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Exhibit 10.6
IPC Advisors S.a.r.l.
c/o Unsworth & Associates
Herengracht 483
101 BT
Amsterdam, The Netherlands
November 6, 2000
Balanced Care Corporation
c/o Special Committee of the Board of Directors
1215 Manor Drive
Mechanicsburg, PA 17055
Gentlemen:
You have requested that RH Investments Limited, HR Investments
Limited and VXM Investments Limited (collectively, the "Lenders") make loans
("Loans") to Balanced Care Corporation (the "Company") in the amount of $8
million, on the terms set forth on the attached term sheet. You have also
requested that IPC Advisors S.a.r.l. or one of its affiliates (collectively,
"IPC") consider making an offer to purchase the outstanding common stock of the
Company. IPC is pleased to inform you that IPC would be willing to consider
making an offer of $1.00 per common share in cash for the entire equity interest
in the Company not already owned by IPC subject, however, to our completion of
due diligence, the results of which are satisfactory to IPC in its sole
discretion, and to the negotiation and execution of mutually satisfactory
definitive documentation (the "Proposed Offer"), it being acknowledged and
agreed that IPC shall have no obligation to make the Proposed Offer.
In consideration of the Lenders making the Loans and IPC
agreeing to incur the time and expense of conducting due diligence, you hereby
agree as follows:
1. STANDSTILL AGREEMENT. Section 6.8 of the Subscription
Agreement dated as of October 8, 1999 between the Company and IPC, as amended,
is hereby amended by replacing the words "Six ($6.00) Dollars per share" to read
"One Dollar ($1.00) per share". The Company hereby represents that the foregoing
amendment has been approved by a resolution of the Board of Directors of the
Company and the IPC nominees refrained from voting thereon.
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2. NO SOLICITATION. The Company shall not, and shall cause its
Subsidiaries not to, and will use its reasonable best efforts to cause its
officers, directors, employees, investment bankers, attorneys and other advisors
and representatives not to, directly or indirectly, (i) solicit, initiate or
encourage the submission of any Acquisition Proposal (as hereinafter defined) or
(ii) participate in any discussions, negotiations or other communications
regarding, or furnish to any person any information with respect to, any
Acquisition Proposal or otherwise cooperate in any way, assist or participate
in, facilitate or encourage any effort or attempt by any other person or entity,
to seek to do any of the foregoing. The Company shall, and shall cause its
Subsidiaries to, immediately cease and cause to be terminated, and will use
reasonable best efforts to cause, and will not authorize, its officers,
directors, employees, investment bankers, attorneys and other advisors and
representatives to, immediately cease and cause to be terminated, any of the
actions specified in (i) and (ii) above. Notwithstanding the provisions of the
preceding two sentences, the Company, any of its Subsidiaries or any officer,
director or employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of its Subsidiaries may, (i) following
receipt of a request for information which was not solicited, initiated or
encouraged by the Company, any of its Subsidiaries or any officer, director or
employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of its subsidiaries after the date of this
Agreement, furnish information, provided the person requesting the information
has executed a confidentiality agreement with customary terms and conditions
with the Company , and (ii) following receipt of an unsolicited Acquisition
Proposal, participate in discussions or negotiations regarding, and furnish
information with respect to, and take other actions to facilitate, such
Acquisition Proposal, if, in the case of (i) and (ii) above, the Special
Committee determines in its good faith judgment (after receiving the advice of
counsel) that if the Company fails to participate in such discussions or
negotiations with, or provide such information to, the person or entity making
the Acquisition Proposal or requesting information, there is a reasonable
probability that the Board of Directors of the Company would be in violation of
its fiduciary duties under applicable law. From and after the date hereof, the
Company shall promptly advise IPC orally and in writing of the receipt by it (or
any of the other entities or persons referred to above) of any Acquisition
Proposal, or any inquiry which the Board of Directors determines is reasonably
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likely to lead to any Acquisition Proposal, the material terms and conditions of
such Acquisition Proposal or inquiry, and the identity of the person making any
such Acquisition Proposal or inquiry. The Company will keep IPC fully informed
of the status and details of any such Acquisition Proposal or inquiry. If an
Acquisition Proposal is approved by the Board of Directors of the Company prior
to January 31, 2001, the Company shall concurrently therewith reimburse IPC all
of its documented costs and expenses (including, without limitation, reasonable
attorneys' fees) in connection with the transactions contemplated by this letter
(including the Loans and the Proposed Offer), provided that in no event shall
the Company be obligated to reimburse IPC for more than $500,000 of such costs
and expenses in the aggregate. For purposes of this Agreement, "Acquisition
Proposal" means any proposal with respect to a merger, consolidation, share
exchange, tender offer or similar transaction involving the Company or any
significant portion of the assets of the Company and its Subsidiaries, taken as
a whole, other than the transactions contemplated hereby. The provisions of this
paragraph 2 shall terminate on the earlier of the termination of this letter
agreement pursuant to paragraph 7 hereof and January 15, 2001.
3. DUE DILIGENCE. The Company shall (and shall cause each of
its Subsidiaries to) afford to the officers, employees, accountants, counsel,
financing sources and other representatives of IPC, reasonable access, during
normal business hours, to all of its and its Subsidiaries' properties, books,
contracts, commitments and records and, during such period, the Company shall
use its commercially reasonable efforts to afford IPC access to its lessors and
lenders and shall (and shall cause each of its Subsidiaries to) furnish promptly
to IPC (i) a copy of each report, schedule, registration statement and other
document filed or received by it pursuant to the requirements of the federal
securities laws and (ii) all other information concerning its business,
properties and personnel as IPC may reasonably request. IPC will hold any such
information which is nonpublic in confidence in accordance with the provisions
of the confidentiality agreement, dated November 6, 2000, between the Company
and IPC Advisors S.a.r.l.
4. PUBLICITY. So long as this letter is in effect, neither the
Company nor IPC nor their affiliates shall issue or cause the publication of any
press release or other public statement or announcement with respect to this
letter, the Proposed Offer or the other matters contemplated hereby without
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prior consultation with the other party, except as may be required by law or by
obligations pursuant to any listing agreement with a national securities
exchange, and in such case shall use all reasonable efforts to consult with the
other party prior to such release or announcement being issued.
5. FAIRNESS OPINION. The Special Committee confirms that it
has received an oral opinion (which will be confirmed in writing) from an
independent investment bank that, subject to stated assumptions, limitations and
qualifications, including, without limitation, assumptions regarding the terms
and conditions of definitive agreements relating to the Proposed Offer, the
Proposed Offer is fair to the stockholders of the Company (other than IPC and
its affiliates) from a financial point of view. The Special Committee further
confirms that it has determined that the consideration of $1.00 per share in
cash for each share of the Company's outstanding common stock not owned by IPC
and its affiliates is advisable and fair to the stockholders of the Company and,
subject to negotiation of definitive agreements relating to the Proposed Offer
acceptable to the Special Committee, the Special Committee will recommend that
the Board of Directors of the Company approve and adopt such definitive
agreements and the Special Committee will recommend that stockholders of the
Company tender into and/or vote to approve and adopt such definitive agreements,
as applicable, and once recommended, the Special Committee will not modify,
amend or withdraw such recommendations, unless the Special Committee determines,
in its good faith judgment (after receiving the advice of counsel), that if the
Special Committee fails to modify, amend or withdraw such recommendations, there
is a reasonable probability that the Special Committee would be in violation of
its fiduciary duties under applicable law.
6. BINDING EFFECT. This letter is intended to be legally
binding and enforceable upon the parties hereto. Notwithstanding the foregoing,
no legally binding agreement shall arise or exist with respect to any Proposed
Offer unless and until a definitive agreement is executed and delivered
containing such terms, provisions, representations, warranties, covenants and
conditions, as are approved by IPC and the Company.
7. TERMINATION. This letter may be terminated at any time upon
mutual written consent of the parties. In addition, numbered paragraphs 2
through 5 of this letter may be terminated at the option of the Company or IPC,
if a definitive agreement reflecting the Proposed Offer shall not have been
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executed on or prior to January 31, 2001, unless the Company and IPC agree to an
extension of such date.
8. GOVERNING LAW. This letter shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the principles of conflict of laws thereof.
9. COUNTERPARTS. This letter may be executed in one or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same letter.
10. SECURITY. The Company hereby agrees to provide the
Lenders, if requested by the Lenders, with additional security for the Loans and
all other existing and future obligations of the Company or any of its
subsidiaries to the Lenders, IPC or any of their respective affiliates
(including, without limitation, the $14 million 9.5% convertible debentures), in
the form of (i) a pledge of the shares in the capital of the owners of
properties to be designated by IPC, subject to the approval of Heller Healthcare
Finance Inc. ("Heller"), and (ii) a second charge on the Meditrust Tranche I
properties after Heller has been repaid out of a refinancing of these
properties.
Very truly yours,
/S/ J.B. Unsworth
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J.B. Unsworth, Manager
Accepted and agreed this 6th day of November, 2000:
BALANCED CARE CORPORATION
By: /s/ Brad E. Hollinger
Its: Chairman
SPECIAL COMMITTEE OF THE
BOARD OF DIRECTORS OF
BALANCED CARE CORPORATION
By: /s/ David L. Goldsmith
Its: Chairman
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