LOAN MODIFICATION AGREEMENT
EX-10.71.19
“Emeritol-Batus
Facilities”
This LOAN
MODIFICATION AGREEMENT dated October 30, 2009, is made by and among EMERITOL
XXXXXX OAKS LLC, a Delaware limited liability company, EMERITOL SADDLERIDGE
LODGE LLC, a Delaware limited liability company and EMERITOL SEVILLE ESTATES
LLC, a Delaware limited liability company (each a “Borrower”
and collectively, “Borrowers”),
KEYBANK NATIONAL ASSOCIATION, a national banking association, its successors and
assigns (“Lender”),
and EMERITUS CORPORATION, a Washington corporation (“Emeritus”)
and XXXXXX X. XXXX, individually (jointly and severally with Emeritus, “Guarantor”).
Recitals
A. On
or about October 17, 2008, Lender made a loan (“Loan”) to
Borrowers in the original principal amount of $17,595,000. The Loan
is evidenced by Borrowers’ Promissory Note (“Note”)
and is secured by (i) a Deed of Trust, Assignment of Rents, Security Agreement
and Fixture Filing (“Xxxxxx Oaks Deed
of Trust”), recorded as Document No. 2008036082, records of Jefferson
County, Texas, encumbering certain real property (“Xxxxxx Oaks
Property”) located in Jefferson County, Texas and legally described on
Exhibit A to the Xxxxxx Oaks Deed of Trust; (ii) a Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing (“Saddleridge Deed
of Trust”), recorded as Document No. 2008-23345, records of Midland
County, Texas, encumbering certain real property (“Saddleridge
Property”) located in Midland County, Texas and legally described on
Exhibit A to the Saddleridge Deed of Trust; and (iii) a Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing (“Seville Estates
Deed of Trust”), recorded as Document No. 2008020233, records of Xxxxxxx
County, Texas, encumbering certain real property (“Seville Estates
Property”) located in Xxxxxxx County, Texas and legally described on
Exhibit A to the Seville Estates Deed of Trust. Disbursement of
the proceeds of the Loan is governed by a Loan Agreement (“Loan
Agreement”) between Borrowers and Lender dated October 17,
2008. Payment of the Loan is unconditionally guaranteed by Guarantors
under Unconditional Payment Guaranties (“Guaranties”)
dated October 17, 2008.
B. Borrowers
have requested that the Loan Documents be modified to allow the release the
Saddleridge Property and the Seville Estates Property. Lender is
willing to do so subject to the terms and conditions of this
Agreement.
Agreement
NOW
THEREFORE, the parties agree as follows:
1.
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Definitions. Capitalized
terms used but not defined in this Agreement are defined in the Loan
Agreement.
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2.
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Release
of Saddleridge Property and Seville Estates Property.
Notwithstanding the restrictions in the Loan Agreement and the Deeds of
Trust, Lender will cause the Saddleridge Deed of Trust to be released and
reconveyed from the Saddleridge Property, and the Seville Estates Deed of
Trust to be released and reconveyed from the Seville Estates Property,
provided that all the following conditions are
satisfied:
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2.1
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Borrower
has provided evidence satisfactory to Lender that the Saddleridge Property
and the Seville Estates Property have been approved by Xxxxxxx Mac for
permanent financing.
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2.2
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Lender
has been paid the “Release
Price” for the Saddleridge Property and Seville Estates
Property. The Release Price for the Saddleridge Property is
$7,785,000. The Release Price for the Seville Estates Property
is $2,850,000.
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2.3
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There
is then no Event of Default, nor any event or condition which would be an
Event of Default if not cured within the time
allowed.
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2.4
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Borrower
has provided to Lender, at Borrower’s expense, an endorsement to Lender’s
policy of title insurance for the Xxxxxx Oaks Property, insuring the
continued priority of the lien of the Xxxxxx Oaks Deed of Trust against
the Dowlen Oaks Property. There shall be no exceptions to title
other than those previously approved by
Lender.
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2.5
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Borrower
has paid all costs and expenses (including all attorney, trustee, title
and recording fees) incurred by Lender in connection with Borrower’s
request for a release of the Saddleridge Property and the Seville Estates
Property. Borrower covenants to pay all such costs and expenses
even if the release is not given because the conditions have not been
met.
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2.6
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Emeritol
Xxxxxx Oaks LLC has executed and delivered to Lender an Amended and
Restated Promissory Note in the form attached as Exhibit 1
hereto.
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3.
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Loan
Modifications. The following modifications to the Loan
Documents shall become effective upon the date that the Saddleridge Deed
of Trust and the Seville Estates Deed of Trust have both been
released.
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3.1
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Definitions. The
definitions of the following terms in the Loan Documents are revised to
mean the following:
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Borrower: Emeritol
Xxxxxx Oaks LLC, a Delaware limited liability company.
Debt
Service: (a) For the quarterly periods (based on calendar
quarters) ending December 31, 2009, March 31, 2010, and June 30, 2010,
interest-only payments on the Loan during such periods at the Applicable Rate,
(b) For the quarterly period (based on calendar quarters) ending September 30,
2010, interest-only payments on the Loan during such periods at
an
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interest
rate equal to the greater of the Applicable Rate or 6.85% per annum; and (c) for
each calendar quarter thereafter, the total payments of principal and interest
which would be required during such period in order to fully amortize the
then-unpaid principal balance of the Loan over a 25 year amortization period at
an interest rate equal to the greater of the Applicable Rate or 6.85% per
annum.
Debt
Service Coverage: For each calendar quarter commencing with
the calendar quarter ending December 31, 2009, the ratio of the aggregate Net
Operating Income of the Facility during such period, to the Debt Service during
such period.
Facilities:
All references to the Facilities shall be deemed to refer to the Xxxxxx Oaks
Facility located at 0000 X. Xxxxxx Xx., Xxxxxxxx,
XX 00000.
Loan
Amount: Six Million, Nine Hundred Sixty Thousand and No/100
Dollars ($6,960,000.00), as reduced by principal payments made from time to
time.
Note: The
Amended and Restated Promissory Note in the Loan Amount, executed by Borrower
and payable to the order of Lender, evidencing the Loan.
3.2
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Payments. Section 4.5 of
the Loan Agreement is hereby deleted and replaced with the
following:
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(a) Borrower
shall pay interest in arrears on the first (1st) day
of every calendar month in the amount of all interest accrued and unpaid through
the last day of the immediately preceding calendar month.
(b) On
or before June 30, 2010, Borrower shall make a principal payment in the amount
required to reduce the unpaid principal balance of the Loan to not more than
Five Million, Nine Hundred Sixty Thousand and No/100 Dollars
($5,960,000). Borrower’s failure to so reduce the unpaid principal
balance of the Loan on or before June 30, 2010 shall be an Event of
Default.
(c) On
or before December 31, 2010, Borrower shall make a principal payment in the
amount required to reduce the unpaid principal balance of the Loan to not more
than Three Million, Nine Hundred Sixty Thousand and No/100 Dollars
($3,960,000). Borrower’s failure to so reduce the unpaid principal
balance of the Loan on or before December 31, 2010 shall be an Event of
Default.
(d) All
payments (whether of principal or of interest) shall be deemed credited to
Borrower’s account only if received by 12:00 noon Seattle time on a Business
Day; otherwise, such payment shall be deemed received on the next Business
Day.
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(e) All
unpaid principal shall be due and payable in full on the Maturity
Date.
3.3
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Debt
Service Coverage. Section
10.12(b) of the Loan Agreement is hereby deleted and replaced with
the following:
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Minimum Debt Service
Coverage. For each calendar quarter commencing with the
calendar quarter ending December 31, 2009, the Debt Service Coverage shall be no
less than the required Debt Service Coverage set out below:
Quarter End
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Required Debt Service
Coverage
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12/31/2009
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1.501
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3/31/2009
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1.50
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6/30/2010
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1.50
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9/30/2010
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1.002
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12/31/2010
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1.003
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3/31/2011
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1.10
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6/30/2011
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1.15
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9/30/2011
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1.20
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In the
event the minimum Debt Service Coverage is not met for any calendar quarter,
such shall not be an Event of Default hereunder if by the date the Quarterly
Compliance Certificate for such calendar quarter is due, Borrower makes a
principal payment on the Loan in an amount sufficient to cause such Debt Service
Coverage to be met.
3.4
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Monthly
Excess Cash Flow. The following provision is hereby
added to the Loan Agreement:
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For so
long as the unpaid principal balance of the Loan is greater than or equal to
$3,960,000, (a) Borrower shall not make any distributions to partners, members
or shareholders; and (b) Borrower shall add to its monthly payments of interest
to Lender an amount equal to one hundred percent (100%) of Monthly Excess Cash
Flow. “Monthly Excess
Cash Flow” means, for any month, the amount by which Gross Revenues
exceed the sum of (a) actual cash operating expenses and (b) actual debt service
on the Loan. So long as there is no Event of Default, Lender will
apply
1 Debt
Service is interest only at the Applicable Rate for the quarters ending
12/31/09, 3/31/09, and 6/30/10.
2 Debt
Service is interest only at the greater of the Applicable Rate or 6.85%for the
quarter ending 9/30/10.
3 From
and after quarter ending 12/31/10, Debt Service includes principal and interest
to fully amortize the then-unpaid principal amount of the Loan over a 25 year
amortization period at an interest rate equal to the greater of the Applicable
Rate or 6.85% per annum.
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Borrower’s
payments of Monthly Excess Cash Flow to reduce the unpaid principal balance of
the Loan.
3.5
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Compliance
Certificate. The form of Compliance Certificate attached as Exhibit B to
the Loan Agreement is hereby replaced with the Compliance Certificate
attached as Exhibit B
hereto:
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4.
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Conditions. This
Agreement shall be effective only upon satisfaction of the conditions set
forth below:
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4.1
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Borrower
has paid Lender all costs, fees and expenses relating to the execution and
performance of this Agreement, including all legal fees, title insurance
premiums, and other out-of-pocket expenses of
Lender.
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4.2
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Lender
has received certified copies of such duly adopted resolutions as Lender
may require, authorizing Borrower’s and Guarantor’s execution of this
Agreement and naming the persons authorized to execute this Agreement on
their behalf.
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5.
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Guaranty. Each
Guarantor consents and agrees to this Agreement and ratifies and reaffirms
the obligations of such Guarantor under the respective Guaranty of the
Loan as modified by this Agreement.
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6.
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Representations. Borrower
and each Guarantor represent to Lender as
follows.
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6.1
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Neither
Borrower nor any Guarantor has any claim, defense, counterclaims or right
of offset against Lender or its agents arising out of or in any way
connected with the Loan.
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6.2
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Borrower
and Guarantor have full right, power and authority to enter into this
Agreement and perform their obligations hereunder, and no information or
material submitted to Lender in connection with this Agreement contains
any material misstatement or misrepresentation nor omits to state any
material fact or circumstance.
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6.3
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There
is no Event of Default by Borrower under any of the Loan Documents, nor,
to Borrower’s knowledge, any event, circumstance or condition which with
notice or the passage of time or both would be an Event of
Default.
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6.4
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Except
as disclosed to Lender in writing, all representations made by Borrower
and any Guarantor to Lender in the
Loan Documents are true and
correct.
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7.
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Ratification. Each and
every representation and warranty made by Borrower in the Loan Documents
and the Environmental Indemnities are hereby renewed and each and every
provision of the Loan Documents, as amended by this Agreement, is hereby
affirmed and ratified. This Agreement is not intended and shall
not be construed to impair the validity, priority or enforceability of the
Deeds of Trust or
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the other
Loan Documents. As further consideration for Lender’s execution of
this Agreement, Borrower and each Guarantor hereby release and
discharge Lender from any and all claims, defenses, actions, counterclaims or
rights of offset in connection with the Loan and arising out of any act or
circumstance prior to the date hereof.
8.
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General.
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8.1
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This
Agreement and the documents and instruments to be executed hereunder
constitute the entire agreement among the parties with respect to the
subject matter hereof and shall not be amended, modified or terminated
except by a writing signed by the party to be charged
therewith.
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8.2
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Borrower
and each Guarantor agree to execute
such other instruments and documents and provide Lender with such further
assurances as Lender may reasonably request to more fully carry out the
intent of this Agreement.
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8.3
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This
Agreement may be executed in a number of identical
counterparts. If so, each such counterpart shall collectively
constitute one agreement.
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8.4
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No
provision of this Agreement is intended or shall be construed to be for
the benefit of any third party.
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8.5
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The
Loan Documents are hereby modified to include this Agreement within the
definition of the term “Loan
Documents” as used therein.
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ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
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IN
WITNESS WHEREOF, the parties execute this Agreement as of the day and year first
above written.
“Borrowers”
EMERITOL
XXXXXX OAKS LLC,
a Delaware
limited liability company
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By:
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Batus
LLC, a Delaware limited liability company, its Sole
Member
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By:
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Summerville
Senior Living, Inc., a Delaware corporation, its Administrative
Member
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By:
_/s/ Xxxx Xxxxxxxxxx __
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Xxxx
Xxxxxxxxxx, Senior VP
Corporate
Development
EMERITOL
SEVILLE ESTATES LLC,
a
Delaware limited liability company
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By:
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Batus
LLC, a Delaware limited liability company, its Sole
Member
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By:
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Summerville
Senior Living, Inc., a Delaware corporation, its Administrative
Member
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By:
_/s/ Xxxx Xxxxxxxxxx _
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Xxxx
Xxxxxxxxxx, Senior VP
Corporate
Development
EMERITOL
SADDLERIDGE LODGE LLC,
a
Delaware limited liability company
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By:
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Batus
LLC, a Delaware limited liability company, its Sole
Member
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By:
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Summerville
Senior Living, Inc., a Delaware corporation, its Administrative
Member
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By:
/s/ Xxxx Xxxxxxxxxx
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Xxxx
Xxxxxxxxxx, Senior VP
Corporate
Development
[signatures
continued on following page]
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“Lender”
KEYBANK
NATIONAL ASSOCIATION, a national banking association
By: /s/
Bellini Lacey______
Name: _
Xxxxxxx Xxxxx ________
Title: AVP
Closing Officer_____
“Guarantor”
EMERITUS
CORPORATION, a Washington corporation
By: /s/
Xxxx Xxxxxxxxxx _
Name: Xxxx
Xxxxxxxxxx
Title: Senior
VP Corporate Development
/s/
Xxxxxx X. Baty________
XXXXXX X.
XXXX, individually
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EXHIBIT
B
to
Loan
Agreement
Certificate
of Compliance
KeyBank
National Association
KeyBank
Real Estate Capital
Healthcare
Finance
0000 0xx
Xxx, 00xx Xxxxx
Xxxxxxx,
XX 00000
Attn:
____________________
Re:
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Loan
Agreement dated as of October 17, 2008 (as amended, modified,
supplemented, restated, or renewed, from time to time, the “Agreement”),
between EMERITOL XXXXXX OAKS LLC, a Delaware limited liability company,
(“Borrower”),
and KEYBANK NATIONAL ASSOCIATION (“Lender”).
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Reference
is made to the Agreement. Capitalized terms used in this Certificate
(including schedules and other attachments hereto, this “Certificate”)
without definition have the meanings specified in the Agreement.
Pursuant
to applicable provisions of the Agreement, Borrower and Emeritus Corporation
hereby certifies to Lender that all information furnished in this Certificate
and in the attachments hereto and in the financial statements (such statements
the “Financial
Statements” and each periods covered thereby the “reporting
period”) submitted herewith is true, correct and complete in all material
respects.
Emeritus
Corporation further certifies to Lender that:
1. Compliance with Financial
Covenants.
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A.
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Covenant: Minimum
Facility Occupancy. As of the end of each calendar
quarter commencing with the calendar quarter ending December 31, 2008, the
Occupancy of the Facility shall no time be less than 90% of the Occupancy
for the Facility as of September 30,
2008.
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Facility
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Occupancy
as of 9/30/08
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Occupancy
at end of reporting period
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Compliance?
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Xxxxxx
Oaks
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_______%
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________%
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________
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See attached rent rolls and
operating statements for calendar quarter ending _______________,
20__
B. Covenant: Minimum
Debt Service Coverage.
For each calendar quarter commencing with the calendar quarter ending
December 31, 2009, the Debt
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Service
Coverage shall be no less than the required Debt Service Coverage set out
below:
Quarter End
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Required Debt Service
Coverage
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12/31/2009
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1.504
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3/31/2009
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1.50
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6/30/2010
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1.50
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9/30/2010
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1.005
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12/31/2010
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1.006
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3/31/2011
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1.10
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6/30/2011
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1.15
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9/30/2011
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1.20
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Quarter
Ending ________________, 20___
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Required
Debt Service
Coverage: 1.___
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Actual
Debt Service
Coverage: 1.___
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Compliance?
(Yes or
No) ____________________
See attached Financial
Statements
2. Compliance with Emeritus
Covenants.
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A.
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Covenant: Minimum
Liquid Assets. Emeritus
shall maintain minimum Liquid Assets of Twenty Million Dollars
($20,000,000.00)
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Emeritus
Liquid
Assets: $_________ as
of period ending ___________
See attached Financial
Statements
Compliance?
(Yes or
No) ____________________
4 Debt
Service is interest only at the Applicable Rate for the quarters ending
12/31/09, 3/31/09, and 6/30/10.
5 Debt
Service is interest only at the greater of the Applicable Rate or 6.85%for the
quarter ending 9/30/10.
6 From
and after quarter ending 12/31/10, Debt Service includes principal and interest
to fully amortize the then-unpaid principal amount of the Loan over a 25 year
amortization period at an interest rate equal to the greater of the Applicable
Rate or 6.85% per annum.
10
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B.
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Covenant: Minimum
Fixed Charge Coverage. Emeritus agrees to
maintain a minimum Fixed Charge Coverage Ratio of 1.10 to 1.00 (measured
at the end of each calendar quarter beginning with the calendar quarter
ending December 31, 2008, and building to the previous four calendar
quarters).
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Quarter
Ending ________________, 20___
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EBITAR7 ($______________________) divided
by Fixed Charges8 ($____________________)
= Fixed Charge Coverage Ratio of ____________ .
See
calculations of EBITAR and Fixed Charges attached to this
Certificate
Compliance: __________
yes _________________ no
See attached Financial
Statements
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C.
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Covenant: Emeritus
agrees to permit no Change of Control without the prior written consent of
Lender.
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Compliance?
(Yes or
No) ____________________
More Restrictive Financial
Covenants
If
Emeritus has entered into an agreement with any other entity providing financing
to Emeritus or to any Affiliate of Emeritus to comply with any more restrictive
covenants than the Emeritus Covenants set out above, those more restrictive
covenants and Emeritus’ compliance or non-compliance therewith are described on
Schedule B to this Certificate. If Schedule B indicates “none,” this
Certificate shall constitute Emeritus’ representation to Lender that no such
more restrictive covenants have been agreed to.
3. Review of
Condition. Emeritus has reviewed the terms of the Agreement,
including, but not limited to, the representations, warranties and covenants of
Borrower set forth in the Agreement and has made a review in reasonable detail
of the transactions and condition of Borrower and Emeritus through the reporting
periods.
4. Representations and
Warranties. To the actual knowledge of Emeritus, the representations and
warranties of Borrower and Emeritus contained in the Loan Documents, including
those contained in the Agreement, are true and accurate in all material respects
as of the date hereof and were true and accurate in all material respects at all
times during the reporting period except as expressly noted on Schedule A
hereto.
7 Net
income computed in accordance with generally accepted accounting principles,
plus facility
lease expense, income taxes, interest expense depreciation, amortization, asset
impairment and other non-cash charges and plus or minus, as applicable,
non-recurring and/or extraordinary items.
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5. Covenants. To
the actual knowledge of Emeritus, during the reporting period, Borrower and
Emeritus observed and performed all of their respective covenants and other
agreements under the Agreement and the Loan Documents in all material respects,
except as expressly noted on Schedule A hereto.
6. No Event of
Default. To the actual knowledge of Emeritus, no Default or
Event of Default exists as of the date hereof or existed at any time during the
reporting period, except as expressly noted on Schedule A hereto.
IN
WITNESS WHEREOF, this Certificate is executed by this ____ day of __________,
20__.
EMERITUS
CORPORATION, a Washington corporation
By: _________________________________
Name: _________________________________
Title: _________________________________
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Exhibit
1
Amended
and Restated Promissory Note
13