ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Georgia | 31-1332119 | |
(State or other jurisdiction of incorporation) | (I.R.S. Employer Identification Number) |
Large accelerated filer o | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company x | |
(Do not check if a smaller reporting company) |
Page Number | ||
FINANCIAL INFORMATION | ||
Financial Statements (Unaudited) | ||
Consolidated Balance Sheets as of September 30, 2014 (unaudited) and December 31, 2013 | ||
Consolidated Statements of Operations for the three and nine months ended September 30, 2014 and 2013 (unaudited) | ||
Consolidated Statement of Stockholders' Equity for the nine months ended September 30, 2014 (unaudited) | ||
Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013 (unaudited) | ||
Notes to Consolidated Financial Statements (unaudited) | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||
Quantitative and Qualitative Disclosures About Market Risk | ||
Controls and Procedures | ||
OTHER INFORMATION | ||
Legal Proceedings | ||
Risk Factors | ||
Unregistered Sales of Equity Securities and Use of Proceeds | ||
Defaults upon Senior Securities | ||
Mine Safety Disclosures | ||
Other Information | ||
Exhibits | ||
September 30, 2014 | December 31, 2013 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 12,867 | $ | 19,374 | ||||
Restricted cash and investments | 921 | 3,801 | ||||||
Accounts receivable, net of allowance of $6,202 and $4,989 | 25,771 | 23,598 | ||||||
Prepaid expenses and other | 2,198 | 483 | ||||||
Assets of disposal group held for use | — | 5,135 | ||||||
Assets of disposal groups held for sale | 7,045 | 400 | ||||||
Assets of variable interest entity held for sale | 5,894 | 5,945 | ||||||
Total current assets | 54,696 | 58,736 | ||||||
Restricted cash and investments | 7,773 | 11,606 | ||||||
Property and equipment, net | 136,572 | 138,233 | ||||||
Intangible assets - bed licenses | 2,471 | 2,471 | ||||||
Intangible assets - lease rights, net | 4,254 | 4,889 | ||||||
Goodwill | 4,224 | 4,224 | ||||||
Lease deposits | 1,832 | 1,715 | ||||||
Deferred loan costs, net | 3,948 | 4,542 | ||||||
Other assets | 93 | 12 | ||||||
Total assets | $ | 215,863 | $ | 226,428 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of notes payable and other debt | $ | 24,249 | $ | 12,027 | ||||
Current portion of convertible debt, net of discounts | 14,000 | 11,389 | ||||||
Revolving credit facilities and lines of credit | 6,894 | 2,738 | ||||||
Accounts payable | 17,729 | 23,783 | ||||||
Accrued expenses | 15,644 | 13,264 | ||||||
Liabilities of disposal group held for sale | 5,197 | — | ||||||
Liabilities of variable interest entity held for sale | 5,954 | 6,034 | ||||||
Total current liabilities | 89,667 | 69,235 | ||||||
Notes payable and other debt, net of current portion: | ||||||||
Senior debt, net of discounts | 86,832 | 107,858 | ||||||
Bonds, net of discounts | 7,007 | 6,996 | ||||||
Revolving credit facilities | 1,121 | 5,765 | ||||||
Convertible debt | — | 7,500 | ||||||
Other liabilities | 1,916 | 1,589 | ||||||
Deferred tax liability | — | 191 | ||||||
Total liabilities | 186,543 | 199,134 | ||||||
Commitments and contingencies (Note 14) | ||||||||
Preferred stock, no par value; 5,000 shares authorized; 950 shares issued and outstanding, redemption amount 23,750 at both September 30, 2014 and December 31, 2013 | 20,392 | 20,442 | ||||||
Stockholders’ equity: | ||||||||
Common stock and additional paid-in capital, no par value; 55,000 shares authorized; 18,811 and 16,016 issued and outstanding at September 30, 2014 and December 31, 2013, respectively | 61,251 | 48,370 | ||||||
Accumulated deficit | (50,141 | ) | (39,884 | ) | ||||
Total stockholders’ equity | 11,110 | 8,486 | ||||||
Noncontrolling interest in subsidiary | (2,182 | ) | (1,634 | ) | ||||
Total equity | 8,928 | 6,852 | ||||||
Total liabilities and equity | $ | 215,863 | $ | 226,428 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenues: | ||||||||||||||||
Patient care revenues | $ | 56,637 | $ | 53,126 | $ | 165,196 | $ | 160,471 | ||||||||
Management revenues | 354 | 521 | 1,140 | 1,529 | ||||||||||||
Rental revenues | 88 | — | 88 | — | ||||||||||||
Total revenues | 57,079 | 53,647 | 166,424 | 162,000 | ||||||||||||
Expenses: | ||||||||||||||||
Cost of services (exclusive of facility rent, depreciation and amortization) | 47,198 | 43,802 | 137,743 | 134,392 | ||||||||||||
General and administrative expenses | 3,578 | 4,583 | 12,318 | 14,016 | ||||||||||||
Audit committee investigation expense | — | 302 | — | 2,284 | ||||||||||||
Facility rent expense | 1,695 | 1,702 | 5,085 | 5,077 | ||||||||||||
Depreciation and amortization | 1,906 | 1,779 | 5,716 | 5,245 | ||||||||||||
Salary retirement and continuation costs | 1,489 | 5 | 2,771 | 154 | ||||||||||||
Total expenses | 55,866 | 52,173 | 163,633 | 161,168 | ||||||||||||
Income from Operations | 1,213 | 1,474 | 2,791 | 832 | ||||||||||||
Other Income (Expense): | ||||||||||||||||
Interest expense, net | (2,644 | ) | (3,204 | ) | (7,916 | ) | (9,459 | ) | ||||||||
Acquisition costs, net of gains | (8 | ) | (33 | ) | (8 | ) | (610 | ) | ||||||||
Derivative gain | — | 1,989 | — | 2,178 | ||||||||||||
Loss on extinguishment of debt | (1,220 | ) | (6 | ) | (1,803 | ) | (33 | ) | ||||||||
Loss on disposal of assets | — | (6 | ) | — | (10 | ) | ||||||||||
Other (expense) income | (444 | ) | 15 | (636 | ) | 15 | ||||||||||
Total other expense, net | (4,316 | ) | (1,245 | ) | (10,363 | ) | (7,919 | ) | ||||||||
(Loss) Income from Continuing Operations Before Income Taxes | (3,103 | ) | 229 | (7,572 | ) | (7,087 | ) | |||||||||
Income tax benefit (expense) | 244 | 54 | 236 | (24 | ) | |||||||||||
(Loss) Income from Continuing Operations | (2,859 | ) | 283 | (7,336 | ) | (7,111 | ) | |||||||||
Loss from Discontinued Operations, Net of Tax | (690 | ) | (696 | ) | (1,531 | ) | (2,998 | ) | ||||||||
Net Loss | (3,549 | ) | (413 | ) | (8,867 | ) | (10,109 | ) | ||||||||
Net Loss Attributable to Noncontrolling Interests | 218 | 195 | 548 | 629 | ||||||||||||
Net Loss Attributable to AdCare Health Systems, Inc. | (3,331 | ) | (218 | ) | (8,319 | ) | (9,480 | ) | ||||||||
Preferred stock dividend | (646 | ) | (306 | ) | (1,938 | ) | (918 | ) | ||||||||
Net Loss Attributable to AdCare Health Systems, Inc. Common Stockholders | $ | (3,977 | ) | $ | (524 | ) | $ | (10,257 | ) | $ | (10,398 | ) | ||||
Net loss per Common Share attributable to AdCare Health Systems, Inc. | ||||||||||||||||
Common Stockholders - | ||||||||||||||||
Basic: | ||||||||||||||||
Continuing Operations | $ | (0.18 | ) | $ | 0.01 | $ | (0.50 | ) | $ | (0.50 | ) | |||||
Discontinued Operations | (0.04 | ) | (0.04 | ) | (0.09 | ) | (0.20 | ) | ||||||||
$ | (0.22 | ) | $ | (0.03 | ) | $ | (0.59 | ) | $ | (0.70 | ) | |||||
Diluted: | ||||||||||||||||
Continuing Operations | $ | (0.18 | ) | $ | 0.01 | $ | (0.50 | ) | $ | (0.50 | ) | |||||
Discontinued Operations | (0.04 | ) | (0.04 | ) | (0.09 | ) | (0.20 | ) | ||||||||
$ | (0.22 | ) | $ | (0.03 | ) | $ | (0.59 | ) | $ | (0.70 | ) | |||||
Weighted Average Common Shares Outstanding: | ||||||||||||||||
Basic | 18,134 | 14,962 | 17,539 | 14,805 | ||||||||||||
Diluted | 18,134 | 14,962 | 17,539 | 14,805 |
Common Stock Shares | Common Stock and Additional Paid-in Capital | Accumulated Deficit | Noncontrolling Interests | Total | |||||||||||||||
Balances, December 31, 2013 | 16,016 | $ | 48,370 | $ | (39,884 | ) | $ | (1,634 | ) | $ | 6,852 | ||||||||
Stock-based compensation expense | — | 983 | — | — | 983 | ||||||||||||||
Exercises of options and warrants | 934 | 3,105 | — | — | 3,105 | ||||||||||||||
Stock issued for converted debt and interest | 1,861 | 8,706 | — | — | 8,706 | ||||||||||||||
Nonemployee warrants issued in conjunction with debt offering | — | 87 | — | — | 87 | ||||||||||||||
Preferred stock dividend | — | — | (1,938 | ) | — | (1,938 | ) | ||||||||||||
Net loss | — | — | (8,319 | ) | (548 | ) | (8,867 | ) | |||||||||||
Balances, September 30, 2014 | 18,811 | $ | 61,251 | $ | (50,141 | ) | $ | (2,182 | ) | $ | 8,928 |
Nine Months Ended September 30, | ||||||||
2014 | 2013 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (8,867 | ) | $ | (10,109 | ) | ||
Loss from discontinued operations, net of tax | 1,531 | 2,998 | ||||||
Loss from continuing operations | (7,336 | ) | (7,111 | ) | ||||
Adjustments to reconcile net loss from continuing operations to net cash (used in) provided by operating activities: | ||||||||
Depreciation and amortization | 5,716 | 5,245 | ||||||
Warrants issued for services | 87 | 9 | ||||||
Stock-based compensation expense | 983 | 737 | ||||||
Lease expense in excess of cash | 166 | 121 | ||||||
Amortization of deferred financing costs | 1,460 | 1,727 | ||||||
Amortization of debt discounts and premiums | (13 | ) | 502 | |||||
Derivative gain | — | (2,178 | ) | |||||
Loss on debt extinguishment | 1,803 | 33 | ||||||
Deferred tax benefit | (191 | ) | (27 | ) | ||||
Loss on disposal of assets | — | 10 | ||||||
Provision for bad debts | 2,995 | 3,156 | ||||||
Changes in certain assets and liabilities, net of acquisitions: | ||||||||
Accounts receivable | (5,430 | ) | (3,163 | ) | ||||
Prepaid expenses and other | (1,660 | ) | (965 | ) | ||||
Other assets | (198 | ) | 387 | |||||
Accounts payable and accrued expenses | (3,056 | ) | 4,698 | |||||
Net cash (used in) provided by operating activities - continuing operations | (4,674 | ) | 3,181 | |||||
Net cash used in operating activities - discontinued operations | (1,441 | ) | (493 | ) | ||||
Net cash (used in) provided by operating activities | (6,115 | ) | 2,688 | |||||
Cash flows from investing activities: | ||||||||
Change in restricted cash and investments and escrow deposits for acquisitions | 5,785 | (5,632 | ) | |||||
Proceeds from notes receivable | — | 3,240 | ||||||
Purchase of property and equipment | (3,420 | ) | (3,049 | ) | ||||
Net cash provided by (used in) investing activities - continuing operations | 2,365 | (5,441 | ) | |||||
Net cash (used in) provided by investing activities - discontinued operations | (778 | ) | 886 | |||||
Net cash provided by (used in) investing activities | 1,587 | (4,555 | ) | |||||
Cash flows from financing activities: | ||||||||
Proceeds from debt | 17,750 | 7,372 | ||||||
Proceeds from convertible debt | 6,022 | — | ||||||
Repayment on notes payable | (18,484 | ) | (5,295 | ) | ||||
Repayment on bonds payable | (3,049 | ) | — | |||||
Repayment on convertible debt | (4,014 | ) | — | |||||
Change in lines of credit | (335 | ) | 8 | |||||
Debt issuance costs | (945 | ) | (407 | ) | ||||
Exercise of warrants and options | 3,105 | 67 | ||||||
Preferred stock offering costs | (50 | ) | — | |||||
Dividends paid on preferred stock | (1,938 | ) | (918 | ) | ||||
Net cash flows (used in) provided by financing activities - continuing operations | (1,938 | ) | 827 | |||||
Net cash flows used in financing activities - discontinued operations | (41 | ) | (2,173 | ) | ||||
Net cash flows used in financing activities | (1,979 | ) | (1,346 | ) | ||||
Net Change in Cash | (6,507 | ) | (3,213 | ) | ||||
Cash, Beginning | 19,374 | 15,937 | ||||||
Cash, Ending | $ | 12,867 | $ | 12,724 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the year for: | ||||||||
Interest | $ | 7,340 | $ | 7,984 | ||||
Supplemental disclosure of Non-cash Activities: | ||||||||
Conversions of debt and other liabilities to equity | $ | 6,942 | $ | 2,331 | ||||
2011 Notes surrendered and cancelled in payment for 2014 Notes | $ | 445 | $ | — | ||||
Warrants issued for financing costs | $ | — | $ | 9 | ||||
Warrants issued in conjunction with debt offering | $ | 87 | $ | — |
Three Months Ended September 30, | ||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||
(Amounts in 000’s, except per share data) | Income (loss) | Shares | Per Share | Income (loss) | Shares | Per Share | ||||||||||||||||
Continuing Operations: | ||||||||||||||||||||||
(Loss) income from continuing operations | $ | (2,859 | ) | $ | 283 | |||||||||||||||||
Net loss attributable to noncontrolling interests | 218 | 195 | ||||||||||||||||||||
Basic (loss) income from continuing operations | $ | (2,641 | ) | 18,134 | $ | (0.14 | ) | $ | 478 | 14,962 | $ | 0.03 | ||||||||||
Preferred stock dividend | (646 | ) | 18,134 | $ | (0.04 | ) | (306 | ) | 14,962 | $ | (0.02 | ) | ||||||||||
Effect of dilutive securities: Stock options, warrants outstanding and convertible debt (a) | ||||||||||||||||||||||
Diluted (loss) income from continuing operations | $ | (3,287 | ) | 18,134 | $ | (0.18 | ) | $ | 172 | 14,962 | $ | 0.01 | ||||||||||
Discontinued Operations: | ||||||||||||||||||||||
Basic loss from discontinued operations | (690 | ) | 18,134 | $ | (0.04 | ) | (696 | ) | 14,962 | $ | (0.04 | ) | ||||||||||
Diluted loss from discontinued operations | (690 | ) | 18,134 | $ | (0.04 | ) | (696 | ) | 14,962 | $ | (0.04 | ) | ||||||||||
Net Loss Attributable to AdCare: | ||||||||||||||||||||||
Basic loss | (3,977 | ) | 18,134 | $ | (0.22 | ) | (524 | ) | 14,962 | $ | (0.03 | ) | ||||||||||
Diluted loss | (3,977 | ) | 18,134 | $ | (0.22 | ) | (524 | ) | 14,962 | $ | (0.03 | ) |
Nine Months Ended September 30, | ||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||
(Amounts in 000’s, except per share data) | Income (loss) | Shares | Per Share | Income (loss) | Shares | Per Share | ||||||||||||||||
Continuing Operations: | ||||||||||||||||||||||
Loss from continuing operations | $ | (7,336 | ) | $ | (7,111 | ) | ||||||||||||||||
Net loss attributable to noncontrolling interests | 548 | 629 | ||||||||||||||||||||
Basic loss from continuing operations | $ | (6,788 | ) | 17,539 | $ | (0.39 | ) | $ | (6,482 | ) | 14,805 | $ | (0.44 | ) | ||||||||
Preferred stock dividend | (1,938 | ) | 17,539 | $ | (0.11 | ) | (918 | ) | 14,805 | $ | (0.06 | ) | ||||||||||
Effect of dilutive securities: Stock options, warrants outstanding and subordinated convertible promissory notes (a) | ||||||||||||||||||||||
Diluted loss from continuing operations | $ | (8,726 | ) | 17,539 | $ | (0.50 | ) | $ | (7,400 | ) | 14,805 | $ | (0.50 | ) | ||||||||
Discontinued Operations: | ||||||||||||||||||||||
Basic loss from discontinued operations | (1,531 | ) | 17,539 | $ | (0.09 | ) | (2,998 | ) | 14,805 | $ | (0.20 | ) | ||||||||||
Diluted loss from discontinued operations | (1,531 | ) | 17,539 | $ | (0.09 | ) | (2,998 | ) | 14,805 | $ | (0.20 | ) | ||||||||||
Net Loss Attributable to AdCare: | ||||||||||||||||||||||
Basic loss | (10,257 | ) | 17,539 | $ | (0.59 | ) | (10,398 | ) | 14,805 | $ | (0.70 | ) | ||||||||||
Diluted loss | (10,257 | ) | 17,539 | $ | (0.59 | ) | (10,398 | ) | 14,805 | $ | (0.70 | ) |
September 30, | ||||||
(Amounts in 000’s) | 2014 | 2013 | ||||
Outstanding Stock Options | 1,144 | 1,357 | ||||
Outstanding Warrants - employee | 1,846 | 1,876 | ||||
Outstanding Warrants - nonemployee | 816 | 1,904 | ||||
Subordinated Convertible Promissory Notes (a) | 4,000 | 6,406 | ||||
Total anti-dilutive securities | 7,806 | 11,543 |
(Amounts in 000’s) | September 30, 2014 | December 31, 2013 | ||||||
Defeased bonds escrow | $ | — | $ | 3,138 | ||||
HUD escrow deposits | 168 | 91 | ||||||
Property tax escrow | 19 | 84 | ||||||
Lender's collection account | 734 | 488 | ||||||
Total current portion | 921 | 3,801 | ||||||
HUD replacement reserves | 1,010 | 383 | ||||||
Repair and remediation/replacement reserves | 54 | 18 | ||||||
Reserves for capital improvements | 1,036 | 1,481 | ||||||
Restricted investments for other debt obligations | 5,673 | 9,724 | ||||||
Total noncurrent portion | 7,773 | 11,606 | ||||||
Total restricted cash and investments | $ | 8,694 | $ | 15,407 |
(Amounts in 000’s) | Estimated Useful Lives (Years) | September 30, 2014 | December 31, 2013 | |||||||
Buildings and improvements | 5-40 | $ | 132,856 | $ | 131,123 | |||||
Equipment | 2-10 | 13,849 | 11,987 | |||||||
Land | — | 6,808 | 6,788 | |||||||
Computer related | 2-10 | 2,952 | 2,980 | |||||||
Construction in process | — | 108 | 270 | |||||||
156,573 | 153,148 | |||||||||
Less: accumulated depreciation and amortization expense | 20,001 | 14,915 | ||||||||
Property and equipment, net | $ | 136,572 | $ | 138,233 |
(Amounts in 000’s) | Bed Licenses (included in property and equipment) | Bed Licenses - Separable | Lease Rights | Total | ||||||||||||
Balances, December 31, 2013 | ||||||||||||||||
Gross | $ | 38,407 | $ | 2,471 | $ | 7,407 | $ | 48,285 | ||||||||
Accumulated amortization | (2,620 | ) | — | (2,518 | ) | (5,138 | ) | |||||||||
Net carrying amount | $ | 35,787 | $ | 2,471 | $ | 4,889 | $ | 43,147 | ||||||||
Reclass to held for sale | (1,530 | ) | — | — | (1,530 | ) | ||||||||||
Accumulated amortization reclass to held for sale | 68 | — | — | 68 | ||||||||||||
Amortization expense | (924 | ) | — | (635 | ) | (1,559 | ) | |||||||||
Balances, September 30, 2014 | ||||||||||||||||
Gross | 36,877 | 2,471 | 7,407 | 46,755 | ||||||||||||
— | — | — | — | |||||||||||||
Accumulated amortization | (3,476 | ) | — | (3,153 | ) | (6,629 | ) | |||||||||
Net carrying amount | $ | 33,401 | $ | 2,471 | $ | 4,254 | $ | 40,126 |
(Amounts in 000’s) | Bed Licenses | Lease Rights | ||||||
2014 (a) | $ | 308 | $ | 166 | ||||
2015 | 1,232 | 667 | ||||||
2016 | 1,232 | 667 | ||||||
2017 | 1,232 | 667 | ||||||
2018 | 1,232 | 667 | ||||||
Thereafter | 28,165 | 1,420 | ||||||
Total expected amortization expense | $ | 33,401 | $ | 4,254 |
(Amounts in 000’s) | September 30, 2014 | December 31, 2013 | ||||||
Beginning balances | $ | 5,023 | $ | 5,023 | ||||
Accumulated impairment losses | (799 | ) | (799 | ) | ||||
Ending balances | $ | 4,224 | $ | 4,224 |
(Amounts in 000’s) | September 30, 2014 | December 31, 2013 | ||||||
Accrued payroll related | $ | 7,359 | $ | 5,204 | ||||
Accrued employee benefits | 3,861 | 3,712 | ||||||
Real estate and other taxes | 1,373 | 1,543 | ||||||
Other accrued expenses | 3,051 | 2,805 | ||||||
Total accrued expenses | $ | 15,644 | $ | 13,264 |
(Amounts in 000’s) | September 30, 2014 | December 31, 2013 | ||||||
Revolving credit facilities and lines of credit (a) | $ | 8,213 | $ | 8,503 | ||||
Senior debt - guaranteed by HUD | 18,469 | 4,063 | ||||||
Senior debt - guaranteed by USDA | 27,296 | 27,763 | ||||||
Senior debt - guaranteed by SBA | 5,774 | 5,954 | ||||||
Senior debt - bonds, net of discount (b) | 12,961 | 16,102 | ||||||
Senior debt - other mortgage indebtedness (c) | 63,390 | 78,408 | ||||||
Other debt | 1,151 | 625 | ||||||
Convertible debt issued in 2010, net of discount | — | 6,930 | ||||||
Convertible debt issued in 2011 | — | 4,459 | ||||||
Convertible debt issued in 2012 | 7,500 | 7,500 | ||||||
Convertible debt issued in 2014 | 6,500 | — | ||||||
Total | $ | 151,254 | $ | 160,307 | ||||
Less: current portion | 45,143 | 26,154 | ||||||
Less: portion included in liabilities of disposal group held for sale (a),(c) | 5,197 | — | ||||||
Less: portion included in liabilities of variable interest entity held for sale (b) | 5,954 | 6,034 | ||||||
Notes payable and other debt, net of current portion | $ | 94,960 | $ | 128,119 |
(Amounts in 000’s) | |||
2015 | $ | 56,470 | |
2016 | 17,865 | ||
2017 | 14,262 | ||
2018 | 3,920 | ||
2019 | 1,989 | ||
Thereafter | 57,147 | ||
Subtotal | 151,653 | ||
Less: unamortized discounts ($190 classified as current) | (399 | ) | |
Total notes and other debt | $ | 151,254 |
Date of conversion | Conversion Price | Shares of Common Stock Issued | Debt and Interest Converted | ||||||||
2011: | |||||||||||
July | $ | 4.13 | 18,160 | $ | 75,000 | ||||||
November | $ | 3.92 | 19,132 | 75,000 | |||||||
Subtotal | 37,292 | $ | 150,000 | ||||||||
2013: | |||||||||||
February | $ | 3.73 | 6,635 | $ | 24,749 | ||||||
March | $ | 3.73 | 6,635 | 24,749 | |||||||
April | $ | 3.73 | 67,024 | 250,000 | |||||||
August | $ | 3.73 | 284,878 | 1,062,595 | |||||||
September | $ | 3.73 | 246,264 | 918,553 | |||||||
October | $ | 3.73 | 448,215 | 1,671,840 | |||||||
November | $ | 3.73 | 136,402 | 508,778 | |||||||
December | $ | 3.73 | 82,326 | 307,067 | |||||||
Subtotal | 1,278,379 | $ | 4,768,331 | ||||||||
2014: | |||||||||||
January | $ | 3.73 | 788,828 | $ | 2,942,328 | ||||||
July | $ | 3.73 | 26,810 | 100,000 | |||||||
August | $ | 3.73 | 1,045,575 | 3,900,000 | |||||||
Subtotal | 1,861,213 | $ | 6,942,328 | ||||||||
Total | 3,176,884 | $ | 11,860,659 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(Amounts in 000’s) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Total revenues from discontinued operations | $ | 1,400 | $ | 2,230 | $ | 5,789 | $ | 10,469 | ||||||||
Net loss from discontinued operations | $ | (690 | ) | $ | (696 | ) | $ | (1,531 | ) | $ | (2,998 | ) | ||||
Interest expense, net from discontinued operations | $ | 263 | $ | 258 | $ | 787 | $ | 864 | ||||||||
Loss on disposal of assets from discontinued operations | $ | — | $ | (20 | ) | $ | — | $ | (467 | ) |
(Amounts in 000’s) | September 30, 2014 | December 31, 2013 | ||||||
Property and equipment, net | $ | 5,418 | $ | 400 | ||||
Other assets | 1,627 | — | ||||||
Assets of disposal groups held for sale | $ | 7,045 | $ | 400 | ||||
Mortgage payable | $ | 5,000 | $ | — | ||||
Line of credit | 197 | — | ||||||
Liabilities of disposal group held for sale | $ | 5,197 | $ | — |
Amounts in (000's) | December 31, 2013 | |||
Property and equipment, net | $ | 5,135 | ||
Assets of disposal group held for use | $ | 5,135 |
Amounts in (000's) | September 30, 2014 | December 31, 2013 | ||||||
Property and equipment, net | $ | 5,893 | $ | 5,893 | ||||
Other assets | $ | 1 | $ | 52 | ||||
Assets of variable interest entity held for sale | $ | 5,894 | $ | 5,945 | ||||
Bonds payable | $ | 5,954 | $ | 6,034 | ||||
Liabilities of variable interest entity held for sale | $ | 5,954 | $ | 6,034 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(Amounts in 000’s) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Employee compensation: | ||||||||||||||||
Stock options | $ | 88 | $ | 55 | $ | 277 | $ | 343 | ||||||||
Employee warrants | 43 | 31 | 133 | 90 | ||||||||||||
Management restricted stock | 10 | 2 | 112 | 19 | ||||||||||||
Total employee stock-based compensation expense | $ | 141 | $ | 88 | $ | 522 | $ | 452 | ||||||||
Non-employee compensation | ||||||||||||||||
Board restricted stock | $ | 42 | $ | 67 | $ | 268 | $ | 201 | ||||||||
Board stock options | 61 | 26 | 182 | 79 | ||||||||||||
Subtotal non-employee stock-based compensation expense | $ | 103 | $ | 93 | $ | 450 | $ | 280 | ||||||||
Amortization of prepaid services | — | 5 | 11 | 5 | ||||||||||||
Total non-employee stock-based compensation expense | $ | 103 | $ | 98 | $ | 461 | $ | 285 | ||||||||
Total stock-based compensation expense | $ | 244 | $ | 186 | $ | 983 | $ | 737 |
Nine Months Ended September 30, | |||||
2014 | 2013 | ||||
Expected volatility | 51.0 | % | 60.0 | % | |
Expected life (in years) | 5.2 | 5.2 | |||
Expected dividend yield | — | — | |||
Risk-free interest rate | 1.73 | % | 0.71 | % |
Nine Months Ended September 30, | ||||
2014 | 2013 | |||
Expected volatility | 51.0 | % | n/a | |
Expected life (in years) | 5.0 | n/a | ||
Expected dividend yield | — | n/a | ||
Risk-free interest rate | 1.74 | % | n/a |
Number of Shares (000's) | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in 000’s) | ||||||||||
Outstanding, December 31, 2013 | 1,804 | $ | 4.54 | ||||||||||
Granted | 55 | $ | 4.23 | ||||||||||
Exercised | (115 | ) | $ | 3.71 | |||||||||
Unvested options forfeited or cancelled | (411 | ) | $ | 4.24 | |||||||||
Vested options expired | (189 | ) | $ | 4.37 | |||||||||
Outstanding, September 30, 2014 | 1,144 | $ | 4.74 | 7.2 | $ | 604 | |||||||
Vested at September 30, 2014 | 675 | $ | 5.20 | 6.5 | $ | 295 | |||||||
Vested or expected to vest at September 30, 2014 (a) | 1,063 | $ | 4.79 | 7.1 | $ | 554 |
Stock Options Outstanding | Options Exercisable | |||||||||||||||
Exercise Price | Number Outstanding (000's) | Weighted Average Remaining Contractual Term (in years) | Weighted Average Exercise Price | Vested and Expected to Vest (000's) | Weighted Average Exercise Price | |||||||||||
$1.30 | 16 | 1.1 | $ | 1.30 | 16 | $ | 1.30 | |||||||||
$1.31 - $3.99 | 323 | 5.3 | $ | 3.93 | 305 | $ | 3.93 | |||||||||
$4.00 - $4.30 | 450 | 8.5 | $ | 4.12 | 395 | $ | 4.12 | |||||||||
$4.31 - $4.99 | 40 | 8.7 | $ | 4.51 | 32 | $ | 4.52 | |||||||||
$5.00 - $7.62 | 315 | 7.3 | $ | 6.67 | 315 | $ | 6.67 | |||||||||
Total | 1,144 | 7.2 | $ | 4.74 | 1,063 | $ | 4.79 |
Number of Shares (000's) | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in 000’s) | ||||||||||
Outstanding, December 31, 2013 | 1,876 | $ | 3.09 | ||||||||||
Granted | — | $ | — | ||||||||||
Exercised | (30 | ) | $ | 2.54 | |||||||||
Unvested warrants forfeited or cancelled | — | $ | — | ||||||||||
Vested warrants expired | — | $ | — | ||||||||||
Outstanding, September 30, 2014 | 1,846 | $ | 3.10 | 4.1 | $ | 3,112 | |||||||
Vested at September 30, 2014 | 1,694 | $ | 2.94 | 3.8 | $ | 3,073 | |||||||
Vested or expected to vest at September 30, 2014 (a) | 1,836 | $ | 3.09 | 4.1 | $ | 3,111 |
Number of Shares (000's) | Weighted Avg. Grant Date Fair Value | ||||||
Unvested at December 31, 2013 | 314 | $ | 3.31 | ||||
Granted | — | $ | — | ||||
Vested | (10 | ) | $ | 4.34 | |||
Forfeited | — | $ | — | ||||
Unvested at September 30, 2014 | 304 | $ | 3.28 |
Number of Shares (000's) | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (000's) | ||||||||||
Outstanding, December 31, 2013 | 1,989 | $ | 3.84 | ||||||||||
Granted | 49 | $ | 4.50 | ||||||||||
Exercised | (897 | ) | $ | 3.62 | |||||||||
Unvested warrants forfeited or cancelled | — | $ | — | ||||||||||
Vested warrants expired | (325 | ) | $ | 4.51 | |||||||||
Outstanding, September 30, 2014 | 816 | $ | 3.86 | 1.8 | $ | 716 | |||||||
Vested at September 30, 2014 | 816 | $ | 3.86 | 1.8 | $ | 716 | |||||||
Vested or expected to vest at September 30, 2014 (a) | 816 | $ | 3.86 | 1.8 | $ | 716 |
Options (000's) | Employee Warrants (000's) | Non-employee Warrants (000's) | Exercise Price | ||||||||
203 | $ | 1.04 | |||||||||
16 | $ | 1.30 | |||||||||
13 | $ | 1.73 | |||||||||
199 | $ | 1.93 | |||||||||
222 | $ | 2.57 | |||||||||
212 | $ | 2.59 | |||||||||
222 | $ | 3.43 | |||||||||
116 | $ | 3.46 | |||||||||
276 | $ | 3.75 | |||||||||
50 | $ | 3.80 | |||||||||
548 | $ | 3.81 | |||||||||
32 | $ | 3.86 | |||||||||
191 | 105 | $ | 3.93 | ||||||||
100 | 85 | $ | 3.96 | ||||||||
20 | $ | 4.05 | |||||||||
272 | $ | 4.06 | |||||||||
55 | $ | 4.08 | |||||||||
57 | $ | 4.11 | |||||||||
101 | $ | 4.30 | |||||||||
116 | $ | 4.32 | |||||||||
15 | $ | 4.33 | |||||||||
16 | $ | 4.37 | |||||||||
49 | $ | 4.50 | |||||||||
105 | $ | 4.58 | |||||||||
25 | $ | 4.61 | |||||||||
105 | $ | 5.71 | |||||||||
70 | $ | 5.90 | |||||||||
105 | $ | 6.67 | |||||||||
105 | $ | 7.62 | |||||||||
1,144 | 1,846 | 816 |
(Amounts in 000’s) | September 30, 2014 | December 31, 2013 | ||||||
Cash | $ | 2 | $ | 11 | ||||
Accounts receivable | — | 92 | ||||||
Assets of variable interest entity held for sale | 5,894 | 5,945 | ||||||
Other assets | 347 | 371 | ||||||
Total assets | $ | 6,243 | $ | 6,419 | ||||
Accounts payable | $ | 1,919 | $ | 1,791 | ||||
Accrued expenses | 552 | 228 | ||||||
Liabilities of variable interest entity held for sale | 5,954 | 6,034 | ||||||
Noncontrolling interest | (2,182 | ) | (1,634 | ) | ||||
Total liabilities and equity | $ | 6,243 | $ | 6,419 |
• | Under the Amended Consulting Agreement, Mr. Brogdon is entitled to receive a success fee of $25,000 (increased from $20,000 under the Original Consulting Agreement) for each potential acquisition identified by Mr. Brogdon which the Company completes (the “Success Fee”); provided, however, that the Success Fee shall not exceed $160,000 in any calendar year without a majority vote of the Board of Directors. |
• | The fee originally payable to Mr. Brogdon upon termination of the Original Consulting Agreement without cause (approximately $550,000 for such termination prior to a change of control and approximately $1.1 million for such termination within six months after a change of control) was eliminated in the Amended Consulting Agreement. Instead, Mr. Brogdon will receive a fee of $500,000 if a change of control occurs on or before May 1, 2015 (the “Change of Control Fee”) and the Amended Consulting Agreement has not been earlier terminated. If a change of control occurs after May 1, 2015, then no Change of Control Fee is payable. The Amended Consulting Agreement will terminate immediately upon a change of control and the unpaid portion of the Consulting Fee, any accrued and unpaid Success Fee and Change of Control Fee (if applicable) will be paid to Mr. Brogdon upon the closing of the change of control. |
September 30, 2014 | September 30, 2013 | |||||
Cumulative number of facilities | 37 | 44 | ||||
Cumulative number of operational beds | 4,201 | 4,504 |
Number of Facilities at | |||||||||||||||
September 30, 2014 | |||||||||||||||
State | Number of Operational Beds/Units | Owned | Leased | Managed For Third Parties | Total | ||||||||||
Alabama | 304 | 2 | — | — | 2 | ||||||||||
Arkansas | 1,041 | 10 | — | — | 10 | ||||||||||
Georgia | 1,588 | 4 | 6 | 1 | 11 | ||||||||||
Missouri | 80 | — | 1 | — | 1 | ||||||||||
North Carolina | 106 | 1 | — | — | 1 | ||||||||||
Ohio | 705 | 4 | 1 | 3 | 8 | ||||||||||
Oklahoma | 197 | 2 | — | — | 2 | ||||||||||
South Carolina | 180 | 2 | — | — | 2 | ||||||||||
Total | 4,201 | 25 | 8 | 4 | 37 |
Facility Type | Number of Operational Beds/Units | Owned | Leased | Managed For Third Parties | Total | ||||||||||
Skilled Nursing | 4,006 | 23 | 8 | 3 | 34 | ||||||||||
Assisted Living | 112 | 2 | — | — | 2 | ||||||||||
Independent Living | 83 | — | — | 1 | 1 | ||||||||||
Total | 4,201 | 25 | 8 | 4 | 37 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(Amounts in 000’s) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Total revenues from discontinued operations | $ | 1,400 | $ | 2,230 | $ | 5,789 | $ | 10,469 | ||||||||
Net loss from discontinued operations | $ | (690 | ) | $ | (696 | ) | $ | (1,531 | ) | $ | (2,998 | ) | ||||
Interest expense, net from discontinued operations | $ | 263 | $ | 258 | $ | 787 | $ | 864 | ||||||||
Loss on disposal of assets from discontinued operations | $ | — | $ | (20 | ) | $ | — | $ | (467 | ) |
Patient Mix (SNF only) | ||||||
Three Months Ended September 30, | ||||||
2014 | 2013 | |||||
Medicare | 15.4 | % | 14.1 | % | ||
Medicaid | 70.2 | % | 71.6 | % | ||
Other | 14.4 | % | 14.3 | % | ||
Total | 100 | % | 100 | % |
Patient Mix (SNF only) | ||||||
Nine Months Ended September 30, | ||||||
2014 | 2013 | |||||
Medicare | 15.6 | % | 15.5 | % | ||
Medicaid | 70.5 | % | 70.9 | % | ||
Other | 13.9 | % | 13.6 | % | ||
Total | 100.0 | % | 100.0 | % |
For the Three Months Ended September 30, 2014 | ||||||||||||||||||||||||
State (SNF only) | Operational Beds at Period End (1) | Period's Average Operational Beds | Occupancy (Operational Beds) | Medicare Utilization (Skilled %ADC) (2) | Total Revenues | Medicare (Skilled) $PPD (3) | Medicaid $PPD (3) | |||||||||||||||||
Alabama | 304 | 304 | 68.6 | % | 10.5 | % | $ | 3,868 | $ | 393.26 | $ | 170.11 | ||||||||||||
Arkansas | 1,009 | 1,009 | 68.3 | % | 17.5 | % | $ | 14,958 | $ | 496.75 | $ | 170.40 | ||||||||||||
Georgia | 1,327 | 1,327 | 89.4 | % | 15.2 | % | $ | 23,407 | $ | 441.62 | $ | 160.19 | ||||||||||||
Missouri | 80 | 80 | 71.9 | % | 9.9 | % | $ | 892 | $ | 386.73 | $ | 138.08 | ||||||||||||
North Carolina | 106 | 106 | 71.3 | % | 21.9 | % | $ | 1,679 | $ | 444.48 | $ | 162.97 | ||||||||||||
Ohio | 293 | 293 | 83.3 | % | 14.3 | % | $ | 5,105 | $ | 439.84 | $ | 164.17 | ||||||||||||
Oklahoma | 197 | 197 | 77.7 | % | 19.6 | % | $ | 3,041 | $ | 461.52 | $ | 144.79 | ||||||||||||
South Carolina | 180 | 180 | 88.2 | % | 11.5 | % | $ | 2,950 | $ | 440.70 | $ | 162.12 | ||||||||||||
Total | 3,496 | 3,496 | 79.3 | % | 15.4 | % | $ | 55,900 | $ | 455.22 | $ | 162.84 |
For the Three Months Ended September 30, 2013 | ||||||||||||||||||||||||
State (SNF only) | Operational Beds at Period End (1) | Period's Average Operational Beds | Occupancy (Operational Beds) | Medicare Utilization (Skilled %ADC) (2) | Total Revenues | Medicare (Skilled) $PPD (3) | Medicaid $PPD (3) | |||||||||||||||||
Alabama | 304 | 304 | 70.5 | % | 11.5 | % | $ | 3,889 | $ | 393.61 | $ | 165.72 | ||||||||||||
Arkansas | 1,009 | 1,009 | 63.2 | % | 15.0 | % | $ | 12,869 | $ | 461.61 | $ | 162.71 | ||||||||||||
Georgia | 1,327 | 1,327 | 89.5 | % | 14.7 | % | $ | 23,174 | $ | 452.77 | $ | 156.90 | ||||||||||||
Missouri | 80 | 80 | 72.0 | % | 9.4 | % | $ | 926 | $ | 395.01 | $ | 134.76 | ||||||||||||
North Carolina | 106 | 106 | 67.9 | % | 16.4 | % | $ | 1,496 | $ | 448.49 | $ | 162.53 | ||||||||||||
Ohio | 293 | 293 | 83.4 | % | 12.5 | % | $ | 4,931 | $ | 422.42 | $ | 165.95 | ||||||||||||
Oklahoma | 197 | 197 | 70.9 | % | 11.2 | % | $ | 2,451 | $ | 434.38 | $ | 146.45 | ||||||||||||
South Carolina | 180 | 180 | 82.1 | % | 16.1 | % | $ | 2,680 | $ | 411.17 | $ | 144.42 | ||||||||||||
Total | 3,496 | 3,496 | 77.3 | % | 14.1 | % | $ | 52,416 | $ | 444.47 | $ | 158.14 |
For the Nine Months Ended September 30, 2014 | ||||||||||||||||||||||||
State (SNF only) | Operational Beds at Period End (1) | Period's Average Operational Beds | Occupancy (Operational Beds) | Medicare Utilization (Skilled %ADC) (2) | Total Revenues | Medicare (Skilled) $PPD (3) | Medicaid $PPD (3) | |||||||||||||||||
Alabama | 304 | 304 | 67.3 | % | 9.4 | % | $ | 11,360 | $ | 411.00 | $ | 173.03 | ||||||||||||
Arkansas | 1,009 | 1,009 | 67.1 | % | 18.0 | % | $ | 42,597 | $ | 478.77 | $ | 167.12 | ||||||||||||
Georgia | 1,327 | 1,327 | 88.3 | % | 15.4 | % | $ | 68,734 | $ | 452.93 | $ | 158.90 | ||||||||||||
Missouri | 80 | 80 | 72.0 | % | 10.8 | % | $ | 2,787 | $ | 413.49 | $ | 138.08 | ||||||||||||
North Carolina | 106 | 106 | 69.7 | % | 17.1 | % | $ | 4,672 | $ | 449.13 | $ | 162.26 | ||||||||||||
Ohio | 293 | 293 | 83.9 | % | 14.9 | % | $ | 15,378 | $ | 436.29 | $ | 164.41 | ||||||||||||
Oklahoma | 197 | 197 | 72.8 | % | 19.4 | % | $ | 8,418 | $ | 453.72 | $ | 144.99 | ||||||||||||
South Carolina | 180 | 180 | 87.6 | % | 13.8 | % | $ | 9,001 | $ | 439.38 | $ | 163.23 | ||||||||||||
Total | 3,496 | 3,496 | 78.1 | % | 15.6 | % | $ | 162,947 | $ | 455.64 | $ | 161.83 |
For the Nine Months Ended September 30, 2013 | ||||||||||||||||||||||||
State (SNF only) | Operational Beds at Period End (1) | Period's Average Operational Beds | Occupancy (Operational Beds) | Medicare Utilization (Skilled %ADC) (2) | Total Revenues | Medicare (Skilled) $PPD (3) | Medicaid $PPD (3) | |||||||||||||||||
Alabama | 304 | 304 | 72.1 | % | 11.2 | % | $ | 11,570 | $ | 392.61 | $ | 166.33 | ||||||||||||
Arkansas | 1,009 | 1,009 | 61.8 | % | 17.0 | % | $ | 38,400 | $ | 444.21 | $ | 169.55 | ||||||||||||
Georgia | 1,327 | 1,327 | 89.4 | % | 15.8 | % | $ | 69,337 | $ | 451.12 | $ | 157.31 | ||||||||||||
Missouri | 80 | 80 | 73.7 | % | 14.3 | % | $ | 2,978 | $ | 417.23 | $ | 134.52 | ||||||||||||
North Carolina | 106 | 106 | 73.7 | % | 15.9 | % | $ | 4,816 | $ | 453.74 | $ | 163.74 | ||||||||||||
Ohio | 293 | 293 | 84.2 | % | 15.3 | % | $ | 15,565 | $ | 438.51 | $ | 166.70 | ||||||||||||
Oklahoma | 197 | 197 | 72.5 | % | 14.9 | % | $ | 7,658 | $ | 432.03 | $ | 141.69 | ||||||||||||
South Carolina | 180 | 180 | 81.8 | % | 14.1 | % | 8,062 | 402.72 | 157.27 | |||||||||||||||
Total | 3,496 | 3,496 | 77.3 | % | 15.5 | % | $ | 158,386 | $ | 440.82 | $ | 160.60 |
Average Occupancy | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||
Same Facilities (a) | 79.7 | % | 77.5 | % | 78.7 | % | 77.6 | % |
Total Revenues | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(Amounts in 000’s) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Same Facilities (a) | $ | 56,637 | $ | 53,126 | $ | 165,196 | $ | 160,471 |
Three Months Ended September 30, | Increase (Decrease) | ||||||||||||||
(Amounts in 000’s) | 2014 | 2013 | Amount | Percent | |||||||||||
Revenues: | |||||||||||||||
Patient care revenues | $ | 56,637 | $ | 53,126 | $ | 3,511 | 7 | % | |||||||
Management revenues | 354 | 521 | (167 | ) | (32 | )% | |||||||||
Rental revenues | 88 | — | 88 | — | % | ||||||||||
Total revenues | 57,079 | 53,647 | 3,432 | 6 | % | ||||||||||
Expenses: | |||||||||||||||
Cost of services (exclusive of facility rent, depreciation and amortization) | 47,198 | 43,802 | 3,396 | 8 | % | ||||||||||
General and administrative expenses | 3,578 | 4,583 | (1,005 | ) | (22 | )% | |||||||||
Audit committee investigation expense | — | 302 | (302 | ) | (100 | )% | |||||||||
Facility rent expense | 1,695 | 1,702 | (7 | ) | — | % | |||||||||
Depreciation and amortization | 1,906 | 1,779 | 127 | 7 | % | ||||||||||
Salary retirement and continuation costs | 1,489 | 5 | 1,484 | 29,680 | % | ||||||||||
Total expense | 55,866 | 52,173 | 3,693 | 7 | % | ||||||||||
Income from Operations | 1,213 | 1,474 | (261 | ) | (18 | )% | |||||||||
Other Income (Expense): | |||||||||||||||
Interest expense, net | (2,644 | ) | (3,204 | ) | (560 | ) | (17 | )% | |||||||
Acquisition costs, net of gains | (8 | ) | (33 | ) | (25 | ) | (76 | )% | |||||||
Derivative gain | — | 1,989 | (1,989 | ) | (100 | )% | |||||||||
Loss on extinguishment of debt | (1,220 | ) | (6 | ) | 1,214 | 20,233 | % | ||||||||
Loss on disposal of assets | — | (6 | ) | (6 | ) | (100 | )% | ||||||||
Other (expense) income | (444 | ) | 15 | 459 | 3,060 | % | |||||||||
Total other expense, net | (4,316 | ) | (1,245 | ) | 3,071 | 247 | % | ||||||||
(Loss) Income from Continuing Operations Before Income Taxes | (3,103 | ) | 229 | 3,332 | 1,455 | % | |||||||||
Income tax benefit | 244 | 54 | 190 | 352 | % | ||||||||||
(Loss) Income from Continuing Operations | $ | (2,859 | ) | $ | 283 | $ | 3,142 | 1,110 | % |
Nine Months Ended September 30, | Increase (Decrease) | ||||||||||||||
(Amounts in 000’s) | 2014 | 2013 | Amount | Percent | |||||||||||
Revenues: | |||||||||||||||
Patient care revenues | $ | 165,196 | $ | 160,471 | $ | 4,725 | 3 | % | |||||||
Management revenues | 1,140 | 1,529 | (389 | ) | (25 | )% | |||||||||
Rental revenues | 88 | — | 88 | — | % | ||||||||||
Total revenues | 166,424 | 162,000 | 4,424 | 3 | % | ||||||||||
Expenses: | |||||||||||||||
Cost of services (exclusive of facility rent, depreciation and amortization) | 137,743 | 134,392 | 3,351 | 2 | % | ||||||||||
General and administrative expenses | 12,318 | 14,016 | (1,698 | ) | (12 | )% | |||||||||
Audit committee investigation expense | — | 2,284 | (2,284 | ) | (100 | )% | |||||||||
Facility rent expense | 5,085 | 5,077 | 8 | — | % | ||||||||||
Depreciation and amortization | 5,716 | 5,245 | 471 | 9 | % | ||||||||||
Salary retirement and continuation costs | 2,771 | 154 | 2,617 | 1,699 | % | ||||||||||
Total expense | 163,633 | 161,168 | 2,465 | 2 | % | ||||||||||
Income from Operations | 2,791 | 832 | 1,959 | 235 | % | ||||||||||
Other Income (Expense): | |||||||||||||||
Interest expense, net | (7,916 | ) | (9,459 | ) | (1,543 | ) | (16 | )% | |||||||
Acquisition costs, net of gains | (8 | ) | (610 | ) | (602 | ) | (99 | )% | |||||||
Derivative gain | — | 2,178 | (2,178 | ) | (100 | )% | |||||||||
Loss on extinguishment of debt | (1,803 | ) | (33 | ) | 1,770 | 5,364 | % | ||||||||
Loss on disposal of assets | — | (10 | ) | (10 | ) | (100 | )% | ||||||||
Other (expense) income | (636 | ) | 15 | 651 | 4,340 | % | |||||||||
Total other expense, net | (10,363 | ) | (7,919 | ) | 2,444 | 31 | % | ||||||||
Loss from Continuing Operations Before Income Taxes | (7,572 | ) | (7,087 | ) | 485 | 7 | % | ||||||||
Income tax benefit (expense) | 236 | (24 | ) | 260 | 1,083 | % | |||||||||
Loss from Continuing Operations | $ | (7,336 | ) | $ | (7,111 | ) | $ | 225 | 3 | % |
Nine Months Ended September 30, | ||||||||
(Amounts in 000’s) | 2014 | 2013 | ||||||
Net cash (used in) provided by operating activities - continuing operations | $ | (4,674 | ) | $ | 3,181 | |||
Net cash used in operating activities - discontinued operations | (1,441 | ) | (493 | ) | ||||
Net cash provided by (used in) investing activities - continuing operations | 2,365 | (5,441 | ) | |||||
Net cash (used in) provided by investing activities - discontinued operations | (778 | ) | 886 | |||||
Net cash flows (used in) provided by financing activities - continuing operations | (1,938 | ) | 827 | |||||
Net cash flows used in financing activities - discontinued operations | (41 | ) | (2,173 | ) | ||||
Net change in cash and cash equivalents | (6,507 | ) | (3,213 | ) | ||||
Cash and cash equivalents at beginning of period | 19,374 | 15,937 | ||||||
Cash and cash equivalents at end of period | $ | 12,867 | $ | 12,724 |
(Amounts in 000’s) | September 30, 2014 | December 31, 2013 | ||||||
Revolving credit facilities and lines of credit(a) | $ | 8,213 | $ | 8,503 | ||||
Senior debt - guaranteed by HUD | 18,469 | 4,063 | ||||||
Senior debt - guaranteed by USDA | 27,296 | 27,763 | ||||||
Senior debt - guaranteed by SBA | 5,774 | 5,954 | ||||||
Senior debt - bonds, net of discount(b) | 12,961 | 16,102 | ||||||
Senior debt - other mortgage indebtedness(c) | 63,390 | 78,408 | ||||||
Other debt | 1,151 | 625 | ||||||
Convertible debt issued in 2010, net of discount | — | 6,930 | ||||||
Convertible debt issued in 2011 | — | 4,459 | ||||||
Convertible debt issued in 2012 | 7,500 | 7,500 | ||||||
Convertible debt issued in 2014 | 6,500 | — | ||||||
Total | $ | 151,254 | $ | 160,307 | ||||
Less: current portion | 45,143 | 26,154 | ||||||
Less: portion included in liabilities of disposal group held for sale(a),(c) | 5,197 | — | ||||||
Less: portion included in liabilities of variable interest entity held for sale(b) | $ | 5,954 | $ | 6,034 | ||||
Notes payable and other debt, net of current portion | $ | 94,960 | $ | 128,119 |
(Amounts in 000’s) | |||
2015 | $ | 56,470 | |
2016 | 17,865 | ||
2017 | 14,262 | ||
2018 | 3,920 | ||
2019 | 1,989 | ||
Thereafter | 57,147 | ||
Subtotal | 151,653 | ||
Less: unamortized discounts ($190 classified as current) | (399 | ) | |
Total notes and other debt | $ | 151,254 |
Credit Facility | Balance at Sept 30, 2014 (000's) | Consolidated or Subsidiary Level Covenant Requirement | Financial Covenant | Measurement Period | Min/Max Financial Covenant Required | Financial Covenant Metric Achieved | Future Financial Covenant Metric Required | |||||||||
Gemino Lines of Credit | $ | 2,801 | Consolidated | Fixed Charge Coverage Ratio (FCCR) | Quarterly | 1.10 | 1.18 | 1.10 | ||||||||
Contemporary Healthcare Capital - Term Note and Line of Credit - CSCC Nursing, LLC | $ | 5,000 | Subsidiary | DSCR | Quarterly | 1.15 | 0.73 | * | 1.15 | |||||||
$ | 197 | Subsidiary | Minimum Occupancy | Quarterly | 70 | % | 67 | % | * | 70 | % | |||||
PrivateBank - Mortgage Note - Valley River Nursing, LLC; Park Heritage Nursing, LLC; Benton Nursing, LLC | $ | 11,068 | Subsidiary | Minimum EBITDAR | Quarterly | $ | 450 | $ | 413 | * | $ | 450 | ||||
Subsidiary | Fixed Charge Coverage Ratio (FCCR) | Quarterly | 1.05 | 0.92 | * | 1.05 |
Date of conversion | Conversion Price | Shares of Common Stock Issued | Debt and Interest Converted | ||||||||
2011: | |||||||||||
July | $ | 4.13 | 18,160 | $ | 75,000 | ||||||
November | $ | 3.92 | 19,132 | $ | 75,000 | ||||||
Subtotal | 37,292 | $ | 150,000 | ||||||||
2013: | |||||||||||
February | $ | 3.73 | 6,635 | $ | 24,749 | ||||||
March | $ | 3.73 | 6,635 | $ | 24,749 | ||||||
April | $ | 3.73 | 67,024 | $ | 250,000 | ||||||
August | $ | 3.73 | 284,878 | $ | 1,062,595 | ||||||
September | $ | 3.73 | 246,264 | $ | 918,553 | ||||||
October | $ | 3.73 | 448,215 | $ | 1,671,840 | ||||||
November | $ | 3.73 | 136,402 | $ | 508,778 | ||||||
December | $ | 3.73 | 82,326 | $ | 307,067 | ||||||
Subtotal | 1,278,379 | $ | 4,768,331 | ||||||||
2014: | |||||||||||
January | $ | 3.73 | 788,828 | 2,942,328 | |||||||
July | $ | 3.73 | 26,810 | 100,000 | |||||||
August | $ | 3.73 | 1,045,575 | 3,900,000 | |||||||
Subtotal | 1,861,213 | 6,942,328 | |||||||||
Total | 3,176,884 | 11,860,659 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(Amounts in 000’s) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Condensed Consolidated Statement of Operations Data: | ||||||||||||||||
Net loss | $ | (3,549 | ) | $ | (413 | ) | $ | (8,867 | ) | $ | (10,109 | ) | ||||
Discontinued operations | 690 | 696 | 1,531 | 2,998 | ||||||||||||
Net (loss) income from continuing operations (Per GAAP) | (2,859 | ) | 283 | (7,336 | ) | (7,111 | ) | |||||||||
Add back: | ||||||||||||||||
Interest expense, net | 2,644 | 3,204 | 7,916 | 9,459 | ||||||||||||
Income tax (benefit) expense | (244 | ) | (54 | ) | (236 | ) | 24 | |||||||||
Amortization of stock based compensation | 244 | 186 | 983 | 737 | ||||||||||||
Depreciation and amortization | 1,906 | 1,779 | 5,716 | 5,245 | ||||||||||||
Acquisition costs, net of gain | 8 | 33 | 8 | 610 | ||||||||||||
Loss on extinguishment of debt | 1,220 | 6 | 1,803 | 33 | ||||||||||||
Derivative gain | — | (1,989 | ) | — | (2,178 | ) | ||||||||||
Loss on disposal of assets | — | 6 | — | 10 | ||||||||||||
Audit committee investigation expense | — | 302 | — | 2,284 | ||||||||||||
Salary retirement and continuation costs | 1,489 | 5 | 2,771 | 154 | ||||||||||||
Other expenses (income) | 444 | (15 | ) | 636 | (15 | ) | ||||||||||
Adjusted EBITDA from continuing operations | 4,852 | 3,746 | 12,261 | 9,252 | ||||||||||||
Facility rent expense | 1,695 | 1,702 | 5,085 | 5,077 | ||||||||||||
Adjusted EBITDAR from continuing operations | $ | 6,547 | $ | 5,448 | $ | 17,346 | $ | 14,329 |
• | They are helpful in identifying trends in the Company’s day-to-day performance because the items excluded have little or no significance to the Company’s day-to-day operations; |
• | They provide an assessment of controllable expenses and afford management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance; and |
• | They provide data that assists management determine whether or not adjustments to current spending decisions are needed. |
• | should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; |
• | have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; |
• | may apply standards of materiality in a way that is different from what may be viewed as material to investors; and |
• | were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. |
Exhibit No. | Description | Method of Filing | ||
3.1 | Declaration of Conversion of AdCare Health Systems, Inc., an Ohio corporation, to AdCare Health Systems, Inc., a Georgia corporation | Incorporated by reference to Appendix A of the Registrant’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on October 29, 2013 | ||
3.2 | Certificate of Conversion of AdCare Health Systems, Inc. | Incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K filed on December 18, 2013 | ||
3.3 | Certificate for Conversion for Entities Converting Within or Off the Records of the Ohio Secretary of State | Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed on December 18, 2013 | ||
3.4 | Articles of Incorporation of AdCare Health Systems, Inc., filed with the Secretary of State of the State of Georgia on December 12, 2013 | Incorporated by reference to Exhibit 3.3 of the Registrant’s Current Report on Form 8-K filed on December 27, 2013 | ||
3.5 | Articles of Correction to Articles of Incorporation of AdCare Health Systems, Inc., filed with the Secretary of State of the State of Georgia on December 12, 2013 | Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed on December 27, 2013 | ||
3.6 | Bylaws of AdCare Health Systems, Inc. | Incorporated by reference to Exhibit 3.4 of the Registrant’s Current Report on Form 8-K filed on December 27, 2013 | ||
3.7 | Amendment No. 1 to the Bylaws of AdCare Health Systems, Inc. | Incorporated by reference to Exhibit 3.7 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013 | ||
4.1 | Form of Registration Rights Agreement, dated March 28, 2014, by and among AdCare Health Systems, Inc. and the investors named therein | Incorporated by reference to Exhibit 4.23 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013 | ||
4.2 | Form of 10% Subordinated Convertible Note Due April 30, 2015 issued by AdCare Health Systems, Inc. | Incorporated by reference to Exhibit 4.24 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013 | ||
4.3 | Form of Warrant, dated March 28, 2014, issued by AdCare Health Systems, Inc. to the placement agent and its affiliates in connection with the offering of 10% Subordinated Convertible Notes Due April 30, 2015 | Incorporated by reference from Exhibit 4.3 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 | ||
10.1 | Waiver and Amendment, dated February 10, 2014, by and among the Company and Gemino Healthcare Finance, LLC | Incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K filed on February 14, 2014 | ||
10.2 | Termination Notice, dated December 31, 2013 to Living Center, LLC, Kenmetal, LLC, Senior NH, LLC, BAN NH, LLC, and Oak Lake, LLC | Incorporated by reference to Exhibit 99.2 of the Registrant’s Current Report on Form 8-K filed on February 14, 2014 | ||
10.3 | Termination Notice, dated December 31, 2013 to Harrah Whites Meadows Nursing, LLC | Incorporated by reference to Exhibit 99.3 of the Registrant’s Current Report on Form 8-K filed on February 14, 2014 | ||
10.4 | Termination Notice, dated December 31, 2013 to Meeker Nursing, LLC | Incorporated by reference to Exhibit 99.4 of the Registrant’s Current Report on Form 8-K filed on February 14, 2014 | ||
10.5 | Termination Notice, dated December 31, 2013 to MCL Nursing, LLC | Incorporated by reference to Exhibit 99.5 of the Registrant’s Current Report on Form 8-K filed on February 14, 2014 |
10.6 | Letter agreement, dated February 28, 2014, by and among AdCare Health Systems, Inc., AdCare Administrative Services, LLC, AdCare Oklahoma Management, LLC, Hearth & Home of Ohio, Inc., BAN NH, LLC, Senior NH, LLC, Oak Lake, LLC, Kenmetal, LLC, Living Center, LLC, Meeker Nursing, LLC, Meeker Property Holdings, LLC, MCL Nursing, LLC, McLoud Property Holdings, LLC, Harrah Whites Meadows Nursing, LLC, Harrah property Holdings, LLC, Christopher F. Brogdon, GL Nursing, LLC, and Marsh Pointe Management, LLC | Incorporated by reference to Exhibit 10.333 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013 | ||
10.7 | Note, dated February 28, 2014, by and among AdCare Health Systems, Inc. and Christopher F. Brogdon | Incorporated by reference to Exhibit 10.334 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013 | ||
10.8 | Fourth Amendment to Secured Loan Agreement and Payment Guaranty, dated March 28, 2014, by and among Woodland Hills HC Property Holdings, LLC, Northridge HC&R Property Holdings, LLC, APH&R Property Holdings, LLC, Woodland Hills HC Nursing, LLC, Northridge HC&R Nursing, LLC, and APH&R Nursing, LLC, AdCare Health Systems, Inc., AdCare Property Holdings, LLC, AdCare Operations, LLC and KeyBank National Association | Incorporated by reference to Exhibit 10.335 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013 | ||
10.9 | Agreement Regarding Exit Fees, dated March 28, 2014, by and among Woodland Hills HC Property Holdings, LLC, Northridge HC&R Property Holdings, LLC, APH&R Property Holdings, LLC, Woodland Hills HC Nursing, LLC, Northridge HC&R Nursing, LLC, APH&R Nursing, LLC, AdCare Health Systems, Inc., AdCare Property Holdings, LLC, AdCare Operations, LLC and KeyBank National Association | Incorporated by reference to Exhibit 10.336 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013 | ||
10.10 | Sublease Termination Agreement, entered into May 6, 2014 and effective as of May 31, 2014, by and between Winter Haven Homes, Inc. and ADK Administrative Property, LLC | Incorporated by reference from Exhibit 10.10 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 | ||
10.11 | Amendment to Consulting Agreement, dated May 6, 2014, by and between AdCare Health Systems, Inc. and Christopher F. Brogdon | Incorporated by reference from Exhibit 10.11 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 | ||
10.12 | Amendment, dated May 15, 2014, by among AdCare Health Systems, Inc., AdCare Administrative Services, LLC, AdCare Oklahoma Management, LLC, Hearth & Home of Ohio, Inc., BAN NH, LLC, Senior NH, LLC, Oak Lake, LLC, Kenmetal, LLC, Living Center, LLC, Meeker Nursing, LLC, Meeker Property Holdings, LLC, MCL Nursing, LLC, McLoud Property Holdings, LLC, Harrah Whites Meadows Nursing, LLC, Harrah Property Holdings, LLC, Christopher F. Brogdon, and GL Nursing, LLC | Incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K filed on May 21, 2014 | ||
10.13 | Amended and Restated Note, dated May 15, 2014, by and among AdCare Health Systems, Inc. and Christopher F. Brogdon | Incorporated by reference to Exhibit 99.2 of the Registrant’s Current Report on Form 8-K filed on May 21, 2014 | ||
10.14 | Modification Agreement, dated as of July 2, 2014, by and among Glenvue H&R Property Holdings, LLC and The PrivateBank and Trust Company | Incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K filed on July 23, 2014 | ||
10.15 | Fifth Modification Agreement, dated as of July 22, 2014, by and among ADK Thomasville Operator, LLC, ADK Lumber City Operator, LLC, ADK LaGrange Operator, LLC, ADK Powder Springs Operator, LLC, ADK Thunderbolt Operator, LLC, Attalla Nursing ADK, LLC, Mountain Trace Nursing ADK, LLC, Mt. Kenn Nursing, LLC, Erin Nursing, LLC, CP Nursing, LLC Benton Nursing, LLC, Valley River Nursing, LLC, Park Heritage Nursing, LLC, Homestead Nursing, LLC, Woodland Manor Nursing, LLC, Mountain View Nursing, LLC, Little Rock HC&R Nursing, LLC, Glenvue H&R Nursing, LLC, Coosa Nursing ADK, LLC, QC Nursing, LLC, AdCare Health Systems, Inc., and The PrivateBank and Trust Company | Incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K filed on July 29, 2014 |
10.16 | Separation and Release Agreement, dated May 29, 2014, by and between AdCare Health Systems, Inc. and Boyd P. Gentry | Incorporated by reference from Exhibit 10.16 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 | ||
10.17 | Escrow Agreement, dated May 29, 2014, by and between AdCare Health Systems, Inc., Boyd P. Gentry, and Hughes, White, Kralicek, P.C. | Incorporated by reference from Exhibit 10.17 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 | ||
10.18 | Sixth Modification Agreement, dated as of September 24, 2014, by and among ADK Thomasville Operator, LLC, ADK Lumber City Operator, LLC, ADK LaGrange Operator, LLC, ADK Powder Springs Operator, LLC, ADK Thunderbolt Operator, LLC, Attalla Nursing ADK, LLC, Mountain Trace Nursing ADK, LLC, Mt. Kenn Nursing, LLC, Erin Nursing, LLC, CP Nursing, LLC Benton Nursing, LLC, Valley River Nursing, LLC, Park Heritage Nursing, LLC, Homestead Nursing, LLC, Woodland Manor Nursing, LLC, Mountain View Nursing, LLC, Little Rock HC&R Nursing, LLC, Glenvue H&R Nursing, LLC, Coosa Nursing ADK, LLC, QC Nursing, LLC, AdCare Health Systems, Inc., and The PrivateBank and Trust Company | Filed herewith | ||
10.19 | Promissory Note, dated September 24, 2014, by and among Woodland Manor Nursing, LLC, Glenvue H&R Nursing, LLC and The PrivateBank and Trust Company | Filed herewith | ||
10.20 | Guaranty of Payment and Performance, dated September 24, 2014, by and between AdCare Health Systems, Inc. and The PrivateBank and Trust Company | Filed herewith | ||
10.21 | Loan and Security Agreement, dated September 24, 2014, by and among Woodland Manor Nursing, LLC, Glenvue H&R Nursing, LLC and The PrivateBank and Trust Company | Filed herewith | ||
10.22 | Surplus Cash Note, dated September 24, 2014, by and between Woodland Manor Property Holdings, LLC and AdCare Administrative Services, LLC | Filed herewith | ||
10.23 | Security Instrument, Mortgage & Deed of Trust, dated September 24, 2014, by and between Woodland Manor Property Holdings, LLC and Housing & Healthcare Finance, LLC. | Filed herewith | ||
10.24 | Security Instrument, Mortgage & Deed of Trust, dated September 24, 2014, by and between Glenvue H&R Property Holdings, LLC and Housing & Healthcare Finance, LLC | Filed herewith | ||
10.25 | Healthcare Regulatory Agreement - Borrower, dated September 24, 2014, by and between Woodland Manor Property Holdings, LLC and The U.S. Department of Housing and Urban Development | Filed herewith | ||
10.26 | Healthcare Regulatory Agreement - Borrower, dated September 24, 2014, by and between Glenvue H&R Property Holdings, LLC and U.S. Department of Housing and Urban Development | Filed herewith | ||
10.27 | Healthcare Facility Note, dated September 24, 2014, by and between Woodland Manor Property Holdings, LLC and Housing & Healthcare Finance, LLC | Filed herewith | ||
10.28 | Healthcare Facility Note, dated September 24, 2014, by and between Glenvue H&R Property Holdings, LLC and Housing & Healthcare Finance, LLC. | Filed herewith | ||
10.29 | Separation Agreement, dated August 11, 2014, by and between AdCare Health Systems, Inc. and David Rubenstein | Filed herewith | ||
10.30 | Note, dated October 10, 2014, by and among AdCare Health Systems, Inc. and Riverchase Village ADK, LLC | Incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K filed on October 17 , 2014 | ||
10.31 | Second Amended and Restated Note, dated October 10, 2014, by and among AdCare Health Systems, Inc. and Christopher F. Brogdon | Incorporated by reference to Exhibit 99.2 of the Registrant’s Current Report on Form 8-K filed on October 17 , 2014 |
10.32 | Second Amendment, dated October 10, 2014, by among AdCare Health Systems, Inc., AdCare Administrative Services, LLC, AdCare Oklahoma Management, LLC, Hearth & Home of Ohio, Inc., BAN NH, LLC, Senior NH, LLC, Oak Lake, LLC, Kenmetal, LLC, Living Center, LLC, Meeker Nursing, LLC, Meeker Property Holdings, LLC, MCL Nursing, LLC, McLoud Property Holdings, LLC, Harrah Whites Meadows Nursing, LLC, Harrah Property Holdings, LLC, Christopher F. Brogdon, and GL Nursing, LLC | Incorporated by reference to Exhibit 99.3 of the Registrant’s Current Report on Form 8-K filed on October 17 , 2014 | ||
10.33 | Executive Employment Agreement, dated October 10, 2014, by and among AdCare Health Systems, Inc. and William McBride III | Incorporated by reference to Exhibit 99.4 of the Registrant’s Current Report on Form 8-K filed on October 17 , 2014 | ||
31.1 | Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act | Filed herewith | ||
31.2 | Certification of CAO pursuant to Section 302 of the Sarbanes-Oxley Act | Filed herewith | ||
32.1 | Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act | Filed herewith | ||
32.2 | Certification of CAO pursuant to Section 906 of the Sarbanes-Oxley Act | Filed herewith | ||
101 | The following financial information from AdCare Health Systems, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the three and nine months ended September 30, 2014 and 2013, (ii) Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013, (iii) Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013, (iv) Consolidated Statements of Stockholders’ Equity for the nine months ended September 30, 2014 and (v) the Notes to Consolidated Financial Statements. | Filed herewith |
ADCARE HEALTH SYSTEMS, INC. | |||
(Registrant) | |||
Date: | November 13, 2014 | /s/ William McBride III | |
William McBride III | |||
Chief Executive Officer | |||
(Principal Executive Officer) | |||
Date: | November 13, 2014 | /s/ Sheryl A. Wolf | |
Sheryl A. Wolf | |||
Chief Accounting Officer | |||
(Principal Financial Officer) |
(b) | All capitalized terms used and not otherwise defined in this Agreement shall hav e |
Facility | Borrower | Facilitv Name | Location | Beds |
1 | Borrower 1 | Released | 52 | |
2 | Borrower 2 | Lumber City Nursing and Rehabilitation Center | 93 Highway 19, Lumber City, Telfair County, Georgia | 86 |
3 | Borrower 3 | Released | ||
4 | Borrower 4 | LaGrange Nursing and Rehab Center | 2111 West Point Road, LaGrange , Troup County , Georgia | 138 |
5 | Borrower 5 | Powder Springs Nursing and Rehab Center | 3460 Powder Springs Road , Powder Springs, | 208 |
Cobb County, Georgia | ||||
6 | Borrower 6 | Released , | 85 | |
7 | Borrower 7 | Tara at Thunderbolt Nursing and Rehabilitation Center | 3223 Falligant Avenue, Thunderbolt , Chatham County, Georgia | 134 |
8 | Borrower 8 | Released | 50 | |
9 | Borrower 9 | Attalla Health Care | 915 Stewart Avenue SE, Attalla, Etowah County , Alabama | 182 |
10 | Borrower 10 | Mountain Trace Nursing and Rehabilitation Center | 417 Mountain Trace Road, Sylva, Jackson County, North Carolina | 106 |
11 | Borrower 11 | Autumn Breeze Healthcare Center | 1480 Sandtown Road, Marietta, Cobb County, Georgia | 109 |
12 | Borrower 12 | Southland Healthcare and Rehab Center | 606 Simmons Street, Dublin, Laurens County, Georgia | 126 |
13 | Borrower 13 | College Park Healthcare Center | 1765 Temple Avenue, College Park, Fulton County, Georgia | 100 |
14 | Borrower 14 | Bentonville Manor Nursing Hom e | 224 South Main Street, Bentonville, Benton County, Arkansas | 95 |
15 | Borrower 15 | River Valley Health and Rehabilitation Center | 5301 Whee ler Ave, Fort Smith, Sebastian County, Arkansas | 117 |
16 | Borrower 16 | Heritage Park Nursing Center | 1513 South Dixieland Road, Rogers, Benton County, Arkansas | 100 |
17 | Borrower 17 | Homestead Manor Nursing Home | 826 North Street, Stamps, LaFayette County, Arkansas | 94 |
18 | Borrower 18 | Released | ||
19 | Borrower 19 | Stone County Nursing and Rehabilitation Center | 706 Oak Grove Street, Mountain View, Stone County, Arkansas | 97 |
20 | Borrower 20 | Released | ||
21 | Borrower 2 1 | Little Rock Healthcare and Rehab, a/k/a West Markham Sub Acute & Rehab Center | 5720 W. Markham, Little Rock, Pulaski County, Arkansas | 157 |
22 | Borrower 22 | Released | ||
23 | Borrower 23 | Released | ||
24 | Borrower 24 | Released | ||
25 | Borrower 25 | Coosa Valley Healthcare | 513 Pineview Avenue, Glencoe, Etowah County, Alabama 35905 | 124 |
26 | Borrower 26 | Quail Creek Nursing and Rehabilitation Center | 13500 Brandon Place, Oklahoma City, Oklahoma County, Oklahoma | 118 |
Facility | Borrower | Owner/Sublessor | Date of Lease/Sublease |
1 | Borrower 1 | Released | |
2 | Borrower 2 | Owner, Master Lease Lessor - William Foster Sublessor - ADK Georgia, LLC | Master Lease - August 1, 20 10 Sublease-August1' 20 10 |
3 | Borrower 3 | Released | |
4 | Borrower 4 | Owner, Master Lease Lessor - William Foster Sublessor - ADK Georgia, LLC | Master Lease - August 1, 2010 Sublease-August1' 20 10 |
5 | Borrower 5 | Owner, Master Lease Lessor - William Foster Sublessor - ADK Georgia, LLC | Master Lease - August 1, 2010 Sublease-August1' 2010 |
6 | Borrower 6 | Released | |
7 | Borrower 7 | Owner , Master Lease Lessor- William Foster Sublessor - ADK Georgia, LLC | Master Lease - August 1, 2010 Sublease - September 1' 2010 |
8 | Borrower 8 | Released | |
9 | Borrower 9 | Owner, Borrower 9 | None |
10 | Borrower 10 | Owner, Borrower 10 | None |
11 | Borrower 11 | Owner, Mt. Kenn Property Holdings, LLC | May 1, 2011 |
12 | Borrower 12 | Owner, Erin Property Holdings, LLC | May 1, 2011 |
13 | Borrower 13 | Owner , CP Property Holdings, LLC | September 6, 2011 |
14 | Borrower 14 | Owner , Benton Property Holdings , LLC | August 31,2011 |
15 | Borrower 15 | Owner, Valley River Property Holdings, LLC | August 31, 2011 |
16 | Borrower 16 | Owner , Park Heritage Property Holdings, LLC | August 31, 2011 |
17 | Borrower 17 | Owner, Homestead Property Holdings, LLC | August 31, 2011 |
18 | Borrower 18 | Released | |
19 | Borrower 19 | Owner , Mount V Property Holdings , LLC | November 30, 2011 |
20 | Borrower 20 | Released | |
21 | Borrower 2 1 | Owner, Little Rock HC&R Property Holdings, LLC | April 1,2012 |
22 | Borrower 22 | Released | |
23 | Borrower 23 | Released | |
24 | Borrower 24 | Released | |
25 | Borrower 25 | Owner , Borrower 25 | None |
26 | Borrower 26 | Owner , QC Property Holdings, LLC | June 25, 2012, amended July 1, 2012 |
(g) | The statements contained in the Recitals to this Agreement are true and correct. |
By | /s/ David Rubenstein |
David Rubenstein, Manager of each Borrower |
ADCARE HEALTH SYSTEMS, INC. | |
By | /s/ Ronald W. Fleming |
Ronald W. Fleming, Chief Financial Officer |
THE PRIVATEBANK AND TRUST COMPANY | |
By | /s/ Amy K. Hallberg |
Amy K. Hallberg, Managing Director |
$1,500,000 Chicago, Illinois | September 24, 2014 |
WOODLAND MANOR NURSING, LLC | |
By: /s/ David Rubenstein | |
David Rubenstein, Manager | |
GLENVUE H&R NURSING, LLC | |
By: /s/ David Rubenstein | |
David Rubenstein, Manager |
Guarantor: | AdCare Health Systems, Inc. 1145 Hembree Road Roswell, Georgia 30076 Attention: David A. Tenwick, CEO | |
With a copy to: | Holt Ney Zatcoff & Wasserman, LLP 100 Galleria Parkway, Suite 1800 Atlanta, Georgia 30339 Attention: Gregory P. Youra | |
Lender: | The PrivateBank and Trust Company 120 South LaSalle Street Chicago, Illinois 60603 Attention: Amy K. Hallberg | |
With a copy to: | Seyfarth Shaw LLP 131 South Dearborn Street Suite 2400 Chicago, Illinois 60603 Attention: Alvin L. Kruse |
ADCARE HEALTH SYSTEMS, INC. | |
By | /s/ Ronald W. Fleming |
Ronald W. Fleming, Chief Financial Officer |
TABLE OF CONTENTS Article Page | |||
ARTICLE 1 INCORPORATION AND DEFINITIONS | 1 | ||
1.1. | Incorporation and Definitions. | 1 | |
1.2. | Other Terms Defined in Code | 8 | |
ARTICLE 2 REPRESENTATIONS AND WARRANTIES | 8 | ||
2.1. | Representations and Warranties | 8 | |
2.2. | Continuation of Representations and Warranties | 13 | |
ARTICLE 3 THE LOAN | 13 | ||
3.1. | Agreement to Lend | 13 | |
3.2. | Interest | 13 | |
3.3. | Principal Payments; Maturity Date | 14 | |
3.4. | Uniform Commercial Code Matters | 14 | |
ARTICLE 4 LOAN DOCUMENTS | 15 | ||
4.1. | Loan Documents | 15 | |
4.2. | Interest Rate Protection | 16 | |
ARTICLE 5 LOAN DISBURSEMENTS | 16 | ||
5.1. | Conditions to Loan Opening and Subsequent Disbursements | 17 | |
5.2. | Additional Conditions to Loan Opening and Subsequent Disbursements | 17 | |
5.3. | Termination of Agreement | 17 | |
ARTICLE 6 PAYMENT OF LOAN EXPENSES | 18 | ||
6.1. | Payment of Loan Expenses at Loan Opening | 18 | |
ARTICLE 7 FURTHER AGREEMENTS OF BORROWER | 18 | ||
7.1. | Fixtures and Personal Property; Concerning the Lease | 18 | |
7.2. | Insurance Policies | 19 | |
7.3. | Furnishing Information | 20 | |
7.4. | Excess Indebtedness | 22 | |
7.5. | Compliance with Laws | 22 | |
7.6. | ERISA Liabilities; Employee Plans | 22 | |
7.7. | Licensure; Notices of Agency Actions | 22 | |
7.8. | Project and Facility Accounts and Revenues | 23 | |
7.9. | Single-Asset Entity; Indebtedness; Distributions | 23 | |
7.10. | Restrictions on Transfer | 24 | |
7.11. | Leasing, Operation and Management of Project | 25 | |
7.12. | Debt Service Coverage Ratio | 25 | |
7.13. | Fixed Charge Coverage Ratio | 25 | |
7.14. | Rental Income Coverage of Debt Service Ratio | 26 | |
7.15. | Security Interest Matters | 26 |
7.16. | Field Audits | 26 |
7.17. | Collateral Records | 26 |
7.18. | Further Assistance | 26 |
ARTICLE 8 SECURITY | 27 | |
8.1. | Security for the Loan | 27 |
8.2. | Possession and Transfer of Collateral | 28 |
8.3. | Preservation of the Collateral | 28 |
8.4. | Others Actions as to any and all Collateral | 29 |
8.5. | Collateral in the Possession of a Warehouseman or Bailee | 29 |
8.6. | Letter-of-Credit Rights | 29 |
8.7. | Commercial Tort Claims | 29 |
8.8. | Electronic Chattel paper and Transferable Records | 29 |
8.9. | Directions for Payment of Accounts to Account Lender; Court Order for Payment of Accounts to Lender | 30 |
ARTICLE 9 ASSIGNMENTS, SALE AND ENCUMBRANCES | 30 | |
9.1. | Lender's Right to Assign | 30 |
9.2. | Prohibition of Assignments and Encumbrances by Borrowers | 30 |
ARTICLE 10 EVENTS OF DEFAULT BY BORROWER | 31 | |
10.1. | Event of Default Defined | 31 |
ARTICLE 11 LENDER'S REMEDIES UPON EVENT OF DEFAULT | 33 | |
11.1. | Remedies Conferred upon Lender | 33 |
11.2. | Possession and Assembly of Collateral | 34 |
11.3. | Sale of Collateral | 34 |
11.4. | Standards for Exercising Remedies | 35 |
11.5. | Code and Offset Rights | 35 |
11.6. | Additional Remedies | 36 |
11.7. | Right of Lender to Make Advances to Cure Event of Defaults; Obligatory Advances | 37 |
11.8. | Attorney-in-Fact | 37 |
11.9. | No Marshalling | 38 |
11.10. | Application of Proceeds | 38 |
11.11 | Attorneys' Fees | 38 |
11.12. | No Waiver | 38 |
11.13. | Default Rate | 39 |
ARTICLE 12 MISCELLANEOUS | 39 | |
12.1. | Time is of the Essence | 39 |
12.2. | Lender's Determination of Facts; Lender Approvals and Consents | 39 |
12.3. | Prior Agreements; No Reliance; Modifications | 39 |
12.4. | Disclaimer by Lender | 40 |
12.5. | Loan Expenses; Indemnification | 40 |
12.6. | Captions | 40 |
12.7. | Inconsistent Terms and Partial Invalidity | 40 |
12.8. | Gender and Number | 40 |
12.9. | Notices | 41 |
12.10. | Effect of Agreement | 41 |
12.11. | Refinancing Proposal | 41 |
12.12. | Construction | 42 |
12.13. | Governing Law | 42 |
12.14. | Waiver of Defenses | 42 |
12.15. | Consent to Jurisdiction | 42 |
12.16. | Waiver of Jury Trial | 42 |
12.17. | Counterparts; Facsimile Signatures | 43 |
12.18. | Customer Identification-USA Patriot Act Notice; OFAC and Bank Secrecy Act | 43 |
EXHIBITS | ||
EXHIBIT A - DIRECT AND INDIRECT OWNERSHIP OF BORROWERS |
Borrowers: | Woodland Manor Nursing, LLC Glenvue H&R Nursing, LLC 1145 Hembree Road Roswell, Georgia 30076 Attention: David Rubenstein |
With copies to: | Holt Ney Zatcoff & Wasserman, LLP 100 Galleria Parkway, Suite 1800 Atlanta, Georgia 30339 Attention: Gregory P. Youra |
Housing & Healthcare Finance, LLC 2 Wisconsin Circle, Suite 540 Chevy Chase, Maryland 20815 Attention: Erik Lindenauer | |
U.S. Department of Housing and Urban Development Office of Residential Care Facilities 451 Seventh Street SW Washington, DC 20410 | |
Lender: | The PrivateBank and Trust Company 120 South LaSalle Street Chicago, Illinois 60603 Attention: Amy K. Hallberg |
With a copy to: | Seyfarth Shaw LLP 131 South Dearborn Street Suite 2400 Chicago, Illinois 60603 Attention: Alvin L. Kruse |
WOODLAND MANOR NURSING, LLC |
GLENVUE H&R NURSING, LLC |
By /s/ David Rubenstein |
David Rubenstein, Manager of each Borrower |
THE PRIVATEBANK AND TRUST COMPANY |
By /s/ Amy K. Hallberg |
Amy K. Hallberg, Managing Director |
Surplus Cash Note Section 232 | U.S. Department of Housing and Urban Development Office of Residential Care Facilities | OMB Approval No. 2502-0605 (exp. 03/31/2014) |
Project Name: Eaglewood Care Center (a.k.a. Woodland Manor) |
FHA Project No: 043-22101 |
{1020/124/00098884.3} | ||
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{1020/124/00098884.3} | ||
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MAKER: | |
WOODLAND MANOR PROPERTY HOLDINGS, LLC | |
By: /s/ Ronald W. Fleming | |
Manager | |
MAKER: | |
WOODLAND MANOR PROPERTY HOLDINGS, LLC | |
By: /s/ Ronald W. Fleming | |
Manager | |
PAYEE: | |
ADCARE ADMINISTRATIVE SERVICES, LLC | |
By: /s/ Ronald W. Fleming | |
Manager |
{1020/124/00098884.3} | ||
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Security Instrument/ Mortgage/Deed of Trust Section 232 | U.S. Department of Housing and Urban Development Office of Residential Care Facilities | OMB Approval No. 2502-0605 (exp. 06/30/2017) |
{1020/124/00093481.2} | ||
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SECTION | PAGE | ||
1 | Definitions......................................................................... | 5 | |
2 | Uniform Commercial Code Security Agreement.............. | 14 | |
3 | Control of Deposit Accounts............................................. | 15 | |
4 | Assignment of Leases; Leases Affecting the | ||
Mortgaged Property .......................................................... | 16 | ||
5 | Payment of Indebtedness; Performance Under the Loan | ||
Documents; Prepayment Premium…................................ | 17 | ||
6 | Exculpation ....................................................................... | 17 | |
7 | Deposits for Taxes, Insurance and Other Charges............. | 18 | |
8 | Imposition Deposits .......................................................... | 19 | |
9 | Regulatory Agreement ...................................................... | 20 | |
10 | Application of Payments .................................................. | 21 | |
11 | Compliance with Laws...................................................... | 21 | |
12 | Use of Property ................................................................. | 21 | |
13 | Protection of Lender’s Security ........................................ | 22 | |
14 | Inspection .......................................................................... | 22 | |
15 | Books and Records; Financial Reporting.......................... | 22 | |
16 | Taxes; Operating Expenses ............................................... | 23 | |
17 | Liens; Encumbrances ........................................................ | 23 | |
18 | Preservation, Management and Maintenance of | ||
the Mortgaged Property..................................................... | 24 | ||
19 | Property and Liability Insurance....................................... | 24 | |
20 | Condemnation .................................................................. | 27 | |
21 | Transfers of the Mortgaged Property or Interests in | ||
Borrower .......................................................................... | 27 | ||
22 | Events of Default.............................................................. | 28 | |
23 | Remedies Cumulative ...................................................... | 29 | |
24 | Forbearance....................................................................... | 29 | |
25 | Loan Charges………………………………………......... | 30 | |
26 | Waiver of Statute of Limitations....................................... | 30 | |
27 | Waiver of Marshalling ...................................................... | 30 | |
28 | Further Assurances............................................................ | 30 | |
29 | Estoppel Certificate........................................................... | 31 | |
30 | Governing Law; Consent to Jurisdiction and Venue ........ | 31 | |
31 | Notice ............................................................................... | 31 | |
32 | Sale of Note; Change in Servicer ..................................... | 32 | |
33 | Single Asset Borrower ..................................................... | 32 | |
{1020/124/00093481.2} | ||
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34 | Successors and Assigns Bound ........................................ | 33 | |
35 | Joint and Several Liability ............................................... | 33 | |
36 | Relationships of Parties; No Third Party Beneficiary....... | 33 | |
37 | Severability; Amendments................................................ | 33 | |
38 | Rules of Construction ...................................................... | 33 | |
39 | Loan Servicing ................................................................. | 34 | |
40 | Disclosure of Information ................................................ | 34 | |
41 | No Change in Facts or Circumstances ............................. | 34 | |
42 | Estoppel............................................................................ | 34 | |
43 | Acceleration; Remedies ................................................... | 34 | |
44 | Federal Remedies ............................................................. | 35 | |
45 | Remedies for Waste ......................................................... | 35 | |
46 | Termination of HUD Rights and References ................... | 35 | |
47 | [Construction Financing] ................................................. | 35 | |
48 | Environmental Hazards ................................................... | 36 | |
49 | Counterpart Signatures..................................................... | 43 | |
50 | [State Law Requirements]………………………............ | 43 | |
51 | Attached Exhibits……………………………………...... | 43 | |
EXHIBIT A - LEGAL DESCRIPTION OF THE LAND ................................................ | 45 | ||||
EXHIBIT B - MODIFICATION TO THE SECURITY INSTRUMENT.......................... | 46 |
{1020/124/00093481.2} | ||
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OPEN-END HEALTHCARE MORTGAGE DEED, | ||||
ASSIGNMENT OF LEASES, RENTS AND REVENUE AND | ||||
SECURITY AGREEMENT |
{1020/124/00093481.2} | ||
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(1) | the Land; |
(2) | the Healthcare Facility; |
(3) | the Improvements; |
(4) | the Fixtures; |
(5) | the Personalty; |
(6) | all current and future rights, including air rights, development rights, zoning rights and other similar rights or interests, easements, tenements, rights-of-way, strips and gores of land, streets, alleys, roads, sewer rights, waters, watercourses, and appurtenances related to or benefiting the Land or the Improvements, or both, and all rights-of-way, streets, alleys and roads which may have been or may in the future be vacated; |
(7) | all insurance policies covering any of the Mortgaged Property, and all proceeds paid or to be paid by any insurer of the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property, whether or not Borrower obtained the insurance pursuant to Lender’s requirement; |
(8) | all awards, payments and other compensation made or to be made by any Governmental Authority with respect to the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property, including any awards or settlements resulting from condemnation proceedings or the total or partial taking of the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property under the power of eminent domain or otherwise and including any conveyance in lieu thereof; |
(9) | all contracts, options and other agreements for the sale of the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property entered into by Borrower now or in the future, including cash or securities deposited to secure performance by parties of their obligations; |
(10) | all proceeds (cash or non-cash), liquidated claims or other consideration from the conversion, voluntary or involuntary, of any of the Mortgaged Property and the right to collect such proceeds, liquidated claims or other consideration; |
{1020/124/00093481.2} | ||
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(11) | all revenue generated by any portion of the Mortgaged Property and any Leases; |
(12) | all earnings, royalties, instruments, accounts (including any deposit accounts), Accounts Receivable, supporting obligations, issues and profits from the Land, the Improvements, the Healthcare Facility, or any other part of the Mortgaged Property, and all undisbursed proceeds of the Loan; |
(13) | all Imposition Deposits; |
(14) | all refunds or rebates of Impositions by any Governmental Authority or insurance company (other than refunds applicable to periods before the real property tax year in which this Security Instrument is dated); |
(15) | any security deposits under any Lease; |
(16) | all names under or by which any of the above Mortgaged Property may be operated or known, and all trademarks, trade names, and goodwill relating to any of the Mortgaged Property; |
(17) | all deposits and/or escrows held by or on behalf of Lender under Ancillary Agreements; |
(18) | all awards, payments, settlements or other compensation resulting from litigation involving the Project; |
(19) | any and all licenses, bed authority, and/or certificates of need required to operate the Healthcare Facility and receive the benefits and reimbursements under a provider agreement with Medicaid, Medicare, any State or local programs, healthcare insurers or other assistance providers relied upon by HUD to insure this Security Instrument, to the extent allowed by law, and regardless of whether such rights and contracts are held by Borrower or an operator; and |
(20) | all receipts, revenues, income and other moneys received by or on behalf of the Healthcare Facility, including all Accounts Receivable, all contributions, donations, gifts, grants, bequests, all revenues derived from the operation of the Healthcare Facility and all rights to receive the same, whether in the form of Accounts Receivable, contract rights, chattel paper, instruments or other rights whether now owned or held or later acquired by or in connection with the operation of the Healthcare Facility. |
{1020/124/00093481.2} | ||
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(1) | physically changes, or permits changes to, the Mortgaged Property, whether negligently or intentionally, in a manner that reduces its value; |
(2) | fails to maintain the Mortgaged Property in decent, safe, and sanitary condition and in good repair; |
(3) | fails to pay, or cause to be paid, before delinquency any Taxes secured by a lien having priority over this Security Instrument; |
(4) | materially fails to comply with covenants in the Note, this Security Instrument, Borrower’s Regulatory Agreement, or any Loan Document, respecting physical care, maintenance, construction, abandonment, demolition, or insurance against casualty of the Mortgaged Property; or |
{1020/124/00093481.2} | ||
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(5) | retains possession of Rents to which Lender or its assigns have the right of possession under the terms of the Loan Documents. |
{1020/124/00093481.2} | ||
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(1) | an amount sufficient to provide Lender with funds to pay the next mortgage insurance premium if this Security Instrument and the Note are insured by HUD, or a monthly service charge, if they are held by HUD, as follows: |
(i) | If and so long as the Note is insured under the provisions of the National Housing Act, as amended, an amount sufficient to accumulate in the hands of Lender one month prior to its due date the annual mortgage insurance premium; or |
(ii) | If and so long as the Note and this Security Instrument are held by HUD, a monthly service charge in an amount equal to the lesser of the amount permitted by law the amount set forth in Program Obligations, o computed for each successive year beginning with the |
{1020/124/00093481.2} | ||
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(2) | a sum equal to the ground rents, if any, next due, plus the premiums that will next become due and payable on policies of fire and other property insurance covering the premises covered hereby, plus water rates, Taxes, municipal/government utility charges and special assessments next due on the premises covered hereby (all as estimated by Lender) less all sums already paid therefore divided by the number of months to the date when such ground rents, premiums, water rates, Taxes, municipal/utility charges and special assessments will become delinquent, such sums to be held by Lender in trust to pay said ground rents, premiums, water rates, Taxes, and special assessments; |
(3) | provided that, all payments and deposits mentioned in the two preceding subsections of this Section and all payments to be made under the Note shall be added together and the aggregate amount thereof shall be paid each month in a single payment or deposit to be applied by Lender to the following items in the order set forth: |
(i) | mortgage insurance premium charges under the Contract of Insurance; |
(ii) | ground rents, if Lender has required them to be escrowed with Lender, Taxes, special assessments, water rates, municipal/government utility charges, fire and other property insurance premiums; |
(iii) | interest on the Note; and |
(iv) | amortization of the principal of the Note. |
{1020/124/00093481.2} | ||
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(1) | fraud or material misrepresentation or material omission by Borrower, any of its officers, directors, trustees, general partners, members, managers or any guarantor in connection with (i) the Loan Application for or creation of the Indebtedness, (ii) any financial statements, or other report or information provided to Lender or any governmental entity during the term of the Indebtedness, or (iii) any request for Lender’s consent to any proposed action under this Security Instrument or the Note; |
(2) | the commencement of a forfeiture action or proceeding, whether civil or criminal, which, in Lender’s reasonable judgment, could result in a forfeiture of the Mortgaged Property or otherwise materially impair the lien created by this Security Instrument or Lender’s interest in the Mortgaged Property; |
(3) | any material failure by Borrower to perform or comply with any of its obligations under this Security Instrument (other than those otherwise specified in this Section 22), as and when required, which continues for a period of thirty (30) calendar days after Notice of such failure by Lender to Borrower, Lender shall extend such 30-day period by such time as Lender reasonably determines is necessary to correct the failure for so long as Lender determines, in its discretion, that: (i) Borrower is timely satisfying all payment obligations in the Loan Documents; (ii) none of the Permits and Approvals is at substantial and imminent risk of being terminated; (iii) such failure cannot reasonably be corrected during such 30-day period, but can reasonably be corrected in a timely manner, and (iv) Borrower commences to correct such failure, or cause such correction to be commenced, during such 30-day period and thereafter diligently and continuously proceeds to correct, or cause correction of, such failure. However, no such Notice shall apply in the case of any such material failure which could, in Lender’s judgment, absent immediate exercise by Lender of a right or remedy under this Security Instrument, result in harm to Lender or impairment of the Note or this Security Instrument; |
(4) | so long as the Loan is insured or held by HUD, any failure by Borrower to |
{1020/124/00093481.2} | ||
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(5) | so long as the Loan is insured or held by HUD, any Event of Default pursuant to the Operator’s Regulatory Agreement, provided that such Event of Default pursuant to the Operator’s Regulatory Agreement may only be treated as a default under this Security Instrument if HUD requests Lender to treat it as such. |
{1020/124/00093481.2} | ||
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BORROWER: | Woodland Manor Property Holdings, LLC | |
1145 Hembree Rd. | ||
Roswell, GA 30076 | ||
Attention: Manager | ||
LENDER: | Housing & Healthcare Finance, LLC | |
2 Wisconsin Circle, Ste. 540 | ||
Chevy Chase, Maryland 20815 | ||
Attention: Erik Lindenauer, Director |
{1020/124/00093481.2} | ||
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(1) | “Hazardous Materials” means petroleum and petroleum products and compounds containing them, including gasoline, diesel fuel and oil; explosives; flammable materials; radioactive materials; polychlorinated biphenyls (“PCBs”) and compounds containing them; lead and lead-based paint; asbestos or asbestos-containing materials in any form that is or could |
{1020/124/00093481.2} | ||
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(2) | “Hazardous Materials Laws” means all federal, state, and local laws, ordinances and regulations and standards, rules, policies and other governmental requirements, administrative rulings and court judgments and decrees in effect now or in the future and including all amendments that relate to Hazardous Materials and apply to Borrower or to the Mortgaged Property. Hazardous Materials Laws include, but are not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq., the Clean Water Act, 33 U.S.C. Section 1251, et seq., and the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101, et seq., and their state analogs. |
(3) | “Environmental Permit” means any permit, license, or other authorization issued under any Hazardous Materials Law with respect to any activities or businesses conducted on or in relation to the Mortgaged Property. |
(i) | any occurrence or condition on the Mortgaged Property or any other property of Borrower that is adjacent to the Mortgaged Property, which occurrence or condition is or may be in violation of Hazardous Materials Laws; or |
(ii) | any violation of or noncompliance with the terms of any Environmental Permit with respect to the Mortgaged Property or any property of Borrower that is adjacent to the Mortgaged Property. |
{1020/124/00093481.2} | ||
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(1) | Borrower has not at any time engaged in, caused or permitted any Prohibited Activities or Conditions; |
(2) | to the best of Borrower’s knowledge after reasonable and diligent inquiry, no Prohibited Activities or Conditions exist or have existed; |
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(3) | the Mortgaged Property does not now contain any underground storage tanks, and, to the best of Borrower’s knowledge after reasonable and diligent inquiry, the Mortgaged Property has not contained any underground storage tanks in the past. If there is an underground storage tank located on the Mortgaged Property that has been previously disclosed by Borrower to Lender in writing, that tank complies with all requirements of Hazardous Materials Laws; |
(4) | Borrower has complied with all Hazardous Materials Laws, including all requirements for notification regarding releases of Hazardous Materials. Without limiting the generality of the foregoing, Borrower has obtained all Environmental Permits required for the operation of the Mortgaged Property in accordance with Hazardous Materials Laws now in effect and all such Environmental Permits are in full force and effect; no event has occurred with respect to the Mortgaged Property that constitutes, or with the passing of time or the giving of Notice would constitute, noncompliance with the terms of any Environmental Permit; |
(5) | to the best of Borrower’s knowledge after reasonable and diligent inquiry, there are no actions, suits, claims or proceedings, pending or threatened, that involve the Mortgaged Property and allege, arise out of, or relate to any Prohibited Activities or Conditions; and |
(6) | Borrower has not received any complaint, order, notice of violation or other communication from any Governmental Authority with regard to air emissions, water discharges, noise emissions or Hazardous Materials, or any other environmental, health or safety matters affecting the Mortgaged Property or any other property of Borrower that is adjacent to the Mortgaged Property that have not previously been resolved legally. |
(1) | Borrower’s discovery of any Prohibited Activities or Conditions; |
(2) | Borrower’s receipt of or knowledge of any complaint, order, notice of violation or other communication from any Governmental Authority or other |
{1020/124/00093481.2} | ||
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(3) | any representation or warranty in this Section 48 becoming untrue after the date of this Security Instrument. |
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(i) | any breach of any representation or warranty of Borrower in this Section 48; |
(ii) | any failure by Borrower to perform or comply with any of its obligations under this Section 48; |
(iii) | the existence or alleged existence of any Prohibited Activities or Conditions; |
(iv) | the actual or alleged violation of any Hazardous Materials Law. |
{1020/124/00093481.2} | ||
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(1) | any amendment or modification of any Loan Document; |
(2) | any extensions of time for performance required by any Loan Document; |
(3) | the accuracy or inaccuracy of any representations and warranties made by Borrower under this Security Instrument or any other Loan Document; |
(4) | the release of Borrower or any other person, by Lender or by operation of law, from performance of any obligation under any Loan Document; |
(5) | the release or substitution in whole or in part of any security for the Indebtedness; and |
(6) | Lender’s failure to properly perfect any lien or security interest given as security for the Indebtedness. |
(1) | pay or satisfy any judgment or decree that may be entered against any Indemnitee or Indemnitees in any legal or administrative proceeding incident to any matters against which Indemnitees are entitled to be indemnified under this Section 48; |
(2) | reimburse Indemnitees for any expenses paid or incurred in connection with any matters against which Indemnitees are entitled to be indemnified under this Section 48; and |
(3) | reimburse Indemnitees for any and all expenses, including fees and out-of- |
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x | Exhibit A | Description of the Land (required) | ||
x | Exhibit B | Modifications to Security Instrument | ||
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By: | /s/ Ronald W. Fleming | |||
Name: | Ronald W. Fleming | |||
Title: | Manager |
STATE OF GEORGIA | ) | |||
) ss: | ||||
COUNTY OF FULTON | ) |
[SEAL] | /s/ Ellen W. Smith | |||
Notary Public |
My Commission Expires: | ||||
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Security Instrument/ Mortgage/Deed of Trust Section 232 | U.S. Department of Housing and Urban Development Office of Residential Care Facilities | OMB Approval No. 2502-0605 (exp. 06/30/2017) |
{1020/125/00094134.4} | ||
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SECTION | PAGE | ||
1 | Definitions............................................................................. | 5 | |
2 | Uniform Commercial Code Security Agreement.................. | 14 | |
3 | Control of Deposit Accounts…………………...………….. | 15 | |
4 | Assignment of Leases; Leases Affecting the | ||
Mortgaged Property ............................................................. | 16 | ||
5 | Payment of Indebtedness; Performance Under the Loan | ||
Documents; Prepayment Premium…................................... | 17 | ||
6 | Exculpation .......................................................................... | 17 | |
7 | Deposits for Taxes, Insurance and Other Charges ............... | 18 | |
8 | Imposition Deposits ............................................................. | 19 | |
9 | Regulatory Agreement ......................................................... | 20 | |
10 | Application of Payments ...................................................... | 21 | |
11 | Compliance with Laws ........................................................ | 21 | |
12 | Use of Property .................................................................... | 21 | |
13 | Protection of Lender’s Security ........................................... | 22 | |
14 | Inspection.............................................................................. | 22 | |
15 | Books and Records; Financial Reporting............................. | 22 | |
16 | Taxes; Operating Expenses................................................... | 23 | |
17 | Liens; Encumbrances ........................................................... | 23 | |
18 | Preservation, Management and Maintenance of | ||
the Mortgaged Property ........................................................ | 24 | ||
19 | Property and Liability Insurance........................................... | 24 | |
20 | Condemnation ...................................................................... | 27 | |
21 | Transfers of the Mortgaged Property or Interests in | ||
Borrower ............................................................................... | 27 | ||
22 | Events of Default .................................................................. | 28 | |
23 | Remedies Cumulative ........................................................... | 29 | |
24 | Forbearance........................................................................... | 29 | |
25 | Loan Charges………………………………………………. | 30 | |
26 | Waiver of Statute of Limitations........................................... | 30 | |
27 | Waiver of Marshalling .......................................................... | 30 | |
28 | Further Assurances................................................................ | 30 | |
29 | Estoppel Certificate............................................................... | 31 | |
30 | Governing Law; Consent to Jurisdiction and Venue ............ | 31 | |
31 | Notice.................................................................................... | 31 | |
32 | Sale of Note; Change in Servicer.......................................... | 32 | |
33 | Single Asset Borrower ......................................................... | 32 | |
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34 | Successors and Assigns Bound............................................. | 33 | |
35 | Joint and Several Liability ................................................... | 33 | |
36 | Relationships of Parties; No Third Party Beneficiary........... | 33 | |
37 | Severability; Amendments.................................................... | 33 | |
38 | Rules of Construction ........................................................... | 33 | |
39 | Loan Servicing...................................................................... | 34 | |
40 | Disclosure of Information..................................................... | 34 | |
41 | No Change in Facts or Circumstances.................................. | 34 | |
42 | Estoppel................................................................................. | 34 | |
43 | Acceleration; Remedies ....................................................... | 34 | |
44 | Federal Remedies................................................................. | 35 | |
45 | Remedies for Waste ............................................................. | 35 | |
46 | Termination of HUD Rights and References ....................... | 35 | |
47 | [Construction Financing] ..................................................... | 35 | |
48 | Environmental Hazards ........................................................ | 36 | |
49 | Counterpart Signatures.......................................................... | 43 | |
50 | [State Law Requirements]…………………………………. | 43 | |
51 | Attached Exhibits………………………………………….. | 43 | |
EXHIBIT A - LEGAL DESCRIPTION OF THE LAND .............................................. | 45 | ||||
EXHIBIT B - MODIFICATION TO THE SECURITY INSTRUMENT........................ | 46 |
{1020/125/00094134.4} | ||
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HEALTHCARE DEED TO SECURE DEBT, | ||||
ASSIGNMENT OF LEASES, RENTS AND REVENUE AND | ||||
SECURITY AGREEMENT |
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(1) | the Land; |
(2) | the Healthcare Facility; |
(3) | the Improvements; |
(4) | the Fixtures; |
(5) | the Personalty; |
(6) | all current and future rights, including air rights, development rights, zoning rights and other similar rights or interests, easements, tenements, rights-of-way, strips and gores of land, streets, alleys, roads, sewer rights, waters, watercourses, and appurtenances related to or benefiting the Land or the Improvements, or both, and all rights-of-way, streets, alleys and roads which may have been or may in the future be vacated; |
(7) | all insurance policies covering any of the Mortgaged Property, and all proceeds paid or to be paid by any insurer of the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property, whether or not Borrower obtained the insurance pursuant to Lender’s requirement; |
(8) | all awards, payments and other compensation made or to be made by any Governmental Authority with respect to the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property, including any awards or settlements resulting from condemnation proceedings or the total or partial taking of the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property under the power of eminent domain or otherwise and including any conveyance in lieu thereof; |
(9) | all contracts, options and other agreements for the sale of the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property entered into by Borrower now or in the future, including cash or securities deposited to secure performance by parties of their obligations; |
(10) | all proceeds (cash or non-cash), liquidated claims or other consideration from the |
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(11) | all revenue generated by any portion of the Mortgaged Property and any Leases; |
(12) | all earnings, royalties, instruments, accounts (including any deposit accounts), Accounts Receivable, supporting obligations, issues and profits from the Land, the Improvements, the Healthcare Facility, or any other part of the Mortgaged Property, and all undisbursed proceeds of the Loan; |
(13) | all Imposition Deposits; |
(14) | all refunds or rebates of Impositions by any Governmental Authority or insurance company (other than refunds applicable to periods before the real property tax year in which this Security Instrument is dated); |
(15) | any security deposits under any Lease; |
(16) | all names under or by which any of the above Mortgaged Property may be operated or known, and all trademarks, trade names, and goodwill relating to any of the Mortgaged Property; |
(17) | all deposits and/or escrows held by or on behalf of Lender under Ancillary Agreements; |
(18) | all awards, payments, settlements or other compensation resulting from litigation involving the Project; |
(19) | any and all licenses, bed authority, and/or certificates of need required to operate the Healthcare Facility and receive the benefits and reimbursements under a provider agreement with Medicaid, Medicare, any State or local programs, healthcare insurers or other assistance providers relied upon by HUD to insure this Security Instrument, to the extent allowed by law, and regardless of whether such rights and contracts are held by Borrower or an operator; and |
(20) | all receipts, revenues, income and other moneys received by or on behalf of the Healthcare Facility, including all Accounts Receivable, all contributions, donations, gifts, grants, bequests, all revenues derived from the operation of the Healthcare Facility and all rights to receive the same, whether in the form of Accounts Receivable, contract rights, chattel paper, instruments or other rights whether now owned or held or later acquired by or in connection with the operation of the Healthcare Facility. |
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(1) | physically changes, or permits changes to, the Mortgaged Property, whether negligently or intentionally, in a manner that reduces its value; |
(2) | fails to maintain the Mortgaged Property in decent, safe, and sanitary condition and in good repair; |
(3) | fails to pay, or cause to be paid, before delinquency any Taxes secured by a lien having priority over this Security Instrument; |
(4) | materially fails to comply with covenants in the Note, this Security Instrument, Borrower’s Regulatory Agreement, or any Loan Document, |
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(5) | retains possession of Rents to which Lender or its assigns have the right of possession under the terms of the Loan Documents. |
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(1) | an amount sufficient to provide Lender with funds to pay the next mortgage insurance premium if this Security Instrument and the Note are insured by HUD, or a monthly service charge, if they are held by HUD, as follows: |
(i) | If and so long as the Note is insured under the provisions of the National Housing Act, as amended, an amount sufficient to accumulate in the hands of Lender one month prior to its due date the annual mortgage insurance premium; or |
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(ii) | If and so long as the Note and this Security Instrument are held by HUD, a monthly service charge in an amount equal to the lesser of the amount permitted by law or the amount set forth in Program Obligations computed for each successive year beginning with the first day of the month following the date of this Security Instrument, or the first day of the month following assignment, if the Note and this Security Instrument are assigned to HUD without taking into account delinquencies or prepayment; and |
(2) | a sum equal to the ground rents, if any, next due, plus the premiums that will next become due and payable on policies of fire and other property insurance covering the premises covered hereby, plus water rates, Taxes, municipal/government utility charges and special assessments next due on the premises covered hereby (all as estimated by Lender) less all sums already paid therefore divided by the number of months to the date when such ground rents, premiums, water rates, Taxes, municipal/utility charges and special assessments will become delinquent, such sums to be held by Lender in trust to pay said ground rents, premiums, water rates, Taxes, and special assessments; |
(3) | provided that, all payments and deposits mentioned in the two preceding subsections of this Section and all payments to be made under the Note shall be added together and the aggregate amount thereof shall be paid each month in a single payment or deposit to be applied by Lender to the following items in the order set forth: |
(i) | mortgage insurance premium charges under the Contract of Insurance; |
(ii) | ground rents, if Lender has required them to be escrowed with Lender, Taxes, special assessments, water rates, municipal/government utility charges, fire and other property insurance premiums; |
(iii) | interest on the Note; and |
(iv) | amortization of the principal of the Note. |
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(1) | fraud or material misrepresentation or material omission by Borrower, any of its officers, directors, trustees, general partners, members, managers or any guarantor in connection with (i) the Loan Application for or creation of the Indebtedness, (ii) any financial statements, or other report or information provided to Lender or any governmental entity during the term of the Indebtedness, or (iii) any request for Lender’s consent to any proposed action under this Security Instrument or the Note; |
(2) | the commencement of a forfeiture action or proceeding, whether civil or criminal, which, in Lender’s reasonable judgment, could result in a forfeiture of the Mortgaged Property or otherwise materially impair the lien created by this Security Instrument or Lender’s interest in the Mortgaged Property; |
(3) | any material failure by Borrower to perform or comply with any of its obligations under this Security Instrument (other than those otherwise specified in this Section 22), as and when required, which continues for a period of thirty (30) calendar days after Notice of such failure by Lender to Borrower, Lender shall extend such 30-day period by such time as Lender reasonably determines is necessary to correct the failure for so long as Lender determines, in its discretion, that: (i) Borrower is timely satisfying all payment obligations in the Loan Documents; (ii) none of the Permits and Approvals is at substantial and imminent risk of being terminated; (iii) such failure cannot reasonably be corrected during such 30-day period, but can reasonably be corrected in a timely manner, and (iv) Borrower commences to correct such failure, or cause such correction to be commenced, during such 30-day period and thereafter diligently and continuously proceeds to correct, or cause correction of, such failure. However, no such Notice shall apply in the case of any such material failure which could, in Lender’s judgment, absent immediate exercise by Lender of a right or remedy under this Security Instrument, result in harm to Lender or impairment of the Note |
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(4) | so long as the Loan is insured or held by HUD, any failure by Borrower to perform any of its obligations as and when required under the Borrower’s Regulatory Agreement, which failure continues beyond the applicable cure period, if any, specified in the Borrower’s Regulatory Agreement; however, violations under the terms of the Borrower’s Regulatory Agreement may only be treated as a default under this Security Instrument if HUD requests Lender to treat them as such; and, |
(5) | so long as the Loan is insured or held by HUD, any Event of Default pursuant to the Operator’s Regulatory Agreement, provided that such Event of Default pursuant to the Operator’s Regulatory Agreement may only be treated as a default under this Security Instrument if HUD requests Lender to treat it as such. |
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BORROWER: | Glenvue H&R Property Holdings, LLC | |
1145 Hembree Rd. | ||
Roswell, GA 30076 | ||
Attention: Manager | ||
LENDER: | Housing & Healthcare Finance, LLC | |
2 Wisconsin Circle, Ste. 540 | ||
Chevy Chase, Maryland 20815 | ||
Attention: Erik Lindenauer, Director |
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(1) | “Hazardous Materials” means petroleum and petroleum products and compounds containing them, including gasoline, diesel fuel and oil; explosives; flammable materials; radioactive materials; polychlorinated |
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(2) | “Hazardous Materials Laws” means all federal, state, and local laws, ordinances and regulations and standards, rules, policies and other governmental requirements, administrative rulings and court judgments and decrees in effect now or in the future and including all amendments that relate to Hazardous Materials and apply to Borrower or to the Mortgaged Property. Hazardous Materials Laws include, but are not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq., the Clean Water Act, 33 U.S.C. Section 1251, et seq., and the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101, et seq., and their state analogs. |
(3) | “Environmental Permit” means any permit, license, or other authorization issued under any Hazardous Materials Law with respect to any activities or businesses conducted on or in relation to the Mortgaged Property. |
(i) | any occurrence or condition on the Mortgaged Property or any other property of Borrower that is adjacent to the Mortgaged Property, which occurrence or condition is or may be in violation of Hazardous Materials Laws; or |
(ii) | any violation of or noncompliance with the terms of any Environmental |
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(1) | Borrower has not at any time engaged in, caused or permitted any Prohibited Activities or Conditions; |
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(2) | to the best of Borrower’s knowledge after reasonable and diligent inquiry, no Prohibited Activities or Conditions exist or have existed; |
(3) | the Mortgaged Property does not now contain any underground storage tanks, and, to the best of Borrower’s knowledge after reasonable and diligent inquiry, the Mortgaged Property has not contained any underground storage tanks in the past. If there is an underground storage tank located on the Mortgaged Property that has been previously disclosed by Borrower to Lender in writing, that tank complies with all requirements of Hazardous Materials Laws; |
(4) | Borrower has complied with all Hazardous Materials Laws, including all requirements for notification regarding releases of Hazardous Materials. Without limiting the generality of the foregoing, Borrower has obtained all Environmental Permits required for the operation of the Mortgaged Property in accordance with Hazardous Materials Laws now in effect and all such Environmental Permits are in full force and effect; no event has occurred with respect to the Mortgaged Property that constitutes, or with the passing of time or the giving of Notice would constitute, noncompliance with the terms of any Environmental Permit; |
(5) | to the best of Borrower’s knowledge after reasonable and diligent inquiry, there are no actions, suits, claims or proceedings, pending or threatened, that involve the Mortgaged Property and allege, arise out of, or relate to any Prohibited Activities or Conditions; and |
(6) | Borrower has not received any complaint, order, notice of violation or other communication from any Governmental Authority with regard to air emissions, water discharges, noise emissions or Hazardous Materials, or any other environmental, health or safety matters affecting the Mortgaged Property or any other property of Borrower that is adjacent to the Mortgaged Property that have not previously been resolved legally. |
(1) | Borrower’s discovery of any Prohibited Activities or Conditions; |
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(2) | Borrower’s receipt of or knowledge of any complaint, order, notice of violation or other communication from any Governmental Authority or other person with regard to present or future alleged Prohibited Activities or Conditions or any other environmental, health or safety matters affecting the Mortgaged Property or any other property of Borrower that is adjacent to the Mortgaged Property; and |
(3) | any representation or warranty in this Section 48 becoming untrue after the date of this Security Instrument. |
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(i) | any breach of any representation or warranty of Borrower in this Section 48; |
(ii) | any failure by Borrower to perform or comply with any of its obligations under this Section 48; |
(iii) | the existence or alleged existence of any Prohibited Activities or Conditions; |
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(iv) | the actual or alleged violation of any Hazardous Materials Law. |
(1) | any amendment or modification of any Loan Document; |
(2) | any extensions of time for performance required by any Loan Document; |
(3) | the accuracy or inaccuracy of any representations and warranties made by Borrower under this Security Instrument or any other Loan Document; |
(4) | the release of Borrower or any other person, by Lender or by operation of law, from performance of any obligation under any Loan Document; |
(5) | the release or substitution in whole or in part of any security for the Indebtedness; and |
(6) | Lender’s failure to properly perfect any lien or security interest |
(1) | pay or satisfy any judgment or decree that may be entered against any Indemnitee or Indemnitees in any legal or administrative proceeding incident to any matters against which Indemnitees are entitled to be indemnified under this Section 48; |
(2) | reimburse Indemnitees for any expenses paid or incurred in connection with any matters against which Indemnitees are entitled to be indemnified under this Section 48; and |
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(3) | reimburse Indemnitees for any and all expenses, including fees and out-of-pocket expenses of attorneys and expert witnesses, paid or incurred in connection with the enforcement by Indemnitees of their rights under this Section 48, or in monitoring and participating in any legal (including appellate) or administrative proceeding. |
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x | Exhibit A | Description of the Land (required) | ||
x | Exhibit B | Modifications to Security Instrument | ||
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BORROWER: | |||||
Signed, sealed and delivered in the presence of: | GLENVUE H&R PROPERTY HOLDINGS, LLC | ||||
/s/ Rachel S. Zinkand | |||||
Witness | |||||
By | /s/ Ronald W. Fleming | ||||
/s/ Ellen W. Smith | Ronald W. Fleming, Manager | ||||
Notary Public | |||||
My Commission Expires: | |||||
[NOTARIAL SEAL] |
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Healthcare Regulatory Agreement - Borrower Section 232 | U.S. Department of Housing and Urban Development Office of Residential Care Facilities | OMB Approval No. 2502-0605 (exp. 06/30/2017) |
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(1) | physically changes, or permits changes to, the Mortgaged Property, whether negligently or intentionally, in a manner that reduces its value; |
(2) | fails to maintain the Mortgaged Property in decent, safe, and sanitary condition and in good repair; |
(3) | fails to pay, or cause to be paid, before delinquency any Taxes that because of such failure, may subject the Project to a lien having priority over the Borrower’s Security Instrument; |
(4) | materially fails to comply with covenants in the Note, the Borrower’s Security Instrument, this Agreement, or any of the Loan Documents respecting physical care, maintenance, construction, abandonment, demolition, or insurance against casualty of the Mortgaged Property; or |
(5) | retains possession of Rents to which Lender or its assigns have the right of possession under the terms of the Loan Documents. |
{1020/124/00093614.2} | ||
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(i) | the payment of (1) all sums due or currently required to be paid by Borrower under the Loan Documents, including any required deposits into reserves; and (2) all of Borrower’s obligations relating to the Project other than those required to be paid under the Loan Documents, unless funds for such payments have been set aside or deferment of payment has been approved by HUD; and |
(ii) | the segregation of all amounts required to be held in trust (e.g., tenant security deposits) and all amounts required to be held (segregated) in other restricted asset accounts of the Project (e.g., Reserve for Replacements) pursuant to this Agreement, the Loan Documents and Program Obligations. |
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(i) | from borrowed funds (unless the Borrower is Operator and such Distribution is permitted under the Operator’s Regulatory Agreement and Program Obligations) or prior to the completion of the construction or rehabilitation of the Project; |
(ii) | after HUD has given written notice to Borrower of a violation or default under this Agreement and/or after Lender has given written notice to Borrower of a violation or default under any of the Loan Documents, and until the terms of such notices of violation or default have been satisfied to the satisfaction of HUD and/or Lender, as applicable; |
(iii) | when Borrower or the Project is under a forbearance agreement; |
(iv) | If: (A) necessary services for the operation of the Healthcare Facility are not being provided on a regular basis, which failure Borrower knows or should have known about in the exercise of due care; (B) written notices of necessary physical repairs or deficiencies involving exigent or significant health or safety risks to residents in connection with the Project (including but not limited to building code violations) by other Governmental Authorities and/or by HUD have been issued and remain unresolved to the satisfaction of the issuing Governmental Authority, (C) Borrower has been notified in writing by HUD, Lender or other Governmental Authority that necessary physical repairs and/or deficiencies exist in connection with the Project and Borrower has not corrected or cured, or caused to be corrected or cured, the identified items to HUD’s satisfaction, (D) there remain any outstanding loans from the Reserve for Replacement or Residual Receipts account, or any required deposits to such accounts have not been made when due, or (E) the Reserve for Replacement account or any other required reserve does not have the minimum balance required by HUD; and/or |
(v) | if the Borrower is also Operator, at any time that Operator is prohibited from distributing, advancing or otherwise using funds attributable to the Healthcare Facility (e.g., failure to timely file financial reports or when Healthcare Facility Working Capital is negative). |
{1020/124/00093614.2} | ||
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(i) | Distributions may only be made after the end of any annual or semi-annual fiscal period, and when the Borrower can demonstrate positive Surplus Cash pursuant to Section 15, at the end of the immediately prior annual or semi-annual fiscal period; |
(ii) | Operator is in good standing with the applicable licensing agency and has no open state compliance issues or special focus facility designation; |
(iii) | No unresolved audit findings in the annual audited financial statements exist relating to the Project; |
(iv) | Borrower and Operator are in compliance with the terms of this Agreement and the Operator’s Regulatory Agreement, respectively, with no notice of noncompliance or violation from HUD; |
(v) | No defaults exist under any of the Loan Documents and all payments required by any of the Loan Documents are current, with no notice of noncompliance or violation from HUD; and |
(vi) | The balance of the Residual Receipts account remains equal to no less than six months of the Borrower’s required debt service (including any mortgage insurance premium, escrow deposit, reserve deposits, or any other payments required by Borrower pursuant to the Loan Documents). |
{1020/124/00093614.2} | ||
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{1020/124/00093614.2} | ||
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(i) | Transactions are executed, and access to assets is permitted, only in accordance with Borrower’s authorization; |
(ii) | Transactions are accurately and timely recorded to permit the preparation of quarterly and annual financial reports in conformity with applicable Program Obligations; |
(iii) | Transactions are timely recorded in sufficient detail so as to permit an efficient audit of the Borrower’s books and records in accordance with Generally Accepted Auditing Standards (GAAS), Generally Accepted Government Auditing Standards (GAGAS), and other applicable Program Obligations; and |
{1020/124/00093614.2} | ||
Previous versions obsolete | Page 15 of 36 | form HUD-92466-ORCF (Rev. 06/2014) |
(iv) | Transactions are timely recorded in sufficient detail so as to maintain accountability of the Borrower’s assets. The recorded accountability for assets shall be compared with the existing assets at reasonable intervals, but not less than annually, and appropriate action shall be taken with respect to any differences. |
{1020/124/00093614.2} | ||
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{1020/124/00093614.2} | ||
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{1020/124/00093614.2} | ||
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{1020/124/00093614.2} | ||
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{1020/124/00093614.2} | ||
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{1020/124/00093614.2} | ||
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{1020/124/00093614.2} | ||
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{1020/124/00093614.2} | ||
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{1020/124/00093614.2} | ||
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{1020/124/00093614.2} | ||
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(i) | If HUD holds the Note, declare the whole of the Indebtedness immediately due and payable and then proceed with the foreclosure of the Borrower’s Security Instrument or otherwise dispose of HUD’s interest in the Note and the Borrower’s Security Instrument pursuant to Program Obligations; |
(ii) | If the Note is not held by HUD, notify the holder of the Note of such default and require the holder to declare a default under the Note and the Borrower’s Security Instrument, and the holder after receiving such Notice and demand, shall declare the whole of the Indebtedness due and payable and thereupon proceed with foreclosure of the Borrower’s Security Instrument and/or the exercise of other remedies available to Lender under the Loan Documents |
{1020/124/00093614.2} | ||
Previous versions obsolete | Page 26 of 36 | form HUD-92466-ORCF (Rev. 06/2014) |
(iii) | Collect all Rents and charges in connection with the Project or the operation of the Healthcare Facility, to the extent permitted by applicable law, and use such collections to pay obligations of Borrower under this Agreement and under the Note and the Loan Documents and the necessary expenses of preserving and operating the Project; |
(iv) | Take possession of the Mortgaged Property, bring any action necessary to enforce any rights of Borrower growing out of the Mortgaged Property’s operation, and maintain the Mortgaged Property in decent, safe, sanitary condition and good repair; |
(v) | Apply to any court, state or federal, for specific performance of this Agreement, for an injunction against any Violations of this Agreement, for the appointment of a receiver to take over and operate the Project in accordance with the terms of this Agreement, or for such other relief as may be appropriate, as the injury to HUD arising from a default under any of the terms of this Agreement would be irreparable and the amount of damage would be difficult to ascertain; and, |
(vi) | Collect reasonable attorney fees related to enforcing Borrower’s compliance with this Agreement. |
{1020/124/00093614.2} | ||
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{1020/124/00093614.2} | ||
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ADCARE HEALTH SYSTEMS, INC., | ||||
a Georgia corporation | ||||
By: | /s/ Ronald W. Fleming | |||
Name: | Ronald W. Fleming | |||
Its: | Chief Financial Officer | |||
STATE OF GEORGIA | ) | |||
) ss: | ||||
COUNTY OF FULTON | ) |
[SEAL] | /s/ Ellen W. Smith | |||
Notary Public | ||||
My Commission Expires: | ||||
{1020/124/00093614.2} | ||
Previous versions obsolete | Page 29 of 36 | form HUD-92466-ORCF (Rev. 06/2014) |
{1020/124/00093614.2} | ||
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{1020/124/00093614.2} | ||
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BORROWER: | WOODLAND MANOR PROPERTY HOLDINGS, LLC |
1145 Hembree Rd. | |
Roswell, GA 30076 | |
Attention: Manager | |
HUD: | FEDERAL HOUSING COMMISSIONER |
U.S. Department of Housing and Urban Development | |
Office of Residential Care Facilities | |
451 Seventh St. SW | |
Washington, DC 20410 | |
LENDER: | HOUSING & HEALTHCARE FINANCE, LLC |
2 Wisconsin Circle, Ste. 540 | |
Chevy Chase, Maryland 20815 | |
Attention: Erik Lindenauer, Director |
{1020/124/00093614.2} | ||
Previous versions obsolete | Page 32 of 36 | form HUD-92466-ORCF (Rev. 06/2014) |
WOODLAND MANOR PROPERTY HOLDINGS, LLC, | ||||
a Georgia limited liability company | ||||
By: | /s/ Ronald W. Fleming | |||
Name: | Ronald W. Fleming | |||
Title: | Manager | |||
STATE OF GEORGIA | ) | |||
) ss: | ||||
COUNTY OF FULTON | ) |
[SEAL] | /s/ Ellen W. Smith | |||
Notary Public | ||||
My Commission Expires: | ||||
{1020/124/00093614.2} | ||
Previous versions obsolete | Page 33 of 36 | form HUD-92466-ORCF (Rev. 06/2014) |
By: | /s/ Timothy P. Gruenes | |||
Timothy P. Gruenes | ||||
Authorized Agent | ||||
Office of Residential Care Facilities |
STATE OF MINNESOTA | ) | |||
) ss: | ||||
COUNTY OF HENNEPIN | ) |
[SEAL] | /s/ Miranda J. Schoenecker | |||
Notary Public | ||||
(Print Name) | Miranda J. Schoenecker | |||
HUD/OHP | ||||
Title (and rank) | ||||
My commission expires: | 31 Jan 2016 |
{1020/124/00093614.2} | ||
Previous versions obsolete | Page 34 of 36 | form HUD-92466-ORCF (Rev. 06/2014) |
{1020/124/00093614.2} | ||
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{1020/124/00093614.2} | ||
Previous versions obsolete | Page 36 of 36 | form HUD-92466-ORCF (Rev. 06/2014) |
Document prepared by: Jeremy F. Segall, Esq. GUTNICKI LLP 4711 Golf Rd., Ste. 200 Skokie, Illinois 60076 And after Recording Return to: Darryl B. Austin HUD Atlanta Regional Office 40 Marietta St. Atlanta, GA 30303-2806 Healthcare Regulatory Agreement - Borrower Section 232 | U.S. Department of Housing and Urban Development Office of Residential Care Facilities | OMB Approval No. 2502-0605 (exp. 06/30/2017) |
{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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(1) | physically changes, or permits changes to, the Mortgaged Property, whether negligently or intentionally, in a manner that reduces its value; |
(2) | fails to maintain the Mortgaged Property in decent, safe, and sanitary condition and in good repair; |
(3) | fails to pay, or cause to be paid, before delinquency any Taxes that because of such failure, may subject the Project to a lien having priority over the Borrower’s Security Instrument; |
(4) | materially fails to comply with covenants in the Note, the Borrower’s Security Instrument, this Agreement, or any of the Loan Documents respecting physical care, maintenance, construction, abandonment, demolition, or insurance against casualty of the Mortgaged Property; or |
(5) | retains possession of Rents to which Lender or its assigns have the right of possession under the terms of the Loan Documents. |
{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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(i) | the payment of (1) all sums due or currently required to be paid by Borrower under the Loan Documents, including any required deposits into reserves; and (2) all of Borrower’s obligations relating to the Project other than those required to be paid under the Loan Documents, unless funds for such payments have been set aside or deferment of payment has been approved by HUD; and |
(ii) | the segregation of all amounts required to be held in trust (e.g., tenant security deposits) and all amounts required to be held (segregated) in other restricted asset accounts of the Project (e.g., Reserve for Replacements) pursuant to this Agreement, the Loan Documents and Program Obligations. |
{1020/125/00094150.4} | ||
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(i) | from borrowed funds (unless the Borrower is Operator and such Distribution is permitted under the Operator’s Regulatory Agreement and Program Obligations) or prior to the completion of the construction or rehabilitation of the Project; |
(ii) | after HUD has given written notice to Borrower of a violation or default under this Agreement and/or after Lender has given written notice to Borrower of a violation or default under any of the Loan Documents, and until the terms of such notices of violation or default have been satisfied to the satisfaction of HUD and/or Lender, as applicable; |
(iii) | when Borrower or the Project is under a forbearance agreement; |
(iv) | If: (A) necessary services for the operation of the Healthcare Facility are not being provided on a regular basis, which failure Borrower knows or should have known about in the exercise of due care; (B) written notices of necessary physical repairs or deficiencies involving exigent or significant health or safety risks to residents in connection with the Project (including but not limited to building code violations) by other Governmental Authorities and/or by HUD have been issued and remain unresolved to the satisfaction of the issuing Governmental Authority, (C) Borrower has been notified in writing by HUD, Lender or other Governmental Authority that necessary physical repairs and/or deficiencies exist in connection with the Project and Borrower has not corrected or cured, or caused to be corrected or cured, the identified items to HUD’s satisfaction, (D) there remain any outstanding loans from the Reserve for Replacement or Residual Receipts account, or any required deposits to such accounts have not been made when due, or (E) the Reserve for Replacement account or any other required reserve does not have the minimum balance required by HUD; and/or |
(v) | if the Borrower is also Operator, at any time that Operator is prohibited from distributing, advancing or otherwise using funds attributable to the Healthcare Facility (e.g., failure to timely file financial reports or when Healthcare Facility Working Capital is negative). |
{1020/125/00094150.4} | ||
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(i) | Distributions may only be made after the end of any annual or semi-annual fiscal period, and when the Borrower can demonstrate positive Surplus Cash pursuant to Section 15, at the end of the immediately prior annual or semi-annual fiscal period; |
(ii) | Operator is in good standing with the applicable licensing agency and has no open state compliance issues or special focus facility designation; |
(iii) | No unresolved audit findings in the annual audited financial statements exist relating to the Project; |
(iv) | Borrower and Operator are in compliance with the terms of this Agreement and the Operator’s Regulatory Agreement, respectively, with no notice of noncompliance or violation from HUD; |
(v) | No defaults exist under any of the Loan Documents and all payments required by any of the Loan Documents are current, with no notice of noncompliance or violation from HUD; and |
(vi) | The balance of the Residual Receipts account remains equal to no less than six months of the Borrower’s required debt service (including any mortgage insurance premium, escrow deposit, reserve deposits, or any other payments required by Borrower pursuant to the Loan Documents). |
{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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(i) | Transactions are executed, and access to assets is permitted, only in accordance with Borrower’s authorization; |
(ii) | Transactions are accurately and timely recorded to permit the preparation of quarterly and annual financial reports in conformity with applicable Program Obligations; |
(iii) | Transactions are timely recorded in sufficient detail so as to permit an efficient audit of the Borrower’s books and records in accordance with Generally Accepted Auditing Standards (GAAS), Generally Accepted Government Auditing Standards (GAGAS), and other applicable Program Obligations; and |
{1020/125/00094150.4} | ||
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(iv) | Transactions are timely recorded in sufficient detail so as to maintain accountability of the Borrower’s assets. The recorded accountability for assets shall be compared with the existing assets at reasonable intervals, but not less than annually, and appropriate action shall be taken with respect to any differences. |
{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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(i) | If HUD holds the Note, declare the whole of the Indebtedness immediately due and payable and then proceed with the foreclosure of the Borrower’s Security Instrument or otherwise dispose of HUD’s interest in the Note and the Borrower’s Security Instrument pursuant to Program Obligations; |
(ii) | If the Note is not held by HUD, notify the holder of the Note of such default and require the holder to declare a default under the Note and the Borrower’s Security Instrument, and the holder after receiving such Notice and demand, shall declare the whole of the Indebtedness due and payable and thereupon proceed with foreclosure of the Borrower’s Security Instrument and/or the exercise of other remedies available to Lender under |
{1020/125/00094150.4} | ||
Previous versions obsolete | Page 26# of 35 | form HUD-92466-ORCF (06/2014) |
the Loan Documents or at law or equity, or assign the Note and the Borrower’s Security Instrument to HUD as provided in Program Obligations. Upon assignment of the Note and the Borrower’s Security Instrument to HUD, HUD may then proceed with the foreclosure of the Borrower’s Security Instrument or otherwise dispose of HUD’s interest in the Note and the Borrower’s Security Instrument pursuant to Program Obligations; |
(iii) | Collect all Rents and charges in connection with the Project or the operation of the Healthcare Facility, to the extent permitted by applicable law, and use such collections to pay obligations of Borrower under this Agreement and under the Note and the Loan Documents and the necessary expenses of preserving and operating the Project; |
(iv) | Take possession of the Mortgaged Property, bring any action necessary to enforce any rights of Borrower growing out of the Mortgaged Property’s operation, and maintain the Mortgaged Property in decent, safe, sanitary condition and good repair; |
(v) | Apply to any court, state or federal, for specific performance of this Agreement, for an injunction against any Violations of this Agreement, for the appointment of a receiver to take over and operate the Project in accordance with the terms of this Agreement, or for such other relief as may be appropriate, as the injury to HUD arising from a default under any of the terms of this Agreement would be irreparable and the amount of damage would be difficult to ascertain; and, |
(vi) | Collect reasonable attorney fees related to enforcing Borrower’s compliance with this Agreement. |
{1020/125/00094150.4} | ||
Previous versions obsolete | Page 27# of 35 | form HUD-92466-ORCF (06/2014) |
{1020/125/00094150.4} | ||
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BORROWER: | |||||
Signed, sealed and delivered in the presence of: | ADCARE HEALTH SYSTEMS, INC., | ||||
a Georgia corporation | |||||
/s/ Rachel S. Zinkand | |||||
Witness | |||||
By | /s/ Ronald W. Fleming | ||||
/s/ Ellen W. Smith | Ronald W. Fleming, Manager | ||||
Notary Public | |||||
My Commission Expires: | |||||
[NOTARIAL SEAL] |
{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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{1020/125/00094150.4} | ||
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BORROWER: | GLENVUE H&R PROPERTY HOLDINGS, LLC |
1145 Hembree Rd. | |
Roswell, GA 30076 | |
Attention: Manager | |
HUD: | FEDERAL HOUSING COMMISSIONER |
U.S. Department of Housing and Urban Development | |
Office of Residential Care Facilities | |
451 Seventh St. SW | |
Washington, DC 20410 | |
LENDER: | HOUSING & HEALTHCARE FINANCE, LLC |
2 Wisconsin Circle, Ste. 540 | |
Chevy Chase, Maryland 20815 | |
Attention: Erik Lindenauer, Director |
{1020/125/00094150.4} | ||
Previous versions obsolete | Page 32# of 35 | form HUD-92466-ORCF (06/2014) |
BORROWER: | |||||
Signed, sealed and delivered in the presence of: | GLENVUE H&R PROPERTY HOLDINGS, LLC | ||||
/s/ Rachel S. Zinkand | |||||
Witness | |||||
By | /s/ Ronald W. Fleming | ||||
/s/ Ellen W. Smith | Ronald W. Fleming, Manager | ||||
Notary Public | |||||
My Commission Expires: | |||||
[NOTARIAL SEAL] |
{1020/125/00094150.4} | ||
Previous versions obsolete | Page 33# of 35 | form HUD-92466-ORCF (06/2014) |
STATE OF MINNESOTA | ) | |||
) ss: | ||||
COUNTY OF HENNEPIN | ) |
[SEAL] | /s/ Miranda J. Schoenecker | |||
Notary Public | ||||
(Print Name) | Miranda J. Schoenecker | |||
HUD/OHP | ||||
Title (and rank) | ||||
My commission expires: | 31 Jan 2016 |
{1020/125/00094150.4} | ||
Previous versions obsolete | Page 34# of 35 | form HUD-92466-ORCF (06/2014) |
{1020/125/00094150.4} | ||
Previous versions obsolete | Page 35# of 35 | form HUD-92466-ORCF (06/2014) |
Healthcare Facility Note Section 232 | U.S. Department of Housing and Urban Development Office of Residential Care Facilities | OMB Approval No. 2502-0605 (exp. 03/31/2014) |
US $5,678,400.00 | as of September 24, 2014 |
{1020/124/00093857.2} | ||
Previous versions obsolete | Page 1 of 9 | form HUD-94001-ORCF (Rev. 03/13) |
{1020/124/00093857.2} | ||
Previous versions obsolete | Page 2 of 9 | form HUD-94001-ORCF (Rev. 03/13) |
{1020/124/00093857.2} | ||
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{1020/124/00093857.2} | ||
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{1020/124/00093857.2} | ||
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{1020/124/00093857.2} | ||
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{1020/124/00093857.2} | ||
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WOODLAND MANOR PROPERTY HOLDINGS, LLC, |
a Georgia limited liability company |
By: /s/ Ronald W. Fleming |
Name:Ronald W. Fleming |
Its: Manager |
{1020/124/00093857.2} | ||
Previous versions obsolete | Page 8 of 9 | form HUD-94001-ORCF (Rev. 03/13) |
{1020/124/00093857.2} | ||
Previous versions obsolete | Page 9 of 9 | form HUD-94001-ORCF (Rev. 03/13) |
1. | Prepayment |
Time of Prepayment | Payment Premium |
From November 1, 2014 through October 31, 2015 | 10% |
From November 1, 2015 through October 31, 2016 | 9% |
From November 1, 2016 through October 31, 2017 | 8% |
From November 1, 2017 through October 31, 2018 | 7% |
From November 1, 2018 through October 31, 2019 | 6% |
From November 1, 2019 through October 31, 2020 | 5% |
From November 1, 2020 through October 31, 2021 | 4% |
From November 1, 2021 through October 31, 2022 | 3% |
From November 1, 2022 through October 31, 2023 | 2% |
From November 1, 2023 through October 31, 2024 | 1% |
From November 1, 2024 and thereafter | 0% |
2. | Exceptions to Prepayment Restrictions. |
a. | Avoidance of Mortgage Insurance Claim. Notwithstanding any prepayment prohibition imposed and/or premium required by the Note with respect to prepayments made prior to November 1, 2023, the indebtedness secured hereby may be prepaid in part or in full on the last or first day of any calendar month without the consent of the holder of the Note and without prepayment premium if the U.S. Department of Housing and Urban Development (“HUD”) determines that prepayment will avoid a mortgage insurance claim and is, therefore, in the best interest of the Federal Government. The holder of the Note acknowledges that HUD would consider exercising an override of the prepayment prohibition and/or prepayment premium contained herein only if the following conditions are met: |
i. | Mortgagor has defaulted and HUD has received notice as required by the regulations; |
ii. | HUD determines that the project financed with the proceeds of the Note (the “Project”) has been experiencing a net income deficiency that has not been caused solely by management inadequacy or lack of owner interest and that is of such a magnitude that Mortgagor is currently unable to made required debt service payments, pay all Project operating expenses and fund all required HUD reserves; |
iii. | HUD finds there is reasonable likelihood that Mortgagor can arrange to refinance the defaulted loan at a lower interest rate or otherwise reduce the debt service payments through partial prepayment; and |
iv. | HUD determines that refinancing the defaulted loan at a lower rate or partial prepayment is necessary to restore the Project to a financially viable condition and to avoid a full insurance claim. |
WOODLAND MANOR PROPERTY HOLDINGS, LLC, |
a Georgia limited liability company |
By: /s/ Ronald W. Fleming |
Name: Ronald W. Fleming |
Its: Manager |
Healthcare Facility Note Section 232 | U.S. Department of Housing and Urban Development Office of Residential Care Facilities | OMB Approval No. 2502-0605 (exp. 03/31/2014) |
US $8,816,800.00 | as of September 24, 2014 |
{1020/125/00094205.2} | ||
Previous versions obsolete | Page 1 of 9 | form HUD-94001-ORCF (Rev. 03/13) |
{1020/125/00094205.2} | ||
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{1020/125/00094205.2} | ||
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{1020/125/00094205.2} | ||
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{1020/125/00094205.2} | ||
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{1020/125/00094205.2} | ||
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{1020/125/00094205.2} | ||
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GLENVUE H&R PROPERTY HOLDINGS, LLC, |
a Georgia limited liability company |
By: /s/ Ronald W. Fleming |
Name: Ronald W. Fleming |
Its: Manager |
{1020/125/00094205.2} | ||
Previous versions obsolete | Page 8 of 9 | form HUD-94001-ORCF (Rev. 03/13) |
{1020/125/00094205.2} | ||
Previous versions obsolete | Page 9 of 9 | form HUD-94001-ORCF (Rev. 03/13) |
1. | Prepayment |
Time of Prepayment | Payment Premium |
From November 1, 2014 through October 31, 2015 | 10% |
From November 1, 2015 through October 31, 2016 | 9% |
From November 1, 2016 through October 31, 2017 | 8% |
From November 1, 2017 through October 31, 2018 | 7% |
From November 1, 2018 through October 31, 2019 | 6% |
From November 1, 2019 through October 31, 2020 | 5% |
From November 1, 2020 through October 31, 2021 | 4% |
From November 1, 2021 through October 31, 2022 | 3% |
From November 1, 2022 through October 31, 2023 | 2% |
From November 1, 2023 through October 31, 2024 | 1% |
From November 1, 2024 and thereafter | 0% |
2. | Exceptions to Prepayment Restrictions. |
GLENVUE H&R PROPERTY HOLDINGS, LLC, |
a Georgia limited liability company |
By: /s/ Ronald W. Fleming |
Name: Ronald W. Fleming |
Its: Manager |
Regards, | ||
/s/ David A. Tenwick | ||
David Tenwick, CEO | ||
I accept the Separation Agreement as outlined above. | ||||
/s/ David Rubenstein | 8/14/14 | |||
David Rubenstein | Date |
Date: | November 13, 2014 | /s/ William McBride III | |
William McBride III | |||
Chief Executive Officer |
Date: | November 13, 2014 | /s/ Sheryl A. Wolf | |
Sheryl A. Wolf | |||
Chief Accounting Officer |
Date: | November 13, 2014 | /s/ William McBride III | |
William McBride III | |||
Chief Executive Officer |
Date: | November 13, 2014 | /s/ Sheryl A. Wolf | |
Sheryl A. Wolf | |||
Chief Accounting Officer |
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