Exhibit 10.17
REAL ESTATE LIEN NOTE
DATE: September 30, 1994
MARKER: Summit Care Corporation, a California corporation
PAYEE: Leonard May and Catherine May
PLACE FOR PAYMENT: 4733A Baldwin, Corpus Christi, Texas 78408
PRINCIPAL AMOUNT: Three Million Dollars ($3,000,000.00)
ANNUAL INTEREST RATE ON UNPAID PRINCIPAL FROM DATE OF FUNDING: Seven percent
(7%)
TERMS OF PAYMENT (PRINCIPAL AND INTEREST): In equal monthly installments of
Forty Five Thousand Two Hundred Seventy Eighty and 04/100 Dollars ($45,278.04)
(or more) each, the first payment being due November 15th, 1994, and a like
payment being due on the same day of each month thereafter until paid in full.
Interest shall be calculated on the unpaid principal to the date of each
installment paid, and the payment made credited first to the discharge of the
interest accrued and the balance to the reduction of the principal.
ANNUAL INTEREST RATE ON MATURED, UNPAID AMOUNTS: Eighteen Percent (18%)
SECURITY FOR PAYMENT: A Deed of Trust of even date herewith to Robert Anderson,
Trustee, upon the following-described property, to-wit:
As described on Exhibit "A" attached hereto and made a part hereof for
all purposes.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note or in the performance of any
obligation in any instrument securing or collateral to it, this note and all
obligations in all instruments securing or collateral to it shall become
immediately due at the election of Payee. Maker and each surety, endorser, and
guarantor waive all demands for payment, presentations for payment, notices of
intention to accelerate maturity, notices of acceleration of maturity, protests,
and notices of protest.
If this note or any instrument securing or collateral to it is
given to an attorney for collection or enforcement, or if suit is brought for
collection or enforcement, or if it is collected or enforced through probate,
bankruptcy, or other judicial proceeding, then Maker shall pay Payee reasonable
attorneys' fees in addition to other amounts due. Reasonable attorneys' fees
shall be 10% of all amounts due unless either party pleads otherwise.
Nothing in this note shall authorize the collection of interest in excess
of the highest rate allowed by law.
Each Maker is responsible for the entire amount of this note.
All agreements between Maker and Payee, whether now existing or hereafter
arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of the maturity hereof
or otherwise, shall the interest contracted for, charged, received, paid, or
agreed to be paid to Payee hereof exceed the maximum contractual rate permitted
under applicable law; and if from any circumstances Payee shall ever receive
anything of value deemed interest by applicable law in excess of the maximum
lawful amount, an amount equal to any excessive interest shall be applied to the
reduction of the principal hereof and if said amount exceeds the unpaid balance
of principal hereof, such excess shall be refunded to Maker. All interest paid
or agreed to be paid to Payee shall, to the extent permitted by applicable law,
be amortized, prorated, allocated, and spread throughout the full period until
payment in full of the principal so that the interest hereon for such full
period shall not exceed the maximum amount permitted by applicable law. This
paragraph shall control all agreements between Maker and Payee.
The terms Maker and Payee and other nouns and pronouns include the plural
if more than one. The terms Maker and Payee also include their respective
heirs, personal representatives, successors and assigns.
Maker shall have a right of off-set, but only to the extent of $100,000.00,
if any misrepresentations have been made by payees under that particular
Agreement of Purchase and Sale of Assets among maker, payee and others dated
August 23, 1994, but only to the extent that such misrepresentations result in
an actual monetary loss to maker.
SUMMIT CARE CORPORATION
By /s/ Derwin L. Williams
--------------------------
Derwin L. Williams
--------------------------
Its Vice President-Finance
----------------------
BETTERSWORTH & ASSOCIATES, INC.
ENGINEERS SURVEYORS
315 SOUTH CROCKETT ST. SEGUIN, TEXAS 78155
16449 AC (210) 379-5552
564-28 FAX (210) 379-5553
16449-C-O
SEPTEMBER 23, 1994 KEN L. REMMGER, P.E. & P.L.S.
5.199 ACRE TRACT
----------------
Being a 5.199 ACRE TRACT situated in and being part of Lot 1, Guadalupe Nursing
Center recorded in volume 5 at page 101A of the Plat Records of Guadalupe
County, Texas. Said 5.199 ACRE TRACT is that tract called 5.188 acres in
conveyance from Lloyd Hobbs to S&H, Inc. recorded in volume 900 at page 0339 of
the Official Records of said county and being described by metes and bounds, as
follows:
BEGINNING at a fence corner marking the southwest corner of the tract herein
described, some being the southwest corner of said S&H, Inc. tract, the
southeast corner of a tract called 60 x 145.5 feet recorded in volume 303 at
page 376, lying in the north line of a tract called 0.983 acres described in
volume 214 at page 340 and lying in the north line of F.M. Highway No. 466 (aka
Capote Road - Eastwood Drive);
THENCE with the west line of the tract herein described, same being the common
line of said S&H, Inc. tract with that of said 60 x 145.5 foot tract, as
follows:
N 04 degrees 56' 57" W 332.00 feet called N 04 degrees 55' 49" W 331.93
feet) to a two-way fence corner; and N 11 degrees 00' 48" W 99.76 feet
(called N 11 degrees 02' 34" W 99.71 feet) to a two-way fence corner
marking the northwest corner of the tract herein described, same being the
northwest corner of said S&H, Inc. tract, the northeast corner of said 60 x
145.5 foot tract, lying in the south line of the residue of a tract called
Tract One (15.72 acres) described in volume 472 at page 180;
THENCE with the north line of the tract herein described, same being the north
line of said S&H, Inc. tract, same being a segment of the common line of said
Lot 1 and said residue of 15.72 acres, S 89 dregrees 34' 13" E 557.84 feet
(called S 89 dregrees 34' 13" E 557.85 feet) to the northeast corner of the
tract herein described, same being the northeast corner of said S&H, Inc. tract
and northwest corner of a tract called 0.325 acres described in volume 876 at
page 75;
THENCE with the east line of the tract herein described, same being the common
line of said S&H, Inc. tract and said 0.325 acre tract, as follows:
S 00 degrees 25' 47" W 380.78 feet (called S 00 degrees 25' 47" W 300.78
feet) to a point; and
16449
564-28
16449-C-G
0.325 ACRE TRACT
September 23, 1994
Page 2
S 45 degrees 25' 00" W 70.71 feet (called S 45 degrees 25' 47" W 70.71
feet) to the southeast corner of the tract herein described, same being the
southeast corner of said S&H, Inc. tract and lying in the common line of
said Lot 1 and said F.M. Highway No. 466;
THENCE with the south line of the tract herein described, same being the common
line of said S&H, Inc. tract and said F.M. Highway No. 466, as follows:
N 89 degrees 34' 34" W 237.00 feet (called N 89 degrees 34' 13" W 237.00
feet) to a 1/2 inch diameter rebar found; and N 88 55' 11" 219.95 feet
(called N 88 53' 49" W 220.2 feet) to the PLACE OF BEGINNING and containing
5.199 ACRES OF LAND.
Basis of bearings is the record bearing along the north line of said S&H, Inc.
tract.
I hereby certify the foregoing field notes represent the results of an on the
ground survey made under my supervision in September, 1994.
/s/ Ken L. Reininger
------------------------------
Ken L. Reininger, P.L.S. 2633
BETTERSWORTH & ASSOCIATES, INC.
ENGINEERS SURVEYORS
315 SOUTH CROCKETT ST. SEGUIN, TEXAS 78155
16449 AC (210) 379-5552
564-28 FAX (210) 379-5553
16449-C-O
SEPTEMBER 23, 1994 KEN L. REMMGER, P.E. & P.L.S.
0.336 ACRE TRACT
----------------
Being a 0.336 ACRE TRACT situated in and being part of Lot 1 of Guadalupe Valley
Nursing Center recorded in volume 5 at page 101A of the Plat Records of
Guadalupe County, Texas. Said 0.336 ACRE TRACT is that tract called 0.325 acre
in conveyance from Mary Louise Orr, et al, to Lloyd Hobbs recorded in volume 876
at page 75 of the Official Records of said county and being described by metes
and bounds, as follows:
BEGINNING at a PK nail set marking the southeast corner of the tract herein
described, same being the southeast corner of said Hobbs tract, the southeast
corner of said Lot 1, the southwest corner of the residue of a tract called
Tract One described in volume 472 at page 180, lying in the north line of a
tract called 0.983 acres described in volume 214 at page 340 and lying in the
north line of F.M. Highway No. 466 (aka Capote Road - Eastwood Drive);
THENCE with the south line of the tract herein described, same being the common
line of said Hobbs tract and said 0.983 acre tract and along the north line of
said F.M. Highway No. 466, N 89 34' 34" W 80.00 feet to the southwest corner of
the tract herein described, same being the southwest corner of said Hobbs tract,
the southeast corner of a tract called 5.188 acres described in volume 900 at
page 0339;
THENCE with the west line of the tract herein described, same being the common
line of said Hobbs tract and said 5.188 acre tract, as follows:
N 45 degrees 25' 00" E 70.71 feet called N 45 degrees 25' 47" E 70.71
feet); and N 00 degrees 25' 47" E 380.78 feet (called N 00 degrees 25' 47"
E 380.78 feet) to the northwest corner of the tract therein described, same
being the northwest corner of said Hobbs tract, the northeast corner of
said 5.188 acre, lying in the north line of said Lot 1 and lying in the
south line of the residue of said Tract One;
THENCE with the north line of the tract herein described, same being the north
line of said Hobbs tract and a segment of the common line of said Lot 1 and said
Tract One, S 89 34' 13" E 30.01 feet (called S 89 34' 13" E 30 feet) to a 1/2
inch diameter rebar found marking the northeast corner of the tract herein
described, same being the northeast corner of said Hobbs tract, the northeast
corner of said Lot 1 and being a re-entrant corner of the residue of said Tract
One;
THENCE with the east line of the tract herein described, same being the east
line of said Hobbs tract and the common line of said Lot 1 and said Tract One, S
00 25' 46" W 430.78 feet (called S 00 25' 47" W 430.78) feet to the PLACE OF
BEGINNING and containing 0.336 ACRE OF LAND.
16449
564-28
16449-C-G
0.325 ACRE TRACT
September 23, 1994
Page 2
Basis of bearing is the record bearing along the north line of said Hobbs tract.
I hereby certify the foregoing field notes represent the results of an on the
ground survey made under my supervision in September, 1994.
/s/ Ken L. Reininger
------------------------------
Ken L. Reininger, P.L.S. 2633
DEED OF TRUST, SECURITY AGREEMENT
AND FINANCING STATEMENT
DATE: September 30, 1994
GRANTOR: Summit Care Corporation, a California corporation
GRANTOR'S ADDRESS: 2600 W. Magnolia Blvd., Burbank, CA 91505
TRUSTEE: Robert Anderson
TRUSTEE'S MAILING ADDRESS: 1200 American Bank Plaza, Corpus Christi, Texas
78475
BENEFICIARY: Leonard May and Catherine May
BENEFICIARY'S MAILING ADDRESS: P.O. Box 4956 Corpus Christi, Texas 78469
NOTE:
DATE: Even date herewith
AMOUNT: $3,000,000.00
MAKER: Summit Care Corporation, a California corporation
PAYEE: Leonard May and Catherine May
FINAL MATURITY DATE: Eighty Four (84) months from date
MAKER'S MAILING ADDRESS: 2600 W. Magnolia Blvd., Burbank, CA 91505
TERMS OF PAYMENT: As therein provided
PROPERTY (INCLUDING ANY IMPROVEMENTS):
Leasehold estate in and option to purchase the property described on
Exhibit "A" attached hereto and made a part hereof for all purposes.
PRIORITY OF LIEN: First lien
OTHER EXCEPTIONS TO CONVEYANCE AND WARRANTY: None
For value received and to secure the payment of the note, Grantor conveys
the property to Trustee in trust. Grantor warrants and agrees to defend the
title to the property. If Grantor performs all the covenants and pays the note
according to its terms, this deed of trust shall have no further effect, and
Beneficiary shall release it at Grantor's expense.
GRANTOR'S OBLIGATIONS:
GRANTOR AGREES TO:
1. keep the property in at least as good a repair and condition as it
exists as of the date hereof;
2. pay all taxes and assessments on the property before delinquency;
3. preserve the priority of lien;
4. maintain, in a form acceptable to Beneficiary, an insurance policy
that:
a. covers all improvements for their full insurable value as
determined when the policy is issued and renewed, unless Beneficiary approves a
smaller amount in writing;
b. contains an 80% co-insurance clause;
c. provides fire and extended coverage, including windstorm
coverage;
d. protects Beneficiary with a standard mortgage clause;
e. provides flood insurance at any time the property is in a flood
hazard area; and
f. contains such other coverage as Beneficiary may reasonably
require;
5. comply at all times with the requirements of the 80% co-insurance
clause;
6. deliver the insurance policy to Beneficiary and deliver renewals to
Beneficiary at least ten days before expiration;
7. keep any buildings occupied as required by the insurance policy;
8. if this is not a first lien, pay all prior lien notes that Grantor is
personally liable to pay and abide by all prior lien instruments;
9. as part of this transaction, it is agreed by and between Grantor and
Beneficiary that Grantor will pay the taxes annually prior to their due dates
and shall furnish copies of the paid receipt to Beneficiary prior to said dates,
showing the payment of all such taxes. In the event that Grantor should fail
for any reason to make such payments and furnish such receipts, Beneficiary may,
without waiving any of their rights of default under the Note and Deed of Trust,
require Grantor to establish an escrow account with Beneficiary and pay the
taxes on a monthly basis to Beneficiary as provided in the Deed of Trust.
Failure to establish and pay such sums into the escrow account may, at
Beneficiary's option, be considered a default.
BENEFICIARY'S RIGHTS
1. Beneficiary may appoint in writing a substitute or successor trustee,
succeeding to all rights and responsibilities of the original trustee.
2. If the proceeds of the note are used to pay any debt secured by prior
liens, Beneficiary is subrogated to all of the rights and liens of the holders
of any debt so paid.
3. Beneficiary may apply any proceeds received under the insurance policy
either to reduce the note or to repair or replace damaged or destroyed
improvements covered by the policy.
4. If Grantor fails to perform any of Grantor's obligations, Beneficiary
may perform those obligations and be reimbursed by Grantor, on demand, at the
place where the note is payable for any sums so paid, including attorney's fees,
plus interest on those sums from the dates of payment at the rate stated in the
note. The sum to be reimbursed shall be secured by this deed of trust.
5. If Grantor or Maker defaults on the note or if either fails to perform
any of their obligations, Beneficiary may:
a. declare the note, including any other sums secured by this deed
of trust, immediately due (Grantor waives the requirements for presentment,
demand for payment, notice of acceleration of maturity and notice of intention
to accelerate maturity);
b. request Trustee to foreclose this lien; and
c. purchase the property at any sale by offering the highest bid
and; have the bid credited on the note.
TRUSTEE'S DUTIES
If requested by Beneficiary to foreclose this lien, Trustee shall:
1. either personally or by agent give notice of the foreclosure sale as
required by the Texas Property Code as then amended;
2. sell and convey all or part of the property to the highest bidder for
cash with a general warranty binding Grantor, subject to prior liens and to
other exceptions to conveyance and warranty; and
3. from the proceeds of the sale, pay, in this order:
a. expenses of foreclosure, including a commission to Trustee of
five percent of the bid;
b. to Beneficiary, the full amount of principal, interest,
attorney's fees, and other charges due and unpaid;
c. any amounts required by law to be paid before payment to Grantor;
and
d. to Grantor, any balance.
GENERAL PROVISIONS
1. If any of the property is sold under this deed of trust, Grantor shall
immediately surrender possession to the purchaser. If Grantor fails to do so,
Grantor shall become a tenant at
sufferance of the purchaser, subject to an action for forcible detainer.
2. Recitals in any trustee's deed conveying the property will be deemed
conclusively true.
3. Proceeding under this deed of trust, filing suit for foreclosure, or
pursuing any other remedy will not constitute an election of remedies.
4. This lien shall remain superior to liens later created even if the
time of payment of all or part of the note is extended or part of the property
is released.
5. If any portion of the note cannot be lawfully secured by this deed of
trust, payments shall be applied first to discharge that portion.
6. Grantor assigns to Beneficiary all sums payable to or received by
Grantor from condemnation of all or part of the property, from private sale in
lieu of condemnation, and from damages caused by public works or constructions
on or near the property. After deducting any expenses incurred, including
attorney's fees, Beneficiary may release any remaining sums to Grantor or apply
such sums to reduce the note. Beneficiary shall not be liable for failure to
collect or to exercise diligence in collecting any such sums.
7. Grantor assigns to Beneficiary absolutely, not only as collateral, all
present and future rent and other income and receipts from the property.
Grantor warrants and validity and enforceability of the assignment. Grantor
may, as Beneficiary's licensee, collect rent and other income and receipts as
long as Grantor is not in default under the note or this deed of trust. Grantor
will apply all rent and other income and receipts to payment of the note and
performance of this deed of trust, but if the rent and other income and receipts
exceed the amount due under the note and deed of trust, Grantor may retain the
excess. If Grantor defaults in payment of the note or performance of this deed
of trust, Beneficiary may terminate Grantor's license to collect and then as
Grantor's agent may rent the property if it is vacant and collect all rent and
other income and receipts. Beneficiary neither has nor assumes any obligations
as lessor or landlord with respect to any occupancy of the property.
Beneficiary may exercise Beneficiary's rights and remedies under this paragraph
without taking possession of the property. Beneficiary shall apply all rent and
other income and receipts collected under this paragraph first to expenses
incurred in exercising Beneficiary's rights and remedies and then to Grantor's
obligations under the note and this Deed of Trust in the order determined by
Beneficiary. Beneficiary is not required to act under this paragraph, and
acting under this paragraph does not waive any of Beneficiary's other rights or
remedies. If Grantor becomes a voluntary or involuntary bankrupt, Beneficiary's
filing a proof of claim in bankruptcy will be tantamount to the appointment of a
receiver under Texas Law.
8. Interest on the debt secured by this deed of trust shall not exceed
the maximum amount of nonusurious interest that may be contracted for, taken,
reserved, charged, or received under law; any interest in excess of that maximum
amount shall be credited on the principal of the debt or, if that has been paid,
refunded. On
any acceleration or required or permitted prepayment, any such excess shall be
canceled automatically as of the acceleration or prepayment or, if already paid,
credited on the principal of the debt, or if the principal of the debt has been
paid, refunded. This provision overrides other provisions in this and all other
instruments concerning the debt.
9. When the context requires, singular nouns and pronouns include the
plural.
10. The term note includes all sums secured by this deed of trust.
11. This deed of trust shall bind, inure to the benefit of, and be
exercised by successors in interest of all parties.
12. If Grantor and Maker are not the same person, the term Grantor shall
include maker.
13. In the event of any sale either judicial or voluntary, of the property
above described, or any part thereof, Beneficiary shall have the right at
Beneficiary's option to declare the entire indebtedness hereby secured due and
payable.
14. The note hereby secured may from time to time be renewed or extended
by the Holder of Holders thereof, and in any such case all the provisions of
this Deed of Trust, and the lien hereof, shall remain in full force with the
same effect as if said note had originally been made to mature at such extended
time or times.
15. Should any portion of the indebtedness evidenced by the above
described note not be secured by a valid lien hereunder on the above described
property, then all payments made on said note shall be applied to the payment of
the unsecured portion thereof until such unsecured portion, and interest thereon
shall have been paid.
16. It is agreed that the lien hereby created shall take precedence over
and be a prior lien to any other lien of any character whether vendor's
materialmen's or mechanic's lien hereafter created on the above described
property. In the event the proceeds of the indebtedness secured hereby as set
forth herein are used to pay off and satisfy any liens heretofore existing on
said property, then Beneficiary is, and shall be subrogated to all of the
rights, liens and remedies of the holders of the indebtedness so paid.
17. It is agreed that an extension, or extensions, may be made of the time
of payment of all, or any part, of the indebtedness secured hereby. Any part of
the above described real property may be released from this lien without
altering or affecting the priority of the lien created by this Deed of Trust in
favor of any junior encumbrancer, mortgage or purchaser, or any person acquiring
an interest in the property hereby conveyed, or any part thereof. It is the
intention of the parties hereto to preserve this lien on the property herein
described and all improvements thereon, and that may be hereafter constructed,
first and superior to any liens that may be placed thereon, or that may be
fixed, given or imposed by law thereon after the execution of this instrument
notwithstanding any such extension of the time of payment, or the release of a
portion of said property from this lien.
18. This Deed of Trust is also intended to be a security
agreement pursuant to the Texas Business and Commerce Code as to all property
described above other than the realty, which under applicable law, may be made
subject to a security interest. Grantor hereby grants to the Beneficiary a
security interest in said property (also herein described as "goods"). Grantor
agrees to execute and deliver financing statements covering said goods from time
to time and in such form as the Beneficiary may require to perfect a security
interest with respect to said goods. Grantor shall pay all costs of filing such
statements and renewals and releases thereof and shall pay all reasonable costs
and expenses of any record searches for financing statements which Beneficiary
may reasonably require. Without the prior written consent of the Beneficiary,
Grantor shall not create or suffer to be created any other security interest in
said goods including replacements and additions thereto. Upon default in
payment of the indebtedness secured hereby when due or declared due, the
Beneficiary shall have the remedies of a secured party under the Texas Business
and Commerce Code and, at the Beneficiary's option, may also invoke the remedies
provided in this Deed of Trust as to such goods. In the event of a foreclosure
sale under this Deed of Trust, Grantor agrees that all the real and personal
property may be sold as a whole at Beneficiary's option and that said goods need
not be present at the place of sale.
19. This Deed of Trust covers goods which are or are to become fixtures
related to the real estate described herein. This Deed of Trust, as to such
goods, is intended as a financing statement to be filed in the Real Estate
Records of the County where the real property is located.
20. The lien hereby created is secondary and inferior to that particular
deed of trust dated August 31, 1988, recorded in Volume 711, Page 612 of the
deed of Trust Records of Fayette County, Texas, securing a note of even date
therewith in the original principal sum of $2,000,000.00, and the obligation to
pay said indebtedness has been assumed by Grantor. In the event of any default
under the terms of said indebtedness or any renewal or extension thereof, or in
the event of any default under any instrument securing said indebtedness, the
note hereby secured, at the option of the holder thereof, may be declared
immediately due and payable. It is further agreed that Beneficiary shall not be
required to release this lien until the above mentioned first lien indebtedness
has been paid in full, and in the event of any default under the terms of said
first lien indebtedness, Beneficiary may cure any such default, shall be
subrogated to the rights of the holder of such first lien indebtedness and this
deed of trust shall secure the Beneficiary for the repayment of any advances
made by Beneficiary. All such payments made by Beneficiary under the first lien
indebtedness shall be due and repayable immediately from Grantors, with interest
at the rate of eighteen percent (18%) per annum due from the date of any advance
being made.
SUMMIT CARE CORPORATION
By /s/ Derwin L. Williams
----------------------
Derwin Williams, Vice President-
Finance, Chief Financial Officer
(Acknowledgment)
THE STATE OF Texas *
----------
*
COUNTY OF Neuces *
--------------
This instrument was acknowledged before me on the 30th day of
----------
September, 1994, by Derwin Williams, Vice President-Finance, Chief Financial
- ---------
Officer, Summit Care Corporation, a California corporation.
[Signature]
---------------------------------
Notary Public, State of _____________
My Commission Expires:___________
________________________________
Typed or Printed Name
PREPARED IN THE LAW OFFICES OF:
MARVIN J WANNER
SORRELL ANDERSON LEHRMAN WANNER & THOMAS
1200 AMERICAN BANK PLAZA
CORPUS CHRISTI TX 78475
AFTER RECORDING:
RETURN TO:
ROBERT ANDERSON
1100 AMERICAN BANK
CORPUS CHRISTI, TX 78475
RE: LEONARD AND CATHERINE MAY
MAY ENTERPRISES, INC.
SECURITY AGREEMENT
DATE: September 30, 1994
DEBTOR: Summit Care Corporation, a California corporation
DEBTOR'S MAILING ADDRESS (INCLUDING COUNTY): 2600 W. Magnolia Blvd., Burbank,
California 91505
SECURED PARTY: Leonard May and Catherine May
SECURED PARTY'S MAILING ADDRESS (INCLUDING COUNTY): 4733A Baldwin, Corpus
Christi, Texas 78408
CLASSIFICATION OF COLLATERAL: Equipment, inventory, accounts, general
intangibles
COLLATERAL (INCLUDING ALL ACCESSIONS): All personal property used in or arising
from the operation of nursing home facility in Seguin, Texas
OBLIGATION NOTE:
DATE: Even date herewith
AMOUNT: $3,000,000.00
PAYEE: Leonard May and Catherine May
MAKER: Summit Care Corporation
FINAL MATURITY DATE: Eighty Four (84) months from date
TERMS OF PAYMENT: As provided in said note
Subject to the terms of this agreement, Debtor grants to Secured Party a
security interest in the collateral and all its proceeds to secure payment and
performance of Debtor's obligation in this security agreement and all renewals
and extensions of any of the obligation.
DEBTOR'S WARRANTIES
1. Financing Statement. Except for that in favor of Secured Party, no
financing statement covering the collateral is filed in any public office.
2. Ownership. Debtor owns the collateral and has the authority to grant
this security interest. Ownership is free from any setoff, claim, restriction,
lien, security interest, or encumbrance except this security interest and liens
for taxes not yet due.
3. Fixtures and Accessions. None of the collateral is
affixed to real estate, is an accession to any goods, is commingled with other
goods, or will become a fixture, accession, or part of a product or mass with
other goods except as expressly provided in this agreement.
4. Financial Statements. All information about Debtor's financial
condition provided to Secured Party was accurate when submitted, as will be any
information subsequently provided.
DEBTOR'S COVENANTS
1. Protection of Collateral. Debtor will defend the collateral against
all claims and demands adverse to Secured Party's interest in it and will keep
it free from all liens except those for taxes not yet due and from all security
interests except this one. The collateral will remain in Debtor's possession or
control at all times, except as otherwise provided in this agreement. Debtor
will maintain the collateral in good condition and protect it against misuse,
abuse, waste, and deterioration except for ordinary wear and tear resulting from
its intended use.
2. Insurance. Debtor will insure the collateral in accord with Secured
Party's reasonable requirements regarding choice of carrier, casualties insured
against, and amount of coverage. Policies will be written in favor of Debtor and
Secured Party according to their respective interests or according to Secured
Party's other requirements. All policies will provide that Secured Party will
receive at least ten days' notice before cancellation, and the policies or
certificates evidencing them will be provided to Secured Party when issued.
Debtor assumes all risk of loss and damage to the collateral to the extent of
any deficiency in insurance coverage. Debtor irrevocably appoints Secured Party
at attorney-in-fact to collect any return, unearned premiums, and proceeds of
any insurance on the collateral and to endorse any draft or check deriving from
the policies and made payable to debtor.
3. Secured Party's Costs. Debtor will pay all expenses incurred by
Secured Party in obtaining, preserving, perfecting, defending, and enforcing
this security interest or the collateral and in collecting or enforcing the
note. Expenses for which Debtor is liable include, but are not limited to,
taxes, assessments, reasonable attorney's fees, and other legal expenses. These
expenses will bear interest from the dates of payments at the highest rate
stated in notes that are part of the obligation, and Debtor will pay Secured
Party this interest on demand at a time and place reasonably specified by
Secured Party. These expenses and interest will be part of the obligation and
will be recoverable as such in all respects.
4. Additional Documents. Debtor will sign any papers that Secured Party
considers necessary to obtain, maintain and perfect this security interest or to
comply with any relevant law.
5. Notice of Changes. Debtor will immediately notify Secured Party of
any material change in the collateral; change in Debtor's name, address or
location; change in any matter warranted or represented in this agreement;
change that may affect this security interest; and any event of default.
6. Use and Removal of Collateral. Debtor will use the collateral
primarily according to the stated classification unless Secured Party consents
otherwise in writing. Debtor will not permit the collateral to be affixed to
any real estate, to become an accession to any goods, to be commingled with
other goods, or to become a fixture, accession, or part of a product or mass
with other goods, except as expressly provided in this agreement.
7. Sale. Debtor will not sell, transfer, or encumber any of the
collateral without the prior written consent of Secured Party.
RIGHTS AND REMEDIES OF SECURED PARTY
1. Generally. Secured Party may exercise the following rights and
remedies either before or after default:
a. take control of any proceeds of the collateral;
b. release any collateral in Secured Party's possession to any
debtor, temporarily or otherwise;
c. take control of any funds generated by the collateral, such as
refunds from and proceeds of insurance, and reduce any part of the obligation
accordingly or permit Debtor to use such funds to repair or replace damaged or
destroyed collateral covered by insurance; and
d. demand, collect, convert, redeem, settle, compromise, receipt
for, realize on, adjust, sue for, and foreclose on the collateral either in
Secured Party's or Debtor's name, as Secured Party desires.
2. Insurance. If Debtor fails to maintain insurance as required by this
agreement or otherwise by Secured Party, then that will protect only Secured
Party. If Secured Party purchases Secured Party may purchase single-interest
Insurance Coverage this insurance, its premiums will become part of the
obligation.
EVENTS OF DEFAULT
Each of the following conditions is an event of default:
1. if Debtor defaults in timely payment or performance of any obligation,
covenant, or liability in any written agreement between Debtor and Secured Party
or in any other transaction secured by this agreement;
2. if any warranty, covenant, or representation made to Secured Party by
or on behalf of Debtor provides to have been false in any material respect when
made;
3. if a receiver is appointed for Debtor or any of the collateral;
4. if the collateral is assigned for the benefit of creditors or, to the
extent permitted by law, if bankruptcy or insolvency proceedings commence
against or by any of these parties: Debtor; any partnership of which Debtor is a
general partner; and any maker, drawer, acceptor, endorser, guarantor, surety,
accommodation party, or other person liable on or for any part of the
obligation;
5. if any financing statement regarding the collateral but not related to
this security interest and not favoring Secured Party is filed;
6. if any lien attaches to any of the collateral;
7. if any of the collateral is lost, stolen, damaged, or destroyed,
unless it is promptly replaced with collateral of like quality or restored to
its former condition.
REMEDIES OF SECURED PARTY ON DEFAULT
During the existence of any event of default, Secured Party may declare the
unpaid principal and earned interest of the obligation immediately due in whole
or in part, enforce the obligation, and exercise any rights and remedies granted
by the Texas Uniform Commercial Code or by this agreement, including the
following:
1. require Debtor to deliver to Secured Party all books and records
relating to the collateral;
2. require Debtor to assemble the collateral and make it available to
Secured Party at a place reasonably convenient to both parties;
3. take possession of any of the collateral and for this purpose enter
any premises where it is located if this can be done without breach of the
peace;
4. sell, lease or otherwise dispose of any of the collateral in accord
with the rights, remedies, and duties of a secured party under chapters 2 and 9
of the Texas Uniform Commercial Code after giving notice as required by those
chapters; unless the collateral threatens to decline speedily in value, is
perishable, or would typically be sold on a recognized market, Secured Party
will give Debtor reasonable notice of any public sale of the collateral or of a
time after which it may be otherwise disposed of without further notice to
Debtor; in this event, notice will be deemed reasonable if it is mailed, postage
prepaid, to Debtor at the address specified in this agreement at least ten days
before any public sale or ten days before the time when the collateral may be
otherwise disposed of without further notice to Debtor;
5. surrender any insurance policies covering the collateral and receive
the unearned premium;
6. apply any proceeds from disposition of the collateral after default in
the manner specified in chapter 9 of the Texas Uniform Commercial Code,
including payment of Secured Party's reasonable attorney's fees and court
expenses; and
7. if disposition of the collateral leaves the obligation unsatisfied,
collect the deficiency from Debtor.
GENERAL PROVISIONS
1. Parties Bound. Secured Party's rights under this agreement shall
inure to the benefit of its successors and assigns. Assignment of any part of
the obligation and delivery by Secured Party of any part of the collateral will
fully discharge Secured Party from responsibility for that part of the
collateral. If Debtor is more than one, all their representations, warranties,
and agreements are joint and several. Debtor's obligations under this agreement
shall bind Debtor's personal representatives, successors and assigns.
2. Waiver. Neither delay in exercise nor partial exercise
of any of Secured Party's remedies or rights shall waive further exercise of
those remedies or rights. Secured Party's failure to exercise remedies or
rights does not waive subsequent exercise of those remedies or rights. Secured
Party's waiver of any default does not waive further default. Secured Party's
waiver of any right in this agreement or of any default is binding only if it is
in writing. Secured party may remedy any default without waiving it.
3. Reimbursement. If Debtor fails to perform any of Debtor's
obligations, Secured Party may perform those obligations and be reimbursed by
Debtor on demand at the place where the notice is payable for any sums so paid,
including attorney's fees and other legal expenses, plus interest on those sums
from the dates of payment at the rate stated in the note for matured, unpaid
amounts. The sum to be reimbursed shall be secure by this security agreement.
4. Interest Rate. Interest included in the obligation shall not exceed
the maximum amount of nonusurious interest that may be contracted for, taken,
reserved, charged, or received under law: any interest in excess of that maximum
amount shall be credited to the principal of the obligation or, if that has been
paid, refunded. On any acceleration or required or permitted prepayment of the
obligation, any such excess shall be canceled automatically as of the
acceleration or prepayment or, if already paid, credited on the principal amount
of the obligation or, if the principal amount has been paid, refunded. This
provision overrides other provisions in this and all other instruments
concerning the obligation.
5. Modifications. No provisions of this agreement shall be modified or
limited except by written agreement.
6. Severability. The unenforceability of any provision of this agreement
will not affect the enforceability or validity of any other provision.
7. After-Acquired Consumer Goods. This security interest shall attach to
after-acquired consumer goods only to the extent permitted by law.
8. Applicable law. This agreement will be construed according to Texas
laws.
9. Place of Performance. This agreement is to be performed in the county
of Security Party's mailing address.
10. Financing Statement. A carbon, photographic, or other reproduction of
this agreement or any financing statement covering the collateral is sufficient
as a financing statement.
11. Presumption of Truth and Validity. If the collateral is sold after
default, recital in the bill of sale or transfer will be prima facie evidence of
their truth, and all prerequisites to the sale specified by this agreement and
by the Texas Uniform Commercial Code will be presumed satisfied.
12. Singular and Plural. When the context requires, singular nouns and
pronouns include the plural.
13. Priority of Security Interest. This security interest shall neither
affect nor be affected by any other security for any of the obligation. Neither
extensions of any of the obligation nor releases of any of the collateral will
affect the priority or
validity of this security interest with reference to any third person.
14. Cumulative Remedies. Foreclosure of this security interest by suit
does not limit Secured Party's remedies, including the right to sell the
collateral under the terms of this agreement. All remedies of Secured Party may
be exercised at the same or different times, and no remedy shall be a defense to
any other. Secured Party's rights and remedies include all those granted by law
or otherwise, in addition to those specified in this agreement.
15. Agency. Debtor's appointment of Secured Party as Debtor's agent is
coupled with an interest and will survive any disability of Debtor.
16. Attachments Incorporated. The addendum indicated below is attached to
this agreement and incorporated into it for all purposes:
(x) addendum relating to accounts, inventory, documents, chattel paper,
and general intangibles.
( ) addendum relating to instruments
SECURED PARTY:
/s/ Leonard May
-----------------------------
Leonard May
/s/ Catherine May
-----------------------------
Catherine May
DEBTOR:
SUMMIT CARE CORPORATION
By /s/ Derwin L. Williams
----------------------------
Derwin L. Williams
----------------------------
Its Vice President-Financial
---------------------------
ADDENDUM TO SECURITY AGREEMENT
(Accounts, Inventory, Documents, Chattel Paper, and
General Intangibles)
DATE: September 30, 1994
DEBTOR: Summit Care Corporation
SECURED PARTY: Leonard May and Catherine May
DATE OF SECURITY AGREEMENT: even date herewith
The collateral includes one or more of these classifications: accounts,
inventory, document, chattel paper, and general intangibles; this addendum
covering that collateral applies to and is incorporated into the security
agreement to which it is attached.
DEBTOR'S WARRANTY
No account debtors or other obligors whose debts or obligations are part of
the collateral have any right to setoffs, counterclaims, or adjustments or any
defenses in connection with their debts or obligations.
DEBTOR'S COVENANTS
1. Information and Inspection. At the time and in the form specified by
Secured Party, Debtor will furnish Secured party any requested information
related to the collateral, which may include:
a. all information necessary to identify any of the collateral; and
b. shipping and delivery receipts evidencing the shipment of goods,
and invoices evidencing receipt of and payment for inventory in
collateral.
Debtor will also allow Secured Party to inspect the collateral at any time and
place and to inspect and copy all records relating to the collateral and the
obligation, as long as these are accomplished without breach of the peace.
2. Parties Liable on the Collateral. Debtor will preserve the liability
of all obligors on the collateral, preserve the priority of all security for the
collateral, and deliver to Secured Party the original certificates of title on
all motor vehicles included in the collateral.
3. Modification of Collateral. Without the written consent of Secured
Party, Debtor will not agree to any modification of terms in any writing related
to the collateral.
4. Delivery of Receipts to Secured Party. On Secured Party's demand
Debtor will deposit all payments received as proceeds of collateral in a special
bank account designated by Secured Party, who alone will have power of
withdrawal. Debtor will deposit the
payments on receipt, in the form received, and with any necessary endorsements
as security for the obligation. Secured Party may make any endorsements in
Debtor's name and behalf. Between receiving and depositing these payments
Debtor will not mingle them with any of Debtor's other funds or property but
will hold them separate and in an express trust for Secured Party. Secured
Party shall apply all or part of these funds against the obligation.
5. Rejected Goods and Unpaid Accounts. If the collateral includes
inventory or accounts, then unless notified otherwise in writing by Secured
Party, Debtor will:
a. inform Secured Party immediately of the rejection of goods, delay
in delivery or performance, or claim made in regard to any
collateral;
b. as trustee for Secured Party, keep returned goods segregated from
Debtor's other property until Secured Party has been paid the
amount loaned against the related account and deliver the goods on
demand to Secured Party; and
c. pay Secured Party the unpaid amount of any account in collateral
under any of these conditions: if the account is not paid when due;
if purchaser rejects the goods or services covered by the account;
or if Secured Party rejects the account as unsatisfactory. Secured
Party may retain the account in collateral and may charge any
deposit account of Debtor with the unpaid amount.
6. Records of Collateral. Debtor will maintain accurate books and
records covering the collateral and showing the assignment of accounts in
collateral to Secured Party. Only undisputed and unpaid amounts will be shown
as owed to Debtor on the books and any assignment schedule.
7. Disposition of Collateral. If the collateral included inventory but
not accounts, Debtor will immediately notify Secured Party of the disposition of
any inventory and that Debtor's expense will either assign to Secured Party a
first priority security interest in any resulting account, chattel paper, or
instrument or deliver to Secured Party cash in the amount of the sale price.
Debtor will not sell, lease, or otherwise dispose of any collateral except in
the ordinary course of business without the prior written consent of Secured
Party.
8. Accounts. Each account in the collateral will represent the valid,
legally enforceable obligations of third parties and will not be evidenced by
any instrument or chattel paper.
9. Location of Accounts and Inventory. Debtor will notify Secured Party
in writing of the location of records of accounts in collateral, of the
locations of inventory in collateral, and, prior to the change, of any change in
these locations. Absent this notice, Debtor's records of accounts and inventory
will be kept at Debtor's mailing address specified in this agreement.
10. Consumer Credit. If any collateral or proceeds include obligations of
third parties to Debtor, the transactions creating those obligations will
conform in all respects to applicable state and federal consumer credit law.
11. Chattel Paper. By means satisfactory to Secured Party,
Debtor has perfected or will perfect a security interest in goods covered by
chattel paper in collateral.
12. Possession of Collateral. By delivering a copy of this agreement to
the broker, seller, or other person in possession of collateral that is chattel
paper or documents Secured Party will effectively notify that person of Secured
Party's interest in the collateral. Delivery of the copy of the agreement will
also constitute Debtor's instruction to deliver to Secured Party certificates or
other evidence of the collateral as soon as it is available. Debtor will
immediately deliver to Secured Party all chattel paper and documents that are
collateral as soon as it is available. Debtor will immediately deliver to
Secured Party all chattel paper and documents that are collateral in Debtor's
possession. If that collateral is hereafter acquired, Debtor will deliver it to
secured party immediately following acquisition and either endorse it to Secured
Party's order or give Secured Party appropriate executed powers.
13. Uncertificated Securities. If the collateral is uncertificated
securities, Secured Party's delivery of a copy of this agreement to the
financial intermediary on whose books the Debtor's interest in the collateral
appears will effectively notify the financial intermediary of Secured Party's
interest in the collateral and will constitute Debtor's instruction that the
issuer of the securities register their pledge to Secured Party. Debtors agrees
to do everything required by Secured Party to complete the transfer and
perfection of this security interest.
RIGHTS AND REMEDIES OF SECURED PARTY.
1. General. After default Secured Party may exercise any or all of these
rights and remedies:
a. Contact account debtors directly to verify information furnished by
Debtor;
b. notify obligors on the collateral to pay Secured Party directly;
c. take control of all proceeds of and payments on any collateral and
apply them against the obligation; and
d. as Debtor's agent endorse any documents or chattel paper that is
collateral or that represents proceeds of collateral.
2. Liability. Secured Party has no obligation to collect any account and
will not be liable for failure to collect any account or for any act or omission
on the part of Secured Party or Secured Party's officers, agents, or employees,
except willful misconduct.
SECURED PARTY:
/s/ Leonard May
---------------------------------
Leonard May
/s/ Catherine May
---------------------------------
Catherine May
DEBTOR:
SUMMIT CARE CORPORATION
By /s/ Derwin L. Williams
--------------------------------
Derwin L. Williams
--------------------------------
Its Vice President-Finance
--------------------------------