SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended May 31, 1995
OR
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 0-3997
GERIATRIC & MEDICAL COMPANIES, INC.
(Exact name of registrant as specified in the charter)
Delaware 23-1713341
(State or other jurisdiction (IRS Employer Identification
of incorporation or organization) Number)
5601 Chestnut Street, Philadelphia, Pennsylvania 19139
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (215) 476-
2250
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the
past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Yes X No
On August 11, 1995 the aggregate market value of the registrant's
Common Stock, $.10 par value (its only
voting stock), held by non-affiliates of the registrant was
$26,284,167.
On August 11, 1995, there were 15,244,261 shares of the
registrant's Common Stock, $.10 par value,
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
Part I
Item 1. Business
GERIATRIC & MEDICAL COMPANIES, INC., a Delaware corporation
(hereinafter, together with its subsidiaries, referred to as the
"Company"), is a Mid-Atlantic health care company providing
support services in pharmacy, rehabilitative therapies, ambulance
transportation, contract management, financial, diagnostic
services and home care, which includes infusion, respiratory and
equipment rental to hospitals, HMO's, physician groups and
nursing homes. It also is a major long-term care provider in
Pennsylvania and New Jersey.
The Company
The Company was founded in 1968 as Geriatric & Medical Centers,
Inc. The Company changed its name to Geriatric & Medical
Companies, Inc. in 1993 to more accurately reflect the scope and
nature of the business, which had evolved into a diversified
health care provider from a company that primarily owned and
managed long term care and personal care facilities.
The Company serves as a holding company for seven operating
companies. Each operating company is led by a president who
reports to a senior officer of the Company. The operating
companies maintain their own management systems, employees and
sales force, however, the sales and marketing function is
integrated through cross training and cross selling. Support
functions are centrally administered for the operating companies.
These functions include: finance, accounting, treasury
management, public relations, government relations, legal
affairs, human resource management and insurance services.
The Company's operating strategy is to create service
distribution centers that combine long term care and support
services as part of each center's product mix. The Company
believes that this reconfiguration of products and product mix
will strategically position the Company as the managed care
market matures and moves to competitive bidding for services on a
capitated rate basis. In such a system, providers will be asked
to quote on as many services as possible. Accordingly, the
Company believes it will have opportunities to bid on a full
range of services, including long term care, sub-acute care and
support services.
The Company's structure and marketing approach is designed to
provide for (1) efficient utilization of top management; (2)
economies of scale in purchasing, marketing and resource
utilization; (3) stronger corporate image and presence in the
market; and (4) a broader base to support recruiting. At the
same time, the corporate structure has been designed to permit
the individual operating companies to function autonomously
within their respective market niche.
Since 1993, the Company has steadily moved to maximize
productivity and re-engineer its business consistent with the
goal of targeting the managed care market. The Company has
undertaken a number of initiatives including (1) the
installation of new computer technology to expedite the
processing of receivables, improve cash flow and reduce the need
for the amount of reserves for receivables; (2) the elimination
of duplicate positions and consolidation of management functions;
(3) the cross training of sales teams; (4) the development of an
executive sales team; and (5) the implementation of a sales
development program.
The Company believes that the concept of providing a one stop,
single source continuum of health care services provides a
competitive advantage to the Company, particularly in the
combination of support services with direct care. Most of the
Company's competitors are companies providing single service or
"smaller bundles" of services, or they are exclusively in some
facet of long-term care. The degree of market share that the
Company has varies with each line of business.
The Company competes with a number of national, regional and
local companies, non-profit agencies, hospitals, home health
agencies, and other similar organizations.
The degree of success with which the Company competes is
dependent on a number of factors. The quality of products and
services, reputation, responsiveness, clinical support, and the
physical appearance of facilities are significant competitive
factors. There is limited competition in price with respect to
Medicaid and Medicare patients, since revenues for services to
such patients are strictly controlled and based on fixed rates
and cost reimbursement principles.
Services Provided
The Operating Companies
Life Support Ambulance
Life Support Ambulance (LSA), provides a full range of ambulance
transportation services to hospitals, nursing homes,
rehabilitation centers, and other health care facilities
throughout Pennsylvania and New Jersey. LSA services include
basic life support, advanced life support, critical care
transport and paratransit transportation. LSA has in place a
state of the art vehicle tracking system enabling it to maximize
efficiencies. This satellite driven system allows LSA to provide
in excess of 8,000 transports monthly. LSA is one of
approximately 45 transportation companies in the country fully
accredited by the Commission on Accreditation of Ambulance
Services.
United Health Care Services
United Health Care Services (UHCS), provides a full range of
respiratory therapy, infusion therapy and enteral therapy
(delivery of nutrients through feeding tubes) to adult and
pediatric patients primarily in the home care setting and
distributes durable medical equipment and home medical supplies.
UHCS serves its patients through its branches located in
Philadelphia, Reading, Easton, and Pittsburgh, Pennsylvania and
Clifton, New Jersey. UHCS is accredited by the Joint Commission
On The Accreditation of Health Care Organizations ("JCAHO").
Innovative Pharmacy Services
Innovative Pharmacy Services (IPS) is a full service
institutional pharmacy which provides pharmaceutical services and
enteral nutrition products to health care institutions through
its full service pharmacies located in Philadelphia, Pennsylvania
and Blackwood, New Jersey. IPS also operates a retail pharmacy
in west Philadelphia, Pennsylvania. IPS currently fills
approximately 45,000 prescriptions each month and provides
various products and services to approximately 5,900 long term
care and residential beds.
Healthcare Hospitality Services
Healthcare Hospitality Services (HCHS), provides contract
management services including dietary, housekeeping, laundry,
pest control, plant operations and facilities management services
to nursing homes, personal care facilities, and retirement
communities. HCHS operates with full time, on site management
which are supported by a regional team of specialists. HCHS
provides such contract services to approximately 6,700 long term
care and residential beds.
Diagnostic & Rehab Technologies
Diagnostic and Rehab Technologies provides diagnostic and
rehabilitative management services including portable x-ray,
Holter monitoring, ultra sound, echocardiograms, and physical,
speech and occupational therapy, primarily to skilled nursing
facilities. The Diagnostics division provides portable x-ray,
Holter monitoring, ultra sound and echocardiograms to
approximately 6,000 long term care beds. The Rehab Tech Division
provides comprehensive rehabilitation programs to approximately
4,000 long term care beds which include physical and occupational
therapists, speech pathologists and administrative personnel.
The division also manages five subacute medical specialty units,
known as Rehab Tech Units. These units provide rehabilitation,
non-acute cardiac care, wound care, infusion therapy,
neurological, oncology, pulmonary and post surgical care at units
located within long term care facilities.
Healthcare Financial Services and Information Systems
Healthcare Financial Services and Information Services (HCIS)
provides integrated business solutions to the long term care
industry. HCIS blends financial and clinical software systems,
financial processing services, software and industry
training/consulting services, and insurance services (i.e.: risk
management, claims management, employee benefits, worker's
compensation) to meet the operational and management reporting
needs of its clients. HCIS currently serves 4,800 long term care
and residential beds.
Geriatric and Medical Services
Geriatric and Medical Services (GMS), provides sub-acute, rehab,
long term skilled care, residential and independent living
services to approximately 4,000 beds at 28 locations in
Pennsylvania and New Jersey. GMS operates 18 long term care, 8
residential and 2 independent living facilities. Services
provided include the prescribed type of nursing care, room and
board, special diets as needed, occupational, physical and
recreational therapy and other services as specified by the
patient's physician.
The Company is focused on the development of its sub-acute and
specialized care wings. GMS now operates 18 Medicare certified
distinct part units with approximately 350 beds. This includes 5
"Rehab Tech Units" which provide lower cost alternatives as
compared to acute care settings for rehabilitative and sub-acute
services.
The residential and independent living facilities operated by GMS
are available for rental without regard to age; however,
substantially all residents are senior citizens. Services at
these facilities include meals, recreation and housekeeping, but
generally only limited nursing care. Each of these facilities is
subject to various state and local licensing requirements and
building codes.
The following table sets forth pertinent information concerning the long-term
care, residential and independent living facilities operated by the Company.
LONG TERM CARE FACILITIES (1) NUMBER OF LICENSED BEDS
FACILITIES OR UNITS AS OF
OPERATED MAY 31, 1995
NEW JERSEY 9 1,746
PENNSYLVANIA 9 1,542
TOTAL 18 3,288
RESIDENTIAL FACILITIES (1)
NEW JERSEY 5 175
PENNSYLVANIA 3 230
TOTAL 8 405
INDEPENDENT LIVING FACILITIES (2)
PENNSYLVANIA 2 296
GRAND TOTAL 28 3,989
(1) All facilities are owned by the Company except a long term care facility of
280 beds and a residential facility of 55 beds which are owned by a company
controlled by the Chairman of the Board, President and Chief Executive
Officer of the Company. The Company provides various services to these
facilities.
(2) Facilities managed by the Company
The Company has been approved to add 10 beds each to 4 facilities
in Pennsylvania.
The Company is currently developing a 60 bed nursing facility and
60 bed residential health care facility in Cape May, New Jersey
(North Cape Convalescent Center) and a 120 bed facility in
Norristown, Pennsylvania (West Logan Nursing and Rehabilitation
Center) both of which are anticipated to be completed in fiscal,
1996.
The Company's Market
The Company has defined its target market as the Mid-Atlantic
Region. The Company's present business is principally
concentrated in Pennsylvania and New Jersey which contains
approximately 20 million people and have an estimated per capita
health care spending of $3,500 which equates to a $70 billion
market for health care services. Currently, this market is
spread over a number of service providers which control varying
amounts of the market. The largest segments include: hospitals
(44%); physician services (23%) and nursing homes (10%). The
balance is spread among a number of other providers.
The nation's population is changing. People are living longer
than ever before, with the fastest growing segment of the
population being those aged 85 and over. This segment of the
U.S. population is expected to continue to significantly
increase. In the Pennsylvania/New Jersey region, the 85 and over
population is expected to increase approximately 16.5% from 1990
through the year 2000. This segment of the population represents
the primary consumers of long term care services, related support
services, rehabilitative services and skilled nursing care.
The Company has determined that consumers are demanding
increasingly higher levels of clinical quality and assurances
that they are receiving the best possible medical treatment,
while these same individuals, their employers, insurers and
governments are demanding that the market provide health care in
the most cost efficient manner. Managed care has evolved as a
result of these competitive pressures.
The Company's experience has been that treatment has shifted in
managed care. The hospital or acute care setting is no longer
the focus of service delivery. What has evolved are cost
effective, clinically appropriate alternatives known as the acute
care step down alternatives, including, home care, sub-acute care
and skilled nursing. More and more, providers and physicians are
turning to these service alternatives because they meet the
demands of the market.
The Company is actively pursuing HMO relationships. The
Company's operating companies presently have contracts or
referral arrangements with approximately 50% of the HMOs within
its service areas in the Pennsylvania/New Jersey region.
Marketing Strategy
The Company's marketing strategy is to capture a greater share of
current markets and to selectively expand into new markets,
particularly areas with high concentrations of the elderly. The
Company uses three approaches to further penetrate existing
markets: (1) traditional referral sources, (2) managed care
contracts, and (3) executive sales.
Since its inception, the Company has anticipated the developments
in the health care industry and used the core technology and
critical mass of business in its nursing homes to develop a
network of support service companies. The companies were grown
through the expansion of Company-owned beds, non-Company business
and acquisitions. Today these support service companies
represent approximately 30% of overall Company revenue. Nursing
homes represent the largest market for the support services,
followed by hospitals, home health care and other smaller
segments.
Nursing care facility marketing is focused at the local level and
is conducted primarily by the facility administrator and its
admissions director who call on referral sources such as doctors,
hospitals, hospital discharge planners, churches and various
community organizations. Beside actively soliciting admissions
from these sources, the Company's marketing strategy is to
maintain a public awareness of each care facility and its
capabilities.
Traditional referral sources include hospital discharge planners,
nursing or social service directors, nursing home administrators,
and social workers. These sources normally do not insure the
people they refer, and they are more concerned with service and
clinical quality. In this approach, the Company highlights its
clinical accreditation, expertise, experience, and service
capabilities. The Company takes advantage of its regional
concentrations in its marketing efforts, where appropriate,
through consolidated marketing programs which benefit more than
one facility.
HMO's have a dual perspective as insurers: quality and cost.
Because of the rapid growth of HMO's, market access for providers
like the Company is increasingly dependent on being an approved
provider of the HMO. In this approach, the Company promotes the
benefits of "one stop shopping" and a "continuum of care" that
offers high clinical quality at competitive rates.
Executives from traditional referral organizations and HMOs are
concerned with both quality and cost. They are also interested in
the Company's distribution center network and the Company's
ability to create multi-dimensional relationships whether through
the provision of several support services or a product mix of
long term care and support services. The flexibility of being a
regional company and the Company's ability to tailor
relationships to suit the needs of emerging markets is a key
factor here.
Third Party Payor Programs
The levels of revenues and profitability of the Company, like
those of other health care companies, are affected by the
continuing efforts of third party payors to contain or reduce the
costs of health care by lowering reimbursement rates, increasing
case management review of services and negotiating contract
pricing. The implementation of managed care programs either
mandated by government action or adopted by the industry is
expected to continue to bring additional pressures on pricing.
The Company believes that such programs also favor providers who
can efficiently deliver a continuum of products and services to a
large defined population on a capitated basis. Home health, long
term care facilities and other sub-acute care facilities, which
are generally less costly to third party payors than hospital-
based care, have benefitted from those cost containment
objectives. However, as expenditures in these segments continue
to grow, initiatives aimed at reducing the costs of health care
delivery at non-hospital sites are increasing. Such initiatives
have been implemented in the past and have negatively impacted
operating results. A significant change in coverage or a
reduction in payment rates by third party payors could have a
material adverse effect upon the Company's business and financial
condition.
The Company derives substantially all its revenues from third
party payors, including Medicare, Medicaid and private insurers.
The collection of accounts receivable from third party payors is
critical to the Company's success and therefore is a high
priority for all levels of management. Funds received under
Medicare and Medicaid by all companies in the health care
industry are subject to audit with respect to the proper
application of various regulations and payment formulas. Such
audits can result in retroactive adjustments resulting in amounts
due to or from the governmental agency. While the Company
believes that the charges it has submitted are appropriate, no
assurance can be given that such adjustments will not be made,
and if made, that they will not be material. Life Support
Ambulance, Inc. ("LSA"), a subsidiary of the Company, received a
notice of suspension of payments relating to Medicare billings
submitted by LSA to its Medicare intermediary effective April 6,
1995. The suspension was imposed because the intermediary had
received evidence that prior payments made to LSA may not have
been billed correctly. The intermediary has not yet quantified
the nature of the alleged deficiency in billing procedures nor
the amount for which LSA may have improperly billed Medicare. In
connection therewith, the Office of Inspector General has
subpoenaed certain records of LSA. LSA believes that it has
operated, at all times, in substantial compliance with all
regulations required by Medicare relating to reimbursement of
services. On August 11, 1995, LSA reached an agreement with its
Medicare intermediary whereby Medicare will retain until
resolution of the issues amounts it is holding, approximately
$3,100,000 and 25% of future billings processed. In connection
with the agreement, Geriatric & Medical Companies, Inc. has
agreed to guarantee the payment by LSA of up to $5,000,000 of any
finally determined overpayments. It is not possible at the
present time to determine the length of the suspension or whether
such suspension will have a material adverse effect on the
operations or the financial condition of the Company.
The Clinton Administration made healthcare reform one of its top
priorities. The White House Task Force on Health Care Reform
studied the issue of health care reform and presented its report
and recommendations to the Administration. The Administration
proposed health care reform legislation to Congress. Various
other legislative and industry groups continue to study numerous
health care issues, including access, delivery, and financing of
long-term health care. These and other groups' recommendations
will likely impact the form and content of future health care
reform legislation. As a result, the Company is unable to
predict the type of legislation or regulations that may be
adopted affecting the future of the health care industry and
their impact on the Company. There can be no assurance that any
health care reform will not adversely affect the Company's
financial position or results of operations.
In April, 1995 the state of New Jersey reduced its Medicaid
reimbursement rates. Similar pressures exist in Pennsylvania.
The Company is unable to predict the impact of such initiatives
since the Company is exploring opportunities to shift business to
other payors, thereby decreasing reliance on Medicaid programs.
The Company is unable to determine whether or when new
reimbursement rates will be adopted, or if adopted, the effect on
the financial results of the Company.
Bills and proposed regulations have been pending in Pennsylvania
to substantially change Pennsylvania's Medicaid System. The new
System, expected to have been implemented no later than July 1,
1994, was not adopted. The Company is not able to determine, at
this time, whether or when a new system will be adopted, or, if
adopted, the effect on the financial results of the Company.
The Medicare program consists of two separate insurance programs:
"Hospital Insurance," Part A, provides certain benefits covering
inpatient hospital, nursing facility, home health and hospice
services; and "Supplementary Medical Insurance," Part B of the
Social Security Act, provides benefits in the areas of outpatient
hospital visits, physician services, respiratory therapy,
infusion therapy, home medical equipment and prosthetic devices.
The Company's 7 operating companies are authorized suppliers
eligible to receive direct reimbursement under Medicare Part B.
Health care providers must meet "conditions of participation" to
receive Medicare payments. The conditions of participation are
Federal requirements intended to insure the quality of the
medical services provided. Part A providers such as hospitals
and skilled nursing facilities are required to sign a provider
agreement to participate in Medicare.
Under Part B, there is an annual deductible of $100 that the
beneficiary must pay before Medicare will make any payments.
After the Part B deductible is satisfied, Medicare will
ordinarily pay 80% of the Medicare-approved payment amount, and
the beneficiary or its secondary insurance will be responsible
for paying the remaining 20%.
All of the Company's long-term care facilities are currently
certified and where appropriate all of the Company's other
business units are qualified to receive payments under the
Medicare and Medicaid programs. Both initial and continuing
certification or qualification to participate in such programs is
dependent upon many factors including, among others,
accommodations, equipment, services, patient care, safety,
personnel, physical environment, and adequate policies,
procedures and controls.
The Company's services and products are principally provided to
and revenues derived from, billings to private pay, private
insurance, Medicare and Medicaid recipients. Revenue derived
from these sources for the year ended May 31, 1995 were 28.5%
private pay and private insurance, 18.4% Medicare, 53.1%
Medicaid.
The Company is dependent upon the continuation of the present
reimbursement system, or something similar thereto, pursuant to
which third-party payors (principally Medicaid and Medicare) pay
for the services and products provided by the Company.
Because of the significance of Medicaid Reimbursement on the
Company's operations, significant increases in costs have an
adverse impact on the Company's operating results. This occurs
because the Medicaid reimbursement rates set by each state, which
are applicable throughout the ensuing year, are established
periodically and are based on historical data. Additionally, the
Company tends to build up Medicaid receivables due to differences
between interim payments and final cost report audits and
settlements. Although Pennsylvania Medicaid regulations require
audits within one year of the filing of cost reports and the
audit of the Medicare home office cost report, it is the
Company's experience that such audits and settlements thereof may
take up to four years after the costs involved are incurred.
Both the Medicare and Medicaid programs are subject to statutory
and regulatory changes, administrative rulings, interpretations
of policy, determinations by the Medicare carrier and
governmental funding restrictions, all of which may materially
increase or decrease the rate of program payments to health care
providers. Congress is attempting to limit the growth of Federal
spending on health care programs, including limitations on
payments under the Medicare and Medicaid programs. The Company
can give no assurance that payments under such programs will in
the future remain at a level comparable to the present level.
Government Regulation
The Federal government and each state in which the Company
currently operates regulate various aspects of its business. The
Company's operations are subject to the Federal laws covering the
repackaging and dispensing of drugs and are also subject to
Federal laws covering the dispensing of oxygen environmental
regulations and interstate motor-carrier transportation, as well
as state laws governing pharmacies, nursing services and certain
types of home health care activities.
Operation and development of long term care facilities are
subject to various federal, state and local statutes and
regulations. The states in which the Company operates have
statutes which require that prior to the addition or construction
of new beds, the addition of new services or certain capital
expenditures in excess of defined levels, the Company must obtain
a certificate of need ("CON") which certifies that the state has
made a determination that a need exists for such new or
additional beds, new services or capital expenditures. These
state determinations of need or CON programs are designed to
comply with certain minimum Federal standards and to enable
states to participate in certain federal and state health related
programs. The Company believes that the elimination or
relaxation of CON requirements may result in increased
competition but may also result in increased expansion
possibilities.
Since August 1982, Pennsylvania has refused to reimburse long
term care providers for depreciation and interest on facilities
built after that date even though the Commonwealth issued a CON
for the facility. The Company has received legal counsel opinion
that Pennsylvania's position violates various provisions of
Federal law. The Company is negotiating to receive reimbursement
for the beds for periods not previously settled and if it is not
successful, the Company is prepared to litigate the issue. Even
if the Company is successful, there is no assurance that the
amount of reimbursement will be sufficient to cover all costs
incurred.
The Company's long term care facilities are also subject to
licensure regulations. Each of the long term care facilities is
licensed as a nursing facility. State and local agencies survey
all long term care facilities on a regular basis to determine
whether such facilities are in compliance with governmental
operating and health standards and conditions for participation
in government medical assistance programs. Such surveys include
review of patient utilization of healthcare facilities and
standards for patient care.
New survey, certification and enforcement regulations adopted by
the Health Care Financing Administration apply to all surveys of
the Company's nursing facilities effective July 1, 1995. Under
these new regulations, state surveyors utilize a scope and
severity rating to determine whether a nursing facility is in
substantial compliance with applicable state and federal
regulations. Using a scope and severity score for each cited
deficiency noted during a survey, surveyors will determine
whether there is substandard quality of care and whether an
extended survey process is warranted. The scope and severity
score will also be used to impose remedies, which may include
termination of the provider agreement, denial of payment for new
admissions, imposition of temporary management, and civil
monetary penalties of up to $10,000 per day. Under the new
regulations, facilities may appeal a certification of
noncompliance but not the choice of remedy.
The Company endeavors to maintain and operate its facilities in
substantial compliance with all such standards and conditions.
However, in the ordinary course of business the facilities
receive notices of deficiencies for failure to comply with
various regulatory requirements. Generally, the facility and the
reviewing agency will agree upon the measures to be taken to
bring the facility into compliance with the regulatory
requirements. In some cases or upon repeat violations, the
reviewing agency may take adverse actions against a facility,
including the imposition of fines, temporary suspension of
admission of new patients to the facility ("bed holds"),
suspension or decertification from participation in the Medicare
or Medicaid programs, and, in extreme circumstances, revocation
of a facility's license. These adverse actions may adversely
affect the ability of a facility to operate or to provide certain
services and its adversely effect eligibility to participate in
the Medicare or Medicaid programs. Certain of the Company's
facilities have in the past received notices from governmental
agencies to the effect that if certain alleged deficiencies are
not rectified, such facilities would be decertified from
participation in Medicare and Medicaid programs. In all such
cases, the alleged deficiencies were rectified before any such
facilities were decertified. Enforcement of these regulations is
becoming more stringent. As a result the Company has in recent
years experienced bed holds in certain facilities and other
administrative activities, however, the Company has not had any
of its operating licenses revoked.
In addition, all healthcare facilities are subject to various
local building codes and other ordinances. It is not possible to
predict the content or impact of future legislation and
regulations affecting the healthcare industry.
As a provider of services under the Medicare and Medicaid
programs, the Company is subject to the Medicare and Medicaid
fraud and abuse laws. These laws prohibit any bribe, kickback or
rebate in return for the referral of Medicare or Medicaid
patients. Violations of these provisions may result in civil and
criminal penalties and exclusion from participation in the
Medicare and Medicaid programs. In July 1991, the Office of the
Inspector General of the United States Department of Health and
Human Services promulgated regulations setting forth certain safe
harbors under the fraud and abuse laws (the "Safe Harbors").
These laws and regulations were updated under OBRA'93 and
pursuant to clarifying regulations adopted in July, 1994. In
addition, certain states in which the Company operates have laws
that prohibit certain direct or indirect payments or fee-
splitting arrangements between health care providers, if such
arrangements are designed to induce or encourage the referral of
patients to a particular provider. Possible sanctions for
violation of these state-created restrictions include loss of
licensure, civil and criminal penalties and exclusion from
participating in the Medicare and Medicaid programs.
Such laws and regulations vary from state to state, often are
vague and seldom have been interpreted by the courts or
regulatory agencies. Some states enacted laws which, with some
exceptions, have the effect of prohibiting a physician from
referring to an ancillary service in which the physician has
either an ownership interest or a contractual arrangement. As a
result of the various statutes and interpretations, the Company
has reviewed its joint venture and management arrangements and
has terminated these arrangements as deemed appropriate. The
Company believes that its operations including joint venture and
management arrangements with other health care providers
substantially comply with applicable laws and regulations;
however, there can be no assurance that judicial or
administrative interpretation of existing laws, including the
fraud and abuse laws, or legislative enactment of new laws will
not have a material adverse effect on the Company's business.
The Company's subsidiary, United Health Care Services, Inc.
("United") had been involved in certain joint ventures, most of
which were in place when the Company purchased United, which were
subsequently terminated. In connection with a recent review of
such arrangements in the industry, the Company was requested by
the Office of the United States Attorney for the Eastern District
of Pennsylvania and the Commonwealth of Pennsylvania, Department
of Welfare to provide certain information concerning such joint
venture arrangements. As a result of such inquiry, the Company
has reached a settlement with the Office of the United States
Attorney for the Eastern District of Pennsylvania and is
discussing a settlement with the Commonwealth of Pennsylvania
Department of Public Welfare regarding such joint ventures. The
Company believes that such settlement will not have a material
adverse effect on the Company's business and financial condition.
(See Item 3 "Legal Proceedings".)
Each year Congress enacts an Omnibus Reconciliation Act ("OBRA")
which generally effects the operations of the Company. OBRA 1987
created six categories for durable medical equipment
reimbursement under the Medicare Part B program. OBRA 1987 also
defined whether products would be paid for on a rental or sale
basis and established fixed payment rates for oxygen service as
well as a 15-month rental ceiling on certain medical equipment.
OBRA 1990 made new changes to Medicare Part B reimbursement that
were implemented in 1991. The substantive changes included a
national standardization of Medicare rates for certain equipment
categories and reductions in amounts paid for certain durable
medical equipment.
The failure to obtain, renew or maintain any of the required
regulatory approvals or licenses could adversely affect expansion
of the business conducted by the Company and could prevent the
delivery of one or more products and services.
Quality Assurance
The Company maintains quality assurance programs in all of its
operating entities. The Quality Review Committee of the Board of
Directors reviews and oversees these programs and reports to the
Board with respect to these programs, as appropriate.
Competition
While the Company is unable to determine whether health care
reform will be dominated by third party payors or integrated
delivery systems, the Company believes that its strategy of
positioning itself as a provider of a continuum of care along the
lines of long term care and support services will allow the
Company to compete effectively in a changing marketplace. A
dramatic growth in the health care market in recent years has
attracted a large number of providers, some of which are national
in scope and a greater number of which, like the Company, operate
only in limited geographic areas. Accordingly, the market for
health care service is highly competitive. Competition is
encountered from a variety of health care organizations including
major national chains which are larger than the Company. Some
existing competitors in the home health care business also
manufacture their own products and equipment. Other competitors
include health care organizations, hospital and health
maintenance organizations. Some of the significant competitive
factors include reputation, quality and diversity of services
offered, family and physician preferences, referral networks and
price. The Company believes that the changing health care market
will afford the Company opportunities because the Company can
provide an array of services to health care providers which
results in increased operating and administrative efficiencies.
The Company's ability to successfully compete in the delivery of
health care services is dependent, among other things, on its
ability to adjust to a changing regulatory environment, obtain
payment from third-party payors, control costs, deliver a
consistently high quality of care, adapt to the changing needs of
the population it serves and position itself to provide a
continuum of cost efficient products and services to the managed
care industry.
The long-term care, residential and independent living facilities
operated by the Company compete with all types of health care
facilities, nursing and convalescent centers, retirement
facilities and communities, and similar institutions. There are
a large number of skilled nursing facilities and other facilities
in each of the geographic areas served by the Company's
facilities. The degree of success with which the Company's care
facilities compete varies from location to location and is
dependent on a number of factors. The Company believes that the
quality of care provided, reputation and physical appearance of
facilities, and in the case of private patients, charges for
services, are significant competitive factors. There is limited,
if any, competition in price with respect to Medicaid and
Medicare patients, since revenues for services to such patients
are strictly controlled and based on fixed rates and cost
reimbursement principles. Provision of quality care by the
Company is dependent in part on its ability to adequately staff
its facilities.
Liability Insurance
In recent years, participants in the health care market have
become subject to an increasing number of lawsuits alleging
malpractice, product liability or related legal theories, many of
which involve large claims and significant defense costs. The
Company is from time to time subject to such suits as a result of
the nature of its business. The Company currently maintains
liability insurance intended to cover such claims. While the
Company has been able to obtain liability insurance in the past,
such insurance varies in cost, is difficult to obtain and may not
be available in the future on acceptable terms or at all. A
successful claim against the Company in excess of the Company's
insurance coverage could have a material adverse effect upon the
Company and its financial condition.
The Company currently has in force general liability insurance,
including professional liability, with an aggregate annual limit
of $11,000,000 covering operations at all of its owned long-term
care and residential health care facilities and the other
operations of the Company other than the ambulance services for
which the limit of coverage is $3,000,000. In addition, the
ambulance services has in force automobile insurance coverage
with an aggregate annual limit of $1,000,000. The Company also
currently has in force two general liability policies, with
aggregate annual limits of $6,000,000 each, covering the
operations of UHCS and IPS, respectively. These insurance
policies have no deductibles, are subject to annual renewal, and
provide coverage on a claims made basis for professional
liability. All other policies provide coverage on an occurrence
basis. However, there can be no assurance that the coverage
limits of the Company's insurance policies will be adequate.
The Company makes available health plan coverage to certain of
its employees under a fully insured program. The Company also
maintains retroactively rated workers' compensation insurance
with an A+ rated insurance carrier in all states of operation.
The Company has implemented and continues to maintain programs to
minimize the number and severity of occurrences and to control
the costs of existing and future claims. The Company's ultimate
liability is limited under the terms of the worker's compensation
insurance contracts and by state statute.
Employees
As of May 31, 1995, the Company employed approximately 5,300 full
and part time employees. Approximately 2,500 of the employees,
primarily the service worker employees of GMS, are represented by
labor unions. The Company believes that its employee relations
are generally satisfactory. However, it cannot predict the
effect of organizational activities on its future operations. In
the present labor market, the prospect of demands for higher
wages or strikes is a possibility.
The health care industry is labor intensive and dependent upon
skilled personnel. On occasion, a shortage of skilled and entry
level healthcare personnel may occur which could adversely affect
the operating results of the Company.
In the conduct of its business, the Company does not discriminate
against any individual on account of his/her race, color,
religion, sex, national origin or physical disability.
Item 2. Properties
Reference is made to Item 1 of this Report for a description of
the long-term care, residential and independent living facilities
operated by the Company. All owned facilities listed in Item 1
are subject to mortgages. See Note 2 of the Notes to
Consolidated Financial Statements. In addition, the Company owns
and occupies a 175,000 square foot building in west Philadelphia
which houses its management and administrative activities as well
as the operations of its pharmacy and durable medical equipment
businesses. The Company believes that all of the properties are
adequately maintained and are suitable for the purposes intended.
The Company also holds various improved and unimproved properties
for development which, in the aggregate, are not material.
Item 3. Legal Proceedings
The Company was named a defendant, together with GMS Management,
Inc., and various current and former officers of the Company, in
a class action suit which was filed in September, 1992, in the
United States District Court for the Eastern District of
Pennsylvania in Philadelphia. The plaintiff class alleged that,
among other things, various reports and press releases issued by
the Company misrepresented or omitted adverse material facts
concerning various matters relating to the Company and its
affairs. The plaintiff class did not seek a specified sum other
than "to pay to plaintiff and to all members of the class damages
in an amount to be proven at trial, with interest thereon." The
jury returned a verdict on Friday, June 9, 1995, resulting in no
liability on five of the six alleged misrepresentations or
omissions set forth in the plaintiff's complaint. The jury found
in favor of the plaintiff class with respect to the remaining
alleged omission relating to the criminal investigation conducted
by the Pennsylvania Attorney General. Based on the findings of
the jury, the court entered judgement of $.20 per share in
damages for each share of the Company's common stock purchased by
a class member during the period March 1, 1992 to September 2,
1992. The Company believes that damages in the aggregate,
calculated pursuant to the judgement, will not exceed $350,000,
exclusive of costs, pre and post judgement interest and other
charges which may apply.
As a result of the jury's findings, the primary insurer of the
individual defendants, which had entered into a funding agreement
under which the insurer had promised to pay 60% of the legal fees
and other expenses associated with the defense of this suit,
after the retention amount of $250,000 had been paid, sent a
letter stating that it was terminating the funding agreement.
Accordingly, the insurer has declined to participate in the
payment of any part of the judgment or additional costs and fees
and expenses to be incurred in this matter and could seek a
repayment of advances already made. The Company intends to
pursue its right under its insurance policies and to enforce the
Funding Agreement previously entered into with the insurance
company. All parties have filed post trial motions in connection
with this judgement.
Life Support Ambulance, Inc. ("LSA"), a subsidiary of the
company, received a notice of suspension of payments relating to
Medicare billings submitted by LSA to its Medicare intermediary
effective April 6, 1995. The suspension was imposed because the
intermediary had received evidence that prior payments made to
LSA may not have been billed correctly. The intermediary has not
yet quantified the nature of the alleged deficiency in billing
procedures nor the amount for which LSA may have improperly
billed Medicare. In connection therewith, the Office of the
Inspector General has subpoenaed certain records of LSA. LSA
believes that it has operated, at all times, in substantial
compliance with all provisions required by Medicare relating to
reimbursement for services. On August 11, 1995 LSA reached an
agreement with its Medicare intermediary whereby Medicare will
retain until resolution of the issues all amounts it is currently
holding, approximately $3,100,000 and 25% of future billings
processed. In connection with this agreement Geriatric & Medical
Companies, Inc. has agreed to guarantee the payment by LSA of up
to $5,000,000 of any finally determined overpayments. It is not
possible to determine at the present time the length of the
suspension or whether such suspension will have a material
adverse effect on the operations or the financial condition of
the Company.
In May, 1995, the U.S. Attorney for the Eastern District of
Pennsylvania delivered a draft complaint to the Company which
alleges that Healthcare Hospitality Services, Inc. ("HCHS"), a
subsidiary of the Company, failed to recommend adequate
nutritional requirements to three residents of a nursing home
facility (the "Facility") previously managed by another
subsidiary of the Company. The draft complaint contains a
further allegation that HCHS billed Medicare and state Medical
assistance programs for reimbursement for nutritional services
which were not provided to such residents. The U.S Attorney has
invited the Company to discuss a possible resolution of this
matter before the filing of such complaint in federal district
court. The Company has had preliminary discussions with the U.S.
Attorney and believes that this matter may be settled prior to
the filing of such complaint by the payment of an as of yet
unspecified amount, with no admission of wrongdoing. Although
the outcome of this matter can not be predicted, the Company
denies any wrongdoing and is prepared to vigorously defend this
action should the complaint be filed. The Management Agreement
with the Facility provides that the Facility indemnify and hold
the Company harmless with respect to claims such as that alleged
by the U.S. Attorney. However, it is unclear whether the
facility has or would have the funds necessary to provide such
indemnification.
On or about June 6, 1995, an officer of HCHS was served with a
subpoena issued by the Attorney General of the Commonwealth of
Pennsylvania, relating to the nutritional care provided to
residents of the Facility. In addition, the Attorney General has
subpoenaed certain records of the Company. It is the belief of
counsel for the Company that such subpoenas result from the same
facts surrounding the operations of this Facility as are alleged
in the draft complaint delivered to the Company by the U.S.
Attorney, as discussed above. At the present time, it is unclear
as to what action, if any, the State Attorney General intends to
take with respect to the Company's management of and other
involvement with this facility.
The Company's subsidiary UHCS reached an agreement with the
United States Attorney for the Eastern District of Pennsylvania
regarding its joint ventures and management arrangements whereby
the Company paid $320,000 in fiscal 1995 and will pay $340,000 in
Fiscal, 1996 and $440,000 in Fiscal, 1997. The Company has had
negotiations and anticipates settling similar issues with the
Commonwealth of Pennsylvania. However, the Company cannot
predict the ultimate outcome of such negotiations.
The Company is involved in routine government inquiries, audit
surveys and administrative proceedings concerning its activities
and operations. The Company is also involved in various claims
and legal actions arising in the ordinary course of business.
The Company believes that the outcome of all of these routine
matters will not have a material adverse effect on the Company's
operations, financial position and cash flows.
Item 4.Submission of Matters to a Vote of Security Holders
There were no matters submitted during the fourth quarter of the
fiscal year covered by this report to a vote of security holders,
through the solicitation of proxies or otherwise.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The Company`s Common Stock is traded in the over-the-counter
market and listed on the Automated Quotations System of the
National Association of Securities Dealers, Inc. (NASDAQ symbol:
GEMC). The following table sets forth, for the fiscal periods
indicated, the high and low sale prices of the Company's Common
Stock as reported by the National Quotation Bureau, Inc.,
together with information concerning cash dividends paid per
share during those periods. The following quotations represent
prices between dealers and do not include retail markup,
markdown, or commissions. They do not necessarily represent
actual transactions. The high and low sale prices for each
quarterly period for the two most recent fiscal years are:
Fiscal 1996 High Low Dividends Per Share
First Quarter (Thru
August 11, 1995) 2 7/8 2 -
Fiscal 1995
Fourth Quarter 2 13/16 1 13/16 -
Third Quarter 3 1/8 2 3/8 -
Second Quarter 3 1 5/8 -
Fourth Quarter 3 1/16 2 -
Fiscal 1994 3 5/8 2 1/4 -
Fourth Quarter 3 3/8 1 15/16 -
Third Quarter 2 5/8 1 1/4 -
Second Quarter 2 1 3/8 -
On August 11, 1995, the last sale price for the Company's Common Stock was
2 9/16. As of May 31, 1995, the Company had 1,330 stockholders of record
of its Common Stock.
The Company did not declare or pay cash dividends in fiscal year 1995 and
future dividends will depend, among other things, upon the earnings of the
Company, its working capital needs, capital requirements, debt service
requirements, its general financial condition and other factors.
Pursuant to a guaranty in connection with the issuance of certain 1992
tax-exempt bonds, the Company has agreed not to pay any dividends or make any
distribution which could have the effect of reducing the Company's consolidated
tangible net worth and subordinated indebtedness, if the Company's
consolidated tangible net worth and subordinated indebtedness is at such
time or would be reduced to less than $9,000,000. No assurance can be
given that the Company will declare or pay dividends in the future.
However, the Company has, in the past, declared and paid stock dividends
in the form of stock splits.
Item 6. Selected Financial Data
GERIATRIC & MEDICAL COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED SELECTED FINANCIAL DATA
[S] [C] [C] [C] [C] [C]
Years Ended May 31,
1991 1992 1993 1994 1995
Operating Revenues,
Net $144,633,000 $ 164,551,000 $164,364,000 $177,957,000 $192,234,000
Income before
Interest and
Taxes (a) $ 14,205,000 $ 10,986,000 $ 14,623,000 $ 9,152,000 $ 16,143,000
Interest Expense,
net $ ( 10,096,000)$ ( 9,463,000) $(11,377,000) $(10,889,000)$(11,078,000)
Pre-Tax Income
(Loss) $ 4,109,000 $ 1,523,000 $ 3,246,000 $( 1,737,000)$ 5,065,000
Income Tax
Provision (Benefit)
$ 2,014,000 $ 380,000 $ 812,000 $( 299,000) $ 1,012,000
Extraordinary Items:
Utilization of Net
Operating Loss
Carryforwards
$1,400,000 $ 66,000 $ - $ - $ -
Extinguishment of
Debt - net of
tax benefit
$ - $ ( 650,000) $ - $ - $ -
Net Income (Loss)
$ 3,495,000 $ 559,000 $ 2,434,000 $ (1,438,000) $ 4,053,000
Per Common Share:
Net Income (Loss) before
Extraordinary Item(s) $ .14 $ .08 $ .16 $ ( .09) $ .27
Extraordinary Item(s)$ .09 $ (.04) $ - $ - $ -
Net Income $ .23 $ .04 $ .16 $ ( .09) $ .27
Cash Dividends Declared
Per Common Share - - - - -
Years Ended May 31,
1991 1992 1993 1994 1995
Total Assets $144,504,000 $163,479,000 $169,619,000 $162,724,000 $178,244,000
Long-Term Debt and
Subordinated
Debentures (b) $ 75,991,000 $115,834,000 $122,582,000 $119,343,000 $121,660,000
Shareholders' Equity
$ 8,618,00 $ 9,382,000 $ 11,951,000 $ 10,545,000 $ 14,648,000
Patient Days (c) 1,061,035 1,039,403 1,039,204 983,671 992,146
Average Occupancy Based
on Beds in Service (c) 94% 95% 94% 93% 92%
Revenues From Government
Programs (c) 71% 78% 83% 86% 86%
Number of Company
Employees 4,105 4,018 3,887 4,150 5,300
Number of Beds - Operated
5,486 5,530 4,942 3,904 3,989
(a)Includes recognition of deferred and current gains on facilities sold:
1991 $ 4,452,000
1992 $ 3,175,000
1993 $ 6,365,000
1994 $ 1,576,000
1995 $ -
(b) Excludes current portion of long-term debt and subordinated debentures.
(c) Pertains to owned long-term care facilities only.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Geriatric & Medical Companies, Inc. is a Mid-Atlantic health care
company providing support services in pharmacy, rehabilitative
therapies, ambulance transportation, contract management,
financial, diagnostic services and home care, which includes
infusion, respiratory and equipment rental to hospitals, HMO's,
physician groups and nursing homes. It also is a major long-term
care provider in Pennsylvania and New Jersey.
Liquidity and Capital Resources
In November 1993, the Company entered into a $25 million
accounts receivable sale agreement, with recourse. This is a
three year agreement with program costs charged at 9.84% of the
outstanding receivables sold. In May 1994, the Company entered
into an additional agreement to sell certain receivables due from
third party payors. The program cost charged is 9.75% of
outstanding amounts sold. The maximum amount to be sold under
this agreement will be $5,000,000. The amount outstanding at
May 31, 1995 under these agreements was $20,924,000. These
agreements expire in November, 1997. The Company has accounted
for these transactions as a sale of receivables (See Note 4 to
the Notes to Consolidated Financial Statements.)
A substantial part of the Company's revenues consists of
reimbursements under the Pennsylvania Medicaid Program, a
retrospective cost based program that typically results in the
generation of large receivables which are periodically settled.
Pennsylvania had previously announced plans to switch to a
prospective Medicaid reimbursement system effective January, 1994
which did not occur. It is not known whether Pennsylvania will
institute a prospective system during fiscal 1996 and the
effects of the final plan on the cash flow or operations of the
Company are not known. The Company anticipates the State of
Pennsylvania increasing its rates as of July, 1995 and also
anticipates Pennsylvania will pay tentative settlements on its
fiscal 1995 cost reports during fiscal 1996.
The Company's subsidiary, Life Support Ambulance, Inc. (LSA), on
April 6, 1995 received a notice of suspension of payment
pertaining to Medicare billings submitted to its Medicare
intermediary. The Company believes the suspension was imposed
because of evidence received by the intermediary that prior
payments may not have been billed correctly. LSA believes it has
operated, at all times, in substantial compliance with all
provisions required by Medicare for reimbursement of its
services. The purchaser under the $25 million accounts
receivable sale agreement discussed above informed the Company on
June 20, 1995 that it suspended purchasing LSA receivables. The
purchase of the receivables was resumed in July 1995, retroactive
to June 20, 1995, after the Company provided certain information
to the purchaser. On August 11, 1995 LSA reached an agreement
with its Medicare intermediary whereby Medicare will retain until
resolution of the issues all amounts it is currently holding,
approximately $3,100,000 and 25% of future billings processed. In
connection with the agreement, Geriatric & Medical Companies,
Inc. has agreed to guarantee the payment by LSA of up to
$5,000,000 of any finally determined overpayments. It is not
possible to determine at the present time the length of
suspension, or whether such suspension will have a material
adverse effect on the operations or financial condition of the
Company.
In December, 1994 the Company arranged financing under section
232 of the National Housing Act, of a 60 bed nursing home and 60
bed residential health care facility in Cape May, New Jersey.
The total construction costs are expected to be $6,137,000 of
which $5,636,000 will be financed under the construction loan. In
connection with the financing the Company was required to submit
a letter of credit totalling $500,000. (See Note 2 to
Consolidated Financial Statements).
On May 31, 1995 the Company completed an agreement to finance a
120 bed long term care facility in Norristown, PA (West Logan
Nursing & Rehabilitation Center) with Meditrust Mortgage
Investments, Inc. (Meditrust) for $6,939,000 at a rate of prime
plus 2 percent during construction and a rate based on Treasury
Bonds at the time of the permanent mortgage but not less than
10.75%. The total cost of the project is expected to be
$7,535,000. The amount not financed has been funded by the
Company.
In connection with the financing, Meditrust agreed to release
$2,500,000 of cash previously held as a pledge deposit,
classified as restricted cash on the accompanying balance sheets,
under its mortgage loan completed in April, 1992. Under the
amendment the Company must maintain certain quarterly covenants
or replace the amount released within 60 days of non-compliance.
The Company is in compliance with these agreements as of May 31,
1995.
The Company reached a settlement in Fiscal 1994, with the Office
of the United States Attorney for the Eastern District of
Pennsylvania regarding the joint venture and management
arrangements of its subsidiary United Health Care Services, Inc.
whereby the Company is required to pay $340,000 in Fiscal, 1996
and $440,000 in Fiscal, 1997.
As more fully discussed in Note 14, the Company is a party to
various legal and other matters asserted against the Company.
The ultimate liability resulting from the foregoing matters
cannot presently be determined. Accordingly, no provision for
any liability that may result has been made to the accompanying
consolidated financial statements.
The Company intends to meet its capital commitments and working
capital requirements in fiscal 1995 from operations, existing
financing arrangements including the $25 million and $5 million
receivable funding facilities, or the sale or refinancing of
other assets.
<PAGE>
Comparison of Consolidated Results of Operations for Fiscal 1995 and Fiscal 1994
The following table derived from the Company's consolidated statements of
operations sets forth for the items listed the respective changes when
compared between the periods:
1995 1994 Increase %
(Decrease) Change
Operating revenues, net $192,234 $177,957 $14,277 8.0 %
Other revenues - 1,576 (1,576) (100.0)%
192,234 179,533 12,701 7.1 %
Operating expenses 163,769 157,612 6,157 3.9 %
Depreciation and
amortization 8,734 9,238 (504) (5.5)%
Interest expense, net 11,078 10,889 189 1.7 %
Provision for costs on
sale of accounts receivable
3,588 3,531 57 1.6 %
187,169 181,270 5,901 3.3 %
Income (loss) before taxes 5,065 (1,737) 6,802 NM
Tax provision (benefit) 1,012 (299) 1,311 NM
Net income (loss) $ 4,053 $ (1,438) $ 5,491 NM
NM=not measurable
<PAGE>
Net income was $4,053,000 for the twelve months ended May 31,
1995 compared to a net loss of $1,438,000 in 1994. Income before
income taxes was $5,065,000 in 1995 compared to a net loss of
$1,737,000 in 1994 which includes $1,576,000 related to a gain on
facilities sold and recognition of deferred income.
Operating revenues are $14,277,000 higher in 1995 when compared
to 1994. Of this increase, $8,842,000 relates to the Company's
long term care operations which resulted from growth in its
medicare census ($5,920,000), addition of new beds in 1995
($1,480,000), improved rates from government and private payors
($1,719,000) offset principally by a decrease in management fees
from external facilities ($277,000). The remaining increases are
related to higher volume in the ambulance and hospitality
businesses.
Operating expenses increased $6,157,000 in 1995 compared to 1994.
This relates to increased costs associated with the acquisition
of three ambulance companies, higher volume including new beds,
new customers, salary and other inflationary factors offset by a
reduction in the provision for uncollectible accounts of
approximately $700,000, the elimination of nonrecurring charges
in workers compensation in 1994 of approximately $700,000 and
continued operating efficiencies and cost reductions.
Depreciation and amortization decreased $504,000 in 1995
principally as a result of the completion in fiscal 1994 of the
amortization of certain deferred financing costs.
Interest expense, net, for the year ended May 31, 1995 increased
approximately $189,000 over 1994. This increase is principally
attributable to the debt related to new beds opened in 1994 and
1995.
<PAGE>
Comparison of Consolidated Results of Operations for Fiscal 1994 and Fiscal
1993
The following table derived from the Company's consolidated statements of
operations sets forth for the items listed the respective charges when
compared between the periods:
1994 1993 Increase %
(Decrease) Change
Operating revenues, net $177,957 $164,364 $13,593 8.3 %
Other revenues 1,576 6,654 (5,078) (76.3)%
179,533 171,018 8,515 5.0 %
Operating expenses 157,612 142,018 15,594 11.0 %
Depreciation and
amortization 9,238 9,000 238 2.6 %
Interest expense, net 10,889 11,377 (488) (4.3)%
Provision for costs on
sale of accounts receivable 3,531 5,377 (1,846) (34.3)%
181,270 167,772 13,498 8.0 %
Income (loss) before taxes (1,737) 3,246 (4,983) (153.5)%
Tax provision (benefit) (299) 812 (1,111) (136.8)%
Net income (loss) $(1,438) $ 2,434 $(3,872) (159.1)%
Net loss was $1,438,000 for the twelve months ended May 31, 1994
compared to net income of $2,434,000 in 1993. Income (loss)
before income taxes was a loss of $1,737,000 in 1994 compared to
income of $3,246,000 in 1993 which includes $1,576,000 in 1994
and $6,365,000 in 1993 related to a gain on facilities sold and
recognition of deferred income.
Operating revenues increased $13,593,000 in 1994 when compared to
1993. Ambulance, pharmacy and hospitality companies increased
their operating revenues in 1994 when compared to 1993, by
$4,062,000 principally as a result of increased volume. Long
term care increased its operating revenues, $9,531,000 in 1994
compared with the same period in 1993. The increase resulted
from an increase in rates from government and private payors of
$9,665,000 and a reduction in the allowance for third party
receivables of approximately $1,100,000 resulting from a change
in the estimation of the allowance needed for various issues.
These increases were offset by a decrease in revenue related to
the sale of a facility on May 31, 1993 which was offset by
staffing and other services provided to the new owners and 60 new
beds added during fiscal, 1994. The net effect of these items
was a net loss of revenue of approximately $811,000. In
addition, management fees decreased by approximately $423,000
resulting from the termination of substantially all non owned
management agreements.
Operating expenses increased $15,594,000 in 1994 compared to
1993. Ambulance, pharmacy and hospitality companies, operating
expenses increased $8,027,000 in 1994 resulting primarily from
the Company providing a non cash charge of approximately
$4,500,000 for possible uncollectible receivables. The Company
completed in 1994 the installation of new billing and collection
systems for several of the entities and has provided for possible
uncollectibles related to receivables still outstanding on the
replaced systems. In addition the Company recorded its estimate
of a tentative settlement of $1,100,000 with the Office of the
United States Attorney for the Eastern District of Pennsylvania
and its anticipated settlement with the Commonwealth of
Pennsylvania regarding joint ventures and management agreements
(See Note 14 of the Notes to Consolidated Financial Statements).
The remaining expense increase of $2,427,000 relates to increased
volume at new and existing customers. The Company's long term
care operations increased its operating expenses by $7,567,000
in 1994 relating principally to salary and other inflationary
increases and the recording of a $700,000 non cash charge
relating to a change in estimating workers' compensation expense
in 1994.
Depreciation and amortization increased $238,000 in 1994 as a
result of the amortization of costs incurred in connection with
bond refinancings in July 1993.
Interest expense, net, for the year ended May 31, 1994 decreased
approximately $488,000 over 1993. The net decrease is
principally attributable to the redemption of $2.8 million of
subordinated debentures in February 1, 1994 combined with
capitalization of interest on construction and development
projects.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements of the Company for the
years ended May 31, 1995, 1994 and 1993, and the reports of the
Company's independent certified public accountants with respect
thereto, are included in this report beginning on the following
page.<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of
Geriatric & Medical Companies, Inc.
and Subsidiaries
We have audited the consolidated financial statements and the
financial statement schedules of Geriatric & Medical Companies,
Inc. and Subsidiaries as of May 31, 1994 and May 31, 1993 listed
in Item 14(a) of this form 10-K. These financial statements and
financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Geriatric & Medical Companies, Inc. and
Subsidiaries as of May 31, 1994 and May 31, 1993, and the
consolidated results of their operations and their cash flows for
each of the two years in the period ended May 31, 1994 in
conformity with generally accepted accounting principles. In
addition, in our opinion, the financial statement schedules
referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all
material respects, the information required to be included
therein.
As more fully discussed in Note 14, a class action shareholder
lawsuit has been brought against the Company. The ultimate
outcome of the foregoing cannot presently be determined.
Accordingly, no provision for any liability has been made to the
accompanying consolidated financial statements.
2400 Eleven Penn Center
Philadelphia, Pennsylvania 19103
October 11, 1994
COOPERS & LYBRAND, L.L.P.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of
Geriatric & Medical Companies, Inc.
and Subsidiaries
We have audited the consolidated balance sheet of Geriatric &
Medical Companies, Inc. and Subsidiaries as of May 31, 1995, and
the related statement of operations, stockholders' equity, and
cash flows for the year ended May 31, 1995. We have also audited
the 1995 schedules listed in the accompanying index. These
consolidated financial statements and financial statement
schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Geriatric & Medical Companies, Inc. and
Subsidiaries as of May 31, 1995 and the consolidated results of
their operations and their cash flows for the year ended May 31,
1995 in conformity with generally accepted accounting principles.
In addition, in our opinion, the financial statement schedules
referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all
material respects, the information required to be included
therein.
As more fully discussed in Note 14, the Company is a party to
various legal and other matters asserted against the Company.
The ultimate liability resulting from the foregoing matters
cannot presently be determined. Accordingly, no provision for
any liability that may result has been made to the accompanying
consolidated financial statements.
BDO Seidman, LLP
Philadelphia, Pennsylvania
August 14, 1995
GERIATRIC & MEDICAL COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except par values and shares)
May 31,
ASSETS 1995 1994
Current Assets:
Cash $ 3,368 $ 927
Restricted cash 715 837
Patients' funds 1,388 311
Accounts receivable, net of allowance
of $7,733 and $6,776 at May 31, 1995
and 1994, respectively 25,672 20,716
Other receivables, net of allowance
of $975 at May 31, 1995 and 1994 5,919 5,555
Prepaids and other assets 6,622 4,039
Inventories 5,154 4,204
Due from third-party payors, net of
allowance of $3,391 and $3,877 at
May 31, 1995 and 1994, respectively 13,948 9,314
Total current assets 62,786 45,903
Property and equipment:
Land 3,702 3,702
Building and improvements 99,971 89,471
Equipment and fixtures 38,299 36,248
Construction-in-progress 5,259 10,591
147,231 140,012
Less accumulated depreciation 59,293 53,688
87,938 86,324
Other noncurrent assets:
Restricted cash 3,021 7,090
Investments in joint ventures 385 582
Goodwill net of accumulated amortization
of $359 and $245 at May 31, 1995
and 1994, respectively 2,567 2,236
Notes and other receivables 11,132 10,432
Deferred charges and other, net of
amortization of $2,891 and $4,130
at May 31, 1995 and 1994, respectively 10,415 10,157
27,520 30,497
$ 178,244 $ 162,724
May 31,
LIABILITIES 1995 1994
Current Liabilities:
Current portion of long-term debt and
subordinated debentures $ 2,906 $ 2,026
Accounts payable 25,297 16,943
Accrued expenses 10,151 9,937
Total current liabilities 38,354 28,906
Other long-term liabilities 3,090 3,438
Long-term debt 120,660 119,343
Subordinated debentures 1,000 -
Deferred gains 492 492
Commitments and contingencies
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, $.10 par, authorized
15,000,000 shares; none were issued
or outstanding - -
Common Stock, $.10 par, authorized
30,000,000 shares in 1995 and 1994
issued and outstanding 15,244,261
and 15,159,661 in 1995 and 1994
respectively 1,524 1,516
Capital in excess of par value 14,643 14,601
Accumulated deficit (1,519) (5,572)
14,648 10,545
$ 178,244 $162,724
See accompanying notes to consolidated financial statements.
GERIATRIC & MEDICAL COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($'s in thousands except per common share)
Years Ended May 31,
1995 1994 1993
Operating revenues, net $ 192,234 $177,957 $164,364
Other revenues - 1,576 6,654
192,234 179,533 171,018
Cost and Expenses:
Operating expenses 163,769 157,612 142,018
Depreciation and amortization 8,734 9,238 9,000
Interest expense, net 11,078 10,889 11,377
Provision for costs on sale
of accounts receivable 3,588 3,531 5,377
187,169 181,270 167,772
Income (loss) before
income taxes 5,065 (1,737) 3,246
Income taxes 1,012 ( 299) 812
Net Income (Loss) $ 4,053 $ (1,438) $ 2,434
Earnings (Loss) per common share
$ 0.27 $ (0.09) $ 0.16
Average common shares
outstanding 15,209 15,314 15,231
See accompanying notes to consolidated financial statements.
GERIATRIC & MEDICAL COMPANEIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($'S IN THOUSANDS)
Years Ended May 31,
CASH FLOWS FROM OPERATING ACTIVITIES 1995 1994* 1993*
Net income (loss) $4,053 $(1,438) $2,434
Adjustments to reconcile net income
(loss) to net cash
provided by operating activities:
Provision for uncollectible accounts 6,388 7,102 3,855
Depreciation and amortization 8,734 9,238 9,000
Gain on sale of facilities and
other assets, net
and recognition of deferred income - (115) (5,962)
Noncash change in workers' compensation expense - (405) -
Other items 332 547 362
Changes in assets and liabilities,
net of effects from acquisitions:
(Increase) decrease in patients'
funds and other, net (1,077) (40) 55
Increase in accounts receivable (10,506) (8,587) (10,712)
(Increase) decrease in other receivables (364) (814) 1,820
(Increase) decrease in prepaids and
other assets and inventories (3,533) 701 (761)
(Increase) decrease in net amounts
due from third party payors (4,634) 321 (2,604)
Increase (decrease) in accounts
payable and accrued expenses 8,297 (1,098) 3,954
Increase (decrease) in other long-term
liabilities ( 348) 815 -
Net cash provided by operating activities 7,342 6,227 1,441
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,251) (4,092) (3,275)
Capital expenditures financed by
construction and property
improvement funds (2,786) (4,450) (10,121)
Increase (decrease) in joint ventures, net 197 339 ( 301)
(Increase) decrease in notes and other
receivables (700) 1,027 233
Acquisitions of ambulance companies, net
of cash acquired (553) - -
Proceeds from sale of facilities
and other assets, net - - 2,305
Other investing activities, net (166) (224) (416)
Net cash used in investing activities (7,259) (7,400) (11,575)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 2,238 6,570 18,611
Repayment of debt and subordinated debentures (2,933) (11,351) (17,542)
Decrease in restricted cash 4,191 5,625 9,056
Expenditures for deferred charges (1,197) (1,621) (1,767)
Proceeds from issuance of common stock 59 32 80
Net cash provided by (used in) financing
activities 2,358 (745) 8,438
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 2,441 (1,918) (1,696)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
YEAR 927 2,845 4,541
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 3,368 $ 927 $ 2,845
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 16,200 $ 16,123 $ 14,974
Income taxes $ 157 $ 179 $ 129
SUPPLEMENTAL SCHEDULE OF NONCASH ITEMS:
Assets acquired under capital leases $ 1,938 $ 975 $ 683
Note receivable from sale of facilities
(see Note 3) $ - $ - $ 6,000
Note receivable charged to deferred
income (see Note 3) $ - $ - $ 427
Acquisitions of ambulance companies:
Fair value of assets acquired $ 2,809 $ 782 $ -
Cash paid and debt issued $ (2,282) $ - $ -
Liabilities assumed $ 527 $ 782 $ -
* Reclassified for comparative purposes
See accompanying notes to consolidated financial statements.
GERIATRIC & MEDICAL COMPANEIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
for the years ended May 31, 1995, 1994, 1993
(in thousands) Capital in
Common stock Excess of Accumulated
Shares Amount Par Value Deficit
Balance, May 31, 1992 15,173 $ 1,517 $14,433 $(6,568)
Net Income - - - 2,434
Restricted shares issued to key
employees net of cancellations 34 3 (3) -
Stock options exercised 67 7 73 -
Amortization of unearned
compensation - - 55 -
Balance, May 31, 1993 15,274 1,527 14,558 (4,134)
Net Loss - - - (1,438)
Restricted shares cancelled net of
issued shares to key employees (153) (15) - -
Stock options exercised 39 4 43 -
Balance, May 31, 1994 15,160 1,516 14,601 (5,572)
Net Income 4,053
Restricted shares cancelled
net of issued shares 9 1 10
Stock options exercised 75 7 32
Balance, May 31, 1995 15,244 $ 1,524 $14,643 $ (1,519)
See accompanying notes to consolidated financial statements.
1. Summary of Significant Accounting Policies:
(a) Principles of Consolidation and Presentation:
The consolidated financial statements include the accounts of
Geriatric & Medical Companies, Inc. and its Subsidiaries and its
investments in majority owned joint ventures hereafter referred
to as the "Company". The Company uses the equity method to
account for its ownership interest in other joint ventures.
Under the equity method, the Company recognizes its proportionate
share of the net income or loss of joint ventures currently
rather than when realized through dividends or disposals. All
material intercompany transactions and accounts have been
eliminated in consolidation.
(b) Net Patient Service Revenue:
The Company's operations and cash flows are dependent upon the
payments for patient services by third-party payors and, in
particular, Federal and State administered programs.
Reimbursement under these programs is limited to certain
expenditures in accordance with Federal and State regulations and
is subject to retroactive adjustment upon audit by Federal and
State agencies. Accordingly, net patient service revenue is
recorded at the estimated realizable amounts due from third-party
payors and others.
Differences between the amounts accrued and subsequent
settlements will be recorded in operations in the year of
settlement. Management maintains an allowance that it considers
adequate to provide for potential disallowances on its recorded
revenues under Federal and State administered programs. This
allowance is based on the estimated net realizable value of the
Company's revenues. Management periodically evaluates specific
past experience and the results of the most recent regulatory
examinations, as well as other relevant factors. While
management uses the best information available to make such
evaluations, no assurance can be given that future adjustments to
the allowance may not be necessary if regulatory agencies
interpret the Company's claims for reimbursement on a basis
different than the Company's historical experience with
regulatory examinations.
Although receivables due from third-party payors may be
outstanding in excess of one year, in accordance with industry
practices, such amounts are classified as current.
(c) Cash and Cash Equivalents:
For purposes of the statements of cash flows, the Company
considers cash and cash equivalents to be cash on hand, cash in
banks and overnight investments.
(d) Restricted Cash:
Restricted cash represents funds held in trust to be used to
repay debt obligations.
(e) Patients' Funds:
Patients' funds represent cash balances which have been deposited
by the Company into a separate bank account and are restricted
for the use of patients. The related liability is included in
accounts payable.
(f) Inventories:
Inventories, principally consisting of durable medical and
respiratory therapy equipment, medical supplies and
pharmaceuticals, are stated at the lower of cost or market. Cost
is determined principally on the first-in, first-out basis
(FIFO).
(g) Property, Equipment and Related Depreciation:
Property and equipment are stated at cost. Depreciation is
provided over the estimated useful lives of the respective assets
using the straight-line method. The annual depreciation rates
range from 2.5% to 10% for buildings and improvements and 5% to
33% for equipment and fixtures. Normal maintenance and repair
costs are charged to expense as incurred. Major expenditures for
renewals and betterments which extend useful lives are
capitalized. Upon sale or retirement the costs and related
accumulated depreciation are eliminated from the respective
accounts and the resulting gain or loss is included in income.
(h) Other Noncurrent Assets:
Goodwill represents the excess of the cost of purchased
businesses over the fair value of their net assets. Goodwill
arising after October 31, 1970 is being amortized by the
straight-line method over 40 years. Goodwill in the amount of
$565,000 relating to acquisitions prior to November 1, 1970 is
not being amortized. The Company evaluates the recoverability of
goodwill annually, or more frequently, whenever events and
circumstances warrant revised estimates, and considers whether
the goodwill should be completely or partially written off or the
amortization period accelerated. In the opinion of Management,
there has been no impairment of goodwill.
Notes and other receivables consist primarily of term loans
related to facility sales.
Costs incurred in obtaining long-term borrowings are amortized on
a straight-line basis, which approximates the interest method
over the term of the loan. Pre-opening costs incurred in
connection with the expansion of existing or with the
construction of new long-term care facilities, are capitalized
until the facility nursing units admit the initial patient or are
substantially completed and then amortized using the straight-
line method over a five-year period which coincides with the
amortization period required by government reimbursement
regulations.
(i) Income Taxes:
In 1993 the provision for deferred income taxes is applicable to
timing differences between taxable income and income for
financial reporting purposes. Beginning in fiscal 1994, the
Company adopted Statement of Financial Accounting Standards
(SFAS) No. 109, Accounting for Income Taxes, which provides that
income taxes be accounted for under the liability method. Under
the liability method, deferred income taxes are recognized by
applying enacted statutory tax rates, applicable to future years,
to temporary differences between the tax bases and financial
statement carrying values of the Company's assets and
liabilities. The adoption of SFAS No. 109 did not have a
material effect on the Company's consolidated financial
statements.
(j) Workers' Compensation Insurance:
The Company self-insures for certain levels of Workers'
Compensation Insurance and estimated costs for the workers'
compensation programs are accrued at present values based upon
actuarially projected claims. Related workers' compensation
expense for 1995, 1994, and 1993 amount to $4,757,000,
$4,928,000, and $4,429,000, respectively. During 1994 the
Company refined its estimate of its workers' compensation expense
which resulted in an additional charge of $700,000. Included in
other assets at May 31, 1995 and 1994 is $3,563,000 and
$3,028,000, respectively, relating to the future revenue
associated with the difference in accounting for workers'
compensation expense under third party payor programs which is
different than the method used for financial reporting purposes.
The accrued workers' compensation expense amounting to $2,529,000
and $2,623,000 at May 31, 1995 and in 1994, respectively, is
included in other long term liabilities in the accompanying
consolidated financial statements.
(k) Financial Instruments:
Effective May 31, 1993, the Company adopted Statement of
Financial Accounting Standards No. 107 "Disclosures about Fair
Value of Financial Instruments." The statement requires
disclosure of
the fair value of certain of the Company's financial instruments
for which it is practicable to estimate the fair value. Fair
value amounts disclosed do not affect financial results and do
not necessarily represent the amounts that could be realized in a
sale or settlement. See Note 15 of the Notes to Consolidated
Financial Statements.
(l) Earnings (Loss) Per Common Share:
Earnings (loss) per common share is based on the weighted average
number of shares of common stock outstanding. Potential dilution
from common stock equivalents is not material.
<PAGE>
2. Long-Term Debt and Subordinated Debentures:
A summary of long-term debt and subordinated debentures follows:
($'s in thousands) Fiscal Year Fiscal
of Maturity May 31,
Mortgages:
1995 1994
Mortgages (a) 2002, 2006 $84,580 $84,766
Industrial Development
Authority (b) 2000 10,920 11 065
Other (c) 2033, 2035 8,738 8,125
Bonds Payable, (d) 2000-2022 14,805 14,975
Notes and Leases (e) 1995-1999 4,523 2,438
123,566 121,369
Less amounts due within one year 2,906 2,026
$ 120,660 $ 119,343
Subordinated debentures (f) $ 1,000 $ -
Less amounts due within one year - -
$ 1,000 $ -
<PAGE>
(a) In April, 1992 the Company completed an agreement with
Meditrust Mortgage Investment, Inc. ("Meditrust"), pursuant to
which the Company received $86,000,000 under a credit facility
collateralized by mortgages on various nursing home facilities
located in Pennsylvania and New Jersey (the "Mortgaged
Facilities"). The credit facility was used to pay off or
refinance debt, capital improvements and additions to mortgaged
facilities, debt service reserve and working capital.
The Credit Facility is payable over ten years based upon a
twenty-five year amortization schedule, at an initial interest
rate of 11.5% per annum ("Base Rate") which may increase
prospectively (based upon revenues) to a maximum rate of 11.75%
over the initial five year period. At the end of five years, the
Base Rate will be reset prospectively at either the higher of
11.5% or the five-year treasury note interest rate plus 4%, or
the rate in effect at the end of the initial five-year period.
At the Company's election, such Credit Facility may be prepaid at
103.5% of the outstanding principal at the end of the fifth year.
The loan had a balance of approximately $83,972,000 and bears
interest at a rate of 11.75% as of May 31, 1995.
In connection with this agreement the Company may not pay
dividends under certain circumstances and is required to comply
with certain financial covenants, the most restrictive of which
is the debt service coverage ratio, at May 31, 1995. The Company
has complied with the provision of the agreement.
On May 31, 1995, the Company completed an agreement to finance a
120 bed long term care facility (West Logan Nursing &
Rehabilitation Center) with Meditrust for $6,939,000 at a rate of
prime plus 2 percent during construction and a rate based upon
Treasury Bonds at the time of the permanent mortgage but not less
than 10.75%. The total cost of the project is expected to be
$7,535,000. As of May 31, 1995, the construction loan had a
balance of approximately $608,000. In connection with this
financing, Tomahawk Capital Investments, Inc. ("Tomahawk"), which
is controlled by an executive officer of the Company, issued on
behalf of the Company a $74,380 letter of credit. The Company
will pay $1,800 per quarter for this letter of credit.
Construction on this facility is anticipated to be completed
during Fiscal, 1996.
(b) The Company's facilities are owned and are subject to
mortgages. Mortgage loans made through Pennsylvania Industrial
Development Authorities bear interest at fixed rates of 7.50% to
9% payable semi-annually.
(c) The Company has two mortgage loans insured under Section 232
of the National Housing Act by the United States Department of
Housing and Urban Development, Federal Housing Administration.
The first loan is with Northwest Total Care Associates, Limited
Partnership ("LP"), which is owned by subsidiaries of the
Company. Construction of the facility ("Care Center of Brakeley
Park") was completed during fiscal 1993. The loan had a balance
of approximately $8,108,000 as of May 31, 1995 and bears interest
at 10.35% per annum. The loan is payable in equal monthly
payments over forty years. The obligation is collateralized by
the assets of the Limited Partnership without recourse to the
partners.
The second loan is with North Cape Convalescent Center
Associates, L.P., which is owned by subsidiaries of the Company.
Construction of the facility is expected to be completed during
fiscal 1996. The total cost of the project is anticipated to be
$6,137,000 of which $5,636,000 is to be financed through HUD at
9.5% over 40 years. The remainder will be funded by the Company
through working capital. The obligation is collateralized by the
assets of the Limited Partnership without recourse to the
partners. The loan had a balance of approximately $630,000 at
May 31, 1995. In connection with this loan, Tomahawk issued on
behalf of the Company, a $500,000 letter of credit. The Company
is paying Tomahawk $15,000 per quarter for the letter of credit.
(d) Principal on the $2,025,000 and $715,000 Economic Development
Revenue Bonds is payable quarterly beginning July 15, 2004 and
July 15, 1992, respectively. These bonds bear interest at a fixed
rate of 9.625% payable quarterly. Additionally, at May 31, 1995,
the Company had $5,965,000 of Economic Development Refunding
Bonds which are secured by a skilled and nursing facility.
Interest on these bonds is at a fixed rate of 10.5% payable semi-
annually over a thirty year period.
At May 31, 1995, the Company had $6,100,000 of NJEDA First
Mortgage Revenue Refunding Bonds. These bonds are collateralized
by mortgages on two facilities and bear interest at 9.0% payable
semi-annually beginning July 1, 1993.
With respect to certain Industrial and Economic Development
Authority loans, the Company has agreed not to pay any dividends
or make any distribution which could have
the effect of reducing consolidated tangible net worth and
subordinated indebtedness, if consolidated tangible net worth and
subordinated indebtedness is at such time or would
thereby be reduced to less than $9,000,000.
(e) Notes and leases consist primarily of capitalized leases and
promissory notes bearing interest at 6.00% to 17.66%.
(f) In November 1994, the Company issued a $1,000,000
subordinated debenture to Tomahawk which is due December 1, 1996.
The interest is payable at a rate of 12% per annum over eight
quarters beginning March 1, 1995.
<PAGE>
(g) Amounts due on long-term debt in each of the next five fiscal
years are as follows:
($'s in thousands)
1996 $ 2,906
1997 3,684
1998 2,387
1999 2,239
2000 17,866
Thereafter 95,484
Total $ 124,566
Substantially all of the Company's property related to its long
term care facilities is pledged as collateral on borrowings.
Substantially all other assets of the Company (excluding property
under capital lease and certain accounts receivable) are
unencumbered.
<PAGE>
3.Acquisitions and Disposals:
Concurrent with the sale of nursing or residential facilities in
prior years, the Company entered into long-term agreements to
provide management and other services in operating these
facilities. All of these management agreements have expired or
been terminated as of May 31, 1994.
Under the terms of these sales of nursing and residential
facilities, the Company was required to lend the purchaser
amounts to cover certain issuance costs of bond offerings and to
enter into operating deficits agreements under which the Company
lends the purchaser, if needed, funds for working capital
requirements. These working capital advances, plus related
interest, were not payable to the Company until certain
conditions were achieved or over a five-year period upon
termination or expiration of the management agreements. In
conjunction with the expiration or termination of these
agreements, the Company has converted the operating deficits
advances as well as certain subordinated management fees, as
appropriate, into term loans at an interest rate range of 10% to
13%.
As of May 31, 1995 and 1994, with respect to the aforementioned
facility sales, the Company was owed the following:
May 31,
($'s in thousands)
1995 1994
Operating deficits advances $ 390 $ 735
Issuance cost loans 925 934
Term loans and accrued interest 5,728 3,664
Management and other fees 4,503 6,636
Total $11,546 $ 11,969
Included in noncurrent notes and other receivables are $5,693,000
and $4,851,000 of receivables related to the aforementioned
transactions at May 31, 1995 and 1994, respectively.
The Company has deferred the recognition of gain on sale of
facilities related to guarantees under an operating deficit
agreement. As of May 31, 1995, the Company may ultimately
recognize as additional gain on sale of facilities $492,000 if
certain minimum operating cash flow requirements and other
factors are achieved. In fiscal 1994 the Company recognized
$1,576,000 of deferred gain on facilities sold in prior years.
On February 28, 1993, Tomahawk which is controlled by Geriatric &
Medical Companies, Inc.'s Chairman of the Board, purchased a note
receivable from the Company for $773,000, the fair market value
of the note as established by an independent appraisal, plus
accrued interest of $57,000. This resulted in the recognition of
$773,000 of associated deferred gain on facilities sold which is
included in other revenue at May 31, 1993.
On May 31, 1993, the Company sold its Mt. Laurel, New Jersey
facilities to Tomahawk for a purchase price of $8.5 million, the
fair market value as established by an independent appraisal.
The Company received $2.5 million in cash and a $6.0 million note
bearing interest at nine percent (9%) per annum. The note is
payable based on a
25-year amortization with a balloon payment due June of 2005.
This resulted in the recognition of a $4,678,000 gain on the sale
of these facilities which is included in other
revenue at May 31, 1993. The Company received a prepayment of
$1,000,000 on this note in Fiscal, 1994 and, in connection with
the release of the mortgage, received an additional prepayment of
$500,000 in Fiscal, 1995. As of May 31, 1995 and 1994, the
Company has a note receivable balance of $4,500,000 and
$5,000,000 and management/other fees due from Tomahawk of
$3,235,000 and $2,255,000.
On May 20, 1994, the Company acquired all of the outstanding
stock of an ambulance transportation company in exchange for the
assumption of $782,000 in liabilities. Goodwill of $683,000, was
recorded in connection with the acquisition. The transaction has
been accounted for as a purchase for financial reporting
purposes. The operating results of the acquired company are
included in the Company's consolidated results of operations from
the date of acquisition and do not have a material effect on the
Company's consolidated financial statements.
During fiscal 1995, the Company acquired three ambulance
transportation companies for $2,282,000. Two of the acquisitions
were asset purchases while the third was a stock purchase.
Goodwill of $365,000 was recorded in connection with these
acquisitions. The transactions have been accounted for as
purchases for financial reporting purposes. The operating
results of the acquired companies are included in the Company's
consolidated results of operations from the respective dates of
acquisition and do not have a material effect on the Company's
consolidated financial statements.
4. Accounts Receivable:
Effective November 4, 1993, the Company entered into a three year
$25 million accounts receivable sale agreement with recourse with
a financial institution, retiring its previous arrangement. The
Company may sell, on a continuing basis, up to $25,000,000 of
certain qualifying accounts receivable. The Company receives,
net of reserves, approximately 80% of accounts receivable
submitted. This transaction has been accounted for as a sale
under Financial Accounting Standards Board Statement No. 77
guidelines but may be treated as a financing (borrowing)
transaction for Medicare/Medicaid purposes.
Under the terms of the agreement, the Company will pay program
costs at 9.84% on the outstanding receivables submitted. During
fiscal 1995 and 1994, the Company sold approximately $110,297,000
and $92,739,000 respectively, of certain qualifying accounts
receivables. As of May 31, 1995 and 1994, the balance of the
receivables submitted for sale was approximately $20,774,000 and
$16,746,000 of which approximately $16,619,000 and $13,397,000
were funded, respectively. The unfunded portion is included in
other receivables on the balance sheet.
In May 1994, the Company entered into an agreement to sell
certain receivables due from third-party payors. The program
costs charged are 9.75% of the outstanding receivables sold. The
maximum amount of receivables to be sold is $5,000,000. The
Company receives, net of reserves, approximately 80% of third-
party payor receivables sold. The unfunded portion is included
in other receivables on the balance sheet. As of May 31, 1995
and 1994 the amount of the receivables sold was $150,000 and
$628,000 respectively.
As of May 31, 1995, 1994 and 1993, the Company has recognized a
provision for costs on sale of accounts receivable of $3,588,000,
$3,531,000, and $5,377,000 respectively. The provision for costs
on sale of accounts receivable consists of : (A) program and
other costs incurred on receivables sold and (B) servicing costs
relating to the collection of receivables sold. Under the sale
agreement, the Company continues and is required to service the
accounts receivable sold.
5.. Inventories:
The components of inventories are as follows:
May 31,
($'s in thousands) 1995 1994
Durable medical equipment $3,972 $3,082
Institutional pharmacy
drugs and supplies 518 605
Other 664 517
Total $5,154 $4,204
6. Capitalized Interest:
The Company capitalized interest expense of approximately
$879,000, $1,388,000 and $1,485,000 in fiscal 1995, 1994 and
1993, respectively, relating to the cost of additions to existing
nursing home facilities and construction of new facilities.
<PAGE>
7. Deferred Charges and Other:
The components of deferred charges and other are as follows:
May 31,
($'s in thousands) 1995 1994
Deferred financing costs $ 6,345 $ 8,395
Deferred pre-opening costs 951 692
Accumulated amortization ( 2,891) (4,130)
4,405 4,957
Deferred reimbursement-
workers' compensation 3,563 3,028
Deposits 219 285
Prepaid bedding and linen
and other miscellaneous costs 2,228 1,887
$ 10,415 $ 10,157
8. Incentive Plans and Option Arrangements:
The Company's 401(k) profit sharing plan covers substantially all
full-time employees not covered by collective bargaining
agreements. "Highly Compensated Employees," as
defined within IRS Code Section 414(O) (which includes all
executive officers), are excluded from the plan. Contributions
under the plan are at the discretion of the Board of Directors.
No contributions were made in fiscal 1995, 1994 and 1993.
Effective November 1989, the Company adopted a 1989 stock option
and restricted stock plan, for certain key employees, whereby
eligible employees may be issued up to an aggregate of 281,250
shares of the Company's common stock, subject to certain
restrictions, and up to an additional 343,750 shares upon the
exercise of incentive and/or non-qualified stock options granted
pursuant to the plan. The restricted share portion of this plan
expired as of May 31, 1994. No restricted shares vested during
fiscal 1994. As of May 31, 1995, there were 260,221 shares under
option under this plan, of which 119,346 shares were exercisable
at an average price of $2.18. During fiscal 1995, 137,000 shares
under option under this plan were granted at exercise prices
ranging from $2.0625 at $2.6875. During fiscal 1995, 2,000
shares were exercised at an average exercise price of $1.41 per
share and 10,344 options expired. As of May 31, 1994, there
were 135,565 shares under option under this plan, of which 76,003
were exercisable at an average price of $2.03. During fiscal
1994, 8,500 shares under option under this plan were granted at
exercise prices ranging from $1.375 to $1.625 of which 1,500
shares were exercisable. During fiscal 1994, 2,750 shares were
exercised at an average exercise price of $1.72 per share.
The Company has a 1982 incentive stock option plan for key
executive and management personnel. At May 31, 1995, there were
211,502 shares under option and exercisable under this plan at
exercise prices ranging from $.80 to $2.50 with an average
exercise price of $1.94. During fiscal 1995, 1994, and 1993,
79,062, 46,484, and 66,060 options were exercised, respectively,
at an average price of $1.09 $1.14, and $1.22, respectively.
Effective January 28, 1992 additional options cannot be granted
under this plan.
In April 1985, a stock option plan was approved under which
options to purchase 23,438 shares may be granted to nonemployees.
In fiscal 1995, such plan expired. No shares were issued or
exercised during the fiscal year.
Effective November 17, 1994, the Company adopted the 1994 Stock
Option and Restricted Stock Plan for Directors whereby Directors
of the Company, who are not employees of the Company or its
subsidiaries, may be issued up to an aggregate of 250,000 shares
of the Company's common stock. In January 1995, 9,000 restricted
shares were granted at a price of $2.875 and will vest over a one
year period.
The Company has a 1990 stock option plan for directors under
which options to purchase up to a total of 120,313 shares may be
granted to outside directors. Under this plan, a total of 90,283
options have been granted to outside directors at exercise prices
ranging from $.96 to $2.6875 per share. During fiscal 1995,
10,157 shares were exercised at an average price of $1.45. No
shares were exercised during fiscal 1994. At May 31, 1995 and
1994, 62,876 and 65,823 shares under this plan were exercisable,
respectively. Effective December 31, 1994, additional options
cannot be granted under this plan.
Under all stock option plans maintained by the Company, the
exercise price of options issued is the same as the market price
at the date of grant.
Effective June 1, 1993, the Company entered into an employment
agreement with the Chairman of the Board of Geriatric & Medical
Companies, Inc. The term of the agreement is for an initial five
year period with a provision for annual extensions. The
employment agreement provides for a short-term and long-term
incentive plan in addition to a base compensation package. The
short-term incentive plan provides for an incentive bonus
contingent upon the Company's annual operating results. A short-
term incentive bonus of $107,000 was accrued for the fiscal year
ended May 31, 1995. No bonus was awarded for the fiscal year
ended May 31, 1994. The long-term incentive plan provides for
long-term compensation based upon the increase in market value of
the Company's stock to the shareholders. As of May 31, 1995, the
Company has an accrued liability of $13,000 relating to this
plan. As of May 31, 1994, the Company had an accrued liability
of $11,000 relating to this plan. The employment agreement,
while in effect, also provides for a death benefit of $1,000,000
payable in forty equal quarterly installments. As of May 31,
1995, the Company has accrued the present value of the
actuarially computed benefit totalling $56,000. The amount
accrued as of May 31, 1994 relating to this benefit totaled
$27,000.
9. Medicare and Medicaid Revenue:
The Company's long-term care facilities, which are located in
Pennsylvania and New Jersey, receive reimbursement under the
Medicare and Medicaid programs, which is subject to adjustment
upon audit by Federal and State agencies (see Note 1b). Revenue
from these programs related to the Company's long-term care
facilities totalled approximately $105,900,000, $98,200,000, and
$91,600,000, for the years ended May 31, 1995, 1994 and 1993,
respectively. At May 31, 1995 and 1994 the Company had a net
third-party receivable of approximately $13,948,000 and
$9,314,000, respectively. The total amounts due from third-party
payors generally are not paid in full until audit issues are
resolved. The Company is continually negotiating to resolve the
audit findings and accelerate interim payments due under the
reimbursement system.
For the fiscal years 1990 through 1995, the Company has
receivables of approximately $6,337,000 for open issues with the
Pennsylvania Department of Public Welfare (DPW). Management
believes that any reduction of the amount recorded that results
from final settlement of these open issues will not have a
material adverse effect on the financial position of the Company.
In 1994 the Company reduced its allowance for third party
receivables approximately $1,100,000 resulting from a change in
the estimation of allowance needed for various issues on appeal.
(Also see Note 14 of the Notes to Consolidated Financial
Statements.)
10. Income Taxes:
A summary of the components of the tax provision for fiscal
years 1995, 1994, and 1993 is as follows:
($'s in thousands) 1995 1994 1993
Current Federal $551 $ - $261
Current State and
Local 296 165 163
Federal & State Over/Under
Accrual Net of Credits 165 (464) 388
$1,012 $(299) $812
The effective net income tax rates before the utilization of the
Company's operating loss carryforwards are different than the
statutory Federal income tax rates of 34% in Fiscal years 1995,
1994, and 1993 as indicated below:
($'s in thousands) 1995 1994 1993
Statutory Federal
Income Tax $1,722 $(591) $1,104
Permanent Differences 52 25 53
State and Local Taxes,
Net of
Federal Benefit 195 109 195
Investment and
Other Tax Credits (293) - (493)
Net Operating Loss
Carryforward (489) - -
Other (175) 158 (47)
$1,012 $(299) $812
<PAGE>
The following is a summary of the significant components of
the Company's deferred tax assets and liabilities as of May
31, 1995 and 1994 determined in accordance with the
provisions of SFAS No. 109:
($'s in thousands) 1995 1994
Deferred Tax Assets:
Deferred Gain on Sale of Facilities
in Prior Years $1,779 $3,789
Net Tax Operating Loss Carryforwards 988 3,430
Bad Debts 2,905 2,412
Tax Credits 2,461 1,826
Deferred Start-Up Costs - 1,714
Inventories (Uniform Capitalization) 84 182
Accrued Workers' Compensation
Liability - 1,154
Other - 62
Total Deferred Tax Assets $8,217 $14,569
Deferred Tax Liabilities:
Accelerated Depreciation $4,236 $5,775
Deferred Income 1,183 2,514
Deferred Reimbursement Workers'
Compensation - 1,332
Deferred Costs 333 1,223
Accrued Vacation - 614
Total Deferred Tax Liabilities $5,752 $11,458
Deferred Tax Assets in Excess
of Deferred Tax Liabilities
before Valuation Allowance $2,465 $3,111
Valuation Allowance (2,465) (3,111)
Net Deferred Tax Assets $ - $ -
For tax purposes, the Company has unused State and Federal net
operating loss carryovers of approximately $1,080,000 and
$2,246,000, respectively, and Federal tax credit carryovers of
approximately $1,890,000 which will expire in varying amounts
through the year 2010. Differences between State and Federal
NOL's for financial statement and tax purposes result from timing
differences and utilization of previous years' NOL carryforwards.
11. Revenues:
Operating revenues, net are presented net of contractual
allowances of $38,555,000, $36,997,000, and $33,239,000, for the
years ended May 31, 1995, 1994 and 1993, respectively. Included
in other revenue are deferred and current gains recognized on
facilities sold of $1,576,000 and $6,365,000 for the years ended
May 31, 1994 and 1993, respectively.
12.Interest Expense:
Interest expense is reflected net of approximately $1,576,000,
$1,405,000, and $844,000, of interest income for the years ended
May 31, 1995, 1994, and 1993, respectively. The interest income
is principally related to overnight investments, restricted cash
and notes receivables.
13. Quarterly Results (Unaudited):
The following table summarizes the Company's quarterly results of operations
for the fiscal years ending May 31, 1995 and 1994:
($'s in thousands except Per Share Data)
1995
1st 2nd 3rd 4th Total
Operating revenues, net $45,975 $47,782 $ 48,565 $49,912 $192,234
Net income $ 740 $ 1,025 $ 1,208 $ 1,080 $ 4,053
Net income per share of
common stock $ .05 $ .07 $ .08 $ .07 $ .27
Common Stock price range:
High 3 1/16 3 3 1/8 2 13/16 3 1/8
Low 2 1 5/8 2 3/8 1 13/16 1 5/8
1994
1st 2nd 3rd 4th Total
Operating revenues, net $43,053 $44,404 $43,520 $46,980 $177,957
Net income (Loss) $ 722 $ 885 $ 778 $(3,823)(a) $( 1,438)
Net income (Loss)
per share of common
stock $ .05 $ .06 $ .05 $( .25) $( .09)
Common stock price range:
High 2 2 5/8 3 3/8 3 5/8 3 5/8
Low 1 3/8 1 1/4 1 15/16 2 1/4 1 1/4
Primary earnings per share were used to calculate net income (loss) per
share of common stock.
Price range of Common Stock: The Company's common stock is listed on the
Automated Quotation System of the National Association of Securities
Dealers, Inc. (NASDAQ symbol: GEMC). On August 11, 1995, the last
sale price for the Company's Common Stock was 2 9/16. There were
1,330 stockholders of record of its Common Stock as of May 31, 1995.
The table above sets forth, for the periods indicated, the range of
high and low sale prices of the common stock as reported by The Wall
Street Journal.
(a) The net loss in the fourth quarter of Fiscal 1994 resulted primarily
from an increase in the provision for uncollectible receivables to provide
for potential uncollectibles related to the conversion of billing and
collection systems and a charge of $700,000 related to a change in
estimating workers' compensation expense.
14. Commitments and Contingencies:
Geriatric & Medical Companies, Inc. (the "Company") was named a
defendant, together with GMS Management, Inc., and various
current and former officers of the Company, in a class action
suit which was filed in September, 1992, in the United States
District Court for the Eastern District of Pennsylvania in
Philadelphia. The plaintiff class alleged that, among other
things, various reports and press releases issued by the Company
misrepresented or omitted adverse material facts concerning
various matters relating to the Company and its affairs. The
plaintiff class did not seek a specified sum other than "to pay
to plaintiff and to all members of the class damages in an amount
to be proven at trial, with interest thereon." The jury returned
a verdict on Friday, June 9, 1995, resulting in no liability on
five of the six alleged misrepresentations or omissions set forth
in the plaintiff's complaint. The jury found in favor of the
plaintiff class with respect to the remaining alleged omission
relating to the criminal investigation conducted by the
Pennsylvania Attorney General. Based on the findings of the
jury, the court entered judgement of $.20 per share in damages
for each share of the Company's common stock purchased by a class
member during the period March 1, 1992 to September 2, 1992. The
Company believes that damages in the aggregate, calculated
pursuant to the judgement will not exceed $350,000, exclusive of
costs, pre and post judgement interest and other charges which
may apply.
As a result of the jury's findings, the primary insurer of the
individual defendants, which had entered into a funding agreement
under which the insurer had promised to pay 60% of the legal fees
and other expenses associated with the defense of this suit,
after the retention amount of $250,000 had been paid, sent a
letter stating that it was terminating the funding agreement.
Accordingly, the insurer has declined to participate in the
payment of any part of the judgment or additional costs and fees
and expenses to be incurred in this matter and could seek a
repayment of advances already made. The Company intends to
pursue its rights under its insurance policies and to enforce the
Funding Agreement previously entered into with the insurance
company. All parties have filed post trial motions in connection
with this judgement.
Life Support Ambulance, Inc. ("LSA"), a subsidiary of the
Company, received a notice of suspension of payments relating to
Medicare billings submitted by LSA to its Medicare intermediary
effective April 6, 1995. The suspension was imposed because the
intermediary had received evidence that prior payments made to
LSA may not have been billed correctly. The intermediary has not
yet quantified the nature of the alleged deficiency in billing
procedures nor the amount for which LSA may have improperly
billed Medicare. In connection therewith, the Office of the
Inspector General has subpoenaed certain records of LSA. LSA
believes that it has operated, at all times, in substantial
compliance with all provisions required by Medicare relating to
reimbursement for services. On August 11, 1995 LSA reached an
agreement with its Medicare intermediary whereby Medicare will
retain until resolution of the issues amounts it is currently
holding, approximately $3,100,000 and 25% of future billings
processed. In connection with the agreement, Geriatric & Medical
Companies, Inc. has agreed to guarantee the payment by LSA of up
to $5,000,000 of any finally determined overpayments. It is not
possible to determine at the present time the length of the
suspension or whether such suspension will have a material
adverse effect on the operations or the financial condition of
the Company.
On May 19, 1995, the U.S. Attorney for the Eastern District of
the Pennsylvania delivered a draft complaint to the Company which
alleges that Healthcare Hospitality Services, Inc. ("HCHS"), a
subsidiary of the Company, failed to recommend adequate
nutritional requirements to three residents of a nursing home
facility (the "Facility") previously managed by another
subsidiary of the Company. The draft complaint contains a further
allegation that HCHS billed Medicare and state Medical assistance
programs for reimbursement for nutritional services which were
not provided to such residents. The U.S Attorney has invited the
Company to discuss a possible resolution of this matter before
the filing of such complaint in federal district court. The
Company has had preliminary discussions with the U.S. Attorney
and believes that this matter may be settled prior to the filing
of such complaint by the payment of an as of yet unspecified
amount, with no admission of wrongdoing. Although the outcome of
this matter can not be predicted, the Company denies any
wrongdoing and is prepared to vigorously defend this action
should the complaint be filed. The Company's management
agreement with the Facility provides that the Facility indemnify
and hold the Company harmless with respect to claims such as that
alleged by the U.S. Attorney. However, it is unclear whether the
Facility has or would have the funds necessary to provide such
indemnification.
On or about June 6, 1995, an officer of HCHS was served with a
subpoena issued by the Attorney General of the Commonwealth of
Pennsylvania, relating to the nutritional care provided to
residents of the Facility. In addition, the Attorney General has
subpoenaed certain records of the Company. It is the belief of
counsel for the Company that such subpoena results from the same
facts surrounding the operations of the facility as are alleged
in the draft complaint delivered to the Company by the U.S.
Attorney, as discussed above. At the present time, it is unclear
as to what action, if any, the State Attorney General intends to
take with respect to the Company's management of and other
involvement with this Facility.
The Company's subsidiary UHCS reached an agreement with the
United States Attorney for the Eastern District of Pennsylvania
regarding its joint ventures and management arrangements whereby
the Company paid $320,000 in Fiscal, 1995 and will pay $340,000
in Fiscal, 1996 and $440,000 in Fiscal, 1997. The Company has
had negotiations and anticipates settling this with the
Commonwealth of Pennsylvania.
The Company is involved in routine government inquiries, audit
surveys and administrative proceedings concerning its activities
and operations. The Company is also involved in various claims
and legal actions arising in the ordinary course of business.
The Company believes that the outcome of all of these matters
will not have a material adverse effect on the Company's
operations, financial position and cash flows.
In fiscal 1994, the Company received an assessment from the New
Jersey Division of Taxation totalling $612,000 as a result of an
audit of sales, use and corporate business taxes for the years
1986 to 1992. The Company is currently involved with
negotiations regarding this matter with the State of New Jersey.
The Company has recorded in the accompanying consolidated
financial statements its estimate (which is less than the
assessment) of the liability to be paid in connection with this
assessment.
15., Fair Value of Financial Instruments:
As of May 31, 1995, the estimated fair values of the Company's
financial instruments and significant assumptions made in
determining fair values are as follows:
- Cash, accounts receivable, accounts payable and accrued
expenses: The amounts reported in the balance sheet approximate
fair value due to the short-term maturities of these instruments.
- Due from third party payors, net: The approximate fair value of
the amount reported in the balance sheet is $12,472,000 based
upon the Company's current discount rate.
- Notes receivable: The amounts reported in the balance sheet
were negotiated at May 31, 1993 or are subject to fluctuating
market rates of interest and approximate fair value.
- Long-term debt: Substantially all of the amounts reported in
the balance sheet had been negotiated since April, 1992 and
approximate fair value.
16. Other Transactions:
Dedicated Staffing Services, Inc., a Pennsylvania non-profit
corporation, previously provided registered nurses, licensed
practical nurses, nursing assistants and other personnel to the
Company on a temporary employment basis. Certain officers of the
Company are members of Dedicated Staffing's Board of Directors.
The Company paid Dedicated Staffing Services, Inc. approximately
$1,659,000 and $6,809,000 for these services in fiscal 1995 and
1994, respectively. The Company no longer uses Dedicated
Staffing Services, Inc. for its temporary employment services.
The Company sold various assets during fiscal 1993. See Note 3
of the Notes to Consolidated Financial Statements for a
description of the transactions.
The Company provides certain services which are priced at or
above projected cost, and include staffing services, dietary,
environmental, financial, and other services, to Mount Laurel
Convalescent Center and Laurelview Manor which are owned by
Tomahawk. The total services rendered during fiscal 1995 and
1994 were $7,194,000 and $6,754,000. At May 31, 1995 and 1994
the Company had a receivable of $3,235,000 and $2,255,000 due
from Tomahawk for these services, respectively.
During fiscal 1995 and 1994, the Company received additional
revenues of approximately $1,000,000 and $1,500,000 related to
its provision of ancillary services at the Tomahawk facilities.
These services, including provision of ambulance transportation,
diagnostics, rehabilitation, pharmacy and medical supplies are
provided at market rates.
Tomahawk has provided letters of credit on behalf of the Company
totalling $574,380 (See Note 2 of the Notes to Consolidated
Financial Statements).
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
A Current Report on Form 8-K was filed, dated January 26, 1995,
with respect to Item 4, reporting a change in the Company's
Certifying Accountant. The Company's Board of Directors approved
the change, based upon the recommendation of the Company's Audit
Committee. There were no disagreements with Coopers & Lybrand,
L.L.P. on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure.
There were no disagreements with BDO Seidman, LLP, on any matter
of accounting principles or practices, financial statement
disclosure or auditing scope or procedure.
Part III
Item 10.Directors and Executive Officers of the Registrant
The information beginning immediately following the caption
"Election of Directors" to, but not including, the caption
"Executive Compensation" in the Company's Proxy Statement, to be
filed with the Securities and Exchange Commission within 120 days
after the close of the Company's fiscal year ended May 31, 1995
(the "1995 Proxy Statement), is incorporated herein by reference.
Item 11. Executive Compensation
The information beginning immediately following the caption
"Executive Compensation" to, but not including, the caption
"Information Concerning Committees of the Board of Directors" in
the 1995 Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information beginning immediately following the caption
"Security Ownership of Certain Beneficial Owners and Management"
to, but not including, the caption "Election of Directors" in the
1995 Proxy Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
The information beginning immediately following the caption
"Certain Relationships and Related Transactions" to, but not
including, the caption "Independent Accountants" in the 1995
Proxy Statement is incorporated herein by reference.
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) Exhibits and Financial Statement Schedules.
1. Financial Statements (Covered by Independent Accountant's
Report)
Auditors' Report
Consolidated Financial Statements
Balance Sheets - May 31, 1995 and 1994
Consolidated Statements of Operations for the Years
Ended May 31, 1995, 1994, and 1993
Consolidated Statements of Cash Flows for the Years
Ended May 31, 1995, 1994, and 1993
Consolidated Statements of Shareholders' Equity (Deficit)
for the Years Ended May 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
2. Financial Statement Schedule (Covered by Independent
Accountant's Report)
II. Valuation and Qualifying Accounts
Schedules other than the schedules listed above have been omitted
because they are not applicable or the required information is
shown in or can be derived from the financial statements and
notes thereto.
<PAGE>
SCHEDULE II
GERIATRIC & MEDICAL COMPANIES, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
for the years ended May 31, 1995, 1994, and 1993
($'s in thousands)
Column A Column B Column C Column D Column E
Additions
Description Balance at Charged To Charged to Additions Balance at
Beginning Costs and Other (Deductions) End of
of Period Expenses Accounts (a) (Describe) Period
Year ended May
31, 1995:
Allowance for
doubtful accounts $7,751 $ 6,388 $ - $(5,431)(b) $8,708
Allowance for
third-party
receivables $3,877 $ - $ 694 $(1,180)(b) $3,391
Year ended May
31, 1994:
Allowance for
doubtful accounts $7,570 $ 7,102 $ - $(6,921)(b) $7,751
Allowance for third-party
receivables $4,090 $ - $ 1,546 $(1,759)(b) $3,877
Year ended
May 31, 1993:
Allowance for
doubtful accounts $6,950 $ 3,855 $ 2,441 $(5,676)(b) $7,570
Allowance for
third-party
receivables $5,922 $ - $ 3,157 $(4,989)(b) $4,090
(a) Amounts reflected as a reduction of revenues.
(b)Amounts written off, net of recoveries.
3. Exhibits
3(a). Articles of Incorporation of the Registrant, as amended. -
Incorporated by reference to Exhibit 3(a) to the Registrant's
Registration Statement on Form S-1 (File No. 2-94822) (the
"1984 Registration Statement") and as amended in the Registrant's Current
Report on Form 8-K dated December 31, 1992.
3(b). By-Laws of the Registrant, as amended. Incorporated by reference
to Exhibit 3 (b) to the Registrant's Annual Report on Form 10-K for the
fiscal year ended May 31, 1990.
4(a). Master Loan Agreement between Registrant and the New Jersey National
Bank dated as of October 1, 1983. Incorporated by reference to Exhibit
4(e) to the Registrant's Annual Report on Form 10-K for the fiscal year
ended May 31, 1984.
4(b). Loan Agreement, dated as of November 1, 1986 between New Jersey Economic
Development Authority and Geriatric and Medical Services, Inc. relating
to $2,025,000 principal amount New Jersey Economic Development Authority
Demand Revenue Bonds and related Trust Indenture. Incorporated by
reference to Exhibit 4(b) to the Registrant's Annual Report on Form
10-K for the fiscal year ended May 31, 1987.
4(c). Amended and Restated Reimbursement Agreement, dated as of November 1,
1986 by and among Geriatric and Medical Services, Inc., First Pennsylvania
Bank N.A. and Mellon Bank, N.A. Incorporated by reference to Exhibit
4(c) to the Registrant's Annual Report on Form 10-K for the fiscal year ended
May 31, 1987.
4(d). Loan Agreement, dated as of November 1, 1986 between New Jersey Economic
Development Authority and Geriatric and Medical Services, Inc. relating to
$850,000 principal amount New Jersey Economic Development Authority Demand
Revenue Refunding Bonds and related Trust Indenture. Incorporated by
reference to Exhibit 4(f) to the Registrant's Annual Report on Form
10-K for the fiscal year ended May 31, 1987.
4(e). Amended and Restated Reimbursement Agreement, dated as of November 1,
1986 by and among Geriatric and Medical Services, Inc., First Pennsylvania
Bank N.A. and Mellon Bank, N.A. Incorporated by reference to Exhibit 4(g)
to the Registrant's Annual Report on Form 10-K for the fiscal year ended
May 31, 1987.
4(f). Loan Agreement, dated as of May 1, 1990 between New Jersey Economic
Development Authority and Geriatric and Medical Services, Inc. relating
to $5,000,000 and $1,175,000 of Demand Revenue Bonds and Demand Revenue
Refunding Bonds, respectively. Incorporated by reference to Exhibit
4(t) to the Registrant's Annual Report on Form 10-K for the fiscal
year ended May 31, 1990.
10(a). 1982 Incentive Stock Option Plan as amended. Incorporated by
reference to Exhibit 10(a) to the Registrant's Annual Report on Form
10-K for the fiscal year ended May 31, 1989.
10(b). 1984 Stock Option Plan Incorporated by reference to Exhibit 10(b) to
the 1984 Registration Statement.
10(c). 1990 Stock Option Plan for Directors. Incorporated by reference to
Exhibit 10(c) to the Registrant's Annual Report on Form 10-K for the fiscal
year ended May 31, 1990.
10(d). 1989 Stock Option and Restricted Stock Plan. Incorporated by
reference to Exhibit 4(a) to the Registrant's Registration Statement
on Form S-8 (File No. 33-34803).
10(e)(i). Operating Deficits Agreement, dated February 1, 1988 among the
Company and Resource Housing of America, Inc. Incorporated by reference
to exhibit 10(c)(iii) to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended February 29, 1988.
10(e)(ii). Revolving Credit and Term Loan Agreement, dated February 1, 1988
by and among the Company and Resource Housing of America, Inc. Incorporated
by reference to exhibit 10(c)(v) to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended February 29, 1988.
10(f)(i). $175,000 Purchase Money Note, dated November 30, 1988, given by
RHA/Philadelphia Nursing Homes, Inc. to Geriatric and Medical Services, Inc.
Incorporated by reference to exhibit 10(c) to the Registrant's Current Report
on Form 8-K, dated November 30, 1988.
10(f)(ii). Revolving Credit and Term Loan Agreement, dated as of November
1, 1988, by and between RHA/Philadelphia Nursing Homes, Inc. and Geriatric
& Medical Centers, Inc. Incorporated by reference to exhibit 10(f) to the
Registrant's Current Report on Form 8-K, dated November 30, 1988.
10(f)(iii). $2,455,000 Promissory Note dated as of November 1, 1988, given by
RHA/Philadelphia Nursing Homes, Inc. to Geriatric & Medical Centers, Inc.
Incorporated by reference to exhibit 10(g) to the Registrant's Current
Report on Form 8-K, dated November 30, 1988.
10(f)(iv). Operating Deficits Agreement, dated as of November 1, 1988, by
and between RHA/Philadelphia Nursing Homes, Inc. and Geriatric & Medical
Centers, Inc. Incorporated by reference to exhibit 10(h) to the
Registrant's Current Report on Form 8-K, dated November 30, 1988.
10(f)(v). Second Mortgage and Security Agreement, dated as of November 30,
1988, between RHA/Philadelphia Nursing Homes, Inc., Geriatric & Medical
Centers, Inc., Geriatric and Medical Services, Inc. and Total Care
Development Corporation Incorporated by reference to exhibit 10(i)
to the Registrant's Current Report on Form 8-K, dated November 30, 1988.
10(f)(vi). Subordination Agreement, dated as of November 1, 1988, between
and among Geriatric & Medical Centers, Inc., Total Care Development Corporation,
Geriatric and Medical Services, Inc. and RHA/Philadelphia Nursing Homes, Inc.
Incorporated by reference to exhibit 10(j) to the Registrant's Current Report
on Form 8-K, dated November 30, 1988.
10(g)(i). Term Loan Agreement, dated as of August 1, 1989, by and between
RHA/Pennsylvania Nursing Homes, Inc. and Geriatric & Medical Centers, Inc.
Incorporated by reference to the Registrant's Current Report on Form 8-K,
dated August 31, 1989.
10(g)(ii). $724,500 Promissory Note dated as of August 1, 1989 given
by RHA/Pennsylvania Nursing Homes, Inc. to Geriatric & Medical Centers,
Inc. Incorporated by reference to the Registrant's Current Report on
Form 8-K, dated August 31, 1989.
10(g)(iii). Operating Deficits Agreement, dated as of August 1, 1989 by and
between RHA/Pennsylvania Nursing Homes, Inc. and Geriatric & Medical
Centers, Inc. Incorporated by reference to the Registrant's Current
Report on Form 8-K, dated August 31, 1989.
10(g)(iv). Second Mortgage and Security Agreement, dated as of August 31,
1989, by and among RHA/ Pennsylvania Nursing Homes, Inc., Geriatric &
Medical Centers, Inc., GMS Management, Inc., GMC Financial Services,
Inc., Total Care Insurance Corporation, d/b/a Rite Care Resources and
Total Care Management Inc. Incorporated by reference to the
Registrant's Current Report on Form 8-K, dated August 31, 1989.
10(g)(v). Subordination Agreement, dated as of August 1, 1989, between and
among Geriatric & Medical Centers, Inc., GMS Management, Inc., GMC Financial
Services, Inc., Total Care Inn Corporation, d/b/a Rite Care Resources,
RHA/Pennsylvania Nursing Homes, Inc., and RHA/Home Office, Inc.
Incorporated by reference to the Registrant's Current Report on
Form 8-K, dated August 31, 1989.
10(h)(i). Operating Deficits Agreement, dated as of October 1, 1988 by and
among Walnut Park Plaza Associates, Villas Realty & Investments, Inc. and
Maryland National Bank, exclusive of exhibits thereto. Incorporated by
reference to Exhibit 10(e)(ii) to the Registrant's report on Form 8 dated
September 26, 1989.
10(i)(i). Operating Deficits and Term Loan Agreement, dated as of September
1, 1990, between AHF/Montgomery, Inc. and Geriatric & Medical Centers, Inc.
Incorporated by reference to Exhibit 10(b) to the Registrant's Current
Report on Form 8-K dated October 26, 1990.
10(i)(ii). Subordination Agreement, dated as of September 1, 1990, between
and among Montgomery County Higher Education and Health Authority (the
"Authority"), Geriatric & Medical Centers, Inc., GMS Management, Inc.,
GMC Financial Services, Inc., AHF/Montgomery, Inc., and AHF/Home Office,
Inc. Incorporated by reference to Exhibit 10(c) to the
Registrant's Current Report on Form 8-K dated October 26, 1990.
10(i)(iii). Loan and Security Agreement, dated as of September 1, 1990,
between the Authority, AHF/Montgomery, Inc., and Assignment of the
Authority's Interest to Geriatric & Medical Centers, Inc. as Bondholder.
Incorporated by reference to Exhibit 10(d) to the Registrant's Current
Report on Form 8-K dated October 26, 1990.
10(j). Management Incentive Bonus Program. Incorporated by reference to
Exhibit 10(i) to the Registrant's Annual Report on Form 10-K for the
fiscal year ended May 31, 1990.
10(l)(i). Supplemental Loan Agreement, dated as of April 15, 1992 between
New Jersey Economic Development Authority and Geriatric and Medical
Services, Inc. relating to $2,025,000 and $850,000 of Revenue Bonds
and Revenue Refunding Bonds, respectively. Incorporated by reference
to Exhibit 10(l)(i) to the Registrant's Current Report on Form
8-K dated May 14, 1992.
10(l)(ii). Loan Agreement, dated as of April 23, 1992, by and among Meditrust
Mortgage Investments, Inc. and Geriatric and Medical Services, Inc.,
Crestview Convalescent Home, Inc., Burlington Woods Convalescent
Center, Inc., Geriatric & Medical Centers, Inc. and Crestview North,
Inc. relating to a loan in the amount of $86,003,000. Incorporated by
reference to Exhibit 10(l)(ii) to the Registrant's Current Report on Form
8-K dated May 14, 1992.
10(l)(iii). Loan Agreement, dated as of April 23, 1992, between Geriatric
and Medical Services, Inc. and Geriatric & Medical Centers, Inc. and
CoreStates Enterprise Fund relating to a loan in the amount of $5,000,000.
Incorporated by reference to Exhibit 10(l)(iv) to the Registrant's Current
Report on Form 8-K dated May 14, 1992.
10(m)(i) Loan Agreement, dated as of May 1, 1992 between New Jersey Economic
Development Authority and Geriatric and Medical Services, Inc. relating to
$6,215,000 of Mortgage Revenue Refunding Bonds.
10(m)(ii) Loan Agreement, dated as of May 1, 1992 between Montgomery County
(Pennsylvania) Industrial Development Authority and Geriatric and Medical
Services, Inc., relating to $2,105,000 of Mortgage Revenue Refunding Bonds.
10(n) Accounts Financing Agreement, dated as of December 6, 1991, between
American Insured Receivables Fund, Inc. and Geriatric & Medical Centers,
Inc. and certain of its subsidiaries.
10(o) Master Trust Indenture, dated May 1, 1992, by and between Geriatric
and Medical Services, Inc. and Fidelity Bank, National Association.
10(p)(i) Loan Agreement, dated as of June 1, 1992 between Chester
County (Pennsylvania) Industrial Development Authority and Geriatric
and Medical Services, Inc., relating to $2,285,000 of Mortgage Revenue
Refunding Bonds.
10(p)(ii) Loan Agreement, dated as of June 1, 1992, between Bucks County
(Pennsylvania) Industrial Development Authority and Geriatric and Medical
Services, Inc., relating to $2,370,000 of Mortgage Revenue Refunding Bonds.
10(q) Loan Agreement, dated as of December 1, 1992, between Lancaster
(Pennsylvania) Industrial Development Authority and Geriatric and Medical
Services, Inc., relating to $855,000 of Mortgage Revenue Refunding Bonds
and Loan Agreement, dated as of December 1, 1992, between Montgomery
County (Pennsylvania) Industrial Development Authority and Geriatric
and Medical Services, Inc., relating to $1,195,000 of Mortgage Revenue
Refunding Bonds.
10(r)(i) Assignment Agreement, dated February 26, 1993, by and between
Geriatric & Medical Companies, Inc., and Robert P. Krauss, Esquire, as
agent, regarding the assignment of $1,200,000 Subordinated Revenue Bond
(AHF/Montgomery, Inc., Project) - Series 1990B to agent.
10(r)(ii) Agency Agreement, dated February 26, 1993, by, between and among
the Daniel Veloric Individual Retirement Account, Transcorp, Inc.,
Custodian; Tomahawk Capital Investments, Inc.; and Robert P. Krauss,
Esquire, as agent.
10(s)(i) Agreement of Sale, dated as of May 31, 1993, by and between Geriatric
and Medical Services, Inc, and Tomahawk Capital Investments, Inc.
10(s)(ii) Mortgage Note, dated as of May 31, 1993, given by Tomahawk Capital
Investments, Inc., to Geriatric and Medical Services, Inc.
10(s)(iii) Mortgage and Security Agreement, dated as of May 31, 1993, by and
between Tomahawk Capital Investments, Inc, and Geriatric and Medical
Services, Inc.
10(t) Sale and Subservicing Agreement, dated as of November 4, 1993, by and
among certain subsidiaries of Geriatric & Medical Companies, Inc. as Seller
and Subservicer, NPF-PW, Inc. as Purchaser and National Premier Financial
Services, Inc., as Servicer.
10(u) Sale and Subservicing Agreement, dated as of May 19, 1994, by and
among certain subsidiaries of Geriatric & Medical Companies, Inc. as
Seller and Subservicer, NPF-PW, Inc. as Purchaser and National Premier
Financial Services, Inc, as Servicer.
10(v) Employment Agreement dated March 4, 1993, effective June 1, 1993 by
and between Geriatric & Medical Companies, Inc. and Daniel Veloric -
Chairman of the Board, Chief Executive Officer and President.
10(w) Subordinated debenture, dated as of November 30, 1994, by and between
Tomahawk Securities, Inc. and Geriatric & Medical Companies, Inc. for
$1,000,000.
10(x) HUD Agreements, dated as of December 14, 1994, by and between Republic
Realty Mortgage Corporation and North Cape Convalescent Center, L.P. for
$5,636,400 in connection with the financing of a nursing facility located
in Cape May, New Jersey.
10(x) (1) Agreement of Pledge by and between North Cape and Republic;
10(x) (2) First Amended Limited Partnership Agreement of North Cape;
10(x) (3) Certificate of Limited Partnership Agreement of North Cape;
10(x) (4) Mortgage from North Cape to Republic;
10(x) (5) Certifications of Republic to the Department of Housing and
Urban Development concerning the Mortgage Loan for North Cape;
10(x) (6) Mortgage Note from North Cape to Republic in the principal of
$5,636,400;
10(x) (7) Regulatory Agreement for Multifamily Housing Project by and between
North Cape and the Secretary of Housing and Urban Development;
10(x) (8) Building Loan Agreement by and between North Cape, Republic with
attached legal description as Exhibit A and Contractor's and/or Mortgagor's
Cost Breakdown as Exhibit B;
10(x) (9) Security Agreement by and between North Cape, Republic and/or the
Secretary of Housing and Urban Development of Washington, D.C.;
10(x) (10) Construction Contract - Lump Sum by and between Quaker Construction
Management and North Cape;
10(x) (11) Agreement of Sponsors to Furnish Additional Funds by and between
Geriatric & Medical Companies, Inc. and Republic for North Cape.
10(y) Agreements dated as of May 31, 1995 ("effective date"), by and between
Meditrust Mortgage Investments, Inc. and Norristown Nursing and
Rehabilitation Center Associates. L.P. for $6,939,000 in
connection with the financing of a nursing facility located in
Norristown, Pennsylvania.
10(y) (1) Promissory Note dated as of the effective date by Norristown payable
to Meditrust;
10(y) (2) Construction Loan Agreement dated as of the effective date, by and
between Norristown and Meditrust;
10(y) (3) Third Agreement Amending Loan Documents dated as of the effective
date by and between, Geriatric and Medical Services, Inc., et al and Meditrust;
10(y) (4) Form of Deposit Pledge Agreement dated as of the effective date by
and between Norristown and Meditrust;
10(y) (5) Form of Pledge Agreement dated as of the effective date by and
between Geriatric and Medical Services, Inc., et al and Meditrust;
10(y) (6) Form of Agreement of Leases and Rents as of the effective date by and
between Norristown and Meditrust;
10(y) (7) Form of Environmental Indemnity Agreement dated as of the effective
date by and between Norristown et al and Meditrust;
10(y) (8) Form of Collateral Assignment of Permits, Licenses, Approvals and
Contracts dated as of the effective date by and between Norristown,
Geriatric & Medical Services, Inc. and Meditrust;
10(y) (9) Form of Guaranty dated as of the effective date by and between
Geriatric & Medical Companies, Inc., Geriatric and Medical Services, Inc.
and Meditrust;
10(y) (10) Form of Mortgage and Security Agreement dated as of the effective
date by and between Norristown and Meditrust;
10(y) (11) Form of Affiliated Party Subordination and Cross-Default / Cross-
Collateralization Agreement dated as of the effective date by and between
Norristown et al and Meditrust;
10(y) (12) Form of Collateral Assignment of Design / Build Contract dated as
of the effective date by and between Norristown and Meditrust;
10(y) (13) Form of Collateral Assignment of Management Contract dated as of
the effective date by and between Norristown and Meditrust.
10(z) Interim Funding Agreement and Guaranty, dated as of August 4, 1995, by
and between Pennsylvania Blue Shield d/b/a Xact Medicare Services and Life
Support Ambulance, Inc.
22. Subsidiaries of the Registrant.
28(a). Stipulation and Settlement Agreement (City of Philadelphia).
Incorporated by reference to Exhibit 28(a) to the Registrant's Annual
Report on form 10-K for the fiscal year May 31, 1990.
28(b). Stipulation of Settlement in Whole and In Part (Commonwealth
of Pennsylvania - Department of Public Welfare). Incorporated by
reference to Exhibit 28(b) to the Registrant's Annual Report on
Form 10-K for the fiscal year ended May 31, 1990.
(b) Reports on Form 8-K
The Company filed with the Securities and Exchange Commission a Current Report
on Form 8-K, dated January 26, 1995, with respect to Item 4, reporting a change
in the Company's Certifying Accountant and Form 8-K, dated May 19, 1995,
with respect to Item 5, reportingother events.
SIGNATURES
Pursuant to requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GERIATRIC & MEDICAL COMPANIES, INC.
(Registrant)
Dated: August 22, 1995 By: /s/James J. O'Malley
James J. O'Malley
Vice President - Finance
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Capacity Date
Chairman of the Board,
President and Director
(Chief Executive
/s/Daniel Veloric Officer) August 22, 1995
Daniel Veloric
Vice President-
Finance and Chief
/s/James J. O'Malley Financial Officer August 22, 1995
James J. O'Malley
/s/Gerald E. Bisbee, Jr. Director August 22, 1995
Gerald E. Bisbee, Jr.
/s/Thomas J. Gorman Director August 22, 1995
Thomas J. Gorman
/s/Anthony C. Salvo Director August 22, 1995
Anthony C. Salvo
/s/Michael Veloric Director August 22, 1995
Michael Veloric
/s/Esther Ponnocks Director August 22, 1995
Esther Ponnocks
/s/Gregory S. Bronczyk Corporate Controller August 22, 1995
Gregory S. Bronczyk
GERIATRIC & MEDICAL COMPANIES, INC.
Annual Report on Form 10-K for Year Ended May 31, 1995
Exhibit Index
10(w) Subordinated debenture, dated as of November 30, 1994, by and between
Tomahawk Securities and Geriatric & Medical Companies, Inc., for $1,000,000.
10(x) HUD Agreements, dated as of December 14, 1994, by and between Republic
Realty Mortgage Corporation ("Republic") and North Cape Convalescent Center,
L.P. ("North Cape") for $5,636,400 in connection with the financing of a
nursing facility located in Cape May, New Jersey;
10(x) (1) Agreement of Pledge by and between North Cape and Republic;
10(x) (2) First Amended Limited Partnership Agreement of North Cape;
10(x) (3) Certificate of Limited Partnership of North Cape;
10(x) (4) Mortgage from North Cape to Republic;
10(x) (5) Certifications of Republic to the Department of Housing and Urban
Development concerning the Mortgage Loan for North Cape;
10(x) (6) Mortgage Note from North Cape to Republic in the principal of
$5,636,400;
10(x) (7) Regulatory Agreement for Multifamily Housing Project by and between
North Cape and the Secretary of Housing and Urban Development;
10(x) (8) Building Loan Agreement by and between North Cape and Republic with
attached legal description as Exhibit A and Contractor's and/or Mortgagor's
Cost Breakdown as Exhibit B;
10(x) (9) Security Agreement by and between North Cape, Republic and/or the
Secretary of Housing and Urban Development of Washington, D.C.;
10(x) (10) Construction Contract - Lump Sum by and between Quaker Construction
Management and North Cape;
10(x) (11) Agreement of Sponsors to Furnish Additional Funds by and between
Geriatric & Medical Companies, Inc. and Republic for North Cape.
10(y) Agreements, dated as of May 31, 1995 ("effective date"), by and between
Meditrust Mortgage Investments, Inc. ("Meditrust") and Norristown Nursing and
Rehabilitation Center Associates, L.P. ("Norristown") for $6,939,000 in
connection with the financing of a nursing facility in Norristown, Pennsylvania;
10(y) (1) Promissory Note dated as of the effective date by Norristown
payable to Meditrust;
10(y) (2) Construction Loan Agreement dated as of the effective date, by and
between Norristown and Meditrust;
10(y) (3) Third Agreement Amending Loan Documents dated as of the
effective date by and between, Geriatric and Medical Services, Inc.,
et al and Meditrust;
10(y) (4) Form of Deposit Pledge Agreement dated as of the effective date by
and between Norristown and Meditrust;
10(y) (5) Form of Pledge Agreement dated as of the effective date by and
between Geriatric and Medical Services, Inc., et al and Meditrust;
10(y) (6) Form of Agreement of Leases and Rents as of the effective date by
and between Norristown and Meditrust;
10(y) (7) Form of Environmental Indemnity Agreement dated as of the
effective date by and between Norristown et al and Meditrust;
10(y) (8) Form of Collateral Assignment of Permits, Licenses, Approvals and
Contracts dated as of the effective date by and between Norristown,
Geriatric & Medical Services, Inc. and Meditrust;
10(y) (9) Form of Guaranty dated as of the effective date by and between
Geriatric & Medical Companies, Inc., Geriatric and Medical Services, Inc.
and Meditrust;
10(y) (10) Form of Mortgage and Security Agreement dated as of the effective
date by and between Norristown and Meditrust;
10(y) (11) Form of Affiliated Party Subordination and Cross-Default / Cross-
Collateralization Agreement dated as of the effective date by and between
Norristown et al and Meditrust;
10(y) (12) Form of Collateral Assignment of Design / Build Contract dated as
of the effective date by and between Norristown and Meditrust;
10(y) (13) Form of Collateral Assignment of Management Contract dated as of the
effective date by and between Norristown and Meditrust.
10(z) Interim Funding Agreement and Guaranty, dated as of August 4, 1995, by
and between Pennsylvania Blue Shield d/b/a Xact Medicare Services and Life
Support Ambulance, Inc.
27 Article 5 FDS - Financial Data Summary for the fiscal year ended May 31,
1995.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> MAY-31-1995
<CASH> 3,368,000
<SECURITIES> 0
<RECEIVABLES> 57,638,000
<ALLOWANCES> 12,099,000
<INVENTORY> 5,154,000
<CURRENT-ASSETS> 62,786,000
<PP&E> 147,231,000
<DEPRECIATION> 59,293,000
<TOTAL-ASSETS> 178,244,000
<CURRENT-LIABILITIES> 38,354,000
<BONDS> 0
<COMMON> 1,524,000
0
0
<OTHER-SE> 13,124,000
<TOTAL-LIABILITY-AND-EQUITY> 178,244,000
<SALES> 192,234,000
<TOTAL-REVENUES> 192,234,000
<CGS> 0
<TOTAL-COSTS> 166,115,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 9,976,000
<INTEREST-EXPENSE> 11,078,000
<INCOME-PRETAX> 5,065,000
<INCOME-TAX> 1,012,000
<INCOME-CONTINUING> 4,053,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,053,000
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
</TABLE>
$1,000,000
November 30, 1994
GERIATRIC & MEDICAL COMPANIES, INC.
SUBORDINATED DEBENTURE
DUE NOVEMBER 30, 1996
GERIATRIC & MEDICAL COMPANIES, INC. (the "Company"), a
Delaware corporation, for value received, and intending to be
legally bound, hereby promises to pay to the order of Tomahawk
Securities, Inc., a Delaware corporation, or registered assigns,
the principal amount of One Million Dollars ($1,000,000) on
November 30, 1996. Interest shall accrue on the unpaid principal
balance thereof at the rate of 12% per annum, which interest
shall be payable in eight quarterly installments commencing on
February 28, 1995 and continuing on the last day of each fiscal
quarter thereafter, until such unpaid principal balance shall
become due and payable (whether at maturity or by acceleration or
otherwise). Overdue principal payments and (to the extent
permitted by applicable law) any overdue interest shall accrue
interest at the foregoing rate per annum plus 2% until paid,
which interest shall be payable on demand.
Payments of principal and interest on this Debenture shall be
made in lawful money of the United States of America by delivery
of a check payable in immediately available funds to the address
provided by the payee as shown on the Debenture Register.
The Company may treat the person in whose name this Debenture is
registered (the "Holder") on the Debenture Register kept by the
Company as the owner of this Debenture for the purpose of
receiving payment and for all other purposes, and the Company
shall not be affected by any notice to the contrary. This
Debenture is transferable only (i) in accordance with the terms
hereof and (ii) by surrender thereof at an office or agency of
the Company where this Debenture is payable, duly endorsed or
accompanied by a written instrument duly executed by the Holder
of this Debenture or its attorney duly authorized in writing.
Defaults. If any of the following conditions or events ("Events
of Default") shall occur and be continuing:
(a) if the Company shall default in the payment of principal of
this Debenture when the same becomes due and payable, whether at
maturity or by declaration of acceleration or otherwise, and
shall fail to cure such default within thirty days after written
notice thereof from the Holder to the Company; or
(b) if the Company shall default in the payment of any interest
on this Debenture and shall fail to cure such default within
thirty days after written notice thereof from the Holder to the
Company; or
(c) if the Company shall materially default in the performance
of or compliance with any term contained herein and such default
shall not have been remedied within thirty days after written
notice thereof from the Holder to the Company; or
(d) if the Company shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its
debts as they become due, or a voluntary petition for
reorganization under Title 11 of the United States Code ("Title
11") shall be filed by the Company or an order shall be entered
granting relief to the Company under Title 11 or a petition shall
be filed by the Company in bankruptcy, or the Company shall be
adjudicated a bankrupt or insolvent, or shall file any petition
or answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, or
shall file any answer admitting or not contesting the material
allegations of a petition filed against the Company in any such
proceeding, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of the Company
or of all or any substantial part of the properties of the
Company or if the Company or its directors or majority
shareholders shall take any action looking to the dissolution or
liquidation of the Company; or
(e) if within 120 days after the commencement of an action
against the Company seeking a reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation,
such action shall not have been dismissed or nullified or all
orders or proceedings thereunder affecting the operations or the
business of the Company stayed, or if the stay of any such order
or proceeding shall thereafter be set aside, or if, within 120
days after the appointment without the consent or acquiescence of
the Company of any trustee, receiver or liquidator of the Company
or of all or any substantial part of the properties of the
Company such appointment shall not have been vacated;
then, and in any such event, the Holder may at any time (unless
such Event of Default shall theretofore have been remedied) at
its option, by written notice to the Company, declare the
Debenture to be due and payable, whereupon the Debenture shall
forthwith mature and become due and payable, together with
interest accrued thereon, and thereafter interest shall be due,
at the rate per annum hereinabove provided, on the entire
principal balance until the same is fully paid, and on any
overdue interest (but only to the extent permitted by law),
without presentment, demand, protest or notice, all of which are
hereby waived, subject however, to the other terms, including
those relating to subordination, of this Debenture.
In case of a default in the payment of any principal of or
interest on the Debenture, the Company will pay to the Holder
such further amount as shall be sufficient to cover the cost and
expenses of collection, including, without limitation, reasonable
attorneys' fees, expenses and disbursements. No course of
dealing and no delay on the part of Holder in exercising any
right shall operate as a waiver thereof or otherwise prejudice
such Holder's rights, powers or remedies. No right, power or
remedy conferred by this Debenture upon Holder shall be exclusive
of any other right, power or remedy referred to herein or now or
hereafter available at law, in equity, by statute or otherwise.
Subordination of Debenture; Senior Debt. As used in this
Debenture, the term "Senior Debt" shall mean all amounts due and
owing by the Company to Meditrust Mortgage Investments, Inc. or
its affiliates, regardless of whether such amounts were incurred
on, before or after the date of this Debenture and any renewals
and extensions of such debt.
The Company covenants and agrees, and the Holder, by acceptance
hereof, covenants, expressly for the benefit of the present and
future holders of Senior Debt, that the payment of the principal
and interest on this Debenture is expressly subordinated to the
right of payment in full of principal and interest of Senior Debt
of the Company. There are no restrictions on the Company's
ability to issue Senior Debt or additional Senior Debt.
Accordingly, all present and future Senior Debt of the Company
shall be superior to this Debenture and may be incurred without
the consent of the Holder. Upon any default by the Company in
the payment of all or any portion of principal of or interest on
any Senior Debt when due and payable, no payment may be made on
or in respect of this Debenture, unless or until such default has
been cured or is waived. Upon any insolvency, reorganization,
bankruptcy or similar proceeding, or upon liquidation or winding
up of the Company, in any case whether voluntary or involuntary,
the Holder of this Debenture shall not be entitled to receive
thereafter, any amount in respect of interest or principal on
this Debenture, unless and until the Senior Debt shall have been
paid or otherwise discharged. In the event of any such
proceeding, and after payment in full of all sums owing with
respect to Senior Debt, Holder shall be entitled to be paid from
the remaining assets of the Company the unpaid principal of and
interest on this Debenture. Such payment shall be made before
any payment or other distribution, whether in cash, property or
otherwise, shall be made on account of any capital stock or any
obligations of the Company junior to this Debenture.
It is understood that the provisions of this section entitled
"Subordination of Debenture; Senior Debt" are, and are intended
to be, solely for the purpose of defining the relative rights of
the Holder of this Debenture on the one hand and the holder of
Senior Debt of the Company on the other hand. Nothing contained
in this section or elsewhere in this Debenture shall or is
intended to impair, as between the Company, its creditors other
than holders of Senior Debt, and the Holder of this Debenture,
the unconditional and absolute obligation of the Company to pay
the Holder of this Debenture the principal of and interest on
this Debenture as and when the same shall become due and payable
in accordance with its terms, or affect the relative rights of
the Holder of this Debenture and the creditors of the Company,
other than holders of Senior Debt, nor shall anything herein
prevent the holder of this Debenture from exercising all remedies
otherwise permitted by applicable law upon default under the
Debenture, subject to the rights, if any, of holders of Senior
Debt in respect to cash, property or securities of the Company
received upon the exercise of such remedy.
Notwithstanding any provision contained in this Debenture to the
contrary, the Company's liability for payment of interest shall
not exceed the limits imposed by applicable usury law. If any
provision hereof requires interest payments in excess of the then
legally permitted maximum rate, such provision shall
automatically be deemed to require such payment at the then
legally-permitted maximum rate.
All notices required or permitted to be given under this
Debenture shall be in writing (delivered by hand or sent
certified or registered mail, return receipt requested, or by
nationally recognized overnight courier service) addressed to the
following addresses:
<PAGE>
If to Holder: At its address on the Debenture
Register of the Company
If to Company: 5601 Chestnut Street
Philadelphia, PA 19139
Attn: James J. Wankmiller, Esq.
All notices shall be deemed given upon personal delivery or upon
deposit of such notice in the United States mails or with the
aforementioned overnight courier service, with all postage
affixed.
This Debenture has been made and delivered in Philadelphia,
Pennsylvania and shall be governed by the internal laws of the
State of Delaware.
ATTEST: GERIATRIC & MEDICAL COMPANIES, INC.
ARTHUR A. CARR, JR., JAMES J. O'MALLEY, Vice President
Secretary
AGREEMENT TO PLEDGE
North Cape Convalescent Center Associates, L.P. a Pennsylvania
Limited partnership (hereinafter referred to as the "Debtor") has
received a mortgage loan (hereinafter referred to as the "Mortgage
Loan") in the principal amount of $5,636,400.00 from Republic
Realty Mortgage Corporation, a Delaware corporation, its successors
and assigns (hereinafter referred to as the "Secured Party") which
Mortgage Loan was insured under Section 232 of the National Housing
Act, as amended, by the Secretary of Housing and Urban Development
acting by and through the Federal Housing Commissioner (hereinafter
referred to as the "Secretary"). In consideration of the granting
of the Mortgage Loan and the insurance thereof and for value
received, Debtor hereby agrees to pledge to the Secured Party, and
its successors and assigns, the following instruments (hereinafter
referred to as the "Collateral") and grants to the Secured Party a
security interest in the Collateral:
The Certificate of Need issued to the Debtor by the State of
New Jersey concerning Debtor's nursing home (hereinafter
referred to as the "Nursing Home") know as North Cape
Convalescent Center situated in Cape May County, New Jersey;
all operating licenses pertaining to the Nursing Home issued
by the State of New Jersey to the Debtor; and all
Medicare/Medicaid Provider Agreements pertaining to the
Nursing Home.
The Debtor agrees to deliver the Collateral to the Secured Party
upon demand; provided, no demand shall be made unless and until
Debtor is in default under the "Obligations" (as hereafter
defined).
The security interest granted hereby secures payment of the
Mortgage Loan and any and all other liabilities of Debtor to the
Secured Party, direct or indirect absolute or contingent, due or to
become due, now existing or hereinafter arising out of or pursuant
to the documents evidencing or securing the Mortgage Loan
(hereinafter referred to as the "Obligations").
The term "Collateral" as used in any agreement executed by the
Debtor to evidence any of the Obligations of the Debtor shall
include any and all Collateral as that term is defined in this
agreement.
Debtor shall pay all expenses and charges in connection with the
Collateral and will at all times while the same is in its hands
hold the Collateral separate and distinct from any property of the
Debtor and capable of identification and will show such separation
in all its records and entries.
Upon the occurrence of any event of default under this agreement or
under the terms of nay of the Obligations of the Debtor to the
Secured Party, and thereafter, the Secured Party shall have, in any
jurisdiction where an enforcement hereof is sought, in addition to
all other rights and remedies, the rights and remedies of a secured
party under the Uniform Commercial Code of New Jersey, including
without limitation thereto, the right to take possession of the
Collateral. For that purpose the Secured Party may, so far as the
Debtor can give authority therefore, enter upon any premises on
which the Collateral may be situate and remove the same therefrom.
The Secured Party may require the Debtor to make the Collateral
available to the Secured Party at a place to be designated by the
Secured Party at a place to be designated by the Secured Party,
which is reasonably convenient to both parities. Expenses of
retaking, holding, selling or the like, shall include reasonable
attorneys' fees and legal expenses of the Secured Party and the
Debtor shall pay all such fees and expenses.
Debtor specifically agrees and covenants with the Secured Party
that none of the Collateral may be transferred to any other entity
or property nor may it be terminated by the Debtor upon any
assignment of the Mortgage Loan by the Secured Party to the
Secretary or by foreclosure of the Mortgage Loan by Secured Party
or the Secretary.
No waiver of any rights or powers by the Secured Party or consent
by is shall be valid unless in writing signed by the Secured Party.
The rights and powers herein given to the Secured Party herein are
in addition to all other howsoever arising.
This agreement to Pledge is made pursuant to the Uniform Commercial
Code of New Jersey and is to be interpreted in accordance with the
laws of said State.
The parties hereto acknowledge that their rights hereunder are
subject to obtaining any and all approvals and consents that may be
required from time to time pursuant to N.J.A.C.8:33 and N.J.S.A.
26:2H-1 et. seq., as each may be amended from time to time, and any
other applicable governmental requirements.
NORTH CAPE CONVALESCENT CENTER ASSOCIATES, L.P.
By: Geriatric & Medical Services, Inc., General Partner
By: Andrew G. Conn, Asst. Vice President
ATTEST
James J. Wankmiller, Secretary
REPUBLIC REALTY MORTGAGE CORPORATION
By: Jeaneda C. Bishop, Vice President
ATTEST:
Raymond J. Walshlager, Asst. Secretary
Dated December 21, 1994
<PAGE>
FIRST AMENDED LIMITED PARTNERSHIP AGREEMENT OF
NORTH CAPE CONVALESCENT CENTER ASSOCIATES, L.P.
This First Amended Limited Partnership Agreement of NORTH CAPE
CONVALESCENT CENTER ASSOCIATES, L.P. is made as of the 15th of
November, 1994, by and between GERIATRIC AND MEDICAL SERVICES,
INC., a New Jersey corporation, as general partner ("General
Partner"), and VILLAS REALTY AND INVESTMENTS, INC., a Pennsylvania
corporation, as limited partner ("Limited Partner"). The General
Partner and the Limited Partner are hereinafter sometimes referred
to individually as a "Partner" and collectively as "Partners".
The Partners formed a limited partnership under the laws of the
Commonwealth of Pennsylvania on December 1, 1992 and provided for
the agreement as among them.
The Partners now desire to replace the Limited Partnership
Agreement in its entirety and to replace it with this First Amended
Limited Partnership Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and intending to be legally bound, the Partners hereby
agree as follows:
ARTICLE I
FORMATION OF PARTNERSHIP
1. The Partners hereby form the limited partnership ("Partnership)
pursuant to the Uniform Limited Partnership Act of Pennsylvania.
ARTICLE II
NAME AND OFFICE
2. The name of the Partnership is "North Cape Convalescent Center
Associates, L.P." and its business shall be conducted in such name.
The principal office and principal place of business of the
Partnership shall be located at 5601 Chestnut Street, Philadelphia,
PA or such other place as the General Partner may, from time to
time, determine.
ARTICLE III
PURPOSES AND BUSINESS OF THE PARTNERSHIP
3. (a) The sole purpose of the Partnership and the only business to
be carried on and the objectives to be attained by it are to
acquire a tract of ground generally located at Shunpike and
Townbank Roads, Lower Township, Cape May County, New Jersey (the
"Property") and to construct develop, maintain, operate and lease
a
nursing home and convalescent center consisting of approximately 60
nursing beds, 60 residential beds and facilities and amenities
related thereto upon the Property (the acquisition of the Property
and the construction related thereto is hereinafter referred to as
the "Project"); to finance the acquisition, construction and
operation of the Project; and to carry on any other activities
necessary to, in connection with or incidental to, the foregoing.
(b) The Partnership is authorized to execute a Mortgage Note and
Mortgage in order to secure a loan to be insured by the Secretary
of Housing and Urban Development ("Secretary") and to execute a
Regulatory Agreement for Multifamily Housing Projects and other
documents required by the Secretary in connection with such loan.
Any incoming general partner, shall as a condition of receiving an
interest in the Partnership agree to be bound by the Mortgage Note,
Mortgage and Regulatory Agreement for Multifamily Housing Projects
and other documents required in connection with the FHA insured
loan to the same extent and on the same terms as the other general
partners. Upon any dissolution, no title or right to possession
and control of the Project, and no right to collect the rents
therefrom, shall pass to any person who is not bound by the
Regulatory Agreement for Multifamily Housing Projects in a manner
satisfactory to the Secretary. The provisions of the Regulatory
Agreement shall be controlling over any inconsistent provisions of
this instrument or other agreements among the Partners. So long as
the Secretary is the insurer or holder of the Mortgage on NORTH
CAPE CONVALESCENT CENTER, no amendment to this Limited Partnership
Agreement which results in any of the following shall be in force
or effect without prior written consent of HUD: (i) any amendment
which modifies the duration of this Limited Partnership Agreement;
(ii) any amendment which results in the requirement that HUD
previous participation certification (HUD Form 2530) be obtained
for any additional "principal" as that term is defined by HUD;
(iii) any amendment which in any way affects the Mortgage or
Regulatory Agreement for Multifamily Housing Projects; and (iv)
any amendment which alters or deletes the terms and provisions of
this paragraph.
ARTICLE IV
CAPITAL
4. (a) On or about the date of this Agreement, the General Partner
shall make a Capital Contribution of $1.00 to the Partnership, and
the Limited Partner shall make a Capital Contribution to the
Partnership in the amount of $99.00.
(b) A Capital Account shall be established for each Partner and
shall be credited with that portion of its Capital Contribution
paid in cash and its share of profits, and shall be charged with
distributions from Cash Flow and other distributions and its share
of losses.
(c) The Partnership may, at the discretion of the General Partner,
borrow for Partnership purposes at any time and from any source.
The Limited Partner shall not be liable for any indebtedness of the
Partnership and shall not be required to contribute any capital or
lend any funds to the Partnership other than its Capital
Contribution set forth in this Article IV.
(d) No Partner shall have the right to withdraw or reduce its
Capital Contribution.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5. (a) Profits (Losses) form Operations for each fiscal year shall
be determined in accordance with the accounting methods followed by
the Partnership for federal income tax purposes and shall be
allocated in the same percentages as the Partners' Proportionate
Shares.
(b) Gain and loss arising form a Sale of Assets shall be allocated
in the same percentages as the Partners' Proportionate Shares.
(c) Cash Flow shall be determined for each fiscal year and shall be
distributed to the Partners no less frequently than annually in the
same percentages as the Partners' Proportionate Shares.
(d) All cash available for distribution (other than Cash Flow and
the proceeds form a Sale of Assets), including proceeds form
refinancing of the Property, after deduction of funds needed by the
Partnership, shall be distributed in the same percentages as the
Partners' Proportionate Shares.
(e) Distributions arising as a result of a Sale of Assets shall be
made in accordance with Paragraph 7(c).
ARTICLE VI
RIGHTS, POWERS AND DUTIES OF PARTNERS
6. (a) The General Partner shall use its best efforts and shall
have the necessary powers to carry out the purposes, business and
objectives of the Partnership and shall possess and enjoy all the
rights and powers of partners, except as otherwise provided herein
or by the laws of the Commonwealth of Pennsylvania. Without
limiting the generality of the foregoing, the General Partner shall
have the right and power to execute and deliver, on behalf of the
Partnership, evidences of indebtedness and documents granting
security for the payment thereof (with our without warrant of
attorney to confess judgment against the Partnership). All
decisions as to the management of the business of the Partnership
shall be made by the General Partner and such decisions made by the
General Partner shall be binding upon the Partnership and the
Partners without the need of any further approval or ratification.
(b) Except as may be otherwise provided for herein, the Limited
Partner shall not participate in the management of the Partnership
or have any control over the Partnership's business or assets or
have any right or authority to act for or to bind the Partnership.
(c) In the event of the withdrawal or Bankruptcy of the General
Partner, the Limited Partner may appoint, within sixty (60) days
after such event, a substitute general partner, who shall make all
decisions as to the management of the Partnership.
ARTICLE VII
TERMINATION
7.(a) Except as otherwise provided herein, the Partnership shall
not be terminated by the substitution, admission, withdrawal or
Bankruptcy of any Partner.
(b) The Partnership shall be terminated and its affairs wound up
upon:
(i) the withdrawal or Bankruptcy of the General Partner, unless the
Limited Partner elects, within sixty (60) days after such event, a
substitute general partner;
(ii) a Sale of Assets;
(iii) December 31, 2041; or
(iv) the determination of the General Partner that the Partnership
should be terminated.
(c) Upon the termination of the Partnership, the following steps
shall be taken in the following order of priority:
(i) The Capital Account of each Partner shall be determined.
Profits or losses to the date of termination, including realized
gain (whether or not recognized for tax purposes) or loss arising
form a Sale of Assets, and unrealized profits and losses on any
assets to be distributed in kind [determined as provided in
Paragraph 7(d)] shall be allocated as set forth in paragraph 5(b)
and credited or charged to the Capital Accounts of the Partners.
(ii) The Partnership shall be dissolved and its affairs shall be
wound up. All debts and obligations of the Partnership shall be
paid, discharged or provided for by setting up appropriate
reserves.
(iii) The assets of the Partnership not required to pay, discharge
or provide for the debts and obligations of the Partnership shall
be distributed to each partner having a positive Capital Account,
in liquidation of (i.e., to reduce to zero) such Capital Account,
pro rata in the proportion that the positive Capital Account of
each such Partner bears to the positive Capital Accounts of all
such Partners.
(d) If any assets of the Partnership are to be distributed in kind,
such assets shall be distributed on the basis of the then fair
market value thereof to the Partners entitled thereto as tenants-
in-common in accordance with their respective interests therein.
ARTICLE VIII
GENERAL PROVISIONS
8. (a)The books of the Partnership shall be kept on an accrual
method of accounting. The fiscal year of the Partnership shall end
on May 31st of each year.
(b) Invalidation or a holding of unenforceability of any provision
of this Agreement shall in no way affect any other provision
hereof, which other provision hereof, which other provisions shall
remain in full force and effect.
(c) This Agreement embodies the entire agreement and understanding
by and between the Partners relating to the subject matter hereof
and supersedes all prior agreements and understandings relating to
such subject matter. Any modification or amendment of this
Agreement must be in writing and signed by both Partners.
(d) This Agreement and the rights of the Partners shall be governed
by and construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania.
(e) This Agreement shall be binding upon and inure to the
benefit
of the Partners and their respective successors and assigns.
ARTICLE IX
DEFINED TERMS
9. In addition to the terms defined elsewhere in this Agreement,
the following terms used in this Agreement shall have the meaning
specified below:
"Bankruptcy" mean, with respect to any Partner, such Partner making
an assignment for the benefit of creditors, becoming a party or
subject to any liquidation or dissolution action or proceeding with
respect to such Partner, the institution of any bankruptcy,
reorganization, insolvency or other proceeding for the relief of
financially distressed debtors with respect to such Partner, or a
receiver, liquidator, custodian or trustee being appointed for such
Partner or a substantial part of such Partner's assets and, if any
of the same occur involuntarily, the same is not dismissed, stayed
or discharged within sixty (60) days; or the entry of an order for
relief against such Partner under Title 11 of the United States
Code entitled "Bankruptcy"' or such Partner taking any action to
effect, or which indicates its acquiescence in, any of the
foregoing.
"Capital Account" means the amount of a Partner's Capital
Contribution paid in cash adjusted for profits, losses and
distributions as shown on the books and records of the Partnership.
"Capital Contribution" means the cash or other property required to
be contributed by a Partner to the Partnership.
"Cash Flow" means the Partnership's cash receipts in a particular
year other than receipts from (a) Capital Contributions; (b) a
financing or refinancing of Partnership assets or other loans to
the Partnership; or (c) a Sale of Assets, less cash expenditures
paid or payable with respect to such year other than those paid out
of (a), (b), or (c) herein and any reserve established by the
General Partner.
"Partnership" means the Limited Partnership formed by the Partners
pursuant to this Agreement.
"Profits (Losses) from Operations" means the profits (losses) from
the operations of the Partnership excluding gains and losses
resulting from the Sale of Assets.
"Proportionate Share(s)" means the following:
Partner Proportionate Share
General Partnerm 1%
Limited Partner 99%
Sale of Assets" means (a) the sale of all or substantially all of
the assets of the Partnership; (b) the taking of all or
substantially all of the assets of the Partnership by eminent
domain; or (c) the damage or destruction of all or substantially
all of the assets of the Partnership.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement.
GENERAL PARTNER:
GERIATRIC & MEDICAL SERVICES, INC.
By: Arthur A. Carr,Jr., President
LIMITED PARTNER:
VILLAS REALTY AND INVESTMENTS, INC.
By: Andrew G. Conn, Vice-President
MORTGAGE
This indenture, dated as of December 14, 1994, between NORTH CAPE
CONVALESCENT CENTER ASSOCIATES, L.P., a limited partnership
organized and existing under the laws of the Commonwealth of
Pennsylvania having its principal place of business at 5601
Chestnut Street in the City of Philadelphia, County of
Philadelphia, State of Pennsylvania, party of the first part,
hereinafter, with its successors and assigns, called the Mortgagor,
and REPUBLIC REALTY MORTGAGE CORPORATION, a corporation organized
and existing under the laws of Delaware, having its principal place
of business at 100 S. Wacker Drive, in the City of Chicago, County
of Cook, State of Illinois, party of the second part, hereinafter,
with its successors and assigns, called the Mortgagee.
Whereas, the said Mortgagor is justly indebted to the Mortgagee in
the sum of Five Million Six Hundred Thirty Six Thousand Four
Hundred and no/100ths Dollars ($5,636,400.00) with interest thereon
at the rate of (herein called note) bearing even date with these
presents, conditioned for the payment of the said sum to the
Mortgagee, the said principal and interest to be payable as
follows:
Interest alone payable on the first day of January 1995 and on the
first day of each month thereafter, up to and including May 1,
1996. Thereafter and commencing on the first day of June 1996,
monthly installments of interest and principal shall be paid in the
sum of $45,658.31 each. Such payments to continue monthly
thereafter on the first day of each succeeding month until the
entire indebtedness has been paid. In any event, the balance of
principal (if any) remaining unpaid, plus accrued interest, shall
be due and payable on May 1, 2036. The installments of interest
and principal shall be applied first to interest at the rate of
9.5% per annum upon the principal sum or so much thereof as shall
from time to time remain unpaid, and the balance thereof shall be
applied on account of principal. In the event any installment, or
part of any installment due under this Mortgage becomes delinquent
for more than (15) days, there shall be due, in addition to other
sums then due hereunder, a sum equal to two percent (2%) of the
amount of principal and interest so delinquent. Late charges must
be separately charged to and collect from the Mortgagor and cannot
be deducted from any total monthly mortgage payment, or collected
from any reserve escrow, residual receipts funds, or from any
interest accruals thereto. Whenever, under the laws of the
jurisdiction where the property is located, the amount of a "late
charge" is considered to be additional interest, this provision
shall not be used if the rate of interest specified in the
Mortgage, together with the amount of the "late charge," would
aggregate an amount in excess of the maximum rate of the interest
permitted and would constitute usury.
Now this indenture witnesseth, that the Mortgagor, for better
securing the payment of the said sum of money mentioned in the
note, with interest thereon according to the true intent and
meaning thereof, and also for and in consideration of the sum of
One Dollar ($1) to it in hand paid by the Mortgagee, at or before
the sealing and delivery of these presents, the receipt whereof is
hereby acknowledged, has granted, bargained, sold, aliened,
released, conveyed and confirmed and by these presents does grant,
bargain, sell, alien, release, convey and confirm unto the said
Mortgagee, its successors or assigns, forever,
All the tract or parcel of land and premises situated, lying and
being in the Lower Township in the County of Cape May in the State
of New Jersey more particularly described as follows:
SEE EXHIBIT A ATTACHED HERETO AND MADE A PART OF
Notwithstanding any other provision contained herein or in the
Note, it is agreed that the execution of the Note shall impose no
personal liability upon the Mortgagor for payment of the
indebtedness evidenced thereby and in the event of a default, the
holder of the Note shall look solely to the property subject to
this Mortgage and to the rents, issues and profits thereof in
satisfaction of the indebtedness evidenced by the Note and will not
seek or obtain any deficiency or personal judgement against the
Mortgagor except such judgment or decree as may be necessary to
foreclose or bar its interest in the property subject to the this
Mortgage and all other property mortgaged, pledged, conveyed or
assigned to secure payment of the Note; provided, that nothing in
this condition and no action so taken shall operate to impair any
obligation of the marker under the Regulatory Agreement herein
refereed to and made a part hereof.
Together with all buildings and improvements thereon and all
fixtures, and all and singular the tenements, hereditaments and
appurtenances thereunto belonging or in any wise appertaining, and
the reversion or reversions, remainder and remainders, rents issues
and profits thereof; and also all the estate, right title,
interest, property, possession, claim and demand whatsoever, as
will in law as in equity, of the Mortgagor, of in, and to the same,
and every part and parcel thereof, with the appurtenances; and also
all building materials, equipment, furniture, furnishings, or other
property installed or to be installed or used in and about the
building or buildings now erected or hereafter to be erected upon
the lands herein described which are necessary to the complete and
comfortable use and occupancy of such building or buildings for the
purpose for which they were or are to be erected, including but not
limited to all gas and electric appliances and fixtures; all
engines, motors dynamos, elevators, and machinery; all boilers,
radiators, heaters, furnaces, stoves, and heating equipment all
stoves, ranges, and cooking equipment; all bathtubs, sinks, basins,
pipes, hot water boilers, faucets, and other plumbing fixtures; all
mantels; all refrigerators, whether mechanical or otherwise; all
kitchen and other cabinets; all washing machines, laundry tubs, and
ironers; all lighting, air-conditioning and ventilating equipment;
all awnings, shades. screens, and venetian blinds; and all
incinerating equipment, together with appurtenances thereto. (The
Mortgagor hereby declaring that it is intended that the items
herein enumerated shall be deemed to have been permanently
installed as part of the realty.) To have and to hold the above
granted and described premises with the appurtenances and articles
of personal property unto the said Mortgagee, to its own proper
use, benefit and behalf forever; and the said Mortgagor does
covenant with the said Mortgagee, that it is seized of an
indefeasible estate in fee simple in said premises, and will
warrant and forever defend the title thereto unto the said
Mortgagee, against all lawful claims whatsoever.
Provided always, and these presents are upon this express
condition, that if the Mortgagor shall well and truly pay unto the
said Mortgagee, the said sum of money mentioned in the note, the
interest thereon, and all other payments to be made by the
Mortgagor hereunder without any deduction or credit for any amount
payable for taxes, according to the terms of said note, then these
presents and the estate hereby granted shall cease, determine and
be void.
And the Said Mortgagor does covenant and agree to pay unto the
Mortgagee the sum of money and interest as mentioned above and
expressed in the note:
1. That, together with, and in addition to, the monthly payments
of interest or of principal and interest payable under the terms of
the note secured hereby, it will deposit with the Mortgagee on the
first day of each month after the date hereof until the said note
is fully paid, the followings sums:
(a) An amount sufficient to provide the Mortgagee with funds too
pay the next mortgage insurance premium if this mortgage and the
note secured hereby are insured, or a monthly service charge, if
they are held by the federal Housing Commissioner, as follows:
(i) If and so long as said note of even date and this mortgage are
insured or are reinsured under the provisions of the National
Housing Act, an amount sufficient to accumulate in the hands of the
Mortgagee 1 month prior to its due date the annual mortgage
insurance premium, in order to provide the Mortgagee with funds to
pay such premium to the Federal Housing Commissioner pursuant to
the National Housing Act, as amended, and applicable Regulations
thereunder or,
(ii) Beginning with the first day of the month following an
assignment of this mortgage and the note secured hereby to the
Commissioner, a monthly service charge which shall be an amount
equal to one-twelfth of half percent of the average outstanding
principal balance due on the note computed for each successive year
beginning with the average outstanding principal balance due on the
note computed for each successive year beginning with the first of
the month following such assignment, without taking into account
delinquencies or prepayments.
(b) A sum equal to the group rents, if any, next due, plus the
premiums that will next become due and payable on policies of fire
and other hazard insurance covering the premises accrued hereby,
plus water rates, taxes and assessments next due on the premises
covered hereby (all as estimated by the Mortgagee) less all sums
already paid therefor, divided by the number of months to elapse
before 1 month prior to the date when such ground rents premiums,
water rates, taxes and assessments will become delinquent, such
sums to be held by the Mortgagee to pay said ground rents,
premiums, water rates, taxes, and special assessments.
(c) All payments mentioned in the two preceding subsections of
this paragraph and all payments to be made under the note secured
hereby shall be added together and the aggregate amount thereof
shall be paid by the Mortgagor each month in a single payment to be
applied by the Mortgagee to the following items in the order set
forth:
(I) premium charges under the contract of mortgage insurance with
the Federal Housing Commissioner or service charge:
(II) group rents, taxes, water rates, special assessments, fire,
and other hazard insurance premiums;
(III)interest on the balance of the principal due and owing on the
note secured hereby; and amortization of the principal of said
note.
(IV) amortization of the principal of said note
Any deficiency, in the amount of such aggregate monthly payment
shall, unless made good by the Mortgagor prior to the due date of
the next such payment, constitute an event of default under this
mortgage.
2. Any excess fund accumulated under (b) of paragraph 1 remaining
after payment of the items therein mentioned, shall be credited to
subsequent monthly payments of the same nature required thereunder;
but if any such item shall exceed the estimate therefor, the
Mortgagor shall without demand forthwith make good the deficiency.
Failure to do so before the due date of such item shall be a
default hereunder. In case of termination of the Contract of
Mortgage Insurance by prepayment of the mortgage in full, or
otherwise (except as hereinafter provided), accumulations under (a)
of paragraph 1 hereof not required to meet payments due under the
Contract of Mortgage Insurance, shall be credited to the Mortgagor.
If the property is sold under foreclosure or is otherwise acquired
by the Mortgagee after default, any remaining balance of the
accumulations under (b) of paragraph 1 shall be credited to the
principal of the mortgage as of the date of commencement of
foreclosure proceedings or as of date the property is otherwise
acquired; and accumulations under (a) of paragraph 1 shall be
similarly applied unless required to pay sums due to the
Commissioner under the Contract of Mortgage Insurance.
3.That the Mortgagor will pay all group rents, if any, taxes,
assessments, water rates and other governmental or municipal
charges or impositions to the extent provision therefor has not
been made by monthly payments as hereinbefore provided before the
same become delinquent or subject to interest or penalties, and in
default thereof the Mortgagee may pay the same. All such sums so
paid by the Mortgagee plus any sums which the Mortgagee has
advanced to pay mortgage insurance premiums or fire and other
hazard insurance premiums not provided for by monthly payments
hereunder, shall be added to the principal of this mortgage, shall
bear interest at nine and one half per centum from the date of the
advance and shall be due and payable to the Mortgagee upon demand.
4. That it will not claim or demand or be entitled to receive any
credit or credits on the principal indebtedness to secure payment
of which this mortgage is made, or on the interest payable thereon,
for so much of the taxes assessed against said lands as is equal to
the tax rate applied to the principal indebtedness due on this
mortgage or any part thereof, and that no deduction shall be
claimed from the taxable value of said lands and premises by reason
of this mortgage; and that during the continuance of this mortgage,
the Mortgagor shall keep all the buildings subject to this mortgage
in good and substantial repair, and that if the Mortgagor shall
neglect to do so, or the buildings, or any of them, shall become
vacant the mortgagee may at its option, enter upon said premises
from time to time, in order to repair, and keep in repair, the said
premises, without thereby becoming liable to the Mortgagor, or any
person holding under it in possession, and that the Mortgagee's
expense of so repairing, or keeping in repair, shall be a lien on
said mortgaged premises, added to the principal of said note, and
secured by these presents, payable on demand with interest,
together with any charge that may be imposed by the Mortgagee.
That the Mortgagor will not commit or permit waste or make any
structural alterations in the premises without written consent of
the Mortgagee and the Commissioner.
5. That the Mortgagee may, at its option, advance and pay any sum
of money that in its judgement may be necessary to perfect title to
the mortgaged premises in the Mortgagor, so as to make this a first
lien upon the premises above described, or to preserve the security
intended to be given by this mortgage, and all such sums shall be
added to the amount of said note and secured by these presents,
payable on demand.
6. That the Mortgagor will keep the improvements now existing or
hereafter erected on the mortgaged property insured by standard
policies against loss by fire and such other hazards, casualties
and contingencies, as may be stipulated by the Commissioner upon
the insurance of the mortgage and other hazards as may be insured
from time to time by the Mortgagee, and all such insurance shall be
carried in such companies and be for such as may be required by the
Mortgagee, and be in an amount which will comply with the co-
insurance clause applicable to the location and character of the
property; but not less than eighty per centum of the actual cash
value of the insurable improvements and equipment of the property.
Such policies shall be endorsed with standard mortgagee clause with
loss payable to the Mortgagee and the Federal Housing Commission as
interest may appear, and shall be deposited with the Mortgagee.
That if the premises covered hereby, or any part thereof, shall be
damaged by fire or other hazard against which insurance is held
hereinabove provided, the amount paid by any insurance company in
pursuance of the contract of insurance to the extent of the
indebtedness then remaining unpaid, shall be paid to the Mortgagee
and at its option may be applied to the debt or released for the
repairing or rebuilding of the premises.*
7. That in the event the said premises or any part thereof shall be
taken or condemned for public or quasi-public purposes by the
proper authorities, the Mortgagor shall have no claim against the
award for damages, or be entitled to any portion of the award until
the within mortgage shall be paid and all rights of the Mortgagor
to damages are hereby assigned to the Mortgagee to the extent of
any indebtedness that remains unpaid; the Mortgagor, however have
the right to appeal said award to the courts of complete
jurisdiction.
8. That in the event the Mortgagor should fail to pay within thirty
(30) days of its due date any payment secured hereby, the Mortgagor
or anyone claiming by, through, or under it shall upon demand of
the Mortgagee, become a month to month tenant of the Mortgagee and
shall pay as monthly rental for the portion of the mortgaged
premises acquired by the Mortgagor, the respective sums agreed to
be paid as monthly payments on the mortgage in advance on the
dates and in the manner provided for such payment in said note and
mortgage; and in default of so doing, the Mortgagor and anyone
claiming by, through, or under it, may. be dispossessed by
proceeding under the Landlord and Tenant Act, or any other
appropriate summary proceedings, and this covenant shall be
effective wither with or without any actin being brought to
foreclose this mortgage and without applying for a receiver to
collect rents.
9. That failure at any one or more times of the Mortgagee to assert
its right to the security created by the assignment of said rents,
shall at not item be deemed a waiver of said Mortgagor's right to
said security and the right to collect said rents, nor shall it
impair the security of the mortgage or have any effect on the
amount due hereunder.
10. That in the event the Mortgagor should fail to pay within
thirty (30) days of the due date any payment of interest or any
installment of principal, or any part thereof or any monthly
payment due under paragraph numbered above; or in the event the
Mortgagor shall fail to comply with the laws, rules, regulations
and ordinances made or promulgated by lawful authority which are
now or may hereafter become applicable to the mortgaged premises,
within sixty (60) days after a notice in writing given by the said
Mortgagee to the Mortgagor; or if any building, structure, or other
improvement on the premises shall be removed or demolished by the
Mortgagor or owner, or its agents or servants, without the written
consent of the Mortgagee; or should any default be made by the
Mortgagor in the performance of any covenants in this mortgage, or
in the building loan agreement hereinafter mentioned; or should
proceedings be instituted for the foreclosure or collection of any
mortgage or other lien prior to or subordinate to said mortgage
affecting the premises therein; or should proceedings be instituted
by or against the Mortgagor or owner under any bankruptcy or
insolvency law, or should the Mortgagor commit any act of
bankruptcy; or should title to or possession of, the mortgaged
premises pass to any receiver on trustee or assignee for benefit of
creditors: then in any of these cases, the aforesaid principal
indebtedness or so much thereof any may remain unpaid with all
arrearages of interest charges and all advancements, at the option
of the Mortgagee, shall become and be due immediately thereafter.
11. That the holder of this mortgage, in any action to foreclose,
shall be entitled to the appointment of a receiver of the rents and
profits of the mortgaged premises as a matter of right and without
notice, with power to collect the rents, issues, and profits of
said mortgaged premises, due and becoming due during the pendency
of such foreclosure suit, such rents and profits being hereby
expressly assigned and pledged as additional security for the
payment of the indebtedness secured by this mortgage without regard
to the value of the mortgaged premises or the solvency of any
person or persons liable for the payment of the mortgaged
indebtedness. The Mortgagor for itself and any subsequent owner
hereby waives any and all defenses to the application for a
receiver as above and hereby specifically consents to such
appointment without notice, but nothing herein contained is to be
construed to deprive the holder of the mortgage of any other right,
remedy or privilege it may now have under the law to have a
receiver appointed. The provision for the appointment of a
receiver of the rents and profits and the assignment of such rents
and profits, is made an express conditions upon which the loan
hereby secured is made. The rights and remedies herein provided
for shall be deemed to be cumulative and in addition to, and not in
limitation of, those provided by law.
12. That the funds to be advanced herein are to be used in the
construction of certain improvements on the lands herein described,
in accordance with a building loan agreement between the Mortgagor
and Mortgagee, dated as of December 14, 1994, which building loan
agreement (except such part or parts thereof as may be inconsistent
herewith) is incorporated herein by reference to the same extent
and effect as if fully set forth and made a part of this mortgage,
and if the construction of the improvements to be made pursuant to
said building loan agreement shall not be carried on with
reasonable diligence, or shall be discontinued at any time for any
reason other than strikes or lockouts, the Mortgagee, after due
notice to the Mortgagor, or any subsequent owner, is hereby
invested with full and complete authority to enter upon the said
premises, employ watchmen to protect such improvements from
depredation or injury and to preserve and protect the personal
property therein, and to continue any and all outstanding contracts
for the erection and completion of said building or buildings; to
make and enter into any contracts and obligations whenever
necessary, either in its own name or in the name of the Mortgagor,
or other owner, and to pay and discharge all debts, obligations and
liabilities incurred thereby. All such sums so advanced by the
Mortgagee (exclusive of advances of the principal of the
indebtedness secured hereby) shall be added to the principal of the
indebtedness secured hereby and shall be secured by this mortgage
and shall be due and payable on demand with interest at the per
centum per annum rate then in force, but no such advances shall be
insured unless same are specially approved by the Federal Housing
Commissioner prior to the making thereof. Nothing herein contained
shall be construed as requiring or placing the Mortgagee under
obligation to continue or complete such improvements, but the
principal sum and other charges provided for herein shall, at the
option of the Mortgagee or holder of this mortgage and the note
securing the same, become due and payable on the failure of the
Mortgagor, or other owner, to keep and perform any of the
covenants, conditions and agreements of said building loan
agreement, anything contained herein to the contrary
notwithstanding. This covenant shall be terminated upon the
completion of the improvements to the satisfaction of the Mortgagee
and the making of the final advance as provided in said building
loan agreement.
13. The Mortgagor covenants that it will not voluntarily create or
permit to be created against the property subject to this mortgage
any lien or liens inferior or superior to the lien of this
mortgage; and further that it will keep and maintain the same free
from the claim of all persons supplying labor or materials which
will enter into the construction of any and all buildings now being
erected or to be erected on said premises, and on the failure of
the Mortgagor, or other owner to perform these covenants, or any
part thereof, thereupon the principal and all arrears of interest
shall, at the option of the Mortgagee or any holder of the note
secured by this mortgage, become due and payable, anything
contained herein to the contrary notwithstanding.
14. The Mortgagor covenants and warrants that the improvements
about to be made upon the premises above described and all plans
and specifications comply with all State laws, municipal ordinances
and regulations made or promulgated by lawful authority, and that
the same will upon completion comply with all such laws, municipal
ordinances and regulations made or promulgated by lawful authority,
and that the same will upon completion comply with all such laws,
municipal ordinances and regulations and with the rules of the
applicable Board of Fire Underwriters. In the event the Mortgagor,
or other owner, shall at any time fail to comply with such rules,
regulations, laws, and ordinances which are now or may hereafter
become applicable to the premises above described, after due notice
and demand by the Mortgagee, thereupon the principal sum and all
areas of interest and other charges provided for herein, shall at
the option of the Mortgagee become due and payable.
* The insurance carrier providing such insurance shall be chosen
by the Mortgagor subject to approval by the Mortgagee; provide that
such approval shall not be unreasonably withheld.
15. The Mortgagor covenants that so long as this mortgage and the
said note secured hereby are insured under the provisions of the
national Housing Act, or held by the Federal Housing Commissioner,
it will not execute or file for record any instrument which imposes
a restriction upon the sale or occupancy of the mortgaged property
on the basis of race, color or creed. Upon any violation of this
undertaking, the Mortgagee may, at its option, declare the unpaid
balance of the debt secured hereby immediately due and payable.
16. The Mortgagor covenants and agrees that so long as the mortgage
and the note secured hereby are insured under the provisions of the
National Housing Act, or held by the Federal Housing Commissioner,
it will not rent dwelling accommodations in the mortgaged premises
at rental rates in excess of the rates permitted by the Federal
Housing Commissioner or for periods of less than 1 month or in
excess of 3 years, nor rent the premises as an entirety. Upon any
violation of this undertaking, the Mortgages may, at its option,
declare the unpaid balance of the debt secured hereby immediately
due and payable.
17. The Mortgagor covenants that it will not permit or suffer the
use of any of the mortgaged property for any purpose other than
that for which the same is now agreed upon to be used.
18. The Regulatory Agreement of even date herewith executed by the
Mortgagor herein, which is being recorded simultaneously herewith,
is incorporated in and made a part of this mortgage. Upon default
under the Regulatory Agreement and upon request by the Federal
Housing Commissioner, the Mortgagee, at its option, may declare
this mortgage in default and may declare the whole of the
indebtedness secured hereby to be due and payable.
And it is further agreed by and between the parties to theses
presents that in the vent of the failure of the Mortgagor to pay
any sum due under this mortgage or the note secured hereby within
thirty (30) days of the due date of such payment; or, if any
default should be made herein by the Mortgagor in the performance
of nay covenant herein contained, then it shall and may be lawful
for the said Mortgagee to enter upon and take possession of the
said mortgaged premises and to let the same, either in its own name
or in the name of the said Mortgagor, and to receive the rents,
issues, and profits of the said mortgaged premises and to apply the
same, after the payment of all necessary charges and expenses on
account of the amount hereby secured; and said rents and profits
are, in the event of any such defaults as aforesaid, hereby
assigned to the said Mortgagee: Provided always that after all
defaults under this indenture shall have been remedied and amended
and all necessary charges and expenses incurred by reason thereof
shall have been paid, possession of said mortgaged premises shall
be restored to the Mortgagor who shall thereafter again hold the
same subject to the within mortgage as if the said Mortgagee had
made no entry, but nothing hereinbefore contained shall extend to
or affect any subsequent default or impair any right consequent
thereon. In the event of entry as aforesaid, the Mortgagee shall
render an account to the Mortgager for all moneys received under
said entry and shall pay over to the Mortgagor all excess moneys
over and above the moneys which said Mortgagee is entitled to have
by the terms of the said note and mortgage. The said Mortgagee
while in possession of said mortgaged premises shall only be liable
to account for the rents actually received.
All of the covenants and conditions herein contained shall be for
the benefit of, and bind the successors and assigns of the
respective parties hereto.
IN WITNESS WHEREOF the Mortgagor has caused this Instrument to be
duly executed in its behalf by the General Partner, GERIATRIC &
MEDICAL SERVICES, INC., on the day and year first above written.
NORTH CAPE CONVALESCENT CENTER ASSOCIATES, L.P.
By: Geriatric & Medical Services, Inc., General Partner
By: Andrew G. Conn, Asst. Vice President
Attest:
James J. Wankmiller, Secretary
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF PHILADELPHIA
On this 15th day of December, 1994 before me, the undersigned
officer, personally appeared Andrew G. Conn, who acknowledged
himself to be the Assistant Vice President of Geriatric & Medical
Services, Inc., the corporation named in the foregoing instrument
as the General Partner of NORTH CAPE CONVALESCENT CENTER
ASSOCIATES, L.P., a limited partnership and that he as such
Assistant Vice President of the General Partner, being authorized
to do so, executed the foregoing instrument for the purposes
therein contained in the name of such Limited Partnership by
himself as Assistant Vice President of the General Partner, on
behalf of Said limited partnership.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Marie C. Chaney
Notary
STATE OF NEW JERSEY
LOAN NO.
MORTGAGE
North Cape Convalescent Center Associates, L.P.
TO
Republic Realty Mortgage Corporation
Received for record on the day of , ad 19 , at
o'clock M., and recorded in Book No. of Mortgages at pay
Recorded
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
FEDERAL HOUSING ADMINISTRATION
PROJECT NO. 035-43053
NORTH CAPE CONVALESCENT CENTER
BEGINNING AT THE INTERSECTION OF THE SOUTHWESTERLY SIDE OF TOWN
BANK ROAD, AS WIDENED TO 33 FEET SOUTHWEST OF CENTER LINE, WITH THE
SOUTHEASTERLY SIDE OF SHUNPIKE, AS WIDENED TO 43 FEET SOUTHEAST
FROM CENTER LINE; AND FROM SAID BEGINNING POINT EXTENDED
1. SOUTH FIFTY-THREE DEGREES FIFTEEN MINUTES TWENTY-EIGHT SECONDS
EAST (S. 53 DEGREES 15 FEET 28 INCHES E) EIGHT HUNDRED SIXTY-FOUR
AND NINETEEN HUNDREDTHS (864.19) FEET ALONG SAID WIDENED RIGHT-OF-
WAY OF TOWN BANK ROAD TO THE NORTHWESTERLY LINE TO LANDS OF THE
LOWER TOWNSHIP BOARD OF EDUCATION (LOT 1.03); THENCE
2. SOUTH THIRTY-FIVE DEGREES FORTY-FOUR MINUTES FIFTY SECONDS WEST
(S 35 DEGREES 44 FEET 50 INCHES W) NINE HUNDRED SEVENTY-SIX AND
THIRTY-FIVE HUNDREDTHS (976.35) FEET ALONG SAID LINE OF THE LOWER
TOWNSHIP BOARD OF EDUCATION TO THE NORTHEASTERLY RIGHT-OF-WAY OF
CAP MAY-LEWES FERRY APPROACH ROAD (ALSO KNOW AS NEW JERSEY STATE
HIGHWAY ROUTE NO. 9, ALSO KNOWN AS SANDMAN BOULEVARD, ALSO KNOWN AS
LINCOLN BOULEVARD), VARIABLE WIDTHS; THENCE
3. NORTH FIFTY-TWO DEGREES FIFTY-FOUR MINUTES SEVENTEEN AND ONE
TENTH SECONDS WEST (N 52 DEGREES 54 FEET 17.1 INCHES WEST) FIVE
HUNDRED TWENTY-ONE AND EIGHTY-SEVEN HUNDREDTHS (521.87) FEET ALONG
SAID SIDE OF CAPE MAY-LEWES FERRY APPROACH ROAD TO A CONCRETE
MONUMENT FOUND MARKING A POINT OF CURVATURE THEREIN; THENCE
4. FOLLOWING A 5,644.80 FEED RADIUS CURVE TO THE RIGHT, PASSING
THROUGH AN ARC ANGEL OF TWO DEGREES FOURTEEN MINUTES NO SECONDS
((02 DEGREES 14 FEET 00 INCHES), AN ARC LENGTH OF TWO HUNDRED
TWENTY AND FOUR HUNDREDTHS (220.04) FEET, THE CHORD OF SAID CURVE
BEARING NORTH FIFTY-ONE DEGREES THIRTY-THREE MINUTES TWENTY-SEVEN
SECONDS WEST (M 51 DEGREES 33 FEET 27 INCHES W) TWO HUNDRED TWENTY
AND TWO HUNDREDTHS (220.02) FEET TO ANOTHER CONCRETE MONUMENT FOUND
MARKING A POINT OF TANGENCY THEREIN; THENCE
5. NORTH FIFTY DEGREES TWENTY-SIX MINUTES TWENTY-SIX AND FIVE
TENTHS SECONDS WEST (N 50 DEGREES 26 FEET 26.5 INCHES W) TWO
HUNDRED EIGHTY-NINE AND FIFTY-TWO HUNDREDTHS (289.52) FEET STILL
ALONG SAID SIDE OF CAPE MAY-LEWES FERRY APPROACH ROAD TO THE
AFORESAID WIDENED RIGHT-OF-WAY OF SHUNPIKE; THENCE
6. NORTH FORTY-FIVE DEGREES FORTY-ONE MINUTES NO SECONDS EAST (N 45
DEGREES 41 FEET 00 INCHES) NINE HUNDRED SIXTY-THREE AND NINETY-
FOUR-HUNDREDTHS (963.94) FEET ALONG SAID WIDENED RIGHT-OF-WAY OF
SHUNPIKE TO THE AFORESAID SIDE OF TOWN BANK ROAD AND PLACE OF
BEGINNING.
December 21, 1994
Department of Housing and
Urban Development
Newark Regional Office
One Newark Center
Newark, NJ 07102
RE: North Cape Convalescent Center
Federal Housing Administration
Project No. 035-43053
Gentlemen:
Republic Realty Mortgage Corporation (hereinafter referred to as
"Republic")hereby certifies as follows with respect to the
financing of North Cape Convalescent Center (hereinafter referred
to as the "Project"), which is identified among the records of the
Federal Housing Administration (hereinafter referred to as "FHA")
as FHA Project No. 035-43053.
1. Legal title to the insured Mortgage for the Project shall be
held by Republic.
2. The Participation Agreement under which the Third Party
Investor is acquiring a 100% Participation Interest in the Mortgage
Loan for the Project provides that:
a. Republic shall remain the Mortgagee of record under the contract
of Mortgage Insurance.
b. The Federal Housing Commissioner shall have no obligation to
recognize or deal with anyone other than Republic with respect to
the rights, benefits and obligations of Republic under the contract
of Mortgage Insurance, and
c. North Cape Convalescent Associates, L.P. (hereinafter referred
to as the "Mortgagor") shall have no obligation to recognize or do
business with anyone other than Republic or its servicing agent
with aspect to rights, benefits and obligations of the Mortgagor or
Republic under the Mortgage.
REPUBLIC REALTY MORTGAGE CORPORATION
BY: Jeaneda C. Bishop, Vice President
Attest: Raymond J. Walschlager, Assistant Secretary<PAGE>
December 21, 1994
Department of Housing and
Urban Development
Newark Regional Office
One Newark Center
Newark, NJ 07102
RE: North Cape Convalescent Center
Federal Housing Administration
Project No. 035-43053
Gentlemen:
Republic Realty Mortgage Corporation has obtained the mortgage
funds from a third party investor, and we are required in writing
to repay such investor at a stated interest rate and in accordance
with a fixed repayment schedule in connection with the financing of
the above captioned Project.
REPUBLIC REALTY MORTGAGE CORPORATION
BY: Jeaneda C. Bishop, Vice President
Attest: Raymond J. Walschlager, Assistant Secretary<PAGE>
CERTIFICATE REGARDING
"OTHER BOND OBLIGATIONS"
Department of Housing and
Urban Development
Newark Regional Office
One Newark Center
Newark, NJ 07102
RE: North Cape Convalescent Center
Federal Housing Administration
Project No. 035-43053
Gentlemen:
In connection with the referenced transaction, the undersigned
Mortgagee, Republic Realty Mortgage Corporation, hereby certifies
to the U.S. Department of Housing and Urban Development that,
pursuant to a participation agreement dated November 3, 1994,
between the undersigned and CS First Boston Mortgage Capital Corp.,
the third party investors, the undersigned as the insured mortgagee
has obtained the mortgage funds from the third party investors and
has agreed in writing to repay such investors at a stated interest
rate and in accordance with a fixed repayment schedule. Based on
said agreement, the insured mortgage is funded with the proceeds of
"other bond obligations" and includes prepayment restrictions and
prepayment penalty charges as permitted by HUD Handbook 4430.1,Rev-
1, Par 1-21(B)(4), derived from Mortgagee Letter 87-9.
The foregoing certification by the undersigned is made and
delivered for the purpose of influencing an official action of HUD
and is to be relied upon by HUD as true.
Witness the signature of the undersigned as of December 21, 1994.
REPUBLIC REALTY MORTGAGE CORPORATION
BY: Jeaneda C. Bishop, Vice President
Attest: Raymond J. Walschlager, Assistant Secretary<PAGE>
FHA Form No 4151-h
(Corporate)
(Rev. February 1961
MORTGAGE NOTE
5,636,400,00 Lower Township, New Jersey
Dated: as of December 14, 1994
For value received, the undersigned, NORTH CAPE CONVALESCENT CENTER
ASSOCIATES, L.P., a limited partnership - organized and existing
under the laws of the Commonwealth of Pennsylvania promises to pay
to REPUBLIC REALTY MORGAGE CORPORATE---, a corporation organized
and existing under the Laws of the State of Delaware or order, the
principal sum of FIVE MILLION SIX HUNDRED THIRTY SIX THOUSAND FOUR
HUNDRED DOLLARS ($5,636,400.00) with interest from date at the rate
of Nine and One Half per centrum (9.5 percent) per annum on the
unpaid balance until paid. The said principal and interest shall
be payable in monthly installments as follows:
Interest alone payable on the first day of January 1995 and on the
first day of each month thereafter, up to an including May 1, 1996.
Thereafter and commencing on the first day of June 1996, monthly
installments of interest and principal shall e paid in the sum of
$45,658.31 each. Such payments to continue monthly thereafter on
the first day of each succeeding month until the entire
indebtedness has been paid. In any event, the balance of principal
(if any) remaining unpaid, plus accrued interest shall be due and
payable on May 1, 2036. The installments of interest and principal
shall be applied first to interest at the rate of 9.5 percent per
annum upon the principal sum or so much thereof as shall from time
to time remain unpaid, and the balance thereof shall be applied on
account of principal.
Both principal and interest, under this note, as well as the
additional payments set forth in the mortgage, shall be payable at
the office of REPUBLIC REALTY MORTGAGE CORPORATION - in Chicago,
Illinois - or such other place as the holder may designate in
writing.
And it is hereby expressly agreed that the undersigned, its
successors and assigns, shall not make or claim any deduction from
or credit on the interest herein, and in the mortgage securing this
note agreed to be paid, by reason of any tax or taxes, assessed ot
to be assessed, on the real estate described in said mortgate or
any part thereof; and that should any default be made in the
payment of any monthly installment on account and that should any
default be made in the payment of any monthly installment on
account of principal or interest, or principal and interest, or any
part thereof which is not made good prior to the due date of the
next such installment, or any of the other payments to be made
under the provisions of the mortgage securing this note on the day
whereon the same is payable as provided in said mortgage, or should
any ground rent, tax, or installment thereof, assessment, water
rates, or other municipal or governmental rate, charge, imposition,
or lien be hereafter imposed or acquired upon the premises
described in said mortgage, the payment of which is not otherwise
provided for therein, become due and payable and remain unpaid for
the space of thirty (30) days, then and from thenceforth, that is
to say, after the lapse or expiration of either of said periods, as
the case may be, or should any default be made in the performance
of any covenants hereof or in said mortgage securing the same, or
under the building loan agreement mentioned in the mortgage, or
should proceedings be instituted for the foreclosure or collecting
of any mortgage or other lien prior to or subordinate to said
mortgage affecting the premises therein, or should proceedings be
instituted by or against the undersigned under any bankruptcy or
insolvency law, or should the undersigned commit any act of
bankruptcy, or should title to or possession of the premises
described in said mortgage pass to any receiver or trustee or
assignee for benefit of creditors; then at such time, or upon the
happening of any such event, as the case may be, the above first-
mentioned principal sum, or so much thereof as may at the time of
such default remain unpaid, with all the arrearage of interest
thereon, and all other payments provided in said mortgage securing
this note, to be made by undersigned, at the option of said holder
thereof, shall become and be due and payable immediately thereafter
although the period may not have then expired, anything herein
contained to the contrary thereof in anyway notwithstanding; and
the said holder may at its option also pay any such premium of fire
or other insurance, ground rent, tax or installment thereof,
assessment or water rate in arrears as aforesaid, or make any other
advance provided for in the mortgage, and in the amount so paid
shall be added to and become part of the principal sum secured
hereby and by said mortgage, and shall be payable on demand with
interest at Nine and One Half per centum (9.5 percent) per annum.
See paragraph 3 of Rider attached hereto.
All parties to this note hereby waive presentment for payment,
demand, protest, notice of protest, and notice of dishonor.
See Rider attached hereto and made a part hereof (AGC)
Signed and sealed the day and year above written.
NORTH CAPE CONVALESCENT CENTER ASSOCIATES, L.P.
By: Geriatric & Medical Services, Inc., General Partner
By: Andrew G. Conn, Assistant Vice President<PAGE>
I HEREBY CERTIFY that this is the
note described in and secured by mortgage of even date herewith, in the same
principal; amount as herein stated and secured by real estate in the County
of Cape May
-
state of New Jersey.
Date this 20 day of December 1994.
Marie E. Chaney
Notary Public
Notarial Seal
Marie E. Chaney
City of Philadelphia, Phila. County
My Commission Expires September 22, 1997.
STATE OF NEW JERSEY
Loan No.
MORTGAGE NOTE
North Cape Convalescent Center Associates, L.P.
TO
Republic realty Mortgage Corporation
No. 035-43-53
Insured under Section 232 - the National Housing Act and
Regulations thereunder of the Federal Housing Commission
In effect on October 19, 1994 to the extent of advances approved by
the Commissioner
FEDERAL HOUSING COMMISSIONER
By: Authorized Agent
Date: 12/21/94
A total sum of $
Has been approved for insurance hereunder by the Commission
FEDERAL HOUSING COMMISSIONER
By: Authorized agent
Date:
Reference is made to the Act and to the Regulations thereunder
covering assignments of the insurance protection on this note.<PAGE>
RIDER TO
MORTGAGE NOTE
FEDERAL HOUSING ADMINISTRATION
PROJECT NO 035-43053
NORTH CAPE CONVALESCENT CENTER
1. Incorporation by Reference. This Rider is incorporated by
reference in and made a part of that certain Mortgage Note (The
Note), dated as of December 14, 1994 executed by NORTH CAPE
CONVALESCENT CENTER ASSOCIATES, L.P. (the Mortgagor or Borrower),
as maker, and payable to the order or REPUBLIC REALTY MORTGAGE
CORPORATION (the Mortgagee or Holder) in connection with the
following nursing home (the Project):
North Cape Convalescent Center
FHA Project No. 035-43053
Lower Township, New Jersey
Capitalized terms used herein shall have the same meaning given to
such terms in the Note.
2. HUD Required Payments. Notwithstanding any prepayment
prohibition imposed and/or penalty required by the Note with
respect to prepayments made prior to December 22, 2004, the
indebtedness may be prepaid in part of in full without the consent
of the Holder and without prepayment penalty if HUD determines that
prepayment will avoid a mortgage insurance claim and is, therefore,
in the best interest of the Federal Government.
3. Other Prepayments. Any prepayments as to which Paragraph 2
above is inapplicable shall be subject to the terms and provisions
of this Paragraph 3.
a. Prepayment Limitations. Except as provided in Paragraph 2 above,
the Note may not be prepaid in whole or in part on or prior to
December 21,2000.
During the period following December 21, 2000 the Note may be
prepaid in whole or in part at any time, provided that (i) all of
the requirements and conditions of this Paragraph 3 are complied
with and (ii) said prepayment is accompanied by the applicable
prepayment premium (expressed as a percentage of the principal
amount so prepaid)set forth below:
Prepayment Limitation Period Prepayment Premium
(a) Five percent (5) if prepaid during the period of December 22,
2000 to December 21, 2001;
(b) Four percent (4) if prepaid during the period of December 22,
2001 to December 21, 2002.
(c) Three percent (3) if prepaid during the period of December 22,
2002 to December 21, 2003;
(d) Two percent (2) if prepaid during the period of December 22,
2003 to December 21, 2004;
(e) One percent (1) if prepaid during the period of December 22,
2004 to December 21, 2005;
No prepayment penalty shall be imposed thereafter.
Subsequent to December 21, 2005, the following three provisions
shall apply:
Privilege is reserved to pay the debt in whole or in an amount
equal to one or more monthly payments on principal next due, on the
first day of any month prior to maturity upon at least thirty (30)
days' prior written notice to the holder. If this debt is paid in
full prior to maturity and while insured under the National Housing
Act, all parties liable for payment thereof hereby agree to be
jointly and severally bound to pay to the holder thereof the
adjusted premium charge referred to in the applicable Regulations
promulgated under the National Housing Act, as amended.
No default shall exist by reason of nonpayment of any required
installment of principal so long as the amount of optional
additional prepayments of principal already made pursuant to the
foregoing privilege of prepayment equals or exceeds the amount of
such required installment of principal.
Notwithstanding any provisions for a prepayment charge or premium,
prepayments of principal which do not exceed an aggregate of
fifteen percentum (15) of the original principal sum of this note
in any one calendar year may be made without any prepayment charge
or premium.
b. Applicability. The provisions of this Paragraph 3 shall apply
to any prepayment made during the Prepayment Limitation Period
specified above, irrespective of whether said prepayment is
voluntary or involuntary, including any prepayment occurring due to
an acceleration of the debt by the Holder as a result of any
default by the Borrower or in the event the debt is satisfied or
released by foreclosure (whether by power of sale or by judicial
proceedings), deed in lieu of foreclosure, or by any other means.
The restrictions on prepayment contained in this Paragraph 3 shall
not be waived, modified, altered, amended or deleted without the
written consent of the Holder.
c. Notice Requirements. The Borrower shall give the Holder not
less than thirty (30) days advance written notice of any
prepayment, which notice shall specify the date on which prepayment
is to be made, the principal amount of such prepayment and the
total amount to be tendered.
d. Date of Payment. Any prepayment made hereunder shall be made to
the Holder only on the first day of any given month.
e. Amount of Payment. Any prepayment made before December 21, 2005
shall be accompanied by an amount of money that is sufficient to
provide for the payment of the following:
i. The applicable prepayment premium as provided for in Paragraph
3
(a) hereof; and
ii. Interest accrued and unpaid on the principal balance of the
Note, to and including the date of prepayment; and
iii. All other sums due or owing under the Note or the Mortgage at
the time of prepayment.
4. Late Charge. In the event any installment or part of any
installment due hereunder becomes delinquent for more than fifteen
(15) days, there shall be due at the option of the Holder hereof,
in addition to other sums then due hereunder, a sum equal to two
percent (2) of the amount of principal and interest so delinquent.
Late charges must be separately charged to and collected from the
Mortgagor and cannot be deducted from any total monthly mortgage
payment, or collected from any reserve escrow, residual receipts
funds, or from any interest accruals thereto. Whenever, under the
law of the State of New Jersey, the amount of any such late charges
is considered to be additional interest, this provision shall not
be used if the rate of interest specified is in excess of the
maximum rate of interest permitted by law.
5. Exculpatory Provision. Notwithstanding any other provision
contained in this Note, it is agreed that the execution of this
Note shall impose no personal liability on the Maker hereof for
payment of the indebtedness evidenced hereby and in the event of a
default, the holder of this Note shall look solely to the property
described in the Mortgage of even date hereof and to the rents,
issues and profits therefore in satisfaction of the indebtedness
evidenced hereby and will not seek or obtain any deficiency or
personal judgment against the Maker hereof except such judgment or
decree as may be necessary to foreclose or bar its interest in the
property and all other property mortgaged, pledged, conveyed or
assigned to secure payment of this Note except as set our in the
Mortgage of even date given to secure this indebtedness.
Regulatory Agreement for U.S. Department of Housing
Multifamily Housing Projects and Urban Development
Office of Housing
Federal Housing
Commissioner
Under Sections 207, 220, 221(d)(4), 231 and 232, Except Nonprofits
Project No. 035-43053
Mortgagee REPUBLIC REALTY MORTGAGE CORPORATION
Amount of Mortgage Note $5,636,400.00
Date: as of December 14, 1994
Mortgage: Recorded: State New Jersey County Cape May Date
Book Page
Originally endorsed for insurance under Section 232 of the National
Housing Act.
This Agreement entered into as of the 14th day of December 1994,
between NORTH CAPE CONVALESCENT CENTER ASSOCIATES, L.P. whose
address is 5601 Chestnut Street, Philadelphia, PA 19149, their
successors, heirs, and assigns (jointly and severally, hereinafter
referred to as Owners) and the undersigned Secretary of Housing and
Urban Development and his successors (hereinafter referred to as
Secretary).
In consideration of the endorsement for insurance by the
Secretary of the above described note or in consideration of the
consent of the Secretary to the transfer of the mortgaged property
or the sale and conveyance of the mortgaged property by the
Secretary, and in order to comply with the requirements of the
National Housing Act, as amended, and the Regulations adopted by
the Secretary pursuant thereto, Owners agree for themselves, their
successors, heirs and assigns, that in connection with the
mortgaged property and the project operated thereon and so long as
the contract of mortgage insurance continues in effect, and during
such further period of time as the Secretary shall be the owner,
holder or reinsurer of the mortgage, or during any time the
Secretary is obligated to insure a mortgage on the mortgagee
property:
1. Owners, except as limited by paragraph 17 hereof, assume and
agree to make promptly all payments due under the note and
mortgage.
2. (a) Owners shall establish or continue to maintain a reserve
fund for replacements by the allocation to such reserve fund in a
separate account with the mortgagee or in a safe and responsible
depository designated by the mortgagee, concurrently with the
beginning of payments towards amortization of the principal of the
mortgage insured or held by the Secretary of an amount equal to
$5,469.25 per month unless a different date or amount is approved
in writing by the Secretary. See Rider 1 attached hereto and made
a part hereof.
Such fund, whether in the form of a cash deposit or invested in
obligations of, or fully guaranteed as to principal by, the United
States of America shall at all times be under the control of the
mortgagee. Disbursements from such fund, whether for the purpose
of effecting replacement of structural elements and mechanical
equipment of the project or for any other purpose, may be made only
after receiving the consent in writing of the Secretary. In the
event that the owner is unable to make a mortgage note payment on
the due date and that payment cannot be made prior to the due day
of the next such installment or when the mortgagee has agreed to
forgo making an election to assign the mortgage to the Secretary
based on a monetary default, or to withdraw an election already
made, the Secretary is authorized to instruct the mortgagee to
withdraw funds from the reserve fund for replacements to be applied
to the mortgage payment in order to prevent or cure the default.
In addition, the event of a
___________________________________________ loan has been
accelerated, the Secretary may apply or authorize the application
of the balance in such fund to the amount due on the mortgage debt
as accelerated.
(b) Where Owners are acquiring a project already subject to an
insured mortgage, the reserve fund for replacements to be
established will be equal to the amount due to be in such fund
under existing agreements or charter provisions at the time Owners
acquire such project, and payments hereunder shall begin with the
first payment due on the mortgage after acquisition, unless some
other method of establishing and maintaining the fund is approved
in writing by the Secretary.
3.Real property covered by the mortgage and this agreement
described in Schedule A attached hereto.
(This paragraph 4 is not applicable to cases insured under Section
232).
4.Does not apply.
5.Does not apply.
6.Owners shall not without the prior written approval of the
Secretary:
(a) Convey, transfer, or encumber any of the mortgaged property, or
permit the conveyance, transfer or encumbrance of such property.
(b) Assign, transfer, dispose of, or encumber any personal property
of the project, including rents, or pay out any funds except from
surplus cash, except for reasonable operating expenses and
necessary repairs.
(c) Convey, assign, or transfer any beneficial interest in any
trust holding title to the property, or the interest of any general
partner in a partnership owning the property, or any right to
manage or receive the rents and profits from the mortgaged
property.
(d) Remodel, add to, reconstruct, or demolish any part of the
mortgaged property or subtract from any real or personal property
of the project.
(e) Make, or receive and retain, any distribution of assets or any
income of any kind of the project except surplus cash and except on
the following conditions:
(1) All distributions shall be made only as of and after the end of
a semiannual or annual fiscal period, and only as permitted by the
law of the applicable jurisdiction;
(2)No distribution shall be made from borrowed funds, prior to the
completion of the project or when there is any default under this
Agreement or under the note or mortgage;
(3) Any distribution of any funds of the project, which the party
receiving such funds is not entitled to retain hereunder, shall be
held in trust separate and apart from any other funds; and
(4) There shall have been compliance with all outstanding notices
of requirements for proper maintenance of the project.
(f) Engage, except for natural persons, in any other business or
activity, including the operation of any other rental project, or
incur any liability or obligation not in connection with the
project.
(g) Require, as a condition of the occupancy or leasing of any unit
in the project, any consideration or deposit other than the
prepayment of the first month's rent plus a security deposit in an
amount not in excess of one month's rent to guarantee the
performance of the covenants of the lease. Any funds collected as
security deposits shall be kept separate and apart from all other
funds of the project in a trust account the amount of which shall
at all times equal or exceed the aggregate of all outstanding
obligations under said account.
(h) Permit the use of the dwelling accommodations or nursing
facilities of the project for any purpose except the use which was
originally intended, or permit commercial use greater than that
originally approved by the Secretary.
7. Owners shall maintain the mortgaged premises, accommodations and
the grounds and equipment appurtenant thereto, in good repair and
condition. In the even all or any of the buildings covered by the
mortgage shall be destroyed or damaged by fire or other casualty,
the money derived from any insurance on the property shall be
applied in accordance with the terms of the mortgage.
8. Owners shall not file any petition in bankruptcy or for a
receiver or in insolvency or for reorganization or composition, or
make any assignment for the benefit of creditors or to a trustee
for creditors, or permit an adjudication in bankruptcy or the
taking possession of the mortgaged property or any part thereof by
a receiver or the seizure and sale of the mortgaged property or any
part thereof under judicial process or pursuant to any power of
sale, and fail to have such adverse actions set aside within forty-
five (45) days.
9. (a) Any management contract entered into by Owners or any of
them involved the project shall contain a provision that, in the
event of default hereunder, it shall be subject to termination
without penalty upon written request by the Secretary. Upon such
request Owners shall immediately arrange to terminate the contract
within a period of not more than thirty (30) days and shall make
arrangements satisfactory to the Secretary for continuing proper
management of the project.
(b) Payment for services, supplies, or materials shall not exceed
the amount ordinarily paid for such services, supplies or materials
in the area where the services are rendered or the supplies or
materials furnished.
(c) The mortgaged property, equipment, buildings, plans, offices,
apparatus, devices, books, contracts, records, documents, and other
papers relating thereto shall at all times be maintained in
reasonable condition for proper audit and subject to examination
and inspection at any reasonable time by the Secretary or his duly
authorized agents. Owners shall keep copies of all written
contracts or other instruments which affect the mortgaged property,
all or any of which may be subject to inspection and examination by
the Secretary or his duly authorized agents.
(d) The books and accounts of the operations of the mortgaged
property and of the project shall be kept in accordance with the
requirements of the Secretary.
(e) Within sixty (60) days following the end of each fiscal year
the Secretary shall be furnished with a complete annual financial
report based upon an examination of the books and records of
mortgagor prepared in accordance with the requirements of the
Secretary, prepared and certified to by an officer or responsible
Owner and, when required by the Secretary, prepared and certified
by a Certified Public Accountant, or other person acceptable to the
Secretary.
(f) At request of the Secretary, his agents, employees, or
attorneys, the Owners shall furnish monthly occupancy reports and
shall give specific answers to questions upon which information is
desired from time to time relative to income, assets, liabilities,
contracts, operation, and condition of the property and the status
of the insured mortgage.
(g) All rents and other receipts of the project shall be deposited
in the name of the project in a financial institution, whose
deposits are insured by an agency of the Federal Government. Such
funds shall be withdrawn only in accordance with the provisions of
this Agreement for expenses of the project or for distributions of
surplus cash as permitted by paragraph 6(e) above. Any owner
receiving funds of the project other than by such distribution of
surplus cash shall immediately deposit such funds in the project
bank account and failing to do in violation of this Agreement shall
hold such funds in trust. At such time as the Owners shall have
lost control and/or possession of the project, all funds held in
trust shall be delivered to the mortgagee to the extent that the
mortgage indebtedness has not been satisfied.
(h) If the mortgage is insured under Section 232:
1. The Owners or lessees shall at all times maintain in full force
and effect from the state or other licensing authority such license
as may be required to operate the project as a nursing home and
shall not lease all or part of the project except on terms approved
by the Secretary.
2. The Owners shall suitably equip the project for nursing home
operations.
3. The Owners shall execute a Security Agreement and Financing
Statement (or other form of chattel lien) upon all items of
equipment, except as the Secretary may exempt, which are not
incorporated as security for the insured mortgage. The Security
Agreement and Financing Statement shall constitute a first lien
upon such equipment and shall run in favor of the mortgagee as
additional security for the insured mortgage.
10. Owners will comply with the provisions of any Federal, State,
or local law prohibiting discrimination in housing on the grounds
of race, color, religion or creed, sex, or national origin,
including Title V111 of the Civil Rights Act of 1968 (Public Law
90-284; 82 Stat. 73), as amended, Executive Order 11063, and all
requirements imposed by or pursuant to the regulations of the
Department of Housing and Urban Development implementing these
authorities (including 24 CFR Parts 100, 107 and 110, and Subparts
I and M of Part 200).
11. Upon a violation of any of the above provisions of this
Agreement by Owners, the Secretary may give written notice thereof,
to Owners, by registered or certified mail, addressed to the
addresses stated in this Agreement, or such other addresses as may
subsequently, upon appropriate written notice thereof to the
Secretary, be designated by the Owners as their legal business
address. If such violation is not corrected to the satisfaction of
the Secretary within thirty (30) days after the date such notice is
mailed or within such further time as the Secretary determines is
necessary to correct the violation, without further notice the
Secretary may declare a default under this Agreement effective on
the date of such declaration of default and upon such default the
Secretary may:
(a) (i) If the Secretary holds the note - declare the whole of said
indebtedness immediately due and payable and then proceed with the
foreclosure of the mortgage;
(ii) If said note is not held by the Secretary - notify the holder
of the note of such default and request holder to declare a default
under the note and mortgage, and holder after receiving such notice
and request, but not otherwise, at its option, may declare the
whole indebtedness due, and thereupon proceed with foreclosure of
the mortgage, or assign the note and mortgage to the Secretary as
provided in the Regulations;
(b) Collect all rents and charges in connection with the operation
of the project and use such collections to pay the Owners'
obligations under this Agreement and under the note and mortgage
and the necessary expenses of preserving the property and operating
the project.
(c) Take possession of the project, bring any action necessary to
enforce any rights of the Owners growing out of the project
operation, and operate the project in accordance with the terms of
this Agreement until such time as the Secretary in his discretion
determines that the Owners are again in a position to operate the
project in accordance with the terms of this Agreement and in
compliance with the requirements of the note and mortgage.
(d) Apply to any court, State or Federal, for specific performance
of this Agreement, for an injunction against any violation of the
Agreement, for the appointment of a receiver to take over and
operate the project in accordance with the terms of the Agreement,
or for such other relief as may be appropriate, since the injury to
the Secretary arising from a default under any of the terms of this
Agreement would be irreparable and the amount of damage would be
difficult to ascertain.
12. As security for the payment due under this Agreement to the
reserve fund for replacements, and to secure the Secretary because
of his liability under the endorsement of the note for insurance,
and as security for the other obligations under this Agreement, the
Owners respectively assign, pledge and mortgage to the Secretary
their rights to the rents, profits, income and charges of
whatsoever sort which they may receive or be entitled to receive
from the operation of the mortgaged property, subject, however, to
any assignment of rents in the insured mortgage referred to herein.
Until a default is declared under this Agreement, however,
permission is granted to Owners to collect and retain under the
provisions of this Agreement such rents, profits, income, and
charges, but upon default this permission is terminated as to all
rents due or collected thereafter.
13.As used in this Agreement the term:
(a) "Mortgage" includes "Deed of Trust", "Chattel Mortgage",
"Security Instrument", and any other security for the note
identified herein, and endorsed for insurance or held by the
Secretary;
(b) "Mortgagee" refers to the holder of the mortgage identified
herein, its successors and assigns;
(c) "Owners" refers to the persons named in the first paragraph
hereof and designated as Owners, their successors, heirs and
assigns;
(d) "Mortgaged Property" includes all property, real, personal or
mixed, covered by the mortgage or mortgages securing the note
endorsed for insurance or held by the Secretary;
(e) "Project" includes the mortgaged property and all its other
assets of whatsoever nature or wheresoever situate, used in or
owned by the business conducted on said mortgaged property, which
business is providing housing and other activities as are
incidental thereto;
(f) "Surplus Cash" means any cash remaining after:
(1) the payment of:
(i) All sums due or currently required to be paid under the terms
of any mortgage or note insured or held by the Secretary;
(ii) All amounts required to be deposited in the reserve fund for
replacements;
(iii) All obligations of the project other than the insured
mortgage unless funds for payment are set aside or deferment of
payment has been approved by the Secretary; and
(2) the segregation of:
(i) An amount equal to the aggregate of all special funds required
to be maintained by the project; and
(ii) All tenant security deposits held.
(g) "Distribution" means any withdrawal or taking of cash or any
assets of the project, including the segregation of cash or assets
for subsequent withdrawal within the limitations of Paragraph 6(e)
hereof, and excluding payment for reasonable expenses incident to
the operation and maintenance of the project.
(h) "Default" means a default declared by the Secretary when a
violation of this Agreement is not corrected to his satisfaction
within the time allowed by this Agreement or such further time as
may be allowed by the Secretary after written notice;
(i) "Section" refers to a Section of the National Housing Act, as
amended.
(j) "Displaced persons or families" shall mean a family of
families, or a person, displaced from an urban renewal area, or as
the result of government action, or as a result of a major disaster
as determined by the President pursuant to the Disaster Relief Act
of 1970.
(k) "Elderly person" means any person, married or single, who is
sixty-two years of age or over.
14. This instrument shall bind, and the benefits shall inure to,
the respective Owners, their heirs, legal representatives,
executors, administrators, successors in office or interest, and
assigns, and to the Secretary and his successors so long as the
contract of mortgage insurance continues in effect, and during such
further time as the Secretary shall be the owner, holder, or
reinsurer of the mortgage, or obligated to reinsure the mortgage.
15. Owners warrant that they have not, and will not, execute any
other agreement with provisions contradictory of, or in opposition
to, the provisions hereof, and that, in any event, the requirements
of this Agreement are paramount and controlling as to the rights
and obligations set forth and supersede any other requirements in
conflict therewith.
16. The invalidity of any clause, part or provision of this
Agreement shall not affect the validity or the remaining portions
thereof.
17. The following Owners:
NORTH CAPE CONVALESCENT CENTER ASSOCIATES, L.P., AND ITS GENERAL
PARTNER, GERIATRIC AND MEDICAL SERVICES, INC. do not assume
personal liability for payments due under the note and mortgage, or
for the payments to the reserve for replacements, or for matters
not under their control, provided that said Owners shall remain
liable under this Agreement only with respect to the matters
hereinafter stated; namely:
(a) for funds or property of the project coming into their hands,
which, by the provisions hereof, they are not entitled to retain;
and
(b)n for their own acts and deeds or acts and deeds of others which
they have authorized in violation of the provisions hereof.
(To be executed with formalities for recording a deed to real
estate)
IN WITNESS WHEREOF, the parties hereto have set their hands and
seals on the date first hereinabove written.
NORTH CAPE CONVALESCENT CENTER ASSOCIATES, L.P.
By: Geriatric and Medical Services, Inc., General Partner
By: Andrew G. Conn, Asst. Vice President
ATTEST:
James J. Wankmiller, Secretary
SECRETARY OF HOUSING AND URBAN DEVELOPMENT ACTING BY AND THROUGH
THE FEDERAL HOUSING COMMISSIONER
By: Encarnacion C. Loukatos, Authorized Agent
COMMONWEALTH OF PENNSYLVANIA )
) SS:
COUNTY OF PHILADELPHIA
On this 15th day of December, 1994 before me, the undersigned
officer, personally appeared Andrew G. Conn, who acknowledged
himself to be the Assistant Vice President of GERIATRIC AND MEDICAL
SERVICES, INC., the corporation named in the foregoing instrument
as the General Partner of NORTH CAPE CONVALESCENT CENTER
ASSOCIATES, L.P., a limited partnership and that he as such
Assistant Vice President of the General Partner, being authorized
to do so, executed the foregoing instrument for the purposes
therein contained in the name of such Limited Partnership by
himself as Assistant Vice President of the General Partner, on
behalf of said limited partnership.
IN WITNESS WHEREOF, I hereunto set may hand and official seal.
Notary
My Commission Expires:
STATE OF NEW JERSEY )
) SS
COUNTY OF ESSEX )
On this 19th day of December, 1994 before me appeared Encarnacion
C. Loukatos who, being duly sworn, did say that he is the duly
appointed Authorized Agent and the person who executed the
foregoing instrument by virtue of the authority vested in him and
acknowledged the same to be his free and voluntary act and deed as
Authorized Agent for an on behalf of the FEDERAL HOUSING
COMMISSIONER.
IN TESTIMONY HEREOF, I have hereunto set my hand and affixed my
Notarial Seal on the day and year last above written.
Shie-Fong Sun
An Attorney-at-Law of New Jersey
RIDER 1 TO
REGULATORY AGREEMENT FOR MULTIFAMILY HOUSING PROJECTS
BY AND BETWEEN
NORTH CAPE CONVALESCENT CENTER ASSOCIATES, L.P.
AND THE SECRETARY OF HOUSING AND URBAN DEVELOPMENT
DATED DECEMBER 21, 1994
A. Addendum to Section 2(a)
So long as the mortgage of the owner or owners is insured or held
by the Federal Housing Administration, the said owner or owners
shall keep in full force and effect, from the date of final
endorsement, an elevator contract for maintenance, together with
any necessary and proper renewals thereof, providing for the
replacement of all items of elevator mechanical equipment. Such
contract and renewals, if any, shall be with an elevator
maintenance company and in such form as shall be satisfactory to
the Federal Housing Commissioner. Should such contract or any
renewal thereof, not be obtained by the said owner, or owners, or
should same be allowed or permitted to lapse, an additional
allocation to the monthly reserve fund for replacements from the
Breakdown of Reserve for Replacements (FHA Form #2419) shall be
made forthwith by the Federal Housing Administration, and same
shall be paid by the said owner or owners, in monthly installments,
together with the amount first mentioned in the paragraph, and
commencing at a date thereafter as may be specified by the Federal
Housing Administration in writing.
SCHEDULE A
LEGAL DESCRIPTION
FEDERAL HOUSING ADMINISTRATION
PROJECT NO. 035-43053
NORTH CAPE CONVALESCENT CENTER
BEGINNING AT THE INTERSECTION OF THE SOUTHWESTERLY SIDE OF TOWN
BANK ROAD, AS WIDENED TO 33 FEET SOUTHWEST OF CENTER LINE, WITH THE
SOUTHEASTERLY SIDE OF SHUNPIKE, AS WIDENED TO 43 FEET SOUTHEAST
FROM CENTER LINE; AND FROM SAID BEGINNING POINT EXTENDING
1. SOUTH FIFTY-THREE DEGREES FIFTEEN MINUTES TWENTY-EIGHT SECONDS
EAST (S 53o 15' 28" E) EIGHT HUNDRED SIXTY-FOUR AND NINETEEN
HUNDREDTHS (864.19) FEET ALONG SAID WIDENED RIGHT-OF-WAY OF TOWN
BANK ROAD TO THE NORTHWESTERLY LINE TO LANDS OF THE LOWER TOWNSHIP
BOARD OF EDUCATION (LOT 1.03); THENCE
2. SOUTH THIRTY-FIVE DEGREES FORTY-FOUR MINUTES FIFTY SECONDS WEST
(S 35o 44' 50" W) NINE HUNDRED SEVENTY-SIX AND THIRTY-FIVE
HUNDREDTHS (976.35) FEET ALONG SAID LINE OF THE LOWER TOWNSHIP
BOARD OF EDUCATION TO THE NORTHEASTERLY RIGHT-OF-WAY OF CAPE MAY-
LEWES FERRY APPROACH ROAD (ALSO KNOWN AS NEW JERSEY STATE HIGHWAY
ROUTE NO. 9, ALSO KNOWN AS SANDMAN BOULEVARD, ALSO KNOWN AS
LINCOLN BOULEVARD), VARIABLE WIDTHS; THENCE
3. NORTH FIFTY-TWO DEGREES FIFTY-FOUR MINUTES SEVENTEEN AND ONE
TENTH SECONDS WEST (N 52o 54' 17.1" W) FIVE HUNDRED TWENTY-ONE AND
EIGHTY-SEVEN HUNDREDTHS (521.87) FEET ALONG SAID SIDE OF CAPE MAY-
LEWES FERRY APPROACH ROAD TO A CONCRETE MONUMENT FOUND MARKING A
POINT OF CURVATURE THEREIN; THENCE
4. FOLLOWING A 5,644.80' RADIUS CURVE TO THE RIGHT, PASSING THROUGH
AN ARC ANGLE OF TWO DEGREES FORTEEN MINUTES NO SECONDS (02o 14'
00"), AN ARC LENGTH OF TWO HUNDRED TWENTY AND FOUR HUNDREDTHS
(220.04) FEET, THE CHORD OF SAID CURVE BEARING NORTH FIFTY-ONE
DEGREES THIRTY-THREE MINUTES TWENTY-SEVEN SECONDS WEST (N 51o 33'
27" W) TWO HUNDRED TWENTY AND TWO HUNDREDTHS (220.02) FEET TO
ANOTHER CONCRETE MONUMENT FOUND MARKING A POINT OF TANGENCY
THEREIN; THENCE
5. NORTH FIFTY DEGREES TWENTY-SIX MINUTES TWENTY-SIX AND FIVE
TENTHS SECONDS WEST (N 50o 26' 26.5" W) TWO HUNDRED EIGHTY-NINE AND
FIFTY-TWO HUNDREDTHS (289.52) FEET STILL ALONG SAID SIDE OF CAPE
MAY-LEWES FERRY APPROACH ROAD TO THE AFORESAID WIDENED RIGHT-OF-WAY
OF SHUNPIKE; THENCE
6. NORTH FORTY-FIVE DEGREES FORTY-ONE MINUTES NO SECONDS EAST (N
45o 41' 00" E) NINE HUNDRED SIXTY-THREE AND NINETY-FOUR HUNDREDTHS
(963.94) FEET ALONG SAID WIDENED RIGHT-OF-WAY OF SHUNPIKE TO THE
AFORESAID SIDE OF TOWN BANK ROAD AND PLACE OF BEGINNING.
U.S. Department of Housing
and Urban Development
Office of Housing
Federal Housing Commissioner
THIS AGREEMENT, made as of the 14th day of December, 1994, by and
between NORTH CAPE CONVALESCENT CENTER ASSOCIATES, L.P., a limited
partnership, organized an existing under the laws of the
Commonwealth of Pennsylvania, with an office and place of business
in Philadelphia, County of Philadelphia, and State of Pennsylvania
(hereinafter called the "Borrower"), and REPUBLIC REALTY MORTGAGE
CORPORATION, a corporation organized and existing under the laws of
the State of Delaware, having an office and place of business in
Chicago, County of Cook and State of Illinois (hereinafter called
the ("Lender").
WHEREAS, the Borrower as the owner in fee simple of, or the owner
of the leasehold estate in, the property described in Exhibit "A",
attached hereto and made a part hereof, has applied to the Lender
for a mortgage loan of Five Million Six Hundred Thirty Six Thousand
Four Hundred Dollars and no/cents ($5,636,400.00) to aid the
Borrower in the construction on said property of a project
(identified as FHA Project No. thirty five dash forty three hundred
and fifty three) in accordance with Drawings and Specifications
hereinafter referred to; and
WHEREAS, the Borrower understands that the Lender has received a
commitment from the Federal Housing Commissioner (hereinafter
called the "Commissioner") for insurance of said loan under the
provisions of the National Housing Act and intends upon execution
of the hereinafter-mentioned Note and Mortgage to have said Note
endorsed for insurance by the Commissioner,
NOW, THEREFORE, in consideration of the mutual promises hereinafter
set out and of other valuable considerations, the undersigned agree
as follows:
(1) The Lender shall make and the Borrower shall take a building
loan in the principal sum of Five Million Six Hundred Thirty Six
Thousand Four Hundred Dollars and no/cents ($5,636,400.00), to be
advanced as hereinafter provided, and to bear interest from the
date of each advance at the rate of Nine and One Half percent
(9.5%) per annum. Said loan shall be evidenced by a credit
instrument (hereinafter called the "Note") dated the fourteenth day
of December nineteen hundred ninety four, shall be payable in
monthly installments, and shall have a maturity date of May, first,
two thousand thirty six. Said Note shall be executed by the
Borrower and payable to the Lender, or order, and shall be secured
by a Mortgage (hereinafter called the "Mortgage"), of even date, on
the property described in Exhibit "A". The Mortgage shall
constitute a valid first lien on said property and the improvements
to be erected thereon, and the only lien thereon except for liens
for taxes and assessments not yet payable and other liens
acceptable to the Lender and the Commissioner.
(2) The Borrower shall complete on the aforesaid property, by
February twenty first, nineteen hundred ninety six, a project in
accordance with Drawings Specifications filed with the Commissioner
and designated.
NORTH CAPE CONVALESCENT CENTER
FHA Project No. thirty five dash forty three hundred and fifty
three), dated December twenty first, nineteen hundred ninety four.
Such Drawings And Specifications, which include "General Condition
of the Contract for Construction" (ALA Document A Two hundred and
one) and "Supplementary conditions of the contract for
Construction" (FHA Form No. Two thousand five hundred fifty four),
have been identified by the Borrower, the Design Architect, the
Architect administering the Construction Contract (hereinafter
called the "Architect") the Contractor and the contractors Surety.
(3) Changes in the Drawings and Specifications, or changes by
altering or adding to the work contemplated, or orders for extra
work must have the prior written approval of the Architect. In
additions, any such change or order, which will result in a net
construction cost increase, or will change the design concept, or
will result in a net cumulative construction cost decrease of more
than two percent of the contract amount may be effected only with
the prior written approval of the Lender and the Commissioner and
under such conditions as either the Lender or the Commissioner may
establish.
(4) (a) The Borrower shall make monthly applications on FHA Form
No. Two thousand four hundred and three for advances of mortgage
proceeds from the Lender. Applications for advances with respect
to construction items shall be for amounts equal to (i) the total
value of classes of the work acceptably completed; plus (ii) ten
percent (holdback) and less prior advances. The "values" of both
(i) and (ii) shall be computed in accordance with the amounts
assigned to classes of the work in the "contractor's and/or
Mortgagor's cost Breakdown", attached hereto as Exhibit "B", and
made a part hereof. Each application shall be filed at least ten
days before the date the advance is desired, and the Borrower shall
be entitled thereon only to such amount as may be approved by the
Lender and the Commissioner.
(b) Upon completion of the improvements, including all landscape
requirements and off-site utilities and streets, the Borrower shall
furnish to the Lender and the Commissioner satisfactory evidence
that all work requiring inspection by municipal other governmental
authorities having jurisdiction has been duly inspected and
approved by such authorities and by the rating or inspection
organization, bureau, association or office having jurisdiction;
and that all requisite certificates of occupancy and other
approvals have been issued. The balance due the Borrower hereunder
shall be payable at such time after completion as the Commissioner
authorizes the release of the holdback. However, the Lender may
withhold final payment until after the expiration of any period
which mechanics and materialmen may have for filing liens.
(c) The Borrower agrees that any funds required for the completion
of the project over and above the proceeds of the loan which have
been deposited with the Lender for that purpose shall be advanced
by the Lender to the Borrower prior to the advance of any proceeds
of the loan.
(d) The Borrower covenants that it will hold in trust each advance
hereunder for application to the items for which such advance was
requested and approved.
(e) The Borrower agrees that the loan shall at all times remain in
balance. The Lender shall, in accordance with the provision so f
this agreement, continue to advance to the Borrower funds out of
the proceeds of the loan as long as the loan remains in balance and
the Borrower is not in default hereunder or under the Note or
Mortgage. The loan shall be deemed to be in balance only when the
undistributed proceeds of the loan (after provision for reserves,
fees, expenses and other deposits required by the Lender or the
Commissioner) equal or exceed the amount necessary (based on the
Commissioner's estimate of the cost of construction) to pay for all
work completed and all materials delivered, for which payment has
not been made, and the cost of completing construction of the
project in accordance with the Drawings and Specifications.
(5) The Lender shall advance to the Borrower out of the funds
referred to in (4)(c) above, or out of the proceeds of the loan,
amounts for application to the charges or items enumerated below,
but only to the extent that such charges have accrued, or that the
Borrower is otherwise entitled to payment on account of such items.
(a) Interest during construction. . . . . . . . . . . . . . . . .
. . . . . . . . . .
Three hundred twelve thousand, three hundred fifty one dollars, and
no cents
(b) Real estate taxes during construction . . . . . . . . . . . .
. . . . . . . . . .
Thirty Thousand dollars, and no cents
(c) Insurance during construction. . . . . . . . . . . . . . . . .
. . . . . . . . . .
Thirty Thousand dollars, and no cents
(d) FHA mortgage insurance premium. . . . . . . . . . . . . . . .
. . . . . . . . . .
Fifty six thousand, three hundred sixty four dollars, and no cents
(e) FHA examination fee . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . .
Sixteen Thousand, nine hundred and nine dollars, and no cents
(f) Initial service charge. . . . . . . . . . . . . . . . . . . .
. . . . . . . . . .
One hundred twelve, seven hundred twenty eight dollars and no cents
(g) Title and recording expense . . . . . . . . . . . . . . . . .
. . . . . . . . . .
Sixteen Thousand, nine hundred and nine dollars, and no cents
(h) Inspection fee
Twenty eight thousand, One hundred eighty two dollars, and no cents
(i) Permanent Financing fee
Eighty-four thousand, five hundred forty six, and no cents
(j) Major Moveable Equipment
Four hundred fifty-three thousand, Five hundred thirty-seven
dollars, and no cents
(k) Legal, Organization and Audit Fee
Twenty thousand dollars, and no cents
(l) Architect's Cash Fee (Design)
One hundred forty-two thousand, five hundred dollars, and no cents
(m) Architects Cash Fee (Supervisory). . . . . . . . . . . . . . .
. . . . . . . . . .
Forty-seven thousand, five hundred dollars and no cents
(n) Other Fees
Seventy-two thousand, one hundred thirty nine dollars and no cents
(6) The Borrower shall cause either this instrument of the
construction contract under which the improvements are to be
erected to be filed in the public records, if the effect thereof
will be to relieve the mortgaged property from mechanics' and
materialmen's liens. Before any advance hereunder, the Lender may
require the Borrower to obtain from the contractor and all
subcontractors and materialmen dealing directly with the principal
contractor acknowledgments of payment and releases of lien down to
the date covered by the last advance, and concurrently with the
final payment for the entire project. Such acknowledgments and
releases shall be in the form required by local lien laws and shall
cover all work done, labor performed and materials (including
equipment and fixtures) furnished for the project.
(7) The Borrower shall, as a condition precedent to the first
advance hereunder, furnish the Lender with a certified, current
survey of the mortgaged property and a mortgagee's title policy (or
other title policy (or other evidence of title) in form, substance
and amount satisfactory to the Lender and the Commissioner. Said
policy (or other title evidence) shall be extended so as to cover
each and every advance of said loan at the time of payment thereof
and shall show no mechanics' or materialmen's liens against the
mortgaged property. The Borrower shall furnish duplicate originals
of said survey and title policy (or title evidence) for the
Commissioner.
(8) The Borrower agrees that said project shall be constructed
strictly in accordance with all applicable ordinances and statues,
and in accordance with the requirements of all regulatory
authorities, and any rating or inspection organization, bureau,
association or office having jurisdiction. The Borrower further
agrees that said project shall be constructed entirely on the
aforesaid property and will not encroach upon any easement or
right-of-way, or the land of others; and that the buildings when
erected shall be wholly within the building restriction lines,
however established, and will not violate applicable use or other
restrictions contained in prior conveyances, zoning ordinances or
regulation. The Borrower shall furnish from time to time such
evidence with respect thereto as may be required by the Lender or
the Commissioner and, upon completion of construction, shall
furnish a survey, certified by a registered surveyor, which shows
the project to be entirely on said property and to be free from any
such violations.
(9) If the Borrower at any time prior to the completion of the
project abandons the same or ceases work thereon for a period of
more than 20 days or fails to compete the erection of the project
strictly in accordance with the Drawings and Specifications, or
makes changes in the Drawings and Specifications without first
securing the written approval required by paragraph 3 hereof, or
otherwise fails to comply with the terms hereof, any such failure
shall be a default hereunder, and the Lender, at its option, may
terminate this agreement. If the Lender so elects purpose for
which such funds were deposited, in such manner and for such
purposes as the Commissioner may prescribe. If the Lender elects
not to terminate this agreement, it may enter into possession of
the premises and perform any and all work and labor necessary to
complete the improvements substantially according to the Drawings
and Specifications, and employ watchmen to protect the premises
from injury. All sums so expended by the Lender shall be deemed to
have been paid to the Borrower and secured by the Mortgage. For
this purpose, the Borrower hereby constitutes and appoints the
Lender its true and lawful attorney-in-fact, with full power of
substitution in the premises, to complete the project in the name
of the Borrower. The Borrower hereby empowers said attorney as
follows: (a) To use any funds of the Borrower, including any
balance which may be held in escrow and any funds which may remain
unadvanced hereunder for the purpose of completing the project in
the manner called for by the Drawings Specifications; (b) to make
such additions, changes and corrections in the Drawings and
Specifications as shall be necessary or desirable to complete the
project in substantially the manner contemplated by the Drawings
and Specifications; (c) to employ such contractors, subcontractors,
agents, architects and inspectors as shall be required for said
purposes; (d) to pay, settle or compromise all existing bills and
claims which may be liens against the mortgaged property, or as may
be necessary or desirable for the completion of the project, or for
clearance of title; (e) to execute all applications and
certificates in the name of the Borrower which may be required by
any of the contract documents; (f) to prosecute and defend all
actions or proceedings in connection with the mortgaged premises or
the construction of the project and to take such action and require
such performance as he deems necessary under the accepted guaranty
of completion; and (g) to do any and every act which the Borrower
might do in its own behalf. It is further understood and agreed
that this power of attorney, which shall be deemed to be a power
coupled with an interest, cannot be revoked. The Borrower hereby
assigns and quitclaims to the Lender all sums unadvanced under the
Mortgage and all sums due in escrow conditioned upon the use of
said sums for the completion of the project, such assignment to
become effective only in case of the Borrower's default.
(10) The Borrower shall provide or cause to be provided workmen's
compensation insurance and public liability and other insurance
required by applicable law or by the general conditions included in
the Specifications. The Borrowers further agrees to purchase and
maintain fire insurance and extended coverage on the mortgaged
property. All such policies shall be issued by companies approved
by the Lender and shall be in form and amounts satisfactory to the
Lender and the Commissioner. Such policies shall be endorsed with
standard mortgagee clauses making loss payable to the Lender or its
assigns; and may be endorsed to make loss during construction
payable to the contractor, as interest may appear. The originals
of such policies shall be deposited with the Lender.
(11) The Lender and its agents and the Commissioner and his agents
shall, at all times during construction, have the right of entry
and free access to the project and the right to inspect all work
down, and materials, equipment and fixtures furnished, installed or
stored in and about the project, and to inspect all books,
subcontracts and records of the Borrower.
(12) The Borrower shall execute and deliver to the Lender, upon
completion of the project, a security agreement and financing
statement, or other similar instrument, covering all property of
any kind whatsoever purchased with mortgage proceeds and concerning
which there may be any doubt as to such property's being subject to
the lien of the Mortgage under the laws of the state in which the
project is situated.
(13) The Borrower shall furnish to the Lender assurance of
completion of the project in the form specified in the applicable
FHA Regulations in effect on the date of this agreement. Such
assurance of completion shall run to the Lender as obligee and
shall contain a provision granting to the Lender the authority to
assign all rights thereunder to the Commissioner.
(14) (a) The Borrower understands that the wages to be paid
laborers and mechanics employed in the construction of the project
are required by the provisions of Section 212(a) of the National
Housing Act, as amended, to be not less than the prevailing wage
rates for corresponding classes of laborers and mechanics employees
on construction of a similar character in the locality in which the
work is to be performed, as determined by the Secretary of Labor
with respect to this project. The Borrower hereby states that it
has read the aforesaid determination by the Secretary of Labor and
is fully familiar with the same.
(b) The Borrower shall, as a condition precedent to any advance
hereunder, submit to the Lender (i) with each application for
advance prior to the final application, certifications, in form
approved by the Commissioner, that all laborers and mechanics
employed in the construction of the project whose work is covered
by that or any previous application and who have been paid in whole
or in part on account of said employment, have been paid at rates
not less than the said prevailing wage rates; and j(ii) with the
final application for advance, certifications, in form satisfactory
to the Commissioner, that the project has been fully constructed in
accordance with the provision of this agreement and that all
laborers and mechanics employed in the construction of the
completed project have been paid not less than the said prevailing
wage rates. The Secretary's prevailing wage determination shall be
construed to include every amendment to or modification of the
determination which may be made prior to the beginning of
construction.
(c) The Borrower agrees that should any advances hereunder be
ineligible for insurance under the National Housing Act by reason
of (i) the nonpayment of the said prevailing wage rates, or (ii)
violation of any of the applicable labor standards provision of the
regulations of the Secretary of Labor, the Lender may withhold from
the Borrower all payments or advances payable to the Borrower
hereunder until the Borrower establishes to the satisfaction of the
Commissioner what all laborers and mechanics or other persons
employed in the construction of the project have been paid said
prevailing wage rates and that such violation of the said Labor
Standards provisions no longer exists. The written statement of
any officer of the Federal Housing administration or authorized
agent of the Commissioner declining to insure any advance of funds
hereunder by reason of such nonpayment or violation shall be deemed
conclusive proof that such advances are ineligible for mortgage
insurance.
(d) The Borrower shall insert the labor standard provision of the
aforesaid Supplementary Construction of the Contract for
Construction in any contract made by him for the construction of
the project, or any part thereof, and shall require the Contractor
to insert similar provision in each subcontract relating to the
construction of the project.
(15) The Lender and the Borrower agree that the mortgage loan
shall be reduced by any amount required by the Agreement and
Certification (FHA Form No. Three thousand three hundred and five)
between the parties hereto and the Commissioner, which agreement is
incorporated herein by reference to the same extent as if set forth
herein at length.
(16) The Borrower shall furnish such records, papers and documents
relating to the project as the Lender or the Commissioner may
reasonably required from time to time.
(17) The Borrower shall not transfer, assign or pledge any right
or interest in, or title to, any funds deposited by the Borrower
with the Lender, or reserved by the Lender for the Borrower,
without the prior written approval of the Lender and the
Commissioner.
(18) As used in this instrument, the term "Lender" shall be deemed
to include any person to whom the Note and Mortgage referred to
above shall be assigned with the knowledge and consent of the
Commissioner. This instrument shall be binding upon the parties
hereto and their respective successors and assigns.
(19) The personal monetary liability of the Borrower under this
Agreement for constructing the building or buildings shall be
limited to the mortgage proceeds, any funds required for
construction changes and other sums deposited with the Lender or
others as required by Commissioner in connection with this
transaction; provided, however, that nothing herein shall release
Borrower from liability under any other instrument or agreement.
This provision is not applicable in cases of willful misconduct and
deceit, theft, waste, gross negligence or willful failure to keep
the Project insured.
(20) The Agreement shall become effective on the date the Note
herein described is initially endorsed for mortgage insurance by
the Commissioner.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and year above first written.
NORTH CAPE CONVALESCENT CENTER ASSOCIATES, L.P.
By: Geriatric and Medical Services, Inc., General Partner
By: Andrew G. Conn, Asst. Vice President
ATTEST:
James J. Wankmiller, Secretary
ATTEST REPUBLIC REALTY MORTGAGE CORPORATION
Raymond J. Walschinger, By: Jeaneda C. Bishop, Vice President
Asst. Secretary
COMMONWEALTH OF PENNSYLVANIA )
COUNTY OF PHILADELPHIA )
On this Fifteen day of December, Nineteen hundred, ninety-four
before me, the undersigned officer, personally appeared Andrew G.
conn, who acknowledged himself to be the Assistant Vice President
of GERIATRIC AND MEDICAL SERVICES, INC., the corporation named in
the foregoing instrument as the General Partner of NORTH CAPE
CONVALESCENT CENTER ASSOCIATES, L.P., a limited partnership and
that he as such Assistant Vice President of the General Partner,
being the name of such Limited Partnership by himself as Assistant
Vice President of the General Partner, on behalf of said limited
partnership.
IN WITNESS WHEREOF, I here unto set my hand and official seal.
Marie E. Chaney
Notary
My Commission Expires:
NOTARIAL SEAL
Marie E. Chaney, Notary Public
City of Philadelphia, Phila. County
My Commission Expires Sept. 22, 1997
STATE OF ILLINOIS )
) SS:
COUNTY OF COOK )
I Janet E. Kimper, a Notary Public, in and for said County, in the
State aforesaid, do hereby certify the Jeaneda C. Bishop,
personally known to me to be the same person whose name is
respectively as a Vice President of REPUBLIC REALTY MORTGAGE
CORPORATION, a corporation of the State of Illinois, subscribed to
the foregoing instrument, appeared before me this day in person and
acknowledge that she, being thereunto duly authorized, signed,
sealed with the corporate seal, and delivered the said instrument
as the free and voluntary act of said corporation and as her own
free and voluntary act, for the uses and purposes therein set
forth.
Given under my hand and notarial seat, this Sixteenth day of
December, Nineteen hundred ninety-four.
My Commission Expires:
OFFICIAL SEAL
Janet E. Kemper
Notary Public State of Illinois
My Commission Expires Oct. 16, 1997
EXHIBIT A
LEGAL DESCRIPTION
FEDERAL HOUSING ADMINISTRATION
PROJECT NO. THIRTY FIVE-FORTY THREE THOUSAND AND FIFTY-THREE
NORTH CAPE CONVALESCENT CENTER
BEGINNING AT THE INTERSECTION OF THE SOUTHWESTERLY SIDE OF TOWN
BANK ROAD, AS WIDENED TO THIRTY-THREE FEET SOUTHWEST OF CENTER
LINE, WITH THE SOUTHEREASTERLY SIDE OF SHUNPIKE, AS WIDENED TO
FORTY-THREE FEET SOUTHEAST FROM CENTER LINE; AND FROM SAID
BEGINNING POINT EXTENDING
1. SOUTH FIFTY-THREE DEGREES FIFTEEN MINUTES TWENTY-EIGHT SECONDS
EAST (S FIFTY-THREE DEGREES FIFTEEN FEET TWENTY-EIGHT INCHES E)
EIGHT HUNDRED SIXTY-FOUR AND NINETEEN HUNDREDTHS FEET ALONG SAID
WIDENED RIGHT-OF-WAY OF TOWN BANK ROAD TO THE NORTHWESTERLY LINE TO
LANDS OF THE LOWER TOWNSHIP BOARD OF EDUCATION (LOT ONE AND THREE
HUNDREDTHS); THENCE
2. SOUTH THIRTY-FIVE DEGREES FORTY-FOUR MINUTES FIFTY SECONDS WEST
(S THIRTY-FIVE DEGREES FORTY-FOUR FEET FIFTY INCHES E) NINE HUNDRED
SEVENTY-SIX AND THIRTY-FIVE HUNDREDTHS FEET ALONG SAID LINE OF THE
LOWER TOWNSHIP BOARD OF EDUCATION TO THE NORTHEASTERLY RIGHT-OF-WAY
OF CAPE MAY-LEWES FERRY APPROACH ROAD (ALSO KNOWN AS NEW JERSEY
STATE HIGHWAY ROUTE NO. NINE, ALSO KNOWN AS SANDMAN BOULEVARD, ALSO
KNOWN AS LINCOLN BOULEVARD), VARIABLE WIDTHS; THENCE
3. NORTH FIFTY-TWO DEGREES FIFTY-FOUR MINUTES SEVENTEEN AND ONE
TENTH SECONDS WEST (N FIFTY-TWO DEGREES FIFTY-FOUR FEET SEVENTEEN
AND ONE TENTH INCHES W) FIVE HUNDRED TWENTY-ONE AND EIGHTY-SEVEN
HUNDREDTHS FEET ALONG SAID SIDE OF CAPE MAY-LEWES FERRY APPROACH
ROAD TO A CONCRETE MONUMENT FOUND MARKING A POINT OF CURVATURE
THEREIN; THENCE
4. FOLLOWING A FIVE THOUSAND SIX HUNDRED FORTY-FOUR AND EIGHTY FOOT
RADIUS CURVE TO THE RIGHT, PASSING THROUGH AN ARC ANGLE OF TWO
DEGREES FOURTEEN MINUTES NO SECONDS (ZERO TWO DEGREES FOURTEEN FEET
ZERO INCHES), AN ARCH LENGTH OF TWO HUNDRED TWENTY AND FOUR
HUNDREDTHS FEET, THE CHORD OF SAID CURVE BEARING NORTH FIFTY-ONE
DEGREES THIRTY-THREE MINUTES TWENTY-SEVEN SECONDS WEST, TWO HUNDRED
TWENTY AND TWO HUNDREDTHS FEET TO ANOTHER CONCRETE MONUMENT FOUND
MARKING A POINT OF TENGENCY THEREIN; THENCE
5. NORTH FIFTY DEGREES TWENTY-SIX MINUTES TWENTY-SIX AND FIVE
TENTHS SECONDS WEST (n FIFTY DEGREES TWENTY-SIX FEET TWENTY-SIX AND
FIVE TENTHS INCHES W) TWO HUNDRED EIGHTY-NINE AND FIFTY-TWO
HUNDREDTHS FEET STILL ALONG SAID SIDE OF CAPE MAY-LEWES FERRY
APPROACH ROAD TO THE AFORESAID WIDENED RIGHT-OF-WAY OF SHUNPIKE;
THENCE
6. NORTH FORTY-FIVE DEGREES FORTY-ONE MINUTES NO SECONDS EAST (N
FORtY-FIVE DEGREES FORTY-ONE FEET ZERO INCHES E) NINE HUNDRED
SIXTY-THREE AND NINETY-FOUR HUNDREDTHS FEET ALONG SAID WIDENED
RIGHT-OF WAY OF SHUNPIKE TO THE AFORESAID SIDE OF TOWN BANK ROAD
AND PLACE OF BEGINNING.
<PAGE>
Federal Housing Administration
Contractor's and/or Mortgagor's
Cost Breakdown
(Schedule of Values)
Date: 7-8-94
Geriatric and Medical Co., Inc.
Name of Project: North Cape Convalescent Center
Project No.: 035-43053
Location: Townbank and Shunpike Roads
Lower Township, Cape May, New Jersey
This form represents the contractors and/or Mortgagors line costs
and services as a basis for distributing dollar amounts when
incurred advances are requested. Detailed instructions for
completing this form are included on the reverse side.
Line Div Trade Item Cost Trade Description
1 3 Concrete 174,295 footings flat work, special shapes
2 4 Masonry 95,808 Subgrade block, block work
3 5 Metals 205,131 Structural steel, reinforcing
4 6 Rough
carpentry 226,480 Framing, metal studs, trusses,
sheathing
5 6 Finish
carpentry 133,785 Labor to install doors, hardware,
millwork
6 7 Waterproof 13,300 Seal brick and stucco area
7 7 Insulation 47,600 Wall insulation, roof insulation, spray
fireproofing
8 7 Roofing 92,100 Shingles, flashing and roof work
9 7 Sheet metal 0 with roofing
10 8 Doors 117,450 Doors, frames and hardware
11 8 Windows 40,250 Windows, glass doors installed and
material
12 8 Glass 26,000 Entrance and interior glazing
13 9 Lath/Plaster 133,200 Stucco, dryyit areas material and
labor
14 9 Drywall 198,762 Material and labor drywall gypsum and
finish, cut and patch
15 9 Tile work 42,000 Ceramic tile and payers
16 9 Acoustical 77,088 Acout. ceiling tiles common areas
17 9 Wood floor 0 Not applicable
18 9 Res. floor 135,634 Sheetgoods, vinyl base and VCT
19 9 Paint/decor.148,497 Wallcovering and painting of frames
20 10 Specialitiea 1,963 Equipment, tracks for curtains,
handicapped
21 11 Spec. equip 0
221 1 Cabinets 75,000Including millwork
23 11 Appliances 4,800 Refrigerator, microwave, nourishment
station
24 12 Bls/shdes/artwrk 5,640 Window shades, patient rooms and
common areas
25 12 Carpets, 15,908
26 13 Special const.78,056 Sprinklers
27 14 Elevators 80,000 Cabs, equipment, installation of
elevators
28 15 Plumb/htwtr 298,222 As per plan, toilets, sinks, HW
heaters
29 15 Heat/Vent. 424,296 As per plan, thru wall units, common
areas HVAC
30 15 Air conditioning 0 with heating and ventilation
31 16 Electrical 438,296 As per plan, service, switch
gear,outlets, lights
32 Subtotal 3,379,561
33 Accessory structure
34 Tot(lns 32,33) 3,379,561
35 2 Earth work 114,300 Bldg. excavation, clearing
36 2 Skills utilities 95,600 Water service, sewer, storm water
37 2 Roads and walks 167,400 Vehicular paving curbs and walks
38 2 Site improvement 3,100
39 2 Lawn/planting 73,000 Landscaping, seeding and sod
40 2 Unusual site cond. 0 Nonresidential and special exterior
land
41 Tot land imprvts 453,400 improvement (included in
breakdown)
42 Tot. struct and land imprvts Offsite costs
3,832,961
43 General Requirements 252,000 Traffic Light 7,992
44 Subtotal (lines 42,43) Street improvement 53,560
4,084,961
45 Builder's overhead 81,800
46 Builder's profit 257,937
47 Subtotal (lines 44 thru 46) Total 71,552
4,424,698 Other Fees
48 Cost certification 10,000
49 Other fees 10,000
50 Bond premises 44,309
51 Total for all improvements 4,479,007
52
53 Total for all improvements
less line 52
4,479,007
Mortgagor: North Cape Convalescent Center Associates, L.P
Date 7/8/94
By: Andrew Conn, Sec. Geriatric and Medical Services, Inc.-General
Partner
Contractor: Quaker Construction Management, Inc.
Date 7/8/94
By: James Methven, Exec. VP
FHA 7-28-94 Peter J. Catania 7-28-94
Treasury Analyst date Chm Cash Branch
date
FHA Geraldine McGorm 7-28-94
Chief Underwriter
Security Agreement
THIS SECURITY AGREEMENT (the "Agreement") made as of this 14th day
of December, 1994 by and between NORTH CAPE CONVALESCENT CENTER
ASSOCIATES, L.P., a Pennsylvania Limited Partnership having an
office and place of business at 5601 Chestnut Street, Philadelphia,
PA ("Debtor"), REPUBLIC REALTY MORTGAGE CORPORATION, a Corporation
organized and existing under the laws of the State of Illinois,
having an office and place of business at 100 s. Washer Drive,
Chicago, Illinois 60606 and/or the SECRETARY OF HOUSING AND URBAN
DEVELOPMENT OF WASHINGTON, DC its successors and assigns, 451 7th
Street, SW, Washington, DC 20410, as their interests may appear
(hereinafter jointly and severally referred to as the "Secured
Party").
The Debtor is indebted to the Secured Party in the amount of
$5,636,400.00 (the "Mortgage Loan") in connection with the
financing of a nursing facility know as NORTH CAPE CONVALESCENT
CENTER, Federal Housing Administration (the "FHA") Project NO.,
035-43053, to be located in Lower Township, Cape May County, New
Jersey (the "Project"). The indebtedness (the "Debt") is evidenced
by a Mortgage Note dated of even date herewith, payable to the
order of the Secured Party, and is secured by the Mortgage (the
"Mortgage") of even date herewith, and recorded or to be recorded
among the records of Cape May County, New Jersey. The Debt is to
be insured by the Secretary of Housing and Urban Development (the
"Secretary") under Section 232 of the National Housing Act.
To further secure the repayment of the Debt, and at the request of
the Secured Party and the Secretary, the Debtor wishes to grant to
the Secured Party,m pursuant to the Uniform Commercial Code as in
effect in the State of New Jersey (the "State") a security interest
in certain property related to the Project. The parties also
intend to set forth in this instrument their agreement with respect
to that security interest.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises set for the below, and in further consideration of the sum
of One Dollar ($1.00) and other good and valuable consideration in
hand paid by each party to the other, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as
follows:
1. Creation of Security Interest.
a. Granting Clause. The Debtor hereby grants a security interest
(referred to in this Agreement as the "{Security Interest") to the
Secured Party in all property (the "Collateral") which (i) is owned
by the Debtor or becomes the property of the Debtor hereafter;
and/or (ii) is described in Exhibit "B" attached to this Agreement;
and/or (iii) is part of, attached to, or located on the land and
premises described in Exhibit "A" attached to this Agreement.
Exhibits "A" and "B" are hereby incorporated into this Agreement by
reference. The Security Interest is granted for the purpose of
securing the Debt.
b. Warranty. The Debtor warrants and represents to the Secured
Party that the Collateral is free and clear of any lien, security
interest, incumbrance, and other claim of any kind, other than the
Security Interest created by this agreement, and has the full power
to grant the Security Interest.
c.Perfection. The Debtor agrees to comply with the requirements of
all valid and applicable state and Federal laws in order to grant
to the Secured Party a valid, perfected lien upon, and Security
Interest in, the Collateral, and shall, upon the request of the
Secured Party, form item to time execute and deliver to the Secured
Party one or more financing statements pursuant to the Uniform
Commercial Code then in effect in the State, and any other
instruments required by the Secured Party in connection herewith
the filing of which is advisable, in the sole judgement of the
Secured Party, to perfect the Secured Party's Security Interest in
the Collateral under the laws of the United States, the State, or
any other jurisdiction in which the secured Party shall determine
such filings to be advisable. The Debtor hereby authorizes the
Secured Party to execute and file, at any item and from time to
time, on behalf of the Debtor one or more financing statements with
respect to the Collateral, the filing of which is advisable, in the
sole judgement of the Secured Party including, especially, but
without limitation, continuation statements and statements
reperfecting a security interest in any of the Collateral where the
financing statements with respect thereto had lapsed. The Debtor
hereby irrevocably appoints the Secured Party as the Debtor's
attorney-in-fact to execute and file, from time to time, on its
behalf, one or more financing statements with respect to the
Collateral and to execute such other documents and instruments on
behalf of the Debtor as the Secured Party, in its sold judgment,
shall deem necessary or desirable for the purposes of effectuating
this Agreement, such power being coupled with an interest and
irrevocable. The Debtor agrees to notify the Secured Party prior
to any change in its mailing address or principal place of
business, in order that a prompt filing or refiling of any
outstanding financing statements or other public notices may be
made, if necessary. The Debtor further agrees to advise the
Secured Party promptly of any new facts which, under the uniform
Commercial Code of the State, would affect the priority of the
Security Interest granted to the Secured Party by this Agreement.
d. Proceeds, etc. The Security Interest shall extend to and
include the proceeds of any Collateral and any property which the
Debtor may receive on account of any Collateral.
e. Costs and Expenses of Secured Party. The Debtor will pay any
and all fees, costs and expenses, of whatever kind and nature,
which the Secured Party may incur in filing any financial
statements or other public notices, and the charges of any
attorneys whom the Secured Party may engage in preparing and filing
such documents, making title examinations and rendering opinion
letters, as well as all costs and expenses incurred by the Secured
Party, including reasonable attorney's fees and court costs in
protecting, maintaining, preserving, enforcing or foreclosing the
Security Interest granted to the Secured Party hereunder, whether
through judicial proceedings or otherwise, or in defending or
prosecuting and actions or proceedings arising out of or relating
to this transaction, promptly after the Debtor shall have been
notified by the Secured Party of the amount of such fees, costs, or
expenses, together with interest thereon at the rate of ten percent
(10 percent) per annum until paid.
2. Care of Collateral. Unless specifically otherwise agreed by the
Secured Party in writing, the Debtor shall:
a. Maintain possession of the Collateral on the Project premises
(which are described in Exhibit "a") and not remove the Collateral
from the location.
b. Keep the Collateral separate and identifiable.
c. Maintain the Collateral in good and salable condition, repair it
if necessary, and otherwise deal with the Collateral in all such
ways as are considered good practice by owners of such property.
d. Use the Collateral lawfully and only as permitted by insurance
policies.
e. Permit the Secured Party to inspect the Collateral and any
records relating to the Collateral upon request during normal
business hours.
f. Insure the Collateral for its full replacement value, subject to
a deductible of not more than the lesser of (i) $10,000 or (ii) one
percent (1 percent) of the Mortgage Loan (unless the Secured Party
has given written approval of a larger deductible) in the name of
and with loss of or damage payable to the Secured Party, as its
interest may appear. All such policies shall provide for thirty
(30) days minimum written notice to the Secured Party of
cancellation or material change.
g. Keep the Collateral free and clear of all liens and security
interests of others.
3. Defense of Collateral. The Debtor will promptly defend any
proceeding which may affect the Security Interest or the title to
the Collateral, and will reimburse the Secured Party for all costs
and expenses incurred by the Secured Party in connection with such
defense.
4. Charges, Liens and Encumbrances of Collateral. The Debtor will
pay when due all existing or future charges, liens or encumbrances
on and all taxes and assessments now or hereafter imposed on or
affecting the Collateral.
5.Remedies or Default. In the event of a default, as defined in
Section 6, and after the expiration of any applicable grace period:
a.The Secured Party may, at its option, declare the full principal
amount of the debt, and any interest accrued on that amount, to be
immediately due and payable; and
b. The Secured Party Shall have all of the rights and remedies of
a
Secured Party against the Collateral under the Uniform Commercial
Code as in effect in the State.
Without limitation of those rights and remedies, the Secured Party
may, upon written notice to the Debtor, take, and publicly or
privately sell or convey full right, title and interest in and to,
the Collateral, or any part of it, in the name of the Secured Party
and/or its designees. The Debtor hereby constitutes and appoints
the Secured Party as its true and lawful attorney-in-fact, such
power being coupled with an interest and irrevocable, to assign and
transfer its interest in any or all of the Collateral i the event
of a default.
6. Defaults. for purposes of this Agreement, the Debtor shall be
deemed to be in default if:
a. The Debtor violates any provision of (i) the above-described
Mortgage Note (which evidences the Debt), (ii) the above-described
Mortgage (which also secures the Debt); (iii) that certain
Regulatory Agreement for Multifamily Housing Projects (hereinafter
referred to as the "Regulatory Agreement") of even date herewith
between the Debtor as Owner, and the Secretary; (iv) that certain
Building Loan Agreement of even date herewith between the Debtor,
as Borrower, and the Secured Party, as Lender, or (v) any other
instrument related to the Debt (which Note, Mortgage, Regulatory
Agreement, Building Loan Agreement and other instruments related to
the Debt are hereinafter sometimes collectively referred to as the
"Security Documents"); or
b. The Debtor violates any provision of this Agreement; or
c. There occurs any actual or threatened demolition of or injury or
waste to the Project premises which may impair the value of the
Collateral; or
d. A receiver is appointed for or a petition in bankruptcy is filed
by or against the debtor, its successors or its assigns; or
e. The Debtor is dissolved and liquidation of the Debtor is
commenced in accordance with the Debtor's organizational documents
and/or the law of the State.
7. No Waiver. No failure on the part of the Secured Party to
exercise, and no delay on the part of the Secured Party in
exercising, any right or remedy under this Agreement shall operate
as a waiver of that right or remedy. A single or partial exercise
by the Secured Party or preclude any other or further exercise of
that right or remedy or the exercise of any other right or remedy.
The remedies provided in this Agreement are not exclusive of any
remedies provided by law.
8. Priority of remedies; Renewals and Extensions. Neither the
Debtor nor any other person interested in the Collateral or the
proceeds of the Collateral shall have any right to require the
Secured Party first to resort to or proceed personally against any
other person or to proceed against any other collateral security;
or to give priority or preference to any item of Collateral, or to
proceed upon any guaranty prior to exercising its rights hereunder.
No renewal or extension of the Debt, no release or surrender of any
collateral given as security for the Debt, no release of any
obligor with respect to the Debt, and no delay by the Secured Party
in enforcing the Debt or exercising any right or power with respect
to the Debt shall affect the Secured Party's rights with respect to
the Collateral.
9. Termination. When the Debt has been paid in full, this Security
Agreement shall terminate, and the Secured Party shall execute a
Termination Statement and any other documents necessary to
terminate this Agreement and release the Collateral from the
Security Interest.
10. Non-Recourse Obligation. This Security Agreement is given upon
the condition, to which the Secured Party by acceptance hereof
agrees, that neither the Debtor nor any Partner of the Debtor, from
time to time, shall be personally liable either at law or in equity
for the repayment of the Debt or the failure to performance of any
other obligations evidenced by the Note or contained in the
aforesaid Mortgage, Regulatory Agreement, Building Loan Agreement
and any other of the Security Documents, and the Secured Party, its
successors and assigns, will satisfy and judgments, orders or
decrees on account of the failure to repay such Indebtedness or the
failure to perform any such obligation, from the Property
encumbered by the Mortgage and any such other real or personal
property, tangible or intangible, as the Debtor shall have pledged
or assigned to secure the Indebtedness, and the Secured Party shall
not seek or obtain a deficiency judgement against the Debtor or any
Partner of the Debtor. This Paragraph 10 shall not be deemed to
limit the remedies of the Secured Party, its successors and
assigns, in law or in equity, pursuant to this Agreement, provided
that the exercise of such remedies, including the obtaining of any
judgements or decrees at laws or in equity or other orders hall not
impose personal liability on the Debtor or any Partner of the
Debtor. The provisions of this Paragraph 10 shall not impair any
rights or remedies of the Secured Party or limit any obligations of
the Secured Party under the Regulatory Agreement (including with
respect thereto the rights of HUD), the Mortgage, the Note, the
Building Loan Agreement or any of the other instrument related to
the Debt, no shall it be deemed applicable to claims by the Secured
Party for any of the following:
a. Misapplication of insurance or condemnation proceeds.
b. Misapplication of loan proceeds.
c. Improper application of tenant security deposits or prepaid
rents.
d. Failure, prior to any default by the Assignee hereunder or under
any of the Security Documents, to properly apply rents and other
revenue of the Property actually collected by the Debtor's default
hereunder or under any of the Security Documents, to properly apply
rents and other revenue of the Property actually collected by the
Debtor (i) to necessary and proper expenses of the Property or (ii)
to reduce the Debt by applying such amounts first to costs, then to
unpaid interest due and finally to the principal balance
outstanding on the Note or other Debt secured by the Mortgage.
e. Failure to pay valid mechanic's and/or materialmen's liens filed
against the Property prior to the Debtor's default under the Debts
or filed after the Debtor's default under the Debt to the extent
the claim set forth in such lien relates to labor performed or
material supplied prior to the date of the Debtor's default under
the Debt.
f. Fraud
Nothing contained in this paragraph 10 shall in any manner or way
release, affect, alter, prejudice or impair (i) the existence of
the Debt secured by the Mortgage, the Note and any other of the
Security Documents, or the liens and security interests under the
mortgage, the Note and any other of the Security Documents; (ii)
the rights of the holder of the Note to secure a deficiency
judgment against the Debtor or any Partner of the Debtor, or
against any other person, who has agreed or hereafter agrees to be
independently liable for the payment of any indebtedness or
obligations of the Debtor; and (iii) the rights of the holder of
the Note to collect upon or exercise any remedy against such
Stockholders or Officers with respect to any guaranty, or to
exercise or enforce any right or remedy against any collateral or
other property pledged to, granted or held by the Holder of the
Note as security for the Debtor's obligations.
11. Terms. Unless otherwise defined, all words used in this
Agreement shall have the meanings given them in the Uniform
Commercial code as in effect in the State.
12. Notices. All notices, demands and communications between the
parties concerning this Agreement shall be in writing and shall be
delivered, or mailed by registered or certified mail with postage
prepaid, or telegraphed, addressed in each case as follows, and
shall be deemed to have been given or made when so delivered,
deposited in the mail, or telegraphed:
If to the Debtor, to:
North Cape Convalescent Center
Associates, L.P.
5601 Chestnut St.
Philadelphia, PA
If to the Secured Party, to:
Republic Realty Mortgage Corporation
100 S. Wacker Drive
Chicago, Illinois 60606
Either party, at any time, by written notice given to the other in
accordance with this Section, may designate a different address to
which such communications shall thereafter be directed.
13. Miscellaneous.
a. This Agreement shall be governed by and construed in accordance
with the laws of the State.
b. All captions in this Agreement are for convenience only, and
shall not be considered in construing this Agreement.
c. any reference in this Agreement to a "section" shall be
construed as referring to a Section of this Agreement.
d. This Agreement shall be binding upon and insure to the benefit
of the parties and their respective successors and assigns.
e. The invalidity or unenforceability or any provision of this
Agreement shall not affect the validity or enforceability of the
remaining provisions, which shall remain in full force and effect.
f. this instrument contains the entire agreement between the
parties as to the rights granted and the obligations assumed in
this instrument. This Agreement may be amended only be a
subsequent written instrument signed by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year hereinabove first written.
NORTH CAPE CONVALESCENT CENTER
ASSOCIATES, L.P.
By: Geriatric & Medical Services, Inc.,
General Partner
By: Andrew G. conn, Asst. Vice President
Attest:
James J. Wankmiller, Secretary
Attest:
Raymond J. Walshlager, Assistant Secretary
Republic Realty Mortgage Corporation
By: Jeaneda C.Bishop, Vice President
SECRETARY OF HOSING AND URBAN DEVELOPMENT ACTING BY AND THROUGH THE
FEDERAL HOUSING COMMISSIONER
By: Authorized Agent
Attachments
Exhibit "A" [Legal Description]
Exhibit "B" [Description of Collateral]
EXHIBIT A
LEGAL DESCRIPTION
FEDERAL HOUSING ADMINISTRATION
PROJECT NO. 035-43053
NORTH CAPE CONVALESCENT CENTER
BEGINNING AT THE INTERSECTION OF THE SOUTHWESTERLY SIDE OF TOWN
BANK ROAD, AS WIDENED TO THIRTY-THREE FEES SOUTHWEST OR CENTER
LINE, WITH THE SOUTHEASTERLY SIDE OF SHUNPIKE, AS WIDENED TO FORTY-
THREE FEED SOUTHEAST FROM CENTER LINE; AND FROM SAID BEGINNING
POINT EXTENDED.
1. SOUTH FIFTY-THREE DEGREES FIFTEEN MINUTES TWENTY-EIGHT SECONDS
EAST, EIGHT HUNDRED SIXTY-FOUR AND NINETEEN HUNDREDTHS FEED ALONG
SAID WIDENED RIGHT-OF-WAY OF TOWN BANK ROAD TO THE NORTHWESTERLY
LINE TO LANDS OF THE LOWER TOWNSHIP BOARD OF EDUCATION ()LOT ONE-
ZERO THREE); THENCE
2. SOUTH THIRTY-FIVE DEGREES FORTY-FOUR MINUTES FIFTY SECONDS WEST
NINE HUNDRED SEVENTY-SIX AND THIRTY-FIVE HUNDREDTHS FEET ALONG SAID
LINE OF THE LOWER TOWNSHIP BOARD OF EDUCATION TO THE NORTHEASTERLY
RIGHT-OF-WAY OF CAPE MAY-LEWES FERRY APPROACH ROAD) ALSO KNOW AS
SANDMAN BOULEVARD, ALSO KNOW AS LINCOLN BOULEVARD, VARIABLE WIDTHS;
THENCE.
3. NORTH FIFTY-TWO DEGREES FIFTY-FOUR MINUTES SEVENTEEN AND ONE
TENTH SECONDS WEST (N 52 DEGREES 54 FEET 17.1 INCHES WEST) FIVE
HUNDRED TWENTY-ONE AND EIGHTY-SEVEN HUNDREDTHS (521.87) FEET ALONG
SAID SIDE OF CAPE MAY-LEWES FERRY APPROACH ROAD TO A CONCRETE
MONUMENT FOUND MARKING A POINT OF CURVATURE THEREIN; THENCE
4. FOLLOWING A 5,644.80 FEED RADIUS CURVE TO THE RIGHT, PASSING
THROUGH AN ARC ANGEL OF TWO DEGREES FOURTEEN MINUTES NO SECONDS
((02 DEGREES 14 FEET 00 INCHES), AN ARC LENGTH OF TWO HUNDRED
TWENTY AND FOUR HUNDREDTHS (220.04) FEET, THE CHORD OF SAID CURVE
BEARING NORTH FIFTY-ONE DEGREES THIRTY-THREE MINUTES TWENTY-SEVEN
SECONDS WEST (M 51 DEGREES 33 FEET 27 INCHES W) TWO HUNDRED TWENTY
AND TWO HUNDREDTHS (220.02) FEET TO ANOTHER CONCRETE MONUMENT FOUND
MARKING A POINT OF TANGENCY THEREIN; THENCE
5. NORTH FIFTY DEGREES TWENTY-SIX MINUTES TWENTY-SIX AND FIVE
TENTHS SECONDS WEST (N 50 DEGREES 26 FEET 26.5 INCHES W) TWO
HUNDRED EIGHTY-NINE AND FIFTY-TWO HUNDREDTHS (289.52) FEET STILL
ALONG SAID SIDE OF CAPE MAY-LEWES FERRY APPROACH ROAD TO THE
AFORESAID WIDENED RIGHT-OF-WAY OF SHUNPIKE; THENCE
6. NORTH FORTY-FIVE DEGREES FORTY-ONE MINUTES NO SECONDS EAST (N 45
DEGREES 41 FEET 00 INCHES) NINE HUNDRED SIXTY-THREE AND NINETY-
FOUR-HUNDREDTHS (963.94) FEET ALONG SAID WIDENED RIGHT-OF-WAY OF
SHUNPIKE TO THE AFORESAID SIDE OF TOWN BANK ROAD AND PLACE OF
BEGINNING.
EXHIBIT B
TO
SECURITY AGREEMENT
FEDERAL HOUSING ADMINISTRATION
PROJECT NO. 035-43053
NORTH CAPE CONVALESCENT CENTER
As used herein, the tern"Debtor" shall mean and include the terms
"Mortgagor", "Grantor" and "Borrower"; and the term "Secured Party"
shall mean and include the terms "Lender", "Beneficiary" and
"Creditor".
This Exhibit "B" is attached to, incorporated by reference in and
forms a part of certain documents (collectively, the "Security
Documents"), dated of even date herewith, executed and delivered by
the Debtor in connection with the financing of the Project (as
hereinafter defined), including: (i) a Mortgage; (ii) Security
Agreement; and (iii) Financing Statements.
This Exhibit "B" refers to the following collateral which may be
now or hereafter located on the premises of, relate to, or be used
in connection with, the acquisition, construction, equipping,
repair, ownership, management, and operation of a [X] skilled
nursing facility, [] intermediate care facility, or [X] board and
care facility know as NORTH CAPE CONVALESCENT CENTER (the
"Project"), FHA Project No. 035-43053, located in Lower Township,
Cape May County, New Jersey;
1. All materials now owned or hereafter acquired by the Debtor and
intended for construction, reconstruction, alternation and repair
of any building, structure or improvement now or hereafter erected
or placed on the property described in Exhibit "A" (the
"Property"), all of which materials shall be deemed to be included
within the Project immediately upon the delivery thereof to the
Project.
2. All of the walks, fences, shrubbery, driveways, fixtures,
machinery, apparatus, equipment, fittings, and other goods and
other personal property of every kind and description whatsoever,
now owned or hereafter acquired by the Debtor and attached to or
contained in and used or usable in connection with any present or
future operation of the Project, including, by way of example
rather than of limitation, all lighting, laundry, incinerating and
power equipment; all engines, boilers, machines, motors, furnaces,
compressors and transformers; all generating equipment; all pumps,
tanks, ducts, conduits, wire, switches, electrical equipment and
fixtures, fans and switchboards; all telephone equipment; all
piping, tubing, plumbing equipment, and fixtures; all heating,
refrigeration, air conditioning, cooling, ventilation, sprinkling,
water, power and communications equipment, systems and apparatus;
all water coolers and water heaters; all fire prevention, alarm and
extinguishing systems and apparatus; all cleaning equipment; all
lift, elevator and escalator equipment and apparatus; all
partitions, shades, blinds, awnings, screens, screen doors, storm
doors, exterior and interior signs, gas fixtures, stoves, ovens,
refrigerators, garbage disposals, dishwashers, cabinets, mirrors,
mantles, floor coverings, carpets, rugs, draperies and other
furnishings and furniture installed or to be installed or used or
usable in the operation of any part of the Project or facilities
erected or to be erected in or upon the Property; and every renewal
or replacement thereof or articles in substitution therefor,
whether or not the same are now or hereafter attached to the
Property in any manner; all except for any right, title or interest
therein owned by any tenant (it being agreed that all personal
property owned by the Debtor and placed by it on the Property
shall, so far as permitted by law, be deemed to be affixed to the
Property, appropriated to its use, and covered by each of the
Security Documents to which this Exhibit is attached).
3. All of the Debtor's right, title and interest in and to any and
all judgements, awards of damages (including but not limited to
severance and consequential damages), payments, proceeds,
settlements or other compensation (collectively, the "Awards")
heretofore and hereafter med, including interest thereon, and the
right to receive the same, as a result of, in connection with, or
in lieu of (i) any taking of the Property or any part thereof by
the exercise of the power of condemnation or eminent domain, or the
police power, (ii) any change or alternation of the grade of any
street, or (iii) any other injury or decrease in the value of the
Property or any part thereof (including but not limited to
destruction or decrease in value by fire or other casualty), all of
which Awards, rights thereto and shares therein are hereby assigned
to the Secured Party, who is hereby authorized to collect and
receive the proceeds thereof and to give property receipts and
acquittances therefor and to apply, at its option, the net proceeds
thereof, after deducting expenses of collection, as a credit upon
any portion, as selected by the Secured Party, or the indebtedness
secured by the Security Documents.
4. All of the Debtor's rights, title and interest in and to any and
all payments, proceeds, settlements or other compensation
heretofore or hereafter made, including any interest thereon, and
the right to receive the same from any and all insurance policies
covering the Property or any portion thereof, or any of the other
property described herein.
5. The interest of the Debtor in and to all of the Rents,
royalties, issues, profits, revenues, income and other benefits of
the Property, or arising from the use or enjoyment of all or any
portion thereof, or from any lease or agreement pertaining thereto,
and all right, title and interest of the Debtor in and to, and
remedies under,m all contract rights, accounts receivable and
general intangibles arising out of or in connection with any and
all leases and subleases of the Property, or any part thereof, and
of the other property described herein, or any part thereof, both
now in existence or hereafter entered into, together with all
proceeds (cash and non-cash) thereof; and including, without
limitation, all cash or securities deposited thereunder to secure
performance by the lessees of their obligations thereunder.
6. All of the Debtor's rights, options, powers and privileges in
and to (but not the Debtor's obligations and burdens under) any
construction contract, architectural and engineering agreements and
management contract pertaining to the construction, development,
ownership, equipping and management of the Property and all of the
Debtor's obligations and interest in and to (but not the Debtor's
obligations and burdens under) all architectural, engineering and
similar plans, specifications, drawings, reports, surveys, plats,
permits and the like, contracts for construction, operation and
maintenance of, or provision of services to, the Property or any of
the other property described herein, and all sewer taps and
allocations, agreements for utilities, bonds and the like, all
relating to the Property.
7. All intangible personal property, accounts, licenses, permits,
instruments, contract rights, and chattel paper of the Debtor,
including but not limited to cash; accounts receivable; bank
accounts; certificates of deposit; securities; promissory notes;
rents; rights (if any) to amount held in escrow; insurance
proceeds; condemnation rights; deposits; judgements, liens and
causes of action; warranties and guarantees.
8. The interest of the Debtor in any cash escrow fund and in any
and all funds, securities, instruments, documents and other
property which are at any time paid to, deposited with, under the
control of, or in the possession of the Secured Party, or any of
its agents, branches, affiliates, correspondents or others acting
on its behalf, which rights shall be in addition to any right of
set-off or right of lien that the Secured Party may otherwise enjoy
under applicable law, regardless of whether the same arose out of
or relates in any way, whether directly or indirectly, to the
Project located upon the Property.
9. The interest of the Debtor in and to any and all funds created
or established and held by the Trustee pursuant to any indenture of
trust or similar instrument authorizing the issuance of bonds or
notes for the purpose of financing the Project located upon the
Property.
10. Any collateral provided by the Debtor or for its account to
each and every issuer of a letter of credit, subject to the prior
claim of the issuer of any such letter of credit to such
collateral.
11. All inventory, including raw materials, components, work-in-
process, finished merchandise and packing and shipping materials.
12. Proceeds, products, returns, additions, accessions and
substitutions of and to any or all of the above.
13. Any of the above arising or acquired by the Debtor or to which
the Debtor may have a legal or beneficial interest in on the date
hereof and at any time in the future.
14. Any of the above which may become fixtures by virtue of
attachment to Property.
15 All of the records and books of account now or hereafter
maintained by or on behalf of the Debtor in connection with the
Project.
16.All names now or hereafter used in connection with the Project
and the goodwill associated herewith.
Construction Contract U.S. Department of Housing
Lump Sum and Urban Development
Office of Housing
Federal Housing Commissioner
CMB Approval No. 2502-0011 (Exp )
Public Reporting Burden for this collection of information is
estimated to average 0.40 hours per response, including the time
for reviewing instructions, searching data sources, gathering and
maintaining other data needed and completing and reviewing the
collection of information. Send comments regarding this burden or
any other aspect of this collection of information, including
suggestions for reducing this burden, to the Reports Management
Officer, Office of Information PA and Systems, U.S. Department of
Housing and Urban Development, Washington, DC 20410-3600 and to the
Office of Management and Budget, Paperwork Re-j Project (2502-
0011), Washington, DC 20503. Do not send this completed form to
either of these addresses.
This Agreement, made as of the 21st date of December 1994, between
Quaker Construction Management (hereinafter called the Contractor)
and North Cape Convalescent Center Associates, L.P. (hereinafter
called the Owner).
Witnesseth, that the Contract and Owner, for the consideration
hereinafter set out, agree as follows:
Article 1 Scope of Contract
A. The Contract between the parties is et forth in the Contract
Documents, which consist of this Agreement, the Drawings and
Specifications, which include the current edition of AIA Document
A201, "General Conditions of the Contract for Construction", and
Form HUD 2554, "Supplementary Conditions of the Contract for
Construction." The provisions of this instrument and the said HUD
Supplementary Conditions take precedence over all inconsistent
provisions in the said AIA General Conditions. This Contract
constitutes the entire agreement between the parties, and any
previously existing contract concerning the work contemplated by
the contract documents is hereby revoked.
B. The Contractor shall furnish all of the materials and perform
all of the work (within the property lines) shown on, and in
accordance with the Drawings and Specifications entitled North Cape
Convalescent Center, HUD Project Number 035-43053, dated 12-21-94.
C. The Drawings, which are numbered SEE RIDER ATTACHED, and the
Specifications, the pages of which are numbered SEE RIDER ATTACHED,
have been prepared by J.K. Roller Architects (Design Architect).
The Architect administering the Construction Contract (hereinafter
and elsewhere in the Contract Documents, referred to as the
"Architect) is J.K. Roller Architects.
D. A master set of said Drawings and Specifications, identified by
the parties hereto and by the Design Architect, the Architect, and
the Contract's Surety or Guarantor, have been placed on file with
the Federal Housing Commission (hereinafter referred to as the
"Commissioner"), and shall govern in all matters which arise with
respect to such Drawings and Specifications.
E. Changes in the Drawings and Specifications or any terms of the
Contract Documents, or orders for extra work, or changes by
altering or adding to the work or which will change the design
concept, may be effected only with the prior written approval of
the Owner's Lender (more particularly identified below and
hereinafter referred to as the "Lender") and the Commission under
such conditions as either the Lender or the Commissioner may
establish.
Article 2 - Time
A. The work to be performed under this Contract shall be menced
within 10 days of this Agreement, and shall be completed by
December 21, 1995. The time by which the work be completed may be
extended in accordance with the terms said AIA General Conditions
only with the prior written approval Commissioner.
B. The Contractor shall correct any defects due to faulty material
workmanship which appear within one year from the date of
completion.
C. If the work is not brought to final completion in accordance
with Drawings and Specifications, including any authorized changes,
date specified above, or by such date to which the contract time be
extended, the contract sum stated in Article 3A below should be
reduced by $2,141.83, as liquidated damages, for excess of delay
until the date of final completion. When the Owner cost to HUD,
the actual cost of interest, taxes, insurance, met insurance
premiums and construction and permanent loan extra fees, as
approved by the Commissioner, for the period from scheduled date of
completion through the date construction is actually completed,
shall be determined. The lessor of the liquidation to actual
damages shall be applied. The applicable amount should be reduced
by the project net operating income (as determined by the
Commissioner) for the damage period.
D. The Owner and Contractor may amend this contract prior to
endorsement (Insurance of advances projects) or upon execution of
the construction contract (Insurance upon completion projects form
prescribed by the Commissioner, to provide for an increase payment
to the Contractor, which will result in an increase contract sum
stated in Article 3A below, if the work is completed by the date
specified in this contract. The Contractor will not be to any
incentive payment resulting from early completion determines that
the Contractor's cost certification, if required by Article 7 is
fraudulent or materially misrepresents the Contractor's act of
construction.
E. The date of final completion shall be the date the HUD
representative signs the final HUD Representative's Trip report
provided that the trip report is subsequently endorsed by the Chief
Architect.
Article 3 - Contract Sum and Payments
A. The Owner shall pay the contractor for the performance
Contract, as hereinafter provided the sum of $4,479,007.
B. Each month after the commencement of work hereunder, the
Contractor shall make a monthly request on Form HUD 92448 for
payment by the Owner for work done during the preceding month.
Each request for payment shall be filed at least 10 days before the
date payment is desired. Subject to the approval of the Lender and
the Commissioner, the Contractor shall be entitled to payment
thereon in an amount equal to (1) the total value of classes of the
work acceptably completed; plus (2) the value of materials and
equipment not incorporated in the work, but delivered to and
suitably stored at the site; plus (3) the value of components
stored off-site in compliance with applicable HUD requirements;
less (4) 10 percent holdback and less prior payments. The "Values"
of (1), (2), and (3) shall be computed in accordance with the
amounts assigned to classes of work in the "Contractor's and/or
Mortgagor's Cost Breakdown", attached hereto as Exhibit "A". The
Contractor agrees that no materials or equipment required by the
Specifications will be purchased under a conditional sale contract
or with the use of any security agreement or other vendor's title
or lien retention instrument.
C. The balance due the Contractor hereunder shall be payable upon
the expiration of 30 days after the work hereunder is fully
completed, provided the following have occurred:
1) All work hereunder requiring inspection by municipal or other
governmental authorities having jurisdiction has been inspected and
approved by such authorities and by the rating or inspection
organization, bureau, association or office having jurisdiction;
2) All certificates of occupancy, or other approvals, with respect
to all units of the project have been issued by a State or local
governmental authorities having jurisdiction; and
3) Permission(s)to Occupy (Form HUD-92485) for all units of the
project have been issued by the Commissioner.
D. With its final application for payment by the Owner, the
Contractor shall disclose, on a form prescribed by the
Commissioner, all unpaid obligations contracted in connection with
the work performed under this Contract. The Contractor agrees that
within 15 days following receipt of final payment, it will pay such
obligations in cash and furnish satisfactory evidence of such
payment to the Owner.
Article 4 - Receipts and Releases of Liens
The Owner may require the Contractor to attach to each request for
payment its acknowledgements of payment and all subcontractors' and
material supplier's acknowledgements of payment for work done and
materials, equipment and fixtures furnished through the date
covered by the previous payment. Concurrently with the final
payment, the Owner may require the Contractor to execute a waiver
or release of lien for all work performed and materials furnished
hereunder, and may require the Contractor to obtain similar waivers
or releases from all subcontractors and material suppliers.
Article 5 - Requirements of Contractor
A. The Contractor shall furnish, at its own expense, all building
and other permits, licenses, tools, equipment and temporary
structures necessary for the construction of the project. The
Contractor shall give all required notices and shall comply with
all applicable codes, laws, ordinances, rules and regulations, and
with the current regulations of the National Board of Fire
Underwriters, wherever applicable. The Contractor further shall
comply with the provisions of the Occupational Safety and Health
Act of 1970. The Contractor shall immediately notify the
Commissioner of the delivery of all permits, licenses, certificates
of inspection, certificates of occupancy, and any other such
certificates and instruments required by law, regardless of to whom
issued, and shall cause them to be displayed to the Commissioner
upon request.
B. If the Contractor observes that the Drawings and Specifications
ar at variance with any applicable codes, laws, ordinances, rules
or regulations, or protective covenants, it shall promptly notify
the Architect in writing, and any necessary changes shall be made
as provided in this contract for changes in the Drawings and
Specifications. If the Contractor performs any work knowing it to
be contrary to such codes, laws, ordinances, rules or regulations,
or protective covenants, without giving such notice to the
Architect, it shall bear all costs arising therefrom.
C. Upon completion of construction, the Contractor shall furnish
to the Owner a survey showing the location on the site of all
improvements constructed thereon, and showing the location of all
water, sewer, gas and electric lines and mains, and of all exiting
utility easements. Such survey shall be prepared by a licensed
surveyor who shall certify that the work is installed and erected
entirely upon the land covered by the mortgage and within any
building restriction lines or said land, and does not overhang or
otherwise encroach upon any easement or right-of-way of others. In
addition, the Contractor shall furnish additional surveys when
required by the Owner for any improvements, including structures
and utilities, not theretofore located on a survey. The Contractor
shall furnish copies of such survey required hereunder for the
Lender and the Commissioner.
D. The Contractor shall assume full responsibility for the
maintenance of all landscaping which may be required by the
Drawings and Specifications until such time as both parties to this
Contract shall receive written notice from the Commissioner that
such landscaping has been finally completed. The Owner hereby
agrees to make available to the Contractor, for such purpose,
without cost to the latter such facilities as water, hose and
sprinkler.
Article 6 - Assurance of Completion
The Contractor shall furnish to the Owner assurance of completion
of the work in the form of (specify) Performance Bond - Dual
Obligee and Payment bond each in the Penal Sum of $4,479,007.00.
Such assurance of completion shall run to the Owner and the Lender
as obligees and shall contain a provision whereby the Surety agrees
that any claim or Right of Action that either the Owner or the
Lender might have thereunder may be assigned to the Commissioner.
Article 7 - Cost Certification
In the event the Commissioner determines that there is an identity
of interest between the Contractor and the Owner, the Contractor
shall certify on a form prescribed by the Commissioner, its cost
incurred, in the performance of work, under this Contract.
Article 8 - Right of Entry and Interpretation
A. The Lender and its agents or assigns and the Commissioner and
his/her agents shall, at all times during construction, have the
right of entry and free access to the project and the right to
inspect all work done and materials, equipment and fixtures
furnished, installed and stored in and about the project. For such
purposes, the Contractor shall furnish such enclosed working space
as the Lender or Commissioner may require and find acceptable as to
location, size, accommodation and furnishings.
B. The Commissioner shall also have the right to interpret the
Contract Documents and to determine compliance therewith,
Article 9 - Assignments, Subcontracts and Termination
A. This Contract shall not be assignable by either party without
the prior written consent of the other party, the Lender and the
Commissioner, except that the Owner may assign the Contract, or any
rights hereunder, to the Lender or the Commissioner.
B. The Contractor shall not subcontract all of the work to be
performed hereunder without the prior written consent of the Owner,
the Lender, and the Commissioner.
C. Upon request by the Owner, the Lender or the Commissioner, the
Contractor shall disclose the names of all persons with whom it has
contracted or will contract with respect to work to be done and
materials and equipment to be furnished hereunder.
D. The Contractor understands that the work under this contract is
to financed by a building loan to be secured by a mortgage and
insured by the Commissioner, and that the terms of said loan are
set forth in a building Loan Agreement between the Owner as
Borrower and Republic Realty Mortgage Corporation as Lender. The
contractor further understands that said Building Loan Agreement
provides that, in the event of the failure of the Owner to perform
its obligations to the Lender thereunder, the Lender may, as
attorney-in-fact for the Owner, undertake the completion of the
project in accordance with this Contract. In the event the Lender
elects not to undertake such completion, the Contractor's
obligations under this contract shall terminate.
IN WITNESS WHEREOF, the parties to these presents have executed
this contract in six (6) counterparts, each of which shall be
deemed an original, in the year and day first above mentioned.
<PAGE>
NORTH CAPE CONVALESCENT CENTER ASSOCIATES, L.P.
BY: Geriatric and Medical Services, Inc.,
General Partner
BY: Andrew G. Conn, Assistant Vice President
ATTEST: James J. Wankmiller, Secretary
Quaker Construction Management
BY: James Methven, Exec. Vice President
ATTEST:
Dawn Morton, Asst. Sec.
Replaces Form FHA-2442 which is obsolete
Previous Editions are obsolete
Form HUD-92442 (3-9)
ref Handbook 443C<PAGE>
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF PHILADELPHIA
On this 19th day of December, 1994 before me, the undersigned
officer; personally appeared Andrew G. Conn, who acknowledged
himself to be the Assistant Vice President of Geriatric and Medical
Services, Inc., the corporation named in the foregoing instrument
as the General Partner of North Cape Convalescent Center,
Associates, L.P., a limited partnership and that he as such
Assistant Vice President of the General Partner, being authorized
to do so, executed the foregoing instrument for the purposes
therein contained in the name of such Limited Partnership by
himself as Assistant Vice President of the General Partner, on
behalf of said limited partnership.
IN WITNESS WHEREOF, I hereunto set my hand and official seal
Marie E. Chaney
Notary
My Commission Expires:
Notarial Seal
Marie E. Chaney, Notary Public
City of Philadelphia, Phila. County
My Commission Expires September 22, 1997
STATE OF NEW JERSEY
COUNTY OF CAMDEN
On this 20th day of December, 1994, before me personally came James
Methven, to me known, who being by me duly sworn, did depose and
say that he is the Executive Vice President of QUAKER CONSTRUCTION
MANAGEMENT, the Corporation described in and which executed the
above instrument; that he knows the seal of said Corporation; that
the seal affixed to said instrument is such corporate seal; that it
was so affixed by the order of the Board of Directors of said
Corporation, and that he signed his name thereto by like order.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
notarial seal on the date and year last above written.
Lisa Ann Yuhas
Notary Public
Lisa Ann Yuhas
Notary Public of New Jersey
My commission Expires March 23, 1999
RIDER 1 TO
CONSTRUCTION CONTRACT-COST PLUS
BY AND BETWEEN
QUAKER CONSTRUCTION MANAGEMENT AND
NORTH CAPE CONVALESCENT CENTER ASSOCIATES, L.P.
DATED AS OF DECEMBER 21, 1994
Delete from AIA Document A201, "General Conditions of the Contract
for Construction, section 4.5 "Arbitration", and substitute the
following therefore:
4.5 Disputes
4.5.1. Except for disputes arising from Form HUD 2554, Supplement
to the General Conditions of the Contract for Construction, Article
1, "Labor Standards" (Development), all disputes arising under or
relating to this contract, including any claims for damages for the
alleged breach thereof which are not disposed of by agreement,
shall be presented in writing to the architect hereinafter referred
to as the contracting Officer, the Contracting Officer shall, with
reasonable promptness, render his/her decision to the contractor in
writing.
4.5.2. Unless the Contractor, within 30 days after receipt of the
Contracting Officer's decision, shall notify the Contracting
Officer in writing that it takes exception to such decision, the
decision shall be final and conclusive.
4.5.3. Provided the Contractor has (1) given the notice within the
time stated in (b) above, and (2) excepted its claim relating to
such decision from the final release, and (3) brought suit against
the Mortgagor not later than one year after receipt of final
payment or if final payment has not been made, not later than one
year after the Contractor has had a reasonable time to respond to
a
written request by the mortgagor that it submit a final voucher and
release, which ever is earlier, then the Contracting Officer's
decision shall not be final or conclusive but the dispute shall be
determined on the merits by a court of competent jurisdiction.
4.5.4. Whether or not the Contractor presents a claim to the
Contracting Officer or takes exception to the decision of the
Contracting Officer, it shall, unless directed otherwise by the
Contracting Officer, proceed with the work as directed, but only if
said directive in previously approved in writing, by HUD.
NORTH CAPE CONVALESCENT CENTER ASSOCIATES, L.P.
BY: Geriatric and Medical Services, Inc., General Partner
By: Andrew G. Conn, Assistant Vice President
ATTEST: James J. Wankmiller, Secretary
QUAKER CONSTRUCTION MANAGEMENT
By: James Methven, Executive Vice President
ATTEST: Dawn Morton, Asst. Sec.<PAGE>
SHEET INDEX NORTH CAPE FHA PROJECT 035-43053
Issued for Issued
HUD DWG.1 Sheet No. Sheet Title HUD N.J.D.O.H.
1 S Cover Sheet 4/15/94 3/21/94
2 SD1 Survey Plan 4/15/94 2/7/94
3 SD2 Site Plan 4/15/94 3/11/94
4 SD3 Landscaping Plan 4/15/94 2/10/94
5 SD4 Landscaping Plan 4/15/94
6 SD5 Landscaping Plan 4/15/94
7 SD6 Landscaping Plan 4/15/94
8 SD7 Site Light Plan 4/15/94 2/10/94
9 SD8 Site Details 4/15/94 2/10/94
10 A1 Fst Fl Key Plan 4/15/9 1/24/94
11 A2 Sec. Fl Key Plan 4/15/94 1/24/94
12 A3 First Floor Plan:
LTC wing 4/15/94 1/24/94
13 A4 Fst Fl Pln Admin
and Service 4/15/94 3/21/94
14 A5 Second Floor
Plan RHC Wing 4/15/94 3/14/94
15 A6 Second Floor
Plan: Admin and
service 4/15/94 1/24/94
16 A7 Reflected Ceiling
Plan first floor
resident 4/15/94 1/24/94
17 A8 Reflected Ceiling Plan
first floor admin 4/15/94 3/21/94
18 A9 Reflected Ceiling Plan
2nd floor resident 4/15/94 3/14/94
19 A10 Reflected Ceiling Plan
2nd floor admin 4/15/94 3/21/94
20 A11-A Roof Plan - resident wing 4/15/94
21 A11-B Roof Plan - Admin and
service wing 4/15/94
22 A12 Elevations 4/15/94 1/24/94
23 A13 Elevations 4/15/94 1/24/94
24 A14 Elevation 4/15/94 1/24/94
25 A15 Wall sections 4/15/94 3/21/94
26 A16 Wall sections 4/15/94 1/24/94
27 A17 Large Scale Plans 4/15/94 3/21/94
28 A18 Large Scale Plans 4/15/94 1/24/94
29 A19 Kitchen Plan 4/15/94 3/21/94
30 A20 Mechanical and Laundry
Room Plans 4/15/94 1/24/94
31 A21 Dining Room Plans 4/15/94 1/24/94
32 A22 Entrance Lobby and
Activities Plan 4/15/94 1/24/94
33 A23 Stairs/Elevators 4/15/94 12/27/93
34 A24 Stairs/Elevators 4/15/94 1/20/94
35 A25 Stairs/Elevators 4/15/94 1/20/94
36 A26 Door Schedule and
Details 4/15/94 3/21/94
37 A27 Finish Schedule 4/15/94 3/21/94
38 S1 Foundation Plan:
Resident Wing 4/15/94 3/24/94
39 S2 Foundation Plan: Admin
and service wing 4/15/94 3/24/94
40 S3 Second floor framing
plan: resident wing 4/15/94 3/24/94
41 S4 Second floor framing 4/15/94 3/24/94
plan: service and admin wings
42 S5 Roof framing plan:
resident wing 4/15/94 3/24/94
43 S6 Roof framing plan: service
and admin wings 4/15/94 3/24/94
44 S7 Structural details 4/15/94 3/24/94
45 M1 HVAC Plan: 1st floor
LTC wing 4/15/94 12/27/93
46 M2 HVAC Plan: first floor
service and admin wings 4/15/94 1/10/94
47 M3 HVAC Plan: Second floor
RHC wing 4/15/94 3/14/94
48 M4 HVAC Plan: Second floor
Service and admin wings 4/15/94 3/14/94
49 M5 HVAC Schedules 4/15/94 1/10/94
50 M6 Details and Notes 4/15/94 12/27/93
51 P1 Plumbing Plan: 1st floor
LTC wing 4/15/94 3/2/94
52 P2 Plumbing Plan: 1st Floor
Service and admin wings 4/15/94 3/2/94
53 P3 Plumbing Plan: 2nd floor
RHC wings 4/15/94 3/14/94
54 P4 Plumbing Plan: 2nd floor
service and admin
4/15/94 12/27/93
wings
55 P5 Sanitary riser diagram
and notes 4/15/9 3/14/94
56 P6 Domestic water piping
details 4/15/94 3/14/94
57 P7 Kitchen plumbing 4/15/94 3/14/94
58 P8 Attic sprinkler plan 4/15/94 12/27/93
59 E1 Power, lighting and
signals: 1st floor LTC wing 4/15/9 1/26/94
60 E2 Power, lighting and
signals: 1st floor service
and admin wings 4/15/94 3/21/94
61 3 Power, lighting and
signals: 2nd floor
RHC wings 4/15/94 3/9/94
62 E4 Power, lighting and
signals: 2nd floor service
and admin wings 4/15/94 1/26/94
63 E5 Symbols, Notes and Details 4/15/94 12/13/94
64 E6 Free alarm riser diagram 4/15/94 12/13/94
65 E7 Kitchen Power Plan 4/15/94 1/26/94
66 E8 Electrical panel schedules 4/15/94 1/26/94
HUD 1
Supplementary Conditions of the
Contract for Construction
U.S. Department of Housing and Urban Development
Article 1 - Labor Standards
Instructions
Whenever only FHA mortgage insurance is involved, use paragraph (A)
and (C) of Article 1 - Labor Standards. Whenever any direct form
of assistance (Section 8, section 202, direct loans, grants, ) is
involved, use paragraphs (A) and (B); and (C) of Article 1 - Labor
Standards.
Applicability
The Project or Program to which the construction work covered by
this contract pertains is being assisted or insured by the United
States of America and the following Federal Labor Standards
Provisions are included in the Contract or related instrument
pursuant to the provisions applicable to such Federal assistance or
insurance.
A.1.(i) Minimum Wages. All laborers and mechanics employed or
working upon the site of the work (or under the United States
Housing Act of 1937 or under the Housing Act of 1949 in the
construction or development of the project) will be paid
unconditionally and not less often than once a week and without
subsequent deduction or rebate on any account (except such payroll
deductions as are permitted by regulations issued by the Secretary
of Labor under the Copeland Act (29 CFR Part 3), the full amount of
wages and bona fide fringe benefits (or cash equivalents thereof)
due at time of payment computed at rates not less than those
contained in the wage determination of the Secretary of Labor which
is attached hereto and made a part hereof, regardless of any
contractual relationship which may be alleged to exist between the
contractor and such laborers and mechanics. Contributions made or
costs reasonably anticipated for bona fide fringe benefits under
Section 1(b)(2) of the Davis-Bacon Act on behalf of laborers or
mechanics are considered wages paid to such laborers or mechanics,
subject to the provisions of 29 CFR 5.5(a)(1)(iv); also regular
contributions made or costs incurred for more than a weekly period
(but not less often than quarterly) under plans, funds, or
programs, which cover the particular weekly period, are deemed to
be constructively made or incurred during such weekly period.
Such laborers and mechanics shall be paid the appropriate wage rate
and fringe benefits on the wage determination for the
classification of work actually performed, without regard to skill,
except as provided in 29 CFR Part 5.5(a)(4). Laborers or mechanics
performing work in more than one classification may be compensated
at the rate specified for each classification for the time actually
worked therein. Provided, that the employer's payroll records
accurately set forth the time spent in each classification in which
work is performed. The wage determination (including any
additional classification and wage rates conformed under 29CFR Part
5.5(a)(1)(ii) and the David-Bacon poster (WH-1321) shall be posted
at all times by the contractor and its subcontractors at the site
of the work in a prominent and accessible place where it can be
easily seen by the workers.
(ii)(a) Any class of laborers or mechanics which is not listed in
the wage determination and which is to be employed under the
contract shall be classified in conformance with the wage
determination. HUD shall approve an additional classification and
wage rate and fringe benefits therefore only when the following
criteria have been met
(1) The work to be performed by the classification requested is not
performed by a classification in the wage determination; and
(2) The classification is utilized in the area by the construction
industry, and
(3) The proposed wage rate, including bona fide fringe benefits,
bears a reasonable relationship to the wage rates contained in the
wage determination.
(b) If the contractor and the laborers and mechanics to be employed
in the classification (if known) or their representatives, and HUD
or its designee agree on the classification and wage rate
(including the amount designee agrees on the classification and
wage rate (including the amount designated for fringe benefits
where appropriate), a report of the action taken shall be sent by
HUD or its designee to the Administrator of the Wage and Hours
Division, Employment Standards Administration, U.S. Department of
Labor, Washington, DC 20210. The Administrator, or an authorized
representative, will approve, modify, or disapprove every
additional classification action within 30 days of receipt and so
advise HUD or its designee or will notify HUD or its designee
within the 30 day period that additional time is necessary.
(Approved by the Office of Management and Budget under OMB control
number 1215-0140).
(c) In the event the contractor, the laborers or mechanics to be
employed in the classification or their representatives and HUD or
its designee do not agree on the proposed classification and wage
rate (including the amount designated for fringe benefits where
appropriate). HUD or its designee shall refer the questions
including the view of all interested parties and the recommendation
of HUD or its designee to the Administrator for determination. The
Administrator or an authorized representative will issue a
determination within 30 days of receipt and so advise HUD or its
designee or will notify HUD or its designee with the 30 day period
that additional time is necessary. (Approved by the Office of
Management and Budget under OMB Control Number 1215-0140).
(d) The wage rate (including fringe benefits where appropriate)
determined pursuant to subparagraphs A1 (ii)(b) or (c) of this
paragraph shall be paid to all workers performing work in the
classification under this contract from the first day on which work
is performed in the classification.
(iii) Whenever the minimum wage rate prescribed in the contract for
a class of laborers of mechanics includes a fringe benefit which is
not expressed as an hourly rate, the contractor shall either pay
the benefit as stated in the wage determination or shall pay
another bona fide fringe benefit or an hourly cash equivalent.
(iv) If the contractor does not make payments to a trustee or other
third person, the contractor may consider as part of the wages of
any laborer or mechanic the amount of any costs reasonably
anticipated in providing bona fide fringe benefits under a plan or
program, provided that the Secretary of Labor has found, upon the
written request of the contractor, that the applicable standards of
the Davis-Bacon Act have been met. The Secretary of Labor may
require the contractor to set aside in a separate account assets
for the meeting of obligations under the plan or program.
(Approved by the Office of Management and Budget under OMB Control
Number 1215-0140).
(2) Withholding. HUD or its designee shall upon its own action or
upon written request of an authorized representative of the
Department of Labor withhold or cause to be withheld from the
contractor under this contract or any other federal contract with
the same prime contractor, or any other Federally assisted contract
subject to Davis-Bacon prevailing wage requirements, which is held
by the same prime contractor so much of the accrued payments or
advances as may be considered necessary to pay laborers and
mechanics including apprentices, trainees and helpers employed by
the contractor or any subcontractor the full amount of wages
required by the contract in the event of failure to pay any laborer
or mechanic, including any apprentice, trainee or helper, employed
or working on the site of the work (or under the United States
Housing Act of 1937 or under the Housing Act of 1949 in the
construction or development of the project) all or part of the
wages required by the contract HUD or its designee may, after
written notice to the contractor, sponsor, applicant or owner, less
than the applicable wage rate on the wage determination for the
classification of work actually performed. In addition, any
trainee performing work on the job site in excess of the ratio
permitted under the registered program shall be paid not less than
the applicable wage rate on the wage determination for the work
actually performed. In the event the Employment and Training
Administration withdraws approval of a training program, the
contractor will no longer be permitted to utilize trainees at less
than the applicable predetermined rate for the work performed until
an acceptable program is approved.
(iii) Equal employment opportunity, the utilization of apprentices,
trainees, and journeymen under this part shall be in conformity
with the equal employment opportunity requirements of Executive
Order 11246, as amended and 29 CFR Part 30.
5. Compliance with Copeland Act requirements. The contractor shall
comply with the requirements of 29 CFR Part 3 which are
incorporated by reference in this contract.
6. Subcontracts. The contractor or subcontractor will insert in
any subcontracts the clauses contained in 29 CFR 5.5(a) (1) through
(10) and such other clauses as HUD or its designee may by
appropriate instructions require and also a clause requiring the
subcontractors to include these clauses in any lower tier
subcontracts. The prime contractor shall be responsible for the
compliance by any subcontractor or lower tier subcontractor with
all the contract clauses in 29 CFR Part 5.5.
7. Contract termination; debarment. A breach of the contract
clauses in 29 CFR 5.5 may be grounds for termination of the
contract and for debarment as a contractor and a subcontract as
provided in 29 CFR 5.12.
8. Compliance with Davis-Bacon and Related Act Requirements. All
rulings and interpretations of the Davis-Bacon and Related Acts
contained in 29 CFR Parts 1,3 and 5 are herein incorporated by
reference in this contract.
9. Disputes concerning labor standards. Disputes arising out of
the labor standards provisions of this contract shall not be
subject to the general disputes clause of this contract. Such
disputes shall be resolved in accordance with the procedures of the
Department of Labor set forth in 29 CFR Parts 5,6 and 7. disputes
within the meaning of this clause include disputes between the
contractor (or any of its subcontractors) and HUD or its designee,
the U.S. Department of Labor, or the employees or their
representatives.
10. (i) Certification of Eligibility. By entering into this
contract, the contractor certifies that neither it (nor he or she)
nor any person of firm who has an interest in the contractor's firm
is a person or firm ineligible to be awarded Government contracts
by virtue of Section 3(a) of the Davis-Bacon Act or 29 CFR
5.12(a)(1) or to be awarded HUD contracts or participate in HUD
programs pursuant to 24 CFR Part 24.
(ii) No part of this contract shall be subcontracted to any person
or firm ineligible for award of a government contract by virtue of
Section 3(A) of the Davis-Bacon Act or 29 CFR 5.12(a)(1) or to be
awarded HUD contracts or participate in HUD programs pursuant to 24
CFR Part 24.
(iii) The penalty for making false statements is prescribed in the
U.S. Criminal Code, 18 U.S.C. 1001. Additionally, U.S. Criminal
Code, Section 1010, Title 18,U.S.C., "Federal Housing
Administration Transactions", provides in part "Whoever, for the
purpose of. . . . influencing in any way the action of such
Administration.. makes, utters or publishes any statement, knowing
the same to be false...shall be fined not more that 5,000 thousand
dollars or imprisoned not more than two years/or both.
B. Contract Work Hours and Safety Standards. As used in this
paragraph, the terms "laborers" and "mechanics" include watchmen
and guards.
(1) Overtime Requirements. No contractor or subcontractor
contracting for any part of the contract work which may require or
involve the employment of laborers or mechanics shall require or
permit any such laborer or mechanic in any workweek in which he or
she is employed on such work to work in excess of eight hours in
any calendar day or in excess of forty hours in such workweek
unless such laborer or mechanic receives compensation at a rate not
less than one and on-half times the basic rate of pay for all
hours worked in excess of eight hours in any calendar day or in
excess of forty hours in such workweek, whichever is greater.
(2) Violation; liability for unpaid wages; liquidated damages. In
the event of any violation of the clause set forth in subparagraph
(1) of this paragraph, the contractor and any subcontractor
responsible therefor shall be liable for the unpaid wages. In
addition, such contractor and subcontractor shall be liable to the
United States (in the case of work done under contract for the
District of Columbia or a territory, to such district or to such
territory) for liquidated damages. Such liquidated damages shall
be computed with respect to each individual laborer or mechanic,
including watchmen and guards, employed in violation of the clause
set forth in subparagraph (1) of this paragraph. In the sum of ten
dollars for each calendar day on which such individual was required
or permitted to work in excess of eight hours or in excess of the
standard workweek of forty hours without payment of the overtime
wages required by the clause set forth in subparagraph (1) of this
paragraph.
(3) Withholding for unpaid wages and liquidated damages. HUD or
its designee shall upon its own action or upon written request of
an authorized representative of the Department of Labor withhold or
cause to be withheld, from any moneys payable on account of work
performed by the contractor or subcontractor under any such
contract or any other Federal contract with the same prime
contractor, or any other Federally assisted contract subject to the
Contract Work Hours and Safety Standards Act, which is held by the
same prime contractor such sums as may be determined to be
necessary to satisfy any liabilities of such contractor or
subcontractor for unpaid wages and liquidated damages as provided
in the clause set forth in subparagraph (2) of this paragraph.
(4) Subcontracts. the contractor or subcontractor shall insert in
any subcontracts the clauses set forth in subparagraph (1) through
(4) of this paragraph and also a clause requiring the
subcontractors to include these clauses in any lower tier
subcontracts. The prime contractor shall be responsible for
compliance by any subcontractor or lower tier subcontractor with
the clauses set forth in subparagraphs (1) through (4) of this
paragraph.
C. The contractor will be required to execute FHA Form No.2403.A.
Contractor's Prevailing Wage Certificate, as a condition precedent
to insurance by the Federal Housing Administration of that certain
mortgage loan, or an advance thereof, made or to be made by the
mortgagee in connection with the construction of the project.
Article 2 - Equal Employment Opportunity
The applicant hereby agrees that it will incorporate or cause to be
incorporated into any contract for construction work, or
modification thereof as defined in the regulations of the Secretary
of Labor at 41 CFR Chapter 60, which is paid for in whole or inpart
with funds obtained from the Federal Government or borrowed on the
credit of the Federal Government pursuant to a grant contract, loan
insurance or guarantee or undertaken pursuant to any Federal
program involving such grant contract, loan, insurance, or
guarantee the following equal opportunity clause.
During the performance of this contract the Contractor agrees as
follows:
A. The contractor will not discriminate against any employee or
applicant for employment because of race, color, religion, sex, or
national origin. The contractor will take affirmative action to
ensure that applicants are employed, and that employees are treated
during employment without regard to their race, color, religion,
sex or national origin. Such action shall include, but not be
limited to the following: Employment, upgrading demotion, or
transfer, recruitment or recruitment advertising, layoff or
termination, rates of pay or other forms of compensation and
selection for training including apprenticeship. The contractor
agrees to post in conspicuous places available to employees and
applicants for employment notices to be provided setting forth the
provisions of this nondiscrimination clause.
B. The contractor will, in all solicitations or advertisements for
employees placed by or on behalf of the contractor state that all
qualified applicants will receive consideration for employment
without regard to race, color, religion, sex or national origin.
C. The contractor will send to each labor union or representative
of workers with which it has a collective bargaining agreement or
other contract or understanding a notice to be provided advising
the said labor union or worker's representatives of the
contractor's commitments hereunder, and shall post copies of the
notice in conspicuous places available to employees and applicants
for employment.
D. The contractor will comply with all provisions of Executive
Order 11246 of September 24, 1965 and of the rules, regulations,
and relevant orders of the Secretary of Labor.
E. The contractor will furnish all information and reports
required by Executive Order 11246 of September 24, 1965 and by
rules, regulations and orders of the Secretary of Labor, or
pursuant thereto, and will permit access to its books, records and
accounts by the Secretary of Labor for purposes of investigation to
ascertain compliance with such rules, regulations and orders.
F. In the event of the contractor's noncompliance with the
nondiscrimination clauses of this contract or with any of the said
rules, regulations or orders, this contact may be canceled,
terminated, or suspended in whole or in part and the contractor may
be declared ineligible for further government contracts or
federally assisted construction contracts in accordance with
procedures authorized in Executive Order 11246 of September 24,
1965, and such other sanctions may be imposed and remedies invoked
as provided in Executive Order 11246 of September 24, 1965, or by
rule, regulations or order of the Secretary of Labor, or as
otherwise provided by law.
G. The contractor will include the portion of the sentence
immediately preceding paragraph A and the provisions of paragraphs
A through G in every subcontract or purchase order unless exempted
by rules, regulations, or orders of the Secretary of Labor issued
pursuant to Section 204 of Executive Order 11246 of September 24,
1965, so that such provisions will be binding upon each
subcontractor or vendor. The contractor will take such action with
respect to any subcontract or purchase order as the Secretary of
Housing and Urban Development or the secretary of Labor may direct
as a means of enforcing such provisions, including sanctions for
noncompliance. Provided however, that in the event the Contractor
becomes involved in, or is threatened with, litigation with
subcontractor or vendor as a result of such direction by the
Secretary of Housing and Urban Development or the secretary of
Labor, the contractor may request the United States to enter into
such litigation to protect the interests of the United States.
H. The applicant further agrees that it will be bound by the above
equal opportunity clause with respect to its own employment
practices when it participates in federally assisted construction
work. Provided, that if the applicant so participating is a State
or local government the above equal opportunity clause is not
applicable to any agency, instrumentality or sub-division of such
government which does not participate in work on or under the
contract.
1. The applicant agrees that it will assist and cooperate actively
with the administering agency and the Secretary of Labor in
obtaining the compliance of contractors and subcontractors with the
equal opportunity clause and the rules, regulations, and relevant
orders of the Secretary of Labor, that it will furnish the
administering agency and the Secretary of Labor such information as
they may require for the supervision of such compliance, and that
it will otherwise assist the administering agency in the discharge
of the agency's primary responsibility for securing compliance.
J. The applicant further agrees that it will refrain from entering
into any contract or contract modification subject to Executive
Order 11246 of September 24, 1965, with a contractor debarred from,
or who has not demonstrated eligibility for, Government contracts
and federally assisted construction contracts pursuant to the
Executive Order and will carry out such sanctions and penalties for
violation of the equal opportunity, clause as may be imposed upon
contractors and subcontractors by the administering agency or the
Secretary of Labor pursuant to Part II, Subpart D of the Executive
order. In addition, the applicant agrees that it if fails or
refuses to comply with these undertakings, the administering agency
may take any or all of the following actions: Cancel, terminate, or
suspend in whole or in part this grant (contract, loan, insurance,
guarantee), refrain from extending any further assistance to the
applicant under the program with respect to which the failure or
refund occurred until satisfactory assurance of future compliance
has been received from such applicant and refer the case to the
Department of Justice for appropriate legal proceedings.
Article 3 - Equal Opportunity for Business and Lower Income Persons
Located Within the Project Area
(Applicable to Section 236 projects where the estimated replacement
cost of the project as determined by the Secretary of Housing and
Urban Development exceeds $500,000 and to all projects, including
Section 236 regardless of estimated replacement cost, receiving
rent supplement assistance under Title I, Section 101 of the
Housing and Urban Development act of 1965).
A. The work to be performed under this contract is on a project
assisted under a program providing direct Federal financial
assistance from the Department of Housing and Urban Development and
is subject to the requirements of Section 3 of the Housing and
Urban Development Act of 1968 as amended, 12 U.S.C. 1701u. Section
3 requires that to the greatest extent feasible opportunities for
training and employment be given lower income residents of the unit
of local government or the metropolitan area (or nonmetropolitan
county) as determined by the Secretary of Housing and Urban-
Development in which the projects located and contracts for work in
connection with the project be awarded to business concerns which
are located in, or owned, in substantial part by persons residing
in the same metropolitan area (or nonmetropolitan county) as the
project.
Article 4 - Health and Safety
A. No laborer or mechanic shall be required to work in
surroundings or under working conditons which are unsanitary
hazardous, or dangerous to his health and safety, as determined
under construction, safety and health standards promulgated by the
Secretary of Labor by regulation.]
B. The contract shall comply with all regulations issued by the
Secretary of Labor pursuant to title 29 Part 1926 (formerly part
151B) and failure to comply may result in imposition of sanctions
pursuant to the contract Work Hours and Safety Standards Act
(Public Law 91-54.83 Stbt 96).
C. The Contractor shall include the provisions of the Article in
every subcontract so that such provisions will be binding on each
subcontractor. The contractor shall take such action with repsect
to any subcontract as the Secretary of Housing and Urban
Development of the Secretary of Labor shall direct as a means of
enforcing such provisions.
Federal Housing Administration
Contractor's and/or Mortgagor's
Cost Breakdown
(Schedule of Values)
Date: 7-8-94
Geriatric and Medical Co., Inc.
Name of Project: North Cape Convalescent Center
Project No.: 035-43053
Location: Townbank and Shunpike Roads
Lower Township, Cape May, New Jersey
This form represents the contractors and/or Mortgagors line costs
and services as a basis for distributing dollar amounts when
incurred advances are requested. Detailed instructions for
completing this form are included on the reverse side.
Line Div Trade Item Cost Trade Description
1 3 Concrete 174,295 footings flat work, special shapes
2 4 Masonry 95,808 Subgrade block, block work
3 5 Metals 205,131 Structural steel, reinforcing
4 6 Rough carpentry
226,480 Framing, metal studs, trusses,
sheathing
5 6 Finish carpentry
133,785 Labor to install doors, hardware,
millwork
6 7 Wtrproof 13,300 Seal brick and stucco area
7 7 Insulation 47,600 Wall insulation, roof insulation,
spray fireproofing
8 7 Roofing 92,10 Shingles, flashing and roof work
9 7 Sheet metal 0 with roofing
10 8 Doors 117,450 Doors, frames and hardware
11 8 Windows 40,250 Windows, glass doors installed and
material
12 8 Glass 26,000 Entrance and interior glazing
13 9 Lath/Plstr133,200 Stucco, dryyit areas material and
labor
14 9 Drywall 198,762 Material and labor drywall gypsum
and finish, cut and patch
15 9 Tile work 42,000 Ceramic tile and payers
16 9 Acoustical 77,088 Acout. ceiling tiles common areas
17 9 Wood flooring 0 Not applicable
18 9 Resilient flooring
135,634 Sheetgoods, vinyl base and VCT
19 9 Painting/decorating
148,497 Wallcovering and painting of frames
20 10 Specialities
51,963 Equipment, tracks for curtains,
handicapped
21 11 Spec equip. 0
22 11 Cabinets 75,000 Including millwork
23 11 Appliances 4,800 Refrigerator, microwave,
nourishment station
24 12 Blinds/shades,
artwork 5,640 Window shades, patient
rooms and common areas
25 12 Carpets 15,908
26 13 Special
construction 78,056 Sprinklers
27 14 Elevators 80,000 Cabs, equipment, installation
of elevators
28 15 Plumbing/ht wtr 298,222 As per plan, toilets, sinks,
HW heaters
29 15 Heat/Vent 424,296 As per plan, thru wall units,
common areas HVAC
30 15 Air conditioning 0 with heating and ventilation
31 16 Electrical 438,296 As per plan, service, switch gear,
outlets, lights
32 Subtotal 3,379,561
33 Accessory structure
34 Total (lines 32,33) 3,379,561
35 2 Earth work 114,300 Bldg. excavation, clearing
36 2 Sills utilities 95,600 Water service, sewer, storm
water
37 2 Roads and walks 167,400 Vehicular paving curbs and
walks
38 2 Site improvement 3,100
39 2 Lawn and planting 73,000 Landscaping, seeding and sod
40 2 Unusual site condition 0 Nonresidential and special exterior
land
41 Total land imprvts 453,400 improvement (included in breakdown)
42 Tot. struct and land imprvts Offsite costs
3,832,961
Description Est. Cost
43 General Requirements 252,000 Traffic Light 7,992
44 Subtotal (lines 42,43) Street improvement 53,560
4,084,961
45 Builder's overhead 81,800
46 Builder's profit 257,937
47 Subtotal (lines 44 thru 46) Total 71,552
4,424,698
Other Fees
48 Cost certification 10,000
49 Other fees 10,000
50 Bond premises 44,309
51 Total for all improvements
4,479,007
52
53 Total for all improvements
less line 52
4,479,007
Mortgagor: North Cape Convalescent Center Associates, L.P.
Date 7/8/94
By: Andrew Conn, Sec. Geriatric and Medical Services, Inc.-General
Partner
Contractor: Quaker Construction Management, Inc.
Date
7/8/94
By: James Methven, Exec. VP
FHA 7-28-94 Peter J. Catania 7-28-94
Treasury Analyst date Chm Cash Branch date
FHA Geraldine McGorm 7-28-94
Chief Underwriter
<PAGE>
4430.1 Rev 1
Appendix B
Department of Housing and Urban Development
Amendment to the Construction Contract
to Identify Identities of Interest Between
Owner/Contractor/Subcontractor/Architect
1. Definition of terms used in this Amendment.
a. Architect. Architect administering the Construction Contract
b. HUD. The U.S. Department of Housing and Urban Development
c. Owner. The mortgagor/owner
d. Subcontractor. Any Project subcontractor, materials supplier,
equipment lessor, or industrialized housing manufacturer/supplier.
2. The undersigned hereby certify that all identities of interest
known to exist between the Owner and the Contractor, and/or between
the Owner and/or the Contractor and the Architect and/or any
Project subcontractor are listed herein. the Owner and the
contractor shall each inform HUD in writing within 5 working days
of its knowledge of any identity of interest that develops after
execution of this contract.
List all Identities of Interest:
None.
An Identity of Interest is construed to exist where:
1. The contractor, Architect and/or any subcontractor take any
financial interest in the Project and/or Owner,as part of the
consideration to be paid.
2. The Contractor advances any funds to the Owner or Atchitect; or
the Architect advances any funds to the Owner, Contractor and/or
any subcontractor; or any subcontractor advances any funds to the
Owner, Contractor and/or Architect.
Page 1 9/92
<PAGE>
4430.1 Rev 1
Appendix 8
3. The Owner has any financial interest in the Contractor,
Architect and/or any subcontractor; or the Contractor has any
financial interest in the Owner, architect and/or any
subcontractor; or the architect has any financial interest in the
Owner, Contractor and/or any subcontractor; or any subcontractor
has any financial interest in the Owner, Contractor and/or
Architect.
4. Any officer, director, stockholder or partner of the Owner has
any financial interest in the Contractor, architect and/or any
subcontractor; or any officer, director, stockholder or partner of
the Contractor, has any financial interest in the Owner, Architect
and/or any subcontractor; or any officer, director, stockholder or
partner of the Architect has any financial interest in the Owner,
Contractor and/or any subcontractor; or any officer, director,
stockholder or partner of any subcontractor has any financial
interest in the Owner, Contractor and/or Architect.
5. Any officer, director, stockholder or partner of the Owner is
also an officer, director, stockholder or partner of the
Contractor, Architect and/or any subcontractor; or any officer,
director, stockholder or partner of the Contractor,is also an
officer, director, stockholder or partner of the Owner, Architect
and/or any subcontractor; or any officer, director, stockholder or
partner of the Architect is also an officer, director, stockholder
or partner of the Owner, Contracror, and/or any subcontractor; or
any officer, director, stockholder or partner of any subcontractor
is also an officer, director, stockholder or partner of the Owner,
Contractor and/or Architect.
6. The Owner, \contractor and/or any subcontractor, or any
officer, director, stockholder or partner of such Owner, Contractor
and/or subcontractor provides any of the required architectural
services; or where the Owner, Contractor and/or any subcontractor,
or any officer, director, stockholder or partner of such Owner,
Contractor and/or subcontractor, while not directly providing an
architectural service, acts as a consultant to the Architect.
7. Any family relationships between the officers, directors,
stockholders or partners of the Owner and officers, directors,
stockholders or partners of the Contractor, Architect and/or any
subcontractor; or between the officers, directors, stockholders or
partners of the Contractor and officers, directors, stockholders or
partners of the Owner, Architect and/or any subcontractor; or
between any officers, directors, stockholder, or partners of the
Architect and officers, directors, stockholders or partners of the
Owner, Contractor and/or any subcontractor; or between any
officers, directors, stockholder or partners of any subcontractor
and the officers, directors, stockholders or partners of the Owner,
Contractor and/or Architect which could cause or results in control
or influence over prices paid and/or work accepted.
8. Any side deal, agreement, contract or undertaking, thereby
altering, amending, or canceling any of the required closing
documents, except as approved by HUD.
North Cape Convalescent Quaker Construction Management
Center Associates, L.P.
By: Geriatric and Medical
Services, Inc., General Partner
By: Andrew G. Conn By: James Methven
Asst. VP Exec. VP
Warning: Title 18 U.S.C. 1001, provides in part that whoever
knowingly and willfully makes or uses a document containing any
false, fictitious, or fraudulent statement or entry, in any matter
in the jurisdiction of any department or agency of the United
States, shall be fined not more than ten thousand dollars or
imprisoned for not more than five years or both.
Dated: December 21, 1994
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
FEDERAL HOUSING ADMINISTRATION
ESCROW AGREEMENT
ADDITIONAL CONTRIBUTION BY SPONSORS
Whereas GERIATRIC AND MEDICAL SERVICES, INC. are sponsors of a
project located Lower Township, New Jersey as FHA Project No.
thirty five dash forty three hundred and fifty three, which project
has been, is being, or will be constructed from the proceeds of a
mortgage from North Cape Convalescent Center Associates, L.P. to
Republic Realty Mortgage Corporation with respect to which mortgage
the Federal Housing Commissioner has issued his commitment to
insure, and without which insurance financing of the construction
of the project as proposed by the sponsors could not be obtained,
and
WHEREAS, said commitment is conditioned upon assurance that
additional funds by made available or project purposes, primarily
for the absorption of any deficit resulting from the operation of
the project during the initial period of occupancy;
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
1. That the sponsors have deposited with, Republic Realty Mortgage
Corporation Depository,
(a) in cash,
(b) by an unconditional Irrevocable letter of credit issued to
Depository by a banking institution,
(c) in United States bearer bonds at market value,
Five hundred thousand dollars and no cents, receipt of which is
acknowledged by the Depository, to be held and disbursed by the
Depository as hereinafter set out.
2. Said deposit shall be held subject to disbursement of the
direction of the Commissioner for a period of twelve months
following final endorsement of the mortgage loan for insurance plus
any additional period by which the beginning of amortization of the
loan may be deferred. Disbursements for the escrow may be
authorized monthly be the Commissioner to meet any cash deficit in
the operation of the project for the period immediately following
substantia completion of construction. In determining the amount of
such cash deficit, effect will be given to the mortgagor's payments
for amortization and deposits in the Reserve for Replacements but
no effect will be given to depreciation, officers' salaries, and
management fees paid to the owners or sponsors of the 2project of
their nominees.
3. The deposit will be subject to immediate application to the
mortgage debt in the event of default under the mortgage at any
time prior to the expiration of the escrow period.
4. IT IS UNDERSTOOD AND AGREED that at the expiration of the
escrow period, or at such earlier date as the Commissioner
determines that the project has achieved sustaining occupancy and
income, any balance remaining on deposit will be returned to the
sponsor, without interest.
5. IT IS FURTHER UNDERSTOOD AND AGREED that the Depository will
hold and disburse this escrow of the sole direction of the
commissioner; and the sponsors hereby authorize the Depository, in
the event the deposit hereunder in other than in cash,m to draw
against the letter of credit or to sell the bonds to the extent
necessary to provide the cash necessary to make the disbursements
directed by the Commissioner.
6. Whenever used herein, the singular number shall include the
plural, the plural the singular, and the use of any gender shall be
applicable to all genders.
GERIATRIC AND MEDICAL SERVICES, INC.
Dated: December 21, 1994 By: Andrew G. Conn, Asst. Vice President
ATTEST:
James J. Wankmiller, Secretary
ATTEST REPUBLIC REALTY MORTGAGE CORPORATION
Raymond J. Walschinger, By: Jeaneda C. Bishop, Vice
President
Asst. Secretary
<PAGE>
Promissory Note
$6,939,000 Boston, Massachusetts
May 31, 1995
FOR VALUE RECEIVEd, Norristown Nursing and Rehabilitation Center,
Associates, L.P., a Pennsylvania limited partnership, having its
principal place of business at care of Geriatric & Medical
Companies, Inc., 5601 Chestnut Street, Philadelphia, Pennsylvania
19139 (hereinafter referred to as the "Maker") promises to pay to
the order of Meditrust Mortgage Investments, Inc., a Delaware
corporation (hereinafter referred to as the "Lender") (the Lender
and each successor, owner, endorsee, bearer and holder of this Note
being hereinafter referred to as the "Holder") at its principal
place of business located at 197 First Avenue, Needham,
Massachusetts, 02194, or at such other place as the Holder of this
Note may from time to time designate in writing, in lawful money of
the United States of America, in immediately available Federal
funds or the equivalent, the principal sum of SIX MILLION NINE
HUNDRED THIRTY-NINE THOUSAND DOLLARS ($6,939,000) (hereinafter
referred to as the "Loan Amount") or so much thereof as shall have
been advanced to the Maker, with interest on so much thereof as
shall from time to time be outstanding at the rate of interest
defined below as the "Interest Rate," except as otherwise
specifically provided herein. Interest hereunder shall be
calculated on the basis of a 360-day year, but charged for the
actual days elapsed during each calendar year (or portion thereof)
that the indebtedness evidenced by this Note remains outstanding.
This Note is referred to in that certain construction loan
agreement of even date herewith by and between the Maker and the
Holder (hereinafter referred to as the "Loan Agreement") and is in
all respects subject to the provisions thereof.
1.Terms of Payment. The Maker shall make the following payments to
the Holder:
(a) Commencing on June 1, 1995 and on the first day of each and
every calendar month thereafter through and including the first day
of the first month after the first (1st) anniversary (hereinafter
referred to as the "First Anniversary Date") of the Conversion Date
(as defined in the Loan Agreement) has occurred, the Maker shall
pay to the Holder monthly installments of interest only in arrears
with interest accruing on the outstanding principal balance
calculated at the Interest Rate.
(b) Commencing on the first day of the second month after the
First Anniversary Date has occurred and on the first day of each
and every calendar month thereafter through and including the first
day of the month immediately preceding the Maturity Date (as
hereinafter defined), the Maker shall pay to the Holder monthly
installments of principal and interest in arrears based upon the
outstanding Loan Amount, and a twenty-five (25) year direct
reduction amortization schedule, with interest accruing on such
outstanding principal balance calculated at the Interest Rate.
(c)On the date which is ten (10) years from the Conversion Date
(the "Maturity Date"), the Maker shall pay to the Holder the entire
principal balance of the Loan Amount then remaining unpaid,
together with accrued and unpaid interest thereon and any costs,
charges and other amounts due under this Note and all of the other
Loan Documents (as hereinafter defined). The period from the date
hereof through the Maturity Date shall be referred to herein as the
"Loan Term."
All payments hereunder received by the Holder shall be applied by
the Holder, without any marshalling of assets, towards payment of
the items immediately set forth below in the following order:
(a) interest due on any advances made by the Holder under the
provisions of any of the other Loan Documents;
(b) the principal amount of any advances made by Holder under the
provisions of any of the other Loan Documents;
(c) all Late Payment Charges (as hereinafter defined), attorneys'
fees and expenses, court costs and all other amounts due under this
Note, excluding the amounts described in subparagraphs (d), (e) and
(f) immediately below;
(d) the Prepayment Fee (as hereinafter defined), if any;
(e) any and all accrued and unpaid interest due hereunder
including, without limitation, "Additional
Interest" (as such term is defined in the Loan Agreement); and
(f) the outstanding principal balance due under this Note (and in
the case of any prepayment allowed hereunder, in inverse order of
maturity), provided, however, that the foregoing shall not be
construed as permitting any prepayment of the outstanding principal
balance (whether in whole or in part) except as otherwise
specifically provided in Paragraph 3 of this Note.
2. Interest Rate. For the period from the date hereof through and
including the day immediately preceding the Conversion Date, the
Interest Rate shall be the rate announced, from time to time, by
Fleet Bank of Connecticut, N.A. as its prime rate, plus 200 basis
points, per annum. The Interest Rate for such period shall change
as of any day upon which there is a change in such prime rate and
shall be calculated on the basis of the actual number of days
elapsed over a 360-day year. The Interest Rate shall be
recalculated as of the Conversion Date (such calculation date is
referred to herein as the "Interest Calculation Date"), and from
the Interest Calculation Date through the Maturity Date, the
Interest Rate shall be the greater of: (i) ten and three-quarters
percent (10.75%) per annum or (ii) the rate per annum which is 365
basis points over the rate of interest of actively traded
marketable United States Treasury Securities bearing a fixed rate
of interest adjusted to a constant maturity of ten (10) years as
published by the Federal Reserve Board (hereinafter referred to as
the "Index"), using the Index in effect at the close of business on
the Interest Calculation Date.
If the Interest Calculation Date should not fall on a Business Day,
the recalculation referred to above shall be made using the Index
in effect as of the close of business on the immediately preceding
Business Day. In the event that the Index is no longer published
or announced or becomes unascertainable for any reason, the Holder
shall designate a comparable reference rate which shall be deemed
to be the Index hereunder.
3.Prepayment. A prepayment fee (referred to herein as the
Prepayment Fee) shall be paid to the Holder in the event that the
loan evidenced by this Note is prepaid (or shall become due and
payable) prior to the Maturity Date, whether such prepayment is
voluntary or involuntary, including, without limitation, any
prepayment which results from any default under any of the Loan
Documents and an acceleration of the indebtedness due thereunder.
The Maker shall have the right, at any time during the Loan Term,
to prepay the entire outstanding principal balance provided that
the Maker provide the Holder with at least ninety (90) days' prior
written notice of its intent to prepay, which notice once given may
not be revoked, and provided further, that the Maker pays to the
Holder (upon the date for prepayment specified in the Maker's
written notice), together with the entire outstanding principal
balance, all accrued and unpaid interest (including, without
limitation, Additional Interest) and any other costs, charges and
sums due under this Note and all of the other Loan Documents, a
"Prepayment Fee" equal to (and defined herein as) the greater of:
(i) the then present value, discounted by the Current Rate (as
hereinafter defined), of the difference between (a)the product of
the Interest Rate then in effect multiplied by the then outstanding
Loan Amount, multiplied by the remaining number of years (or
fraction thereof) of the Loan Term and (b) the product of the
annual rate of interest (as of the date of prepayment) of actively
traded marketable United States Treasury Securities bearing a fixed
rate of interest adjusted for a constant maturity equal to the
remaining number of years (rounded to the nearest year) of the Loan
Term (hereinafter referred to as the "Current Rate"), multiplied by
the then outstanding Loan Amount, multiplied by the remaining
number of years (or fraction thereof) of the Loan Term or (ii) one
percent (1%) of the then outstanding Loan Amount multiplied by the
remaining number of years (or fraction thereof) of the Loan Term.
Notwithstanding the foregoing, provided that no Event of Default
shall have occurred and be continuing under the Loan Documents and
no event shall have occurred which, with the giving of notice or
the passage of time or both, would constitute an Event of Default,
(a) the Maker shall have a single opportunity to prepay the
outstanding Loan Amount, along with any other amounts due under the
Loan on May 31, 2000 upon the payment of a prepayment fee equal to
three and one-half percent (3.5%) of the then outstanding Loan
Amount in lieu of the Prepayment Fee specified above, provided that
the Borrower gives the Lender at least one hundred eighty (180)
days (but no more than two hundred seventy (270) days) prior
written notice of its intent to prepay, which notice once given may
not be revoked and, provided, further that any such prepayment is
made in full within thirty (30) days before, or on, May 31, 2000.
Except as expressly set forth in the immediately foregoing
sentence, the Maker shall not be entitled to make any partial
prepayments of principal at any time during the Loan Term without
the prior written consent of the Lender, which consent may be
withheld in the Lender's sole and absolute discretion. The
Prepayment Fee shall be paid without prejudice to the rights of the
Holder to collect any other amounts due to the Holder pursuant to
the provisions of this Note or any of the other Loan Documents.
4. Security. This Note is secured, in part, by a certain Mortgage
and Security Agreement of even date (referred to herein as the
"Mortgage"), granted by the Maker, as mortgagor, to the Holder, as
mortgagee, relating to a certain parcel of land described on
EXHIBIT A attached hereto and incorporated by reference (the parcel
of land described on EXHIBIT A is more particularly described in
the Mortgage and, together with the improvements thereon, are
hereinafter collectively referred to as the "Mortgaged Property",
and the facility located on said parcel of land is hereinafter
referred to as the "Facility") all as more particularly described
therein, to be recorded with the applicable recording office.
This Note, the Loan Agreement, the Mortgage and all other documents
and instruments evidencing or securing repayment of, or otherwise
pertaining to and executed and delivered in connection with, the
loan evidenced by this Note are collectively referred to herein as
the "Loan Documents."
5.Acceleration of Maturity. Any one or more of the following
events shall be defined as an "Event of Default":
(i)the failure to pay any installment of the principal
indebtedness, interest (including, without limitation, Additional
Interest) or of any other sum due under this Note or any of the
other Loan Documents within ten (10) days following the date when
such payment was due (provided, however, that there shall be no
such grace period if any such installment of the principal
indebtedness or interest is late more than twice in any twelve (12)
month period);
(ii) the occurrence of any other default or breach of condition
under this Note continuing for a period of thirty (30) days after
notice by the Holder to the Maker; and
(iii) the occurrence of a default or breach of condition continuing
beyond the expiration of any applicable notice and grace periods,
if any, under any of the other Loan Documents.
Upon the occurrence of an Event of Default, at the option of the
Holder, which may be exercised at any time after an Event of
Default shall have occurred, the entire outstanding principal
balance, together with all interest (including, without limitation,
Additional Interest), costs, charges and other amounts due under
this Note and all of the other Loan Documents, shall immediately
become due and payable and upon such acceleration, all amounts due
hereunder shall bear interest at the Advances Rate.
In addition, at the Holder's option and without demand, notice or
protest, the occurrence of any such Event of Default shall also
constitute a default under all other agreements between the Holder
and the Maker, any Affiliates (as defined in the Loan Agreement) of
the Maker or of the Guarantor (as defined in the Loan Agreement),
or the Guarantor or any endorser, surety or other guarantor of this
Note and under all other instruments and papers given to the Holder
by the Maker, any Affiliates of the Maker, the Guarantor, or any
endorser, surety or other guarantor of this Note.
Any and all deposits or other sums at any time or times credited by
or due from the Holder to, and all securities or other property in
the possession of the Holder for safekeeping or otherwise and
belonging to, the Maker, the Guarantor, or any endorser, surety or
other guarantor of this Note or the obligations represented hereby
are and shall be subject to a security interest in favor of the
Holder to secure payment of this Note. Upon the occurrence of any
of Event of Default and at any time or times thereafter, without
any demand or notice, except to such extent as notice may be
required by applicable law, the Holder may sell or dispose of any
or all of such securities or other property and may exercise any
and all of the rights accorded the Holder by the Massachusetts
Uniform Commercial Code or other applicable state's Uniform
Commercial Code. The Holder at any time and from time to time may
apply or set off such deposits or other sums against the liability
of the Maker, the Guarantor, or any endorser, surety or other
guarantor whether or not such liability is then due. The
provisions of this Paragraph 5 are cumulative and are not exclusive
of any other rights that the Holder has with respect to such
deposits, sums, securities or other property under other agreements
or applicable principles of law. The Holder shall have no duty to
take steps to preserve rights against prior parties as to such
securities or other property.
6Late Charges; Interest Following Certain Events. In the event of
any delinquency in the payment of any installment of principal and
interest (including, without limitation, Additional Interest) or in
the payment of any other monetary obligation under this Note or any
of the other Loan Documents continuing for ten (10) days
(hereinafter referred to as a "Late Payment"), the Maker shall pay
the Holder a late payment charge of Two Hundred Fifty Dollars (250)
(referred to herein as a "Late Payment Charge") for the month
during which such delinquency occurs and for each month (or portion
of the month) thereafter that the Late Payment remains unpaid, for
the purpose of defraying the expenses incurred by the Holder in
handling and processing such Late Payments. In addition to any
Late Payment Charges which may become due hereunder, the Maker
shall pay interest on any Late Payment, calculated at the Advances
Rate, from the date upon which the Late Payment was originally due
until the date that the Holder actually receives such Late Payment.
It is understood that nothing contained in this Paragraph 6 shall
be deemed to relieve the Maker of its obligations to make any and
all payments due and payable to the Holder pursuant to the
provisions of this Note or any of the other Loan Documents upon the
dates set forth therein, it being acknowledged that time is of the
essence.
7.Collection and Enforcement Costs. Upon demand, the Maker shall
reimburse the Holder for all costs and expenses, including, without
limitation, attorneys' fees and expenses and court costs, paid or
incurred by the Holder in connection with the collection of any sum
due hereunder, or in connection with the enforcement of any of the
Holder's rights or the Maker's obligations under this Note or any
of the other Loan Documents. Any amount due and payable to the
Holder pursuant to the provisions of this Paragraph 8 shall bear
interest at the Advances Rate.
8.Continuing Liability. The obligation of the Maker to pay the
outstanding principal balance, interest (including, without
limitation, Additional Interest) and all other costs, charges and
sums due hereunder or under any of the other Loan Documents shall
continue in full force and effect and in no way shall be impaired,
until the actual payment thereof to the Holder. In the event of
(i) a sale, conveyance, transfer or other disposition of the
Mortgaged Property, (ii) any further agreement given to secure the
payment of this Note or (iii)any agreement or stipulation extending
the time or modifying the terms of payment set forth herein; the
Maker shall nevertheless remain obligated to pay the indebtedness
evidenced by this Note, as extended or modified by any such
agreement or stipulation, unless the Maker is released and
discharged from such obligation by a written agreement executed by
the Holder.
9.Joint and Several Liability. If more than one Person shall
execute this Note, then each such Person shall be fully liable for
all obligations of the Maker hereunder, and all such obligations
shall be joint and several.
10.Amendments, Waivers and Modifications. None of the terms,
covenants, conditions, warranties or representations contained in
this Note may be renewed, replaced, amended, modified, extended,
substituted, revised, waived, consolidated or terminated, except by
an agreement, in writing, signed by the Person against whom
enforcement is sought. The provisions of this Note shall extend
and be applicable to all renewals, replacements, amendments,
extensions, substitutions, revisions, consolidations and
modifications of the Loan Documents; and all references herein to
the Loan Documents shall be deemed to include any such renewals,
amendments, extensions, consolidations, or modifications thereof.
Notwithstanding the foregoing, any reference contained herein,
whether express or implied, to any renewal, replacement, amendment,
extension, substitution, revision, consolidation or modification of
any of the Loan Documents is not intended to constitute an
agreement or consent by the Lender to any such renewal,
replacement, amendment, extension, substitution, revision,
consolidation or modification of any of the Loan Documents; but,
rather as a reference only to those instances where the Lender may
give consent to any such renewal, replacement, amendment,
extension, substitution, revision, consolidation or modification,
as the same may be required pursuant to the terms, covenants or
conditions of the Loan Documents.
11.Waivers. The Maker, the Guarantor and any endorser, surety and
other guarantor hereof, jointly and severally, waive presentment
for payment, demand, notice of nonpayment, notice of dishonor,
protest of any dishonor, suretyship defenses, notice of protest and
protest of this Note, and all other notices in connection with the
delivery, acceptance, performance, default (except notice of
default as specifically elsewhere herein required), or enforcement
of the payment of this Note, and agree that the liability of each
of them shall be unconditional without regard to the liability of
any other party and shall not be in any manner affected by any
indulgence, extension of time, renewal, waiver or modification
granted or consented to by the Holder; and the Maker and all
endorsers, sureties and other guarantors hereof consent to any and
all extensions of time, renewals, waivers or modifications that may
be granted or consented to by the Holder with respect to the
payment or performance of any obligations under this Note and to
the release of the Collateral (as defined in the Loan Agreement),
or any part thereof, with or without substitution, and agree that
additional makers, endorsers, guarantors or sureties may become
parties hereto without notice to them or affecting their liability
hereunder.
12.Contribution. No Person obligated on account of this Note may
seek contribution from any other Person also obligated unless and
until all liabilities, obligations and indebtedness to the Holder
of the Person from whom contribution is sought have been satisfied
in full.
13.Indemnification. With the exception of any claim arising out of
an action brought by the Maker against the Holder in which a final
decision is issued by a court in favor of the Maker and all appeal
periods having lapsed or been exhausted, the Maker, the Guarantor,
and each endorser, surety and other guarantor of this Note, shall
indemnify, defend (with counsel acceptable to the Holder), and hold
the Holder harmless against any claim brought or threatened against
the Holder by the Maker, the Guarantor, by any endorser, surety or
other guarantor, or by any other Person on account of the Holder's
relationship with the Maker, the Guarantor, or any endorser, surety
or other guarantor hereof (each of which may be defended,
compromised, settled or pursued by the Holder with counsel of the
Holder's selection, but at the expense of the Maker, the Guarantor,
and any endorser, surety and other guarantor). The aforesaid
indemnification agreement shall include, without limitation,
attorneys' fees and expenses and court costs incurred by the Holder
in connection with any such claims and with the enforcement of said
indemnification. The provisions of this Paragraph 13 shall survive
the complete payment and performance of the Mortgaged Indebtedness
and the foreclosure of the Mortgage.
14.Successors and Assigns. This Note shall (i) be binding on the
Maker and the Maker's heirs, executors, administrators, legal
representatives and permitted successors and assigns and (ii)inure
to the benefit of the Holder, any other Person who may now or
hereafter hold any interest in the Loan and their respective
successors and assigns. Notwithstanding the foregoing, the Maker
shall not assign or otherwise transfer this Note or any of its
rights or obligations hereunder without the express written consent
of the Holder, in each instance, which consent may be withheld in
the Holder's sole and absolute discretion.
15.Applicable Law. This Note is being executed and delivered in
Boston, Massachusetts, and shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, to
the maximum extent that the parties may so lawfully agree, except
that the laws of the Commonwealth of Pennsylvania, as the case may
be, shall govern (i)this Note to the extent necessary for the
Holder to perfect, protect or enforce the rights and remedies
granted to it in this Note and to obtain the benefit of the rights
and remedies set forth in the Loan Documents with respect to the
Mortgaged Property and (ii)for procedural requirements which must
be governed by the law of the state in which the Mortgaged Property
is located.
16.Invalidity. If any provision of this Note or the application
thereof to any Person or circumstance shall, for any reason and to
any extent, be invalid or unenforceable, neither the remainder of
this Note, nor the application of such provision to any other
Person or circumstance shall be affected thereby, but rather the
same shall be enforced to the maximum extent permitted by law.
Notwithstanding the foregoing, if such provision relates to the
payment of a monetary sum, then the Holder may, at its option,
declare the entire indebtedness evidenced hereby due and payable
upon sixty (60) days prior written notice to the Maker. Upon such
acceleration, provided that an Event of Default has not occurred
under the terms of this Note or any of the other Loan Documents,
the Maker shall not be required to pay a Prepayment Fee to the
Holder.
Notwithstanding the foregoing, it is the intention of the Maker and
the Holder that if any provision of this Note is capable of two (2)
constructions, one of which would render the provision void and the
other of which would render the provision valid, then such
provision shall be construed in accordance with the construction
which renders such provision valid.
17.Usury. In the event that fulfillment of any provision of this
Note or any of the other Loan Documents, at the time performance of
such provision shall be due and as a result of any circumstance,
shall involve transcending the limit of validity presently or
hereinafter prescribed by any applicable usury statute or any other
law, with regard to obligations of like character and amount, then
ipso facto the obligation to be fulfilled shall be reduced to the
limit of such validity, so that in no event shall any exaction be
possible under this Note that is in excess of the limit of such
validity. In no event shall the Maker be bound to pay for the use,
forbearance or detention of the money loaned pursuant hereto,
interest of more than the maximum rate, if any, permitted by law to
be charged by the Holder; the right to demand any such excess being
hereby expressly waived by the Holder.
18.Notice. Any notice, request, demand, statement or consent made
hereunder shall be in writing and shall be deemed duly given if
personally delivered, sent by certified mail, return receipt
requested, or sent by a nationally recognized commercial overnight
delivery service with provision for a receipt, postage or delivery
charges prepaid, and shall be deemed given when postmarked or
placed in the possession of such mail or delivery service and
addressed as follows:
If to Maker:Norristown Nursing and Rehabilitation
Center, Associates,
c/o Geriatric & Medical Companies, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
Attention: President
With a copy to: Mesirov, Gelman, Jaffee, Cramer
& Jamieson
1735 Market Street
Philadelphia, Pennsylvania 19103-7598
Attn: Robert P. Krauss, Esq.
If to Holder:Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attention: President
With copies to: Meditrust Mortgage Investments, Inc.
128 Technology Center
Waltham, MA 02154-8979
Attention: General Counsel
Mintz, Levin, Cohn, Ferris
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Andrew R. Urban, Esq.
or at such other place as either the Holder or the Maker may from
time to time hereafter designate to the other in writing. Any
notice given to the Maker by the Holder at any time shall not imply
that such notice or any further or similar notice was or is
required.
19. Captions and Headings. The captions and headings set forth in
this Note are included for convenience and reference only and the
words contained therein shall in no way be held or deemed to
define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning of any provisions of, or
the scope or intent of, this Note or any portion hereof.
20.Rule of Construction. References in this Note to "herein,"
"hereof" and "hereunder" shall be deemed to refer to this Note and
shall not be limited to the particular text or Paragraph in which
such words appear. The use of any gender shall include all genders
and the singular number shall include the plural and vice versa as
the context may require. References in this Note to the Holder's
attorneys shall be deemed to include, without limitation, special
counsel and local counsel. References in this Note to attorneys'
fees and expenses shall be deemed to include all costs for
administrative, paralegal and other support staff. References in
this Note to the term "Mortgaged Property" or the "Collateral"
shall be deemed to include references to all of the Mortgaged
Property or the Collateral, as the case may be and references to
any portion thereof. The word "foreclosure" as used herein shall
be deemed to include the acquisition of the Mortgaged Property by
voluntary deed or assignment in lieu of foreclosure.
As used herein, the term "including", when following any general
statement, will not be construed to limit such statement to the
specific items or matters as provided immediately following the
term "including" (whether or not non-limiting language such as
"without limitation" or "but not limited to" or words of similar
import are also used), but rather will be deemed to refer to all
items or matters that could reasonably fall within the broader
scope of the general statement.
All capitalized terms used herein and not otherwise defined herein
shall have the same meanings as set forth for such terms under the
Loan Agreement.
IN ADDITION TO THE FOREGOING, THE MAKER HEREBY EMPOWERS ANY
PROTHONOTARY OR ATTORNEY OF ANY COURT OF RECORD IN THE UNITED
STATES OF AMERICA OR ELSEWHERE TO APPEAR FOR THE MAKER AFTER AN
EVENT OR DEFAULT HAS OCCURRED, AND WITH OR WITHOUT COMPLAINT FILED,
CONFESS JUDGMENT, OR A SERIES OF JUDGMENTS, AGAINST THE MAKER IN
FAVOR OF THE HOLDER OR ITS ASSIGNEE AS OF ANY TERM FOR THE ABOVE
SUM TOGETHER WITH INTEREST THEREON IF NOT PAID WHEN DUE, WHETHER BY
ACCELERATION OR OTHERWISE, COSTS OF SUIT AND ANY OTHER SUMS AND
AMOUNTS DUE AND PAYABLE UNDER THE LOAN DOCUMENTS, INCLUDING,
WITHOUT LIMITATION, ATTORNEY'S FEES AND EXPENSES. THE MAKER HEREBY
FOREVER WAIVES AND RELEASES ALL IN SAID PROCEEDINGS, WAIVES ALL
RIGHT OF APPEAL AND STAY OF EXECUTION AND EXTENSION OF TIME OR
PAYMENT, AGREES TO CONDEMNATION OF ANY PROPERTY LEVIED UPON BY
VIRTUE OF ANY SUCH EXECUTION, AND WAIVES ALL EXEMPTIONS FROM LEVY
AND SALE OF ANY PROPERTY THAT NOW IS OR HEREAFTER MAY BE EXEMPTED
BY LAW. INTEREST ON ANY SUCH JUDGMENT SHALL ACCRUE AT THE ADVANCES
RATE.
NO SINGLE EXERCISE OF THE FOREGOING POWER TO CONFESS JUDGMENT, OR
A SERIES OF JUDGMENTS, SHALL BE DEEMED TO EXHAUST THE POWER,
WHETHER OR NOT ANY SUCH EXERCISE SHALL BE HELD BY ANY COURT TO BE
VALID, VOIDABLE, OR VOID, BUT THE POWER SHALL CONTINUE UNDIMINISHED
AND IT MAY BE EXERCISED FROM TIME TO TIME AS OFTEN AS THE HOLDER OR
ITS ASSIGNEE SHALL ELECT UNTIL SUCH TIME AS THE HOLDER OR ITS
ASSIGNEE SHALL HAVE RECEIVED PAYMENT IN FULL OF THE PRINCIPAL,
INTEREST AND COSTS.
<PAGE>
IN WITNESS WHEREOF, the Maker has duly executed this Note as a
sealed instrument as of the day and year first above written.
WITNESS: Maker:
NORRISTOWN NURSING AND REHABILITATION CENTER ASSOCIATES, L.P.
By: GMC-LTC Management, Inc., a Pennsylvania corporation, its
general partner
By:
Name: Name:
Title:
T3/547709.1
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
All that certain piece of land located in Block 82 in the Borough
of Norristown, Montgomery County, Pennsylvania, situated between
Pine and Locust Streets and West Logan Streets, described as Lot 2
on the subdivision plan for Rittenhouse Nursing Center made by
Geriatric and Medical Companies,Inc., and prepared by NTH
Consultants, Ltd., Exton, Pennsylvania, dated January 25, 1994 and
last revised March 8, 1994, and approved by the Borough Council of
the Borough of Norristown on April 5, 1994 and duly recorded with
the Recorded of Deeds of Montgomery County, Pennsylvania, being
more fully described as follows:
From the intersection of Pine Street and West Roberts Street,
proceeding from a point, marked by an iron pin, on the northwest
corner of Block 82 in an easterly direction parallel to Pine
Street, a distance of 314.71 feet along a bearing of North 60
degrees 52 minutes 16 second East to the point of beginning;
thence, in an easterly direction along the same bearing, a distance
of 232.24 feet to a point, marked by an iron pin, on the northeast
corner of Block 82 at the intersection of Pine Street and West
Logan Street; thence, in a southerly direction paralleling West
Logan Street, a distance of 300.63 feet along a bearing of South 29
degrees 04 minutes 19 seconds East to a point, marked by an iron
pin; thence, in a westerly direction paralleling Locust Street a
distance of 232.61 feet along a bearing South 61 degrees 00 minutes
00 seconds West to a point; thence, in a northerly direction along
the common boundary with Lot 1, a distance of 300.11 feet along a
bearing of North 29 degrees 00 minutes 00 seconds West to the point
and place of beginning.
The above premises being the same land shown as Lot 2 on Plan of
Survey for Rittenhouse Nursing Center by Nave, Newell & Stampfel,
Ltd., dated May 6, 1995.
TOGETHER WITH the benefit of rights and easements set forth in that
certain Declaration of Reciprocal Easement Agreement made by
Geriatric and Medical Services, Inc., dated June ____, 1995 and
recorded in Deed Book _____ page _____.
BEING THE SAME PREMISES WHICH Rittenhouse Partners by Indenture
dated 5/11/1987 and recorded 5/18/1987 at Norristown in the Office
for the Recording of deeds, in and for the County of Montgomery in
Deed Book 4837 page 2319 granted and conveyed unto Geriatric and
Medical Services, Inc., its successors and assigns, in fee.
<PAGE>
CONSTRUCTION LOAN AGREEMENT
between
SUBSIDIARY OF GERIATRIC AND MEDICAL SERVICES, INC.
and
MEDITRUST MORTGAGE INVESTMENTS, INC.
<PAGE>
LOAN AGREEMENT
TABLE OF CONTENTS
Section Page
1. DEFINITIONS 3
2.REPRESENTATIONS, WARRANTIES AND COVENANTS 14
3.BORROWER'S AGREEMENTS TO PERFORM CERTAIN OBLIGATIONS 23
4.AGREEMENT TO LEND AND BORROW 23
5.CONSTRUCTION LOAN ADVANCES 23
6.AGREEMENT TO ASSIGN 25
7.ADDITIONAL AFFIRMATIVE COVENANTS OF THE BORROWER 25
8.ADDITIONAL NEGATIVE COVENANTS OF BORROWER 27
9.LENDER'S RIGHT TO MAKE PAYMENTS AND TAKE OTHER ACTION 30
10.EVENTS OF DEFAULT 30
11.LENDER'S REMEDIES IN EVENT OF DEFAULT 32
12.LOAN FEES 33
13.FINANCIAL COVENANTS 33
14.MISCELLANEOUS 34
15.FURTHER ASSURANCES 34
16.MANAGEMENT AGREEMENT 35
17.FINANCIAL STATEMENTS AND OTHER INFORMATION 37
18.REMEDIES CUMULATIVE; NO WAIVERS 40
19.USURY 41
20.PARTICIPANTS 41
21.SUCCESSORS AND ASSIGNS 42
22.NO THIRD PARTY BENEFICIARIES 42
23.GOVERNING LAW 42
24.NOTICES 43
25.CAPTIONS AND HEADINGS 44
26.AMENDMENTS, WAIVERS AND MODIFICATIONS 44
27.INVALIDITY 44
28.RULES OF CONSTRUCTION 44
29.LIMITATION OF LIABILITY 44
30.NO JOINT VENTURE OR PARTNERSHIP 45
31.ESTOPPEL CERTIFICATE 45
32.COUNTERPARTS 46
33.TIME OF THE ESSENCE 46
34.TEXAS CODE PROVISION 46
EXHIBITS
EXHIBIT A -Description of Land
EXHIBIT B-Project Plans and Specifications
EXHIBIT C -Construction Schedule
EXHIBIT D Project Budget
EXHIBIT E-List of Provider Agreements
EXHIBIT F -List of National Accounts and Local Discount Agreements
EXHIBIT G -Restrictions or Limitations on Rates
EXHIBIT H -Rates
EXHIBIT I -General Cost Reports
EXHIBIT J -Percentage of Beds Requirements
EXHIBIT K -Surveyor's Certificate
EXHIBIT L -Architect's Certificate
EXHIBIT M -Opinions
EXHIBIT N -Borrower's Requisition Certificate
EXHIBIT O -General Contractor's Requisition Certificate
EXHIBIT P -Architect's Requisition Certificate<PAGE>
SCHEDULES
SCHEDULE 2.F-Action, Suits, Investigations or Proceedings
SCHEDULE 2.G-Delinquent Obligations
SCHEDULE 2.H-Liabilities for Borrowed Money from the Affiliates
SCHEDULE 2.II-Additional Material Liabilities
SCHEDULE 2.JJ -Additional Required Permits and Contracts<PAGE>
CONSTRUCTION LOAN
AGREEMENT
THIS CONSTRUCTION LOAN AGREEMENT (this "Agreement") made this ___
day of May, 1995 by and between [Subsidiary of Geriatric and
Medical Services, Inc., a New Jersey Corporation], having its
principal place of business at c/o Geriatric & Medical Centers,
Inc., 5601 Chestnut Street, Philadelphia, Pennsylvania 19139
(hereinafter referred to as the "Borrower") and Meditrust Mortgage
Investments, Inc., a Delaware corporation, having its place of
business at 197 First Avenue, Needham, Massachusetts 02194
(hereinafter referred to as the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower is the present owner of a certain parcel
of land more particularly described in EXHIBIT A attached hereto
and incorporated herein by reference (the Land ). The Borrower
proposes to construct a 120-bed nursing/rehabilitation facility
(the "Facility") and other improvements, including, without
limitation, accessory parking and landscaping on the Land (the
Project) ; and
WHEREAS, the Project is to be constructed and equipped in
accordance with the plans and specifications (collectively, the
Project Plans ), listed on EXHIBIT B pr
(the "Architect") pursuant to the agreement dated
, 19 , by and between the Borrower and the Architect
(the Architect's Contract) .
WHEREAS, the Project is to be constructed pursuant to a fixed price
contract (the "Construction Contract") dated ,
1995, by and between the Borrower and ______________________ (the
"General Contractor").
WHEREAS, the work necessary to complete and fully equip the
Facility is to be (a) undertaken and completed in accordance with
the schedule which is annexed hereto as EXHIBIT C and (b)
substantially completed by , 19 (the
"Completion Date").
WHEREAS, in order to construct the Project, the Borrower has
applied to the Lender for a loan in the amount of up to SIX MILLION
NINE HUNDRED THIRTY-NINE THOUSAND DOLLARS ( 6,939,000) (herein
referred to as the "Loan") to be evidenced by the Note (as
hereinafter defined), this Agreement and all of the other Loan
Documents (as hereinafter defined); and
WHEREAS, the Borrower has simultaneously herewith executed and
delivered to the Lender a promissory note to the order of the
Lender in the maximum principal amount of SIX MILLION NINE HUNDRED
THIRTY-NINE THOUSAND DOLLARS ( 6,939,000) (herein referred to as
the "Note") to evidence the indebtedness of the Borrower for all
money borrowed hereunder; and
WHEREAS, the Borrower has submitted to the Lender a line item
budget (the "Project Budget"), a copy of which is annexed hereto as
EXHIBIT D, setting forth a total cost of
DOLLARS ($ ) for the design and construction of
the Project, including (a) a breakdown of construction costs
(itemized as to trade category, subdivision of the work to be
performed and the names of each contractor), (b) a breakdown of all
soft costs (itemized as to trade category, subdivision of the work
to be performed and the names of each contractor), (b) a breakdown
of all soft costs in connection with the construction of the
Project including, without limitation, costs for such items as real
estate taxes, legal and accounting fees, survey costs, permits and
inspection fees, insurance premiums, architect's and engineer's
fees, marketing, management, leasing and advertising expenses, and
all amounts due in connection with the Loan, (c) a projected draw
schedule and (d) a projected progress schedule for the construction
of the Project.
WHEREAS, as security for (A) the payment and performance of the
Borrower's obligations under the Note and this Agreement, (B) the
payment of all obligations and the performance of all covenants and
agreements under any and all documents, agreements and instruments
made in connection with or related to the Loan, this Agreement and
all of the other Loan Documents and (C) the payment and performance
of all other indebtedness, covenants, liabilities, obligations and
agreements evidenced by the Affiliate Transactions (as hereinafter
defined) (all of the aforesaid indebtedness, covenants, agreements
and obligations set forth in clauses (A) through (C) are
hereinafter collectively referred to as the "Mortgaged
Indebtedness"), the Borrower has also delivered or caused to be
delivered the following to the Lender:
(a)the Mortgage and Security Agreement of even date herewith, by
the Borrower in favor of the Lender (hereinafter referred to as the
"Mortgage"), granting to the Lender a first lien on the Borrower's
right, title and interest in the Mortgaged Property (as hereinafter
defined), together with a security interest from the Borrower as to
certain items of tangible and intangible, real and personal
property;
(b)the Collateral Assignment of Leases and Rents of even date
herewith, by the Borrower in favor of the Lender (hereinafter
referred to as the "Assignment of Leases"), with respect to leases
of the Facility, and all rents, issues and profits from such
leases;
(c)a Collateral Assignment of Management Contract of even date
herewith, by the Borrower in favor of the Lender (hereinafter
referred to as the "Assignment of Management Agreement"), with
respect to Borrower's management contract with [ ]
relating to the Facility;
(d)a Collateral Assignment of Permits, Licenses, Approvals and
Contracts of even date herewith, by the Borrower in favor of the
Lender (hereinafter referred to as the "Permits Assignment"), with
respect to all (i) licenses, approvals, qualifications, variances,
permissive uses, certificates of need, franchises, accreditations,
certificates, certifications, consents, permits and other
authorizations (including, without limitation, building permits,
subdivision approvals and subdivision plans) (hereinafter
collectively referred to as the "Permits") and (ii) agreements
(including, without limitation, all Provider Agreements (as
hereinafter defined) and Patient Admission Agreements (as
hereinafter defined)), contracts (including, without limitation,
construction contracts, subcontracts and architects' contracts),
contract rights, warranties and representations, franchises, and
records and books of account (hereinafter collectively referred to
as the "Permits and Contracts") benefiting, relating to or
affecting the Mortgaged Property or the ownership, construction,
development, maintenance, management, repair, use, occupancy,
possession or operation thereof or the operation of any programs or
services in conjunction with the Facility and all renewals,
replacements and substitutions therefor, now or hereafter issued by
or entered into with any Governmental Authority (as hereinafter
defined), Accreditation Body (as hereinafter defined) or Third
Party Payor (as hereinafter defined) or maintained or used by the
Borrower or entered into by the Borrower with any third Person (as
hereinafter defined);
(e)an Unconditional Guaranty of Geriatric & Medical Companies, Inc.
(sometimes referred to herein as the "Guarantor") of even date
herewith, guaranteeing the Borrower's obligations under the Note,
the Mortgage, this Agreement and all of the other Loan Documents as
set forth herein (hereinafter referred to as the "Guaranty");
(f)Pledge Agreements of even date herewith, by and among each of
the [partners] [shareholders] of the Borrower in favor of the
Lender, relating to all of the [partnership interests] [shares] of
the Borrower owned by each such [partner] [shareholders]
(hereinafter collectively referred to as the "Pledge Agreement");
(g)Environmental Indemnity Agreement of even date herewith, between
the Borrower and the Lender (hereinafter collectively referred to
as the "Environmental Indemnity Agreement");
(h)an Affiliated Party Subordination, Cross Default/Cross
Collateralization Agreement of even date herewith, among the
Borrower, the Guarantor and the Lender (hereinafter referred to as
the "Subordination Agreement"); and
(i)various other documents as required by the Lender in connection
with the closing of this Loan.
NOW, THEREFORE, for good and valuable consideration paid by each of
the parties hereto to the other, the receipt and sufficiency of
which is hereby acknowledged, the Lender and the Borrower agree
with each other as follows:
1.DEFINITIONS: For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise
requires, (A) the terms defined in this Section have the meaning
assigned to them in this Section and include the plural as well as
the singular, (B) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally
acceptable accounting principles as at the time applicable and (C)
all references in this Agreement to "Sections" and other
subdivisions are to designated Sections and other subdivisions of
this Agreement:
Acceleration Event: An Event of Default which results in the
Lender's giving notice that the Maturity Date of the Loan has been
accelerated.
Accreditation Body:CARF, JCAHO and all other Persons having or
claiming jurisdiction over the accreditation, certification,
evaluation or operation of the Facility.
Additional Interest: As defined in the Note.
Advances Rate: The rate of interest per annum equal to the lesser
of: (i) eighteen percent (18%) per annum or (ii) three (3)
percentage points above the rate then being charged under the Note;
but in no event in excess of the maximum rate of interest permitted
by law to be charged by the Lender.
Affiliate: With respect to any Person (i) any other Person which,
directly or indirectly, controls or is controlled by or is under
common control with such Person, (ii) any other Person that owns,
beneficially, directly or indirectly, five percent (5%) or more of
the outstanding capital stock, shares or equity interests of such
Person or (iii) any officer, director, employee, general partner or
trustee of such Person or any other Person controlling, controlled
by or under common control with such Person (excluding trustees and
Persons serving in similar capacities who are not otherwise an
Affiliate of such Person). For the purposes of this definition,
the term "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of such Person, through the ownership of
voting securities, partnership interests or other equity interests.
Affiliate Transactions: Any agreement, document or instrument
(including, without limitation, all leases and loan documents)
evidencing any indebtedness, covenant, liability, obligation or
undertaking due to, or made for the benefit of, the Lender (and/or
any of its Affiliates), which (at the time of the execution,
delivery and closing of the transaction giving rise to such
indebtedness, covenant, liability, obligation or undertaking), is
made by the Borrower (and/or any of its Affiliates) or the
Guarantor (and/or any of its Affiliates), whether such
indebtedness, covenants, liabilities, obligations or undertakings
are direct or indirect, absolute or contingent, liquidated or
unliquidated, due or to become due, joint, several or joint and
several, primary or secondary, now existing or hereafter arising.
Assignment of Leases: As defined in the preamble of this
Agreement.
Assignment of Management Agreements: As defined in the preamble of
this Agreement.
Borrower: As defined in the preamble of this Agreement.
Borrower's Refinancing Notice: As defined in Section 11 of this
Agreement.
Business Day:Any day which is not a Saturday or a Sunday or a
public holiday under the laws of the United Sates of America, the
Commonwealth of Massachusetts or the state in which the Lender's
depository bank is located.
Cash Flow: The Consolidated Net Income (or Consolidated Net Loss)
for any period plus the amount of the provision for depreciation
and amortization actually deducted on the books of the applicable
Person for the purposes of computing such Consolidated Net Income
(or Consolidated Net Loss) for the period involved, plus (i)
interest on all Indebtedness and
(ii) subordinated management fees.
Collateral: As defined in the Mortgage.
Consolidated and Consolidating: When used with reference to any
term defined, shall herein mean that term as applied to the
accounts of the relevant Person and its Subsidiaries consolidated
in accordance with GAAP.
Consolidated Financials: For any fiscal year or other accounting
period for any Person and its consolidated Subsidiaries, statements
of earnings and retained earnings and of changes in financial
position for such period and for the period from the beginning of
the respective fiscal year to the end of such period and the
related balance sheet as at the end of such period, together with
the notes thereto and a statement of all contingent liabilities of
such Person if the same are required to be disclosed under GAAP,
all in reasonable detail and setting forth in comparative form the
corresponding figures for the corresponding period in the preceding
fiscal year, and prepared in accordance with GAAP.
Consultants: Architects, engineers, inspectors, surveyors and
other consultants engaged by the Lender to perform services for the
Lender in connection with the Loan.
Construction Loan Commitment Fee: [
] Dollars ($ ).
Current Assets : All assets of any Person which would, in
accordance with GAAP, be classified as current assets of a Person
conducting a business the same as or similar to that of such
Person, excluding, however, any and all advances to or Current
Liabilities owed to such Person by its Subsidiaries.
Current Liabilities : All liabilities of any Person which would,
in accordance with GAAP, be classified as current liabilities of a
Person conducting a business the same as or similar to that of such
entity, including, without limitation, all lease rental payments
and other payments under leases and fixed prepayments of, and
sinking fund payments with respect
to, Indebtedness required to be made within one year from the date
of determination.
Debt Coverage Ratio: The ratio of (i) Cash Flow for each
applicable fiscal quarter to (ii) the total of all interest and
principal amortization required under the Note paid or payable
during such fiscal quarter or accrued for such fiscal quarter.
Declaration: As defined in Section 29 of this Agreement.
Dollars: Lawful money of the United States of America.
Environmental Laws: As defined in the Mortgage.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
Event of Default: As defined in Section 10 of this Agreement.
Exercise Notice: As defined in Section 11 of this Agreement.
Facility: As defined in the preamble of this Agreement.
Failure to Operate: As defined in Section 10 of this Agreement.
Financial Statements: For any fiscal year or other accounting
period for any Person, statements of earnings and retained earnings
and of changes in financial position for such period and for the
period from the beginning of the respective fiscal year to the end
of such period and the related balance sheet as at the end of such
period, together with the notes thereto, all in reasonable detail
and setting forth in comparative form the corresponding figures for
the corresponding period in the preceding fiscal year, and prepared
in accordance with GAAP.
Financing Statements: Uniform Commercial Code Financing Statements
evidencing the security interests granted to the Lender in
connection with the Loan
GAAP: Generally accepted accounting principles, consistently
applied.
Governmental Authority:All agencies, authorities, bodies, boards,
commissions, courts, instrumentalities, legislatures and offices of
any nature whatsoever for any government unit or political
subdivision, whether federal, state, county, district, municipal,
city or otherwise, and whether now or hereafter in existence.
Guarantor: As defined in the preamble of this Agreement.
Guaranty: As defined in the preamble of this Agreement.
Hazardous Substances: As defined in the Mortgage.
Indebtedness: The total of all obligations of a Person, whether
current or long-term, which in accordance with GAAP would be
included as liabilities upon such Person's balance sheet at the
date as of which Indebtedness is to be determined, and shall also
include guaranties, endorsements (other than for collection of
instruments in the ordinary course of business) or other
arrangements whereby responsibility is assumed for the obligations
of others, whether by agreement to purchase or otherwise acquire
the obligations of others, including any agreement, contingent or
otherwise, to furnish funds through the purchase of goods, supplies
or services for the purpose of payment of the obligations of
others.
Interest Rate: As defined in the Note.
JCAHO: Joint Commission on Accreditation of Healthcare
Organizations.
Land: As defined in the preamble of this Agreement.
Late Payment Charges: As defined in the Note.
Leases: Any and all leases, subleases, licenses, agreements,
concession agreements, tenancy at will agreements and other
occupancy agreements of every kind and nature, whether oral or in
writing, now in existence or subsequently entered into by the
Borrower, encumbering or affecting all or any portion of the
Mortgaged Property, together with all extensions, renewals,
modifications and replacements thereof.
Legal Requirements: All federal, state, county, municipal and
other governmental statutes, ordinances, by-laws, codes,
restrictions, orders, judgments, decrees and injunctions
(including, without limitation, all applicable building, health
code, zoning, subdivision, and other land use and health-care
licensing statutes, ordinances, by-laws and codes) or, to the best
of the Borrower's knowledge, any rule or regulation to which any of
the Borrower is subject, whether now or hereafter enacted,
affecting the Mortgaged Property and/or the construction,
development, maintenance, management, repair, use and/or operation
thereof, including, without limitation, any of the foregoing which
may (i) require repairs, modifications or alterations in or to the
Mortgaged Property, (ii) in any way affect (adversely or otherwise)
the use and enjoyment of the Mortgaged Property or (iii) require
the clean-up of any Hazardous Substances on the Mortgaged Property.
Without limiting the foregoing, the term Legal Requirements
includes all Environmental Laws and shall also include all Permits
and Contracts issued by or entered into with any governmental or
quasi-governmental authority or agency relating to the Mortgaged
Property and all Permitted Encumbrances.
Lender: As defined in the preamble of this Agreement.
Lessee: Any lessee, sublessee, licensee, concessionaire, tenant or
other occupant under any of the Leases.
Loan: As defined in the preamble of this Agreement.
Loan Amount: The principal amount of the Loan shall be an amount up
to the maximum of SIX MILLION NINE HUNDRED THIRTY-NINE THOUSAND
DOLLARS ($6,939,000).
Loan Documents: The Note, the Deeds of Trust, this Agreement, the
Assignment of Leases, the Assignment of Management Agreements, the
Permits Assignment, the Guaranty, the Pledge Agreement, the
Environmental Indemnity Agreement, the Architect Contract, the
Construction Contract, the Subordination Agreement, the Financing
Statements and all of the other documents, agreements and
instruments made by (i) the Borrower, (ii) any Affiliate of the
Borrower, (iii) any Lessee under any Lease, (iv) any Person under
any Management Agreement, and (v) the Guarantor or any other
endorser, surety or guarantor of the Note, evidencing or securing
the repayment of, or otherwise pertaining to, the Loan.
Loan Term: As defined in the Note.
Management Agreement: Any agreement, whether written or oral,
entered into by the Borrower or any Lessee pursuant to which the
Borrower or such Lessee provides any payment and/or fee to any
other Person to operate and/or manage the Facility, including,
without limitation, that certain Management Agreement, dated
19 , between the Borrower and the Guarantor, with
respect to the Facility.
Manager: Any Person who has entered into a Management Agreement
with the Borrower or any Lessee.
Maturity Date: As defined in the Note.
Meditrust: As defined in Section 29 of this Agreement.
Mortgage: As defined in the preamble of this Agreement.
Mortgaged Indebtedness: As defined in the preamble of this
Agreement.
Mortgaged Property: The Land and any improvements now or hereafter
located thereon, including, without limitation, the Facility.
Net Income (or Net Loss): The net income (or net loss, expressed
as a negative number) of a Person for any period, after all taxes
actually paid or accrued and all expenses and other charges
determined in accordance with GAAP.
Note: As defined in the preamble of this Agreement.
Permanent Loan Commitment Fee: [
] Dollars ($ ).
Permits and Contracts: As defined in the preamble of this
Agreement.
Permits Assignment: As defined in the preamble of this Agreement.
Permitted Encumbrances: As defined in the Mortgage.
Permitted Financing: Indebtedness (including capitalized equipment
leases) for equipment currently used or to be used exclusively at
the Facility, provided that, with respect to each equipment lease
or financing agreement, the Borrower shall have first obtained from
the relevant equipment financier or lessor an agreement to the
effect that (A) the Lender shall be given notice of and an
opportunity (but not the obligation) to cure each default by the
Borrower under such equipment lease or equipment financing
agreement and (B) in the event that the Lender or its designee
takes possession of the Facility, the Lender shall have the right
(but not the obligation) to assume such equipment lease or
equipment financing agreement.
Person: Individuals, corporations, general and limited
partnerships, stock companies or associations, joint ventures,
unincorporated associations, companies, trusts, banks, trust
companies, land trusts, business trusts, or any other entities, and
governments and agencies and political subdivisions thereof.
Pledge Agreement: As defined in the preamble of this Agreement.
Prepayment Fee: As defined in the Note.
Primary Intended Use: As defined in the Mortgage.
Principal Place of Business: As defined in Section 2 of this
Agreement.
Provider Agreements:All participation, provider and reimbursement
agreements or arrangements now or hereafter in effect for the
benefit of the Borrower or any Lessee or Manager in connection with
the operation of the Facility relating to any right of payment or
other claim arising out of or in connection with the Borrower's
participation in any Third Party Payor Program.
Purchaser: Any Person to whom title to the Mortgaged Property is
transferred by reason of the Lender's exercise of rights granted
under any of the Loan Documents, including without limitation, the
exercise of the power of sale under the Mortgage, any other
foreclosure of the Mortgage or any other proceeding brought to
enforce the rights of the holder of the Mortgage, by deed in lieu
of foreclosure or by any other method.
Refinancing Period: As defined in Section 11 of this Agreement.
Rents: As defined in the Mortgage.
Subsidiary: Any corporation or other entity of any Person and/or
any of its Subsidiaries which owns, directly or indirectly, or has
the right to control or direct the voting of, fifty percent (50
percent) of the outstanding capital stock or other ownership
interest having general voting power (under ordinary circumstances)
of any such Person and/or any of its Subsidiaries.
Survey: The survey entitled "[
]", dated , 1995,
as prepared by [ ].
Tangible Net Worth: An amount equal to the total assets of any
Person (excluding the total intangible assets of such Person) minus
the total liabilities of such Person. Total intangible assets
shall be deemed to include, but shall not be limited to, the excess
of cost over book value of acquired businesses accounted for by the
purchase method, formula, trademarks, trade names, patents, patent
rights and deferred expenses (including, but not limited to,
unamortized debt discount and expense, organizational expense and
experimental and development expenses).
Third Party Payor Programs:All third party payor programs in which
the Borrower presently or in the future may participate, including,
without limitation, Medicare, Medicaid, CHAMPUS, Blue Cross and/or
Blue Shield, Managed Care Plans, other private insurance programs
and employee assistance programs.
Third Party Payors:Medicare, Medicaid, CHAMPUS, Blue Cross and/or
Blue Shield, private insurers and any other Person which presently
or in the future maintains Third Party Payor Programs.
2.REPRESENTATIONS, WARRANTIES AND COVENANTS: The Borrower hereby
represents and warrants to, and covenants and agrees with, the
Lender, that:
A. the Borrower is a corporation duly organized, validly existing
and in good standing under the laws of [ ]. The
Borrower has all requisite corporate power to own and operate its
properties and to carry on its business as now conducted and as
proposed to be conducted and is duly qualified to do business and
is in good standing in each jurisdiction where such qualification
is necessary or desirable in order to carry out its business as now
conducted and as proposed to be conducted;
B.the Borrower is duly authorized to carry on its business as
presently conducted and to make and enter into all of the Loan
Documents to which it is a party and to carry out the transactions
contemplated therein. All of the Loan Documents to which the
Borrower is a party have each been duly executed and delivered by
such Borrower, and each is a legal, valid and binding obligation of
such Borrower, enforceable in accordance with its terms;
C.the Borrower is, and during the entire time that this Agreement
remains in full force and effect shall be, engaged in no business,
trade or activity other than the construction of the Project and
operation of the Facility in accordance with the terms and
provisions of this Agreement, the Mortgage and the other Loan
Documents;
D. the execution, delivery and performance of the Loan Documents
and the consummation of the transactions thereby contemplated shall
not result in any breach of, or constitute a default under, or
result in the acceleration of any obligation of the Borrower under
any of the Permits and Contracts or any other contract, mortgage,
lien, lease, agreement, instrument, franchise, arbitration award,
judgment, decree, bank loan or credit agreement, trust indenture or
other instrument to which the Borrower is a party or by which the
Borrower may be bound or affected and do not violate or contravene
any of the Legal Requirements or any other statute, ordinance,
by-law, code, ruling, restriction, order, judgment, writ decree or
injunction to which the Borrower is subject or, to the best of the
Borrower's knowledge, any rule or regulation to which the Borrower
is subject;
E.no consent or approval or other authorization of, or exemption
by, or declaration or filing with, any Person and no waiver of any
right by any Person is required to authorize or permit, or is
otherwise required in connection with the execution, delivery and
performance of the Loan Documents or in connection with the
validity and priority of any liens granted thereunder except the
recording of the Mortgage and the Assignment of Leases and the
filing of the Financing Statements;
F.the Borrower is financially solvent and except as provided in
Schedule 2.F attached hereto and incorporated herein by reference,
there are no actions, suits, investigations or proceedings
including, without limitation, outstanding federal or state tax
liens, garnishments, or insolvency and bankruptcy proceedings,
pending or, to the best of the Borrower's knowledge and belief,
threatened (i) against or affecting the Borrower or any Person
holding or controlling, directly or indirectly, any interest in the
Borrower, the Guarantor or any other endorser, surety or guarantor
of the Note, which, if adversely resolved to the Borrower, such
other Person, the Guarantor or such other endorser, surety or
guarantor, would materially affect the ability of any of the
foregoing to perform their respective obligations under the Loan
Documents, (ii) against or affecting the Mortgaged Property or the
Facility or the ownership, construction, use, occupancy,
possession, operation or maintenance thereof or (iii) which may
involve or affect the validity, priority or enforceability of the
Note, the Mortgage, this Agreement or any of the other Loan
Documents at law or in equity, or before or by any arbitrator,
administrative agency or other governmental authority. The
Borrower is not in default with respect to any order, writ,
injunction, decree or demand of any court or any governmental
authority affecting the Borrower;
G.except as provided in Schedule 2.G attached hereto and
incorporated herein by reference, neither the Borrower nor any
Person holding or controlling, directly or indirectly, any interest
in the Borrower nor the Guarantor or any other endorser, surety or
guarantor of the Note are delinquent or claimed to be delinquent
under any obligation for the payment of borrowed money;
H.except as provided in Schedule 2.H attached hereto and
incorporated herein by reference, the Borrower has not created,
incurred, assumed, guaranteed, endorsed or suffered to exist any
liability (whether direct or contingent) for borrowed money from
the Guarantor (or any of its Affiliates) or any Affiliate of the
Borrower;
I.the Borrower has filed all tax returns which are required to be
filed, as to which extensions are not currently in effect, and has
paid all taxes (including interest and penalties) which have become
due pursuant to such returns or pursuant to any assessment or
notice of tax claim or deficiency received by the Borrower. No tax
liability has been asserted by the Internal Revenue Service or any
other federal, state or local taxing authority for taxes (or
interest or penalties thereon) in excess of those already paid;
J.no consent or approval or other authorization of, or exemption
by, or declaration or filing with, any Person and no waiver of any
right by any Person is required to authorize or permit, or is
otherwise required in connection with the execution, delivery and
performance of the Loan Documents or in connection with the
validity and priority of any liens granted thereunder;
K.there are no actions or investigations pending or, to the best
knowledge and belief of the Borrower, threatened, anticipated or
contemplated (nor, to the knowledge of the Borrower, is there any
basis therefor) against or affecting the Borrower, the Mortgaged
Property, or any Lessee before any Governmental Authority,
Accreditation Body or Third Party Payor which could prevent or
hinder the consummation of the transactions contemplated hereby or
call into question the validity of any of the Loan Documents or any
action taken or to
be taken in connection with the transactions contemplated
thereunder or which in any single case or in the aggregate might
result in any material adverse change in the business, prospects,
condition, affairs or operations of the Borrower, the Mortgaged
Property, or any Lessee or any material impairment of the right or
ability of the Borrower, or any Lessee to construct the Project or
to carry on its operations as now conducted or proposed to be
conducted;
L.the Borrower and the Mortgaged Property and the ownership,
construction, development, maintenance, management, repair, use,
occupancy, possession and operation thereof comply with all Legal
Requirements (to the best of the Borrower's knowledge with respect
to rules and regulations) and there is no claim of any violation
thereof known to the Borrower;
M.there are no outstanding notices of deficiencies or work orders
relating to the Mortgaged Property issued by any Governmental
Authority, Accreditation Body or Third Party Payor requiring
conformity to any of the Legal Requirements;
N.none of the Permitted Encumbrances has or is likely to have a
material adverse impact upon, nor interfere with or impede, in any
material respect, the construction of the Project or the operation
of the Mortgaged Property in accordance with its Primary Intended
Use;
O. upon the construction of the Project, all building facilities
and other improvements necessary, both legally and practically, for
the proper and efficient operation of the Facility shall be located
upon the Land;
P.the Facility is accredited by all applicable organizations and
there are no deficiencies in either the Mortgaged Property or any
services provided at the Facility that would prevent the extension
of the accreditation of the Facility by the applicable
organizations after their next regularly scheduled inspections [the
Facility shall be accredited in due course upon the construction of
the Project by all applicable organizations and there are no facts
or circumstances known to the Borrower and no deficiencies in
either the Mortgaged Property or any services to be provided at the
Facility that would prevent such accreditation of the Facility by
the applicable organizations];
Q.the Borrower and the Facility are fully qualified as a provider
of services under and [shall in due course upon construction of the
Project] participate in all Third Party Payor Programs and referral
programs as is necessary for the prudent operation of the Facility
in the good faith exercise of commercially reasonable business
judgment. The Facility shall be operated by [the Guarantor];
R.attached hereto as EXHIBIT E and incorporated herein by reference
is a list of Provider Agreements currently in effect;
S.attached hereto as EXHIBIT F and incorporated herein by reference
is a list of national accounts and local discount agreements, which
constitute all of the agreements between the Borrower or the
Facility, on the one hand, and Third Party Payors on the other
hand, [except for agreements with the Third Party Payors listed
thereon which the Borrower or the Facility shall execute in due
course upon the construction of the Project,] pursuant to which the
Borrower or the Facility agrees to provide services based on a
discount factor from the rates regularly charged for services
rendered by the Borrower or the Facility;
T.the state in which the Facility is located currently imposes no
restrictions or limitations on rates which may be charged to
private pay patients receiving services at the Facility, except as
set forth on EXHIBIT G attached hereto and incorporated herein by
reference;
U.The Borrower and the Facility, as the case may be, shall, upon
construction of the Project, charge those rates set forth on
Exhibit H attached hereto and incorporated herein by reference, all
of which rates are legal, valid and enforceable rates, and are [or
shall be] reimbursed pursuant to the Provider Agreements currently
in effect or which shall be executed in due course, as the case may
be, at the rates set forth on EXHIBIT H.
V.neither the Borrower nor the Facility has any rate appeal
currently pending before any Government Authority or any
administrator of any Third Party Payor Program or referral source
other than such appeals which, if determined adversely to the
Borrower or the Facility, would have a materially adverse effect,
either singly or in the aggregate, on the financial condition of
the Borrower or the Facility;
W.all cost reports and financial reports submitted to any Third
Party Payor with respect to the Facility have been materially
accurate and complete and have not been misleading in any material
respects. As a result of any audits by any Third Party Payor,
there are no related recoupment claims made or contests pending or
threatened other than such recoupment claims or contests which, if
determined adversely to the Borrower or the Facility, would not
have a materially adverse effect, either singly or in the
aggregate, on the financial condition of the Borrower or the
Facility. As of the date hereof, no cost reports for the Facility
remain open or unsettled other than those listed on EXHIBIT I
attached hereto and incorporated herein by reference;
X.neither the Borrower nor the Facility has received any notice of
any claim, requirement or demand of any Governmental Authority,
Accreditation Body, Third Party Payor or any insurance body having
or claiming any licensing, certifying, supervising, evaluating or
accrediting authority over the Facility to rework or redesign the
Facility, its professional staff or its professional services,
procedures or practices in any material respect or to provide
additional furniture, fixtures, equipment or inventory so as to
make the Facility conform to or comply with any Legal Requirement;
Y.the most recent utilization reviews relating to the Facility by
all applicable Third Party Payors, Accreditation Bodies and
Governmental Authority and reviews or scrutiny by any managed care
or utilization review companies have not had a material adverse
impact on the proposed utilization of beds or programs at the
Facility. No claims or assertions have been made in any
utilization review that any of the practices or procedures proposed
at the Facility are improper or inappropriate other than such
claims or assertions which singly and in the aggregate will not
have a material adverse impact on the Facility;
Z.except as disclosed on EXHIBIT J attached hereto and
incorporated herein by reference, there are no Contracts, Permits
or Legal Requirements which require that a percentage of beds or
slots in any programs at the Facility be reserved for Medicaid or
Medicare eligible patients or that the Facility provide a certain
amount of welfare, free or charity care or discounted or government
assisted patient care;
AA.the Borrower has delivered or caused to be delivered to the
Lender true and correct copies of all inspection reports relating
to the Facility, issued by any Governmental Authority or
Accreditation Body during the most recent licensing period,
together with all plans of correction relating thereto;
BB.there are no proceedings now pending, nor, to the best of the
Borrower's knowledge, threatened with respect to the operation of
the Facility before the National Labor Relations Board, U.S.
Department of Labor, any state department of labor and employment,
or any other Governmental Authority having jurisdiction of employee
rights with respect to hiring, tenure and conditions of employment,
and the Borrower has not experienced any material controversy with
its employees or with any labor organization;
CC.no employee pension benefit plan maintained by the Borrower has
any accumulated funding deficiency within the meaning of ERISA, nor
does the Borrower have any material liability to the PBGC
established under ERISA (or any successor thereto) in connection
with any employee pension benefit plan (or other class of benefit
which the PBGC has elected to insure), and there have been no
"reportable events" (not waived) or "prohibited transactions" with
respect to any such plan, as those terms are defined in Section
4043 of ERISA and Section 4975 of the Internal Revenue Code of
1986, as amended, respectively;
DD.to the best of the Borrower's knowledge, the Borrower is duly
licensed or authorized to use all (if any) copyrights, rights of
reproduction, trademarks, tradenames, trademark applications,
service marks, patent applications, patents and patent license
rights (all whether registered or unregistered, U.S. or foreign),
inventions, franchises, discoveries, ideas, research, engineering,
methods, practices, processes, systems, formulae, designs,
drawings, products, projects, improvements, developments, know-how
and trade secrets which are used in or necessary for the operation
of the Facility in accordance with its Primary Intended Use,
without conflict with or infringement of any, and subject to no
restriction, lien, encumbrance, right, title or interest in others;
EE.the Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of the Loan will be
used to purchase or carry any margin security or to extend credit
to others for the purpose of purchasing or carrying any margin
security or in any other manner which would involve a violation of
any of the regulations of the Board of Governors of the Federal
Reserve System. The Borrower is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended;
FF.the principal place of business of the Borrower is located at
c/o Geriatric & Medical Centers, Inc., 5601 Chestnut Street,
Philadelphia, Pennsylvania 19139 (referred to herein as the
"Principal Place of Business");
GG.as of the date hereof, no part of the Collateral has been
damaged by fire or other casualty and has not been restored to good
order and repair;
HH.there is no condemnation or similar proceeding pending with
respect to or affecting the Collateral, and the Borrower is not
aware, to the best of the Borrower's knowledge and belief, that any
such proceeding is contemplated;
II.the financial statements of the Borrower and the Guarantor given
to the Lender in connection with the making of the Loan were true
and accurate as of the date thereof and disclosed all liabilities
of such parties, and there has been no material adverse change
since such date with respect to the Tangible Net Worth of each such
party or any other matters contained or referred to therein and no
additional material liabilities, including, without limitation,
contingent liabilities of such parties, if the same are required to
be disclosed under GAAP, have arisen or been incurred since such
date except as provided in Schedule 2.II attached hereto and
incorporated herein by reference;
JJ.all Permits and Contracts required to be issued by or entered
into with any governmental or quasi-governmental authority or
agency for the operation of the Facility have been obtained or
executed, as the case may be, except for those Permits and
Contracts listed in Schedule 2.JJ attached hereto and incorporated
herein by reference, which shall be obtained in due course upon
construction of the Project. Except as provided on such Schedule,
all such Permits and Contracts are in full force and effect, are
not subject to any unexpired appeal periods or any appeals or
challenges which have not been conclusively resolved in favor of
the Borrower, and do not contain any conditions or terms which have
not been fully satisfied. There is no action pending, or, to the
best knowledge and belief of the Borrower, recommended by the
appropriate local, state or federal governmental authority having
jurisdiction thereof, either to revoke, repeal, cancel, modify,
withdraw or suspend, delay or prevent the obtainment of any such
Permit or Contract relating to the construction or operation of the
Facility, or any other action of any other type which would have a
material adverse effect on the Facility;
KK.there are no outstanding deficiencies or work orders of any
authority having jurisdiction over the Facility requiring
conformity to any Legal Requirement;
LL.the Mortgaged Property is not located in any flood hazard area
as identified on any Flood Insurance Rate Map published by the
Federal Emergency Management Agency or any flood plain wetlands,
protected watershed areas, aquifer protection district or other
similar district as identified under applicable state or local law;
MM.the Borrower does not have any actual knowledge of any
legislation which has been enacted nor regulations promulgated
within the eighteen (18) months preceding the date of this
Agreement or any proposed legislation or regulation currently
pending in the state where the Facility is located, which may
materially adversely affect rates at the Facility or any programs
at the Facility or may result in the likelihood of increased
competition at the Facility or the imposition of additional
Medicaid, Medicare, charity, free care, welfare or other discounted
or government assisted patients at the Facility or require that the
Facility obtain a certificate of need, Section 1122 approval or the
equivalent, which the Facility does not currently possess;
NN.the Borrower has not received any notice of any claim,
requirement or demand of any licensing or certifying agency
supervising or having authority over the Facility to rework or
redesign the Facility in any material respect or to provide
additional furniture, fixtures, equipment or inventory than those
proposed so as to make the Facility conform to or comply with any
Legal Requirement;
OO.all utilities necessary for the construction, use and operation
of the Facility are available to the lot lines of the applicable
portion of Mortgaged Property (i) in sufficient supply and
capacity, (ii) through validly created and existing easements of
record appurtenant to or encumbering the Mortgaged Property (which
easements shall not impede or restrict the construction and
operation of the Facility) and (iii) without need for any Permits
and Contracts required by or issued by any governmental or quasi-
governmental authority or agency of any nature, except as already
obtained or as shown, to the satisfaction of the Lender, to be
readily obtainable;
PP.except as indicated on the Survey, there are no encroachments of
buildings, structures or improvements located on the Mortgaged
Property onto adjoining lands or on or over any easements or rights
of way, if any, included in the Permitted Encumbrances;
QQ.the Borrower has not dealt with any broker or agent in
connection with the Loan. The Borrower shall and hereby agrees to
indemnify, defend (with counsel acceptable to the Lender) and hold
the Lender harmless from and against any and all claims for any
premiums or other charges, finder's fees, taxes, brokerage fees or
commissions and other similar compensation due in connection with
the Loan as a result of actions, or inactions, attributable to the
Borrower. Notwithstanding the foregoing, in the event that the
Borrower shall fail to take action to defend the Lender within a
reasonable period of time after the assertion of any such claim,
the Lender shall have the option of conducting its own defense
against any such claims with counsel of the Lender's choice, but at
the expense of the Borrower, as aforesaid. This indemnification
shall include all attorneys' fees and costs incurred by the Lender
in connection with the defense against any such claims and the
enforcement of this indemnification;
RR.neither this Agreement, nor any of the other Loan Documents nor
any certificate, statement or other document, including, without
limitation, any financial statements concerning the financial
condition of the Borrower, the Guarantor, and any other endorser,
surety or guarantor of the Note or the Loan Documents, furnished to
or to be furnished to the Lender in connection with the Loan,
contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to
prevent all statements contained herein and therein from being
misleading;
SS.no event which constitutes, or which, with notice or lapse of
time, or both, would constitute, an Event of Default hereunder or
under any of the other Loan Documents has occurred and is
continuing; and
TT.all certifications, representations and warranties contained in
this Agreement or in any certificate or other instrument or
agreement delivered by the Borrower, pursuant to this Agreement or
the Loan Documents are true, correct and complete as of the date
hereof, and shall constitute representations and warranties made by
the Borrower hereunder continuing throughout the Loan Term.
UU.the Architect's Contract and the Construction Contract have been
validly executed by and are binding upon the parties thereto and
each is in full force and effect in accordance with the terms
thereof. All of the parties to the Construction Contract and the
Architect's Contract have faithfully performed all of their
respective obligations thereunder to the extent accrued as of the
date hereof, and none of the parties to the foregoing instruments
has asserted any claim of default thereunder;
VV.the two (2) copies of the Project Plans delivered to the Lender
by the Borrower (a) are true and correct and satisfactory to the
Borrower and (b) have been filed with and approved by all
appropriate Governmental Authorities. All necessary Permits
relating to the Project Plans to be issued or granted by any
applicable Governmental Authority having or claiming jurisdiction
over the Mortgaged Property have been obtained and all such Permits
are in full force and effect, are not subject to any unexpired
appeal periods or any appeals or challenges which have not been
fully resolved in favor of the Borrower, and do not contain any
conditions or terms which have not been fully satisfied or which
will not be fully satisfied by the completion of the construction
of the Project (in accordance with the Project Plans and the terms
and provisions of this Agreement). Furthermore, the Project Plans
have been approved in writing by the Lender, any construction
heretofore performed on the Project has been performed in
accordance with the Plans and Specifications and all future
construction on the Project shall be performed in accordance with
the Project Plans and the terms and conditions of this Agreement.
There are no structural defects in the Project of which the
Borrower has been advised or of which the Borrower has notice or
knowledge. The Borrower has not received any notice claiming that,
and the Borrower has no knowledge that, the Project Plans violate
any Legal Requirement;
XX.no Person has performed any construction work or furnished any
services in connection with any construction carried on or to be
carried on at the Mortgaged Property who or which remains unpaid at
the time of execution of this Agreement, except as indicated in the
requisition submitted simultaneously herewith or otherwise
expressly approved by the Lender;
YY.the Project Plans provide for the construction and renovation of
all buildings and related improvements necessary, both legally and
practically, for the proper and efficient construction of the
Project and the operation of the Facility for its Primary Intended
Use;
ZZ.upon the completion of construction of the Project, which shall
be constructed in accordance with the Project Plans and the terms
and provisions of this Agreement, the Facility shall be in
compliance with (a) all Legal Requirements; (b) all Permits and
Contracts and (c) all applicable by-laws, codes, rules, regulations
and restrictions of the Board of Fire Underwriters or other
insurance underwriters or similar bodies.
AAA.all Permits and Contracts required by or entered into with any
Governmental Authority or quasi-governmental authority or agency
for, or in connection with, the construction of the Project have
been obtained or executed, as the case may be. All such Permits
and Contracts are in full force and effect, are not subject to any
unexpired appeal periods or any appeals or challenges which have
not been conclusively resolved in favor of the Borrower, and do not
contain any conditions or terms which have not been fully satisfied
or which will not be fully satisfied by the completion of the
construction of the Project (if constructed in accordance with the
Plans and Specifications and the terms and provisions of this
Agreement). There is no action pending, or, to the best knowledge
and belief of the Borrower, recommended by the applicable
Governmental Authority having jurisdiction thereof, either to
revoke, repeal, cancel, modify, withdraw or suspend any such Permit
or Contract relating to the construction of the Project, or any
other action of any other type which would have a material adverse
effect on the Project;
BBB.as of the date of the first advance to the Borrower pursuant to
this Agreement, the amount of the money expended by the Borrower on
account of the construction of the Project in accordance with the
Project Plans and the items listed on Project Budget will not be
less than the amount of such first advance.
3.BORROWER'S AGREEMENTS TO PERFORM CERTAIN OBLIGATIONS:
The Borrower agrees faithfully to perform, pay and observe all
agreements, covenants, indebtedness, obligations and liabilities of
the Borrower to the Lender, direct or indirect, absolute or
contingent, due or to become due, existing or hereafter arising,
including, without limitation, all of the Borrower's obligations
under the Note, this Agreement, the Mortgage and all of the other
Loan Documents. The payment of all obligations and the performance
of all covenants of and agreements by the Borrower under the Loan
Documents shall be absolute and unconditional, irrespective of any
defense or any rights of set-off, recoupment or counterclaim the
Borrower might otherwise have against the Lender, and the Borrower
shall pay during the Loan Term all payments to be made as
prescribed in the Note, this Agreement, the Mortgage and all of the
other Loan Documents, free of any deductions and without abatement,
diminution or set-off.
Except as may otherwise be specifically set forth herein or in any
of the other Loan Documents, all payments to be made to the Lender
hereunder or under any of the other Loan Documents, including,
without limitation, all payments of principal, interest (including,
without limitation, Additional Interest), the Prepayment Fee, Late
Payment Charges, all other charges, costs, expenses and other
amounts due hereunder or under any of the other Loan Documents,
shall be made to the Lender at its address set forth in Section 24
hereof, in lawful money of the United States of America, not later
than 12:00 Noon Eastern Standard Time on the date that such payment
is due. All payments received by the Lender after such time shall
be deemed to have been received by the Lender, for the purposes of
computing interest and Late Payment Charges, as of the next
Business Day. If any payment to be made to the Lender under any of
the Loan Documents falls due on a day which is not a Business Day,
the due date therefor shall be extended to the next succeeding
Business Day. At the Lender's option and upon notice to the
Borrower, all payments to be made under any of the Loan Documents
to the Lender shall be made by wire transfer of immediately
available Federal funds or the equivalent, to the Lender's bank and
bank account, as specified in said notice.
If the Borrower named herein shall be more than one Person, all
agreements, conditions, covenants, provisions, stipulations, powers
of attorney, authorizations, waivers, releases, options,
undertakings, rights and benefits made or given by the Borrower
shall be joint and several, and shall bind and affect each and all
Persons who are defined herein as the "Borrower" as fully as though
all of them were specifically named herein wherever the term
"Borrower" is used. The Borrower shall have only such rights of
prepayment, if any, as are set forth in the Note, subject to the
conditions and the payment of the Prepayment Fee as provided
therein.
The Borrower further agree (A) to enforce all of Borrower's rights
under the Loan Documents and any and all other Permits and
Contracts relating to the Facility and (B) not to enter into,
amend, modify or terminate any agreement of any kind with respect
to the Mortgaged Property or the Facility, including without
limitation, any Leases or Management Agreements, without in each
case first obtaining the prior written consent of the Lender (which
consent may be withheld in the Lender's sole and absolute
discretion).
4.AGREEMENT TO LEND AND BORROW: Subject to all of the terms and
conditions hereof, the Lender hereby agrees to lend to the
Borrower, and the Borrower hereby agrees to borrow from the Lender,
the principal amount of the Note in installments from time to time,
pursuant to the terms of the Note, this Agreement and the other
Loan Documents, and to pay interest on the amounts so borrowed at
the applicable Interest Rate per annum set forth in the Note (as
the same may from time to time be adjusted pursuant to the terms
and conditions set forth therein); it being understood that the
Borrower shall be liable for the payment of interest only on such
sums as shall have been advanced from time to time under the Note,
this Agreement and the other Loan Documents to the Borrower and
which remain outstanding.
5.CONSTRUCTION LOAN ADVANCES:
A. Prior to the first advance, and as a condition of the
Borrower's right to receive any of the proceeds of the Loan
contemplated by this Agreement, there shall have been furnished to
the Lender:
(i) A mortgagee's title insurance policy in form and substance
satisfactory to the Lender in its sole and absolute discretion,
issued by a title insurance company or companies satisfactory to
the Lender with such endorsements, reinsurance and/or co-insurance
as the Lender may require, insuring the first priority of the
Lender's valid mortgage lien on the Borrower's fee title to the
Mortgaged Property free from all liens and encumbrances and without
exception for (i) filed or unfiled mechanics' liens, (ii) survey
matters, (iii) rights of parties in possession, (iv) environmental
liens and (v) any other matters of any kind or nature whatsoever
other than the Permitted Encumbrances;
(ii) Such evidence as the Lender may require that the use
contemplated for the Mortgaged Property (i.e., its Primary Intended
Use), and all of the improvements and construction contemplated by
the Project Plans, comply with all applicable Legal Requirements,
to the extent in force and applicable;
(iii) Insurance policies and/or Certificates of Insurance required
pursuant to the terms and provisions of the Mortgage;
(iv) Such evidence as the Lender may require to determine that the
Borrower has with its own funds constructed the Project to a point
of completion from which, in the sole and absolute judgment of the
Lender, the total cost of completion of the Project in all
respects, as and when needed, including all related direct and
indirect costs as previously approved by the Lender, will not
exceed [ DOLLARS ($ )], together with
satisfactory assurance that the Borrower has funds available to
contribute not less than [ DOLLARS ($
)] of equity to the Project;
(v) Such evidence as the Lender may require that the Borrower's
representations and warranties contained herein and in all of the
other Loan Documents are true and correct;
(vi) Such evidence as the Lender may require as to the
satisfaction of such of the terms and conditions of the Commitment
Letter, dated April 18, 1995, by and among the Lender, the Borrower
and the Guarantor, this Agreement and of the other Loan Documents
as may by their nature be satisfied prior to the making of such
advance;
(vii) An updated Survey of the Mortgaged Property and a
certificate substantially in the form of EXHIBIT K (the "Surveyor's
Certificate"), prepared and signed by a surveyor licensed to do
business in the state where the Mortgaged Property is located, with
his or her seal affixed thereto;
(viii) True and correct copies of the Construction Contract, the
Architect's Contract and all major subcontracts in effect with
respect to the Project, as well as all receipted bills paid by the
Borrower to the Contractor and the Architect for the Project prior
to the date of such advance;
(ix) True and correct copies of (i) the Project Budget and
(ii) the Project Plans, each of which shall be in form and content
satisfactory to the Lender (in its sole and absolute discretion);
(x) A certificate from an engineer and/or architect, registered as
such in the state where the Mortgaged Property is located,
substantially in the form attached hereto as EXHIBIT L certifying
as to the (i) compliance of the Mortgaged Property with all
applicable Legal Requirements, (ii) the availability and adequacy
of access/egress to and from the Mortgaged Property and (iii) the
availability and adequacy of sewer, drainage, water, electric and
other utility services to the lot line of the Mortgaged Property;
together with such other assurances concerning the design of the
Project as the Lender may require;
(xi) the Lender's receipt of opinions, in forms satisfactory to
the Lender (in its sole and absolute discretion), from the
Borrower's counsel and the Guarantor's counsel, prepared in
accordance with the requirements set forth in EXHIBIT M
(collectively the "Opinions");
(xii) Payment of the Construction Loan Commitment Fee and the
Permanent Loan Commitment Fee (subject, however, to the provisions
of Article 12 hereof);
(xiii) True and correct copies of all Permits and Contracts
relating to the construction and operation of the Project
(including, without limitation, an unconditional building permit or
a building permit which is subject only to such conditions as will
be fully satisfied by the completion of the construction of the
Project in accordance with the Project Plans and this Agreement);
and
(xiv) Such evidence as the Lender may require that there has been
no material adverse change in the financial condition and strength
of the Borrower or the Guarantor, and that the Mortgaged Property
shall have sustained no impairment, reduction, loss or damage which
has not been fully restored and repaired, and that no condemnation
proceedings or other governmental action is or shall be pending
against or with respect thereto.
B.Without at any time waiving any of the Lender's rights hereunder,
the Lender shall have the right to make the first advance hereunder
without the satisfaction of each and every condition precedent to
the Lender's obligation to make such advance, and the Borrower
agrees to accept such advance as the Lender may elect to make. The
making of any advance hereunder shall not constitute an approval or
acceptance by the Lender of any work on the Project theretofore
completed.
C.Advances against the Note and this Agreement shall be made not
more than once each month and at least ten (10) Business Days
before the date upon which an advance is requested, the Borrower
shall give notice to the Lender, specifying the total advance which
will be desired, accompanied by:
(i) Itemized requisitions for advances signed by the Borrower, the
Architect and the General Contractor on A.I.A. Forms G702, G702A or
G703 or such other form(s) as the Lender may reasonably require
(together with copies of invoices or receipted bills relating to
items covered by such requisitions when so requested by the
Lender). All such requisitions shall include a joint and several
indemnification of the Lender by the Architect, the General
Contractor and the Borrower against any and all claims of any
subcontractors, laborers and suppliers;
(ii) A certificate executed by the Borrower substantially in the
form attached hereto as EXHIBIT N
(iii) A certificate executed by the General Contractor
substantially in the form attached hereto as EXHIBIT O;
(iv) A certificate executed by the Architect substantially in the
form attached hereto as EXHIBIT P.
(v) At the Lender's request, certificates executed by the
Consultants in such form as the Lender may reasonably require;
(vi) An endorsement of the title insurance policy referred to in
Section 5.A.(i) hereof, satisfactory in form and substance to the
Lender, redating the policy to the date that the then current
advance will be made, increasing the coverage afforded by such
policy so that the same shall constitute insurance of the lien of
the Mortgage in an amount equal to the aggregate amount advanced
under this Agreement as of the date that the then current advance
is made available to the Borrower and subject to no additional
exceptions other than the Mortgage, the Assignment of Rents, one of
the Financing Statements and the Permitted Encumbrances;
(vii) If and when requested by the Lender, satisfactory assurance
that the construction of the Project has been performed in
accordance with the requirements of the Construction Contract, the
Project Plans, this Agreement and all of the other Loan Documents
and has been inspected and found satisfactory by the parties
hereto;
(viii) If and when requested by the Lender, an updated Surveyor's
Certificate substantially in the form attached hereto as EXHIBIT K
and/or updated Engineer's/Architect's Certificate substantially in
the form attached hereto as EXHIBIT L;
(ix) If and when requested by the Lender, updated Opinions from
the Borrower's counsel and the Guarantor's counsel (in form and
substance satisfactory to the Lender in its sole and absolute
discretion);
(x) If and when requested by the Lender, satisfactory evidence
that the funds remaining unadvanced under this Agreement, together
with undisbursed equity funds of the Borrower, are sufficient for
the payment of all related direct and indirect costs for the
completion of the Project in accordance with the terms and
provisions hereof. If the evidence furnished shall not be
satisfactory to the Lender, in its sole and absolute discretion, it
shall be a condition to the making of any further advance hereunder
that the Borrower will provide the Lender with such financial
guaranties (whether in the form of a bond, cash deposit, letter of
credit or otherwise) as are acceptable to the Lender, in its sole
and absolute discretion, to assure the completion of the
construction of the Project in accordance with the Project Plans
and the terms and conditions of this Agreement. In the event that
the Lender requires a cash deposit from the Borrower, the Borrower
shall deposit with the Lender such funds, to be held in an interest
bearing account with the interest accruing thereon to the benefit
of the Borrower, which, together with such unadvanced funds of the
Loan, shall be sufficient to pay all of the aforesaid costs. All
funds so deposited with the Lender, along with the proceeds
thereof, shall be disbursed prior to any further advance hereunder;
(xi) A certification of work completed by any major contractor
working on the Project, together with a statement of the payment
due therefor;
(xii) Partial lien waivers from the General Contractor, all other
contractors and all subcontractors and suppliers for all work
theretofore performed;
(xiii) If and when requested, the Borrower shall deliver to the
Lender an updated Survey of the Mortgaged Property, acceptable to
the Lender (in its sole and absolute discretion);
(xiv) Evidence satisfactory to the Lender (in its sole and
absolute discretion) that all materials and other property
furnished by any contractors, subcontractors, materialmen or other
Persons, the cost of which will be paid with the proceeds of the
advance to be made by the Lender, are free and clear of all liens
and encumbrances, except (a) encumbrances, if any, (securing
indebtedness due to Persons whose names, addresses and amounts due
to them are identified to the Lender) that shall be discharged upon
the disbursement of the funds then being requested, (b) the liens
created by the Loan Documents and (c) the Permitted Encumbrances;
and
(xv) Such evidence as the Lender may require that there has been
no material adverse change in the financial condition and strength
of the Borrower or the Guarantor, and that the Mortgaged Property
shall have sustained no impairment, reduction, loss or damage which
has not been fully restored and repaired and that no condemnation
is or shall be pending against or with respect thereto.
The Borrower hereby designates
with authority to approve requisitions and to execute certificates
to be delivered pursuant to Section 5.C.(ii) on behalf of the
Borrower.
D.All advances hereunder shall be made by wire transfer of funds
into a bank account in the Commonwealth of Massachusetts maintained
by either the Borrower or an authorized agent of the Borrower.
E.The following shall be conditions precedent to all advances to be
made against the Note and this Agreement:
(i) Advances hereunder shall be made solely for the payment of the
costs and expenses incurred by the Borrower directly in connection
with the financing and construction of the Project, consistent with
the Project Budget, which are required to be paid out-of-pocket to
all other Persons; except that no advances hereunder may be used to
refund any part of expenditures from the Borrower's own resources
on the Project. No funds advanced by the Lender shall be utilized
for any purpose other than as specified herein and none of the
proceeds of the Loan shall be paid over to officers, stockholders
or employees of the Borrower, if a corporation, or, if the Borrower
is an unincorporated entity, to any of the individuals collectively
constituting the Borrower or those holding a beneficial interest in
the entity, or any employee thereof, except to the extent funds are
used to pay compensation to an employee for and with respect to
activity of such employee in construction of the Project.
(ii) The amount of each requisition shall represent (i) the cost
of the work completed on the Project as of the date of such
requisition, (ii) the cost of all equipment, fixtures and
furnishings included within the Project Budget, but not
incorporated into any contract approved by the Lender, which have
been delivered to the Mortgaged Property for incorporation into the
Project; provided that, in the Lender's judgment, such materials
are suitably stored, secured and insured and that the Borrower can
furnish the Lender with evidence satisfactory to the Lender of the
Borrower's unencumbered title thereto and
(iii) approved soft costs.
(iii) All requisitions shall be subject to a ten percent (10%)
retainage for the completion of the Project. It is understood that
such retainage is intended to provide a contingency fund to assure
that the construction of the Project shall be fully completed in
accordance with the Project Plans and the terms and provisions of
this Agreement. All amounts so withheld shall be disbursed after
(i) construction of the Project has been fully completed in
accordance with the Project Plans and the terms and provisions of
this Agreement, (ii) all of the items set forth in Section 5.F.
hereof have been delivered to the Lender and
(iii) the expiration of the period during which liens may be
perfected with respect to any work performed or labor or materials
supplied in connection with the construction of the Project or the
receipt of such evidence as may be required to assure the Lender
that no claim may thereafter arise with respect to any work
performed or labor or materials supplied in connection with the
construction of the Project.
(iv) At the time of each advance, no event which constitutes, or
which, with notice or lapse of time, or both, could constitute, an
Event of Default shall have occurred and be continuing.
(v) Without at any time waiving any of the Lender's rights under
this Agreement, the Lender shall always have the right to make an
advance hereunder without satisfaction of each and every condition
upon the Lender's obligation to make an advance under this
Agreement, and the Borrower agrees to accept any advance which the
Lender may elect to make under this Agreement. Notwithstanding the
foregoing, the Lender shall have the right, notwithstanding a
waiver relative to the first advance or any subsequent advance
hereunder, to refuse to make any and all subsequent advances under
this Agreement until each and every condition set forth in this
Section has been satisfied. The making of any advance hereunder
shall not constitute an approval or acceptance by the Lender of any
work on the Project theretofore completed.
(vi) If, while this Agreement is in effect, a claim is made that
the Project does not comply with any Legal Requirement or an action
is instituted before any Governmental Authority with jurisdiction
over the Mortgaged Property or the Borrower in which a claim is
made as to whether the Project does so comply, the Lender shall
have the right to defer any advance which the Lender would
otherwise be obligated to make until such time as any such claim is
finally disposed of favorably to the position of the Borrower,
without any obligation on the part of the Lender to make a
determination of, or judgment on, the merits of any such claim.
For the purposes of the foregoing sentence, the term "claim" shall
mean an assertion by any Governmental Authority or Person as to
which, in each case, the Lender has made a good faith determination
that the assertion may properly be made by the party asserting the
same, that the assertion, on its face, is not without foundation
and that the interests of the Lender require that the assertion be
treated as presenting a bona fide risk of liability or adverse
effect on the Project.
If any such proceeding is not favorably resolved within thirty (30)
days after the commencement thereof, the Lender shall also have the
right, at its option, to treat the commencement of such action as
an Event of Default, for which the Lender shall have all rights
herein specified for an Event of Default. As aforesaid, the Lender
shall have no obligation to make a determination with reference to
the merits of any such claim. No waiver of the foregoing right
shall be implied from any forbearance by the Lender in making such
election or any continuation by the Lender in making advances under
the Loan.
In all events, the Borrower agrees to notify the Lender forthwith
upon learning of the assertion of any such claim or the
commencement of any such proceedings.
(vii) It is contemplated that all advances made by the Lender to
the Borrower will be pursuant to this Agreement as amended from
time to time; that the Note will evidence the debt of the Borrower
to the Lender hereunder and that the Mortgage, Assignment of
Leases, Permits Assignment, Assignment of Architect's Contract,
Assignment of Construction Contract, Subordination Agreement,
Guaranty, Pledge Agreement and Financing Statements will secure the
repayment of all advances made hereunder. At the option of the
Lender, the unpaid principal balance of the Note shall not be
reduced to zero unless and until the Lender has no further
obligation to advance funds with respect to the Project.
(viii) No inspections or any approvals of the Project during or
after construction shall constitute a warranty or representation by
the Lender or any of the Consultants as to the technical
sufficiency, adequacy or safety of any structure or any of its
component parts, including, without limitation, any fixtures,
equipment or furnishings, or as to the subsoil conditions or any
other physical condition or feature pertaining to the Mortgaged
Property. All acts, including any failure to act, relating to the
Mortgaged Property by any agent, representative or designee of the
Lender (including, without limitation, the Consultants) are
performed solely for the benefit of the Lender to assure the
payment and performance of the Obligations and are not for the
benefit of the Borrower or the benefit of any other Person.
F.Upon the completion of the construction of the Project in
accordance with the Project Plans and the terms and provisions of
this Agreement, the Borrower shall provide the Lender with (A)
true, correct and complete copies of (i) a final unconditional
Certificate of Occupancy (or its equivalent) issued by the
appropriate governmental authorities, permitting the occupancy and
use of the Project for its Primary Intended Use and (ii) all
health-care Permits issued by the appropriate Governmental
Authorities which are necessary in order to operate the Project as
a fully-licensed nursing/rehabilitation facility, (B) a
certification from the Architect or the Consultants stating that
the Project was completed in accordance with the Project Plans, (C)
an updated Survey of the Mortgaged Property, acceptable to the
Lender (in its sole and absolute discretion), (D) updated Opinions
and (E) such other items relating to the operation and/or
construction of the Project as may be reasonably requested by the
Lender.
6.AGREEMENT TO ASSIGN: Upon the request of the Lender, from time
to time, the Borrower agrees to assign to the Lender (in such forms
as the Lender may reasonably require), as collateral security for
the Borrower's obligations under this Agreement: (A) the Leases,
(B) the Management Agreements, and (C) the Permits and Contracts;
such assignments to provide that the Lender shall not be obligated
thereby to perform any of the Borrower's obligations under any of
the instruments or other items so assigned, unless the Lender
elects so to do, and further to provide that the Lender shall not
exercise the Borrower's rights thereunder until an Event of Default
has occurred under any of the Loan Documents. To the extent that
the Lender determines that the consent or approval of any other
Person is required or advisable in connection with any such
assignment, the Borrower shall provide evidence of such consent or
approval to the Lender in such form as the Lender may require.
7.ADDITIONAL AFFIRMATIVE COVENANTS OF THE BORROWER: The Borrower
hereby covenants and agrees as follows:
A.Maintenance of Existence: If the Borrower is a corporation,
trust or partnership, during the entire time that this Agreement
remains in full force and effect, the Borrower shall keep in effect
its existence and rights as a corporation, trust or partnership
under the laws of the state of its incorporation or formation and
its right to own property and transact business in the state in
which the Mortgaged Property is situated.
B.Participation in Third Party Payor Programs: The Borrower s
all continue its participation in all material Third Party Payor
Programs, in accordance with all requirements thereof (including,
without limitation, all applicable Provider Agreements), in which
the Borrower currently participates and the Borrower shall continue
to remain eligible to participate in all other Third Party Payor
Programs as shall be necessary for the prudent operation of the
Facility in the good faith exercise of commercially reasonable
business judgment.
C.Warranties: All representations and warranties contained in this
Agreement shall constitute continuing representations and
warranties which shall remain true, correct and complete throughout
the Loan Term.
D.Conduct of its Business : The Borrower will maintain, and cause
any Lessee and Manager to maintain, experienced and competent
professional senior management with respect to its business and
with respect to the Mortgaged Property. The Borrower, any Lessee
and any Manager shall conduct, in the ordinary course, the
operation of the Facility and shall not enter into any other
businesses or ventures; provided, however that any Manager may
enter into agreements with other Persons relating to the management
of health care facilities owned or leased by such Persons.
E.Address: The Borrower shall provide the Lender thirty (30) days'
prior written notice of any change of its Principal Place of
Business from its current Principal Place of Business. The
Borrower shall maintain records relating to its business and the
Collateral at no location other than its Principal Place of
Business and at the Mortgaged Property.
F.Insurance: Throughout the term of this Agreement, the Borrower
shall maintain the insurance coverage required by the Lender
pursuant to the terms and provisions of the Mortgage.
G.Compliance With Legal Requirements And Applicable Agreements: At
all times throughout the Loan Term, the Mortgaged Property
(including, without limitation, the Facility) and the Borrower, as
the case may be, shall conform to and comply with (i) all
applicable Legal Requirements, (ii) the provisions of all Permits
and Contracts, (iii) all applicable by-laws, codes, restrictions
and, to the best of the Borrower's knowledge, rules and
regulations, of the Board of Fire Underwriters or other insurance
underwriters or similar body, (iv) the provisions of the Loan
Documents, and (v) the provisions of the Permitted Encumbrances.
H.Priority Of Mortgage: The Mortgaged Property shall at all times
be free from any attachment, encumbrance, lis pendens, mechanic's
or materialmen's lien or notice arising from the furnishing of
materials or labor and, with the exception of the Permitted
Encumbrances, all other liens and encumbrances of any kind, whether
such liens or encumbrances shall be superior to or subordinate to
the Mortgage except with respect to Permitted Financing. The
Borrower shall not permit the recording of any notice of contract
or mechanic's or materialmen's lien relating to the construction of
the Project or otherwise affecting the Mortgaged Property.
Notwithstanding the foregoing provisions of this Subsection 7I, the
existence of an attachment or lis pendens for a period not in
excess of thirty (30) days shall not be deemed to be a default
hereunder provided that (i) there shall be no cessation of
construction of the Project, (ii) an Event of Default has not
occurred under any of the Loan Documents and (iii) the Borrower
shall proceed promptly to cause such attachment or lis pendens to
be removed, but the Lender shall not be obliged to make any further
advance under this Agreement while such attachment or lis pendens
remains outstanding.
J.Commencement of Construction: If construction of the Project has
not already begun, the Borrower shall commence construction of the
Project within thirty (30) days from the date hereof. The Borrower
shall diligently and continuously cause the Project to be
constructed and completed and made ready for occupancy and use in
accordance with the Project Plans all in a manner satisfactory to
the Lender on or before the Completion Date. Notwithstanding
anything to the contrary contained herein, the Borrower shall be
and shall remain unconditionally liable to the Lender for (a) the
complete construction of the Project in accordance with the Project
Plans on or before the Completion Date and whether or not proceeds
of the Loan remaining to be disbursed hereunder, if any, are
sufficient to cover all costs of construction and (b) the complete
performance of all other obligations, covenants, agreements and
liabilities of the Borrower hereunder.
K.Quality of Materials and Workmanship: The materials used in the
Project shall be of the quality called for by the Project Plans,
and the workmanship shall be in conformity with the Construction
Contract and this Agreement, and both the quality of such materials
and such workmanship shall be satisfactory to the Lender. The
Borrower shall not make any changes in, and shall not permit the
General Contractor or the Architect to make any changes in, the
quality of such materials, the Project Plans or the Project Budget,
whether by change order or otherwise, without the prior written
consent of the Lender, in each instance (which consent may be
withheld in the Lender's sole and absolute discretion); provided,
however, that such consent shall not be required for any individual
change (necessitated by job conditions) which has been approved by
the Architect, which does not materially affect the structure or
exterior of the Project, and the cost of which does not exceed TEN
THOUSAND DOLLARS
( 10,000) or which changes, in the aggregate, do not exceed ONE
HUNDRED THOUSAND DOLLARS ($100,000) in cost. Notwithstanding the
foregoing, prior to making any change in Project Plans, copies of
all change orders shall be submitted by the Borrower to the Lender
and the Borrower shall also deliver to the Lender evidence
satisfactory to the Lender, in its reasonable discretion, that all
necessary Permits and/or Contracts required by any Governmental
Authority in connection therewith have been obtained or entered
into, as the case may be.
L.Project Budget: Upon the request of the Lender, the Borrower
shall furnish the Lender with revisions to the Project Budget to
reflect (a) any changes approved by the Lender to the Project
Budget, (b) the total cost of the construction of the Project
completed through any specific date and (c) the remaining cost to
complete the construction of the Project in accordance with the
Project Plans and the terms and provisions of this Agreement.
M.Architect Certificates: The Borrower agrees to cause the
Architect to furnish such statements and certificates as to
progress of completion as the Lender may reasonably require from
time to time during the term of this Agreement, all without expense
to the Lender. The Borrower agrees to cause the Architect to make
the Project Plans available to the Lender without expense to the
Lender, and to agree that, in the event that the Lender shall take
over the Project by reason of an occurrence of an Event of Default,
the Lender shall be entitled to use said Project Plans without any
compensation to the Architect.
N.Subcontractors: Prior to the closing of the Loan contemplated by
this Agreement, the Borrower agrees to provide the Lender with a
list of the major subcontractors working on the Project, including
an identification by trade and the amount of each subcontract. The
Lender reserves the right of reasonable approval of all major
subcontractors. The Borrower further agrees that the Borrower
shall not permit the major subcontractors working on the Project to
change without the Lender's prior written consent, in each
instance, which consent shall not be unreasonably withheld.
O.The Lender's Consultant: The Borrower agrees to pay the costs
and expenses incurred by the Lender to retain the Consultants to
perform various services to the Lender in connection with the Loan,
including, without limitation, the following:
(i) to review and analyze the Project Plans and advise the Lender
whether the same are satisfactory for the intended purposes
thereof;
(ii) to make periodic inspections of the Mortgaged Property for
the purpose of assuring that construction performed in connection
with the Project prior to the date of such inspection has been
completed in accordance with the Project Plans and this Agreement;
(iii) to review the Borrower's and the Guarantor's then current
requisition to determine whether it is consistent with the
obligations of the Borrower under this Agreement, and to advise the
Lender of the anticipated costs of, and the time for, the
completion of the Project in accordance with the Project Plans, and
the adequacy of reserves and contingencies related thereto;
(iv) to review and analyze any proposed changes to the Project
Plans and advise the Lender regarding the same;
(v) to review and analyze the Project Budget and advise the Lender
as to the sufficiency thereof; and
(vi) to review and analyze the Architect's Contract, the
Construction Contract and all subcontracts entered into by the
Borrower or the General Contractor in connection with the
construction of the Project and advise the Lender regarding the
same.
The Borrower agrees promptly to make such changes or corrections in
the construction of the Project as may be required by the Lender,
based on the recommendation of any of the Consultants, unless the
Borrower demonstrates to the Lender's satisfaction that such
corrective work is inconsistent with the Project Plans.
P.The Borrower shall not suffer the use in connection with any
construction relating to the Project of any materials, fixtures or
equipment intended to become part of the Project which are
purchased upon lease or conditional bill of sale or to which the
Borrower does not have absolute and unencumbered title, and the
Borrower covenants to cause to be paid punctually all sums becoming
due for labor, materials, fixtures or equipment used or purchased
in connection with any such construction.
Q.In order more fully to secure the Lender with reference to all
advances made hereunder, the Borrower hereby conveys to the Lender
all of the Borrower's right, title and interest in materials on the
Mortgaged Property which are not at any relevant time incorporated
into the Project and materials, wherever located, intended for
incorporation into the Project. The Borrower agrees:
(i) that the Lender shall have all the rights, with reference to
such security, as a secured party is entitled to hold with
reference to any security interest under the Uniform Commercial
Code, as it is enacted in the State in which the Mortgaged Project
is located;
(ii) that such security interest shall cover cash and non-cash
proceeds of such materials;
(iii) that such materials will not be held for sale to others or
disposed of by the Borrower without the prior written consent of
the Lender and, if at any time located on the Mortgaged Property
shall be suitably stored, secured and insured and furthermore,
shall not be removed from the Mortgaged Property; and
(iv) that such security interest shall be prior to the rights of
any other party.
The undertakings of the Borrower in this Section shall also be
applicable to any personal property owned by the Borrower and used
or to be used in connection with the Project, whether or not the
purchase thereof was financed by advances made by the Lender.
The Borrower agrees to execute such instruments as the Lender may
from time to time request to perfect the security interest of the
Lender in any and all rights under this Agreement, and any and all
property of the Borrower which, under applicable provisions of this
Agreement, may or shall stand as security for advances under this
Agreement.
R.The Borrower, the Plans and Specifications and the Mortgaged
Property and all uses thereof shall comply with (a) all Legal
Requirements, (b) all Permits and Contracts, (c) all applicable by-
laws, codes, rules, regulations and restrictions of the Board of
Fire Underwriters or other insurance underwriters or similar body
and (d) the Loan Documents.
S.The Borrower shall cause to be kept and maintained, and shall
permit the Lender and its representatives to inspect at all
reasonable times, accurate books of accounts in which complete
entries will be made in accordance with GAAP reflecting all
financial transactions of the Borrower (showing, without
limitation, all materials ordered and received and all
disbursements, accounts payable and accounts receivable in
connection with the construction of the Project and the operation
of the Mortgaged Property). Such books and records must accurately
reflect that all funds advanced hereunder for construction of the
Project have been used solely for the payment of obligations and
expenses properly incurred in connection with said construction.
T.The Lender and its representatives including, without limitation,
the Consultants, shall, at all times during the Loan Term, have the
right to enter the Mortgaged Property for the purpose of inspecting
the Mortgaged Property and the progress of the work and materials
thereon, and if any such inspection is not satisfactory to the
Lender (in its sole and absolute discretion), then the Lender shall
not be obligated to make any further advances under this Agreement
to the Borrower.
U.The Borrower shall give to the Lender prompt written notice of
any fire, explosion, accident, flood, storm, earthquake or other
casualty or strike, lock out, act of God or interruption of the
construction of the Project which may interfere with the ability of
the Borrower to complete the Project by the Completion Date.
V.Performance, payment and lien bonds, in form and substance and
guaranteed by sureties satisfactory to the Lender (in its sole and
absolute discretion), shall be furnished to the Lender in
connection with (a) the Construction Contract, (b) all other
construction contracts in excess of ONE HUNDRED THOUSAND DOLLARS (
100,000) and (c) all other construction contracts entered into with
any contractor or subcontractor (or any of their respective
affiliates), the aggregate amounts due under which is equal to or
in excess of ONE HUNDRED THOUSAND DOLLARS ( 100,000); in amounts at
least equivalent to the respective amounts of such contracts,
naming the Lender as a dual obligee, shall be furnished to the
Lender prior to the commencement of any work pursuant to the
applicable contract.
W.The Borrower shall utilize all advances by the Lender pursuant to
the terms of this Agreement only for those items for which
requisitions are permitted under this Agreement or for
reimbursement of expenditures already made for items for which
requisitions are so permitted. The Borrower agrees to hold all
advances by the Lender hereunder as a trust fund for the purpose of
payment of the costs and expenses permitted under this Agreement.
X.During the construction of the Project and upon the request of
the Lender, the Borrower shall erect a sign or add a legend to the
Borrower's signs on the Mortgaged Property (in either case of such
size and style, including such information and in such locations,
as may be reasonably requested by the Lender) identifying the
Lender as the source of the construction loan financing for the
Project. Additionally, subject to the Lender's prior approval, the
Borrower shall include in any public announcement or media release
concerning the development or construction of the Project a
statement that the Lender has provided the construction financing
for the Project.
Y.The Borrower shall not permit any occupancy of the Project (other
than such occupation as is required in connection with the
construction thereof) prior to (a) the substantial completion of
that portion of the Project being occupied and (b) the issuance by
the appropriate Governmental Authorities of a Certificate of
Occupancy (or its equivalent) permitting the occupation of the
Facility for its Primary Intended Use.
8.ADDITIONAL NEGATIVE COVENANTS OF BORROWER: The Borrower
covenants that as long as any of the Loan Documents shall remain in
effect:
A.Restrictions: Except as otherwise provided in the Mortgage, the
Borrower shall not, without the prior written consent of the
Lender, in each instance, which consent may be withheld in the sole
and absolute discretion of the Lender:
(i)convey, assign, hypothecate, transfer, lease (other than the
Leases between Borrower and the Lessees existing as of the date
hereof, as approved by Lender, it being agreed that a customary
form of patient contract will not be considered a lease), dispose
of or encumber, or permit the conveyance, assignment, transfer,
hypothecation, disposal or encumbrance of all or any part of any
legal or beneficial interest in the Mortgaged Property or the
Facility or any of the real estate, personal property or fixtures
included therein or used in connection therewith (including in such
personal property, without limitation, Rents and other contractual
claims) except with respect to Permitted Financing;
(ii) dispose of or delegate any right to manage or receive any of
the Rents in violation of any of the Loan Documents;
(iii) (a) collect funds as consideration or deposit for the
occupancy or leasing of any portion of the Mortgaged Property or
collect any of the Rents in excess of one month's Rent, without
forthwith depositing the same with the Lender in a special account
or (b) withdraw or disburse any such funds;
(iv)permit the use of the Mortgaged Property or the Facility for
any purpose other than the Primary Intended Use or to suffer any
occupancy of the Facility (other than such occupation as is
required in connection with the construction thereof) prior to (a)
the substantial completion of that portion of the Facility being
occupied and (b) the issuance by the appropriate governmental
authorities of a Certificate of Occupancy (or its equivalent)
permitting occupation of the Facility for its Primary Intended Use;
(v)repay sums borrowed (from anyone other than the Lender) for the
purpose of financing the cost of the construction and/or operation
of the Facility or the cost of any other undertaking of the
Borrower (including, without limitation, the prepayment of long-
term debt or any other costs and expenses not within the ordinary
course of the Borrower's business), but nothing herein contained
shall restrict the payment of debts, costs and expenses arising
from the ordinary course of the Borrower's business or interest in
connection with any borrowings which may otherwise be allowed
hereunder or under any of the other Loan Documents, in accordance
with the applicable terms of such borrowings, so long as an Event
of Default has not occurred hereunder; or
(vi)liquidate or dissolve or merge or consolidate with any other
Person or, except in the ordinary course of business, sell, convey,
assign, hypothecate, lease or otherwise transfer (whether in one
transaction or in a series of transactions) any material asset
(whether now owned or hereafter acquired). As used in this clause,
an asset shall be deemed material if the fair market value thereof
equals or exceeds FIVE HUNDRED THOUSAND DOLLARS
( 500,000).
B.Agreement Not Assignable: The Borrower shall not suffer any
attachment, whether by trustee process or otherwise, to be made or
attempted against the Borrower's interest in, to or under this
Agreement or any of the other Loan Documents or in or to any
payment, advance or other sums hereunder or thereunder, and shall
not, without the prior written consent of the Lender (in each
instance, which consent may be withheld in the Lender's sole and
absolute discretion), assign or transfer any of the same, or any
interest therein. Any such assignment or transfer made without the
Lender's consent shall be void and of no force or effect.
C.ERISA: The Borrower shall not establish or permit any Lessee to
establish any new pension or defined benefit plan or modify any
such existing plan for employees subject to ERISA, which plan
provides any benefits based on past service without the advance
consent of the Lender to the amount of the aggregate past service
liability thereby created.
D.Forgiveness of Indebtedness: The Borrower will not waive, or
permit any Lessee which is an Affiliate to waive, any debt or
claim, except in the ordinary course of its business.
E. Relocation of Books and Records: The Borrower shall not remove
from either the Mortgaged Property or its Principal Place of
Business any books or records relating to any Collateral until
after receipt of a certificate from the Lender, signed by an
officer thereof, stating that the Lender has, to its satisfaction,
obtained all documentation that it deems necessary or desirable to
obtain, maintain, perfect and confirm the first priority security
interests granted in the Loan Documents.
F.Relocation of Principal Place of Business: The Borrower shall
not relocate its Principal Place of Business until after receipt of
a certificate from the Lender, signed by an officer thereof,
stating that the Lender has, to its satisfaction, obtained all
documentation from the Borrower that the Lender deems necessary or
desirable to obtain, maintain, perfect and confirm the first
priority security interests granted in the Loan Documents.
G.Value of Assets: Except as disclosed in the financial statements
provided to the Lender as of the date hereof, the Borrower will not
write up (by creating an appraisal surplus or otherwise) the value
of any assets of the Borrower above its cost to the Borrower, less
the depreciation regularly allowable thereon.
H.Changes in Fiscal Year and Accounting Procedures: The Borrower
shall not, without the prior written consent of the Lender, in each
instance, which consent may be withheld in the Lender's sole and
absolute discretion (i) change its fiscal year or capital structure
or (ii) change, alter, amend or in any manner modify any of its
current accounting procedures related to the method of revenue
recognition, billing procedures or determinations of doubtful
accounts or bad debt expenses nor will the Borrower permit any of
its Subsidiaries to change its fiscal year or suffer or permit any
circumstance to exist in which any Subsidiary is not wholly-owned,
directly or indirectly, by the Borrower. Notwithstanding the
foregoing, the Lender agrees to consent to any change in the
Borrower's fiscal year, provided that (1) the Borrower shall have
requested such consent not less than thirty (30) days prior to the
proposed effective date of such change and shall have promptly
furnished to the Lender all such financial information as the
Lender may have reasonably requested in order to determine the
impact of such change on the Borrower's financial statements, (2)
no such change shall be permitted if its effect would be to enable
the Borrower to satisfy any covenant contained in this Agreement
which, absent such change, would not have been satisfied and (3)
the Borrower shall have entered into any amendment to this
Agreement which the Lender shall have reasonably requested in order
to maintain the intended effect of the covenants contained in this
Agreement.
9.LENDER'S RIGHT TO MAKE PAYMENTS AND TAKE OTHER ACTION: The Lender
may, after five (5) business days' prior written notice to the
Borrower of its intention so to do (except in an emergency when
such shorter notice shall be given as is reasonable under the
circumstances), pay any sums due or claimed to be due for labor or
materials furnished in connection with the ownership, construction,
development, maintenance, management, repair, use or operation of
the Mortgaged Property and any other sums which in the reasonable
opinion of the Lender, or its attorneys, it is expedient to pay,
and may take such other and further action as it may deem advisable
in order to secure (A) the protection and priority of the security
interests granted to the Lender pursuant to the Loan Documents and
(B) the performance of all obligations under the Loan Documents.
The Borrower agrees to repay to the Lender all such amounts not
charged against advances due hereunder, notwithstanding that the
aggregate indebtedness of the Borrower to the Lender hereunder may
exceed the aggregate amount which the Lender is obligated to
advance hereunder. Any amount expended by the Lender pursuant to
the provisions of this Section and all costs and expenses incurred
in connection therewith (including, without limitation, attorneys'
fees and expenses), with interest thereon at the Advances Rate
shall be a demand obligation of the Borrower and, to the maximum
extent permitted by law, shall be added to the Mortgaged
Indebtedness and secured by the liens of the Mortgage and the other
Loan Documents, as fully and effectively as every other obligation
of the Borrower thereunder and hereunder.
10.EVENTS OF DEFAULT: Each of the following shall constitute an
"Event of Default" hereunder and shall entitle the Lender to
exercise its remedies hereunder and under any of the other Loan
Documents:
A.any failure of the Borrower to pay any amount due under or with
respect to this Agreement within five (5) days following written
notice that such payment was due (provided, however, that there
shall be no such grace period if the Borrower has received notice
of default for failure to make any payments hereunder more than
twice in any twelve (12) month period);
B.any failure in the observance or performance of any other term,
condition, obligation, covenant, promise or agreement provided
herein, other than the payment of any monetary obligation or the
performance of the obligations specified in subsections (C) through
(H) below (hereinafter referred to as a "Failure to Perform"),
continuing for thirty (30) days after notice thereof, except as to
matters not susceptible to cure within thirty (30) days, provided
that with respect to such matters, (a) the Borrower commences the
cure thereof within thirty (30) days after such notice, (b) the
Borrower continuously and expeditiously prosecutes such cure to
completion, (c) such cure is completed within ninety (90) days
after such notice and (d) such Failure to Perform does not impair
the Lender's rights with respect to the Mortgaged Property or
otherwise impair or decrease the value of the security evidenced by
the Loan Documents;
C.the occurrence of any default beyond the applicable notice or
grace period, if any, under the Note, the Mortgage or any of the
other Loan Documents;
D.if a default occurs in connection with the payment or performance
of any other obligations of the Borrower with respect to the
Facility and continues for a period of thirty (30) days after the
Lender sends notice thereof, or for any shorter period if
continuation of such default for such shorter period shall involve
or result in the taking of possession of the Facility or any part
thereof by any creditor or obligee of the Borrower or shall involve
or result in the assertion of any other remedy by such creditor or
obligee, which default, in the Lender's opinion, may impair the
Borrower's ability punctually to perform all of its obligations
under this Agreement or may threaten the Lender's security;
E.the occurrence of a default or breach of condition continuing
beyond the expiration of any applicable grace period under the
terms of any other agreement, document or instrument (including,
without limitation, all leases and loan documents) evidencing any
indebtedness, covenant, liability, obligation or undertaking due
to, or made for the benefit of, the Lender (and/or any of its
Affiliates) by (i) the Borrower, (ii) any Affiliate of the
Borrower, (iii) any endorser, surety or guarantor of the Note, (iv)
any Affiliate of any such endorser, surety or guarantor and/or (v)
any entity owned, legally or beneficially, by the Borrower or any
such endorser, surety or guarantor, whether such indebtedness,
covenants, liabilities, obligations or undertakings are direct or
indirect, absolute or contingent, liquidated or unliquidated, due
or to become due, point, several or joint and several, primary or
secondary, now existing or hereafter arising, excepting any such
indebtedness, covenant, liability, obligation or undertaking
arising in connection with a loan or lease transaction which
includes provisions for shared appreciation.
F.if any representation or warranty made by or for the Borrower
herein or in any statement heretofore or hereafter furnished to the
Lender by or on behalf of the Borrower shall prove to have been
false in any material respect when made or furnished.;
G.INTENTIONALLY OMITTED;
H.except as a result of damage, destruction or a complete or
partial condemnation or taking of the Mortgaged Property, if the
Borrower ceases or allows the cessation of operations of the
Facility, for a period in excess of thirty (30) days (referred to
herein as a "Failure to Operate").
I.if a suspension of any work in connection with the construction
of the Project occurs for a period in excess of ten (10) Business
Days, irrespective of the cause thereof, provided that the Borrower
shall not be deemed to be in default under this Subsection if such
suspension is for circumstances not reasonably within its control,
but only if the Lender, in its sole and absolute discretion, shall
determine that such suspension shall not create any risk that the
construction of the Project will not be completed (in accordance
with the Plans and Specifications and the terms and conditions of
this Agreement) on or before the Completion Date;
J.if construction of the Project shall not be completed in
accordance with the Project Plans and this Agreement on or before
the Completion Date;
11.LENDER'S REMEDIES IN EVENT OF DEFAULT: The Lender may at any
time or times, after the occurrence of an Event of Default, declare
the entire outstanding balance, together with all interest
(including, without limitation, Additional Interest) to be
immediately due and payable, whereupon the same, together with all
Late Payment Charges and any and all costs, charges and other
amounts payable by the Borrower to the Lender under the Loan
Documents shall become due and payable, and upon such acceleration,
all amounts due hereunder shall bear interest at the Advances Rate.
All materials at that time on or near the Mortgaged Property which
are the property of the Borrower and which are to be used in
connection with the completion of the Project shall become the
property of the Lender, without payment therefor and the Lender is
authorized to charge all money expended for said completion against
any payments hereunder and under the Note which have not already
been advanced; and the Borrower agrees to pay the Lender all sums
expended in good faith by the Lender in connection with the
completion of the Project, even if the same shall be more than the
amount agreed to be advanced hereunder and under the Note, and, in
addition thereto, the Borrower agrees to pay to the Lender for
services in connection with said completion such additional sums as
shall reasonably compensate the Lender for the time and effort the
Lender and its employees shall have expended in connection
therewith. The Lender is authorized, but not obligated in any
event, to do all such things in connection with the operation of
the Facility as the Lender, in its sole and absolute discretion,
may deem advisable, including, without limitation, the right to
make any payments with respect to any obligation of the Borrower to
the Lender or to any other Person in connection with the completion
of construction of the Project and the operation of the Facility,
to make additions and changes in the Project Plans, to employ
contractors, subcontractors and agents and to take any and all such
action, either in the Lender's own name or in the name of the
Borrower, and the Borrower hereby grants the Lender an irrevocable
power of attorney to act in its name in connection with the
foregoing. This power of attorney, being coupled with an interest,
shall be irrevocable until all of the obligations of the Borrower
hereunder or under any of the other Loan Documents are fully paid
and performed and shall not be affected by any disability or
incapacity which the Borrower may suffer and shall survive the
same. The power of attorney conferred on the Lender by the
provisions of this Section 11 is provided solely to protect the
interests of the Lender and shall not impose any duty on the Lender
to exercise any such power and neither the Lender nor such
attorney-in-fact shall be liable for any act, omission, error in
judgment or mistake of law, except as the same may result from its
gross negligence or wilful misconduct. In the event that the
Lender takes possession of the Mortgaged Property and assumes
control of the Project and/or the Facility as aforesaid, it shall
not be obligated to continue the operation of the Facility for any
period of time longer than the Lender shall see fit (in its sole
and absolute discretion), and the Lender may thereafter, at any
time, abandon its efforts and refuse to make further payments for
the account of the Borrower, whether or not the Project has been
completed. For the purposes of determining Additional Interest
upon the occurrence of an Event of Default for a Failure to
Operate, it shall be deemed that the Additional Interest for such
period where operations of the Facility had ceased would be equal
to the highest annualized rate that Additional Interest accrued
during the five (5) preceding calendar years or such shorter period
of time as this Agreement is in force and effect.
Notwithstanding anything contained herein to the contrary, upon the
occurrence of a default under Section 10.E, the Lender shall have
the option of declaring the entire outstanding principal balance,
together with all interest (including, without limitation,
Additional Interest) to be due and payable, whereupon the same,
together with the Prepayment Fee, all Late Payment Charges and any
and all costs, charges and other amounts payable by the Borrower to
the Lender under the Loan Documents shall become due and payable.
If such option is exercised by the Lender (hereinafter referred to
as the "Exercise Notice") and there shall be no other events of
default under the Loan Documents at such time, then the Borrower
shall have the right to repay the outstanding principal balance,
together with all such interest, Additional Interest, Late Payment
Charges and all such other costs, charges and other amounts payable
under the Loan Documents within one hundred twenty (120) days after
such Exercise Notice (hereinafter referred to as the "Refinancing
Period") without a Prepayment Fee; provided, that the Borrower (A)
notifies the Lender in writing of the Borrower's intent to so repay
within twenty (20) days after the date of the Exercise Notice
(hereinafter referred to as the "Borrower's Refinancing Notice"),
(B) promptly thereafter and at all times during the Refinancing
Period the Borrower shall diligently and in good faith attempt to
locate, negotiate and close on substitute financing and (C) at all
times thereafter there shall be no other events of default under
the Loan Documents other than an Event of Default under Section
10.E of this Agreement. If (A) the Borrower fails to notify the
Lender within such twenty (20) days, or (B) the Borrower shall fail
to promptly, and at all times during the Refinancing Period, to
diligently and in good faith attempt to locate, negotiate and close
on substitute financing, or (C) an Event of Default shall occur
under the Loan Documents other than an Event of Default under
Section 10.E of this Agreement, or (D) if such outstanding
principal balance, interest and all such other costs, charges and
amounts payable by the Borrower under the Loan Documents are not
repaid prior to the expiration of the Refinancing Period, the
Lender shall be entitled to a Prepayment Fee in addition to all
other rights and remedies for an event of default under the Loan
Documents, at law or in equity. In addition, notwithstanding the
Borrower's Refinancing Notice, the Borrower acknowledges and agrees
that the Lender, at the Lender's option, shall have the right to
proceed with all of the Lender's rights and remedies for an Event
of Default under the Loan Documents, at law or in equity, but shall
not consummate the same until the expiration of the Refinancing
Period; provided, that at all times during the Refinancing Period
the Borrower is honoring the foregoing terms and conditions to this
paragraph.
12.LOAN FEES: The Borrower shall pay to the Lender (a) the
Construction Loan Commitment Fee and the Permanent Loan Commitment
Fee simultaneously with the execution of this Agreement; provided,
however, that, at the Lender's option, such commitment fees shall
be held in an escrow account established with a Person designated
by the Lender pursuant to an escrow arrangement satisfactory to the
Lender, with interest thereon benefiting the Lender. The Permanent
Loan Commitment Fee and the Construction Loan Commitment Fee shall
be disbursed from said escrow account only upon the joint
instructions of the Borrower and the Lender (which instructions
from the Borrower shall be immediately given upon the request of
the Lender) and in no event shall the Permanent Loan Commitment Fee
and the Construction Loan Commitment Fee be disbursed therefrom, in
whole or in part, unless and until so requested by the Lender.
13.FINANCIAL COVENANTS: So long as the Note, this Agreement, the
Mortgage and any of the other Loan Documents may remain in effect:
A.the Borrower shall not create, incur, assume or suffer to exist
any liability for borrowed money except (i) indebtedness to the
Lender under the Loan Documents, (ii) fully subordinated debt to
Affiliates of the Borrower incurred in the ordinary course of
business, (iii) normal trade debt incurred in the ordinary course
of business, (iv) working capital loans, in an amount to be
approved by the Lender used exclusively for the operation of the
Facility, and (v) purchase money indebtedness (including
capitalized equipment leases) for equipment to be used exclusively
at the Facility, provided that with respect to each equipment lease
or purchase money financing agreement the Borrower shall have
obtained from the relevant equipment financer or lessor an
agreement to the effect that (A) the Lender shall be given notice
of and an opportunity (but will have no obligation) to cure each
default by the Borrower under such equipment lease or equipment
financing agreement and (B) in the event that the Lender or its
designee takes possession of the Facility, the Lender will have the
right (but not the obligation) to assume such equipment lease or
equipment financing agreement;
B.the Borrower shall not assume, guarantee, endorse, contingently
agree to purchase or otherwise become liable upon the obligation of
any Person, except by the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary
course of business;
C.the Facility shall maintain in the aggregate for each fiscal
quarter a Debt Coverage Ratio equal to or greater than 1.3 to 1;
D.Life Care Centers of America, Inc. shall maintain a Tangible Net
Worth of TWENTY MILLION DOLLARS ( 20,000,000); and
E.Life Care Centers of America, Inc. shall maintain at all times a
ratio of Consolidated Current Assets to Consolidated Current
Liabilities equal to or greater than 1.1 to 1.
14.MISCELLANEOUS:
A.No suit at law or in equity shall be brought by the Borrower for
any alleged breach of the terms of this Agreement unless notice in
writing, particularly describing said alleged breach, shall have
been given to the Lender and the Lender shall have failed to
commence to cure such breach within thirty (30) days after such
written notice. In no event shall the liability of the Lender to
the Borrower for any breach hereof by the Lender exceed a sum equal
to the amount which the Lender may have failed to advance in breach
of this Agreement, together with interest thereon at the rate
payable by the Borrower under the Note computed from the due date
for the payment of such amount to the earlier of the date on which
this Agreement is to be fully performed by the Borrower or the date
on which such payment is made by the Lender, which sum when paid
shall be deemed an advance under the Note.
B.Absent manifest error, all decisions and determinations of the
Lender made in good faith on any question of fact or expediency
hereunder or under any of the other Loan Documents shall be deemed
to be prima facie correct as to the Borrower and every other Person
who is a party to any of the Loan Documents.
15.FURTHER ASSURANCES: At any time and from time to time, upon
request by the Lender, the Borrower shall promptly make, execute
and deliver, or cause to be made, executed and delivered, to the
Lender and, where appropriate, cause to be recorded and/or filed
(and from time to time thereafter to be re-recorded and/or refiled)
at such time and in such offices and places as shall be deemed
desirable by the Lender (in its sole and absolute discretion), any
and all such other and further amendments, assignments, instruments
of further assurance, certificates and other documents as the
Lender may, in its sole and absolute discretion, deem desirable
(but which shall not create any further or additional obligation
for the Borrower) to (A) enable the Lender to negotiate the Note
and to assign the Loan Documents, and/or (B) effectuate, complete,
or perfect, or to continue and preserve the obligations of the
Borrower under the Note, the Mortgage, this Agreement and any of
the other Loan Documents. Any failure by the Borrower to comply
with any request pursuant to this Section 15 within twenty (20)
days after such request is made by the Lender, shall be an Event of
Default hereunder and upon such Event of Default, the Lender may
make, execute, record, file, re-record and/or refile any and all
such amendments, assignments, instruments, certificates, and
documents for and in the name of the Borrower, and the Borrower
hereby appoints the Lender as the Borrower's attorney-in-fact, with
full power of substitution, to take such actions (on behalf of and
in the name of the Borrower) as the Lender, in its sole and
absolute discretion, may deem necessary or desirable to effectuate
the intent of this Section 15. This power of attorney, being
coupled with an interest, shall be irrevocable until all of the
Mortgaged Indebtedness is fully paid and performed and shall not be
affected by any disability or incapacity which the Borrower may
suffer and shall survive the same. The power of attorney conferred
on the Lender by the provisions of this Section 15 is provided
solely to protect the interests of the Lender and shall not impose
any duty on the Lender to exercise any such power and neither the
Lender nor such attorney-in-fact shall be liable for any act,
omission, error in judgment or mistake of law, except as the same
may result from its gross negligence or wilful misconduct.
16.MANAGEMENT AGREEMENT: The Borrower hereby represents and
warrants that there is no Management Agreement in force and effect
as of the date hereof, except as previously approved in writing by
the Lender. Throughout the term of this Agreement, neither the
Borrower nor any Lessee shall enter into any Management Agreement
without the prior written consent of the Lender, in each instance,
which consent may be withheld in the Lender's sole and absolute
discretion. There shall be no one or more sales, pledges or other
transfers of an aggregate of twenty-five percent (25) or more of
the capital stock, partnership interest or any other equity
interest of any class of a manager (or any of its Affiliates) under
any Management Agreement without the prior written consent of the
Lender, in each instance, which consent may be withheld in the
Lender's sole and absolute discretion. Every Management Agreement
must be in writing and must provide that all fees payable
thereunder are and shall be subordinated to the Mortgaged
Indebtedness or in lieu thereof, the Borrower shall cause the
manager to execute and deliver to the Lender a separate
subordination instrument. The Borrower and/or any Lessee shall, at
their sole cost and expense, promptly and fully perform or cause to
be performed every covenant, condition, promise and obligation of
the owner of the Mortgaged Property or such Lessee under any
Management Agreement. The Borrower shall deliver or cause to be
delivered to the Lender a true and correct copy of each Management
Agreement within ten (10) days after the execution thereof. The
Borrower and/or any Lessee shall not cancel, transfer, amend or
assign any Management Agreement and/or consent to the cancellation,
transfer, amendment or assignment of any Management Agreement by
any party thereto, without the prior written consent of the Lender,
in each instance, which consent may be withheld in the Lender's
sole and absolute discretion.
The Borrower and/or any Lessee shall furnish to the Lender, within
three (3) days after receipt thereof, or after the mailing or
service thereof by the Borrower and/or any Lessee, as the case may
be, a copy of each notice of default which the Borrower and/or any
Lessee shall give to, or receive from any Person, based upon the
occurrence, or alleged occurrence, of any default or defaults in
the performance of any covenant, condition, promise or obligation
under any Management Agreement.
Whenever and as often as the Borrower and/or any Lessee shall fail
to perform, promptly and fully, at their sole cost and expense, any
covenant, condition, promise or obligation on the part of the owner
of the Mortgaged Property and/or a Lessee thereof under and
pursuant to any Management Agreement, the Lender, or a lawfully
appointed receiver of the Mortgaged Property, may, at their
respective options (and without any obligation to do so), enter
upon the Mortgaged Property and perform, or cause to be performed,
such work, labor, services, acts or things, and take such other
steps and do such other acts as they may deem advisable, to cure
such defaulted covenant, condition, promise or obligation, and any
amount so paid or advanced by the Lender and/or such receiver and
all costs and expense incurred in connection therewith (including,
without limitation, attorneys' fees and expenses and court costs),
with interest thereon at the Advances Rate, shall be a demand
obligation of the Borrower to the Lender and/or such receiver, and,
to the extent permitted by law, shall be added to the Mortgaged
Indebtedness and shall be secured by the lien of the Deeds of Trust
and the other Loan Documents as fully and effectively and with same
priority as every other obligation thereunder and hereunder.
Without limiting the foregoing, all of the following payments,
payable by the Borrower or any Lessee to (A) the Guarantor (or any
of its Affiliates) or (B) any Affiliate of the Borrower and/or any
Lessee, shall be subordinated to the Mortgaged Indebtedness: (i)
management fees and all other fees of every kind and nature for
services provided in connection with the operation of the Facility,
including, without limitation, all allocations of any so-called
corporate or central office costs, expenses and charges of any kind
or nature and (ii) payments in connection with any loan or other
extension of credit. Notwithstanding anything to the contrary
contained herein, the Borrower shall not be prohibited from making
any of the foregoing payments contained in this paragraph except if
at the time any such payments are due or made an Event of Default
shall exist under this Agreement or any of the Loan Documents or if
the actual payment by the Borrower to any such Lessee, Guarantor or
Affiliates would impair the Borrower's ability to honor its
obligations, or cause an Event of Default, under this Agreement or
any of the Loan Documents.
17.FINANCIAL STATEMENTS AND OTHER INFORMATION: The Borrower shall
furnish and/or shall cause to be furnished to the Lender the
following statements, information and other materials:
A.within one hundred twenty (120) days after the end of each of
their fiscal years, (i) a copy of the Financial Statements for the
Borrower and the Guarantor for the preceding fiscal year, certified
and audited by independent certified public accountants acceptable
to the Lender and certified as true and correct by the Borrower and
the Guarantor, as the case may be (and, without limiting anything
else contained herein, the Financial Statements for the Borrower
shall contain a detailed balance sheet for the Mortgaged Property
as of the last day of such fiscal year and a statement of earnings
from the Mortgaged Property for such fiscal year showing, among
other things, all rents and other income therefrom and all expenses
paid or incurred in connection with the operation of the Mortgaged
Property), (ii) a copy of the Financial Statements for each of the
partners [shareholders] of the Borrower for the preceding year,
certified as true and correct by such partners [shareholders], and
(iii) statements certified as true and correct by the Borrower, the
Guarantor such partners [shareholders] and each such endorser,
surety or guarantor stating that, to the best of the signer's
knowledge and belief after making due inquiry, the Borrower, such
partners, such Lessee and such Guarantor, as the case may be, is
not in default in the performance or observance of any of the terms
of any Lease, the Note, the Mortgage, the Guaranty, this Loan
Agreement or any of the other Loan Documents or, if the Borrower,
each of its partners or such Guarantor, as the case may be, shall
be so in default to its knowledge, specifying all such defaults,
the nature thereof and the steps being taken to immediately remedy
the same;
B.Upon construction of the Project and within ninety (90) days
after the end of each fiscal year of the Borrower, a statement
certified as true and correct by the Borrower, setting forth all
Leases of the Mortgaged Property as of the last day of such fiscal
year, the respective areas demised thereunder, the names of the
Lessees thereunder, the respective expiration dates of the Leases,
the respective rentals provided for therein, and such other
information pertaining to the Leases as may be reasonable requested
by the Lender;
C.upon construction of the Project and within forty-five (45) days
after the end of each calendar month thereafter, an income and
expense report for the Facility which shall include an unaudited,
but detailed, operating and income statement, occupancy statistics
(including the actual number of patients, the number of beds
available and total patient days for such month) and patient mix
breakdowns for each patient day during such month (classifying
patients by the type of care required and source of payment);
D.within forty-five (45) days after the end of each calendar month,
unaudited Consolidated Financials for the Borrower compiled on a
monthly and year-to-date basis;
E.upon construction of the Project and at least thirty (30) days
prior to the end of the fiscal year for the Facility thereafter,
the Borrower, any such Lessee and any manager under any Management
Agreement shall submit a proposed annual budget for the Facility
for the next fiscal year;
F.intentionally deleted;
G.upon the issuance or execution thereof, as the case may be, true
and complete copies of all Permits and Contracts;
H.upon receipt thereof, true and complete copies of any notices,
orders, consents and/or statements of any kind or nature relating
to any of the Permits and Contracts, which may have a material
adverse effect on the Facility;
I.upon receipt thereof, true and complete copies of all surveys,
examinations, inspections, compliance certificates, permits,
licenses, qualifications, accreditations and other reports,
approvals, consents, statements and notices of any kind issued to
the Borrower and/or any Lessee by any governmental agency or
authority having jurisdiction over the construction, accreditation,
regulation, rate setting, licensing or operation of the Facility,
which may have a material adverse effect on the Facility;
J.upon execution thereof, true and complete copies of all provider
agreements and reimbursement contracts material to the operation of
the Facility;
K.upon completion and/or filing thereof, complete copies of all
applications, notices, statements, annual reports, cost reports and
other reports and/or filings of any kind provided by the Borrower
and/or any Lessee to any governmental agency or authority having
jurisdiction over any of the accreditation, regulation, rate
setting, licensing or operation of the Facility;
L.upon receipt thereof, complete copies of any notices received by
the Borrower and/or any Lessee from any federal, state, municipal
or other governmental authority pursuant to any of the
Environmental Laws or in connection with any other Legal
Requirements, including, without limitation, any notices pertaining
to any delinquency in or proposed revision of, the Borrower's
obligations under the terms and conditions of any Permits and
Contracts now or hereafter issued by or entered into with any
governmental authorities having or claiming jurisdiction over the
construction or operation of the Facility, which may have a
material adverse effect on the Facility;
M.upon the completion and/or filing, mailing or other delivery
thereof, complete copies of all financial statements, reports,
notices and proxy statements, if any, sent by the Borrower to its
shareholders and of all reports, if any, filed by the Borrower with
any securities exchange or with the Securities Exchange Commission;
N.with reasonable promptness, such other information as the Lender
may reasonably request from time to time respecting (i) the
financial condition and affairs of the Borrower, the Guarantor,
each Lessee and/or each endorser, surety and guarantor of the Note
and (ii) the licensing of the operation of the Facility; including,
without limitation, audited Financial Statements, certificates and
consents from accountants and any other financial and
licensing/operational information as may be required or requested
by any governmental authority; and
O.with reasonable promptness, such information as the Lender may
request relating to subcontractors and materialmen.
Any certificate to be provided to the Lender by the Borrower, the
Guarantor any Lessee and such endorsers, sureties and guarantors of
the Note shall be signed by any executive officer of the Borrower,
the Guarantor any Lessee or any such endorser, surety or guarantor,
as the case may be, in the event that any of the foregoing is not
an individual.
The Lender shall make good faith efforts not to disclose any
information received pursuant to this Section provided that the
Borrower has identified the same as confidential or proprietary
prior to the delivery of such information to the Lender, and,
provided further, that the Lender shall have the unconditional
right to disclose, as necessary and subject to any limitations
imposed by federal or state laws and regulations, any such
information in the event the Lender sells, transfers, conveys,
participates, assigns or forecloses any of the Loan Documents.
Without limiting the foregoing, the Lender may also utilize any
information furnished to it pursuant to this Section 20 as and to
the extent counsel to the Lender determines that such utilization
is necessary pursuant to 15 U.S.C. 77a-77aa or 15 U.S.C. 78a-78jj
and the rules and regulations promulgated thereunder, and/or if
required or requested by any governmental authority.
Notwithstanding anything contained herein to the contrary, the
Lender shall make a good faith effort to notify the Borrower
(orally or in writing) of any disclosure of such information, as
permitted herein, prior to such disclosure.
18.REMEDIES CUMULATIVE; NO WAIVERS: The rights and remedies set
forth in this Agreement are in addition to all other rights and
remedies afforded to the Lender under any of the other Loan
Documents or at law or in equity, by statute or otherwise, all of
which are hereby reserved by the Lender, and this Agreement is made
and accepted without prejudice to any such rights and remedies.
The exercise by the Lender of any of the rights and remedies
granted to it in this Agreement shall not be considered a waiver of
any default arising hereunder or under the Note or any of the other
Loan Documents. All of the rights and remedies of the Lender under
the Note, the Mortgage, this Agreement and all of the other Loan
Documents shall be separate and cumulative and may be exercised
concurrently or successively in the Lender's sole and absolute
discretion. The exercise of any right and/or remedy by the Lender
hereunder shall not be considered to be a waiver of any of the
Lender's other rights or remedies hereunder or under the Note, the
Mortgage or any of the other Loan Documents. No failure or delay
on the part of the Lender to exercise any such right or remedy
shall operate as a waiver thereof.
Any failure or delay by the Lender to insist upon the strict
performance of or compliance with of any of the terms, conditions,
covenants or provisions hereof shall not be deemed to be a waiver
of any of the terms, conditions, covenants and provisions hereof,
and the Lender, notwithstanding any such failure or delay, shall
have the right thereafter to insist upon the strict performance of
or compliance with any and all of the terms, conditions, covenants
and provisions hereof. No waiver at any time of any of the terms,
conditions, covenants or provisions of this Agreement shall be
construed as a waiver of any other term, condition, covenant or
provision of this Agreement, nor shall such a waiver in any one
instance or circumstance be construed as a waiver of the same term,
condition, covenant or provision in any subsequent instance or
circumstance. The Lender shall not, by any act, delay, omission or
otherwise, be deemed to have waived any of its rights and/or
remedies hereunder or under any of the other Loan Documents unless
such waiver is in writing and signed by the Lender, and then, only
to the extent specifically set forth therein.
Whether or not for consideration paid or payable to the Lender and,
except as may otherwise be specifically agreed to by the Lender, no
forbearance on the part of the Lender or extension of the time for
the payment of the whole or any part of the Mortgaged Indebtedness
or other indulgence given by the Lender to the Borrower or any
other Person, shall operate to release or in any manner affect the
original liability of the Borrower or such other Persons, or the
priority of the Mortgage or to limit, prejudice or impair any right
of the Lender, including, without limitation, the right to realize
upon the security, or any part thereof, for any of the obligations
evidenced and/or secured by the Loan Documents, notice of any such
extension, forbearance or indulgence being hereby waived by the
Borrower and all those claiming by, through or under the Borrower.
19.USURY: In the event that fulfillment of any provision of any of
the Loan Documents, at the time performance of such provision shall
be due and as a result of any circumstance, shall involve
transcending the limit of validity presently or hereinafter
prescribed by any applicable usury statute or any other law, with
regard to obligations of like character and amount, then ipso facto
the obligation to be fulfilled shall be reduced to the limit of
such validity, so that in no event shall any exaction be possible
under any of the Loan Documents that is in excess of the limit of
such validity. In no event shall the Borrower be bound to pay for
the use, forbearance or detention of the money loaned pursuant
hereto, interest of more than the maximum rate, if any, permitted
by law to be charged by the Lender; the right to demand any such
excess being hereby expressly waived by the Lender.
20.PARTICIPANTS: The Lender reserves the right from time to time
during the Loan Term, to (A) enter into participation arrangements
with respect to the Loan or (B) assign, directly or as collateral,
all or any portion of the obligations evidenced and/or secured by
the Loan Documents and any or all of the Lender's rights therein;
and the Borrower, any Lessee and the Guarantor shall each cooperate
with the Lender in connection with the sale of any such
participations and/or the transfer of any such assignments. Such
cooperation shall include without limitation: (i) supplying
financial statements of the Borrower, any Lessee, the Guarantor and
the Facility; (ii) providing estoppel certificates (1) consenting
to such participations and/or assignments, (2) confirming the
Borrower's, the Guarantor's and any Lessee's respective obligations
under the Loan Documents, (3) confirming the amount of the then
outstanding principal balance of the Loan and the amounts of any
tax and/or insurance escrow deposits held by the Lender, (4)
stating whether the Borrower, the Guarantor and/or any Lessee have
any defenses, offsets or credits against the payment of any amounts
due or the performance of any obligations under the Loan Documents
and
(5) stating whether any default or any state of facts which, with
the passing of time or the giving of notice or both, could
constitute a default, exists under the Loan Documents;
(iii) making such modifications or alterations to the Loan
Documents as the Lender may reasonably request; (iv) providing such
other documentation relating to the Loan and the Facility as the
Lender may reasonably request and (v) making the Mortgaged Property
available for inspection upon reasonable notice from the Lender.
The Lender shall have the right to provide potential participants
and/or assignees with any and all financial, licensing and other
information provided to the Lender pursuant to the Loan Documents.
The terms and conditions upon which participations of the Loan are
sold and/or any assignment of the Lender's rights under the Loan
Documents are made shall be determined by the Lender in its sole
and absolute discretion.
21.SUCCESSORS AND ASSIGNS: The provisions of this Agreement shall
be binding on the Borrower and the Borrower's heirs, executors,
administrators, legal representatives, successors and assigns and
this Agreement and all of the covenants herein contained shall
inure to the benefit of the Lender and the Lender's successors and
assigns.
22.NO THIRD PARTY BENEFICIARIES: This Agreement is solely for the
benefit of the Lender, its successors, assigns and participants (if
any) and the Borrower, and nothing contained herein shall confer
upon anyone other than the Borrower or the Lender, its successors,
assigns and participants, any right to insist upon or to enforce
the performance or observance of any of the obligations contained
herein. All conditions to the obligations of the Lender to advance
the proceeds of the Loan are imposed solely and exclusively for the
benefit of the Lender, its successors, assigns and participants.
No other Person shall have standing to require satisfaction of such
conditions in accordance with their terms and no other Person
shall, under any circumstances, be a beneficiary of such
conditions, any or all of which may be freely waived in whole or in
part by the Lender at any time, if, in the Lender's sole and
absolute discretion, the Lender deems it advisable or desirable to
do so.
23.GOVERNING LAW: This Agreement shall be construed, and the
rights and obligations of the Borrower and the Lender shall be
determined, in accordance with the laws of the Commonwealth of
Massachusetts, except (i) to the extent necessary for the Lender to
perfect, protect or enforce the rights and remedies set forth in
the Loan Documents with respect to the Mortgaged Property and (ii)
for procedural requirements which must be governed by the law of
the state in which the Mortgaged Property is located. To the
maximum extent permitted by applicable law, the Borrower hereby
submits to the jurisdiction of the courts of the Commonwealth of
Massachusetts and the United States District Court for the District
of Massachusetts, as well as to the jurisdiction of all courts from
which an appeal may be taken from the aforesaid courts, for the
purpose of any suit, action or other proceeding arising out of, or
with respect to this Agreement and expressly waives any and all
objections the Borrower may have as to venue in any of such courts.
24.NOTICES: Any notice, request, demand, statement or consent made
hereunder shall be in writing and shall be deemed duly given if
personally delivered, sent by certified mail, return receipt
requested, or sent by a nationally recognized commercial overnight
delivery service with provisions for a receipt, postage or delivery
charges prepaid, and shall be deemed given when postmarked or
placed in the possession of such mail or delivery service and
addressed as follows:
If to the Borrower: Subsidiary of Geriatric and Medical Services,
Inc.]
Geriatric & Medical Centers, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
Attention: Daniel Veloric
With copies to:Geriatric & Medical Centers, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
Attention: Daniel Veloric
If to the Lender:Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: David F. Benson, President
With copies to:Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: Michael S. Benjamin, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Andrew R. Urban, Esq.
or at such other place as either party may from time to time
hereafter designate to the other in writing. Any notice given to
the Borrower by the Lender at any time shall not imply that such
notice or any further or similar notice was or is required.
25.CAPTIONS AND HEADINGS: The captions and headings set forth in
this Agreement are included for convenience and reference only and
the words contained therein shall in no way be held or deemed to
define, limit, describe, explain, modify, amplify and/or add to the
interpretation, construction or meaning of, or the scope or intent
of, this Agreement or any part hereof.
26.AMENDMENTS, WAIVERS AND MODIFICATIONS: This Agreement and the
other Loan Documents set forth the entire agreement of the parties
with respect to the subject matter hereof and none of the terms or
provisions of this Agreement may be amended, modified, revised,
waived or terminated, except by an agreement, in writing, signed by
the party against whom enforcement is sought. The provisions of
this Agreement shall extend and be applicable to all renewals,
replacements, amendments, extensions, substitutions, revisions,
consolidations and modifications of the Loan Documents and any and
all references herein to the Loan Documents shall be deemed to
include any such renewals, replacements, amendments, substitutions,
revisions, extensions, consolidations or modifications thereof.
27.INVALIDITY: If any provision of this Agreement or the
application thereof to any Person or circumstance, for any reason
and to any extent, shall be held to be invalid or unenforceable,
neither the remainder of this Agreement nor the application of such
provision to any other Person or circumstance shall be affected
thereby, but rather the same shall be enforced to the greatest
extent permitted by law.
28.RULES OF CONSTRUCTION: References in this Agreement to
"herein", "hereof" and "hereunder" shall be deemed to refer to this
Agreement and shall not be limited to the particular text or
Section in which such words appear. References in this Agreement
to the Lender's attorneys shall be deemed to include, without
limitation, special counsel and local counsel for the Lender.
References in this Agreement to attorneys' fees and expenses shall
be deemed to mean reasonable fees and expenses and shall include
all costs for administrative, paralegal and support staff.
References in this Agreement to the Mortgaged Property shall be
deemed to include references to all of the Mortgaged Property and
references to any portion thereof. The use of any gender shall
include all genders and the singular number shall include the
plural and vice versa as the context may require. In the event of
any conflict between the terms of this Agreement and the other Loan
Documents, the provisions of this Agreement shall control.
29.LIMITATION OF LIABILITY: The Declaration of Trust establishing
the sole shareholder of the Lender, Meditrust, a Massachusetts
business trust (referred to herein as "Meditrust"), dated August 6,
1985 (referred to herein as the "Declaration"), a copy of which,
together with all amendments thereto, is duly filed in the office
of the Secretary of State of the Commonwealth of Massachusetts,
provides that the name "Meditrust" refers to the trustees under the
Declaration collectively as trustees, but not individually or
personally; and that no trustee, officer, shareholder, employee or
agent of Meditrust or its Subsidiaries shall be held to any
personal liability, jointly, or severally, for any obligation of,
or claim against Meditrust or any of its Subsidiaries. All Persons
dealing with Meditrust or the Lender, in any way, shall look only
to the assets of Meditrust or the Lender for the payment of any sum
or the performance of any obligation. Furthermore, in no event
shall the Lender or Meditrust ever be liable to the Borrower or any
other Person for any indirect or consequential damages incurred by
the Borrower, or any such Person resulting from any cause
whatsoever. Notwithstanding the foregoing, the Borrower hereby
acknowledges and agrees that Meditrust is not a party to this
Agreement and that the Borrower shall look only to the assets of
the Lender for the payment of any sum or performance of any
obligation due by or from the Lender pursuant to the terms and
provisions hereof.
30.NO JOINT VENTURE OR PARTNERSHIP: Neither anything contained
herein, in the Note or in any of the other Loan Documents, nor the
acts of the parties hereto shall be construed to create a
partnership or joint venture between the Borrower and the Lender.
The Borrower is not the agent or representative of the Lender, and
nothing contained herein or in any of the other Loan Documents
shall be construed to make the Lender liable to any Person for
goods delivered or services performed with respect to the Mortgaged
Property or for debts or claims accruing against the Lender. The
Borrower's obligations hereunder or under any of the other Loan
Documents are not for the benefit of or enforceable by any other
person.
31.ESTOPPEL CERTIFICATE: Within ten (10) days after written
request of the other, either party hereto shall furnish a
certificate or affidavit, duly acknowledged, stating the amount
then due or outstanding under the Loan Documents, whether there are
any defaults under the Loan Documents and whether or not any
offsets or defenses exist against the Mortgaged Indebtedness, and
if so, specifying such offsets and defenses. Within ten (10) days
following the written request of the Lender, the Borrower shall
furnish a certificate or affidavit, duly acknowledged, stating the
amount then due under any other documents evidencing any
Indebtedness of the Borrower secured by a lien relating to the
Mortgaged Property, whether there are any defaults under such
documents and whether or not any offsets or defenses exist against
the amount due thereunder and if so, specifying such offsets and
defenses.
32.COUNTERPARTS: This Agreement may be executed in one or more
counterparts, each of which taken together shall constitute an
original and all of which shall constitute one and the same
instrument.
33.TIME OF THE ESSENCE: Time is of the essence of each and every
term, condition, obligation and argument set forth herein.
EXECUTED as a sealed instrument as of the day and year first above
mentioned.
WITNESS:
LENDER:
MEDITRUST MORTGAGE INVESTMENTS,
INC., a Delaware corporation
By:
Name: Name:
Title:<PAGE>
WITNESS:
BORROWER:
[ ]
By:
Name:
Title:
Name:
T3/547718.1
<PAGE>
EXHIBIT A
Description Of Land
T3/547718.1
<PAGE>
EXHIBIT B
Project Plans and Specifications
T3/547718.1
<PAGE>
EXHIBIT C
Construction Schedule<PAGE>
EXHIBIT D
Project Budget<PAGE>
EXHIBIT E
List of Provider Agreements
T3/547718.1
<PAGE>
EXHIBIT F
List of National Accounts and Local Discount Agreements
T3/547718.1
<PAGE>
EXHIBIT G
Restrictions or Limitations on Rates
T3/547718.1
<PAGE>
EXHIBIT H
Rates
T3/547718.1
<PAGE>
EXHIBIT I
General Cost Reports
T3/547718.1
<PAGE>
EXHIBIT J
Percentage of Beds Requirements
T3/547718.1
<PAGE>
EXHIBIT K
Surveyor's Certificate<PAGE>
EXHIBIT L
Architect's Certificate<PAGE>
EXHIBIT M
Opinions<PAGE>
EXHIBIT N
Borrower's Requisition Certificate<PAGE>
EXHIBIT O
General Contractor's Requisition Certificate<PAGE>
EXHIBIT P
Architect's Requisition Certificate<PAGE>
SCHEDULE 2.F
ACTIONS, SUITS, INVESTIGATIONS OR PROCEEDINGS
T3/547718.1
<PAGE>
SCHEDULE 2.G
DELINQUENT OBLIGATIONS
T3/547718.1
<PAGE>
SCHEDULE 2.H
LIABILITIES FOR BORROWED MONEY
FROM AFFILIATES
T3/547718.1
<PAGE>
SCHEDULE 2.II
ADDITIONAL MATERIAL LIABILITIES
<PAGE>
SCHEDULE 2.JJ
ADDITIONAL REQUIRED PERMITS AND CONTRACTS
<PAGE>
THIRD AGREEMENT AMENDING LOAN DOCUMENTS
THIS AGREEMENT AMENDING LOAN DOCUMENTS made as of the ___ day of
May, 1995, by and between Geriatric and Medical Services, Inc., a
New Jersey corporation ("Services"), Crestview Convalescent Home,
Inc., a Pennsylvania corporation, Burlington Woods Convalescent
Center, Inc., a New Jersey corporation, Geriatric & Medical
Companies, Inc., a Delaware corporation ("Companies"), and
Crestview North, Inc., a Pennsylvania corporation, each having its
principal place of business care of Geriatric & Medical Companies,
Inc., 5601 Chestnut Street, Philadelphia, Pennsylvania 19139
(hereinafter collectively referred to as the "Borrowers"), and
Meditrust Mortgage Investments, Inc., a Delaware corporation,
having its place of business at 197 First Avenue, Needham,
Massachusetts 02194 (hereinafter referred to as the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrowers and the Lender have entered into a certain
Loan Agreement dated as of April 23, 1992, as amended by that
certain Agreement Amending Loan Documents dated as of August 31,
1992 and First (sic.) Amendment to Loan Agreement dated as of April
18, 1995 (as so amended, the "Loan Agreement");
WHEREAS, all capitalized terms used herein and not expressly
defined herein shall have the meaning ascribed to them in the Loan
Agreement;
WHEREAS, the Borrowers and the Lender wish to modify the provisions
of the Loan Documents as hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration paid by each of
the parties hereto to the other, the receipt and sufficiency of
which is hereby acknowledged, the Lender and the Borrowers agree
with each other as follows:
1. The Loan Agreement is hereby amended as follows:
a. References to the Deposit Pledge Agreement shall be deemed to be
references thereto as amended by this Agreement;
b. References to the Guaranty shall be deemed to be references
thereto as amended by this Agreement;
c. References to the other Loan Documents, singly and collectively,
shall be deemed to be references thereto as amended by this
Agreement;
d. The definition of "Stated Amount" is deleted and the following
is substituted in its place: "TWO MILLION SIX HUNDRED TWENTY TWO
THOUSAND FIVE HUNDRED EIGHTY ONE DOLLARS ($2,622,581.41) (subject
to adjustment as provided in the Deposit Pledge Agreement");
e. The following definition shall be added in Section 1:
Norristown Loan Documents : That certain loan agreement dated as
of May 31, 1995 by and between the Lender to Norristown Nursing and
Rehabilitation Center, Associates, L.P. regarding a loan in the
amount of SIX MILLION NINE HUNDRED THIRTY NINE THOUSAND DOLLARS
($6,939,000) evidenced by that certain Promissory Note dated as of
May 31, 1995 and the documents executed and delivered in connection
therewith; and
f.The following is added to the end of subsection K. of Section 10:
"(including, without limitation, the Norristown Loan Documents)".
g.The definition of Tangible Net Worth in Section 1 is amended by
deleting therefrom the words: "as of the date of this Agreement".
2.The Note is hereby amended as follows:
a. References to the Loan Documents, singly and collectively, shall
be deemed to be references thereto as amended by this Agreement;
b. The following text is added to the end of the penultimate
paragraph of Section 3:
and (d) the Borrowers shall have a single opportunity to prepay an
amount equal to the lesser of (i) eighty two percent (82%) of the
appraised value of the Rittenhouse Facility (which appraisal shall
be accomplished in conformity with the Lender's customary
requirements and shall have been conducted no earlier than 60 days
prior the proposed date of prepayment) and (ii) THREE MILLION NINE
HUNDRED TWENTY SIX THOUSAND FOUR HUNDRED DOLLARS ($3,926,400)
without payment of the Prepayment Fee whereupon the Lender shall
release the lien of the mortgage encumbering the Rittenhouse
Facility, provided that the Borrowers give the Lender at least
thirty (30) days' (but no more than 60 days') prior written notice
of its intent to prepay, which notice once given may not be revoked
and provided, further, that simultaneously with such prepayment,
all right, title and interest in the Rittenhouse Facility is
conveyed to a Person which is not an Affiliate of the Borrowers.
3.The Deposit Pledge Agreement is hereby amended as follows:
a. The words "FIVE MILLION TWO HUNDRED FORTY-FIVE THOUSAND ONE
HUNDRED SIXTY-TWO DOLLARS ($5,245,162.82)" are deleted therefrom
where ever they appear and the following is substituted in their
place: "TWO MILLION SIX HUNDRED TWENTY TWO THOUSAND FIVE HUNDRED
EIGHTY ONE DOLLARS ($2,622,581.41) (provided, however that if the
Facilities' Debt Coverage Ratio in the aggregate shall be less than
1.4 for any one (1) fiscal quarter, or (ii) an Event of Default has
occurred (but without, in any way, limiting any other right or
remedy the Lender may have upon the occurrence of an Event of
Default), the Borrowers shall, within sixty (60) days after the
expiration of such fiscal quarter or occurrence of an Event of
Default, pay to the Lender such amounts as are required to increase
the foregoing amount to FIVE MILLION TWO HUNDRED FORTY-FIVE
THOUSAND ONE HUNDRED SIXTY-TWO DOLLARS ($5,245,162.82))";
5.The Guaranty is hereby amended so that references to the Loan
Documents, singly and collectively, shall be deemed to be
references thereto as amended by this Agreement;
6. Each of the other Loan Documents is hereby amended so that
references therein to the Loan Documents, singly and collectively,
shall be deemed to be references thereto as amended by this
Agreement;
7. Companies acknowledges that it executes and delivers this
Agreement in its capacity as guarantor under the Guaranty as well
as in its capacity as one of the Borrowers.
8. The Borrowers each confirm and ratify their continued
liabilities and obligations under the Loan Documents as amended
hereby.
9. This Agreement shall be construed, and the rights and
obligations of the Borrowers and the Lender shall be determined, in
accordance with the laws of the Commonwealth of Massachusetts,
except that the laws of the Commonwealth of Pennsylvania shall
govern (A) this Agreement to the extent necessary for the Lender to
perfect, protect or enforce the rights and remedies granted to it
in this Agreement and to obtain the benefit of the rights and
remedies set forth herein with respect to the Mortgaged Property
therein located and (B) procedural requirements which must be
governed by the law of the state in which the Mortgaged Property is
located.
To the maximum extent permitted by applicable law, the Borrower
hereby submits to the jurisdiction of the courts of the
Commonwealth of Massachusetts and the United States District Court
for the District of Massachusetts, as well as to the jurisdiction
of all courts from which an appeal may be taken from the aforesaid
courts, for the purpose of any suit, action or other proceeding
arising out of, or with respect to this Agreement or any of the
other Loan Documents and expressly waives any and all objections
the Borrowers may have as to venue in any of such courts.
EXECUTED as a sealed instrument as of the day and year first above
written.
ATTEST: LENDER:
MEDITRUST MORTGAGE INVESTMENTS, INC., a Delaware
Corporation
By:
Name: Name:
Title: Title:
ATTEST: BORROWERS:
GERIATRIC AND MEDICAL SERVICES, INC., a New Jersey
corporation
By:
Name: Name:
Title Title:
ATTEST: CRESTVIEW CONVALESCENT HOME, INC., a Pennsylvania
corporation
By: Name: Name:
Title: Title:
ATTEST: BURLINGTON WOODS CONVALESCENT
CENTER, INC., a New Jersey
corporation
By:
Name: Name:
Title: Title:
ATTEST: GERIATRIC & MEDICAL COMPANIES,
INC., a Delaware corporation,
as Borrower and Guarantor
By:
Name: Name:
Title: Title:
ATTEST: CRESTVIEW NORTH, INC., a Pennsylvania corporation
By:
Name: Name:
Title: Title:
<PAGE>
DEPOSIT PLEDGE AGREEMENT
THIS AGREEMENT is made as of the 31st day of May, 1995 Norristown
Nursing and Rehabilitation Center Associates, L.P., a Pennsylvania
limited partnership, having its principal place of business care of
Geriatric & Medical Companies, Inc., 5601 Chestnut Street,
Philadelphia, Pennsylvania 19101 (hereinafter referred to as the
"Pledgor") and Meditrust Mortgage Investments, Inc., a Delaware
corporation, having its principal address at 197 First Avenue,
Needham, Massachusetts 02194 (hereinafter referred to as the
"Lender").
W I T N E S S E T H
WHEREAS, the Lender has loaned to the Pledgor the sum of SIX
MILLION NINE HUNDRED THIRTY-NINE THOUSAND DOLLARS ($6,939,000),
evidenced by a promissory note of even date and delivery herewith
made by the Pledgor to the order of the Lender (hereinafter
referred to as the "Note"); and
WHEREAS, the Note is referred to in that certain Construction Loan
Agreement of even date herewith by and between the Pledgor and the
Lender (the "Loan Agreement") and is in all respects subject to the
provisions thereof;
WHEREAS, payment of the indebtedness evidenced by the Note is
secured, in part, by a certain Mortgage and Security Agreement of
even date (referred to herein as the "Mortgage"), granted by the
Pledgor, as mortgagor, to the Lender, as mortgagee, relating to a
certain parcel of land described on EXHIBIT A attached hereto and
incorporated by reference (the parcel of land described on EXHIBIT
A is more particularly described in the Mortgage, and, together
with the improvements to be located thereon, are hereinafter
collectively referred to as the "Mortgaged Property" and the
facility to be located on said parcel of land is hereinafter
referred to as the "Facility") all as more particularly described
therein, to be recorded with the applicable recording office;
WHEREAS, the Note, the Loan Agreement, the Mortgage, this Agreement
and all other documents and instruments evidencing or securing the
repayment of, or otherwise pertaining to and executed and delivered
in connection with, the loan evidenced by the Note are hereinafter
collectively referred to as the "Loan Documents". Capitalized
terms used herein but not otherwise defined herein shall have the
meanings ascribed thereto in the Loan Agreement; and
WHEREAS, the Lender has required a pledge of and a security
interest in the Collateral (as hereinafter defined) as additional
security for the complete payment of all indebtedness and the
performance, observance and fulfillment of all other covenants,
terms, conditions, obligations, warranties and agreements
(hereinafter collectively referred to as the "Mortgaged
Indebtedness") contained in:
(i)the Loan Documents including, without limitation, the payment of
the principal indebtedness and accrued and unpaid interest due
under the Note (including, without limitation, Additional Interest,
any applicable Prepayment Fee due under the Note, any Late Payment
Charges due under the Note and all other charges, costs, advances
and other monetary obligations due under the Loan Documents; and
(ii)all other agreements, documents and instruments (including,
without limitation, all leases and loan documents) evidencing any
indebtedness, covenant, liability, obligation or undertaking due
to, or made for the benefit of, the Lender (or any of its
Affiliates, as hereinafter defined) by: (a) the Pledgor, (b any
Affiliate of the Pledgor, (c) the Guarantor or any endorser, surety
or other guarantor of the Note or (d) any Affiliate of the
Guarantor or any such endorser, surety or other guarantor; whether
such indebtedness, covenants, liabilities, obligations, agreements
or undertakings are direct or indirect, absolute or contingent,
liquidated or unliquidated, due or to become due, joint, several or
joint and several, primary or secondary, now existing or hereafter
arising, including, without limitation, all indebtedness,
covenants, liabilities, obligations, agreements and undertakings
set forth under the agreements listed on EXHIBIT B attached hereto
and incorporated herein by reference.
NOW, THEREFORE, in order to induce the Lender to accept the Note
and in consideration therefor, and for One Dollar (1.00) and other
good and valuable consideration, the receipt and sufficiency of
which are acknowledged, and in consideration of the mutual
covenants set forth herein, the parties hereto hereby agree as
follows:
1.Collateral. A. As security for the Mortgaged Indebtedness,
subject to the terms of this Agreement, the Pledgor hereby pledges,
assigns, transfers and grants to the Lender a security interest in
and exclusive control over the following property (hereinafter
collectively referred to herein as the "Collateral"), such pledge,
assignment, transfer and grant to be effective as of the Conversion
Date: (a) TWO HUNDRED THOUSAND TWO HUNDRED EIGHTY DOLLARS AND
83/100 ($200,280.83); (b) the "Cash Collateral Account" to be
established hereunder; (c) all interest or income now or hereafter
earned therefrom and all investments now or hereafter made thereof;
and (d) all proceeds and products of any one or more of the
foregoing whether now existing or
arising at any time in the future. The Pledgor hereby
acknowledges, agrees and confirms that upon and after delivery of
the Collateral to the Lender on or before the Conversion Date, the
Collateral shall remain in full and complete control of the Lender
for the duration of this Agreement and shall constitute continuing
collateral security for the full payment and performance of the
Mortgaged Indebtedness.
B. Pledgor agrees that the TWO HUNDRED THOUSAND TWO HUNDRED EIGHTY
DOLLARS AND 83/100 (200,280.83) (the "Stated Amount") to be paid
and deposited with the Lender shall be held by the Lender in a
"Cash Collateral Account" as security for the Mortgaged
Indebtedness and the obligations of the Pledgor hereunder.
Payments to the Cash Collateral Account shall be deposited by the
Lender in a bank account in the name of the Lender at such bank
(the "Bank") as the Lender may, from time to time, select and such
account shall be subject to withdrawal by order of such officers
and agents of Lender as Lender may designate from time to time for
use in accordance with the provisions of, and for the purposes
stated in, this Agreement. Subject to the provisions of Section 21
hereof, the Lender may, at its election from time to time
exercised, invest the such funds in one or more of the investment
vehicles described on EXHIBIT C attached hereto and incorporated by
reference. Pledgor shall pay, or there shall be deducted from the
Cash Collateral Account or the income therefrom, all regular
service fees, maintenance fees and transaction charges related
thereto. The Lender shall not be responsible for any decline in
value of any such investment nor for any loss thereon as a result
of a disposition thereof prior to payment by the issuer or obligor.
The Cash Collateral Account shall be held by the Lender until the
Pledgor is entitled to a release of all or some portion thereof as
provided in this Agreement; provided, however, the Lender may at
its sole discretion from time to time, and notwithstanding any
waiver in any prior instance, make payment of sums out of the Cash
Collateral Account, to the extent that collected funds are
available therefor, for any one or more of the following purposes:
(i) to pay any cost related to construction aspects of the Facility
which remain unpaid on the due date thereof, or (ii) upon an Event
of Default, to pay all or any portion of the Mortgaged
Indebtedness. All income earned on the Cash Collateral Account and
all proceeds thereof shall be added thereto and all taxes payable
thereon shall be paid by the Pledgor. So long as no Event of
Default, or fact or circumstance which with the passage of time or
giving of notice or both would constitute an Event of Default,
either hereunder or under any of the other Loan Documents, exists
the income earned on the Cash Collateral Account, net of any such
service fees, maintenance fees or transaction charges, shall be
paid over to the Pledgor not more often than semi-annually, upon
the written request of the Pledgor giving from time to time. The
Pledgor hereby agrees:
(i)that, if the Pledgor should obtain possession of any portion of
the Collateral while this Agreement remains in force and effect,
the Pledgor shall receive the same as trustee for the Lender and
shall forthwith deliver the same to the Lender, in kind, together
with any endorsements thereon as may be required by the Lender;
(ii)that so long as any of the Mortgaged Indebtedness remains
outstanding, no action of any kind whatsoever may be taken by the
Pledgor or any other Person with respect to all or any portion of
the Collateral without the Lender's prior written consent, in each
instance, which consent may be withheld in the Lender's sole and
absolute discretion; and
(iii)at the request of the Lender, to execute and deliver to the
Bank a "Notice and Acknowledgment of Assignment of Deposits" with
respect to such Collateral in form and substance satisfactory to
the Lender.
2.Waivers by Pledgor. The Pledgor waives notice of acceptance
hereof, notice of any action taken or omitted by the Lender in
reliance hereon, notice of default with respect to any of the
Mortgaged Indebtedness, presentment, demands for performance,
notice of any indulgences, notices of extensions or renewals
relating to the Mortgaged Indebtedness, any suretyship defenses and
any and all other notices of every kind and description in
connection with the Mortgaged Indebtedness, this Agreement or the
Collateral to which it might otherwise be entitled. The Pledgor
hereby assents to any indulgences, postponements, compromises,
extensions or renewals in connection with the Mortgaged
Indebtedness and to any discharge, termination, substitution,
exchange, increase, release or surrender of the Collateral or any
other collateral securing the Mortgaged Indebtedness or any Person
primarily or secondarily liable to the Lender for the Mortgaged
Indebtedness. The Lender shall not be required:
(i)to make demand upon or pursue or exhaust the Lender's rights or
remedies against any Person with respect to the Mortgaged
Indebtedness;
(ii)to pursue or exhaust any of the Lender's rights or remedies
with respect to any present or future collateral which the Lender
may hold as security for the Mortgaged Indebtedness; or
(iii)to marshall such security or resort to any such security in
any particular order.
3.Pledge Unconditional. No invalidity, irregularity or
unenforceability of all or any part of the Mortgaged Indebtedness
or of any security therefor shall affect, impair or be a defense to
this Agreement, and this Agreement is the direct, unconditional,
absolute and primary obligation of the Pledgor. This Agreement and
the Collateral are given to secure payment, and not collection
merely, of the Mortgaged Indebtedness. The Lender shall not be
required to seek to enforce any of its rights under any of the
other Loan Documents as a condition to exercise or enforcement of
its rights under this Agreement, nor shall any failure to seek to
enforce the same affect, impair or be a defense to the Lender's
rights under this Agreement.
4.Default. Any default beyond the expiration of applicable notice
and grace periods, if any, under any of the other Loan Documents
shall constitute a default hereunder, whereupon the Lender may
apply any or all of Collateral toward the satisfaction of any or
all of the Mortgaged Indebtedness and pursue any additional rights
or remedies available to it under this Agreement, any of the other
Loan Documents or applicable law. The Lender shall have at all
times, with respect to the Collateral, all of the rights, remedies
and powers of a secured party under the Uniform Commercial Code as
enacted in Massachusetts.
5.Lender Appointed Attorney-in-Fact; Indemnity. The Lender is
hereby appointed the Pledgor's attorney-in-fact, with full power of
substitution, for the purpose of carrying out the provisions of
this Agreement and taking any action and executing any instruments
which such attorney-in-fact may deem necessary or advisable to
accomplish the purposes hereof, including, without limitation,
signing and delivering such documents, endorsements and instruments
and taking all such other actions in the name of the Pledgor as the
Lender may deem necessary or advisable to perfect or preserve its
security interest in and lien on the Collateral. This power of
attorney, being coupled with an interest, shall be irrevocable
until all of the Mortgaged Indebtedness has been fully paid and
performed and shall not be affected by any disability or incapacity
which the Pledgor may suffer and shall survive the same.
The power of attorney conferred on the Lender pursuant to the
provisions of this Section5 is provided solely to protect the
interests of the Lender and shall not impose any duty on the Lender
to exercise any such power, and neither the Lender nor such
attorney-in-fact shall be liable for any act, omission, error in
judgment or mistake of law, except as the same may result from its
gross negligence or wilful misconduct. The Pledgor shall and
hereby agrees to indemnify and save harmless Lender from and
against any liability or damage which it may incur, in good faith
and without negligence, in the exercise and performance of any of
Lender's powers and duties specifically set forth herein.
The aforesaid indemnification agreement shall survive the complete
payment and performance of the Mortgaged Indebtedness and the
foreclosure of the Mortgage.
6.Representations and Warranties. The Pledgor hereby warrants and
represents to the Lender and covenants and agrees with the Lender
as follows:
(i)the Pledgor is the owner of the Collateral, free and clear of
all claims, liens, security interests, attachments and
encumbrances;
(ii)the Pledgor has the full power, right and authority to execute,
deliver and perform the pledge, assignment, transfer and grant of
a security interest set forth herein;
(iii)the Pledgor shall warrant and defend the title and interests
of the Lender in and to the Collateral against the claims and
demands of all Persons;
(iv)the Pledgor shall not, without the Lender's prior written
consent (in each instance, which consent may be withheld in the
Lender's sole and absolute discretion), encumber, sell, assign,
pledge, transfer or grant a security interest in or otherwise
dispose of all or any part of the Collateral or any interest
therein;
(v)without the prior written consent of the Lender in each instance
(which consent may be withheld in the Lender's sole and absolute
discretion), the Pledgor shall have no right to reach the
Collateral or to withdraw any part thereof from the possession of
the Bank or to in any way control the Lender regarding the
disposition of the Collateral; and
(vi)the Bank now has, and shall have as long as this agreement
remains in force and effect, no defense, offset, claim or
counterclaim to the Collateral.
7.No Waiver. No failure on the part of the Lender to exercise, and
no delay on the part of the Lender in exercising, any right, power
or remedy hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise by the Lender of any right, power or
remedy hereunder preclude any other or further right, power or
remedy. The remedies herein provided are separate and cumulative
and are not exclusive of any remedies provided to the Lender at
law, in equity or by any other agreement.
8.Custody and Care of the Collateral. Any duty of reasonable care
with respect to the Lender's custody and care of the Collateral in
its possession shall be satisfied merely if the Collateral is kept
at the Lender's principal place of business or any other premises
that are locked or guarded at night. The Pledgor hereby authorizes
the Lender to exercise its discretion in the payment of all
reasonable expenses that the Lender may deem necessary or desirable
for the storage, custody and preservation of the Collateral. The
Pledgor agrees to reimburse the Lender upon demand for all such
expenses incurred by the Lender. The Lender shall have no
obligation to preserve rights against prior parties. Beyond use of
ordinary care in the custody of the Collateral in its possession,
the Lender shall be under no duty or liability with respect to the
collection of any obligation due under the Collateral or of any
income thereon nor with respect to the protection or preservation
of any rights pertaining thereto. With respect to any portion of
the Collateral now or hereafter in the possession of the Bank, the
Bank shall be deemed the bailee and agent of the Lender and not of
the Pledgor and the Bank shall be irrevocably authorized to comply
with all instructions and directions of the Lender with respect to
the Collateral.
9.Application of Proceeds. Any amounts collected by the Lender
hereunder shall be applied by the Lender, without marshalling of
assets, towards payment of the Mortgaged Indebtedness in such order
as the Lender, in its sole and absolute discretion, shall
determine.
10.Indemnification. The Pledgor shall and hereby agrees to
indemnify and hold the Lender harmless from and against all
obligations, liabilities, losses, costs, claims, expenses, fines,
penalties and damages (including, without limitation, attorneys'
fees and expenses and court costs) which the Lender may incur by
reason of this Agreement and any actions the Lender may take to
preserve or enforce its rights and remedies hereunder. The
foregoing indemnification agreement shall also include all costs
incurred by the Lender in connection with the enforcement of said
indemnification agreement.
Any amounts owed to the Lender under this Section10 shall bear
interest at the Advances Rate, and to the extent permissible under
applicable law, shall be added to the Mortgaged Indebtedness and
shall be secured hereby as fully and effectively and with the same
priority as every other obligation of the Pledgor hereunder. The
provisions of this Section10 shall survive the complete payment and
performance of the Mortgaged Indebtedness and the foreclosure of
the Mortgage.
11.Termination of Pledge. This Agreement shall remain in effect
until the earlier to occur of (i) the determination by the Lender,
in its sole and absolute discretion and based upon the Lender's
review of the financial and operating statements to be submitted to
the Lender pursuant to the terms and provisions of the Loan
Documents, that the financial performance of the Facility has
reached such a level that the Lender no longer requires the
additional security of the Collateral or (ii) the complete payment
and full performance of the Mortgaged Indebtedness; after which,
the Lender shall forthwith terminate its security interest in the
Collateral and shall provide notice thereof to the Bank.
The Pledgor hereby agrees that any affidavit, certificate, letter
or statement of any officer, agent or attorney of the Lender
indicating (a) that any part of the Mortgaged Indebtedness remains
outstanding shall be deemed conclusive evidence of the validity,
effectiveness and continuing force of this Agreement or (b) that
there is a default under the Deposit Pledge Agreement (this
Agreement) shall be deemed conclusive evidence thereof; and any
Person, including, without limitation, the Bank, is hereby
authorized to rely thereon.
12.Governing Law. This Agreement shall in all respects be
construed and interpreted in accordance with and governed by the
laws of the Commonwealth of Massachusetts, except that the laws of
the Commonwealth of Pennsylvania shall govern (i) this Agreement to
the extent necessary for the Lender to perfect, protect or enforce
the rights and remedies granted to it in this Agreement to obtain
the benefit of the rights and remedies set forth in the Loan
Documents with respect to the Mortgaged Property and (ii)procedural
requirements which must be governed by the law of the state in
which the Mortgaged Property is located.
13.Notices. Any notice, request, demand, statement or consent made
hereunder shall be in writing and shall be deemed duly given if
personally delivered, sent by certified mail, return receipt
requested, or sent by a nationally recognized commercial overnight
delivery service with provision for a receipt, postage or delivery
charges prepaid, and shall be deemed given when postmarked or
placed in the possession of such mail or delivery service and
addressed as follows:
If to the Pledgor:Norristown Nursing and Rehabilitation Center,
Associates, L.P.
Geriatric & Medical Companies, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19101
Attention: President
With a copy to:Mesirov, Gelman, Jaffe, Cramer & Jamieson
1735 Market Street
Philadelphia, Pennsylvania 19103-7598
Attn: Robert P. Krauss, Esq.
If to the Lender:Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attention: President
With copies to:Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, MA 02194
Attention: General Counsel
Mintz, Levin, Cohn, Ferris Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Andrew R. Urban, Esq.
or at such other place as either the Pledgor or the Lender may from
time to time hereafter designate to the other in writing. Any
notice given to the Pledgor by the Lender at any time shall not
imply that such notice or any further or similar notice was or is
required.
14.Amendments and Modifications. This Agreement sets forth the
entire agreement of the parties with respect to the subject matter
hereof and none of the terms, conditions, covenants or warranties
set forth herein may be renewed, replaced, amended, modified,
extended, substituted, revised, waived, consolidated or terminated
except by an agreement in writing signed by the Person against whom
enforcement is sought. The provisions of this Agreement shall
extend and be applicable to all renewals, replacements, amendments,
extensions, substitutions, revisions, consolidations and
modifications of the Loan Documents and the Collateral; and all
references herein to the Loan Documents and the Collateral shall be
deemed to include any such renewals, replacements, amendments,
substitutions, revisions, extensions, consolidations or
modifications thereof.
Notwithstanding the foregoing, any reference contained herein,
whether express or implied, to any renewal, replacement, amendment,
extension, substitution, revision, consolidation or modification of
any of the Loan Documents or the Collateral is not intended to
constitute an agreement or consent by the Lender to any such
renewal, replacement, amendment, extension, substitution, revision,
consolidation or modification of any of the Loan Documents or the
Collateral; but, rather as a reference only to those instances
where the Lender may give consent to any such renewal, replacement,
amendment, extension, substitution, revision, consolidation or
modification, as the same may be required pursuant to the terms,
covenants or conditions of the Loan Documents.
15.Invalidity. If any provision of this Agreement or the
application thereof to any Person or circumstance, for any reason
and to any extent, shall be held to be invalid or unenforceable,
neither the remainder of this Agreement nor the application of such
provision to any other Person or circumstance shall be affected
thereby, but rather the same shall be enforced to the greatest
extent permitted by law.
Notwithstanding the foregoing, it is the intention of the Pledgor
and the Lender that if any provision of any of this Agreement is
capable of two (2) constructions, one of which would render the
provision void and the other of which would render the provision
valid, then such provision shall be construed in accordance with
the construction which renders such provision valid.
16.Successors and Assigns; Joint and Several Liability. This
Agreement shall (i) be binding on the Pledgor and the Pledgor's
respective heirs, executors, administrators, legal representatives
and permitted successors and assigns and (ii) inure to the benefit
of the Lender, any other Person who may now or hereafter hold any
interest in the Loan and their respective successors and assigns.
Where more than one Person shall execute this Agreement on behalf
of the Pledgor, then each such Person shall be fully liable for all
of the obligations of the Pledgor hereunder and all such
obligations shall be joint and several.
17.Rules of Construction. References in this Agreement to
"herein," "hereof" and "hereunder" shall be deemed to refer to this
Agreement and shall not be limited to the particular text or
Section in which such words appear. The use of any gender shall
include all genders and the singular number shall include the
plural and vice versa as the context may require. References in
this Agreement to the Lender's attorneys shall be deemed to
include, without limitation, special counsel and local counsel for
the Lender. References in this Agreement to attorneys' fees and
expenses shall be deemed to include all costs for administrative,
paralegal and other support staff.
The word "foreclosure" as used herein shall be deemed to include
the acquisition of the Mortgaged Property by voluntary deed or
assignment in lieu of foreclosure. As used herein, the term
"including", when following any general statement, will not be
construed to limit such statement to the specific items or matters
as provided immediately following the term "including" (whether or
not non-limiting language such as "without limitation" or "but not
limited to" or words of similar import are also used), but rather
will be deemed to refer to all items or matters that could
reasonably fall within the broader scope of the general statement.
As used herein the term "Person" shall include all individuals and
all entities of every kind and nature, including, without
limitation, corporations, general and limited partnerships, stock
companies or associations, joint ventures, unincorporated
associations, companies, trusts, banks, trust companies, land
trusts, business trusts, and agencies, authorities, bodies, boards,
commissions, courts, instrumentalities, legislatures, or offices of
any nature whatsoever for any government unit or political
subdivision, whether federal, state, county, district, municipal,
city or otherwise, and whether now or hereafter in existence.
As used in this Agreement, the term "Affiliate" shall mean (i) any
other Person that, directly or indirectly, controls or is
controlled by or is under common control with such Person; (ii) any
other Person that owns, beneficially, directly or indirectly, five
percent (5) or more of the outstanding capital stock, shares or
equity interests of such Person; or (iii) any officer, director,
employee, general partner or trustee of such Person or any Person
controlling, controlled by or under common control with such Person
(excluding trustees and Persons serving in similar capacities who
are not otherwise an Affiliate of such Person). For the purposes
of such definition, the term "control" (including the correlative
meanings of the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person,
through the ownership of voting securities, partnership interests
or other equity interests.
18.Captions and Headings. The captions and headings set forth in
this Agreement are included for convenience and reference only and
the words contained therein shall in no way be held or deemed to
define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning of, or the scope or intent
of, this Agreement or any part hereof.
19.Time of the Essence. Time is of the essence of each and every
term, condition, covenant and warranty set forth herein.
20.Limitation of Liability. The Declaration of Trust establishing
the sole shareholder of the Lender, Meditrust, a Massachusetts
business trust ("Meditrust"), dated August6, 1985 (the
"Declaration"), a copy of which, together with all amendments
thereto, is duly filed in the office of the Secretary of State of
the Commonwealth of Massachusetts, provides that the name
"Meditrust" refers to the trustees under the Declaration
collectively as trustees, but not individually or personally; and
that no trustee, officer, shareholder, employee or agent of
Meditrust or its subsidiaries shall be held to any personal
liability, jointly, or severally, for any obligation of, or claim
against Meditrust or any of its subsidiaries. All Persons dealing
with Meditrust or the Lender, in any way, shall look only to the
assets of Meditrust or the Lender for the payment of any sum or the
performance of any obligations. Furthermore, in no event shall the
Lender or Meditrust ever be liable to the Pledgor for any indirect
or consequential damages suffered by the Pledgor resulting from any
cause whatsoever. Notwithstanding the foregoing, the Pledgor
hereby acknowledges and agrees that Meditrust is not a party to
this Agreement and that the Pledgor shall look only to the assets
of the Lender for the payment of any sum or performance of any
obligations due by or from the Lender pursuant to the terms and
provisions hereof.
21.Letters of Credit. At any time and from time to time but in no
event more than once in any twelve month period and provided that
no Event of Default shall have occurred under the Loan Documents
and or an event has occurred which, with the passage of time or the
giving of notice, or both, would constitute an Event of Default, at
the Pledgor's option and upon at least thirty (30) days' prior
written notice to the Lender, (i) an unconditional irrevocable
letter of credit (the "Letter of Credit") in favor of the Lender in
an amount equal to the Stated Amount (and satisfactory to the
Lender in all respects) may be substituted for the Stated Amount of
cash as additional security for the Loan or (ii) in the event that
the Letter of Credit or the Additional Letter of Credit (as
hereinafter defined) is outstanding, the Pledgor may substitute for
the Letter of Credit or the Additional Letter of Credit cash in the
amount of the Stated Amount to be deposited in the Cash Collateral
Account. Without limiting the foregoing, the Letter of Credit must
provide that it shall inure to the benefit of the Lender's
successors and assigns and may be successively transferred, and
must be issued by an institutional lender continuously satisfactory
to the Lender in its sole and absolute discretion. The Letter of
Credit and the Additional Letter of Credit shall serve as
additional security for the Loan may be drawn upon by the Lender
upon the occurrence of an Event of Default.
The Letter of Credit shall also provide that the Pledgor and the
Lender shall receive ninety (90) days' prior written notice of the
termination or expiration of the same (or any successor thereto) by
the issuer thereof and that if such notice is not provided, the
Letter of Credit (or any successor thereto) shall automatically be
extended for one year. Within forty-five (45) days after such
notice, the Pledgor shall provide the Lender with a substitute
letter of credit, in form substantially similar to the Letter of
Credit, to replace the Letter of Credit ("Additional Letter of
Credit").
The Pledgor shall pay all costs and expenses incurred by the Lender
in connection with the substitution of the Letter of Credit for
cash in the Stated Amount or vice versa, including, without
limitation, the Lender's cost of corporate overhead, of which the
Lender shall provide the Pledgor with an accounting.
If the financial strength of a bank or other financial institution
which has issued the Letter of Credit or the Additional Letter of
Credit, subsequently shall materially diminish as determined by the
Lender in its sole and absolute discretion, then the Lender shall
have the right to require the Pledgor to replace the Letter of
Credit or Additional Letter of Credit, as the case may be, with one
from another bank or other financial institution acceptable to the
Lender. From time to time at the request of the Lender, the
Pledgor shall deliver to the Lender the most recent available
financial statements of, and such other materials relating to, such
banks or other financial institutions issuing the Letter of Credit
or the Additional Letter of Credit, as the Lender may request.
In the event the Pledgor shall fail to replace the Letter of Credit
or the Additional Letter of Credit, as the case may be, as required
pursuant to this Section 21, without limiting the exercise of any
other rights and remedies it may have, the Lender may draw upon the
Letter of Credit and hold the proceeds thereof in the Cash
Collateral Account.
IN WITNESS WHEREOF, the Pledgor and the Lender have caused this
Agreement to be duly executed under seal and delivered as of the
date first above written.
WITNESS:Pledgor:
NORRISTOWN NURSING AND REHABILITATION CENTER ASSOCIATES, L.P.
By:GMC-LTC MANAGEMENT, INC., a Pennsylvania corporation, its
general partner
By:
Name:
Name:
Title:
WITNESS:
LENDER:
MEDITRUST MORTGAGE INVESTMENTS, INC., a Delaware Corporation
By:
Name:
Name:
Title:
<PAGE>
EXHIBIT A
REAL PROPERTY DESCRIPTION
All that certain piece of land located in Block 82 in the Borough
of Norristown, Montgomery County, Pennsylvania, situated between
Pine and Locust Streets and West Logan Streets, described as Lot 2
on the subdivision plan for Rittenhouse Nursing Center made by
Geriatric and Medical Companies,Inc., and prepared by NTH
Consultants, Ltd., Exton, Pennsylvania, dated January 25, 1994 and
last revised March 8, 1994, and approved by the Borough Council of
the Borough of Norristown on April 5, 1994 and duly recorded with
the Recorded of Deeds of Montgomery County, Pennsylvania, being
more fully described as follows:
From the intersection of Pine Street and West Roberts Street,
proceeding from a point, marked by an iron pin, on the northwest
corner of Block 82 in an easterly direction parallel to Pine
Street, a distance of 314.71 feet along a bearing of North 60
degrees 52 minutes 16 second East to the point of beginning;
thence, in an easterly direction along the same bearing, a distance
of 232.24 feet to a point, marked by an iron pin, on the northeast
corner of Block 82 at the intersection of Pine Street and West
Logan Street; thence, in a southerly direction paralleling West
Logan Street, a distance of 300.63 feet along a bearing of South 29
degrees 04 minutes 19 seconds East to a point, marked by an iron
pin; thence, in a westerly direction paralleling Locust Street a
distance of 232.61 feet along a bearing South 61 degrees 00 minutes
00 seconds West to a point; thence, in a northerly direction along
the common boundary with Lot 1, a distance of 300.11 feet along a
bearing of North 29 degrees 00 minutes 00 seconds West to the point
and place of beginning.
The above premises being the same land shown as Lot 2 on Plan of
Survey for Rittenhouse Nursing Center by Nave, Newell & Stampfel,
Ltd., dated May 6, 1995.
TOGETHER WITH the benefit of rights and easements set forth in that
certain Declaration of Reciprocal Easement Agreement made by
Geriatric and Medical Services, Inc., dated June , 1995 and
recorded in Deed Book page .
BEING THE SAME PREMISES WHICH Rittenhouse Partners by Indenture
dated 5/11/1987 and recorded 5/18/1987 at Norristown in the Office
for the Recording of deeds, in and for the County of Montgomery in
Deed Book 4837 page 2319 granted and conveyed unto Geriatric and
Medical Services, Inc., its successors and assigns, in fee.
<PAGE>
EXHIBIT B
THE LOAN DOCUMENTS.
<PAGE>
EXHIBIT C
1.Certificates of deposit in a bank with (i) capitalization or
total equity in excess of ONE HUNDRED MILLION DOLLARS (100,000,000)
or (ii) a Moody's rating of "A" or better.
2. AAA rated bonds or A-1, P-1 commercial paper.
3. United States Treasury securities which mature in one year or
less.
4. Deposit accounts with Fleet Bank, N.A.
5.Such other investments as may be mutually agreed upon by the
Pledgor and the Lender.
<PAGE>
PLEDGE AGREEMENT
THIS AGREEMENT is made as of the 31st day of May, 1995 by and among
Geriatric and Medical Services, Inc. ("Services"), a New Jersey
corporation, having a principal address at c/o Geriatric & Medical
Companies, Inc., 5601 Chestnut Street, Philadelphia, Pennsylvania
19139, GMC-LTC Management, Inc. ("GMC-LTC"), a Pennsylvania
corporation, having a principal address at c/o Geriatric & Medical
Companies, Inc., 5601 Chestnut Street, Philadelphia, Pennsylvania
19139 (each a "Pledgor" and collectively the "Pledgors") and
Meditrust Mortgage Investments, Inc., a Delaware corporation,
having a principal address at 197 First Avenue, Needham,
Massachusetts 02194 (the "Lender").
WITNESSETH :
WHEREAS, Norristown Nursing and Rehabilitation Center, Associates,
L.P., a Pennsylvania limited partnership (the "Borrower"), has
executed and delivered to the Lender a Promissory Note of even date
in the maximum original principal amount of SIX MILLION NINE
HUNDRED THIRTY-NINE THOUSAND DOLLARS ($6,939,000) made by the
Borrower to the order of the Lender (the "Note");
WHEREAS, the Note is referred to in that certain Construction Loan
Agreement of even date herewith by and between the Borrower and the
Lender (the "Loan Agreement") and is in all respects subject to the
provisions thereof;
WHEREAS, the payment of the indebtedness evidenced by the Note is
secured, in part, by a Mortgage and Security Agreement of even
date, granted by the Borrower, as mortgagor, to the Lender, as
mortgagee (the "Mortgage") relating to the premises more
particularly described therein;
WHEREAS, the Note, the Loan Agreement the Mortgage, this Agreement
and all other instruments and documents evidencing or securing the
repayment of, or otherwise pertaining to and executed and delivered
in connection with, the loan evidenced by the Note are hereinafter
collectively referred to as the "Loan Documents. Capitalized terms
used herein but not otherwise defined herein shall have the
meanings ascribed thereto in the Loan Agreement;
WHEREAS, all of the terms, conditions, covenants, warranties,
agreements and undertakings contained in the following agreements,
documents and instruments shall hereinafter collectively be
referred to as the "Mortgaged Indebtedness":
(i)the Loan Documents including, without limitation, the payment of
the principal indebtedness and accrued and unpaid interest due
under the Note, any applicable Prepayment Fee due under the Note,
any Late Payment Charges due under the Note and all other charges,
costs, advances and other monetary obligations (including, without
limitation, Additional Interest) due under the Loan Documents; and
(ii)all other agreements, documents and instruments (including,
without limitation, all leases and loan documents) evidencing any
indebtedness, covenant, liability, obligation or undertaking due
to, or made for the benefit of, the Lender (or any of its
Affiliates) by (a) the Borrower; (b) the Pledgors; (c)any Affiliate
of the Borrower or the Pledgors; (d)the Guarantor or any surety or
other guarantor of the Note or (e)any Affiliate of the Guarantor or
any such surety or other guarantor; whether such indebtedness,
covenants, liabilities, obligations, agreements or undertakings are
direct or indirect, absolute or contingent, liquidated or
unliquidated, due or to become due, joint, several or joint and
several, primary or secondary, now existing or hereafter arising;
WHEREAS, GMC-LTC, being the sole general partner, and Services,
being the sole limited partner, of the Borrower, shall receive a
direct benefit from the consummation of the loan transaction
evidenced by the Loan Documents;
WHEREAS, it is a condition precedent to the willingness of the
Lender to accept the Note from the Borrower that the Pledgors shall
simultaneously execute and deliver this Agreement to and with the
Lender.
NOW, THEREFORE, in order to induce the Lender to accept the Note
and in consideration therefor, and for One Dollar ($1.00) and other
good and valuable consideration, the receipt and sufficiency of
which are acknowledged, and in consideration of the mutual
covenants set forth herein, the parties hereto hereby agree as
follows:
Pledge. Each of the Pledgors hereby pledges, grants a security
interest in, mortgages, assigns, transfers, delivers, sets over and
confirms unto the Lender, its successors and assigns, all of such
Pledgor's right, title and interest in and to such Pledgor's entire
partnership interest in the Borrower, including, without
limitation, the right to receive all distributions of whatever
nature from time to time made to the Pledgors by the Borrower in
respect of or in exchange for all or any part of the interests of
the Pledgors in the Borrower (the "Pledged Collateral"), as
security for the Borrower' full and prompt performance under the
Loan Documents and for the complete payment and performance of the
Mortgaged Indebtedness.
2.Representations and Warranties. Each Pledgor jointly and
severally represents and warrants:
(i)that there are no restrictions upon the transfer of the Pledged
Collateral and that the Pledgor has good and valid title to the
Pledged Collateral free and clear of any liens, charges or
encumbrances thereon or affecting the title thereto;
(ii)that the Borrower is a limited partnership duly organized,
validly existing and in good standing under the laws of its
jurisdiction and has the power and holds all licenses necessary to
carry on its business as it is being conducted;
(iii)that the Pledgors have full power, authority and legal right
and any approval required by law to enter into and carry out the
terms,provisions and agreements hereof and to make the
representations and warranties contained herein;
(iv)that the execution, delivery and performance of this Agreement
by the Pledgors and the delivery of the Pledged Collateral by the
Pledgors do not contravene and will not result in the breach of any
of the terms and provisions of, or constitute a default under the
partnership agreement of the Borrower or, any note, indenture,
mortgage, deed of trust, agreement, commitment, contract, or other
instrument, obligation or restriction affecting the Borrower, the
Pledgors or any property thereof, or violate, any existing statute,
ordinance, by-law, code, rule, ruling, regulation, restriction,
order, judgment, decree, writ, or judicial or administrative
interpretations, injunction of any government, governmental
instrumentality, agency or body, arbitration tribunal, or court,
domestic or foreign, having jurisdiction over the Borrower, the
Pledgors or property owned by the Borrower or the Pledgors;
(v)that this Agreement and the delivery of the Pledged Collateral
to the Lender creates a duly perfected first and prior possessory
security interest in the Pledged Collateral in the Lender's favor;
(vi)that this Agreement represents the legal, valid and binding
obligation of the Pledgors enforceable against them in accordance
with its terms; and
(vii)that GMC-LTC is the sole general partner of the Borrower and
Services is the sole limited partner of the Borrower.
3.Covenants. The Pledgors each covenant that the Pledgors:
(i)shall not sell, assign, exchange, or otherwise transfer or grant
any option with respect to any of the Pledgor's rights to the
Pledged Collateral;
(ii)shall not create or suffer to exist any lien, security interest
or other charge or encumbrance against, in or with respect to the
Pledged Collateral, except for the pledge hereunder and the
security interest created hereby;
(iii)shall warrant and defend the title to the Pledged Collateral
and the lien thereon conveyed to the Lender by this Agreement
against the claims of all Persons; and
(iv)shall not knowingly take any action which would in any manner
impair the value of the Pledged Collateral.
4.Intentionally Deleted.
5.Voting Power, Distributions, Etc. Unless and until an Event of
Default (as hereinafter defined in Section 8) the Pledgors shall
have the right to exercise all voting, consensual and other powers
of ownership pertaining to the Pledged Collateral, and the Pledgors
shall be entitled to receive and retain any distributions made in
respect of or in exchange for all or any part of the Pledged
Collateral; provided, however, that no vote shall be cast or
consent given which would be inconsistent with or violate any of
the provisions of this Agreement or any of the Loan Documents.
If any Event of Default shall have occurred, then and whether or
not the Lender exercises any available option to declare the
Borrower in default under any of the other Loan Documents or seeks
or pursues any other relief or remedy available to the Lender under
this Agreement or any of the other Loan Documents:
(i)upon written notice from the Lender to the Pledgor, the Pledgor
shall vote and exercise all consensual and other powers of
ownership pertaining to the Pledged Collateral in such manner as
the Lender in its sole and absolute discretion may direct and, if
the Lender shall so request in writing, the Pledgor agrees to
execute and deliver to the Lender such additional powers,
authorizations, distributions and such other documents as the
Lender may request to secure to the Lender the rights, powers and
authorities intended to be conferred upon the Lender by this
Section 5; and
(ii)all distributions made in respect of or in exchange for all or
any part of the Pledged Collateral shall be paid directly to the
Lender and be retained by it as part of the Pledged Collateral,
subject to the terms of this Agreement, and, if the Lender shall so
request in writing, the Pledgor agrees to execute and deliver to
the Lender appropriate additional distribution and other orders and
documents to that end.
6.Sale of Pledged Collateral After an Event of Default. Ifany
Event of Default shall have occurred, then, at the Lender's option,
in addition to any rights andremedies the Lender may otherwise
have, and without further demand, advertisement or notice, and in
any manner necessary to comply with the applicable requirements of
the Internal Revenue Code concerning real estate investment trusts,
except as expressly provided for in subsection (i) of this Section
6, the Lender may apply the cash, if any, then held by it as
collateral hereunder, for the purposes and in the manner provided
in Section 7 hereof, or if there shall be no such cash or the cash
so applied shall beinsufficient to make in full all payments
provided in subsections (i) and (ii) of Section 7 hereof, the
Lender may:
(i)elect to sell the Pledged Collateral, or any part thereof, in
one or more sales, at public or private sale, conducted by any
officer or agent of, or auctioneer or attorney for, the Lender, at
the Lender's place of business or elsewhere, for cash or on credit,
and at such reasonable price or prices as the Lender shall
determine, and the Lender may be the purchaser of any or all of the
Pledged Collateral so sold. The Lender may, in its reasonable
discretion, at any such sale restrict the prospective bidders or
purchasers as to their number, nature of business and investment
intention, including, without limitation, a requirement that the
Persons making such purchases represent and agree to the
satisfaction of the Lender that they are purchasing the Pledged
Collateral for their account, for investment, and not with a view
to the distribution or resale of any thereof. Upon any such sale
the Lender shall have the right to deliver, assign and transfer the
Pledged Collateral so sold directly to the purchaser thereof. Each
purchaser (including the Lender) at any such sale shall hold the
Pledged Collateral so sold, absolutely free from any claim or right
of whatever kind, including, without limitation, any equity or
right of redemption, of the Pledgors, which each of the Pledgors
hereby specifically waives, to the extent the Pledgors may lawfully
do so, and all rights of redemption, stay or appraisal which the
Pledgors have or may have under any rule of law or statute now
existing or hereafter adopted. The Lender shall give the Pledgors
at least ten (10) days' written notice (which shall constitute
reasonable notice) of any public or private sale and shall state
the time and place fixed for such sale. Any such public sale shall
be held at such time or times within ordinary business hours as the
Lender shall fix in the notice of such sale. At any such sale the
Pledged Collateral may be sold in one lot as an entirety or in
separate lots. The Lender shall not be obligated to make any sale
pursuant to any such notice. The Lender, without notice or
publication, may adjourn any public or private sale from time to
time by announcement at the time and place fixed for such sale, or
any adjournment thereof, and any such sale may be made at any time
or place to which the same may be so adjourned without further
notice or publication. In case of any sale of all or any part of
the Pledged Collateral on credit, the Pledged Collateral so sold
may be retained by the Lender until the selling price is paid by
the purchaser thereof, but the Lender shall not incur any liability
in case of the failure of such purchaser to take up and pay for the
Pledged Collateral so sold, and in case of any such failure, such
Pledged Collateral may again be sold under and pursuant to the
provisions hereof; or
(ii)proceed by a suit or suits at law or in equity to foreclose
upon this Agreement and sell the Pledged Collateral, or any portion
thereof, under a judgment or decree of a court or courts of
competent jurisdiction.
The Lender, as attorney-in-fact pursuant to Section 10 hereof may,
in the name and stead of the Pledgors, make and execute all
conveyances, assignments and transfers of the Pledged Collateral
sold pursuant to subsection (i) or (ii) of this Section 6. If so
requested by the Lender, the Pledgors shall ratify and confirm any
sale or sales by executing and delivering to the Lender or to such
purchaser or purchasers, all such instruments as may, in the
judgment of the Lender, be reasonably necessary or appropriate for
such purpose.
The receipt of the Lender for the purchase money paid at any such
sale made by it shall be a sufficient discharge therefor to any
purchaser of the Pledged Collateral, or any portion thereof, sold
as aforesaid; and no such purchaser (or his or its representatives
or assigns), after paying such purchase money and receiving such
receipt, shall be bound to see to the application of such purchase
money or any part thereof or inany manner whatsoever be answerable
for any loss, misapplication or nonapplication of any such purchase
money, orany part thereof, or be bound to inquire as to the
authorization, necessity, expediency or regularity of any such
sale.
The curing of any Event of Default shall not divest the Lender of
its rights under this Section 6 or any other provision of this
Agreement unless and until the Lender waives said rights in
writing.
7.Application of Proceeds. The proceeds of any sale, or of
collection, of all or any part of the Pledged Collateral shall be
applied by the Lender, without any marshalling of assets, towards
payment of the items immediately set forth below, in the following
order:
(i)all costs and expenses of such sale, including, without
limitation, reasonable compensation to the Lender and its agents,
attorneys and counsel, and all other reasonable expenses,
liabilities and advances made or incurred by the Lender in
connection therewith; and
(ii)the Mortgaged Indebtedness (in such order as the Lender, in its
sole and absolute discretion shall determine);
after which, any surplus from such proceeds shall be paid to the
Pledgors and the Pledgors' successors assigns, heirs, executors or
administrators, or to whomever may be lawfully entitled to receive
the same or as a court of competent jurisdiction may direct.
8.Events of Default. For purposes of this Agreement, an Event of
Default shall mean the occurrence of any one of the following
events:
(i)any default by the Pledgors in the due observance or performance
of any covenant or agreement of the Pledgors contained herein orany
breach by the Pledgors of any representation or warranty herein
contained, and, in each case, failure by the defaulting party or
parties to cure such default within fifteen (15) days after the
date such party or parties first become aware of such default or
receive notice of such default from Lender, whichever shall first
occur; or
(ii)any Event of Default under any of the other Loan Documents
pursuant to the terms and provisions thereof.
9.Obligations with Respect to Pledged Collateral. The Lender shall
have no duty as to the collection or protection of the Pledged
Collateral or any income thereon, nor as to the preservation of any
rights pertaining thereto, beyond the safe custody thereof. The
Lender may exercise its rights with respect to the Pledged
Collateral without resorting or regard to other security or sources
of reimbursement.
10.Holder Appointed Attorney-in-Fact; Indemnity. The Lender, is
hereby appointed the attorney-in-fact, with full power of
substitution, of each of the Pledgors for the purpose of carrying
out the provisions of this Agreement and taking any action and
executing any instruments which such attorney-in-fact may deem
necessary or advisable to accomplish the purposes hereof. The
power of attorney conferred on the Lender pursuant to the
provisions of this Section 10, being coupled with an interest,
shall be irrevocable until all of the Pledgors' and the Borrower's
obligations under the Loan Documents have been fully paid and
performed and shall not be affected by any disability or incapacity
which the Pledgors may suffer and shall survive the same. Such
power of attorney is provided solely to protect the interests of
the Lender and shall not impose any duty on the Lender to exercise
any such power, and neither the Lender nor such attorney-in-fact
shall be liable for any act, omission, error in judgment or mistake
of law, except as the same may result from its gross negligence or
wilful misconduct.
Each of the Pledgors shall and hereby agrees to indemnify and save
harmless Lender from and against any liability or damage which it
may incur, in good faith and without negligence, in the exercise
and performance of any of Lender's powers and duties specifically
set forth herein and in connection with the enforcement of this
indemnity agreement. The indemnity provisions of this Section 10
shall survive the complete payment and performance of the Mortgaged
Indebtedness and the foreclosure of the Mortgage. As used in this
Section 10, the word foreclosure shall include any acquisition of
the Mortgaged Property by voluntary deed or assignment in lieu of
foreclosure.
11.No Waiver. No failure on the part of the Lender to exercise,
and no delay on the part of the Lender in exercising, any right,
power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by the Lender of any right,
power or remedy hereunder preclude any other or further right,
power or remedy. The remedies herein provided are cumulative and
are not exclusive of any remedies provided by law.
12.Termination of Pledge. This pledge shall remain in effect until
all terms and conditions of all of the other Loan Documents have
been satisfied in full and the other Loan Documents shall have
expired by their terms. The Lender shall forthwith assign,
transfer and deliver to the Pledgors without representation,
warranty or recourse, against appropriate receipts, all the Pledged
Collateral, if any, then held by it in pledge hereunder.
13.Governing Law. This Agreement shall in all respects be
construed and interpreted in accordance with and governed by the
laws of the Commonwealth of Massachusetts.
To the maximum extent permitted by applicable law, the Pledgors
hereby submit to the jurisdiction of the courts of the Commonwealth
of Massachusetts and the United States District Court for the
District of Massachusetts, as well as to the jurisdiction of all
courts from which an appeal may be taken from the aforesaid courts,
for the purpose of any suit, action or other proceeding arising out
of, or with respect to any of the Loan Documents and expressly
waive any and all objections the Pledgors may have as to venue in
any of such courts.
14.Further Assurances. At any time and from time to time, upon
request by the Lender, the Pledgors shall promptly make, execute
and deliver, or cause to be made, executed and delivered, to the
Lender and, where appropriate, cause to be recorded or filed (and
from time to time thereafter to be re-recorded or refiled) at such
time and in such offices and places as shall be deemed desirable by
the Lender (in its sole and absolute discretion), any such other
and further amendments, assignments, instruments of further
assurance, certificates and other documents as the Lender may, in
its sole and absolute discretion, deem desirable to: (i) enable the
Lender to negotiate the Note and to assign the Loan Documents; (ii)
enable the Lender to execute participation agreements with respect
to all or any portion of the Mortgaged Indebtedness or (iii)
effectuate, complete, or perfect, or to continue and preserve the
obligations of the Pledgors under this Agreement; provided,
however, that no such additional document or other instrument
requested by the Lender hereunder shall increase the Mortgaged
Indebtedness (except as to the costs and expenses of the Lender in
connection therewith).
Any failure by the Pledgors to comply with any request pursuant to
this Section 14 within twenty (20) days after such request is made
by the Lender, shall be an Event of Default hereunder and upon such
Event of Default, the Lender may make, execute, record, file,
re-record or refile any and all such amendments, assignments,
instruments, certificates, and documents for and in the name of the
Pledgors, and the Pledgors each hereby appoint the Lender as their
attorney-in-fact, with full power of substitution, to take such
actions (on their behalf and in their name) as the Lender, in its
sole and absolute discretion, may deem necessary or desirable to
effectuate the intent of this Section 14.
The power of attorney conferred on the Lender pursuant to the
provisions of this Section 14, being coupled with an interest,
shall be irrevocable until all of the Mortgaged Indebtedness is
fully paid and performed and shall not be affected by any
disability or incapacity which the Pledgors may suffer and shall
survive the same. Such power of attorney is provided solely to
protect the interest of the Lender and shall not impose any duty on
the Lender to exercise any such power, and neither the Lender nor
such attorney in fact shall be liable for any act, omission, error
in judgment or mistake of law, except as the same may result from
its gross negligence or wilful misconduct.
15.Notices. Any notice, request, demand, statement or consent made
hereunder shall be in writing and shall be deemed duly given if
personally delivered, sent by certified mail, return receipt
requested, or sent by a nationally recognized commercial overnight
delivery service with provisions for a receipt, postage or delivery
charges prepaid, and shall be deemed given when postmarked or
placed in the possession of such mail or delivery service and
addressed as follows:
If to the Pledgors:Geriatric and Medical Services, Inc.
Geriatric & Medical Companies, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
Attention: President
GMC-LTC Management, Inc.
Geriatric & Medical Companies, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
Attention: President
With a copy to:Mesirov, Gelman, Jaffe, Cramer & Jamieson
1735 Market Street
Philadelphia, Pennsylvania 19103-7598
Attn: Robert P. Krauss, Esq.
If to the Lender:Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: President
With copies to:Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: General Counsel
Mintz, Levin, Cohn, Ferris
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Andrew R. Urban, Esq.
or at such other place as any of the parties hereto may from time
to time hereafter designate to the others in writing. Any notice
given to the Pledgors from the Lender shall not imply that such
notice or any further or similar notice was or is required.
16.Amendments and Modifications. This Agreement sets forth the
entire agreement of the parties with respect to the subject matter
hereof and may not be amended, modified, revised or terminated
except by an agreement in writing signed by the party against whom
enforcement is sought. The provisions of this Agreement shall
extend and be applicable to all renewals, replacements, amendments,
extensions, substitutions, revisions, consolidations and
modifications of the Loan Documents and any and all references
herein to the Loan Documents shall be deemed to include any such
renewals, replacements, amendments, substitutions, revisions,
extensions, consolidations or modifications thereof.
Notwithstanding the foregoing, any reference contained herein,
whether express or implied, to any renewal, replacement, amendment,
extension, substitution, revision, consolidation or modification of
any of the Loan Documents is not intended to constitute an
agreement or consent by the Lender to any such renewal,
replacement, amendment, extension, substitution, revision,
consolidation or modification of any of the Loan Documents but,
rather as a reference only to those instances where the Lender may
give consent to any such renewal, replacement, amendment,
extension, substitution, revision, consolidation or modification,
as the same may be required pursuant to the terms, covenants or
conditions of the Loan Documents.
17.Invalidity. If any provision of this Agreement or the
application thereof to any Person or circumstance, for any reason
and to any extent, shall be held to be invalid or unenforceable,
neither the remainder of this Agreement nor the application of such
provision to any other Person or circumstance shall be affected
thereby, but rather the same shall be enforced to the greatest
extent permitted by law.
Notwithstanding the foregoing, it is the intention of the Pledgors
and the Lender that if any provision of any of the Loan Documents
is capable of two (2) constructions, one of which would render the
provision valid, then such provision shall be construed in
accordance with the construction which renders such provision
valid.
18.Successors and Assigns; Joint and Several Liability. This
Agreement shall be (i) binding on the Pledgors and their respective
heirs, executors, administrators, legal representatives and
permitted successors and assigns and (ii) inure to the benefit of
the Lender, any other Person who may now or hereafter hold any
interest in the Loan and their respective successors and assigns.
Notwithstanding the foregoing, the Pledgors may not assign or
otherwise transfer this Agreement or any of their respective rights
or obligations hereunder without the express written consent of the
Lender, in each instance, which consent may be withheld in the
Lender's sole and absolute discretion. Where more than one Person
shall execute this Agreement on behalf of the Pledgors, then each
such Person shall be fully liable for all of the obligations of the
Pledgors hereunder and all such obligations shall be joint and
several.
19.Rules of Construction. References in this Agreement to
"herein," "hereof" and "hereunder" shall be deemed to refer to this
Agreement and shall not be limited to the particular text or
Section in which such words appear. References in this Agreement
to the Lender's attorneys shall be deemed to include, without
limitation, special counsel and local counsel for the Lender.
References in this Agreement to attorneys' fees and expenses shall
be deemed to include all costs for administrative, paralegal and
other support staff. References in this Agreement to the Mortgaged
Property shall be deemed to include references to all of the
Mortgaged Property and references to any portion thereof. The use
of any gender shall include all genders and the singular number
shall include the plural and vice versa as the context may require.
As used herein, the term "including", when following any general
statement, will not be construed to limit such statement to the
specific items or matters as provided immediately following the
term "including" (whether or not non-limiting language such as
"without limitation" or "but not limited to" or words of similar
import are also used), but rather will be deemed to refer to all
items or matters that could reasonably fall within the broader
scope of the general statement.
All capitalized terms used herein and not otherwise defined herein
shall have the same meanings as set forth for such terms under the
Loan Agreement.
20.Captions and Headings. The captions and headings set forth in
this Agreement are included for convenience and reference only and
the words contained therein shall in no way be held or deemed to
define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning of, or the scope or intent
of, this Agreement or any part hereof.
20.Time of the Essence. Time is of the essence of each and every
term, condition, covenant and warranty set forth herein.
21. Limitation of Liability. The Declaration of Trust establishing
the sole shareholder of the Lender, Meditrust, a Massachusetts
business trust ("Meditrust"), dated August6, 1985 (the
"Declaration"), a copy of which, together with all amendments
thereto, is duly filed in the office of the Secretary of State of
the Commonwealth of Massachusetts, provides that the name
"Meditrust" refers to the trustees under the Declaration
collectively as trustees, but not individually or personally; and
that no trustee, officer, shareholder, employee or agent of
Meditrust or its subsidiaries shall be held to any personal
liability, jointly, or severally, for any obligation of, or claim
against Meditrust or any of its subsidiaries. All persons dealing
with Meditrust or the Lender, in any way, shall look only to the
assets of Meditrust or the Lender for the payment of any sum or the
performance of any obligations. Furthermore, in no event shall the
Lender or Meditrust ever be liable to the Pledgors for any indirect
or consequential damages suffered by the Pledgors resulting from
any cause whatsoever. Notwithstanding the foregoing, the parties
hereto acknowledge and agree that Meditrust is not a party to this
Agreement. The Pledgors shall look only to the Lender for the
payment of any sum or performance of any obligation due by or from
the Lender pursuant to the terms and provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal on the day and year first above written.
WITNESS:
PLEDGORS
GERIATRIC AND MEDICAL SERVICES, INC., a New Jersey corporation
By:
Name:
Name:
Title:
GMC-LTC MANAGEMENT, INC., a Pennsylvania corporation
By:
Name:
Name:
Title:
WITNESS:
LENDER
MEDITRUST MORTGAGE INVESTMENTS, INC., a Delaware corporation
By:
Name
Name:
Title:
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT is made as of the day of May, 1995, by
Norristown Nursing and Rehabilitation Center, Associates, L.P., a
Pennsylvania limited partnership, having its principal place of
business at c/o Geriatric & Medical Companies, Inc., 5601 Chestnut
Street, Philadelphia, Pennsylvania 19139 (hereinafter referred to
as the "Assignor") to Meditrust Mortgage Investments, Inc., a
Delaware corporation, having its principal address at 197 First
Avenue, Needham, Massachusetts 02194 (hereinafter referred to as
the "Assignee").
W I T N E S S E T H
WHEREAS, the Assignee has loaned to the Assignor the sum of SIX
MILLION NINE HUNDRED THIRTY-NINE THOUSAND DOLLARS ($6,939,000),
evidenced by a promissory note of even date and delivery herewith
made by the Assignor to the order of the Assignee (hereinafter
referred to as the "Note"); and
WHEREAS, the Note is referred to in that certain construction loan
agreement of even date herewith by and between the Assignor and the
Assignee (the "Loan Agreement") and is in all respects subject to
the provisions thereof;
WHEREAS, the payment of the indebtedness evidenced by the Note is
secured, in part, by a mortgage and security agreement (hereinafter
referred to as the "Mortgage") of even date and record herewith,
executed by the Assignor in favor of the Assignee, encumbering a
certain parcel of land described on EXHIBIT A attached hereto and
incorporated by reference (the parcel of land described on EXHIBIT
A are more particularly described in the Mortgage and, together
with the improvements to be located thereon, are hereinafter
collectively referred to as the "Mortgaged Property" and the
facility to be located on said parcel of land is hereinafter
referred to as the "Facility");
WHEREAS, the Note, the Loan Agreement, the Mortgage, this
Assignment and all other documents and instruments evidencing or
securing repayment of, or otherwise pertaining to and executed and
delivered in connection with, the loan evidenced by the Note are
hereinafter collectively referred to as the "Loan Documents".
Capitalized terms used herein but not otherwise defined herein
shall have the meanings ascribed to such terms in the Loan
Agreement;
WHEREAS, the Assignee has required an assignment of leases as
additional security for the complete payment of all indebtedness
and the performance, observance and fulfillment of all of the
indebtedness, covenants, obligations, conditions, warranties,
agreements and undertakings (hereinafter collectively referred to
as the "Mortgaged Indebtedness") contained in:
(i)the Loan Documents including, without limitation, the payment of
the principal indebtedness and accrued and unpaid interest due
under the Note, any applicable Prepayment Fee due under the Note,
any Late Payment Charges due under the Note and all other charges,
costs, advances and other monetary obligations (including, without
limitation, Additional Interest) due under the Loan Documents; and
(ii)all other agreements, documents and instruments evidencing any
indebtedness, covenant, obligation, agreement or undertaking due
to, or made for the benefit of, the Assignee (or any of its
Affiliates) by: (a)the Assignor, (b)any Affiliate of the Assignor,
(c)the Guarantor or any endorser, surety or other guarantor of the
Note or (d)any Affiliate of the Guarantor or any such endorser,
surety or other guarantor; whether such indebtedness, covenants,
liabilities, obligations, agreements or undertakings are direct or
indirect, absolute or contingent, liquidated or unliquidated, due
or to become due, joint, several or joint and several, primary or
secondary, now existing or hereafter arising, including, without
limitation, all indebtedness, covenants, liabilities, obligations,
agreements and undertakings set forth under the agreements listed
on EXHIBITB attached hereto and incorporated herein by reference;
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Assignor does hereby transfer,
assign, deliver and grant a security interest to the Assignee as
follows:
I. ASSIGNMENT
1.1.Assignment of Leases. The Assignor hereby presently and
irrevocably assigns and transfers to the Assignee all of the
Assignor's right, title, and interest in and to all leases, license
agreements, concession agreements, tenancy at will agreements and
other occupancy agreements of every kind and nature, whether oral
or in writing, now in existence or subsequently entered into by the
Assignor, encumbering or affecting all or any portion of the
Mortgaged Property (hereinafter collectively referred to as the
"Leases," which term as here and hereinafter used shall be
construed to include the singular and plural thereof if the context
so requires),
including, but not limited to, the Leases listed on the EXHIBITC
attached hereto and incorporated herein by reference (hereinafter
referred to as the "Schedule of Leases"), together with all
extensions, renewals, modifications and replacements thereof, and
together with any and all guaranties (hereinafter collectively
referred to as the "Guaranties") of the obligations of the lessees,
licensees, concessionaires and occupants (hereinafter collectively
referred to as the "Lessees") under the Leases.
1.2.Assignment Absolute. This Assignment shall be a present,
absolute and unconditional assignment, and immediately upon the
execution and delivery hereof, this Assignment shall give the
Assignee the right to collect all rents, revenues, royalties,
issues, profits, insurance proceeds, condemnation awards, license
fees, concession fees and all other income and security of every
kind and nature due by virtue of the Leases and the Guaranties
(hereinafter collectively referred to as the "Rents").
1.3.Assignment of Security Deposit. If any of the Leases provide
for a security deposit to be paid by any Lessee to the Assignor,
the Assignor hereby assigns its right, title and interest in and to
such security deposit to the Assignee. Notwithstanding the
foregoing, the Assignor shall have the right to retain such
security deposits provided there has been no Event of Default
(hereinafter defined in Section 4.1 hereof) hereunder or under any
of the other Loan Documents and the Assignee shall not be obligated
to any Lessee to account for any such security deposit unless and
until the Assignee obtains actual possession or control of such
security deposit after an Event of Default.
II. LICENSE TO COLLECT
The Assignee hereby grants to the Assignor a license to collect the
Rents as such Rents respectively become due and to enforce the
Leases and the Guaranties, so long as there is no Event of Default
hereunder or under any of the other Loan Documents. The Assignor
shall hold the Rents, or such portion of the Rents as is sufficient
to discharge all sums currently due under the Loan Documents, in
trust for use in satisfaction of the Mortgaged Indebtedness. The
Assignor hereby irrevocably authorizes and directs each of the
Lessees under the Leases and the guarantors under the Guaranties,
upon receipt of a written notice from the Assignee so demanding, to
pay all Rents due or which become due under the Leases or the
Guaranties to the Assignee and to continue to do so until otherwise
notified by the Assignee. Neither the Lessees, nor any of the
guarantors under the Guaranties shall have any obligation to
determine whether or not an Event of Default hereunder does in fact
exist.
Notwithstanding anything contained herein to the contrary, the
Assignor agrees that the Assignee, and not the Assignor, shall be
and is deemed to be the creditor of each Lessee under each Lease
and each guarantor under each Guaranty with respect to any and all
of the Rents which may be payable by any Lessee under any Lease and
by any guarantor under any of the Guaranties on account of a
default by the Lessee under such Lease, including, without
limitation, any damages or further rentals payable by such Lessee
or such guarantor on account of or after such default, and in
respect of all assignments for the benefit of creditors and
bankruptcy, reorganization, insolvency, dissolution or receivership
proceedings affecting any Lessee under any Lease or any guarantor
under any of the Guaranties (without any obligation on the part of
the Assignee, however, to file or make timely filings of claims in
such proceedings or otherwise to pursue creditor's rights thereon),
and the Assignee shall have the option to apply any money received
or receivable by the Assignee as such creditor in reduction of the
Mortgaged Indebtedness, whether or not an Event of Default under
any of the Loan Documents shall then exist.
III. WARRANTIES AND COVENANTS
3.1.Warranties of Assignor. The Assignor hereby warrants and
represents the following:
(i)the Assignor is the sole holder of the landlord's or owner's
interest in and under the Leases and the Guaranties and has good
right to sell, assign, transfer and set over the Leases, the
Guaranties and the Rents to the Assignee;
(ii)the Assignor has made no assignment currently outstanding
(other than this Assignment) of any of the Assignor's rights in any
of the Leases, the Guaranties or the Rents;
(iii)there is no default by the Assignor or any Lessee under any of
the Leases or by any guarantor under any of the Guaranties, or any
state of facts which, with the passing of time or the giving of
notice or both, would constitute a default by the Assignor or any
Lessee under any of the Leases or by any guarantor under any of the
Guaranties;
(iv)all of the Leases provide for Rents to be paid monthly in
advance, all of the Rents due to date have been collected and no
Rents have been collected more than one (1) month in advance;
(v)no Lessee under any of the Leases nor any guarantor under any of
the Guaranties has any defense, setoff or counterclaim against the
Assignor;
(vi)the Schedule of Leases attached as EXHIBIT C hereto lists all
of the Leases currently in effect for the Mortgaged Property and
true and correct copies thereof have been provided to the Assignee;
(vii)the Assignor has provided the Assignee with true and correct
copies of all of the Guaranties currently in effect;
(viii)each of the Leases and the Guaranties (including any
amendments and modifications thereof) submitted by the Assignor to
the Assignee constitutes the entire agreement between the parties
thereto, and there are no agreements, amendments, modifications,
undertakings, representations or warranties, either oral or
written, which have not been submitted to the Assignee;
(ix)each of the Leases and the Guaranties is valid, in full force
and effect, and enforceable in accordance with its terms;
(x)neither the Assignor, nor any Lessee has commenced any action or
given or served any notice for the purpose of terminating any
Lease; and
(xi)no rental concession in the form of any period of free Rent or
any other waiver, release, reduction, discount or other alteration
of the Rents due or to become due has been granted to any Lessee
under the Leases or any guarantor under the Guaranties for any
period subsequent to the effective date of this Assignment.
3.2.Covenants of the Assignor. The Assignor hereby covenants and
agrees that the Assignor:
(i)shall fulfill, perform and observe (or cause to be fulfilled,
observed and performed) all of the duties, covenants and
obligations of landlord under the Leases;
(ii)shall give prompt written notice to the Assignee of any default
or claim of default by the Assignor or any Lessee under any of the
Leases or by any guarantor under any of the Guaranties, along with
a complete copy of any written notice of such default or claim of
default;
(iii)shall enforce (in a manner satisfactory to the Assignee and
short of termination of either the Leases or the Guaranties), the
performance by the Lessees and the guarantors under the Guaranties
of all of their duties, covenants and obligations under the Leases
and the Guaranties, as the case may be;
(iv)shall appear in and defend any action or proceeding arising
under or in any manner connected with (a)any of the Leases, (b)the
obligations and undertakings of the landlord or any Lessee under
the Leases and (c)the obligations and undertakings of the
guarantors under the Guaranties;
(v)shall not alter, modify, amend, release, replace, terminate or
cancel any of the Leases or any of the Guaranties, nor accept a
surrender of any of the Leases, nor waive any term or condition of
any of the Leases or any of the Guaranties without the prior
written consent of Assignee, in each instance, which consent may be
withheld in the Assignee's sole and absolute discretion;
(vi)shall not collect nor accept any Rents more than one (1)month
in advance of the time any such Rents becomes due;
(vii)shall not execute any future Leases, nor consent to the
assignment of any Lessee's interest under any of the Leases, nor
consent to any subletting thereunder, without the prior written
consent of the Assignee, in each instance, which consent may be
withheld in the Assignee's sole and absolute discretion;
(viii)shall not consent to the assignment of the guarantors'
obligations under any of the Guaranties without prior written
consent of the Assignee, in each instance, which consent may be
withheld in the Assignee's sole and absolute discretion;
(ix)shall not execute any assignment of the landlord's interest
under any of the Leases, nor any assignment of the Rents or any
interest therein and shall not suffer or permit any such assignment
to occur by operation of law;
(x)shall not subordinate any Lease to any lien other than the lien
of the Mortgage, nor permit, consent or agree to any such
subordination;
(xi)shall not take any action which may cause or permit the estate
of any of the Lessees under the Leases to merge with the Assignor's
interest in the Mortgaged Property;
(xii)shall not take any action (or allow any action to be taken)
that may impair the security of the Leases;
(xiii)shall not commit or suffer any violation of law in connection
with the Leases, including, without limitation, any violation of
the provisions of the Commonwealth of Pennsylvania; and
(xiv)shall not allow the premises demised under any Lease to be
abandoned or vacated.
3.3.Covenant of the Assignee. Upon the complete payment and
performance of the Mortgaged Indebtedness other than Related Party
Obligations and provided that no event of default or event which
with the passage of time, the giving of notice or both would
constitute an event of default has occurred with respect to the
Related Party Obligations, this Assignment shall be deemed
terminated and released by the Assignee without further action and
shall thereupon be of no further force or effect. The Assignor
agrees that an affidavit, certificate, letter or statement of any
officer, agent or attorney of the Assignee indicating that any part
of the Mortgaged Indebtedness remains outstanding shall be deemed
conclusive evidence of the validity, effectiveness and continuing
force of this Assignment and any Person, including, without
limitation, any Lessee or any guarantor under any of the Guaranties
may and is hereby authorized to rely thereon. Notwithstanding the
foregoing, the recording with the applicable recording office of a
duly authorized and executed discharge of mortgage discharging the
Mortgage shall likewise discharge this Assignment.
ARTICLE IV. DEFAULTS; ASSIGNEE'S REMEDIES
4.1.Events of Default. Each of the following shall constitute an
Event of Default hereunder:
(i)the occurrence of an Event of Default under any of the Loan
Documents;
(ii)any breach by the Assignor of any covenant, agreement, duty,
obligation or condition of this Assignment; and
(iii)if any representation or warranty by the Assignor contained in
this Assignment proves to be false or misleading in any material
respect.
4.2.Remedies. Upon an Event of Default hereunder and at any time
thereafter (without in any way waiving such Event of Default), at
the Assignee's option and without notice or demand of any kind, and
without regard to the adequacy of security for the complete payment
and performance of the Mortgaged Indebtedness, the Assignee may
exercise any or all of the following remedies, either in person or
by agent, with or without bringing any action or proceeding, or by
a receiver appointed by a court:
(i)declare all of the Mortgaged Indebtedness immediately due and
payable;
(ii)take physical possession of the Mortgaged Property and of all
books, records, documents and accounts relating to the Mortgaged
Property and the Assignor's business thereon, and (at the
Assignor's sole cost and expense) hold, complete the construction
of, lease, manage, maintain and operate the Mortgaged Property and
the Assignor's business thereon (on such terms and for such period
of time as the Assignee, in its sole and absolute discretion, may
deem proper) without any interference whatsoever from the Assignor;
(iii)with or without taking possession of the Mortgaged Property,
collect the Rents (including those past due and unpaid) and any
other sums owing under any of the Leases and Guaranties and, in the
Assignee's sole and absolute discretion, apply such Rents to the
payment of (a) all expenses of managing the Mortgaged Property,
including, without limitation, the salaries, fees and wages of a
managing agent and such other employees as the Assignee, in its
sole and absolute discretion, may deem necessary or desirable, and
all expenses of operating and maintaining the Mortgaged Property,
including, without limitation, all taxes, charges, claims,
assessments, water rents, sewer rents and any other liens, and
premiums for all insurance which the Assignee, in its sole and
absolute discretion, may deem necessary or desirable, and the cost
of all alterations, renovations, repairs or replacements, and all
expenses incident to taking and retaining possession of the
Mortgaged Property and (b) the Mortgaged Indebtedness;
(iv)institute any legal or equitable action (in either the
Assignor's or the Assignee's name) which the Assignee, in its sole
and absolute discretion, deems desirable to collect any or all of
the Rents;
(v)perform any or all obligations of the Assignor under any of the
Leases or this Assignment and to take such actions as the Assignee
deems appropriate to protect its security, including, without
limitation:
(a) appearing in any action or proceeding affecting any of the
Leases, any of the Guaranties or the Mortgaged Property;
(b) executing new Leases, and modifying, terminating or cancelling
existing Leases or Guaranties;
(c) collecting, modifying and compromising any Rents payable under
the Leases and the Guaranties; and
(d) enforcing any of the Leases and the Guaranties, including, if
necessary, evicting any Lessees; and
(vi)exercise any other rights and remedies permitted to the
Assignee under applicable law.
All costs and expenses incurred by the Assignee in connection with
any actions taken pursuant to this Section 4.2, including, without
limitation, attorneys' fees and expenses and court costs, shall be
a demand obligation of the Assignor to the Assignee, shall bear
interest at the Advances Rate and shall be secured hereby and by
the Mortgage as fully and effectively and with the same priority as
every other obligation of the Assignor hereunder.
The foregoing rights and remedies are in addition to all other
rights and remedies afforded to the Assignee under any of the other
Loan Documents or at law or in equity, by statute or otherwise, all
of which are hereby reserved by the Assignee, and this Assignment
is made and accepted without prejudice to any such rights and
remedies. The exercise by the Assignee of any of the rights or
remedies granted to it in this Assignment, including, without
limitation, the collection of the Rents and the application thereof
as herein provided, shall not be considered a waiver of any default
hereunder or under any of the Loan Documents. All of the rights
and remedies of the Assignee under the Loan Documents shall be
separate and cumulative and may be exercised concurrently or
successively in the Assignee's sole and absolute discretion. The
exercise of any right or remedy by the Assignee hereunder shall not
be considered to be a waiver of any of the Assignee's other rights
or remedies hereunder or under any of the other Loan Documents; in
particular, but without limitation, the Assignee's exercise of its
rights to collect and receive Rents shall not preclude the Assignee
from simultaneously or subsequently electing to take possession of
the Mortgaged Property, nor shall the Assignee's exercise of its
rights or remedies with respect to any particular Lease, any of the
Guaranties or any portion of the Mortgaged Property (which exercise
shall be expressly permitted, at the Assignee's option) preclude
the Assignee from simultaneously or subsequently electing to
exercise any of its rights or remedies with respect to any other
Lease, any of the Guaranties or any other portion of the Mortgaged
Property subject hereto. No failure or delay on the part of the
Assignee to exercise any such right or remedy shall operate as a
waiver thereof. Notwithstanding the foregoing, nothing contained
in this Assignment and no entry by the Assignee upon the Mortgaged
Property as herein provided shall be construed so that the Assignee
shall be deemed to be a mortgagee in possession.
Any failure or delay by the Assignee to insist upon the strict
performance of or compliance with any of the terms, conditions,
covenants or warranties hereof shall not be deemed to be a waiver
of any of the terms, conditions, covenants and provisions hereof,
and the Assignee, notwithstanding any such failure or delay, shall
have the right thereafter to insist upon the strict performance of
and compliance with any and all of the terms and provisions hereof.
No waiver at any time of any of the terms, conditions, covenants or
provisions of this Assignment shall be construed as a waiver of any
other term, condition, covenant or provision of this Assignment;
nor shall such a waiver in any one instance be construed as a
waiver of the same term, condition, covenant or provision in any
subsequent instance or circumstance. The Assignee shall not, by
any act, delay, omission or otherwise, be deemed to have waived any
of its rights or remedies hereunder or under any of the other Loan
Documents unless such waiver is in writing and signed by the
Assignee, and then, only to the extent specifically set forth
therein.
The Assignor does hereby make, constitute and appoint the Assignee
or any officer or agent designated by the Assignee, the Assignor's
true and lawful attorney-in-fact, with power of substitution, at
any time after an Event of Default, to
(i) endorse the name of the Assignor upon any notes, checks,
drafts, money orders, or other instruments of payment with respect
to the Leases and Guaranties and with respect to all Rents in
connection therewith;
(ii) give such notice and directions, in writing or otherwise, to
the United States Post Office as may be necessary to effect
delivery to the Assignee or any of its designated agents of all
mail addressed to the Assignor; and
(iii) take possession of the Mortgaged Property, and to have,
hold, complete the construction of, manage, lease and operate the
same; hereby granting unto the Assignor's said attorney full power
to do any and all things necessary to be done in and about the
Mortgaged Property as fully and effectually as the Assignor might
or could do, and hereby ratifying all that said attorney shall do
or cause to be done by virtue hereof.
The power of attorney conferred on the Assignee pursuant to the
provisions of this Section4.2, being coupled with an interest,
shall be irrevocable until all of the Mortgaged Indebtedness is
fully paid and performed and shall not be affected by any
disability or incapacity which the Assignor may suffer and shall
survive the same. Such power of attorney is provided solely to
protect the interests of the Assignee and shall not impose any duty
on the Assignee to exercise any such power, and neither the
Assignee nor such attorney-in-fact shall be liable for any act,
omission, error in judgment or mistake of law, except as the same
may result from its gross negligence or wilful misconduct.
4.3.Application of Proceeds. Any amounts collected by the Assignee
hereunder shall be applied by the Assignee, without marshalling of
assets, towards the payment of the Mortgaged Indebtedness in such
order as the Assignee shall determine in its sole and absolute
discretion.
ARTICLE V. NO LIABILITY, INDEMNIFICATION
5.1.No Liability. Nothing in this Assignment shall be construed to
impose any obligation on or responsibility from the Assignee to the
Assignor, nor from the Assignee to any Lessee under any of the
Leases, any guarantor under any of the Guaranties or any other
third party, for:
(i) the control, care, management, construction or repair of the
Mortgaged Property;
(ii) the performance of any of the landlord's obligations under
any of the Leases;
(iii) for any waste committed on the Mortgaged Property;
(iv) for any dangerous or defective condition on or under the
Mortgaged Property;
(v) the Assignee's failure to let the Mortgaged Property after an
Event of Default hereunder or from any other act or omission of the
Assignee in managing the Mortgaged Property after an Event of
Default hereunder; or
(vi) for any negligence in the management, upkeep, construction,
repair or control of the Mortgaged Property resulting in loss or
injury or death to any Lessee, licensee, employee or other party.
5.2.Indemnification. The Assignor shall indemnify and hold the
Assignee harmless from and against all obligations, liabilities,
losses, costs, claims, expenses, fines, penalties and damages
(including, without limitation, attorneys' fees and expenses and
court costs) which the Assignee may incur:
(i) by reason of this Assignment including without limitation the
exercise of any right or remedy hereunder;
(ii) in connection with any of the Leases (including, without
limitation, all claims and demands which may be asserted against
the Assignee by reason of any alleged obligation or undertaking on
its part to perform or discharge any of the terms, covenants or
agreements contained in any Lease); and
(iii) with regard to the Mortgaged Property.
The Assignor shall defend the Assignee against any claim or
litigation involving the Assignee for the same unless solely
resulting from the Assignee's gross negligence or willful
misconduct, with counsel approved by the Assignee, and should the
Assignee incur any such obligation, liability, loss, cost, expense,
fine, penalty or damage, then the Assignor shall reimburse the
Assignee for such amounts upon demand, and upon the failure of the
Assignor so to do, the Assignee may, at its option, declare the
entire Mortgaged Indebtedness immediately due and payable.
Notwithstanding anything to the contrary contained herein, the
Assignee shall have the option of conducting its own defense with
counsel of the Assignee's selection, but at the expense of the
Assignor. The foregoing indemnification agreement shall also
include all costs incurred by the Assignee in connection with the
enforcement of said indemnification agreement.
Any amounts owed to the Assignee under this Section 5.2 shall be a
demand obligation, shall bear interest at the Advances Rate and, to
the extent permitted by law, shall be added to the Mortgaged
Indebtedness and shall be secured by the lien of this Assignment as
fully and effectively and with the same priority as every other
obligation of the Assignor secured hereby. The provisions of this
Section 5.2 shall survive the complete payment and performance of
the Mortgaged Indebtedness and the foreclosure of the Mortgage.
ARTICLE VI. MISCELLANEOUS
6.1.Modifications, Etc. The Assignor hereby consents and agrees
that, at any time and from time to time, without notice to or
further consent from the Assignor and either with or without
consideration, the Assignee may surrender any property or other
security of any kind or nature whatsoever held by the Assignee or
by any Person on the Assignee's behalf or for the Assignee's
account, securing the Mortgaged Indebtedness; substitute for any
collateral so held by the Assignee, other collateral of like kind,
or of any kind; agree to modification of the terms of the or any of
the Loan Documents; extend or renew Loan Documents (for any period
and upon such terms and conditions as the Assignee, in its sole and
absolute discretion, may deem desirable); grant releases,
compromises and indulgences with respect to any of the Loan
Documents to any person now or hereafter liable thereunder or
hereunder; release any guarantor or endorser of any of the Loan
Documents; or take or fail to take any action of any type
whatsoever; and no such action which the Assignee shall take or
fail to take in connection with any of the Loan Documents, or any
security for the payment and performance of the Mortgaged
Indebtedness, nor any course of dealing with the Assignor or any
other person, shall release the Assignor's obligations hereunder,
affect this Assignment in any way or afford the Assignor any
recourse against the Assignee.
6.2.Successors and Assigns; Joint and Several Liability. This
Assignment shall (i) be binding on the Assignor and the Assignor's
heirs, executors, administrators, legal representatives, and
permitted successors and assigns and (ii) inure to the benefit of
the Assignee, any other Person who may now or hereafter hold any
interest in the Loan and their respective successors and assigns.
Where more than one Person shall execute this Assignment, then each
such Person shall be fully liable for all of the obligations of the
Assignor hereunder and all such obligations shall be joint and
several.
6.3.Notices. Any notice, request, demand, statement or consent
made hereunder shall be in writing and shall be deemed duly given
if personally delivered, sent by certified mail, return receipt
requested, or sent by a nationally recognized commercial overnight
delivery service with provisions for a receipt, postage or delivery
charges prepaid, and shall be deemed given when postmarked or
placed in the possession of such mail or delivery service and
addressed as follows:
If to the Assignor:Norristown Nursing and Rehabilitation Center,
Associates, L.P.
Geriatric & Medical Companies, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
Attention: President
With a copy to:Mesirov, Gelman, Jaffe, Cramer & Jamieson
1735 Market Street
Philadelphia, Pennsylvania 19103-7598
Attn: Robert P. Krauss, Esq.
If to the Assignee:Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: President
With copies to:Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: General Counsel
Mintz, Levin, Cohn, Ferris
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Andrew R. Urban, Esq.
or at such other place as the Assignor or Assignee may from time to
time hereafter designate to the other in writing. Any notice given
to the Assignor by the Assignee at any time shall not imply that
such notice or any further or similar notice was or is required.
6.4.Governing Law. This Assignment shall be construed, and the
rights and obligations of the Assignee and the Assignor shall be
determined, in accordance with the laws of the Commonwealth of
Massachusetts, except that the laws of the Commonwealth of
Pennsylvania shall govern (i) this Assignment to the extent
necessary for the Assignee to perfect, protect or enforce the lien
hereof and to obtain the benefit of the rights and remedies set
forth herein with respect to the Mortgaged Property and (ii)
procedural requirements which must be governed by the law of the
state in which the Mortgaged Property is located.
6.5.Captions and Headings. The captions and headings set forth in
this Assignment are included for convenience and reference only and
the words contained therein shall in no way be held or deemed to
define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning of, or the scope or intent
of, this Assignment or any part hereof.
6.6.Amendments, Waivers and Modifications. This Assignment and the
other Loan Documents set forth the entire agreement of the Assignor
and the Assignee with respect to the subject matter hereof and none
of the terms, covenants, conditions, warranties or representations
contained in this Assignment may be renewed, replaced, amended,
modified, extended, substituted, revised, waived or terminated,
except by an agreement, in writing, signed by the Person against
whom enforcement is sought. The terms or provisions of this
Assignment shall extend and be applicable to all renewals,
replacements, amendments, extensions, substitutions, revisions,
consolidations and modifications of the Loan Documents, the Leases
and the Guaranties; and all references herein to the Loan
Documents, the Leases or the Guaranties shall be deemed to include
any such renewals, replacements, amendments, extensions,
substitutions, revisions, consolidations or modifications thereof.
Notwithstanding the foregoing, any reference contained herein,
whether express or implied, to any renewal, replacement, amendment,
extension, substitution, revision, consolidation or modification of
any of the Loan Documents or of any Lease or Guaranty is not
intended to constitute an agreement or consent by the Lender to any
such renewal, replacement, amendment, extension, substitution,
revision, consolidation or modification of any of the Loan
Documents or any Lease or Guaranty; but, rather as a reference only
to those instances where the Lender may give consent to any such
renewal, replacement, amendment, extension, substitution, revision,
consolidation or modification, as the same may be required pursuant
to the terms, covenants or conditions of the Loan Documents.
6.7Invalidity. If any provision of this Assignment or the
application thereof to any person or circumstance, for any reason
and to any extent, shall be held to be invalid or unenforceable,
neither the remainder of this Assignment nor the application of
such provision to any other person or circumstance shall be
affected thereby, but rather the same shall be enforced to the
greatest extent permitted by law. Notwithstanding the foregoing,
if such provision provides for the payment of principal or interest
with respect to the Mortgaged Indebtedness, Additional Interest,
any Prepayment Fee, the Advance Rate, any administrative fees, or
the Construction Loan Commitment Fee or the Permanent Loan
Commitment Fee, the Assignee, in its sole and absolute discretion,
may declare the entire Mortgaged Indebtedness due and payable upon
sixty (60) days' prior written notice to the Assignor. In the
event of any such acceleration of the Mortgaged Indebtedness,
provided that an Event of Default has not occurred under the terms
of this Assignment or under any of the other Loan Documents, the
Assignor shall not be required to pay the Assignee a Prepayment Fee
(as defined under the Note).
Notwithstanding the foregoing, it is the intention of the Assignor
and the Assignee that if any provision of any of this Assignment is
capable of two (2) constructions, one of which would render the
provision void and the other of which would render the provision
valid, then such provision shall be construed in accordance with
the construction which renders such provision valid.
6.8Time of the Essence. Time is of the essence of each and every
term, condition, covenant and warranty set forth herein.
6.9Rules of Construction. References in this Assignment to
"herein", "hereof" and "hereunder" shall be deemed to refer to this
Assignment and shall not be limited to the particular text or
Section in which such words appear. The use of any gender shall
include all genders and the singular number shall include the
plural and vice versa as the context may require. References in
this Assignment to the Assignee's attorneys shall be deemed to
include, without limitation, special counsel and local counsel for
the Assignee. References in this Assignment to attorneys' fees and
expenses shall be deemed to include all costs for administrative,
paralegal and other support staff.
References in this Assignment to the Mortgaged Property shall be
deemed to include references to all of the Mortgaged Property and
references to any portion thereof. The word "foreclosure" as used
herein shall be deemed to include the acquisition of the Mortgaged
Property by voluntary deed or assignment in lieu of foreclosure.
As used in any of the Loan Documents, the term "including", when
following any general statement, will not be construed to limit
such statement to the specific items or matters as provided
immediately following the term "including" (whether or not
non-limiting language such as "without limitation" or "but not
limited to" or words of similar import are also used), but rather
will be deemed to refer to all items or matters that could
reasonably fall within the broader scope of the general statement.
All capitalized terms used herein and not otherwise defined herein
shall have the same meanings as set forth for such terms under the
Loan Agreement.
<PAGE>
IN WITNESS WHEREOF, the Assignor has duly executed this Assignment
as a sealed instrument as of the day and year first above written.
WITNESS:
ASSIGNOR
NORRISTOWN NURSING AND REHABILITATION CENTER, ASSOCIATES, L.P., a
Pennsylvania limited partnership
By:GMC-LTC Management, Inc., a Pennsylvania corporation, its
general partner
By:
Name:
Name:
Title:
COMMONWEALTH OF MASSACHUSETTS
May , 1995
Then personally appeared the above-named
who swore that he/she is the of GMC-LTC Management,
Inc., the general partner of Norristown Nursing and Rehabilitation
Center Associates, L.P., the above-named assignor, and acknowledged
the foregoing to be his/her/the free act and deed of
, before me,
T3/547889.1
<PAGE>
EXHIBIT A
Mortgaged Property Description
All that certain piece of land located in Block 82 in the Borough
of Norristown, Montgomery County, Pennsylvania, situated between
Pine and Locust Streets and West Logan Streets, described as Lot 2
on the subdivision plan for Rittenhouse Nursing Center made by
Geriatric and Medical Companies,Inc., and prepared by NTH
Consultants, Ltd., Exton, Pennsylvania, dated January 25, 1994 and
last revised March 8, 1994, and approved by the Borough Council of
the Borough of Norristown on April 5, 1994 and duly recorded with
the Recorded of Deeds of Montgomery County, Pennsylvania, being
more fully described as follows:
From the intersection of Pine Street and West Roberts Street,
proceeding from a point, marked by an iron pin, on the northwest
corner of Block 82 in an easterly direction parallel to Pine
Street, a distance of 314.71 feet along a bearing of North 60
degrees 52 minutes 16 second East to the point of beginning;
thence, in an easterly direction along the same bearing, a distance
of 232.24 feet to a point, marked by an iron pin, on the northeast
corner of Block 82 at the intersection of Pine Street and West
Logan Street; thence, in a southerly direction paralleling West
Logan Street, a distance of 300.63 feet along a bearing of South 29
degrees 04 minutes 19 seconds East to a point, marked by an iron
pin; thence, in a westerly direction paralleling Locust Street a
distance of 232.61 feet along a bearing South 61 degrees 00 minutes
00 seconds West to a point; thence, in a northerly direction along
the common boundary with Lot 1, a distance of 300.11 feet along a
bearing of North 29 degrees 00 minutes 00 seconds West to the point
and place of beginning.
The above premises being the same land shown as Lot 2 on Plan of
Survey for Rittenhouse Nursing Center by Nave, Newell & Stampfel,
Ltd., dated May 6, 1995.
TOGETHER WITH the benefit of rights and easements set forth in that
certain Declaration of Reciprocal Easement Agreement made by
Geriatric and Medical Services, Inc., dated June , 1995 and
recorded in Deed Book page .
BEING THE SAME PREMISES WHICH Rittenhouse Partners by Indenture
dated 5/11/1987 and recorded 5/18/1987 at Norristown in the Office
for the Recording of deeds, in and for the County of Montgomery in
Deed Book 4837 page 2319 granted and conveyed unto Geriatric and
Medical Services, Inc., its successors and assigns, in fee.
<PAGE>
EXHIBIT B
The Loan Documents.
<PAGE>
EXHIBIT C
Schedule of Leases
None.
ENVIRONMENTAL INDEMNITY AGREEMENT
THIS AGREEMENT is made as of the 31st day of May, 1995, by and
between Norristown Nursing and Rehabilitation Center Associates,
L.P., a Pennsylvania limited partnership, having its principal
place of business at c/o Geriatric & Medical Companies, Inc., 5601
Chestnut Street, Philadelphia, Pennsylvania 19139 (hereinafter
referred to as the "Borrower"); Geriatric & Medical Companies,
Inc., a Pennsylvania corporation, having its principal place of
business at 5601 Chestnut Street, Philadelphia, Pennsylvania 19139,
and Geriatric and Medical Services, a New Jersey corporation,
having its principal place of business at c/o Geriatric & Medical
Companies, Inc., 5601 Chestnut Street, Philadelphia, Pennsylvania
19139 (hereinafter collectively referred to as the "Guarantors")
and Meditrust Mortgage Investments, Inc., a Delaware corporation,
having its principal address at 197 First Avenue, Needham,
Massachusetts 021954 (hereinafter referred to as the "Lender").
W I T N E S S E T H
WHEREAS, the Lender has agreed to lend to the Borrower the maximum
original principal amount of SIX MILLION NINE HUNDRED THIRTY-NINE
THOUSAND DOLLARS ($6,939,000) (hereinafter referred to as the
"Loan") evidenced by a Promissory Note of even date and delivery
herewith, made by the Borrower to the order of the Lender
(hereinafter referred to as the "Note");
WHEREAS, the Note is referred to in that certain Construction Loan
Agreement of even date herewith by and between the Borrower and the
Lender (hereinafter referred to as the "Loan Agreement") and is in
all respect subject to the provisions thereof. Capitalized terms
used herein but not otherwise defined herein shall have the
meanings ascribed thereto in the Loan Agreement;
WHEREAS, payment of the indebtedness evidenced by the Note is
secured, in part, by a Mortgage and Security Agreement (hereinafter
referred to as the "Mortgage") of even date herewith, granted by
the Borrower in favor of the Lender, encumbering a certain parcel
of land described on EXHIBIT A attached hereto and incorporated by
reference (the parcel of land described on EXHIBIT A is more
particularly described in the Mortgage and, together with the
improvements to be located thereon, are hereinafter collectively
referred to as the "Mortgaged Property"; and the facility located
on said parcel of land are hereinafter referred to as the
"Facility");
WHEREAS, the Guarantors, having ownership interests in the
Borrower, directly and indirectly, shall derive substantial
benefits from the consummation of the Loan;
WHEREAS, the payment of the indebtedness evidenced by the Note and
the performance of all other obligations set forth under the Loan
Documents are unconditionally guaranteed by the Guarantors pursuant
to that certain Guaranty of even date from the Guarantors to the
Lender (hereinafter referred to as the "Guaranty");
WHEREAS, the Note, the Mortgage, the Guaranty, this Agreement and
all other documents and instruments evidencing or securing the
repayment of, or otherwise pertaining to and executed and delivered
in connection with, the Loan are hereinafter collectively referred
to as the "Loan Documents" and all of the indebtedness and other
terms, conditions, covenants and warranties evidenced by or
contained in the Loan Documents are hereinafter collectively
referred to as the "Mortgaged Indebtedness");
WHEREAS, the Borrower and the Guarantors are hereinafter
collectively referred to as the "Indemnitors";
WHEREAS, the Lender has required that the Indemnitors execute and
deliver this Agreement as a condition of the Lender's agreeing to
make the loan evidenced by the Note and accepting delivery of the
other Loan Documents; and
WHEREAS, as a material inducement to the Lender to consummate the
Loan, the Indemnitors have agreed to enter into this Agreement,
acknowledging that the Lender intends to rely upon the
representations, warranties, covenants and indemnifications
contained herein.
NOW, THEREFORE, in consideration of the foregoing premises and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto do hereby
covenant and agree as follows:
1.DEFINITIONS: For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise
requires, the terms defined in this Section have the meaning
assigned to them in this Section:
Accreditation Body: As defined in the Loan Agreement.
Advances Rate: As defined in the Loan Agreement.
Affiliate: As defined in the Loan Agreement.
Borrower: As defined in the preamble of this Agreement.
Collateral: As defined in the Loan Agreement.
Contracts: As defined in the Loan Agreement.
Environmental Enforcement Actions: Collectively, all actions or
orders instituted, threatened, required or completed by any
Governmental Authority and all claims made or threatened by any
Person against any of the Indemnitors or the Mortgaged Property (or
any other occupant, prior occupant or prior owner thereof), arising
out of or in connection with any of the Environmental Laws or the
assessment, monitoring, clean-up, containment, remediation or
removal of, or damages caused or alleged to be caused by, any
Hazardous Substances (i) located on or under the Mortgaged
Property, (ii) emanating from the Mortgaged Property or (iii)
generated, stored, transported, utilized, disposed of, managed or
released by any of the Indemnitors (whether or not on, under or
from the Mortgaged Property).
Environmental Laws: Collectively, all Legal Requirements
applicable to (i) environmental conditions on, under or emanating
from the Mortgaged Property including, without limitation, the
Pennsylvania Air Pollution Control Act, as amended, 35 P.S.
Sections 4001-4106, the Pennsylvania Clean Streams Law, as amended,
35 P.S. Sections 691.1-691.1001, Pennsylvania Solid Waste
Management Act, as amended, 35 P.S. Sections 6018.1003,
Pennsylvania Radiation Protection Act, 35 P.S. Sections 7110.101-
7110.703, the Low-Level Radioactive Waste Disposal Act, as amended,
35 P.S. Sections 7130.101-7130.906, and the Storage Tank and Spill
Prevention Act, as amended, 35 P.S. Sections 6021.101-6021.2101,
the Comprehensive Environmental Response, Compensation and
Liability Act, the Resource Conservation and Recovery Act, the
Federal Water Pollution Control Act and the Federal Clean Air Act
and (ii) the generation, storage, transportation, utilization,
disposal, management or release (whether or not on, under or from
the Mortgaged Property) of Hazardous Substances by any of the
Indemnitors.
Environmental Reports: As defined in EXHIBIT B attached hereto and
incorporated by reference.
Facility: As defined in the preamble of this Agreement.
Governmental Authority: All agencies, authorities, bodies, boards,
commissions, courts, instrumentalities, legislatures and offices of
any nature whatsoever for any government unit or political
subdivision, whether federal, state, county, district, municipal,
city or otherwise, and whether now or hereafter in existence.
Guarantors: As defined in the preamble of this Agreement.
Guaranty: As defined in the preamble of this Agreement.
Hazardous Substances: Collectively, (i) any "hazardous material,"
"hazardous substance," "hazardous waste," "oil," "regulated
substance," "toxic substance," "restricted hazardous waste",
"special waste" or words of similar import as defined under any of
the Environmental Laws; (ii) asbestos in any form; (iii) urea
formaldehyde foam insulation; (iii) polychlorinated biphenyls; (iv)
radon gas; (v) flammable explosives; (vi) radioactive materials;
(vii) any chemical, contaminant, solvent, material, pollutant or
substance that may be dangerous or detrimental to the Mortgaged
Property, the environment, or the health and safety of the patients
and other occupants of the Mortgaged Property or of the owners or
occupants of any other real property nearby the Mortgaged Property
and (vii) any substance, the generation, storage, transportation,
utilization, disposal, management, release or location of which,
on, under or from the Mortgaged Property is prohibited or otherwise
regulated pursuant to any of the Environmental Laws.
Notwithstanding the foregoing, the term Hazardous Substances as
defined herein shall not include pharmaceuticals, cleaning agents
and similar materials of the types and in the quantities and
concentrations normally stocked by health care providers similar to
the Facility that are used, stored, transported and disposed of in
accordance with all Legal Requirements.
Indemnitors: As defined in the preamble of this Agreement.
Legal Requirements: All statutes, ordinances, by-laws, codes,
rules, rulings, regulations, restrictions, orders, judgments,
decrees, writs, judicial or administrative interpretations and
injunctions (including, without limitation, all applicable
building, health code, zoning, subdivision and other land use and
health-care licensing statutes, ordinances, by-laws, codes, rules
and regulations), whether now or hereafter enacted, promulgated or
issued by any Governmental Authority affecting any of the
Indemnitors or the Mortgaged Property or the ownership,
construction, development, maintenance, management, repair, use,
occupancy, possession or operation thereof, including, without
limitation, any of the foregoing which may (i)require repairs,
modifications or alterations in or to the Mortgaged Property,
(ii)in any way affect (adversely or otherwise) the construction,
use and enjoyment of the Mortgaged Property or (iii)require the
assessment, monitoring, clean-up, containment or removal of any
Hazardous Substances on, under or from the Mortgaged Property.
Without limiting the foregoing, the term Legal Requirements
includes all Environmental Laws and shall also include all
Permitted Encumbrances and all Permits and Contracts issued by or
entered into with any Governmental Authority or Accreditation Body.
Lender: As defined in the preamble of this Agreement.
Loan Documents: As defined in the preamble of this Agreement.
Meditrust: As defined in Section22 of this Agreement.
Mortgage: As defined in the preamble of this Agreement.
Mortgaged Indebtedness: As defined in the preamble of this
Agreement.
Mortgaged Property: As defined in the preamble of this Agreement.
Note: As defined in the preamble of this Agreement.
Permits: As defined in the Loan Agreement.
Permitted Encumbrances: As defined in the Mortgage.
Person: All individuals, corporations, general partnerships,
limited partnerships, joint ventures, stock companies or
associations, companies, banks, trusts, trust companies, land
trusts, business trusts, unincorporated organizations, Governmental
Authorities and other entities of any kind or nature whatsoever.
Purchaser: Any Person to whom title to the Mortgaged Property is
transferred by reason of the Lender's exercise of rights granted
under any of the Loan Documents, including, without limitation, the
exercise of the power of sale under the Mortgage, any other
foreclosure of the Mortgage or any other proceedings brought to
enforce the rights of the holder of the Mortgage, by deed in lieu
of foreclosure or by any other method.
Surrounding Property: Any real property that is located within a
one-half (1/2) mile radius of the Mortgaged Property.
2.REPRESENTATIONS AND WARRANTIES: The Indemnitors each represent
and warrant to the Lender, the same to be true as of the date
hereof and throughout the period that any of the Loan Documents
shall remain in force and effect, that:
(i)no Hazardous Substance has been or is currently generated,
stored, transported, utilized, disposed of, managed, released or
located on, under or from the Mortgaged Property (whether or not in
reportable quantities), or in any manner introduced onto the
Mortgaged Property, including, without limitation, the septic,
sewage or other waste disposal systems serving the Mortgaged
Property;
(ii)none of the Indemnitors has any knowledge of any threat of
release of any Hazardous Substance on, under or from the Mortgaged
Property;
(iii)none of the Indemnitors has received any notice from the
Pennsylvania Department of Environmental Resources, the Air
Management Services Bureau of the Philadelphia County Department of
Health, the United States Environmental Protection Agency or any
other Governmental Authority claiming that (a)the Mortgaged
Property or any use thereof violates any of the Environmental Laws
or (b)any of the Indemnitors or any of their respective employees
or agents have violated any of the Environmental Laws;
(iv)none of the Indemnitors has incurred any liability to the
Commonwealth of Pennsylvania, the United States of America or any
other Governmental Authority under any of the Environmental Laws;
(v)no lien against the Mortgaged Property has arisen under or
related to any of the Environmental Laws;
(vi)there are no Environmental Enforcement Actions pending, or to
the best of the Indemnitors' information, knowledge and belief,
threatened;
(vii)none of the Indemnitors has any knowledge that any Hazardous
Substance has been or is currently generated, stored, transported,
utilized, disposed of, managed, released or located on, under or
from any Surrounding Property in violation of, or allegedly in
violation of any of, the Environmental Laws;
(viii)none of the Indemnitors has any knowledge of any threat of
release of any Hazardous Substance on, under or from any
Surrounding Property;
(ix)none of the Indemnitors has any knowledge of any action or
order instituted or threatened against any Person by any
Governmental Authority arising out of or in connection with the
Environmental Laws involving the assessment, monitoring, clean-up,
containment, remediation or removal of or damages caused or alleged
to be caused by (a) any Hazardous Substances generated, stored,
transported, utilized, disposed of, managed, released or located
on, under or from any Surrounding Property or (b) the threat of
release of any Hazardous Substance on, under or from any
Surrounding Property; and
(x) there are no underground storage tanks on or under the
Mortgaged Property,except as disclosed to the Lender by the
Environmental Reports.
As used in this Agreement, the terms "generated," "stored,"
"transported," "utilized," "disposed," "managed," "released" and
"threat of release" (and all conjugates thereof) shall have the
meanings and definitions set forth in the Environmental Laws.
3.MAINTENANCE OF MORTGAGED PROPERTY: The Indemnitors each covenant
that, as long as any of the Loan Documents shall remain in force
and effect, none of the Indemnitors shall:
(i)generate, store, transport, utilize, dispose of, manage, release
or locate, or permit the generation, storage, transportation,
utilization, disposal, management, release or threat of release, or
location of any Hazardous Substances on, under or from the
Mortgaged Property; or
(ii)permit any lien arising under or related to any of the
Environmental Laws to attach to the Mortgaged Property.
In addition to all other covenants contained herein, the
Indemnitors agree that the Mortgaged Property shall be maintained
in compliance with the Environmental Laws.
4.NOTICE OF ENVIRONMENTAL CONDITIONS: The Indemnitors shall
provide the Lender with immediate written notice: (i)upon any of
the Indemnitors becoming aware of (a)the presence of, any release
or any threat of release of any Hazardous Substances on, under or
from the Mortgaged Property (whether or not caused by any of the
Indemnitors), (b)any Environmental Enforcement Action instituted or
threatened, (c)any enforcement, assessment, monitoring, clean-up,
containment, removal, remediation, restoration or other action or
order instituted, threatened, required or completed by any
Governmental Authority pursuant to any of the Environmental Laws
with respect to any Surrounding Property and (d)any condition or
occurrence on any Surrounding Property that may constitute a
violation of any of the Environmental Laws and (ii)the receipt by
any of the Indemnitors of any notice relating to the Mortgaged
Property or any Hazardous Substance allegedly originating on, under
or from the Mortgaged Property, from any Governmental Authority
pursuant to any of the Environmental Laws.
5.INDEMNITORS' AGREEMENT TO TAKE REMEDIAL ACTIONS: Upon any of the
Indemnitors becoming aware of the presence of, any release, or any
threat of release of any Hazardous Substances on, under or from the
Mortgaged Property or any Surrounding Property (whether or not
caused by any of the Indemnitors), the Indemnitors shall
immediately take all such actions to arrange for the assessment,
monitoring, clean-up, containment, removal, remediation or
restoration of the Mortgaged Property and the Surrounding Property,
to the extent that the presence of any Hazardous Substances on the
Surrounding Property originated on, under or from the Mortgaged
Property as (i)are required pursuant to any of the Environmental
Laws or by any Governmental Authority and (ii)may otherwise be
advisable and requested by the Lender.
The Indemnitors shall provide the Lender, within thirty (30) days
after a demand by the Lender, with a bond, letter of credit or
other similar financial assurance, in form and substance
satisfactory to the Lender (in its sole and absolute discretion)
evidencing to the Lender's satisfaction that the necessary
financial resources are available to pay all costs associated with
the aforementioned actions, the release of any lien against the
Mortgaged Property, the release or other satisfaction of the
liability, if any, of any of the Indemnitors arising under or
related to any of the Environmental Laws and the satisfaction of
any applicable Environmental Enforcement Actions.
Further, in the event the Indemnitors have not commenced the clean-
up, removal and remediation of the Mortgaged Property and the
Surrounding Property, as required by the first paragraph of this
Section 5, within thirty (30) days after the Indemnitors' first
becoming aware of such Hazardous Substances, or do not thereafter
diligently prosecute the same or do not in any event complete the
same to the reasonable satisfaction of the Lender within one
hundred fifty (150) days after the commencement of clean-up,
removal and/or remediation, then, at the option of the Lender
exercised by written notice to the Indemnitors, the Indemnitors
shall pay to the Lender the sum equal to the then outstanding
balance of the Loan as the Purchase Price for the Mortgaged
Property, and the Lender shall thereafter cause the Mortgaged
Property to be released from the lien of the Loan Documents. The
Indemnitors shall pay such amount to the Lender not later than
thirty (30) days after the receipt of the Lender's notice
exercising the option described in the preceding sentence.
6.LENDER'S RIGHTS TO INSPECT THE PROPERTY AND TAKE REMEDIAL
ACTIONS: So long as any of the Loan Documents shall remain in
force and effect, the Lender shall have the right, but not the
obligation, to enter upon the Mortgaged Property, and may expend
funds to:
(i)if the Lender in good faith believes that circumstances may
exist which would warrant the same, cause one or more environmental
assessments of the Mortgaged Property to be undertaken. Such
environmental assessments may include, without limitation, (a)
detailed visual inspections of the Mortgaged Property, including,
without limitation, all storage areas, storage tanks, drains, dry
wells and leaching areas, (b) the taking of soil and surface water
samples, (c) the performances of soil and ground water analyses and
(d) the performance of such other investigations or analyses as are
necessary or appropriate and consistent with sound professional
environmental engineering practice in order for the Lender to
obtain a complete assessment of the compliance of Mortgaged
Property and the use thereof with all Environmental Laws and to
make a determination as to whether there is any risk of
contamination (x) to the Mortgaged Property resulting from
Hazardous Substances originating on, under or from any Surrounding
Property or (y) to any Surrounding Property resulting from
Hazardous Substances originating on, under or from the Mortgaged
Property;
(ii)cure any breach of the representations, warranties, conditions
and covenants of this Agreement including, without limitation, any
violation by any of the Indemnitors or the Mortgaged Property (or
any other occupant, prior occupant or prior owner thereof) of any
of the Environmental Laws;
(iii)take any actions as are necessary to (a) prevent the migration
of Hazardous Substances on, under or from the Mortgaged Property to
any other property; (b) clean-up, contain, remediate or remove any
Hazardous Substances on, under or from any other property, which
Hazardous Substances originated on, under or from the Mortgaged
Property or (c)prevent the migration of any Hazardous Substances
on, under or from any other property to the Mortgaged Property; and
(iv)comply with, settle or otherwise satisfy any Environmental
Enforcement Action (including, without limitation, the payment of
any fines or penalties imposed by any Governmental Authority).
Any amounts paid or advanced by the Lender and all costs and
expenses incurred in connection with any action taken pursuant to
the terms of this Section6 (including, without limitation,
environmental consultants' and experts' fees and expenses,
attorneys' fees and expenses, court costs and all costs of
assessment, monitoring, clean-up, containment, remediation, removal
and restoration), with interest thereon at the Advances Rate, shall
be a demand obligation of the Indemnitors to the Lender, and, to
the extent permitted by law, shall be added to the Mortgaged
Indebtedness and shall be secured by the lien of the Mortgage and
the other Loan Documents as fully and effectively and with the same
priority as every other obligation secured thereby.
The exercise by the Lender of any of the rights and remedies set
forth in this Section6 shall not operate or be deemed (a) to place
upon the Lender any responsibility for the construction, operation,
control, care, service, management, maintenance or repair of the
Mortgaged Property or (b) to make the Lender the "owner" or
"operator" of the Mortgaged Property or a "responsible party"
within the meaning of any of the Environmental Laws. Furthermore,
the Lender, by making any such payment or incurring any such costs,
shall be subrogated to all rights of each of the Indemnitors or any
other occupant of the Mortgaged Property to seek reimbursement from
any Person, including, without limitation, any predecessor to the
Borrower's fee title to the Mortgaged Property, who may be a
"responsible party" under any of the Environmental Laws, in
connection with the presence of Hazardous Substances on, under or
from the Mortgaged Property.
Without limiting the generality of the provisions of Section12
hereof, any partial exercise by the Lender of any of the rights and
remedies set forth in this Section6, including, without limitation,
any partial undertaking on the part of the Lender to cure any
failure by any of the Indemnitors or the Mortgaged Property (or any
other occupant, prior occupant or prior owner thereof) to comply
with any of the Environmental Laws, shall not obligate the Lender
to complete such actions taken or require the Lender to expend
further sums to cure such non-compliance, provided, however, that
in the event the Lender shall commence such actions and shall
curtail the same, the Lender shall not leave the Mortgaged Property
in a dangerous condition resulting from such actions taken by the
Lender.
7.INDEMNIFICATION: Each of the Indemnitors shall and hereby agrees
to indemnify, exonerate, defend (with counsel acceptable to the
Lender) and hold the Lender harmless from and against any claim,
liability, loss, cost, damage or expense (including, without
limitation, environmental consultants' and experts' fees and
expenses, attorneys' fees and expenses, court costs and all costs
of assessment, monitoring, clean-up, containment, removal,
remediation and restoration) arising out of or in connection with
(i)any breach of any of the representations, warranties, conditions
and covenants of this Agreement (whether any such matters arise
before or after foreclosure proceedings are commenced or entry for
the purpose of foreclosure is made or foreclosure of the Mortgage
is completed), (ii)the Lender's exercise of any of its rights and
remedies hereunder or (iii)the enforcement of the aforesaid
indemnification agreement. Notwithstanding the foregoing, the
Lender shall have the option of conducting its defense with counsel
of the Lender's choice, but at the expense of the Indemnitors as
aforesaid.
The matters covered by the foregoing indemnity with respect to any
property other than the Mortgaged Property shall not include any
costs incurred as a result of the clean-up, containment,
remediation or removal of Hazardous Substances on, under or from
such other property or the restoration thereof if such Hazardous
Substances did not originate on, under or from the Mortgaged
Property, unless the clean-up, containment, remediation or removal
thereof or the restoration of such other property is either
required in connection with any Environmental Enforcement Action or
is necessary to prevent the migration of Hazardous Substances from
such other property to the Mortgaged Property. The Indemnitors
each acknowledges and agrees that its obligations pursuant to the
provisions hereof are in addition to any and all other legal
liabilities and responsibilities (at law or in equity) that any of
the Indemnitors may otherwise have as an "owner" or "operator" of
the Mortgaged Property or a "responsible party" within the meaning
of any of the Environmental Laws, as the case may be.
The indemnity provisions of this Section7 shall survive the payment
and performance of the Mortgaged Indebtedness and the foreclosure
of the Mortgage.
8.JOINT AND SEVERAL LIABILITY: All obligations of the Indemnitors
under this Agreement shall be joint and several.
9.NOTICES: Any notice, request, demand, statement or consent made
hereunder shall be in writing and shall be deemed duly given if
personally delivered, sent by certified mail, return receipt
requested, or sent by a nationally recognized commercial overnight
delivery service with provisions for a receipt, postage or delivery
charges prepaid, and shall be deemed given when postmarked or
placed in the possession of such mail or delivery service and
addressed as follows:
If to the Borrower:
Norristown Nursing and Rehabilitation Center, Associates, L.P.
Geriatric & Medical Companies, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
Attention: President
With a copy to:Mesirov, Gelman, Jaffe, Cramer & Jamieson
1735 Market Street
Philadelphia, Pennsylvania 19103-7598
Attn: Robert P. Krauss, Esq.
If to the Guarantors:
Geriatric & Medical Companies, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
Attention: President
<PAGE>
Geriatric and Medical Services, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
Attention: President
With a copy to:Mesirov, Gelman, Jaffe, Cramer & Jamieson
1735 Market Street
Philadelphia, Pennsylvania 19103-7598
Attn: Robert P. Krauss, Esq.
If to the Lender:Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: President
With copies to:Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: General Counsel
Mintz, Levin, Cohn, Ferris
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Andrew R. Urban, Esq.
or at such other place as any of parties hereto may from time to
time hereafter designate to the others in writing. Any notice
given to any of the Indemnitors by the Lender at any time shall not
imply that such notice or any further or similar notice was or is
required.
10.GOVERNING LAW. This Agreement shall be construed, and the
rights and obligations of each of the Indemnitors and the Lender
shall be determined, in accordance with the laws of the
Commonwealth of Massachusetts, except that the laws of the
Commonwealth of Pennsylvania shall govern (i) this Agreement to the
extent necessary for the Lender to perfect, protect or enforce the
rights and remedies granted to the Lender in this Agreement and to
obtain the benefit of the rights and remedies set forth herein with
respect to the Mortgaged Property and (ii) procedural requirements
which must be governed by the law of the state in which the
Mortgaged Property is located.
To the maximum extent permitted by applicable law, the Indemnitors
hereby submit to the jurisdiction of the courts of the Commonwealth
of Massachusetts and the United States District Court for the
District of Massachusetts, as well as to the jurisdiction of all
courts from which an appeal may be taken from the aforesaid courts,
for the purpose of any suit, action or other proceeding arising out
of, or with respect to this Agreement and expressly waive all
objections the Indemnitors may have as to venue in any of such
courts.
11.REMEDIES CUMULATIVE; NO WAIVERS: The rights and remedies set
forth under this Agreement are in addition to all other rights and
remedies afforded to the Lender under any of the other Loan
Documents or at law or in equity, all of which are hereby reserved
by the Lender, and this Agreement is made and accepted without
prejudice to any such rights and remedies. All of the rights and
remedies of the Lender under each of the Loan Documents shall be
separate and cumulative and may be exercised concurrently or
successively in the Lender's sole and absolute discretion.
The Lender shall not by any act, delay, omission or otherwise
(including, without limitation, the exercise of any right or remedy
hereunder) be deemed to have waived any of its rights or remedies
hereunder or under any of the other Loan Documents unless such
waiver is in writing and signed by the Lender, and then, only to
the extent specifically set forth therein. Without limiting the
foregoing, notwithstanding any failure or delay by the Lender to
insist upon the strict performance of, or compliance with, any of
the terms, conditions, covenants or warranties set forth in this
Agreement or in any of the other Loan Documents, the Lender shall
have the right thereafter to insist upon the strict performance of,
and compliance with, any and all of the terms, conditions,covenants
and warranties contained herein or in any of the other Loan
Documents. No waiver at any time of any of the terms, conditions,
covenants or warranties of this Agreement or any of the other Loan
Documents shall be construed as a waiver of any other term,
condition, covenant or warranty set forth under any of the Loan
Documents, nor shall such a waiver in any one instance or
circumstance be construed as a waiver of the same term, condition,
covenant or warranty in any subsequent instance or circumstance.
No such failure, delay or waiver shall be construed as creating a
requirement that the Lender must thereafter, as a result of such
failure, delay or waiver, give notice to the Indemnitors or any
other Person that the Lender does not intend to give a further
waiver or to refrain from insisting upon the strict performance of
the terms, conditions, covenants and warranties set forth herein or
in any of the other Loan Documents before the Lender can exercise
any of its rights or remedies hereunder or under any of the other
Loan Documents or before any Event of Default under any of the Loan
Documents can occur or as establishing a course of dealing for
interpreting the conduct of and agreements between the Lender and
the Indemnitors or any other Person.
12.FORBEARANCE AND OTHER ACTS OF THE LENDER: Whether or not for
consideration paid or payable to the Lender and, except as may be
otherwise specifically agreed to by the Lender, no forbearance on
the part of the Lender or extension of the time for the payment of
the whole or any part of the Mortgaged Indebtedness, or any other
indulgence given by the Lender to any of the Indemnitors or any
other Person, shall operate to release or in any manner affect the
original liability of the Indemnitors or any other Person, or the
priority of the Mortgage or to limit, prejudice or impair any right
of the Lender, including, without limitation, the right to realize
upon the Collateral, or any part thereof, for any of the
obligations evidenced or secured by the Loan Documents, except as
may be expressly agreed to in writing by the Lender; notice of any
such extension, forbearance or indulgence being hereby waived by
the Indemnitors and all those claiming by, through or under the
Indemnitors.
Without limiting the foregoing, the liability of each of the
Indemnitors under this Agreement shall in no way be limited or
impaired by (i)any amendment, modification or waiver of the
provisions of any of the Loan Documents and each of the Indemnitors
hereby consents to and agrees to be bound by any such amendment,
modification or waiver, (ii) any sale, assignment or other transfer
of, or foreclosure under, any of the Loan Documents or any portion
of the Lender's interest therein, (iii)any sale or other transfer
of the Mortgaged Property, (iv)any exculpatory provision in any of
the Loan Documents limiting the Lender's recourse to the Mortgaged
Property or to any other Collateral, (v)the release of any
Indemnitor or any other Person from performance or observance of
any of the agreements, covenants, terms or conditions contained in
any of the Loan Documents by operation of law, the Lender's
voluntary act or otherwise, (vi)the release or substitution in
whole or in part of the Collateral or any portion thereof, (vii)the
Lender's failure to record the Mortgage or file any UCC financing
statements (or the improper recording or filing thereof by any
Person on behalf of the Lender) or otherwise to perfect, protect,
secure or insure any security interest or lien given as security
for the Mortgaged Indebtedness or (viii)the invalidity or
unenforceability, in whole or in part, of any of the Loan
Documents; and, in any such case, whether with or without notice to
any of the Indemnitors and with or without consideration.
13.MARSHALLING OF ASSETS: Each of the Indemnitors waives any right
or claim of right to cause a marshalling of any of the Indemnitors'
assets or to cause the Lender to proceed against any of the
security for the Mortgaged Indebtedness before proceeding under
this Agreement against any of the Indemnitors or to proceed against
any of the Indemnitors in any particular order. Furthermore, each
of the Indemnitors also waives and relinquishes all other rights
and remedies accorded by applicable law to indemnitors, guarantors
and sureties.
14.INVALIDITY: If any provision of this Agreement or the
application thereof to any Person or circumstance, for any reason
and to any extent, shall be held to be invalid or unenforceable,
neither the remainder of this Agreement nor the application of such
provision to any other Person or circumstance shall be affected
thereby, but rather the same shall be enforced to the greatest
extent permitted by law.
Notwithstanding the foregoing, it is the intention of the
Indemnitors and the Lender that if any provision of this Agreement
is capable of two (2) constructions, one of which would render the
provision void and the other of which would render the provision
valid, then such provision shall be construed in accordance with
the construction which renders such provision valid.
15.AMENDMENTS, WAIVERS AND MODIFICATIONS: This Agreement sets forth
the entire agreement of the parties with respect to the subject
matter hereof and none of the terms, covenants, conditions,
warranties or representations contained herein may be renewed,
replaced, amended, extended, substituted, revised, waived,
consolidated, modified or terminated except by an agreement in
writing signed by the Person against whom enforcement is sought.
The provisions of this Agreement shall extend and be applicable to
all renewals, replacements, amendments, extensions, substitutions,
revisions, consolidations and modifications of the each of the Loan
Documents, the Permits and the Contracts; and all references herein
to any of the Loan Documents, the Permits or the Contracts shall be
deemed to include any such renewals, replacements, amendments,
substitutions, revisions, extensions, consolidations or
modifications thereof.
Notwithstanding the foregoing, any reference, whether express or
implied, to any renewal, replacement, amendment, extension,
substitution, revision, consolidation or modification of any of the
Loan Documents, the Permits or the Contracts is not intended to
constitute a consent to any such renewal, replacement, amendment,
extension, substitution, revision, consolidation or modification of
any of the Loan Documents, the Permits or the Contracts but as a
reference only to those instances where the Lender may give consent
to any such renewal, replacement, amendment, extension,
substitution, revision, consolidation or modification of any of the
Loan Documents, the Permits or the Contracts, as the same may be
required pursuant to the terms, covenants and conditions of any of
the Loan Documents.
16.PARTICIPANTS: The Lender reserves the right, from time to time
during the period that any of the Loan Documents may remain in
force and effect without the consent of the Indemnitors, to (i)
enter into participation agreements with respect to the loan
transaction evidenced by the Loan Documents or (ii) assign,
directly or as collateral, all or any portion of the obligations
evidenced or secured by the Loan Documents and any or all of the
Lender's rights therein; and each of the Indemnitors shall
cooperate with the Lender in connection with the execution of any
such participation agreements or the transfer of any such
assignments.
Such cooperation shall include without limitation:
(a)supplying financial statements of the Indemnitors and the
Facility;
(b)providing estoppel certificates (1)consenting to such
participations or assignments, (2)confirming the Indemnitors'
respective obligations under the Loan Documents, (3)confirming the
amount of the then outstanding principal balance of the Loan and
the amounts of any tax or insurance escrow deposits held by the
Lender, (4)stating whether any of the Indemnitors have any
defenses, offsets or credits against the payment of any amounts due
or the performance of any obligations under the Loan Documents and
(5)stating whether any default or any state of facts which, with
the passing of time or the giving of notice or both, could
constitute a default, exists under the Loan Documents;
(c)making such modifications or alterations to the Loan Documents
as the Lender may reasonably request, provided, however, that the
making of such modifications or alterations shall be at no cost to
the Borrower and shall not result in changes that materially and
adversely affect the Borrower;
(d)providing such other documentation relating to the Loan and the
Facility as the Lender may reasonably request; and
(e)making the Mortgaged Property available for inspection upon
reasonable notice from the Lender.
The Lender shall have the right to provide potential participants
and assignees with any and all financial, licensing and other
information provided to the Lender pursuant to the Loan Documents.
Except as expressly provided in this Section 16, the terms and
conditions of any participation agreements with respect to the Loan
or any assignment of all or any of the obligations evidenced or
secured by the Loan Documents and the Lender's rights and remedies
therein shall be determined by the Lender in its sole and absolute
discretion.
17.FURTHER ASSURANCES: Upon request of the Lender, at any time and
from time to time, each of the Indemnitors shall promptly make,
execute and deliver, or cause to be made, executed and delivered,
to the Lender and, where appropriate, cause to be recorded or filed
and from time to time thereafter to be re-recorded or refiled at
such time and in such offices and places as shall be deemed
necessary or desirable by the Lender (in its sole and absolute
discretion), any such other or further amendments, assignments,
instruments of further assurance, certificates and other documents
as shall be deemed necessary or desirable by the Lender (in the
Lender's sole and absolute discretion) to: (i)enable the Lender to
negotiate the Note or any portion thereof and to assign the
Mortgage or any portion thereof and all or any of the other Loan
Documents; (ii)enable the Lender to enter into participation
agreements in connection with the loan transaction evidenced by the
Loan Documents or (iii)effectuate, complete or perfect, or to
continue and preserve the obligations of the Indemnitors under this
Agreement or any of the other Loan Documents; provided, however,
that no such additional document or other instrument requested by
the Lender hereunder shall increase the Mortgaged Indebtedness
(except as to the costs and expenses of the Lender in connection
therewith).
In the event of any failure by any of the Indemnitors to comply
with any request pursuant to this Section17 within twenty (20) days
after such request is made by the Lender, the Lender may make,
execute, record, file, re-record or refile any and all such
amendments, assignments, instruments, certificates and documents
for and in the name of such Indemnitor, and each of Indemnitors
hereby appoints the Lender as the Indemnitors' attorney-in-fact,
with full power of substitution, to take such actions (on behalf of
and in the name of each of the Indemnitors) as the Lender, in its
sole and absolute discretion, may deem necessary or desirable to
effectuate the intent of this Section 17.
The power of attorney conferred on the Lender pursuant to the
provisions of this Section17 being coupled with an interest, shall
be irrevocable until all of the obligations hereunder shall have
been fully paid and performed, including without limitation, the
indemnity obligations set forth in Section 7 hereof, and shall not
be affected by any disability or incapacity which any of the
Indemnitors may suffer and shall survive the same. Such power of
attorney, is provided solely to protect the interests of the Lender
and shall not impose any duty on the Lender to exercise any such
power, and neither the Lender nor such attorney-in-fact shall be
liable for any act, omission, error in judgment or mistake of law,
except as the same may result from its gross negligence or wilful
misconduct.
18.SUCCESSORS AND ASSIGNS: This Agreement shall (i)be binding on
each of the Indemnitors and their respective heirs, executors,
administrators, legal representatives and permitted successors and
assigns and (ii)inure to the benefit of the Lender, any other
Person who may now or hereafter hold any interest in the Loan and
their respective successors and assigns, including, without
limitation, any Purchaser which is an Affiliate of (a)the Lender,
(b)any other Person who may now or hereafter hold any interest in
the Loan or (c)any of their respective successors and assigns.
Notwithstanding the foregoing, none of the Indemnitors shall assign
or otherwise transfer this Agreement or any of their rights or
obligations hereunder without the express written consent of the
Lender, in each instance, which consent may be withheld in the
Lender's sole and absolute discretion.
19.TIME OF THE ESSENCE: Time is of the essence of each and every
term, condition, covenant and warranty set forth herein.
20.RULES OF CONSTRUCTION: References in this Agreement to
"herein", "hereof" and "hereunder" shall be deemed to refer to this
Agreement and shall not be limited to the particular text or
Section in which such words appear. References in this Agreement
to the Lender's attorneys shall be deemed to include, without
limitation, special counsel and local counsel for the Lender.
References in this Agreement to attorneys' fees and expenses shall
be deemed to include all costs for administrative, paralegal and
other support staff.
References in this Agreement to the Mortgaged Property shall be
deemed to include references to all of the Mortgaged Property and
references to any portion thereof. The use of any gender shall
include all genders and the singular number shall include the
plural and vice versa as the context may require. The words
"foreclosure" and "foreclosure sale" as used herein shall be deemed
to include the acquisition of the Mortgaged Property or by
voluntary deed or assignment in lieu of foreclosure.
As used herein, the term "including", when following any general
statement, will not be construed to limit such statement to the
specific items or matters as provided immediately following the
term "including" (whether or not non-limiting language such as
"without limitation" or "but not limited to" or words of similar
import are also used), but rather will be deemed to refer to all
items or matters that could reasonably fall within the broader
scope of the general statement.
21.CAPTIONS AND HEADINGS: The captions and headings set forth in
this Agreement are included for convenience and reference only and
the words contained therein shall in no way be held or deemed to
define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning of, or the scope or intent
of, this Agreement or any part hereof.
22.LIMITATION OF LIABILITY: The Declaration of Trust establishing
the sole shareholder of the Lender, Meditrust, a Massachusetts
business trust (referred to herein as "Meditrust"), dated August6,
1985 (hereinafter referred to as the "Declaration"), a copy of
which, together with all amendments thereto, is duly filed in the
office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "Meditrust" refers to the
trustees under the Declaration collectively as trustees, but not
individually or personally; and that no trustee, officer,
shareholder, employee or agent of Meditrust or its Subsidiaries
shall be held to any personal liability, jointly, or severally, for
any obligation of, or claim against Meditrust or any of its
Subsidiaries. All Persons dealing with Meditrust or the Lender, in
any way, shall look only to the assets of Meditrust or the Lender,
respectively, for the payment of any sum or the performance of any
obligation. Furthermore, in no event shall the Lender or Meditrust
ever be liable to the Indemnitors for any indirect or consequential
damages suffered by the Indemnitors resulting from any cause
whatsoever. Notwithstanding the foregoing, the Indemnitors hereby
acknowledge and agree that Meditrust is not a party to this
Agreement and that the Indemnitors shall look only to the assets of
the Lender for the payment of any sum or performance of any
obligation due by or from the Lender pursuant to the terms and
provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as a sealed instrument on the date first above-mentioned.
WITNESS:
BORROWER
NORRISTOWN NURSING AND REHABILITATION CENTER ASSOCIATES, L.P., a
Pennsylvania limited partnership
By:GMC-LTC MANAGMENT, INC., a Pennsylvania corporation, its general
partner.
Name:
Title:
WITNESS:
Guarantors:
GERIATRIC AND MEDICAL SERVICES, INC., a New Jersey corporation
By:
Name:
Name:
Title:
GERIATRIC & MEDICAL COMPANIES, INC., a Delaware corporation
By:
Name:
Name:
Title:
WITNESS:
LENDER
MEDITRUST MORTGAGE INVESTMENTS, INC., a Delaware corporation
By:
Name:
Name:
Title:
T3/547886.1<PAGE>
EXHIBIT A
MORTGAGED PROPERTY DESCRIPTION
All that certain piece of land located in Block 82 in the Borough
of Norristown, Montgomery County, Pennsylvania, situated between
Pine and Locust Streets and West Logan Streets, described as Lot 2
on the subdivision plan for Rittenhouse Nursing Center made by
Geriatric and Medical Companies,Inc., and prepared by NTH
Consultants, Ltd., Exton, Pennsylvania, dated January 25, 1994 and
last revised March 8, 1994, and approved by the Borough Council of
the Borough of Norristown on April 5, 1994 and duly recorded with
the Recorded of Deeds of Montgomery County, Pennsylvania, being
more fully described as follows:
From the intersection of Pine Street and West Roberts Street,
proceeding from a point, marked by an iron pin, on the northwest
corner of Block 82 in an easterly direction parallel to Pine
Street, a distance of 314.71 feet along a bearing of North 60
degrees 52 minutes 16 second East to the point of beginning;
thence, in an easterly direction along the same bearing, a distance
of 232.24 feet to a point, marked by an iron pin, on the northeast
corner of Block 82 at the intersection of Pine Street and West
Logan Street; thence, in a southerly direction paralleling West
Logan Street, a distance of 300.63 feet along a bearing of South 29
degrees 04 minutes 19 seconds East to a point, marked by an iron
pin; thence, in a westerly direction paralleling Locust Street a
distance of 232.61 feet along a bearing South 61 degrees 00 minutes
00 seconds West to a point; thence, in a northerly direction along
the common boundary with Lot 1, a distance of 300.11 feet along a
bearing of North 29 degrees 00 minutes 00 seconds West to the point
and place of beginning.
The above premises being the same land shown as Lot 2 on Plan of
Survey for Rittenhouse Nursing Center by Nave, Newell & Stampfel,
Ltd., dated May 6, 1995.
TOGETHER WITH the benefit of rights and easements set forth in that
certain Declaration of Reciprocal Easement Agreement made by
Geriatric and Medical Services, Inc., dated June , 1995 and
recorded in Deed Book page .
BEING THE SAME PREMISES WHICH Rittenhouse Partners by Indenture
dated 5/11/1987 and recorded 5/18/1987 at Norristown in the Office
for the Recording of deeds, in and for the County of Montgomery in
Deed Book 4837 page 2319 granted and conveyed unto Geriatric and
Medical Services, Inc., its successors and assigns, in fee.
<PAGE>
EXHIBIT B
List of Reports Relied Upon by Lender
1.Phase 1 Environmental Site Assessment, dated May 19, 1995,
prepared by ATEC Associates, Inc.
<PAGE>
COLLATERAL ASSIGNMENT OF PERMITS,
LICENSES, APPROVALS AND CONTRACTS
THIS ASSIGNMENT is made as of the 31st day of May, 1995, by
Norristown Nursing and Rehabilitation Center, Associates, L.P., a
Pennsylvania limited partnership (the "Borrower"), and Geriatric
and Medical Services, Inc., a Pennsylvania corporation, each having
its principal place of business at c/o Geriatric & Medical
Companies, Inc., 5601 Chestnut Street, Philadelphia, Pennsylvania
19139 (hereinafter collectively referred to as the "Assignor") to
Meditrust Mortgage Investments, Inc., a Delaware corporation,
having its principal address at 197 First Avenue, Needham,
Massachusetts 02194 (hereinafter referred to as the "Assignee").
W I T N E S S E T H
WHEREAS, the Assignee has loaned to the Borrower the maximum sum of
SIX MILLION NINE HUNDRED THIRTY-NINE THOUSAND DOLLARS (6,939,000),
evidenced by a promissory note of even date and delivery herewith
(hereinafter referred to as the "Note"), made by the Borrower to
the order of the Assignee;
WHEREAS, the Note is referred to in that certain Construction Loan
Agreement of even date herewith by and between the Borrower and the
Assignee (hereinafter referred to as the "Loan Agreement") and is
in all respects subject to the provisions thereof;
WHEREAS, payment of the indebtedness evidenced by the Note is
secured, in part, by a Mortgage and Security Agreement (hereinafter
referred to as the "Mortgage") of even date herewith, granted by
the Borrower in favor of the Assignee, encumbering a certain parcel
of land described on EXHIBIT A attached hereto and incorporated by
reference (the parcel of land described on EXHIBIT A is more
particularly described in the Mortgage and, together with the
improvements to be located thereon, are hereinafter collectively
referred to as the "Mortgaged Property" and the facility to be
located on said parcel of land is hereinafter referred to as the
"Facility");
WHEREAS, the Note, the Loan Agreement, the Mortgage, this
Assignment and all other documents evidencing or securing repayment
of, or otherwise pertaining to and executed and delivered in
connection with, the loan evidenced by the Note are hereinafter
collectively referred to as the "Loan Documents". Capitalized
terms used herein but not otherwise defined herein shall have the
meanings ascribed thereto in the Loan Agreement;
WHEREAS, the Assignee has required an assignment of and a security
interest in all of the Assignor's right, title and interest in and
to all (i) licenses, approvals, qualifications, variances,
permissive uses, certificates of need, franchises, accreditations,
certificates, certifications, consents, permits and other
authorizations (including, without limitation, building permits,
subdivision approvals and subdivision plans) (hereinafter
collectively referred to as the "Permits") and (ii) agreements
including, without limitation, all Provider Agreements and Patient
Admission Agreements, contracts (including, without limitation,
construction contracts, subcontracts and architects' contracts),
contract rights, warranties and representations, franchises, and
records and books of account (hereinafter collectively referred to
as the Contracts"); benefiting, relating to or affecting the
Mortgaged Property and the ownership, construction, development,
maintenance, management, repair, use, occupancy, possession or
operation thereof or the operation of any programs or services at
or in conjunction with the Facility and all renewals, replacements
and substitutions therefor, now or hereafter issued by or entered
into with any Governmental Authority or maintained or used by the
Assignor or entered into by the Assignor or with any third Person,
including, without limitation, the Permits and Contracts set forth
on EXHIBIT B attached hereto and incorporated herein by reference,
as additional security for the complete payment of all indebtedness
and performance, observance and fulfillment of all of the
covenants, terms, conditions and warranties (hereinafter
collectively referred to as the "Mortgaged Indebtedness") contained
in:
(i)the Loan Documents, including, without limitation, the payment
of the principal indebtedness and accrued and unpaid interest due
under the Note, any applicable Prepayment Fee due under the Note,
any Late Payment Charges due under the Note and all other charges,
costs, advances and other monetary obligations (including, without
limitation, Additional Interest) due under the Loan Documents; and
(ii)all other agreements, documents and instruments evidencing any
indebtedness, covenant, liability, obligation, warranty or
undertaking due to, or made for the benefit of, the Assignee (or
any of its Affiliates) by (a)the Assignor or any of its Affiliates;
(b)the Guarantor or any endorser, surety or other guarantor of the
Note or (c)any Affiliate of the Guarantor or any such endorser,
surety or other guarantor; whether such indebtedness, covenants,
liabilities, obligations, warranties or undertakings are direct or
indirect, absolute or contingent, liquidated or unliquidated, due
or to become due, joint, several or joint and several, primary or
secondary, now existing or hereafter arising, including, without
limitation, all indebtedness, covenants, liabilities, obligations,
warranties and undertakings set forth under the Related Party
Agreements; and
WHEREAS, the Assignor is willing to so secure the Mortgaged
Indebtedness.
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Assignor does hereby transfer,
assign, deliver and grant a security interest to the Assignee as
follows:
1.Assignment of the Permits. As security for the due and punctual
payment and performance of all of the Assignor's obligations under
the Loan Documents, the Assignor hereby assigns, transfers and sets
over unto the Assignee, subject expressly to all applicable Legal
Requirements, including, without limitation, any duly enacted
"Patients' Bill of Rights" or similar legislation, including such
limitations as may be necessary to preserve the confidentiality of
the facility-patient relationship and the physician-patient
privilege, all of the Assignor's right, title and interest in and
to the Permits and Contracts.
2.Term. This Assignment shall remain in full force and effect so
long as the Mortgaged Indebtedness remains undischarged or
unsatisfied in any respect.
3.Representation, Warranties, Covenants and Agreements of the
Assignor. The Assignor represents and warrants to the Assignee
(which representations and warranties shall remain true and correct
throughout the term of this Assignment) and covenants and agrees
with the Assignee as follows:
(i)the Assignor is and shall be the sole owner of the interest in
each of the Permits and Contracts being assigned hereunder;
(ii)no obligation or liability has been incurred in connection with
any of the Permits and Contracts which is not set forth on the face
thereof or otherwise required by Legal Requirements;
(iii) there are no existing defaults by the Assignor under any of
the Permits and Contracts and there exists no state of facts, which
with the giving of notice or the passage of time, or both, would
constitute such a default;
(iv)there is no action pending, or to the best knowledge and belief
of the Assignor threatened to revoke, repeal, suspend, terminate,
modify, restrict, limit, withdraw any Permit or Contract;
(v)all conditions precedent to the effectiveness of each of the
Permits and Contracts have been or shall be satisfied by the
operation of the Mortgaged Property in accordance with its Primary
Intended Use;
(vi)the Assignor has not executed or granted and will not execute
or grant any modification, extension or waiver whatsoever with
respect to any of the Permits and Contracts other than in the
ordinary course of business without the prior written consent of
the Assignee, in each instance, which consent the Assignee may
withhold in its sole and absolute discretion;
(vii) each of the Permits and Contracts is validly issued, binding
and in full force and effect and is not subject to any unexpired
appeal periods on any appeals or challenges which have not been
conclusively resolved in favor of the Assignor;
(viii) the Assignor has not executed any prior assignment of or
granted any other security interest in any of the Permits and
Contracts which remains outstanding, nor has the Assignor performed
any act or executed any other instrument which might prevent the
Assignee from exercising its rights with respect to the Permits and
Contracts as set forth under the terms of this Assignment; and
(ix)all payments required to be made by the Assignor under each of
the Permits and Contracts have been made in full and the Assignor
shall continue to make all payments necessary in the ordinary
course of business to maintain the effectiveness and validity of
all Permits and Contracts.
Notwithstanding anything to the contrary contained herein, the
provisions of the Loan Agreement shall control with respect to any
matter set forth in this Section 3 to the extent addressed therein
and nothing contained herein shall derogate from the provisions of
the Loan Agreement.
4.Certification. Without charge and within ten (10) days after any
request therefor by the Assignee, the Assignor shall execute,
acknowledge, and deliver to the Assignee its certification with
respect to any or all of the Permits and Contracts, which
certification shall include a copy of the applicable Permits or
Contracts and contain the following information:
(i)the date of issuance of each of the Permits and Contracts or the
anticipated date thereof, the effective date of each of the Permits
and Contracts (if a different date from the date of issuance), and
the respective amounts and payment dates of all sums due or to
become due under each of the Permits and Contracts;
(ii)a statement that each of the Permits and Contracts is
unmodified and in full force and effect; or, if there have been any
modifications (which modifications shall not be effective without
the prior written consent of the Assignee pursuant to the
provisions hereof), a statement that each of the Permits and
Contracts is in full force and effect as modified and stating the
modifications and the dates thereof;
(iii) a statement that there are no defenses against the
enforcement of any of the terms or conditions of any of the Permits
or Contracts upon the part of the relevant issuer thereof; and
(iv)the date of expiration of the term of any Permit or Contract.
5.Limitations on Right of the Assignor to Deal with the Permits or
Contracts. The following are additional conditions of this
Assignment:
(i)the Assignor shall not amend, cancel, abridge, surrender,
terminate, change, alter, revise, replace, rescind or otherwise
modify any of the Permits or Contracts or release any of the
issuers thereof or parties thereto from liability or withhold
payment of charges, or make any assignment of its interest in, to
or under any of the Permits and Contracts, or consent to any
assignment thereof or subletting thereunder, except in the ordinary
course of business, without the prior written consent of the
Assignee, in each instance, which consent the Assignee may withhold
in its absolute and sole discretion;
(ii)the Assignor shall not execute any other assignment of any of
the Permits or Contracts assigned hereby. The Assignor shall not
grant or suffer any lien, charge, encumbrance or judgment, whether
voluntary or involuntary, against all or any part of the interest
of the Assignor in any of the Permits or Contracts;
(iii) the Assignor shall perform all of its covenants and
agreements under each of the Permits and Contracts. The Assignor
shall give prompt notice to the Assignee of any notice alleging the
Assignor's default received from any issuer or from any other
Person and furnish the Assignee with complete copies of said
notice; and
(iv)if requested by the Assignee, the Assignor shall enforce each
Permit and Contract and all rights and remedies available to the
Assignor against the issuer or party to any Permit or Contract in
the event that the Assignee determines, in the Assignee's sole and
absolute discretion, that any action taken by the issuer or party
to any Permit or Contract threatens the validity or effectiveness
thereof.
6.Effect of Assignment. This Assignment constitutes the granting
by the Assignor of a security interest under the Uniform Commercial
Code as enacted in the state where the Mortgaged Property is
located of the right, title, and interest of the Assignor in and to
the Permits and Contracts. Notwithstanding the foregoing, to the
extent the Assignee is not permitted by law to take a security
interest in any of the Permits and Contracts, the Assignor hereby
agrees to execute any and all other documents deemed necessary or
advisable by the Assignee to give the Assignee such interest in
such Permit or Contract as is allowed or allowable under law. In
addition to and not in limitation of the other rights of the
Assignee hereunder, in the event of any default continuing beyond
the expiration of applicable notice and grace periods, if any,
under any of the Loan Documents, the Assignee shall have, with
respect to the right, title and interest of the Assignor in the
Permits and Contracts, all of the rights of a secured party under
the Uniform Commercial Code as enacted in the state where the
Mortgaged Property is located, including, without limitation, a
right to sell the same at public or private sale. The Assignee
shall give the Assignor reasonable notice of the time and place of
any public sale thereof or of the time after which any private sale
or other intended dispositions thereof is to be made. The
requirement of reasonable notice shall be met if such notice is
mailed to the Assignor at the mailing address of the Assignor set
forth in Section14 hereof, by certified mail, postage prepaid,
return receipt requested, at least ten (10) days before the time of
the sale or disposition.
7.Events of Default. Each of the following shall constitute an
Event of Default hereunder:
(i)the occurrence of any default or breach of condition continuing
beyond the expiration of applicable notice and grace periods, if
any, under any of the Loan Documents;
(ii)any breach by the Assignor of any covenant, agreement, duty,
obligation or condition of this Assignment continuing for thirty
(30) days after the giving of notice by the Assignor; and
(iii) if any representation or warranty by the Assignor contained
in this Assignment proves to be false or misleading in any material
respect.
8.Rights of Assignee Upon Default. Upon the occurrence of any
Event of Default and at any time thereafter (without in any way
waiving such Event of Default), at the Assignee's option and
without notice or demand of any kind, and without regard to the
adequacy of security for the complete payment or performance of the
Mortgaged Indebtedness, the Assignee may exercise any or all of the
following remedies, either in person or by agent, with or without
bringing any action or proceeding, or by a receiver appointed by a
court:
(i)declare all of the Mortgaged Indebtedness immediately due and
payable;
(ii)with or without taking possession of the Mortgaged Property
exercise any and all rights or privileges granted by or permitted
under, and enjoy all benefits of, the Permits and Contracts and to
otherwise exercise any and all rights assigned to the Assignee
hereunder;
(iii) institute any legal or equitable action (in either the
Assignor's or the Assignee's name) which the Assignee, in its sole
and absolute discretion, deems desirable to collect any income or
proceeds from any of the Permits or Contracts; and
(iv)exercise any other rights and remedies permitted to the
Assignee under applicable law.
Any amounts advanced by the Assignee in connection with the Permits
and Contracts and all costs and expenses, including, without
limitation, attorneys' fees and expenses and court costs incurred
in connection therewith, shall be a demand obligation, shall bear
interest at the Advances Rate and, to the extent permissible under
applicable law, shall be added to the Mortgaged Indebtedness and
shall be secured hereby as fully and effectively and with the same
priority as every other obligation of the Assignor secured hereby.
Notwithstanding the foregoing, so long as there shall exist no
Event of Default hereunder, the Assignor shall have the right,
subject to the terms and conditions of this Assignment, to exercise
any and all rights and privileges granted by or permitted under,
and enjoy all benefits of, the Permits and Contracts.
9.Effect of Notice. A written notice made upon the issuer of or
any party to any Permit or Contract by the Assignee stating that an
Event of Default exists hereunder and that the Assignee has
succeeded to all of the Assignor's right, title and interest in and
to such Permit or Contract shall be sufficient notice to such
issuer or other party of such circumstances without the necessity
for any consent by the Assignor. The Assignor hereby waives any
claim whatsoever against any such issuer or contracting party for
any action taken by any such issuer or contracting party at the
written request of Assignee pursuant to the terms of this
Assignment.
10.Liability. This Assignment shall not operate to place
responsibility upon the Assignee for the care, control,
construction, maintenance, management, operation or repair of the
Mortgaged Property, nor for the carrying out of any of the terms
and conditions of any of the Permits or Contracts unless such
responsibility is specifically assumed by the Assignee in writing;
nor shall it operate to make the Assignee responsible or liable for
any waste committed on or at the Mortgaged Property, any dangerous
or defective condition of or relating to the Mortgaged Property, or
for any negligence in the construction, management, upkeep, repair
or control of the Mortgaged Property resulting in loss, injury or
death to any licensee, employee or any other Person, whether or not
such Person is connected with the Mortgaged Property. Nothing
herein contained shall be construed to bind the Assignee to the
performance of any of the terms and provisions contained in any of
the Permits or Contracts or to otherwise impose any obligation
whatsoever on the Assignee.
11.Application of Proceeds. Any amounts collected by the Assignee
hereunder shall be applied by the Assignee, without marshalling of
assets, towards payment of the Mortgaged Indebtedness in such order
as the Assignee, in its sole and absolute discretion, shall
determine.
12.Indemnification. The Assignor shall and hereby agrees to
indemnify and hold the Assignee harmless from and against all
obligations, liabilities, losses, costs, claims, expenses, fines,
penalties and damages (including, without limitation, attorneys'
fees and expenses and court costs) which the Assignee may incur (i)
by reason of this Assignment, including, without limitation, the
exercise of any right or remedy hereunder; (ii) in connection with
any of the Permits and Contracts (including, without limitation,
all claims and demands which may be asserted against the Assignee
by reason of any alleged obligation or undertaking on its part to
perform or discharge any of the terms, covenants or agreements
contained in any Permit or Contract) and (iii) with regard to the
Mortgaged Property.
The Assignor shall defend the Assignee against any claim or
litigation involving the Assignee for the same unless solely
resulting from the Assignee's gross negligence or willful
misconduct, with counsel approved by the Assignee, and should the
Assignee incur any such obligation, liability, loss, cost, expense,
fine, penalty or damage, then the Assignor shall reimburse the
Assignee for such amounts upon demand, and upon the failure of the
Assignor so to do, the Assignee may, at its option, declare the
entire Mortgaged Indebtedness immediately due and payable.
Notwithstanding anything to the contrary contained herein, the
Assignee shall have the option of conducting its own defense with
counsel of the Assignee's selection, but at the expense of the
Assignor.
The foregoing indemnification agreement shall also include all
costs incurred by the Assignee in connection with the enforcement
of said indemnification agreement. Any amounts owed to the
Assignee under this Section12 shall bear interest at the Advances
Rate and, to the extent permissible under applicable law, shall be
added to the Mortgaged Indebtedness and shall be secured hereby as
fully and effectively and with the same priority as every other
obligation of the Assignor secured hereby. The provisions of this
Section12 shall survive payment of the Mortgaged Indebtedness and
the foreclosure of the Mortgage.
13.Successors and Assigns; Joint and Several Liability. This
Assignment shall (i)be binding on the Assignor and the Assignor's
heirs, executors, administrators, legal representatives, and
permitted successors and assigns and (ii)inure to the benefit of
the Assignee, any other Person who may now or hereafter hold any
interest in the Loan and their respective successors and assigns.
Notwithstanding the foregoing, the Assignor shall not assign or
otherwise transfer this Assignment or any of its rights or
obligations hereunder without the express written consent of the
Assignee, in each instance, which consent may be withheld in the
Assignee's sole and absolute discretion. Where more than one
Person shall execute this Assignment, then each such Person shall
be fully liable for all of the obligations of the Assignor
hereunder and all such obligations shall be joint and several.
14.Notices. Any notice, request, demand, statement or consent made
hereunder shall be in writing and shall be deemed duly given if
personally delivered, sent by certified mail, return receipt
requested, or sent by a nationally recognized commercial overnight
delivery service with provisions for a receipt, postage or delivery
charges prepaid, and shall be deemed given when postmarked or
placed in the possession of such mail or delivery service and
addressed as follows:
If to the Assignor:Norristown Nursing and Rehabilitation Center,
Associates, L.P.
Geriatric & Medical Companies, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
Attention: President
With a copy to: Mesirov, Gelman, Jaffe, Cramer &Jamieson
1735 Market Street
Philadelphia, Pennsylvania 19103-7598
Attn: Robert P. Krauss, Esq.
If to the Assignee:
Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: President
With copies to:Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: General Counsel
Mintz, Levin, Cohn, Ferris
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Andrew R. Urban, Esq.
or at such other place as the Assignor or Assignee may from time to
time hereafter designate to the other in writing. Any notice given
to the Assignor by the Assignee at any time shall not imply that
such notice or any further or similar notice was or is required.
15.Governing Law. This Assignment shall be construed, and the
rights and obligations of the Assignee and the Assignor shall be
determined, in accordance with the laws of the Commonwealth of
Massachusetts, except that the laws of the Commonwealth of
Pennsylvania, shall govern (i)this Assignment to the extent
necessary for the Assignee to perfect, protect or enforce the
rights and remedies granted to it in this Assignment and to obtain
the benefit of the rights and remedies set forth herein with
respect to the Mortgaged Property and (ii)procedural requirements
which must be governed by the law of the state in which the
Mortgaged Property is located.
16.Captions and Headings. The captions and headings set forth in
this Assignment are included for convenience and reference only and
the words contained therein shall in no way be held or deemed to
define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning of, or the scope or intent
of, this Assignment or any part hereof.
17.Amendments, Waivers and Modifications. This Assignment and the
other Loan Documents set forth the entire agreement of the Assignor
and the Assignee with respect to the subject matter hereof and none
of the terms, conditions, covenants, warranties or representations
set forth in this Assignment may be renewed, replaced, amended,
modified, extended, substituted, revised, waived, consolidated or
terminated except by an agreement in writing signed by the Person
against whom enforcement is sought. The provisions of this
Assignment shall extend and be applicable to all renewals,
replacements, amendments, extensions, substitutions, consolidations
and modifications of the Loan Documents, the Permits and the
Contracts; and all references herein to the Loan Documents, the
Permits or the Contracts shall be deemed to include any such
renewals, replacements, amendments, extensions, substitutions,
consolidations or modifications thereof.
Notwithstanding the foregoing, any reference contained herein,
whether express or implied, to any renewal, replacement, amendment,
extension, substitution, revision, consolidation or modification of
any of the Loan Documents or of any Permit or Contract is not
intended to constitute an agreement or consent by the Lender to any
such renewal, replacement, amendment, extension, substitution,
revision, consolidation or modification of any of the Loan
Documents or any Permit or Contract; but, rather as a reference
only to those instances where the Lender may give consent to any
such renewal, replacement, amendment, extension, substitution,
revision, consolidation or modification, as the same may be
required pursuant to the terms, covenants or conditions of any of
the Loan Documents.
18.Invalidity. If any provision of this Assignment or the
application thereof to any Person or circumstance, for any reason
and to any extent, shall be held to be invalid or unenforceable,
neither the remainder of this Assignment nor the application of
such provision to any other Person or circumstance shall be
affected thereby, but rather the same shall be enforced to the
greatest extent permitted by law. Notwithstanding the foregoing,
if such provision which provides for the payment of principal or
interest with respect to the Mortgage Indebtedness, Additional
Interest, any Prepayment Fee, the Advances Rate or any
administrative fees, the Construction Loan Prepayment Fee or the
Permanent Loan Commitment Fee, the Assignee, in its sole and
absolute discretion, may declare the entire Mortgaged Indebtedness
due and payable upon sixty (60) days' prior written notice to the
Assignor. In the event of any such acceleration of the Mortgaged
Indebtedness, provided that an Event of Default has not occurred
under any of the Loan Documents, the Assignor shall not be required
to pay the Assignee a Prepayment Fee.
Notwithstanding the foregoing, it is the intention of the Assignor
and Assignee that if any provision hereof is capable of two (2)
constructions, one of which would render the provision void and the
other of which would render the provision valid, then such
provision shall be construed in accordance with the construction
which renders such provision valid.
19.Covenant of the Assignee. Upon the complete payment and
performance of the Mortgaged Indebtedness other than Related Party
Obligations and provided no event of default or event which with
the passage of time or the giving of notice or both would
constitute an event of default shall have occurred with respect to
the Related Party Obligations, this Assignment shall be deemed
terminated and released by the Assignee without further action and
shall thereupon be of no further force or effect. The Assignor
agrees that an affidavit, certificate, letter or statement of any
officer, agent or attorney of the Assignee indicating that any part
of the Mortgaged Indebtedness remains outstanding shall be deemed
conclusive evidence of the validity, effectiveness and continuing
force of this Assignment and any Person may and is hereby
authorized to rely thereon. Notwithstanding the foregoing, the
recording with the applicable recording office of a duly authorized
and executed discharge of mortgage discharging the Mortgage shall
likewise discharge this Assignment.
20.Rules of Construction. References in this Assignment to
"herein", "hereof" and "hereunder" shall be deemed to refer to this
Assignment and shall not be limited to the particular text or
Section in which such words appear. The use of any gender shall
include all genders and the singular number shall include the
plural and vice versa as the context may require. References in
this Assignment to the Assignee's attorneys shall be deemed to
include, without limitation, special counsel and local counsel for
the Assignee. References in this Assignment to attorneys' fees and
expenses shall be deemed to include all costs for administrative,
paralegal and other support staff.
References in this Assignment to the term Mortgaged Property shall
be deemed to include references to all of the Mortgaged Property
and references to any portion thereof. The word "foreclosure" as
used herein shall be deemed to include the acquisition of the
Mortgaged Property by voluntary deed or assignment in lieu of
foreclosure.
As used herein, the term "including", when following any general
statement, will not be construed to limit such statement to the
specific items or matters as provided immediately following the
term "including" (whether or not non-limiting language such as
"without limitation" or "but not limited to" or words of similar
import are also used), but rather will be deemed to refer to all
items or matters that could reasonably fall within the broader
scope of the general statement.
All capitalized terms used herein and not otherwise defined herein
shall have the same meaning as set forth under the Loan Agreement.
<PAGE>
IN WITNESS WHEREOF, the Assignor has duly executed this Assignment
as a sealed instrument as of the day and year first above written.
WITNESS:
ASSIGNOR
NORRISTOWN NURSING AND REHABILITATION CENTER ASSOCIATES, L.P., a
Pennsylvania limited partnership
By: GMC-LTC MANAGEMENT, INC., a Pennsylvania corporation, its
general partner
By:
Name:
Name:
Title:
GERIATRIC AND MEDICAL SERVICES, INC., a New Jersey corporation
By:
Name:
Name:
Title:
T3/547890.1
<PAGE>
EXHIBIT A
Mortgaged Property Description
All that certain piece of land located in Block 82 in the Borough
of Norristown, Montgomery County, Pennsylvania, situated between
Pine and Locust Streets and West Logan Streets, described as Lot 2
on the subdivision plan for Rittenhouse Nursing Center made by
Geriatric and Medical Companies,Inc., and prepared by NTH
Consultants, Ltd., Exton, Pennsylvania, dated January 25, 1994 and
last revised March 8, 1994, and approved by the Borough Council of
the Borough of Norristown on April 5, 1994 and duly recorded with
the Recorded of Deeds of Montgomery County, Pennsylvania, being
more fully described as follows:
From the intersection of Pine Street and West Roberts Street,
proceeding from a point, marked by an iron pin, on the northwest
corner of Block 82 in an easterly direction parallel to Pine
Street, a distance of 314.71 feet along a bearing of North 60
degrees 52 minutes 16 second East to the point of beginning;
thence, in an easterly direction along the same bearing, a distance
of 232.24 feet to a point, marked by an iron pin, on the northeast
corner of Block 82 at the intersection of Pine Street and West
Logan Street; thence, in a southerly direction paralleling West
Logan Street, a distance of 300.63 feet along a bearing of South 29
degrees 04 minutes 19 seconds East to a point, marked by an iron
pin; thence, in a westerly direction paralleling Locust Street a
distance of 232.61 feet along a bearing South 61 degrees 00 minutes
00 seconds West to a point; thence, in a northerly direction along
the common boundary with Lot 1, a distance of 300.11 feet along a
bearing of North 29 degrees 00 minutes 00 seconds West to the point
and place of beginning.
The above premises being the same land shown as Lot 2 on Plan of
Survey for Rittenhouse Nursing Center by Nave, Newell & Stampfel,
Ltd., dated May 6, 1995.
TOGETHER WITH the benefit of rights and easements set forth in that
certain Declaration of Reciprocal Easement Agreement made by
Geriatric and Medical Services, Inc., dated June , 1995 and
recorded in Deed Book page .
BEING THE SAME PREMISES WHICH Rittenhouse Partners by Indenture
dated 5/11/1987 and recorded 5/18/1987 at Norristown in the Office
for the Recording of deeds, in and for the County of Montgomery in
Deed Book 4837 page 2319 granted and conveyed unto Geriatric and
Medical Services, Inc., its successors and assigns, in fee.
<PAGE>
EXHIBIT B
Permits and Contracts
All Permits and Contracts as referenced in the Loan Documents or
otherwise used in connection with the construction or operation of
the Project.
<PAGE>
GUARANTY
TO:MEDITRUST MORTGAGE INVESTMENTS, INC.
1.Guaranty of Payment and Performance of Obligations. For value
received and hereby acknowledged and as an inducement to Meditrust
Mortgage Investments, Inc., a Delaware corporation, having its
principal office at 197 First Avenue, Needham, Massachusetts, 02194
(hereinafter referred to as the "Lender") to: (a) enter into that
certain loan transaction with Norristown Nursing and Rehabilitation
Center, Associates, L.P., a Pennsylvania limited partnership,
having its principal place of business at care of Geriatric &
Medical Companies, Inc., 5601 Chestnut Street, Philadelphia,
Pennsylvania 19139 (hereinafter referred to as the "Borrower"),
which loan transaction is evidenced by a Promissory Note of even
date made by the Borrower to the order of the Lender, in the
original principal amount of SIX MILLION NINE HUNDRED THIRTY-NINE
THOUSAND DOLLARS ($6,939,000) (hereinafter referred to as the
"Note") and is secured, in part, by a certain Mortgage and Security
Agreement, (hereinafter referred to as the "Mortgage"), of even
date, granted by the Borrower, in favor of the Lender encumbering
a certain parcel of land described on EXHIBIT A attached hereto and
incorporated by reference (the parcel of land described on EXHIBIT
A is more particularly described in the Mortgage and, together with
the 120-bed nursing/rehabilitation facility (the "Facility") and
other improvements to be constructed thereon, including, without
limitation, accessory parking and landscaping [collectively with
the Facility, the "Project"], are hereinafter collectively referred
to as the "Mortgaged Property") the real property and all of the
improvements now or hereafter located thereon, (the Note, the
Mortgage, this Guaranty, that certain Construction Loan Agreement
of even date by and between the Borrower and the Lender
(hereinafter referred to as the "Loan Agreement") and all other
documents and instruments evidencing or securing repayment of, or
otherwise pertaining to and executed and delivered in connection
with, the loan evidenced by the Note are hereinafter collectively
referred to as the "Loan Documents"; capitalized terms used herein
but not otherwise defined herein shall have the meanings ascribed
thereto in the Loan Agreement) and (b) make present and future
loans, advances andextensions of credit to, for the account of or
on behalf of the Borrower; the undersigned, Geriatric & Medical
Companies, Inc. ("Companies"), a Delaware corporation, and
Geriatric and Medical Services, Inc. ("Services"), a New Jersey
corporation, each having its principal place of business at c/o
Geriatric & Medical Companies, Inc., 5601 Chestnut Street,
Philadelphia, Pennsylvania 19139 (hereinafter collectively referred
to as the "Guarantor"), Services being the sole limited partner and
Companies being the sole shareholder of Services, respectively, of
the Borrower and, as such, deriving a substantial benefit from the
consummation of the loan transaction evidenced by the Loan
Documents, hereby unconditionally guarantees to the Lender:
(i) the full and punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all monetary obligations
of the Borrower now or hereafter existing under the Loan Documents,
whether for principal, interest (including, without limitation,
Additional Interest), any applicable Prepayment Fee due under the
Note (as defined therein), all Late Payment Charges due under the
Note (as defined therein), other charges, costs, advances, fees,
expenses or otherwise;
(ii)the performance, fulfillment and observance of all other terms,
conditions, warranties and covenants in the Loan Documents by the
Borrower or any Related Party; and
(iii) the payment and performance as and when due of all
indebtedness, obligations, agreements and liabilities of every
kind, nature and description, direct or indirect, matured or
unmatured, primary or secondary, certain or contingent, liquid or
non-liquid, voluntary or involuntary, whether or not otherwise
guaranteed or secured and however arising, owed to the Lender by
the Borrower;
all whether now owed or hereafter owing or incurred, and whether
recovery upon such indebtedness, obligations, agreements and
liabilities may be or hereafter become barred by any statute of
limitations, or whether such indebtedness, obligations, agreements
and liabilities may be or hereafter become otherwise unenforceable,
including, without limitation, all costs and expenses incurred by
the Lender in collecting or enforcing or attempting to collect or
enforce any of the foregoing (hereinafter collectively referred to
as the "Obligations" and individually referred to as an
"Obligation").
This Guaranty is an absolute, unconditional and continuing guaranty
of the full and punctual payment and performance by the Borrower of
the Obligations and not merely of their collectability and is in no
way conditioned upon any requirement that the Lender first collect
or attempt to collect the Obligations or any portion thereof from
the Borrower or from any endorser, surety or other guarantor of any
of the same or resort to any security or other means of obtaining
payment of any of the Obligations which the Lender now has or may
acquire after the date hereof, or upon any other contingency
whatsoever. Upon any default in the full and punctual payment and
performance of the Obligations, the Obligations and all liabilities
and obligations of the Guarantor to the Lender, hereunder or
otherwise, shall, at the option of the Lender, become immediately
due and payable to the Lender without further demand or notice of
any nature, all of which are expressly waived by the Guarantor.
Payments by the Guarantor hereunder may be required by the Lender
on any number of occasions. This Guaranty shall continue in full
force and effect until the complete payment and performance of all
of the Obligations.
All payments hereunder received by the Lender shall be applied by
the Lender, without any marshalling of assets, towards payment of
the Obligations and any other indebtedness of the Guarantor
hereunder in such order as the Lender, in its sole and absolute
discretion, may determine.
2.Guarantor's Further Agreements to Pay. The Guarantor further
agrees, as the principal obligor and not as a guarantor, to pay to
the Lender forthwith upon demand, in funds immediately available to
the Lender, all reasonable costs and expenses, including without
limitation, court costs and attorneys' fees and expenses and court
costs, incurred or expended by the Lender in connection with the
collection or enforcement of the Obligations and the enforcement
hereof. Any amounts owed to the Lender under this Section2 shall
bear interest at the Advances Rate. The provisions of this
Section2 shall survive the complete payment and performance of the
Obligations and the foreclosure of the Mortgage.
3.Liability of Guarantor. This Guaranty is unlimited and each of
the Guarantors shall be jointly and severally liable with each
other and with every endorser, surety or other guarantor of any or
all of the Obligations and the continuation of this Guaranty shall
not be affected by the termination, discontinuance, release or
modification of any agreement from any such endorser, surety or
guarantor of any of the Obligations to the Lender. Nothing
contained herein or otherwise shall require the Lender to make
demand upon or join the Borrower or any such endorser, surety or
guarantor or other party in any suit brought upon this Guaranty;
and the Guarantor hereby waives any right to require marshalling or
exhaustion of any remedy against any collateral, other property, or
any other Person primarily or secondarily liable.
4.Lender's Freedom to Deal with Borrower and Other Parties. The
Lender shall be at liberty, without giving notice to or obtaining
the assent of the Guarantor and without relieving the Guarantor of
any liability hereunder, to deal with the Borrower and with each
other Person who now is or after the date hereof becomes liable in
any manner for any of the Obligations in such manner as the Lender,
in its sole and absolute discretion, deems fit. The Lender has
full authority (in its sole and absolute discretion) to do any or
all of the following things, none of which shall discharge or
affect the Guarantor's liability hereunder:
(a)extend credit, make loans and afford other financial
accommodations to the Borrower at such times, in such amounts and
on such terms as the Lender may approve;
(b)modify, amend, vary the terms and grant extensions or renewals
of any present or future indebtedness or of the Obligations or any
instrument relating to or securing the same, and without
limitation, this Guaranty shall survive payment of the Note;
(c)grant time, waivers and other indulgences in respect of the
Obligations;
(d)vary, exchange, release or discharge, wholly or partially, or
delay or abstain from perfecting and enforcing any security or
guaranty or other means of obtaining payment of any of the
Obligations which the Lender now has or acquires after the date
hereof;
(e)take or omit to take any of the actions referred to in any
instrument evidencing, securing or relating to any of the
Obligations or any actions under this Guaranty;
(f)fail, omit or delay to enforce, assert or exercise any right,
power or remedy conferred on the Lender in this Guaranty or in any
other instrument evidencing, securing or relating to any of the
Obligations or take or refrain from taking any other action;
(g)accept partial payments from the Borrower or any other Person;
(h)release or discharge, wholly or partially, the Borrower, or any
endorser, surety or other guarantor of the Obligations (or any
portion thereof) or accept additional collateral for the payment of
any Obligations;
(i)compromise or make any settlement or other arrangement with the
Borrower or any such other Person in respect of the Obligations;
and
(j)consent to and participate in the proceeds of any assignment,
trust or mortgage for the benefit of creditors.
5.Unenforceability of Obligations; Invalidity of Security or Other
Guaranties. The Obligations of the Guarantor hereunder shall not
be affected by any change in the beneficial ownership of the
Borrower, by reason of any disability of the Borrower or by any
other circumstance which might constitute a defense available to,
or a discharge of, the Borrower in respect of any of the
Obligations. If for any reason now or hereafter the Borrower has
no legal existence or is under no legal obligation to discharge any
of the Obligations undertaken or purported to be undertaken by it
or on its behalf, or if any of the moneys included in the
Obligations have become irrecoverable from the Borrower by
operation of law or for any other reason, this Guaranty shall
nevertheless be binding on the Guarantor and the Guarantor shall
remain unconditionally liable for the complete payment and
performance of the Obligations. This Guaranty shall be in addition
to any other guaranty or other security for the Obligations, and it
shall not be prejudiced or rendered unenforceable by the invalidity
of any such other guaranty or security. This Guaranty shall
continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Obligations is rescinded or
must otherwise be returned by the Lender, upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise, all as
though such payment had not been made. The Guarantor covenants to
cause the Borrower to maintain and preserve the enforceability of
any instruments now or hereafter executed in favor of the Lender,
and to take no action of any kind which might be the basis for a
claim that the Guarantor has any defense hereunder other than the
complete payment and performance of the Obligations.
It shall not be necessary for the Lender to inquire into the power
of the Borrower or anyone acting or purporting to act on its
behalf, and any Obligation made or created in reliance upon the
professed exercise of such powers shall be guarantied hereunder.
The Guarantor represents that the Borrower is the bona fide
borrower and that the Borrower has not been formed or availed of to
evade or circumvent the applicable usury laws of any state or
states concerned therewith, and the Guarantor hereby indemnifies
the Lender and agrees to save it harmless against any damages or
expenses suffered by the Lender should this representation or any
other representation contained herein proves untrue. The aforesaid
indemnification agreement shall include, without limitation,
attorneys' fees and expenses and court costs incurred by the Lender
should any such representation prove untrue and in connection with
the enforcement of said indemnification.
The indemnity provisions of this Section5 shall survive the
complete payment and performance of the Obligations and the
foreclosure of the Mortgage.
6.Representations, Warranties and Covenants . The Guarantor hereby
warrants and represents to, and covenants and agrees with, the
Lender that:
(a)if the Guarantor is a corporation or partnership, during the
entire time that this Guaranty remains in full force and effect,
the Guarantor shall keep in effect its existence and rights as a
corporation or partnership under the laws of the state of its
incorporation or formation;
(b)if the Guarantor shall be the trustees of a trust, the trustees
hereby certify, pursuant to the provisions of said trust, that said
trust is in full force and effect; that none of the trustees have
resigned or been removed as such a trustee; that said trust has not
been altered, amended, modified, revoked or terminated and remains
in full force and effect; and that they are the sole trustees of
said trust;
(c)the Guarantor is duly authorized to carry on its business as
presently conducted and to make and deliver this Guaranty. This
Guaranty has been duly executed and delivered by the Guarantor and
is a legal, valid and binding obligation of the Guarantor,
enforceable in accordance with its terms;
(d)the execution, delivery and performance of this Guaranty shall
not result in any breach of, or constitute a default under, or
result in the acceleration of any obligation of the Guarantor
under, any contract, mortgage, lien, lease, agreement, instrument,
arbitration award, judgment, decree, bank loan or credit agreement,
trust indenture or other instrument to which Guarantor is a party
or by which the Guarantor may be bound or affected and do not
violate or contravene any law, order, decree, rule or regulation to
which the Guarantor is subject; nor do any such instruments impose
or contemplate any obligations which are or may be inconsistent
with any other obligations imposed on the Guarantor under any other
instruments (i) heretofore or hereafter delivered by the Guarantor
or (ii) to which the Guarantor is now or hereafter subject;
(e)the Guarantor is financially solvent and there are no actions,
suits or proceedings including, without limitation, outstanding
federal or state tax liens, garnishments, or insolvency and
bankruptcy proceedings, pending or threatened, against or affecting
the Guarantor, which may involve or affect the validity or
enforceability of this Guaranty;
(f)except as set forth in Exhibit A attached hereto and hereby made
a part hereof, the Guarantor has filed all tax returns which are
required to be filed, as to which extensions are not currently in
effect, and has paid all taxes (including interest and penalties)
which have become due pursuant to such returns or pursuant to any
assessment or notice of tax claim or deficiency received by the
Guarantor. No tax liability has been asserted by the Internal
Revenue Service or any other federal, state or local taxing
authority for taxes (or interest or penalties thereon) in excess of
those already paid;
(g)no consent or approval or other authorization of, or exemption
by, or declaration or filing with, any Person and no waiver of any
right by any Person is required to authorize or permit, or is
otherwise required in connection with, the execution, delivery and
performance of this Guaranty;
(h)the financial statements of the Guarantor given to the Lender in
connection with the making of the loan evidenced by the Loan
Documents were true and accurate as of the date thereof and
disclosed all liabilities, including, without limitation,
contingent liabilities, of the Guarantor, and there has been no
material adverse change since such date with respect to the
tangible net worth of the Guarantor or any other matters contained
or referred to therein and no additional material liabilities,
including, without limitation, contingent liabilities of the
Guarantor, have arisen or been incurred since such date;
(i)there are no actions, proceedings or investigations pending or,
to the best knowledge of the Guarantor, threatened against the
Guarantor, before or by any court, arbitrator, administrative
agency or other governmental authority which are expected, in the
reasonable judgment of the Guarantor, to materially and adversely
affect the financial condition or operations of the Guarantor, or
its ability to carry out the terms and provisions of this Guaranty;
(j)neither this Guaranty, nor any certificate, statement or other
document, including, without limitation, any financial statements
concerning the financial condition of the Guarantor furnished to or
to be furnished to the Lender by or on behalf of the Guarantor, in
connection with the loan evidenced by the Note, contains or will
contain any untrue statements of a material fact or omits or will
omit to state a material fact necessary in order to prevent the
statements contained herein or therein from being misleading;
(k)all of the representations and warranties made in any of the
Loan Documents with respect to the Guarantor are true and correct
as of the date hereof; and
(l)the Guarantor shall be bound by all terms, conditions, covenants
and agreements contained in any of the Loan Documents with respect
to the Guarantor. Without limiting the foregoing, the Guarantor
agrees that pursuant to the Affiliated Party Subordination
Agreement executed contemporaneously herewith, all of the following
payments, payable by the Borrower or any Lessee to the Guarantor or
any of its Affiliates shall be subordinate to the Obligations: (i)
management fees and all other fees of every kind and nature for
services provided in connection with the operation of the Mortgaged
Property, including, without limitation, all allocations of any
so-called corporate or central office costs, expenses any charges
of any kind or nature and (ii) payments in connection with any
extension of credit. The Guarantor shall deliver or cause to be
delivered to the Lender any instrument requested by the Lender to
implement the intent of the foregoing provisions.
7.Line of Credit. The Guarantor acknowledges that the occurrence
of any default or breach of condition continuing beyond the
expiration of applicable notice and grace periods, if any, under
any credit agreement, loan agreement or other agreement
establishing a major line of credit (or any documents executed in
connection with such lines of credit) by, or on behalf of the
Guarantor, if the applicable creditor has elected to (a) declare a
default thereunder or (b) commence any action (i) constituting an
acceleration of the loan or (ii) in order to realize on its
security thereunder, shall a be default hereunder. The Guarantor
hereby agrees to provide the Lender with prompt written notice of
any default or claim of default by any party to any such credit
agreement, loan agreement or other agreement, along with a complete
copy of any such written notice of such default or claim of
default. For the purposes of this provision, a major line of
credit shall mean and include any line of credit established in an
amount equal to or greater than ONE MILLION DOLLARS ($1,000,000).
8.No Contest with Lender. No set-off, counterclaim, reduction or
diminution of any obligation, or any claim or defense of any kind
or nature which the Guarantor has or may have against the Borrower
or the Lender shall be available hereunder to the Guarantor. The
Guarantor shall not assert and hereby waives any right whatsoever
that the Guarantor may have at law or in equity, including, without
limitation, any right of subrogation or to seek contribution,
indemnification or any other form of reimbursement from the
Borrower, any other endorser, surety or guarantor of any of the
Obligations or any other Person now or hereafter primarily or
secondarily liable for any of the Obligations. The Guarantor shall
not, in any proceedings under the Bankruptcy Code or insolvency
proceedings of any nature, prove in competition with the Lender in
respect of any payment hereunder or be entitled to have the benefit
of any counterclaim or proof of claim or dividend or payment by or
on behalf of the Borrower or the benefit of any other security for
any Obligation which, now or hereafter, the Guarantor may hold in
competition with the Lender.
9.Financial Statements and Covenants. The Guarantor hereby agrees
to be bound by and to comply with the terms and conditions
contained in the Loan Agreement, as the same may be applicable to
the Grantor. Without in any way limiting the foregoing:
(a) the Guarantor further covenants and agrees with the Lender that
during such time as this Guaranty is in effect the Guarantor shall
furnish to the Lender the Consolidated Financials and all other
information required with respect to the Guarantor under Section 16
of the Loan Agreement. The Consolidated Financials hereinafter
submitted to the Lender shall show a Tangible Net Worth of the
Guarantor of not less than NINE MILLION DOLLARS (9,000,000).
(b) the Guarantor hereby agrees that the Guarantor shall not,
without having first obtained the Lender's written consent, in each
instance, which consent may be withheld in the Lender's sole and
absolute discretion, convey, assign, donate, sell, mortgage or
pledge any real or personal property which would cause the Tangible
Net Worth of the Guarantor to be reduced to less than NINE MILLION
DOLLARS (9,000,000).
(c) the Guarantor shall not create, incur, assume or suffer to
exist any liability for borrowed money which is secured by an
interest in personal property at any of the Mortgaged Property or
pertains to a lease of personal property at any of the Mortgaged
Property except (i) indebtedness to the Lender under the Loan
Documents, (ii) unsecured normal trade debt incurred upon customary
terms in the ordinary course of business and (iii) any other
indebtedness that may be expressly allowed under the Loan
Documents; or
(d) The Guarantor shall not liquidate, dissolve or terminate its
existence or merge with any other Person other than a merger in
which the Guarantor is the surviving entity and continues to meet
the financial covenants set forth in this Guaranty and the other
Loan Documents.
10.Set-off. In addition to any rights now or hereafter granted
under any agreement or applicable law and not by way of limitation
of any such rights, upon the occurrence of any Event of Default
under any of the Loan Documents or any failure or default by the
Guarantor hereunder, the Lender is hereby authorized at any time or
from time to time, without presentment, demand, protest or other
notice of any kind to the Guarantor or to any other Person, all of
which are hereby expressly waived, to set off and to appropriate
and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by the Lender (or any
subsidiary or affiliate of the Lender) to or for the credit or the
account of the Guarantor against and on account of the obligations
and liabilities of the Guarantor to the Lender under this Guaranty
or otherwise, irrespective of whether or not the Lender shall have
made any demand hereunder and although said obligations,
liabilities or claims, or any of them, may then be contingent or
unmatured and without regard to the availability or adequacy of
other collateral. The Guarantor also grants to the Lender a
security interest in all of the Guarantor's deposits, securities
and other property at any time and from time to time, in the
possession of the Lender (or any subsidiary or affiliate of the
Lender) and, upon the occurrence of any Event of Default under any
of Loan Documents or any such failure or default by the Guarantor,
the Lender may exercise all rights and remedies of a secured party
under the Massachusetts Uniform Commercial Code. The Lender shall
have no duty to take steps to preserve rights against prior parties
as to such securities or other property.
The Guarantor hereby agrees that all collateral now or hereafter
granted as security for any indebtedness of the Guarantor to the
Lender shall be deemed to be additional collateral securing the
Obligations.
11.Non-Competition. The Guarantor acknowledges that the Borrower
has established a substantial reputation and good will in the
Facility and the Mortgaged Property created over a long period of
time and the expenditure of substantial effort and sums of money,
the Guarantor has derived substantial benefit from such reputation
and good will, the Guarantor further acknowledges that any
competition by the Guarantor with any Purchaser upon the transfer
of title to the Mortgaged Property to such Purchaser by reason of
the Lender's exercise of rights granted under any of the Loan
Documents, including without limitation, the exercise of the power
of sale under the Mortgage, any other foreclosure of the Mortgage
or any other proceeding brought to enforce the rights of the holder
of the Mortgage, by deed in lieu of foreclosure or by any other
method, would cause irreparable harm to the Lender and the
Purchaser. To induce the Lender to fund the Loan and to accept
this Guaranty, the Guarantor agrees that, from and after the date
of any such transfer of title to the Mortgaged Property to the
Purchaser until the fifth anniversary thereof, the Guarantor, shall
not thereafter, directly or indirectly, become involved in any
capacity in or lend any of its name to or engage in any capacity in
any nursing home facility, center, unit or program (or in any
partnership, firm, company, corporation or other entity engaged in
any such activity or any related activity competitive therewith),
whether such competitive activity shall be as an officer, director,
owner, employee, agent, advisor, independent contractor, developer,
lender, sponsor, venture capitalist, administrator, manager,
investor, partner, joint venturer, consultant or other participant
in any capacity whatsoever within a fifty (50) mile radius of the
Mortgaged Property except for any such nursing home facility,
center, unit or program which (a) is owned by the Guarantor and for
which a Certificate of Need has been issued or (b) is subject to
acquisition by the Guarantor pursuant to a bona fide arms-length
purchase and sale agreement calling for settlement within twelve
months from the date thereof.
The Guarantor hereby acknowledges and agrees that none of the time
span, scope or area covered by the foregoing restrictive covenants
is or are unreasonable and that it is the specific intent of the
Guarantor that each and all of the restrictive covenants set forth
hereinabove shall be valid and enforceable as specifically set
forth herein. The Guarantor further agrees that these restrictions
are special, unique, extraordinary and reasonably necessary for the
protection of the Lender and any Purchaser and that the violation
of any such covenant by the Guarantor would cause irreparable
damage to the Lender and any Purchaser, for which a legal remedy
alone would not be sufficient to fully protect such parties.
Therefore, in addition to and without limiting any other remedies
available at law or hereunder, in the event that the Guarantor
breaches any of its restrictive covenants hereunder or shall
threaten breach of any of such covenants, then the Lender and any
Purchaser shall be entitled to obtain equitable remedies, including
specific performance and injunctive relief, to prevent or otherwise
restrain a breach of this Section10 (without the necessity of
posting a bond) and to recover any and all costs and expenses
(including, without limitation, attorneys' fees and expenses and
court costs), incurred in enforcing the provisions of this
Section10 against the Guarantor. The existence of any claim or
cause of action of the Guarantor against the Lender or any
Purchaser, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Lender or any
Purchaser of the foregoing restrictive covenants and the Guarantor
shall not defend on the basis that there is an adequate remedy at
law.
Without limiting any other provision of this Guaranty, the
Guarantor and the Lender acknowledge that the foregoing restrictive
covenants are severable and separate. If at any time any of the
foregoing restrictive covenants shall be deemed invalid or
unenforceable by a court having jurisdiction over this Guaranty, by
reason of being vague or unreasonable as to duration, or geographic
scope or scope of activities restricted, or for any other reason,
such covenants shall be considered divisible as to such portion and
such covenants shall be immediately amended and reformed to include
only such covenants as are deemed reasonable and enforceable by the
court having jurisdiction over this Guaranty to the full duration,
geographic scope and scope of restrictive activities deemed
reasonable and thus enforceable by said court; and the parties
agree that such covenants as so amended and reformed, shall be
valid and binding as through the invalid or unenforceable portion
has not been included therein.
The provisions of this Section11 shall survive the early
termination of the Loan Term by reason of a transfer of title to
the Mortgaged Property as described in the first paragraph of this
Section and any satisfaction of the Mortgaged Indebtedness in
connection therewith or subsequent thereto. The Guarantor agrees
that any Purchaser may enforce the provisions of this Section11 as
a third-party beneficiary.
12.Remedies Cumulative; Waivers. The Guarantor hereby waives
notice of acceptance hereof and reliance hereon, notice of any
action taken or omitted by the Lender in reliance hereon,
suretyship defenses, presentment, demand, protest, notice of
nonpayment, notice of dishonor, protest of any dishonor, notice of
protest, giving notice of any default by the Borrower under any of
the Loan Documents or asserting any other right of the Lender
hereunder, and all other notices in connection with the delivery,
acceptance, performance, default, or enforcement of the payment and
performance of this Guaranty and the other Loan Documents.
The rights and remedies set forth in this Guaranty are in addition
to all other rights and remedies afforded to the Lender under any
of the other Loan Documents or at law or in equity, all of which
are hereby reserved by the Lender, and this Guaranty is made and
accepted without prejudice to any such rights and remedies. All of
the rights and remedies of the Lender under this Guaranty and all
of the other Loan Documents shall be separate and cumulative and
may be exercised concurrently or successively in the Lender's sole
and absolute discretion.
The Lender shall not by any act, delay, omission or otherwise
(including, without limitation, the exercise of any right or remedy
hereunder) be deemed to waive any of its rights or remedies
hereunder or under any of the other Loan Documents unless such
waiver is in writing and signed by the Lender, and then only to the
extent specifically set forth therein. No waiver at any time of
any of the terms, conditions, covenants or provisions of this
Guaranty shall be construed as a waiver of any other term,
condition, covenant or provision of this Guaranty, nor shall such
a waiver in any one instance or circumstance be construed as a
waiver of the same term, condition, covenant or provision in any
subsequent instance or circumstance. The acceptance by the Lender
of any payment that is less than payment in full of all amounts due
under this Guaranty (or any of the other Loan Documents) at the
time of the making of such payment shall not: (i)constitute a
waiver of the right to exercise any of Lender's remedies at that
time or at any subsequent time; (ii)constitute an accord and
satisfaction or (iii)nullify any prior exercise of any remedy,
without the express written consent of Lender.
Whether or not for consideration paid or payable to the Lender and,
except as may be otherwise specifically agreed to by the Lender, no
forbearance on the part of the Lender or extension of the time for
the payment of the whole or any part of the Obligations, or any
other indulgence given by the Lender to the Borrower or any other
Person, shall operate to release or in any manner affect the
original liability of the Borrower or any other Person (including,
without limitation, the Guarantor) or the priority of the Mortgage
or to limit, prejudice or impair any right of the Lender,
including, without limitation, the right to realize upon the
Collateral, or any part thereof, for any of the obligations
evidenced or secured by the Loan Documents, except as may be
expressly agreed to in writing by the Lender; notice of any such
extension, forbearance or indulgence being hereby waived by the
Guarantor.
Any failure by the Lender to accelerate the indebtedness due under
this Guaranty or any of the other Loan Documents by reason of a
default hereunder or thereunder, acceptance of a past due
installment, or indulgences granted from time to time shall not be
construed (x)as a novation of this Guaranty or any of the other
Loan Documents or as a reinstatement of the indebtedness evidenced
thereby or as a waiver of such right of acceleration or of the
right of the Lender thereafter to insist upon strict compliance
with the terms of this Guaranty or any of the other Loan Documents
or (y) to prevent the exercise of such right of acceleration or any
other right granted hereunder or under applicable law; and, to the
maximum extent permitted by law, the Guarantor hereby expressly
waives the benefit of any statute or rule of law or equity now
provided, or which may hereafter be provided, which would produce
a result contrary to or in conflict with the foregoing.
To the maximum extent permitted by law, the Guarantor hereby
waives and renounces for itself, its heirs, executors,
administrators, legal representatives, successors and assigns, all
rights to the benefits of any statute of limitations and any
moratorium, reinstatement, marshalling, forbearance, valuation,
stay, extension, redemption, appraisement, exemption and homestead
now provided, or which may hereafter be provided, by the
Constitution and laws of the United States of America and of any
state thereof, both as to itself and in and to all of its property,
real and personal, against the enforcement and collection of the
Obligations. The Guarantor hereby transfers, conveys and assigns
to the Lender a sufficient amount of such homestead or exemption as
may be set apart in bankruptcy, to pay the obligations of the
Guarantor under this Guaranty in full, with all costs of
collection, and does hereby direct any trustee in bankruptcy having
possession of such homestead or exemption to deliver to the Lender
a sufficient amount of property or money set apart as exempt to pay
the obligations of the Guarantor hereunder, and does hereby appoint
the Lender the attorney-in-fact for the Guarantor, with full power
of substitution, to claim any and all homestead exemptions allowed
by law.
The power of attorney conferred on the Lender pursuant to the
provisions of this Section 11 being coupled with an interest, shall
be irrevocable until all of the Obligations have been fully paid
and performed, shall not be affected by any disability or
incapacity which the Guarantor may suffer and shall survive the
same. Such power of attorney, is provided solely to protect the
interests of the Lender and shall not impose any duty on the Lender
to exercise any such power, and neither the Lender nor such
attorney-in-fact shall be liable for any act, omission, error in
judgment or mistake of law, except as the same may result from its
gross negligence or wilful misconduct.
TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE GUARANTOR HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THE
GUARANTOR MAY NOW OR HEREAFTER HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS GUARANTY. The Guarantor hereby certifies that neither the
Lender, nor any of the Lender's representatives, agents or counsel
has represented, expressly or otherwise, that the Lender would not,
in the event of any such suit, action or proceeding, seek to
enforce this waiver of the right to trial by jury, and acknowledge
that the Lender has been induced by this waiver (among other
things) to enter into the loan transaction evidenced by the Note,
and further acknowledges that the Guarantor (1)has read the
provisions of this Guaranty and in particular, the paragraph
containing this waiver; (2)has consulted legal counsel;
(3)understands the rights that it is granting in this Guaranty and
the rights that it is waiving in this paragraph in particular and
(4)makes the waivers set forth herein knowingly, voluntarily and
intentionally.
13.Indemnification: With the exception of any claim arising out of
an action brought by (a) the Borrower or (b) any endorser, surety
or other guarantor of the Obligations (or any portion thereof),
against the Lender, in which a final decision is issued by a court
in favor of any such party and all appeal periods having lapsed or
been exhausted, the Guarantor, shall and hereby agrees to
indemnify, defend and hold the Lender harmless against any claim
brought or threatened against the Lender by (i)the Borrower;
(ii)any endorser, surety or other guarantor of the Obligations (or
any portion thereof) or (iii)by any other Person; on account of the
Lender's relationship with the Borrower, or any such endorser,
surety or other guarantor (each of which may be defended,
compromised, settled, or pursued by the Lender with counsel of the
Lender's selection, but at the expense of the Guarantor).
The aforesaid indemnification agreement shall include, without
limitation, attorneys' fees and expenses and court costs incurred
by the Lender in connection with any such claims and with the
enforcement of said indemnification. The provisions of this
Section13 shall survive the complete payment and performance of the
Obligations and the foreclosure of the Mortgage.
14.Usury. In the event that fulfillment of any provision of this
Guaranty or any of the other Loan Documents, at the time
performance of such provision shall be due and as a result of any
circumstance, shall involve transcending the limit of validity
presently or hereinafter prescribed by any applicable usury statute
or any other law, with regard to obligations of like character and
amount, then ipso facto the obligation to be fulfilled shall be
reduced to the limit of such validity, so that in no event shall
any exaction be possible under this Guaranty that is in excess of
the limit of such validity. In no event shall the Borrower or the
Guarantor be bound to pay for the use, forbearance or detention of
the money loaned pursuant hereto, interest of more than the maximum
rate, if any, permitted by law to be charged by Lender; the right
to demand any such excess being hereby expressly waived by the
Lender.
15.Participants. The Lender reserves the right, at any time and
from time to time while the Obligations remain outstanding, to (a)
enter into participation agreements with respect to the loan
transaction evidenced by the Loan Documents, (except that with
respect to participation agreements with any entity engaged in
activities directly competitive with the services provided at the
Facility, or with any entity with the general reputation of
acquiring and liquidating distressed property or Mellon Bank, N.A.,
Foothill Capital Corporation and Marine Midland Bank or any of
their affiliates, the Lender shall first obtain the Borrower's
consent, which consent shall not be unreasonably withheld or
delayed) or (b) assign, directly or as collateral, all or all
portion of the obligations evidenced or secured by the Loan
Documents and any or all of the Lender's rights therein, and the
Guarantor hereby agrees to cooperate with the Lender in connection
with the execution of any such participation agreements and the
transfer of all such assignments. Such cooperation shall include
without limitation:
(i)supplying financial statements of the Guarantor;
(ii)providing estoppel certificates (1)consenting to such
participations or assignments, (2)confirming the Guarantor's
obligations under this Guaranty, (3)confirming the amount of the
then outstanding principal balance of the Loan and the amounts of
any tax and insurance escrow deposits held by the Lender,
(4)stating whether the Borrower or the Guarantor have any defenses,
offsets or credits against the payment of any amounts due or the
performance of any obligations under the Loan Documents and
(5)stating whether any default or any state of facts which, with
the passing of time or the giving of notice or both, would
constitute a default, exists under the Loan Documents;
(iii)making such modifications or alterations to this Guaranty as
are reasonably requested by the Lender, provided, however, that the
making of such modifications or alterations shall be at no cost to
the Guarantor and shall not result in changes that materially and
adversely affect the Guarantor;
(iv)consenting to such modifications or alterations to the other
Loan Documents as are reasonably requested by the Lender
(notwithstanding that any modifications or alterations to the other
Loan Documents may be made without the Guarantor's consent and
shall not affect the Guarantor's obligations hereunder); and
(v)providing such other documentation relating to the loan
transaction evidenced by the Loan Documents as the Lender may
reasonably request.
The Lender shall have the right to provide potential participants
and assignees with any and all information provided to the Lender
pursuant to the Loan Documents. Subject to the provisions of this
Section 15, The terms and conditions upon which any participation
agreements with respect to the loan transaction evidenced by the
Loan Documents are sold or any assignments of all or any of the
obligations evidenced or secured by the Loan Documents and the
Lender's rights and remedies under the Loan Documents are made
shall be determined by the Lender in its sole and absolute
discretion.
16.Successors and Assigns. This Guaranty shall be (i) binding on
the Guarantor and the Guarantor's heirs, executors, administrators,
legal representatives and permitted successors and assigns and (ii)
inure to the benefit of Lender, any Person who may now or hereafter
hold any interest in the Loan and their respective successors and
assigns. Notwithstanding the foregoing, the Guarantor shall not
assign any of its rights or obligations hereunder without the prior
consent of the Lender, in each instance, which consent may be
withheld in the Lender's sole and absolute discretion.
17.Notices. Any notice, request, demand, statement or consent made
hereunder shall be in writing and shall be deemed duly given if
personally delivered, sent by certified mail, return receipt
requested, or sent by a nationally recognized commercial overnight
delivery service with provisions for a receipt, postage or delivery
charges prepaid, and shall be deemed given when postmarked or
placed in the possession of such mail or delivery service and
addressed as follows:
If to the Guarantor:Geriatric and Medical Services, Inc.
Geriatric & Medical Centers, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
Attention: President
Geriatric & Medical Companies, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
Attention: President
With a copy to: Mesirov, Gelman, Jaffe, Cramer& Jamieson
1735 Market Street
Philadelphia, Pennsylvania 19103-7598
Attn: Robert P. Krauss, Esq.
If to the Lender:Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: President
With copies to:Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 021954
Attn: General Counsel
Mintz, Levin, Cohn, Ferris
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Andrew R. Urban, Esq.
or at such other place as either the Lender or the Guarantor may
from time to time hereafter designate to the other in writing. Any
notice given to the Guarantor by the Lender at any time shall not
imply that such notice or any further or similar notice was or is
required.
18.Governing Law. This Guaranty shall be construed, and the rights
and obligations of the Lender and the Guarantor shall be
determined, in accordance with the laws of the Commonwealth of
Massachusetts, except that the laws of the Commonwealth of
Pennsylvania shall govern (i) this Guaranty to the extent necessary
for the Lender to perfect, protect or enforce the rights and
remedies granted to it in this Guaranty and to obtain the benefit
of the rights and remedies set forth in the Loan Documents with
respect to the Mortgaged Property and (ii) procedural requirements
which must be governed by the law of the state in which the
Mortgaged Property is located.
To the maximum extent permitted by applicable law, the Guarantor
hereby irrevocably submits to the jurisdiction of the courts of the
Commonwealth of Massachusetts and the United States District Court
for the District of Massachusetts, as well as to the jurisdiction
of all courts from which an appeal may be taken from the aforesaid
courts, for the purpose of any suit, action or other proceeding
arising out of, or with respect to this Guaranty or any of the
other Loan Documents and expressly waives any and all objections
the Guarantor may have as to venue in any of such courts. The
Guarantor agrees that final judgment in any such suit, action or
proceeding brought in such a court shall be enforced in any court
of proper jurisdiction by a suit upon such judgment, provided that
service of process in such action, suit or proceeding shall have
been effected upon the Guarantor in one of the manners specified in
Section 18 hereof or as otherwise permitted by law.
19.Captions and Headings. The captions and headings set forth in
this Guaranty are included for convenience and reference only and
the words contained therein shall in no way be held or deemed to
define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning of, or the scope or intent
of, this Guaranty or any part hereof.
20.Amendments, Waivers and Modifications. This Guaranty and the
other Loan Documents set forth the entire agreement of the Lender
and the Guarantor with respect to the subject matter hereof and
none of the terms, conditions, warranties, covenants or
representations hereof may be renewed, replaced, revised, amended,
extended, consolidated, modified, substituted, waived or
terminated, except by an agreement, in writing, signed by the
Person against whom enforcement is sought. The provisions of this
Guaranty shall extend and be applicable to all renewals,
replacements, revisions, amendments, extensions, consolidations and
modifications of the Loan Documents and all references herein to
the Loan Documents shall be deemed to include any such renewals,
replacements, revisions, amendments, extensions, substitutions,
revisions, consolidations or modifications thereof.
Notwithstanding the foregoing, any reference contained herein,
whether express or implied, to any renewal, replacement, amendment,
extension, substitution, revision, consolidation or modification of
any of the Loan Documents or is not intended to constitute an
agreement or consent by the Lender to any such renewal,
replacement, amendment, extension, substitution, revision,
consolidation or modification of any of the Loan Documents; but,
rather as a reference only to those instances where the Lender may
give consent to any such renewal, replacement, amendment,
extension, substitution, revision, consolidation or modification,
as the same may be required pursuant to the terms, covenants or
conditions of the Loan Documents.
21.Further Assurances. Upon request of the Lender, at any time and
from time to time, the Guarantor shall promptly make, execute and
deliver, or cause to be made, executed and delivered, to the Lender
and, where appropriate, cause to be recorded or filed and from time
to time thereafter to be re-recorded or refiled at such time and in
such offices and places as shall be deemed necessary or desirable
by the Lender (in its sole and absolute discretion), any such other
or further amendments, assignments, instruments of further
assurance, certificates and other documents as shall be deemed
necessary or desirable by the Lender (in the Lender's sole and
absolute discretion) to: (a)enable the Lender to negotiate the
Note or any portion thereof and to assign the Mortgage or any
portion thereof and all or any of the other Loan Documents;
(b)enable the Lender to enter into participation agreements in
connection with the loan transaction evidenced by the Loan
Documents or (c)effectuate, complete, or perfect, or to continue
and preserve the obligations of the Guarantor under this Guaranty;
provided, however, that no such additional document or other
instrument requested by the Lender hereunder shall increase the
Obligations (except as to the costs and expenses of the Lender in
connection therewith).
In the event of any failure by the Guarantor to comply with any
request pursuant to this Section21 within twenty (20) days after
such request is made by the Lender, the Lender may make, execute,
record, file, re-record or refile any and all such amendments,
assignments, instruments, certificates, and documents for and in
the name of the Guarantor, and the Guarantor hereby appoints the
Lender as the Guarantor's attorney-in-fact, with full power of
substitution, to take such actions (on behalf of and in the name of
the Guarantor) as the Lender, in its sole and absolute discretion,
may deem necessary or desirable to effectuate the intent of this
Section 21.
The power of attorney conferred on the Lender pursuant to the
provisions of this Section21 being coupled with an interest, shall
be irrevocable until all of the Obligations have been fully paid
and performed, and shall not be affected by any disability or
incapacity which the Guarantor may suffer and shall survive the
same. Such power of attorney, is provided solely to protect the
interests of the Lender and shall not impose any duty on the Lender
to exercise any such power, and neither the Lender nor such
attorney-in-fact shall be liable for any act, omission, error in
judgment or mistake of law, except as the same may result from its
gross negligence or wilful misconduct.
22.Invalidity. If any provision of this Guaranty or the
application thereof to any Person or circumstance, for any reason
and to any extent, shall be held to be invalid or unenforceable,
neither the remainder of this Guaranty nor the application of such
provision to any other person or circumstance shall be affected
thereby, but rather the same shall be enforced to the greatest
extent permitted by law.
Notwithstanding the foregoing, it is the intention of the Guarantor
and the Lender that if any provision of the Guaranty is capable of
two (2) constructions, one of which would render the provision void
and the other of which would render the provision valid, then such
provision shall be construed in accordance with the construction
which renders such provision valid.
23.Time of the Essence. Time is of the essence of each and every
term, condition, warranty and covenant set forth herein.
24.Rules of Construction. References in this Guaranty to "herein",
"hereof" and "hereunder" shall be deemed to refer to this Guaranty
and shall not be limited to the particular text or Section in which
such words appear. The use of any gender shall include all genders
and the singular number shall include the plural and vice versa as
the context may require. References in this Guaranty to the
Lender's attorneys shall be deemed to include, without limitation,
special counsel and local counsel for the Lender. References in
this Guaranty to attorneys' fees and expenses shall be deemed to
include all costs for administrative, paralegal and other support
staff. References in this Guaranty to the term "Mortgaged
Property" shall be deemed to include references to all of the
Mortgaged Property and references to any portion thereof. The word
"foreclosure" as used herein shall be deemed to include the
acquisition of the Mortgaged Property by voluntary deed or
assignment in lieu of foreclosure.
25.Certificate of Need. Services shall use its best efforts to
cause the transfer of the Certificate of Need to the Borrower as
soon as practicable. Services covenants and agrees that upon the
occurrence of an Event of Default and in the event the Certificate
of Need has not been transferred at the request of the Lender
Services shall enter into a lease of the Facility for purposes of
allowing the operation of the Facility under the Certificate of
Need.
As used herein, the term "including", when following any general
statement, will not be construed to limit such statement to the
specific items or matters as provided immediately following the
term "including" (whether or not non-limiting language such as
"without limitation" or "but not limited to" or words of similar
import are also used), but rather will be deemed to refer to all
items or matters that could reasonably fall within the broader
scope of the general statement.
All capitalized terms used herein and not otherwise defined herein
shall have the same meanings as set forth for such terms under the
Loan Agreement.
<PAGE>
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as an
instrument under seal as of the day of May, 1995.
WITNESS
GUARANTOR:
GERIATRIC AND MEDICAL SERVICES, INC., a New Jersey corporation
By:
Name:
Name:
Title:
GERIATRIC & MEDICAL COMPANIES, INC.
a Delaware corporation
By:
Name
Name:
Title:
T3/547891.1
<PAGE>
EXHIBIT A
Real Property Description
All that certain piece of land located in Block 82 in the Borough
of Norristown, Montgomery County, Pennsylvania, situated between
Pine and Locust Streets and West Logan Streets, described as Lot 2
on the subdivision plan for Rittenhouse Nursing Center made by
Geriatric and Medical Companies,Inc., and prepared by NTH
Consultants, Ltd., Exton, Pennsylvania, dated January 25, 1994 and
last revised March 8, 1994, and approved by the Borough Council of
the Borough of Norristown on April 5, 1994 and duly recorded with
the Recorded of Deeds of Montgomery County, Pennsylvania, being
more fully described as follows:
From the intersection of Pine Street and West Roberts Street,
proceeding from a point, marked by an iron pin, on the northwest
corner of Block 82 in an easterly direction parallel to Pine
Street, a distance of 314.71 feet along a bearing of North 60
degrees 52 minutes 16 second East to the point of beginning;
thence, in an easterly direction along the same bearing, a distance
of 232.24 feet to a point, marked by an iron pin, on the northeast
corner of Block 82 at the intersection of Pine Street and West
Logan Street; thence, in a southerly direction paralleling West
Logan Street, a distance of 300.63 feet along a bearing of South 29
degrees 04 minutes 19 seconds East to a point, marked by an iron
pin; thence, in a westerly direction paralleling Locust Street a
distance of 232.61 feet along a bearing South 61 degrees 00 minutes
00 seconds West to a point; thence, in a northerly direction along
the common boundary with Lot 1, a distance of 300.11 feet along a
bearing of North 29 degrees 00 minutes 00 seconds West to the point
and place of beginning.
The above premises being the same land shown as Lot 2 on Plan of
Survey for Rittenhouse Nursing Center by Nave, Newell & Stampfel,
Ltd., dated May 6, 1995.
TOGETHER WITH the benefit of rights and easements set forth in that
certain Declaration of Reciprocal Easement Agreement made by
Geriatric and Medical Services, Inc., dated June 1995 and recorded
in Deed Book page .
BEING THE SAME PREMISES WHICH Rittenhouse Partners by Indenture
dated 5/11/1987 and recorded 5/18/1987 at Norristown in the Office
for the Recording of deeds, in and for the County of Montgomery in
Deed Book 4837 page 2319 granted and conveyed unto Geriatric and
Medical Services, Inc., its successors and assigns, in fee.
<PAGE>
MORTGAGE AND SECURITY AGREEMENT
from
Norristown Nursing and Rehabilitation
Center Associates, L.P., as Mortgagor
to
Meditrust Mortgage Investments, Inc.,
as Mortgagee
RECORD AND RETURN TO:
Mintz, Levin, Cohn, Ferris
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Andrew R. Urban, Esq.
Prepared By:_____________________
Joshua Davis, Esq.<PAGE>
MORTGAGE AND SECURITY AGREEMENT
TABLE OF CONTENTS
Section Page
1.Definitions 10
2.Payment of Indebtedness 14
3.Covenants of Title 14
4.Usury 15
5.Impositions 15
6.Tax Deposits 17
7.Change in Taxes 18
8.Insurance 19
9.Insurance Deposits 23
10.Restoration Following Fire and Other Casualty or Condemnation
25
11.Disposition of Condemnation
or Insurance Proceeds 30
12.Fire and Other Casualty;
Self-Help 31
13.Rent Loss and/or Business
Interruption Insurance Proceeds 32
14.Repair; Use; Compliance
With Law; Alterations; Waste 33
15.Independence of
Mortgaged Property 36
16.Sidewalks, Municipal Charges 37
17 No Other Liens 37
18.Assignment of Leases 38
19.Future Actions With Respect
to the Lease 39
20.Leases; Foreclosure 39
21.Events of Default 40
22.Remedies Upon Default 41
23.No Obligation to Marshall
Assets 43
24.Additional Collateral 43
25.Security Interest 45
26.Right of Entry 46
27.Rights Cumulative, No Waiver 46
28.Mortgage Extension 47
29.
Indemnification 48
30.Advance Money Mortgage 48
31. Administrative Fees 48
32. Notices 48
33. Applicable Law 49
34. Invalidity 50
35. Captions and Headings 51
36.Amendments, Waivers and Modifications 51
37.Successors and Assigns 52
38.Further Assurances 52
39.No Partnership or Joint Venture 53
40.Time of the Essence 53
41.Rule of Construction 54
EXHIBITS :
EXHIBIT A - Real Property Description
EXHIBIT B - Schedule of Leases
EXHIBIT C - Permitted Encumbrances
<PAGE>
MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE AND SECURITY AGREEMENT is made as of the day
of May, 1995, by Norristown Nursing and Rehabilitation Center
Associates, L.P., a Pennsylvania limited partnership, having its
principal place of business at c/o Geriatric & Medical Companies,
Inc., 5601 Chestnut Street, Philadelphia, Pennsylvania 19139
(hereinafter referred to as the "Mortgagor") to Meditrust Mortgage
Investments, Inc., a Delaware corporation, having its principal
address at 197 First Avenue, Needham, Massachusetts 02194
(hereinafter referred to as the "Mortgagee").
WITNESSETH:
THAT, to secure the payment, observance, fulfillment and
performance of the following terms, conditions, covenants and
warranties (hereinafter collectively referred to as the "Mortgaged
Indebtedness"):
(i) the payment to the Mortgagee of the principal indebtedness of
SIX MILLION NINE HUNDRED THIRTY-NINE THOUSAND DOLLARS (6,939,000),
together with interest thereon and other charges, all as evidenced
by that certain promissory note (hereinafter referred to as the
"Note") of even date and delivery herewith, made by the Mortgagor
to the order of the Mortgagee, in and by which Note the Mortgagor
promises to pay the said principal indebtedness and interest at the
rate and in the installments as provided in the Note;
(ii)the performance, observance and fulfillment of all of the
terms, conditions, covenants and warranties set forth in this
Mortgage;
(iii) the performance, observance and fulfillment of all of the
terms, conditions, covenants and warranties set forth in the Loan
Documents (as hereinafter defined); and
(iv)the payment, observance and performance of all other
indebtedness, covenants, conditions, obligations, warranties,
agreements and undertakings (hereinafter collectively referred to
as the "Related Party Obligations") due to, or made for the benefit
of, the Mortgagee (or any of its Affiliates) by (a)the Mortgagor
(or any of its Affiliates) or (b)the Guarantor, any endorser,
surety or other guarantor of the Note (or any Affiliate of the
Guarantor or any such endorser, surety or other guarantor), whether
such indebtedness, covenants, conditions, obligations, warranties
or undertakings are direct or indirect, absolute or contingent,
liquidated or unliquidated, due or to become due, joint, several or
joint and several, primary or secondary, now existing or hereafter
arising ;
the Mortgagor does hereby mortgage, grant, bargain, sell, transfer
and convey unto the Mortgagee and to the Mortgagee's successors and
assigns forever, with MORTGAGE COVENANTS, all of the following
described land, improvements and property and all of the
Mortgagor's estate, right, title and interest therein (hereinafter
collectively referred to as the "Mortgaged Property"):
The land described in EXHIBITA attached hereto and incorporated
herein by reference as if fully set forth herein, situate, lying
and being in the City/Town of Norristown, County of Montgomery, and
State of Pennsylvania (hereinafter referred to as the "Land");
TOGETHER with the 120-bed nursing home/rehabilitation facility (the
"Facility") to be constructed thereon, together and all other
buildings and other improvements now or hereafter located on the
Land or any part thereof (hereinafter referred to as the
"Improvements");
TOGETHER with all of the Mortgagor's right, title and interest in
and to the land lying in the bed of any street, way, road, highway
or avenue in front of or adjoining the Land;
TOGETHER with all easements now or hereafter located on or
appurtenant to the Land and/or Improvements on, under or above the
same or any part thereof, and all rights-of-way, licenses, and
privileges, belonging or in any way appertaining to the Land and/or
Improvements;
TOGETHER with any and all awards hereafter to be made by any
governmental authority (municipal, state or federal) to the present
and all subsequent owners of the Mortgaged Property for the taking
of all or any portion of the Mortgaged Property by power of eminent
domain, including, without limitation, awards for damage to the
remainder of the Mortgaged Property and any awards for any change
or changes of grade of streets affecting the Mortgaged Property;
which said proceeds, premiums and awards are hereby assigned to the
Mortgagee, and the Mortgagee, at its option, is hereby authorized,
directed and empowered to adjust, compromise, collect and receive
the proceeds of any insurance judgments or settlements made in lieu
thereof and such premiums and the proceeds of any such awards from
the authorities making the same and to give proper receipts and
acquittances therefor, and to apply the same toward the repair,
rebuilding or restoration of the Mortgaged Property or toward
payment of the Mortgaged Indebtedness, notwithstanding the fact
that such amount may not then be due; and the Mortgagor hereby
covenants and agrees to and with the Mortgagee, upon request by the
Mortgagee, to make, execute and deliver, at the Mortgagor's sole
cost and expense, any and all assignments and other instruments
sufficient for the purpose of assigning the aforesaid proceeds,
premiums and awards to the Mortgagee, free, clear and discharged of
any and all encumbrances of any kind or nature whatsoever (all of
the foregoing Land, Improvements, rights, easements, rights-of-way,
licenses, privileges and awards, hereinafter collectively referred
to as the "Real Property");
TOGETHER with all articles, appliances, chattels, fixtures,
furniture, furnishings, machinery, equipment, goods and every other
article of personal property, tangible or intangible, now or
hereafter attached to or used in connection with the Real Property,
or placed on any part thereof, whether or not attached thereto,
appertaining or adapted to the use, management, operation or
improvement of the Real Property, regardless of whether hereafter
removed from the Real Property, all insofar as the same and any
reversionary right thereto may now or hereafter be owned or
acquired by the Mortgagor (hereinafter referred to as the "Personal
Property"), including, without limitation: all partitions and
portable or sectional buildings; screens; awnings; shades; blinds;
storm and other detachable windows and doors; floor coverings;
mantels, built-in cases, counters, closets, chests of drawers and
mirrors; patient room furnishings, equipment for the treatment of
patients, kitchen and dining room equipment and furnishings and
inventories of linen, dishware and cooking utensils; hall and lobby
equipment; heating, lighting, plumbing, ventilating, refrigerating,
incinerating, elevator, escalator, air conditioning and
communication plants, apparatus and/or equipment with appurtenant
fixtures; garbage incinerators and receptacles; boilers; stoves;
tanks; motors; vacuum cleaning systems; call systems; door bell and
alarm systems; sprinkler systems, smoke detectors and other fire
prevention and extinguishing apparatus and materials; all
equipment, manual, mechanical and motorized, for the construction,
maintenance, repair and cleaning of, and removal of snow from,
parking areas, walks, underground ways, truck ways, driveways,
common areas, roadways, highways and streets; and all other
machinery, pipes, poles, appliances, equipment, wiring, fittings,
panels and fixtures; and any proceeds therefrom, any replacements
thereof or additions or accessions thereto; and all building
materials, equipment, supplies and other property delivered to the
Real Property for incorporation into the Improvements thereon, all
of which are declared to be a part of the Real Property and covered
by the lien hereof, but said lien shall not cover any fixture,
machinery, equipment or article of personal property which is owned
by a Lessee and not required for the operation or maintenance of
the Real Property, provided said fixture, machinery, equipment or
article of personal property is not permanently affixed to the Real
Property and may be removed without material damage thereto and is
not a replacement of any item which shall have been subject to the
lien hereof;
TOGETHER with the right to use, in perpetuity, in connection with
the operation of the Mortgaged Property, the common name of the
Facility and the goodwill of the Mortgagor with respect thereto;
TOGETHER with all of the Mortgagor's right, title and interest in
and to any and all leases, subleases, licenses agreements,
concession agreements, tenancy at will agreements and other
occupancy agreements of every kind and nature, whether oral or in
writing, now in existence or subsequently entered into by the
Mortgagor, encumbering or affecting all or any portion of the
Mortgaged Property (including, but not limited to, the leases
listed on EXHIBITB attached hereto and incorporated herein by
reference as a material part hereof), together with all extensions,
renewals, modifications and replacements thereof (hereinafter
collectively referred as the "Leases"), together with any and all
guaranties (hereinafter collectively referred to as the "Lease
Guaranties") of the obligations of the lessees, licensees,
concessionaires and other occupants under the Leases (hereinafter
collectively referred to as the "Lessees") and all extensions,
renewals, modifications and replacements of the Lease Guaranties
and all rents, revenues, royalties, issues, profits, insurance
proceeds, condemnation awards, license fees, concession fees and
all other income and security of every kind and nature due by
virtue of the Leases and the Lease Guaranties (hereinafter
collectively referred to as the "Rents");
TOGETHER with all of the Mortgagor's right, title and interest in
and to all (i) licenses, approvals, qualifications, variances,
permissive uses, certificates of need, franchises, accreditations,
certificates, certifications, consents, permits and other
authorizations (including, without limitation, building permits,
subdivision approvals and subdivision plans) to the extent the same
are assignable as or matter of law (hereinafter collectively
referred to as the "Permits") and (ii) agreements, including,
without limitation, all Provider Agreements (as hereinafter
defined) and Patient Admission Agreements (as hereinafter defined),
contracts (including, without limitation, construction contracts,
subcontracts and architects' contracts), contract rights,
warranties and representations, franchises, and records and books
of account (hereinafter collectively referred to as the
"Contracts") benefiting, relating to or affecting the Mortgaged
Property and the ownership, construction, development, maintenance,
management, repair, use, occupancy, possession or operation thereof
or the operation of any programs or services in conjunction with
the Facility and all renewals, replacements and substitutions
therefor, now or hereafter issued by or entered <PAGE>
into with any Governmental
Authority (as hereinafter defined), Accreditation Body (as hereinafter
defined) or Third Party Payor
(as hereinafter defined) or maintained or used by the Mortgagor or
entered into by the Mortgagor with any third Person (as hereinafter
defined);
TOGETHER with all of the Mortgagor's right, title and interest in,
to and under any and all Instruments, Accounts, Proceeds, General
Intangibles, Intangibles and Equipment whether now existing or
hereafter acquired or arising (as those foregoing capitalized terms
are defined in the Uniform Commercial Code as adopted in
Massachusetts);
TOGETHER with any and all proceeds of and any unearned premiums on
any insurance policies covering the Mortgaged Property, including,
without limitation, the right, at the Mortgagee's option, to
adjust, compromise, collect, receive and apply the proceeds of any
insurance judgments or settlements made in lieu thereof for damage
to the Mortgaged Property or toward payment of the Mortgaged
Indebtedness, notwithstanding the fact that such amount may not
then be due;
TOGETHER with all of the right, title and interest of the Mortgagor
in and to all and singular the tenements, hereditaments and
appurtenances belonging to or in any way pertaining to the
Mortgaged Property; all the estate, right, title and claim
whatsoever of the Mortgagor, either at law or in equity, in and to
the Mortgaged Property; and any and all other, further or
additional title, estate, interest or right which may at any time
be acquired by the Mortgagor in or to the Mortgaged Property; and
if the Mortgagor shall at any time acquire any further estate or
interest in or to the Mortgaged Property, the lien of this Mortgage
shall attach, extend to, cover and be a lien upon such further
estate or interest, and the Mortgagor, upon request of the
Mortgagee, shall execute such instrument or instruments as shall
reasonably be requested by the Mortgagee to confirm such lien, and
the Mortgagor hereby appoints the Mortgagee as the Mortgagor's
attorney-in-fact, with full power of substitution, to execute all
such instruments if the Mortgagor shall fail to do so within ten
(10) days after demand (which power of attorney, being coupled with
an interest, shall be irrevocable until all of the Mortgaged
Indebtedness is fully paid and performed, and shall not be affected
by any disability or incapacity which the Mortgagor may suffer and
shall survive the same; the power of attorney conferred on the
Mortgagee pursuant to the foregoing provisions is provided solely
to protect the interests of the Mortgagee and shall not impose any
duty on the Mortgagee to exercise any such power, and neither the
Mortgagee nor such attorney-in-fact shall be liable for any act,
omission, error in judgment or mistake of law, except as the same
may result from its gross negligence or wilful misconduct);
TO HAVE AND TO HOLD the Mortgaged Property, and each and every part
thereof, unto the Mortgagee and its successors and assigns forever,
for the purposes and uses herein set forth;
Provided, however, that if the Mortgagor shall pay to the Mortgagee
the Mortgage Indebtedness other than Related Obligations and
provided that no event of default or event which with the passage
of time, the giving of notice, or both, would constitute an event
of default has occurred with respect to any of the Related Party
Obligations, and if the Mortgagor shall keep and perform each of
its other covenants, conditions and agreements set forth herein and
in the other Loan Documents, then, upon termination of all
obligations, duties and commitments of the Mortgagor hereunder and
under the other Loan Documents, the estate hereby granted and
conveyed shall become null and void.
AND, the Mortgagor hereby further covenants, agrees and warrants as
follows:
1.Definitions. For all purposes of this Mortgage, except as
otherwise expressly provided or unless the context otherwise
requires, (i)the terms defined in this Section have the meaning
assigned to them in this Section and include the plural as well as
the singular, (ii)all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally
acceptable accounting principles as at the time applicable and
(iii)all references in this Mortgage to "Sections" and other
subdivisions are to designated Sections and other subdivisions of
this Mortgage:
Accreditation Body: As defined in the Loan Agreement.
Accounts: As defined in the Uniform Commercial Code as adopted in
Massachusetts.
Additional Interest: As defined in the Loan Agreement.
Advances Rate: As defined in the Loan Agreement.
Affiliate: As defined in the Loan Agreement.
Collection and Foreclosure Costs: As defined in Section 22.
Completion Date: As defined in Section 12.
Condemnation: As defined in Section 10.
Construction Loan Commitment Fee: As defined in the Loan
Agreement.
Contract: As defined in the granting clause of this Mortgage.
Event of Default: As defined in Section 21.
Environmental Laws: As defined in the Loan Agreement.
Equipment: As defined in the Uniform Commercial Code as adopted in
Massachusetts.
Facility: As defined in the granting clause of this Mortgage.
Failure to Perform: As defined in Section 21.
General Intangibles: As defined in the Uniform Commercial Code as
adopted in Massachusetts.
Governmental Authority: All agencies, authorities, bodies, boards,
commissions, courts, instrumentalities, legislatures or offices of
any nature whatsoever for any government unit or political
subdivision, whether federal, state, county, district, municipal,
city or otherwise, and whether now or hereafter in existence.
Gross Revenues: As defined in the Loan Agreement.
Guarantor: As defined in the Loan Agreement.
Guaranty: As defined in the Loan Agreement.
Hazardous Substances: As defined in the Loan Agreement.
Impositions: As defined in Section 5.
Improvements: As defined in the granting clause of this Mortgage.
Instruments: As defined in the Uniform Commercial Code as adopted
in Massachusetts.
Insurance Requirements: All terms and provisions of any and all
insurance policies required pursuant to the provisions of Sections8
and 10 and all requirements of the issuers of such policies.
Intangibles: As defined in the Uniform Commercial Code as adopted
in Massachusetts.
Land: As defined in the granting clause of this Mortgage.
Late Payment Charges: As defined in the Note.
Lease Guaranties: As defined in the granting clause of this
Mortgage.
Leases: As defined in the granting clause of this Mortgage.
Legal Requirements: All statutes, ordinances, by-laws, codes,
rules, regulations, restrictions, orders, judgments, decrees,
writs, administrative or judicial interpretations, and injunctions
(including, without limitation, all applicable building, health
code, zoning, subdivision and other land use and health-care
licensing statutes, ordinances, by-laws, codes, rules and
regulations), whether now or hereafter enacted, promulgated or
issued by any Governmental Authority, Accreditation Body or Third
Party Payor affecting the Mortgagor or the Mortgaged Property or
the ownership, construction, development, maintenance, management,
repair, use, occupancy, possession or operation thereof, including,
without limitation, any of the foregoing which may (i)require
repairs, modifications or alterations in or to the Mortgaged
Property, (ii)in any way affect (adversely or otherwise) the use
and enjoyment of the Mortgaged Property or (iii)require the
assessment, monitoring, clean-up, containment or removal of any
Hazardous Substances on, under or from the Mortgaged Property.
Without limiting the foregoing, the term Legal Requirements shall
also include all Permitted Encumbrances, all Permits or Contracts
issued or entered into by any Governmental Authority or
Accreditation Body.
Lessee: As defined in the granting clause of this Mortgage.
Loan: The loan in the original maximum principal amount of SIX
MILLION NINE HUNDRED THIRTY-NINE THOUSAND DOLLARS (6,939,000) from
the Mortgagee to the Mortgagor evidenced by the Loan Agreement and
Note and secured, in part, by this Mortgage.
Loan Agreement: That certain Construction Loan Agreement of even
date herewith by and between the Mortgagor and the Mortgagee.
Loan Documents: As defined in the Loan Agreement.
Loan Term: As defined in the Note.
Manager: As defined in the Loan Agreement.
Monthly Insurance Deposit Date: As defined in Section 9.
Monthly Tax Deposit Date: As defined in Section 6.
Mortgaged Indebtedness: As defined in the granting clause of this
Mortgage.
Mortgaged Property: As defined in the granting clause of this
Mortgage.
Mortgagee: As defined in the granting clause of this Mortgage.
Mortgagor: As defined in the granting clause of this Mortgage.
Note: As defined in the granting clause of this Mortgage.
Patient Admission Agreements: As defined in the Loan Agreement.
Permits: As defined in the granting clause of this Mortgage.
Permanent Loan Commitment Fee: As defined in the Loan Agreement.
Permitted Encumbrances: As defined in Section 3.
Person: All individuals, corporations, general partnerships,
limited partnerships, joint ventures, stock companies or
associations, companies, banks, trusts, trust companies, land
trusts, business trusts, unincorporated organizations, Governmental
Authorities or other entities.
Personal Property: As defined in the granting clause of this
Mortgage.
Plans and Specifications: As defined in Section 10.
Prepayment Fee: As defined in the Note.
Primary Intended Use: The use of the Facility as a nursing
home/rehabilitation facility, with the number of licensed beds
described in the recitals of this Mortgage.
Proceeds: As defined in the Uniform Commercial Code as adopted in
Massachusetts.
Project: As defined in the Loan Agreement.
Provider Agreements: As defined in the Loan Agreement.
Real Property: As defined in the granting clause of this Mortgage.
Related Party Agreements: As defined in the granting clause of
this Mortgage.
Related Party Obligations: As defined in the granting clause of
this Mortgage.
Rent Insurance Proceeds: As defined in Section 13.
Rents: As defined in the granting clause of this Mortgage.
Retainage: As defined in Section 10.
Third Party Payor: As defined in the Loan Agreement.
UCC: Uniform Commercial Code as adopted in the state where the
Mortgaged Property is located.
Work: As defined in Section 10.
2.Payment of Indebtedness. The Mortgagor shall pay all of the
obligations due under the Loan Documents in accordance with the
provisions thereof, including, without limitation, the principal
indebtedness and interest due under the Note, the Prepayment Fee,
if any due under the Note, all Late Payment Charges due under the
Note and any and all other charges, costs and amounts (including,
without limitation, Additional Interest) due under the Loan
Documents, and shall perform, fulfill and observe all of the other
terms, covenants, conditions and warranties under this Mortgage and
all of the other Loan Documents; all in the manner herein or
therein set forth. The payment of all obligations and the
performance, fulfillment and observance of all terms, conditions,
covenants and warranties under the Loan Documents shall be absolute
and unconditional, irrespective of any defense or any rights of
set-off, recoupment or counterclaim the Mortgagor might otherwise
have against the Mortgagee, and the Mortgagor shall pay absolutely
net during the Loan Term all payments to be made as prescribed in
this Mortgage and all of the other Loan Documents, free of any
deductions and without abatement, diminution or set-off.
If the Mortgagor named herein shall be more than one Person, all
agreements, conditions, covenants, provisions, stipulations, powers
of attorney, authorizations, waivers, releases, options,
undertakings, rights and benefits made or given by the Mortgagor
shall be joint and several, and shall bind and affect all Persons
who are defined as "Mortgagor" as fully as though all of them were
specifically named herein wherever the word "Mortgagor" is used.
The Mortgagor shall have only such rights of prepayment, if any, as
are set forth in the Note, subject to the conditions and the
payment of the Prepayment Fee as provided therein.
3.Covenants of Title. The Mortgagor hereby warrants and represents
that the Mortgagor has good and indefeasible title to the entire
Real Property in fee simple, has absolute unencumbered title to the
Personal Property, and has good right and full power to assign,
grant, bargain, sell, mortgage, transfer and convey the same. The
Mortgagor further warrants and represents that the Mortgaged
Property is free and clear of agreements, covenants, easements,
restrictions, liens, Leases and other encumbrances, except those
agreements, covenants, easements, restrictions, liens, Leases and
encumbrances to which this Mortgage is expressly subject, whether
presently existing, as listed on EXHIBITC attached hereto and
incorporated herein by reference, or which may hereafter be created
in accordance with the terms hereof (collectively referred to
herein as the "Permitted Encumbrances"); and the Mortgagor shall
warrant and defend title to the Mortgaged Property against any and
all claims and demands of every kind and nature whatsoever. The
Mortgagee shall have the right, at its option and at such time or
times as the Mortgagee (in its sole and absolute discretion) shall
deem necessary or desirable to take whatever action the Mortgagee
(in its sole and absolute discretion) may deem necessary or
desirable to defend or uphold the lien or the rights of the
Mortgagee hereunder or otherwise enforce any obligation secured
hereby, including, without limitation, the right to institute
appropriate legal proceedings for such purposes, and all costs and
expenses incurred by the Mortgagee in connection therewith
(including, without limitation, attorneys' fees and expenses and
court costs), with interest thereon at the Advances Rate, shall be
a demand obligation of the Mortgagor to the Mortgagee, and to the
extent permitted by law, shall be added to the Mortgaged
Indebtedness and shall be secured by the lien of this Mortgage as
fully and effectively and with the same priority as every other
obligation of the Mortgagor secured hereby.
4.Usury. In the event that the fulfillment of any provision of any
of the Loan Documents, at the time performance of such provision
shall be due and as a result of any circumstance whatsoever, shall
involve transcending the limit of validity presently or hereafter
prescribed by any applicable usury statute or any other law, with
regard to obligations of like character and amount, then ipso facto
the obligation to be fulfilled shall be reduced to the limit of
such validity, so that in no event shall any exaction be possible
under this Mortgage or any of the other Loan Documents that is in
excess of the limit of such validity. In no event shall the
Mortgagor be bound to pay for the use, forbearance or detention of
the money loaned pursuant to the Loan Documents, interest of more
than the maximum amount, if any, permitted by law to be charged by
the Mortgagee; the right to demand any such excess being hereby
expressly waived by the Mortgagee.
5.Impositions. The Mortgagor shall pay, or cause to be paid,
without deduction (except such discount as may be permitted by
law), defalcation or abatement, not later than ten (10) business
days before the last day on which the same may be paid without
penalty or interest, all real estate taxes, ground rents, sewer
rents, water charges and all other municipal and governmental
assessments, fees (including, without limitation, license, permit,
inspection, authorization and similar fees), taxes, rates, charges,
impositions, levies, liabilities, obligations, special assessments
and liens of every kind and nature (hereinafter collectively
referred to as the "Impositions") that now or hereafter may be
imposed, suffered, placed, assessed, levied or filed at any time,
upon (i)the Mortgagor, (ii)or the Mortgagor's interest in the
Mortgaged Property, (iii)the Mortgaged Property or any Rent
therefrom or any estate, right, title or interest therein and
(iv)any occupancy, leasing, operation, use or possession of, sales
from, or activity conducted on, or in connection with, the
Mortgaged Property, or which by any Legal Requirement may have
priority over the indebtedness secured either in lien or in
distribution out of the proceeds of any judicial sale (without
regard to any law heretofore or hereafter enacted imposing payment
in whole or in part upon the Mortgagee). Furthermore, if any such
Imposition is of record, the same shall be promptly satisfied and
discharged of record and evidence of such discharge of record
(satisfactory to the Mortgagee) shall be forwarded to the Mortgagee
on or before the date required hereunder for payment of such
Imposition. If any Imposition is not paid within the time
hereinabove specified, the Mortgagee shall have the right, but not
the obligation, to pay the same, together with any penalty and
interest thereon, and any amount so paid or advanced by the
Mortgagee and all costs and expenses incurred in connection
therewith (including, without limitation, attorneys' fees and
expenses and court costs), with interest thereon at the Advances
Rate, shall be a demand obligation of the Mortgagor to the
Mortgagee, and to the extent permitted by law, shall be added to
the Mortgaged Indebtedness and shall be secured by the lien of this
Mortgage as fully and effectively and with the same priority as
every other obligation of the Mortgagor secured hereby.
Notwithstanding the foregoing, the Mortgagor, in good faith and at
the Mortgagor's sole cost and expense, may contest by proper legal
proceedings the validity or amount of any Imposition, provided that
(i)the Mortgagor shall deposit with the Mortgagee, as security for
the payment of such contested item, an amount equal to the
contested item plus all penalties and interest which would be
payable if the Mortgagor is ultimately required to pay such
contested item and (ii)no amount so contested may remain unpaid for
such length of time as shall permit the Mortgaged Property, or the
lien thereon created by the item being contested, to be sold for
the nonpayment thereof, or as shall permit any action, either of
foreclosure or otherwise, to be commenced by the holder of any such
lien.
The Mortgagor hereby assigns to the Mortgagee all rights of the
Mortgagor now or hereafter arising in and to the refund of any
Imposition and any interest thereon. If, at the time of receipt of
any such refund by the Mortgagee, a default has occurred hereunder
or any of the other Loan Documents, then the Mortgagee may apply
said refund in reduction of the Mortgaged Indebtedness; otherwise,
the Mortgagee shall promptly forward any such refund to the
Mortgagor upon demand.
6.Tax Deposits. At the option of the Mortgagee, the Mortgagor
shall deposit with the Mortgagee, on the first day of the calendar
month immediately following the date of this Mortgage and on the
first day of each calendar month thereafter (each of which dates is
hereinafter referred to as a "Monthly Tax Deposit Date") until the
payment in full of the Mortgaged Indebtedness, a sum equal to
one-twelfth (1/12) of the Impositions to be levied, charged, filed,
assessed or imposed upon or against the Mortgaged Property within
one (1) year after said Monthly Tax Deposit Date. If the amount of
the Impositions to be levied, charged, assessed or imposed within
the ensuing one (1) year period shall not be fixed upon any Monthly
Tax Date, such amount for the purpose of computing the tax deposit
to be made by the Mortgagor hereunder shall be estimated by the
Mortgagee, with an appropriate adjustment to be promptly made
between the Mortgagor and the Mortgagee as soon as the fixed amount
of such Impositions is determinable.
The sums deposited by the Mortgagor under this Section6 shall be
held by the Mortgagee and shall be applied in payment of the
Impositions when due. No trust shall be created by such deposits
and any such deposits may be commingled with other assets of the
Mortgagee, and in the discretion of the Mortgagee, invested by the
Mortgagee for its account, without any obligation to pay the income
from such investment, or interest on such deposit, to the
Mortgagor, or to account to the Mortgagor for such income in any
way. The Mortgagor shall give thirty (30) days' prior written
notice to the Mortgagee in each instance when an Imposition is due,
specifying the Imposition to be paid and the amount thereof, the
place of payment and the last day on which the same may be paid in
order to be within the time limit specified above in Section5 of
this Mortgage.
If for any reason the sums on deposit with the Mortgagee under this
Section6 shall not be sufficient to pay an Imposition within the
time specified in Section5 hereof, then, within ten (10) days after
demand by the Mortgagee, the Mortgagor shall deposit sufficient
sums so that the Mortgagee may pay such Imposition in full,
together with any penalty and interest thereon. The Mortgagee may
change its estimate of any Imposition for any period on the basis
of a change in an assessment or tax rate or on the basis of a prior
miscalculation or for any other reason; in which event, within ten
(10) days after demand by the Mortgagee, the Mortgagor shall
deposit with the Mortgagee the amount in excess of the sums
actually deposited which would theretofore have been payable under
the revised estimate.
If any Imposition shall be levied, charged, filed, assessed or
imposed upon or against the Mortgaged Property and if such
Imposition shall also be a levy, charge, assessment or imposition
upon or for any other real or personal property not covered by the
lien of this Mortgage, then the computation of the amounts to be
deposited under this Section6 shall be based upon the entire amount
of such Imposition and the Mortgagor shall not have the right to
apportion any deposit with respect to such Imposition.
Upon an assignment of this Mortgage by the Mortgagee, the Mortgagee
shall have the right to transfer all amounts deposited pursuant to
the provisions of this Section6 and still in its possession to such
assignee (as the subsequent holder of this Mortgage) and the
original Mortgagee named herein shall thereupon be completely
released from all liability with respect to such tax deposits and
the Mortgagor shall look solely to said assignee (as the subsequent
holder of this Mortgage) in reference thereto.
All amounts deposited with the Mortgagee pursuant to the provisions
of this Section6 shall be held by the Mortgagee as additional
security for the sums secured by this Mortgage and upon the
occurrence of any Event of Default hereunder the Mortgagee may, in
its sole and absolute discretion, apply said amounts toward payment
of the Mortgaged Indebtedness. Upon the complete payment and
performance of the Mortgaged Indebtedness, any sums then held by
the Mortgagee under this Section6 shall be refunded to the
Mortgagor.
The Mortgagor shall deliver to the Mortgagee copies of all notices,
demands, claims, bills and receipts in relation to the Impositions
immediately upon the receipt thereof by the Mortgagor.
7.Change in Taxes. In the event any tax shall be due or become due
and payable to any Governmental Authority with respect to the
execution and delivery or recordation of any of the Loan Documents
or the interest of the Mortgagee in the Mortgaged Property, the
Mortgagor shall pay such tax at the time and in the manner required
by applicable law (without regard to whether any such tax is
imposed in whole or in part on the Mortgagee) and the Mortgagor
shall hold harmless, defend (with counsel acceptable to the
Mortgagee) and hereby agrees to indemnify the Mortgagee against any
liability of any nature whatsoever as a result of the imposition of
any such tax. Notwithstanding the foregoing, the Mortgagee shall
have the option of conducting its own defense with counsel of its
own choice. Furthermore, the aforesaid indemnification agreement
shall include, without limitation, attorneys' fees and expenses and
court costs incurred by the Mortgagee in connection with the
imposition of any such taxes and the enforcement of said
indemnification agreement. The Mortgagor shall not claim any
credit on, or make any deduction from, the Mortgaged Indebtedness
by reason of the payment of any such tax.
If any Legal Requirement becomes effective after the date hereof
changing (in any manner) any of the present Legal Requirements as
to the taxation of notes or debts secured by mortgages, for
federal, state, or local purposes, or the manner of collection of
any Impositions, so as to affect any of the Loan Documents, then,
upon demand, the Mortgagor shall make such payments to the
Mortgagee and take such other steps as may be necessary or
desirable in the Mortgagee's sole and absolute discretion, to place
the Mortgagee in the same financial position as it was in prior to
any such enactment; failing which, at the option of the Mortgagee
and upon demand, the Mortgaged Indebtedness shall immediately
become due and payable. In the event of any such acceleration of
the Mortgaged Indebtedness, provided that an Event of Default has
not occurred under this Mortgage, the Mortgagor shall not be
required to pay the Mortgagee a Prepayment Fee.
The indemnity provisions of this Section 7 shall survive the
complete payment and performance of the Mortgaged Indebtedness and
the foreclosure of this Mortgage.
8.Insurance. At all times until the Mortgaged Indebtedness is
fully paid and performed, the Mortgagor shall keep the Mortgaged
Property insured (with a joint loss endorsement) against loss or
damage by fire, vandalism, malicious mischief, extended coverage,
sprinkler leakage and all physical loss perils commonly known as
"All Risk" for its full replacement cost, with an agreed amount
endorsement (which cost shall be reset once a year at the
Mortgagee's option) or in such amount which is economically
feasible and which is acceptable to the Mortgagee. The term "full
replacement cost" as used herein shall mean the actual replacement
cost of the Mortgaged Property, including coverage for (a)
increased cost of construction, (b) cost of demolition and (c)
contingent liability from the operation of building laws, less
exclusions provided in the normal "All Risk" insurance policy. At
all times during the construction of the Facility, such insurance
shall be in builder's risk completed value non-reporting form
(including all risk and extended coverage, collapse and value of
undamaged portion of the improvements protection). As long as this
Mortgage shall remain in effect, the Mortgagor shall also maintain:
(i)flood insurance (if the Mortgaged Property or any portion
thereof is situated in an area which is considered a flood risk
area by the U.S. Department of Housing and Urban Development);
(ii)boiler and machinery insurance with a joint loss endorsement
and including related electrical apparatus and components (under a
standard comprehensive form, providing coverage against loss or
damage caused by explosion of steam boilers, pressure vessels or
similar vessels, now or hereafter installed on the Mortgaged
Property);
(iii) earthquake insurance (if deemed necessary by the Mortgagee);
(iv)environmental impairment liability insurance (if available);
(v)rent loss and/or business interruption insurance in an amount
sufficient to cover the total of all Rents and other income
accruing from the Mortgaged Property for a one year period;
(vi)commercial general public liability insurance including
coverages commonly found in the Broad Form Commercial Liability
Endorsements with amounts not less than FIVE MILLION DOLLARS
($5,000,000) per occurrence with respect to bodily injury, death
property damage and personal injury;
(vii) malpractice insurance in an amount not less than TEN MILLION
DOLLARS ($10,000,000) for each medical incident; and
(viii) increased cost of construction and demolition insurance;
(ix) such other insurance as the Mortgagee from time to time may
reasonably require (to the extent permissible under applicable
Legal Requirements) and also, as may from time to time be required
by applicable Legal Requirements.
All such insurance shall be maintained in such amounts and shall be
issued by such companies (licensed to do business in the state
where the Mortgaged Property is located and which, according to the
rating system established by the A.M. Best Company, have a Best's
Rating and Financial Size Category of not less than A:XII) as shall
be approved by the Mortgagee, with a deductible not to exceed TEN
THOUSAND DOLLARS ($10,000).
In addition to the insurance policies described above, the
Mortgagor shall maintain or cause any Lessee to maintain Workers'
Compensation and Employers Liability Insurance providing protection
against all claims arising out of injuries to all employees of the
Mortgagor or Lessee (employed on the Mortgaged Property or any
portion thereof) in amounts equal for Workers' Compensation, to the
statutory benefits payable to employees in the state in which the
Mortgaged Property is located and for Employers Liability, to
limits of not less than ONE HUNDRED THOUSAND DOLLARS ($100,000) for
injury by accident, ONE HUNDRED THOUSAND DOLLARS ($100,000) per
employee for disease and FIVE HUNDRED THOUSAND DOLLARS ($500,000)
disease policy limit.
Furthermore, the Mortgagor shall and hereby agrees to indemnify,
defend (with counsel acceptable to the Mortgagee) and hold the
Mortgagee harmless from and against all losses, costs, damages,
claims, fines, penalties and expenses (including, without
limitation, all attorneys' fees and expenses and court costs),
incurred by the Mortgagee in connection with any injury claims by
any Persons employed upon the Mortgaged Property and in the
enforcement of this indemnification agreement. Notwithstanding
anything to the contrary contained herein, the Mortgagee shall have
the option of conducting its own defense with counsel of its own
choice. The aforesaid indemnification agreement shall survive the
payment and performance of the Mortgaged Indebtedness and the
foreclosure of this Mortgage.
Every policy of insurance from time to time required hereunder
shall name the Mortgagee as mortgagee, loss payee and an additional
insured. Each such policy:
(a)shall include an agreed amount endorsement and a mortgagee and
loss payee endorsement, in forms acceptable to the Mortgagee, in
its sole and absolute discretion;
(b)shall provide that the same may not be cancelled, not renewed or
modified except upon thirty (30) days' prior written notice to the
Mortgagee;
(c)shall be payable to the Mortgagee notwithstanding any defense or
claim against the Mortgagor (or any other Person holding any other
interest in the Mortgaged Property) that the insurer may have to
the payment of the same to the Mortgagee (or any other Person
holding any other interest in the Mortgaged Property);
(d)shall be endorsed with standard noncontributory mortgagee
clauses in favor of and in form acceptable to the Mortgagee; and
(e)shall otherwise be in such forms as shall be acceptable to the
Mortgagee, in its sole and absolute discretion reasonably
exercised.
The Mortgagor shall promptly provide to the Mortgagee copies of any
and all notices (including notice of non-renewal), claims and
demands which the Mortgagor receives from insurers of the Mortgaged
Property. At least ten (10) days prior to the expiration of any
insurance policy required hereunder, the Mortgagor shall deliver to
the Mortgagee a certificate of insurance relating to all renewals
and replacements thereof (together with evidence, satisfactory to
the Mortgagee, of payment of the premiums thereon). The Mortgagor
shall deliver to the Mortgagee true and correct copies of all
insurance policies required hereunder within ten (10) days after
receipt thereof by the Mortgagor. If any insurance policy required
hereunder, or any part thereof, shall expire or be cancelled or
become void or voidable by reason of the Mortgagor's breach of any
condition thereof, or if the Mortgagee determines that such
insurance coverage is unsatisfactory by reason of the failure or
impairment of the capital of any insurance company which wrote any
such policy, upon demand by the Mortgagee, the Mortgagor shall
promptly obtain new or additional insurance coverage on the
Mortgaged Property satisfactory to the Mortgagee.
If the Mortgagor shall fail to obtain any insurance policy required
hereunder by the Mortgagee, or shall fail to deliver the
certificate of insurance relating to any such policy to the
Mortgagee, then the Mortgagee may obtain such insurance and pay the
premium or premiums therefor, in which event any amount so paid or
advanced by the Mortgagee and all costs and expenses incurred in
connection therewith (including, without limitation, attorneys'
fees and expenses and court costs), with interest thereon at the
Advances Rate, shall be a demand obligation of the Mortgagor to the
Mortgagee, and, to the extent permitted by law, shall be added to
the Mortgaged Indebtedness and shall be secured by the lien of this
Mortgage as fully and effectively and with the same priority as
every other obligation of the Mortgagor secured hereby.
All insurance policies required hereunder (except for general
public liability and workers' compensation and employers liability
insurance) shall provide that in the event of loss, injury or
damage, all proceeds shall be paid to the Mortgagee alone (rather
than jointly to the Mortgagor and the Mortgagee). No such loss or
damage shall itself reduce the Mortgaged Indebtedness. The
Mortgagee is hereby authorized to adjust and compromise any such
loss without the consent of the Mortgagor and to collect and
receive such proceeds in the name of the Mortgagee and the
Mortgagor, and the Mortgagor appoints the Mortgagee as the
Mortgagor's attorney-in-fact with full power of substitution, to
endorse the Mortgagor's name upon any check in payment thereof.
Subject to the provisions of Sections10, 11 and 12 hereof, such
insurance proceeds shall be applied first toward reimbursement of
all costs and expenses of the Mortgagee in collecting said
insurance proceeds, then toward payment of the Mortgaged
Indebtedness or any portion thereof, whether or not then due and
payable, or the Mortgagee, at its option, may apply said insurance
proceeds in whole or in part toward restoration of the Mortgaged
Property for which such insurance proceeds shall have been paid.
The power of attorney conferred on the Mortgagee pursuant to the
provisions of this Section8, being coupled with an interest, shall
be irrevocable until all of the Mortgaged Indebtedness is fully
paid and performed, and shall not be affected by any disability or
incapacity which the Mortgagor may suffer and shall survive the
same. Such power of attorney, is provided solely to protect the
interests of the Mortgagee and shall not impose any duty on the
Mortgagee to exercise any such power, and neither the Mortgagee nor
such attorney-in-fact shall be liable for any act, omission, error
in judgment or mistake of law, except as the same may result from
its gross negligence or wilful misconduct.
Notwithstanding anything to the contrary contained herein, the
Mortgagor's obligations to carry the insurance provided for herein
may be brought within the coverage of a so-called blanket policy or
policies of insurance carried and maintained by the Mortgagor;
provided, however, that the coverage afforded to the Mortgagee
shall not be reduced or diminished or otherwise be different from
that which would exist under a separate policy meeting all other
requirements of this Mortgage by reason of the use of such blanket
policy of insurance, and provided further that the requirements of
this Section8 are otherwise satisfied.
The Mortgagor shall not, on the Mortgagor's own initiative or
pursuant to the request or requirement of any other Person, take
out separate insurance concurrent in form or contributing in the
event of loss with the insurance required pursuant to this Section8
to be furnished by the Mortgagor, or increase the amounts of any
then existing insurance by securing an additional policy or
additional policies, unless all parties having an insurable
interest in the subject matter of the insurance, including the
Mortgagee, are included therein as additional insureds and the loss
is payable under said insurance in the same manner as losses are
required to be payable under this Mortgage. The Mortgagor shall
immediately notify the Mortgagee of the taking out of any such
separate insurance or of the increasing of any of the amounts of
the then existing insurance by securing an additional insurance
policy or policies.
The Mortgagor hereby assigns to the Mortgagee all rights of the
Mortgagor in and to any unearned premiums on any insurance policy
required hereunder to be furnished by the Mortgagor which may
become payable or are refundable after the occurrence of an Event
of Default hereunder. In the event that the Mortgagee becomes the
owner of the Mortgaged Property by foreclosure or otherwise, the
insurance policies required to be maintained hereunder, including
all right, title and interest of the Mortgagor thereunder, shall
become the absolute property of the Mortgagee.
9.Insurance Deposits. At the option of the Mortgagee, the
Mortgagor shall deposit with the Mortgagee, on the first day of the
calendar month immediately following the date of this Mortgage and
on the first day of each calendar month thereafter (each of which
dates is hereinafter referred to as a "Monthly Insurance Deposit
Date") until the complete payment and performance of the Mortgaged
Indebtedness, a sum equal to one-twelfth (1/12) of the premiums of
the insurance policies required hereunder which are payable within
one (1) year after said Monthly Insurance Deposit Date. If the
total amount of the insurance premiums to be paid within the
ensuing one (1) year period are not fixed upon any Monthly
Insurance Deposit Date, such amount for the purpose of computing
the insurance deposit to be made by the Mortgagor pursuant to this
Section9 shall be estimated by the Mortgagee, with an appropriate
adjustment to be promptly made between the Mortgagor and the
Mortgagee as soon as the total amount of the insurance premiums is
determinable.
The sums deposited by the Mortgagor under this Section9 shall be
held by the Mortgagee and shall be applied in payment of the
insurance premiums when due. No trust shall be created by such
deposits and any such deposits may be commingled with other assets
of the Mortgagee, and in the discretion of the Mortgagee, invested
by the Mortgagee for its account, without any obligation to pay the
income from such investment, or interest on such deposit, to the
Mortgagor, or to account to the Mortgagor for such income in any
way. The Mortgagor shall give thirty (30) days' prior written
notice to the Mortgagee in each instance when an insurance policy
premium is due, specifying the premium to be paid and the amount
thereof, the place of payment and the last day on which the same
may be paid.
If for any reason the sums on deposit with the Mortgagee under this
Section9 shall not be sufficient to pay any insurance policy
premium, then, within ten (10) days after demand by the Mortgagee,
the Mortgagor shall deposit sufficient sums so that the Mortgagee
may pay such insurance policy premium in full, together with any
penalty and interest thereon. The Mortgagee may change its
estimate of any insurance premiums for any period on the basis of
a change in any premium rates, a change in the type or amount of
coverage required hereunder, a prior miscalculation or for any
other reason; in which event, within ten (10) days after demand by
the Mortgagee, the Mortgagor shall deposit with the Mortgagee the
amount in excess of the sums actually deposited which would
theretofore have been payable under the revised estimate.
Upon an assignment of this Mortgage by the Mortgagee, the Mortgagee
shall have the right to transfer all amounts deposited pursuant to
the provisions of this Section9 and still in its possession to such
assignee (as the subsequent holder of this Mortgage) and the
original Mortgagee named herein shall thereupon be completely
released from all liability with respect to such insurance deposits
and the Mortgagor shall look solely to said assignee (as the
subsequent holder of this Mortgage) in reference thereto.
All amounts deposited with the Mortgagee pursuant to the provisions
of this Section9 shall be held by the Mortgagee as additional
security for the sums secured by this Mortgage and upon the
occurrence of any Event of Default hereunder the Mortgagee may, in
its sole and absolute discretion, apply said amounts toward payment
of the Mortgaged Indebtedness. Upon the complete payment and
performance of the Mortgaged Indebtedness, any sums then held by
the Mortgagee under this Section 9 shall be refunded to the
Mortgagor.
10.Restoration Following Fire and Other Casualty or Condemnation.
In the event of any damage or destruction to the Mortgaged Property
by reason of fire or other hazard or casualty, the Mortgagor shall
give immediate written notice thereof to the Mortgagee and, if
required hereunder by the Mortgagee pursuant to the terms of
Section11 hereof, the Mortgagor shall and hereby agrees to proceed
with reasonable diligence (in full compliance with all applicable
Legal Requirements) to perform such repairs, replacement and
rebuilding work (hereinafter referred to as the "Work") to restore
the Mortgaged Property to the condition it was in immediately prior
to such damage or destruction. In the event of a taking by power
of eminent domain or conveyance in lieu thereof of all or any
portion of the Mortgaged Property (hereinafter referred to as a
"Condemnation") and, if restoration is required by the Mortgagee
pursuant to Section11 hereof, the Mortgagor shall and hereby agrees
to proceed with reasonable diligence to perform such restoration
(also hereinafter referred to as the "Work").
In the event that such casualty results in non-structural damage to
the Mortgaged Property in excess of ONE HUNDRED THOUSAND DOLLARS
($100,000), or in any structural damage to the Mortgaged Property
regardless of the extent of such structural damage, or in the event
of any Condemnation, prior to commencing the Work, the Mortgagor
shall comply with the following requirements:
(i)the Mortgagor shall furnish to the Mortgagee complete plans and
specifications for the Work (hereinafter referred to as the "Plans
and Specifications"), for the Mortgagee's approval, in each
instance, which approval may be withheld in the Mortgagee's
reasonable discretion. The Plans and Specifications shall bear the
signed approval thereof by an architect (licensed to do business in
the state where the Mortgaged Property is located) satisfactory to
the Mortgagee and shall be accompanied by a written estimate from
the architect (bearing the architect's seal) of the entire cost of
completing the Work, and to the extent feasible, the Plans and
Specifications shall provide for Work of such nature, quality and
extent, that, upon the completion thereof, the Mortgaged Property
shall be at least equal in value and general utility to its value
and general utility prior to the damage or destruction or
Condemnation;
(ii)the Mortgagor shall furnish to the Mortgagee certified or
photostatic copies of all Permits and Contracts required by all
applicable Legal Requirements in connection with the commencement
and conduct of the Work;
(iii) the Mortgagor shall furnish to the Mortgagee
(a)a surety bond for the Work or a guaranty of completion of and
payment for the Work, which bond or guaranty shall be in form
satisfactory to the Mortgagee in its sole and absolute discretion
and shall be signed by a surety or sureties, or guarantor or
guarantors, as the case may be, who have been approved by the
Mortgagee, in each instance, which approval may be withheld in the
Mortgagee's sole and absolute discretion, or
(b)a cash deposit sufficient to guaranty completion of and payment
for the Work;
in an amount not less than the architect's estimate of the entire
cost of completing the Work, less the amount of insurance proceeds
or Condemnation award, if any, then held by the Mortgagee and which
the Mortgagee shall have elected or shall be required to apply
toward restoration of the Mortgaged Property as provided in
Section11 hereof; and
(iv)the Mortgagor shall furnish to the Mortgagee such insurance (in
addition to the insurance required under Section8 hereof) in such
amounts and in such forms as is required by the Mortgagee (in its
reasonable discretion).
The Mortgagor shall not commence any of the Work until the
Mortgagor shall have complied with the requirements set forth in
subsections(i)-(iv) immediately above, and thereafter the Mortgagor
shall perform the Work diligently, in a good and workmanlike
fashion and in good faith in accordance with (1)the Plans and
Specifications referred to in subsection(i) immediately above,
(2)the Permits and Contracts referred to in subsection(ii)
immediately above and (3)all applicable Legal Requirements.
If, as provided in Section11 hereof, the Mortgagee shall have
elected or is required to apply any insurance proceeds or
Condemnation awards toward repair or restoration of the Mortgaged
Property, then as long as the Work is being diligently performed by
the Mortgagor in accordance with the terms and conditions of this
Mortgage, the Mortgagee shall disburse such insurance proceeds or
Condemnation awards to the Mortgagor from time to time during the
course of the Work in accordance with the following provisions.
The Mortgagee shall not be required to make disbursements more
often than at thirty (30) day intervals. The Mortgagor shall
submit a written request for each disbursement at least ten (10)
business days in advance and shall comply with the following
requirements in connection with each disbursement:
A.Prior to the commencement of any Work, the Mortgagor shall have
received the Mortgagee's written approval of the Plans and
Specifications and the Work shall be supervised by an experienced
construction manager with the consultation of an architect or
engineer (qualified and licensed to do business in the state where
the Mortgaged Property is located);
B.Each request for payment shall be accompanied by (a)a certificate
of the architect or engineer (bearing the architect's or engineer's
seal) and (b)a certificate of the general contractor (qualified and
licensed to do business in the state where the Mortgaged Property
is located) performing the Work, each dated not more than ten (10)
days prior to the application for withdrawal of funds, and each
stating:
(i)that all of the Work performed as of the date of the
certificates has been completed in compliance with the approved
Plans and Specifications and all applicable Legal Requirements;
(ii)that the sum then requested to be withdrawn has been paid by
the Mortgagor or is justly due to contractors, subcontractors,
materialmen, engineers, architects or other Persons (whose names
and addresses shall be stated therein) who have rendered or
furnished certain services or materials for the Work, and the
certificate shall also include a brief description of such services
and materials and the principal subdivisions or categories thereof
and the respective amounts so paid or due to each of said Persons
in respect thereof and stating the progress of the Work up to the
date of said certificate;
(iii) that the sum then requested to be withdrawn, plus all sums
previously withdrawn, do not exceed the cost of the Work insofar as
actually accomplished up to the date of such certificate;
(iv)that the remainder of the moneys, guarantees or suretys held by
the Mortgagee will be sufficient to pay for the full completion of
the Work in accordance with the Plans and Specifications;
(v)that no part of the cost of the services and materials described
in the foregoing subparagraph(i) of this ClauseB has been or is
being made the basis of the withdrawal of any funds in any previous
or then pending application; and
(vi)that, except for the amounts, if any, specified in the
foregoing subsection(ii) of this ParagraphB to be due for services
or materials, there is no outstanding indebtedness known (after due
inquiry) which is then due and payable for work, labor, services or
materials in connection with the Work which, if unpaid, might
become the basis of a vendor's, mechanic's, laborer's or
materialman's statutory or other similar lien upon the Mortgaged
Property;
C.the Mortgagor shall deliver to the Mortgagee satisfactory
evidence that the Mortgaged Property and all materials and all
property described in the certificate furnished pursuant to
subsection(ii) of the foregoing ParagraphB are free and clear of
all mortgages, liens, charges or encumbrances, except
(a)encumbrances, if any, securing indebtedness due to Persons
(whose names and addresses and the several amounts due them shall
be stated therein) specified in said certificate furnished pursuant
to subsection(i) of the foregoing ParagraphB, which encumbrances
shall be discharged upon disbursement of the funds then being
requested, (b) this Mortgage and (c) the Permitted Encumbrances.
The Mortgagee shall accept as satisfactory evidence under this
ParagraphC lien waivers in customary form from the general
contractor and all subcontractors performing the Work, together
with, if deemed appropriate by the Lender in its reasonable
judgment, an endorsement of a title insurance company acceptable to
the Mortgagee, dated as of the date of the making of the
disbursement, confirming the foregoing;
D.prior to the making of the final advance, the Mortgagor shall
deliver to the Mortgagee, upon the request of the Mortgagee, an
"as-built" survey of the Real Property dated as of a date within
ten (10) days prior to the making of the advance (or revised to a
date within ten (10) days prior to the advance) showing no
encroachments other than those, if any, acceptable to the
Mortgagee;
E.prior to the making of the initial advance, the Mortgagor shall
deliver to the Mortgagee an opinion of counsel (satisfactory to the
Mortgagee both as to counsel and as to the form of opinion) that
the Mortgaged Property, if repaired, replaced or rebuilt in
accordance with the approved Plans and Specifications, shall comply
with all applicable Legal Requirements; and
F.there shall be no Event of Default hereunder or under any of the
Loan Documents or any state of facts existing which, with the
giving of notice or passage of time, or both, would constitute any
such Event of Default.
The Mortgagee, at its option, may waive any of the foregoing
requirements.
Upon compliance by the Mortgagor with the foregoing ClausesA, B, C,
D, E and F (except for such requirements, if any, as the Mortgagee
may have expressly elected to waive), and to the extent of (i) the
insurance proceeds or Condemnation awards, if any, which the
Mortgagee shall have elected or shall be required to apply to
restoration of the Mortgaged Property pursuant to the provisions of
this Mortgage and (ii) all other cash deposits made by the
Mortgagor, the Mortgagor shall pay or cause to be paid to the
Persons named in the certificate furnished to the Mortgagee
pursuant to the foregoing Clause B, the respective amounts stated
in said certificate to be due and the Mortgagee shall pay to the
Mortgagor ninety percent (90%) of the amounts stated in said
certificate to have been paid by the Mortgagor on account of labor
and materials for such Work (the remaining ten percent (10%)
hereinafter referred to as the "Retainage"), and one hundred
percent (100%) of the amounts stated in said certificate to have
been paid by the Mortgagor on account of costs other than for labor
and materials for such Work. It is understood that the Retainage
is intended to provide a contingency fund to assure the Mortgagee
that the Work shall be fully completed in accordance with the Plans
and Specifications.
Upon completion of the Work, in addition to the requirements set
forth in ClausesA, B, C, D, E and F immediately above, the
Mortgagor shall promptly deliver to the Mortgagee:
(i)a written certificate of the architect or engineer (bearing the
architect's or engineer's seal) and the general contractor
certifying that the Work has been fully completed in a good and
workmanlike manner in accordance with the Plans and Specifications;
(ii)a written report and policy of a title insurance company
acceptable to the Mortgagee insuring the Mortgaged Property against
all mechanic's and materialman's liens accompanied by the final
lien waivers from the general contractor and all subcontractors;
(iii) a certificate by the Mortgagor in form and substance
satisfactory to the Mortgagee, listing all costs and expenses in
connection with the completion of the Work and the amount paid by
the Mortgagor with respect to the Work; and
(iv)a temporary certificate of occupancy and all other applicable
Permits and Contracts issued by or entered into with any
Governmental Authority with respect to the Mortgaged Property and
its Primary Intended Use and by the appropriate Board of Fire
Underwriters or other similar bodies acting in and for the locality
in which the Mortgaged Property is situated; provided that within
thirty (30) days after completion of the Work, the Mortgagor shall
obtain and deliver to Mortgagee a permanent certificate of
occupancy for the Mortgaged Property.
Upon completion of the Work and delivery of the documents required
pursuant to the provisions of this Section 10 the Mortgagee shall
pay over the Retainage to the Mortgagor, and if there shall be
insurance proceeds, Condemnation awards or cash deposits, other
than the Retainage, held by the Mortgagee in excess of the amounts
withdrawn pursuant to the foregoing provisions, then the Mortgagee,
at the Mortgagee's option, may either retain such proceeds, awards
or cash deposits and apply the same in reduction of the Mortgaged
Indebtedness, or the Mortgagee may pay over such proceeds, awards
or cash deposits to the Mortgagor.
No inspections or any approvals of the Work during or after
construction shall constitute a warranty or representation by the
Mortgagee (or any of its agents) as to the technical sufficiency,
adequacy or safety of any structure or any of its component parts,
including, without limitation, any fixtures, equipment or
furnishings, or as to the subsoil conditions or any other physical
condition or feature pertaining to the Mortgaged Property. All
acts, including any failure to act, relating to the Mortgaged
Property by any agent, representative or designee of the Mortgagee
are performed solely for the benefit of the Mortgagee to assure the
payment and performance of the Mortgaged Indebtedness and are not
for the benefit of the Mortgagor or the benefit of any other
Person.
11.Disposition of Condemnation or Insurance Proceeds. In the event
of any damage, destruction or Condemnation of the Mortgaged
Property, the Mortgagee, in its sole and absolute discretion, may
decide whether and to what extent, if any, proceeds of insurance
policies or Condemnation awards shall be made available to the
Mortgagor for repair or restoration of the Mortgaged Property.
Notwithstanding the foregoing, the Mortgagee hereby agrees to make
insurance proceeds or Condemnation awards available to the
Mortgagor for repair or restoration provided that:
(i)not more than twenty-five percent (25%) of the fair market value
of the Facility is damaged or taken;
(ii) there does not then exist an Event of Default hereunder or
under any of the other Loan Documents or any state of facts
existing which, with the giving of notice or passage of time, or
both, would constitute such an Event of Default;
(iii)the Mortgagor can demonstrate to the Mortgagee's satisfaction
that the Mortgagor has the financial ability to satisfy its
obligations under the Loan Documents during such repair or
restoration;
(iv)no Lease affecting the Mortgaged Property immediately prior to
such damage or taking shall have been cancelled or terminated, nor
contain any still exercisable right to cancel or terminate, due to
such damage or taking;
(v)such damage or taking occurs prior to the seventh anniversary
date of this Mortgage; and
(vi)the proceeds or awards are released under the
escrow/construction funding arrangements specified in Section 10
hereof.
If the Mortgagee elects or is required to make the insurance
proceeds or Condemnation awards available for the repair and
restoration of the Mortgaged Property and the amount of such
proceeds or awards actually available is not sufficient to pay the
total cost for the repair and restoration of the Mortgaged
Property, then the Mortgagor shall be obligated and hereby agrees
to repair and restore the Mortgaged Property pursuant to the terms
and provisions hereof, notwithstanding any such deficiency, and the
Mortgagor shall pay the remaining cost of such repair and
restoration in excess of the amounts of the insurance proceeds or
Condemnation awards actually made available.
If the Mortgagee elects not to make the insurance proceeds or
Condemnation awards available for repair or restoration of the
Mortgaged Property, then such proceeds or awards shall be applied
to reduce the Mortgaged Indebtedness, in which event the Mortgagor
shall not be obligated to repair or restore the Mortgaged Property.
Any application of such proceeds or awards toward payment of the
Mortgaged Indebtedness shall be at par without any Prepayment Fee
and the monthly payments due under the Note shall be adjusted
accordingly; provided, however, that if there exists any Event of
Default hereunder, the Prepayment Fee shall also be due.
Furthermore, if the Mortgagee elects not to make the insurance
proceeds or Condemnation awards available for the repair and
restoration of the Mortgaged Property, in addition to applying such
proceeds or awards to the Mortgaged Indebtedness and if, upon such
application, (a) the outstanding principal balance of the Mortgaged
Indebtedness is less than FIFTY MILLION DOLLARS ($50,000,000), (b)
the Loan Amount exceeds eighty percent (80) of the aggregate fair
market value of the Mortgaged Property or (c) the Debt Coverage
Ratio shall be less than 1.5, the Mortgagee, at its option and in
its sole and absolute discretion, may elect to declare the
Mortgaged Indebtedness due and payable upon sixty (60) days' prior
written notice to the Mortgagor. Upon such acceleration, provided
that an Event of Default has not occurred hereunder, the Mortgagor
shall not be required to pay a Prepayment Fee to the Mortgagee.
12.Fire and Other Casualty; Self-Help. If within one hundred
twenty (120) days after the occurrence of any non-structural damage
to the Mortgaged Property in excess of TWENTY-FIVE THOUSAND DOLLARS
($25,000), any structural damage to the Mortgaged Property
regardless of the extent of such structural damage, or any
Condemnation, the Mortgagor shall not have submitted to the
Mortgagee and received the Mortgagee's approval of the Plans and
Specifications for the repair, replacement or rebuilding of the
Mortgaged Property or shall not have obtained approval of such
Plans and Specifications from all Governmental Authorities whose
approval is required pursuant to applicable Legal Requirements, or
if, after the date upon which such Plans and Specifications are
approved by the Mortgagee and all such Governmental Authorities
(such date is referred to herein as the "Completion Date"), the
Mortgagor shall fail to commence promptly such repair, replacement
or rebuilding, or if the Mortgagor fails to complete such repair,
replacement or rebuilding within one hundred twenty (120) days
following the Completion Date or, in the event of delays resulting
from reasons beyond the reasonable control of the Mortgagor such
longer period reasonably required but in no event more than one
hundred eighty (180) days following the Completion Date, or is
delinquent in the payment to mechanics, materialmen or others of
the costs incurred in connection with such work, or, in the case of
any non-structural loss or damage not in excess of TWENTY-FIVE
THOUSAND DOLLARS ($25,000), if the Mortgagor shall fail to promptly
repair, replace or rebuild the Mortgaged Property, then, in
addition to all other rights herein set forth, the Mortgagee, or
any lawfully appointed receiver of the Mortgaged Property, may at
their respective options, perform or cause to be performed such
repair, replacement or rebuilding, and may take such other steps as
they deem advisable to perform such repair, replacement or
rebuilding, and may enter upon the Mortgaged Property for any of
the foregoing purposes, and the Mortgagor hereby waives, for the
Mortgagor and all others holding under the Mortgagor, any claim
against the Mortgagee or such receiver arising out of anything done
by the Mortgagee or such receiver pursuant to this Section12, and
the Mortgagee may apply insurance proceeds (without the need to
fulfill the requirements of Section10 hereof) to reimburse the
Mortgagee or such receiver for all amounts expended or incurred by
them, respectively, in connection with the performance of such
work, and any excess costs and expenses incurred in connection
therewith (including, without limitation, attorneys' fees and
expenses and court costs), with interest thereon at the Advances
Rate, shall be a demand obligation of the Mortgagor to the
Mortgagee or such receiver, and, to the extent permitted by law,
shall be added to the Mortgaged Indebtedness and shall be secured
by the lien of this Mortgage as fully and effectively and with the
same priority as every other obligation of the Mortgagor secured
hereby.
13.Rent Loss and/or Business Interruption Insurance Proceeds. If
the Mortgagor shall promptly and diligently commence to perform its
obligations hereunder with respect to the repair, replacement and
restoration of any damage occurring to the Mortgaged Property, and
no Event of Default has occurred under this Mortgage and no state
of facts exists which, with the giving of notice or passage of
time, or both, would constitute an Event of Default hereunder, then
the Mortgagee shall each month pay to the Mortgagor out of the rent
loss and/or business interruption insurance proceeds actually
received by the Mortgagee (hereinafter referred to as the "Rent
Insurance Proceeds") a sum equal to that amount, if any, of the
Rent Insurance Proceeds paid by the insurer which is allocable to
the rental loss and/or business interruption for the preceding
month. At its option, the Mortgagee may waive any of the foregoing
conditions to the payment of Rent Insurance Proceeds. If the
Mortgagor does not fulfill the foregoing conditions entitling the
Mortgagor to monthly disbursements of Rent Insurance Proceeds, then
such Rent Insurance Proceeds may be applied by the Mortgagee, at
the Mortgagee's option, toward payment of the Mortgaged
Indebtedness and/or to the payment of the cost of such repair,
replacement or restoration of the Mortgaged Property, and/or to the
payment of any Imposition required to be paid by the Mortgagor (the
nonpayment of which is an Event of Default under this Mortgage),
and/or to the payment of any monthly tax deposit, any monthly
insurance deposit or other amount required to be paid by the
Mortgagor under the provisions of this Mortgage and the nonpayment
of which is a default hereunder.
14.Repair; Use; Compliance With Law; Alterations; Waste. At all
times until the Mortgaged Indebtedness is fully paid and performed,
the Mortgaged Property shall be maintained in good order, repair
and condition (damage from casualty expressly not excepted), and
the Mortgagor expressly agrees that it will neither permit nor
suffer any waste upon the Mortgaged Property, nor cause or permit
any nuisance thereon, nor do any act whereby the Mortgaged Property
may become less valuable or the lien hereof may be impaired. No
additional Improvement (other than the Project) may be constructed
on the Land, nor may any Improvement on the Land be altered,
removed or demolished without the prior written consent of the
Mortgagee in each instance, which consent may be withheld in the
Mortgagee's sole and absolute discretion. Without limiting any of
the Mortgagee's other rights of entry pursuant to the terms of this
Mortgage or any of the other Loan Documents, the Mortgagor shall
permit the Mortgagee to enter the Mortgaged Property at any
reasonable time to determine whether the Mortgagor and the
Mortgaged Property are in compliance with the provisions of this
Section 14.
The Mortgagor covenants that the Mortgaged Property shall be
continuously operated in accordance with its Primary Intended Use
and for such other uses as may be necessary in connection with or
incidental to such Primary Intended Use. The Mortgagor shall not
allow the Mortgaged Property to be used for any use other than its
Primary Intended Use without the prior written consent of the
Mortgagee in each instance, which consent may be withheld in the
Mortgagee's sole and absolute discretion.
The Mortgagor further covenants that the operation of the Facility
shall be conducted in a manner consistent with the highest
standards and practices recognized in the health care industry as
those customarily utilized by first class business operations.
Subject to any applicable Legal Requirements, the Mortgagor, any
Lessee and any Manager shall use their best efforts to maximize the
Facility's Gross Revenues, and to that end (i)a full staff of
employees shall be maintained at the Facility and (ii)a maximum
amount of space in the Facility shall be devoted to patient care
and only such part thereof shall be devoted for storage, office and
other ancillary purposes as shall be reasonably necessary.
No use shall be made or permitted to be made of the Mortgaged
Property and no acts shall be done which will cause the
cancellation of any insurance policy required pursuant to the terms
of this Mortgage, nor shall the Mortgagor, any Lessee or any
Manager sell or otherwise provide to patients therein, or permit to
be kept, used or sold in or about the Mortgaged Property any
article which may be prohibited by any Legal Requirement or by the
standard form of fire insurance policies, any other insurance
policies required to be carried hereunder or fire underwriters'
regulations.
The Mortgagor and any Lessee, at their sole cost and expense, at
all times throughout the term of this Mortgage, shall (a)fully
comply with all Legal Requirements and Insurance Requirements
whether or not compliance therewith shall require any structural
change of the Mortgaged Property or interfere with the use and
enjoyment of the Mortgaged Property and (b)procure, maintain and
comply with all Permits, accreditations, qualifications, Provider
Agreements, Contracts and other authorizations required for any use
of the Mortgaged Property for the Primary Intended Use or other
permitted uses then being made, and for the proper erection,
installation, operation and maintenance of the Mortgaged Property,
and shall not violate or permit the violation or breach of any
Permits, accreditations, Contracts and Legal Requirements.
All utilities necessary for the use and operation of the Facility
are available to the lot lines of the Mortgaged Property:
(x)in sufficient supply and capacity;
(y)through validly created and existing easements of record
appurtenant to or encumbering the Mortgaged Property (which
easements shall not impede or restrict the construction of the
Project or the operation of the Facility); and
(z)without need for any Permits and Contracts required to be issued
by or entered into with any Governmental Authority, except as
already obtained or executed, as the case may be, or as otherwise
shown, to the satisfaction of the Mortgagee, to be readily
obtainable.
Unless there is a Event of Default under this Mortgage or under any
of the other Loan Documents, or any state of facts existing which,
with the giving of notice or passage of time, or both, would
constitute an Event of Default, upon prior written notice to the
Mortgagee, the Mortgagor, any Lessee or any Manager may contest the
legality or applicability of any Legal Requirement or the decision
of any Third Party Payor or Accreditation Body related to the
operation of the Mortgaged Property for the Primary Intended Use or
other uses conducted thereon which are permitted by the Mortgagee
(pursuant to the terms and provisions of this Mortgage), provided
that the Mortgagor, the Lessee or the Manager maintains such action
in good faith, with due diligence, without prejudice to the
Mortgagee's rights hereunder, and at the Mortgagor's, the Lessee's
and the Manager's sole cost and expense. If, by the terms of any
Legal Requirement or the decision of any Third Party Payor or
Accreditation Body, compliance therewith pending the prosecution of
any such proceeding may legally be delayed without the occurrence
of any lien, charge or liability of any kind against the Mortgaged
Property and without subjecting the Mortgagee, the Mortgagor, the
Lessee or the Manager to any liability, civil or criminal, for
failure so to comply therewith, the Mortgagor, the Lessee or the
Manager may delay compliance therewith until the final
determination of such proceeding. If any lien, charge or civil or
criminal liability would be incurred by reason of any such delay,
the Mortgagor, the Lessee or the Manager, on obtaining the prior
written consent of the Mortgagee (in each instance, which consent
may be withheld in the Mortgagee's sole and absolute discretion),
may nonetheless contest as aforesaid any delay as aforesaid
provided that (1)such delay would not subject the Mortgagee, the
Mortgagor, the Lessee or the Manager to criminal liability, (2) the
Mortgagor, the Lessee or the Manager provides the Mortgagee with
security (reasonably satisfactory to the Mortgagee) against any
loss or injury by reason of such contest or delay and (3)prosecutes
the contest with due diligence and in good faith until the
resolution thereof.
If the Mortgagor fails to observe or cause to be observed any of
the provisions of this Section14, the Mortgagee or a lawfully
appointed receiver of the Mortgaged Property, at their respective
options, from time to time may perform, or cause to be performed,
any and all repairs and such other work as they deem necessary to
bring the Mortgaged Property into compliance with the provisions of
this Section14 and may enter upon the Mortgaged Property for any of
the foregoing purposes, and the Mortgagor hereby waives any claim
against the Mortgagee or such receiver arising out of such entry or
out of any other act carried out pursuant to this Section14. All
amounts so expended or incurred by the Mortgagee and by such
receiver and all costs and expenses incurred in connection
therewith (including, without limitation, attorneys' fees and
expenses and court costs), with interest thereon at the Advances
Rate, shall be a demand obligation of the Mortgagor to the
Mortgagee or such receiver, and, to the extent permitted by law,
shall be added to the Mortgaged Indebtedness and shall be secured
by the lien of this Mortgage as fully and effectively and with the
same priority as every other obligation of the Mortgagor secured
hereby.
The Mortgagor covenants that the Mortgagor shall not initiate, join
in or consent to any zoning changes affecting the Mortgaged
Property nor initiate, join in or consent to any private
restrictive covenant or other public or private restriction upon
the use of the Mortgaged Property without the Mortgagee's prior
written consent, in each instance, which consent may be withheld in
the Mortgagee's sole and absolute discretion.
Upon the request of the Mortgagee, at any time and from time to
time while this Mortgage remains in full force and effect and in
the event the Mortgagee shall determine that the same is warranted,
the Mortgagor shall engage independent professional consultants,
engineers and inspectors (qualified to do business in the state
where the Mortgaged Property is located and acceptable to the
Mortgagee) to perform any environmental and structural
investigations and other inspections of the Mortgaged Property and
the Facility as the Mortgagee may reasonably request in order to
detect (A)any structural deficiencies in the Mortgaged Property or
the utilities servicing the Mortgaged Property or (B)the presence
of any condition that may be harmful to the environment or present
a health hazard to the patients and other occupants of the
Facility. In the event that the Mortgagee determines that the
results of such investigations and inspections are unsatisfactory,
within thirty (30) days of notice from the Mortgagee, the Mortgagor
shall undertake such appropriate remedial actions as may be
reasonably requested by and acceptable to the Mortgagee to correct
any such unsatisfactory conditions, and shall thereafter diligently
and continuously prosecute such remedial actions to completion.
15.Independence of Mortgaged Property. The Mortgagor shall not, by
act or omission, permit any building or other improvement on any
premises not subject to the lien of this Mortgage to rely on the
Mortgaged Property or any interest therein to fulfill any
applicable Legal Requirement, and the Mortgagor hereby assigns to
the Mortgagee any and all rights to give consent for all or any
portion of the Mortgaged Property or any interest therein to be so
used. Similarly, no portion of the Mortgaged Property shall rely
on any premises not subject to the lien of this Mortgage (or any
interest therein) in order to operate the Facility in a reasonable
and businesslike manner or to fulfill any applicable Legal
Requirement. The Mortgagor shall not, by act or omission, impair
the integrity of the Real Property as a single zoning lot separate
and apart from all other premises. Any act or omission by the
Mortgagor which would result in a violation of any of the
provisions of this Section15 shall be void and shall be an Event of
Default hereunder.
16.Sidewalks, Municipal Charges. The Mortgagor shall promptly pay
and discharge any and all license fees and similar charges, with
penalties and interest thereon, which may be imposed by the
municipality in which the Mortgaged Property is situated, for the
use of vaults, chutes, areas and other space beyond the lot line
and under or abutting the public sidewalks in front of or adjoining
the Mortgaged Property, and the Mortgagor shall promptly cure any
violation of law and comply with any order of such municipality
respecting the repair, replacement or condition of the sidewalk or
curb in front of or adjoining the Mortgaged Property. In the event
that the Mortgagor fails to comply with the provisions of this
Section16, upon five (5) days notice to the Mortgagor, the
Mortgagee may pay any and all such license fees or similar charges,
with penalties and interest thereon, and the charges of the
municipality for such repair or replacement, and any amount so paid
or advanced by the Mortgagee and all costs and expenses incurred in
connection therewith (including, without limitation, attorneys'
fees and expenses and court costs), with interest thereon at the
Advances Rate, shall be a demand obligation of the Mortgagor to the
Mortgagee, and, to the extent permitted by law, shall be added to
the Mortgaged Indebtedness and shall be secured by the lien of this
Mortgage as fully and effectively as every other obligation of the
Mortgagor secured hereby.
17.No Other Liens. Except as otherwise specifically provided
herein, the Mortgagor shall not create, consent to, agree to,
permit or suffer to exist any mortgage, security interest,
attachment, lis pendens, mechanic's or materialman's lien or other
lien or encumbrance upon or affecting the Mortgaged Property,
whether superior or inferior to the lien of this Mortgage
(including, without limitation, the filing of a notice of federal
or state tax lien at any location at which by law such notice must
be filed in order to be effective against the Mortgaged Property,
whether or not such lien applies, by its terms, to the Mortgaged
Property), except as granted in this Mortgage and any other lien or
security interest granted to the Mortgagee.
If this Mortgage, by its terms, is now, or at any time hereafter,
subject or subordinate to a prior mortgage, the Mortgagor shall
not, without the prior written consent of the Mortgagee, in each
instance, which consent may be withheld in the Mortgagee's sole and
absolute discretion, agree at any time to any waiver, revision,
modification, amendment, indulgence, suspension or extension of or
any addition to any of the provisions, terms, conditions or
payments of such prior mortgage.
The Mortgagor shall promptly pay and discharge any and all amounts
which are now or hereafter become liens against the Mortgaged
Property, except for such liens, if any, otherwise specifically
permitted pursuant to the provisions of this Mortgage, and in
default thereof, the Mortgagee, upon five (5) days' notice to the
Mortgagor, may pay and discharge the same, and any amount so paid
or advanced by the Mortgagee and all costs and expenses incurred in
connection therewith (including, without limitation, attorneys'
fees and expenses and court costs), with interest thereon at the
Advances Rate, shall be a demand obligation of the Mortgagor to the
Mortgagee, and to the extent permitted by law, shall be added to
the Mortgaged Indebtedness and shall be secured by the lien of this
Mortgage as fully and effectively and with the same priority as
every other obligation of the Mortgagor secured hereby.
The covenants of this Section17 shall survive any foreclosure of
the Mortgaged Property with respect to any such liens in existence
as of the date of transfer of title.
18.Assignment of Leases. As additional security for the payment
and performance of the Mortgaged Indebtedness, the Mortgagor hereby
grants, transfers and assigns to the Mortgagee all of its right,
title and interest in and to any and all Leases and Lease
Guaranties. The Mortgagee shall not be deemed by virtue of this
assignment to have assumed any of the lessor's obligations, duties
or liabilities under or in connection with the Leases or Lease
Guaranties, which obligations the Mortgagor covenants and agrees to
perform and observe as if this assignment had not been made. In
addition to the remedies hereinafter set forth in this Mortgage,
after the occurrence of an Event of Default hereunder, the
Mortgagee shall be entitled, either with or without taking
possession of the Mortgaged Property, to demand, sue for or
otherwise collect and receive all of the Rents, including those
past due and unpaid, reserved to the lessor under the terms of the
Leases and upon receipt thereof, the Mortgagee shall apply said
amounts collected to the indebtedness secured hereby. The
Mortgagor hereby authorizes all Lessees and guarantors under the
Lease Guaranties, upon receipt of written notice from the Mortgagee
that an Event of Default has occurred hereunder, to pay over all
Rent at any time owed under the Leases to the Mortgagee in lieu of
the Mortgagor. The Mortgagor shall and does hereby agree to
defend, with counsel acceptable to the Mortgagee, indemnify and
hold the Mortgagee harmless from any and all claims, demands,
losses, damages, liabilities, costs and expenses of every kind and
nature, including, without limitation, attorneys' fees and expenses
and court costs, which the Mortgagee shall sustain or incur arising
out of or in connection with the Leases or the enforcement of this
indemnification unless solely resulting from the Mortgagee's gross
negligence or willful misconduct. Any Lessee (and any guarantor of
such Lessee's obligations under the applicable Lease) shall be
deemed by virtue of said Lessee's occupancy of the Mortgaged
Property, to have agreed to the terms of this assignment and shall
be entitled to rely conclusively on any written notice from the
Mortgagee of the existence of an Event of Default under this
Mortgage. Upon receipt of such written notice, each Lessee (or
guarantor of the obligations of such Lessees under the applicable
Lease) shall pay over to the Mortgagee, on the dates set forth
under the applicable Lease (except as to those amounts past due and
unpaid, which amounts shall be payable immediately to the Mortgagee
upon receipt of such written notice), all Rent required to be made
to the lessor pursuant to such Lease.
The indemnification provisions of this Section18 shall survive the
complete payment and performance of the Mortgaged Indebtedness and
the foreclosure of the Mortgage.
19.Future Actions With Respect to the Leases. The Mortgagor shall
furnish to the Mortgagee a true and complete copy of each Lease
hereafter made by the Mortgagor within ten (10) days after
execution and delivery of each such Lease by the parties thereto.
Upon the request of the Mortgagee, the Mortgagor shall also furnish
to the Mortgagee an original mortgagee attornment agreement
executed by each Lessee under any Lease and an original estoppel
certificate, all in form and substance satisfactory to the
Mortgagee, addressed to the Mortgagee, from each Lessee under any
Lease.
The Mortgagor shall, from time to time, upon request of the
Mortgagee, confirm in writing the assignment to the Mortgagee of
any or all of the Leases, and such written confirmation shall be in
such form as the Mortgagee shall require and as shall be necessary
to make the same recordable.
20.Leases; Foreclosure. Any proceedings or other steps taken by
the Mortgagee to foreclose this Mortgage, or otherwise to protect
the interests of the Mortgagee hereunder, shall not operate to
terminate the rights of any present or future Lessee under the
Leases, notwithstanding that said rights may be subject and
subordinate to the lien of this Mortgage, unless the Mortgagee
specifically elects otherwise in the case of any particular Lessee.
The failure to make any such Lessee a defendant in any such
foreclosure proceeding and to foreclose such Lessee's rights shall
not be asserted by the Mortgagor or any other defendant in such
foreclosure proceeding as a defense to any proceeding instituted by
the Mortgagee to foreclose this Mortgage or otherwise to protect
the interests of the Mortgagee hereunder.
In addition, the Mortgagee shall have the right to subordinate this
Mortgage and its rights hereunder to any Lease which is subject and
subordinate to this Mortgage, except that the Mortgagee shall be
entitled to expressly exclude from such subordination the
Mortgagee's rights to insurance proceeds and Condemnation awards as
set forth herein.
21.Events of Default. Each of the following shall constitute an
"Event of Default" hereunder and shall entitle the Mortgagee to
exercise its remedies hereunder and under any of the other Loan
Documents:
(i)any failure of the Mortgagor to pay any amount due under any of
the Loan Documents within ten (10) days following the date when
such payment was due (provided, however, that there shall be no
such grace period if the Mortgagor is late in making any payment
due under the Loan Documents more than twice in any twelve (12)
month period);
(ii) any failure in the observance, fulfillment or performance of
any other covenant, term, condition or warranty under any of the
Loan Documents, other than the payment of any monetary obligation
and other than as specified in subsections (iii) through (vi) below
(hereinafter referred to as a "Failure to Perform"), continuing for
thirty (30) days after the giving of notice by the Mortgagee to the
Mortgagor specifying the nature of the Failure to Perform, except
as to matters not susceptible to cure within thirty (30) days,
provided that with respect to such matters, (a) the Mortgagor
commences the cure thereof within thirty (30) days after the giving
of such notice by the Mortgagee to the Mortgagor, (b) the Mortgagor
continuously prosecutes such cure to completion, (c) such cure is
completed within ninety (90) days after the giving of such notice
by the Mortgagee to the Mortgagor and (d) such Failure to Perform
does not impair the Mortgagee's rights with respect to the
Mortgaged Property or otherwise impair the security evidenced
hereby;
(iii) if, without the prior written consent of the Mortgagee, in
each instance, which consent may be withheld by the Mortgagee in
its sole and absolute discretion all or any part of the Mortgaged
Property shall be, directly or indirectly, mortgaged (whether or
not junior to this Mortgage), encumbered (by any voluntary or
involuntary lien other than the Permitted Encumbrances), leased,
subleased, sold, assigned, hypothecated or otherwise transferred;
(iv)the occurrence of any default or breach of condition continuing
beyond the expiration of applicable notice and grace periods, if
any, under any of the other Loan Documents;
(v)the occurrence of a default or breach of condition continuing
beyond the expiration of the applicable notice and grace periods,
if any, under the terms of any other agreement, document or
instrument evidencing any Related Party Obligation, including,
without limitation, any Related Party Agreement;
(vi)except as a result of damage, destruction or a partial or
complete Condemnation, if the operation of the Facility ceases for
a period in excess of thirty (30) days;
(vii)any failure to maintain the insurance required pursuant to
Section 8 of this Mortgage in force and effect at all times until
the Mortgaged Indebtedness shall be fully paid and performed; and
(viii)a default or breach of condition continuing beyond the
expiration of any notice or grace periods, if any, under any prior
mortgage which may be included in the definition of Permitted
Encumbrances and to which this Mortgage is now, or at any time
hereafter, subject or subordinate.
22.Remedies Upon Default. Immediately upon the occurrence of any
Event of Default referred to above in Section 21 or elsewhere in
this Mortgage, the Mortgagee shall have the option, in addition to
and not in lieu of or substitution for the other rights and
remedies provided in this Mortgage and the other Loan Documents and
as may be provided by applicable law, and is hereby authorized and
empowered by the Mortgagor, to do any or all of the following:
(i)declare the entire unpaid amount of the Mortgaged Indebtedness,
including, without limitation, the outstanding principal balance of
the Note and all accrued and unpaid interest due under the Note,
the Prepayment Fee, all Late Payment Charges and any and all costs,
charges and other amounts (including, without limitation,
Additional Interest) payable by the Mortgagor to the Mortgagee
pursuant to the Loan Documents, immediately due and payable and, at
the Mortgagee's option, (a)bring suit therefor, or (b)bring suit
for any delinquent payment of, or bring suit upon, the Mortgaged
Indebtedness or (c)take any and all steps and institute any and all
other proceedings that the Mortgagee deems necessary or desirable
to enforce the payment and performance of the Mortgaged
Indebtedness and to protect the lien of this Mortgage;
(ii)commence foreclosure proceedings against all or any part of the
Mortgaged Property through judicial proceedings, by advertisement
or as otherwise provided by law, at the option of the Mortgagee,
and to sell all or any portion of the Mortgaged Property or to
cause the same to be sold at public sale, and to convey the same to
a purchaser, as provided by the law, in a single parcel or in
several parcels at the option of the Mortgagee;
(iii)cause to be brought down to date an abstract or abstracts of
title and tax histories of the Mortgaged Property, procure title
insurance or title reports and, if necessary, procure new abstracts
and tax histories;
(iv)enter upon and take possession of and operate all or any
portion of the Mortgaged Property (with or without bringing any
action or proceeding in any court);
(v)have a receiver appointed to manage the Mortgaged Property with
all such powers as the court making such appointment shall confer;
(vi)demand and receive payment of all Rents, benefits, income and
profits from the Mortgaged Property, including those past due and
unpaid (whether or not the Mortgagee has taken possession of the
Mortgaged Property);
(vii)in the event of any sale of the Mortgaged Property by
foreclosure, through judicial proceedings, by advertisement or
otherwise, retain one percent (1%) of the proceeds of any such sale
and then apply the remaining proceeds of any such sale towards
payment of the items immediately set forth below in the following
order:
(a)all expenses incurred for the collection and enforcement of the
Mortgaged Indebtedness and the foreclosure of this Mortgage,
including, without limitation, attorneys' fees and expenses, court
costs, publication and advertising expenses, auctioneers' fees,
appraisal fees and expenses for environmental site audit reports
(hereinafter collectively referred to as the "Collection and
Foreclosure Costs"), or such Collection and Foreclosure Costs as
are permitted by law;
(b)all sums expended or incurred by the Mortgagee directly or
indirectly in connection with the enforcement of terms, conditions,
covenants and warranties contained in the Loan Documents and all
other agreements evidencing or securing the Mortgaged Indebtedness,
together with interest thereon as therein provided;
(c)all accrued and unpaid interest (including, without limitation,
Additional Interest) upon the Mortgaged Indebtedness;
(d)the Prepayment Fee;
(e)the unpaid principal amount of the Mortgaged Indebtedness (in
the inverse order of maturity); and
(f)the surplus, if any, unless prohibited by law or a court of
competent jurisdiction decrees otherwise, to the Mortgagor or any
other Person lawfully entitled thereto or as any court of competent
jurisdiction may direct; and
(viii)set off or apply, without notice to or demand on the
Mortgagor, all deposits or other sums at any time credited by or
due from the Mortgagee to the Mortgagor, and all cash, securities,
instruments or other property of the Mortgagor in possession of the
Mortgagee (whether for safekeeping or otherwise), which shall at
all times constitute security for the obligations contained in the
Loan Documents.
Failure to exercise any option to accelerate the Mortgage
Indebtedness upon the occurrence of an Event of Default hereunder
or other circumstance permitting the exercise of such option, shall
not constitute a waiver of the default or of the right to exercise
such option at a later time, or a waiver of the right to exercise
such option upon the occurrence of any other Event of Default or
circumstance specified above.
23.No Obligation to Marshall Assets. Notice is hereby given that
neither the Mortgagor, nor any holder of any mortgage, lien or
other encumbrance affecting all or part of the Mortgaged Property
which is inferior to the lien of this Mortgage shall have any right
to require the Mortgagee to marshall assets.
24.Additional Collateral. The Mortgagor hereby covenants and
agrees that all collateral now or hereafter granted as security for
any of the Mortgaged Indebtedness (now existing or hereafter
arising) shall be deemed to be additional collateral securing the
complete payment, performance, observance and fulfillment of all of
the terms, covenants, conditions and warranties secured by this
Mortgage.
To the extent that the Mortgagor is not the primary obligor of any
of the terms, covenants, conditions or warranties included within
the definition of the Mortgaged Indebtedness, the Mortgagor also
hereby guarantees to the Mortgagee (and its Affiliates) the
complete payment, performance, observance and fulfillment of such
terms, covenants, conditions and warranties included within the
definition of the Mortgaged Indebtedness; provided, however, that
(except as provided below) recourse against the Mortgagor for the
performance of this guaranty shall be limited to the Mortgagor's
interest the Mortgaged Property. Notwithstanding the foregoing, it
is expressly understood and agreed that the provisions of this
guaranty shall in no way limit or otherwise affect: (i)any other
provision of this Mortgage or (ii)any other term, condition,
covenant or warranty set forth under any agreement made by the
Mortgagor to, and for the benefit of, the Mortgagee, whether such
agreement is now existing or hereafter entered into, including,
without limitation, the Note and the Guaranty, as to which the
Mortgagee shall have full recourse to the Mortgagor.
The Mortgagor hereby waives any right to require the Mortgagee to:
(a)proceed against any other primary obligor or guarantor of any of
the indebtedness, liabilities, covenants, obligations or agreements
included within the definition of the Mortgaged Indebtedness or
(b)pursue any other remedy in the Mortgagee's power whatsoever.
The Mortgagor waives any defense arising by reason of any
disability or other defense of any such Person or by reason of the
cessation from any cause whatsoever of the liability of any such
Person. The Mortgagor shall not assert, and hereby waives, any
right or claim whatsoever including without limitation, any right
of subrogation, arising against such Persons in connection with the
Mortgagor's performance of the obligations, covenants and
agreements as set forth in this Section 24 and the Mortgagee's
enforcement of any rights and remedies hereunder.
Furthermore, the Mortgagor also hereby waives any right to enforce
any remedy which the Mortgagee now has or may hereafter have
against any such Person, and hereby waives any benefit of rights to
participate in any security now or hereafter held by the Mortgagee.
The Mortgagor hereby waives notice of acceptance hereof and
reliance hereon, notice of any action taken or omitted by the
Mortgagee in reliance hereon, suretyship defenses, presentment,
demand, protest, notice of nonpayment, notice of dishonor, protest
of any dishonor, notice of protest and giving notice of:
(1)any default by any such Person under any of the applicable
agreements between any such Person and the Mortgagee or the
assertion of any right of the Mortgagee thereunder or hereunder;
(2)all other notices in connection with the delivery, acceptance,
performance, default or enforcement of the payment and performance
of such agreements; and
(3)notices of the existence, creation or incurring of new or
additional indebtedness, liabilities, covenants, obligations or
agreements which shall be included in the Mortgaged Indebtedness.
The Mortgagor shall take no action of any kind which might be
the basis for a claim that the Mortgagor has any defense hereunder
other than the complete payment and performance of the Mortgaged
Indebtedness. The Mortgagor hereby agrees to hold harmless and
indemnify and shall indemnify the Mortgagee against any claim,
injury, loss, cost, damage, liability and expense, including,
without limitation, attorneys' fees and expenses and court costs,
arising out of or in connection with the assertion by any such
Person of any defense to any of its obligations to the Mortgagee or
resulting from the attempted assertion by the Mortgagor of any
defense hereunder based upon such action or inaction of any such
Person. The aforesaid indemnification agreement shall also include
all costs and expenses incurred by the Mortgagee in connection with
the enforcement thereof. The Mortgagor hereby waives any right or
claim of right to cause a marshalling of the assets of any such
Person. No delay on the part of the Mortgagee in the exercise of
any right, power or privilege under any documentation with any such
Person or hereunder shall operate as a waiver of any such
privilege, power or right.
The indemnity provisions of this Section 24 shall survive the
complete payment and performance of the Mortgaged Indebtedness and
the foreclosure of the Mortgage.
25.Security Interest. As to any fixtures, equipment and other
Personal Property included in the Mortgaged Property, all
Instruments, General Intangibles of the Mortgagor (other than
Accounts) and the Permits and Contracts, this Mortgage shall be
deemed to constitute a security agreement and the Mortgagor, as
debtor, hereby grants to the Mortgagee, as secured party, a
security interest therein pursuant to the Uniform Commercial Code
as enacted in the state where the Mortgaged Property is located.
Notwithstanding the foregoing, to the extent that the Mortgagee is
not permitted by applicable law to take a security interest in any
of the Permits and Contracts, the Mortgagor hereby agrees to
execute any and all other documents deemed necessary and desirable
by the Mortgagee to give the Mortgagee such interest in such Permit
or Contract as is allowed under applicable law. The Mortgagor
agrees, upon request of the Mortgagee, to furnish an inventory of
Personal Property owned by the Mortgagor and subject to this
Mortgage and, upon request by the Mortgagee, to execute any
supplements to this Mortgage, any separate security agreement and
any financing statements and continuation statements in order to
include specifically said inventory of Personal Property or
otherwise to perfect the security interest granted hereby and to
pay all costs and expenses related thereto including, without
limitation, attorneys' fees and expenses and court costs.
Upon the occurrence of any Event of Default hereunder, the
Mortgagee shall have all of the rights and remedies therein
provided or otherwise provided by law or by this Mortgage,
including, but not limited to, the option of proceeding as to both
the Real Property and the Personal Property in accordance with the
Mortgagee's rights and remedies in respect of the Real Property, in
which event the default provisions of the UCC shall not apply. In
the event that the Mortgagee, at its option, elects to proceed with
the Personal Property separately from the Real Property, the
Mortgagee shall have all of the rights and remedies herein provided
or otherwise provided by law, including, without limitation, the
right to require the Mortgagor to assemble such Personal Property
and to make it available to the Mortgagee at a place to be
designated by the Mortgagee which is reasonably convenient to both
parties, the right to take possession of such Personal Property
with or without demand and with or without process of law and the
right to sell and dispose of the same and distribute the proceeds
according to law. The parties hereto agree that any requirement of
reasonable notice under the UCC shall be met if the Mortgagee sends
such notice to the Mortgagor at least five (5) days prior to the
date of sale, disposition or other event giving rise to the
required notice, and that the proceeds of any disposition of any
such Personal Property may be applied by the Mortgagee first to the
expenses in connection therewith, including attorneys' fees and
expenses and court costs incurred, and then, toward payment of the
Mortgaged Indebtedness. With respect to the Personal Property that
has become so attached to the Real Property that an interest
therein arises under the real property law of the state, this
Mortgage shall also constitute a financing statement and a fixture
filing under the UCC.
26. Right of Entry. At reasonable times and upon reasonable notice
to the Mortgagor (which limitations with respect to time and notice
shall not apply in emergency situations), the Mortgagee and the
Mortgagee's representatives, from time to time throughout the term
of this Mortgage, may enter upon the Mortgaged Property and inspect
the same, or cause the Mortgaged Property to be inspected by
agents, employees or independent contractors of the Mortgagee, and
show the same to others, but the Mortgagee shall not be obligated
to make any such entry or inspection.
27. Rights Cumulative, No Waiver. The rights and remedies set
forth under this Mortgage are in addition to all other rights and
remedies afforded to the Mortgagee under any of the other Loan
Documents or at law or in equity, all of which are hereby reserved
by the Mortgagee, and this Mortgage is made and accepted without
prejudice to any such rights and remedies. All of the rights and
remedies of the Mortgagee under each of the Loan Documents shall be
separate and cumulative and may be exercised concurrently or
successively in the Mortgagee's sole and absolute discretion.
The Mortgagee shall not by any act, delay, omission or otherwise
(including, without limitation, the exercise of any right or remedy
hereunder) be deemed to have waived any of its rights or remedies
hereunder or under any of the other Loan Documents unless such
waiver is in writing and signed by the Mortgagee, and then, only to
the extent specifically set forth therein. Without limiting the
foregoing, notwithstanding any failure or delay by the Mortgagee to
insist upon the strict performance of, or compliance with, any of
the terms, conditions, covenants or warranties set forth in any of
the Loan Documents, the Mortgagee shall have the right thereafter
to insist upon the strict performance of, and compliance with, any
and all of the terms, conditions, covenants and warranties
contained in the Loan Documents. No waiver at any time of any of
the terms, conditions, covenants or warranties of any of the Loan
Documents shall be construed as a waiver of any other term,
condition, covenant or warranty of any of the Loan Documents, nor
shall such a waiver in any one instance or circumstance be
construed as a waiver of the same term, condition, covenant or
warranty in any subsequent instance or circumstance. No such
failure, delay or waiver shall be construed as creating a
requirement that the Mortgagee must thereafter, as a result of such
failure, delay or waiver, give notice to the Mortgagor, the
Guarantor, any endorser, surety or other guarantor of the Note or
any other Person that the Mortgagee does not intend to give a
further waiver or to refrain from insisting upon the strict
performance of the terms, conditions, covenants and warranties set
forth in the Loan Documents before the Mortgagee can exercise any
of its rights or remedies under any of the Loan Documents or before
any Event of Default under any of the Loan Documents can occur or
as establishing a course of dealing for interpreting the conduct of
and agreements between the Mortgagee and the Mortgagor, the
Guarantor, any endorser, surety or other guarantor of the Note or
any other Person.
Whether or not for consideration paid or payable to the Mortgagee
and, except as may otherwise be specifically agreed to by the
Mortgagee, no forbearance on the part of the Mortgagee or extension
of the time for the payment of the whole or any part of the
obligations secured hereby or any other indulgence given by the
Mortgagee to the Mortgagor or to any other Person claiming any
interest in or to the Mortgaged Property, shall operate to release
or in any manner affect the original liability of the Mortgagor, or
the priority of this Mortgage or to limit, prejudice or impair any
right of the Mortgagee, including, without limitation, the right to
realize upon the Mortgaged Property, for any of the obligations
evidenced or secured by this Mortgage; notice of any such
extension, forbearance or indulgence being hereby waived by the
Mortgagor and all those claiming by, through or under the
Mortgagor.
28.Mortgage Extension. The lien hereof shall remain in full force
and effect during any postponement or extension of the time for the
payment and performance of the Mortgaged Indebtedness, or of any
part thereof, and any number of extensions or modifications hereof
or any additional notes taken by the Mortgagee shall not affect the
lien hereof or the liability of the Mortgagor or of any subsequent
obligor to pay and perform the Mortgaged Indebtedness unless and
until such lien or liability be expressly released in writing by
the Mortgagee.
29. Indemnification. The Mortgagor shall and hereby agrees to
indemnify and hold the Mortgagee harmless from and against all
obligations, liabilities, losses, costs, claims, expenses, fines,
penalties or damages which the Mortgagee may sustain or incur by
reason of this Mortgage or with regard to the Mortgaged Property,
including, without limitation, attorneys' fees and expenses and
expenses, unless solely resulting from the Mortgagor's gross
negligence or willful misconduct. The Mortgagor shall defend the
Mortgagee against any claim or litigation involving the Mortgagee
for the same, with counsel approved by the Mortgagee, and should
the Mortgagee incur such obligation, liability, loss, cost,
expense, fine, penalty or damage, then the Mortgagor shall
reimburse the Mortgagee for such amounts upon demand.
Notwithstanding the foregoing, the Mortgagee shall have the option
of conducting its own defense with counsel of the Mortgagee's
choice, but at the expense of the Mortgagor, as aforesaid. The
aforesaid indemnification shall also include all attorneys' fees
and expenses and court costs incurred in connection with the
enforcement of said indemnification agreement. Any amount owed to
the Mortgagee under this Section 29 shall bear interest at the
Advances Rate. The provisions of this Section 29 shall survive the
complete payment and performance of the Mortgaged Indebtedness and
the foreclosure of this Mortgage.
30. Advance Money Mortgage. This Mortgage secures future advances
made pursuant to the Loan Agreement. Without limiting the
foregoing, this Mortgage secures all advances made by the Mortgagee
of any kind or nature described in 42 Pa. C.S. 8144.
If the Mortgagor sends a written notice to the Mortgagee which
purports to limit the indebtedness secured by this Mortgage and to
release the obligation of the Mortgagee to make any additional
advances to the Mortgagor, such a notice shall be ineffective as to
any future advances made: (i) to enable completion of the
improvements on the Mortgaged Property for which the loan secured
hereby was made, (ii) to pay taxes, assessments, maintenance
charges and insurance premiums, (iii) for costs incurred for the
protection of the Mortgaged Property or the lien of this Mortgage,
(iv) expenses incurred by the Mortgagee by reason of a default of
the Mortgagor hereunder or under the Note or the Loan Agreement,
(v) any other costs incurred by the Mortgagee to protect and
preserve the Mortgaged Property. It is the intention of the
parties hereto that any such advance made by the Mortgagee shall be
secured by the lien of this Mortgage on the Mortgaged Property.
31.Administrative Fees. The Mortgagee shall have the right to
charge administrative fees during the term of the loan evidenced by
the Note in such amounts and at such times as the Mortgagee may
determine, in its sole reasonable discretion, in connection with
any servicing requests made by the Mortgagor requiring the
Mortgagee's evaluation, preparation and processing of any such
requests and in connection with the processing. The Mortgagee
shall also be entitled to reimbursement for all professional fees
and expenses incurred in connection with such requests including,
without limitation, those of architects, engineers and attorneys.
32. Notices. Any notice, request, demand, statement or consent
made hereunder shall be in writing and shall be deemed duly given
if personally delivered, sent by certified mail, return receipt
requested, or sent by a nationally recognized commercial overnight
delivery service with provision for a receipt, postage or delivery
charges prepaid, and shall be deemed given when postmarked or
placed in the possession of such mail or overnight delivery service
and addressed as follows:
If to the Mortgagor:
Norristown Nursing and Rehabilitation Center Associates, L.P.
c/o Geriatric & Medical Companies, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
Attention: President
With a copy to:
Mesirov, Gelman, Jaffee, Cramer &
Jamieson
1735 Market Street
Philadelphia, Pennsylvania 19103-7598
Attn: Robert P. Krauss, Esq.
If to the Mortgagee:
Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: President
with copies to:
Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 021954
Attn: General Counsel
Mintz, Levin, Cohn, Ferris
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Andrew R. Urban, Esq.
or such other address as either the Mortgagor or the Mortgagee
shall hereinafter from time to time designate in writing to the
other. Any notice given to the Mortgagor by the Mortgagee at any
time shall not imply that such notice or any further or similar
notice was or is required.
33.Applicable Law. The provisions of this Mortgage shall be
construed and enforceable in accordance with the laws of the
Commonwealth of Massachusetts, except that the laws of the State of
Commonwealth of Pennsylvania shall govern (i) this Mortgage to the
extent necessary for the Mortgagee to perfect, protect or enforce
the lien hereof and to obtain the benefit of the rights and
remedies set forth herein with respect to the Mortgaged Property
including, without limitation, the Statutory Power of Sale and (ii)
procedural requirements which must be governed by the law of the
state in which the Mortgaged Property is located.
34.Invalidity. If any provision of this Mortgage or the
application thereof to any Person or circumstance, for any reason
and to any extent, shall be held invalid or unenforceable, neither
the remainder of this Mortgage, nor the application of such
provision to any other Person or circumstance shall be affected
thereby, but rather the same shall be enforced to the greatest
extent permitted by law. Notwithstanding the foregoing, if such
provision provides for the payment of principal or interest with
respect to the Mortgage Indebtedness, Additional Interest, any
Prepayment Fee, the Advances Rate, any administrative fees, the
Construction Loan Commitment Fee or the Permanent Loan Commitment
Fee, then the Mortgagee, at its option, may declare the entire
Mortgaged Indebtedness due and payable upon sixty (60) days' prior
written <PAGE>
notice to the Mortgagor. In the event of any such acceleration of
the Mortgaged Indebtedness, provided that an Event of Default or
any event which with notice or the passage of time or both would
constitute an Event of Default has not occurred under this
Mortgage, the Mortgagor shall not be required to pay the Mortgagee
a Prepayment Fee.
Notwithstanding the foregoing, it is the intention of the Mortgagor
and the Mortgagee that if any provision of this Mortgage is capable
of two (2) constructions, one of which would render the provision
void and the other of which would render the provision valid, then
such provision shall be construed in accordance with the
construction which renders such provision valid.
35.Captions and Headings. The captions and headings set forth in
this Mortgage are included for convenience and reference only and
the words contained therein shall in no way be held or deemed to
define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning of any provision of, or the
scope or intent of this Mortgage or any portion thereof.
36.Amendments, Waivers and Modifications. This Mortgage and the
other Loan Documents set forth the entire agreement of the parties
with respect to the subject matter hereof and none of the terms,
conditions, covenants, warranties or representations contained in
this Mortgage may be renewed, replaced, amended, modified,
extended, substituted, revised, waived, consolidated or
terminated, except by an agreement, in writing, signed by the party
against whom enforcement is sought. The provisions of this
Mortgage shall extend and be applicable to all renewals,
replacements, amendments, extensions, substitutions, revisions,
extensions, consolidations and modifications of all of the Loan
Documents. Any references herein to any of the Loan Documents, or
any Lease, Permit or Contract shall be deemed to include any such
renewals, replacements, amendments, extensions, consolidations or
modifications thereof.
Notwithstanding the foregoing, any reference contained herein,
whether express or implied, to any renewal, replacement, amendment,
extension, substitution, revision, consolidation or modification of
any of the Loan Documents or of any Permit, Contract, Lease or
Lease Guaranty is not intended to constitute an agreement or
consent by the Mortgagee to any such renewal, replacement,
amendment, extension, substitution, revision, <PAGE>
consolidation or modification of
any of the Loan Documents or any Permit or Contract, Lease or Lease Guaranty;
but, rather as a reference only to those instances where the Mortgagee may
give consent to any such renewal, replacement, amendment, extension,
substitution, revision, consolidation or modification, as the same
may be required pursuant to the terms, covenants or conditions of
the Loan Documents.
37.Successors and Assigns. This Mortgage (i) shall be binding on
the parties hereto and their respective heirs, executors,
administrators, legal representatives and permitted successors and
assigns, and any subsequent owners of the Mortgaged Property,
(ii) shall run with the land and (iii)shall inure to the benefit of
(a)the parties hereto, (b)any Person which may now or hereafter
hold any interest in the Loan and (c) their respective successors
and assigns.
In the event that the Mortgagor transfers the Mortgagor's interest
in the Mortgaged Property to any party not appearing in this
instrument (without implying any right of the Mortgagor to do so
without the Mortgagee's prior written consent in each instance
pursuant to the provisions hereof), the Mortgagee may, at its
option and without notice to the Mortgagor, deal with such
successor or successors in interest with reference to all of the
Loan Documents, including, without limitation, forbearance on the
part of the Mortgagee or extension of the time for payment or
performance of the Mortgaged Indebtedness, without in any way
modifying or affecting the provisions of this Mortgage or the
liability of the Mortgagor or any other party under the this
Mortgage or any of the other Loan Documents.
38. Further Assurances. Upon request of the Mortgagee, at any time
and from time to time, the Mortgagor shall promptly make, execute
and deliver, or cause to be made, executed and delivered, to the
Mortgagee and, where appropriate, cause to be recorded or filed and
from time to time thereafter to be re-recorded or refiled at such
time and in such offices and places as shall be deemed necessary or
desirable by the Mortgagee (in its sole and absolute discretion),
such agreements, amendments, assignments, deeds to secure debt,
mortgages, deeds of trust, security agreements, financing
statements, continuation statements, instruments of further
assurance, certificates, notices, consents and other documents as
shall be deemed necessary or desirable by the Mortgagee (in the
Mortgagee's sole and absolute discretion) to (i) enable the
Mortgagee to negotiate the Note or any portion thereof and to
assign this Mortgage or any portion thereof and all or any portion
of the other Loan Documents; (ii) enable the Mortgagee to enter
into participation agreements with respect to all or any portion of
the Mortgaged Indebtedness or (iii) effectuate, complete or
perfect, or to continue and preserve (a) the obligations of the
Mortgagor under this Mortgage and (b) the security interest created
by this Mortgage as a first and prior security interest upon the
Mortgaged Property; provided, however, that no such additional
document or other instrument requested by the Mortgagee hereunder
shall increase the Mortgaged Indebtedness and expenses of the
Mortgagee in connection therewith, which.
Any failure by the Mortgagor to comply with any request pursuant to
this Section 38 within twenty (20) days after such request is made
by the Mortgagee, shall be an Event of Default hereunder and upon
such Event of Default, the Mortgagee may make, execute, record,
file, re-record or refile any and all such amendments, 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 the
Mortgagor, and the Mortgagor hereby appoints the Mortgagee as the
Mortgagor's attorney-in-fact, with full power of substitution, to
take such actions (on behalf of and in the name of the Mortgagor)
as the Mortgagee, in its sole and absolute discretion, may deem
necessary or desirable to effectuate the intent of this Section 38.
The power of attorney conferred on the Mortgagee pursuant to the
provisions of this Section 38, being coupled with an interest,
shall be irrevocable until all of the Mortgaged Indebtedness is
fully paid and performed, and shall not be affected by any
disability or incapacity which the Mortgagor may suffer and shall
survive the same. Such power of attorney is provided solely to
protect the interests of the Mortgagee and shall not impose any
duty on the Mortgagee to exercise any such power, and neither the
Mortgagee nor such attorney-in-fact shall be liable for any act,
omission, error in judgment or mistake of law, except as the same
may result from its gross negligence or wilful misconduct.
39. No Partnership or Joint Venture. Neither anything contained
herein, or in the any of the other Loan Documents, nor the acts of
the parties hereto shall be construed to create a partnership or
joint venture between the Mortgagee and the Mortgagor. The
Mortgagor is not the agent or representative of the Mortgagee, and
nothing contained herein or in any of the other Loan Documents
shall be construed so as to make the Mortgagee liable to any Person
for goods delivered or services performed with respect to the
Facility or for debts or claims accruing against the Mortgagee.
The Mortgagor's obligations hereunder or under any of the other
Loan Documents are not for the benefit of, or enforceable by, any
other Person other than the Mortgagee.
40. Time of the Essence. Time is of the essence of each and every
term, condition, covenant and warranty set forth herein.
41.Rule of Construction. References in this Mortgage to "herein,"
"hereof" and "hereunder" shall be deemed to refer to this Mortgage
and shall not be limited to the particular text or Section in which
such words appear. The use of any gender shall include all genders
and the singular number shall include the plural and vice versa as
the context may require. References in this Mortgage to the
Mortgagee's attorneys shall be deemed to include, without
limitation, special counsel and local counsel. References in this
Mortgage to attorneys' fees and expenses shall be deemed to include
all costs for administrative, paralegal and other support staff.
references in this Mortgage to the term "Mortgaged Property" shall
be deemed to include references to all of the Mortgaged Property
and references to any portion thereof. The words "foreclosure" and
"foreclosure sale" as used herein shall be deemed to include the
acquisition of the Mortgaged Property by voluntary deed or
assignment in lieu of foreclosure.
As used herein, the term "including", when following any general
statement, will not be construed to limit such statement to the
specific items or matters as provided immediately following the
term "including" (whether or not non-limiting language such as
"without limitation" or "but not limited to" or words of similar
import are also used), but rather will be deemed to refer to all
items or matters that could reasonably fall within the broader
scope of the general statement.
IN WITNESS WHEREOF, the Mortgagor has duly executed this Mortgage
under seal on the day and year first above written.
WITNESS: MORTGAGOR:
NORRISTOWN NURSING AND REHABILITATION
CENTER ASSOCIATES, L.P., a Pennsylvania
limited partnership
By: GMC-LTC Management, Inc., a Pennsylvania corporation, its
general partner
By:
Name: Name: Title:
CERTIFICATE OF RESIDENCY
The undersigned _____________, ______________ of GMC -LTC
Management, Inc., the general partner of Norristown Nursing and
Rehabilitation Center Associates, L.P., the above-named mortgagor,
hereby certifies that the precise address of the Mortgagor is 5601
Chestnut Street, Philadelphia, Pennsylvania 19139.
MORTGAGOR:
NORRISTOWN NURSING AND REHABILITATION CENTER ASSOCIATES, L.P., a
Philadelphia limited partnership
By: GMC-LTC Management, Inc., its general partner, a Pennsylvania
corporation
By: Name: Title:
COMMONWEALTH OF MASSACHUSETTS
, ss. May ___, 1995
Then personally appeared the above-named who
swore that he/she is the of GMC-LTC
Management, Inc., the general partner of Norristown Nursing and
Rehabilitation Center Associates, L.P., the above-named mortgagor,
and acknowledged the foregoing to be his/her/the free act and deed
of , before me,
Notary Public
My commission expires:
EXHIBIT A
Real Property Description
All that certain piece of land located in Block 82 in the Borough
of Norristown, Montgomery County, Pennsylvania, situated between
Pine and Locust Streets and West Logan Streets, described as Lot 2
on the subdivision plan for Rittenhouse Nursing Center made by
Geriatric and Medical Companies,Inc., and prepared by NTH
Consultants, Ltd., Exton, Pennsylvania, dated January 25, 1994 and
last revised March 8, 1994, and approved by the Borough Council of
the Borough of Norristown on April 5, 1994 and duly recorded with
the Recorded of Deeds of Montgomery County, Pennsylvania, being
more fully described as follows:
From the intersection of Pine Street and West Roberts Street,
proceeding from a point, marked by an iron pin, on the northwest
corner of Block 82 in an easterly direction parallel to Pine
Street, a distance of 314.71 feet along a bearing of North 60
degrees 52 minutes 16 second East to the point of beginning;
thence, in an easterly direction along the same bearing, a distance
of 232.24 feet to a point, marked by an iron pin, on the northeast
corner of Block 82 at the intersection of Pine Street and West
Logan Street; thence, in a southerly direction paralleling West
Logan Street, a distance of 300.63 feet along a bearing of South 29
degrees 04 minutes 19 seconds East to a point, marked by an iron
pin; thence, in a westerly direction paralleling Locust Street a
distance of 232.61 feet along a bearing South 61 degrees 00 minutes
00 seconds West to a point; thence, in a northerly direction along
the common boundary with Lot 1, a distance of 300.11 feet along a
bearing of North 29 degrees 00 minutes 00 seconds West to the point
and place of beginning.
The above premises being the same land shown as Lot 2 on Plan of
Survey for Rittenhouse Nursing Center by Nave, Newell & Stampfel,
Ltd., dated May 6, 1995.
TOGETHER WITH the benefit of rights and easements set forth in that
certain Declaration of Reciprocal Easement Agreement made by
Geriatric and Medical Services, Inc., dated June ____, 1995 and
recorded in Deed Book _____ page _____.
BEING THE SAME PREMISES WHICH Rittenhouse Partners by Indenture
dated 5/11/1987 and recorded 5/18/1987 at Norristown in the Office
for the Recording of deeds, in and for the County of Montgomery in
Deed Book 4837 page 2319 granted and conveyed unto Geriatric and
Medical Services, Inc., its successors and assigns, in fee.
<PAGE>
EXHIBIT B
Schedule of Leases
None.<PAGE>
EXHIBIT C
Permitted Encumbrances
Items specifically set forth in Schedule B of Penn Title Title
Insurance Company Specimen Policy No. 62032P insuring the
Mortgagee.
AFFILIATED PARTY SUBORDINATION AND
CROSS-DEFAULT/CROSS-COLLATERALIZATION AGREEMENT
THIS AGREEMENT is made as of the 31st day of May, 1995, by and
among Norristown Nursing and Rehabilitation Center, Associates,
L.P. (hereinafter the "Borrower"); Geriatric and Medical Services,
Inc. ("Services"), a New Jersey corporation, Crestview Convalescent
Home, Inc., a Pennsylvania corporation, Burlington Woods
Convalescent Center, Inc., a New Jersey corporation, Geriatric &
Medical Companies, Inc., a Delaware corporation, Crestview North,
Inc., a Pennsylvania corporation, Geriatric and Medical Investments
Corp., GMC-LTC Management, Inc., HSS Paratransit Inc., Life Support
Ambulance, Inc., United Health Care Services, Inc., Innovative
Pharmacy Services, Inc., GMS Management Inc., and GMS Management
Tucker, Inc., each having its principal place of business care of
Geriatric & Medical Companies, Inc., 5601 Chestnut Street,
Philadelphia, Pennsylvania 19139 and all other Affiliates of
Services which hereafter enter into Intercompany Agreements
(hereinafter defined) with the Borrower or into Affiliated
Party/Meditrust Agreements (hereinafter defined) with the Lender or
any of the Lender's Affiliates (hereinafter collectively referred
to as the "Affiliated Parties"); and Meditrust Mortgage
Investments, Inc., a Delaware corporation, having a principal
address at 197 First Avenue, Needham, Massachusetts 02194 (the
"Lender").
WITNESSETH:
WHEREAS, the Borrower has executed and delivered to the Lender a
Promissory Note of even date in the maximum original principal
amount of SIX MILLION NINE HUNDRED THIRTY-NINE THOUSAND DOLLARS
($6,939,000) made by the Borrower to the order of the Lender
(hereinafter referred to as the "Note");
WHEREAS, the Note is referred to in that certain Construction Loan
Agreement of even date herewith by and between the Borrower and the
Lender (hereinafter referred to as the "Loan Agreement") and is in
all respects subject to the provisions thereof;
WHEREAS, all capitalized terms used herein and not defined herein
have the meaning ascribed to them in the Loan Agreement;
WHEREAS, the Affiliated Parties (which are Affiliates of the
Borrower) have entered into or may enter into agreements with the
Borrower, including Facility management agreements (such
agreements, together with any agreements hereafter entered into
with the Borrower, as the same may from time to time be amended,
revised, replaced, modified or supplemented, are hereinafter
referred to as the "Intercompany Agreements");
WHEREAS, all of the management fees, indebtedness, interests,
liabilities, and obligations of the Borrower to any of the
Affiliated Parties, whether now existing or hereafter arising,
including, without limitation, the indebtedness, liabilities, and
obligations of the Borrower to any of the Affiliated Parties under
the Intercompany Agreements and all other instruments and documents
executed and delivered in connection therewith, but excluding
therefrom payments of salary, are hereinafter referred to
collectively as the "Related Party Debt";
WHEREAS, the Affiliated Parties have entered into or may enter into
agreements with the Lender or any of its Affiliates (such
agreements, together with any agreements hereafter entered into
with the Lender by the Affiliated Parties or any other Affiliates
of the Borrower, now or hereafter existing, as the same may from
time to time be amended, revised, replaced, modified or
supplemented, are hereinafter referred to as the "Affiliated
Party/Meditrust Agreements");
WHEREAS, it is a condition precedent to the willingness of the
Lender to make the Loan that any and all indebtedness, covenant,
obligation, agreement or undertaking due to, or made for the
benefit of, the Lender (or any of its Affiliates) pursuant to the
Affiliated Party/Meditrust Agreements be cross-defaulted and cross-
collateralized with the Loan;
WHEREAS, the Affiliated Parties shall derive a substantial benefit
from the making of the Loan by the Lender and therefore desire that
the Lender make the Loan; and
WHEREAS, it is a condition precedent to the willingness of the
Lender to make the Loan that the Affiliated Parties and the
Borrower shall execute and deliver this Agreement to and with the
Lender.
NOW, THEREFORE, in order to induce the Lender to consent to the
Intercompany Agreements and in consideration therefor, and for One
Dollar ($1.00) and other good and valuable consideration, the
receipt and sufficiency of which is acknowledged, and in
consideration of the mutual covenants set forth herein, the parties
hereto hereby agree as follows:
1. Subordination.
A. The payment of any and all of the Related Party Debt is hereby
expressly subordinated and made junior to the payment and
performance of all of the Mortgaged Indebtedness to the extent and
in the manner set forth herein.
B. Subject to subparagraph C below, until the Mortgaged
Indebtedness shall have been completely paid and performed, the
Borrower shall not make, and the Affiliated Parties shall not
receive, accept or retain any direct or indirect payment,
distribution or reduction (whether by way of loan, setoff or
otherwise) in respect of the Related Party Debt, including, without
limitation, with respect to the principal of, or premium or
interest on, the Related Party Debt, if, on the date such payment
would (but for the terms hereof) be payable to and received by the
Affiliated Parties pursuant to the Intercompany Agreements (each of
which such dates shall be hereinafter referred to as a "Related
Party Debt Payment Date"):
(i) after giving effect to such payment, the Borrower shall be
unable to comply with any of its obligations then due under any of
the Loan Documents, including, but not limited to, payments of
principal and interest due under the Note and all other costs,
charges, expenses and sums (including, without limitation,
Additional Interest, or the Construction Loan Commitment Fee) due
under the Loan Documents; or
(ii) an Event of Default under any of the Loan Documents shall have
occurred, shall be continuing and shall not have been specifically
waived in writing by the Lender, whether or not the Lender
(pursuant to any of the Loan Documents) shall have declared the
Mortgaged Indebtedness to be due and payable in full on the basis
of the occurrence of either such Event of Default or, if such an
Event of Default shall not be continuing on the date on which any
payment in respect of the Related Party Debt is due and payable,
the Lender (pursuant to any of the Loan Documents) shall have
commenced to exercise any of its rights and remedies under the Loan
Documents on the basis of the occurrence of such Event of Default
and such exercise shall not have been specifically rescinded in
writing by the Lender.
C. In the event of any voluntary or involuntary insolvency,
bankruptcy, receivership, custodianship, readjustment of debt,
arrangement, composition, assignment for the benefit of creditors
or other similar proceeding relative to the Borrower or the
Borrower's property, then and in any such event:
(i)all of the Mortgaged Indebtedness shall first be paid in full
before any payment or distribution of any character, whether in
cash, securities, obligations or other property, shall be made in
respect of the Related Party Debt;
(ii) any payment or distribution of any character, which would
otherwise (but for the terms hereof) be payable or deliverable in
respect of the Related Party Debt (including, without limitation,
any payment or distribution of any other indebtedness of the
Borrower being subordinated to the Related Party Debt), shall be
paid or delivered directly to the Lender until all of the Mortgaged
Indebtedness shall have been paid in full, and the Affiliated
Parties or any other holders of the Related Party Debt irrevocably
authorize, empower and direct all receivers, custodians, trustees,
liquidators, conservators, and others having authority with respect
to the Mortgaged Property to effect all such payments and
deliveries;
(iii) upon the written request of the Lender, the Affiliated
Parties shall prove, enforce and endeavor to obtain payment of the
aggregate outstanding amount of all unpaid Related Party Debt
payments due and payable, or thereafter becoming due and payable,
from the Borrower to the Affiliated Parties, and shall turn over to
the Lender in precisely the form received, any payment of any kind
or character on account of such Related Party Debt for application
to the payment of any indebtedness, liabilities or obligations of
the Borrower to the Lender then existing. In the event that the
Affiliated Parties shall fail to take any such action requested by
the Lender, the Lender as attorney-in-fact for the Affiliated
Parties, with full power of substitution, may take such action on
behalf of the Affiliated Parties, but for the use and benefit of
the Lender. This power of attorney, being coupled with an
interest, shall be irrevocable until all of the Mortgaged
Indebtedness is fully paid and performed and shall not be affected
by any disability or incapacity which the Affiliated Parties may
suffer and shall survive the same. The power of attorney conferred
on the Lender by the foregoing provisions is provided solely to
protect the interests of the Lender and shall not impose any duty
on the Lender to exercise any such power, and neither the Lender
nor such attorney-in-fact shall be liable for any act, omission,
error in judgment or mistake of law, except as the same may result
from its gross negligence or willful misconduct; and
(iv) the Affiliated Parties or any other holder of the Related
Party Debt shall execute and deliver to the Lender all such further
instruments confirming the authorization referred to in the
foregoing clauses (ii) and (iii), and any powers of attorney
specifically confirming the rights of the Lender arising hereunder,
and all such proofs of claim, assignments of claim and other
instruments and shall take all such other actions as may be
requested by the Lender in order to enable the Lender to enforce
any and all claims upon or in respect of such Related Party Debt
and to collect and give any and all payments or distributions which
may be payable or deliverable at any time upon or with respect to
such Related Party Debt.
D. If, notwithstanding the provisions of this Agreement, any
payment or distribution of any character (whether in cash,
securities or other property) or any security shall be received by
the Affiliated Parties in contravention of the terms of this
Agreement, and before all of the Mortgaged Indebtedness shall have
been paid in full, such payment, distribution or security shall be
paid over or delivered and transferred to, the Lender for
application to the payment of all Mortgaged Indebtedness remaining
unpaid, until all of the Mortgaged Indebtedness shall have been
paid in full.
E. Except to the extent provided in this Agreement that the Related
Party Debt may not become due and payable or be paid, nothing
contained herein shall impair, as between the Borrower and the
Affiliated Parties, the obligation of the Borrower, which is
absolute and unconditional, to pay to the Affiliated Parties
amounts due under the Intercompany Agreements, as and when the same
shall become due and payable in accordance with the terms thereof,
or prevent the Affiliated Parties, upon default with respect to the
Related Party Debt, from exercising all rights, powers, and
remedies otherwise provided therein or by applicable law, all
subject to the rights of the Lender hereunder.
2. Continued Effectiveness of this Agreement.
A. The terms of this Agreement, the subordination effected hereby,
and the rights of the Lender, and the obligations of the Affiliated
Parties and the Borrower arising hereunder shall not be affected,
modified or impaired in any manner or to any extent by:
(i) any renewal, replacement, amendment, extension, substitution,
revision, consolidation, modification or termination of or
supplement to any of the Loan Documents or the Affiliated
Party/Meditrust Agreements;
(ii) the validity or enforceability of any such documents referred
to in clause (i) above;
(iii) the release, sale, exchange or surrender, in whole or in
part, of any collateral security, now or hereafter existing, for
any of the Mortgaged Indebtedness;
(iv) any exercise or nonexercise of any right, power or remedy
under or in respect of the Mortgaged Indebtedness or any of such
instruments and documents referred to in clause (i) above or
arising at law or in equity; or
(v) any waiver, consent, release, indulgency, extension, renewal,
modification, delay or other action, inaction or omission in
respect of the Mortgaged Indebtedness or any of the agreements,
instruments or documents referred to in clause (i) above or in
respect of any collateral security for the Mortgaged Indebtedness
or any other indebtedness, liability or obligation of the Borrower
to the Lender, now existing or hereafter arising, all whether or
not the Affiliated Parties shall have had notice or knowledge of
any of the foregoing and whether or not it shall have consented
thereto.
B. In the event of any sale, assignment, disposition or other
transfer of the Related Party Debt, the Affiliated Parties shall
cause the transferee thereof to execute and deliver to the Lender
an agreement (substantially identical with this Agreement or
otherwise in form and substance satisfactory to the Lender)
providing for the continued subordination of the Related Party Debt
to the Mortgaged Indebtedness as provided herein and for the
continued effectiveness of all of the rights of the Lender arising
under this Agreement, provided, however, that notwithstanding the
delivery of such an agreement, the Lender shall not be deemed to
have waived its right to consent to any assignment, transfer,
amendment or alteration of the Intercompany Agreements pursuant to
the terms of the Loan Documents.
3. Assignment.
A. The Affiliated Parties hereby assign, convey and transfer to the
Lender all of their right, title, interest, privileges, benefits
and remedies in, to and under the Intercompany Agreements.
Notwithstanding the foregoing, so long as there shall exist no
default by the Affiliated Parties under the Intercompany
Agreements, the Affiliated Parties shall continue and hereby agree
to perform and observe all of the duties, obligations, and
covenants of the Affiliated Parties under the Intercompany
Agreements. Furthermore, this assignment shall not be deemed to
obligate the Lender to perform and observe any of the duties,
obligations and covenants of the Affiliated Parties under the
Intercompany Agreements unless the Lender specifically agrees in
writing to assume any of such duties, obligations and covenants.
B. Notwithstanding anything in the Intercompany Agreements to the
contrary, the Affiliated Parties agree that so long as the Lender
holds the Mortgage, the Affiliated Parties shall provide the Lender
with a copy of all notices which the Affiliated Parties from time
to time may serve upon the Borrower or any successor to the
Borrower's interest under the Intercompany Agreements, pursuant to
the terms and conditions of the Intercompany Agreements.
Furthermore, the Affiliated Parties agree that each shall not
terminate the Intercompany Agreements due to a default by the
Borrower or any successor to the Borrower's interest under the
Intercompany Agreements until the Affiliated Parties shall have
given the Lender written notice of such default and a reasonable
time to cure such default. A "reasonable period of time" for these
purposes shall constitute thirty (30) days after receipt of such
notice, together with such additional time as may reasonably be
required to gain possession of the Mortgaged Property, if deemed
necessary or desirable by the Lender in its sole and absolute
discretion and such additional time, if any, as may reasonably be
required to cure such default with the exercise of due diligence,
provided that cure is begun or possession is sought within such
period and diligently prosecuted thereafter.
C. Notwithstanding anything to the contrary contained in
theIntercompany Agreements, the Affiliated Parties hereby agree
that after the occurrence of a default or breach of condition
continuing beyond the expiration of applicable notice and grace
periods, if any, under any of the Loan Documents, the Lender may
terminate the Intercompany Agreements, upon written notice to the
Affiliated Parties, in the event that:
(i) title to the Mortgaged Property is transferred to the Lender or
any other person by reason of the exercise of the rights and
remedies granted to the Lender under any of the Loan Documents
(including, without limitation, the power of sale granted in the
Mortgage or the foreclosure of the Mortgage) or any other
proceedings brought to enforce the rights of the Lender, by deed in
lieu of foreclosure or by any other method; or
(ii) the Lender elects to take possession of the Mortgaged Property
pursuant to the terms of any of the Loan Documents.
In the event of a termination of the Intercompany Agreements
pursuant to the provisions hereof, neither the Lender nor any such
purchaser shall have any liabilities or obligations whatsoever with
respect to the Related Party Debt or any portion thereof (whether
past due or which would have become due and payable if the
Intercompany Agreements had not been terminated) or any other
duties, covenants, agreements or obligations of the Borrower under
the Intercompany Agreements.
4. Consent. The Affiliated Parties acknowledge that each has
received a copy of the Mortgage, the Loan Agreement and the
Environmental Indemnity Agreement and hereby agree to be bound by
and to fully comply with the terms and conditions contained
therein, as the same may be applicable to the Affiliated Parties
(either directly or as a result of the Affiliated Parties' duties,
obligations, covenants and agreements under the Intercompany
Agreements) including, without limitation, the provisions set forth
in:
(i) the Section of the Mortgage entitled "Insurance";
(ii) the Section of the Mortgage entitled "Repair; Use; Compliance
with Law; Alterations; Waste";
(iii) the Section of the Loan Agreement entitled "Financial
Statements and Other Information"; and
(iv) the Section of the Loan Agreement entitled "Management
Agreement.
5. Indemnification. The Affiliated Parties and the Borrower shall
and hereby jointly and severally agree to indemnify and hold the
Lender harmless from and against all obligations, liabilities,
losses, costs, claims, expenses, fines, penalties and damages
(including attorneys' fees and expenses and court costs) which the
Lender may incur (i) by reason of this Agreement, (ii) in
connection with the Intercompany Agreements (including, without
limitation, all claims and demands which may be asserted against
the Lender by reason of any alleged obligation or undertaking on
its part to perform or discharge any of the terms, covenants or
agreements contained in the Intercompany Agreements) or (iii) with
regard to the Mortgaged Property (or any portion thereof).
The Affiliated Parties and the Borrower shall defend the Lender
against any claim or litigation involving the Lender for the same,
with counsel approved by the Lender, and should the Lender incur
any such obligation, liability, loss, cost, expense, fine, penalty
or damage, then the Affiliated Parties and the Borrower shall
reimburse the Lender for such amounts upon demand, and upon the
failure of the Affiliated Parties and the Borrower so to do, the
Lender, at its option, may declare the entire Mortgaged
Indebtedness immediately due and payable. Notwithstanding anything
to the contrary contained herein, the Lender shall have the option
of conducting its own defense with counsel of its own choice (in
the event that the Borrower shall fail to take action to defend the
Lender within a reasonable period of time after the assertion of
any such claim), but at the expense of the Borrower and the
Affiliated Parties.
The foregoing indemnification agreement shall also include all
costs incurred by the Lender in connection with the enforcement of
said indemnification agreement. Any amounts owed to the Lender
under this Paragraph 5 shall bear interest at the Advances Rate and
to the extent permissible under applicable law, shall be added to
the Mortgaged Indebtedness.
The provisions of this Paragraph 5 shall survive the complete
payment and performance of the Mortgaged Indebtedness and the
foreclosure of the Mortgage.
6.Cross-Default and Cross-Collateralization. The Affiliated Parties
hereby confirm to the Lender and all of Meditrust's Affiliates
that, and hereby modify and amend the Affiliated Party/Meditrust
Agreements, to the extent necessary, such that:
(i) an event of default under any of the Loan Documents which
remains uncured beyond applicable grace periods contained in the
Loan Documents shall be deemed an event of default under each of
the Affiliated Party/Meditrust Agreements without the benefit of
any grace periods contained in the Affiliated Party/Meditrust
Agreements and the Lender and its Affiliates shall have the benefit
of any and all of the rights and remedies granted by the Affiliated
Part/Meditrust Agreements in the event of a default thereunder in
connection with such an event of default; and
(ii) any collateral in which a security interest has been granted
under any of the Affiliated Party/Meditrust Agreements shall also
secure the full payment and performance by the Borrower and any
Affiliated Party of their obligations under the Loan Documents and
the Lender shall have the benefit of any and all of the rights and
remedies granted by the Affiliated Party/Meditrust Agreements as
security for such payment and performance.
7. Conflict. In the event of any conflict between any term,
covenant or condition of this Agreement and any term, covenant or
condition of the Intercompany Agreements, or any documents executed
in connection therewith or the indebtedness evidenced thereby, the
provisions of this Agreement shall control and govern.
8. Further Assurances. At any time and from time to time, upon
request by the Lender, the Affiliated Parties and the Borrower
shall promptly make, execute and deliver, or cause to be made,
executed and delivered, to the Lender and, where appropriate, cause
to be recorded and/or filed (and from time to time thereafter to be
re-recorded and/or refiled) at such time and in such offices and
places as shall be deemed desirable by the Lender (in its sole and
absolute discretion), any and all such other and further
amendments, assignments, instruments of further assurance,
certificates and other documents as the Lender may, in its sole and
absolute discretion, deem desirable (but which shall not create any
further or additional obligation for the Borrower) to (A) enable
the Lender to negotiate the Note and to assign the Loan Documents,
and/or (B) effectuate, complete, or perfect, or to continue and
preserve the obligations of the Affiliated Parties and the Borrower
under this Agreement; provided, however, that no such additional
document or other instrument requested by the Lender hereunder
shall increase the Mortgaged Indebtedness (except as to the costs
and expenses of the Lender in connection therewith). Any failure
by the Affiliated Parties and/or the Borrower to comply with any
request pursuant to this Paragraph 8 within twenty (20) days after
such request is made by the Lender, shall be an Event of Default
hereunder and upon such Event of Default, the Lender may make,
execute, record, file, re-record and/or refile any and all such
amendments, assignments, instruments, certificates, and documents
for and in the name of the Affiliated Parties and/or the Borrower
and the Affiliated Parties and the Borrower each hereby appoint the
Lender as their attorney-in-fact, with full power of substitution,
to take such actions (on their behalf and in their name) as the
Lender, in its sole and absolute discretion, may deem necessary or
desirable to effectuate the intent of this Paragraph 8. This power
of attorney, being coupled with an interest, shall be irrevocable
until all of the Mortgaged Indebtedness is fully paid and performed
and shall not be affected by any disability or incapacity which the
Affiliated Parties and/or the Borrower may suffer and shall survive
the same. The power of attorney conferred on the Lender pursuant
to the provisions of this Paragraph 8 is provided solely to protect
the interests of the Lender and shall not impose any duty on the
Lender to exercise any such power, and neither the Lender nor such
attorney-in-fact shall be liable for any act, omission, error in
judgment or mistake of law, except as the same may result from its
gross negligence or willful misconduct.
9. Notice. Any notice, request, demand, statement or consent made
hereunder shall be in writing and shall be deemed duly given if
personally delivered, sent by certified mail, return receipt
requested, or sent by a nationally recognized commercial overnight
delivery service with provisions for a receipt, postage or delivery
charges prepaid, and shall be deemed given when postmarked or
placed in the possession of such mail or delivery service and
addressed as follows:
If to the Affiliated
Parties: Geriatric & Medical Companies, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
Attention: President
With a copy to: Mesirov, Gelman, Jaffee, Cramer &
Jamieson
1735 Market Street
Philadelphia, Pennsylvania 19103-7598
Attn: Robert P. Krauss, Esq.
If to the Borrower: Norristown Nursing and Rehabilitation
Center, Associates, L.P.
c/o Geriatric & Medical Companies, Inc.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
Attention: President
With a copy to: Mesirov, Gelman, Jaffee, Cramer &
Jamieson
1735 Market Street
Philadelphia, Pennsylvania 19103-7598
Attn: Robert P. Krauss, Esq.
If to the Lender: Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: President
With copies to: Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: General Counsel
Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Joshua Davis, Esq.
or at such other place as any of the parties hereto may from time
to time hereafter designate to the others in writing. Any notice
given to the Affiliated Parties or the Borrower by the Lender at
any time shall not imply that such notice or any further or similar
notice was or is required.
10. Priority. This Agreement is intended to establish relative
rights and priorities between the Lender and the Affiliated
Parties.
11. Governing Law. This Agreement shall be construed, and the
rights and obligations of the Borrower, the Affiliated Parties and
the Lender shall be determined, in accordance with the laws of the
Commonwealth of Massachusetts, except that the laws of the
Commonwealth of Pennsylvania shall govern (i) this Agreement to the
extent necessary for the Lender to obtain the benefit of the rights
and remedies set forth herein and in the Loan Documents with
respect to the Mortgaged Property and (ii) for procedural
requirements which must be governed by the law of the state in
which the Mortgaged Property is located.
To the maximum extent permitted by applicable law, the Borrower and
the Affiliated Parties hereby submit to the jurisdiction of the
courts of the Commonwealth of Massachusetts and the United States
District Court for the District of Massachusetts, as well as to the
jurisdiction of all courts from which an appeal may be taken from
the aforesaid courts, for the purpose of any suit, action or other
proceeding arising out of, or with respect to this Agreement and
expressly waive any and all objections they may have as to venue in
any of such courts.
12. Amendments and Modifications. This Agreement sets forth the
entire agreement of the parties with respect to the subject matter
hereof and may not be amended, modified, revised or terminated
except by an agreement in writing signed by the party against whom
enforcement is sought. The provisions of this Agreement shall
extend and be applicable to all renewals, replacements, amendments,
extensions, substitutions, revisions, consolidations and
modifications of the Loan Documents or the Affiliated
Party/Meditrust Agreements and any and all references herein to the
Loan Documents shall be deemed to include any such renewals,
replacements, amendments, substitutions, revisions, extensions,
consolidations or modifications thereof. Notwithstanding the
foregoing, any reference contained herein, whether express or
implied, to any renewal, replacement, amendment, extension,
substitution, revision, consolidation or modification of any of the
Loan Documents or the Affiliated Party/Meditrust Agreements is not
intended to constitute an agreement or a consent by the Lender to
any such renewal, replacement, amendment, extension, substitution,
revision, consolidation or modification of any of the Loan
Documents or the Affiliated Party/Meditrust Agreements, but rather
as a reference only to those instances where the Lender may give
consent to any such renewal, replacement, amendment, extension,
substitution, revision, consolidation or modification, as the same
may be required pursuant to the terms, covenants or conditions of
the Loan Documents or the Affiliated Party/Meditrust Agreements.
13. Invalidity. If any provision of this Agreement or the
application thereof to any person (as hereinafter defined) or
circumstance, for any reason and to any extent, shall be held to be
invalid or unenforceable, neither the remainder of this Agreement
nor the application of such provision to any other person or
circumstance shall be affected thereby, but rather the same shall
be enforced to the greatest extent permitted by law.
Notwithstanding the foregoing, it is the intent of the Affiliated
Parties, the Borrower and the Lender that if any provision of any
of this Agreement is capable of two (2) constructions, one of which
would render the provision void and the other of which would render
the provision valid, then such provision shall be construed in
accordance with the construction which renders such provision
valid.
14. Successors and Assigns; Joint and Several Liability. The
provision of this Agreement shall be (i) binding on the Borrower
and the Affiliated Parties and their respective heirs, executors,
administrators, legal representatives, successors and assigns and
any Affiliates of any of the Affiliated Parties or the Borrower,
now or hereafter existing, and (ii) inure to the benefit of the
Lender, any other person who may now or hereafter hold any interest
in the Loan and their respective successors, assigns and
participants, provided, however, that in the event an Affiliated
Party shall have been sold to a purchaser which is not an
Affiliated Party or an Affiliate of an Affiliated Party, then the
obligation of the Borrower and such Affiliate hereunder with
respect to Related Party Debt shall cease with respect to Related
Party Debt first incurred by such Affiliated Party following such
sale. Notwithstanding the foregoing, the Borrower and the
Affiliated Parties shall not, individually or together, assign or
otherwise transfer this Agreement or any of their respective rights
or obligations hereunder without the prior express written consent
of the Lender, in each instance, which consent may be withheld in
the Lender's sole and absolute discretion. Where more than one
person shall execute this Agreement as the Affiliated Parties or
the Borrower, then each such person shall be fully liable for all
of the respective obligations hereunder of the Affiliated Parties
or the Borrower, as the case may be, and all such obligations shall
be joint and several.
15. No Waiver. No waiver of any term or provision of this
Agreement shall be effective, unless it is in writing, making
specific reference to this Agreement, and signed by the person
against whom such waiver is sought to be enforced. This Agreement
constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof.
16. Term. This Agreement shall remain in full force and effect so
long as the Mortgaged Indebtedness remains undischarged or
unsatisfied in any respect. The Affiliated Parties and the
Borrower agrees that an affidavit, certificate, letter or statement
of any officer, agent or attorney of the Lender indicating that any
part of the Mortgaged Indebtedness remains outstanding shall be
deemed conclusive evidence of the validity, effectiveness and
continuing force of this Agreement and any person may and is hereby
authorized to rely thereon. Upon the complete payment and
performance of the Mortgaged Indebtedness, this Agreement shall be
deemed terminated without further action and shall thereupon be of
no further force or effect. Notwithstanding the foregoing, the
recording with the applicable recording office of a duly authorized
and executed instrument discharging the Mortgage shall likewise
discharge this Agreement.
17. Rules of Construction. References in this Agreement to
"herein", "hereof" and "hereunder" shall be deemed to refer to this
Agreement and shall not be limited to the particular text or
Paragraph in which such words appear. The use of any gender shall
include all genders and the singular number shall include the
plural and vice versa as the context may require. References in
this Agreement to the Lender's attorneys shall be deemed to
include, without limitation, special counsel and local counsel for
the Lender. References in this Agreement to attorneys' fees and
expenses shall be deemed to include all costs for administrative,
paralegal and other support staff.
References in this Agreement to the term "Mortgaged Property"
shall be deemed to include references to all of the Mortgaged
Property and references to any portion of the Mortgaged Property.
The words "foreclosure" and "foreclosure sale" as used herein shall
be deemed to include the acquisition of the Mortgaged Property by
voluntary deed or assignment in lieu of foreclosure.
As used herein, the term "including", when following any general
statement, will not be construed to limit such statement to the
specific items or matters as provided immediately following the
term "including" (whether or not non-limiting language such as
"without limitation" or "but not limited to" or words of similar
import are also used), but rather will be deemed to refer to all
items or matters that could reasonably fall within the broader
scope of the general statement.
As used herein the term "person" shall include all individuals and
all entities of every kind and nature, including, without
limitation, corporations, general and limited partnerships, stock
companies or associations, joint ventures, unincorporated
associations, companies, trusts, banks, trust companies, land
trusts, business trusts, and agencies, authorities, bodies, boards,
commissions, courts, instrumentalities, legislatures, or offices of
any nature whatsoever for any government unit or political
subdivision, whether federal, state, county, district, municipal,
city or otherwise, and whether now or hereafter in existence or
other entities and governments and agencies and political
subdivisions thereof. The use of any gender shall include all
genders and the singular number shall include the plural and vice
versa as the context may require. The words "foreclosure" and
"foreclosure sale" as used herein shall be deemed to include the
acquisition of the Mortgaged Property by voluntary deed (or
assignment) in lieu of foreclosure. All capitalized terms used
herein and not otherwise defined herein shall have the same meaning
as set forth under the Loan Agreement. The parties agree that in
the event of any conflict between the terms of this Agreement and
the Loan Agreement, the provisions of the Loan Agreement shall
control.
As used in this Agreement, the term "Affiliate" shall mean (i) any
other person that, directly or indirectly, controls or is
controlled by or is under common control with such person, (ii) any
other person that owns, beneficially, directly or indirectly, five
percent (5%) or more of the outstanding capital stock, shares or
equity interests of such person or (iii) any officer,
director, employee, general partner or trustee of such person or
any person controlling, controlled by or under common control with
such person (excluding trustees and persons serving in similar
capacities who are not otherwise an Affiliate of such person). For
the purposes of such definition, the term "control" (including the
correlative meanings of the terms "controlled by" and "under common
control with"), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such person,
through the ownership of voting securities, partnership interests
or other equity interests.
17. Captions and Headings. The captions and headings set forth in
this Agreement are included for convenience and reference only and
the words contained therein shall in no way be held or deemed to
define, limit, describe, explain, modify, amplify and/or add to the
interpretation, construction or meaning of, or the scope or intent
of, this Agreement or any part hereof.
18. Time of the Essence. Time is of the essence of each and every
term, condition, obligation, agreement, covenant and warranty set
forth herein.
19. Limitation of Liability. The Declaration of Trust establishing
the sole shareholder of the Lender, Meditrust, a Massachusetts
business trust ("Meditrust"), dated August 6, 1985 (the
"Declaration"), a copy of which, together with all amendments
thereto, is duly filed in the office of the Secretary of State of
the Commonwealth of Massachusetts, provides that the name
"Meditrust" refers to the trustees under the Declaration
collectively as trustees, but not individually or personally; and
that no trustee, officer, shareholder, employee or agent of
Meditrust or its subsidiaries shall be held to any personal
liability, jointly, or severally, for any obligation of, or claim
against Meditrust or any of its subsidiaries. All persons dealing
with Meditrust or any of its subsidiaries, in any way, shall look
only to the assets of Meditrust for the payment of any sums or the
performance of any obligations which are due from Meditrust.
Furthermore, in no event shall the Lender or Meditrust ever be
liable to the Affiliated Parties and the Borrower for any indirect
or consequential damages suffered by the Affiliated Parties and the
Borrower resulting from any cause whatsoever. Notwithstanding the
foregoing, the parties hereto hereby acknowledge and agree that
Meditrust is not a party to this Agreement and that the Affiliated
Parties and the Borrower shall look only to the assets of the
Lender for the payment of any sum or performance of any obligations
due by or from the Lender pursuant to the terms and provisions
hereof.
[INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal on the day and year first above written
WITNESS: BORROWER:
NORRISTOWN NURSING AND REHABILITATION CENTER
ASSOCIATES, L.P., a Pennsylvania limited partnership
By: GMC-LTC Management, Inc., a Pennsylvania corporation,
its general partner
By:
Name: Name:
Title:
WITNESS: AFFILIATED PARTIES:
GERIATRIC AND MEDICAL SERVICES, INC.
By: Name: Name:
Title:
GMC-LTC MANAGEMENT, INC.
By
Name: Name:
Title:
CRESTVIEW CONVALESCENT HOME, INC.
By:
Name: Name:
Title:
BURLINGTON WOODS CONVALESCENT CENTER, INC.
By: Name: Name:
Title:
GERIATRIC & MEDICAL COMPANIES, INC.
By: Name: Name:
Title:
CRESTVIEW NORTH, INC.
By: Name: Name:
Title:
GERIATRIC AND MEDICAL INVESTMENTS CORP.
By: Name: Name:
Title:
HSS PARATRANSIT INC.
By: Name: Name:
Title:
LIFE SUPPORT AMBULANCE, INC.
By: Name: Name
Title:
UNITED HEALTH CARE SERVICES, INC.
By: Name: Name:
Title:
INNOVATIVE PHARMACY SERVICES, INC.
By: Name: Name:
Title:
GMS MANAGEMENT INC.
By: Name: Name:
Title:
GMS MANAGEMENT TUCKER, INC.
By: Name: Name:
Title:
WITNESS: LENDER:
MEDITRUST MORTGAGE INVESTMENTS, INC., a Delaware corporation
By:
Name:
Title:
COLLATERAL ASSIGNMENT OF DESIGN/BUILD CONTRACT
As additional security for the performance of that certain
Construction Loan Agreement of even date herewith (the "Loan
Agreement"), made by and between Norristown Nursing and
Rehabilitation Center Associates, L.P., a Pennsylvania limited
partnership, having its principal address at c/o Geriatric &
Medical Companies, Inc., 5601 Chestnut Street Philadelphia,
Pennsylvania 19139 (the "Borrower") and Meditrust Mortgage
Investments, Inc., a Delaware corporation, having its principal
address at 197 First Avenue, Needham, Massachusetts 02194 (the
"Lender"), the Borrower hereby assigns to the Lender all of its
rights under the design/build construction contract made by the
Borrower with Quaker Construction Management, Inc., having an
address at 1202 Laurel Oak Road, Suite 105A, Voorhees, New Jersey
08043 (the "Contractor"), dated on or about May 31, 1995, a true
and complete copy of which as now in full force and effect is
annexed hereto as EXHIBIT A and incorporated herein by reference
(the "Design/Build Contract"). This Assignment is made subject to
all of the terms and conditions of the Loan Agreement, none of
which are waived by the Lender, and, without limiting the
generality of the foregoing, it is understood that this Assignment
is an assignment only of all of the rights which the Borrower may
now, or at any time hereafter, have in the Design/Build Contract or
against the Contractor arising out of or under the Design/Build
Contract. It is further understood that by virtue of this
Assignment (i) the Lender shall not be deemed to have assumed any
of the obligations of the Borrower under the Design/Build Contract,
which obligations the Borrower covenants and agrees with the Lender
to perform and observe as if this Assignment had not been made and
(ii) the Lender shall not be under any liability of any kind to the
Contractor under the Design/Build Contract or by reason of any
labor or materials furnished by the Contractor to or for the
Borrower, unless and until the Lender expressly notifies the
Contractor in writing that the Lender has elected to assume the
Borrower's obligations under the Design/Build Contract.
By acceptance hereof, the Lender agrees not to exercise any rights
under this Assignment until the Lender shall have determined that
there exists an "Event of Default" under the Loan Agreement (as
such term is defined therein). The Borrower agrees that the
Contractor may rely conclusively upon any written notice given by
the Lender to the Contractor setting forth that (i) the Lender has
determined that an Event of Default has occurred under the Loan
Agreement and (ii) until further written notice from the Lender to
the Contractor, the Lender may exercise all rights of the Borrower
under the Design/Build Contract pursuant to this Assignment.
The Borrower represents and warrants that the Design/Build Contract
is in full force and effect and has not been modified or amended.
The Borrower further warrants and represents that there are no
defaults under the Design/Build Contract by either party thereto
and that the Borrower has not made and will not make any other
assignment thereof. The Borrower hereby agrees that the
Design/Build Contract shall not be amended, changed, modified or
terminated without the prior written consent of the Lender, which
consent shall not be unreasonably withheld or delayed.
At the Lender's option, any action or proceedings to enforce the
foregoing Assignment may be taken by the Lender in either the
Lender's name or the name of Borrower. The Borrower further agrees
that the Lender may bring any action in its own name or in the
Borrower's name involving claims of the Borrower against the
Contractor or its insurer in connection with the development of the
"Project" (as such term is defined in the Loan Agreement).
The Borrower acknowledges that the Lender has been induced by this
Assignment (among other things) to enter into the Loan Agreement
with the Borrower and this Assignment shall, without further
reference of assignment, pass to, and may be relied upon and
enforced by, any successor or participant or assignee of the Lender
in and to any liabilities or obligations of the Borrower under this
Assignment, the Loan Agreement and the other "Loan Documents" (as
such term is defined in the Loan Agreement). Furthermore, this
Assignment shall be binding upon the Borrower's successors,
assigns, heirs, executors, administrators and legal
representatives.
If any provision hereof or the application thereof to any person or
circumstance shall, to any extent, be held invalid or
unenforceable, at the Lender's option, the remainder hereof, or the
application of such provision to any persons or circumstances other
than those as to which such provision is held invalid or
unenforceable, shall not be affected thereby, and each provision
hereof shall be valid and in force to the fullest extent permitted
by law.
This Assignment shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts to the maximum
extent that the parties hereto may so lawfully agree. Where more
than one person or entity constitutes the Assignor, the liability
of such persons and/or entities under this Assignment for the
obligations set forth herein shall be joint and several.
The Declaration of Trust establishing the sole shareholder of the
Lender, Meditrust, dated August 6, 1985 (the "Declaration"), as
amended, a copy of which is duly filed in the office of the
Secretary of State of the Commonwealth of Massachusetts, provides
that the name "Meditrust" refers to the trustees under the
Declaration collectively as trustees, but not individually or
personally; and that no trustee, officer, shareholder, employee or
agent of Meditrust or its subsidiaries shall be held to any
personal liability, jointly, or severally, for any obligation of,
or claim against Meditrust or any of its subsidiaries. All persons
dealing with Meditrust or the Lender, in any way, shall look only
to the assets of Meditrust or the Lender for the payment of any sum
or the performance of any obligations. Notwithstanding the
foregoing, the parties hereto hereby acknowledge and agree that
Meditrust is not a party to this Agreement and that the parties
hereto shall look only to the assets of the Lender for the payment
of any sum or performance of any obligations due by or from the
Lender pursuant to the terms and provisions hereof.
As previously set forth herein, EXHIBIT A attached hereto is
incorporated herein by reference as a material part hereof.
EXECUTED as a sealed instrument this day of May, 1995.
BORROWER:
NORRISTOWN NURSING AND REHABILITATION CENTER ASSOCIATES, L.P., a
Pennsylvania limited partnership
By: GMC-LTC Management, Inc., its general partner, a Pennsylvania
corporation
By:
Name:
Title:
Accepted by:
LENDER:
MEDITRUST MORTGAGE INVESTMENTS, INC.,
a Delaware corporation
By:
Name:
Title:
CONTRACTOR'S CONSENT
Quaker Construction Management, Inc., having its principal address
at 1202 Laurel Oak Road, Suite 105A, Voorhees, New Jersey 08043
(the "Contractor") hereby acknowledges the execution and delivery
of the foregoing Collateral Assignment of Design/Build Contract
(the "Assignment"), by Norristown Nursing and Rehabilitation Center
Associates, L.P. (the "Borrower") to Meditrust Mortgage
Investments, Inc. (the "Lender"), of the Design/Build Contract
referred to in the Assignment, and hereby consents to all of the
terms and provisions of said Assignment and hereby consents to be
bound by all of the terms and provisions thereof as if the same
were set forth herein. The Contractor agrees that it will furnish
the Lender with copies of all written notices given to the Borrower
by the Contractor, pursuant to the Design/Build Contract, with
respect to any default of the Borrower thereunder, simultaneously
with the giving of such notice to the Borrower. Notwithstanding
anything contained in the Design/Build Contract to the contrary,
the Contractor hereby agrees that the Lender shall have a
reasonable opportunity to cure any such default of the Borrower and
that Contractor will accept any such performance by the Lender. So
long as the Lender (i) commences to cure any default of the
Borrower within a reasonable period of time after notice thereof
(and in any event within thirty (30) days after notice thereof),
and causes any such default of the Borrower to be cured within
thirty (30) days of notice thereof, if it can reasonably be cured
within such thirty-day period, or within such longer period as is
reasonably required to cure such default, and provided that such
cure is prosecuted with diligence to completion; and (ii) so long
as the Lender pays or causes to be paid any sums payable from time
to time by the Borrower to the Contractor within a reasonable
period of time (but not longer than thirty (30) days) after the
Contractor notifies the Lender of the Borrower's default in the
timely payment thereof, the Contractor shall continue to meet fully
its obligations under the Design/Build Contract to the end that
there shall be no interruption of the work called for thereby.
The Contractor further agrees that unless and until the Lender
shall expressly agree in writing to assume the obligations of the
Borrower under the Design/Build Contract, the Lender shall not be
deemed by virtue of the Assignment to have assumed any of the
obligations of the Borrower under the Design/Build Contract, nor
will the Lender be under any liability of any kind to the
Contractor under the Design/Build Contract or by reason of any
labor or materials furnished by the Contractor to or for the
Borrower prior to the assumption by the Lender of the Borrower's
obligations under the Design/Build Contract. The Assignment and
this Consent shall not be deemed to release or to affect in any way
the obligations of the Borrower to the Contractor.
The Contractor represents to the Lender that Exhibit A
attached hereto is a true and complete copy of the Design/Build
Contract, and that said Design/Build Contract is in full force and
effect and has not been modified, and that there are no defaults
thereunder by either party thereto. The Contractor hereby agrees
that the Design/Build Contract shall not be amended, changed,
modified or terminated without the prior written consent of the
Lender, which consent shall not be unreasonably withheld or
delayed.
The Contractor hereby acknowledges that the Lender has relied upon
this Consent (among other things) in making the loan to the
Borrower evidenced by the Loan Agreement of even date by and
between the Borrower and the Lender.
Any notice, request, demand, statement or consent made hereunder
shall be in writing and shall be deemed duly given if personally
delivered, sent by certified mail, return receipt requested, or
sent by a nationally recognized commercial overnight delivery
service with provisions for a receipt, postage or delivery charges
prepaid, and shall be deemed given when postmarked or placed in the
possession of such mail or delivery service and addressed as
follows:
If to the
Contractor: Quaker Construction Management, Inc.
1202 Laurel Oak Road, Suite 105A
Voorhees, New Jersey 08043
Attention: ____________________
With a copy to:
_____________________________
_____________________________
_____________________________
If to the Lender: Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: President
With copies to: Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: General Counsel
Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Andrew R. Urban, Esquire
or at such other place as either party hereto may from time to
time hereafter designate to the other in writing. Any notice given
to the Contractor by the Lender at any time shall not imply that
such notice or any further or similar notice was or is required.
This Consent shall be binding upon and inure to the benefit of, as
the case may be, the successors, assigns, heirs, executors,
administrators and legal representatives of the Contractor and the
Lender.
This Consent shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts to the maximum extent
that the parties hereto may lawfully agree.
Any capitalized terms used herein and not otherwise expressly
defined herein shall have the meanings set forth in the Assignment.
As previously set forth herein, EXHIBIT A attached hereto is
incorporated herein by reference as a material part hereof.
EXECUTED as a sealed instrument as of the day of May, 1995.
CONTRACTOR:
QUAKER CONSTRUCTION MANAGEMENT, INC.
By:
Name:
Title:
EXHIBIT A
Design/Build Contract
COLLATERAL ASSIGNMENT OF MANAGEMENT CONTRACT
As additional security for the performance of that certain
Construction Loan Agreement, dated as of May ___, 1995 (the "Loan
Agreement"), made by and between Norristown Nursing and
Rehabilitation Center Associates, L.P., a Pennsylvania limited
partnership, having its principal address at c/o Geriatric &
Medical Centers, Inc., 5601 Chestnut Street, Philadelphia,
Pennsylvania 19139 (the "Borrower") and Meditrust Mortgage
Investments, Inc., a Delaware corporation, having its principal
address at 197 First Avenue, Needham, Massachusetts 02194 (the
"Lender"), the Borrower hereby assigns to the Lender all of its
rights under the management contract made by the Borrower with
[_____________________________], a [____________________], having
its principal address at [_______________________________] (the
"Manager"), dated as of ________________________, a true and
complete copy of which as now in full force and effect is annexed
hereto as EXHIBIT A and incorporated herein by reference (the
"Management Contract"). This Assignment is made subject to all of
the terms and conditions of the Loan Agreement, none of which are
waived by the Lender, and, without limiting the generality of the
foregoing, it is understood that this Assignment is an assignment
only of all of the rights which the Borrower may now, or at any
time hereafter, have in the Management Contract or against the
Manager arising out of or under the Management Contract. It is
further understood that by virtue of this Assignment (i) the Lender
shall not be deemed to have assumed any of the obligations of the
Borrower under the Management Contract, which obligations the
Borrower covenants and agrees with the Lender to perform and
observe as if this Assignment had not been made and (ii) the Lender
shall not be under any liability of any kind to the Manager under
the Management Contract or by reason of any labor or materials
furnished by the Manager to or for the Borrower, unless and until
the Lender expressly notifies the Manager in writing that the
Lender has elected to assume the Borrower's obligations under the
Management Contract.
By acceptance hereof, the Lender agrees not to exercise any rights
under this Assignment until the Lender shall have determined that
there exists an "Event of Default" under the Loan Agreement (as
such term is defined therein). The Borrower agrees that the
Manager may rely conclusively upon any written notice given by the
Lender to the Manager setting forth that (i) the Lender has
determined that an Event of Default has occurred under the Loan
Agreement and (ii) until further written notice from the Lender to
the Manager, the Lender may exercise all rights of the Borrower
under the Management Contract pursuant to this Assignment.
The Borrower represents and warrants that the Management Contract
is in full force and effect and has not been modified or amended.
The Borrower further warrants and represents that there are no
defaults under the Management Contract by either party thereto and
that the Borrower has not made and will not make any other
assignment thereof. The Borrower hereby agrees that the Management
Contract shall not be amended, changed, modified or terminated
without the prior written consent of the Lender.
At the Lender's option, any action or proceedings to enforce the
foregoing Assignment may be taken by the Lender in either the
Lender's name or the name of Borrower. The Borrower further agrees
that the Lender may bring any action in its own name or in the
Borrower's name involving claims of the Borrower against the
Manager or its insurer in connection with the management of the
"Project" (as such term is defined in the Loan Agreement).
The Borrower acknowledges that the Lender has been induced by this
Assignment (among other things) to enter into the Loan Agreement
with the Borrower and this Assignment shall, without further
reference of assignment, pass to, and may be relied upon and
enforced by, any successor or participant or assignee of the Lender
in and to any liabilities or obligations of the Borrower under this
Assignment, the Loan Agreement and the other "Loan Documents" (as
such term is defined in the Loan Agreement). Furthermore, this
Assignment shall be binding upon the Borrower's successors,
assigns, heirs, executors, administrators and legal
representatives.
If any provision hereof or the application thereof to any person or
circumstance shall, to any extent, be held invalid or
unenforceable, at the Lender's option, the remainder hereof, or the
application of such provision to any persons or circumstances other
than those as to which such provision is held invalid or
unenforceable, shall not be affected thereby, and each provision
hereof shall be valid and in force to the fullest extent permitted
by law.
This Assignment shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts to the maximum
extent that the parties hereto may so lawfully agree. Where more
than one person or entity constitutes the Assignor, the liability
of such persons and/or entities under this Assignment for the
obligations set forth herein shall be joint and several.
The Declaration of Trust establishing the sole shareholder of the
Lender, Meditrust, dated August 6, 1985 (the "Declaration"), as
amended, a copy of which is duly filed in the office of the
Secretary of State of the Commonwealth of Massachusetts, provides
that the name "Meditrust" refers to the trustees under the
Declaration collectively as trustees, but not individually or
personally; and that no trustee, officer, shareholder, employee or
agent of Meditrust or its subsidiaries shall be held to any
personal liability, jointly, or severally, for any obligation of,
or claim against Meditrust or any of its subsidiaries. All persons
dealing with Meditrust or the Lender, in any way, shall look only
to the assets of Meditrust or the Lender for the payment of any sum
or the performance of any obligations. Notwithstanding the
foregoing, the parties hereto hereby acknowledge and agree that
Meditrust is not a party to this Agreement and that the parties
hereto shall look only to the assets of the Lender for the payment
of any sum or performance of any obligations due by or from the
Lender pursuant to the terms and provisions hereof.
As previously set forth herein, EXHIBIT A attached hereto is
incorporated herein by reference as a material part hereof.
EXECUTED as a sealed instrument this day of
___________________, 19__.
BORROWER:
NORRISTOWN NURSING AND REHABILITATION CENTER ASSOCIATES, L.P., a
Pennsylvania limited partnership
By: Geriatric and Medical Services, Inc., its general partner, a
New Jersey corporation
By:
Name:
Title:
Accepted by:
LENDER:
MEDITRUST MORTGAGE INVESTMENTS, INC.,
a Delaware corporation
By:
Name:
Title:
MANAGER'S CONSENT
[_________________________________], a
[_________________________], having its principal address at
[_____________________________________] (the "Manager") hereby
acknowledges the execution and delivery of the foregoing Collateral
Assignment of Management Contract (the "Assignment"), by Norristown
Nursing and Rehabilitation Center Associates, L.P. (the "Borrower")
to Meditrust Mortgage Investments, Inc. (the "Lender"), of the
Management Contract referred to in the Assignment, and hereby
consents to all of the terms and provisions of said Assignment and
hereby consents to be bound by all of the terms and provisions
thereof as if the same were set forth herein. The Manager agrees
that it will furnish the Lender with copies of all written notices
given to the Borrower by the Manager, pursuant to the Management
Contract, with respect to any default of the Borrower thereunder,
simultaneously with the giving of such notice to the Borrower.
Notwithstanding anything contained in the Management Contract to
the contrary, the Manager hereby agrees that the Lender shall have
a reasonable opportunity to cure any such default of the Borrower
and that Manager will accept any such performance by the Lender.
So long as the Lender commences to cure or to cause to be cured any
such default of the Borrower (within a reasonable period of time
after notice thereof to the Lender by the Manager) and the
elimination of any such default is carried on with due diligence,
and so long as the Lender pays or causes to be paid any sums
payable from time to time by the Borrower to the Manager within a
reasonable period of time after the Manager notifies the Lender of
the Borrower's default in the timely payment thereof, the Manager
shall continue to meet fully its obligations under the Management
Contract to the end that there shall be no interruption of the work
called for thereby.
The Manager further agrees that unless and until the Lender shall
expressly agree in writing to assume the obligations of the
Borrower under the Management Contract, the Lender shall not be
deemed by virtue of the Assignment to have assumed any of the
obligations of the Borrower under the Management Contract, nor will
the Lender be under any liability of any kind to the Manager under
the Management Contract or by reason of any labor or materials
furnished by the Manager to or for the Borrower prior to the
assumption by the Lender of the Borrower's obligations under the
Management Contract. The Assignment and this Consent shall not be
deemed to release or to affect in any way the obligations of the
Borrower to the Manager.
The Manager represents to the Lender that Exhibit A attached hereto
is a true and complete copy of the Management Contract, and that
said Management Contract is in full force and effect and has not
been modified, and that there are no defaults thereunder by either
party thereto. The Manager hereby agrees that the Management
Contract shall not be amended, changed, modified or terminated
without the prior written consent of the Lender.
The Manager hereby acknowledges that the Lender has relied upon
this Consent (among other things) in making the loan to the
Borrower evidenced by the Loan Agreement of even date by and
between the Borrower and the Lender.
Any notice, request, demand, statement or consent made hereunder
shall be in writing and shall be deemed duly given if personally
delivered, sent by certified mail, return receipt requested, or
sent by a nationally recognized commercial overnight delivery
service with provisions for a receipt, postage or delivery charges
prepaid, and shall be deemed given when postmarked or placed in the
possession of such mail or delivery service and addressed as
follows:
If to the
Manager:
If to the Lender: Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: David F. Benson, President
With copies to: Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: Michael S. Benjamin, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Andrew R. Urban, Esquire
or at such other place as either party hereto may from time to time
hereafter designate to the other in writing. Any notice given to
the Manager by the Lender at any time shall not imply that such
notice or any further or similar notice was or is required.
This Consent shall be binding upon and inure to the benefit of, as
the case may be, the successors, assigns, heirs, executors,
administrators and legal representatives of the Manager and the
Lender.
This Consent shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts to the maximum extent
that the parties hereto may lawfully agree.
Any capitalized terms used herein and not otherwise expressly
defined herein shall have the meanings set forth in the Assignment.
As previously set forth herein, EXHIBIT A attached hereto is
incorporated herein by reference as a material part hereof.
EXECUTED as a sealed instrument as of the day of
_______________, 19__.
MANAGER:
By:
Name:
Title:
<PAGE>
INTERIM FUNDING AGREEMENT
This Agreement is made and entered into as of this 4th day of
August, 1995 by and between Pennsylvania Blue Shield d/b/a Xact
Medicare Services ("Xact") and Life Support Ambulance, Inc.
("LSA").
WHEREAS, Xact is the Medicare Part B carrier for Pennsylvania, New
Jersey, Delaware and the Washington, D.C. metropolitan area; and
WHEREAS, LSA, a subsidiary of Geriatric & Medical Companies, Inc
("Geri-Med"), is a provider of ambulance services to individuals in
Pennsylvania and New Jersey and submits claims for reimbursement
for services rendered to Medicare Part B beneficiaries to Xact; and
WHEREAS, Xact has suspended reimbursement payments to LSA pursuant
to 42 C F R. 405.370-373; and
WHEREAS, Xact is now holding in excess of $3 million of funding
with respect to claims submitted by LSA and LSA has offered
payment assurances to protect the Medicare Part B Program against
financial loss;
WHEREAS, LSA is in need of a resumption of payments in order to
continue to provide services;
NOW, THEREFORE, the parties hereto agree to the following terms and
conditions
A. Agreement of LSA
1. LSA's parent corporation, Geri-Med, shall enter into a Guaranty
in the form agreed to by Xact and deliver the same to Xact on the
date hereof.
2. LSA will not knowingly submit claims for reimbursement to Xact
which are not consistent with the conditions of Medicare
participation and procedures for payment of claims set forth at 42
U.S.C. 1395n and 1395x(s)(7) and in the relevant Health Care
Financing Administration regulations and policies and in the
carrier's published policies and bulletins and will refund any
payments for claims submitted which are not consistent with such
conditions in accordance with usual and customary practices.
<PAGE>
3. LSA and Geri-Med agree to continue to cooperate with Xact in its
investigation of the circumstances which led to the suspension of
payments pursuant to 42 C F.R. 405 370-373. In consideration of
Xact's willingness to enter into this Agreement and accept the
Guaranty, LSA and Geri-Med agree not to seek any judicial relief
regarding the substantive issues underlying the suspension until
the earlier of the date on which the suspension is resolved or
December 31, 1995.
B. Agreement of Xact
1. Xact will retain funds withheld from LSA pursuant to Xact's
suspension of payment as of the effective date of this Agreement
(in the amount of $3,100,000) until the investigation is completed
and a final resolution is reached.
2. Xact agrees to resume partial payments on claims made by LSA by
releasing seventy-five percent (75%) of the approved claims amount
determined after the claims are processed. The resumption of
partial payments will begin with the processing of any claims that
have not been processed on the effective date of this Agreement.
Xact agrees to continue partial payments on claims under the terms
of this Agreement as long as the Guaranty remains in full force and
effect. Xact will retain the remaining 25% of the approved claims
amount in addition to the amount retained pursuant to B.1 above
until the investigation is completed and a final resolution is
reached.
C. Miscellaneous
1. By this Agreement, LSA neither admits nor agrees that it has
submitted improper claims, that it has committed any fraudulent act
or made any false representations or claims to Xact in its request
for reimbursement.
2. By the resumption of funding, Xact neither admits nor agrees
that the suspension of payments pursuant to 42 C.F.R. 405.370-373
was improper
3. By this Agreement, neither Xact nor LSA waive any rights, duties
or obligations under law, regulations or provider or carrier manual
instructions
4. Both parties agree that the sole purpose of this Agreement is to
allow LSA to continue its business operations through a partial
resumption of reimbursement by Xact while ensuring that Xact meets
its obligation to protect the Medicare Part B program against
financial loss.
5. This Agreement may not be modified except in a writing signed by
the party or parties to be bound thereby.
6. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.<PAGE>
7. This Agreement and accompanying Guaranty are binding only
between Xact Medicare Services, Geri-Med and LSA. Xact's
acceptance of the payment terms represented in this Agreement and
Guaranty does not constitute a waiver of any criminal, civil or
administrative rights of the United States Government.
Xact Medicare Services, Inc
August __, 1995
By:
Terrence E. Bowling, Senior Vice
President, Government Business
Life Support Ambulance, Inc.
August 11, 1995
By:
Dean Bollendorf, President
Geriatric & Medical Companies, Inc.
August 11, 1995
By:
Daniel Veloric, President and
Chief Executive Officer
GUARANTY
THIS GUARANTY is made and entered into by the undersigned (the
"Guarantor"), for the benefit of Pennsylvania Blue Shield d/b/a
Xact Medicare Services as a contractor for the Health Care
Financing Administration ("Xact")
OBLIGOR The "Obligor" means Life Support Ambulance, Inc., Valley
Transport Ambulance Services, Inc., Valley Medical Services (DBA
Valley Ambulance) and Weisenfluh Ambulance Service, Inc. and any
other names or entities under which the Guarantor performs or
provides ambulance services.
OBLIGATIONS. The "Obligations" means all existing and hereafter
incurred or arising obligations of Obligor for any amounts of money
due to the federal government and its contractors as a result of
improper claims or billings made by the Obligor for reimbursement
related to its delivery of services under the Medicare program
provided that, in the event Xact makes a payment demand upon
resolution of its investigation, Guarantor may avail itself of any
payment options under current Medicare regulations and manual
instructions.
UNCONDITIONAL GUARANTY. In consideration of any existing
Obligations and any Obligations which may hereafter arise or be
incurred, Guarantor, intending to be legally bound, absolutely and
unconditionally guaranties to Xact the payment, performance and
satisfaction when due (whether by stated maturity, demand,
acceleration or otherwise) of all Obligations. The obligations of
the Guarantor hereunder shall continue in full force and effect
irrespective of the validity, legality or enforceability of any
agreements, document, laws, rules or regulations pursuant to which
any of the Obligations arise, or of any other guaranty of the
Obligations,, or any other circumstance which might Otherwise
constitute a legal or equitable discharge of a surety or guarantor.
COST OF ENFORCEMENT. Guarantor agrees to pay Xact all costs and
expenses (including reasonable attorney's fees) at any time
incurred by Xact in the enforcement of this Guaranty against
Guarantor.
PAYMENT BY GUARANTOR. Payment by Guarantor is due upon demand by
Xact and is payable in lawful money of the United States of America
at such time or times as shall be agreed to by the parties.
LIMITATION OF GUARANTORS LIABILITY. Guarantor's liability under
paragraph 3 of this Guaranty shall be limited to the smaller of the
following amounts: (a) $5,000,000 (the "Limit Amount") or (b) the
aggregate amount of the Obligations, as said amount may increase or
decrease from time to time. Whenever the aggregate amount of the
Obligation, exceeds the Limit Amount, and regardless of the amount
of any such excess, payments on and reductions of the Obligations
may be applied by Xact to that portion of the Obligations which is
in excess of the Limit Amount, so that the Limit Amount is
applicable to the Obligations on a "last-out" basis.
Notwithstanding the provisions of the preceding sentence, any
payments made by Guarantor in respect to this Guaranty itself shall
directly reduce the unpaid amount of Guarantor's liability under
paragraph 3 of this Guaranty.
CONTINUING GUARANTY. This Guaranty shall continue in full force
and effect with respect to Guarantor and may not be revoked until
all existing Obligations and all Obligations hereafter incurred or
arising have been paid, performed and satisfied in full.
WAIVERS AND CONSENTS BY GUARANTOR. Guarantor unconditionally
consents to, and waives as a defense to liability hereunder, each
of the following. (a) any waiver, inaction, delay or lack of
diligence by Xact in enforcing its rights against any Obliger or in
any property, or the unenforceability of any such rights, including
any failure to perfect, protect or preserve any lien or security
interest which may be intended directly or indirectly to secure any
of the obligations, and the absence of notice thereof to Guarantor,
(b) the absence of any notice of the incurrence or existence of any
Obligation, (c) any action, and the absence of notice thereof to
Guarantor, taken by Xact or any Obligor with respect to any off the
Obligations, including any release, subordination or substitution
of any collateral or release, termination, compromise, modification
or amendment of any instrument executed by or applicable to any
Obliger or of any claim, right or remedy against any Obligor or any
property, (d) any impairment of Guarantor's right to reimbursement
by way of subrogation, indemnification or contribution, (e) any
other action taken or omitted by Xact in good faith with respect to
any Obligation, the absence or inadequacy of any formalities of
every kind in connection with enforcement of the Obligations,
including presentment, demand, notice and protest, and (g) the
waiver of any rights of Xact under or any action taken or omitted
by Xact with respect to any other guaranty of the Obligations
OTHER AGREEMENTS BY GUARANTOR. Guarantor agrees that there shall be
no requirement that Xact document its acceptance of this Guaranty,
evidence its reliance thereon, or that Xact take any action against
any person or any property prior to taking action against
Guarantor. Guarantor further agrees that Xact's rights and remedies
hereunder shall not be impaired or subject to any stay, suspension
or other delay as a result of any Obligor's insolvency or as a
result of any proceeding applicable to any Obligor or any Obligor's
property under any bankruptcy or insolvency law. Guarantor also
agrees that payments and other reductions on the Obligation's may
be applied to such of the Obligations and in such order as Xact may
elect.
REINSTATEMENT OF LIABILITY. If any claim is made upon Xact for
repayment or recovery of any amount or amounts received by Xact in
payment or on account of any Obligations and Xact repays all or
part of said amount by reason of (a) any judgment, decree or order
of any court or administrative body having jurisdiction over Xact
or any of its property, or (b) any settlement or compromise in good
faith with any such claimant (including any Obligor), then and in
such event Guarantor agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon the Guarantor,
notwithstanding any termination hereof or the cancellation of any
instrument evidencing any Obligation, and Guarantor shall remain
liable to Xact hereunder for the amount so repaid or recovered to
the same extent as if such amount had never originally been
received by Xact.
GUARANTOR'S ADDRESS. Guarantor warrants and represents that the
address set forth below is Guarantor's correct mailing address and
agrees immediately to notify Xact in the event of any change
therein.
MISCELLANEOUS
(a) No amendment of any provision of this Guaranty shall be
effective unless it is in writing and signed by Guarantor and Xact,
and no waiver of any provisions of this Guaranty, and no waiver or
consent to any departure by the Guarantor therefrom, shall be
effective unless it is in writing and signed by Xact, and then such
waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
(b) Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof
or affecting the validity or enforceability of such provisions in
any other jurisdiction.
(c) The obligations of Guarantor hereunder shall not be subject to
any counterclaim, setoff, deduction or defense based upon any
related or unrelated claim which such Guarantor may now or
hereafter have against Xact or any Obligor, except payment of the
Obligations, and shall not be affected by any change in Obligor's
legal status or ownership or by any change in corporate or other
organizational structure applicable to Obliger.
(d) This Guaranty shall (i) be binding on Guarantor and its
successors and assigns, and (ii) inure, together with all rights
and remedies of Xact hereunder, to the benefit of Xact and its
successors, transferees and assigns. Notwithstanding the foregoing
clause (i), none of the rights or obligations of Guarantor
hereunder may be assigned or otherwise transferred without the
prior written consent of Xact.
(e) Guarantor agrees that, until the Obligations are paid in full,
it will not cause any assets, tangible or intangible, of LSA to be
transferred without LSA's receiving reasonable value therefor.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty under seal
as of the 4th day of August, 1995.
GERIATRIC & MEDICAL COMPANIES, INC.
5601 Chestnut Street
Philadelphia, Pennsylvania 19139
By: DANIEL VELORIC, President and
Chief Executive Officer
