<PAGE> 1
Exhibit Index Begins on Page 8
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8 - K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 15, 1999
BALANCED CARE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 1-13845 25-1761898
(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
incorporation)
</TABLE>
1215 MANOR DRIVE, MECHANICSBURG, PENNSYLVANIA 17055
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 717-796-6100
Page 1 of 8
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 30, 1999, Balanced Care Corporation (the "Company"), certain direct
and indirect subsidiaries of the Company (Balanced Care Realty at Altoona, Inc.,
Balanced Care Realty at Berwick, Inc., Balanced Care Realty at Lewistown, Inc.,
Balanced Care Realty at Mansfield, Inc., Balanced Care Realty at Martinsburg,
Inc., Balanced Care Realty at Maumelle, Inc., Balanced Care Realty at Mountain
Home, Inc., Balanced Care Realty at Peckville, Inc., Balanced Care Realty at
Reading, Inc., Balanced Care Realty at Scranton, Inc., Balanced Care Realty at
Sherwood, Inc. and Balanced Care Realty at State College, Inc., collectively the
"Subsidiaries"), IPC Advisors S.a.r.l., a 49.97% stockholder of the Company
("IPC") and New Meditrust Company LLC ("Meditrust"), entered into a Memorandum
of Understanding (the "Memorandum of Understanding"). In accordance with the
Memorandum of Understanding, the Subsidiaries acquired the real property,
improvements, furniture, fixtures and equipment of twelve Outlook Pointe(R)
assisted living facilities located in Pennsylvania (7), Arkansas (3), Ohio (1)
and West Virginia (1) (collectively, the "Tranche One Properties").
The Tranche One Properties consist of twelve Outlook Pointe(R) assisted living
facilities and have an aggregate resident capacity of 720 beds. All of the
Tranche One Properties were developed by the Company over the past three years,
leased from Meditrust by either the Company or a third party operator, and
managed by the Company prior to closing on December 30, 1999. The Company will
continue to operate and manage the Tranche One Properties.
The aggregate purchase price for the Tranche One Properties was $52,073,054 (the
"Tranche One Purchase Price"). The Tranche One Purchase Price was paid as
follows: (a) $44,262,000 in cash by the Company (the "Cash Portion") and (b)
$7,811,054 pursuant to a Promissory Note dated as of December 30, 1999 (the
"Meditrust Note") made jointly by the Company and IPC in favor of Meditrust. The
Tranche One Purchase Price was determined based on arms' length negotiations.
The Cash Portion of the Tranche One Purchase Price was funded as follows: (a)
$5,262,000 in cash by the Company, (b) $32,000,000 in the form of a loan (the
"Heller Loan") pursuant to a Loan Agreement dated as of December 30, 1999 (the
"Heller Loan Agreement") entered into by and among the Subsidiaries and Heller
Healthcare Finance, Inc. ("Heller"), and (c) $7,000,000 pursuant to a Series One
1999 BCC Discount Note (the "FRR Note") made by the Company in favor of FRR
Investments Limited ("FRR").
The Meditrust Note has a maturity date of November 30, 2000. In the event the
Company and IPC have exercised the Option relating to any Tranche Two Property
(as described below), a "Required Prepayment" is due under the Meditrust Note at
the Closing (as defined below) without any prepayment penalty or premium. Except
as otherwise provided in the Meditrust Note, no interest shall accrue on the
outstanding principal balance thereof.
Page 2 of 8
<PAGE> 3
The FRR Note has a maturity date of June 26, 2000. The FRR Note is a discount
note with an issue price of $7,000,000, a maturity value of $7,424,580, and a
yield of 12.6829% per annum. Except as otherwise provided in the FRR Note, no
interest shall accrue on the outstanding principal balance thereof.
The Heller Loan has a maturity date of December 31, 2001. Interest on the Heller
Loan accrues at a floating rate per annum equal to the Base Rate (as defined in
the Heller Loan Agreement) plus 3.75%. The interest rate for each month will be
fixed based upon the Base Rate in effect on the first business day of such
month. Commencing on February 1, 2000, the Company will pay interest monthly in
arrears on the first day of each month. In addition to monthly payments of
interest, commencing on November 20, 2000 and on the 20th day after the end of
each calendar month, the Company will pay 100% of the Excess Cash Flow (as
defined in the Heller Loan Agreement).
As an inducement for IPC to enter into the Meditrust Note, IPC, Meditrust
Mortgage Investments, Inc. ("MMI") and Meditrust Corporation ("MC", and together
with MMI, the "Meditrust Parties") entered into a Right of First Refusal
Agreement dated as of December 30, 1999 (the "Right of First Refusal
Agreement"). Under the Right of First Refusal Agreement, in the event the
Meditrust Parties desire to sell, give or otherwise transfer the 1,081,312
shares of common stock of the Company (the "Stock") owned by the Meditrust
Parties to any party other than an entity that is a direct or indirect
subsidiary of MC, the Meditrust Parties are obligated to offer in writing to
sell the Stock to IPC on the same terms (the "Offer"). IPC has ten days after
receipt of the Offer (the "Acceptance Period") to accept the Offer in writing.
If the Offer is accepted by IPC, IPC must pay the purchase price set forth in
the Offer on the tenth day after acceptance of the Offer (the "Payment Date").
If IPC does not elect to accept the Offer within the Acceptance Period or if IPC
accepts the Offer and then fails to purchase the Stock on or before the Payment
Date, the Meditrust Parties may transfer the stock to the proposed transferee
but only in accordance with the terms of the Offer and only prior to the
expiration of six months from the date of the Offer. After the expiration of
said six month period or if the Meditrust Parties desire to transfer the Stock
on terms other than as set forth in the Offer, the Meditrust Parties must first
offer the Stock to IPC. The Right of First Refusal Agreement, unless sooner
terminated in accordance with the terms thereof, will remain in effect until
December 31, 2009.
As a further inducement for IPC to enter into the Meditrust Note, the Company
entered into an Indemnification, Defense, Hold Harmless and Reimbursement
Agreement dated as of December 29, 1999 (the "Indemnification Agreement") in
favor of IPC, under which the Company has agreed to indemnify, defend and hold
harmless IPC and certain other Indemnified Parties (as defined in the
Indemnification Agreement") from any Losses (as defined in the Indemnification
Agreement") arising under or otherwise related to or in connection with the
Meditrust Note (including, without limitation, all payments made or to be made
by IPC under the Meditrust Note), except for any Losses that arise as a result
of the gross negligence or willful misconduct of any Indemnified Party or a
breach of a fiduciary duty of IPC or any affiliate of IPC to the Company.
As an inducement for FRR to accept the FRR Note and as additional security for
the Company's obligations under the Indemnification Agreement, the Company and
the Subsidiaries have agreed to enter into a Stock Pledge Agreement (the "Stock
Pledge Agreement") with IPC and FRR, under which the Company will pledge the
stock of each of the Subsidiaries to IPC and FRR.
Page 3 of 8
<PAGE> 4
Notwithstanding the foregoing, the Company, the Subsidiaries, IPC, FRR and
Heller have agreed to enter into a Subordination Agreement in favor of Heller.
Under the Subordination Agreement, IPC and FRR will agree to subordinate their
respective rights under the Stock Pledge Agreement, the FRR Note and the
Indemnification Agreement in favor of Heller and will agree to refrain from
taking any action against the collateral pledged under the Stock Pledge
Agreement until the obligations under the Heller Loan Agreement are paid in
full; provided, however, the Subordination Agreement will permit IPC, FRR and
the Company, so long as no event of default exists under the Heller Loan
Agreement, to pay and to collect such sums that are owed under the FRR Note and
the Indemnification Agreement in accordance with the respective terms thereof.
In connection with the foregoing, the Company, IPC and Meditrust also entered
into an Option Agreement dated as of December 30, 1999 (the "Option Agreement"),
pursuant to which the Company and IPC have the right, but not the obligation
(the "Option"), to designate various nominees (each, a "Designee") to acquire
the real property, improvements, furniture, fixtures and equipment of an
additional twelve Outlook Pointe(R) assisted living facilities located in
Pennsylvania (3), Arkansas (2), Ohio (2), Virginia (2), and Tennessee (3)
(collectively, the "Tranche Two Properties"). Hereinafter, the Company, IPC and
their Designees may be referred to as the "Buyer".
The Tranche Two Properties consist of twelve Outlook Pointe(R) assisted living
facilities and have an aggregate resident capacity of 773 beds. All of the
Tranche Two Properties were developed by the Company over the past three years,
and are currently leased from Meditrust by either the Company or a third party
operator, and managed by the Company. The Company will continue to operate and
manage the Tranche Two Properties following each Closing under the Option
Agreement.
The Option is jointly exercisable by the Company and IPC upon 30 days' prior
written notice to Meditrust (the "Option Notice") for the period commencing on
January 2, 2000 and continuing up through and including October 31, 2000. The
Company and IPC may not exercise the Option with respect to any single Tranche
Two Property, but rather may only exercise the Option with respect to groups of
three or more Tranche Two Properties. Therefore, the acquisition of the Tranche
Two Properties may close in a series of transactions (each, a "Closing"), with
the final Closing on any of the Tranche Two Properties to occur no later than
November 30, 2000.
Once given, each Option Notice is irrevocable. If, after exercising the Option,
the Buyer fails to close on any of the Tranche Two Properties for which an
Option Notice was given, Meditrust may (a) accelerate the amount due under the
Meditrust Note, (b) receive reimbursement for all reasonable out-of-pocket
expenses (including attorneys' fees and expenses), and (c) terminate the Option
Agreement, all as more specifically set forth in the Option Agreement.
Page 4 of 8
<PAGE> 5
The aggregate purchase price for the Tranche Two Properties is $45,530,946 (the
"Tranche Two Purchase Price"). The Tranche Two Purchase Price is allocated among
the Tranche Two Properties as more specifically set forth in the Option
Agreement (each, a "Facility Purchase Price"). The Facility Purchase Price for
each Tranche Two Property for which an Option Notice has been given shall be
paid to Meditrust at Closing. The Tranche Two Purchase Price was determined
based on arms' length negotiations.
The Memorandum of Understanding, the Option Agreement, the Right of Refusal
Agreement, the Heller Loan Agreement, the Meditrust Note, the FRR Note, and the
Indemnification Agreement are attached hereto as exhibits and incorporated by
reference herein.
ITEM 5. OTHER EVENTS.
SALE OF SKILLED NURSING OPERATIONS
As described in the press release dated January 13, 2000, attached as Exhibit
99.3, the Company announced it had entered into a definitive purchase agreement
with Christian Health Care Services of Missouri, Inc. to sell its Missouri
operations, consisting of ten skilled nursing facilities with 1,135 beds and
nine assisted and independent living facilities with 245 beds. The sale closed
on January 12, 2000. Details of the terms of this transaction will be reported
in a separate Current Report on Form 8-K.
EQUITY FUNDING
As described in the Company's press releases dated December 15, 1999 and
December 21, 1999 attached hereto as Exhibits 99.1 and 99.2 respectively, and as
previously reported by the Company on its Current Report on Form 8-K dated
October 8, 1999, the Company announced it had received stockholder approval to
issue 13,400,000 shares of common stock, par value $0.001, to IPC at a price per
share of $1.25 for an aggregate purchase price of $16,750,000. Upon receipt of
stockholder approval, the 3,300,000 shares of Series C Convertible Preferred
Stock, par value $0.001, previously issued to IPC on October 11, 1999 at a price
per share of $1.25 for an aggregate purchase price of $4,125,000 automatically
converted into 3,300,000 shares of common stock. In accordance with the Stock
Subscription Agreement between the Company and IPC dated October 8, 1999 (as
amended and restated October 11, 1999), on December 21, 1999, IPC was issued an
aggregate of 16,700,000 shares of common stock, which represents 49.97% of the
outstanding shares of common stock of the Company.
Page 5 of 8
<PAGE> 6
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Pro forma financial information will be submitted within the time
period specified.
(c) Exhibits. The following Exhibits are filed with this Current Report on
Form 8-K Pursuant to Item 601 of Regulation S-K:
Exhibit
Number Description
- ------ -----------
4.1 Subscription Agreement dated October 8, 1999, as amended and
restated October 11, 1999, between the Company and IPC
(incorporated by reference to Exhibit 4.1 to the Company's
8-K dated October 8, 1999).
10.1 Memorandum of Understanding by and among New Meditrust
Company LLC, IPC Advisors S.a.r.l., Balanced Care
Corporation, and Balanced Care Realty at Altoona, Inc.,
Balanced Care Realty at Berwick, Inc., Balanced Care Realty at
Lewistown, Inc., Balanced Care Realty at Mansfield, Inc.,
Balanced Care Realty at Martinsburg, Inc., Balanced Care
Realty at Maumelle, Inc., Balanced Care Realty at Mountain
Home, Inc., Balanced Care Realty at Peckville, Inc., Balanced
Care Realty at Reading, Inc., Balanced Care Realty at
Scranton, Inc., Balanced Care Realty at Sherwood, Inc., and
Balanced Care Realty at State College, Inc. dated as of
December 30, 1999 (filed herewith)
10.2 Option Agreement by and among New Meditrust Company LLC, IPC
Advisors S.a.r.l., and Balanced Care Corporation dated as of
December 30, 1999 (filed herewith)
10.3 Promissory Note made by Balanced Care Corporation and IPC
Advisors S.a.r.l. in favor of New Meditrust Company LLC dated
December 30, 1999 (filed herewith)
10.4 Loan Agreement by and among Heller Healthcare Finance, Inc.,
Balanced Care Realty at Berwick, Inc., Balanced Care at
Lewistown, Inc., Balanced Care Realty at Mansfield, Inc.,
Balanced Care Realty at Martinsburg, Inc., Balanced Care
Realty at Maumelle, Inc., Balanced Care Realty at Mountain
Home, Inc., Balanced Care Realty at Peckville, Inc., Balanced
Care Realty at Reading, Inc., Balanced Care Realty at
Scranton, Inc., Balanced Care Realty at Sherwood, Inc., and
Balanced Care Realty at State College, Inc. dated as of
December 30, 1999 (filed herewith)
10.5 Series One 1999 BCC Discount Note made by Balanced Care
Corporation in favor of FRR Investments Limited dated
December 29, 1999 (filed herewith)
10.6 Indemnification, Defense, Hold Harmless and Reimbursement
Agreement by and between Balanced Care Corporation and IPC
Advisors S.a.r.l. dated as of December 29, 1999 (filed
herewith)
10.7 Right of First Refusal Agreement by and among Meditrust
Mortgage Investments, Inc., Meditrust Corporation, and IPC
Advisors S.A.R.L. dated as December 30, 1999 (filed herewith)
99.1 Press release of the Company dated December 15, 1999
99.2 Press release of the Company dated December 21, 1999
99.3 Press release of the Company dated January 13, 2000
Page 6 of 8
<PAGE> 7
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALANCED CARE CORPORATION
/s/ Brad E. Hollinger
---------------------
Date: January 14, 2000 By: Brad E. Hollinger
Chairman of the Board,
President and Chief Executive Officer
Page 7 of 8
<PAGE> 8
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
4.1 Subscription Agreement dated October 8, 1999, as amended and
restated October 11, 1999, between the Company and IPC
(incorporated by reference to Exhibit 4.1 to the Company's
8-K dated October 8, 1999).
10.1 Memorandum of Understanding by and among New Meditrust
Company LLC, IPC Advisors S.a.r.l., Balanced Care
Corporation, and Balanced Care Realty at Altoona, Inc.,
Balanced Care Realty at Berwick, Inc., Balanced Care Realty at
Lewistown, Inc., Balanced Care Realty at Mansfield, Inc.,
Balanced Care Realty at Martinsburg, Inc., Balanced Care
Realty at Maumelle, Inc., Balanced Care Realty at Mountain
Home, Inc., Balanced Care Realty at Peckville, Inc., Balanced
Care Realty at Reading, Inc., Balanced Care Realty at
Scranton, Inc., Balanced Care Realty at Sherwood, Inc., and
Balanced Care Realty at State College, Inc. dated as of
December 30, 1999 (filed herewith)
10.2 Option Agreement by and among New Meditrust Company LLC, IPC
Advisors S.a.r.l., and Balanced Care Corporation dated as of
December 30, 1999 (filed herewith)
10.3 Promissory Note made by Balanced Care Corporation and IPC
Advisors S.a.r.l. in favor of New Meditrust Company LLC dated
December 30, 1999 (filed herewith)
10.4 Loan Agreement by and among Heller Healthcare Finance, Inc.,
Balanced Care Realty at Berwick, Inc., Balanced Care at
Lewistown, Inc., Balanced Care Realty at Mansfield, Inc.,
Balanced Care Realty at Martinsburg, Inc., Balanced Care
Realty at Maumelle, Inc., Balanced Care Realty at Mountain
Home, Inc., Balanced Care Realty at Peckville, Inc., Balanced
Care Realty at Reading, Inc., Balanced Care Realty at
Scranton, Inc., Balanced Care Realty at Sherwood, Inc., and
Balanced Care Realty at State College, Inc. dated as of
December 30, 1999 (filed herewith)
10.5 Series One 1999 BCC Discount Note made by Balanced Care
Corporation in favor of FRR Investments Limited dated
December 29, 1999 (filed herewith)
10.6 Indemnification, Defense, Hold Harmless and Reimbursement
Agreement by and between Balanced Care Corporation and IPC
Advisors S.a.r.l. dated as of December 29, 1999 (filed
herewith)
10.7 Right of First Refusal Agreement by and among Meditrust
Mortgage Investments, Inc., Meditrust Corporation, and IPC
Advisors S.A.R.L. dated as December 30, 1999 (filed herewith)
99.1 Press release of the Company dated December 15, 1999
99.2 Press release of the Company dated December 21, 1999
99.3 Press release of the Company dated January 13, 2000
PAGE 8 OF 8
<PAGE> 1
Exhibit 10.1
MEMORANDUM OF UNDERSTANDING
By and Among
NEW MEDITRUST COMPANY, LLC,
IPC ADVISORS S.a.r.l.,
BALANCED CARE CORPORATION,
AND
BALANCED CARE REALTY AT ALTOONA, INC.,
BALANCED CARE REALTY AT BERWICK, INC.,
BALANCED CARE REALTY AT LEWISTOWN, INC.,
BALANCED CARE REALTY AT MANSFIELD, INC.,
BALANCED CARE REALTY AT MARTINSBURG, INC.,
BALANCED CARE REALTY AT MAUMELLE, INC.,
BALANCED CARE REALTY AT MOUNTAIN HOME, INC.,
BALANCED CARE REALTY AT PECKVILLE, INC.,
BALANCED CARE REALTY AT READING, INC.,
BALANCED CARE REALTY AT SCRANTON, INC.,
BALANCED CARE REALTY AT SHERWOOD, INC.,
and
BALANCED CARE REALTY AT STATE COLLEGE, INC.
Dated as of : December 30, 1999
<PAGE> 2
MEMORANDUM OF UNDERSTANDING
THIS MEMORANDUM OF UNDERSTANDING is made and entered into as of this
30th day of December, 1999, by and among (a) IPC ADVISORS S.a.r.l., a Luxembourg
corporation, having for the purposes of this Memorandum, an address at 38-40 Rue
Sainte Zithe, Luxembourg L-2763 (hereinafter referred to as "IPC"); (b) NEW
MEDITRUST COMPANY LLC, a Delaware limited liability company, having a principal
address at 197 First Avenue, Needham Heights, Massachusetts 02494 (hereinafter
referred to as the "Seller"); (c) BALANCED CARE CORPORATION, a Delaware
corporation, having its principal address at 1215 Manor Drive, Mechanicsburg, PA
17055 ("Balanced Care") and (d) BALANCED CARE REALTY AT ALTOONA, INC., BALANCED
CARE REALTY AT BERWICK, INC., BALANCED CARE REALTY AT LEWISTOWN, INC., BALANCED
CARE REALTY AT MANSFIELD, INC., BALANCED CARE REALTY AT MARTINSBURG, INC.,
BALANCED CARE REALTY AT MAUMELLE, INC., BALANCED CARE REALTY AT MOUNTAIN HOME,
INC., BALANCED CARE REALTY AT PECKVILLE, INC., BALANCED CARE REALTY AT READING,
INC., BALANCED CARE REALTY AT SCRANTON, INC., BALANCED CARE REALTY AT SHERWOOD,
INC., and BALANCED CARE REALTY AT STATE COLLEGE, INC., each a Delaware
corporation, having its principal address at 1215 Manor Drive, Mechanicsburg, PA
17055 (hereinafter collectively referred to the "Title Designees" and, together
with IPC and Balanced Care, as the "Purchasers").
W I T N E S S E T H
WHEREAS, the Seller is the owner of twelve (12) parcels of land located
in Arkansas, Pennsylvania, Ohio, and West Virginia more particularly described
in each of the Leases (as hereinafter defined) and defined therein as the Land
(collectively, the "Land");
WHEREAS, pursuant to the Leases (as hereinafter defined), the Seller
leases the Land and the other Leased Property (as hereinafter defined) to the
Lessees (as hereinafter defined) and, in accordance with the BCC Lease Documents
each Lessee, or such Lessee's predecessor in interest under the applicable BCC
Lease Documents constructed (or is constructing) an assisted living or other
senior housing facility on the portion of the Land demised under the applicable
Lease and each Lessee operates (or will operate) the Facility (as hereinafter
defined) demised to it;
WHEREAS, the Lessees are, directly or indirectly, wholly-owned
subsidiaries of Balanced Care;
<PAGE> 3
WHEREAS, Balanced Care and IPC, a shareholder of Balanced Care, agreed
to acquire the Leased Property from the Seller and, in order to consummate such
acquisition, IPC and Balanced Care designated the Title Designees to take title
thereto;
WHEREAS, the Title Designees are, directly or indirectly,
wholly-owned subsidiaries of Balanced Care;
WHEREAS, simultaneously with the execution and delivery of this
Memorandum, the Seller has conveyed to the Title Designees the Leased Property
for a purchase price (the "Purchase Price") of FIFTY-TWO MILLION SEVENTY-THREE
THOUSAND FIFTY-FOUR DOLLARS ($52,073,054), allocated to each portion of the
Leased Property as set forth on the Schedule attached hereto as EXHIBIT A (the
"Allocation Schedule"), such Purchase Price having been paid by the Title
Designees to the Seller as follows: (a) by payment in cash, subject to the
adjustments expressly provided herein, in the amount of FORTY-FOUR MILLION TWO
HUNDRED SIXTY-TWO THOUSAND DOLLARS ($44,262,000), allocated to each portion of
the Leased Property as set forth on the Allocation Schedule under the heading
"Allocated Cash Component;" and (b) by execution and delivery of a Promissory
Note of even date and delivery herewith from IPC and Balanced Care to the order
of the Seller in the original principal amount of SEVEN MILLION EIGHT HUNDRED
ELEVEN THOUSAND FIFTY-FOUR DOLLARS ($7,811,054);
WHEREAS, the Purchasers, being affiliates of the Lessees, the
Developers and the Managers (as such terms are hereinafter defined), have
independent and thorough knowledge of the Leased Property and, accordingly, have
agreed to accept title to the applicable portion of the Leased Property being
conveyed to each of the Title Designees in its current AS-IS condition without
representation or warranty of any kind from the Seller, except for any express
representations or warranties made by the Seller in the Transaction Documents;
and
WHEREAS, as a material inducement to the Seller to sell the Leased
Property to IPC and Balanced Care and to convey the applicable portion of the
Leased Property to each of the Title Designees, the Seller has required that the
Purchasers execute and deliver this Memorandum to (a) confirm that, except as
for any express representations or warranties made by the Seller in the
Transaction Documents, the Seller is making no representations or warranties to
the Purchasers in connection with the sale of the Leased Property, as more
particularly provided herein, and (b) agree on certain other matters in
connection with such sale.
<PAGE> 4
NOW, THEREFORE, for and in consideration of the foregoing premises, the
mutual covenants, conditions, representations and undertakings hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS AND MEANINGS. For all purposes of this Memorandum,
except as otherwise expressly provided or unless the context otherwise requires,
(a) the terms defined in this Section have the meanings assigned to them in this
Section and include the plural as well as the singular and (b) all references in
this Memorandum to designated "Sections" and other subdivisions are to
designated Sections and other subdivisions of this Memorandum.
Altoona Lease: As defined under each of the Leases.
Altoona Facility: The Facility as defined under the Altoona
Lease.
Altoona Land: The Land as defined under the Altoona Lease.
Altoona Lease: That certain First Amended and Restated Facility Lease
Agreement by and between the Original Lessor and the Altoona Lessee dated as of
December 19, 1997, as amended.
Altoona Lessee: TC Realty of Altoona, Inc., a Delaware corporation.
Balanced Care: As defined in the preamble of this Memorandum and its
permitted successors and assigns.
BCC Lease Documents: Collectively, the Lease Documents as
defined under each of the Leases.
Berwick Facility: The Facility as defined under the Berwick
Lease.
Berwick Land: The Land as defined under the Berwick Lease.
Berwick Lease: That certain Facility Lease Agreement by and between the
Original Lessor and the Berwick Lessee, dated as of January 7, 1998, as amended.
Berwick Lessee: TC Realty of Berwick, Inc., a Delaware
corporation.
Cash Collateral: Collectively, the Cash Collateral as defined under
each of the Leases.
<PAGE> 5
Closing Date: December 30, 1999.
Closing Quarter: As defined in Section 2.
Commencement Dates: Collectively, the Commencement Date as defined
under each of the Leases.
Deposit Pledge Agreements: Collectively, the Deposit Pledge Agreement
as defined under each of the Leases.
Developers: Collectively, the Developer as defined under each of the
Leases (except the Altoona Lease, the Mountain Home Lease, the Reading Lease,
the Sherwood Lease and the Maumelle Lease).
Facilities: Collectively, the Altoona Facility, the Berwick Facility,
the Lewistown Facility, the Mansfield Facility, the Martinsburg Facility, the
Maumelle Facility, the Mountain Home Facility, the Peckville Facility, the
Reading Facility, the Scranton Facility, the Sherwood Facility and the State
College Facility.
Fixtures: Collectively, all fixtures, fittings, furniture, apparatus,
equipment, machinery and building systems permanently affixed to or incorporated
into any portion of the Leased Property, including, without limitation, all
furnaces, boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, incinerating, air and water pollution control, waste disposal, air-
cooling and air conditioning systems and apparatus and sprinkler systems.
Governmental Authorities: Collectively, all agencies, authorities,
bodies, boards, commissions, courts, instrumentalities, legislatures and offices
of any nature whatsoever of any government, quasi-government unit or political
subdivision, whether with a federal, state, county, district, municipality, city
or otherwise and whether now or hereinafter in existence.
Gross Revenues: As defined under each of the Leases.
Guarantors: Collectively, any guarantor of all or any portion of the
BCC Lease Obligations.
Impositions: As defined under each of the Leases.
IPC: As defined in the preamble of this Memorandum and its permitted
successors and assigns.
<PAGE> 6
Land: As defined in the preamble of this Memorandum, including, without
limitation, the Altoona Land, the Berwick Land, the Lewistown Land, the
Mansfield Land, the Martinsburg Land, the Maumelle Land, the Mountain Home Land,
the Peckville Land, the Reading Land, the Scranton Land, the Sherwood Land and
the State College Land.
Leases: Collectively, the Altoona Lease, the Berwick Lease, the
Lewistown Lease, the Mansfield Lease, the Martinsburg Lease, the Maumelle Lease,
the Mountain Home Lease, the Peckville Lease, the Reading Lease, the Scranton
Lease, the Sherwood Lease and the State College Lease.
Leased Improvements: Collectively, all buildings, structures, fixtures
and other improvements of every kind including, but not limited to, alleyways
and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site
and off-site), and parking areas and roadways appurtenant to such buildings and
structures situated upon any portion of the Land, including, without limitation,
the Facilities.
Leased Property: Collectively, the Land, the Related Rights, the Leased
Improvements and the Fixtures.
Lessees: Collectively, the Altoona Lessee, the Berwick Lessee, the
Lewistown Lessee, the Mansfield Lessee, the Martinsburg Lessee, the Maumelle
Lessee, the Mountain Home Lessee, the Peckville Lessee, the Reading Lessee, the
Scranton Lessee, the Sherwood Lessee and the State College Lessee.
Lewistown Facility: The Facility as defined under the
Lewistown Lease.
Lewistown Land: The Land as defined under the Lewistown
Lease.
Lewistown Lease: That certain Facility Lease Agreement by and between
the Original Lessor and the Lewistown Lessee, dated as of January 7, 1998, as
amended.
Lewistown Lessee: TC Realty of Lewistown, Inc., a Delaware
corporation.
Managers: Collectively, the Current Manager as defined under each
Lease.
Mansfield Facility: The Facility as defined under the Mansfield Lease.
<PAGE> 7
Mansfield Land: The Land as defined under the Mansfield Lease.
Mansfield Lease: That certain First Amended and Restated Facility Lease
by and between the Original Lessor and the Mansfield Lessee dated as of January
8, 1998, as amended.
Mansfield Lessee: TC Realty Corporation II, a Delaware corporation.
Martinsburg Facility: The Facility as defined under the Martinsburg
Lease.
Martinsburg Land: The Land as defined under the Martinsburg Lease.
Martinsburg Lease: That certain Facility Lease Agreement by and between
the Original Lessor and the Martinsburg Lessee dated as of December 31, 1997, as
amended.
Martinsburg Lessee: Black Box of Martinsburg, Inc., a Delaware
corporation.
Maumelle Facility: The Facility as defined under the Maumelle Lease.
Maumelle Land: The Land as defined under the Maumelle Lease.
Maumelle Lease: That certain First Amended and Restated Facility Lease
Agreement by and between the Original Lessor and the Maumelle Lessee dated as of
December 19, 1997, as amended.
Maumelle Lessee: TC Realty of Maumelle, Inc., a Delaware corporation.
Memorandum: This Memorandum of Understanding, together with all
Exhibits attached hereto as the same may hereafter be amended, restated and
supplemented from time to time.
Mountain Home Facility: The Facility as defined under the Mountain Home
Lease.
Mountain Home Land: The Land as defined under the Mountain Home Lease.
Mountain Home Lease: That certain First Amended and Restated Facility
Lease by and between the Original Lessor and the Mountain Home Lessee dated as
of December 19, 1997, as amended.
<PAGE> 8
Mountain Home Lessee: TC Realty of Mountain Home, Inc., a
Delaware corporation
Officer's Certificate: As defined in each of the Leases.
Original Lessor: Meditrust Acquisition Corporation II, a Delaware
corporation and the Seller's predecessor in interest as landlord under the
Leases.
Peckville Facility: The Facility as defined under the Peckville Lease.
Peckville Land: The Land as defined under the Peckville Lease.
Peckville Lease: That certain Facility Lease Agreement by and between
the Original Lessor and the Peckville Lessee dated as of December 31, 1997.
Peckville Lessee: Black Box of Peckville, Inc., a Delaware corporation
Person: A corporation (including a business trust), limited liability
company, association, trust, partnership, joint venture, joint stock company,
organization, proprietorship, natural person, government or governmental agency
or political subdivision thereof or any other entity of whatever nature.
Primary Intended Use. With respect to any Facility, as defined under
the Lease relating thereto.
Purchasers: As defined in the preamble of this Memorandum.
Reading Facility: The Facility as defined under the Reading Lease.
Reading Land: The Land as defined under the Reading Lease.
Reading Lease: That certain First Amended and Restated Facility Lease
by and between the Original Lessor and the Reading Lessee dated as of December
19, 1997, as amended.
Reading Lessee: TC Realty of Reading, Inc., a Delaware corporation.
Related Rights: Collectively, all easements, rights and appurtenances
of every nature and description now or hereafter relating to or benefitting all
or any portion of the Land and the Leased Improvements.
Rent: As defined under each of the Leases.
Scranton Facility: The Facility as defined under the Scranton Lease.
<PAGE> 9
Scranton Land: The Land as defined under the Scranton Lease.
Scranton Lease: That First Amended and Restated Facility Lease by and
between the Original Lessor and the Scranton Lessee dated as of January 8, 1998,
as amended.
Scranton Lessee: TC Realty Corporation III, a Delaware corporation.
Seller: As defined in the preamble of this Memorandum and its
successors and assigns.
Sherwood Facility: The Facility as defined under the Sherwood Lease.
Sherwood Land: The Land as defined under the Sherwood Lease.
Sherwood Lease: That certain First Amended and Restated Facility Lease
by and between the Original Lessor and the Sherwood Lessee dated as of December
19, 1997, as amended.
Sherwood Lessee: TC Realty of Sherwood, Inc., a Delaware corporation.
State College Facility: The Facility as defined under the State College
Lease.
State College Land: The Land as defined under the State College Lease.
State College Lease: That certain Amended and Restated Facility Lease
Agreement by and between the Original Lessor and the State College Lessee dated
as of November 1, 1996, as amended.
State College Lessee: BCC at State College, Inc., a Delaware
corporation.
Title Designee: As defined in the preamble of this
Memorandum.
Transaction Documents: Collectively (a) the deeds from the
Seller of even or near even date herewith conveying the Leased
Property to the Title Designees, and (b) the agreements of even
or
<PAGE> 10
near even date herewith by and among the Seller, the Lessees, Balanced Care, the
Developer and the Title Designees pursuant to which the Leases and certain of
the other BCC Lease Documents either were terminated or certain of the Seller's
rights thereunder were assigned to the Title Designees.
2. LEASE ADJUSTMENTS.
2.1 Rent Adjustment. On or prior to Closing Date, (a) each of the
Lessees has paid any amounts that are due and outstanding under the applicable
BCC Lease Documents relating to the applicable Facility (and the applicable
portion of the Leased Property relating thereto) conveyed to the applicable
Title Designee, including, without limitation, all Rent (other than a final
accounting of Additional Rent as required below) due under the applicable Lease,
prorated as of the Closing Date, and (b) notwithstanding anything to the
contrary set forth in the Leases, the applicable Title Designees will pay to
Seller on behalf of the applicable Lessees, as an adjustment to the Price on the
Closing Date, an amount equal to the Seller's reasonable estimate of the
Additional Rent due for the quarter in which the Closing Date occurred (the
"Closing Quarter"), as more particularly shown on the Allocation Schedule, which
amounts have been approved by the Lessee. Within ninety (90) days after the
Closing Date, Balanced Care shall deliver to the Seller, for each Facility, an
Officer's Certificate reasonably acceptable to the Seller and certified by the
chief financial officers of the applicable Lessee and Balanced Care, setting
forth the Gross Revenues for such Facility for the period from the commencement
of the Closing Quarter through the Closing Date. A final reconciliation of the
Additional Rent due under each Lease for the Closing Quarter shall be made based
upon such Officer's Certificate. If, as a result of such reconciliation, (a) the
Additional Rent determined to be due under each Lease for the Closing Quarter
exceeds the amount paid by the applicable Lessee on or prior to the Closing
Date, then Balanced Care agrees to pay, or to cause the applicable Lessee to
pay, such difference to the Seller within ten (10) days after such final
reconciliation, or (b) the Additional Rent determined to be due under each Lease
for the Closing Quarter is less than the amount paid by the applicable Lessee on
or prior to the Closing Date, then the Seller agrees to refund such overpayment
to the applicable Lessee within ten (10) days after such final reconciliation,
which obligation shall survive the acceptance by the Title Designees of the
Seller's deeds to the Leased Property.
2.2 No Other Adjustments; Cash Collateral. The Purchasers and, by
joining in the execution of this Agreement as provided below, the Lessees each
confirm and agree that, no matter whether any particular Lease has been assigned
or terminated on the Closing
<PAGE> 11
Date, other than the disposition of the Cash Collateral in accordance with the
terms hereof, no other adjustments will be made under the BCC Lease Documents
and/or with respect to the Leased Property for Impositions, utility costs or any
other matter. The Lessees hereby direct the Seller to deliver the Cash
Collateral held by the Seller under the Deposit Pledge Agreements to the
Purchasers by crediting the Purchase Price due the Seller hereunder. Except for
such credit, no other adjustments to the Purchase Price shall be made between
the parties hereto as a result of the consummation of the transaction referenced
hereunder. Without limiting the foregoing, Balanced Care and the Title Designees
shall be responsible for the payment of any and all transfer taxes and
recordation taxes imposed as a result of the conveyance of the Leased Property
by the Sellers to the Title Designees or any assignment or termination of the
Leases, and for any and all other governmental charges that are payable in
connection with the sale of the Leased Property as described herein.
3. AS-IS CONDITION OF THE LEASED PROPERTY; NO SELLER REPRESENTATIONS OR
WARRANTIES. The Purchasers acknowledge that (a) each Lessee (or, under certain
of the Leases, another subsidiary of Balanced Care as predecessor to the
Lessee's interest thereunder) accepted receipt and delivery of the applicable
portion of the Leased Property that it leases from the Seller on or about the
applicable Commencement Date, (b) each of the Lessees (or such other subsidiary
of Balanced Care), the Developers and the Managers examined and otherwise
acquired knowledge of the condition of the applicable portion of the Leased
Property prior to such date that the applicable Lessee (or such other subsidiary
of Balanced Care) acquired possession of such portion of the Leased Property and
found the same to be in good order and repair and satisfactory for its purposes,
(c) the Lessees (or such other subsidiary of Balanced Care), the Developers
and/or the Managers have been in possession of the Leased Property from and
after such dates, (d) the Purchasers, the Developers and the Managers, all being
affiliates of the Lessees, have independent and thorough knowledge of the Leased
Property, the title thereto and all matters affecting the same, (e) the
Purchasers have made their own inquiry and investigation into, and based thereon
have formed an independent judgment concerning the Leased Property and the
operation thereof and are not relying on the Seller for any facts or information
with respect thereto, and (f) except for the express representations and
warranties contained in any of the Transaction Documents, the Seller is not
making, and the Purchasers are not relying upon, any representation or warranty,
express or implied, of any nature whatsoever with respect to the Leased
Property. Consequently, the Purchasers waive any and all claims and causes of
action, now or hereafter arising, against the Seller in respect of the condition
<PAGE> 12
of the Leased Property. No such waiver shall limit any express representations
or warranties made by the Seller in the Transaction Documents. THE SELLER MAKES
NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED
PROPERTY, EITHER AS TO ITS FITNESS FOR ANY PARTICULAR PURPOSE OR USE, ITS DESIGN
OR CONDITION OR OTHERWISE, OR AS TO DEFECTS IN THE QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, LATENT OR PATENT; IT BEING AGREED THAT ALL RISKS RELATING
TO THE DESIGN, CONDITION AND/OR USE OF THE LEASED PROPERTY ARE TO BE BORNE BY
THE PURCHASERS. THE LESSEES, THE DEVELOPERS, THE MANAGERS AND THE GUARANTORS
HAVE ASSUMED (PURSUANT TO THE BCC LEASE DOCUMENTS) AND, AS OF THE CLOSING DATE,
THE PURCHASERS ASSUME ALL RISK OF (I) THE PHYSICAL CONDITION OF THE LEASED
PROPERTY, (II) THE SUITABILITY OF EACH PORTION OF THE LEASED PROPERTY FOR
OPERATION IN ACCORDANCE WITH ITS APPLICABLE PRIMARY INTENDED USE, (III) THE
COMPLIANCE OR NON-COMPLIANCE OF THE LEASED PROPERTY WITH ALL APPLICABLE
REQUIREMENTS OF LAW, INCLUDING BUT, NOT LIMITED TO, ENVIRONMENTAL LAWS AND
ZONING AND OTHER LAND USE LAWS, (IV) ALL MATTERS THAT A SURVEY OF THE LAND MAY
DISCLOSE AND (V) WHETHER TITLE TO THE LEASED PROPERTY IS INSURABLE.
Without limiting the generality of the foregoing, the acceptance by the
Title Designees of the Seller's deeds to the Leased Property shall be deemed to
be a full performance and discharge of every agreement and obligation of the
Seller relating to the Leased Property, except those obligations hereunder that
by their express terms survive such acceptance, and except any express
representations or warranties made by the Seller in any of the Transaction
Documents. All of the Purchasers' obligations under this Memorandum shall
survive such acceptance.
4. PUBLICITY. All press releases, filings and other publicity
concerning the conveyance of the Leased Property pursuant to the Transaction
Documents will be subject to review and approval by the Seller, IPC and Balanced
Care, such approval not to be unreasonably withheld, conditioned or delayed.
Such approval shall not be required if the Person issuing any such publicity
reasonably believes it to be necessary for compliance with law, but such Person
shall provide the other parties with reasonable notice and an opportunity to
review same before any such release. The Seller, IPC and Balanced Care hereby
covenant and agree to keep the terms and conditions of the sale of the Leased
Property in accordance with this Memorandum and the Transaction Documents
confidential except to the extent that disclosure is required by law (including,
without limitation, any rules and regulations of any securities exchange on
which any of the parties hereto are listed that may require such disclosure;
provided, however, it is acknowledged and agreed that the parties hereto may
disclose such terms and conditions to their respective lenders, to the
professional advisors and consultants that are advising them or providing
<PAGE> 13
necessary professional services in connection with the acquisition of the Leased
Property from the Seller and to any Governmental Authorities. Notwithstanding
the provisions of Section 3, the Seller's obligations under this Section 4 shall
survive the acceptance by the Title Designees of the Seller's deeds to the
Leased Property.
5. MISCELLANEOUS.
5.1 No Broker. Each of the Seller, Balanced Care and the Title
Designees represents to the others that no agent, finder or broker has acted for
it or was the producing and effective cause of the transactions referenced
herein, and that no commissions or finder's fees are due by it to any third
parties. Balanced Care and the Title Designees agree to indemnify, exonerate and
hold the Seller harmless from and against any claim, loss, damage, cost or
liability for any brokerage commission or fee which may be asserted against the
Seller as a result of the breach of this warranty by Balanced Care or any of the
Title Designees. The Seller agrees to indemnify, exonerate and hold Balanced
Care and the Title Designees harmless from and against any claim, loss, damage,
cost or liability for any brokerage commission or fee which may be asserted
against Balanced Care or any of the Title Designees as a result of the Seller's
breach of this warranty. Notwithstanding the provisions of Section 3, the
Seller's indemnity under this Section 5.1 shall survive the acceptance by the
Title Designees of the Seller's deeds to the Leased Property.
5.2 Entire Agreement. This Memorandum contains the entire
understanding of the parties with respect to the subject matters hereof and
supersedes all prior and other contemporaneous oral or written understandings
and agreements between the parties hereto.
5.3 Binding Effect; Assignment. This Memorandum shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. None of the parties hereto may assign its rights
hereunder without the written consent of the other parties.
5.4 Captions. The captions of this Memorandum are for convenience and
reference only, and in no way define, describe, extend or limit the scope or
intent of this Memorandum or the intent of any provisions hereof.
5.5 Joint Effort. The preparation of this Memorandum has been the joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
<PAGE> 14
5.6 Counterparts. This Memorandum may be executed in counterparts and
each executed copy shall be deemed an original which shall be binding upon all
parties hereto.
5.7 Partial Invalidity. If any provision of this Memorandum shall be
invalid or unenforceable, the remainder of this Memorandum shall not be affected
thereby. Notwithstanding the foregoing, it is the intention of the parties
hereto that if any provision of any of this Memorandum is capable of two (2)
constructions, one of which would render the provision void and the other of
which would render the provision valid, then such provision shall be construed
in accordance with the construction which renders such provision valid.
5.8 Amendments. This Memorandum may not be amended in any respect
whatsoever except by a further agreement, in writing, fully executed by each of
the parties hereto.
5.9 Governing Law. This Memorandum including the validity thereof and
the rights and obligations of the parties hereunder shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
The Purchasers hereby consent to personal jurisdiction in any state or
Federal court located within the Commonwealth of Massachusetts, as well as to
the jurisdiction of all courts from which an appeal may be taken from the
aforesaid courts, for the purpose of any suit, action or other proceeding
arising out of or with respect to this Memorandum and/or any of the Transaction
Documents, the negotiation and/or consummation of the transactions contemplated
by this Memorandum and the Transaction Documents and/or the performance of any
obligation or the exercise of any remedy under any of the Transaction Documents
and the Purchasers expressly waive any and all objections they may have as to
venue in any of such courts.
5.10 Third Parties. Nothing in this Memorandum, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Memorandum on any Persons other than the parties hereto, their respective legal
representatives, successors and permitted assigns. No Person, other than the
Purchasers and the Seller may rely hereon or derive any benefit hereby as a
third party beneficiary or otherwise.
5.11 Rules of Construction. References in this Memorandum to "herein,"
"hereof" and "hereunder " shall be deemed to refer to this Memorandum and shall
not be limited to the particular text in which such words appear. The use of any
gender shall include all
<PAGE> 15
genders, and the singular number shall include the plural and vice versa as the
context may require.
5.12 Joint and Several Liability. IPC, Balanced Care and each of the
Title Designees shall be jointly and severally liable for the Purchasers'
obligations hereunder.
[Remainder of Page Intentionally Left Blank]
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals as of the date first above appearing.
SELLER:
NEW MEDITRUST COMPANY LLC, a Delaware
limited liability company
By:/s/Michael S. Benjamin
Name:Michael S. Benjamin
Title:Senior Vice President
IPC:
IPC ADVISORS S.a.r.l., a Luxembourg
corporation
By:/s/J.B. Unsworth
Name:J.B. Unsworth
Title:Manager
BALANCED CARE:
BALANCED CARE CORPORATION, a Delaware
corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Senior Vice President and
Legal Counsel & Assistant Secretary
TITLE DESIGNEES:
BALANCED CARE REALTY AT ALTOONA, INC., a
Delaware corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
BALANCED CARE REALTY AT BERWICK, INC., a
Delaware corporation
<PAGE> 17
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
BALANCED CARE REALTY AT LEWISTON, INC.,
a Delaware corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
BALANCED CARE REALTY AT MANSFIELD, INC.,
a Delaware corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
BALANCED CARE REALTY AT MARTINSBURG,
INC., a Delaware corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
BALANCED CARE REALTY AT MAUMELLE, INC.,
a Delaware corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
BALANCED CARE REALTY AT MOUNTAIN HOME,
INC., a Delaware corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
<PAGE> 18
BALANCED CARE REALTY AT PECKVILLLE,
INC., a Delaware corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
BALANCED CARE REALTY AT READING, INC., a
Delaware corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
BALANCED CARE REALTY AT SCRANTON, INC.,
a Delaware corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
BALANCED CARE REALTY AT SHERWOOD, INC.,
a Delaware corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
BALANCED CARE REALTY AT STATE COLLEGE,
INC., a Delaware corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
The undersigned Lessees hereby join in the execution of the foregoing
Memorandum for the purposes of agreeing to the terms set forth in Section 2
thereof.
LESSEES:
<PAGE> 19
TC REALTY OF ALTOONA, INC., a Delaware
corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
TC REALTY OF BERWICK, INC., a Delaware
corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
TC REALTY OF LEWISTON, INC., a Delaware
corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
TC REALTY CORPORATION II, a Delaware
corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
BLACK BOX OF MARTINSBURG, INC., a
Delaware corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
TC REALTY OF MAUMELLE, INC., a Delaware
corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
<PAGE> 20
TC REALTY OF MOUNTAIN HOME, INC., a
Delaware corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
BLACK BOX OF PECKVILLE, INC., a Delaware
corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
TC REALTY OF READING, INC., a Delaware
corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
TC REALTY CORPORATION III, a Delaware
corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
TC REALTY OF SHERWOOD, INC., a Delaware
corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
BALANCED CARE AT STATE COLLEGE, INC., a
Delaware corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Vice President and Secretary
<PAGE> 21
EXHIBIT A
<TABLE>
<CAPTION>
TITLE ALLOCATED ALLOCATED
FACILITY EXISTING LESSEE DESIGNEE PURCHASE CASH
PRICE COMPONENT
<S> <C> <C> <C> <C>
Balanced Care of TC Realty of Altoona, Balanced Care $4,462,495 $3,793,113
Altoona Inc. Realty at Altoona,
Inc.
Balanced Care of TC Realty of Berwick, Balanced Care $3,405,346 $2,894,538
Berwick Inc. Realty at Berwick,
Inc.
Balanced Care of TC Realty of Balanced Care $3,423,345 $2,909,837
Lewistown Lewistown, Inc. Realty at
Lewistown, Inc.
Outlook Pointe of TC Realty Corporation Balanced Care $5,125,618 $4,356,766
Mansfield II Realty at
Mansfield, Inc.
Outlook Pointe of Black Box of Balanced Care $5,348,156 $4,545,923
Martinsburg Martinsburg, Inc. Realty at
Martinsburg, Inc.
Balanced Care of TC Realty of Maumelle, Balanced Care $4,784,963 $4,067,210
Maumelle Inc. Realty at
Maumelle, Inc.
Balanced Care of TC Realty of Mountain Balanced Care $4,700,000 $3,994,991
Mountain Home Home, Inc. Realty at Mountain
Home, Inc.
Outlook Pointe Black Box of Balanced Care $2,648,338 $2,251,082
Keepsake at Mid Valley Peckville, Inc. Realty at
(Peckville) Peckville, Inc.
Balanced Care of TC Realty of Reading, Balanced Care $5,888,384 $5,005,116
Reading Inc. Realty at Reading,
Inc.
Outlook Pointe Commons TC Realty Corporation Balanced Care $3,705,700 $3,149,838
at Scranton III Realty at
Scranton, Inc.
</TABLE>
<TABLE>
<CAPTION>
ALLOCATED ESTIMATED
NOTE ADDITIONAL
AMOUNT RENT
<S> <C> <C>
Balanced Care of $669,382 $2,300.00
Altoona
Balanced Care of $510,808 -0-
Berwick
Balanced Care of $513,508 -0-
Lewistown
Outlook Pointe of $768,852 $1,200.00
Mansfield
Outlook Pointe of $802,233 -0-
Martinsburg
Balanced Care of $717,753 $2,500.00
Maumelle
Balanced Care of $705,009 $2,500.00
Mountain Home
Outlook Pointe $397,256 $1,200.00
Keepsake at Mid Valley
(Peckville)
Balanced Care of $883,268 $2,500.00
Reading
Outlook Pointe Commons $555,862 -0-
at Scranton
</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>
TITLE ALLOCATED
FACILITY EXISTING LESSEE DESIGNEE PURCHASE
PRICE
<S> <C> <C> <C>
Balanced Care of TC Realty of Sherwood, Balanced Care $4,943,703
Sherwood Inc. Realty at
Sherwood, Inc.
Balanced Care of State BCC at State College, Balanced Care $3,637,006
College Inc. Realty at State
College, Inc.
</TABLE>
<TABLE>
<CAPTION>
ALLOCATED ALLOCATED ESTIMATED
FACILITY CASH NOTE ADDITIONAL
COMPONENT AMOUNT RENT
<S> <C> <C> <C>
Balanced Care of $4,202,138 $741,565 $2,800.00
Sherwood
Balanced Care of State $3,091,448 $545,558 -0-
College
</TABLE>
<PAGE> 1
Exhibit 10.2
OPTION AGREEMENT
By and Among
NEW MEDITRUST COMPANY, LLC
and
IPC ADVISORS S.A.R.L.
and
BALANCED CARE CORPORATION
Dated: December 30, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. DEFINITIONS AND MEANINGS............................................... 2
2. OPTION................................................................. 10
3. FACILITY PURCHASE PRICE................................................ 11
4. SELLER'S REPRESENTATIONS............................................... 11
4.1 Existence; Power; Qualification.................................. 11
4.2 Valid and Binding................................................ 12
4.3 No Violation..................................................... 12
4.4 Consents and Approvals........................................... 12
4.5 FIRPTA Representation............................................ 12
4.6 Nothing Omitted.................................................. 12
4.7 Pending Actions, Notices and Reports............................. 13
5. THE BUYER'S REPRESENTATIONS............................................ 13
5.1 Existence; Power; Qualification.................................. 13
5.2 Valid and Binding................................................ 14
5.3 No Violation..................................................... 14
5.4 Consents and Approvals........................................... 14
5.5 Pending Actions, Notices and Reports............................. 14
5.6 Nothing Omitted.................................................. 14
6. CONDITION OF THE LEASED PROPERTY....................................... 15
6.1 AS-IS Condition.................................................. 15
6.2 Casualty and Condemnation........................................ 16
7. COVENANTS OF THE PARTIES............................................... 16
7.1 BCC Lease Documents.............................................. 16
7.2 Publicity........................................................ 17
7.3 Costs and Fees................................................... 18
7.5 Right of First Refusal and Option to Purchase.................... 18
7.6 Title Review..................................................... 18
7.7 Use of Purchase Money to Clear Title............................. 19
8. THE BUYER'S CONDITIONS PRECEDENT TO EACH CLOSING. .................... 19
8.1 Accuracy of Warranties; Compliance with Covenants................ 19
8.2 Absence of Injunction............................................ 20
8.3 Absence of Seller Default........................................ 20
9. THE SELLER'S CONDITIONS PRECEDENT TO EACH CLOSING...................... 20
9.1 Accuracy of Warranties; Compliance with Covenants................ 20
9.2 Absence of Injunction............................................ 20
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
9.3 Concurrent Payment of Applicable Required Prepayment
under the Promissory Note........................................ 20
9.4 Payments under Lease Documents................................... 20
9.5 Lessee's Right of First Refusal.................................. 21
9.6 Lessee's Option to Purchase...................................... 21
9.7 Termination or Assignment of Lease............................... 21
9.8 Stock Transfers.................................................. 21
10. EXTENSION.............................................................. 21
11. CLOSINGS............................................................... 22
11.1 Closing Dates.................................................... 22
11.2 Deliveries of the Seller at each Closing......................... 22
11.3 Deliveries of the Buyer at each Closing.......................... 23
12. REMEDIES............................................................... 24
13. ADJUSTMENTS. ......................................................... 25
14. SURVIVAL OF PROVISIONS IN THE LEASE DOCUMENTS.......................... 25
15. MISCELLANEOUS.......................................................... 25
15.1 No Broker........................................................ 25
15.2 Entire Agreement................................................. 25
15.3 Binding Effect; Assignment....................................... 26
15.4 Notices.......................................................... 26
15.5 Captions......................................................... 28
15.6 Joint Effort..................................................... 28
15.7 Counterparts..................................................... 28
15.8 Partial Invalidity............................................... 28
15.9 No Offer......................................................... 29
15.10 Amendments....................................................... 29
15.11 Exhibits......................................................... 29
15.12 Governing Law.................................................... 29
15.13 Third Parties.................................................... 29
15.14 Further Assurances............................................... 29
15.15 No Solicitation.................................................. 29
15.16 Time of the Essence.............................................. 30
15.17 Rules of Construction............................................ 30
15.18 Joint and Several Liability...................................... 30
EXHIBIT A DESCRIPTION OF THE LAND
EXHIBIT B RELATED AGREEMENTS
EXHIBIT C CERTIFICATE REGARDING SELLER'S
REPRESENTATIONS AND WARRANTIES
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
EXHIBIT D CERTIFICATE REGARDING IPC'S
REPRESENTATIONS AND WARRANTIES
</TABLE>
<PAGE> 5
OPTION AGREEMENT
THIS OPTION AGREEMENT is made and entered into as of this 30th day of
December, 1999, by and among IPC ADVISORS S.A.R.L., a Luxembourg corporation
(hereinafter referred to as "IPC"), BALANCED CARE CORPORATION, a Delaware
corporation (hereinafter referred to as "Balanced Care") and NEW MEDITRUST
COMPANY LLC, a Delaware limited liability company (hereinafter referred to as
the "Seller").
W I T N E S S E T H
WHEREAS, the Seller is the owner of twelve (12) parcels of lands
located in Arkansas, Pennsylvania, Ohio, Virginia and Tennessee and more
particularly described on EXHIBITS A-1 through EXHIBITS A-12 attached hereto and
incorporated herein by reference (collectively, the "Land");
WHEREAS, pursuant to the Leases (as hereinafter defined), the Seller
leases the Land and the other Leased Property (as hereinafter defined) to the
Lessees (as hereinafter defined) and, in accordance with the BCC Lease Documents
(as hereinafter defined), each Lessee, other than the Potomac Point Lessee (as
hereinafter defined), has constructed (or is constructing) an assisted living or
other senior housing facility on the portion of the Land demised to such Lessee
and each Lessee operates (or will operate) the Facility (as hereinafter defined)
demised to it;
WHEREAS, certain of the Lessees are, directly or indirectly,
wholly-owned Subsidiaries (as hereinafter defined) of Balanced Care and, to the
extent that any Lessee is not a Subsidiary of Balanced Care as of the date
hereof, Balanced Care has been granted options to acquire all of the issued and
outstanding capital stock of the Lessees that are not Subsidiaries of Balanced
Care (collectively, the "Third Party Lessees");
WHEREAS, subsidiaries of Balanced Care were engaged to develop the
Facilities, other than the Potomac Point Facility, and to manage the Facilities;
WHEREAS, IPC is an Affiliate (as hereinafter defined) of Balanced Care
and, concurrently herewith, IPC and Balanced Care (collectively, the "Buyer")
exercised their right to acquire twelve (12) other parcels of land from the
Seller (collectively,
<PAGE> 6
the "Tranche 1 Properties") and designated subsidiaries of Balanced Care to take
title to the Tranche 1 Properties;
WHEREAS, as part of the consideration paid by the Buyer for the Tranche
1 Properties, the Buyer executed and delivered to the Seller a Promissory Note,
of even date, in the original principal amount of SEVEN MILLION EIGHT HUNDRED
ELEVEN THOUSAND FIFTY-FOUR DOLLARS ($7,811,054) made by the Buyer to the order
of the Seller (the "Promissory Note");
WHEREAS, as a condition of the consummation of the transaction
involving the Trance 1 Properties, the Buyer desires to acquire from the Seller
an option to acquire a fee simple interest in the Leased Property and the Seller
desires to grant the Buyer an option to acquire a fee simple interest in the
Leased Property, all in accordance with the terms and conditions herein set
forth; and
WHEREAS, subject to the Buyer's retaining all of its other obligations
hereunder, the Buyer desires to designate various nominees (each, a "Designee")
to acquire, on the applicable Closing Dates (as hereinafter defined), a fee
simple interest in the Leased Property, all in accordance with the terms and
conditions herein set forth.
NOW, THEREFORE, for and in consideration of the foregoing premises, the
mutual covenants, conditions, representations and undertakings hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS AND MEANINGS. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires, (a)
the terms defined in this Section have the meanings assigned to them in this
Section and include the plural as well as the singular and (b) all references in
this Agreement to designated "Sections" and other subdivisions are to designated
Sections and other subdivisions of this Agreement.
Additional Rent: As defined under each of the Leases.
Affiliate: As defined under each of the Leases.
Agreement: This Option Agreement, together with all Exhibits attached
hereto as the same may hereafter be amended, restated and supplemented from time
to time.
<PAGE> 7
Assignment and Assumption Documents: As defined in Section 7.1.
Balanced Care: As defined in the preamble of this Agreement and its
successors and assigns.
Balanced Care Entities: Collectively, Balanced Care and its
Subsidiaries.
BCC Lease Documents: Collectively, the Lease Documents as defined under
each of the Leases.
BCC Lease Obligations: Collectively, the Lease Obligations as defined
under each of the Leases.
Blytheville Facility: The Facility as defined under the Blytheville
Lease.
Blytheville Land: The Land as defined under the Blytheville Lease and
as more particularly described in EXHIBIT A-1 attached hereto and incorporated
herein by reference.
Blytheville Lease: That certain First Amended and Restated Facility
Lease, dated as of December 19, 1997, as amended, by and between Meditrust
Acquisition Corporation II and TC Realty of Blytheville, Inc.
Blytheville Lessee: TC Realty at Blytheville, Inc., a Delaware
corporation.
Buyer: As defined in the preamble of this Agreement and its permitted
successors and assigns.
Buyer Default: As defined in the Section 12 of this Agreement.
Buyer Documents: Collectively, all documents required hereunder to be
delivered by IPC, Balanced Care and/or any Balanced Care Entity at any Closing
in order to effectuate the consummation thereof.
Cash Collateral: Collectively, the Cash Collateral as defined under
each of the Leases.
Casualty: Any damage or destruction to any portion of the Leased
Property by reason of fire or other hazard or casualty.
<PAGE> 8
Chesterfield Facility: The Facility as defined under the Chesterfield
Lease.
Chesterfield Land: The Land as defined under the Chesterfield Lease and
as more particularly described in EXHIBIT A-9 attached hereto and incorporated
herein by reference.
Chesterfield Lease: That certain Facility Lease Agreement, dated as of
June 30, 1998, by and between Meditrust Company LLC and TC Realty of
Chesterfield, Inc.
Chesterfield Lessee: TC Realty of Chesterfield, Inc., a Delaware
corporation.
Chippewa Facility: The Facility as defined under the Chippewa Lease.
Chippewa Land: The Land as defined under the Chippewa Lease and as more
particularly described in EXHIBIT A-7 attached hereto and incorporated herein by
reference.
Chippewa Lease: That certain Facility Lease Agreement, dated as of
January 7, 1998, by and between Meditrust Acquisition Corporation II and TC
Realty of Chippewa, Inc.
Chippewa Lessee: TC Realty of Chippewa, Inc., a Delaware corporation.
Closing: As defined in Section 2 of this Agreement.
Closing Conditions: As defined in Section 2 of this Agreement.
Closing Date: As defined in Section 11.1 of this Agreement.
Closing Quarter: As defined in Section 9.4 of this Agreement.
Code: As defined in Section 4.5 of this Agreement.
Commencement Dates: Collectively, the Commencement Date as defined
under each Lease.
Condemnation: A taking by power of eminent domain or conveyance in lieu
thereof of all or any portion of the Land.
Designee: As defined in the preamble of this Agreement.
<PAGE> 9
Developers: Collectively, each Developer as defined under each of the
Leases.
Dillsburg Facility: The Facility as defined under the Dillsburg Lease.
Dillsburg Land: The Land as defined under the Dillsburg Lease and as
more particularly described in EXHIBIT A-5 attached hereto and incorporated
herein by reference.
Dillsburg Lease: That certain Facility Lease Agreement, dated as of
December 31, 1997, by and between Meditrust Acquisition Corporation II and Black
Box of Dillsburg, Inc.
Dillsburg Lessee: Black Box of Dillsburg, Inc., a Delaware corporation.
Exercise Period: The period from and including January 2,
2000 through and including October 31, 2000.
Facilities: Collectively, the Blytheville Facility, the Lewisburg
Facility, the Lima Facility, the Potomac Point Facility, the Dillsburg Facility,
the Xenia Facility, the Chippewa Facility, the Kingsport Facility, the
Chesterfield Facility, the Hendersonville Facility, the Knoxville Facility and
the Pocahontas Facility.
Facility Purchase Price: With respect to each Facility (and the
applicable portion of the Leased Property relating thereto), the amount which
the Buyer shall pay to consummate the purchase and sale of such Facility (and
the applicable portion of the Leased Property relating thereto), as provided in
Section 3 of this Agreement.
First Leasehold Mortgages: Collectively, each First Leasehold Mortgage
as defined under each of the Leases (other than the Potomac Point Lease).
Fixtures: Collectively, all fixtures, fittings, furniture, apparatus,
equipment, machinery and building systems permanently affixed to or incorporated
into any portion of the Leased Property, including, without limitation, all
furnaces, boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, incinerating, air and water pollution control, waste disposal,
air-cooling and air conditioning systems and apparatus and sprinkler systems.
<PAGE> 10
Governmental Authorities: Collectively, all agencies, authorities,
bodies, boards, commissions, courts, instrumentalities, legislatures and offices
of any nature whatsoever of any government, quasi-government unit or political
subdivision, whether with a federal, state, county, district, municipality, city
or otherwise and whether now or hereinafter in existence.
Gross Revenues: As defined under each of the Leases.
Guarantor: Any guarantor of all or any portion of the BCC Lease
Obligations.
Hendersonville Facility: The Facility as defined under the
Hendersonville Lease.
Hendersonville Land: The Land as defined under the Hendersonville Lease
and as more particularly described in EXHIBIT A-10 attached hereto and
incorporated herein by reference.
Hendersonville Lease: That certain Facility Lease Agreement, dated as
of June 30, 1998, by and between Meditrust Company LLC and TC Realty of
Hendersonville, Inc.
Hendersonville Lessee: TC Realty of Hendersonville, Inc., a Delaware
corporation.
IPC: As defined in the preamble of this Agreement and its permitted
successors and assigns.
Impositions: Collectively, all taxes (including, without limitation,
all ad valorem, property, sales, use, single business, gross receipts,
transaction privilege, rent or similar taxes, but, specifically excluding any
income, capital stock, franchise or similar taxes), assessments (including,
without limitation, all assessments for public improvements or benefits, whether
or not commenced or completed prior to the date hereof and whether or not to be
completed prior to the applicable Closing), ground rents, water and sewer rents,
water charges or other rents and charges, excises, tax levies, fees (including,
without limitation, license, permit, inspection, authorization and similar
fees), transfer taxes and recordation taxes imposed as a result of the
conveyance of the applicable portion of the Leased Property to the Buyer (or the
applicable Designee) or any assignment or termination of any Lease, and all
other governmental charges, in each case whether general or special,
<PAGE> 11
ordinary or extraordinary, or foreseen or unforeseen, of every character in
respect of the applicable portion of the Leased Property, which at any time
prior to the sale of the applicable portion of the Leased Property in accordance
with the terms hereof, may be assessed or imposed on or in respect of or be a
Lien upon (a) the Seller's interest in the applicable portion of the Leased
Property, (b) the applicable portion of the Leased Property or any rent
therefrom or any estate, right, title or interest therein or (c) any occupancy,
operation, use or possession of, sales from, or activity conducted on, or in
connection with, the applicable portion of the Leased Property or the leasing or
use of the applicable portion of the Leased Property.
Kingsport Facility: The Facility as defined under the Kingsport Lease.
Kingsport Land: The Land as defined under the Kingsport Lease and as
more particularly described in EXHIBIT A-8 attached hereto and incorporated by
references.
Kingsport Lease: That certain Facility Lease Agreement, dated as of
June 30, 1998, by and between Meditrust Company LLC and TC Realty of Kingsport,
Inc.
Knoxville Facility: The Facility as defined under the Knoxville Lease.
Knoxville Land: The Land as defined under the Knoxville Lease and as
more particularly described in EXHIBIT A-11 attached hereto and incorporated
herein by reference.
Knoxville Lease: That certain Facility Lease Agreement, dated as of
June 30, 1998, by and between Meditrust Company LLC and TC Realty of Knoxville,
Inc.
Knoxville Lessee: TC Realty of Knoxville, Inc., a Delaware corporation.
Land: As defined in the preamble of this Agreement and, including,
without limitation, the Blytheville Land, the Lewisburg Land, the Lima Land, the
Potomac Point Land, the Dillsburg Land, the Xenia Land, the Chippewa Land, the
Kingsport Land, the Chesterfield Land, the Hendersonville Land, the Knoxville
Land and the Pocahontas Land.
<PAGE> 12
Leases: Collectively, the Blytheville Lease, the Lewisburg Lease, the
Lima Lease, the Potomac Point Lease, the Dillsburg Lease, the Xenia Lease, the
Chippewa Lease, the Kingsport Lease, the Chesterfield Lease, the Hendersonville
Lease, the Knoxville Lease and the Pocahontas Lease.
Leased Improvements: Collectively, all buildings, structures, fixtures
and other improvements of every kind including, but not limited to, alleyways
and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site
and off-site), and parking areas and roadways appurtenant to such buildings and
structures situated upon any portion of the Land, including, without limitation,
the Facilities.
Leased Property: Collectively, the Land, the Related Rights, the Leased
Improvements and the Fixtures.
Leasehold Improvement Agreements: Collectively, as defined under each
of the Leases (other than the Potomac Point Lease).
Lessees: Collectively, the Blytheville Lessee, the Lewisburg Lessee,
the Lima Lessee, the Potomac Point Lessee, the Dillsburg Lessee, the Xenia
Lessee, the Chippewa Lessee, the Kingsport Lessee, the Chesterfield Lessee, the
Hendersonville Lessee, the Knoxville Lessee and the Pocahontas Lessee.
Letter Agreement: That certain letter, dated December 20, 1999, from
International Property Corporation to, and accepted by, The Meditrust Companies.
Lewisburg Facility: The Facility as defined under the Lewisburg Lease.
Lewisburg Land: The Land as defined under the Lewisburg Lease and as
more particularly described in EXHIBIT A-2 attached hereto and incorporated
herein by reference.
Lewisburg Lease: That certain Facility Lease Agreement, dated as of
December 31, 1997, by and between Meditrust Acquisition Corporation II and Black
Box of Lewisburg, Inc.
Lewisburg Lessee: Black Box of Lewisburg, Inc., a Delaware
corporation.
Lien: With respect to all or any portion of the Leased Property, any
mortgage, easement, restriction, lien, pledge, collateral assignment,
hypothecation, charge, security interest,
<PAGE> 13
title retention agreement, levy, execution, seizure, attachment, garnishment or
other encumbrance of any kind in respect of all or any portion of the Leased
Property, whether or not choate, vested or perfected.
Lima Facility: The Facility as defined under the Lima Lease.
Lima Land: The Land as defined under the Lima Lease and as more
particularly described in EXHIBIT A-3 attached hereto and incorporated herein by
reference.
Lima Lease: That certain First Amended and Restated Facility Lease,
dated as of December 31, 1997, by and between Meditrust Acquisition Corporation
II and TC Realty Corporation I.
Lima Lessee: TC Realty Corporation I, a Delaware corporation.
Managers: Collectively, each Current Manager as defined under each of
the Leases.
Notice: As defined in Section 15.4 of this Agreement.
Officer's Certificate: As defined in the Lease.
Option Notice: As defined in Section 2 of this Agreement.
Option Right: As defined in Section 2 of this Agreement.
Optional Title Matters: As defined in Section 7.6 of this Agreement.
Optional Title Notice: As defined in Section 7.6 of this Agreement.
Permitted Exceptions: With respect to each Facility (and the applicable
portion of the Leased Property relating thereto), collectively, (a) any sublease
entered into (or consented to) by the applicable Lessee, (b) the matters set
forth on Exhibit B of the applicable Lease and any other encumbrance permitted
under the applicable Lease (other than any First Leasehold Mortgage), (c) Liens
of mechanics, laborers, materialmen, suppliers or vendors, (d) Liens for
Impositions, (e) any matters that current surveys of the Land may disclose and
(f) all other Liens other than (i) any other Liens securing a monetary, tax (but
only to the extent that any such tax is excluded from the definition of
<PAGE> 14
Imposition) or other obligation or undertaking of the Seller and (ii) any
involuntary Liens caused by the actions or omissions of the Seller.
Person: A corporation (including a business trust), limited liability
company, association, trust, partnership, joint venture, joint stock company,
organization, proprietorship, natural person, government or governmental agency
or political subdivision thereof or any other entity of whatever nature.
Pocahontas Facility: The Facility as defined under the Pocahontas
Lease.
Pocahontas Land: The Land as defined under the Pocahontas Lease and as
more particularly described in EXHIBIT A-12 attached hereto and incorporated
herein by reference.
Pocahontas Lease: That certain First Amended and Restated Facility
Lease, dated as of December 19, 1997, as amended, by and between Meditrust
Acquisition Corporation II and TC Realty of Pocahontas, Inc.
Pocahontas Lessee: TC Realty at Pocahontas, Inc., a Delaware
corporation.
Potomac Point Facility: The Facility as defined under the Potomac Point
Lease.
Potomac Point Land: The Land as defined under the Potomac Point Lease
and as more particularly described in EXHIBIT A-4 attached hereto and
incorporated herein by reference.
Potomac Point Lease: That certain Facility Lease Agreement, dated as of
June 30, 1998, by and between Meditrust Company LLC and Balanced Care at
Stafford, Inc.
Potomac Point Lessee: Balanced Care at Stafford, Inc., a Delaware
corporation.
Primary Intended Use. With respect to any Facility, as defined under
the Lease relating thereto.
Project Funds: Collectively, as defined under each Leasehold
Improvement Agreement.
<PAGE> 15
Promissory Note: As defined in the preamble of this Agreement, as the
same may hereafter be amended, restated and supplemented from time to time.
Related Rights: Collectively, all easements, rights and appurtenances
of every nature and description now or hereafter relating to or benefitting all
or any portion of the Land and the Leased Improvements.
Rent: As defined under each of the Leases.
Required Prepayment: As defined in the Promissory Note.
Seller: As defined in the preamble of this Agreement and its successors
and assigns.
Seller Default: Any failure by the Seller to advance any Project Funds
under any Leasehold Improvement Agreement in accordance with the terms thereof
notwithstanding the satisfaction, in accordance with the terms of such Leasehold
Improvement Agreement, of every condition precedent to the Seller's obligation
to make any such advance.
Seller Documents: Collectively, all documents required hereunder to be
delivered by the Seller at any Closing in order to effectuate the consummation
thereof.
Seller's Closing Certification. As defined in Section 4 of this
Agreement.
Stock Transfers: Collectively, each Stock Transfer as defined under
each of the Leases (other than the Potomac Point Lease).
Subsidiary: As defined under each of the Leases.
Title Objection Notice: As defined in Section 7.6 of this Agreement.
Third Party Lessees: As defined in the preamble of this Agreement.
Tranche 1 Properties: As defined in the preamble of this Agreement.
Transaction Documents: Collectively, the Note, this Agreement, the
Seller Documents and the Buyer Documents.
<PAGE> 16
Xenia Facility: The Facility as defined under the Xenia Lease.
Xenia Land: The Land as defined under the Xenia Lease and as more
particularly described in EXHIBIT A-6 attached hereto and incorporated herein by
reference.
Xenia Lease: That certain First Amended and Restated Facility Lease,
dated as of January 8, 1998, by and between Meditrust Acquisition Corporation II
and TC Realty Corporation IV.
Xenia Lessee: TC Realty Corporation IV, a Delaware corporation.
2. OPTION. Subject to the provisions hereof, the Buyer shall have the
right but not the obligation to acquire and the Seller shall have the obligation
to transfer all of its right, title and interest in the Leased Property;
provided, that, at the time of the consummation of the closing relating to any
Facility and the applicable portion of the Leased Property relating thereto
(each, a "Closing"), subject to Sections 8.1 and 9.1 hereof, (a) the Seller
shall have fulfilled all of its obligations hereunder with respect to such
Facility and the applicable portion of the Leased Property relating thereto and
all conditions precedent to the Seller's obligations to consummate the
applicable Closing set forth in Section 9 of this Agreement shall be satisfied
and (b) all of the conditions precedent to the Buyer's obligation to consummate
the applicable Closing set forth in Section 8 of this Agreement shall be
satisfied (the matters referred to in the foregoing clauses (a) and (b) are
collectively referred to herein as the "Closing Conditions").
The Buyer's right to acquire the Seller's interest in any Facility and
the applicable portion of the Leased Property relating thereto (the "Option
Right") shall be exercisable, upon not less than thirty (30) days' prior written
notice (the "Option Notice") during the Exercise Period; provided, however, that
notwithstanding anything to the contrary set forth herein, the Buyer may not
exercise its Option Right with respect to any single Facility, but rather may
only exercise its Option Right with respect to groups of Facilities equal to
three (3) or more. Once given, each Option Notice shall be irrevocable and any
failure to acquire the Facilities identified in any Option Notice in accordance
with the terms hereof shall constitute a Buyer Default. Subject to the
provisions of Section 10 hereof, the
<PAGE> 17
Closing relating to any Facility (and the applicable portion of the Leased
Property relating thereto) with respect to which the Buyer has exercised its
Option Right shall occur on the specific date designated by the Buyer in the
Option Notice, which date shall be within the Exercise Period or no later than
thirty (30) days thereafter. The Closings relating to the Facilities identified
in any Option Notice shall occur on the same date (and the Option Notice shall
so specify).
3. FACILITY PURCHASE PRICE. In consideration for the Seller's agreement
to convey the Leased Property to the Buyer in accordance with the terms hereof,
at the Closing relating to any Facility (and the applicable portion of the
Leased Property relating thereto), as long as at the time of such Closing, the
applicable Closing Conditions shall have been satisfied, then, the Buyer shall
pay to the Seller, the applicable Facility Purchase Price for such Facility set
forth on EXHIBIT B attached hereto and incorporated herein by reference. The
applicable Facility Purchase Price shall be paid by the Buyer to the Seller at
such Closing by wire transfer of funds without adjustment of any kind or nature
except as may be otherwise expressly set forth herein.
4. SELLER'S REPRESENTATIONS. As a material inducement to the Buyer to
enter into this Agreement and to purchase the Leased Property, the Seller makes
the following representations and warranties to the Buyer, which representations
and warranties are true as of the date of this Agreement and, as a condition of
the Buyer's obligation to consummate the transactions contemplated hereunder,
except as otherwise expressly provided herein, shall be true and correct as of
each Closing Date; provided, that, subject to the provisions of Section 8.1 of
this Agreement, such representations and warranties shall be treated as modified
as of the applicable Closing, and without breach of the foregoing obligation of
the Seller, by the Seller's delivery at such Closing of a certification in
substantially the form attached hereto as EXHIBIT C and incorporated herein by
reference, reflecting the occurrence of any event or change in the state of
facts effective after the date hereof and prior to the applicable Closing
relating to the representations and warranties made by the Seller (the "Seller's
Closing Certification"). The following representations and warranties (as the
same may be modified by any Seller Closing Certification with such modifications
being reasonably acceptable to the Buyer) shall survive each Closing for a
period of one year and any earlier termination of this Agreement for a period of
one year.
<PAGE> 18
4.1 Existence; Power; Qualification. The Seller is a limited liability
company duly organized, validly existing and in good standing under the laws of
the state of Delaware. The Seller has all requisite power and authority to own
and operate its properties and to carry on its businesses as presently operated
and to enter into and carry out the terms of the Transaction Documents to which
the Seller is or will be a party. The Seller is, or by the applicable Closing
Date will be, in good standing in each jurisdiction where such qualification is
necessary or desirable in order to carry out its business as presently
conducted, except where the failure to so qualify would not have a material
adverse effect on the financial condition and results of operations of the
Seller and its subsidiaries taken as a whole.
4.2 Valid and Binding. Subject to (i) the Lessees waiving the Lessees'
respective rights of first refusal to purchase portions of the Leased Property
pursuant to Section 18.3 of the Leases and (ii) with respect to any Lease to be
terminated at any Closing, the applicable Lessee waiving its option to purchase
set forth in Section 18.4 of such Lease, the Seller is duly authorized to make
and enter into this Agreement and to carry out the transactions contemplated
therein and is duly authorized to make and enter into all of the other
Transaction Documents to which it is or will be a party and to carry out the
transactions contemplated therein. This Agreement has been duly executed and
delivered by the Seller and is the legal, valid and binding obligation of the
Seller enforceable against the Seller in accordance with its terms. All of the
other Transaction Documents to which the Seller is or will be a party have been,
or will be by the applicable Closing, duly executed and delivered by the Seller,
and each is, or will be by the applicable Closing, a legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance with
their respective terms.
4.3 No Violation. The execution, delivery and performance of the
Transaction Documents to which the Seller is or will be a party and the
consummation of the transactions thereby contemplated shall not result in any
breach of, or constitute a default under, or result in the acceleration of, or
constitute an event which, with the giving of notice or the passage of time, or
both, could result in default or acceleration of any obligation of the Seller
under any permit, contract, mortgage, lien, lease, agreement, instrument,
franchise, arbitration award, judgment, decree, bank loan or credit agreement,
trust indenture or other instrument to which the Seller is a party or by which
the Seller
<PAGE> 19
may be bound or affected and do not violate or contravene any requirements of
law.
4.4 Consents and Approvals. Subject to (i) the Lessees waiving the
Lessees' respective rights of first refusal to purchase portions of the Leased
Property pursuant to Section 18.3 of the Leases and (ii) with respect to any
Lease to be terminated at any Closing, the applicable Lessee waiving its option
to purchase set forth in Section 18.4 of such Lease, no consent or approval or
other authorization of, or exemption by, or declaration or filing with, any
Person and no waiver of any right by any Person is required to authorize or
permit, or is otherwise required as a condition of the execution, delivery and
performance of the Seller's obligations under the Transaction Documents to which
it is or will be a party.
4.5 FIRPTA Representation. The Seller is not a "foreign person" as that
term is defined in the Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations promulgated pursuant thereto.
4.6 Nothing Omitted. None of the Transaction Documents to which the
Seller is or will be a party, nor any certificate, agreement, statement or other
document, now or hereafter prepared or executed by the Seller and furnished to
or to be furnished to the Buyer or its attorneys in connection with the
transactions contemplated by the Transaction Documents, contains or will contain
any untrue statement of a material fact relating to the Seller or omits or will
omit to state a material fact relating to the Seller necessary in order to
prevent all statements contained herein and therein relating to the Seller from
being misleading.
4.7 Pending Actions, Notices and Reports. There is no action or
investigation pending or, to the knowledge and belief of the Seller, threatened,
anticipated or contemplated (nor, to the knowledge of the Seller, is there any
reasonable basis therefor) against or affecting the Seller before any
Governmental Authority which could prevent or hinder the consummation of the
transactions contemplated hereby or call into question the validity of any of
the Transaction Documents to which the Seller is or will be a party or any
action taken or to be taken in connection with the transactions contemplated
thereunder.
5. THE BUYER'S REPRESENTATIONS. As a material inducement to the Seller
to enter into this Agreement, and to sell the Leased Property to the Buyer, the
Buyer makes the following representations and warranties to the Seller, which
<PAGE> 20
representations and warranties are true as of the date of this Agreement and, as
a condition of the Seller's obligation to consummate the transactions
contemplated hereunder, except as otherwise expressly provided herein, shall be
true and correct as of each Closing Date; provided, that, subject to the
provisions of Section 9.1 of this Agreement, such representations and warranties
shall be treated as modified as of the applicable Closing, and without breach of
the foregoing obligation of the Buyer, by the Buyer's delivery at such Closing
of a certification in substantially the form attached hereto as EXHIBIT D and
incorporated herein by reference, reflecting the occurrence of any event or
change in the state of facts effective after the date hereof and prior to the
applicable Closing relating to the representations and warranties made by the
Buyer (the "Buyer Closing Certification"). The following representations and
warranties (as the same may be modified by any Buyer Closing Certification with
such modifications being reasonably acceptable to the Seller) shall survive each
Closing and any earlier termination of this Agreement.
5.1 Existence; Power; Qualification. IPC is a corporation duly
organized, validly existing and in good standing under the laws of the Grand
Duchy of Luxembourg. Balanced Care is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware. IPC and
Balanced Care each has all requisite corporate power to own and operate its
properties and to carry on its business as now conducted and to enter into and
carry out the Transaction Documents to which it is or will be a party and is
duly qualified to transact business and is, or by the applicable Closing Date
will be, in good standing in each jurisdiction where such qualification is
necessary or desirable in order to carry out its business as presently conducted
and as proposed to be conducted, except where the failure to so qualify would
not have a material adverse effect on the financial condition and results of
operations of IPC and its Subsidiaries taken as a whole and/or Balanced Care and
its Subsidiaries taken as a whole.
5.2 Valid and Binding. IPC and Balanced Care are each duly authorized
to make and enter into this Agreement and to carry out the transactions
contemplated therein and each is duly authorized to make and enter into all of
the other Transaction Documents to which it is or will be a party and to carry
out the transactions contemplated therein. This Agreement has been duly executed
and delivered by IPC and Balanced Care and is the legal, valid and binding
obligation of IPC and Balanced Care enforceable against IPC and Balanced Care in
accordance with its terms. All of the
<PAGE> 21
other Transaction Documents to which IPC is or will be a party have been, or
will be by the applicable Closing Date, duly executed and delivered by IPC, and,
as of the applicable Closing Date, each will be a legal, valid and binding
obligation of IPC, enforceable in accordance with its terms. All of the other
Transaction Documents to which Balanced Care is or will be a party have been, or
will be by the applicable Closing Date, duly executed and delivered by Balanced
Care, and as of the applicable Closing Date, each will be a legal, valid and
binding obligation of Balanced Care, enforceable with its terms.
5.3 No Violation. The execution, delivery and performance of the
Transaction Documents to which IPC and/or Balanced Care as the case may be, is
or will be a party and the consummation of the transactions thereby contemplated
shall not result in any breach of, or constitute a default under, or result in
the acceleration of, or constitute an event which, with the giving of notice or
the passage of time, or both, could result in default or acceleration of any
obligation of IPC and/or Balanced Care, as the case may be, under any permit,
contract, mortgage, lien, lease, agreement, instrument, franchise, arbitration
award, judgment, decree, bank loan or credit agreement, trust indenture or other
instrument to which IPC and/or Balanced Care, as the case may be, is a party or
by which IPC and/or Balanced Care, as the case may be, may be bound or affected
and do not violate or contravene any requirements of law.
5.4 Consents and Approvals. No consent or approval or other
authorization of, or exemption by, or declaration or filing with, any Person and
no waiver of any right by any Person is required to authorize or permit, or is
otherwise required as a condition of the execution, delivery and performance of
IPC's and/or Balanced Care obligations under the Transaction Documents to which
it is or will be a party.
5.5 Pending Actions, Notices and Reports. There is no action or
investigation pending or, to the knowledge and belief of the Buyer, threatened,
anticipated or contemplated (nor, to the knowledge of the Buyer, is there any
reasonable basis therefor) against or affecting IPC and/or Balanced Care before
any Governmental Authority which could prevent or hinder the consummation of the
transactions contemplated hereby or call into question the validity of any of
the Transaction Documents to which IPC and/or Balanced Care, as the case may be,
is or will be a party or any action taken or to be taken in connection with the
transactions contemplated thereunder.
<PAGE> 22
5.6 Nothing Omitted. None of the Transaction Documents to which IPC
and/or Balanced Care, as the case may be, is or will be a party, nor any
certificate, agreement, statement or other document, now or hereafter prepared
or executed by IPC and/or Balanced Care as the case may be, and furnished to or
to be furnished to the Seller by IPC and/or Balanced Care, as the case may be,
in connection with the transactions contemplated by the Transaction Documents,
contains or will contain any untrue statement of a material fact relating to IPC
and/or Balanced Care, as the case may be, or omits or will omit to state a
material fact relating to IPC and/or Balanced Care, as the case may be,
necessary in order to prevent all statements contained herein and therein from
being misleading.
6. CONDITION OF THE LEASED PROPERTY
6.1 AS-IS Condition. The Buyer acknowledges that (a) each Lessee
accepted receipt and delivery of the applicable portion of the Leased Property
that it leases from the Seller on or about the applicable Commencement Date, (b)
each of the Lessees, the Developers and the Managers examined and otherwise
acquired knowledge of the condition of the applicable portion of the Leased
Property prior to such date that the applicable Lessee acquired possession of
such portion of the Leased Property and found the same to be in good order and
repair and satisfactory for its purposes, (c) the Lessees, the Developers and/or
the Managers have been in possession of the Leased Property from and after such
dates, (d) IPC and Balanced Care, being Affiliates of the Lessees (other than
the Third Party Lessees), the Developers and the Managers has independent and
thorough knowledge of the Leased Property, the title thereto and all matters
affecting the same, (e) the Buyer has made its own inquiry and investigation
into, and based thereon will have formed an independent judgment concerning the
Leased Property and the operation thereof and is not relying on Seller for any
facts or information with respect thereto and (f) except for the express
representations and warranties contained in this Agreement or any of the other
Transaction Documents, the Seller is not making, and the Buyer is not relying
upon, any representation or warranty, express or implied, of any nature
whatsoever with respect to the Leased Property. Consequently, IPC and Balanced
Care (on behalf of themselves and all Designees) waive any and all claims and
causes of action, now or hereafter arising, against the Seller in respect of the
condition of the Leased Property. THE SELLER MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTY, EITHER
AS TO ITS FITNESS FOR ANY PARTICULAR PURPOSE OR USE, ITS DESIGN OR CONDITION OR
OTHERWISE,
<PAGE> 23
OR AS TO DEFECTS IN THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT
OR PATENT; IT BEING AGREED THAT ALL RISKS RELATING TO THE DESIGN, CONDITION
AND/OR USE OF THE LEASED PROPERTY ARE TO BE BORNE BY THE BUYER. THE LESSEES, THE
DEVELOPERS, THE MANAGERS AND THE GUARANTORS HAVE ASSUMED (PURSUANT TO THE BCC
LEASE DOCUMENTS) AND, AS OF THE CONSUMMATION OF EACH CLOSING, THE BUYER ASSUMES
ALL RISK OF (I) THE PHYSICAL CONDITION OF THE APPLICABLE PORTION OF THE LEASED
PROPERTY BEING CONVEYED TO THE BUYER (OR TO THE APPLICABLE DESIGNEE), (II) THE
SUITABILITY OF SUCH PORTION OF THE LEASED PROPERTY FOR OPERATION IN ACCORDANCE
WITH ITS PRIMARY INTENDED USE, (III) THE COMPLIANCE OR NON-COMPLIANCE OF SUCH
PORTION OF THE LEASED PROPERTY WITH ALL APPLICABLE REQUIREMENTS OF LAW,
INCLUDING BUT, NOT LIMITED TO, ENVIRONMENTAL LAWS AND ZONING AND OTHER LAND USE
LAWS, (IV) ALL MATTERS THAT A SURVEY OF THE APPLICABLE PORTION OF THE LAND MAY
DISCLOSE AND (V) SUBJECT TO THE SELLER'S PERFORMANCE OF ITS OBLIGATIONS
HEREUNDER, WHETHER TITLE TO THE LEASED PROPERTY IS INSURABLE. Without limiting
the foregoing, the Buyer acknowledges and agrees that, in connection with the
consummation of the transactions contemplated hereunder, in the event that the
Buyer obtains or seeks to obtain title insurance insuring its interest in the
Leased Property, the Seller shall not be obligated to provide any form of
representation or indemnification to the title insurance company issuing such
policy; provided, however, that the Seller shall provide to such title insurance
company (1) a copy of its operating agreement, (2) evidence of its authority to
execute and deliver the Transaction Documents to which it is a party, (3) the
certificate of the Seller referred to in Section 11.2(d) of this Agreement, (4)
evidence of the Seller's qualification to do business in the state where the
applicable portion of the Leased Property is located, (5) certificates of good
standing relating to the Seller from the state where the applicable portion of
the Leased Property is located and from the state of its formation, (6) any of
the other documents listed in Section 11.2(a)-(g) of this Agreement and (7)
evidence of the clearance of any Lien that does not constitute a Permitted
Encumbrance.
The provisions of this Section 6.1 are not intended to and shall not be
deemed to limit the express provisions set forth in any of the other Seller
Documents.
6.2 Casualty and Condemnation. The Buyer acknowledges and agrees that
if, between the date hereof and any Closing Date, all or any portion of the
Leased Property is damaged by any Casualty or if any Condemnation occurs, the
Buyer shall nevertheless remain obligated to perform its agreements hereunder
and to
<PAGE> 24
consummate the transactions contemplated hereunder (to the extent that the Buyer
exercised its Option Right with respect to the applicable portion of this prior
or subsequent to such Casualty or Condemnation) and there shall be no adjustment
made to any Facility Purchase Price as a consequence of such Casualty or
Condemnation; provided, however, that, at any applicable Closing, as applicable,
the Seller shall pay over or assign to the Buyer as applicable all amounts
recovered or recoverable by the Seller on account of any insurance covering such
Casualty or all damage awards recovered or recoverable by the Seller for such
Condemnation.
7. COVENANTS OF THE PARTIES
7.1 BCC Lease Documents. Prior to the consummation of each Closing
hereunder, other than the Closing relating to any conveyance of the Potomac
Point Facility and the applicable portion of the Leased Property relating
thereto, the Buyer shall cause the Stock Transfers to be consummated in
accordance with the terms of the Leases.
Simultaneously with the exercise of its Option Right with respect to
any Facility (and the applicable portion of the Leased Property relating
thereto), the Buyer shall notify the Seller in writing whether the Buyer elects
to take title (or cause its Designee to take title) to the Leased Property
subject to the applicable Lease. In the event that the Buyer so elects, at the
applicable Closing, the Buyer or its Designee shall assume the Seller's
obligations under the applicable BCC Lease Documents pursuant to an assignment
and assumption agreement and any other documents as are reasonably requested by
the Seller (collectively, the "Assignment and Assumption Documents"). Without
limiting the foregoing, it is acknowledged and agreed that the Assignment and
Assumption Documents shall be in materially the same form as the assignment and
assumption documents entered into between various Balanced Care Entities and the
Seller in connection with the sale of the Tranche 1 Properties).
If the Buyer does not elect to take title (or cause its Designee to
take title) to any Facility (and the applicable portion of the Leased Property
relating thereto) subject to the applicable Lease, then, at the applicable
Closing, (i) the Seller agrees to terminate the applicable BCC Lease Documents
relating to such portion of the Leased Property pursuant to documents reasonably
acceptable to the Seller (collectively, the "Lease Termination Documents") and
(ii) the Buyer agrees to cause the
<PAGE> 25
applicable Lessee to execute such Lease Termination Documents. Without limiting
the foregoing, it is acknowledged and agreed that the Lease Termination
Documents shall be in materially the same form as the lease termination
documents entered into between various Balanced Care Entities and the Seller in
connection with the sale of the Tranche 1 Properties.
At each Closing, no matter whether any particular Lease is assigned or
terminated, the Buyer acknowledges (and will cause each applicable Lessee and
Designee to acknowledge) that, other than the disposition of the Cash Collateral
in accordance with the terms hereof, no other adjustments will be made under the
BCC Lease Documents and/or with respect to the Leased Property for Impositions,
utility costs or any other matter. At each Closing, the Buyer (or applicable
Designee) shall direct the Seller as to the disposition of the Cash Collateral
held by the Seller under the applicable Deposit Pledge Agreement (as defined
under such Lease) and the Seller shall comply with such direction as long as the
applicable Lessee assents in writing to such direction.
7.2 Publicity. All press releases, filings and other publicity
concerning the transactions contemplated hereby will be subject to review and
approval by the Seller and the Buyer, such approval not to be unreasonably
withheld or delayed. Such approval shall not be required if the Person issuing
any such publicity reasonably believes it to be necessary for compliance with
law, but such Person shall provide the other party with reasonable notice and an
opportunity to review same before any such release. The Seller and the Buyer
hereby covenant and agree to keep the terms and conditions of this Agreement
confidential except to the extent that disclosure is required by law; provided,
however, it is acknowledged and agreed that the parties hereto may disclose this
Agreement to their respective lenders, to the professional advisors and
consultants that are advising them or providing necessary professional services
in connection with the transactions contemplated hereby and to any Governmental
Authorities.
7.3 Costs and Fees. The Buyer shall be responsible for payment of all
closing costs in connection with the transfer of the Leased Property, including,
without limitation, recording fees, stamp taxes, document taxes, transfer fees
and any other payments in the nature of or in lieu of transfer fees.
Each party shall pay all costs incurred by it in connection with the
preparation, negotiation and performance of this Agreement; provided, however,
that, in the event of any
<PAGE> 26
litigation between the parties arising under this Agreement, the prevailing
party shall be reimbursed all reasonable costs incurred in connection with such
litigation (including, without limitation, attorneys' fees and expenses) by the
non-prevailing party.
7.5 Right of First Refusal and Option to Purchase. In the event that
the Buyer exercises its Option Right with respect to any Facility (and the
applicable portion of the Leased Property relating thereto), at or prior to the
applicable Closing, (i) the Buyer shall cause the applicable Lessee to waive the
right of first refusal granted to such Lessee pursuant to Section 18.3 of the
applicable Lease and (ii) if the applicable BCC Lease Documents relating to such
Facility (and the applicable portion of the Leased Property relating thereto)
are to be terminated at the Closing in accordance with the terms of Section 7.1
hereof, the Buyer shall cause the applicable Lessee to waive the purchase option
granted to such Lessee pursuant to Section 18.4 of the applicable Lease.
7.6 Title Review. At each Closing, if the Closing Conditions have been
satisfied (or waived), the Seller shall deliver title to the applicable Facility
and the portion of the Leased Property relating thereto to the Buyer (or, if
applicable, to a Designee), subject only to the applicable Permitted Exceptions
relating to such Facility (and the applicable portion of the Leased Property
relating thereto). If, on or before the applicable Closing Date, the Buyer
determines that title to the portion of the Leased Property to be conveyed is
subject to any matter other than the applicable Permitted Exceptions, the Buyer
shall provide the Seller with written notice that title to such portion of the
Leased Property is subject to any matters other than such applicable Permitted
Exceptions (the "Title Objection Notice"). The Title Objection Notice shall
identify with specificity the objections asserted by the Buyer and the
applicable Closing Date shall be extended in accordance with Section 10 of this
Agreement in order to allow the Seller to remove all defects in title.
Notwithstanding anything to the contrary set forth herein, but without
implying, in any way, that (i) the Buyer's obligations hereunder are subject to
a financing contingency or (ii) the Buyer may object to any Permitted Exceptions
or refuse to accept title to any portion of the Leased Property because such
portion of the Leased Property is subject to the Permitted Exceptions; in the
event that any Person (including, without limitation, any Designee) financing
the Buyer's acquisition of
<PAGE> 27
any portion of the Leased Property refuses to consummate such financing
transaction due to the existence of any Permitted Exceptions (the "Optional
Title Matters"), then (1) the Buyer shall notify the Seller in writing (the
"Optional Title Notice") that its lender refuses to finance the Buyer's
acquisition of the Leased Property due to the Optional Title Matters and (2) the
Seller shall cooperate with all reasonable requests from the Buyer in connection
with any efforts made by the Buyer (at the Buyer's sole cost and expense) to
release, remove and/or otherwise correct, satisfy or address the Optional Title
Matters, including, without limitation, executing and delivering any instrument
required because the Seller is the record title holder to the Leased Property
(as long as the Seller is not required to assume or undertake any obligations
under any such instrument or make any representations regarding the Leased
Property).
Notwithstanding anything to the contrary set forth herein, in the event
that the Buyer has exercised its Option Right with respect to any Facility, in
accordance with the terms hereof, any subsequent failure by the Buyer to
consummate any Closing in accordance with the terms hereof because of any
Optional Title Matter (provided that all of the other Closing Conditions
precedent to the Buyer's obligation to consummate such Closing have been
satisfied) shall constitute a Buyer Default.
7.7 Use of Purchase Money to Clear Title. To enable the Seller to
deliver title to all or any portion of the Leased Property, the Seller may, at
the time of delivery of the applicable deed, use all or any portion of the
applicable Facility Purchase Price to clear title of any or all encumbrances or
interests, provided, that all instruments so procured are recorded
simultaneously with the delivery of the applicable deed or, in the case of
institutional liens, provided, that, arrangements in accordance with customary
conveyancing practices are made for a discharge to be promptly procured,
recorded or filed after the delivery of the applicable deed.
8. THE BUYER'S CONDITIONS PRECEDENT TO EACH CLOSING. Each Closing and
the Buyer's obligations hereunder and with respect thereto are expressly
contingent and conditional upon the fulfillment, compliance, satisfaction and
performance of each of the following conditions prior thereto, any one or more
of which may be waived or deferred in whole or in part, but only in writing, by
the Buyer at its option and sole discretion. Notwithstanding the foregoing, any
condition precedent to any Closing which has not been fulfilled, complied with,
satisfied or performed at or prior to the applicable Closing Date shall be
<PAGE> 28
conclusively deemed waived if the Buyer consummates such Closing despite the
lack of fulfillment, compliance with, satisfaction or performance of such
condition.
8.1 Accuracy of Warranties; Compliance with Covenants. Notwithstanding
anything to the contrary set forth herein, all of the covenants and agreements
made by the Seller in this Agreement with respect to the applicable Facility
(and the portion of the Leased Property relating thereto) shall have been fully
and timely performed, in all material respects, and the Buyer shall have
received a Seller's Closing Certification, dated as of the applicable Closing
Date, reasonably acceptable to the Buyer in all material respects.
8.2 Absence of Injunction. There shall be no injunction, or any order
of any nature issued by or pending before any Governmental Authority directing
that the applicable conveyance or any other transactions relating to the
applicable Facility (and the applicable portion of the Leased Property relating
thereto) contemplated by this Agreement not be consummated.
8.3 Absence of Seller Default. A Seller Default relating to the
applicable Facility shall not have occurred.
9. THE SELLER'S CONDITIONS PRECEDENT TO EACH CLOSING. Each Closing and
the Seller's obligations hereunder and with respect thereto are expressly
contingent and conditional upon the fulfillment, compliance, satisfaction and
performance of each of the following conditions prior thereto; any one or more
of which may be waived or deferred in whole or in part, but only in writing, by
the Seller at its option and sole discretion. Notwithstanding the foregoing, any
condition precedent to any Closing which has not been fulfilled, complied with,
satisfied or performed at or prior to the applicable Closing Date shall be
conclusively deemed waived if the Seller consummates such Closing despite the
lack of fulfillment, compliance with, satisfaction or performance of such
condition.
9.1 Accuracy of Warranties; Compliance with Covenants. Notwithstanding
anything to the contrary set forth herein, all of the covenants and agreements
made by the Buyer in this Agreement shall have been fully and timely performed,
in all material respects, and the Seller shall have received a Buyer Closing
Certification, dated as of the applicable Closing Date, reasonably acceptable to
the Seller in all material respects.
<PAGE> 29
9.2 Absence of Injunction. There shall be no injunction, or any order
of any nature issued by or pending before any court or Governmental Agency
directing that the applicable conveyance or any other transactions relating to
the applicable Facility (and the applicable portion of the Leased Property
relating thereto) contemplated by this Agreement not be consummated.
9.3 Concurrent Payment of Applicable Required Prepayment under the
Promissory Note. In accordance with the terms of the Promissory Note, the Buyer
shall have paid the Seller an amount equal to the Required Prepayment relating
to the applicable Facility (and the applicable portion of the Leased Property
relating thereto) to be conveyed to the Buyer (or its Designee) at the Closing
as set forth on Exhibit A of the Note, to be applied toward the outstanding
indebtedness under the Promissory Note.
9.4 Payments under Lease Documents. Without limiting the provisions set
forth in Section 7.1, (i) any amounts that are due and outstanding under the
applicable BCC Lease Documents, relating to the applicable Facility (and the
applicable portion of the Leased Property relating thereto) to be conveyed to
the Buyer (or its Designee), as of the applicable Closing Date, shall be paid to
the Seller by the applicable Lessee on or prior to such Closing Date, including,
without limitation, all Rent due under the applicable Lease, prorated as of such
Closing Date, and (ii) notwithstanding anything to the contrary set forth in the
applicable Lease, the applicable Lessee shall have paid to the Seller an amount
equal to the Seller's reasonable estimate of the Additional Rent due for the
quarter in which the applicable Closing occurs (the "Closing Quarter") and shall
have agreed to the provisions set forth in this Section 9.4. Within ninety (90)
days after the applicable Closing Date, the Buyer shall deliver to the Seller an
Officer's Certificate reasonably acceptable to the Seller and certified by the
chief financial officers of such Lessee and Balanced Care, setting forth the
Gross Revenues for the period from the commencement of the Closing Quarter
through the applicable Closing Date. A final reconciliation of the Additional
Rent due for the Closing Quarter shall be made based upon such Officer's
Certificate. If, as a result of such reconciliation, (a) the Additional Rent
determined to be due for the Closing Quarter exceeds the amount paid by such
Lessee at the applicable Closing, the Buyer agrees to pay (or cause the Lessee
to pay) such difference to the Seller within ten (10) days after such final
reconciliation or (b) the Additional Rent determined to be due for the Closing
Quarter is less than the amount paid by the Lessee at such Closing, the Seller
agrees to refund such
<PAGE> 30
overpayment to such Lessee within ten (10) days after such final reconciliation.
The provisions of this Section 9.4 shall survive the Closings.
9.5 Lessee's Right of First Refusal. The applicable Lessee shall have
waived such Lessee's right of first refusal to purchase the applicable portion
of the Leased Property pursuant to Section 18.3 of the applicable Lease.
9.6 Lessee's Option to Purchase. In the event that the Buyer has
directed the Seller to terminate the applicable Lease relating to the Facility
(and the portion of the Leased Property relating thereto) to be conveyed to the
Buyer (or its Designee) at the applicable Closing, the applicable Lessee shall
have waived such Lessee's right to purchase such portion of the Leased Property
pursuant to Section 18.4 of the applicable Lease.
9.7 Termination or Assignment of Lease. The provisions of Section 7.1
hereof shall have been satisfied.
9.8 Stock Transfers. The Stock Transfers shall have been consummated in
accordance with the terms of the Leases.
10. EXTENSION. If the Seller shall be unable to give title to any
Facility and the applicable portion of the Leased Property relating thereto on
the applicable Closing Date, subject only to the Permitted Exceptions relating
to such Facility (and the applicable portion of the Leased Property relating
thereto), or if all of the applicable Closing Conditions precedent to the
Buyer's obligation to consummate the applicable acquisition shall not have been
satisfied on or before such Closing Date, the Buyer shall so notify the Seller
on or prior to such Closing Date; whereupon, in order to allow the Seller to so
perform or for such Closing Conditions to be satisfied, such Closing Date shall
be extended for a period not to exceed thirty (30) days. During such extended
period of time, the Seller shall use diligent efforts to remove any defects in
title and the parties hereto shall use diligent efforts to cause such Closing
Conditions to be satisfied.
At either the original or extended time for performance, the Buyer
shall have the election to accept such title to such Facility (and the
applicable portion of the Leased Property relating thereto) as the Seller can
deliver (in its then condition) and/or to waive any unsatisfied Closing
Conditions and to pay the applicable Facility Purchase Price for such Facility
(and the applicable portion of the Leased Property relating
<PAGE> 31
thereto) without deduction; in which case, subject to the provisions of Section
9 hereof, the Seller shall convey such title to such Facility (and the
applicable portion of the Leased Property relating thereto) as it can deliver
and the applicable Closing shall be consummated in accordance with the terms
hereof. In the event that, at the extended time for performance, (a) the Seller
shall be unable to give title to such Facility )and the applicable portion of
the Leased Property relating thereto), subject only to the Permitted Exceptions
relating to such Facility (and the applicable portion of the Leased Property
relating thereto) and the Buyer does not elect to accept such title to such
Facility (and the applicable portion of the Leased Property relating thereto) as
the Seller can deliver and/or (b) the Closing Conditions precedent to the
Buyer's obligation to consummate the acquisition of such Facility (and the
applicable portion of the Leased Property relating thereto) have not been
satisfied or waived, then, the Buyer's option relating to such Facility and the
applicable portion of the Leased Property relating thereto shall terminate as of
the applicable Closing Date, as so extended, without recourse to the parties,
except as otherwise provided herein to survive such termination.
11. CLOSINGS
11.1 Closing Dates. Each Closing under this Agreement shall take place
at the offices of Nutter, McClennen & Fish, LLP, One International Place,
Boston, Massachusetts at 10:00 a.m. on the date specified in the Option Notice
in accordance with the terms of Section 2 hereof or at such other time and place
mutually agreed upon in writing by the Buyer and the Seller (such date of each
Closing being referred to herein as a "Closing Date"). Notwithstanding the
foregoing, the Seller and the Buyer acknowledge that the parties hereto are
willing to consummate the Closings by utilizing a nationally recognized title
insurance company designated by the Buyer as escrow agent for the delivery of
the Transaction Documents required hereunder by mail, subject to such escrow
arrangements as are reasonably acceptable to the Seller and the Buyer.
11.2 Deliveries of the Seller at each Closing. At each Closing, the
Seller shall deliver to the Buyer the following:
(a) A deed to the applicable portion of the Land with
covenants against only the actions of the grantor, in substantially the same
form as the deed conveying the Land to Meditrust Acquisition Corporation II.
<PAGE> 32
(b) Certificate of the Manager of the Seller, authorizing the
transactions contemplated hereunder.
(c) The Seller's Closing Certification, certifying that,
subject to Section 8.1 and the first paragraph of Section 4 of this Agreement,
all of the representations and warranties made by the Seller in this Agreement
are true and correct as of the applicable Closing Date.
(d) Certificate of the Seller, executed under the pains and
penalties of perjury, stating that the Seller is not a "foreign person", as
defined in Section 1445(f) of the Code and the regulations issued thereunder, in
order to comply with Section 1445(b)(2) and the regulations issued thereunder,
in such form as the Buyer may require in its reasonable discretion or the title
insurance company issuing the title policy may reasonably require.
(e) A certification of the information necessary to complete
and file with the Internal Revenue Service a Form 1099-S in connection with the
conveyance of the applicable portion of Land.
(f) Any applicable Termination Documents or Assignment and
Assumption Documents executed by the Seller.
(g) Any other documents required under applicable local law to
(i) convey the applicable portion of the Leased Property to the Buyer or the
applicable Designee, (ii) to record the deed or other conveyancing documents
and/or (iii) to terminate or assign the applicable Lease.
(h) Any other applicable Seller Documents.
(i) Payment of the applicable Cash Collateral in accordance
with the terms of Section 7.1 hereof.
11.3 Deliveries of the Buyer at each Closing. At each Closing, the
Buyer shall deliver to the Seller the following:
(a) Payment of the applicable Facility Purchase Price in
accordance with Section 3 hereof.
(b) a Buyer Closing Certification, certifying that, subject to
Section 9.1 and the first paragraph of Section 5 of this Agreement, all of the
representations and warranties made by
<PAGE> 33
the Buyer in this Agreement are true and correct as of the applicable Closing
Date.
(c) Certificate of resolutions of the board of directors of
Balanced Care, authorizing the transactions contemplated hereby, certified by
the Secretary of Balanced Care.
(d) Certificate of the Secretary of Balanced Care as to
incumbency and other related matters.
(e) Documents reasonably acceptable to the Seller, evidencing
all requisite corporate authorization needed by IPC to authorize the
transactions contemplated hereby.
(f) Any applicable Termination Documents or Assignment and
Assumption Documents executed by the Buyer (or its Designee) and/or the
appropriate Balanced Care Entities.
(g) Any other documents required to be executed by the Buyer
or the applicable Designee(s) under applicable local law to (i) effectuate the
conveyance of the applicable portion Leased Property to the Buyer or the
Designee, (ii) to record the deed or other conveyancing documents and/or (iii)
to terminate or assign the applicable Lease.
(h) Any other applicable Buyer Documents.
(i) Payment of the amounts due under Section 9.3 and Section
9.4 hereof.
12. REMEDIES. The rights and remedies of the Buyer hereunder may be
enforced at law or in equity. The agreements, covenants and obligations of the
Seller under this Agreement shall be deemed of the essence and every breach
thereof material to the Buyer and special, unique and extraordinary so that any
breach thereof shall be deemed to cause the Buyer irreparable injury justifying
a decree of specific performance by a court of competent jurisdiction and not
properly compensable solely by money damages in an action at law. Therefore, in
the event that the Buyer shall institute any action to enforce the provisions of
this Agreement, the Seller hereby acknowledges that (a) the Buyer does not have
an adequate remedy at law and that injunction, specific performance or other
equitable relief will not constitute any hardship on the Seller and (b) if the
Buyer prevails on any such action, the Seller shall reimburse the Buyer for all
reasonable out-of-pocket expenses (including, without
<PAGE> 34
limitation, attorneys' fees and expenses) reasonably incurred by the Buyer in
connection with such action.
If, after exercising its Option Right in accordance with the terms
hereof, the Buyer shall fail to consummate any Closing, notwithstanding the
satisfaction of all Closing Conditions relating thereto (a "Buyer Default"), the
sole remedies, at law or in equity, of the Seller as a consequence of any such
Buyer Default shall be (i) to accelerate the amount due under the Promissory
Note and to exercise its rights and remedies under the Promissory Note as a
consequence of the Buyer Default (which constitutes an Event of Default under
the Promissory Note) and the acceleration of the amounts due thereunder, (ii) to
be reimbursed by the Buyer for all reasonable out-of-pocket expenses (including,
without limitation, attorneys' fees and expenses) reasonably incurred by Seller
in connection with (x) any preparation for the applicable Closing or Closings
that were not consummated as a consequence of the Buyer Default and (y) the
enforcement of the Seller's rights and remedies hereunder and under the
Promissory Note and (iii) to terminate this Option Agreement; and the Seller
shall have no right or be entitled to bring an action for specific performance
or for any other damages whatsoever.
The provisions of this Section 12 shall survive the Closings
consummated hereunder and any termination of this Agreement.
13. ADJUSTMENTS. Except as otherwise expressly provided herein, no
adjustments to any Facility Purchase Price shall be made between the parties
hereto as a result of the consummation of the transactions contemplated
hereunder.
14. SURVIVAL OF PROVISIONS IN THE LEASE DOCUMENTS. Without limiting the
provisions set forth in Section 7.1, nothing set forth herein shall be deemed to
amend or modify any Lease or affect any of the Lessees' respective obligations
thereunder, including, without limitation, the (a) indemnification provisions of
the Leases and the other BCC Lease Documents and (b) other provisions set forth
in the Leases and the other BCC Lease Documents which by their express terms
provide that they will survive the expiration or earlier termination of the
Leases (including, without limitation, subject to the provisions of Section 9.4
of this Agreement, the obligation to pay Additional Rent), which shall survive
and not be deemed waived by the execution and delivery of this Agreement or the
consummation of any Closing and/or the expiration or earlier termination of any
Lease.
<PAGE> 35
15. MISCELLANEOUS.
15.1 No Broker. Each of the parties represents to the others that no
agent, finder or broker has acted for it or was the producing and effective
cause of this Agreement or the transactions contemplated hereby, and that no
commissions or finder's fees are due by it to any third parties. The Buyer
agrees to indemnify, exonerate and hold the Seller harmless from and against any
claim, loss, damage, cost or liability for any brokerage commission or fee which
may be asserted against the Seller as a result of the Buyer's breach of this
warranty. The Seller agrees to indemnify, exonerate and hold the Buyer harmless
from and against any claim, loss, damage, cost or liability for any brokerage
commission or fee which may be asserted against the Buyer as a result of the
Seller's breach of this warranty. The provisions in this Section shall survive
the consummation of the Closings contemplated hereunder or any earlier
termination of this Agreement.
15.2 Entire Agreement. This Agreement, together with the Exhibits
attached hereto contains the entire understanding of the parties with respect to
the subject matters hereof and supersedes all prior and other contemporaneous
oral or written understandings and agreements between the parties hereto,
including, without limitation, the Letter Agreement. Without limiting the
foregoing, it is acknowledged and agreed that the Letter Agreement is of no
further force and effect.
15.3 Binding Effect; Assignment. This Agreement, shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Neither IPC nor Balanced Care may assign its rights
hereunder without the prior written consent of the Seller, which consent may be
withheld in its sole discretion; provided, however, that, upon prior written
notice to the Seller from the Buyer, the Buyer may designate one or more
Designees to take title to all or any portion of the Leased Property to be
conveyed hereunder. The Buyer acknowledges and agrees that notwithstanding any
such designation, the Buyer shall not be released from any of its obligations
hereunder. The Seller acknowledges and agrees that any Designee's obligations
shall be limited solely to acceptance of transfer and delivery of the applicable
portion of the Leased Property, to be performed as of the applicable Closing
Date and as part of the applicable Closing, and no Designee shall be responsible
for, and the Seller releases each Designee from, any and all other agreements,
covenants, warranties, obligations and liabilities of the Buyer hereunder and
under the other Buyer
<PAGE> 36
Documents, including, without limitation, the Buyer's obligation to pay each
applicable Facility Purchase Price and all obligations to be performed by the
Buyer subsequent to any Closing.
15.4 Notices. Any notice, demand, offer or other writing required or
permitted pursuant to this Agreement shall be in writing (each, a "Notice"). Any
Notice shall be (i) personally delivered, (ii) sent by certified mail, return
receipt requested or (iii) sent by nationally recognized commercial overnight
delivery service, with provision for a receipt, postage or delivery charges
prepaid and, in each instance, sent simultaneously by facsimile transmission.
Any Notice shall be deemed given when hand delivered, postmarked or placed in
the possession of such mail or delivery service, as the case may be (provided,
that, in each instance, a copy of such Notice was simultaneously sent by
facsimile transmission) and shall be addressed as follows:
(a) If to the Buyer:
IPC Advisors S.a.r.l.
38-40 Rue Saint Zithe
Luxembourg L-2763
Fax: 011 352 407 804
Attn: J.B. Unsworth
and
Balanced Care Corporation
1215 Manor Drive
Mechanicsburg, Pennsylvania 17055
Fax: (717) 796-6150
Attn: President
<PAGE> 37
With copies to:
IPC Advisors S.a.r.l.
c/o Unsworth & Associates
Herengracht 483
1017 BT
Amsterdam
Fax: 011-31206232285
Attn: J.B. Unsworth
and
Goodman Phillips and Vineburg
250 Yonge Street, Suite 2400
Toronto, Ontario
Canada M5B 2M6
Fax: (416) 979-1234
Attn: Stephen Pincus, Esq.
and
Balanced Care Corporation
1215 Manor Drive
Mechanicsburg, Pennsylvania 17055
Fax: (717) 796-6294
Attn: Robin L. Barber, Esq.
and
Kirkpatrick & Lockhart LLP
Henry W. Oliver Building
535 Smithfield Street
Pittsburgh, PA 15222-2312
Fax: (412) 355-6501
Attn: Steven J. Adelkoff, Esq.
(b) If to the Seller:
New Meditrust Company LLC
197 First Avenue
Needham Heights, MA 02494-9127
Fax: (781) 433-1290
Attn: Chief Operating Officer
<PAGE> 38
With copies to:
New Meditrust Company LLC
197 First Avenue
Needham Heights, MA 02494-9127
Fax: (781) 449-1530
Attn: General Counsel
and
Nutter, McClennen & Fish, LLP
One International Place
Boston, Massachusetts 02110
Fax: (617) 973-9748
Attn: Marianne Ajemian, Esq.
Either party shall have the right to change the place to which such notice shall
be given by similar notice sent in like manner to the other party hereto. Any
such notice, if sent by such overnight delivery service, shall be deemed
delivered on the earlier of the date of actual delivery or the next business day
following deposit, postage prepaid, with such overnight delivery service and if
delivered by hand delivery shall be deemed delivered on the date of the actual
delivery and if sent by mail, shall be deemed delivered on the earlier of the
third day following deposit with the U.S. Postal Service or actual delivery.
15.5 Captions. The captions of this Agreement are for convenience and
reference only, and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provisions hereof.
15.6 Joint Effort. The preparation of this Agreement has been the joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
15.7 Counterparts. This Agreement may be executed in counterparts and
each executed copy shall be deemed an original which shall be binding upon all
parties hereto.
15.8 Partial Invalidity. If any provision of this Agreement shall be
invalid or unenforceable, the remainder of this Agreement shall not be affected
thereby. Notwithstanding the foregoing, it is the intention of the parties
hereto that if any provision of any of this Agreement is capable of two (2)
<PAGE> 39
constructions, one of which would render the provision void and the other of
which would render the provision valid, then such provision shall be construed
in accordance with the construction which renders such provision valid.
15.9 No Offer. Neither the negotiations to date nor the preparation of
this Agreement shall be deemed an offer by any party to the other. No such
contract shall be deemed binding on any party until such party has executed and
delivered a written agreement.
15.10 Amendments. This Agreement may not be amended in any respect
whatsoever except by a further agreement, in writing, fully executed by each of
the parties.
15.11 Exhibits. All Exhibits referred to in this Agreement shall be
incorporated into this Agreement by such reference and shall be deemed a part of
this Agreement as if fully set forth in this Agreement.
15.12 Governing Law. This Agreement including the validity thereof and
the rights and obligations of the parties hereunder shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
(including, without limitation, principles of conflicts of law).
IPC and Balanced Care each hereby consents to personal jurisdiction in
any state or Federal court located within the Commonwealth of Massachusetts, as
well as to the jurisdiction of all courts from which an appeal may be taken from
the aforesaid courts, for the purpose of any suit, action or other proceeding
arising out of or with respect to this Agreement and/or any of the other
Transaction Documents, the negotiation and/or consummation of the transactions
contemplated by the this Agreement and the other Transaction Documents and/or
the performance of any obligation or the exercise of any remedy under any of the
Transaction Documents and IPC and Balanced Care each expressly waives any and
all objections it may have as to venue in any of such courts.
15.13 Third Parties. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any Persons other than the parties hereto, their respective legal
representatives, successors and permitted assigns. No Person, other than the
Buyer and the Seller may rely hereon or derive any benefit hereby as a third
party beneficiary or otherwise.
<PAGE> 40
15.14 Further Assurances. From time to time before or after any
Closing, at no additional consideration, the parties hereto each agree that they
will promptly execute and deliver all additional documents and perform (or cause
the performance of) any other acts that may be reasonably requested in order to
effectuate the intent of this Agreement and to consummate the transactions
contemplated hereby.
15.15 No Solicitation. From the date of this Agreement until its
termination, the Seller shall not, directly or indirectly, through any of its
officers, directors, employees, representatives or agents, encourage, solicit or
initiate discussions or negotiations with, or knowingly provide any information
to, any Person (other than the Buyer and its agents and representatives)
concerning the sale of the Leased Property; provided, however, that from and
after the earlier to occur of (i) a Buyer Default or (ii) November 30, 2000, the
Seller may enter into any such discussions or negotiations regarding the
portions of the Leased Property that have not been conveyed to the Buyer or its
Designee(s).
15.16 Time of the Essence. Time is of the essence of each and every
term, condition, covenant and warranty set forth herein.
15.17 Rules of Construction. References in this Agreement to "herein,"
"hereof" and "hereunder" shall be deemed to refer to this Agreement and shall
not be limited to the particular text in which such words appear. The use of any
gender shall include all genders, and the singular number shall include the
plural and vice versa as the context may require.
15.18 Joint and Several Liability. IPC and Balanced Care are fully
liable for all obligations of the Buyer hereunder, and all such obligations
shall be joint and several. Notwithstanding the foregoing, it is acknowledged
and agreed that the Option Right hereunder may only be exercised jointly by IPC
and Balanced Care.
<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals as of the date first above appearing.
SELLER:
NEW MEDITRUST COMPANY LLC, a Delaware
limited liability company
By:/s/Michael S. Benjamin
Name:Michael S. Benjamin, Esq.
Title:Senior Vice President
BUYER:
IPC ADVISORS S.A.R.L., a Luxembourg
corporation
By:/s/J.B. Unsworth
Name:J.B. Unsworth
Title:Manager
BALANCED CARE CORPORATION, a Delaware
corporation
By:/s/Robin L. Barber
Name:Robin L. Barber
Title:Senior Vice President and
Legal Counsel & Assistant Secretary
<PAGE> 42
EXHIBIT B
<TABLE>
<CAPTION>
Applicable Facility
Facility Purchase Price
<S> <C>
Blytheville $3,206,236
Lewisburg $2,244,768
Lima $3,044,814
Potomac Point $2,459,821
Dillsburg $3,363,505
Xenia $5,877,130
Chippewa $3,500,125
Kingsport $3,182,312
Chesterfield $4,886,665
Hendersonville $3,565,920
Knoxville $6,993,413
Pocahontas $3,206,237
TOTAL $45,530,946
</TABLE>
<PAGE> 43
EXHIBIT C
CERTIFICATE REGARDING THE SELLER'S
REPRESENTATIONS AND WARRANTIES
Reference is hereby made to that certain Option Agreement, dated as of
December , 1999 (the "Option Agreement"), by and among NEW MEDITRUST COMPANY
LLC, a Delaware limited liability company (the "Seller"), and IPC ADVISORS
S.A.R.L., a Luxembourg corporation and BALANCED CARE CORPORATION, a Delaware
corporation (collectively, the "Buyer"). The undersigned hereby certifies to the
Buyer [or the Buyer's Nominee] as follows:
There are no changes in the representations and warranties made by the
Seller in the Option Agreement [or, list changes here].
This Certification is being given to the Buyer [or the Buyer's Nominee]
incident to the consummation of the sale of the Seller's interest in the
Leased Property (as defined under the Option Agreement) and it is intended that
the Buyer [or the Buyer's Nominee] shall rely upon the contents and accuracy of
this Certification.
EXECUTED as a sealed instrument as of this day of ,
2000.
NEW MEDITRUST COMPANY LLC, a
Delaware limited liability company
By:
Name:
Title:
<PAGE> 44
EXHIBIT D
CERTIFICATE REGARDING THE BUYER'S
REPRESENTATIONS AND WARRANTIES
Reference is hereby made to that certain Option Agreement, dated as of
December 30th, 1999 (the "Option Agreement"), by and among NEW MEDITRUST COMPANY
LLC, a Delaware limited liability company (the "Seller"), and IPC ADVISORS
S.A.R.L., a Luxembourg corporation and BALANCED CARE CORPORATION, a Delaware
corporation (collectively, the "Buyer"). The undersigned hereby certifies to the
Seller as follows:
There are no changes in the representations and warranties made by the
Buyer in the Option Agreement [or, list changes here].
This Certification is being given to the Seller incident to the
consummation of the sale of the Seller's interest in the Leased Property (as
defined under the Option Agreement) and it is intended that the Seller shall
rely upon the contents and accuracy of this Certification.
EXECUTED as a sealed instrument as of this day of , 2000.
IPC ADVISORS S.A.R.L., a Luxembourg
corporation
By:
Name:
Title:
BALANCED CARE CORPORATION,
a Delaware corporation
By:
Name:
Title:
<PAGE> 1
Exhibit 10.3
PROMISSORY NOTE
$7,811,054 Boston, Massachusetts
December 30, 1999
FOR VALUE RECEIVED, IPC ADVISORS S.A.R.L., a Luxembourg corporation
(hereinafter referred to as "IPC"), having for the purposes of this Note, an
address at 38-40 Rue Sainte Zithe, Luxembourg L-2763 and BALANCED CARE
CORPORATION, a Delaware corporation (hereinafter referred to as "BCC"), having
an address at 1215 Manor Drive, Mechanicsburg, Pennsylvania 17055 (hereinafter
collectively referred to as the "Maker") promises to pay to the order of New
Meditrust Company LLC, a Delaware limited liability company (hereinafter
referred to as the "Lender") (the Lender and each successor, owner, endorsee,
bearer and holder of this Note being hereinafter referred to as the "Holder") at
its principal place of business located at 197 First Avenue, Needham Heights,
Massachusetts 02494, or at such other place as the Holder of this Note may from
time to time designate in writing, in lawful money of the United States of
America, in immediately available Federal funds or the equivalent the principal
sum of SEVEN MILLION EIGHT HUNDRED ELEVEN THOUSAND FIFTY-FOUR DOLLARS
($7,811,054) (hereinafter referred to as the "Loan Amount"), with interest on so
much thereof as shall from time to time be outstanding at the rate of interest
specifically provided herein. To the extent applicable, interest hereunder shall
be calculated on the basis of a 360-day year, but charged for the actual days
elapsed during each calendar year (or portion thereof) that the indebtedness
evidenced by this Note remains outstanding.
1. Terms of Payment. The Maker shall make the following payments to the
Holder:
(i) in the event that the Maker has exercised its "Option
Right" as such term is defined in that certain Option Agreement, of even date,
by and between the Maker and the Lender (the "Option Agreement") relating to any
"Facility" and the applicable portion of the "Leased Property" relating thereto
(as such terms are defined under the Option Agreement), as a condition of the
consummation of the applicable "Closing" (as defined under the Option
Agreement), the Maker shall pay to the Holder, on the applicable "Closing Date"
(as defined under the Option Agreement), an amount hereinafter referred to as
the
<PAGE> 2
"Required Prepayment" set forth for such Facility on EXHIBIT A attached hereto
and incorporated herein by reference; and
(ii) on November 30, 2000 (hereinafter referred to as the "Maturity
Date"), the Maker shall pay to the Holder the entire principal balance then
remaining unpaid, together with accrued and unpaid interest thereon and any
costs, charges and other amounts due under this Note.
All payments hereunder received by the Holder shall be applied by the Holder,
without any marshalling of assets, towards payment of the Maker's obligations
hereunder in such order as the Holder shall determine in its sole discretion
Notwithstanding the foregoing, in the event that, as a consequence of
any Seller Default (as defined under the Option Agreement), (i) the Maker does
not elect to exercise its Option Right relating to any Facility or (ii) any
Closing relating to any Facility is not consummated (notwithstanding the
exercise by the Maker of its Option Right relating thereto), the principal
amount of the indebtedness hereunder shall be reduced by the amount of the
Required Prepayment relating to such Facility set forth on EXHIBIT A.
2. Interest Rate. Except as otherwise expressly provided in Paragraph 4
or Paragraph 5 hereof, no interest shall accrue on the outstanding principal
balance hereunder.
3. Prepayment. The indebtedness evidenced by this Note may be prepaid,
in whole or in part, at any time without prepayment penalty, fee or premium.
4. Acceleration of Maturity. Any one or more of the following events
shall be defined as an "Event of Default":
(i) the failure to pay any Required Prepayment or any other sum due
under this Note on the date when such payment was due;
(ii) the occurrence of any "Buyer Default" (as defined under the Option
Agreement);
(iii) if either IPC or BCC shall (a) voluntarily be adjudicated a
bankrupt or insolvent, (b) seek or consent to the appointment of a receiver or
trustee for itself or for any of its properties, (c) file a petition seeking
relief under the bankruptcy or other similar laws of the United States or any
<PAGE> 3
other country, any state or any other jurisdiction, (d) make a general
assignment for the benefit of creditors, (v) make or offer a composition of its
debts with its creditors or (e) be unable to pay its debts as such debts mature;
(iv) if any court shall enter an order, judgment or decree
appointing, without the consent of either IPC or BCC, a receiver or trustee for
such entity or for any of their respective properties, and such order, judgment
or decree shall remain in force, undischarged or unstayed, ninety (90) days
after it is entered;
(v) if any petition is filed against IPC or BCC which seeks
relief under the bankruptcy or other similar laws of the United States, any
other country, any state or any other jurisdiction and such petition is not
dismissed within ninety (90) days after it is filed; and
(vi) the liquidation, dissolution or termination of existence
of IPC or BCC.
Upon the occurrence of an Event of Default, at the option of the
Holder, which may be exercised at any time after an Event of Default shall have
occurred, the entire outstanding principal balance, together with all interest,
costs, charges and other amounts due under this Note, shall immediately become
due and payable and upon such acceleration, all amounts due hereunder shall bear
interest at the rate of interest per annum equal to the greater of (a) eighteen
percent (18%) per annum or (b) a variable rate of interest per annum equal to
one hundred twenty percent (120%) of the "Prime Rate" (as hereinafter defined);
but in no event in excess of the maximum rate of interest permitted by
applicable law to be charged by the Holder (hereinafter referred to as the
"Advances Rate"). As used herein, Prime Rate shall mean the variable rate of
interest per annum from time to time announced by Fleet Bank of Connecticut,
N.A. ("Fleet"), as its prime rate of interest and in the event that Fleet no
longer announces a prime rate of interest, then the Prime Rate shall be deemed
to be the variable rate of interest per annum which is the prime rate of
interest or base rate of interest from time to time announced by any other major
bank or other financial institution reasonably selected by the Holder.
Any and all deposits or other sums at any time or times credited by or
due from the Holder to, and all securities or other property in the possession
of the Holder for safekeeping or otherwise and belonging to, the Maker or any
endorser, surety or
<PAGE> 4
guarantor of this Note or the obligations represented hereby are and shall be
subject to a security interest in favor of the Holder to secure payment of this
Note. Upon the occurrence of any Event of Default and at any time or times
thereafter, without any demand or notice, except to such extent as notice may be
required by applicable law, the Holder may sell or dispose of any or all of such
securities or other property and may exercise any and all of the rights accorded
the Holder by the Massachusetts Uniform Commercial Code or other applicable
state's Uniform Commercial Code. The Holder at any time and from time to time
may apply or set off such deposits or other sums against the liability of the
Maker or any such endorser, surety or guarantor whether or not such liability is
then due. The provisions of this Paragraph 4 are cumulative and are not
exclusive of any other rights that the Holder has with respect to such deposits,
sums, securities or other property under other agreements or applicable
principles of law. The Holder shall have no duty to take steps to preserve
rights against prior parties as to such securities or other property.
5. Late Charges; Interest Following Certain Events. In the event of any
delinquency in the payment of any Required Prepayment or in the payment of any
other monetary obligation under this Note (hereinafter referred to as a "Late
Payment"), the Maker shall pay the Holder a late payment charge of Two Hundred
Fifty Dollars ($250) (referred to herein as a "Late Payment Charge") for the
month during which such delinquency occurs and for each month (or portion of the
month) thereafter that the Late Payment remains unpaid, for the purpose of
defraying the expenses incurred by the Holder in handling and processing such
Late Payments. In addition to any Late Payment Charges which may become due
hereunder, the Maker shall pay interest on any Late Payment, calculated at the
Advances Rate, from the date upon which the Late Payment was originally due
until the date that the Holder actually receives such Late Payment. It is
understood that nothing contained in this Paragraph 5 shall be deemed to relieve
the Maker of its obligations to make any and all payments due and payable to the
Holder pursuant to the provisions of this Note upon the dates set forth herein,
it being acknowledged that time is of the essence.
6. Collection and Enforcement Costs. Upon demand, the Maker shall
reimburse the Holder for all costs and expenses, including, without limitation,
attorneys' fees and expenses and court costs, paid or incurred by the Holder in
connection with the collection of any sum due hereunder, or in connection with
the enforcement of any of the Holder's rights or the Maker's
<PAGE> 5
obligations under this Note. Any amount due and payable to the Holder pursuant
to the provisions of this Paragraph 6 shall bear interest at the Advances Rate.
7. Continuing Liability. The obligation of the Maker to pay the
outstanding principal balance, interest and all other costs, charges and sums
due hereunder shall continue in full force and effect and in no way shall be
impaired, until the actual payment thereof to the Holder.
8. Joint and Several Liability. If more than one Person shall execute
this Note, then each such Person shall be fully liable for all obligations of
the Maker hereunder, and all such obligations shall be joint and several.
9. Amendments, Waivers and Modifications. None of the terms, covenants,
conditions, warranties or representations contained in this Note may be renewed,
replaced, amended, modified, extended, substituted, revised, waived,
consolidated or terminated, except by an agreement, in writing, signed by the
Person against whom enforcement is sought. The provisions of this Note shall
extend and be applicable to all renewals, replacements, amendments, extensions,
substitutions, revisions, consolidations and modifications of the Option
Agreement; and all references herein to the Option Agreement shall be deemed to
include any such renewals, amendments, extensions, consolidations, or
modifications thereof.
10. Waivers. The Maker and each endorser, surety and guarantor hereof,
jointly and severally, waive presentment for payment, demand, notice of
nonpayment, notice of dishonor, protest of any dishonor, suretyship defenses,
notice of protest and protest of this Note, and all other notices in connection
with the delivery, acceptance, performance, default (except notice of default as
specifically elsewhere herein required), or enforcement of the payment of this
Note, and agree that the liability of each of them shall be unconditional
without regard to the liability of any other party and shall not be in any
manner affected by any indulgence, extension of time, renewal, waiver or
modification granted or consented to by the Holder; and the Maker and all
endorsers, sureties and guarantors hereof consent to any and all extensions of
time, renewals, waivers or modifications that may be granted or consented to by
the Holder with respect to the payment or performance of any obligations under
this Note, and agree that additional makers, endorsers, guarantors or sureties
may become parties hereto without notice to them or affecting their liability
hereunder.
<PAGE> 6
11. Contribution. No Person obligated on account of this Note may seek
contribution from any other Person also obligated unless and until all
liabilities, obligations and indebtedness to the Holder of the Person from whom
contribution is sought have been satisfied in full.
12. Indemnification. With the exception of any claim arising out of an
action brought by IPC and/or BCC against the Holder in which a final decision is
issued by a court in favor of IPC and/or BCC and all appeal periods having
lapsed or been exhausted, the Maker, and each endorser, surety and guarantor of
this Note, shall indemnify, defend (with counsel acceptable to the Holder), and
hold the Holder harmless against any claim brought or threatened against the
Holder by the Maker, by any endorser, surety or guarantor, or by any other
Person on account of the Holder's relationship with the Maker or any endorser,
surety or guarantor hereof (each of which may be defended, compromised, settled
or pursued by the Holder with counsel of the Holder's selection, but at the
expense of the Maker and any endorser, surety and guarantor). The aforesaid
indemnification agreement shall include, without limitation, attorneys' fees and
expenses and court costs incurred by the Holder in connection with any such
claims and with the enforcement of said indemnification.
13. Successors and Assigns. This Note shall be binding on and inure to
the benefit of (i) the Maker and the Maker's permitted successors and assigns
and (ii) inure to the benefit of the Holder and its successors and assigns.
Notwithstanding the foregoing, neither IPC nor BCC shall assign or otherwise
transfer this Note or any of its rights or obligations hereunder without the
express written consent of the Holder, in each instance, which consent may be
withheld in the Holder's sole and absolute discretion.
14. Applicable Law. This Note is being negotiated and delivered in
Boston, Massachusetts, and shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts
15. Invalidity. If any provision of this Note or the application
thereof to any Person or circumstance shall, for any reason and to any extent,
be invalid or unenforceable, neither the remainder of this Note, nor the
application of such provision to any other Person or circumstance shall be
affected thereby, but rather the same shall be enforced to the maximum extent
<PAGE> 7
permitted by law. Notwithstanding the foregoing, it is the intention of the
Maker and the Holder that if any provision of this Note is capable of two (2)
constructions, one of which would render the provision void and the other of
which would render the provision valid, then such provision shall be construed
in accordance with the construction which renders such provision valid.
16. Usury. In the event that fulfillment of any provision of this Note,
at the time performance of such provision shall be due and as a result of any
circumstance, shall involve transcending the limit of validity presently or
hereinafter prescribed by any applicable usury statute or any other law, with
regard to obligations of like character and amount, then ipso facto the
obligation to be fulfilled shall be reduced to the limit of such validity, so
that in no event shall any exaction be possible under this Note that is in
excess of the limit of such validity. In no event shall the Maker be bound to
pay for the use, forbearance or detention of the money loaned pursuant hereto,
interest of more than the maximum rate, if any, permitted by law to be charged
by the Holder; the right to demand any such excess being hereby expressly waived
by the Holder.
17. Notice. Any notice, request, demand, statement or consent made
hereunder shall be in writing (each, a "Notice"). Any Notice shall be (i)
personally delivered, (ii) sent by certified mail, return receipt requested or
(iii) sent by a nationally recognized commercial overnight delivery service with
provision for a receipt, postage or delivery charges prepaid, and, in each
instance, simultaneously by facsimile transmission. Any Notice shall be deemed
given when hand delivered, when postmarked or placed in the possession of such
mail or delivery service, as the case may be (provided, that, in each instance,
a copy of such notice was simultaneously sent by facsimile transmission), and
shall be addressed as follows:
<TABLE>
<S> <C>
If to Maker: IPC Advisors S.a.r.l.
38-40 Rue Saint Zithe
Luxembourg L-2763
Fax: 011 352 407 804
Attn: J. B. Unsworth
and
Balanced Care Corporation
1215 Manor Drive
Mechanicsburg, Pennsylvania 17055
</TABLE>
<PAGE> 8
<TABLE>
<S> <C>
Fax: (717) 796-6150
Attn: President
With copies to: IPC Advisors S.a.r.l.
c/o Unsworth & Associates
Herengracht 483
1017 BT
Amsterdam
Fax: 011 3120 623 2285
Attn: J. B. Unsworth
and
Goodman Phillips and Vineburg
250 Yonge Street, Suite 2400
Toronto, Ontario
Canada M5B2M6
Fax: (416) 979-1234
Attn: Stephen Pincus, Esq.
and
Balanced Care Corporation
1215 Manor Drive
Mechanicsburg, Pennsylvania 17055
Fax: (717) 796-6294
Attn: Robin L. Barber, Esq.
and
Kirkpatrick & Lockhart LLP
Henry W. Oliver Building
535 Smithfield Street
Pittsburgh, PA 15222-2312
Fax: (412) 355-6501
Attn: Steven J. Adelkoff, Esq.
If to Holder: New Meditrust Company LLC
197 First Avenue
Needham, Massachusetts 02494
Fax: (781) 433-1290
Attention: President
With copies to: New Meditrust Company LLC
197 First Avenue
Needham, MA 02494
Fax: (781) 449-1530
Attention: General Counsel
</TABLE>
<PAGE> 9
<TABLE>
<S> <C>
and
Nutter, McClennen & Fish, LLP
One International Place
Boston, Massachusetts 02110-2699
Fax: (617) 973-9748
Attention: Marianne Ajemian, Esq.
</TABLE>
or at such other place as either the Holder or the Maker may from time to time
hereafter designate to the other in writing. Any notice given to the Maker by
the Holder at any time shall not imply that such notice or any further or
similar notice was or is required.
19. Captions and Headings. The captions and headings set forth in this
Note are included for convenience and reference only and the words contained
therein shall in no way be held or deemed to define, limit, describe, explain,
modify, amplify or add to the interpretation, construction or meaning of any
provisions of, or the scope or intent of, this Note or any portion hereof.
20. Rule of Construction. References in this Note to "herein," "hereof"
and "hereunder" shall be deemed to refer to this Note and shall not be limited
to the particular text or Paragraph in which such words appear. The use of any
gender shall include all genders and the singular number shall include the
plural and vice versa as the context may require. References in this Note to the
Holder's attorneys shall be deemed to include, without limitation, special
counsel and local counsel.
As used herein, the term "including", when following any general
statement, will not be construed to limit such statement to the specific items
or matters as provided immediately following the term "including" (whether or
not non-limiting language such as "without limitation" or "but not limited to"
or words of similar import are also used), but rather will be deemed to refer to
all items or matters that could reasonably fall within the broader scope of the
general statement.
[SIGNATURES ON NEXT PAGE]
<PAGE> 10
IN WITNESS WHEREOF, the Maker has duly executed this Note as a sealed
instrument as of the day and year first above written.
WITNESS: MAKER:
IPC ADVISORS S.A.R.L., a Luxembourg
corporation
/s/J. Theot By:/s/J.B. Unsworth
Name: J. Theot Name: J.B. Unsworth
Title: Manager
BALANCED CARE CORPORATION, a
Delaware corporation
/s/Jaynelle D. Covert By:/s/Robin L. Barber
Name: Jaynelle D. Covert Name: Robin L. Barber
Title: Senior Vice President
and Legal Counsel &
Assistant Secretary
<PAGE> 11
EXHIBIT A
<TABLE>
<CAPTION>
Facility Required Prepayment
<S> <C>
Blytheville $550,045
Lewisburg $385,102
Lima $522,353
Potomac Point $421,994
Dillsburg $577,025
Xenia $1,008,250
Chippewa $600,463
Kingsport $545,941
Chesterfield $838,331
Hendersonville $611,751
Knoxville $1,199,754
Pocahontas $550,045
</TABLE>
<PAGE> 1
Exhibit 10.4 Loan No. 99-407
LOAN AGREEMENT
AMONG
HELLER HEALTHCARE FINANCE, INC.,
A DELAWARE CORPORATION
("LENDER")
AND
BALANCED CARE REALTY AT STATE COLLEGE, INC., a Delaware corporation,
BALANCED CARE REALTY AT ALTOONA, INC., a Delaware corporation,
BALANCED CARE REALTY AT LEWISTOWN, INC., a Delaware corporation,
BALANCED CARE REALTY AT READING, INC., a Delaware corporation,
BALANCED CARE REALTY AT BERWICK, INC., a Delaware corporation,
BALANCED CARE REALTY AT PECKVILLE, INC., a Delaware corporation,
BALANCED CARE REALTY AT SCRANTON, INC., a Delaware corporation,
BALANCED CARE REALTY AT MARTINSBURG, INC., a Delaware corporation,
BALANCED CARE REALTY AT MAUMELLE, INC., a Delaware corporation,
BALANCED CARE REALTY AT SHERWOOD, INC., a Delaware corporation,
BALANCED CARE REALTY AT MOUNTAIN HOME, INC., a Delaware corporation,
and
BALANCED CARE REALTY AT MANSFIELD, INC., a Delaware corporation
(collectively, "BORROWER")
$32,000,000 LOAN
TWELVE OUTLOOK POINTE
ASSISTED LIVING FACILITIES
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
RECITALS..........................................................................................................1
ARTICLE I The Loan................................................................................................3
ARTICLE II Security...............................................................................................5
ARTICLE III Conditions Precedent..................................................................................6
ARTICLE IV Representations and Warranties........................................................................10
ARTICLE V Affirmative Covenants..................................................................................14
ARTICLE VI Negative Covenants....................................................................................18
ARTICLE VII Events of Default; Acceleration of Indebtedness; Remedies ...........................................19
ARTICLE VIII Miscellaneous.......................................................................................21
</TABLE>
Loan No. 99-407
LOAN AGREEMENT
This LOAN AGREEMENT (this "Agreement") is made this 30th day of December, 1999
among HELLER HEALTHCARE FINANCE, INC., a Delaware corporation ("Lender") and
BALANCED CARE REALTY AT STATE COLLEGE, INC., a Delaware corporation, BALANCED
CARE REALTY AT ALTOONA, INC., a Delaware corporation, BALANCED CARE REALTY AT
LEWISTOWN, INC., a Delaware corporation, BALANCED CARE REALTY AT READING, INC.,
a Delaware corporation, BALANCED CARE REALTY AT BERWICK, INC., a Delaware
corporation, BALANCED CARE REALTY AT PECKVILLE, INC., a Delaware corporation,
BALANCED CARE REALTY AT SCRANTON, INC., a Delaware corporation, BALANCED CARE
REALTY AT MARTINSBURG, INC., a Delaware corporation, BALANCED CARE REALTY AT
MAUMELLE, INC., a Delaware corporation, BALANCED CARE REALTY AT SHERWOOD, INC.,
a Delaware corporation, BALANCED CARE REALTY AT MOUNTAIN HOME, INC., a Delaware
corporation and BALANCED CARE REALTY AT MANSFIELD, INC., a Delaware corporation
(collectively "Borrower").
RECITALS
A. Lender has agreed to make a loan (the "Loan") of Thirty-Two Million
and No/100 Dollars ($32,000,000.00) to
<PAGE> 3
Borrower subject to the terms and conditions contained herein. The Loan is
evidenced by that certain Promissory Note A of even date herewith in the
original principal amount of Twenty-Five Million Six Hundred Thousand and No/100
Dollars ($25,600,000.00) ("Note A") and by that certain Subordinated Promissory
Note B of even date herewith in the original principal amount of Six Million
Four Hundred Thousand and No/100 Dollars ($6,400,000.00) ("Note B") (Note A and
Note B and all amendments thereto and substitutions therefor are hereinafter
referred to collectively as the "Note"). The terms and provisions of Note A and
Note B are hereby incorporated herein by reference in this Agreement.
B. On the Closing Date, each Borrower will be the owner of the real
property more particularly described on Exhibit A hereto (collectively called
the "Properties" and individually called a "Property"), and the assisted living
facility and other improvements located thereon (collectively called the
"Improvements"). The Properties and the Improvements are sometimes collectively
called the "Project".
C. Each Borrower will use the proceeds of the Loan for the purpose of
acquiring its respective Property and Improvements.
D. Borrower's obligations under the Loan will be secured by, among
other things, (a) a first priority mortgage or deed of trust, each of even date
herewith (individually, a "Mortgage", and collectively, the "Mortgages")
encumbering each Property and the Improvements thereon, and (b) an Assignment of
Leases and Rents of even date herewith (an "Assignment of Leases") encumbering
each Property and the Improvements thereon. This Agreement, the Note, the
Mortgages, all of the Assignments of Leases, the Environmental Indemnity, the
Guaranty, and any other documents evidencing or securing the Loan or executed in
connection therewith, and any modifications, renewals and extensions thereof,
are referred to herein collectively as the "Loan Documents."
E. An index of defined terms appears on the attached Schedule II.
NOW, THEREFORE, in consideration of the foregoing and the mutual conditions
and agreements contained herein, the parties agree as follows:
-2-
<PAGE> 4
ARTICLE I
The Loan
1.1. Funding. On the Closing Date, Lender shall disburse to Borrower
the proceeds of the Loan in the sum of Thirty-Two Million and No/100 Dollars
($32,000,000.00). The maximum amount to be disbursed to each Borrower is that
Borrower's Loan Allocation Amount as set forth on Exhibit A hereto. "Closing
Date" means the date of disbursement of the proceeds of the Loan.
1.2. Loan Term. The Loan shall mature on December 31, 2001 (the
"Maturity Date") or any earlier date on which the Loan shall be required to be
paid in full, whether by acceleration or otherwise.
1.3. Interest Rate. Borrower shall pay interest on the outstanding
principal balance of the Loan at a floating rate per annum equal to the Base
Rate plus three and seventy-five percent (3.75%) (the aggregate rate referred to
as the "Interest Rate"). "Base Rate" shall mean the rate published each day in
The Wall Street Journal for notes maturing three (3) months after issuance under
the caption "Money Rates, London Interbank Offered Rates (LIBOR)". The Interest
Rate for each calendar month shall be fixed based upon the Base Rate published
prior to and in effect on the first (1st) business day of such month; provided,
however, the Interest Rate from and including the Closing Date through December
31, 1999 shall be fixed based upon the Base Rate in effect on December 30, 1999.
Interest shall be calculated based on a 360 day year and charged for the actual
number of days elapsed.
1.4. Payments. Borrower shall make interest payments monthly in arrears
on the first (1st) day of each month commencing February 1, 2000 computed on the
outstanding principal balance of the Loan at the Interest Rate; provided,
however, interest for the period from and after the Closing Date through
December 31, 1999 shall be paid in advance on the Closing Date at the rate
described in Note A and Note B, respectively.
1.5. Sources and Uses. The sources and uses of funds for the
contemplated transaction are as follows:
SOURCES
<TABLE>
<S> <C>
BORROWER'S EQUITY: $13,200,000
LOAN: $32,000,000
TOTAL: $45,200,000
</TABLE>
USES
<TABLE>
<S> <C>
PURCHASE PRICE: $44,200,000
LEGAL AND CLOSING COSTS: $360,000
COMMITMENT FEE: $ 640,000
TOTAL: $45,200,000
</TABLE>
-3-
<PAGE> 5
Borrower shall deliver such information and documentation as Lender shall
request to verify that the sources and uses are as indicated above. A reduction
in the amounts necessary for any of the uses shall result in an equal reduction
in the amount of the Loan.
1.6. Excess Cash Flow.
1.6.1. Payments. On or before November 30, 2000 and on or
before the thirtieth (30th) day after the end of each calendar month thereafter
and continuing until the Repayment Date, Borrower shall pay Lender one hundred
percent (100%) of Excess Cash Flow attributable to the calendar month then
ended, to be applied to principal outstanding under the Loan.
"Excess Cash Flow" for any calendar month means Net Cash Flow
for such period less payments made on the Loan during such period.
"Net Cash Flow" for any calendar month means all gross revenue
("Gross Revenue") collected by Borrower from or in connection with the Project
during such calendar month (including rents, other occupancy payments, fees and
other amounts paid by residents of the Project, expense reimbursements, interest
income and forfeited security deposits); less (i) all bona fide normal,
customary and reasonable operating expenses actually paid during such calendar
month (including a management fee not to exceed six percent (6%) of effective
Gross Revenue; and (ii) deposits into reserves approved by Lender or required by
the Loan Documents and deposits escrowed with Lender; provided, however, that
amounts included in such reserves and escrows shall not also be included as an
expense upon disbursement from such reserves and escrows.
"Repayment Date" means the date upon which the entire
principal balance of the Loan and all interest thereon, the Exit Fee and other
sums due pursuant to the Loan Documents have been paid in full.
1.6.2. Cash Flow Reports. Within thirty (30) days after the
end of every calendar month during the term of the Loan, Borrower shall deliver
to Lender (a) a statement and report, on a form approved by Lender in its sole
and absolute discretion (the "Cash Flow Report"), detailing Borrower's
calculation of Net Cash Flow and Excess Cash Flow for such month, (b) if
requested by Lender, back-up documentation (including, without limitation,
invoices, receipts and other evidence of costs incurred during such quarter as
Lender shall reasonably require) evidencing the propriety of the deductions from
Gross Revenues in determining such Net Cash Flow and Excess Cash Flow
-4-
<PAGE> 6
and (c) operating statements for the Project on a Property by Property basis)
certified true, complete and correct by Borrower.
1.7. Intentionally Omitted.
1.8. Prepayments of Loan.
Borrower may prepay the outstanding principal balance of the Loan in
full or in part any time; provided Borrower gives Lender at least thirty (30)
days' prior written notice and pays the Exit Fee then due Lender.
1.9. Exit Fee. As additional consideration for entering into this
Agreement and making the Loan, Borrower shall, on the date payment in full of
the Loan is made, pay to Lender an amount (the "Final Exit Fee") equal to (A)
Nine Hundred Sixty Thousand and No/100 Dollars ($960,000.00), if payment in full
is made on or after October 1, 2000, otherwise Three Hundred Twenty Thousand and
No/100 Dollars ($320,000.00), less (B) the sum of the Proportionate Exit Fees,
if any, paid to Lender under Section 2.2 below. The Proportionate Exit Fees, if
any, payable to Lender and the Final Exit Fee payable to Lender are collectively
referred to as the "Exit Fee".
ARTICLE II
Security
2.1. Collateral. The Loan and all other indebtedness and obligations
under the Loan Documents shall be secured by the following (collectively, the
"Collateral"): (a) the Mortgages, (b) the Assignments of Leases, and (c) any
other collateral or security described in this Agreement or required by Lender
in connection with the Loan.
2.2. Release of Collateral. Subject to the Borrower which owns a
Property paying Lender the applicable Release Price with respect to that
Property (as set forth in Exhibit A hereto) and the satisfaction of each of the
following conditions, Lender shall release the lien of its Mortgage and
Assignment of Leases with respect to such Property and such Property shall not
be included in the Project for any period thereafter for purposes of the Loan
Documents, and such Borrower shall be released from all obligations of all
remaining Borrowers arising from and after receipt by Lender of the Release
Price and satisfaction of such other conditions:
(i) the Property is sold to a third party who or which is not
an Affiliate of any Borrower or Guarantor, in an arms-
-5-
<PAGE> 7
length transaction, or the Property is refinanced by another lender who is not
an Affiliate of any Borrower or Guarantor;
(ii) the projected Project Yield, as reasonably determined by
Lender for the Project (without taking into account the Property being sold or
refinanced) during the period following the sale or refinancing through the
Maturity Date, or if later for a period of one year following the sale or
refinancing transaction, will equal or exceed thirteen percent (13%);
(iii) no default by any Borrower or Guarantor is then
continuing under this Loan Agreement or any other Loan Document;
(iv) in addition to the Release Price, Borrower shall pay to
Lender concurrently with payment of the Release Price, an amount equal to the
applicable Proportionate Exit Fee set forth in Exhibit A hereto; and
(v) no default by Guarantor or any Affiliate of Guarantor or
of any Borrower is then continuing under any of the Other Finance Documents,
including without limitation, any of the Other Finance Documents listed on
Exhibit E hereto.
"Project Yield" means the quotient of (x) the Net Operating
Income from the Project, as reasonably estimated by Lender, divided by (y) the
then current outstanding principal balance of the Loan plus all accrued but
unpaid interest thereon.
The "Release Price" of each Property shall equal one hundred
twenty-five percent (125%) of the Loan Allocation amount set forth in Exhibit A
hereto for such Property
ARTICLE III
Conditions Precedent
Lender's obligation to disburse the Loan is subject to
satisfaction of all of the following conditions:
3.1. Loan Documents. Lender shall have received the following Loan
Documents, all in form and substance satisfactory to Lender:
(a) this Agreement;
(b) the Note;
(c) the Mortgages;
-6-
<PAGE> 8
(d) the Assignments of Leases;
(e) such Uniform Commercial Code financing statements as
Lender may require;
(f) a Guaranty executed by Balanced Care Corporation, a
Delaware corporation ("Guarantor") in favor of Lender;
(g) a hazardous wastes indemnity agreement ("Environmental
Indemnity"), executed by Borrower and Guarantor;
(h) an assignment of management contract, subordination and
recognition agreement, including a waiver of property management and broker's
liens, executed by Borrower and the Manager, relating to the Management
Contract;
(i) an assignment of permits and licenses relating to the
Project;
(j) with respect to each Property which is subject to a master
lease (a "Master Lease" in favor of an Affiliate of Guarantor (a "Master
Lessee"), (i) a subordination agreement from the Master Lessee, (ii) an
agreement to effect the changes described in Section R-2(t) of the Senior
Housing Rider attached hereto, which agreement shall provide for the automatic
termination of such Master Lease upon effecting such changes, and (iii) a
present assignment (not merely for security) by the Master Lessee to the
Borrower which owns that Property of all leases, occupancy agreements and
licenses affecting the Property, and an agreement to assign to Borrower all such
future leases, occupancy agreements and licenses entered into by Master Lessee
concurrently therewith; and
(k) amendments to existing mortgages and deeds of trust
encumbering properties owned by Affiliates of Guarantor to, among other things,
provide cross-collateralization as additional security for the Indebtedness.
3.2. Borrower's Equity. On the Closing Date, Borrower shall have
invested cash equity in the Project in an amount not less than Thirteen Million
Two Hundred Thousand and No/100 Dollars ($13,200,000.00) ("Borrower's Equity").
3.3. Appraisal. Lender shall obtain an appraisal report for the
Project, in form and content acceptable to Lender, prepared by an independent
MAI appraiser in accordance with the Financial Institutions Reform, Recovery and
Enforcement Act ("FIRREA") and the regulations promulgated pursuant to such act.
-7-
<PAGE> 9
3.4. Title Policy and Endorsements. Lender shall have received a
commitment for title insurance in an amount and issued by a title insurance
company satisfactory to Lender. On the Closing Date, Lender shall receive a
title insurance policy ("Title Policy"), acceptable to Lender, insuring
marketability of title and insuring that the lien of each of the Mortgages is a
valid first lien on each of the Properties and the Improvements thereon, subject
only to exceptions to title approved by Lender. The Title Policy shall also
contain any reinsurance and endorsements required by Lender including without
limitation creditors' rights, zoning 3.1, survey, access, variable rate, usury,
last dollar, first loss, tying and extended coverage endorsements (Comprehensive
Form 1).
3.5. Survey. Lender shall have received and approved a survey of each
of the Properties and the Improvements thereon, dated no more than forty-five
(45) days prior to the Closing Date, prepared by registered land surveyors in
accordance with the 1992 American Land Title Association/ American Congress on
Surveying and Mapping Standards and certified in favor of Lender and the title
insurer. The surveyors shall certify that each Property is not in a flood hazard
area as identified by the Secretary of Housing and Urban Development (or if it
does state that a Property is in a flood hazard area, Borrower shall maintain
flood insurance with respect to that Property in amounts reasonably acceptable
to Lender and otherwise in compliance with the Mortgage). The surveys shall be
sufficient for the title insurer to remove the general survey exception.
3.6. Environmental Report. Lender shall have received a Phase I
Environmental audit of the Project. The audit shall (i) be addressed to Lender;
(ii) state that Lender may rely thereon; and (iii) be acceptable to Lender in
its sole discretion.
3.7. Leases. All leases, licenses and other agreements with regard to
the occupancy of each of the Properties, including patient and resident care
agreements and service agreements which include an occupancy agreement
("Leases") shall be in form and substance reasonably acceptable to Lender;
provided Borrower need not seek Lender's approval for the form of any Qualified
Non-residential Lease. Borrower shall submit for Lender's approval a copy of the
form of residential Lease Borrower proposes to utilize at each of the
Properties, and all residential Leases entered into after the Closing Date shall
be on forms reasonably approved by Lender without material modification. Lender
must approve all non-residential Leases of any part of the Project; provided,
however, Lender's approval shall not be required, nor shall Lender's approval of
the form of Lease be required, for
-8-
<PAGE> 10
(but Borrower shall provide Lender with a copy of) the execution, amendment,
surrender or termination of any Lease of non-residential space with an occupant
thereof entered into hereafter which provides for market rentals and otherwise
contains market terms and provisions, so long as such Lease is not entered into
with Guarantor or any of its or Borrower's Affiliates, does not have a term
(including extension options in favor of lessee) in excess of five years, and
will not (in Lender's reasonable estimation) account for Ten Thousand and No/100
Dollars ($10,000.00) or more of Gross Revenue for that Property in any one-year
period (a "Qualified Non-residential Lease"). The attached Exhibit B, which
Borrower will update through the Closing Date, describes all existing Leases. On
the Closing Date, all existing Leases shall be in full force and effect and
Borrower shall submit a revised and recertified rent roll for each of the
Properties.
3.8. Insurance. Borrower shall have provided Lender with and Lender
shall have approved copies of certificates evidencing the insurance policies
required to be delivered pursuant to the Mortgages.
3.9. Compliance with Laws. Borrower shall have submitted and Lender
shall have approved (a) a final certificate of occupancy (or the equivalent) for
each of the Properties and the Improvements thereon, (b) evidence satisfactory
to Lender that each of the Properties and the Improvements thereon complies in
all material respects with all applicable laws (including, without limitation,
all building, zoning, density, land use, ordinances, regulations and planning
requirements), covenants, conditions and restrictions, subdivision requirements
(including, without limitation, parcel maps), and environmental impact and other
environmental requirements.
3.10. Commitment Fee. Borrower shall have paid Lender a commitment fee
in the amount of Six Hundred Forty Thousand and No/100 Dollars ($640,000.00)
which commitment fee shall be nonrefundable and shall be deemed fully earned
upon receipt.
3.11. Audit Requirement. Lender shall have determined that the
annualized Net Operating Income (as defined in Schedule I attached hereto) of
the Project is at least Three Million and No/100 Dollars ($3,000,000).
3.12. Management Contract. Lender shall have approved (in Lender's
reasonable discretion) each management contract (collectively, the "Management
Contract") between Guarantor or its Affiliates (as manager of each Property)
(collectively, the
-9-
<PAGE> 11
"Manager") and each Borrower for each Property. So long as no Event of Default
is continuing, each Manager shall be an Affiliate of Guarantor.
3.13. Additional Items. Lender shall have received such other items as
Lender may reasonably require.
ARTICLE IV
Representations and Warranties
As an inducement to Lender to disburse the Loan, Borrower
hereby represents and warrants as follows, which representations and warranties
shall be true as of the date hereof and shall remain true throughout the term of
the Loan:
4.1. Borrower Existence. Each of the Borrowers is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Delaware with its principal place of business at 1215 Manor Drive,
Mechanicsburg, Pennsylvania 17055. Each Borrower is in good standing under the
laws of the State of Delaware and the State where its Property is located. Each
Borrower is authorized to transact business in the State where its Property is
located. The Loan Documents have each been duly authorized, executed and
delivered and each constitutes the duly authorized, valid and legally binding
obligation of Borrower and Guarantor, as the case may be, enforceable against
Borrower and Guarantor, as the case may be, in accordance with their respective
terms, except as enforceability is limited by bankruptcy and similar laws and
general principles of equity.
4.2. Stockholders.
4.2.1. Guarantor. Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with its principal place of business at 1215 Manor Drive, Mechanicsburg,
Pennsylvania 17055. Guarantor owns, directly or indirectly, all of the issued
and outstanding shares of capital stock of each Borrower free and clear of all
liens, claims, and encumbrances and rights of others. Guarantor has full right,
power and authority to execute those Loan Documents to which it is a party.
Guarantor is a publicly traded corporation.
4.2.2. Authority. Each of the President or Chief Executive
Officer of Guarantor acting alone, shall have authority to make all material
business decisions (including a sale or refinance) for each Borrower during the
term of the Loan.
4.3. Intentionally Omitted.
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4.4. Corporate Documents. A true and complete copy of the articles of
incorporation and by-laws of each Borrower and Guarantor and all other documents
creating and governing each Borrower and Guarantor (collectively, the
"Incorporation Documents") have been furnished to Lender. There are no other
agreements, oral or written, among any of the shareholders of any Borrower
relating to any Borrower. The Incorporation Documents were duly executed and
delivered, are in full force and effect, and binding upon and enforceable in
accordance with their terms. The Incorporation Documents of each Borrower
constitute the entire understanding among the shareholders of each Borrower. No
breach exists under the Incorporation Documents and no act has occurred and no
condition exists which, with the giving of notice or the passage of time would
constitute a breach under the Incorporation Documents.
4.5. Other Agreements. No Borrower is in default under any contract,
agreement or commitment to which it is a party. The execution, delivery and
compliance with the terms and provisions of this Agreement and the Loan
Documents will not (i) to the best of Borrower's knowledge, violate any
provisions of law or any applicable regulation, order or other decree of any
court or governmental entity, or (ii) conflict or be inconsistent with, or
result in any default under, any contract, agreement or commitment to which
Borrower is bound. Borrower has delivered to Lender copies of any agreements
(including leases) between any Borrower and any Affiliate of a Borrower or
Guarantor or International related in any way to the Project or any part
thereof, and any other agreements or documents materially affecting the use and
operation of the Project or any part thereof.
4.6. Property. Fee simple title to each Property will be
contemporaneously with the funding of the Loan, owned by Borrower as listed on
Exhibit A hereto, free and clear of all liens, claims, encumbrances, covenants,
conditions and restrictions, security interests and claims of others, except
only Leases listed on Exhibit B hereto and such exceptions as are set forth in
the title insurance policies for the Properties accepted by Lender at the
closing of the Loan (the "Title Policies"). To the best of Borrower's knowledge,
each Property and the Improvements thereon are in compliance in all material
respects with all zoning requirements, building codes, subdivision improvement
agreements, and all covenants, conditions and restrictions of record. The zoning
and subdivision approval of each Property and the right and ability to, use or
operate the Improvements thereon are not in any way dependent on or related to
any real estate other than such Property, except for easements insured under the
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Title Policies. To Borrower's knowledge, there are no, nor are there any alleged
or asserted, violations of law, regulations, ordinances, codes, permits,
licenses, declarations, covenants, conditions, or restrictions of record, or
other agreements relating to the Project, or any part thereof.
4.7. Property Access. Each Property is accessible through fully
improved and dedicated roads accepted for maintenance and public use by the
public authority having jurisdiction, unless otherwise expressly indicated on
the survey of such Property delivered to (and certified in favor of) Lender in
connection with the Closing.
4.8. Utilities. All utility services necessary and sufficient for the
use or operation of each Property and the Improvements thereon are available
including water, storm, sanitary sewer, gas, electric and telephone facilities.
4.9. Flood Hazards/Wetlands. No Property is situated in an area
designated as having special flood hazards as defined by the Flood Disaster
Protection Act of 1973, as amended, or as a wetlands by any governmental entity
having jurisdiction over any Property, unless otherwise expressly indicated on
the survey of such Property delivered to (and certified in favor of) Lender in
connection with the Closing.
4.10. Taxes/Assessments. There are no unpaid or outstanding real estate
or other taxes or assessments on or against any Property or Improvements or any
part thereof, except general real estate taxes not yet due or payable. Copies of
the current general real estate tax bills with respect to each Property and the
Improvements thereon have been delivered to Lender. Said bills cover the entire
Project and do not cover or apply to any other property. There is no pending or
contemplated action pursuant to which any special assessment may be levied
against any portion of the Project.
4.11. Eminent Domain. There is no eminent domain or condemnation
proceeding pending or, to Borrower's knowledge threatened, relating to any part
of the Project.
4.12. Litigation. Except as set forth in Exhibit C, there is no
litigation, arbitration or other proceeding or governmental investigation
pending or, to Borrower's knowledge, threatened against or relating to
Guarantor, Borrower, any stockholder of Borrower or any of their property,
assets, or business, including the Project, which if decided adversely would
affect the business, affairs, assets or financial condition of Borrower,
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Guarantor, any Property or the Improvements thereon or the prospects for
repayment of the Loan.
4.13. Accuracy. Neither this Agreement nor any document, financial
statement, credit information, certificate or statement furnished to Lender by
Borrower or Guarantor contains any untrue statement of a material fact or omits
to state a material fact which would affect Lender's decision to make the Loan.
4.14. Foreign Ownership. Except for foreign ownership of capital stock
of Guarantor, neither Borrower nor any stockholder of Borrower is or will be,
and no legal or beneficial interest of a stockholder of Borrower (other than
Guarantor itself) is or will be held, directly or indirectly, by a "foreign
corporation", "foreign partnership", "foreign trust", "foreign estate", "foreign
person", "affiliate" of a "foreign person" or a "United States intermediary" of
a "foreign person" within the meaning of IRC Sections 897 and 1445, the Foreign
Investments in Real Property Tax Act of 1980, the International Foreign
Investment Survey Act of 1976, the Agricultural Foreign Investment Disclosure
Act of 1978, or the regulations promulgated pursuant to such Acts or any
amendments to such Acts.
4.15. Solvency. Neither Borrower, nor any stockholder of Borrower, nor
Guarantor is insolvent and there has been no: (i) assignment made for the
benefit of the creditors of any of them; (ii) appointment of a receiver for any
of them or for the property of any of them; or (iii) bankruptcy, reorganization,
or liquidation proceeding instituted by or against any of them.
4.16. Financial Statement/No Change. Guarantor has heretofore delivered
to Lender copies of the most current financial statements of Guarantor. Said
financial statements were prepared on a basis consistent with that of preceding
years, and all of such financial statements present fairly the financial
condition of Guarantor as of the dates in question and the results of operations
for the periods indicated. Since the dates of such statements, there has been no
material adverse change in the business or financial condition of Guarantor,
except for the Disclosed Items described on Exhibit E attached hereto. Neither
any Borrower nor Guarantor has any material contingent liabilities not provided
for or disclosed in said financial statements, except for the Disclosed Items
described on Exhibit E attached hereto. Since their creation and prior to the
closing of the acquisition of the Properties and the Loan, there has been no
adverse change in the structure, business operations, credit, prospects or
financial condition of any Borrower. There has been no material adverse change
in the financial condition, operations
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or physical condition of any of the Properties or the Improvements thereon since
the date of the most recent financial information about such Property received
by Lender.
4.17. Single Asset Entities. No Borrower: (i) holds, directly or
indirectly, any ownership interest (legal or equitable) in any real or personal
property other than the interest which it owns in its Property and the
Improvements thereon and certain equipment used in the operation of such
Improvements; (ii) is a shareholder or partner or member of any other entity;
and (iii) conducts any business other than the ownership, management and
operation of its Property and the Improvements thereon.
4.18. No Broker. No brokerage commission or finder's fee is owing to
any broker or finder arising out of any actions or activity of Borrower in
connection with the Loan.
4.19. Year 2000. Borrower has made an assessment of the microchip and
computer-based systems and the software used in its business and based upon such
assessment believes that it will be Year 2000 Compliant by January 1, 2000.
"Year 2000 Compliant" means that all software, embedded microchips and other
processing capabilities utilized by, and material to the business operations or
financial condition of, Borrower are able to interpret, store, transmit, receive
and manipulate data on and involving all calendar dates correctly and without
causing any abnormal ending scenarios in relation to dates in and after the Year
2000. From time to time, at the request of Lender, Borrower shall provide to
Lender such updated information as is requested regarding its efforts to become
Year 2000 Compliant.
ARTICLE V
Affirmative Covenants
5.1. Inspection. Subject to the rights of tenants under Leases approved
by Lender, Lender and its authorized agents may enter upon and inspect the
Project at all reasonable times upon notice given orally or in writing to
Borrower. Lender, at Borrower's reasonable expense, shall retain one or more
independent consultants to periodically (but so long as no Event of Default is
then continuing, not more often than once per calendar year for each Property)
inspect the Project and all documents, drawings, plans, and consultants' reports
relating thereto. On the first (1st) day of each month during the term of the
Loan, Borrower shall pay to Lender, in addition to all other amounts due under
the Loan Documents, the product of Two Hundred Fifty and No/100 Dollars
($250.00) multiplied by the number of
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Properties which remain subject to the Loan Documents (that is, the number of
Properties, initially twelve (12), which have not been released pursuant to
Section 2.2 above), which Lender shall apply against the cost of the aforesaid
inspections.
5.2. Books and Records/Audits. Borrower shall keep and maintain at all
times at Borrower's address stated below (or at Guarantor's address set forth in
the Guaranty), or such other place as Lender may approve in writing, complete
and accurate books of accounts and records adequate to reflect the results of
the operation of the Project on a Property by Property basis (including
computations of Net Cash Flow and Excess Cash Flow) and to provide the financial
statements required to be provided to Lender pursuant to Section 5.3 below and
copies of all written contracts, correspondence, reports of Lender's independent
consultant, if any, and other documents affecting the Project. Lender and its
designated agents shall have the right to inspect and copy any of the foregoing
during normal business hours upon advance notice to Borrower or Guarantor.
Additionally, Lender may audit and determine, in Lender's sole and absolute
discretion, the accuracy of Borrower's records and computations. The costs and
expenses of the audit shall be paid by Borrower if the audit discloses a
monetary variance in any financial information or computation (including the
computation of Net Cash Flow and Excess Cash Flow) equal to or greater than the
greater of: (i) five percent (5%); or (ii) Five Thousand and No/100 Dollars
($5,000.00) more than any computation submitted by Borrower.
5.3. Financial Statements; Balance Sheets. Each Borrower shall furnish
to Lender and shall cause the Guarantor to furnish to Lender such financial
statements and other financial information as Lender may from time to time
request. All such financial statements shall show all material contingent
liabilities and shall accurately and fairly present the results of operations
and the financial condition of each Borrower and/or Guarantor, as applicable, at
the dates and for the period indicated. Without limitation of the foregoing,
Borrower shall furnish to Lender and shall cause Guarantor to furnish to Lender
the following statements:
5.3.1. Monthly and Annual Operating Statements. Statements of
the operation of the Project, on a Property by Property basis (including a
current rent roll, monthly operating statements, monthly delinquency reports and
a monthly schedule of delinquency of receipts and payments) as of the last day
of each month, to be delivered within thirty (30) days after the end of each
month and certified by Borrower as true, correct, and
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complete, and yearly statements of the operation of the Project on a
Property-by-Property basis, to be delivered within ninety (90) days after the
end of each fiscal year and certified by Borrower as true, correct, and
complete.
5.3.2. Annual Balance Sheets and Financial Statements. Annual
balance sheets and financial statements from each Borrower and Guarantor (each
on an unaudited basis) within ninety (90) days of the end of each fiscal year
which are true and correct in all respects, have been prepared in accordance
with sound accounting practices, and fairly present the financial condition(s)
of the person(s) referred to therein as of the date(s) indicated. At Lender's
request, such financial statements shall include, specific information
concerning Guarantor's and its Affiliate's other real estate holdings, including
property income and expenses, debt service requirements and occupancy.
5.3.3. Audits. If Borrower fails to furnish or cause to be
furnished promptly any report required by this Section 5.3, or if Lender
reasonably deems such reports to be unacceptable, Lender may elect (in addition
to exercising any other right and remedy) to conduct an audit of all books and
records of each or every Borrower, Guarantor and/or such Affiliates of Guarantor
which in any way pertain to the Project or own, directly or indirectly, any
interest in a Borrower, and to prepare the statement or statements which
Borrower or Guarantor failed to procure and deliver. Such audit shall be made
and such statement or statements shall be prepared by an independent firm of
certified public accountants to be selected by Lender. Borrower shall pay all
reasonable expenses of such audit and other services, which expenses shall be
immediately due and payable with interest thereon at the default rate contained
in the Note.
5.4. Use of Proceeds. Borrower shall use the proceeds of the Loan for
proper business purposes. No portion of the proceeds of the Loan shall be used
by Borrower in any manner that might cause the borrowing or the application of
such proceeds to violate Regulation G, Regulation U, Regulation T or Regulation
X or any other regulation of the Board of Governors of the Federal Reserve
System or to violate the Securities Act of 1933 or the Securities Exchange Act
of 1934.
5.5. Notice of Litigation or Default. Borrower shall promptly provide
Lender with:
(a) written notice of any litigation, arbitration, or other
proceeding or governmental investigation pending or, to any
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Borrower's or Guarantor's knowledge, threatened against or relating to any
Borrower, Guarantor, any of the Guarantor's Affiliates which own, directly or
indirectly, an interest in a Borrower, or any of the Properties or the
Improvements thereon.
(b) a copy of all notices of default and violations of laws,
regulations, codes, ordinances and the like received by any Borrower or
Guarantor relating to Borrower, the Collateral or the Project or any part
thereof; and
(c) a copy of all notices sent to or received from a Manager
under a Management Agreement.
5.6. Affiliate Transactions. Prior to entering into any agreement with
an Affiliate pertaining to the Project or any part thereof, Borrower shall
deliver to Lender a copy of such agreement, which shall be satisfactory to
Lender in its sole reasonable discretion. If requested by Lender, such agreement
shall provide Lender the right to terminate it upon Lender's (or its designee's)
acquisition of the Project or any part thereof through foreclosure, a
deed-in-lieu of foreclosure, UCC sale or otherwise.
"Affiliate" means with respect to any individual, trust, estate,
partnership, limited liability company, corporation or any other incorporated or
unincorporated organization (each a "Person"), a Person that directly or
indirectly, through one or more intermediaries, controls or is controlled by or
is under common control with any Borrower, Guarantor or International, or any
officer, director, partner or shareholder of any Borrower, Guarantor or
International, or any relative of any of the foregoing. The term "control" means
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
5.7. Advertisement. Borrower agrees to allow Lender to advertise in the
various news or financial media that Heller has provided financing to Borrower.
5.8. Replacement Reserve. At the time of and in addition to the monthly
installments of interest and, if applicable, principal, due under the Note,
Borrower shall pay to Lender an amount equal to the product of Twenty-Five and
No/100 Dollars ($25.00) multiplied by the number of units in the entire Project
(the "Replacement Reserve"). The Replacement Reserve may be commingled with the
general funds of Lender, and no interest shall be payable thereon nor shall
these sums be deemed to be
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held in trust for the benefit of Borrower. On the Maturity Date, the monies then
remaining on deposit with Lender shall, at Lender's option, be applied against
the Indebtedness or if no Event of Default is continuing, returned to Borrower.
So long as there is no Event of Default, Borrower may request Lender to disburse
funds from the Replacement Reserve (which request will include a reasonably
detailed description of the capital expenditures at a Property Borrower intends
to pay for with such funds), which request shall not be unreasonably denied by
Lender. If requested by Lender, each disbursement request will be accompanied by
copies of invoices, lien waivers and other evidence reasonably required by
Lender.
5.9. Repair Reserve. On the Closing Date, Borrower shall deposit with
Lender the sum of Sixty-Five Thousand and No/100 Dollars ($65,000.00) (the
"Repair Deposit"). The Repair Deposit may be commingled with the general funds
of Lender, and such sum shall not be deemed to be held in trust for Borrower. No
interest shall be due Borrower with respect to the Repair Deposit. Borrower
shall cause the repairs described on Exhibit F attached hereto to be completed
promptly (taking into account the nature of the matter) after the Closing Date.
Upon completion of such required repairs, and confirmation thereof satisfactory
to Lender, Lender shall, so long as no Event of Default is then continuing,
disburse the Repair Deposit to Borrower. If any such funds are being held by
Lender on the Maturity Date, then Lender may, at its option, apply such funds to
the Indebtedness, or so long as no Event of Default is continuing, return such
funds to Borrower. In addition to the repairs described on Exhibit F, Borrower
shall, at Borrower's expense, (i) have additional testing for radon gas
performed by EMG at the Property located in Reedsville, Pennsylvania, such
testing to be completed and copies of all test results and reports thereof to be
delivered to Lender within thirty (30) days after the date hereof, and (ii)
follow the recommendations of EMG attached hereto as Exhibit G with respect to
radon gas at such Property, as EMG may modify its recommendations after taking
into account subsequent testing.
ARTICLE VI
Negative Covenants
6.1. No Amendments. Borrower shall not (without Lender's prior written consent,
which Lender shall not unreasonably withhold) amend, modify or terminate, or
permit the amendment, modification or termination of:
(a) the Articles of Incorporation or Bylaws of any Borrower;
or
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(b) any Management Agreement.
6.2. No Additional Indebtedness. No Borrower shall, without Lender's
prior written consent, incur additional indebtedness, except for Senior Personal
Property Interests (as defined in its Mortgage) and trade payables in the
ordinary course of business.
6.3. Intentionally Omitted.
6.4. Property Manager. Borrower shall not change the Manager or amend
or terminate the Management Contract for any Property without Lender's prior
written consent, which shall not be unreasonably withheld.
6.5. Lienable Work. No excavation, construction, earth work, site work
or any other mechanic's lienable work shall be done to or for the benefit of the
Project or any part thereof, without Lender's approval (which approval will not
be unreasonably withheld), except for normal repair and maintenance in the
ordinary course of business.
6.6. Conversion. Borrower shall not, and shall not permit, the Project
or any portion thereof to be converted or take any preliminary actions which
could lead to a conversion to condominium or cooperative form or ownership.
6.7. Use of Project. Unless required by applicable law, Borrower shall
not permit changes in the use of any part of the Project from the use existing
at the Closing Date. Borrower shall not initiate or acquiesce in a change in the
plat of subdivision, or zoning classification of any Property without Lender's
prior written consent.
ARTICLE VII
Events of Default; Acceleration of Indebtedness; Remedies
7.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" under this Agreement:
(a) Failure of Borrower to pay, within ten (10) days of the
due date, any of the payment obligations of a Borrower to Lender
("Indebtedness"), including any payment due under the Note, this Agreement or
the other Loan Documents; or
(b) Failure of Borrower to strictly comply with the provisions
of Section 4.17 (single asset entity) or 5.1 (inspection) of this Agreement; or
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(c) Breach of any covenant, representation or warranty other
than as set forth in subsections (a) and (b) above which is not cured within
thirty (30) days after notice; provided, however, if such breach cannot by its
nature be cured within thirty (30) days, and Borrower diligently pursues the
curing thereof (and then in all events cures such failure within ninety (90)
days after the original notice thereof), Borrower shall not be in default
hereunder; or
(d) A petition under any Chapter of Title 11 of the United
States Code or any similar law or regulation is filed by or against Borrower or
Guarantor (and in the case of an involuntary petition in bankruptcy, such
petition is not discharged within sixty (60) days of its filing), or a
custodian, receiver or trustee for any of the Project is appointed, or Borrower
or Guarantor makes an assignment for the benefit of creditors, or any of them
are adjudged insolvent by any state or federal court of competent jurisdiction,
or any of them admit their insolvency or inability to pay their debts as they
become due or an attachment or execution is levied against any of the Project;
or
(e) The occurrence of a default and the expiration of any cure
period applicable thereto under any Loan Document; or
(f) Borrower shall default in the payment of any indebtedness
in excess of $10,000.00 (other than the Indebtedness) and such default is
declared and is not cured within the time, if any, specified therefor in any
agreement governing the same; or
(g) Any statement, report or certificate made or delivered to
Lender by Borrower or any Principal is not materially true and complete at any
time; or
(h) The occurrence of a default under the Management Agreement
which continues beyond the expiration of any applicable cure period thereunder;
or
(i) The occurrence of a default which default continues
uncured beyond any applicable cure period under any other loan agreement, note,
mortgage, deed of trust, security agreement, guaranty or other instrument,
document or agreement (collectively, the "Other Finance Documents") executed and
delivered by Guarantor, a Borrower or any Affiliate of Guarantor or a Borrower,
which evidences, secures or was delivered in connection with any other loan,
line of credit or other financing provided by Lender to any such party, whether
now existing or hereafter arising, including without limitation, the
instruments, documents and agreements listed on Exhibit E attached to this
Agreement; or
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(j) All of the issued and outstanding capital stock of any
Borrower (and any and all rights thereto or therein, including without
limitation, warrants or options) ceases to be wholly owned, directly or
indirectly, by Guarantor; or
(k) The occurrence of a default by a Borrower, Guarantor or
any Affiliate of a Borrower or Guarantor under any lease, agreement, instrument
or documents evidencing or securing any Senior Movable Personal Property
Interests (as defined in the Mortgages), which default continues uncured beyond
any applicable cure period.
7.2. Acceleration; Remedies. Upon the occurrence of an Event of Default
at the option of Lender, the Indebtedness shall become immediately due and
payable without notice to Borrower and Lender shall be entitled to all of the
rights and remedies provided in the Loan Documents or at law or in equity. Each
remedy provided in the Loan Documents is distinct and cumulative to all other
rights or remedies under the Loan Documents or afforded by law or equity, and
may be exercised concurrently, independently, or successively, in any order
whatsoever.
ARTICLE VIII
Miscellaneous
8.1. Expenditures and Expenses. Borrower shall promptly pay all
reasonable Costs (defined below) incurred by Lender in connection with the
post-Closing matters contemplated by the Loan Documents, documentation,
modification, workout, collection or enforcement of the Loan or any of the Loan
Documents (as applicable) and all such Costs shall be included as additional
Indebtedness bearing interest at the Default Rate set forth in the Note until
paid; provided, no interest shall accrue for thirty (30) days on any Costs not
incurred or arising as a result of a default under any Loan Document. For the
purposes hereof "Costs" means all reasonable expenditures and expenses which may
be paid or incurred by or on behalf of Lender including repair costs, payments
to remove or protect against liens, attorneys' fees (including fees of Lender's
inside counsel), receivers' fees, engineers' fees, accountants' fees,
independent consultants' fees (including environmental consultants), all costs
and expenses incurred in connection with any of the foregoing, Lender's
out-of-pocket costs and expenses related to any audit or inspection of the
Project, outlays for documentary and expert evidence, stenographers' charges,
stamp taxes, publication costs, and costs (which may be estimates as to items to
be expended after entry of an order or judgment) for procuring
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all such abstracts of title, title and UCC searches, and examination, title
insurance policies, Torrens' Certificates (if applicable) and similar data and
assurances with respect to title as Lender may deem reasonably necessary either
to prosecute any action or to evidence to bidders at any foreclosure sale of the
Project or any part thereof the true condition of the title to, or the value of,
the Project or any part thereof.
8.2. Disclosure of Information. Lender shall have the right (but shall
be under no obligation) to make available to any party for the purpose of
granting participations in or selling, transferring, assigning or conveying all
or any part of the Loan (including any governmental agency or authority and any
prospective bidder at any foreclosure sale of the Project or any part thereof)
any and all information which Lender may have with respect to the Project, any
Borrower or Guarantor or any of their Affiliates, whether provided by Borrower,
Guarantor or any third party or obtained as a result of any environmental
assessments. Borrower and Guarantor agree that Lender shall have no liability
whatsoever as a result of delivering any such information to any third party,
and each Borrower and Guarantor, on behalf of themselves and their successors
and assigns, hereby release and discharge Lender from any and all liability,
claims, damages, or causes of action, arising out of, connected with or
incidental to the delivery of any such information to any third party.
8.3. Sale of Loan. Lender, at any time and without the consent of
Borrower or the Guarantor, may grant participations in or sell, transfer, assign
and convey all or any portion of its right, title and interest in and to the
Loan, this Agreement and the other Loan Documents, any guaranties given in
connection with the Loan and any collateral given to secure the Loan.
8.4. Forbearance by Lender Not a Waiver. Any forbearance by Lender in
exercising any right or remedy under any of the Loan Documents, or otherwise
afforded by applicable law, shall not be a waiver of or preclude the exercise of
any right or remedy. Lender's acceptance of payment of any sum secured by any of
the Loan Documents after the due date of such payment shall not be a waiver of
Lender's right to either require prompt payment when due of all other sums so
secured or to declare a default for failure to make prompt payment. The
procurement of insurance or the payment of taxes or other liens or charges by
Lender shall not be a waiver of Lender's right to accelerate the maturity of the
Loan, nor shall Lender's receipt of any awards, proceeds, or damages under
Section 4 of any Mortgage operate to cure or waive Borrower's or Guarantor's
default in payment of sums secured by any of the Loan Documents. With respect to
all Loan Documents,
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only waivers made in writing by Lender shall be effective against Lender.
8.5. Governing Law; Severability. The Loan Documents shall be governed
by and construed in accordance with the internal laws of the State of Illinois,
except that the provisions of the laws of the State where each Property is
located shall be applicable to the creation, perfection and enforcement of the
lien created by the Mortgage on such Property. The invalidity, illegality or
unenforceability of any provision of this Agreement shall not affect or impair
the validity, legality or enforceability of the remainder of this Agreement, and
to this end, the provisions of this Agreement are declared to be severable.
8.6. Relationship. The relationship between Lender and Borrower shall
be that of creditor-debtor only. No term in this Agreement or in the other Loan
Documents and no course of dealing between the parties shall be deemed to create
any relationship of agency, partnership or joint venture or any fiduciary duty
by Lender to any other party.
8.7. Indemnity. Borrower shall indemnify, protect, hold harmless and
defend Lender, its successors, assigns, shareholders, directors, officers,
employees, and agents from and against any and all loss, damage, cost, expense
(including reasonable attorneys' fees), and claims arising out of or in
connection with (a) the Project, (b) the Collateral, (c) any act or omission of
any Borrower, Guarantor, Manager, or their respective employees or agents,
whether actual or alleged, and (d) any and all brokers' commissions or other
costs of similar type by any party in connection with the Loan, in each case
except to the extent arising from the indemnitee's gross negligence or willful
misconduct. Upon written request by an indemnitee, Borrower will undertake, at
its own cost and expense, on behalf of such indemnitee, using counsel reasonably
satisfactory to the indemnitee, the defense of any legal action or proceeding
whether or not such indemnitee shall be a party and for which such indemnitee is
entitled to be indemnified pursuant to this section. At Lender's option, Lender
may, at Borrower's expense, prosecute or defend any action involving the
priority, validity or enforceability of any of the Loan Documents.
8.8. Notice. Any notice or other communication required or permitted to
be given shall be in writing addressed to the respective party as set forth
below and may be personally served, telecopied or sent by overnight courier or
U.S. Mail and shall be deemed given: (a) if served in person, when served; (b)
if telecopied, on the date of transmission if before 3:00 p.m.
-23-
<PAGE> 25
(Chicago time) on a business day; provided that a hard copy of such notice is
also sent pursuant to (c) or (d) below; (c) if by overnight courier, on the
first business day after delivery to the courier; or (d) if by U.S. Mail,
certified or registered mail, return receipt requested on the fourth (4th) day
after deposit in the mail postage prepaid.
Notices to Borrower: Balanced Care Corporation
1215 Manor Drive
Mechanicsburg, Pennsylvania 17055
Attn: Clint Fegan, Chief Financial Officer
Telecopy: (717) 796-6150
With a copy to: Balanced Care Corporation
1215 Manor Drive
Mechanicsburg, Pennsylvania 17055
Attn: General Counsel
Telecopy: (717) 796-6294
And a copy to: Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, Pennsylvania 15222
Attn: Steven J. Adelkoff, Esq.
Telecopy: (412) 355-6501
Notices to Lender: Heller Healthcare Finance, Inc.
Loan No. 99-407
2 Wisconsin Circle, Suite 400
Chevy Chase, Maryland 20815
Attn: Ethan D. Leder, President
Telecopy: (301) 664-9866
With a copy to: Heller Healthcare Finance, Inc.
2 Wisconsin Circle, Suite 400
Chevy Chase, Maryland 20815
Attn: General Counsel
Telecopy: (301) 664-9866
And a copy to: Heller Financial, Inc.
Real Estate Financial Services
Loan No. 99-407
Attn: Group General Counsel
500 West Monroe Street, 31st Floor
Chicago, Illinois 60661
Telecopy: (312) 441-7872
8.9. Successors and Assigns Bound; Joint and Several Liability; Agents;
and Captions. The covenants and agreements
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<PAGE> 26
contained in the Loan Documents shall bind, and the rights thereunder shall
inure to, the respective successors and assigns of Lender, Borrower and
Guarantor, subject to the provisions of this Agreement. All covenants and
agreements of each Borrower and Guarantor shall be joint and several. In
exercising any rights under the Loan Documents or taking any actions provided
for therein, Lender may act through its employees, agents or independent
contractors as authorized by Lender. The captions and headings of the paragraphs
and sections of this Agreement are for convenience only and are not to be used
to interpret or define the provisions hereof.
8.10. Terms and Usage. As used in the Loan Documents "business day"
means any day, other than a Saturday or a Sunday, when banks in Chicago,
Illinois are not required or authorized to be closed.
8.11. Intentionally Omitted.
8.12. Time of Essence. Time is of the essence of this Agreement and the
other Loan Documents and the performance of each of the covenants and agreements
contained herein and therein.
8.13. Venue. BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE
OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND
IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. BORROWER EXPRESSLY SUBMITS AND
CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS. BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWER BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER,
AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE
TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
8.14. Jury Trial Waiver. BORROWER AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR
RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY BORROWER AND LENDER, AND
BORROWER ACKNOWLEDGES THAT NEITHER LENDER NOR ANY PERSON ACTING ON BEHALF OF
LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY
JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.
BORROWER
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<PAGE> 27
AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH OF THEM HAS ALREADY RELIED ON THIS WAIVER IN
ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT EACH OF THEM
WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWER
AND LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE
OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
8.15. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, and together shall
constitute the Agreement.
8.16. Final Agreement/Modification. This Agreement (including the
Senior Housing Rider attached hereto and hereby made a part hereof), together
with the other Loan Documents, represents the entire agreement among Borrower,
Guarantor and Lender and supersedes all prior agreements among the parties with
respect to the Loan. This Agreement and the other Loan Documents may only be
modified by written instrument executed by the applicable parties.
-26-
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or has caused the same to be executed by their duly authorized
representatives as of the date first above written.
BORROWER:
BALANCED CARE REALTY AT STATE
COLLEGE, INC., a Delaware corporation
By /s/Clint T. Fegan
Name Clint T. Fegan
Its VP-CFO
BALANCED CARE REALTY AT ALTOONA,
INC., a Delaware corporation
By /s/Clint T. Fegan
Name
Its
BALANCED CARE REALTY AT LEWISTOWN,
INC., a Delaware corporation
By /s/Clint T. Fegan
Name
Its
BALANCED CARE REALTY AT READING,
INC., a Delaware corporation
By /s/Clint T. Fegan
Name
Its
BALANCED CARE REALTY AT BERWICK,
INC., a Delaware corporation
By /s/Clint T. Fegan
Name
Its
BALANCED CARE REALTY AT PECKVILLE,
INC., a Delaware corporation
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<PAGE> 29
By /s/Clint T. Fegan
Name
Its
BALANCED CARE REALTY AT SCRANTON,
INC., a Delaware corporation
By /s/Clint T. Fegan
Name
Its
BALANCED CARE REALTY AT MARTINSBURG,
INC., a Delaware corporation
By /s/Clint T. Fegan
Name
Its
BALANCED CARE REALTY AT MAUMELLE,
INC., a Delaware corporation
By /s/Clint T. Fegan
Name
Its
BALANCED CARE REALTY AT SHERWOOD,
INC., a Delaware corporation
By /s/Clint T. Fegan
Name
Its
BALANCED CARE REALTY AT MOUNTAIN HOME,
INC., a Delaware corporation
By /s/Clint T. Fegan
Name
Its
BALANCED CARE REALTY AT MANSFIELD,
INC., a Delaware corporation
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<PAGE> 30
By /s/Clint T. Fegan
Name
Its
LENDER:
HELLER HEALTHCARE FINANCE, INC.,
a Delaware corporation
By /s/Kevin J. McMeen
Name Kevin J. McMeen
Its Sr. V.P.
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<PAGE> 31
SCHEDULE I
CALCULATION OF NET OPERATING INCOME
"Net Operating Income" means annualized Revenue less Expenses, all as determined
by Lender in its sole discretion.
"Revenue" means the lesser of (i) annualized Adjusted Actual Rent or (ii)
annualized Monthly Effective Rent. In determining Revenue, the occupancy factor
utilized shall be the lesser of (a) actual occupancy, or (b) an assumed
ninety-three percent (93%) occupancy rate.
"Adjusted Actual Rent" means (a) all amounts collected from tenants of the
Property for the most current three (3) months, excluding corporate apartment
income, pet fees, redecorating fees and other income (unless specifically
included below), percentage rents, nonrecurring income and non-property related
income (as determined by Lender in its sole discretion) and income from tenants
(i) that are thirty (30) or more days delinquent, (ii) that are in bankruptcy
(even if current), (iii) non-residential tenants whose leases terminate within
six (6) months (as adjusted for space re-leased upon terms acceptable to Lender
in its sole discretion) and (iv) that have been delinquent four (4) or more
times during the past twelve (12) months, and (b) other revenue not to exceed
ten percent (10%) of the amounts included in clause (a) above for laundry,
vending, parking and other occupancy payments (but excluding late fees and
interest income) based upon collections for the previous twelve (12) months.
"Monthly Effective Rent" means an amount equal to (x) total rent due over the
term of the leases less any payments or concessions which Lender, in its sole
discretion, deems to be a rent concession, divided by (y) the total number of
months in the leases.
"Expenses" means actual and customary operating expenses on a stabilized accrual
basis for the previous twelve (12) month period (as reasonably adjusted by
Lender), including: (i) recurring expenses (e.g., tenant improvements, leasing
commissions, carpeting replacement, appliance and drapery replacement and such
others as determined by Lender), (ii) real estate taxes, (iii) management fees
(whether paid or not) in an amount not less than five percent (5%) of effective
gross income, and (iv) a replacement reserve (whether reserved or not) of not
less than Three Hundred and No/100 Dollars ($300.00) per unit.
-30-
<PAGE> 1
Exhibit 10.5
SERIES ONE 1999 BCC DISCOUNT NOTE
Maturity Value: $7,424,580.00 December 29, 1999
FOR VALUE RECEIVED, BALANCED CARE CORPORATION, a Delaware corporation (the
"Maker"), having an address at 1215 Manor Drive, Mechanicsburg, Pennsylvania
17055, promises to pay to the order of FRR Investments Limited, a Cayman Island
corporation ("FRR") (FRR and each successor, owner, endorsee, bearer and holder
of this Note being hereinafter referred to as the "Holder") at its principal
place of business located at C/O Unsworth & Associates, Herengracht 483, 1017
BT, Amsterdam, Netherlands, Attn: J.B. Unsworth or at such other place as the
Holder of this Note may from time to time designate in writing, in lawful money
of the United States of America, in immediately available Federal funds or the
equivalent, the sum of SEVEN MILLION, FOUR HUNDRED TWENTY-FOUR THOUSAND, FIVE
HUNDRED EIGHTY AND XX/100 DOLLARS ($7,424,580.00) (the "Loan Amount"). The loan
evidenced hereby is issued at a discount, with the issue price being $7,000,000.
The sums advanced hereunder shall be used by the Maker to fund the equity
capital needs of the Realty Companies (as hereinafter defined).
1. Terms of Payment. On June 26, 2000 (the "Maturity Date"), the Maker
shall pay to the Holder the full Maturity Value, together with any costs,
charges and other amounts due under this Note. All payments hereunder received
by the Holder shall be applied by the Holder, without any marshalling of assets,
towards payment of the Maker's obligations hereunder in the following order: (i)
first, to all costs and expenses required to be paid by the Maker under the Loan
Documents (as hereinafter defined), (ii) second, to all discount then due and
payable, (iii) third to all principal amounts owed and (iv) excess, if any,
shall be repaid to Maker.
2. Interest Rate. Since this Note is issued at a discount, except as
otherwise expressly provided in Paragraph 3 or Paragraph 4 hereof, no interest
shall accrue on the Maturity Value of this Note. The yield on this Note is
12.6829% per annum (the "Yield").
3. Acceleration of Maturity. Any one or more of the following events shall
be an "Event of Default":
<PAGE> 2
(a) the failure to pay any sum due under this Note on the date when
such payment is due;
(b) if the Maker shall (i) voluntarily be adjudicated a bankrupt or
insolvent, (ii) seek or consent to the appointment of a receiver or trustee for
itself or for any of its properties, (iii) file a petition seeking relief under
the bankruptcy or other similar laws of the United States or any other country,
any state or any other jurisdiction, (iv) make a general assignment for the
benefit of creditors, or (v) make or offer a composition of its debts with
substantially all of its creditors;
(c) if any court shall enter an order, judgment or decree
appointing, without the consent of the Maker, a receiver or trustee for such
entity or for any of its properties, and such order, judgment or decree shall
remain in force, undischarged or unstayed, ninety (90) days after it is entered;
(d) if any petition is filed against the Maker which seeks relief
under the bankruptcy or other similar laws of the United States, any other
country, any state or any other jurisdiction and such petition is not dismissed
within ninety (90) days after it is filed; or
(e) Maker shall otherwise default under any other Loan Document
beyond the applicable grace or cure period.
Upon the occurrence of an Event of Default, at the option of the Holder,
which may be exercised at any time after an Event of Default shall have
occurred, the entire Maturity Value less any discount not yet accrued at the
Yield provided for in this Note, together with all costs, charges and other
amounts due under this Note, shall immediately become due and payable and upon
such acceleration, all amounts due hereunder shall bear interest equal to
eighteen percent (18%) per annum (the "Default Rate"). Upon the occurrence of an
Event of Default, the Holder shall be entitled to pursue, in addition to the
remedies provided under this Note, all other remedies available in law or in
equity, as well as all remedies available under the other Loan Documents.
Remedies may be exercised by the Holder concurrently or in the alternative, and
the exercise of one remedy by the Holder shall not prevent the Holder from
exercising any other remedy available at law, at equity or under the Loan
Documents.
4. Late Charges; Interest Following Certain Events. In the event of any
delinquency in the payment of any monetary obligation under this Note (a "Late
Payment"), the Maker shall
2
<PAGE> 3
pay the Holder a late payment charge of Two Hundred Fifty Dollars ($250) (a
"Late Payment Charge") for the month during which such delinquency occurs and
for each month (or portion of the month) thereafter that the Late Payment
remains unpaid, for the purpose of defraying the expenses incurred by the Holder
in handling and processing such Late Payments. In addition to any Late Payment
Charges which may become due hereunder, the Maker shall pay interest on any Late
Payment, calculated at the Default Rate, from the date upon which the Late
Payment was originally due until the date that the Holder actually receives such
Late Payment. It is understood that nothing contained in this Paragraph 4 shall
be deemed to relieve the Maker of its obligations to make any and all payments
due and payable to the Holder pursuant to the provisions of this Note upon the
dates set forth herein, it being acknowledged that time is of the essence.
5. Collection and Enforcement Costs. Upon demand, the Maker shall
reimburse the Holder for all reasonable costs and expenses, including, without
limitation, reasonable attorneys' fees and expenses and court costs, paid or
incurred by the Holder in connection with the collection of any sum due
hereunder, or in connection with the enforcement of any of the Holder's rights
or the Maker's obligations under this Note or the other Loan Documents. Any
amount due and payable to the Holder pursuant to the provisions of this
Paragraph 5 shall bear interest at the Default Rate.
6. Continuing Liability. The obligation of the Maker to pay the
outstanding principal balance, interest and all other costs, charges and sums
due hereunder shall continue in full force and effect and in no way shall be
impaired, until the actual payment thereof to the Holder.
7. Security/Other Loan Documents. This Note is the Note referred to in,
and is entitled to the benefits of, (a) an Indemnification, Defense, Hold
Harmless and Reimbursement Agreement of even date herewith (the "Indemnification
Agreement") between the Maker and IPC Advisors S.a.r.l., a Luxembourg
corporation ("IPC") and (b) a Stock Pledge Agreement (the "Stock Pledge") to be
executed by the shareholders of Balanced Care Realty at Altoona, Inc., Balanced
Care Realty at Berwick, Inc., Balanced Care Realty at Lewistown, Inc., Balanced
Care Realty at Peckville, Inc., Balanced Care Realty at Reading, Inc., Balanced
Care Realty at Scranton, Inc., Balanced Care Realty at Mansfield, Inc., Balanced
Care Realty at Mountain Home, Inc., Balanced Care Realty at Sherwood, Inc.,
Balanced Care Realty at Maumelle, Inc., Balanced Care Realty at Martinsburg,
Inc. and Balanced Care
3
<PAGE> 4
Realty of State College, Inc., (each a "Realty Company" and collectively the
"Realty Companies") whereby such shareholders will agree to pledge their entire
right, title and interest in and to all outstanding shares of stock in each
Realty Company to IPC and FRR. The Indemnification Agreement, the Stock Pledge
(at such time the same is executed and delivered by the parties thereto) and
this Note, and all writings entered into between Maker, any of the Realty
Companies, FRR and/or IPC in connection with any of the foregoing, are
collectively referred to herein as the "Loan Documents".
8. Amendments, Waivers and Modifications. None of the terms, covenants,
conditions, warranties or representations contained in this Note may be renewed,
replaced, amended, modified, extended, substituted, revised, waived,
consolidated or terminated, except by an agreement, in writing, signed by the
Person against whom enforcement is sought.
9. Waivers. The Maker and each endorser, surety and guarantor hereof,
jointly and severally, waive presentment for payment, demand, notice of
nonpayment, notice of dishonor, protest of any dishonor, suretyship defenses,
notice of protest and protest of this Note, and all other notices in connection
with the delivery, acceptance, performance, default (except notice of default as
specifically elsewhere herein required), or enforcement of the payment of this
Note, and agree that the liability of each of them shall be unconditional
without regard to the liability of any other party and shall not be in any
manner affected by any indulgence, extension of time, renewal, waiver or
modification granted or consented to by the Holder; and the Maker and all
endorsers, sureties and guarantors hereof consent to any and all extensions of
time, renewals, waivers or modifications that may be granted or consented to by
the Holder with respect to the payment or performance of any obligations under
this Note, and agree that additional makers, endorsers, guarantors or sureties
may become parties hereto without notice to them or affecting their liability
hereunder.
10. Contribution. No Person obligated on account of this Note may seek
contribution from any other Person also obligated unless and until all
liabilities, obligations and indebtedness to the Holder of the Person from whom
contribution is sought have been satisfied in full.
11. Indemnification. With the exception of any claim arising out of an
action brought by the Maker against the Holder in which a final decision is
issued by a court in favor of the Maker and all appeal periods having lapsed or
been exhausted, the
4
<PAGE> 5
Maker, and each endorser, surety and guarantor of this Note, shall indemnify,
defend (with counsel reasonably acceptable to the Holder), and hold the Holder
harmless against any claim brought or threatened against the Holder by the
Maker, by any endorser, surety or guarantor, or by any other Person on account
of the Holder's relationship with the Maker or any endorser, surety or guarantor
hereof. The aforesaid indemnification agreement shall include, without
limitation, reasonable attorneys' fees and expenses and court costs incurred by
the Holder in connection with any such claims and with the enforcement of said
indemnification.
12. Successors and Assigns. This Note shall be binding on and inure to the
benefit of (a) the Maker and the Maker's permitted successors and assigns and
(b) inure to the benefit of the Holder and its successors and assigns.
Notwithstanding the foregoing, the Maker shall not assign or otherwise transfer
this Note or any of its rights or obligations hereunder without the express
written consent of the Holder, in each instance, which consent may be withheld
in the Holder's sole and absolute discretion.
13. Applicable Law. This Note is being negotiated and delivered in
Pennsylvania and shall be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania, excluding its conflicts of law principles.
14. Invalidity. If any provision of this Note or the application thereof
to any Person or circumstance shall, for any reason and to any extent, be
invalid or unenforceable, neither the remainder of this Note, nor the
application of such provision to any other Person or circumstance shall be
affected thereby, but rather the same shall be enforced to the maximum extent
permitted by law. Notwithstanding the foregoing, it is the intention of the
Maker and the Holder that if any provision of this Note is capable of two (2)
constructions, one of which would render the provision void and the other of
which would render the provision valid, then such provision shall be construed
in accordance with the construction which renders such provision valid.
15. Usury. In the event that fulfillment of any provision of this Note, at
the time performance of such provision shall be due and as a result of any
circumstance, shall involve transcending the limit of validity presently or
hereinafter prescribed by any applicable usury statute or any other law, with
regard to obligations of like character and amount, then ipso
5
<PAGE> 6
facto the obligation to be fulfilled shall be reduced to the limit of such
validity, so that in no event shall any exaction be possible under this Note
that is in excess of the limit of such validity. In no event shall the Maker be
bound to pay for the use, forbearance or detention of the money loaned pursuant
hereto, interest of more than the maximum rate, if any, permitted by law to be
charged by the Holder; the right to demand any such excess being hereby
expressly waived by the Holder.
16. Notice. Any notice, request, demand, statement or consent made
hereunder shall be in writing and shall be deemed duly given if personally
delivered, sent by certified mail, return receipt requested, or sent by a
nationally recognized commercial overnight delivery service with provision for a
receipt, postage or delivery charges prepaid, and shall be deemed given when
postmarked or placed in the possession of such mail or delivery service and
addressed as follows:
If to Maker: Balanced Care Corporation
1215 Manor Drive
Mechanicsburg, Pennsylvania 17055
Attention: President
With copies to: Balanced Care Corporation
1215 Manor Drive
Mechanicsburg, Pennsylvania 17055
Attention: Legal Department
and
Kirkpatrick & Lockhart LLP
Henry W. Oliver Building
535 Smithfield Street
Pittsburgh, PA 15235
Attention: Steven J. Adelkoff
If to Holder: FRR Investments Limited
Walker House
Mary Street
George Town, Grand Cayman
Attention: J.B. Unsworth
With copies to: Unsworth & Associates
Herengracht 483, 1017 BT
Amsterdam, Netherlands
Attention: J.B. Unsworth
6
<PAGE> 7
Goodman, Phillips & Vineberg
250 Young Street
Suite 2400
Toronto, Ontario M5B 2M6
Attention: Stephen Pincus
or at such other place as either the Holder or the Maker may from time to time
hereafter designate to the other in writing. Any notice given to the Maker by
the Holder at any time shall not imply that such notice or any further or
similar notice was or is required.
17. Captions and Headings. The captions and headings set forth in this
Note are included for convenience and reference only and the words contained
therein shall in no way be held or deemed to define, limit, describe, explain,
modify, amplify or add to the interpretation, construction or meaning of any
provisions of, or the scope or intent of, this Note or any portion hereof.
18. Rule of Construction. References in this Note to "herein," "hereof"
and "hereunder" shall be deemed to refer to this Note and shall not be limited
to the particular text or Paragraph in which such words appear. The use of any
gender shall include all genders and the singular number shall include the
plural and vice versa as the context may require. References in this Note to the
Holder's attorneys shall be deemed to include, without limitation, special
counsel and local counsel.
As used herein, the term "including", when following any general
statement, will not be construed to limit such statement to the specific items
or matters as provided immediately following the term "including" (whether or
not non-limiting language such as "without limitation" or "but not limited to"
or words of similar import are also used), but rather will be deemed to refer to
all items or matters that could reasonably fall within the broader scope of the
general statement. The term "Person" shall mean any individual, firm,
corporation, partnership, limited liability company, trust, joint venture or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
{remainder of page intentionally left blank}
7
<PAGE> 8
IN WITNESS WHEREOF, the Maker has duly executed this Note as a sealed
instrument as of the day and year first above written.
MAKER:
ATTEST: BALANCED CARE CORPORATION,
a Delaware corporation
/s/Clint T. Fegan By:/s/Robin L. Barber
Name: Clint T. Fegan Name: Robin L. Barber
Chief Financial Officer Title: Senior Vice President
and Legal Counsel
& Assistant Secretary
8
<PAGE> 1
Exhibit 10.6
INDEMNIFICATION, DEFENSE, HOLD HARMLESS AND REIMBURSEMENT AGREEMENT
This INDEMNIFICATION, DEFENSE, HOLD HARMLESS AND REIMBURSEMENT
AGREEMENT (this "Agreement") is made this 29th day of December, 1999, by and
between Balanced Care Corporation, a Delaware corporation ("BCC"), and IPC
Advisors S.a.r.l., a Luxembourg corporation ("IPC").
WITNESSETH:
WHEREAS, BCC and IPC have agreed to jointly execute a Promissory
Note in the principal amount of $7,811,054 to be dated as of December 30, 1999
(as the same may be amended, modified, supplemented or extended, the "BCC-IPC
Note") in favor of New Meditrust Company LLC, a Delaware limited liability
company (New Meditrust Company LCC, together with any other holder of the
BCC-IPC Note, is referred to herein as "Meditrust"); and
WHEREAS, the execution of the BCC-IPC Note is a condition precedent
to the sale of certain properties by Meditrust to the Realty Companies; and
WHEREAS, IPC has required the execution and delivery of this
Agreement by BCC as a condition precedent to IPC's execution of the BCC-IPC Note
and agreement to be jointly and severally liable with BCC under the BCC-IPC
Note, and IPC would not be willing to execute the BCC-IPC Note or be held
jointly and severally liable with BCC under the BCC-IPC Note in the absence of
the execution and delivery by BCC of this Agreement.
NOW, THEREFORE, as an inducement to IPC to execute the BCC-IPC Note
and agree to be jointly and severally liable with BCC under the BCC-IPC Note,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, BCC, intending to be legally and fully bound, hereby
covenants and agrees to and for the benefit of IPC as follows:
1. General Indemnity. (a) BCC shall indemnify, defend (with counsel
reasonably acceptable to IPC) and hold harmless IPC, its directors, officers,
shareholders, employees, agents and professional advisors (collectively, the
"Indemnified Parties") from and against any and all claims, losses, damages,
judgments, suits, causes of action, impairment of rights, expenses (including
without limitation court costs and reasonable attorneys' fees) and costs (each,
a "Loss", and collectively, "Losses") that they, or any of them, may incur for
or on account of or arising (directly or indirectly) out of actions taken or
threatened by any Person under, or otherwise related to or in connection with,
the BCC-IPC Note. Without limiting the generality of the definition of Losses,
Losses shall include, without limitation, the payment of any and all amounts
whatsoever
<PAGE> 2
required to be paid by IPC to Meditrust under the BCC-IPC Note, including
without limitation all principal, interest, costs or expenses due thereunder.
(b) Notwithstanding the foregoing provisions to the contrary, in no
event shall BCC be required to indemnify, defend or hold harmless one or more
Indemnified Party if the Loss for which such Indemnified Party is seeking to
make a claim hereunder arose as a result of the grossly negligent or willful
misconduct of any Indemnified Party or a breach of fiduciary duty of IPC or any
affiliate of IPC to BCC. Without limiting the foregoing, but provided no default
beyond any applicable cure period has occurred under the BCC-IPC Note, IPC shall
not prepay before maturity (unless otherwise required by Meditrust pursuant to
the terms of the BCC-IPC Note) any principal or interest under the BCC-IPC Note
without the prior written consent of BCC, which consent (absent a default beyond
the applicable cure period under the BCC-IPC Note) may be withheld in the sole
and absolute discretion of BCC.
2. Reimbursement of Fees, Costs and Expenses. BCC shall promptly
upon demand reimburse any Indemnified Party for any and all reasonable fees,
costs and expenses (collectively "Fees") whatsoever incurred or suffered by any
Indemnified Party arising or resulting from or in connection with any Loss,
including without limitation court costs, filing fees and other court related
expenses, reasonable attorneys' fees and costs of any Indemnified Party incurred
in connection with the enforcement of this Agreement, and all other costs and
expenses incurred by any Indemnified Party, whether foreseen or unforeseen,
arising in connection with the enforcement of the rights of any Indemnified
Party hereunder.
3. Payment of Losses and Fees; Obligations Not Paid to Incur
Interest. BCC shall make all payments to IPC required hereunder within 15 days
after written demand is made, which writing shall also contain such
documentation evidencing Losses and Fees as may reasonably be needed to verify
such Losses and Fees; provided, however, in connection with any Loss resulting
from any payments of principal and interest under the BCC-IPC Note, no such
documentation shall be required. Notwithstanding the foregoing, the
documentation evidencing Losses and Fees provided by IPC shall be deemed to be
true and correct, absent manifest error. All obligations, indemnifications,
payments and reimbursements owed hereunder from time to time to or for the
benefit of any Indemnified Party, if not paid when due, shall incur interest at
the Default Rate.
4. Representations and Warranties of BCC. BCC represents and
warrants to IPC as follows:
(a) BCC (a) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, (b) has the power
and holds all licenses
2
<PAGE> 3
necessary to carry on its business as it is being conducted and (c) is
duly qualified to transact business in each jurisdiction in which
qualification is required and where failure to do so would have a material
adverse effect on the business of BCC;
(b) BCC has the corporate power, authority and legal right and any
approval required by law to enter into and carry out the terms, provisions
and agreements contained herein and in the other Loan Documents, and to
make the representations and warranties contained herein and therein;
(c) the execution, delivery and performance of this Agreement by BCC
does not contravene and will not result in the breach of any of the terms
and provisions of, or constitute a default under, the charter documents of
BCC or any note, indenture, mortgage, deed of trust, other agreement,
commitment, contract, or other instrument, obligation or restriction
affecting BCC or any property owned by BCC, or violate any statute,
ordinance, by-law, code, rule, ruling, regulation, restriction, order,
judgment, decree, writ, judicial or administrative interpretation or
injunction of any governmental authority having jurisdiction over BCC or
any property owned by BCC;
(d) except as already obtained or filed, as the case may be, no
consent or approval or other authorization of, or exemption by, or
declaration or filing with, any Person and no waiver of any right by any
Person is required to authorize or permit, or is otherwise required as a
condition to (i) the execution and delivery of this Agreement or any of
the other Loan Documents by BCC, (ii) the performance of BCC's obligations
hereunder and thereunder or (iii) the validity or enforceability of any of
the same; and
(e) this Agreement and each of the other Loan Documents are the
legal, valid and binding obligation of BCC enforceable against BCC in
accordance with their terms, except as enforceability may be limited by
bankruptcy and creditor's rights laws, and general principles of equity.
5. Security for Obligations Hereunder. The obligations of BCC
hereunder will be secured by Pledged Interests to be defined in and provided by
that certain Stock Pledge Agreement (the "Stock Pledge") to be among FRR
Investments Limited, a Cayman Islands corporation ("FRR"), IPC, BCC, the
additional Pledgors to be named therein and the Realty Companies. In addition to
securing the obligations of BCC hereunder, the Stock Pledge will also secure the
obligations of BCC under that certain Series One 1999 BCC Discount Note of even
date herewith in the issued amount of $7,424,580 (the "Note") issued in favor of
FRR. In the event of a default or breach hereunder by BCC which remains uncured
for a period of 15 days after written
3
<PAGE> 4
notice is provided to BCC, IPC and FRR shall have, in addition to all rights and
remedies provided hereunder or at law or in equity, the right to exercise any
and all remedies available to the Secured Party under the Stock Pledge.
6. Waiver. No delay or omission in exercising any right hereunder
shall operate as a waiver of such right or any other right.
7. Binding Effect; Assignment. This Agreement shall be binding upon
and shall insure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither party hereto shall
assign this Agreement nor any of its rights hereunder without the prior written
consent of the other party, which consent shall not be unreasonably withheld.
8. Governing Law. This Agreement shall be governed by, construed and
interpreted in accordance with the laws of the Commonwealth of Pennsylvania,
excluding its conflicts of laws principles.
9. Further Cooperation. BCC agrees to execute and deliver to any
Indemnified Party such further instruments, notices, certificates, affidavits
and any other writing or agreement as any Indemnified Party may reasonably
request in connection with this Agreement.
10. Interpretation. Capitalized terms used but not defined herein
have the meanings set forth for such terms in the Promissory Note, and the rules
of interpretation provided in the Promissory Note shall apply to this Agreement.
11. Notice. Any notice, request, demand, statement or consent made
hereunder shall be in writing and shall be deemed duly given if personally
delivered, sent by certified mail, return receipt requested, or sent by a
nationally recognized commercial overnight delivery service with provision for a
receipt, postage or delivery charges prepaid, and shall be deemed given when
postmarked or placed in the possession of such mail or delivery service and
addressed as follows:
If to BCC: Balanced Care Corporation
1215 Manor Drive
Mechanicsburg, Pennsylvania 17055
Attention: President
With copies to: Balanced Care Corporation
1215 Manor Drive
Mechanicsburg, Pennsylvania 17055
Attention: Legal Department
and
4
<PAGE> 5
Kirkpatrick & Lockhart LLP
Henry W. Oliver Building
535 Smithfield Street
Pittsburgh, PA 15235
Attention: Steven J. Adelkoff
If to IPC: IPC Advisors S.a.r.l.
38-40 Rue Sainte Zithe
Luxembourg L-2763
Attention: J.B. Unsworth
With copies to: Goodman, Phillips & Vineberg
250 Young Street; Suite 2400
Toronto, Ontario M5B 2M6
Attention: Stephen Pincus
Unsworth and Associates
Herengracht 483, 1017 BT
Amsterdam, Netherlands
Attention: J.B. Unsworth
or at such other place as either the Holder or the Maker may from time to time
hereafter designate to the other in writing. Any notice given to the Maker by
the Holder at any time shall not imply that such notice or any further or
similar notice was or is required.
12. Captions and Headings. The captions and headings set forth in
this Agreement are included for convenience and reference only and the words
contained therein shall in no way be held or deemed to define, limit, describe,
explain, modify, amplify or add to the interpretation, construction or meaning
of any provisions of, or the scope or intent of, this Agreement or any portion
hereof.
13. Counterparts. IPC and BCC may execute this Agreement in any
number of counterparts, each of which, when executed and delivered, shall have
the force and effect of an original; but all such counterparts shall constitute
one and the same instrument.
14. Termination of Obligations. This Agreement, and all obligations
of BCC hereunder, shall automatically and with no further action on the party of
any party terminate and be of no further force and effect at such time as the
BCC-IPC Note is retired, and all obligations thereunder have been satisfied.
[remainder of page intentionally left blank}
5
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as of the day and year first above written.
BALANCED CARE CORPORATION,
a Delaware corporation
By:/s/Robin L. Barber
Name: Robin L. Barber
Title:Senior Vice President
and Legal Counsel & Assistant
Secretary
IPC ADVISORS S.A.R.L.,
a Luxembourg corporation
By:/s/J.B. Unsworth
Name:J.B. Unsworth
Title:Managing Director
6
<PAGE> 1
Exhibit 10.7
RIGHT OF FIRST REFUSAL AGREEMENT
This Right of First Refusal Agreement is dated December 30, 1999 by and
among Meditrust Mortgage Investments, Inc., a Delaware corporation having a
principal place of business at 197 First Avenue, Needham, Massachusetts, 02494
("MMI"), Meditrust Corporation, a Delaware corporation having a principal place
of business at 197 First Avenue, Needham, Massachusetts, 02494 ("MC"; MMI and MC
hereinafter collectively referred to as Meditrust), and IPC Advisors S.A.R.L., a
Luxembourg corporation having for the purposes of this Agreement, an address at
38-40 Rue Sainte Zithe, Luxembourg L-2763 ("IPC").
W I T N E S S E T H
WHEREAS, MMI owns three hundred thirty-one thousand three hundred
twelve (331,312) shares of common stock, $0.001 par value (the "Common Stock")
of Balanced Care Corporation, a Delaware corporation (the "Company"), and MC
owns seven hundred fifty thousand (750,000) shares of Common Stock of the
Company (said 331,312 and 750,000 shares of Common Stock being hereinafter
referred to as the "Shares"); and
WHEREAS, the parties desire to impose restrictions on the transfer of
the Shares.
NOW, THEREFORE, the parties, each in consideration that the other joins
herein, act and agree as follows:
1. Right of First Refusal. (a) In the event Meditrust desires to sell,
give or otherwise dispose of or transfer any of the Shares (such Shares so
desired to be sold, given or otherwise disposed of or transferred being
hereinafter in this Section 1 called the "Stock"), Meditrust shall, except only
as provided in subsection (b) below, be under an obligation, before selling,
giving or otherwise disposing of or transferring the Stock, to offer in writing
the Stock to IPC for purchase or acquisition by IPC and in such offer, and as an
essential part thereof, to state the name and address of the proposed transferee
(or that the proposed transferee will be a transferee in the open market), and
the price or consideration, if any, to be paid by such transferee (or the
expected price to be received by Meditrust if the Shares will be sold on the
open market) and the terms, if any, of payment of such price. IPC may, at any
time within ten (10) days after receipt of such an offer from Meditrust, elect
to accept such offer, but only with respect to all of the Stock, by so
<PAGE> 2
notifying Meditrust in writing and delivering to it a written acceptance of such
offer. The price, if any, at which IPC shall buy and Meditrust shall sell the
Stock, if such offer shall have been duly accepted as aforesaid, shall be the
price per Share, if any, as stated in the offer, to be paid for the Stock by the
proposed transferee, and shall be payable upon such terms, as stated in the
offer, to be paid by the proposed transferee on the tenth (10th) day after
acceptance of the offer (the "Payment Date") at the principal place of business
of Meditrust. If, within such ten (10) day period, IPC shall not elect to accept
the offer, or if IPC shall accept the offer and then fail to purchase the Stock
on or before the Payment Date, Meditrust may, prior to the expiration of six (6)
months from the date of such offer by Meditrust, give or otherwise dispose of or
transfer the Stock to the proposed transferee, and only to the proposed
transferee, and at the price, and only at the price, if any, named in the offer,
but not after the expiration of said six (6) months or to any other transferee
or at any other price without again offering the Stock to IPC for purchase by it
hereunder. Such failure by IPC to purchase the Stock following its acceptance of
an offer shall not deprive Meditrust of any right or remedy arising out of such
failure.
(b) The restrictions on transfer contained in this Section 1 shall not
be applicable to any transfer of Common Stock by Meditrust to any entity that is
a direct or indirect subsidiary of Meditrust Corporation, provided however, that
no such transfer under this subsection 1(b) may be made unless and until such
transferees shall have become parties to and bound by this Right of First
Refusal Agreement.
(c) A pledge or hypothecation shall not be deemed a sale, transfer or
other disposition for the purposes of this Section 1, provided that the pledgee
shall agree to be bound by and subject to this Right of First Refusal Agreement
upon any foreclosure or transfer pursuant to foreclosure under the pledge or
hypothecation. If the pledge or hypothecation is foreclosed, any transfer
pursuant to foreclosure shall be deemed a sale or transfer and shall be subject
to this Right of First Refusal Agreement.
(d) Any transfer, sale or disposition (or attempted transfer, sale or
disposition) of any Shares which violates or fails to comply with this Section 1
shall be absolutely void and of no force or effect.
2. Legend. Meditrust agrees that, during the term of this
<PAGE> 3
Right of First Refusal Agreement, it will cause each certificate representing
Shares to have noted thereon the following legend:
"This certificate and the shares represented hereby are subject to a
Right of First Refusal Agreement dated December 30, 1999, executed by
and among Meditrust Mortgage Investments, Inc., Meditrust Corporation
and IPC Advisors S.A.R.L. and to the restrictions and rights contained
therein, a copy of which Right of First Refusal Agreement will be
furnished by Meditrust Corporation to the holder of this certificate
upon written request and without charge."
3. Benefit and Binding Effect. This Right of First Refusal Agreement
shall inure to the benefit of the respective representatives, successors and
assigns of the parties hereto, and no other persons, and shall be binding upon
such representatives, successors and assigns and all other persons having or
claiming an interest in any Shares, whether by operation of law or otherwise.
4. Termination. This Right of First Refusal Agreement, as the same may
from time to time be amended, may be terminated at any time by an instrument in
writing duly executed by Meditrust and IPC, or their respective successors,
assigns and transferees, without any requirement for action by or on behalf of
the Company. Unless sooner terminated pursuant to the provisions of the
immediately preceding sentence, this Right of First Refusal Agreement shall
continue until December 31, 2009; provided, however, that this Right of First
Refusal Agreement shall terminate automatically upon the occurrence of any of
the following events:
(a) as a result of purchases made pursuant to this Right of First
Refusal Agreement, Meditrust no longer owns any Shares;
(b) a "Buyer Default" pursuant to and as defined in that certain Option
Agreement of even date herewith by and among the Company, New Meditrust Company
LLC and IPC;
(c) an "Event of Default" pursuant to and as defined in that certain
$7,811,054 Note of even date herewith from the Company and IPC to New Meditrust
Company LLC;
(d) the Company is liquidated and dissolved; or
(e) the Company is adjudicated bankrupt or insolvent.
<PAGE> 4
5. Additional Securities. (a) All references in this Right of First
Refusal Agreement to Shares shall be deemed to mean, and this Right of First
Refusal Agreement shall be applicable to, all other securities which may from
time to time hereafter come to the holders of record of the Shares as a result
of any one or more stock or security reclassifications, changes, exchanges,
dividends, splits, consolidations, subdivisions or combinations, or any one or
more consolidations, mergers, recapitalizations or reorganizations affecting the
Company or the holders of record of its stock or other securities, or any one or
more sales or conveyances to another corporation of the properties of the
Company as an entirety or substantially as an entirety, except for stock or
other securities surrendered or canceled pursuant to any of same.
6. Severability. If any term or condition of this Right of First
Refusal Agreement shall be invalid or unenforceable to any extent or in any
application, then the remainder of this Right of First Refusal Agreement, and
such term or condition except to such extent or in such application, shall not
be affected thereby, and each and every term and condition of this Right of
First Refusal Agreement shall be valid and enforceable to the fullest extent and
in the broadest application permitted by law.
7. Waivers or Modifications. Neither this Right of First Refusal
Agreement nor any term or condition hereof, including without limitation, the
terms and conditions in this Section, may be waived in whole or in part or
otherwise modified as against any party hereto, except by written instrument
signed by the party sought to be charged hereunder expressly stating that it is
intended to operate as a waiver or modification of this Right of First Refusal
Agreement.
8. Notices. Any notice, offer, acceptance, request, instruction or
other document to be given, made or delivered under this Right of First Refusal
Agreement shall be in writing (a "Notice"). Any Notice shall be (i) personally
delivered, (ii) sent by certified mail, return receipt requested or (iii) sent
by nationally recognized commercial overnight delivery service, with provision
for a receipt, postage or delivery charges prepaid and, in each instance, sent
simultaneously by facsimile transmission. Any Notice shall be deemed given when
hand delivered, postmarked or placed in the possession of such mail or delivery
service, as the case may be (provided, that, in each instance, a copy of such
Notice was simultaneously sent by facsimile transmission) and shall be addressed
as follows:
<PAGE> 5
if to Meditrust, to it at:
Meditrust Corporation
197 First Avenue
Needham, Massachusetts 02494
Fax: (781) 433-1290
Attention: President
with a copy simultaneously so sent to:
Meditrust Corporation
197 First Avenue
Needham, Massachusetts 02494
Fax: (781) 449-1530
Attention: General Counsel
and
Nutter, McClennen & Fish, LLP
One International Place
Boston, Massachusetts 02110-2699
(617) 973-9748
Attention: Marianne Ajemian, Esq.
if to IPC, to it at
IPC Advisors S.a.r.l.
38-40 Rue Saint Zithe
Luxembourg L-2763
Fax: 011352407804
Attention: J.B.Unsworth
with a copy simultaneously so sent to:
IPC Advisors S.a.r.l.
c/o Unsworth & Associates
Herengracht 483
1017 BT
Amsterdam, Netherlands
Fax: 011-31206232285
Attention: J.B. Unsworth
Goodman, Phillips and Vineburg
250 Yonge Street, Suite 2400
Toronto, Ontario
Canada M5B 2M6
Fax: (416) 979-1234
<PAGE> 6
Attn: Stephen Pincus, Esq.
or to such other address as any party hereto may designate by notice given as
herein provided.
9. Captions. The captions of the Sections of this Right of First
Refusal Agreement are for convenience of reference only and shall not affect the
meaning or interpretation of any of the provisions hereof.
10. Governing Law. This Right of First Refusal Agreement shall be
construed in all respects in accordance with the law of the Commonwealth of
Massachusetts.
11. Closing Dates. If any closing contemplated by this Right of First
Refusal Agreement is, by the terms of this Right of First Refusal Agreement,
scheduled to occur on (i) a Saturday, Sunday or statutory holiday in the State
of New York or (ii) any of the first, second, seventh or eighth day of Passover,
the first or second day of Shavuoth, the first or second day of Rosh Hashanah,
Yom Kippur, the first or second day of Sukkoth, Shemini Azereth or Simchas
Torah, the closing shall occur on the next day that is not such a day.
12. Ownership. Meditrust hereby represents and warrants to IPC that the
Shares are the only Common Stock or rights to acquire any equity securities of
the Company held by Meditrust.
WITNESS the execution hereof under seal as of the day and year first
above written.
MEDITRUST MORTGAGE INVESTMENTS, INC.
CORPORATE
SEAL By: /s/ Michael S. Benjamin, Esq.
Its : Senior Vice President
MEDITRUST CORPORATION
CORPORATE
SEAL By: /s/ Michael S. Benjamin, Esq.
Its: Senior Vice President
<PAGE> 7
IPC ADVISORS S.A.R.L.
CORPORATE
SEAL By: /s/ J.B. Unsworth
Its: Manager
-7-
<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT: CLINT FEGAN, CFO
ROBERT SUTTON, VP
(717) 796-6100
BALANCED CARE ANNOUNCES STOCKHOLDER APPROVAL
OF $16.8 MILLION EQUITY INVESTMENT
Mechanicsburg, PA, December 15, 1999----Balanced Care Corporation (AMEX:BAL), an
operator of assisted living communities and related services, reported today
that its stockholders approved the previously announced investment of $16.8
million by IPC Advisors S.A.R.L. ("IPC"), a company owned by a trust whose
beneficiaries are Mr. Paul Reichmann, Mrs. Lea Reichmann and their children.
The investment will be made through the purchase of 13.4 million shares of newly
issued Balanced Care common stock at $1.25 per share. This investment is the
second tranche of an aggregate $21 million investment. The first tranche of the
investment was completed on October 11, 1999 when IPC purchased 3.3 million
shares of Balanced Care convertible preferred stock at $1.25 per share. The
Company expects to close the $16.8 million transaction on or about December 21,
1999. At closing, the convertible preferred stock previously issued to IPC will
automatically convert to common stock resulting in a total IPC common stock
ownership of 16.7 million shares, which represents 49.97% of the outstanding
common stock of the Company.
In addition to approving the equity investment, the Company's stockholders
elected the following individuals to serve as Directors of the Company for the
next three years: Manfred J. Walt, George H. Strong and Edward R. Stolman.
Previous to the stockholder meeting, John Brennan, Bill Foster and Ray Schultz
resigned as Directors of the Company, and Paul Reichmann, Barry Reichmann,
Manfred Walt and George Kuhl were appointed.
Brad Hollinger, Chairman and Chief Executive Officer of Balanced Care stated:
"We are pleased with the stockholder support for this transaction and believe
that this equity infusion will enable the Company to execute its business plan
and realize the embedded value of its assisted living portfolio. The Company
expects to utilize the new capital to:
1) lease-up our young portfolio of signature assisted living communities,
2) acquire real estate associated with assisted living facilities
currently managed by the Company,
3) accelerate the purchase from Black Box owners of ten to fourteen
operations that have achieved positive cash flow, and
4) strategically develop and/or acquire additional capacity in our defined
operating markets."
Mr. Hollinger continued, "We are pleased to welcome our new Directors and
grateful for the
<PAGE> 2
service and contribution of our former Directors John Brennan, a founding
stockholder, Bill Foster and Ray Schultz."
Balanced Care Corporation provides senior care services in its assisted living
facilities that include an array of health care and hospitality services,
including preventive care, wellness and Alzheimer's/dementia care. The Company
currently operates 61 facilities, excluding its Missouri operations scheduled
for disposition on December 31, 1999.
Except for the historical information contained in the press release, the
matters discussed herein contain forward-looking statements that are subject to
certain risks and uncertainties that could cause actual results to differ
materially from expectations. These include risks associated with, among other
things, substantial debt and operating lease payment obligations, managing rapid
expansion, the need for additional financing, the possibility of rising interest
rates, securing necessary licensing and permits, construction delays, cost
increases on new construction and increased competition. These and other risks
are set forth in the Company's Annual Report on Form 10-K (as amended) for the
fiscal year ended June 30, 1999 and other reports filed with the Securities and
Exchange Commission.
<PAGE> 1
EXHIBIT 99.2
FOR IMMEDIATE RELEASE CONTACT: CLINT FEGAN, CFO
ROBERT SUTTON, VP
(717) 796-6100
BALANCED CARE ANNOUNCES COMPLETION
OF $16.8 MILLION EQUITY INVESTMENT
Mechanicsburg, PA, December 21, 1999----Balanced Care Corporation (AMEX:BAL), an
operator of assisted living communities and related services, reported today
that it has closed on the previously announced investment of $16.8 million by
IPC Advisors S.A.R.L. ("IPC"), a company owned by a trust whose beneficiaries
are Mr. Paul Reichmann, Mrs. Lea Reichmann and their children.
The investment is the second tranche of an aggregate $21 million investment. The
first tranche of the investment was completed on October 11, 1999 when IPC
purchased 3.3 million shares of Balanced Care convertible preferred stock at
$1.25 per share. The convertible preferred stock has converted to common stock
resulting in a total IPC common stock ownership of 16.7 million shares, which
represents 49.97% of the outstanding common stock of the Company.
Balanced Care Corporation provides senior care services in its assisted living
facilities that include an array of health care and hospitality services,
including preventive care, wellness and Alzheimer's/dementia care. The Company
currently operates 61 facilities, excluding its Missouri operations scheduled
for disposition on or about December 31, 1999.
Except for the historical information contained in the press release, the
matters discussed herein contain forward-looking statements that are subject to
certain risks and uncertainties that could cause actual results to differ
materially from expectations. These include risks associated with, among other
things, substantial debt and operating lease payment obligations, managing rapid
expansion, the need for additional financing, the possibility of rising interest
rates, securing necessary licensing and permits, construction delays, cost
increases on new construction and increased competition. These and other risks
are set forth in the Company's Annual Report on Form 10-K (as amended) for the
fiscal year ended June 30, 1999 and other reports filed with the Securities and
Exchange Commission.
<PAGE> 1
EXHIBIT 99.3
FOR IMMEDIATE RELEASE Contact: Clint Fegan, CFO
Robert Sutton, VP
(717) 796-6100
BALANCED CARE ANNOUNCES COMPLETION OF THE SALE
OF SKILLED NURSING OPERATIONS FOR $60.2 MILLION
Mechanicsburg, PA, January 13, 1999----Balanced Care Corporation (AMEX:BAL), an
operator of assisted living communities and related services, reported today
that it has completed the sale of its Missouri operations to Christian Health
Care Services of Missouri, Inc., and its affiliates. The operations consist of
ten skilled nursing facilities with 1,135 beds and nine assisted and independent
living facilities with 245 beds. The transaction is valued at approximately
$60.2 million, consisting of $9.2 million in cash and notes, and approximately
$51.0 million of assumed lease obligations.
Brad Hollinger, Chairman and Chief Executive Officer of Balanced Care stated:
"This sale of substantially all of Balanced Care's skilled nursing beds
significantly reduces the Company's exposure to Medicare and Medicaid
reimbursement. We are now strategically positioned as an assisted living company
focused on growing our private pay assisted living business and related
operations. The transaction will result in a gain and a favorable impact on the
Company's balance sheet, operating cash flow and net income, including an annual
reduction of approximately $2.0 million in corporate general and administrative
expense."
Mr. Hollinger commented further: "In the last three months, we have completed
three transactions fundamental to the success of the Company:
Infusion of $21 million in new equity capital by IPC Advisors S.A.R.L.,
a Reichmann affiliate;
Purchase of 12 of its Outlook Pointe assisted living facilities from
Meditrust;
Sale of Missouri skilled nursing operations.
These transactions enable the Company to channel all resources into leasing-up
its young portfolio of assisted living facilities and building the Outlook
Pointe brand through superior resident care and profitable operations."
With the sale completed, Balanced Care now owns, leases or manages 62 facilities
with resident capacity of 4,118. The Company has an additional six Outlook
Pointe assisted living facilities under construction with resident capacity of
609.
<PAGE> 2
These facilities are expected to open over the next two quarters, bringing total
resident capacity to 4,727. With the acquisition of 12 of the Company's Outlook
Pointe facilities from Meditrust on December 30, 1999 and upon exercise of its
option and closing on the purchase of an additional 12 Outlook Pointe facilities
from Meditrust on or before November 30, 2000, Balanced Care will own 29 of its
68 communities.
Balanced Care Corporation provides senior care services in its assisted living
facilities that include an array of health care and hospitality services,
including preventive care and wellness, Alzheimer's/dementia care and extended
care services.
Except for the historical information contained in the press release, the
matters discussed herein contain forward-looking statements that are subject to
certain risks and uncertainties that could cause actual results to differ
materially from expectations. These include risks associated with, among other
things, substantial debt and operating lease payment obligations, managing rapid
expansion, the need for additional financing, the possibility of rising interest
rates, securing necessary licensing and permits, construction delays, cost
increases on new construction and increased competition. These and other risks
are set forth in the Company's Annual Report on Form 10-K (as amended) for the
fiscal year ended June 30, 1999 and other reports filed with the Securities and
Exchange Commission.
