UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2012
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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 |
|
31-1332119 |
(State or other jurisdiction of incorporation) |
|
(I.R.S. Employer Identification Number) |
1145 Hembree Road, Roswell, GA 30076
(Address of principal executive offices)
(678) 869-5116
(Registrants telephone number, including area code)
5057 Troy Road, Springfield, OH 45502-9032
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 x No o
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 x No 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.
Large accelerated filer o |
|
Accelerated filer o |
|
|
|
Non-accelerated filer o |
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Smaller reporting company x |
(Do not check if a smaller reporting company) |
|
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.
As of June 30, 2012: 13,696,538 shares of common stock with no par value were outstanding.
AdCare Health Systems, Inc.
Form 10-Q
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
(Amounts in 000s)
|
|
June 30, |
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December 31, |
|
||
|
|
2012 |
|
2011 |
|
||
|
|
(Unaudited) |
|
|
|
||
ASSETS |
|
|
|
|
|
||
Current Assets: |
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
9,373 |
|
$ |
7,364 |
|
Restricted cash and cash equivalents |
|
3,624 |
|
1,883 |
|
||
Accounts receivable, net of allowance of $2,460 and $1,346 |
|
26,964 |
|
18,759 |
|
||
Prepaid expenses and other |
|
668 |
|
663 |
|
||
Assets of disposal group held for sale |
|
38 |
|
47 |
|
||
Total current assets |
|
40,667 |
|
28,716 |
|
||
|
|
|
|
|
|
||
Restricted cash and investments |
|
5,812 |
|
4,870 |
|
||
Property and equipment, net |
|
147,093 |
|
105,143 |
|
||
Intangible assets bed licenses |
|
2,464 |
|
1,189 |
|
||
Intangible assets lease rights, net |
|
7,925 |
|
8,460 |
|
||
Goodwill |
|
906 |
|
906 |
|
||
Escrow deposits for acquisitions |
|
1,513 |
|
3,172 |
|
||
Lease deposits |
|
1,725 |
|
1,685 |
|
||
Deferred loan costs, net |
|
5,733 |
|
4,818 |
|
||
Other assets |
|
71 |
|
122 |
|
||
Total assets |
|
$ |
213,909 |
|
$ |
159,081 |
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|
|
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
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Current Liabilities: |
|
|
|
|
|
||
Current portion of notes payable and other debt |
|
$ |
9,401 |
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$ |
4,567 |
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Revolving credit facilities and lines of credit |
|
1,900 |
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7,343 |
|
||
Accounts payable |
|
16,601 |
|
12,075 |
|
||
Accrued expenses |
|
11,424 |
|
9,858 |
|
||
Liabilities of disposal group held for sale |
|
143 |
|
240 |
|
||
Total current liabilities |
|
39,469 |
|
34,083 |
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||
|
|
|
|
|
|
||
Notes payable and other debt, net of current portion: |
|
|
|
|
|
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Senior debt, net of discounts |
|
116,603 |
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87,771 |
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||
Convertible debt, net of discounts |
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15,035 |
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14,614 |
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Revolving credit facilities |
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7,064 |
|
1,308 |
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Other debt |
|
12,880 |
|
1,400 |
|
||
Derivative liability |
|
1,127 |
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1,889 |
|
||
Other liabilities |
|
1,729 |
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2,437 |
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||
Deferred tax liability |
|
87 |
|
86 |
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Total liabilities |
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193,994 |
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143,588 |
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||
|
|
|
|
|
|
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Commitments and contingencies (Note 14) |
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|
|
|
|
||
|
|
|
|
|
|
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Stockholders equity: |
|
|
|
|
|
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Preferred stock, no par value; 1,000 shares authorized; no shares issued or outstanding |
|
|
|
|
|
||
Common stock and additional paid-in capital, no par value; 29,000 shares authorized; 13,697 and 12,193 shares issued and outstanding |
|
39,647 |
|
35,047 |
|
||
Accumulated deficit |
|
(18,240 |
) |
(18,713 |
) |
||
Total stockholders equity |
|
21,407 |
|
16,334 |
|
||
Noncontrolling interest in subsidiaries |
|
(1,492 |
) |
(841 |
) |
||
Total equity |
|
19,915 |
|
15,493 |
|
||
Total liabilities and stockholders equity |
|
$ |
213,909 |
|
$ |
159,081 |
|
See notes to consolidated financial statements
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in 000s, except per share data)
(Unaudited)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
||||||||
|
|
2012 |
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2011 |
|
2012 |
|
2011 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
||||
Patient care revenues |
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$ |
54,642 |
|
$ |
33,872 |
|
$ |
104,450 |
|
$ |
64,404 |
|
Management revenues |
|
363 |
|
484 |
|
726 |
|
982 |
|
||||
Total revenues |
|
55,005 |
|
34,356 |
|
105,176 |
|
65,386 |
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||||
|
|
|
|
|
|
|
|
|
|
||||
Expenses: |
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|
|
|
|
|
|
|
|
||||
Cost of services (exclusive of facility rent, depreciation and amortization) |
|
42,227 |
|
27,104 |
|
82,350 |
|
52,279 |
|
||||
General and administrative |
|
4,929 |
|
3,167 |
|
8,860 |
|
6,091 |
|
||||
Facility rent expense |
|
2,050 |
|
1,947 |
|
4,115 |
|
3,850 |
|
||||
Depreciation and amortization |
|
1,761 |
|
705 |
|
3,258 |
|
1,352 |
|
||||
Salary retirement and continuation costs |
|
|
|
622 |
|
|
|
622 |
|
||||
Total expenses |
|
50,967 |
|
33,545 |
|
98,583 |
|
64,194 |
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||||
|
|
|
|
|
|
|
|
|
|
||||
Income from Operations |
|
4,038 |
|
811 |
|
6,593 |
|
1,192 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Other Income (Expense): |
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
(3,366 |
) |
(1,852 |
) |
(6,320 |
) |
(3,288 |
) |
||||
Acquisition costs, net of gains |
|
(524 |
) |
(622 |
) |
(817 |
) |
357 |
|
||||
Derivative gain (loss) |
|
353 |
|
(2,588 |
) |
763 |
|
(3,938 |
) |
||||
Loss on extinguishment of debt |
|
|
|
(77 |
) |
|
|
(77 |
) |
||||
Other income (expense) |
|
(13 |
) |
(19 |
) |
(29 |
) |
587 |
|
||||
Total other expense, net |
|
(3,550 |
) |
(5,158 |
) |
(6,403 |
) |
(6,359 |
) |
||||
|
|
|
|
|
|
|
|
|
|
||||
Income (Loss) from Continuing Operations Before Income Taxes |
|
488 |
|
(4,347 |
) |
190 |
|
(5,167 |
) |
||||
Income Tax Expense |
|
(45 |
) |
(124 |
) |
(99 |
) |
(210 |
) |
||||
Income (Loss) from Continuing Operations |
|
443 |
|
(4,471 |
) |
91 |
|
(5,377 |
) |
||||
Loss from discontinued operations |
|
(160 |
) |
(91 |
) |
(269 |
) |
(126 |
) |
||||
Net Income (Loss) |
|
283 |
|
(4,562 |
) |
(178 |
) |
(5,503 |
) |
||||
Net Loss Attributable to Noncontrolling Interests |
|
396 |
|
165 |
|
651 |
|
341 |
|
||||
Net Income (Loss) Attributable to AdCare Health Systems |
|
$ |
679 |
|
$ |
(4,397 |
) |
$ |
473 |
|
$ |
(5,162 |
) |
|
|
|
|
|
|
|
|
|
|
||||
Net Income (Loss) per Common Share Basic: |
|
|
|
|
|
|
|
|
|
||||
Continuing Operations |
|
$ |
0.06 |
|
$ |
(0.49 |
) |
$ |
0.06 |
|
$ |
(0.58 |
) |
Discontinued Operations |
|
(0.01 |
) |
(0.01 |
) |
(0.02 |
) |
(0.01 |
) |
||||
|
|
$ |
0.05 |
|
$ |
(0.50 |
) |
$ |
0.04 |
|
$ |
(0.59 |
) |
Net Income (Loss) per Common Share Diluted: |
|
|
|
|
|
|
|
|
|
||||
Continuing Operations |
|
$ |
0.06 |
|
$ |
(0.49 |
) |
$ |
0.06 |
|
$ |
(0.58 |
) |
Discontinued Operations |
|
(0.01 |
) |
(0.01 |
) |
(0.02 |
) |
(0.01 |
) |
||||
|
|
$ |
0.05 |
|
$ |
(0.50 |
) |
$ |
0.04 |
|
$ |
(0.59 |
) |
See notes to consolidated financial statements
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(Amounts in 000s)
(Unaudited)
|
|
Common Stock
|
|
Common
|
|
Accumulated
|
|
Noncontrolling
|
|
Total |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance, January 1, 2012 |
|
12,193 |
|
$ |
35,047 |
|
$ |
(18,713 |
) |
$ |
(841 |
) |
$ |
15,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nonemployee warrants for services |
|
|
|
390 |
|
|
|
|
|
390 |
|
||||
Stock based compensation expense |
|
|
|
347 |
|
|
|
|
|
347 |
|
||||
Public stock offering, net |
|
1,165 |
|
3,768 |
|
|
|
|
|
3,768 |
|
||||
Exercises of options and warrants |
|
69 |
|
95 |
|
|
|
|
|
95 |
|
||||
Issuance of restricted stock |
|
270 |
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
|
|
|
|
473 |
|
(651 |
) |
(178 |
) |
||||
Balance, June 30, 2012 |
|
13,697 |
|
$ |
39,647 |
|
$ |
(18,240 |
) |
$ |
(1,492 |
) |
$ |
19,915 |
|
See notes to consolidated financial statements
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in 000s)
(Unaudited)
|
|
Six Months Ended June 30, |
|
||||
|
|
2012 |
|
2011 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
||
Net Loss |
|
$ |
(178 |
) |
$ |
(5,503 |
) |
Net Loss from discontinued operations |
|
269 |
|
126 |
|
||
Net Income (loss) from continuing operations |
|
91 |
|
(5,377 |
) |
||
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities: |
|
|
|
|
|
||
Depreciation and amortization |
|
3,258 |
|
1,352 |
|
||
Warrants issued for services |
|
|
|
297 |
|
||
Stock based compensation expense |
|
347 |
|
467 |
|
||
Provision for leases in excess of cash |
|
291 |
|
379 |
|
||
Amortization of deferred financing costs |
|
975 |
|
407 |
|
||
Amortization of debt discounts |
|
429 |
|
445 |
|
||
Derivative (gain) loss |
|
(763 |
) |
3,938 |
|
||
Loss on debt extinguishment |
|
|
|
77 |
|
||
Deferred tax expense |
|
1 |
|
95 |
|
||
(Gain) loss on disposal of assets |
|
(2 |
) |
126 |
|
||
Gain on acquisitions |
|
|
|
(1,104 |
) |
||
Provision for bad debts |
|
1,233 |
|
351 |
|
||
Other noncash items |
|
29 |
|
45 |
|
||
Changes in certain assets and liabilities, net of acquisitions: |
|
|
|
|
|
||
Accounts receivable |
|
(9,306 |
) |
(3,538 |
) |
||
Prepaid expenses and other |
|
(4 |
) |
278 |
|
||
Other assets |
|
50 |
|
(29 |
) |
||
Accounts payable and accrued expenses |
|
5,081 |
|
3,010 |
|
||
Net cash provided by operating activities continuing operations |
|
1,710 |
|
1,219 |
|
||
Net cash (used in) provided by operating activities discontinued operations |
|
(426 |
) |
14 |
|
||
Net cash provided by operating activities |
|
1,284 |
|
1,233 |
|
||
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
||
Proceeds from property and equipment |
|
3 |
|
|
|
||
Change in restricted cash and investments |
|
(485 |
) |
(110 |
) |
||
Acquisitions |
|
(8,849 |
) |
(5,793 |
) |
||
Purchase of property and equipment |
|
(2,569 |
) |
(1,943 |
) |
||
Net cash used in investing activities |
|
(11,900 |
) |
(7,846 |
) |
||
Cash flows from financing activities: |
|
|
|
|
|
||
Proceeds from debt |
|
11,515 |
|
4,830 |
|
||
Debt issuance costs |
|
(205 |
) |
(175 |
) |
||
Change in line of credit |
|
312 |
|
4,287 |
|
||
Exercise of warrants and options |
|
95 |
|
219 |
|
||
Proceeds from stock issuances, net |
|
3,768 |
|
|
|
||
Repayment of notes payable |
|
(2,763 |
) |
(709 |
) |
||
Net cash provided by financing activities continuing operations |
|
12,722 |
|
8,452 |
|
||
Net cash used in financing activities discontinued operations |
|
(97 |
) |
(89 |
) |
||
Net cash provided by financing activities |
|
12,625 |
|
8,363 |
|
||
|
|
|
|
|
|
||
Net Change in Cash |
|
2,009 |
|
1,750 |
|
||
Cash, Beginning |
|
7,364 |
|
3,911 |
|
||
Cash, Ending |
|
$ |
9,373 |
|
$ |
5,661 |
|
|
|
|
|
|
|
||
Supplemental Disclosure of Cash Flow Information: |
|
|
|
|
|
||
Cash paid during the period for: |
|
|
|
|
|
||
Interest |
|
$ |
4,630 |
|
$ |
2,438 |
|
Income Taxes |
|
$ |
46 |
|
$ |
|
|
Supplemental Disclosure of Non-cash Activities: |
|
|
|
|
|
||
Acquisitions in exchange for debt and equity instruments |
|
$ |
32,720 |
|
$ |
17,384 |
|
Warrants issued for financings costs |
|
$ |
390 |
|
$ |
330 |
|
Other assets acquired in exchange for debt |
|
$ |
3,490 |
|
$ |
3,427 |
|
See notes to consolidated financial statements.
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States. These statements include the accounts of AdCare Health Systems, Inc. (AdCare) and its controlled subsidiaries (collectively with AdCare, the Company or we). Controlled subsidiaries include AdCares majority owned subsidiaries and variable interest entities (VIE) in which AdCare has control as 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 VIEs 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.
The Company delivers skilled nursing, assisted living and home health services through wholly owned separate operating subsidiaries. All inter-company accounts and transactions were eliminated in the consolidation. The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete annual financial statements and should be read in conjunction with the Companys audited consolidated financial statements and notes included in the Companys Annual Report on Form 10-K for the year ended December 31, 2011 (the Annual Report). In the opinion of the Companys management, all adjustments considered for a fair presentation are included and are of a normal recurring nature. Operating results for the three and six months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. Certain prior year amounts have been reclassified to conform to the current year presentation.
Earnings per Share
Basic earnings per share is computed by dividing net income or loss by the weighted-average number of common shares 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 common shares upon conversion or exercise of convertible securities and the weighted-average number of common shares outstanding 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 options, warrants and non-vested 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 debt 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.
|
|
Three Months Ended June 30, |
|
||||||||||||||
|
|
2012 |
|
2011 |
|
||||||||||||
(Amounts in 000s, except per share
|
|
Income
|
|
Shares (1) |
|
Per
|
|
Income
|
|
Shares
|
|
Per Share |
|
||||
Continuing Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from continuing operations |
|
$ |
443 |
|
|
|
|
|
$ |
(4,471 |
) |
|
|
|
|
||
Net loss attributable to noncontrolling interests |
|
396 |
|
|
|
|
|
165 |
|
|
|
|
|
||||
Basic income (loss) from continuing operations |
|
$ |
839 |
|
13,467 |
|
$ |
0.06 |
|
$ |
(4,306 |
) |
8,847 |
|
$ |
(0.49 |
) |
Effect from options, warrants and non-vested shares |
|
|
|
447 |
|
|
|
|
|
|
|
|
|
||||
Effect from assumed issuance of convertible shares (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted net income (loss)from continuing operations |
|
$ |
839 |
|
13,914 |
|
$ |
0.06 |
|
$ |
(4,306 |
) |
8,847 |
|
$ |
(0.49 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Discontinued Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic loss from discontinued operations |
|
$ |
(160 |
) |
13,467 |
|
$ |
(0.01 |
) |
$ |
(91 |
) |
8,847 |
|
$ |
(0.01 |
) |
Diluted loss from discontinued operations |
|
$ |
(160 |
) |
13,467 |
|
$ |
(0.01 |
) |
$ |
(91 |
) |
8,847 |
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Income (Loss) Attributable to AdCare: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net income (loss) |
|
$ |
679 |
|
13,467 |
|
$ |
0.05 |
|
$ |
(4,397 |
) |
8,847 |
|
$ |
(0.50 |
) |
Diluted net income (loss) |
|
$ |
679 |
|
13,914 |
|
$ |
0.05 |
|
$ |
(4,397 |
) |
8,847 |
|
$ |
(0.50 |
) |
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited) (Continued)
|
|
Six Months Ended June 30, |
|
||||||||||||||
|
|
2012 |
|
2011 |
|
||||||||||||
(Amounts in 000s, except per share
|
|
Income
|
|
Shares (1) |
|
Per
|
|
Income
|
|
Shares
|
|
Per Share |
|
||||
Continuing Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from continuing operations |
|
$ |
91 |
|
|
|
|
|
$ |
(5,377 |
) |
|
|
|
|
||
Net loss attributable to noncontrolling interests |
|
651 |
|
|
|
|
|
341 |
|
|
|
|
|
||||
Basic income (loss) from continuing operations |
|
$ |
742 |
|
12,834 |
|
$ |
0.06 |
|
$ |
(5,036 |
) |
8,806 |
|
$ |
(0.58 |
) |
Effect from options, warrants and non-vested shares |
|
|
|
562 |
|
|
|
|
|
|
|
|
|
||||
Effect from assumed issuance of convertible shares (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted net income (loss) from continuing operations |
|
$ |
742 |
|
13,396 |
|
$ |
0.06 |
|
$ |
(5,036 |
) |
8,806 |
|
$ |
(0.58 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Discontinued Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic loss from discontinued operations |
|
$ |
(269 |
) |
12,834 |
|
$ |
(0.02 |
) |
$ |
(126 |
) |
8,806 |
|
$ |
(0.01 |
) |
Diluted loss from discontinued operations |
|
$ |
(269 |
) |
12,834 |
|
$ |
(0.02 |
) |
$ |
(126 |
) |
8,806 |
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Income (Loss) Attributable to AdCare: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net income (loss) |
|
$ |
473 |
|
12,834 |
|
$ |
0.04 |
|
$ |
(5,162 |
) |
8,806 |
|
$ |
(0.59 |
) |
Diluted net income (loss) |
|
$ |
473 |
|
13,396 |
|
$ |
0.04 |
|
$ |
(5,162 |
) |
8,806 |
|
$ |
(0.59 |
) |
(1) The weighted average shares outstanding includes retroactive adjustments from the stock dividend issued on October 1, 2011.
(2) The impact of the conversion of the 2010 and 2011 convertible notes were excluded as the impact would be anti-dilutive.
Intangible Assets and Goodwill
There have been no required impairment adjustments to intangible assets and goodwill during the six months ended June 30, 2012.
Intangible assets consist of the following:
|
|
June 30, 2012 |
|
December 31, 2011 |
|
||||||||||||||
|
|
Gross |
|
|
|
Net |
|
Gross |
|
|
|
Net |
|
||||||
|
|
Carrying |
|
Accumulated |
|
Carrying |
|
Carrying |
|
Accumulated |
|
Carrying |
|
||||||
Amounts in (000s) |
|
Amount |
|
Amortization |
|
Amount |
|
Amount |
|
Amortization |
|
Amount |
|
||||||
Lease Rights |
|
$ |
9,545 |
|
$ |
1,620 |
|
$ |
7,925 |
|
$ |
9,545 |
|
$ |
1,085 |
|
$ |
8,460 |
|
Bed Licenses (included in property and equipment) |
|
34,664 |
|
1,056 |
|
33,608 |
|
26,149 |
|
533 |
|
25,616 |
|
||||||
Bed Licenses - Separable |
|
2,464 |
|
|
|
2,464 |
|
1,189 |
|
|
|
1,189 |
|
||||||
Totals |
|
$ |
46,673 |
|
$ |
2,676 |
|
$ |
43,997 |
|
$ |
36,883 |
|
$ |
1,618 |
|
$ |
35,265 |
|
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited) (Continued)
Intangible Assets and Goodwill
For the six months ended June 30, 2012, amortization expense was approximately $523,000 for bed licenses included in property and equipment. There was no amortization of bed licenses for the six months ended June 30, 2011. For the six months ended June 30, 2012 and 2011, amortization expense was $535,000 and $442,000, respectively, for lease rights. Estimated amortization expense for each of the following years ending December 31 is as follows:
(Amounts in 000s) |
|
Lease Rights |
|
Bed Licenses |
|
||
2012 (remainder) |
|
$ |
534 |
|
$ |
601 |
|
2013 |
|
1,069 |
|
1,202 |
|
||
2014 |
|
1,010 |
|
1,202 |
|
||
2015 |
|
885 |
|
1,202 |
|
||
2016 |
|
885 |
|
1,202 |
|
||
Thereafter |
|
3,542 |
|
28,199 |
|
||
|
|
$ |
7,925 |
|
$ |
33,608 |
|
Compensated Absences
In 2012, the Company removed the ability for employees to accumulate earned but unused vacation beyond the current calendar year. As a result, vacation time previously accumulated must be used by the employee by December 31, 2012 or it will be forfeited. Management has estimated the potential forfeitures and has adjusted the vacation accrual accordingly.
NOTE 2. LIQUIDITY AND PROFITABILITY
The Company had net income of approximately $679,000 and $473,000 for the three and six months ended June 30, 2012, respectively, and a net loss of $4,397,000 and $5,162,000 for the three and six months ended June 30, 2011, respectively. The Company had positive working capital of approximately $1,198,000 at June 30, 2012. The Companys ability to sustain profitable operations is dependent on continued growth in revenue and controlling costs.
Managements plans for increasing liquidity and profitability in future years include the following:
· increasing facility occupancy and improving the occupancy mix by increasing Medicare patients;
· acquiring additional long term care facilities with existing cash flowing operations to expand our operations, and
· refinancing debt where possible to obtain more favorable terms.
Management believes that the foregoing actions, if taken by the Company, should provide the opportunity for the Company to improve liquidity and achieve profitability; however, there is no assurance that such actions will occur or, if they do occur, that they will result in improved liquidity or profitability. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 3. DISCONTINUED OPERATIONS
As part of the Companys 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. This segment represents less than 2% of total revenues for the Company over the past year.
As a result of the decision to exit the home health business, the assets and liabilities that are expected to be sold are reflected as assets and liabilities held for sale and are comprised of the following:
(Amounts in 000s) |
|
June 30, 2012 |
|
December 31, 2011 |
|
||
Property and equipment, net |
|
$ |
36 |
|
$ |
45 |
|
Other assets |
|
2 |
|
2 |
|
||
Assets of disposal group held for sale |
|
$ |
38 |
|
$ |
47 |
|
|
|
|
|
|
|
||
Current portion of debt |
|
$ |
143 |
|
$ |
197 |
|
Notes payable |
|
|
|
43 |
|
||
Liabilities of disposal group held for sale |
|
$ |
143 |
|
$ |
240 |
|
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited) (Continued)
NOTE 4. SEGMENTS
The Company reports its operations in three segments: Skilled Nursing Facility (SNF), Assisted Living Facility (ALF), and Corporate & Other. The SNF and ALF segments provide services to individuals needing long-term care in a nursing home or assisted living setting, and the management of those facilities. The Corporate & Other segment engages in the management of facilities and accounting and IT services. We evaluate financial performance and allocate resources primarily based upon segment operating income (loss). Segment operating results excludes interest expense and other non-operating income and expenses. The table below sets forth our segment information for the three and six months ended June 30, 2012 and 2011.
|
|
|
|
|
|
Corporate |
|
|
|
|
|
|||||
(Amounts in 000s) |
|
SNF |
|
ALF |
|
& Other |
|
Eliminations |
|
Total |
|
|||||
Three months ended June 30, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|||||
Net revenues |
|
$ |
51,230 |
|
$ |
3,413 |
|
$ |
3,131 |
|
$ |
(2,769 |
) |
$ |
55,005 |
|
Cost of services |
|
42,493 |
|
2,563 |
|
(60 |
) |
(2,769 |
) |
42,227 |
|
|||||
General and administrative |
|
(36 |
) |
|
|
4,965 |
|
|
|
4,929 |
|
|||||
Facility rent expense |
|
2,000 |
|
|
|
50 |
|
|
|
2,050 |
|
|||||
Depreciation and amortization |
|
1,369 |
|
220 |
|
172 |
|
|
|
1,761 |
|
|||||
Operating income/(loss) |
|
$ |
5,404 |
|
$ |
630 |
|
$ |
(1,996 |
) |
$ |
|
|
$ |
4,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Three months ended June 30, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|||||
Net revenues |
|
$ |
31,462 |
|
$ |
2,410 |
|
$ |
2,585 |
|
$ |
(2,101 |
) |
$ |
34,356 |
|
Cost of services |
|
27,283 |
|
1,869 |
|
53 |
|
(2,101 |
) |
27,104 |
|
|||||
General and administrative |
|
|
|
|
|
3,167 |
|
|
|
3,167 |
|
|||||
Facility rent expense |
|
1,902 |
|
|
|
45 |
|
|
|
1,947 |
|
|||||
Depreciation and amortization |
|
504 |
|
161 |
|
40 |
|
|
|
705 |
|
|||||
Salary retirement and continuation costs |
|
|
|
|
|
622 |
|
|
|
622 |
|
|||||
Operating income/(loss) |
|
$ |
1,773 |
|
$ |
380 |
|
$ |
(1,342 |
) |
$ |
|
|
$ |
811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Six months ended June 30, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|||||
Net revenues |
|
$ |
97,775 |
|
$ |
6,674 |
|
$ |
5,981 |
|
$ |
(5,254 |
) |
$ |
105,176 |
|
Cost of services |
|
82,770 |
|
4,920 |
|
(86 |
) |
(5,254 |
) |
82,350 |
|
|||||
General and administrative |
|
|
|
|
|
8,860 |
|
|
|
8,860 |
|
|||||
Facility rent expense |
|
4,026 |
|
|
|
89 |
|
|
|
4,115 |
|
|||||
Depreciation and amortization |
|
2,485 |
|
430 |
|
343 |
|
|
|
3,258 |
|
|||||
Operating income/(loss) |
|
$ |
8,494 |
|
$ |
1,324 |
|
$ |
(3,225 |
) |
$ |
|
|
$ |
6,593 |
|
Total assets |
|
$ |
154,971 |
|
$ |
29,371 |
|
$ |
29,567 |
|
$ |
|
|
$ |
213,909 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Six months ended June 30, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|||||
Net revenues |
|
$ |
59,653 |
|
$ |
4,751 |
|
$ |
5,297 |
|
$ |
(4,315 |
) |
$ |
65,386 |
|
Cost of services |
|
52,607 |
|
3,854 |
|
133 |
|
(4,315 |
) |
52,279 |
|
|||||
General and administrative |
|
|
|
|
|
6,091 |
|
|
|
6,091 |
|
|||||
Facility rent expense |
|
3,805 |
|
|
|
45 |
|
|
|
3,850 |
|
|||||
Depreciation and amortization |
|
963 |
|
313 |
|
76 |
|
|
|
1,352 |
|
|||||
Salary retirement and continuation costs |
|
|
|
|
|
622 |
|
|
|
622 |
|
|||||
Operating income/(loss) |
|
$ |
2,278 |
|
$ |
584 |
|
$ |
(1,670 |
) |
$ |
|
|
$ |
1,192 |
|
Total assets |
|
$ |
68,317 |
|
$ |
21,518 |
|
$ |
26,103 |
|
$ |
|
|
$ |
115,938 |
|
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited) (Continued)
NOTE 5. PROPERTY AND EQUIPMENT
(Amounts in 000s) |
|
Estimated Useful
|
|
June 30,
|
|
December 31,
|
|
||
Buildings and improvements |
|
5-40 |
|
$ |
134,232 |
|
$ |
96,065 |
|
Equipment |
|
2-10 |
|
11,114 |
|
7,108 |
|
||
Land |
|
|
|
9,867 |
|
7,636 |
|
||
Computer related |
|
2-10 |
|
2,517 |
|
2,414 |
|
||
Construction in process |
|
|
|
195 |
|
77 |
|
||
|
|
|
|
157,925 |
|
113,300 |
|
||
Less: accumulated depreciation expense |
|
|
|
9,776 |
|
7,624 |
|
||
Less: accumulated amortization expense |
|
|
|
1,056 |
|
533 |
|
||
Property and equipment, net |
|
|
|
$ |
147,093 |
|
$ |
105,143 |
|
For the six months ended June 30, 2012 and 2011, depreciation and amortization expense was approximately $2,723,000 and $910,000, respectively.
NOTE 6. RESTRICTED CASH AND INVESTMENTS
The following table sets forth the Companys various restricted cash, escrow deposits and investments:
|
|
June 30, |
|
December 31, |
|
||
(Amounts in 000s) |
|
2012 |
|
2011 |
|
||
HUD escrow deposits |
|
$ |
249 |
|
$ |
326 |
|
Funds held in trust for residents |
|
21 |
|
45 |
|
||
Refundable escrow deposit |
|
|
|
500 |
|
||
Collateral certificates of deposit |
|
3,354 |
|
1,012 |
|
||
Total current portion |
|
3,624 |
|
1,883 |
|
||
|
|
|
|
|
|
||
HUD reserve replacements |
|
1,111 |
|
1,130 |
|
||
Reserves for capital improvements |
|
2,429 |
|
1,767 |
|
||
Restricted investments for other debt obligations |
|
2,272 |
|
1,973 |
|
||
Total noncurrent portion |
|
5,812 |
|
4,870 |
|
||
|
|
|
|
|
|
||
Total restricted cash and investments |
|
$ |
9,436 |
|
$ |
6,753 |
|
NOTE 7. ACCRUED EXPENSES
Accrued expenses consist of the following:
|
|
June 30, |
|
December 31, |
|
||
(Amounts in 000s) |
|
2012 |
|
2011 |
|
||
Accrued payroll related |
|
$ |
5,788 |
|
$ |
5,040 |
|
Accrued employee benefits |
|
1,525 |
|
2,023 |
|
||
Real estate and other taxes |
|
1,275 |
|
982 |
|
||
Other accrued expenses |
|
2,836 |
|
1,813 |
|
||
|
|
$ |
11,424 |
|
$ |
9,858 |
|
NOTE 8. NOTES PAYABLE AND OTHER DEBT
Notes payable and other debt consist of the following:
|
|
June 30, |
|
December 31, |
|
||
(Amounts in 000s) |
|
2012 |
|
2011 |
|
||
Revolving credit facilities and lines of credit |
|
$ |
8,964 |
|
$ |
8,651 |
|
Senior debt HUD |
|
15,802 |
|
15,738 |
|
||
Senior debt USDA |
|
38,343 |
|
38,717 |
|
||
Senior debt SBA |
|
4,996 |
|
5,087 |
|
||
Senior debt bonds, net of discount |
|
13,083 |
|
6,176 |
|
||
Senior debt other mortgage indebtedness |
|
53,511 |
|
23,823 |
|
||
Other debt |
|
13,149 |
|
4,197 |
|
||
Convertible debt issued in 2010, net of discount |
|
10,526 |
|
10,105 |
|
||
Convertible debt issued in 2011 |
|
4,509 |
|
4,509 |
|
||
Total |
|
162,883 |
|
117,003 |
|
||
Less current portion of notes payable and other debt |
|
9,401 |
|
4,567 |
|
||
Less current portion of revolving credit facility and lines of credit |
|
1,900 |
|
7,343 |
|
||
Notes payable and other debt, net of current portion |
|
$ |
151,582 |
|
$ |
105,093 |
|
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited) (Continued)
Scheduled Maturities
The following is a summary of the scheduled maturities of indebtedness as of June 30, 2012 for each of the next five years and thereafter:
(Amounts in 000s) |
|
|
|
|
2013 |
|
$ |
11,301 |
|
2014 |
|
22,797 |
|
|
2015 |
|
9,872 |
|
|
2016 |
|
7,994 |
|
|
2017 |
|
26,856 |
|
|
Thereafter |
|
85,623 |
|
|
|
|
164,443 |
|
|
Less: unamortized discounts |
|
(1,560 |
) |
|
|
|
$ |
162,883 |
|
Revolving Credit Facilities
Gemino Credit Agreement
At December 31, 2011, the outstanding balance of approximately $7,265,000 for the revolving credit agreement was classified as current as a result of the required lockbox arrangement and subjective acceleration clauses. At June 30, 2012, a portion of the outstanding balance is reflected as non-current in the amount of approximately $5,164,000. This portion is classified as non-current because management is currently in the process of refinancing this debt into a revolving credit agreement that management anticipates will be long-term with no features that would require current presentation. Management has demonstrated the intent and ability to refinance this debt. At June 30, 2012, the Companys outstanding balance was in excess of the borrowing base restriction and the portion in excess is presented as a current obligation.
Mortgage Notes
Hearth and Home of Vandalia
In connection with the Companys January 2012 refinance of the assisted living facility located in Vandalia, Ohio known as Hearth and Home of Vandalia, a wholly owned subsidiary of AdCare obtained a term loan insured by U.S. Department of Housing and Urban Development (HUD) with a financial institution for a total amount of $3,721,500 that matures in 2041. The HUD term loan requires monthly principal and interest payments of approximately $17,500 with a fixed interest rate of 3.74%. Deferred financing costs incurred on the term loan amounted to approximately $201,000 and are being amortized to interest expense over the life of the loan. The HUD term loan has a prepayment penalty of 8% through 2014 declining by 1% each year through 2022.
Woodland Manor
In connection with the Companys January 2012 acquisition of the skilled nursing facility located in Springfield, Ohio, known as Woodland Manor, a wholly owned subsidiary of the Company entered into a loan agreement for $4,800,000. The loan matures in December 2016 with a required final payment of approximately $4,300,000 and accrues interest at the LIBOR rate plus 4% with a minimum rate of 6% per annum. The loan requires monthly principal payments of $8,500 plus interest for total current monthly payments of approximately $33,000. Deferred financing costs incurred on the loan amounted to approximately $107,300 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.
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited) (Continued)
Little Rock, Northridge and Woodland Hills
In connection with the Companys April 2012 acquisition of three skilled nursing facilities located in Arkansas known as Little Rock, Northridge and Woodland Hills, certain wholly owned subsidiaries of AdCare entered into a loan agreement for $21,800,000 with the Private Bank. The loan matures in March 2017 with a required final payment of approximately $19,700,000 and accrues interest at the LIBOR rate plus 4% with a minimum rate of 6% per annum. The loan requires monthly principal payments of $37,000 plus interest for total current monthly payments of approximately $153,000. Deferred financing costs incurred on the loan amounted to approximately $410,000 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 approximately $1,810,000 of restricted assets related to this loan.
On June 15, 2012, certain wholly owned subsidiaries of AdCare entered into a modification agreement with Private Bank 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. The Company anticipates that it will re-finance the Little Rock, Northridge and Woodland Hills facilities later this year with long-term financing.
Abington Place
In connection with the Companys 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 $3,425,000 with Metro City Bank. The loan matures in September 2012 and 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 approximately $130,000 and are being amortized to interest expense over the life of the loan. The loan may be prepaid at any time without penalty. The loan is secured by the Abington Place facility and guaranteed by AdCare.
Stone County
In June 2012, a wholly owned subsidiary of Adcare financed the skilled nursing located in Mountain View, Arkansas known as Stone County by entering into a loan agreement for $1,810,000 with Metro City Bank. The 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 the loan amounted to approximately $67,000 and are being amortized to interest expense over the life of the loan. The loan has a prepayment penalty of 10% through 2012 declining by 1% each year through 2021. The loan is secured by the Stone County facility and guaranteed by AdCare.
In June 2012, a wholly owned subsidiary of AdCare entered into a short-term loan agreement for $1,267,000 with Metro City Bank. The loan matured in July 2012 and accrued interest at a fixed rate of 6.25% per annum. Deferred financing costs incurred on the loan amounted to approximately $12,000 and are being amortized to interest expense over the life of the loan. The loan may be prepaid at any time without penalty. The loan is secured by the Stone County facility and guaranteed by AdCare. This loan was refinanced subsequent to June 30, 2012. For information regarding the refinancing subsequent to June 30, 2012, see Note 16 in the Notes to Consolidated Financial Statements.
Bonds
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 (City of Springfield) pursuant to which City of Springfield lent to such subsidiary the proceeds from the sale of City of Springfields Series 2012 Bonds. The Series 2012 Bonds consist of $6,610,000 in Series 2012A First Mortgage Revenue Bonds and $620,000 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 approximately $575,000 and are being amortized to interest expense over the life of the loan. The loan is secured by the Companys assisted living facility located in Springfield, Ohio known as Eaglewood Village and guaranteed by AdCare. There is an original issue discount of approximately $250,000 and restricted assets of $317,000 related to this loan.
Other Debt
Eaglewood Village Promissory Note
In January 2012, two wholly owned subsidiaries of AdCare issued a promissory note in the amount of $500,000 in connection with the January 2012 acquisition of the assisted living facility located in Springfield, Ohio. The note
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited) (Continued)
matures in January 2014 and bears interest at 6.5% per annum payable monthly beginning February 2012. The note requires monthly principal and interest payments of $3,700. 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 $3,500,000. The promissory note bears interest at 10% per annum and matures in October 2012. The interest rate increases 1% each month beginning in July 2012 through October 2012. The note may also be prepaid without penalty at any time; provided, however, if the note is prepaid prior to October 1, 2012, the interest on the note through such date is payable. In connection with the issuance of the note, Cantone Research, Inc. agreed to provide AdCare with certain consulting services for a monthly fee if the Company and Cantone Asset Management LLC (or an affiliated entity) do not agree to the terms of an additional financing arrangement pursuant to which it (or affiliated entity) would loan to us at least $4,000,000 for a four-year term.
In April 2012, AdCare issued a promissory note to Cantone Asset Management LLC in the amount of $1,500,000. The promissory note bears interest at 10% per annum and matures in October 2012. The interest rate increases 1% each month beginning in July 2012 through October 2012. Deferred financing costs incurred on the loan amounted to approximately $78,000 and are being amortized to interest expense over the life of the loan. The note may also be prepaid without penalty at any time; provided, however, if the note is prepaid prior to October 1, 2012, then interest on the note through such date is payable.
The promissory notes issued to Cantone Asset Management LLC in March and April 2012 were refinanced and the consulting arrangement with Cantone Research, Inc. was revised subsequent to June 30, 2012. For information regarding the refinancing and the revision to the consulting arrangement, see Note 16 in the Notes to Consolidated Financial Statements.
Strome Note
On April 1, 2012, AdCare issued an unsecured promissory note in the amount of $5,000,000 to Strome Alpha Offshore Ltd. The promissory note matures on November 1, 2012 and accrues interest at a fixed rate of 10% per annum. The promissory note requires interest payments of approximately $125,000 on July 1, 2012 and October 1, 2012. The promissory note may be prepaid at any time without penalty.
NOTE 9. ACQUISITIONS
Summary of 2012 Acquisitions
During the six months ended June 30, 2012, the Company acquired a total of five skilled nursing facilities and one assisted living facility described further below. The Company has incurred a total of approximately $817,000 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 obtained effective control of 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 $12,412,000 after final closing adjustments.
(Amounts in 000s) |
|
|
|
|
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 assets bed licenses |
|
1,275 |
|
|
Total assets acquired |
|
12,500 |
|
|
Liabilities assumed: |
|
|
|
|
Real estate taxes and other |
|
(88 |
) |
|
Total identifiable net assets |
|
$ |
12,412 |
|
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited) (Continued)
Little Rock, Northridge and Woodland Hills
On April 1, 2012, the Company obtained effective control of the Little Rock, Northridge and Woodland Hills facilities, three skilled nursing facilities located in Little Rock, Arkansas. The total purchase price was $27,231,000 after final closing adjustments.
(Amounts in 000s) |
|
|
|
|
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 Assets bed licenses |
|
6,822 |
|
|
Total assets acquired |
|
27,280 |
|
|
Liabilities assumed: |
|
|
|
|
Real estate taxes and other |
|
(49 |
) |
|
Total identifiable net assets |
|
$ |
27,231 |
|
Abington Place
On June 1, 2012, the Company obtained effective control of the Abington Place, a skilled nursing facility located in Little Rock, Arkansas. The total purchase price was $3,581,000 after final closing adjustments.
(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 assets bed licenses |
|
1,075 |
|
|
Total assets acquired |
|
3,600 |
|
|
Liabilities assumed: |
|
|
|
|
Real estate taxes and other |
|
(19 |
) |
|
Total identifiable net assets |
|
$ |
3,581 |
|
Unaudited Pro forma Financial Information
The above acquisitions have been included in the consolidated financial statements since the dates the Company gained effective control. Combined revenue for all 2012 acquisitions since gaining effective control is approximately $9,300,000 and resulted in income from operations of approximately $1,317,000 for the six months ended June 30, 2012.
The following table represents pro forma results of consolidated operations as if all of the 2011 and 2012 acquisitions had occurred at the beginning of the earliest fiscal year being presented, after giving effect to certain adjustments.
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited) (Continued)
|
|
Six Months Ended June 30, |
|
||||
(Amounts in 000s) |
|
2012 |
|
2011 |
|
||
Pro forma revenue |
|
$ |
110,514 |
|
$ |
108,679 |
|
Pro forma operating expenses |
|
$ |
103,321 |
|
$ |
103,279 |
|
Pro forma income from operations |
|
$ |
7,193 |
|
$ |
5,400 |
|
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.
NOTE 10. STOCKHOLDERS EQUITY
2012 Public Stock Offering
In March 2012, the Company closed a firm commitment underwritten public offering of 1,100,000 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 underwriters partial exercise of this option, the Company issued 65,000 shares of common stock at an offering price to the public of $3.75 per share on May 22, 2012. The Company received net proceeds of approximately $3.8 million after deducting underwriting discounts and other offering-related expenses of approximately $0.6 million.
NOTE 11. STOCK BASED COMPENSATION
Employee Common Stock Warrants & Options
In February 2012, the Company granted non-qualified stock options to Christopher Brogdon, the Companys Vice Chairman and Chief Acquisition Officer, pursuant to the Companys 2011 Stock Incentive Plan (the 2011 Plan). A total of 50,000 options were granted with an exercise price per share of $7.00 and 100,000 options were granted with an exercise price of $8.00. The options vest in September of 2013 and 2014, respectively. The options are exercisable until the term expires in February 2022. The fair value of the options was estimated at $1.19 and $1.03 per share, respectively, and is being recognized as share-based compensation expense over the requisite service period of the awards.
In March 2012, the Company granted incentive stock options to certain members of management pursuant to the 2011 Plan. A total of 439,200 options were granted with an exercise price per share of $4.13. The options vest ratably on the day before each of the three subsequent anniversaries. The options are exercisable until the term expires in March 2017. The fair value of the options was estimated at $1.34 per share and is being recognized as share-based compensation expense over the requisite service period of the awards.
On June 1, 2012, at the Annual Meeting of Shareholders of the Company, the shareholders approved an amendment to the 2011 Plan to increase the maximum number of shares of common stock that may be issued under the 2011 Plan to an aggregate of 2,000,000 shares from the current maximum of 1,000,000. The Companys management, key employees (including the Companys principal executive officer, principal financial officer and named executive officers), directors and consultants are eligible to participate in the 2011 Plan.
Nonemployee Common Stock Warrants
On March 29, 2012, in connection with the issuance of the $3,500,000 promissory note to Cantone Asset Management LLC, the Company granted to Cantone Asset Management LLC a warrant to purchase 300,000 shares of common stock at an exercise price per share of $4.00. The warrant is exercisable until March 2015. The fair value of the warrant was estimated at $0.64 per share and is included in deferred loan costs and is being amortized as interest expense over the life of the promissory note.
On April 1, 2012, in connection with the issuance of the $5,000,000 promissory note to Strome Alpha Offshore Ltd., the Company granted to Strome Alpha Offshore Ltd. a warrant to purchase 312,500 shares of common stock at an exercise price per share of $4.00. The warrant is exercisable until April 2015. The fair value of the warrant was estimated at $0.64 per share and is included in deferred loan costs and is being amortized as interest expense over the life of the promissory note.
Restricted Stock
In June 2012, the Company approved issuing 270,000 shares of common stock with a three year restriction on transfer to its nine directors. The restricted stock is subject to forfeiture if the recipient is not a director at the end of the three year restriction. The restricted stock has all the rights of a shareholder from the date of grant, including, without limitation the right
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited) (Continued)
to receive dividends and the right to vote. The Company determined the fair value of the restricted stock to be equal to the grant date closing stock price of $3.36. The related compensation expense is being recognized over the three year restricted period. The compensation expense for the three months ended June 30, 2012 was $25,200 with unrecognized compensation expense of $882,000 remaining at June 30, 2012.
NOTE 12. VARIABLE INTEREST ENTITIES
As further described in Note 19 to the consolidated financial statements in the Annual Report, the Company has certain variable interest entities that are required to be consolidated. In June 2012, the Company amended the Option Agreement to purchase Riverchase Village Facility to extend the option exercise period to June 22, 2013. There have been no significant changes in these relationships in 2012. The following summarizes the assets and liabilities of the variable interest entities included in the consolidated balance sheets:
Riverchase Village Facility - Assets and Liabilities:
(Amounts in 000s) |
|
June 30, 2012 |
|
December 31, 2011 |
|
||
Cash |
|
$ |
|
|
$ |
16 |
|
Accounts receivable |
|
26 |
|
10 |
|
||
Restricted investments |
|
413 |
|
451 |
|
||
Property and equipment, net |
|
5,920 |
|
5,999 |
|
||
Other assets |
|
432 |
|
432 |
|
||
Total assets |
|
$ |
6,791 |
|
$ |
6,908 |
|
|
|
|
|
|
|
||
Accounts payable |
|
$ |
1,055 |
|
$ |
740 |
|
Accrued expenses |
|
99 |
|
174 |
|
||
Notes payable |
|
6,107 |
|
6,176 |
|
||
Noncontrolling interest |
|
(470 |
) |
(182 |
) |
||
Total liabilities |
|
$ |
6,791 |
|
$ |
6,908 |
|
Oklahoma Facilities - Assets and Liabilities:
(Amounts in 000s) |
|
June 30, 2012 |
|
December 31, 2011 |
|
||
Cash |
|
$ |
300 |
|
$ |
181 |
|
Accounts receivable |
|
1,138 |
|
800 |
|
||
Property and equipment, net |
|
11,033 |
|
11,111 |
|
||
Other assets |
|
701 |
|
642 |
|
||
Total assets |
|
$ |
13,172 |
|
$ |
12,734 |
|
|
|
|
|
|
|
||
Accounts payable |
|
$ |
1,323 |
|
$ |
458 |
|
Accrued expenses |
|
387 |
|
357 |
|
||
Notes payable |
|
12,484 |
|
12,578 |
|
||
Noncontrolling interest |
|
(1,022 |
) |
(659 |
) |
||
Total liabilities |
|
$ |
13,172 |
|
$ |
12,734 |
|
In March 2012, a wholly owned subsidiary of AdCare entered into a purchase agreement for a skilled nursing home facility in Tulsa, Oklahoma and agreed to provide back office services for the facility until the earlier of its acquisition by the Company or the termination of the purchase agreement. It was determined that in this arrangement, the Company has a variable interest. The current owner of the facility is obligated for the outstanding debt of the facility and the Company has not provided any guarantee of the debt. The Company can terminate the current arrangement without any requirement to provide future financial support. As such, it was determined that the Company is not the primary beneficiary and, consolidation is not required. The Companys current exposure to loss as a result of its involvement with the facility is limited to an accounts receivable balance of approximately $539,000 at June 30, 2012 which represents amounts primarily due from governmental agencies.
NOTE 13. FAIR VALUE MEASUREMENTS
The following are the major categories of assets and liabilities measured at fair value on a recurring basis during the six months ended June 30, 2012, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3).
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited) (Continued)
(Amounts in 000s) |
|
Level 1: |
|
Level 2: |
|
Level 3: |
|
Total at June 30,
|
|
||||
Derivative Liability |
|
$ |
|
|
$ |
|
|
$ |
1,127 |
|
$ |
1,127 |
|
Set forth below is a reconciliation of the beginning and ending balances for the derivative liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the six months ended June 30, 2012:
(Amounts in 000s) |
|
Derivative
|
|
|
Beginning Balance |
|
$ |
1,889 |
|
Other |
|
1 |
|
|
Total gain |
|
(763 |
) |
|
Ending Balance |
|
$ |
1,127 |
|
NOTE 14. COMMITMENTS AND CONTINGENCIES
Legal Matters
The skilled nursing and assisted living business involves a significant risk of liability given the age and health of the Companys 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 and others in the industry are 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 payor. A violation may provide the basis for exclusion from federally-funded healthcare programs. As of June 30, 2012, the Company does not have any material loss contingencies recorded based on managements evaluation of the probability of loss from known claims.
Commitments
Tulsa Companion Care PSA
On March 14, 2012, a wholly owned subsidiary of AdCare entered into a Purchase and Sale Agreement with F & F Ventures, LLC and Tulsa Christian Care, Inc., doing business as Companions Specialized Care Center, to acquire a 121-bed skilled nursing facility located in Tulsa, Oklahoma for an aggregate purchase price of $5,750,000. The purchase price consists of a $5,000,000 cash payment and the issuance of shares of common stock with an aggregate value of $750,000, with such shares valued at the average closing price of common stock for the ten-day period ending on the last business day prior to the closing of the acquisition. Pursuant to the Purchase and Sale Agreement, the Company deposited $150,000 into escrow to be held as earnest money. On July 19, 2012, the Purchase and Sale Agreement was amended to (i) extend the closing date of the acquisition to July 31, 2012; (ii) require the Company to deliver an additional $50,000 to the sellers to be held as earnest money; and (iii) provide that all amounts held as earnest money under the purchase agreement (including, but not limited to, the $50,000 deposited by the Company pursuant to the amendment) shall be credited against the purchase price at closing (or returned to the Company in the event of a default by the sellers). On August 7, 2012, the Purchase and Sale Agreement was amended, effective as of July 31, 2012, to further extend the closing date of the acquisition to August 17, 2012. The Company expects to close on the acquisition in mid-August 2012.
Oklahoma PSA Amendment
On April 17, 2012, a wholly owned subsidiary of AdCare amended the Purchase and Sale Agreement with First Commercial Bank to acquire five skilled nursing facilities located in Oklahoma. The amendment requires an additional deposit of $50,000 into escrow to be used as earnest money; amends the closing date to the date which is sixty (60) days after all required licenses are received, but in no event later than September 30, 2012; and releases $200,000 from escrow to First Commercial Bank. Upon the closing of the purchase, the Company shall receive a $200,000 credit against the purchase price; however, if the transaction fails to be consummated for any reason other than (i) default by First Commercial Bank; (ii) the failure of a condition to closing to be satisfied; or (iii) an event of casualty or condemnation, First Commercial Bank shall be entitled to retain the $200,000 disbursed from escrow. If the transaction fails to be consummated for any reason other than as described in the preceding sentence, First Commercial Bank shall return the $200,000 to the Company upon demand.
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited) (Continued)
Sumter Valley PSA
On April 27, 2012, a wholly owned subsidiary of AdCare entered into a Purchase and Sale Agreement with 1761 Pinewood Holdings, LLC to acquire a 96-bed skilled nursing facility located in Sumter, South Carolina for an aggregate purchase price of $5,500,000. The purchase price consists of: (i) $5,250,000 cash consideration; and (ii) a $250,000 promissory note to be issued by one of AdCares subsidiaries that shall bear interest at a fixed rate of 6% based on a 15-year amortization schedule. Pursuant to the Purchase and Sale Agreement, as amended, the Company deposited $100,000 into escrow and delivered $150,000 to the seller to be held as earnest money.
Hembree Road Property PA
On June 4, 2012, the Company entered into a purchase agreement with JRT Group Properties, LLC (JRT) to acquire property comprising Building 1145 of the Offices at Hembree, a condominium, located in Roswell, Georgia, for an aggregate purchase price of $1,083,781. The lender which the Company anticipates using to finance this acquisition has received a third party appraisal with respect to the property which is consistent with the purchase price. One member of JRT is a non-officer employee of the Company and another member of JRT is the son of Christopher Brogdon, the Companys Vice Chairman and Chief Acquisition Officer.
Benefit Plans
In the second quarter of 2012, it was determined that the Company has potential obligations related to the Company sponsored 401(k) plan. The Company has not yet recorded this obligation as the amount cannot yet be reasonably estimated. However, management does not believe the ultimate impact of the resolution will be material to its results of operations and expects this issue to be resolved before the end of 2012.
NOTE 15. RELATED PARTY TRANSACTIONS
On January 17, 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 $6,486,000. Pursuant to the purchase and sale agreement, we deposited $250,000 into escrow to be held as earnest money. On May 9, 2012, AdCare assigned all of its rights under the purchase and sale agreement to GL Nursing, LLC, an entity affiliated with Christopher Brogdon, AdCares Vice Chairman and Chief Acquisition Officer and a beneficial owner of more than 10% of the common stock. GL Nursing, LLC has agreed to reimburse us the $250,000 deposit and all of our out-of-pocket costs relating to Golden Years Manor upon the closing of the acquisition, which occurred on May 31, 2012. The Company has recorded a receivable for this amount.
On June 4, 2012, a wholly owned subsidiary of AdCare entered into a Purchase Agreement with JRT Group Properties, LLC (JRT) to acquire property comprising Building 1145 of the Offices at Hembree, a condominium, located in Roswell, Georgia for an aggregate purchase price of $1,083,781.24. The closing of the Hembree Purchase is expected to occur on or before September 30, 2012. One member of JRT is a non-officer employee of AdCare and another member of JRT is the son of Christopher Brogdon. As previously disclosed in the Annual Report, AdCare leases the Hembree property for use as administrative offices.
On July 26, 2012, Hearth & Home of Ohio, Inc. (Hearth & Home), a wholly owned subsidiary of AdCare, entered into an Amendment with Christopher Brogdon which amends that certain Option Agreement, as previously amended, between Hearth & Home and Mr. Brogdon, dated June 22, 2010, to extend the last date on which the option provided for thereby may be exercised from June 22, 2012 to June 22, 2013. Pursuant to the option agreement, AdCare has an exclusive and irrevocable option exercisable until June 22, 2013 to purchase from Mr. Brogdon 100% percent of the issued and outstanding membership interests of Riverchase Village ADK, LLC (Riverchase) for a purchase price of $100,000. As previously disclosed, AdCare: (i) entered into a five-year management contract with Riverchase on June 22, 2010 to manage the 105-bed assisted living facility located in Hoover, Alabama, known as Riverchase Village; and (ii) guaranteed the repayment by Riverchase of certain bonds owing to The Medical Clinic Board of the City of Hoover.
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited) (Continued)
NOTE 16. SUBSEQUENT EVENTS
Glenvue Acquisition
On July 2, 2012, the Company completed the acquisition of Glenview Health & Rehabilitation, a 160-bed skilled nursing facility located in Glennville, Georgia, pursuant to the previously announced Purchase and Sale Agreement, between the sellers and a wholly owned subsidiary of AdCare, dated as of April 3, 2012, for an aggregate purchase price of $8,240,000. In connection with the closing of this acquisition, a wholly owned subsidiary of AdCare entered into a loan agreement with Private Bank in an aggregate principal amount of $6,600,000.
The loan matures on July 2, 2014. Interest on the loan accrues on the principal balance thereof at an annual rate of the greater of (i) 6.0% per annum or (ii) the LIBOR rate plus 4.0% per annum, and payments for the interest and a portion of the principal balance are payable monthly, commencing on August 1, 2012. The entire outstanding balance of the loan, together with all accrued but unpaid interest thereon, is payable on July 2, 2014. The loan is secured by a first mortgage on the real property and improvements constituting Glenview Health & Rehabilitation and guaranteed by AdCare.
Quail Creek Acquisition
On July 3, 2012, the Company completed the acquisition of a 118-bed skilled nursing facility located in Oklahoma City, Oklahoma, pursuant to the previously announced Purchase and Sale Agreement, as amended, between the sellers and a wholly owned subsidiary of AdCare, dated as of March 12, 2012, for an aggregate purchase price of $5,800,000. In connection with the closing of this acquisition, a wholly owned subsidiary of AdCare entered into an assignment and assumption agreement pursuant to which it assumed the sellers existing indebtedness under a loan agreement and indenture in an aggregate principal amount of $2,800,000.
The loan matures on August 27, 2016. Interest on the loan accrues on the principal balance thereof at an annual rate of 10.25% per annum, and payments for the interest and a portion of the principal balance are payable monthly, commencing on August 27, 2012. The entire outstanding balance of the loan, together with all accrued but unpaid interest thereon, is payable on August 27, 2016. The loan is secured by a first mortgage on the real property and improvements constituting the facility.
Subordinated Convertible Notes
The Company entered into a Securities Purchase Agreement, dated as of June 28, 2012, with certain accredited investors signatory thereto (the Buyers) pursuant to which the Company issued and sold to the Buyers on July 2, 2012 an aggregate of $7,500,000 in principal amount of the Companys 8% Subordinated Convertible Notes due 2015. The subordinated convertible notes bear interest at 8.0% per annum and such interest is payable quarterly in cash in arrears beginning on September 30, 2012. The subordinated convertible notes mature on July 31, 2015. The subordinated convertible notes are unsecured and subordinated in right of payment to existing and future senior indebtedness of the Company.
At any time on or after the six-month anniversary of the date of issuance of the subordinated convertible notes, the subordinated convertible notes are convertible at the option of the holder into shares of the common stock at an initial conversion price equal to $4.17 per share, 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 of the date of issuance of the subordinated convertible notes, 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 of $4.17 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 subordinated convertible notes in cash at a redemption price equal to the sum of: (i) 100% of the principal amount being redeemed; plus (ii) any accrued and unpaid interest on such principal.
On July 2, 2012, the Company and Cantone Asset Management LLC refinanced the two promissory notes issued by the Company in favor of Cantone Asset Management LLC in the aggregate amount of $5,000,000. The promissory notes were canceled and terminated in exchange for the issuance of a convertible subordinated note with a $5,000,000 principal amount to Cantone Asset Management LLC.
In connection with the above subordinated convertible notes, the consulting arrangement with Cantone Research, Inc. was revised so as to provide for a certain monthly fee payable to Cantone Research, Inc. regardless of whether the Company and Cantone Asset Management LLC (or a related entity) agree to an additional financing arrangement. On July 2, 2012, under the terms of this revised arrangement, the Company issued 50,000 common shares and 100,000 warrants to Cantone Research, Inc.
ADCARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited) (Continued)
Sumter Valley PSA Amendment
On July 19, 2012, the Company amended its Purchase and Sale Agreement with 1761 Pinewood Holdings, LLC to acquire a 96-bed skilled nursing facility located in Sumter, South Carolina. The amendment extends the closing date of the acquisition to August 31, 2012; (ii) requires the Company to deliver an additional $150,000 to the seller to be held as earnest money; and (iii) provides that all amounts held as earnest money under the purchase agreement (including, but not limited to, the $150,000 deposited by the Company pursuant to the amendment) shall be credited against the purchase price at closing (or returned to the Company in the event of a default by the seller).
Stone County Financing
In July 2012, the Company refinanced the Stone County facility short-term through the issuance of a term loan with the Economic Development Corporation of Fulton County, an economic development corporation working with the U.S. Small Business Administration (SBA) for a total amount of $1,304,000.
The SBA loan matures in July 2032 and accrues interest at the rate of 2.42%. The SBA loan is payable in equal monthly installments of principal and interest based on a twenty (20) year amortization schedule. Each such payment is payable on the first business day of each month, commencing on August 1, 2012 and continuing until July 1, 2032, when all unpaid amounts are due. The SBA loan is secured by the Stone County facility and guaranteed by AdCare.
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
Special Note Regarding Forward Looking Statements
Certain statements in this Quarterly Report on Form 10-Q (this Quarterly Report) constitute forward-looking statements. These forward-looking statements involve known or unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Specifically, the actions of our competitors and customers, our ability to execute our business plan and our ability to increase revenues is dependent upon our ability to continue to expand our current business and to expand into new markets, general economic conditions, and other factors. You can identify forward-looking statements by terminology such as may, will, should, expects, intends, plans, anticipates, believes, estimates, predicts, potential, continues, or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we do not guarantee future results, levels of activity, performance or achievements. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise. You should read this Managements Discussion and Analysis of Financial Condition and Results of Operations in conjunction with the financial statements and related notes included in this Quarterly Report and included in the Annual Report.
Overview
We own and manage skilled nursing facilities and assisted living facilities. We deliver skilled nursing, assisted living and home health services through wholly owned separate operating subsidiaries. During the first six months of 2012, we acquired six facilities (five skilled nursing facilities and one assisted living facility), bringing our total bed count to 4,427 at June 30, 2012. The following tables provide summary information regarding our recent acquisitions and facility composition.
|
|
June 30, 2012 |
|
March 31, 2012 |
|
December 31, 2011 |
|
June 30, 2011 |
|
December 31, 2010 |
|
Cumulative number of facilities |
|
48 |
|
44 |
|
42 |
|
31 |
|
27 |
|
Cumulative number of operational beds |
|
4,427 |
|
3,916 |
|
3,737 |
|
2,888 |
|
2,428 |
|
|
|
Number of |
|
Number of Facilities at June 30, 2012 |
|
||||||||
State |
|
Operational
|
|
Owned |
|
VIE |
|
Leased |
|
Managed for
|
|
Total |
|
Arkansas |
|
1,041 |
|
10 |
|
|
|
|
|
|
|
10 |
|
Alabama |
|
408 |
|
2 |
|
1 |
|
|
|
|
|
3 |
|
Georgia |
|
1,497 |
|
3 |
|
|
|
10 |
|
|
|
13 |
|
Missouri |
|
80 |
|
|
|
|
|
1 |
|
|
|
1 |
|
North Carolina |
|
106 |
|
1 |
|
|
|
|
|
|
|
1 |
|
Ohio |
|
981 |
|
10 |
|
|
|
1 |
|
4 |
|
15 |
|
Oklahoma |
|
314 |
|
|
|
5 |
|
|
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
4,427 |
|
26 |
|
6 |
|
12 |
|
4 |
|
48 |
|
Facility Type |
|
|
|
|
|
|
|
|
|
|
|
|
|
Skilled Nursing |
|
3,932 |
|
18 |
|
5 |
|
12 |
|
3 |
|
38 |
|
Assisted Living |
|
412 |
|
8 |
|
1 |
|
|
|
|
|
9 |
|
Independent Living |
|
83 |
|
|
|
|
|
|
|
1 |
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
4,427 |
|
26 |
|
6 |
|
12 |
|
4 |
|
48 |
|
Acquisitions
We have embarked on a strategy to grow our business through acquisitions and leases of senior care facilities. During the first six months of 2012, we acquired six facilities (five skilled nursing facilities and one assisted living facility), bringing our total bed count to 4,427 at June 30, 2012.
· On December 30, 2011, we acquired a skilled nursing facility and an assisted living facility both located in Springfield, Ohio, for an aggregate adjusted purchase price of $12,412,000. We obtained effective control and commenced operating these facilities on January 1, 2012.
· On March 30, 2012, we acquired three skilled nursing facilities located in Little Rock, Arkansas. The total purchase price was $27,231,000. We obtained effective control and operations commenced on April 1, 2012.
· On April 30, 2012, we acquired a skilled nursing facility located in Little Rock, Arkansas for an aggregate purchase price of $3,581,000. We obtained effective control and operations commenced on June 1, 2012.
Subsequent to June 30, 2012, the following acquisitions were completed:
· On July 2, 2012 we acquired a skilled nursing facility in Glennville, Georgia for an aggregate purchase price of $8,240,000. We obtained effective control and operations commenced on July 2, 2012.
· On July 2, 2012 we acquired a skilled nursing facility in Oklahoma City, Oklahoma for an aggregate purchase price of $5,800,000. We obtained effective control and operations commenced on July 3, 2012.
In addition, the following potential acquisitions have been announced during the six months ended June 30, 2012:
· On April 27, 2012, we entered into a Purchase and Sale Agreement with 1761 Pinewood Holdings, LLC to acquire a 96-bed skilled nursing facility located in Sumter, South Carolina for an aggregate purchase price of $5,500,000. We expect the closing of the acquisition to occur on August 31, 2012.
· On March 14, 2012, we entered into a Purchase and Sale Agreement with F & F Ventures, LLC and Tulsa Christian Care, Inc., doing business as Companions Specialized Care Center to acquire a 121-bed skilled nursing facility located in Tulsa, Oklahoma for an aggregate purchase price of $5,750,000. We expect the closing of the acquisition to occur in mid-August 2012. Beginning April 1, 2012, we entered into a management agreement to operate the facility in the interim period. The Company has a variable interest in this arrangement but is not the primary beneficiary and thus consolidation of the results of operations is not required.
For information regarding purchase and sale agreements of facilities that have been entered into subsequent to June 30, 2012, see Note 16 in the Notes to Consolidated Financial Statements section of Part I, Item 1 of this Quarterly Report.
The Company is currently evaluating potential acquisition opportunities in addition to those described above, and we continue to seek new opportunities to further our growth strategy. No assurance is made that any of these potential acquisition opportunities will be determined to be appropriate for us or that we will complete any of such acquisitions on terms acceptable to us, or at all.
Segments
The Company reports its operations in three segments: SNF, ALF and Corporate & Other. The Company delivers services through wholly owned separate operating subsidiaries. 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. We evaluate financial performance and allocate resources primarily based on segment operating income (loss). Segment operating results excludes interest expense and other non-operating income and expenses. See Note 4 in the Notes to Consolidated Financial Statements section of Part I, Item 1 of this Quarterly Report.
Skilled Nursing Facilities
We focus on two primary indicators in evaluating the financial performance in this segment. Those indicators are facility occupancy and patient mix. Facility occupancy is important because 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 continue our work towards maximizing the number of patients covered by Medicare where our operating margins are higher. 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.
For the three and six months ended June 30, 2012, revenue in our skilled nursing segment increased approximately $19,768,000 and $38,122,000, respectively, compared to June 30, 2011, as a result of acquisition growth. For the three and six months ended June 30, 2012, this segment had an income from operations of $5,404,000 and $8,494,000 respectively, as a result of optimization of occupancy and quality mix as well as expense controls. We expect to continue to implement and refine strategies designed to sustain these goals. Total assets increased $86,654,000 due to acquisitions made since June 30, 2011 and other building improvements.
Average Occupancy
|
|
Three Months Ended June 30, |
|
||
|
|
2012 |
|
2011 |
|
Same Facilities (1) |
|
84.5 |
% |
86.7 |
% |
Recently Acquired Facilities (2) |
|
65.0 |
% |
n/a |
|
Total |
|
76.5 |
% |
86.7 |
% |
|
|
Six Months Ended June 30, |
|
||
|
|
2012 |
|
2011 |
|
Same Facilities (1) |
|
85.2 |
% |
86.8 |
% |
Recently Acquired Facilities (2) |
|
67.4 |
% |
n/a |
|
Total |
|
78.7 |
% |
86.8 |
% |
(1) Same Facilities results represent those owned and leased facilities we began to operate prior to July 1, 2011.
(2) Recently Acquired Facilities results represents those owned and leased facilities we began to operate subsequent to July 1, 2011.
Patient Mix
Three Months Ended June 30,
|
|
|
|
|
|
Recently |
|
|
|
|
|
||
|
|
|
|
|
|
Acquired |
|
|
|
|
|
||
|
|
Same Facilities |
|
Facilities |
|
Total |
|
||||||
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
|
2012 |
|
2011 |
|
Medicare |
|
14.9 |
% |
14.5 |
% |
11.6 |
% |
n/a |
% |
13.7 |
% |
14.5 |
% |
Medicaid |
|
73.7 |
% |
75.9 |
% |
73.5 |
% |
n/a |
% |
73.6 |
% |
75.9 |
% |
Other |
|
11.4 |
% |
9.6 |
% |
14.9 |
% |
n/a |
% |
12.7 |
% |
9.6 |
% |
Total |
|
100.0 |
% |
100.0 |
% |
100.0 |
% |
n/a |
% |
100.0 |
% |
100.0 |
% |
Six Months Ended June 30
|
|
|
|
|
|
Recently |
|
|
|
|
|
||
|
|
|
|
|
|
Acquired |
|
|
|
|
|
||
|
|
Same Facilities |
|
Facilities |
|
Total |
|
||||||
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
|
2012 |
|
2011 |
|
Medicare |
|
14.8 |
% |
15.0 |
% |
12.4 |
% |
n/a |
% |
14.0 |
% |
15.0 |
% |
Medicaid |
|
74.0 |
% |
76.1 |
% |
72.4 |
% |
n/a |
% |
73.5 |
% |
76.1 |
% |
Other |
|
11.2 |
% |
8.9 |
% |
15.2 |
% |
n/a |
% |
12.5 |
% |
8.9 |
% |
Total |
|
100.0 |
% |
100.0 |
% |
100.0 |
% |
n/a |
% |
100.0 |
% |
100.0 |
% |
For the Three Months Ended June 30, 2012:
|
|
Operational |
|
Periods |
|
|
|
Medicare |
|
|
|
|
|
|
|
|||
|
|
Beds at |
|
Average |
|
Occupancy |
|
Utilization |
|
2012 QTD |
|
Medicare |
|
|
|
|||
|
|
Period |
|
Operational |
|
(Operational |
|
(Skilled |
|
Total |
|
(Skilled) |
|
Medicaid |
|
|||
Region (SNF Only) |
|
End(1) |
|
Beds |
|
Beds) |
|
%ADC)(2) |
|
Revenues |
|
$PPD(3) |
|
$PPD(3) |
|
|||
Alabama |
|
304 |
|
304 |
|
82.5 |
% |
11.1 |
% |
$ |
4,982 |
|
$ |
387.91 |
|
$ |
192.01 |
|
Arkansas |
|
1,009 |
|
957 |
|
61.2 |
% |
10.9 |
% |
$ |
10,899 |
|
$ |
396.21 |
|
$ |
171.48 |
|
Georgia |
|
1,497 |
|
1,497 |
|
85.7 |
% |
15.5 |
% |
$ |
24,245 |
|
$ |
463.56 |
|
$ |
148.00 |
|
Missouri |
|
80 |
|
80 |
|
63.0 |
% |
16.2 |
% |
$ |
819 |
|
$ |
410.09 |
|
$ |
128.35 |
|
North Carolina |
|
106 |
|
106 |
|
79.6 |
% |
17.8 |
% |
$ |
1,709 |
|
$ |
450.85 |
|
$ |
163.31 |
|
Ohio |
|
293 |
|
293 |
|
84.7 |
% |
16.0 |
% |
$ |
5,334 |
|
$ |
478.24 |
|
$ |
158.63 |
|
Oklahoma |
|
314 |
|
314 |
|
68.7 |
% |
9.4 |
% |
$ |
3,242 |
|
$ |
411.38 |
|
$ |
124.21 |
|
Total |
|
3,603 |
|
3,551 |
|
76.5 |
% |
13.7 |
% |
$ |
51,230 |
|
$ |
443.46 |
|
$ |
156.33 |
|
For the Six Months Ended June 30, 2012:
|
|
Operational |
|
Periods |
|
|
|
Medicare |
|
|
|
|
|
|
|
|||
|
|
Beds at |
|
Average |
|
Occupancy |
|
Utilization |
|
2012 YTD |
|
Medicare |
|
|
|
|||
|
|
Period |
|
Operational |
|
(Operational |
|
(Skilled |
|
Total |
|
(Skilled) |
|
Medicaid |
|
|||
Region (SNF Only) |
|
End(1) |
|
Beds |
|
Beds) |
|
%ADC)(2) |
|
Revenues |
|
$PPD(3) |
|
$PPD(3) |
|
|||
Alabama |
|
304 |
|
304 |
|
83.1 |
% |
12.0 |
% |
$ |
9,906 |
|
$ |
386.57 |
|
$ |
187.40 |
|
Arkansas |
|
1,009 |
|
728 |
|
64.5 |
% |
11.6 |
% |
$ |
17,321 |
|
$ |
379.27 |
|
$ |
171.42 |
|
Georgia |
|
1,497 |
|
1,497 |
|
86.1 |
% |
15.0 |
% |
$ |
48,108 |
|
$ |
466.07 |
|
$ |
146.82 |
|
Missouri |
|
80 |
|
80 |
|
62.2 |
% |
20.1 |
% |
$ |
1,742 |
|
$ |
403.68 |
|
$ |
130.91 |
|
North Carolina |
|
106 |
|
106 |
|
84.3 |
% |
18.0 |
% |
$ |
3,616 |
|
$ |
458.69 |
|
$ |
159.00 |
|
Ohio |
|
293 |
|
293 |
|
83.8 |
% |
16.9 |
% |
$ |
10,616 |
|
$ |
472.47 |
|
$ |
158.69 |
|
Oklahoma |
|
314 |
|
314 |
|
69.0 |
% |
9.4 |
% |
$ |
6,466 |
|
$ |
420.76 |
|
$ |
124.07 |
|
Total |
|
3,603 |
|
3,322 |
|
78.7 |
% |
14.0 |
% |
$ |
97,775 |
|
$ |
442.76 |
|
$ |
154.35 |
|
(1) Excludes managed beds which are not consolidated.
(2) ADC is the Average Daily Census
(3) PPD is the Per Patient Day equivalent
Assisted Living Facilities
For the three and six months ended June 30, 2012, revenue in our ALF segment increased approximately $1,003,000 and $1,923,000, respectively, compared to June 30, 2011 as a result of increased revenue from acquisitions, an annual increase in rates charged to privately paying residents and increasing occupancy. For the three and six months ended June 30, 2012, this segment had income from operations of $630,000 and $1,324,000, respectively. Total assets increased $7,853,000 primarily due to acquisitions since June 30, 2011 and other building improvements made during the last 12 months.
|
|
Average Occupancy |
|
||
|
|
Three Months Ended
|
|
||
|
|
2012 |
|
2011 |
|
|
|
83.6 |
% |
76.4 |
% |
|
|
Six Months Ended
|
|
||
|
|
2012 |
|
2011 |
|
|
|
82.5 |
% |
75.0 |
% |
Residents of our assisted living facilities rely on their personal investments and wealth to pay for their stay. Although many of the risks still remain, such as declines in market values of investments, depressed market for the sale of private homes, and adult children caring for their elderly at home, we have seen an increase in census.
Corporate & Other
We manage three skilled nursing facilities and one independent living campus for third party owners under management agreements that either are for a fixed monthly fee or for a percentage of revenue generated by the managed facility. Depending on the type of management agreement, our revenues increase annually according to inflationary adjustments stipulated in our management agreements or they increase as the facilitys revenue increases for the management agreements that are based on a percentage of revenue. This segment includes our corporate overhead expenses, which are made up of salaries of our senior management team members and various other corporate expenses, including, but not limited to, corporate office operating expenses, audit fees, legal fees and board activities. Additionally, non-cash charges for compensation expense related to warrants, restricted stock and stock options are included in corporate overhead. We do not allocate these expenses to the divisions or separate them from the management business for management review purposes.
Results of Operations
|
|
Total Patient Care Revenues |
|
||||||||||
(Amounts in 000s) |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
||||||||
Skilled Nursing |
|
2012 |
|
2011 |
|
2012 |
|
2011 |
|
||||
Same Facilities |
|
$ |
34,253 |
|
$ |
31,462 |
|
$ |
68,279 |
|
$ |
59,653 |
|
Recently Acquired Facilities |
|
16,977 |
|
n/a |
|
29,496 |
|
n/a |
|
||||
Total |
|
$ |
51,230 |
|
$ |
31,462 |
|
$ |
97,775 |
|
$ |
59,653 |
|
|
|
Total Patient Care Revenues |
|
||||||||||
(Amounts in 000s) |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
||||||||
Assisted Living |
|
2012 |
|
2011 |
|
2012 |
|
2011 |
|
||||
Same Facilities |
|
$ |
2,715 |
|
$ |
2,410 |
|
$ |
5,310 |
|
$ |
4,751 |
|
Recently Acquired Facilities |
|
698 |
|
n/a |
|
1,364 |
|
n/a |
|
||||
Total |
|
$ |
3,413 |
|
$ |
2,410 |
|
$ |
6,674 |
|
$ |
4,751 |
|
Comparison for the three months ended June 30, 2012 and 2011
Patient Care Revenues - For the periods presented, total patient care revenues increased $20.8 million, or 61%.
Revenue in our SNF segment increased approximately $19,768,000 when compared to the three months ended June 30, 2011, primarily as a result of additional facilities acquired since June 2011. In addition, census and quality mix improved existing facilities. This segment had a net income from operations of $5,404,000 which is $3,631,000 higher compared to the three months ended June 30, 2011 as a result of higher revenue due to acquisitions and improved reimbursement. We are seeking to increase facility occupancy and to increase the number of patients covered by Medicare. We seek to continue to implement and refine strategies designed to achieve these goals.
Revenue in our ALF segment increased approximately $1,003,000 when compared to the three months ended June 30, 2011, as a result of increased census and levels of care as well as the addition of one new facility in 2012 and one new facility in the fourth quarter of 2011. This segment had income from operations of $630,000 which is $250,000 more than the same period in 2011 from increased occupancy and an annual increase in rates charged to residents of the facilities.
Management Revenue - For the periods presented, management revenues (net of eliminations) decreased $121,000, or 25%, as a result of fewer managed facilities.
Cost of Services For the periods presented, cost of services was approximately $42,227,000 or 77.3% of patient care revenue compared to $27,104,000 or 80.0% of patient care revenue for the same period a year ago. This increase in overall cost is the result of numerous acquisitions over the past 12 months. The improvement as percent of patient care revenue reflects the implementation of consolidated purchasing programs and other cost reduction efforts. In 2012, the Company removed the ability for employees to accumulate earned but unused vacation beyond the current calendar year. As a result, vacation time previously accumulated must be used by the employee by December 31, 2012 or it will be forfeited. Management has estimated the potential forfeitures and has adjusted the vacation accrual accordingly.
General and Administrative - For the three months ended June 30, 2012, general and administrative expenses were approximately $4.9 million in 2012 compared to $3.2 million in 2011, an increase of $1.7 million, or 55.6%. Performance-based incentive expense increased by $0.9 which is reflective of the improvement in the Companys financial results. Wage and other employee related costs increased $0.4 million as a result of additional staffing needed to support the growth in operations. The Companys goal is to become better known in the financial market place has resulted in additional investor relations expenses of approximately $0.1 million.
Facility Rent Expense - For the periods presented, lease expenses increased $103,000 due to annual increases and the addition of the one new leased facility in the fourth quarter of 2011.
Depreciation and Amortization - For the periods presented, depreciation and amortization increased $1,056,000. The depreciation increase is directly related to acquisition activity that was not included in the 2011 results as it occurred in later periods. In addition, the acquisitions resulted in intangibles that are being amortized during the period.
Interest Expense, net - For the periods presented, interest expense, net increased $1,514,000, or 82%. 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. In addition, several of the arrangements are short term in nature resulting in higher interest rates than previously experienced and an increase in the amortization of deferred loan costs associated with the new debt agreements.
Acquisition Costs, net of Gains - For the three months ended June 30, 2012, acquisition costs, net of gains was an expense of $524,000, compared to $622,000 for the comparative period. For the three months ended June 30, 2012, the total acquisition costs were legal fees directly related to acquisitions and other costs incurred on potential future acquisitions.
Derivative Gain/Loss - For the three months ended June 30, 2012, the derivative gain was $353,000, compared to a loss of $2,588,000 for the same period 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 increases as the stock price climbs, and conversely decreases as the stock price declines. The price of the common stock declined during the three-month period ended June 30, 2012, from March 31, 2012 to June 30, 2012.
Comparison for the six months ended June 30, 2012 and 2011
Patient Care Revenues - For the periods presented, total patient care revenues increased $40.0 million, or 62%.
Revenue in our SNF segment increased approximately $38,122,000 when compared to the six months ended June 30, 2011, primarily as a result of additional facilities acquired since June, 2011. In addition, census and quality mix improved existing facilities. This segment had a net income from operations of $8,494,000 which is $6,216,000 higher compared to the six months ended June 30, 2011 as a result of higher revenue due to acquisitions and improved reimbursement. We are seeking to increase facility occupancy and to increase the number of patients covered by Medicare. We seek to continue to implement and refine strategies designed to achieve these goals.
Revenue in our ALF segment increased approximately $1,923,000 when compared to the six months ended June 30, 2011, as a result of increased census and levels of care as well as the addition of one new facility in 2012 and one new facility in the fourth quarter of 2011. This segment had income from operations of $1,324,000 which is $740,000 more than the same period in 2011 from increased occupancy and an annual increase in rates charged to residents of the facilities.
Management Revenue - For the periods presented, management revenues (net of eliminations) decreased $256,000, or 26%, as a result of fewer managed facilities.
Cost of Services For the periods presented, cost of services was approximately $82,350,000 or 78.8% of patient care revenue compared to $52,279,000 or 81.1% of patient care revenue for the same period a year ago. This increase in overall cost is the result of numerous acquisitions over the past 12 months. The improvement as a percent of patient care revenue reflects the implementation of consolidated purchasing programs and other cost reduction efforts. In 2012, the Company removed the ability for employees to accumulate earned but unused vacation beyond the current calendar year. As a result, vacation time previously accumulated must be used by the employee by December 31, 2012 or it will be forfeited. Management has estimated the potential forfeitures and has adjusted the vacation accrual accordingly.
General and Administrative - For the six month period ended June 30, 2012, general and administrative expenses were approximately $8.9 million in 2012 compared to $6.1 million in 2011, an increase of $2.8 million, or 45.5%. Performance-based incentive expense increased by $0.9 reflecting the improvement in the Companys financial results. Wage and other employee related costs increased $0.4 million as a result of additional staffing needed to support the growth in operations. Travel costs have increased approximately $0.3 million as a result of acquisitions and more geographically dispersed operations. The Companys goal is to become better known in the financial market place has resulted in additional investor relations expenses of approximately $0.2 million.
Facility Rent Expense - For the periods presented, lease expenses increased $265,000 due to annual increases and the addition of the one
new leased facility in the fourth quarter of 2011.
Depreciation and Amortization - For the periods presented, depreciation and amortization increased $1,906,000. The depreciation increase is directly related to acquisition activity that was not included in the 2011 results as it occurred in later periods. In addition, the acquisitions resulted in intangibles that are being amortized during the period.
Interest Expense, net - For the periods presented, interest expense, net increased $3,032,000 or 92%. 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. In addition, several of the arrangements are short term in nature resulting in higher interest rates than previously experienced and an increase in the amortization of deferred loan costs associated with the new debt agreements.
Acquisition Costs, net of Gains - For the six months ended June 30, 2012, acquisition costs, net of gains was an expense of $817,000, compared to a gain of $357,000 for the comparative period. For the six months ended June 30, 2012, the total acquisition costs were legal fees directly related to acquisitions during the six months ended June 30, 2012 and other costs incurred on potential future acquisitions.
Derivative Gain/Loss - For the six months ended June 30, 2012, the derivative gain was $763,000, compared to a loss of $3,938,000 for the same period 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 increases as the stock price climbs, and conversely decreases as the stock price declines. The price of the common stock of the Company declined during the six-month period ended June 30, 2012 from December 31, 2011 to June 30, 2012.
Other Income/(Expense) - For the periods presented, other income decreased $616,000. There was a recovery of receivables recorded in the prior year.
Critical Accounting Policies and Use of Estimates
There have been no significant changes during the three months ended June 30, 2012 to the items that we disclosed as our critical accounting policies and use of estimates in our discussion and analysis of financial condition and results of operation contained in the Annual Report except as noted below:
Liquidity and Capital Resources
Overview
Liquidity is the measure of the Companys 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 other debt and equity securities.
We have positive working capital of approximately $1,198,000 at June 30, 2012. Our ability to sustain profitable operations is dependent on continued growth in revenues and controlling costs.
During the next twelve months, the Company believes it will require additional financing to satisfy its financial obligations and implement its expansion strategy. The Company is currently exploring several financing alternatives and may seek to raise additional capital through the sale of additional debt or equity securities, although there is no assurance that the Company will be able to raise additional capital through the issuance of debt or equity securities on terms acceptable to it, or at all. If the Company is unable to secure such additional financing, then the Company may be required to restructure its outstanding indebtedness and delay or modify its expansion plans.
Woodland Manor Financing
On January 1, 2012, a wholly owned subsidiary of AdCare, entered into a loan agreement with Private Bank in an aggregate principal amount of $4,800,000. The loan was used to fund the acquisition of the Woodland Manor facility located in Springfield, Ohio. The loan matures on December 30, 2016. Interest on the loan accrues on the principal balance thereof at an annual rate of the greater of (i) 6.0%
per annum or (ii) the LIBOR rate plus 4.0% per annum, and payments for the interest and a portion of the principal balance are payable monthly, commencing on February 1, 2012 and ending on December 1, 2016. The entire outstanding principal balance of the loan, together with all accrued but unpaid interest thereon, is payable on December 30, 2016. The loan is secured by a first mortgage on the real property and improvements constituting the Woodland Manor facility and guaranteed by AdCare.
Eaglewood Village Financing
On January 1, 2012, two wholly owned subsidiaries of AdCare, jointly and severally issued two promissory notes to the seller of the Eaglewood Village facility located in Springfield, Ohio in the amounts of $4,500,000 and $500,000. Proceeds from the notes were used to fund the acquisition of the Eaglewood Village facility.
The $500,000 note matures on December 30, 2016 and the $4,500,000 note matures on June 30, 2012. Interest on the $500,000 note accrues at a rate of 6.5% per annum and interest on the $4,500,000 note accrues at a rate of (i) 6.5% per annum from January 1, 2012 to February 29, 2012; (ii) 8.5% per annum from March 1, 2012 to April 30, 2012; and (iii) 10.5% per annum from May 1, 2012 to June 30, 2012. Principal and interest payments under the notes shall be due and payable monthly, beginning on February 1, 2012. The notes are secured by a mortgage on the real property and improvements constituting the Eaglewood Village facility.
Eaglewood Village Bonds
In April 2012, a wholly owned subsidiary of AdCare entered into a loan agreement with City of Springfield pursuant to which City of Springfield lent to such subsidiary the proceeds from the sale of City of Springfields Series 2012 Bonds. The Series 2012 Bonds consist of $6,610,000 in Series 2012A First Mortgage Revenue Bonds and $620,000 in Taxable Series 2012B First Mortgage Revenue Bonds. The Series 2012 Bonds were issued pursuant to an April 2012 Indenture of Trust between City of Springfield and 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 approximately $575,000 and are being amortized to interest expense over the life of the loan. The loan is secured by the real property and improvements constituting the Eaglewood Village facility and guaranteed by AdCare. There is an original issue discount of approximately $250,000 and restricted assets of $317,000 related to this loan.
HUD Financing
On January 31, 2012, we refinanced the mortgage on the Home & Hearth of Vandalia facility to obtain a term note guaranteed by HUD. The HUD mortgage note requires monthly principal and interest payments with an annual fixed interest rate of 3.74%. The note matures in 2041. The note has a prepayment penalty of 8% for any prepayment made prior to March 1, 2014, which penalty is reduced by 1% each year thereafter until the eighth anniversary of such date, after which there is no prepayment penalty.
Cantone Promissory Notes
On March 29, 2012, we issued an unsecured promissory note in favor of Cantone Asset Management LLC for an aggregate principal amount of $3,500,000. The note matures on the earlier of: (i) October 1, 2012; or (ii) the date on which we shall receive proceeds, in an amount not less than $6,000,000, from a public offering or private placement of our common stock. Interest on the note accrues on the principal balance thereof at an annual rate of 10%; provided, however, if the entire principal amount of the note is not paid by July 1, 2012, the interest rate shall increase by 1% for each month or part thereof during which any principal amount of the note shall remain unpaid. We may prepay the note in whole or in part, at any time, without notice or penalty; provided, however, if the note is prepaid prior to October 1, 2012, then we shall continue to pay interest on the note through such date.
In connection with the issuance of the note, Cantone Research, Inc. agreed to provide us with certain consulting services for a monthly fee if the Company and Cantone Asset Management LLC (or an affiliated entity) do not agree to the terms of an additional financing arrangement pursuant to which it (or affiliated entity) would loan to us at least $4,000,000 for a four-year term.
In April 2012, the Company issued a promissory note to Cantone Asset Management LLC in the amount of $1,500,000. The promissory note bears interest at 10% per annum and matures in October 2012. The interest rate increases 1% each month beginning in July 2012 through October 2012. Deferred financing costs incurred on the loan amounted to approximately $78,000 and are being amortized to interest expense over the life of the loan. We may prepay the note in whole or in part, at any time, without notice or penalty; provided, however, if the note is prepaid prior to October 1, 2012, then we shall continue to pay interest on the note through such date.
The promissory notes issued in March and April 2012 were refinanced, and the consulting arrangement with Cantone Research, Inc. revised, subsequent to June 30, 2012. For information regarding the refinancing and revision to the consulting arrangement, see Note 16 in the Notes to Consolidated Financial Statements section of Part 1, Item 1 of this Quarterly Report.
Little Rock, Northridge and Woodland Hills Financing
On April 1, 2012, certain wholly owned subsidiaries of AdCare, entered into a Loan Agreement with Private Bank in an aggregate principal amount of $21,800,000 The loan was used to fund the acquisition of Little Rock, Northridge and Woodland Hills facilities, each located in Little Rock, Arkansas.
The loan matures on March 30, 2017. Interest on the loan accrues on the principal balance thereof at an annual rate of the greater of (i) 6.0% per annum or (ii) the LIBOR rate plus 4.0% per annum, and payments for the interest and a portion of the principal balance are payable monthly, commencing on May 1, 2012. The entire outstanding principal balance of the loan, together with all accrued but unpaid interest thereon, is payable on March 30, 2017. The loan is secured by a first mortgage on the real property and improvements constituting the facilities, a first priority security interest on all furnishings, fixtures and equipment associated with the facilities and an assignment of all rents paid under any existing or future leases and rental agreements with respect to the facilities. AdCare has unconditionally guaranteed all amounts owing under the loan. The Company has approximately $1,810,000 of restricted assets related to this loan.
On June 15, 2012, certain wholly owned subsidiaries of AdCare entered into a modification agreement with Private Bank to modify the terms of the loan agreement. The loan modification agreement, among other things, amends the loan agreement to reflect a maturity date of March 30, 2013. The Company anticipates that it will re-finance the Little Rock, Northridge and Woodland Hills facilities later this year with long-term financing.
AdCare issued a promissory note in the amount of $5,000,000 to Strome Alpha Offshore Ltd. The promissory note matures in November 2012 and accrues interest at a fixed rate of 10% per annum. The promissory note requires interest payments of approximately $125,000 on July 1, 2012 and October 1, 2012. The promissory note may be prepaid at any time without penalty.
Abington Place Financing
On April 30, 2012, a wholly owned subsidiary of AdCare entered into a loan agreement with Metro City Bank in an aggregate principal amount of $3,425,000. The loan was used to fund the acquisition of the Abington Place facility located in Little Rock, Arkansas.
The loan matures on September 1, 2012. Interest on the loan accrues on the principal balance thereof at an annual rate of 2.25% per annum plus the prime interest rate, to be adjusted on a monthly basis (and in no event shall the total interest be less than 6.25% per annum), and payments for the interest and a portion of the principal balance are payable monthly, commencing on June 1, 2012. The entire outstanding principal balance of the loan, together with all accrued but unpaid interest thereon, is payable on September 1, 2012. The loan is secured by the Abington Place facility and guaranteed by AdCare.
Stone County Financing
In June 2012, the Company refinanced the Stone County facility through the issuance of: (i) a term loan with the Economic Development Corporation of Fulton County, an economic development corporation working with the SBA for a total amount of $1,304,000 that matures in 2032; (ii) a term loan with Metro City Bank in the amount of $1,810,000 that matures in 2022; and (iii) a term loan with Metro City Bank in the amount of $1,267,000 that matured in July 2012.
The $1,810,000 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. The loan is payable in equal monthly installments of principal and interest based on a twenty-five (25) year amortization schedule. Each such payment is payable on the first day of each month, commencing on August 1, 2012 and continuing through and including the maturity date, June 8, 2022. The $1,810,000 Metro City Bank loan has a prepayment penalty of 10% through 2012 declining by 1% each year through 2021. The loan is secured by the Stone County facility and guaranteed by AdCare.
The SBA loan matures in July 2032 and accrues interest at the rate of 2.42%. The SBA loan is payable in equal monthly installments of principal and interest based on a twenty (20) year amortization schedule. Each such payment is payable on the first business day of each month, commencing on January 1, 2012 and continuing until July 1, 2032, when all unpaid amounts are due. The SBA loan is secured by the Stone County facility and guaranteed by AdCare.
2012 Public Stock Offering
In March 2012, the Company closed a firm commitment underwritten public offering of 1,100,000 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 underwriters partial exercise of this option, the Company issued 65,000 shares of common stock at an offering price to the public of $3.75 per share on May 22, 2012. The Company received net proceeds from the offering of approximately $3.8 million after deducting underwriting discounts, and other offering-related expenses of approximately $0.6 million. We intend to use the net proceeds from the offering for working capital and other general corporate purposes.
For information on financings that have been entered into subsequent to June 30, 2012, see Note 16 in the Notes to Consolidated Financial Statements section of Part I, Item 1 of this Quarterly Report.
The following table presents selected data from our consolidated statement of cash flows for the periods presented:
|
|
Six Months Ended June 30 |
|
||||
|
|
2012 |
|
2011 |
|
||
Net cash provided by operating activities - continuing operations |
|
$ |
1,710 |
|
$ |
1,219 |
|
Net cash (used in) provided by operating activities - discontinued operations |
|
(426 |
) |
14 |
|
||
Net cash used in investing activities - continuing operations |
|
(11,900 |
) |
(7,846 |
) |
||
Net cash provided by financing activities - continuing operations |
|
12,722 |
|
8,452 |
|
||
Net cash used in financing activities - discontinued operations |
|
(97 |
) |
(89 |
) |
||
Net change in cash and cash equivalents |
|
2,009 |
|
1,750 |
|
||
Cash and cash equivalents at beginning of period |
|
7,364 |
|
3,911 |
|
||
Cash and cash equivalents at end of period |
|
$ |
9,373 |
|
$ |
5,661 |
|
Six months ended June 30, 2012
Net cash provided by operating activities for the six months ended June 30, 2012, was approximately $1,284,000 consisting primarily of our net income and changes in working capital, offset by noncash charges (primarily depreciation and amortization, 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 activities.
Net cash used in investing activities for the six months ended June 30, 2012, was approximately $11,900,000. This is primarily the result of funding our acquisitions, including making escrow deposits.
Net cash provided by financing activities was approximately $12,625,000 for the six months ended June 30, 2012. This is primarily the result of cash proceeds received from warrant exercises, the public stock offering, and proceeds from debt financings to fund our acquisitions, partially offset by repayments of existing debt obligations.
Six months ended June 30, 2011
Net cash provided by operating activities for the six months ended June 30, 2011 was approximately $1,233,000 consisting primarily of our income from operations less the noncash gain on acquisitions, and 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 activit ies.
Net cash used in investing activities for the six months ended June 30, 2011, was approximately $7,846,000. This is primarily the result of funding our acquisitions, including making escrow deposits.
Net cash provided by financing activities was approximately $8,363,000 for the six months ended June 30, 2011. This is primarily the result of increases in borrowings on the line of credit, proceeds from debt financings to fund our acquisitions, partially offset by repayments of existing debt obligations.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Not required.
Item 4. 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 Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission 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 management, with the participation of our Chief Executive Officer and Chief Financial Officer, has 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 Quarterly 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 are effective.
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) during the quarter ended June 30, 2012 that have been materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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 can be no assurance that the outcomes of these matters will not have a material adverse effect on our 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 financial position, results of operations and cash flows.
Our operations and financial results are subject to various risks and uncertainties that could adversely affect our business, financial condition, results of operations, cash flows, and trading price of our common stock. Please refer to our Annual Report for additional information concerning these and other uncertainties that could negatively impact the Company.
Employment Agreement
On August 7, 2012, AdCare entered into an Employment Agreement with Mr. Martin D. Brew, AdCares Chief Financial Officer. Pursuant to the agreement, effective as of July 1, 2012, AdCare will continue to employ Mr. Brew as Chief Financial Officer, and additionally as Senior Vice President and Treasurer, on the following terms: (i) AdCare will pay to Mr. Brew an annual base salary of $235,000, with such salary to increase to $250,000 effective January 1, 2013 and to be subject to review on an annual basis thereafter; (ii) Mr. Brew will be eligible to earn an annual bonus with a target amount equal to 75% of his annual salary, based on reasonably expected performance; (iii) Mr. Brew will be eligible to receive grants of equity compensation at the discretion of AdCares Chief Executive Officer and the Compensation Committee of the Board of Directors of AdCare (the Compensation Committee); (iv) Mr. Brew shall be entitled to participate in life insurance, hospitalization and medical insurance, retirement and other benefits as are presently and may hereafter be provided to other executive officers of AdCare; and (v) if Mr. Brew resigns his employment for good reason or AdCare terminates Mr. Brews employment without cause, Mr. Brew or his successors and assigns, shall be entitled to severance pay in an amount equal to the sum of his annual salary plus target bonus, payable in substantially equal installments at least monthly for twelve (12) months after the termination date, 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. Brew is entitled to an additional payment equal to the sum of annual salary plus target bonus, payable at least monthly in substantially equal installments over a period not to exceed six (6) months which period shall begin immediately after the twelve (12) months following the termination date. For the period for which severance pay is paid, Mr. Brew and his family are entitled to continue to be covered under all employee benefit plans of AdCare under which executive officers of AdCare are covered and at the same cost and under the same terms and conditions as apply to executive officers, provided, however, that if AdCare is unable under applicable law or the insurer will not permit the Mr. Brew to be covered under any such plan, AdCare is required to pay Mr. Brew an amount each month during the severance period equal to AdCares cost of coverage for similarly situated executive officers. The agreement contains a customary covenant protecting AdCares confidential information, as well as customary non-compete and non-solicitation covenants in which Mr. Brew has agreed not to compete with, or solicit employees of, AdCare during the term of the employment agreement and for a period of twelve (12) months thereafter.
For purposes of the above employment agreement, the following terms have the following meanings: (i) resignation for good reason means the officers resignation within ninety (90) days following AdCares failure to cure a material breach of the agreement within thirty (30) days after the officer gives AdCare written notice of such breach within ninety (90) days of the occurrence of such breach; (ii) cause means the officers fraud, dishonesty, willful misconduct, or gross negligence in his performance of his duties, or the officers conviction for a crime of moral turpitude, or material breach by the officer of the agreement which the officer fails to cure within thirty (30) days after AdCare gives the officer written notice of such breach; (iii) 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 acquisition cease to own directly or indirectly common stock of AdCare or its legal successor representing more than fifth percent (50%) of the voting power of the common stock of AdCare or its legal successor.
Riverchase Option
On July 26, 2012, one of our wholly owned subsidiaries entered into an Amendment with Mr. Christopher Brogdon which amends that certain Option Agreement, as previously amended, between Purchaser and Mr. Brogdon, dated June 22, 2010, to extend the last date on which the option provided for thereby may be exercised from June 22, 2012 to June 22, 2013. Pursuant to the option agreement, AdCare has an exclusive and irrevocable option exercisable until June 22, 2013 to purchase from Mr. Brogdon 100% percent of the issued and outstanding membership interests of Riverchase Village ADK, LLC (Riverchase) for a purchase price of $100,000. As previously disclosed, AdCare: (i) entered into a five-year management contract with Riverchase on June 22, 2010 to manage the 105-bed assisted living facility located in Hoover, Alabama, known as Riverchase Village; and (ii) guaranteed the repayment by Riverchase of certain bonds owing to The Medical Clinic Board of the City of Hoover. Christopher Brogdon is the AdCares Vice Chairman and Chief Acquisition Officer and a beneficial owner of greater than 10% of AdCares common stock.
For a further description of AdCares relationship with Mr. Brogdon, see the information set forth in: (i) the section entitled Certain Information and Related Party Transactions of our Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on March 30, 2012; (ii) AdCares Annual Report on Form 10-K for the year ended December 31, 2011; (iii) Item 5 of AdCares Quarterly Report on Form 10-Q for the quarter ended March 31, 2012; (iv) Item 1.01of our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 23, 2012; (vi) Item 1.01of our Current Report on Form 8-K filed with the Securities and Exchange Commission on May 3, 2012; and (vi) Item 1.01of our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 6, 2012, which sections and items are incorporated herein by this reference.
Tulsa Companion Care PSA Amendment
On August 7, 2012, one of our wholly owned subsidiaries entered into an Amendment, effective as of July 31, 2012, with F&F Ventures, LLC, Tulsa Christian Care, Inc., doing business as Companions Specialized Care Center, George Perry Farmer, Jr. and Jessica L. Farmer, which amends that certain Purchase and Sale Agreement, as previously amended, between the Company and the sellers, dated March 14, 2012, to extend the closing date of the acquisition to August 17, 2012.
The agreements included as exhibits to this Quarterly Report are included to provide information regarding the terms of these agreements and are not intended to provide any other factual or disclosure information about the Company, its business or the other parties to these agreements. These agreements may 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:
· should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
· have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
· may apply standards of materiality in a way that is different from what may be viewed as material to investors; and
· were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time, and should not be relied upon by investors.
Exhibit No. |
|
Description |
|
Method of Filing |
|
|
|
|
|
2.1 |
|
Purchase and Sale Agreement, dated as of April 3, 2012, between Evans Memorial Hospital, Inc. and AdCare Property Holdings, LLC |
|
Incorporated by reference from Exhibit 2.1 to the Registrants Current Report on Form 8-K filed April 9, 2012 |
|
|
|
|
|
2.2 |
|
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 from Exhibit 2.2 to the Registrants Current Report on Form 8-K filed April 23, 2012 |
|
|
|
|
|
2.3 |
|
Purchase Agreement, dated as of April 27, 2012, between AdCare Property Holdings, LLC and 1761 Pinewood Holdings, LLC |
|
Incorporated by reference from Exhibit 2.1 to the Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
2.4 |
|
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 from Exhibit 2.2 to the Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
2.5 |
|
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 |
|
Filed herewith |
|
|
|
|
|
2.6 |
|
First Amendment to Purchase and Sale Agreement, dated May 15, 2012, by and between AdCare Property Holdings, LLC and Westlake Nursing Home Limited |
|
Filed herewith |
|
|
|
|
|
2.7 |
|
Purchase Agreement, dated June 4, 2012, by and between AdCare Hembree Road Property, LLC and JRT Group Properties, LLC |
|
Filed herewith |
|
|
|
|
|
3.1 |
|
Amended and Restated Articles of Incorporation |
|
Incorporated by reference from Exhibit 3.1 of the Registrants Registration Statement Form SB (Registration No. 333-131542) filed |
Exhibit No. |
|
Description |
|
Method of Filing |
|
|
|
|
|
|
|
|
|
February 3, 2006 |
|
|
|
|
|
3.2 |
|
Code of Regulations |
|
Incorporated by reference from Exhibit 3.2 of the Registrants 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 Registrants 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 Registrants Current Report on Form 8-K filed on July 5, 2012 |
|
|
|
|
|
4.1 |
|
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 Registrants Quarterly Report on Form 10-Q for the quarter ended March 30, 2012 |
|
|
|
|
|
4.2 |
|
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 Registrants Quarterly Report on Form 10-Q for the quarter ended March 30, 2012 |
|
|
|
|
|
4.3 |
|
Warrant to Purchase 100,000 Shares of Common Stock, dated July 2, 2012, issued by AdCare Health Systems, Inc. to Cantone Research, Inc. |
|
Filed herewith |
|
|
|
|
|
10.1 |
|
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 Registrants Quarterly Report on Form 10-Q for the quarter ended March 30, 2012 |
|
|
|
|
|
10.2 |
|
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 Registrants Quarterly Report on Form 10-Q for the quarter ended March 30, 2012 |
|
|
|
|
|
10.3 |
|
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 Registrants Quarterly Report on Form 10-Q for the quarter ended March 30, 2012 |
|
|
|
|
|
10.4 |
|
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 Registrants Quarterly Report on Form 10-Q for the quarter ended March 30, 2012 |
|
|
|
|
|
10.5 |
|
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 Registrants Current Report on Form 8-K filed May 3, 2012 |
Exhibit No. |
|
Description |
|
Method of Filing |
|
|
|
|
|
10.6 |
|
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 Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
10.7 |
|
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 Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
10.8 |
|
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 Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
10.9 |
|
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 Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
10.10 |
|
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 Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
10.11 |
|
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 Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
10.12 |
|
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 Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
10.13 |
|
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 |
|
Filed herewith |
|
|
|
|
|
10.14 |
|
Loan Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
|
Filed herewith |
|
|
|
|
|
10.15 |
|
Mortgage and Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
|
Filed herewith |
|
|
|
|
|
10.16 |
|
Assignment of Leases and Rents, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
|
Filed herewith |
|
|
|
|
|
10.17 |
|
Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
|
Filed herewith |
|
|
|
|
|
10.18 |
|
Guaranty, dated June 8, 2012, made by AdCare Health Systems, Inc. in favor of Metro City Bank |
|
Filed herewith |
|
|
|
|
|
10.19 |
|
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 |
|
Filed herewith |
Exhibit No. |
|
Description |
|
Method of Filing |
|
|
|
|
|
10.20 |
|
Loan Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
|
Filed herewith |
|
|
|
|
|
10.21 |
|
Mortgage and Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
|
Filed herewith |
|
|
|
|
|
10.22 |
|
Assignment of Leases and Rents, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
|
Filed herewith |
|
|
|
|
|
10.23 |
|
Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
|
Filed herewith |
|
|
|
|
|
10.24 |
|
Guaranty, dated June 8, 2012, made by AdCare Health Systems, Inc. in favor of Metro City Bank |
|
Filed herewith |
|
|
|
|
|
10.25 |
|
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 |
|
Filed herewith |
|
|
|
|
|
10.26 |
|
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 |
|
Filed herewith |
|
|
|
|
|
10.27 |
|
Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Economic Development Corporation of Fulton County |
|
Filed herewith |
|
|
|
|
|
10.28 |
|
Mortgage and Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Economic Development Corporation of Fulton County |
|
Filed herewith |
|
|
|
|
|
10.29 |
|
Assignment of Leases and Rents, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Economic Development Corporation of Fulton County |
|
Filed herewith |
|
|
|
|
|
10.30 |
|
Unconditional Guarantee, dated June 8, 2012, issued by Mountain View Nursing, LLC in favor of Economic Development Corporation of Fulton County |
|
Filed herewith |
|
|
|
|
|
10.31 |
|
Unconditional Guarantee, dated June 8, 2012, issued by AdCare Health Systems, Inc. in favor of Economic Development Corporation of Fulton County |
|
Filed herewith |
|
|
|
|
|
10.32 |
|
Loan Agreement, dated as of July 2, 2012, by and between Glenvue H&R Property Holdings, LLC and the PrivateBank and Trust Company |
|
Filed herewith |
|
|
|
|
|
10.33 |
|
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 |
|
Filed herewith |
|
|
|
|
|
10.34 |
|
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 |
|
Filed herewith |
|
|
|
|
|
10.35 |
|
Assignment of Leases and Rents, dated as of July 2, 2012, from Glenvue H&R Property Holdings, LLC to the PrivateBank and |
|
Filed herewith |
Exhibit No. |
|
Description |
|
Method of Filing |
|
|
|
|
|
|
|
Trust Company |
|
|
|
|
|
|
|
10.36 |
|
Guaranty of Payment and Performance, dated as of July 2, 2012, issued by Glenvue H&R Property Holdings, LLC and AdCare Health Systems, Inc. for the benefit of The PrivateBank and Trust Company |
|
Filed herewith |
|
|
|
|
|
10.37 |
|
Assignment and Assumption Agreement, dated as of July 1, 2012, by and between Westlake Nursing Home Limited Partnership and QC Property Holdings, LLC |
|
Filed herewith |
|
|
|
|
|
10.38 |
|
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 |
|
Filed herewith |
|
|
|
|
|
10.39 |
|
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 |
|
Filed herewith |
|
|
|
|
|
10.40 |
|
Bond Purchase Agreement, dated April 10, 2012, among Lawson Financial Corporation, The City of Springfield, Ohio and Eaglewood Property Holdings, LLC |
|
Filed herewith |
|
|
|
|
|
10.41 |
|
Note Purchase Agreement, dated April 12, 2012, by and between Cantone Asset Management LLC and AdCare Health Systems, Inc. |
|
Filed herewith |
|
|
|
|
|
10.42 |
|
Employment Agreement, dated August 6, 2012, between AdCare Health Systems, Inc. and Martin D. Brew |
|
Filed herewith |
|
|
|
|
|
10.43 |
|
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 |
|
Filed herewith |
|
|
|
|
|
10.44 |
|
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 Registrants Current Report on Form 8-K filed July 5, 2012 |
|
|
|
|
|
10.45 |
|
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 Registrants Current Report on Form 8-K filed July 5, 2012 |
|
|
|
|
|
10.46 |
|
Form of 8% Subordinated Convertible Note Due 2015, issued by AdCare Health Systems, Inc. |
|
Incorporated by reference from Exhibit 99.3 to the Registrants Current Report on Form 8-K filed July 5, 2012 |
|
|
|
|
|
10.47 |
|
Amendment, entered into as of July 26, 2012, by and between Christopher F. Brogdon and Hearth & Home of Ohio, Inc. |
|
Filed herewith |
|
|
|
|
|
10.48 |
|
Employment Agreement, dated August 6, 2012, between AdCare Health Systems, Inc. and Melissa L. Green |
|
Filed herewith |
|
|
|
|
|
31.1 |
|
Certification of CEO pursuant to Section 302 of the |
|
Filed herewith |
Exhibit No. |
|
Description |
|
Method of Filing |
|
|
|
|
|
|
|
Sarbanes-Oxley Act |
|
|
|
|
|
|
|
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 |
|
|
|
|
|
32.2 |
|
Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act |
|
Filed herewith |
|
|
|
|
|
101 |
|
The following financial information from AdCare Health Systems, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the three months ended June 30, 2012 and 2011 and for the six months ended June 30, 2012 and 2011, (ii) Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011, (iii) Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and 2011, (iv) Consolidated Statements of Stockholders Equity for the six months ended June 30, 2012 and (v) the Notes to Consolidated Financial Statements. |
|
Filed herewith |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused the report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
ADCARE HEALTH SYSTEMS, INC. |
||
|
(Registrant) |
||
|
|
||
Date: |
August 7, 2012 |
|
/s/Boyd P. Gentry |
|
Boyd P. Gentry |
||
|
Chief Executive Officer |
||
|
(Principal Executive Officer) |
||
|
|
||
Date: |
August 7, 2012 |
|
/s/Martin D. Brew |
|
Martin D. Brew |
||
|
Chief Financial Officer |
||
|
(Principal Financial and Accounting Officer) |
Exhibit No. |
|
Description |
|
Method of Filing |
|
|
|
|
|
2.1 |
|
Purchase and Sale Agreement, dated as of April 3, 2012, between Evans Memorial Hospital, Inc. and AdCare Property Holdings, LLC |
|
Incorporated by reference from Exhibit 2.1 to the Registrants Current Report on Form 8-K filed April 9, 2012 |
|
|
|
|
|
2.2 |
|
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 from Exhibit 2.2 to the Registrants Current Report on Form 8-K filed April 23, 2012 |
|
|
|
|
|
2.3 |
|
Purchase Agreement, dated as of April 27, 2012, between AdCare Property Holdings, LLC and 1761 Pinewood Holdings, LLC |
|
Incorporated by reference from Exhibit 2.1 to the Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
2.4 |
|
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 from Exhibit 2.2 to the Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
2.5 |
|
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 |
|
Filed herewith |
|
|
|
|
|
2.6 |
|
First Amendment to Purchase and Sale Agreement, dated May 15, 2012, by and between AdCare Property Holdings, LLC and Westlake Nursing Home Limited |
|
Filed herewith |
|
|
|
|
|
2.7 |
|
Purchase Agreement, dated June 4, 2012, by and between AdCare Hembree Road Property, LLC and JRT Group Properties, LLC |
|
Filed herewith |
|
|
|
|
|
3.1 |
|
Amended and Restated Articles of Incorporation |
|
Incorporated by reference from Exhibit 3.1 of the Registrants 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 Registrants 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 Registrants Quarterly Report on Form 10-Q for the quarter ended September 30, |
Exhibit No. |
|
Description |
|
Method of Filing |
|
|
|
|
|
|
|
|
|
2011 |
|
|
|
|
|
3.4 |
|
Affidavit, dated June 28, 2012 |
|
Incorporated by reference to Exhibit 3.1 of the Registrants Current Report on Form 8-K filed on July 5, 2012 |
|
|
|
|
|
4.1 |
|
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 Registrants Quarterly Report on Form 10-Q for the quarter ended March 30, 2012 |
|
|
|
|
|
4.2 |
|
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 Registrants Quarterly Report on Form 10-Q for the quarter ended March 30, 2012 |
|
|
|
|
|
4.3 |
|
Warrant to Purchase 100,000 Shares of Common Stock, dated July 2, 2012, issued by AdCare Health Systems, Inc. to Cantone Research, Inc. |
|
Filed herewith |
|
|
|
|
|
10.1 |
|
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 Registrants Quarterly Report on Form 10-Q for the quarter ended March 30, 2012 |
|
|
|
|
|
10.2 |
|
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 Registrants Quarterly Report on Form 10-Q for the quarter ended March 30, 2012 |
|
|
|
|
|
10.3 |
|
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 Registrants Quarterly Report on Form 10-Q for the quarter ended March 30, 2012 |
|
|
|
|
|
10.4 |
|
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 Registrants Quarterly Report on Form 10-Q for the quarter ended March 30, 2012 |
|
|
|
|
|
10.5 |
|
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 Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
10.6 |
|
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 Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
10.7 |
|
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 Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
10.8 |
|
Security Agreement, dated April 30, 2012, between APH&R |
|
Incorporated by reference from Exhibit 99.4 to the Registrants |
Exhibit No. |
|
Description |
|
Method of Filing |
|
|
|
|
|
|
|
Property Holdings, LLC and Metro City Bank |
|
Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
10.9 |
|
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 Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
10.10 |
|
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 Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
10.11 |
|
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 Registrants Current Report on Form 8-K filed May 3, 2012 |
|
|
|
|
|
10.12 |
|
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 Registrants Current Report on Form 8-K filed May 3, 2012 |
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10.13 |
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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 |
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Filed herewith |
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10.14 |
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Loan Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
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Filed herewith |
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10.15 |
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Mortgage and Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
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Filed herewith |
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10.16 |
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Assignment of Leases and Rents, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
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Filed herewith |
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10.17 |
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Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
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Filed herewith |
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10.18 |
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Guaranty, dated June 8, 2012, made by AdCare Health Systems, Inc. in favor of Metro City Bank |
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Filed herewith |
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10.19 |
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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 |
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Filed herewith |
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10.20 |
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Loan Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
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Filed herewith |
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10.21 |
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Mortgage and Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
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Filed herewith |
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10.22 |
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Assignment of Leases and Rents, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
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Filed herewith |
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10.23 |
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Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Metro City Bank |
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Filed herewith |
Exhibit No. |
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Description |
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Method of Filing |
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10.24 |
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Guaranty, dated June 8, 2012, made by AdCare Health Systems, Inc. in favor of Metro City Bank |
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Filed herewith |
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10.25 |
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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 |
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Filed herewith |
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10.26 |
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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 |
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Filed herewith |
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10.27 |
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Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Economic Development Corporation of Fulton County |
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Filed herewith |
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10.28 |
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Mortgage and Security Agreement, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Economic Development Corporation of Fulton County |
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Filed herewith |
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10.29 |
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Assignment of Leases and Rents, dated June 8, 2012, by and between Mt. V Property Holdings, LLC and Economic Development Corporation of Fulton County |
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Filed herewith |
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10.30 |
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Unconditional Guarantee, dated June 8, 2012, issued by Mountain View Nursing, LLC in favor of Economic Development Corporation of Fulton County |
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Filed herewith |
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10.31 |
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Unconditional Guarantee, dated June 8, 2012, issued by AdCare Health Systems, Inc. in favor of Economic Development Corporation of Fulton County |
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Filed herewith |
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10.32 |
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Loan Agreement, dated as of July 2, 2012, by and between Glenvue H&R Property Holdings, LLC and the PrivateBank and Trust Company |
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Filed herewith |
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10.33 |
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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 |
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Filed herewith |
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10.34 |
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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 |
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Filed herewith |
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10.35 |
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Assignment of Leases and Rents, dated as of July 2, 2012, from Glenvue H&R Property Holdings, LLC to the PrivateBank and Trust Company |
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Filed herewith |
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10.36 |
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Guaranty of Payment and Performance, dated as of July 2, 2012, issued by Glenvue H&R Property Holdings, LLC and AdCare Health Systems, Inc. for the benefit of The PrivateBank and Trust Company |
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Filed herewith |
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10.37 |
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Assignment and Assumption Agreement, dated as of July 1, 2012, by and between Westlake Nursing Home Limited Partnership and QC Property Holdings, LLC |
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Filed herewith |
Exhibit No. |
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Description |
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Method of Filing |
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10.38 |
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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 |
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Filed herewith |
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10.39 |
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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 |
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Filed herewith |
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10.40 |
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Bond Purchase Agreement, dated April 10, 2012, among Lawson Financial Corporation, The City of Springfield, Ohio and Eaglewood Property Holdings, LLC |
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Filed herewith |
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10.41 |
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Note Purchase Agreement, dated April 12, 2012, by and between Cantone Asset Management LLC and AdCare Health Systems, Inc. |
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Filed herewith |
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10.42 |
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Employment Agreement, dated August 6, 2012, between AdCare Health Systems, Inc. and Martin D. Brew |
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Filed herewith |
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10.43 |
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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 |
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Filed herewith |
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10.44 |
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Form of Securities Purchase Agreement, dated as of June 28, 2012, between AdCare Health Systems, Inc. and the Buyers signatory thereto |
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Incorporated by reference from Exhibit 99.1 to the Registrants Current Report on Form 8-K filed July 5, 2012 |
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10.45 |
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Form of Registration Rights Agreement, dated as of June 28, 2012, between AdCare Health Systems, Inc. and the Buyers signatory thereto |
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Incorporated by reference from Exhibit 99.2 to the Registrants Current Report on Form 8-K filed July 5, 2012 |
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10.46 |
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Form of 8% Subordinated Convertible Note Due 2015, issued by AdCare Health Systems, Inc. |
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Incorporated by reference from Exhibit 99.3 to the Registrants Current Report on Form 8-K filed July 5, 2012 |
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10.47 |
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Amendment, entered into as of July 26, 2012, by and between Christopher F. Brogdon and Hearth & Home of Ohio, Inc. |
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Filed herewith |
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10.48 |
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Employment Agreement, dated August 6, 2012, between AdCare Health Systems, Inc. and Melissa L. Green |
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Filed herewith |
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31.1 |
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Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act |
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Filed herewith |
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31.2 |
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Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act |
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Filed herewith |
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32.1 |
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Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act |
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Filed herewith |
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32.2 |
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Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act |
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Filed herewith |
Exhibit No. |
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Description |
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Method of Filing |
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101 |
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The following financial information from AdCare Health Systems, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the three months ended June 30, 2012 and 2011 and for the six months ended June 30, 2012 and 2011, (ii) Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011, (iii) Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and 2011, (iv) Consolidated Statements of Stockholders Equity for the six months ended June 30, 2012 and (v) the Notes to Consolidated Financial Statements. |
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Filed herewith |
Exhibit 2.5
SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT
This Second Amendment to Purchase and Sale Agreement (this Amendment ) is made and entered into as of June 19, 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 (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. Seller Parties . George Perry Farmer, Jr. and Jessica L. Farmer join as parties to the Agreement as they are the current owners of the Real Property and they agree to abide by the terms of the Agreement applicable to Seller.
3. Closing Date . The Agreement is hereby amended to provide that the Closing Date is extended to and shall be July 31, 2012.
4. Extension Fee . In exchange for Sellers agreement to extend the Closing Date as set forth herein, (i) Purchaser shall deliver $50,000.00 (the Extension Fee ) to the Escrow Agent, and (ii) the Escrow Agent shall immediately deliver the Extension Fee to Seller. Notwithstanding the delivery of the Extension Fee to Seller in accordance with this Second Amendment, the parties acknowledge and agree that the Extension Fee shall be a credit against the Cash Consideration portion of the Purchase Price (in addition to the Remaining Balance of the Capital Improvement Escrow Deposit) 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).
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, each party has caused this instrument to be executed as of the date set forth hereinabove.
SELLER: |
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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/ G. Perry Farmer, Jr. |
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G. Perry Farmer, Jr., Owner, F&F |
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By: |
/s/ Boyd P. Gentry |
Ventures, L.L.C., Owner, Tulsa Christian Care, Inc., d/b/a Companions Specialized Care Center |
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Boyd P. Gentry, Manager |
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By: |
/s/ Jessica L. Farmer |
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Jessica L. Farmer |
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Exhibit 2.6
FIRST AMENDMENT TO
PURCHASE AND SALE AGREEMENT
THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT ( First Amendment ) is made and entered into as of May 15, 2012, by and between WESTLAKE NURSING HOME LIMITED , an Oklahoma Limited Partnership ( 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 March 12, 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 June 30, 2012.
3. Deposit . As of the date of this Amendment, the total amount of the Deposit is $50,000.00. In exchange for Sellers agreement to extend the Closing Date as set forth herein, (i) Purchaser shall deliver an additional $150,000.00 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 $150,000.00 of the Deposit. Notwithstanding the delivery of a portion of the Deposit to Seller in accordance with this First Amendment, the total Deposit shall be a credit against the Purchase Price at Closing (or in the event of a Seller default, returned to Purchaser).
4. 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.
5. 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: |
PURCHASER : |
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Westlake Nursing Home Limited, an |
ADCARE PROPERTY HOLDINGS, LLC , |
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Oklahoma Limited Partnership |
an Ohio limited liability company |
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By: |
/s/ Ron Lusk |
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By: |
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Ron Lusk
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Christopher F. Brogdon, Vice Chairman |
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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: |
PURCHASER : |
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Westlake Nursing Home Limited, an |
ADCARE PROPERTY HOLDINGS, LLC , |
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Oklahoma Limited Partnership |
an Ohio limited liability company |
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By: |
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By: |
/s/ Christopher F. Brogdon |
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Ron Lusk, |
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Christopher F. Brogdon, Vice Chairman |
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Exhibit 2.7
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this Agreement), dated as of the 4th day of June, 2012 (the Effective Date), is made by and between JRT Group Properties, LLC, a Georgia limited liability company (Seller) and AdCare Hembree Road Property, LLC, a Georgia limited liability company (Purchaser).
W I T N E S S E T H :
WHEREAS, Seller owns that certain parcel of real property located at 1145 Hembree Road, Roswell, Fulton County, Georgia 30076, being Units 110, 120, 130, 140, 210, 220, 230 and 240 of Building 1145 of the Offices at Hembree, a condominium, as more particularly described on Exhibit A attached hereto and incorporated herein by reference (the Real Property) and all personal property located on and used in connection with the Real Property except for the personal property identified on Exhibit B (the Personal Property) (hereinafter, the Real Property and the Personal Property are collectively referred to as the Property);
WHEREAS, Seller wishes to sell and Purchaser wishes to purchase the Property subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Purchase . Seller agrees to sell and convey to Purchaser, and Purchaser agrees to purchase from Seller, the Property, pursuant to the terms and conditions hereinafter set forth.
SECTION 2. Purchase Price . The purchase price for the Property shall be $1,083,781.24 to be paid in immediately available funds at Closing.
SECTION 3. [Intentionally Omitted].
SECTION 4. Sellers Covenants, Representations and Warranties.
(A) As a material inducement to Purchaser to enter into this Agreement and to pay the Purchase Price for the Property as set forth herein, Seller hereby covenants, warrants and represents to Purchaser as follows:
(i) Seller is authorized to enter into and perform all its obligations under this Agreement. This Agreement is, and all documents to be executed by Seller pursuant hereto will be, the valid and binding obligations of Seller enforceable in accordance with their respective terms.
(ii) The Seller is not a party to any litigation or administrative proceedings nor, is Seller aware of a threat of any litigation or administrative proceedings, which could affect the Property or Sellers right to enter into this Agreement or to consummate the transactions contemplated by this Agreement.
The 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 the Seller is or was a party which is binding upon Seller.
(iii) The Property is not subject to any lease, tenancy or other arrangement and from the date hereof to the Closing Date, no lease, tenancy, or other arrangement applicable to the Property, will be entered into by Seller without the prior written approval of Purchaser.
(iv) The Property shall, on the Closing Date, be in the same condition as it was on the date of Purchasers execution of this Agreement, normal wear excepted. Immediately prior to Closing (as hereinafter defined) Seller will have good and marketable fee simple title to the Property.
(v) All documents required by this Agreement to be delivered by Seller to Purchaser are and will be true, correct and complete in all material respects and contain no material omissions that make such documents false or misleading.
(vi) To the best of Sellers knowledge and belief, without actual examination or review having been made, that (a) the Property is in compliance with all applicable zoning and building laws, ordinances and regulations and (b) the Property has all necessary legal rights, utility service, and access to a public street.
(vii) Except for encumbrances described in the Title Commitment, Seller holds good and marketable title to the Property, free and clear of restrictions on or conditions to transfer or assignment, and free and clear of liens, pledges, charges, or encumbrances.
(viii) There is no litigation, proceeding, or governmental investigation pending or threatened in eminent domain, for rezoning or otherwise against Seller that relates to or affects the Property.
(ix) During the time in which Seller has owned the Property, Seller has not used, generated, transported, treated, constructed, deposited, stored, disposed, placed or located at, on, under or from the Property any flammable explosives, radioactive materials, hazardous or toxic substances, materials or wastes, pollutants or contaminants defined, listed or regulated by any local, state or federal environmental laws.
(x) Seller is not a foreign person for purposes of § 1455 of the Internal Revenue Code.
(B) All of the foregoing representations and warranties shall be applicable, true, correct and complete, both as of the date hereof and as of the Closing Date, and Seller shall, as stated in Section 11(B) of this Agreement, certify in writing at Closing
that each and all of said representations and warranties are true, correct and complete as of and with respect to that date.
(C) Notwithstanding anything else to the contrary herein, the parties acknowledge and agree that the improvements on the property are being purchased as-is with no representations or warranties regarding their condition(s).
SECTION 5. Purchasers Covenants, Representations and Warranties .
(A) As a material inducement to Seller to enter into this Agreement and to sell the Property to Purchaser as set forth herein, Purchaser hereby covenants, warrants and represents to Seller as follows:
(i) The Purchaser is a Georgia limited liability company and has full power and authority to carry on its business as now being conducted and to enter into and perform all its obligations under the Agreement. This Agreement and all documents to be executed by Purchaser pursuant hereto will be the valid and binding obligations of Purchaser enforceable with their respective terms. All action required by law and by any agreement, arrangement or document to authorize the execution and delivery of this Agreement by Purchaser and the consummation of the transactions contemplated hereby has been or will be taken and the execution and delivery of this Agreement or the consummation of any of the transactions contemplated herein shall not violate or conflict with any provisions of any lease, mortgage, note or any other agreement or arrangement to or of which Purchaser is subject.
(ii) The Purchaser is not a party to any litigation nor is Purchaser aware of a threat of any litigation that would affect Purchasers right to enter into this Agreement or to consummate the transaction contemplated by this Agreement.
(B) All of the foregoing representations and warranties shall be applicable, true, correct and complete, both as of the date hereof and as of the Closing Date, and Purchaser shall, as stated in Section 12(B) of this Agreement, certify in writing at Closing that each and all of said representations and warranties are true, correct and complete as of and with respect to that date.
SECTION 6. Condition of Title and Survey .
(A) The Property shall be conveyed to Purchaser by Limited Warranty Deed to be delivered to Purchaser at Closing, free and clear of all liens and encumbrances, except those caused by or on behalf of Purchaser and except that the Property may be subject to the lien for taxes for the current year, if not yet due and payable, and other matters of record acceptable to Purchaser in its sole discretion. Purchaser shall have the option to obtain a title insurance commitment for a title insurance policy on behalf of a title company acceptable to Purchaser (the Title Commitment). Should the Title Commitment disclose exceptions to title unacceptable to Purchaser, other than liens and encumbrances which Seller shall cause to be released at Closing and the lien for current year taxes, Purchaser shall so notify Seller in writing at least 10 days before Closing and
Seller shall be given a reasonable time in which to correct any such exceptions. If Seller fails to correct such exceptions within such time period, Purchaser may elect, as its sole remedy, to either (i) grant Seller additional time within which to cure any exception, if Seller requests such additional time; or (ii) accept title in its existing condition; or (iii) terminate this Agreement and have returned to Purchaser all Earnest Money.
(B) Prior to Closing, Purchaser may obtain a current survey of the Property prepared and certified by a surveyor registered and licensed in the State of Georgia (the Survey). The Survey shall certify as to any flood plain restrictions affecting the Property and shall identify and locate all easements or encroachments which traverse or affect the Property and shall set forth the location, availability and, where appropriate, dimensions or diameters of all utilities servicing the land, including, without limitation, water, sewer, electric and telephone. The legal description for documents necessary or appropriate to consummate the purchase or sale contemplated herein shall be based upon the Survey, as revised if applicable. The Survey shall be sufficient to enable the title insurer to delete the general exception relating to survey matters.
(C) Prior to Closing, Purchase may obtain an environmental assessment of the Property (the Environmental Report). Should the Environmental Report disclose environmental conditions unacceptable to Purchaser, Purchaser shall so notify Seller in writing before Closing and Seller shall be given a reasonable time in which to correct any such conditions. If Seller fails to correct such conditions within such time period, Purchaser may elect, as its sole remedy, to either (i) grant Seller additional time within which to cure any condition, if Seller requests such additional time; or (ii) accept the Property in its existing condition; or (iii) terminate this Agreement and have returned to Purchaser all Earnest Money.
SECTION 7. Closing Costs . Purchaser shall pay for all closing costs including, without limitation, the cost of any title examination, the Title Commitment and title insurance premium, the Survey, the Environmental Report, the transfer taxes required for the transfer of the Real Property to Purchaser and all recording fees.
SECTION 8. [Intentionally Omitted.]
SECTION 9. Date of Closing . The Purchaser shall close the transaction contemplated herein (the Closing) on or before June 30, 2012; the exact time and date of which to be determined by Purchaser (the Closing Date) at the offices of Purchasers counsel in Atlanta Georgia. The above date may be further extended as may be agreed to in writing by the parties.
SECTION 10. Waivers . The waiver by any party of any breach by the other of any term, covenant or condition herein contained shall not be deemed to be a waiver of any other condition or of any subsequent breach of the same or of any other term, covenant or condition herein contained. No delay or omission in the exercise of any right or remedy accruing to any party as a result of a breach by the other party under this Agreement shall impair such right or remedy or be construed as a waiver of any such breach theretofore or thereafter occurring.
SECTION 11. Conditions Precedent to Obligations of Purchaser . The obligations of Purchaser under this Agreement are subject to, and shall, be conditioned upon, the satisfaction (or the waiver in writing by Purchaser) prior to the Closing of each of the following conditions:
(A) Compliance by Seller and Representations Correct . All of the covenants and obligations of this Agreement to be complied with and performed by Seller at or before the Closing shall have been complied with and performed, and the representations and warranties made by Seller in this Agreement shall be true and correct (i) on and as of the date of this Agreement, and (ii) on and as of the Closing, with the same force and effect as though such representations and warranties had been made on and as of the Closing.
(B) Certificate . Seller shall have delivered to Purchaser a certificate, dated the Closing Date, certifying to the fulfillment of the conditions set forth in subparagraph (A) above.
(C) No Legal Action . No action, suit, investigation, other proceeding or claim shall have been threatened or instituted before any court or before or by any government or governmental agency or instrumentality either (i) to impose any restriction, limitations or conditions with respect to the transactions contemplated by this Agreement, or (ii) to obtain damages or other relief in connection with such transactions. No action, suit, investigation, or other proceeding or claim against Seller shall have been instituted before any court or before or by any government or governmental agency or instrumentality, domestic or foreign which might adversely affect the Property or the Facility.
(D) Approval . Purchasers Board of Directors or Executive Committee shall have approved the transactions contemplated hereunder.
(E) Additional Documents . Seller shall have furnished such other duly executed documents as may be required, in the reasonable opinion of Purchaser, (i) to evidence the accuracy of Sellers representations and warranties and (ii) to perfect or evidence the performance of the covenants and agreements made and to be performed by Seller and the compliance by Seller with all conditions to be satisfied by Seller.
SECTION 12. Conditions Precedent To Obligations of Seller . The obligations of Seller under this Agreement are subject to, and shall be conditioned upon the satisfaction (or the waiver in writing by Seller) prior to the Closing of each of the following conditions:
(A) Compliance by Purchaser and Representations Correct . All of the covenants and obligations of this Agreement to be complied with and performed by Purchaser at or before the Closing shall have been complied with and performed, and the representations and warranties made by Purchaser in this Agreement, shall be correct (a) on and as of the date of this Agreement, and (b) on and as of the Closing, with the same force and effect as though such representations and warranties had been made on and as of the Closing.
(B) Certificate . Purchaser shall have delivered to Seller a certificate, dated the Closing Date, duly executed by Purchaser, certifying to the fulfillment of the conditions set forth in subparagraph (A) above.
(C) No Legal Action . No action, suit, investigation, other proceeding or claim shall have been threatened or instituted before any court or before or by any government or governmental agency or instrumentality either (1) to impose any restrictions, limitations or conditions with respect to the transaction contemplated by this Agreement or (2) to obtain damages or other relief in connection with such transactions. No action, suit, investigation or other proceeding or claim against Purchaser shall have been instituted before any court or before or by any government or governmental agency or instrumentality, domestic or foreign, which might adversely affect the Property or the Facility.
(D) Additional Documents . Purchaser shall have furnished Seller with such other duly executed documents as may be required, in the reasonable opinion of Seller (i) to evidence the accuracy of Purchasers representations and warranties and (ii) to perfect or evidence the performance of the covenants and agreements made and to be performed by Purchaser and the compliance by Purchaser with all conditions to be satisfied by Purchaser.
SECTION 13. Deliveries at Closing . At Closing, Seller shall deliver to Purchaser, in consideration of payment to Seller of the Purchase Price, the following:
(A) Limited Warranty Deed conveying the Real Property.
(B) Bill of Sale conveying Personal Property.
SECTION 14. Assignment . Neither party may assign any of its right, title, or interest in and to this Agreement without the written consent of the other party.
SECTION 15. Commissions and Fees . Purchaser hereby represents and warrants to Seller that it has not dealt with any real estate agent, broker or finder in connection with this transaction and agrees to indemnify Seller for all damages, costs and liability that may result from breach of this warranty and representation. Seller hereby represents and warrants to Purchaser that, Seller has not dealt with any real estate agent, broker or finder in connection with this transaction and agrees to indemnify Purchaser for all damages, costs and liability that may result from breach of this warranty and representation.
SECTION 16. Condemnation . Seller represents that it has received no notice of any condemnation proceedings against the whole or any part of the Property. If prior to the Closing Date, all or a substantial portion of either the Property shall be condemned or taken by eminent domain by any competent authority for any public or quasi-public use or purpose, then, in such event, Purchaser shall have the option to terminate this Agreement or close the transactions herein provided for. If Purchaser shall elect pursuant to such option to terminate this Agreement, this Agreement shall be null and void and the Earnest Money shall be returned to Purchaser. If, however, Purchaser shall elect to close this transaction, then there shall be an abatement in the Purchase Price equal to the amount of proceeds of any condemnation award allowed.
SECTION 17. Default . If either party defaults under this Agreement, the other party shall have all rights or remedies permitted in law or at equity. Before a party may declare a default hereunder, it shall give written notice to the other party specifying the failure of the other
party under this Agreement and the other party shall have ten (10) days from the receipt of such notice to cure such default.
SECTION 18. Notices . All notices provided for herein shall be made either by certified or registered mail and deposited in the U.S. Mail, postage prepaid, or by overnight delivery service, to the following addresses:
To Purchaser: AdCare Health Systems, Inc.
Two Buckhead Plaza
3050 Peachtree Road NW, Suite 355
Atlanta, Georgia 30305
Attn: Boyd P. Gentry
To Seller: JRT Group Properties, LLC
1145 Hembree Road
Roswell, Georgia 30076
Attn: Robert Lancaster
Any notices sent as provided herein shall be deemed delivered when actually received.
SECTION 19. Miscellaneous .
(A) This Agreement sets forth all promises, agreements, conditions, inducements and understanding between and among the parties and there are no promises, agreements, conditions, inducements, warranties, representations, oral or written, express or implied, between them, other than as herein set forth. This Agreement shall not be modified or amended in any manner except by an instrument in writing executed by the parties.
(B) The headings contained in this Agreement are for convenience and reference only, and in no way modify, interpret or construe the meaning of the parties.
(C) All terms, agreements, covenants, conditions, representations, warranties and provisions herein made shall survive the Closing.
(D) This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but such counterparts shall together constitute hut one and the same instrument.
(E) This Agreement shall be construed and enforced in accordance with the laws of the State of Georgia. If any provision of this Agreement is determined to be illegal or unenforceable, such determination shall not affect the remaining terms of this Agreement. If litigation is instituted based upon this Agreement, the prevailing party shall be entitled to recover all expenses, including reasonable attorney fees.
(F) Each of the parties shall execute such other documents as may be reasonably necessary to carry out the intent as well as comply with the provisions of this Agreement.
(G) Subject to Section 14, this Agreement shall be binding upon and inure to the benefit of the respective parties and their heirs, executors, personal representatives, successors and assigns.
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IN WITNESS WHEREOF , the parties have executed this Agreement effective as of the date first set forth.
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PURCHASER : |
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ADCARE HEMBREE ROAD PROPERTY, LLC, |
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a Georgia limited liability company |
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By: |
/s/ Boyd P. Gentry |
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Boyd P. Gentry, Manager |
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SELLER : |
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JRT GROUP PROPERTIES, LLC, |
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a Georgia limited liability company |
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By: |
/s/ [ILLEGIBLE] |
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Name: |
[ILLEGIBLE] |
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Title: |
[ILLEGIBLE] |
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Exhibit 4.3
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 100,000 SHARES OF COMMON STOCK OF
ADCARE HEALTH SYSTEMS, INC.
July 2, 2012
THIS CERTIFIES THAT, for value received, CANTONE RESEARCH, INC. 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 July 2, 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 or wire transfer.
(b) The Company shall, as promptly as practicable and in any event within three (3) 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 the Exercise Notice. The share certificate or certificates so delivered shall be in such denominations as may be specified in such Exercise Notice (or, if such Exercise 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 Exercise 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 Exercise 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 (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, and unless the shares of Common Stock issuable upon exercise of this Warrant are registered for resale under the Securities Act, 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 9.99% 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.
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.
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. 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 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 Registration Rights . The shares of Common Stock issuable upon exercise of this Warrant shall be Registrable Securities under that certain Registration Rights Agreement, dated as of June 28, 2012, between the Company and the buyers signatory thereto, and the Holder shall have such rights and obligations with respect to such shares as if a party thereto.
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, GA 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 dated July 2, 2012, to be executed by its duly authorized representative.
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ADCARE HEALTH SYSTEMS, INC. |
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By: |
/s/ Martin D. Brew |
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Name: |
Martin D. Brew |
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Title: |
Chief Financial Officer |
ACKNOWLEDGED AND AGREED TO BY:
CANTONE RESEARCH, INC.
By: |
/s/ Anthony Cantone |
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Name: |
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Exhibit 10.13
METRO CITY BANK
$1,810,000.00 |
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June 8, 2012 |
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, jointly and severally if more than one, promises to pay to the order METRO CITY BANK or its successors or assigns at 5441 Buford Highway, Suite 109, Atlanta, GA 30340 , or such other place as the holder hereof may from time to time designate in writing, the principal sum of One Million Eight Hundred Ten Thousand and No/100 Dollars ($1,810,000.00), plus interest on the unpaid principal balance at the rate specified below. Interest shall be calculated on the basis of the actual number of days elapsed over a year of 360 days.
For the period commencing on the date hereof and continuing through and until the Maturity Date (hereinafter defined) interest on the principal balance hereof, or portions thereof, outstanding from time to time shall accrue at the rate per annum equal to two and 25/100ths percent (2.25%) plus the prime interest rate (hereinafter referred to as the Prime) quoted or published from time to time in the Money Rates section of the Wall Street Journal, or if no such rate is published in the Wall Street Journal, then the nearest comparable published rate, as determined by the holder of this Note. The interest rate shall be adjusted daily hereafter upon any change in the Prime to the appropriate percentage above the Prime in effect on such date. At no time shall the interest rate be less than six and 25/100ths percent (6.25%). Accordingly, the rate of interest in effect as of the date hereof, and remaining in effect until and unless a daily change occurs to the Prime and Prime exceeds four percent (4.00%), is and shall be six and 25/100ths (6.25%) percent per annum.
The repayment of this note shall be as follows:
(i) Equal monthly installments of principal and interest based on a twenty-five (25) year amortization schedule will be due and payable each in the amount of $12,041.94 beginning on August 1, 2012 and continuing on the same day of each and every month thereafter through and including June 8 th , 2022.
(ii) On June 8 th , 2022 (the Maturity Date), the entire outstanding principal balance of the indebtedness hereby evidenced, together with all accrued but unpaid interest thereon, and all other sums due to holder hereunder shall be due and payable in full.
Each installment payment will be applied first to pay interest accrued to the day Lender receives the payment, then to bring principal current, then to pay any late fees, and then apply any remaining balance to reduce principal.
If any payment required to be paid by this Note is not paid in full within ten (10) days after its scheduled due date, the holder hereof may assess a late charge in the amount of five percent (5%) of the unpaid amount of the payment, or the maximum permitted by applicable law, whichever is less.
The undersigned and all guarantors and endorsers of this Note waive presentment, demand, protest and notice of non-payment and each of the undersigned is bound as a principal and not as a surety. The undersigned and all guarantors and endorsers hereof agree to any extensions of time of payment and partial payment, before, at or after maturity, without notice. This Note shall bear interest at the rate of four points (4.00%) per annum above the interest rate otherwise payable under the terms of this Note after maturity or in the event of default until paid in full, or the maximum permitted by applicable law, whichever is less. Time is of the essence of this Note.
This Note and any extensions or renewals hereof is secured by (i) that certain Mortgage and Security Agreement dated of even date herewith and recorded in the Stone County, Arkansas records, and any and all amendments and replacements thereto, executed by the undersigned in favor of METRO CITY BANK and (ii) other security.
Failure to make any payment when due, or any default under any encumbrance or agreement securing this Note, or any default in any document executed simultaneously herewith in connection with the loan, shall cause the entire remaining unpaid balance of principal and interest to be declared immediately due and payable at the option of the holder of this Note.
In the event holder shall employ counsel to collect this obligation or to administer, protect or foreclose the security given in connection herewith, the undersigned, jointly and severally if more than one, agrees to pay reasonable attorneys fees for services of such counsel, whether or not suit is brought, plus costs incurred in connection therewith.
In the event of prepayment, in whole or in part, voluntarily or involuntarily, a prepayment penalty rate shall be assessed as follows.
1. If the prepayment occurs on or before the first anniversary date of this Note, the prepayment penalty will equal ten percent (10%) of the principal amount prepaid.
2. If the prepayment occurs after the first anniversary date, but on or before the second anniversary date, the prepayment penalty will equal nine percent (9%) of the principal amount prepaid.
3. If the prepayment occurs after the second anniversary date, but on or before the third anniversary date, the prepayment penalty will equal eight percent (8%) of the principal amount prepaid.
4. If the prepayment occurs after the third anniversary date, but on or before the fourth anniversary date, the prepayment penalty will equal seven percent (7%) of the principal amount prepaid.
5. If the prepayment occurs after the fourth anniversary date, but on or before the fifth anniversary date, the prepayment premium will equal six percent (6%) of the principal amount prepaid.
6. If the prepayment occurs after the fifth anniversary date, but on or before the sixth anniversary date, the prepayment premium will equal five percent (5%) of the principal amount prepaid.
7. If the prepayment occurs after the sixth anniversary date, but on or before the seventh anniversary date, the prepayment premium will equal four percent (4%) of the principal amount prepaid.
8. If the prepayment occurs after the seventh anniversary date, but on or before the eighth anniversary date, the prepayment premium will equal three percent (3%) of the principal amount prepaid.
9. If the prepayment occurs after the eighth anniversary date, but on or before the ninth anniversary date, the prepayment premium will equal two percent (2%) of the principal amount prepaid.
10. If the prepayment occurs after the ninth anniversary date, but on or before the tenth anniversary date, the prepayment premium will equal one percent (1%) of the principal amount prepaid.
A prepayment penalty shall not apply if the prepayment occurs after the tenth anniversary date.
This Promissory Note will 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 real and personal property collateral, 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 Agreement 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 Note has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of Georgia.
If the Note is mutilated, lost, stolen or destroyed, then upon surrender thereof (if mutilated) or receipt of evidence and indemnity (if lost, stolen or destroyed) the undersigned shall execute and deliver a new note of like tenor, which shall show all payments which have been made on account of the principal hereof.
IN WITNESS WHEREOF, the undersigned has executed this Note under seal as of the date first above written.
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MT. V PROPERTY HOLDINGS, LLC |
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/s/ Christopher F. Brogdon |
(L.S.) |
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Christopher F. Brogdon, Manager |
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Exhibit 10.14
LOAN AGREEMENT
THIS LOAN AGREEMENT, made and entered into this 8th day of June, 2012, by and between MT. V PROPERTY HOLDINGS, LLC (the Borrower) and METRO CITY BANK (Lender).
W I T N E S S E T H :
WHEREAS, Borrower desires financing on certain real property and business assets located thereon in Stone County, Arkansas, more particularly described in Exhibit A attached hereto and by this reference made a part hereof (Property);
WHEREAS, of even date herewith, Lender and Borrower entered into that certain loan wherein the Lender agreed to provide a loan (the Loan) to Borrower for One Million Eight Hundred Ten Thousand and No/100 Dollars ($1,810,000.00) to refinance existing debt and for soft costs; and
WHEREAS, in order to loan funds to Borrower, Lender enters into this Loan Agreement with Borrower for the purposes herein contained; and
WHEREAS, the loan made hereunder will be secured in part by a first security interest in the Property and a first lien position on furniture, fixtures and equipment located at the Property.
NOW, THEREFORE, for and in consideration of the premises, the sum of Ten ($10.00) Dollars and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
AMOUNT AND TERMS OF LOAN
1.1 RECITALS. Each of the above recitals are hereby incorporated into and made a part of this Agreement by this reference.
1.2 LOAN AND NOTE. The term Loan herein shall refer to the indebtedness of Borrower to Lender evidenced by a Note in the original principal amount One Million Eight Hundred Ten Thousand and No/100 Dollars ($1,810,000.00) in form satisfactory to Lender (the Note).
ARTICLE II
CONDITION OF LENDING
2.1 CONDITIONS PRECEDENT TO THE LOAN. As a condition precedent to Lender making the Loan, the Borrower shall deliver to Lender on or before the date of the Loan closing, the following, in form and substance satisfactory to Lender:
(a) The Note;
(b) Mortgage and Security Agreement;
(c) UCC-1 Financing Statements;
(d) Evidence satisfactory to Lender of ownership of the Collateral by Borrower free and clear of encumbrances of any kind;
(e) Guaranties from Mountain View Nursing, LLC and AdCare Health Systems, Inc. (collectively, the Guarantor or Guarantors);
(f) Such other documents as reasonably may be required by the Lender or Lenders counsel.
The Loan documents as provided above (collectively, the Loan Documents), when prepared, shall set forth the matters contained in the Loan Agreement and contain such other provisions as are deemed necessary or desirable by Lender. The form and substance of all such documents must be satisfactory to Lender prior to disbursement by Lender of any of the proceeds of the Loan.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BORROWER
The Borrower represents and warrants to, and agrees with the Lender as follows:
3.1 POWER AND AUTHORIZATION.
(a) The Borrower and/or Guarantor have authorized the execution and delivery of the Note and all other documents contemplated by this Loan Agreement, and such execution and delivery will not violate any law, or any other agreement to which Borrower and/or Guarantor are a party.
(b) This Loan Agreement constitutes, and upon execution and delivery thereof, the Note, the Mortgage and Security Agreement and the ancillary documents will constitute, legal, valid and binding obligations of the Borrower and/or Guarantor enforceable against the Borrower and/or Guarantor.
3.2 FINANCIAL CONDITION. The reports and financial statements of Borrower and Guarantor submitted to Lender in connection with the Loan have been prepared from Borrowers or Guarantors books and records in accordance with generally accepted accounting principles and practices, consistently applied, and fairly reflect the financial condition of Borrower and Guarantor for the periods therein defined. No material adverse changes have since occurred.
Except as disclosed in the aforesaid reports and financial statements, Borrower:
(a) Has not incurred any debts, liabilities or other obligations nor committed to incur any debts, liabilities or obligations;
(b) Has no liabilities, direct or contingent;
(c) Has made no investments in, advances to, or guaranties or obligations of any other company, person, firm, corporation, or other entity;
(d) Is not subject to any judgment, nor are there any liens, encumbrances or security interests outstanding against Borrower or any of its properties.
3.3 LITIGATION. There is no litigation, proceeding, claim or dispute pending or threatened against Borrower, the adverse determination of which would materially affect Borrowers ability to repay the loan or otherwise perform hereunder.
ARTICLE IV
COVENANTS BY BORROWER
Until all the obligations of Borrower under this Agreement have been performed and paid in full, Borrower covenants and agrees as follows:
4.1 INSURANCE. Borrower shall maintain or require Guarantor to maintain insurance on the Collateral (hereinafter defined) as described in Article VII hereof in such amounts and against such hazards and liabilities as is customarily maintained by other companies in the same geographical area operating similar businesses or as may be otherwise requested by the Lender. All such policies of insurance shall be in form and substance and with insurance companies satisfactory to Lender, and Borrower shall deliver evidence thereof to Lender upon request. Further, upon request, Lender shall be designated as loss payee or as mortgagee under any such policies, as its interests may appear.
4.2 MAINTENANCE OF BUSINESS AND CORPORATE EXISTENCE. Borrower shall comply with all valid and applicable statutes, ordinances, rules and regulations and shall keep in force and effect all licenses, permits, bonds and franchises necessary for the proper conduct of its business.
4.3 ADVERSE CHANGES AND LITIGATION. Borrower shall immediately inform Lender of any material adverse change in its financial condition, or the financial condition of Guarantor, and shall promptly inform Lender of any litigation or threatened litigation or of the occurrence of any other event or circumstance which might substantially affect the financial condition or business of Borrower or Guarantor.
4.4 MANAGEMENT AND OWNERSHIP. No material adverse change shall be made without the prior written consent of Lender in the management or ownership of Borrower,
or in the manner in which its business is conducted. Said consent shall not be unreasonably withheld by Lender.
4.5 FINANCIAL STATEMENTS. Within ninety (90) days of Borrowers fiscal year end, Borrower and Guarantor shall furnish to Lender a copy of their compiled financial statement. Borrowers and Guarantors financial statements shall contain a balance sheet, profit and loss statement and aging of accounts receivable and accounts payable, all in reasonable detail, prepared in accordance with generally accepted accounting principles, consistently applied. Each set of financial statements shall be prepared by a certified public accountant or accountants acceptable to Lender and certified by a duly authorized officer of Borrower to be correct and accurate. Borrower and Guarantor shall also furnish a copy of its income tax returns, and such other or additional financial information as Lender may from time to time request. Borrower shall also furnish evidence of payment of real estate taxes on the Property to Lender on an annual basis.
4.6 OTHER DEBTS. Other than the loan from Lender of even date herein in the principal amount of $1,810,000.00, that certain second lien in favor of Lender in the principal amount of $1,267,000.00 (to be replaced by permanent financing in favor of Economic Development Corporation of Fulton County in the principal amount of $1,304,000.00), the Borrower shall not directly or indirectly incur, create, assume or permit to exist any obligation for payment of borrowed money, excepting only unsecured current liabilities incurred in the ordinary course of business and obligations contemplated by this Agreement, without the express written consent of Lender, which consent shall not be unreasonably withheld. Further, Borrower shall not guarantee the obligations of any person or entity, excepting only obligations contemplated by this Agreement provided, however, that Borrower shall have the right to guarantee the obligations of Mountain View Nursing, LLC with respect to such entitys working capital financing with a third party lender.
4.7 SALE OF COLLATERAL. Borrower shall not sell, lease, transfer or otherwise dispose of any of the Collateral as described in ARTICLE VII hereof, other than in the ordinary course of Borrowers business. If Borrower should desire to sell any of the Collateral, a release price therefor will be determined at the sole discretion of Lender, and upon the sale of that Collateral, the release price will be paid over by Borrower to Lender and applied by Lender to payments due on the Note, in inverse order of the due dates, and Lender shall thereupon release its lien or security interest upon the Collateral sold.
4.8 BULK SALE. The Borrower shall not, without the prior written consent of the Lender, sell, transfer or convey all or any part of its interest in its assets to another entity.
4.9 ENCUMBRANCES. Borrower shall not incur or permit to exist nor allow Guarantor to incur or permit to exist any encumbrance, pledge or lien upon or against any of the Collateral, except:
(a) Liens or security interests required or expressly contemplated or permitted by this Agreement;
(b) Liens for taxes, assessments and other governmental charges not yet due and liens of carriers, warehousemen, mechanics and materialmen incurred in the ordinary course of business for sums not yet due; and
(c) Tax liens which are being contested in good faith.
4.10 TAXES. Borrower shall pay promptly, when due, all taxes, assessments and governmental charges or levies imposed upon the Borrower or upon the income or any property of the Borrower, as well as all claims of any kind (including claims for labor, material, supplies or rent) which, if unpaid, might become a lien upon any or all of the Collateral.
4.11 EXAMINATION OF RECORDS. Borrower shall permit any representative of Lender to examine and to audit any or all of Borrowers books and records and to copy portions thereof, and to visit and inspect any of the Collateral upon receipt of reasonable notification and request.
ARTICLE V
EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute an Event of Default:
(a) Nonpayment, when due, of any principal, accrued interest, premium, fee or other charge due under the Note.
(b) Default by Borrower in the due observance or performance of any term, covenant, condition or agreement on its part to be performed under this Loan Agreement, the Note, or under any other document contemplated by this Loan Agreement.
(c) If Borrower shall:
(1) Make a general assignment for the benefit of its creditors;
(2) File a voluntary petition in bankruptcy;
(3) Be adjudicated as bankrupt or insolvent;
(4) File any petition or answer seeking, consenting to, or acquiescing in, reorganization, arrangement, composition, liquidation, dissolution or similar relief, under any present or future statute, law or regulation;
(5) File an answer admitting or failing to deny the material allegations of the petition against it for any such relief;
(6) Admit in writing its inability to pay its debts as they mature;
(7) Discontinue business; or
(8) Be unable to pay debts as they become due.
(d) Borrower fails to have vacated or set aside within thirty (30) days of its entry any court order appointing a receiver or trustee for all or a substantial portion of the Borrowers property.
(e) Any warranty, representation or statements made or furnished to Lender by Borrower in connection with the Loan or in connection with this Agreement (including any warranty, representation or statement in the application of Borrower for the Loan or in any accompanying financial statements) or to induce Lender to make the Loan, proves to be untrue, misleading or false in any material respect.
(f) Borrower suffers or permits any lien, encumbrance or security interest to attach to any of its property, except as herein otherwise expressly permitted, or if any judgment shall be entered against Borrower or any attachment shall be made against any property of Borrower, which judgment or attachment shall remain undischarged, unbonded, or undismissed for a period of ten (10) days.
(g) Borrower defaults in the payment of any principal or interest on any obligation to Lender or to any other creditor.
(h) Borrower shall sell, lease, or otherwise transfer or convey any of the Collateral, or any interest therein without Lenders prior written approval, except as herein otherwise expressly permitted.
(i) Borrower defaults under or causes to be revoked any state or county permit or license.
ARTICLE VI
REMEDIES ON EVENT OF DEFAULT
6.1 DECLARE NOTE DUE. Upon the occurrence of any Event of Default as defined in this Agreement, the Note, the Mortgage and Security Agreement and Security Agreement or any other document contemplated by this Agreement, then in any such event, Lender at its option, may declare the entire unpaid balance of the Note to be forthwith due and payable, and thereupon such balance shall become so due and payable without presentment, protest or further demand or notice of any kind, all of which are hereby expressly waived, and Borrower will forthwith pay to Lender the entire principal of and interest accrued on the Note.
6.2 OTHER REMEDIES. Upon the occurrence or discovery of an Event of Default, the Lender shall, in addition to its option to declare the entire unpaid amount of the Note due and payable, at its option:
(a) Move to protect its rights and remedies as a secured party under the Mortgage and Security Agreement and Security Agreement, by extrajudicial authority as set forth in those instruments, by action at law or equity, or by any other lawful remedy to enforce payment.
(b) Apply the proceeds from any disposition of the Collateral to the satisfaction of the following items in the order in which they are listed:
(1) The expenses of taking, preserving, insuring, repairing, holding and selling the Collateral, including any legal costs and attorneys fees. If any of the Note shall be referred to an attorney for collection, Borrower and all others liable on the Note, jointly and severally agree to pay reasonable attorneys fees and all costs of collection.
(2) The unpaid amount of any interest due on the Note, and all other expenses of Lender.
(3) The unpaid principal amounts of the Note.
(4) Any other indebtedness of Borrower to Lender.
(5) The remainder, if any, to Borrower, it being understood and agreed that if the proceeds realized from the disposition of the Collateral shall fail to satisfy items (1) through (4) above, Borrower shall forthwith pay any such deficiency to Lender upon demand.
(c) Exercise any and all rights of setoff which Lender may have against any account, fund or property of any kind, tangible or intangible, belonging to Borrower and which shall be in Lenders possession or under Lenders control.
ARTICLE VII
COLLATERAL
Borrowers obligation for payment of the Note shall be collateralized by the following (the Collateral):
7.1 MORTGAGE AND SECURITY AGREEMENT. A first Mortgage and Security Agreement on property located at 706 Oak Grove Street, Mountain View, Arkansas 72560.
7.2 UCC FINANCING STATEMENTS. A first security interest on all Borrowers furniture, fixtures and equipment located at the Property.
ARTICLE VIII
MISCELLANEOUS
8.1 CLOSING. The Lender shall not be obligated to make the Loan or advance any funds until Borrower has fully met all requirements herein set forth to be met by Borrower, and until Borrower has paid to Lender and any other parties entitled thereto, all fees and other charges due in connection with the Loan.
8.2 AMENDMENTS. No amendment of any provisions of this Loan Agreement, nor consent to any departure of Borrower therefrom, 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.
8.3 NOTICES. All notices and other communications provided for hereunder shall be in writing and mailed or telegraphed or delivered.
If to Borrower:
3050 Peachtree Road, NW, Suite 355
Two Buckhead Plaza
Atlanta, Georgia 30305
If to Lender:
METRO CITY BANK
5441 Buford Highway, Suite 109
Atlanta, GA 30340
8.4 GOVERNING LAW AND PARTIES BOUND. This Agreement and Note 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 Agreement 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 Agreement 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.
8.5 ATTORNEYS FEES AND EXPENSES. If Lender shall incur any cost or expense, including, without limitation, reasonable attorneys fees, in connection with this Agreement, the Note or the Loan, in any manner whatsoever, direct or indirect, whether with regard to the collection of amounts due, protection of Collateral, defense of Lender or otherwise, upon demand by Lender, Borrower shall pay the same or shall reimburse Lender therefor in full.
8.6 ASSIGNMENT BY BORROWER. No commitment issued by Lender to Borrower for the Loan nor any of Borrowers rights hereunder shall be assignable by Borrower without the prior written consent of Lender.
8.7 NO WAIVER: REMEDIES. No failure on the part of the Lender, and no delay in exercising any right under this Loan Agreement, shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Loan Agreement preclude any other or further exercise thereof or the exercise of any other right.
8.8 SEVERABILITY. In the event that any clause or provisions of this Loan Agreement or any document or instrument contemplated by this Agreement shall be held to be
invalid by any court of competent jurisdiction, the invalidity of such clause or provision shall not affect any of the remaining portions or provisions of this Loan Agreement.
8.9 TIME. Time is of the essence of this Agreement.
8.10 INTEREST. Interest shall be calculated on the basis of an actual 360 day year.
8.11 GRACE AND NOTICE OF CURE RIGHTS. Notwithstanding any other provision to the contrary contained in this Agreement or in any of the other Loan Documents, upon the occurrence of a monetary default or a monetary Event of Default under any of the Loan Documents, Lender shall not be required to send written notice to Borrower and/or Guarantors. All loan payments are due on the first (1 st ) day of each month, however; payments will not be considered late until ten (10) days thereafter. In the event the default does not involve the payment of money by Borrower to Lender, Borrower and Guarantors shall have thirty (30) days following receipt of such notice to fully cure such default. In the event the default is cured within such period, it shall be as if no default had occurred.
8.12 MISCELLANEOUS. Notwithstanding anything contained in this Loan Agreement or in the loan documents, including, without limitation, any security agreement executed in connection with this Loan Agreement (collectively, the Loan Documents) evidencing the Loan, Lender agrees that its collateral for the loan expressly excludes (and any definition of Collateral in the Loan Documents shall also expressly exclude) all of the following property of MOUNTAIN VIEW NURSING, LLC:
(a) all Accounts; (b) all Payment Intangibles; (c) all Instruments, Chattel Paper (including Electronic Chattel Paper), Documents, Letter-of-Credit Rights, Supporting Obligations and Commercial Tort Claims, in each case to the extent arising out of, relating to or given in exchange for or settlement of or to evidence the obligation to pay any Account or Payment Intangible; (d) all General Intangibles (including contract rights and trademarks, copyrights, patents and other intellectual property) that arise out of or relate to any Account or Payment Intangible or from which any Account or Payment Intangible arises; (e) all remedies, guarantees and collateral evidencing, securing or otherwise relating to or associated with any Account or Payment Intangible, including all rights of enforcement and collection; (f) all Commercial Lockboxes, Governmental Lockboxes, Collection Accounts and other Deposit Accounts into which Collections or other proceeds of Collateral or Advances are deposited, and all checks or Instruments from time to time representing or evidencing the same; (g) all cash, currency and other monies at any time in the possession or under the control of MOUNTAIN VIEW NURSING, LLCs working capital or operating lender [the Operations Lender] or a bailee of such Operations Lender; (h) all books and records evidencing or relating to or associated with any of the foregoing; (i) all information and data compiled or derived with respect to any of the foregoing (other than any such information and data subject to legal restrictions of patient confidentiality); and (j) all Collections, Accessions, receipts and Proceeds derived from any of the foregoing, all words with capitalized letters being defined in the Uniform Commercial Code or the loan agreement between MOUNTAIN VIEW NURSING, LLC and Operations Lender.
IN WITNESS WHEREOF, the parties have executed this Loan Agreement as of the date first above written.
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BORROWER: |
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Signed, sealed and delivered in the presence of: |
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MT. V PROPERTY HOLDINGS, LLC |
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/s/ [ILLEGIBLE] |
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By: |
/s/ Christopher F. Brogdon |
(L.S.) |
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Witness |
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Christopher F. Brogdon, Manager |
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/s/ Ellen W. Smith |
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Notary Public |
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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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By: |
/s/ [ILLEGIBLE] |
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Witness |
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Name: |
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Title: |
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/s/ [ILLEGIBLE] |
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Notary Public |
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The undersigned hereby expressly agree and consent to all of the terms and conditions contained herein and further agree to be bound by all of the terms and conditions contained herein. This 8th day of June, 2012.
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GUARANTOR: |
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MOUNTAIN VIEW NURSING, LLC |
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/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 Chief Acquisition Officer |
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[Corporate Seal] |
Exhibit 10.15
MORTGAGE AND SECURITY AGREEMENT
This Mortgage and Security Agreement (the Mortgage), dated 8th day of June 2012, between MT. V PROPERTY HOLDINGS, LLC (hereinafter referred to as Mortgagor) whose mailing address is 3050 Peachtree Road, NW, Suite 355, Two Buckhead Plaza, Atlanta, Georgia 30305, and Metro City Bank, the address of which is 5441 Buford Highway, Suite 109, Atlanta, GA 30340 , (hereinafter Mortgagee).
W I T N E S S E T H:
MORTGAGOR HEREBY IRREVOCABLY GRANTS, BARGAINS, SELLS, TRANSFERS, ASSIGNS AND CONVEYS TO MORTGAGEE WITH WARRANTY COVENANTS:
All that certain property and all buildings and all other improvements now thereon or hereafter constructed thereon situated in the County of Stone, State of Arkansas, described in Exhibit A attached hereto and made a part hereof by reference, (commonly known as 706 Oak Grove Street, Mountain View, Arkansas 72560) (the Premises);
TOGETHER WITH all of the following which, with the Premises, are herein collectively called the Mortgaged Property:
(a) All appurtenances and all estate and rights of Mortgagor in and to the Premises;
(b) All water and water rights, ditch and ditch rights, reservoir and reservoir rights, stock or interests in irrigation or ditch companies, royalties, minerals, oil and gas rights, lease or leasehold interests owned by Mortgagor, now or hereafter used or useful in connection with, appurtenant to or related to the Premises;
(c) All right, title and interest of Mortgagor in and to all streets, roads and public places, opened or proposed, and all easements and rights of way, public or private, now or hereafter used in connection with the Premises;
(d) All improvements, fixtures, equipment, furniture, inventory and other articles of personal property, and all rights therein, now owned or hereafter acquired by Mortgagor and affixed to, placed upon or used in connection with the Premises, and all replacements thereof and substitutions therefor (as further described in paragraph A.7); and
(e) All awards, payments or other amounts, including interest thereon, which may be made with respect to the Mortgaged Property as a result of injury to or decrease in the value of the Mortgaged Property or as a result of the exercise of the power of condemnation or eminent domain.
(f) All rights to the rents, issues and profits of the Mortgaged Property as well as the fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities (provided, however, that the Mortgagor shall be entitled to the collect and retain the above until a Default has occurred hereunder).
FOR THE PURPOSE OF SECURING, in such order of priority as Mortgagee may elect, the full and prompt payment, observance and performance when due, of all present and future obligations and indebtedness of Mortgagor to Mortgagee, whether at the stated time, by acceleration or otherwise, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, whether or not of the same or similar class or of like kind to any indebtedness incurred contemporaneously with the execution of this Mortgage, and whether now or hereafter existing, or due or to become due, including without limitation, the following:
(a) Obligations under Promissory Note . Payment of any and all amounts in connection with and/or pursuant to the indebtedness evidenced by that certain Promissory Note from Mortgagor to Mortgagee of even date herewith, in the original principal sum of One Million Eight Hundred Ten Thousand and No/100 Dollars ($1,810,000.00) (the Note) with a maturity date of June 8 th , 2022, with interest thereon according to the provisions thereof, and all obligations of Mortgagor under, in connection with and/or pursuant to this Mortgage granted by Mortgagor as security for payment of the foregoing indebtedness; and
(b) All Sums in Connection with Note and Mortgage . All sums advanced or expenses or costs paid or incurred (including without limitation reasonable attorneys fees and other legal expenses) by Mortgagee pursuant to or in connection with the Note, Guarantee or this Mortgage, plus any interest on such sums, expenses or costs; and
(c) Any Changes to Note . Any extensions, amendments, modifications, changes, substitutions, restatements, renewals or increases or decreases to the Note and all other indebtedness secured by this Mortgage; and
(d) Any Additional Loans . Such additional sums with interest thereon as may be hereafter borrowed from Mortgagee, its successors or assigns, by the then record owner or owners of the Mortgaged Property when evidenced by another promissory note or notes, which are by the terms thereof secured by this Mortgage; and
(e) Any and All Other Indebtedness . All other indebtedness, obligations and liabilities of any kind, of Mortgagor to Mortgagee, now or hereafter existing, absolute or contingent, direct or indirect, joint and/or several, due or not due, secured or unsecured, arising by operation of law or otherwise including indebtedness, obligations and liabilities to Mortgagee of Mortgagor as a member of any partnership, syndicate or association or other group and whether incurred by Mortgagor as principal, surety, endorser, guarantor, accommodation party or otherwise, and any obligations which give rise to an equitable remedy for breach of performance if such breach gives rise to an obligation by Mortgagor to pay Mortgagee, and including any judgments in connection with any of the foregoing.
This Mortgage shall secure all of such obligations up to the maximum principal amount of One Million Eight Hundred Ten Thousand and No/100 Dollars ($1,810,000.00) and such amount may be advanced and repaid in whole or in part and again advanced and repaid in whole or in part from time to time without affecting the existence or priority of the lien of this Mortgage and this total shall limit only the total amount of principal which may be secured by this Mortgage at any one time.
A. PROVISIONS RELATING TO THE MORTGAGED PROPERTY
A.1 Taxes and Governmental Claims and Other Liens . Mortgagor agrees to pay or cause to be paid, prior to the date they would become delinquent if not paid, all taxes, assessments and governmental charges whatsoever levied upon or assessed or charged against the Mortgaged Property, including, without limitation, all water and sewer taxes, assessments and other charges, taxes, impositions and rents, if any. Mortgagor shall give to Mortgagee a receipt or receipts, or certified copies thereof, evidencing every such payment by Mortgagor, not later than forty-five (45) days after such payment is made but not later than forty-five (45) days after such payment would become delinquent if not paid. Mortgagor also agrees to promptly and faithfully pay, satisfy, and obtain the release of all other claims, liens, encumbrances, and contracts, affecting or purporting to affect the title to, or which may be or appear to be liens on, the Mortgaged Property or any part thereof, and all costs, charges, interest and penalties on account thereof, including, without limitation, the claims of all persons supplying labor or materials to the Mortgaged Property and to give Mortgagee, upon demand, evidence satisfactory to Mortgagee of the payment, satisfaction or release thereof.
A.2 Insurance . Mortgagor agrees to keep the Mortgaged Property insured against loss or damage by fire and other casualty with extended coverage and against any other risks or hazards which in the opinion of Mortgagee should be insured against, and in any case against all risks which persons engaged in the same business as is carried on at the Premises customarily insure against, with the minimum amount of said insurance to be no less than the amount of the Note. Mortgagor shall also carry insurance against the risk of rental or business interruption at the Premises, in an amount deemed satisfactory by Mortgagee. All of such insurance shall be placed with a company or companies and in such form and with such endorsements as may be approved or required by Mortgagee. Loss under all such insurance shall be payable to Mortgagee in accordance with this paragraph, and all such insurance policies shall be endorsed with a standard, non-contributory Mortgagees clause in favor of Mortgagee. Mortgagor shall also carry public liability insurance, in such form, amount and with such companies as Mortgagee may from time to time require, naming Mortgagee as an additional insured. The policy or policies evidencing all insurance referred to in this paragraph and receipts for the payments of premiums thereon shall be delivered to and held by Mortgagee. All such insurance policies shall contain a provision requiring at least ten (10) days notice to Mortgagee prior to any cancellation or modification. Mortgagor shall give Mortgagee satisfactory evidence of renewal of all such policies with premiums paid at least thirty (30) days before expiration. Mortgagor agrees to pay all premiums on such insurance as they become due, and will not permit any condition to exist on or with respect to the Mortgaged Property which would wholly or partially invalidate any insurance thereon. Mortgagee shall not by the fact of approving, disapproving, accepting, preventing, obtaining or failing to obtain any such insurance, incur any liability for the form or legal sufficiency or absence of insurance contracts, solvency of insurers, or payment of losses, and Mortgagor hereby expressly assumes full responsibility therefor and all liability, if any, thereunder. Effective upon any default hereunder, all of Mortgagors right, title and interest in and to all such policies and any unearned premiums paid thereon are hereby assigned to Mortgagee, which shall have the right, but not the obligation, to assign the same to any purchaser of the Mortgaged Property at any foreclosure sale or other disposition thereof. The requirements of Mortgagee for insurance under the provisions of this paragraph may be modified or amended in whole or in part by Mortgagee, in its reasonable discretion, and Mortgagor agrees, upon any expiration of any existing policy or policies of insurance, to provide a replacement policy or policies which shall meet such amended or modified insurance standards. In the event of a loss, Mortgagor shall give immediate written notice to the insurance carrier and Mortgagee. Mortgagor hereby appoints Mortgagee its attorney-in-fact for the purposes hereinafter set out, and authorizes and empowers Mortgagee, at Mortgagees option and in Mortgagees sole discretion as attorney-in-fact for Mortgagor, to make proof of loss, to adjust and prosecute any action arising from such insurance policies, to collect and receive insurance proceeds, and to deduct therefrom Mortgagees expenses incurred in the collection of such proceeds. Mortgagor understands and agrees that the power of attorney hereby granted to Mortgagee is a power coupled with an interest and is irrevocable until Mortgagees interest hereunder is terminated by the payment and performance of all of Mortgagors obligations and indebtedness secured hereby. In the event of any insured damage to or destruction of the Mortgaged Property or any part thereof (herein called an Insured Casualty), if (A) in the reasonable judgment of Mortgagee, the Mortgaged Property can be restored within ten (10) months after insurance proceeds are made available to an economic unit not less valuable and not less useful than the same was prior to the
Insured Casualty, and after such restoration will adequately secure the outstanding balance of the Indebtedness, and (B) no Event of Default (hereinafter defined) shall have occurred and be then continuing, then the proceeds of insurance may, in Mortgagees sole discretion, be applied to reimburse Mortgagor for the cost of restoring, repairing, replacing or rebuilding the Mortgaged Property or part thereof subject to Insured Casualty, as provided below; and Mortgagor hereby covenants and agrees forthwith to commence and diligently to prosecute such restoring, repairing, replacing or rebuilding; provided, however, in any event Mortgagor shall pay all costs (and if required by Mortgagee, Mortgagor shall deposit the total thereof with Mortgagee in advance) of such restoring, repairing, replacing or rebuilding in excess of the net proceeds of insurance made available pursuant to the terms hereof. Notwithstanding the above, the proceeds of insurance collected upon any Insured Casualty shall, at the option of Mortgagee, in its sole discretion, be applied to the payment of the Indebtedness, whether or not then due, or applied to reimburse Mortgagor for the cost of restoring, repairing, replacing or rebuilding the Mortgaged Property or part thereof subject to the Insured Casualty, in the manner set forth below. Any such application to the Indebtedness shall not be considered a voluntary prepayment requiring payment of the prepayment consideration provided in the Note, and shall not reduce or postpone any payments otherwise required pursuant to the Note, other than the final payment on the Note. If proceeds of insurance, if any, are made available to Mortgagor for the restoring, repairing, replacing or rebuilding of the Mortgaged Property, Mortgagor hereby convenants to restore, repair, replace or rebuild the same to be of at least equal value and of substantially the same character as prior to such damage or destruction, all to be effected in accordance with applicable law and plans and specifications approved in advance by Mortgagee. If Mortgagor is entitled to reimbursement out of insurance proceeds held by Mortgagee, such proceeds shall be disbursed from time to time upon Mortgagee being furnished with (1) evidence satisfactory to it (which evidence may include inspection[s] of the work performed) that the restoration, repair, replacement and rebuilding covered by the disbursement has been completed in accordance with plans and specifications approved by Mortgagee, (2) evidence satisfactory to it of the estimated cost of completion of the restoration, repair, replacement and rebuilding, (3) funds, or, at Mortgagees option, assurances satisfactory to Mortgagee that such funds are available, sufficient in addition to the proceeds of insurance to complete the proposed restoration, repair, replacement and rebuilding, and (4) such architects certificates, waivers of lien, contractors sworn statements, title insurance endorsements, bonds, plats of survey and such other evidences of cost, payment and performance as Mortgagee may reasonably require and approve; and Mortgagee may, in any event, require that all plans and specifications for such restoration, repair, replacement and rebuilding be submitted to and approved by Mortgagee prior to commencement of work. With respect to disbursements to be made by Mortgagee: (A) no payment made prior to the final completion of the restoration, repair, replacement and rebuilding shall exceed ninety percent (90%) of the value of the work performed from time to time: (B) funds other than proceeds of insurance shall be disbursed prior to disbursement of such proceeds; and (C) at all times, the undisbursed balance of such proceeds remaining in the hands of Mortgagee, together with funds deposited for that purpose or irrevocably committed to the satisfaction of Mortgagee by or on behalf of Mortgagor for that purpose, shall be at least sufficient in the reasonable judgment of Mortgagee to pay for the cost of completion of the restoration, repair, replacement or rebuilding, free and clear of all liens or claims for lien and the costs. Any surplus which may remain out of insurance proceeds held by Mortgagee after payment of such costs of restoration,
repair, replacement or rebuilding shall be paid to any party entitled thereto. In no event shall Mortgagee assume any duty or obligation for the adequacy, form or content of any such plans and specifications, nor for the performance, quality or workmanship of any restoration, repair, replacement and rebuilding. Notwithstanding anything to the contrary contained herein, the proceeds of insurance reimbursed to Mortgagor in accordance with the terms and provisions of this Mortgage shall be reduced by the reasonable costs (if any) incurred by Mortgagee in the adjustment and collection thereof and in the reasonable costs incurred by Mortgagee of paying out such proceeds (including, without limitation, reasonable attorneys fees and costs paid to third parties for inspecting the restoration, repair, replacement and rebuilding and reviewing the plans and specifications therefor). If the insurance proceeds are applied to the payment of the sums secured by this Mortgage, any such application of proceeds to principal shall be in such order as Mortgagee may determine and, if after so applying such insurance proceeds Mortgagee reasonably determines the remaining security to be inadequate to secure the remaining indebtedness, Mortgagor shall upon written demand from Mortgagee prepay on principal such an amount as will reduce the remaining indebtedness to a balance for which adequate security is present.
A.3 Condemnation and Other Awards . If the Mortgaged Property or any part thereof is taken or diminished in value, or if a consent settlement is entered, by or under threat of such proceeding, the award or settlement payable to Mortgagor by virtue of its interest in the Mortgaged Property shall be, and by these presents is, assigned, transferred and set over unto, and to be held by Mortgagee subject to the lien and security interest of this Mortgage, and disbursed at Mortgagees option, (a) to hold all or any portion of such proceeds to be used to reimburse Mortgagor for the costs of reconstruction or repair of the Mortgaged Property, or (b) to apply all or any portion of such proceeds to the payment of the sums secured by this Mortgage, whether or not then due. In the event of a taking of the Mortgaged Property or any part thereof (herein called a Condemnation), if (A) in the reasonable judgment of Mortgagee, the Mortgaged Property can be restored within ten (10) months after the proceeds of the condemnation proceeds are made available to an economic unit not less valuable (including an assessment by Mortgagee of the impact of the termination of any Leases due to such Condemnation) and not less useful than the same was prior to the Condemnation, and after such restoration will adequately secure the outstanding balance of the Indebtedness, and (B) no Event of Default (hereinafter defined) shall have occurred and be then continuing, then the proceeds may, in Mortgagees sole discretion, be applied to reimburse Mortgagor for the cost of restoring, repairing, replacing or rebuilding the Mortgaged Property or part thereof subject to the Condemnation, as provided below; and Mortgagor hereby covenants and agrees forthwith to commence and diligently to prosecute such restoring, repairing, replacing or rebuilding; provided, however, in any event Mortgagor shall pay all costs (and if required by Mortgagee, Mortgagor shall deposit the total thereof with Mortgagee in advance) of such restoring, repairing, replacing or rebuilding in excess of the net proceeds of the Condemnation made available pursuant to the terms hereof. Notwithstanding the above, the proceeds collected upon any Condemnation shall, at the option of Mortgagee, in its sole discretion, be applied to the payment of the Indebtedness, whether or not then due, or applied to reimburse Mortgagor for the cost of restoring, repairing, replacing or rebuilding the Mortgaged Property or part thereof subject to the Condemnation, in the manner set forth below. Any such application to the Indebtedness shall not
be considered a voluntary prepayment requiring payment of the prepayment consideration provided in the Note, and shall not reduce or postpone any payments otherwise required pursuant to the Note, other than the final payment on the Note. If proceeds of the Condemnation, if any, are made available to Mortgagor for the restoring, repairing, replacing or rebuilding of the Mortgaged Property, Mortgagor hereby covenants to restore, repair, replace or rebuild the same to be of at least equal value and of substantially the same character as prior to such damage or destruction, all to be effected in accordance with applicable law and plans and specifications approved in advance by Mortgagee. If Mortgagor is entitled to reimbursement out of the proceeds of the Condemnation held by Mortgagee, such proceeds shall be disbursed from time to time upon Mortgagee being furnished with (1) evidence satisfactory to it (which evidence may include inspection[s] of the work performed) that the restoration, repair, replacement and rebuilding covered by the disbursement has been completed in accordance with plans and specifications approved by Mortgagee, (2) evidence satisfactory to it of the estimated cost of completion of the restoration, repair, replacement and rebuilding, (3) funds, or, at Mortgagees option, assurances satisfactory to Mortgagee that such funds are available, sufficient in addition to the proceeds of Condemnation to complete the proposed restoration, repair, replacement and rebuilding, and (4) such architects certificates, waivers of lien, contractors sworn statements, title insurance endorsements, bonds, plats of survey and such other evidences of cost, payment and performance as Mortgagee may reasonably require and approve; and Mortgagee may, in any event, require that all plans and specifications for such restoration, repair, replacement and rebuilding be submitted to and approved by Mortgagee prior to commencement of work. With respect to disbursements to be made by Mortgagee: (A) no payment made prior to the final completion of the restoration, repair, replacement and rebuilding shall exceed ninety percent (90%) of the value of the work performed from time to time: (B) funds other than proceeds of the Condemnation shall be disbursed prior to disbursement of such proceeds; and (C) at all times, the undisbursed balance of such proceeds remaining in the hands of Mortgagee, together with funds deposited for that purpose or irrevocably committed to the satisfaction of Mortgagee by or on behalf of Mortgagor for that purpose, shall be at least sufficient in the reasonable judgment of Mortgagee to pay for the cost of completion of the restoration, repair, replacement or rebuilding, free and clear of all liens or claims for lien and the costs. Any surplus which may remain out of the Condemnation proceeds held by Mortgagee after payment of such costs of restoration, repair, replacement or rebuilding shall be paid to any party entitled thereto. In no event shall Mortgagee assume any duty or obligation for the adequacy, form or content of any such plans and specifications, nor for the performance, quality or workmanship of any restoration, repair, replacement and rebuilding. Notwithstanding anything to the contrary contained herein, the proceeds of the Condemnation reimbursed to Mortgagor in accordance with the terms and provisions of this Mortgage shall be reduced by the reasonable costs (if any) incurred by Mortgagee in the adjustment and collection thereof and in the reasonable costs incurred by Mortgagee of paying out such proceeds (including, without limitation, reasonable attorneys fees and costs paid to third parties for inspecting the restoration, repair, replacement and rebuilding and reviewing the plans and specifications therefor). If the Condemnation proceeds are applied to the payment of the sums secured by this Mortgage, any such application of proceeds to principal shall be in such order as Mortgagee may determine and, if after so applying such proceeds Mortgagee reasonably determines the remaining security to be inadequate to secure the remaining indebtedness, Mortgagor shall upon written demand from Mortgagee prepay on
principal such an amount as will reduce the remaining indebtedness to a balance for which adequate security is present.
A.4 Condition of Mortgaged Property .
(a) Mortgagor agrees to properly care for and keep the Mortgaged Property in good condition and repair. Without the prior written consent of Mortgagee, Mortgagor agrees not to cause or permit any building or improvement which constitutes a part of the Premises to be removed, demolished or structurally altered, in whole or in part, or any fixture or article of personal property which constitutes a portion of the Mortgaged Property to be removed (other than in the ordinary course of Mortgagors business), damaged or destroyed. Mortgagee consents to the removal and replacement of fixtures and articles of personal property if such articles of personal property are simultaneously replaced with fixtures and articles of equal or greater value, that are free and clear of all liens other than that of Mortgagees, and if the value of the Mortgaged Property is not diminished thereby. Mortgagor agrees not to abandon the Premises or leave the Premises unprotected, unguarded, vacant or deserted, and not to cause or permit any waste to the buildings, improvements or fixtures constituting any portion of the Mortgaged Property. Mortgagor agrees (i) to repair, restore and reconstruct in good and workmanlike manner to the condition required hereby any improvement which constitutes a part of the Mortgaged Property which may be damaged or destroyed, in accordance with the provisions of Paragraph A.2 hereof (provided however, Mortgagor shall not be required to so repair, restore or reconstruct if Mortgagee elects under Paragraph A.2 to retain the insurance proceeds and apply them to the sums secured by this Mortgage, and further provided, if Mortgagee elects to use such proceeds to reimburse Mortgagor for the costs of such repair, restoration or reconstruction, provided however, if such proceeds are not adequate, Mortgagor shall deposit with Mortgagee such additional funds as may be required to accomplish such repair, restoration or reconstruction); (ii) not to permit any lien of mechanics or materialmen to attach to the Mortgaged Property, provided, however, that the filing of any such lien shall not constitute a default hereunder if Mortgagor shall provide an adequate bond with respect to any such lien, in accordance with applicable law or shall provide indemnification with respect to such lien with security therefor acceptable to Mortgagee in Mortgagees sole discretion; (iii) to comply with all laws, ordinances, regulations or governmental orders affecting the Mortgaged Property or requiring any alterations or improvements thereto; (iv) not to commit, suffer or permit any act with respect to the Mortgaged Property in violation of law or of any covenants, prior encumbrances, conditions or restrictions affecting the Mortgaged Property; (v) to make or cause to be made from time to time all needed or proper replacements, repairs and renewals; (vi) to perform all obligations and pay all amounts as and when required to protect Mortgagors interest in the Premises; and (vii) to do any other act or acts, all in a timely and proper manner which from the character or use of the Mortgaged Property may be reasonably necessary to protect and preserve the value of the Mortgaged Property. Mortgagor covenants and agrees that the Mortgaged Property shall be used for a skilled nursing facility and for no other purpose without Mortgagees prior written consent.
(b) Mortgagee may, during normal business hours and upon reasonable notice to Mortgagor, enter and inspect or protect the Mortgaged Property, in person or by agent, in such
manner and to such extent as it may deem necessary. In the event that Mortgagor fails to maintain the Mortgaged Property in the manner specified herein, Mortgagee may, at its option, undertake such repairs or maintenance, for the account of Mortgagor, as Mortgagee deems necessary. The cost of any such repairs or maintenance undertaken by Mortgagee shall become immediately due and payable by Mortgagor to Mortgagee and Mortgagee shall be reimbursed therefor in accordance with the provisions of Paragraph B.2 hereof. The right of Mortgagee to undertake such repairs or maintenance shall be optional, shall not impose any duties on Mortgagee, and shall not be deemed to cure any Default under this Mortgage for failure to maintain the Mortgaged Property in accordance with the covenants herein.
A.5 Alterations and Additions . Mortgagor agrees that, as to any alteration, addition, construction or improvement to be made upon the Premises, all plans and specifications therefor shall be prepared by or on behalf of Mortgagor and shall be subject to Mortgagees written approval in advance of the commencement of work; once commenced, all work thereunder shall be prosecuted with due diligence; all construction thereof will be in substantial accordance with the plans and specifications so approved and will comply with all laws, ordinances or regulations made or promulgated by any governmental agency or other lawful authority and with the rules of the applicable Board of Fire Underwriters. Should Mortgagor at any time fail to comply with any notice or demand by any governmental agency, which alleges a failure to comply with any such plan, specification, law, ordinance or regulation, such failure shall, at Mortgagees option, constitute a default hereunder.
A.6 Status of Title . Mortgagor represents and warrants that it is the lawful owner of the Mortgaged Property in fee simple, subject to no liens or encumbrances, except for covenants, conditions, restrictions, easements and rights-of-way of record, if any. Mortgagor represents and warrants that it has full right, power and authority to convey and mortgage the Mortgaged Property and to execute this Mortgage. Mortgagor also agrees to protect, preserve and defend its interest in the Mortgaged Property and title thereto, including full performance of any prior claim or lien; to appear and defend this Mortgage in any action or proceeding affecting or purporting to affect the Mortgaged Property, the lien of this Mortgage thereon or any of the rights of Mortgagee hereunder, and to pay all costs and expenses incurred by Mortgagee in connection with any such action or proceeding, including, without limitation, reasonable attorneys fees, whether any such action or proceeding progresses to judgment and whether brought by or against Mortgagee, Mortgagor, or the Mortgaged Property. Mortgagee shall be reimbursed for any such costs and expenses in accordance with the provisions of Paragraph B.2 hereof. Mortgagee may, but shall not be under any obligation to, appear or intervene in any such action or proceeding and retain counsel therein and defend the same or otherwise take such action therein as it may deem advisable or may settle or compromise the same and, for any of such purposes, may expend and advance such sums of money as it may deem necessary, and Mortgagee shall be reimbursed therefor in accordance with the provisions of Paragraph B.2 hereof. Notwithstanding the above, Mortgagee consents to a second lien from Mortgagor to Mortgagee in the principal amount of $1,267,000.00 which shall subsequently be replaced by a subordinate lien in favor of Economic Development Corporation of Fulton County in the principal amount of $1,304,000.00.
A.7 Personal Property Security Interest .
(a) This Mortgage shall cover, and Mortgagor hereby grants to Mortgagee a security interest in, all property now or hereafter affixed or attached or incorporated upon the Mortgaged Property including without limitation all furnaces, heating equipment, air conditioners, fans, water heaters, pipes, ducts, wiring and electrical fixtures, conduits, plumbing, sinks, partitions, restroom fixtures, light fixtures, windows and window coverings, and floor, ceiling and wall coverings, and all replacements thereof and substitutions therefor, which, to the fullest extent permitted by law shall be deemed fixtures and a part of the real property. In addition, this Mortgage shall cover, and Mortgagor hereby grants to Mortgagee a security interest in: (i) all building materials, fixtures, equipment and other personal property to be incorporated into any improvements constructed on the Premises; (ii) all interest of Mortgagor in all goods, materials, supplies, fixtures, equipment, machinery, furniture and furnishing and other personal property which are now or hereafter affixed to, placed upon or used in connection with, the Premises, and all replacements thereof, and substitutions therefor; (iii) all interest of Mortgagor in all rents, issues and profits, as well as the fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities, and insurance policies, insurance and condemnation awards and proceeds, tradenames, trademarks and service marks, arising from or related to the Premises and any other business conducted on the Premises; (iv) all of Mortgagors interest in and rights pursuant to any franchise or licensing agreement or other similar agreement with respect to the Premises but only to the extent such grant does not violate any such agreement; and (v) all books, records and files relating to, any of the foregoing. The security interests hereby granted are first and prior liens on the property described. To the extent any property covered by this Mortgage consists of rights in action or personal property covered by the Uniform Commercial Code, this Mortgage constitutes a Security Agreement and is intended to create a security interest in such property in favor of Mortgagee. This Mortgage shall be self-operative with respect to such property, but Mortgagor agrees to execute and deliver on demand such security agreements, financing statements and other instruments as Mortgagee may request in order to manifest or perfect the lien hereof more specifically upon any of such property. If the lien of this Mortgage on any property is subject to a prior security agreement covering such property, then in the event of any default hereunder, all the right, title and interest of Mortgagor in and to any and all deposits made in connection with the transaction whereby such prior security agreement was made is hereby assigned to Mortgagee, together with the benefit of any payments now or hereafter made in connection with such transactions.
(b) Mortgagor agrees that all property of every nature and description, whether real or personal covered by this Mortgage, together with all personal property covered by any separate security interests granted to Mortgagee, are encumbered as one unit, and that upon default by Mortgagor under the Note, or under this Mortgage or any security agreement given pursuant to this paragraph, this Mortgage and such security interest, at Mortgagees option, may be foreclosed and the security sold in the same proceedings, and all of the Premises (both realty and personalty) may, at Mortgagees option, be sold as such in one unit as a going business. The filing of any financing statement relating to any personal property or rights or interest generally or specifically described herein shall not be construed to diminish or alter any of Mortgagees rights or priorities hereunder.
A.8 Severability . Should any term, provision, covenant or condition of this Mortgage be held to be void or invalid, the same shall not affect any other term, provision, covenant or condition of this Mortgage, but the remainder hereof shall be effective as though such term, provision, covenant or condition had not been contained herein.
A.9 Usury Disclaimer . Any provision contained herein or in the Note or in any other instrument now or hereafter evidencing, securing or otherwise relating to any indebtedness secured by this Mortgage to the contrary notwithstanding, neither Mortgagee nor the holder of any such indebtedness shall be entitled to receive or collect, nor shall Mortgagor be obligated to pay, interest on any of the secured indebtedness in excess of the maximum rate of interest at the particular time in question, if any, which, under applicable law, Mortgagee is then permitted to charge Mortgagor (herein the Maximum Rate) provided that the Maximum Rate shall be automatically increased or decreased as the case may be, without notice to Mortgagor from time to time as of the effective time of each change in the Maximum Rate, and if any provision herein or in the Note or in such other instrument shall ever be construed or held to permit the collection or to require the payment of any amount of interest in excess of that permitted by applicable law, the provisions of this Paragraph A.9 shall control and shall override any contrary or inconsistent provision herein or in the Note or in such other instrument. The intention of the parties being to conform strictly to the usury limitations under applicable law, the Note, this Mortgage, and each other instrument now or hereafter evidencing or relating to any indebtedness secured by this Mortgage shall be held subject to reduction to the maximum amount allowed under said applicable law as now or hereafter construed by the courts having jurisdiction, and any payment by Mortgagor over the Maximum Rate shall be applied to reduce the principal amount due and owing to Mortgagee.
A.10 Impounds . Upon an Event of Default, Mortgagor shall, if requested by Mortgagee, deposit with Mortgagee or Mortgagees designee on each monthly payment date as set forth in the Note one-twelfth (1/12) of the reasonably estimated amount of real estate taxes assessed or to be assessed against the Mortgaged Property for the then current year, together with one-twelfth (1/12) of the reasonably estimated total of all insurance premiums required to be paid for the then current year, as estimated by Mortgagee, together with any extra amount necessary so that the next installments of real property taxes and insurance premiums may be paid from the deposit. Such moneys shall at proper times be progressively returned to Mortgagor for use in the actual payment of said taxes and said insurance premiums or, at the sole election of Mortgagee, Mortgagee may use said moneys in actual payment of such taxes and premiums, but nothing in this paragraph shall release Mortgagor from its obligations to pay said taxes as the same become due and payable under the provisions hereof and to maintain in force all insurance policies as required hereby. All impounds required under this paragraph shall be deposited in a non-interest bearing account of Mortgagee, to be withdrawn by Mortgagee at such times and in such amounts as shall be deemed appropriate by Mortgagee. All amounts deposited under this paragraph are hereby assigned to Mortgagee as additional security for all indebtedness secured by this Mortgage, and so long as any Default as set forth herein including a default in the payment of any money or the performance of any covenant or obligation herein contained or secured hereby exists, then any deposits made by Mortgagor under this paragraph may, at the option of
Mortgagee, be applied to the payment of principal and interest or other indebtedness secured hereby, in lieu of being applied to any of the purposes of this paragraph A.10 previously stated.
A.11 Environmental Representations and Warranties . Mortgagor represents and warrants to Mortgagee that: (a) during the period of Mortgagors ownership of the Mortgaged Property, there has not been, nor will there be in the future, any use, generation, manufacture, storage, treatment, disposal, release, or threatened release of any hazardous waste or substance by any person or entity on, or about the Mortgaged Property; (b) Mortgagor has no knowledge of, or reason to believe that there has been, except as previously disclosed to and acknowledged by Mortgagee in writing, (i) any use, generation, manufacture, storage, treatment, disposal, release, or threatened release of any hazardous waste or substance by any prior owners or occupants of the Mortgaged Property or (ii) any actual or threatened litigation or claims of any kind by any person or entity relating to such matters; and (c) except as previously disclosed to and acknowledged by Mortgagor in writing, (i) neither Mortgagor nor any tenant, contractor, agent, or other authorized user of the Mortgaged Property shall use, generate, manufacture, store, treat, dispose of, or release any hazardous waste or substance on, under, or about the Mortgaged Property and (ii) all such activity shall be conducted in full compliance with all applicable federal, state, and local laws, regulations and ordinances. Mortgagor, at any time during usual business hours, authorizes Mortgagee and its agents to enter upon the Mortgaged Property to make such inspections and tests, including, without limitation, intrusive tests, at Mortgagors expense, as Mortgagee may deem appropriate to determine compliance with this section of the Mortgage and the absence of any hazardous waste or hazardous substance on or near the Mortgaged Property. Any inspections or tests made by Mortgagee shall be for Mortgagees purposes only and shall not be construed to create any responsibility or liability on the part of Mortgagee. Mortgagor hereby (a) releases and waives any future claims against Mortgagee for indemnity or contribution in the event Mortgagor becomes liable for cleanup or other costs associated therewith, and (b) agrees to indemnify and hold harmless Mortgagee against any and all claims, losses, liabilities, damages, penalties, and expenses, which Mortgagee 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 Mortgagors ownership or interest in the Mortgaged Property, whether or not the same was or should have been known to Mortgagor. The provisions of this paragraph of the Mortgage, including the obligation to indemnify, shall survive the payment of the indebtedness secured herein and the satisfaction and reconveyance of the lien of this Mortgage and shall not be affected by Mortgagees acquisition of any interest in the Mortgaged Property, whether by foreclosure or otherwise. The terms hazardous waste, disposal, release, and threatened release, as used in this Mortgage shall have the same meanings as set forth in 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 Act, 49 U.S.C. Section 6901 et seq., as amended, or other applicable state or federal laws, rules or regulations adopted pursuant to any of the foregoing. The term hazardous waste and hazardous substance shall also include, without limitation, petroleum and petroleum by-products and asbestos. Notwithstanding anything contained in this paragraph, Mortgagee acknowledges that the Borrower may use office supplies,
cleaning substances, medical supplies and materials used in the ordinary course of operation for a nursing home facility and that such use is consistent with all Environmental Laws.
A.12 Time of the Essence . Time of each payment and performance of each of Mortgagors obligations pursuant to the Note, this Mortgage, and each other instrument or obligation of Mortgagor secured by this Mortgage or given in connection with this Mortgage is specifically declared to be of the essence.
B. GENERAL PROVISIONS .
B.1 Non-Waiver . Mortgagees acceptance of any sum after the same is due shall not constitute a waiver of the right either to require prompt payment, when due, of all other sums hereby secured or to declare a Default as herein provided. The acceptance by Mortgagee of any sum in an amount less than the sum then due shall be deemed an acceptance on account only and upon condition that it shall not constitute a waiver of the obligation of Mortgagor to pay the entire sum then due, and Mortgagors failure to pay said entire sum then due shall be and continue to be a default notwithstanding such acceptance of such amount on account, as aforesaid, and Mortgagee shall be at all times thereafter and until the entire sum then due shall have been paid, and notwithstanding the acceptance by Mortgagee thereafter of further sums on account, or otherwise, entitled to exercise all rights in this Mortgage conferred upon Mortgagee, upon the occurrence of a default, and the right to proceed with a sale under any notice of default and election to sell shall in no way be impaired, whether any of such amounts are received prior or subsequent to such notice. Consent by Mortgagee to any transaction or action which is subject to consent or approval of Mortgagee hereunder shall not be deemed a waiver of the right to require such consent or approval to future or successive transactions or actions.
B.2 Substitute Performance by Mortgagee . Should Mortgagor fail to pay or perform when required hereunder any obligation of Mortgagor hereunder, or if any action or proceeding is commenced which affects the Mortgaged Property or title thereto or the interest of Mortgagee therein, including but not limited to, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving bankruptcy, insolvency or reorganization, Mortgagee may, but shall not be obligated to, without regard to the adequacy of its security and without prejudice to its right to declare a Default hereunder, make such appearances, disburse such sums or take such actions as Mortgagee reasonably deems necessary to protect Mortgagees interest, including, but not limited to disbursement of attorneys fees and entry upon the Mortgaged Property to make repairs without notice or demand to or upon Mortgagor. Mortgagor hereby grants to Mortgagee an easement to enter upon the Property at any time, which easement shall continue for the duration of this Mortgage. The payment by Mortgagee of any delinquent tax, assessment or governmental charge, or any lien or encumbrance which Mortgagee in good faith believes may be prior to the lien of this Mortgage, or any insurance premium for insurance which Mortgagor is obligated to provide hereunder but which Mortgagee in good faith believes has not been supplied, shall be conclusive between Mortgagor and Mortgagee as to the propriety and amount so paid. Mortgagee shall be subrogated to all rights, equities and liens discharged by any such expenditure. After any Default hereunder and whether or not any action is instituted to enforce any provision of this Mortgage or the Note, Mortgagor promises to pay to Mortgagee, as
incurred, all reasonable sums incurred by Mortgagee for attorneys fees and costs to enforce this Mortgage or the Note or to defend any claims arising from this Mortgage or the Note. Any amounts so paid pursuant to this Paragraph B.2, or the cost of such performance, together with all costs and expenses incurred by Mortgagee in connection with such payment or performance, and any amounts for which Mortgagor is specifically obligated to reimburse Mortgagee pursuant to provisions hereof, including reasonable attorneys fees and interest on all such amounts at the default rate, as described in the Note, from the date paid by Mortgagee until repaid to Mortgagee, shall be payable by Mortgagor to Mortgagee immediately upon notice to Mortgagor of the amount owing, without further demand, shall be secured by this Mortgage and shall be added to the judgment in any suit brought by Mortgagee against Mortgagor. Failure to pay any such amount within ten (10) days after notice to Mortgagor of the amount owing shall constitute a Default hereunder and Mortgagee may, at its option, accelerate and demand full payment of all amounts secured hereby.
B.3 Powers of Mortgagee . At any time or from time to time, without liability therefor and without notice, without affecting the personal liability of any person or entity for the payment of the indebtedness secured hereby and without affecting the lien of this Mortgage upon the Mortgaged Property for the full amount of all amounts secured hereby, Mortgagee may (a) release all or any part of the Mortgaged Property, (b) consent to the making of any map or plat thereof, (c) join in granting any easement thereon or in creating any covenants or conditions restricting use or occupancy thereof, or (d) join in any extension agreement or in any agreement subordinating the lien or charge hereof.
B.4 Certain Definitions . The term Mortgagee means the original Mortgagee hereunder, its successors or assigns, and any future owner and holder, including pledgee, of the Note. All obligations of each Mortgagor hereunder are joint and several, and this Mortgage in all its parts applies to and binds the heirs, personal representatives, administrators, executors, successors and assigns of all and each of the parties hereto. If Mortgagor is two or more entities or persons, the term Mortgagor as used herein shall refer to them collectively, as well as individually.
B.5 Financial Statements and Other Disclosures . Mortgagor represents and warrants to Mortgagee that all financial statements and credit applications delivered by Mortgagor to Mortgagee accurately reflect the financial condition and operations of Mortgagor at the times and for the periods therein stated. So long as this Mortgage is in force and effect, Mortgagor agrees to deliver to Mortgagee, within 90 days after the end of each of Mortgagors fiscal years, an income statement on the use and operation of the Mortgaged Property, a complete and accurate copy of Mortgagors federal tax returns and financial statements, including a balance sheet, profit and loss statement and aging of accounts receivable and accounts payable, all schedules, all prepared in accordance with generally accepted accounting principles certified by an officer of the Mortgagor, showing the consolidated financial position of Mortgagor at the close of such fiscal year, and concurrently therewith a certificate of its Managing Member or chief financial officer to the effect that such officer is not aware of any condition or event which constitutes a default under this Mortgage or a default under any franchise agreement to which Mortgagor is a party, or under any notes or obligations or which, with the mere passage of time or notice, or
both, would constitute a default under this Mortgage or a default under any such franchise agreement or under any notes or obligations of the Mortgagor. Mortgagor hereby agrees to immediately notify Mortgagee in writing as to the existence of any notes payable by Mortgagor, or any related person or entity, to any franchisor for unpaid royalties or other unpaid obligations to such franchisor.
B.6 Amendment . No alteration, amendment or waiver of this Mortgage, or the Note shall be effective unless in writing and signed by the parties sought to be charged or bound thereby.
B.7 Governing Law . This Mortgage will 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 creation, perfection, priority and enforcement of Mortgagees rights and remedies against the Mortgaged 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 Mortgage is challenged or questioned, such provision shall be governed by whichever applicable state or federal law would uphold or would enforce such challenged or questioned provision. The loan transaction which 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 Mortgagee in the State of Georgia.
B.8 Statement Fee . For any statement requested by Mortgagor regarding the obligations and indebtedness secured by this Mortgage, or regarding the amounts held in any impound or reserve fund established hereunder, Mortgagee may charge a reasonable fee, not to exceed any maximum amount provided by any applicable law at the time of the request therefor.
B.9 Notices .
(a) All notices required or permitted to be given hereunder shall be delivered in person or by United States mail, postage prepaid, registered or certified with return receipt requested. If any written notice is mailed, it shall be deemed effective on the earlier of actual receipt or on the third (3rd) calendar day following the date of mailing. Notice given in person shall be effective only if, and when, received. The addresses of the parties for delivery of notices shall be the addresses set forth above.
(b) Any party may change its address for notice hereunder to any other location within the continental United States by giving ten (10) days notice to other parties in the manner set forth above.
B.10 Representations and Warranties of Mortgagor . Mortgagor and each signatory who signs on Mortgagors behalf hereby represents and warrants as follows:
(a) That this Mortgage, the Note and all other documents executed and delivered to Mortgagee in connection herewith were executed in accordance with the requirements of law and are valid, binding and enforceable in accordance with their terms.
(b) That the execution of this Mortgage, the Note and any other document executed and delivered to Mortgagee in connection herewith, and the full and complete performance of the provisions hereof and thereof, will not result in any breach of, or constitute a default under any indenture, mortgage, bank loan or credit agreement or other agreement or instrument to which Mortgagor is a party or by which Mortgagor is bound, and will not result in the creation of any lien, charge or encumbrance (other than those in favor of Mortgagee) upon any property or assets of Mortgagor.
(c) That as of the date of execution of this Mortgage, Mortgagor is the owner of the Mortgaged Property.
(d) The improvements on the Premises, existing and proposed, and their intended use will, when completed, comply fully with all applicable environmental, air quality, zoning, planning, building, subdivision and other governmental laws and requirements. Mortgagor specifically warrants that the existing improvements on each property listed on Exhibit A attached hereto and made a part hereof by reference, complies with all local zoning ordinances.
(e) The Premises are composed of one or more whole tax parcels with a separate tax assessment, independent of any land or improvements not encumbered by this Mortgage.
(f) There is no litigation pending or, to the best of Mortgagors knowledge, threatened against the Mortgaged Property. There is no litigation pending or, to the best of Mortgagors knowledge, threatened against Mortgagor, which might, so far as Mortgagor can now reasonably foresee, have a material adverse effect on Mortgagors ability to repay the Note or to perform the provisions of this Mortgage or of any other document delivered to Mortgagee in connection herewith. Mortgagor has disclosed all litigation pending and threatened against Mortgagor to Mortgagee in writing, and will disclose all future such litigation to Mortgagee in writing within thirty (30) days of its receipt of notice thereof.
(g) The Mortgaged Property complies with all applicable subdivision laws, ordinances, regulations, rules and other requirements.
(h) Mortgagor is not in default with respect to any existing indebtedness or obligation.
(i) Mortgagor has the power and authority to enter into and perform all terms and conditions of this Mortgage, the Note, and all other documents executed in connection with this transaction, and to incur the obligations herein and therein provided for.
(j) Unless previously disclosed to Mortgagee in writing, Mortgagor has not made any agreement or taken any action which may cause anyone to become entitled to a commission or finders fee as a result of the making of any loan to Mortgagor by Mortgagee.
These representations and warranties may be relied upon by Mortgagee with or without investigation by Mortgagee and they shall survive any such investigation, and shall continue and may be relied upon by Mortgagee until all obligations secured by this Mortgage have been paid in full.
B.11 Extensions and Modifications . From time to time, without affecting the obligation of Mortgagor or Mortgagors successors or assigns to pay the sums secured by this Mortgage and to observe the obligations of Mortgagor contained herein, without affecting the guaranty of any person, corporation, partnership or other entity for payment of the indebtedness secured hereby, and without affecting the lien or priority of lien hereof on the Mortgaged Property, Mortgagee may, at Mortgagees option, without giving notice to or obtaining the consent of Mortgagor, Mortgagors successors or assigns or of any other lienholders or guarantors, and without liability on Mortgagees part, extend the time for payment of said indebtedness or any part thereof, reduce the payments thereon, release anyone liable on any of said indebtedness, accept a renewal note or notes therefor, modify the terms and time of payment of said indebtedness, release from this Mortgage any part of the Mortgaged Property, take or release other or additional security, reconvey any part of the Mortgaged Property, consent to the granting of any easement or dedication, join in any extension or subordination agreement and agree in writing with any person obligated to pay the same to modify the rate of interest or period of amortization of any indebtedness secured hereby or change the amount of the installments payable thereon. Mortgagor shall pay Mortgagee a reasonable service charge, together with such title insurance premiums and attorneys fees as may be incurred by Mortgagee in connection with any such action.
B.12 Waiver by Mortgagor . Mortgagor waives any requirement of presentment, demand for payment, notice of nonpayment or late payment, protest, notice of protest, notice of dishonor, and all other formalities. Mortgagor waives and releases all right of appraisement, sale, and redemption allowed under any law or laws of the State of Arkansas, or the laws of any other state or jurisdiction, including particularly all right of redemption under Ark. Code Ann. § 18-49-106 or Ark. Code Ann. § 16-66-502. Mortgagor waives all rights and/or privileges it might otherwise have to require Mortgagee to proceed against or to pursue any remedy available to Mortgagee in any particular manner or order as to any particular collateral, person or entity under any legal or equitable doctrine or principle including, without limitation, marshalling of assets and/or suretyship principles, and further agrees that Mortgagee may proceed against any or all of the assets encumbered hereby or by any other security document or instrument in the event of Default in such order and manner as Mortgagee in its sole discretion may determine. Any Mortgagor that has signed this Mortgage as a surety or accommodation party, or that has subjected its property to this Mortgage to secure the indebtedness of another, hereby expressly waives any defense arising by reason of the cessation from any cause whatsoever of the liability of Mortgagor, and waives the benefit of any statutes of limitation affecting the enforcement hereof.
B.13 Corrections . Mortgagor will, upon request of Mortgagee, promptly correct any defect, error or omission which may be discovered in the contents of this Mortgage or in the
execution or acknowledgment hereof, and will execute, acknowledge and deliver such further documents and do such further acts as may be necessary or as may be reasonably requested by Mortgagee to carry out more effectively the purposes of this Mortgage, to subject to the liens and security interests hereby created any of Mortgagors properties, rights or interest covered or intended to be covered hereby, and to perfect and maintain such liens and security interests.
B.14 Mortgagee Indemnification . Mortgagor shall and does hereby agree to indemnify and to hold Mortgagee and Mortgagees affiliates and parent companies, and all of its and their respective officers, directors, employees and agents (the Indemnified Parties), harmless from and against all claims, demands, liabilities, losses or damages (including all related costs, expenses, and reasonable attorneys fees) asserted against, imposed on or incurred by the Indemnified Parties in connection with or as a result of this Mortgage or the exercise of any rights or remedies under this Mortgage or by reason of any alleged obligations or undertakings of Mortgagee to perform or discharge any of the terms, covenants or agreements contained in this Mortgage. Should Mortgagee incur any such liability, the amount thereof, together with interest thereon at the Default Rate stated in the Note, shall be secured hereby and Mortgagor shall reimburse the Mortgagee therefor immediately upon demand.
B.15 Late Payment Charge . Mortgagor acknowledges that late payment to Mortgagee will cause Mortgagee to incur costs not contemplated by this Mortgage. Such costs include, without limitation, processing and accounting charges. Therefore, if any payment required by the Note or this Mortgage is not received by Mortgagee within ten (10) days after the due date, Mortgagee hereby may assess a late charge in the amount of five percent (5.0%) of the unpaid amount of the payment, or the maximum permitted by applicable law, whichever is less.
The parties agree that this late charge represents a reasonable sum considering all of the circumstances existing on the date of this Mortgage and represents a fair and reasonable estimate of the costs that Mortgagee will incur by reason of the late payment. The parties further agree that proof of actual damages would be costly or inconvenient. Acceptance of any late charge shall not constitute a waiver of the Default with respect to the overdue amount, and shall not prevent Mortgagee from exercising any of the other rights and remedies available to Mortgagee.
B.16 Exhibits . All of the provisions in each of the attached Exhibits are incorporated herein by this reference for all purposes.
B.17 Acknowledgment of Notice. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
C. DEFAULT PROVISIONS .
C.1 Events of Default . Any of the following shall constitute a Default hereunder:
(a) The failure of Mortgagor to pay any payment required under the Note or on any other indebtedness to Mortgagee or any payment required hereunder or under any other agreement securing the Note;
(b) The filing of any petition, or the commencement of any case or proceeding, or the entry of any order for relief, under the Federal Bankruptcy Code or any other federal or state law relating to insolvency, bankruptcy, reorganization, or composition of debts by Mortgagor or any guarantor or endorser of the Note or any other obligation of Mortgagor to Mortgagee; or any adjudication that Mortgagor or any such guarantor or endorser is insolvent or bankrupt;
(c) If Mortgagee, in good faith, believes that a substantial part of Mortgagors property is in danger of loss, misuse, seizure or confiscation;
(d) (i) The filing of any petition or the commencement of any case or proceeding described in subparagraph C.1(b) above against Mortgagor or against any endorser or guarantor of the Note or any other obligation of Mortgagor to Mortgagee, unless such petition and the case or proceeding initiated thereby are dismissed within thirty (30) days from the date of such filing; the filing of an answer by Mortgagor or such endorser or guarantor admitting the allegations of any such petition; or (ii) the appointment of or the taking of possession by a custodian, trustee or receiver for all or any assets of Mortgagor or any such endorser or guarantor, unless such appointment is vacated or dismissed or such possession is terminated within thirty (30) days from the earlier of the date of such appointment or commencement of such possession, but not later than five (5) days before the proposed sale of any assets of Mortgagor or any such endorser or guarantor by such custodian, trustee or receiver;
(e) The insolvency of Mortgagor or of any guarantor or endorser of the Note or any other obligation of Mortgagor to Mortgagee; or the execution by Mortgagor or any such guarantor or endorser of an assignment for the benefit of creditors; or the convening by Mortgagor or any such guarantor or endorser of a meeting of its creditors, or any class thereof, for purposes of effecting a moratorium upon or extension or composition of its debts; or the failure of Mortgagor or of any such guarantor or endorser to pay its debts as they mature; or if Mortgagor or any such guarantor or endorser is generally not paying its debts as they mature;
(f) The admission in writing by Mortgagor or any endorser or guarantor of the Note or any other obligation of Mortgagor to Mortgagee that it is unable to pay its debts as they mature or that it is generally not paying its debts as they mature;
(g) The liquidation, termination or dissolution of Mortgagor or any guarantor or endorser of the Note or any other obligation of Mortgagor to Mortgagee which are corporations, partnerships or joint ventures;
(h) The sale, lease, exchange, conveyance or transfer, of any legal or equitable interest in and to the Mortgaged Property, or the agreement to do so; or the mortgage, assignment, pledge or encumbrance, either voluntarily or involuntarily, or the agreement to do so, without the prior written consent of Mortgagee being first obtained, or the levy, attachment, foreclosure, or seizure, of (i) any right, title or interest of Mortgagor or of any successor to Mortgagor, in and to the Mortgaged Property; or (ii) any material portion of the assets of Mortgagor or of any successor to Mortgagor;
(i) The falsity or misleading nature of any representation or warranty contained herein or any representation to Mortgagee concerning the financial condition or credit standing of either Mortgagor or any endorser or guarantor of the Note or any other obligation of Mortgagor to Mortgagee;
(j) The failure of Mortgagor to make any deposit of funds required hereunder or under the Note within the time period provided herein or in the Note, or in the absence of such a provision, within five (5) days after written demand therefor from Mortgagee;
(k) The existence of any encroachment upon the Premises which has occurred without the approval of Mortgagee and which is not removed or corrected within thirty (30) days after its creation, or if litigation to remove or correct such encroachment is not instigated by Mortgagor within such thirty (30) day period and thereafter diligently prosecuted;
(l) The filing of any claim of lien against the Premises, any improvements thereon or any part thereof, or any interest or right made appurtenant thereto or the service on Mortgagee, as a disburser, of any notice to withhold funds and the continued maintenance of said claim of lien or notice to withhold for a period of ten (10) days without discharge or satisfaction thereof or provision therefor satisfactory to Mortgagee in its sole discretion, including the posting of a bond or indemnification satisfactory to Mortgagee;
(m) The obtaining by any person of an order or decree in any court of competent jurisdiction enjoining the construction or development of any improvements needed for the operation of Mortgagors business on the Premises or enjoining or prohibiting Mortgagor or Mortgagee or both of them from performing any of their agreements or obligations with respect to this Mortgage, which proceedings are not discontinued and such decree is not vacated within fifteen (15) days after the granting thereof;
(n) The demolition, destruction or substantial damage of the Mortgaged Property unless Mortgagor either (i) commences and completes restoration or rebuilding within a reasonable time, not to exceed ten (10) months, or (ii) prepays the Note, by the amount equal to the percentage of reduction of leasable or otherwise productive area of the Premises caused by such demolition, destruction or substantial damage; provided, however, that the loan to value ratio after giving effect to the demolition, destruction or substantial damage, the restoration or repair thereof and the prepayment as a result thereof shall not be greater than eighty percent (80%);
(o) The failure of Mortgagor to perform any obligations constituting, set forth in, or relating to (a) this Mortgage, the Note, or any other obligation of Mortgagor to Mortgagee now existing or hereafter arising (b) any other agreement or indebtedness of Mortgagor to any affiliate of Mortgagee now existing or hereafter arising irrespective of whether Mortgagee or such affiliate elects pursuant to a provision thereof to declare immediately due and payable the entire unpaid principal sum together with all interest, or other balance thereon, plus any other sums due thereunder;
(p) If Mortgagor is a corporation, the sale, pledge, transfer or assignment by the shareholders of Mortgagor of any shares of the stock of Mortgagor without the prior written consent of Mortgagee, the merger or consolidation of Mortgagor with another company or entity, the liquidation of Mortgagor, the issuance of any new stock or warrants, or the transfer of issued and outstanding treasury stock or warrants of Mortgagor. If Mortgagor is a corporation, the sale, pledge, transfer or assignment of any of the members of Mortgagor of any of their interest in Mortgagor, or the withdrawal or the admittance of any members into Mortgagor without the prior written consent of Mortgagee;
(q) Any guaranty of the obligations and indebtedness secured by this Mortgage ceases to be effective, except pursuant to a written release from Mortgagee, or any guarantor denies liability thereunder or any default occurs under any such guaranty; or
C.2 Remedies Upon Default . At any time after a Default hereunder, Mortgagee may, at its option, declare all indebtedness secured by this Mortgage immediately due and payable, and collectible without notice, regardless of maturity, and irrespective of whether Mortgagee exercises such option, and regardless of (i) Mortgagees delay in exercising such option, (ii) Mortgagees failure to exercise such option on the occasion of any prior Default or (iii) the adequacy of Mortgagees security, Mortgagee may, at its option and in its sole discretion, without prior notice or demand to or upon Mortgagor, do any one or more of the following:
(a) Mortgagee may in person or by agent enter upon, take possession of, manage and operate the Mortgaged Property or any part thereof, make repairs and alterations, and do any acts which Mortgagee deems proper to protect the security hereof or to operate and maintain the Mortgaged Property and the business operated thereon; and either with or without taking possession, in its own name, sue for or otherwise collect and receive rents, issues, and profits as well as the fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities including those past due and unpaid, and apply the same less costs and expenses of operation and collection, including reasonable attorneys fees, upon any indebtedness secured hereby, and in such order as Mortgagee may determine. Upon request of Mortgagee, Mortgagor shall assemble and make available to Mortgagee at the Premises any of the Mortgaged Property which has been removed therefrom. The entering upon and taking possession of the Mortgaged Property, the collection of any rents, issues and profits as well as the fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities and the application thereof as aforesaid, shall not cure or waive any Default theretofore or thereafter occurring, or affect any notice of Default hereunder or invalidate any act done
pursuant to any such notice. Mortgagee or Mortgagees agent shall have access to the books and records used in the operation and maintenance of the Mortgaged Property and the business operated thereon and shall be liable to account only for those rents, issues and profits as well actually received by Mortgagee. Mortgagee shall not be liable to Mortgagor, anyone claiming by, from, under or through Mortgagor or anyone having an interest in the Mortgaged Property by reason of anything done or undone by Mortgagee. Nothing contained in this paragraph shall require Mortgagee to incur any expense or do any act. If the rents, issues and profits of the Mortgaged Property and the business operated thereon are not sufficient to meet the costs of taking control of and managing the Mortgaged Property and collecting the rents, issues and profits, any funds expended by Mortgagee for such purposes shall become indebtedness of Mortgagor to Mortgagee secured by this Mortgage. Such amounts, together with interest and attorneys fees if applicable as provided in Paragraph B.2. hereof, shall be immediately due and payable in accordance with the provisions of Paragraph B.2. hereof. Notwithstanding Mortgagees continuance in possession or receipt and application of rents, issues or profits, Mortgagee shall be entitled to exercise every right provided for in this Mortgage or by law upon or after the occurrence of a default, including any right to exercise the power of sale. Any of the actions referred to in this Paragraph may be taken by Mortgagee at such time as Mortgagee is so entitled, without regard to the adequacy of any security for the indebtedness hereby secured.
(b) Mortgagee shall, without regard to the adequacy of any security for the indebtedness hereby secured, be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession of and protect the Mortgaged Property and the business operated thereon, and, in Mortgagees discretion, operate the same, in whole or in part, and collect the rents, issues and profits as well as the fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities therefrom.
(c) Mortgagee may bring an action in any court of competent jurisdiction to foreclose this Mortgage through judicial or non-judicial foreclosure, including statutory foreclosure under Ark. Code Ann. § 18-5-101 et seq. , with notice to Mortgagor as required under applicable law, or to enforce any of the covenants, agreements or other obligations contained in this Mortgage.
(d) Mortgagee may elect to cause the Mortgaged Property or any part thereof to be sold as follows:
(i) Mortgagee may cause any such sale or other disposition of personal property to be conducted immediately following the expiration of any grace period, if any, herein provided (or immediately upon the expiration of any applicable redemption period), and may cause any such sale of real property to be conducted as soon after foreclosure as is permitted by law, or Mortgagee may delay any such sale or other disposition for such period of time as Mortgagee deems to be in its best interest. Should Mortgagee desire that more than one such sale or other disposition be conducted, Mortgagee may at its option, cause the same to be conducted simultaneously, or successively on the same day, or at such different days or times and in such order as Mortgagee may deem to be in its best interest.
(ii) Should Mortgagee elect to cause any of the Mortgaged Property to be disposed of as personal property as permitted by subparagraph (i) above, it may dispose of any part thereof in any manner now or hereafter permitted by Article 9 of the Uniform Commercial Code or in accordance with any other right or remedy provided by applicable law. Both Mortgagor and Mortgagee shall be eligible to purchase all or any part of such property at any such disposition. Any such disposition may be either by public or private sale or other disposition as Mortgagee may elect in its sole discretion. Mortgagee shall give Mortgagor at least ten (10) days prior written notice of the time and place of any public sale or other disposition of such property or of the time at or after which any private sale or any other intended disposition is to be made, and if such notice is sent to Mortgagor as provided in Paragraph B.10 hereof, it shall constitute reasonable notice to Mortgagor.
(iii) At the foreclosure sale of the Mortgaged Property which is real property, the Mortgaged Property or any portion thereof specified by Mortgagee shall be sold at public auction to the highest bidder for cash in lawful money of the United States, subject, however, to the provisions of Paragraph C.6 hereof. If the Mortgaged Property consists of several lots or parcels, it may be sold as a whole or in separate lots or parcels, if directed by Mortgagee. Any person or entity, including Mortgagee, may purchase at the sale.
(iv) Mortgagee may, in any manner that it deems appropriate, apply the proceeds of any judicial foreclosure sale or sale made pursuant to the power of sale created hereby (to the extent permitted by applicable law) or other disposition of any of the Mortgaged Property hereunder to payment of the following: (1) the expenses of such sale or disposition, together with Mortgagees fees, costs and expenses and reasonable attorneys fees incurred by Mortgagee, and the actual cost of publishing, recording, mailing and posting notice; (2) the cost of any search and/or other evidence of title procured in connection therewith and revenue stamps on any deed or conveyance; (3) the payment of the Note secured by this Mortgage; (4) any or all other sums secured by this Mortgage; and (5) the remainder, if any, to the person or persons legally entitled thereto, in the order of their priority.
(e) Mortgagee may take any other appropriate action permitted by applicable law.
C.3 Deficiency; Liabilities and Rights After Default . To the extent permitted by law, Mortgagor shall be and remain liable for any deficiency remaining after sale either pursuant to the Uniform Commercial Code, judicial proceedings, or otherwise. After Default or the occurrence of an event which after the passage of time or giving of notice, or both, could become a Default, Mortgagor shall pay Mortgagees reasonable attorneys fees, Mortgagees fees and its costs and expenses incurred as a result of said Default or other such event, and if suit is brought, all costs of suit, all of which sums shall be secured by this Mortgage. Mortgagors statutory rights of reinstatement, if any, are expressly conditioned upon Mortgagors payment of all sums required under the applicable statute and performance of all required acts.
C.4 Right of Setoff . In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, Mortgagee is hereby authorized
by Mortgagor at any time or from time to time, without notice to Mortgagor, any guarantor or endorser of the Note or any other indebtedness or obligation secured by this Mortgage, or any other person, any such notice being hereby expressly waived, to set off any obligations or liabilities any time held or owing by Mortgagee to or for the credit or the account of Mortgagor or any such guarantor or endorser against the obligations and liabilities of Mortgagor or any such guarantor or endorser to Mortgagee, including, but not limited to, all claims of any nature or description arising out of or connected with this Mortgage, the Note or any other indebtedness or obligation secured by this Mortgage, irrespective of whether or not (a) Mortgagee shall have made any demand hereunder or (b) Mortgagee shall have declared the principal of and interest on the Note to be due and owing and although said obligations and liabilities, or any of them, shall be contingent and unmatured.
C.5 Foreclosure Procedure . Mortgagor hereby expressly waives, to the extent permitted by law, any right which it may have to direct the order in which any of the Mortgaged Property shall be sold in the event of any sale or sales pursuant hereto.
C.6 Foreclosure Purchase . Upon any sale of the Mortgaged Property, if the holder of the Note is a purchaser at such sale, it shall be entitled to use and apply all or any portion of the indebtedness then secured by this Mortgage for or in settlement or payment of all or any portion of the purchase price of the Mortgaged Property purchased.
C.7 Cumulative Remedies . No remedy herein conferred upon or reserved to Mortgagee is intended to be exclusive of any other remedy herein or by law provided, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by this Mortgage to Mortgagee, or to which it may be otherwise entitled, may be exercised from time to time and as often as may be deemed expedient by Mortgagee, and Mortgagee may pursue inconsistent remedies. The unenforceability of any provision in this Mortgage shall not affect the enforceability of any other provision herein. If there exists additional security for the performance of the obligations secured hereby, the Mortgagee, at its sole option, and without limiting or affecting any rights or remedies hereunder, may exercise any of the rights and remedies to which it may be entitled hereunder either concurrently with whatever other rights it may have in connection with such other security or in such order as it may determine.
C.8. Marshalling of Assets . Mortgagor agrees that all of the Mortgaged Property and all other collateral or security which may be granted to Mortgagee in connection with the obligations secured by this Mortgage constitutes equal security for all of the obligations secured hereby, and Mortgagor agrees that Mortgagee shall be entitled to sell, retain or otherwise deal with any or all of the Mortgaged Property and all other collateral or security, in any order or simultaneously as Mortgagee shall determine in its sole and absolute discretion, free of any requirement for the marshalling of assets or other restriction upon Mortgagee in dealing with the Mortgaged Property and all other collateral or security.
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the day and year set forth above.
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MT. V PROPERTY HOLDINGS, LLC |
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/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager |
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STATE OF GEORGIA |
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ACKNOWLEDGEMENT |
COUNTY OF Fulton |
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On this 8th day of June, 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 MT. V 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 for the consideration, uses and purposes therein set forth.
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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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Exhibit 10.16
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT, made and entered into as of this 8th day of June, 2012, between MT. V PROPERTY HOLDINGS, LLC, a limited liability company duly organized, existing and in good standing under the laws of the State of Georgia and authorized to transact business in Arkansas, whose mailing address is 3050 Peachtree Road, NW, Suite 355, Two Buckhead Plaza, Atlanta, Georgia 30305 (hereinafter referred to as Borrower), and METRO CITY BANK, the address of which is 5441 Buford Highway, Suite 109, Atlanta, GA 30340 (hereinafter referred to as 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 good and valuable considerations, 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, convey and assign to Lender, its successors, successors-in-title and assigns, all of Borrowers right, title and interest in, to and under any and all of those leases and rental agreements now existing and hereafter made, including any and all extensions, renewals and modifications thereof, and all security deposits and other refundable and non-refundable deposits paid by the tenants thereunder (said leases and rental agreements are hereinafter referred to collectively as the Leases, and the tenants and lessees thereunder are hereinafter referred to collectively as Tenants or individually as Tenant as the context requires), which Leases cover or shall cover portions of certain real property described in Exhibit A (commonly known as 706 Oak Grove Street, Mountain View, Arkansas 72560) attached hereto and by this reference made a part hereof and/or the improvements thereon
(said real property and improvements hereinafter collectively referred to as the Premises); together with all of Borrowers right, title and interest in and to all rents, issues and profits from the Leases and from the Premises.
TO HAVE AND TO HOLD unto Lender, its successors and assigns, forever, subject to and upon the terms and conditions set forth herein.
This Assignment is made for the purpose of securing (a) the full and prompt payment when due, whether by acceleration or otherwise, with such interest as may accrue thereon, either before or after maturity thereof, of that certain Note dated of even date herewith, made by Borrower to the order of Lender in the principal face amount of One Million Eight Hundred Ten Thousand and No/100 Dollars ($1,810,000.00), (hereinafter referred to as the Note), together with any renewals, modifications, consolidations and extensions thereof and amendments thereto and all advances of principal thereunder, (b) the full amount and prompt payment and performance of any and all obligations of Borrower to Lender under the terms of the Deed to Secure Debt and Security Agreement from Borrower to Lender, dated of even date herewith and securing the indebtedness evidenced by the Note (hereinafter referred to as the Security Instrument), (c) the full and prompt payment and performance of all obligations of Borrower to Lender under the terms of that certain Loan Agreement of even date herewith (hereinafter referred to as the Loan Agreement), (d) the full and prompt payment and performance of any and all other obligations of Borrower to Lender under any other instruments now or hereafter evidencing, securing, or otherwise relating to the indebtedness evidenced by the Note, and (e) any judgments in connection with the foregoing (the Note, Security Instrument, the Loan Agreement, and said other instruments are hereinafter referred to collectively as the Loan Documents, and said indebtedness is hereinafter referred to as the Indebtedness).
ARTICLE I.
WARRANTIES AND COVENANTS
1.1. Warranties of Borrower . To the extent that there are Leases, Borrower hereby warrants and represents as follows:
(a) Borrower is the sole holder of the landlords interest under the Leases, is entitled to receive the rents, issues and profits from the Leases and from the Premises, and has good right to sell, assign, transfer and set over the same and to grant to and confer upon Lender the rights, interests, powers, and authorities herein granted and conferred;
(b) Borrower has made no assignment other than this Assignment of any of the rights of Borrower under any of the Leases or with respect to any of said rents, issues or profits;
(c) 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;
(d) All Leases provide for rental to be paid monthly, in advance, and Borrower has not accepted payment of rental under any of the Leases for more than one (1) month in advance of the due date thereof;
(e) So far as is known to Borrower, there exists no default or event of default or any state of facts which would, with the passage of time or the giving of notice, or both, constitute a default or event of default on the part of Borrower or by any Tenant under the terms of any of the Leases;
(f) Neither the execution and delivery of this Assignment or any of the Leases, the performance of each and every covenant of Borrower under this Assignment and the Leases, nor the meeting of each and every condition contained in this Assignment, conflicts with, or constitutes a breach or default under any agreement, indenture or other instrument to which Borrower is a party, or any law, ordinance, administrative regulation or court decree which is applicable to Borrower;
(g) No action has been brought or, so far as is known to Borrower, is threatened, which would interfere in any way with the right of Borrower to execute this Assignment and perform all of Borrowers obligations contained in this Assignment and in the Leases;
(h) The Leases are valid, enforceable and in full force and effect; and
(i) All security deposits and other deposits (whether refundable or non-refundable pursuant to the terms of the Leases) are held by Borrower in a segregated account and have been received and applied for the uses and purposes designated in the Leases.
1.2. Covenants of Borrower . Borrower hereby covenants and agrees as follows:
(a) Borrower shall (i) fulfill, perform and observe each and every condition and covenant of landlord or lessor contained in each of the Leases; (ii) give prompt notice to Lender of any claim of default under any of the Leases, whether given by the Tenant to Borrower, or given by Borrower to the Tenant, together with a complete copy of any such notice; (iii) at no cost or expense to Lender, enforce, short of termination, the performance and observance of each and every covenant and condition of each of the Leases, to be performed or observed by the Tenant thereunder; and (iv) appear in and defend any action arising out of, or in any manner connected with, any of the Leases, or the obligations or liabilities of Borrower as the landlord thereunder, or of the Tenant or any guarantor thereunder;
(b) Borrower shall not, without the prior written consent of Lender, (i) modify any of the Leases; (ii) terminate the term or accept the surrender of any of the Leases; (iii) waive or release the Tenant from the performance or observance by the Tenant of any obligation or condition of any of the Leases; (iv) permit the prepayment of any rents under any of the Leases for more than one (1) month prior to the accrual thereof; (v) give any consent to any assignment or sublease by the Tenant under any of the Leases; or (vi) assign its interest in, to or under the
Leases or the rents, issues and profits from the Leases and from the Premises to any person or entity other than Lender;
(c) Borrower shall not, without the prior written consent of Lender, enter into any Lease unless the Tenant thereunder shall have been approved in writing by Lender and said Lease is in form and content satisfactory to and approved in writing by Lender;
(d) Borrower shall protect, indemnify and save harmless Lender from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, attorneys fees and expenses) imposed upon or incurred by Lender by reason of this Assignment and any claim or demand whatsoever which may be asserted against Lender by reason of any alleged obligation or undertaking to be performed or discharged by Lender under this Assignment. In the event Lender incurs any liability, loss or damage by reason of this Assignment, or in the defense of any claim or demand arising out of or in connection with this Assignment, the amount of such liability, loss or damage shall be added to the Indebtedness, shall bear interest at the rate of Default Interest specified in the Note from the date incurred until paid and shall be payable on demand;
(e) Borrower shall authorize and direct, and does hereby authorize and direct each and every present and future Tenant of the whole or any part of the Premises to pay all rental to Lender upon receipt of written demand from Lender to so pay the same;
(f) The warranties and representations of Borrower made in Paragraph 1.01 hereof and the covenants and agreements of Borrower made in this Paragraph apply to each Lease in effect as of the time of execution of this Assignment, and shall apply to each Lease hereafter made at the time each such future Lease becomes effective.
(g) At the request of Lender, Borrower immediately shall deliver to Lender evidence that all security deposits and other deposits (whether refundable or non-refundable) paid by Tenants under the Leases have been placed in a separate account in accordance with applicable law.
1.3. Covenants of Lender . Lender, by its acceptance of this Assignment, hereby covenants and agrees with Borrower as follows:
(a) Although this Assignment constitutes a present and current assignment of all rents, issues and profits from the Premises, so long as there shall exist no Default, Lender shall not demand that such rents, issues and profits be paid directly to Lender, and Borrower shall have the right to collect, but no more than one (1) month prior to accrual, all such rents, issues and profits from the Premises (including, but not by way of limitation, all rental payments under the Leases); and
(b) Upon the payment in full of the Indebtedness, as evidenced by the recording or filing of an instrument of satisfaction or full release of the Security Instrument without the recording of another security instrument in favor of Lender affecting the Premises, this Assignment shall be terminated and released of record by Lender and shall thereupon be of no further force or effect.
ARTICLE II.
DEFAULT
2.1. Default . The term, Default, wherever used in this Assignment, shall mean any one or more of the following events:
(a) The occurrence of any Default under any of the Loan Documents;
(b) The failure by Borrower duly and fully to comply with any covenant, condition or agreement of this Assignment; or
(c) The breach of any warranty by Borrower contained in this Assignment.
2.2. Remedies . Upon the occurrence of any Default, Lender may at its option, with or without notice or demand of any kind, exercise any or all of the following remedies:
(a) Declare any part or all of the Indebtedness to be due and payable, whereupon the same shall become immediately due and payable;
(b) Perform any and all obligations of Borrower under any or all of the Leases or this Assignment and exercise any and all rights of Borrower herein or therein as fully as Borrower himself could do, including, without limitation of the generality of the foregoing: enforcing, modifying, extending or terminating any or all of the Leases; collecting, modifying, compromising, waiving or increasing any or all the rents payable thereunder; and obtaining new tenants and entering into new leases on the Premises on any terms and conditions deemed desirable by Lender; and, to the extent Lender shall incur any costs in connection with the performance of any such obligations of Borrower, including costs of litigation, then all such costs shall become a part of the Indebtedness, shall bear interest from the incurring thereof at the rate of Default Interest specified in the Note, and shall be due and payable on demand;
(c) In Borrowers or Lenders name, institute any legal or equitable action which Lender in its sole discretion deems desirable to collect and receive any or all of the rents, issues and profits assigned herein;
(d) Collect the rents, issues and profits and any other sums due under the Leases and with respect to the Premises, and apply the same in such order as Lender in its sole discretion may elect against (i) all costs and expenses, including reasonable attorneys fees, incurred in connection with the operation of the Premises, the performance of Borrowers obligations under the Leases and collection of the rents thereunder; (ii) all the costs and expenses, including
reasonable attorneys fees, incurred in the collection of any or all of the Indebtedness, including all costs, expenses and attorneys fees incurred in seeking to realize on or to protect or preserve Lenders interest in any other collateral securing any or all of the Indebtedness; and (iii) any or all unpaid principal and interest on the Indebtedness.
Lender shall have the full right to exercise any or all of the foregoing remedies without regard to the adequacy of security for any or all of the Indebtedness, and with or without the commencement of any legal or equitable action or the appointment of any receiver or trustee, and shall have full right to enter upon, take possession of, use and operate all or any portion of the Premises which Lender in its sole discretion deems desirable to effectuate any or all of the foregoing remedies.
ARTICLE III.
GENERAL PROVISIONS
3.1. 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.
3.2. Terminology . All personal pronouns used in this Assignment, whether used in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural, and vice versa. Titles of articles are for convenience only and neither limit nor amplify the provisions of this Assignment.
3.3. 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.
3.4. Applicable Law . This Assignment and the rights and obligations of the parties hereunder 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 creation, perfection, priority, and enforcement of Lenders rights and remedies against the Premises, 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 Assignment is challenged or questioned, such provision shall be governed by whichever applicable state or federal law would uphold or would enforce such challenged or questioned provision. The loan transaction which is evidenced by this Assignment has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of Georgia.
3.5. No Third Party Beneficiaries . This Assignment is made solely for the benefit of Lender and its assigns. No Tenant under any of the Leases nor any other person shall have standing to bring any action against Lender as the result of this Assignment, or to assume that Lender will
exercise any remedies provided herein, and no person other than Lender shall under any circumstances be deemed to be a beneficiary of any provision of this Assignment.
3.6. No Oral Modifications . Neither this Assignment nor any provisions hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought.
3.7. Cumulative Remedies . The remedies herein provided shall be in addition to and not in substitution for the rights and remedies vested in Lender in or by any of the Loan Documents or in law or equity, all of which rights and remedies are specifically reserved by Lender. The remedies herein provided or otherwise available to Lender shall be cumulative and may be exercised concurrently. The failure to exercise any of the remedies herein provided shall not constitute a waiver thereof, nor shall use of any of the remedies herein provided prevent the subsequent or concurrent resort to any other remedy or remedies. It is intended that this clause shall be broadly construed so that all remedies herein provided or otherwise available to Lender shall continue to be each and all available to Lender until the Indebtedness shall have been paid in full.
3.8. Cross-Default . A Default by Borrower under this Assignment shall constitute a Default under the other Loan Documents.
3.9. Counterparts . This Assignment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties or signatories hereto may execute this Assignment by signing any such counterpart.
3.10. Further Assurance . At any time and from time to time, upon request by Lender, Borrower will make, execute and deliver, or cause to be made, executed and delivered, to Lender and, where appropriate, cause to be recorded and/or refiled at such time and in such offices and places as shall be deemed desirable by Lender, any and all such other and further assignments, deeds to secure debt, mortgages, deeds of trust, security agreements, financing statements, continuation statements, instruments of further assurance, certificates and other documents as may, in the opinion of Lender, be necessary or desirable in order to effectuate, complete or perfect, or to continue and preserve (a) the obligations of Borrower under this Assignment and (b) the security interest created by this Assignment as a first and prior security interest upon the Leases and the rents, issues and profits from the Premises. Upon any failure by Borrower so to do, Lender may make, execute, record, file, re-record and/or refile any and all such assignments, deeds to secure debt, mortgages, deeds of trust, security agreements, financing statements, continuation statements, instruments, certificates, and documents for and in the name of Borrower, and Borrower hereby irrevocably appoints Lender the agent and attorney-in-fact of Borrower so to do.
3.11. Notices . Any and all notices, elections or demands permitted or required to be made under this Assignment shall be in writing, signed by the party giving such notice, election or demand and shall be delivered personally, or sent by overnight courier service by a company regularly engaged in the business of delivering business packages (such as Federal Express or Purolator), or sent by registered or certified United States mail, postage prepaid, to the other party at the address set forth below, or at such other address within the continental United States of America as may have theretofore been designated in writing. The effective date of such notice, election or demand shall be the date of personal delivery or, if sent by overnight courier
then the date of delivery as evidenced by the couriers receipt, or, if mailed, then the date of postmark. For the purposes of this Assignment:
The Address of Lender is:
METRO CITY BANK
5441 Buford Highway, Suite 109
Atlanta, GA 30340
The Address of Borrower is:
3050 Peachtree Road, NW, Suite 355
Two Buckhead Plaza
Atlanta, Georgia 30305
3.12. Modifications, etc . Borrower hereby consents and agrees that Lender may at any time, and from time to time, without notice to or further consent from Borrower, either with or without consideration, surrender any property or other security of any kind or nature whatsoever held by it or by any person, firm or corporation on its behalf or for its account, securing the Indebtedness; substitute for any collateral so held by it, other collateral of like kind, or of any kind; agree to modification of the terms of the Note or the Loan Documents; extend or renew the Note or any of the Loan Documents for any period; grant releases, compromises and indulgences with respect to the Note or the Loan Documents to any persons or entities now or hereafter liable thereunder or hereunder; release any guarantor or endorser of the Note, the Security Instrument, the Loan Agreement, or any other Loan Document; or take or fail to take any action of any type whatsoever, and no such action which Lender shall take or fail to take in connection with the Loan Documents, or any of them, or any security for the payment of the Indebtedness or for the performance of any obligations or undertakings of Borrower, nor any course of dealing with Borrower or any other person, shall release Borrowers obligations hereunder, affect this Assignment in any way or afford Borrower any recourse against Lender. The provisions of this Assignment shall extend and be applicable to all renewals, amendments, extensions, consolidations and modifications of the Loan Documents and the Leases, and any and all references herein to the Loan Documents or the Leases shall be deemed to include any such renewal, amendments, extension, consolidation or modifications thereof.
[SIGNATURE ON FOLLOWING PAGE.]
IN WITNESS WHEREOF, Borrower has executed this Assignment under seal, as of the day and year first above written.
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BORROWER: |
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MT. V PROPERTY HOLDINGS, LLC |
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By: |
/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager |
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STATE OF GEORGIA |
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ACKNOWLEDGEMENT |
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COUNTY OF Fulton |
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On this 8th day of June, 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 MT. V 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 for the consideration, uses and purposes therein set forth.
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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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(NOTARIAL SEAL) |
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Exhibit 10.17
METRO CITY BANK
SECURITY AGREEMENT
This Security Agreement (hereinafter called Agreement) is between MT. V PROPERTY HOLDINGS, LLC (the Debtor) and METRO CITY BANK (hereinafter called Secured Party).
1. Grant of Security Interest. Subject to the terms and conditions of this Agreement, Debtor, for consideration, and to secure the full and prompt payment, observance and performance when due of all present and future obligations and indebtedness of Debtor to Secured Party, whether at the stated time, by acceleration or otherwise, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, whether or not of the same or similar class or of like kind to any indebtedness incurred contemporaneously with the execution of this Agreement, and whether now or hereafter existing, or due or to become due, and whether such indebtedness from time to time is reduced and thereafter increased, or entirely extinguished and thereafter reincurred, including without limitation, the following:
(a) Any and all amounts owed by Debtor under, in connection with, and/or pursuant to the indebtedness evidenced by that certain Term Note of even date herewith, in the original principal sum of One Million Eight Hundred Ten Thousand and No/100 Dollars ($1,810,000.00) (the Note), with interest thereon according to the provisions thereof, and all obligations thereunder, in connection therewith and/or pursuant to any and all agreements and other documents in connection therewith; and
(b) All sums advanced or expenses or costs paid or incurred (including without limitation reasonable attorneys fees and other legal expenses) by Secured Party pursuant to or in connection with the Note or any other agreements and documents in connection therewith plus applicable interest on such sums, expenses or costs; and
(c) Any extensions, modifications, changes, substitutions, restatements, renewals or increases or decreases of any or all of the indebtedness referenced above; and
(d) Any and all other indebtedness, obligations and liabilities of any kind, of Debtor to Secured Party, now or hereafter existing, absolute or contingent, joint and/or several, due or not due, secured or unsecured, arising by operation of law or otherwise, direct or indirect, including without limitation indebtedness, obligations and liabilities of Debtor to Secured Party as a manager of any partnership, syndicate or association or other group and whether incurred by Debtor as principal, surety, endorser, guarantor, accommodation party or otherwise, and any obligations which give rise to an equitable remedy for breach of performance if such breach gives rise to an obligation by Debtor to pay Secured Party;
Debtor hereby grants to Secured Party a security interest in the collateral described in Schedule 1 to this Agreement and made a part hereof and the proceeds of such collateral (hereinafter collectively called the Collateral).
2. Representations, Warranties and Covenants of Debtor. Debtor expressly represents, warrants and covenants as follows:
(a) The address appearing with Debtors signature below is the address of Debtors chief executive office or, if Debtor has no place of business, Debtors residence. If the Collateral is not located at Debtors address appearing below, it will be located at: 706 Oak Grove Street, Mountain View, Arkansas 72560.
(b) If Debtor does not keep the records concerning the Collateral and concerning general intangibles, mobile goods and contract rights at the address appearing below, these records will be located at: 706 Oak Grove Street, Mountain View, Arkansas 72560.
(c) Debtor will give Secured Party sixty (60) days prior written notice of any change in (i) Debtors chief executive office (or, if Debtor has no place of business, Debtors residence), the location of the Collateral or the location of the records described above, or (ii) the ownership of Debtors business, (iii) the principals responsible for the management of Debtors business, (iv) Debtors corporate structure or identity, or (v) Debtors name or trade name, or prior to commencing to use an assumed name not set forth in this Agreement. Lender acknowledges that MOUNTAIN VIEW NURSING, LLC will register or has registered the trade name Stone County Nursing and Rehab and will operate the business under such name.
(d) If any of the Collateral is to be or has been attached to real estate, the legal description of the real estate is attached to this Agreement as Schedule 2 and made a part hereof.
(e) If Debtor does not have a record interest in the real estate described above, the record owner is indicated on the attached Schedule 2.
(f) Without the prior written consent of Secured Party, Debtor will not move, sell, lease, permit any encumbrance on or otherwise dispose of the Collateral, other than its inventory in the ordinary course of its business. Debtor represents and warrants that Debtor is the sole owner of the Collateral, free and clear of all liens, charges, interests, and encumbrances, other than in favor of Secured Party, that no other person or other entity has any interest in the Collateral whatsoever, and that Debtor will defend same against all adverse claims and demands.
(g) Debtor will keep the Collateral insured by such companies, in such amounts and against such risks as shall be acceptable to Secured Party, with loss payable and additional insured clauses in favor of Secured Party as are satisfactory to Secured Party. Debtor will deposit such insurance policies with Secured Party. Debtor hereby assigns to Secured Party and grants to Secured Party a security interest in any return of unearned premium due upon cancellation of any such insurance and directs the insurer
thereunder to pay to Secured Party all amounts so due. All amounts received by Secured Party in payment of insurance losses or return of unearned premium may, at Secured Partys option, be applied to the indebtedness by Secured Party, or all or any part thereof may be used for the purpose of repairing, replacing or restoring the Collateral. If Debtor fails to maintain satisfactory insurance, Secured Party shall have the option, but not the obligation, to obtain such insurance in such amounts as Secured Party deems necessary, and Debtor agrees to repay, with interest at the highest rate applicable to any indebtedness which this Agreement secures, all amounts so expended by Secured Party.
(h) Debtor represents and warrants to Secured Party that all financial statements and credit applications delivered by Debtor to Secured Party accurately reflect the financial condition and operations of Debtor at the times and for the periods therein stated. So long as this Agreement is in force and effect, Debtor agrees to deliver to Secured Party within 90 days after the end of each of Debtors fiscal years, a complete and accurate copy of Debtors compiled financial statements, including consolidated statements of cash flow, and a consolidated balance sheet and statement of income, together with all schedules, showing the consolidated financial position of Debtor at the close of such fiscal year, and concurrently therewith a certificate of its Manager or chief financial officer to the effect that such officer is not aware of any condition or event which constitutes a default under this Agreement or under any notes or other obligations of Debtor or which, with the mere passage of time or notice, or both, would constitute a default under this Agreement.
(i) Secured Party shall not be deemed to have waived any of its rights in any Collateral unless such waiver is in writing and signed by an authorized representative of Secured Party. No delay or omission by Secured Party in exercising any of Secured Partys rights shall operate as a waiver thereof or of any other rights. Secured Party shall have, in addition to all other rights and remedies provided by this Agreement or applicable law, the rights and remedies of a secured party under the Uniform Commercial Code.
(j) Debtor will maintain the Collateral in good condition and repair and will pay promptly all taxes, levies, and encumbrances and all repair, maintenance and preservation costs pertaining to the Collateral. If Debtor fails to make such payments, Secured Party shall have the option, but not the obligation, to pay the same and Debtor agrees to repay, with interest at the highest rate applicable to any indebtedness which this Agreement secures, all amounts so expended by Secured Party. Debtor will at any time and from time to time, upon request of Secured Party, give any representative of Secured Party access during normal business hours to inspect the Collateral or the books and records thereof.
(k) Debtor agrees to pay on demand, all expenses, including reasonable attorney fees and expenses, incurred by Secured Party in protecting or enforcing its rights in the Collateral or otherwise under this Agreement. After deducting all said expenses, the remainder of any proceeds of sale or other disposition of the Collateral shall be applied to the indebtedness due Secured Party in such order of preference as Secured Party shall determine.
(l) Debtor hereby agrees to faithfully preserve and protect Secured Partys security interest in the Collateral at all times, and further agrees to execute and deliver, from time to time, any and all further, or other, documents, instruments, continuation statements and perform or refrain from performing such acts, as Secured Party may reasonably request to effect the purposes of this Agreement and to secure to Secured Party the benefits of all the rights, authorities and remedies conferred upon Secured Party by the terms of this Agreement. Debtor shall permit, or cause to be permitted, at Debtors expense, representatives of Secured Party to inspect and make copies of the books and records of Debtor relating to the Collateral at any reasonable time during normal business hours upon prior written notice.
3. Defaults. The occurrence of any of the following events shall constitute a default (hereinafter called Default) hereunder:
(a) The failure of Debtor to make any payment on any indebtedness to Secured Party whether pursuant to the Note or any other obligation to Secured Party, or a default in any provision of the Note or any other agreement or document secured hereby or any other encumbrance or agreement securing the Note, which is not cured within any applicable cure period;
(b) The breach of or failure to perform promptly any obligation or covenant set forth in this Agreement, or the breach or the failure to perform promptly any obligation or covenant set forth in the Note or any other agreement secured hereby or securing the Note, which is not cured within any applicable cure period;
(c) The suspension of business, insolvency, failure generally to pay debts as they became due, or the commission of any act constituting or resulting in a business failure, in each case on the part of Debtors business; the concealment or removal of any substantial portion of Debtors property with the intent to hinder, delay or defraud any one or more creditors, or the making of any other transfer which is fraudulent or otherwise voidable under the Bankruptcy Code or other applicable federal or state law; the existence or creation of any lien, including without limitation any tax or judgment lien, upon the Collateral or any substantial part of Debtors property; an assignment for the benefit of creditors; the commencement of any proceedings by or against Debtor (under the Bankruptcy Code or otherwise) seeking to adjudicate if bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or seeking the appointment of a receiver, trustee or custodian for Debtor or for the Collateral or a substantial part of the property of Debtor; or the institution by Debtor or any other person or entity of any liquidation, dissolution or reorganization proceedings with respect to Debtor;
(d) The failure to effectively and promptly discharge, stay or indemnify against, to Secured Partys satisfaction, any lien or attachment against any of Debtors property or the Collateral;
(e) Any representation or warranty contained herein or in any other document delivered by or on behalf of Debtor to Secured Party shall be false or misleading when made;
(f) If Secured Party, in good faith, believes the prospect of payment secured by this Agreement is impaired, or believes that any of the Collateral is in danger of loss, misuse, seizure or confiscation;
(g) Any guaranty of the obligations described herein ceases to be effective, except pursuant to a written release from Secured Party, or any guarantor denies liability thereunder, or one of the events described in Paragraph 3(c) hereof occurs with respect to any guarantor, or any default occurs under any such guaranty;
(h) If Debtor is a corporation, the occurrence of any of the following without the Secured Partys written consent: the sale, pledge or assignment by the shareholders of Debtor of any shares of stock of Debtor; the merger or consolidation of Debtor with another company or entity; the change of the Debtors name; the liquidation of Debtor; or the issuance by Debtor of any new stock or warrants, or the transfer of issued and outstanding treasury stock or warrants of Debtor. If Debtor is a limited liability company, the sale, pledge, transfer or assignment of any of the Managers or members of Debtor of any of their interest in Debtor, or the withdrawal or the admittance of any Managers into Debtor without the prior written consent of Secured Party. If Debtor is a partnership or joint venture, the occurrence of any of the following without Secured Partys written consent: the sale, pledge, transfer or assignment by any of the partners or joint ventures of Debtor of any of their partnership or joint venture interest in Debtor; the withdrawal of any general partner(s) or joint venturer(s); or the admittance of any additional partner(s) or joint venturer(s) into Debtor;
(i) The occurrence of any default, after the expiration of all cure periods, if any, or event of default under any other document or agreement securing or guaranteeing any of the obligations secured by the Agreement; or the occurrence of any default, after the expiration of all cure periods, if any or event of default due to any material indebtedness or obligation of Debtor to any third party that causes such third party to declare such indebtedness or other obligation due prior to its scheduled date of maturity; or
(j) The occurrence of any default, after the expiration of all cure periods, if any, or event of default under or with respect to any obligation of Debtor to any affiliate of Secured Party (for the purposes of this subparagraph, affiliate is defined as METRO CITY BANK or any entity owned or controlled, directly or indirectly, by METRO CITY BANK).
4. Remedies.
(a) Upon the occurrence of any default under this Agreement, after the expiration of all cure periods, if any, Secured Party is authorized in its discretion to declare any or all of the indebtedness to be immediately due and payable without demand
or notice to Debtor, and may exercise any one or more of the rights and remedies granted pursuant to this Agreement or given to a secured party under applicable law, including without limitation the Uniform Commercial Code, such rights and remedies to include without limitation the right to take possession and sell, lease or otherwise dispose of the Collateral. If reasonable notice of any disposition of Collateral or other enforcement is required, such requirement will be met if such notice is mailed, postage pre-paid, to the address of Debtor shown below Debtors signature on this Agreement at least fifteen (15) days prior to the time of disposition or other enforcement. Debtor agrees that upon demand by Secured Party after default, Debtor will promptly assemble the Collateral and make the Collateral available to Secured Party at a place convenient to Secured Party.
(b) Debtor agrees that all of the Collateral and all of the other security which may be granted to Secured Party in connection with the obligations secured hereby constitute equal security for all of the obligations secured hereby, and agrees that Secured Party shall be entitled to sell, retain or otherwise deal with any or all of the Collateral, in any order or simultaneously as Secured Party shall determine in its sole and absolute discretion, free of any requirement for the marshaling of assets or other restriction upon Secured Party in dealing with the Collateral or such other security.
(c) Upon the occurrence of any default under this Agreement, after the expiration of all cure periods, if any, Debtor hereby irrevocably constitute and appoints Secured Party (and any employee or agent of Secured Party) as Debtors true and lawful attorney-in-fact with full power of substitution, in Secured Partys name or Debtors name or otherwise, for Secured Partys sole use and benefit, at Debtors cost and expense, to exercise the following powers with respect to the Collateral:
1. To demand, sue for collection, receive, and give acquittance for any and all monies due or owing with respect to the Collateral;
2. To receive, take, endorse Debtors name on, assign and deliver any checks, notes, drafts, documents or other instruments taken or received by Secured Party in connection with the Collateral;
3. To settle, compromise, prosecute, or defend any action or proceeding with respect to the Collateral;
4. To sell, transfer, assign or otherwise deal in or with the Collateral or the proceeds thereof, as fully as if Secured Party were the absolute owner thereof;
5. To sign Debtors name to and file financing statements or such other documents and instruments as Secured Party may deem appropriate; and
6. To take any and all action that Secured Party deems necessary or proper to preserve its interest in the Collateral, including without limitation, the payment of debts of Debtor that might impair the Collateral or Secured Partys security interest therein, the purchase of insurance on the Collateral, the repair or safeguard of the Collateral, or the payment of taxes thereon; and
7. To notify account debtors of Secured Partys security interest in Debtors accounts and to instruct them to make payment directly to Secured Party.
(d) Debtor agrees that the powers of attorney granted herein are coupled with an interest and shall be irrevocable until full, final and irrevocable payment and performance of the indebtedness secured hereby; and that neither Secured Party nor any officer, director, employee or agent of Secured Party shall be liable for any act or omission, or for any mistake or error of judgment, in connection with any such powers.
(e) Notwithstanding the foregoing, Secured Party shall be under no duty to exercise any such powers, or to collect any amount due on the Collateral, to realize on the Collateral, to keep the Collateral, to make any presentment, demand or notice of protest in connection with the Collateral, or to perform any other act relating to the enforcement, collection or protection of the Collateral.
(f) This Agreement shall not prejudice the right of Secured Party at its option to enforce the collection of any indebtedness secured hereby or any other instrument executed in connection with this transaction, by suit or in any other lawful manner. No right or remedy is intended to be exclusive of any other right or remedy, but every such right or remedy shall be cumulative to every other right or remedy herein or conferred in any other agreement or document for the benefit of Secured Party, or now or hereafter existing at law or in equity.
(g) Any action or proceeding to enforce this Agreement may be taken by Secured Party either in Debtors name or in Secured Partys name, as Secured Party may deem necessary.
(h) All rights of marshaling of assets of Debtor, including any such right with respect to the Collateral, are hereby waived by Debtor.
5. Remedies Cumulative; Delay Not Waiver .
(a) No right, power or remedy herein conferred upon or reserved to Secured Party hereunder is intended to be exclusive of any other right, power or remedy, and every such right, power and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right, power and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Resort to any or all security now or hereafter held by Secured Party, may be taken concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken non-judicial proceedings, or both.
(b) No delay or omission of Secured Party to exercise any right or power accruing upon the occurrence and during the continuance of any default as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such default or
an acquiescence therein; and every power and remedy given by this Agreement may be exercised from time to time, and as often as shall be deemed expedient, by Secured Party.
6. Further Assurances; Certain Waivers .
(a) Debtor agrees that, from time to time, at the expense of Debtor, Debtor shall promptly execute and deliver all further instruments and documents, and take all further action, that may be reasonably necessary or desirable, or that Secured Party may reasonably request, in order to perfect and protect the assignment and security interest granted or intended to be granted hereby or to enable Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, Debtor shall: (i) if any Collateral shall be evidenced by a promissory note or other instrument, deliver and pledge to Secured Party such note or instrument duly endorsed (without recourse) and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to Secured Party; and (ii) execute and file such financing statements or continuation statements, or amendments thereto, and such other instruments, endorsements or notices, as may be reasonably necessary or desirable, or as Secured Party may reasonably request, in order to perfect and preserve the assignments and security interests granted or purported to be granted hereby.
(b) Debtor hereby authorizes Secured Party to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of Debtor where permitted by law. Copies of any such statement or amendment thereto shall promptly be delivered to Debtor.
(c) Debtor shall pay all filing, registration and recording fees or re-filing, re-registration and re-recording fees, and all reasonable expenses incident to the execution and acknowledgment of this Agreement, any assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imports, assessments and charges arising out of or in connection with the execution and delivery of this Agreement, any agreement supplemental hereto and any instruments of further assurance.
(d) Debtor hereby waives, to the maximum extent permitted by law (i) all rights under any law limiting remedies, including recovery of a deficiency, under an obligation secured by a mortgage on real property if the real property is sold under a power of sale contained in the mortgage, and all defenses based on any loss whether as a result of any such sale or otherwise; (ii) all rights under any law to require Secured Party to pursue any other person, any security which Secured Party may hold, or any other remedy before proceeding against Debtor; (iii) all rights to participate in any security held by Secured Party until the obligations have been paid in full; and (iv) all rights to require Secured Party to give any notices of any kind including, without limitation, notices of nonpayment, nonperformance, protest, dishonor, default, delinquency or acceleration, or to make any presentments, demands or protests, except as expressly provided in this Agreement. Secured Party shall incur no liability as a result of the sale of the Collateral, or any part thereof, at any private sale pursuant to this Agreement conducted in a commercially reasonable manner. Debtor hereby waives any claims
against Secured Party arising by reason of the fact that the price at which the Collateral may have been sold at such a private sale was less than the price that might have obtained at a public sale or was less than the aggregate amount of the obligations, even if Secured Party accepts the first offer received and does not offer the Collateral to more than one offeree, provided that such private sale is conducted in a commercially reasonable manner.
7. Miscellaneous.
(a) This Agreement and the security interest in the Collateral created hereby shall terminate when the obligations and indebtedness hereunder have been fully, finally and irrevocably paid and all other obligations of Debtor to Secured Party have been performed in full. Prior to such termination, this shall be a continuing agreement.
(b) This Agreement and the rights and obligations of the parties hereunder 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 Collateral, 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 Agreement 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 Agreement has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of Georgia.
(c) DEBTOR AND SECURED PARTY BY ACCEPTANCE OF THIS AGREEMENT, EACH HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY ACTION UNDER OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, AND IN NO EVENT SHALL SECURED PARTY BE LIABLE FOR PUNITIVE OR CONSEQUENTIAL DAMAGES.
(d) This Agreement shall inure to the benefit of Secured Party, its successors and assigns and to any other holder who derives from Secured Party title to or an interest in the indebtedness which this Agreement secures, and shall be binding upon Debtor, its successors and assigns.
(e) In case any one or more of the provisions of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had not been included.
(f) Any provision to the contrary notwithstanding contained herein or in the Note or in any other instrument now or hereafter evidencing, securing or otherwise
relating to any secured indebtedness, neither Secured Party nor any other holder of the secured indebtedness shall be entitled to receive or collect, nor shall Debtor be obligated to pay, interest on any of the secured indebtedness in excess of the maximum rate of interest at the particular time in question, if any, which, under applicable law, may be charged to Debtor (herein the Maximum Rate), provided that the Maximum Rate shall be automatically increased or decreased, as the case may be, without notice to Debtor from time to time as of the effective time of each change in the Maximum Rate, and if any provision herein or in the Note or in such other instrument shall ever be construed or held to permit the collection or to require the payment of any amount of interest in excess of that permitted by applicable law, the provisions of this paragraph shall control and shall override any contrary or inconsistent provision herein or in the Note or in such other instrument. The intention of the parties being to conform strictly to the usury limitations under applicable law, the Note, this Agreement, and each other instrument now or hereafter evidencing or relating to any secured indebtedness shall be held subject to reduction to the amount allowed under said applicable law as now or hereafter construed by the courts having jurisdiction.
(g) All notices pursuant to this Security Agreement shall be in writing and shall be directed to the addresses set forth below or such other address as may be specified in writing, by certified or registered mail, return receipt requested by the party to which or whom notices are to be given. Notices shall be deemed to be given three (3) days after mailing by depositing same in any United States post office station or letter box in a post-paid envelope.
(h) The singular used herein shall include the plural.
(i) If more than one party shall execute this Agreement as Debtor, the term Debtor shall mean all such parties executing this Agreement, and all such parties shall be jointly and severally obligated hereunder.
(j) A photocopy or other reproduction of this Agreement or of any financing statement is sufficient as a financing statement and may be filed as a financing statement in any government office.
(k) THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date written below.
Dated: June 8, 2012.
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DEBTOR: |
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MT. V PROPERTY HOLDINGS, LLC |
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By: |
/s/ Christopher F. Brogdon |
(L.S.) |
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Christopher F. Brogdon, Manager |
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Addresses of Debtor: |
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3050 Peachtree Road, NW, Suite 355 |
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Two Buckhead Plaza |
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Atlanta, Georgia 30305 |
Exhibit 10.18
GUARANTY
1. As an inducement for and in consideration of any loan(s), lease(s), or other financial accommodation(s) of even date herewith granted to MT. V PROPERTY HOLDINGS, LLC (hereinafter called Obligor), by METRO CITY BANK (hereinafter, together with its successors and assigns, called Lender), the undersigned, AdCare Health Systems, Inc., (hereinafter called Guarantor), hereby, jointly and severally if more than one, unconditionally guarantees the full and prompt payment, observance and performance when due, whether at the stated time, by acceleration or otherwise, of all obligations of Obligor to Lender, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, whether or not of the same or similar class or of like kind to any indebtedness incurred contemporaneously with the execution of this Guaranty, and whether now or hereafter existing, or due or to become due, including without limitation, the following:
(a) Any and all amounts owed by Obligor under, in connection with, and/or pursuant to the indebtedness evidenced by that certain Term Note of even date herewith, in the original principal sum of One Million Eight Hundred Ten Thousand and No/100 Dollars ($1,810,000.00) (the Note), with interest thereon according to the provisions thereof, and all obligations of Obligor thereunder, in connection therewith and/or pursuant to any and all agreements and other documents in connection therewith; and
(b) All sums advanced or expenses or costs paid or incurred (including without limitation reasonable attorneys fees and other legal expenses) by Lender pursuant to or in connection with the Note or any agreements and other documents in connection therewith plus applicable interest on such sums, expenses or costs; and
(c) Any extensions, modifications, changes, substitutions, restatements, renewals or increases or decreases of any or all of the indebtedness referenced above; and
(d) Any and all other indebtedness, obligations and liabilities of any kind, of Obligor to Lender, now or hereafter existing, absolute or contingent, joint and/or several, due or not due, secured or unsecured, arising by operation of law or otherwise, direct or indirect, including without limitation indebtedness, obligations and liabilities of Obligor to Lender as a member of any partnership, syndicate or association or other group and whether incurred by Obligor as principal, surety, endorser, guarantor, accommodation party or otherwise, and any obligations which give rise to an equitable remedy for breach of performance if such breach gives rise to an obligation by Obligor to pay Lender.
2. All of the obligations described in paragraph 1, above, shall be referred to hereafter as the Liabilities. In the event any of the Liabilities shall not be paid or performed according to their terms, Guarantor, shall immediately pay, perform or cause the performance of the same, this Guaranty being a guarantee of full payment and performance and not of collectibility and in no way conditional or contingent. This Guaranty is an absolute, unconditional and continuing guarantee the Guarantor being jointly and severally liable with the Obligor and is in no way conditioned upon any requirement that Lender first attempt to collect payment or seek performances of any of the Liabilities from Obligor or any other obligor or guarantor, or resort to any other security or other means of obtaining payment or performance of any of the Liabilities, or upon any other contingency whatsoever.
3. Guarantor further agrees to pay all expenses (including reasonable attorneys fees and legal expenses) paid or incurred by Lender in endeavoring to collect the Liabilities, or any part thereof, and in enforcing or defending this Guaranty, whether or not a lawsuit is commenced.
4. Guarantor represents and warrants that Guarantor is either financially interested in Obligor or will receive other material economic benefits as a result of any loan(s), leases(s) or other financial accommodation(s) made or granted to Obligor by Lender from time to time. Guarantor further represents and warrants that Guarantor is willing to enter into this Guaranty as a material inducement to Lender to extend loan(s) or other financial accommodation(s), or to enter into lease(s), from time to time to or with Obligor, and acknowledges that Lender would not be willing to extend any such loan(s) or other financial accommodation(s) or enter into such lease(s) absent this Guaranty. In any community property state, if Guarantor is married, Guarantors promise is made for the benefit of Guarantors marital community.
5. Guarantor agrees that the occurrence of any of the following events shall constitute a default under this Guaranty: (a) the failure of Guarantor to perform or observe any obligation under this Guaranty or (b) the death, incompetency, dissolution or insolvency of Obligor or Guarantor or any other guarantor of any of the Liabilities, or (c) the inability of Obligor or Guarantor or any other guarantor of any of the Liabilities to pay debts as they mature, or (d) an assignment by Obligor or Guarantor or any other guarantor of any of the Liabilities for the benefit of creditors, or (e) the institution of any proceeding by or against Obligor or Guarantor or any other guarantor of any of the Liabilities (under the Bankruptcy Code or otherwise) seeking to adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or seeking the appointment of a receiver, trustee or custodian for itself or for all or a substantial part of its property unless such petition and the case or proceeding initiated thereby are dismissed within thirty (30) days from the date of such filing, or (f) the institution by Guarantor or any other person or entity of any liquidation, dissolution or reorganization proceedings with respect to Guarantor, or (g) the default by Obligor under any other agreement or document concerning or relating to the Liabilities, or (h) the default by Guarantor under the terms of any other obligation of Guarantor to Lender, or (i) any representation or warranty contained herein or in any other document delivered by or on behalf of Guarantor or Obligor to Lender shall be false or misleading in any material respect, or (j) there shall be a default or event of default under any other agreement or document securing or guaranteeing any of the obligations secured by this Guaranty. Upon and after the occurrence of a default hereunder, the Liabilities shall be automatically accelerated and shall become immediately due and payable by Guarantor, or Guarantors successor or estate, without presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by Guarantor.
6. Guarantor further agrees that this Guaranty shall continue to be effective or shall be reinstated, as the case may be, if at any time payment to or for the benefit of Lender of the Liabilities, or any part thereof, is rescinded or must otherwise be returned by Lender due to the insolvency, bankruptcy or reorganization of Obligor or otherwise, all as though such payment to or for the benefit of Lender had not been made.
7. Lender may, without demand or notice of any kind, at any time when any amount shall be due and payable hereunder by Guarantor, appropriate and apply toward the payment of such amount, and in such order of application as Lender may from time to time elect, any property, balances, credits, deposits, accounts, instruments or moneys of Guarantor in the possession or control of Lender for any purpose.
8. This Guaranty shall be a continuing, absolute and unconditional guaranty of payment and performance and not of collectibility and shall remain in full force and effect as to Guarantor, subject to discontinuance only as follows: Guarantor, or any person duly authorized and acting on behalf of Guarantor, may give written notice to Lender of discontinuance of this Guaranty, but no such notice shall be effective in any respect until it is actually received by Lender and no such notice shall affect or impair the obligations hereunder of Guarantor with respect to any Liabilities existing at the date of receipt of such notice by Lender (or any Liabilities required or permitted to be advanced by Lender on or after such date), or for renewals or extensions of such Liabilities made after Lender receives Guarantors notice, or any interest thereon or any expenses paid or incurred by Lender in endeavoring to collect such Liabilities, or any part thereof, or in enforcing this Guaranty against Guarantor. Any such notice of discontinuance by or on behalf of any Guarantor shall not affect, impair or release the obligations hereunder of any other guarantor with respect to any of the Liabilities.
9. Guarantor hereby agrees to provide Lender, upon filing, or as appropriate, a certified copy of Guarantors most recent federal tax return, and within ninety (90) days of its fiscal year end, a compiled financial statement prepared in accordance with generally accepted accounting principles, and concurrently therewith a certificate to the effect that such Guarantor is not aware of any condition or event which constitutes a default under this Guaranty, or under any notes or other obligations of Guarantor or which, with the mere passage of time or notice, or both, would constitute a default under this Guaranty.
10. Lender may at any time and from time to time, without the consent of, or notice to, Guarantor, and without affecting, impairing or releasing the obligations of Guarantor hereunder, do any or all of the following: (a) retain or obtain a security interest in any property to secure any of the Liabilities or any obligations hereunder, (b) retain or obtain the primary or secondary liability of any party or parties, in addition to Guarantor, with respect to any of the Liabilities, (c) renew, extend (including extensions beyond the original term), modify, alter, change the interest rate of, release or discharge any of the Liabilities, (d) settle, release or compromise any liability of any other guarantor of any of the Liabilities or any liability of any nature of any other party or parties with respect to the Liabilities or any security therefor, (e) accept partial payments of the Liabilities, (f) settle, release (by operation of law or otherwise), compound, compromise, collect or liquidate any of the Liabilities and any property securing any of the Liabilities, (g) consent to the transfer of any property securing any of the Liabilities, (h) resort to Guarantor for payment of any of the Liabilities, whether or not Lender shall have resorted to any property securing any of the Liabilities or any obligation hereunder or shall have proceeded against any other guarantor or any other party primarily or secondarily liable on any of the Liabilities, (i) make any other changes in its agreements with Obligor, and (j) stop lending money or extending other credit to Obligor.
11. Any amount received by Lender from whatsoever source and applied by it to the payment of the Liabilities may be applied in such order of application as Lender may from time to time elect.
12. Guarantor is now adequately informed of Obligors financial condition, and Guarantor agrees to keep so informed. Guarantor agrees that Lender has no obligation to provide Guarantor with any present or future information concerning the financial condition of Obligor. Guarantor has not relied on financial information furnished by Lender in deciding to execute this Guaranty.
13. Guarantor hereby agrees that any debt of Obligor to Guarantor is expressly subordinate to the right of Lender to payment of the Liabilities, and that Lender shall be entitled to full payment of all of the Liabilities prior to the exercise by Guarantor of any rights to payment or performance of any debt which the Obligor may owe Guarantor. Guarantor assigns to Lender all rights Guarantor may have in any proceeding under the Federal Bankruptcy Code or any receivership or insolvency proceeding of Obligor, including all rights of Guarantor to be paid by Obligor. This assignment does not prevent Lender from enforcing Guarantors obligations hereunder in any way.
14. Guarantor hereby expressly waives: (a) notice of the acceptance of this Guaranty, (b) notice of the existence or creation of all or any of the Liabilities, (c) presentment, demand, notice of dishonor, protest, and all other notices whatsoever, (d) all diligence in collection or protection of or realization upon the Liabilities or any part thereof, any obligation hereunder, or any security for any of the foregoing, (e) all defenses based on suretyship or impairment of collateral, and (f) all events and circumstances which might otherwise constitute a defense or discharge of the obligations of Obligor, Guarantor or any other guarantor. Guarantor shall not be released or discharged, either in whole or in part, by Lenders failure to perfect, delay in perfection or failure to continue the perfection of any security interest in any property that secures any of the Liabilities or any obligation of Guarantor hereunder, or to protect the property covered by any such security interest.
15. Lender may, without notice to Guarantor or Obligor 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 assignee, transferee or holder were herein by name specifically given such rights, powers and benefits. Lender shall have an unimpaired right, prior and superior to that of any such assignee, transferee or holder, to enforce this Guaranty for the benefit of Lender as to so much of the Liabilities as it has not sold, assigned, or transferred.
16. 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.
17. No action of Lender permitted hereunder shall in any way affect, impair or release this Guaranty.
18. For purposes of this Guaranty, Liabilities shall include all obligations of Obligor to Lender stated herein, notwithstanding any right or power of Obligor or anyone else to assert any claim or defense as to the payment or performance of such Liabilities, and no such claim or defense shall affect, impair or release the obligations of Guarantor hereunder.
19. This Guaranty shall be binding upon Guarantor and the heirs, legal representatives, successors and assigns of Guarantor. If more than one party shall execute this Guaranty, the term Guarantor shall mean all parties executing this Guaranty, and all such parties shall be jointly and severally obligated hereunder.
20. As further consideration for the loan(s), lease(s), or other financial accommodation(s) by Lender to Obligor and as a material inducement to Lender to make or enter into the loan(s), lease(s), or other financial accommodation(s) and accept this Guaranty, and notwithstanding anything to the contrary contained in this Guaranty or any other document delivered in connection with this Guaranty, Guarantor hereby irrevocably waives, disclaims and relinquishes any and all claims, rights or remedies which Guarantor may now have or hereafter acquire against Obligor that arise in connection with this Guaranty and/or the performance by Guarantor hereunder, including without limitation any claim, remedy or right of subrogation, reimbursement, exoneration, contribution, indemnification, or participation in any claim, right or remedy of Lender against Obligor or any security which Lender now has or hereafter acquires, whether or not such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise.
21. All notices pursuant to this Guaranty shall be in writing and shall be directed to the addresses set forth herein or such other address as may be specified in a notice given in accordance with the requirements of this paragraph. Except as otherwise specifically provided herein, notices shall be deemed to be given three (3) days after mailing by certified or registered mail, return receipt requested, or one (1) business day after deposit with a recognized overnight courier, or when personally delivered to and received at the required address.
22. In the event any provision contained in this Guaranty is 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.
23. THE GUARANTOR HEREBY WAIVES THE RIGHT TO REQUIRE THE HOLDER OF THE OBLIGATIONS HEREBY GUARANTEED TO TAKE ACTION AGAINST THE DEBTOR AS PROVIDED IN O.C.G.A. § 10-7-24.
24. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF GEORGIA AND/OR OHIO, EXCEPT AND ONLY TO THE EXTENT OF PROCEDURAL MATTERS RELATED TO THE PERFECTION AND ENFORCEMENT OF LENDERS RIGHTS AND REMEDIES AGAINST THE REAL AND PERSONAL PROPERTY COLLATERAL, 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 AGREEMENT 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 THE NOTE AND THIS GUARANTY HAVE BEEN APPLIED FOR, CONSIDERED, APPROVED AND MADE, AND ALL NECESSARY LOAN DOCUMENTS HAVE BEEN ACCEPTED BY LENDER IN THE STATE OF GEORGIA.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the date written below.
June 8, 2012 |
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AdCare Health Systems, Inc. |
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By: |
/s/ Christopher F. Brogdon |
Address of Guarantor: |
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Christopher F. Brogdon, |
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Vice Chairman and Chief Acquisition Officer |
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5057 Troy Road |
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Springfield, OH 45502 |
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Exhibit 10.19
METRO CITY BANK
$1,267,000.00 |
June 8, 2012 |
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, jointly and severally if more than one, promises to pay to the order Metro City Bank or its successors or assigns at 5441 Buford Highway, Suite 109, Atlanta, GA 30340 , or such other place as the holder hereof may from time to time designate in writing, the principal sum of One Million Two Hundred Sixty-Seven Thousand and No/100 Dollars ($1,267,000.00), plus interest on the unpaid principal balance at the rate specified below. Interest shall be calculated on the basis of the actual number of days elapsed over a year of 360 days.
The interest rate shall be fixed at six and 25/100ths (6.25%) percent continuing through and until the Maturity Date (hereinafter defined).
The repayment of this note shall be as follows:
(i) |
On July 11 th , 2012 (the Maturity Date), the entire outstanding principal balance of the indebtedness hereby evidenced, together with all accrued but unpaid interest thereon, and all other sums due to holder hereunder shall be due and payable in full. |
Payments, when made, shall be applied in a manner and order according to the sole discretion of the holder of this Note.
If any payment required to be paid by this Note is not paid in full within ten (10) days after its scheduled due date, the holder hereof may assess a late charge in the amount of five percent (5%) of the unpaid amount of the payment, or the maximum permitted by applicable law, whichever is less.
The undersigned and all guarantors and endorsers of this Note waive presentment, demand, protest and notice of non-payment and each of the undersigned is bound as a principal and not as a surety. The undersigned and all guarantors and endorsers hereof agree to any extensions of time of payment and partial payment, before, at or after maturity, without notice. This Note shall bear interest at the rate of four points (4.00%) per annum above the interest rate otherwise payable under the terms of this Note after maturity or in the event of default until paid in full.
This Note and any extensions or renewals hereof is secured by (i) that certain Mortgage and Security Agreement dated of even date herewith and filed in the Recorders Office of Stone County, Arkansas, and any and all amendments and replacements thereto, executed by the undersigned in favor of Metro City Bank and (ii) other security.
Failure to make any payment when due, or any default under any encumbrance or agreement securing this Note, or any default in any document executed simultaneously herewith in connection with the loan, shall cause the entire remaining unpaid balance of principal and interest to be declared immediately due and payable at the option of the holder of this Note.
In the event holder shall employ counsel to collect this obligation or to administer, protect or foreclose the security given in connection herewith, the undersigned, jointly and severally if more than one, agrees to pay reasonable attorneys fees for services of such counsel, whether or not suit is brought, plus costs incurred in connection therewith. Time is of the essence of this Note.
This Promissory Note will 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 real and personal property collateral, 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 Agreement 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 Note has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of Georgia.
If the Note is mutilated, lost, stolen or destroyed, then upon surrender thereof (if mutilated) or receipt of evidence and indemnity (if lost, stolen or destroyed) the undersigned shall execute and deliver a new note of like tenor, which shall show all payments which have been made on account of the principal hereof.
Exhibit 10.20
LOAN AGREEMENT
THIS LOAN AGREEMENT, made and entered into this 8 th day of June, 2012, by and between MT. V PROPERTY HOLDINGS, LLC (the Borrower) and METRO CITY BANK (Lender).
W I T N E S S E T H :
WHEREAS, Borrower desires financing on certain real property and business assets located thereon in Stone County, Arkansas, more particularly described in Exhibit A attached hereto and by this reference made a part hereof (Property);
WHEREAS, of even date herewith, Lender and Borrower entered into that certain loan wherein the Lender agreed to provide a loan (the Loan) to Borrower for Three One Million Two Hundred Sixty-Seven Thousand and No/100 Dollars ($1,267,000.00) to refinance existing debt and for soft costs; and
WHEREAS, in order to loan funds to Borrower, Lender enters into this Loan Agreement with Borrower for the purposes herein contained; and
WHEREAS, the loan made hereunder will be secured in part by a second security interest in the Property and a second lien position on furniture, fixtures and equipment located at the Property.
NOW, THEREFORE, for and in consideration of the premises, the sum of Ten ($10.00) Dollars and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
AMOUNT AND TERMS OF LOAN
1.1 RECITALS. Each of the above recitals are hereby incorporated into and made a part of this Agreement by this reference.
1.2 LOAN AND NOTE. The term Loan herein shall refer to the indebtedness of Borrower to Lender evidenced by a Note in the original principal amount One Million Two Hundred Sixty-Seven Thousand and No/100 Dollars ($1,267,000.00) in form satisfactory to Lender (the Note).
ARTICLE II
CONDITION OF LENDING
2.1 CONDITIONS PRECEDENT TO THE LOAN. As a condition precedent to Lender making the Loan, the Borrower shall deliver to Lender on or before the date of the Loan closing, the following, in form and substance satisfactory to Lender:
(a) The Note;
(b) Mortgage and Security Agreement;
(c) UCC-1 Financing Statements;
(d) Evidence satisfactory to Lender of ownership of the Collateral by Borrower free and clear of encumbrances of any kind;
(e) Guaranties from Mountain View Nursing, LLC and AdCare Health Systems, Inc. (collectively, the Guarantor or Guarantors);
(f) Such other documents as reasonably may be required by the Lender or Lenders counsel.
The Loan documents as provided above (collectively, the Loan Documents), when prepared, shall set forth the matters contained in the Loan Agreement and contain such other provisions as are deemed necessary or desirable by Lender. The form and substance of all such documents must be satisfactory to Lender prior to disbursement by Lender of any of the proceeds of the Loan.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BORROWER
The Borrower represents and warrants to, and agrees with the Lender as follows:
3.1 POWER AND AUTHORIZATION.
(a) The Borrower and/or Guarantor have authorized the execution and delivery of the Note and all other documents contemplated by this Loan Agreement, and such execution and delivery will not violate any law, or any other agreement to which Borrower and/or Guarantor are a party.
(b) This Loan Agreement constitutes, and upon execution and delivery thereof, the Note, the Mortgage and Security Agreement and the ancillary documents will constitute, legal, valid and binding obligations of the Borrower and/or Guarantor enforceable against the Borrower and/or Guarantor.
3.2 FINANCIAL CONDITION. The reports and financial statements of Borrower and Guarantor submitted to Lender in connection with the Loan have been prepared from Borrowers or Guarantors books and records in accordance with generally accepted accounting principles and practices, consistently applied, and fairly reflect the financial condition of Borrower and Guarantor for the periods therein defined. No material adverse changes have since occurred.
Except as disclosed in the aforesaid reports and financial statements, Borrower:
(a) Has not incurred any debts, liabilities or other obligations nor committed to incur any debts, liabilities or obligations;
(b) Has no liabilities, direct or contingent;
(c) Has made no investments in, advances to, or guaranties or obligations of any other company, person, firm, corporation, or other entity;
(d) Is not subject to any judgment, nor are there any liens, encumbrances or security interests outstanding against Borrower or any of its properties.
3.3 LITIGATION. There is no litigation, proceeding, claim or dispute pending or threatened against Borrower, the adverse determination of which would materially affect Borrowers ability to repay the loan or otherwise perform hereunder.
ARTICLE IV
COVENANTS BY BORROWER
Until all the obligations of Borrower under this Agreement have been performed and paid in full, Borrower covenants and agrees as follows:
4.1 INSURANCE. Borrower shall maintain or require Guarantor to maintain insurance on the Collateral (hereinafter defined) as described in Article VII hereof in such amounts and against such hazards and liabilities as is customarily maintained by other companies in the same geographical area operating similar businesses or as may be otherwise requested by the Lender. All such policies of insurance shall be in form and substance and with insurance companies satisfactory to Lender, and Borrower shall deliver evidence thereof to Lender upon request. Further, upon request, Lender shall be designated as loss payee or as mortgagee under any such policies, as its interests may appear.
4.2 MAINTENANCE OF BUSINESS AND CORPORATE EXISTENCE. Borrower shall comply with all valid and applicable statutes, ordinances, rules and regulations and shall keep in force and effect all licenses, permits, bonds and franchises necessary for the proper conduct of its business.
4.3 ADVERSE CHANGES AND LITIGATION. Borrower shall immediately inform Lender of any material adverse change in its financial condition, or the financial condition of Guarantor, and shall promptly inform Lender of any litigation or threatened litigation or of the occurrence of any other event or circumstance which might substantially affect the financial condition or business of Borrower or Guarantor.
4.4 MANAGEMENT AND OWNERSHIP. No material adverse change shall be made without the prior written consent of Lender in the management or ownership of Borrower, or in the manner in which its business is conducted. Said consent shall not be unreasonably withheld by Lender.
4.5 FINANCIAL STATEMENTS. Within ninety (90) days of Borrowers fiscal year end, Borrower and Guarantor shall furnish to Lender a copy of their compiled financial statement. Borrowers and Guarantors financial statements shall contain a balance sheet, profit and loss statement and aging of accounts receivable and accounts payable, all in reasonable detail, prepared in accordance with generally accepted accounting principles, consistently applied. Each set of financial statements shall be prepared by a certified public accountant or accountants acceptable to Lender and certified by a duly authorized officer of Borrower to be correct and accurate. Borrower and Guarantor shall also furnish a copy of its income tax returns, and such other or additional financial information as Lender may from time to time request. Borrower shall also furnish evidence of payment of real estate taxes on the Property to Lender on an annual basis.
4.6 OTHER DEBTS. Other than the loan from Lender of even date herein in the principal amount of $1,267,000.00 (to be replaced by permanent financing in favor of Economic Development Corporation of Fulton County in the principal amount of $1,304,000.00), and that certain first lien in favor of Metro City Bank in the principal amount of $1,810,000.00, the Borrower shall not directly or indirectly incur, create, assume or permit to exist any obligation for payment of borrowed money, excepting only unsecured current liabilities incurred in the ordinary course of business and obligations contemplated by this Agreement, without the express written consent of Lender, which consent shall not be unreasonably withheld. Further, Borrower shall not guarantee the obligations of any person or entity, excepting only obligations contemplated by this Agreement provided, however, that Borrower shall have the right to guarantee the obligations of Mountain View Nursing, LLC with respect to such entitys working capital financing with a third party lender.
4.7 SALE OF COLLATERAL. Borrower shall not sell, lease, transfer or otherwise dispose of any of the Collateral as described in ARTICLE VII hereof, other than in the ordinary course of Borrowers business. If Borrower should desire to sell any of the Collateral, a release price therefor will be determined at the sole discretion of Lender, and upon the sale of that Collateral, the release price will be paid over by Borrower to Lender and applied by Lender to payments due on the Note, in inverse order of the due dates, and Lender shall thereupon release its lien or security interest upon the Collateral sold.
4.8 BULK SALE. The Borrower shall not, without the prior written consent of the Lender, sell, transfer or convey all or any part of its interest in its assets to another entity.
4.9 ENCUMBRANCES. Borrower shall not incur or permit to exist nor allow Guarantor to incur or permit to exist any encumbrance, pledge or lien upon or against any of the Collateral, except:
(a) Liens or security interests required or expressly contemplated or permitted by this Agreement;
(b) Liens for taxes, assessments and other governmental charges not yet due and liens of carriers, warehousemen, mechanics and materialmen incurred in the ordinary course of business for sums not yet due; and
(c) Tax liens which are being contested in good faith.
4.10 TAXES. Borrower shall pay promptly, when due, all taxes, assessments and governmental charges or levies imposed upon the Borrower or upon the income or any property of the Borrower, as well as all claims of any kind (including claims for labor, material, supplies or rent) which, if unpaid, might become a lien upon any or all of the Collateral.
4.11 EXAMINATION OF RECORDS. Borrower shall permit any representative of Lender to examine and to audit any or all of Borrowers books and records and to copy portions thereof, and to visit and inspect any of the Collateral upon receipt of reasonable notification and request.
ARTICLE V
EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute an Event of Default:
(a) Nonpayment, when due, of any principal, accrued interest, premium, fee or other charge due under the Note.
(b) Default by Borrower in the due observance or performance of any term, covenant, condition or agreement on its part to be performed under this Loan Agreement, the Note, or under any other document contemplated by this Loan Agreement.
(c) If Borrower shall:
(1) Make a general assignment for the benefit of its creditors;
(2) File a voluntary petition in bankruptcy;
(3) Be adjudicated as bankrupt or insolvent;
(4) File any petition or answer seeking, consenting to, or acquiescing in, reorganization, arrangement, composition, liquidation, dissolution or similar relief, under any present or future statute, law or regulation;
(5) File an answer admitting or failing to deny the material allegations of the petition against it for any such relief;
(6) Admit in writing its inability to pay its debts as they mature;
(7) Discontinue business; or
(8) Be unable to pay debts as they become due.
(d) Borrower fails to have vacated or set aside within thirty (30) days of its entry any court order appointing a receiver or trustee for all or a substantial portion of the Borrowers property.
(e) Any warranty, representation or statements made or furnished to Lender by Borrower in connection with the Loan or in connection with this Agreement (including any warranty, representation or statement in the application of Borrower for the Loan or in any accompanying financial statements) or to induce Lender to make the Loan, proves to be untrue, misleading or false in any material respect.
(f) Borrower suffers or permits any lien, encumbrance or security interest to attach to any of its property, except as herein otherwise expressly permitted, or if any judgment shall be entered against Borrower or any attachment shall be made against any property of Borrower, which judgment or attachment shall remain undischarged, unbonded, or undismissed for a period of ten (10) days.
(g) Borrower defaults in the payment of any principal or interest on any obligation to Lender or to any other creditor.
(h) Borrower shall sell, lease, or otherwise transfer or convey any of the Collateral, or any interest therein without Lenders prior written approval, except as herein otherwise expressly permitted.
(i) Borrower defaults under or causes to be revoked any state or county permit or license.
ARTICLE VI
REMEDIES ON EVENT OF DEFAULT
6.1 DECLARE NOTE DUE. Upon the occurrence of any Event of Default as defined in this Agreement, the Note, the Mortgage and Security Agreement and Security Agreement or any other document contemplated by this Agreement, then in any such event, Lender at its option, may declare the entire unpaid balance of the Note to be forthwith due and payable, and thereupon such balance shall become so due and payable without presentment, protest or further demand or notice of any kind, all of which are hereby expressly waived, and Borrower will forthwith pay to Lender the entire principal of and interest accrued on the Note.
6.2 OTHER REMEDIES. Upon the occurrence or discovery of an Event of Default, the Lender shall, in addition to its option to declare the entire unpaid amount of the Note due and payable, at its option:
(a) Move to protect its rights and remedies as a secured party under the Mortgage and Security Agreement and Security Agreement, by extrajudicial authority as set forth in those instruments, by action at law or equity, or by any other lawful remedy to enforce payment.
(b) Apply the proceeds from any disposition of the Collateral to the satisfaction of the following items in the order in which they are listed:
(1) The expenses of taking, preserving, insuring, repairing, holding and selling the Collateral, including any legal costs and attorneys fees. If any of the Note shall be referred to an attorney for collection, Borrower and all others liable on the Note, jointly and severally agree to pay reasonable attorneys fees and all costs of collection.
(2) The unpaid amount of any interest due on the Note, and all other expenses of Lender.
(3) The unpaid principal amounts of the Note.
(4) Any other indebtedness of Borrower to Lender.
(5) The remainder, if any, to Borrower, it being understood and agreed that if the proceeds realized from the disposition of the Collateral shall fail to satisfy items (1) through (4) above, Borrower shall forthwith pay any such deficiency to Lender upon demand.
(c) Exercise any and all rights of setoff which Lender may have against any account, fund or property of any kind, tangible or intangible, belonging to Borrower and which shall be in Lenders possession or under Lenders control.
ARTICLE VII
COLLATERAL
Borrowers obligation for payment of the Note shall be collateralized by the following (the Collateral):
7.1 MORTGAGE AND SECURITY AGREEMENT. A second Mortgage and Security Agreement on property located at 706 Oak Grove Street, Mountain View, Arkansas 72560.
7.2 UCC FINANCING STATEMENTS. A second security interest on all Borrowers furniture, fixtures and equipment located at the Property.
ARTICLE VIII
MISCELLANEOUS
8.1 CLOSING. The Lender shall not be obligated to make the Loan or advance any funds until Borrower has fully met all requirements herein set forth to be met by Borrower, and until Borrower has paid to Lender and any other parties entitled thereto, all fees and other charges due in connection with the Loan.
8.2 AMENDMENTS. No amendment of any provisions of this Loan Agreement, nor consent to any departure of Borrower therefrom, 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.
8.3 NOTICES. All notices and other communications provided for hereunder shall be in writing and mailed or telegraphed or delivered.
If to Borrower:
3050 Peachtree Road, NW, Suite 355
Two Buckhead Plaza
Atlanta, Georgia 30305
If to Lender:
METRO CITY BANK
5441 Buford Highway, Suite 109
Atlanta, GA 30340
8.4 GOVERNING LAW AND PARTIES BOUND. This Agreement and Note 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 Agreement 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 Agreement 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.
8.5 ATTORNEYS FEES AND EXPENSES. If Lender shall incur any cost or expense, including, without limitation, reasonable attorneys fees, in connection with this Agreement, the Note or the Loan, in any manner whatsoever, direct or indirect, whether with regard to the collection of amounts due, protection of Collateral, defense of Lender or otherwise, upon demand by Lender, Borrower shall pay the same or shall reimburse Lender therefor in full.
8.6 ASSIGNMENT BY BORROWER. No commitment issued by Lender to Borrower for the Loan nor any of Borrowers rights hereunder shall be assignable by Borrower without the prior written consent of Lender.
8.7 NO WAIVER: REMEDIES. No failure on the part of the Lender, and no delay in exercising any right under this Loan Agreement, shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Loan Agreement preclude any other or further exercise thereof or the exercise of any other right.
8.8 SEVERABILITY. In the event that any clause or provisions of this Loan Agreement or any document or instrument contemplated by this Agreement shall be held to be invalid by any court of competent jurisdiction, the invalidity of such clause or provision shall not affect any of the remaining portions or provisions of this Loan Agreement.
8.9 TIME. Time is of the essence of this Agreement.
8.10 INTEREST. Interest shall be calculated on the basis of an actual 360 day year.
8.11 PERMANENT REFINANCING CONDITIONS. In regards to permanent financing, Borrower acknowledges the following:
a. Should the Borrower opt to not have Lender provide permanent take out financing of this Loan within the SBA 504 program, Borrower shall be charged a one percent (1%) separation fee; and
b. If, for any reason, the Borrower is unable to obtain SBA approval of an SBA 504 Loan, Lender shall have the right to pay down the Loan using i) the certificate of deposit collaterally assigned to Lender; ii) the estimated 504 lender costs held in escrow as more particularly shown on the disbursement memorandum executed of even date herewith; and iii) all funds held in the capital improvements account held by Lender in the amount of $300,000.00.
8.12 GRACE AND NOTICE OF CURE RIGHTS. Notwithstanding any other provision to the contrary contained in this Agreement or in any of the other Loan Documents, upon the occurrence of a monetary default or a monetary Event of Default under any of the Loan Documents, Lender shall not be required to send written notice to Borrower and/or Guarantors. All loan payments are due on the first (1 st ) day of each month, however; payments will not be considered late until ten (10) days thereafter. In the event the default does not involve the payment of money by Borrower to Lender, Borrower and Guarantors shall have thirty (30) days following receipt of such notice to fully cure such default. In the event the default is cured within such period, it shall be as if no default had occurred.
8.13 MISCELLANEOUS. Notwithstanding anything contained in this Loan Agreement or in the loan documents, including, without limitation, any security agreement executed in connection with this Loan Agreement (collectively, the Loan Documents) evidencing the Loan, Lender agrees that its collateral for the loan expressly excludes (and any definition of Collateral in the Loan Documents shall also expressly exclude) all of the following property of MOUNTAIN VIEW NURSING, LLC:
(a) all Accounts; (b) all Payment Intangibles; (c) all Instruments, Chattel Paper (including Electronic Chattel Paper), Documents, Letter-of-Credit Rights, Supporting Obligations and Commercial Tort Claims, in each case to the extent arising out of, relating to or given in exchange for or settlement of or to evidence the obligation to pay any Account or Payment Intangible; (d) all General Intangibles (including contract rights and trademarks, copyrights, patents and other intellectual property) that arise out of or relate to any Account or Payment Intangible or from which any Account or Payment Intangible arises;
(e) all remedies, guarantees and collateral evidencing, securing or otherwise relating to or associated with any Account or Payment Intangible, including all rights of enforcement and collection; (f) all Commercial Lockboxes, Governmental Lockboxes, Collection Accounts and other Deposit Accounts into which Collections or other proceeds of Collateral or Advances are deposited, and all checks or Instruments from time to time representing or evidencing the same; (g) all cash, currency and other monies at any time in the possession or under the control of MOUNTAIN VIEW NURSING, LLCs working capital or operating lender [the Operations Lender] or a bailee of such Operations Lender; (h) all books and records evidencing or relating to or associated with any of the foregoing; (i) all information and data compiled or derived with respect to any of the foregoing (other than any such information and data subject to legal restrictions of patient confidentiality); and (j) all Collections, Accessions, receipts and Proceeds derived from any of the foregoing, all words with capitalized letters being defined in the Uniform Commercial Code or the loan agreement between MOUNTAIN VIEW NURSING, LLC and Operations Lender.
IN WITNESS WHEREOF, the parties have executed this Loan Agreement as of the date first above written.
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BORROWER: |
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Signed, sealed and delivered in the presence of: |
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MT. V PROPERTY HOLDINGS, LLC |
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/s/ [ILLEGIBLE] |
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By: |
/s/ Christopher F. Brogdon |
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Witness |
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Christopher F. Brogdon, Manager |
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Jan. 30, 2016 |
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Notary Public |
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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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By: |
/s/ [ILLEGIBLE] |
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Witness |
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Name: |
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Title: |
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Notary Public |
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(Bank Seal) |
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The undersigned hereby expressly agree and consent to all of the terms and conditions contained herein and further agree to be bound by all of the terms and conditions contained herein. This 8 th day of June, 2012.
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GUARANTOR: |
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MOUNTAIN VIEW NURSING, 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 Chief Acquisition Officer |
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[Corporate Seal] |
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Exhibit 10.21
MORTGAGE AND SECURITY AGREEMENT
This Mortgage and Security Agreement (the Mortgage), dated 8th day of June 2012, between MT. V PROPERTY HOLDINGS, LLC (hereinafter referred to as Mortgagor) whose mailing address is 3050 Peachtree Road, NW, Suite 355, Two Buckhead Plaza, Atlanta, Georgia 30305, and Metro City Bank, the address of which is 5441 Buford Highway, Suite 109, Atlanta, GA 30340 , (hereinafter Mortgagee).
W I T N E S S E T H:
MORTGAGOR HEREBY IRREVOCABLY GRANTS, BARGAINS, SELLS, TRANSFERS, ASSIGNS AND CONVEYS TO MORTGAGEE WITH WARRANTY COVENANTS:
All that certain property and all buildings and all other improvements now thereon or hereafter constructed thereon situated in the County of Stone, State of Arkansas, described in Exhibit A attached hereto and made a part hereof by reference, (commonly known as 706 Oak Grove Street, Mountain View, Arkansas 72560) (the Premises);
TOGETHER WITH all of the following which, with the Premises, are herein collectively called the Mortgaged Property:
(a) All appurtenances and all estate and rights of Mortgagor in and to the Premises;
(b) All water and water rights, ditch and ditch rights, reservoir and reservoir rights, stock or interests in irrigation or ditch companies, royalties, minerals, oil and gas rights, lease or leasehold interests owned by Mortgagor, now or hereafter used or useful in connection with, appurtenant to or related to the Premises;
(c) All right, title and interest of Mortgagor in and to all streets, roads and public places, opened or proposed, and all easements and rights of way, public or private, now or hereafter used in connection with the Premises;
(d) All improvements, fixtures, equipment, furniture, inventory and other articles of personal property, and all rights therein, now owned or hereafter acquired by Mortgagor and affixed to, placed upon or used in connection with the Premises, and all replacements thereof and substitutions therefor (as further described in paragraph A.7); and
(e) All awards, payments or other amounts, including interest thereon, which may be made with respect to the Mortgaged Property as a result of injury to or decrease in the value of the Mortgaged Property or as a result of the exercise of the power of condemnation or eminent domain.
(f) All rights to the rents, issues and profits of the Mortgaged Property as well as the fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities (provided, however, that the Mortgagor shall be entitled to the collect and retain the above until a Default has occurred hereunder).
FOR THE PURPOSE OF SECURING, in such order of priority as Mortgagee may elect, the full and prompt payment, observance and performance when due, of all present and future obligations and indebtedness of Mortgagor to Mortgagee, whether at the stated time, by acceleration or otherwise, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, whether or not of the same or similar class or of like kind to any indebtedness incurred contemporaneously with the execution of this Mortgage, and whether now or hereafter existing, or due or to become due, including without limitation, the following:
(a) Obligations under Promissory Note . Payment of any and all amounts owed by Mortgagor under that certain Promissory Note from Mortgagor of even date herewith, in the original principal sum of One Million Two Hundred Sixty-Seven Thousand and No/100 Dollars ($1,267,000.00) (the Note) with a maturity date of July 11 th , 2012, with interest thereon according to the provisions thereof, and all obligations of Mortgagor under, in connection with and/or pursuant to this Mortgage granted by Mortgagor as security for payment of the foregoing indebtedness; and
(b) All Sums in Connection with Note and Mortgage . All sums advanced or expenses or costs paid or incurred (including without limitation reasonable attorneys fees and other legal expenses) by Mortgagee pursuant to or in connection with the Note, Guarantee or this Mortgage, plus any interest on such sums, expenses or costs; and
(c) Any Changes to Note . Any extensions, amendments, modifications, changes, substitutions, restatements, renewals or increases or decreases to the Note and all other indebtedness secured by this Mortgage; and
(d) Any Additional Loans . Such additional sums with interest thereon as may be hereafter borrowed from Mortgagee, its successors or assigns, by the then record owner or owners of the Mortgaged Property when evidenced by another promissory note or notes, which are by the terms thereof secured by this Mortgage; and
(e) Any and All Other Indebtedness . All other indebtedness, obligations and liabilities of any kind, of Mortgagor to Mortgagee, now or hereafter existing, absolute or contingent, direct or indirect, joint and/or several, due or not due, secured or unsecured, arising by operation of law or otherwise including indebtedness, obligations and liabilities to Mortgagee of Mortgagor as a member of any partnership, syndicate or association or other group and whether incurred by Mortgagor as principal, surety, endorser, guarantor, accommodation party or otherwise, and any obligations which give rise to an equitable remedy for breach of performance if such breach gives rise to an obligation by Mortgagor to pay Mortgagee, and including any judgments in connection with any of the foregoing.
This Mortgage shall secure all of such obligations up to the maximum principal amount of One Million Two Hundred Sixty-Seven Thousand and No/100 Dollars ($1,267,000.00) and such amount may be advanced and repaid in whole or in part and again advanced and repaid in whole or in part from time to time without affecting the existence or priority of the lien of this Mortgage and this total shall limit only the total amount of principal which may be secured by this Mortgage at any one time.
A. PROVISIONS RELATING TO THE MORTGAGED PROPERTY
A.1 Taxes and Governmental Claims and Other Liens . Mortgagor agrees to pay or cause to be paid, prior to the date they would become delinquent if not paid, all taxes, assessments and governmental charges whatsoever levied upon or assessed or charged against the Mortgaged Property, including, without limitation, all water and sewer taxes, assessments and other charges, taxes, impositions and rents, if any. Mortgagor shall give to Mortgagee a receipt or receipts, or certified copies thereof, evidencing every such payment by Mortgagor, not later than forty-five (45) days after such payment is made but not later than forty-five (45) days after such payment would become delinquent if not paid. Mortgagor also agrees to promptly and faithfully pay, satisfy, and obtain the release of all other claims, liens, encumbrances, and contracts, affecting or purporting to affect the title to, or which may be or appear to be liens on, the Mortgaged Property or any part thereof, and all costs, charges, interest and penalties on account thereof, including, without limitation, the claims of all persons supplying labor or materials to the Mortgaged Property and to give Mortgagee, upon demand, evidence satisfactory to Mortgagee of the payment, satisfaction or release thereof.
A.2 Insurance . Mortgagor agrees to keep the Mortgaged Property insured against loss or damage by fire and other casualty with extended coverage and against any other risks or hazards which in the opinion of Mortgagee should be insured against, and in any case against all risks which persons engaged in the same business as is carried on at the Premises customarily insure against, with the minimum amount of said insurance to be no less than the amount of the Note. Mortgagor shall also carry insurance against the risk of rental or business interruption at the Premises, in an amount deemed satisfactory by Mortgagee. All of such insurance shall be placed with a company or companies and in such form and with such endorsements as may be approved or required by Mortgagee. Loss under all such insurance shall be payable to Mortgagee in accordance with this paragraph, and all such insurance policies shall be endorsed with a standard, non-contributory Mortgagees clause in favor of Mortgagee. Mortgagor shall also carry public liability insurance, in such form, amount and with such companies as Mortgagee may from time to time require, naming Mortgagee as an additional insured. The policy or policies evidencing all insurance referred to in this paragraph and receipts for the payments of premiums thereon shall be delivered to and held by Mortgagee. All such insurance policies shall contain a provision requiring at least ten (10) days notice to Mortgagee prior to any cancellation or modification. Mortgagor shall give Mortgagee satisfactory evidence of renewal of all such policies with premiums paid at least thirty (30) days before expiration. Mortgagor agrees to pay all premiums on such insurance as they become due, and will not permit any condition to exist on or with respect to the Mortgaged Property which would wholly or partially invalidate any insurance thereon. Mortgagee shall not by the fact of approving, disapproving, accepting, preventing, obtaining or failing to obtain any such insurance, incur any liability for the form or legal sufficiency or absence of insurance contracts, solvency of insurers, or payment of losses, and Mortgagor hereby expressly assumes full responsibility therefor and all liability, if any, thereunder. Effective upon any default hereunder, all of Mortgagors right, title and interest in and to all such policies and any unearned premiums paid thereon are hereby assigned to Mortgagee, which shall have the right, but not the obligation, to assign the same to any purchaser of the Mortgaged Property at any foreclosure sale or other disposition thereof. The requirements of Mortgagee for insurance under the provisions of this paragraph may be modified or amended in whole or in part by Mortgagee, in its reasonable discretion, and Mortgagor agrees, upon any expiration of any existing policy or policies of insurance, to provide a replacement policy or policies which shall meet such amended or modified insurance standards. In the event of a loss, Mortgagor shall give immediate written notice to the insurance carrier and Mortgagee. Mortgagor hereby appoints Mortgagee its attorney-in-fact for the purposes hereinafter set out, and authorizes and empowers Mortgagee, at Mortgagees option and in Mortgagees sole discretion as attorney-in-fact for Mortgagor, to make proof of loss, to adjust and prosecute any action arising from such insurance policies, to collect and receive insurance proceeds, and to deduct therefrom Mortgagees expenses incurred in the collection of such proceeds. Mortgagor understands and agrees that the power of attorney hereby granted to Mortgagee is a power coupled with an interest and is irrevocable until Mortgagees interest hereunder is terminated by the payment and performance of all of Mortgagors obligations and indebtedness secured hereby. In the event of any insured damage to or destruction of the Mortgaged Property or any part thereof (herein called an Insured Casualty), if (A) in the reasonable judgment of Mortgagee, the Mortgaged Property can be restored within ten (10) months after insurance proceeds are made available to an economic unit not less valuable and not less useful than the same was prior to the
Insured Casualty, and after such restoration will adequately secure the outstanding balance of the Indebtedness, and (B) no Event of Default (hereinafter defined) shall have occurred and be then continuing, then the proceeds of insurance may, in Mortgagees sole discretion, be applied to reimburse Mortgagor for the cost of restoring, repairing, replacing or rebuilding the Mortgaged Property or part thereof subject to Insured Casualty, as provided below; and Mortgagor hereby covenants and agrees forthwith to commence and diligently to prosecute such restoring, repairing, replacing or rebuilding; provided, however, in any event Mortgagor shall pay all costs (and if required by Mortgagee, Mortgagor shall deposit the total thereof with Mortgagee in advance) of such restoring, repairing, replacing or rebuilding in excess of the net proceeds of insurance made available pursuant to the terms hereof. Notwithstanding the above, the proceeds of insurance collected upon any Insured Casualty shall, at the option of Mortgagee, in its sole discretion, be applied to the payment of the Indebtedness, whether or not then due, or applied to reimburse Mortgagor for the cost of restoring, repairing, replacing or rebuilding the Mortgaged Property or part thereof subject to the Insured Casualty, in the manner set forth below. Any such application to the Indebtedness shall not be considered a voluntary prepayment requiring payment of the prepayment consideration provided in the Note, and shall not reduce or postpone any payments otherwise required pursuant to the Note, other than the final payment on the Note. If proceeds of insurance, if any, are made available to Mortgagor for the restoring, repairing, replacing or rebuilding of the Mortgaged Property, Mortgagor hereby convenants to restore, repair, replace or rebuild the same to be of at least equal value and of substantially the same character as prior to such damage or destruction, all to be effected in accordance with applicable law and plans and specifications approved in advance by Mortgagee. If Mortgagor is entitled to reimbursement out of insurance proceeds held by Mortgagee, such proceeds shall be disbursed from time to time upon Mortgagee being furnished with (1) evidence satisfactory to it (which evidence may include inspection[s] of the work performed) that the restoration, repair, replacement and rebuilding covered by the disbursement has been completed in accordance with plans and specifications approved by Mortgagee, (2) evidence satisfactory to it of the estimated cost of completion of the restoration, repair, replacement and rebuilding, (3) funds, or, at Mortgagees option, assurances satisfactory to Mortgagee that such funds are available, sufficient in addition to the proceeds of insurance to complete the proposed restoration, repair, replacement and rebuilding, and (4) such architects certificates, waivers of lien, contractors sworn statements, title insurance endorsements, bonds, plats of survey and such other evidences of cost, payment and performance as Mortgagee may reasonably require and approve; and Mortgagee may, in any event, require that all plans and specifications for such restoration, repair, replacement and rebuilding be submitted to and approved by Mortgagee prior to commencement of work. With respect to disbursements to be made by Mortgagee: (A) no payment made prior to the final completion of the restoration, repair, replacement and rebuilding shall exceed ninety percent (90%) of the value of the work performed from time to time: (B) funds other than proceeds of insurance shall be disbursed prior to disbursement of such proceeds; and (C) at all times, the undisbursed balance of such proceeds remaining in the hands of Mortgagee, together with funds deposited for that purpose or irrevocably committed to the satisfaction of Mortgagee by or on behalf of Mortgagor for that purpose, shall be at least sufficient in the reasonable judgment of Mortgagee to pay for the cost of completion of the restoration, repair, replacement or rebuilding, free and clear of all liens or claims for lien and the costs. Any surplus which may remain out of insurance proceeds held by Mortgagee after payment of such costs of restoration,
repair, replacement or rebuilding shall be paid to any party entitled thereto. In no event shall Mortgagee assume any duty or obligation for the adequacy, form or content of any such plans and specifications, nor for the performance, quality or workmanship of any restoration, repair, replacement and rebuilding. Notwithstanding anything to the contrary contained herein, the proceeds of insurance reimbursed to Mortgagor in accordance with the terms and provisions of this Mortgage shall be reduced by the reasonable costs (if any) incurred by Mortgagee in the adjustment and collection thereof and in the reasonable costs incurred by Mortgagee of paying out such proceeds (including, without limitation, reasonable attorneys fees and costs paid to third parties for inspecting the restoration, repair, replacement and rebuilding and reviewing the plans and specifications therefor). If the insurance proceeds are applied to the payment of the sums secured by this Mortgage, any such application of proceeds to principal shall be in such order as Mortgagee may determine and, if after so applying such insurance proceeds Mortgagee reasonably determines the remaining security to be inadequate to secure the remaining indebtedness, Mortgagor shall upon written demand from Mortgagee prepay on principal such an amount as will reduce the remaining indebtedness to a balance for which adequate security is present.
A.3 Condemnation and Other Awards . If the Mortgaged Property or any part thereof is taken or diminished in value, or if a consent settlement is entered, by or under threat of such proceeding, the award or settlement payable to Mortgagor by virtue of its interest in the Mortgaged Property shall be, and by these presents is, assigned, transferred and set over unto, and to be held by Mortgagee subject to the lien and security interest of this Mortgage, and disbursed at Mortgagees option, (a) to hold all or any portion of such proceeds to be used to reimburse Mortgagor for the costs of reconstruction or repair of the Mortgaged Property, or (b) to apply all or any portion of such proceeds to the payment of the sums secured by this Mortgage, whether or not then due. In the event of a taking of the Mortgaged Property or any part thereof (herein called a Condemnation), if (A) in the reasonable judgment of Mortgagee, the Mortgaged Property can be restored within ten (10) months after the proceeds of the condemnation proceeds are made available to an economic unit not less valuable (including an assessment by Mortgagee of the impact of the termination of any Leases due to such Condemnation) and not less useful than the same was prior to the Condemnation, and after such restoration will adequately secure the outstanding balance of the Indebtedness, and (B) no Event of Default (hereinafter defined) shall have occurred and be then continuing, then the proceeds may, in Mortgagees sole discretion, be applied to reimburse Mortgagor for the cost of restoring, repairing, replacing or rebuilding the Mortgaged Property or part thereof subject to the Condemnation, as provided below; and Mortgagor hereby covenants and agrees forthwith to commence and diligently to prosecute such restoring, repairing, replacing or rebuilding; provided, however, in any event Mortgagor shall pay all costs (and if required by Mortgagee, Mortgagor shall deposit the total thereof with Mortgagee in advance) of such restoring, repairing, replacing or rebuilding in excess of the net proceeds of the Condemnation made available pursuant to the terms hereof. Notwithstanding the above, the proceeds collected upon any Condemnation shall, at the option of Mortgagee, in its sole discretion, be applied to the payment of the Indebtedness, whether or not then due, or applied to reimburse Mortgagor for the cost of restoring, repairing, replacing or rebuilding the Mortgaged Property or part thereof subject to the Condemnation, in the manner set forth below. Any such application to the Indebtedness shall not
be considered a voluntary prepayment requiring payment of the prepayment consideration provided in the Note, and shall not reduce or postpone any payments otherwise required pursuant to the Note, other than the final payment on the Note. If proceeds of the Condemnation, if any, are made available to Mortgagor for the restoring, repairing, replacing or rebuilding of the Mortgaged Property, Mortgagor hereby covenants to restore, repair, replace or rebuild the same to be of at least equal value and of substantially the same character as prior to such damage or destruction, all to be effected in accordance with applicable law and plans and specifications approved in advance by Mortgagee. If Mortgagor is entitled to reimbursement out of the proceeds of the Condemnation held by Mortgagee, such proceeds shall be disbursed from time to time upon Mortgagee being furnished with (1) evidence satisfactory to it (which evidence may include inspection[s] of the work performed) that the restoration, repair, replacement and rebuilding covered by the disbursement has been completed in accordance with plans and specifications approved by Mortgagee, (2) evidence satisfactory to it of the estimated cost of completion of the restoration, repair, replacement and rebuilding, (3) funds, or, at Mortgagees option, assurances satisfactory to Mortgagee that such funds are available, sufficient in addition to the proceeds of Condemnation to complete the proposed restoration, repair, replacement and rebuilding, and (4) such architects certificates, waivers of lien, contractors sworn statements, title insurance endorsements, bonds, plats of survey and such other evidences of cost, payment and performance as Mortgagee may reasonably require and approve; and Mortgagee may, in any event, require that all plans and specifications for such restoration, repair, replacement and rebuilding be submitted to and approved by Mortgagee prior to commencement of work. With respect to disbursements to be made by Mortgagee: (A) no payment made prior to the final completion of the restoration, repair, replacement and rebuilding shall exceed ninety percent (90%) of the value of the work performed from time to time: (B) funds other than proceeds of the Condemnation shall be disbursed prior to disbursement of such proceeds; and (C) at all times, the undisbursed balance of such proceeds remaining in the hands of Mortgagee, together with funds deposited for that purpose or irrevocably committed to the satisfaction of Mortgagee by or on behalf of Mortgagor for that purpose, shall be at least sufficient in the reasonable judgment of Mortgagee to pay for the cost of completion of the restoration, repair, replacement or rebuilding, free and clear of all liens or claims for lien and the costs. Any surplus which may remain out of the Condemnation proceeds held by Mortgagee after payment of such costs of restoration, repair, replacement or rebuilding shall be paid to any party entitled thereto. In no event shall Mortgagee assume any duty or obligation for the adequacy, form or content of any such plans and specifications, nor for the performance, quality or workmanship of any restoration, repair, replacement and rebuilding. Notwithstanding anything to the contrary contained herein, the proceeds of the Condemnation reimbursed to Mortgagor in accordance with the terms and provisions of this Mortgage shall be reduced by the reasonable costs (if any) incurred by Mortgagee in the adjustment and collection thereof and in the reasonable costs incurred by Mortgagee of paying out such proceeds (including, without limitation, reasonable attorneys fees and costs paid to third parties for inspecting the restoration, repair, replacement and rebuilding and reviewing the plans and specifications therefor). If the Condemnation proceeds are applied to the payment of the sums secured by this Mortgage, any such application of proceeds to principal shall be in such order as Mortgagee may determine and, if after so applying such proceeds Mortgagee reasonably determines the remaining security to be inadequate to secure the remaining indebtedness, Mortgagor shall upon written demand from Mortgagee prepay on
principal such an amount as will reduce the remaining indebtedness to a balance for which adequate security is present.
A.4 Condition of Mortgaged Property .
(a) Mortgagor agrees to properly care for and keep the Mortgaged Property in good condition and repair. Without the prior written consent of Mortgagee, Mortgagor agrees not to cause or permit any building or improvement which constitutes a part of the Premises to be removed, demolished or structurally altered, in whole or in part, or any fixture or article of personal property which constitutes a portion of the Mortgaged Property to be removed (other than in the ordinary course of Mortgagors business), damaged or destroyed. Mortgagee consents to the removal and replacement of fixtures and articles of personal property if such articles of personal property are simultaneously replaced with fixtures and articles of equal or greater value, that are free and clear of all liens other than that of Mortgagees, and if the value of the Mortgaged Property is not diminished thereby. Mortgagor agrees not to abandon the Premises or leave the Premises unprotected, unguarded, vacant or deserted, and not to cause or permit any waste to the buildings, improvements or fixtures constituting any portion of the Mortgaged Property. Mortgagor agrees (i) to repair, restore and reconstruct in good and workmanlike manner to the condition required hereby any improvement which constitutes a part of the Mortgaged Property which may be damaged or destroyed, in accordance with the provisions of Paragraph A.2 hereof (provided however, Mortgagor shall not be required to so repair, restore or reconstruct if Mortgagee elects under Paragraph A.2 to retain the insurance proceeds and apply them to the sums secured by this Mortgage, and further provided, if Mortgagee elects to use such proceeds to reimburse Mortgagor for the costs of such repair, restoration or reconstruction, provided however, if such proceeds are not adequate, Mortgagor shall deposit with Mortgagee such additional funds as may be required to accomplish such repair, restoration or reconstruction); (ii) not to permit any lien of mechanics or materialmen to attach to the Mortgaged Property, provided, however, that the filing of any such lien shall not constitute a default hereunder if Mortgagor shall provide an adequate bond with respect to any such lien, in accordance with applicable law or shall provide indemnification with respect to such lien with security therefor acceptable to Mortgagee in Mortgagees sole discretion; (iii) to comply with all laws, ordinances, regulations or governmental orders affecting the Mortgaged Property or requiring any alterations or improvements thereto; (iv) not to commit, suffer or permit any act with respect to the Mortgaged Property in violation of law or of any covenants, prior encumbrances, conditions or restrictions affecting the Mortgaged Property; (v) to make or cause to be made from time to time all needed or proper replacements, repairs and renewals; (vi) to perform all obligations and pay all amounts as and when required to protect Mortgagors interest in the Premises; and (vii) to do any other act or acts, all in a timely and proper manner which from the character or use of the Mortgaged Property may be reasonably necessary to protect and preserve the value of the Mortgaged Property. Mortgagor covenants and agrees that the Mortgaged Property shall be used for a skilled nursing facility and for no other purpose without Mortgagees prior written consent.
(b) Mortgagee may, during normal business hours and upon reasonable notice to Mortgagor, enter and inspect or protect the Mortgaged Property, in person or by agent, in such
manner and to such extent as it may deem necessary. In the event that Mortgagor fails to maintain the Mortgaged Property in the manner specified herein, Mortgagee may, at its option, undertake such repairs or maintenance, for the account of Mortgagor, as Mortgagee deems necessary. The cost of any such repairs or maintenance undertaken by Mortgagee shall become immediately due and payable by Mortgagor to Mortgagee and Mortgagee shall be reimbursed therefor in accordance with the provisions of Paragraph B.2 hereof. The right of Mortgagee to undertake such repairs or maintenance shall be optional, shall not impose any duties on Mortgagee, and shall not be deemed to cure any Default under this Mortgage for failure to maintain the Mortgaged Property in accordance with the covenants herein.
A.5 Alterations and Additions . Mortgagor agrees that, as to any alteration, addition, construction or improvement to be made upon the Premises, all plans and specifications therefor shall be prepared by or on behalf of Mortgagor and shall be subject to Mortgagees written approval in advance of the commencement of work; once commenced, all work thereunder shall be prosecuted with due diligence; all construction thereof will be in substantial accordance with the plans and specifications so approved and will comply with all laws, ordinances or regulations made or promulgated by any governmental agency or other lawful authority and with the rules of the applicable Board of Fire Underwriters. Should Mortgagor at any time fail to comply with any notice or demand by any governmental agency, which alleges a failure to comply with any such plan, specification, law, ordinance or regulation, such failure shall, at Mortgagees option, constitute a default hereunder.
A.6 Status of Title . Mortgagor represents and warrants that it is the lawful owner of the Mortgaged Property in fee simple, subject to no liens or encumbrances, except for covenants, conditions, restrictions, easements and rights-of-way of record, if any. Mortgagor represents and warrants that it has full right, power and authority to convey and mortgage the Mortgaged Property and to execute this Mortgage. Mortgagor also agrees to protect, preserve and defend its interest in the Mortgaged Property and title thereto, including full performance of any prior claim or lien; to appear and defend this Mortgage in any action or proceeding affecting or purporting to affect the Mortgaged Property, the lien of this Mortgage thereon or any of the rights of Mortgagee hereunder, and to pay all costs and expenses incurred by Mortgagee in connection with any such action or proceeding, including, without limitation, reasonable attorneys fees, whether any such action or proceeding progresses to judgment and whether brought by or against Mortgagee, Mortgagor, or the Mortgaged Property. Mortgagee shall be reimbursed for any such costs and expenses in accordance with the provisions of Paragraph B.2 hereof. Mortgagee may, but shall not be under any obligation to, appear or intervene in any such action or proceeding and retain counsel therein and defend the same or otherwise take such action therein as it may deem advisable or may settle or compromise the same and, for any of such purposes, may expend and advance such sums of money as it may deem necessary, and Mortgagee shall be reimbursed therefor in accordance with the provisions of Paragraph B.2 hereof. Notwithstanding the above, Mortgagee consents to a first lien in favor of Mortgagee from Mortgagor in the principal amount of $1,810,000.00.
A.7 Personal Property Security Interest .
(a) This Mortgage shall cover, and Mortgagor hereby grants to Mortgagee a security interest in, all property now or hereafter affixed or attached or incorporated upon the Mortgaged Property including without limitation all furnaces, heating equipment, air conditioners, fans, water heaters, pipes, ducts, wiring and electrical fixtures, conduits, plumbing, sinks, partitions, restroom fixtures, light fixtures, windows and window coverings, and floor, ceiling and wall coverings, and all replacements thereof and substitutions therefor, which, to the fullest extent permitted by law shall be deemed fixtures and a part of the real property. In addition, this Mortgage shall cover, and Mortgagor hereby grants to Mortgagee a security interest in: (i) all building materials, fixtures, equipment and other personal property to be incorporated into any improvements constructed on the Premises; (ii) all interest of Mortgagor in all goods, materials, supplies, fixtures, equipment, machinery, furniture and furnishing and other personal property which are now or hereafter affixed to, placed upon or used in connection with, the Premises, and all replacements thereof, and substitutions therefor; (iii) all interest of Mortgagor in all rents, issues and profits, as well as the fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities, and insurance policies, insurance and condemnation awards and proceeds, tradenames, trademarks and service marks, arising from or related to the Premises and any other business conducted on the Premises; (iv) all of Mortgagors interest in and rights pursuant to any franchise or licensing agreement or other similar agreement with respect to the Premises but only to the extent such grant does not violate any such agreement; and (v) all books, records and files relating to, any of the foregoing. The security interests hereby granted are first and prior liens on the property described. To the extent any property covered by this Mortgage consists of rights in action or personal property covered by the Uniform Commercial Code, this Mortgage constitutes a Security Agreement and is intended to create a security interest in such property in favor of Mortgagee. This Mortgage shall be self-operative with respect to such property, but Mortgagor agrees to execute and deliver on demand such security agreements, financing statements and other instruments as Mortgagee may request in order to manifest or perfect the lien hereof more specifically upon any of such property. If the lien of this Mortgage on any property is subject to a prior security agreement covering such property, then in the event of any default hereunder, all the right, title and interest of Mortgagor in and to any and all deposits made in connection with the transaction whereby such prior security agreement was made is hereby assigned to Mortgagee, together with the benefit of any payments now or hereafter made in connection with such transactions.
(b) Mortgagor agrees that all property of every nature and description, whether real or personal covered by this Mortgage, together with all personal property covered by any separate security interests granted to Mortgagee, are encumbered as one unit, and that upon default by Mortgagor under the Note, or under this Mortgage or any security agreement given pursuant to this paragraph, this Mortgage and such security interest, at Mortgagees option, may be foreclosed and the security sold in the same proceedings, and all of the Premises (both realty and personalty) may, at Mortgagees option, be sold as such in one unit as a going business. The filing of any financing statement relating to any personal property or rights or interest generally or specifically described herein shall not be construed to diminish or alter any of Mortgagees rights or priorities hereunder.
A.8 Severability . Should any term, provision, covenant or condition of this Mortgage be held to be void or invalid, the same shall not affect any other term, provision, covenant or condition of this Mortgage, but the remainder hereof shall be effective as though such term, provision, covenant or condition had not been contained herein.
A.9 Usury Disclaimer . Any provision contained herein or in the Note or in any other instrument now or hereafter evidencing, securing or otherwise relating to any indebtedness secured by this Mortgage to the contrary notwithstanding, neither Mortgagee nor the holder of any such indebtedness shall be entitled to receive or collect, nor shall Mortgagor be obligated to pay, interest on any of the secured indebtedness in excess of the maximum rate of interest at the particular time in question, if any, which, under applicable law, Mortgagee is then permitted to charge Mortgagor (herein the Maximum Rate) provided that the Maximum Rate shall be automatically increased or decreased as the case may be, without notice to Mortgagor from time to time as of the effective time of each change in the Maximum Rate, and if any provision herein or in the Note or in such other instrument shall ever be construed or held to permit the collection or to require the payment of any amount of interest in excess of that permitted by applicable law, the provisions of this Paragraph A.9 shall control and shall override any contrary or inconsistent provision herein or in the Note or in such other instrument. The intention of the parties being to conform strictly to the usury limitations under applicable law, the Note, this Mortgage, and each other instrument now or hereafter evidencing or relating to any indebtedness secured by this Mortgage shall be held subject to reduction to the maximum amount allowed under said applicable law as now or hereafter construed by the courts having jurisdiction, and any payment by Mortgagor over the Maximum Rate shall be applied to reduce the principal amount due and owing to Mortgagee.
A.10 Impounds . Upon an Event of Default, Mortgagor shall, if requested by Mortgagee, deposit with Mortgagee or Mortgagees designee on each monthly payment date as set forth in the Note one-twelfth (1/12) of the reasonably estimated amount of real estate taxes assessed or to be assessed against the Mortgaged Property for the then current year, together with one-twelfth (1/12) of the reasonably estimated total of all insurance premiums required to be paid for the then current year, as estimated by Mortgagee, together with any extra amount necessary so that the next installments of real property taxes and insurance premiums may be paid from the deposit. Such moneys shall at proper times be progressively returned to Mortgagor for use in the actual payment of said taxes and said insurance premiums or, at the sole election of Mortgagee, Mortgagee may use said moneys in actual payment of such taxes and premiums, but nothing in this paragraph shall release Mortgagor from its obligations to pay said taxes as the same become due and payable under the provisions hereof and to maintain in force all insurance policies as required hereby. All impounds required under this paragraph shall be deposited in a non-interest bearing account of Mortgagee, to be withdrawn by Mortgagee at such times and in such amounts as shall be deemed appropriate by Mortgagee. All amounts deposited under this paragraph are hereby assigned to Mortgagee as additional security for all indebtedness secured by this Mortgage, and so long as any Default as set forth herein including a default in the payment of any money or the performance of any covenant or obligation herein contained or secured hereby exists, then any deposits made by Mortgagor under this paragraph may, at the option of
Mortgagee, be applied to the payment of principal and interest or other indebtedness secured hereby, in lieu of being applied to any of the purposes of this paragraph A.10 previously stated.
A.11 Environmental Representations and Warranties . Mortgagor represents and warrants to Mortgagee that: (a) during the period of Mortgagors ownership of the Mortgaged Property, there has not been, nor will there be in the future, any use, generation, manufacture, storage, treatment, disposal, release, or threatened release of any hazardous waste or substance by any person or entity on, or about the Mortgaged Property; (b) Mortgagor has no knowledge of, or reason to believe that there has been, except as previously disclosed to and acknowledged by Mortgagee in writing, (i) any use, generation, manufacture, storage, treatment, disposal, release, or threatened release of any hazardous waste or substance by any prior owners or occupants of the Mortgaged Property or (ii) any actual or threatened litigation or claims of any kind by any person or entity relating to such matters; and (c) except as previously disclosed to and acknowledged by Mortgagor in writing, (i) neither Mortgagor nor any tenant, contractor, agent, or other authorized user of the Mortgaged Property shall use, generate, manufacture, store, treat, dispose of, or release any hazardous waste or substance on, under, or about the Mortgaged Property and (ii) all such activity shall be conducted in full compliance with all applicable federal, state, and local laws, regulations and ordinances. Mortgagor, at any time during usual business hours, authorizes Mortgagee and its agents to enter upon the Mortgaged Property to make such inspections and tests, including, without limitation, intrusive tests, at Mortgagors expense, as Mortgagee may deem appropriate to determine compliance with this section of the Mortgage and the absence of any hazardous waste or hazardous substance on or near the Mortgaged Property. Any inspections or tests made by Mortgagee shall be for Mortgagees purposes only and shall not be construed to create any responsibility or liability on the part of Mortgagee. Mortgagor hereby (a) releases and waives any future claims against Mortgagee for indemnity or contribution in the event Mortgagor becomes liable for cleanup or other costs associated therewith, and (b) agrees to indemnify and hold harmless Mortgagee against any and all claims, losses, liabilities, damages, penalties, and expenses, which Mortgagee 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 Mortgagors ownership or interest in the Mortgaged Property, whether or not the same was or should have been known to Mortgagor. The provisions of this paragraph of the Mortgage, including the obligation to indemnify, shall survive the payment of the indebtedness secured herein and the satisfaction and reconveyance of the lien of this Mortgage and shall not be affected by Mortgagees acquisition of any interest in the Mortgaged Property, whether by foreclosure or otherwise. The terms hazardous waste, disposal, release, and threatened release, as used in this Mortgage shall have the same meanings as set forth in 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 Act, 49 U.S.C. Section 6901 et seq., as amended, or other applicable state or federal laws, rules or regulations adopted pursuant to any of the foregoing. The term hazardous waste and hazardous substance shall also include, without limitation, petroleum and petroleum by-products and asbestos. Notwithstanding anything contained in this paragraph, Mortgagee acknowledges that the Borrower may use office supplies,
cleaning substances, medical supplies and materials used in the ordinary course of operation for a nursing home facility and that such use is consistent with all Environmental Laws.
A.12 Time of the Essence . Time of each payment and performance of each of Mortgagors obligations pursuant to the Note, this Mortgage, and each other instrument or obligation of Mortgagor secured by this Mortgage or given in connection with this Mortgage is specifically declared to be of the essence.
B. GENERAL PROVISIONS .
B.1 Non-Waiver . Mortgagees acceptance of any sum after the same is due shall not constitute a waiver of the right either to require prompt payment, when due, of all other sums hereby secured or to declare a Default as herein provided. The acceptance by Mortgagee of any sum in an amount less than the sum then due shall be deemed an acceptance on account only and upon condition that it shall not constitute a waiver of the obligation of Mortgagor to pay the entire sum then due, and Mortgagors failure to pay said entire sum then due shall be and continue to be a default notwithstanding such acceptance of such amount on account, as aforesaid, and Mortgagee shall be at all times thereafter and until the entire sum then due shall have been paid, and notwithstanding the acceptance by Mortgagee thereafter of further sums on account, or otherwise, entitled to exercise all rights in this Mortgage conferred upon Mortgagee, upon the occurrence of a default, and the right to proceed with a sale under any notice of default and election to sell shall in no way be impaired, whether any of such amounts are received prior or subsequent to such notice. Consent by Mortgagee to any transaction or action which is subject to consent or approval of Mortgagee hereunder shall not be deemed a waiver of the right to require such consent or approval to future or successive transactions or actions.
B.2 Substitute Performance by Mortgagee . Should Mortgagor fail to pay or perform when required hereunder any obligation of Mortgagor hereunder, or if any action or proceeding is commenced which affects the Mortgaged Property or title thereto or the interest of Mortgagee therein, including but not limited to, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving bankruptcy, insolvency or reorganization, Mortgagee may, but shall not be obligated to, without regard to the adequacy of its security and without prejudice to its right to declare a Default hereunder, make such appearances, disburse such sums or take such actions as Mortgagee reasonably deems necessary to protect Mortgagees interest, including, but not limited to disbursement of attorneys fees and entry upon the Mortgaged Property to make repairs without notice or demand to or upon Mortgagor. Mortgagor hereby grants to Mortgagee an easement to enter upon the Property at any time, which easement shall continue for the duration of this Mortgage. The payment by Mortgagee of any delinquent tax, assessment or governmental charge, or any lien or encumbrance which Mortgagee in good faith believes may be prior to the lien of this Mortgage, or any insurance premium for insurance which Mortgagor is obligated to provide hereunder but which Mortgagee in good faith believes has not been supplied, shall be conclusive between Mortgagor and Mortgagee as to the propriety and amount so paid. Mortgagee shall be subrogated to all rights, equities and liens discharged by any such expenditure. After any Default hereunder and whether or not any action is instituted to enforce any provision of this Mortgage or the Note, Mortgagor promises to pay to Mortgagee, as
incurred, all reasonable sums incurred by Mortgagee for attorneys fees and costs to enforce this Mortgage or the Note or to defend any claims arising from this Mortgage or the Note. Any amounts so paid pursuant to this Paragraph B.2, or the cost of such performance, together with all costs and expenses incurred by Mortgagee in connection with such payment or performance, and any amounts for which Mortgagor is specifically obligated to reimburse Mortgagee pursuant to provisions hereof, including reasonable attorneys fees and interest on all such amounts at the default rate, as described in the Note, from the date paid by Mortgagee until repaid to Mortgagee, shall be payable by Mortgagor to Mortgagee immediately upon notice to Mortgagor of the amount owing, without further demand, shall be secured by this Mortgage and shall be added to the judgment in any suit brought by Mortgagee against Mortgagor. Failure to pay any such amount within ten (10) days after notice to Mortgagor of the amount owing shall constitute a Default hereunder and Mortgagee may, at its option, accelerate and demand full payment of all amounts secured hereby.
B.3 Powers of Mortgagee . At any time or from time to time, without liability therefor and without notice, without affecting the personal liability of any person or entity for the payment of the indebtedness secured hereby and without affecting the lien of this Mortgage upon the Mortgaged Property for the full amount of all amounts secured hereby, Mortgagee may (a) release all or any part of the Mortgaged Property, (b) consent to the making of any map or plat thereof, (c) join in granting any easement thereon or in creating any covenants or conditions restricting use or occupancy thereof, or (d) join in any extension agreement or in any agreement subordinating the lien or charge hereof.
B.4 Certain Definitions . The term Mortgagee means the original Mortgagee hereunder, its successors or assigns, and any future owner and holder, including pledgee, of the Note. All obligations of each Mortgagor hereunder are joint and several, and this Mortgage in all its parts applies to and binds the heirs, personal representatives, administrators, executors, successors and assigns of all and each of the parties hereto. If Mortgagor is two or more entities or persons, the term Mortgagor as used herein shall refer to them collectively, as well as individually.
B.5 Financial Statements and Other Disclosures . Mortgagor represents and warrants to Mortgagee that all financial statements and credit applications delivered by Mortgagor to Mortgagee accurately reflect the financial condition and operations of Mortgagor at the times and for the periods therein stated. So long as this Mortgage is in force and effect, Mortgagor agrees to deliver to Mortgagee, within 90 days after the end of each of Mortgagors fiscal years, an income statement on the use and operation of the Mortgaged Property, a complete and accurate copy of Mortgagors federal tax returns and financial statements, including a balance sheet, profit and loss statement and aging of accounts receivable and accounts payable, all schedules, all prepared in accordance with generally accepted accounting principles certified by an officer of the Mortgagor, showing the consolidated financial position of Mortgagor at the close of such fiscal year, and concurrently therewith a certificate of its Managing Member or chief financial officer to the effect that such officer is not aware of any condition or event which constitutes a default under this Mortgage or a default under any franchise agreement to which Mortgagor is a party, or under any notes or obligations or which, with the mere passage of time or notice, or
both, would constitute a default under this Mortgage or a default under any such franchise agreement or under any notes or obligations of the Mortgagor. Mortgagor hereby agrees to immediately notify Mortgagee in writing as to the existence of any notes payable by Mortgagor, or any related person or entity, to any franchisor for unpaid royalties or other unpaid obligations to such franchisor.
B.6 Amendment . No alteration, amendment or waiver of this Mortgage, or the Note shall be effective unless in writing and signed by the parties sought to be charged or bound thereby.
B.7 Governing Law . This Mortgage will 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 creation, perfection, priority and enforcement of Mortgagees rights and remedies against the Mortgaged 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 Mortgage is challenged or questioned, such provision shall be governed by whichever applicable state or federal law would uphold or would enforce such challenged or questioned provision. The loan transaction which 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 Mortgagee in the State of Georgia.
B.8 Statement Fee . For any statement requested by Mortgagor regarding the obligations and indebtedness secured by this Mortgage, or regarding the amounts held in any impound or reserve fund established hereunder, Mortgagee may charge a reasonable fee, not to exceed any maximum amount provided by any applicable law at the time of the request therefor.
B.9 Notices .
(a) All notices required or permitted to be given hereunder shall be delivered in person or by United States mail, postage prepaid, registered or certified with return receipt requested. If any written notice is mailed, it shall be deemed effective on the earlier of actual receipt or on the third (3rd) calendar day following the date of mailing. Notice given in person shall be effective only if, and when, received. The addresses of the parties for delivery of notices shall be the addresses set forth above.
(b) Any party may change its address for notice hereunder to any other location within the continental United States by giving ten (10) days notice to other parties in the manner set forth above.
B.10 Representations and Warranties of Mortgagor . Mortgagor and each signatory who signs on Mortgagors behalf hereby represents and warrants as follows:
(a) That this Mortgage, the Note and all other documents executed and delivered to Mortgagee in connection herewith were executed in accordance with the requirements of law and are valid, binding and enforceable in accordance with their terms.
(b) That the execution of this Mortgage, the Note and any other document executed and delivered to Mortgagee in connection herewith, and the full and complete performance of the provisions hereof and thereof, will not result in any breach of, or constitute a default under any indenture, mortgage, bank loan or credit agreement or other agreement or instrument to which Mortgagor is a party or by which Mortgagor is bound, and will not result in the creation of any lien, charge or encumbrance (other than those in favor of Mortgagee) upon any property or assets of Mortgagor.
(c) That as of the date of execution of this Mortgage, Mortgagor is the owner of the Mortgaged Property.
(d) The improvements on the Premises, existing and proposed, and their intended use will, when completed, comply fully with all applicable environmental, air quality, zoning, planning, building, subdivision and other governmental laws and requirements. Mortgagor specifically warrants that the existing improvements on each property listed on Exhibit A attached hereto and made a part hereof by reference, complies with all local zoning ordinances.
(e) The Premises are composed of one or more whole tax parcels with a separate tax assessment, independent of any land or improvements not encumbered by this Mortgage.
(f) There is no litigation pending or, to the best of Mortgagors knowledge, threatened against the Mortgaged Property. There is no litigation pending or, to the best of Mortgagors knowledge, threatened against Mortgagor, which might, so far as Mortgagor can now reasonably foresee, have a material adverse effect on Mortgagors ability to repay the Note or to perform the provisions of this Mortgage or of any other document delivered to Mortgagee in connection herewith. Mortgagor has disclosed all litigation pending and threatened against Mortgagor to Mortgagee in writing, and will disclose all future such litigation to Mortgagee in writing within thirty (30) days of its receipt of notice thereof.
(g) The Mortgaged Property complies with all applicable subdivision laws, ordinances, regulations, rules and other requirements.
(h) Mortgagor is not in default with respect to any existing indebtedness or obligation.
(i) Mortgagor has the power and authority to enter into and perform all terms and conditions of this Mortgage, the Note, and all other documents executed in connection with this transaction, and to incur the obligations herein and therein provided for.
(j) Unless previously disclosed to Mortgagee in writing, Mortgagor has not made any agreement or taken any action which may cause anyone to become entitled to a commission or finders fee as a result of the making of any loan to Mortgagor by Mortgagee.
These representations and warranties may be relied upon by Mortgagee with or without investigation by Mortgagee and they shall survive any such investigation, and shall continue and may be relied upon by Mortgagee until all obligations secured by this Mortgage have been paid in full.
B.11 Extensions and Modifications . From time to time, without affecting the obligation of Mortgagor or Mortgagors successors or assigns to pay the sums secured by this Mortgage and to observe the obligations of Mortgagor contained herein, without affecting the guaranty of any person, corporation, partnership or other entity for payment of the indebtedness secured hereby, and without affecting the lien or priority of lien hereof on the Mortgaged Property, Mortgagee may, at Mortgagees option, without giving notice to or obtaining the consent of Mortgagor, Mortgagors successors or assigns or of any other lienholders or guarantors, and without liability on Mortgagees part, extend the time for payment of said indebtedness or any part thereof, reduce the payments thereon, release anyone liable on any of said indebtedness, accept a renewal note or notes therefor, modify the terms and time of payment of said indebtedness, release from this Mortgage any part of the Mortgaged Property, take or release other or additional security, reconvey any part of the Mortgaged Property, consent to the granting of any easement or dedication, join in any extension or subordination agreement and agree in writing with any person obligated to pay the same to modify the rate of interest or period of amortization of any indebtedness secured hereby or change the amount of the installments payable thereon. Mortgagor shall pay Mortgagee a reasonable service charge, together with such title insurance premiums and attorneys fees as may be incurred by Mortgagee in connection with any such action.
B.12 Waiver by Mortgagor . Mortgagor waives any requirement of presentment, demand for payment, notice of nonpayment or late payment, protest, notice of protest, notice of dishonor, and all other formalities. Mortgagor waives and releases all right of appraisement, sale, and redemption allowed under any law or laws of the State of Arkansas, or the laws of any other state or jurisdiction, including particularly all right of redemption under Ark. Code Ann. § 18-49-106 or Ark. Code Ann. § 16-66-502. Mortgagor waives all rights and/or privileges it might otherwise have to require Mortgagee to proceed against or to pursue any remedy available to Mortgagee in any particular manner or order as to any particular collateral, person or entity under any legal or equitable doctrine or principle including, without limitation, marshalling of assets and/or suretyship principles, and further agrees that Mortgagee may proceed against any or all of the assets encumbered hereby or by any other security document or instrument in the event of Default in such order and manner as Mortgagee in its sole discretion may determine. Any Mortgagor that has signed this Mortgage as a surety or accommodation party, or that has subjected its property to this Mortgage to secure the indebtedness of another, hereby expressly waives any defense arising by reason of the cessation from any cause whatsoever of the liability of Mortgagor, and waives the benefit of any statutes of limitation affecting the enforcement hereof.
B.13 Corrections . Mortgagor will, upon request of Mortgagee, promptly correct any defect, error or omission which may be discovered in the contents of this Mortgage or in the
execution or acknowledgment hereof, and will execute, acknowledge and deliver such further documents and do such further acts as may be necessary or as may be reasonably requested by Mortgagee to carry out more effectively the purposes of this Mortgage, to subject to the liens and security interests hereby created any of Mortgagors properties, rights or interest covered or intended to be covered hereby, and to perfect and maintain such liens and security interests.
B.14 Mortgagee Indemnification . Mortgagor shall and does hereby agree to indemnify and to hold Mortgagee and Mortgagees affiliates and parent companies, and all of its and their respective officers, directors, employees and agents (the Indemnified Parties), harmless from and against all claims, demands, liabilities, losses or damages (including all related costs, expenses, and reasonable attorneys fees) asserted against, imposed on or incurred by the Indemnified Parties in connection with or as a result of this Mortgage or the exercise of any rights or remedies under this Mortgage or by reason of any alleged obligations or undertakings of Mortgagee to perform or discharge any of the terms, covenants or agreements contained in this Mortgage. Should Mortgagee incur any such liability, the amount thereof, together with interest thereon at the Default Rate stated in the Note, shall be secured hereby and Mortgagor shall reimburse the Mortgagee therefor immediately upon demand.
B.15 Late Payment Charge . Mortgagor acknowledges that late payment to Mortgagee will cause Mortgagee to incur costs not contemplated by this Mortgage. Such costs include, without limitation, processing and accounting charges. Therefore, if any payment required by the Note or this Mortgage is not received by Mortgagee within ten (10) days after the due date, Mortgagee hereby may assess a late charge in the amount of five percent (5.0%) of the unpaid amount of the payment, or the maximum permitted by applicable law, whichever is less.
The parties agree that this late charge represents a reasonable sum considering all of the circumstances existing on the date of this Mortgage and represents a fair and reasonable estimate of the costs that Mortgagee will incur by reason of the late payment. The parties further agree that proof of actual damages would be costly or inconvenient. Acceptance of any late charge shall not constitute a waiver of the Default with respect to the overdue amount, and shall not prevent Mortgagee from exercising any of the other rights and remedies available to Mortgagee.
B.16 Exhibits . All of the provisions in each of the attached Exhibits are incorporated herein by this reference for all purposes.
B.17 Acknowledgment of Notice. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
C. DEFAULT PROVISIONS .
C.1 Events of Default . Any of the following shall constitute a Default hereunder:
(a) The failure of Mortgagor to pay any payment required under the Note or on any other indebtedness to Mortgagee or any payment required hereunder or under any other agreement securing the Note;
(b) The filing of any petition, or the commencement of any case or proceeding, or the entry of any order for relief, under the Federal Bankruptcy Code or any other federal or state law relating to insolvency, bankruptcy, reorganization, or composition of debts by Mortgagor or any guarantor or endorser of the Note or any other obligation of Mortgagor to Mortgagee; or any adjudication that Mortgagor or any such guarantor or endorser is insolvent or bankrupt;
(c) If Mortgagee, in good faith, believes that a substantial part of Mortgagors property is in danger of loss, misuse, seizure or confiscation;
(d) (i) The filing of any petition or the commencement of any case or proceeding described in subparagraph C.1(b) above against Mortgagor or against any endorser or guarantor of the Note or any other obligation of Mortgagor to Mortgagee, unless such petition and the case or proceeding initiated thereby are dismissed within thirty (30) days from the date of such filing; the filing of an answer by Mortgagor or such endorser or guarantor admitting the allegations of any such petition; or (ii) the appointment of or the taking of possession by a custodian, trustee or receiver for all or any assets of Mortgagor or any such endorser or guarantor, unless such appointment is vacated or dismissed or such possession is terminated within thirty (30) days from the earlier of the date of such appointment or commencement of such possession, but not later than five (5) days before the proposed sale of any assets of Mortgagor or any such endorser or guarantor by such custodian, trustee or receiver;
(e) The insolvency of Mortgagor or of any guarantor or endorser of the Note or any other obligation of Mortgagor to Mortgagee; or the execution by Mortgagor or any such guarantor or endorser of an assignment for the benefit of creditors; or the convening by Mortgagor or any such guarantor or endorser of a meeting of its creditors, or any class thereof, for purposes of effecting a moratorium upon or extension or composition of its debts; or the failure of Mortgagor or of any such guarantor or endorser to pay its debts as they mature; or if Mortgagor or any such guarantor or endorser is generally not paying its debts as they mature;
(f) The admission in writing by Mortgagor or any endorser or guarantor of the Note or any other obligation of Mortgagor to Mortgagee that it is unable to pay its debts as they mature or that it is generally not paying its debts as they mature;
(g) The liquidation, termination or dissolution of Mortgagor or any guarantor or endorser of the Note or any other obligation of Mortgagor to Mortgagee which are corporations, partnerships or joint ventures;
(h) The sale, lease, exchange, conveyance or transfer, of any legal or equitable interest in and to the Mortgaged Property, or the agreement to do so; or the mortgage, assignment, pledge or encumbrance, either voluntarily or involuntarily, or the agreement to do so, without the prior written consent of Mortgagee being first obtained, or the levy, attachment, foreclosure, or seizure, of (i) any right, title or interest of Mortgagor or of any successor to Mortgagor, in and to the Mortgaged Property; or (ii) any material portion of the assets of Mortgagor or of any successor to Mortgagor;
(i) The falsity or misleading nature of any representation or warranty contained herein or any representation to Mortgagee concerning the financial condition or credit standing of either Mortgagor or any endorser or guarantor of the Note or any other obligation of Mortgagor to Mortgagee;
(j) The failure of Mortgagor to make any deposit of funds required hereunder or under the Note within the time period provided herein or in the Note, or in the absence of such a provision, within five (5) days after written demand therefor from Mortgagee;
(k) The existence of any encroachment upon the Premises which has occurred without the approval of Mortgagee and which is not removed or corrected within thirty (30) days after its creation, or if litigation to remove or correct such encroachment is not instigated by Mortgagor within such thirty (30) day period and thereafter diligently prosecuted;
(l) The filing of any claim of lien against the Premises, any improvements thereon or any part thereof, or any interest or right made appurtenant thereto or the service on Mortgagee, as a disburser, of any notice to withhold funds and the continued maintenance of said claim of lien or notice to withhold for a period of ten (10) days without discharge or satisfaction thereof or provision therefor satisfactory to Mortgagee in its sole discretion, including the posting of a bond or indemnification satisfactory to Mortgagee;
(m) The obtaining by any person of an order or decree in any court of competent jurisdiction enjoining the construction or development of any improvements needed for the operation of Mortgagors business on the Premises or enjoining or prohibiting Mortgagor or Mortgagee or both of them from performing any of their agreements or obligations with respect to this Mortgage, which proceedings are not discontinued and such decree is not vacated within fifteen (15) days after the granting thereof;
(n) The demolition, destruction or substantial damage of the Mortgaged Property unless Mortgagor either (i) commences and completes restoration or rebuilding within a reasonable time, not to exceed ten (10) months, or (ii) prepays the Note, by the amount equal to the percentage of reduction of leasable or otherwise productive area of the Premises caused by such demolition, destruction or substantial damage; provided, however, that the loan to value ratio after giving effect to the demolition, destruction or substantial damage, the restoration or repair thereof and the prepayment as a result thereof shall not be greater than eighty percent (80%);
(o) The failure of Mortgagor to perform any obligations constituting, set forth in, or relating to (a) this Mortgage, the Note, or any other obligation of Mortgagor to Mortgagee now existing or hereafter arising (b) any other agreement or indebtedness of Mortgagor to any affiliate of Mortgagee now existing or hereafter arising irrespective of whether Mortgagee or such affiliate elects pursuant to a provision thereof to declare immediately due and payable the entire unpaid principal sum together with all interest, or other balance thereon, plus any other sums due thereunder;
(p) If Mortgagor is a corporation, the sale, pledge, transfer or assignment by the shareholders of Mortgagor of any shares of the stock of Mortgagor without the prior written consent of Mortgagee, the merger or consolidation of Mortgagor with another company or entity, the liquidation of Mortgagor, the issuance of any new stock or warrants, or the transfer of issued and outstanding treasury stock or warrants of Mortgagor. If Mortgagor is a corporation, the sale, pledge, transfer or assignment of any of the members of Mortgagor of any of their interest in Mortgagor, or the withdrawal or the admittance of any members into Mortgagor without the prior written consent of Mortgagee;
(q) Any guaranty of the obligations and indebtedness secured by this Mortgage ceases to be effective, except pursuant to a written release from Mortgagee, or any guarantor denies liability thereunder or any default occurs under any such guaranty; or
C.2 Remedies Upon Default . At any time after a Default hereunder, Mortgagee may, at its option, declare all indebtedness secured by this Mortgage immediately due and payable, and collectible without notice, regardless of maturity, and irrespective of whether Mortgagee exercises such option, and regardless of (i) Mortgagees delay in exercising such option, (ii) Mortgagees failure to exercise such option on the occasion of any prior Default or (iii) the adequacy of Mortgagees security, Mortgagee may, at its option and in its sole discretion, without prior notice or demand to or upon Mortgagor, do any one or more of the following:
(a) Mortgagee may in person or by agent enter upon, take possession of, manage and operate the Mortgaged Property or any part thereof, make repairs and alterations, and do any acts which Mortgagee deems proper to protect the security hereof or to operate and maintain the Mortgaged Property and the business operated thereon; and either with or without taking possession, in its own name, sue for or otherwise collect and receive rents, issues, and profits as well as the fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities including those past due and unpaid, and apply the same less costs and expenses of operation and collection, including reasonable attorneys fees, upon any indebtedness secured hereby, and in such order as Mortgagee may determine. Upon request of Mortgagee, Mortgagor shall assemble and make available to Mortgagee at the Premises any of the Mortgaged Property which has been removed therefrom. The entering upon and taking possession of the Mortgaged Property, the collection of any rents, issues and profits as well as the fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities and the application thereof as aforesaid, shall not cure or waive any Default theretofore or thereafter occurring, or affect any notice of Default hereunder or invalidate any act done
pursuant to any such notice. Mortgagee or Mortgagees agent shall have access to the books and records used in the operation and maintenance of the Mortgaged Property and the business operated thereon and shall be liable to account only for those rents, issues and profits as well actually received by Mortgagee. Mortgagee shall not be liable to Mortgagor, anyone claiming by, from, under or through Mortgagor or anyone having an interest in the Mortgaged Property by reason of anything done or undone by Mortgagee. Nothing contained in this paragraph shall require Mortgagee to incur any expense or do any act. If the rents, issues and profits of the Mortgaged Property and the business operated thereon are not sufficient to meet the costs of taking control of and managing the Mortgaged Property and collecting the rents, issues and profits, any funds expended by Mortgagee for such purposes shall become indebtedness of Mortgagor to Mortgagee secured by this Mortgage. Such amounts, together with interest and attorneys fees if applicable as provided in Paragraph B.2. hereof, shall be immediately due and payable in accordance with the provisions of Paragraph B.2. hereof. Notwithstanding Mortgagees continuance in possession or receipt and application of rents, issues or profits, Mortgagee shall be entitled to exercise every right provided for in this Mortgage or by law upon or after the occurrence of a default, including any right to exercise the power of sale. Any of the actions referred to in this Paragraph may be taken by Mortgagee at such time as Mortgagee is so entitled, without regard to the adequacy of any security for the indebtedness hereby secured.
(b) Mortgagee shall, without regard to the adequacy of any security for the indebtedness hereby secured, be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession of and protect the Mortgaged Property and the business operated thereon, and, in Mortgagees discretion, operate the same, in whole or in part, and collect the rents, issues and profits as well as the fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities therefrom.
(c) Mortgagee may bring an action in any court of competent jurisdiction to foreclose this Mortgage through judicial or non-judicial foreclosure, including statutory foreclosure under Ark. Code Ann. § 18-5-101 et seq. , with notice to Mortgagor as required under applicable law, or to enforce any of the covenants, agreements or other obligations contained in this Mortgage.
(d) Mortgagee may elect to cause the Mortgaged Property or any part thereof to be sold as follows:
(i) Mortgagee may cause any such sale or other disposition of personal property to be conducted immediately following the expiration of any grace period, if any, herein provided (or immediately upon the expiration of any applicable redemption period), and may cause any such sale of real property to be conducted as soon after foreclosure as is permitted by law, or Mortgagee may delay any such sale or other disposition for such period of time as Mortgagee deems to be in its best interest. Should Mortgagee desire that more than one such sale or other disposition be conducted, Mortgagee may at its option, cause the same to be conducted simultaneously, or successively on the same day, or at such different days or times and in such order as Mortgagee may deem to be in its best interest.
(ii) Should Mortgagee elect to cause any of the Mortgaged Property to be disposed of as personal property as permitted by subparagraph (i) above, it may dispose of any part thereof in any manner now or hereafter permitted by Article 9 of the Uniform Commercial Code or in accordance with any other right or remedy provided by applicable law. Both Mortgagor and Mortgagee shall be eligible to purchase all or any part of such property at any such disposition. Any such disposition may be either by public or private sale or other disposition as Mortgagee may elect in its sole discretion. Mortgagee shall give Mortgagor at least ten (10) days prior written notice of the time and place of any public sale or other disposition of such property or of the time at or after which any private sale or any other intended disposition is to be made, and if such notice is sent to Mortgagor as provided in Paragraph B.10 hereof, it shall constitute reasonable notice to Mortgagor.
(iii) At the foreclosure sale of the Mortgaged Property which is real property, the Mortgaged Property or any portion thereof specified by Mortgagee shall be sold at public auction to the highest bidder for cash in lawful money of the United States, subject, however, to the provisions of Paragraph C.6 hereof. If the Mortgaged Property consists of several lots or parcels, it may be sold as a whole or in separate lots or parcels, if directed by Mortgagee. Any person or entity, including Mortgagee, may purchase at the sale.
(iv) Mortgagee may, in any manner that it deems appropriate, apply the proceeds of any judicial foreclosure sale or sale made pursuant to the power of sale created hereby (to the extent permitted by applicable law) or other disposition of any of the Mortgaged Property hereunder to payment of the following: (1) the expenses of such sale or disposition, together with Mortgagees fees, costs and expenses and reasonable attorneys fees incurred by Mortgagee, and the actual cost of publishing, recording, mailing and posting notice; (2) the cost of any search and/or other evidence of title procured in connection therewith and revenue stamps on any deed or conveyance; (3) the payment of the Note secured by this Mortgage; (4) any or all other sums secured by this Mortgage; and (5) the remainder, if any, to the person or persons legally entitled thereto, in the order of their priority.
(e) Mortgagee may take any other appropriate action permitted by applicable law.
C.3 Deficiency; Liabilities and Rights After Default . To the extent permitted by law, Mortgagor shall be and remain liable for any deficiency remaining after sale either pursuant to the Uniform Commercial Code, judicial proceedings, or otherwise. After Default or the occurrence of an event which after the passage of time or giving of notice, or both, could become a Default, Mortgagor shall pay Mortgagees reasonable attorneys fees, Mortgagees fees and its costs and expenses incurred as a result of said Default or other such event, and if suit is brought, all costs of suit, all of which sums shall be secured by this Mortgage. Mortgagors statutory rights of reinstatement, if any, are expressly conditioned upon Mortgagors payment of all sums required under the applicable statute and performance of all required acts.
C.4 Right of Setoff . In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, Mortgagee is hereby authorized
by Mortgagor at any time or from time to time, without notice to Mortgagor, any guarantor or endorser of the Note or any other indebtedness or obligation secured by this Mortgage, or any other person, any such notice being hereby expressly waived, to set off any obligations or liabilities any time held or owing by Mortgagee to or for the credit or the account of Mortgagor or any such guarantor or endorser against the obligations and liabilities of Mortgagor or any such guarantor or endorser to Mortgagee, including, but not limited to, all claims of any nature or description arising out of or connected with this Mortgage, the Note or any other indebtedness or obligation secured by this Mortgage, irrespective of whether or not (a) Mortgagee shall have made any demand hereunder or (b) Mortgagee shall have declared the principal of and interest on the Note to be due and owing and although said obligations and liabilities, or any of them, shall be contingent and unmatured.
C.5 Foreclosure Procedure . Mortgagor hereby expressly waives, to the extent permitted by law, any right which it may have to direct the order in which any of the Mortgaged Property shall be sold in the event of any sale or sales pursuant hereto.
C.6 Foreclosure Purchase . Upon any sale of the Mortgaged Property, if the holder of the Note is a purchaser at such sale, it shall be entitled to use and apply all or any portion of the indebtedness then secured by this Mortgage for or in settlement or payment of all or any portion of the purchase price of the Mortgaged Property purchased.
C.7 Cumulative Remedies . No remedy herein conferred upon or reserved to Mortgagee is intended to be exclusive of any other remedy herein or by law provided, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by this Mortgage to Mortgagee, or to which it may be otherwise entitled, may be exercised from time to time and as often as may be deemed expedient by Mortgagee, and Mortgagee may pursue inconsistent remedies. The unenforceability of any provision in this Mortgage shall not affect the enforceability of any other provision herein. If there exists additional security for the performance of the obligations secured hereby, the Mortgagee, at its sole option, and without limiting or affecting any rights or remedies hereunder, may exercise any of the rights and remedies to which it may be entitled hereunder either concurrently with whatever other rights it may have in connection with such other security or in such order as it may determine.
C.8. Marshalling of Assets . Mortgagor agrees that all of the Mortgaged Property and all other collateral or security which may be granted to Mortgagee in connection with the obligations secured by this Mortgage constitutes equal security for all of the obligations secured hereby, and Mortgagor agrees that Mortgagee shall be entitled to sell, retain or otherwise deal with any or all of the Mortgaged Property and all other collateral or security, in any order or simultaneously as Mortgagee shall determine in its sole and absolute discretion, free of any requirement for the marshalling of assets or other restriction upon Mortgagee in dealing with the Mortgaged Property and all other collateral or security.
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the day and year set forth above.
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MT. V PROPERTY HOLDINGS, LLC |
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/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager |
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STATE OF GEORGIA |
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ACKNOWLEDGEMENT |
COUNTY OF FULTON |
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On this 8 th day of June, 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 MT. V 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 for the consideration, uses and purposes therein set forth.
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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: |
Jan. 30, 2016 |
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Exhibit 10.22
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT, made and entered into as of this 8 th day of June, 2012, between MT. V PROPERTY HOLDINGS, LLC, a limited liability company duly organized, existing and in good standing under the laws of the State of Georgia and authorized to transact business in Arkansas, whose mailing address is 3050 Peachtree Road, NW, Suite 355, Two Buckhead Plaza, Atlanta, Georgia 30305 (hereinafter referred to as Borrower), and METRO CITY BANK, the address of which is 5441 Buford Highway, Suite 109, Atlanta, GA 30340 (hereinafter referred to as 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 good and valuable considerations, 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, convey and assign to Lender, its successors, successors-in-title and assigns, all of Borrowers right, title and interest in, to and under any and all of those leases and rental agreements now existing and hereafter made, including any and all extensions, renewals and modifications thereof, and all security deposits and other refundable and non-refundable deposits paid by the tenants thereunder (said leases and rental agreements are hereinafter referred to collectively as the Leases, and the tenants and lessees thereunder are hereinafter referred to collectively as Tenants or individually as Tenant as the context requires), which Leases cover or shall cover portions of certain real property described in Exhibit A (commonly known as 706 Oak Grove Street, Mountain View, Arkansas 72560) attached hereto and by this reference made a part hereof and/or the improvements thereon
(said real property and improvements hereinafter collectively referred to as the Premises); together with all of Borrowers right, title and interest in and to all rents, issues and profits from the Leases and from the Premises.
TO HAVE AND TO HOLD unto Lender, its successors and assigns, forever, subject to and upon the terms and conditions set forth herein.
This Assignment is made for the purpose of securing (a) the full and prompt payment when due, whether by acceleration or otherwise, with such interest as may accrue thereon, either before or after maturity thereof, of that certain Note dated of even date herewith, made by Borrower to the order of Lender in the principal face amount of One Million Two Hundred Sixty-Seven Thousand and No/100 Dollars ($1,267,000.00), (hereinafter referred to as the Note), together with any renewals, modifications, consolidations and extensions thereof and amendments thereto and all advances of principal thereunder, (b) the full amount and prompt payment and performance of any and all obligations of Borrower to Lender under the terms of the Deed to Secure Debt and Security Agreement from Borrower to Lender, dated of even date herewith and securing the indebtedness evidenced by the Note (hereinafter referred to as the Security Instrument), (c) the full and prompt payment and performance of all obligations of Borrower to Lender under the terms of that certain Loan Agreement of even date herewith (hereinafter referred to as the Loan Agreement), (d) the full and prompt payment and performance of any and all other obligations of Borrower to Lender under any other instruments now or hereafter evidencing, securing, or otherwise relating to the indebtedness evidenced by the Note, and (e) any judgments in connection with the foregoing (the Note, Security Instrument, the Loan Agreement, and said other instruments are hereinafter referred to collectively as the Loan Documents, and said indebtedness is hereinafter referred to as the Indebtedness).
ARTICLE I.
WARRANTIES AND COVENANTS
1.1. Warranties of Borrower . To the extent that there are Leases, Borrower hereby warrants and represents as follows:
(a) Borrower is the sole holder of the landlords interest under the Leases, is entitled to receive the rents, issues and profits from the Leases and from the Premises, and has good right to sell, assign, transfer and set over the same and to grant to and confer upon Lender the rights, interests, powers, and authorities herein granted and conferred;
(b) Borrower has made no assignment other than this Assignment of any of the rights of Borrower under any of the Leases or with respect to any of said rents, issues or profits;
(c) 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;
(d) All Leases provide for rental to be paid monthly, in advance, and Borrower has not accepted payment of rental under any of the Leases for more than one (1) month in advance of the due date thereof;
(e) So far as is known to Borrower, there exists no default or event of default or any state of facts which would, with the passage of time or the giving of notice, or both, constitute a default or event of default on the part of Borrower or by any Tenant under the terms of any of the Leases;
(f) Neither the execution and delivery of this Assignment or any of the Leases, the performance of each and every covenant of Borrower under this Assignment and the Leases, nor the meeting of each and every condition contained in this Assignment, conflicts with, or constitutes a breach or default under any agreement, indenture or other instrument to which Borrower is a party, or any law, ordinance, administrative regulation or court decree which is applicable to Borrower;
(g) No action has been brought or, so far as is known to Borrower, is threatened, which would interfere in any way with the right of Borrower to execute this Assignment and perform all of Borrowers obligations contained in this Assignment and in the Leases;
(h) The Leases are valid, enforceable and in full force and effect; and
(i) All security deposits and other deposits (whether refundable or non-refundable pursuant to the terms of the Leases) are held by Borrower in a segregated account and have been received and applied for the uses and purposes designated in the Leases.
1.2. Covenants of Borrower . Borrower hereby covenants and agrees as follows:
(a) Borrower shall (i) fulfill, perform and observe each and every condition and covenant of landlord or lessor contained in each of the Leases; (ii) give prompt notice to Lender of any claim of default under any of the Leases, whether given by the Tenant to Borrower, or given by Borrower to the Tenant, together with a complete copy of any such notice; (iii) at no cost or expense to Lender, enforce, short of termination, the performance and observance of each and every covenant and condition of each of the Leases, to be performed or observed by the Tenant thereunder; and (iv) appear in and defend any action arising out of, or in any manner connected with, any of the Leases, or the obligations or liabilities of Borrower as the landlord thereunder, or of the Tenant or any guarantor thereunder;
(b) Borrower shall not, without the prior written consent of Lender, (i) modify any of the Leases; (ii) terminate the term or accept the surrender of any of the Leases; (iii) waive or release the Tenant from the performance or observance by the Tenant of any obligation or condition of any of the Leases; (iv) permit the prepayment of any rents under any of the Leases for more than one (1) month prior to the accrual thereof; (v) give any consent to any assignment or sublease by the Tenant under any of the Leases; or (vi) assign its interest in, to or under the
Leases or the rents, issues and profits from the Leases and from the Premises to any person or entity other than Lender;
(c) Borrower shall not, without the prior written consent of Lender, enter into any Lease unless the Tenant thereunder shall have been approved in writing by Lender and said Lease is in form and content satisfactory to and approved in writing by Lender;
(d) Borrower shall protect, indemnify and save harmless Lender from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, attorneys fees and expenses) imposed upon or incurred by Lender by reason of this Assignment and any claim or demand whatsoever which may be asserted against Lender by reason of any alleged obligation or undertaking to be performed or discharged by Lender under this Assignment. In the event Lender incurs any liability, loss or damage by reason of this Assignment, or in the defense of any claim or demand arising out of or in connection with this Assignment, the amount of such liability, loss or damage shall be added to the Indebtedness, shall bear interest at the rate of Default Interest specified in the Note from the date incurred until paid and shall be payable on demand;
(e) Borrower shall authorize and direct, and does hereby authorize and direct each and every present and future Tenant of the whole or any part of the Premises to pay all rental to Lender upon receipt of written demand from Lender to so pay the same;
(f) The warranties and representations of Borrower made in Paragraph 1.01 hereof and the covenants and agreements of Borrower made in this Paragraph apply to each Lease in effect as of the time of execution of this Assignment, and shall apply to each Lease hereafter made at the time each such future Lease becomes effective.
(g) At the request of Lender, Borrower immediately shall deliver to Lender evidence that all security deposits and other deposits (whether refundable or non-refundable) paid by Tenants under the Leases have been placed in a separate account in accordance with applicable law.
1.3. Covenants of Lender . Lender, by its acceptance of this Assignment, hereby covenants and agrees with Borrower as follows:
(a) Although this Assignment constitutes a present and current assignment of all rents, issues and profits from the Premises, so long as there shall exist no Default, Lender shall not demand that such rents, issues and profits be paid directly to Lender, and Borrower shall have the right to collect, but no more than one (1) month prior to accrual, all such rents, issues and profits from the Premises (including, but not by way of limitation, all rental payments under the Leases); and
(b) Upon the payment in full of the Indebtedness, as evidenced by the recording or filing of an instrument of satisfaction or full release of the Security Instrument without the recording of another security instrument in favor of Lender affecting the Premises, this Assignment shall be terminated and released of record by Lender and shall thereupon be of no further force or effect.
ARTICLE II.
DEFAULT
2.1. Default . The term, Default, wherever used in this Assignment, shall mean any one or more of the following events:
(a) The occurrence of any Default under any of the Loan Documents;
(b) The failure by Borrower duly and fully to comply with any covenant, condition or agreement of this Assignment; or
(c) The breach of any warranty by Borrower contained in this Assignment.
2.2. Remedies . Upon the occurrence of any Default, Lender may at its option, with or without notice or demand of any kind, exercise any or all of the following remedies:
(a) Declare any part or all of the Indebtedness to be due and payable, whereupon the same shall become immediately due and payable;
(b) Perform any and all obligations of Borrower under any or all of the Leases or this Assignment and exercise any and all rights of Borrower herein or therein as fully as Borrower himself could do, including, without limitation of the generality of the foregoing: enforcing, modifying, extending or terminating any or all of the Leases; collecting, modifying, compromising, waiving or increasing any or all the rents payable thereunder; and obtaining new tenants and entering into new leases on the Premises on any terms and conditions deemed desirable by Lender; and, to the extent Lender shall incur any costs in connection with the performance of any such obligations of Borrower, including costs of litigation, then all such costs shall become a part of the Indebtedness, shall bear interest from the incurring thereof at the rate of Default Interest specified in the Note, and shall be due and payable on demand;
(c) In Borrowers or Lenders name, institute any legal or equitable action which Lender in its sole discretion deems desirable to collect and receive any or all of the rents, issues and profits assigned herein;
(d) Collect the rents, issues and profits and any other sums due under the Leases and with respect to the Premises, and apply the same in such order as Lender in its sole discretion may elect against (i) all costs and expenses, including reasonable attorneys fees, incurred in connection with the operation of the Premises, the performance of Borrowers obligations under the Leases and collection of the rents thereunder; (ii) all the costs and expenses, including
reasonable attorneys fees, incurred in the collection of any or all of the Indebtedness, including all costs, expenses and attorneys fees incurred in seeking to realize on or to protect or preserve Lenders interest in any other collateral securing any or all of the Indebtedness; and (iii) any or all unpaid principal and interest on the Indebtedness.
Lender shall have the full right to exercise any or all of the foregoing remedies without regard to the adequacy of security for any or all of the Indebtedness, and with or without the commencement of any legal or equitable action or the appointment of any receiver or trustee, and shall have full right to enter upon, take possession of, use and operate all or any portion of the Premises which Lender in its sole discretion deems desirable to effectuate any or all of the foregoing remedies.
ARTICLE III.
GENERAL PROVISIONS
3.1. 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.
3.2. Terminology . All personal pronouns used in this Assignment, whether used in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural, and vice versa. Titles of articles are for convenience only and neither limit nor amplify the provisions of this Assignment.
3.3. 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.
3.4. Applicable Law . This Assignment and the rights and obligations of the parties hereunder 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 creation, perfection, priority, and enforcement of Lenders rights and remedies against the Premises, 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 Assignment is challenged or questioned, such provision shall be governed by whichever applicable state or federal law would uphold or would enforce such challenged or questioned provision. The loan transaction which is evidenced by this Assignment has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of Georgia.
3.5. No Third Party Beneficiaries . This Assignment is made solely for the benefit of Lender and its assigns. No Tenant under any of the Leases nor any other person shall have standing to bring any action against Lender as the result of this Assignment, or to assume that Lender will
exercise any remedies provided herein, and no person other than Lender shall under any circumstances be deemed to be a beneficiary of any provision of this Assignment.
3.6. No Oral Modifications . Neither this Assignment nor any provisions hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought.
3.7. Cumulative Remedies . The remedies herein provided shall be in addition to and not in substitution for the rights and remedies vested in Lender in or by any of the Loan Documents or in law or equity, all of which rights and remedies are specifically reserved by Lender. The remedies herein provided or otherwise available to Lender shall be cumulative and may be exercised concurrently. The failure to exercise any of the remedies herein provided shall not constitute a waiver thereof, nor shall use of any of the remedies herein provided prevent the subsequent or concurrent resort to any other remedy or remedies. It is intended that this clause shall be broadly construed so that all remedies herein provided or otherwise available to Lender shall continue to be each and all available to Lender until the Indebtedness shall have been paid in full.
3.8. Cross-Default . A Default by Borrower under this Assignment shall constitute a Default under the other Loan Documents.
3.9. Counterparts . This Assignment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties or signatories hereto may execute this Assignment by signing any such counterpart.
3.10. Further Assurance . At any time and from time to time, upon request by Lender, Borrower will make, execute and deliver, or cause to be made, executed and delivered, to Lender and, where appropriate, cause to be recorded and/or refiled at such time and in such offices and places as shall be deemed desirable by Lender, any and all such other and further assignments, deeds to secure debt, mortgages, deeds of trust, security agreements, financing statements, continuation statements, instruments of further assurance, certificates and other documents as may, in the opinion of Lender, be necessary or desirable in order to effectuate, complete or perfect, or to continue and preserve (a) the obligations of Borrower under this Assignment and (b) the security interest created by this Assignment as a first and prior security interest upon the Leases and the rents, issues and profits from the Premises. Upon any failure by Borrower so to do, Lender may make, execute, record, file, re-record and/or refile any and all such assignments, deeds to secure debt, mortgages, deeds of trust, security agreements, financing statements, continuation statements, instruments, certificates, and documents for and in the name of Borrower, and Borrower hereby irrevocably appoints Lender the agent and attorney-in-fact of Borrower so to do.
3.11. Notices . Any and all notices, elections or demands permitted or required to be made under this Assignment shall be in writing, signed by the party giving such notice, election or demand and shall be delivered personally, or sent by overnight courier service by a company regularly engaged in the business of delivering business packages (such as Federal Express or Purolator), or sent by registered or certified United States mail, postage prepaid, to the other party at the address set forth below, or at such other address within the continental United States of America as may have theretofore been designated in writing. The effective date of such notice, election or demand shall be the date of personal delivery or, if sent by overnight courier
then the date of delivery as evidenced by the couriers receipt, or, if mailed, then the date of postmark. For the purposes of this Assignment:
The Address of Lender is:
METRO CITY BANK
5441 Buford Highway, Suite 109
Atlanta, GA 30340
The Address of Borrower is:
3050 Peachtree Road, NW, Suite 355
Two Buckhead Plaza
Atlanta, Georgia 30305
3.12. Modifications, etc . Borrower hereby consents and agrees that Lender may at any time, and from time to time, without notice to or further consent from Borrower, either with or without consideration, surrender any property or other security of any kind or nature whatsoever held by it or by any person, firm or corporation on its behalf or for its account, securing the Indebtedness; substitute for any collateral so held by it, other collateral of like kind, or of any kind; agree to modification of the terms of the Note or the Loan Documents; extend or renew the Note or any of the Loan Documents for any period; grant releases, compromises and indulgences with respect to the Note or the Loan Documents to any persons or entities now or hereafter liable thereunder or hereunder; release any guarantor or endorser of the Note, the Security Instrument, the Loan Agreement, or any other Loan Document; or take or fail to take any action of any type whatsoever, and no such action which Lender shall take or fail to take in connection with the Loan Documents, or any of them, or any security for the payment of the Indebtedness or for the performance of any obligations or undertakings of Borrower, nor any course of dealing with Borrower or any other person, shall release Borrowers obligations hereunder, affect this Assignment in any way or afford Borrower any recourse against Lender. The provisions of this Assignment shall extend and be applicable to all renewals, amendments, extensions, consolidations and modifications of the Loan Documents and the Leases, and any and all references herein to the Loan Documents or the Leases shall be deemed to include any such renewal, amendments, extension, consolidation or modifications thereof.
[SIGNATURE ON FOLLOWING PAGE.]
IN WITNESS WHEREOF, Borrower has executed this Assignment under seal, as of the day and year first above written.
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MT. V PROPERTY HOLDINGS, LLC |
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Christopher F. Brogdon, Manager |
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STATE OF GEORGIA |
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ACKNOWLEDGEMENT |
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COUNTY OF FULTON |
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On this 8 th day of June, 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 MT. V 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 for the consideration, uses and purposes therein set forth.
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/s/ Ellen W. Smith |
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Exhibit 10.23
METRO CITY BANK
SECURITY AGREEMENT
This Security Agreement (hereinafter called Agreement) is between MT. V PROPERTY HOLDINGS, LLC (the Debtor) and METRO CITY BANK (hereinafter called Secured Party).
1. Grant of Security Interest. Subject to the terms and conditions of this Agreement, Debtor, for consideration, and to secure the full and prompt payment, observance and performance when due of all present and future obligations and indebtedness of Debtor to Secured Party, whether at the stated time, by acceleration or otherwise, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, whether or not of the same or similar class or of like kind to any indebtedness incurred contemporaneously with the execution of this Agreement, and whether now or hereafter existing, or due or to become due, and whether such indebtedness from time to time is reduced and thereafter increased, or entirely extinguished and thereafter reincurred, including without limitation, the following:
(a) Any and all amounts owed by Debtor under, in connection with, and/or pursuant to the indebtedness evidenced by that certain Term Note of even date herewith, in the original principal sum of One Million Two Hundred Sixty-Seven Thousand and No/100 Dollars ($1,267,000.00) (the Note), with interest thereon according to the provisions thereof, and all obligations thereunder, in connection therewith and/or pursuant to any and all agreements and other documents in connection therewith; and
(b) All sums advanced or expenses or costs paid or incurred (including without limitation reasonable attorneys fees and other legal expenses) by Secured Party pursuant to or in connection with the Note or any other agreements and documents in connection therewith plus applicable interest on such sums, expenses or costs; and
(c) Any extensions, modifications, changes, substitutions, restatements, renewals or increases or decreases of any or all of the indebtedness referenced above; and
(d) Any and all other indebtedness, obligations and liabilities of any kind, of Debtor to Secured Party, now or hereafter existing, absolute or contingent, joint and/or several, due or not due, secured or unsecured, arising by operation of law or otherwise, direct or indirect, including without limitation indebtedness, obligations and liabilities of Debtor to Secured Party as a manager of any partnership, syndicate or association or other group and whether incurred by Debtor as principal, surety, endorser, guarantor, accommodation party or otherwise, and any obligations which give rise to an equitable remedy for breach of performance if such breach gives rise to an obligation by Debtor to pay Secured Party;
Debtor hereby grants to Secured Party a security interest in the collateral described in Schedule 1 to this Agreement and made a part hereof and the proceeds of such collateral (hereinafter collectively called the Collateral).
2. Representations, Warranties and Covenants of Debtor. Debtor expressly represents, warrants and covenants as follows:
(a) The address appearing with Debtors signature below is the address of Debtors chief executive office or, if Debtor has no place of business, Debtors residence. If the Collateral is not located at Debtors address appearing below, it will be located at: 706 Oak Grove Street, Mountain View, Arkansas 72560.
(b) If Debtor does not keep the records concerning the Collateral and concerning general intangibles, mobile goods and contract rights at the address appearing below, these records will be located at: 706 Oak Grove Street, Mountain View, Arkansas 72560.
(c) Debtor will give Secured Party sixty (60) days prior written notice of any change in (i) Debtors chief executive office (or, if Debtor has no place of business, Debtors residence), the location of the Collateral or the location of the records described above, or (ii) the ownership of Debtors business, (iii) the principals responsible for the management of Debtors business, (iv) Debtors corporate structure or identity, or (v) Debtors name or trade name, or prior to commencing to use an assumed name not set forth in this Agreement. Lender acknowledges that MOUNTAIN VIEW NURSING, LLC will register or has registered the trade name Stone County Nursing and Rehab and will operate the business under such name.
(d) If any of the Collateral is to be or has been attached to real estate, the legal description of the real estate is attached to this Agreement as Schedule 2 and made a part hereof.
(e) If Debtor does not have a record interest in the real estate described above, the record owner is indicated on the attached Schedule 2.
(f) Without the prior written consent of Secured Party, Debtor will not move, sell, lease, permit any encumbrance on or otherwise dispose of the Collateral, other than its inventory in the ordinary course of its business. Debtor represents and warrants that Debtor is the sole owner of the Collateral, free and clear of all liens, charges, interests, and encumbrances, other than in favor of Secured Party, that no other person or other entity has any interest in the Collateral whatsoever, and that Debtor will defend same against all adverse claims and demands.
(g) Debtor will keep the Collateral insured by such companies, in such amounts and against such risks as shall be acceptable to Secured Party, with loss payable and additional insured clauses in favor of Secured Party as are satisfactory to Secured Party. Debtor will deposit such insurance policies with Secured Party. Debtor hereby assigns to Secured Party and grants to Secured Party a security interest in any return of unearned premium due upon cancellation of any such insurance and directs the insurer
thereunder to pay to Secured Party all amounts so due. All amounts received by Secured Party in payment of insurance losses or return of unearned premium may, at Secured Partys option, be applied to the indebtedness by Secured Party, or all or any part thereof may be used for the purpose of repairing, replacing or restoring the Collateral. If Debtor fails to maintain satisfactory insurance, Secured Party shall have the option, but not the obligation, to obtain such insurance in such amounts as Secured Party deems necessary, and Debtor agrees to repay, with interest at the highest rate applicable to any indebtedness which this Agreement secures, all amounts so expended by Secured Party.
(h) Debtor represents and warrants to Secured Party that all financial statements and credit applications delivered by Debtor to Secured Party accurately reflect the financial condition and operations of Debtor at the times and for the periods therein stated. So long as this Agreement is in force and effect, Debtor agrees to deliver to Secured Party within 90 days after the end of each of Debtors fiscal years, a complete and accurate copy of Debtors compiled financial statements, including consolidated statements of cash flow, and a consolidated balance sheet and statement of income, together with all schedules, showing the consolidated financial position of Debtor at the close of such fiscal year, and concurrently therewith a certificate of its Manager or chief financial officer to the effect that such officer is not aware of any condition or event which constitutes a default under this Agreement or under any notes or other obligations of Debtor or which, with the mere passage of time or notice, or both, would constitute a default under this Agreement.
(i) Secured Party shall not be deemed to have waived any of its rights in any Collateral unless such waiver is in writing and signed by an authorized representative of Secured Party. No delay or omission by Secured Party in exercising any of Secured Partys rights shall operate as a waiver thereof or of any other rights. Secured Party shall have, in addition to all other rights and remedies provided by this Agreement or applicable law, the rights and remedies of a secured party under the Uniform Commercial Code.
(j) Debtor will maintain the Collateral in good condition and repair and will pay promptly all taxes, levies, and encumbrances and all repair, maintenance and preservation costs pertaining to the Collateral. If Debtor fails to make such payments, Secured Party shall have the option, but not the obligation, to pay the same and Debtor agrees to repay, with interest at the highest rate applicable to any indebtedness which this Agreement secures, all amounts so expended by Secured Party. Debtor will at any time and from time to time, upon request of Secured Party, give any representative of Secured Party access during normal business hours to inspect the Collateral or the books and records thereof.
(k) Debtor agrees to pay on demand, all expenses, including reasonable attorney fees and expenses, incurred by Secured Party in protecting or enforcing its rights in the Collateral or otherwise under this Agreement. After deducting all said expenses, the remainder of any proceeds of sale or other disposition of the Collateral shall be applied to the indebtedness due Secured Party in such order of preference as Secured Party shall determine.
(l) Debtor hereby agrees to faithfully preserve and protect Secured Partys security interest in the Collateral at all times, and further agrees to execute and deliver, from time to time, any and all further, or other, documents, instruments, continuation statements and perform or refrain from performing such acts, as Secured Party may reasonably request to effect the purposes of this Agreement and to secure to Secured Party the benefits of all the rights, authorities and remedies conferred upon Secured Party by the terms of this Agreement. Debtor shall permit, or cause to be permitted, at Debtors expense, representatives of Secured Party to inspect and make copies of the books and records of Debtor relating to the Collateral at any reasonable time during normal business hours upon prior written notice.
3. Defaults. The occurrence of any of the following events shall constitute a default (hereinafter called Default) hereunder:
(a) The failure of Debtor to make any payment on any indebtedness to Secured Party whether pursuant to the Note or any other obligation to Secured Party, or a default in any provision of the Note or any other agreement or document secured hereby or any other encumbrance or agreement securing the Note, which is not cured within any applicable cure period;
(b) The breach of or failure to perform promptly any obligation or covenant set forth in this Agreement, or the breach or the failure to perform promptly any obligation or covenant set forth in the Note or any other agreement secured hereby or securing the Note, which is not cured within any applicable cure period;
(c) The suspension of business, insolvency, failure generally to pay debts as they became due, or the commission of any act constituting or resulting in a business failure, in each case on the part of Debtors business; the concealment or removal of any substantial portion of Debtors property with the intent to hinder, delay or defraud any one or more creditors, or the making of any other transfer which is fraudulent or otherwise voidable under the Bankruptcy Code or other applicable federal or state law; the existence or creation of any lien, including without limitation any tax or judgment lien, upon the Collateral or any substantial part of Debtors property; an assignment for the benefit of creditors; the commencement of any proceedings by or against Debtor (under the Bankruptcy Code or otherwise) seeking to adjudicate if bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or seeking the appointment of a receiver, trustee or custodian for Debtor or for the Collateral or a substantial part of the property of Debtor; or the institution by Debtor or any other person or entity of any liquidation, dissolution or reorganization proceedings with respect to Debtor;
(d) The failure to effectively and promptly discharge, stay or indemnify against, to Secured Partys satisfaction, any lien or attachment against any of Debtors property or the Collateral;
(e) Any representation or warranty contained herein or in any other document delivered by or on behalf of Debtor to Secured Party shall be false or misleading when made;
(f) If Secured Party, in good faith, believes the prospect of payment secured by this Agreement is impaired, or believes that any of the Collateral is in danger of loss, misuse, seizure or confiscation;
(g) Any guaranty of the obligations described herein ceases to be effective, except pursuant to a written release from Secured Party, or any guarantor denies liability thereunder, or one of the events described in Paragraph 3(c) hereof occurs with respect to any guarantor, or any default occurs under any such guaranty;
(h) If Debtor is a corporation, the occurrence of any of the following without the Secured Partys written consent: the sale, pledge or assignment by the shareholders of Debtor of any shares of stock of Debtor; the merger or consolidation of Debtor with another company or entity; the change of the Debtors name; the liquidation of Debtor; or the issuance by Debtor of any new stock or warrants, or the transfer of issued and outstanding treasury stock or warrants of Debtor. If Debtor is a limited liability company, the sale, pledge, transfer or assignment of any of the Managers or members of Debtor of any of their interest in Debtor, or the withdrawal or the admittance of any Managers into Debtor without the prior written consent of Secured Party. If Debtor is a partnership or joint venture, the occurrence of any of the following without Secured Partys written consent: the sale, pledge, transfer or assignment by any of the partners or joint ventures of Debtor of any of their partnership or joint venture interest in Debtor; the withdrawal of any general partner(s) or joint venturer(s); or the admittance of any additional partner(s) or joint venturer(s) into Debtor;
(i) The occurrence of any default, after the expiration of all cure periods, if any, or event of default under any other document or agreement securing or guaranteeing any of the obligations secured by the Agreement; or the occurrence of any default, after the expiration of all cure periods, if any or event of default due to any material indebtedness or obligation of Debtor to any third party that causes such third party to declare such indebtedness or other obligation due prior to its scheduled date of maturity; or
(j) The occurrence of any default, after the expiration of all cure periods, if any, or event of default under or with respect to any obligation of Debtor to any affiliate of Secured Party (for the purposes of this subparagraph, affiliate is defined as METRO CITY BANK or any entity owned or controlled, directly or indirectly, by METRO CITY BANK).
4. Remedies.
(a) Upon the occurrence of any default under this Agreement, after the expiration of all cure periods, if any, Secured Party is authorized in its discretion to declare any or all of the indebtedness to be immediately due and payable without demand
or notice to Debtor, and may exercise any one or more of the rights and remedies granted pursuant to this Agreement or given to a secured party under applicable law, including without limitation the Uniform Commercial Code, such rights and remedies to include without limitation the right to take possession and sell, lease or otherwise dispose of the Collateral. If reasonable notice of any disposition of Collateral or other enforcement is required, such requirement will be met if such notice is mailed, postage pre-paid, to the address of Debtor shown below Debtors signature on this Agreement at least fifteen (15) days prior to the time of disposition or other enforcement. Debtor agrees that upon demand by Secured Party after default, Debtor will promptly assemble the Collateral and make the Collateral available to Secured Party at a place convenient to Secured Party.
(b) Debtor agrees that all of the Collateral and all of the other security which may be granted to Secured Party in connection with the obligations secured hereby constitute equal security for all of the obligations secured hereby, and agrees that Secured Party shall be entitled to sell, retain or otherwise deal with any or all of the Collateral, in any order or simultaneously as Secured Party shall determine in its sole and absolute discretion, free of any requirement for the marshaling of assets or other restriction upon Secured Party in dealing with the Collateral or such other security.
(c) Upon the occurrence of any default under this Agreement, after the expiration of all cure periods, if any, Debtor hereby irrevocably constitute and appoints Secured Party (and any employee or agent of Secured Party) as Debtors true and lawful attorney-in-fact with full power of substitution, in Secured Partys name or Debtors name or otherwise, for Secured Partys sole use and benefit, at Debtors cost and expense, to exercise the following powers with respect to the Collateral:
1. To demand, sue for collection, receive, and give acquittance for any and all monies due or owing with respect to the Collateral;
2. To receive, take, endorse Debtors name on, assign and deliver any checks, notes, drafts, documents or other instruments taken or received by Secured Party in connection with the Collateral;
3. To settle, compromise, prosecute, or defend any action or proceeding with respect to the Collateral;
4. To sell, transfer, assign or otherwise deal in or with the Collateral or the proceeds thereof, as fully as if Secured Party were the absolute owner thereof;
5. To sign Debtors name to and file financing statements or such other documents and instruments as Secured Party may deem appropriate; and
6. To take any and all action that Secured Party deems necessary or proper to preserve its interest in the Collateral, including without limitation, the payment of debts of Debtor that might impair the Collateral or Secured Partys security interest therein, the purchase of insurance on the Collateral, the repair or safeguard of the Collateral, or the payment of taxes thereon; and
7. To notify account debtors of Secured Partys security interest in Debtors accounts and to instruct them to make payment directly to Secured Party.
(d) Debtor agrees that the powers of attorney granted herein are coupled with an interest and shall be irrevocable until full, final and irrevocable payment and performance of the indebtedness secured hereby; and that neither Secured Party nor any officer, director, employee or agent of Secured Party shall be liable for any act or omission, or for any mistake or error of judgment, in connection with any such powers.
(e) Notwithstanding the foregoing, Secured Party shall be under no duty to exercise any such powers, or to collect any amount due on the Collateral, to realize on the Collateral, to keep the Collateral, to make any presentment, demand or notice of protest in connection with the Collateral, or to perform any other act relating to the enforcement, collection or protection of the Collateral.
(f) This Agreement shall not prejudice the right of Secured Party at its option to enforce the collection of any indebtedness secured hereby or any other instrument executed in connection with this transaction, by suit or in any other lawful manner. No right or remedy is intended to be exclusive of any other right or remedy, but every such right or remedy shall be cumulative to every other right or remedy herein or conferred in any other agreement or document for the benefit of Secured Party, or now or hereafter existing at law or in equity.
(g) Any action or proceeding to enforce this Agreement may be taken by Secured Party either in Debtors name or in Secured Partys name, as Secured Party may deem necessary.
(h) All rights of marshaling of assets of Debtor, including any such right with respect to the Collateral, are hereby waived by Debtor.
5. Remedies Cumulative; Delay Not Waiver .
(a) No right, power or remedy herein conferred upon or reserved to Secured Party hereunder is intended to be exclusive of any other right, power or remedy, and every such right, power and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right, power and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Resort to any or all security now or hereafter held by Secured Party, may be taken concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken non-judicial proceedings, or both.
(b) No delay or omission of Secured Party to exercise any right or power accruing upon the occurrence and during the continuance of any default as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such default or
an acquiescence therein; and every power and remedy given by this Agreement may be exercised from time to time, and as often as shall be deemed expedient, by Secured Party.
6. Further Assurances; Certain Waivers .
(a) Debtor agrees that, from time to time, at the expense of Debtor, Debtor shall promptly execute and deliver all further instruments and documents, and take all further action, that may be reasonably necessary or desirable, or that Secured Party may reasonably request, in order to perfect and protect the assignment and security interest granted or intended to be granted hereby or to enable Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, Debtor shall: (i) if any Collateral shall be evidenced by a promissory note or other instrument, deliver and pledge to Secured Party such note or instrument duly endorsed (without recourse) and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to Secured Party; and (ii) execute and file such financing statements or continuation statements, or amendments thereto, and such other instruments, endorsements or notices, as may be reasonably necessary or desirable, or as Secured Party may reasonably request, in order to perfect and preserve the assignments and security interests granted or purported to be granted hereby.
(b) Debtor hereby authorizes Secured Party to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of Debtor where permitted by law. Copies of any such statement or amendment thereto shall promptly be delivered to Debtor.
(c) Debtor shall pay all filing, registration and recording fees or re-filing, re-registration and re-recording fees, and all reasonable expenses incident to the execution and acknowledgment of this Agreement, any assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imports, assessments and charges arising out of or in connection with the execution and delivery of this Agreement, any agreement supplemental hereto and any instruments of further assurance.
(d) Debtor hereby waives, to the maximum extent permitted by law (i) all rights under any law limiting remedies, including recovery of a deficiency, under an obligation secured by a mortgage on real property if the real property is sold under a power of sale contained in the mortgage, and all defenses based on any loss whether as a result of any such sale or otherwise; (ii) all rights under any law to require Secured Party to pursue any other person, any security which Secured Party may hold, or any other remedy before proceeding against Debtor; (iii) all rights to participate in any security held by Secured Party until the obligations have been paid in full; and (iv) all rights to require Secured Party to give any notices of any kind including, without limitation, notices of nonpayment, nonperformance, protest, dishonor, default, delinquency or acceleration, or to make any presentments, demands or protests, except as expressly provided in this Agreement. Secured Party shall incur no liability as a result of the sale of the Collateral, or any part thereof, at any private sale pursuant to this Agreement conducted in a commercially reasonable manner. Debtor hereby waives any claims
against Secured Party arising by reason of the fact that the price at which the Collateral may have been sold at such a private sale was less than the price that might have obtained at a public sale or was less than the aggregate amount of the obligations, even if Secured Party accepts the first offer received and does not offer the Collateral to more than one offeree, provided that such private sale is conducted in a commercially reasonable manner.
7. Miscellaneous.
(a) This Agreement and the security interest in the Collateral created hereby shall terminate when the obligations and indebtedness hereunder have been fully, finally and irrevocably paid and all other obligations of Debtor to Secured Party have been performed in full. Prior to such termination, this shall be a continuing agreement.
(b) This Agreement and the rights and obligations of the parties hereunder 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 Collateral, 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 Agreement 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 Agreement has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of Georgia.
(c) DEBTOR AND SECURED PARTY BY ACCEPTANCE OF THIS AGREEMENT, EACH HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY ACTION UNDER OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, AND IN NO EVENT SHALL SECURED PARTY BE LIABLE FOR PUNITIVE OR CONSEQUENTIAL DAMAGES.
(d) This Agreement shall inure to the benefit of Secured Party, its successors and assigns and to any other holder who derives from Secured Party title to or an interest in the indebtedness which this Agreement secures, and shall be binding upon Debtor, its successors and assigns.
(e) In case any one or more of the provisions of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had not been included.
(f) Any provision to the contrary notwithstanding contained herein or in the Note or in any other instrument now or hereafter evidencing, securing or otherwise
relating to any secured indebtedness, neither Secured Party nor any other holder of the secured indebtedness shall be entitled to receive or collect, nor shall Debtor be obligated to pay, interest on any of the secured indebtedness in excess of the maximum rate of interest at the particular time in question, if any, which, under applicable law, may be charged to Debtor (herein the Maximum Rate), provided that the Maximum Rate shall be automatically increased or decreased, as the case may be, without notice to Debtor from time to time as of the effective time of each change in the Maximum Rate, and if any provision herein or in the Note or in such other instrument shall ever be construed or held to permit the collection or to require the payment of any amount of interest in excess of that permitted by applicable law, the provisions of this paragraph shall control and shall override any contrary or inconsistent provision herein or in the Note or in such other instrument. The intention of the parties being to conform strictly to the usury limitations under applicable law, the Note, this Agreement, and each other instrument now or hereafter evidencing or relating to any secured indebtedness shall be held subject to reduction to the amount allowed under said applicable law as now or hereafter construed by the courts having jurisdiction.
(g) All notices pursuant to this Security Agreement shall be in writing and shall be directed to the addresses set forth below or such other address as may be specified in writing, by certified or registered mail, return receipt requested by the party to which or whom notices are to be given. Notices shall be deemed to be given three (3) days after mailing by depositing same in any United States post office station or letter box in a post-paid envelope.
(h) The singular used herein shall include the plural.
(i) If more than one party shall execute this Agreement as Debtor, the term Debtor shall mean all such parties executing this Agreement, and all such parties shall be jointly and severally obligated hereunder.
(j) A photocopy or other reproduction of this Agreement or of any financing statement is sufficient as a financing statement and may be filed as a financing statement in any government office.
(k) THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date written below.
Dated: June 8, 2012.
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DEBTOR: |
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MT. V PROPERTY HOLDINGS, LLC |
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By: |
/s/ Christopher F. Brogdon |
(L.S.) |
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Christopher F. Brogdon, Manager |
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Addresses of Debtor: |
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3050 Peachtree Road, NW, Suite 355 |
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Two Buckhead Plaza |
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Atlanta, Georgia 30305 |
Exhibit 10.24
GUARANTY
1. As an inducement for and in consideration of any loan(s), lease(s), or other financial accommodation(s) of even date herewith granted to MT. V PROPERTY HOLDINGS, LLC (hereinafter called Obligor), by METRO CITY BANK (hereinafter, together with its successors and assigns, called Lender), the undersigned, Mountain View Nursing, LLC, (hereinafter called Guarantor), hereby, jointly and severally if more than one, unconditionally guarantees the full and prompt payment, observance and performance when due, whether at the stated time, by acceleration or otherwise, of all obligations of Obligor to Lender, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, whether or not of the same or similar class or of like kind to any indebtedness incurred contemporaneously with the execution of this Guaranty, and whether now or hereafter existing, or due or to become due, including without limitation, the following:
(a) Any and all amounts owed by Obligor under, in connection with, and/or pursuant to the indebtedness evidenced by that certain Term Note of even date herewith, in the original principal sum of One Million Two Hundred Sixty-Seven Thousand and No/100 Dollars ($1,267,000.00) (the Note), with interest thereon according to the provisions thereof, and all obligations of Obligor thereunder, in connection therewith and/or pursuant to any and all agreements and other documents in connection therewith; and
(b) All sums advanced or expenses or costs paid or incurred (including without limitation reasonable attorneys fees and other legal expenses) by Lender pursuant to or in connection with the Note or any agreements and other documents in connection therewith plus applicable interest on such sums, expenses or costs; and
(c) Any extensions, modifications, changes, substitutions, restatements, renewals or increases or decreases of any or all of the indebtedness referenced above; and
(d) Any and all other indebtedness, obligations and liabilities of any kind, of Obligor to Lender, now or hereafter existing, absolute or contingent, joint and/or several, due or not due, secured or unsecured, arising by operation of law or otherwise, direct or indirect, including without limitation indebtedness, obligations and liabilities of Obligor to Lender as a member of any partnership, syndicate or association or other group and whether incurred by Obligor as principal, surety, endorser, guarantor, accommodation party or otherwise, and any obligations which give rise to an equitable remedy for breach of performance if such breach gives rise to an obligation by Obligor to pay Lender.
2. All of the obligations described in paragraph 1, above, shall be referred to hereafter as the Liabilities. In the event any of the Liabilities shall not be paid or performed according to their terms, Guarantor, shall immediately pay, perform or cause the performance of the same, this Guaranty being a guarantee of full payment and performance and not of collectibility and in no way conditional or contingent. This Guaranty is an absolute, unconditional and continuing guarantee the Guarantor being jointly and severally liable with the Obligor and is in no way conditioned upon any requirement that Lender first attempt to collect payment or seek performances of any of the Liabilities from Obligor or any other obligor or guarantor, or resort to any other security or other means of obtaining payment or performance of any of the Liabilities, or upon any other contingency whatsoever.
3. Guarantor further agrees to pay all expenses (including reasonable attorneys fees and legal expenses) paid or incurred by Lender in endeavoring to collect the Liabilities, or any part thereof, and in enforcing or defending this Guaranty, whether or not a lawsuit is commenced.
4. Guarantor represents and warrants that Guarantor is either financially interested in Obligor or will receive other material economic benefits as a result of any loan(s), leases(s) or other financial accommodation(s) made or granted to Obligor by Lender from time to time. Guarantor further represents and warrants that Guarantor is willing to enter into this Guaranty as a material inducement to Lender to extend loan(s) or other financial accommodation(s), or to enter into lease(s), from time to time to or with Obligor, and acknowledges that Lender would not be willing to extend any such loan(s) or other financial accommodation(s) or enter into such lease(s) absent this Guaranty. In any community property state, if Guarantor is married, Guarantors promise is made for the benefit of Guarantors marital community.
5. Guarantor agrees that the occurrence of any of the following events shall constitute a default under this Guaranty: (a) the failure of Guarantor to perform or observe any obligation under this Guaranty or (b) the death, incompetency, dissolution or insolvency of Obligor or Guarantor or any other guarantor of any of the Liabilities, or (c) the inability of Obligor or Guarantor or any other guarantor of any of the Liabilities to pay debts as they mature, or (d) an assignment by Obligor or Guarantor or any other guarantor of any of the Liabilities for the benefit of creditors, or (e) the institution of any proceeding by or against Obligor or Guarantor or any other guarantor of any of the Liabilities (under the Bankruptcy Code or otherwise) seeking to adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or seeking the appointment of a receiver, trustee or custodian for itself or for all or a substantial part of its property unless such petition and the case or proceeding initiated thereby are dismissed within thirty (30) days from the date of such filing, or (f) the institution by Guarantor or any other person or entity of any liquidation, dissolution or reorganization proceedings with respect to Guarantor, or (g) the default by Obligor under any other agreement or document concerning or relating to the Liabilities, or (h) the default by Guarantor under the terms of any other obligation of Guarantor to Lender, or (i) any representation or warranty contained herein or in any other document delivered by or on behalf of Guarantor or Obligor to Lender shall be false or misleading in any material respect, or (j) there shall be a default or event of default under any other agreement or document securing or guaranteeing any of the obligations secured by this Guaranty. Upon and after the occurrence of a default hereunder, the Liabilities shall be automatically accelerated and shall become immediately due and payable by Guarantor, or Guarantors successor or estate, without presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by Guarantor.
6. Guarantor further agrees that this Guaranty shall continue to be effective or shall be reinstated, as the case may be, if at any time payment to or for the benefit of Lender of the Liabilities, or any part thereof, is rescinded or must otherwise be returned by Lender due to the insolvency, bankruptcy or reorganization of Obligor or otherwise, all as though such payment to or for the benefit of Lender had not been made.
7. Lender may, without demand or notice of any kind, at any time when any amount shall be due and payable hereunder by Guarantor, appropriate and apply toward the payment of such amount, and in such order of application as Lender may from time to time elect, any property, balances, credits, deposits, accounts, instruments or moneys of Guarantor in the possession or control of Lender for any purpose.
8. This Guaranty shall be a continuing, absolute and unconditional guaranty of payment and performance and not of collectibility and shall remain in full force and effect as to Guarantor, subject to discontinuance only as follows: Guarantor, or any person duly authorized and acting on behalf of Guarantor, may give written notice to Lender of discontinuance of this Guaranty, but no such notice shall be effective in any respect until it is actually received by Lender and no such notice shall affect or impair the obligations hereunder of Guarantor with respect to any Liabilities existing at the date of receipt of such notice by Lender (or any Liabilities required or permitted to be advanced by Lender on or after such date), or for renewals or extensions of such Liabilities made after Lender receives Guarantors notice, or any interest thereon or any expenses paid or incurred by Lender in endeavoring to collect such Liabilities, or any part thereof, or in enforcing this Guaranty against Guarantor. Any such notice of discontinuance by or on behalf of any Guarantor shall not affect, impair or release the obligations hereunder of any other guarantor with respect to any of the Liabilities.
9. Guarantor hereby agrees to provide Lender, upon filing, or as appropriate, a certified copy of Guarantors most recent federal tax return, and within ninety (90) days of its fiscal year end, a compiled financial statement prepared in accordance with generally accepted accounting principles, and concurrently therewith a certificate to the effect that such Guarantor is not aware of any condition or event which constitutes a default under this Guaranty, or under any notes or other obligations of Guarantor or which, with the mere passage of time or notice, or both, would constitute a default under this Guaranty.
10. Lender may at any time and from time to time, without the consent of, or notice to, Guarantor, and without affecting, impairing or releasing the obligations of Guarantor hereunder, do any or all of the following: (a) retain or obtain a security interest in any property to secure any of the Liabilities or any obligations hereunder, (b) retain or obtain the primary or secondary liability of any party or parties, in addition to Guarantor, with respect to any of the Liabilities, (c) renew, extend (including extensions beyond the original term), modify, alter, change the interest rate of, release or discharge any of the Liabilities, (d) settle, release or compromise any liability of any other guarantor of any of the Liabilities or any liability of any nature of any other party or parties with respect to the Liabilities or any security therefor, (e) accept partial payments of the Liabilities, (f) settle, release (by operation of law or otherwise), compound, compromise, collect or liquidate any of the Liabilities and any property securing any of the Liabilities, (g) consent to the transfer of any property securing any of the Liabilities, (h) resort to Guarantor for payment of any of the Liabilities, whether or not Lender shall have resorted to any property securing any of the Liabilities or any obligation hereunder or shall have proceeded against any other guarantor or any other party primarily or secondarily liable on any of the Liabilities, (i) make any other changes in its agreements with Obligor, and (j) stop lending money or extending other credit to Obligor.
11. Any amount received by Lender from whatsoever source and applied by it to the payment of the Liabilities may be applied in such order of application as Lender may from time to time elect.
12. Guarantor is now adequately informed of Obligors financial condition, and Guarantor agrees to keep so informed. Guarantor agrees that Lender has no obligation to provide Guarantor with any present or future information concerning the financial condition of Obligor. Guarantor has not relied on financial information furnished by Lender in deciding to execute this Guaranty.
13. Guarantor hereby agrees that any debt of Obligor to Guarantor is expressly subordinate to the right of Lender to payment of the Liabilities, and that Lender shall be entitled to full payment of all of the Liabilities prior to the exercise by Guarantor of any rights to payment or performance of any debt which the Obligor may owe Guarantor. Guarantor assigns to Lender all rights Guarantor may have in any proceeding under the Federal Bankruptcy Code or any receivership or insolvency proceeding of Obligor, including all rights of Guarantor to be paid by Obligor. This assignment does not prevent Lender from enforcing Guarantors obligations hereunder in any way.
14. Guarantor hereby expressly waives: (a) notice of the acceptance of this Guaranty, (b) notice of the existence or creation of all or any of the Liabilities, (c) presentment, demand, notice of dishonor, protest, and all other notices whatsoever, (d) all diligence in collection or protection of or realization upon the Liabilities or any part thereof, any obligation hereunder, or any security for any of the foregoing, (e) all defenses based on suretyship or impairment of collateral, and (f) all events and circumstances which might otherwise constitute a defense or discharge of the obligations of Obligor, Guarantor or any other guarantor. Guarantor shall not be released or discharged, either in whole or in part, by Lenders failure to perfect, delay in perfection or failure to continue the perfection of any security interest in any property that secures any of the Liabilities or any obligation of Guarantor hereunder, or to protect the property covered by any such security interest.
15. Lender may, without notice to Guarantor or Obligor 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 assignee, transferee or holder were herein by name specifically given such rights, powers and benefits. Lender shall have an unimpaired right, prior and superior to that of any such assignee, transferee or holder, to enforce this Guaranty for the benefit of Lender as to so much of the Liabilities as it has not sold, assigned, or transferred.
16. 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.
17. No action of Lender permitted hereunder shall in any way affect, impair or release this Guaranty.
18. For purposes of this Guaranty, Liabilities shall include all obligations of Obligor to Lender stated herein, notwithstanding any right or power of Obligor or anyone else to assert any claim or defense as to the payment or performance of such Liabilities, and no such claim or defense shall affect, impair or release the obligations of Guarantor hereunder.
19. This Guaranty shall be binding upon Guarantor and the heirs, legal representatives, successors and assigns of Guarantor. If more than one party shall execute this Guaranty, the term Guarantor shall mean all parties executing this Guaranty, and all such parties shall be jointly and severally obligated hereunder.
20. As further consideration for the loan(s), lease(s), or other financial accommodation(s) by Lender to Obligor and as a material inducement to Lender to make or enter into the loan(s), lease(s), or other financial accommodation(s) and accept this Guaranty, and notwithstanding anything to the contrary contained in this Guaranty or any other document delivered in connection with this Guaranty, Guarantor hereby irrevocably waives, disclaims and relinquishes any and all claims, rights or remedies which Guarantor may now have or hereafter acquire against Obligor that arise in connection with this Guaranty and/or the performance by Guarantor hereunder, including without limitation any claim, remedy or right of subrogation, reimbursement, exoneration, contribution, indemnification, or participation in any claim, right or remedy of Lender against Obligor or any security which Lender now has or hereafter acquires, whether or not such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise.
21. All notices pursuant to this Guaranty shall be in writing and shall be directed to the addresses set forth herein or such other address as may be specified in a notice given in accordance with the requirements of this paragraph. Except as otherwise specifically provided herein, notices shall be deemed to be given three (3) days after mailing by certified or registered mail, return receipt requested, or one (1) business day after deposit with a recognized overnight courier, or when personally delivered to and received at the required address.
22. In the event any provision contained in this Guaranty is 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.
23. THE GUARANTOR HEREBY WAIVES THE RIGHT TO REQUIRE THE HOLDER OF THE OBLIGATIONS HEREBY GUARANTEED TO TAKE ACTION AGAINST THE DEBTOR AS PROVIDED IN O.C.G.A. § 10-7-24.
24. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER 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 REAL AND PERSONAL PROPERTY COLLATERAL, 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 AGREEMENT 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 THE NOTE AND THIS GUARANTY HAVE BEEN APPLIED FOR, CONSIDERED, APPROVED AND MADE, AND ALL NECESSARY LOAN DOCUMENTS HAVE BEEN ACCEPTED BY LENDER IN THE STATE OF GEORGIA.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the date written below.
June 8, 2012 |
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Mountain View Nursing, LLC |
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By: |
/s/ Christopher F. Brogdon |
(L.S.) |
Address of Guarantor: |
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Christopher F. Brogdon, Manager |
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3050 Peachtree Road, NW, Suite 355 |
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Two Buckhead Plaza |
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Atlanta, Georgia 30305 |
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Exhibit 10.25
U.S. Small Business Administration |
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U.S. Small Business Administration
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SBA Loan # |
52327550-06 |
SBA Loan Name |
MOUNTAIN VIEW NURSING, LLC |
Date |
2012 |
Loan Amount |
$ 1,304,000.00 |
Borrower |
MT. V PROPERTY HOLDINGS, LLC |
Operating Company |
MOUNTAIN VIEW NURSING, LLC |
CDC |
Economic Development Corporation of Fulton County |
Funding Date: July 11, 2012
First Payments Due: August 1, 2012
Note Maturity Date: July 1, 2032
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* Interest Rate: |
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% |
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* P&I Amount: |
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$ |
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* Monthly Payment: |
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$ |
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(* blank at signing)
1. PROMISE TO PAY:
In return for the Loan, Borrower promises to pay to the order of CDC the amount of One Million Three Hundred Four Thousand and No/100 Dollars ($1,304,000.00), interest on the unpaid principal balance, the fees specified in the Servicing Agent Agreement, and all other amounts required by this Note.
2. DEFINITIONS:
Collateral means any property taken as security for payment of this Note or any guarantee of this Note.
Debenture means the debenture issued by CDC to fund the Loan.
Guarantor means each person or entity that signs a guarantee of payment of this Note.
Loan means the loan evidenced by this Note.
Loan Documents means the documents related to this loan signed by Borrower, any Guarantor, or anyone who pledges collateral.
SBA means the Small Business Administration, an Agency of the United State of America.
Servicing Agent Agreement means the agreement between the Borrower and the CDC that, among other things, appoints a servicing agent (Servicing Agent) for this Note.
3. INTEREST RATE AND PAYMENTS:
The terms of the Debenture sale will establish the interest rate, P&I amount, and Monthly Payment for this Note. Borrower acknowledges that these terms are unknown when Borrower signs this Note.
A. Once established, the interest rate is fixed. Interest begins to accrue on the Funding Date.
B. Monthly Payments are due on the first business day of each month, beginning on the First Payment Date and continuing until the Note Maturity Date, when all unpaid amounts will be due. Borrower must pay at the place and by the method the Servicing Agent or CDC designates. The Monthly Payment includes the monthly principal and interest installment (P & I Amount), and the monthly fees in the Servicing Agent Agreement. The Servicing Agent will apply regular Monthly Payments in the following order: 1) monthly fees, 2) accrued interest, and 3) principal.
4. LATE-PAYMENT FEE:
CDC charges a late fee if the Servicing Agent receives a Monthly Payment after the fifteenth day of the month when it is due. The late fee is five percent of the payment amount, or $100.00, whichever is greater. The late fee is in addition to the regular Monthly Payment.
5. RIGHT TO PREPAY:
Borrower may prepay this Note in full on a specific date each month set by the Servicing Agent. Borrower may not make partial prepayments. Borrower must give CDC at least 45 days prior written notice. When it receives the notice, CDC will give Borrower prepayment instructions. At least 10 days before the payment date, Borrower must wire a non-refundable deposit of $1,000 to the Servicing Agent. The Servicing Agent will apply the deposit to the prepayment if Borrower prepays. In any prepayment, Borrower must pay the sum of all of the following amounts due and owing through the date of the next semi-annual Debenture payment:
A. Principal balance;
B. Interest;
C. SBA guarantee fees;
D. Servicing agent fees;
E. CDC servicing fees;
F. Late fees;
G. Expenses incurred by CDC for which Borrower is responsible; and
H. Any prepayment premium.
6. PREPAYMENT PREMIUM:
If Borrower prepays during the first half of the Note term, Borrower must pay a prepayment premium. The formula for the prepayment premium is specified in the Debenture and may be obtained from CDC.
7. DEFAULT:
Borrower is in default under this Note if Borrower does not make a payment when due under this Note, or if Borrower or Operating Company:
A. Fails to do anything required by this Note and other Loan Documents;
B. Defaults on any other loan made or guaranteed by SBA;
C. Does not preserve, or account to CDCs satisfaction for, any of the Collateral or its proceeds;
D. Does not disclose, or anyone acting on their behalf does not disclose, any material fact to CDC or SBA;
E. Makes, or anyone acting on their behalf makes, a materially false or misleading representation to CDC or SBA;
F. Defaults on any loan or agreement with another creditor, if CDC believes the default may materially affect Borrowers ability to pay this Note.
G. Fails to pay any taxes when due;
H. Becomes the subject of a proceeding under any bankruptcy or insolvency law;
I. Has a receiver or liquidator appointed for any part of their business or property;
J. Makes an assignment for the benefit of creditors;
K. Has any adverse change in financial condition or business operation that CDC believes may materially affect Borrowers ability to pay this Note;
L. Reorganizes, merges, consolidates, or otherwise changes ownership or business structure without CDCs prior written consent, except for ownership changes of up to 5 percent beginning six months after the Loan closes; or
M. Becomes the subject of a civil or criminal action that CDC believes may materially affect Borrowers ability to pay this Note.
8. CDCS RIGHTS IF THERE IS A DEFAULT:
Without notice or demand and without giving up any of its rights, CDC may:
A. Require immediate payment of all amounts owing under this Note;
B. Collect all amounts owing from any Borrower or Guarantor;
C. File suit and obtain judgment;
D. Take possession of any Collateral; or
E. Sell, lease, or otherwise dispose of, any Collateral at public or private sale, with or without advertisement.
9. CDCS GENERAL POWERS:
Without notice and without Borrowers consent, CDC may:
A. Bid or buy at any sale of Collateral by Lender or another lienholder, at any price it chooses;
B. Incur expenses to collect amounts due under this Note, enforce the terms of this Note or any other Loan Document, and preserve or dispose of the Collateral. Among other things, the expenses may include payments for property taxes, prior liens, insurance, appraisals, environmental remediation costs, and reasonable attorneys fees and costs. If CDC incurs such expenses, it may demand immediate repayment from Borrower or add the expenses to the principal balance;
C. Release anyone obligated to pay this Note;
D. Compromise, release, renew, extend or substitute any of the Collateral; and
E. Take any action necessary to protect the Collateral or collect amounts owing on this Note.
10. FEDERAL LAW:
When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. CDC or SBA may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.
11. SUCCESSORS AND ASSIGNS:
Under this Note, Borrower and Operating Company include the successors of each, and CDC includes its successors and assigns.
12. GENERAL PROVISIONS:
A. All individuals and entities signing this Note are jointly and severally liable.
B. Borrower authorizes CDC, the Servicing Agent, or SBA to complete any blank terms in this Note and any other Loan Documents. The completed terms will bind Borrower as if they were completed prior to this Note being signed.
C. Borrower waives all suretyship defenses.
D. Borrower must sign all documents necessary at any time to comply with the Loan Documents and to enable CDC to acquire, perfect, or maintain CDCs liens on Collateral.
E. CDC may exercise any of its rights separately or together, as many times and in any order it chooses. CDC may delay or forgo enforcing any of its rights without giving any up.
F. Borrower may not use an oral statement to contradict or alter the written terms of, or raise a defense to, this Note.
G. If any part of this Note is unenforceable, all other parts remain in effect.
H. To the extent allowed by law, Borrower waives all demands and notices in connection with this Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any defenses based upon any claim that CDC did not obtain any guarantee; did not obtain, perfect, or maintain a lien upon Collateral; impaired Collateral; or did not obtain the fair market value of Collateral at a sale.
13. STATE-SPECIFIC PROVISIONS:
Time is of the essence of this Note.
14. BORROWERS NAME(S) AND SIGNATURE(S):
By signing below, each individual or entity becomes obligated under this Note as Borrower.
IN WITNESS WHEREOF, MT. V PROPERTY HOLDINGS, LLC has executed this Note under seal this 8 th day of June, 2012.
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BORROWER: |
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MT. V PROPERTY HOLDINGS, LLC |
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BY: |
/s/ Christopher F. Brogdon |
(L.S.) |
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Christopher F. Brogdon, Manager |
ASSIGNMENT: CDC assigns this Note to SBA.
Economic Development Corporation of Fulton County
By: |
/s/ Eugene Merriday |
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Date: June 8,2012 |
Typed Name: Eugene Merriday , authorized officer of CDC.
Exhibit 10.26
LOAN AGREEMENT
THIS LOAN AGREEMENT, made and entered into this 8 th day of June, 2012, by and between MT. V PROPERTY HOLDINGS, LLC (the Borrower), MOUNTAIN VIEW NURSING, LLC and AdCare Health Systems, Inc. (collectively Guarantor or Guarantors) and Economic Development Corporation of Fulton County (Lender or CDC).
W I T N E S S E T H :
WHEREAS, Borrower desires financing on certain real property located in Stone County, Arkansas, more particularly described in Exhibit A attached hereto and by this reference made a part hereof (Property);
WHEREAS, of even date herewith, Lender and Borrower entered into that certain loan wherein the Lender agreed to provide a loan (the Loan) to Borrower for up to One Million Three Hundred Four Thousand and No/100 Dollars ($1,304,000.00) for the refinance of existing debt, closing costs and other permissible uses; and
WHEREAS, in order to loan funds to Borrower, Lender enters into this Loan Agreement with Borrower for the purposes herein contained; and
WHEREAS, the loan made hereunder will be secured in part by a second security interest in the Property and a second priority security interest in all the furniture, fixtures and equipment, now owned or hereafter acquired and located at the Property or wherever located.
NOW, THEREFORE, for and in consideration of the premises, the sum of Ten ($10.00) Dollars and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
AMOUNT AND TERMS OF LOAN
1.1 RECITALS. Each of the above recitals are hereby incorporated into and made a part of this Agreement by this reference.
1.2 LOAN AND NOTE. The term Loan herein shall refer to the indebtedness of Borrower to Lender evidenced by a Note in the original principal amount of One Million Three Hundred Four Thousand and No/100 Dollars ($1,304,000.00) in form satisfactory to Lender (the Note). The term of this Loan shall be for twenty (20) years.
ARTICLE II
CONDITION OF LENDING
2.1 CONDITIONS PRECEDENT TO THE LOAN. As a condition precedent to Lender making the Loan, the Borrower shall deliver to Lender on or before the date of the Loan closing, the following, in form and substance satisfactory to Lender:
(a) The SBA 504 Note (SBA Form 1505) (Note);
(b) The Mortgage and Security Agreement to be filed on the Property;
(c) Assignment of Leases and Rents to be filed on the Property;
(d) UCC-1 Financing Statements;
(e) Evidence satisfactory to Lender of ownership of the Collateral by Borrower free and clear of encumbrances of any kind;
(f) Corporate guaranties from MOUNTAIN VIEW NURSING, LLC and AdCare Health Systems, Inc. (collectively, the Guarantor);
(g) Executed SBA 504 Authorization;
(h) Executed Central Servicing Agent Agreement (SBA Form 1506), in a form satisfactory to Lender;
(i) Such other documents as reasonably may be required by the Lender or Lenders counsel.
The Loan documents as provided above (collectively, the Loan Documents), when prepared, shall set forth the matters contained in the Loan Agreement and contain such other provisions as are deemed necessary or desirable by Lender. The form and substance of all such documents must be satisfactory to Lender prior to disbursement by Lender of any of the proceeds of the Loan.
Further, this Loan Agreement will be automatically amended to include each and every term and condition of the SBA 504 Authorization, as may be amended from time to time. In the event between any conflict between the terms of the SBA 504 Authorization and this Loan Agreement, the SBA 504 Authorization shall control.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BORROWER
The Borrower represents and warrants to, and agrees with the Lender as follows:
3.1 POWER AND AUTHORIZATION.
(a) The Borrower has authorized the execution and delivery of the Note and all other documents contemplated by this Loan Agreement, and such execution and delivery will not violate any law, or any other agreement to which Borrower is a party.
(b) This Loan Agreement constitutes, and upon execution and delivery thereof, the Note, the Mortgage and Security Agreement and the ancillary documents will constitute, legal, valid and binding obligations of the Borrower enforceable against the Borrower.
3.2 FINANCIAL CONDITION. The reports and financial statements of Borrower and Guarantors submitted to Lender in connection with the Loan have been prepared from Borrowers or Guarantors books and records in accordance with generally accepted accounting principles and practices, consistently applied, and fairly reflect the financial condition of Borrower and Guarantors for the periods therein defined. No material adverse changes have since occurred.
Except as disclosed in the aforesaid reports and financial statements, Borrower:
(a) Has not incurred any debts, liabilities or other obligations nor committed to incur any debts, liabilities or obligations;
(b) Has no liabilities, direct or contingent;
(c) Has made no investments in, advances to, or guaranties or obligations of any other company, person, firm, corporation, or other entity;
(d) Is not subject to any judgment, nor are there any liens, encumbrances or security interests outstanding against Borrower or any of its properties.
3.3 LITIGATION. There is no litigation, proceeding, claim or dispute pending or threatened against Borrower, the adverse determination of which would materially affect Borrowers ability to repay the loan or otherwise perform hereunder.
3.4 NO ADVERSE CHANGE. The Borrower certifies that there has been no un-remedied substantial adverse change since the date of the Borrowers original loan application made in conjunction with this transaction in the financial condition, organization, operation, business prospects, fixed properties, or the personnel of the Borrower.
ARTICLE IV
COVENANTS BY BORROWER
Until all the obligations of Borrower under this Agreement have been performed and paid in full, Borrower covenants and agrees as follows:
4.1 INSURANCE. Borrower shall maintain or require Guarantors to maintain insurance on the Collateral (hereinafter defined) as described in Article VII hereof in such amounts and against such hazards and liabilities as is customarily maintained by other companies in the same geographical area operating similar businesses or as may be otherwise requested by
the Lender. All such policies of insurance shall be in form and substance and with insurance companies satisfactory to Lender, and Borrower shall deliver evidence thereof to Lender upon request. Further, upon request, Lender shall be designated as loss payee or as Mortgagor under any such policies, as its interests may appear.
4.2 MAINTENANCE OF BUSINESS AND CORPORATE EXISTENCE. Borrower shall comply with all valid and applicable statutes, ordinances, rules and regulations and shall keep in force and effect all licenses, permits, bonds and franchises necessary for the proper conduct of its business.
4.3 ADVERSE CHANGES AND LITIGATION. Borrower shall immediately inform Lender of any material adverse change in its financial condition, or the financial condition of Guarantors, and shall promptly inform Lender of any litigation or threatened litigation or of the occurrence of any other event or circumstance which might substantially affect the financial condition or business of Borrower or Guarantors.
4.4 MANAGEMENT AND OWNERSHIP. No material adverse change shall be made without the prior written consent of Lender in the management or ownership of Borrower, or in the manner in which its business is conducted. Said consent shall not be unreasonably withheld by Lender.
4.5 FINANCIAL STATEMENTS. Within one hundred twenty (120) days of Borrowers and Guarantors fiscal year end, Borrower shall furnish to Lender a copy of its compiled financial statement. Borrowers and Guarantors financial statements shall contain a balance sheet, profit and loss statement and aging of accounts receivable and accounts payable, all in reasonable detail, prepared in accordance with generally accepted accounting principles, consistently applied. Each set of financial statements shall be prepared by a certified public accountant or accountants acceptable to Lender and certified by a duly authorized officer of Borrower and Guarantor to be correct and accurate. Borrower and Guarantor shall also furnish a copy of its income tax returns, and such other or additional financial information as Lender may from time to time request. Borrower and Guarantor shall also furnish evidence of payment of real estate taxes on the Property to Lender on an annual basis. Borrower shall maintain a debt service coverage ratio of 1.25 to 1 for the duration of the Loan.
4.6 OTHER DEBTS. Other than the loan from Lender of even date herein in the principal amount of $1,304,000.00 and that certain first lien in favor of METRO CITY BANK in the principal amount of $1,810,000.00, the Borrower shall not directly or indirectly incur, create, assume or permit to exist any obligation for payment of borrowed money, excepting only unsecured current liabilities incurred in the ordinary course of business and obligations contemplated by this Agreement, without the express written consent of Lender, which consent shall not be unreasonably withheld. Further, Borrower shall not guarantee the obligations of any person or entity, excepting only obligations contemplated by this Agreement provided, however, that Borrower shall have the right to guarantee the obligations of Mountain View Nursing, LLC with respect to such entitys working capital financing with a third party lender.
4.7 SALE OF COLLATERAL. Borrower shall not sell, lease, transfer or otherwise dispose of any of the Collateral as described in ARTICLE VII hereof, other than in the ordinary course of Borrowers business. If Borrower should desire to sell any of the Collateral, a release price therefor will be determined at the sole discretion of Lender, and upon the sale of that Collateral, the release price will be paid over by Borrower to Lender and applied by Lender to payments due on the Note, in inverse order of the due dates, and Lender shall thereupon release its lien or security interest upon the Collateral sold.
4.8 BULK SALE. The Borrower shall not, without the prior written consent of the Lender, sell, transfer or convey all or any part of its interest in its assets to another entity.
4.9 ENCUMBRANCES. Borrower shall not incur or permit to exist nor allow Guarantors to incur or permit to exist any encumbrance, pledge or lien upon or against any of the Collateral, except:
(a) Liens or security interests required or expressly contemplated or permitted by this Agreement;
(b) Liens for taxes, assessments and other governmental charges not yet due and liens of carriers, warehousemen, mechanics and materialmen incurred in the ordinary course of business for sums not yet due; and
(c) Tax liens which are being contested in good faith.
4.10 TAXES. Borrower shall pay promptly, when due, all taxes, assessments and governmental charges or levies imposed upon the Borrower or upon the income or any property of the Borrower, as well as all claims of any kind (including claims for labor, material, supplies or rent) which, if unpaid, might become a lien upon any or all of the Collateral.
4.11 EXAMINATION OF RECORDS. Borrower shall permit any representative of Lender to examine and to audit any or all of Borrowers books and records and to copy portions thereof, and to visit and inspect any of the Collateral upon receipt of reasonable notification and request.
4.12 CENTRAL SERVICING AGENT. The Borrower agrees to use the services of the institution appointed by the SBA as the Central Servicing Agent (hereafter the CSA) as agent for the Lender. In consideration of the CSAs expenses associated with the origination and servicing of the Loan, the Borrower agrees to pay monthly to the CSA a combined servicing charge in the form of monthly fee, calculated at a rate of 0.10% of the outstanding principal balance of the loan determined at five (5) year intervals. This percentage remains constant throughout the life of the Debenture. Such charge shall be included in the monthly loan installment as determined by the CSA.
4.13 PAYMENT OF LENDERS FEES. In consideration of the Lenders expenses associated with processing and servicing this Loan, the Borrower agrees to pay to the Lender a processing fee of 1-1/2%, if applicable, of the Debenture amount at Loan closing, together with an annual servicing fee of .625 % to be paid to the CDC and an ongoing guarantee fee of 0.9375% to be paid to the U.S. Small Business Administration, each such fee based upon the unpaid Loan
balance as determined at inception and redetermined at the beginning of each five year anniversary date of the Loan, payable on a monthly basis.
4.14: CONFORMITY WITH 13 CFR 108/SBA AUTHORIZATION AND DEBENTURE GUARANTY. The Borrower agrees to at all times be in conformity with the provisions of Title 13, Code of Federal Regulations, part 108 and each and every requirement of the SBA Authorization.
4.15: JOBS CERTIFICATION. The Borrower certifies that as a result of this project it will use its best efforts to create or retain full-time equivalent jobs within 2 years of project completion.
ARTICLE V
EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute an Event of Default:
(a) Nonpayment, when due, of any principal, accrued interest, premium, fee or other charge due under the Note.
(b) Default by Borrower in the due observance or performance of any term, covenant, condition or agreement on its part to be performed under this Loan Agreement, the Note, or under any other document contemplated by this Loan Agreement.
(c) If Borrower shall:
(1) Make a general assignment for the benefit of its creditors;
(2) File a voluntary petition in bankruptcy;
(3) Be adjudicated as bankrupt or insolvent;
(4) File any petition or answer seeking, consenting to, or acquiescing in, reorganization, arrangement, composition, liquidation, dissolution or similar relief, under any present or future statute, law or regulation;
(5) File an answer admitting or failing to deny the material allegations of the petition against it for any such relief;
(6) Admit in writing its inability to pay its debts as they mature;
(7) Discontinue business; or
(8) Be unable to pay debts as they become due.
(d) Borrower fails to have vacated or set aside within thirty (30) days of its entry any court order appointing a receiver or trustee for all or a substantial portion of the Borrowers property.
(e) Any warranty, representation or statements made or furnished to Lender by Borrower in connection with the Loan or in connection with this Agreement (including any warranty, representation or statement in the application of Borrower for the Loan or in any accompanying financial statements) or to induce Lender to make the Loan, proves to be untrue, misleading or false in any material respect.
(f) Borrower suffers or permits any lien, encumbrance or security interest to attach to any of its property, except as herein otherwise expressly permitted, or if any judgment shall be entered against Borrower or any attachment shall be made against any property of Borrower, which judgment or attachment shall remain undischarged, unbonded, or undismissed for a period of thirty (30) days.
(g) Borrower defaults in the payment of any principal or interest on any obligation to Lender.
(h) Borrower shall sell, lease, or otherwise transfer or convey any of the Collateral, or any interest therein without Lenders prior written approval, except as herein otherwise expressly permitted.
(i) Borrower or MOUNTAIN VIEW NURSING, LLC defaults under or causes to be revoked, any state or local license or permit which is required in order to operate a skilled nursing facility.
(j) If Borrower or any affiliate thereof should acquire, directly or indirectly, in excess of ten (10%) percent ownership or interest in Lender.
ARTICLE VI
REMEDIES ON EVENT OF DEFAULT
6.1 DECLARE NOTE DUE. Upon the occurrence of any Event of Default as defined in this Agreement, the Note, the Mortgage and Security Agreements, Security Agreement or any other document contemplated by this Agreement, then in any such event (subject however to any notice and cure provision or any grace period), Lender at its option, may declare the entire unpaid balance of the Note to be forthwith due and payable, and thereupon such balance shall become so due and payable without presentment, protest or further demand or notice of any kind, all of which are hereby expressly waived, and Borrower will forthwith pay to Lender the entire principal of and interest accrued on the Note.
6.2 OTHER REMEDIES. Upon the occurrence or discovery of an Event of Default, the Lender shall, in addition to its option to declare the entire unpaid amount of the Note due and payable, at its option:
(a) Move to protect its rights and remedies as a secured party under the Deeds to Secure Debt and Security Agreements and Security Agreement, by extrajudicial authority as set forth in those instruments, by action at law or equity, or by any other lawful remedy to enforce payment.
(b) Apply the proceeds from any disposition of the Collateral to the satisfaction of the following items in the order in which they are listed:
(1) The expenses of taking, preserving, insuring, repairing, holding and selling the Collateral, including any legal costs and attorneys fees. If any of the Note shall be referred to an attorney for collection, Borrower and all others liable on the Note, jointly and severally agree to pay reasonable attorneys fees and all costs of collection.
(2) The unpaid amount of any interest due on the Note, and all other expenses of Lender.
(3) The unpaid principal amounts of the Note.
(4) Any other indebtedness of Borrower to Lender.
(5) The remainder, if any, to Borrower, it being understood and agreed that if the proceeds realized from the disposition of the Collateral shall fail to satisfy items (1) through (4) above, Borrower shall forthwith pay any such deficiency to Lender upon demand.
(c) Exercise any and all rights of setoff which Lender may have against any account, fund or property of any kind, tangible or intangible, belonging to Borrower and which shall be in Lenders possession or under Lenders control.
ARTICLE VII
COLLATERAL
Borrowers obligation for payment of the Note shall be collateralized by the following (the Collateral):
7.1 MORTGAGE AND SECURITY AGREEMENT. A second Mortgage and Security Agreement on the Property.
7.2 UCC FINANCING STATEMENT. A second lien on all the furniture, fixtures, and equipment now owned or hereafter acquired and located at the Property or wherever located.
ARTICLE VIII
MISCELLANEOUS
8.1 CLOSING. The Lender shall not be obligated to make the Loan or advance any funds until Borrower has fully met all requirements herein set forth to be met by Borrower, and
until Borrower has paid to Lender and any other parties entitled thereto, all fees and other charges due in connection with the Loan.
8.2 AMENDMENTS. No amendment of any provisions of this Loan Agreement, nor consent to any departure of Borrower therefrom, 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.
8.3 NOTICES. All notices and other communications provided for hereunder shall be in writing and mailed or telegraphed or delivered.
If to Borrower:
3050 Peachtree Road, NW, Suite 355
Two Buckhead Plaza
Atlanta, Georgia 30305
If to Lender:
5534 Old National Highway
College Park, GA 30349
8.4 GOVERNING LAW AND PARTIES BOUND. This Agreement shall be governed by and construed and enforced in accordance with federal law and the substantive, and not the conflict laws of the State of Georgia.
8.5 ATTORNEYS FEES AND EXPENSES. If Lender shall incur any cost or expense, including, without limitation, reasonable attorneys fees, in connection with this Agreement, the Note or the Loan, in any manner whatsoever, direct or indirect, whether with regard to the collection of amounts due, protection of Collateral, defense of Lender or otherwise, upon demand by Lender, Borrower shall pay the same or shall reimburse Lender therefor in full.
8.6 CHANGES IN OWNERSHIP. Transfers or changes of majority beneficial ownership in Borrower will be permitted, subject to satisfactory underwriting and compliance with applicable rating agency criteria, subject to the payment of a 1% transfer fee. Transfers of minority interests in the Borrower will be permitted without the payment of a transfer fee.
8.7 ASSIGNMENT BY BORROWER. No commitment issued by Lender to Borrower for the Loan nor any of Borrowers rights hereunder shall be assignable by Borrower without the prior written consent of Lender.
8.8 NO WAIVER: REMEDIES. No failure on the part of the Lender, and no delay in exercising any right under this Loan Agreement, shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Loan Agreement preclude any other or further exercise thereof or the exercise of any other right.
8.9 SEVERABILITY. In the event that any clause or provisions of this Loan Agreement or any document or instrument contemplated by this Agreement shall be held to be invalid by any court of competent jurisdiction, the invalidity of such clause or provision shall not affect any of the remaining portions or provisions of this Loan Agreement.
8.10 TIME. Time is of the essence of this Agreement.
8.11 GRACE AND NOTICE OF CURE RIGHTS. Notwithstanding any other provision to the contrary contained in this Agreement or in any of the other Loan Documents, upon the occurrence of a monetary default or a monetary Event of Default under any of the Loan Documents, Lender shall not be required to send written notice to Borrower and/or Guarantors. All loan payments are due on the first (1 st ) day of each month, however; payments will not be considered late until ten (10) days thereafter. In the event the default does not involve the payment of money by Borrower to Lender, Borrower and Guarantors shall have thirty (30) days following receipt of such notice to fully cure such default. In the event the default is cured within such period, it shall be as if no default had occurred.
8.12 OCCUPANCY. By execution of this document Borrower certifies that Borrower and MOUNTAIN VIEW NURSING, LLC will comply with the following provisions: (a) Borrower must lease 100% of the rentable property to MOUNTAIN VIEW NURSING, LLC; (b) MOUNTAIN VIEW NURSING, LLC may sublease up to 49% of the rentable property; (c) Borrower will not use Loan proceeds to improve or renovate any of the rentable property to be sub-leased.
8.13 PAYMENTS. Borrower will make payments to the Lender in accordance with the terms and conditions and instructions contained in the Central Servicing Agent Agreement (SBA Form 1506).
8.14 MISCELLANEOUS. Notwithstanding anything contained in this Loan Agreement or in the loan documents, including, without limitation, any security agreement executed in connection with this Loan Agreement (collectively, the Loan Documents) evidencing the Loan, Lender agrees that its collateral for the loan expressly excludes (and any definition of Collateral in the Loan Documents shall also expressly exclude) all or part of the following property of MOUNTAIN VIEW NURSING, LLC:
(a) all Accounts; (b) all Payment Intangibles; (c) all Instruments, Chattel Paper (including Electronic Chattel Paper), Documents, Letter-of-Credit Rights, Supporting Obligations and Commercial Tort Claims, in each case to the extent arising out of, relating to or given in exchange for or settlement of or to evidence the obligation to pay any Account or Payment Intangible; (d) all General Intangibles (including contract rights and trademarks, copyrights, patents and other intellectual property) that arise out of or relate to any Account or Payment Intangible or from which any Account or Payment Intangible arises; (e) all remedies, guarantees and collateral evidencing, securing or otherwise relating to or associated with any Account or Payment Intangible, including all rights of enforcement and collection; (f) all Commercial Lockboxes, Governmental Lockboxes, Collection Accounts and other Deposit Accounts into which Collections or other proceeds of Collateral or Advances are deposited, and all checks or
Instruments from time to time representing or evidencing the same; (g) all cash, currency and other monies at any time in the possession or under the control of MOUNTAIN VIEW NURSING, LLCs working capital or operating lender [the Operations Lender] or a bailee of such Operations Lender; (h) all books and records evidencing or relating to or associated with any of the foregoing; (i) all information and data compiled or derived with respect to any of the foregoing (other than any such information and data subject to legal restrictions of patient confidentiality); and (j) all Collections, Accessions, receipts and Proceeds derived from any of the foregoing, all words with capitalized letters being defined in the Uniform Commercial Code or the loan agreement between MOUNTAIN VIEW NURSING, LLC and Operations Lender.
IN WITNESS WHEREOF, the parties have executed this Loan Agreement as of the date first above written.
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BORROWER: |
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Signed, sealed and delivered in the presence of: |
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MT. V PROPERTY HOLDINGS, 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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/s/ Ellen W. Smith |
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Notary Public |
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LENDER: |
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Signed, sealed and delivered in the presence of: |
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Economic Development Corporation of Fulton County |
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/s/ [ILLEGIBLE] |
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By: |
/s/ Eugene Merriday |
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Witness |
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Eugene Merriday |
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TITLE: Executive Director |
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Notary Public |
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[CORPORATE SEAL] |
The undersigned hereby expressly agree and consent to all of the terms and conditions contained herein and further agree to be bound by all of the terms and conditions contained herein. This 8th day of June, 2012.
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GUARANTORS: |
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MOUNTAIN VIEW NURSING, LLC |
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By: |
/s/ Christopher F. Brogdon |
(L.S.) |
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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 |
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and Chief Acquisitions Officer |
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[CORPORATE SEAL] |
Exhibit 10.27
ECONOMIC DEVELOPMENT
CORPORATION OF FULTON COUNTY
SECURITY AGREEMENT
This Security Agreement (hereinafter called Agreement) is between MT. V PROPERTY HOLDINGS, LLC (hereinafter called the Debtor) and ECONOMIC DEVELOPMENT CORPORATION OF FULTON COUNTY (hereinafter called Secured Party).
1. Grant of Security Interest. Subject to the terms and conditions of this Agreement, Debtor, for consideration, and to secure the full and prompt payment, observance and performance when due of all present and future obligations and indebtedness of Debtor to Secured Party, whether at the stated time, by acceleration or otherwise, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, whether or not of the same or similar class or of like kind to any indebtedness incurred contemporaneously with the execution of this Agreement, and whether now or hereafter existing, or due or to become due, and whether such indebtedness from time to time is reduced and thereafter increased, or entirely extinguished and thereafter reincurred, including without limitation, the following:
(a) Any and all amounts owed by Debtor under, in connection with, and/or pursuant to the indebtedness evidenced by that certain Promissory Note of even date herewith, in the original principal sum of One Million Three Hundred Four Thousand and No/100 Dollars ($1,304,000.00) (the Note), with interest thereon according to the provisions thereof, and all obligations thereunder, in connection therewith and/or pursuant to any and all agreements and other documents in connection therewith; and
(b) All sums advanced or expenses or costs paid or incurred (including without limitation reasonable attorneys fees and other legal expenses) by Secured Party pursuant to or in connection with the Note or any other agreements and documents in connection therewith plus applicable interest on such sums, expenses or costs; and
(c) Any extensions, modifications, changes, substitutions, restatements, renewals or increases or decreases of any or all of the indebtedness referenced above; and
(d) Any and all other indebtedness, obligations and liabilities of any kind, of Debtor to Secured Party, now or hereafter existing, absolute or contingent, joint and/or several, due or not due, secured or unsecured, arising by operation of law or otherwise, direct or indirect, including without limitation indebtedness, obligations and liabilities of Debtor to Secured Party as a manager of any partnership, syndicate or association or other group and whether incurred by Debtor as principal, surety, endorser, guarantor, accommodation party or otherwise, and any obligations which give rise to an equitable remedy for breach of performance if such breach gives rise to an obligation by Debtor to pay Secured Party;
Debtor hereby grants to Secured Party a security interest in the collateral described in Schedule 1 to this Agreement and made a part hereof and the proceeds of such collateral (hereinafter collectively called the Collateral).
2. Representations, Warranties and Covenants of Debtor. Debtor expressly represents, warrants and covenants as follows:
(a) The address appearing with Debtors signature below is the address of Debtors chief executive office or, if Debtor has no place of business, Debtors residence. If the Collateral is not located at Debtors address appearing below, it will be located at 706 Oak Grove Street, Mountain View, Arkansas 72560 or wherever located.
(b) If Debtor does not keep the records concerning the Collateral and concerning accounts, general intangibles, mobile goods and contract rights at the address appearing below, these records will be located at: 706 Oak Grove Street, Mountain View, Arkansas 72560 or wherever located.
(c) Debtor will give Secured Party sixty (60) days prior written notice of any change in (i) Debtors chief executive office (or, if Debtor has no place of business, Debtors residence), the location of the Collateral or the location of the records described above, or (ii) the ownership of Debtors business, (iii) the principals responsible for the management of Debtors business, (iv) Debtors corporate structure or identity, or (v) Debtors name or trade name, or prior to commencing to use an assumed name not set forth in this Agreement. Lender acknowledges that MOUNTAIN VIEW NURSING, LLC will register or has registered the trade name Stone County Nursing and Rehab and will operate the business under such name.
(c) If any of the Collateral is to be or has been attached to real estate, the legal description of the real estate is attached to this Agreement as Schedule 2 and made a part hereof.
(d) If Debtor does not have a record interest in the real estate described above, the record owner is indicated on the attached Schedule 2.
(e) Without the prior written consent of Secured Party, Debtor will not move, sell, lease, permit any encumbrance on or otherwise dispose of the Collateral, other than its inventory in the ordinary course of its business. Debtor represents and warrants that Debtor is the sole owner of the Collateral, free and clear of all liens, charges, interests, and encumbrances, other than in favor of Secured Party, that no other person or other entity has any interest in the Collateral whatsoever, and that Debtor will defend same against all adverse claims and demands.
(f) Debtor will keep the Collateral insured by such companies, in such amounts and against such risks as shall be acceptable to Secured Party, with loss payable and additional insured clauses in favor of Secured Party as are satisfactory to Secured Party. Debtor will deposit such insurance policies with Secured Party. Debtor hereby assigns to Secured Party and grants to Secured Party a security interest in any return of unearned premium due upon cancellation of any such insurance and directs the insurer thereunder to pay to Secured Party all amounts so due. All amounts received by Secured Party in payment of insurance losses or return of unearned premium may, at Secured Partys option, be applied to the indebtedness by Secured Party, or all
or any part thereof may be used for the purpose of repairing, replacing or restoring the Collateral. If Debtor fails to maintain satisfactory insurance, Secured Party shall have the option, but not the obligation, to obtain such insurance in such amounts as Secured Party deems necessary, and Debtor agrees to repay, with interest at the highest rate applicable to any indebtedness which this Agreement secures, all amounts so expended by Secured Party.
(g) Secured Party shall not be deemed to have waived any of its rights in any Collateral unless such waiver is in writing and signed by an authorized representative of Secured Party. No delay or omission by Secured Party in exercising any of Secured Partys rights shall operate as a waiver thereof or of any other rights. Secured Party shall have, in addition to all other rights and remedies provided by this Agreement or applicable law, the rights and remedies of a secured party under the Uniform Commercial Code.
(h) Debtor will maintain the Collateral in good condition and repair and will pay promptly all taxes, levies, and encumbrances and all repair, maintenance and preservation costs pertaining to the Collateral. If Debtor fails to make such payments, Secured Party shall have the option, but not the obligation, to pay the same and Debtor agrees to repay, with interest at the highest rate applicable to any indebtedness which this Agreement secures, all amounts so expended by Secured Party. Debtor will at any time and from time to time, upon request of Secured Party, give any representative of Secured Party access during normal business hours to inspect the Collateral or the books and records thereof.
(i) Debtor agrees to pay to Secured Party on demand all expenses, including reasonable attorney fees and expenses, incurred by Secured Party in protecting or enforcing its rights in the Collateral or otherwise under this Agreement. After deducting all said expenses, the remainder of any proceeds of sale or other disposition of the Collateral shall be applied to the indebtedness due Secured Party in such order of preference as Secured Party shall determine.
(j) Debtor hereby agrees to faithfully preserve and protect Secured Partys security interest in the Collateral at all times, and further agrees to execute and deliver, from time to time, any and all further, or other, documents, instruments, continuation statements and perform or refrain from performing such acts, as Secured Party may reasonably request to effect the purposes of this Agreement and to secure to Secured Party the benefits of all the rights, authorities and remedies conferred upon Secured Party by the terms of this Agreement. Debtor shall permit, or cause to be permitted, at Debtors expense, representatives of Secured Party to inspect and make copies of the books and records of Debtor relating to the Collateral at any reasonable time during normal business hours and upon prior written notice.
(k) Debtor represents and warrants to Secured Party that all financial statements and credit applications delivered by Debtor to Secured Party accurately reflect the financial condition and operations of Debtor at the times and for the periods therein stated. So long as this Agreement is in force and effect, Debtor agrees to deliver to Secured Party within one hundred twenty (120) days after the end of each calendar year, a compiled financial statement prepared in accordance with generally accepted accounting principles, and concurrently therewith a certificate to the effect that such Debtor is not aware of any condition or event which constitutes a default under this Agreement.
3. Defaults. The occurrence of any of the following events shall constitute a default (hereinafter called Default) hereunder:
(a) The failure of Debtor to make any payment on any indebtedness to Secured Party whether pursuant to the Note or any other obligation to Secured Party, or a default in any provision of the Note or any other agreement or document secured hereby or any other encumbrance or agreement securing the Note, which is not cured within any applicable cure period;
(b) The breach of or failure to perform promptly any obligation or covenant set forth in this Agreement or the breach or the failure to perform promptly any obligation or covenant set forth in the Note or any other agreement secured hereby or securing the Note, which is not cured within any applicable cure period;
(c) The suspension of business, insolvency, failure generally to pay debts as they became due, or the commission of any act constituting or resulting in a business failure, in each case on the part of Debtors business; the concealment or removal of any substantial portion of Debtors property with the intent to hinder, delay or defraud any one or more creditors, or the making of any other transfer which is fraudulent or otherwise voidable under the Bankruptcy Code or other applicable federal or state law; the existence or creation of any lien, including without limitation any tax or judgment lien, upon the Collateral or any substantial part of Debtors property; an assignment for the benefit of creditors; the commencement of any proceedings by or against Debtor (under the Bankruptcy Code or otherwise) seeking to adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or seeking the appointment of a receiver, trustee or custodian for Debtor or for the Collateral or a substantial part of the property of Debtor; or the institution by Debtor or any other person or entity of any liquidation, dissolution or reorganization proceedings with respect to Debtor;
(d) The failure to effectively and promptly discharge, stay or indemnify against, to Secured Partys satisfaction, any lien or attachment against any of Debtors property or the Collateral;
(e) Any representation or warranty contained herein or in any other document delivered by or on behalf of Debtor to Secured Party shall be false or misleading when made;
(f) If Secured Party, in good faith, believes the prospect of payment secured by this Agreement is impaired, or believes that any of the Collateral is in danger of loss, misuse, seizure or confiscation;
(g) Any guaranty of the obligations described herein ceases to be effective, except pursuant to a written release from Secured Party, or any guarantor denies liability thereunder, or one of the events described in Paragraph 3(c) hereof occurs with respect to any guarantor, or any default occurs under any such guaranty;
(h) If Debtor is a corporation, the occurrence of any of the following without the Secured Partys written consent: the sale, pledge or assignment by the shareholders of Debtor
of any outstanding stock of Debtor; the transfer of Debtors assets not in the ordinary course of Debtors business; the merger or consolidation of Debtor with another company or entity; the change of the Debtors name; the liquidation of Debtor; or the issuance by Debtor of any new stock or warrants, or the transfer of issued and outstanding treasury stock or warrants of Debtor. If Debtor is a limited liability company, the sale, pledge, transfer or assignment of any of the members of Debtor of any of their interest in Debtor, or the withdrawal or the admittance of any members into Debtor without the prior written consent of Secured Party. If Debtor is a partnership or joint venture, the occurrence of any of the following without Secured Partys written consent: the sale, pledge, transfer or assignment by any of the partners or joint ventures of Debtor of any of their partnership or joint venture interest in Debtor; the withdrawal of any general partner(s) or joint venturer(s); or the admittance of any additional partner(s) or joint venturer(s) into Debtor;
(i) The occurrence of any default or event of default under any other document or agreement securing or guaranteeing any of the obligations secured by the Agreement; or the occurrence of any default or event of default due to any material indebtedness or obligation of Debtor to any third party that causes such third party to declare such indebtedness or other obligation due prior to its scheduled date of maturity; or
(j) The occurrence of any default or event of default under or with respect to any obligation of Debtor to any affiliate of Secured Party (for the purposes of this subparagraph, affiliate is defined as Economic Development Corporation of Fulton County or any entity owned or controlled, directly or indirectly, by Economic Development Corporation of Fulton County).
4. Remedies.
(a) Upon the occurrence of any default under this Agreement, Secured Party is authorized in its discretion to declare any or all of the indebtedness to be immediately due and payable without demand or notice to Debtor, and may exercise any one or more of the rights and remedies granted pursuant to this Agreement or given to a secured party under applicable law, including without limitation the Uniform Commercial Code, such rights and remedies to include without limitation the right to take possession and sell, lease or otherwise dispose of the Collateral. If reasonable notice of any disposition of Collateral or other enforcement is required, such requirement will be met if such notice is mailed, postage pre-paid, to the address of Debtor shown below Debtors signature on this Agreement at least fifteen (15) days prior to the time of disposition or other enforcement. Debtor agrees that upon demand by Secured Party after default, Debtor will promptly assemble the Collateral and make the Collateral available to Secured Party at a place convenient to Secured Party.
(b) Debtor agrees that all of the Collateral and all of the other security which may be granted to Secured Party in connection with the obligations secured hereby constitute equal security for all of the obligations secured hereby, and agrees that Secured Party shall be entitled to sell, retain or otherwise deal with any or all of the Collateral, in any order or simultaneously as Secured Party shall determine in its sole and absolute discretion, free of any requirement for the marshaling of assets or other restriction upon Secured Party in dealing with the Collateral or such other security.
(c) Upon the occurrence of any default under this Agreement, Debtor hereby irrevocably constitute and appoints Secured Party (and any employee or agent of Secured Party) as Debtors true and lawful attorney-in-fact with full power of substitution, in Secured Partys name or Debtors name or otherwise, for Secured Partys sole use and benefit, at Debtors cost and expense, to exercise the following powers with respect to the Collateral:
1. To demand, sue for collection, receive, and give acquittance for any and all monies due or owing with respect to the Collateral;
2. To receive, take, endorse Debtors name on, assign and deliver any checks, notes, drafts, documents or other instruments taken or received by Secured Party in connection with the Collateral;
3. To settle, compromise, prosecute, or defend any action or proceeding with respect to the Collateral;
4. To sell, transfer, assign or otherwise deal in or with the Collateral or the proceeds thereof, as fully as if Secured Party were the absolute owner thereof;
5. To sign Debtors name to and file financing statements or such other documents and instruments as Secured Party may deem appropriate; and
6. To take any and all action that Secured Party deems necessary or proper to preserve its interest in the Collateral, including without limitation, the payment of debts of Debtor that might impair the Collateral or Secured Partys security interest therein, the purchase of insurance on the Collateral, the repair or safeguard of the Collateral, or the payment of taxes thereon; and
7. To notify account debtors of Secured Partys security interest in Debtors accounts and to instruct them to make payment directly to Secured Party.
(d) Debtor agrees that the powers of attorney granted herein are coupled with an interest and shall be irrevocable until full, final and irrevocable payment and performance of the indebtedness secured hereby; and that neither Secured Party nor any officer, director, employee or agent of Secured Party shall be liable for any act or omission, or for any mistake or error of judgment, in connection with any such powers.
(e) Notwithstanding the foregoing, Secured Party shall be under no duty to exercise any such powers, or to collect any amount due on the Collateral, to realize on the Collateral, to keep the Collateral, to make any presentment, demand or notice of protest in connection with the Collateral, or to perform any other act relating to the enforcement, collection or protection of the Collateral.
(f) This Agreement shall not prejudice the right of Secured Party at its option to enforce the collection of any indebtedness secured hereby or any other instrument executed in connection with this transaction, by suit or in any other lawful manner. No right or remedy is
intended to be exclusive of any other right or remedy, but every such right or remedy shall be cumulative to every other right or remedy herein or conferred in any other agreement or document for the benefit of Secured Party, or now or hereafter existing at law or in equity.
(g) Any action or proceeding to enforce this Agreement may be taken by Secured Party either in Debtors name or in Secured Partys name, as Secured Party may deem necessary.
(h) All rights of marshaling of assets of Debtor, including any such right with respect to the Collateral, are hereby waived by Debtor.
5. Remedies Cumulative; Delay Not Waiver .
(a) No right, power or remedy herein conferred upon or reserved to Secured Party hereunder is intended to be exclusive of any other right, power or remedy, and every such right, power and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right, power and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Resort to any or all security now or hereafter held by Secured Party, may be taken concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken non-judicial proceedings, or both.
(b) No delay or omission of Secured Party to exercise any right or power accruing upon the occurrence and during the continuance of any Default as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Default or an acquiescence therein; and every power and remedy given by this Agreement may be exercised from time to time, and as often as shall be deemed expedient, by Secured Party.
5. Further Assurances; Certain Waivers .
(a) Debtor agrees that from time to time, at the expense of Debtor, Debtor shall promptly execute and deliver all further instruments and documents, and take all further action, that may be reasonably necessary or desirable, or that Secured Party may reasonably request, in order to perfect and protect the assignment and security interest granted or intended to be granted hereby or to enable Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, Debtor shall: (i) if any Collateral shall be evidenced by a promissory note or other instrument, deliver and pledge to Secured Party such note or instrument duly endorsed (without recourse) and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to Secured Party; and (ii) execute and file such financing statements or continuation statements, or amendments thereto, and such other instruments, endorsements or notices, as may be reasonably necessary or desirable, or as Secured Party may reasonably request, in order to perfect and preserve the assignments and security interests granted or purported to be granted hereby.
(b) Debtor hereby authorizes Secured Party to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral
without the signature of Debtor where permitted by law. Copies of any such statement or amendment thereto shall promptly be delivered to Debtor.
(c) Debtor shall pay all filing, registration and recording fees or re-filing, re-registration and re-recording fees, and all reasonable expenses incident to the execution and acknowledgment of this Agreement, any assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imports, assessments and charges arising out of or in connection with the execution and delivery of this Agreement, any agreement supplemental hereto and any instruments of further assurance.
(d) Debtor hereby waives, to the maximum extent permitted by law (i) all rights under any law limiting remedies, including recovery of a deficiency, under an obligation secured by a mortgage on real property if the real property is sold under a power of sale contained in the mortgage, and all defenses based on any loss whether as a result of any such sale or otherwise; (ii) all rights under any law to require Secured Party to pursue any other person, any security which Secured Party may hold, or any other remedy before proceeding against Debtor; (iii) all rights to participate in any security held by Secured Party until the Obligations have been paid in full; and (iv) all rights to require Secured Party to give any notices of any kind including, without limitation, notices of nonpayment, nonperformance, protest, dishonor, default, delinquency or acceleration, or to make any presentments, demands or protests, except as expressly provided in this Agreement, Secured Party shall incur no liability as a result of the sale of the Collateral, or any part thereof, at any private sale pursuant to this Agreement conducted in a commercially reasonable manner. Debtor hereby waives any claims against Secured Party arising by reason of the fact that the price at which the Collateral may have been sold at such a private sale was less than the price that might have obtained at a public sale or was less than the aggregate amount of the Obligations, even if Secured Party accepts the first offer received and does not offer the Collateral to more than one offeree, provided that such private sale is conducted in a commercially reasonable manner.
6. Miscellaneous.
(a) This Agreement and the security interest in the Collateral created hereby shall terminate when the Obligations and indebtedness hereunder have been fully, finally and irrevocably paid and all other obligations of Debtor to Secured Party have been performed in full. Prior to such termination, this shall be a continuing agreement.
(b) This Agreement and the rights and obligations of the parties hereunder 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 Agreement 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 Agreement has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of Georgia.
(c) DEBTOR AND SECURED PARTY BY ACCEPTANCE OF THIS AGREEMENT, EACH HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY ACTION UNDER OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, AND IN NO EVENT SHALL SECURED PARTY BE LIABLE FOR PUNITIVE OR CONSEQUENTIAL DAMAGES.
(d) This Agreement shall inure to the benefit of Secured Party, its successors and assigns and to any other holder who derives from Secured Party title to or an interest in the indebtedness which this Agreement secures, and shall be binding upon Debtor, its successors and assigns.
(e) In case any one or more of the provisions of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had not been included.
(f) Any provision to the contrary notwithstanding contained herein or in the Note or in any other instrument now or hereafter evidencing, securing or otherwise relating to any secured indebtedness, neither Secured Party nor any other holder of the secured indebtedness shall be entitled to receive or collect, nor shall Debtor be obligated to pay, interest on any of the secured indebtedness in excess of the maximum rate of interest at the particular time in question, if any, which, under applicable law, may be charged to Debtor (herein the Maximum Rate), provided that the Maximum Rate shall be automatically increased or decreased, as the case may be, without notice to Debtor from time to time as of the effective time of each change in the Maximum Rate, and if any provision herein or in the Note or in such other instrument shall ever be construed or held to permit the collection or to require the payment of any amount of interest in excess of that permitted by applicable law, the provisions of this paragraph shall control and shall override any contrary or inconsistent provision herein or in the Note or in such other instrument. The intention of the parties being to conform strictly to the usury limitations under applicable law, the Note, this Agreement, and each other instrument now or hereafter evidencing or relating to any secured indebtedness shall be held subject to reduction to the amount allowed under said applicable law as now or hereafter construed by the courts having jurisdiction.
(g) All notices pursuant to this Security Agreement shall be in writing and shall be directed to the addresses set forth below or such other address as may be specified in writing, by certified or registered mail, return receipt requested by the party to which or whom notices are to be given. Notices shall be deemed to be given three (3) days after mailing by depositing same in any United States post office station or letter box in a post-paid envelope.
(h) The singular used herein shall include the plural.
(i) If more than one party shall execute this Agreement as Debtor, the term Debtor shall mean all such parties executing this Agreement, and all such parties shall be jointly and severally obligated hereunder.
(j) A photocopy or other reproduction of this Agreement or of any financing statement is sufficient as a financing statement and may be filed as a financing statement in any government office.
(k) THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
(l) SBA Loan. The Loan secured by this lien was made under a United States Small Business Administration (SBA) nationwide program which uses tax dollars to assist small business owners. If the United States is seeking to enforce this document, then under SBA regulations:
a) When SBA is the holder of the Note, this document and all documents evidencing or securing this Loan will be construed in accordance with federal law.
b) Lender or SBA may use local or state procedures for purposes such as filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using these procedures, SBA does not waive any federal immunity from local or state control, penalty, tax or liability. No Borrower or Guarantor may claim or assert against SBA any local or state law to deny any obligation of Borrower, or defeat any claim of SBA with respect to this Loan.
Any clause in this document requiring arbitration is not enforceable when SBA is the holder of the Note secured by this instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date written below.
Dated: June 8, 2012.
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DEBTOR: |
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MT. V PROPERTY HOLDINGS, LLC |
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By: |
/s/ Christopher F. Brogdon |
(L.S.) |
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Christopher F. Brogdon, Manager |
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Address of Debtor: |
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3050 Peachtree Road, NW, Suite 355 |
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Two Buckhead Plaza |
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Atlanta, Georgia 30305 |
Exhibit 10.28
MORTGAGE AND SECURITY AGREEMENT
This Mortgage and Security Agreement (the Mortgage), dated 8 th day of June 2012, between MT. V PROPERTY HOLDINGS, LLC (hereinafter referred to as Mortgagor) whose mailing address is 3050 Peachtree Road, NW, Suite 355, Two Buckhead Plaza, Atlanta, Georgia 30305, and Economic Development Corporation of Fulton County , the address of which is 5534 Old National Highway, College Park, GA 30349 , (hereinafter Mortgagee).
W I T N E S S E T H:
MORTGAGOR HEREBY IRREVOCABLY GRANTS, BARGAINS, SELLS, TRANSFERS, ASSIGNS AND CONVEYS TO MORTGAGEE WITH WARRANTY COVENANTS:
All that certain property and all buildings and all other improvements now thereon or hereafter constructed thereon situated in the County of Stone, State of Arkansas, described in Exhibit A attached hereto and made a part hereof by reference, (commonly known as 706 Oak Grove Street, Mountain View, Arkansas 72560) (the Premises);
TOGETHER WITH all of the following which, with the Premises, are herein collectively called the Mortgaged Property:
(a) All appurtenances and all estate and rights of Mortgagor in and to the Premises;
(b) All water and water rights, ditch and ditch rights, reservoir and reservoir rights, stock or interests in irrigation or ditch companies, royalties, minerals, oil and gas rights, lease or leasehold interests owned by Mortgagor, now or hereafter used or useful in connection with, appurtenant to or related to the Premises;
(c) All right, title and interest of Mortgagor in and to all streets, roads and public places, opened or proposed, and all easements and rights of way, public or private, now or hereafter used in connection with the Premises;
(d) All improvements, fixtures, equipment, furniture, inventory and other articles of personal property, and all rights therein, now owned or hereafter acquired by Mortgagor and affixed to, placed upon or used in connection with the Premises, and all replacements thereof and substitutions therefor (as further described in paragraph A.7); and
(e) All awards, payments or other amounts, including interest thereon, which may be made with respect to the Mortgaged Property as a result of injury to or decrease in the value of the Mortgaged Property or as a result of the exercise of the power of condemnation or eminent domain.
(f) All rights to the rents, issues and profits of the Mortgaged Property as well as the fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities (provided, however, that the Mortgagor shall be entitled to the collect and retain the above until a Default has occurred hereunder).
FOR THE PURPOSE OF SECURING, in such order of priority as Mortgagee may elect, the full and prompt payment, observance and performance when due, of all present and future obligations and indebtedness of Mortgagor to Mortgagee, whether at the stated time, by acceleration or otherwise, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, whether or not of the same or similar class or of like kind to any indebtedness incurred contemporaneously with the execution of this Mortgage, and whether now or hereafter existing, or due or to become due, including without limitation, the following:
(a) Obligations under Promissory Note . Payment of any and all amounts owed by Mortgagor under that certain Promissory Note from MT. V PROPERTY HOLDINGS, LLC of even date herewith, in the original principal sum of One Million Three Hundred Four Thousand and No/100 Dollars ($1,304,000.00) (the Note) with a maturity date of July 1, 2032, with interest thereon according to the provisions thereof, and all obligations of Mortgagor under, in connection with and/or pursuant to this Mortgage granted by Mortgagor as security for payment of the foregoing indebtedness; and
(b) All Sums in Connection with Note and Mortgage . All sums advanced or expenses or costs paid or incurred (including without limitation reasonable attorneys fees and other legal expenses) by Mortgagee pursuant to or in connection with the Note, Guarantee or this Mortgage, plus any interest on such sums, expenses or costs; and
(c) Any Changes to Note . Any extensions, amendments, modifications, changes, substitutions, restatements, renewals or increases or decreases to the Note and all other indebtedness secured by this Mortgage; and
(d) Any Additional Loans . Such additional sums with interest thereon as may be hereafter borrowed from Mortgagee, its successors or assigns, by the then record owner or owners of the Mortgaged Property when evidenced by another promissory note or notes, which are by the terms thereof secured by this Mortgage; and
(e) Any and All Other Indebtedness . All other indebtedness, obligations and liabilities of any kind, of Mortgagor to Mortgagee, now or hereafter existing, absolute or contingent, direct or indirect, joint and/or several, due or not due, secured or unsecured, arising by operation of law or otherwise including indebtedness, obligations and liabilities to Mortgagee of Mortgagor as a member of any partnership, syndicate or association or other group and whether incurred by Mortgagor as principal, surety, endorser, guarantor, accommodation party or otherwise, and any obligations which give rise to an equitable remedy for breach of performance if such breach gives rise to an obligation by Mortgagor to pay Mortgagee, and including any judgments in connection with any of the foregoing.
This Mortgage shall secure all of such obligations up to the maximum principal amount of One Million Three Hundred Four Thousand and No/100 Dollars ($1,304,000.00) and such amount may be advanced and repaid in whole or in part and again advanced and repaid in whole or in part from time to time without affecting the existence or priority of the lien of this Mortgage and this total shall limit only the total amount of principal which may be secured by this Mortgage at any one time.
A. PROVISIONS RELATING TO THE MORTGAGED PROPERTY
A.1 Taxes and Governmental Claims and Other Liens . Mortgagor agrees to pay or cause to be paid, prior to the date they would become delinquent if not paid, all taxes, assessments and governmental charges whatsoever levied upon or assessed or charged against the Mortgaged Property, including, without limitation, all water and sewer taxes, assessments and other charges, taxes, impositions and rents, if any. Mortgagor shall give to Mortgagee a receipt or receipts, or certified copies thereof, evidencing every such payment by Mortgagor, not later than forty-five (45) days after such payment is made but not later than forty-five (45) days after such payment would become delinquent if not paid. Mortgagor also agrees to promptly and faithfully pay, satisfy, and obtain the release of all other claims, liens, encumbrances, and contracts, affecting or purporting to affect the title to, or which may be or appear to be liens on, the Mortgaged Property or any part thereof, and all costs, charges, interest and penalties on account thereof, including, without limitation, the claims of all persons supplying labor or materials to the Mortgaged Property and to give Mortgagee, upon demand, evidence satisfactory to Mortgagee of the payment, satisfaction or release thereof.
A.2 Insurance . Mortgagor agrees to keep the Mortgaged Property insured against loss or damage by fire and other casualty with extended coverage and against any other risks or hazards which in the opinion of Mortgagee should be insured against, and in any case against all risks which persons engaged in the same business as is carried on at the Premises customarily insure against, with the minimum amount of said insurance to be no less than the amount of the Note. Mortgagor shall also carry insurance against the risk of rental or business interruption at the Premises, in an amount deemed satisfactory by Mortgagee. All of such insurance shall be placed with a company or companies and in such form and with such endorsements as may be approved or required by Mortgagee. Loss under all such insurance shall be payable to Mortgagee in accordance with this paragraph, and all such insurance policies shall be endorsed with a standard, non-contributory Mortgagees clause in favor of Mortgagee. Mortgagor shall also carry public liability insurance, in such form, amount and with such companies as Mortgagee may from time to time require, naming Mortgagee as an additional insured. The policy or policies evidencing all insurance referred to in this paragraph and receipts for the payments of premiums thereon shall be delivered to and held by Mortgagee. All such insurance policies shall contain a provision requiring at least ten (10) days notice to Mortgagee prior to any cancellation or modification. Mortgagor shall give Mortgagee satisfactory evidence of renewal of all such policies with premiums paid at least thirty (30) days before expiration. Mortgagor agrees to pay all premiums on such insurance as they become due, and will not permit any condition to exist on or with respect to the Mortgaged Property which would wholly or partially invalidate any insurance thereon. Mortgagee shall not by the fact of approving, disapproving, accepting, preventing, obtaining or failing to obtain any such insurance, incur any liability for the form or legal sufficiency or absence of insurance contracts, solvency of insurers, or payment of losses, and Mortgagor hereby expressly assumes full responsibility therefor and all liability, if any, thereunder. Effective upon any default hereunder, all of Mortgagors right, title and interest in and to all such policies and any unearned premiums paid thereon are hereby assigned to Mortgagee, which shall have the right, but not the obligation, to assign the same to any purchaser of the Mortgaged Property at any foreclosure sale or other disposition thereof. The requirements of Mortgagee for insurance under the provisions of this paragraph may be modified or amended in whole or in part by Mortgagee, in its reasonable discretion, and Mortgagor agrees, upon any expiration of any existing policy or policies of insurance, to provide a replacement policy or policies which shall meet such amended or modified insurance standards. In the event of a loss, Mortgagor shall give immediate written notice to the insurance carrier and Mortgagee. Mortgagor hereby appoints Mortgagee its attorney-in-fact for the purposes hereinafter set out, and authorizes and empowers Mortgagee, at Mortgagees option and in Mortgagees sole discretion as attorney-in-fact for Mortgagor, to make proof of loss, to adjust and prosecute any action arising from such insurance policies, to collect and receive insurance proceeds, and to deduct therefrom Mortgagees expenses incurred in the collection of such proceeds. Mortgagor understands and agrees that the power of attorney hereby granted to Mortgagee is a power coupled with an interest and is irrevocable until Mortgagees interest hereunder is terminated by the payment and performance of all of Mortgagors obligations and indebtedness secured hereby. In the event of any insured damage to or destruction of the Mortgaged Property or any part thereof (herein called an Insured Casualty), if (A) in the reasonable judgment of Mortgagee, the Mortgaged Property can be restored within ten (10) months after insurance proceeds are made available to an economic unit not less valuable and not less useful than the same was prior to the
Insured Casualty, and after such restoration will adequately secure the outstanding balance of the Indebtedness, and (B) no Event of Default (hereinafter defined) shall have occurred and be then continuing, then the proceeds of insurance may, in Mortgagees sole discretion, be applied to reimburse Mortgagor for the cost of restoring, repairing, replacing or rebuilding the Mortgaged Property or part thereof subject to Insured Casualty, as provided below; and Mortgagor hereby covenants and agrees forthwith to commence and diligently to prosecute such restoring, repairing, replacing or rebuilding; provided, however, in any event Mortgagor shall pay all costs (and if required by Mortgagee, Mortgagor shall deposit the total thereof with Mortgagee in advance) of such restoring, repairing, replacing or rebuilding in excess of the net proceeds of insurance made available pursuant to the terms hereof. Notwithstanding the above, the proceeds of insurance collected upon any Insured Casualty shall, at the option of Mortgagee, in its sole discretion, be applied to the payment of the Indebtedness, whether or not then due, or applied to reimburse Mortgagor for the cost of restoring, repairing, replacing or rebuilding the Mortgaged Property or part thereof subject to the Insured Casualty, in the manner set forth below. Any such application to the Indebtedness shall not be considered a voluntary prepayment requiring payment of the prepayment consideration provided in the Note, and shall not reduce or postpone any payments otherwise required pursuant to the Note, other than the final payment on the Note. If proceeds of insurance, if any, are made available to Mortgagor for the restoring, repairing, replacing or rebuilding of the Mortgaged Property, Mortgagor hereby convenants to restore, repair, replace or rebuild the same to be of at least equal value and of substantially the same character as prior to such damage or destruction, all to be effected in accordance with applicable law and plans and specifications approved in advance by Mortgagee. If Mortgagor is entitled to reimbursement out of insurance proceeds held by Mortgagee, such proceeds shall be disbursed from time to time upon Mortgagee being furnished with (1) evidence satisfactory to it (which evidence may include inspection[s] of the work performed) that the restoration, repair, replacement and rebuilding covered by the disbursement has been completed in accordance with plans and specifications approved by Mortgagee, (2) evidence satisfactory to it of the estimated cost of completion of the restoration, repair, replacement and rebuilding, (3) funds, or, at Mortgagees option, assurances satisfactory to Mortgagee that such funds are available, sufficient in addition to the proceeds of insurance to complete the proposed restoration, repair, replacement and rebuilding, and (4) such architects certificates, waivers of lien, contractors sworn statements, title insurance endorsements, bonds, plats of survey and such other evidences of cost, payment and performance as Mortgagee may reasonably require and approve; and Mortgagee may, in any event, require that all plans and specifications for such restoration, repair, replacement and rebuilding be submitted to and approved by Mortgagee prior to commencement of work. With respect to disbursements to be made by Mortgagee: (A) no payment made prior to the final completion of the restoration, repair, replacement and rebuilding shall exceed ninety percent (90%) of the value of the work performed from time to time: (B) funds other than proceeds of insurance shall be disbursed prior to disbursement of such proceeds; and (C) at all times, the undisbursed balance of such proceeds remaining in the hands of Mortgagee, together with funds deposited for that purpose or irrevocably committed to the satisfaction of Mortgagee by or on behalf of Mortgagor for that purpose, shall be at least sufficient in the reasonable judgment of Mortgagee to pay for the cost of completion of the restoration, repair, replacement or rebuilding, free and clear of all liens or claims for lien and the costs. Any surplus which may remain out of insurance proceeds held by Mortgagee after payment of such costs of restoration,
repair, replacement or rebuilding shall be paid to any party entitled thereto. In no event shall Mortgagee assume any duty or obligation for the adequacy, form or content of any such plans and specifications, nor for the performance, quality or workmanship of any restoration, repair, replacement and rebuilding. Notwithstanding anything to the contrary contained herein, the proceeds of insurance reimbursed to Mortgagor in accordance with the terms and provisions of this Mortgage shall be reduced by the reasonable costs (if any) incurred by Mortgagee in the adjustment and collection thereof and in the reasonable costs incurred by Mortgagee of paying out such proceeds (including, without limitation, reasonable attorneys fees and costs paid to third parties for inspecting the restoration, repair, replacement and rebuilding and reviewing the plans and specifications therefor). If the insurance proceeds are applied to the payment of the sums secured by this Mortgage, any such application of proceeds to principal shall be in such order as Mortgagee may determine and, if after so applying such insurance proceeds Mortgagee reasonably determines the remaining security to be inadequate to secure the remaining indebtedness, Mortgagor shall upon written demand from Mortgagee prepay on principal such an amount as will reduce the remaining indebtedness to a balance for which adequate security is present.
A.3 Condemnation and Other Awards . If the Mortgaged Property or any part thereof is taken or diminished in value, or if a consent settlement is entered, by or under threat of such proceeding, the award or settlement payable to Mortgagor by virtue of its interest in the Mortgaged Property shall be, and by these presents is, assigned, transferred and set over unto, and to be held by Mortgagee subject to the lien and security interest of this Mortgage, and disbursed at Mortgagees option, (a) to hold all or any portion of such proceeds to be used to reimburse Mortgagor for the costs of reconstruction or repair of the Mortgaged Property, or (b) to apply all or any portion of such proceeds to the payment of the sums secured by this Mortgage, whether or not then due. In the event of a taking of the Mortgaged Property or any part thereof (herein called a Condemnation), if (A) in the reasonable judgment of Mortgagee, the Mortgaged Property can be restored within ten (10) months after the proceeds of the condemnation proceeds are made available to an economic unit not less valuable (including an assessment by Mortgagee of the impact of the termination of any Leases due to such Condemnation) and not less useful than the same was prior to the Condemnation, and after such restoration will adequately secure the outstanding balance of the Indebtedness, and (B) no Event of Default (hereinafter defined) shall have occurred and be then continuing, then the proceeds may, in Mortgagees sole discretion, be applied to reimburse Mortgagor for the cost of restoring, repairing, replacing or rebuilding the Mortgaged Property or part thereof subject to the Condemnation, as provided below; and Mortgagor hereby covenants and agrees forthwith to commence and diligently to prosecute such restoring, repairing, replacing or rebuilding; provided, however, in any event Mortgagor shall pay all costs (and if required by Mortgagee, Mortgagor shall deposit the total thereof with Mortgagee in advance) of such restoring, repairing, replacing or rebuilding in excess of the net proceeds of the Condemnation made available pursuant to the terms hereof. Notwithstanding the above, the proceeds collected upon any Condemnation shall, at the option of Mortgagee, in its sole discretion, be applied to the payment of the Indebtedness, whether or not then due, or applied to reimburse Mortgagor for the cost of restoring, repairing, replacing or rebuilding the Mortgaged Property or part thereof subject to the Condemnation, in the manner set forth below. Any such application to the Indebtedness shall not
be considered a voluntary prepayment requiring payment of the prepayment consideration provided in the Note, and shall not reduce or postpone any payments otherwise required pursuant to the Note, other than the final payment on the Note. If proceeds of the Condemnation, if any, are made available to Mortgagor for the restoring, repairing, replacing or rebuilding of the Mortgaged Property, Mortgagor hereby covenants to restore, repair, replace or rebuild the same to be of at least equal value and of substantially the same character as prior to such damage or destruction, all to be effected in accordance with applicable law and plans and specifications approved in advance by Mortgagee. If Mortgagor is entitled to reimbursement out of the proceeds of the Condemnation held by Mortgagee, such proceeds shall be disbursed from time to time upon Mortgagee being furnished with (1) evidence satisfactory to it (which evidence may include inspection[s] of the work performed) that the restoration, repair, replacement and rebuilding covered by the disbursement has been completed in accordance with plans and specifications approved by Mortgagee, (2) evidence satisfactory to it of the estimated cost of completion of the restoration, repair, replacement and rebuilding, (3) funds, or, at Mortgagees option, assurances satisfactory to Mortgagee that such funds are available, sufficient in addition to the proceeds of Condemnation to complete the proposed restoration, repair, replacement and rebuilding, and (4) such architects certificates, waivers of lien, contractors sworn statements, title insurance endorsements, bonds, plats of survey and such other evidences of cost, payment and performance as Mortgagee may reasonably require and approve; and Mortgagee may, in any event, require that all plans and specifications for such restoration, repair, replacement and rebuilding be submitted to and approved by Mortgagee prior to commencement of work. With respect to disbursements to be made by Mortgagee: (A) no payment made prior to the final completion of the restoration, repair, replacement and rebuilding shall exceed ninety percent (90%) of the value of the work performed from time to time: (B) funds other than proceeds of the Condemnation shall be disbursed prior to disbursement of such proceeds; and (C) at all times, the undisbursed balance of such proceeds remaining in the hands of Mortgagee, together with funds deposited for that purpose or irrevocably committed to the satisfaction of Mortgagee by or on behalf of Mortgagor for that purpose, shall be at least sufficient in the reasonable judgment of Mortgagee to pay for the cost of completion of the restoration, repair, replacement or rebuilding, free and clear of all liens or claims for lien and the costs. Any surplus which may remain out of the Condemnation proceeds held by Mortgagee after payment of such costs of restoration, repair, replacement or rebuilding shall be paid to any party entitled thereto. In no event shall Mortgagee assume any duty or obligation for the adequacy, form or content of any such plans and specifications, nor for the performance, quality or workmanship of any restoration, repair, replacement and rebuilding. Notwithstanding anything to the contrary contained herein, the proceeds of the Condemnation reimbursed to Mortgagor in accordance with the terms and provisions of this Mortgage shall be reduced by the reasonable costs (if any) incurred by Mortgagee in the adjustment and collection thereof and in the reasonable costs incurred by Mortgagee of paying out such proceeds (including, without limitation, reasonable attorneys fees and costs paid to third parties for inspecting the restoration, repair, replacement and rebuilding and reviewing the plans and specifications therefor). If the Condemnation proceeds are applied to the payment of the sums secured by this Mortgage, any such application of proceeds to principal shall be in such order as Mortgagee may determine and, if after so applying such proceeds Mortgagee reasonably determines the remaining security to be inadequate to secure the remaining indebtedness, Mortgagor shall upon written demand from Mortgagee prepay on
principal such an amount as will reduce the remaining indebtedness to a balance for which adequate security is present.
A.4 Condition of Mortgaged Property .
(a) Mortgagor agrees to properly care for and keep the Mortgaged Property in good condition and repair. Without the prior written consent of Mortgagee, Mortgagor agrees not to cause or permit any building or improvement which constitutes a part of the Premises to be removed, demolished or structurally altered, in whole or in part, or any fixture or article of personal property which constitutes a portion of the Mortgaged Property to be removed (other than in the ordinary course of Mortgagors business), damaged or destroyed. Mortgagee consents to the removal and replacement of fixtures and articles of personal property if such articles of personal property are simultaneously replaced with fixtures and articles of equal or greater value, that are free and clear of all liens other than that of Mortgagees, and if the value of the Mortgaged Property is not diminished thereby. Mortgagor agrees not to abandon the Premises or leave the Premises unprotected, unguarded, vacant or deserted, and not to cause or permit any waste to the buildings, improvements or fixtures constituting any portion of the Mortgaged Property. Mortgagor agrees (i) to repair, restore and reconstruct in good and workmanlike manner to the condition required hereby any improvement which constitutes a part of the Mortgaged Property which may be damaged or destroyed, in accordance with the provisions of Paragraph A.2 hereof (provided however, Mortgagor shall not be required to so repair, restore or reconstruct if Mortgagee elects under Paragraph A.2 to retain the insurance proceeds and apply them to the sums secured by this Mortgage, and further provided, if Mortgagee elects to use such proceeds to reimburse Mortgagor for the costs of such repair, restoration or reconstruction, provided however, if such proceeds are not adequate, Mortgagor shall deposit with Mortgagee such additional funds as may be required to accomplish such repair, restoration or reconstruction); (ii) not to permit any lien of mechanics or materialmen to attach to the Mortgaged Property, provided, however, that the filing of any such lien shall not constitute a default hereunder if Mortgagor shall provide an adequate bond with respect to any such lien, in accordance with applicable law or shall provide indemnification with respect to such lien with security therefor acceptable to Mortgagee in Mortgagees sole discretion; (iii) to comply with all laws, ordinances, regulations or governmental orders affecting the Mortgaged Property or requiring any alterations or improvements thereto; (iv) not to commit, suffer or permit any act with respect to the Mortgaged Property in violation of law or of any covenants, prior encumbrances, conditions or restrictions affecting the Mortgaged Property; (v) to make or cause to be made from time to time all needed or proper replacements, repairs and renewals; (vi) to perform all obligations and pay all amounts as and when required to protect Mortgagors interest in the Premises; and (vii) to do any other act or acts, all in a timely and proper manner which from the character or use of the Mortgaged Property may be reasonably necessary to protect and preserve the value of the Mortgaged Property. Mortgagor covenants and agrees that the Mortgaged Property shall be used for a skilled nursing facility and for no other purpose without Mortgagees prior written consent.
(b) Mortgagee may, during normal business hours and upon reasonable notice to Mortgagor, enter and inspect or protect the Mortgaged Property, in person or by agent, in such
manner and to such extent as it may deem necessary. In the event that Mortgagor fails to maintain the Mortgaged Property in the manner specified herein, Mortgagee may, at its option, undertake such repairs or maintenance, for the account of Mortgagor, as Mortgagee deems necessary. The cost of any such repairs or maintenance undertaken by Mortgagee shall become immediately due and payable by Mortgagor to Mortgagee and Mortgagee shall be reimbursed therefor in accordance with the provisions of Paragraph B.2 hereof. The right of Mortgagee to undertake such repairs or maintenance shall be optional, shall not impose any duties on Mortgagee, and shall not be deemed to cure any Default under this Mortgage for failure to maintain the Mortgaged Property in accordance with the covenants herein.
A.5 Alterations and Additions . Mortgagor agrees that, as to any alteration, addition, construction or improvement to be made upon the Premises, all plans and specifications therefor shall be prepared by or on behalf of Mortgagor and shall be subject to Mortgagees written approval in advance of the commencement of work; once commenced, all work thereunder shall be prosecuted with due diligence; all construction thereof will be in substantial accordance with the plans and specifications so approved and will comply with all laws, ordinances or regulations made or promulgated by any governmental agency or other lawful authority and with the rules of the applicable Board of Fire Underwriters. Should Mortgagor at any time fail to comply with any notice or demand by any governmental agency, which alleges a failure to comply with any such plan, specification, law, ordinance or regulation, such failure shall, at Mortgagees option, constitute a default hereunder.
A.6 Status of Title . Mortgagor represents and warrants that it is the lawful owner of the Mortgaged Property in fee simple, subject to no liens or encumbrances, except for covenants, conditions, restrictions, easements and rights-of-way of record, if any. Mortgagor represents and warrants that it has full right, power and authority to convey and mortgage the Mortgaged Property and to execute this Mortgage. Mortgagor also agrees to protect, preserve and defend its interest in the Mortgaged Property and title thereto, including full performance of any prior claim or lien; to appear and defend this Mortgage in any action or proceeding affecting or purporting to affect the Mortgaged Property, the lien of this Mortgage thereon or any of the rights of Mortgagee hereunder, and to pay all costs and expenses incurred by Mortgagee in connection with any such action or proceeding, including, without limitation, reasonable attorneys fees, whether any such action or proceeding progresses to judgment and whether brought by or against Mortgagee, Mortgagor, or the Mortgaged Property. Mortgagee shall be reimbursed for any such costs and expenses in accordance with the provisions of Paragraph B.2 hereof. Mortgagee may, but shall not be under any obligation to, appear or intervene in any such action or proceeding and retain counsel therein and defend the same or otherwise take such action therein as it may deem advisable or may settle or compromise the same and, for any of such purposes, may expend and advance such sums of money as it may deem necessary, and Mortgagee shall be reimbursed therefor in accordance with the provisions of Paragraph B.2 hereof. Notwithstanding anything contained herein, Mortgagee acknowledges a superior lien in favor of Metro City Bank in the amount of $1,810,000.00.
A.7 Personal Property Security Interest .
(a) This Mortgage shall cover, and Mortgagor hereby grants to Mortgagee a security interest in, all property now or hereafter affixed or attached or incorporated upon the Mortgaged Property including without limitation all furnaces, heating equipment, air conditioners, fans, water heaters, pipes, ducts, wiring and electrical fixtures, conduits, plumbing, sinks, partitions, restroom fixtures, light fixtures, windows and window coverings, and floor, ceiling and wall coverings, and all replacements thereof and substitutions therefor, which, to the fullest extent permitted by law shall be deemed fixtures and a part of the real property. In addition, this Mortgage shall cover, and Mortgagor hereby grants to Mortgagee a security interest in: (i) all building materials, fixtures, equipment and other personal property to be incorporated into any improvements constructed on the Premises; (ii) all interest of Mortgagor in all goods, materials, supplies, fixtures, equipment, machinery, furniture and furnishing and other personal property which are now or hereafter affixed to, placed upon or used in connection with, the Premises, and all replacements thereof, and substitutions therefor; (iii) all interest of Mortgagor in all rents, issues and profits, as well as the fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities, and insurance policies, insurance and condemnation awards and proceeds, tradenames, trademarks and service marks, arising from or related to the Premises and any other business conducted on the Premises; (iv) all of Mortgagors interest in and rights pursuant to any franchise or licensing agreement or other similar agreement with respect to the Premises but only to the extent such grant does not violate any such agreement; and (v) all books, records and files relating to, any of the foregoing. The security interests hereby granted are first and prior liens on the property described. To the extent any property covered by this Mortgage consists of rights in action or personal property covered by the Uniform Commercial Code, this Mortgage constitutes a Security Agreement and is intended to create a security interest in such property in favor of Mortgagee. This Mortgage shall be self-operative with respect to such property, but Mortgagor agrees to execute and deliver on demand such security agreements, financing statements and other instruments as Mortgagee may request in order to manifest or perfect the lien hereof more specifically upon any of such property. If the lien of this Mortgage on any property is subject to a prior security agreement covering such property, then in the event of any default hereunder, all the right, title and interest of Mortgagor in and to any and all deposits made in connection with the transaction whereby such prior security agreement was made is hereby assigned to Mortgagee, together with the benefit of any payments now or hereafter made in connection with such transactions.
(b) Mortgagor agrees that all property of every nature and description, whether real or personal covered by this Mortgage, together with all personal property covered by any separate security interests granted to Mortgagee, are encumbered as one unit, and that upon default by Mortgagor under the Note, or under this Mortgage or any security agreement given pursuant to this paragraph, this Mortgage and such security interest, at Mortgagees option, may be foreclosed and the security sold in the same proceedings, and all of the Premises (both realty and personalty) may, at Mortgagees option, be sold as such in one unit as a going business. The filing of any financing statement relating to any personal property or rights or interest generally or specifically described herein shall not be construed to diminish or alter any of Mortgagees rights or priorities hereunder.
A.8 Severability . Should any term, provision, covenant or condition of this Mortgage be held to be void or invalid, the same shall not affect any other term, provision, covenant or condition of this Mortgage, but the remainder hereof shall be effective as though such term, provision, covenant or condition had not been contained herein.
A.9 Usury Disclaimer . Any provision contained herein or in the Note or in any other instrument now or hereafter evidencing, securing or otherwise relating to any indebtedness secured by this Mortgage to the contrary notwithstanding, neither Mortgagee nor the holder of any such indebtedness shall be entitled to receive or collect, nor shall Mortgagor be obligated to pay, interest on any of the secured indebtedness in excess of the maximum rate of interest at the particular time in question, if any, which, under applicable law, Mortgagee is then permitted to charge Mortgagor (herein the Maximum Rate) provided that the Maximum Rate shall be automatically increased or decreased as the case may be, without notice to Mortgagor from time to time as of the effective time of each change in the Maximum Rate, and if any provision herein or in the Note or in such other instrument shall ever be construed or held to permit the collection or to require the payment of any amount of interest in excess of that permitted by applicable law, the provisions of this Paragraph A.9 shall control and shall override any contrary or inconsistent provision herein or in the Note or in such other instrument. The intention of the parties being to conform strictly to the usury limitations under applicable law, the Note, this Mortgage, and each other instrument now or hereafter evidencing or relating to any indebtedness secured by this Mortgage shall be held subject to reduction to the maximum amount allowed under said applicable law as now or hereafter construed by the courts having jurisdiction, and any payment by Mortgagor over the Maximum Rate shall be applied to reduce the principal amount due and owing to Mortgagee.
A.10 Impounds . Upon an Event of Default, Mortgagor shall, if requested by Mortgagee, deposit with Mortgagee or Mortgagees designee on each monthly payment date as set forth in the Note one-twelfth (1/12) of the reasonably estimated amount of real estate taxes assessed or to be assessed against the Mortgaged Property for the then current year, together with one-twelfth (1/12) of the reasonably estimated total of all insurance premiums required to be paid for the then current year, as estimated by Mortgagee, together with any extra amount necessary so that the next installments of real property taxes and insurance premiums may be paid from the deposit. Such moneys shall at proper times be progressively returned to Mortgagor for use in the actual payment of said taxes and said insurance premiums or, at the sole election of Mortgagee, Mortgagee may use said moneys in actual payment of such taxes and premiums, but nothing in this paragraph shall release Mortgagor from its obligations to pay said taxes as the same become due and payable under the provisions hereof and to maintain in force all insurance policies as required hereby. All impounds required under this paragraph shall be deposited in a non-interest bearing account of Mortgagee, to be withdrawn by Mortgagee at such times and in such amounts as shall be deemed appropriate by Mortgagee. All amounts deposited under this paragraph are hereby assigned to Mortgagee as additional security for all indebtedness secured by this Mortgage, and so long as any Default as set forth herein including a default in the payment of any money or the performance of any covenant or obligation herein contained or secured hereby exists, then any deposits made by Mortgagor under this paragraph may, at the option of
Mortgagee, be applied to the payment of principal and interest or other indebtedness secured hereby, in lieu of being applied to any of the purposes of this paragraph A.10 previously stated.
A.11 Environmental Representations and Warranties . Mortgagor represents and warrants to Mortgagee that: (a) during the period of Mortgagors ownership of the Mortgaged Property, there has not been, nor will there be in the future, any use, generation, manufacture, storage, treatment, disposal, release, or threatened release of any hazardous waste or substance by any person or entity on, or about the Mortgaged Property; (b) Mortgagor has no knowledge of, or reason to believe that there has been, except as previously disclosed to and acknowledged by Mortgagee in writing, (i) any use, generation, manufacture, storage, treatment, disposal, release, or threatened release of any hazardous waste or substance by any prior owners or occupants of the Mortgaged Property or (ii) any actual or threatened litigation or claims of any kind by any person or entity relating to such matters; and (c) except as previously disclosed to and acknowledged by Mortgagor in writing, (i) neither Mortgagor nor any tenant, contractor, agent, or other authorized user of the Mortgaged Property shall use, generate, manufacture, store, treat, dispose of, or release any hazardous waste or substance on, under, or about the Mortgaged Property and (ii) all such activity shall be conducted in full compliance with all applicable federal, state, and local laws, regulations and ordinances. Mortgagor, at any time during usual business hours, authorizes Mortgagee and its agents to enter upon the Mortgaged Property to make such inspections and tests, including, without limitation, intrusive tests, at Mortgagors expense, as Mortgagee may deem appropriate to determine compliance with this section of the Mortgage and the absence of any hazardous waste or hazardous substance on or near the Mortgaged Property. Any inspections or tests made by Mortgagee shall be for Mortgagees purposes only and shall not be construed to create any responsibility or liability on the part of Mortgagee. Mortgagor hereby (a) releases and waives any future claims against Mortgagee for indemnity or contribution in the event Mortgagor becomes liable for cleanup or other costs associated therewith, and (b) agrees to indemnify and hold harmless Mortgagee against any and all claims, losses, liabilities, damages, penalties, and expenses, which Mortgagee 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 Mortgagors ownership or interest in the Mortgaged Property, whether or not the same was or should have been known to Mortgagor. The provisions of this paragraph of the Mortgage, including the obligation to indemnify, shall survive the payment of the indebtedness secured herein and the satisfaction and reconveyance of the lien of this Mortgage and shall not be affected by Mortgagees acquisition of any interest in the Mortgaged Property, whether by foreclosure or otherwise. The terms hazardous waste, disposal, release, and threatened release, as used in this Mortgage shall have the same meanings as set forth in 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 Act, 49 U.S.C. Section 6901 et seq., as amended, or other applicable state or federal laws, rules or regulations adopted pursuant to any of the foregoing. The term hazardous waste and hazardous substance shall also include, without limitation, petroleum and petroleum by-products and asbestos. Notwithstanding anything contained in this paragraph, Mortgagee acknowledges that the Borrower may use office supplies,
cleaning substances, medical supplies and materials used in the ordinary course of operation for a nursing home facility and that such use is consistent with all Environmental Laws.
A.12 Time of the Essence . Time of each payment and performance of each of Mortgagors obligations pursuant to the Note, this Mortgage, and each other instrument or obligation of Mortgagor secured by this Mortgage or given in connection with this Mortgage is specifically declared to be of the essence.
B. GENERAL PROVISIONS .
B.1 Non-Waiver . Mortgagees acceptance of any sum after the same is due shall not constitute a waiver of the right either to require prompt payment, when due, of all other sums hereby secured or to declare a Default as herein provided. The acceptance by Mortgagee of any sum in an amount less than the sum then due shall be deemed an acceptance on account only and upon condition that it shall not constitute a waiver of the obligation of Mortgagor to pay the entire sum then due, and Mortgagors failure to pay said entire sum then due shall be and continue to be a default notwithstanding such acceptance of such amount on account, as aforesaid, and Mortgagee shall be at all times thereafter and until the entire sum then due shall have been paid, and notwithstanding the acceptance by Mortgagee thereafter of further sums on account, or otherwise, entitled to exercise all rights in this Mortgage conferred upon Mortgagee, upon the occurrence of a default, and the right to proceed with a sale under any notice of default and election to sell shall in no way be impaired, whether any of such amounts are received prior or subsequent to such notice. Consent by Mortgagee to any transaction or action which is subject to consent or approval of Mortgagee hereunder shall not be deemed a waiver of the right to require such consent or approval to future or successive transactions or actions.
B.2 Substitute Performance by Mortgagee . Should Mortgagor fail to pay or perform when required hereunder any obligation of Mortgagor hereunder, or if any action or proceeding is commenced which affects the Mortgaged Property or title thereto or the interest of Mortgagee therein, including but not limited to, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving bankruptcy, insolvency or reorganization, Mortgagee may, but shall not be obligated to, without regard to the adequacy of its security and without prejudice to its right to declare a Default hereunder, make such appearances, disburse such sums or take such actions as Mortgagee reasonably deems necessary to protect Mortgagees interest, including, but not limited to disbursement of attorneys fees and entry upon the Mortgaged Property to make repairs without notice or demand to or upon Mortgagor. Mortgagor hereby grants to Mortgagee an easement to enter upon the Property at any time, which easement shall continue for the duration of this Mortgage. The payment by Mortgagee of any delinquent tax, assessment or governmental charge, or any lien or encumbrance which Mortgagee in good faith believes may be prior to the lien of this Mortgage, or any insurance premium for insurance which Mortgagor is obligated to provide hereunder but which Mortgagee in good faith believes has not been supplied, shall be conclusive between Mortgagor and Mortgagee as to the propriety and amount so paid. Mortgagee shall be subrogated to all rights, equities and liens discharged by any such expenditure. After any Default hereunder and whether or not any action is instituted to enforce any provision of this Mortgage or the Note, Mortgagor promises to pay to Mortgagee, as
incurred, all reasonable sums incurred by Mortgagee for attorneys fees and costs to enforce this Mortgage or the Note or to defend any claims arising from this Mortgage or the Note. Any amounts so paid pursuant to this Paragraph B.2, or the cost of such performance, together with all costs and expenses incurred by Mortgagee in connection with such payment or performance, and any amounts for which Mortgagor is specifically obligated to reimburse Mortgagee pursuant to provisions hereof, including reasonable attorneys fees and interest on all such amounts at the default rate, as described in the Note, from the date paid by Mortgagee until repaid to Mortgagee, shall be payable by Mortgagor to Mortgagee immediately upon notice to Mortgagor of the amount owing, without further demand, shall be secured by this Mortgage and shall be added to the judgment in any suit brought by Mortgagee against Mortgagor. Failure to pay any such amount within ten (10) days after notice to Mortgagor of the amount owing shall constitute a Default hereunder and Mortgagee may, at its option, accelerate and demand full payment of all amounts secured hereby.
B.3 Powers of Mortgagee . At any time or from time to time, without liability therefor and without notice, without affecting the personal liability of any person or entity for the payment of the indebtedness secured hereby and without affecting the lien of this Mortgage upon the Mortgaged Property for the full amount of all amounts secured hereby, Mortgagee may (a) release all or any part of the Mortgaged Property, (b) consent to the making of any map or plat thereof, (c) join in granting any easement thereon or in creating any covenants or conditions restricting use or occupancy thereof, or (d) join in any extension agreement or in any agreement subordinating the lien or charge hereof.
B.4 Certain Definitions . The term Mortgagee means the original Mortgagee hereunder, its successors or assigns, and any future owner and holder, including pledgee, of the Note. All obligations of each Mortgagor hereunder are joint and several, and this Mortgage in all its parts applies to and binds the heirs, personal representatives, administrators, executors, successors and assigns of all and each of the parties hereto. If Mortgagor is two or more entities or persons, the term Mortgagor as used herein shall refer to them collectively, as well as individually.
B.5 Financial Statements and Other Disclosures . Mortgagor represents and warrants to Mortgagee that all financial statements and credit applications delivered by Mortgagor to Mortgagee accurately reflect the financial condition and operations of Mortgagor at the times and for the periods therein stated. So long as this Mortgage is in force and effect, Mortgagor agrees to deliver to Mortgagee, within 120 days after the end of each of Mortgagors fiscal years, an income statement on the use and operation of the Mortgaged Property, a complete and accurate copy of Mortgagors federal tax returns and financial statements, including a balance sheet, profit and loss statement and aging of accounts receivable and accounts payable, all schedules, all prepared in accordance with generally accepted accounting principles certified by an officer of the Mortgagor, showing the consolidated financial position of Mortgagor at the close of such fiscal year, and concurrently therewith a certificate of its Managing Member or chief financial officer to the effect that such officer is not aware of any condition or event which constitutes a default under this Mortgage or a default under any franchise agreement to which Mortgagor is a party, or under any notes or obligations or which, with the mere passage of time or notice, or
both, would constitute a default under this Mortgage or a default under any such franchise agreement or under any notes or obligations of the Mortgagor. Mortgagor hereby agrees to immediately notify Mortgagee in writing as to the existence of any notes payable by Mortgagor, or any related person or entity, to any franchisor for unpaid royalties or other unpaid obligations to such franchisor.
B.6 Amendment . No alteration, amendment or waiver of this Mortgage, or the Note shall be effective unless in writing and signed by the parties sought to be charged or bound thereby.
B.7 Governing Law . This Mortgage will 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 creation, perfection, priority and enforcement of Mortgagees rights and remedies against the Mortgaged 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 Mortgage is challenged or questioned, such provision shall be governed by whichever applicable state or federal law would uphold or would enforce such challenged or questioned provision. The loan transaction which 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 Mortgagee in the State of Georgia.
B.8 Statement Fee . For any statement requested by Mortgagor regarding the obligations and indebtedness secured by this Mortgage, or regarding the amounts held in any impound or reserve fund established hereunder, Mortgagee may charge a reasonable fee, not to exceed any maximum amount provided by any applicable law at the time of the request therefor.
B.9 Notices .
(a) All notices required or permitted to be given hereunder shall be delivered in person or by United States mail, postage prepaid, registered or certified with return receipt requested. If any written notice is mailed, it shall be deemed effective on the earlier of actual receipt or on the third (3rd) calendar day following the date of mailing. Notice given in person shall be effective only if, and when, received. The addresses of the parties for delivery of notices shall be the addresses set forth above.
(b) Any party may change its address for notice hereunder to any other location within the continental United States by giving ten (10) days notice to other parties in the manner set forth above.
B.10 Representations and Warranties of Mortgagor . Mortgagor and each signatory who signs on Mortgagors behalf hereby represents and warrants as follows:
(a) That this Mortgage, the Note and all other documents executed and delivered to Mortgagee in connection herewith were executed in accordance with the requirements of law and are valid, binding and enforceable in accordance with their terms.
(b) That the execution of this Mortgage, the Note and any other document executed and delivered to Mortgagee in connection herewith, and the full and complete performance of the provisions hereof and thereof, will not result in any breach of, or constitute a default under any indenture, mortgage, bank loan or credit agreement or other agreement or instrument to which Mortgagor is a party or by which Mortgagor is bound, and will not result in the creation of any lien, charge or encumbrance (other than those in favor of Mortgagee) upon any property or assets of Mortgagor.
(c) That as of the date of execution of this Mortgage, Mortgagor is the owner of the Mortgaged Property.
(d) The improvements on the Premises, existing and proposed, and their intended use will, when completed, comply fully with all applicable environmental, air quality, zoning, planning, building, subdivision and other governmental laws and requirements. Mortgagor specifically warrants that the existing improvements on each property listed on Exhibit A attached hereto and made a part hereof by reference, complies with all local zoning ordinances.
(e) The Premises are composed of one or more whole tax parcels with a separate tax assessment, independent of any land or improvements not encumbered by this Mortgage.
(f) There is no litigation pending or, to the best of Mortgagors knowledge, threatened against the Mortgaged Property. There is no litigation pending or, to the best of Mortgagors knowledge, threatened against Mortgagor, which might, so far as Mortgagor can now reasonably foresee, have a material adverse effect on Mortgagors ability to repay the Note or to perform the provisions of this Mortgage or of any other document delivered to Mortgagee in connection herewith. Mortgagor has disclosed all litigation pending and threatened against Mortgagor to Mortgagee in writing, and will disclose all future such litigation to Mortgagee in writing within thirty (30) days of its receipt of notice thereof.
(g) The Mortgaged Property complies with all applicable subdivision laws, ordinances, regulations, rules and other requirements.
(h) Mortgagor is not in default with respect to any existing indebtedness or obligation.
(i) Mortgagor has the power and authority to enter into and perform all terms and conditions of this Mortgage, the Note, and all other documents executed in connection with this transaction, and to incur the obligations herein and therein provided for.
(j) Unless previously disclosed to Mortgagee in writing, Mortgagor has not made any agreement or taken any action which may cause anyone to become entitled to a commission or finders fee as a result of the making of any loan to Mortgagor by Mortgagee.
These representations and warranties may be relied upon by Mortgagee with or without investigation by Mortgagee and they shall survive any such investigation, and shall continue and may be relied upon by Mortgagee until all obligations secured by this Mortgage have been paid in full.
B.11 Extensions and Modifications . From time to time, without affecting the obligation of Mortgagor or Mortgagors successors or assigns to pay the sums secured by this Mortgage and to observe the obligations of Mortgagor contained herein, without affecting the guaranty of any person, corporation, partnership or other entity for payment of the indebtedness secured hereby, and without affecting the lien or priority of lien hereof on the Mortgaged Property, Mortgagee may, at Mortgagees option, without giving notice to or obtaining the consent of Mortgagor, Mortgagors successors or assigns or of any other lienholders or guarantors, and without liability on Mortgagees part, extend the time for payment of said indebtedness or any part thereof, reduce the payments thereon, release anyone liable on any of said indebtedness, accept a renewal note or notes therefor, modify the terms and time of payment of said indebtedness, release from this Mortgage any part of the Mortgaged Property, take or release other or additional security, reconvey any part of the Mortgaged Property, consent to the granting of any easement or dedication, join in any extension or subordination agreement and agree in writing with any person obligated to pay the same to modify the rate of interest or period of amortization of any indebtedness secured hereby or change the amount of the installments payable thereon. Mortgagor shall pay Mortgagee a reasonable service charge, together with such title insurance premiums and attorneys fees as may be incurred by Mortgagee in connection with any such action.
B.12 Waiver by Mortgagor . Mortgagor waives any requirement of presentment, demand for payment, notice of nonpayment or late payment, protest, notice of protest, notice of dishonor, and all other formalities. Mortgagor waives and releases all right of appraisement, sale, and redemption allowed under any law or laws of the State of Arkansas, or the laws of any other state or jurisdiction, including particularly all right of redemption under Ark. Code Ann. § 18-49-106 or Ark. Code Ann. § 16-66-502. Mortgagor waives all rights and/or privileges it might otherwise have to require Mortgagee to proceed against or to pursue any remedy available to Mortgagee in any particular manner or order as to any particular collateral, person or entity under any legal or equitable doctrine or principle including, without limitation, marshalling of assets and/or suretyship principles, and further agrees that Mortgagee may proceed against any or all of the assets encumbered hereby or by any other security document or instrument in the event of Default in such order and manner as Mortgagee in its sole discretion may determine. Any Mortgagor that has signed this Mortgage as a surety or accommodation party, or that has subjected its property to this Mortgage to secure the indebtedness of another, hereby expressly waives any defense arising by reason of the cessation from any cause whatsoever of the liability of Mortgagor, and waives the benefit of any statutes of limitation affecting the enforcement hereof.
B.13 Corrections . Mortgagor will, upon request of Mortgagee, promptly correct any defect, error or omission which may be discovered in the contents of this Mortgage or in the
execution or acknowledgment hereof, and will execute, acknowledge and deliver such further documents and do such further acts as may be necessary or as may be reasonably requested by Mortgagee to carry out more effectively the purposes of this Mortgage, to subject to the liens and security interests hereby created any of Mortgagors properties, rights or interest covered or intended to be covered hereby, and to perfect and maintain such liens and security interests.
B.14 Mortgagee Indemnification . Mortgagor shall and does hereby agree to indemnify and to hold Mortgagee and Mortgagees affiliates and parent companies, and all of its and their respective officers, directors, employees and agents (the Indemnified Parties), harmless from and against all claims, demands, liabilities, losses or damages (including all related costs, expenses, and reasonable attorneys fees) asserted against, imposed on or incurred by the Indemnified Parties in connection with or as a result of this Mortgage or the exercise of any rights or remedies under this Mortgage or by reason of any alleged obligations or undertakings of Mortgagee to perform or discharge any of the terms, covenants or agreements contained in this Mortgage. Should Mortgagee incur any such liability, the amount thereof, together with interest thereon at the Default Rate stated in the Note, shall be secured hereby and Mortgagor shall reimburse the Mortgagee therefor immediately upon demand.
B.15 Late Payment Charge . Mortgagor acknowledges that late payment to Mortgagee will cause Mortgagee to incur costs not contemplated by this Mortgage. Such costs include, without limitation, processing and accounting charges. Therefore, if any payment required by the Note or this Mortgage is not received by Mortgagee within ten (10) days after the due date, Mortgagee hereby may assess a late charge in the amount of five percent (5.0%) of the unpaid amount of the payment, or the maximum permitted by applicable law, whichever is less.
The parties agree that this late charge represents a reasonable sum considering all of the circumstances existing on the date of this Mortgage and represents a fair and reasonable estimate of the costs that Mortgagee will incur by reason of the late payment. The parties further agree that proof of actual damages would be costly or inconvenient. Acceptance of any late charge shall not constitute a waiver of the Default with respect to the overdue amount, and shall not prevent Mortgagee from exercising any of the other rights and remedies available to Mortgagee.
B.16 Exhibits . All of the provisions in each of the attached Exhibits are incorporated herein by this reference for all purposes.
B.17 Acknowledgment of Notice. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
C. DEFAULT PROVISIONS .
C.1 Events of Default . Any of the following shall constitute a Default hereunder:
(a) The failure of Mortgagor to pay any payment required under the Note or on any other indebtedness to Mortgagee or any payment required hereunder or under any other agreement securing the Note;
(b) The filing of any petition, or the commencement of any case or proceeding, or the entry of any order for relief, under the Federal Bankruptcy Code or any other federal or state law relating to insolvency, bankruptcy, reorganization, or composition of debts by Mortgagor or any guarantor or endorser of the Note or any other obligation of Mortgagor to Mortgagee; or any adjudication that Mortgagor or any such guarantor or endorser is insolvent or bankrupt;
(c) If Mortgagee, in good faith, believes that a substantial part of Mortgagors property is in danger of loss, misuse, seizure or confiscation;
(d) (i) The filing of any petition or the commencement of any case or proceeding described in subparagraph C.1(b) above against Mortgagor or against any endorser or guarantor of the Note or any other obligation of Mortgagor to Mortgagee, unless such petition and the case or proceeding initiated thereby are dismissed within thirty (30) days from the date of such filing; the filing of an answer by Mortgagor or such endorser or guarantor admitting the allegations of any such petition; or (ii) the appointment of or the taking of possession by a custodian, trustee or receiver for all or any assets of Mortgagor or any such endorser or guarantor, unless such appointment is vacated or dismissed or such possession is terminated within thirty (30) days from the earlier of the date of such appointment or commencement of such possession, but not later than five (5) days before the proposed sale of any assets of Mortgagor or any such endorser or guarantor by such custodian, trustee or receiver;
(e) The insolvency of Mortgagor or of any guarantor or endorser of the Note or any other obligation of Mortgagor to Mortgagee; or the execution by Mortgagor or any such guarantor or endorser of an assignment for the benefit of creditors; or the convening by Mortgagor or any such guarantor or endorser of a meeting of its creditors, or any class thereof, for purposes of effecting a moratorium upon or extension or composition of its debts; or the failure of Mortgagor or of any such guarantor or endorser to pay its debts as they mature; or if Mortgagor or any such guarantor or endorser is generally not paying its debts as they mature;
(f) The admission in writing by Mortgagor or any endorser or guarantor of the Note or any other obligation of Mortgagor to Mortgagee that it is unable to pay its debts as they mature or that it is generally not paying its debts as they mature;
(g) The liquidation, termination or dissolution of Mortgagor or any guarantor or endorser of the Note or any other obligation of Mortgagor to Mortgagee which are corporations, partnerships or joint ventures;
(h) The sale, lease, exchange, conveyance or transfer, of any legal or equitable interest in and to the Mortgaged Property, or the agreement to do so; or the mortgage, assignment, pledge or encumbrance, either voluntarily or involuntarily, or the agreement to do so, without the prior written consent of Mortgagee being first obtained, or the levy, attachment, foreclosure, or seizure, of (i) any right, title or interest of Mortgagor or of any successor to Mortgagor, in and to the Mortgaged Property; or (ii) any material portion of the assets of Mortgagor or of any successor to Mortgagor;
(i) The falsity or misleading nature of any representation or warranty contained herein or any representation to Mortgagee concerning the financial condition or credit standing of either Mortgagor or any endorser or guarantor of the Note or any other obligation of Mortgagor to Mortgagee;
(j) The failure of Mortgagor to make any deposit of funds required hereunder or under the Note within the time period provided herein or in the Note, or in the absence of such a provision, within five (5) days after written demand therefor from Mortgagee;
(k) The existence of any encroachment upon the Premises which has occurred without the approval of Mortgagee and which is not removed or corrected within thirty (30) days after its creation, or if litigation to remove or correct such encroachment is not instigated by Mortgagor within such thirty (30) day period and thereafter diligently prosecuted;
(l) The filing of any claim of lien against the Premises, any improvements thereon or any part thereof, or any interest or right made appurtenant thereto or the service on Mortgagee, as a disburser, of any notice to withhold funds and the continued maintenance of said claim of lien or notice to withhold for a period of ten (10) days without discharge or satisfaction thereof or provision therefor satisfactory to Mortgagee in its sole discretion, including the posting of a bond or indemnification satisfactory to Mortgagee;
(m) The obtaining by any person of an order or decree in any court of competent jurisdiction enjoining the construction or development of any improvements needed for the operation of Mortgagors business on the Premises or enjoining or prohibiting Mortgagor or Mortgagee or both of them from performing any of their agreements or obligations with respect to this Mortgage, which proceedings are not discontinued and such decree is not vacated within fifteen (15) days after the granting thereof;
(n) The demolition, destruction or substantial damage of the Mortgaged Property unless Mortgagor either (i) commences and completes restoration or rebuilding within a reasonable time, not to exceed ten (10) months, or (ii) prepays the Note, by the amount equal to the percentage of reduction of leasable or otherwise productive area of the Premises caused by such demolition, destruction or substantial damage; provided, however, that the loan to value ratio after giving effect to the demolition, destruction or substantial damage, the restoration or repair thereof and the prepayment as a result thereof shall not be greater than eighty percent (80%);
(o) The failure of Mortgagor to perform any obligations constituting, set forth in, or relating to (a) this Mortgage, the Note, or any other obligation of Mortgagor to Mortgagee now existing or hereafter arising (b) any other agreement or indebtedness of Mortgagor to any affiliate of Mortgagee now existing or hereafter arising irrespective of whether Mortgagee or such affiliate elects pursuant to a provision thereof to declare immediately due and payable the entire unpaid principal sum together with all interest, or other balance thereon, plus any other sums due thereunder;
(p) If Mortgagor is a corporation, the sale, pledge, transfer or assignment by the shareholders of Mortgagor of any shares of the stock of Mortgagor without the prior written consent of Mortgagee, the merger or consolidation of Mortgagor with another company or entity, the liquidation of Mortgagor, the issuance of any new stock or warrants, or the transfer of issued and outstanding treasury stock or warrants of Mortgagor. If Mortgagor is a corporation, the sale, pledge, transfer or assignment of any of the members of Mortgagor of any of their interest in Mortgagor, or the withdrawal or the admittance of any members into Mortgagor without the prior written consent of Mortgagee;
(q) Any guaranty of the obligations and indebtedness secured by this Mortgage ceases to be effective, except pursuant to a written release from Mortgagee, or any guarantor denies liability thereunder or any default occurs under any such guaranty; or
C.2 Remedies Upon Default . At any time after a Default hereunder, Mortgagee may, at its option, declare all indebtedness secured by this Mortgage immediately due and payable, and collectible without notice, regardless of maturity, and irrespective of whether Mortgagee exercises such option, and regardless of (i) Mortgagees delay in exercising such option, (ii) Mortgagees failure to exercise such option on the occasion of any prior Default or (iii) the adequacy of Mortgagees security, Mortgagee may, at its option and in its sole discretion, without prior notice or demand to or upon Mortgagor, do any one or more of the following:
(a) Mortgagee may in person or by agent enter upon, take possession of, manage and operate the Mortgaged Property or any part thereof, make repairs and alterations, and do any acts which Mortgagee deems proper to protect the security hereof or to operate and maintain the Mortgaged Property and the business operated thereon; and either with or without taking possession, in its own name, sue for or otherwise collect and receive rents, issues, and profits as well as the fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities including those past due and unpaid, and apply the same less costs and expenses of operation and collection, including reasonable attorneys fees, upon any indebtedness secured hereby, and in such order as Mortgagee may determine. Upon request of Mortgagee, Mortgagor shall assemble and make available to Mortgagee at the Premises any of the Mortgaged Property which has been removed therefrom. The entering upon and taking possession of the Mortgaged Property, the collection of any rents, issues and profits as well as the fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities and the application thereof as aforesaid, shall not cure or waive any Default theretofore or thereafter occurring, or affect any notice of Default hereunder or invalidate any act done
pursuant to any such notice. Mortgagee or Mortgagees agent shall have access to the books and records used in the operation and maintenance of the Mortgaged Property and the business operated thereon and shall be liable to account only for those rents, issues and profits as well actually received by Mortgagee. Mortgagee shall not be liable to Mortgagor, anyone claiming by, from, under or through Mortgagor or anyone having an interest in the Mortgaged Property by reason of anything done or undone by Mortgagee. Nothing contained in this paragraph shall require Mortgagee to incur any expense or do any act. If the rents, issues and profits of the Mortgaged Property and the business operated thereon are not sufficient to meet the costs of taking control of and managing the Mortgaged Property and collecting the rents, issues and profits, any funds expended by Mortgagee for such purposes shall become indebtedness of Mortgagor to Mortgagee secured by this Mortgage. Such amounts, together with interest and attorneys fees if applicable as provided in Paragraph B.2. hereof, shall be immediately due and payable in accordance with the provisions of Paragraph B.2. hereof. Notwithstanding Mortgagees continuance in possession or receipt and application of rents, issues or profits, Mortgagee shall be entitled to exercise every right provided for in this Mortgage or by law upon or after the occurrence of a default, including any right to exercise the power of sale. Any of the actions referred to in this Paragraph may be taken by Mortgagee at such time as Mortgagee is so entitled, without regard to the adequacy of any security for the indebtedness hereby secured.
(b) Mortgagee shall, without regard to the adequacy of any security for the indebtedness hereby secured, be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession of and protect the Mortgaged Property and the business operated thereon, and, in Mortgagees discretion, operate the same, in whole or in part, and collect the rents, issues and profits as well as the fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities therefrom.
(c) Mortgagee may bring an action in any court of competent jurisdiction to foreclose this Mortgage through judicial or non-judicial foreclosure, including statutory foreclosure under Ark. Code Ann. § 18-5-101 et seq. , with notice to Mortgagor as required under applicable law, or to enforce any of the covenants, agreements or other obligations contained in this Mortgage.
(d) Mortgagee may elect to cause the Mortgaged Property or any part thereof to be sold as follows:
(i) Mortgagee may cause any such sale or other disposition of personal property to be conducted immediately following the expiration of any grace period, if any, herein provided (or immediately upon the expiration of any applicable redemption period), and may cause any such sale of real property to be conducted as soon after foreclosure as is permitted by law, or Mortgagee may delay any such sale or other disposition for such period of time as Mortgagee deems to be in its best interest. Should Mortgagee desire that more than one such sale or other disposition be conducted, Mortgagee may at its option, cause the same to be conducted simultaneously, or successively on the same day, or at such different days or times and in such order as Mortgagee may deem to be in its best interest.
(ii) Should Mortgagee elect to cause any of the Mortgaged Property to be disposed of as personal property as permitted by subparagraph (i) above, it may dispose of any part thereof in any manner now or hereafter permitted by Article 9 of the Uniform Commercial Code or in accordance with any other right or remedy provided by applicable law. Both Mortgagor and Mortgagee shall be eligible to purchase all or any part of such property at any such disposition. Any such disposition may be either by public or private sale or other disposition as Mortgagee may elect in its sole discretion. Mortgagee shall give Mortgagor at least ten (10) days prior written notice of the time and place of any public sale or other disposition of such property or of the time at or after which any private sale or any other intended disposition is to be made, and if such notice is sent to Mortgagor as provided in Paragraph B.10 hereof, it shall constitute reasonable notice to Mortgagor.
(iii) At the foreclosure sale of the Mortgaged Property which is real property, the Mortgaged Property or any portion thereof specified by Mortgagee shall be sold at public auction to the highest bidder for cash in lawful money of the United States, subject, however, to the provisions of Paragraph C.6 hereof. If the Mortgaged Property consists of several lots or parcels, it may be sold as a whole or in separate lots or parcels, if directed by Mortgagee. Any person or entity, including Mortgagee, may purchase at the sale.
(iv) Mortgagee may, in any manner that it deems appropriate, apply the proceeds of any judicial foreclosure sale or sale made pursuant to the power of sale created hereby (to the extent permitted by applicable law) or other disposition of any of the Mortgaged Property hereunder to payment of the following: (1) the expenses of such sale or disposition, together with Mortgagees fees, costs and expenses and reasonable attorneys fees incurred by Mortgagee, and the actual cost of publishing, recording, mailing and posting notice; (2) the cost of any search and/or other evidence of title procured in connection therewith and revenue stamps on any deed or conveyance; (3) the payment of the Note secured by this Mortgage; (4) any or all other sums secured by this Mortgage; and (5) the remainder, if any, to the person or persons legally entitled thereto, in the order of their priority.
(e) Mortgagee may take any other appropriate action permitted by applicable law.
C.3 Deficiency; Liabilities and Rights After Default . To the extent permitted by law, Mortgagor shall be and remain liable for any deficiency remaining after sale either pursuant to the Uniform Commercial Code, judicial proceedings, or otherwise. After Default or the occurrence of an event which after the passage of time or giving of notice, or both, could become a Default, Mortgagor shall pay Mortgagees reasonable attorneys fees, Mortgagees fees and its costs and expenses incurred as a result of said Default or other such event, and if suit is brought, all costs of suit, all of which sums shall be secured by this Mortgage. Mortgagors statutory rights of reinstatement, if any, are expressly conditioned upon Mortgagors payment of all sums required under the applicable statute and performance of all required acts.
C.4 Right of Setoff . In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, Mortgagee is hereby authorized
by Mortgagor at any time or from time to time, without notice to Mortgagor, any guarantor or endorser of the Note or any other indebtedness or obligation secured by this Mortgage, or any other person, any such notice being hereby expressly waived, to set off any obligations or liabilities any time held or owing by Mortgagee to or for the credit or the account of Mortgagor or any such guarantor or endorser against the obligations and liabilities of Mortgagor or any such guarantor or endorser to Mortgagee, including, but not limited to, all claims of any nature or description arising out of or connected with this Mortgage, the Note or any other indebtedness or obligation secured by this Mortgage, irrespective of whether or not (a) Mortgagee shall have made any demand hereunder or (b) Mortgagee shall have declared the principal of and interest on the Note to be due and owing and although said obligations and liabilities, or any of them, shall be contingent and unmatured.
C.5 Foreclosure Procedure . Mortgagor hereby expressly waives, to the extent permitted by law, any right which it may have to direct the order in which any of the Mortgaged Property shall be sold in the event of any sale or sales pursuant hereto.
C.6 Foreclosure Purchase . Upon any sale of the Mortgaged Property, if the holder of the Note is a purchaser at such sale, it shall be entitled to use and apply all or any portion of the indebtedness then secured by this Mortgage for or in settlement or payment of all or any portion of the purchase price of the Mortgaged Property purchased.
C.7 Cumulative Remedies . No remedy herein conferred upon or reserved to Mortgagee is intended to be exclusive of any other remedy herein or by law provided, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by this Mortgage to Mortgagee, or to which it may be otherwise entitled, may be exercised from time to time and as often as may be deemed expedient by Mortgagee, and Mortgagee may pursue inconsistent remedies. The unenforceability of any provision in this Mortgage shall not affect the enforceability of any other provision herein. If there exists additional security for the performance of the obligations secured hereby, the Mortgagee, at its sole option, and without limiting or affecting any rights or remedies hereunder, may exercise any of the rights and remedies to which it may be entitled hereunder either concurrently with whatever other rights it may have in connection with such other security or in such order as it may determine.
C.8. Marshalling of Assets . Mortgagor agrees that all of the Mortgaged Property and all other collateral or security which may be granted to Mortgagee in connection with the obligations secured by this Mortgage constitutes equal security for all of the obligations secured hereby, and Mortgagor agrees that Mortgagee shall be entitled to sell, retain or otherwise deal with any or all of the Mortgaged Property and all other collateral or security, in any order or simultaneously as Mortgagee shall determine in its sole and absolute discretion, free of any requirement for the marshalling of assets or other restriction upon Mortgagee in dealing with the Mortgaged Property and all other collateral or security.
C.9. SBA Loan . The Loan secured by this lien was made under a United States Small Business Administration (SBA) nationwide program which uses tax dollars to assist small business owners. If the United States is seeking to enforce this document, then under SBA regulations:
a) When SBA is the holder of the Note, this document and all documents evidencing or securing this Loan will be construed in accordance with federal law.
b) Lender or SBA may use local or state procedures for purposes such as filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using these procedures, SBA does not waive any federal immunity from local or state control, penalty, tax or liability. No Borrower or Guarantor may claim or assert against SBA any local or state law to deny any obligation of Borrower, or defend any claim of SBA with respect to this Loan.
c) Any clause in this document requiring arbitration is not enforceable when SBA is the holder of the Note secured by this instrument.
[SIGNATURE ON FOLLOWING PAGE.]
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the day and year set forth above.
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MORTGAGOR: |
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MT. V PROPERTY HOLDINGS, LLC |
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By: |
/s/ Christopher F. Brogdon |
(L.S.) |
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Christopher F. Brogdon, Manager |
/s/ [ILLEGIBLE] |
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Witness |
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/s/ [ILLEGIBLE] |
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STATE OF GEORGIA |
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ACKNOWLEDGEMENT |
COUNTY OF FULTON |
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On this 8 th day of June, 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 MT. V 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 for the consideration, uses and purposes therein set forth.
Signature: |
/s/ Ellen W. Smith |
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Notary Public in and for said County and State |
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My Commission Expires: |
Jan. 30, 2016 |
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(NOTARIAL SEAL) |
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Exhibit 10.29
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT, made and entered into as of this 8 th day of June, 2012, between MT. V PROPERTY HOLDINGS, LLC, a limited liability company duly organized, existing and in good standing under the laws of the State of Georgia and authorized to transact business in Arkansas, whose mailing address is 3050 Peachtree Road, NW, Suite 355, Two Buckhead Plaza, Atlanta, Georgia 30305 (hereinafter referred to as Borrower), and ECONOMIC DEVELOPMENT CORPORATION OF FULTON COUNTY , the address of which is 5534 Old National Highway, College Park, GA 30349 (hereinafter referred to as 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 good and valuable considerations, 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, convey and assign to Lender, its successors, successors-in-title and assigns, all of Borrowers right, title and interest in, to and under any and all of those leases and rental agreements now existing and hereafter made, including any and all extensions, renewals and modifications thereof, and all security deposits and other refundable and non-refundable deposits paid by the tenants thereunder (said leases and rental agreements are hereinafter referred to collectively as the Leases, and the tenants and lessees thereunder are hereinafter referred to collectively as Tenants or individually as Tenant as the context requires), which Leases cover or shall cover portions of certain real property described in Exhibit A (commonly known as 706 Oak Grove Street, Mountain View, Arkansas 72560) attached hereto and by this reference made a part hereof and/or the improvements thereon
(said real property and improvements hereinafter collectively referred to as the Premises); together with all of Borrowers right, title and interest in and to all rents, issues and profits from the Leases and from the Premises.
TO HAVE AND TO HOLD unto Lender, its successors and assigns, forever, subject to and upon the terms and conditions set forth herein.
This Assignment is made for the purpose of securing (a) the full and prompt payment when due, whether by acceleration or otherwise, with such interest as may accrue thereon, either before or after maturity thereof, of that certain Note dated of even date herewith, made by Borrower to the order of Lender in the principal face amount of One Million Three Hundred Four Thousand and No/100 Dollars ($1,304,000.00), (hereinafter referred to as the Note), together with any renewals, modifications, consolidations and extensions thereof and amendments thereto and all advances of principal thereunder, (b) the full amount and prompt payment and performance of any and all obligations of Borrower to Lender under the terms of the Deed to Secure Debt and Security Agreement from Borrower to Lender, dated of even date herewith and securing the indebtedness evidenced by the Note (hereinafter referred to as the Security Instrument), (c) the full and prompt payment and performance of all obligations of Borrower to Lender under the terms of that certain Loan Agreement of even date herewith (hereinafter referred to as the Loan Agreement), (d) the full and prompt payment and performance of any and all other obligations of Borrower to Lender under any other instruments now or hereafter evidencing, securing, or otherwise relating to the indebtedness evidenced by the Note, and (e) any judgments in connection with the foregoing (the Note, Security Instrument, the Loan Agreement, and said other instruments are hereinafter referred to collectively as the Loan Documents, and said indebtedness is hereinafter referred to as the Indebtedness).
ARTICLE I.
WARRANTIES AND COVENANTS
1.1. Warranties of Borrower . To the extent that there are Leases, Borrower hereby warrants and represents as follows:
(a) Borrower is the sole holder of the landlords interest under the Leases, is entitled to receive the rents, issues and profits from the Leases and from the Premises, and has good right to sell, assign, transfer and set over the same and to grant to and confer upon Lender the rights, interests, powers, and authorities herein granted and conferred;
(b) Borrower has made no assignment other than this Assignment of any of the rights of Borrower under any of the Leases or with respect to any of said rents, issues or profits;
(c) 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;
(d) All Leases provide for rental to be paid monthly, in advance, and Borrower has not accepted payment of rental under any of the Leases for more than one (1) month in advance of the due date thereof;
(e) So far as is known to Borrower, there exists no default or event of default or any state of facts which would, with the passage of time or the giving of notice, or both, constitute a default or event of default on the part of Borrower or by any Tenant under the terms of any of the Leases;
(f) Neither the execution and delivery of this Assignment or any of the Leases, the performance of each and every covenant of Borrower under this Assignment and the Leases, nor the meeting of each and every condition contained in this Assignment, conflicts with, or constitutes a breach or default under any agreement, indenture or other instrument to which Borrower is a party, or any law, ordinance, administrative regulation or court decree which is applicable to Borrower;
(g) No action has been brought or, so far as is known to Borrower, is threatened, which would interfere in any way with the right of Borrower to execute this Assignment and perform all of Borrowers obligations contained in this Assignment and in the Leases;
(h) The Leases are valid, enforceable and in full force and effect; and
(i) All security deposits and other deposits (whether refundable or non-refundable pursuant to the terms of the Leases) are held by Borrower in a segregated account and have been received and applied for the uses and purposes designated in the Leases.
1.2. Covenants of Borrower . Borrower hereby covenants and agrees as follows:
(a) Borrower shall (i) fulfill, perform and observe each and every condition and covenant of landlord or lessor contained in each of the Leases; (ii) give prompt notice to Lender of any claim of default under any of the Leases, whether given by the Tenant to Borrower, or given by Borrower to the Tenant, together with a complete copy of any such notice; (iii) at no cost or expense to Lender, enforce, short of termination, the performance and observance of each and every covenant and condition of each of the Leases, to be performed or observed by the Tenant thereunder; and (iv) appear in and defend any action arising out of, or in any manner connected with, any of the Leases, or the obligations or liabilities of Borrower as the landlord thereunder, or of the Tenant or any guarantor thereunder;
(b) Borrower shall not, without the prior written consent of Lender, (i) modify any of the Leases; (ii) terminate the term or accept the surrender of any of the Leases; (iii) waive or release the Tenant from the performance or observance by the Tenant of any obligation or condition of any of the Leases; (iv) permit the prepayment of any rents under any of the Leases for more than one (1) month prior to the accrual thereof; (v) give any consent to any assignment or sublease by the Tenant under any of the Leases; or (vi) assign its interest in, to or under the
Leases or the rents, issues and profits from the Leases and from the Premises to any person or entity other than Lender;
(c) Borrower shall not, without the prior written consent of Lender, enter into any Lease unless the Tenant thereunder shall have been approved in writing by Lender and said Lease is in form and content satisfactory to and approved in writing by Lender;
(d) Borrower shall protect, indemnify and save harmless Lender from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, attorneys fees and expenses) imposed upon or incurred by Lender by reason of this Assignment and any claim or demand whatsoever which may be asserted against Lender by reason of any alleged obligation or undertaking to be performed or discharged by Lender under this Assignment. In the event Lender incurs any liability, loss or damage by reason of this Assignment, or in the defense of any claim or demand arising out of or in connection with this Assignment, the amount of such liability, loss or damage shall be added to the Indebtedness, shall bear interest at the rate of Default Interest specified in the Note from the date incurred until paid and shall be payable on demand;
(e) Borrower shall authorize and direct, and does hereby authorize and direct each and every present and future Tenant of the whole or any part of the Premises to pay all rental to Lender upon receipt of written demand from Lender to so pay the same;
(f) The warranties and representations of Borrower made in Paragraph 1.01 hereof and the covenants and agreements of Borrower made in this Paragraph apply to each Lease in effect as of the time of execution of this Assignment, and shall apply to each Lease hereafter made at the time each such future Lease becomes effective.
(g) At the request of Lender, Borrower immediately shall deliver to Lender evidence that all security deposits and other deposits (whether refundable or non-refundable) paid by Tenants under the Leases have been placed in a separate account in accordance with applicable law.
1.3. Covenants of Lender . Lender, by its acceptance of this Assignment, hereby covenants and agrees with Borrower as follows:
(a) Although this Assignment constitutes a present and current assignment of all rents, issues and profits from the Premises, so long as there shall exist no Default, Lender shall not demand that such rents, issues and profits be paid directly to Lender, and Borrower shall have the right to collect, but no more than one (1) month prior to accrual, all such rents, issues and profits from the Premises (including, but not by way of limitation, all rental payments under the Leases); and
(b) Upon the payment in full of the Indebtedness, as evidenced by the recording or filing of an instrument of satisfaction or full release of the Security Instrument without the recording of another security instrument in favor of Lender affecting the Premises, this Assignment shall be terminated and released of record by Lender and shall thereupon be of no further force or effect.
ARTICLE II.
DEFAULT
2.1. Default . The term, Default, wherever used in this Assignment, shall mean any one or more of the following events:
(a) The occurrence of any Default under any of the Loan Documents;
(b) The failure by Borrower duly and fully to comply with any covenant, condition or agreement of this Assignment; or
(c) The breach of any warranty by Borrower contained in this Assignment.
2.2. Remedies . Upon the occurrence of any Default, Lender may at its option, with or without notice or demand of any kind, exercise any or all of the following remedies:
(a) Declare any part or all of the Indebtedness to be due and payable, whereupon the same shall become immediately due and payable;
(b) Perform any and all obligations of Borrower under any or all of the Leases or this Assignment and exercise any and all rights of Borrower herein or therein as fully as Borrower himself could do, including, without limitation of the generality of the foregoing: enforcing, modifying, extending or terminating any or all of the Leases; collecting, modifying, compromising, waiving or increasing any or all the rents payable thereunder; and obtaining new tenants and entering into new leases on the Premises on any terms and conditions deemed desirable by Lender; and, to the extent Lender shall incur any costs in connection with the performance of any such obligations of Borrower, including costs of litigation, then all such costs shall become a part of the Indebtedness, shall bear interest from the incurring thereof at the rate of Default Interest specified in the Note, and shall be due and payable on demand;
(c) In Borrowers or Lenders name, institute any legal or equitable action which Lender in its sole discretion deems desirable to collect and receive any or all of the rents, issues and profits assigned herein;
(d) Collect the rents, issues and profits and any other sums due under the Leases and with respect to the Premises, and apply the same in such order as Lender in its sole discretion may elect against (i) all costs and expenses, including reasonable attorneys fees, incurred in connection with the operation of the Premises, the performance of Borrowers obligations under the Leases and collection of the rents thereunder; (ii) all the costs and expenses, including
reasonable attorneys fees, incurred in the collection of any or all of the Indebtedness, including all costs, expenses and attorneys fees incurred in seeking to realize on or to protect or preserve Lenders interest in any other collateral securing any or all of the Indebtedness; and (iii) any or all unpaid principal and interest on the Indebtedness.
Lender shall have the full right to exercise any or all of the foregoing remedies without regard to the adequacy of security for any or all of the Indebtedness, and with or without the commencement of any legal or equitable action or the appointment of any receiver or trustee, and shall have full right to enter upon, take possession of, use and operate all or any portion of the Premises which Lender in its sole discretion deems desirable to effectuate any or all of the foregoing remedies.
ARTICLE III.
GENERAL PROVISIONS
3.1. 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.
3.2. Terminology . All personal pronouns used in this Assignment, whether used in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural, and vice versa. Titles of articles are for convenience only and neither limit nor amplify the provisions of this Assignment.
3.3. 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.
3.4. Applicable Law . This Assignment and the rights and obligations of the parties hereunder 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 creation, perfection, priority, and enforcement of Lenders rights and remedies against the Premises, 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 Assignment is challenged or questioned, such provision shall be governed by whichever applicable state or federal law would uphold or would enforce such challenged or questioned provision. The loan transaction which is evidenced by this Assignment has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of Georgia.
3.5. No Third Party Beneficiaries . This Assignment is made solely for the benefit of Lender and its assigns. No Tenant under any of the Leases nor any other person shall have standing to bring any action against Lender as the result of this Assignment, or to assume that Lender will
exercise any remedies provided herein, and no person other than Lender shall under any circumstances be deemed to be a beneficiary of any provision of this Assignment.
3.6. No Oral Modifications . Neither this Assignment nor any provisions hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought.
3.7. Cumulative Remedies . The remedies herein provided shall be in addition to and not in substitution for the rights and remedies vested in Lender in or by any of the Loan Documents or in law or equity, all of which rights and remedies are specifically reserved by Lender. The remedies herein provided or otherwise available to Lender shall be cumulative and may be exercised concurrently. The failure to exercise any of the remedies herein provided shall not constitute a waiver thereof, nor shall use of any of the remedies herein provided prevent the subsequent or concurrent resort to any other remedy or remedies. It is intended that this clause shall be broadly construed so that all remedies herein provided or otherwise available to Lender shall continue to be each and all available to Lender until the Indebtedness shall have been paid in full.
3.8. Cross-Default . A Default by Borrower under this Assignment shall constitute a Default under the other Loan Documents.
3.9. Counterparts . This Assignment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties or signatories hereto may execute this Assignment by signing any such counterpart.
3.10. Further Assurance . At any time and from time to time, upon request by Lender, Borrower will make, execute and deliver, or cause to be made, executed and delivered, to Lender and, where appropriate, cause to be recorded and/or refiled at such time and in such offices and places as shall be deemed desirable by Lender, any and all such other and further assignments, deeds to secure debt, mortgages, deeds of trust, security agreements, financing statements, continuation statements, instruments of further assurance, certificates and other documents as may, in the opinion of Lender, be necessary or desirable in order to effectuate, complete or perfect, or to continue and preserve (a) the obligations of Borrower under this Assignment and (b) the security interest created by this Assignment as a first and prior security interest upon the Leases and the rents, issues and profits from the Premises. Upon any failure by Borrower so to do, Lender may make, execute, record, file, re-record and/or refile any and all such assignments, deeds to secure debt, mortgages, deeds of trust, security agreements, financing statements, continuation statements, instruments, certificates, and documents for and in the name of Borrower, and Borrower hereby irrevocably appoints Lender the agent and attorney-in-fact of Borrower so to do.
3.11. Notices . Any and all notices, elections or demands permitted or required to be made under this Assignment shall be in writing, signed by the party giving such notice, election or demand and shall be delivered personally, or sent by overnight courier service by a company regularly engaged in the business of delivering business packages (such as Federal Express or Purolator), or sent by registered or certified United States mail, postage prepaid, to the other party at the address set forth below, or at such other address within the continental United States of America as may have theretofore been designated in writing. The effective date of such notice, election or demand shall be the date of personal delivery or, if sent by overnight courier
then the date of delivery as evidenced by the couriers receipt, or, if mailed, then the date of postmark. For the purposes of this Assignment:
The Address of Lender is:
ECONOMIC DEVELOPMENT CORPORATION OF FULTON COUNTY
5534 Old National Highway
College Park, GA 30349
The Address of Borrower is:
3050 Peachtree Road, NW, Suite 355
Two Buckhead Plaza
Atlanta, Georgia 30305
3.12. Modifications, etc . Borrower hereby consents and agrees that Lender may at any time, and from time to time, without notice to or further consent from Borrower, either with or without consideration, surrender any property or other security of any kind or nature whatsoever held by it or by any person, firm or corporation on its behalf or for its account, securing the Indebtedness; substitute for any collateral so held by it, other collateral of like kind, or of any kind; agree to modification of the terms of the Note or the Loan Documents; extend or renew the Note or any of the Loan Documents for any period; grant releases, compromises and indulgences with respect to the Note or the Loan Documents to any persons or entities now or hereafter liable thereunder or hereunder; release any guarantor or endorser of the Note, the Security Instrument, the Loan Agreement, or any other Loan Document; or take or fail to take any action of any type whatsoever, and no such action which Lender shall take or fail to take in connection with the Loan Documents, or any of them, or any security for the payment of the Indebtedness or for the performance of any obligations or undertakings of Borrower, nor any course of dealing with Borrower or any other person, shall release Borrowers obligations hereunder, affect this Assignment in any way or afford Borrower any recourse against Lender. The provisions of this Assignment shall extend and be applicable to all renewals, amendments, extensions, consolidations and modifications of the Loan Documents and the Leases, and any and all references herein to the Loan Documents or the Leases shall be deemed to include any such renewal, amendments, extension, consolidation or modifications thereof.
3.13 SBA Loan . The Loan secured by this lien was made under a United States Small Business Administration (SBA) nationwide program which uses tax dollars to assist small business owners. If the United States is seeking to enforce this document, then under SBA regulations:
a) When SBA is the holder of the Note, this document and all documents evidencing or securing this Loan will be construed in accordance with federal law.
b) Lender or SBA may use local or state procedures for purposes such as filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using these procedures, SBA does not waive any federal immunity from local or state control,
penalty, tax or liability. No Borrower or Guarantor may claim or assert against SBA any local or state law to deny any obligation of Borrower, or defend any claim of SBA with respect to this Loan.
c) Any clause in this document requiring arbitration is not enforceable when SBA is the holder of the Note secured by this instrument.
IN WITNESS WHEREOF, Borrower has executed this Assignment under seal, as of the day and year first above written.
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BORROWER: |
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MT. V PROPERTY HOLDINGS, LLC |
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By: |
/s/ Christopher F. Brogdon |
(L.S.) |
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Christopher F. Brogdon, Manager |
/s/ [ILLEGIBLE] |
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Witness |
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/s/ [ILLEGIBLE] |
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Witness |
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STATE OF GEORGIA |
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ACKNOWLEDGEMENT |
COUNTY OF FULTON |
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On this 8 th day of June, 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 MT. V 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 for the consideration, uses and purposes therein set forth.
Signature: |
/s/ Ellen W. Smith |
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Notary Public in and for said County and State |
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My Commission Expires: |
Jan. 30, 2016 |
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(NOTARIAL SEAL) |
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Exhibit 10.30
U.S. Small Business Administration
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U.S. Small Business Administration
UNCONDITIONAL GUARANTEE |
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SBA Loan # |
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52327550-06 |
SBA Loan Name |
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MOUNTAIN VIEW NURSING, LLC |
Guarantor |
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MOUNTAIN VIEW NURSING, LLC |
Borrower |
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MT. V PROPERTY HOLDINGS, LLC |
Lender |
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Economic Development Corporation of Fulton County |
Date |
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June 8 2012 |
Note Amount |
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$ 1,304,000.00 |
1. GUARANTEE:
Guarantor unconditionally guarantees payment to Lender of all amounts owing under the Note. This Guarantee remains in effect until the Note is paid in full. Guarantor must pay all amounts due under the Note when Lender makes written demand upon Guarantor. Lender is not required to seek payment from any other source before demanding payment from Guarantor.
2. NOTE:
The Note is the promissory note dated of even date in the principal amount of One Million Three Hundred Four Thousand and No/100 Dollars ($1,304,000.00), from Borrower to Lender. It includes any assumption, renewal, substitution, or replacement of the Note, and multiple notes under a line of credit.
3. DEFINITIONS:
Collateral means any property taken as security for payment of the Note or any guarantee of the Note.
Loan means the loan evidenced by the Note.
Loan Documents means the documents related to the Loan signed by Borrower, Guarantor or any other guarantor, or anyone who pledges Collateral.
SBA means the Small Business Administration, an Agency of the United States of America.
4. LENDERS GENERAL POWERS:
Lender may take any of the following actions at any time, without notice, without Guarantors consent, and without making demand upon Guarantor:
A. Modify the terms of the Note or any other Loan Document except to increase the amounts due under the Note;
B. Refrain from taking any action on the Note, the Collateral, or any guarantee;
C. Release any Borrower or any guarantor of the Note;
D. Compromise or settle with the Borrower or any guarantor of the Note;
E. Substitute or release any of the Collateral, whether or not Lender receives anything in return;
F. Foreclose upon or otherwise obtain, and dispose of, any Collateral at public or private sale, with or without advertisement;
G. Bid or buy at any sale of Collateral by Lender or any other lienholder, at any price Lender chooses; and
H. Exercise any rights it has, including those in the Note and other Documents.
These actions will not release or reduce the obligations of Guarantor or create any rights or claims against Lender.
5. FEDERAL LAW:
When SBA is the holder, the Note and this Guarantee will be construed and enforced under federal law, including SBA regulations. Lender or SBA may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Guarantee, Guarantor may not claim or assert any local or state law against SBA to deny any obligation, defeat any claim of SBA, or preempt federal law.
6. RIGHTS, NOTICES, AND DEFENSES THAT GUARANTOR WAIVES:
To the extent permitted by law,
A. Guarantor waives all rights to:
1) Require presentment, protest, or demand upon Borrower;
2) Redeem any Collateral before or after Lender disposes of it;
3) Have any disposition of Collateral advertised; and
4) Require a valuation of Collateral before or after Lender disposes of it.
B. Guarantor waives any notice of:
1) Any default under the Note;
2) Presentment, dishonor, protest, or demand;
3) Execution of the Note;
4) Any action or inaction on the Note or Collateral, such as disbursements, payment, nonpayment, acceleration, intent to accelerate, assignment, collection activity, and incurring enforcement expenses;
5) Any change in the financial condition or business operations of Borrower or any guarantor;
6) Any changes in the terms of the Note or other Loan Documents, except increases in the amounts due under the Note; and
7) The time or place of any sale or other disposition of Collateral.
C. Guarantor waives defenses based upon any claim that:
1) Lender failed to obtain any guarantee;
2) Lender failed to obtain, perfect, or maintain a security interest in any property offered or taken as Collateral;
3) Lender or others improperly valued or inspected the Collateral;
4) The Collateral changed in value or was neglected, lost, destroyed, or underinsured;
5) Lender impaired the Collateral;
6) Lender did not dispose of any of the Collateral;
7) Lender did not conduct a commercially reasonable sale;
8) Lender did not obtain the fair market value of the Collateral;
9) Lender did not make or perfect a claim upon the death or disability of Borrower or any guarantor of the Note;
10) The financial condition of Borrower or any guarantor was overstated or has adversely changed;
11) Lender made errors or omissions in Loan Documents or administration of the Loan;
12) Lender did not seek payment from the Borrower, any other guarantors, or any Collateral before demanding payment from Guarantor;
13) Lender impaired Guarantors suretyship rights;
14) Lender modified the Note terms, other than to increase amounts due under the Note. If Lender modifies the Note to increase the amounts due under the Note without Guarantors consent, Guarantor will not be liable for the increased amounts and related interest and expenses, but remains liable for all other amounts;
15) Borrower has avoided liability on the Note; or
16) Lender has taken an action allowed under the Note, this Guarantee, or other Loan Documents.
7. DUTIES AS TO COLLATERAL:
Guarantor will preserve the Collateral pledged by Guarantor to secure this Guarantee. Lender has no duty to preserve or dispose of any Collateral.
8. SUCCESSORS AND ASSIGNS:
Under this Guarantee, Guarantor includes heirs and successors, and Lender includes its successors and assigns.
9. GENERAL PROVISIONS:
A. ENFORCEMENT EXPENSES. Guarantor promises to pay all expenses Lender incurs to enforce this Guarantee, including, but not limited to, attorneys fees and costs.
B. SBA NOT A CO-GUARANTOR. Guarantors liability will continue even if SBA pays Lender. SBA is not a co-guarantor with Guarantor. Guarantor has no right of contribution from SBA.
C. SUBROGATION RIGHTS. Guarantor has no subrogation rights as to the Note or the Collateral until the Note is paid in full.
D. JOINT AND SEVERAL LIABILITY. All individuals and entities singing as Guarantor are jointly and severally liable.
E. DOCUMENT SIGNING. Guarantor must sign all documents necessary at any time to comply with the Loan Documents and to enable Lender to acquire, perfect, or maintain Lenders liens on Collateral.
F. FINANCIAL STATEMENTS. Guarantor must give Lender financial statements as Lender requires.
G. LENDERS RIGHTS CUMULATIVE, NOT WAIVED. Lender may exercise any of its rights separately or together, as many times as it chooses. Lender may delay or forgo enforcing any of its rights without losing or impairing any of them.
H. ORAL STATEMENTS NOT BINDING. Guarantor may not use oral statement to contradict or alter the written terms of the Note or this Guarantee, or to raise a defense to this Guarantee.
I. SEVERABILITY. If any part of this Guarantee is found to be unenforceable, all other parts will remain in effect.
J. CONSIDERATION. The consideration for this Guarantee is the Loan or any accommodation by Lender as to the Loan.
10. STATE-SPECIFIC PROVISIONS:
Time is of the essence of this Guaranty.
The Guarantor hereby waives the right to require the Holder of the obligations hereby guaranteed to take action against the Debtor as provided for in O.C.G.A. § 10-7-24.
11. GUARANTOR ACKNOWLEDGEMENT OF TERMS:
Guarantor acknowledges that Guarantor has read and understands the significance of all terms of the Note and this Guarantee, including all waivers.
12. GUARANTOR NAME(S) AND SIGNATURE(S):
By signing below, each individual or entity becomes obligated as Guarantor under this Guarantee.
IN WITNESS WHEREOF, GUARANTOR has executed this Guaranty under seal as of the 8 th day of June, 2012.
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GUARANTOR: |
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MOUNTAIN VIEW NURSING, LLC |
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By: |
/s/ Christopher F. Brogdon |
(L.S.) |
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Christopher F. Brogdon, Manager |
Exhibit 10.31
U.S. Small Business Administration
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U.S. Small Business Administration
UNCONDITIONAL GUARANTEE |
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SBA Loan # |
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52327550-06 |
SBA Loan Name |
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MOUNTAIN VIEW NURSING, LLC |
Guarantor |
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AdCare Health Systems, Inc. |
Borrower |
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MT. V PROPERTY HOLDINGS, LLC |
Lender |
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Economic Development Corporation of Fulton County |
Date |
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June 8 2012 |
Note Amount |
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$ 1,304,000.00 |
1. GUARANTEE:
Guarantor unconditionally guarantees payment to Lender of all amounts owing under the Note. This Guarantee remains in effect until the Note is paid in full. Guarantor must pay all amounts due under the Note when Lender makes written demand upon Guarantor. Lender is not required to seek payment from any other source before demanding payment from Guarantor.
2. NOTE:
The Note is the promissory note dated of even date in the principal amount of One Million Three Hundred Four Thousand and No/100 Dollars ($1,304,000.00), from Borrower to Lender. It includes any assumption, renewal, substitution, or replacement of the Note, and multiple notes under a line of credit.
3. DEFINITIONS:
Collateral means any property taken as security for payment of the Note or any guarantee of the Note.
Loan means the loan evidenced by the Note.
Loan Documents means the documents related to the Loan signed by Borrower, Guarantor or any other guarantor, or anyone who pledges Collateral.
SBA means the Small Business Administration, an Agency of the United States of America.
4. LENDERS GENERAL POWERS:
Lender may take any of the following actions at any time, without notice, without Guarantors consent, and without making demand upon Guarantor:
A. Modify the terms of the Note or any other Loan Document except to increase the amounts due under the Note;
B. Refrain from taking any action on the Note, the Collateral, or any guarantee;
C. Release any Borrower or any guarantor of the Note;
D. Compromise or settle with the Borrower or any guarantor of the Note;
E. Substitute or release any of the Collateral, whether or not Lender receives anything in return;
F. Foreclose upon or otherwise obtain, and dispose of, any Collateral at public or private sale, with or without advertisement;
G. Bid or buy at any sale of Collateral by Lender or any other lienholder, at any price Lender chooses; and
H. Exercise any rights it has, including those in the Note and other Documents.
These actions will not release or reduce the obligations of Guarantor or create any rights or claims against Lender.
5. FEDERAL LAW:
When SBA is the holder, the Note and this Guarantee will be construed and enforced under federal law, including SBA regulations. Lender or SBA may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Guarantee, Guarantor may not claim or assert any local or state law against SBA to deny any obligation, defeat any claim of SBA, or preempt federal law.
6. RIGHTS, NOTICES, AND DEFENSES THAT GUARANTOR WAIVES:
To the extent permitted by law,
A. Guarantor waives all rights to:
1) Require presentment, protest, or demand upon Borrower;
2) Redeem any Collateral before or after Lender disposes of it;
3) Have any disposition of Collateral advertised; and
4) Require a valuation of Collateral before or after Lender disposes of it.
B. Guarantor waives any notice of:
1) Any default under the Note;
2) Presentment, dishonor, protest, or demand;
3) Execution of the Note;
4) Any action or inaction on the Note or Collateral, such as disbursements, payment, nonpayment, acceleration, intent to accelerate, assignment, collection activity, and incurring enforcement expenses;
5) Any change in the financial condition or business operations of Borrower or any guarantor;
6) Any changes in the terms of the Note or other Loan Documents, except increases in the amounts due under the Note; and
7) The time or place of any sale or other disposition of Collateral.
C. Guarantor waives defenses based upon any claim that:
1) Lender failed to obtain any guarantee;
2) Lender failed to obtain, perfect, or maintain a security interest in any property offered or taken as Collateral;
3) Lender or others improperly valued or inspected the Collateral;
4) The Collateral changed in value or was neglected, lost, destroyed, or underinsured;
5) Lender impaired the Collateral;
6) Lender did not dispose of any of the Collateral;
7) Lender did not conduct a commercially reasonable sale;
8) Lender did not obtain the fair market value of the Collateral;
9) Lender did not make or perfect a claim upon the death or disability of Borrower or any guarantor of the Note;
10) The financial condition of Borrower or any guarantor was overstated or has adversely changed;
11) Lender made errors or omissions in Loan Documents or administration of the Loan;
12) Lender did not seek payment from the Borrower, any other guarantors, or any Collateral before demanding payment from Guarantor;
13) Lender impaired Guarantors suretyship rights;
14) Lender modified the Note terms, other than to increase amounts due under the Note. If Lender modifies the Note to increase the amounts due under the Note without Guarantors consent, Guarantor will not be liable for the increased amounts and related interest and expenses, but remains liable for all other amounts;
15) Borrower has avoided liability on the Note; or
16) Lender has taken an action allowed under the Note, this Guarantee, or other Loan Documents.
7. DUTIES AS TO COLLATERAL:
Guarantor will preserve the Collateral pledged by Guarantor to secure this Guarantee. Lender has no duty to preserve or dispose of any Collateral.
8. SUCCESSORS AND ASSIGNS:
Under this Guarantee, Guarantor includes heirs and successors, and Lender includes its successors and assigns.
9. GENERAL PROVISIONS:
A. ENFORCEMENT EXPENSES. Guarantor promises to pay all expenses Lender incurs to enforce this Guarantee, including, but not limited to, attorneys fees and costs.
B. SBA NOT A CO-GUARANTOR. Guarantors liability will continue even if SBA pays Lender. SBA is not a co-guarantor with Guarantor. Guarantor has no right of contribution from SBA.
C. SUBROGATION RIGHTS. Guarantor has no subrogation rights as to the Note or the Collateral until the Note is paid in full.
D. JOINT AND SEVERAL LIABILITY. All individuals and entities singing as Guarantor are jointly and severally liable.
E. DOCUMENT SIGNING. Guarantor must sign all documents necessary at any time to comply with the Loan Documents and to enable Lender to acquire, perfect, or maintain Lenders liens on Collateral.
F. FINANCIAL STATEMENTS. Guarantor must give Lender financial statements as Lender requires.
G. LENDERS RIGHTS CUMULATIVE, NOT WAIVED. Lender may exercise any of its rights separately or together, as many times as it chooses. Lender may delay or forgo enforcing any of its rights without losing or impairing any of them.
H. ORAL STATEMENTS NOT BINDING. Guarantor may not use oral statement to contradict or alter the written terms of the Note or this Guarantee, or to raise a defense to this Guarantee.
I. SEVERABILITY. If any part of this Guarantee is found to be unenforceable, all other parts will remain in effect.
J. CONSIDERATION. The consideration for this Guarantee is the Loan or any accommodation by Lender as to the Loan.
10. STATE-SPECIFIC PROVISIONS:
Time is of the essence of this Guaranty.
11. GUARANTOR ACKNOWLEDGEMENT OF TERMS:
Guarantor acknowledges that Guarantor has read and understands the significance of all terms of the Note and this Guarantee, including all waivers.
12. GUARANTOR NAME(S) AND SIGNATURE(S):
By signing below, each individual or entity becomes obligated as Guarantor under this Guarantee.
IN WITNESS WHEREOF, GUARANTOR has executed this Guaranty under seal as of the 8 th day of June, 2012.
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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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Christopher F. Brogdon, Vice Chairman and Chief |
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Acquisitions Officer |
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[CORPORATE SEAL] |
Exhibit 10.32
LOAN AGREEMENT
Dated as of July 2, 2012
by and between
GLENVUE H&R PROPERTY HOLDINGS, LLC ,
a Georgia limited liability company,
as Borrower
and
THE PRIVATEBANK AND TRUST COMPANY ,
an Illinois banking corporation,
as Lender
TABLE OF CONTENTS
Article |
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Page |
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ARTICLE 1 INCORPORATION AND DEFINITIONS |
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1 |
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1.1. |
Incorporation and Definitions |
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1 |
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ARTICLE 2 REPRESENTATIONS AND WARRANTIES |
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7 |
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2.1. |
Representations and Warranties |
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7 |
2.2. |
Continuation of Representations and Warranties |
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12 |
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ARTICLE 3 THE LOAN |
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13 |
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3.1. |
Agreement to Borrow and Lend |
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13 |
3.2. |
Interest |
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13 |
3.3. |
Principal Payments; Maturity Date; Prepayment |
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14 |
3.4. |
Uniform Commercial Code Matters |
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14 |
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ARTICLE 4 LOAN DOCUMENTS |
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15 |
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4.1. |
Loan Documents |
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15 |
4.2. |
Interest Rate Protection |
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16 |
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ARTICLE 5 CONDITIONS TO LOAN DISBURSEMENTS |
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16 |
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5.1. |
Conditions to Loan Opening |
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16 |
5.2. |
Additional Conditions to Loan Opening |
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19 |
5.3. |
Termination of Agreement |
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19 |
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ARTICLE 6 PAYMENT OF LOAN EXPENSES |
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20 |
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6.1. |
Payment of Loan Expenses at Loan Opening |
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20 |
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ARTICLE 7 FURTHER AGREEMENTS OF BORROWER |
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20 |
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7.1. |
Mechanics Liens, Taxes and Contest Thereof |
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20 |
7.2. |
Fixtures and Personal Property |
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20 |
7.3. |
Insurance Policies |
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20 |
7.4. |
Furnishing Information |
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21 |
7.5. |
Excess Indebtedness |
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22 |
7.6. |
Certain Title Related Matters |
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22 |
7.7. |
Compliance with Laws; Environmental Matters |
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22 |
7.8. |
ERISA Liabilities; Employee Plans |
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23 |
7.9. |
Licensure; Notices of Agency Actions |
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23 |
7.10. |
Project and Facility Accounts and Revenues |
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24 |
7.11. |
Single-Asset Entity; Indebtedness; Distributions |
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24 |
7.12. |
Restrictions on Transfer |
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25 |
7.13. |
Leasing, Operation and Management of Project |
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26 |
7.14. |
Operator Minimum EBITDAR |
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27 |
7.15. |
Operator Fixed Charge Coverage Ratio |
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27 |
7.16. |
Borrower Coverage of Debt Service |
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27 |
7.17. |
Concerning Operator |
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28 |
7.18. |
Capital Expenditures Reserve Account |
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28 |
7.19. |
Security Interest Matters |
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29 |
7.20. |
Further Assurance |
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29 |
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ARTICLE 8 CASUALTIES AND CONDEMNATION |
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29 |
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8.1. |
Application of Insurance Proceeds and Condemnation Awards |
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29 |
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ARTICLE 9 ASSIGNMENTS, SALE AND ENCUMBRANCES |
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29 |
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9.1. |
Lenders Right to Assign |
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29 |
9.2. |
Prohibition of Assignments and Encumbrances by Borrower |
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29 |
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ARTICLE 10 EVENTS OF DEFAULT BY BORROWER |
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30 |
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10.1. |
Event of Default Defined |
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30 |
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ARTICLE 11 LENDERS REMEDIES UPON EVENT OF DEFAULT |
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32 |
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11.1. |
Remedies Conferred upon Lender |
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32 |
11.2. |
Right of Lender to Make Advances to Cure Event of Defaults; Obligatory Advances |
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33 |
11.3. |
Attorneys Fees |
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33 |
11.4. |
No Waiver |
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34 |
11.5. |
Default Rate |
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34 |
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ARTICLE 12 MISCELLANEOUS |
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34 |
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12.1. |
Time is of the Essence |
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34 |
12.2 |
Concerning the Operator Loan Documents |
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35 |
12.3. |
Lenders Determination of Facts; Lender Approvals and Consents |
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36 |
12.4. |
Prior Agreements; No Reliance; Modifications |
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36 |
12.5. |
Disclaimer by Lender |
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36 |
12.6. |
Loan Expenses; Indemnification |
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37 |
12.7. |
Captions |
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37 |
12.8. |
Inconsistent Terms and Partial Invalidity |
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37 |
12.9. |
Gender and Number |
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37 |
12.10. |
Notices |
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38 |
12.11. |
Effect of Agreement |
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38 |
12.12. |
Construction |
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38 |
12.13. |
Governing Law |
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38 |
12.14. |
Litigation Provisions |
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38 |
12.15. |
Counterparts; Electronic Signatures |
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39 |
12.16. |
Customer Identification-USA Patriot Act Notice; OFAC and Bank Secrecy Act |
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39 |
EXHIBITS |
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EXHIBIT A |
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THE LAND |
EXHIBIT B |
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PERMITTED EXCEPTIONS |
EXHIBIT C |
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DIRECT AND INDIRECT OWNERSHIP OF BORROWER |
EXHIBIT D |
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INSURANCE REQUIREMENTS |
LOAN AGREEMENT
THIS LOAN AGREEMENT dated as of July 2, 2012 (this Agreement ), is executed by and between GLENVUE H&R PROPERTY HOLDINGS, LLC , a Georgia limited liability company ( Borrower ), and THE PRIVATEBANK AND TRUST COMPANY , an Illinois banking corporation ( Lender ).
RECITALS
A. Borrower has contracted to purchase the property described in Exhibit A attached hereto and the building located thereon, which is designed to be used as a skilled nursing facility (collectively, the Project ).
B. Borrower has applied to Lender for the Loan (as hereinafter defined) to provide mortgage financing for the Project, and Lender is willing to make the Loan upon the terms and conditions hereinafter set forth.
AGREEMENTS
In consideration of the mutual representations, warranties, covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:
ARTICLE 1
INCORPORATION AND DEFINITIONS
1.1 Incorporation and Definitions . The foregoing recitals and all exhibits hereto are hereby made a part of this Agreement. The following terms shall have the following meanings in this Agreement:
AdCare : AdCare Health Systems, Inc., an Ohio corporation.
Affiliate : As to a person or entity, any other person or entity which, directly or indirectly, Controls, is Controlled by or is under common Control with such first person or entity.
Agreement : This Loan Agreement by and between Borrower and Lender.
Assignment of Rents : As defined in Section 4.1 hereof.
Bank Product Agreements : Those certain cash management service agreements entered into from time to time between Borrower and Lender or its Affiliates in connection with any of the Bank Products.
Bank Product Obligations : All obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing by Borrower to Lender or its Affiliates pursuant to or evidenced by the Bank Product Agreements and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all such amounts that Borrower is obligated to reimburse to Lender as a result of Lender purchasing participations or executing indemnities or reimbursement obligations with respect to the Bank Products provided to Borrower pursuant to the Bank Product Agreements.
Bank Products : Any service or facility extended to Borrower by Lender or its Affiliates, including, without limitation, (i) deposit accounts, (ii) cash management services, including, without limitation, controlled disbursement, lockbox, electronic funds transfers (including, without limitation, book transfers, fedwire transfers, ACH transfers), online reporting and other services relating to accounts maintained with Lender or its Affiliates, (iii) debit cards, and (iv) Hedging Agreements.
Borrower : Glenvue H&R Property Holdings, LLC, a Georgia limited liability company.
Capital Expenditures Reserve Account : The account so designated that is created in Section 7.18 of this Agreement.
Capital Lease : With respect to any party, a lease of any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, by such party, as lessee, that is or should be recorded as a capital lease on the financial statements of such party prepared in accordance with GAAP.
Capitalized Lease Obligations : With respect to any party, all rental obligations of such party as lessee under a Capital Lease which are or will be required to be capitalized on the books of such party.
Code : The Uniform Commercial Code of the State of Illinois 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 Illinois, the term Code shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of this Agreement or the other Loan Documents relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.
Control : Possession by a person or an entity, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether by contract, ownership of voting securities, membership or partnership interests or otherwise.
Debt Service : With respect to any party, for any period, the sum of (i) Interest Charges, plus (ii) all principal payable to a lender in connection with borrowed money or the deferred purchase price of assets that are treated as interest in accordance with GAAP, plus (iii) the portion of Capitalized Lease Obligations with respect to that period that should be treated as principal in accordance with GAAP.
Declarations : Any documents containing covenants, conditions, restrictions, easements, operating agreements or the like, which benefit or burden the Land, or both, whether or not recorded.
Deed to Secure Debt : As defined in Section 4.1 hereof.
Default : When used in reference to this Agreement or any other document, or in reference to any provision of or obligation under this Agreement 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 Agreement or such other document, as the case may be.
Default Rate : As defined in the Note.
Depreciation : With respect to any party, for any period, the total amounts added to depreciation, amortization, obsolescence, valuation and other proper reserves, as reflected on such partys financial statements for such period and determined in accordance with GAAP.
Distribution : In the case of any entity 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 interest in such entity (each 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 to any Affiliate of any Principal.
EBITDA : With respect to any party, for any period, the sum for such period of the following of or payable by such party, as the case may be: (i) Net Income, plus (ii) Interest Charges, plus (iii) federal and state income taxes, plus (iv) Depreciation.
EBITDAR : With respect to any party, for any period, the sum for such period of the following of or payable by such party, as the case may be: (i) Net Income, plus (ii) Interest Charges, plus (iii) federal and state income taxes, plus (iv) Depreciation, plus (v) Rental Expense.
Employee Plan : Any pension, stock bonus, employee stock ownership plan, retirement, profit sharing, deferred compensation, stock option, bonus or other incentive plan, whether qualified or nonqualified, or any disability, medical, dental or other health plan, life insurance or other death benefit plan, vacation benefit plan, severance plan or other employee benefit plan or arrangement, including, without limitation, those pension, profit-sharing and retirement plans of Borrower or Operator described from time to time in its financial statements, and any pension plan, welfare plan, Defined Benefit Pension Plans (as defined in ERISA) or multi-employer plan, maintained or administered by Borrower or Operator or to which Borrower or Operator is a party, or under which Borrower or Operator may have any liability, or by which Borrower or Operator may be bound.
Environmental Indemnity : As defined in Section 4.1 hereof.
Environmental Laws : As defined in the Environmental Indemnity.
ERISA : The Employee Retirement Income Security Act of 1974, as amended.
Event of Default : The following: (i) when used in reference to this Agreement, one or more of the events or occurrences referred to in Section 10.1 of this Agreement; 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.
Facility : A skilled nursing facility containing 134 active beds (licensed for 160 beds) known as Glenvue Health and Rehabilitation Center, 721 North Veterans Boulevard, Glennville, Georgia, which is operated by Operator in the Project.
GAAP : Generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination, provided, however, that interim financial statements or reports shall be deemed in compliance with GAAP despite the absence of footnotes and fiscal year-end adjustments as required by GAAP.
Gross Revenues : All income and receipts from all sources, including, without limitation, with respect to the Project, and in the case of the Project, including, without limitation, all base rent, additional rent, security deposits and other amounts paid by tenants of the Project.
Guarantors : Operator and AdCare.
Guaranty : As defined in Section 4.1 hereof.
Hazardous Substance : As defined in the Environmental Indemnity.
Hedging Agreements : The following: (i) any ISDA Master Agreement between Borrower and Lender or any other provider, (ii) any Schedule to Master Agreement between Borrower and Lender or any other provider, and (iii) all other agreements entered into from time to time by Borrower and Lender or any other provider relating to Hedging Transactions.
Hedging Transaction : Any transaction (including an agreement with respect thereto) now existing or hereafter entered into between Borrower and Lender or any other provider which is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.
Interest Charges : With respect to any party, for any period, the sum of: (i) all interest, charges and related expenses payable with respect to that period to a lender in connection with borrowed money or the deferred purchase price of assets that are treated as interest in accordance with GAAP, plus (ii) the portion of Capitalized Lease Obligations with respect to that period that should be treated as interest in accordance with GAAP, plus (iii) all charges paid or payable (without duplication) during that period with respect to any hedging agreements.
Land : That certain parcel or parcels of real estate legally described in Exhibit A to this Agreement, together with all improvements presently located thereon and all easements and other rights appurtenant thereto.
Lease : The Facility Lease dated as of June 19, 2012, by and between Borrower, as Landlord, and Operator, as Tenant.
Legal Requirements : As to any person or party, the organizational and governing documents of such person or party, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other governmental authority, in each case applicable to or binding upon such person or party or any of its property or to which such person or party or any of its property is subject.
Lender : The PrivateBank and Trust Company, an Illinois banking corporation.
Loan : The loan to be made pursuant to this Agreement.
Loan Amount : $6,600,000.
Loan Documents : This Agreement, the documents specified in Article 4 hereof and any other instruments evidencing, securing or guarantying obligations of any party under the Loan, and any Bank Product Agreements to which Lender or any of its Affiliates is a party, including, without limitation, any Hedging Agreements to which Lender is a party.
Loan Expenses : All interest, charges, costs and expenses incurred by Lender in connection with the Loan, including, but not limited to, (i) interest due on the Loan and any points, loan fees, service charges, commitment fees or other fees due to Lender in connection with the Loan; (ii) all title examination, survey, escrow, filing, search, recording and registration fees and charges; (iii) all fees and disbursements of architects, engineers and consultants engaged by Borrower and Lender; (iv) all documentary stamp and other taxes and charges imposed by law on the issuance or recording of any of the Loan Documents; (v) all appraisal fees; (vi) all title, casualty, liability, payment, performance or other insurance or bond premiums; (vii) the cost of a real estate tax monitoring service; (viii) all reasonable fees and disbursements of legal counsel engaged by Lender in connection with the Loan, including, without limitation, counsel engaged in connection with the origination, negotiation, document preparation, consummation, enforcement or administration of this Agreement or any of the Loan Documents; and (ix) any amounts required to be paid by Borrower under this Agreement, the Deed to Secure Debt or any Loan Document after the occurrence of an Event of Default under this Agreement or any of the other Loan Documents.
Loan Opening : The first disbursement of Loan Proceeds.
Loan Proceeds : All amounts advanced as part of the Loan, whether advanced directly to Borrower or otherwise.
Maturity Date : July 2, 2014.
Net Income : With respect to any party, for any period, the net income (or loss) of such party for such period as determined in accordance with GAAP, excluding any gains from dispositions of assets, any extraordinary gains and any gains from discontinued operations.
Note : As defined in Section 4.1 hereof.
Old Operator : Evans Memorial Hospital Inc., a Georgia corporation.
Operations Transfer Agreement : The Operations Transfer Agreement dated as of April 3, 2012, by and between Old Operator and Operator, as assignee.
Operator : Glenvue H&R Nursing, LLC, a Georgia limited liability company.
Operator Loan : Any future loan by Lender to Operator, whether to Operator alone or to Operator and other borrowers.
Operator Loan Documents : All documents at any time evidencing or securing any Operator Loan, and all as heretofore and hereafter modified, amended, restated, increased, renewed and extended.
Permitted Exceptions : The title exceptions specified in Exhibit B hereto, together with such additional exceptions as may be permitted by the express terms of this Agreement or any of the other Loan Documents.
Permitted Substance : As defined in the Environmental Indemnity.
Prohibited Transfer : As defined in Section 7.12 hereof.
Project : The Land and the building and other improvements located on the Land.
Rental Expense : With respect to any party, for any period, the rental expense for real estate leased by such party as lessee for such period as determined in accordance with GAAP.
Rental Income : With respect to any party, for any period, the rental income for real estate leased by such party as lessor for such period, minus the operating expenses of such real estate for such period, all as determined in accordance with GAAP.
Required Loan Opening Date : July 2, 2012.
Signing Entity : Each entity (other than Borrower itself) that appears in the signature block of Borrower in this Agreement, if any.
State : The state in which the Project is located.
Title Insurance Company : Chicago Title Insurance Company.
Title Insurance Policy : As defined in Section 5.1 hereof.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties . To induce Lender to execute and perform this Agreement, Borrower hereby represents, covenants and warrants to Lender as follows:
(a) At the Loan Opening and at all times thereafter until the Loan is paid in full, Borrower will have good and merchantable fee simple title to the Land, subject only to the Permitted Exceptions. Borrower has legal power and authority to encumber and convey the Project. The Declarations are in full force and effect and have not been modified or amended. No Default or Event of Default under the Declarations on the part of Borrower has occurred and is continuing.
(b) Borrower is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Georgia. Borrower has full power and authority to conduct its business as presently conducted, to own and operate the Project, to enter into this Agreement and to perform all of its duties and obligations under this Agreement and under the Loan Documents, all of which has been duly authorized by all necessary Legal Requirements applicable to Borrower. Each Signing Entity is duly organized, validly existing and in good standing under the laws of the State in which it is organized, has full power and authority to conduct its business as presently conducted and to execute this Agreement and the other Loan Documents to which Borrower is a party in the capacity shown in the signature block of Borrower contained in this Agreement, and such execution has been duly authorized by all necessary Legal Requirements applicable to such Signing Entity. Neither Borrower nor any Guarantor has been convicted of a felony and there are no proceedings or investigations being conducted involving criminal activities of Borrower or any Guarantor. The direct and indirect ownership of Borrower and Operator is as shown in Exhibit C attached to this Agreement.
(c) Operator is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Georgia. Operator has full power and authority to conduct its business as presently conducted, to lease the Project from Borrower and operate the Facility, and to enter into and to perform the Guaranty and the other Loan Documents to which it is a party and to perform all of its duties and obligations thereunder, all of which has been duly authorized by all necessary Legal Requirements applicable to Operator.
(d) AdCare is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio. AdCare has full power and authority to conduct its business as presently conducted and to enter into and to perform the Guaranty
and the other Loan Documents to which it is a party and to perform all of its duties and obligations thereunder, all of which has been duly authorized by all necessary Legal Requirements applicable to AdCare.
(e) Borrower and each Guarantor is able to pay its or his debts as such debts become due, and each has capital sufficient to carry on its or his respective present businesses and transactions and all businesses and transactions in which it or he is about to engage. Neither Borrower nor any Guarantor (i) is bankrupt or insolvent, (ii) has made an assignment for the benefit of its or his respective creditors, (iii) has had a trustee or receiver appointed, (iv) has had any bankruptcy, reorganization or insolvency proceedings instituted by or against it or him, or (v) shall be rendered insolvent by its or his execution, delivery or performance of the Loan Documents or by the transactions contemplated thereunder. There is no Uniform Commercial Code financing statement on file that names Borrower or any Guarantor as debtor and covers any of the collateral for the Loan, and there is no judgment or tax lien outstanding against Borrower or any Guarantor.
(f) This Agreement, the Note, the Deed to Secure Debt, the other Loan Documents and any other documents and instruments required to be executed and delivered by Borrower or any Guarantor in connection with the Loan, when executed and delivered, will constitute the duly authorized, valid and legally binding obligations of the party required to execute the same and will be enforceable strictly in accordance with their respective terms (except to the extent that enforceability may be affected or limited by applicable bankruptcy, insolvency and other similar debtor relief laws affecting the enforcement of creditors rights generally); and no basis exists for any claim against Lender under this Agreement, under the Loan Documents or with respect to the Loan; and enforcement of this Agreement and the Loan Documents is subject to no defenses of any kind.
(g) The execution, delivery and performance of this Agreement, the Note, the Deed to Secure Debt, the other Loan Documents and any other documents or instruments to be executed and delivered by Borrower or any Guarantor pursuant to this Agreement or in connection with the Loan and the use and occupancy of the Project will not: (i) violate any Legal Requirements applicable to Borrower or any Signing Entity, or (ii) conflict with, be inconsistent with, or result in any breach or default of any of the terms, covenants, conditions or provisions of any indenture, mortgage, deed of trust, instrument, document, agreement or contract of any kind to which Borrower, any Guarantor or any Signing Entity is a party or by which any of them may be bound. Neither Borrower, any Guarantor nor any Signing Entity is in default (without regard to grace or cure periods) under any contract or agreement to which it is a party, the effect of which default will adversely affect the performance by Borrower or any Guarantor of its or his obligations pursuant to and as contemplated by the terms and provisions of this Agreement or the other Loan Documents.
(h) No condition, circumstance, event, agreement, document, instrument, restriction, litigation or proceeding, or threatened litigation or proceeding or basis therefor, exists which could (i) adversely affect the validity or priority of the liens and
security interests granted Lender under the Loan Documents; (ii) materially adversely affect the ability of Borrower or any Guarantor to perform their obligations under the Loan Documents; or (iii) constitute a Default or Event of Default under this Agreement or any of the other Loan Documents.
(i) It is a condition of this Agreement and the Loan that the Project and the use and occupancy of the Project do not violate or conflict with any applicable law, statute, ordinance, rule, regulation or order of any kind, including, without limitation, Environmental Laws, zoning, building, land use, noise abatement, occupational health and safety or other laws, any building permit or any Declarations, and if a third-party is required under any Declarations or other documents, to consent to use or operation of the Project, Borrower has obtained such approval from such party, and to the best of Borrowers knowledge, such condition is satisfied. In addition, and without limiting the foregoing, Borrower shall (i) ensure that no person or entity which owns a controlling interest in or otherwise controls Borrower is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control ( OFAC ), the Department of the Treasury or included in any Executive Orders, (ii) not use or permit the use of any Loan Proceeds to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, and (iii) comply with all applicable Bank Secrecy Act laws and regulations, as amended.
(j) Each of the following is a condition of this Agreement and the Loan: Except as disclosed in the environmental site assessments referred to below, the Project has never been used for any activities which, directly or indirectly, involve the use, generation, treatment, storage, transportation or disposal of any Hazardous Substances, and no Hazardous Substances exist on the Project or under the Project or in any surface waters or groundwaters on or under the Project. The Project and its existing and prior uses have at all times complied with all Environmental Laws, and Borrower has not violated any Environmental Laws. The environmental site assessments referred to above are as follows: (i) Phase I Environmental Site Assessment dated April 25, 2012, prepared by Environmental Corporation of America, and (ii) Phase II Environmental Site Assessment dated June 21, 2012, prepared by Environmental Corporation of America. To the best of Borrowers knowledge, each of such conditions is satisfied.
(k) There are no facilities on the Project which are subject to reporting under any State laws or Section 312 of the Federal Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C. Section 11022), and federal regulations promulgated thereunder. Except as disclosed in the environmental site assessments referred to above, the Project does not contain any underground or above ground storage tanks.
(l) All financial statements submitted by Borrower, Operator or any Guarantor to Lender in connection with the Loan are true and correct in all material respects, have been prepared in accordance with GAAP consistently applied, and fairly present the respective financial conditions and results of operations of the entities and persons which are their subjects.
(m) This Agreement and all financial statements, budgets, schedules, opinions, certificates, confirmations, applications, rent rolls, affidavits, agreements, and other materials submitted to Lender in connection with or in furtherance of this Agreement by or on behalf of Borrower, Operator or any Guarantor fully and fairly state the matters with which they purport to deal, and neither misstate any material fact nor, separately or in the aggregate, fail to state any material fact necessary to make the statements made not misleading in any material respect.
(n) The Land is taxed as one or more separate tax parcels which do not include any property other than the Land.
(o) Under applicable law, the Land may be encumbered, conveyed and otherwise dealt with as a separate legal parcel.
(p) All utility and municipal services required for the construction, occupancy and operation of the Project, including, but not limited to, water supply, storm and sanitary sewage disposal systems, cable services, gas, electric and telephone facilities are available for use by and currently provide service to the Project.
(q) Subject to the provisions of Section 7.9(b) of this Agreement, all governmental permits and licenses required by applicable law in order for Borrower to own and lease the Project, and for Operator to operate the Facility, have been validly issued and are in full force.
(r) Each of the following is a condition of this Agreement and the Loan: The storm and sanitary sewage disposal system, water system, drainage system and all mechanical systems of the Project comply with all applicable laws, statutes, ordinances, rules and regulations, including, without limitation, all Environmental Laws. The applicable environmental protection agency, pollution control board and/or other governmental agencies having jurisdiction of the Project have issued their permits for the construction, tap-on and operation of those systems. To the best of Borrowers knowledge, each of such conditions is satisfied.
(s) It is a condition of this Agreement and the Loan that all utility, parking, access (including curb-cuts and highway access), construction, recreational and other permits and easements required for the use of the Project have been granted and issued, and to the best of Borrowers knowledge, such condition is satisfied.
(t) With the exception of Permitted Exceptions, the improvements located on the Land do not encroach upon any building line, set back line, sideyard line, or any recorded or visible easement (or other easement of which Borrower is aware or has reason to believe may exist) which exists with respect to the Project.
(u) The Loan, including interest rate, fees and charges as contemplated hereby, is a business loan within the meaning of subparagraph (1)(c) contained in Section 205/4 of Chapter 815 of the Illinois Compiled Statutes, as amended. The Loan is an exempted transaction under the Truth In Lending Act, 12 U.S.C. §1601 et seq.; and the Loan does not, and when disbursed will not, violate the provisions of the usury laws of
the State, any consumer credit laws or the usury laws of any state which may have jurisdiction over this transaction, Borrower or any property securing the Loan.
(v) There are no leases for use or occupancy of the Project other than the Lease, with the exception of agreements entered into with residents and occupants in the ordinary course of business of operating the Facility.
(w) The Lease is in full force and effect; no Defaults or Events of Default on the part of Borrower have occurred and are continuing thereunder; the tenant has no right of set-off against payment of rent due thereunder; and enforcement of the Lease by Borrower or by Lender pursuant to an exercise of Lenders rights under the Assignment of Rents would be subject to no defenses of any kind. The Operations Transfer Agreement is in full force and effect and no Defaults or Events of Default on the part of Operator or Old Operator have occurred and are continuing thereunder.
(x) All Employee Plans of Borrower and Operator meet the minimum funding standards of Section 302 of ERISA and 412 of the Internal Revenue Code where applicable, and each such Employee Plan that is intended to be qualified within the meaning of Section 401 of the Internal Revenue Code of 1986 is qualified. No withdrawal liability has been incurred under any such Employee Plans and no Reportable Event or Prohibited Transaction (as such terms are defined in ERISA), has occurred with respect to any such Employee Plans, unless approved by the appropriate governmental agencies. Borrower and Operator have promptly paid and discharged all obligations and liabilities arising under ERISA of a character which if unpaid or unperformed might result in the imposition of a lien against any of their properties or assets.
(y) Each of the following is a condition of this Agreement and the Loan: There are no strikes, lockouts or other labor disputes pending or threatened against Borrower or Operator; hours worked by and payment made to employees of Borrower and Operator 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 Borrower or Operator before any governmental authority. To the best of Borrowers knowledge, each of such conditions is satisfied.
(z) Subject to the provisions of Section 7.9(b) of this Agreement, the Facility has all necessary licenses, permits and certifications required by any applicable governmental authority to operate and maintain a skilled nursing facility therein with its current number of beds in service, and participates in the Medicare and Medicaid programs. Operator has complied with all applicable requirements of the United States of America, the State of Georgia and all applicable local governments, and of its agencies and instrumentalities, necessary to operate and maintain the Facility as such a facility. All utilities necessary for use, operation and occupancy of the Project and the Facility are available to the Project and the Facility. All requirements for unrestricted use of the Project and the Facility as a skilled nursing facility under the rules and regulations of the State of Georgia Department Health and of any other department or agency of the State of Georgia having jurisdiction over the Project or the Facility have been fulfilled. All
building, zoning, safety, health, fire, water district, sewerage and environmental protection agency and any other permits or licenses which are required by any governmental authority for use, occupancy and operation of the Project and the Facility as a skilled nursing facility have been obtained and are maintained in full force and effect. Neither Borrower, Operator, the Project, the Facility nor any Guarantor is subject to any corporate integrity agreement, compliance agreement or other agreement governing the operation of the Project or the Facility or the operations of Borrower, Operator or any Guarantor.
(w) Borrower and Operator are in compliance in all material respects with all laws, orders, regulations and ordinances of all federal, foreign, state and local governmental authorities binding upon or affecting the business, operation or assets of Borrower or Operator. Neither Borrower nor Operator: (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 program 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)(l), (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, neither Borrower nor Operator is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Medicare or Medicaid Provider Agreement or other agreement or instrument to which Borrower or Operator 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 or Medicaid Certification of Borrower or Operator.
2.2 Continuation of Representations and Warranties . Borrower hereby covenants, warrants and agrees that the representations and warranties made in Section 2.1 hereof shall be and shall remain true and correct in all material respects at the time of the Loan Opening and at all times thereafter so long as any part of the Loan shall remain outstanding. Each request for disbursement of Loan Proceeds shall constitute a reaffirmation that these representations and warranties are true in all material respects as of the date of such request and will be true in all material respects on the date of the disbursement.
ARTICLE 3
THE LOAN
3.1 Agreement to Borrow and Lend .
(a) On the terms of and subject to the conditions of this Agreement, Borrower agrees to borrow from Lender, and Lender agrees to lend to Borrower, an amount not to exceed the Loan Amount. The proceeds of the Loan shall be used by Borrower for the purchase of the Project. Notwithstanding any other provision of this Agreement, the amount of the Loan shall not exceed an amount equal to 80% of the as is appraised value of the Project as shown in the appraisal required by this Agreement.
(b) The Loan shall be evidenced by the Note executed by Borrower and shall be secured by the Deed to Secure Debt and the Assignment of Rents. The Loan shall be guaranteed by Guarantors pursuant to the Guaranty, and Borrower and Guarantors shall protect Lender with respect to environmental matters pursuant to the Environmental Indemnity. If Lender extends any Operator Loan to Operator, the Loan shall be secured by the Operator Loan Documents and the Loan Documents shall secure the Operator Loan; provided, however, that notwithstanding any other provision of the Loan Documents or the Operator Loan Documents, (i) if the Loan is repaid at a time when the Operator Loan is outstanding, and if there is no existing Default or Event of Default under any of the Operator Loan Documents, the Operator Loan shall no longer be secured by the liens and encumbrances created under the Loan Documents, and (ii) if the Operator Loan is repaid and terminated at a time when the Loan is outstanding, and no there is no existing Default or Event of Default under any of the Loan Documents, the Loan shall no longer be secured by the liens and encumbrances created under the Operator Loan Documents. At any time that Lender does not have an Operator Loan extended to Operator, the references in this Agreement and the other Loan Documents to the Operator Loan shall be of no force or effect. Nothing contained in this Agreement shall constitute a commitment or agreement by Lender to extend any Operator Loan to Operator.
3.2 Interest . Interest on funds advanced hereunder shall
(i) From the Loan Opening until the Maturity Date, accrue at the interest rates provided for in the Note;
(ii) Be computed upon advances of the Loan from and including the date of each advance by Lender to or for the account of Borrower (whether to an escrow or otherwise), on the basis of a 360-day year and the actual number of days elapsed in any portion of a month in which interest is due; and
(iii) Be paid by Borrower to Lender together with principal payments, if any, in the manner set forth in the Note.
3.3 Principal Payments; Maturity Date; Prepayment .
(a) Prior to the Maturity Date, principal payments, if any, shall be made as provided in the Note. The entire principal balance of the Note and all accrued and unpaid interest thereon shall be due, if not sooner paid, on the Maturity Date.
(b) The Loan may be prepaid prior to the Maturity Date on the terms and upon payment of the charges and fees set forth in the Note.
3.4 Uniform Commercial Code Matters .
(a) All references in this Agreement and the other Loan Documents to the Code are to the Code as from time to time in effect.
(b) Borrower represents and warrants to Lender as follows:
(i) The exact legal name of Borrower is as stated in the first paragraph of this Agreement.
(ii) The nature of the Borrower entity and the State in which it is organized is as stated in the first paragraph of this Agreement. The organizational number of Borrower in such State is as follows: 12030304.
(iii) The address of Borrowers chief executive office is the address for notices to Borrower set forth in Section 12.10 of this Agreement.
(iv) Borrower has no place of business other than the chief executive office referred to in (iii) above, at the address for notices set forth in Section 12.10 of this Agreement, and at the Project in Glennville, Georgia.
(c) Borrower shall not, without not less than 30 days prior written notice to Lender, change its legal name, the nature of the Borrower entity, the State in which it is organized, its organizational number in the State in which it is organized, if any, the address of its chief executive office, or the addresses of its other place of business, from those referred to in paragraph (b) of this Section.
(d) Borrower acknowledges that by entering into the security agreements contained in this Agreement and the other Loan Documents, Borrower has authorized the filing of financing statements and amendments under the Code covering the collateral described in such security agreements, without the signature of Borrower.
(e) As additional security for the payment and performance of all of the obligations Borrower under this Agreement and the other Loan Documents and all of the obligations of Operator under the Operator Loan Documents, Borrower hereby grants to Lender a security interest in all Deposit Accounts (as defined in the Code) from time to time maintained by Borrower with Lender, all cash and investments from time to time on deposit in all such Deposit Accounts, and all proceeds of all of the foregoing.
ARTICLE 4
LOAN DOCUMENTS
4.1 Loan Documents . As a condition precedent to the Loan Opening, Borrower agrees that it will deliver the following Loan Documents to Lender at or prior to the Loan Opening, all of which must be satisfactory to Lender and Lenders counsel in form, substance and execution:
(a) Promissory Note . A Promissory Note dated the date hereof (the Note ), executed by Borrower and made payable to the order of Lender, in the Loan Amount.
(b) Deed to Secure Debt . A Deed to Secure Debt and Security Agreement dated as of even date herewith (the Deed to Secure Debt ), duly executed by Borrower to and for the benefit of Lender, conveying good and marketable title to the Land and creating a first lien on the Land to secure the Note, the Loan and all obligations of Borrower in connection therewith.
(c) Assignment of Rents and Leases . An Assignment of Rents and Leases dated as of even date herewith (the Assignment of Rents ), duly executed by Borrower to and for the benefit of Lender, collaterally assigning to Lender all of Borrowers rents, leases and profits of the Project as security for the Note, the Loan and all obligations of Borrower in connection therewith.
(d) Financing Statements . Uniform Commercial Code Financing Statements as required by Lender to perfect all security interests granted by this Agreement, the Deed to Secure Debt and the other Loan Documents.
(e) Environmental Indemnity . An Environmental Indemnity Agreement dated as of even date herewith (the Environmental Indemnity ), executed by Borrower and each Guarantor jointly and severally to and for the benefit of Lender, indemnifying Lender for all risks, liabilities, costs and expenses which may be incurred as a result of environmental matters at the Project.
(f) Guaranty . A Guaranty of Payment and Performance dated as of even date herewith (the Guaranty ), executed by each Guarantor jointly and severally to and for the benefit of Lender, guaranteeing to Lender the payment and performance of all obligations of Borrower in connection with the Loan.
(g) Collateral Assignments . Collateral assignments of such agreements, leases, contracts and other rights or interests of Borrower with respect to the Project as Lender may reasonably request.
(h) Other Loan Documents . Such other documents and instruments as further security for the Loan as Lender may reasonably require.
4.2 Interest Rate Protection .
(a) Any and all obligations, contingent or otherwise, whether now existing or hereafter arising, of Borrower arising under or in connection with all Hedging Transactions and Hedging Agreements to which Lender is a party shall be secured by all of the collateral for the Loan.
(b) 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, Borrower hereby pledges and assigns to Lender, and grants to Lender a first lien on and a first priority security interest in, (i) all Hedging Transactions from time to time entered into by Borrower with Lender or any other provider, (ii) all contracts from time to time entered into by Borrower with Lender or any other provider with respect to such Hedging Transactions, (iii) all amounts from time to time payable to Borrower under such Hedging Transactions and contracts, and (iv) all proceeds of all of the foregoing.
ARTICLE 5
CONDITIONS TO LOAN DISBURSEMENTS
5.1 Conditions to Loan Opening . As conditions precedent to the Loan Opening, (i) Borrower shall satisfy all applicable conditions and requirements contained in other Sections of this Agreement, and (ii) Borrower shall furnish the following to Lender at or prior to the Loan Opening or at such time as is set forth below, all of which must be satisfactory to Lender and Lenders counsel in form, content and execution:
(a) Title Insurance Policy . A loan title insurance policy for the Land, issued on the date of the Loan Opening by the Title Insurance Company to Lender, in the full amount of the Loan, insuring the Deed to Secure Debt to be a valid first, prior and paramount lien upon the fee title to the Project subject only to the Permitted Exceptions, and containing such endorsements as Lender may require, each in form and substance satisfactory to Lender (the Title Insurance Policy ).
(b) Survey . A current plat of survey of the Land (the Survey ) which shall (i) be made by a land surveyor licensed in the State, (ii) be prepared in accordance with the 2011 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys, jointly established and adopted by ALTA and NSPS, (iii) include such Table A Items as Lender shall require, (iv) be made such that the relative positional accuracy of the Survey does not exceed that which is specified in the Accuracy Standards as adopted by ALTA and NSPS and in effect on the date of the Survey, (v) contain a certificate acceptable to Lender naming Borrower, Lender and the Title Insurance Company, and (v) contain such additional information as may be required by Lender or the Title Insurance Company.
(c) Insurance Policies . Evidence satisfactory to Lender in its reasonable judgment that the insurance coverages required by Section 7.3 hereof are in force.
(d) Utilities; Licenses; Permits . Evidence satisfactory to Lender that
(i) All utility and municipal services required for the occupancy and operation of the Project are available and currently servicing the Project;
(ii) Subject to the provisions of Section 7.9(b) of this Agreement, all permits, licenses and governmental approvals required by applicable law to occupy and operate the Project and the Facility have been issued, are in full force and all fees therefor have been fully paid;
(iii) The storm and sanitary sewage disposal system, the water system and all mechanical systems serving the Project comply with all applicable laws, ordinances, rules and regulations, including Environmental Laws and the applicable environmental protection agency, pollution control board and/or other governmental agencies having jurisdiction of the Project have issued their permits for the operation thereof; and
(iv) All utility, parking, access (including curb-cuts and highway access), recreational and other easements and permits required or, in Lenders judgment, necessary for the use of the Project have been granted or issued;
which evidence shall include such evidence as Lender shall reasonably request.
(e) Environmental Report . An environmental site assessment (the Environmental Report ) prepared at Borrowers sole cost and expense by an independent professional environmental consultant approved by Lender in its sole and absolute discretion. The Environmental Report shall be subject to Lenders approval in its sole and absolute discretion. If the Environmental Report reveals contamination or conditions warranting further investigation in order to establish baseline data, Lender may also require as a condition to the Loan Opening, in its sole and absolute discretion, a written report (also referred to herein as the Environmental Report ) based on additional testing and investigation in order to define the source and extent of the contamination or to establish baseline data, as well as to provide relevant detailed information on the areas geological and hydrogeological conditions. Any additional Environmental Report prepared pursuant to this requirement shall be subject to Lenders approval, in its sole and absolute discretion.
(f) Appraisal . An appraisal of the Project addressed to Lender and satisfactory to Lender, prepared by a certified or licensed appraiser who is approved by Lender, each in its sole and absolute discretion, which appraisal must show an as is appraised value of the Project of not less than $8,250,000, such that the Loan Amount will not exceed an amount equal to 80% of the as is appraised value of the Project.
(g) Documents of Record . Copies of all documents of record which affect the Project, including, without limitation, the Declarations, and estoppel letters from the other parties thereto covering such matters as Lender shall reasonably require.
(h) Searches . A report from the appropriate filing officers of the state and county in which the Land is located, indicating that no judgments, tax or other liens, security interests, leases of personalty, financing statements or other encumbrances (other than Permitted Exceptions and liens and security interests in favor of Lender) are of record or on file encumbering any portion of the Land, and that there are no judgments, tax liens, pending litigation or bankruptcy actions outstanding with respect to Borrower and Guarantors.
(i) Attorneys Opinion . An opinion of counsel to Borrower and Guarantors addressing such issues as Lender may request, subject to assumptions and qualifications satisfactory to Lender.
(j) Organizational Documents . Organizational documents, any resolutions required by such documents, and good standing certificates, for Borrower and the other parties to the Loan Documents, and for any entities executing Loan Documents on behalf of Borrower or any other parties to the Loan Documents.
(k) Lease . A copy of the Lease and a lease subordination agreement with Operator in a form satisfactory to Lender. In addition, Borrower shall deposit all security deposits required under the Lease with Lender in an account in Borrowers name.
(l) Management and Consulting Agreements . If Operator has entered into a management or consulting agreement with respect to the Facility, a copy of such management or consulting agreement and a subordination agreement from the manager or consultant in a form satisfactory to Lender.
(m) Operations Transfer Agreement . A copy of the Operations Transfer Agreement, and such agreements between Lender and Old Operator as Lender shall require.
(n) Real Estate Taxes . Copies of the most recent real estate tax bills for the Land and evidence satisfactory to Lender that the Land is separately assessed for real estate taxing purposes.
(o) Broker . Evidence satisfactory to Lender that all brokers commissions or fees due with respect to the Loan or the Project have been paid in full in cash.
(p) Property Condition Report . A property condition report prepared at Borrowers sole cost and expense by an independent consultant approved by Lender in its sole and absolute discretion, and which shall be subject to Lenders approval in its sole and absolute discretion.
(q) Operator Loan Documents . If Lender has extended the Operator Loan to Operator, copies of the executed Operator Loan Documents.
(r) Additional Documents . Such other papers and documents regarding Borrower, the Project or the Facility as Lender may require.
5.2 Additional Conditions to Loan Opening . The following are additional conditions precedent to the Loan Opening:
(a) Written Request . Borrower shall have delivered to Lender a written request for disbursement prepared in such form and detail, and accompanied by such supporting information and documents, as shall be strictly satisfactory to Lender.
(b) Representations and Warranties . All representations and warranties of Borrower contained in this Agreement, the other Loan Documents and other documents delivered to Lender shall be true and correct in all material respects as of the date of the Loan Opening.
(c) Financial Condition . There shall be no material adverse change in the financial condition of Borrower or any Guarantor as of the date of the Loan Opening.
(d) Accounts Set Up with Lender; Capital Expenditures Reserve Account . Without limitation on the generality of paragraph (f) below, Borrower and Operator shall have set up all of their respective operating and other accounts with Lender as required by Section 7.10 of this Agreement, and Borrower shall have caused the Capital Expenditures Reserve Account to be established and funded as required by Section 7.18 of this Agreement.
(e) Interest Rate Protection . Borrower shall have purchased from a qualified counterparty one or more contracts for interest rate protection for such portion or all of the Loan as Lender may require, which contracts shall be in effect for the full term of the Loan and for a rate and otherwise in form and substance satisfactory to Lender in all respects. Lender agrees that interest rate protection is not required for the Loan.
(f) Operator Cash Equity . On the date of the Loan Opening, Operator must have cash equity of not less than $235,0000 on deposit in one or more accounts at Lender to be used for working capital needs, as shown on an opening balance sheet of Operator furnished to Lender on the date of the Loan Opening, without any requirement to keep such amount on deposit if and to the extent such funds are used by Operator as working capital. In lieu of having such cash equity, Operator may have a commitment for an unsecured working capital loan from AdCare of not less than $235,000, which loan must be subordinate to the Loan. The terms and documentation for such loan from AdCare and the subordination thereof to the Loan shall be subject to the approval of Lender.
(g) No Default or Event of Default . No Default or Event of Default under this Agreement or under any other Loan Document, or if the Operator Loan has been extended by Lender to Operator, under any Operator Loan Document, shall have occurred and be continuing as of the date of the Loan Opening.
5.3 Termination of Agreement . Borrower agrees that all conditions precedent to the Loan Opening will be complied with on or prior to the Required Loan Opening Date. If all of the conditions precedent to the Loan Opening hereunder shall not have been performed on or before the Required Loan Opening Date, Lender, at its option at any time thereafter and prior to
the Loan Opening, may terminate this Agreement and all of its obligations hereunder by giving a written notice of termination to Borrower. In the event of such termination, Borrower shall pay all Loan Expenses which have accrued or been charged as of the date of such termination.
ARTICLE 6
PAYMENT OF LOAN EXPENSES
6.1 Payment of Loan Expenses at Loan Opening . At the Loan Opening, Lender may pay from Loan Proceeds all Loan Expenses, to the extent the same have not been previously paid.
ARTICLE 7
FURTHER AGREEMENTS OF BORROWER
7.1 Mechanics Liens, Taxes and Contest Thereof . Borrower agrees that it will not suffer or permit any mechanics lien claims to be filed or otherwise asserted against the Project and will promptly discharge the same in case of the filing of any claims for lien or proceedings for the enforcement thereof, and will pay all special assessments which have been placed in collection and all real estate taxes and assessments of every kind (regardless of whether the same are payable in installments) upon the Project, before the same become delinquent; provided, however, that Borrower shall have the right to contest in good faith and with reasonable diligence the validity of any such lien, claim, tax or assessment if the right to contest such matters is expressly granted in the Deed to Secure Debt. If Borrower shall fail promptly either to discharge or to contest claims, taxes or assessments asserted or give security or indemnity in the manner provided in the Deed to Secure Debt, 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 Deed to Secure Debt, or upon the 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, in its sole discretion, effect any settlement or compromise of the same. Any amounts so expended by Lender, including premiums paid or security furnished in connection with the issuance of any surety bonds, shall be deemed to constitute disbursement of Loan Proceeds hereunder. In settling, compromising, discharging or providing indemnity or security for any claim for lien, tax or assessment, Lender shall not be required to inquire into the validity or amount thereof.
7.2 Fixtures and Personal Property . Except for a security interest granted to Lender, Borrower agrees that all of the personal property, fixtures, attachments, furnishings and equipment delivered in connection with the construction, equipping or operation of the Project will be kept free and clear of all chattel mortgages, vendors liens, and all other liens, claims, encumbrances and security interests whatsoever, and that Borrower will be the absolute owner of said personal property, fixtures, attachments and equipment, subject to the rights of Operator
under the Lease. Borrower, on request, shall furnish Lender with satisfactory evidence of such ownership, and of the terms of purchase and payment therefor.
7.3 Insurance Policies . Borrower shall, at its expense, during the term of this Agreement, procure and keep in force, or cause to be procured and kept in force by Operator, the insurance coverages described in Exhibit D attached to this Agreement and conforming to the insurance requirements contained in the Deed to Secure Debt, and in addition thereto, professional liability insurance covering the operations in the Project in such amounts and with such deductibles as shall be approved by Lender. In addition, all insurance shall be in form, content and amounts approved by Lender and written by an insurance company or companies licensed to do business in the state in which the Project is located and domiciled in the United States or a governmental agency or instrumentality approved by Lender. The policies for such insurance shall have attached thereto standard mortgagee clauses in favor of and permitting Lender to collect any and all proceeds payable thereunder and shall include a 30 day (except for nonpayment of premium, in which case, a 10 day) notice of cancellation clause in favor of Lender. All policies or certificates of insurance shall be delivered to and held by Lender as further security for the payment of the Note and any other obligations arising under the Loan Documents, with evidence of renewal coverage delivered to Lender at least 30 days before the expiration date of any policy.
7.4 Furnishing Information .
(a) Borrower shall promptly supply Lender with such information concerning its assets, liabilities and affairs, and the assets, liabilities and affairs of Guarantors, as Lender may reasonably request from time to time hereafter; which shall include:
(i) Without necessity of any request by Lender, as soon as available and in no event later than 120 days after the end of each fiscal year, annual financial statements of Borrower showing the results of operations of the Project and consisting of a balance sheet, statement of income and expense and statement of cash flows, prepared in accordance with GAAP, and certified by an officer of Borrower.
(ii) Until such time as subparagraph (iii) below becomes effective, without necessity of any request by Lender, as soon as available and in no event later than 30 days after the end of each calendar month, financial statements of Operator showing the results of operations of the Facility and consisting of a balance sheet, statement of income and expense and statement of payor mix, prepared in accordance with GAAP, and certified by an officer of Operator.
(iii) Effective for the first fiscal quarter as of which the ratio calculated under Sections 7.14 of this Agreement has been not less that 1.50 to 1.0 for two consecutive fiscal quarters, and for each fiscal quarter thereafter, without necessity of any request by Lender, as soon as available and in no event later than 45 days after the end of each fiscal quarter, financial statements of Operator showing the results of operations of the Facility and consisting of a balance sheet, statement of income and expense and statement of payor mix, prepared in accordance with GAAP, and certified by an officer of Operator.
(iv) Without necessity of any request by Lender, as soon as available and in no event later than 120 days after the end of each fiscal year, annual financial statements of Operator showing the results of operations of the Facility and consisting of a balance sheet, statement of income and expense, statement of cash flows and statement of payor mix, prepared in accordance with GAAP, and certified by an officer of Operator, and accompanied by a review report of a firm of independent certified public accountants acceptable to Lender.
(iv) Without necessity of any request by Lender, as soon as available and in no event later than 120 days after the end of each fiscal year, annual financial statements of AdCare, consisting of a balance sheet, statement of income and expense and statement of cash flows, prepared in accordance with GAAP, and certified by an officer of AdCAre, and accompanied by an audit report of a firm of independent certified public accountants acceptable to Lender.
(v) Without necessity of any request by Lender, not later than 45 days after the end of each fiscal quarter, a duly completed compliance certificate, dated as of the date of submission and certified as true and correct by appropriate officers of Borrower and Operator, containing a computation of each of the financial covenants set forth in Sections 7.14, 7.15, 7.16 and 7.17 hereof, and stating that Borrower has not become aware of any Default or Event of Default under this Agreement or any of the other Loan Documents that has occurred and is continuing or, if there is any such Default or Event of Default describing it and the steps, if any, being taken to cure it.
(b) Borrower shall promptly notify Lender of any condition or event which constitutes a Default or Event of Default under this Agreement or any of the other Loan Documents, and of any material adverse change in the financial condition of Borrower or any Guarantor.
(c) It is a condition of this Agreement and the Loan that Borrower and Operator shall each maintain a standard and modern system of accounting in accordance with GAAP consistently applied.
(d) It is a condition of this Agreement and the Loan that Borrower and Operator shall each permit Lender or any of its agents or representatives to have access to and to examine all books and records regarding the Project and the Facility at any time or times hereafter upon reasonable prior notice during business hours.
(e) It is a condition of this Agreement and the Loan that Borrower and Operator shall each permit Lender to copy and make abstracts from any and all of said books and records.
7.5 Excess Indebtedness . Borrower agrees to pay to Lender on demand the amount by which the indebtedness hereunder, at any time, may exceed the Loan Amount.
7.6 Certain Title Related Matters .
(a) Borrower shall comply with all recorded or other covenants affecting the Project, including, without limitation, the Declarations. Borrower shall not record or permit to be
recorded any document, instrument, agreement or other writing against the Land other than Permitted Exceptions.
(b) Borrower shall at all times duly perform and observe all of the terms, provisions, conditions and agreements on its part to be performed and observed under the Declarations, and shall not suffer or permit any Default or Event or Default on the part of Borrower to exist thereunder, and shall not agree or consent to, or suffer or permit, any modification, amendment or termination thereof without the prior written consent of Lender. Borrower shall promptly furnish to Lender copies of all notices of default and other material documents and communications sent or received by Borrower under or relating to any Declaration.
(c) Borrower shall cause the Project to be taxed as one or more separate tax parcels which do not include any property other than the Project.
(d) Borrower shall ensure that under applicable law, the Project may be encumbered, conveyed and otherwise dealt with as a separate legal parcel.
7.7 Compliance with Laws; Environmental Matters . Each of the following is a condition of this Agreement and the Loan:
(a) Borrower and Operator shall comply, in all respects, including the conduct of their business and operations and the use of their properties and assets, with all applicable laws, rules, regulations, decrees, orders, judgments, licenses and permits, including without limitation, Environmental Laws, Titles XVIII and XIX of the Social Security Act, Medicare Regulations, Medicaid Regulations, and all laws, rules and regulations of any governmental authorities pertaining to the licensing of professional and other health care providers.
(b) With the exception of Permitted Substances, the Project will not be used, for any activities which, directly or indirectly, involve the use, generation, treatment, storage, transportation or disposal of any Hazardous Substances, and no Hazardous Substances will exist on the Project or under the Project or in any surface waters or groundwaters on or under the Project. The Project and its existing and future uses will comply with all Environmental Laws, and Borrower and Operator will not violate any Environmental Laws.
7.8 ERISA Liabilities; Employee Plans . It is a condition of this Agreement and the Loan that Borrower and Operator shall (i) keep in full force and effect any and all Employee Plans which are presently in existence or may, from time to time, come into existence under ERISA, and not withdraw from any such Employee Plans, unless such withdrawal can be effected or such Employee Plans can be terminated without liability to Borrower or Operator; (ii) make contributions to all of such Employee Plans in a timely manner and in a sufficient amount to comply with the standards of ERISA, including the minimum funding standards of ERISA; (iii) comply with all material requirements of ERISA which relate to such Employee Plans; (iv) notify Lender immediately upon receipt by Borrower or Operator of any notice concerning the imposition of any withdrawal liability or of the institution of any proceeding or other action which may result in the termination of any such Employee Plans or the appointment of a trustee
to administer such Employee Plans; (v) promptly advise Lender of the occurrence of any Reportable Event or Prohibited Transaction (as such terms are defined in ERISA), with respect to any such Employee Plans; and (vi) amend any Employee Plan that is intended to be qualified within the meaning of Section 401 of the Internal Revenue Code of 1986 to the extent necessary to keep the Employee Plan qualified, and to cause the Employee Plan to be administered and operated in a manner that does not cause the Employee Plan to lose its qualified status.
7.9 Licensure; Notices of Agency Actions . The following are conditions of this Agreement and the Loan:
(a) Subject to the provisions of paragraph (b) of this Section, Operator shall be fully qualified by all necessary permits, licenses, certifications, accreditations and qualifications and shall be in compliance with all annual filing requirements of all regulatory authorities.
(b) The State of Georgia licenses for the operation of the Facility and the Medicare and Medicaid certifications for the Facility are currently held by Old Operator. It is a condition of this Agreement and the Loan that within a period of 90 days after the date of this Agreement, Operator shall have obtained a State of Georgia license for the Facility in the name of Operator, and that within a period of 180 days after the date of this Agreement, Operator shall have obtained Medicare and Medicaid certifications for the Facility. Pending the receipt of such license and Medicare and Medicaid certifications by Operator, (i) Old Operator shall retain the existing license and Medicare and Medicaid certifications for the Facility, and (ii) Operator shall operate the Facility under the license and Medicare and Medicaid certifications of Old Operator under the Operations Transfer Agreement. Upon the issuance of the license and Medicare and Medicaid certifications to Operator, the arrangements described above under the Operations Transfer Agreement shall terminate and Operator shall thereafter operate the Facility under its own license and Medicare and Medicaid certifications.
(c) Borrower and Operator shall within five days after receipt, furnish to Lender copies of all adverse notices from any licensing, certifying, regulatory, reimbursing or other agency which has jurisdiction over the Project or the Facility or over any license, permit or approval under which the Project or the Facility operates, and if Borrower or Operator becomes aware that any such notice is to be forthcoming before receipt thereof, it shall promptly inform Lender thereof.
7.10 Project and Facility Accounts and Revenues .
(a) It is a condition of this Agreement and the Loan that Borrower and Operator shall each set up and maintain all of their respective operating accounts and other accounts related to the Project and the Facility with Lender, shall deposit all of their respective income and receipts promptly upon receipt in such accounts, and shall maintain all of their respective cash and investments on deposit in deposit accounts with Lender.
(b) Borrower shall deposit all Gross Revenues promptly upon receipt thereof, into a bank account or accounts maintained by Borrower with Lender. 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, Borrower hereby pledges and assigns to Lender, and grants to Lender a first lien on and a first priority security interest in, the Gross Revenues, all of Borrowers present and future Accounts (as defined in the Code), and the proceeds of all of the foregoing.
7.11 Single-Asset Entity; Indebtedness; Distributions .
(a) Borrower shall not at any time own any asset or property other than the Project and property related thereto, and shall not at any time engage in any business other than the ownership, development, construction, leasing and operation of the Project. The articles of organization and operating agreement of Borrower shall not be modified or amended, nor shall any member of Borrower be released or discharged from its, his or her obligations under the operating agreement of Borrower.
(b) Borrower shall not at any time have outstanding any indebtedness or obligations, secured or unsecured, direct or indirect, absolute or contingent, including any guaranty, other than the following: (i) obligations to Lender; (ii) obligations under interest rate protection agreements to which Lender is a party; (iii) obligations, other than borrowings, incurred in the ordinary course of the ownership and operation of the Project; and (iv) obligations under the Lease.
(c) Borrower shall not at any time make any Distribution in violation of any of the following provisions:
(i) Borrower shall not, directly or indirectly, at any time make any Distribution if any Default or Event of Default has occurred and is continuing under this Agreement or any of the other Loan Documents.
(ii) Borrower shall not, directly or indirectly, at any time make any Distribution that would cause Borrowers cash and cash equivalents remaining after such Distribution to be less than an amount equal to the aggregate of (i) the total amount of the security and other deposits received by Borrower from tenants of the Project, (ii) the total amount of accrued but unpaid real estate taxes on the Project, based on the last full year tax bill or bills received by Borrower, minus any amount held in a real estate tax escrow by Lender, and (iii) a reasonable working capital reserve.
(iii) Borrower shall not, directly or indirectly, at any time make any Distribution prior time that Operator has achieved a debt service coverage ratio calculated in accordance with Section 7.14 of this Agreement for two consecutive fiscal quarters ending on or after September 30, 2012, and Borrower has delivered to Lender financial statements and compliance certificates as required by Section 7.4 of this Agreement demonstrating that such ratios have been achieved.
(iv) After the condition set forth in subparagraph (iii) above has been satisfied, Borrower shall not, directly or indirectly, at any time make any Distribution unless the
Fixed Charge Coverage Ratio (as defined below) for the Test Period (as defined below) was not less than 1.05 to 1.00. For such purpose, the term Test Period shall mean (A) until the Loan has been outstanding for 12 full calendar months, the period commencing on the date of this Agreement and ending on the last day of the fiscal quarter immediately preceding the date of a Distribution, and (B) thereafter, the 12-month period ending on the last day of the fiscal quarter immediately preceding the date of a Distribution.
For purposes of this paragraph, the term Fixed Charge Coverage Ratio shall mean, for any period, the ratio of
(i) the amount of EBITDAR for Operator for such quarter, to
(ii) the sum of the amounts of the following for Operator for such period: (A) Debt Service, plus (B) Rental Expense, plus (C) Distributions, other than any amounts which were treated as an expense for accounting purposes.
Notwithstanding the definition of the term Net Income in Section 1.1 of this Agreement, the Net Income for Operator used in calculating EBITDAR of Operator for the purpose of this paragraph for any period, shall be computed by taking into account an annual capital expenditures reserve allowance of $350 per licensed bed in the Facility. For the avoidance of doubt, unlike Section 7.14 hereof, the Net Income for Operator used in calculating EBITDAR of Operator for the purpose of this paragraph for any period shall be computed by taking into account Operators actual management fees for such period only and not taking into account any imputed management fees.
7.12 Restrictions on Transfer .
(a) Borrower shall not effect, suffer or permit any Prohibited Transfer. Any conveyance, sale, assignment, transfer, lien, pledge, mortgage, security interest or other encumbrance or alienation (or any agreement to do any of the foregoing) of any of the following properties or interests shall constitute a Prohibited Transfer :
(i) The Project or any part thereof or interest therein, excepting only sales or other dispositions of collateral for the Loan no longer useful in connection with the operation of the Project, provided that prior to the sale or other disposition thereof, such collateral has been replaced by collateral of at least equal value and utility and which is subject to the lien of the Deed to Secure Debt with the same priority as with respect to the original collateral;
(ii) Any shares of capital stock of a corporate Borrower, or a corporation which is a direct or indirect owner of an ownership interest in Borrower (other than the shares of capital stock of a corporate trustee or a corporation whose stock is publicly traded on a national securities exchange or on the National Association of Securities Dealers Automated Quotation System);
(iii) All or any part of the membership interests in a limited liability company Borrower, or a limited liability company which is a direct or indirect owner of an ownership interest in Borrower;
(iv) All or any part of the general partner or the limited partner interest, as the case may be, of a partnership or limited partnership Borrower, or a partnership or limited partnership which is a direct or indirect owner of an ownership interest in Borrower;
(v) If there shall be any change in Control (by way of transfers of stock, partnership or member interests or otherwise) in any partner, member, manager or shareholder, as applicable, which directly or indirectly Controls the day to day operations and management of Borrower or any Guarantor that is not a natural person and/or owns a Controlling interest in Borrower or any such Guarantor; provided, however, that this subparagraph shall not apply to AdCare; or
(vi) If any Guarantor who is a natural person shall die or be declared a legal incompetent;
in each case whether any such conveyance, sale, assignment, transfer, lien, pledge, mortgage, security interest, encumbrance or alienation is effected directly, indirectly (including the nominee agreement), voluntarily or involuntarily, by operation of law or otherwise; provided, however, that the foregoing provisions of this Section shall not apply to (i) liens securing obligations to Lender, (ii) the lien of current taxes and assessments not in default, (iii) any transfers of the Project, or part thereof, or interest therein, or any shares of stock or partnership or limited liability company interests, as the case may be, by or on behalf of an owner thereof who is deceased or declared judicially incompetent, to such owners heirs, legatees, devisees, executors, administrators, estate or personal representatives, (iv) the Lease, or (v) Permitted Exceptions.
(b) In determining whether or not to make the Loan, Lender evaluated the background and experience of Borrower and its members in owning and operating property such as the Project, found it acceptable and relied and continues to rely upon same as the means of maintainin g the value of the Project. Borrower and its members are well experienced in borrowing money and owning and operating property such as the Project, were ably represented by a licensed attorney at law in the negotiation and documentation of the Loan and bargained at arms length and without duress of any kind for all of the terms and conditions of the Loan, including this provision. Borrower recognizes that Lender is entitled to keep its loan portfolio at current interest rates by either making new loans at such rates or collecting assumption fees and/or increasing the interest rate on a loan, the security for which is purchased by a party other than the original Borrower. Borrower further recognizes that any further junior financing placed upon the Project (a) may divert funds which would otherwise be used to pay the Note; (b) could result in acceleration and foreclosure by any such junior encumbrancer which would force Lender to take measures and incur expenses to protect its security; (c) would detract from the value of the Project should Lender come into possession thereof with the intention of selling same; and (d) would impair Lenders right to accept a deed in lieu of foreclosure, as a foreclosure by Lender would be necessary to clear the title to the Project. In accordance with the foregoing and for the purposes of (i) protecting Lenders security, both of repayment and of
value of the Project; (ii) giving Lender the full benefit of its bargain and contract with Borrower; (iii) allowing Lender to raise the interest rate and collect assumption fees; and (iv) keeping the Project free of subordinate financing liens, Borrower agrees that if this Section is deemed a restraint on alienation, that it is a reasonable one.
7.13 Leasing, Operation and Management of Project .
(a) The Project shall at all times be owned by Borrower and leased to Operator under the Lease (with the result that Borrower shall not operate the Facility). Borrower shall not agree or consent to or suffer or permit any modification, amendment or termination of the Lease, and shall not suffer or permit any Event of Default on the part of Borrower to exist at any time under the Lease.
(b) It is a condition of this Agreement and the Loan that the Facility shall at all times be operated as a skilled nursing facility under the management of Operator.
7.14 Operator Debt Service Coverage Ratio . It is a condition of this Agreement and the Loan that for each fiscal quarter commencing with the fiscal quarter ending September 30, 2012, the ratio of
(i) the amount of EBITDAR for Operator for such quarter, to
(ii) the total amount of Debt Service for Operator for such quarter,
shall be not less than (A) -1.25 (negative) to 1.00 in the case of the quarter ending September 30, 2012, (B) 1.35 to 1.00 in the case of the quarter ending December 31, 2012, and (C) 1.50 to 1.00 in the case of the quarter ending March 31, 2013, and each quarter thereafter. For the avoidance of doubt, the ratio in clause (A) above is a negative ratio and the ratios in clauses (B) and (C) above are positive ratios. Notwithstanding the definition of the term Net Income in Section 1.1 of this Agreement, the Net Income for Operator used in calculating EBITDAR of Operator for the purpose of this Section for any period, shall be computed by taking into account (i) management fees equal to the greater of Operators actual management fees for such period or imputed management fees equal to 5% of Operators gross income for such period as determined in accordance with GAAP, and (ii) an annual capital expenditures reserve allowance of $350 per licensed bed in the Facility.
7.15 Borrower Coverage of Debt Service . It is a condition of this Agreement and the Loan that for each fiscal year commencing with the fiscal year ending December 31, 2012, the ratio of
(i) the amount of EBITDA for Borrower for such year, to
(ii) the total amount of Debt Service for Borrower for such year,
shall be not less than 1.10 to 1.00.
7.16 AdCare Debt Service Coverage Ratio . It is a condition of this Agreement and the Loan that for each fiscal year commencing with the fiscal year ending December 31, 2012, the ratio of
(i) the amount of EBITDAR for AdCare for such year, to
(ii) the sum of the amounts of the following for AdCare for such year: (A) Debt Service, plus (B) Rental Expense,
shall be not less than 1.00 to 1.00. Notwithstanding the foregoing provisions of this Section, if such ratio for any fiscal year is less than 1.00 to 1.00, the condition in this Section shall nevertheless be deemed to be satisfied if the amount of unencumbered, unrestricted cash shown as an asset in AdCares audited financial statements as at the end of such fiscal year is not less than an amount equal to the sum of (i) $2,000,000, plus (ii) the total additional amount of EBITDAR for AdCare that would have been necessary in order for such ratio to have been not less than 1.00 to 1.00 for such fiscal year and for all prior fiscal years ending after on and after December 31, 2012 (the Cumulative Shortfall ); provided, however, that the foregoing provisions of this sentence shall not apply if the Cumulative Shortfall is more than $3,000,000.
7.17 AdCare Leverage Ratio . It is a condition of this Agreement and the Loan that for each fiscal year commencing with the fiscal year ending December 31, 2012, the ratio of
(i) the total amount of long term senior secured indebtedness of AdCare, including the current portion thereof, each as determined in accordance with GAAP, outstanding on the last day of such year, to
(ii) the amount of EBITDA for AdCare for such year,
shall be not more than 11.00 to 1.00.
7.18 Concerning Operator .
(a) It is a condition of this Agreement and the Loan that Operator shall not at any time own any asset or property other than the assets of the Facility and property related thereto, and shall not at any time engage in any business other than the operation of the Facility.
(b) It is a condition of this Agreement and the Loan that Operator shall not at any time have outstanding any indebtedness or obligations, secured or unsecured, direct or indirect, absolute or contingent, including any guaranty, other than the following: (i) obligations to Lender; (ii) obligations under interest rate protection agreements to which Lender is a party; (iii) obligations, other than borrowings, incurred in the ordinary course of the ownership and operation of the Facility; (iv) obligations under the Lease; and (v) obligations under the Operations Transfer Agreement.
(c) It is a condition of this Agreement and the Loan that with the exception of security interests granted to secure any future financing which Lender may provide to Operator, all of Operators property and assets shall at all times be free and clear of all liens, encumbrances and security interests.
7.19 Capital Expenditures Reserve Account . Borrower shall establish and maintain a capital expenditures reserve account held by Lender (the Capital Expenditures Reserve Account ). The Capital Expenditures Reserve 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 as security for 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 Capital Expenditures Reserve Account, all cash and investments from time to time on deposit in the Capital Expenditures Reserve Account, and all proceeds of all of the foregoing. Commencing on August 1, 2012, Borrower shall make a deposit in the Capital Expenditures Reserve Account on the first day of each month in the amount of $4,666. Lender shall disburse amounts on deposit in the Capital Expenditures Reserve Account from time to time at the written request of Borrower for the purpose of paying or reimbursing the cost of capital expenditures made by Borrower for the Project upon submission of invoices or receipts for such capital expenditures, provided that in the case of each disbursement that no Default or Event of Default under this Agreement or any of the other Loan Documents or under any of the Operator Loan Documents has occurred and is continuing. Amounts on deposit in the Capital Expenditures Reserve Account may be invested at the written request of Borrower in certificates of deposit issued by Lender. Provided that no Default or Event of Default under this Agreement or any of the other Loan Documents or any of the Operator Loan Documents has occurred and is continuing, interest earned on amounts on deposit in the Capital Expenditures Reserve Account shall be released by Lender to Borrower at its written request. Except as provided above in this Section, all amounts on deposit in the Capital Expenditures Reserve Account shall be released by Lender to Borrower at such time, and only 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, the other Loan Documents and the Operator Loan Documents have been fully paid and performed..
7.20 Security Interest Matters . This Agreement is intended to be a security agreement under the Code for the purpose of creating the security interests provided for herein. Borrower shall execute and deliver such additional security agreements and other documents as Lender shall from time to time request in order to create and perfect such security interests. Borrower shall keep all collateral in which security interests are created under this Agreement free and clear of all other liens, security interests and encumbrances.
7.21 Further Assurance . Borrower, on request of Lender, from time to time, shall execute and deliver such documents as may be necessary to perfect and maintain perfected as valid liens upon the Project and the personal property owned by Borrower located thereon the liens granted to Lender pursuant to this Agreement or any of the other Loan Documents, and to fully consummate the transactions contemplated by this Agreement.
ARTICLE 8
CASUALTIES AND CONDEMNATION
8.1 Application of Insurance Proceeds and Condemnation Awards . The proceeds of any insurance policies collected or claims as a result of any loss or damage to any portion of
the Project 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 the Project, as provided in the Deed to Secure Debt. Borrower shall not settle and adjust any claims under policies of insurance except as provided in the Deed to Secure Debt.
ARTICLE 9
ASSIGNMENTS, SALE AND ENCUMBRANCES
9.1 Lenders Right to Assign . Lender may assign, negotiate, pledge or otherwise hypothecate this Agreement or any of its rights and security hereunder, including the Note, the Deed to Secure Debt and the other Loan Documents, to any bank, participant, financial institution or other person or entity, and in case of such assignment, negotiation, pledge or other hypothecation, Borrower shall accord full recognition thereto and agrees that all rights and remedies of Lender in connection with the interest so assigned, negotiated, pledged or otherwise hypothecated shall be enforceable against Borrower by such bank, financial institution or other person or entity, with the same force and effect and to the same extent as the same would have been enforceable by Lender but for such assignment, negotiation, pledge or other hypothecation.
9.2 Prohibition of Assignments and Encumbrances by Borrower . Except as expressly permitted by this Agreement, Borrower shall not create, effect, consent to, attempt, contract for, agree to make, suffer or permit any Prohibited Transfer.
ARTICLE 10
EVENTS OF DEFAULT BY BORROWER
10.1 Event of Default Defined . The occurrence of any one or more of the following shall constitute an Event of Default under this Agreement, and any Event of Default which may occur hereunder shall constitute an Event of Default under each of the other Loan Documents:
(a) Borrower fails to pay (i) any installment of principal or interest payable pursuant to the Note on the date when due, or (ii) any other amount payable to Lender under the Note, this Agreement or any of the other Loan Documents when any such payment is due in accordance with the terms hereof or thereof;
(b) If there is any failure to perform, observe or satisfy any obligation, covenant, agreement, term, condition or provision contained in any of the following provisions of this Agreement: Section 7.9(a), 7.10, 7.11, 7.12, 7.13, 7.14, 7.15, 7.16, 7.17, 7.18, 7.19 or 7.20;
(c) If there is any failure to perform, observe or satisfy any obligation, covenant, agreement, term, condition or provision contained in this Agreement and not otherwise described in this Section; 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 Borrower;
(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 Borrower; 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 Borrower within such 30-day period and is diligently pursued and such failure is cured within 90 days after the occurrence of such failure;;
(d) The existence of any inaccuracy or untruth in any material respect in any representation or warranty contained in this Agreement or any of the other Loan Documents or of any statement or certification as to facts delivered to Lender by Borrower or Guarantors; provided, however, that
(i) If such inaccuracy or untruth 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 10 days after Borrower becomes aware of inaccuracy or untruth, whether by notice from Lender or otherwise;
(ii) If such inaccuracy or untruth 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 Borrower becomes aware of inaccuracy or untruth, whether by notice from Lender or otherwise; 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 Borrower within such 30-day period and is diligently pursued and such failure is cured within 120 days after Borrower becomes aware of such inaccuracy or untruth, whether by notice from Lender or otherwise;;
(e) The occurrence of a Prohibited Transfer;
(f) The existence of any collusion, fraud, dishonesty or bad faith by or with the acquiescence of Borrower or any Guarantor which in any way relates to or affects the Loan, the Project or the Facility;
(g) The occurrence of a material adverse change in the financial condition of Borrower, Operator or any Guarantor;
(h) Borrower or any Guarantor (i) files a voluntary petition in bankruptcy or is adjudicated a bankrupt or insolvent or files any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future federal, state, or other statute or law, or (ii) seeks or consents to or acquiesces in the appointment of any trustee, receiver or similar officer of Borrower or any Guarantor or of all or any substantial part of the property of Borrower or any Guarantor or any portion of the Project or the Facility; or all or a substantial part of the assets of Borrower or any Guarantor are attached, seized, subjected to a writ or distress warrant or are levied upon unless the same is released or vacated within 30 days;
(i) The commencement of any involuntary petition in bankruptcy against Borrower or any Guarantor or the institution against Borrower or any Guarantor of any reorganization, arrangement, composition, readjustment, dissolution, liquidation or similar proceedings under any present or future federal, state or other statute or law, or the appointment of a receiver, trustee or similar officer for all or any substantial part of the property of Borrower or any Guarantor, which shall remain undismissed or undischarged for a period of 30 days;
(j) The entry against Borrower or any Guarantor of any final judgment for the payment of money in an amount in excess of $100,000 and such judgment shall not have been, within 30 days from the entry thereof, vacated, satisfied or appealed from and stayed pending appeal;
(k) The dissolution, termination or merger of Borrower or any Guarantor which is an entity, or the occurrence of the death or declaration of legal incompetency of any Guarantor who is a natural person;
(l) The validity or enforceability of this Agreement or any of the other Loan Documents shall be contested by Borrower, any Guarantor or any other party thereto (other than Lender), or Borrower, any Guarantor or any other party thereto (other than Lender) shall deny that it has any or further liability or obligation hereunder or thereunder;
(m) The occurrence of an Event of Default under the Note or any of the other Loan Documents, including, without limitation, any Bank Product Agreement to which Lender or any of its Affiliates is a party, including, without limitation, any Hedging Agreement to which Lender is a party, or any Event of Default or other similar condition or event (however described) shall occur and be continuing with respect to any Bank Product Obligation, including, without limitation, any Hedging Transaction, to which Lender or any of its Affiliates is a party;
(n) The occurrence of an Event of Default on the part of Operator under the Operations Transfer Agreement;
(o) The occurrence of an Event of Default under any document or agreement evidencing or securing the Operator Loan, or any modification, amendment, restatement, increase, renewal, extension or refinancing of the Operator Loan; or
(p) The occurrence of any Event of Default under any document or agreement evidencing or securing any other obligation or indebtedness of Borrower or any Guarantor to Lender.
ARTICLE 11
LENDERS REMEDIES UPON EVENT OF DEFAULT
11.1 Remedies Conferred upon Lender . During the continuance of any Event of Default under this Agreement, Lender, in addition to all remedies conferred upon Lender by law and by the terms of the Note, the Deed to Secure Debt and the other Loan Documents, 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 others:
(a) Take possession of the Project and do anything required, necessary or advisable in Lenders sole judgment to fulfill the obligations of Borrower hereunder, including the rights to employ watchmen to protect the Project from injury. Without restricting the generality of the foregoing and for the purposes aforesaid, Borrower hereby appoints and constitutes Lender as Borrowers lawful attorney-in-fact with full power of substitution in the premises to perform the following actions:
(i) without inquiring into and without respect to the validity thereof, to pay, settle or compromise all existing bills and claims which may be liens, or to avoid such bills and claims becoming liens, against the Project or any portion of the Project or as may be necessary or desirable for the completion of the construction and equipping of the Project or for the clearance of title to the Project;
(ii) to prosecute and defend actions or proceedings in connection with the Project; and
(iii) to do any and every act which Borrower might do in its own behalf with respect to the Project, it being understood and agreed that this power of attorney shall be a power coupled with an interest and cannot be revoked;
(b) Withhold further disbursement of Loan Proceeds and terminate any of its obligations to Borrower;
(c) Declare the Note to be due and payable forthwith, without presentment, demand, protest or other notice of any kind, all of which Borrower hereby expressly waives;
(d) In addition to any rights of setoff that Lender may have under applicable law, without notice of any kind to Borrower, appropriate and apply to the payment of the Note or of any sums due under this Agreement any and all balances, deposits, credits, accounts, certificates of deposit, instruments or money of Borrower then or thereafter in the possession of Lender; and
(e) Exercise or pursue any other remedy or cause of action permitted at law or in equity or under this Agreement or any other Loan Document, including, but not limited to, foreclosure of the Deed to Secure Debt and enforcement of all Loan Documents.
11.2 Right of Lender to Make Advances to Cure Event of Defaults; Obligatory Advances . If Borrower shall fail to perform any of its covenants or agreements herein or in any of the other Loan Documents contained, Lender may (but shall not be required to) perform any of such covenants and agreements, and any amounts expended by Lender in so doing, and any amounts expended by Lender pursuant to Section 11.1 hereof and any amounts advanced by Lender pursuant to this Agreement shall be deemed advanced by Lender under an obligation to do so regardless of the identity of the person or persons to whom said funds are disbursed. Loan Proceeds advanced by Lender to complete any work at the Project or to protect its security for the Loan are obligatory advances hereunder and shall constitute additional indebtedness payable on demand and evidenced and secured by the Loan Documents.
11.3 Attorneys Fees . Borrower shall pay Lenders reasonable attorneys fees and costs in connection with the negotiation, preparation and administration of this Agreement and shall pay Lenders reasonable attorneys fees and costs in connection with the administration and enforcement of this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, if at any time or times hereafter Lender employs counsel for advice or other representation with respect to any matter concerning Borrower, this Agreement, the Project or the Loan Documents or if Lender employs one or more counsel to protect, collect, lease, sell, take possession of, or liquidate any portion of the Project, or to attempt to enforce or protect any security interest or lien or other right in any portion of the Project or under any of the Loan Documents, or to enforce any rights of Lender or obligations of Borrower or any other person, firm or corporation which may be obligated to Lender by virtue of this Agreement or under any of the Loan Documents or any other agreement, instrument or document, heretofore or hereafter delivered to Lender in furtherance hereof, then in any such event, all of the attorneys fees arising from such services and actually incurred, and any expenses, costs and charges relating thereto and actually incurred, shall constitute an additional indebtedness owing by Borrower to Lender payable on demand and evidenced and secured by the Loan Documents.
11.4 No Waiver . No failure by Lender to exercise, 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 of any right, power or privilege hereunder preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. The rights and remedies provided in this Agreement and in the Loan Documents are cumulative and not exclusive of each other or of any right or remedy provided at law or in equity. No notice to or demand on Borrower in any case, in itself, shall entitle Borrower to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of Lender to any other or further action in any circumstances without notice or demand.
11.5 Default Rate . During the continuance of any Event of Default under this Agreement or any of the other Loan Documents, interest on funds outstanding hereunder shall accrue at the Default Rate and be payable on demand. The failure of Lender to charge interest at the Default Rate shall not be evidence of the absence of an Event of Default or waiver of an Event of Default by Lender.
ARTICLE 12
MISCELLANEOUS
12.1 Time is of the Essence . Borrower agrees that time is of the essence in all of its covenants under this Agreement.
12.2 Concerning the Operator Loan Documents .
(a) This Agreement, the Deed to Secure Debt and the other Loan Documents and the undertakings of Borrower hereunder and thereunder and the security interests, mortgage, assignments and other liens created hereby and thereby as security for the Operator Loan and the Operator Loan Documents shall be continuing and shall be binding upon Borrower, the Project and the other collateral described herein and therein, and shall remain in full force and effect, and shall not be discharged, impaired or affected by (i) the power or authority of Operator to issue or to execute, acknowledge or deliver the Operator Loan Documents; (ii) the existence or continuance of any obligation on the part of Operator on or with respect to the obligations under the Operator Loan Documents; (iii) the validity or invalidity of the obligations under the Operator Loan Documents; (iv) any defense, set-off or counterclaim whatsoever that Operator may or might have to the performance or observance of the obligations under the Operator Loan Documents or to the performance or observance of any of the terms, provisions, covenants and agreements contained in any of the Operator 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 Operator; (v) the existence or continuance of any Operator as a legal entity; (vi) the transfer by any Operator of all or any part of any property encumbered by the Operator 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 under the Operator Loan Documents or of any of the Operator Loan Documents, all of which Lender is hereby expressly authorized to make from time to time without notice to Borrowers, or to anyone; (viii) the acceptance by Lender of the primary or secondary obligation of any party with respect to, or any security for, or any guarantors upon, all or any part of the obligations under the Operator Loan Documents; or (ix) any failure, neglect or omission on the part of Lender to realize or protect any of the obligations under the Operator Loan Documents or any collateral or appropriation of any moneys, credits or property of Operator toward the liquidation of the obligations under the Operator Loan Documents or by any application of any moneys received by Lender under the Operator Loan Documents. The obligations of Borrowers under this Agreement, the Deed to Secure Debt and the other Loan Documents and the and the undertakings of Borrowers hereunder and thereunder and the security interests, mortgage, assignments and other liens on the Projects and other collateral created hereby and thereby as
security for the Operator Loan and the Operator Loan Documents shall not be affected, discharged, impaired or varied by any act, omission or circumstance whatsoever, whether or not specifically enumerated above, except the due and punctual payment and performance of all of the obligations hereby and thereby secured and then, in each case, only to the extent thereof.
(b) Lender shall have the right to enforce this Agreement, the Deed to Secure Debt and the other Loan Documents for and to the full extent of the amounts hereby and thereby secured for the Operator Loan and the Operator Loan Documents, whether or not other proceedings or steps are pending or have been taken or have been concluded to enforce or otherwise realize upon the obligations of Operator under the Operator Loan Documents. The enforcement of this Agreement, the Deed to Secure Debt and the other Loan Documents against the Projects or other collateral for the collection of the obligations of Operator under the Operator Loan Documents hereby and thereby secured shall not in any way entitle Borrowers, either at law, or in equity or otherwise, to any right, title or interest in and to the Operator Loan Documents or any of the other obligations hereby or thereby secured, or in and to any security therefor, or to any right of recovery against Operator, in each case whether by way of indemnity, reimbursement, contribution, subrogation or otherwise.
(c) Without limitation on the foregoing provisions of this Section, if and to the extent that Borrower is deemed to be a surety by reason of providing collateral for the Operator Loan as provided in this Agreement, Borrower waives any and all rights under the Illinois Sureties Act. Also without limitation on the foregoing provisions of this Section, if and to the extent that Borrower is deemed to be a guarantor of the Operator Loan by reason of providing collateral for the Operator Loan as provided in this Agreement, Borrower also waives any and all rights under O.C.G.A. Section 10-7-24 et seq. (if such Sections were to be held by a court to be applicable to this Agreement or any of the other Loan Documents despite the choice of Illinois law in Section 12.13 of this Agreement and in other Loan Documents).
12.3 Lenders Determination of Facts; Lender Approvals and Consents .
(a) Lender at all times shall be free to establish independently to its satisfaction and in its sole and absolute discretion the existence or nonexistence of any fact or facts, the existence or nonexistence of which is a condition of this Agreement.
(b) Wherever in this Agreement or any of the other Loan Documents provision is made for the approval or consent of Lender or counsel to Lender, or that any matter is to be to the satisfaction of or as required by Lender or counsel to Lender, or that any matter is to be as estimated or determined by Lender, or the like, unless specifically stated to the contrary, such approval, consent, satisfaction, requirement, estimate or determination or the like shall be in the sole and absolute discretion of Lender or counsel to Lender, as the case may be.
(c) Notwithstanding any other provision of this Agreement or the other Loan Documents, wherever in this Agreement or any of the other Loan Documents provision is made for the approval or consent of Lender with respect to a matter, if Lender elects to grant such approval or consent, it shall not be unreasonable for Lender to make such approval or consent subject to the condition that such matter must also be approved or consented to in writing by any
one of more of Guarantors, any other guarantors of the Loan, and any parties other than Borrower that have provided collateral for the Loan.
12.4 Prior Agreements; No Reliance; Modifications . This Agreement and the other Loan Documents, and any other documents or instruments executed pursuant thereto or contemplated thereby, shall represent the entire, integrated agreement between the parties hereto with respect to the subject matter of this Agreement, and shall supersede all prior negotiations, representations or agreements pertaining thereto, either oral or written. Borrower acknowledges that it is executing this Agreement without relying on any statements, representations or warranties, either oral or written, that are not expressly set forth herein. This Agreement 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 Agreement.
12.5 Disclaimer by Lender . Borrower is not or shall not be an agent of Lender for any purposes, and Lender is not a venture partner with Borrower in any manner whatsoever. Approvals granted by Lender for any matters covered under this Agreement shall be narrowly construed to cover only the parties and facts identified in any written approval or, if not in writing, such approvals shall be solely for the benefit of Borrower.
12.6 Loan Expenses; Indemnification . Borrower shall pay all Loan Expenses promptly upon demand therefor by Lender. To the fullest extent permitted by law, Borrower hereby agrees to protect, indemnify, defend and save harmless, Lender and its directors, officers, agents and employees from and against any and all liability, expense or damage of any kind or nature and from any suits, claims or demands, including legal fees and expenses on account of any matter or thing or action or failure to act by Lender, whether or not arising from a claim by a third party, and whether or not in litigation, arising out of this Agreement or in connection herewith, unless such suit, claim or damage is caused solely by any act, omission or willful malfeasance of Lender, its directors, officers, agents and authorized employees. This indemnity is not intended to excuse Lender from performing hereunder. This obligation on the part of Borrower shall survive the closing of the Loan, the repayment thereof and any cancellation of this Agreement. Borrower shall pay, and hold Lender harmless from, any and all claims of any brokers, finders or agents claiming a right to any fees in connection with arranging the financing contemplated hereby. Lender hereby represents and warrants that it has not employed a broker or other finder in connection with the Loan. Borrower hereby represents and warrants that no brokerage commissions or finders fees are to be paid in connection with the Loan.
12.7 Captions . The captions and headings of various Articles and Sections 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.
12.8 Inconsistent Terms and Partial Invalidity . In the event of any inconsistency among the terms hereof (including incorporated terms), or between such terms and the terms of any other Loan Document, Lender may elect which terms shall govern and prevail. If any provision of this Agreement, or any section, paragraph, sentence, clause, phrase or word, or the application thereof, in any circumstances, is adjudicated by a court of competent jurisdiction to be invalid, the validity of the remainder of this Agreement shall be construed as if such invalid part were never included herein.
12.9 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.
12.10 Notices . All notices and other communications provided for in this Agreement ( Notices ) shall be in writing. The Notice Addresses of the parties for purposes of this Agreement are as follows:
Borrower: |
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Glenvue H&R Property Holdings, LLC |
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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, Georgia 30305 |
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Attention: Boyd P. Gentry |
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With a copy to: |
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Holt Ney Zatcoff & Wasserman, LLP |
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100 Galleria Parkway, Suite 1800 |
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Atlanta, Georgia 30339 |
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Attention: Gregory P. Youra |
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Lender: |
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The PrivateBank and Trust Company |
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120 South LaSalle Street |
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Chicago, Illinois 60603 |
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Attention: Amy K. Hallberg |
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With a copy to: |
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Seyfarth Shaw LLP |
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131 South Dearborn Street |
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Suite 2400 |
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Chicago, Illinois 60603 |
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Attention: Alvin L. Kruse |
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.
12.11 Effect of Agreement . The submission of this Agreement and the Loan Documents to Borrower for examination does not constitute a commitment or an offer by Lender to make a commitment to lend money to Borrower; this Agreement shall become effective only upon execution and delivery hereof by Lender to Borrower.
12.12 Construction . Each party to this Agreement and legal counsel to each party 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.
12.13 Governing Law . This Agreement has been negotiated, executed and delivered at Chicago, Illinois, and shall be construed and enforced in accordance with the laws of the State of Illinois.
12.14 Litigation Provisions .
(a) BORROWER CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS, AND OF ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PROJECT IS LOCATED, IN WHICH ANY LEGAL PROCEEDING MAY BE COMMENCED OR PENDING RELATING IN ANY MANNER TO THIS AGREEMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
(b) BORROWER AGREES THAT ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT AGAINST BORROWER IN ANY STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS, OR ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PROJECT IS LOCATED. BORROWER 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) BORROWER AGREES THAT IT WILL NOT COMMENCE ANY LEGAL PROCEEDING AGAINST LENDER RELATING IN ANY MANNER TO THIS AGREEMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS, OR IF A LEGAL PROCEEDING IS COMMENCED BY LENDER AGAINST BORROWER IN A COURT IN ANOTHER LOCATION, BY WAY OF A COUNTERCLAIM IN SUCH LEGAL PROCEEDING.
(d) BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
12.15 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 Agreement. Receipt of an executed signature page to this Agreement by facsimile or other electronic transmission shall constitute effective delivery thereof. Electronic records of executed Loan Documents maintained by Lender shall deemed to be originals thereof.
12.16 Customer Identification-USA Patriot Act Notice; OFAC and Bank Secrecy Act . Lender hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56, signed into law October 26, 2001) (the Act ), and Lenders policies and practices, Lender is required to obtain, verify and record certain information and documentation that identifies Borrower, which information includes the name and address of Borrower and such other information that will allow Lender to identify Borrower in accordance with the Act. In addition, Borrower shall (i) ensure that no person who owns a controlling interest in or otherwise controls Borrower or any subsidiary of Borrower is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control ( OFAC ), the Department of the Treasury, or included in any Executive Orders, (ii) not use or permit the use of Loan Proceeds to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, and (iii) comply, and cause any of its subsidiaries to comply, with all applicable Bank Secrecy Act laws and regulations, as amended.
[SIGNATURE PAGE(S) AND EXHIBIT(S),
IF ANY, FOLLOW THIS PAGE]
IN WITNESS WHEREOF , Borrower and Lender have caused this Agreement to be executed the day and year first above written.
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GLENVUE H&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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THE PRIVATEBANK AND TRUST COMPANY |
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By |
/s/ Amy K. Hallberg |
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Amy K. Hallberg, Managing Director |
- AdCare Glenvue H&R Property Holdings, LLC Owner Loan Agreement -
- Signature Page -
Exhibit 10.33
14590388
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(2) |
PROMISSORY NOTE
$6,600,000
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July 2, 2012 |
1. AGREEMENT TO PAY . For value received, GLENVUE H&R PROPERTY HOLDINGS, LLC , a Georgia limited liability company (the Borrower ), hereby promises to pay to the order of THE PRIVATEBANK AND TRUST COMPANY , an Illinois banking corporation (the Lender ), the principal sum of $6,600,000 (the Loan ), or so much of the Loan as may be advanced under and pursuant to that certain Loan Agreement dated as of even date herewith (the Loan Agreement ), executed by and between the Borrower and the Lender, on or before July 2, 2014 (the Maturity Date ), at the time and place and in the manner hereinafter provided, together with interest thereon at the rate or rates described below, and any and all other amounts which may be due and payable hereunder or under any of the Loan Documents (as defined in the Loan Agreement) from time to time. All capitalized terms used and not otherwise defined in this Note shall have the same meanings as in the Loan Agreement. Each disbursement on the Loan made by the Lender, and all payments on account of the principal and interest thereof, shall be recorded on the books and records of the Lender and the principal balance as shown on such books and records, or any copy thereof certified by an officer of the Lender, shall be rebuttably presumptive evidence of the principal amount owing hereunder.
2. INTEREST RATE .
2.1 Interest Prior to Default .
(a) Certain Defined Terms . In addition to the terms defined in paragraphs (b) and (c) of this Section and elsewhere in this Note, for purposes of this Note, the following terms shall have and be subject to the following respective meanings and provisions:
Applicable Margin means 4.00%.
Business Day means any day other than a Saturday, Sunday or a legal holiday on which banks are authorized or required to be closed for the conduct of commercial banking business in Chicago, Illinois.
Floating Rate means a floating per annum rate of interest equal to the greater of (i) the Prime Rate, or (ii) 6.00%. Changes in the Floating Rate to be charged hereunder based on the Prime Rate shall take effect immediately upon the occurrence of any change in the Prime Rate.
LIBOR Loan means any portion of the principal balance of this Note at any time bearing interest at the LIBOR Rate.
LIBOR Loan Request means a written request by the Borrower which sets forth the amount and Interest Period for a LIBOR Loan.
Prime Loan means any portion of the principal amount of this Note bearing interest at the Floating Rate.
Prime Rate means the floating per annum rate of interest most recently announced by the Lender at Chicago, Illinois as its prime or base rate. A certificate made by an officer of the Lender stating the Prime Rate in effect on any given day, for the purposes hereof, shall be conclusive evidence of the Prime Rate in effect on such day. The Prime Rate is a base reference rate of interest adopted by the Lender as a general benchmark from which the Lender determines the floating interest rates chargeable on various loans to borrowers with varying degrees of creditworthiness and the Borrower acknowledges and agrees that the Lender has made no representations whatsoever that the Prime Rate is the interest rate actually offered by the Lender to borrowers of any particular creditworthiness.
(b) LIBOR Rate . Except as otherwise expressly provided in this Note, interest shall accrue on the principal balance of this Note through the Maturity Date at a rate of interest equal to the greater of (i) a per annum rate of interest (the LIBOR Rate ) equal to LIBOR (as defined in paragraph (c) below) for the relevant Interest Period (as defined in paragraph (c) below), plus the Applicable Margin, such LIBOR Rate to remain fixed for such Interest Period, or (ii) 6.00% per annum.
(c) Additional Provisions Relating to LIBOR Rate . The following provisions shall apply with respect to the LIBOR Rate:
(i) At the Loan Opening, the Borrower shall deliver to the Lender a single LIBOR Loan Request, which shall establish a single LIBOR Loan in an amount equal to the entire amount of proceeds disbursed on this Note at the Loan Opening, with an Interest Period of one month. At the time of each subsequent disbursement of proceeds disbursed on this Note, the Borrower shall deliver to the Lender a single LIBOR Loan Request, which shall establish a single LIBOR Loan in an amount equal to the entire amount of such disbursement, with an Interest Period of one month. If on the first day of any Interest Period more than one LIBOR Loan is outstanding, such multiple LIBOR Loans shall be combined into a single LIBOR Loan.
(ii) If pursuant to the LIBOR Loan Request, the initial Interest Period of any LIBOR Loan commences on any day other than the first Business Day of any month, then the initial Interest Period of such LIBOR Loan shall end on the first day of the following calendar month, notwithstanding the Interest Period specified in the LIBOR Loan Request, and the LIBOR Rate for such LIBOR Loan shall be a per annum rate of interest equal to the greater of (i) LIBOR for an interest period equal to the length of such partial month, plus the Applicable Margin, or (ii) 6.00%. Thereafter, each LIBOR Loan shall automatically renew (a LIBOR Rollover ) for the Interest Period specified in the LIBOR Loan Request at the then current LIBOR Rate, except that an Interest Period for a LIBOR Loan shall not automatically renew with respect to any principal amount which is
scheduled to be repaid before the last day of the applicable Interest Period, and any such amounts shall bear interest at the Floating Rate, until repaid.
(iii) LIBOR shall mean a rate of interest equal to (A) the per annum rate of interest at which United States dollar deposits in an amount comparable to the amount of the relevant LIBOR Loan and for a period equal to the relevant Interest Period are offered in the London Interbank Eurodollar market at 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period (or three Business Days prior to the commencement of such Interest Period if banks in London, England were not open and dealing in offshore United States dollars on such second preceding Business Day), as displayed in the Bloomberg Financial Markets system (or other authoritative source selected by the Lender in its sole discretion), divided by (B) a number determined by subtracting from 1.00 the then stated maximum reserve percentage for determining reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D), such rate to remain fixed for such Interest Period, or as LIBOR is otherwise determined by the Lender in its sole and absolute discretion. The Lenders determination of LIBOR shall be conclusive, absent manifest error.
(iv) Interest Period shall mean, with regard to any LIBOR Loan, successive one month periods; provided, however, that: (A) each Interest Period occurring after the initial Interest Period of any LIBOR Loan shall commence on the day on which the preceding Interest Period for such LIBOR Loan expires, with interest for such day to be calculated at the LIBOR Rate in effect for the new Interest Period; (B) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day; (C) whenever the first day of any Interest Period occurs on a date for which there is no numerically corresponding date in the month in which such Interest Period terminates, such Interest Period shall end on the last day of such month, unless such day is not a Business Day, in which case the Interest Period shall terminate on the first Business Day of the following month, provided, however, that so long as the LIBOR Rollover remains in effect, all subsequent Interest Periods shall terminate on the date of the month numerically corresponding to the date on which the initial Interest Period commenced; and (D) if at any time the Interest Period for a LIBOR Loan expires less than one month before the Maturity Date, such LIBOR Loan shall automatically renew at the then current LIBOR Rate for an Interest Period terminating on the Maturity Date.
(v) If the Lender determines in good faith (which determination shall be conclusive, absent manifest error) prior to the commencement of any Interest Period that (A) the making or maintenance of any LIBOR Loan would violate any applicable law, rule, regulation or directive, whether or not having the force of law, (B) United States dollar deposits in the principal amount, and for periods equal to the Interest Period, of any LIBOR Loan are not available in the London Interbank Eurodollar market in the ordinary course of business, (C) by reason of circumstances affecting the London Interbank Eurodollar market, adequate and fair means do not exist for ascertaining the LIBOR Rate to be applicable to the relevant LIBOR Loan, (D) the LIBOR Rate does not
accurately reflect the cost to the Lender of a LIBOR Loan, or (E) a Default or an Event of Default (each as defined in Section 5 hereof) has occurred and is continuing, the Lender shall promptly notify the Borrower thereof and, so long as any of the foregoing conditions continue, the Lender will have no obligation to permit any principal of this Note to become a LIBOR Loan. Following such a notice by the Lender, each existing LIBOR Loan, at the Borrowers option, shall be (1) converted to a Prime Loan on the last Business Day of the then existing Interest Period, or (2) due and payable on the last Business Day of the then existing Interest Period, without further demand, presentment, protest or notice of any kind, all of which are hereby waived by the Borrower.
(vi) If, after the date hereof, a Regulatory Change (as hereinafter defined) shall, in the reasonable determination of the Lender, make it unlawful for the Lender to make or maintain any LIBOR Loans, the Lender will have no obligation to permit any principal of this Note to become a LIBOR Loan, and in such event, at the Borrowers option, each existing LIBOR Loan shall be immediately (A) converted to a Prime Loan on the last Business Day of the then existing Interest Period or on such earlier date as required by law, or (B) due and payable on the last Business Day of the then existing Interest Period or on such earlier date as required by law, all without further demand, presentment, protest or notice of any kind, all of which are hereby waived by the Borrower. As used herein, Regulatory Change shall mean the introduction of, or any change in any applicable law, treaty, rule, regulation or guideline or in the interpretation or administration thereof by any governmental authority or any central bank or other fiscal, monetary or other authority having jurisdiction over the Lender or its lending office.
(vii) If any Regulatory Change (whether or not having the force of law) shall (A) impose, modify or deem applicable any assessment, reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of, or loans by, or any other acquisition of funds or disbursements by, the Lender; (B) subject the Lender or any LIBOR Loan to any tax, duty, charge, stamp tax or fee, or change the basis of taxation of payments to the Lender of principal or interest due from the Borrower hereunder (other than a change in the taxation of the overall net income of the Lender); or (C) impose on the Lender any other condition regarding any LIBOR Loan or the Lenders funding thereof, and the Lender shall determine (which determination shall be conclusive, absent manifest error) that the result of the foregoing is to actually increase the cost to the Lender of making or maintaining any LIBOR Loan or to reduce the amount of principal or interest received by the Lender hereunder on any LIBOR Loan, then the Borrower shall pay to the Lender, on demand, such additional amounts as the Lender shall from time to time determine are sufficient to compensate and indemnify the Lender for such increased costs or reduced amounts.
2.2 Interest After Default . From and after the Maturity Date or upon the occurrence and during the continuance of an Event of Default, interest shall accrue on the unpaid principal balance during any such period at an annual rate (the Default Rate ) 5.0% greater than the interest rate which would otherwise be in effect under the terms of this Note. However, in no event shall the Default Rate exceed the maximum rate permitted by law. The interest accruing
under this Section shall be immediately due and payable by the Borrower to the holder of this Note upon demand and shall be additional indebtedness evidenced by this Note.
2.3 Interest Calculation . Interest on this Note shall be calculated on the basis of a 360-day year and the actual number of days elapsed in any portion of a month in which interest is due. If any payment to be made by the Borrower hereunder shall become due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing any interest in respect of such payment.
3. PAYMENT TERMS .
3.1 Payment of Principal and Interest . Payments of principal and interest due under this Note, if not sooner declared to be due in accordance with the provisions hereof, shall be made as follows:
(a) On the first day of the month of August 1, 2012, and on the first day of each month thereafter through and including the month in which the Maturity Date occurs, interest accrued on this Note shall be due and payable.
(b) On the first day of the month of August 1, 2012, and on the first day of each month thereafter through and including the month in which the Maturity Date occurs, in addition to accrued interest on this Note payable as provided in paragraph (a) above, a payment of principal on this Note shall be due and payable in the amount of $10,092.
(c) The unpaid principal balance of this Note, if not sooner paid or declared to be due in accordance with the terms hereof, together with all accrued and unpaid interest thereon and any other amounts due and payable hereunder or under any of the Loan Documents shall be due and payable in full on the Maturity Date.
3.2 Application of Payments . Prior to the occurrence of an Event of Default, all payments and prepayments on account of the indebtedness evidenced by this Note shall be applied as follows: (a) first, to fees, expenses, costs and other similar amounts then due and payable to the Lender, including, without limitation any prepayment premium, exit fee or late charges due hereunder, (b) second, to accrued and unpaid interest on the principal balance of this Note, (c) third, to the payment of principal due in the month in which the payment or prepayment is made, (d) fourth, to any escrows, impounds or other amounts which may then be due and payable under the Loan Documents, (e) fifth, to any other amounts then due the Lender hereunder or under any of the Loan Documents, and (f) last, to the unpaid principal balance of this Note in the inverse order of maturity. Any prepayment on account of the indebtedness evidenced by this Note shall not extend or postpone the due date or reduce the amount of any subsequent monthly payment of principal and interest due hereunder. After an Event of Default has occurred and is continuing, payments may be applied by the Lender to amounts owed hereunder and under the Loan Documents in such order as the Lender shall determine, in its sole discretion.
3.3 Method of Payments . All payments of principal and interest hereunder shall be paid by automatic debit, wire transfer, check or in coin or currency which, at the time or times of payment, is the legal tender for public and private debts in the United States of America and shall be made at such place as the Lender or the legal holder or holders of this Note may from time to time appoint in the payment invoice or otherwise in writing, and in the absence of such appointment, then at the offices of the Lender at 120 South LaSalle Street, Chicago, Illinois 60603. Payment made by check shall be deemed paid on the date the Lender receives such check; provided, however, that if such check is subsequently returned to the Lender unpaid due to insufficient funds or otherwise, the payment shall not be deemed to have been made and shall continue to bear interest until collected. Notwithstanding the foregoing, the final payment due under this Note must be made by wire transfer or other immediately available funds. With the exception of interest which under the terms of the Loan Documents is to be paid from a disbursement of proceeds of the Loan, interest, principal payments and any fees and expenses owed the Lender from time to time will be deducted by the Lender automatically on the due date from an account of the Borrower with the Lender. The Borrower shall maintain sufficient funds in the account on the dates the Lender enters debits authorized by this Note. If there are insufficient funds in the account on the date the Lender enters any debit authorized by this Note, the debit will be reversed.
3.4 Late Charge . If any payment of interest or principal due hereunder is not made within five days after such payment is due in accordance with the terms hereof, then, in addition to the payment of the amount so due, the Borrower shall pay to the Lender a late charge of five cents for each whole dollar so overdue to defray part of the cost of collection and handling such late payment. The Borrower agrees that the damages to be sustained by the holder hereof for the detriment caused by any late payment are extremely difficult and impractical to ascertain, and that the amount of five cents for each one dollar due is a reasonable estimate of such damages, does not constitute interest, and is not a penalty.
3.5 Principal Prepayments . The principal of this Note may be prepaid, either in whole or in part, at any time and from time to time, provided that such prepayment is accompanied by payment to the Lender of all accrued and unpaid interest on this Note as of the date of such prepayment. If the principal of this Note is prepaid in whole from the proceeds of a loan which is insured, guaranteed or extended by any agency of the United States of America, no prepayment premium or penalty shall be payable in connection with such prepayment.
3.6 Loan Fees . In consideration of the Lenders agreement to make the Loan, the Borrower shall pay to the Lender a non-refundable fee in the amount of $26,400, which shall be due and payable in full as a condition precedent to any disbursement of proceeds under this Note.
4. SECURITY; LOAN DOCUMENTS . This Note is secured by the Loan Agreement, the Mortgage, the Assignment of Rents and the other Loan Documents. Reference is hereby made to the Loan Agreement, the Mortgage, the Assignment of Rents and the other Loan Documents (all of which are incorporated herein by reference as fully and with the same effect as if set forth herein at length) for a statement of the covenants and agreements contained therein, a statement of the rights, remedies, and security afforded thereby, and all matters therein contained. If any Operator Loan is extended by the Lender to the Operator, this Note and the
Loan will also be secured by all of the collateral provided to the Lender for the Operator Loan, and all of the collateral for this Note and the Loan will also secure the Operator Loan.
5. EVENTS OF DEFAULT . The occurrence of any one or more of the following events shall constitute an Event of Default under this Note:
(a) The failure by the Borrower to pay (i) any installment of principal or interest payable pursuant to this Note on the date when due, or (ii) any other amount payable to the Lender under this Note, the Loan Agreement, the Mortgage or any of the other Loan Documents on the date when any such payment is due in accordance with the terms hereof or thereof; or
(b) The occurrence of any Event of Default under the Loan Agreement, the Mortgage or any of the other Loan Documents.
For purposes of this Note, the term Default means the occurrence or existence of any event or circumstance which, with the giving of notice or passage of time, or both, would constitute an Event of Default.
6. REMEDIES . At the election of the holder hereof, and without notice, the principal balance remaining unpaid under this Note, and all unpaid interest accrued thereon and any other amounts due hereunder, shall be and become immediately due and payable in full upon the occurrence of any Event of Default. Failure to exercise this option shall not constitute a waiver of the right to exercise same in the event of any subsequent Event of Default. No holder hereof shall, by any act of omission or commission, be deemed to waive any of its rights, remedies or powers hereunder or otherwise unless such waiver is in writing and signed by the holder hereof, and then only to the extent specifically set forth therein. The rights, remedies and powers of the holder hereof, as provided in this Note, the Mortgage and in all of the other Loan Documents are cumulative and concurrent, and may be pursued singly, successively or together against the Borrower, any Guarantor hereof, the Project and any other security given at any time to secure the repayment hereof, all at the sole discretion of the holder hereof. If any suit or action is instituted or attorneys are employed to collect this Note or any part hereof, the Borrower promises and agrees to pay all costs of collection, including reasonable attorneys fees and court costs.
7. COVENANTS AND WAIVERS . The Borrower and all others who now or may at any time become liable for all or any part of the obligations evidenced hereby, expressly agree hereby to be jointly and severally bound, and jointly and severally: (i) waive and renounce any and all homestead, redemption and exemption rights and the benefit of all valuation and appraisement privileges against the indebtedness evidenced by this Note or by any extension or renewal hereof; (ii) waive presentment and demand for payment, notices of nonpayment and of dishonor, protest of dishonor, and notice of protest; (iii) waive any and all notices in connection with the delivery and acceptance hereof and all other notices in connection with the performance, default, or enforcement of the payment hereof or hereunder; (iv) waive any and all lack of diligence and delays in the enforcement of the payment hereof; (v) agree that the liability of the Borrower and each guarantor, endorser or obligor shall be unconditional and without regard to the liability of any other person or entity for the payment hereof, and shall not in any manner be
affected by any indulgence or forbearance granted or consented to by the Lender to any of them with respect hereto; (vi) consent to any and all extensions of time, renewals, waivers, or modifications that may be granted by the Lender with respect to the payment or other provisions hereof, and to the release of any security at any time given for the payment hereof, or any part thereof, with or without substitution, and to the release of any person or entity liable for the payment hereof; and (vii) consent to the addition of any and all other makers, endorsers, guarantors, and other obligors for the payment hereof, and to the acceptance of any and all other security for the payment hereof, and agree that the addition of any such makers, endorsers, guarantors or other obligors, or security shall not affect the liability of the Borrower, any guarantor and all others now liable for all or any part of the obligations evidenced hereby. This provision is a material inducement for the Lender making the Loan to the Borrower.
8. GENERAL AGREEMENTS .
8.1 Incorporation of Section 12.2 of Loan Agreement . The provisions of Section 12.2 of the Loan Agreement are hereby incorporated into and made a part of this Note.
8.2 Usury and Truth in Lending . The Loan is a business loan within the meaning of subparagraph (1)(c) contained in Section 205/4 of Chapter 815 of the Illinois Compiled Statutes, as amended. The Loan is an exempted transaction under the Truth In Lending Act, 12 U.S.C. §1601 et seq., as amended. The Loan does not, and when disbursed will not, violate the provisions of the usury laws of the State, any consumer credit laws or the usury laws of any state which may have jurisdiction over this transaction, the Borrower or any property securing the Loan.
8.3 Time . Time is of the essence hereof.
8.4 Governing Law . This Note is governed and controlled as to validity, enforcement, interpretation, construction, effect and in all other respects by the statutes, laws and decisions of the State of Illinois, without regard to its conflict of laws provisions.
8.5 Entire Agreement; Amendments . This Note sets forth all of the covenants, promises, agreements, conditions and understandings of the parties relating to the subject matter of this Note, and there are no covenants, promises, agreements, conditions or understandings, either oral or written, between them other than as are herein set forth. The Borrower acknowledges that it is executing this Note without relying on any statements, representations or warranties, either oral or written, that are not expressly set forth herein. This Note may not be changed or amended orally but only by an instrument in writing signed by the party against whom enforcement of the change or amendment is sought.
8.6 No Joint Venture . The Lender shall not be construed for any purpose to be a partner, joint venturer, agent or associate of the Borrower or of any lessee, operator, concessionaire or licensee of the Borrower in the conduct of its business, and by the execution of this Note, the Borrower agrees to indemnify, defend, and hold the Lender harmless from and against any and all damages, costs, expenses and liability that may be incurred by the Lender as a result of a claim that the Lender is such partner, joint venturer, agent or associate.
8.7 Disbursement . This Note has been made and delivered at Chicago, Illinois and all funds disbursed to or for the benefit of the Borrower will be disbursed in Chicago, Illinois.
8.8 Joint and Several Obligations; Successors and Assigns . If this Note is executed by more than one party, the obligations and liabilities of each Borrower under this Note shall be joint and several. This Note shall be binding upon and enforceable against each Borrower and their respective successors and assigns. This Note shall inure to the benefit of and may be enforced by the Lender and its successors and assigns.
8.9 Severable Provisions . If any provision of this Note 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 Borrower and the 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 Note, 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.
8.10 Interest Limitation . If the interest provisions herein or in any of the Loan Documents shall result, at any time during the Loan, in an effective rate of interest which, for any month, exceeds the limit of usury or other laws applicable to the Loan, all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice between or by any party hereto, be applied upon principal immediately upon receipt of such monies by the Lender, with the same force and effect as though the payer has specifically designated such extra sums to be so applied to principal and the Lender had agreed to accept such extra payment(s) as a premium-free prepayment. Notwithstanding the foregoing, however, the Lender may at any time and from time to time elect by notice in writing to the Borrower to reduce or limit the collection to such sums which, when added to the said first-stated interest, shall not result in any payments toward principal in accordance with the requirements of the preceding sentence. In no event shall any agreed to or actual exaction as consideration for this Loan transcend the limits imposed or provided by the law applicable to this transaction or the maker hereof for the use or detention of money or for forbearance in seeking its collection.
8.11 Assignability . The Lender may at any time assign its rights in this Note and the Loan Documents, or any part thereof and transfer its rights in any or all of the collateral, and the Lender thereafter shall be relieved from all liability with respect to such collateral. In addition, the Lender may at any time sell one or more participations in this Note. The Borrower may not assign its interest in this Note, or any other agreement with the Lender or any portion thereof, either voluntarily or by operation of law, without the prior written consent of the Lender.
9. NOTICES . All notices required under this Note will be in writing and will be transmitted in the manner and to the addresses required by the Loan Agreement, or to such other addresses as the Lender and the Borrower may specify from time to time in writing.
10. LITIGATION PROVISIONS .
10.1 Consent to Jurisdiction . THE BORROWER CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN
CHICAGO, ILLINOIS, AND OF ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PROJECT IS LOCATED, IN WHICH ANY LEGAL PROCEEDING MAY BE COMMENCED OR PENDING RELATING IN ANY MANNER TO THIS NOTE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
10.2 Consent to Venue . THE BORROWER AGREES THAT ANY LEGAL PROCEEDING RELATING TO THIS NOTE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT AGAINST THE BORROWER IN ANY STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS, OR ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PROJECT IS LOCATED. THE BORROWER 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.
10.3 No Proceedings in Other Jurisdictions . THE BORROWER AGREES THAT IT WILL NOT COMMENCE ANY LEGAL PROCEEDING AGAINST THE LENDER RELATING IN ANY MANNER TO THIS NOTE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS, OR IF A LEGAL PROCEEDING IS COMMENCED BY THE LENDER AGAINST THE BORROWER IN A COURT IN ANOTHER LOCATION, BY WAY OF A COUNTERCLAIM IN SUCH LEGAL PROCEEDING.
10.4 Waiver of Jury Trial . THE BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS NOTE, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
11. CUSTOMER IDENTIFICATION - USA PATRIOT ACT NOTICE; OFAC AND BANK SECRECY ACT . The Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the Act ), and the Lenders policies and practices, the Lender is required to obtain, verify and record certain information and documentation that identifies the Borrower, which information includes the name and address of the Borrower and such other information that will allow the Lender to identify the Borrower in accordance with the Act. In addition, the Borrower shall (a) ensure that no person who owns a controlling interest in or otherwise controls the Borrower or any subsidiary of the Borrower is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control ( OFAC ), the Department of the Treasury or included in any Executive Orders, (b) not use or permit the use of the proceeds of the Loan to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, and (c) comply, and cause any of its subsidiaries to comply, with all applicable Bank Secrecy Act ( BSA ) laws and regulations, as amended.
12. EXPENSES AND INDEMNIFICATION . The Borrower shall pay all costs and expenses incurred by the Lender in connection with the preparation of this Note and the Loan Documents, including, without limitation, reasonable attorneys fees and time charges of
attorneys who may be employees of the Lender or any affiliate or parent of the Lender. The Borrower shall pay any and all stamp and other taxes, UCC search fees, filing fees and other costs and expenses in connection with the execution and delivery of this Note and the other instruments and documents to be delivered hereunder, and agrees to save the Lender harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such costs and expenses. The Borrower hereby authorizes the Lender to charge any account of the Borrower with the Lender for all sums due under this Section. The Borrower also agrees to defend (with counsel satisfactory to the Lender), protect, indemnify and hold harmless the Lender, any parent corporation, affiliated corporation or subsidiary of the Lender, and each of their respective officers, directors, employees, attorneys and agents (each an Indemnified Party ) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and distributions of any kind or nature (including, without limitation, the disbursements and the reasonable fees of counsel for each Indemnified Party thereto, which shall also include, without limitation, attorneys fees and time charges of attorneys who may be employees of the Lender, any parent corporation or affiliated corporation of the Lender), which may be imposed on, incurred by, or asserted against, any Indemnified Party (whether direct, indirect or consequential and whether based on any federal, state or local laws or regulations, including, without limitation, securities, environmental laws and commercial laws and regulations, under common law or in equity, or based on contract or otherwise) in any manner relating to or arising out of this Note or any of the Loan Documents, or any act, event or transaction related or attendant thereto, the preparation, execution and delivery of this Note and the Loan Documents, the making or issuance and management of the Loan, the use or intended use of the proceeds of this Note and the enforcement of the Lenders rights and remedies under this Note, the Loan Documents any other instruments and documents delivered hereunder, or under any other agreement between the Borrower and the Lender; provided, however, that the Borrower shall not have any obligations hereunder to any Indemnified Party with respect to matters caused by or resulting from the willful misconduct or gross negligence of such Indemnified Party. To the extent that the undertaking to indemnify set forth in the preceding sentence may be unenforceable because it violates any law or public policy, the Borrower shall satisfy such undertaking to the maximum extent permitted by applicable law. Any liability, obligation, loss, damage, penalty, cost or expense covered by this indemnity shall be paid to each Indemnified Party on demand, and failing prompt payment, together with interest thereon at the Default Rate from the date incurred by each Indemnified Party until paid by the Borrower, shall be added to the obligations of the Borrower evidenced by this Note and secured by the collateral securing this Note. The provisions of this Section shall survive the satisfaction and payment of this Note.
[SIGNATURE PAGE(S) AND EXHIBIT(S),
IF ANY, FOLLOW THIS PAGE]
IN WITNESS WHEREOF , the Borrower has executed and delivered this Promissory Note as of the day and year first above written.
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GLENVUE H&R PROPERTY HOLDINGS, LLC |
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/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager |
- AdCare Glenvue H&R Property Holdings, LLC Owner Loan Note -
- Signature Page
Exhibit 10.34
DEED TO SECURE DEBT, SECURITY AGREEMENT AND
ASSIGNMENT OF LEASES AND RENTS
from
GLENVUE H&R PROPERTY HOLDINGS, LLC ,
a Georgia limited liability company
to
THE PRIVATEBANK AND TRUST COMPANY ,
an Illinois banking corporation
Dated as of July 2, 2012
THIS INSTRUMENT SECURES REPAYMENT OF A NOTE WITH A MATURITY DATE OF JULY 2, 2014. THEREFORE, THIS INSTRUMENT SECURES A SHORT-TERM NOTE SECURED BY REAL ESTATE. ACCORDINGLY, PURSUANT TO O.C.G.A. §48-6-60 ET SEQ ., NO INTANGIBLE RECORDING TAX IS DUE.
DEED TO SECURE DEBT, SECURITY AGREEMENT AND
ASSIGNMENT OF LEASES AND RENTS
THIS DEED TO SECURE DEBT, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES dated as of July 2, 2012 (this Deed to Secure Debt ), is executed by GLENVUE H&R PROPERTY HOLDINGS, LLC , a Georgia limited liability company (the Grantor ), whose address is Two Buckhead Plaza, 3050 Peachtree Road NW, Suite 355, Atlanta, Georgia 30305, to and for the benefit of THE PRIVATEBANK AND TRUST COMPANY, an Illinois banking corporation (the Grantee ), whose address is 120 South LaSalle Street, Chicago, Illinois, 60603.
RECITALS
A. Pursuant to the terms and conditions of a Loan Agreement of even date herewith (the Loan Agreement ) by and between the Grantor and the Grantee, the Grantee has agreed to make a loan to the Grantor in the maximum principal amount of Six Million Six Hundred Thousand and No/100 Dollars ($6,600,000) (the Loan ). The Loan will bear interest at interest at 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 Grantees 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 of even date herewith (the Note ), executed by the Grantor and made payable to the order of the Grantee in the principal amount of the Loan and due on July 2, 2014 (the Maturity Date ), except as it may be accelerated pursuant to the terms hereof, of the Note or the Loan Agreement or any of the other Loan Documents (as defined in the Loan Agreement).
B. As is provided in the Loan Agreement, the Grantee may extend a revolving loan (the Operator Loan ) to Glenvue H&R Nursing, LLC, a Georgia limited liability company (the Operator ), pursuant to the Operator Loan Documents (as defined in the Loan Agreement).
C. A condition precedent to the Grantees extension of the Loan to the Grantor, and to the making of the Operator Loan by the Grantee to the Operator, is the execution and delivery by the Grantor of this Deed to Secure Debt.
AGREEMENTS
FOR GOOD AND VALUABLE CONSIDERATION , including the indebtedness hereby secured, the receipt and sufficiency of which are hereby acknowledged, the Grantor agrees as follows:
The Grantor hereby grants, bargains, sells and conveys to the Grantee and its successors and assigns forever, with power of sale, all of its right, title and interest in and to the following described property, rights and interests (referred to collectively herein as the Premises ), all of
which property, rights and interests are hereby conveyed 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 Deed to Secure Debt), this Deed to Secure Debt 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 the Grantor hereby grants to the Grantee 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 Tattnall, State of Georgia (the State ), 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 the Grantor 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 the Grantor 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 the Grantor 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, 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 the Grantor 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 the Grantor thereon, to be applied against the Indebtedness (as hereinafter defined); provided, however, that the Grantor, so long as no Event of Default (as defined in Section 36 of this Deed to Secure Debt) 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 the Grantor in all leases now or hereafter on the Premises, whether written or oral (each, a Lease , and collectively, the Leases ), together with all security therefor and all monies payable thereunder, subject, however, to the conditional permission hereinabove given to the Grantor to collect the rentals under any such Lease;
(f) All fixtures and articles of personal property now or hereafter owned by the Grantor and forming a part of or used in connection with the Real Estate or the
Improvements, 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 the Grantor 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 Deed to Secure Debt 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 the Grantee, as secured party, and the Grantor, as debtor, all in accordance with the Code;
(g) All of the Grantors interests in general intangibles including payment intangibles and software now owned or hereafter acquired and related to the Premises, including, without limitation, all of the Grantors right, title and interest in and to: (i) all agreements, licenses, permits and contracts to which the Grantor is or may become a party and which relate to the Premises; (ii) all obligations and indebtedness owed to the Grantor 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 the Grantors 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 the Grantor: (i) accounts, contract rights, health-care-insurance receivables, book debts, notes, drafts, and other obligations or indebtedness owing to the Grantor arising from the sale, lease or exchange of goods or other property and/or the performance of services; (ii) the Grantors rights in, to and under all purchase orders for goods, services or other property; (iii) the Grantors rights to any goods, services or other property represented by any of the foregoing; (iv) monies due or to become due to the Grantor 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 the Grantor); (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 the Grantor with respect to the Premises; and
(i) All proceeds of the foregoing, including, without limitation, all judgments, awards of damages and settlements hereafter made resulting from condemnation proceeds or the taking of the Premises or any portion thereof under the power of eminent domain, any proceeds of any policies of insurance, maintained with respect to the Premises or proceeds of any sale, option or contract to sell the Premises or any portion thereof.
TO HAVE AND TO HOLD the Premises, unto the Grantee and its successors and assigns, IN FEE SIMPLE FOREVER , for 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 Deed to Secure Debt; the Grantor hereby RELEASING AND WAIVING all rights under and by virtue of the homestead exemption laws of the State.
THIS INSTRUMENT is a deed passing legal title to the Grantee pursuant to the laws of the State of Georgia relating to deeds to secure debt, including, without limitation O.C.G.A. Sections 44-14-60 et seq., and is not a mortgage, and is given to secure the following:
(i) The payment of the Loan 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 the Grantee for the account of the Grantor, if any, and other indebtedness evidenced by or owing under the Note, the Loan Agreement, 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 Grantor or any other obligor to or benefiting the Grantee which are evidenced or secured by or otherwise provided in the Note, this Deed to Secure Debt, the Loan Agreement or any of the other Loan Documents;
(iii) Any and all obligations, contingent or otherwise, whether now existing or hereafter arising, of the Grantor arising under or in connection with all Hedging Transactions and Hedging Agreements (each as defined in Section 36 hereof) to which the Grantee is a party;
(iv) The reimbursement to the Grantee of any and all sums incurred, expended or advanced by the Grantee pursuant to any term or provision of or constituting additional indebtedness under or secured by this Deed to Secure Debt, the Loan Agreement, any of the other Loan Documents, any such Hedging Transactions and Hedging Agreements or any application for letters of credit and master letter of credit agreement, with interest thereon as provided herein or therein;
(v) The payment of the Operator Loan and all interest, late charges, LIBOR breakage charges, if any, 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 the Grantee for the account of the Operator, if any, and other
indebtedness evidenced by or owing under any of the Operator Loan Documents, and any application for letters of credit and master letter of credit agreement executed by the Operator, together with any renewals, extensions, replacements, amendments, modifications and refinancings of any of the foregoing; and
(vi) The performance and observance of the covenants, conditions, agreements, representations, warranties and other liabilities and obligations of the Operator or any other obligor to or benefiting the Grantee which are evidenced or secured by or otherwise provided in any of the Operator Loan Documents;
(collectively, the Indebtedness ).
PROVIDED, HOWEVER , that if the Grantor shall pay the principal and all interest as provided in the Note and pay and perform all of the obligations provided in the Loan Agreement and the other Loan Documents, and if the Operator shall pay the principal and all interest as provided in the Operator Loan Documents, and if all other sums secured hereby are paid, and if the Grantor 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 the Grantor, otherwise to remain in full force and effect.
IT IS FURTHER UNDERSTOOD AND AGREED THAT :
1. Title . The Grantor represents, warrants and covenants that (a) the Grantor 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 the Grantee and except for Permitted Exceptions (as defined in the Loan Agreement); (b) the Grantor has legal power and authority to convey, grant security title to and encumber the Premises; (c) this Deed to Secure Debt creates a valid and enforceable security title, security interest and lien on the Premises; and (d) the Grantor will preserve such title, and will forever warrant and defend the same to the Grantee and will forever warrant and defend the validity and priority of the lien and conveyance hereof against the claims of all persons and parties whomsoever, except as to the Permitted Exceptions.
2. Maintenance, Repair, Restoration, Prior Liens, Parking . The Grantor covenants that, so long as any portion of the Indebtedness remains unpaid, the Grantor 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 the Grantors 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 the Grantor under the Note, this Deed to Secure Debt, the Loan Agreement 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 Deed to Secure Debt, and upon request exhibit satisfactory evidence of the discharge of such lien to the Grantee (subject to the Grantors 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 the Grantors obligations under this Deed to Secure Debt;
(h) Make no material alterations in the Premises or demolish any portion of the Premises without the Grantees 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 the Grantees 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 the Grantees 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 . The Grantor will pay when due and before any penalty attaches, all general and special taxes, 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 the Grantor, if applicable to the Premises or any interest therein, or the Indebtedness, or any obligation or agreement secured hereby, subject to the Grantors right to contest the same, as provided by the terms hereof; and the Grantor will, upon written request, furnish to the Grantee duplicate receipts therefor within 10 days after the Grantees request.
4. Tax Deposits . If requested by the Grantee, the Grantor shall deposit with the Grantee, on the first day of each month until the Indebtedness is fully paid, a sum equal to 1/12th of 105% of the most recent ascertainable annual Taxes on the Premises. If requested by the Grantee, the Grantor shall also deposit with the Grantee an amount of money which, together with the aggregate of the monthly deposits to be made pursuant to the preceding sentence as of one month prior to the date on which the next installment of annual Taxes for the current calendar year become due, shall be sufficient to pay in full such installment of annual Taxes, as estimated by the Grantee. Such deposits are to be held without any allowance of interest and are to be used for the payment of Taxes next due and payable when they become due. So long as no Event of Default under this Deed to Secure Debt shall exist, the Grantee shall, at its option, pay such Taxes when the same become due and payable (upon submission of appropriate bills therefor from the Grantor) or shall release sufficient funds to the Grantor for the payment thereof. If the funds so deposited are insufficient to pay any such Taxes for any year (or installments thereof, as applicable) when the same shall become due and payable, the Grantor shall, within 10 days after receipt of written demand therefor, deposit additional funds as may be necessary to pay such Taxes in full. If the funds so deposited exceed the amount required to pay such Taxes for any year, the excess shall be applied toward subsequent deposits. Said deposits need not be kept separate and apart from any other funds of the Grantee. The Grantee, in making any payment hereby authorized relating to Taxes, may do so according to any bill, statement or estimate procured from the appropriate public office without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof. The Grantee shall not exercise its right to require such deposits so long as the Grantor has paid all Taxes when due.
5. Grantees Interest In and Use of Deposits . Upon an Event of Default under this Deed to Secure Debt, the Grantee 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 Deed to Secure Debt or to pay any of the Indebtedness in such order and manner as the Grantee may elect. If such deposits are used to cure an Event of Default or pay any of the Indebtedness, the Grantor shall immediately, upon demand by the Grantee, deposit with the Grantee 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 the Grantor. Such deposits are hereby pledged as additional security for the Indebtedness and shall not be subject to the direction or control of the Grantor. The Grantee shall not be liable for any failure to apply to the payment of Taxes any amount so deposited unless the Grantor, prior to an Event of Default under this Deed to Secure Debt, shall have requested the Grantee in writing to make application of such funds to the payment of such amounts, accompanied by the bills for such Taxes. The Grantee shall not be liable for any act or omission taken in good faith or pursuant to the instruction of any party.
6. Insurance .
(a) The Grantor 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 the Grantee, in accordance with the terms, coverages and provisions described in the Loan Agreement, and such other insurance as the Grantee may from time to time reasonably require. Unless the Grantor provides the Grantee evidence of the insurance coverages required hereunder, the Grantee may purchase insurance at the Grantors expense to cover the Grantees interest in the Premises. The insurance may, but need not, protect the Grantors interest. The coverages that the Grantee purchases may not pay any claim that the Grantor makes or any claim that is made against the Grantor in connection with the Premises. The Grantor may later cancel any insurance purchased by the Grantee, but only after providing the Grantee with evidence that the Grantor has obtained insurance as required by this Deed to Secure Debt. If the Grantee purchases insurance for the Premises, the Grantor will be responsible for the costs of such insurance, including, without limitation, interest and any other charges which the Grantee 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 the Grantor may be able to obtain on its own.
(b) The Grantor shall not take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained hereunder unless the Grantee is included thereon as the loss payee or an additional insured as applicable, under a standard mortgage clause acceptable to the Grantee and such separate insurance is otherwise acceptable to the Grantee.
(c) In the event of loss, the Grantor shall give prompt notice thereof to the Grantee, and the Grantee shall have the sole and absolute right to make proof of loss. The Grantee 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 the Grantees expenses, either (i) on account of the Indebtedness, irrespective of whether such principal balance is then due and payable, whereupon the Grantee 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 the Grantor by the Grantee as hereinafter provided, the Grantor 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 Deed to Secure Debt, all right, title and interest of the Grantor 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 the Grantee to the Grantor, 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, the
Grantor shall obtain from the Grantee 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 the Grantees option, through an escrow, the terms and conditions of which are satisfactory to the Grantee and the cost of which is to be borne by the Grantor), the Grantee shall be satisfied as to the following:
(A) No Default (as defined in Section 36 of this Deed to Secure Debt) or Event of Default under this Deed to Secure Debt 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 and conveyance of this Deed to Secure Debt and the Permitted Exceptions, or, if such insurance proceeds shall be insufficient to repair, restore and rebuild the Premises, the Grantor has deposited with the Grantee 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, the Grantee shall be furnished with a statement of the Grantees architect (the cost of which shall be borne by the Grantor), 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 the Grantee and with all statutes, regulations or ordinances (including building and zoning ordinances) affecting the Premises; and the Grantee 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 the Grantor shall fail to restore, repair or rebuild such Improvements within a time deemed satisfactory by the Grantee, then the Grantee, at its option, may (A) commence and perform all necessary acts to restore, repair or rebuild such Improvements for or on behalf of the Grantor, or (B) declare an Event of Default under this Deed to Secure Debt. 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 the Grantee, who is empowered to collect and receive the
same and to give proper receipts therefor in the name of the Grantor and the same shall be paid forthwith to the Grantee. 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 the Grantee 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 the Grantee 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 the Grantor, any tax is due or becomes due in respect of the execution and delivery of this Deed to Secure Debt, the Note or any of the other Loan Documents, including, without limitation, the intangibles tax due on this Deed to Secure Debt pursuant to State law, the Grantor shall pay such tax in the manner required by any such law. The Grantor further agrees to reimburse the Grantee for any sums which the Grantee may expend by reason of the imposition of any such tax. Notwithstanding the foregoing, the Grantor shall not be required to pay any income or franchise taxes of the Grantee.
9. Lease and Rent Assignment . The Grantor acknowledges that, concurrently herewith, the Grantor has executed and delivered to the Grantee, as additional security for the repayment of the Loan, an Assignment of Rents and Leases (the Assignment ) pursuant to which the Grantor has assigned to the Grantee 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 Deed to Secure Debt. The Grantor 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 the Grantor, shall be held to assent to such extension, variation, release or change and their liability and the lien and conveyance and all of the provisions hereof shall continue in full force, any right of recourse against all such persons being expressly reserved by the Grantee, 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 the Grantee of the payment of the whole or any part of the Taxes, charges or liens herein required to be paid by the Grantor, or (c) a change in the method of taxation of mortgages, deeds of trust or debts secured by mortgages or deeds of trust or the interest of the Grantee in the Premises, or the manner of collection of taxes, so as to affect this Deed to Secure Debt or the Indebtedness or the holders thereof, then the Grantor, upon demand by the Grantee, shall pay such Taxes or charges, or reimburse the Grantee therefor; provided, however, that the Grantor shall not be deemed to be required to pay any income or franchise taxes of the Grantee. Notwithstanding the foregoing, if in the opinion of counsel for
the Grantee it is or may be unlawful to require the Grantor 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 the Grantee may declare all of the Indebtedness to be immediately due and payable.
12. Grantees Performance of Defaulted Acts and Expenses Incurred by Grantee . If an Event of Default under this Deed to Secure Debt has occurred and is continuing, the Grantee may, but need not, make any payment or perform any act herein required of the Grantor in any form and manner deemed expedient by the Grantee, 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 the Grantor 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 the Grantee in regard to any tax referred to in Section 8 hereof or to protect the Premises or the lien and conveyance hereof, shall be so much additional Indebtedness, and shall become immediately due and payable by the Grantor to the Grantee, upon demand, and with interest thereon accruing from the date of such demand until paid at the Default Rate (as defined in the Note and the Loan Agreement). In addition to the foregoing, any costs, expenses and fees, including reasonable attorneys fees actually incurred, incurred by the Grantee in connection with (a) sustaining the lien and conveyance of this Deed to Secure Debt or its priority, (b) protecting or enforcing any of the Grantees rights hereunder, (c) recovering any Indebtedness, (d) any litigation or proceedings affecting the Note, this Deed to Secure Debt, 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 Deed to Secure Debt, any of the other Loan Documents or the Premises, shall be so much additional Indebtedness, and shall become immediately due and payable by the Grantor to the Grantee, 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 the Grantor to the Grantee, and shall be additional Indebtedness evidenced by the Note and secured by this Deed to Secure Debt. The Grantees failure to act shall never be considered as a waiver of any right accruing to the Grantee on account of any Event of Default under this Deed to Secure Debt or any of the other Loan Documents. Should any amount paid out or advanced by the Grantee hereunder, or pursuant to any agreement executed by the Grantor 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 the Grantee 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 . The Grantor and the Grantee agree that this Deed to Secure Debt 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 the Grantor or held by the Grantee (whether deposited by or on behalf of the Grantor or anyone else) pursuant to any of the provisions of this Deed to Secure Debt or the other Loan Documents, and (b) any personal property included in the
granting clauses of this Deed to Secure Debt, 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 the Grantee, and the Collateral and all of the Grantors right, title and interest therein are hereby assigned to the Grantee, all to secure payment of the Indebtedness. All of the provisions contained in this Deed to Secure Debt 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 Deed to Secure Debt but shall be in addition thereto:
(a) The Grantor (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 and conveyance of this Deed to Secure Debt, other liens and encumbrances benefiting the Grantee 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 the Grantor 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 and conveyance of this Deed to Secure Debt, will not be removed therefrom without the consent of the Grantee (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 the Grantor, the Grantee and holders of interests, if any, expressly permitted hereby.
(e) No Financing Statement (other than Financing Statements showing the Grantee 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 the Grantor, at the Grantors own cost and expense, upon demand, will furnish to the Grantee such further information and will execute and deliver to the Grantee such financing statements and other documents in form satisfactory to the Grantee and will do all such acts as the Grantee 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 the Grantee and no other party, and liens and encumbrances (if any) expressly permitted hereby; and the Grantor 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 the Grantee to be desirable. The Grantor hereby irrevocably authorizes the Grantee at any time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto, without the signature of the Grantor, that (i) indicate the Collateral (A) is comprised of all assets of the Grantor 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 the Grantor is an organization, the type of organization and any organizational identification number issued to the Grantor, 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. The Grantor agrees to furnish any such information to the Grantee promptly upon request. The Grantor further ratifies and affirms its authorization for any financing statements and/or amendments thereto, executed and filed by the Grantee in any jurisdiction prior to the date of this Deed to Secure Debt. In addition, the Grantor shall make appropriate entries on its books and records disclosing the Grantees security interests in the Collateral.
(f) Upon and during the continuance of an Event of Default under this Deed to Secure Debt, the Grantee 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 the Grantor 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 the Grantee 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 the Grantors right of redemption in satisfaction of the Grantors obligations, as provided in the Code. The Grantee may render the Collateral unusable without removal and may dispose of the Collateral on the Premises. The Grantee may require the Grantor to assemble the Collateral and make it available to the Grantee for its possession at a place to be designated by the Grantee which is reasonably convenient to both parties. The Grantee will give the Grantor 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 the Grantor hereinafter set forth at least 10 days before the time of the sale or disposition. The Grantee may buy at any public sale. The Grantee 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 the Grantee 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 the Grantee, shall be applied against the Indebtedness in such order or manner as the Grantee shall select. The Grantee will account to the Grantor 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) To the extent permitted by applicable law, the security interest created hereby is specifically intended to cover all Leases between the Grantor 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 the Grantor, as lessor thereunder.
(i) The Grantor represents and warrants that: (i) the Grantor is the record owner of the Premises; (ii) the Grantors chief executive office is located in the State of Georgia; (iii) the Grantors state of organization is the State of Georgia; (iv) the Grantors exact legal name is as set forth on Page 1 of this Deed to Secure Debt; and (v) the Grantors organizational identification number, if any, is as stated in the Loan Agreement.
(j) The Grantor hereby agrees that: (i) where Collateral is in possession of a third party, the Grantor will join with the Grantee in notifying the third party of the Grantees interest and obtaining an acknowledgment from the third party that it is holding the Collateral for the benefit of the Grantee; (ii) the Grantor will cooperate with the Grantee 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, Grantor will not change the state where it is located or change its name or form of organization without giving the Grantee at least 30 days prior written notice in each instance.
14. Events of Default; Acceleration . Each of the following shall constitute an Event of Default under this Deed to Secure Debt:
(a) The Grantor fails to pay any amount payable payable to the Grantee under this Deed to Secure Debt when any such payment is due in accordance with the terms hereof.
(b) The Grantor 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 Grantor under this Deed to Secure Debt; 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 Grantor;
(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 Grantor; 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 Grantor within such 30-day period and is diligently pursued and such failure is cured within 90 days after the occurrence of such failure.
(c) 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 Deed to Secure Debt, the Grantee may, at its option, declare the whole of the Indebtedness to be immediately due and payable without further notice to the Grantor, with interest thereon accruing from the date of such Event of Default until paid at the Default Rate.
15. Foreclosure and Other Remedies; Expense of Enforcement .
(a) When all or any part of the Indebtedness shall become due, whether by acceleration or otherwise, the Grantee shall have the right to foreclose the lien hereof for such Indebtedness or part thereof and/or exercise any right, power or remedy provided in this Deed to Secure Debt or any of the other Loan Documents in accordance with the applicable laws of the State of Georgia. In the event of a foreclosure sale, the Grantee is hereby authorized, without the consent of the Grantor, to assign any and all insurance policies to the purchaser at such sale or to take such other steps as the Grantee 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 Deed to Secure Debt or enforce any other remedy of the Grantee under this Deed to Secure Debt 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 the Grantee 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 the Grantee 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 the Grantors obligations hereunder, the protection of said Premises and the maintenance of the interest created by this Deed to Secure Debt, including the actual and reasonable fees of any attorney employed by the Grantee in any litigation or proceeding affecting this Deed to Secure Debt, 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 the Grantor, with interest thereon until paid at the Default Rate and shall be secured by this Deed to Secure Debt.
(c) The Grantee, at its option, may sell the Premises, or any part thereof, at public sale or sales before the door of the courthouse of the county in which the Premises, or any part thereof, are situated, to the highest bidder for cash, in order to pay the obligations secured by this Deed to Secure Debt and insurance premiums, liens, assessments, taxes and charges, including utility charges, if any, with accrued interest thereon, and all costs and expenses incurred by the Grantee in connection with such sale and all other expenses of the sale and of all proceedings in connection therewith, including reasonable attorneys fees, after advertising the time, place and terms of sale once a week for four weeks immediately preceding such sale (but without regard to the number of days) in a newspaper in which sheriffs sales are advertised in said county, ALL OTHER NOTICE BEING HEREBY WAIVED BY THE GRANTOR. The foregoing notwithstanding, the Grantee may sell, or cause to be sold, any tangible or intangible personal property, or any part thereof, and which constitutes a part of the security hereunder, in the foregoing manner, or as may otherwise be provided by law. The Grantee may bid and purchase at any such sale and may satisfy the Grantees obligation to purchase pursuant to the Grantees bid by canceling an equivalent portion of any obligations secured hereby then outstanding. At any such sale, the Grantee may execute and deliver to the purchaser a conveyance of the Premises, or any part thereof, in fee simple (but without covenants and warranties, express or implied), and, to this end, the Grantor hereby constitutes and appoints the Grantee the agent and attorney-in-fact of the Grantor to make such sale and conveyance, and thereby to divest the Grantor of all right, title, and equity that the Grantor may have in and to the Premises and to vest the same in the purchaser or purchasers at such sale or sales, and all the acts and doings of said agent and attorney-in-fact are hereby ratified and confirmed, and any recitals in said conveyance or conveyances as to facts essential to a valid sale shall be binding on the Grantor. The Grantor agrees that any such conveyance shall be effectual to bar all right, title and interest, equity of redemption, including all statutory redemption, homestead, dower, courtesy and all other rights of the Grantor, or its successors in interest, in and to the Premises. The aforesaid power of sale and agency hereby granted are coupled with an interest and are irrevocable by death or otherwise, are granted as cumulative of the other remedies provided by law for collection of the obligations secured hereby, and shall not be exhausted by one exercise thereof but may be exercised until full payment and performance of all obligations secured hereby. In the event of any such sale, the Grantor shall be deemed a tenant holding over and shall forthwith deliver possession to the purchaser or purchasers at such sale or be summarily dispossessed according to provisions of law applicable to tenants holding over.
(d) To the extent permitted under and in accordance with the applicable laws of the State of Georgia, the following provisions shall, as the Grantee may determine in its sole discretion, apply to any sales under this Deed to Secure Debt, whether by judicial proceeding, judgment, decree, power of sale, foreclosure or otherwise: (i) the Grantee may conduct multiple sales of any part of the property to be sold in separate tracts or in its entirety and the Grantor waives any right to require otherwise; (ii) any sale may be postponed or adjourned by public announcement at the time and place appointed for such sale or for such postponed or adjourned sale without further notice; and (iii) the Grantee may acquire the property being sold and, in lieu of paying cash, may pay by crediting against the obligations secured by this Deed to Secure Debt
the amount of its bid, after deducting therefrom any sums which the Grantee is authorized to deduct under the provisions of this Deed to Secure Debt or any of the other Loan Documents.
(e) BY EXECUTION OF THIS DEED TO SECURE DEBT, THE GRANTOR EXPRESSLY: (A) ACKNOWLEDGES THE RIGHT OF THE GRANTEE TO ACCELERATE THE INDEBTEDNESS EVIDENCED BY THE NOTE AND LOAN AGREEMENT AND THE POWER OF ATTORNEY GIVEN HEREIN TO THE GRANTEE TO SELL THE PREMISES BY NONJUDICIAL FORECLOSURE UPON AN EVENT OF DEFAULT WITHOUT ANY JUDICIAL HEARING AND WITHOUT ANY NOTICE EXCEPT AS SPECIFICALLY REQUIRED HEREIN OR IN THE LOAN AGREEMENT; (B) TO THE EXTENT ALLOWED BY APPLICABLE LAW, WAIVES ANY AND ALL RIGHTS WHICH THE GRANTOR MAY HAVE UNDER THE CONSTITUTION OF THE UNITED STATES, THE VARIOUS PROVISIONS OF THE CONSTITUTIONS OF THE STATE OR OF THE SEVERAL STATES, OR BY REASON OF ANY OTHER APPLICABLE LAW, TO NOTICE AND TO JUDICIAL HEARING PRIOR TO THE EXERCISE BY THE GRANTEE OF ANY RIGHT OR REMEDY HEREIN PROVIDED TO THE GRANTEE; (C) ACKNOWLEDGES THAT THE GRANTOR HAS READ THIS DEED TO SECURE DEBT AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO THE GRANTOR AND THE GRANTOR HAS CONSULTED WITH LEGAL COUNSEL OF THE GRANTORS CHOICE PRIOR TO EXECUTING THIS DEED TO SECURE DEBT; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF THE GRANTOR HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY THE GRANTOR AS PART OF A BARGAINED FOR LOAN TRANSACTION.
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16. Application of Proceeds of Sale and Other Remedies . The proceeds of the exercise of any remedy hereunder shall be distributed and applied in accordance with applicable State law and, unless otherwise specified therein, in such order as the Grantee may determine in its sole and absolute discretion, subject to any express provisions of the Loan Agreement.
17. Appointment of Receiver . At any time after the occurrence and during the continuance of an Event of Default under this Deed to Secure Debt, the Grantee shall have the right to have a receiver appointed for the Premises or any portion thereof. To the extent not prohibited by Georgia law, such appointment may be made, without notice, without regard to the solvency or insolvency of the Grantor at the time of application for such receiver and without regard to the then value of the Premises, and the Grantee or any holder of the Note may be appointed as such receiver. To the extent not prohibited by Georgia law, such receiver shall have power (i) to collect the rents, issues and profits of the Premises pending the sale of the Premises, as well as during any further times when the Grantors, except for the intervention of such receiver, would be entitled to collect such rents, issues and profits; (ii) to extend or modify any then existing leases and to make new leases, which extension, modifications and new leases may provide for terms to expire, or for options to lessees to extend or renew terms to expire, beyond the maturity date of the indebtedness secured by this Deed to Secure Debt and beyond the date of the issuance of a deed or deeds to a purchaser or purchasers at a sale of the Premises, it being understood and agreed that any such leases, and the options or other such provisions to be
contained therein, shall be binding upon the Grantors and all persons whose interests in the Premises are subject to this Deed to Secure Debt and upon the purchaser or purchasers at any such sale, notwithstanding discharge of the indebtedness secured by this Deed to Secure Debt or issuance of any deed to any purchaser; and (iii) all other powers which may be necessary or are usual in such cases for the protection, possession, control, management and operation of the Premises during the whole of said period. The court from time to time may authorize the receiver to apply the net income in his hands in payment in whole or in part of the indebtedness secured by this Deed to Secure Debt, or any tax, special assessment or other lien which may be or become superior to the lien and conveyance hereof.
18. Grantees Right of Possession in Case of Default . At any time after an Event of Default under this Deed to Secure Debt has occurred and is continuing, the Grantor shall, upon demand of the Grantee, surrender to the Grantee possession of the Premises. The Grantee, 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 the Grantor and its employees, agents or servants therefrom, and the Grantee may then hold, operate, manage and control the Premises, either personally or by its agents. The Grantee 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, the Grantee shall have full power to:
(a) Cancel or terminate any lease or sublease for any cause or on any ground which would entitle the Grantor to cancel the same;
(b) Elect to disaffirm any lease or sublease which is then subordinate to this Deed to Secure Debt;
(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 the Grantor and all persons whose interests in the Premises are subject to this Deed to Secure Debt 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 the Grantee deems are necessary;
(e) Insure and reinsure the Premises and all risks incidental to the Grantees possession, operation and management thereof; and
(f) Receive all of such avails, rents, issues and profits.
19. Application of Income Received by Grantee . The Grantee, 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 the Grantee 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 the Grantee 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 Georgia Deed to Secure Debt Foreclosure Law .
(a) If any provision in this Deed to Secure Debt shall not comply with any statutory law of the State pertaining to foreclosures, such laws shall take precedence over the provisions of this Deed to Secure Debt, but shall not invalidate or render unenforceable any other provision of this Deed to Secure Debt that can be construed in a manner consistent with such laws.
(b) If any provision of this Deed to Secure Debt shall grant to the Grantee (including the Grantee acting as a mortgagee-in-possession) or a receiver appointed pursuant to the provisions of this Deed to Secure Debt any powers, rights or remedies prior to, upon or following the occurrence of an Event of Default under this Deed to Secure Debt which are more limited than the powers, rights or remedies that would otherwise be vested in the Grantee or in such receiver under the applicable laws of the State in the absence of said provision, the Grantee and such receiver shall be vested with the powers, rights and remedies granted by the applicable laws of the State to the full extent permitted by law.
(c) Without limiting the generality of the foregoing, all expenses incurred by the Grantee, whether incurred before or after any decree or judgment of foreclosure, and whether or not enumerated in this Deed to Secure Debt, shall be added to the Indebtedness by the judgment of foreclosure.
21. Rights Cumulative . Each right, power and remedy herein conferred upon the Grantee 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 the Grantee, 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 the Grantee 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 Deed to Secure Debt or acquiescence therein.
22. Grantees Right of Inspection . The Grantee and its representatives shall have the right to inspect the Premises and the books and records with respect thereto at all reasonable times upon not less than 24 hours prior notice to the Grantor, and access thereto, subject to the rights of tenants in possession, shall be permitted for that purpose.
23. Release Upon Payment and Discharge of Borrowers Obligations . The Grantee shall release this Deed to Secure Debt and the lien and conveyance hereof by proper instrument upon payment and discharge of all Indebtedness, including payment of all reasonable expenses incurred by the Grantee in connection with the execution of such release.
24. Notices . All notices and other communications provided for in this Deed to Secure Debt shall be in writing. The notice addresses of the parties for purposes of this Deed to Secure Debt are as follows:
Grantor: |
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Glenvue H&R Property Holdings, LLC Two Buckhead Plaza 3050 Peachtree Road NW Suite 355 Atlanta, Georgia 30305 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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Grantee: |
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The PrivateBank and Trust Company 120 S. LaSalle Street Chicago, Illinois 60603 Attention: Amy K. Hallberg |
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With a copy to: |
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Seyfarth Shaw LLP 131 South Dearborn Street Suite 2400 Chicago, Illinois 60603 Attention: Alvin L. Kruse |
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 . The Grantor 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 or extension 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) The Grantor hereby expressly waives any and all rights of reinstatement and redemption, if any, from any sale under this Deed to Secure Debt, or under any order, judgment or decree of judicial foreclosure of this Deed to Secure Debt, or from any sale under this Deed to Secure Debt in a judicial foreclosure, on its own behalf and on behalf of each and every person, it being the intent hereof that any and all such rights of reinstatement and redemption of the Grantor and of all other persons are and shall be deemed to be hereby waived to the full extent permitted by State law; and
(b) The Grantor 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 the Grantee 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, the Grantor 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 Deed to Secure Debt, if, but only if:
(a) The Grantor shall forthwith give notice of any Contested Lien to the Grantee at the time the same shall be asserted;
(b) The Grantor shall either pay under protest or deposit with the Grantee the full amount (the Lien Amount ) of such Contested Lien, together with such amount as the Grantee may reasonably estimate as interest or penalties which might arise during the period of contest; provided that in lieu of such payment the Grantor may furnish to the Grantee a bond or title indemnity in such amount and form, and issued by a bond or title insuring company, as may be satisfactory to the Grantee;
(c) The Grantor 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 the Grantee to be represented in any such contest and
shall pay all expenses incurred, in so doing, including fees and expenses of the Grantees counsel (all of which shall constitute so much additional Indebtedness bearing interest at the Default Rate until paid, and payable upon demand);
(d) The Grantor 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 the Grantor, or (ii) forthwith upon demand by the Grantee if, in the opinion of the Grantee, and notwithstanding any such contest, the Premises shall be in jeopardy or in danger of being forfeited or foreclosed; provided that if the Grantor shall fail so to do, the Grantee 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 the Grantee to obtain the release and discharge of such liens; and any amount expended by the Grantee 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 the Grantee 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 Deed to Secure Debt .
(a) The Grantor will pay all expenses, charges, costs and fees relating to the Loan or necessitated by the terms of the Note, this Deed to Secure Debt or any of the other Loan Documents, including without limitation, the Grantees reasonable attorneys fees in connection with the negotiation, documentation, administration, servicing and enforcement of the Note, this Deed to Secure Debt and the other Loan Documents, all filing, registration and recording fees, all other expenses incident to the execution and acknowledgment of this Deed to Secure Debt and all federal, state, county and municipal taxes, and other taxes (provided the Grantor shall not be required to pay any income or franchise taxes of the Grantee), duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of the Note and this Deed to Secure Debt. The Grantor recognizes that, during the term of this Deed to Secure Debt, the Grantee:
(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 the Grantee 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 Deed to Secure Debt 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 Deed to Secure Debt for, and do work in connection with, the Grantees 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 Deed to Secure Debt, which other actions may or may not be actually commenced;
(v) May enter into negotiations with the Grantor or any of its agents, employees or attorneys in connection with the existence or curing of any Event of Default under this Deed to Secure Debt, 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 the Grantor or any of its agents, employees or attorneys pertaining to the Grantees approval of actions taken or proposed to be taken by the Grantor which approval is required by the terms of this Deed to Secure Debt.
(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 the Grantor forthwith upon demand.
28. Statement of Indebtedness . The Grantor, within seven days after being so requested by the Grantee, shall furnish a duly acknowledged written statement setting forth the amount of the debt secured by this Deed to Secure Debt, 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 the Grantee, the Grantor 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 Deed to Secure Debt 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 Deed to Secure Debt secures more than the stated principal amount of the Note and interest thereon; this Deed to Secure Debt 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 the Grantee to operate, manage or maintain the Premises or to otherwise protect the Premises or the lien and conveyance of this Deed to Secure Debt.
31. Indemnity . The Grantor hereby covenants and agrees that no liability shall be asserted or enforced against the Grantee in the exercise of the rights and powers granted to the Grantee in this Deed to Secure Debt, and the Grantor hereby expressly waives and releases any such liability, except to the extent resulting from the gross negligence or willful misconduct of the Grantee. The Grantor shall indemnify and save the Grantee harmless from and against any and all liabilities, obligations, losses, damages, claims, costs and expenses, including reasonable attorneys fees and court costs (collectively, Claims ), of whatever kind or nature which may be imposed on, incurred by or asserted against the Grantee 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 the Grantee may or does become a party, either as a plaintiff or as a defendant, by reason of this Deed to Secure Debt or for the purpose of protecting the lien and conveyance of this Deed to Secure Debt; (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 the Grantee in accordance with the terms of this Deed to Secure Debt; provided, however, that the Grantor shall not be obligated to indemnify or hold the Grantee harmless from and against any Claims directly arising from the gross negligence or willful misconduct of the Grantee. All costs provided for herein and paid for by the Grantee shall be so much additional Indebtedness and shall become immediately due and payable upon demand by the Grantee and with interest thereon from the date incurred by the Grantee until paid at the Default Rate.
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 and conveyance of this Deed to Secure Debt and shall provide that the Grantee may terminate such agreement, without penalty or cost, at any time after the occurrence of an Event of Default under this Deed to Secure Debt. Such property management agreement or a short form thereof, at the Grantees request, shall be recorded in the appropriate public records of the county where the Premises are located. In addition, if the property management agreement in existence as of the date hereof does not contain a subordination provision, the Grantor shall cause the property manager under such agreement to enter into a subordination of the management agreement with the Grantee, 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 Deed to Secure Debt.
33. Compliance with Environmental Laws . Concurrently herewith the Grantor and the Guarantors have executed and delivered to the Grantee that certain Environmental Indemnity Agreement dated as of the date hereof (the Indemnity ) pursuant to which the Grantor and the Guarantors have indemnified the Grantee for environmental matters concerning the Premises, as more particularly described therein. The provisions of the Indemnity are hereby incorporated herein and this Deed to Secure Debt shall secure the obligations of the Grantor thereunder.
34. Miscellaneous .
(a) Incorporation of Section 12.2 of Loan Agreement . The provisions of Section 12.2 of the Loan Agreement are hereby incorporated into and made a part of this Deed to Secure Debt.
(b) Usury and Truth in Lending . The Loan does not violate the laws of the State relating to the rate of interest which may be charged upon loans of money. The Loan is an exempted transaction under the Truth In Lending Act, 15 U.S.C., §1601, et seq.
(c) Successors and Assigns . This Deed to Secure Debt and all provisions hereof shall be binding upon and enforceable against the Grantor and its assigns and other successors.
This Deed to Secure Debt and all provisions hereof shall inure to the benefit of the Grantee, their respective 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 Deed to Secure Debt 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 Grantor and the Grantee 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 Deed to Secure Debt 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. This Deed to Secure Debt is to be construed in accordance with and governed by the laws of the State of Georgia.
(e) Municipal Requirements . The Grantor shall not by act or omission permit any building or other improvement on premises not subject to the lien and conveyance of this Deed to Secure Debt to rely on the Premises or any part thereof or any interest therein to fulfill any municipal or governmental requirement, and the Grantor hereby assigns to the Grantee 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 Deed to Secure Debt or any interest therein to fulfill any governmental or municipal requirement. Any act or omission by the Grantor which would result in a violation of any of the provisions of this paragraph shall be void.
(f) Rights of Tenants . The Grantee shall have the right and option to cause any sale under this Deed to Secure Debt to be subject to the rights of any tenant or tenants of the Premises having an interest in the Premises prior to that of the Grantee. The failure of any sale to foreclose the rights of any such tenant shall not be asserted by the Grantor 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) Option of Grantee to Subordinate . At the option of the Grantee, this Deed to Secure Debt shall become subject and subordinate, in whole or in part (but not with respect to priority of entitlement to insurance proceeds or any condemnation or eminent domain award) to any and all leases of all or any part of the Premises upon the execution by the Grantee of a unilateral declaration to that effect and the recording thereof in the appropriate public records in and for the county wherein the Premises are situated.
(h) Mortgagee-in-Possession . Nothing herein contained shall be construed as constituting the Grantee a mortgagee-in-possession in the absence of the actual taking of possession of the Premises by the Grantee pursuant to this Deed to Secure Debt.
(i) Relationship of Grantee and Grantor . The Grantee shall in no event be construed for any purpose to be a partner, joint venturer, agent or associate of the Grantor or of any lessee, operator, concessionaire or licensee of the Grantor in the conduct of their respective businesses, and, without limiting the foregoing, the Grantee shall not be deemed to be such partner, joint venturer, agent or associate on account of the Grantee becoming a mortgagee-in-possession or exercising any rights pursuant to this Deed to Secure Debt, any of the other Loan
Documents, or otherwise. The relationship of the Grantor and the Grantee hereunder is solely that of debtor/creditor.
(j) Time of the Essence . Time is of the essence of the payment by the Grantor of all amounts due and owing to the Grantee under the Note and the other Loan Documents and the performance and observance by the Grantor of all terms, conditions, obligations and agreements contained in this Deed to Secure Debt, the Loan Agreement and the other Loan Documents.
(k) No Merger . The parties hereto intend that this Deed to Secure Debt and the interest hereunder shall not merge in the fee simple title to the Premises, and if the Grantee acquires any additional or other interest in or to the Premises or the ownership thereof, then, unless a contrary intent is manifested by the Grantee as evidenced by an express statement to that effect in an appropriate document duly recorded, this Deed to Secure Debt and the interest hereunder shall not merge in the fee simple title and this Deed to Secure Debt may be foreclosed as if owned by a stranger to the fee simple title.
(l) Complete Agreement; No Reliance; Modifications . This Deed to Secure Debt, the Note and the other Loan Documents constitute the complete agreement between the parties with respect to the subject matter hereof. The Grantor acknowledges that it is executing this Deed to Secure Debt 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 Deed to Secure Debt and the Loan Documents may not be modified, altered or amended except by an agreement in writing signed by both the Grantor and the Grantee.
(m) Captions . The captions and headings of various Sections and paragraphs of this Deed to Secure Debt 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.
(n) 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.
(o) Counterparts; Electronic Signatures . This Deed to Secure Debt 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 Deed to Secure Debt by facsimile or other electronic transmission shall constitute effective delivery thereof. An electronic record of this executed Deed to Secure Debt maintained by the Grantee shall be deemed to be an original.
(p) Construction . Each party to this Deed to Secure Debt and legal counsel to each party have participated in the drafting of this Deed to Secure Debt, 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 Deed to Secure Debt.
35. Litigations Provisions .
(a) Consent to Jurisdiction . THE GRANTOR CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS, 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 DEED TO SECURE DEBT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
(b) Consent to Venue . THE GRANTOR AGREES THAT ANY LEGAL PROCEEDING RELATING TO THIS DEED TO SECURE DEBT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT AGAINST THE GRANTOR IN ANY STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS, OR ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED. THE GRANTOR 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 GRANTOR AGREES THAT IT WILL NOT COMMENCE ANY LEGAL PROCEEDING AGAINST THE GRANTEE RELATING IN ANY MANNER TO THIS DEED TO SECURE DEBT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS, OR IF A LEGAL PROCEEDING IS COMMENCED BY THE GRANTEE AGAINST THE GRANTOR IN A COURT IN ANOTHER LOCATION, BY WAY OF A COUNTERCLAIM IN SUCH LEGAL PROCEEDING.
(d) Waiver of Jury Trial . THE GRANTOR HEREBY WAIVES TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS DEED TO SECURE DEBT, THE LOAN OR ANY OF THE OTHER LOAN DOCUMENTS.
36. Definitions of Certain Terms . The following terms shall have the following meanings in this Deed to Secure Debt:
Code : The Uniform Commercial Code of the State of Georgia 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 Georgia, the term Code shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of this Deed to Secure Debt 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 Deed to Secure Debt or any other document, or in reference to any provision of or obligation under this Deed to Secure Debt 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 Deed to Secure Debt or such other document, as the case may be.
Event of Default : The following: (i) when used in reference to this Deed to Secure Debt, one or more of the events or occurrences referred to in Section 14 of this Deed to Secure Debt; 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 specifically set forth in such document.
Hedging Agreements : The following: (i) any ISDA Master Agreement between the Grantor and the Grantee or any other provider, (ii) any Schedule to Master Agreement between the Grantor and the Grantee or any other provider, and (iii) all other agreements entered into from time to time by the Grantor and the Grantee or any other provider relating to Hedging Transactions.
Hedging Transaction : Any transaction (including an agreement with respect thereto) now existing or hereafter entered into between the Grantor and the Grantee or any other provider which is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.
[SIGNATURE PAGE(S) AND EXHIBIT(S),
IF ANY, FOLLOW THIS PAGE]
IN WITNESS WHEREOF , the Grantor has executed and delivered this Deed to Secure Debt as of the day and year first above written.
Signed, sealed and delivered in the presence of: |
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GLENVUE H&R PROPERTY HOLDINGS, LLC |
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/s/ [ILLEGIBLE] |
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Witness |
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By |
/s/ Christopher F. Brogdon |
/s/ Ellen W. Smith |
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Christopher F. Brogdon, Manager |
Notary Public |
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My Commission Expires: |
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Jan. 30, 2016 |
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[NOTARIAL SEAL] |
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- AdCare Glenvue H&R Property Holdings, LLC Owner Loan Deed to Secure Debt -
- Signature/Acknowledgment Page -
Exhibit 10.35
ASSIGNMENT OF LEASES AND RENTS
from
GLENVUE H&R PROPERTY HOLDINGS, LLC ,
a Georgia limited liability company
to
THE PRIVATEBANK AND TRUST COMPANY ,
an Illinois banking corporation
Dated as of July 2, 2012
ASSIGNMENT OF RENTS AND LEASES
THIS ASSIGNMENT OF RENTS AND LEASES dated as of July 2, 2012 (this Assignment ), is executed by GLENVUE H&R PROPERTY HOLDINGS, LLC , a Georgia limited liability company (the Assignor ), to and for the benefit of THE PRIVATEBANK AND TRUST COMPANY , an Illinois banking corporation (the Assignee ).
RECITALS
A. Pursuant to the terms of a Loan Agreement of even date herewith (the Loan Agreement ), by and between the Assignor and the Assignee, the Assignee has agreed to make a loan to the Assignor in the principal amount of $6,600,000 ( the Loan ). The Assignor is executing a certain Promissory Note of even date herewith (the Note ) payable to the order of the Assignee to evidence the Loan.
B. As is provided in the Loan Agreement, the Assignee may extend a revolving loan (the Operator Loan ) to Glenvue H&R Nursing, LLC, a Georgia limited liability company (the Operator ), pursuant to the Operator Loan Documents (as defined in the Loan Agreement).
C. In order to secure the indebtedness described in Paragraph 2 and other obligations as set forth therein, the Assignor executed a Deed to Secure Debt, Security Agreement and Assignment of Leases and Rents of even date herewith conveying to the Assignee the real property 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 ).
D. A condition precedent to the making of the Loan and the Operator Loan by the Assignee to the Assignor is the execution and delivery by the Assignor of this Assignment.
AGREEMENTS
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. Grant of Security Interest . The Assignor hereby presently, absolutely and irrevocably grants, sells, transfers, sets over and assigns to the Assignee, 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 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 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 present transfer and assignment of the foregoing interests to the Assignee given to secure:
(a) Payment by the Assignor 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 indebtedness and obligations that may be due and owing to the Assignee by the Assignor 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;
(b) Observance and performance by the Assignor of the covenants, conditions, agreements, representations, warranties and other liabilities and obligations of the Assignor or any other obligor to or benefiting the Assignee which are evidenced or secured by or otherwise provided in the Note, this Assignment, the Loan Agreement or any of the other Loan Documents, together with all amendments and modifications thereof; and
(c) Payment when due of (i) the Operator Loan and any and all renewals, extensions, replacements, amendments, modifications and refinancings thereof; and (ii) any and all other indebtedness and obligations that may be due and owing to the Assignee by the Operator under or with respect to the Operator 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 and conveyances 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 a revocable 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 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 90 days after the occurrence of such failure.
(c) The occurrence of an Event of Default under the Loan Agreement, the Note 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 Deed to Secure Debt 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 Deed to Secure Debt 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; Indemnity . 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. 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 Deed to Secure Debt, and no exercise by the Assignee of any of the rights set forth herein or in the Deed to Secure Debt 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 Deed to Secure Debt.
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. 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.
16. 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.
17. 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.
18. Governing Law . This Assignment shall be governed by and construed in accordance with the laws of the State of Georgia. The recording of a satisfaction of the Deed to Secure Debt by the Assignee shall terminate this Asignment.
19. 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 Deed to Secure Debt.
20. 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.
21. 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.
22. Counterparts; Electronic Signatures . 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.
23. 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.
24. Incorporation of Section 12.2 of Loan Agreement . The provisions of Section 12.2 of the Loan Agreement are hereby incorporated into and made a part 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 CHICAGO, ILLINOIS, 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 CHICAGO, ILLINOIS, 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 CHICAGO, ILLINOIS, 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.
[SIGNATURE PAGE(S) AND EXHIBIT(S),
IF ANY, FOLLOW THIS PAGE]
IN WITNESS WHEREOF , the Assignor has executed and delivered this Assignment as of the day and year first above written.
Signed, sealed and delivered in the presence of: |
GLENVUE H&R PROPERTY HOLDINGS, LLC |
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/s/ [ILLEGIBLE] |
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Witness |
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By |
/s/ Christopher F. Brogdon |
/s/ Ellen W. Smith |
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Christopher F. Brogdon, Manager |
Notary Public |
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My Commission Expires: |
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Jan. 30, 2016 |
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[NOTARIAL SEAL] |
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- AdCare Glenvue H&R Property Holdings, LLC Owner Loan Assignment of Leases and Rents -
- Signature Page -
Exhibit 10.36
14594959.2
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(5) |
GUARANTY OF PAYMENT AND PERFORMANCE
THIS GUARANTY OF PAYMENT AND PERFORMANCE dated as of July 2, 2012 (this Guaranty ), is executed by GLENVUE H&R NURSING, LLC , a Georgia limited liability company (the Operator ), and ADCARE HEALTH SYSTEMS, INC., an Ohio corporation ( AdCare ) (the Operator and AdCare being sometimes referred to herein collectively as the Guarantors ), jointly and severally, to and for the benefit of THE PRIVATEBANK AND TRUST COMPANY , an Illinois banking corporation (the Lender ).
RECITALS
A. The Lender has agreed to make a loan in the principal amount of $6,600,000 (the Loan ) to Glenvue H&R Property Holdings, LLC, a Georgia limited liability company (the Borrower ), pursuant to the terms and conditions of a Loan Agreement of even date herewith (the Loan Agreement ) by and between the Borrower and the Lender. The Loan is evidenced by a Promissory Note of even date herewith (the Note ) from the Borrower to the Lender in the principal amount of $6,600,000. All terms used and not otherwise defined herein shall have the meanings set forth in the Loan Agreement.
B. As a condition precedent to the making of the Loan to the Borrower by the Lender and in consideration therefor, the Lender has required the execution and delivery of this Guaranty by the Guarantors.
C. The Operator is the lessee of the Project and is deriving a benefit from the making of the Loan by the Lender, and has agreed to execute and deliver this Guaranty to the Lender. AdCare has an ownership interest in the Borrower, either directly or indirectly through one or more intermediary entities, and, having a financial interest in the Borrower, has agreed to execute and deliver this Guaranty to the Lender.
AGREEMENTS
For good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, each Guarantor hereby agrees as follows:
1. Guaranty of Payment . Each Guarantor hereby unconditionally, absolutely and irrevocably guarantees, jointly and severally, the punctual payment and performance when due, whether at stated maturity or by acceleration or otherwise, of the indebtedness and other obligations of the Borrower to the Lender evidenced by the Note and any other amounts that may become owing by the Borrower under the Loan Documents (such indebtedness, obligations and other amounts are hereinafter referred to as the Payment Obligations ). This Guaranty is a present and continuing guaranty of payment and not of collectability, and the Lender shall not be required to prosecute collection, enforcement or other remedies against the Borrower, any Guarantor, or any other guarantor of the Payment Obligations, or to enforce or resort to any collateral for the repayment of the Payment Obligations or other rights or remedies pertaining
thereto, before calling on any Guarantor for payment. If for any reason the Borrower shall fail or be unable to pay, punctually and fully, any of the Payment Obligations, the Guarantors shall jointly and severally pay such obligations to the Lender in full immediately upon demand. One or more successive actions may be brought against the Guarantors, or any of them, as often as the Lender deems advisable, until all of the Payment Obligations are paid and performed in full. The Payment Obligations and the Performance Obligations (as defined below) are referred to herein as the Guaranteed Obligations .
2. Guaranty of Performance . In addition to the guaranty of the Payment Obligations, each Guarantor hereby unconditionally, absolutely and irrevocably guarantees, jointly and severally, (i) the full and prompt performance and observance by the Borrower of each and every other obligation, undertaking, liability, promise, warranty, covenant and agreement of the Borrower in and under the terms of the Loan Documents; and (ii) the truth of each and every representation and warranty made by the Borrower in the Loan Documents or in other certificates or documents delivered in connection with the Loan (the matters described in (i) and (ii) above being collectively referred to herein as the Performance Obligations ).
3. Representations and Warranties . The following shall constitute representations and warranties of each Guarantor and each Guarantor hereby acknowledges that the Lender intends to make the Loan in reliance thereon:
(a) The Operator is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Georgia. The Operator has full power and authority to conduct its business as presently conducted, to execute and deliver the Loan Documents to which it is a party, and to perform all of its duties and obligations under the Loan Documents to which it is a party; and such execution and performance have been duly authorized by all necessary Legal Requirements. The articles of organization and operating agreement of the Operator, each as amended to date, copies of which have been furnished to the Lender, are in effect, have not been further amended, and are the true, correct and complete documents relating to the Operators creation and governance.
(b) AdCare is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio. AdCare has full power and authority to conduct its business as presently conducted, to execute and deliver the Loan Documents to which it is a party, and to perform all of its duties and obligations under the Loan Documents to which it is a party; and such execution and performance have been duly authorized by all necessary Legal Requirements. The articles of incorporation and bylaws of AdCare, each as amended to date, copies of which have been furnished to the Lender, are in effect, have not been further amended, and are the true, correct and complete documents relating to AdCares creation and governance.
(c) Each Guarantor is not in default and no event has occurred that with the passage of time or the giving of notice will constitute a default under any agreement to which such Guarantor is a party, the effect of which will impair performance by such Guarantor of its obligations under this Guaranty. Neither the execution and delivery of this Guaranty nor compliance with the terms and provisions hereof will violate any
applicable law, rule, regulation, judgment, decree or order, or will conflict with or result in any breach of any of the terms, covenants, conditions or provisions of the articles of organization or operating agreement of the Operator, the articles of incorporation or bylaws of AdCare, any indenture, mortgage, deed of trust, instrument, document, agreement or contract of any kind that creates, represents, evidences or provides for any lien, charge or encumbrance upon any of the property or assets of any Guarantor, or any other indenture, mortgage, deed of trust, instrument, document, agreement or contract of any kind to which any Guarantor is a party or to which any Guarantor or the property of any Guarantor may be subject.
(d) There is no litigation, arbitration, governmental or administrative proceedings, actions, examinations, claims or demands pending, or to the Guarantors knowledge, threatened that could adversely affect performance by any Guarantor of its obligations under this Guaranty.
(e) Neither this Guaranty nor any statement or certification as to facts previously furnished or required herein to be furnished to the Lender by any Guarantor, contains any material inaccuracy or untruth in any representation, covenant or warranty or omits to state a fact material to this Guaranty.
4. Continuing Guaranty . Each Guarantor agrees that performance by such Guarantor of the obligations under this Guaranty shall be a primary obligation, shall not be subject to any counterclaim, set-off, abatement, deferment or defense based upon any claim that such Guarantor may have against the Lender, the Borrower, any other guarantor of the Guaranteed Obligations or any other person or entity, and shall remain in full force and effect without regard to, and shall not be released, discharged or affected in any way by, any circumstance or condition (whether or not such Guarantor shall have any knowledge thereof), including without limitation
(a) Any lack of validity or enforceability of any of the Loan Documents;
(b) Any termination, amendment, modification or other change in any of the Loan Documents, including, without limitation, any modification of the interest rate or rates described therein;
(c) Any furnishing, exchange, substitution or release of any collateral securing repayment of the Loan, or any failure to perfect any lien in such collateral;
(d) Any failure, omission or delay on the part of the Borrower, any Guarantor, any other guarantor of the Guaranteed Obligations or the Lender to conform or comply with any term of any of the Loan Documents or any failure of the Lender to give notice of any Event of Default;
(e) Any waiver, compromise, release, settlement or extension of time of payment or performance or observance of any of the obligations or agreements contained in any of the Loan Documents;
(f) Any action or inaction by the Lender under or in respect of any of the Loan Documents, any failure, lack of diligence, omission or delay on the part of the Lender to perfect, enforce, assert or exercise any lien, security interest, right, power or remedy conferred on it in any of the Loan Documents, or any other action or inaction on the part of the Lender;
(g) Any voluntary or involuntary bankruptcy, insolvency, reorganization, arrangement, readjustment, assignment for the benefit of creditors, composition, receivership, liquidation, marshalling of assets and liabilities or similar events or proceedings with respect to the Borrower, any Guarantor or any other guarantor of the Guaranteed Obligations, as applicable, or any of their respective property or creditors, or any action taken by any trustee or receiver or by any court in any such proceeding;
(h) Any merger or consolidation of the Borrower into or with any entity, or any sale, lease or transfer of any of the assets of the Borrower, any Guarantor or any other guarantor of the Guaranteed Obligations to any other person or entity;
(i) Any change in the ownership of the Borrower, or any change in the relationship between the Borrower and any Guarantor or any other guarantor of the Guaranteed Obligations, or any termination of any such relationship;
(j) Any release or discharge by operation of law of the Borrower, any Guarantor or any other guarantor of the Guaranteed Obligations from any obligation or agreement contained in any of the Loan Documents; or
(k) Any other occurrence, circumstance, happening or event, whether similar or dissimilar to the foregoing and whether foreseen or unforeseen, which otherwise might constitute a legal or equitable defense or discharge of the liabilities of a guarantor or surety or which otherwise might limit recourse against the Borrower or any Guarantor to the fullest extent permitted by law.
5. Waivers . Each Guarantor expressly and unconditionally waives (i) notice of any of the matters referred to in Section 4 above, (ii) all notices which may be required by statute, rule of law or otherwise, now or hereafter in effect, to preserve intact any rights against the Guarantors, including, without limitation, any demand, presentment and protest, proof of notice of non-payment under any of the Loan Documents and notice of any Event of Default or any failure on the part of the Borrower, any Guarantor or any other guarantor of the Guaranteed Obligations to perform or comply with any covenant, agreement, term or condition of any of the Loan Documents, (iii) any right to the enforcement, assertion or exercise against the Borrower, any Guarantor or any other guarantor of the Guaranteed Obligations of any right or remedy conferred under any of the Loan Documents, (iv) any requirement of diligence on the part of any person or entity, (v) to the fullest extent permitted by law and except as otherwise expressly provided in this Guaranty or the other Loan Documents, any claims based on allegations that the Lender has failed to act in a commercially reasonable manner or failed to exercise the Lenders obligation of good faith and fair dealing, (vi) any requirement to exhaust any remedies or to mitigate the damages resulting from any default under any of the Loan Documents, and (vii) any notice of any sale, transfer or other disposition of any right, title or interest of the Lender under
any of the Loan Documents. Each Guarantor agrees that such Guarantor is a guarantor and not a surety within the meaning of the Illinois Sureties Act, and also waives any and all rights under the Illinois Sureties Act. Each Guarantor also waives any and all rights under O.C.G.A. Section 10-7-24 et seq. (if such Sections were to be held by a court to be applicable to this Guaranty despite the choice of Illinois law in Section 19 of this Guaranty).
6. Subordination . Each Guarantor agrees that any and all present and future debts and obligations of the Borrower to such Guarantor hereby are subordinated to the claims of the Lender and hereby are assigned by such Guarantor to the Lender as security for the Guaranteed Obligations and such Guarantors obligations under this Guaranty.
7. Subrogation Waiver . Until the Guaranteed Obligations are paid in full and all periods under applicable bankruptcy law for the contest of any payment by the Guarantors or the Borrower as a preferential or fraudulent payment have expired, each Guarantor knowingly, and with advice of counsel, waives, relinquishes, releases and abandons all rights and claims to indemnification, contribution, reimbursement, subrogation and payment which such Guarantor may now or hereafter have by and from the Borrower and the successors and assigns of the Borrower, for any payments made by such Guarantor to the Lender, including, without limitation, any rights which might allow the Borrower, the Borrowers successors, a creditor of the Borrower, or a trustee in bankruptcy of the Borrower to claim in bankruptcy or any other similar proceedings that any payment made by the Borrower or the Borrowers successors and assigns to the Lender was on behalf of or for the benefit of such Guarantor and that such payment is recoverable by the Borrower, a creditor or trustee in bankruptcy of the Borrower as a preferential payment, fraudulent conveyance, payment of an insider or any other classification of payment which may otherwise be recoverable from the Lender.
8. Reinstatement . The obligations of each Guarantor pursuant to this Guaranty shall continue to be effective or automatically be reinstated, as the case may be, if at any time payment of any of the Guaranteed Obligations or any Guarantors obligations under this Guaranty is rescinded or otherwise must be restored or returned by the Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Guarantor or the Borrower or otherwise, all as though such payment had not been made.
9. Financial Statements . Each Guarantor represents and warrants to the Lender that (i) the financial statements of such Guarantor previously submitted to the Lender are true, complete and correct in all material respects, disclose all actual and contingent liabilities, and fairly present the financial condition of such Guarantor, and do not contain any untrue statement of a material fact or omit to state a fact material to the financial statements submitted or this Guaranty, and (ii) no material adverse change has occurred in the financial statements from the dates thereof until the date hereof. Each Guarantor shall furnish to the Lender financial statements and other information as provided in Section 7.4 of the Loan Agreement.
10. Transfers, Sales, Etc. Each Guarantor shall not sell, lease, transfer, convey or assign any of its or his assets, unless (i) if the Guarantor is a natural person, such sale, lease, transfer, conveyance or assignment is of a non-material asset of such Guarantor and will not have a material adverse effect on such Guarantors financial condition, or (ii) if the Guarantor is a limited liability company, corporation, partnership or other entity, such sale, lease, transfer,
conveyance or assignment will not have a material adverse effect on the business or financial condition of such Guarantor or its ability to perform its obligations hereunder.
11. Default; Remedies . An Event of Default shall occur hereunder if any Guarantor shall fail to pay or perform any of its covenants, agreements and obligations hereunder, or if any representation or warranty contained herein shall prove to be untrue or incorrect in any material respect. When any Event of Default hereunder has occurred and is continuing, the Lender may exercise any of the rights and remedies provided for herein or in any of the other Loan Documents, or provided to it by law, including, without limitation, the right of setoff.
12. Enforcement Costs and Interest . If: (i) this Guaranty is placed in the hands of one or more attorneys for collection or is collected through any legal proceeding; (ii) one or more attorneys is retained to represent the Lender in any bankruptcy, reorganization, receivership or other proceedings affecting creditors rights and involving a claim under this Guaranty, or (iii) one or more attorneys is retained to represent the Lender in any other proceedings whatsoever in connection with this Guaranty, then the Guarantors shall pay to the Lender upon demand all fees, costs and expenses incurred by the Lender in connection therewith, including, without limitation, reasonable attorneys fees, court costs and filing fees , in addition to all other amounts due hereunder. Amounts due from a Guarantor under this Guaranty shall bear interest until paid at the Default Rate.
13. Successors and Assigns; Joint and Several Liability . This Guaranty shall inure to the benefit of the Lender and its successors and assigns. This Guaranty shall be binding on each Guarantor and the heirs, legatees, successors and assigns of such Guarantor. If this Guaranty is executed by more than one Guarantor, it shall be the joint and several undertaking of each of the undersigned. Regardless of whether this Guaranty is executed by more than one Guarantor, it is agreed that the liability of the undersigned hereunder is several and independent of any other guarantees or other obligations at any time in effect with respect to the Guaranteed Obligations or any part thereof and that the liability of any Guarantor hereunder may be enforced regardless of the existence, validity, enforcement or non-enforcement of any such other guarantees or other obligations.
14. No Waiver of Rights . No delay or failure on the part of the Lender to exercise any right, power or privilege under this Guaranty or any of the other Loan Documents shall operate as a waiver thereof, and no single or partial exercise of any right, power or privilege shall preclude any other or further exercise thereof or the exercise of any other power or right, or be deemed to establish a custom or course of dealing or performance between the parties hereto. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstance.
15. Prior Agreements; No Reliance; Modification . This Guaranty shall represent the entire, integrated agreement between the parties hereto relating to the subject matter hereof, and shall supersede all prior negotiations, representations or agreements pertaining thereto, either oral or written. The Guarantors acknowledge that they are executing this Guaranty without relying on any statements, representations or warranties, either oral or written, that are not
expressly set forth herein. The terms of this Guaranty may be waived, discharged, or terminated only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. No amendment, modification, waiver or other change of any of the terms of this Guaranty shall be effective without the prior written consent of the Lender.
16. Joinder . Any action to enforce this Guaranty may be brought against any Guarantor without any joinder of the Borrower, any other Guarantor, or any other guarantor of the Guaranteed Obligations in such action.
17. Incorporation of Recitals . The Recitals to this Guaranty are hereby incorporated into and made a part of this Guaranty.
18. Severability . If any provision of this Guaranty 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 Guarantors and the 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 Guaranty 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.
19. Applicable Law . This Guaranty is governed as to validity, interpretation, effect and in all other respects by laws and decisions of the State of Illinois.
20. Captions . The captions and headings of various Sections of this Guaranty 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.
21. Counterparts; Electronic Signatures . This Guaranty 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 Guaranty by facsimile or other electronic transmission shall constitute effective delivery thereof. An electronic record of this executed Guaranty maintained by the Lender shall be deemed to be an original.
22. Construction . Each party to this Guaranty and legal counsel to each party have participated in the drafting of this Guaranty, 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 Guaranty.
23. Notice . All notices and other communications provided for in this Guaranty ( Notices ) shall be in writing. The Notice Addresses of the parties for purposes of this Guaranty are as follows:
Guarantors: |
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Glenvue H&R Nursing, LLC Two Buckhead Plaza 3050 Peachtree Road NW, Suite 355 Atlanta, Georgia 30305 |
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AdCare Health Systems, Inc. 5057 Troy Road Springfield, Ohio 45502 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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The PrivateBank and Trust Company 120 South LaSalle Street Chicago, Illinois 60603 Attention: Amy K. Hallberg |
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With a copy to: |
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Seyfarth Shaw LLP 131 South Dearborn Street Suite 2400 Chicago, Illinois 60603 Attention: Alvin L. Kruse |
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.
24. Litigation Provisions .
(a) EACH GUARANTOR CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS, AND OF ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PROJECT IS LOCATED, IN WHICH ANY LEGAL PROCEEDING MAY BE COMMENCED OR PENDING RELATING IN ANY MANNER TO THIS GUARANTY.
(b) EACH GUARANTOR AGREES THAT ANY LEGAL PROCEEDING RELATING TO THIS GUARANTY MAY BE BROUGHT AGAINST SUCH GUARANTOR IN ANY STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS, OR ANY STATE OR FEDERAL COURT LOCATED OR HAVING JURISDICTION IN THE COUNTY IN WHICH THE PROJECT IS LOCATED. EACH
GUARANTOR WAIVES ANY OBJECTION TO VENUE IN ANY SUCH COURT AND WAIVES ANY RIGHT SUCH GUARANTOR MAY HAVE TO TRANSFER OR CHANGE THE VENUE FROM ANY SUCH COURT.
(c) EACH GUARANTOR AGREES THAT SUCH GUARANTOR WILL NOT COMMENCE ANY LEGAL PROCEEDING AGAINST THE LENDER RELATING IN ANY MANNER TO THIS GUARANTY IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS, OR IF A LEGAL PROCEEDING IS COMMENCED BY THE LENDER AGAINST SUCH GUARANTOR IN A COURT IN ANOTHER LOCATION, BY WAY OF A COUNTERCLAIM IN SUCH LEGAL PROCEEDING.
(d) EACH GUARANTOR HEREBY WAIVES TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS GUARANTY.
[SIGNATURE PAGE(S) AND EXHIBIT(S),
IF ANY, FOLLOW THIS PAGE]
IN WITNESS WHEREOF , the Guarantors have executed this Guaranty as of the date first above written.
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GLENVUE H&R NURSING, LLC |
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Christopher F. Brogdon, Manager |
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ADCARE HEALTH SYSTEMS, INC. |
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/s/ Christopher F. Brogdon |
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Christopher F. Brogdon |
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Vice Chairman and Chief Acquisition Officer |
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- AdCare Glenvue H&R Property Holdings, LLC Owner Loan Guaranty -
- Signature Page
Exhibit 10.37
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this Agreement ) is made and entered into as of July 1, 2012 (the Effective Date ) by and between WESTLAKE NURSING HOME LIMITED PARTNERSHIP , an Oklahoma limited partnership (Assignor), and QC PROPERTY HOLDINGS, LLC, a Georgia limited liability company (Assignee).
RECITALS
A. Assignor was the borrower of the proceeds from the issuance of those certain $4,000,000 Oklahoma County Industrial Authority, Industrial Development Revenue Bonds, 1986 Series A (Westlake Nursing Center Project) (such indebtedness is hereinafter referred to as the Loan).
B. The Loan is secured by the following security instruments (collectively, with all other documents evidencing or otherwise pertaining to the Loan, the Loan Documents): the Loan Agreement and Indenture of First Mortgage between Assignor and The Bank of New York Mellon Global Corporate Trust ( Trustee ), as assignee of The Liberty National Bank and Trust Company of Oklahoma City, as Trustee for the Oklahoma County Industrial Authority, by virtue of that certain Bond Indenture dated September 1, 1986, as amended by that certain First Amendment to Loan Agreement and Indenture of First Mortgage dated as of September 1, 2001 (the First Amendment ), encumbering that certain improved real property commonly known as the Quail Creek Nursing Home, 13500 Brandon Place, Oklahoma City, Oklahoma and more particularly described on Exhibit A attached hereto (the Property ).
C. The Property is being conveyed by Assignor to Assignee as of the Effective Date, and as part of the consideration for such conveyance, Assignee agrees to assume all the obligations under the Loan Documents and comply with all covenants and obligations contained in the Loan Documents.
AGREEMENT
NOW, THEREFORE , in consideration of the sum of Ten and No/100 Dollars ($10.00) cash in hand paid by the parties hereto each to the other and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Recitals True . Assignee and Assignor each hereby approve the recitations set forth in the preamble of this Agreement and agree that said recitations are true and correct in all respects.
2. Representations and Warranties . As of the date hereof, Assignor represents and warrants that to the best of its knowledge (a) the Loan Documents are in full force and effect and have not been amended, modified, or terminated in. any respect since their execution and recording except as described herein, (b) Assignor is not in default under the Loan Documents, nor are there any
pending or alleged defaults under the Loan Documents except as more particularly described in that certain Notice of New and Continuing Events of Defaults and Demand for Payment dated June 22, 2012 from the Trustee, a true, correct and complete copy of which is attached hereto as Exhibit B , (c) Assignor has cured the monetary default described in the Default Notice by paying to the Trustee the amount of $40,392.19 on or about June 27, 2012, , and (d) the principal amount outstanding under the Loan Documents as of the date hereof is $2,800,000.00, with the next payment due on August 27, 2012, as described in the First Amendment.
3. Assumption and Ratification . Assignee hereby assumes and agrees to comply with all covenants and obligations contained in the Loan Documents and henceforth shall be bound by all the terms thereof. Without limiting the foregoing, Assignee hereby assumes and agrees to pay in full as and when due all payments, the obligations and other indebtedness evidenced by the Loan Documents arising after the date hereof. As assumed hereby, the Loan Documents shall remain in full force and effect.
4. Severability . If all or any portion of any provision of this Agreement shall be held to be invalid, illegal or unenforceable in any respect, then such invalidity, illegality or unenforceability shall not affect any other provision hereof or thereof, and such provision shall be limited and construed in such jurisdiction as if such invalid, illegal or unenforceable provision or portion thereof were not contained herein or therein.
5. Counterparts . This Agreement may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document. All such counterparts shall be construed together and shall constitute one instrument, but in making proof hereof it shall only be necessary to produce one such counterpart.
6. Governing Law. The terms and conditions of this Agreement shall be governed by the applicable laws of the state of Oklahoma.
7. Interpretation . Within this Agreement, words of any gender shall be held and construed to include any other gender, and words in the singular number shall be held and construed to include the plural, unless the context otherwise requires. The section headings used herein are intended for reference purposes only and shall not be considered in the interpretation of the terms and conditions hereof. The parties acknowledge that the parties and their counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any exhibits or amendments hereto.
8. Amendment . The terms and conditions hereof may not be modified, altered or otherwise amended except by an instrument in writing executed by Assignee and Assignor.
9. Entire Agreement . This Agreement contains the entire agreement between the parties hereto with respect to the modification of the Loan and fully supersedes all prior agreements and understanding between the parties pertaining to such subject matter.
10. Successors and Assigns . The terms and conditions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their successors and assigns.
[Signatures on next page]
IN WITNESS WHEREOF , the parties hereby have all executed this Agreement as of the day and year first hereinabove written.
SELLER : |
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PURCHASER : |
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WESTLAKE NURSING HOME LIMITED PARTNERSHIP |
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QC PROPERTY HOLDINGS, LLC |
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By: |
Westlake Management Company, a |
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By: |
/s/ Christopher F. Brogdon |
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Texas corporation, its general partner |
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Christopher F. Brogdon, Manager |
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By: |
/s/ Ron Lusk |
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Ron Lusk, President |
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Exhibit 10.38
LOAN AGREEMENT AND INDENTURE OF FIRST MORTGAGE
Dated as of September 1, 1986
By and Among
OKLAHOMA COUNTY INDUSTRIAL AUTHORITY
and
WESTLAKE NURSING HOME LIMITED PARTNERSHIP,
an Oklahoma limited partnership
and
THE LIBERTY NATIONAL BANK AND TRUST
COMPANY OF OKLAHOMA CITY,
Oklahoma City, Oklahoma, as Trustee
Pertaining to:
$4,000,000
Oklahoma County Industrial Authority,
Industrial Development Revenue Bonds, 1986 Series A
(Westlake Nursing Center Project)
Dated September 1, 1986
The interest of the Oklahoma County Industrial Authority in this Loan Agreement and the Owners Note (attached as Exhibit B hereto) have been assigned to The Liberty National Bank and Trust Company of Oklahoma City, Oklahoma City, Oklahoma, as Trustee under the Bond Indenture entered into as of the date hereof by and between the Oklahoma County Industrial Authority and The Liberty National Bank and Trust Company of Oklahoma City, Oklahoma City, Oklahoma, as Trustee, in connection with the Oklahoma County Industrial Authoritys $4,000,000 Industrial Development Revenue Bonds, 1986 Series A (Westlake Nursing Center Project), dated September 1, 1986.
LOAN AGREEMENT AND INDENTURE OF FIRST MORTGAGE
TABLE OF CONTENTS
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1 |
RECITALS |
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ARTICLE I |
DEFINITIONS AND INTERPRETATIONS |
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SECTION 101 |
Definitions |
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SECTION 102 |
Interpretations |
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ARTICLE II |
MORTGAGE, PLEDGE AND ASSIGNMENT OF FACILITIES |
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ARTICLE III |
AUTHORIZATION, TERMS, FORM AND ISSUANCE OF OWNERS NOTE; LOAN OF PROCEEDS OF BONDS TO OWNER; COVENANT OF OWNER TO PAY EXCESS ACQUISITION, CONSTRUCTION, DEVELOPMENT AND EQUIPMENT COSTS; GUARANTY AGREEMENT OF OWNER |
18 |
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SECTION 301 |
Authorization, Terms, Conditions, and Form of Owners Note |
18 |
SECTION 302 |
Loan of Bond Proceeds to Owner |
18 |
SECTION 303 |
Project Fund |
18 |
SECTION 304 |
Investment of Project Fund; Disposition of Investment Income; Application of Excess Funds Upon Completion of Facilities |
19 |
SECTION 305 |
Arbitrage Covenants |
19 |
SECTION 306 |
Certificate of Completion |
20 |
SECTION 307 |
Manufacturers, Vendors, Suppliers, Contractors and Subcontractors; Pursuit of Remedies |
20 |
SECTION 308 |
Owner Required to Pay Project Costs in Event Bond Proceeds Insufficient |
21 |
SECTION 309 |
Guaranty Agreement of Owner with Respect to Bonds |
21 |
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ARTICLE IV |
REPRESENTATIONS, COVENANTS AND WARRANTIES |
24 |
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SECTION 401 |
Additional Payments |
24 |
SECTION 402 |
Property Included in Facilities; Inventory |
25 |
SECTION 403 |
Location of Facilities |
26 |
SECTION 404 |
Excluded Property; Inventory |
26 |
SECTION 405 |
Waste; Reduction in Structural Soundness, Value or Overall Operating Efficiency |
26 |
SECTION 406 |
Maintenance |
26 |
SECTION 407 |
Operation and Maintenance Expenses |
27 |
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Page |
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SECTION 408 |
Inspections |
27 |
SECTION 409 |
Access of Authority, Trustee and Letter of Credit Bank to Facilities |
27 |
SECTION 410 |
Right to Remodel, Alter, Modify or Make Additions |
27 |
SECTION 411 |
Alterations and Additions Made by the Owner Which Become Part of Facilities |
28 |
SECTION 412 |
Additions Made by the Owner Which Do Not Become Part of Facilities |
28 |
SECTION 413 |
Additions or Refunding Financed by the Authority |
29 |
SECTION 414 |
Annual Inventory of Additions |
30 |
SECTION 415 |
Removal of Facilities Other Than Land |
30 |
SECTION 416 |
Removal and Substitution |
30 |
SECTION 417 |
Removal Without Substitution |
30 |
SECTION 418 |
Annual Inventory of Removals and Substitutions; Identification |
31 |
SECTION 419 |
No Warranty of Fitness |
31 |
SECTION 420 |
Indemnification of Authority and Trustee |
31 |
SECTION 421 |
Types of Insurance Required |
32 |
SECTION 422 |
Insurance Policy Requirements |
33 |
SECTION 423 |
Effecting Insurance on Owners Default |
34 |
SECTION 424 |
Damage, Destruction and Condemnation |
34 |
SECTION 425 |
Making Restorations with Net Recovery |
34 |
SECTION 426 |
Making Restorations If Net Recovery Insufficient |
35 |
SECTION 427 |
Disposition of Surplus Net Recovery After Making Restorations |
35 |
SECTION 428 |
Payment of Indebtedness in Lieu of Making Restorations |
35 |
SECTION 429 |
Making Restorations or Retiring Indebtedness Upon Failure of Owner To Do So |
35 |
SECTION 430 |
Notices, Consultation, Cooperation and Approvals in Event of Damage, Destruction or Condemnation |
36 |
SECTION 431 |
Non-Abatement of Indebtedness in Event of Damage, Destruction or Condemnation |
36 |
SECTION 432 |
Conveyance, Assignment and Leasing; Maintenance of Existence and Qualification in Oklahoma; Permitted Exceptions |
36 |
SECTION 433 |
Release of Unimproved Land |
38 |
SECTION 434 |
Additional Representations, Covenants and Warranties of the Owner |
38 |
SECTION 435 |
Representations, Covenants and Warranties of the Authority |
44 |
SECTION 436 |
Representations of the Trustee |
49 |
SECTION 437 |
Payment of Indebtedness |
49 |
SECTION 438 |
Financial Statements |
50 |
SECTION 439 |
Defenses of Actions |
50 |
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Page |
ARTICLE V |
DEFUALT; REMEDIES OF LENDER |
51 |
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SECTION 501 |
Default Defined |
51 |
SECTION 502 |
Acceleration |
52 |
SECTION 503 |
Appointment of Receiver |
52 |
SECTION 504 |
Foreclosure and Enforcement of Remedial Rights |
54 |
SECTION 505 |
Other Remedies |
55 |
SECTION 506 |
Trustee Expenditures Become Secured Indebtedness |
55 |
SECTION 507 |
Effect of Discontinuance of Proceedings |
55 |
SECTION 508 |
Waivers of Default |
56 |
SECTION 509 |
Remedies Cumulative and Not Exclusive |
56 |
SECTION 510 |
Delay or Omission |
56 |
SECTION 511 |
Right of Owner to Cure Default |
56 |
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ARTICLE VI |
SUPPLEMENTS AND AMENDMENTS OF LOAN AGREEMENT; DISCHARGE; MISCELLANEOUS |
57 |
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SECTION 601 |
Limitation on Modifications |
57 |
SECTION 602 |
Discharge of Loan Agreement by Payment of Indebtedness |
57 |
SECTION 603 |
Notice |
57 |
SECTION 604 |
Partial Invalidity |
57 |
SECTION 605 |
Counterparts |
58 |
SECTION 606 |
Laws Covering Loan Agreement |
58 |
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TESTIMONIUM |
58 |
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EXECUTION |
58, 59 |
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ACKNOWLEDGMENTS |
60, 61 |
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SCHEDULE |
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A |
Description of Real and Personal Property |
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B |
Form of Owners Note |
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LOAN AGREEMENT AND INDENTURE OF FIRST MORTGAGE
THIS LOAN AGREEMENT AND INDENTURE OF FIRST MORTGAGE [the Loan Agreement], dated as of September 1, 1986, by and among the Trustees of the OKLAHOMA COUNTY INDUSTRIAL AUTHORITY [Authority], a public trust created for the benefit of the County of Oklahoma, Oklahoma [the County]; WESTLAKE NURSING HOME LIMITED PARTNERSHIP, an Oklahoma limited partnership [Owner]; and THE LIBERTY NATIONAL BANK AND TRUST COMPANY OF OKLAHOMA CITY, Oklahoma City, Oklahoma, acting as Trustee [Trustee] under the Bond Indenture [Indenture] of even date herewith by and between the Authority and Trustee, securing the Trustees of the Oklahoma County Industrial Authority $4,000,000 Industrial Development Revenue Bonds, 1986 Series A (Westlake Nursing Center Project), dated September 1, 1986 [herein the Bonds].
W I T N E S S E T H :
WHEREAS, the Oklahoma County Industrial Authority has been created by a Trust Indenture dated as of May 1, 1981, recorded in the office of the Oklahoma County Clerk in Book 4772 at page 1398, designating certain individuals as Trustees of the Oklahoma County Industrial Authority for the use and benefit of the County under authority of and pursuant to the provisions of the Public Trust Act, the Oklahoma Trust Act, and other applicable statutes and laws of the State of Oklahoma; and
WHEREAS, the powers granted the Authority under said Trust Indenture, as amended by an Amendment to Trust Indenture dated as of May 5, 1982, recorded in the office of the Oklahoma County Clerk in Book 4872 at page 1152, include the power to finance land, buildings, equipment and related facilities for the purpose of providing health, nursing, custodial and residential care to the sick, aged, disabled, handicapped and retarded; and
WHEREAS, the Authority proposes to provide nursing and residential care to the mentally retarded and to provide additional employment in the County by financing part of the cost of acquiring, constructing, developing and equipping a 100-bed intermediate care nursing home facility [hereinafter as more fully described, the Facilities] to be located on the southwest corner of the intersection of Memorial Road and MacArthur Boulevard in The City of Oklahoma City, Oklahoma County, Oklahoma, initially owned and operated by Westlake Nursing Home Limited Partnership, an Oklahoma limited partnership [herein Owner], and mortgaged to the Authority; and
WHEREAS, for the purpose of paying part of the cost of acquiring, constructing, developing and equipping the Facilities and paying costs of Bond issuance [the Project], the Authority has authorized the issuance of its $4,000,000 Industrial Development Revenue Bonds, 1986 Series A (Westlake Nursing Center Project) [the Bonds], dated September 1, 1986, dated their date of delivery under, and pursuant to, and secured by the Indenture; and
WHEREAS, the Authority has determined to loan to the Owner the proceeds of the Bonds, which loan by the Authority to the Owner is to be evidenced by and repaid in accordance with a First Mortgage Promissory Note [the Owners Note], of even date with the Bonds, which Owners Note shall be assigned to the Trustee pursuant to the terms of the Indenture; and
WHEREAS, under the terms of this Loan Agreement the Owner has unconditionally guaranteed the Bonds.
[END OF PREAMBLES AND RECITALS]
NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto covenant, agree and bind themselves as follows (provided, that any obligation of the Authority created by or arising out of this Loan Agreement shall not be in any manner an indebtedness of the State of Oklahoma or the County).
Any reference herein to Authority shall include those who succeed to their functions, duties or responsibilities pursuant to or by operation of law or who are lawfully performing their functions. Any reference to a section or provision of the Constitution of the State of Oklahoma or to a section, provision or chapter of the Oklahoma Statutes shall include such section or provision or chapter as from time to time amended, modified, revised, supplemented or superseded.
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
SECTION 101 . Definitions . The following terms, wherever used in this Loan Agreement, shall have the following meanings unless the context or use indicates another or different meaning:
Additional Payments shall mean all costs, expenses, liabilities, obligations and payments (other than payments on the Owners Note) which the Owner has agreed to pay or assume under the provisions of Section 401 of this Loan Agreement.
Additions means additional buildings, structures, equipment, machinery and other improvements to the Project acquired, constructed or installed pursuant to Section 410 of this Loan Agreement.
Administrative Payments means an annual payment in a sum equal to one-eighth of one percent (1/8th of 1%) of the principal amount of the Bonds outstanding, the first annual sum to be paid September 1, 1987, and annually thereafter on September 1 of each year through and including September 1, 2016.
Annual Inventory means the cumulative annual inventory to be furnished to the Authority and the Trustee on September 1 of each year by the Owner of any Additions having an individual, and not aggregate, acquisition cost in excess of $10,000 and any Removed Property removed (including the disposition thereof) and Substituted Property acquired.
Authority means the Trustees of the Oklahoma County Industrial Authority, a public trust created for the benefit of the County of Oklahoma, Oklahoma, and includes the Trustees thereof, and the successors and assigns of such Authority and Trustees.
Authority Counsel shall mean Fagin, Brown, Bush, Tinney, Kiser & Rogers, Attorneys and Counselors at Law, 1900-W First National Center, Oklahoma City, Oklahoma (73102).
Authority Resolution means the Resolution adopted by the Authority on August 27, 1986, authorizing the issuance of the Bonds and execution of the Project Documents.
Authorized Authority Representative means the Chairman, Vice-Chairman, Secretary or Assistant Secretary of the Authority or any other person at the time designated to act on behalf of the Authority by written certificate furnished to the Owner and the Trustee containing the specimen signature of such person and signed on behalf of the Authority by its Chairman or Vice-Chairman. Such certificate may designate an alternate or alternates.
Authorized Owner Representative means E.W. Dub Jiles, President of JiCo Health Services, Inc., the general partner of the Owner,
or any other person at the time designated to act on behalf of the Owner by written certificate furnished to the Authority and the Trustee containing the specimen signature of such person and signed on behalf of the Owner by an authorized representative. Such certificate may designate an alternate or alternates.
Board means the Board of County Commissioners of Oklahoma County, the governing body of the County.
Bond Counsel to the Authority shall mean Martin, Moses & Gray, Attorneys and Counselors at Law, 316 South Peters, Suite 200, Norman, Oklahoma (73069).
Bond Fund shall mean the Bond Fund established under the provisions of Section 501 of the Indenture and to be used as described in Article V thereof.
Bondholder or Bondholder of the Bonds means the registered owner of any fully registered Bond.
Bonds means the Oklahoma County Industrial Authority, Industrial Development Revenue Bonds, 1986 Series A (Westlake Nursing Center Project), originally issued by the Authority in the aggregate principal amount of $4,000,000, dated September 1, 1986, and maturing September 1, 2016, which are from time to time outstanding under the Indenture.
Business Day means a day on which the Trustee is open for business.
Capital Expenditures shall mean the Capital Expenditures (except excluded capital expenditures): [a] as defined in Title IV of the Renegotiations Amendments Act of 1968 (P.L. 90-634) (Section 103(b)(6)(D) and (E) of the Code) as now or hereafter amended or as defined in any Internal Revenue Service regulations or rulings made pursuant to the aforesaid legislation or in court or administrative decisions with respect to the aforesaid; and [b] made within a period of three (3) years following the issuance of the Bonds and within three (3) years preceding the date of the Bonds; and [c] financed otherwise than out of the proceeds of Industrial Development Bonds to which Section 103(b)(6)(A) of the Code applies.
Closing Date means the date of delivery of the Bonds to the Underwriter upon payment therefor.
Code means the Internal Revenue Code of 1954, as amended, and such term includes all Treasury Regulations and Internal Revenue Service rulings promulgated thereunder.
Completion Date shall be the date of completion of acquisition, construction, developing and equipping of the Project as that date shall be certified in Section 306 of this Loan Agreement.
County means the County of Oklahoma, Oklahoma, the beneficiary of the Authority.
Date of Taxability shall mean the date set forth in the Notice as the date on which an Event of Taxability occurred.
Debt Service Reserve Fund means the Debt Service Reserve Fund established and created by Section 501 of the Indenture.
Default means a default as described in Section 501 of this Loan Agreement.
Determination of Taxability means a determination that the interest income on the Bonds is subject to Federal income taxation as a result of an Event of Taxability, which determination shall be deemed to have been made upon the first to occur of the following:
[a] The date on which the Owner is advised in writing by the Commissioner or any District Director of the Internal Revenue Service that based upon any filing of the Owner, or upon any review or audit of the Owner, or upon any other grounds whatsoever, an Event of Taxability has occurred;
[b] The date on which the Owner receives notice from any Bondholder or the Trustee in writing that the Internal Revenue Service has issued a statutory notice of deficiency or similar notice to a Bondholder or former Bondholder which asserts in effect that the interest on any Bond owned by the Bondholder or former Bondholder is includable in the gross income of such Bondholder or former Bondholder due to the occurrence of an Event of Taxability;
[c] The date on which the Owner is advised in writing by the Commission or any District Director of the Internal Revenue Service that there has been issued a public or private ruling of the Internal Revenue Service or a technical advice memorandum issued by the national office of the Internal Revenue Service that the interest on any Bond is includable for Federal income tax purposes in the gross income of a Bondholder or a former Bondholder due to the occurrence of an Event of Taxability;
[d] The date on which the Owner is advised in writing that a final determination, from which no further right of appeal exists, has been made by a court of competent jurisdiction in the United States of America that the interest on any Bond is includable in the gross income of a Bondholder or a former Bondholder due to the occurrence of an Event of Taxability; or
[e] The date on which the Owner receives a notice from the Trustee in writing that in the opinion of bond counsel of recognized competence in such matters, the interest on the Bonds is includable in the gross income of the Bondholders or former Bondholders of the Bonds due to an Event of Taxability.
Event of Default means any occurrence or event specified in and defined by Section 801 of the Indenture.
Event of Taxability means the occurrence of any of the following conditions or circumstances:
[a] The Bonds constitute arbitrage bonds within the meaning of Section 103(c) of the Code;
[b] The weighted average maturity of the Bonds exceeds the weighted average estimated economic life of the components comprising the Project by more than twenty percent [20%] as determined pursuant to Section 103(b)(14) of the Code;
[c] more than twenty-five percent [25%] of the net proceeds of the Bonds are used to provide a facility, the primary purpose of which is one of the following: retail food and beverage services; automobile sales or service; or the provision of recreation or entertainment; or any portion of the net proceeds of the Bonds is used to provide the following: any private or commercial golf course; country club; massage parlor, tennis club; skating facility (including roller skating, skateboard and ice skating); racket sports facility (including any handball or racquetball court); hot tub facility; suntan facility; racetrack; airplane, skybox or other private luxury box; health club facility; gambling facility; or facility for sale of alcoholic beverages for off-premise consumption;
[d] Less than substantially all [95%] of the net proceeds of the Bonds are used to pay the costs of land or property of a character subject to the allowance for depreciation under Section 167 of the Code;
[e] The Owner fails to observe its capital expenditure and annual supplemental statement covenants in Section 434(11) of this Loan Agreement;
[f] The Owner takes or omits to take any action, or any person acting on the Owners behalf or direction takes or omits to take any action, or there is any mistake in or untruthfulness of any representation of the Owner contained in this Loan Agreement or any Project Document or in connection with the issuance of
the Bonds, if such act or omission, or such mistake in or untruthfulness of such representation, has the effect of causing the interest income on the Bonds to be or to become subject to Federal income taxation; or
[g] The interest income on the Bonds becomes subject to Federal income taxation as a result of a Taxability Change or for any other reason;
provided, however, that no Event of Taxability shall be deemed to have occurred if the interest income on the Bonds shall be subject to Federal income taxation for any period solely because during that period any such Bonds were held by a person who is a Substantial User or a Related Person.
Excluded Property means all Additions made or acquired by the Owner pursuant to Section 412 or 413 of this Loan Agreement.
Facilities means the real and personal property set out on Schedule A attached hereto and made a part hereof; any Additions becoming part of the Facilities pursuant to Section 411 hereof; Restorations; Substituted Property; and repairs, modifications, alterations, accessions and improvements to all of the foregoing, but excluding Removed Property and Excluded Property and any real or personal property destroyed or taken by exercise of the power of eminent domain as provided in Section 424 hereof.
Force Majeure means without limitation the following: Acts of God, strikes, lockouts or other industrial disturbances; acts of public enemies; orders of any kind of the government of the United States or of the State of Oklahoma or any of their departments, agencies or officials or any civil or military authority; riots; insurrections; epidemics; land slides; lightning; earthquakes; wind storms; tornadoes; fire; hurricanes; storms; floods, washouts; droughts; arrests; restraint of government and people; civil disturbances; explosions; breakage or accident to machinery, transmission pipes, lines, wires or canals; or partial or entire failure of the utilities.
The terms herein, hereunder, hereby, hereto, hereof and any similar terms refer to this Loan Agreement; the term heretofore means before the date of execution of this Loan Agreement; and the term hereafter means after the date of execution of this Loan Agreement.
Impositions means:
[a] all taxes and governmental charges of any kind whatsoever (including, but not limited to, any taxes levied upon or with respect to the Facilities or any income or profits of the Authority from the Facilities, and any charge on the revenues and receipts therefrom prior to the charge thereon and mortgage,
pledge or assignment thereof created and made in this Loan Agreement) that may at any time be lawfully assessed or levied against on or with respect to [i] the Facilities or the Owners interest therein; or [ii] the machinery, equipment or other property installed or brought by the Authority or the Owner in or on the Facilities;
[b] all utility and other charges lawfully made by any governmental body for public improvements that may be secured by a lien on the Facilities;
[c] all assessments and charges lawfully made by any governmental body for public improvements that may be secured by a lien on the Facilities; and
[d] all mechanics and materialmens liens, or other encumbrances of whatever nature (except Permitted Encumbrances) on or with respect to the Facilities.
Indebtedness means the Bonds, the Owners Note, the Additional Payments and the Secured Indebtedness.
Indenture means the Bond Indenture, dated as of September 1, 1986, between the Trustee and the Authority, and all amendments and supplements thereto from time to time executed.
Independent Engineer means competent and qualified engineers, architect-engineering corporations or firms of architect-engineers (who, in each, case, shall be registered professional engineers, architect-engineers or architect-engineering firms) selected by the Owner with special reference to his, its or their time, efforts and capability for evaluating the Facilities as required in this Loan Agreement. The Independent Engineer shall be paid by the Owner.
Inducement Resolution means the resolution adopted by the Authority on January 21, 1985, as amended June 12, 1986, offering to finance the acquisition, construction, development and equipping of the Facilities and issue the Bonds.
Industrial Development Bonds shall mean Industrial Development Bonds as defined in Section 103(b)(2) and Section 103(b)(6)(A) and (B) of the Code as heretofore or hereafter amended or in any Internal Revenue Service regulations or rulings made pursuant to the aforesaid legislation or in court or administrative decisions made with respect to the aforesaid. Industrial Development Bonds includes the Bonds.
Investment Obligations or Permitted Investments means any of the following:
[i] any bonds or other obligations which are as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America, including
obligations of any of the Federal agencies set forth in clause (ii) below to the extent unconditionally guaranteed by the United States of America;
[ii] any bonds or other obligations of the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Financing Bank, the Federal Intermediate Credit Banks, Federal Banks of Cooperatives, Federal Land Banks, Federal Home Loan Banks, Farmers Home Administration and Federal Home Loan Mortgage Association;
[iii] Money Market Mutual Funds whose assets consist solely of obligations described in [i] or [ii] above;
[iv] Housing Authority bonds issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a pledge of annual contributions under contracts with the United States of America; or Project Notes issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a requisition or payment agreement with the United States of America;
[v] direct and general obligations of any state of the United States of America or any municipality in Oklahoma, being rated in one of the three highest major rating categories established by Moodys or S&P, to the payment of the principal of and interest on which the full faith and credit of such state or municipality is pledged;
[vi] savings certificates or certificates of deposit, whether negotiable or non-negotiable, issued by any savings and loan association organized under applicable state or federal law, provided such deposits shall be continuously and fully insured by the Federal Savings and Loan Insurance Corporation;
[vii] certificates of deposit issued by any bank or trust company (including the Trustee) organized under the laws of the State, or any other state, or any national banking association (including the Trustee) in any amount provided that such certificates shall be either: (1) continuously and fully insured by the Federal Deposit Insurance Corporation, or (2) continuously and fully secured by such securities as are described above in clauses [i] through [iii], inclusive, which shall have a market value (not including accrued interest) at all times at least equal to the principal amount of such certificates and such certificates shall be lodged with the Trustee responsible for the derivative fund invested, as custodian, by the bank, trust company or national banking association issuing each such certificate required to be so secured shall furnish the Trustee with either the securities pledged to the Authority as secured therefor or a prior perfected security interest in such pledged securities which are free and clear of any claims by third parties and are segregated in a custodial or trust account held
by a third party (other than the bank, trust company or national banking association issuing the certificate of deposit required to be so secured) as the agent solely of, or in trust solely for the benefit of, the Trustee; or
[viii] obligations of guaranteed investment contracts negotiated and/or approved by the Owner and Authority before being presented to the Trustee for investment purposes with any national or state banking institution (including the Trustee) or any other qualified financial institution with the unsecured short-term indebtedness of such national, state or other institution being rated in one of the three highest major rating categories established by Moodys or S&P.
Letter of Credit means the standby irrevocable Letter of Credit substantially in the form attached to the Indenture as Schedule B, issued by The Liberty National Bank and Trust Company of Oklahoma City, Oklahoma City, Oklahoma, and expiring on or before September 1, 1990, as provided therein, in favor of the Trustee, in form and substance satisfactory to the Owner and Letter of Credit Bank, in an aggregate principal sum at least equalling ten percent (10%) of the outstanding principal amount of the Bonds.
Letter of Credit Bank or Bank means The Liberty National Bank and Trust Company of Oklahoma City, Oklahoma City, Oklahoma, a banking association duly organized and existing under the laws of the United States of America and of the State of Oklahoma, and its successors and assigns.
Loan Agreement means this Loan Agreement and Indenture of First Mortgage, dated as of September 1, 1986, by and among the Authority, the Owner and the Trustee, and such term shall include any instrument supplementing or amending such Loan Agreement.
Moodys means Moodys Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, Moodys shall be deemed to refer to any other nationally recognized securities rating agency designated by the Authority, with the consent of Letter of Credit Bank, by notice to Trustee.
Net Proceeds (of sale of all or a part of the Project) shall mean the gross proceeds thereof, less all costs of sale, including bona fide real estate sales commissions.
Net Recovery means the total amount collected under any and all policies of insurance covering damage or destruction of the Facilities or any award, compensation or damages recovered on account of any taking or condemnation of the Facilities (including any proceeds received from the sale of all or part of the Facilities under threat or condemnation), less any expenses, including counsel fees incurred in litigating, arbitrating, compromising or settling any claim arising
out of such damage, destruction, taking or condemnation of the Facilities.
Notice shall mean a notice given by the Trustee or a Bondholder to the Owner of a Determination of Taxability.
Oklahoma Open Meeting Act means Title 25, Oklahoma Statutes 1981, Sections 301-314, as amended.
The terms Outstanding or Bonds outstanding means all Bonds which have been authenticated and delivered by Trustee under the Indenture, except:
[a] Bonds cancelled after purchase in the open market or because of payment at maturity;
[b] Bonds for the payment of which cash funds or Federal Obligations (as defined in the Indenture) shall have been theretofore deposited with Trustee (whether upon or prior to the maturity date of any such Bonds); and
[c] Bonds in lieu of which other Bonds have been authenticated under Section 207 or 208 of the Indenture.
Owner means Westlake Nursing Home Limited Partnership, an Oklahoma limited partnership composed of JiCo Health Services, Inc., an Oklahoma corporation, the General Partner; F.G. Armstrong, of Fairfax, Oklahoma, a Limited Partner; Gail L. Carnes, of Tulsa, Oklahoma, a Limited Partner; and George Carnes, of Tulsa, Oklahoma, a Limited Partner, and permitted successors in ownership of the Project pursuant to Section 432 of this Loan Agreement.
Owners Note means the First Mortgage Promissory Note of even date with the Bonds in the face principal amount of $4,000,000, made payable to the Trustee and issued by the Owner under and pursuant to the terms of this Loan Agreement in the form attached hereto as Schedule B and incorporated herein by reference.
Owners Resolution means the Resolution adopted by the general partner and limited partners of the Owner on September 12, 1986, approving execution of the Project Documents to which the Owner is a party.
partner or partners shall be those individuals, corporations and/or other entities who are or may hereafter become the general partner or a limited partner of the Owner.
Payments means the payments of principal and interest made pursuant to the Owners Note and this Loan Agreement.
Permitted Encumbrances means as of any particular time, [i] Impositions not then delinquent; [ii] the Project Documents; [iii] utility, access and other easements and rights-of-way, mineral rights, restrictions and exceptions that will not materially interfere with or impair the operations being conducted with the Facilities (or, if no operations are being conducted therewith, the operations for which the Facilities were designed or laws modified); and [iv] such minor defects, irregularities, encumbrances, easements, rights-of-way and clouds on title as normally exist with respect to property of the character of the Facilities and as do not in the aggregate materially impair the property affected thereby for the purpose for which it was acquired or is held by the Owner.
Principal User means a principal user of the Facilities within the meaning of Section 103(b)(6)(B) of the Code.
Project means the Facilities acquired, constructed, developed and equipped with the proceeds of the Bonds and shall mean in certain contexts, the acquisition, construction, developing and equipping of the Facilities and any payment of the cost and expenses incident thereto and to the issuance of the Bonds. The Project shall be financed with the proceeds of the Bonds and any funds of the Owner used to pay Project Costs in excess of funds on deposit in the Project Fund prior to the Completion Date.
Project Costs means together with any other proper cost items not specifically mentioned herein (but limited to the extent authorized by the Code and regulations, rulings, and judicial and administrative interpretations thereunder) the following costs of the Project: all costs of acquiring, constructing, developing, furnishing and equipping the Facilities, including but not limited to, obligations incurred for labor and materials and contractors, builders and materialmen; moving and transportation costs for the Facilities and for any machinery or equipment relocated in connection with the construction of the Facilities; the restoration or relocation of property damaged or destroyed in connection with such acquisition, construction, development and equipping; premiums of contractors performance, payment and completion bonds required by the Letter of Credit Bank or the Owner; costs of architects and engineers services related to the period of acquisition, construction, development and equipping of the Facilities; payment or reimbursement of the Owner for the costs of items acquired, fabricated or purchased by the Owner for inclusion in the Project; any fees, compensation or expenses of the Trustee or the Letter of Credit Bank in connection with the Project or issuance of the Bonds; abstract, survey, title opinion and title policy costs; capitalized interest; legal fees and expenses of Bond Counsel and counsel to the Trustee, Owner and the Letter of Credit Bank in connection with the Bonds and Project; the fees of the Letter of Credit Bank for providing the Letter of Credit; recording fees and Bond issuance expenses and the costs of printing the Bonds and reproducing the Project Documents and other transcripts of proceedings. All of the above shall be reasonable and proper and directly attributable to, incident to and properly allocable to the acquisition,
construction, development and equipping of the Facilities included in the Project.
Project Documents means the Bonds, the Indenture, the Owners Note, this Loan Agreement, and the other instruments related to financing of the Project and the making of the Project Loan.
Project Fund means the Project Fund established and created by Section 501 of the Indenture.
Project Loan means the loan to Owner to provide funds to construct the Project as evidenced by the Owners Note.
Public Trust Act means Title 60, Oklahoma Statutes 1981, Section 176 to 180.3, as amended from time to time.
registered owner means the owner of any registered Bond as reflected on the register of the Authority maintained by the Trustee.
Related Person shall mean a related person within the meaning of Section 103(b)(6)(C) of the Code and the regulations issued thereunder.
Removed Property means machinery, equipment, fixtures, Additions, Substituted Property, Restorations or property removed from the Facilities in conformity with Section 416 or 417 of this Loan Agreement. After removal, Removed Property shall be Excluded Property.
Restorations means repairs, restorations, reconstructions, acquisitions or installations made with respect to the Facilities as a result of damage, destruction or condemnation of all or part of the Facilities, but such terms shall not include Additions made to the Facilities. All Restorations shall become part of the Facilities.
Revenue Fund means the Revenue Fund established and created by Section 501 of the Indenture.
S&P means Standard and Poors Corporation, a corporation organized and existing under the laws of the State of New York, its successors and assigns, and if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, S&P shall be deemed to refer to any other nationally recognized securities rating agency designated by the Authority, with the consent of the Letter of Credit Bank, by notice to the Trustee.
Secured Indebtedness means any and all sums which the Authority or the Trustee may expend or become obligated to expend (including, but not limited to, court costs, attorneys fees, and receivers fees) to cure any default of the Authority or Owner under the Project Documents, or arising out of any such default or incident to delay in payment of the sums and the performance of obligations thereunder, or exercising any right, rights, remedy or remedies consequent upon any default or delay, plus interest at the maximum legal rate upon all
such funds in default, and all monies so expended by the Authority or the Trustee from the date of each such expenditure or default, all of which expenditures and interest are repayable at once upon demand.
State means the State of Oklahoma.
Substantial User shall mean a person or entity who will be a substantial user within the meaning of Section 103(b)(13) of the Code of the Project after the Bonds are issued.
Substituted Property means buildings, equipment, machinery, fixtures, Additions or facilities substituted for Removed Property. Substituted Property shall become part of the Facilities.
Taxability Change means any change in the Constitution or laws of the United States of America or the applicable Treasury Regulations thereunder occurring after the date of issuance of the Bonds (whether or not the effective date thereof is prior or subsequent to such issuance date) which results in the interest on the Bonds being included in the gross income of any registered owner (other than a registered owner who is a Substantial User or a Related Person).
Trustee shall mean The Liberty National Bank and Trust Company of Oklahoma City, Oklahoma City, Oklahoma, a banking association organized under the laws of the United States of America and of the State of Oklahoma, and its successors, and any corporation resulting from or surviving any consolidation or merger to which it or its successors may be a party and any successor at the time serving as successor trustee hereunder.
Trustees Acceptance Fee means the acceptance fee of Trustee to accept the trusteeship hereof and any associated expenses.
Trustees Other Fees means the annual fees and unreimbursed expenses of the Trustee Bank.
Trust Estate means the property conveyed to Trustee pursuant to the First, Second and Third Granting Clauses of the Indenture.
Trust Indenture means the Trust Indenture dated as of May 1, 1981, creating the Authority pursuant to the Public Trust Act, the Oklahoma Trust Act and other applicable statutes of the State of Oklahoma, together with the Amendment to Trust Indenture dated as of May 5, 1982, and any supplements or amendments to the foregoing instruments.
Underwriter means Stifel, Nicolaus & Co. Incorporated, of Oklahoma City, Oklahoma.
Words importing persons include firms, associations and corporations. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Words importing the singular number shall include the plural number and vice versa unless the contest shall otherwise indicate.
SECTION 102 . Interpretations . References to Articles, Sections and other subdivisions of this Loan Agreement are the Articles, Sections and other subdivisions of this Agreement as originally executed. The table of contents and headings of this Loan Agreement are for convenience of reference only and shall not define or limit the provisions hereof in any respect.
[END OF ARTICLE I]
ARTICLE II
MORTGAGE, PLEDGE AND ASSIGNMENT OF FACILITIES
WESTLAKE NURSING HOME LIMITED PARTNERSHIP, in consideration of the premises and in consideration of the payment by the Authority to the Owner of the sum of One Dollar ($1.00), receipt whereof is hereby acknowledged, and in consideration of the acceptance by the Authority and Trustee of this Loan Agreement and to secure payment of the Owners Note and all sums and liabilities at any time secured hereby, including interest and attorneys fees with respect to all of the foregoing, and also any and all sums which the Authority, Trustee or Letter of Credit Bank may be or become obligated to pay for or on behalf of the Owner, whether by agreement or by operation of law, and to secure and assure the strict, full and prompt performance and observance by the Owner of each and every covenant, warranty and agreement undertaken by it herein, does hereby grant, bargain, sell, alien, remise, release, convey, transfer, assign, confirm, set over, mortgage and pledge the Facilities unto the Authority, its successors and assigns, and creates a security interest in the Facilities;
TO HAVE AND TO HOLD all and singular the aforesaid Facilities, including all additional property which has become or may be subject to the lien of this Loan Agreement, unto the Authority, its successors and assigns, forever; IN TRUST NEVERTHELESS, until the Owners Note and all Additional Payments required to be paid by Owner under Section 501 hereof have been paid, and all Secured Indebtedness has been paid, and all obligations of the Owner have been performed, for the benefit and security of the Authority and its assignee, the Trustee, secured by this Loan Agreement.
The Facilities mortgaged, pledged and assigned under this Article II is specifically mortgaged, pledged and assigned for the payment of and to secure the payment of any and all Secured Indebtedness and Additional Payments.
AND CONDITIONED HOWEVER, that if the Owner shall well and truly pay or cause to be paid fully and promptly when due the Owners Note, Additional Payments and all Secured Indebtedness at any time secured hereby, and shall promptly faithfully and strictly keep, perform, and observe or cause to be kept, performed and observed all of the covenants, warranties and agreements contained herein to be by Owner kept, performed and observed, then upon retirement of the Owners Note, payment of all Additional Payments and Secured Indebtedness and performance of all obligations of the Owner hereunder, in such event this Loan Agreement shall be and become void and have no further force and effect, and the Facilities shall be released from the lien hereof; otherwise the same shall remain in full force and effect.
The Owner hereby covenants and agrees with, and does hereby covenant unto the Authority, that the Owner has good right and lawful authority to mortgage, pledge, transfer, assign and otherwise involve
the mortgaged, pledged and assigned Facilities to the extent and in the manner herein provided; and that all such Facilities are free and clear of all liens, claims, demands, encumbrances, taxes, special assessments and governmental charges which could or might in any way adversely affect or prejudice the rights, interests, powers and privileges hereby vested in and conferred upon the Authority. The Owner will not suffer any lien or encumbrance upon the Facilities mortgaged, pledged and assigned under the provisions hereof, or any part thereof, superior to the mortgage, pledge, assignment, security interest or lien hereof to accrue or be created; or do or suffer any act or thing whereby the security hereof may be diminished or impaired. The Owner further covenants and agrees to forever defend the title to each and every part and parcel of said mortgaged, pledged and assigned Facilities against the claims and demands of all persons whomsoever.
[END OF ARTICLE II]
ARTICLE III
AUTHORIZATION, TERMS, FORM AND ISSUANCE OF OWNERS NOTE;
LOAN OF PROCEEDS OF BONDS TO OWNER;
COVENANT OF OWNER TO PAY EXCESS ACQUISITION,
CONSTRUCTION, DEVELOPMENT AND EQUIPMENT COSTS;
GUARANTY AGREEMENT OF OWNER
SECTION 301 . Authorization, Terms, Conditions, and Form of Owners Note . The Owner hereby authorizes the issuance of the Owners Note in the principal amount of $4,000,000, dated as of September 1, 1986, to be executed by JiCo Health Services, Inc., an Oklahoma corporation, as the general partner acting for and on behalf of the Owner, and to be in the form attached to this Loan Agreement as Schedule B. On the date of delivery of the Bonds the Owner shall deliver the Owners Note to the Trustee.
SECTION 302 . Loan of Bond Proceeds to Owner . In order to provide funds for financing part of the cost of acquiring, constructing, developing and equipping the Facilities, the Authority agrees that upon issuance of the Bonds, the receipt of proceeds thereof and deposit of the same in the Project Fund shall constitute a loan of the proceeds of the Bonds to the Owner, which Project Loan shall be evidenced and secured by the Owners Note Issued to the Authority and assigned to the Trustee. The Owner, Authority and Trustee covenant and agree to apply the proceeds of the Bonds solely for payment or reimbursement of the Project Costs.
SECTION 303 . Project Fund . On the date of delivery of the Bonds, the Bond proceeds (excluding accrued and capitalized interest in accordance with Section 502 of the Indenture) shall be deposited in the Project Fund with the Trustee. The Authority and Trustee covenant and agree upon receipt of the Bond proceeds, that the Project Fund shall be established and maintained as trust account in the custody of the Trustee separate and apart from all other funds of the Authority, the Letter of Credit Bank and Owner. The funds on deposit in the Project Fund shall be expended by checks issued by the Trustee on the basis of requisitions to pay Project Costs. Such requisitions shall be originated, approved and executed by the Authorized Owner Representative, Authorized Authority Representative and Architect or Engineer, if appropriate, in that order. Such requisitions shall be in the form of Payment Requisition attached to this Loan Agreement (with such revisions as may be approved by Bond Counsel), shall be accompanied by invoices or orders to be paid as determined by Owner; PROVIDED, HOWEVER, until the general contractor has been selected for project construction and its performance bond approved by Underwriter, evidence of which shall be delivered to Trustee, not in excess of $400,000 of the monies available in the Project Fund shall be disbursed. Should the general contractor not be selected and its performance bond tendered to Underwriter for approval prior to January 12, 1987, the Bonds will be subject to extraordinary mandatory redemption as provided in the Bonds. As required by Section 178(D) of the Public
Trust Act, the Authority shall report to the Board all expenditures made from the Project Fund, by means of a copy, forwarded by the Trustee to the Board, of all requisitions paid from the Project Fund or such other means to convey the information as determined by Trustee. The Owner will cause the Facilities to be acquired, constructed and equipped with all reasonable dispatch. The Owner represents that all such Facilities were ordered from the vendor, supplier or manufacturer thereof, or acquisition, construction, or development thereof was initiated subsequent to the date of the Inducement Resolution.
If at any time prior to Completion Date, the Trustee shall, in its option, determine that the undisbursed funds in the Project Fund are insufficient to pay the then remaining Project Costs, the Trustee may, but shall be under no obligation to do so, require the Owner to deposit in the Project Fund, such sum or sums which when added to the funds on deposit therein, shall be adequate in the Trustees opinion, to pay the then remaining Project Costs. Failure of the Owner to make such a deposit within ten (10) days (or in all events by August 31, 1989) after written demand therefor by the Trustee shall constitute a Default. The Owner recognizes that the Trustee shall have the right under this Section to require deposit of funds by the Owner in the Project Fund any time after the issuance of the Bonds and prior to the Completion Date.
Provided the Authority and Owner are otherwise in compliance with the terms and conditions of this Loan Agreement, the Trustee shall not be obligated to make any or further disbursements from the Project Fund, or to allow Payment Requisitions to be paid, if a Default exists and remains uncured or unwaived.
The Project Fund shall be kept in the Trustee, shall be held in a separate and special trust account for the benefit of the Bondholders and shall not be subject to lien or attachment by any creditor of the Trustee, Letter of Credit Bank, Authority or Owner. Such funds shall constitute part of the Trust Estate and be subject to the lien thereon of the Indenture.
SECTION 304 . Investment of Project Fund; Disposition of Investment Income; Application of Excess Funds Upon Completion of Facilities . Monies on deposit in the Project Fund above the current need for payment of Project Costs may at the request of the Owner be invested in Investment Obligations. The Authorized Owner Representative shall request, direct and approve all such investments and such investments shall mature in such amounts and at such times as shall be necessary to provide funds when needed to pay Project Costs from the Project Fund. The Owner shall furnish to the Trustee a schedule of estimated times and amounts of demands upon the Project Fund. Net income and gain received and collected from investment of monies in Project Fund shall be applied as received to offset any investment losses in the Project Fund, and the balance shall remain in the Project Fund until completion. The amount of excess monies in the Project Fund after the Completion Date and payment of all Project Costs shall be transferred from the Project Fund and deposited in the Bond Fund.
SECTION 305 . Arbitrage Covenants . The Authority and the Owner certify and covenant that so long as the Bonds remain outstanding, money on deposit in any fund or account in connection with said Bonds, whether or not such monies were derived from the proceeds of the Bonds or from any other sources, will not be used, allowed to accumulate or invested in a manner which will cause such Bonds to be arbitrage bonds within the meaning of Section 103(c) of the Code and any regulations promulgated or proposed thereunder, as the same presently exist or may from time to time hereafter be amended, supplemented or revised. The parties reserve the right, however, to make any investment of such monies if, when, and to the extent that said Section 103(c) or regulations promulgated hereafter shall be repealed ore relaxed or shall be held void by final decision of a court of competent jurisdiction, but only if any investment made by virtue of such repeal, relaxation or decision would not result, in the opinion of counsel of recognized competence in such matters, in making the interest on the Bonds subject to Federal income taxation. Under Treasury Regulations in effect under Section 103(c) of the Code on the date of issuance of the Bonds, the yield on Investment Obligations in which the Project Fund is invested will be restricted to the yield on the Bonds. The requirements for expenditure of Project Fund investment earnings contained in Articles V and VI of the Indenture shall be observed and the Bond proceeds expended within three (3) years of Bond issuance (or other applicable temporary front end safe harbor period).
SECTION 306 . Certificate of Completion . Upon completion of acquisition, construction, development and equipping of the Facilities, a certificate of completion signed by the Authorized Owner Representative shall be filed with the Authority and the Trustee.
The Owner covenants and agrees to cause the completion of acquisition, construction and equipping of the Facilities and tender a certificate of completion on or before August 31, 1989. Such certificate of completion shall state the Completion Date and inform the Authority, the Letter of Credit Bank and the Trustee that all Project Costs have been paid, with the exceptions therein set out.
Upon receipt of such certificate of completion and upon receipt of approval thereof by the Authorized Authority Representative and upon payment of all Project Costs then remaining unpaid, the Trustee shall apply the balance, except for monies necessary to pay for those exceptions set out in the certificate of completion, in such Project Fund in accordance with Section 304 of this Loan Agreement. After the filing of the certificate of completion and final payment and transfer from such Project Fund, requisition procedures shall not be used for Additions or Restoration to the Facilities.
SECTION 307 . Manufacturers, Vendors, Suppliers, Contractors and Subcontractors; Pursuit of Remedies . In the event of default by any manufacturer, vendor, supplier, contractor or subcontractor under any purchase, construction or improvement contract made by it in connection with the Project or in the event of breach of warranty with respect to any material, workmanship or performance, the Owner will
promptly proceed (subject to the Trustees advice to the contrary), either separately or in conjunction with others, to exhaust the remedies of the Owner against the manufacturer, vendor, supplier, contractor or subcontractor so in default and against each surety for the performance of such contract. The Owner agrees to advise the Trustee and Letter of Credit Bank of the steps it intends to take in connection with any such default. If the Trustee shall so notify the Owner, the Trustee may, in its own name or in the name of the Owner, prosecute or defend any action or proceeding or take any other action involving any such manufacturer, vendor, supplier, contractor, sub-contractor or surety which the Trustee deems reasonably necessary, and in such event the Owner hereby agrees to cooperate fully with the Trustee and to take all action necessary to effect the substitution of the Trustee for the Owner in any such action or proceeding. Any amounts recovered by way of damages, refunds, adjustments or otherwise in connection with the foregoing [a] if the Trustee or Owner has corrected, at its own expense, the matter which gave rise to such default or breach, shall be paid to such Trustee or Owner; otherwise [b] shall be paid into the Project Fund unless recovered after the Completion Date and full disposition of the Project Fund, in which case the amounts shall be disposed of in the same manner as excess Project Fund monies, in accordance with Section 304 of this Loan Agreement.
SECTION 308 . Owner Required to Pay Project Costs in Event Bond Proceeds Insufficient . In the event the proceeds of the Bonds loaned to the Owner by deposit to the Project Fund for payment or reimbursement for payment of Project Costs, and monies on deposit in the Project Fund should not be sufficient to pay such Project Costs in full, the Owner agrees to deposit in the Project Fund or to pay the portion of such Project Costs as may be in excess of the proceeds of the Bonds and the monies on deposit in the Project Fund. The Authority, Letter of Credit Bank and Trustee do not make any warranty, either express or implied, that the proceeds of the Bonds will be sufficient to pay all such Project Costs. The Owner agrees that if the Owner should pay any portion of such Project Costs pursuant to the provisions of this Section, it shall not be entitled to any reimbursement therefor from the Authority, Letter of Credit Bank or Trustee except to the extent of the proceeds of the Bonds, and it shall not be entitled to any diminution of payments payable under the Owners Note or this Loan Agreement. The Trustee may require deposits by the Owner in the Project Fund in accordance with Section 303 hereof.
SECTION 309 . Guaranty Agreement of Owner with Respect to Bonds . The Owner, as primary obligor, in consideration of the Project Loan, evidenced by the Owners Note, made by the Authority and to induce such Project Loan, hereby guarantees the prompt payment when due (whether at maturity, by acceleration or otherwise) of any and all principal, interest, liability and Indebtedness (including, without limitation, the Secured Indebtedness) of the Authority to the Trustee and Bondholders on and under the Bonds, the Indenture and this Loan Agreement. The obligation of the Owner hereunder constitutes an absolute, unconditional and continuing guaranty of the Indebtedness
irrespective of any other security for said Indebtedness. The obligation of the Owner hereunder is to pay the principal, interest, liabilities and Indebtedness and any and all other sums due under the Indenture, this Loan Agreement and the Bonds regardless of any contingencies whatsoever, and notwithstanding any circumstances or occurrences heretofore or hereafter arising or taking place or any action or inaction on the part of the Trustee or the Authority. The Owners agreement to pay the principal, interest, liability and Indebtedness due under the Indenture, this Loan Agreement and the Bonds shall not be subject to any rights of setoff, recoupment, abatement or counter-claim by the Owner. The Owner may not suspend or discontinue such payment or terminate this guaranty agreement until such Bonds and the Indebtedness are paid and retired. The Owner hereby waives presentment, demand for payment, protest, notice of protest and non-payment, notice of dishonor and diligence in collection of the Bonds and Indebtedness and notice of acceptance of this guaranty agreement. The Trustee shall not be required before enforcing any liability of the Owner hereunder to exhaust any remedies against the Authority, or to attempt to collect upon or resort to any other security for the Bonds or Indebtedness. This guaranty agreement shall be a guaranty of payment, and is not limited to a guaranty of collection. Provided, however, notwithstanding any provision in this Section to the contrary, the obligations of Owner herein are payable solely from the Trust Estate, It is understood and agreed by the parties that the debt obligations incurred in the Owners Note by the partners of the Owner are not general obligations of said partners but are limited obligations payable solely from specific revenues and secured by certain collateral.
All liability of the Owner to the Trustee and Bondholders hereunder shall, at the option of the Trustee, mature immediately, and all sums, the payments of which are guaranteed or agreed to be paid under this guaranty agreement shall become accelerated and immediately due and payable forthwith, upon the occurrence of any Default.
Without in any way limiting the absolute, certain, and unconditional character of the Owners obligations as just stated, but rather in amplification thereof, the Owner agrees that the Authority or Trustee may at any time and from time to time without notice to or the consent of the Owner, without incurring any responsibility whatsoever to the Owner, and without affecting, impairing, releasing or in any way diminishing the obligations of the Owner hereunder, upon or without any terms or conditions and in whole or in part [a] grant extensions of time to the Authority or the Owner for the performance of any obligations to the Trustee under the Indenture, this Loan Agreement or the Bonds; [b] alter, supplement, amend or modify any Project Document in accordance with terms thereof and particularly Article XI of the Indenture; [c] exercise or refrain from exercising any rights against the Authority or Owner or others or otherwise act or refrain from taking any action whatever; [d] settle or compromise in any other manner the indebtedness arising under or represented by the Bonds and Project Documents; and/or [e] exercise any rights or privileges granted under and pursuant to the terms of the aforesaid Project Documents.
No invalidity, irregularity or unenforceability of all or any part of the Bonds, any security therefor or any Project Document shall affect, impair, diminish or be a defense to this guaranty agreement. Any claim which the Owner may have against the Authority or Trustee for any reason (including without limitation any claim arising by reason of any payment made by the Owner to the Authority or the Trustee or any other person pursuant to or in respect of any of the Project Documents) shall be subject and subordinate to the prior payment in full of the Bonds and all other obligations under the Project Documents.
This guaranty agreement shall be governed, construed and interpreted in accordance with the laws of the State of Oklahoma. This guaranty agreement shall extend to and bind the respective successors and assigns of the Owner.
This guaranty agreement shall become automatically null and of no further effect from and after the time that [i] the Bonds and Indebtedness have been paid or prepaid as permitted in the Indenture, and [ii] all other obligations of the Owner to the Trustee and the Authority under the Project Documents have been performed and satisfied, and all other obligations of the Owner to the Authority and Trustee under this guaranty agreement have been performed and satisfied. The Owner agrees to pay all costs, expenses and fees, including all reasonable attorneys fees, which may be incurred by the Authority or Trustee in enforcing or attempting to enforce this guaranty agreement or protecting their respective rights following any Default on the part of Owner under any Project Document, whether the same shall be enforced by suit or otherwise.
[END OF ARTICLE III]
ARTICLE IV
REPRESENTATIONS, COVENANTS AND WARRANTIES
SECTION 401 . Additional Payments .
Impositions . The Owner does hereby agree to pay to the entity levying or requiring the payment of such Impositions, in addition to all other payments payable under this Loan Agreement, all Impositions (provided that with respect to Impositions that may be lawfully paid in installments over a period of years, the Owner shall be obligated to pay only such installments as are required to be paid during the term hereof). The Owner may pay such Impositions in installments, if so payable by law, whether or not interest accrues on the unpaid balance. The Owner shall promptly forward to the Authority and the Trustee a certification or other evidence satisfactory to the Authority and Trustee of payment in full or in part of any Imposition. The Owner shall have the right, upon written notice to the Trustee, to contest by appropriate and timely proceedings the validity or amount of any Imposition and in such event the Owner may permit any such Imposition to remain unsatisfied and undischarged during the period of such contest and any appeal therefrom provided the Owner effectively stays or prevents any judicial or official sale of all or part of the Facilities by reason of non-payment of such Imposition. Should the title of the Owner to any part of the Facilities be materially and imminently endangered or jeopardized, due to non-payment of the said Imposition, such Imposition shall be promptly paid by the Owner. In the event the Owner fails to pay any Imposition, the Trustee or Letter of Credit Bank, after first notifying the Owner of any such failure on its part, may (but shall not be obligated to) pay any such Imposition, and the amounts so advanced shall be paid promptly by the Owner as Secured Indebtedness upon the Trustees or Letter of Credit Banks presentation of statements, invoices or receipts evidencing the same.
Administrative Payments . As Additional Payments, during the term hereof, the Owner further agrees to pay the Administrative Payments as and when the same shall become due.
Annual Audit Costa . During the term hereof, Owner further agrees to pay directly to Authority immediately upon receipt of a bill therefore, Owners proportionate share of the annual audit costs of the Authority.
Owners Note Payments . Owner reconfirms that, to the best of its knowledge, the amounts required to be paid by Owner pursuant to the Owners Note and the Indenture, plus any other amounts available pursuant to the Indenture, will be sufficient at all times to pay the principal of and interest on the Bonds, to maintain all other Funds established under the Indenture at their required levels. In case the Payments recited in the Owners Note be insufficient to meet debt service requirements with respect to the Bonds as conclusively determined by the Trustee, then, in that event, the Trustee shall calculate
such deficiency, and the Owner hereby agrees to pay any such deficiency so determined within a reasonable time after notification by the Trustee of such deficiency, not to exceed sixty (60) days, and thereafter the Trustee may adjust such Owners Note Payments so that they will at all times thereafter be sufficient so as to enable the Trustee to make debt service requirements on the Bonds in all respects. In like manner Owner hereby covenants and agrees to keep and maintain the Debt Service Reserve Fund established under the Indenture with a minimum balance required by the Indenture, and in like manner to furnish any monies to the Trustee necessary or required to effect this end, all within 60 days after demand therefor by the Trustee. In the event the Owner fails to pay any Payment or Indebtedness, with or without first notifying the Owner of any such failure on its part, Trustee may (but shall not be obligated to) pay any such Payment or Indebtedness, and the amounts so advanced shall be paid promptly by the Owner as Secured Indebtedness upon the presentation of statements, invoices or receipts evidencing the same.
Costs of Issuing Bonds . The Bonds issued to finance the Project and to make the Project Loan (as an acquired purpose obligation and not as an acquired program obligation under applicable arbitrage regulations) have been collateralized with the Letter of Credit. With respect thereto, it has been necessary to pay certain administrative costs to issue, carry and repay such Bonds. The Owner hereby covenants to pay to the following described party all administrative fees and expenses ordinary and necessary to administer and service other Trustees services so long as they be outstanding, and any other necessary expense thereof, all as is described as follows, to-wit:
As additional costs of issuing, carrying and repaying the Bonds, it is necessary that the Trustee be compensated certain ongoing administrative fees for performing its fiduciary functions under the Indenture with relation to the Bonds, including Trustees Other Fees.
Therefore, to the extent that the Trustee is not paid such fees from Bond proceeds, the Owner agrees to pay beginning September 1, 1986, the annual fees of the Trustee and Trustees Other Fees as they become due under applicable terms of the Indenture.
Any remedy vested in the Authority or the Trustee by this Loan Agreement or the Indenture for the collection of the Bonds or Secured Indebtedness shall be available to the Authority and the Trustee for collection of Additional Payments and Administrative Payments.
SECTION 402 . Property Included in Facilities; Inventory . Real or personal property purchased, acquired, or constructed, in part or in whole, with proceeds of the Bonds loaned to the Owner and, as provided in this Article IV hereof, all modifications thereof and Additions thereto (except Excluded Property) shall become part of the Facilities owned by the Owner and mortgaged and pledged under this Loan Agreement. The Owner shall maintain at all times an inventory of the Facilities including descriptions and serial numbers whenever
possible. Such inventory list shall be open to inspection at any reasonable time by the Trustee and the Authority.
SECTION 403 . Location of Facilities . Equipment constituting part of the Facilities shall be installed and used by the Owner only in or on the site of the Facilities.
SECTION 404 . Excluded Property; Inventory . It is understood and agreed that to the extent the same is not acquired with the loaned proceeds of the Bonds, the Owner shall acquire or cause to be acquired land, structures, equipment, furniture, furnishings and machinery necessary for operation of the Facilities and shall install and use such equipment and machinery in and on the Facilities or site thereof. Such land, structures, equipment, furniture, furnishings and machinery not purchased with the loaned proceeds of the Bonds may be acquired pursuant to the terms of Sections 412 and 413 of this Loan Agreement. The Owner covenants and agrees to maintain at all times an inventory of each item of Excluded Property having an individual, and not aggregate, acquisition cost greater than $10,000. Such inventory list shall be open to inspection at any reasonable time by the Trustee, the Letter of Credit Bank and the Authority. The foregoing notwithstanding, the Owner may acquire Excluded Property by lease or purchase, and install and use such Excluded Property in and on the Facilities or site thereof.
SECTION 405 . Waste; Reduction in Structural Soundness, Value or Overall Operating Efficiency . The Owner shall at no time during the term hereof commit waste on the Facilities. The Owner shall not conduct its operations or allow the use or occupancy of the Facilities in such manner as to violate any applicable zoning, sanitary or safety law or any other applicable law, rule, regulation or ordinance.
The Owner shall comply with all applicable laws, rules, ordinances and regulations and in making or removing modifications, Restorations, remodeling, alterations or Additions shall at no time materially adversely affect or impair the structural soundness or value of the Facilities (provided, however, such overall operating efficiency may be reduced or impaired to the extent necessary to comply with any governmental requirements or regulations) unless the Owner shall, at its own cost and expense, repair any damage and restore the Facilities to their prior structural soundness, value and overall operating efficiency. Unless required by law, competitive bidding shall not be required for modifications, alterations, remodeling, Restorations or Additions.
SECTION 406 . Maintenance . The Owner covenants and agrees that, at its cost and expense, the Owner shall at all times during the term hereof keep and maintain the Facilities in good and reasonably safe operating order, condition and repair, reasonable and ordinary wear and tear alone excepted. The Owner further covenants and agrees to make all repairs, replacements, alterations, Additions, Restorations and modifications to the Facilities necessary to insure that such order, condition, state of repair and the overall operating efficiency
of the Facilities shall not be reduced or impaired, provided however, such overall operating efficiency may be reduced or impaired to the extent necessary to comply with any governmental requirements or regulations.
SECTION 407 . Operation and Maintenance Expenses . The Owner agrees to be obligated for and pay all expenses in connection with the operation and maintenance of the Facilities including, but without limitation, repairs, alterations, improvements and modifications to the Facilities, both internally and externally, cost of insurance, all utility bills and taxes, if any. It is understood and agreed to by the parties hereto that the Owner will enter into a management con-tract with JiCo Health Services, Inc. to operate the Project.
SECTION 408 . Inspections . Without cost to the Owner, the Authority, the Trustee, the Letter of Credit Bank and their representatives or agents shall have the right to make a reasonable number of inspections of the Facilities for the purpose of determining compliance with Section 405 and 406 hereof at reasonable times and in a manner which will not interfere with the Owners use thereof. In the event of the Owners breach of the covenants and agreements contained in Sections 405 and 406, following ten (10) days written notice to the Owner of specified breaches and its failure to take prompt and efficient action to cure the same, the Authority, Trustee, the Letter of Credit Bank or their representatives or agents shall have the right to enter the Facilities for the purpose of curing the same, and the cost thereof shall be paid promptly by the Owner as Secured Indebtedness, upon the Authoritys, the Trustees or the Letter of Credit Banks presentation of statements or invoices evidencing the same. Nothing in this Article shall require the Owner to permit entry in or on the Facilities of any person who is an officer, employee, servant or agent of, or is acting on behalf of, or in the interest of, a competitor of the Owner.
SECTION 409 . Access of Authority and Trustee to Facilities . Except as provided in Section 408 hereof, the Authority, the Trustee and the Letter of Credit Bank will be permitted only such limited access to the Facilities as shall be necessary and convenient to construct or install Additions to the Facilities as provided in Section 413 hereof, to maintain or prevent waste with respect to the Facilities as provided in Sections 405 and 406 hereof, and to make repairs or Restorations required to be constructed, installed or made pursuant to the provisions hereof or pursuant to the provisions of any agreement between the Owner and the Authority, the Trustee or the Letter of Credit Bank supplemental hereto.
SECTION 410 . Right to Remodel, Alter, Modify or Make Additions . As provided in Section 410, 411, 412 and 413, and subject to Sections 405 and 406, the Owner shall have the right at any time and from time to time during the term hereof with the prior written consent of Trustee for any changes set forth below which exceeds $50,000:
[a] to rearrange, modify, remodel or alter the Facilities;
[b] to construct, install and maintain such Additions as the Owner may from time to time desire; and
[c] to connect or tie-in wails and utility and other facilities located on the site of the Facilities to other facilities erected on real property adjacent to the site of the Facilities; provided however, that in such event the Owner must furnish the Authority and the Trustee with a certificate of an Independent Engineer that such connection and tie-in of walls and facilities will not materially adversely affect or impair the structural soundness or value of the Facilities or materially reduce the over-all operating efficiency of the Facilities.
All modifications, remodeling, alterations or Additions and all connection or tie-in walls and other facilities shall be constructed in good and workmanlike manner, conforming to good architectural and engineering practice. Unless required by law, competitive bidding shall not be required for modifications, alterations, remodeling or Additions.
SECTION 411 . Alterations and Additions Made by the Owner Which Become Part of Facilities . With the prior written consent of the Trustee, the Owner, at its own cost and expense, may make or cause to be made the modifications, alterations, remodelings or Additions described in the foregoing Section 410. All modifications, alterations, remodelings or Additions (excluding Excluded Property) shall be free of any liens and encumbrances (except Permitted Encumbrances) and if made pursuant to this Section 411, shall be part of the Facilities and shall be held, operated and maintained on the same terms and conditions as other items included in the Facilities.
SECTION 412 . Additions Made by the Owner Which Do Not Become Fart of Facilities . In lieu of acquiring or constructing Additions and installing, attaching and affixing the same in, on and to the Facilities as provided in Section 411, with the prior written consent of the Trustee, the Owner shall have the right, at its own cost and expense, at any time and from time to time during the term hereof to acquire and construct Additions and to install, attach and affix the same in and to the Facilities and retain title thereto in the name of the Owner, in which case the Additions shall become Excluded Property. No such Additions, title to which is retained by the Owner, shall be deemed part of the Facilities (unless such Additions constitute Substituted Property replacing part of the Facilities as provided in Section 416) and all such Additions shall constitute Excluded Property. The Owner shall have the right at any time and from time to time during the term hereof to remove or permit to be removed such Owner-owned Additions constituting Excluded Property from the Facilities and
to convey the same or to grant or permit any mortgage, encumbrance, lien or charge on or conditional sale or other title retention agreement with respect to such Owner-owned Additions constituting Excluded Property. The Owner may lease, as lessee, items of personal property or fixtures to be placed in or on the the Facilities under conditions which would make such property Excluded Property if owned by the Owner, and such leased property shall constitute Excluded Property.
As provided in Section 404 hereof, it is understood and agreed that the Owner shall acquire at its own cost the land, structures, equipment, furniture, furnishings and machinery necessary for its operations in or on the Project (to the extent the same is not acquired with the loaned proceeds of the Bonds) and shall install, locate and use the same in, on or about the Project. None of such machinery, furniture, furnishings and equipment shall become part of the Facilities. The Owner shall have the right to acquire such Excluded Property owned by the Owner, not included in the Facilities, and not mortgaged, pledged or assigned under this Loan Agreement. As provided in Section 404 hereof, the Owner covenants and agrees to maintain at all times an inventory of each item of Excluded Property having an individual, and not aggregate, cost greater than $10,000.
SECTION 413 . Additions or Refunding Financed by the Authority . In lieu of acquiring or constructing Additions and installing, attaching and affixing the same in, on and to the Facilities, as provided in Section 411 and 412, with the prior written consent of the Trustee, the Owner may make financing arrangements for the acquisition and construction of such Additions, or for refunding of the Bonds, by finding purchasers for indebtedness to be incurred by the Authority, in which case the Authority or Owner, with the proceeds of such indebtedness, will acquire and construct such Additions, and install, attach and affix the same in, on and to the Facilities, or shall refund the Bonds, as applicable. No such Additions shall be deemed part of the Facilities unless such Additions constitute Substituted Property replacing part of the Facilities as provided in Section 416. In the event the Authority incurs such indebtedness, the Owner shall contract with the Authority for making of note, lease or other payments sufficient to meet debt service requirements on the indebtedness incurred to finance such Additions or refund the Bonds. If Additions constituting Excluded Property are acquired as provided in this Section 413, the Owner shall have the right to perform the actions described in the following paragraphs [a] and [b] unless restrictions are imposed by this Loan Agreement, or the Indenture, or by the holders of indebtedness incurred to finance such Additions constituting Excluded Property:
[a] Remove or permit removal of such Additions constituting Excluded Property from the Facilities; or
[b] Convey the same or grant or permit any mortgage, encumbrance, lien or charge on or conditional sale or any other title retention agreement with respect to such Additions constituting Excluded
Property (excluding the site thereof), provided the same create no lien or encumbrance (except Permitted Encumbrances) on the Facilities.
SECTION 414 . Annual Inventory of Additions . The Owner shall file with the Authority and the Trustee on or before September 1 of each year an Annual Inventory of each Addition acquired in accordance with Sections 411, 412 or 413 having an individual, and not aggregate, acquisition cost greater than $10,000, constructed or installed in, on or about the Facilities. Such Annual Inventory shall identify each Addition as a part of the Facilities or Excluded Property.
SECTION 415 . Removal of Facilities Other Than Land . In the event that the Owner in its sound discretion determines that any Additions, Restorations or Facilities (except the site of the Facilities) which are part of the Facilities have become obsolete, worn out, inadequate, unsuitable, undesirable, uneconomic or unnecessary in the operation of the Facilities (though the Authority and the Trustee shall not be required to renew, repair or replace the same) with the prior written consent of the Authority and the Trustee, the Owner may perform the actions set out in Sections 416 or 417.
SECTION 416 . Removal and Substitution . Subject to the obligations of Section 405 the Owner may remove such Removed Property and sell, trade-in, exchange or otherwise dispose of the Removed Property, provided that the Owner substitutes (with direct payment of the cost thereof) and replaces anywhere in, on or to the Facilities other Substituted Property of equal or greater fair market value at the time of substitution and of equal or greater utility (but not necessarily the same function) in the operation of the Facilities. All such Substituted Property shall be free of any and all liens and encumbrances (other than Permitted Encumbrances), shall become part of the Facilities and shall be held, operated and maintained by the Owner on the same terms and conditions as the Removed Property.
Removed Property so replaced and substituted for shall, at the request of the Owner, be released from the encumbrances of this Loan Agreement. The Authority and Trustee agree to execute necessary documents for the accomplishment of such release and title change.
SECTION 417 . Removal Without Substitution . Subject to the obligations of Section 405, the Owner may remove such Removed Property, and sell, trade-in, or exchange it (as a whole or in part) either to itself or to another, or scrap it as a whole or in part without being required to substitute other Substituted Property in lieu thereof, provided:
[a] that in the case of the sale of any such Removed Property to anyone other than itself or in the case of scrapping thereof, the Owner pays to the Trustee (for deposit in the Bond Fund and application to redemption of Bonds) the proceeds from such sale or scrap value thereof, as the case may be;
[b] that in the case of such trade-in of such Removed Property for other items not to be included in the Facilities, the Owner pays to the Trustee (for deposit in the Bond Fund and application to redemption of Bonds) the amount of the credit received by it on such trade-in; or
[c] that in the case of the sale of any such Removed Property to the Owner, the Owner pays to the Trustee (for deposit in the Bond Fund and application to redemption of Bonds) an amount equal to the higher of (i) the original cost thereof less depreciation at rates calculated in accordance with generally accepted accounting principles, or (ii) the current market value as appraised by an appraiser approved by the Trustee, the Letter of Credit Bank and the Owner.
SECTION 418 . Annual Inventory of Removals and Substitutions; Identification . The Owner will report to the Authority and the Trustee in the Annual Inventory on or before September 1 of each year, all such removals of Removed Property and substitutions of Substituted Property and will execute and deliver to the Authority and the Trustee such documents as they may from time to time require to confirm the mortgage and pledge of any Substituted Property that under the provisions of Section 416 is to become subject to this Loan Agreement. The Owner will pay all costs (including counsel fees) incurred in subjecting to the lien of this Loan Agreement any Substituted Property that under the provisions of Section 416 is to become subject to this Loan Agreement. A security interest financing statement shall be executed by the Owner and filed with regard to all Substituted Property if deemed necessary by the Trustee to protect the Trustees security interest (as assignee) under this Loan Agreement.
The Owner covenants that it will not remove, or permit the removal of any Additions, Restorations or Facilities except in accordance with the provisions of this Article IV.
SECTION 419 . No Warranty of Fitness . The Authority, Trustee and Letter of Credit Bank make no warranty, either express or implied, as to the condition, fitness for a particular purpose or merchantability of the Facilities, or any part thereof or that the same will be suitable for the Owners purposes or needs. By execution hereof Owner accepts the Facilities in as-is condition, waives objection to defects or deficiencies known, unknown and latent, and acknowledges that no warranties, representations or agreements not expressed herein have been made; provided however, nothing contained in this Section shall be deemed a waiver of any warranty, representation or agreement contained in the purchase, installation or construction contracts for the Project, or the obligations of any manufacturer, vendor, supplier, contractor, or subcontractor with respect to the Project.
SECTION 420 . Indemnification of Authority and Trustee . The Owner covenants and agrees, at its expense, to pay, and to indemnify
and save the Authority, Trustee and Letter of Credit Bank harmless of, from and against any and all claims, damages, expenses, liabilities and taxes (of any character or nature regardless of by whom imposed), losses of every conceivable kind, character and nature whatsoever (including, but not limited to claims for loss or damage to any property or injury to or death of any person) asserted by or on behalf of any person, firm, corporation or governmental authority arising out of, resulting from, or in any way connected with the Facilities or the condition, occupancy, use, possession, conduct or management of or any work done in or about the Facilities or from the planning, design, acquisition or construction of the Facilities or any part thereof, or from the leasing or subletting of any part thereof. The Owner also covenants and agrees at its expense, to pay and to indemnify and save the Authority, Trustee and Letter of Credit Bank harmless of, from and against, all costs, reasonable counsel fees, expenses and liabilities incurred in any action or proceeding brought by reason of any such claim or demand. The Authority, Trustee and Letter of Credit Bank agree to give the Owner prompt notice of any such action or proceeding and to refrain from incurring unnecessary costs, fees, expenses and liabilities until default in any such action or proceeding is imminent. In the event any such claim or demand, the Owner, upon notice from the Authority, Trustee or Letter of Credit Bank, covenants to resist and defend against such action or proceeding on behalf of the Authority, Trustee or Letter of Credit Bank. The Owner covenants and agrees to indemnify the Trustee and save the Trustee harmless of, from and against any and all claims, damages, expenses, liabilities and taxes (of any character or nature regardless of by whom imposed), losses of every conceivable kind, character and nature whatsoever asserted by or on behalf of any person, firm, corporation or govern-mental authority arising out of, resulting from, or in any way connected with the performance of Trustees duties and obligations under the Indenture.
Notwithstanding the foregoing, nothing contained in this Section shall be construed to indemnify or release the Authority, Trustee or Letter of Credit Bank from any liability which they would otherwise had had, arising from the wrongful actions or failure to act on the part of the Authority, Trustee or Letter of Credit Bank or their employees, agents or representatives acting negligently in their capacities contemplated hereby.
SECTION 421 . Types of Insurance Required . The Owner covenants and agrees that at all times during the term hereof it shall at its own cost and expense keep the Facilities insured against such risks as are customarily insured against by businesses of like size and type, including but not necessarily limited to:
[a] Insurance to the extent of the full insurable value (or if less, the amount necessary to pay or prepay the Owners Note and all Additional Payments and Secured Indebtedness) of the Facilities against loss or damage by fire, with uniform standard extended coverage endorsement limited only as may be provided in the
standard form of extended coverage endorsement at the time in use in Oklahoma; provided, the coverage on such insurance shall be in an amount sufficient to prevent the Owner, the Authority or the Trustee from becoming co-insurers under the applicable terms of the insurance policies;
[b] Comprehensive general liability insurance (including Blanket Contractual Broad Form Property Damage, Producers and Completed Operations coverage for Owners owned, non-owned and hired vehicles and Umbrella Liability Coverage) providing insurance against liability for the death of persons resulting from injuries occurring on or in any way relating to the Facilities, for injuries to persons occurring or in any way relating to the Facilities and for damage to property occurring on or in any way relating to the Facilities. Such insurance for death or injury to persons shall have minimum limits approved by the Trustee and the Letter of Credit Bank; and
[c] Builders Risk - Completed Value type insurance (including Contractors Protective Liability in the event of employment of subcontractors) during the construction of the Facilities against all risks of the type described in subsection [a] of this Section 421 to the extent of the then current full insurable value thereof, or, in lieu thereof, an equivalent rider upon the insurance required by said subsection [a]. In lieu of carrying such insurance described in this subsection [c] the Owner may cause such insurance to be carried by contractors for construction of the Project;
[d] Workmens compensation insurance to the extent required by the laws of the State of Oklahoma in effect from time to time during the term of this Loan Agreement or any extension thereof.
SECTION 422 . Insurance Policy Requirements . The Owner shall not commit or allow any act or omission which invalidates any insurance policy required under this Article. All such insurance policies shall be taken out and maintained in generally recognized responsible insurance companies, approved by the Trustee, qualified under the laws of the State of Oklahoma to assume the respective risks undertaken. All policies of insurance herein required to be carried by the Owner shall make the Authority and Trustee co-insureds or additional insureds as their interests may appear. Copies of all insurance policies herein required to be carried or certificates of insurance shall be furnished to the Authority and the Trustee. All such insurance policies shall contain a provision requiring not less than thirty (30) days notification of the Authority and the Trustee of cancellation or
termination thereof. Prior to the expiration or cancellation of any such policy, the Owner will furnish the Authority and the Trustee satisfactory evidence that such policy has been renewed or replaced by another policy. All insurance policies herein required to be carried by the Owner shall contain a standard mortgage clause favoring the Trustee as mortgagee and senior secured party with respect to the coverage for the Facilities.
SECTION 423 . Effecting Insurance on Owners Default . In the event the Owner fails to take out or maintain the full insurance coverage required under Section 421 hereof, the Authority or Trustee, after first notifying the Owner of any such failure on their part, may (but shall not be obligated to) take out the required policies of insurance and pay the premiums on the same and the costs thereof so advanced shall be paid promptly by the Owner as Secured Indebtedness, upon the Authoritys or the Trustees presentation of statements or invoices evidencing the same.
SECTION 424 . Damage, Destruction and Condemnation . If the Facilities shall be damaged or either partially or totally destroyed at any time during the term hereof, or if the whole or any part of the Facilities shall be taken or condemned by a competent authority for any public use or purpose, there shall be no abatement or reduction in the amounts payable by the Owner under this Loan Agreement or the Owners Note on account of such damage, destruction, taking or condemnation. Disposition of Net Recovery shall be made as provided in Sections 425, 426, 427, 428 and/or 429 hereof and shall promptly when received or collected, be deposited in a special and separate fund in the custody of the Trustee to be used as hereinafter provided in said Sections. Pending the expenditure of such special fund or deposit in the Bond Fund or other disposition as provided in said Sections, and at the request of the Owner, the Trustee shall invest the same in Investment Obligations approved by the Owner and Trustee.
SECTION 425 . Making Restorations With Net Recovery . The Owner, at its own cost, shall if the same can be lawfully done, make Restorations (subject only to Permitted Encumbrances) of equivalent efficiency, utility and value approved by the Trustee, on the remaining site of the Facilities, or on any other land in the County suitable for the needs and uses of the Owner. The total amount of available Net Recovery received and recovered shall in that event be paid over by the Trustee to the Owner, at Trustees election, either upon the completion of such Restorations or periodically as such Restorations progress, and shall be applied by the Owner to payment of the costs thereof, or if such costs have been already paid by the Owner, to reimburse it for such costs; provided, however, that the aggregate sum or sums so paid by the Trustee shall in no event exceed the actual cost of such Restorations. All payments to the recipient shall be made only upon a certification of an Independent Engineer as to the progress and cost of the Restorations and upon delivery of appropriate receipts for payment of Restoration costs and lien waivers as required by Trustee.
SECTION 426 . Making Restorations If Net Recovery Insufficient . In the event that the Trustee determines that the Net Recovery is insufficient to meet the costs of making Restorations so as to make the Facilities again usable for their intended purpose, the over-all operating efficiency and value of which has not been materially reduced, then the Owner shall have the obligation [a] to furnish or cause to be furnished funds sufficient, together with the Net Recovery received or recovered, to make the Facilities again usable for their intended purpose without materially reducing the over-all operating efficiency and value thereof, or [b] to make such Restorations and to be reimbursed for the cost therefor from such Net Recovery received or recovered to the extent of such costs of such Restorations or the extent of such Net Recovery received or recovered, whichever is less, in either of which cases the Restorations shall be made as provided in the preceding Section 425.
SECTION 427 . Disposition of Surplus Net Recovery After Making Restorations . Any surplus of such Net Recovery remaining after the completion of all payments for such Restorations shall be applied in the following order of priority:
[a] Payment to the Trustee for deposit in the Principal Account in the Bond Fund to the extent necessary to retire all outstanding Bonds and Secured Indebtedness;
[b] Payment of any Additional Payments; and
[c] Payment to the Owner as an adjustment.
SECTION 428 . Payment of Indebtedness in Lieu of Making Restorations . In lieu of making Restorations to the Facilities in accordance with the preceding Sections 425 or 426, the Owner may direct that the Net Recovery received or recovered shall be deposited and applied by the Trustee in accordance with Section 427 above.
In the event the Net Recovery is insufficient to retire all outstanding Indebtedness the Owner shall pay to the Trustee, on demand, for use in retiring all such outstanding Indebtedness, an amount which together with the Net Recovery received or recovered will be sufficient to retire all such outstanding Indebtedness, and cause defeasance under the Indenture and this Loan Agreement. Any surplus Net Recovery remaining after retiring all such outstanding Indebtedness shall be paid to the Owner as an adjustment.
SECTION 429 . Making Restorations or Retiring Indebtedness Upon Failure of Owner To Do So . In the event the Owner shall fail to make Restorations and pay the cost thereof pursuant to Sections 425 or 426 above, or exercise its option to pay and prepay the Indebtedness and pay additional sums required by Section 428 above, after the lapse of a reasonable time and after due notice is given by the Trustee to the Owner;
[a] The Trustee may make Restorations on behalf of the Owner and recover the reasonable costs thereof from the Owner, less whatever amount is held by the Trustee in the aforesaid special trust fund, which shall be available to the Trustee as a source of reimbursement for such costs, with any surplus being dealt with as provided in Section 427; or
[b] The Trustee shall apply the Net Recovery to retiring the outstanding Indebtedness in the order of priority stated in Section 427 hereof, and upon demand of the Trustee, the Owner shall pay to the Trustee for use in retiring all outstanding Indebtedness and paying all Additional Payments payable under this Loan Agreement, an amount which, together with Net Recovery received or recovered, will be sufficient to retire all outstanding Indebtedness and cause defeasance under the Indenture and this Loan Agreement.
SECTION 430 . Notices, Consultation, Cooperation and Approvals in Event of Damage, Destruction or Condemnation . The Owner and Trustee shall cooperate and consult with each other in all matters pertaining to the settlement, compromise, arbitration or adjustment of any and all claims and demands for damages on account of damage, destruction, taking or condemnation of the Facilities, or any part thereof, and the settlement, compromising, adjustment, or arbitration of any such claim shall be subject to the approval of both such parties.
The Owner shall not sell or convey any part of the Facilities under threat of condemnation without the written consent of the Trustee to the terms and conditions of such sale, including the consideration to be received and the delivery date.
SECTION 431 . Non-Abatement of Indebtedness in Event of Damage, Destruction or Condemnation . The Owner shall not, by reason of inability to use any of the Facilities following damage, destruction, taking or condemnation or during the period of making Restorations, or by reason of the payment of sums required by Sections 425, 426, 428 or 429, be entitled to any reimbursement from the Authority or the Trustee or any abatement or diminution of the Indebtedness payable under this Loan Agreement.
SECTION 432 . Conveyance, Assignment and Leasing; Maintenance of Existence and Qualification in Oklahoma; Permitted Exceptions . This Loan Agreement is not assignable by the Owner without prior written consent of the Authority, Trustee, Bond Counsel to the Authority, Letter of Credit Bank and Underwriter, which consent shall not be unreasonably withheld. Except for rental arrangements with occupants in the ordinary course of Owners business, the Owner may not convey, lease, sublease or grant use or occupancy rights with respect to the Facilities without the prior written consent of the Authority, Trustee, Bond Counsel to the Authority, Letter of Credit Bank and Underwriter, which consent shall not be unreasonably withheld. The
Authority may withhold such consent if, in the opinion of Bond Counsel to the Authority, the lease, conveyance, sublease or use or occupancy rights will or may result in an Event of Taxability or conflict with the purposes of the Authority under the Trust Indenture. Any such assignee, transferee, lessee, sublessee, user or occupant of any part of the Facilities shall be required to assume in writing in a form acceptable to the Authority, all of the Owners obligations under this Article IV with respect to the portion of the Facilities used or occupied by such person or entity. No such assignment, conveyance, leasing, subleasing or granting of use or occupancy rights shall in any way relieve the Owner from primary liability for any of its obligations under this Loan Agreement or the Owners Note.
In the event of sale, lease or other disposition of substantially all of the Facilities the transferee may become the Owner under the Project Documents, upon written assumption by the transferee of all Owners obligations thereunder, and the entity which was previously Owner shall no longer have the obligations of Owner effective upon the transfer and assumption; provided, however, the transferee must have operation experience or capability and credit characteristics satisfactory to the Underwriter, Letter of Credit Bank and Authority, and Bond Counsel to the Authority must render an opinion that the transfer will not result in an Event of Taxability or result in a conflict with the purposes of the Authority under its Trust Indenture. The Owner hereby covenants to include the requirements and restrictions contained in this Loan Agreement and the Owners Note in any documents transferring any interest in the Facilities to another person to the end that such transferee has notice of, is bound by and agrees to observe such requirements and restrictions.
So long as any Indebtedness is outstanding, the Owner hereby covenants and agrees to maintain its existence; not to dissolve or otherwise dispose of all or substantially all of its assets; and to continuously remain qualified to do business in Oklahoma.
The Owner may, without violating any of the foregoing provisions of this Section 432, consolidate with or merge into another partnership and assign its obligations under this Loan Agreement to such other partnership, or permit one or more partnerships to consolidate with or merge into it, or transfer all or substantially all of its assets to another partnership and assign its obligations under this Loan Agreement to such other partnership and thereafter dissolve, if the partnership surviving such merger or resulting from such consolidation, or the partnership to which all or substantially all of the assets of the Owner are transferred, as the case may be:
[a] expressly assumes in writing all obligations of the Owner contained in this Loan Agreement and the Owners Note;
[b] qualifies to do business in Oklahoma; and covenants to remain so qualified and to observe all of the Owners covenants in this Section 432 continuously during the remainder of the term hereof; and
[c] the surviving, resulting or asset-transferee partnership has consolidated net worth (determined in accordance with generally accepted accounting principles) at least equal to the consolidated net worth of the Owner, similarly determined, immediately preceding the merger, consolidation or asset transfer.
SECTION 433 . Release of Unimproved Land . The foregoing Section 432 and any other provision of this Loan Agreement to the contrary notwithstanding and so long as no Default has been declared and is continuing unwaived, the Owner may at any time any Bonds are outstanding request in writing to the Authority and Trustee the release of and removal from this Loan Agreement and the mortgage on the Facilities hereby created of any unimproved part of the land included in the Facilities on which none of the Facilities (except parking surfaces or landscaping improvements), equipment, structures, facilities or major appurtenances comprising the Facilities are situated. Upon any such request by the Owner, the Authority and Trustee shall execute and deliver any and all instruments necessary or appropriate to so release and remove such part of the unimproved land from the Facilities and the lien of this Loan Agreement, and the Owner may thereupon encumber or convey such released land; provided that if any Indebtedness is then outstanding and unpaid, no such release shall be effected unless there shall be deposited with the Authority and Trustee the following:
[a] A certificate of an Independent Engineer dated not more than sixty (60) days prior to the date of the release, stating that, in the opinion of the Independent Engineer signing such certificate, the land so proposed to be released will not materially reduce the over-all operating efficiency of the Facilities or destroy the only means of ingress and egress from the Facilities; and
[b] An amount of cash Net Proceeds for application to prepayment of the Owners Note and redemption of Bonds equal to higher of the original cost to the Owner or the current value as appraised by an appraiser approved by the Authority, the Trustee, the Owner and the Letter of Credit Bank (apportioned on an acreage basis) of such part of the land so released.
SECTION 434 . Additional Representations, Covenants and Warranties of the Owner . The Owner does hereby for itself represent, warrant and covenant to the Authority, the Trustee, the Letter of Credit Bank, the Underwriter and Bond Counsel to the Authority on behalf of said Owner and according to the official records of said Owner and the personal knowledge of the signatories hereof on behalf of the Owner, as follows:
1. The Owner is a validly organized and existing Oklahoma limited partnership in good standing under the laws of the State of Oklahoma and is duly qualified to do business in Oklahoma. Owner
will, on the Closing Date have good and marketable title to the Facilities, subject only to the first mortgage herein contained. Owner has filed or caused to be filed and will timely file or cause to be filed all Federal, state and local tax or information returns which are required to be filed, and has paid or caused to be paid all taxes as shown on said returns or on any assessment received by it, to the extent that such taxes have become due.
2. The undersigned signatory, JiCo Health Services, Inc., an Oklahoma corporation, as general partner acting for and in behalf of the Owner, has executed this Loan Agreement, the Owners Note and certain other Project Documents in accordance with the Owners Resolution. The aforesaid Owners Resolution has not been amended, revoked, or rescinded. This Loan Agreement and the Owners Note are now binding and enforceable obligations of the Owner in accordance with their terms, except as enforcement thereof may be limited by [i] bankruptcy, insolvency, or other laws affecting creditors rights generally; and [ii] exercise of judicial discretion in accordance with general equitable principles.
3. The warranties, representations and covenants of the Owner herein and in the other Project Documents are made in order to induce the Authority to enter into this Loan Agreement and issue the Bonds; to induce the Underwriter to purchase the same, to induce the Trustee to enter into this Loan Agreement, the Indenture and other Project Documents; to induce Letter of Credit Bank to provide the Letter of Credit and enter into Project Documents; and to induce the Authority to make the loan evidenced by the Owners Note; and such representations, covenants and warranties are made in consideration of the foregoing.
4. The Owner has full power and authority to execute this Loan Agreement and the Owners Note and to carry out, perform and consummate all transactions contemplated by the Owners Resolution, this Loan Agreement, and the Owners Note. The Owner has all necessary powers and governmental authority, licenses and permits to operate the Facilities for nursing home purposes. The operation of the Facilities in the manner presently contemplated and as described herein will not conflict with any zoning, water or air pollution or other ordinance, order, law or regulation applicable thereto. Owner has caused the Facilities to be designed in accordance with all applicable federal, state and local laws or ordinances (including rules and regulations) relating to zoning, building, safety and environmental quality and will proceed with due diligence to acquire, construct, develop and equip the Facilities pursuant to any applicable contracts related thereto. The Owner shall comply with all applicable laws and continuously keep and maintain a Certificate of Need with the Oklahoma Health Planning Commission and/or other appropriate Federal and/or State administrative authorities; and the Owner further covenants and agrees that all work performed in connection with the Project shall be performed in strict compliance with all applicable federal, state, county and municipal laws, ordinances, rules and regulations now in force or that may be enacted hereafter.
5. There is not now pending, or to the knowledge of the Owner threatened, any action, suit, proceeding, inquiry or investigation at law or in equity or before or by any court, public board or body against or affecting (i) the existence of the Owner; or (ii) the rights and powers of the general partner and limited partners of the Owner; or (iii) the power and authority of the General Partner to authorize and to sign this Loan Agreement, the Owners Note or any Project Document; (iv) the validity or enforceability of the Project Documents or Owners Resolution; and to the best of the knowledge of the undersigned signatory on behalf of the Owner, there is no basis for any such action, proceeding, suit, inquiry or investigation wherein an unfavorable decision, ruling or finding would adversely affect the transactions contemplated by or the validity or enforceability of the Project Documents.
6. The execution, delivery and receipt of this Loan Agreement, the Owners Note and Project Documents will not conflict with or constitute on the part of the Owner a breach or default under any existing law, court or administrative regulation, order or decree applicable to the Owner; any legislative act, constitution, or other provisions relating to the Owner or its affairs, or the Partnership Agreement of the Owner or any agreement, resolution, indenture of mortgage, lease or other instrument binding upon the Owner of which the Owner has any knowledge; and to the best knowledge of the Owner, the Owner has no other outstanding obligations or commitments which would, in effect, prevent, condition, restrict, interfere with or impair the compliance of the Owner with the terms of this Loan Agreement or any other Project Document. Owner is not in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any material agreement or instrument to which it is a party.
7. The Owner has fully complied with all requirements of this Loan Agreement respecting insurance to be carried by it.
8. The Owner will not take or omit to take any action or suffer any action or omission, which action or omission will in any way cause the proceeds of the Owners Note or Bonds to be applied in any manner other than as provided in this Loan Agreement. The Project financed with the Bonds consists of the acquisition and installation of property of a character subject to the allowance for depreciation under Section 167 of the Code; and no part of the proceeds of the Bonds will be used directly or indirectly as working capital or to finance inventory. Owner will not take or permit to be taken any action (including, without limitation, any changes in the Facilities or the purpose for which the Facilities are used) which would have the effect, directly or indirectly, of subjecting interest on any of the Bonds to Federal income taxation or violating the permitted purposes or activities of the Authority under the Public Trust Act or Trust Indenture. Owner hereby covenants that no non-exempt person or a Related Person (as such terms be defined in Section 103 of the Code) who is a Substantial User (within the meaning of Treasury Regulation §1.103-11) of the Facilities during the 5-year period preceding the
Closing Date will receive directly or indirectly, proceeds of such Bonds in an amount equal to five percent (5%) or more of the face amount thereof (in payment for its interest in the Facilities) and will be a Substantial User of the Facilities at any time during the 5-year period following the Closing Date. Owner further covenants that any Bond proceeds utilized to repay antecedent expenditures or indebtedness of Owner are expenditures made or indebtedness incurred to acquire land or acquire or construct depreciable property (or capitalizable property under Section 266 of the Code) and that all such expenditures or indebtedness were originated subsequent to the date of the Inducement Resolution (the term originated as used herein meaning the date any such indebtedness was actually first originated and not any note renewal date on which such indebtedness was merely extended or continued). Owner covenants to comply with any and all Code provisions and Treasury Regulations relating to the Facilities and the financing thereof now or hereafter promulgated and other applicable rulings relevant thereto.
9. The Owner concurs in the representations and estimates made by the Authority in Section 435(11) hereof, and has provided the Authority with facts set forth in subparagraphs [d], [e], and [f] thereof.
10. The Owner has provided the Authority with the information set forth in:
[a] parts IV and V of the Form 8038 Information Return for Private Activity Bond Issues filed or to be filed with respect to the Bonds; and
[b] the Notice of Election of $10,000,000 Exemption for Industrial Development Bonds filed or to be filed with respect to the Bonds.
11. The Owner covenants that at no time will outstanding Industrial Development Bonds issued for the benefit of, when added to Capital Expenditures by all Principal Users of the Facilities or Related Persons, exceed $10,000,000. The Owner recognizes that the Capital Expenditures of, and Industrial Development Bonds issued for the benefit of, each Principal User of the Facilities and Related Persons thereto must be aggregated for the purpose of determining compliance with such covenant. The Owner covenants that it will not make Capital Expenditures and that it will prevent or restrict making of such Capital Expenditures by any other person or entity (or will restrict or deny use or occupancy of the Facilities to the extent necessary to prevent any such person or entity from becoming a Principal User), in or on the Facilities or in the County (the Principal User of which is the Principal User of the Facilities or a Related Person) in an aggregate amount, together with the principal amount of outstanding Industrial Development Bonds issued for the benefit of all Principal Users of the Facilities and Related Persons, exceeding $10,000,000. All references in this Section to $10,000,000 shall be understood to refer to the maximum legal limit under Section 103(b)-
(6)(D) of the Code. In the event such maximum limit is raised or (if applicable to the Bonds) lowered to the new maximum limit to the extent applicable to all Principal Users of the Facilities and Related Persons thereto. The Owner represents that the Federal income tax returns of the Owner are filed at the office of the Internal Revenue Service Center, 3651 South Interregional Highway, Austin, Texas (78741). The Owner covenants and agrees that at the end of each of its four (4) fiscal years following the date of issuance of the Bonds it will furnish to the Authority and the Trustee an annual supplemental statement listing by date and amount all Capital Expenditures made by the Owner, any other Principal User of the Facilities and any other Related Person thereon on or related to the Facilities or on or related to any other Facilities in the County, the Principal User of which is a Principal User of the Facilities or a Related Person, which statement shall be prepared or certified by a recognized certified public accountant. Such annual statement shall be prepared and filed with the Internal Revenue Service by the Owner in accordance with regulations and rulings of the Internal Revenue Service in effect during such period. Proposed regulations in effect on the Closing Date require that a statement which lists by date and amount any such Capital Expenditures be filed together with a copy of the Notice of Election at the office of the Director of the IRS District in which the Facilities are located (on the Closing Date, Oklahoma City, Oklahoma) on the due date prescribed for filing of such return (without regard to extensions of time). The cost of such annual supplemental statements of Capital Expenditures shall be paid by Owner. The Owner represents that as of the Closing Date, its fiscal year for income tax purposes ends on December 31 and covenants that annual statements of Capital Expenditures will be filed on or before each September 1 next following its fiscal years ending on December 31 of each of the years 1987, 1988, 1989 and 1990.
12. The Owner understands that Bond Counsel to the Authority will rely on the factual information and representations contained herein in rendering an opinion that the interest on the Bonds is exempt from Federal income taxation under Section 103(b) of the Code, and making the filings described in Section 434(10); that the Underwriter will rely on the same information and representations in purchasing the Bonds; and that the Authority will rely on the same information and representations in issuing the Bonds and making the filings described in Section 434(10). The Owner has received from the Authority and Bond Counsel to the Authority a summary of the requirements under Section 103(b)(14) of the Code which must be met in order to the interest on the Bonds to be exempt from Federal income taxation. From this summary, the Owner understands that Section 103(b)(14) provides that the weighted average maturity of the Bonds measured from the later of (a) the date of issuance or (b) the placed in service date of the Facilities, may not exceed 120% of the weighted average useful (economic) life of the Facilities. To demonstrate compliance with this requirement, the Owner has been asked [i] to identify the components of the Facilities and their costs; [ii] to estimate the useful lives of the components of the Facilities; and [iii] to compute the weighted average useful life of the Facilities.
The Project being financed with the proceeds of the Bonds will consist of the acquisition, construction, development and equipping of the Facilities and payment of costs of issuance. The Owner agrees that the components of the Project and the costs are reflected in Section 435(11)[d] of this Loan Agreement. The Owner has no reason to believe that the proceeds of the Bonds will be used in any manner other than to pay part of its costs of the acquisition, construction, development and equipping of the Facilities and payment of costs of issuance in the amounts stated in the aforesaid Section 435(11)[d] as the amounts to be expended for those purposes.
The acquisition, construction, development and equipping of the Facilities (other than acquisition of the site of the Facilities) is expected to commence during the month of November, 1986, and this date represents the earliest date as of which the Owner expects that it could begin depreciating any property comprising a part of the Facilities.
The Owner has elected to determine the weighted average useful life of the Facilities under a certain safe harbor provisions and guidelines available under Section 103(b) of the Code. The guidelines are:
[a] For property covered under the Asset Depreciation Range Guidelines established in Revenue Procedure 77-10, 1977-1 C.B.548, as revised (the ADR Guidelines), the mid-point useful life of such property under the ADR Guidelines; and
[b] For a structure or building, the guideline life of such property under Revenue Procedures 62-21, 1962-2 C.B.419 as revised (the Structure Guidelines).
$280,000 (less than 25%) of the proceeds of the Bonds will be used to acquire the site of the Facilities identified on Exhibit A hereto. Therefore, under Code §103(b)(14)(C)(ii)(II), land is not taken into account. It is anticipated that real property included in the Project not consisting of land with a cost of $2,528,440 to be paid for from the Project Fund, will constitute buildings and structures and for purposes of the safe harbor provisions, such buildings and structures will be treated as structure or building under the Structure Guidelines. Using these Structure Guidelines, the Owner has estimated the useful (economic) lives of the building and structure at fifteen (15) years. Issuance costs of $80,000 will be paid from the Project Fund. It is anticipated that the equipment and other personal property included in the Facilities to be financed from the Project Fund, not consisting of building and structures, will have a cost of $300,000 and will constitute equipment for the purposes of the safe harbor provisions under the ADR Guidelines. Using these ADR Guidelines, the Owner has estimated the useful (economic) lives of such equipment and other personal property at three (3) years.
Using the above information the Owner has determined that the weighted average useful life of the Facilities financed with Bond
proceeds is nineteen and seven-tenths (19.7) years by (i) multiplying the respective costs of building and structure by the above Structure Guidelines useful life; and (ii) multiplying the cost of the equipment and other personal property financed with Bond proceeds by the above ADR Guidelines useful life; and (iii) dividing the total of steps (i) [$45,511,920] and (ii) [$1,500,000] by the total costs ($2,828,440). Based on these computations the Owner hereby represents that 120% of the weighted average useful (economic) life were measured from September 1, 1986. The Owner further represents and agrees that it will not make nor will it permit to be made any changes in the Facilities or the use of the proceeds of the Bonds which would cause the weighted average maturity of the Bonds to exceed 120% of the weighted average useful (economic) life of the Facilities financed. The Owner hereby represents that the factual information and representations contained herein do not contain any untrue statement of a material fact or omit to state a material fact necessary to be stated herein or necessary to make the statements contained herein in the light of the circumstances under which they were made not misleading.
No persons other than the Trustee, the Letter of Credit Bank, the Underwriter, the Authority and Bond Counsel to the Authority and any persons controlling the same and their respective successors and assigns shall have any right under or by virtue of the representations, warranties and covenants in this Section 434. The representations, warranties and covenants contained in this Loan Agreement shall survive delivery of the Owners Note and Bonds, and any investigation made by or on behalf of the aforesaid parties or their respective counsel of any matters described in or related to the transactions contemplated by any Project Document.
SECTION 435 . Representations, Covenants and Warranties of the Authority . The Authority hereby represents, warrants and covenants according to the official records of said Authority and the personal knowledge of the signatories hereof on behalf of the Authority, to the Owner, Trustee, Letter of Credit Bank, Underwriter and Bond Counsel to the Authority, in order to induce the Owner, Trustee and Letter of Credit Bank to enter into this Loan Agreement and other Project Documents to which they are parties and to induce the Underwriter to purchase the Bonds, and in consideration of the foregoing, as follows:
1. The Authority is a validly organized and existing public trust under the laws of the State of Oklahoma and particularly the Public Trust Act; and under said Public Trust Act is an agency of the State of Oklahoma and regularly constituted authority of the County for performance of the functions set forth in the Trust Indenture, which has not been amended or modified in any respect since the recorded Amendment thereto. A true, correct and complete copy of such Trust Indenture as recorded has been filed in its entirety with the office of the Secretary of State of the State of Oklahoma on May 15, 1981, with notice to the State Auditor and Inspector on May 15, 1981, and the Amendment to Trust Indenture has been filed in the office of the Secretary of State on June 29, 1982, with notice to the State Auditor and Inspector on June 29, 1982.
2. The names of the incumbent Trustees and officers of said Authority are set forth in the Authority Resolution. On the effective date of the Bonds Edward H. Cook was Chairman of the Authority and J.V. Smith was Secretary of the Authority.
3. The Authority has taken the following action to comply with the Public Trust Act and the Oklahoma Open Meeting Act:
[a] The Authority has filed with the Oklahoma County Clerk, oaths of office executed by each of the incumbent Trustees of the Authority identified in 2 above.
[b] The Authority has filed with the County Clerk of Oklahoma County not less than forty-eight (48) hours prior to the meeting, and posted at the offices of the Oklahoma City Chamber of Commerce, 1 Santa Fe Plaza, Oklahoma City, Oklahoma, not less than twenty-four (24) hours prior to the meeting, date, time, place and agenda of the meetings at which the Inducement and Authority Resolutions were adopted.
[c] The fiscal year of the Authority commences on July 1 of each year and terminates on the following June 30. The fiscal year of the Authority has been certified to the Oklahoma State Auditor and Inspector and audits of the Authority for all periods through June 30, 1985, have been filed with the Oklahoma State Auditor and Inspector.
[d] Special meetings of the Authority are held at such places and notices thereof given pursuant to the special meeting provisions in Section 311(11) of the Oklahoma Open Meeting Act.
[e] The Authority has established and adopted By-Laws governing the conduct of the affairs of the Authority and is guided by and relies on the terms of the Trust Indenture, as amended.
[f] Prior to the Closing Date, the Authority has filed with the Internal Revenue Service a Notice of Election of the $10,000,000 Cumulative Small Issue Exemption with respect to the Bonds.
4. Acting in accordance with the Authority Resolution duly adopted by the Trustees of the Authority, the undersigned officers executed, attested and sealed this Loan Agreement, the Indenture, the Bonds and certain other Project Documents. The Bonds, this Loan Agreement, the Indenture and such Project Documents so executed are now binding and enforceable obligations of the Authority in accordance with their terms, except as enforcement may be limited by (i) bankruptcy, insolvency, or other laws affecting the enforcement of creditors rights generally; and (ii) exercise of judicial discretion in
accordance with general equitable principles. The Authority Resolution has not been amended, revoked or rescinded.
5. The Authority has complied with the provisions of the Public Trust Act (and with regard to the meetings at which the Inducement and Authority Resolutions were adopted, the provisions of the Oklahoma Open Meeting Act) to the extent necessary to issue the Bonds and to validly execute this Loan Agreement, the Indenture and other Project Documents; and the Authority has all necessary powers and governmental authority, licenses and permits to finance the Project and the acquisition, construction, development and equipping of the Facilities; to issue the Bonds; and to carry out and consummate all transactions contemplated by the Authority Resolution, this Loan Agreement, the Indenture and the Bonds.
6. There is not now pending or to the knowledge of the Authority threatened, any action, suit, proceeding, inquiry or investigation at law or in equity, or before or by any court, public board or body against or affecting (i) the existence of the Authority; or (ii) the right of its officers and Trustees to hold office; or (iii) the power and authority of its Trustees to authorize and the undersigned Chairman and Secretary or Assistant Secretary to execute this Loan Agreement, the Indenture, the Bonds, or any other Project Document; or (iv) the validity and enforceability of this Loan Agreement, the Indenture, Bonds, any other Project Document, or the Inducement or Authority Resolutions; and to the best of the knowledge of the Authority there is no basis for any such action, proceeding, inquiry or investigation wherein an unfavorable decision, ruling or finding would adversely affect the transactions contemplated by or the validity or enforceability of the Project Documents.
7. The execution, delivery and receipt of this Loan Agreement, the Indenture, Bonds and the Project Documents, and compliance with the terms hereof and thereof, will not conflict with or constitute on the part of the Authority a breach of or default under any existing court, law or administrative regulation, order or decree applicable to the Authority; any legislative act, constitution or other provision relating to the Authority or its affairs; or the Trust Indenture creating the Authority; or any agreement, resolution, indenture of mortgage, lease or other instrument binding on the Authority of which the Authority has any knowledge; and to the best knowledge of the Authority, the Authority has no other outstanding obligations or commitments which would in effect prevent, condition, restrict, interfere with or impair the exemption of income of the Authority from Federal or State income taxation or the compliance of the Authority with the terms of this Loan Agreement, the Indenture, Bonds and Project Documents.
8. The Authority will not take or omit to take any action, which action or omission will in any way cause the proceeds of the Bonds to be applied in any manner other than as provided in this Loan Agreement. The Authority will take such action or actions as may be necessary, in the written opinion of Bond Counsel to the Authority
filed with the Authority and the Trustee, to comply fully with all applicable rules, rulings, policies, procedures, regulations or other official statements promulgated, proposed or made by the Department of Treasury or the Internal Revenue Service pertaining to obligations issued under Section 103 of the Code.
9. The undersigned Chairman and Secretary or Assistant Secretary, pursuant to law and authorization vested in them, have executed the Bonds by facsimile signature (which the undersigned adopt and with respect to which Public Officials Certificates of Manual Signature have been filed in the office of the Oklahoma Secretary of State) in the form set forth in the Indenture and the official seal of the Authority has been impressed or imprinted hereon and thereon. The undersigned are now and were at the time of the execution of the Bonds and Project Documents the duly chosen, qualified and acting officers indicated by said titles.
10. The Bonds have been duly authorized, executed and delivered to the Underwriter by the Authority and constitute valid and legally binding special and limited obligations of the Authority and are entitled to the security of and are secured by the Indenture and this Loan Agreement.
11. The Chairman of the Authority executing this Loan Agreement, along with other officials of the Authority, is charged with the responsibility of issuing the Bonds and participating in the transaction respecting such issuance and is otherwise charged with the responsibility of attending to the financial affairs of the Authority; and the following certifications are made by the Authority and Chairman pursuant to final Treasury Regulations 1.103-13 and 1.103-14 contained in T.D. 7627 dated May 31, 1979, all with respect to arbitrage bonds as described in Section 103(c) of the Code. The words and phrases herein have the same meaning as defined and used in the Regulations. Such certifications are based on facts, estimates, and circumstances in existence on the date of issuance of the Bonds and on such basis, it is reasonably expected that the following will occur with respect to the Bonds:
[a] The Bonds will be delivered on the Closing Date to the Underwriter which will pay to the Authority on such Closing Date a sum equal to the full face principal amount of the Bonds.
[b] Accrued interest is to be paid by the Underwriter with respect to the Bonds and is to be calculated from September 1, 1986, to the Closing Date; and all such interest will be deposited in the Interest Account and applied to paying Bond interest payable March 1, 1987.
[c] The $4,000,000 proceeds of the Bonds received by the Authority will be loaned to the Owner in accordance with Section 302 of this Loan Agreement; and in
said Section 302 the Owner has agreed to apply such proceeds solely for paying or reimbursing the Project Costs.
[d] The total Project Costs will not be less than $4,216,000 and the components of the total cost are as follows: land - $280,000; buildings and structures - $2,528,440; equipment - $300,000; capitalized interest - $405,560; capitalized reserve fund - $400,000; issuance costs - $296,000; TOTAL $4,226,000. Such Project Costs not paid or reimbursed from Bond proceeds will be paid by the Owner and are estimated at $216,000.
[e] The ordering, acquisition, construction and installation of the Facilities was commenced and made by the Owner subsequent to the date of the Inducement Resolution. Binding contracts or commitments obligating the expenditure, for the work of acquiring, constructing, developing and equipping the Facilities, of not less than $ -0- have been entered into, made or performed. It is expected that the work of acquiring, constructing, developing and equipping the Facilities will proceed with due diligence to full completion, presently anticipated on or about September 1, 1987.
[f] The property included in the Facilities is not expected to be sold or otherwise disposed of while any portion of the Bonds remain outstanding.
[g] The Owner is obligated pursuant to the Owners Note and this Loan Agreement to pay semiannual Owners Note payments to the Trustee, for the account of the Authority, equal to the principal and interest requirements on the Bonds, which payments will be applied by the Trustee to the principal and interest requirements on the Bonds. Except for the Bond Fund and the Debt Service Reserve Fund, the Authority has not created or established and does not expect to create or establish any sinking fund or similar fund for the Bonds. Money deposited in all such debt service funds established under Article V of the Indenture will be used to pay principal of and interest on the Bonds and the Authority reasonably expects that there will be no other funds that will be so used. The aggregate amount deposited in the Capitalized Interest Account within the Interest Account and the Debt Service Reserve Fund will not exceed ten percent (10%) of the original proceeds of the Bonds and said Account is expected to be a reasonably required reserve fund within the meaning of Regs. §1.103-14(d), the permitted yield on which will not be restricted under Code Section 103(e). Net earnings from investment of such
Account, together with net earnings from investment of the Project Fund, Bond Fund and Revenue Fund established by the Indenture will be deposited in the Revenue Fund and the Authority expects that such monies will be spent within a twelve (12) month period beginning on the date of deposit, and any money received from investment of money held in the Revenue Fund will be spent within a 12-month period beginning on the date of receipt; and that consequently the yield on such monies will not be restricted under Code Section 103(c) and Regs. §1.103-14(b)(6) and §1.103-14(b)(9) during such 12-month temporary periods. Original proceeds deposited in the Project Fund are expected to meet the temporary period requirements of Regs. §1.103-(b)(1) to (5); however, the yield on investment of such Fund will be restricted to the yield on the Bonds. Unless advised otherwise by counsel of recognized competence in such matters, the Authority will not restrict the yield on the investment of the Bond Fund during the foregoing temporary periods.
[h] The Authority has not been advised of any listing or contemplated listing by the Internal Revenue Service to the effect that Authority certifications with respect to its obligations may not be relied upon.
[i] To the best knowledge and belief of the undersigned there are no other facts, estimates or circumstances that would materially change the above set forth expectations and the date of all certifications is the date of delivery of the Bonds.
No person other than the Owner, the Trustee, the Letter of Credit Bank, the Underwriter and Bond Counsel to the Authority and any persons controlling the same and their respective successors and assigns shall have any right under or by virtue of this Section 435. The representations, warranties and covenants contained in this Loan Agreement shall survive the delivery of the Bonds and any investigation made by or on behalf of any of the aforesaid parties of any of the matters described in and related to the transactions contemplated by any Project Document.
SECTION 436 . Representations of the Trustee . The Trustee represents and warrants that the execution of this Loan Agreement has been lawfully authorized by all requisite corporation action of the Trustee and the officers executing this Loan Agreement on behalf of the Trustee are the officers indicated by their titles subscribed beneath their names and are authorized to execute this Loan Agreement on behalf of the Trustee.
SECTION 437 . Payment of Indebtedness . The Authority covenants that it will promptly pay the Bonds and the Secured Indebtedness or cause payment of the same at the place, on the dates and in the manner provided in the Indenture and Bonds according to the true intent and meaning thereof.
SECTION 438 . Financial Statements . Owner shall furnish the Trustee, or cause to be furnished to Trustee, with a copy to Authority, Letter of Credit Bank and Underwriter, annual audited financial and operating statements of the Owner, including a profit and loss statement within ninety (90) days after the close of each of its fiscal years, prepared by a certified public accountant of recognized standing and approved by Trustee and Letter of Credit Bank. Such statements will be audited only upon the prior written request of Trustee or Letter of Credit Bank or Authority. In addition, Owner shall furnish to the above parties copies of quarterly financial and operating statements of the Owner beginning December 1, 1987.
Not more than six (6) months after the close of each fiscal year of the Authority, the Authority shall furnish the Trustee and the Owner, a statement of all transactions relating to the Facilities and Bonds prepared by reputable independent public or certified municipal accountants to be employed by the Authority for the auditing of the accounts of the Authority; or, if so requested in writing by the Trustee, prepared by independent public or municipal accountants selected by and to be paid by the Trustee.
SECTION 439 . Defenses of Actions . Upon the request of either the Trustee or the Letter of Credit Bank, the Owner will, from time to time, promptly take such action as may be necessary or proper to remedy or cure any defect in or cloud upon the title to the Facilities or any part thereof, whether now existing or hereafter developing, and to prosecute all such suits, actions and other proceedings as may be appropriate for such purposes and to indemnify and save the Trustee and Letter of Credit Bank harmless from all loss, cost, damage and expense, including attorneys fees, which the Trustee or Letter of Credit Bank may incur by reason of any such defect, cloud, suits, actions or proceedings.
The Owner will defend against every suit, action or proceeding at any time brought against the Trustee or Letter of Credit Bank upon any claim arising with respect to the Facilities or involving the Trustees or the Letter of Credit Banks rights under this Loan Agreement. The Owner will indemnify and save harmless the Trustee and Letter of Credit Bank against any and all liability claimed or asserted by any person whomsoever, arising with respect to the Facilities or Project; provided, however, that the Trustee or Letter of Credit Bank, at its election, may appear in and defend against any such suit, action or proceeding; and notwithstanding any contrary provision hereof, this covenant shall continue and remain in full force and effect even though the Owners Note, Bonds and Indebtedness secured hereby may have been full paid and satisfied, and this Loan Agreement may have been released of record and discharged.
[END OF ARTICLE IV]
ARTICLE V
DEFAULT; REMEDIES OF LENDER
SECTION 501 . Default Defined . If any of the following events occur it is hereby defined as and declared to be and to constitute a Default:
[a] The interest on the Owners Note or Bonds is not paid punctually when due.
[b] The principal on the Owners Note or Bonds is not paid punctually when due, whether at the stated maturity thereof, or upon the maturity thereof by declaration.
[c] A Determination of Taxability occurs concerning which the Trustee or a registered Owner has given the Authority and the Owner a Notice; or, alternatively, the Trustee and/or Bond Counsel to the Authority in their sole discretion determines that the Owner is not meeting applicable legal requirements or is not meeting any reasonable reporting requirements set forth in this Agreement.
[d] Any judicial or other proceedings is at any time instituted against the Owner, the Authority, the Trustee or the Letter of Credit Bank involving any part or portion of the Facilities or involving the validity of any Project Document.
[e] Any party shall fail to observe any of its covenants or agreements under the Project Documents (except as a result of Force Majeure and during the continuance thereof), or the representations or warranties of any party therein are materially false.
[f] The Trustee encounters any adverse claims or other difficulties or obstacles in endeavoring to secure for itself, the benefit and advantage of all rights, powers, priorities and privileges vested in and conferred upon the Trustee upon this Loan Agreement, the Indenture or any Project Document.
[g] The Owner fails to continually maintain the Facilities as a duly qualified nursing home facility under applicable rules and regulations of the Oklahoma Health Planning Commission and/or any other applicable regulatory agencies at any time when the Bonds be outstanding.
[h] If a decree or order by a court having jurisdiction in the premises shall have been entered granting relief, or adjudging the Owner a bankrupt, debtor or insolvent, or approving a petition seeking reorganization, composition, readjustment, or liquidation of the Owner under the National Bankruptcy Act or any other similar applicable Federal or State law, and such decree or order shall have continued undischarged and unstayed for a period of sixty (60) days; or a decree or order of a court having jurisdiction in the premises for the appointment of a custodian, receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Owner or of all or substantially all of its properties, or for the winding up or liquidation of its affairs, shall have been entered, and such decree or order shall have remained in force undischarged or unstayed for a period of 60 days.
[i] If the Owner shall institute proceedings to be adjudicated or granted relief as a voluntary bankrupt, or debtor, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization, composition, readjustment or liquidation under the National Bankruptcy Act or any other similar applicable Federal or State law, or shall consent to the filing of any such petition, or shall consent to the appointment of a custodian, receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it or of all or substantially all of its properties, or 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 if the Owner is generally not paying its debts as such debts become due.
The provisions of Section 501[h] and [i] shall be construed to include terms of substantially equivalent meaning under the National Bankruptcy Act, and similar applicable Federal and State laws, as the same now exist, come into effect or are amended during the term hereof.
SECTION 502 . Acceleration . Upon the occurrence of a Default, the Trustee may, by notice in writing delivered to the Authority and Owner, declare the principal and accrued interest then outstanding on the Bonds and/or Owners Note immediately due and payable, and accelerate the payment thereof and such principal and interest shall thereupon become and be immediately due and payable.
SECTION 503 . Appointment of Receiver . Upon occurrence of a Default or in the event of the appointment of a receiver for the Authority or Owner or for any part of the Facilities, or in the event bankruptcy proceedings are instituted by or against the Authority or Owner or in the event the Authority or Owner makes an assignment of a
substantial part of its assets for the benefit of its creditors, or in the event the Authority or Owner fails to strictly and promptly comply with any of its or their covenants and agreements herein or to strictly and promptly perform any provisions hereof and thereof (after the Trustee has first given ten (10) days written notice to the Authority and Owner and upon failure of the Authority and Owner to comply within said 10-day period), or in the event the priority of the mortgage, pledge and assignment contained in this Loan Agreement shall not be established and at all times fully maintained upon and with respect to the Facilities and every part thereof; or in the event the Owner is found or adjudged not to have had good right and full power and authority to mortgage, pledge or assign said Facilities or any part thereof in the manner hereby contemplated; then and in any such event, the Trustee shall be entitled at its option and election and without prior notice to or demand upon the Authority or Owner, to have or cause to be appointed a receiver or temporary trustee or trustees for the Authority and/or Owner to take charge of said Facilities for the purpose of exercising all rights and remedies conferred by this Loan Agreement to the extent necessary for the full and complete protection of the security and rights of the Trustee, and for the purpose of doing all things necessary to assure the most remunerative use of the Facilities. Every appointment shall be in writing or shall be made pursuant to an action filed in a court of competent jurisdiction and shall specify the Default or Defaults existing hereunder or the other grounds for receivership stated in this Section whereby the power of appointment hereby granted is invoked, and shall designate by name the person or persons to be such receiver or temporary trustee or trustees; and the trustees of the Authority so supplanted shall ipso facto cease to have any power or authority under the Trust Indenture and under this Loan Agreement. The receiver, temporary trustee or trustees shall receive a reasonable fee for his or their services in an amount fixed by the Trustee or the court, to be paid as Secured Indebtedness unless otherwise agreed by the Trustee. In the event of any vacancy in the office or position of any receiver, temporary trustee or trustees, no permanent trustee so supplanted shall be entitled to act as trustee under the Trust Indenture or this Loan Agreement by reason thereof, but such vacancy shall continue to exist until some person be appointed as temporary trustee under this Section. The written appointment of any receiver, temporary trustee or trustees hereunder shall be sent by registered mail to the Clerk of the County. Upon the curing of the Default, Defaults or grounds for receivership under any of the provisions of this instrument, the Owner or permanent trustees of the Authority may give written notice to the Trustee or the court of the curing of said Default, Defaults or grounds for receivership, and of the non-existence of any other Default or grounds for receivership hereunder, and upon the delivery of said notice to the Trustee or court and its acquiescence therein, the receiver, temporary trustee or trustees appointed hereunder shall ipso facto cease to have any power or authority under the Trust Indenture or under this Loan Agreement, and the trustees of the Authority shall be reinstated as trustees under the Trust Indenture and this Loan Agreement with all rights and powers to the same extent
as though a receiver or temporary trustee or trustees had not been appointed.
During the period of continuance of any Default hereunder, the receiver or temporary trustee or trustees appointed as provided herein shall take charge of the Facilities for the purpose of exercising all rights and remedies conferred by this Loan Agreement to the extent necessary for the full and complete protection of the security and rights of the Trustee and Bondholders and for the purpose of doing all things necessary to assure the most remunerative use of the Facilities. Any trustee or receiver of the Facilities, whether appointed by the Trustee or court, shall be appointed and serve pursuant to this Section. The rights and protection of the Trustee and Bondholders set out herein are essential to the security of the Trustee and Bondholders and receivership and trusteeship procedures hereunder shall be exclusive. All Facilities and proceeds thereof shall be applied to payment of the Indebtedness in accordance with the Indenture. The appointment of any receiver or temporary trustee or trustees pursuant to the provisions of this Section shall not be construed as curing or waiving any Default hereunder, and notwithstanding any such appointment of any receiver or temporary trustee or trustees, the Trustee may enforce any other remedy provided in the Project Documents.
SECTION 504 . Foreclosure and Enforcement of Remedial Rights . Upon the occurrence of any Default, the Trustee may, as additional remedies, either after entry, or without entry, proceed by suit or suits at law or in equity to enforce payment of the Indebtedness then outstanding hereunder and to enforce this Loan Agreement and to foreclose the mortgage herein contained and foreclose against and sell the mortgaged, pledged and assigned Facilities or any part thereof under the judgment or decree of a court of competent jurisdiction. Upon occurrence of a Default, to the extent that such rights may then lawfully be waived, neither the Authority or Owner nor anyone claiming through or under either of them, shall 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 the foreclosure of this Loan Agreement, and the Owner and Authority for themselves and all who may claim through or under themselves, hereby waive to the extent that they lawfully may do so, the benefit of all such laws and all right of appraisement and redemption to which they may be entitled under the laws of Oklahoma. The Trustee may become the purchaser at any foreclosure sale, if the highest bidder. Upon the occurrence of any Default, the Trustee may, as additional remedies, proceed by suit or suits at law or in equity to enforce payment of the Indebtedness then outstanding hereunder and to enforce this Loan Agreement. This Loan Agreement shall constitute a security agreement upon all of the Facilities not constituting real property under the laws of the State of Oklahoma. Upon any Default hereunder, the Trustee shall be entitled to exercise, with respect to all such Facilities, all of the rights and remedies accorded to a secured party on default under the terms of Article 9 of the Oklahoma Uniform Commercial Code, any or all of which may be pursued and exercised concurrently, consecutively, alternatively or otherwise.
The Owner will execute one or more supplemental security agreements as the Trustee may from time to time reasonably require to more fully describe and identify the Facilities securing the Indebtedness and such financing statements and other and further assurances as the Trustee may request to perfect or evidence the security interest herein created (which shall cover all proceeds and products of the Facilities) and to particularize and identify the Facilities.
SECTION 505 . Other Remedies . Upon the occurrence of a Default, the Trustee may, as an alternative, pursue any available remedy by suit at law or equity to enforce the payment of the Indebtedness then outstanding, including, without limitation, mandamus.
Upon occurrence of a Default, the Trustee may, at its sole option and discretion (after first giving the Owner and/or Authority, as applicable, ten (10) days written notice to comply with the requirements of this Loan Agreement and upon failure of the Owner and/or Authority to so comply within said 10-day period) either in its own name or in the name of the Authority or Owner, compromise or discharge any adverse claims and demands, liabilities and encumbrances; enter an appearance in and defend against any such judicial or other proceeding and file and prosecute therein such cross petition or counterclaim as to the Trustee may seem proper; enforce the covenants and requirements of the Project Documents; institute and prosecute all suits and actions as may be deemed necessary, expedient or advisable to allay or remove any adverse claim or other difficulty or obstacle with respect to the Facilities; and institute and maintain such suits and proceedings and do or cause to be done any and all other and further things (without limitation by virtue of the express enumeration of the powers hereinabove) which the Trustee may deem proper or may be advised shall be necessary or expedient to prevent an impairment of the security under the Project Documents, or for the protection of the Facilities and the Indebtedness, all at the expense of the Owner.
SECTION 506 . Trustee Expenditures Become Secured Indebtedness . In the event of taking any action pursuant to Article V of this Loan Agreement, all costs, expenses, outlays, expenditures, and attorneys fees incurred by the Trustee in taking the aforesaid action, to the extent not paid from the Facilities or their proceeds, shall constitute Secured Indebtedness, shall bear interest from the time of payment thereof by the Trustee at the maximum legal rate until paid and may be included in any judgment if not paid before that time, and all such Secured Indebtedness, with interest, shall be secured by this Loan Agreement.
SECTION 507 . Effect of Discontinuance of Proceedings . In case any proceeding taken by the Trustee on account of any Default shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in any such case, the Authority or Owner and the Trustee shall be restored to their former positions and rights hereunder, and all rights, remedies, powers and duties of the Trustee shall continue as though no such proceeding had been taken.
SECTION 508 . Waivers of Default . The Trustee may in its discretion waive any Default hereunder and its consequences and rescind any declaration of maturity of the Bonds or Owners Note. In case of any such waiver, or in case any proceeding taken by the Trustee on account of any such Default shall have been discontinued or abandoned or determined adversely, then and in every such case, the Authority or Owner and the Trustee shall be restored to their former positions and rights hereunder respectively, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.
SECTION 509 . Remedies Cumulative and Not Exclusive . No remedy by the terms of the Project Documents conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Any limitation herein imposed upon the exercise of any remedy is intended to be effective only to the extent such limitation is permitted by the laws of the State of Oklahoma.
SECTION 510 . Delay or Omission . No delay or omission of the Trustee to exercise any right or power arising upon Default shall impair any right or power or shall be construed to be a waiver of any such Default or any acquiescence therein; and every power and remedy given by this Article to the Trustee may be exercised from time to time and as often as may be deemed expedient by the Trustee.
SECTION 511 . Right of Owner to Cure Default . With regard to any alleged Default concerning which notice is given to the Authority under the provisions of this Article, the Authority hereby grants the Owner full authority for the account of the Authority to perform any covenant or obligation alleged in said notice to constitute a Default, in the name and stead of the Authority, with full power to do any and all things and acts to the same extent that the Authority could do and perform any such things and acts and with powers of substitution, in which event the performing Owner shall be subrogated to any rights with respect to the Authority for performance of such covenant or obligation.
[END OF ARTICLE V]
ARTICLE VI
SUPPLEMENTS AND AMENDMENTS OF LOAN AGREEMENT;
DISCHARGE; MISCELLANEOUS
SECTION 601 . Limitation on Modifications . This Loan Agreement shall not be supplemented or amended in any respect except as may be provided herein or except as provided in the Indenture.
SECTION 602 . Discharge of Loan Agreement by Payment of Indebtedness . If the Authority shall pay or cause to be paid, or there shall otherwise be paid, the Bonds and Owners Note at the time and in the manner stipulated therein and herein, and if all other Additional Payments and Secured Indebtedness payable hereunder shall be paid or provided for so as to cause defeasance of the Indenture, then this Loan Agreement, the mortgage, pledge and assignment of the Facilities and all covenants, agreements and other obligations of the Authority, Owner, Letter of Credit Bank, and Trustee thereupon shall become void and be discharged and satisfied. In such event the Trustee, upon the request of the Authority, shall execute and deliver to the Authority all such instruments as may be desirable to evidence such discharge and satisfaction.
SECTION 603 . Notice . Any notice, demand, direction, request or other instrument authorized or required by this Loan Agreement to be given to or filed with the Authority, Owner, Letter of Credit Bank or Trustee shall be deemed to have been sufficiently given or filed for all purposes of this Loan Agreement if and when sent by registered mail:
[i] To the Authority at Suite 1900 First National Center West, Oklahoma City, Oklahoma (73102).
[ii] To the Letter of Credit Bank at P.O. Box 25848, Oklahoma City, Oklahoma (73125), ATTN: Natural Resources Division.
[iii] To the Owner c/o JiCo Health Services, Inc., at 5600 North May Avenue, Suite 275, Oklahoma City, Oklahoma (73112).
[iv] To the Trustee at P.O. Box 25848, Oklahoma City, Oklahoma (73125), ATTN: Corporate Trust Department.
SECTION 604 . Partial Invalidity . In case any one or more of the provisions of this Loan Agreement or the Owners Note shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provisions of this Loan Agreement or Owners Note, but this Loan Agreement or the Owners Note shall be construed and enforced as if such illegal or invalid provision had not been contained herein or therein. In case any covenant, stipulation,
obligation or agreement of the Authority or Owner contained in the Owners Note or this Loan Agreement, shall, for any reason, be held to be in violation of law, then such covenant, stipulation, obligation or agreement shall be deemed to be the covenant, stipulation, obligation or agreement of the Authority or Owner to the full extent permitted by law.
SECTION 605 . Counterparts . This Loan Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
SECTION 606 . Laws Governing Loan Agreement . The effect and meaning of this Loan Agreement and the rights of all parties hereunder shall be governed by, and construed according to, the laws of the State of Oklahoma.
IN WITNESS WHEREOF, the Authority has caused this Loan Agreement to be executed by the Chairman and Secretary or Assistant Secretary of the Authority and sealed with the seal of the Authority, pursuant to the Bond Resolution duly adopted by the Authority; the Owner has caused this Loan Agreement to be executed by JiCo Health Services, Inc., an Oklahoma corporation, as its general partner, pursuant to an Owners Resolution duly adopted by such general partner and the limited partners; and the Trustee, for itself, its successor or successors, has caused this Loan Agreement to be executed by its Senior Vice President and Assistant Secretary and sealed with its seal, all as of the day and year first above written.
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OKLAHOMA COUNTY INDUSTRIAL AUTHORITY |
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Chairman of Trustees |
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/s/ [ILLEGIBLE] |
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Assistant Secretary |
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Owner |
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WESTLAKE NURSING HOME LIMITED PARTNERSHIP, an Oklahoma Limited Partnership |
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By its General Partner: |
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JICO HEALTH SERVICES, INC. |
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(SEAL) |
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President |
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Asst Secretary |
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Trustee |
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THE LIBERTY NATIONAL BANK AND TRUST COMPANY OF OKLAHOMA CITY,
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Senior Vice President |
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Assistant Secretary |
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STATE OF OKLAHOMA |
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COUNTY OF OKLAHOMA |
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The foregoing instrument was acknowledged before me this 12th day of September, 1986, by Edward H. Cook, Chairman of Trustees of the Oklahoma County Industrial Authority, a public trust, on behalf of the Trust.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year aforesaid.
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/s/ [ILLEGIBLE] |
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Notary Public |
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(SEAL) |
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My commission expires: |
11/08/86 |
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STATE OF OKLAHOMA |
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COUNTY OF OKLAHOMA |
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BEFORE ME, the undersigned, a Notary Public in and for said County and State, on this 12th day of September, 1986, personally appeared E.W. Jiles and Shirley A. Crew, to me known to be the identical persons who subscribed the name of JiCo Health Services, Inc., an Oklahoma corporation, the general partner of Westlake Nursing Home Limited Partnership, an Oklahoma limited partnership, to the foregoing instrument as its President and Asst. Secretary, respectively, and acknowledged to me that they executed the same as their free and voluntary act and deed, and as the free and voluntary act and deed of JiCo Health Services, Inc., acting for and in behalf of Westlake Nursing Home Limited Partnership, for the uses and purposes therein mentioned and set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year first above written.
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/s/ [ILLEGIBLE] |
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Notary Public |
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(SEAL) |
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My commission expires: |
8/13/87 |
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STATE OF OKLAHOMA |
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COUNTY OF OKLAHOMA |
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BEFORE ME, the undersigned, a Notary Public in and for said County and State, on this 12th day of September, 1986, personally appeared Jake L. Riley and Martha E. Ober, to me personally known and to me known to be the identical persons who executed the within and foregoing instrument on behalf of The Liberty National Bank and Trust Company of Oklahoma City, Oklahoma City, Oklahoma, as Trustee, a banking association organized under the laws of the United States of America and of the State of Oklahoma, who, being by me duly sworn, did depose, acknowledge and say: That they are the Sr. Vice President and Assistant Secretary, respectively, of the Trustee Bank described in and which executed the foregoing instrument; that they know the seal of said Bank; that said instrument was signed, sealed and attested by them as the officers hereinabove referred to on behalf of said Bank by authority of its Board of Directors; and that said persons acknowledged the execution of said instrument to be the free and voluntary act and deed of said Bank by it freely and voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year first above written.
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/s/ [ILLEGIBLE] |
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Notary Public |
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(SEAL) |
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My commission expires: |
8/13/87 |
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Exhibit 10.39
FIRST AMENDMENT TO
LOAN AGREEMENT
AND INDENTURE OF FIRST MORTGAGE
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Doc 12002046636 |
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Bk 8391 |
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Pg 399-413 |
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DATE 03/27/02 14:05:50 |
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Filing Fee $41.00 |
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Documentary Tax $0.00 |
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Among |
State of Oklahoma |
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County of Oklahoma |
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Oklahoma County Clerk |
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Carolynn Caudill |
OKLAHOMA COUNTY INDUSTRIAL AUTHORITY,
a public trust
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WESTLAKE NURSING HOME, L.P.,
an Oklahoma limited partnership
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BANK ONE TRUST COMPANY, N.A., as Trustee
Oklahoma City, Oklahoma
000113
TREASURERS ENDORSEMENT |
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I hereby certify that I received $ [ILLEGIBLE] |
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Therefore is payment of mortgage tax on the within mortgage, |
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Dated this 27 day of MAR ,2002. |
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FORREST BUTCH FREEMAN, County Treasurer |
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Pauls wells |
, Deputy [ILLEGIBLE] |
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The interest of the OKLAHOMA COUNTY INDUSTRIAL AUTHORITY in this First Amendment to Loan Agreement and Indenture of First Mortgage has been assigned to Bank One Trust Company, N.A., as Trustee
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WHEN RECORDED MAIL ID |
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NAME |
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G. Blaine Schwabe, III |
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ADDRESS |
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211 N. Robinson, 14th Floor |
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CITY & |
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Two Leadership Square |
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STATE |
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Oklahoma City, OK 73102 |
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FIRST AMENDMENT TO LOAN AGREEMENT
AND INDENTURE OF FIRST MORTGAGE
THIS AGREEMENT is entered into as of the 1st day of September, 2001, by and among WESTLAKE NURSING HOME, L.P., an Oklahoma limited partnership (hereinafter called the Borrower), and the OKLAHOMA COUNTY INDUSTRIAL AUTHORITY, a public trust (hereinafter called the Authority) and BANK ONE TRUST COMPANY, N.A., as Trustee (hereafter called the Trustee).
WITNESSETH:
WHEREAS , the Oklahoma County Industrial Authority is an Oklahoma public trust duly created and existing under Title 60, Oklahoma Statutes 1991, Section 176-180.3, inclusive, as amended (the Act); and
WHEREAS , the Borrower has heretofore acquired, constructed, furnished and equipped a 100-bed intermediate care nursing home facility (the Development) located in Oklahoma County, State of Oklahoma, and the cost of such acquisition, construction, and equipping and expenses incidental thereto was $4,000,000; and
WHEREAS , the Borrower has previously received a loan from the Authority in the aggregate principal amount of $4,000,000 to finance the costs of the Development and the costs related to such financing pursuant to a Loan Agreement and Indenture of First Mortgage by and among the Borrower, the Authority and the Trustee dated as of September 1, 1986 and recorded in Book 5577 at Pages 541-611, inclusive in the records of the Oklahoma County Clerk (the Loan Agreement); and
WHEREAS , the Authority has previously issued its Industrial Development Revenue Bonds, 1986 Series A (Westlake Nursing Center Project) (the 1986 Bonds), in the aggregate principal amount of $4,000,000 pursuant to a Bond Indenture between the Trustee and the Authority dated as of September 1, 1986 (the Bond Indenture), and intends to issue its Industrial Development Ratable Share Revenue Bonds, Series 2001 (Westlake Nursing Center Project) (hereinafter referred to as the Series 2001 Ratable Share Bonds), pursuant to a First Supplemental Bond Indenture dated as of September 1, 2001, and exchange the Series 2001 Ratable Share Bonds for all the outstanding 1986 Bonds pursuant to a First Revised Amended Plan of Reorganization of Westlake Nursing Home, L.P., filed October 31, 2001, as modified by two modifications (non-material) filed on December 19 and 20, 2001, and confirmed by Order of the United States Bankruptcy Court for the Western District of Oklahoma on December 20, 2001 (collectively the Plan); and
WHEREAS , the Authority has found and determined that the restructuring of the indebtedness evidenced by the 1986 Bonds will further the purposes of the Act and will serve the public interest by assisting in the development of industry in Oklahoma County, State of Oklahoma, which purposes are authorized and proper functions of me Authority.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND AGREEMENTS CONTAINED HEREIN, THE BORROWER, THE AUTHORITY AND THE TRUSTEE HEREBY AGREE AND COVENANT TO AMEND THE LOAN AGREEMENT TO READ IN PART AS FOLLOWS:
A. Article I, Section 101, of the Loan Agreement is amended by deleting therefrom the following definitions and all references thereto in the Loan Agreement:
1. Administrative Payments
2. Debt Service Reserve Fund
3. Letter of Credit
4. Letter of Credit Bank
5. Underwriter
B. Article I, Section 101 of the Loan Agreement is further amended by amending the following definitions to read as follows:
Authorized Owner Representative means Ronald E. Lusk, president of the general partner of the Owner, or any other person at the time designated to act on behalf of the Owner by written certificate furnished to the Authority and the Trustee containing the specimen signature of such person and signed on behalf of the Owner by an authorized representative. Such certificate may designate an alternate or alternates.
Bond Counsel to the Authority shall mean an attorney or firm of attorneys of nationally recognized standing in matters pertaining to the issuance of bonds by states and their political subdivisions, appointed by the Authority.
Bonds means the Oklahoma County Industrial Authority, Industrial Development Ratable Share Revenue Bonds, Series 2001 (Westlake Nursing Center Project), issued by the Authority, dated as of September 1, 2001, maturing September 1, 2016, which are from time to time outstanding under the Indenture.
Indenture means the Bond Indenture, dated as of September 1, 1986, as amended and supplemented by a First Supplemental Bond Indenture dated as of September 1, 2001, both between the Trustee and the Authority, and all amendments and supplements thereto from time to time executed.
Loan Agreement means the Loan Agreement and Indenture of First Mortgage, dated as of September 1, 1986, as amended and supplemented by a First Amendment to Loan Agreement dated as of September 1, 2001, both by and among the Authority, the Owner and the Trustee, and such term shall include any further instrument supplementing or amending such Loan Agreement.
Owner means Westlake Nursing Home, L.P., an Oklahoma limited partnership having Westlake Management Company, a Texas corporation, as the General Partner; and permitted successors in ownership of the Project pursuant to Section 432 of this Loan Agreement.
Owners Note means the Amended and Restated First Mortgage Promissory Note dated as of September 1, 2001 in the face principal amount of $2,800,000, made payable to the Authority and assigned to the Trustee as set forth therein and issued by the Owner under and pursuant to the terms of this Loan Agreement in the form attached hereto as Schedule B and incorporated herein by reference.
Trust Estate means the property conveyed to the Trustee pursuant to the First and Third Granting Clauses of the Indenture.
Trustee shall mean Bank One Trust Company, N.A., as successor to The Liberty National Bank and Trust Company of Oklahoma City, Oklahoma, and its successors, and any corporation resulting from or surviving any consolidation or merger to which it or its successors may be a party and any successor at the time serving as successor trustee hereunder.
C. Article III, Section 301 of the Loan Agreement is amended in its entirety to read as follows:
SECTION 301. Authorization, Terms, Conditions, and Form of Owners Note. The Owner hereby authorizes the issuance of the Owners Note in the principal amount of $2,800,000, dated as of September 1, 2001, to be executed by Westlake Management Company, a Texas corporation, as the general partner acting for and on behalf of the Owner, and to be in the form attached to this Loan Agreement as Schedule B. On the date of delivery of the Bonds the Owner shall deliver the Owners Note to the Trustee pursuant to the direction of the Authority.
D. Article VI, Section 603 of the Loan Agreement is amended in its entirety to read as follows:
SECTION 603. Notice. Any notice, demand, direction, request or other instrument authorized or required by this Loan Agreement to be given or filed with the Authority, the Owner or Trustee shall be deemed to have been sufficiently given or filed for all purposes of this Loan Agreement if and when sent by registered mail:
(i) To the Authority at Suite 1900 First National Center West, Oklahoma City, Oklahoma (73102).
(ii) To the Owner c/o WestLake Management Company,c/o The Phoenix Corporation, 801 East Campbell Rd., Suite 345, Richardson, TX 75081, ATTN: Ronald E. Lusk..
(iii) To the Trustee at P.O. Box 25848, Oklahoma City, Oklahoma (73125), ATTN: Corporate Trust Department.
E. Schedule A of the Loan Agreement is hereby restated in its entirety as follows:
SCHEDULE A
DESCRIPTION OF REAL AND PERSONAL PROPERTY
Real Property
The following described real property, all located within Oklahoma County, State of Oklahoma, and being legally described as follows:
A part of the Northeast Quarter (NE/4) of Section 16, Township 13 North, Range 4 West of the Indian Meridian in the City of Oklahoma City, Oklahoma County, Oklahoma, said part being more particularly described as follows:
Original Tract: Beginning at a point located South 00°2833 East a distance of 503.87 feet and North 89°3127 East a distance of 30.00 feet from the Northwest corner of the said NE/4; thence from said POINT OF BEGINNING South 00°2833 East a distance of 293.65 feet to a point on a curve to the right, said curve having a central angle of 15°5238 and a radius of 205.65 feet; thence along the arc of said curve in a Southwesterly direction a distance of 56.99 feet; thence South 89°5109 East a distance of 407.84 feet; thence North 00°2833 West a distance of 350.00 feet; thence North 89°5109 West a distance of 400.00 feet to the point of beginning, containing 140,137.93 square feet more or less, OR 3.2171 Acres more or less; and
Additional Tract: Beginning at a point located South 00°2833 East a distance of 503.87 feet and North 89°3127 East a distance of 30.00 feet from the Northwest corner of said NE/4; thence East a distance of 400.00; thence East 350.00; thence South 314.50; thence West 350.00; thence North 314.50 to the point of beginning, containing 110,068.49 square feet more or less, OR 2.5268 Acres more or less.
Personal Property
The personal property covered under this instrument consists of all buildings, structures, fixtures, improvements and personal property, whether now-owned or hereafter acquired by Westlake Nursing Home Limited Partnership, an Oklahoma limited partnership, and its successors or assigns, together with all other real estate and all accounts, contract rights, inventory, rents and income, general intangibles (including certificate of need and/or license(s) and related rights), fixtures, furnishings and equipment whether attached to the above-described Real Property or not and whether now-owned or hereafter acquired by Westlake Nursing Home Limited Partnership, an Oklahoma limited partnership, and its successors or assigns.
F. Schedule B of the Loan Agreement is hereby amended in its entirety to read as follows:
SCHEDULE B
AMENDED AND RESTATED
FIRST MORTGAGE PROMISSORY NOTE
September 1, 2001 |
$2,800,000.00 |
FOR VALUE RECEIVED, the undersigned, WESTLAKE NURSING HOME, L.P., an Oklahoma limited partnership (Maker) promises to pay to the order of the Trustees of the OKLAHOMA COUNTY INDUSTRIAL AUTHORITY (together with their successors and assigns, the Payee), their successors and assigns, at BANK ONE TRUST COMPANY, N.A., Oklahoma City, Oklahoma (the Trustee), whose mailing address is Post Office Box 25848, Oklahoma City, Oklahoma (73125), or any other place as the Payee may designate to Maker in writing from time to time, the principal sum of Two Million Eight Hundred Thousand Dollars ($2,800,000), together with interest thereon from and after September 1, 2001, at the rate of ten and one-quarter percent per annum (10.25%), payable in the manner and on the dates set forth herein, in lawful money of the United States of America, which shall be at the time of payment legal tender for all debts, public and private.
Principal and interest shall be payable in monthly installments commencing March 27, 2002, and continuing on the 27 th day of each calendar month thereafter through and including August 27, 2016, equal to (1) a minimum monthly payment of $17,500, plus (2) 25% of Makers net cash flow (i.e. earnings before interest, taxes, depreciation and amortization), up to a maximum additional payment of $7,500 per month, for a total maximum monthly payment of $25,000 per month. Any amount paid less than the full $25,000 per month shall bear interest from and after the due date until paid as set forth above; PROVIDED, that in any event (regardless of the amount of net cash flow available in any month or cumulatively), the Maker shall pay no less than a total of $100,000 within each 120-day period during the term hereof. All unpaid principal and interest shall be due and payable in full on August 27, 2016. All payments hereunder shall be applied by the Trustee as set forth in the Bond Indenture dated as of September 1, 1986, as amended and supplemented by the First Supplemental Bond Indenture dated as of September 1, 2001, both between the Payee and the Trustee.
The acceptance of any partial payment by the Payee, after the time when it becomes due as herein set forth, shall not be held to establish a custom, or waive any rights of the Payee to enforce prompt payment of this Note.
The Maker hereby:
(a) Waives demand, presentment for payment, protest, notice of nonpayment or protest, notice of dishonor and diligence in collection;
(b) Agrees that the maturity hereof may be from time to time extended for any term or terms without discharging the liability of the Maker; and
(c) Agrees that if this Note be not paid at maturity (whether by acceleration, extension or otherwise) and be placed with an attorney or attorneys for collection, the Maker will pay, in addition to unpaid principal and accrued interest, a reasonable attorney fee.
None of the rights or remedies of the Payee are to be deemed waived or affected by failure to exercise or delay in exercising same. All remedies conferred by the Maker upon the Payee in this Note or any other instrument or agreement securing this Note shall be cumulative, and none is exclusive and such remedies may be exercised concurrently or consecutively at the Payees option. This instrument shall be
governed as to validity, enforcement, interpretation, construction, effect and in all other respects by the laws of the State of Oklahoma.
The outstanding principal amount of this Note may be prepaid without notice, in whole or in part, at the option of the Maker, on any September 1 and March 1 on or prior to maturity, at par plus accrued interest to the prepayment date.
This Note is issued pursuant and subject to, and payment of principal and interest on this Note are secured by, a Loan Agreement and Indenture of First Mortgage (herein called Loan Agreement), dated as of September 1, 1986 as amended by a First Amendment to Loan Agreement and Indenture of First Mortgage (herein called the First Amendment) dated as of September 1, 2001, each by and among the Payee, the Maker and the Trustee (which Loan Agreement and First Amendment are herein sometimes collectively referred to as the Agreement). All terms defined in the Agreement are incorporated herein in full.
This Note is issued for the purpose of refinancing a Project Loan made to finance part of the cost of acquiring, constructing, developing and equipping a 100-bed intermediate care nursing home facility (the Project) owned and operated by the Maker and mortgaged, pledged and assigned under the Agreement.
Reference is hereby made to the Agreement for a more complete description of the mortgaged, pledged and assigned Project, the nature and extent of the security for this Note, a statement of the terms and conditions on which this Note is issued and secured, the rights, duties and obligations of the Maker, the Trustee, the Payee, the owners and holders of the Industrial Development Ratable Share Revenue Bonds, Series 2001 (Westlake Nursing Center Project) (the Series 2001 Ratable Share Bonds), issued by the initial Payee hereof, and the Project Documents securing and relating to payment of such Series 2001 Ratable Share Bonds and this Note.
The interest rate provided for hereinabove shall be computed on the balance of the principal amount hereof from time to time outstanding and unpaid, based on a three hundred sixty (360) day year consisting of twelve 30-day months at the aforesaid rate.
If any installment of principal and interest on this Note or any part of any such installment be not paid within five (5) days of the date when due (whether by maturity, acceleration or otherwise) the past due sum shall bear interest at an interest rate of four percent (4%) per annum from its due date until paid; all past due sums to be paid as a condition to the curing of any default hereunder. During the existence of any such default, the Payee may apply payments received on any amount due hereunder, or may apply such payments under the terms of any instrument now or hereafter securing this Note, as the Payee may determine in accordance with the terms of the Loan Agreement. The Payee may collect a late charge, not to exceed an amount equal to one-half of one percent (1/2 of 1 %) of each payment which is not paid within fifteen (15) days from the due date hereof, for the purpose of covering expenses involved in the handling of delinquent payments. If any installment of principal or interest of this Note be not paid when due or if any Default identified in the Loan Agreement occurs, the Payee may, without notice to any party, declare the entire unpaid principal and all accumulated interest on this Note to be immediately due and payable.
If any due date for payment of any installment of principal or interest as stipulated above shall not be a Business Day, then such date for payment of principal or interest shall be the immediately preceding Business Day.
It is the intent of the Payee and Maker to conform strictly to the usury laws of the State of Oklahoma, and any interest on the principal sum hereof in excess of that allowed by such usury laws shall be subject to reduction to the maximum amount of interest allowed under such laws. If any interest in excess of the maximum amount of interest allowable by such usury laws is inadvertently paid to the Payee, at any time, such excess interest shall be refunded by the Payee to the party entitled to the same after receiving notice of excess interest.
The records of the Payee shall be prima facie evidence of the amount owing on this Note.
IN WITNESS WHEREOF, the Maker has caused this instrument to be executed by its general partner this day of March, 2002, but shall be effective as of the day and month first above written.
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WESTLAKE NURSING HOME, L.P., |
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an Oklahoma Limited Partnership |
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By its General Partner: |
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WESTLAKE MANAGEMENT COMPANY |
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a Texas Corporation |
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By: |
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Ronald E. Lusk, President |
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Secretary |
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(FORM OF ASSIGNMENT)
For value received, the Trustees of the Oklahoma County Industrial Authority assign and transfer this Note unto Bank One Trust Company, N.A., Oklahoma City, Oklahoma, as Trustee for the registered owners of the Series 2001 Ratable Share Bonds herein referred to.
DATED: March , 2002
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OKLAHOMA COUNTY INDUSTRIAL AUTHORITY |
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Chairman of Trustees |
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Assistant Secretary |
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G. All of the remaining provisions, covenants, representation, warranties and agreements contained in the Loan Agreement are hereby incorporated by reference herein and this First Amendment to Loan Agreement and the Loan Agreement shall be taken, read and construed as one and the same document. The Borrower Note shall be and continue to be secured by the Loan Agreement as amended by this First Amendment to Loan Agreement.
H. Except as otherwise defined or modified herein, all terms used in this First Amendment to Loan Agreement which are defined in the Loan Agreement shall have the same meanings given to such terms in the Loan Agreement.
I. Except as amended by this First Amendment to Loan Agreement, the Loan Agreement shall continue in full force and effect and the Loan Agreement and this First Amendment to Loan Agreement shall be read, taken and construed as one and the same instrument.
J. Notwithstanding the provisions of Article XV. H of the Plan, in the event of any inconsistency or conflict in any material regard between this First Amendment to Loan Agreement and the Plan, the Plan shall control and govern. In addition, in the event of any inconsistency or conflict between the terms and provisions of the Loan Agreement and this First Amendment to Loan Agreement, the terms and provisions of this First Amendment to Loan Agreement, shall control and govern.
IN WITNESS WHEREOF , the parties have caused this instrument to be duly executed as of the day and year first above written.
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WESTLAKE NURSING HOME, L.P. |
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an Oklahoma limited partnership |
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Westlake Management Company, |
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a Texas corporation, General Partner |
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/s/ Ronald E. Lusk |
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Ronald E. Lusk, President |
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[ILLEGIBLE] |
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Secretary |
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BORROWER |
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OKLAHOMA COUNTY INDUSTRIAL AUTHORITY, |
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a public trust |
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ATTEST: |
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/s/ [ILLEGIBLE] |
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Chairman of Trustees |
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Assistant Secretary of Trustees |
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AUTHORITY |
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BANK ONE TRUST COMPANY, N.A. |
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as Trustee |
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/s/ [ILLEGIBLE] |
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Authorized Officer |
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TRUSTEE |
STATE OF OKLAHOMA |
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COUNTY OF OKLAHOMA |
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The foregoing instrument was acknowledged before me this 18th day of March, 2002, by Richard Burpee, Chairman of Trustees of the Oklahoma County Industrial Authority, a public trust, on behalf of the trust.
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/s/ [ILLEGIBLE] |
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Notary Public |
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My Commission Expires: |
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9/9/2004 |
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PAULA G. FOSTER Cleveland County Notary Public in and for State of Oklahoma My commission expires . |
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STATE OF OHIO |
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COUNTY OF DELAWARE |
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The foregoing instrument was acknowledged before me this 20 th day of March, 2002, by DONNA J. PARISI, an authorized officer, of. BANK ONE TRUST COMPANY, N.A., a national association, on behalf of said national banking association.
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Notary Public |
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N/A |
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My commission has no expiration date. |
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Section 147 03 R.C. |
STATE OF TEXAS |
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COUNTY OF DALLAS |
The foregoing instrument was acknowledged before me this 20 day of March 2002, by Ronald E. Lusk, as President of Westlake Management Company, a Texas corporation, on behalf of said corporation, general partner of Westlake Nursing Home, L. P., an Oklahoma limited partnership, on behalf of said limited partnership.
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Notary Public |
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My Commission Expires: |
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SHANNA A. RAYMOND |
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Notary public, State of Texas |
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My Commission Expires 04-12-04 |
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Exhibit 10.40
BOND PURCHASE AGREEMENT
$6,610,000
THE CITY OF SPRINGFIELD, OHIO
First Mortgage Revenue Bonds
(Eaglewood Property Holdings, LLC Project)
Series 2012A
and
$620,000
THE CITY OF SPRINGFIELD, OHIO
First Mortgage Revenue Bonds
(Eaglewood Property Holdings, LLC Project)
Taxable Series 2012B
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April 10, 2012 |
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The City of Springfield, Ohio
76 East High Street
Springfield, Ohio 45502
Attn: Mark Beckdahl, Director of Finance
Eaglewood Property Holdings, LLC
Two Buckhead Plaza
3050 Peachtree Road NW, Suite 355
Atlanta, Georgia 30305
Attn: Christopher F. Brogdon
Dear Ladies and Gentlemen:
The undersigned (the Underwriter) offers to enter into this Bond Purchase Agreement (this Bond Purchase Agreement) with The City of Springfield, Ohio (the Issuer), and Eaglewood Property Holdings, LLC, a Georgia limited liability company (the Borrower), which, upon acceptance of this offer by the Issuer and the Borrower, will be binding upon the Issuer, the Borrower and the Underwriter. This offer is made subject to written acceptance hereof by the Issuer and the Borrower at or before 6:00 P.M., Eastern Time, on the date hereof, unless extended by agreement by the parties.
BACKGROUND AND INTRODUCTION .
Pursuant to a ordinance adopted by the Issuer on March 27, 2012 (the Bond Ordinance), and an Indenture of Trust, dated as of April 12, 2012 (the Indenture), between the Issuer and BOKF, NA, dba Bank of Oklahoma, as trustee (the Trustee), the Issuer expects to issue its: (i) $6,610,000 The City of Springfield, Ohio, First Mortgage Revenue Bonds (Eaglewood Property Holdings, LLC Project), Series 2012A (the Series 2012A Bonds); and (ii) $620,000 The City of Springfield, Ohio, First Mortgage Revenue Bonds (Eaglewood Property Holdings, LLC Project), Taxable Series 2012B (the Series 2012B Bonds and, together with the Series 2012A Bonds, the Series 2012 Bonds). The Series 2012 Bonds will be issued, in book entry form only, on a pari passu basis. Interest on the Series 2012A Bonds is expected to be excludable from the gross income of the holders thereof for federal income tax purposes.
The Issuer will, pursuant to a Loan Agreement, dated as of April 12, 2012 (the Loan Agreement), lend the proceeds from the sale of the Series 2012 Bonds to Eaglewood Property Holdings, LLC, a Georgia limited liability company (the Borrower), which will use such proceeds to undertake a project (the Project) consisting of: (i) re-financing the costs of its acquisition of an 80-unit assisted living facility, which is located in Springfield, Ohio (the Facility), which the Borrower leases to Eaglewood Village, LLC, an affiliated entity (the Operator), pursuant to a Facility Lease, dated December 29, 2011 (as amended by a First Amendment to Facility Lease, dated as of April 12, 2012, the Lease); (ii) making certain initial deposits into the funds and accounts established under the Indenture, including a debt service reserve fund for the Series 2012 Bonds; and (iii) paying certain costs of issuance of the Series 2012 Bonds.
The Borrower will be required to make all of its payment obligations under the Loan Agreement (the Loan Payments) directly to the Trustee in such amounts as will enable the Trustee to pay, when due, the principal of, premium, if any, and interest on, the Series 2012 Bonds and all other amounts, fees, penalties, premiums, adjustments, expenses, counsel fees and other payments due pursuant to the terms of the Indenture. The source of funds available to the Borrower to make the Loan Payments will be the revenues generated by the operation of the Facility (the Gross Revenues).
The Series 2012 Bonds will be special obligations of the Issuer, payable solely from the revenues, receipts, funds or moneys pledged therefor pursuant to, and from any amounts otherwise available under, the Indenture, all of which (except the Rebate Fund) will be held by the Trustee for the equal and ratable benefit of all holders of the Series 2012 Bonds.
Pursuant to a Guaranty Agreement, dated as of April 12, 2012 (the AdCare Guaranty Agreement), AdCare Health Systems, Inc. (AdCare), the Borrowers ultimate corporate parent, will guarantee the prompt payment and performance, as and when due, of the Loan Payments, and the Borrowers other obligations under the Loan Agreement.
As security for its obligations under the Loan Agreement, the Borrower will, pursuant to an Open-End Mortgage, Assignment of Leases and Rents and Security Agreement, dated as of April 12, 2012 (the Security Agreement): (i) grant the Trustee (subject to Permitted Encumbrances) a first lien on and security interest in all of the land, buildings and other improvements that constitute the Facility, and in and to the Lease Payments and all of the Borrowers other personal property now or hereafter located in the Facility; and (ii) collaterally assign the Lease to the Trustee (the Lease and such other property being herein referred to collectively as the Mortgaged Property).
As security for its obligations in respect of the Series 2012 Bonds, the Issuer will, pursuant to the Indenture, assign and pledge to the Trustee, for the equal and ratable benefit of all holders of the Series 2012 Bonds, all of the Issuers right, title and interest in, to and under the Loan Agreement, the AdCare Guaranty Agreement, and the Security Agreement (except for the Reserved Rights of the Issuer, such as the right to receive administrative fees, costs and expenses and certain notices, the right to give certain consents, and its rights to indemnification and to enforce public purpose covenants).
The exclusion of interest on the Series 2012A Bonds, from the gross income of the recipients thereof for federal income tax purposes, is based upon the Facilitys providing residential rental property as such term is defined in Section 142(d) of the Internal Revenue Code of 1986, as amended (the Code). Certain conditions must be satisfied, and must continue to be satisfied, in order for such exclusion of interest to be effective. Accordingly, the Borrower will enter into a Land Use Restriction Agreement, dated as of April 12, 2012 (the Land Use Agreement), in which the Borrower will covenant that it will cause the Facility to comply with the requirements of Section 142(d) of the Code, and that it will not knowingly take or permit any action to be taken that would adversely affect the exemption of interest on the Series 2012A Bonds from federal income taxation.
The Series 2012 Bonds will be limited obligations of the Issuer, payable solely from the revenues, receipts, funds or moneys pledged therefor, and from any amounts otherwise available under the Indenture for the payment thereof, including those derived under the Loan Agreement and the Security Agreement, and those on deposit in all funds and accounts held under the Indenture (except the Rebate Fund), all of which will be held by the Trustee for the equal and ratable benefit of all holders of the Series 2012 Bonds. (The Indenture, the Loan Agreement, the Security Agreement, the Land Use Agreement, and the other documents delivered by or on behalf of the Issuer or the Borrower pursuant to the provisions of any of the Indenture, the Loan Agreement, or the Security Agreement are hereinafter sometimes referred to collectively as the Transaction Documents.)
Pursuant to a Continuing Disclosure Undertaking (the Disclosure Agreement), the Borrower and the Operator will each agree to provide certain financial information and operating data relating to it, annually, and to provide notices of the occurrence of certain enumerated events.
SECTION 1. PURCHASE AND SALE OF THE SERIES 2012 BONDS
Based upon the terms and conditions and upon the representations herein set forth, the Underwriter hereby agrees to purchase from the Issuer, and the Issuer hereby agrees to sell and deliver to the Underwriter, for further sale by the Underwriter, on a best-efforts basis, all (but not less than all) of the $7,230,000 aggregate principal amount of the Series 2012 Bonds, which will have such maturities and bear interest at such rates as are set forth in Exhibit A attached hereto, for an aggregate purchase price of $6,974,133.00 ($7,230,000.00 for the Series 2012 Bonds, less (a) original issue discount of $114,882.00 and (b) an underwriter discount of $140,985.00 The Borrower has also agreed to pay an Underwriting and Marketing Fee to the Underwriter for services related to the offer and sale of the Series 2012 Bonds in the amount of $292,815.00.
The Underwriter agrees to sell the Series 2012 Bonds at no more than the initial offering prices or yields set forth in the Official Statement (as defined in Section 3 hereof). The Underwriter reserves the right to change the initial sale prices or yields as the Underwriter shall deem necessary in connection with the sale of the Series 2012 Bonds and to offer and sell the Series 2012 Bonds to or with certain dealers (including
dealers depositing the Series 2012 Bonds into unit investment trusts) and others at prices lower than the initial offering prices or yields set forth in the Official Statement. The Underwriter also reserves the right (i) to over-allot or effect transactions that stabilize or maintain the market price of the Series 2012 Bonds at a level above that which might otherwise prevail in the open market, and (ii) to discontinue such stabilizing, if commenced, at any time.
SECTION 2. DELIVERY OF THE SERIES 2012 BONDS AND CLOSING
At 10:00 a.m. (Eastern Time) on April 12, 2012, or at such other time or on such earlier or later date as to which we may mutually agree (the Closing Date), the Issuer will cause to be delivered to the Underwriter, at the offices of The Depository Trust Company, in New York, New York, or such other place as to which we may mutually agree, the Series 2012 Bonds in definitive or typewritten form (all the Series 2012 Bonds to be in fully registered form and in such authorized denominations, and shall be registered in such names, as the Underwriter may request at least three (3) business days prior to the Closing Date, duly executed and authenticated, and there will be delivered to the Underwriter at such offices, or to such other place as to which we may mutually agree, the other documents hereinafter mentioned. It is anticipated that CUSIP identification numbers will be printed on the Series 2012 Bonds, but neither the failure to print such numbers on any Series 2012 Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Underwriter to accept delivery of the Series 2012 Bonds in accordance with the terms of this Bond Purchase Agreement. On the Closing Date, the Underwriter will accept delivery of the Series 2012 Bonds and pay the purchase price of the Series 2012 Bonds to the Issuer in federal or other immediately available funds by wire or check.
SECTION 3. OFFICIAL STATEMENT
(a) Delivery and Use; 15c2-12 Representations . The Borrower shall deliver or cause to be delivered to the Underwriter, at the sole expense of the Borrower, and promptly after the acceptance by the Issuer and the Borrower of this Bond Purchase Agreement (but in no event later than the date of the Closing), such number of copies of the Official Statement, which shall be dated the date of the Closing (the Official Statement), relating to the Series 2012 Bonds, as the Underwriter may reasonably request. The Borrower shall also deliver to the Underwriter, at the sole expense of the Borrower, no later than seven (7) business days after the date of this Bond Purchase Agreement (or within such shorter period as may be required by the Underwriter in order to comply with the provisions of Rule 15c2-12 and other applicable security laws, rules and regulations), additional copies of the Official Statement in final form (including all documents incorporated by reference therein) and any amendment or supplement thereto, in such quantities as the Underwriter may reasonably request in order to comply with the obligations of the Underwriter pursuant to the rules of the Municipal Securities Rulemaking Board (the MSRB) and Rule 15c2-12. The Issuer agrees to notify the Underwriter of any material changes that become known to the Issuer that relate to the Issuer and which might affect the accuracy and completeness of the Official Statement, and the Borrower agrees to notify the Underwriter of any material changes that become known to the Borrower and which might affect the accuracy and completeness of the Official Statement, in either case for a period of ninety (90) days after the date on which the Official Statement has been filed with the MSRBs Electronic Municipal Market Access system (EMMA).
Promptly upon its receipt of the Official Statement, the Underwriter shall file the Official Statement, and any amendment and supplement thereto, with EMMA, and shall pay any fees required in connection
therewith. The Underwriter agrees to send to the MSRB or its designee, within the time required under Rule G-32 and all applicable rules of the MSRB the necessary copies of the Official Statement.
By its acceptance of this Bond Purchase Agreement, the Issuer and the Borrower, to the extent each is a party thereto, authorize the use, in connection with the sale of the Series 2012 Bonds, of copies of the Official Statement and the Transaction Documents. The Issuer and the Borrower acknowledge and ratify the distribution by the Underwriter of the Official Statement in connection with the sale of the Series 2012 Bonds, and the Issuer and the Borrower hereby deem the Official Statement final.
SECTION 4. REPRESENTATIONS AND AGREEMENTS OF THE UNDERWRITER
The Underwriter represents to and agrees with the Issuer and the Borrower that, as of the date hereof:
(a) The Underwriter is a Florida corporation duly organized, validly existing and in good standing under the laws of its state of organization, having all requisite power and authority to carry on its business as now constituted.
(b) The Underwriter has received all information with respect to the Issuer, the Borrower, the Project, and the Facility that it has requested from the Issuer and the Borrower in order to purchase the Series 2012 Bonds.
(c) The documents relating to the sale of the Series 2012 Bonds have been reviewed by the Underwriter and contain terms acceptable to, and agreed to by, the Underwriter.
(d) The Underwriter has the requisite authority to enter into this Bond Purchase Agreement. This Bond Purchase Agreement has been duly executed and delivered by the Underwriter and, assuming the due authorization, execution and delivery by the other parties hereto, is the binding and valid obligation of the Underwriter, enforceable in accordance with its terms, except that the enforceability hereof may be limited by applicable bankruptcy, insolvency, moratorium or other similar laws or equitable principles affecting creditors rights or remedies generally.
(e) The Underwriter has not entered into any undisclosed financial or business relationships, arrangements or practices required to be disclosed in the Official Statement pursuant to Securities and Exchange Commission Rule Nos. 33-7049 and 34-33741, FR-42, File No. S7-4-94 (March 9, 1994), or required to be disclosed in the Official Statement pursuant to the MSRB rules.
(f) The Underwriter will offer the Series 2012 Bonds only pursuant to the Official Statement and will not make any statements in connection with the offering and sale of the Series 2012 Bonds that are inconsistent with the information contained in the Official Statement.
(g) The Underwriter will comply with all registration and qualification requirements, which are applicable to the Underwriter and its offering of the Series 2012 Bonds, under any securities or blue sky laws of any jurisdiction.
(h) The Underwriter will not make any untrue or misleading statement in connection with the offering and sale of the Series 2012 Bonds, and will ensure that all information contained in the Official Statement under the caption UNDERWRITING is true and correct in all material respects and does not
omit any statement necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading.
(i) The Underwriter will perform its responsibilities as underwriter for the Series 2012 Bonds under applicable federal and state securities laws, including, without limitation, its obligation to review the Official Statement and to make such investigation as may be appropriate in order to have a reasonable basis for concluding that the Official Statement does not contain any untrue statement of a material fact and does not omit any material fact necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading.
SECTION 5. REPRESENTATIONS AND AGREEMENTS OF THE ISSUER
The Issuer represents to and agrees with the Underwriter that, as of the date hereof and the date of the Closing:
(a) Official Statement . The statements and information in the Official Statement under the headings SUMMARY STATEMENT The Issuer, THE ISSUER and LITIGATION The Issuer are, and such statements and information in the Preliminary Official Statement, dated March 29, 2012 (the Preliminary Official Statement), as of its date were, true, correct and complete in all material respects, and such information and statements in the Official Statement do not, and such information and statements in the Preliminary Official Statement as of its date did not, include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make such statements and information, in light of the circumstances under which they are, or were made, not misleading.
(b) Existence . The City of Springfield, Ohio (the Issuer), is a municipal corporation, duly organized and existing under, and by virtue of, the Constitution and laws of the State of Ohio and its City Charter. Pursuant to Section 133.51 of the Ohio Revised Code, and Article VIII, Section 16, of the Ohio Constitution (together, the Act), and an ordinance passed by the Issuer, the Issuer has the power to issue revenue bonds, such as the Series 2012 Bonds, for the purpose, among others, of financing the acquisition and rehabilitation of assisted living facilities.
(c) Authority. The Issuer has the requisite power and authority (i) to take all actions set forth in the Act, (ii) to adopt the Bond Ordinance and enter into the Indenture, the Loan Agreement and this Bond Purchase Agreement, (iii) to issue and execute the Series 2012 Bonds as provided in the Indenture, and to execute and deliver the Indenture, the Loan Agreement, and this Bond Purchase Agreement, and (iv) to enter into and consummate all other transactions contemplated on the Issuers part by the Series 2012 Bonds, the Indenture, the Loan Agreement, this Bond Purchase Agreement and the Official Statement.
(d) Adoption of Bond Ordinance, Etc . On March 27, 2012, the Commission of the Issuer authorized the issuance of the Series 2012 Bonds pursuant to an ordinance, after determining that the Project was a proper purpose for its issuance of bonds under the Act. The Bond Ordinance and the respective forms of the Indenture, the Series 2012 Bonds, the Loan Agreement and this Bond Purchase Agreement were adopted or approved, as the case may be, at a duly convened meeting of the Issuer, with respect to which all legally required notices were duly given to all members of the Issuer, and at which meetings quorums were present and acting at the time of the adoption or approval, as the case may be, thereof, and the Bond Ordinance remains in full force and effect as of the date hereof.
(e) Due Execution and Delivery of Documents . This Bond Purchase Agreement has been duly executed and delivered by the Issuer and, when executed and delivered by the other parties hereto, will be, and the Loan Agreement, and the Indenture, when executed and delivered by the Issuer and the other parties thereto, will be, legal, valid and binding agreements of the Issuer, enforceable in accordance with their terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws in effect from time to time affecting the rights of creditors generally and to the availability of equitable relief and, in the case of this Bond Purchase Agreement, applicable securities laws.
(f) No Conflicts . The acceptance, execution and delivery of this Bond Purchase Agreement, the adoption of the Bond Ordinance, the execution and delivery of the Series 2012 Bonds, the Indenture, and the Loan Agreement, and the compliance with the provisions hereof and thereof, do not and will not violate or conflict with any resolution adopted by the Issuers City Commissioners and, to the knowledge of the Issuer, do not and will not conflict with or violate, or result in or constitute a breach of or default under, any indenture, mortgage, deed of trust, guaranty, loan, agreement or other instrument to which the Issuer is a party or by which the Issuer or any of its property is bound, which would have a materially adverse effect on the transactions contemplated by this Bond Purchase Agreement, or, to the knowledge of the Issuer, conflict with or violate any provision of any law, administrative rule or regulation, or any judgment, order or decree to which the Issuer or any of its property is subject.
(g) Limited Obligations . The Series 2012 Bonds will be limited obligations of the Issuer, payable solely from the revenues, receipts, funds or moneys pledged therefor, and from any amounts otherwise available under the Indenture for the payment thereof, including those derived under the Loan Agreement, and the Security Agreement, and those on deposit in all funds and accounts held under the Indenture (except the Rebate Fund), all of which will be held by the Trustee for the equal and ratable benefit of all holders of the Series 2012 Bonds. The Series 2012 Bonds will not be in any way a debt, liability or obligation, legal, moral or otherwise, of the Issuer, the State of Ohio, The City of Springfield, or any other political subdivision of the State of Ohio. Neither the general credit of the Issuer nor the general credit or taxing power of the State of Ohio, The City of Springfield, or any other political subdivision of the State of Ohio will be pledged to the payment of the principal of the Series 2012 Bonds or the interest or any premium thereon or other costs incidental thereto.
(h) Defaults . The Issuer, to the best of its knowledge, has never defaulted and is not now in default with respect to, any bonds, notes or other obligations which it has issued, except any of the foregoing that were issued in a conduit financing in which neither the general credit of the Issuer nor the general credit nor taxing power of the State of Ohio or any political subdivision of the State of Ohio was pledged to the payment thereof.
(i) Qualification of Bonds Under Blue Sky Laws . The Issuer will furnish and will continue to furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request from time to time to qualify and to continue to qualify the Series 2012 Bonds for offering and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate and to determine the eligibility of the Series 2012 Bonds for investment under the laws of such states and other jurisdictions. Provided, however, that (i) the Issuer will not be required to execute a special or general consent to service of process or qualify as a foreign corporation in connection with any such qualification in any jurisdiction, and (ii) the Issuer shall not be obligated to pay any expenses or costs (including, without limitation, legal fees) incurred in connection with such qualification.
It is specifically understood and agreed that the Issuer makes no representation as to the
financial position or business condition of the Borrower and does not represent or warrant as to the correctness, completeness or accuracy of any of the statements, information (financial or otherwise), representations or certifications furnished or to be made and furnished by the Borrower in connection with the execution and delivery of the Loan Agreement or the consummation of the transactions contemplated thereunder or in connection with the sale of the Series 2012 Bonds.
SECTION 6. REPRESENTATIONS, WARRANTIES, COVENANTS OF THE BORROWER
The Borrower represents to and agrees with the Underwriter that:
(a) Corporate Status . The Borrower is, and will continue to be, a limited liability company, duly organized, validly existing, in good standing under the laws of the State of Georgia, with full power to own its properties and conduct its business in the State of Ohio, as described in the Official Statement.
(b) Official Statement . As of the date of acceptance hereof by the Borrower, the statements and information in the Official Statement under the headings SUMMARY STATEMENT, THE BORROWER, THE OPERATOR, ADCARE, THE FACILITY, PLAN OF FINANCING, SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2012 BONDS, FINANCIAL COVENANTS, FORECASTED DEBT SERVICE COVERAGE, CERTAIN RISKS OF INVESTMENT and LITIGATION (as it relates to the Borrower), and the information and forecasts set forth in APPENDIX B are true, correct and complete in all material respects, and such information and statements in the Official Statement do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make such statements and information, in light of the circumstances under which they are or were made, not misleading.
(c) Litigation . Other than any items disclosed in the Official Statement, there is no claim, action, temporary restraining order, injunction, suit, proceedings, inquiry or investigation, at law or in equity, before or by any judicial or administrative court, governmental agency, public board or body, pending or, to the best of the Borrowers knowledge, threatened against or affecting, or involving the Borrower or its properties or businesses, or any securities of, the Borrower nor, to the best of the Borrowers knowledge, is there any basis therefor, (i) contesting the existence, status or powers of the Borrower, or (ii) seeking to prohibit, restrain or enjoin the sale of the Series 2012 Bonds or the use of the Official Statement, or (iii) challenging the validity or enforceability of any of the Transaction Documents to which the Borrower is a party, the Disclosure Agreement or this Bond Purchase Agreement or any other document required by the terms of any thereof to be executed and delivered by the Borrower (collectively, the Borrowers Transaction Documents), or contesting the power and authority of the Borrower to execute and deliver or to consummate the transactions contemplated on the Borrowers part by the Borrowers Transaction Documents or the Official Statement, or (iv) wherein an unfavorable decision, ruling or finding would adversely affect the financial condition or the operation of the Borrower or the transactions contemplated on the Borrowers part by the Borrowers Transaction Documents or the Official Statement.
(d) Authority . The Borrower has full power and authority to execute and deliver, and to perform its obligations under, the Borrowers Transaction Documents, and to enter into and carry out the transactions contemplated on the Borrowers part by such documents and by the Official Statement.
(e) Due Authorization . The Borrower by proper action has duly authorized (A) the
execution and delivery of, and the due performance of its obligations under the Borrowers Transaction Documents, and (B) the taking of any and all actions as may be required on the part of the Borrower to carry out, give effect to and consummate the transactions contemplated by the Borrowers Transaction Documents and by the Official Statement. The Borrower will take all actions necessary or appropriate to consummate the transactions contemplated on the Borrowers part by the aforesaid documents.
(f) Due Execution and Delivery of Documents. This Bond Purchase Agreement has been duly executed and delivered by the Borrower and is, and when executed and delivered by the other parties thereto, if any, the Borrowers Transaction Documents, will be, legal, valid and binding agreements of the Borrower enforceable in accordance with their terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws in effect from time to time affecting the rights of creditors generally and to the availability of equitable relief and, in the case of this Bond Purchase Agreement, applicable securities laws. At or prior to the date of Closing, the Borrowers Transaction Documents shall have been duly authorized, executed and delivered by the Borrower.
(g) No Conflicts . The acceptance, execution and delivery of this Bond Purchase Agreement, the approval of the Borrowers Transaction Documents, and the compliance with the provisions hereof and thereof, do not and will not conflict with or violate, or result in or constitute a breach of or default under the Borrowers operating agreement or under any indenture, mortgage, deed of trust, guaranty, loan agreement or other instrument to which the Borrower is a party or by which the Borrower or any of its property is bound, which would have a materially adverse affect on the transactions contemplated by this Bond Purchase Agreement or conflict with or violate any provision of any law, administrative rule or regulation, or, to the best of the Borrowers knowledge, any judgment, order or decree to which the Borrower or any of its property is subject.
(h) Qualification of Bonds Under Blue Sky Laws . The Borrower will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request to qualify the Series 2012 Bonds for offering and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate and to determine the eligibility of the Series 2012 Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Series 2012 Bonds; provided, however, that the Borrower will not be required to execute a special or general consent to service of process or qualify as a foreign company in connection with any such qualification in any jurisdiction.
(i) Governmental Filings. The Borrower has made all filings with, and has obtained all approvals and consents from, all federal, state and local regulatory agencies having jurisdiction to the extent, if any, required by any provision of law or regulation applicable to the Borrower to be made or to be obtained in connection with the execution and delivery of the Borrowers Transaction Documents, the performance of the Borrowers obligations thereunder or hereunder and the consummation of the transactions contemplated on the Borrowers part thereby or hereby and by the Official Statement.
(j) Governmental Approvals . No approval, permit, consent, authorization or order of any court or any governmental or public agency, authority or person not already obtained or effected (other than any approvals that may be required under the Blue Sky laws of any jurisdiction) is required with respect to the Borrower in connection with the performance by the Borrower of its obligations under the Borrowers Transaction Documents.
(k) Certificates and Representations . Any certificate signed by an authorized representative of the Borrower delivered to the Underwriter at the Closing shall be deemed a representation and warranty by the Borrower to such parties as to the statements made therein. The Borrower covenants that between the date hereof and the Closing it will not take any action that will cause the representations and warranties made herein to be untrue as of the Closing.
SECTION 7. INDEMNIFICATION
(a) Scope of Indemnification by the Borrower . The Borrower hereby agrees to indemnify, protect, defend and hold harmless the Issuer, each official, trustee, member, agent, servant, officer, city commissioner, employee and attorney of the Issuer and the Underwriter, each director, officer and employee thereof, and each person, if any, who controls the Underwriter or the Issuer within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended (an Indemnified Party), against all losses, claims, damages, liabilities or expenses, whether joint or several, to which any such Indemnified Party may become subject, under any statute or regulation at law or in equity or otherwise insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact set forth in the Official Statement, or any amendment or supplement thereof, or the Preliminary Official Statement, or arise out of or are based upon (i) the omission or alleged omission to state therein a material fact required to be stated therein or which is necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading in any material respect, and will reimburse any legal or other expenses reasonably incurred by any such Indemnified Party in connection with investigating or defending any such loss, claim, damage, liability or action. Provided, however, that such indemnity shall not inure to the benefit of the Issuer, or any person controlling the Issuer, as aforesaid, in respect of any written material furnished by the Issuer for use in the sections of the Preliminary Official Statement and Official Statement captioned SUMMARY STATEMENT The Issuer, THE ISSUER and LITIGATION The Issuer, or (ii) any act, failure to act, or misrepresentation by any person in connection with the issuance, sale, or delivery of the Series 2012 Bonds. And provided further, that such indemnity shall not extend to any Indemnified Party if the loss, claim, damage or liability is caused by the gross negligence or willful misconduct of the Indemnified Party. This indemnity agreement shall not be construed as a limitation on any other liability that the Borrower may otherwise have to any Indemnified Party, provided that in no event shall the Borrower be obligated for double indemnification.
(b) Procedure . An Indemnified Party shall, promptly after the receipt of notice of the commencement of any action against such Indemnified Party in respect of which indemnification may be sought against the Borrower notify the Borrower in writing of the commencement thereof. Failure of the Indemnified Party to give such notice will reduce the liability of the Borrower by the amount of damages attributable to the failure of the Indemnified Party to give such notice to the Borrower, but the omission to notify the Borrower of any such action shall not relieve the Borrower from any liability that it may have to such Indemnified Party otherwise than under this section. In case any such action shall be brought against an Indemnified Party and such Indemnified Party shall notify the Borrower of the commencement thereof, the Borrower may, or if so requested by such Indemnified Party shall, participate therein or assume the defense thereof, with counsel satisfactory to such Indemnified Party (it being understood that, except as hereinafter provided, the Borrower shall not be liable for the expenses of more than one separate counsel representing the Indemnified Parties in such action), and after notice from the Borrower to such Indemnified Party of an election so to assume the defense thereof, the Borrower will not be liable to such Indemnified Party under this Section for any legal or other expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof other than reasonable costs of investigation; provided, however, that unless and until the Borrower assumes the defense of any such action at the request of such Indemnified Party, the Indemnified Party shall have the right to participate at its own expense in the defense of any such action. If the Borrower shall not have employed counsel to take charge of the defense of any such action, or if an Indemnified Party shall have reasonably concluded that there may be defenses available to it or other Indemnified Parties that are different from or additional to those available to the Borrower (in which cases the Borrower shall not have the right to direct the defense of such action on behalf of such Indemnified Party) or to other Indemnified Parties, legal and other expenses, including the expenses of separate counsel incurred by such Indemnified Party shall be borne by the Borrower.
(c) Underwriters Agreement . The Underwriter agrees, at its expense, to indemnify, promptly defend (by counsel reasonably satisfactory to the Issuer) and hold harmless the Issuer, the Issuers city commissioners, officers, employees and each person, if any, who has the power, directly or indirectly, to direct or cause the direction of the management and policies of the Issuer, from and against any and all losses, claims, damages, demands, liabilities, costs or expenses, including reasonable attorneys fees and expenses, if such losses, claims, damages, demands, liabilities, costs or expenses arise out of, or are materially increased by, or would not exist but for, a breach by the Underwriter of its duties under, or failure to abide by any of its covenants in, this Bond Purchase Agreement.
SECTION 8. CONDITIONS OF UNDERWRITERS OBLIGATIONS
The Underwriter has entered into this Bond Purchase Agreement in reliance upon the representations and agreements of the Issuer and the Borrower herein and the performance by the Issuer and the Borrower of their respective obligations hereunder, both as of the date hereof and as of the Closing Date. The Underwriters obligations under this Bond Purchase Agreement are and shall be subject to the following further conditions:
(a) Conditions at or Prior to Closing . Receipt by the Underwriter of the following documents at or prior to the Closing:
(i) The opinion of Sell & Melton, L.L.P., Bond Counsel, dated the date of Closing, with respect to the matters, and substantially to the effect, as set forth in Exhibit B, attached hereto and made a part hereof;
(ii) The opinion of Holt, Ney, Zatcoff & Wasserman, LLP, counsel for the Borrower, dated the date of Closing, in form and substance satisfactory to the Underwriter;
(iii) The opinion of Squire, Sanders (US) L.L.P., counsel to the Issuer, dated the date of Closing, addressed to the Issuer, Bond Counsel, the Underwriter and the Trustee in form and substance acceptable to the Underwriter;
(iv) The opinion of John T. Lynch, Jr., as counsel to and solely for the benefit of the Underwriter dated the date of Closing and addressed to the Underwriter, in form and substance acceptable to the Underwriter;
(v) A certificate, dated the Closing Date, signed by an authorized official of the Issuer,
and satisfactory to the Underwriter, to the effect that (A) each of the representations and warranties of the Issuer contained in this Bond Purchase Agreement, the Indenture and the Loan Agreement is true, accurate and complete on the Closing Date as if made on and as of the Closing Date, and (B) each of the agreements of the Issuer to be complied with and each of the obligations of the Issuer to be performed hereunder and under the Bond Ordinance, the Indenture and the Loan Agreement on or prior to the Closing Date have been complied with and performed;
(vi) A certificate of the Borrower, dated the Closing Date, signed by an authorized officer of the Borrower, and satisfactory to the Underwriter, to the effect that (A) each of the representations and warranties of the Borrower contained in this Bond Purchase Agreement is true, accurate and complete on the Closing Date as if made on and as of the Closing Date, (B) each of the agreements of the Borrower to be complied with and each of the obligations to be performed by the Borrower hereunder and under the Borrowers Transaction Documents on or prior to the Closing Date have been complied with and performed, and (C) as of the Closing Date, there has been no material adverse change in the status, business, condition or prospects (financial or otherwise) of the Borrower;
(vii) A copy, certified by a duly authorized officer of the Borrower to be correct, complete and as in effect on the date of Closing, of each of the Borrowers organizational documents, operating agreement, and resolution authorizing the transactions contemplated hereby;
(viii) A copy, certified by a duly authorized officer of the Issuer, of the Bond Ordinance, and an executed counterpart of each of the Indenture and the Loan Agreement, each of which documents, including the Bond Ordinance, shall be in full force and effect;
(ix) A certificate, dated the date of the Closing, which shall be true and correct as of such date, signed by an authorized officer of the Trustee, in form and substance satisfactory to counsel for the Underwriter, to the effect that (A) the duties and obligations under the Indenture of the Trustee, as trustee, registrar and paying agent for the Series 2012 Bonds, have been duly accepted by the Trustee, (B) the acceptance by the Trustee of its duties and obligations under the Indenture, and compliance with the provisions thereof will not conflict with or constitute a breach of or default under any law, administrative regulation, consent decree or any agreement or other instrument to which it is subject, and (C) all approval, consents and orders of any governmental authority or agency having jurisdiction in the matter which would constitute a condition precedent to the performance by the Trustee of its obligations under the Indenture have been obtained and are in full force and effect;
(x) A mortgagees title insurance policy insuring the lien of the Trustee, as mortgagee under the Security Agreement, in the amount of $7,230,000, with only such exceptions as shall be Permitted Encumbrances (as defined in the Loan Agreement); and
(xi) Duly executed copies of the Guaranty Agreement, the Borrowers Transaction Documents, the Land Use Agreement, and the Disclosure Agreement, and such additional certificates (including, by way of example, appropriate no litigation certificates and arbitrage certificates), opinions of counsel, appraisals, surveys, environmental assessments, instruments or other documents as the Underwriter may reasonably request.
(b) Failure to Satisfy Conditions . If there shall be a failure to satisfy any of the conditions to the Underwriters obligations contained in this Bond Purchase Agreement, or if the Underwriters obligations shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond
Purchase Agreement shall terminate and none of the Underwriter, the Issuer or the Borrower shall have any further obligation hereunder, except as provided in Section 10 hereof.
SECTION 9. TERMINATION
The Underwriter shall have the right to terminate this Bond Purchase Agreement by notifying the Issuer and the Borrower of its election to do so, if at the time of such notification, between the date hereof and the Closing Date, (i) legislation shall be enacted by the Congress of the United States or adopted by either House thereof or a decision by a court of the United States or the Tax Court of the United States shall be rendered or a ruling regulation or official statement by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental agency shall be made, with respect to the federal taxation of revenues or other income of the general character expected to be derived under the Indenture by the Issuer or of interest received on securities of the general character of the Series 2012 Bonds, which would have the effect of changing, directly or indirectly, the federal income tax consequences of receipt of interest on securities of the general character of the Series 2012 Bonds in the hands of the holders thereof, and which in the reasonable opinion of the Underwriter would materially adversely affect the marketability of the Series 2012 Bonds; (ii) there shall have occurred any new outbreak of hostilities or other unforeseen national or international calamity or crisis, the effect of such new outbreak, calamity or crisis on the financial markets of the United States being such in the reasonable judgment of the Underwriter as to materially adversely affect the marketability of the Series 2012 Bonds; (iii) there shall be in force a general suspension of trading on the New York Stock Exchange or minimum or maximum prices for trading shall have been fixed and be in force or maximum ranges for prices for securities shall have been required and be in force on the New York Stock Exchange, whether by virtue of a determination by that Exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdiction; (iv) a general banking moratorium shall have been established by federal or Ohio authorities; (v) any event, not caused by the Underwriter, shall have occurred or shall exist which, in the reasonable opinion of the Underwriter, makes untrue or incorrect, as of such time, in any material respect, any material statement or information contained in the Official Statement or makes the Official Statement inadequate by reason of the omission of information which should be reflected therein in order to make the statements and information contained therein not misleading as of such time; (vi) a stop order, ruling, regulation or official statement by or on behalf of the Securities and Exchange Commission shall be issued or made to the effect that the issuance, offering or sale of the Series 2012 Bonds, or of obligations of the general character of the Series 2012 Bonds as contemplated hereby, is in violation of any provision of the 1933 Act, the Securities Exchange Act of 1934, as amended, or the Trust Indenture Act of 1939, as amended; or (vii) the Underwriters due diligence examination in respect of the issuance of the Series 2012 Bonds shall have revealed any fact or circumstance that, in the reasonable judgment of the Underwriter, would materially and adversely affect the marketability of the Series 2012 Bonds.
SECTION 10. PAYMENT OF EXPENSES
(a) Payment by the Borrower . Except as provided in Paragraph (b) below, the Borrower shall pay all expenses incident to the sale of the Series 2012 Bonds, including but without limitation, (i) the cost of the preparation (including printing, duplicating and distribution) of this Bond Purchase Agreement, the Transaction Documents, the Disclosure Agreement, the Preliminary Official Statement, the Official Statement and any amendment or supplement thereto, (ii) the cost of the preparation, printing, execution, authentication and delivery of the Series 2012 Bonds, (iii) the cost of preparation of any Blue Sky Surveys, (iv) the CUSIP Service Bureau service charge for the assignment of CUSIP numbers for the Series 2012
Bonds and the Municipal Securities Rulemaking Board fee, and (v) the fees of the Underwriter, Bond Counsel, Underwriters Counsel, the Borrowers Counsel, the Issuers Counsel, and any other counsel, experts or consultants retained by the Borrower, the Trustee or the Underwriter.
(b) Payment by Underwriter . Except as provided in the foregoing Paragraph (a), the Underwriter shall pay the cost of all regulatory expenses incurred by the Underwriter in connection with its and distribution of the Series 2012 Bonds.
SECTION 11. NOTICES
Any notices or other communication to be given under this Bond Purchase Agreement may be given by delivering the same in writing as follows:
As to the Issuer: |
The City of Springfield, Ohio |
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76 East High Street |
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Springfield, Ohio 45502 |
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Attn: Mark Beckdahl, Director of Finance |
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As to the Borrower: |
Eaglewood 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, Manager |
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As to the Underwriter: |
Lawson Financial Corporation |
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3352 E. Camelback Road |
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Phoenix, Arizona 85018 |
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Attention: Robert W. Lawson, President |
or to such different address written notice of which is given to each of the other parties hereto.
SECTION 12. PARTIES IN INTEREST AND SURVIVAL OF REPRESENTATIONS
(a) Parties in Interest . This Bond Purchase Agreement is made solely for the benefit of the Issuer, the Borrower and the Underwriter (including their respective successors or assigns), and no other person, partnership, association or corporation shall acquire or have any right hereunder or by virtue hereof.
(b) Survival of Representations . All representations and agreements of the Issuer and the Borrower in this Bond Purchase Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriter and all representations and agreements of the Issuer, the Borrower and the Underwriter shall survive the delivery of and payment for the Series 2012 Bonds.
SECTION 13. MISCELLANEOUS
(a) Headings. The headings of the Sections and Paragraphs of this Bond Purchase Agreement are inserted for convenience only and shall not be deemed to be a part hereof.
(b) Governing Law . This Bond Purchase Agreement shall be governed by and construed in accordance with the laws of the State of Ohio.
(c) Counterparts. This Bond Purchase Agreement may be executed, accepted and approved in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute and accept or approve this Bond Purchase Agreement by signing any such counterpart.
If you agree with the foregoing, please sign the enclosed counterpart of this Bond Purchase Agreement and return it to the Underwriter. This Bond Purchase Agreement shall become a binding agreement by and among the Issuer, the Borrower and the Underwriter when at least one counterpart of this Bond Purchase Agreement shall have been signed by or on behalf of each of the parties hereto.
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Very truly yours, |
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LAWSON FINANCIAL CORPORATION |
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By: |
/s/ Robert W. Lawson |
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Robert W. Lawson |
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President |
Exhibit 10.41
NOTE PURCHASE AGREEMENT
April 12, 2012
Adcare Health Systems, Inc.
5057 Troy Road
Springfield, Ohio 45502
Attn: Boyd P. Gentry
Chief Executive Officer
Dear Ladies and Gentlemen:
The undersigned (the Note Purchaser) offers to enter into this Note Purchase Agreement (this Note Purchase Agreement) with Adcare Health Systems, Inc., an Ohio corporation (the Company), which, upon acceptance of this offer by the Company, will be binding upon the Company and the Note Purchaser. This offer is made subject to written acceptance hereof by the Company at or before 6:00 P.M., Eastern Time, on the date hereof, unless extended by agreement by the parties.
SECTION 1. PURCHASE AND SALE OF THE NOTE
Based upon the terms and conditions and upon the representations herein set forth, the Note Purchaser hereby agrees to purchase from the Company, and the Company hereby agrees to sell and deliver to the Note Purchaser, a single promissory note (the Note), which will, except as otherwise agreed to in writing by the Note Purchaser and the Company, or as otherwise provided therein, (i) mature on October 1, 2012 (the Stated Maturity Date), (ii) bear interest at the rate of ten percent (10.00%) per annum, (iii) be substantially in the form of Exhibit A, attached hereto and made a part hereof, and (iv) be in a principal amount not in excess of $1,500,000.
SECTION 2. DELIVERY OF THE NOTE AND CLOSING
At 10:00 a.m. (Eastern Time) on April 27, 2012, or at such other time or on such earlier or later date as to which we may mutually agree (the Closing Date), the Company will cause the Note to be delivered to the Note Purchaser, at the offices of the Note Purchaser, at 766 Shrewsbury Avenue, Tinton Falls, New Jersey. On the Closing Date, the Note Purchaser will accept delivery of the Note, and will pay the Company a purchase price therefor in an amount equal to ninety-six percent (96%) of the face amount of the Note, in federal or other immediately available funds by wire.
SECTION 3. DISCLOSURE MEMORANDUM
By its acceptance of this Note Purchase Agreement, the Company authorizes the Note Purchaser to rely upon the Confidential Disclosure Memorandum dated the date hereof (the Confidential Disclosure Memorandum), relating to the sale and purchase of the Note, and hereby deems the Confidential Disclosure Memorandum final. All terms defined in the Confidential Disclosure Memorandum (and not otherwise defined herein) shall have their respective defined meanings when used herein.
SECTION 4. REPRESENTATIONS AND AGREEMENTS OF THE NOTE PURCHASER
The Note Purchaser represents to and agrees with the Company that, as of the date hereof:
(a) The Note Purchaser is a limited liability company, duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania, having all requisite power and authority to carry on its business as now constituted.
(b) The Note Purchaser has received all information with respect to the Company that it has requested from the Company in order to purchase the Note.
(c) The documents relating to the purchase of the Note have been reviewed by the Note Purchaser and contain terms acceptable to, and agreed to by, the Note Purchaser.
(d) The Note Purchaser has the requisite authority to enter into this Note Purchase Agreement. This Note Purchase Agreement has been duly executed and delivered by the Note Purchaser and, assuming the due authorization, execution and delivery by the Company, is the binding and valid obligation of the Note Purchaser, enforceable in accordance with its terms, except that the enforceability hereof may be limited by applicable bankruptcy, insolvency, moratorium or other similar laws or equitable principles affecting creditors rights or remedies generally.
SECTION 5. REPRESENTATIONS, WARRANTIES, COVENANTS OF THE COMPANY
The Company represents to and agrees with the Note Purchaser that, as of the date hereof and the date of the Closing:
(a) Disclosure Memorandum . The statements and information in the Confidential Disclosure Memorandum, insofar as the same relate to the Company, as of its date were true, correct and complete in all material respects, and such information and statements in the Confidential Disclosure Memorandum do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make such statements and information, in light of the circumstances under which they are, or were made, not misleading.
(b) Existence . The Company is, and will continue to be, a corporation, duly organized, validly existing, in good standing under the laws of the State of Ohio, with full power and authority to own its properties and conduct its business as and where the same are now owned and conducted.
(c) Authority . The Company has the requisite power and authority to enter into and consummate all of the transactions contemplated on its part by this Note Purchase Agreement, the Confidential Disclosure Memorandum, the Note, and all other documents required by the terms hereof or of any thereof to be executed and delivered by the Company (collectively, the Transaction Documents).
(d) Due Execution and Delivery of Documents . This Note Purchase Agreement has been duly executed and delivered by the Company and, when executed and delivered by the Note Purchaser, will be, and the other Transaction Documents, when executed and delivered by the Company (if applicable) and the other parties thereto, will be, legal, valid and binding agreements of the Company, enforceable in accordance with their terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws in effect from time to time affecting the rights of creditors generally and to the availability of equitable relief.
(e) No Conflicts . The acceptance, execution and delivery of this Note Purchase Agreement and the other Transaction Documents, and the compliance with the provisions hereof and thereof do not and will not violate or conflict with (in any material respect) any resolution adopted by the Companys board of directors, to the knowledge of the Company, do not and will not conflict with or violate, or result in or constitute a material breach of or default under, any indenture, mortgage, deed of trust, guaranty, lease, agreement or other instrument to which the Company is a party or by which the Company or any of its property is bound, which would have a materially adverse effect on the transactions contemplated by this Note Purchase Agreement, or, to the knowledge of the Company, conflict with or violate any provision of any law, administrative rule or regulation, or any judgment, order or decree to which the Company or any of its property is subject.
(f) Compliance with Law . Except as may otherwise be disclosed in writing to the Note Purchaser, the Company is in substantial compliance with all applicable federal, state and local laws and ordinances (including rules and regulations) that are applicable to it or its business operations and financial affairs.
SECTION 6. INDEMNIFICATION
(a) Scope of Indemnification by the Company . The Company hereby agrees to indemnify, protect, defend and hold harmless the Note Purchaser, each member and employee thereof, and each person, if any, who controls the Note Purchaser within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended (any such person being herein sometimes called an Indemnified Party), against all losses, claims, damages, liabilities or expenses, whether joint or several, to which any such Indemnified Party may become subject, under any statute or regulation at law or in
equity or otherwise insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact set forth in the Confidential Disclosure Memorandum, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or which is necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading in any material respect, and will reimburse any legal or other expenses reasonably incurred by any such Indemnified Party in connection with investigating or defending any such loss, claim, damage, liability or action. Provided, however, that such indemnity shall not extend to any Indemnified Party if the loss, claim, damage or liability is caused by the gross negligence or willful misconduct of the Indemnified Party. This indemnity agreement shall not be construed as a limitation on any other liability that the Company may otherwise have to any Indemnified Party, provided that in no event shall the Company be obligated for double indemnification. And provided further, that the Company shall have no obligation of indemnification hereunder in respect of any statement made in, or omitted from, the following sections of the Confidential Disclosure Memorandum: THE CERTIFICATES OF PARTICIPATION, CANTONE ASSET MANAGEMENT LLC, or TAX MATTERS.
(b) Procedure . An Indemnified Party shall, promptly after the receipt of notice of the commencement of any action against such Indemnified Party in respect of which indemnification may be sought against the Company, notify the Company in writing of the commencement thereof. Failure of the Indemnified Party to give such notice will reduce the liability of the Company by the amount of damages attributable to the failure of the Indemnified Party to give such notice to the Company, but the omission to notify the Company of any such action shall not relieve the Company from any liability that it may have to such Indemnified Party otherwise than under this section. In case any such action shall be brought against an Indemnified Party and such Indemnified Party shall notify the Company of the commencement thereof, the Company may, or if so requested by such Indemnified Party shall, participate therein or assume the defense thereof, with counsel satisfactory to such Indemnified Party (it being understood that, except as hereinafter provided, the Company shall not be liable for the expenses of more than one separate counsel representing the Indemnified Parties in such action), and after notice from the Company to such Indemnified Party of an election so to assume the defense thereof, the Company will not be liable to such Indemnified Party under this Section for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that unless and until the Company assumes the defense of any such action at the request of such Indemnified Party, the Indemnified Party shall have the right to participate at its own expense in the defense of any such action. If the Company shall not have employed counsel to take charge of the defense of any such action, or if an Indemnified Party shall have reasonably concluded that there may be defenses available to it or other Indemnified Parties that are different from or additional to those available to the Company (in which cases the Company shall not have the right to direct the defense of such action on behalf of such Indemnified Party) or to other Indemnified Parties, legal and other expenses, including the expenses of separate counsel incurred by such Indemnified Party shall be borne by the Company.
SECTION 7. CONDITIONS OF THE NOTE PURCHASERS OBLIGATIONS
The Note Purchaser has entered into this Note Purchase Agreement in reliance upon the representations and agreements of the Company herein and the Performance by the Company of its obligations hereunder, both as of the date hereof and as of the Closing Date. The Note Purchasers obligations under this Note Purchase Agreement are and shall he subject to the following further conditions:
(a) Conditions at or Prior to the Closing . Receipt by the Note Purchaser of the following documents at or prior to the Closing, all of which shall be fully executed (except for any necessary signature by the Note Purchaser):
(i) The Note;
(ii) A certificate, dated the date of the Closing, and signed by the Secretary or an Assistant Secretary of the Company, which sets forth or includes evidence satisfactory to the Note Purchaser, that: (A) the Companys execution, delivery and Performance of its obligations under the Transaction Documents have been duly authorized by all necessary corporate action of the Company; and (B) Boyd P. Gentry has been duly authorized by all necessary corporate action of the Company to execute and deliver, on behalf of the Company, all Transaction Documents to which the Company is a party;
(iii) A certificate, dated the date of the Closing, signed by a duly authorized officer of the Company, and satisfactory to the Note Purchaser, to the effect that (A) each of the representations and warranties of the Company contained in this Note Purchase Agreement is true, accurate and complete on the Closing Date as if made on and as of the Closing Date, (B) each of the agreements of the Company to be complied with and each of the obligations of the Company to be performed hereunder on or prior to the Closing Date have been complied with and performed, and (C) as of the Closing Date, there has been no material adverse change in the status, business, condition or prospects (financial or otherwise) of the Company; and
(iv) Such additional certificates, instruments, opinions of counsel, or other documents or conditions as the Note Purchaser may reasonably request, including, but without limitation to the generality of the foregoing, a requirement that the public sales price of the Shares, on the date of Closing, be not less than $3.50.
(b) Failure to Satisfy Conditions . If there shall be a failure to satisfy any of the conditions to the Note Purchasers obligations contained in this Note Purchase Agreement, or if the Note Purchasers obligations shall be terminated for any reason permitted by this Note Purchase Agreement, this Note Purchase Agreement shall terminate and neither the Note Purchaser nor the Company shall have any further obligation hereunder, except as provided in Section 9 hereof.
SECTION 8. TERMINATION
The Note Purchaser shall have the right to terminate this Note Purchase Agreement by notifying the Company of its election to do so, if at the time of such notification, between the date hereof and the Closing Date, (i) there shall have occurred any new outbreak of hostilities or other unforeseen national or international calamity or crisis, the effect of such new outbreak, calamity or crisis on the financial markets of the United States being such in the reasonable judgment of the Note Purchaser as to materially adversely affect the value of the Certificates of Participation; (ii) there shall be in force a general suspension of trading on the New York Stock Exchange or minimum or maximum prices for trading shall have been fixed and be in force or maximum ranges for prices for securities shall have been required and be in force on the New York Stock Exchange, whether by virtue of a determination by that Exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdiction; (iii) a general banking moratorium shall have been established by federal or applicable state authorities; (iv) any event, not caused by the Note Purchaser, shall have occurred or shall exist which, in the reasonable opinion of the Note Purchaser, makes untrue or incorrect, as of such time, in any material respect, any material statement or information contained in the Confidential Disclosure Memorandum or makes the Confidential Disclosure Memorandum inadequate by reason of the omission of information which should be reflected therein in order to make the statements and information contained therein not misleading as of such time; (v) a stop order, ruling, regulation or official statement by or on behalf of the Securities and Exchange Commission shall be issued or made to the effect that the issuance, offering or sale of the Certificates of Participation, or of obligations of the general character of the Certificates of Participation as contemplated hereby, is in violation of any provision of the 1933 Act, the Securities Exchange Act of 1934, as amended, or the Trust Indenture Act of 1939, as amended; or (vi) the Note Purchasers due diligence examination in respect of the issuance of the Certificates of Participation shall have revealed any fact or circumstance that, in the reasonable judgment of the Note Purchaser, would materially and adversely affect the value of the Certificates of Participation.
SECTION 9. PAYMENT OF FEES AND EXPENSES
(a) Payment by the Company .
(i) Except as provided in Paragraph (b) below, the Company shall pay all expenses incident to the sale of the Certificates of Participation, including but without limitation, (A) the cost of the preparation (including printing, duplicating and distribution) of this Note Purchase Agreement, the Transaction Documents, or any amendment or supplement thereto, and (B) the fees of the Note Purchaser, the Note Purchasers Counsel, and any other counsel, experts or Consultants retained by the Company or the Note Purchaser.
(ii) In addition to the foregoing, on the Closing Date, the Company will pay the Note Purchaser a non-accountable miscellaneous expense allowance in the amount of $15,000.
(b) Payment by Purchaser . Except as provided in the foregoing Paragraph (a), the Note Purchaser shall pay the cost of all regulatory expenses incurred by the Note Purchaser in connection with its purchase of the Note.
SECTION 10. NOTICES
Any notices or other communication to be given under this Note Purchase Agreement may be given by delivering the same in writing as follows:
As to the Company: |
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Adcare Health Systems, Inc. |
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5057 Troy Road |
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Springfield, Ohio 45502 |
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Attn: Boyd P. Gentry |
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Chief Executive Officer |
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As to the Note Purchaser: |
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Cantone Asset Management LLC |
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c/o Cantone Research, Inc. |
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766 Shrewsbury Avenue |
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Tinton Falls, NJ 07724 |
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Attention: Anthony J. Cantone |
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Managing Member |
or to such different address written notice of which is given to each of the other parties hereto.
SECTION 11. PARTIES IN INTEREST AND SURVIVAL OF REPRESENTATIONS
(a) Parties in Interest . This Note Purchase Agreement is made solely for the benefit of the Company and the Note Purchaser (including their respective successors or assigns), and no other person, partnership, association or corporation shall acquire or have any right hereunder or by virtue hereof.
(b) Survival of Representations . All representations and agreements of the Company in this Note Purchase Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Note Purchaser and all representations and agreements of the Company and the Note Purchaser shall survive the delivery of and payment for the Note.
SECTION 12. MISCELLANEOUS
(a) Headings . The headings of the sections and Paragraphs of this Note Purchase Agreement are inserted for convenience only and shall not be deemed to be a part hereof.
(b) Governing Law . This Note Purchase Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey.
(c) Counterparts . This Note Purchase Agreement may be executed, accepted and approved in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute and accept or approve this Note Purchase Agreement by signing any such counterpart.
If you agree with the foregoing, please sign the enclosed counterpart of this Note Purchase Agreement and return it to the Note Purchaser. This Note Purchase Agreement shall become a binding agreement by and between the Company and the Note Purchaser when at least one counterpart of this Note Purchase Agreement shall have been signed by or on behalf of each of the parties hereto.
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Very truly yours, |
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CANTONE ASSET MANAGEMENT LLC |
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By: |
/s/ Anthony J. Cantone |
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Anthony J. Cantone |
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Managing Member |
Exhibit 10.42
EMPLOYMENT AGREEMENT
between
AdCare Health Systems, Inc. (the Company)
and
Martin D. Brew (the Officer)
This Employment Agreement (Agreement) is entered into August 6, 2012, to be effective July 1, 2012 (the Effective Date).
Background
The Company employs the Officer as of the Effective Date as Senior Vice President, Chief Financial Officer and Treasurer 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. The Company shall provide the Officer with an office that is initially based in Atlanta, Georgia at its Two Buckhead Plaza, 3050 Peachtree Road location.
Section 2. Duties . The Officer shall be employed by the Company or one of its wholly owned subsidiaries 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, Chief Financial Officer and Treasurer of the Company. The Officer shall report as of the Effective Date to the Chief Executive Officer. The Company reserves the right to change the Officers job position(s) or the position to which the Officer reports, but any such change shall not affect any other provision of this Agreement, including without limitation, the provisions of Section 3(a). The Officer shall devote such time, attention and energy to the business of the Company and the performance of his duties hereunder as are necessary to properly perform his duties hereunder. The Officer represents that his entry into, and performance of services under, this Agreement does not violate the terms of any other agreement. 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 . As of the Effective Date, the Officer shall be paid a salary of $235,000 per year (the Annual Salary), payable in installments on the date of the Companys regular pay periods or such other installments as the Officer and the Company from time to time mutually agree upon. Effective January 1, 2013, the Officers Annual Salary shall be increased to $250,000 per year provided that he is actively employed in good standing with the Company as of that date. Thereafter, 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 each year. The target amount of the annual bonus, based on reasonably expected performance, shall be seventy-five percent (75%) of the Executives Annual Salary as of December 31 st of the year for which the bonus is awarded (the Target Bonus). The performance criteria for earning the bonus and the formula for determining the amount of the bonus shall be established by the CEO and Compensation Committee under the Companys management incentive plan for executive officers. The criteria and the formula for each year will be provided to the Officer no later than the ninetieth (90 th ) day of that year. The bonus earned shall be paid in the following year as soon as feasible following the end of the year, but not later than March 30 th 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 . The Officer shall be eligible to receive grants of equity compensation at the discretion of the CEO and Compensation Committee.
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 as are presently or may hereafter be provided 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 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. 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 and owing to the Officer as of the effective date of such termination). 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.
(c) If 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 the severance pay and benefits hereafter provided. The severance pay shall be an amount equal to one (1) times Annual Salary payable in substantially equal installments at least monthly for twelve (12) months after the termination date, plus if such termination occurs within three (3) months before or twenty-four (24) months after the occurrence of a Change in Control, an additional half times Annual Salary plus Target Bonus payable in substantially equal installments at least monthly for six (6) months beginning immediately after twelve (12) months following the termination date. For purposes of this Agreement, 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 fifty percent (50%) of the voting power of the common stock of the Company or its legal successor.
For the period for which severance pay is paid, i.e., twelve (12) or twenty-four (24) 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 under applicable law 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, 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 any state in which 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 . During the Employment Term and 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 last twelve (12) months of the Officers termination of 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: |
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: |
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THE OFFICER: |
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ADCARE HEALTH SYSTEMS, INC. |
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MARTIN D. BREW |
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By: |
/s/ Boyd P. Gentry, |
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/s/ Martin D. Brew |
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Boyd P. Gentry, |
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Martin D. Brew |
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President and CEO |
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Exhibit 10.43
14513178.3
06-04-12
MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT dated as of June 15, 2012, but effective as of March 30, 2012 (this Agreement ), is entered into by and among LITTLE ROCK HC&R PROPERTY HOLDINGS, LLC ( Borrower 1 ), NORTHRIDGE HC&R PROPERTY HOLDINGS, LLC ( Borrower 2 ), and WOODLAND HILLS HC PROPERTY HOLDINGS, LLC , each a Georgia limited liability company ( Borrower 3 ) (collectively Borrowers ), ADCARE HEALTH SYSTEMS, INC. , an Ohio corporation ( AdCare ), LITTLE ROCK HC&R NURSING, LLC , NORTHRIDGE HC&R NURSING, LLC , and WOODLAND HILLS HC NURSING, LLC , each a Georgia limited liability company (each an Operator and collectively the Operators ) (AdCare and the Operators being sometimes referred to herein collectively as the Guarantors ) (the Borrowers 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 Borrowers and the Lender.
(ii) Promissory Note dated March 30, 2012 (the Existing Note ), from the Borrowers to the Lender in the principal amount of $21,800,000.
(iii) Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing dated as of April 1, 2012 ( Mortgage 1 ), by Borrower 1 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.
(iv) Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing dated as of April 1, 2012 ( Mortgage 2 ), by Borrower 2 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.
(v) Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing dated as of April 1, 2012 ( Mortgage 3 ), by Borrower 3 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.
(vi) Absolute Assignment of Rents and Leases dated as of April 1, 2012 ( Assignment of Rents 1 ), by Borrower 1 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.
(vii) Absolute Assignment of Rents and Leases dated as of April 1, 2012 ( Assignment of Rents 2 ), by Borrower 2 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.
(viii) Absolute Assignment of Rents and Leases dated as of April 1, 2012 ( Assignment of Rents 3 ), by Borrower 3 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.
(ix) Environmental Indemnity Agreement dated as of March 30, 2012 (the Indemnity Agreement ), by the Borrowers and the Guarantors to and for the benefit of the Lender.
(x) Guaranty of Payment and Performance dated as of March 30, 2012 (the Guaranty ), by the Guarantors to and for the benefit of the Lender.
B. The Documents encumber the real estate described in Exhibit A attached hereto and the personal property located thereon.
C. The parties desire to make certain modifications and amendments to the Documents, 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 .
(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.
Section 2 . Change in Maturity Date . The maturity date of the Loan and the Existing Note is hereby changed from March 30, 2017, to March 30, 2013, and all of the Documents are hereby modified and amended accordingly. Without limitation on the generality of the foregoing provisions of this Section, the date March 30, 2017 is hereby changed to March 30, 2013 each time it appears in the Documents in reference to the maturity date of the Loan and the Existing Note, including, without limitation in the definition of the term Maturity Date in Section 1.1 of the Loan Agreement, in Section 1 of the Existing Note, and in Recital Paragraph A in each of Mortgage 1, Mortgage 2 and Mortgage 3.
Section 3 . Separate Notes .
(a) The Existing Note shall be and hereby is split into three separate promissory notes in the aggregate principal amount of $21,800,000, which is the principal amount of the Existing Note (the Separate Notes ), with such split to be effective as of the original March 30, 2012, date of the Existing Note. One of the Separate Notes shall be executed by each of the Borrowers on the date of this Agreement, in a form acceptable to the Lender in its sole and absolute discretion. The Separate Notes are described as follows:
(i) Promissory Note A dated March 30, 2012, ( Note A ), from Borrower 1 to the Lender in the principal amount of $13,664,956.
(ii) Promissory Note B dated March 30, 2012, ( Note B ), from Borrower 2 to the Lender in the principal amount of $4,507,038.
(iii) Promissory Note C dated March 30, 2012, ( Note C ), from Borrower 3 to the Lender in the principal amount of $3,628,006.
Each of the Separate Notes shall be secured by Mortgage 1, Mortgage 2, Mortgage 3, Assignment of Rents 1, Assignment of Rents 2 and Assignment of Rents 3. Each of the Borrowers shall guaranty the Separate Notes executed by the other two Borrowers pursuant to the Guaranty as modified and amended by this Agreement.
(b) Each payment of principal and interest on the Existing Note which was made prior to the date of this Agreement by the Borrowers shall be deemed to be a payment made on the Separate Notes on the date on which such payment was made, and each such payment shall be allocated among the Separate Notes on a pro rata basis based on the face amount of the Separate Notes.
(c) Each payment of principal on the Existing Note which was made by the Borrowers prior to the date of this Agreement (each of which payments is deemed to be a
payment of principal on the Separate Notes pursuant to paragraph (b) of this Section), is hereby reversed and reborrowed by the respective Borrowers effective as of the date of this Agreement, and the total amount of such reversed and reborrowed payments on the principal each of the Separate Notes shall on the date of this Agreement be deposited into the Sinking Fund Account for such Separate Note which is created under Section 4 of this Agreement. As a result of the foregoing, the principal balance outstanding on each of the Separate Notes on the date of this Agreement is an amount equal to the face amount of such Separate Note.
(d) Without limitation on the foregoing provisions of this Section, the defined term Note in Section 1.1 of the Loan Agreement is hereby modified and amended in its entirety to read as follows:
Note : Collectively, the following: (i) Promissory Note A dated March 30, 2012, from Borrower 1 to the Lender in the principal amount of $13,664,956; (ii) Promissory Note B dated March 30, 2012, from Borrower 2 to the Lender in the principal amount of $4,507,038; and (iii) Promissory Note C dated March 30, 2012, from Borrower 3 to the Lender in the principal amount of $3,628,006.
(e) All of the Documents are hereby modified and amended to incorporate the foregoing provisions of this Section.
Section 4 . Sinking Fund Accounts .
(a) The following new defined term is hereby added to Section 1.1 of the Loan Agreement:
Sinking Fund Accounts : The accounts so designated that are provided for in Section 3.6 of this Agreement.
(b) The following new Section 3.6 is hereby added to the Loan Agreement:
3.6 Sinking Fund Account s.
(a) Each Borrower shall establish and maintain a deposit account in the name of such Borrower held by Lender as a collateral account (each a Sinking Fund Account ). Each Sinking Fund Account shall be held as additional security for the payment and performance of all of the obligations of all of the Borrowers under this Agreement and the other Loan Documents and all of the obligations of Operators under the Operator Loan Documents, and each Borrower hereby pledges and assigns to Lender, and grants to Lender a first lien on and a first priority security interest in, its Sinking Fund Account, all cash and investments from time to time on deposit in its Sinking Fund Account, and all proceeds of all of the foregoing. All amounts on deposit in each Sinking Fund Account shall be released by Lender to the applicable Borrower at such time as all of the principal of and interest on the Loan and the Operator Loan have been paid in full and all of the other obligations to Lender under this Agreement, the other Loan Documents and the Operator Loan Documents have been fully paid and performed.
(b) Provided that no Default or Event of Default under this Agreement or any of the other Loan Documents has occurred and is continuing, in lieu of making any monthly payment on the principal of its Note which is required under the terms of its Note (other than the payment of principal due on the Maturity Date), each Borrower may elect to deposit the amount of such payment in its Sinking Fund Account, and when such deposit has been made, such Borrowers obligation to make such payment on its Note shall be deemed to have been satisfied.
(c) Amounts on deposit in each Sinking Fund Account shall be held in an interest bearing account at Lender. Provided that the amount on deposit is large enough for investment in certificates of deposit as determined by Lender, each Borrower shall have the right to invest amounts on deposit in its Sinking Fund Account in certificates of deposit issued by Lender. Earnings on investments of amounts in each Sinking Fund Account shall be added to such Sinking Fund Account.
(c) Section 10.1(a) of the Loan Agreement is hereby modified and amended in its entirety to read as follows:
(a) Any Borrower fails to pay (i) any installment of principal or interest payable pursuant to its Note on the date when due, or in the case of monthly principal payments due under its Note, to make a deposit in its Sinking Fund Account in lieu of such payment as permitted by the provisions of Section 3.6(b) of this Agreement, or (ii) any other amount payable to Lender under either of its Notes, this Agreement or any of the other Loan Documents when any such payment is due in accordance with the terms hereof or thereof;
Section 5 . Amendment of Mortgage 1 . Without limitation on any other provision of this Agreement, Recital Paragraph A in Mortgage 1 is hereby 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, Northridge HC&R Property Holdings, LLC, a Georgia limited liability company, Woodland Hills HC Property Holdings, LLC, a Georgia limited liability company (the Mortgagor together with Northridge HC&R Property Holdings, LLC and Woodland Hills HC Property Holdings, LLC, the Borrowers ) and the Lender, as modified and amended by a Modification Agreement dated as of June 15, 2012 (as so modified and amended, the Loan Agreement ), the Lender has agreed to make a loan to the Borrowers in the maximum principal amount of $21,800,000 (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 three separate Promissory Notes each dated March 30,
2012 (collectively the Note ), executed by the Borrowers and made payable to the order of the Lender in the aggregate principal amount of the Loan and due on March 30, 2013 (the Maturity Date ) , except as they 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 6 . Amendment of Mortgage 2 . Without limitation on any other provision of this Agreement, Recital Paragraph A in Mortgage 2 is hereby 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, Little Rock HC&R Property Holdings, LLC, a Georgia limited liability company, Woodland Hills HC Property Holdings, LLC, a Georgia limited liability company (the Mortgagor together with Little Rock HC&R Property Holdings, LLC and Woodland Hills HC Property Holdings, LLC, the Borrowers ) and the Lender, as modified and amended by a Modification Agreement dated as of June 15, 2012 (as so modified and amended, the Loan Agreement ), the Lender has agreed to make a loan to the Borrowers in the maximum principal amount of $21,800,000 (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 three separate Promissory Notes each dated March 30, 2012 (collectively the Note ), executed by the Borrowers and made payable to the order of the Lender in the aggregate principal amount of the Loan and due on March 30, 2013 (the Maturity Date ) , except as they 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 Mortgage 3 . Without limitation on any other provision of this Agreement, Recital Paragraph A in Mortgage 1 is hereby 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, Northridge HC&R Property Holdings, LLC, a Georgia limited liability company, Little Rock HC&R Property Holdings, LLC, a Georgia limited liability company (the Mortgagor together with Northridge HC&R Property Holdings, LLC and Little Rock HC&R Property Holdings, LLC, the Borrowers ) and the Lender, as modified and amended by a Modification Agreement dated as of June 15, 2012 (as so modified and amended, the Loan Agreement ), the Lender has agreed to make a loan to the Borrowers in the maximum principal amount of $21,800,000 (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 three separate Promissory Notes each dated March 30, 2012 (collectively the Note ), executed by the Borrowers and made payable to the order of the Lender in the aggregate principal amount of the Loan and due on March 30, 2013 (the Maturity Date ) , except as they 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 8 . Amendment of Assignment of Rents 1 . Without limitation on any other provision of this Agreement, Recital Paragraph A in Assignment of Rents 1 is hereby modified and amended and restated 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, Northridge HC&R Property Holdings, LLC, a Georgia limited liability company, Woodland Hills HC Property Holdings, LLC, a Georgia limited liability company (the Assignor together with Northridge HC&R Property Holdings, LLC and Woodland Hills HC Property Holdings, LLC, the Borrowers ) and the Assignee, as modified and amended by a Modification Agreement dated as of June 15, 2012 (as so modified and amended, the Loan Agreement ), the Assignee has agreed to make a loan to the Borrowers in the principal amount of $21,800,000 ( the Loan ). The Loan shall be evidenced by three separate Promissory Notes each dated March 30, 2012 (collectively the Note ), executed by the Borrowers and made payable to the order of the Lender in the aggregate principal amount of the Loan.
Section 9 . Amendment of Assignment of Rents 2 . Without limitation on any other provision of this Agreement, Recital Paragraph A in Assignment of Rents 1 is hereby modified and amended and restated 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, Little Rock HC&R Property Holdings, LLC, a Georgia limited liability company, Woodland Hills HC Property Holdings, LLC, a Georgia limited liability company (the Assignor together with Little Rock HC&R Property Holdings, LLC and Woodland Hills HC Property Holdings, LLC, the Borrowers ) and the Assignee, as modified and amended by a Modification Agreement dated as of June 15, 2012 (as so modified and amended, the Loan Agreement ), the Assignee has agreed to make a loan to the Borrowers in the principal amount of $21,800,000 ( the Loan ). The Loan shall be evidenced by three separate Promissory Notes each dated March 30, 2012 (collectively the Note ), executed by the Borrowers and made payable to the order of the Lender in the aggregate principal amount of the Loan.
Section 10 . Amendment of Assignment of Rents 3 . Without limitation on any other provision of this Agreement, Recital Paragraph A in Assignment of Rents 1 is hereby modified and amended and restated 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, Northridge HC&R Property Holdings, LLC, a Georgia limited liability company, Little Rock HC&R Property Holdings, LLC, a Georgia limited liability company (the Assignor together with Northridge HC&R Property Holdings, LLC and Little Rock HC&R Property Holdings, LLC, the Borrowers ) and the Assignee, as modified and amended by a Modification Agreement dated as of June 15, 2012 (as so modified and amended, the Loan Agreement ), the Assignee has agreed to make a loan to the Borrowers in the principal amount of $21,800,000 ( the Loan ). The Loan shall be evidenced by three separate Promissory Notes each dated March 30, 2012 (collectively the Note ), executed by the Borrowers and made payable to the order of the Lender in the aggregate principal amount of the Loan.
Section 11 . Joinder by Borrowers in Guaranty; Amendment of Guaranty .
(a) Each Borrower hereby joins in the Guaranty as a Guarantor, and hereby agrees to be jointly and severally bound and obligated under the Guaranty. From and after the date of this Agreement, all references in the Guaranty and the other Documents to the Guarantors shall be deemed to include a reference to the Borrowers, and the Guaranty and all of the other Documents are hereby modified and amended accordingly.
(b) Without limitation on the foregoing provisions of this Section, the defined term Guarantor in Section 1.1 of the Loan Agreement is hereby modified and amended in its entirety to read as follows:
Guarantors : AdCare, Operators and Borrowers.
(c) Without limitation on any other provision of this Agreement, Recital Paragraph A in the Guaranty is hereby 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, Northridge HC&R Property Holdings, LLC and Woodland Hills HC Property Holdings, LLC, each a Georgia limited liability company (collectively, the Borrowers ), in the principal amount of $21,800,000 (the Loan ) pursuant to the terms and conditions of a Loan Agreement of even date herewith by and among the Borrowers and the Lender, as modified and amended by a Modification Agreement dated as of June 15, 2012 (as so modified and amended, the Loan Agreement ). The Loan is evidenced by three separate Promissory Notes of even date herewith (collectively the Note ), each executed by a Borrower and payable to the order of the Lender, in the aggregate principal amount of the Loan, which are secured by three separate Mortgages, Security Agreements, Assignments of Rents and Leases and Fixture Filings dated as of April 1, 2012 (the Mortgages ), each executed by a 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 12 . 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 Borrowers in the principal amount of $21,800,000 (the Loan ) pursuant to the terms and conditions of a Loan Agreement of even date herewith by and among the Borrowers and the Lender, as modified and amended by a Modification Agreement dated as of June 15, 2012 (as so modified and amended, the Loan Agreement ). The Loan is evidenced by three separate Promissory Notes of even date herewith (collectively the Note), each executed by a Borrower and payable to the order of the Lender, in the aggregate principal amount of the Loan, which are secured by three separate Mortgages, Security Agreements, Assignments of Rents and Leases and Fixture Filings dated as of April 1, 2012 (the Mortgages), each executed by a 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 13 . Additional Documents . As soon as practicable after the date of this Agreement, the Borrower/Guarantor Parties shall deliver to the Lender such lien searches, organizational documents and resolutions, closing certificates, legal opinions, title insurance endorsements and other documents as the Lender shall request in its sole and absolute discretion relating to the Borrowers, the Guarantors, any Signing Entities and any other entities which are parties to any of the Documents, each of which shall be in form and content satisfactory to the Lender in its sole and absolute discretion. Any failure of the Borrower/Guarantor Parties to comply with the foregoing provisions of this Section shall constitute and Event of Default under the Loan Agreement.
Section 14 . 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 or any of the Documents, 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) Each 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 and each of the Documents to which it is a party 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 and each of the Documents to which it is a party and to perform and consummate the transactions contemplated hereby and thereby.
(c) Each 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. Each 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 and the Documents in the capacity shown in each signature block contained in this Agreement and the Documents 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 and each of the Documents has been duly authorized, executed and delivered by such of the Borrower/Guarantor Parties as are parties thereto, and this Agreement and each of the Documents constitutes 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 and the Documents 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 no Default or Event of Default has occurred and is continuing with respect to any of the Documents.
(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 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 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 15 . 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 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 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 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 modified and amended by this Agreement. Electronic records of executed documents maintained by the Lender shall be deemed to be originals thereof.
Section 16 . 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 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 17 . 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 18 . 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 19 . 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 20 . 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 21 . 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 22 . 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 23 . 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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NORTHRIDGE HC&R PROPERTY HOLDINGS, LLC |
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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 of Each Borrower |
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ADCARE HEALTH SYSTEMS, INC. |
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/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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NORTHRIDGE HC&R NURSING, LLC |
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WOODLAND HILLS HC NURSING, LLC |
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/s/ Christopher F. Brogdon |
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Christopher F. Brogdon, Manager of Each Operator |
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THE PRIVATEBANK AND TRUST COMPANY |
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/s/ Amy K. Hallberg |
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Amy K. Hallberg, Managing Director |
- AdCare Little Rock Owner Loan Modification Agreement
- Signature Page 1 -
ACKNOWLEDGEMENTS
STATE OF GEORGIA |
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COUNTY OF COBB |
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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 Little Rock HC&R Property Holdings, LLC, Northridge HC&R Property Holdings, LLC and Woodland Hills HC Property Holdings, LLC, each 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 companies, 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 15 day of June, 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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- AdCare Little Rock Owner Loan Modification Agreement
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STATE OF GEORGIA |
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COUNTY OF COBB |
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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 Vice Chairman and Chief Acquisition Officer of Adcare Health Systems, Inc. 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 15 day of June, 2012.
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/s/ Ellen W. Smith |
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Notary Public |
My Commission Expires: |
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(S E A L) |
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- AdCare Little Rock Owner Loan Modification Agreement
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STATE OF GEORGIA |
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COUNTY OF COBB |
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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 Little Rock HC&R Nursing, LLC, Northridge HC&R Nursing, LLC and Woodland Hills HC Nursing, LLC, each 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 companies, 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 15 day of June, 2012.
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/s/ Ellen W. Smith |
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Notary Public |
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- AdCare Little Rock Owner Loan Modification Agreement
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STATE OF ILLINOIS |
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COUNTY OF COOK |
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The foregoing instrument was acknowledged before me this 15 day of June, 2012, by Amy K. Hallberg, Managing Director of The PrivateBank and Trust Company, an Illinois banking corporation, on behalf of the corporation.
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- AdCare Little Rock Owner Loan Modification Agreement
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Exhibit 10.47
AMENDMENT
This Amendment (this Amendment) is made and entered into as of the 22 nd day of June, 2012 (the Effective Date) by and between Christopher F. Brogdon (Seller) and Hearth & Home of Ohio, Inc., an Ohio corporation (Purchaser).
RECITALS
Purchaser and Seller are parties to that certain Option Agreement dated as of June 22, 2010 (the Option Agreement); and
Purchaser and Seller desire to amend the Option Agreement 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 Option Agreement.
2. Amendment . Section 1.2 of the Option Agreement is hereby deleted in its entirety and the following is inserted in lieu thereof:
1.2 Term and Exercise of Option . The term of the Option shall commence on June 22, 2010 and shall terminate on June 22, 2013 (the Option Period), unless exercised as set forth herein. The Option may be exercised during the Option Period by the delivery of written notice by Purchaser to Seller (the Exercise Notice), at the address of Seller herein set forth, of Purchasers election to exercise the Option.
3. Ratification . Except to the extent amended hereby, Purchaser and Seller ratify and confirm that all other terms and conditions of the Option 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 a 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 or facsimile) identical in form hereto but having attached to it one or more additional signature pages (whether original or facsimile).
Exhibit 10.48
EMPLOYMENT AGREEMENT
between
AdCare Health Systems, Inc. (the Company)
and
Melissa L. Green (the Officer)
This Employment Agreement (Agreement) is entered into August 6, 2012, to be effective July 1, 2012 (the Effective Date).
Background
The Company employs the Officer as of the Effective Date as Senior Vice President, Clinical Services 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. The Company shall provide the Officer with an office that is initially based at its Roswell Service Center Location at 1145 Hembree Road, Roswell, Georgia 30076.
Section 2. Duties . The Officer shall be employed by the Company or one of its wholly owned subsidiaries 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 Clinical Services of the Company. The Officer shall report as of the Effective Date to the Chief Executive Officer. The Company reserves the right to change the Officers job position(s) or the position to which the Officer reports, but any such change shall not affect any other provision of this Agreement, including without limitation, the provisions of Section 3(a). The Officer shall devote such time, attention and energy to the business of the Company and the performance of her duties hereunder as are necessary to properly perform her duties hereunder. The Officer represents that her entry into, and performance of services under, this Agreement does not violate the terms of any other agreement. The Officer also represents and warrants that he is bound by no agreement that would in any way restrict her ability to perform her duties for the Company. The Officer will be expected to carry out her 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 her 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 . As of the Effective Date, the Officer shall be paid a salary of $200,000 per year (the Annual Salary), payable in installments on the date of the Companys regular pay periods or such other installments as the Officer and the Company from time to time mutually agree upon. Thereafter, 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 each year. The target amount of the annual bonus, based on reasonably expected performance, shall be sixty percent (60%) of the Executives Annual Salary as of December 31 st of the year for which the bonus is awarded (the Target Bonus). The performance criteria for earning the bonus and the formula for determining the amount of the bonus shall be established by the CEO and Compensation Committee under the Companys management incentive plan for executive officers. The criteria and the formula for each year will be provided to the Officer no later than the ninetieth (90 th ) day of that year. The bonus earned shall be paid in the following year as soon as feasible following the end of the year, but not later than March 30 th 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 . The Officer shall be eligible to receive grants of equity compensation at the discretion of the CEO and Compensation Committee.
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 as are presently or may hereafter be provided 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 continue to pay the Officer at the rate of 100% of her 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. For purposes of this Agreement, the term Disability means the inability of the Officer to perform her 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 and owing to the Officer as of the effective date of such termination). 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 her performance of her 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.
(c) If the Officer resigns her employment for Good Reason or the Company terminates the Officers employment without Cause (other than due to the Officers Disability) the Officer or her successors and assigns shall receive the severance pay and benefits hereafter provided. The severance pay shall be an amount equal to one (1) times Annual Salary payable in substantially equal installments at least monthly for twelve (12) months after the termination date, plus if such termination occurs within three (3) months before or twenty-four (24) months after the occurrence of a Change in Control, an additional half times Annual Salary plus Target Bonus payable in substantially equal installments at least monthly for six (6) months beginning immediately after twelve (12) months following the termination date. For purposes of this Agreement, 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 fifty percent (50%) of the voting power of the common stock of the Company or its legal successor.
For the period for which severance pay is paid, i.e., twelve (12) or twenty-four (24) months following termination of employment (the Severance Period), the Officer and her 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 under applicable law 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, 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 her employment with the Company. For purposes of this Agreement Area shall be defined as any state in which 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 . During the Employment Term and 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 last twelve (12) months of the Officers termination of 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 her duties hereunder, the Officer shall not at any time while he is employed by the Company or after termination of her 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 her 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 her 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 her 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:
Chief Executive Officer
AdCare Health Systems, Inc.
Two Buckhead Plaza
3050 Peachtree Road NW
Suite 355
Atlanta, GA 30305
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 her 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 her 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 her 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: |
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THE OFFICER: |
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ADCARE HEALTH SYSTEMS, INC. |
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MELISSA L. GREEN |
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By: |
/s/ Boyd P. Gentry |
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/s/ Melissa L. Green |
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Boyd P. Gentry, |
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Melissa L. Green |
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President and CEO |
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Exhibit 31.1
CERTIFICATIONS
I, Boyd P. Gentry, certify that:
1. I have reviewed this quarterly report on Form 10-Q 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; and
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: August 7, 2012 |
By |
/s/Boyd P. Gentry |
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Chief Executive Officer |
Exhibit 31.2
CERTIFICATIONS
I, Martin D. Brew, certify that:
1. I have reviewed this quarterly report on Form 10-Q 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; and
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: August 7, 2012 |
By |
/s/Martin D. Brew |
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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 Quarterly Report of AdCare Health Systems, Inc. (the Company) on Form 10-Q for the period ended June 30, 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: August 7, 2012 |
By: |
/s/Boyd P. Gentry |
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Chief Executive Officer |
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 Quarterly Report of AdCare Health Systems, Inc. (the Company) on Form 10-Q for the period ended June 30, 2012, as filed with the Securities and Exchange Commission (the Report), I, Martin D. Brew, 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: August 7, 2012 |
By: |
/s/Martin D. Brew |
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Chief Financial Officer |