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EXHIBIT 10.73
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FACILITY AGREEMENT
by and between
AMERICAN HEALTH PROPERTIES, INC.,
a Delaware corporation ("American Health")
and
BALANCED CARE CORPORATION,
a Delaware corporation ("Balanced Care").
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January 30, 1998
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TABLE OF CONTENTS
1. Definitions and Construction...........................................................1
2. Term; Limitation of Funding............................................................7
3. Pre-Development Services...............................................................8
4. Acquisition of Qualified Properties....................................................10
5. Development, Lease and Operation of Qualified Property.................................15
6. Title Insurance; Status of Title.......................................................16
7. Option Agreement.......................................................................16
8. Representations of Balanced Care.......................................................20
9. Representations of American Health.....................................................21
10. Conditions to Obligations of American Health and AHP..................................22
11. Conditions to Obligations of Balanced Care and BCC....................................22
12. Covenants of Balanced Care............................................................22
13. Default...............................................................................22
14. Calculation of Days...................................................................25
15. Miscellaneous.........................................................................25
LIST OF EXHIBITS
Exhibit A - Form of Completion Guarantee
Exhibit B - Form of Development Agreement
Exhibit C - Form of Environmental Indemnity
Exhibit D - Form of Lease
Exhibit E - Form of Management Agreement
Exhibit F - Form of Leasehold Mortgage
Exhibit G - Form of Management Guarantee
Exhibit H - Form of Shortfall Funding Agreement
Exhibit I - Form of Assignment of Acquisition Rights
Exhibit J - Form of Option Agreement
Exhibit K - Form of Working Capital Assurance Agreement
Exhibit L - Exceptions to Representations and Warranties
Exhibit M - Form of Non-Competition Agreement
Exhibit N - Form of Security and Subordination Documents:
Exhibit N-1 - Guaranty of Payment and Performance
Exhibit N-2 - Subordination and Standstill Agreement
Exhibit N-3 - Security Agreement
Exhibit N-4 - Assignment of Leases, Rents and Receivables
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FACILITY AGREEMENT
THIS FACILITY AGREEMENT is made and entered into this 1st day of
February, 1998, to be effective for all purposes as of the 30th day of January
1998 by and between BALANCED CARE CORPORATION, a Delaware corporation ("BALANCED
CARE") and AMERICAN HEALTH PROPERTIES, INC., a Delaware corporation ("AMERICAN
HEALTH") with reference to the following facts:
A. Balanced Care is in the business of operating and managing assisted
living, senior independent living and skilled nursing facilities and providing
patients services to the residents of those facilities including therapies,
pharmacy, medical supplies and rehabilitation services.
B. Balanced Care wants American Health and/or one or more of its
wholly-owned subsidiaries (which subsidiaries are referred to herein,
individually and collectively, as "AHP") to develop up to five (5) new assisted
living facilities (each, a "FACILITY" and collectively, the "FACILITIES") for an
aggregate cost to AHP of no more than Thirty Five Million Dollars ($35,000,000)
in the aggregate, each of which shall be leased by AHP to a special purpose
limited liability company ("TENANT"), as tenant, with (i) each such Tenant
solely owning and incurring liabilities solely related to the leasehold interest
in the Facility and personal property relating to the operation thereof, and
(ii) the outstanding ownership interests in Tenant at all times held 99% by
Assisted Care Operators, L.L.C., a Delaware limited partnership ("PRIMARY
PARENT") and 1% by Oakhaven Senior Living, Inc., a California corporation
("SECONDARY PARENT") (Primary Parent and Secondary Parent being referred to
herein as "TENANT PARENT") and (iii) such Facility operated, pursuant to a
written management agreement with Tenant, by a wholly owned subsidiary of
Balanced Care as manager ("MANAGER") and AHP wants to develop the Facilities on
the terms and subject to the conditions provided in this Agreement.
C. AHP wants to engage BCC DEVELOPMENT AND MANAGEMENT CO., a Delaware
corporation ("DEVELOPER") as the developer of each of the Facilities and
Balanced Care wishes (i) to cause Developer to accept such engagement and (ii)
to cause Manager to accept Tenant's engagement of Manager as the manager of each
Facility and (iii) to cause Manager and Balanced Care to commit to provide
additional capital and services to Tenant or any successor owner or lessee of
each Facility, on the terms and subject to the conditions hereinafter provided.
All of Balanced Care's wholly-owned subsidiaries acting as Manager or Developer
with respect to any Project or Facility (as defined below) are referred to
herein, individually and collectively, as "BCC".
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally and equitably bound,
do hereby agree as follows:
1. Definitions and Construction.
1.1 Definitions. Each of the following terms, when used in this
Agreement, shall have the meaning indicated below:
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(a) "APPLICABLE LAWS" shall mean all local, city, county,
state and federal laws, codes, rules, regulations, ordinances and directives,
covenants, easements and restrictions of record, statutes, decisional case
authority and administrative authority, permits, and any requirements of any
applicable fire insurance underwriter or rating bureau, relating in any manner
to a Qualified Property, a Facility, or to the use, ownership or operation of
either of the foregoing or to any activities conducted thereon or thereabout,
including, without limitation, any laws relating to planning, zoning or
Hazardous Substances, now in effect or which may hereafter come into effect.
(b) "ASSIGNMENT OF ACQUISITION RIGHTS" shall have the
meaning ascribed thereto in Section 4.2.
(c) "BEST KNOWLEDGE" of a Person as to any matter shall
mean that knowledge which is actually known regarding the matter or which would
have been acquired if a responsible and prudent representative had made a
reasonable inquiry and investigation of such matter.
(d) "CHANGE IN CONTROL" shall mean the acquisition of by
any Person or group of Persons acting in concert (other than the current
management of the corporation) of the beneficial interest in sufficient Voting
Stock of a corporation to permit the Person(s) acquiring such beneficial
interests to vote for the majority of the board of directors of the corporation.
(e) "CLOSING" shall mean the acquisition of fee simple
title to a Qualified Property in accordance with the Assignment of Acquisition
Rights and the Property Acquisition Agreement contemplated therein.
(f) "COLLATERAL ASSIGNMENT" shall mean an assignment from
Tenant to AHP and American Health of the Tenant's rights under the Management
Agreement and the Shortfall Funding Agreement with respect to each Facility,
which Collateral Assignments shall also include the direct assurance of Balanced
Care to provide such funding to successor tenants of the Facility and each of
which shall be substantially in the form attached to each Lease as Exhibit C
thereto.
(g) "COMMENCE CONSTRUCTION" shall mean the mobilization of
the Prime Contractor (as defined in the Development Agreement), commencement of
site and other work and, at the time of determination, the continuing diligent
prosecution of the Substantial Completion (as defined in the Development
Agreement) of the Project to be constructed on a Qualified Property in
accordance with sound construction industry practice.
(h) "COMPLETION GUARANTEE" shall mean the written
guarantee of Balanced Care with respect to each Facility, guaranteeing to
American Health and AHP (i) the Final Completion of each Facility at a cost to
AHP less than or equal to the Approved Budget (as such term is defined in the
Development Agreement and (ii) the complete and timely performance by Developer
of all of its obligations under the Development Agreement applicable to each
Facility, with each such Completion Guarantee to be substantially in the form of
Exhibit A attached hereto.
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(i) "DEPOSIT PLEDGE AGREEMENT" shall mean the Deposit
Pledge Agreement to be entered into by the Tenant of each Facility in the form
attached to the Lease as Exhibit J thereto.
(j) "DEVELOPMENT AGREEMENT" shall mean the agreement with
respect to each Facility entered into by and between Developer and AHP and
providing for the development of each Facility upon the Qualified Property, each
of which shall be substantially in the form attached hereto as Exhibit B.
(k) "ENVIRONMENTAL INDEMNITY" shall mean the agreement
entered into with respect to each Facility by Balanced Care in favor of AHP,
each of which shall be in the form attached hereto as Exhibit C .
(l) "FINAL COMPLETION" of a Facility shall mean "Final
Completion" as defined in the Development Agreement.
(m) "FINANCIAL STATEMENTS" of a Person shall mean audited
financial statements of that Person (with the exception that Financial
Statements of Tenant shall be certified by Tenant and Manager as true, correct,
accurate, complete and fairly presenting the financial condition of Tenant by a
representative of Tenant authorized to make such certification), prepared in
accordance with GAAP, which fairly present that Person's financial condition as
at the dates of such Financial Statements and results of operations, properties
or prospects of that Person, including at a minimum statements of earnings and
retained earnings and of changes in financial position for such period and for
the period from the beginning of the respective fiscal year of the Person to the
end of such period, a statement of cash flows for the period(s) then ended and
the related balance sheet as at the end of such period together with the notes
thereto (which shall include reasonable detail regarding any and all contingent
liabilities of the Person), all in reasonable detail and setting forth in
comparative form the corresponding figures for the corresponding period in the
preceding fiscal year of the Person.
(n) "GAAP" shall mean generally accepted accounting
principles applied consistently from period to period.
(o) "GOVERNMENTAL AUTHORITY" shall mean (a) any government
or municipality or political subdivision of any government or municipality, (b)
any assessment, improvement, community facilities or other special taxing
district, (c) any governmental or quasi-governmental agency, authority, board,
bureau, commission, corporation, department, instrumentality or public body, (d)
any court, administrative tribunal arbitrator, public utility or regulatory
body, or (e) any central bank or comparable authority.
(p) "HAZARDOUS SUBSTANCES" shall mean any hazardous or
toxic material or waste which is regulated by any authority of or operating
under the authority of any local or municipal government, the State, or the
United States of America or which may require remediation at the behest of any
governmental or quasi-governmental agency or which may cause a detriment to or
impair the value or beneficial use of the Land or Improvements or cause a
health, safety or environmental hazard on, under or about any portion of the
Property, including, without limitation, any material or substance which is: (1)
petroleum or a petroleum by-product or a fraction, derivative or product of the
decay or decomposition thereof; (2) asbestos or an
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asbestos containing material in any form; (3) a hydrocarbon or similar
substance; (4) PCB; (5) formaldehyde; (6) medical waste, (7) radioactive, (8)
flammable or explosive; (9) leaked or released from any underground storage
tanks; (10) listed as a "toxic pollutant" pursuant to Section 311 of the Federal
Pollution Control Act (33 U.S.C. Section 1317) including any amendments thereto;
(11) defined as a "hazardous waste" pursuant to Section 1004 of the Federal
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42
U.S.C. Section 6903) including any amendments thereto; (12) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (42 U.S.C. Section 9601) including
any amendments thereto; (13) listed in the United States Department of
Transportation Table (49 CFR ss. 172.101) or by the U.S. Environmental
Protection Agency as a hazardous substance; (14) any material, waste or
substance which is governed, regulated, listed and/or defined under any
Applicable Laws of the State or in the regulations or judicial or administrative
orders, decisions or decrees promulgated pursuant to any of the foregoing State
or federal laws. The foregoing list of definitions and statutes is intended to
be illustrative and not exhaustive, and such list shall not be deemed to include
all definitions and laws applicable to the subject matter contained herein, all
such laws being included within the definition of Applicable Laws.
(q) "INSTITUTIONAL PROJECT FINANCE" shall mean the funding
of the construction and development costs of a Facility (as a single project and
without direct recourse to or security interests in the assets of a Person other
than the Qualified Property, the Facility to be constructed thereon and deposit
accounts of the proposed tenant thereof) by any of (i) a real estate investment
trust, (ii) a commercial bank or its regulated subsidiary or affiliate (but if
via loans or mortgage financing, only to the extent such bank provides such
financing with a maturity of no less than 10 years after completion of the
Facility) or (iii) an insurance company, to the extent such Persons are
regularly engaged in the funding of similar construction or development
projects.
(r) "LEASE" shall mean the lease to be entered into with
respect to each Facility by and between AHP as landlord and Tenant as tenant,
each of which shall be substantially in the form attached to this Agreement as
Exhibit D attached hereto.
(s) "LEASEHOLD MORTGAGE" shall mean the Revolving
Credit/Future Advance Leasehold Mortgage with respect to each Facility, each of
which shall be substantially in the form of Exhibit F attached hereto and shall
encumber each Tenant's leasehold interest in a Facility as security for the
obligations of Tenant and Tenant Parent to Balanced Care and Manager pursuant to
the Shortfall Funding Agreement, Working Capital Assurance Agreement and the
Option Agreement.
(t) "MANAGEMENT AGREEMENT" shall mean the agreement to be
entered into with respect to each Facility between Tenant and Manager providing
for the management and operation of each Facility by Manger, each of which shall
be substantially in the form of Exhibit E attached hereto.
(u) "MANAGEMENT GUARANTEE" shall mean the written
obligation of Balanced Care that Manager shall timely, fully and faithfully
perform all of its obligations under
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the Management Agreement for each Facility, each of which shall be substantially
in the form of Exhibit G attached hereto
(v) "NON-COMPETITION AGREEMENT" shall mean the agreement
entered into by and among American Health, AHP, each Tenant and Tenant Parent
with respect to each Facility, each of which shall be substantially in the form
attached hereto as Exhibit M.
(w) "OPTION AGREEMENT" shall mean an agreement between
each owner of an interest in Tenant and Balanced Care granting to Balanced Care
(or a BCC subsidiary) the right to purchase all interests in Tenant, which
Option Agreement shall be in the form attached hereto as Exhibit J.
(x) "PERMITTED EXCEPTIONS" shall have the meaning ascribed
to that term in Section 6.2
(y) "PERSON" shall mean any natural person or legal
entity, whether an individual, trustee, corporation, partnership, limited
liability company, joint stock company, trust, unincorporated organization,
bank, business association or firm, joint venture, Governmental Authority or
otherwise.
(z) "PROJECT" shall mean each project to be completed upon
a Qualified Property in accordance with the Development Agreement to be entered
into with respect to that Qualified Property pursuant to this Agreement and the
other Transaction Documents.
(aa) "PROPERTY ACQUISITION AGREEMENT" shall mean the real
property purchase and sale agreement, option agreement or other agreement
providing for the acquisition by Balanced Care or BCC of property which has been
approved by AHP as Qualified Property in accordance with this Agreement.
(bb) "QUALIFIED PROPERTY" shall mean up to five (5)
individual parcels of land (i) as to which BCC or Balanced Care has the right to
purchase the fee interest thereto pursuant to a binding contract of sale or
binding option to purchase, and (ii) upon which a Facility is proposed to be
constructed, which Tenant will lease from AHP upon Final Completion thereof and
(iii) which AHP approves for acquisition in the exercise of its reasonable
business discretion (and for the avoidance of doubt, but without limitation on
the right of AHP to approve or disapprove any real property as Qualified
Property AHP shall have the right to determine that any proposed real property
is not Qualified Property based upon its reasonable determination that the
demographics of the proposed vicinity of the property or other market conditions
including such items as the degree of existing, proposed or potential
competition within an area makes it unlikely that a Person could operate the
Facility profitably).
(cc) "SECURITY AND SUBORDINATION DOCUMENTS" shall mean,
collectively, (i) the Guaranty of Payment and Performance made with respect to
each Lease by Tenant Parent, as Guarantor, in favor of AHP, as Landlord, each of
which shall be substantially in the form attached hereto as Exhibit N-1, (ii)
the Subordination and Standstill Agreement entered into with respect to each
Lease by and among AHP, as landlord, each Tenant, as tenant and Tenant Parent,
as Guarantor, each of which shall be in substantially the form attached hereto
as Exhibit N-2, (iii) the Security Agreement executed with respect to each
Facility by Tenant in
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favor of AHP, as landlord, each of which shall be in the form attached hereto as
Exhibit N-3 and (v) the Assignment of Leases, Rents and Receivables made by with
respect to each Facility by Tenant in favor of AHP, as Landlord, each of which
shall be in the form attached hereto as Exhibit N-4.
(dd) "SELLER" shall mean the Person selling a Qualified
Property in accordance with a Property Acquisition Agreement.
(ee) "SHORTFALL FUNDING AGREEMENT" shall mean the
agreement of Balanced Care to fund deficits in the working capital required for
Tenant to operate any one or more of the Facilities, substantially in the form
attached hereto as Exhibit I.
(ff) "STATE" shall mean, with respect to each Qualified
Property, the State in which the Qualified Property is located.
(gg) "TRANSACTION DOCUMENTS" means, collectively, this
Agreement and each and every one of the Development Agreements, Assignments of
Acquisition Rights, Non-Competition Agreements, Completion Guarantees,
Management Agreements, Management Guarantees, Security and Subordination
Documents, Working Capital Documents, and Leases executed and delivered with
respect to each Facility and any and all documents, instruments or agreements
delivered to AHP or American Health pursuant to any one or more of the
foregoing.
(hh) "WORKING CAPITAL ASSURANCE AGREEMENT" shall mean the
undertaking of Balanced Care in favor of American Health, obligating Balanced
Care, among other things, to fund deficits in the working capital required for
Tenant to operate any one or more of the Facilities, substantially in the form
attached hereto as Exhibit K
(ii) "WORKING CAPITAL DOCUMENTS" shall mean, with respect
to each Tenant and each Facility, the Shortfall Funding Agreement, Deposit
Pledge Agreement, Working Capital Assurance Agreement, Option Agreement,
Leasehold Mortgage and all notes or other similar instruments to be delivered in
connection with any one or more of the foregoing.
1.2 Terms Not Defined. All accounting terms which are not
otherwise defined in this Agreement shall have the meanings ascribed to such
term under GAAP.
1.3 Additional Rules of Construction. The terms "including" and
"include" mean "including without limitation" and "including, but not limited
to". The term "any" as a modifier to any noun, shall be construed to mean "any
and/or all" preceding the same noun in the plural The terms "herein" "hereunder"
and other similar compounds of the word "here" refer to the entire document in
which the term appears and not to any particular provision or section of the
document in which the term appears and not to any particular provision or
section of the document. References herein to a Section, paragraph or subsection
shall refer to the indicated provision of this Agreement unless referred to
herein to the contrary. In all cases where American Health's approval or consent
is required hereunder, such approval or consent must be in writing and may be
withheld in American Health's sole and absolute discretion.
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1.4 Incorporation of Exhibits and Schedules. All Exhibits and
schedules attached to this agreement or otherwise referred to herein are
incorporated herein and made an integral part of this Agreement by this
reference as if fully set forth herein at length.
2. Term; Limitation of Funding.
2.1 Term. The term of this Agreement (the "TERM") shall commence
on January 30, 1998 and unless sooner terminated in accordance with the terms of
the Transaction Documents (including this Agreement) shall expire upon the
earlier of July 31, 1999 and the date on which Developer Commences Construction
with respect to the fifth Project to be acquired and developed pursuant to this
Agreement. Neither American Health nor AHP shall have any obligation to consider
or acquire Qualified Properties nor to enter into any Transaction Documents with
respect to any property, Project or Facility upon the expiration or sooner
termination of this Agreement.
2.2 Limitation on Funding. Notwithstanding any provision of this
Agreement or any Transaction Document to the contrary, American Health shall not
be obligated to fund (whether directly or indirectly, through one or more AHP
subsidiaries, by Construction Advance or otherwise) more than Thirty Five
Million Dollars ($35,000,000) in the aggregate pursuant to this Agreement and
the other Transaction Documents, inclusive of all fees paid to Developer, other
Costs of the Work, any other Advances (as defined in the Development Agreement)
and Imputed Interest thereon (as defined in the Development Agreement).
3. Pre-Development Services.
Prior to proposing the acquisition by AHP of any site as a
Qualified Property or proposing the development of any Facility upon such
property, Balanced Care shall have performed or have caused Developer to perform
each of the following services (collectively, the "PRE-DEVELOPMENT SERVICES"):
3.1 completing a market analysis to confirm bed need,
3.2 determining that the proposed property is a suitable site for
a Facility and obtaining the right to acquire (i) good, marketable and
indefeasible fee simple title to the site subject only to the Permitted
Exceptions and (ii) any related or appurtenant rights, easements or other
property desirable for the development of a Facility upon a site;
3.3 obtaining architectural plans for the Project to be
constructed upon the proposed site, which plans shall be based on the prototype
plans for the Facilities previously delivered to American Health by Balanced
Care,
3.4 retaining to the extent reasonably required for the
development of a Project on the proposed site, engineers, architects, 1and
planners, surveyors, consultants, independent contractors, subcontractors,
attorneys, service agents, suppliers and other providers of materials or
services,
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3.5 obtaining preliminary site and other plans or surveys showing
any easements, plats, maps, subdivisions, plans, declarations of covenants and
restrictions, right-of-way deeds and other similar instruments and obtaining any
and all other entitlements and permits necessary to the development of the
Project, and
3.6 performing such other investigations and other tasks as may
reasonably be requested by American Health or AHP in connection with the
proposed site, including but not limited to soil and geotechnical testing,
environmental site assessments (including without limitation obtaining a Phase I
Environmental Report and completing any Phase II Environmental Report
recommended therein), determining that storm water, surface and other drainage
on the proposed site is adequate for the proposed Project, that utilities
adequate to service the Project will be made available by reliable utility
providers and confirming that planning, zoning and other Applicable Laws or
restrictions will permit the operation of the Facility upon the proposed site.
4. Acquisition of Qualified Properties.
Upon (i) the performance by Balanced Care of each of the
Pre-Development Services set forth in Sections 0 through 0 above, (ii) AHP
receiving each of the items listed in subparagraphs (0) through (0) of Section 0
below and (iii) AHP delivering to Balanced Care its written approval of the
performance of the Pre-Development Services and the items required to be
delivered to it pursuant to Section 0 and its approval of a proposed property as
a Qualified Property in the manner contemplated in Section 0 below (provided,
however, that no such approval shall be construed as a warranty as to any such
matters by AHP, shall not relieve Balanced Care from any of its obligations
under any Transaction Document, including but not limited to the obligation of
Balanced Care and BCC to cause the Final Completion of each Facility at a cost
to AHP and American Health not to exceed the Maximum Project Amount with respect
to each Facility, nor subject American Health or AHP to any liability
whatsoever), AHP shall acquire each approved Qualified Property, subject to the
terms of the applicable Property Acquisition Agreement, the Assignment of
Acquisition Rights, this Agreement and the other Transaction Documents.
4.1 Identification of Qualified Properties to American Health.
Balanced Care shall deliver written notice (the "IDENTIFICATION NOTICE") to
American Health of any land which Balanced Care desires AHP to acquire as a
Qualified Property. The Identification Notice shall include each of the
following items, each of which shall be delivered by Balanced Care in form and
substance satisfactory to AHP:
(a) a legal description, street address or other
reasonable identification of the particular property which Balanced Care
proposes AHP approve as a Qualified Property,
(b) a description of and preliminary plans and
specifications for the Facility which BCC proposes to construct upon the
Property pursuant to a Development Agreement and which Tenant will lease and BCC
will manage in accordance with the terms of this Agreement, the Lease and the
Management Agreement,
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(c) a description of the demographic characteristics of
the vicinity of the proposed Qualified Property and of the area which will be
serviced by the proposed Facility to be constructed thereupon;
(d) a description of existing or proposed facilities which
are reasonably anticipated to compete with the proposed Facility including a
description of the bed capacity of each such competitive facility, the services
to be provided therein, and the anticipated and/or existing operator and manager
thereof;
(e) a description of the results of and information
obtained in connection with the performance by Balanced Care and BCC of the
Pre-Development Services described in Section 3.
(f) a copy of the Property Acquisition Agreement pursuant
to which BCC or Balanced Care has the right to acquire the fee interest in and
to the proposed Qualified Property;
(g) a preliminary budget for the project showing in
reasonable detail the anticipated costs of development, construction and opening
costs of the Facility proposed to be constructed upon the proposed Qualified
Property;
(h) preliminary projections of revenue and operating
expenses for no less than the first five (5) years of operations of the Facility
proposed to be constructed upon the proposed Qualified Property, including
reasonable details regarding the underlying operating and financial assumptions
used to arrive at such projections;
(i) the written commitment of Tenant to enter into a Lease
of the Facility proposed to be constructed on the proposed Qualified Property at
the Closing;
(j) Financial Statements of Tenant showing, among other
things, that Tenant has sufficient working capital or the ability to obtain
sufficient working capital for the operation of the proposed Facility, including
without limitation funding of all pre-opening expenses and start up losses (with
the sole exception that with respect to the single Facilities to be located in
Jackson, Tennessee and Anderson, Indiana, such Financial Statements shall be
delivered no later than March 30, 1998); and
(k) such other information regarding the proposed
Qualified Property, the vicinity of that property, the Tenant, proposed Facility
and any other information reasonably related to the proposed Qualified Property
or the development thereof as American Health may reasonably request.
4.2 Notice of Approval. Within 20 business days after its receipt
of the Identification Notice and the last to be received of the items listed in
subparagraphs (0) through (0) of Section 0, American Health shall deliver
written notice to Balanced Care stating whether the property identified therein
is approved by American Health as a Qualified Property. If American Health
delivers notice that it has not approved the property as a Qualified Property or
if American Health fails to respond to the Identification Notice within the 20
business day period identified above, the property identified in the
Identification Notice shall not constitute Qualified Property and neither
American Health nor AHP shall have any obligation to acquire such
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property or to develop any improvement or Facility thereon. American Health may,
but shall not be obligated to, specify in any notice of disapproval the reasons
for disapproving any proposed property as a Qualified Property and if a specific
reason is so specified, Balanced Care may, but shall not be obligated to,
resubmit the proposed property upon rectifying the item noted as the basis for
disapproval. If, however, American Health timely approves the property
identified in the Identification Notice as Qualified Property then American
Health (or the AHP subsidiary designated by American Health) shall, subject to
the terms of this Agreement, acquire the right of Balanced Care or BCC (as the
case may be) to acquire the Qualified Property on the terms and subject to the
conditions of the Property Acquisition Agreement and this Agreement with respect
to such Qualified Property pursuant to the terms and subject to the conditions
of a written Assignment ("ASSIGNMENT OF ACQUISITION RIGHTS") to be entered into
between AHP and the Balanced Care or BCC entity who holds the rights to acquire
the Qualified Property with each such Assignment of Acquisition Rights to be
substantially in the form attached hereto as Exhibit H.
4.3 Failure to Acquire Qualified Property. If, in accordance with
and pursuant to the terms and conditions of this Agreement or the Property
Acquisition Agreement, AHP shall not acquire any Qualified Property and the
Assignment of Acquisition Rights with respect to that property is terminated,
such property shall cease to be Qualified Property unless and until Balanced
Care delivers a subsequent Identification Notice to American Health and American
Health again approves that property as a Qualified Property in accordance with
Section 4.2.
5. Development, Lease and Operation of Qualified Property.
5.1 Delivery of Transaction Documents. In addition to all other
conditions set forth in this Agreement, the Property Acquisition Agreement and
the Assignment of Acquisition Rights, concurrently with, and as a condition to
the Closing of each Qualified Property acquired by AHP:
(a) Development Agreement., BCC and AHP shall have entered
into a Development Agreement, substantially in the form of Exhibit B to this
Agreement and otherwise in form and substance satisfactory to AHP, regarding the
Facility to be developed and constructed upon the Qualified Property.
(b) Completion Guarantee. Balanced Care shall have entered
into a Completion Guarantee, substantially in the form of Exhibit A to this
Agreement and otherwise in form and substance satisfactory to AHP, regarding the
Facility to be developed and constructed upon the Qualified Property.
(c) Environmental Indemnity. Balanced Care shall have
entered into an Environmental Indemnity, substantially in the form of Exhibit C
to this Agreement and otherwise in form and substance satisfactory to AHP,
regarding the Qualified Property.
(d) Lease. AHP and Tenant shall have entered into a Lease
of the Qualified Property and the Facility to be developed and constructed
thereon, substantially in the form of Exhibit D to this Agreement and otherwise
in form and substance satisfactory to AHP;
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(e) Management Agreement. Tenant and Manager shall have
entered into a Management Agreement, substantially in the form of Exhibit E to
this Agreement and otherwise in form and substance satisfactory to AHP,
for the Facility proposed to be constructed on the Qualified Property;
(f) Security and Subordination Documents. Tenant, Tenant
Parent, Manager, Developer, Balanced Care and BCC, on the one hand and American
Health and AHP, on the other, shall have entered into each of the Security and
Subordination Documents, substantially in the form of Exhibit N to this
Agreement and otherwise in form and substance satisfactory to AHP, regarding the
Facility to be developed and constructed upon the Qualified Property;
(g) Non-Competition. BCC, Balanced Care, Tenant Parent and
each existing Tenant shall have entered into a Non-Competition Agreement
regarding the Facility to be developed and constructed upon the Qualified
Property, substantially in the form of Exhibit M to this Agreement and otherwise
in form and substance satisfactory to AHP;
(h) Management Guaranty. Balanced Care shall have entered
into a Management Guarantee, substantially in the form of Exhibit G to this
Agreement and otherwise in form and substance satisfactory to AHP, regarding the
Facility to be developed and constructed upon the Qualified Property.
(i) Working Capital Documents. Tenant, Tenant Parent and
Balanced Care shall, with respect to the Facility to be developed and
constructed upon the Qualified Property, have entered into the Working Capital
Documents, including without limitation the Working Capital Assurances
Agreement, substantially in the form of Exhibit K to this Agreement and
otherwise in form and substance satisfactory to AHP, and the Shortfall Funding
Agreement, substantially in the form of Exhibit H to this Agreement and
otherwise in form and substance satisfactory to AHP;
(j) Collateral Assignment. Tenant shall have entered into
the Collateral Assignment to AHP and American Health and Balanced Care and
Manager shall have executed and delivered their written consent thereto in the
form contemplated in the Collateral Assignment, substantially in the form of
Exhibit C to the Lease and otherwise in form and substance satisfactory to AHP.
5.2 Conditions to Be Satisfied at Assumption of Property
Acquisition Agreement. AHP's obligation to assume each Property Acquisition
Agreement is conditioned upon the complete satisfaction or written waiver by AHP
of each and every one of the following conditions:
(a) Conditions to Assumption of Property Acquisition
Agreement. Compliance with Law. AHP shall have satisfied itself that the
Property is then in full compliance with all Applicable Laws (as defined
herein).
(b) Contracts. Developer shall have entered into contracts
for labor, materials and services in connection with the Final Completion of the
Project, each of which
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shall be acceptable to AHP, as contemplated in this Agreement, the Development
Agreement and the other Transaction Documents,
(c) Zoning and Subdivision. Developer shall have obtained
and filed all plans, surveys, plats, maps, subdivisions, use permits,
declarations of covenants and restrictions, right-of-way deeds and other similar
instruments and shall have obtained any and all other entitlements and permits
necessary to the development of the Project
(d) Environmental Condition. AHP shall have approved in
writing a Phase I Environmental Assessment Report ("Phase I Report") addressed
to AHP and dated as of a recent date and prepared by a qualified geotechnical
firm acceptable to AHP concerning the absence of Hazardous Substances (as
defined herein) on, in, under or about the Property (AHP reserving the right to
require and approve in writing a Phase II Environmental Assessment Report
("Phase II Report"), at AHP's expense, if a Phase II Report is recommended in
the Phase I Report), with copies of all such reports to be provided to BCC upon
BCC's request therefor.
(e) Title Commitment and Policy. AHP shall have received a
title commitment covering the Property issued by the Title Company, together
with legible copies of all underlying documents referred to therein
(collectively, the "Commitment") and shall have approved in writing the form and
substance of the Commitment and the form of "Title Policy" (as defined in
Section 0) to be issued to the AHP at Closing pursuant thereto, and the Title
Policy shall be issued in the form previously approved, and neither the "Survey"
(as defined in Section 0(0)) nor Title Policy shall contain any exception other
than the "Permitted Exceptions" (as defined in Section 0) and without limitation
on the foregoing, the Title Policy shall include no material exception disclosed
by the Survey, and at or prior to Closing Seller shall have removed any items
affecting title to or use of the Property which are disapproved by AHP and which
Seller agrees to remove in accordance with this Section 0(0). If, AHP shall
disapprove any exception to title noted in the Commitment by delivery of notice
of disapproval to Seller and BCC, BCC and/or Seller shall notify AHP, within
five (5) business days after receipt of such notice of disapproval, as to
whether Seller or BCC will remove such item from title to the Property. If
Seller or BCC elects to remove such item, the transaction will proceed to
Closing subject to the other conditions stated herein. If Seller or BCC shall
notify AHP within the foregoing five (5) business day period that neither it nor
Seller will remove such exception, or Seller and BCC fail to respond during the
foregoing five (5) business day period, AHP shall have the option either to
accept such disapproved exception as a Permitted Exception and thus continue to
proceed to the Closing subject to the other conditions stated herein, or, to
terminate this Agreement by written notice to BCC delivered within five (5)
business days after AHP's receipt of notice from that neither Seller nor BCC
will remove a disapproved item from title to the Property.
(f) Survey. AHP shall have received and approved in
writing a current survey of the Property certified to Title Company and to AHP
(which certification shall be in the form of Exhibit B and shall be certified as
of a date no earlier than fifteen (15) business days prior to Closing) (the
"Survey"), to be procured by BCC, and fulfilling (and certified to AHP's
reasonable satisfaction as fulfilling) the requirements for an ALTA Survey, the
current surveyor's association standards applicable in the State, if any, and
Specifications for a Category
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1A Condition II Survey, ACSM 1992 Minimum Detail Requirements and all other
requirements imposed by the Title Company in connection with the issuance to AHP
of the Title Policy.
(g) Structural and Conditions Reports. AHP shall have
received and approved in writing one or more geological, physical condition and
structural inspection, soils, foundations and other report(s) regarding the
physical condition of the Property from architectural or engineering firm(s)
approved by AHP in it reasonable business discretion (collectively, the
"Structural Report").
(h) Tenant Financial Statements. AHP shall have received
Financial Statements of Tenant, dated as of the last day of the second to last
full calendar month ending prior to the proposed date of Closing, acceptable to
AHP and showing, among other things, that Tenant has sufficient working capital
to support the payment and performance by Tenant under all existing Leases of
Facilities and the obligations which Tenant will undertake to pay and perform
under the Lease of the Facility to be constructed upon the Property.
(i) Appraisal. AHP shall have received an appraisal from
an independent MAI appraiser selected by AHP and reasonably acceptable to Seller
("Appraisal") stating that, based upon the projected cash flow of the Facility
to be constructed upon the Property pursuant to the Development Agreement (net
of all capital and operating expenditures), the fair market value of the
Property and the Facility to be constructed thereupon will be no less than the
Maximum Project Amount (as defined in the Development Agreement), upon Final
Completion of the Facility.
(j) Performance. Seller shall have performed all of
Seller's obligations under the Property Acquisition Agreement, and each of
Tenant, Balanced Care and BCC shall have performed each of their respective
obligations (i) pursuant to this Agreement and any and all Transaction Documents
delivered with respect to the Qualified Property to be acquired and the Facility
to be constructed thereon and (ii) all Transaction Documents then in effect with
respect to all other Qualified Property, Projects and Facilities.
(k) Representations and Warranties. The representations
and warranties of Seller made pursuant to the Property Acquisition Agreement and
the representations and warranties of Tenant, Balanced Care and BCC made
pursuant to (i) this Agreement, the Property Acquisition Agreement, and all
Transaction Documents delivered with respect to the Qualified Property to be
acquired and the Facility to be constructed thereon and (ii) all Transaction
Documents then in effect with respect to all other Qualified Property, Projects
and Facilities, shall continue to be true and correct as of the Closing.
(l) Board Approval. The acquisition of the Qualified
Property and development of the Project and Lease to Tenant shall each have been
approved by the Board of Directors of AHP and the Board of Directors of American
Health (collectively, the "Board Approvals"), such Boards to have complete and
absolute discretion to approve or disapprove this Agreement. American Health
acknowledges and agrees that the required Board Approvals have been obtained
with respect to the Qualified Property located in Jackson, Tennessee and
Anderson, Indiana.
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5.3 Conditions to Be Fulfilled at Closing. In addition to the
conditions set forth in Section 0, AHP's obligation to purchase each Qualified
Property is further conditioned upon the complete satisfaction of each and every
one of the following conditions at the Closing thereof:
(a) No Change in Conditions. Each of the items approved or
conditionally approved by AHP in accordance with Section 0 above shall continue
at the Closing in the condition previously approved by AHP. Without limiting the
generality of the foregoing condition:
(i) the Title Company shall be in a position to
issue the Title Policy to AHP upon the Closing as contemplated in Section 0 with
no exceptions other than the Permitted Exceptions and in the form contemplated
in Section 6.1,
(ii) no new violation of Applicable Law shall have
occurred on the Property after the satisfaction of the condition set forth in
Section 5.2(a) above,
(iii) no new adverse environmental condition shall
have occurred on the Property after the date of the Phase I Report (and, if
applicable, Phase II Report) approved by AHP as contemplated in Section
5.2(d) above, and
(iv) the physical condition of the Property shall
not have changed in any material respect from the condition stated in the
Structural Report approved by AHP as contemplated in Section 5.2(g) above.
(b) Consents for Sale. AHP shall have received
satisfactory written evidence that (i) Seller has obtained any and all consents
required for Seller lawfully and rightfully to close the transactions
contemplated in the Property Acquisition Agreement and this Agreement, (ii) BCC
has obtained any and all consents required for it lawfully and rightfully to
close the transactions contemplated in the Property Acquisition Agreement and
this Agreement and (iii) all such consents remain in full force and effect
without revocation or modification as of the Closing.
(c) Additional Actions. Seller, BCC and Balanced Care
shall have taken such additional actions and shall have delivered such
additional items as may be required to fulfill all conditions to AHP's
obligation to purchase the Qualified Property and delivered all affidavits,
certificates, statements and other items as may be required for the Title
Company to deliver the Title Policy required to be delivered to AHP pursuant to
Section 0 of this Agreement.
(d) Vendor's Affidavit. To the extent required by
Applicable Law of the State, a vendor's affidavit together with disclosure of
sales information on the form promulgated by the State department of revenue.
(e) UCC Searches. Seller shall have delivered to AHP, at
Seller's cost and expense, Uniform Commercial Code financing statement searches
covering Seller and its general partners for the State and the County in which
the Qualified Property is located, showing that all of the personal property to
be transferred pursuant to the Property Acquisition Agreement
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(the "PERSONAL PROPERTY") and all property which may constitute a fixture in the
Property is free and clear of all liens and encumbrances other than any
Permitted Exceptions approved by AHP.
(f) Tax Receipts. Not later than two (2) business days
prior to the Closing, Seller shall deliver to AHP receipts showing the payment
of all taxes levied and payable on the Property.
(g) Assignment/Termination of Contracts. At least five (5)
business days prior to Closing, Seller shall have delivered to AHP a proposed
assignment of contracts, if any, relating to the Qualified Property and, at
Closing, shall have delivered to AHP reasonable evidence of the termination of
any of such contracts which AHP notifies Seller to terminate prior to Closing.
(h) Performance. The condition stated in Section 5.2(j)
shall continue to be true in all respects.
(i) Representations and Warranties. The condition stated
in Section 5.2(k) shall continue to be true in all respects.
(j) Development Items. BCC shall have caused Developer to
execute and deliver the Development Agreement and Initial Budget and Project
Schedule required thereunder to AHP.
(k) Transactional Documents. Balanced Care shall have
caused each of Manager, Developer, Tenant and Tenant Parent, to the extent each
is a party thereto, to have executed and delivered to AHP each of the
Transaction Documents (including without limitation the Lease, Shortfall Funding
Agreement, Working Capital Documents and Environmental Indemnity) and (ii) each
Transaction Document shall be in full force and effect without breach or default
or claim of default thereunder.
(l) Closing Statements. AHP shall have received a closing
statement in form and substance acceptable to AHP.
(m) Opinions of Counsel. Legal Counsel to BCC (which legal
counsel shall be reasonably acceptable to AHP) shall have delivered to AHP a
legal opinion substantially in the form attached hereto as Exhibit O-1 and legal
counsel to Tenant (which legal counsel shall be reasonably acceptable to AHP)
shall have delivered to AHP a legal opinion substantially in the form attached
hereto as Exhibit O-2.
5.4 AHP's Benefit. The conditions set forth herein are for the
sole and express benefit of AHP. No action or inaction shall be deemed a waiver
or estoppel of AHP's enforcement of any of the foregoing conditions, and each
and every such condition may only be waived by a writing executed by AHP
expressly waiving such condition. AHP's failure to give any written notice of
approval of any item shall, at AHP's option, be deemed disapproval of such item
and a failure of such condition.
6. Title Insurance; Status of Title.
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6.1 Title Insurance. Title to each Qualified Property to be
acquired by AHP pursuant to this Agreement and any Property Acquisition
Agreement shall be evidenced by an ALTA Owner's Policy of Title Insurance issued
by a title company duly authorized to issue such insurance within the State and
otherwise acceptable to AHP in the exercise of its reasonable discretion (the
"Title Company") together with such revisions and endorsements thereto as are
available in the State which AHP requires in its reasonable discretion, in the
full amount of the Purchase Price ("Title Policy") insuring good and
indefeasible title to the Property as vested in AHP (or AHP's assignee), subject
only to the Permitted Exceptions.
6.2 Status of Title. Good, marketable and indefeasible title to
the Property in fee simple absolute shall be conveyed at the Closing to AHP by
the deed required under the Property Acquisition Agreement. Title to the
Property shall be conveyed to AHP free and clear of all liens, covenants,
conditions, restrictions, encumbrances, mortgages, deeds of trust,
encroachments, leases, rights, rights of way, rights of occupancy or possession,
and other matters affecting title to or use of the Property, except the
following exceptions (collectively, the "Permitted Exceptions"):
(a) Liens to secure payment of real property taxes and
assessments for the year of Closing and subsequent years, each of which are a
lien not yet payable;
(b) Any and all matters affecting the condition of title
created by the act of AHP or created with the written consent of AHP;
(c) The Lease; and
(d) Any matters disclosed by the Commitment or the Survey
which are approved by AHP in writing as contemplated in Section 5.2(e) above.
AHP hereby disapproves of, and title to the Property at the Closing shall be
free and clear of, (a) all monetary liens and encumbrances and (b) any leases
other than the Lease.
7. Option Agreement.
American Health acknowledges and agrees that Balanced Care (or
its duly designated wholly-owned BCC subsidiary) shall have the right to acquire
the issued and outstanding interests in each Tenant at the time and in the
manner and subject to the terms and conditions of the Option Agreement and that
the exercise of the option granted thereunder will not constitute an assignment
of the Lease or an Event of Default thereunder so long as Tenant continues to
perform all covenants and obligations required of Tenant and to fulfill all
conditions applicable under the Lease.
8. Representations of Balanced Care.
Balanced Care warrants and represents to each of American Health
and each AHP subsidiary that, as of the date of this Agreement and on the date
of each Closing, the following shall be true and correct (and the warranties and
representations set forth in this Section 8 shall survive each Closing):
8.1 Due Formation; Solvency; etc. Balanced Care is a corporation
which is duly organized validly existing and in good standing under the Laws of
the State of Delaware
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and is qualified to do business under the laws of each State where its
properties, the nature of its activities or business require such qualification.
Each BCC subsidiary is duly organized, validly existing and in good standing
under the Laws of its state of organization and is qualified to do business in
each State where the nature of its activities requires such qualification.
Balanced Care has full power, capacity, authority and legal right to execute and
deliver this Agreement and all Transaction Documents to be delivered by Balanced
Care. Each BCC subsidiary has full power, capacity, authority and legal right to
execute and deliver the Transaction Documents required to be delivered by that
Person pursuant to this Agreement. Each of Balanced Care and BCC has full power,
capacity, authority and legal right to perform all transactions (including the
execution and delivery of all documents contemplated hereunder and to cause the
delivery by each BCC subsidiary of such documents) required of Balanced Care or
the BCC subsidiaries for the performance of this Agreement (including all
performance required under the documents to be delivered hereunder) and the
Transaction Documents. Each of Balanced Care and each BCC subsidiary is solvent
and (i) has filed all tax returns which are required to be filed by it and (ii)
is not in default in the payment of any taxes levied or assessed against it or
any of its assets, or under any judgment, order, decree, rule or regulation of
any court, arbitrator, administrative agency or other governmental authority to
which it may be subject which would, in each case or in the aggregate,
materially and adversely affect the transactions contemplated by this Agreement.
8.2 Due Authorization, Execution and Delivery. This Agreement and
each Transaction Document executed and delivered by Balanced Care has been duly
authorized and, when executed and delivered, shall constitute the legal, valid
and binding obligation of Balanced Care. Each Transaction Document executed and
delivered by BCC has been duly authorized and, when executed and delivered,
shall constitute the legal, valid and binding obligation of BCC.
8.3 No Conflicts. The execution and delivery of this Agreement by
Balanced Care and the execution and delivery of the other documents hereunder by
BCC and the performance by Balanced Care and BCC of all transactions
contemplated hereunder or thereunder (including the execution and delivery of
all documents required by this Agreement to be executed and delivered by
Balanced Care or BCC):
(i) shall not breach any contracts, covenants or
restrictions between or binding upon Balanced Care or BCC and any third party or
affecting any Qualified Property; shall not create or cause to be created any
mortgage, lien, encumbrance or charge on any Qualified Property; and shall not
conflict with or otherwise violation any Applicable Laws or result in a breach
or violation of (a) any law or governmental rule or regulation applicable to
Balanced Care or BCC now in effect, (b) any provision of Balanced Care's or
BCC's corporate charter or other organizational documents, or (c) any judgment,
order or decree of any court, arbitrator, administrative agency or other
governmental authority binding upon Balanced Care or BCC.
(ii) do not require any consent or approval of
any public or private authority (including any legislative or judicial body)
which has not already been obtained (provided, however, that approval of the
completion of development of a Facility and issuance of approval for the
occupancy and use thereof may require the obtaining of approvals in the future,
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which future approvals Balanced Care and Manager shall be obligated to obtain in
all events); and
(iii) are not threatened with invalidity or
unenforceability by any action, proceeding, including bankruptcy or insolvency
proceedings, or investigation pending or threatened by or against Balanced Care,
BCC or the seller of any Qualified Property.
8.4 Governmental Approvals. No consents, approvals or other
authorizations of any Governmental Authority is required for the due and valid
execution and delivery of this Agreement or any other agreement described herein
to which Balanced Care or BCC is a party.
8.5 Litigation. Except as included within the exceptions to
representations attached hereto as Exhibit L (i) no litigation or proceedings
are pending or threatened relating to Balanced Care, BCC or the Qualified
Property and (ii) there are no actions, proceedings or investigations pending
or, to its Best Knowledge, threatened against Balanced Care or BCC, before or by
any court, arbitrator, administrative agency or other governmental authority
which are expected, in its reasonable judgment, to materially and adversely
affect its financial condition or operations or its ability to carry out the
transactions contemplated by this Agreement or any other document contemplated
hereby to which it is a party.
8.6 Obligations and Liabilities of Balanced Care Relating to
Qualified Property. Neither Balanced Care nor BCC has incurred any other
obligation or liability which could individually or in the aggregate adversely
affect its ability to transfer its interest in the Qualified Property.
8.7 No Brokers. No Person is entitled to receive any commission
or finder's fee payable by American Health or AHP in connection with the
execution or delivery of this Agreement by reason of any action or commitment
made by Balanced Care or BCC.
8.8 Ownership of Each Tenant. Except to the extent the interests
in a Tenant are acquired by Balanced Care or its wholly-owned BCC subsidiary in
accordance with the terms and conditions of the Option Agreement, each Tenant
shall at all times be owned 99% by Primary Parent and 1% by Secondary Parent. No
change shall occur in the certificate of organization, management agreement or
other organizational documents of any Tenant or of Primary Parent and no change
shall occur in the certificate of incorporation, bylaws or other organizational
documents of Secondary Parent. Primary Parent shall at all times have a single
class of ownership interests representing ownership in the entirety of Primary
Parent.
8.9 With respect to each Qualified Property to be acquired by AHP
in accordance with this Agreement and any Property Acquisition Agreement,
Balanced Care shall be conclusively deemed to have made the following warranties
and representations (and AHP shall be entitled to rely fully on such warranties
and representations in proceeding to fund the Closing of any Qualified
Property):
(a) To BCC's Best Knowledge, no person other than the
Seller of the Qualified Property holds any right, title and interest in and to
the Qualified Property.
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(b) To BCC's Best Knowledge, there are no causes of
action, suits, or judgments pending, or threatened by any entity, person,
governmental authority, or agency against all or any portion of the Qualified
Property or against any interest of Seller in or to all or any portion of the
Qualified Property.
(c) BCC has received no notice of any violations of any
Applicable Laws (as defined herein) with respect to the Qualified Property or
any portion thereof and to the Best Knowledge of BCC there are no material
violations of any Applicable Laws with respect to the Qualified Property.
(d) There are no leases, tenancies, licenses or rights of
use or occupancy in effect pertaining to the Qualified Property or any portion
thereof, or agreements or contracts affecting or related to the Qualified
Property not disclosed in the Property Acquisition Agreement or in the
Commitment with respect to that Qualified Property.
(e) BCC is not a party to any oral contracts and is not
aware of any other oral contracts affecting the Property Acquisition Agreement
or the Qualified Property to which it pertains or any portion thereof.
(f) BCC has received no notice of outstanding claims
against, or liens, assessments or encumbrances upon or against the Qualified
Property, or any portion thereof, nor to its Best Knowledge do any such claims,
liens, assessments or encumbrances exist.
(g) To the Best Knowledge of BCC, there are no intended
public improvements which will result in any charge being levied upon or
assessed against the Qualified Property or any portion thereof, or which will
result in the creation of any lien upon the Qualified Property or any portion
thereof.
(h) BCC has not received notice or and to the Best
Knowledge of BCC, there are no pending or threatened proceedings in eminent
domain which could affect the Qualified Property or any portion thereof, and BCC
has no actual knowledge of any fact which might give rise to any such action or
proceeding.
(i) To BCC's Best Knowledge, there have been no releases
nor are there existing any threatened releases of any Hazardous Substances in,
on, under or about the Property, or any portion thereof. Seller has not used the
Property, or any portion thereof and, to its Best Knowledge, neither the
Property, nor any portion thereof. has been used by any third party, for the
deposit, storage, handling, use or discharge of any Hazardous Substances, except
for the use of those Hazardous Substances commonly used in standard commercial
office uses, and then only in strict accordance with all Applicable Laws.
(j) The Property Acquisition Agreement with respect to the
Qualified Property is in full force and effect without modification and without
default or claim of default by any party thereunder. Any option to purchase
granted under the Property Acquisition Agreement has not been exercised by BCC
and may be exercised by AHP after its assumption of the Property Acquisition
Agreement and AHP shall bear no liability to Seller under the Property
Acquisition Agreement unless and until AHP exercises any such option in
accordance with this Agreement and the Assignment of Acquisition Rights relating
to the Property Acquisition Agreement.
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8.10 Full Disclosure. Neither this Agreement nor any other
document submitted to American Health or AHP and executed or authorized by
Balanced Care or any BCC subsidiary in connection herewith contains an untrue
statement of a material fact or omits a material fact which would make the
statements contained herein or in such documents misleading.
9. Representations of American Health.
American Health warrants and represents to each of Balanced Care
and each BCC subsidiary that, as of the date of this Agreement and on the date
of each Closing, the following shall be true and correct (and the warranties and
representations set forth in this Section 9 shall survive each Closing):
9.1 Due Formation; Solvency; etc. American Health is a
corporation which is duly organized validly existing and in good standing under
the Laws of the State of Delaware and is qualified to do business under the laws
of each State where its properties, the nature of its activities or business
require such qualification. Each AHP subsidiary is duly organized, validly
existing and in good standing under the Laws of its state of organization and is
qualified to do business in each State where the nature of its activities
requires such qualification. American Health has full power, capacity, authority
and legal right to execute and deliver this Agreement and to perform all
transactions (including the execution and delivery of all documents contemplated
hereunder and to cause the delivery by each AHP subsidiary of such documents)
required of American Health or the AHP subsidiaries for the performance of this
Agreement (including all performance required under the documents to be
delivered hereunder). Each of American Health and each AHP subsidiary is solvent
and (i) has filed all tax returns which are required to be filed by it and (ii)
is not in default in the payment of any taxes levied or assessed against it or
any of its assets, or under any judgment, order, decree, rule or regulation of
any court, arbitrator, administrative agency or other governmental authority to
which it may be subject which would, in each case or in the aggregate,
materially and adversely affect the transactions contemplated by this Agreement.
9.2 Due Authorization, Execution and Delivery. This Agreement has
been duly authorized and, when executed and delivered, shall constitute the
legal, valid and binding obligation of American Health.
9.3 No Conflicts. The execution and delivery of this Agreement by
American Health and the execution and delivery of the other documents hereunder
by AHP and the performance by American Health and AHP of all transactions
contemplated hereunder or thereunder (including the execution and delivery of
all documents required by this Agreement to be executed and delivered by
American Health or AHP):
(i) shall not breach any contracts, covenants or
restrictions between or binding upon American Health or AHP; and shall not
conflict with the Laws or result in a breach or violation of (a) any law or
governmental rule or regulation applicable to American Health or AHP now in
effect, (b) any provision of American Health's or AHP's corporate charter or
other organizational documents, or (c) any judgment, order or decree of any
court, arbitrator, administrative agency or other governmental authority binding
upon American Health or AHP.
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(ii) do not require any consent or approval of
any public or private authority (including any legislative or judicial body)
which has not already been obtained; and
(iii) are not threatened with invalidity or
unenforceability by any action, proceeding, including bankruptcy or insolvency
proceedings, or investigation pending or threatened by or against American
Health or AHP.
9.4 Governmental Approvals. No consents, approvals or other
authorizations of any Governmental Authority is required for the due and valid
execution and delivery of this Agreement or any other agreement described herein
to which American Health or AHP is a party.
9.5 No Brokers. No Person is entitled to receive any commission
or finder's fee payable by Balanced Care or BCC in connection with the execution
or delivery of this Agreement by reason of any action or commitment made by
American Health or AHP.
9.6 Full Disclosure. Neither this Agreement nor any other
document submitted to Balanced Care or BCC and executed or authorized by
American Health or any AHP subsidiary in connection herewith contains an untrue
statement of a material fact or omits a material fact which would make the
statements contained herein or in such documents misleading.
10. Conditions to Obligations of American Health and AHP. Neither
American Health nor any AHP subsidiary entity shall have any
obligations under this Agreement or with respect to any property, Qualified
Property or development of any Facility, whether under this Agreement or under
any document contemplated to be delivered hereunder or otherwise unless each of
the following conditions are fulfilled both at the execution and delivery of
this Agreement and at the Closing of each Qualified Property:
10.1 Performance of Obligations. Balanced Care and BCC shall have
performed all of its obligations to be performed at a particular point in time
under this Agreement, each Transaction Document and each document to be
delivered pursuant hereto or thereto.
10.2 Truth of Representations and Warranties. All representations
and warranties of or made by Balanced Care or BCC in this Agreement and in any
other Transaction Document shall be true and correct.
10.3 Completion of Initial Public Offering. Balanced Care shall
have successfully completed the sale of the shares of its common stock for
aggregate proceeds Balanced Care of not less than $60,000,000 as contemplated in
its Registration Statement (Form S-1, Registration No. 333-37833) as filed with
the Securities and Exchange Commission on December 9, 1997 as from time to time
amended. Notwithstanding the foregoing to the contrary, the condition set forth
in this Section 10.3 shall not apply with respect to the acquisition, funding
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and development of the first two parcels of Qualified Property (located in
Jackson, Tennessee and Anderson, Indiana) nor the development or leasing of the
Facility to be constructed thereon.
10.4 Approval by Boards of Directors. The acquisition of such
Qualified Property and the development of the Facility thereon has been approved
and authorized by the Board of Directors of American Health and the Board of
Directors of the AHP subsidiary which is acquire and develop the Facility upon
the Qualified Property in question.
11. Conditions to Obligations of Balanced Care and BCC.
Neither Balanced Care nor any BCC subsidiary entity shall have
any obligations under this Agreement or under any document contemplated to be
delivered hereunder or otherwise unless each of the following conditions are
fulfilled both at the execution and delivery of this Agreement:
11.1 Performance of Obligations. American Health and AHP shall
have performed all of its obligations to be performed at a particular point in
time under this Agreement and each document to be delivered pursuant hereto.
11.2 Truth of Representations and Warranties. All representations
and warranties of or made by American Health or AHP in this Agreement and in any
other Transaction Document shall be true and correct.
12. Covenants of Balanced Care.
12.1 Fulfillment of Conditions. Balanced Care shall use all
commercially reasonable efforts to cause each condition to the obligations of
AHP and American Health under this Agreement and the Transaction Documents to be
fulfilled with respect to each Qualified Property and each Project and Facility.
12.2 Further Assurances. Balanced Care and BCC shall execute and
deliver any and all additional papers, documents, and other assurances, and
shall do any and all acts and things reasonably necessary in connection with the
performance of their obligations hereunder and to carry out the intent of the
parties hereto.
13. Default.
13.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default:
(a) Any representation or warranty of Developer or
Guarantor contained in this Agreement or any Transaction Document or made in
connection with the Project, this Agreement or any Transaction Document proves
to have been incorrect in any material respect when made;
(b) Any one or more of Developer, Manager, BCC or Balanced
Care is enjoined by any court or other Governmental Agency from constructing the
Project, managing
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the Facility, leasing the Property or otherwise is enjoined or prevented from
entering into or performing its obligations under this Agreement or any other
Transaction Document or Tenant is enjoined from performing any of its
obligations under the Lease and such injunction continues unreleased and
unstayed for a period of forty five (45) days from the date of issuance;
(c) Without American Health's consent, any one or more of
Tenant, Primary Parent, Secondary Parent, Manager, Developer or Balanced Care is
dissolved or liquidated or merged with or into any other Person or any election
is made or proceedings commenced in furtherance of any such dissolution or
liquidation or any one or more of Tenant, Primary Parent, Secondary Parent,
Manager, Developer or Balanced Care otherwise ceases to continue to validly
exist and remain in good standing under the Laws of the state of its
organization or fails to remain duly qualified and in good standing under the
Laws of the State or all or substantially all of the assets of any one or more
of Tenant, Primary Parent, Secondary Parent, Manager, Developer or Balanced Care
are sold or otherwise transferred (except in accordance with the terms of the
Option Agreement or the Shortfall Funding Agreement);
(d) Balanced Care ceases to own 100% of the capital stock
of Manager and Developer or Balanced Care suffers a Change in Control occurring
after the completion of the initial public offering contemplated in Section
10.3;
(e) Any one or more of Tenant, Primary Parent, Secondary
Parent, Manager, Developer or Balanced Care files for protection under the U.S.
Bankruptcy Code or under any similar Laws regarding insolvency or protection of
debtors from claims of creditors;
(f) Any one or more of Tenant, Primary Parent, Secondary
Parent, Manager, Developer or Balanced Care is subject to an order for relief by
the bankruptcy court or is unable or admits in writing its inability to pay its
debt as they mature or makes an assignment for the benefit of creditors or any
one or more of Tenant, Primary Parent, Secondary Parent, Manager, Developer or
Balanced Care applies for or consents to the appointment of any receiver,
trustee or similar official for it or for all or any part of its property (or
any such appointment is made without its consent and the appointment continues
undismissed, undischarged or unstayed for sixty (60) days from commencement
thereof); or any one or more of Tenant, Primary Parent, Secondary Parent,
Manager, Developer or Balanced Care institutes or consents to any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, dissolution,
custodianship, conservatorship, liquidation, rehabilitation or similar
proceeding relating to it or to all or any part of its property under the Laws
of any jurisdiction (or any such proceeding is instituted without its consent
and continues undismissed for sixty (60) days from commencement); or any
judgment, writ, warrant of attachment or execution or similar process is issued
or levied against any property of Developer or any Guarantor and is not
released, vacated or fully bonded within sixty (60) days after its initial issue
or levy;
(g) Balanced Care and BCC shall have failed to Commence
Construction of five Facilities on five Qualified Properties on or prior to the
expiration or sooner termination of the Term; provided, however, that if either
(I) Balanced Care presents eight or more properties for consideration as
Qualified Properties which are (a) properties on which a Balanced Care "Outlook
Pointe" facility having 60, 80 or 106 units is to be constructed within a market
having market demographics and bed need relative to the market which is no less
favorable to the proposed Project than was the case with respect to both the
Project to be
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constructed in Jackson, Tennessee and the Project to be constructed in Anderson,
Indiana, (b) rejected as Qualified Properties by American Health in accordance
with this Agreement and (c) subsequently developed with the Project as proposed
to American Health, with the costs of such Project funded by Institutional
Project Financing, or (II) if the condition set forth in Section 0 is not
fulfilled and is not thereafter waived by American Health prior to the
expiration of the Term, and both the Project to be constructed in Jackson,
Tennessee and the Project to be constructed in Anderson, Indiana have been
Finally Completed in accordance with the Transaction Documents applicable
thereto, Balanced Care shall not have suffered an Event of Default by reason of
this Section 0(0).
(h) An Event of Default shall have occurred and shall be
continuing under any Transaction Document other than this Agreement; and
(i) Balanced Care or BCC shall fail to perform any other
material term, covenant or condition of this Agreement or any Transaction
Document or other documents executed in connection herewith or therewith and
such failure is not cured by Developer within a period of thirty (30) days after
receipt by Developer of notice thereof from American Health, unless such failure
cannot with reasonable due diligence be cured within a period of thirty (30)
days, in which case such failure shall not be deemed to continue if Developer
proceeds promptly and with reasonable due diligence to cure the failure and
thereafter diligently completes the curing thereof as soon as reasonably
possible but in all events within a period of ninety (90) days after receipt by
Developer of the notice referred to above in this subparagraph.
13.2 Remedies of American Health. Upon the occurrence of any
Event of Default hereunder, American Health may, without further notice to or
demand, if any, upon Balanced Care, which are expressly waived by Balanced Care,
exercise any one or more of the following remedies as American Health may
determine:
(a) American Health may exercise all remedies granted to
American Health or AHP in any one or more of the Transaction Documents;
(b) American Health may terminate Balanced Care's rights
under this Agreement upon notice to Balanced Care and upon such termination may
require Balanced Care to purchase all Qualified Property previously acquired by
AHP for a purchase price equal to the total amounts expended with respect to (i)
the cost of the acquisition of all Qualified Property plus all Costs of the Work
(inclusive of all Hard Costs and Soft Costs advanced by AHP under the
Development Agreement), (ii) all transaction expenses and other costs advanced
by AHP or American Health with respect to the development and construction of
each Project and the Facility constructed upon any such Qualified Property
(whether or not such Project or Facility is in the course of construction) and
(iii) all costs and expenses incurred by American Health in the negotiation and
preparation of the Transaction Documents
(c) American Health may perform any of Balanced Care's
obligations at the costs and expense of Balanced Care in such manner as American
Health may reasonably determine; or
(d) American Health may proceed to protect, exercise and
enforce any and all other remedies provided under the Transaction Documents or
by applicable Laws.
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All actual and reasonable costs, expenses, charges and advances of American
Health in exercising any such remedies (including without limitation costs of
attorneys' and staff fees including costs of preparation for litigation
computerized research, telephone, fax, mileage, depositions, postage,
photocopies, process service, video tapes and similar expenses) shall be payable
to American Health as transaction expenses in accordance herewith.
13.3 Remedies Cumulative. Each of the remedies of American Health
provided in the Transaction Documents is cumulative and not exclusive of, and
shall not prejudice, any other remedy provided in the Transaction Documents or
by applicable Laws. Each remedy may be exercised from time to time as often as
deemed necessary by American Health, and in such order and manner as American
Health may determine. No failure or delay on the part of American Health in
exercising any remedy shall operate as a waiver of such remedy; nor shall any
single or partial exercise of any remedy preclude any other or further exercise
of such remedy or of any other remedy. No application of payments, or any
advances or other action by American Health, will cure or waive any Event of
Default or prevent acceleration, or continued acceleration, of amounts payable
under the Transaction Documents or prevent the exercise, or continued exercise,
of any remedies of American Health.
14. Calculation of Days.
For purposes of this Agreement, all references to "days" shall
mean calendar days, except where expressly referred to as "business days".
"Business days" shall mean Monday through Friday only, except for holidays on
which Banks in San Francisco, California are required or permitted to close for
business.
15. Miscellaneous.
15.1 Notice. Any notices, demands, approvals and other
communications provided for herein shall be in writing and shall be delivered by
telephonic facsimile and by overnight air courier, personal delivery or
registered or certified U.S. Mail with return receipt requested, postage paid,
to the appropriate party at its address as follows:
If to American Health: American Health Properties, Inc.
0000 Xxxxx Xxxxxxx'x Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: President and General Counsel
If to Balanced Care: BCC Development and Management Co.
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq
With copies to: Xxxxxxxxxxx and Xxxxxxxx, L.L P
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
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Addresses for notice may be changed from time to time by written notice to all
other parties. Any communication given by mail wil1 be effective (i) upon the
earlier of (a) three business days following deposit in a post office or other
official depository under the care and custody of the United States Postal
Service or (b) actual receipt, as evidenced by the return receipt; (ii) if given
by telephone facsimile, when sent, and (iii) if given by personal delivery or by
overnight air courier, when delivered to the appropriate address set forth
above.
15.2 Governing Law This Agreement shall be interpreted according
to the laws of the Commonwealth of Pennsylvania. All disputes hereunder shall be
adjudicated in the federal courts sitting in the State of Colorado, or should
such courts refuse to recognize jurisdiction over such matters, the courts of
the State of Colorado.
15.3 Press Releases. Prior to any party issuing a press release
regarding this Agreement or the transaction contemplated hereunder, the parties
shall consult and confer with one another regarding the form and content of any
such press release; provided, however, the provisions of this Paragraph 15.3
shall not prevent any party from issuing such releases or filing such documents
as either reasonably believes in the exercise of its good faith business
judgment to be necessary or desirable under applicable federal or State
securities laws.
15.4 Assignment. Neither party shall assign its rights and
obligations under this Agreement without the prior written approval of the other
party.
15.5 Entire Agreement. This Agreement (including all items
incorporated herein pursuant to Section 1.4) constitutes the entire Agreement
and understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements, oral or written and all other communications
between the parties relating to such subject matter. Except as set forth in this
Agreement, neither party has made any representations or promises with respect
to the subject matter hereof.
15.6 Amendments. This Agreement shall not be modified or amended
except by mutual written agreement.
15.7 Waiver of Breach. The waiver by either party of a breach or
violation of any provisions of this Agreement shall not operate as, or be
construed to be, a waiver of any subsequent breach of the same or other
provision.
15.8 Severability. In the event any provision of this Agreement
is held to be unenforceable or invalid for any reason, this Agreement shall
remain in full force and effect and enforceable in accordance with its terms
disregarding such enforceable or invalid provision; provided, however, that in
the event that a provision of this Agreement is rendered invalid or
unenforceable and its removal has the effect of materially altering the
obligations or benefits to either party, the party so affected shall have the
right to terminate this Agreement upon thirty (30) days prior written notice to
the other party.
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15.9 Captions and Headings. The captions or headings in this
Agreement are made for convenience and general reference only and should not be
construed to describe, define or limit the scope and intent of the provisions of
this Agreement.
15.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which together shall constitute one and the same Agreement.
15.11 Binding Effect. This Agreement shall be binding and shall
inure to the benefit of the parties hereto, and their respective heirs,
legatees, executors, administrators, legal representatives, successors and
assigns.
15.12 No Rule of Construction. The parties acknowledge that all
parties hereto, and their counsel, have read and fully negotiated all of the
language used in this Agreement. The parties acknowledge that, because all
parties and their counsel participated in negotiating and drafting this
Agreement, no rule of construction shall apply to this Agreement which construes
ambiguous and unclear language in favor of or against any party because such
party drafted this Agreement.
15.13 Time is of the Essence. With respect to all provisions of
this Agreement, time is of the essence.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
AMERICAN HEALTH PROPERTIES, BALANCED CARE CORPORATION
INC., a Delaware corporation a Delaware corporation
By: /s/ Signature Illegible By: /s/ Signature Illegible
------------------------------ ---------------------------------
Name: Name:
Title: Title:
