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EXHIBIT 10.65
SHORTFALL FUNDING AGREEMENT
THIS AGREEMENT ("AGREEMENT") is made as of February 6, 1998,
by and among Extended Care Operators of Ravenna, LLC, a 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, Lessee, Lessor and Management Firm (defined
hereinafter) executed and delivered an Assignment, Assumption and Amendment of
Lease Agreement dated as of December 1, 1997, wherein Management Firm assigned
to Lessee that certain Lease dated as of March 28, 1997 (the "LEASE") between
Lessee and Capstone Capital Corporation, a Maryland corporation (the "LESSOR"),
whereby Lessee leased from Lessor property, together with all improvements built
or to be built thereon, located in Dauphin County, Pennsylvania, as more fully
described in the Lease (the "PROPERTY"); and
WHEREAS, the Lessee and Balanced Care at Ravenna, Inc., a
Delaware corporation (the "MANAGEMENT FIRM") have entered into that certain
Management Agreement dated as of December 1, 1997 (the "MANAGEMENT AGREEMENT")
whereby Lessee has appointed the Management Firm as the exclusive manager and
operator the Facility; 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 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; WORKING CAPITAL RESERVE. (a) Each Member
(jointly and severally if more than one) hereby agrees to contribute as capital
to the Lessee such amounts
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as are required from time to time by BCC to fund Shortfalls; provided, however,
the contribution of the Members in the aggregate shall not exceed $400,000; and
provided, further, such capital contribution shall be made as follows:
(i) On February 28, 1998, the Member shall deposit into the
Cash Collateral Account no less than the sum of $130,000; and
(ii) on or before March 31, 1998 the Member shall deposit into
the Cash Collateral Account funds sufficient to make to the total amounts
contributed no less than the sum of $400,000.
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), 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 shall be the amount of Fundings actually
deposited by the Member into the Cash Collateral Account, plus an amount
(calculated as a yearly return) equal to 27.5% of the Working Capital Reserve
actually funded through Fundings, compounded annually through the closing date.
In such event, all terms and conditions of the sale applicable to the Asset
Purchase Option or Option shall be equally applicable to the sale under this
Section 1.01(c), and the failure by Lessee or the Member (as the case may be) 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 evidence of a loan from any Member to the
Lessee and (iii) Lessor and the Manager may 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.
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
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Notes and hereunder to BCC, and all other obligations and covenants under the
Transaction Documents applicable to Lessee and 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 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 27.5% 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.
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 the following:
(i) the Lease and the other Lease Documents to
which it is a party;
(ii) Open End 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.
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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, but subject to the rights of Lessor under the Lease,
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.
ARTICLE II
CONDITIONS TO ADVANCES
SECTION 2.01 CONDITIONS PRECEDENT TO ADVANCES. 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
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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. 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 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
Maryland, 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.
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(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.
(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
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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.
(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:
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(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.
(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) 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.
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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:
(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. 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 Lessor, BCC or a BCC Affiliate in accordance with the
terms and conditions of the Transaction Documents and Lease Documents.
(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 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
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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
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.
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(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 the interest due upon the
Notes;
(c) Third: to the payment of the principal due upon the Notes
or any other payments owed to BCC under the Transaction Documents; and
(d) Fourth: 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 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
13
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. 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.
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:
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(i) If to the Lessee, at:
Extended Care Operators of Ravenna, LLC
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 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
15
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 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
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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.
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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.
WITNESS:: EXTENDED CARE OPERATORS OF
RAVENNA, LLC
-------------------------------- By: /s/ Signature Illegible
--------------------------------
Title:
-----------------------------
ATTEST: OAKHAVEN SENIOR LIVING, INC.
By: /s/ Signature Illegible By: /s/ Signature Illegible
-------------------------------- --------------------------------
Title: Title:
--------------------------- ----------------------------
MEMBER: EXTENDER CARE OPERATORS, LLC
By: /s/ Signature Illegible By: /s/ Signature Illegible
----------------------------- --------------------------------
Title:
----------------------------
ATTEST: BALANCED CARE CORPORATION
By: /s/ Signature Illegible
-------------------------------- --------------------------------
Title:
----------------------------
S-1
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APPENDIX 1
TO
SHORTFALL FUNDING AGREEMENT, OPTION AGREEMENT,
MANAGEMENT AGREEMENT, OPEN END 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
(ix) references in any Transaction Document to any titles,
articles, sections, subsections, schedules, or exhibits are for
convenience only, and neither limit nor amplify
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the provisions of any such Transaction Document.
B. GOVERNING LAW. Each Transaction Document 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 but, to the
extent (and only to the extent) of such conflict, the Shortfall Agreement shall
prevail and control.
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 to exercise, and no delay
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.
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 an original, but all of which
together shall constitute a single instrument.
I. ENTIRE AGREEMENT/AMENDMENTS. The Transaction Documents 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.
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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 second 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.
ASSIGNMENT AGREEMENT" means that certain Assignment, Assumption and
Amendment to Lease Agreement dated as of February 6, 1998 among Lessee, Lessor
and Management Firm.
"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.
"CASH COLLATERAL" is defined in Section 1 of the Deposit Agreement.
"CASH COLLATERAL ACCOUNT" is defined in Section 1 of the Deposit
Agreement.
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21
"CLOSING" is defined in Section 3 of the Option Agreement.
"CLOSING DATE" is defined in Section 3 of the Option Agreement.
"COMPANY" means the Lessee.
"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 February 6, 1998, among the Members, the Lessee, the Lessor 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.
"FACILITY" means that certain 51 bed assisted care facility located 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.
"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
4
22
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, dated as of March 28, 1997, between the Lessor
and the Management Firm, assigned to Lessee pursuant to the Assignment
Agreement..
"LEASE DOCUMENTS" mean the following documents the Lease Agreement,
(ii) the Assignment Agreement, (iii) the Subordination and Standstill Agreement,
(iv) the Assignment and Security Agreement executed by Lessee in favor of Lessor
dated as of February 6, 1998, (v) the Working Capital Assurances Agreement, (vi)
Consent and Subordination Agreement dated as of February 6, 1998, among Lessee,
Lessor and Management Firm and (vii){ADD OTHER DOCUMENTS}
"LEASE EVENT OF DEFAULT" means "Event of Default" as defined in Section
___ of the Lease.
"LEASE OBLIGATIONS" means the obligations of the Lessee under the Lease
and the other Lease Documents.
"LEASEHOLD MORTGAGE" means that certain Revolving Credit/Future
Advances Leasehold Mortgage and Security Agreement dated as of February 6, 1998,
between BCC and Lessee.
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23
"LESSEE" means Extended Care Operators of Ravenna, LLC, a Delaware
limited liability company.
"LESSOR" means Capstone Capital Corporation, a Maryland 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 February 6, 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 Leasehold Tenant under
the Management Agreement.
"MANAGEMENT FEE" is defined in Section 9 of the Management Agreement.
"MANAGEMENT FIRM" means BCC at Ravenna, Inc., a Delaware corporation.
"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.
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24
"OPTION AGREEMENT" means that certain Option Agreement dated as of
February 6, 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 collectively Extended 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 LIENS" is defined in Section 3.01 of the Shortfall
Agreement.
"PERSONAL PROPERTY" is defined in Section 29 of the Leasehold Mortgage.
"PROPERTY" means all of that certain property leased pursuant to the
Lease..
"PURCHASE PRICE" is defined in Section 2 of the Option Agreement.
"RIGHT OF REFUSAL AGREEMENT" means that certain Right of Refusal
Agreement dated as of February 6, 1998, between Lessor and BCC.
"SHORTFALL AGREEMENT" means that certain Shortfall Funding Agreement
dated as of February 6, 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 of any kind
or nature whatsoever (exclusive of costs and expenses incurred in the original
construction of improvements on the Property), 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 February 6, 1998, between the Members and BCC.
"TRANSACTION DOCUMENTS" means the following:
(a) the Shortfall Agreement;
(b) the Notes;
(c) the Lease;
(d) the Deposit Agreement;
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25
(e) the Leasehold Mortgage;
(f) the Option Agreements;
(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 Assurance Agreement dated as of February 6, 1998, between 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 enacted in the state whether
the Facility is located, as the same may be amended, supplemented or modified
from time to time.
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26
Schedule to Exhibit 10.65 filed pursuant to Instruction 2 to Item
601(a) of Regulation S-K
Shortfall Funding Agreement
Location Entities
Harrisburg, PA BCC at Harrisburg, Inc.;
Extended Care Operators of Harrisburg LLC
Greensboro, NC BCC at Greensboro, Inc.
Extended Care Operators of Greensboro LLC
