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EXHIBIT 10.75
SHORTFALL FUNDING AGREEMENT
THIS AGREEMENT ("AGREEMENT") is made as of January 30, 1998, by and
among ASSISTED CARE OPERATORS OF XXXXXXXX, LLC., a Delaware limited
liability company (the "LESSEE"), the members of Lessee listed on Schedule A
attached hereto (collectively, the "MEMBER") and Balanced Care Corporation, a
Delaware corporation ("BCC").
W I T N E S S E T H
WHEREAS, the Member constitutes the holder of all equity
interests in the Lessee; and
WHEREAS, pursuant to the Facility Agreement, Lessee executed
and delivered the Lease and Security Agreement dated as of January 30, 1998 (the
"LEASE") between Lessee and AHP OF [INDIANA], INC., an [Indiana] corporation
(the "LESSOR"), whereby Lessee leased from Lessor property, together with all
improvements built or to be built thereon, located in Madison County, [Indiana]
as more fully described in the Lease (the "PROPERTY"); and
WHEREAS, pursuant to the Facility Agreement the Lessee and
Balanced Care at Xxxxxxxx, Inc., a Delaware corporation (the "MANAGEMENT FIRM")
have entered into that certain Management Agreement dated as of January 30, 1998
(the "MANAGEMENT AGREEMENT") whereby Lessee has appointed the Management Firm as
the exclusive manager and operator the Facility; and
WHEREAS, pursuant to the Facility Agreement Lessor and BCC
Development and Management Company, Inc., a Delaware corporation ("Developer")
have entered into a Development Agreement of even date herewith (the
"Development Agreement") for the purpose of developing the Facility; and
WHEREAS, the Developer and the Manager are wholly-owned
subsidiaries of BCC; and
WHEREAS, Lessee will deposit with Lessor immediately available
funds from time to time as specifically provided in this Agreement to fund the
Working Capital Reserve (to be used to fund Shortfalls); and
WHEREAS, upon depletion of the Working Capital Reserve, BCC
intends to make Advances to the Lessee, on the terms and conditions herein
stated, to fund continuing Shortfalls; and
WHEREAS, BCC is willing to fund Advances to Lessee covering
Shortfalls upon depletion of the Working Capital Reserve only on the terms and
conditions provided in this Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of
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which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I
FUNDING SHORTFALLS
SECTION 1.01 FUNDING; CAPITALIZATION OF LESSEE; WORKING
CAPITAL RESERVE. (a) The Member (jointly and severally if more than one) hereby
agrees to contribute as capital to the Lessee the following capital
contributions:
(i) On the date hereof the Member shall deposit into the
Collateral Account no less than the sum of $200,000; and
(ii) on or before April 2, 1998 the Member shall deposit into
the Collateral Account funds sufficient to make to the total amounts contributed
to Lessee no less than the sum of $600,000.
Time is of the essence with respect to each contribution
described in this Section 1.01(a).
(b) The contributions described in Section 1.01 (a) shall be
made directly into the Cash Collateral Account. Each contribution of funds into
the Cash Collateral Account as provided in this Section 1.01 is referred to
herein as a "FUNDING", and the aggregate of all Fundings made is collectively
referred to as the "WORKING CAPITAL RESERVE").
(c) In the event that the Member defaults in the timely
payment of Fundings into the Working Capital Reserve as provided in Section 1.01
(a)(or defaults in the timely payment of fundings regarding other transactions
in which Lessor has or will enter into leases with entities wholly-owned by the
Member), BCC shall have the right at any time thereafter, but not the
obligation, to require that the Member sell all of the Equity Interests to BCC
or its designee in the manner provided for in the Option Agreement; provided,
however, the purchase price for the Equity Interests (as the case may be) shall
be the amount of Fundings actually deposited by the Member into the Collateral
Account, plus an amount calculated on a pro rata basis as 25% per annum of the
amount of funds actually contributed into the Working Capital Reserve from the
date of deposit through the date of closing. In such event, all terms and
conditions of the sale applicable to the Option shall be equally applicable to
the sale under this Section 1.01(c), and the failure by the Member to close on
such sale within 3 days after written notice from BCC (time being of the
essence) shall constitute an Event of Default.
(d) The Member and the Lessee acknowledge and agree that (i)
each Funding constitutes the capital contribution of the Member to the Lessee,
(ii) each Funding is not in any way to be construed as Indebtedness of Lessee
nor to be construed as evidence of a loan from any Member to the Lessee and
(iii) Lessor and the Manager may (without notice to Lessee or Member, and
whether acting alone or together) withdraw funds from the Working Capital
Reserve to fund Shortfalls with respect to the Facility as provided in the
Transaction Documents and the Lease Documents.
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SECTION 1.02 ADVANCES. Upon complete depletion of the Working
Capital Reserve, and to the extent thereafter of any Shortfall, BCC hereby
agrees to advance from time to time funds to the Lessee upon no less than three
(3) days prior written notice, upon the terms and conditions provided herein
(each advance being an "ADVANCE" and collectively, the "ADVANCES"). Advances
shall be evidenced by one or more promissory notes issued by the Lessee in the
form attached hereto as Exhibit A (the "NOTES"). The Notes shall be payable upon
demand. Interest shall accrue on the Notes at the rate of 2% over the Prime Rate
as announced from time to time in the Wall Street Journal (or, in the event of
the discontinuance of the publishing of the Prime Rate in the Wall Street
Journal, such other source as the parties may agree), and shall be payable in
arrears on the first day of each calendar quarter. All sums owed under the Notes
and hereunder to BCC, and all other obligations, agreements and covenants under
the Transaction Documents applicable to and binding upon either Lessee or the
Member (including the obligations of each Member under the Option Agreement),
together with all interest payable under the Transaction Documents and all other
costs and expenses payable by Lessee or any Member to or for the benefit of
Lessor, any Lessor Affiliate, BCC or any BCC Affiliate (including
indemnification and defense obligations) are referred to herein as the
"OBLIGATIONS".
SECTION 1.03 ASSET PURCHASE OPTION. The Lessee and the Member
hereby grant to BCC an option (the "ASSET PURCHASE OPTION") to purchase all of
the assets of the Lessee (including the option to take an assignment of the
Lease) for the Asset Purchase Price. The Asset Purchase Option may be exercised
by BCC by providing written notice to the Lessee at any time during the term of
the Lease. The closing of the purchase of the assets of the Lessee shall take
place within 30 days after BCC exercises the Asset Purchase Option at such
location in Pennsylvania as BCC may designate. At the closing of the asset
purchase, the Lessee shall transfer, assign and convey to BCC (or its designee)
all assets of Lessee, free and clear of all Liens and restrictions of any kind
or nature, except for Liens or restrictions in favor of the Lessor pursuant to
the Lease Documents or in favor of BCC pursuant to the Transaction Documents
(provided, however, Liens in favor of BCC securing Advances or other Obligations
shall be paid in full by Lessee and the Member at the closing of the asset
purchase). The Lessee (and the Member if requested by BCC) shall execute and
deliver at the closing of the asset purchase an assignment of lease (assigning
the Lease to the purchaser), a xxxx of sale conveying all other assets of the
Lessee and such other documents and instruments as BCC may reasonably request,
all in form and substance reasonably satisfactory to BCC. The "ASSET PURCHASE
PRICE" as used herein shall mean (i) all amounts actually funded into the
Working Capital Reserve, plus (ii) an amount (calculated as a yearly return)
equal to 25% of the Working Capital Reserve actually funded through Fundings,
compounded annually through the closing date, plus (iii) the aggregate amount of
all Advances and all other Obligations due and payable by Lessee or the Member
to BCC or a BCC Affiliate through the closing date (exclusive of the Management
Fee), minus (iv) any payments made to the Member under the Option Agreement. All
Advances and all other Obligations due and payable by Lessee or the Member to
BCC or a BCC Affiliate through the closing date of the asset purchase shall be
payable from the Asset Purchase Price to BCC or the BCC Affiliate, as
appropriate. Notwithstanding any provision to the contrary contained herein, in
no event shall BCC be permitted to exercise the Asset Purchase Option unless (i)
BCC is otherwise current on all Option Payments due and owing under the Option
Agreement at the time of exercise of the Asset Purchase Option and (ii) BCC
obtains the consent of Lessor to release
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Lessee and the Member from all liability under the Lease Documents, or otherwise
terminates Lessee's and Member's liability thereunder.
SECTION 1.04 TRANSACTION DOCUMENTS. In addition to the Notes,
and to better secure the performance of Lessee hereunder and under the other
Transaction Documents, Lessee and the Member (as applicable) have executed and
delivered to Lessor or BCC (as applicable) the following:
(i) the Lease and the other Lease Documents to which
it is a party;
(ii) Revolving Credit/Future Advances Leasehold
Mortgage in the form attached hereto as Exhibit B encumbering
the Property in favor of BCC (the "LEASEHOLD MORTGAGE");
(iii) the Deposit Pledge Agreement and the Stock
Pledge Agreement; and
(iv) such other documents, certificates, powers,
affidavits and instrument as BCC may reasonably request.
In addition to the foregoing documents, the Member has
executed and delivered to BCC the Option Agreement (the
"OPTION AGREEMENT") substantially in the form attached hereto
as Exhibit C, whereby each Member has agreed that BCC shall
have an option to purchase the equity interest of each Member
in Lessee, on the terms and conditions provided therein.
SECTION 1.05 INTEREST PAYMENTS. In no event shall the amount
of interest due or payable pursuant to any Transaction Document exceed the
maximum rate of interest allowed by Law and, in the event any such payment is
inadvertently paid by the Lessee or the Member or inadvertently received by BCC
or any BCC Affiliate, then such excess sum shall be credited as a payment of
principal due to BCC or any BCC Affiliate. It is the express intention of the
parties hereto that neither the Lessee nor the Member pay to BCC, directly or
indirectly, in any manner whatsoever, interest in excess of that which may be
lawfully paid by the Lessee.
SECTION 1.06 INTENTION. It is the intention of BCC, the Member
and Lessee that (i) the Management Firm operate the Facility pursuant to the
Management Agreement and that Lessee act as a passive investor with respect to
the Facility, (ii) Lessee include on its financial statements all revenue and
losses with respect to the Facility during the term of this Agreement for
accounting purposes, and (iii) Advances made hereunder and all other obligations
of Lessee and the Member under the Transaction Documents be secured by the
Leasehold Mortgage Deposit Pledge and Stock Pledge, but subject to the rights of
Lessor under the Lease Documents and Transaction Documents, regardless of any
bankruptcy, insolvency, receivership or similar proceedings instituted by or
against Lessee. BCC, each Member and Lessee agree to take no position
inconsistent with the intention of the parties as herein stated.
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ARTICLE II
CONDITIONS TO ADVANCES
SECTION 2.01 CONDITIONS PRECEDENT TO ADVANCES. Subject to the
rights of Lessor under the Working Capital Assurance Agreement, the obligations
of BCC to accept delivery of the Transaction Documents and make Advances are
subject to the condition precedent that BCC receives the following five days
prior to the making of any Advance, in form and substance satisfactory to BCC:
(a) the Note(s);
(b) the Working Capital Assurance Agreement;
(c) the Leasehold Mortgage;
(d) the Option Agreements;
(e) the Management Agreement;
(f) a certificate of the Secretary of State of the State of
Delaware stating that the Lessee is duly organized, validly existing and in good
standing in such state;
(g) a certified copy of the Operating Agreement of the Lessee
and the Member, together with certified resolutions or authorizations of the
Lessee and the Member granting the power to Lessee and the Member to enter into
and perform the Transaction Documents;
(h) all other Transaction Documents;
(i) the Lease and all other Lease Documents; and
(j) such other affidavits, documents, certificates, statements
and instruments as BCC may reasonably request.
SECTION 2.02 ADDITIONAL CONDITIONS PRECEDENT TO ADVANCES.
Subject to the rights of Lessor under the Working Capital Assurance Agreement,
the obligation of BCC to accept delivery of the Transaction Documents and
consummate this transaction, and to make any Advance, shall be further subject
to the condition precedent that:
(a) the following statements shall be true and correct (and
the delivery by the Lessee and the Member of the Transaction Documents shall be
deemed to constitute a representation and warranty by the Lessee and the Member
that such statements are true on such date):
(i) The representations and warranties contained in
Article III of this Agreement and the other Transaction
Documents are true and correct in all
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material respects on and as of date of the execution and
delivery of this Agreement, at the time of each Advance, and
as of each date until the Obligations are satisfied in full;
and
(ii) No event has occurred and is continuing which
constitutes a Default or an Event of Default under any of the
Transaction Documents; and
(b) BCC shall have received such other opinions or documents
as BCC may request in BCC's sole discretion.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 REPRESENTATIONS AND WARRANTIES OF THE LESSEE. The
Lessee and each Member represents and warrants as follows:
(a) ORGANIZATION; QUALIFICATION. The Lessee is a limited
liability company duly formed, validly existing and in good standing under the
laws of State of Delaware, has qualified to do business in the State of
{________}, and has the power and authority to own its properties and to carry
on its business as now being and hereafter proposed to be conducted.
(b) POWER; AUTHORITY. The execution, delivery and performance
by the Lessee of this Agreement and the other Transaction Documents to which it
is a party are within the Lessee's power and have been duly authorized by all
necessary action, and this Agreement and the other Transaction Documents to
which Lessee is a party have been duly executed and delivered by the duly
authorized Manager of the Lessee.
(c) APPROVAL OR CONSENTS. No approval or consent of any
foreign, domestic, federal, state or local authority is required for the due
execution, delivery and performance by the Lessee of this Agreement or any other
Transaction Document to which it is a party and the execution, delivery and
performance by the Lessee of this Agreement and the other Transaction Documents
to which it is a party do not conflict with, and will not result in the breach
of or default under, any contract, agreement or other document or instrument to
which the Lessee is a party or by which its properties are bound.
(d) BINDING OBLIGATIONS. This Agreement and the other
Transaction Documents to which the Lessee is a party are legal, valid and
binding obligations of the Lessee enforceable against the Lessee in accordance
with their respective terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting generally the
enforcement of creditors' rights.
(e) LITIGATION. There is no pending or, to the best of
Lessee's knowledge, threatened action, suit or proceeding against or affecting
the Lessee before any court, governmental agency or arbitrator.
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(f) APPLICABLE LAW. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which the Lessee is a
party, and the borrowings hereunder, do not and will not, by the passage of
time, the giving of notice or otherwise, violate any Law applicable to the
Lessee.
(g) TITLE AND CONDITION OF ASSETS. Except for Lessee's
leasehold interest in the Lease, the Lessee has good, marketable and legal title
to its properties and assets. The Lessee has a good and valid leasehold interest
in the Lease.
(h) LIENS. None of the properties and assets of the Lessee are
subject to any Lien or other charge other than Liens in favor of BCC as provided
herein, a BCC Affiliate or the Lessor ("PERMITTED Liens"), and the execution,
delivery and performance by the Lessee of this Agreement and the other
Transaction Documents to which it is a party will neither result in the creation
of any Lien or other change upon any of the Lessee's properties or assets, nor
cause a default under any agreements to which Lessee is a party.
(i) SECURITY. Upon the consummation of this transaction, BCC
will have a valid and perfected mortgage lien in the Lease.
(j) TAX RETURNS AND PAYMENTS. All federal, state and other tax
returns of the Lessee required by Law to be filed have been duly filed, and all
federal, state and other taxes, assessments and other governmental charges or
levies upon the Lessee and its properties, income, profits and assets which are
due and payable have been paid.
(k) NO EMPLOYEES. The Lessee has no employees for which it is
required to comply with the Employment Retirement Income Security Act of 1974.
(l) ABSENCE OF DEFAULTS. No event has occurred, which has not
been remedied, cured or waived, which constitutes, or with the passage of time
or giving of notice or both would constitute, a Default or an Event of Default
under any Transaction Document or Lease Document or which constitutes or which
with the passage of time or giving of notice or both would constitute a default
or event of default by the Lessee under any agreement or judgment, decree or
order, to which the Lessee is a party or by which the Lessee or any of its
properties may be bound.
(m) ACCURACY AND COMPLETENESS OF INFORMATION. All written
information, reports and other papers and data furnished to BCC were, at the
time the same were so furnished, complete and correct in all material respects,
to the extent necessary to give BCC a true and accurate knowledge of the subject
matter, or, in the case of financial statements, present fairly, in accordance
with GAAP consistently applied throughout the periods involved, the financial
position of the persons involved as at the date thereof and the results of
operations for such periods. No document furnished or written statement made to
BCC by Lessee or any Member in connection with the execution of this Agreement
or any of the other Transaction Documents (or in connection with the
organization or capitalization of Lessee by the Members) contains or will
contain any untrue statement of a material fact or fails to state a material
fact necessary in order to make the statements contained therein not materially
misleading.
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(n) SUBSIDIARIES. The Lessee does not own, directly or
indirectly, of record or beneficially, any of the voting stock of any class or
classes of, or any other voting interests of, any Entity.
(o) INVESTMENT COMPANY. The Lessee is not an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
(p) PUBLIC UTILITY COMPANY. The Lessee is not a "holding
company" or a "subsidiary company", or an "affiliate" of a "holding company",
within the meaning of the Public Holding Company Act of 1935, as amended.
(q) SECURITIES REPRESENTATIONS. Neither Lessee nor any agent,
broker, dealer or other person or entity has offered or sold any equity
interests in Lessee in violation of the 1933 Act or any state securities laws.
(r) CAPITAL CONTRIBUTIONS. All Indebtedness (if any) incurred
by any Member or equity owner of any Member to fund the capital contributions to
Lessee or any Member (including Indebtedness used to make Fundings) constitutes
full recourse Indebtedness against such Member or equity owners (as
appropriate), and such Indebtedness is not limited in collection to any
particular asset of the person or Entity incurring such Indebtedness.
ARTICLE IV
COVENANTS OF THE LESSEE
SECTION 4.01 AFFIRMATIVE COVENANTS. So long as BCC or any BCC
Affiliate shall have any commitment or Obligation hereunder or under the other
Transaction Documents owed to it, the Lessee will and the Member shall cause the
Lessee to:
(a) COMPLIANCE WITH LAWS; ETC. Comply, in all material
respects with all applicable Laws, such compliance to include, without
limitation, paying before the same become delinquent all taxes, assessments and
governmental charges imposed upon it or upon its property.
(b) MAINTENANCE OF INSURANCE. Maintain or contract to be
maintained, with premiums fully paid, with responsible and reputable insurance
companies or associations, such insurance in such amounts and covering such
risks as is required to be carried under the Lease, and all such policies
evidencing such insurance shall name BCC and Lessor as additional insureds
thereunder. Lessee shall also maintain insurance of sufficient types and amounts
to comply with all other Laws of any government entity exercising jurisdiction
over Lessee. All insurance policies shall provide for notice of nonrenewal and
notice of extension to BCC and Lessor, and shall not be terminated, canceled,
amended or modified without 30 days prior written notice to BCC and Lessor.
Lessee shall provide BCC with evidence of all insurance, including renewals or
extensions of such insurance, promptly after receiving such insurance. Insurance
policies and proceeds thereof shall at all times during the term of the Lease be
subject to the Lessor's rights as provided in the Lease Documents.
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(c) NOTICE OF LITIGATION AND OTHER MATTERS. Promptly give
notice to BCC of the following: (i) any actions, suits or proceedings instituted
against the Lessee; (ii) any change in the chief executive office, principal
place of business or location of the books and records of the Lessee and (iii)
the occurrence of a Default or an Event of Default.
(d) MAINTENANCE OF PROPERTY. In addition to, and not in
derogation of, the requirements of any of the other Transaction Documents, (i)
protect and preserve all of its properties, (ii) maintain in good repair,
working order and condition all of its tangible properties, and (iii) from time
to time make or cause to be made all needed and appropriate repairs, renewals,
replacements and additions to such properties so that the business carried on in
connection therewith may be properly and advantageously conducted at all times,
as reasonably may be determined by BCC.
(e) PRESERVATION OF EXISTENCE AND SIMILAR MATTERS. Preserve
and maintain its existence under the Laws of the state of its formation, and
preserve and maintain its rights, franchises, licenses and privileges in such
state as a limited liability company, and qualify and remain qualified and
authorized to do business in such state.
(f) BUSINESS. At all times endeavor to carry on its business
in the most efficient manner possible under the circumstances and engage only in
the business presently carried on by the Lessee.
(g) APPLICATIONS OF ADVANCES. To apply each Advance or cause
each Advance to be applied to the following Obligations in the following order
of priority:
(a) First, to any outstanding Lease Obligations
which are due or payable,
(b) Second, to other Obligations owed to Lessor
or its Affiliates under the Transaction
Documents
(c) Third, to any other Obligations and
(d) Fourth, to any other obligation or liability
giving rise to a Shortfall.
(h) FURTHER ASSURANCES. At BCC's request, from time to time,
execute, acknowledge or take such further action as BCC may reasonably require
to effectuate the purposes of this Agreement and the purposes of the other
Transaction Documents.
Provided, however, notwithstanding anything to the contrary contained in this
Section 4.01, Lessee shall not be in default hereunder to the extent that the
obligations described in this Section 4.01 are required to be performed by the
Management Firm under the Management Agreement.
SECTION 4.02 NEGATIVE COVENANTS. So long as BCC shall have any
commitment or Obligation hereunder or under the other Transaction Documents owed
to it, the Lessee will not, and no Member will cause the Lessee to, without the
prior written consent of BCC:
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(a) LIENS CREATED BY LESSEE. Create or suffer to exist any
Lien or any other type of preferential arrangement, upon or with respect to any
of its properties, whether now owned or hereafter acquired, or assign any right
to receive income, other than Permitted Liens.
(b) DISTRIBUTIONS. Make any distribution of cash or other
property to the Member or declare or pay any dividend or distribution on any
securities of Lessee.
(c) OTHER BUSINESS. Engage in any business venture or enter
into any agreement with respect to any business venture, except as expressly
provided in the Transaction Documents with respect to the Facility.
(d) TRANSFER OF ASSETS. Except as expressly contemplated in
the Transaction Documents with respect to a transfer to BCC or its wholly owned
subsidiary designated by BCC or otherwise as expressly permitted in Section 23.1
of the Lease, convey, transfer, lease, sublease, assign or otherwise dispose of
(whether in one transaction or in a series of transactions) any of its assets
(whether now owned or hereafter acquired) to, or acquire all or substantially
all of the assets of, any person or Entity. The restrictions of this Subsection
shall include a prohibition on any assignment, pledge, hypothocation or other
transfer of the Lease or sublease or license of the Facility, except to BCC or a
BCC Affiliate in accordance with the terms and conditions of the Lease or
otherwise as expressly permitted in Section 23.1 of the Lease.
(e) INDEBTEDNESS FOR BORROWED MONEY. Create, assume, guaranty
or otherwise become or remain obligated in respect of, or permit or suffer to
exist or to be created, assumed or incurred or to be outstanding, any
Indebtedness, except Indebtedness incurred to BCC or a BCC Affiliate under the
Transaction Documents or Indebtedness incurred to Lessor as expressly provided
in the Lease Documents.
(f) CREATION OF AFFILIATES. Form, organize or participate in
the formation or organization of any Entity, or make any investment in any newly
formed or existing Entity.
(g) LOANS. Extend credit to or make any advance, loan,
contribution or payment of money or goods to any person or Entity.
(h) GOVERNANCE DOCUMENTS. Amend, supplement or otherwise
modify the terms of the Articles of Organization or the Operating Agreement of
the Lessee in any way.
(i) OTHER TRANSACTIONS WITH LESSOR. Enter into any transaction
with Lessor or any affiliate or related party to or with Lessor, other than
pursuant to the Transaction Documents.
(j) TRANSFERS OF EQUITY INTERESTS. Permit the Member to
transfer all or any portion of the Member's Equity Interest in Lessee to a party
that does not as of the date hereof hold an equity interest in the Lessee.
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(k) AMEND TRANSACTION DOCUMENTS. (i) Amend, terminate,
supplement or otherwise modify any Transaction Document, (ii) waive any default
or potential event of default by Lessor under any Transaction Document, (iii)
declare a default or event of default under any Transaction Document, (iv)
exercise any right to extend the term of the Lease, (v) exercise any right to
purchase the Facility or exercise a right of refusal with respect thereto or
(vi) exercise any right to cancel the Lease as a result of a casualty or
condemnation with respect to the Facility, or otherwise.
(l) MERGERS AND CONSOLIDATIONS. Merger or consolidate with,
purchase all or any substantial part of the assets of, or otherwise acquire any
Entity.
(m) ISSUANCE OF SECURITIES. Except for the equity interests of
the Lessee that have been issued to the Member and are outstanding as of the
date hereof, issue any equity interests or options, warrants or other rights to
purchase any equity interests or any securities convertible or exchangeable for
equity interests, or commit to do any of the foregoing.
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.01 EVENTS OF DEFAULT. Each of the following events
shall constitute an event of default hereunder ("SHORTFALL EVENT OF DEFAULT"),
whatever the reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment or
order of any court or any order, rule or regulation of any governmental or
nongovernmental body:
(a) The Lessee shall fail to make any payment of principal or
interest, as stated in the Notes, when due, or the Member shall fail to make
payments in connection with Fundings (as provided in Section 1.01 hereof) when
due (each a "MONETARY DEFAULT"); or
(b) Any representation or warranty made by the Lessee or the
Member under or in connection with any Transaction Document shall prove to have
been incorrect or misleading in any material respect when made; or
(c) The Lessee or the Member shall fail to perform or observe
any term, covenant or agreement contained in this Agreement, or in any other
Transaction Document, on its or their part to be performed or observed beyond
the applicable cure period; or
(d) The Lessee or any Member shall generally not pay its debts
when due; or
(e) The Lessee or any Member shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against the
Lessee or any Member seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of the Lessee or any Member of any of its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking
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the entry of an order for relief or the appointment of a receiver, trustee or
other similar official for the Lessee or any Member or for any substantial part
of its property; or the Lessee or any Member shall take any action to authorize
any of the actions set forth above in this subsection; or
(f) Any nonappealable judgment or order for the payment of
money in excess of $50,000 shall be rendered against the Lessee and the same
shall not be discharged within 30 days after entry; or
(g) A warrant or writ of attachment or execution or similar
process shall be issued against any property of the Lessee which exceeds $50,000
in value and such warrant or process shall continue undischarged or unstayed for
ten consecutive days; or
(h) Any material provision of any Transaction Document to
which the Lessee or the Member is a party shall for any reason cease to be valid
and binding on the Lessee or the Member, or the Lessee or the Member shall so
state in writing; or
(i) The Leasehold Mortgage shall for any reason cease to
create a valid and perfected security interest in any of the collateral covered
thereby, subject in priority only to the Permitted Liens; or
(j) an Option Agreement Event of Default, a Mortgage Event of
Default, a Lease Event of Default, a Deposit Pledge Event of Default or a
Management Agreement Event of Default shall occur and be continuing.
ARTICLE VI
REMEDIES
SECTION 6.01 APPLICABLE PROVISIONS UPON OCCURRENCE OF AN EVENT
OF DEFAULT. Upon the occurrence of a Shortfall Event of Default, the following
provisions shall apply:
(a) ACCELERATOR AND TERMINATION:
(i) Automatic. Upon the occurrence of a Shortfall
Event of Default specified in Section 5.01(e), the principal
of, and the interest on, the Notes at the time outstanding,
and all other amounts owed to BCC under this Agreement and any
of the other Transaction Documents, shall become automatically
due and payable without presentment, demand, protest, or other
notice of any kind all of which are expressly waived, anything
in this Agreement or the other Transaction Documents to the
contrary notwithstanding.
(ii) Optional. If any other Shortfall Event of
Default shall have occurred, and in every such event, BCC may
do the following: declare the principal of, and interest on,
the Notes at the time outstanding, and all other amounts owed
to BCC under this Agreement and the other Transaction
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Documents, to be forthwith due and payable, whereupon the same
shall immediately become due and payable without presentment,
demand, protest or other notice of any kind, all of which are
expressly waived, anything in this Agreement or the other
Transaction Documents to the contrary notwithstanding.
(b) BCC'S RIGHT TO ENTER PROPERTY. BCC may enter upon the
Property and any premises on which collateral may be located and, without
resistance or interference by the Lessee, take physical possession of any or all
thereof and maintain such possession on such premises or move the same or any
part thereof to such other place or places as BCC shall choose, without being
liable to the Lessee on account of any loss, damage or depreciation that may
occur as a result thereof.
(c) USE OF PREMISES. BCC may, without payment of any rent or
any other charge, enter the Property and, without breach of peace, take
possession of the Property or place custodians in exclusive control thereof,
remain on such premises and use the same and any of the Lessee's equipment, for
the purpose of (i) operating the Facility and (ii) collecting any accounts
receivable.
(d) OTHER RIGHTS. BCC may exercise any and all of its rights
and remedies available under the other Transaction Documents, as well as those
available in Law or in equity.
(e) RIGHT TO FORECLOSE. BCC may foreclose upon the Lease, take
immediate possession of the Facility and Property and operate the Property, all
in accordance with the terms and conditions of the Leasehold Mortgage.
SECTION 6.02 APPLICATION OF PROCEEDS. All proceeds from each
sale of, or other realization upon, all or any part of the Collateral following
a Shortfall Event of Default shall be applied or paid over as follows:
(a) First: to the payment of all costs and expenses incurred
in connection with such sale or other realization, including, without
limitation, the expenses for indemnification as provided herein;
(b) Second: to the payment of any Lease Obligations which are
due and payable, including any interest or late charge applicable thereto;
(c) Third: to the payment of any trade creditors of Lessee;
(d) Fourth: to the payment of any accrued but unpaid interest
due upon the Notes;
(e) Fifth: to the payment of the principal due upon the Notes
or any other payments owed to BCC under the Transaction Documents; and
(f) Sixth: the balance (if any) of such proceeds shall be paid
to the Lessee subject to any duty imposed by law or otherwise to the holder of
any subordinate lien in the
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Collateral known to BCC and subject to the direction of a court of competent
jurisdiction.
The Lessee shall remain liable and will pay, on demand, any
deficiency remaining in respect of the Obligations owing by the Lessee to BCC
after the application of proceeds set forth above together with interest thereon
at a rate per annum equal to the highest rate then payable hereunder.
SECTION 6.03 MISCELLANEOUS PROVISIONS CONCERNING REMEDIES.
(a) RIGHTS CUMULATIVE. The rights and remedies of BCC under
this Agreement and each of the other Transaction Documents shall be cumulative
and not exclusive of any rights or remedies which it would otherwise have. In
exercising its rights and remedies BCC may be selective and no failure or delay
by BCC in exercising any right shall operate as a waiver of it, nor shall any
single or partial exercise of any power or right preclude its other or further
exercise of any other power or right.
(b) WAIVER OF MARSHALLING. The Lessee hereby waives any right
to require any marshalling of assets and any similar right.
(c) LIMITATION OF LIABILITY. Nothing contained in this Article
VI or elsewhere in this Agreement or in any other Transaction Documents shall be
construed as requiring or obligating BCC or any agent or designee thereof to
make any demand, or to make any inquiry as to the nature or sufficiency of any
payment received by it, or to present or file any claim or notice or take any
action, with respect to any account or any other Collateral or the moneys due or
to become due under the Notes or any other Transaction Documents or in
connection therewith, or to take any steps necessary to preserve any rights
against prior parties and neither BCC nor any of its agents or designees shall
have any liability to the Lessee for actions taken pursuant to this Article VI,
any other provision of this Agreement or any other Transaction Documents, except
as otherwise provided by Law.
(d) WAIVER OF DEFENSES. Lessee hereby waives any and all
defenses, either by way of set-off as to matters arising prior to the date
hereof or any other defenses, which Lessee presently believes it has or which
Lessee may have in the future relating to monetary defaults under this Agreement
or any other Transaction Document.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 RIGHT TO CURE DEFAULTS UNDER TRANSACTION
DOCUMENTS. Lessee shall give BCC immediate notice of an default or event of
default under any Transaction Document received from Lessor. BCC shall have the
right, but not the obligation, to cure such default or event of default as
provided in the Transaction Documents. To the extent that BCC shall expend sums
to cure any such default or event of default, such sums shall be deemed Advances
hereunder, payable upon demand.
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 DEFINITIONS; INTERPRETATION; MISCELLANEOUS.
Capitalized terms used but not otherwise defined in this Agreement have the
respective meanings specified in Appendix 1 hereto; the rules of interpretation
and other provisions set forth in Appendix 1 hereto shall apply to this
Agreement.
SECTION 8.02 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered in person, Federal Express or other recognized overnight courier or
sent by registered or certified U.S. mail, return receipt requested or sent by
facsimile or telecopy transmission and addressed:
(i) If to the Lessee or Member at:
Assisted Care Operators of _____, LLC
Assisted Care Operators, LLC
Oakhaven Senior Living, Inc.
c/o Hakman & Company, Incorporated
0000 Xxx Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
(ii) If to BCC, at
0000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxxxx, XX 00000
or to such other address or facsimile number as a party may designate by notice
to the other parties hereto.
SECTION 8.03 JURISDICTION. THE LESSEE AND THE MEMBER HEREBY
IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY PENNSYLVANIA COURT OR
FEDERAL COURT SITTING IN PENNSYLVANIA IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS TO WHICH
THE LESSEE IS A PARTY, AND THE LESSEE AND THE MEMBER HEREBY IRREVOCABLY AGREE
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE HEARD AND
DETERMINED IN SUCH PENNSYLVANIA COURT OR IN SUCH FEDERAL COURT. THE LESSEE AND
THE MEMBER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING. THE LESSEE AND THE MEMBER IRREVOCABLY CONSENT TO THE
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SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY
BE SERVED IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH
PROCESS TO THE LESSEE AT ITS ADDRESS SPECIFIED IN SECTION 8.02. THE LESSEE AND
THE MEMBER AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS SECTION SHALL AFFECT THE
RIGHT OF BCC TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF BCC TO BRING ANY ACTION OR PROCEEDING AGAINST THE LESSEE OR
ITS PROPERTY (OR THE MEMBER OR THE MEMBER'S PROPERTY) IN THE COURTS OF OTHER
JURISDICTIONS.
SECTION 8.04 PERFORMANCE OF LESSEE'S DUTIES. The Lessee's
obligations, and the obligation of the Member, under this Agreement and the
other Transaction Documents shall be performed by the Lessee and the Member at
their sole cost and expense. If the Lessee or the Member shall fail to do any
act or thing which it or they have covenanted to do under this Agreement or any
of the other Transaction Documents, BCC may, but shall not be obligated to, do
the same or cause it to be done either in the name of BCC or in the name and on
behalf of the Lessee or the Member, and the Lessee and the Member hereby
irrevocably authorizes BCC so to act.
SECTION 8.05 INDEMNIFICATION. The Lessee agrees to reimburse
BCC for all costs and expenses, including reasonable counsel fees and
disbursements, incurred, and to indemnify and hold BCC harmless from and against
all losses suffered by BCC in connection with:
(a) any breach by Lessee or any Member of any covenant,
agreement, representation or warranty under any Transaction Document,
(b) any and all uncollected items, including all checks or
other negotiable instruments returned to BCC for insufficient funds, and
(c) any claim, debt, demand, loss, damage, action, cause of
action, liability, cost and expense or suit of any kind or nature whatsoever,
brought against or incurred by BCC, in any manner arising out of or, directly or
indirectly, related to or connected with the operation of the Lessee's business
or sale thereto, which claim, debt, demand, loss, damage, action , cause of
action, liability, cost or expense was not caused by the acts or omissions of
BCC or a BCC Affiliate.
The Lessee shall indemnify BCC as provided herein upon demand
and in immediately available funds.
SECTION 8.06 INJUNCTIVE RELIEF. The Lessee and each Member
recognize that, in the event the Lessee or any Member fails to perform, observe
or discharge any of its or their obligations or liabilities under this Agreement
or any of the other Transaction Documents, any
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remedy of Law may prove to be inadequate relief to BCC; therefore, the Lessee
and each Member agrees that BCC shall be entitled to temporary and permanent
equitable relief in any such case without the necessity of proving actual
damages.
SECTION 8.07 BINDING EFFECT. This Agreement shall be binding
upon and inure to the benefit of the Lessee, the Member and BCC and their
respective personal representatives, heirs, successors and assigns, except that
Lessee shall have no right to assign its rights hereunder or any interest
herein.
SECTION 8.08 WAIVERS.
(a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR
CONTROVERSY BETWEEN THE LESSEE, THE MEMBER AND BCC WOULD BE BASED ON DIFFICULT
AND COMPLEX ISSUES OF LAW AND FACT. ACCORDINGLY THE LESSEE, EACH MEMBER AND BCC,
HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN
ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST THE
LESSEE AND/OR THE MEMBER ARISING OUT OF THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN THE
LESSEE, THE MEMBER AND BCC OF ANY KIND OR NATURE, WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE, AND WHETHER NOW EXISTING OR HEREAFTER ARISING, AND LESSEE
AND THE MEMBER HEREBY AGREE AND CONSENT THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE DECIDED BY A COURT TRIAL, IF BCC SO CHOOSES, WITHOUT JURY AND BCC MAY FILE AN
ORIGINAL COUNTERPART OR COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF THE LESSEE AND THE MEMBERS TO THE WAIVER OF THE RIGHT TO TRIAL
BY JURY.
(b) FURTHER, THE LESSEE AND THE MEMBER WAIVE THE BENEFIT OF
ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS.
(c) THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF
COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF.
SECTION 8.09 CONFLICT WITH LEASE DOCUMENTS
This Agreement is subject to the covenants and agreements
contained in the Lease and other Lease Documents. In the event of any conflict
between the provisions of this Agreement and the Lease Documents, the provisions
of the Lease Documents shall control.
SECTION 8.10 THIRD PARTY BENEFICIARY
BCC, the Member and the Lessee each acknowledge and agree that
this Agreement and the rights hereunder are intended to benefit, in addition to
the parties hereto, the
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Lessor, who shall be deemed to be a third party beneficiary hereof but shall
have no obligations hereunder. Without limiting the generality of the foregoing,
(i) the representations, warranties, affirmative covenants and negative
covenants of Lessee and the Member contained herein shall inure to the benefit
of Lessor (together with BCC) and (ii) the Lessor may enforce any or all of the
provisions herein contained, for its benefit and at its sole option.
SECTION 8.11 NO AMENDMENT
BCC, Lessee and the Member hereby agree that no Transaction
Document shall be amended, modified or altered in any manner without the prior
written consent of the Lessor.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound, have caused this Agreement to be executed by their respective
officers or authorized agents as of the date first above written.
WITNESSES: BALANCED CARE CORPORATION,
a Delaware corporation
/s/ Signature Illegible By: /s/ Signature Illegible
------------------------------- -------------------------------
Name: Name:
Title:
WITNESS: AHP OF [INDIANA], INC.,
an Indiana corporation
/s/ Signature Illegible By: /s/ Signature Illegible
------------------------------- -------------------------------
Name: Name:
Title:
ASSISTED CARE OPERATORS, LLC
a Delaware limited liability company
WITNESS: By: /s/ Signature Illegible
------------------------------
Name:
Title:
/s/ Signature Illegible Its Authorized Representative
-------------------------------
Name:
WITNESS: ASSISTED CARE OPERATORS
OF ________________ ,LLC
/s/ Signature Illegible a Delaware limited liability company,
-------------------------------
Name: By: Assisted Care Operators, LLC
a Delaware limited liability
company its Manager and
authorized representative
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By: /s/ Signature Illegible
------------------------------
Name:
Title:
Its Authorized Representative
WITNESS: OAKHAVEN SENIOR LIVING, INC.
a California corporation
By: /s/ Signature Illegible
------------------------------ ------------------------------
Name:
Title:
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APPENDIX 1
TO
SHORTFALL FUNDING AGREEMENT, OPTION AGREEMENT,
MANAGEMENT AGREEMENT, REVOLVING CREDIT/FUTURE ADVANCES LEASEHOLD MORTGAGE AND
SECURITY AGREEMENT, STOCK PLEDGE AGREEMENT
AND DEPOSIT PLEDGE AGREEMENT
DEFINITIONS, INTERPRETATION, AND MISCELLANEOUS PROVISIONS
A. INTERPRETATION. In each Transaction Document, unless a clear
contrary intention appears:
(i) wherever from the context it appears appropriate, each
term stated in either the singular or plural shall include the singular
and plural;
(ii) reference in the masculine, feminine or neuter gender
shall include the masculine, feminine and the neuter;
(iii) reference to any agreement, document or instrument means
such agreement, document or instrument as amended, supplemented or
modified and in effect from time to time in accordance with the terms
thereof and, if applicable, the terms of the other Transaction
Documents and reference to any promissory note includes any promissory
note which is an extension or renewal thereof or a substitute or
replacement therefor;
(iv) reference in any Transaction Document to any title,
article, section, subsection, schedule, or exhibit means such title,
article, section, subsection, schedule, or exhibit thereto;
(v) "hereunder", "hereof", "hereto" and words of similar
import shall be deemed references to a Transaction Document as a whole
and not to any particular Article, Section or other provision thereof;
(vi) "including" (and with correlative meaning "include")
means including without limiting the generality of any description
preceding such term;
(vii) reference to any Law means such Law as amended,
modified, codified, replaced or reenacted, in whole or in part, and in
effect from time to time, including rules and regulations promulgated
thereunder and reference to any section or other provision of any Law
means that provision of such Law from time to time in effect and
constituting the substantive amendment, modification, codification,
replacement or reenactment of such section or other provision
(viii) relative to the determination of any period of time,
"from" means "from and including" and "to" means "to but excluding",
and
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(ix) references in any Transaction Document to any titles,
articles, sections, subsections, schedules, or exhibits are for
convenience only, and neither limit nor amplify the provisions of any
such Transaction Document.
B. GOVERNING LAW. Each Transaction Document to which this Appendix is
attached shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Pennsylvania excluding its conflicts of laws, it being
recognized that BCC Affiliates have negotiated this transaction in Pennsylvania,
certain notices to BCC and BCC Affiliates are to be made in Pennsylvania,
certain payments made under the Transaction Documents are to be sent to or from
Pennsylvania and Pennsylvania has a significant and material interest in the
transactions contemplated by the Transaction Documents; provided, however, if a
Facility is located in a state other than the Commonwealth of Pennsylvania, then
the Laws of such state shall apply solely with respect to the creation of
interests in real property, the perfection of security interests (other than the
pledges of Equity Interests) and the exercise of remedies under the Mortgage.
C. ACCOUNTING TERMS. In each Transaction Document, unless expressly
otherwise provided, accounting terms shall be construed and interpreted, and
accounting determinations and computations shall be made, in accordance with
GAAP consistently applied.
D. CONFLICT IN TRANSACTION DOCUMENTS. If there is any conflict between
any Transaction Documents, such Transaction Document shall be interpreted and
construed, if possible, so as to avoid or minimize such conflict.
E. LEGAL REPRESENTATION OF THE PARTIES. The Transaction Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring the Transaction Document
to be construed or interpreted against any party shall not apply to any
construction or interpretation hereof or thereof.
F. NO WAIVER. No failure on the part of BCC or Lessor to exercise, and
no delay or failure in exercising, any right under any Transaction Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right under any Transaction Document preclude any other or further exercise
thereof or the exercise of any other right. The remedies provided in the
Transaction Documents are cumulative and not exclusive of any remedies provided
by law in equity or otherwise.
G. SEVERABILITY. If any provision of any Transaction Document is held
to be unenforceable for any reason, all other provisions of the respective
Transaction Document shall be deemed valid and enforceable to the fullest extent
possible. To the fullest extent permitted by Law, the parties hereto hereby
waive any provision of Law that renders any term or provision of any Transaction
Document invalid or unenforceable in any respect.
H. COUNTERPARTS. Each Transaction Document may be executed in two or
more counterparts, each of which shall constitute
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an original, but all of which together shall constitute a single instrument.
I. ENTIRE AGREEMENT/AMENDMENTS. The Transaction Documents taken
together contain the entire understanding among the parties thereto with respect
to the subject matter thereof and supersede any prior understandings or
agreements between such parties with respect to such subject matter. Each
Transaction Document may be modified or amended only by a written instrument
executed by the parties thereto.
J. NOTICES. A notice or other communication shall be deemed to be duly
received:
(a) if sent by hand or telegram or express service, when left at
the address of the recipient;
(b) if sent by registered or certified U.S. mail, return receipt
requested, the third business day after mailing; and
(c) if sent by facsimile, upon receipt by the sender of an
acknowledgment or transmission report generated by the machine
from which the facsimile was sent indicating that the
facsimile was sent in its entirety to the recipient's
facsimile number;
provided that if a notice or other communication is served by hand or
by telegram, or is received by telex or facsimile on a day which is not a
business day, or after 5:00 P.M. on any business day at the addressee's
location, such notice or communication shall be deemed to be duly received by
the recipient at 9:00 A.M. on the first business day thereafter.
K. DEFINED TERMS. Unless a clear contrary intention appears, terms
defined herein have the respective indicated meanings when used in each
Transaction Document.
"1933 ACT" means the Securities Act of 1933, as the same may be
amended, supplemented and modified from time to time.
"ADVANCE" is defined in Section 1.01 of the Shortfall Agreement.
"ASSET PURCHASE OPTION" is defined in Section 1.03 of the Shortfall
Agreement.
"ASSET PURCHASE PRICE" is defined in Section 1.03 of the Shortfall
Agreement.
"BANK" is defined in Section 1 of the Deposit Agreement.
"BCC" means Balanced Care Corporation, a Delaware corporation.
"BCC AFFILIATE" means any Entity in which BCC owns, either outright or
beneficially, 50% or more of the outstanding equity interests.
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"CLOSING" is defined in Section 3 of the Option Agreement.
"CLOSING DATE" is defined in Section 3 of the Option Agreement.
"COLLATERAL" is defined in Section 1 of the Deposit Agreement.
"COLLATERAL ACCOUNT" is defined in Section 1 of the Deposit Agreement.
"COMPANY" means Assisted Care Operators of _____________, Inc., a
Delaware limited liability company
"CONFIDENTIAL INFORMATION" is defined in Section 4 of the Management
Agreement.
"DEBT" is defined in Section 1 of the Leasehold Mortgage.
"DEFAULT" means any event that, with the passage of time or the giving
of notice or both would constitute an Event of Default.
"DEPOSIT AGREEMENT" means that certain Deposit Pledge Agreement dated
as of January 30, 1998 among the Lessor, the Members, the Lessee and BCC.
"DEPOSIT PLEDGE EVENT OF DEFAULT" means any breach of any
representation, warranty, covenant or agreement by the Lessee or any Member
under the Deposit Agreement.
"ENTITY" means any corporation, partnership, limited partnership,
limited liability company, common law trust, business trust, statutory trust,
professional corporation, joint venture, limited liability partnership, sole
proprietorship, or other business entity,
"ENVIRONMENTAL LAWS" is defined in Section 6 of the Leasehold Mortgage.
"EQUITY INTERESTS" is defined in the recitals of the Option Agreement.
"EVENT OF DEFAULT" means a Shortfall Event of Default, a Mortgage Event
of Default, an Option Event of Default, a Lease Event of Default, a Deposit
Pledge Event of Default, a Management Agreement Event of Default and any other
breach by the Company or any Member of any provision of any Transaction
Document, and any other default of Lessee or any Member under Transaction
Document or Lease Document.
"FACILITY" means that certain 66 bed assisted living facility to be
developed and thereafter operated on the Property.
"FUNDING" is defined in Section 1.01 of the Shortfall Agreement.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time consistently applied.
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"GOVERNMENTAL AUTHORITIES" means all Federal, state and local
government entities and agencies thereof.
"IMPROVEMENTS" is defined in the Leasehold Mortgage.
"INDEBTEDNESS" means, for any person or Entity, (i) all indebtedness of
such person or Entity for borrowed money or for the deferred purchase price of
property or services, (ii) all obligations of such person or Entity under any
conditional sale or other title retention agreement relating to property
purchased by such person or Entity, (iii) all indebtedness for borrowed money or
for the deferred purchase price of property or services secured by (or for which
the holder of such indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on any property owned by such person or Entity,
whether or not such indebtedness has been assumed, (iv) all obligations of such
person or Entity as lessee under leases that have been or should be, in
accordance with GAAP, recorded as capital leases, (v) all obligations of such
person or Entity under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clause (i) through (iv) above,
and (vi) all current or past due liabilities of such person or Entity in respect
of unfunded vested benefits under plans covered by Title IV of ERISA.
"INTANGIBLE RIGHTS" is defined in Section 4 of the Management
Agreement.
"LAND" is defined in the Leasehold Mortgage.
"LAWS" means all existing and future applicable laws (including the
common law and rules of equity), rules, regulations (including Environmental
Laws, as defined in the Mortgage) statutes, treaties, codes, ordinances,
permits, certificates, orders and licenses of and interpretations by, any
Governmental Authority, and applicable judgments, decrees, injunctions, writs,
orders or like action of any court, arbitrator or other administrative, judicial
or quasi-judicial tribunal or agency of competent jurisdiction (including those
pertaining to health, safety or the environment (including wetlands) and those
pertaining to the construction, use or occupancy of the Facility) and any
restrictive covenant or deed restriction or easement of record affecting the
Facility or any other material asset of the Lessee.
"LEASE" means the Lease and Security Agreement, dated as of January 30,
1998 between the Lessor and the Lessee.
"LEASE DOCUMENTS" mean the following documents, each dated as of
January 30, 1998: (i) the Facility Agreement between BCC and American Health
Properties, Inc. (the "Facility Agreement"), (ii) the Development Agreement
between Lessor and BCC Development & Management Company, Inc., (iii) the Lease,
(iv) the Subordination and Standstill Agreement among the Lessee, BCC and the
Lessor, (v) the Management Agreement Guaranty executed by BCC in favor of the
Lessor, (vi) the Payment and Performance Guaranty of each Tenant Parent (as
defined in the Lease) in favor of Lessor, (vi) the Collateral Assignment (as
defined in the
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Facility Agreement), (vii) the Environmental Indemnification Agreement executed
by BCC in favor of Lessor, (viii) the Completion and Performance Guaranty
executed by BCC in favor of Lessor, (ix) the Assignment of Acquisition Rights
between Lessor and BCC, (x) the Deposit Pledge Agreement, (xi) the Security
Agreement executed by Lessee in favor of Lessor, (xii) the Non-Competition
Agreement executed by BCC in favor of the Lessor and (xiii) the Assignment of
Leases, Rents and Receipts entered into by Lessee in favor of the Lessor, (xiv)
the Working Capital Assurances Agreement, and (xv) all other documents,
instruments, certificates and affidavits executed and delivered in connection
with any of the foregoing.
"LEASE EVENT OF DEFAULT" means "Event of Default" as defined in Section
17.1 of the Lease.
"LEASE OBLIGATIONS" means all obligations, covenants and agreements of
the Lessee, Tenant Parent, BCC, Manager, Developer and any guarantor under the
Lease and the other Lease Documents, including the obligation for the payment of
Rent (as defined in the Lease) and all other obligations of the foregoing
Entities to the Lessor or any affiliate of Lessor.
"LEASEHOLD MORTGAGE" means that certain Revolving Credit/Future
Advances Leasehold Mortgage and Security Agreement dated as of January 30, 1998
between BCC and Lessee.
"LEASEHOLD TENANT" means Lessee.
"LESSEE" means Assisted Care Operators of ________________, LLC.
"LESSOR" means AHP of [Indiana], Inc., an Indiana corporation
"LIENS" means any mortgage, deed of trust, pledge, security interest,
encumbrance, lien, easement, servitude or charge of any kind, including any
irrevocable license, conditional sale or other title retention agreement, any
lease in the nature thereof, or any other right of or arrangement with any
creditor to have its claim satisfied out of any specified property or asset with
the proceeds therefrom prior to the satisfaction of the claims of the general
creditors of the owner thereof, whether or not filed or recorded, or the filing
of, or agreement to execute as "debtor", any financing or continuation statement
under the UCC of any jurisdiction or any federal, state or local lien imposed
pursuant to any Environmental Law.
"MANAGEMENT AGREEMENT" means that certain Management Agreement dated as
of January 30, 1998, between the Management Firm and the Leasehold Tenant.
"MANAGEMENT AGREEMENT EVENT OF DEFAULT" means any breach of any
representation, warranty, covenant or agreement by the Operator under the
Management Agreement.
"MANAGEMENT FEE" is defined in Section 9 of the Management Agreement.
"MANAGEMENT FIRM" means Balanced Care at ____________, Inc., a Delaware
corporation.
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"MEMBERS" means those parties listed on Schedule 1 attached to the
Shortfall Agreement;
"MONETARY DEFAULT" is defined in Section 5.01 of the Shortfall
Agreement
"MORTGAGEE" means BCC.
"MORTGAGE EVENT OF DEFAULT" is defined in Section 13 of the Leasehold
Mortgage.
"MORTGAGED PROPERTY" is defined in the Leasehold Mortgage.
"MORTGAGOR" means the Lessee.
"NOTES" means promissory notes in the form attached to the Shortfall
Agreement as Exhibit A.
"OBLIGATIONS" is defined in Section 1.02 of the Shortfall Agreement.
"OPERATING ACCOUNTS" is defined in Section 1 of the Management
Agreement.
"OPTION" is defined in Section 2 of the Option Agreement.
"OPTION AGREEMENT" means that certain Option Agreement dated as of
January 30, 1998 between the Optionor and BCC.
"OPTION AGREEMENT EVENT OF DEFAULT" means any breach of any
representation, warranty, covenant or agreement by the Optionor under the Option
Agreement.
"OPTION PAYMENTS" is defined in Section 2 of the Option Agreement.
"OPTION TERM" is defined in Section 2 of the Option Agreement.
"OPTIONOR" means, jointly and collectively, Assisted Care Operators,
LLC a Delaware limited liability company and Oakhaven Senior Living, Inc., a
California corporation.
"PERMITTED ENCUMBRANCES" is defined in the Leasehold Mortgage.
"PERMITTED INVESTMENTS" shall mean direct obligations of or obligations
guaranteed by the United States of America or any agency thereof, (ii)
certificates of deposit of any commercial bank the senior unsecured debt
securities of which are rated at the time of acquisition "A" or better by
Standard & Poor's Corporation ("S&P") and "A2" or better by Xxxxx'x Investors
Service, Inc. ("MOODY'S"), (iii) commercial paper rated at the time of
acquisition "A-1" or better by S&P and "P1" or better by Moody's, (iv) corporate
debt securities rated at the time of acquisition "A" or better by S&P and "A2"
or better by Moody's, in each case, with maturities of one
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year or less from the date of acquisition and (v) such other investments as may
be consented to by the mutual agreement of the Lessor and BCC, each in its sole
and absolute discretion.
"PERMITTED LIENS" is defined in Section 3.01 of the Shortfall
Agreement.
"PERSONAL PROPERTY" is defined in Section 29 of the Leasehold Mortgage.
"PROPERTY" has the meaning ascribed to such term in Section 2.1 of the
Lease.
"PURCHASE PRICE" is defined in Section 2 of the Option Agreement.
"RIGHT OF FIRST OFFER AGREEMENT" means that certain Right of First
Offer Agreement dated as of January 30, 1998 between Lessor and BCC.
"SHORTFALL AGREEMENT" means that certain Shortfall Funding Agreement
dated as of January 30, 1998 between Lessee, the Members and BCC.
"SHORTFALL EVENT OF DEFAULT" is defined in Section 5.01 of the
Shortfall Agreement.
"SHORTFALLS" is defined as the excess of all recurring and nonrecurring
expenses and costs of the operation and management of the Facility (including
all Lease Obligations) of any kind or nature whatsoever (exclusive of costs and
expenses incurred in the original construction of improvements on the Property,
but only to the extent that a party other than Lessee is responsible therefor),
over all revenues and other income attributable to the Facility earned by or on
behalf of the Lessee.
"STOCK PLEDGE AGREEMENT" means that certain Stock Pledge Agreement
dated as of January 30, 1998 between the Members and BCC.
"TRANSACTION DOCUMENTS" means all of the following:
(a) the Shortfall Agreement;
(b) the Notes;
(c) the Lease and all other Lease Documents;
(d) the Deposit Agreement;
(e) the Leasehold Mortgage;
(f) the Option Agreement;
(g) the Management Agreement;
(h) the Working Capital Assurance Agreement;
(i) the Stock Pledge Agreement; and
(j) the other documents, certificates, financing statements,
affidavits and instruments executed by Lessee, as any of the same may be
amended, modified or supplemented from time to time.
"WORKING CAPITAL ASSURANCE AGREEMENT" means that certain Working
Capital
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Assurance Agreement dated as of January 30, 1998 between the Lessor and BCC.
"WORKING CAPITAL LOANS" is defined in Section 1 of the Working Capital
Assurance Agreement.
"WORKING CAPITAL RESERVE" is defined in Section 1.01 of the Shortfall
Agreement.
"UCC" means the Uniform Commercial Code as adopted in the State where
the Facility is located, as the same may be amended, supplemented or modified
from time to time.
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Schedule to Exhibit 10.75 filed pursuant to Instruction 2 to Item
601(a) of Regulation S-K
Shortfall Funding Agreement
Management
Location Lessor Firm
Jackson, TN AHP of Tennessee, Inc. Balanced Care at Xxxxxxx, Inc.
