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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
September 16, 1997
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Date of Report (date of earliest event reported)
NEWCARE HEALTH CORPORATION
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Exact name of Registrant as Specified in its Charter
Nevada 0-24110 86-0594391
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State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
6000 Lake Forrest Drive, Suite 315, Atlanta, Georgia 30328
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Address of Principal Executive Offices, Including Zip Code
(404) 252-2923
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Registrant's Telephone Number, Including Area Code
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 16, 1997, a newly-formed, wholly-owned subsidiary of NewCare
Health Corporation (the "Company") purchased all of the outstanding stock of
Wakulla Acquisition, Inc., which owns a 120-bed nursing home in Wakulla,
Florida, for $1,200,000 in cash. In addition, the Company assumed and paid
off approximately $3,240,000 of existing debt on the property.
The Company financed this transaction through a loan of $4.8 million
from LTC Properties, Inc. The loan is secured by a mortgage on the nursing
home and is due on September 1, 2007. The loan bears interest at an initial
rate of 10.83% per annum, which interest rate will increase by 12.5 Basis
Points on the first day of September of each calendar year commencing on
September 1, 1998. The loan is payable in monthly installments of interest
and principal based on a 25 year amortization schedule with a balloon payment
due on September 1, 2007. The Company paid LTC Properties, Inc. a loan fee of
$48,000 in connection with this transaction.
The Wakulla nursing home is a one story nursing home facility containing
a total of 41,953 square feet of gross building area including 4088 square
feet of administrative office area. It was built in 1974 and was 97% occupied
when purchased. The payor mix was Medicaid - 93%, Medicare - 4%, and private
pay - 3%.
Physical therapy, speech therapy and occupational therapy are offered in
the facility and a pharmacy is available at the site.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. The financial
statements for Wakulla Acquisition, Inc. will be filed by amendment on or
before December 1, 1997.
(b) PRO FORMA FINANCIAL INFORMATION. Pro forma financial information
will be filed by amendment on or before December 1, 1997.
(c) EXHIBITS.
Exhibit 10.1 Stock Purchase Agreement with Wakulla Manor, Inc. et
al., and First Amendment to Stock Purchase Agreement
Exhibit 10.2 Loan Agreement and Promissory Note Secured by
Mortgage
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, hereunto duly authorized.
NEWCARE HEALTH CORPORATION
Dated: November 21, 1997 By /s/ James H. Sanregret
James H. Sanregret
Chief Financial Officer
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EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of June 1997,
by and among (i) WAKULLA MANOR, INC., a Florida corporation ("Company"), (ii)
WAKULLA ACQUISITION, INC., a Delaware corporation ("Acquisition"), (iii)
THOMAS M. CLARKE ("Clarke") and LAWRENCE B. CUMMINGS ("Cummings") (hereinafter
Clarke and Cummings are sometimes collectively referred to as "Guarantor"),
JOSEPH D. MITCHELL ("Mitchell"), C. GUY FARMER ("Farmer"), and FREDDIE L.
FRANKLIN ("Franklin") (hereinafter Clarke, Cummings, Mitchell, Farmer, and
Franklin are sometimes referred to as "Sellers"), and (iv) NEWCARE HEALTH
CORPORATION, a Nevada corporation ( "Purchaser").
WITNESSETH:
WHEREAS, Acquisition owns 100% of the Company's common stock; and
WHEREAS, Sellers own 100% of the issued and outstanding shares of
Acquisition's common stock ("Common Stock") as follows:
Sellers Number of Shares
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Clark 100
Cummings 100
Mitchell 100
Farmer 100
Franklin 200
and
WHEREAS, Purchaser desires to purchase from Sellers all of Sellers'
Common Stock upon the terms and conditions set forth below:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereby agree as follows:
ARTICLE I
THE PURCHASE
SECTION 1.1. Purchase of Common Stock. On the terms and subject to the
conditions herein expressed, and simultaneously with the execution of this
Agreement, Sellers hereby sell, convey and transfer to Purchaser all of
Sellers' right, title, and interest in and to 600 shares of the Common Stock,
which shares constitute one hundred percent (100%) of the issued and
outstanding shares of the stock of Acquisition and Purchaser hereby purchases
from Sellers said shares of stock for the purchase price set forth herein
below.
SECTION 1.2. Purchase Price and Deposit. The total purchase price for the
stock to be paid by Purchaser is $1,200,000, which shall be payable on a pro
rata stock ownership basis to Sellers at Closing. Contemporaneous with the
execution of this Agreement, Purchaser shall deliver a nonrefundable earnest
money deposit in the amount of $50,000 in cash to be payable to Seller's
Counsel, Ausley & McMullen, P.A., which shall be credited to the Purchase
Price at Closing.
SECTION 1.3. Closing. The sale contemplated hereby shall be consummated
on the closing date designated by Purchaser (the "Closing Date"), but in no
event later than July 31, 1997. The closing shall occur at the offices of
Purchaser or Purchaser's counsel in Atlanta, Georgia on the Closing Date. On
the Closing Date, the purchase and sale shall take place as follows, subject
to all the terms and conditions of this Agreement:
(a) Sellers shall execute and deliver a Bill of Sale with
accompanying stock certificates conveying all of Sellers' right, title and
interest in and to the stock, free and clear of all liens, security interests,
claims, restrictions, and any other encumbrances whatsoever, in a form
reasonably acceptable to Purchaser.
(b) To the extent not contained in the Bill of Sale, Sellers shall
execute and deliver to Purchaser such documents as are necessary to convey to
Purchaser all rights necessary for the use and enjoyment of Sellers' rights in
the Company.
(c) Sellers shall deliver to Purchaser a written opinion,
satisfactory to Purchaser, dated as of the Closing Date from counsel for
Sellers to the effect that:
(i) Company, Acquisition, Sellers and Guarantor have full power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby.
(ii) The individuals that have executed this Agreement have the
authority to so execute this Agreement on behalf of Acquisition and Sellers.
(iii) Sellers have taken all requisite action to authorize,
approve and carry out this Agreement and the transactions on the part of
Sellers, Company and Acquisition contemplated hereby, and this Agreement
constitutes a legal, valid and binding agreement of Sellers except to the
extent limited by bankruptcy, insolvency, reorganization, moratorium and other
laws of general application relating to or affecting the enforcement of
creditors' rights.
(iv) The consummation of the transactions on the part of
Sellers, Acquisition, and Company contemplated by this Agreement, does not
require the consent, approval, authorization or order, giving of notice to, or
the registration with, any court or any Federal, state, or other governmental
authority, agency or instrumentality or any other person.
(v) To such counsel's knowledge, no action or proceeding
against Sellers, Acquisition or Company is pending before any court, or before
or by any governmental body, to restrain, prohibit, invalidate or obtain
damages with respect to, or otherwise question or attack the transactions
contemplated by this Agreement and to the best of such counsel's knowledge,
neither Sellers nor Company is involved in any litigation which might have an
adverse effect on the property of the Company.
(d) Sellers shall deliver to Purchaser a Reaffirmation, as of the
Closing Date, of the representations and warranties set forth in Article II
hereof.
(e) Sellers shall execute and deliver to Purchaser an any other
documents and certificates which may be reasonably requested by Purchaser and
which are customarily executed in connection with similar transactions.
SECTION 1.4. Additional Agreements. In addition to the transfers
contemplated by this Agreement, Clarke, Cummings, Mitchell, Farmer, and
Franklin each covenant and agree to resign as employees, officers and
directors of the Company, Acquisition, and all Company Subsidiaries, without
payment of any compensation other than as contained in this Agreement.
SECTION 1.5. Pre-Closing Revenues and Liabilities. All revenues, rents,
other items of income accruing to the Company in the ordinary course of their
business activities and other assets listed on Exhibit I preceding the Closing
Date and any proceeds derived therefrom and received thereafter by the Company
shall be separately accounted for by the Company listed on Exhibit I (the
"Company's Revenues"). All expenses, liabilities and other debts or charges of
the Company existing, arising or accruing as of the Closing Date (the
"Company's Liabilities"), including, without limitation, all items listed on
Exhibit 11 shall become the obligations of the Sellers and Guarantor and are
hereby covered by Article 111 herein. As of midnight on the date immediately
preceding the Closing Date, a listing of such Company's Liabilities (the
"Preliminary Liabilities List") shall be prepared by Sellers and provided to
Purchaser.
At the Closing Date the Sellers will establish an Escrow Account with
their Counsel, Ausley & McMullen, P.A. of Tallahassee, Florida, which may be
used to discharge excess Company's Liabilities upon final settlement one
hundred and eighty (180) days after the Closing Date. The Escrow balance will
be equal to the amount that Sellers Liabilities (Preliminary Liabilities List)
exceed Company's Revenues as of the Closing Date or $200,000, whichever is
higher. For this computation of the initial Escrow balances the total of
Company's accounts receivable shall be reduced by 20% (one-fifth) of patient
accounts receivable, subject to confirmation by the reasonable and timely due
diligence of Purchaser.
The Company shall receive revenues and other items of income accruing to
the Sellers (Company's Revenues) after the Closing Date. The Company will pay
and discharge the Company's Liabilities (Preliminary Liabilities List) from
the receipt of Company's Revenues after the Closing Date. One hundred and
eighty (180) days after the Closing Date, the Company shall provide to Seller
an accounting showing the then Company's Revenues and the then current
Company's Liabilities. Company's Revenues shall be reduced by 50% (one-half)
of any patient accounts receivables remaining to determine the total Adjusted
Company's Revenues. On the one hundred and eightieth (180th) day following the
Closing Date, Sellers may request from the Escrow Account the positive net
difference, if any, of the then current Company's Adjusted Revenues in excess
of the then current Company's Liabilities. Likewise on the one hundred and
eightieth (180th) day following the Closing Date, the Company may request from
the Escrow account the positive net difference, if any, of the then current
Company's Liabilities in excess of the then current Company's Adjusted
Revenues.
Thereafter, the Sellers and the Company agree to continue to deliver to
each other such amounts as may be necessary to comply with the intent of this
Section 1.5.
ARTICLE 11
REPRESENTATIONS AND WARRANTIES
SECTION 2.1. Representations and Warranties by the Sellers and Guarantor.
Sellers and Guarantor, jointly and severally, represent and warrant to, and
agree with, Purchaser as follows:
(a) Organization and Qualification of the Company and Acquisition.
Company and Acquisition are corporations duly incorporated, validly existing
and in good standing, under the laws of the States of Florida and Delaware,
respectively, and have all requisite corporate power and corporate authority
to own or lease and operate its properties and assets and to carry on its
business as, and in the places where, such properties and assets are now owned
or leased and operated and such business is now being conducted. Attached
hereto as Schedule 2.1(a) are true and complete copies of the Company's and
Acquisition's Articles of Incorporation and Bylaws as amended.
(b) Company Subsidiaries. Except as listed on Schedule 2.1(b), the
Company has no Company Subsidiaries. For purposes of this Agreement, the term
"Company Subsidiary" shall mean any corporation or other business entity of
which the Company and/or one or more other Company Subsidiaries owns a
majority of the outstanding voting stock entitled to vote for the election of
directors or an equivalent equity interest.
(c) Capitalization of the Company. The authorized Capital stock of
the Company consists of 1000 shares of Common Stock of which 600 shares are
validly issued and outstanding, all of which are fully paid and nonassessable
and free of preemptive rights. There are no outstanding options, warrants,
convertible securities or other rights, agreements, arrangements or
commitments obligating the Company or Sellers to issue or sell any shares of
capital stock of the Company. No dividends have been declared with respect to
any shares of the Company's capital stock which have not been paid.
(d) Authority Relative to Agreement: Non-Contravention. The Company
has all requisite corporate power and corporate authority to enter into this
Agreement, and to perform its obligations hereunder. This Agreement has been
duly executed and delivered by the Company, Sellers and Guarantor and (i) will
constitute valid and binding obligations of the Company, Sellers and
Guarantor, enforceable against the Company, Sellers and Guarantor in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, fraudulent conveyance or other laws
relating to or affecting the enforcement of creditors' rights or the
collection of debtors' obligations in general or by general equitable
principles, and (ii) will not (A) conflict with any provision of the Articles
of Incorporation or Bylaws of the Company or Sellers or (B) result in any
violation of or default under, or permit the acceleration of any obligation
under, any material mortgage, indenture, lease, agreement or other instrument,
permit, concession, grant, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or its
properties or any material agreement or understanding between any
administrative or regulatory authority, on the one hand, or any rules or
regulations of any trade association or organization of which the Company is a
member.
(e) Financial Statements. Attached hereto as Schedule 2.1(c) are
true, correct and complete copies of the Company's and the Company
Subsidiaries' financial statement for the period ended April 30, 1997 (the
"Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis (except as may be expressly stated therein or in the notes
thereto) and fairly present the financial position of the Company (and each
Company Subsidiary, as applicable) at the date thereof and the results of its
operations and its cash flow for the period then ended. The Financial
Statements were prepared from books and records of the Company (and each
Company Subsidiary, as applicable), which accurately and fairly reflect all
the transactions of, acquisitions and dispositions of assets by, and
incurrence of liabilities by, the Company (and each Company Subsidiary, as
applicable). The Financial Statements contain all material liabilities or
material obligations that were, as of April 30, 1997, required to be accrued,
reserved against or otherwise disclosed in the Financial Statements under
generally accepted accounting principles.
(f) Accounts Receivable. All accounts receivable are reflected on
the Company's (and each Company Subsidiary's, as applicable) records and
Financial Statements and arose from bona fide transactions in the ordinary
course of business. Such accounts receivable will be collectible at their
aggregate balance, with allowance for doubtful accounts on the Company's (and
each Company Subsidiary's, as applicable) books and records (which has been
determined in accordance with generally accepted accounting principles and
historical practices) in the ordinary course of business without resort to
litigation, and will not in the aggregate be subject to any material
counterclaims, set-offs or other reductions.
(g) No Default or Litigation
(i) The business of the Company and the Company Subsidiaries is
being conducted in compliance with, and the Company has made (or has caused to
be made) all material filings required by, the laws, orders, regulations,
policies and guidelines of all applicable governmental entities (including,
without limitation, applicable laws, orders and regulations relating to labor
relations or environmental protection);
(ii) The Company and/or the Company Subsidiaries are not in
default under the terms of any outstanding contract, agreement, lease or other
commitment and there does not currently exist under any such contract,
agreement, lease or commitment any condition or event that, with notice or
lapse of time or both, would constitute a default;
(iii) There are no actions at law, suits in equity,
administrative proceedings or claims pending or, to their knowledge,
threatened against or affecting the Company, the Company Subsidiaries, or
their properties and, to their knowledge, there is no basis for any such
action, proceeding or claim;
(iv) The Company and/or the Company Subsidiaries have not been
charged by any governmental entity with any violation of, or threatened by any
governmental entity with a charge or any violation of. any applicable law,
order or regulation; and
(v) The Company and/or the Company Subsidiaries are not subject
to any judgment, order, writ, injunction, decree or award of any court,
arbitrator or governmental department, agency, board, bureau or
instrumentality issued or entered in a proceeding to which the Company or a
Company Subsidiary is or was a party which is binding upon the Company or a
Company Subsidiary, including, without limitation, any uncorrected license
deficiencies, restrictions or limitations related to the operation of Wakulla
Manor Nursing Home, a 120-bed skilled nursing facility located at 4679
Crawfordville Highway, Crawfordville, Florida (the "Facility").
(h) Licenses, Permits and Authorizations. The Company and the
Company Subsidiaries have validly and legally obtained and duly hold all
approvals, licenses or other permits of all governmental or regulatory
agencies, whether federal, state or local, which are required for the
operations of their business as it is presently being conducted, including
without limitation, all licenses, permits and approvals necessary for the
lawful operation of the Facility.
(i) Taxes. All tax returns, reports and forms required to be filed
by or on behalf of the Company and/or the Company Subsidiaries and Acquisition
with respect to any income, properties or operations of the Company and/or the
Company Subsidiaries and Acquisition with any taxing authority have been
timely filed, and all taxes owed by the Company and the Company Subsidiaries
and Acquisition have been or will be timely paid prior to Closing. Neither the
Company nor any of the Company Subsidiaries nor Acquisition have consented to
the extension of the applicable statute of limitation with respect to any
federal, state or local income, franchise, property or other tax. There is no
action, suit, proceeding, investigation, audit or claim now pending against,
nor has any claim for additional tax or assessment been asserted by any taxing
authority relating to the Company or any of the Company Subsidiaries nor
Acquisition, nor are there any agreements for the extension of the time for
the assessments of any taxes of the Company or any of the Company Subsidiaries
or Acquisition with respect to any income, properties or operations of the
Company or any Company Subsidiary or Acquisition. Neither the Company nor any
of the Company Subsidiaries nor Acquisition have filed any agreement or
consent under Section 341(f) of the Internal Revenue Code of 1986, as amended
(the "Code"). There are no liens for federal, state or local income or
property taxes upon the assets of the Company or any of the Company
Subsidiaries or Acquisition except liens for current federal, state and local
taxes not yet due.
(j) Labor Controversies. Neither the Company, Acquisition, nor any
of the Company Subsidiaries are a party to any collective bargaining agreement
with respect to any employees of the Company, Acquisition, or the Company
Subsidiaries. There are no labor controversies presently pending or threatened
against the Company, Acquisition, or any of the Company Subsidiaries which may
reasonably be expected to adversely affect the business or financial condition
of the Company, Acquisition, or any of the Company Subsidiaries.
(k) Employee Benefit Plans.
(i) Employee Welfare Benefit Plans. There is no "employee
welfare benefit plan" (as defined in Section 3(1) of the Employment Retirement
Income Security Act of 1974 ("ERISA")) maintained by the Company or any
corporate or other trade or business under common control of the Company,
within the meaning of Section 414 of the Code (hereinafter an "Affiliate") or
to which the Company, or any Affiliate thereof, contributes or is required to
contribute (such plans being hereinafter collectively referred to as "Employee
Welfare Benefit Plans") for employees or for former employees of the Company.
(ii) Employee Pension Benefit Plans. There is no "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) maintained by the
Company or any Affiliate, and there is no such plan to which the Company or
any Affiliate contributes, is required to contribute or has contributed (such
employee benefit plans being hereinafter collectively referred to as the
"Employee Pension Benefit Plans"). The Company and any Affiliate do not
maintain or contribute to any pension plan (including any multi-employer
pension plan as defined in Section 3(37) of ERISA) which is subject to the
provision of Part 3 of Title I or Title IV of ERISA.
(iii) Other Tax Qualified Plans. Neither the Company, nor any
Affiliate, maintains any tax qualified plans within the meaning of Section 401
of the Code.
(iv) Certain Severance Arrangements. Neither the Company, nor
any Affiliate, is a party to or obligated under any agreement, plan, contract
or other arrangement pursuant to which the Company, or any Affiliate or the
Purchaser is or might be required to make payments that would not be
deductible or capitalizable for federal income tax purposes by reason of the
application of Section 280G of the Code. Further, the consummation of the
transactions contemplated by this Agreement will not by their occurrence
result in any employee becoming entitled to severance payments from the
Company.
(v) Health Care Continuation Coverage. The Company and any
Affiliates have complied with the requirements of Section 162(k) of the Code
regarding continuation of health care coverage under any group health plans.
(vi) No Other Liabilities. As of the Closing Date, there are no
material liabilities (in excess of $5,000.00 individually or $25,000.00 in the
aggregate), absolute or contingent, of the Company, any Company Subsidiary, or
of any employee, officer, director or any person which may have indemnity
rights or contributions rights or other recourse against the Company or any
Company Subsidiary with respect to any employee benefit plan, program,
practice, arrangement, agreement or understanding, whether written or oral,
except for liabilities which have been fully accrued on the Company's (and
each Company Subsidiary, as applicable) financial statements.
(1) Compliance with Environmental Laws. Neither the Company nor any
of the Company Subsidiaries have received any notification from a governmental
agency that there is any past, present or continuing violation of any
environmental laws, environmental ordinances, environmental regulations or
environmental rules with respect to the business or properties of the Company
and/or the any of the Company Subsidiaries and such business and the use of
such properties conform in all material respects to all applicable
environmental laws, environmental ordinances, environmental regulations and
environmental rules. Notwithstanding anything to contrary contained herein,
Purchaser's obligations hereunder are subject to the receipt by Purchaser
prior to Closing of a Phase I environmental report satisfactory to Purchaser
in its sole discretion.
(m) Intellectual Property. Schedule 2.1(d) to this Agreement sets
forth a complete and correct list of each patent, patent application,
trademark (whether or not registered), trademark application, trade name,
service mark, copyright and proprietary intellectual property (including,
without limitation, proprietary computer software, whether in object or source
form) (collectively, "Intellectual Property") owned, used or licensed by the
Company or any Company Subsidiary and a description of whether such
Intellectual Property is owned or licensed by the Company and/or any Company
Subsidiary. To their knowledge, the Company and/or the Company Subsidiary has
the right to use such Intellectual Property and the current use by the Company
or the Company Subsidiary of such Intellectual Property does not infringe upon
the rights of any other person. To their knowledge, no other person is
infringing upon the right of the Company or any Company Subsidiary in any such
Intellectual Property where such infringement may have a material adverse
effect on the Company or any Company Subsidiary.
(n) Title to Properties; Absence of Liens and Encumbrances, Etc. All
real property owned by the Company or any Company Subsidiary and all real and
personal property leased to the Company or any Company Subsidiary are
described in Schedule 2.1(e) hereof. The Company and each of the Company
Subsidiaries has good ,and marketable title to all its properties and assets,
real, personal and mixed, used in its business, including without limitation
to the Facility, free and clear of any liens, charges, pledges, security
interests or other encumbrances, except for liens with respect to (A) those
items shown on Schedule 2.1(e) hereto, (B) statutory liens arising or incurred
in the ordinary course of business with respect to the underlying obligations
are not delinquent and (C) liens for taxes not yet due for the current year.
All leases under which the Company or a Company Subsidiary is the lessee of
any real or personal property are valid and binding on the lessors thereunder
in accordance with their respective terms and there is not under any of such
leases any existing default, or any condition, event or act which with notice
or lapse of time or both would constitute such a default.
(o) Contracts and Commitments. Except as set forth on Schedule 2.
l(f), neither the Company nor any Company Subsidiary is a party to, or subject
to any liabilities arising from:
(i) any management or employment contract, special termination
agreement or other contract for personal services with an officer, consultant,
director, employee or other person that is not terminable by the Company or a
Company Subsidiary on not more than one month's notice without penalty;
(ii) any contract to sell goods or any contract to purchase
goods which exceeds $5,000 in price;
(iii) any plan, contract, or arrangement providing for bonuses,
pensions, deferred compensation, retirement plan payments, profit sharing,
incentive pay, or for any other employee benefits;
(iv) any agreement providing for liability for severance pay,
collective bargaining agreements, labor contracts, or labor or personnel
policies;
(v) any contract, agreement, or instrument evidencing or
relating to any outstanding indebtedness for borrowed money or the deferred
purchase price of property, or any direct or indirect guarantee of any such
indebtedness or deferred purchase price.
(vi) any agreement that restricts the right of the Company or
any Company Subsidiary to engage in any place, in any line of business,
solicit employees or customers or otherwise compete in any line of business;
(vii) any contract, commitment, or agreement that involves (A)
capital expenditures by the Company or any Company Subsidiary or (B) the
disposition of any assets of the Company or any Company Subsidiary reflected
in the Financial Statements not in the ordinary course of business consistent
with past prices;
(viii) any contract, commitment, or agreement between (A) the
Company or any Company Subsidiary and (B) any shareholder, officer or director
(or any of their affiliates) of the Company or any Company Subsidiary;
(ix) any partnership agreement in which the Company or any
Company Subsidiary is a partner;
(x) any joint venture contract or arrangement or any other
agreement that involves a sharing of profits.
Complete and correct copies (in the case of any of the foregoing that are
in writing) or descriptions (in the case of any of the foregoing that are not
in writing) of each of the foregoing have been delivered to Purchaser. Each of
the foregoing is in full force and effect and neither the Company nor any
Company Subsidiary is in default with respect to any of the foregoing and has
not been notified or advised by any party to any of the foregoing of such
party's intention or desire to terminate or modify in any respect any of the
foregoing.
(p) Insurance. The properties of the Company and the Company
Subsidiaries, including without limitation, the Facility, are insured under
valid and enforceable policies issued by insurers of recognized responsibility
against all risks usually insured against by persons operating similar
properties in the localities where such properties are located. Copies of each
of the foregoing insurance policies will be delivered to Purchaser prior to
the Closing Date. Sellers shall be entitled to any refund of insurance
premiums paid (for property, liability, casualty and workers' compensation)
prior to the Closing Date for coverage after the Closing Date.
(q) Absence of Certain Changes. Since neither the Company nor any of
the Company Subsidiaries have suffered any material adverse change in its
financial condition, assets, liabilities, business, business prospects, or
operations, incurred any indebtedness, incurred any other obligations or
liabilities, paid any dividends or made any other distribution in respect of
its capital stock, or made any payments or loans to any affiliate.
(r) Accounts Payable. All accounts payable are reflected on the
Company's (and each Company Subsidiary's, as applicable) records and Financial
Statements and arose from bona fide transactions in the ordinary course of
business.
SECTION 2.2. Representations and Warranties by Purchaser. Purchaser
represents and warrants to, and agrees with, Sellers as follows
(a) Organization of Purchaser. Purchaser is a corporation duly
incorporated, validly existing and in good standing, under the laws of the
State of Nevada and has all requisite corporate power and corporate authority
to own or lease and operate its properties and assets and to carry on its
business as, and in the places where, such properties and assets are now owned
or leased and operated and such business is now being conducted.
(b) Authority Relative to Agreement; Non-Contravention. Purchaser
has all requisite corporate power and corporate authority to enter into this
Agreement, and to perform its obligations hereunder. This Agreement has been
duly executed and delivered by Purchaser and (i) will constitute valid and
binding obligations of Purchaser, enforceable against Purchaser in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or other laws
relating to or affecting the enforcement of creditors' rights or the
collection of debtors' obligations in general or by general equitable
principles, and (ii) will not (A) conflict with any provision of the Articles
of Incorporation or Bylaws of Purchaser or (B) result in any violation of or
default under, or permit the acceleration of any obligation under, any
material mortgage, indenture, lease, agreement or other instrument, permit,
concession, grant, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Purchaser or its properties or any
material agreement or understanding between any administrative or regulatory
authority, on the one hand, or any rules or regulations of any trade
association or organization of which Purchaser is a member.
(c) Purchaser shall be required to acquire property, liability,
casualty and workers' compensation insurance coverages comparable to Company's
prior to closing to be effective as of the Closing Date.
(d) Purchaser shall not make any election under IRC Section 338.
ARTICLE III
INDEMNITY
Indemnification by the Sellers and Guarantors. Sellers and Guarantor,
jointly and severally, hereby agree to indemnify, defend and hold harmless
Purchaser and the Company (including without limitation its officers,
directors, agents and employees) from and against all demands, claims, actions
or causes of action, assessments, losses, damages, liabilities, costs and
expenses, including without limitation, interest, penalties and reasonable
attorney's fees and expenses asserted against, resulting to, imposed upon or
incurred by Purchaser or the Company (including its officers, directors,
agents and employees) by reason of or as a result of (i) any breach of or
misrepresentation or omission in any representation or warranty contained
herein; and (ii) any breach by Sellers or Guarantor of any agreement entered
into or in any certificate furnished to Purchaser in connection with this
Agreement, for a period of three (3) years from the Closing Date. If any
action or suit is instituted against Purchaser by reason of, or in connection
with, any claim against or liability of Sellers, of whatsoever kind or nature,
not specifically assumed by Purchaser in this Agreement, then and in such
event, Purchaser, upon being duly served with process, shall give notice to
Sellers of the institution of such action, and in any such action, Sellers
shall have the option to defend the same at their own expense, and pay any
judgment entered therein, but Purchaser shall in such case have the right, if
it so chooses, to participate in any such action or suit with counsel of its
own selection at its own expense.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. Brokers. Each party hereto represents and warrants to all
other parties that no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf
of such party.
SECTION 4.2. Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby (including legal,
accounting, investment advisory and other such costs) shall be paid by the
party incurring such expenses; provided, however, Sellers (not the Company)
shall pay for all expenses relating to Sellers hereunder.
SECTION 4.3. Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if sent by registered or
certified mail, postage prepaid, addressed as follows:
If to Sellers or Guarantor:
250 Royal Palm Way
Suite 205
Palm Beach, Florida 33480
Attn: Larry Cummings
With a copy to: Joseph D. Mitchell, CPA
Mitchell & Company
2851 Remington Green Circle, Suite D
Tallahassee, Florida 32308
If to Purchaser: 6000 Lake Forrest Drive
Suite 200
Atlanta, Georgia 30328
Attn: General Counsel
or such other address as shall be furnished in writing by any party to the
others prior to the giving of the applicable notice or communication.
SECTION 4.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 4.5. Headings. The headings herein are for convenience of
reference only, do not constitute a part of this Agreement, and shall not be
deemed to limit or affect the provisions hereof.
SECTION 4.6. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof, and
supersedes all prior agreements and negotiations.
SECTION 4.7. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the substantive laws of the State of Florida,
without regard to conflicts of laws principles.
SECTION 4.8. Assignment. Purchaser may not assign any of its right,
title, and interest in and to this Agreement without the consent of Sellers,
not to be unreasonably withheld or delayed, except that Purchaser may assign
this Agreement to any entity under common control with Purchaser, where
Purchaser has majority control of the assignee or where Purchaser or
Purchaser's largest shareholder controls the assignee, without the consent of
Sellers. Upon any such assignment Purchaser shall be relieved from all
liability for the performance of each and every term, condition,
representation, warranty, covenant in and of this Agreement that is or may be
applicable to Purchaser. In the event of any such assignment, this Agreement
shall automatically be deemed amended to cover and take into account such
assignee as the Purchaser. Neither Sellers nor Guarantor may assign any of its
right, title or interest in and to this Agreement without the consent of
Purchaser, which may be withheld in Purchaser's sole discretion.
SECTION 4.9. Survival of Representations, Warranties and Agreements. All
covenants, representations, warranties and agreements made hereunder or
pursuant hereto or in connection with the transactions contemplated hereby
shall survive the closing of the transactions contemplated hereby, the
delivery of any instruments or documents pursuant hereto, and shall remain
effective regardless of any investigation made by any party at any time, for a
period of three (3) years following the Closing Date.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal as of the date first above written.
Sellers:
Wakulla Acquisition, Inc.
By:/s/ Freddie L. Franklin
Title: President
Attest:/s/ Joseph D. Mitchell
Title: Secretary
[CORPORATE SEAL]
Guarantor and Shareholders:
/s/ Thomas M. Clarke
/s/ Lawrence B. Cummings
Shareholders:
/s/ Joseph D. Mitchell
/s/ C. Guy Farmer
/s/ Freddie L. Franklin
Company:
Wakulla Manor, Inc.
By:/s/ Freddie L. Franklin
Title President
Attest:/s/ Joseph D. Mitchell
Title: Secretary
[CORPORATE SEAL]
Purchaser:
NewCare Health Corporation
By:/s/ James H. Sanregret
Title: President
Attest:/s/ Philip M. Rees
Title: Secretary
[CORPORATE SEAL]
<PAGE>
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT is dated as of July 24,
1997, by and among (i) WAKULLA MANOR, INC., a Florida corporation ("Company"),
(ii) WAKULLA ACQUISITION, INC., a Delaware corporation ("Acquisition"), (iii)
THOMAS M. CLARKE ("Clarke") and LAWRENCE B. CUMMINGS ("Cummings") (hereinafter
Clarke and Cummings are sometimes collectively referred to as "Guarantor"),
JOSEPH D. MITCHELL ("Mitchell"), C. GUY FARMER ("Farmer"), and FREDDIE L.
FRANKLIN ("Franklin") (hereinafter Clarke, Cummings, Mitchell, Farmer, and
Franklin are sometimes referred to as "Sellers"), and (iv) NEWCARE NURSING
CORPORATION, a Georgia corporation ("Purchaser"), as assignee of NEWCARE
HEALTH CORPORATION, a Nevada corporation.
W I T N E S S E T H:
WHEREAS, the parties have entered into that certain Stock Purchase
Agreement dated as of June, 1997 (the "Stock Purchase Agreement");
WHEREAS, Sellers have requested that the Closing Date (as defined in the
Stock Purchase Agreement) be extended from July 31, 1997 to no later than
August 31, 1997;
WHEREAS, Purchaser is willing to extend the Closing Date to no later than
August 31, 1997 subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereby agree as follows:
1. Amendment to Stock Purchase Agreement. Section 1.3 of the Stock
Purchase Agreement is hereby amended by deleting the date "July 31, 1997" and
inserting in lieu thereof the date "August 31, 1997."
2. Condition to Closing. Sellers acknowledge and agree that the only
condition to Sellers' obligation to close the sale of Acquisition's Common
Stock contemplated by the Stock Purchase Agreement is obtaining a court order
in the case of Lawrence B. Cummings. United States Bankruptcy Court for the
Southern District of Florida. Case No. 96-33413-BKC-SHF authorizing and
approving the sale of Cummings' shares of Acquisition's Common Stock to
Purchaser on the terms and conditions set forth in the Stock Purchase
Agreement, as amended hereby? and the running of any applicable notice period
to creditors required by law or by such court order. Sellers agree to seek in
good faith to obtain the court order referred to in the preceding sentence.
3. Reaffirmation of the Stock Purchase Agreement. Except as expressly
amended hereby, Sellers and Purchaser ratify and confirm the terms and
conditions of the Stock Purchase Agreement.
4. Deposit. This First Amendment to Stock Purchase Agreement and the
Stock Purchase Agreement shall be null and void if Purchaser has not delivered
the $50,000.00 deposit required by Section 1.2 of the Stock Purchase Agreement
to Sellers' counsel, Ausley & McMullen, P.A., within two (2) business days
after Purchaser receives Sellers' fully executed counterpart to this
Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal as of the date first above written.
COMPANY:
WAKULLA MANOR, INC., a Florida corporation
By: /s/ Freddie L. Franklin
President
Attest: /s/ Joseph D. Mitchell
Secretary
[CORPORATE SEAL]
SELLERS:
WAKULLA ACQUISITION, INC., a Delaware
corporation
By: /s/ Freddie L. Franklin
President
Attest: /s/ Joseph D. Mitchell
Secretary
[CORPORATE SEAL]
GUARANTOR AND SHAREHOLDERS:
/s/ Thomas M. Clarke
/s/ Lawrence B. Cummings
SHAREHOLDERS:
/s/ Joseph D. Mitchell
/s/ C. Guy Farmer
/s/ Freddie L. Franklin
NEWCARE NURSING CORPORATION,
a Georgia Corporation
By: /s/ Chris Brogdon
Name: Chris Brogdon
Title: President
LOAN AGREEMENT
This LOAN AGREEMENT (this "Agreement") is made as of the 16th day of
September, 1997, by and between WAKULLA MANOR, INC., a Florida corporation
("Borrower"), and LTC PROPERTIES, INC., a Real Estate Investment Trust
incorporated in the State of Maryland ("Lender").
R E C I T A L S:
This Agreement is made with reference to the following facts:
A. Borrower is the owner of that certain nursing home known as
Wakulla Manor (120 licensed nursing home beds) and located in Crawfordville,
Florida ("Facility"). The Facility is located on that certain parcel of real
property described in Exhibit "A" attached hereto and made a part hereof
(sometimes referred to as the "Real Property.")
B. Borrower desires to finance the Property and Borrower desires to
borrow from Lender the sum of Four Million Eight Hundred Thousand U.S. Dollars
(U.S. $4,800,000.00).
C. Lender is willing to lend the sum of Four Million Eight Hundred
Thousand U.S. Dollars (U.S. $4,800,000.00) to Borrower upon the terms and
subject to the conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the covenants set forth herein and
for other valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree, as follows:
1. Incorporation of Recitals. The above Recitals are incorporated
herein by this reference.
2. Definitions. In addition to the terms defined in the Recitals, and
elsewhere in this Agreement, the following terms shall have the meanings set
forth below, except where the context requires a different meaning:
2.1. "Affiliate" means any person or entity who, directly or
indirectly, whether by itself or through one or more intermediaries, controls
or is controlled by, or is under common control with, Borrower, including
but not limited to any entity whose principals are identical to, or
substantially in common with, the principals of Borrower.
2.2. "Agreement" or "Loan Agreement" shall mean this Agreement, as
originally executed and as it may from time to time be amended.
2.3. "Assignment of Leases" shall mean the document entitled
Assignment of Leases, Rents, Issues and Profits of even date herewith executed
by Borrower in favor of Lender in the form attached hereto as Exhibit
"E".
2.4. "Basis Point" shall mean one one-hundredth of one percent.
2.5. "Borrower" shall mean Wakulla Manor, Inc., a Florida
corporation.
2.6. "Business Day" shall mean any day in which dealings in U.S.
Dollar deposits between banks may be carried on in New York, New York, and on
which Lender is open for business at its principal place of business in
Oxnard, California.
2.7. "Closing Date" shall mean the date of the Funding and
recordation and/or filing of the Mortgage. Provided that all conditions
contained herein to Closing have either been satisfied or waived in writing by
Lender, then the Closing Date shall occur no later than September 30, 1997.
If the Funding has not occurred on or before September 30, 1997, this
Agreement may be declared null, void and of no force or effect, at Lender's
sole option; provided, however, that if Lender is unable or unwilling to Fund
the Loan by or before September 16, 1997, because of Lender's dissatisfaction
with (i) the environmental condition of the Real Property as disclosed by the
Phase I Environmental Assessment, (ii) the state of title to the Property as
disclosed by the preliminary title report, the ALTA/ACSM survey and/or the UCC
search reports with respect thereto (all as described in Section 4.3 hereof)
or (iii) the fact that there is an outstanding Level 2, 3 or 4 deficiency or
waiver affecting the Facility, then at Lender's sole option, this Agreement
may at any time be declared null, void and of no force and effect, and, except
as provided in this Section 2.7 below, the parties shall thereafter have no
liabilities or obligations to one another of any kind or nature
whatsoever. Borrower acknowledges and agrees that if Lender terminates or
otherwise cancels this Agreement as provided above, notwithstanding anything
to the contrary contained in the Loan Documents, Lender shall have no
obligation to refund to Borrower the Loan Fee and Borrower shall also be
obligated to pay to Lender an amount not to exceed Fifteen Thousand Dollars
($15,000.00) to compensate Lender for Lender's attorneys' fees (but not
including costs) incurred in connection with the transactions contemplated by
this Agreement, including without limitation, the negotiation and
documentation of the Loan Documents.
2.8. "Default Interest Rate" shall mean a rate per annum equal to
the lesser of (i) the Regular Interest Rate plus two percent (2%) per annum,
or (ii) the Highest Lawful Rate (as defined in Section 17.6, below).
2.9. "Dollar", "Dollars" and "$" shall mean dollars in lawful
currency of the United States of America.
2.10. "Environmental Indemnity Agreement" shall mean that
certain document entitled Environmental Indemnity Agreement of even date
herewith as executed by Borrower in the form attached hereto as
Exhibit "H."
2.11. "Escrow Agent" shall mean Hughes and White, c/o Greg
Hughes, Esq. 1640 Powers Ferry Road, Building 29, Suite 200, Marietta, Georgia
30067
2.12. "Event of Default" shall mean any one of the events of
default set forth in Section 13, below.
2.13. "Funding" (or "Funding Date") shall mean the advance (and
the date thereof) of the Loan Amount made by Lender to Borrower pursuant to
Section 4, below.
2.14. "Guarantor" shall mean Newcare Health Corporation, a
Nevada corporation.
2.15. "Guaranty" shall have the same meaning ascribed to it in
Section 3.3, below.
2.16. "Improvements" shall mean with respect to the Real
Property, all of Borrower's ownership interest in the Facility, including all
present and future structures, buildings, improvements, appurtenances and
fixtures of any kind located on any portion of the Real Property, including
all apparatus, equipment, furniture and appliances located on, in or at the
Facility, including without limitation, heating and air-conditioning systems,
washers, dryers, stoves, refrigerators, freezers, ovens, microwave ovens,
garbage disposals, window coverings, drapes and rods, carpeting and floor
coverings, it being intended and agreed that all such items shall be
conclusively considered to be a part of the Real Property, whether or not
attached or affixed thereto.
2.17. "Interest" shall mean Regular Interest and Default
Interest.
2.18. "Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time, and any successor statute.
2.19. "Lien" shall mean any lien, mortgage, pledge, security
interest, lease, charge, option or encumbrance of any kind, whether voluntary
or involuntary (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to create or
give any security interest).
2.20. "Loan" shall mean the loan made by Lender to Borrower
pursuant to the terms of this Agreement, the Note and the other Loan
Documents.
2.21. "Loan Amount" shall mean the principal amount of FOUR
MILLION EIGHT HUNDRED THOUSAND DOLLARS ($4,800,000.00), subject to the terms
of this Agreement.
2.22. "Loan Closing" shall mean the Closing Date.
2.23. "Loan Documents" shall mean and include this Agreement,
the Note, the Mortgage, the Security Agreement, the Assignment of Leases, the
UCC-1 Financing Statements, the Environmental Indemnity Agreement, the
Guaranty and any and all other documents of whatever kind evidencing,
securing, or relating to the Loan.
2.24. "Loan Fee" shall mean a sum equal to one percent (1%) of
the Loan Amount, that is, Forty-Eight Thousand U.S. Dollars (U.S.$48,000.00),
payable as provided in Section 10, below.
2.25. "Loan Year" shall mean each twelve-month period from
September 1, in one calendar year to the last day of August in the following
calendar year; except that the first Loan Year shall commence on the Funding
Date and end on the last day of August, 1998. Accordingly, by way of example,
Loan year 1997 shall be the period from Funding Date to the last day of
August, 1998; Loan Year 1998 shall be the twelve-month period from September
1, 1998 to the last day of August, 1999; and so on.
2.26. "Maturity Date" shall be as defined in Section 8.1 hereof.
2.27. "Mortgage" shall mean that certain document entitled
Mortgage and Fixtures Financing Statement, of even date herewith, encumbering
the Real Property, and given concurrently herewith by Borrower, as
Mortgagor, for the benefit of Lender, as Mortgagee, in the form attached
hereto as Exhibit "B," granting Lender a first priority security title and
security interest in the Real Property to secure Borrower's payment of the
amounts due and performance of the obligations under the Loan Documents.
2.28. "Note" shall mean the Promissory Note Secured By Mortgage
to be executed by Borrower payable to the order of Lender in form identical to
that attached as Exhibit "C."
2.29. "Payment Date" shall mean (i) the date on which any
payment of principal, Regular Interest or Default Interest is due, or (ii) the
Maturity Date, as the context requires.
2.30. "Permitted Exceptions" shall mean (i) those Liens and
other matters with respect to the Real Property which are described on Exhibit
"D," attached hereto and made a part hereof; and (ii) current, but not
delinquent, real property taxes, a lien not yet due and payable including
current (but not delinquent) supplemental taxes.
2.31. "Phase I Environmental Assessment" shall mean that certain
environmental report for the
Real Property dated July, 1997, prepared by Rust Environment & Infrastructure.
2.32. "Property" shall mean all of the Real Property and
Improvements, including but not limited to the Facility, and all personal
property located on, or used or useful in connection with the Facility, owned
by Borrower in which Lender is granted a Lien and/or security interest under
the Loan Documents.
2.33. "Real Property" shall mean that certain parcel of real
property more particularly described in Exhibit "A" attached hereto and all
entitlements, rights and easements appurtenant thereto.
2.34. "Regular Interest" shall mean interest on the unpaid
principal balance of the Loan at the Regular Interest Rate, as determined and
regularly adjusted by reference to this Agreement.
2.35. "Regular Interest Payment Date" shall mean the first (1st)
day of each and every calendar month during the term hereof; provided,
however, that if any such date is not a Business Day, the Regular
Interest Payment Date shall be the first (1st) Business Day which precedes the
first (1st) day of the calendar month. Regular Interest shall be payable on
each Regular Interest Payment Date; provided, however, that if the Closing
Date falls on any date which is not the first (1st) day of a calendar month,
then the first (1st) payment of Regular Interest (which shall be a prorated
amount based on the number of days from and including the Funding Date to and
excluding the first (1st) Regular Interest Payment Date occurring after the
Funding Date) shall not be made on the first (1st) Regular Interest Payment
Date, but shall be due and payable concurrently with the Funding of the Loan.
The second (2nd) payment of Regular Interest shall then be due, according to
schedule, on the second (2nd) Regular Interest Payment Date occurring after
the date of the Funding. Notwithstanding anything in this Agreement to the
contrary, no Regular Interest Payment Date may extend beyond the Maturity
Date.
2.36. "Regular Interest Rate" shall mean interest at the lesser
of (i) an initial annual rate of Ten and 83/100 percent (10.83%), which rate
shall be adjusted periodically as set forth in Section 5.5, below; or (ii) the
Highest Lawful Rate (as defined in Section 17.6 below).
2.37. "Security Agreement" shall mean the document entitled
Security Agreement of even date herewith executed by Borrower in favor of
Lender, in the form attached hereto as Exhibit "G."
2.38. [Intentionally Deleted].
2.39. "Taxes" shall mean taxes, levies, imposts, duties,
withholdings or other charges of whatever nature levied, imposed, collected,
withheld or assessed by any government or any political subdivision or taxing
authority thereof, including without limitation Florida documentary stamp
taxes and intangible personal property taxes, other than any such charges on
or measured by the net income, net worth or shareholders' capital of Lender.
2.40. "Title Company" shall mean Chicago Title Insurance
Company, whose address is set forth in Paragraph 2.11, above.
3. Loan Amount; Guaranty:
3.1. Loan Amount. Subject to the terms and conditions of this
Agreement, Lender agrees to lend to Borrower and Borrower agrees to borrow
from Lender the Loan Amount for the purpose of financing the Real
Property and the Facility. To further evidence the Loan and/or to secure its
payment, Borrower shall execute and deliver to Lender the Loan Documents and
other documents and instruments as required by this Agreement.
3.2. Borrower's Use of Loan Amount. Borrower shall use the Loan
Amount for the purpose of financing the Property, or any of it, and may use
the balance of the Loan Amount for other purposes Borrower may desire.
3.3. Guaranty. The Borrower's obligation shall be guaranteed by
Newcare Health Corporation, a Florida corporation ("Guarantor") pursuant to
that certain Absolute Guaranty of Payment and Performance (subject to
the limitation stated therein), a form of which is attached hereto as Exhibit
"I."
4. Funding:
4.1. Amount of Funding. The Loan shall be funded to Borrower in one
Funding in an amount equal to the Loan Amount.
4.2. Procedure for Funding. So long as (i) no Event of Default has
occurred and/or is continuing hereunder, and no condition exists which with
the passage of time or the giving of notice (or both) would constitute an
Event of Default, and (ii) all conditions precedent specified in Section 4.3,
below, have been satisfied by Borrower or waived in writing by Lender by no
later than 11:00 o'clock a.m. Pacific Standard Time on the Closing Date,
Lender shall wire transfer the Loan Amount to the Title Company and shall
deliver to the Title Company and/or the Escrow Agent Lender's closing and
recording instructions. The Loan Amount shall be held in escrow by the Title
Company until the Loan Documents have been fully executed by Borrower, and
have been delivered to Lender or are held by the Title Company for delivery to
Lender, and all other instructions contained in Lender's closing and recording
instructions to the Title Company have been satisfied.
4.3. Conditions Precedent to Funding. The obligation of Lender to
make the Loan is subject to satisfaction of all of the following or Lender
having waived in writing (each as determined by Lender in its sole and
absolute discretion) each of the following conditions precedent at or prior to
the Closing Date:
(a) Borrower has delivered, or the Title Company is prepared
to deliver, to Lender the Note, the Mortgage and all other Loan Documents each
in form and substance satisfactory to Lender and each duly executed and
delivered by Borrower.
(b) Title Company is prepared to issue to Lender with respect
to the Property an ALTA Extended-Coverage Lender's Policy of Title Insurance,
insuring the first-lien priority of the Mortgage, which policy shall
have a liability amount not less than the Loan Amount and shall be subject
only to the Permitted Exceptions. The policy shall name as the insured "LTC
Properties, Inc., a Maryland corporation and its successors and assigns as
their interests may appear," and shall include coverage satisfactory to
Lender, including, but not limited to, coverage insuring the priority of the
Lien of the Mortgage over mechanic's, materialmen's or laborers' liens
notwithstanding that commencement of any work of improvement is visible on the
Property and shall include endorsements required by Lender, and coverage
otherwise reasonably required and satisfactory to Lender.
(c) Borrower shall have delivered to Lender an ALTA/ACSM Land
Title Survey of the Real Property and the Improvements prepared by a
professional land surveyor entirely satisfactory to Lender, which
survey shall be certified to Lender and the Title Company with the following
language:
"Without limiting the foregoing, this is also to certify that the
survey was actually made upon the ground and that it and the information,
courses and distances shown thereon are correct; that the title lines and
lines of actual possession are the same; that the size, location and type of
buildings and improvements are as shown and all are within the boundary lines
and applicable set-back lines of the property; that there are no violations of
zoning ordinances, restrictions or other rules and regulations with reference
to the location of said buildings and improvements; that there are no
easements, streets, rights of way or other physical matters or uses affecting
this property appearing from a careful physical inspection of the same, other
than those shown and depicted thereon; that there are no encroachments
affecting this property; that all utility services required for the operation
of the premises either enter the premises through adjoining public streets, or
the survey shows the point of entry and location of any utilities which pass
through or are located on adjoining private land; that the survey shows the
location and direction of all storm drainage systems for the collection and
disposal of all roof and surface drainage; that any discharge into streams,
rivers or other conveyance system is shown on the survey; and that the
parcel(s) described hereon do not lie within flood hazard areas in accordance
with any maps entitled: "Flood Insurance Rate Map," "Flood Hazard Floodway
Boundary Map, " "Flood Hazard Boundary Map" or "Flood Boundary and Floodway
Map" published by the Federal Emergency Management Agency or a Flood Hazard
Boundary Map published by the U.S. Department of Housing and Urban
Development."
In addition, the record legal description of the Real Property must appear on
the survey, and any record easements or servitudes and covenants affecting the
Real Property must be plotted thereon.
(d) Lender shall have received a certified copy of the articles of
organization of Borrower and a Certificate of Existence and/or Good Standing
for Borrower, issued by the Secretary of State of Nevada dated as of a date
not earlier than thirty (30) days prior to the Closing Date.
(e) Lender shall have received a Certificate of Good Standing for
Guarantor issued by the Secretary of State of Georgia dated as of a date not
earlier than thirty (30) days prior to the Closing Date.
(f) Lender shall have received a certified resolution of the Manager(s)
of Borrower, authorizing (i) the borrowing made by Borrower pursuant to this
Agreement; and (ii) the execution and delivery of the Loan Documents by the
persons signing this Agreement, the Note, the Mortgage and the other Loan
Documents on behalf of Borrower.
(g) Lender shall have received a certified resolution of the Board of
Directors of Guarantor, authorizing the execution and delivery of the
Guaranty.
(h) Lender shall have received an opinion of counsel for Borrower for
Florida in form
and substance acceptable to Lender.
(i) Borrower shall have delivered to Lender at Borrower's expense a UCC
lien search prepared by a search company acceptable to Lender dated as of a
date not earlier than thirty (30) days prior to the Closing Date reflecting no
UCC financing liens on the Property other than those previously approved by
Lender's counsel. The searches shall be conducted in the name of Borrower and
in the name under which the Facility is operated.
(j) Lender shall have been provided with certificates of "evidence" of
all the insurance policies on the Real Property and the Facility required by
Lender pursuant to the Mortgage which policy shall include a standard
"Lender's Loss Payable Endorsement" satisfactory to Lender naming Lender as a
loss payee, naming Lender as mortgagee and naming Lender as an additional
insured and the originals of said certificates shall be provided to Lender
no later than thirty (30) days after the date of the Funding.
(k) No Event of Default (and no event which with the giving of notice,
lapse of time or both would constitute an Event of Default) shall have
occurred and be continuing on the Closing Date; and all the representations
and warranties made by Borrower in this Agreement and in the Mortgage shall
have been true and correct when made and shall be true and correct in all
material respects as if made on the Closing Date; and all the covenants of
Borrower contained herein, in the Mortgage and in any one or more of the other
Loan Documents shall have been fully satisfied by Borrower or waived in
writing by Lender on or prior to the Closing Date and there shall be
no outstanding Level 2, 3 or 4 deficiencies or waivers thereof affecting the
Facility.
(l) Lender shall have received and approved a certificate executed by
Borrower stating that no material adverse change in the financial condition of
Borrower or the Facility (or its operation), and no event which could result
in a material adverse change in the financial condition of Borrower or the
Facility (or its operation), has occurred as of the Closing Date.
(m) Lender shall have received and approved an appraisal for the Real
Property and Improvements prepared as of a date not earlier than June 1, 1997
by Valuation Counselors, Inc., reflecting a fair market value in an amount
acceptable to Lender.
(n) Borrower shall have delivered to Lender, and Lender shall have
approved, the Phase I Environmental Assessment for the Real Property and
Lender shall have received the executed Environmental Indemnity Agreement.
(o) Borrower shall have delivered to Lender a Certificate, in form and
content satisfactory to Lender, executed by Borrower, effective as of the
Closing Date, stating that all information prepared by Borrower and delivered
by Borrower to Lender regarding the Property, is to Borrower's knowledge, true
and accurate in all material respects, and that to Borrower's knowledge, there
are no omissions in the information which was submitted by Borrower to Lender
which would make such information submitted or any statements by Borrower, or
its agents, inaccurate or misleading in any material respect in light of the
circumstances under which they were submitted and/or made.
(p) Borrower shall have delivered to Lender true and complete copies of
all management agreements, leases and other rental or occupancy agreements
relating to the Real Property and the Improvements and all amendments or
modifications thereto.
(q) Lender shall have received such other approvals, opinions and
documents as it may reasonably request.
(r) Borrower shall have delivered to Lender such documentation as is
deemed necessary, in Lender's sole discretion, to satisfy Lender that the use
of the Facility as a long-term care facility conforms to all existing zoning
ordinances or is otherwise permitted under existing zoning ordinances,
including without limitation, a certification as to compliance with zoning
ordinances issued by the applicable County.
5. Regular Interest; Default Interest.
5.1. Accrual; Payment. Regular Interest on the outstanding principal of the
Loan shall accrue from the date of the Funding of the Loan at the Regular
Interest Rate. Payments of Regular Interest shall be made by
Borrower on each and every Regular Interest Payment Date during the term of
the Loan; provided, however, that if the Closing is on a day other than the
first (1st) day of a calendar month, the first (1st) payment of Regular
Interest shall be made in advance on the Closing Date, as described in Section
7.1 below.
5.2. Limitations on Regular Interest Payment Date.
5.2.1. Each Regular Interest Payment Date for the Loan which would
otherwise fall on a day which is not a Business Day shall be on the first
(1st) Business Day which precedes the first (1st) day of the calendar
month.
5.2.2. No Regular Interest Payment Date may extend beyond the Maturity
Date.
5.3. Default Interest Rate. After the occurrence of an Event of Default and
until such Event of Default has been cured, any and all amounts payable under
this Agreement, the Note, the Mortgage or the other Loan Documents shall bear
interest at the Default Interest Rate.
5.4. Computation. All computations of Regular Interest and Default Interest
shall be made on the basis of a three hundred sixty (360) day year and a
twenty-five (25) year amortization so that any Regular Interest or
Default Interest, as the case may be, shall be computed by multiplying the
Regular Interest Rate or Default Interest Rate, as applicable, by a fraction,
the numerator of which shall be equal to the number of days that have elapsed
during the period for which such computation is made (including the first day
of such period but excluding the last day of such period) and the denominator
of which shall be three hundred sixty (360) unless such computation shall
result in a Regular Interest Rate or Default Interest Rate higher than the
Highest Lawful Rate (defined below), in which event the Regular Interest Rate
or Default Interest Rate, as applicable, shall be the Highest Lawful Rate.
Regular Interest and Default Interest shall not be compounded.
5.5 Adjustment to Regular Interest Rate. On the first (1st) day of each and
every September, (commencing September 1, 1998), the Regular Interest Rate
shall increase by twelve and one-half (12.5) Basis Points, and the resulting
adjusted Regular Interest Rate shall thereafter constitute the Regular
Interest Rate applicable to the Loan from the date of said adjustment until
the next adjustment of the Regular Interest Rate; provided, however, that in
no event shall such an adjustment result in a Regular Interest Rate higher
than the Highest Lawful Rate as set forth in Section 17.6 hereof. In
addition, the Regular Interest Rate may be reduced one time, and one time
only, by one percentage point (1%) effective the first day of the first
calendar month following Borrower having provided Lender with certified
financial statements of the Facility operator for the most recent six (6)
month period (or most recent fiscal year) which shows a debt service coverage
ratio of 1.2 to 1.0 (after deducting six percent (6%) of revenues as a
management fee).
5.6 Survival of Note and Other Loan Documents. It is the intention of
Lender and Borrower that this Agreement and the Note shall remain in full
force and effect and shall continue to be secured by the Loan
Documents until all obligations of Borrower to Lender under this Agreement,
including, but not limited to this Section 5, have been fully satisfied.
Notwithstanding any other provision of the Loan Documents, the Loan Documents
and any other security for this Agreement and/or the Note shall continue in
full force and effect, and Borrower shall have no right to a release of any
security for this Agreement and/or the Note until all of Borrower's
obligations under the Note, this Agreement (including but not limited to, this
Section 5 hereof) and the other Loan Documents have been paid and performed in
full.
6. Financial Information.
6.1. Financial Statements. Within one hundred and twenty (120) calendar days
after the end of each calendar year during the term of the Loan, Borrower
shall provide to Lender financial statements of Borrower for the calendar year
just ended audited by a certified public accounting firm acceptable to Lender
and a profit and loss statement showing the results of operations of the
Facility the calendar year just ended, also audited by a certified public
accounting firm acceptable to Lender. In addition, within sixty (60) calendar
days after the written request of Lender, Borrower shall provide Lender with
(a) unaudited interim financial statements of Borrower for the most recently
ended calendar quarter, (b) unaudited interim profit and loss statements for
the Facility for the most recently ended calendar quarter and (c) any other
report Lender may reasonably require from time to time regarding Borrower, the
Property and/or the Facility. (The financial information provided to Lender
pursuant to this Section 6.1 is sometimes hereinafter referred to as the
"Financial Information.") Lender, upon reasonable prior notice, shall have
the right from time to time by its accountants or representatives to audit the
information set forth in the Financial Information provided by Borrower, and
in connection with such audits, to examine the records of the Facility with
respect thereto (including supporting data and sales and excise tax returns)
subject to any prohibitions or limitations on disclosure of any such data
under applicable law or regulation, including without limitation, any duly
enacted "Patients' Bill of Rights" or similar legislation including such
limitations as may be necessary to preserve the confidentiality of the
Facility-patient relationship and the physician-patient privilege. Failure by
Borrower to timely provide the Financial Information to Lender as required by
this Section 6.1 shall constitute an Event of Default pursuant to Section
13.1(a) hereof (including the grace period set forth therein), notwithstanding
that such failure is not a failure to make a payment to Lender as otherwise
described in said Section 13.1(a). Notwithstanding the foregoing, to the
extent that Borrower's tenant is the party who provides financial information
with respect to the Facility, Borrower shall cause such tenant to deliver such
information as is required in this Paragraph 6.1.
6.2. Annual State Survey. Within thirty (30) days after Borrower's or
Tenant's receipt of the Annual State Survey of the Facility from the State of
Florida in each calendar year during the term of the Loan (or of any
report after a follow-up inspection of the same), Borrower shall provide a
copy of said Annual State Survey (or follow-up report) to Lender. The failure
by Borrower to timely provide the Annual State Survey to Lender pursuant to
this Section 6.2 shall be deemed a default under Section 13.1(a) of this
Agreement (including the grace period set forth therein) notwithstanding that
such failure is not a failure to pay money.
7. Payment.
7.1. Amortized Payments. Borrower shall make monthly payments of principal
and Regular Interest, in arrears, on each and every Regular Interest Payment
Date during the term of the Loan without set-off, deduction, demand or notice
of any kind or nature whatsoever; provided, however, that if the Closing Date
falls on any date which is not the first (1st) day of a calendar month, then
the first (1st) payment of Regular Interest (which shall be a pro-rated amount
of Regular Interest only based on the number of days from and including the
Funding Date to the first (1st) Regular Interest Payment Date following the
Funding Date), shall be made on the Funding Date (and, at Lender's
sole option, deducted from the Loan Amount), and the first (1st) amortized
payment of principal and Regular Interest shall be due on the second Regular
Interest Payment Date following the Funding Date. Borrower's monthly payments
of principal and Regular Interest shall be calculated on the basis of a three
hundred sixty (360) day year and a twenty-five (25) year amortization, as
described in Section 5.4, above, and shall increase as the Regular Interest
Rate increases, as set forth in Section 5.5, above. On the Maturity Date, the
entire outstanding principal balance of the Loan, together with
any and all accrued and unpaid Regular Interest, and all other amounts, of any
kind or nature whatsoever, owing by Borrower to Lender under the Loan
Documents shall be fully due and payable to Lender.
7.2. Prepayment.
7.2.1. Prepayment Not Allowed. Except as specifically set forth
below, the Loan may not be prepaid in whole or in part at any time without the
prior written consent of Lender, which consent may be given or
withheld by Lender in Lender's sole and absolute discretion.
7.2.2. Prepayment During Last Two Years. During the last two (2)
years of the term of the Loan (that is, commencing on the first (1st) day of
the ninety-seventh (97th) month of the term of the Loan and continuing through
the last day of the one hundred twentieth (120th) full calendar month of the
term of the Loan, the Loan may be prepaid (in whole but not in part) without
any premium or penalty; provided, however, that Borrower must still otherwise
comply with the provisions of this Section 7.2 in connection with such
prepayment, including but not limited to the terms regarding the giving of the
Prepayment Notice (as that term is defined below).
7.2.3. Prepayment Premium. Borrower may, and shall, prepay the Loan
in full at any time from and after the Funding Date in the event that Borrower
sells its entire ownership interest in the Real Property and/or the Facility
located thereon, to any third party which is not an Affiliate of Borrower.
However, upon any such sale by Borrower to a third party who is not an
Affiliate of Borrower, Borrower shall, in addition to paying all principal,
Interest and other charges of any kind whatsoever then due and owing under the
Loan Documents, and as pre-conditions to Borrower's right to prepay the Loan,
(a) deliver to Lender a Prepayment Notice within the time periods described in
Section 7.2.6 below, and (b) pay to Lender, in addition to all other sums then
due under the Loan Documents, a prepayment premium ("Prepayment Premium")
equal to the following, together with the "Release Price" (defined below):
(i) From and including the Funding Date through and including the last
day of the sixtieth (60th) full calendar month of the Loan, the Prepayment
Premium shall be equal to five percent (5%) of the amount of the Loan being
prepaid;
(ii) From and including the first (1st) day of the sixty-first (61st)
full calendar month of the Loan through and including the last day of the
seventy-second (72nd) full calendar month of the Loan, the Prepayment Premium
shall be equal to four percent (4%) of the amount of the Loan being prepaid;
(iii) From and including the first (1st) day of the seventy-third
(73rd) full calendar month of the Loan through and including the last day of
the eighty-fourth (84th) full calendar month of the Loan, the Prepayment
Premium shall be equal to three percent (3%) of the amount of the Loan being
prepaid; and
(iv) From and including the first (1st) day of the eighty-fifth (85th)
full calendar month of the Loan through and including the last day of the
ninety-sixth (96th) full calendar month of the Loan, the Prepayment Premium
shall be equal to two percent (2%) of the amount of the Loan being prepaid.
7.2.4. Application of Prepayment Premium. The Prepayment Premium
described above in Section 7.2.3(i)-(v) shall apply to any prepayment of the
Loan (other than the prepayments permitted pursuant to Section 7.2.2, above),
including but not limited to any prepayment made or required to be made upon
acceleration by Lender of the Note pursuant to the terms of the Note or any
other of the Loan Documents. Notwithstanding the foregoing, no Prepayment
Premium shall be payable in connection with a prepayment arising as a result
of a casualty or eminent domain taking as provided for in the Mortgage.
7.2.5. Transfers/Prepayments Requiring Consent.
(a) Borrower shall not at any time prior to the first day of the
ninety-seventh (97th) month of the term of the Loan, without the prior written
consent of Lender, which consent may be withheld in Lender's sole and absolute
discretion, have the right to prepay all or any portion of the Loan upon (i) a
sale of all or any portion of Borrower's interest in the Real Property (and/or
the Facility located thereon) to an Affiliate of Borrower; (ii) a like-kind
exchange of the Real Property and/or the Facility, pursuant to the provisions
of Internal Revenue Code Section 1031 et seq., or other similar statute; (iii)
a sale of less than Borrower's entire ownership interest in the Real Property
(and/or the Facility located thereon); (iv) any other transfer or conveyance
of the Property, other than a sale of the Property, to a third party which is
not an Affiliate of Borrower; or (v) a refinancing of the Property. Upon the
occurrence of any of the events described in (i)-(v) above in this Section
7.2.5(a) without the prior written consent of Lender, Lender may, at its
sole option, elect to accelerate all sums due under the Loan. If Lender so
elects to accelerate all sums due under the Loan pursuant to this Section
7.2.5(a), Borrower shall pay, in addition to the prepayment of all principal,
Interest and other sums then due under the Loan Documents, the applicable
Prepayment Premium.
(b) In the event that Lender gives its prior written consent to the
occurrence of one or more of the events set forth above in Section
7.2.5(a)(i)-(v), or if, upon the occurrence without Lender's prior
written consent of any of the events described above in (i)-(v) of Section
7.2.5(a), Lender elects not to accelerate the sums due under the Loan, then in
either of said events, Borrower shall not be required to, and shall not be
entitled to, prepay all or any portion of the Loan in connection with such
occurrence (except as otherwise permitted pursuant to Section 7.2.2, above).
If, however, Borrower desires to prepay all or any portion of the Loan upon
the occurrence of any of the events set forth in Section 7.2.5(a)(i)-(v),
above, Borrower shall provide Lender with a Prepayment Notice (as
described in Section 7.2.6, below). Upon receipt of said Prepayment Notice,
Lender shall have thirty (30) calendar days within which to grant or withhold
its consent (in Lender's sole and absolute discretion) to such requested
prepayment. If Lender grants its consent to such requested prepayment,
Borrower shall pay, in addition to all other sums due under the
Loan, the applicable Prepayment Premium. If, however, Lender does not grant
its consent to such prepayment, Lender shall be deemed to have waived its
right to accelerate the Loan in respect of any of the events contemplated in
(I)-(v) above in Section 7.2.5(a). Notwithstanding anything to the contrary
in this Section 7.2.5, Lender may require from Borrower at any time after
receipt of a Prepayment Notice given pursuant to this Section 7.2.5, written
financial information and other written information about the experience in
the long-term care business of any intended transferee (under (i)-(v) in
Section 7.2.5(a) above). Such information will be delivered by Borrower to
Lender within five (5) Business Days after request by Lender. The consent to
any one sale, exchange, transfer or refinancing under this Section 7.2.5 shall
not be deemed to be a consent to future or additional sales, exchanges,
transfers, refinancings, or a waiver of any of Lender's other rights or
remedies under the Loan Documents.
7.2.6. Prepayment Notice. If Borrower is required to prepay the
Loan, or if Borrower is permitted to and intends to prepay the Loan, in full,
Borrower shall, as a condition to Borrower's right to prepay the
Loan, give Lender prior written notice ("Prepayment Notice") in the form and
within the time periods described below in this Section 7.2.6 of the intended
date of prepayment ("Prepayment Date").
(a) The Prepayment Notice shall state (i) that Borrower desires (or will be
required) to prepay the Loan in full; (ii) whether or not the prepayment is
being made in connection with a sale of Borrower's ownership interest in the
Real Property (together with the Facility located thereon) to a party which is
not an Affiliate of Borrower; (iii) the date designated as the Prepayment Date
(which Prepayment Date shall be no earlier than ninety (90) and no later than
one hundred fifty (150) calendar days after the date of the Prepayment
Notice); (iv) the identity of the purchaser and basic terms of the sale (if
the prepayment is being made in connection with a sale of the Real Property,
together with the Facility located thereon); and (v) the amount and
calculation of the prepayment and the Prepayment Premium which Borrower
intends to pay.
(b) Any Prepayment Notice given hereunder may be rescinded by Borrower
within thirty (30) calendar days after the date of such Prepayment Notice. On
the thirty-first (31st) calendar day after the date of a Prepayment Notice,
such Prepayment Notice shall be non-rescindable, except as provided in
subparagraph (d) below.
(c) Notwithstanding the time period required for the Prepayment Notice
under Section 7.2.6(a), above, within the final three (3) full calendar months
prior to the Maturity Date, Borrower shall be required to give only a thirty
(30) day Prepayment Notice to Lender prior to a prepayment of the Loan.
(d) At any time prior to or on the thirtieth (30th) day after the date of
Lender's receipt of the Prepayment Notice, Borrower may rescind the Prepayment
Notice without any fee or charge. If the Prepayment Notice is rescinded by
Borrower on or after the thirty-first (31st) day after the giving of the
Prepayment Notice, then, subject to the provisions of Section 17.6 hereof,
Borrower shall pay to Lender a fee (the "Rescission Fee"), in addition to all
other amounts owing hereunder, to compensate Lender for its costs in preparing
for the prepayment described in the Prepayment Notice, which Rescission Fee
shall be in an amount equal to one percent (1%) of the principal amount of the
Note which was to be prepaid pursuant to the Prepayment Notice.
BORROWER ACKNOWLEDGES AND AGREES THAT IT WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICABLE TO FIX THE ACTUAL COST, EXPENSE AND DAMAGE
THAT LENDER WOULD SUFFER IN PREPARING FOR THE PREPAYMENT DESCRIBED IN
THE PREPAYMENT NOTICE (INCLUDING, BUT NOT LIMITED TO, MAKING
ARRANGEMENTS (AND ENTERING INTO CONTRACTS) FOR LENDING THE PREPAID
MONEY TO OTHER PROSPECTIVE BORROWERS), AND BORROWER THEREFORE
AGREES THAT THE RESCISSION FEE CONSTITUTES A REASONABLE ESTIMATE AND
COMPROMISE OF LENDER'S COSTS, EXPENSES AND DAMAGES IN ARRANGING FOR
SUCH PREPAYMENT.
INITIAL: ______________
BORROWER
(e) Prepayment may only be made on the first (1st) day of a calendar
month.
7.2.7. Prepayment Expenses. In addition to all other sums to be paid
by Borrower, Borrower shall also be responsible for all reasonable costs and
expenses, including but not limited to reasonable attorneys' and paralegals'
fees actually incurred by Lender in connection with any prepayment of the
Loan.
7.2.8. No Understandings Regarding Prepayment. Borrower acknowledges
that no understandings or agreements, except as otherwise provided herein,
have been entered into which would require prepayment in part or in whole
hereunder.
7.3. Place of Payment. Unless otherwise directed by Lender, all sums payable
by Borrower to Lender pursuant to the Loan Documents shall be payable to
Lender on the Payment Date, as follows:
If By Mail: LTC Properties, Inc.
P.O. Box 74742
Chicago, Illinois 60694-4742
If By Federal Express: Harris Trust and Savings
311 West Monroe Street/Box 74742
Chicago, Illinois 60694-4742
7.4. Application of Payments. Any payments made to Lender hereunder and
under the Note shall be applied in the following priority: first, to costs
and expenses due under the Loan Documents; second, to fees due to Lender, if
any; third, to accrued and unpaid Default Interest and late charges, if any;
fourth, to accrued and unpaid Regular Interest; and fifth, to unpaid
principal.
7.5. No Set-Off; Payments Net of Taxes.
7.5.1. Each payment of principal, Interest or other amount payable by
Borrower under this Agreement, the Note or any other Loan Document shall, to
the extent permitted by applicable law, be made without set-off or
counterclaim and free and clear of, and exempt from, and without deduction or
withholding for or on account of, any present or future Taxes levied, imposed,
collected, withheld or assessed by any governmental entity or any political
subdivision or taxing authority thereof. Borrower shall indemnify Lender
against any such Taxes (other than Taxes on the overall net income of Lender
imposed by any taxing authority) which may be assessed against Lender or
claimed or demanded from Lender in respect of any amount payable by Borrower
hereunder (including, without limitation, all amounts paid pursuant to this
Section 7.5 or in respect of the Funding), and against any costs, charges,
expenses actually incurred or liability arising out of or in respect of any
such assessment, claim or demand.
7.5.2. For purposes of this Section 7.5, "Taxes" shall specifically
exclude (i) any taxes, levies, imposts, duties, withholdings or other charges
of whatsoever kind or nature levied, imposed, collected, withheld
or assessed by any government or any political subdivision or taxing authority
thereof which are measured by Lender's net income, net worth or shareholders'
capital, or any other value or worth of Lender, (ii) any such Taxes or
withholdings imposed on interest income under Sections 871 or 881 of the
Internal Revenue Code or any corresponding provisions of succeeding laws or
similar state laws, and (iii) any amounts required to be withheld under
Sections 1441 or 1442 of the Internal Revenue Code to collect any Taxes
described in this Section 7.5.2.
7.5.3. If any Taxes are levied, imposed, collected, subjected to
withholding or assessed on any payment made by Borrower pursuant to this
Agreement or the other Loan Documents, Borrower shall make any
withholding required for the account of Lender and make timely payment thereof
to the appropriate governmental authority and shall in any event forthwith pay
to Lender such additional amounts as may be necessary so that the net
amount actually received by Lender in respect of each such payment, after
withholding, deduction or payment for or on account of such Taxes, and after
payment by Lender of any Taxes due by reason of the payment of such additional
amounts, will not be less than the amount Lender is entitled to receive
hereunder or under the other Loan Documents had no such Taxes been deducted,
withheld from or paid in respect of such payment. Borrower shall, promptly
upon receipt, furnish to Lender all official receipts evidencing payment of
any such Taxes (which shall be either originals, duplicate originals or copies
duly certified or authenticated). Lender may, but is not required to, pay at
any time and from time to time any amount in respect of such Taxes or
penalties therefor or interest thereon, in which event Borrower shall, in each
instance, reimburse Lender on demand therefor and pay to Lender the additional
amounts specified above. In the event, however, that any such Taxes are
levied, imposed, collected, subject to withholding or assessed on any payment
by Borrower pursuant to this Agreement or the other Loan Documents, Borrower
shall have the right, at its sole option, and upon not less than sixty (60)
calendar days prior written notice to Lender (the "Tax Prepayment Notice"), to
prepay the Loan without a sale of the Property, or any of it, without first
obtaining Lender's written consent, and without the obligation of paying any
Prepayment Premium, as defined above in Section 7.2; provided, however, that
if Lender notifies Borrower in writing within ten (10) Business Days after
receiving the Tax Prepayment Notice that Lender will pay the Taxes which are
the subject of this Section 7.5.3 on Borrower's behalf, then Borrower shall
not have the right to prepay the Loan in accordance with this Section 7.5.3,
and thereafter Lender shall be responsible for the payment of any and all such
Taxes.
7.6. Late Payments.
7.6.1. If Borrower fails to make any payment of Interest, principal
or any other sum due hereunder or under the Note or any other Loan Document
(including the balloon payment due at the Maturity Date) within five (5)
Business Days after the same is due and payable, then, in addition to any and
all other rights and remedies Lender may have hereunder, under the Loan
Documents or otherwise at law or in equity, a late charge by way of
damages shall be immediately due and payable to Lender. BORROWER RECOGNIZES
THAT DEFAULT IN MAKING THE PAYMENTS HEREIN AGREED TO BE PAID WHEN DUE WILL
RESULT IN LENDER INCURRING ADDITIONAL EXPENSE IN SERVICING THE LOAN AND IN
LOSS TO LENDER OF THE USE OF THE MONEY DUE. BORROWER AGREES THAT IF FOR ANY
REASON IT FAILS TO PAY ANY AMOUNTS DUE UNDER THIS AGREEMENT, THE NOTE OR OTHER
LOAN DOCUMENTS WITHIN FIVE (5) CALENDAR DAYS AFTER THE DATE WHEN SAID PAYMENTS
ARE DUE, LENDER SHALL BE ENTITLED TO DAMAGES FOR THE DETRIMENT CAUSED THEREBY,
BUT THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICAL TO ASCERTAIN THE EXTENT OF
SUCH DAMAGES. BORROWER THEREFORE AGREES THAT A CHARGE OF FIVE PERCENT (5%) OF
EACH DELINQUENT PAYMENT IS A REASONABLE ESTIMATE OF THE DAMAGES TO LENDER,
WHICH SUM BORROWER AGREES TO PAY TO LENDER ON DEMAND.
INITIAL: _______________
BORROWER
8. Maturity Date.
8.1. Maturity Date. Assuming no acceleration by Lender and no prepayment in
full of the Loan, the Maturity Date of the Loan is September 1, 2007. On the
Maturity Date, Borrower shall pay to Lender the entire outstanding principal,
accrued and unpaid Interest and any and all other outstanding charges, fees or
amounts owing to Lender by Borrower hereunder, under the Note or any other
Loan Document.
8.2. Right to Accelerate Maturity Date.
8.2.1. Lender's Option to Accelerate. Lender shall have the right
and option to accelerate the Maturity Date if Borrower commits an Event of
Default under this Agreement, or otherwise defaults (after applicable cure
periods) in the payment or performance of any of Borrower's obligations under
any of the Loan Documents.
8.2.2. Events Requiring Prior Written Consent. Lender shall have the
right and option to accelerate the Maturity Date if Borrower, without the
prior written consent of Lender, which consent may be given or withheld in
Lender's sole discretion: (i) finances or refinances its interest in the
Property or any part of the Property, other than in connection with a
permitted prepayment of the Loan pursuant to Section 7.2.2 above; (ii) obtains
additional financing secured by a Lien on the Property, or any of it, other
than an additional Lien in favor of LTC Properties, Inc. or its successors or
Affiliates, whether or not LTC Properties, Inc. is, at that time, the holder
of the indebtedness evidenced by the Note, the Mortgage and the other Loan
Documents; provided, however, that Borrower may grant security interests
encumbering specific items of personal property located at the Facility (but
not fixtures attached to the Real Property) in favor of the lessors of or
purchase-money lenders for said personal property, so long as said Liens
secure, in the aggregate, obligations of Borrower not in excess of One
Thousand Five Hundred Dollars ($1,500.00) per month, and the existence of such
Liens shall not give Lender the right or option to accelerate the Maturity
Date; (iii) sells the Property and/or the Facility, or any part thereof or
interest therein, to an Affiliate of Borrower; (iv) exchanges or agrees to
exchange all or any portion of the Property and/or the Facility in a like-kind
exchange pursuant to the provisions of Section 1031 et seq. of the Internal
Revenue Code or other similar statute; (v) sells, or otherwise transfers or
conveys, less than its entire interest in any of the parcels of the Real
Property, together with the Improvements thereon; or (vi) enters into, amends,
modifies, renews, terminates, extends, adds to or otherwise changes or
revises, in any manner whatsoever, any lease, sublease, option agreement,
management agreement or other rental or occupancy agreement
affecting the Property, or any of it (collectively, the "Leases").
8.2.3. Sale or Further Encumbrance. Lender shall have the right and
option to accelerate the Maturity Date if Borrower sells, assigns, gives,
mortgages, pledges, hypothecates, encumbers or otherwise transfers the
Property and/or the Facility, or any portion thereof, without Lender's prior
written consent, except as otherwise specifically permitted herein.
9. Loan Documents. To evidence and/or secure the payment to Lender of
all sums due or to become due under this Agreement and the Note, Borrower and
Guarantor, as applicable, shall execute and/or deliver to Lender
the following, among other things:
(a) Mortgage, substantially in the form attached hereto as Exhibit "B;"
(b) Assignment of Leases, Rents, Issues and Profits substantially in the
form attached hereto as Exhibit "E;"
(c) UCC-1 Financing Statements, substantially in the form attached hereto as
Exhibit "F;"
(d) a Security Agreement, substantially in the form attached hereto as
Exhibit "G;"
(e) Environmental Indemnity Agreement, substantially in the form attached
hereto as Exhibit "H;"
(f) Guaranty, substantially in the form attached hereto as Exhibit "I;"
The Loan Documents shall create in favor of Lender a perfected first-lien
encumbrance or security interest in the Property and any other collateral
covered thereby.
10. Loan Fee. Borrower shall pay to Lender a total Loan Fee of
Forty-Eight Thousand U.S. Dollars (U.S. $48,000.00) as consideration to Lender
for its commitment to make the Loan. Thirty Thousand Dollars ($30,000.00) of
the said Loan Fee has been previously paid and the balance of the Loan Fee (in
the amount of $18,000.00) shall be paid on or before the Closing Date and such
balance of the Loan Fee shall, at Lender's sole option, be deducted by Lender
directly from the Loan Amount.
11. Borrower's Covenants, Representations and Warranties.
11.1. Representations and Warranties. Borrower hereby represents and
warrants for the benefit of Lender as of the date hereof and as of each
Regular Interest Payment Date, as follows:
(a) Borrower is a corporation validly existing and in good standing
under the laws of the State of Florida.
(b) Borrower has the power, authority and legal right and all necessary
permits and licenses to own and operate the Property and Facility,
respectively, in compliance with applicable law and to create a Lien on and
security interest in the Property pursuant to the Loan Documents to be
executed and delivered by Borrower and to execute and deliver this Agreement,
the Note, the other Loan Documents and any other documents or instruments
contemplated herein or therein to be executed and delivered by Borrower, and
to observe and perform the provisions hereof and thereof.
(c) The execution and delivery of this Agreement, the Note, the
Mortgage and the other Loan Documents to be executed and delivered by
Borrower, have been duly authorized by all corporate action on the
part of Borrower as required; this Agreement has been duly executed and
delivered by Borrower and constitutes valid and legally binding obligations of
Borrower, enforceable against Borrower in accordance with the terms hereof,
except as such enforceability may be limited by bankruptcy, insolvency or
other laws affecting generally the enforceability of creditors' rights and by
limitations on the availability of equitable remedies, and the Note, the other
Loan Documents to be executed and delivered by Borrower, and any other
documents or instruments contemplated herein or therein to be
executed and delivered by Borrower, when executed and delivered to Lender
pursuant to the provisions of this Agreement, will each constitute, valid and
legally binding obligations of Borrower, enforceable against Borrower in
accordance with the terms hereof and thereof, except as such enforceability
may be limited by bankruptcy, insolvency or other laws affecting generally the
enforceability of creditors' rights and by limitations on the availability of
equitable remedies.
(d) Neither the execution, delivery or performance of this Agreement,
the Note, the other Loan Documents, or any other documents or instruments
contemplated herein or therein to be executed and delivered by Borrower, the
consummation of the transactions contemplated hereby or thereby, nor
compliance with the provisions hereof and thereof, will conflict with or
result in a breach of (i) any of the provisions of any of the Borrower's
formation or governing documents, (ii) any of the provisions of any applicable
license, permit, statute, ordinance, law, judgment, order, writ, injunction,
decree, rule or regulation of any court, administrative agency or other
governmental authority, (iii) any determination or award of any arbitrator,
(iv) any agreement or instrument to which Borrower is a party or by which it
or any of the Property is bound, or (v) would constitute a default under any
thereof, or result in the creation or imposition of any lien, charge or
encumbrance upon the Property, except as permitted by the Loan Documents and
the other documents and instruments contemplated herein and therein to be
executed and delivered by Borrower.
(e) There are no actions, suits or proceedings pending or, to the best
of the knowledge of Borrower, threatened against Borrower or any subsidiary or
Affiliate of Borrower or all or any portion of the Property, by or before any
court, administrative agency or other governmental authority or any arbitrator
which could interfere with or bring into question the validity of the
transactions contemplated by this Agreement, or the Loan Documents to be
executed and delivered by Borrower, or which might result in any material
adverse change in the business, assets or condition of Borrower or all or any
portion of the Property. To the best of Borrower's knowledge, neither
Borrower nor any of its Affiliates or subsidiaries is a party to and no part
of the Property is bound by any agreement or other instrument, other than the
Permitted Exceptions, or subject to any license, permit, statute, ordinance,
law, judgment, order, writ, injunction, decree, rule or regulation of any
court, administrative agency or other governmental authority, or
any determination or award of any arbitrator which might materially adversely
affect the business, assets or condition of Borrower, its Affiliates or
subsidiaries, or all or any portion of the Property or the ability of Borrower
to perform its obligations under this Agreement, or the other Loan Documents
to be executed and delivered by Borrower. To Borrower's best knowledge,
Borrower is not in default in compliance with any obligation, relating to the
Property and/or the Facility, under any applicable license, permit, statute,
ordinance, law, judgment, order, writ, injunction, decree, rule
or regulation of any court, administrative agency or other governmental
authority or any determination or award of any arbitrator, or of any agreement
or instrument to which Borrower is a party or by which it or any of the
Property is bound.
(f) To the best of Borrower's knowledge, there are no outstanding Level
2, 3 or 4 deficiencies or waiver thereof affecting the Facility.
(g) The Facility:
(1) Has a total of one hundred and twenty (120) licensed beds, all of which
are licensed and certified to participate in the State Medicaid program
for nursing home facilities (Title XIX);
(2) All hallways are at least eight (8) feet wide;
(3) The square footage of each patient room is at least 80 square feet per
bed.
In other words, private rooms are at least 80 square feet, semi-private
rooms are at least 160 square feet, etc.;
(4) There are fire sprinklers throughout the entire facility, and such fire
sprinklers have been tested and approved by the local fire marshall or
other appropriate regulatory authority;
(5) There is an emergency electric power generator at the facility, and
such generator has been tested and approved by the appropriate
regulatory authority;
(6) To the best of Borrower's knowledge, there are no material geological
and/or structural deficiencies affecting the Property and/or the
Facility; and
(7) There are no waivers in connection with any aspect of the Facility.
(h) No consent, approval or other authorization of or by any court,
administrative agency or other governmental authority is required in
connection with the execution, delivery, performance, or consummation of the
transactions contemplated by this Agreement, or the Loan Documents to be
executed and delivered by Borrower.
(i) Borrower has filed all tax returns required to be filed by it and
is not in default in the payment of any taxes levied or assessed against it,
any of its assets or any of the Property.
(j) Borrower owns the Property free and clear of all liens and
encumbrances, except the Permitted Exceptions and the Property is not, and
will not be, subject to any option or other right to purchase the
Property in favor of any third party.
(k) The documents submitted by Borrower to Lender prepared in
connection with, and in order to procure, Lender's commitment to make the Loan
are true and correct in all material respects and accurately
set out the facts contained therein, except with respect to any estimates or
projections set forth therein, which estimates or projections are made to the
best of Borrower's knowledge and ability.
(l) The Improvements situated on the Real Property conform to all
existing building, zoning, environmental or other laws and ordinances in all
material respects. No notice from any governmental body has been served upon
Borrower claiming a violation of any building, zoning, environmental or other
laws or ordinances nor is Borrower aware, after due and diligent
investigation, of any such notice having been served on any other person or
entity.
(m) Neither Borrower nor any subsidiary or Affiliate of Borrower is
insolvent and no voluntary proceeding or petition has been instituted or is
contemplated by Borrower or any Affiliate or subsidiary of Borrower and no
involuntary proceeding has been instituted against Borrower or any subsidiary
or Affiliate of Borrower under the bankruptcy laws of the United States, any
political subdivision thereof, or any other country. Neither Borrower nor any
Affiliate or subsidiary of Borrower has (i) made any assignment of any of its
assets or properties for the benefit of its creditors, nor is any
contemplated, (ii) consented to the appointment of a receiver or trustee for
any of its assets or properties, (iii) been adjudicated a bankrupt, made a
bulk sale or taken any action which contemplates the making a bulk sale and no
court has entered any order appointing a receiver or trustee for any assets of
Borrower or any Affiliate or subsidiary thereof or has assumed the custody of
or sequestered any assets or properties of Borrower or any Affiliate or
subsidiary of Borrower and no attachment has been made on any assets or
properties of Borrower or any subsidiary or Affiliate of Borrower.
(n) Each certificate delivered by Borrower to Lender pursuant to this
Agreement is or will be true and correct in all material respects and
accurately and adequately sets out or will accurately and correctly set
out the facts contained therein, and does not or will not omit to state any
fact necessary to make the information contained or to be contained therein
not misleading.
(o) There are no leases, subleases, option agreements or other rental
or occupancy agreements relating to the Real Property and the Improvements
other than a written lease of the Facility to Guarantor.
11.2. Covenants of Borrower. In addition to all other covenants and
undertakings herein contained, Borrower hereby covenants and agrees with
Lender from and after the date hereof and during the term of this
Agreement that:
(a) Borrower shall maintain its existence as a corporation in good
standing under the laws of the State of Florida.
(b) Borrower shall pay all sums due pursuant to this Agreement, the
Note, the Mortgage and the other Loan Documents to be executed and delivered
by Borrower, as and when the same shall be due and payable and shall perform
all of its obligations hereunder and thereunder in accordance with the terms
hereof and thereof.
(c) Borrower shall not refinance, incur any liability or indebtedness
secured by the Property or any part thereof, or mortgage, hypothecate, assign,
pledge, grant security interests in or otherwise encumber or allow any Lien to
be placed of record against all or any part of the Property (except in favor
of LTC Properties, Inc. or its successors or Affiliates, whether or not LTC
Properties, Inc. is, at that time, the holder of the indebtedness evidenced
by the Note, the Mortgage and the other Loan Documents), without the prior
express written consent of Lender which consent may be withheld in Lender's
sole discretion. Notwithstanding the foregoing, Borrower may grant security
interests encumbering (i) specific items of personal property (but not
fixtures attached to the Real Property) in favor of the lessors of or
purchase-money lenders for said personal property, so long as said Liens
secure, in the aggregate, obligations of Borrower not in excess of One
Thousand Five Hundred Dollars ($1,500.00) per month; provided, however, that
said $1,500.00 monthly limit on personal property financing shall not apply to
security interests granted to LTC Properties, Inc. or its successors or
Affiliates.
(d) Borrower shall (or shall cause its tenant of the Facility to) (i)
manage and maintain the Property and Facility in compliance with applicable
state and federal licensure and certification laws and maintain in
full force and effect all licenses, permits and certificates necessary to
operate the Property and the Facility; (ii) pay all Taxes and other charges
against the Property as and when the same become due and payable and prior to
delinquency, (iii) not encumber the Property, except as permitted herein, or
permit the filing of any mechanics', materialmen's or laborers' liens against
the Property, and (iv) maintain all policies of insurance with respect to the
Property in favor of Lender in form and substance reasonably satisfactory to
Lender, all as more particularly required by the Mortgage.
(e) As soon as Borrower becomes aware of the same, Borrower shall
promptly notify Lender of any occurrence, event, or condition (including, but
not limited to, any pending or threatened suit or proceeding against Borrower,
or any of its Affiliates or subsidiaries, or the Property, by or before any
court, administrative agency or other governmental authority or any arbitrator
which is not fully covered by insurance), the enactment of any statute,
ordinance or law, or the giving of any notice or other communication by any
party pursuant to any of the Permitted Exceptions which, individually or in
the aggregate, has resulted or might result in (i) an Event of Default
hereunder or under any one or more of the other Loan Documents, (ii) a
material adverse change in the condition, financial or otherwise, of Borrower,
or any of its Affiliates or subsidiaries as determined in accordance with
GAAP, or in the suitability of the Property, or any portion thereof, for its
present use, (iii) the breach of any of the representations and
warranties of Borrower set forth in this Agreement or in any of the other Loan
Documents or any other documents or instruments contemplated herein or therein
to be executed and delivered by Borrower, or (iv) a default in any obligation
of Borrower to any third party.
(f) Borrower shall allow Lender and Lender's representatives and agents
full access to the Property upon reasonable prior notice and at reasonable
times and shall provide to Lender such documents relating to the Property as
may be reasonably requested by Lender or its representatives and agents.
(g) Borrower shall, at all reasonable times and as often as Lender may
request, allow Lender and Lender's representatives and agents full access to
Borrower's financial and other records relating to the Property and Facility
for the purpose of inspecting the same and making copies of all or any portion
thereof, at Lender's expense, subject to any prohibitions or limitations on
disclosure of any such data under applicable law or regulation, including
without limitation, any duly enacted "Patients' Bill of Rights" or similar
legislation including such limitations as may be necessary to preserve the
confidentiality of the Facility-patient relationship and the physician-patient
privilege.
(h) Borrower shall not enter into, amend, modify, terminate, renew,
extend, replace, add to or otherwise change or revise, in any manner
whatsoever, any Lease, or enter into any new Lease, without the prior written
consent of Lender, in Lender's sole discretion.
12. Survival of Covenants, Representations and Warranties. All
covenants, agreements, representations and warranties made by Borrower herein,
in the Mortgage, in the Note, and all other Loan Documents, and in any
certificates delivered by Borrower to Lender hereunder, and other instruments
described in or delivered pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Loan Closing and shall
continue in effect so long as this Agreement or any other Loan Document or any
of the instruments described herein or therein are outstanding. All
covenants, agreements, representations and warranties in this Agreement and in
any other Loan Document shall bind the party making the same and its
successors and assigns and shall inure to the benefit of and be enforceable by
each party to whom made and by their respective successors and assigns.
13. Events of Default.
13.1. Events Constituting a Default. The occurrence of any one or more
of the following events shall constitute an event of default under this
Agreement, the Note, the Mortgage and all of the other Loan Documents
(each of which is hereafter referred to as an "Event of Default"):
(a) Borrower defaults in the payment of any installment of Interest on
the Loan or any required payment, repayment or prepayment of the principal of
the Loan, or fails to make when due any other payment, of any kind or nature
whatsoever, when and as the same becomes due and payable, whether such payment
is owed to Lender or to a third-party payee, and such default shall continue
for more than seven (7) Business Days (provided, however, that a late charge
shall be due and owing in connection with such delinquent payments if not made
within five (5) Business Days of the date due, as provided above in Section
7.6.1, it being understood that the imposition and/or payment of the late
charge shall not excuse or cure any delinquency which would otherwise
constitute an Event of Default hereunder).
(b) Borrower (i) breaches any of the representations and warranties set
forth herein, in the Mortgage or any of the other Loan Documents, or (ii)
commits a default in the performance of or compliance with any of the terms,
covenants or conditions of this Agreement, of the Mortgage or the other Loan
Documents, other than a default under Section 13.1(a), above, or Sections
13.1(c) through (k), below, and such default shall continue for more
than thirty (30) calendar days after Lender shall have given written notice
thereof to Borrower, and Borrower shall not within such thirty (30) calendar
day period commence with due diligence and dispatch the curing of such default
or if Borrower shall within such period commence with due diligence and
dispatch the curing of such default and shall thereafter fail or neglect to
prosecute and complete with due diligence and dispatch the curing of such
default within ten (10) calendar days after said initial thirty (30) calendar
day period.
(c) Any representation or warranty of Borrower made or deemed to have
been made in this Agreement, the Note, the Mortgage, or the other Loan
Documents or in any certificate, instrument or agreement delivered or to be
delivered hereunder or thereunder proves to have been untrue or incorrect in
any material respect as of the date hereof.
(d) Borrower fails to pay any final, nonappealable judgment entered
against Borrower which exceeds Fifty Thousand Dollars ($50,000) within one
hundred eighty (180) days after the date such judgment becomes final unless
within such 180-day period Lender, in Lender's sole discretion, approves an
agreement which allows any such final, nonappealable judgment to be paid
during a period of time in excess of one hundred eighty (180) days after the
date such judgment becomes final.
(e) Any governmental approval, authorization, consent or license
necessary in connection with the execution or performance of any of this
Agreement, the Note, the Mortgage or the other Loan Documents, or in
connection with the operation of the Facility, or any other documents required
to be delivered by Borrower (or tenant of the Facility) hereunder or under any
other Loan Document is modified, revoked or withdrawn in a way materially
prejudicial to the rights of Lender hereunder.
(f) Borrower (i) suspends its business operation other than as a result
of a casualty or eminent domain, or (ii) transfers or disposes all of or
substantially all of its assets other than in the ordinary course of its
business as contemplated by this Agreement; or the tenant of the Facility
(iii) ceases to be the licensed operator of the Facility, or ceases to operate
the Facility as a long-term care facility in compliance with applicable local,
state and federal law, or (iv) the tenant's (or operator's) license to operate
the Facility revoked by the applicable Florida state licensing authority.
(g) By virtue of the enactment of any federal, state or local law,
ordinance or regulation, or as a result of a determination of any court of
competent jurisdiction, arbitrator in a binding arbitration or judicial
referee, the Mortgage or the other Loan Documents cease to constitute the
legal, valid and binding obligations of Borrower enforceable in accordance
with their terms.
(h) The Mortgage or the recordation thereof cease to be in full force
and effect and to create a Lien in favor of Lender with the first-lien
priority required by this Agreement.
(i) Borrower commences any proceedings relating to any substantial
portion of the Property under any reorganization arrangement, readjustment of
debt, dissolution, winding up, adjustment, composition or liquidation law or
statute of any jurisdiction, whether now or hereafter in effect, or Borrower
files a petition under any provision of the bankruptcy laws of the United
States or under any similar or successor Federal statute relating to
bankruptcy, insolvency arrangements or reorganizations, or under any state
bankruptcy or insolvency act ("Proceeding"); there is commenced against
Borrower any Proceeding and such Proceeding remains undismissed for a period
of sixty (60) days (or such longer period as Lender may agree); or Borrower
files an answer in an involuntary proceeding admitting insolvency or inability
to pay debts, or Borrower fails to obtain a vacation or stay or dismissal of
involuntary proceedings brought for the reorganization, dissolution or
liquidation of Borrower within sixty (60) days after the institution of such
proceedings, or Borrower is adjudged a bankrupt; or any receiver, trustee,
liquidator or sequestrator of, or for, Borrower, or the Real Property and/or
the Facility, or any substantial portion of the Property is appointed and
is not discharged within a period of sixty (60) days (or such longer period as
Lender may agree); or Borrower consents to or acquiesces in any Proceeding or
the appointment of any receiver, trustee, liquidator or sequestrator of, or
for, Borrower or any substantial portion of the Property; or the Property
becomes subject to the jurisdiction of a Federal bankruptcy court or similar
state court, or Borrower makes an assignment for the benefit of creditors, or
there is an attachment, execution or other judicial seizure of the Property or
any portion thereof or of any material portion of the assets of Borrower and
such seizure is not discharged within ten (10) calendar days.
(j) It becomes unlawful for Borrower to perform any of its material
obligations under this Agreement, the Note, the Mortgage or the other Loan
Documents.
(k) Borrower files a notice of record pursuant to Section 697.04,
Florida Statutes limiting the maximum amount that may be secured by the
Mortgage.
13.2. Remedies for Default.
13.2.1. Lender's Remedies. Upon the occurrence of an Event of Default
and at any time thereafter if such Event of Default shall then be continuing,
Lender (i) may declare the indebtedness evidenced by this Agreement, the Note
and all other Loan Documents to be immediately due and payable; and (ii) may
pursue any and all remedies provided for under this Agreement, the Note, the
Mortgage or any other Loan Document, or otherwise at law or in equity,
including, to the extent permitted by applicable Florida law, the right to
appoint a receiver as a matter of strict right without regard to the solvency
of Borrower for the purpose of preserving the Property, preventing waste and
protecting all rights of Lender under this Agreement, the Note, the Mortgage
and the other Loan Documents and for any and all other purposes for which the
appointment of a receiver is allowed under the laws of the State of Florida,
and all costs and expenses actually incurred by Lender in connection with any
of the foregoing shall be paid by Borrower and shall be secured by the Loan
Documents.
13.2.2. Remedies Cumulative. The remedies provided in this Agreement
shall be in addition to, and not in substitution for, the rights and remedies
which would otherwise be vested in Lender for the recovery of damages, or
otherwise, in the event of a breach of any of the representations, warranties,
covenants, undertakings or agreements of Borrower hereunder.
13.2.3. Indemnification. Without prejudice to any other provisions of
this Agreement, Borrower shall indemnify Lender against any and all
liabilities, damages, claims, causes of action, losses and/or expenses, which
Lender may sustain or incur as a consequence of the occurrence of an Event of
Default, including without limitation, reasonable attorneys' fees.
14. Books, Records, Statements and Audits.
14.1. Books and Records. Borrower shall, or shall cause its tenant or
agent to, keep accurate, full and complete books, records and accounts
reflecting all operations, transactions, assets, liabilities and financial
condition of the Property and every part thereof. All books, records,
accounts and financial statements shall be accurate and complete in all
material respects, shall present fully and fairly the financial position and
results of the operation and maintenance of the Property and shall be prepared
in accordance with GAAP.
14.2. Lender's Right to Audit. The books, accounts and records of the
Property shall at all times
be maintained at Borrower's principal office or at the Facility, unless Lender
in writing otherwise agrees. Upon reasonable notice to Borrower, Lender may
at its option and expense conduct audits and make copies of the books,
records and accounts of the Property, on either a continuing or periodic
basis, or both, by employees of Lender, an Affiliate of Lender, or by
independent certified public accountants retained by Lender.
15. Expenses, Charges and Attorneys' Fees.
15.1. Closing Costs. At the Loan Closing, Borrower shall pay, in
addition to its own costs and expenses in connection with the closing of the
Loan, all costs and expenses incurred by Lender in connection with the
negotiation, preparation and execution of this Agreement, the Note, the
Mortgage and all other Loan Documents and any other certificate, instrument or
agreement delivered or to be delivered hereunder or thereunder, including but
not limited to Lender's out-of-pocket costs incurred in Lender's physical
inspection of the Facility, Lender's attorneys' fees, all closing costs in
connection with the Loan, filing and recording fees, transfer and/or recording
taxes, intangible taxes, Florida documentary stamp taxes and non-recurring
intangible personal property taxes, appraisal fees, inspection fees,
surveyor's fees and expenses, premiums for Lender's title insurance policy and
all endorsements thereto reasonably required by Lender and any other
out-of-pocket costs and expenses incurred by Lender in connection with the
Loan Closing. If the Loan Closing fails to occur for any reason, Borrower
shall reimburse Lender for all attorneys' fees and costs incurred by Lender in
the preparation, review and negotiation of the Loan Documents and any other
out-of-pocket costs and expenses incurred by Lender in connection with
Lender's preparation for the Loan Closing.
15.2. Attorneys' Fees. Any reasonable attorneys' and paralegals' fees
and other expenses incurred by Lender in connection with the bankruptcy of
Borrower or any of the other events described in Section 13.1(i) hereof
shall be additional indebtedness of Borrower secured by the Mortgage and the
other Loan Documents. Borrower shall upon demand also reimburse Lender for
all reasonable charges and expenses, including but not limited to, fees,
expenses and disbursements of legal counsel for Lender, incurred (whether on
appeal or otherwise) in connection with the enforcement of, or the
preservation of, any rights under this Agreement or any other of the Loan
Documents following any uncured Event of Default thereunder and under any
other certificate, instrument or agreement delivered or to be delivered
hereunder, and any such reimbursement not promptly made to Lender following
demand therefor shall be additional indebtedness of Borrower secured by the
Mortgage and the other Loan Documents.
16. Environmental Covenants and Indemnity.
16.1. Compliance With Laws. Borrower shall, or shall cause its tenant
to, keep and maintain the Property in compliance with, and shall not cause or
permit the Property to be in violation of any federal, state or local
laws, ordinances or regulations, now or hereafter in effect, relating to
environmental contamination or condition, industrial hygiene, human health or
safety or Hazardous Materials on, under or at the Property, including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.,
("RCRA"), the Clean Air Act, 42 U.S.C. Section 7401, et seq., the Toxic
Substances Control Act, 15 U.S.C. Sections 2601 through 2629, the Safe
Drinking Water Act, 42 U.S.C. Section 300f through 300j, Clean Water Act, 33
U.S.C. Section 1251, et seq.; Refuse Act, 33 U.S.C. Section 407; Occupational
Safety and Health Act, 29 U.S.C. Section 651, et seq.; the Hazardous Material
Transportation Act; and any and all similar or comparable Florida state or
local laws; and in the regulations now or hereafter adopted and publications
now or hereafter promulgated pursuant thereto, or any other federal, state or
local governmental law, ordinance, rule or regulation related thereto
(collectively, the "Hazardous Materials Laws").
16.2. Aboveground and Underground Storage Tanks. Borrower has
registered or will register all aboveground and underground storage tanks
which are now or hereafter located on the Property and has paid and,
with respect to the Real Property, shall pay all fees assessed by the Florida
Department of Environmental Protection and is participating and will continue
to participate in the Florida Petroleum Liability Insurance and Restoration
Program in connection with such tanks (and Borrower will so pay said fees and
insurance premiums with respect to any aboveground and underground storage
tanks hereafter located on the Property), as required by any and all
applicable Florida statutes and regulations. In addition, Borrower will fully
comply with the above-mentioned statute and regulations, the Federal Solid
Waste Disposal Act, and 40 C.F.R. Part 280, as supplemented and amended,
including without limitation, requirements for financial assurance, tank
replacement, and monitoring, and Florida Administrative Code Rules 17-761 and
17-762.
Borrower hereafter shall provide to Lender copies of all correspondence and
reports relating to the inspection or testing of underground storage tanks and
lines located on any of the Property submitted by Borrower to the
Florida Department of Environmental Protection or the Florida Petroleum
Liability Insurance and Restoration Program. If an Event of Default (as
defined below) shall have occurred and be continuing, Borrower shall provide
to Lender copies of all environmental audits, tests, site assessments and
other documents relating to the testing of underground storage tanks and lines
located on any of the Property from any source, irrespective of when such
documents were compiled or submitted to the Florida Department of Petroleum
Liability Insurance and Restoration Program. Lender shall have the right to
join and participate in, as a party if it so elects, any legal proceedings or
actions initiated in connection with any claims as to which Borrower is
required to give notice pursuant to this Paragraph 16.2 and to have
its reasonable attorneys' fees and paralegal charges, in connection therewith
paid by Borrower.
16.3. Prohibited Acts. Borrower shall not, nor permit its tenant to,
use, generate, manufacture, treat, handle, refine, produce, process, store,
discharge, release, dispose of or allow to exist on, under or at the Property
pollutants, contaminants, hazardous or toxic substances, materials or wastes
or related materials, including, without limitation, any flammable explosives,
radioactive materials, asbestos, organic compounds known as polychlorinated
biphenyls, chemicals known to cause cancer or reproductive toxicity, oil,
petroleum products, any substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," or "toxic
substances" under the Hazardous Materials Laws (collectively "Hazardous
Materials"), except in compliance with all applicable law. Furthermore,
Borrower shall not allow to exist on, under or at the Property, any
underground storage tanks or underground deposits unless they exist in
compliance with applicable Hazardous Materials Laws.
16.4. Notification. Borrower shall immediately advise Lender in writing
of (i) any actual, suspected or threatened release of any Hazardous Materials
on all or any part of the Property, or on property immediately adjacent to the
Property, (ii) any and all correspondence, notice enforcement, clean up,
removal, mitigation or other governmental or regulatory actions instituted,
contemplated or threatened pursuant to any Hazardous Materials Laws affecting
the Property, (iii) all claims made or threatened by any third party against
Borrower or the Property relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from any Hazardous Materials (the
matters set forth in clauses (ii) and (iii) above are hereinafter referred to
as "Hazardous Materials Claim"), and (iv) Borrower's discovery of any
occurrence or condition on the Property or any real property adjoining or in
the vicinity of the Property which could subject Borrower or the Property to
testing, site assessment and/or remediation pursuant to any Hazardous
Materials Laws or that could cause the Property or any part thereof to be
subject to any claim or liability or restrictions on ownership, occupancy,
transferability or use of the Property under any Hazardous Materials Laws.
16.5. Hazardous Materials Liabilities. Lender shall have the right to
join and participate in, as a party if it so elects, any settlements, remedial
actions, legal proceedings or actions initiated in connection with any
Hazardous Materials Claims and to have its reasonable attorneys' fees actually
incurred in connection therewith paid by Borrower. Borrower shall be solely
responsible for, and shall indemnify, hold harmless and defend (using counsel
of Lender's choosing) Lender, its directors, officers, employees, agents,
successors and assigns (hereinafter collectively called the "Indemnitees")
from and against, any loss, damage, cost, expense or liability directly or
indirectly arising out of or attributable to the use, transportation,
generation, manufacture, treatment, handling, refining, production,
processing, storage, release, threatened release, seeping, emitting,
discharge, disposal, or presence of Hazardous Materials on, under or at the
Property (the losses, damages, costs, expenses or liabilities against which
Borrower is obligated to indemnify and hold harmless the Indemnitees under the
provision of this paragraph are hereinbelow collectively called "Hazardous
Materials Liabilities"), which Hazardous Materials Liabilities include,
without limitation: (a) all foreseeable and unforeseeable consequential
damages; (b) the costs of any required or necessary repair, cleanup
or detoxification of the Property, and the preparation and implementation of
any closure, remedial or other required plans; and (c) all reasonable costs
and expenses incurred by Lender in connection with clauses (a) and (b),
including, without limitation, reasonable attorneys' fees actually incurred.
At the Closing Borrower shall execute an Environmental Indemnity Agreement
with respect to the Facility, in the form attached as Exhibit "H."
16.6. Indemnification. BORROWER HEREBY AGREES TO INDEMNIFY AND HOLD
HARMLESS LENDER AND ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND
ASSIGNS FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES,
FINES, PENALTIES, CHARGES, JUDGMENTS, AND ALL COSTS AND EXPENSES INCURRED IN
CONNECTION THEREWITH (INCLUDING BUT NOT LIMITED TO REASONABLE ATTORNEYS' AND
PARALEGALS' FEES AND EXPENSES, WHETHER INCURRED OR PAID, IN ANY ADMINISTRATIVE
PROCEEDINGS, ON APPEAL, OR OTHERWISE), ARISING DIRECTLY OR INDIRECTLY, IN
WHOLE OR IN PART, OUT OF THE PRESENCE OF HAZARDOUS MATERIALS ON, UNDER, OR
ABOUT THE PROPERTY OR ANY SPILL, DISCHARGE, LEAKAGE, DRAINAGE, INTERNMENT,
EMISSION OR OTHER RELEASE OF ANY HAZARDOUS MATERIALS, ON OR ABOUT THE PROPERTY
(OR ON PROPERTIES ADJACENT THERETO OR IN THE VICINITY THEREOF WHICH, DUE TO
MIGRATION OR OTHER MEANS, AFFECT THE PROPERTY) WHICH MAY CAUSE A THREAT OR
ACTUAL INJURY TO THE HEALTH AND ENVIRONMENT, OR WHICH MAY CAUSE A THREAT OR
ACTUAL INJURY TO PLANT OR ANIMAL LIFE, OR (B) ANY PROCEEDINGS CONCERNING THE
PROPERTY PURSUANT TO ALL ENVIRONMENTAL LAWS, REGULATIONS, ORDERS, DECREES,
RULES, CODES OR ORDINANCES OF ANY CITY, COUNTY, STATE, FEDERAL OR OTHER
GOVERNMENTAL INSTITUTION OR BODY, OR (C) ANY REMEDIAL RESPONSE, REMEDIAL
INVESTIGATION, FEASIBILITY STUDY, ENVIRONMENTAL STUDY, DAMAGE, JUDGMENT OR
SETTLEMENT ARISING OUT OF ANY OF THE FOREGOING, (D) ALL FORESEEABLE
CONSEQUENTIAL DAMAGES; (E) THE COSTS OF ANY REQUIRED OR NECESSARY REPAIR,
CLEANUP OR DETOXIFICATION OF THE PROPERTY AND THE PREPARATION AND
IMPLEMENTATION OF ANY CLOSURE, REMEDIAL OR OTHER REQUIRED PLANS "CLAIMS").
THE FOREGOING INDEMNITY SHALL APPLY TO THE FOREGOING CLAIMS WITHOUT REGARD TO
WHETHER SUCH CLAIMS AROSE PRIOR TO THE TERM OF THE MORTGAGE AND IRRESPECTIVE
OF WHETHER SUCH CLAIMS AROSE AS A RESULT OF ACTIONS TAKEN BY BORROWER OR ANY
PREDECESSOR IN TITLE OR ANY EMPLOYEES, AGENTS, CONTRACTORS OR SUBCONTRACTORS
OF BORROWER OR PREDECESSOR IN TITLE, OR ANY THIRD PERSONS AT ANY TIME
OCCUPYING OR PRESENT ON THE PROPERTY; PROVIDED, HOWEVER, IN THE EVENT THAT THE
FOREGOING CLAIMS AROSE PRIOR TO THE TERM OF THE MORTGAGE, BORROWER'S
OBLIGATION TO PROVIDE THE FOREGOING INDEMNITY SHALL BE LIMITED TO AN AMOUNT
EQUAL TO THE REMAINING INDEBTEDNESS OWING TO LENDER BY BORROWER. THE
FOREGOING INDEMNITY SHALL FURTHER APPLY TO ANY RESIDUAL CONTAMINATION ON OR
UNDER THE PROPERTY, OR AFFECTING ANY NATURAL RESOURCES, AND TO ANY
CONTAMINATION OF ANY PROPERTY OR NATURAL RESOURCES ARISING IN CONNECTION
WITH THE GENERATION, USE, HANDLING, STORAGE, TRANSPORT OR DISPOSAL OF ANY SUCH
HAZARDOUS MATERIALS, AND IRRESPECTIVE OF WHETHER ANY OF SUCH ACTIVITIES WERE
OR WILL BE UNDERTAKEN IN ACCORDANCE WITH APPLICABLE LAWS, REGULATIONS, CODES
AND ORDINANCES.
16.7. Survival. The obligations of Borrower set forth in this Section 16
shall survive repayment of the Loan, any foreclosure of the Mortgage and any
deed in lieu of foreclosure.
17. Miscellaneous.
17.1. Notices. All notices, requests, demands or other communications to
the respective parties hereto (unless otherwise expressly stipulated in this
Agreement) shall be deemed to have been duly given or made if addressed as
follows:
If to Lender, to: LTC Properties, Inc.
300 Esplanade Drive, Suite 1860
Oxnard, California 93030
Attention: James J. Pieczynski, President and
Chief Financial Officer
with a copy to: Pamela J. Privett, Esq.
Senior Vice President and General Counsel
LTC Properties, Inc.
300 Esplanade Drive, Suite 1865
Oxnard, California 93030
with a copy to: Stern, Neubauer, Greenwald & Pauly
A Professional Corporation
1299 Ocean Avenue, Tenth Floor
Santa Monica, California 90401
Attention: Dennis L. Greenwald, Esq.
If to Borrower, to: 6000 Lake Forrest Drive, Suite 550
Atlanta, Georgia 30328
Attention: Christopher F. Brogdon
with copies to: Vincent, Berg, Stalzer & Menendez
3399 Peachtree Road, Suite 1400
Atlanta, Georgia 30326
Attention: Gregory P. Youra, Esq.
or to such other address or such other person as either party may from time to
time hereafter specify to the other in writing delivered in the manner
provided herein.
Any notice, request, demand or other communication to be given or made
hereunder may (except to the extent otherwise required by law) be given or
made by registered or certified U.S. mail, return receipt requested with
postage prepaid, or by a reputable overnight courier service, such as Federal
Express, DHL or other comparable courier. Notices shall be deemed to have
been given or made, in the case of notice by mail on the earlier of the date
reflected on the return receipt or three (3) calendar days after deposit in
the U.S. mails, and in the case of delivery by courier, by the courier's
delivery receipt.
17.2. Entire Agreement. This Agreement, the Note, the Mortgage, all the
other Loan Documents referred to herein embody the entire agreement and
understanding between Borrower and Lender relating to the subject
matter hereof and supersede all prior agreements and understandings relating
thereto. This Agreement may not be changed orally, but only by a written
instrument signed by each party hereto.
17.3. Captions. The headings to the Articles, Sections and Subsections
of this Agreement have been inserted solely for convenience of reference and
shall not modify, define or limit the express provisions of this Agreement.
17.4. Further Assurances. Borrower agrees to execute and deliver such
other instruments as may be requested by Lender from time to time to effect
and confirm the transactions described herein and contemplated hereby.
17.5. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF FLORIDA APPLICABLE TO
INSTRUMENTS, PERSONS AND TRANSACTIONS HAVING CONTACTS AND RELATIONSHIPS SOLELY
WITHIN THE STATE OF FLORIDA AND WITHOUT RESORT TO CHOICE OF LAW PRINCIPLES TO
BE PERFORMED ENTIRELY WITHIN SUCH STATE.
17.6. General Provisions Relating to Interest. IT IS THE INTENTION OF
THE PARTIES HERETO TO CONFORM STRICTLY TO APPLICABLE USURY LAWS REGARDING THE
USE, FORBEARANCE OR DETENTION OF THE INDEBTEDNESS EVIDENCED BY THIS AGREEMENT,
THE NOTE, THE MORTGAGE AND THE OTHER LOAN DOCUMENTS, WHETHER SUCH LAWS ARE NOW
OR HEREAFTER IN EFFECT, INCLUDING THE LAWS OF THE UNITED STATES OF AMERICA OR
ANY OTHER JURISDICTION WHOSE LAWS ARE APPLICABLE, AND INCLUDING ANY SUBSEQUENT
REVISIONS TO OR JUDICIAL INTERPRETATIONS OF THOSE LAWS, IN EACH CASE TO THE
EXTENT THEY ARE APPLICABLE TO THIS AGREEMENT, THE NOTE, THE MORTGAGE AND THE
OTHER LOAN DOCUMENTS (THE "APPLICABLE USURY LAWS"). ACCORDINGLY, THE
FOLLOWING SHALL APPLY:
(a) if any acceleration of the maturity of the Note or any payment by
Borrower or any other person or entity results in Borrower or such other
person or entity being deemed to have paid any interest in excess
of the Maximum Amount, as hereinafter defined, or if any transaction
contemplated hereby would otherwise be usurious under any Applicable Usury
Laws, then, in that event, notwithstanding anything to the contrary in this
Agreement or any other Loan Document or any other agreement or instrument, it
is agreed as follows: (i) the provisions of this Section 17.6 shall govern
and control; (ii) the aggregate of all interest under Applicable Usury Laws
that is contracted for, charged or received under this Agreement, or under any
of the other aforesaid agreements or instruments or otherwise
shall under no circumstances exceed the Maximum Amount, and any excess shall,
if permitted by Florida law, be retained by Lender as additional cash
collateral for the Loan, to be held without interest or trust or, if not
permitted to be so held by Lender, shall either be refunded to Borrower or
applied in reduction of principal, if permitted by Florida law, in the sole
discretion of Lender; (iii) neither Borrower nor any other person or entity
shall be obligated to pay the amount of such interest to the extent that it is
in excess of the Maximum Amount; and (iv) the effective rate of Interest on
the Loan shall be ipso facto reduced to the Highest Lawful Rate (defined
below), and the provisions of this Agreement, the Note, the Mortgage and the
other Loan Documents immediately shall be deemed reformed, without the
necessity of the execution of any new document or instrument, so as to comply
with all Applicable Usury Laws. All sums paid, or agreed to be paid, to
Lender for the use, forbearance or detention of the indebtedness of Borrower
to Lender evidenced by this Agreement, the Note, the Mortgage and the other
Loan Documents shall, to the fullest extent permitted by the Applicable Usury
Laws, be amortized, pro rated, allocated and spread throughout the full term
of the indebtedness evidenced by this Agreement, the Note, the Mortgage and
the other Loan Documents so that the actual rate of Interest does not exceed
the Highest Lawful Rate in effect at any particular time during the full term
thereof. As used herein, the term "Maximum Amount" means the maximum
non-usurious amount of interest which may be lawfully contracted for,
charged or received by Lender in connection with the indebtedness evidenced by
this Agreement, the Note, the Mortgage and other Loan Documents under all
Applicable Usury Laws.
(b) If at any time Interest on the Loan, together with any other fees
and additional amounts payable hereunder or under any other agreements or
instruments that are deemed to constitute interest under Applicable Usury Laws
(the "Additional Interest"), exceeds the Highest Lawful Rate, then the amount
of Interest to accrue pursuant to this Agreement, the Note, the Mortgage and
the other Loan Documents shall be limited, notwithstanding anything to the
contrary in this Agreement, the Note, the Mortgage or any other Loan Document
or any other agreement or instrument, to the amount of Interest that would
accrue at the Highest Lawful Rate; provided, however, that to the fullest
extent permitted by Applicable Usury Laws, any subsequent reductions in the
Interest Rate shall not reduce the Interest to accrue pursuant to this
Agreement, the Note, the Mortgage and the other Loan Documents
below the Highest Lawful Rate until the aggregate amount of Interest actually
accrued pursuant to this Agreement, the Note, the Mortgage and the other Loan
Documents, together with all Additional Interest, equals the amount of
Interest which would have accrued if the Highest Lawful Rate had at all times
been in effect and such Additional Interest, if any, had been paid in full.
For purposes of this Agreement, the term "Highest Lawful Rate" means the
maximum rate of Interest, if any, that may be charged under all Applicable
Usury Laws on the principal balance of the Loan from time to
time outstanding.
17.7. Recourse. The Loan is a full recourse loan to Borrower.
Notwithstanding anything to the contrary in the Note, this Agreement and each
other Loan Document, the liability of Borrower for the payment of
principal and Interest, and the observance and performance of all of the
terms, covenants, conditions and provisions of the Note, this Agreement and
the other Loan Documents is not limited or restricted to the Property, and
full recourse may be had for the payment of such indebtedness, or the
observance or performance of any of the terms, covenants, conditions or
provisions of the Note, this Agreement or any of the other Loan Documents
against any property, assets or funds of Borrower other than the Property.
17.8. Estoppel certificates. Within ten (10) calendar days after written
request by Lender, Borrower shall execute and deliver to Lender, in such form
as Lender shall reasonably request, a certificate confirming
(i) that as of the date of such certificate this Agreement, the Note, the
Mortgage and each other Loan Document are in full force and effect and are
enforceable against Borrower in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency or other laws
affecting generally the enforceability of creditors' rights and by
limitations on the availability of equitable remedies, (ii) the amount of
principal outstanding pursuant to the Note as of the date of such certificate,
and (iii) that as of the date of such certificate, there is no uncured Event
of Default or condition existing which would, with the passing of time or
giving of notice (or both) constitute an Event of Default under this Agreement
or any other Loan Document. Promptly upon the written request of Borrower and
provided that Borrower is not in default in compliance with its obligations
under this Agreement, the Note, the Mortgage or any other Loan Documents,
Lender shall execute and deliver to Borrower a certificate confirming (a) that
as of the date of such certificate this Agreement, the Note, the Mortgage and
the other Loan Documents described and contemplated herein are in full force
and effect, (b) the amount of principal outstanding pursuant to the Note as of
the date of such certificate and the date to which principal and Interest have
been paid, and (c) that as of the date of such certificate, to Lender's
knowledge, there is no Event of Default under this Agreement or the other Loan
Documents.
17.9. Absence of Third Party Benefit. None of the terms of this
Agreement nor of any other of the Loan Documents shall be construed as being
for the benefit of or enforceable by, any third party, including but not
limited to, any creditor of Borrower (other than Lender) or of Lender.
17.10. Pronouns. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural forms thereof, as
its context shall require.
17.11. No Partnership.
17.11.1. Creditor-Debtor Relationship. Lender and Borrower intend that
the relationship between them pursuant to this Agreement and each other of the
Loan Documents shall be solely that of creditor and debtor. Nothing contained
in this Agreement or in any other of the Loan Documents or any other document
or instrument made in connection with the Loan, shall be deemed or construed
to create, or to constitute, a partnership, tenancy-in-common, joint tenancy,
joint venture or co-ownership by and between Lender and Borrower. Lender in
no way shall be responsible or liable for the debts, losses, obligations, or
duties of Borrower with respect to the Property or otherwise. All obligations
to pay real property or other Taxes, assessments, insurance premiums and all
other fees and charges arising from the ownership, operation or occupancy of
the Property and to perform any agreements and contracts relating to the
Property shall be the sole responsibility of Borrower. Borrower, at all times
consistent with the terms and provisions of this Agreement and each other of
the Loan Documents and any other document or instrument evidencing, securing
or otherwise relating to the Loan, shall be free to determine and follow its
own policies and practices in the conduct of its business on the Property.
17.11.2. Indemnification. Borrower hereby agrees to indemnify, hold
harmless and defend Lender, its officers, directors, agents, representatives
and employees (using counsel of Lender's choice) from and against any and all
claims, demands, liabilities, losses, injuries, costs, expenses and damages
(including without limitation reasonable attorneys' and paralegals' fees
actually incurred as herein provided, whether in any administrative or
bankruptcy proceeding or otherwise) which Lender, its officers, directors,
agents, representatives and employees may incur as a result hereof or which
may result from or which may be instituted against Lender, its officers,
directors, agents, representatives and employees by reason of any alleged
obligations or undertakings on its part to perform or discharge any of the
terms, covenants or agreements contained in any agreement made by Borrower
relating to the Property. Borrower shall also indemnify and hold harmless
Lender, its officers, directors, agents, representatives and employees against
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, suits, costs and expenses (including reasonable attorneys' and
paralegals' fees actually incurred, whether in any administrative or
bankruptcy proceeding or otherwise) of whatever kind or nature which may be
imposed on, incurred by or asserted at any time against Lender, its officers,
directors, agents, representatives and employees and in any way relating to or
arising out of or in connection with the Property and/or the construction or
maintenance of the improvements thereon and/or the use, occupation or
operation of the Property. Should Lender, its officers, directors, agents,
representatives and employees incur any such liability under the Note, this
Agreement or any of the other Loan Documents referred to herein, or in defense
of any claims or demands related thereto, the amount thereof, (including
costs, expenses and attorneys' fees as herein provided) shall be secured by
the Mortgage and all other Loan Documents made in connection with the Loan,
and Borrower agrees to reimburse Lender therefor on or before thirty (30) days
following written request therefor, together with interest thereon at the
Default Interest Rate if payment has not been made within said thirty (30)
day period, and upon the failure of Borrower to do so, Lender may declare all
sums due under this Agreement, the Mortgage and the Note immediately due and
payable.
17.12. Resolution of Drafting Ambiguities. Borrower acknowledges that it was
represented by counsel in connection with the preparation, execution and
delivery of this Agreement, the Note, the Mortgage and the other Loan
Documents to be executed and delivered by Borrower and that Borrower's counsel
reviewed and participated in the revision of all of the Loan Documents and
that any rule of construction under any applicable law to the effect that
ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of any of this Agreement or any other of the
Loan Documents.
17.13. Conflicts. Borrower and Lender hereby acknowledge and agree that
concurrently with entering into this Agreement, they have also entered into
the other Loan Documents which set forth rights, obligations and remedies of
the parties in connection with the Loan, some of which are also addressed in
this Agreement. Borrower and Lender hereby further agree that to the extent
that the provisions of any of the other Loan Documents constitute an
addition to or an enhancement of (without conflicting or being inconsistent
with) the provisions of this Agreement, then the provisions of said other Loan
Documents and the provisions of this Agreement shall all be and remain in full
force and effect, enforceable by Lender in accordance with their respective
terms; provided, however, that if and to the extent that there is any direct
conflict or inconsistency between the provisions of the other Loan Documents
and the provisions of this Agreement, the provisions set forth in the other
Loan Documents shall govern and control.
17.14. Severability. In case one or more of the provisions contained in this
Agreement shall be deemed to be invalid, illegal or unenforceable in any
respect under any applicable law, the other provisions contained herein shall
not in any way be affected or impaired thereby.
17.15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which shall
together constitute but one and the same instrument.
17.16. Waiver. The acceptance by Lender of any sum after any Event of
Default shall not constitute a waiver of the right to require prompt
performance of all the covenants and conditions contained in this Agreement,
the Note, the Mortgage or any of the other Loan Documents. The acceptance by
Lender of any sum less than the sum then due shall be deemed an acceptance on
account only and shall not constitute a waiver of the obligation of Borrower
to pay the entire sum then due, and Borrower's failure to pay said entire sum
due shall be and continue to be an Event of Default notwithstanding Lender's
acceptance of such lesser amount on account, and Lender shall be entitled at
all times thereafter to exercise all rights and remedies it has pursuant to
this Agreement following an Event of Default, notwithstanding the acceptance
by Lender thereafter of future sums on account. Lender's failure to exercise
or Lender's delay in exercising any right, power or privilege hereunder shall
not operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or privilege preclude any other or further exercise
thereof, or the exercise of any other right, power or privilege hereunder.
Any waiver of any right, power, or privilege hereunder shall be in writing.
The rights and remedies of the parties herein provided are cumulative and not
exclusive of any rights or remedies as provided by law.
17.17. Commissions. Borrower hereby represents and warrants to Lender that
Borrower has not employed the services of any loan broker, finder, agent or
mortgage banker in connection with the making of the Loan. Borrower hereby
agrees to hold harmless, indemnify and defend Lender (using counsel of
Lender's choice) from any claims or actions for payment of any loan brokerage
fees, commissions or other finder's fees incurred, or claimed to have
been incurred in connection with the Loan.
17.18. Attorneys' Fees; Legal Action.
17.18.1. Attorneys' Fees. Borrower shall reimburse Lender for all
reasonable attorneys' and paralegals' fees and expenses incurred (whether in
any administrative proceeding, on appeal or otherwise) by Lender
in connection with the enforcement of Lender's rights under this Agreement,
including, without limitation, reasonable attorneys' and paralegals' fees
actually incurred and disbursements for out-of-court workouts and settlements
or for enforcement of rights under any state or federal statute, including,
without limitation, reasonable attorneys' and paralegals' fees incurred
(whether in any administrative proceeding, on appeal or otherwise) in
bankruptcy and insolvency proceedings. Borrower specifically acknowledges
that, due to the complexity of the Loan, the real estate development
sophistication of Borrower and the difficulties contemplated in enforcement of
Lender's remedies, Lender, to protect its interests properly and completely in
the event of Borrower's default, shall be entitled to retain attorneys of
Lender's choice, including attorneys in the employ of Lender.
17.18.2. Legal Action. Lender shall have the right, at Borrower's
expense, to commence, to appear in, or to defend any action or proceeding
purporting to affect the rights or duties of the parties to this Agreement,
the Note, the Mortgage or any of the Loan Documents and in connection
therewith shall have the right to pay at Borrower's expense all necessary
expenses, including reasonable attorney's fees, if Borrower fails upon
reasonable notice to so commence, appear in or defend any such action or
proceeding with counsel of Lender's choice, except in a suit by Borrower
against Lender.
17.19. Time is of the Essence. Time is of the essence in the performance of
each and every obligation of Borrower hereunder.
17.20. Exhibits. All Exhibits attached to this Agreement are incorporated
herein by this reference as though set forth in full herein.
17.21. No Oral Agreements. This written Agreement, the Note, the other Loan
Documents and the instruments and documents executed in connection herewith,
represent the final and full agreement between the parties and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
[Signatures to follow on next page]
BORROWER:
WAKULLA MANOR, INC.,
a Florida corporation
By: Chris Brogdon
Its: President
[Signatures continued on next page]
[Signatures continued from previous page]
LENDER:
LTC PROPERTIES, INC.,
a Maryland corporation
By:/s/ James J. Pieczynski
Its: President and CFO
