<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------------------------
For Quarter Ended June 30, 1996 Commission file number 0-11656
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
A Delaware Corporation I.R.S. No. 22-1807533
Two Nationwide Plaza, Suite 760, Columbus, Ohio 43215
Registrant's Telephone No. (614) 221-6000
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 the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date.
EACH OF THE FOLLOWING CLASSES ARE REGISTERED ON THE AMERICAN STOCK
EXCHANGE.
<TABLE>
<CAPTION>
Class Outstanding at July 31, 1996
----- ----------------------------
<S> <C>
Common Stock, par value 5,736,020
$.01 per share
Common Stock Purchase Warrants 414,538 (1)
</TABLE>
(1) Upon exercise, represents 1,139,980 shares of The
Wendt-Bristol Health Services Corporation.
<PAGE> 2
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
I N D E X
<TABLE>
<CAPTION>
Part I Page No.
- ------ --------
<S> <C>
Financial Statements:
Consolidated Balance Sheets - December 31, 1995 and
June 30, 1996 (Unaudited) 3-4
Consolidated Statements of Operations (Unaudited)
Three and Six Months Ended June 30, 1996 and 1995 5
Consolidated Statements of Cash Flow (Unaudited)
Six Months Ended June 30, 1996 and 1995 6-7
Notes to Consolidated Financial Statements 8-10
Management's Discussion and Analysis of Financial Condition
and Results of Operations 11-13
Part II
Other Information 14
Signatures 14
Exhibits 14
</TABLE>
2
<PAGE> 3
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS AT JUNE 30, 1996 AND DECEMBER 31, 1995
ASSETS
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
------------ ------------
(Unaudited)
Current assets:
<S> <C> <C>
Cash $ 163,730 $ 35,825
------------ ------------
Restricted cash 360,650 310,912
------------ ------------
Receivables:
Trade, net of allowance for doubtful
accounts of $ 322,000 (June)
and $340,000 (December) 1,281,137 2,678,551
Notes receivable 108,116 49,920
Miscellaneous 1,079,630 858,032
------------ ------------
2,468,883 3,586,503
------------ ------------
Inventories 519,955 489,042
Prepaid expenses and other 343,612 402,824
------------ ------------
Total current assets 3,856,830 4,825,106
------------ ------------
Property, plant and equipment, at cost 19,806,953 19,531,862
Less: Accumulated depreciation and
amortization (5,636,284) (5,243,057)
------------ ------------
14,170,669 14,288,805
------------ ------------
Investments and other assets:
Notes and other receivables, net of current portion 323,708 395,912
Notes receivable from officers, employees and
related parties, net of amounts payable 1,031,168 863,509
Life insurance premiums receivable 819,489 758,795
Excess of cost over assets of businesses
and subsidiaries acquired, less amortization 629,992 637,729
Deferred charges 975,824 776,622
Other assets 265,102 260,847
------------ ------------
Total investments and other assets 4,045,283 3,693,414
------------ ------------
$ 22,072,782 $ 22,807,325
============ ============
</TABLE>
(Continued)
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
AS AT JUNE 30, 1996 AND DECEMBER 31, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
------------ ------------
(Unaudited)
Current liabilities:
<S> <C> <C>
Accounts payable $ 2,225,858 $ 2,836,474
Accrued expenses and other liabilities:
Salaries and wages 459,446 451,718
Taxes, other than federal income taxes 891,023 1,315,508
Interest 83,307 87,520
Stock purchase agreement payable 625,000 625,000
Other 1,181,882 1,987,634
Long-term obligations classified as current 768,936 2,760,789
Federal income taxes payable -- 100,000
------------ ------------
Total current liabilities 6,235,452 10,164,643
------------ ------------
Long-term obligations, less amounts classified
as current 10,813,104 7,880,566
------------ ------------
Total liabilities 17,048,556 18,045,209
------------ ------------
Minority interests 327,489 219,541
------------ ------------
Stockholders' equity:
Common stock: $.01 par;
authorized: 12,000,000 shares
issued: 8,243,480 shares 82,435 82,435
Capital in excess of par 10,264,751 10,274,974
Retained earnings (deficit) (2,727,390) (2,872,818)
------------ ------------
7,619,796 7,484,591
Treasury stock, at cost, 2,507,460 shares (June)
and 2,523,722 shares (December) (2,923,059) (2,942,016)
------------ ------------
Total stockholders' equity 4,696,737 4,542,575
------------ ------------
$ 22,072,782 $ 22,807,325
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30
-------------------------------- --------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
Revenues:
<S> <C> <C> <C> <C>
Net sales $ 1,376,041 $ 1,351,992 $ 668,064 $ 675,345
Service income 9,368,282 9,268,790 4,755,105 4,732,408
------------ ------------ ------------ ------------
10,744,323 10,620,782 5,423,169 5,407,753
------------ ------------ ------------ ------------
Costs and expenses:
Cost of sales 980,369 920,605 484,690 429,547
Selling, general and administrative
expenses, net 8,578,313 8,461,234 4,280,072 4,270,679
------------ ------------ ------------ ------------
9,558,682 9,381,839 4,764,762 4,700,226
------------ ------------ ------------ ------------
Operating income before depreciation 1,185,641 1,238,943 658,407 707,527
Depreciation 463,524 581,828 233,712 276,620
------------ ------------ ------------ ------------
Operating income 722,117 657,115 424,695 430,907
------------ ------------ ------------ ------------
Other income (expense):
Minority interests in (earnings) losses, net (107,811) (9,782) (82,759) (10,960)
Interest expense (485,057) (600,048) (272,848) (294,554)
Other, net 31,850 36,583 2,495 13,787
------------ ------------ ------------ ------------
(561,018) (573,247) (353,112) (291,727)
------------ ------------ ------------ ------------
Income before income taxes 161,099 83,868 71,583 139,180
Income tax expense (15,671) (45,000) (9,257) (45,000)
------------ ------------ ------------ ------------
Net income $ 145,428 $ 38,868 $ 62,326 $ 94,180
============ ============ ============ ============
Income per common share $ 0.03 $ 0.01 $ 0.01 $ 0.02
============ ============ ============ ============
Weighted average shares outstanding 5,728,425 6,882,102 5,736,020 6,219,758
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30
------------------------------
1996 1995
----------- -----------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 145,428 $ 38,868
----------- -----------
Adjustments required to reconcile net income
to net cash provided by operating activities:
Amortization, depreciation and other, net 473,056 588,935
Provision for losses on notes and accounts receivable 64,217 105,674
Minority interest in earnings of consolidated subsidiaries 107,811 9,782
Changes in assets and liabilities:
Receivables
Sale of receivables 970,550 --
Other changes 164,549 (405,107)
Merchandise inventories (30,913) (33,438)
Prepaid expenses and other current assets 67,946 166,182
Accounts payable (610,616) (409,862)
Accrued expenses and other liabilities (1,226,722) (40,374)
Federal income taxes payable (100,000) (141,000)
Deferred charges and other (229,614) (63,283)
----------- -----------
Total adjustments (349,736) (222,491)
----------- -----------
Net cash used in operating activities (204,308) (183,623)
----------- -----------
Cash flows from investing activities:
Purchase of minority interest from limited partners -- (150,000)
Collection of miscellaneous receivable -- 1,700,000
Decrease in notes receivable 14,008 58,251
Disbursements to related parties
and former affiliates, net (224,353) (122,087)
Utilization of or (deposit) to restricted cash (49,738) 247,068
Capital expenditures (275,880) (235,103)
----------- -----------
Net cash provided by (used in) investing activities (535,963) 1,498,129
----------- -----------
Cash flows from financing activities:
Purchase of common stock of subsidiary (3,000) --
Proceeds from warrants exercised -- 3,750
Principal payments of long-term obligations (672,277) (1,276,323)
Proceeds from long-term obligations 1,543,453 --
Net borrowings from securitization program -- (178,500)
----------- -----------
Net cash provided by (used in) financing activities 868,176 (1,451,073)
----------- -----------
Net increase (decrease) in cash 127,905 (136,567)
Cash at beginning of period 35,825 182,042
----------- -----------
Cash at end of period $ 163,730 $ 45,475
=========== ===========
</TABLE>
(Continued)
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30
-----------------------------------
1996 1995
-------------- --------------
Cash paid during the six months for:
<S> <C> <C>
Interest $ 489,270 $ 626,073
Income taxes $ 108,391 $ 178,705
Supplemental disclosures of noncash
investing and financing activity:
A partnership, of which the Company is the managing general
partner purchased equipment which was financed by entering
into an installment finance agreement.
Increase in equipment cost, net $ 69,509
Increase in long-term obligations (69,509)
Common stock of the Company (2,000,000 shares) and common
stock of a subsidiary (300,000 shares) were exchanged for 30,000
shares of preferred stock, par value $100 per share, owned by the
Company in Life Holdings, Inc.
Decrease in investment in preferred stock, at cost $ (3,000,000)
Decrease in minority interest 512,653
Increase in treasury stock 2,487,347
A subsidiary of the Company incurred costs for the construction
of an Alzheimer's and related disorders facility with draws
against a HUD-insured financing agreement.
Increase in long-term obligations $ (166,826)
Increase in prepaid expenses and other current assets 45,116
Decrease in accounts payable 121,710
A subsidiary of the Company has sold the operating assets, net of
associated liabilities to a related party in exchange for an interest
bearing note.
Increase in notes receivable from officers, employees
and related parties, net of amounts payable:
Note arising in transaction $ 574,949
Other (55,936)
Decrease in accounts payable 48,624
Decrease in accrued expenses and other liabilities 83,006
Decrease in trade and miscellaneous receivables (4,668)
Decrease in inventories (126,703)
Decrease in prepaid expenses and other current assets (38,409)
Decrease in property, plant and equipment, net (240,079)
Decrease in deferred charges (500)
Decrease in other assets (240,284)
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. MANAGEMENT'S REPRESENTATION
In the opinion of Management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting only of normal adjustments and
recurring accruals) necessary to present fairly The Wendt-Bristol Health
Services Corporation ("Wendt-Bristol" or "Company") and subsidiaries
consolidated financial position as at June 30, 1996 and December 31, 1995 and
the consolidated results of its operations for the three and six months ended
June 30, 1996 and 1995 as well as the cash flows for the respective six months.
The results of operations for any interim period are not necessarily indicative
of results for the full year. THESE FINANCIAL STATEMENTS SHOULD BE READ IN
CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES THERETO CONTAINED IN THE
WENDT-BRISTOL ANNUAL REPORT FILED AS FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1995, WHICH IS HEREBY INCORPORATED BY REFERENCE.
2. RECLASSIFICATIONS
Cash required to be held in escrow by HUD for "Replacement Reserves" at the
nursing homes in the amount of $146,950 has been reclassified from Prepaid
expenses to Restricted cash on the December 31, 1995 balance sheet to conform
with the presentation at June 30, 1996, which includes "Replacement Reserves" in
the amount of $192,760.
3. INCOME TAXES
The Company utilizes the provisions of SFAS No. 109 which requires the use of
the liability method of accounting for deferred income taxes. As a result, the
Company has recognized a deferred tax liability, a deferred tax asset and a
valuation allowance against the deferred tax assets. A summary of the December
31, 1995 attributes is as follows:
<TABLE>
<S> <C>
Deferred tax assets $ 2,000,200
Less: valuation allowance 300,000
-----------
1,700,200
Deferred tax liabilities 1,530,800
Net deferred tax asset $ 169,400
===========
</TABLE>
During 1996, the Company does not expect to incur any current Federal tax
liability since it will be able to utilize net operating loss carry forwards to
reduce taxable income to zero.
(Continued)
8
<PAGE> 9
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. INCOME TAXES (CONTINUED)
Federal, state and local taxes are summarized as follows:
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, June 30,
-------------------------------------------------
1996 1995 1996 1995
------- ------- ------- -------
Federal income taxes:
<S> <C> <C> <C> <C>
Current expense $ -- $35,000 $ -- $35,000
State and local taxes:
Current expense 15,671 10,000 9,257 10,000
------- ------- ------- -------
Total tax expense $15,671 $45,000 $ 9,257 $45,000
======= ======= ======= =======
</TABLE>
4. STOCKHOLDERS' EQUITY
At June 30, 1996 there were 414,538 Common Stock purchase warrants outstanding,
exercisable at $3.75 per warrant. Each warrant, upon exercise, provides two and
three quarters (2 3/4) shares of the Company's common stock and a Series II
warrant (issuable upon completion of appropriate Securities and Exchange
Commission filings) exercisable for two shares at $3.00/share. The Warrants'
expiration dates, as amended by the Board of Directors in April 1996, are May 1,
1997 for the initial Warrant and May 1, 1998 for the Series II Warrants. No
warrants were exercised during the six or three months ended June 30, 1996.
Earnings per share were computed using the weighted average number of shares
outstanding (net of Treasury shares) during each period. The common stock
equivalents (warrants and options) are anti-dilutive, thereby yielding similar
primary and fully diluted per share amounts.
5. FINANCING TRANSACTIONS
A. On April 1, 1996, the Company refinanced a mortgage at the Diagnostics and
Radiology Center, operated by a partnership of which a subsidiary is the general
partner. The mortgage of $712,500 bears a fixed interest rate of 9.41%, payable
in monthly installments through April, 2005, with any remaining balance due on
that date. Funds provided from the mortgage are for working capital related to
the expansion of operations at the facility.
(Continued)
9
<PAGE> 10
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. FINANCING TRANSACTIONS (CONTINUED)
B. On April 19, 1996, the Company refinanced the mortgage relating to the New
Jersey property leased by the purchaser of its former manufacturing division.
The mortgage was initially due on October 1, 1995 but the Company received a
short-term extension from the lender; therefore, the entire balance of
approximately $1,640,000 was classified as current on the December 31, 1995
Balance Sheet. Terms of the new five-year $1,700,000 mortgage include
amortization on a ten year basis, a five-year renewal option and interest at
prime plus three percent.
C. On May 30, 1996, certain subsidiaries of the Company entered into a
three-year financing arrangement with a finance company to sell, with limited
recourse, its health care trade accounts receivable. Terms of the agreement
include a commitment of up to $1,500,000 against eligible receivables at an
annual interest rate of 12% plus servicing fees. Proceeds from the initial sale
of these receivables amounted to approximately $971,000 with an additional
$150,000 term note, amortizing over 36 months. Trade receivables as shown in the
Consolidated Balance Sheet are shown exclusive of the receivable interests sold
under this program.
10
<PAGE> 11
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NOTE: REFERENCE SHOULD BE MADE TO THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HEREIN.
FINANCIAL CONDITION
Management believes that the Company's financial condition continues to be
strengthened through the concentration of efforts to develop its Health Care
Services business. As a result of the emphasis on health services, rather than
manufacture or distribution, Management believes that the Company has
established a focused growth plan that is evidenced by the increase in net
income of approximately $106,000 for the first six months from $39,000 in 1995
to $145,000 in 1996.
In addition to the aforementioned, the mortgage on the Company's New Jersey
property was refinanced in April 1996 resulting in a reclassification of
approximately $1,517,000 from current liabilities to long-term debt (see Note
5).
Working capital increased approximately $2,961,000 during the six months ended
June 30, 1996, due mostly from an equipment refinancing in March 1996 and the
refinancing of the New Jersey mortgage (see Form 10-K Note 15 and Note 5
herein). Current assets decreased approximately $968,000, due mostly from a
decrease of approximately $1,397,000 in trade receivables partially offset by an
increase in cash of approximately $128,000. The decrease in receivables is
mostly attributable to the accounts receivable securitization program the
Company entered into in May 1996 (see Note 5). Current liabilities decreased
approximately $3,929,000, due primarily from reductions in current portion of
long-term debt ($1,992,000 - most of which was reclassified to long-term),
accrued expenses-other ($806,000), accounts payable ($611,000), accrued taxes
other than federal income taxes ($424,000), and federal income taxes payable
($100,000). Such reductions in current liabilities were made possible by the
aforementioned financing transactions.
LIQUIDITY AND CAPITAL RESOURCES
The Company improved its working capital during the first half of 1996 by
refinancing most of its equipment and replacing its balloon mortgage on the New
Jersey property (due April, 1996) with a mortgage that matures in 2001 (see Note
5). On March 27, 1996 the Company, through several of its subsidiaries,
refinanced most of its equipment at the nursing homes and Diagnostics Center
with a finance company. The total amount refinanced of $1,700,000 is on a
secured note and bears an interest rate of 12 1/8% payable over sixty months.
With the proceeds, the Company paid off existing debt of approximately
$1,023,000 and used the remainder for working capital needs.
(Continued)
11
<PAGE> 12
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
On May 30, 1996 the Company entered into an agreement with a finance company to
secure additional working capital funds to replace the accounts receivable
securitization program that terminated in 1995. Terms of the agreement include a
commitment of up to $1,500,000 against eligible receivables at an annual
interest rate of 12% plus servicing fees. As a result of the transition between
financing companies, the Company has experienced some cash flow difficulties
from time to time, but has maintained good working relationships with its
vendors.
The Company, at its Diagnostic and Radiology Center, operated by a limited
partnership of which a subsidiary is general partner, is obtaining additional
imaging techniques such as angiography and fluoroscopy in 1996. The cost of such
equipment, approximately $745,000, will be financed through the Partnership by a
favorable vendor financing program.
Management further believes the present resources available, the accounts
receivable financing program indicated above, as well as profitable operations
will meet anticipated requirements for operations of the business. There are no
further material commitments for capital expenditures.
RESULTS OF OPERATIONS 1996-1995
Consolidated revenues from operations for the six months ended June 30, 1996
increased approximately $124,000 or 1.2% while revenues for the three months
ended June 30, 1996 increased approximately $15,000 or .3% over 1995. Net sales
increased approximately $24,000 or 1.8% for the six months and declined $7,000
or 1.1% for the three months ended June 30, 1996 as compared to the same periods
in 1995. Service revenues increased approximately $99,000 or 1.1% for the six
months and $23,000 or .5% for the three months over the same periods in 1995,
mostly attributable to higher rates at the Alzheimer's Center partially offset
by a decline in visits and revenues in the Home Care subsidiary.
Cost of sales increased approximately $60,000 or 6.5% for the six months and
$55,000 or 12.8% for the three months ended June 30, 1996 as compared to the
corresponding periods in 1995. Gross margin for the six months ended June 30,
1996 declined to 28.8% compared to 31.9% for the same period in 1995, primarily
attributable to new competition in the retail pharmacy division.
Selling, general and administrative expenses, which include costs associated to
services rendered, increased approximately $117,000 or 1.4% for the six months
and $9,000 or .2% for the three months ended June 30, 1996 over the same periods
in 1995.
(Continued)
12
<PAGE> 13
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS 1996-1995 (CONTINUED)
Minority interests in earnings increased approximately $98,000 for the six
months and $72,000 for the three months ended June 30, 1996 as compared to the
same periods in 1995 due to improved results in the operations that are not
wholly-owned by the Company, primarily the Alzheimer's Center which is no longer
in a start-up phase and is contributing to profits in 1996.
Interest expense decreased approximately $115,000 or 19.2% for the six months
and $22,000 or 7.4% for the three months ended June 30, 1996 as compared to the
same periods in 1995, mostly due to the termination of the accounts receivable
securitization program, partially offset in the second quarter by the interest
attributable to the new program.
13
<PAGE> 14
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.11- Mortgage and security agreement dated April 1, 1996,
between Wendt-Bristol Diagnostics Co. L.P. and
National City Bank.
10.12- Mortgage and security agreement dated April 19, 1996
between The Wendt-Bristol Health Services Corporation
and Grand Pacific Finance Corp.
10.13- Receivables purchase and sale agreement dated May 30,
1996 between The Wendt-Bristol Company, et al, and
HealthPartners Funding L.P., relating to the health
care receivables securitization program.
27- EDGAR Financial Data Schedule
(b) Reports on Form 8-K - None
--------------------------------
SIGNATURES
Pursuant to the requirements 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.
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
(Registrant)
August 9, 1996 By:
Sheldon A. Gold
President
(Principal Executive Officer)
August 9, 1996 By:
Charles R. Cicerchi
Vice-President, Finance
(Principal Financial and Accounting Officer)
14
<PAGE> 1
OPEN-END MORTGAGE, SECURITY AGREEMENT,
AND ASSIGNMENT OF RENTS
This Open-End Mortgage, Security Agreement, and Assignment of Rents is executed
and delivered at Columbus, Ohio, as of this 1st day of April, 1996 by
WENDT-BRISTOL DIAGNOSTICS COMPANY L.P., a Delaware limited partnership,
("Grantor"), whose mailing address is 1550 Kenny Road, Columbus, Ohio 43212, to
NATIONAL CITY BANK, COLUMBUS, a national banking association having its banking
office at 155 East Broad Street, Columbus, Ohio 43251 ("BANK").
1. GRANT OF INTEREST. In order to induce Bank to extend the Subject Debt and in
consideration thereof and for other valuable considerations, Grantor hereby
grants, mortgages, sells, conveys, and warrants to Bank, the following real
property (the "PREMISES"):
Situated in the city of Columbus, Franklin County, Ohio as is more
particularly described on Exhibit A which is attached to and made a part of
this Mortgage;
together with a security interest in all fixtures, of Grantor that are now
or hereafter located on or related to the Premises or any part thereof, and
any and all replacements and substitutions therefor and additions and
accessions thereto, and all Proceeds of all or any part of the property
hereinbefore described:
together with all awards, damages, and other compensation of any kind made
or to be made to any Person or Persons for any taking, either permanent or
temporary, by eminent domain or other governmental action, of all or any
part of the Collateral which awards and compensation are hereby assigned to
Bank; and
together with all the improvements now or hereafter erected on the property,
and all easements, rights, appurtenances, rents, royalties, mineral, oil and
gas rights and profits, water rights and stock and all fixtures now or
hereafter a part of the property. All replacements and additions shall also
be covered by this Security Instrument. All of the foregoing is referred to
in this Security Instrument as the (the "PROPERTY");
subject, however, to all legal highways, restrictions, and easements of
record, current taxes and assessments not yet due, and the additional
encumbrances, if any, listed as exceptions under any title insurance
commitment issued in connection with this Mortgage
2. OBLIGATIONS SECURED. This Mortgage is given to secure payment of the Subject
Debt. "SUBJECT DEBT" means, collectively,the principal of, interest on,
fees, late charges, premiums, and other amounts owing under that certain
Commercial Note: Time or Term Single Advanced/Fixed (Ohio) made by
Grantor as of April 1st 1996, in the face amount of Seven Hundred Twelve
Thousand Five Hundred and 00/100 Dollars ($712,5OO.00), and payable to the
order of Bank, together with all amendments, modifications, extensions,
replacements, substitutions and renewals of
<PAGE> 2
subject, however, to all legal highways, restrictions, and easements of
record, current taxes and assessments not yet due, and the additional
encumbrances, if any, listed as exceptions under any title insurance
commitment issued in connection with this Mortgage
2. OBLIGATIONS SECURED. This Mortgage is given to secure payment of the Subject
Debt. "SUBJECT DEBT" means, collectively, the principal of, interest on,
fees, late charges, premiums, and other amounts owing under that certain
Commercial Note: Time or Term Single Advanced Fixed (Ohio) made by Grantor
as of April 1st 1996, in the face amount of Seven Hundred Twelve Thousand
Five Hundred and 00/100 Dollars ($712,500.00), and payable to the order of
Bank, together with all amendments, modifications, extensions, replacements,
substitutions and renewals of any thereof, and, in addition to the foregoing
obligations, (a) the unpaid balances of any loan advances or other
extensions of credit with respect to the Subject Debt made on or after the
date on which this Mortgage is delivered to the recorder for record, Subject
Debt, to the extent that the total loan indebtedness secured by this
Mortgage, exclusive of the interest thereon, does not at any time exceed
Seven Hundred Twelve Thousand Five Hundred and 00/100 Dollars ($712,500.00),
(b) all unpaid advances of Bank with respect to the Premises for the payment
of taxes, assessments, insurance premiums, or costs incurred in the
protection or operation of the Premises, and (c) all other obligations of
Grantor under this Mortgage.
3. DEFINITIONS. As used in this Mortgage, except where the context clearly
requires otherwise, "AFFILIATE" means, when used with reference to any
Person (the "subject"), a Person that is in control of, under the control
of, or under common control with, the subject, the term "control" meaning
the possession, directly or indirectly, of the power to direct the
management or policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise; "COLLATERAL" means the Premises and
all other property, whether real, personal, or mixed, tangible or
intangible, now or hereafter existing, that is subject to the lien of this
Mortgage or the security interest granted pursuant to this Mortgage;
"DEFAULT" means (a) the nonpayment of the Subject Debt or any part thereof
when due or (b) the occurrence or existence of any event, condition, or
other thing (other than any event, condition, or other thing which would
constitute a "Default" pursuant to the next preceding clause (a)) which
gives (or which with the lapse of any applicable grace period, the giving of
notice, or both would give) Bank the right to accelerate or which
automatically accelerates the maturity of any of the Subject Debt;
"ENVIRONMENTAL LAW" means the Clean Air Act (42 USC 7401 et seg.),
Comprehensive Environmental Response, Compensation, and Liability Act (42
USC 9601 et seq.), the Hazardous material Transportation Act (49 USC 1801 at
seq.), the Resource Conservation and Recovery Act (42 USC 6901 et seq.), the
Federal Water Pollution Control Act (33 USC 1251 et seq.), the Toxic
Substances Control Act (15 USC 2601 et seq.) and the Occupational Safety and
Health Act (29 USC 651 et seq.), as such laws have been or hereafter may be
amended, and the regulations promulgated pursuant thereto, and any and all
similar present or future federal, state, or local laws and the
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<PAGE> 3
individual or entity of any kind, including, without limitation, any
association, company, cooperative, corporation, partnership, trust,
governmental body, or any other form or kind of entity; "PRIME RATE" means
the fluctuating rate per annum which is publicly announced from time to time
by bank as being its so-called "prime rate" or "base rate" thereafter in
effect, with each change in the Prime Rate automatically, immediately, and
without notice changing the Prime Rate thereafter applicable hereunder, it
being acknowledged that the Prime Rate is not necessarily the lowest rate of
interest then available from Bank on fluctuating-rate loans; "PROCEEDS"
means whatever is received or receivable upon sale, exchange, collection, or
other disposition of any property or Proceeds, whether directly or
indirectly, and includes, without limitation, the proceeds of any casualty,
liability, or title insurance relating to any such property and any goods or
other property returned after any such sale, exchange, collection, or other
disposition; "RELATED WRITING" means this Mortgage and any indenture, note,
guaranty, assignment, mortgage, security agreement, subordination agreement,
notice, financial statement, legal opinion, certificate, or other writing of
any kind pursuant to which all or any part of the Subject Debt of Grantor is
issued, which evidences or secures all or any part of the Subject Debt of
Grantor, which governs the relative rights and priorities of Bank and one or
more other Persons to payments made by, or the property of, any Obligor,
which is delivered to Bank pursuant to another such writing, or which is
otherwise delivered to Bank by or on behalf of any Person (or any employee,
officer, auditor, counsel, or agent of any Person) in respect of or in
connection with all or any part of the Subject Debt of Grantor; "RELEASE"
means any deposit, discharge, dispersal, disposal, emission, injection,
leaching, leaking, migration, transport, or other movement through any
medium, whether indoor or outdoor, whether ambient air, ground water,
surface water, soil, or subsurface strata; and the foregoing definitions
shall be applicable to the respective plurals of the foregoing defined
terms.
4. REPRESENTATION AND WARRANTIES. Grantor represents and warrants to Bank as
follows:
4.1 EXISTENCE. Grantor is a limited partnership created under Ohio law.
4.2 AUTHORITY. Each Person, if any, executing and delivering this mortgage
on behalf of Grantor or any other Person has been duly authorized to do
so, and this Mortgage is valid and enforceable against Grantor in
accordance with its terms.
4.3 OWNERSHIP. Grantor is lawfully seized in fee simple of all of the
Collateral absolutely free from any assignment, attachment,
encumbrance, lease, license, mortgage, security interest, or other
lien, and free from any other claim, right, or interest of any kind,
except for any described in section 1 or any in favor of or consented
to by Bank. Grantor has the lawful right to grant, mortgage, sell, and
convey the Collateral to Bank pursuant to this Mortgage. No assignment,
financing statement, or other writing (except any evidencing any lien
or interest expressly permitted by
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<PAGE> 4
this Mortgage) describing the Collateral or any part thereof is on file
in any public office.
4.4 COMPLIANCE WITH LAW. Grantor and all other Persons under Grantor's
control, if any, occupying, operating, or using the Premises or any
part thereof have at all times been and continue to be in compliance
with all requirements imposed by law, whether federal, state, or local,
whether statutory, regulatory, or other, including, without limitation;
(a) all Environmental Laws; (b) all approvals, certifications,
licenses, permits, and other authorizations required by any
Environmental Law for the conduct of any activity upon or within the
Premises; and (c) all zoning ordinances applicable to the occupancy,
operation, and use of the Premises or any part thereof. Without
limiting the generality of the foregoing,
(i) no condition exists at, on, or under the Premises which would
give rise to any liability under any Environmental Law,
(ii) no legal proceeding relating to the Premises has been commenced
before any judicial or administrative tribunal, arbitrator, or
mediator, nor, to the best of Grantor's knowledge, has any such
proceeding been threatened, and
(iii) neither the Premises nor any part thereof has been placed on any
registry of sites containing Hazardous Materials or that there
has occurred any violation at, on, or under the Premises or any
part thereof of (A) any Environmental Law, (B) any approval,
certification, license, permit, or other authorization required
by any Environmental Law for the conduct of any activity upon or
within the Premises, or (C) any zoning ordinance.
5. FURTHER ASSURANCE. Grantor, at Grantor's expense, will make and do all such
acts and things (including, without limitation, the delivery to Bank of any
chattel paper, document, instrument, or other writing of any kind the
possession of which perfects a security interest therein) as Bank may from
time to time require for the better evidencing, perfection, protection, or
validation of, or realization of the benefits of, this Mortgage or the
security interest granted pursuant to this Mortgage. without limiting the
generality of the foregoing, Grantor will, at Grantor's expense, upon each
request of Bank, (a) warrant and defend the Collateral to Bank and its
successors and assigns and the claims and demand of all Persons whatever,
(b) sign and file or permit Bank to file such financing statements,
mortgages, and other writings as Bank may from time to time require and in
such public offices as Bank may from time to time require; (c) comply with
every other requirement deemed necessary by Bank for the perfection of the
lien of this Mortgage or the security interest granted pursuant to this
Mortgage; and (d) execute and deliver such affidavits, assignments,
financing statements, indorsements of specific items of Collateral,
mortgages, powers of attorney, security agreements, and other writings as
Bank may from time to time require, each in such form and substance
satisfactory
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<PAGE> 5
to Bank. Without diminishing or impairing any obligation of Grantor under
this Mortgage, a carbon, photographic, or other reproduction of this
Mortgage shall be sufficient as a financing statement
6. NOTICE. Grantor will give Bank
(a) not less than seven (7) days, prior written notice of any change in
circumstances which affects or may affect the continuing efficacy of
this Mortgage as the first priority lien (subject to any described in
section 1 or any in favor of or consented to by Bank) on the Collateral
or any part thereof,
(b) immediate written notice if any Person other than Grantor or Bank
claims any lien or other right or interest of any kind (except for any
described in section 1 or any in favor of or expressly consented to by
Bank) in any of the Collateral,
(c) immediate notice whenever any legal proceeding relating to the Premises
shall have been commenced before any judicial or administrative
tribunal, arbitrator, or mediator, or whenever any such proceeding
shall have been threatened, or
(d) immediate written notice whenever Grantor learns or has reason to
believe that the Premises or any part thereof has been placed on any
registry of Hazardous Material disposal sites or that there has
occurred any violation at, on, or under the Premises or any part
thereof of any Environmental Law or of any approval, certification
license, permit, or other authorization required by any Environmental
Law for the conduct of any activity upon or within the Premises, or any
violation of any zoning ordinance upon or within the Premises.
7. RECORDS. Grantor will at all times keep accurate and complete records of the
Collateral. Bank (or one or more Persons selected by Bank) shall have the
right at all reasonable times to examine, inspect, and make extracts from
Grantor's books and records and to examine, appraise, and protect the
Collateral. Without limiting the generality of the foregoing Bank (or one or
more Persons selected by Bank) shall have the right, at any time and from
time to time, to enter upon the Premises and conduct such appraisals,
audits, examinations, inspections, site assessments, and tests as Bank shall
deem advisable in order to comply with applicable law or to determine
whether Grantor is in compliance with sections 10 and 12 of this Mortgage.
Bank shall have no obligation whatever to conduct any such appraisals,
audits, examinations, inspections, site assessments, or tests or disclose
the results thereof, or having done so any one or more times, to thereafter
continuing doing so. Grantor will reimburse Bank, on Bank's demand from time
to time, for any and all fees, costs, and expenses (including, without
limitation, the fees and disbursements of legal counsel) incurred by Bank in
connection with any such appraisal, audit, examination, inspection, site
assessment, or teat. If any amount owing under this Mortgage is not paid
when due, then, and in each such case, Grantor shall pay, on Bank's demand,
interest on that amount from the due date
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<PAGE> 6
thereof until paid in full at a fluctuating rate equal to four percent (4%)
per annum plus the Prime Rate.
8. ADDITIONAL SECURITY.
8.1 UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Mortgage is intended
to be a security agreement pursuant to the Uniform Commercial Code for
any of the items specified above as part of the Property which, under
applicable law, may be subject to a security interest pursuant to the
Uniform Commercial Code, and Grantor hereby grants Bank a security
interest in said items. Upon Grantor's breach of any covenant or
agreement of Grantor contained in this Mortgage, including the
covenants to pay when due all sums secured by this Mortgage, Bank shall
have the remedies of a secured party under the Uniform Commercial Code
and, at Lender's option, may also invoke the remedies provided for in
this Mortgage as to such items of personal property specified above as
part of the Property separately or together and in any order
whatsoever, without in any way affecting the availability of Lender's
remedies under the Uniform Commercial Code or of the remedies provided
for in this Mortgage
8.2 DISPOSITIONS AND ENCUMBRANCES. Grantor will not, without in each case
obtaining Bank's consent,
(a) sell or otherwise dispose of any Collateral or any interest
therein or
(b) suffer or permit any Collateral (i) to be or become subject to
any assignment, attachment, encumbrance, lease, license,
mortgage, security interest, or other lien, and free from any
other claim, right, or interest of any kind, except for any
described in section 1 or any in favor of or consented to by Bank
or (ii) to be described in any mortgage, financing statement, or
such other security instrument, except any evidencing any lien or
interest expressly permitted by this Mortgage.
8.3 ASSIGNMENT OF RENTS. As additional security hereunder, Grantor hereby
assigns to Lender all rents of the Property, provided that Grantor
shall, prior to acceleration under the provisions hereof or abandonment
of the Property and unless otherwise agreed to in writing by Grantor
and Lender, have the right to collect and retain such rents as they may
become due and payable.
9. MOVEMENT AND DETACHMENT FROM REAL PROPERTY. Grantor will not suffer or
permit any improvements or fixtures now or hereafter subject to the lien of
this Mortgage to be moved or detached from the Premises.
10. MAINTENANCE OF GOODS, TAXES, AND PRESERVATION COSTS. Grantor will maintain
all improvements and fixtures now or hereafter subject to the lien of this
Mortgage in good condition. Grantor will pay promptly all assessments,
levies, taxes, and other charges now owing or hereafter arising in
connection with this Mortgage and the Collateral, and will
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<PAGE> 7
pay all repair, maintenance, and preservation costs in respect thereof. If
Grantor does not do so, then, and in each such case, Bank shall have the
right, at its option, to pay the same, and Grantor will, on Bank's demand,
reimburse Bank for all amounts Bank so pays. Grantor will seek such
reductions in the assessments, levies, taxes, and other charges on the
Collateral or such thereof as Bank shall from time to time request, and
prosecute in good faith all complaints and appeals in connection therewith,
all without expense to Bank. Grantor will, upon each request of Bank,
furnish Bank with such advances, assurances (including, without limitation,
a surety bond from a surety satisfactory to Bank), and deposits, in each
case on terms satisfactory to Bank, in order to ensure that Grantor will
perform Grantor's obligations under this section 10.
11. INSURANCE. Grantor will at all times keep all improvements and fixtures now
or hereafter existing upon or within the Premises insured under so-called
"causes of loss-special form" policies of insurance issued by such companies
and in such amounts (but in no case, except in the case of flood insurance,
less than the full replacement value thereof or the amount necessary to
prevent the operation of any applicable coinsurance provision, whichever
amount shall be greater), as shall be acceptable to Bank. Grantor will at
all times maintain flood insurance as required by the Flood Disaster
Protection Act of 1973, as amended from time to time, and the regulations
promulgated thereunder, and will at all times maintain any additional flood
insurance required by Bank. Grantor will at all times maintain so-called
"commercial general liability" insurance with such insurers and in such
amounts as shall be acceptable to Bank. Any determination by Bank regarding
the acceptability of the issuer or the amount of any insurance policy shall
be deemed to have been made without any representation or warranty of any
kind, Grantor hereby assuming the burden of ensuring that each such issuer
and each such amount is adequate for the protection of Grantor and all other
Persons.
11.1 POLICIES. Grantor will cause each policy of insurance covering any
improvements or fixtures existing upon or within the Premises to (a)
require the insurer to give Bank written notice not less than thirty
(30) days prior to any cancellation, expiration, modification, or
non-renewal of the policy, (b) have attached thereto (i) a standard
mortgagee's or lender's loss payable endorsement in favor of Bank,
entitling Bank to collect any and all proceeds payable under the policy
and providing in effect that the rights and interests of Bank
thereunder are independent of, and shall not be diminished or impaired
by, any action, inaction, or breach of condition on the part of Grantor
and (ii) a waiver of subrogation endorsement, and (c) be otherwise in
form and substance satisfactory to Bank. Grantor will seasonably pay
all premiums for the foregoing policies of insurance and will cause the
issuer of each such policy to deliver an original counterpart thereof
directly to Bank.
11.2 ASSIGNMENT. Grantor hereby assigns to Bank any returned or unearned
premium due upon cancellation of any such insurance and directs insurer
to pay to Bank all amounts so due. All or any portion of amounts
received by Bank in payment of insurance losses or returned or unearned
premiums may, at Bank's option, be applied
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<PAGE> 8
to the Subject Debt (with such allocation to the respective parts
thereof and,the respective due dates thereof as Bank in its sole
discretion may from time to time deem advisable) or to the repair,
replacement, or restoration of the improvements or fixtures insured.
11.3 ADJUSTMENTS. Grantor hereby irrevocably appoints Bank as Grantor's
attorney-in-fact to adjust all insurance losses, to sign all
applications, receipts, releases, and other writings necessary to
collect any such loss and any returned or unearned premiums, to execute
proofs of loss, to make settlements, to indorse and collect any check
or other item payable to Grantor issued in connection therewith, and to
apply the same to payment of the Subject Debt as hereinbefore provided.
11.4 INSURANCE COLLATERAL ACCOUNT. If Grantor does not maintain insurance
pursuant to this section, then, and in each such case, Bank shall have
the right to obtain such insurance or obtain insurance covering only
Bank's interest; and, if Bank elects to do either, Grantor will, on
Bank's demand, reimburse Bank for all amounts Bank expends in doing so.
Bank shall have the right to require Grantor, at any time and from time
to time, to maintain with Bank, in a non-interest bearing account (the
"INSURANCE COLLATERAL ACCOUNT") over which Bank shall have sole
dominion and control and from which only Bank may withdraw funds, a
deposit balance in an amount equal to one hundred ten percent (110%) of
one/twelfth (1/12th) of the aggregate annual premiums under all
policies of insurance required under this Mortgage. Each deposit to the
Insurance Collateral Account shall be subject to Bank's general rules
and regulations except to the extent, if any, inconsistent with this
Mortgage. Bank shall have the right (but no obligation) withdraw funds
from the insurance Collateral Account at any time and from time to time
and to use the same to obtain insurance as hereinbefore provided, or,
after the occurrence of any Default, for application to any Subject
Debt. Bank in its discretion may from time to time release to Grantor
(or to Grantor's order) all or any of the funds then held in the
Insurance Collateral Account, but no such release or releases shall
commit Bank thereafter to make any further or other such releases.
Grantor hereby grants Bank a security interest in the Insurance
Collateral Account to secure all obligations secured by the lien of
this Mortgage. If at any time the balance in the Insurance Collateral
Account shall be less than the required amount, whether as a result of
any withdrawal by Bank or otherwise, then, and in each such case,
Grantor will, forthwith on Bank's request, deposit such additional
amounts as are necessary to restore that balance to the required
amount.
12. COMPLIANCE WITH LAW. Grantor will, and cause all other Persons under its
control, if any, operating or in possession of the Premises to, comply at
all times and in all respects with all laws (whether federal, state, or
local and whether statutory, administrative, judicial, or other) and with
every lawful governmental order (whether administrative or judicial)
pertaining to the occupancy, operation, and use of the
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<PAGE> 9
Premises and, without limiting the generality of the foregoing, will, and
will cause each such Person to,
(a) occupy, operate, and use the Premises in compliance with all
Environmental Laws and handle all Hazardous Materials in compliance
therewith,
(b) comply with and keep in full effect each approval, certification,
license, permit, or other authorization required by any Environmental
Law for the conduct of any activity upon or within the Premises, and
(c) occupy, operate, and use the Premises in compliance with all zoning
ordinances.
13. POWER OF ATTORNEY. Grantor hereby irrevocably constitutes and appoints Bank,
through its employees and agents, with full power of substitution, as
Grantor's true and lawful attorney-in-fact, with full irrevocable power and
authority in the place of Grantor and in the name of Grantor or in Bank's
own name, after the occurrence of and during a continuing Event of Default,
for the purpose of carrying out the terms of this Mortgage, to perform, at
any time and from time to time, each agreement contained in this Mortgage
that is on Grantor's part to be complied with, and to take any and all
actions and to execute and deliver any and all writings which may be
necessary or desirable to give Bank the full benefit of this Mortgage, in
each case as Bank may from time to time deem advisable, Grantor hereby
agreeing that Bank shall owe no duty whatever to Grantor to perform any such
agreement, to take any such action, or to execute or deliver any such
writing or, having done so any one or more times, to thereafter continue
doing so. Without limiting the generality of the foregoing, Grantor hereby
irrevocably authorizes Bank, after the occurrence of and during a continuing
Event of Default, to sign on Grantor's behalf and file, at Grantor's expense
and without Grantor's signature, such affidavits, assignments, financing
statements, indorsements of specific items of Collateral, mortgages, powers
of attorney, security agreements, and other writings as Bank may from time
to time deem advisable for the better evidencing, perfection, protection, or
validation of, or realization of the benefits of, this Mortgage or the
security interest granted pursuant to this Mortgage, 14.
UNCONDITIONAL AND CONTINUING INTEREST. Grantor's obligations under this
Mortgage and granting of the mortgage lien and security interest to Bank
pursuant to this Mortgage are unconditional and effective immediately, and
(except for obligations surviving indefinitely pursuant to section 22) those
obligations and the lien and security interest so granted shall continue in
full effect until the Subject Debt shall have been paid in full, regardless
of the lapse of time, regardless of the fact that there may be a time or
times when no Subject Debt is outstanding, regardless of any act, omission,
or course of dealing whatever on Bank's part, and regardless of any other
event, condition, or other thing.
15. PAYMENT IN FULL; DEFEASANCE. Payment in full of the Subject Debt shall be
deemed not to have occurred unless and until (a) Grantor shall have limited
the indebtedness secured by this Mortgage to zero by the giving
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<PAGE> 10
and recording of notice under applicable law, (b) (c) all of the Subject
Debt shall have been paid to Bank in collected funds that are not subject to
recovery by any trustee in bankruptcy or any other Person. Upon payment in
full of the Subject Debt, this Mortgage (except for obligations surviving
indefinitely pursuant to section 22) shall be void.
16. BANK'S DUTIES LIMTED. Bank shall have no duty as to the collection or
protection of Collateral or any income therefrom, nor as to the preservation
of rights Against other Persons, beyond the safe custody of any Collateral
in Bank's possession. Bank shall have no liability for its delivery of any
property to any Person or Persons who Bank determines in good faith to be
entitled to the same.
17. NO SETOFF. Grantor hereby waives any and all now existing or hereafter
arising rights to recoup or offset any obligation of Grantor under or in
connection with this Mortgage or any Related Writing against any claim or
right of Grantor against Bank.
18. NO HOMESTEAD, EXEMPTION, VALUATION, OR APPRAISAL RIGHTS; NO DOWER. Grantor
waives any homestead or exemption rights as against the obligations secured
by this Mortgage, and waives any and all rights Grantor may now or hereafter
have to insist upon any valuation or appraisal of the Collateral or any part
thereof. If Grantor is more than one Person, then, at Bank's discretion,
those Persons, or either of them, may be deemed to be jointly and severally
liable for the payment and performance of Grantor's obligations under this
Mortgage.
19. INDEMNITY: ADMINISTRATION, ENFORCEMENT, AND TERMINATION; INTEREST. Grantor
will reimburse Bank, on Bank's demand from time to time, for any and all
fees, costs, and expenses (including, without limitation, the fees and
disbursements of legal counsel) incurred by Bank in administering this
Mortgage and in enforcing, exercising, or protecting its rights under this
Mortgage or under applicable law, or in attempting to do any of the
foregoing. Grantor agrees that if and when Bank's security interest shall
have terminated in accordance with the provisions of this Mortgage, Grantor
will, on Bank's demand from time to time, reimburse Bank for all costs and
expenses (including, without limitation, fees and disbursements of legal
counsel) incurred by Bank in releasing or terminating each assignment,
financing statement, mortgage, or other writing signed pursuant to this
Mortgage. If any amount owing under this Mortgage is not paid when due,
then, and in each such case, Grantor shall pay, on Bank's demand, interest
on that amount from the due date thereof until paid in full at a fluctuating
rate equal to four percent (4%) per annum plus the Prime Rate. Grantor will,
upon each request of Bank, furnish Bank with such advances, assurances
(including, without limitation, a surety bond from a surety satisfactory to
Bank) and deposits, in each case on terms satisfactory to Bank, in order to
ensure that Grantor will perform Grantors obligations under this section 19.
20. INDEMNITY: COMPLIANCE WITH LAW. Grantor will indemnify Bank, its
shareholders, directors, officers, employees, agents, and independent
contractors and their respective successors and assigns, from and
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<PAGE> 11
against any and all liabilities and any and all fees, costs, and expenses
(including, without limitation, the fees and disbursements of legal counsel)
arising out of or in connection with any breach of any representation or
warranty contained in subsection 4.4, or any failure to perform or observe
any agreement contained in section 12, or the existence of any Hazardous
Material upon or within, or the Release of any Hazardous Material from,
upon, or within, the Premises or any part thereof and, in connection
therewith, (a) the release of any lien upon all or any part of the Premises,
(b) any clean-up or other remediation under any Environmental Law or
otherwise, (c) any claim of any Person, (d) any action or inaction by
Grantor or any other Person occupying, operating, or using the Premises or
any part thereof, or by any of their respective shareholders, directors,
officers, employees, agents, or contractors, (e) any loss of value in the
Collateral, and (f) any failure of or defect in title to the Collateral or
any part thereof.
21. WAIVERS; REMEDIES; APPLICATION OF PAYMENTS. Bank may from time to time in
its discretion grant waivers and consents in respect of this mortgage or any
other Related Writing or assent to amendments thereof, but no such waiver,
consent, or amendment shall be binding upon Bank unless set forth in a
writing (which writing shall be narrowly construed) signed by Bank. No
course of dealing in respect of, nor any omission or delay in the exercise
of, any right, power, or privilege by Bank shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any
further or other exercise thereof or of any other, as each such right,
power, or privilege may be exercised either independently or concurrently
with others and as often and in such order as Bank may deem expedient. Each
right, power, or privilege specified or referred to in this Mortgage is in
addition to and not in limitation of any other rights, powers, and
privileges that Bank may otherwise have or acquire by operation of law, by
other contract, or otherwise. Bank shall be entitled to equitable remedies
with respect to each breach or anticipatory repudiation of any provision of
this Mortgage, and Grantor hereby waives any defense which might be asserted
to bar any such equitable remedy. Without limiting the generality of the
foregoing, Bank, in any action to enforce any right arising under or in
connection with this Mortgage, shall be entitled to the appointment, without
notice to Grantor and regardless of whether Bank has an adequate remedy at
law, of a receiver of the Collateral or such thereof as Bank shall deem
advisable, with power to manage and operate that Collateral during the
pendency of that action and until the consummation of any sale or other
disposition of that Collateral, and with power to do such other acts and
things to enable Bank to realize the benefits of this Mortgage. Bank shall
have the right to apply all cash Proceeds of any Collateral to the Subject
Debt with such allocation to the respective parts thereof and the respective
due dates thereof as Bank in its sole discretion may from time to time deem
advisable.
22. OTHER PROVISIONS. The provisions of this mortgage shall bind Grantor and
Grantor's executors, heirs, successors, and assigns and benefit Bank and its
successors and assigns. Except for Grantor and Bank and their respective
successors and assigns, there are no intended beneficiaries of this
mortgage, provided, that Bank shall have the right, in its discretion, to
designate, at any time and from time to time, one or more
-11-
<PAGE> 12
of Bank's shareholders, directors, officers, employees, agents, and
independent contractors and their respective successors and assigns as
intended beneficiaries of section 20. Each representation or warranty made
in or pursuant to this Mortgage shall survive the execution and delivery of
this Mortgage and each other Related Writing. The several captions to
different sections and subsections of this Mortgage are inserted for
convenience only and shall be ignored in interpreting the provisions
thereof. Each reference to a section includes a reference to all subsections
thereof (i.e., those having the same character or characters to the left of
the decimal point), except where the context clearly does not so permit. If
any provision in this Mortgage shall be or become illegal or unenforceable
in any case, then that provision shall be deemed modified in that case so as
to be legal and enforceable to the maximum extent permitted by law while
most nearly preserving its original intent, and in any case the illegality
or unenforceability of that provision shall affect neither that provision in
any other case nor any other provision. Interest for any given period shall
accrue on the first day thereof but not on the last day thereof (unless the
last day is the first day) and in each case shall be computed on the basis
of a 360-day year and the actual number of days in the period. In no event
shall interest accrue at a higher rate than the maximum rate, if any,
permitted by law. Bank shall have the right to furnish to its Affiliates,
and to such other Persons as Bank shall deem advisable for the conduct of
its business, information concerning the business, financial condition, and
property of Grantor, the amount of the Subject Debt of Grantor, and the
terms, conditions, and other provisions applicable to the respective parts
thereof. This Mortgage shall be governed by the law (excluding conflict of
laws rules) of the jurisdiction in which Bank's banking office is located.
23. INTEGRATION. This Mortgage and, to the extent consistent with this Mortgage,
the other Related Writings, set forth the entire agreement of Grantor and
Bank as to its subject matter, and may not be contradicted by evidence of
any agreement or statement unless made in a writing (which writing shall be
narrowly construed) signed by Bank contemporaneously with or after the
execution and delivery of this Mortgage.
24. NOTICE AND OTHER COMMUNICATIONS. Each notice, demand, or other
communication shall be deemed to have been given to Grantor whenever Bank
shall have mailed a writing to that effect by certified or registered mail
to Grantor at Grantor's mailing address (or any other address of which
Grantor shall have given Bank notice after the execution and delivery of
this mortgage); however, no other method of giving actual notice to Grantor
is hereby precluded. Each communication to be given to Bank shall be in
writing and shall be given to Bank's commercial Real Estate Division at
Bank's banking office (or any other address of which Bank shall have given
notice to Grantor after the execution and delivery this Agreement). Grantor
hereby assumes all risk arising out of or in connection with each such
communication given by Grantor to Bank and each communication given or
attempted by Grantor in contravention of this section. Bank shall be
entitled to rely on each communication believed in good faith by Bank to be
genuine.
-12-
<PAGE> 13
25. JURISDICTION AND VENUE; WAIVER OF JURY TRIAL. Any action, claim,
counterclaim, crossclaim, proceeding, or suit, whether at law or in equity,
whether sounding in tort, contract, or otherwise at any time arising under
or in connection with this Mortgage or any other Related Writing, the
administration, enforcement, or negotiation of this Mortgage or any other
Related Writing, or the performance of any obligation in respect of this
Mortgage or any other Related Writing (each such action, claim,
counterclaim, crossclaim, proceeding, or suit, an "ACTION") may be brought
in any federal or state court located in the city in which Bank's banking
office is located. Grantor hereby unconditionally submits to the
jurisdiction of any such court with respect to each such Action and hereby
waives any objection Grantor may now or hereafter have to the venue of any
such Action brought in any such court. Grantor HEREBY, AND EACH HOLDER OF
THE Subject Debt OR ANY PART THEREOF, KNOWINGLY AND VOLUNTARILY WAIVES JURY
TRIAL IN RESPECT OF ANY Action.
Signed and Acknowledged Grantor:
in the Presence of:
WENDT-BRISTOL DIAGNOSTICS
/s/ John D. Robinett COMPANY L.P., a Delaware
__________________________________ limited partnership
Witness
John D. Robinett
__________________________________ By: Wendt-Bristol Diagnostics
Witness name printed Company, an Ohio Corporation
Its: General Partner
/s/ James R. Partridge
__________________________________
Witness
Sheldon A. Gold, Its President
By:_____________________________________
Name Printed
James R. Partridge
__________________________________
Witness name printed
STATE OF OHIO
COUNTY OF FRANKLIN , SS:
---------------
BEFORE ME, a Notary Public in and for said County and State, personally appeared
SHELDON A. GOLD in his capacity as President of Wendt-Bristol Diagnostics
Company in its capacity as General Partner of Wendt Bristol Diagnostics
Company, L.P., who acknowledged that (he)(she) did sign the foregoing for and
on behalf of that entity, with all necessary power and authority to do so, and
that the same is the free act and deed of that entity and is the free act and
deed of each such individual personally and in the capacity hereinbefore set
forth.
IN TESTIMONY, I set my hand and official seal this 1st day of April 1996.
/s/ John D. Robinette
---------------------------------------
Notary Public
This instrument prepared by:
-13-
<PAGE> 14
National City Bank, Columbus
Law Department
155 East Broad Street
Columbus, Ohio 43251-0073
-14-
<PAGE> 15
Legal Description
EXHIBIT A
<PAGE> 16
EXHIBIT "A"
Situated in the State of Ohio, County of Franklin, City of Columbus, and being
in the 3rd Quarter of Township 1, Range 18 of the United states Military Lands,
and being part of Lots 15 and 16 of the Franklin County Infirmary Lots (also
being all of a 0.480 acre tract and part of a 1.229 acre tract conveyed to
Eugene Deal by a deed recorded in Official Records Volume 8009, Page B20, of
the Franklin County Deed Records), and being further bounded and described as
follows:
Beginning for a point of reference at the centerline intersection of King Avenue
and Kenny Road; thence South 03 20' 00" West 231.00 feet, along the centerline
of Kenny Road, to the true point of beginning, said point being the
northwesterly corner of the aforementioned 0.480 acre tract; thence South 87 06'
58" East, parallel with the centerline of King Avenue, 330.58 feet to an iron
pin set on the east line of the aforementioned 1.229 acre tract, pressing an
iron pin found on the easterly right-of-way line of Kenny Road at 25.00, also
passing an iron pin found at the northeasterly corner of said 0.480 acre tract
at 178.00 feet; thence South 03 41' 01" West 119.74 feet, along the easterly
line of the aforementioned 1.229 acre tract to an iron pin found at the
southeasterly corner of said 1.229 acre tract, said point being the
northeasterly corner of a 1.94 acre tract conveyed to Mary C. Burns by deed of
record in Deed Book 3106, Page 394 of the Franklin County Deed Records; thence
North 86 35' 47" West 329.84 feet, along the southerly line of said 1.229 acre
an 0.480 acre tracts and along the northerly line of said 1.94 acre tract, to a
point in the centerline, of Kenny Road, said point being the southwesterly
corner of the aforementioned 0.480 acre tract, passing an iron pin found at the
southwesterly corner of said 1.229 acre tract and the southeasterly corner of
said 0.480 acre at 151.84 feet, also passing an iron pipe found on the easterly
right-of-way line of Kenny Road at 304.84 feet; thence North 03 20' 00" East
116.74 feet, along the centerline of Kenny Road and along the westerly line of
said 0.480 acre tract to the place or beginning.
Containing 0.896 acres, subject to the right-of-way of Kenny Road, and any valid
and existing easements of record.
Also subject to an easement for ingress and egress along the north line of the
above described 0.896 acre tract. Said easement being 20 feet in width and
beginning at the easterly right-of-way of Kenny Road and extending easterly a
distance of 250.00 feet, fully described in Official Records Volume 9582, Page
D13, Recorder's Office, Franklin County, Ohio.
The bearings used in this description are based on the bearings used in the deed
to Eugene Deal recorded in Official Records Volume 8009, Page B20, of the
Franklin County Deed Records. The iron pins described are 5/8 inch diameter,
30 inches long, solid reinforcing bars with plastic identification caps.
This description was prepared by the Hitchens Corporation, Division of
Engineering and Surveying, from a survey made by sane during April of 1987.
<PAGE> 1
Prepared by:
- --------------------------
Christopher L. Beers, Esq.
FIRST MORTGAGE, ASSIGNMENT OF
LEASES AND RENTS AND SECURITY AGREEMENT
Dated: as of April 19, 1996
In the amount of
$1,700,000
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
(formerly known as Temco Home Care Products, Inc.)
Two Nationwide Plaza
Suite 760
Columbus, Ohio 43215
Mortgagor,
-to-
GRAND PACIFIC FINANCE CORP.
41-99 Main Street
Flushing, New York 11355
Mortgagee.
LOCATION OF PREMISES:
Street Address: 125 South Street
County of: Passaic
City of: Passaic
State of: New Jersey
Lot: 23
Block: 1030
- --------------------------------------------------------------------------------
After recording, please return to:
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112-0127
Prepared by: _________________________
Lester Ross
- --------------------------------------------------------------------------------
<PAGE> 2
FIRST MORTGAGE, ASSIGNMENT OF LEASES
AND RENTS AND SECURITY AGREEMENT
THIS FIRST MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND SECURITY
AGREEMENT, made as of this 19th day of April, 1996, by THE WENDT-BRISTOL HEALTH
SERVICES CORPORATION (formerly known as Temco Home Care Products, Inc.), a
Delaware corporation with an address at Two Nationwide Plaza, Suite 760,
Columbus, Ohio 43215 (the "Mortgagor"), to GRAND PACIFIC FINANCE CORP., having
an address at 41-99 Main Street, Flushing, New York 11355 (the "Mortgagee").
RECITALS
WHEREAS, Mortgagor is the owner of a fee interest in the real property
and the improvements thereon situate upon the real property with a street
address at 125 South Street, Passaic, New Jersey, as more particularly described
in Exhibit A hereto (the "Premises"); and
WHEREAS, the Premises are the same as those described in deed recorded
on December 14, 1983 in Deed Book L111, page 43 in the Clerk's Office of
Passaic County; and
WHEREAS, Mortgagee has agreed to lend to Mortgagor pursuant to a First
Mortgage Loan Agreement between Mortgagor and Mortgagee of even date herewith
(the "Loan Agreement") the principal amount of ONE MILLION SEVEN HUNDRED
THOUSAND and no/100 Dollars ($1,700,000) (the "Loan") which is to be evidenced
by a Secured Promissory Note (the "Note") of Mortgagor of even date herewith in
such amount; and
WHEREAS, in order to secure Mortgagor's obligations under the Note and
Loan Agreement, Mortgagor has agreed to grant this Mortgage to Mortgagee;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Mortgagor and Mortgagee agree as follows:
CERTAIN DEFINITIONS
Unless the context otherwise specifies or requires, the following terms
shall have the indicated meanings, such definitions to be applicable equally to
the singular and the plural forms of such terms.
"Affiliate" means any person that is under common ownership and control
as Mortgagor.
"Bankruptcv Code" means the United State Bankruptcy Code, II U.S.C.
Section 111 et seq., as the same may be amended from time to time.
"Chattels" means all fixtures, furnishings, fittings, appliances,
apparatus, equipment, supplies, building materials, machinery and other articles
of personal property (and additions thereto and replacements thereof) that are
not Improvements and that (i) are now or at any time hereafter affixed to,
attached to, placed upon, or used in any way in connection with the use,
enjoyment, occupancy,
<PAGE> 3
improvement or operation of the Premises, and/or (ii) were purchased with a
portion of the sums secured hereby, other than personal property owned by
tenants under Leases.
"Default Rate" has the meaning ascribed to it in the Note and/or the
Loan Agreement.
"Entity" or "entity" means any corporation, firm, trust, partnership,
association, government, governmental agency, or any other entity, whether
acting in an individual, fiduciary or other capacity.
"Environmental Laws" means any and all Legal Requirements regulating,
relating to or imposing liability or standards of conduct concerning any
Hazardous Material, as may now or at any time hereafter be in effect.
"Event of Default" means any of the events or circumstances described
as such in Section 3.1 hereof.
"Governmental Authority" means any nation, government, city or state
or any political subdivision of any of the foregoing, including, without
limitation, any monetary authority, central bank or its equivalent, any court or
any other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government exercising jurisdiction
over the Mortgaged Property, or whose consent or approval is required as a
prerequisite to the use, operation or occupancy of the Mortgaged Property, or to
the performance of any act or obligation or the observance of any agreement,
provision or condition of whatever nature herein contained.
"Handling" means the manufacture, production, storage, handling,
transferring, refining, treating, processing, transporting, discharging,
releasing or disposing of Hazardous Materials.
"Hazardous Materials" means hazardous substances, pollutants,
contaminants, toxic or hazardous wastes, or any other substances the removal or
remediation of which may be required, or the Handling of which is restricted,
prohibited, regulated or penalized by any Legal Requirement now or at any time
hereafter in effect under the laws of the United States or the State of New
Jersey or any subdivision thereof, including, without limitation, any waste,
substance or material that exhibits any of the characteristics enumerated in 40
C.F.R. Sections 261.20-261.24, inclusive, any hazardous substance, pollutant or
contaminant as defined in or pursuant to 42 U.S.C. Sections 9601(14), 9601(33)
or 9602, any extremely hazardous substances listed under or pursuant to 42
U.S.C. Sections 11002 or 40 C.F.R. Sections 355 or 372, or any toxic or
hazardous chemical substances that are present in quantities that exceed
exposure standards as those terms are defined under 29 U.S.C. Sections 655 or
657 or 29 C.F.R. Part 1910 subpart Z, except for minor quantities of chemicals
normally found in residential apartment facilities such as in cleaning supplies
and fire extinguishers, the presence or Handling of which is not prohibited by
Legal Requirements. All references to any statute in this definition shall be
deemed to refer to such statute as it may be amended from time to time, and to
include any statute superseding or supplementing any such statute.
"Improvements" means the buildings, structures and other improvements
situate upon the Premises including, without limitation, all equipment,
apparatus, machinery and fixtures of every kind and nature whatever affixed to
and forming part of such structures or buildings.
"Indebtedness" means the total of (a) the principal amount evidenced by
the Note together with interest thereon as set forth in the Note, (b) any and
all sums paid by Mortgagee for Taxes and insurance premiums as provided in this
Mortgage with respect to the Mortgaged Property, together with interest thereon
at the Default Rate, (c) any and all other sums advanced or paid by Mortgagee
pursuant to the terms of this Mortgage to protect and preserve the Mortgaged
Property or Mortgagee's
2 of 26
<PAGE> 4
interest in the Mortgaged Property, together with interest thereon at the
Default Rate, and (d) reasonable attorneys' fees, disbursements, costs and
expenses, judgments and settlements paid by Mortgagee in any legal proceeding
affecting the Indebtedness or the Mortgaged Property in which Mortgagee is a
party, including any dispute regarding insurance coverage or insurance proceeds,
any Federal bankruptcy proceeding or state insolvency proceeding or other
proceeding involving the rights of creditors, or any action to enforce or
protect the security of this Mortgage.
"Indemnified Persons" means the Mortgagee's officers, directors,
shareholders, employees and agents, any successor to any interest of the
Mortgagee in the Mortgaged Property and such successor's officers, directors,
shareholders, employees and agents.
"Indemnity Agreement" means the Environmental Indemnity Agreement of
even date herewith from Mortgagor to Mortgagee.
"Late Fee" has the meaning given to such term in the Loan Agreement.
"Leases" means all leases, subleases, concessions, licenses and other
occupancy agreements under which Mortgagor is the landlord or is otherwise the
grantor of the applicable estate or interest, now or hereafter affecting the use
or occupancy of the Premises or any part thereof.
"Legal Requirements" means, as to any entity, the certificate of
incorporation and by-laws or partnership agreements and certificate of limited
partnership or other organizational or governing documents of such entity, and
any law, treaty, rule or regulation, or determination of an arbitrator or a
court or Governmental Authority, in each case applicable to or binding upon any
person or any of its property or to which such person or any of its property is
subject; and, as to the Mortgaged Property, any applicable laws, statutes,
codes, treaties, permits, decrees, ordinances, orders, rules, regulations or
requirements of any Governmental Authority or officer or court, including,
without limitation, any applicable Environmental Laws, ecological, zoning,
landmark, subdivision, building, use and land use laws, codes, statutes and
regulations and any applicable covenants and restrictions.
"Loan" has the meaning given to such term in the Recitals hereof.
"Loan Agreement" has the meaning given to such term in the Recitals
hereof.
"Loan Documents" means this Mortgage, the Loan Agreement, the Note, the
Indemnity Agreement, and any and all other documents given to Mortgagee from
time to time to evidence or secure the Indebtedness and any and all other
documents executed and delivered by Mortgagor in connection with the foregoing.
References to the Loan Documents or to any particular Loan Documents shall be
deemed references to such document as the same may be renewed, modified,
consolidated, replaced and/or restated from time to time in accordance with the
provisions of the Loan Documents.
"Mortgage" means this First Mortgage, Assignment of Leases and Rents
and Security Agreement.
"Mortgaged Property" has the meaning given to such term in the Granting
Clause hereof.
"Note" has the meaning given to such term in the Recitals hereof.
"Permitted Encumbrances" has the meaning given to such term in Section
1.1 hereof.
"Person" or "person" means any natural person and any entity.
3 of 26
<PAGE> 5
"Substantial Casualty" means any damage to or destruction of the
Premises which materially and adversely affects fifty percent (50%) or more (in
rentable square feet or replacement cost) of the Improvements.
"Taxes" has the meaning given to such term in Section 2.9(a) hereof,
"Transfer" means the granting or making of any (i) mortgage,
hypothecation, encumbrance, grant of a security interest, assignment, sale,
conditional sale, option, pledge, chattel mortgage or other transfer of the
Mortgaged Property or any part thereof or any interest therein (including,
without limitation, any "air" or development rights) either voluntarily or
involuntarily, by operation of law or otherwise, or (ii) assignment, sale,
pledge, hypothecation or other transfer of any interest of Mortgagor in the
Premises.
"UCC" means the New Jersey Uniform Commercial Code.
GRANTING CLAUSE
In order to secure the payment of the Indebtedness and the performance
and observance of all of the provisions of this Mortgage, the Note, the Loan
Agreement and the other Loan Documents, Mortgagor hereby gives grants, bargains,
sells, releases, conveys, assigns, transfers, mortgages, hypothecates, pledges,
sets over and confirms unto Mortgagee all of Mortgagor's leasehold estate,
right, title and interest in, to and under any and all of the following
described property (collectively, the "Mortgaged Property") whether now owned or
held or hereafter acquired:
(i) the Premises;
(ii) the Improvements;
(iii) the Chattels;
(iv) all Leases, together with the rents, issues, income,
and profits thereof, and all cash or security deposits, advance rentals, and
deposits or payments made thereunder (except that Mortgagor, as licensee of
Mortgagee, shall have the right to collect such rents and other amounts, subject
to the provisions of this Mortgage, so long as no Event of Default shall have
occurred);
(v) all proceeds of and any unearned premiums accrued,
accruing or to accrue under any insurance policies (including, without
limitation, title insurance policies) now or hereafter covering the Premises;
(vi) all books and records relating to the Premises;
(vii) all warranties, plans and specifications relating to
the Premises or the Chattels;
(viii) to the extent assignable, all consents, certificates,
authorizations, variances, waivers, licenses, permits and approvals from any
Governmental Authority with respect to the Mortgaged Property;
(ix) to the extent assignable, all management, maintenance,
service, marketing, engineering, architectural and construction contracts,
receipts and other items of intangible personal property now or hereafter in
existence and relating to the ownership, improvement,
4 of 26
<PAGE> 6
operation or management of the Premises or the Chattels
(but no such assignment shall be construed as a consent
by Mortgagee to any agreement, contract, license or
permit so assigned, or to impose upon Mortgagee any
obligations with respect thereto);
(x) to the extent assignable, all of Mortgagor's rights and
remedies at any time arising under or pursuant to
Section 365(h) of the Bankruptcy Code, 11 U.S.C.
Section 365(h), including, without limitation, all of
Mortgagor's rights to remain in possession of the
Mortgaged Property thereunder;
(xi) all interest rate swap, exchange or protection
agreements with respect to any debt secured in whole or
in part by the Mortgaged Property now or hereafter
entered into by Mortgagor;
(xii) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or
liquidated claims, including, without limitation, and
subject to the provisions of Section 2.4 hereof,
proceeds of insurance, and, subject to the provisions of
Section 2.6 hereof, condemnation awards, and all rights
of Mortgagor to refunds of real estate taxes and
assessments; and
(xiii) all right, title and interest of Mortgagor in and to
all extensions, improvements, betterments, renewals,
substitutions and replacements of, and all additions and
appurtenances to, the Premises, the improvements and/or
any other property or rights encumbered or conveyed
hereby, hereafter acquired by or released to Mortgagor
or constructed, assembled or placed by Mortgagor in the
Premises, the Improvements and/or any other property or
rights encumbered or conveyed hereby, and all
conversions of the security constituted thereby which,
immediately upon such acquisition, release,
construction, assembling, placement or conversion, as
the case may be, and in each such case without any
further mortgage, conveyance, assignment or other act by
Mortgagor, shall become subject to the lien of this
Mortgage as fully and completely, and with the same
effect, as though now owned by Mortgagor and as
specifically described herein.
TO HAVE AND TO HOLD unto Mortgagee, its successors and assigns forever.
AND Mortgagor further covenants and agrees with Mortgagee as follows:
ARTICLE I
Representations and Warranties of Mortgagor
With respect to its corporate existence Mortgagor represents and
warrants to Mortgagee as follows:
Section 1.1 Title to the Mortgaged Property. Mortgagor has good,
marketable and insurable fee interest in the Premises, subject only to those
exceptions to the title insurance policy insuring the lien of this Mortgage and,
if required by order of The New Jersey Department of Environmental Protection,
to a declaration of environmental restriction to be filed on ISRA Case #E88557
and 92062 (the "Permitted Encumbrances"). Mortgagor owns the Chattels, rents and
all other personal property encumbered by this Mortgage free and clear of liens
and claims and options to purchase the Premises. Mortgagor has full power and
lawful authority to encumber the Mortgaged Property in the manner and form set
forth herein. This Mortgage is a valid and enforceable first lien on the
Mortgaged Property, subject only to the Permitted Encumbrances.
5 of 26
<PAGE> 7
Section 1.2 Mortgage Authorized. The execution and delivery by
Mortgagor of, and performance by the Mortgagor of its obligations under, this
Mortgage, the Loan Agreement and the Note will not result in Mortgagor being in
default under any provision of any mortgage, credit or other agreement to which
he is a party, by which he is bound or which affects Mortgagor or the Mortgaged
Property, or any part thereof.
Section 1.3 Flood Insurance Status. The Land is located in an area
designated as a "Special Flood Hazard Area" by the Federal Insurance
Administration.
Section 1.4 No Hazardous Materials. Except for Hazardous Materials used
by the tenant of the Mortgaged Property as disclosed to the New Jersey
Department of Environmental Protection in ISRA Case #E88557 and 92062, (a) to
the best knowledge of Mortgagor no part of the Mortgaged Property has been or is
now being used (whether pursuant to law or otherwise) for the Handling of
Hazardous Materials nor has there been any use at, or any discharge at or
affecting, the Premises or any part thereof, nor has there been any discharge at
or affecting any property in the vicinity of the Premises, of any Hazardous
Materials; (b) to the best knowledge of Mortgagor, the Premises is free of
contamination by any Hazardous Materials; and (c) Mortgagor has not received
notice of any violation, claim, action or threatened action arising out of the
presence or Handling of any Hazardous Materials in, on or around the Premises or
the noncompliance of the Premises with any Environmental Laws, and to the best
knowledge of Mortgagor the Premises is in full compliance with all Environmental
Laws.
Section 1.5 Certificates, Licenses, etc. for Operation of the Premises.
(a) All certificates, licenses, authorizations, registrations, permits and/or
approvals necessary, to the best knowledge of Mortgagor, for the use and
operation of the Premises or any part thereof (including, but not limited to,
temporary Certificate(s) of Occupancy, Board of Fire Underwriters Certificate(s)
and all required environmental permits) have been or, as otherwise disclosed to
Mortgagee, will be duly obtained or renewed by Mortgagor as set forth in the
Loan Agreement and (b) as of the date hereof, to the best knowledge of
Mortgagor, no certificate, license, authorization, registration, permit and/or
approval necessary to use or operate the Premises is subject to denial or
restriction that would prohibit or unreasonably restrict such use or operation
as contemplated in the Loan Agreement.
Section 1.6 No Litigation. There are no legal actions or arbitration or
other proceedings pending or, to the best of Mortgagor's knowledge, threatened
against Mortgagor relating to the Premises.
Section 1.7 Compliance with Law. As to the Premises, Mortgagor is
conducting its business and operations in all material respects in compliance
with all applicable laws and directives of governmental authorities having the
force of law. Mortgagor has filed all tax returns required to be filed and has
paid all taxes due in respect of the ownership of its assets and the conduct of
its operations.
Section 1.8 Receipt of Mortgage. Mortgagor certifies and acknowledges
that Mortgagor has received a true and correct copy of this Mortgage without
charge.
ARTICLE 2
Covenants and Agreements of Mortgagor
Mortgagor covenants with and to Mortgagee as follows:
Section 2.1 Payment of the Indebtedness. Mortgagor will punctually pay
the Indebtedness as provided in the Loan Documents.
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<PAGE> 8
Section 2.2 Preservation of Title. Mortgagor shall (a) preserve good,
marketable and insurable title to the Mortgaged Property, subject only to the
Permitted Encumbrances, (b) own all fixtures and articles of personal property
hereafter comprising part of the Mortgaged Property free and clear of all liens
and claims, (c) maintain this Mortgage as a valid and enforceable first
leasehold lien on the Premises, subject only to the Permitted Encumbrances and
(d) forever warrant and defend the validity and priority of the lien of this
Mortgage against the claims of all Entities whomsoever.
Section 2.3 Insurance Coverage.
(a) Mortgagor, at Mortgagor's sole cost and expense, shall keep the
improvements and Chattels insured at all times, for the mutual benefit of
Mortgagee and Mortgagor against loss or damage by fire and such other hazards
and risks as are now or hereafter embraced by so-called "all risk" coverage
(including loss or damage caused by flood) for the full replacement value, of
the Improvements and Chattels; such insurance shall be written on an "agreed
amount" basis so as to prevent Mortgagor from becoming a co-insurer.
(b) Mortgagor, at Mortgagor's sole cost and expense, shall maintain and
keep in full force and effect at all times: (i) broad form commercial general
liability insurance with coverage of not less than One Million Seven Hundred
Thousand Dollars ($1,700,000) in aggregate and One Million Seven Hundred
Thousand Dollars ($1,700,000) per occurrence; (ii) workers' compensation
insurance, in accordance with all applicable statutory requirements; (iii)
rental insurance against loss due to fire or other hazards and risks in an
amount not less than the annual gross value of all rents for the Premises; (iv)
any other insurance required to be maintained by Mortgagor pursuant to any
Lease; and (v) such other insurance in such amounts as may from time to time be
reasonably required by Mortgagee, insuring against insurable risks which at the
time are commonly required to be insured against by prudent lenders in respect
of comparable premises in New Jersey.
(c) All insurance policies required pursuant to this Section 2.3 shall
be endorsed to the name of Mortgagee as an insured thereunder, as its interest
may appear, with loss payable to Mortgagee, without contribution, under a
standard New York mortgagee non-contribution clause or equivalent endorsement
and shall be issued by a company or companies approved by Mortgagee. All such
insurance policies and endorsements shall be fully paid for and contain such
provisions and expiration dates and be in such form and issued by such insurance
companies licensed to do business in New Jersey as shall be approved by
Mortgagee with an A.M. Best Company Rating Guide rating of A plus, Category X or
a Standard & Poor's Corporation rating of "A". Each policy shall provide (i)
that such policy may not be canceled or materially changed except upon thirty
(30) days' prior written notice to Mortgagee and (ii) that no act or thing done
by Mortgagor shall invalidate the policy as against Mortgagee. If Mortgagor
fails to maintain insurance in compliance with this Section 2.3. Mortgagee may,
but shall not be obligated to, obtain such insurance and pay the premium
therefor and Mortgagor shall, on demand, reimburse Mortgagee for all expenses
incurred in connection therewith. Mortgagor shall deliver to Mortgagee copies of
all original policies together with the endorsements required hereunder,
certified by the insurance company or authorized agent as being true copies.
Mortgagor shall forward to Mortgagee all renewal policies, or certificates
evidencing such policies, at least thirty (30) days prior to the expiration of
Mortgagor's then current policies. Notwithstanding anything to the contrary
contained herein or any other provision of applicable law, the proceeds of
insurance policies coming into the possession of Mortgagee shall not be deemed
trust funds and Mortgagee shall be entitled to dispose of such proceeds as
herein provided. No insurance policy maintained by the Borrower shall contain a
deductible in excess of Five Thousand Dollars ($5,000).
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Section 2.4 Damage or Destruction, Insurance Proceeds.
(a) Mortgagor shall give to Mortgagee written notice of any
damage to or destruction of the Improvements or Chattels, or any part thereof,
having a cost of repair or replacement in excess of Twenty-Five Thousand Dollars
($25,000) as reasonably estimated by Mortgagor's insurance consultant.
(b) Mortgagor shall promptly commence and diligently complete
the restoration of the Mortgaged Property, whether or not insurance proceeds (if
any) made available to Mortgagor are sufficient therefor. Any restoration shall
be performed in accordance with the requirements set forth in this Section 2.4.
(c) (i) Except as provided to the contrary herein, the
proceeds of insurance (including, without limitation, loss of rental income
insurance) paid on account of any damage or destruction to the Mortgaged
Property, or any part thereof, shall be paid over to Mortgagee to be applied as
hereinafter provided. Notwithstanding anything to the contrary contained herein
or in any provision of any applicable law, (1) the proceeds of insurance
policies coming into the possession of Mortgagee shall not be deemed trust funds
and (2) Mortgagee shall be entitled to dispose of such proceeds as hereinafter
provided in this Section 2.4.
(ii) In the event of damage to or destruction of
the Improvements or Chattels or any part thereof, the estimated cost of repair
(either as estimated by Mortgagor and agreed to by Mortgagee or as finally
determined in the event of a dispute by a reputable, licensed engineer or
architect selected by and paid for by Mortgagor and reasonably satisfactory to
Mortgagee) of which is equal to or less than Twenty-Five Thousand Dollars
($25,000), any insurance proceeds actually received by Mortgagee with respect
thereto (less any reasonable expense, including, without limitation, any
reasonable attorneys' fees and disbursements, incurred by Mortgagee in
connection with the collection of such insurance proceeds, and reasonable costs
of consultants or other costs in determining the amount of the loss) shall,
except as provided to the contrary below, and provided no Event of Default then
exists, be immediately released by Mortgagee to Mortgagor for application to the
cost of restoration.
(iii) In the event of any damage to or destruction
of the Improvements or Chattels or any part thereof, the estimated cost of
repair of which exceeds Twenty-Five Thousand Dollars ($25,000), any insurance
proceeds actually paid to Mortgagor shall be promptly delivered to Mortgagee,
and shall be applied by Mortgagee (1) first to reimburse Mortgagee for any
reasonable expenses (including, without limitation, any reasonable attorneys'
and consultants' fees and disbursements) incurred by Mortgagee in connection
with the collection of such insurance proceeds or the determination of the
amount of the loss, and (2) except as provided to the contrary in clause (iv)
below, then to Mortgagor (or, at Mortgagee's option, directly to any contractors
performing restoration) in accordance with the procedures and subject to the
conditions specified in clauses (iv) and (v) below to pay the cost of the
restoration of the improvements and Chattels.
(iv) Any provision of this Mortgage to the contrary
notwithstanding, Mortgagee shall not be obligated to make insurance proceeds
received by Mortgagee available to Mortgagor for restoration in accordance with
the terms and conditions more particularly set forth herein, and may elect to
apply any such proceeds towards the reduction of the Indebtedness, if (1) an
Event of Default has occurred, (2) the damage or destruction constitutes a
Substantial Casualty, (3) the estimated cost to restore is in excess of the
insurance proceeds available for such purpose and Mortgagor shall have failed
to deposit with Mortgagee a sum (by way of cash, letter of credit or other
similar liquid collateral reasonably satisfactory to Mortgagee) equal to the
amount by which the estimated cost to restore shall exceed insurance proceeds
available for such purpose, (4) in Mortgagee's reasonable judgment such
restoration will not be completed by Mortgagor during the period with respect to
which proceeds of the rental insurance carried pursuant to Section 2.3 are
payable, and Mortgagor has not made provisions
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satisfactory to Mortgagee for the payment of any portion of the Indebtedness
payable prior to the completion of such restoration or (5) Mortgagee's
construction consultant determines that the restoration can not be completed
prior to the Maturity Date.
(v) If Mortgagee shall make insurance monies
available for the reimbursement of Mortgagor's costs of restoration, Mortgagor
shall, not more often than once each month, as a condition precedent to each
advance of insurance proceeds, submit to Mortgagee a cost breakdown of work
completed to date, together with a requisition on Mortgagee's form, which shall
be certified by Mortgagor and, when the restoration so requires, its architect
and shall state that (1) such work has been completed substantially in
accordance with the plans and/or specifications approved by Mortgagee, such
approval not to be unreasonably withheld or delayed, (2) the requested amount
has been paid in full or has actually been incurred and is payable, and (3) the
then estimated cost of completing the restoration does not exceed the amount
that Mortgagee, will hold pursuant to this Section 2.4(c) following the
requested payment to Mortgagor. Disbursements by Mortgagee with respect to costs
of restoration shall be subject to such reasonable and customary conditions
(including retainages) as Mortgagee shall determine, shall be conditioned upon
receipt by Mortgagee of such evidence of compliance with all laws and the
absence of liens as Mortgagee shall reasonably require, and may be conditioned
upon such independent inspections by Mortgagee or its agents as Mortgagee may
reasonably elect to make or cause to be made at Mortgagor's expense.
(d) Notwithstanding any damage to or destruction of the
improvements or the Chattels or any part thereof, and regardless of the
sufficiency or insufficiency of insurance proceeds made available to Mortgagor
by reason thereof, Mortgagor shall continue to pay the Indebtedness, and any
reduction in the Indebtedness resulting from the application of any insurance
proceeds to the payment of the Indebtedness by Mortgagee shall be deemed to take
effect only from and after the date of such application by Mortgagee.
Section 2.5 Restoration by Mortgagee. If within a reasonable
period of time (taking into consideration the circumstances then prevailing)
after the occurrence of any damage or destruction to any part of the Premises,
Mortgagor shall not have submitted to Mortgagee and received Mortgagee's
approval of plans and specifications for the restoration of the Premises so
damaged or destroyed (prepared by a licensed architect and approved by all
Governmental Authorities whose approval is required), or if, following approval
of such plans and specifications by all such Governmental Authorities and
Mortgagee, Mortgagor shall fail to commence restoration with reasonable
promptness, or if, after commencing restoration Mortgagor shall fail promptly
and diligently to complete such restoration, then, in any of such events, in
addition to all other rights set forth herein and after giving Mortgagor ten
(10) days' written notice of the nonfulfillment of one or more of the foregoing
conditions, Mortgagee and/or its agents, or any lawfully appointed receiver of
the Premises, may at their respective options, take such steps as they deem
advisable, including performing or causing to be performed any such restoration.
Without limiting the generality of the foregoing provisions of this Section 2.5,
upon twenty-four (24) hours' prior notice to Mortgagor, Mortgagee may enter upon
the Premises to the extent reasonably necessary for any of the foregoing
purposes, and Mortgagor hereby waives any claim against Mortgagee, its agents
and such receiver arising out of any act or failure to act by Mortgagee, its
agents or such receiver pursuant hereto, other than a claim arising out of the
gross negligence or willful misconduct of Mortgagee, its agents or such
receiver. Mortgagee may, at its option, apply any net insurance proceeds
(without Mortgagee being required to fulfill any other requirements of this
Mortgage) to reimburse Mortgagee, its agents and/or such receiver for all
amounts expended or incurred by them in connection with the performance of such
restoration or the payment of such lien, and any such costs for which such net
insurance proceeds are not sufficient to fully reimburse Mortgagee, its agents
and such receiver shall be paid by Mortgagor to Mortgagee upon demand, and such
excess costs shall be deemed part of the Indebtedness and shall be secured by
the lien of this Mortgage.
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Section 2.6 Condemnation.
(a) Mortgagor shall give Mortgagee prompt written notice of
the commencement of any condemnation or eminent domain proceedings affecting all
or any part of the Mortgaged Property, and shall deliver to Mortgagee copies of
any papers served in connection with such proceedings. Mortgagor shall give
Mortgagee advance notice of, and Mortgagee shall have the right (to the fullest
extent permitted by law) to intervene or otherwise participate in any such
proceedings and may be represented by counsel of its selection. Mortgagor shall
be responsible for the payment of Mortgagee's reasonable legal fees and
disbursements in connection therewith.
(b) So long as no default or Event of Default has occurred,
Mortgagor shall have the right and the obligation to enforce, compromise or
settle the claim for any award, but if the amount of such claim is in excess of
Twenty-Five Thousand Dollars ($25,000), such enforcement, compromise or
settlement shall be subject to the prior written consent of Mortgagee, which
consent shall not be unreasonably withheld or delayed. The foregoing
notwithstanding, so long as a default or an Event of Default has occurred and is
continuing, Mortgagee (to the exclusion of Mortgagor) is hereby empowered and
authorized to enforce, compromise or settle the claim for any award without the
consent of Mortgagor. Any awards made to Mortgagor for the taking by
condemnation or eminent domain of all or any part of the Mortgaged Property (or
payments made in lieu thereof) are hereby assigned by Mortgagor to Mortgagee,
and Mortgagee shall be and is hereby irrevocably authorized to collect and
receive such awards (or payments) from the condemnation authorities. Any such
awards (or payments) shall be applied (i) first to reimburse Mortgagee for any
expenses, including, without limitation, any reasonable attorneys' fees and
disbursements, incurred by Mortgagee in connection with the collection of such
awards (or payments), and then (ii) to reduce the Indebtedness; provided,
however, that Mortgagee shall not apply any such awards (or payments) to reduce
the Indebtedness to the extent of the costs of restoring the Improvements
actually incurred by Mortgagor as a direct result of such condemnation if (1)
less than five percent (5%) of the Improvements shall have been taken, (2) no
Event of Default exists, and (3) using such awards to pay for costs of
restoration rather than to reduce the Indebtedness would not result in a
loan-to-value ratio (ie., the ratio of Indebtedness to the fair market value of
the Premises after such taking as determined by Mortgagee's appraiser) which is
greater than the loan-to-value ratio of the Indebtedness to the Premises and
prior to the taking. Mortgagor shall, whether or not it receives awards
sufficient for such purpose, diligently proceed in accordance with the
procedures set forth herein to restore the Improvements as nearly as practicable
to their condition prior to such taking, and to the extent that the reasonably
estimated cost of completing such restoration shall exceed the amount of any
condemnation award available to Mortgagor to pay such cost, Mortgagor shall, as
a condition to disbursement of proceeds to Mortgagor, deposit with Mortgagee
security for the payment of such excess cost (by way of cash, letter of credit
or other collateral reasonably acceptable to Mortgagee). Mortgagee shall hold
and apply such awards and/or security deposited by Mortgagor toward such costs
of restoration in the same manner as Mortgagee would hold and disburse insurance
proceeds pursuant to Section 2.4 hereof.
(c) Notwithstanding any condemnation of the Mortgaged Property
or any part thereof, and regardless of the sufficiency or insufficiency of any
condemnation award made available to Mortgagor by reason thereof, Mortgagor
shall continue to pay the Indebtedness hereby secured, and any reduction in the
Indebtedness resulting from the application of the proceeds of any condemnation
award by Mortgagee to the reduction of the Indebtedness shall be deemed to take
effect only from and after the date of such application by Mortgagee.
(d) Mortgagor shall not enter into any agreement providing for
or relating to the taking of the Mortgaged Property or any part thereof be any
Governmental Authority, or providing for or by relating to compensation to be
received in connection therewith, without Mortgagee's prior written approval in
each instance, which approval shall not be unreasonably withheld or delayed.
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Section 2.7 Condition of Premises; Compliance with Legal Requirements;
Right to Inspect; Alterations. Mortgagor (i) shall maintain the Premises and
Chattels in good condition, safe operating order and good repair; (ii) shall
not threaten, commit, permit or suffer to occur any waste, demolition or
removal of the Mortgaged Property or any part thereof except for the
construction of the improvements as described in the Loan Agreement; (iii)
shall observe, perform or cause to be performed all obligations arising under
agreements or recorded instruments affecting the Premises or the operation
thereof; (iv) shall comply or cause to be complied with all Legal Requirements
now or hereafter relating to the Mortgaged Property or any part thereof,
including, without limitation, all applicable covenants, conditions and
restrictions affecting the Premises or Chattels, and all Environmental Laws and
shall not suffer or permit any violation thereof, and shall from time to time
promptly take such actions and make all repairs, renewals, replacements,
additions and improvements in connection therewith that are necessary to comply
with Mortgagor's obligations hereunder; (v) shall comply with all requirements
of insurance policies covering the Mortgaged Property, and with all applicable
orders, rules and regulations of the National Board of Fire Underwriters or any
other body hereafter exercising similar functions; and (vi) shall cure the
violation of any Legal Requirement asserted by any Governmental Authority
within the lesser of (A) thirty (30) days after Mortgagor's receipt of an order
setting forth the violation, or such longer time as may reasonably be required
to cure such violation or (B) the time required pursuant to the terms of such
order, however, Mortgagor shall have such time as may be necessary to
diligently contest the violation of such Legal Requirement provided that, in
Mortgagee's sole discretion, such contest shall not impair the security of
Mortgagee's interest in the Mortgaged Property.
Section 2.8 Security Agreement.
(a) This Mortgage constitutes a security agreement under the UCC with
respect to the Chattels and any other portion of the Mortgaged Property which
is personal property. In addition to the rights and remedies granted to
Mortgagee by other applicable law or by this Mortgage, Mortgagee shall have all
of the rights and remedies with respect to the Chattels and such other personal
property as are granted to a secured party under the UCC. Upon Mortgagee's
request, Mortgagor shall promptly and at its expense assemble the Chattels and
such other personal property and make the same available to Mortgagee at a
convenient place acceptable to Mortgagee. Mortgagor shall pay to Mortgagee on
demand, with interest at the Default Rate, any and all reasonable expenses,
including reasonable attorneys' fees, incurred by Mortgagee in protecting its
interest in the Chattels and such other personal property and in enforcing its
rights with respect thereto. Any notification required by the UCC shall be
deemed reasonably and properly given if mailed certified mail, return receipt
requested, postage prepaid, by Mortgagee to Mortgagor at the address specified
in Section 4.2 hereof at least five (5) days before any sale or other
disposition of the Chattels and other personal property, or any portion
thereof. Disposition of the Chattels and other personal property, or any
portion thereof, shall be deemed commercially reasonable if made pursuant to a
public sale advertised at least twice in a newspaper of general circulation in
the community where the Chattels are located. The proceeds of any such sale or
disposition, or any part thereof, may be applied by Mortgagee to the payment of
the Indebtedness secured hereby in such order of priority and proportions as
Mortgagee in its discretion shall deem appropriate.
(b) If the lien of this Mortgage is subject to a prior security
interest covering any of the Chattels or personal property constituting
Mortgaged Property hereunder, then all of the right, title and interest of
Mortgagor in and to any and all such property is hereby assigned to Mortgagee,
together with the benefits of all deposits and payments now or hereafter made
thereon by Mortgagor.
Section 2.9 Taxes and Other Charges.
(a) Mortgagor shall pay and discharge or cause to be paid or discharged
when due all taxes, franchise taxes and governmental charges of every kind and
nature, all assessments, all water rates and sewer rents, all levies, all
permit, inspection and license fees and all other charges, general and
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special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind
and nature whatsoever, including, but not limited to, assessments for public
improvements or benefits, which are assessed, levied, confirmed, imposed upon or
assessed against the Mortgaged Property or any part thereof or upon the
revenues, rents, issues, income and profits of the Mortgaged Property, or
arising in respect of the ownership, occupancy, use or possession of the
Mortgaged Property or any part thereof (all of the foregoing items being
referred to herein as "Taxes"); and, unless Mortgagor is required to make
monthly deposits with Mortgagee in accordance with Section 2.16 hereof,
Mortgagor shall exhibit to Mortgagee, within five (5) days after the same shall
have become due, validated receipts showing the payment of such Taxes and other
charges which may be or become a lien on the Mortgaged Property.
(b) Mortgagor shall pay or cause to be paid when due all (i)
premiums for fire, hazard and other insurance required to be maintained by
Mortgagor pursuant to Section 2.3, (ii) title insurance premiums and other
charges relating to the title insurance to be maintained on the Premises in
connection with this Mortgage, and (iii) any and all other costs, expenses and
charges required to be paid for the maintenance and/or protection of, or on
account of, any other collateral delivered, assigned, pledged, mortgaged,
transferred or hypothecated to Mortgagee as security for the Indebtedness or in
connection with the execution and delivery of this Mortgage.
(c) Should Mortgagor default in the payment of any of the
foregoing Taxes, insurance premiums or other amounts described in paragraphs (a)
and (b) above, Mortgagee may, but shall not be obligated to, pay the same or any
part thereof and Mortgagor shall, on demand, reimburse Mortgagee for all amounts
so paid. Any such costs or expenses not paid by Mortgagor as aforesaid shall be
secured by the lien of this Mortgage and shall be added to the Indebtedness
secured hereby.
Section 2.10 Mechanics' and Other Liens. Mortgagor shall (i)
pay, from time to time when the same shall become due, all lawful claims and
demands of mechanics, materialmen, laborers and others which, if unpaid, might
result in, or permit the creation of, a lien on the Mortgaged Property or any
part thereof, or on the revenues, rents, issues, income or profits arising
therefrom, (ii) promptly cause to be removed of record (by payment, posting of
bond or otherwise) any mechanic's or other lien on the Mortgaged Property, or
any part thereof, or on the revenues, rents, issues, income or profit arising
therefrom and (iii) in general, do or cause to be done, at the cost of Mortgagor
and without expense to Mortgagee, everything necessary to preserve in full the
lien of this Mortgage. If Mortgagor fails to comply with the requirements of
this Section 2.10, Mortgagee may, but shall not be obligated to, pay any such
lien, and Mortgagor shall, on demand, reimburse Mortgagee for all sums so
expended.
Section 2.11 Leases, Sales
(a) Each Lease of space in the Premises (i) shall be expressly
subject and subordinate to this Mortgage, except as Mortgagee may otherwise
agree in writing, and (ii) new Leases shall contain a covenant on the part of
the tenant thereunder that neither the institution of any suit, action or other
proceeding by Mortgagee to realize on Mortgagor's interest in the Mortgaged
Property nor any sale of the Mortgaged Property pursuant to any provision hereof
shall, by operation of law or otherwise, result in the cancellation or
termination of such Lease or of the obligations of the tenant thereunder (unless
such tenant is specifically named in a foreclosure proceeding). Each such Lease
shall provide that the tenant, at the request of Mortgagee, shall attorn to
Mortgagee, its successors in interest or any purchaser at a foreclosure sale.
(b) Mortgagor shall not, and shall not have the right or
power to, enter into, grant any consent or approval under, or materially modify
any Lease (including, without limitation, a reduction in the term thereof or the
rent payable thereunder, a change in any renewal provisions therein contained,
or an increase in the obligations of the landlord or a decrease in the
obligations of the tenant thereunder) without Mortgagee's prior written consent,
except with respect to minor modifications (including
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modifications in accordance with market conditions but excluding rent
concessions with a duration in excess of three (3) months) of any Lease, and
which consent shall not be unreasonably withheld or delayed provided, that
simultaneously with any request for such consent Mortgagor shall deliver to
Mortgagee (i) a copy of the proposed form of Lease, modification thereof, or
consent or approval (as the case may be), (ii) such other information as
Mortgagee may reasonably request, and (iii) in the case of a request for
approval of a Lease, a summary of all material provisions thereof, including
terms that differ materially from the standard form of lease, if any, previously
approved by Mortgagee, or from existing Leases. Mortgagor shall pay, upon
presentation of bills therefor, all of Mortgagee's reasonable out-of-pocket
costs and expenses, including reasonable attorneys' fees and disbursements,
incurred in connection with its review of any proposed Lease or Lease
modification and its investigation of any proposed tenant, and the preparation,
execution and delivery of any such agreements. Notwithstanding the foregoing,
Mortgagee's consent shall not be required for any Lease or extension thereof of
residential apartments in the ordinary course of business on commercially
reasonable terms with a term of one (1) year or less.
(c) Mortgagor shall duly and timely perform and observe within
applicable grace periods all of the terms, covenants and conditions of all
Leases required to be performed and observed by the landlord thereunder.
(d) Mortgagor shall not, and shall not have the right or power
to, accept prepayments of installments of rent under Leases more than one (1)
month in advance, except in connection with the first (1st) month's rent, or
with Mortgagee's prior written consent.
(e) Mortgagor shall not, without the prior written consent of
Mortgagee, which consent shall not be unreasonably withheld or delayed if the
action is consistent with sound leasing practice, (i) cancel or terminate, or
suffer or permit any cancellation, termination, or surrender of any Lease, (ii)
commence any summary proceeding or other action to recover possession of any
space leased pursuant to any Lease, (iii) consent to any assignment of or
subletting under any Lease, (iv) execute any other or further assignment of
Mortgagor's interest, or of any part thereof, in any Lease or of any rent or (v)
waive, excuse, condone, release or discharge the tenant, or any guarantor under
any guaranty of the obligations of the tenant, of or from any of the obligations
or agreements of the tenant under its Lease or by the guarantor under its
guaranty. Mortgagor shall deliver the request for such consent in writing to
Mortgagee according to the provisions of the Section 4.2 hereof, and Mortgagee
shall have been deemed to have delivered such consent if Mortgagee fails to deny
or grant such consent or request additional information within ten (10) business
days after receiving such request from Mortgagor.
(f) Nothing contained in this Section 2.11 shall be construed
as imposing on Mortgagee any of the obligations of lessor under the Leases.
Section 2.12 Assignment of Rents and Leases.
(a) Mortgagor hereby absolutely and unconditionally assigns
and transfers to Mortgagee, as further security for the payment of the
Indebtedness, all rents, issues and profits of the Mortgaged Property whether
now due, past due or to become due, together with all Leases and any guaranties,
whether now or hereafter made, of the obligations of any tenant, any claims of
Mortgagor against any guarantor, and other documents now or hereafter in effect
evidencing such rents, issues and profits, and any and all deposits held as
security under said Leases and other documents (subject to rights of Tenants).
This is an absolute assignment, not an assignment for security only, and
Mortgagee's right to rents, issues and profits is not contingent on Mortgagee's
possession of all or any portion of the Mortgaged Property. Nothing contained in
the first sentence of this Section 2.12 shall be construed to bind Mortgagee to
the performance of any of the covenants, conditions or provisions contained in
any such Lease or other document or otherwise to impose any obligation on
Mortgagee (including, without limitation, any liability under any covenant of
quiet enjoyment contained in any Lease or under any law
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of the State of New Jersey in the event that any tenant shall have been joined
as a party defendant in any action to foreclose this Mortgage and shall have
been barred and foreclosed thereby of all right, title, interest and equity of
redemption in the Mortgaged Property), except that Mortgagee shall be
accountable for any money actually received pursuant to such assignment.
(b) Neither the foregoing assignment of Leases, income, rents,
issues, deposits, profits and proceeds to Mortgagee nor the exercise by
Mortgagee of any of its rights or remedies under this Article 2 shall be deemed
to make Mortgagee a "mortgagee-in-possession" or otherwise obligated,
responsible or liable in any manner with respect to the Mortgaged Property or
the use, occupancy, enjoyment or operation of all or any portion thereof.
Mortgagor hereby further grants to Mortgagee the right, after the occurrence of
an Event of Default and subject to the provisions hereof, (i) to enter upon and
take possession of the Mortgaged Property for the purpose of collecting the said
rents, issues and profits, (ii) to dispossess any tenant defaulting in the
payment thereof to Mortgagee, (iii) to let the Mortgaged Property or any part
thereof, and (iv) to apply said rents, issues and profits, after payment of all
reasonable and necessary charges and expenses, on account of the Indebtedness.
Such assignment and grant shall continue in effect until the Indebtedness is
paid in full, the execution of this Mortgage constituting and evidencing the
consent of Mortgagor to the entry upon and taking possession of the Mortgaged
Property by Mortgagee pursuant to such grant, whether or not foreclosure has
been instituted and without applying for a receiver.
(c) Notwithstanding the foregoing provisions of this Section
2.12, Mortgagor shall be entitled, except as provided in the next sentence of
this Paragraph (c), to receive and retain for its own account all such rents,
issues and profits and to exercise all other rights and remedies available to it
under such Leases and other documents. Such right of Mortgagor to collect and
receive said rents, issues and profits and deposits may be revoked by Mortgagee
(x) during the continuance of an Event of Default and/or (y) after the
acceleration of the Indebtedness by giving not less than five (5) days' written
notice of such revocation, served personally upon or sent by registered or
certified mail to the record owner of the Mortgaged Property.
(d) In furtherance of the rights granted by Mortgagor to
Mortgagee in paragraphs (a), (b) and (c) above, Mortgagor hereby appoints
Mortgagee as its attorney-in-fact, coupled with an interest, to receive and
collect all rent, additional rent and other sums due under the terms of each
Lease and each such other document and to direct any tenant or occupant
thereunder, by written notice or otherwise, to forward such rent, additional
rent or other sums by mail or in person to Mortgagee. Mortgagor hereby
irrevocably authorizes and directs each space tenant under any Lease, upon
receipt of written notice from Mortgagee of the occurrence of an Event of
Default and until directed otherwise by Mortgagee, to pay directly to Mortgagee,
or as directed by Mortgagee, all rents, issues and profits accruing or due under
its Lease from and after the receipt of such notice. Mortgagor agrees that any
and all tenants shall have the right to rely upon any such notice from
Mortgagee, and to pay such rents, issues and profits to or as directed by
Mortgagee without any obligation to inquire into the actual existence of any
Event of Default claimed by Mortgagee, and notwithstanding any notice from or
contrary claim by Mortgagor; and Mortgagor shall have no right or claim against
any tenant with respect to any rents, issues or profits so paid to Mortgagee.
Section 2.13 Additional Advances and Disbursements. Mortgagor
shall pay when due all payments and charges on all liens, encumbrances, ground
and other leases, and security interests which affect or may affect or attach or
may attach to the Mortgaged Property, or any part thereof, and in default
thereof, Mortgagee shall have the right, but shall not be obligated, to pay,
Without notice to Mortgagor, such payments and charges and Mortgagor shall, on
demand, reimburse Mortgagee for amounts so paid. In addition, upon default of
Mortgagor in the payment and/or performance of any terms, covenants, conditions
or obligations by it to be performed hereunder or under any such lien,
encumbrance, lease or security interest, Mortgagee shall have the right, but
shall not be obligated, to cure
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such default in the name and on behalf of Mortgagor. All sums advanced and
expenses incurred at any time by Mortgagee pursuant to this Section 2.13 or as
otherwise provided under the terms and provisions of this Mortgage or under
applicable law shall bear interest from the date that such sum is advanced or
expense incurred, to and including the date of reimbursement, computed at the
Default Rate. Any such amounts advanced or incurred by Mortgagee, together with
the interest thereon, shall (a) be payable on demand, (b) until paid, be secured
by this Mortgage as a lien on the Mortgaged Property and (c) be part of the
Indebtedness.
Section 2.14 Costs of Enforcement, Waivers. Mortgagor shall
bear and pay all expenses (including reasonable attorneys' fees and
disbursements for legal services of every kind) of or incidental to the
enforcement of any provision hereof, or the enforcement, compromise or
settlement of this Mortgage or the Indebtedness, and for the curing thereof, or
for defending or asserting the rights and claims of Mortgagee in respect
thereof, by litigation or otherwise. AR rights and remedies of Mortgagee shall
be cumulative and may be exercised singly or concurrently. Notwithstanding
anything herein contained to the contrary and to the extent permitted be
applicable law, Mortgagor. (a) hereby waives trial by jury; (b) will not (i) at
any time insist upon, plead or in any manner whatsoever claim or take any
benefit from, or take advantage of, any stay or extension or moratorium law, or
any exemption from execution or sale of the Mortgaged Property or any part
thereof, now or at any time hereafter in force, which may affect this Mortgage,
(ii) claim, take or insist upon any benefit from, or take advantage of, any law
now or hereafter in force providing for the valuation or appraisal of the
Mortgaged Property, or any part thereof, prior to any sale or sales thereof
which may be made pursuant to any provision hereof, or pursuant to the decree,
judgment or order of any court of competent jurisdiction or (iii) after any such
sale or sales, claim or exercise any right under any statute heretofore or
hereafter enacted to redeem the property so sold or any part thereof; (c) hereby
expressly waives all benefit or advantage of any such law or laws; and (d)
covenants not to hinder, delay or impede the execution of any power herein
granted or delegated to Mortgagee, but to suffer and permit the execution of
every power as though no such law or laws had been made or enacted. Mortgagor,
for itself and all who may claim under it, waives, to the extent that it
lawfully may, all right to have the Mortgaged Property marshaled upon any
foreclosure of this Mortgage.
Section 2.15 Mortgage Taxes. Mortgagor shall pay any and all
taxes, charges, filing, registration and recording fees, excises and levies
imposed upon Mortgagee by reason of its ownership of the Note or this Mortgage
or any mortgage supplemental hereto, any security instrument with respect to the
Improvements (or any part thereof) or any Chattels or other personal property or
any instrument or further assurance, other than income, franchise and doing
business taxes, and shall pay all stamp and other taxes, if any, required to be
paid on or in respect of the Note. If Mortgagor fails to make such payment
within five (5) days after written notice thereof to Mortgagor, then, in
addition to any other rights and/or remedies available to Mortgagee upon the
happening of an "Event of Default" (as defined in Section 3.1 hereof), Mortgagee
shall have the right, but shall not be obligated, to pay the amount due, and
Mortgagor shall, on demand, reimburse Mortgagee for said amount, which, until so
reimbursed to Mortgagee, shall be deemed to be part of the Indebtedness and
shall be secured by the lien of this Mortgage.
Section 2.16 (Intentionally Omitted]
Section 2. 17 Financial Statements. Mortgagor shall furnish to
Mortgagee the Financial statements in accordance with Section 6.1 of the Loan
Agreement. As soon as possible, but not later than thirty (30) days after the
end of each calendar year, Mortgagor shall deliver to Mortgagee a certification
that Mortgagor has performed all of its covenants hereunder and no Event of
Default or event that, with the giving of notice or the passing of time would
constitute an Event of Default, has occurred and Mortgagor shall make available
such further information or documents concerning its business and affairs
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relating to the Premises as Mortgagee may from time to time reasonably request,
including, without limitation, current rent rolls for the Premises.
Section 2.18 Transfers. Mortgagor covenants that it shall not,
without the written consent of Mortgagee in each instance, except as occasioned
by the death of the Mortgagor, further Transfer any estate, rights, title or
interest of Mortgagor in, to or under any of the Mortgaged Property, except as
permitted in Section 2.11 hereof and in the Loan Agreement. Upon the occurrence
of a Transfer, Mortgagee may declare the entire unpaid Indebtedness to be
immediately due and payable and exercise any other right reserved by Mortgagee
in Section 3.2 of this Mortgage.
Section 2.19 Estoppel Certificates. From time to time within
ten (10) days after request, Mortgagor shall furnish to Mortgagee a written
statement addressed to Mortgagee or such other person as Mortgagee may
designate, duly acknowledged, setting forth the amount due on this Mortgage, the
date to which interest has been paid, whether any offsets or defenses exist
against the Indebtedness and, if any are alleged to exist, a detailed
description of the nature thereof.
Section 2.20 Costs of Defending and Upholding the Lien of this
Mortgage. If any action or proceeding is commenced to which Mortgagee is made a
party or in which it becomes necessary to defend or uphold the lien of this
Mortgage, Mortgagor shall, on demand, reimburse Mortgagee for all expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
incurred by Mortgagee in connection with any such action or proceeding. In any
action or proceeding to foreclose this Mortgage or to recover or collect the
Indebtedness, the provisions of law relating to the recovering of costs,
disbursements and allowances shall prevail unaffected by this covenant.
Section 2.21 FIRPTA Withholding Provisions. At or prior to any
Transfer of all or any portion of, or any interest in, the Mortgaged Property,
whether or not such Transfer is consented to by Mortgagee and including any sale
of the Mortgaged Property upon a foreclosure of this Mortgage, a duly authorized
officer or a general partner of Mortgagor shall furnish, or cause to be
furnished, to Mortgagee such documentation as shall be required under Section
1445 of the Internal Revenue Code of 1986, as amended (or any successor or
substitute statute of the same or similar import).
Section 2.22 Environmental Damage and Clean-up Provisions.
(a) Mortgagor shall not (i) use the Mortgaged Property or any
part thereof for the Handling of any Hazardous Materials in violation of any
Environmental Laws or (ii) waive any person's liability with regard to Hazardous
Materials in, on or around the Mortgaged Property.
(b) Mortgagor shall (i) keep the Mortgaged Property free of
contamination by Hazardous Materials, (ii) comply fully with all Environmental
Laws applicable to the Mortgaged Property, and (iii) upon notice from Mortgagee
(except that no notice shall be required in an emergency), permit Mortgagee or
Mortgagee's agents access to the Mortgaged Property for the purpose of
monitoring Mortgagor's compliance with all Environmental Laws applicable to the
Mortgaged Property.
(c) immediately upon becoming aware thereof, Mortgagor shall
notify Mortgagee of any investigation of, or claim or action involving, the
Mortgaged Property by any Governmental Authority or any other person regarding
the presence or Handling of any Hazardous Materials in, on or affecting the
Mortgaged Property.
(d) If there shall be filed against the Mortgaged Property a
lien for the payment of any expenditure by any Governmental Authority for the
purpose of (i) removing any Hazardous Materials from the Mortgaged Property or
any part thereof and/or (ii) remedying the effects of any Hazardous Materials
found at the Mortgaged Property, irrespective of whether the same resulted from
any act or
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omission of Mortgagor or of any third party, then Mortgagor shall, within
thirty (30) days after the date on which Mortgagor is given notice that a lien
has been filed against the Mortgaged Property, or immediately if an action has
been commenced to sell the Mortgaged Property to satisfy such lien, pay the
amount of the claim to which the lien relates and remove the lien of record
against the Mortgaged Property.
(e) Mortgagor shall unconditionally indemnify, defend and hold harmless
Mortgagee and each Indemnified Person from and against any and all claims,
losses, costs, expenses, damages, obligations and liabilities of any nature
whatsoever (including, without limitation, litigation costs, reasonable
attorneys' fees and disbursements) made against or suffered or incurred by any
Indemnified Person as a result of (i) the presence or Handling of any Hazardous
Materials in, on or around the Mortgaged Property, or (ii) any breach or
inaccuracy of the representations and warranties of Mortgagor set forth in
Section 1.4 of this Mortgage, or (iii) Mortgagor's failure to comply with any
of the provisions of this Section 2.22, or (iv) the failure of the Mortgaged
Property to comply with any applicable Environmental Laws now or hereinafter in
effect or (v) any claim, action, suit, or proceeding brought or threatened by
any person or entity relating to the presence or Handling of Hazardous
Materials in, on or around the Mortgaged Property. The indemnity provided for
in this subsection (e) shall survive the satisfaction, foreclosure or other
termination of this Mortgage and the sale or other transfer of the Mortgaged
Property. The indemnity provided for in this subsection (e) shall not be
included in any exculpation from personal liability provided for in the Note or
this Mortgage or any of the other Loan Documents.
Section 2.23 Section 365(h)(1) Election. Mortgagor shall not, without
Mortgagee's prior written consent, elect to treat any Lease as terminated under
Section 365(h)(1) of the Bankruptcy Code. Any such election made without
Mortgagee's prior written consent shall be void.
Section 2.24 Transfer Tax Provisions. Mortgagor shall pay any New
Jersey State Transfer Tax and any other taxes of a similar nature and any
recording and titling charges now or hereafter imposed by New Jersey State or
any of its municipalities (any such tax being hereinafter referred to as
"Transfer Tax") that may be or become payable by Mortgagor with respect to any
Transfer of the Mortgaged Property or any portion thereof, including any
Transfer Tax payable upon a foreclosure of this Mortgage. If, and to the extent
that, Mortgagee shall hereafter be or become liable for all or any portion of
any Transfer Tax payable by Mortgagor, Mortgagor shall indemnify, defend and
hold harmless Mortgagee from and against all claims, losses, costs, damages,
obligations and liabilities of any nature whatsoever (including, without
limitation, reasonable attorneys' fees and disbursements) made against or
incurred by Mortgagee as a result of Mortgagor's failure to comply with the
foregoing covenant. The indemnity provided for in this Section shall not be
included in any exculpation from personal liability provided for in this
Mortgage or in any of the other Loan Documents. The provisions of this Section
shall survive any sale of the Mortgaged Property and the delivery of the deed
effecting such sale. Nothing in this Section shall be deemed to deprive
Mortgagee of any rights provided to it elsewhere in this Mortgage.
Section 2.25 Bankruptcy Litigation. In the event that any action,
proceeding, application, motion or notice shall be commenced or filed in
respect of all or any part of the Mortgaged Property, in connection with any
case under the Bankruptcy Code or any other applicable federal or state law
relating to relief for debtors, Mortgagee shall have, and is hereby granted,
the right, but not the obligation, to the exclusion of Mortgagor exercisable
upon notice from Mortgagee to Mortgagor, to conduct and control any such
litigation (including, without limitation, the right to file and prosecute any
proofs of claim, complaints, motions, applications, notices and other
documents) with counsel of Mortgagee's choice. Mortgagee may proceed, in its
own name or in the name of Mortgagor, in connection with any such litigation,
and mortgagor agrees to execute any and all power, authorizations, consents and
other documents required by Mortgagee in connection therewith. Upon request by
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Mortgagee, Mortgagor shall pay to Mortgagee, or to any other person or persons
that Mortgagee may designate, all costs, expenses and liabilities (including
without limitation, attorneys' fees) paid or incurred by Mortgagee in connection
with the prosecution or conduct of any such proceedings, together with interest
thereon at the Default Rate from the date paid or incurred by Mortgagee.
Mortgagor shall not, without the prior written consent of Mortgagee, commence
any action, suit proceeding or case, or file any application or motion, in
respect of the Lease in any such case under the Bankruptcy Code or any other
applicable federal or state law relating to relief for debtors.
Section 2.26 Credit. Mortgagor shall not claim or demand or be
entitled to receive any credit or credits on the principal indebtedness to be
secured by this Mortgage, or on the interest payable thereon, for any part of
the Taxes assessed against the Premises and no deduction shall be made or
claimed from the taxable value of the Premises by reason of this Mortgage.
Section 2.27 Notice. Mortgagor shall promptly give notice to
Mortgagee of. (i) any substantial dispute between Mortgagor and any Governmental
Authority with respect to payment of Taxes or any other matter; (ii) the
occurrence of any Event of Default or event that, with the giving of notice or
the passing of time, or both, would constitute an Event or Default; and/or (iii)
the occurrence of any default or breach or other event that, with the giving of
notice or the passing of time, or both, would constitute an event of default or
breach under any material agreement to which Mortgagor is a party and which
could have a material effect on Mortgagor's financial condition.
Section 2.28 Maintenance of Records. Mortgagor shall keep
adequate records and books of account, in which complete entries will be made in
accordance with generally accepted accounting principles consistently applied,
reflecting all material financial transactions of Mortgagor.
Section 2.29 Right of Inspection. Mortgagor shall at any
reasonable time and from time to time upon advance notice, permit Mortgagee or
any representative thereof to examine and make copies of and abstracts from the
records and books of account of, visit the Premises, and discuss the affairs,
finances, and accounts of Mortgagor with any of its officers and directors
designated for such purposes by Mortgagor and Mortgagor's independent
accountants. The foregoing inspection rights are subject to reasonable
limitations imposed by Mortgagor and shall not extend to trade secrets of
Mortgagor or to information within the attorney-client privilege.
ARTICLE 3
Default and Remedies
Section 3.1 Events of Default. The following shall each
constitute an "Event of Default" under this Mortgage:
(a) the occurrence of any "Event of Default" (as that term is
defined in the Loan Agreement) under the Loan Agreement; or
(b) if any Transfer not expressly permitted under this
Mortgage occurs without the prior written consent of Mortgagee; or
(c) the entry by Mortgagor into any agreement, either written
or oral, which has the effect of deferring the payment of any Taxes or other
charges which are or can be assessed, levied, confirmed, imposed or become a
lien on the Mortgaged Property or become payable during the term of the Note or
this Mortgage; or
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(d) the occurrence, in the sole judgment of Mortgagee
reasonably exercised, of a material adverse change in the financial condition or
the operation of the Mortgaged Property or any part thereof for which Mortgagor
fads to provide alternative arrangements for meeting its obligations under the
Loan Documents that are satisfactory to Mortgagee; or
(e) if title to the Mortgaged Property is or becomes subject
to any lien, charge or encumbrance (other than Permitted Encumbrances), and
Mortgagor fails within thirty (30) days after request by Mortgagee to discharge
(by bonding or otherwise) such lien, charge or encurnbrance; or
(f) if a default occurs under any other mortgage, deed of
trust, deed to secure debt or similar security instrument now or hereafter
encumbering the Mortgaged Property or any part thereof, and continues beyond any
applicable grace period, and/or the indebtedness secured thereby is accelerated,
regardless of whether any such other instrument is prior to or subordinate to
this Mortgage; or if the mortgagee or obligee under any such other instrument
commences an action to foreclose the lien thereof or otherwise to realize upon
the Mortgaged Property or any part thereof; it further being agreed that an
Event of Default under this Mortgage shall constitute an Event of Default under
any other mortgage, deed of trust, indenture or loan agreement held by
Mortgagee; or
(g) if Mortgagor as to the Premises, the Loan Documents or the
transactions contemplated thereby commits or fails to prevent the commission of
any act of fraud, willful breach or malicious default; or
(h) if Mortgagor fails to maintain the Premises in good
condition, safe operating order and good repair, and such failure continues for
thirty (30) days after written notice from Mortgagee or, if such failure cannot,
by its nature, reasonably be cured for within such thirty (30) day period, if
Mortgagor fails to commence such cure within said thirty (30) day period or
fails to diligently thereafter prosecute such cure to completion.
Section 3.2 Remedies.
(a) Upon the occurrence of any Event of Default, Mortgagee
may, in addition to any other rights or remedies available to it hereunder, at
law or in equity, take such action, without notice or demand, as it deems
advisable to protect and enforce its rights against Mortgagor and in and to the
Mortgaged Property, including, but not limited to, the following actions, each
of which may be pursued singly, concurrently or otherwise, at such time and in
such order as Mortgagee may determine, in its sole discretion, without impairing
or otherwise affecting any other rights and remedies of Mortgagee hereunder, at
law or in equity:
(i) declare the entire unpaid Indebtedness to be
immediately due and payable;
(ii) enter into or upon the Premises, either
personally or by its agents, nominees or attorneys, and dispossess Mortgagor and
its agents, employees and servants therefrom, and thereupon Mortgagee may (A)
use, operate, manage, control, insure, maintain, repair, restore and otherwise
deal with all and every part of the Mortgaged Property and conduct the business
thereat, (B) complete any construction on the Land in such manner and form as
Mortgagee deems advisable, (C) make alterations, additions, renewals,
replacements and improvements to or on the Land or Improvements, (D) exercise
all rights and powers of Mortgagor with respect to the Mortgaged Property,
whether in the name of Mortgagor or otherwise, including, without limitation,
the right to enter into, cancel, enforce or modify Leases, obtain and evict
tenants, and demand, sue for, collect and receive all earnings, revenues, rents,
issues, profits and other income of the Mortgaged Property and every part
thereof, and (E) apply the receipts from the Mortgaged Property to the payment
of the Indebtedness, after
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deducting therefrom all expenses (including, without limitation, attorneys' fees
and disbursements) incurred in connection with the aforesaid operations and all
amounts necessary to pay Taxes, insurance and other charges in connection with
the Mortgaged Property, as well as just and reasonable compensation for the
services of Mortgagee, its counsel, agents and employees;
(iii) institute proceedings for the foreclosure of
this Mortgage, in which case the Mortgaged Property may be sold for cash or
credit in one or more parcels;
(iv) with or without entry, and to the extent
permitted and pursuant to the procedures provided by applicable law, institute
proceedings for the partial foreclosure of this Mortgage for the portion of the
Indebtedness then due and payable, subject to the lien of this Mortgage
continuing unimpaired and without loss of priority so as to secure the balance
of the Indebtedness not then due;
(v) sell the Mortgaged Property or any part thereof
and all estate, claim, demand, right, title and interest of Mortgagor therein
and rights of redemption thereof, pursuant to power of sale or otherwise, at one
or more sales, in whole or in parcels, at such time and place, upon such terms
and after such notice thereof as may be required or permitted by law, and in the
event of a sale, by foreclosure or otherwise, of less than all of the Mortgaged
Property, this Mortgage shall continue as a lien on the remaining portion of the
Mortgaged Property;
(vi) institute an action, suit or proceeding in
equity for the specific performance of any covenant, condition or agreement
contained in the Loan Documents;
(vii) recover judgment on the Note either before,
during or after (or in lieu of) any proceedings for the enforcement of this
Mortgage;
(viii) apply, ex parte, for the appointment of a
custodian, trustee, receiver, liquidator or conservator of the Mortgaged
Property, irrespective of the adequacy of the security for the Indebtedness and
without regard to the solvency of Mortgagor or of any person, firm or other
entity liable for the payment of the Indebtedness, to which appointment
Mortgagor does hereby consent; it being understood and agreed that the holder of
this Mortgage, in any action to foreclose it, shall be entitled to the
appointment of a receiver; and/or
(ix) pursue such other remedies as Mortgagee may
have under applicable law or in equity.
(b) The purchase money proceeds or avails of any sale made
under or by virtue of this Article 3, together with any other sums which then
may be held by Mortgagee under this Mortgage, whether under the provisions of
this Article 3 or otherwise, shall be applied as follows:
First: To the payment of the costs and expenses of any such
sale, including reasonable compensation to Mortgagee's agents
and counsel, and of any judicial proceedings wherein the same
may be made, and of all expenses, liabilities and advances
made or incurred by Mortgagee under this Mortgage (together
with interest at the "Default Rate") on all advances made by
Mortgagee, and all Taxes, except any Taxes or other charges
subject to which the Mortgaged Property shall have been sold;
Second: To the payment of all interest then due, owing or
unpaid upon the Note with interest on the unpaid principal
being calculated at the Default Rate from the date of the
occurrence of the earliest Event of Default that formed a
basis for such sale until the same is paid);
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Third: To the payment of any other Indebtedness required to be
paid by Mortgagor pursuant to any provision of this Mortgage,
the Note, the Loan Agreement or any of the other Loan
Documents;
Fourth: To the payment of all principal then due, owing or
unpaid upon the Note; and
Fifth: The surplus, if any, to whomsoever may be lawfully
entitled to receive the same.
(c) Mortgagee and any receiver or custodian of the Mortgaged
Property or any part thereof shall be liable to account for only those rents,
issues and profits actually received by it.
(d) Mortgagee may adjourn from time to time any sale by it to
be made under or by virtue of this Mortgage by announcement at the time and
place appointed for such sale or for such adjourned sale or sales and, except as
otherwise provided by any applicable provision of law, Mortgagee, without
further notice or publication, may make such sale at the time and place to which
the same shall be so adjourned.
(e) Upon the completion of any sale or sales made by Mortgagee
under or by virtue of this Article 3, Mortgagee, or an officer of any court
empowered to do so, shall execute and deliver to the accepted purchaser or
purchasers a good and sufficient instrument, or good and sufficient instruments,
granting, conveying, assigning and transferring all estate, right, title and
interest in and to the property and rights sold. Mortgagee is hereby irrevocably
appointed the true and lawful attomey-in-fact of Mortgagor (coupled with an
interest), in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the property and rights so sold and for
that purpose Mortgagee may execute all necessary instruments of conveyance,
assignment, transfer and delivery, and may substitute one or more persons with
like power, Mortgagor hereby ratifying and confirming all that its said
attorney-in-fact or such substitute or substitutes shall lawfully do by virtue
hereof. Nevertheless, Mortgagor, if so requested by Mortgagee, shall ratify and
confirm any such sale or sales by executing and delivering to Mortgagee or to
such purchaser or purchasers all such instruments as may be advisable, in the
sole judgment of Mortgagee, for such purpose, and as may be designated in such
request. Any such sale or sales made under or by virtue of this Article 3,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or a judgment or decree of foreclosure and sale, shall
operate to divest all the estate, right, title, interest, claim and demand
whatsoever, whether at law or in equity, of Mortgagor in and to the property and
rights so sold, and shall be a perpetual bar both at law and in equity against
Mortgagor and against any and all persons claiming or who may claim the same, or
any part thereof, from, through or under Mortgagor.
(f) In the event of any sale made under or by virtue of this
Article 3 (whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or a judgment or decree of foreclosure and sale),
the entire Indebtedness, if not previously due and payable, immediately
thereupon shall, anything in the Loan Documents to the contrary notwithstanding,
become due and payable.
(g) Upon any sale made under or by virtue of this Article 3
(whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or a judgment or decree of foreclosure and sale), Mortgagee
may bid for and acquire the Mortgaged Property or any part thereof and in lieu
of paying cash therefor may make settlement for the purchase price by crediting
upon the Indebtedness the net sales price after deducting therefrom the expenses
of the sale and the costs of the action and any other sums which Mortgagee is
entitled to receive under the Loan Documents.
(h) No recovery of any judgment by Mortgagee and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Mortgagor shall affect in any
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manner or to any extent the lien of this. Mortgage upon the Mortgaged Property
or any part thereof, or any liens, rights, powers or remedies of Mortgagee
hereunder, but such liens, rights, powers and remedies of Mortgagee shall
continue unimpaired.
Section 3.3 Possession of the Real Property. Upon the
occurrence of any Event of Default hereunder, Mortgagor, if it is an occupant of
the Mortgaged Property or any part thereof, shall upon Mortgagee's demand
immediately surrender possession of the Mortgaged Property (or the portion
thereof so occupied) to Mortgagee, and if Mortgagor is permitted to remain in
possession, the possession shall be as a month-to-month tenant of Mortgagee and,
on demand, Mortgagor shall pay to Mortgagee monthly, in advance, a reasonable
rental for the space so occupied and in default thereof Mortgagor may be
dispossessed. The covenants herein contained may be enforced by Mortgagee or a
receiver of the Mortgaged Property or any part thereof Notwithstanding the
appointment of any custodian, receiver, liquidator or trustee of Mortgagor, or
of any of its property, or of the Mortgaged Property or any part thereof,
Mortgagee shall be entitled to retain possession and control of all property now
and hereafter covered by this Mortgage. Nothing in this Section 3.3 shall be
deemed to be a waiver of the provisions of this Mortgage prohibiting the
Transfer of the Mortgaged Property without Mortgagee's prior written consent.
Section 3.4 Late Payment Charges; Interest After Default.
(a) If any Event of Default occurs hereunder, Mortgagor shall
pay, in addition to any Late Payment Charge which may be due, interest on the
entire outstanding and unpaid principal balance of the Indebtedness at the
Default Rate, in accordance with the terms of the Note and/or the Loan
Agreement.
(b) If any monthly payment provided for herein or in the Note
or in the Loan Agreement shall become overdue, a Late Payment Charge for each
dollar (or any part thereof) so overdue shall become immediately due to
Mortgagee in accordance with the terms of the Note and/or the Loan Agreement.
(c) Default Rate interest shall accrue until the Event of
Default is cured whether or not any action shall have been taken or proceeding
commenced to recover the same or to foreclose this Mortgage. All unpaid and
accrued Default Rate interest and Late Payment Charges shall be secured by this
Mortgage as part of the Indebtedness. Nothing in this Section 3.4 or in any
other provision of this Mortgage shall constitute an extension of the time for
payment of the Indebtedness.
Section 3.5 Mortgagor's Actions After Default. After the
happening of any Event of Default and immediately upon the commencement of any
action, suit or other legal proceedings by Mortgagee to obtain judgment for the
Indebtedness, or of any other nature in aid of the enforcement of the Loan
Documents, Mortgagor shall (a) waive any objection to the issuance and service
of process and enter its voluntary appearance in such action, suit or
proceeding, and (b) if required by Mortgagee, consent to the appointment of a
receiver or receivers of the Mortgaged Property and of all the earnings,
revenues, rents, issues, profits and income thereof.
Section 3.6 Survival of Assignments. Notwithstanding anything
to the contrary contained in this Mortgage, the assignment, pledge and
mortgaging of all insurance policies, unearned premiums thereon, eminent domain
awards and all proceeds of any of the foregoing shall survive any foreclosure of
this Mortgage.
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ARTICLE 4
Miscellaneous
Section 4.1 Credits Waived. Mortgagor shall not claim or
demand or be entitled to receive any credit or credits against the Indebtedness
for so much of the Taxes assessed against the Mortgaged Property or any part
thereof, as is equal to the tax rate applied to the amount due on this Mortgage
or any part thereof, and no deductions shall otherwise be made or claimed from
the taxable value of the Mortgaged Property or any part thereof by reason of the
existence of this Mortgage or the Indebtedness.
Section 4.2 Notices. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing and mailed (registered or certified mail, return receipt requested,
postage prepaid), hand delivered (receipt confirmed), or sent by overnight
courier (receipt confirmed), as follows:
To the Mortgagor: The Wendt-Bristol Health Services Corporation
Two Nationwide Plaza
Suite 760
Columbus, Ohio 43215
Attn: Mr. Sheldon A. Gold
Facsimile: (614) 221-6168
With a copy to: Greenbaum, Rowe, Smith, Ravin & Davis
Metro Corporate Campus One
P.O. Box 5600
Woodbridge, New Jersey 07095-0988
Attn: Kenneth T. Bills, Esq.
Facsimile: (908) 549-1881
To the Mortgagee: Grand Pacific Finance Corp.
41-99 Main Street
Flushing, New York 11355
Attn: Mr. Jay F. Chen
Facsimile: (718) 359-4321
With a copy to: Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112-0127
Attn: Lester Ross, Esq.
Facsimile: (212) 541-5369
Section 4.3 Governing Law, Usury, Interpretation,
Severability.
(a) This Mortgage shall in all respects be governed by, and
interpreted in accordance with, the laws of the State of New Jersey.
(b) Nothing in any of the Loan Documents shall require
Mortgagor to pay, or Mortgagee to accept, interest in an amount which would
subject Mortgagee to any penalty or forfeiture under applicable law. If the
payment of any charges, fees or other sums due under any of the Loan Documents
are (or could be) held to be in the nature of interest and would subject
Mortgagee to any
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penalty or forfeiture under applicable law, then the obligation of Mortgagor to
make such payment shall be reduced to the highest rate of interest authorized
under applicable law. Should Mortgagee receive any payment which is or would be
in excess of the highest rate authorized under applicable law, such payment
shall have been, and shall be deemed to have been, made in error and shall at
Mortgagee's sole option be refunded promptly by Mortgagee to Mortgagor by cash
or check or by applying such payment in reduction of the outstanding principal
balance of the Note.
(c) Any provision of this Mortgage, the Note, the Loan
Agreement or any of the other Loan Documents which is prohibited or
unenforceable in any jurisdiction or prohibited or unenforceable as to any
person shall, as to such jurisdiction or person, be ineffective to the extent of
such prohibition or unenforceability, without invalidating the remaining
provisions hereof or thereof or affecting the validity or enforceability of such
provisions in any other jurisdiction or as to any other person.
Section 4.4 Binding Obligations; Successors and Assigns. The
provisions and covenants of this Mortgage shall run with the Land, shall be
binding upon Mortgagor, successors and assigns, and shall inure to the benefit
of Mortgagee, its successors and assigns, subsequent holders of this Mortgage
and their respective successors and assigns. For the purpose of this Mortgage,
the term "Mortgagor" shall include and refer to Mortgagor named herein, any
subsequent owner of the Mortgaged Property and their respective heirs,
executors, legal representatives, successors and assigns. If there is more
than one Mortgagor, all their undertakings hereunder shall be deemed joint
and several.
Section 4.5 No Release. Mortgagor agrees that if the Mortgaged
Property is sold subject to the lien of this Mortgage, Mortgagor shall continue
to be liable to pay the Indebtedness according to the terms of the Note unless
expressly released and discharged in writing by Mortgagee, notwithstanding any
agreement between Mortgagee and the then owner of the Mortgaged Property
extending the time of payment of the Indebtedness, or otherwise modifying the
terms hereof.
Section 4.6 Further Assurances.
(a) Mortgagor shall do, execute, acknowledge and deliver, at
the sole cost and expense of Mortgagor, all and every such further acts, deeds,
conveyances, mortgages, assignments, estoppel certificates, notices of
assignment transfers and assurances as Mortgagee may reasonably require from
time to time.
(b) Without limiting the generality of the foregoing,
Mortgagor hereby appoints Mortgagee as its attorney-in-fact in connection with
the Chattels covered by this Mortgage, where permitted by law, to file on its
behalf any financing statements or other statements in connection therewith with
the appropriate public office, signed by Mortgagee, as secured party. This
power, being coupled with an interest, shall be irrevocable so long as any part
of the Indebtedness remains unpaid.
Section 4.7 No Oral Modifications. This Mortgage cannot be
altered, waived, amended, modified, discharged or terminated orally or by any
other means except an instrument in writing and signed by the party against whom
enforcement of the alteration, waiver, modification, discharge or termination
is sought.
Section 4.8 No Rights Exclusive, No Waiver. To the extent
permitted by law, no remedy herein conferred upon or reserved to Mortgagee is
intended to be exclusive of any other remedy or remedies, and each and every
such remedy shall be cumulative, and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute.
No delay or omission of Mortgagee in exercising any right or power accruing upon
any Event of Default shall impair any such right or power, or shall be construed
to be a waiver of any such Event of Default, or any acquiescence therein.
Acceptance of any payment after the occurrence of an Event of Default shall not
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be deemed a waiver of or a cure of such Event of Default and every power and
remedy given by this Mortgage to Mortgagee may be exercised from time to time as
often as may be deemed expedient by Mortgagee. Without limiting the generality
of the foregoing, any payment made by Mortgagee for insurance premiums, taxes,
assessments, water rates, sewer rentals, levies, fees or any other charges
affecting the Mortgaged Property shall not constitute a waiver of Mortgagor's
default in making such payments and shall not obligate Mortgagee to make any
further payments. Nothing in this Mortgage or in any of the other Loan Documents
shall affect the obligation of Mortgagor to pay the Indebtedness in the manner
and at the time and place therein respectively expressed.
Section 4.9 Appearance in and Institution of Proceedings.
Mortgagee shall have the right to intervene, participate and appear in and
defend any action or proceeding, in its own name or in the name and on behalf of
Mortgagor, which Mortgagee, in its sole discretion reasonably exercised, feels
may adversely affect the Mortgaged Property or this Mortgage. Mortgagee shall
also have the right to institute any action or proceeding which Mortgagee, in
its sole discretion reasonably exercised, feels should be brought to protect its
interest in the Mortgaged Property or its rights hereunder. All costs and
expenses incurred by Mortgagee in connection with such actions or proceedings,
including, without limitation, reasonable attorneys' fees and disbursements,
shall be paid by Mortgagor on demand and shall be secured by this Mortgage.
Section 4.10 Changes in Tax Laws. In the event of the passage
after the date of this Mortgage of any law of any Governmental Authority having
jurisdiction in respect hereof or of the Mortgaged Property, deducting from the
value of land for the purpose of taxation, affecting any lien thereon or
changing in any way the laws for the taxation of mortgages or debts secured by
mortgages for Federal, state or local purposes, or the manner of the collection
of any such taxes, so as to affect this Mortgage, Mortgagor shall promptly pay
to Mortgagee, on demand, all taxes, costs and charges for which Mortgagee is or
may be liable as a result thereof; provided, however, that if said payment shall
be prohibited by law, render the Note usurious or subject Mortgagee to any
penalty or forfeiture, the Indebtedness shall, at the option of Mortgagee, be
immediately due and payable.
Section 4.11 No Merger. Unless expressly provided otherwise,
if ownership of this Mortgage and title to the fee and/or leasehold estates in
the Mortgaged Property encumbered hereby shall become vested in the same person
or entity, this Mortgage shall not merge in said title but shall continue to be
and remain a valid and subsisting lien on said estates in the Mortgaged Property
for the amount secured hereby.
Section 4.12 Indemnification. Mortgagor shall protect,
indemnify and save Mortgagee harmless from and against all liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
imposed upon or incurred by or asserted against Mortgagee (except to the extent
caused by the gross negligence or willful act or omission of Mortgagee, its
agents, employees or representatives) by reason of or with respect to (a)
Mortgagee's interest in the Mortgaged Property or receipt of any rent or other
sum therefrom, (b) any accident, injury to or death of persons, or loss of or
damage to property occurring on or about the Mortgaged Property or the adjoining
sidewalks, streets, ways, curbs, vaults and vault space, if any, (c) any use,
non-use or condition of the Mortgaged Property or the adjoining sidewalks,
streets, ways, curbs, vaults and vault space, if any, (d) any failure by
Mortgagor to perform or comply with any of the terms, covenants or provisions of
this Mortgage or any other Loan Documents, (e) the performance of any labor or
services or the furnishing of any materials or other property in respect of the
Mortgaged Property, (f) the inaccuracy of any representation made by Mortgagor
in this Mortgage or any other Loan Document, (g) any Lease of space in the
Mortgaged Property, or (h) any Legal Requirement. Any amounts payable to
Mortgagee pursuant to this Section that are not paid within ten (10) days after
written demand therefor by Mortgagee shall bear interest form the date of such
demand through the date of payment at the Default Rate.
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Section 4.13 Maximum Principal Amount. The maximum amount of
principal portion of the Indebtedness secured by this Mortgage at execution, or
which under any contingency may become secured hereby at any time thereafter, is
One Million Seven Hundred Thousand Dollars ($1,700,000) plus all interest, and
amounts expended by Mortgagee after a default by Mortgagor hereunder to maintain
the lien of this Mortgage or to protect the property encumbered by this
Mortgage.
Section 4.14 Participations. Mortgagor acknowledges that
Mortgagee may after the date hereof sell and assign direct interests and
participation interests in the Loan (each such direct interest and participation
interest in the Loan so sold or assigned is hereinafter called a
"Participation") to such domestic and foreign banks, insurance companies,
pension funds, trusts and other institutional lenders as may be selected by
Mortgagee, in its sole and absolute discretion, on terms and conditions
satisfactory to Mortgagee in its sole and absolute discretion.
Section 4.15 Discrepancy. If there is a discrepancy between
any provisions of this Mortgage and any provisions of the Loan Agreement, the
Loan Agreement shall govern.
IN WITNESS WHEREOF, this First Mortgage, Assignment of Leases
and Rents and Security Agreement has been duly executed as of the date first
above written.
THE WENDT-BRISTOL HEALTH SERVICES
CORPORATION
By: /s/ Reed A. Martin
-------------------------
Name: Reed A. Martin
Title: Vice President
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STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
Be it remembered that on this 19th day of April, 1996, before me,_______
____________________, a notary public, personally appeared Reed A. Martin, the
Vice President of THE WENDT-BRISTOL HEALTH SERVICES CORPORATION, who I am
satisfied is the person who has signed the foregoing instrument, and _he did
acknowledge that _he signed, sealed with the seal of the said corporation, and
delivered said instrument as the officer above stated, and that the foregoing
instrument is the voluntary act and deed of said corporation, made by virtue of
the authority of its board of directors.
/s/ Louis Tedone
--------------------------
Notary Public
My commission expires:
[Seal]
<PAGE> 29
EXHIBIT A
LEGAL DESCRIPTION
[TO BE ADDED]
<PAGE> 30
EXHIBIT A
D E S C R I P T I 0 N
ALL that certain tract, lot and parcel of land lying and being in the City of
Passaic, County of Passaic, State of New Jersey, and being more particularly
described as follows:.
Beginning at a point in the southerly line of South Street (Canal Street), said
point being a distance of 145.50 feet easterly from a point which is the
southerly extension of the centerline of Third Street and from said point
running as follows:
1) North 83 degrees 09 minutes 30 seconds East, 344.50 feet to a point;
thence
2) North 06 degrees 50 minutes 30 seconds West, 60 feet to a point; thence
3) North 83 degrees 09 minutes 30 seconds East, 130 feet to a point;
thence
4) South 06 degrees 50 minutes 30 seconds East, 459 feet to a point;
thence
5) South 38 degrees 33 minutes West, 125 feet to a point; thence
6) North 49 degrees 59 minutes West, 60 feet to a point; thence
7) South 47 degrees 11 minutes 30 seconds West, 42.70 feet to a point in
the northerly line of the Passaic River; thence
8) Along same, in a northwesterly direction, along a curve to the left
having a radius of 825.00 feet, an arc distance of 53.40 feet to a
point; thence
9) Continuing along same, South 43 degrees 29 minutes 30 seconds West,
6.97 feet to a point; thence
10) Still along said river, North 56 degrees 02 minutes West, 224.91 feet
to a point; thence
11) Continuing along the line of the Passaic River, North 75 degrees 45
minutes West, 104.94 feet to a point; thence
12) North 06 degrees 50 minutes 30 seconds West, 247.81 feet to the point
and place of beginning.
EXCEPTING THEREFROM, A PARCEL OF LAND NOW OR FORMERLY OWNED BY THE
ERIE-LACKAWANNA RAILROAD, AS RECITED IN DEED BOOK L-13 PAGE 571.
The above description being in accordance with the survey prepared by John A.
Doolittle, P.A., dated August 31, 1988.
<PAGE> 1
RECEIVABLES PURCHASE AND SALE AGREEMENT
This Receivables Purchase and Sale Agreement (the "Agreement") is
entered into as of May 30, 1996, by and among HEALTHPARTNERS FUNDING, L.P., a
Delaware limited partnership, (the "Purchaser") and WENDT-BRISTOL DIAGNOSTICS
COMPANY, L.P., a Delaware limited partnership, THE WENDT-BRISTOL COMPANY, a
Delaware corporation, ETHAN ALLEN CARE CENTER, INC., an Ohio corporation and
WENDT-BRISTOL HOME HEALTH CARE COMPANY, an Ohio corporation (collectively, the
"Seller").
WITNESSETH
WHEREAS, Purchaser is in the business of purchasing receivables; and
WHEREAS, Seller is desirous of selling to Purchaser certain of its receivables
generated in the ordinary course of Seller's business; and
WHEREAS, Purchaser and Seller wish to confirm the terms and conditions pursuant
to which certain receivables of Seller will be sold to Purchaser during the term
of this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions.
The following definitions shall apply to the following terms wherever
used in the Purchase Documents (such definitions to be equally applicable to
both the singular and plural forms of such terms), except where the terms are
expressly defined otherwise or where the context clearly requires otherwise:
Affiliate (or a Person "affiliated with" a specified Person). Any
Person directly or indirectly, through one or more intermediaries, controlling
or controlled by, or under direct or indirect common control with, another
Person. A person shall be deemed to control another Person for the purposes of
this definition if such first Person possesses, directly or indirectly, the
power to direct, or to cause the direction of, the management and policies of
the second Person, whether through the ownership of voting securities, through
common directors, trustees or officers, by contract or otherwise.
Agreement. This Receivables Purchase and Sale Agreement, with any and
all exhibits and schedules attached hereto, and any and all amendments,
supplements and modifications hereof.
Authorized Persons. The Persons designated in writing from time to time
by the Seller on behalf of Seller with respect to all matters involving this
Agreement.
<PAGE> 2
Bankruptcy Event. With respect to any Person, when: (a) a receiver,
custodian, liquidator or trustee of any of its assets is appointed by court
order; (b) an order for relief under any bankruptcy, reorganization or
insolvency Law is entered after the filing of a petition by or against it; (c) a
petition to reorganize or rehabilitate it under any bankruptcy, reorganization
or insolvency Laws is filed against it and is not dismissed within thirty (30)
days of the filing thereof; (d) such Person requests reorganization,
arrangement, composition, readjustment, dissolution, rehabilitation, liquidation
or similar relief under any provision of any present or future Law or consents
to the filing of any petition against it under such Law; or (e) such Person
makes a general assignment for the benefit of its creditors, admits in writing
its inability to pay its debts generally as they become due, generally fails to
pay its debts as they become due, consents to the appointment of a receiver,
trustee or liquidator of all or any part of its assets, or otherwise commits any
similar act.
Batch. A group of Eligible Receivables periodically submitted by each
Seller to Purchaser for Purchase pursuant to the terms hereof or a group of such
Eligible Receivables actually purchased, as applicable.
Business Day. A day other than Saturday or Sunday on which the United
States Post Office is open for regular business in the State of Maryland.
Claim Date. The date of submission of a claim to the Insurer obligated
to pay a Receivable.
Collection Period. The period from the Purchase Date of such a Batch
through and including ninety (90) days from the Purchase Date; provided that at
the option of Purchaser the Collection Period may be extended pursuant to a
written notification to Seller together with the terms of such extension.
Collections. All cash collections or cash proceeds received by the
Purchaser or by the Seller on behalf of the Purchaser in respect of any
Purchased Receivables or Related Security or other Receivables of Seller, as
appropriate.
Commitment. One Million Five Hundred Thousand and No/100 Dollars
($1,500,000.00).
Delinquent Purchased Receivable. A Purchased Receivable which, (i)
remains unpaid in whole or in part after the later of the date which is (a) more
than ninety (90) days after the Claim Date thereof or (b) at the expiration of
the Collection Period applicable thereto or (ii) is not recoverable as
determined in good faith by Purchaser.
Eligible Insurer. An Insurer approved by the Purchaser in its
reasonable discretion, which approval shall be determined when practicable
through the use of objective crite-
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<PAGE> 3
ria, including, without limitation, those certain ratings published from time to
time by A.M. Best & Company.
Eligible Receivable. A Receivable which satisfies all of the following
criteria:
(a) such Receivable is a bona fide undisputed contractual or other
obligation owed to Seller by an Eligible Insurer or under a Government Program
(or assigned to Seller by a Patient) that arises from the Seller having
performed Medical Services with respect to a Patient entitled to benefits under
either an insurance policy between the Patient and the Insurer or from a
Government Program;
(b) the insurance claim related thereto has been (i) verified by a
process approved by the Purchaser and (ii) forwarded to the Insurer for payment,
except for nursing home and home health claims generated in between Seller's
billing cycles for which Seller has generated an internal invoice and forwarded
same to the Purchaser; and
(c) such Receivable is not an Excluded Receivable.
Excluded Receivables. The following Receivables shall not constitute
Eligible Receivables;
(a) Receivables that are evidenced by promissory notes or other
instruments or chattel paper;
(b) Receivables that represent amounts due from Affiliates or employees
of the Seller;
(c) Receivables that are subject to any Lien;
(d) Receivables that represent amounts due from a payor located outside
the United States of America;
(e) Receivables payable in any currency other than United States
dollars;
(f) Receivables that represent amounts due from an Insurer with respect
to which a Bankruptcy Event has occurred and is continuing.
Government Programs. Medicare, Medicaid, Title V Maternal and Child
Health Services Block Grant Program and the Title XX Social Services Block Grant
Program.
Initial Offer. As defined in Section 2.1.
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<PAGE> 4
Initial Payment. With respect to a Batch, an amount equal to
eighty-five percent (85%) of the Purchase Price for a Batch, payable on the
Purchase Date.
Insurer. A Person that insures a Patient against certain of the costs
incurred in the receipt by such Patient of Medical Services.
Investment. At any time, that portion of the Purchase Price actually
paid by the Purchaser to Seller for Purchased Receivables which have not been
re-assigned by Purchaser to Seller, less all Collections with respect thereto
which have been received by the Purchaser.
Law or Laws. Statute(s), law(s), ordinance(s), regulation(s), order(s),
writ(s), injunction(s) or decree(s) of any political or governmental body or
tribunal (federal, state, county, municipal, foreign or domestic, or otherwise)
having competent jurisdiction.
Lien. Any claim, mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including without limitation, any agreement to allow or
give any of the foregoing), any conditional sale or other title retention
agreement, or any lease in the nature thereof, or the interest of the lessor
under any capitalized lease obligation.
Medical Services. Medical and health care services provided to a
Patient, including, but not limited to, medical and health care services
provided to a Patient and performed by Seller which are covered by a policy of
insurance issued by an Insurer, and includes physician services, nurse and
therapist services (including staffing services), dental services, hospital
services, skilled nursing facility services, comprehensive outpatient
rehabilitation services, home health care services, diagnostic services
(including without limitation, x-ray, mammography, C-T scan, Magnetic Resonance
Imaging, angio-fluoroscopy, and ultrasound services) and medicine or health care
equipment provided by Seller to a Patient for a necessary or specifically
requested valid and proper medical or health purpose.
Medicare and Medicaid. As the context may require, the Medicare program
existing pursuant to 42 U.S.C. &1395 et seq., and regulations adopted under the
authority thereof, the Medicaid program adopted by any state pursuant to 42
U.S.C. &1396 et seq., and regulations adopted under the authority thereof, and
every intermediary, carrier and administrator of any of such programs.
Net Outstanding Balance. As of any date, the balance of the Verified
Net Claim Payment Amount applicable to a Purchased Receivable.
Offer. Each offer by the Seller to sell Eligible Receivable(s) to the
Purchaser pursuant to an Offer Letter, including the Initial Offer.
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<PAGE> 5
Offer Letter. A letter from the Seller to the Purchaser supplying the
information specified in the form attached hereto as Exhibit A or in such other
form as Purchaser may direct.
Patient. Any Person receiving Medical Services from Seller and all
Persons legally liable to pay Seller for such Medical Services other than
Insurers.
Person. An individual, corporation, partnership, joint venture, trust,
incorporated organization, or any juridical and/or business entity, or a
government or any agency or political subdivision thereof.
Purchase Date. For Eligible Receivable(s), the effective date of an
Offer, which shall be a Business Day at least one (1) Business Day after receipt
by the Purchaser of an Offer Letter with respect to such Eligible Receivable(s).
Purchase Discount. The Purchase Discount shall be comprised of two
components: (i) a funding fee, in an amount equal to one percent (1%) per thirty
(30) day period of the outstanding "Batch Payoff" (Investment plus accrued
Purchase Discounts) for a Batch of Eligible Receivable(s) purchased under this
Agreement, and (ii) a servicing fee, for the monitoring, processing and tracking
of Receivables, in an amount equal to one third of one percent (0.3333%) per
thirty (30) day period of the outstanding "Batch Payoff" (Investment plus
accrued Purchase Discounts) for a Batch of Eligible Receivable(s) purchased
under this Agreement.
Purchase Documents. This Agreement, each Offer Letter, each Purchased
Receivables Statement and all future amendments, supplements or modifications of
each of the foregoing, and all other documents, certificates and agreements
executed or delivered (or to be executed or delivered) pursuant to any of the
foregoing documents.
Purchase Price. For each Batch of Eligible Receivables purchased by the
Purchaser hereunder, the Verified Net Claim Payment Amount thereof on the
Purchase Date.
Purchased Receivables. Eligible Receivables, and the Related Security
therefor, which have been purchased by the Purchaser pursuant to an Offer Letter
by payment of the Initial Payment therefor.
Receivable. An "account" (as defined in Article 9 of the Uniform
Commercial Code as in effect in the state of any applicable jurisdiction)
generated by the Seller in the ordinary course of its business of providing
Medical Services.
Related Security. (a) All of the Seller's interest in all rights,
security, guarantees, indemnities, payment or performance bonds, insurance
policies (benefits of which have been assigned by Patients to Seller),
warranties and other agreements and arrangements
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<PAGE> 6
supporting or securing payment of a Receivable; (b) all of the Seller's rights
as a provider of Medical Services, other services, seller of goods or unpaid
seller or lienor, including, without limitation, attachment, replevin and
reclamation; (c) all files, records (including, without limitation, computerized
records and all applicable medical records), books, ledger cards (including,
without limitation, computer programs, tapes and related electronic data
processing software) and writings of the Seller or in which it has interest in
any way relating to the foregoing; and (d) all proceeds and products of the
foregoing or any Receivable.
Replacement Date. The fifth (5th) Business Day after any Purchased
Receivable ceases to be an Eligible Receivable or becomes a Delinquent Purchased
Receivable.
Reserve. With respect to a Batch, an amount equal to the Purchase Price
for such Batch less the Initial Payment applicable thereto, which Reserve shall
be held and applied in the manner set forth in Section 2.3.
Settlement Date. Friday of each week if such day is a Business Day or
any other mutually agreed upon day.
Termination Event. (a) The Seller fails to promptly remit to the
Purchaser all or any portion of any Collection with respect to a Purchased
Receivable which it may receive; (b) the occurrence of a Bankruptcy Event with
respect to the Seller; (c) the Seller fails to assign to the Purchaser
additional Eligible Receivable after the Purchaser has exercised the option
described in Section 2.6 hereof; (d) the Seller refuses to permit a verifier,
selected by Purchaser in its reasonable discretion to participate in the
verification of Seller's Receivables or the with respect to Receivables from
Government Programs, the review of cost reports applicable thereto; (e) the
Seller breaches any of its representations or warranties contained in this
Agreement or fails to honor any other material obligations set forth in this
Agreement within ten (10) days after receipt of written notice from the
Purchaser setting forth in reasonable detail any such failure; or (f) an Event
of Default shall have occurred under that certain Secured Term Note dated on or
about the date hereof in the original principal amount of One Hundred Fifty
Thousand and No/100 Dollars ($150,000.00), executed by The Wendt-Bristol Health
Services Corporation (an Affiliate of Seller).
Verified Net Claim Payment Amount. The dollar amount payable to Seller
by an Eligible Insurer obligated on a Receivable, a claim for which has been
submitted to the Insurer and verified by a verifier reasonably selected by
Purchaser, less any and all deductions deemed applicable by Purchaser in its
reasonable discretion, which deductions shall be based when practicable upon
objective criteria, including, without limitation, historical collections by
payor class, specific contractual allowances or the exclusion of individual
co-payment Receivables.
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2. Purchase, Sale and Collection of Receivables.
2.1 Revolving Purchases. On the date on which all conditions precedent
described in Section 4 hereof have been satisfied, the Seller may offer Batches
of Eligible Receivables for sale to the Purchaser on any Business Day (the first
such offer is referred to herein as the "Initial Offer").
2.2 Offer Procedures.
(a) At least two (2) Business Days prior to the Purchase Date of any
Offer, the Seller shall deliver to the Purchaser with respect to each Offer (i)
an Offer Letter, duly executed by an Authorized Person of the Seller, certifying
that each Receivable subject to such Offer Letter is an Eligible Receivable and
containing the other information specified therein, and attached to which shall
be a printout or listing describing the Insurer, the gross claim amount of each
Eligible Receivable in the Batch subject to the Offer Letter, the Verified Net
Claim Payment Amount of the Batch if then available and such other information
as the Purchaser shall require and (ii) an Assignment of Receivables in the form
attached hereto as Exhibit B, duly executed by Authorized Persons of the Seller.
(b) Each Offer of Eligible Receivables for sale to the Purchaser shall
be subject to the condition that the Purchaser's total Investment in Purchased
Receivables shall at no time exceed the Commitment. The Purchaser may, in its
reasonable discretion, accept or reject all or part of any Offer. If the
Purchaser rejects all or any part of any Offer, the Purchaser shall notify the
Seller of the reason for such rejection. If the Purchaser accepts all or any
part of any Offer, the Purchaser shall (i) if not earlier determined determine
the Verified Net Claim Payment Amount of the Batch, (ii) advise Seller thereof,
(iii) notify the Seller of such acceptance no later than 10:00 a.m. on the
Purchase Date, and (iv) make the Initial Payment therefor to the Seller no later
than 2:00 p.m. on the Purchase Date. Seller understands and agrees that except
for its rights in the Reserve applicable to a Batch as set forth herein, payment
of the Initial Payment shall complete the transfer to the Purchaser of full
legal and beneficial title to and full and absolute ownership of the Purchased
Receivables and all Related Security therefor and Seller shall have no further
ownership rights therein. Notwithstanding the foregoing, with respect to any
Purchased Receivable which represents an obligation under a Government Program,
Seller shall retain the right to receipt of payment and any right to demand or
otherwise make a claim under such a Government Program.
2.3 Reserve. The Reserve account applicable to a Batch shall be held as
additional security for Seller's obligations hereunder (and Seller hereby grants
a Security Interest therein to Purchaser) and may be credited, charged, or
applied against such obligations of Seller. So long as no Delinquent Purchased
Receivables are outstanding
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and Seller is not in default of any of its obligations hereunder, the Reserve
(or such portion thereof as has been collected) shall be released and paid to
Seller on the Settlement Date next following the receipt by Purchaser of a sum
equal to the Initial Payment plus the Purchase Discount of the respective Batch.
The balance of such Reserve, if any, (except as otherwise provided below) shall
be released and paid to Seller on the earlier to occur of (i) the Settlement
Date next following receipt by Purchaser of the aggregate Verified Net Claim
Payment Amount of the respective Batch or (ii) the Settlement Date next
following the expiration of the Collection Period applicable to the Batch, and
the balance of such Reserve account applicable to the Batch shall be canceled
and all uncollected Purchased Receivables in the Batch shall be re-assigned to
Seller without recourse or warranties of any kind; provided that if at the
expiration of the Collection Period, Purchaser shall have received Collections
in an amount (a) less than the sum of the Initial Payment plus the Purchase
Discount for the Batch, the Reserve account shall be canceled, all uncollected
Purchased Receivables in the Batch shall be re-assigned to Seller without
recourse or warranties of any kind and, at its option, Purchaser may offset the
difference between the Collections received and the sum of the Initial Payment
plus the Purchase Discount from any other Reserve account for any other Batch of
Purchased Receivables or from amounts due Seller from the purchase of other
Batches or Purchaser may exercise the Replacement Option in Section 2.6. Seller
understands and agrees that a Reserve account may represent accounting entries
and not cash balances.
2.4 Settlement. On each Settlement Date, provided that Seller has not
failed to honor any of its obligations hereunder, Purchaser shall release any
amounts in any Reserve account that Seller is then entitled to pursuant to the
terms hereof, together with (i) any payment on any Purchased Receivables which
were re-assigned to Seller in accordance with Section 2.3 and (ii) any amounts
received by Purchaser not on account of Purchased Receivables. Such settlement
shall be accompanied by a settlement statement in a form prepared by Purchaser.
If any Settlement Date is also a Purchase Date or Replacement Date, the
aggregate amount to be remitted to Seller by Purchaser shall be netted or
credited against any amounts then due Purchaser.
2.5 Reports; Applications. At such times during a Collection Period as
Seller shall request but not more frequently than weekly, Purchaser shall submit
to Seller, or cause a third party to submit to Seller, a Purchased Receivables
Statement substantially in the form of Exhibit C attached hereto, or such other
acceptable report reporting the status of Collections with respect to all
Batches by each Seller of Purchased Receivables, together with a reconciliation
of Purchaser's Investment in Purchased Receivables as of the date of the report.
Purchaser hereby further agrees to make all applications of Collections within
seventy two (72) hours of their receipt by Purchaser.
2.6 Replacement Option.
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(a) If the Net Outstanding Balance of any Purchased Receivable is either
(i) reduced or cancelled as a result of any defective, rejected, repossessed or
returned services, any cash discount or any retainage or any other adjustment,
or (ii) reduced or cancelled as a result of any dispute, setoff or by agreement,
in respect of any claim by the Insurer thereof or by a Patient against the
Seller, then the Purchaser shall have the option of requiring the Seller to
replace such Purchased Receivable by assigning to the Purchaser, on the next
Replacement Date, additional Eligible Receivables with an aggregate Verified Net
Claim Payment Amount on such Replacement Date of at least one hundred percent
(100%) of the amount of such reduction, adjustment or cancellation.
(b) If any Purchased Receivable ceases to be an Eligible Receivable or
any Purchased Receivable becomes a Delinquent Purchased Receivable (unless such
Delinquent Purchased Receivable is the result of the bankruptcy, insolvency or
financial inability to pay of the Insurer thereof as demonstrated by the Seller
to the reasonable satisfaction of the Purchaser), then the Purchaser shall have
the option of requiring the Seller to replace such Purchased Receivable by
assigning to the Purchaser, on the next Replacement Date, additional Eligible
Receivables with an aggregate Verified Net Claim Payment Amount on such
Replacement Date equal to at least one hundred percent (100%) of the Net
Outstanding Balance of the replaced Purchased Receivable.
(c) On the Purchase Date following the Replacement Date, in lieu of the
provisions of paragraphs (a) and (b) above, the Purchaser may elect to reduce
the aggregate Purchase Price for Eligible Receivables purchased by the Purchaser
on such date by one hundred percent (100%) of the Net Outstanding Balance then
remaining unpaid on any Purchased Receivable being replaced.
(d) If the Purchaser elects to exercise the replacement option
described above with respect to any Purchased Receivable(s), the Purchaser will,
contemporaneously with the assignment of the required amount of additional
Eligible Receivables on the Replacement Date, re-assign the replaced Purchased
Receivable(s) to the Seller without recourse or warranties of any kind.
2.7 No Assumption. The Purchaser does not, and shall not be deemed to,
assume any obligations of the Seller relating to any Receivables or the
transactions giving rise to any Receivables.
2.8 Receivables Purchase Transaction; Not a Loan. The transactions
contemplated by this Agreement are purchases of Receivables. The Purchase Price
paid for the Purchased Receivables by the Purchaser does not constitute a loan
to the Seller, and the Seller shall not have any obligation to repay such
Purchase Price or any other obligation with respect to Purchased Receivables
except as specified herein. In the event, however, that a court of competent
jurisdiction were to hold that the transactions
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evidenced by this Agreement constitute loans rather than purchases and sales of
Receivables, it is the intention of the parties hereto that this Agreement shall
constitute a security agreement under the Uniform Commercial Code and other
applicable law, and that Seller shall be deemed to have granted to Purchaser a
first priority security interest in all of Seller's right, title and interest in
and to the Receivables and the Related Security pursuant to the terms of the
Purchase Documents. The Purchaser's ownership of the Purchased Receivables
constitutes full and absolute ownership of all right, title and interest in such
Receivables free and clear of any redemption or conditional ownership by Seller.
2.9 Security Interest in Other Assets. As additional security for
Seller's obligations hereunder, Seller hereby grants a Security Interest in such
other assets of Seller as Purchaser and Seller shall agree, which agreement
shall be evidenced by a Financing Statement executed by Purchaser and Seller.
3. Representations and Warranties of the Seller. To induce the Purchaser
to enter into this Agreement, each entity comprising the Seller
represents and warrants to the Purchaser as follows:
3.1 Existence. The Seller is a corporation or other entity duly
organized or formed, validly existing and in good standing under the laws of its
state of incorporation or formation. The Seller is duly qualified to transact
business, and is in good standing, in each jurisdiction where the nature of its
business or properties requires such qualification. The Seller has all requisite
power, authority, licenses, permits and approvals material to the ownership and
operation of its properties and to the carrying on of its business.
3.2 Capacity. The Seller has all requisite power and authority to
execute and deliver, and to perform under this Agreement and the other Purchase
Documents.
3.3 Authorization. The execution and delivery of, and performance by
the Seller under, this Agreement and the other Purchase Documents, have been
duly authorized by all requisite action; are not in contravention of any
applicable Law; are not in contravention of the terms of its Articles or
Certificate of Incorporation or other formation documents or bylaws (if a
corporation), the terms of any credit or loan agreement, indenture, lease,
franchise, marketing agreement, license, mortgage or deed of trust, or other
material agreement, undertaking or arrangement (written or oral) to which the
Seller is a party or by which it (or any of its assets) may be bound; and will
not give rise to the creation of any Lien upon any of the assets of the Seller.
3.4 Validity. This Agreement and the other Purchase Documents, when
executed and delivered by all parties thereto, will constitute the valid, legal
and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms.
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3.5 Consent. To the best of Seller's knowledge, after reasonable
investigation, no consent, approval or authorization of, registration with or
declaration to any tribunal, Person or entity, including, without limitation,
the Patients or the Insurers obligated on the Purchased Receivables, or approval
by the shareholders of the Seller (if Seller is a corporation), is required in
connection with the execution and delivery of this Agreement and the other
Purchase Documents or in connection with the performance by the Seller of any
covenant or agreement contained herein or therein.
3.6 Defaults Under Other Documents. Except as disclosed in writing by
Seller to Purchaser on or prior to the date hereof, the Seller is not, nor will
the execution, delivery, performance of or compliance with the terms of this
Agreement and the other Purchase Documents cause the Seller to be, in default or
in violation (nor has any event or condition occurred which, with notice or
lapse of time or both, would constitute a default violation) under (a) its
Articles or Certificate of Incorporation or other formation documents or by laws
(if a corporation), or (b) any credit or loan agreement, indenture, lease,
franchise, marketing agreement, license, mortgage or deed of trust, or other
material agreement, undertaking or arrangement to which it is a party or by
which it (or its assets) may be bound.
3.7 Compliance with Laws. The Seller is not, and the execution,
delivery and performance of, and compliance with, the terms of this Agreement
and the other Purchase Documents will not cause the Seller to be, in violation
of any Laws in any respect that could have any material adverse effect
whatsoever upon (a) the validity, performance or enforceability of any of the
material terms of this Agreement and the other Purchase Documents, or (b) the
financial condition or business operations of the Seller.
3.8 Place of Business. The place of business of the Seller, or the
Seller's chief executive office if the Seller has more than one place of
business, is located at the address of the Seller set forth herein, and the
Seller keeps its books and records regarding its Receivables at that address.
3.9 Receivables. The Seller (a) is the sole owner of all right, title
and interest in and to all of its Receivables (including the Purchased
Receivables) free and clear of any Lien and (b) has not sold, assigned,
hypothecated, pledged or granted any Lien or security interest in all or any
portion of such Receivables.
4. Conditions Precedent.
The Seller shall not be deemed to have made the Initial Offer until all
requirements set forth in this Section 4 are satisfied and the Purchaser has
received the documentation set forth in this Section 4 :
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4.1 Formation Documents and Certificates. Copies of the Articles of
Incorporation, or other formation documents, and all amendments thereto, of the
Seller, to be accompanied by (i) a certificate of the Secretary of State of its
jurisdiction of incorporation or formation, dated as of a date no more than ten
(10) days prior to the date of the Initial Offer, to the effect that such copies
are correct and complete, and (ii) a certificate of its Secretary, dated as of
the date of the Initial Offer, that each such copy is correct and complete and
that no changes have occurred therein after the date of the foregoing official
certificate.
4.2 Bylaws. If Seller is a corporation, copies of the bylaws, and all
amendments thereto, of the Seller, to be accompanied by a certificate, dated as
of the date of the Initial Offer, of its Secretary that such copies are correct
and complete.
4.3 Good Standing. A certificate of the Secretary of State of Sellers
jurisdiction of incorporation or formation bearing a date not more than (10)
days prior to the date of the Initial Offer, to the effect that the Seller is a
corporation or other entity duly organized and in good standing under the Laws
of the State of its incorporation or formation.
4.4 Incumbency. Certificates of incumbency of all officers of the
Seller who will be authorized to execute or attest any of the Purchase Documents
on behalf of the Seller, executed by the Secretary of the Seller, dated as of
the date of the Initial Offer.
4.5 Resolutions. Copies of resolutions of the Board of Directors or
partners of the Seller, approving the execution of this Agreement and the other
Purchase Documents and authorizing the performance of the obligations of the
Seller contemplated in this Agreement and in the other Purchase Documents,
accompanied by a certificate of its Secretary, dated as of the date of the
Initial Offer, that such copies are complete and correct copies of resolutions
duly adopted at a meeting of (which may be held by conference telephone or
similar communication equipment by means of which all Persons participating in a
meeting can hear each other if permitted by applicable Law) or by the unanimous
written consent of (if permitted by applicable Law) such Board of Directors or
partners, and that such resolutions have not been amended, modified or revoked
in any respect, and are in full force and effect as of the date of the Initial
Offer.
4.6 Financing Statements. All financing statements requested by the
Purchaser to evidence the sale of Receivables pursuant to this Agreement or
otherwise required by this Agreement, duly executed by the Seller and filed in
the appropriate jurisdictions.
4.7 Opinion of Counsel. Unless waived by Purchaser, the opinion of
counsel to the Seller, addressed to the Purchaser, to the effect that such
counsel has examined this Agreement and such other documents and matters as such
counsel deemed necessary to
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reach the conclusions stated in the opinion, which conclusions shall include the
following: (i) the Seller is a corporation or other entity, duly organized,
validly existing and in good standing under the laws of its state of
incorporation or formation; (ii) to the best knowledge of such counsel, the
Seller is duly qualified to transact business, and is in good standing, in each
jurisdiction where the nature of its business or properties requires such
qualifications; (iii) the Seller has all requisite corporate power and corporate
authority to execute and deliver and perform under, this Agreement; (iv) the
execution and delivery of, and performance by the Seller under, this Agreement
(A) have been duly authorized by all requisite action, (B) to the best knowledge
of such counsel, are not in contravention of any applicable Law, and (C) are not
in contravention of its Articles or Certificate of Incorporation or other
formation documents, or bylaws (if a corporation), or to the best knowledge of
such counsel, the terms of any credit or loan agreement, indenture, lease,
franchise, marketing agreement, license, mortgage or deed of trust, or other
material agreement, undertaking or arrangement (written or oral) to which the
Seller is a party or by which it (or any of its assets) may be bound; (v) this
Agreement, when executed and delivered by all parties hereto, will constitute
the valid, legal and binding obligation of the Seller, enforceable, subject to
customary qualifications, in accordance with its term; (vi) to the best
knowledge of such counsel, no consent, approval or authorization of,
registration with or declaration to any tribunal, Person or entity, including
without limitation, the Patients or Insurers obligated on the Receivables, is
required in connection with the execution and delivery of this Agreement, the
sale of the Receivables to the Purchaser in accordance with the terms hereof or
in connection with the performance by the Seller of any covenant or agreement
contained herein; and (vii) to the best knowledge of such counsel, no approval
by the shareholders of the Seller (if Seller is a corporation) is required in
connection with the execution and delivery of this Agreement or in connection
with the performance by the Seller of any covenant or agreement contained
herein.
4.8 Closing Certificate. Certificates of the Seller, duly executed by
Authorized Persons of the Seller, dated as of the date of the Initial Offer,
certifying that the representations and warranties contained herein are true and
correct as of such date, and that no Termination Event has occurred as of such
date.
4.9 UCC Searches. Copies of Certificates on form UCC-11 of the
Secretary of State of each jurisdiction where the Seller has its chief executive
office or keeps its books and records regarding Receivables, and copies of all
financing statements listed thereon, evidencing that no Person (other than the
Purchaser) has an interest in or Lien on any Receivables owned by the Seller,
whether such interest or Lien arises because such Receivables are proceeds of
inventory or otherwise.
4.10 Other Documents. Any and all other documents or certificates
reasonably requested by the Purchaser in connection with the purchase of
Eligible Receivables pursuant to this Agreement.
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4.11 Commitment Fee. The payment of a fee in an amount equal to one and
one-half percent (1.5%) of the Commitment.
5. Covenants of the Seller.
5.1 Collection by the Seller. From and after the date of the Initial
Offer, the Seller, as independent contractor on behalf of the Purchaser in
accordance with the requirements of this Agreement, shall assist Purchaser and
its representatives in collecting all payments on the Purchased Receivables and,
upon a default by Seller and if directed by Purchaser, all other receivables of
Seller, and cause such Collections to be remitted to the Purchaser as provided
herein. If under any bankruptcy, insolvency, fraudulent transfer or other law
affecting the rights of creditors generally, the Purchaser is required by a
court to return to any Person any amount of Collections previously received by
the Purchaser, the Seller agrees to promptly assign to the Purchaser, without
setoff, deduction or counterclaim of any kind, additional Eligible Receivables
with an Verified Net Claim Payment Amount on such date of at least one hundred
percent (100%) of such amount of Collections required to be returned.
5.2 Operations. The Seller shall assist in collecting the Purchased
Receivables in an orderly and efficient manner consistent with good business
practices and in accordance with all applicable Laws. The Seller shall not
modify the terms of any Purchased Receivables so as to impair the value or
collectability thereof.
5.3 Payment of Collections. The Seller shall instruct all Insurers
obligated to pay Purchased Receivables and, upon a default by Seller, all other
Receivables of Seller, to make all payments thereon to such lockbox or other
account(s) as the Purchaser, or any lender to the Purchaser, may direct,
provided that payments from payors under Government Programs shall be made to
such account(s) or otherwise in compliance with all applicable Laws, rules or
regulations applicable to such payments. If the Seller shall receive any
payments on any Purchased Receivables, such payments shall be promptly
delivered, uncashed by the Seller and without commingling such payments with
other funds of the Seller, to the Purchaser or as directed by the Purchaser.
5.4 Records. The Seller shall at all times maintain full and accurate
books and records regarding the Purchased Receivables and Collections thereon in
accordance with generally accepted accounting principles. Such books and records
shall be marked to indicate the ownership interest of the Purchaser in the
Purchased Receivables. Subject to any prohibitions or any Law, such books and
records, together with other financial and business information concerning
Seller and all applicable medical records, shall be available for inspection,
audit and copying by the Purchaser and its representatives during reasonable
business hours.
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5.5 Relationship of Parties. The Seller shall have the status of and
act as an independent contractor in the collection of Purchased Receivables on
behalf of the Purchaser, and shall in no event be, or be deemed to be, an agent
of the Purchaser. Furthermore, this Agreement shall not be construed to create a
partnership or joint venture between the Purchaser and the Seller.
5.6 Duty of Care. In the administration and collection of the Purchased
Receivables and in all actions contemplated by this Agreement, the Seller shall
use the same degree of care that the Seller uses in the collection of any other
accounts receivable owned by the Seller.
5.7 Notice of Changes. The Seller shall notify Purchaser in writing at
least thirty (30) Business Days prior to the date of change of its name, the
location of its chief executive office, its principal place of business, or the
place where it keeps its books and records. No later than thirty (30) days after
the occurrence of any of the aforementioned changes, the Seller shall deliver to
the Purchaser acknowledgment copies of amendments on form UCC-3 reflecting such
change duly executed and duly filed before the effective date of the change in
each jurisdiction in which UCC-1 filings were made in order to evidence the sale
of Receivables pursuant to this Agreement.
5.8 Patient Compliance. Seller shall use its best efforts to ensure
that Patients have satisfied all conditions precedent to the Insurer's
obligation to pay at least the Verified Net Claim Payment Amount under insurance
policies relating to Purchased Receivables.
6. Certain Rights.
6.1 Notice to Insurers. At any time after the Seller fails to perform
any of its material obligations hereunder, the Purchaser may terminate any
duties of the Seller with respect to assisting in the collection of the
Purchased Receivables. At any time after the date of the Initial Offer, the
Purchaser, upon five (5) days prior written notice to Seller specifying the
reason for such notice, notify any Insurers obligated on the Purchased
Receivables (other than payors under Government Programs if such notification
would be ineffectual or unlawful) (A) of the sale and assignment of the
Purchased Receivables to the Purchaser, and (B) to make all payments on the
Purchased Receivables directly to the Purchaser or its designee, provided that
if Seller is not in default hereunder such notice shall be in the form attached
hereto as Schedule 6.1. Upon the receipt of such notice, the Seller shall
promptly deliver to the Purchaser or its designee all books and records
(including, without limitation, computerized records and all applicable medical
records, subject only to any laws governing patient confidentiality) relating to
the Purchased Receivables.
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6.2 Termination. Unless terminated by either Purchaser or Seller
pursuant to any of the provisions of this Section 6.2, the term of this
Agreement shall be three (3) years from the date of this Agreement, and shall
automatically extend for successive one (1) year terms. At any time, either (i)
immediately upon the occurrence of a Termination Event, or (ii) upon the
expiration of the initial three (3) year term or any subsequent one-year renewal
term, at either time upon thirty (30) days prior written notice to the Seller
from the Purchaser, the Purchaser may terminate this Agreement and the
Commitment of the Purchaser to purchase Eligible Receivables; provided that if a
Termination Event occurs, this Agreement shall be terminated automatically,
without any further action by the Purchaser. Provided Seller is not in default
hereunder, Seller may terminate this Agreement if the Purchaser fails to (A)
purchase Eligible Receivables offered by Seller to Purchaser pursuant to the
terms and conditions of Section 2.2(b) hereof for a period of thirty (30)
substantially consecutive days or (B) release to Seller any Reserve (or a
portion thereof) or other amounts in accordance with the terms and conditions of
Section 2.4 hereof. Seller may also terminate this Agreement to be effective on
the date specified in the Seller's written Notice to Purchaser, which effective
date shall be no earlier than thirty (30) days from the date of said Notice, (A)
after three (3) years from the date hereof, or (B) at the end of any one-year
renewal term, or (C) anytime after one (1) year from the date hereof and before
three (3) years from the date hereof, provided that (i) in the case of a
termination under the preceding item (C), Seller makes a payment to Purchaser of
a termination fee equal to two percent (2%) of the average Batch Payoff during
the term of this Agreement, and (ii) Purchaser has collected or the Seller pays
Purchaser in full the then remaining Batch Payoff amount.
From and after any termination pursuant to this Section 6.2, the Seller
shall not make any further Offers; provided however, the Seller shall continue
to comply with all of its obligations hereunder, including obligations with
respect to outstanding Purchased Receivables. Upon the occurrence of a
Termination Event, Purchaser shall have, in addition to all other rights and
remedies under the Purchase Documents, all other rights and remedies provided
under the applicable Uniform Commercial Code and other applicable law, which
rights shall be cumulative.
During the term of this Agreement, each month Seller shall offer to
sell to Purchaser Eligible Receivables having an aggregate Verified Net Claim
Payment Amount of at least Five Hundred Thousand and No/100 Dollars
($500,000.00).
7. General Provisions.
7.1 Assigns. Seller may not assign any of its rights or duties
hereunder without the prior written consent of the Purchaser and any attempt to
do so shall be void. Purchaser may, without the consent of Seller, assign all or
any portion of its rights hereunder by way of participations (to Affiliates) or
otherwise to such other entities that
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such Purchaser may select, provided that it shall provide prompt notice to
Seller of its assignment of all of its rights hereunder.
7.2 Modifications and Waivers. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver of any right, power or privilege hereunder operate
as a waiver of any other right, power or privilege hereunder, nor shall any
single or partial exercise of any right, power or privilege hereunder. All
rights and remedies herein provided are cumulative and are not exclusive of any
rights or remedies which the parties hereto may otherwise have at law or in
equity. No waiver shall be valid in the absence of the written and signed
consent of the party against which enforcement of such is sought.
7.3 Notice. Except as otherwise specifically provided herein, any
notice hereunder shall be in writing (including telegraphic or telecopy
communication) and, if mailed, shall be deemed to be given three (3) days after
being sent by registered or certified mail, postage prepaid, or if telegraphed
when delivered to the telegraph company, or if telecopied when transmitted, or
otherwise when delivered in person to the addressee and a receipt given for, in
all such instances addressed to the parties as set forth on the signature page
hereof, or at such other address as the addressee may, by written notice
received by the other party hereto, designate as the appropriate address for
purposes of notice hereunder.
7.4 Amendment. This Agreement may be amended, supplemented or modified,
and the observance of any term or provision hereof may be waived, only with the
written consent of the Seller and the Purchaser.
7.5 CHOICE OF LAW. THIS AGREEMENT, AND THE VALIDITY AND ENFORCEMENT
HEREOF, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE STATE OF MARYLAND.
7.6 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or invalidity without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provisions in any other jurisdiction.
7.7 ENTIRETY. THIS AGREEMENT EMBODIES THE ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, IF ANY,
RELATING TO THE SUBJECT MATTER HEREOF. THIS WRITTEN AGREEMENT REPRESENTS THE
FINAL AGREEMENT AMONG THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUB-
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SEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES HERETO.
7.8 Execution. This Agreement may be executed in one or more
counterparts, each of which for all purposes is to be deemed an original. It
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
7.9 Survival. All covenants, agreements, undertakings, indemnities,
representations, and warranties made herein shall survive both the execution and
the termination hereof for a period of three years thereafter, and shall not be
affected by any investigation made by any party.
7.10 Money. All references herein to "Dollars," "dollars," the sign "$"
"money," "payments," or other similar financial or monetary terms are references
to currency of the United States of America.
7.11 Headings. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not be deemed to limit, amplify or
modify the terms of this Agreement.
7.12 Sections , Etc. All references to "Section ," "Sections ,"
"Subsection," "Paragraph" or "paragraphs" contained herein are, unless
specifically indicated otherwise, reference to articles, sections, subsections
and paragraphs of this Agreement. All references to "Exhibits" and "Schedules"
contained herein are references to Exhibits and Schedules attached hereto, all
of which are made a part hereof for all purposes, the same as if set forth
herein verbatim, it being understood that if any Exhibit or Schedule attached
hereto which is to be executed and delivered, contains blanks or is otherwise
required to be updated from time to time, the same shall be completed correctly
and in accordance with the terms and provisions contained herein and as
contemplated herein prior to or at the time of the execution and delivery
thereof.
7.13 Third Party Beneficiaries. It is expressly agreed and understood
among the parties to this Agreement that no provisions of this Agreement are
intended to benefit any third party and no third party is entitled to rely upon
any provisions contained herein; provided that any participant or assignee of
the Purchaser shall be entitled to the benefits hereof.
7.14 Further Assurances. The Seller shall furnish to Purchaser at
Purchaser's request such additional information concerning the Purchased
Receivables or Related Security as Purchaser may from time to time reasonably
request in order to establish compliance with the terms and conditions of this
Agreement, and execute, acknowledge and deliver, or cause to be executed,
acknowledged or delivered, such supplements
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hereto and such further instruments and documents as may reasonably be required
or appropriate and permitted by Law to further express the intention, or to
facilitate the performance, of this Agreement.
7.15 Fees and Expenses. The Seller shall pay to the Purchaser (or any
assignee or participant) the reasonable out-of-pocket costs, fees and expenses
(including reasonable attorney's fees, whether payable to outside counsel or
Purchaser's general counsel, and reasonable auditing fees) incurred by the
Purchaser (or any assignee or participant) incident to the exercise of the
rights of the Purchaser and the enforcement of the Seller's obligations
hereunder, or the bankruptcy or insolvency of the Seller, within fifteen (15)
days of the receipt of notice thereof. Upon request, Seller will reimburse
Purchaser (or any assignee or participant) certain routine expenses, including
credit research, filing searches, filing fees, wire transfer costs, overnight
mail and travel expenses, provided that the costs associated with the closing of
this Agreement shall not exceed $7,500.
7.16 Indemnity. Each entity comprising the Seller hereby indemnifies
and holds harmless Purchaser (or any assignee or participant) against any and
all liabilities, obligations, losses, damages, penalties, action, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, reasonable attorneys' fees and
expenses) which may be imposed on, incurred by or asserted against the Purchaser
(or any assignee or participant) due to any action or inaction of the Seller, or
through the Seller, in any way relating to, or arising out of, this Agreement or
any of the transactions contemplated herein. The Purchaser hereby indemnifies
and holds harmless Seller against any and all liabilities, obligations, losses,
damages, penalties, action, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Seller due to the Purchaser's breach of this
Agreement or any of the transactions contemplated herein. The indemnities
contained in this Section shall survive any termination of this Agreement.
7.17 Joint and Several Liability; Binding Obligations. Except for
Wendt-Bristol Diagnostics Company, L.P., which shall not be jointly and
severally liable for any obligations of the other entities comprising the
Seller, but rather shall only be liable for its own obligations arising under
this Agreement and the other Purchase Documents, each entity comprising the
Seller and executing this Agreement on behalf of the Seller shall be jointly and
severally liable for all of the obligations of each other entity comprising the
Seller under this Agreement and the other Purchase Documents (including,
specifically, the obligations of Wendt-Bristol Diagnostics Company, L.P. arising
under this Agreement and the other Purchase Documents, as to which each of the
other entities comprising the Seller shall be jointly and severally liable). In
addition, except for Wendt-Bristol Diagnostics Company, L.P., which shall be
bound only by its own representations, warranties, covenants, obligations,
conditions, agreements, and in-
19
<PAGE> 20
demnities, each entity comprising the Seller hereby acknowledges and agrees that
all of the representations, warranties, covenants, obligations, conditions,
agreements, indemnities and other terms contained in this Agreement shall be
applicable to and shall be binding upon each individual entity comprising the
Seller, and shall be binding upon all such entities when taken together.
7.18 Limited Power of Attorney. The Seller hereby irrevocably
constitutes and appoints Purchaser (or any assignee or participant) as its agent
and attorney-in-fact for so long as any Purchased Receivables are uncollected
for the limited purposes of (i) preparing, executing on behalf of Seller and
filing for record any notices or other instruments which Purchaser (or any
assignee or participant) reasonably determines is necessary to protect its
interests in Purchased Receivables, (ii) preparing, executing on behalf of
Seller and/or delivering all documents, instruments or information pertaining to
any Related Security which Purchaser (or any assignee or participant) reasonably
determines is necessary, including without limitation, delivering any medical
records (subject only to any laws governing patient confidentiality) or other
records or information to an Insurer to aid in the collection of a Purchased
Receivable, and (iii) receiving and endorsing for Seller any drafts, checks or
other payment instruments and cash evidencing Purchased Receivables or any
Related Security or any other Receivables of Seller then being collected by
Purchaser (or any assignee or participant) and depositing the same in accordance
with the provisions of this Agreement. If requested by Purchaser (or any
assignee or participant), Seller shall execute and deliver to Purchaser (or any
assignee or participant) a separate Power of Attorney in favor of Purchaser (or
any assignee or participant) evidencing the foregoing Power of Attorney which
may be filed of record and provided to third parties if so determined by
Purchaser (or any assignee or participant).
20
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
HEALTHPARTNERS FUNDING, L.P.
c/o HealthPartners Financial Corporation
2 Wisconsin Circle
Suite 320
Chevy Chase, Maryland 20815
By: HEALTHPARTNERS FINANCIAL CORPORATION,
General Partner
By: ________________________________
John K. Delaney, President
WENDT-BRISTOL DIAGNOSTICS COMPANY, L.P.
1550 Kenny Road
Columbus, Ohio 43212
By: Wendt-Bristol Diagnostics Company,
General Partner
By: ______________________________(SEAL)
Name: Sheldon A. Gold
Title: President
THE WENDT-BRISTOL COMPANY
Two Nationwide Plaza, Suite 760
Columbus, Ohio 43215
By: ______________________________(SEAL)
Name: Sheldon A. Gold
Title: President
21
<PAGE> 22
ETHAN ALLEN CARE CENTER, INC.
dba Bristol House of Springfield
Two Nationwide Plaza, Suite 760
Columbus, Ohio 43215
By: ______________________________(SEAL)
Name: Sheldon A. Gold
Title: President
WENDT-BRISTOL HOME HEALTH CARE COMPANY
Two Nationwide Plaza, Suite 760
Columbus, Ohio 43215
By: ______________________________(SEAL)
Name: Sheldon A. Gold
Title: President
22
<PAGE> 23
EXHIBIT A
Form of Offer Letter
TO: HEALTHPARTNERS FUNDING, L.P.
c/o HealthPartners Financial Corporation
2 Wisconsin Circle
Suite 320
Chevy Chase, Maryland 20815
Attn: John K. Delaney
FROM: [Seller]
PURCHASE DATE:___________________, 199___
Pursuant to that certain Receivables Purchase and Sale Agreement dated
_____, 199_ (the "Agreement") between the Purchaser and the undersigned Seller,
the undersigned Seller hereby offers for sale the Batch of Eligible Receivables
described on Schedule A* attached hereto (the "Subject Receivables").
The Seller hereby certifies that:
(a) All of the Subject Receivables constitute Eligible Receivables which
have not heretofore been sold and relate to Patients or residents currently
being provided Medical Services by Seller;
(b) The Seller has fully performed all of its obligations under the
Agreement;
(c) The place of business of the Seller, or the Seller's chief executive
office if the Seller has more than one place of business, is located at the
address given for the Seller in the Agreement, and the Seller keeps its books
and records regarding its Receivables at such address;
(d) The representations and warranties made by the Seller in the Agreement
are true and correct in all material respects as if made as of the date of this
Offer Letter;
(e) Acceptance of this Offer, in whole or in part, and payment of the
Initial Payment, shall transfer full legal and beneficial title to and full
absolute ownership of and to all of the Subject Receivables purchased, and all
Related Security therefor; and
(f) No Termination Event has occurred.
- ---------------
* Schedule A must describe the name of the Patient, the Insurer, the
gross dollar amount of each Subject Receivable and the Verified Net Claim
Payment Amount of each Subject Receivable.
Capitalized terms used herein and not otherwise defined shall have the
meaning set forth in the Agreement.
[Seller]
By:_____________________________________
Name:___________________________________
Title:__________________________________
Date of Offer Letter:
<PAGE> 24
EXHIBIT B
Assignment of Receivables
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned Seller hereby assigns, sells and
conveys to HEALTHPARTNERS FUNDING, L.P. the Subject Receivables specified in the
Offer Letter dated ______________, 199____ and listed on Schedule A attached
hereto, together with all Related Security therefor, all in accordance with and
subject to the terms of that certain Receivables Purchase and Sale Agreement
dated _____, 199_, (the "Agreement"). Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Agreement or the
Offer Letter referred to herein.
Effective Date:__________________199____
[Seller]
By:_________________________________
Name:_______________________________
Title:______________________________
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 524,380
<SECURITIES> 0
<RECEIVABLES> 1,603,137
<ALLOWANCES> 322,000
<INVENTORY> 519,955
<CURRENT-ASSETS> 3,856,830
<PP&E> 19,806,953
<DEPRECIATION> 5,636,284
<TOTAL-ASSETS> 22,072,782
<CURRENT-LIABILITIES> 6,235,452
<BONDS> 10,813,104
0
0
<COMMON> 82,435
<OTHER-SE> 4,614,302
<TOTAL-LIABILITY-AND-EQUITY> 22,072,782
<SALES> 1,376,041
<TOTAL-REVENUES> 10,744,323
<CGS> 980,369
<TOTAL-COSTS> 980,369
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 485,057
<INCOME-PRETAX> 161,099
<INCOME-TAX> 15,671
<INCOME-CONTINUING> 145,428
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 145,428
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
