<PAGE> 1
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): JANUARY 12, 2000
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 14
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 12, 2000, the Company completed the sale of its Missouri operations
to Christian Health Care of Missouri, Inc. and certain of its affiliates
(collectively, "CHM") pursuant to an Asset Purchase Agreement dated October 15,
1999 (as amended, the "Asset Purchase Agreement"). The Company sold its
leasehold interests in eight skilled nursing facilities and nine assisted and
independent living facilities, together with the operations of those facilities.
The Company sold its real property interests and operations, in two skilled
nursing facilities.
The aggregate consideration paid by CHM to the Company for the assets was (i)
$51,000,000 in assumed lease obligations, (ii) $6,675,000 in cash, (iii)
$525,000 pursuant to a First Promissory Note dated January 12, 2000 (the "First
Promissory Note"), and (iv) $2,000,000 pursuant to a Second Promissory Note
dated January 12, 2000 (the "Second Promissory Note"). The aggregate
consideration was determined based on arms' length negotiations.
Under the First Promissory Note, CHM must pay 48 equal monthly installments of
$13,315, consisting of principal and interest on the 1st day of each calendar
month commencing on February 1, 2000 and continuing until January 1, 2004.
Except as otherwise provided in the First Promissory Note, interest accrues at
the fixed rate of 10% per annum. The First Promissory Note may be prepaid at any
time without premium or penalty.
Under the Second Promissory Note, CHM must pay six equal monthly installments of
interest only on the 1st day of each calendar month commencing on February 1,
2000 and continuing until July 1, 2000. Thereafter, CHM must pay 24 equal
monthly installments of $91,140, consisting of principal and interest commencing
on August 1, 2000 and continuing until July 1, 2002. Except as otherwise
provided in the Second Promissory Note, interest accrues at the fixed rate of
8.75% per annum. The Second Promissory Note may be prepaid at any time without
premium or penalty. Under certain circumstances as more specifically set forth
in the Second Promissory Note, CHM must make a mandatory prepayment of all
outstanding principal and interest thereunder.
In 1996, Meditrust Mortgage Investments, Inc. (together with its affiliates,
"MT") loaned $41,385,000 (the "Hawthorn Loan") to Hawthorn Health Properties,
Inc. and its subsidiaries (collectively, "HHP") pursuant to a Loan Agreement
dated August 30, 1996 (the "Hawthorn Loan Agreement") for HHP to purchase seven
skilled nursing facilities and three assisted/independent living facilities
(which constitute a portion of the facilities whose leasehold interests were
transferred to CHM). HHP simultaneously leased the facilities to certain
wholly-owned subsidiaries of the Company pursuant to those certain Facility
Lease Agreements dated August 30, 1996 (collectively, the "Facility Lease
Agreements").
Page 2 of 14
<PAGE> 3
MT required the following as conditions to its consent to the transfer of the
leasehold interests in the HHP facilities to CHM:
- The Company, CHM, HHP and MT enter into an Omnibus Assignment
and Assumption Agreement, Amendment to Loan Documents,
Amendment to Lease Documents, Termination of Lease Documents,
Consent to Assignment and Confirmation of Guaranties dated as
of January 12, 2000 (the "Omnibus Agreement").
- The Company and Dixon Management, Inc., a wholly-owned
subsidiary of the Company ("DM"), remain as guarantors of
CHM's lease obligations pursuant to the Guaranties previously
given by the Company and DM in August 1996 (the "Existing
Guaranties") with respect to the Facility Lease Agreements.
- The Company enter into a Guaranty dated as of January 12, 2000
(the "BCC Guaranty") in favor of MT to guaranty the
obligations of HHP under the Hawthorn Loan.
- The Company, Balanced Care at Stafford, Inc., a wholly-owned
subsidiary of the Company ("Stafford"), and MT enter into a
Cross-Default Agreement dated as of January 12, 2000 (the
"Cross-Default Agreement") that provides that an "Event of
Default" under the Hawthorn Loan Agreement will constitute an
"Event of Default" under the Facility Lease Agreement dated
June 30, 1998 (the "Stafford Facility Lease Agreement")
between MT and Stafford.
- CHM pay a $4,000,000 payment on the Hawthorn Loan on
January 12, 2000 (without any prepayment penalty or premium).
The Existing Guaranties, the BCC Guaranty and the Cross-Default Agreement will
terminate in accordance with the Termination Agreement dated as of January 12,
2000 (the "Termination Agreement") entered into by and among the Company, HHP,
MT and the other parties referred to therein. Subject to the provisions of the
Termination Agreement:
- The Existing Guaranties and the BCC Guaranty will terminate on
the earlier to occur of (a) the complete payment and
performance of the obligations under the Hawthorn Loan or (b)
the Termination Date (as defined below).
- The Cross-Default Agreement will terminate on the earlier to
occur of (a) the Termination Date or (b) such time, if any, as
the Leased Property (as defined in the Stafford Facility Lease
Agreement) is transferred in accordance with the provisions of
the Option Agreement dated as of December 30, 1999 by and
among MT, the Company and the other parties thereto.
As used herein, "Termination Date" means the later to occur of (y) December 31,
1999 and (z) the date upon which the HHP facilities have achieved a combined
Debt Coverage Ratio (as defined in the Termination Agreement) for the prior
fiscal quarter equal to or greater than 1.1 to 1.
Page 3 of 14
<PAGE> 4
In May and August 1997, the Company entered into Lease and Security Agreements
(collectively, the "Lease and Security Agreements") with Health Care Realty
Trust (together with its affiliates, "HCRT") for four assisted/independent
living facilities (which constitute a portion of the facilities whose leasehold
interests were transferred to CHM). In order to induce HCRT to consent to the
transfer of the leasehold interests of these four facilities to CHM, the Company
was required to remain as guarantor of CHM's lease obligations pursuant to the
Guaranties previously given by the Company in 1997 with respect to the Lease and
Security Agreements.
The Asset Purchase Agreement, the First Promissory Note, the Second Promissory
Note, the Omnibus Agreement, the BCC Guaranty, the Termination Agreement and the
Cross-Default Agreement are attached hereto as exhibits and incorporated by
reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
Not Applicable.
(b) Pro forma financial information.
Begins on page 7 of this Current Report.
(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
10.1 Asset Purchase Agreement dated October 15, 1999 by and between
Balanced Care Corporation and certain subsidiaries and
Christian Health Care of Missouri, Inc. (filed herewith)
10.2 First Amendment to Asset Purchase Agreement dated October 21,
1999 by and between Balanced Care Corporation and certain
subsidiaries and Christian Health Care of Missouri, Inc.
(filed herewith)
10.3 Second Amendment to Asset Purchase Agreement dated November
30, 1999 by and between Balanced Care Corporation and certain
subsidiaries and Christian Health Care of Missouri, Inc.
(filed herewith)
10.4 Third Amendment to Asset Purchase Agreement dated December 31,
1999 by and between Balanced Care Corporation and certain
subsidiaries and Christian Health Care of Missouri, Inc.
(filed herewith)
10.5 Fourth Amendment to Asset Purchase Agreement dated January 7,
2000 by and between Balanced Care
Page 4 of 14
<PAGE> 5
Corporation and certain subsidiaries and Christian Health Care
of Missouri, Inc. (filed herewith)
10.6 Promissory Note (First) dated January 12, 2000 made by
Christian Health Care of Missouri, Inc., Christian Health Care
Terraces, Inc., Regional Care of Nevada, LLC, Regional Care of
Republic, LLC and Cornerstone Health Care, Inc. in favor of
Balanced Care Corporation (filed herewith)
10.7 Promissory Note (Second) dated January 12, 2000 made by
Christian Health Care of Missouri, Inc., Christian Health Care
Terraces, Inc., Regional Care of Nevada, LLC, Regional Care of
Republic, LLC and Cornerstone Health Care, Inc. in favor of
Balanced Care Corporation (filed herewith)
10.8 Omnibus Assignment and Assumption Agreement, Amendment of Loan
Documents, Amendment of Lease Documents, Termination of Lease
Documents, Consent to Assignment and Confirmation of
Guaranties dated as of January 12, 2000 by and among Hawthorn
Health Properties, Inc., National Care Centers of Hermitage,
Inc., National Care Centers, Inc., National Care Centers of
Lebanon, Inc., Springfield Retirement Village, Inc., National
Care Centers of Nixa, Inc., National Care Centers of
Springfield, Inc., Mt. Vernon Park Care Center West, Inc., BCC
at Lebanon Care Center, Inc., BCC at Lebanon Park Manor, Inc.,
BCC at Nixa Park Center, Inc., BCC at Springfield Care Center,
Inc., BCC at Mt. Vernon Park Care Center, Inc., BCC at Mt.
Vernon Park Care Center West, Inc., BCC at Hermitage Park Care
Center, Inc., Balanced Care Corporation, Dixon Management,
Inc., Meditrust Mortgage Investments, Inc., Christian Health
Care of Missouri, Inc., Cornerstone Properties Investment II,
LLC, Cornerstone Health Care, Inc., Christian Health Care
Personnel Services, Inc., Christian Health Care, Inc.,
Christian Health Care of Hermitage, Inc., Christian Health
Care of Lebanon North, Inc., Christian Health Care of
Springfield West Park, Inc., Christian Health Care of
Springfield West, Inc., Christian Health Care of Lebanon
South, Inc., Christian Health Care of Springfield East, Inc.,
Christian Health Care of Nixa, Inc. and Alington D. Kilgore
(filed herewith)
Page 5 of 14
<PAGE> 6
10.9 Guaranty (BCC) dated as of January 12, 2000 given by Balanced
Care Corporation in favor of Meditrust Mortgage Investments,
Inc. (filed herewith)
10.10 Termination Agreement dated as of January 12, 2000 by and
among Meditrust Mortgage Investments, Inc., New Meditrust
Company LLC, Hawthorn Health Properties, Inc., National Care
Centers of Hermitage, Inc., National Care Centers, Inc.,
National Care Centers of Lebanon, Inc., Springfield Retirement
Village, Inc., National Care Centers of Nixa, Inc., National
Care Centers of Springfield, Inc., Mt. Vernon Park Care Center
West, Inc., Balanced Care Corporation, Dixon Management, Inc.
and Balanced Care at Stafford, Inc. (filed herewith)
10.11 Cross-Default Agreement dated as of January 12, 2000 by and
among Balanced Care at Stafford, Inc., New Meditrust Company
LLC, Meditrust Mortgage Investments, Inc. and Balanced Care
Corporation (filed herewith)
10.12 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 (incorporated by reference to Exhibit 10.2
to the Company's 8-K dated December 15, 1999)
Page 6 of 14
<PAGE> 7
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The accompanying unaudited pro forma financial information gives effect to the
divestiture of the operations of the Company's Missouri operations, as discussed
in Item 2 of this Current Report.
The column captioned "Consolidated Pro Forma" reflects the divestiture as if it
had occurred prior to the beginning of the period reported in the Statement of
Operations, and as if it had occurred on the date of the Balance Sheet.
The pro forma data is based on the historical financial statements of the
Company and gives effect to the adjustments (which the Company believes to be
reasonable) described in the accompanying Notes to Unaudited Pro Forma Financial
Information. Assets sold are recorded at their estimated fair values as of the
date of divestiture. The pro forma adjustments reflected in the following data
are estimated and, in management's opinion, are not expected to differ
materially from the actual adjustments.
Page 7 of 14
<PAGE> 8
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY PRO FORMA CONSOLIDATED
ACTUAL ADJUSTMENTS PRO FORMA
----------- ----------- ------------
<S> <C> <C> <C>
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 4,731 $ 378 $ 5,109
Receivables (net of allowance for doubtful receivables) 11,544 (1,000)(b) 10,544
Development contracts in process 2,318 0 2,318
Prepaid expenses and other current assets 642 (311)(c) 331
-------- ------- --------
Total current assets 19,235 (933) 18,302
======== ======= ========
Restricted investments 2,543 (135)(c) 2,408
Property and equipment, net 25,202 (3,880)(c) 21,322
Goodwill, net 15,149 (251)(c) 14,898
Purchase option deposits 5,007 0 5,007
Other assets 1,995 2,023 (d) 4,018
-------- ------- --------
Total assets $ 69,131 ($3,176) $ 65,955
======== ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 616 $ 0 $ 616
Accounts payable 8,007 0 8,007
Accrued payroll 2,294 0 2,294
Accrued expenses 5,258 0 5,258
-------- ------- --------
Total current liabilities 16,175 0 16,175
Long-term debt, net of current portion 14,803 (5,400)(f) 9,403
Straight-line lease liability 3,427 (1,425)(c) 2,002
Deferred revenue and other liabilities 797 3,649 (c) 4,446
-------- ------- --------
Total liabilities 35,202 (3,176) 32,026
-------- ------- --------
Stockholders' equity:
Preferred stock, Series C $.001 par value; authorized-5,000,000 shares;
3,300,000 outstanding 0 0
Preferred stock, Series A; authorized - 1,150,958 shares;
None outstanding 0 0
Common stock, $.001 par value; authorized - 50,000,000
shares; issued and outstanding - 16,722,847 shares at
September 30, 1999 and June 30, 1999 17 0 17
Additional paid-in capital 63,814 0 63,814
Accumulated deficit (29,902) 0 (29,902)
-------- ------- --------
Total stockholders' equity 33,929 0 33,929
-------- ------- --------
Total liabilities and stockholders' equity $ 69,131 ($3,176) $ 65,955
======== ======= ========
</TABLE>
Page 8 of 14
<PAGE> 9
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
(Dollars in thousands)
MISSOURI DIVESTITURE
- --------------------
(a) Represents the cash proceeds received from the divesture, as follows:
<TABLE>
<S> <C>
Sale price $ 9,200
Consideration received in the form of promissory notes ($ 2,525)
Closing costs (897)
Repayment on working capital line of credit (5,400)
--------
Total pro forma adjustment $ 378
========
</TABLE>
(b) Represents a provision for uncollectible accounts.
(c) Represents the sale of the Missouri operations, fixed assets and certain
prepaid expenses and other assets for an estimated net gain on the sale
of $3,649.
(d) Represents the promissory notes of $2,525,000 received as partial
consideration for the sale, net of existing other assets sold.
(e) Represents repayment on the Company's working capital line of credit,
pursuant to the Loan and Security Agreement between the Company and
certain of its wholly owned subsidiaries and Heller Healthcare Finance,
Inc., for two of the divested properties which were pledged as
collateral.
Page 9 of 14
<PAGE> 10
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE YEAR ENDED JUNE 30, 1999 AND THE
QUARTER ENDED SEPTEMBER 30, 1999
(DOLLARS AND SHARE AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30, 1999
--------------------------------------------
PRO FORMA CONSOLIDATED
ACTUAL ADJUSTMENTS PRO FORMA
-------- ----------- ------------
(unaudited)
<S> <C> <C> <C>
Revenues:
Patient services $11,045 ($8,806) $2,239
Resident services 6,895 (919) 5,976
Development fees 397 0 397
Management fees 99 (4) 95
Other revenues 41 (14) 27
-------- -------- -------
Total revenues 18,477 (9,743) 8,734
-------- -------- -------
Operating expenses:
Facility operating expenses:
Salaries, wages and benefits 8,821 (4,836) 3,985
Other operating expenses 5,429 (3,341) 2,088
Development, general and administrative expense 2,594 (425) 2,169
Provision for losses on development activities 0 0
Provision for losses under shortfall funding agreements 800 0 800
Provision for losses under severance agreements 0 0
Bad debt expense 0 0
Lease expense 3,439 (1,483) 1,956
Depreciation and amortization expense 740 (102) 638
-------- -------- -------
Total operating expenses 21,823 (10,187) 11,636
-------- -------- -------
Income (loss) from operations (3,346) 444 (2,902)
Other income (expense):
Interest and other income 57 55 (a) 112
Interest expense (399) 130 (b) (269)
Gain (loss) on sale of assets 0 0 0
-------- -------- -------
Income (loss) before income taxes and extraordinary item (3,688) 629 (3,059)
Provision for income taxes 2 0 2
-------- -------- -------
Income (loss) before extraordinary item (3,690) 629 (3,061)
Extraordinary loss on extinguishment of debt (739) 739 0
-------- -------- -------
Net income (loss) (4,429) 1,368 (3,061)
-------- -------- -------
Basic earnings (loss) per share:
Income before extraordinary item ($0.22) ($0.18)
======== =======
Net income (loss) ($0.26) ($0.18)
======== =======
Diluted earnings (loss) per share:
Income before extraordinary item ($0.22) ($0.18)
======== =======
Net income (loss) ($0.26) ($0.18)
======== =======
Weighted average shares - basic 16,723 16,723
======== =======
Weighted average shares - diluted 16,723 16,723
======== =======
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1999
--------------------------------------------
PRO FORMA CONSOLIDATED
ACTUAL ADJUSTMENTS PRO FORMA
--------- ----------- ------------
(audited)
<S> <C> <C> <C>
Revenues:
Patient services $47,999 ($38,474) $9,525
Resident services 22,748 (3,370) 19,378
Development fees 6,288 0 6,288
Management fees 1,117 (4) 1,113
Other revenues 294 (211) 83
--------- --------- ---------
Total revenues 78,446 (42,059) 36,387
--------- --------- ---------
Operating expenses:
Facility operating expenses:
Salaries, wages and benefits 32,994 (18,878) 14,116
Other operating expenses 22,480 (15,266) 7,214
Development, general and administrative expense 12,781 (2,035) 10,746
Provision for losses on development activities 13,050 0 13,050
Provision for losses under shortfall funding agreements 4,660 0 4,660
Provision for losses under severance agreements 1,600 0 1,600
Bad debt expense 2,044 0 2,044
Lease expense 10,715 (5,921) 4,794
Depreciation and amortization expense 2,145 (283) 1,862
--------- --------- ---------
Total operating expenses 102,469 (42,383) 60,086
--------- --------- ---------
Income (loss) from operations (24,023) 324 (23,699)
Other income (expense):
Interest and other income 780 67 (c) 847
Interest expense (647) 370 (277)
Gain (loss) on sale of assets (302) 0 (302)
--------- --------- ---------
Income (loss) before income taxes and extraordinary item (24,192) 761 (23,431)
Provision for income taxes (555) 0 (555)
--------- --------- ---------
Income (loss) before extraordinary item (23,637) 761 (22,876)
Extraordinary loss on extinguishment of debt 0 0
--------- --------- ---------
Net income (loss) ($23,637) $761 ($22,876)
--------- --------- ---------
Basic earnings (loss) per share:
Income before extraordinary item ($1.41) ($1.37)
========= =========
Net income (loss) ($1.41) ($1.37)
========= =========
Diluted earnings (loss) per share:
Income before extraordinary item ($1.41) ($1.37)
========= =========
Net income (loss) ($1.41) ($1.37)
========= =========
Weighted average shares - basic 16,713 16,713
========= =========
Weighted average shares - diluted 16,713 16,713
========= =========
</TABLE>
Page 10 of 14
<PAGE> 11
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999
- -------------------------------------
(Dollars and shares in thousands)
a) Represents interest income on the promissory notes received as part of
the total consideration in the divestiture of the Missouri operations,
net of the elimination of interest income on divested operations,
calculated as follows:
<TABLE>
<CAPTION>
Annual
Principal Rate Interest
--------- ------ --------
<S> <C> <C> <C>
Promissory Note $ 525 10.00% $ 13
Second Promissory Note $2,000 8.75% 44
----
Interest on promissory notes 57
Interest from divested operations (2)
----
Pro forma adjustment $ 55
====
</TABLE>
b) Represents the elimination of interest expense resulting from debt
repayment pursuant to a loan and security agreement in which two of the
divested properties which were pledged as collateral plus interest
expense for the divested operations, calculated as follows:
<TABLE>
<S> <C>
Average outstanding borrowing base generated by
the pledged divested properties $ 5,400
Interest rate 10.75%
Number of months outstanding 2
-------
Interest reduction on line of credit $ 97
Interest relating to divested operations 33
-------
Pro forma adjustment $ 130
=======
</TABLE>
YEAR ENDED JUNE 30, 1999
- -------------------------------------
(Dollars and shares in thousands)
c) Represents interest income on promissory notes received as part the
total consideration received from the divestiture of the Missouri
operations, net of the elimination of interest income on divested
operations, calculated as follows:
<TABLE>
<CAPTION>
Annual
Principal Rate Interest
--------- ------ --------
<S> <C> <C> <C>
Promissory Note $ 525 10.00% $ 53
Second Promissory Note $2,000 8.75% 175
------
Interest on promissory notes 228
Interest from divested operations (161)
------
Pro forma adjustment $ 67
======
</TABLE>
Page 11 of 14
<PAGE> 12
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 27, 2000 By: Brad E. Hollinger
Chairman of the Board,
President and Chief Executive Officer
Page 12 of 14
<PAGE> 13
EXHIBIT INDEX
10.1 Asset Purchase Agreement dated October 15, 1999 by and between
Balanced Care Corporation and certain subsidiaries and
Christian Health Care of Missouri, Inc. (filed herewith)
10.2 First Amendment to Asset Purchase Agreement dated October 21,
1999 by and between Balanced Care Corporation and certain
subsidiaries and Christian Health Care of Missouri, Inc.
(filed herewith)
10.3 Second Amendment to Asset Purchase Agreement dated November
30, 1999 by and between Balanced Care Corporation and certain
subsidiaries and Christian Health Care of Missouri, Inc.
(filed herewith)
10.4 Third Amendment to Asset Purchase Agreement dated December 31,
1999 by and between Balanced Care Corporation and certain
subsidiaries and Christian Health Care of Missouri, Inc.
(filed herewith)
10.5 Fourth Amendment to Asset Purchase Agreement dated January 7,
2000 by and between Balanced Care Corporation and certain
subsidiaries and Christian Health Care of Missouri, Inc.
(filed herewith)
10.6 Promissory Note (First) dated January 12, 2000 made by
Christian Health Care of Missouri, Inc., Christian Health Care
Terraces, Inc., Regional Care of Nevada, LLC, Regional Care of
Republic, LLC and Cornerstone Health Care, Inc. in favor of
Balanced Care Corporation (filed herewith)
10.7 Promissory Note (Second) dated January 12, 2000 made by
Christian Health Care of Missouri, Inc., Christian Health Care
Terraces, Inc., Regional Care of Nevada, LLC, Regional Care of
Republic, LLC and Cornerstone Health Care, Inc. in favor of
Balanced Care Corporation (filed herewith)
10.8 Omnibus Assignment and Assumption Agreement, Amendment of Loan
Documents, Amendment of Lease Documents, Termination of Lease
Documents, Consent to Assignment and Confirmation of
Guaranties dated as of January 12, 2000 by and among Hawthorn
Health
Page 13 of 14
<PAGE> 14
Properties, Inc., National Care Centers of Hermitage, Inc.,
National Care Centers, Inc., National Care Centers of Lebanon,
Inc., Springfield Retirement Village, Inc., National Care
Centers of Nixa, Inc., National Care Centers of Springfield,
Inc., Mt. Vernon Park Care Center West, Inc., BCC at Lebanon
Care Center, Inc., BCC at Lebanon Park Manor, Inc., BCC at
Nixa Park Center, Inc., BCC at Springfield Care Center, Inc.,
BCC at Mt. Vernon Park Care Center, Inc., BCC at Mt. Vernon
Park Care Center West, Inc., BCC at Hermitage Park Care
Center, Inc., Balanced Care Corporation, Dixon Management,
Inc., Meditrust Mortgage Investments, Inc., Christian Health
Care of Missouri, Inc., Cornerstone Properties Investment II,
LLC, Cornerstone Health Care, Inc., Christian Health Care
Personnel Services, Inc., Christian Health Care, Inc.,
Christian Health Care of Hermitage, Inc., Christian Health
Care of Lebanon North, Inc., Christian Health Care of
Springfield West Park, Inc., Christian Health Care of
Springfield West, Inc., Christian Health Care of Lebanon
South, Inc., Christian Health Care of Springfield East, Inc.,
Christian Health Care of Nixa, Inc. and Alington D. Kilgore
(filed herewith)
10.9 Guaranty (BCC) dated as of January 12, 2000 given by Balanced
Care Corporation in favor of Meditrust Mortgage Investments,
Inc. (filed herewith)
10.10 Termination Agreement dated as of January 12, 2000 by and
among Meditrust Mortgage Investments, Inc., New Meditrust
Company LLC, Hawthorn Health Properties, Inc., National Care
Centers of Hermitage, Inc., National Care Centers, Inc.,
National Care Centers of Lebanon, Inc., Springfield Retirement
Village, Inc., National Care Centers of Nixa, Inc., National
Care Centers of Springfield, Inc., Mt. Vernon Park Care Center
West, Inc., Balanced Care Corporation, Dixon Management, Inc.
and Balanced Care at Stafford, Inc. (filed herewith)
10.11 Cross-Default Agreement dated as of January 12, 2000 by and
among Balanced Care at Stafford, Inc., New Meditrust Company
LLC, Meditrust Mortgage Investments, Inc. and Balanced Care
Corporation (filed herewith)
10.12 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 (incorporated by reference to Exhibit 10.2
to the Company's 8-K dated December 15, 1999)
Page 14 of 14
<PAGE> 1
Exhibit 10.1
ASSET PURCHASE AGREEMENT
by and between
BALANCED CARE CORPORATION,
a Delaware corporation
(and certain Subsidiaries),
and
CHRISTIAN HEALTH CARE OF MISSOURI, INC.,
a Missouri nonprofit corporation
<PAGE> 2
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is entered into and is
effective this 15th day of October, 1999 by and between Balanced Care
Corporation, a Delaware corporation ("BCC"), on its behalf and the behalf of its
wholly owned subsidiaries (each a "Subsidiary" and collectively the
"Subsidiaries," and together with BCC the "Seller") listed on Exhibit A, each
with corporate offices at 1215 Manor Drive, Mechanicsburg, PA 17055 except as
otherwise set forth on Exhibit A; and Christian Health Care of Missouri, Inc., a
Missouri nonprofit corporation, with offices at 302 S. 7th Street, Suite B,
Rogers, Arkansas 72765, or its permitted nominees ("Purchaser").
RECITALS:
WHEREAS, the Subsidiaries own two skilled nursing facilities (the
"Owned Facilities") and have lease rights to eight skilled nursing facilities
and nine independent living and/or residential care facilities (the "Leased
Facilities," and together with the Owned Facilities the "Facilities") all of
which are listed on Exhibit B. Purchaser desires to purchase, subject to the
terms and conditions of this Agreement, all of the ownership or leasehold rights
in the Facilities and the Business (as hereinafter defined) related thereto and
the Purchased Assets (as hereinafter defined) and Seller desires to sell all
such assets to Purchaser; and
WHEREAS, this Agreement sets forth the terms and conditions upon which
Purchaser is purchasing the assets to be sold hereunder, and Seller is selling
to Purchaser such assets.
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained herein, Purchaser and Seller, each
intending to be legally bound hereby and in reliance upon the matters set forth
herein, do hereby agree as follows:
ARTICLE I. CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1. "Accounts Receivable" shall mean as of any date any trade accounts
receivable (including, without limitation, any third party receivables arising
in connection with any Third Party Payor Programs), notes receivable, bid or
performance deposits, employee advances and other miscellaneous receivables
associated with the Business through and as of such date, whether or not yet
billed by Seller.
1.2. "Accreditation Body" shall mean JCAHO, the Department of Health,
the Bureau of Home Health Licensing and Certification, the Missouri Department
of Social Services, Divisions of Aging and Medical Services and Persons having
jurisdiction over the accreditation, certification, evaluation or operation of
the Business.
<PAGE> 3
1.3. "Accrued Expenses" shall mean as of any date accrued rents,
insurance premiums, payroll and benefits (including, without limitation,
vacation, sick pay, disability pay) and other accrued expenses as would appear
on a balance sheet of the Business as of such date prepared in accordance with
GAAP consistently applied.
1.4. "Affiliate" shall mean any company or other entity which
controls, is controlled by or is under common control with the designated Party.
For the purpose of the foregoing, ownership, directly or indirectly, of 50% or
more of the voting stock or other equity interest shall be deemed to constitute
control.
1.4A. "Aging Reports" shall have the meaning given to it in Section
12.2.2.
1.5. "Agreement" shall mean this Asset Purchase Agreement.
1.6. "Ancillary Agreements" shall mean the real property conveyances
described in Section 5.2.1 and the bill of sale, assignment and assumption
described in Exhibit D.
1.7. "Assumed Liabilities" shall have the meaning given to it in
Section 4.2.
1.8. "Books and Records" shall have the meaning given to it in Section
6.13.
1.9. "Business" shall mean the operation of the Facilities as
independent living/residential care facilities and skilled nursing facilities
and any other ancillary health care services owned, leased, operated, delivered,
managed, developed, constructed, maintained, used, occupied or possessed by
Seller in connection therewith (including, without limitation, any home health
and hospice, outpatient and contract rehab therapy services).
1.10. "Capital Expenditures" shall mean any outlay of funds for the
acquisition or improvement of a fixed asset which extends the life or increases
the productivity of the asset.
1.11. "Champus" shall mean the Civilian Health and Medical Program of
the Uniform Service, a program of medical benefits covering retirees and
dependents of members or former members of a uniformed service provided,
financed and supervised by the United States Department of Defense and
established by 10 U.S.C. Sections 1071 et seq.
1.12. "Closing" shall have the meaning given to it in Section 5.1.
1.13. "Closing Date" shall have the meaning given to it in Section 5.1.
1.14. "Closing Inventory" shall mean all Inventory relating to the
Business on hand on the Closing Date.
1.15. "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time, and any successor thereto. Any reference herein to a
specific
<PAGE> 4
section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
1.16. "Contract" shall mean all alliance agreements, transfer
agreements, other agreements (including, without limitation, Resident/Patient's
Agreements, Management Agreements and Provider Agreements), contracts, contract
rights, commitments, customer accounts, orders, leases, guaranties, warranties
and representations, franchises and books and records of account benefiting,
relating to the Purchased Assets or the operation of the Business or the
ownership, construction, development, maintenance, repair, management, use,
occupancy, possession or operation thereof, or the operation of any of the
programs or services in conjunction with the Business and all renewals,
replacements and substitutions therefor, issued by any Governmental Authority,
Accreditation Body or Third Party Payor or maintained or used by Seller with any
third Person.
1.17. "Current Liabilities" shall mean all liabilities classified as
current liabilities in accordance with GAAP consistently applied.
1.18. "Damages" shall have the meaning given to such term in Section
14.4.
1.19. "Department of Health" shall mean the Department of Health of the
State of Missouri.
1.20. "Department of Social Services" shall mean the Department of
Social Services, Divisions of Aging and Medical Services of the State of
Missouri.
1.21. "Deposit Escrow Agreement" means an agreement in the form of and
containing the terms and conditions set forth in Exhibit C hereto among
Purchaser, Seller and Escrow Agent.
1.22. "Employee" shall mean any individual employed by Seller in the
conduct of the Business as listed on Schedule 1.22 (such Schedule being subject
to change between the date hereof and the Closing Date as a result of employee
changes in the ordinary course of Seller's business consistent with past
practices).
1.23. "Encumbrance" shall mean any right to, or interest in, property,
which subsists in a third-party and which constitutes a claim, lien, charge or
liability attached to and binding upon the Purchased Assets, including, but not
limited to, a mortgage, judgment lien, mechanic's lien, lease, security
interest, easement and right-of-way.
1.24. "Environmental Law" shall mean any Federal, state or local law,
statute, charter or ordinance, and any rule, regulation, binding interpretation,
binding policy, permit, order, court order or consent decree issued pursuant to
any one of the foregoing, which pertains to, governs or otherwise regulates any
of the following activities: the emission, discharge, release or spilling of any
substance into the air, surface water, ground water, soil or substrata; the
generation, treatment, storage, or disposal of any waste, hazardous substance,
hazardous or infectious waste. The terms "waste",
<PAGE> 5
"hazardous substance", "infectious waste", and "hazardous waste" include any
substance as defined as such by an applicable Environmental Law.
1.25. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.26. "ERISA Plans" shall mean defined benefit pension plans and
defined contribution pension plans qualified under Section 401(a) of the Code.
1.27. "Escrow Agent" means Chicago Title Insurance Company, the title
agent designated to administer the terms and conditions of the Deposit Escrow
Agreement entered into by and among Escrow Agent, Purchaser, and Seller.
1.28. "Escrow Amount" shall have the meaning given to such term in
Section 3.1.2.
1.29. "Excluded Assets" shall mean those assets that are not included
in the sale contemplated hereby and as are further defined in Section 2.2.
1.30. "Facilities" shall have the meaning given to such term in the
Recitals of this Agreement.
1.31. "Facility Leases" shall mean the leases pertaining to the Leased
Facilities set forth in Schedule 2.1.1.
1.32. "GAAP" shall mean generally accepted accounting principles in the
United States of America.
1.33. "Governmental Authorities" shall mean all agencies, authorities,
bodies, boards, commissions, courts, instrumentalities, legislatures and offices
of any government, quasi-governmental unit or political subdivision, whether
federal, state, county, district, municipal, city or otherwise including,
without limitation, the Securities and Exchange Commission and the American
Stock Exchange.
1.34. "Home Health and Hospice Assets" shall mean the Contracts, cash
on hand, Accounts Receivable, and all other tangible or intangible personal
property used exclusively in connection with the operation of the Balanced Care
Home Health and Hospice.
1.35. "Indemnifying Party" shall have the meaning given to such term in
Section 14.4.
1.36. "Indemnified Party" shall have the meaning given to such term in
Section 14.4.
1.37. "Inventory" shall mean the inventory of Seller, including,
without limitation, dry storage goods, janitorial supplies, food and beverage
supplies, office supplies, medical supplies and pharmaceutical supplies.
<PAGE> 6
1.38. "JCAHO" shall mean the Joint Commission on Accreditation of
Healthcare Organizations.
1.39. "Knowledge" shall mean the host of actual knowledge of a
particular fact or any other matter being possessed or which would be possessed
after due and reasonable inquiry by an officer or other individual having
principal responsibility for a business or administrative function of such
Party, including individuals serving in such a capacity in or for the Business.
1.40. "Leased Facilities" shall have the meaning given to such term in
the Recitals of this Agreement.
1.41. "Legal Requirements" shall mean all statutes, ordinances,
by-laws, codes, rules, regulations, restrictions, orders, judgments, decrees and
injunctions (other land use and health care licensing statutes, ordinances,
by-laws, codes, rules and regulations), promulgated or issued by any
Governmental Authority, Accreditation Body or Third Party Payor.
1.42. "Managed Care Plans" shall mean all health maintenance
organizations, preferred provider organizations, individual practice
associations, competitive medical plans and similar arrangements.
1.43. "Management Agreement" shall mean any agreement, whether written
or oral, between Seller and any other Person pursuant to which Seller provides
any payment, fee or other consideration to any other Person to operate or manage
the Business (except any employment agreements).
1.44. "Medicaid" shall mean the medical assistance program established
by Title XIX of the Social Security Act (42 U.S.C. Sections 1396 et seq.) and
any statute succeeding thereto.
1.45. "Medicare" shall mean the health insurance program for the aged
and disabled established by Title XVIII of the Social Security Act (42 U.S.C.
Sections 13965 et seq.) and any statute succeeding thereto.
1.45A "Noncompetition Agreement" shall mean the noncompetition
agreement entered into between Seller and Purchaser, in the form of and
containing terms and conditions mutually agreeable by the Parties.
1.46. "Other Agreements" shall mean the Lease Guaranty Fee Agreement(s)
(if necessary and required due to the guaranty obligations of BCC required by
Seller's landlords and lenders) and the other agreements set forth on Schedule
1.46, including any other agreements executed and delivered under or in
connection therewith.
1.47. "Owned Facilities" shall have the meaning given to such term in
the Recitals of this Agreement and as legally described in Schedule 2.1.1.
<PAGE> 7
1.48. "Party" shall mean either Seller or Purchaser (or its permitted
nominees), individually, as the context so requires, and the term "Parties"
shall mean Seller and Purchaser (or its permitted nominees) together.
1.49. "Payables" as of any date shall mean any of the trade accounts
payable associated with the Business as of such date in accordance with GAAP
consistently applied.
1.50. "Payroll Practice/Employee Arrangement" shall have the meaning
given to such term in Section 6.16.
1.51. "Permits" shall mean all permits, licenses, approvals,
qualifications, rights, variances, permissive uses, accreditations,
certificates, certifications, consents, contracts, interim licenses, permits and
other authorizations of every nature whatsoever required by, or issued to or on
behalf of Seller under, any Legal Requirements benefiting, relating or affecting
the Business or Facilities or the construction, development, maintenance,
management, use or operation thereof, or the operation of any programs or
services in conjunction with the Business and all renewals, replacements and
substitutions therefor, now or hereafter required or issued by any Governmental
Authority, Accreditation Body or Third Party Payor.
1.52. "Permitted Encumbrances" shall mean those encumbrances as
specifically set forth on Schedule 1.52 hereto.
1.53. "Person" shall mean any individual, corporation, company, limited
or general partnership, trust or estate, joint venture, association or other
entity and includes Affiliates.
1.54. "Prepaid Expenses" as of any date shall mean payments made by
Seller with respect to the Business which constitute prepaid expenses of the
Business in accordance with GAAP consistently applied and are set forth in
Schedule 2.1.10.
1.55. "Provider Agreements" shall mean all participation, provider and
reimbursement agreements or arrangements for the benefit of Seller in connection
with the operation of the Business relating to any right to payment or other
claim arising out of or in connection with Seller's participation in any Third
Party Payor Program.
1.56. "Purchase Price" shall have the meaning given to such term in
Section 3.1.1.
1.57. "Purchased Assets" shall have the meaning given to such term in
Section 2.1 and shall include the Facilities, Business, and the Facility Leases.
1.58. "Purchaser" shall have the meaning given to such term in the
preamble of this Agreement.
1.59. "Purchaser Damages" shall have the meaning given to such term in
Section 14.2.
<PAGE> 8
1.60. "Purchaser Indemnitees" shall have the meaning given to such term
in Section 14.2.
1.61. "Real Property" shall have the meaning given to such term in
Section 2.1.1.
1.62. "Related Party" means (i) Seller, (ii) any Affiliate of Seller,
and (iii) any officer, director, shareholder or partner of any Person identified
in clauses (i) or (ii) preceding, and (iv) any spouse, sibling, ancestor or
lineal descendant of any natural Person identified in any one of the preceding
clauses.
1.63. "Resident/Patient's Agreements" shall mean all contracts,
agreements and consents executed by or on behalf of any resident, patient or
other Person seeking services at any of the Facilities, including, without
limitation, assignments of benefits and guarantees, and such resident/patient's
related medical and/or other records.
1.64. "Resident Payments" has the meaning given that term in Section
12.2.2.
1.65. "Retained Liabilities" has the meaning given that term in Section
4.2.
1.66. "Security Right" means, with respect to any security, any option,
warrant, subscription right, preemptive right, other right, proxy, put, call,
demand, plan, commitment, agreement, understanding or arrangement of any kind
relating to such security, whether issued or unissued, or any other security
convertible into or exchangeable for any such security. "Security Right"
includes any right relating to issuance, sale, assignment, transfer, purchase,
redemption, conversion, exchange, registration or voting and includes rights
conferred by statute, by the issuer's governing documents or by agreement.
1.67. "Seller" shall have the meaning given to such term in the
preamble of this Agreement, individually and collectively, as the context may
require.
1.68. "Seller Damages" shall have the meaning given to such term in
Section 14.3.
1.69. "Seller Indemnitees" shall have the meaning given to such term in
Section 14.3.
1.70. Intentionally Omitted;
1.71. "Survival Date" shall have the meaning given to such term in
Section 14.1.
1.72. "Taxes" shall mean all taxes, duties, charges, fees, levies or
other assessments imposed by any Governmental Authority, including, without
limitation, income, gross receipts, value-added, excise, withholding, personal
property, real estate, sales, use, ad valorem, license, lease, service,
severance, stamp, transfer, payroll, employment, customs, duties, alternative,
add-on minimum, estimated and franchise
<PAGE> 9
taxes (including any interest, penalties or additions attributable to or imposed
on or with respect to any such assessment).
1.73. "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to any Tax, including any
schedule or attachment thereto, and including any amendment thereof.
1.74. "Third Party Payor Programs" shall mean all third party payor
programs in which Seller participates, including, without limitation, Medicare,
Medicaid, Champus, Blue Cross and/or Blue Shield, Managed Care Plans, other
private insurance plans and employee assistance programs.
1.75. "Third Party Payors" shall mean Medicare, Medicaid, Blue Cross
and/or Blue Shield, private insurers and any other Person which maintains Third
Party Payor Programs.
ARTICLE II. TRANSFER OF ASSETS AND PROPERTIES
2.1. Purchased Assets. Subject to the terms and conditions of this
Agreement and other than the Excluded Assets, Seller shall bargain, sell and
convey and deliver on the Closing Date to Purchaser, free and clear of all
Encumbrances whatsoever (other than Permitted Encumbrances or except as
expressly provided herein), and Purchaser shall purchase from Seller, the
Business as a going concern and all Seller's rights, title and interest in and
to the Facilities, the assets, properties and rights of every kind and
description, real, personal and mixed, tangible and intangible (including real
property, furniture, fixtures and equipment, inventories, patient contracts,
contracts of leases and commitments concerning the operation of the Facilities,
operating certificates, operational records, and all other items used concerning
the operations of the Facilities), wherever situated, owned by Seller, or which
Seller has a right to use, and used in the Business (the "Purchased Assets"),
including, without limitation, the following:
2.1.1. Real Property.
a. All those certain lots or pieces of ground
described on Schedule 2.1.1 hereto, together with the
buildings, structures, improvements and fixtures located
thereon, all of which relate to the Owned Facilities and any
parking lots adjacent thereto, and all rights, privileges,
easements, licenses, hereditaments and other appurtenances
relating thereto (the "Real Property");
b. The certain leases described on Schedule 2.1.1,
which relate to the Leased Facilities (the "Facility Leases");
and
c. All plans and specifications relating to any and
all of the Leased Facilities which are in the possession of
Seller.
2.1.2. Equipment, Machinery and Other Tangible Personal
Property. All machinery, equipment, leasehold improvements,
automobiles, supplies, office
<PAGE> 10
furniture and office equipment, computing and telecommunications
equipment and other items of personal property that are owned or leased
by Seller located at any of the Facilities and used in connection with
the Business, including but not limited to those described in Schedule
2.1.2 hereto;
2.1.3. Contracts Relating to the Business. All of the interest
of Seller in all Resident/Patient's Agreements and those Contracts
listed on Schedule 2.1.3 and those other Contracts assumed by Purchaser
in writing by separate agreement within 30 days after the Closing Date.
Those other Contracts not assumed by Purchaser in writing by separate
agreement may be terminated by either Seller or Purchaser within 90
days of the Closing Date;
2.1.4. Permits, Licenses. All of Seller's interest in Permits
relating to the Business, including those listed in Schedule 2.1.4
hereto, to the extent such Permits are transferable to Purchaser and
Medicare and Medicaid provider agreements/numbers to the extent
transferable;
2.1.5. Goodwill. All of the interest of Seller in and to the
goodwill incident to the Business, including but not limited to the
value of the names of the Facilities associated with the Business and
the value of good customer relations;
2.1.6. Inventory. All Closing Inventory;
2.1.7. Resident/Patient Funds and Records. All deposits and
escrow accounts of, or for the benefit of, any of Seller's
residents/patients at the Closing Date that relate to the Business,
including any amounts held in trust for residents/patients. All
resident records and all records, reports, studies and documentation
relating to resident records.
2.1.8. Computer Software. Except as set forth in Section
2.2.9, all computer applications software, owned or licensed, whether
for general business usage (e.g., accounting, word processing,
graphics, spreadsheet analysis, etc.), or specific,
unique-to-the-Business usage, and all computer operating, security or
programming software, including all passwords relating thereto, owned
or licensed by Seller and used in the operation of the Business at the
Facilities to the extent transferable to Purchaser without the consent
of any third party. An inventory of the computer software is listed on
Schedule 2.1.8 hereto;
2.1.9. Other Intangible Assets. All other intangible assets
(including all causes of action, rights of action, contract rights and
warranty and product liability claims against third parties) relating
to the Purchased Assets or the Business, to the extent permitted by law
or contract.
2.1.10. Prepaid Expenses. All prepaid expenses of the Business
as more specifically set forth on Schedule 2.1.10 hereto.
<PAGE> 11
2.1.11 Other Assets. Any other tangible assets relating to the
Business that are not removed within 120 days after the Closing, except
as otherwise provided for in Sections 2.2.10 and 2.2.11.
2.2. Excluded Assets. Notwithstanding Section 2.1, only the following
assets (collectively, the "Excluded Assets") shall be excluded from this
Agreement, and shall not be assigned or transferred to Purchaser:
2.2.1. Accounts Receivable. All Accounts Receivable of Seller
existing as of 11:59 p.m. on the Closing Date;
2.2.1. Cash. All other cash, cash equivalents on hand or in
bank accounts (other than accounts for the benefit of Seller's
residents/patients as described in Section 2.1.7), notes and other
securities and unbilled costs and fees up through and including the
Closing Date;
2.2.2. Corporate Books. Corporate minute books and stock books
of Seller;
2.2.3. Third Party Claims. Any claims and rights against third
parties (including, without limitation, insurance carriers) to the
extent they relate to liabilities or obligations that are not assumed
by Purchaser hereunder and that are not included within Section 2.1.9;
2.2.4. Taxes. Claims for refunds of Taxes and other charges
imposed by any Governmental Authority for periods prior to the Closing
Date;
2.2.5. Other Assets. Assets listed on Schedule 2.2.5;
2.2.6. Reimbursement Claims. All reimbursement claims and
appeal rights Seller has or may have with respect to services provided
prior to the Closing Date and/or cost reports pertaining to any period
of time prior to the Closing Date;
2.2.7. Intellectual Property. Subject to the conditions
regarding limited use in Sections 2.2.10 and 2.2.11, all right, title
and interest of Seller in the patents, trademarks, trademark
registrations, trade names, service marks, copyrights and copyright
registrations described in Schedule 2.2.7.;
2.2.8. Intentionally Omitted;
2.2.9 Certain Computer Software. All computer software set
forth in Section 2.1.8 that, by the terms of the contract, agreement,
lease or license pursuant to which the software is owned, leased or
licensed by Seller, is not capable of being (or requires consent to be)
assigned or transferred and that is identified in Schedule 2.2.9;
<PAGE> 12
2.2.10 Signs. Except to the extent used by Purchaser during
the 120 days immediately following the Closing, all signs indicating
that the Facilities are in any way affiliated with Seller. After the
expiration of such 120 day period, Purchaser shall remove all such
signs and cooperate with Seller in arranging for the transfer and
storage of the signage at Seller's expense; and
2.2.11 Marketing Materials. Except to the extent used by
Purchaser during the 120 days immediately following the Closing, all
catalogs, brochures, art work, photographs, public relations material
and advertising material used in the Business, whether in electronic
form or otherwise, to the extent any of the foregoing reference Seller
in any manner. After the expiration of such 120 day period, Purchaser
shall return to Seller all such materials at Seller's expense.
ARTICLE III. CONSIDERATION AND TERMS
3.1. Consideration for Purchased Assets.
3.1.1. Purchase Price. The aggregate consideration to be paid
by Purchaser to Seller for the Purchased Assets and the Business (the
"Purchase Price") shall be $9,200,000 to be paid as set forth in
Section 3.1.2
3.1.2. Form of Payment. The Purchase Price (subject to any
adjustments as set forth in Schedule 2.1.3) shall be paid by Purchaser
as follows:
(i) Escrow Amount. $250,000 (the "Escrow Amount") to be
paid by Purchaser to Escrow Agent on the date of
execution of this Agreement and held by Escrow Agent
pursuant to the terms and subject to the conditions
of the Deposit Escrow Agreement and this Agreement.
The Seller and Purchaser shall simultaneously
herewith enter into a Deposit Escrow Agreement
substantially in the form attached to Exhibit C
hereto.
(ii) Cash Consideration. $8,425,000 in cash (Purchase
Price less the Escrow Amount and Promissory Note
amount), by wire transfer of immediately available
funds to BCC at the time of Closing.
(iii) Promissory Note. At Closing, Purchaser shall deliver
a Promissory Note to BCC in the principal amount of
$525,000 (unless Purchaser, in its sole discretion,
agrees to pay the entire Purchase Price in cash
consideration at Closing). The Promissory Note shall
provide for the payment of interest at a rate equal
to ten percent (10%) per annum, with monthly payments
and a maturity date of forty eight (48) months after
the Closing Date. In addition and as additional
security for the repayment of the Promissory Note,
the principal(s) of Purchaser and Seller shall enter
into an Agreement of Guaranty, Suretyship, and
Indemnity whereby the Purchaser shall unconditionally
guarantee the Purchaser's obligations under the terms
and conditions of the Promissory Note. The Promissory
<PAGE> 13
Note and Guaranty shall each be in a form mutually
agreeable between Seller and Purchaser and shall be
finalized in form and content within 30 days after
the date of execution of this Agreement.
3.1.3. Home Health and Hospice Assets. Notwithstanding Section
3.1.2, in the event that the Home Health and Hospice Assets cannot be
transferred on the Closing Date because the 90-day notice period to the
Department of Health has not elapsed, the Closing will nevertheless
take place as contemplated hereunder and $15,000 of the Purchase Price
will be retained by Purchaser until Closing on the Home Health and
Hospice Assets which is to occur upon waiver of the notice period by
the Department of Health or expiration of such 90-day period, whichever
occurs first but in no event later than May 1, 2000. Such closing shall
be effective as of the Closing Date for accounting purposes. During the
interim notice period, Seller and Purchaser agree to fully cooperate
with each other and enter into any such other agreements necessary to
carry on the operations of the Balanced Care Home Health and Hospice.
3.1.4. Entitlement to Escrow Amount. The Escrow Amount shall
be distributed in accordance with and subject to the terms and
conditions of the Deposit Escrow Agreement.
3.1.5. Prorated Expenses. All ad valorem and property taxes,
and similar assessments by Governmental Authorities based upon or
measured by Seller's interest in the Purchased Assets shall be prorated
between Seller and Purchaser as of the Closing Date based upon such
taxes assessed against the Purchased Assets for the tax period in
question, or if there is insufficient information for such tax period,
based upon taxes assessed for the immediately preceding tax period just
ended. All utility deposits, other Prepaid Expenses listed on Schedule
2.1.10 and amounts relating to any material Contract listed on Schedule
2.1.3 shall be prorated between Seller and Purchaser as of the Closing
Date based upon or measured by the period of Seller's ownership on or
before the Closing Date and Purchaser's ownership after the Closing
Date. All such amounts will be prorated on the basis of a 365-day year.
To the extent practicable, all such prorations and payments shall be
made at the Closing. In the event that Closing occurs on a day other
than a payroll day, with respect to the Employees, Seller shall
reimburse Purchaser at Closing for pay attributable to the period prior
to Closing which will be paid by Purchaser post-Closing. To the extent
exact amounts of any item are not known on the Closing Date, the
Parties agree to cooperate and use their diligent and good faith
efforts to make any such post closing adjustments within 30 days after
Closing or as soon thereafter as practicable.
3.1.6. Other Consideration. As additional consideration,
Purchaser shall also assume the Assumed Liabilities at the time of
Closing.
<PAGE> 14
3.2. Allocation of Purchase Price. The Purchase Price shall be
allocated among the Purchased Assets, Facilities and the Business in accordance
with the allocation set forth in Schedule 3.2 as mutually agreed. Purchaser and
Seller shall report the federal, state and local income and other tax
consequences of the purchase and sale contemplated hereby in a manner consistent
with such allocation.
3.3 Risk of Loss. Prior to and including the Closing Date, all risk of
loss shall be borne by Seller; after the Closing Date, all risk of loss shall be
borne by Purchaser. In the event there is any material damage to or loss of any
of the Purchased Assets (whether by fire, theft, vandalism, terrorism, act of
God or other cause or casualty, damage or loss) between the date hereof and
Closing, such Purchased Assets shall be replaced or repaired at Seller's
expense. If it is impossible or impracticable to repair or replace such
Purchased Assets before the Closing Date, the Purchase Price shall be reduced by
the amount of the loss or damage as mutually determined and agreed upon by the
Parties; provided, however, that in the event of a casualty that in Purchaser's
reasonable judgment adversely and materially affects the Business or the
Purchased Assets, Purchaser may terminate this Agreement without any further
liability or penalty and the Escrow Amount shall be returned to Purchaser by
Escrow Agent in accordance with the procedures set forth in the Escrow
Agreement.
ARTICLE IV. ASSUMPTION OF LIABILITIES; EMPLOYEE MATTERS
4.1. General Limitation on Assumption of Liabilities. Except for
Permitted Encumbrances and as otherwise provided in Sections 4.2 below, Seller
shall transfer the Purchased Assets to Purchaser free and clear of all
Encumbrances, and without any assumption of liabilities and obligations, and
Purchaser shall not, by virtue of its purchase of the Purchased Assets, assume
or become responsible for any liabilities or obligations of:
(i) the Facilities arising prior to the Closing Date; or
(ii) Seller or any other Person whether known or unknown,
liquidated or unliquidated, contingent or otherwise.
4.2. Assumed Liabilities and Obligations. On the Closing Date,
Purchaser shall acquire the Purchased Assets subject only to, and shall
undertake, assume, perform and otherwise pay, satisfy and discharge, and hold
Seller harmless from only the following liabilities and obligations
(collectively, the "Assumed Liabilities"):
(i) all Facility Leases;
(ii) all obligations of Seller accruing after the Closing
Date under the Contracts that are listed on Schedule
2.1.3 or as otherwise assumed pursuant to Section
2.1.3; and
(iii) for claims or other debts or other obligations
arising out of any cost
<PAGE> 15
settlements or other repayments to the Business
relating to periods after the Closing Date
Except for the Assumed Liabilities, Purchaser does not and shall not
assume or in any way undertake to pay, perform, satisfy or discharge any other
liability of Seller existing on, prior to, or after the Closing Date or arising
out of any transactions entered into, or any state of facts existing on, prior
to, or after the Closing Date (the "Retained Liabilities"), and Seller agrees to
pay and satisfy when due all Retained Liabilities and indemnify and hold
Purchaser harmless therefrom. Except for the obligations and liabilities
included in the Assumed Liabilities, the term "Retained Liabilities" shall
include, without limitation, liabilities:
(i) for or in connection with any dividends,
distributions, redemptions, or Security Rights with
respect to any security of Seller;
(ii) for expenses or fees incident to or arising out of
the negotiation, preparation, approval or
authorization of this Agreement and the consummation
of the transactions contemplated hereby, including,
without limitation, all legal and accounting fees and
all brokers or finders fees or commissions;
(iii) under or arising out of this Agreement;
(iv) to indemnify Seller's officers, directors or
shareholders;
(v) Federal, state or local tax liabilities or
obligations of Seller in respect to periods prior to
Closing, and the transactions contemplated hereunder,
including, without limitation, income taxes payable
under the Code, any income tax, any franchise tax,
any tax recapture, any FICA, workers' compensation,
employee benefits, any insurance premiums, rents, or
other accruals and any and all other taxes or amounts
due or payable for a period prior to Closing;
notwithstanding the foregoing, all sales and use
taxes, transfer taxes, and all other impositions of
tax arising solely by reason of the transfers
contemplated by this Agreement (excluding all
federal, state and local income and gross receipt
taxes on the earnings or gross receipts of Seller
prior to the Closing Date, which shall remain the
sole responsibility of Seller) shall be the
responsibility of and shall be borne equally by
Seller and Purchaser;
(vi) for long term indebtedness and other obligations or
guarantees of Seller;
(vii) for Accrued Expenses and Payables of Seller except to
the extent such amounts are expressly assumed by
Purchaser;
(viii) for claims or other debts arising out of any cost
settlements or
<PAGE> 16
other repayments to the business relating to periods
prior to the Closing Date;
(ix) for any obligations under BCC's 401(k) plan and the
ERISA Plans;
(x) any obligations of Seller accruing under the Permits
prior to or after the Closing; and
(xi) for any liability incurred as a result of any
violation of any Environmental Laws that
noncompliance would have a material adverse effect on
the Business.
4.3. Offer of Employment. Purchaser shall offer employment on and as of
Closing, on an at-will basis, to all Employees (except regional office
employees) on terms of employment that Purchaser may determine in its sole
discretion. Seller shall not be required to terminate any Employees prior to
Closing.
4.4. Workers' Compensation and Disability Claims.
4.4.1. Seller's Liability. Seller shall remain liable for all
claims made by any of Seller's Employees for any and all claims of
Employees including, but not limited to, all claims for workers'
compensation, disability and occupational diseases and safety; ERISA
Plans; rate of pay and overtime payments and any other Payroll
Practice/Employee Arrangement; discrimination claims; collective
bargaining agreements or unionization of any of Seller's Employees; or
any other claims whatsoever that arise out of activities prior to the
Closing Date, provided that such claims are made no later than the
expiration of the applicable statute of limitations.
4.4.2. Purchaser's Liability. Purchaser shall be liable for
all claims made by any Employees for all workers' compensation,
disability and occupational diseases of or with respect to all
Employees hired by Purchaser and attributable to events and occurrences
first occurring after the Closing date and not otherwise the Seller's
retained responsibility under Section 4.4.1.
4.5. Vacation Pay.
4.5.1. Seller's Liability. Seller shall be liable for the cost
and expense related to all vacation entitlements, personal days and
attendance incentives for all Employees for the period up to the
Closing Date. As of the Closing Date, Seller shall pay to Purchaser an
amount equal to employee benefits or reimbursements which may have
accrued or may be owed by Seller to its Employees.
4.5.2. Purchaser's Liability. Purchaser shall assume and be
liable for the cost and expense related to all vacation entitlements,
personal days and attendance incentives for all Employees for the
period on or following the Closing Date.
<PAGE> 17
ARTICLE V. CLOSING
5.1. Time; Location. The Parties shall use their commercially
reasonable best efforts to consummate the purchase and sale of the Purchased
Assets on the earlier to occur of the following: (i) as soon as the
contingencies to Purchaser's and Seller's obligations to close are fully
satisfied or at such time such contingencies have been waived by Purchaser or
Seller, as applicable, or (ii) December 31, 1999 (the "Closing"). The date of
the Closing shall be referred to as the "Closing Date." The Closing shall take
place at such time, date and place as may be mutually agreed upon by the
Parties, but if the Parties are unable to agree, the Closing shall take place at
a place of public accommodation in Springfield, Missouri. Notwithstanding the
foregoing, the Closing Date may be extended but only upon the mutual agreement
of the Parties hereto.
5.2. Seller's Documents. At Closing, Seller shall execute and deliver
the following instruments of transfer and assignment:
5.2.1. Deeds. Duly executed and acknowledged special warranty
deeds, in recordable form, transferring the Real Property and such
affidavits or other instruments as Purchaser may reasonably request and
which are customary in transactions of this type.
5.2.2. Bill of Sale. A general bill of sale, assignment and
assumption substantially in the form of Exhibit D attached hereto,
transferring to Purchaser good and indefeasible title to all of the
tangible personal property included in the Purchased Assets, subject
only to Permitted Encumbrances and the Assumed Liabilities and
assigning to Purchaser, to the extent assignable, Seller's right, title
and interest in each of the Contracts, Permits and other agreements
included in the Purchased Assets, including without limitation, the
Facility Leases.
5.2.3. Memorandum of Leases. Duly executed and acknowledged
Memorandums of Leases in recordable form for each of the Leased
Facilities in a form mutually agreed upon between Purchaser and Seller
(and Seller's Landlords) if any of the Facility Leases or memorandums
thereof for the Leased Facilities have not been recorded.
5.2.4. Consents to Transfer. Duly executed and acknowledged
Consents to Transfer in a recordable form for each of the Leased
Facilities in a form reasonably agreed upon between Purchaser and
Seller (and Seller's Landlords) in which the respective Landlords for
each of the Leased Facilities approve the transfer of the Facility
Leases to Purchaser.
5.2.5. Assignment of Leases. Duly executed and acknowledged
Assignment of Leases for each of the Leased Facilities in a form
reasonably agreed upon between Purchaser and Seller (and Seller's
Landlords) which provide for the transfer of all of Seller's right,
title, and interest in and to the Leased Facilities.
<PAGE> 18
5.2.6. Landlord Estoppels. Duly executed Landlord Estoppel
Certificates in a form reasonably agreed upon between Purchaser and
Seller (and Seller's Landlords) in which the respective Landlords for
each of the Leased Facilities represent and warrant
certain facts and other matters relating to the Leased Facilities;
provided, however, the Parties agree that any such facts and other
matters contemplated pursuant to this section may be satisfied in the
other document deliveries required by Seller under this section.
5.2.7. Subordination and Attornment. Duly executed and
acknowledged Subordination and Attornment Agreements in recordable form
with any person having an Encumbrance on any of the Leased Facilities
in a form reasonably agreed upon between Purchaser and Seller (and
Seller's Landlords) which provide that the quiet and lawful enjoyment
of the Leased Facilities shall not be disturbed as long as the
Purchaser complies in all material respects with the Facility Leases.
5.2.3. Contracts and Other Permits. To the extent not
delivered prior to Closing, all Contracts identified in Schedule 2.1.3
and all Permits.
5.2.4. Title Insurance and Surveys. To the extent not
delivered prior to Closing, all title insurance policies (or
commitments) and surveys relating to any of the Facilities and which
are in the possession of Seller.
5.2.5. Rent Roll. The rent roll of Seller listing all
residents/patients and their respective rent payments current as of
five days or fewer prior to the Closing Date.
5.2.6. Covenant Not to Compete. Seller shall deliver to
Purchaser the Noncompetition Agreement as provided for in Section 12.5
below.
5.2.7. Other Documents. The Other Agreements, Ancillary
Agreements and such additional instruments of conveyance and transfer
as Purchaser may reasonably require in order to more effectively vest
in it, and put it in possession of, the Purchased Assets, including,
but not limited to, the Seller's Certificate and Secretary's
Certificate referred to in Sections 10.3 and 10.4 hereinafter, and all
other documents required to be delivered by Seller hereunder.
5.3. Purchaser's Documents. At Closing, Purchaser shall execute and
deliver the following instruments of transfer and assignment:
5.3.1. Bill of Sale. An executed bill of sale, assignment and
assumption as set forth above;
5.3.2. Other Documents. The Ancillary Agreements and such
other additional instruments as Seller may reasonably require in order to
consummate the transactions hereunder and to otherwise affect the agreements of
the Parties hereto, including, but not limited to, the Purchaser's Certificate
and Secretary's Certificate
<PAGE> 19
referred to in Sections 11.3 and 11.4 hereinafter, and all other documents
required to be delivered by Purchaser hereunder; and
5.3.3. Opinion of Counsel. Purchaser shall provide the opinion
of counsel referred to in Section 11.9 hereinafter but only to the extent
required by any of Seller's Landlords.
5.4 Reasonable Steps. Seller shall make such commercially reasonable
best efforts as may be appropriate so that on the Closing Date, Purchaser shall
be placed in actual possession and control of all of the Purchased Assets.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents and warrants
to Purchaser that each of the following representations and warranties is true
and correct as of the date hereof:
6.1. Organization, Good Standing and Power.
6.1.1 BCC. BCC is a corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation, and has all requisite corporate power and authority and
has been duly authorized by each Subsidiary to execute and deliver this
Agreement, the Other Agreements and the Ancillary Agreements to which
it is a Party, to consummate the transactions contemplated hereby and
thereby and to perform all the terms and conditions hereof and thereof
to be performed by it on its behalf or the behalf of the Subsidiaries.
6.1.2 Subsidiaries. The Subsidiaries are corporations duly
organized, validly existing and in good standing under the laws of
their states of incorporation, and have all requisite corporate power
and authority to execute and deliver this Agreement, the Other
Agreements, and the Ancillary Agreements to which they are a party, to
consummate the transactions contemplated hereby and thereby and to
perform all the terms and conditions hereof and thereof to be performed
by them and to duly authorize BCC to do the same on their behalf.
6.2. Authorization of Agreement and Enforceability. Seller has taken
all necessary corporate action to authorize the execution and delivery of this
Agreement, the Other Agreements, and the Ancillary Agreements to which it is a
Party, the performance by it of all terms and conditions hereof and thereof to
be performed by it and the consummation of the transactions contemplated hereby
and thereby. This Agreement, the Other Agreements and the Ancillary Agreements,
upon Seller's execution and delivery thereof, will constitute the legal, valid
and binding obligations of Seller, enforceable in accordance with their terms
except to the extent that enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws presently or hereafter in effect
relating to or affecting the enforcement of creditors' rights generally and by
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).
<PAGE> 20
6.3. No Violation; Consents. The execution, delivery and performance by
Seller of this Agreement, the Other Agreements and the Ancillary Agreements to
which it is a Party, and the consummation of the transactions contemplated
hereby and thereby will not (with or without the giving of notice or the lapse
of time, or both) (i) violate any provision of the charter or bylaws of Seller,
(ii) except with respect to notices and consents required to be given by Seller
and which Seller shall give on or prior to the Closing Date to any Accreditation
Body or Governmental Authority in connection with the sale and change of
ownership or operation of the Purchased Assets, Facilities and the Business,
violate or require any consent, authorization or approval of, or exemption by,
or filing under any Contract or Legal Requirements, (iii) violate any judgment,
order, writ or decree of any court applicable to Seller, the Business or the
Purchased Assets, (iv) except as identified on Schedule 6.3.1, conflict with,
result in a breach of, constitute a default under, or accelerate or permit the
acceleration of the performance required by, or require any consent,
authorization or approval under any agreement, Contract, commitment, lease or
other instrument, document or undertaking to which Seller is a party or to which
any of the Purchased Assets is bound or (v) result in the creation or impression
of any Encumbrances upon the Purchased Assets.
6.4. Financial Statements. Seller has delivered to Purchaser true and
complete copies of the (i) balance sheets of the Subsidiaries at August 31,
1999, June 30, 1999, June 30, 1998 and June 30, 1997, together with the related
income statements for the years or periods then ended and (ii) a statement of
profit and loss for each Subsidiary as of August 31, 1999 and June 30, 1999 and
a corresponding income statement for the fiscal year or period then ended.
Seller shall provide Purchaser, as promptly as the same become available through
the Closing Date, monthly balance sheets and statements of profit and loss of
Seller and each of the Subsidiaries. The foregoing financial statements
(including any provided after the date hereof) have been prepared from the Books
and Records of Seller in accordance with GAAP consistently applied throughout
the periods involved except as may be noted therein and except that not all of
the notes required by GAAP are included nor do the interim statements reflect
customary year end adjustments. Such financial statements are materially true,
correct and complete and fairly present the financial position of the Business
at the dates indicated and the results of operations and cash flows of Business
for the periods then ended in accordance with GAAP.
6.5. Inventory. The level of Inventory maintained by Seller and
included in the Purchased Assets is sufficient to carry on the Business as
historically conducted. Seller will maintain inventory levels consistent with
inventory levels that have been maintained by Seller over the past twelve
months, subject to changes resulting from the ordinary course of business.
6.6. Absence of Certain Changes or Events. Except as set forth in
Schedule 6.6 hereto, since September 30, 1999 in connection with the Business,
Seller has not:
(i) amended in any material respect or terminated any
Contract other than in the ordinary course of
Seller's business consistent with past practice;
<PAGE> 21
(ii) suffered the occurrence of any events that,
individually or in the aggregate, have had, or could
reasonably be expected to have, a material adverse
effect on the Purchased Assets or the results of
operations of the Business;
(iii) incurred any damage or destruction having a material
adverse effect on the Purchased Assets or the results
of operations of the Business by fire, storm or
similar casualty, whether or not covered by
insurance;
(iv) sold, transferred, replaced or leased any of the
Purchased Assets or sold any Inventory at a discount,
except for transactions in the ordinary course of
Seller's business consistent with past practice;
(v) entered into any transaction or made any commitments
(for capital expenditures or otherwise) other than in
the ordinary course of Seller's business consistent
with past practice;
(vi) changed its methods of accounting, excluding changes
in response to new legal or accounting requirements
beyond Seller's control;
(vii) increased the compensation of Employees, except
following normal review procedures or as reasonably
deemed necessary in the ordinary course of Seller's
business consistent with past practice;
(viii) suffered any major or key personnel changes or any
strike, work stoppage or other labor dispute;
(ix) materially altered its conduct in its relations with
suppliers, residents and patients;
(x) materially altered its marketing efforts with respect
to the Business; or
(xi) received any notice nor gained any Knowledge that any
of its licenses or Permits to operate the Facilities
have been or will be suspended, revoked, or
restricted in any manner.
6.7. Real Property. Except as set forth on Schedule 6.7:
6.7.1. Title to Property; Absence of Liens and Encumbrances.
Seller has good and marketable title to the Real Property, free and
clear of all Encumbrances, other than Permitted Encumbrances.
6.7.2. Boundaries; Location. To the best of Seller's
Knowledge, each Real Property and Facility parcel is considered a
separate parcel of land for taxing and conveyancing purposes and each
Real Property or Facility parcel (i) is not
<PAGE> 22
located in a flood plain, flood hazard area or designated wetlands
area, (ii) has no subsidence problems due to natural or manmade
sub-surface conditions, and (iii) the boundaries of each Real Property
and Facility Parcel are consistent with their legal descriptions in
Schedule 6.7 and no Person disputes such boundaries except as may be
otherwise disclosed herein.
6.7.3. Use and Operations. Except as otherwise may be
disclosed in any Schedules, the use and operation of each Facility
conforms in all material respects to all applicable building, zoning,
safety and subdivision laws, Environmental Laws and other Legal
Requirements, and all restrictive covenants and restrictions and
conditions affecting title, including but not limited to:
a. Easements; Rights of Way. To the best of Seller's
Knowledge, there are no easements or rights of way except (i)
those shown by the public records of the counties in which the
Facilities are located and (ii) those identified on the
surveys provided to Purchaser by Seller.
b. Water. To the best of Seller's Knowledge, there are no
public or private rights to any water source located on, by,
or under any of the Facilities.
c. Mechanic/Materialman Liens. To the best of Seller's
Knowledge, all bills for services performed or materials
furnished to the Facilities have been paid in full or will be
paid in full as of the Closing Date. To the best of Seller's
Knowledge, there are no mechanic or materialman liens against
the Facilities.
d. Mortgages. There are no unrecorded mortgages affecting the
Facilities. All recorded mortgages on the Owned Facilities, if
any, shall be satisfied in full and releases thereof shall be
delivered on the Closing Date.
e. Adverse Possession. To the best of Seller's Knowledge, no
person has acquired any rights to any of the Facilities by
adverse possession or prescription.
f. Restrictive Covenants. To the best of Seller's Knowledge,
there are no public or private restrictive covenants,
servitudes, or agreements prohibiting, limiting, or impairing
any use of the Facilities.
6.7.4. Utilities. To the best of Seller's Knowledge, all
utilities (including water, electric, storm and sanitary sewage and
telephone utilities) required to operate the Facilities are available
to the Facilities and such utilities enter the boundaries of the
Facilities through adjoining public streets, permanent easements or
rights-of-way of record in favor of Seller. Such utilities are all
connected pursuant to valid permits, are all in functional working
order and are adequate to service the operations of the Facilities as
currently conducted and intended to be
<PAGE> 23
conducted and are in full compliance with all Legal Requirements.
Seller has not received any written notice of any proposed, planned or
actual curtailment of service of any utility supplied to the
Facilities.
6.7.5. Assessment Notices. Seller has no Knowledge of and has
not received any written or oral notice of assessments for public
improvements against any Facility or any written or oral notice or
order by any Governmental Authority, any insurance company that has
issued a policy with respect to any of the Facilities or any board of
fire underwriters or other body exercising similar functions that
relates to violations of building, safety or fire ordinances or
regulations, that claims any defect or deficiency with respect to any
of the Facilities or requests the performance of any repairs,
alterations or other work to or in any of such properties or in the
streets bounding the same.
6.7.6. Condemnation. To the best of Seller's Knowledge, there
is no pending or threatened condemnation, expropriation, eminent domain
or similar proceeding affecting all or any portion of any Facility and
Seller has no Knowledge of the likelihood thereof.
6.8. Contracts and Commitments. Except as listed on Schedule 2.1.3,
Seller is not a party to any written or oral (related to or in connection with
the Purchased Assets or Business and for which Purchaser shall be bound
following the Closing Date):
(i) Contract for the future purchase of, or payment for,
supplies or products, or for the performance of
services by another party, involving in any one case
$10,000 or more (and not terminable by Seller or
Purchaser without penalty or liability on no more
than 90 days notice);
(ii) Contract to sell or supply products or to perform
services, involving in any one case $10,000 or more
(except for any Resident/Patient's Agreement or any
other agreement terminable by Seller or Purchaser
without penalty or liability on no more than 90 days
notice);
(iii) Contract continuing over a period of more than six
months from the date hereof or exceeding $10,000 in
value (except for any Resident/Patient's Agreement or
any other agreement terminable by Seller or Purchaser
without penalty or liability on no more than 90 days
notice);
(iv) representative, sales agency, dealer or distributor
Contract;
(v) lease (other than the Facility Leases) under which
Seller is either lessor or lessee involving an annual
payment of more than $10,000;
<PAGE> 24
(vi) note, debenture, bond, conditional sale agreement,
equipment trust agreement, letter of credit
agreement, loan agreement or other Contract or for
the borrowing or lending of money (including without
limitation loans to or from Employees) or guarantee,
pledge or undertaking of the indebtedness of any
other Person;
(vii) Contract for any charitable or political
contribution;
(viii) Contract limiting or restraining Seller or any
successor or assign (including Purchaser) from
engaging or competing in any kind of business with
any Person (except as disclosed on Schedule 6.8); or
(ix) license, franchise, distributorship or other
agreement, including those that relate in whole or in
part to any patent, trademark, trade name, service
mark or copyright or to any ideas, technical
assistance or other know-how of or used by the
Business.
Each of the Contracts and other instruments, documents and undertakings
listed on Schedule 2.1.3 is valid and enforceable in accordance with its terms
in all material respects, Seller is in compliance with the provisions thereof in
all material respects, Seller is not in default in the performance, observance
or fulfillment of any material obligation, covenant or condition contained
therein, and no event has occurred that with or without the giving of notice or
lapse of time, or both, would constitute such a default by Seller thereunder or,
to Seller's Knowledge, a material default by any other party thereto. Except as
otherwise listed on Schedule 2.1.3, no consent or approval of any party to any
Contract, commitment, lease or other instrument, document or undertaking listed
on Schedule 2.1.3 is required for the execution of this Agreement or the
consummation of the transactions contemplated hereby.
6.9. Permits, Licenses. Seller has all Permits that are required to
operate the Business and Seller is in material compliance with the terms and
conditions of the Permits. Schedule 2.1.4 hereto sets forth a correct and
complete list of all material Permits, each one of which is in full force and
effect. To Seller's Knowledge, no suspension or cancellation of any of the
Permits is pending or threatened and no cause exists for such suspension or
cancellation. Any Permits that cannot be transferred or require consent or
approval for the transfer are specifically identified on Schedule 2.1.4 hereto
as nontransferable or requiring such consent or approval.
6.10. Compliance with Laws. Except as described in Schedule 6.10
hereto, Seller has conducted, and is presently conducting, the Business so as to
comply in all material respects with all Legal Requirements applicable to the
conduct of operation of the Business or the ownership or use of the Purchased
Assets.
6.11. Legal Proceedings. Except as described in Schedule 6.11 hereto,
there is no claim, action, suit, proceeding, investigation or inquiry pending
before any Governmental Authority or, to Seller's Knowledge, threatened against
Seller with respect to the Business or any of the Purchased Assets, or relating
to the transactions
<PAGE> 25
contemplated by this Agreement, nor to Seller's Knowledge is there any basis for
any such claim, action, suit, proceeding, investigation, or inquiry. Except as
set forth on Schedule 6.11 hereto, Seller is not a party to or subject to the
provisions of any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental, regulatory or administrative official, body
or authority or other Governmental Authority that relates to the Purchased
Assets or the Business or that might affect the transactions contemplated by
this Agreement.
6.12. Absence of Undisclosed Liabilities. Except as set forth in
Schedule 6.12, Seller has no material liabilities or obligations in excess of
$15,000 relating to the Business except (i) those liabilities and obligations
set forth on the financial statements of Seller referenced in Section 6.4 and
not heretofore paid or discharged; (ii) those liabilities and obligations
arising in the ordinary course of Seller's business consistent with past
practice under any Contract or commitment specifically disclosed on Schedule
2.1.3 hereto or not required to be disclosed because of the term or amount
involved; and (iii) those liabilities and obligations incurred in the ordinary
course of Seller's business with past practice since September 30, 1999.
6.13. Books and Records. All books of account and other financial
records of Seller directly relating to the Business (the "Books and Records")
are materially complete and correct and have been made available to Purchaser.
6.14. Employees. Schedule 1.22 sets forth a true, correct and complete
list of all individuals currently employed by Seller in the conduct of the
Business and their rate of compensation and date of hire. Except as set forth on
Schedule 1.22, none of the individuals employed by Seller have been given any
credit for service under any Payroll Practice/Employee Arrangement prior to
their respective date of hire.
6.15. Labor Relations. No Employee of Seller is represented by any
union or other labor organization. No representation election, arbitration
proceeding, grievance, labor strike, dispute, slowdown, or stoppage is pending,
to Seller's Knowledge, or threatened against, involving, affecting or
potentially affecting Seller. No complaint against Seller is pending or, to
Seller's Knowledge, threatened before the National Labor Relations Board, the
Equal Employment Opportunity Commission or any similar state or local agency, by
or on behalf of any Employee of Seller.
6.16. Payroll Practice/Employee Arrangement.
6.16.1. Benefit Plans. Schedule 6.16 contains a complete list
of each employee benefit plan subject to ERISA, and/or holiday,
vacation or other bonus practice or any other employee pay practice,
arrangement, agreement or commitment ("Payroll Practice/Employee
Arrangement") and maintained by or with respect to which Seller has any
liability or obligation, whether actual or contingent, with respect to
the Employees or their respective beneficiaries.
6.16.2. Plan Liability. Seller has not taken and will not take
any action that may result in Purchaser being a party to, or bound by,
an ERISA Plan, and
<PAGE> 26
Purchaser shall have no liability under or be subject to any liability
on account of any ERISA Plan following the consummation of the
transaction hereby.
6.16.3. Retirement Benefits. No Payroll Practice/Employee
Arrangement will require the payment of retiree medical benefits by
Purchaser.
6.17. Finder's Fee. Except as set forth on Schedule 6.17, Seller has
not taken any action that would give to any Person a right to a finder's fee or
any type of brokerage commission in relation to, or in connection with, the
transactions contemplated by this Agreement. Seller is solely responsible for
payment of the fee described on Schedule 6.17.
6.18. Interest in Business. Except as set forth on Schedule 6.18, as of
the date of this Agreement, Seller has not granted, and there is not
outstanding, any option, right, agreement or other obligation pursuant to which
any Person could claim a right to acquire in any way all or any part of, or
interest in, the Business, Facilities, or Purchased Assets.
6.19. Condition of Assets. Except as set forth on Schedule 6.19, all
taken as a whole, the buildings, structures and equipment that are part of the
Purchased Assets are in adequate physical condition for their present and
intended use in the conduct of the Business consistent with past practice and
are otherwise in good working order except for reasonable and ordinary wear and
tear.
6.20. Environmental Matters. Except as disclosed in Schedule 6.20 and
except to the extent that noncompliance would not have a material adverse effect
on the Business, to the best of Seller's Knowledge, Seller is in compliance in
all material respects with all Environmental Laws applicable to Seller, the
Business, the Facilities, the Purchased Assets and the Facility Leases. The
foregoing representation and warranty applies to the operation of the Business
and the use of the Purchased Assets including, but not limited to, the use,
handling, treatment, storage, transportation and disposal of any hazardous,
toxic or infectious waste, material or substance (including medical waste). To
the best of Seller's Knowledge, no investigation or review is pending or
threatened by any Governmental Authority or other Person with respect to any
alleged violation by Seller or the Business of any Environmental Law, the need
for any work, repairs or demolition by Seller, on or in connection with the Real
Property or the Facility Leases in order to comply with any Environmental Law,
or any actual or threatened release (including, but not limited to, any spill,
discharge, leak, emission, ejection, escape or dumping) or inadequate storage
of, or contamination caused by, any hazardous, toxic or infectious waste,
material or substance (including medical waste) or petroleum product, material
or waste or radioactive substance or waste, or any such constituent which would
have a material adverse effect.
6.21. Surveys. Seller has provided Purchaser with copies of Seller's
federal and/or state surveys or inspections and any plans of correction for the
current year and the immediately preceding year for the Facilities. Each such
survey or inspection was prepared in material compliance with all applicable
Legal Requirements.
<PAGE> 27
6.22. Tax Returns. Seller has filed or caused to be filed, or will file
or cause to be filed, all Tax Returns that are required to be filed by it prior
to or on the Closing Date, pursuant to all Legal Requirements of each
Governmental Authority with taxing power over it. All such Tax Returns were or
will be, as the case may be, correct and complete in all material respects.
Seller has paid or will pay all Taxes that have or will become due as shown on
such Tax Returns or pursuant to any assessment received as an adjustment to such
Tax Returns, except (i) such Taxes, if any, as are being contested in good
faith, and (ii) such Taxes that are fully reserved against on the financial
statements of Seller previously provided to Purchaser, and Taxes accruing that
are not yet due. All such Taxes are Retained Liabilities and subject to the
indemnification provisions set forth in Section 14.2.
6.23. Compliance with Medicare and Medicaid. To the best of Seller's
Knowledge, no claims have been made by Medicare or Medicaid or by any Third
Party Payor which would prevent Purchaser from operating the Facilities as
contemplated herein and contracting with and receiving payments from such
sources or which would otherwise materially affect Purchaser's reimbursement
from such sources.
6.24. FIRPTA. Seller is not a "foreign person" as such term is defined
under Section 1445(f)(3) of the Code.
6.25. Computer Software. Seller makes no representations or warranties
regarding year 2000 compliance of any computer software or hardware included in
the Purchased Assets.
6.26. Medicare, Medicaid and Other Third-Party Payors.
(1) Seller participates in the Medicare and Medicaid Programs.
A list of Seller's Medicare and Medicaid contracts and provider numbers
(or if such contracts do not exist other documentation evidencing such
participation) (collectively, the "Provider Agreements") are listed in
Schedule 6.26 attached hereto. Seller is, and intends to be at the time
of Closing, in full compliance with the terms, conditions and
provisions of the Provider Agreements.
(2) To the extent not provided before Closing, Seller shall
provide to Purchaser a copy of the most recent Statement of
Deficiencies and Plan of Correction, if any.
(3) To the best of Seller's Knowledge, no notice of any offset
against future reimbursements under or pursuant to the Provider
Agreements has been received by Seller nor is there any basis therefor.
There are no pending appeals, adjustments, challenges, audits,
litigation, or notices of intent to recoup past or present
reimbursements with respect to the Provider Agreements. Seller has not
been subject to or threatened with loss of waiver or liability for
utilization review denials with respect to the Provider Agreements
during the past twelve (12)
<PAGE> 28
months nor has Seller received notice of any pending, threatened or
possible decertification or other loss of participation in any of the
Provider Agreements.
(4) All liabilities and contractual adjustments of Seller
under any Third Party Payor or reimbursement programs have been
properly reflected and adequately reserved for in its financial
statements. In the event that Purchaser suffers any offsets against any
reimbursement due to Purchaser under any Third Party Payor or
reimbursement programs, including but not limited to the Provider
Agreements, relating to the periods on or prior to Closing, then Seller
shall within 30 days of discovery thereof pay to Purchaser the amounts
so offset. If Seller fails to pay Purchaser any such amounts within 30
days, Seller agrees to pay Purchaser the amounts so offset with
interest at a rate equal to ten percent (10%) per annum accruing
thereafter until the date paid by Seller to Purchaser.
6.26. Facility Leases. With respect to the Facility Leases:
(1) Schedule 2.1.1 sets forth each agreement which relates to Seller's
right to occupy, use and enjoy the Leased Facilities;
(2) Neither Seller, any landlord or sublessor, nor any other Person is
or will be as of the Closing Date in breach or default of any provision
of the Facility Leases nor is Seller aware of anything that with the
passage of time that would constitute an event of default;
(3) All rent and other amounts due under the Facility Leases are
current and no amount is outstanding other than as may be permitted
under the Facility Leases; and
(4) No tangible personal property is leased pursuant to the Facility
Leases except as set forth in Schedule 2.1.3.
6.27. Future Financial Performance. Seller has and will have following
the Closing Date the financial ability to perform its obligations under this
Agreement and to indemnify Purchaser as provided in Section 14.2.
6.28. Knowledge of Purchaser. None of the foregoing representations and
warranties of the Seller shall be deemed materially false, inaccurate or
incomplete as a result of any change in any applicable Legal Requirements over
which Seller has no control or authority and to which Purchaser has knowledge,
including without limitation, changes in private and public payor reimbursement
rules and regulations.
ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser represents and
warrants to Seller that each of the following representations and warranties is
true and correct as of the date hereof:
<PAGE> 29
7.1. Organization, Good Standing, Power. Purchaser is a nonprofit
corporation duly organized, validly existing and in good standing under the laws
of its state of organization and has all requisite power and authority to
execute and deliver this Agreement, the Other Agreements, and the Ancillary
Agreements to which Purchaser is a Party, to consummate the transactions
contemplated hereby and thereby and to perform all the terms and conditions
hereof and thereof to be performed by it.
7.2. Authorization of Agreement and Enforceability. Purchaser has taken
all necessary corporate action to authorize the execution and delivery of this
Agreement and the Ancillary Agreements to which Purchaser is a Party, the
performance by it of all terms and conditions hereof and thereof to be performed
by it and the consummation of the transactions contemplated hereby and thereby.
This Agreement, the Other Agreements, and the Ancillary Agreements, upon
Purchaser's execution and delivery thereof, will constitute, the legal, valid
and binding obligations of Purchaser, enforceable in accordance with their terms
except to the extent that enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws presently or hereafter in effect
relating to or affecting the enforcement of creditors' rights generally and by
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).
7.3. No Violations; Consents. Except as set forth on Schedule 7.3, the
execution, delivery and performance by Purchaser of this Agreement, the Other
Agreements and the Ancillary Agreements to which Purchaser is a Party and the
consummation of the transactions contemplated hereby and thereby will not (with
or without the giving of notice or the lapse of time, or both) (i) violate any
provision of the charter, bylaws or operating agreement of Purchaser, (ii)
except with respect to notices and consents required to be given by Purchaser to
any Accreditation Body or Governmental Authority in connection with the sale and
change of ownership of the Purchased Assets and the Business, violate, or
require any consent, authorization or approval of or exemption by, or filing
under any Legal Requirements (iii) violate any judgment, order, writ or decree
of any court applicable to Purchaser, or (iv) conflict with, result in a breach
of, constitute a default under, or accelerate or permit the acceleration of the
performance required by, or require any consent, authorization or approval under
any agreement, contract, commitment, lease or other instrument, document or
undertaking to which Purchaser is a Party.
7.4. Legal Proceedings. There is no claim, action, suit, proceeding,
investigation or inquiry pending before any Governmental Authority or, to
Purchaser's Knowledge, threatened against Purchaser or any of Purchaser's
properties, assets, operations or businesses that might prevent or delay the
consummation of the transactions contemplated hereby.
7.5. No Finder. Purchaser has not taken any action which would give to
any Person a right to a finder's fee or any type of brokerage commission in
relation to, or in connection with, the transactions contemplated by this
Agreement.
<PAGE> 30
7.6. Purchaser's Assets. Neither Purchaser nor Purchaser's "ultimate
parent entity" (as such term is defined in 16 CFR, Chapter 1, Subchapter H,
Section 801.1 et seq.) had: (i) annual net sales of $100,000,000 or more as
stated on its last regularly prepared statement of income and expenses; or (ii)
total assets of $100,000,000 or more as stated on its last regularly prepared
balance sheet.
7.7. Future Financial Performance. Purchaser has and will have
following the Closing the financial ability to perform its obligations under the
Facility Leases and the Lease Guaranty Fee Agreement(s) (if necessary and
required due to the guaranty obligations of BCC required by Seller's landlords
and lenders). The Parties agree to finalize the form and content of the Lease
Guaranty Fee Agreement on terms mutually acceptable to both Parties within 7
days after the date of execution of this Agreement.
ARTICLE VIII. COVENANTS OF SELLER PRIOR TO CLOSING DATE
8.1. Required Actions. Between the date of this Agreement and the
Closing Date, Seller covenants that it will, in its conduct of the Business,
except as otherwise agreed by Purchaser in writing:
8.1.1. Access to Information. Give to Purchaser and its
counsel, accountants, consultants and other representatives, for the
purpose of audit, review and copying, reasonable access to such of the
books, accounts, Contracts and records of Seller as are relevant to the
Purchased Assets and the Business, and furnish or otherwise make
available to Purchaser all such information concerning the Purchased
Assets and the Business as Purchaser may reasonably request.
Accordingly, Seller shall provide Purchaser with the following:
(i) Seller's occupancy reports for the Facilities, as
soon as the same become available through the Closing
Date, but no later than 20 days after the last day of
any given month (which reports shall be prepared
based on the number of operational beds):
(ii) Seller's federal and/or state surveys or inspections
and any plans of correction for the Facilities, as
soon as the same become available through the Closing
Date, but no later than 10 days after received by
Seller;
(iii) Seller's cost reports for the current year if
applicable and the immediately preceding year for the
Facilities, together with the current rate schedule
for such Facilities;
(iv) monthly statements of profit and loss of Seller for
the Facilities, as soon as the same become available
through the Closing Date, but no later than 30 days
after the last day of each month;
(v) Seller's most recent Aging Reports for the Facilities
on the Closing Date.
<PAGE> 31
8.1.2. Conduct of Business. Operate the Business in the usual,
regular and ordinary manner as such Business was conducted prior to the
date hereof and, to the extent consistent with such operation, use
reasonable commercial efforts until the Closing Date to (i) preserve
and keep intact the Business, (ii) maintain current accounting policies
applied on a consistent basis, (iii) keep available the services of the
Employees; (iv) preserve its relationships with landlords, residents,
patients, suppliers and others having business dealings with Seller in
connection with the Business; (v) satisfy all Encumbrances to the
extent required by the instruments and documents relating thereto; and
(vi) maintain current marketing activities, subject, in each case, to
customary changes in the ordinary course of business;
8.1.3. Maintenance of Properties. Maintain the Purchased
Assets, whether owned or leased, in their present order and condition,
in accordance with Seller's past practices, reasonable wear and tear
excepted but in any event in compliance with the Facility Leases;
8.1.4. Maintenance of Books and Records. Maintain the Books
and Records in the usual, regular and ordinary manner, on a basis
consistent with past practice.
8.1.5. Compliance with Applicable Law. Comply in all material
respects with all Legal Requirements applicable to Seller and the
Purchased Assets and to the conduct of the Business;
8.1.6. Performance of Obligations. Perform all obligations of
Seller relating to the Purchased Assets and the Business in accordance
with the past practices of Seller including all obligations under the
Facility Leases;
8.1.7. Approvals, Consents. Use its commercially reasonable
best efforts to obtain in writing as promptly as possible but no later
than the Closing Date (except for the consent conditions for the Home
Health and Hospice Assets as set forth in Section 3.1.3 above) any
approvals and consents as required to be obtained by Seller in order to
effectuate the transactions contemplated hereby including, without
limitation, consents to the assignment of the leases of the Facility
Leases of the Leased Facilities and deliver to Purchaser copies of such
approvals and consents. Accordingly, Seller shall cooperate with
Purchaser's efforts to obtain the necessary licenses to operate the
Facilities from the appropriate Governmental Authorities and
Accreditation Bodies, including, without limitation, the Department of
Health and Department of Social Services. Upon execution and delivery
of this Agreement, Seller shall promptly:
(i) provide Purchaser with copies of all Permits;
(ii) notify each Accreditation Body, Governmental
Authority, and Third Party Payor as required by any
Legal Requirement of the pending change of ownership
of the Facilities; and
<PAGE> 32
(iii) provide such other notices as required by all Legal
Requirements including, if required, notices to
Seller's residents/patients of the Facilities. Prior
to sending the notices, Seller shall provide copies
to Purchaser for review and approval, which approval
shall not be unreasonably withheld, delayed, or
conditioned.
8.1.8. Compliance with Agreement. Not undertake any course of
action materially inconsistent with satisfaction of the conditions
applicable to it set forth in this Agreement, and use its commercially
reasonable best efforts to do all such acts and take all such measures
as may be reasonably necessary to comply with the representations,
agreements, conditions and other provisions of this Agreement;
8.1.9. Insurance. Keep the Facilities insured against the same
risks and in at least the same amounts of coverage as of the date of
this Agreement or as required by the Facility Leases; and
8.1.10. Other Agreements and Ancillary Agreements. Execute and
deliver each of the Other Agreements and Ancillary Agreements and to
consummate the transactions contemplated thereby;
8.2. Other Deliveries. At its own cost and expense, Seller shall
deliver with respect to the Real Property at or before Closing:
8.2.1. FIRPTA Certificates. A certificate, duly executed and
acknowledged by an officer of Seller, in the form prescribed by
Treasury Regulation Section 1.1445-2(b)(2)(iii), stating Seller's name,
address and Federal tax identification number, and that it is not a
"foreign person" within the meaning of Section 1445 of the Code.
8.2.2 Other. All other documents and items required to be
delivered by Seller pursuant to Section 5.2.
8.3. Prohibited Actions. Between the date of this Agreement and the
Closing Date, in its conduct of the Business, Seller shall not, except as
otherwise agreed by Purchaser in writing:
8.3.1. Sale of Purchased Assets. Sell, transfer, assign,
lease, encumber or otherwise dispose of any of the Purchased Assets
other than in the ordinary course of Seller's business consistent with
past practices;
8.3.2. Business Changes. Change in any material respect the
character of the Business;
8.3.3. Incurrence of Material Obligations. Incur any material
obligation or enter into any material agreement, commitment or other
transaction or arrangement, commitment or other transaction or
arrangement that is not in the
<PAGE> 33
ordinary course of Seller's business and with respect to which
Purchaser will be bound subsequent to Closing;
8.3.4. Incurrence of Liens. Subject to lien, security interest
or any other Encumbrance, other than Permitted Encumbrances, any of the
Purchased Assets;
8.3.5. Change in Employee Compensation and Benefits. Increase
the rate of compensation paid, or pay any bonus, to anyone connected
with the Business, except for those increases or bonuses planned, in
the ordinary course of Seller's business consistent with past practices
and disclosed to Purchaser in writing prior to the Closing Date, or
establish or adopt any new pension or profit-sharing plan, deferred
compensation agreement or employee benefit arrangement of any kind
whatsoever covering or affecting Employees;
8.3.6. Publicity; Advertisement. Except as required by law or
pursuant to the rules and regulations of the Securities and Exchange
Commission or the American Stock Exchange, publicize, advertise or
announce to any third-party, except as required pursuant to this
Agreement to obtain the consent of such third-party, the entering into
of this Agreement, the terms of this Agreement or the transactions
contemplated hereby; and
8.3.7. No Termination or Modification. Terminate or materially
modify any Contract listed on Schedule 2.1.3, any Facility Lease, or
other authorization or agreement affecting the Business or the
Purchased Assets or the operation thereof except in the ordinary course
of business.
8.4. Extended Due Diligence. For the 30 days immediately following the
execution and delivery of this Agreement, Seller shall assist and provide
Purchaser all information and access, with respect to Seller, that Purchaser may
reasonably request for the purpose of conducting due diligence concerning
Seller's ability to perform its obligations under this Agreement; provided,
however, Purchaser shall conduct all reviews, inspections, and visits at the
Facilities during normal business hours and shall obtain the prior approval of
Seller before undertaking any such action.
8.5. Occupancy Rate. Seller shall use its commercially reasonable best
efforts to maintain occupancy rates at the same levels through Closing. For each
of the periods of: (i) one month before Closing; and (ii) five (5) days before
Closing, the average total occupancy of residents shall not have decreased by
more than seven and one-half percent (7.5%).
8.6. Environmental Permit. Seller shall use its commercially reasonable
best efforts to cause Purchaser to receive the permit required to operate the
waste water treatment facility at the Leased Facility known as "Terraces at
Balanced Care, Lamar" no later than the Closing Date.
<PAGE> 34
ARTICLE IX. COVENANTS OF PURCHASER PRIOR TO CLOSING DATE
9.1. Required Actions. Between the date of this Agreement and the
Closing Date, Purchaser shall, except as otherwise agreed by Seller in writing,
use its commercially reasonable best efforts to do all such acts and take all
such measures as may be reasonably necessary to comply with the representations,
agreements, conditions and other provisions of this Agreement.
9.1.1. Other Agreements. Purchaser shall execute and deliver
each of the Other Agreements and shall consummate the transactions
contemplated thereby.
9.2. Prohibited Actions. Between the date of this Agreement
and the Closing Date, Purchaser shall:
9.2.1. Investigation. Use reasonable efforts to conduct an
investigation of the Business of Seller in such a manner as to prevent
disruption of relations with the Employees, residents, patients and
suppliers of Seller, which investigation may include such due diligence
as is customary for transactions of the type contemplated herein.
Purchaser shall have no contact with Employees of any of the Facilities
without the prior consent of Seller.
9.2.2. Approvals, Consents. Use its commercially reasonable
best efforts to obtain in writing as promptly as possible any approvals
and consents as required to be obtained by Purchaser in order to
effectuate the transactions contemplated hereby and deliver to Seller
copies of such approvals and consents. Accordingly, Purchaser shall
take all reasonable action to obtain the necessary licenses to operate
the Facilities from the Department of Health and Department of Social
Services including:
(i) notify each Accreditation Body and Third Party Payor
as required by any Legal Requirement of the pending
change of ownership of the Facilities;
(ii) provide such other notices as required by all Legal
Requirements including notices to Seller's
residents/patients of the Facilities. Prior to
sending the notices, Purchaser shall provide copies
to Seller for review and approval, which approval
shall not be unreasonably withheld, delayed, or
conditioned; and
(iii) obtain its own provider numbers for the Facilities.
9.2.3. Confidentiality. Treat in confidence all books,
records, documents and information obtained regarding Seller, the
Facilities or Business pursuant to Section 8.1.1 of this Agreement or
otherwise during the course of negotiations leading to the consummation
of this Agreement and the transactions contemplated herein
("Confidential Information"), except that Confidential Information for
these purposes shall not include documents and information that is in
the public domain. Purchaser shall not disclose, use, or otherwise
disseminate Confidential
<PAGE> 35
Information except for purposes of evaluating the Business and the
operations of the Facilities, to the extent required to respond to the
reasonable requests of Purchaser's lender to obtain financing necessary
to consummate the transactions contemplated hereunder and as otherwise
permitted under this Agreement and the transactions contemplated
herein.
9.2.4. Publicity; Advertisement. Except as required by law,
publicize, advertise or announce to any third-party, except as required
pursuant to this Agreement to obtain the consent of such third-party,
the entering into of this Agreement, the terms of this Agreement or the
transactions contemplated hereby; provided, however, the foregoing
shall not be applicable to disclosures made by Purchaser to Purchaser's
lender in response to such lender's reasonable requests.
9.3. Extended Due Diligence. For the 30 days immediately following the
execution of this Agreement, Purchaser shall assist and provide Seller all
reasonable information and access, with respect to Purchaser and Purchaser's
owners and lenders, that Seller may reasonably request for the purpose of
conducting due diligence concerning Purchaser's ability to perform its
obligations under the Facility Leases and the Lease Guaranty Fee Agreement(s)
(if necessary and required due to the guaranty obligations of BCC required by
Seller's landlords and lenders).
ARTICLE X. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser to proceed with any Closing under this
Agreement is subject to the fulfillment prior to or at the time of Closing of
the following conditions with respect to Seller, any one or more of which may be
waived in writing in whole or in part by Purchaser:
10.1. Accuracy of Representations and Warranties. The representations
and warranties of Seller contained in this Agreement, the Other Agreements and
the Ancillary Agreements to which Seller is a party shall be true in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date.
10.2. Performance of Agreement. Seller shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants and conditions contained in this Agreement and the
Ancillary Agreements to which Seller is a party to be performed or complied with
by it at or prior to the Closing Date.
10.3. Seller's Certificate. Purchaser shall have received a certificate
from Seller, dated as of the Closing Date, reasonably satisfactory in form and
substance to Purchaser, certifying as to the matters specified in Section 10.1
and Section 10.2 hereof.
10.4. Secretary's Certificate. Purchaser shall have received a
certificate, dated as of the Closing Date, of the Secretary or any Assistant
Secretary of Seller with respect to the incumbency and specimen signature of
each officer or representative of Seller
<PAGE> 36
executing this Agreement and stating the resolution of the board of directors of
Seller authorizing the transactions contemplated hereby, the certificate
referred to in Section 10.3 and the Ancillary Agreements to which Seller is a
party.
10.5. Injunction. On the Closing Date, there shall be no injunction,
writ, preliminary restraining order or any order of any nature in effect issued
by a court of competent jurisdiction directing that the transactions provided
herein, or any of them, not be consummated as herein provided and no suit,
action, investigation, inquiry, or other legal or administrative proceeding by
any Governmental Authority or other Person shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby or which if successfully asserted might otherwise have a
material adverse effect on the conduct of the Business or impose any additional
material financial obligation on or require the surrender of any material right
by, Purchaser.
10.6. Actions and Proceedings. All corporate actions, proceedings,
instruments and documents required to carry out the transactions contemplated by
this Agreement or incidental hereto and all other related legal matters shall be
reasonably satisfactory to Purchaser, and Purchaser shall have been furnished
with such certified copies of such corporate actions and proceedings and such
other instruments and documents as it shall have reasonably requested,
including, without limitation:
(i) certificates of the appropriate public officials to
the effect that BCC and each Subsidiary is a validly
existing corporation in good standing in its state of
incorporation as of a date not more than 30 days
prior to the Closing Date;
(ii) incumbency and specimen signature certificates dated
the Closing Date, signed by the officers of each
Seller and certified by its Secretary; and
(iii) true and correct copies of (A) the charter documents
of BCC and each Subsidiary as of a date not more than
30 days prior to the Closing Date, certified by the
Secretary of State of its state of incorporation and
(B) the bylaws of BCC and each Subsidiary as of the
Closing Date, certified by the Secretary of Seller.
10.7. Other Agreements. Each of the Other Agreements shall have been
executed and delivered by the parties thereto, and the transactions contemplated
thereby shall have been consummated.
10.8. Consents. Any third-party consents, approvals, authorizations or
Permits including, without limitation, those required by any Governmental
Authorities and those required to assign the Facility Leases (except for the
consent conditions for the Home Health and Hospice Assets as set forth in
Section 3.1.3 above) and as otherwise necessary for the conveyance of Purchased
Assets or valid consummation of the transactions contemplated hereby shall have
been obtained. For purposes of this Section, the consents
<PAGE> 37
of all landlords of the Leased Facilities, and the consent of all Governmental
Authorities to the transfer of any Permits (to the extent transferable) shall be
deemed material.
10.9. Material Adverse Change. There shall have been no material
adverse change in the Business or prospects of the Facilities from those
existing on the date hereof.
10.10. Financing Available. Purchaser shall have obtained the necessary
financing for the payment of the Purchase Price.
ARTICLE XI. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
The obligation of Seller to proceed with any Closing under this
Agreement is subject to the fulfillment prior to or at the time of Closing of
the following conditions with respect to Purchaser, any one or more of which may
be waived in whole or in part by Seller.
11.1. Accuracy of Representations and Warranties. The representations
and warranties of Purchaser contained in this Agreement shall have been true in
all material respects on the date hereof and shall be true in all material
respects on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date.
11.2. Performance of Agreement. Purchaser shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants and conditions contained in this Agreement to be
performed or complied with by it at or prior to the Closing Date.
11.3. Purchaser's Certificate. Seller shall have received a certificate
from Purchaser, dated as of the Closing Date, reasonably satisfactory in form
and substance to Seller and its counsel, certifying as to the fulfillment of all
matters specified in Section 11.1 and Section 11.2 hereof.
11.4. Secretary's Certificate. Seller shall have received a
certificate, dated the Closing Date, of the Secretary or any Assistant Secretary
of Purchaser with respect to the incumbency and specimen signature of each
officer or representative of Purchaser executing this Agreement and stating the
resolution of the board of directors of Purchaser authorizing the transactions
contemplated hereby, the certificate referred to in Section 11.3 and the
Ancillary Agreements to which Purchaser is a party.
11.5. Injunction. On the Closing Date, there shall be no injunction,
writ, preliminary restraining order or any order of any nature in effect issued
by a court of competent jurisdiction directing that the transactions provided
for herein, or any of them, not be consummated as herein provided and no suit,
action, investigation, inquiry or other legal or administrative proceeding by
any Governmental Authority or other Person shall
<PAGE> 38
have been instituted, threatened or anticipated which questions the validity or
legality of the transactions contemplated hereby.
11.6. Other Agreements. Each of the Other Agreements shall have been
executed and delivered by the parties thereto, and the transactions contemplated
thereby shall have been consummated.
11.7. Consents. Any third-party consents, approvals, authorizations or
Permits including, without limitation, those required by any Governmental
Authorities and those required to assign the Facility Leases (except for the
consent conditions for the Home Health and Hospice Assets as set forth in
Section 3.1.3 above) and as otherwise necessary for the conveyance of Purchased
Assets or valid consummation of the transactions contemplated hereby shall have
been obtained. For purposes of this Section, the consents of all landlords of
the Leased Facilities, and the consent of all Governmental Authorities to the
transfer of any Permits (to the extent transferable) shall be deemed material.
11.8. Financing Available. Purchaser shall have obtained the necessary
financing for the payment of the Purchase Price.
11.9. Opinion of Counsel. Seller shall have received a favorable
opinion of counsel for Purchaser if required by any of Seller's Landlords
(including, without limitation, Meditrust Corporation and Healthcare Realty
Trust), in a form reasonably satisfactory to Seller's Landlords and its counsel.
ARTICLE XII. OBLIGATIONS AFTER THE CLOSING DATE
12.1. Transition of Employees. From and after the Closing Date,
Purchaser and Seller shall cooperate to ensure an orderly transition of the
Employees who accept employment with Purchaser.
12.2. Certain Transitional Matters.
12.2.1. Transfer of Assets. After the Closing, each Party
shall promptly transfer and deliver to the other Party any property
belonging to the other Party that comes into the possession of the
first Party.
12.2.2. Accounts Receivable. Seller and Purchaser shall use
reasonable commercial efforts to collect and shall deliver to each
other, as the case may be, all Accounts Receivable as of the Closing
Date for services rendered to residents of the Facilities prior to the
Closing Date as follows:
(i) Residents of Facilities. For all private pay
residents of the Facilities who have an account as of
the Closing Date that has a balance owed beyond 30
days on the most recent accounts receivable aging
reports (the "Aging Reports") to be provided at
Closing by Seller to Purchaser, any payments that are
received from any source (the "Resident Payments")
other than Medicare
<PAGE> 39
and Medicaid recipients shall be applied to any
outstanding balance owed to Purchaser, with the
remainder, if any, to be applied to the oldest
outstanding balance of Seller. For all residents who
have an account as of the Closing Date that have a
balance owed of 30 days or less on the Aging Reports,
any Resident Payments that are received from any
source other than a Medicare and Medicaid recipient
shall be applied 50% to Purchaser and 50% to Seller.
If any Resident Payments are received directly from
any Third Party Payor and are accompanied by
remittance advice, such Resident Payments shall be
applied to the outstanding balance corresponding to
such remittance advice. Purchaser agrees to cooperate
with Seller and to allow Seller, at its own cost and
expense, to take such actions as are reasonably
necessary for Seller to collect any outstanding
balances owed to Seller on and after the Closing
Date, including, without limitation, engaging one or
more third parties to provide collection services as
long as such actions shall not materially interfere
with the operation of the Business.
(ii) Non-Residents of Facilities. All payments received by
Purchaser with respect to Accounts Receivable as of
the Closing Date relating to Persons who are not
residents of any of the Facilities as of the Closing
Date shall be delivered to Seller.
(iii) Adequate Assurances Agreement. In order to avoid any
interruption in the payment of the Accounts
Receivable from the Missouri Medicaid Program due and
to become due to Purchaser and/or Seller, Purchaser
and Seller agree to enter into an agreement as
contemplated by 13 CSR 70-10.015(10)(E) to provide
the Department of Social Services with adequate
assurances that the final cost reports will be timely
filed; provided, however, Seller agrees that
Purchaser's payments on the Accounts Receivable shall
not be delayed or withheld as a result of the
untimely filing thereof and to the extent that any
payments are withheld by Seller shall be obligated to
indemnify Purchaser as more fully set forth in the
Adequate Assurances Agreement.
(iv) Procedure. Each of Purchaser and Seller shall
promptly remit to the other Party all payments
received by Purchaser or Seller which belong to the
other Party as determined by the provisions of this
Section 12.2.2. Purchaser may terminate its
obligation to collect the Accounts Receivable at
anytime after the first anniversary of the Closing by
providing 30 days' notice to Seller. Upon providing
such notice, Purchaser shall provide to or as
directed by Seller such information regarding the
Accounts Receivable as Seller may reasonably request
and shall otherwise cooperate with Seller to insure a
smooth transition of collection efforts.
<PAGE> 40
12.2.3. Deferred Transfer. To the extent that either Party
receives funds or other property belonging to the other Party and fails
to deliver it to the Party entitled thereto within 30 days, the Party
failing to deliver shall be obligated to pay the Party entitled to
receive the property a handling fee of $50 per occurrence.
12.2.4. Collection During Transition Period. Purchaser shall
continue to bill all third party and government payors on behalf of and
in the name of Seller as its billing agent for services provided prior
to the Closing Date and until Seller's Accounts Receivable are closed
out or properly transferred and shall remit all collections as provided
herein.
12.3. Further Assurances of Seller. From and after the Closing Date,
Seller shall, at the request of Purchaser, execute, acknowledge and deliver to
Purchaser, without further consideration, all such further assignments,
conveyances, endorsements, deeds, special powers of attorney, consents and other
documents, and take such other action, as Purchaser may reasonably request (i)
to transfer to and vest in Purchaser, and protect its rights, title and interest
in, all the Purchased Assets and (ii) otherwise to consummate the transactions
contemplated by this Agreement. In addition, from and after the Closing Date,
Seller shall afford Purchaser and its attorneys, accountants and other
representatives access, during normal business hours, to any Books and Records
relating to the Business that Seller may retain as may reasonably be required in
connection with the preparation of financial information or tax returns of
Purchaser.
12.4. Further Assurances of Purchaser. From and after the Closing Date
until the Survival Date, Purchaser shall afford to Seller and its attorneys,
accountants and other representatives access, during normal business hours, to
such Books and Records relating to the Business that Purchaser may retain as may
reasonably be required in connection with the preparation of financial
information or Tax Returns relating to the period on or prior to the Closing
Date; provided, however, Purchaser shall retain items in accordance with
applicable laws. From and after the Closing date, Purchaser shall cooperate in
all reasonable respects with Seller with respect to its former interest in the
Business and in connection with financial account closing and reporting and
claims and litigation asserted by or against third parties, including, but not
limited to, making employees then employed by Purchaser available at reasonable
times to assist with, or provide information in connection with financial
account closing and reporting and claims and litigation, provided that Seller
reimburses Purchaser for its reasonable out-of-pocket expenses in connection
therewith.
12.5 Noncompetition. For a period of five (5) years following the
Closing Date, Seller agrees that neither it nor any of its affiliates will
directly or indirectly own, manage, operate, join, control or participate in the
ownership, management, operation or control of any independent living,
residential care, or skilled nursing facilities (as the case may be) within a
10-mile radius of any of the Facilities (as the case may be). Seller
acknowledges that the provisions of this Section are reasonable and necessary to
protect the interests of Purchaser, that any violation of this Section will
result in an irreparable injury to Purchaser and that damages at law would not
be reasonable or adequate compensation to Purchaser for violation of this
Section and that, in addition to any other
<PAGE> 41
available remedies, Purchaser shall be entitled to have the provisions of this
Section specifically enforced by preliminary and permanent injunctive relief
without the necessity of proving actual damages or posting a bond or other
security to an equitable accounting of all earnings, profits and other benefits
arising out of any violation of this Section. In the event that the provision of
this Section shall ever be deemed to exceed the time, geographic scope or other
limitations permitted by applicable law, then the provisions shall be deemed
reformed to the maximum extent permitted by applicable law. The Parties agree to
memorialize the above basic terms, along with other mutually agreeable terms and
conditions, as more fully set forth in a Noncompetition Agreement to be executed
and delivered at Closing.
ARTICLE XIII. TERMINATION
13.1. Termination of Agreement. This Agreement may be terminated:
(i) by the mutual consent of Seller and Purchaser in
writing and signed by both Parties;
(ii) by Seller if the Closing has not taken place (other
than by reason of a material failure of Seller to
fulfill its obligations under this Agreement or by
any other action or inaction by Seller that has a
material adverse effect on the Parties' ability to
consummate the transactions contemplated hereunder)
in accordance with Section 5.1;
(iii) by Purchaser if the Closing has not taken place
(other than by reason of a material failure of
Purchaser to fulfill its obligations under this
Agreement or by any other action or inaction by
Purchaser that has a material adverse effect on the
Parties' ability to consummate the transactions
contemplated hereunder) in accordance with Section
5.1;
(iv) by Purchaser upon notice to Seller if any of the
conditions set forth in Article X hereof have not
been satisfied or become impossible to satisfy by the
Closing Date and are not otherwise waived (other than
by reason of the material failure of Purchaser to
fulfill its obligations under this Agreement or by
any other action or inaction by Purchaser that has a
material adverse effect on the Parties' ability to
consummate the transactions contemplated hereunder);
(v) by Seller upon notice to Purchaser if any of the
conditions set forth in Article XI hereof have not
been satisfied or become impossible to satisfy by the
Closing Date and are not otherwise waived (other than
by reason of the material failure of Seller to
fulfill its obligations under this Agreement or by
any other action or inaction by Seller that has a
material adverse effect on the Parties' ability to
consummate the transactions contemplated hereunder);
<PAGE> 42
(vi) by Seller if Purchaser materially breaches or fails
to fulfill its obligations under this Agreement,
which breach or failure continues and remains uncured
for 15 consecutive calendar days after Seller gives
written notice of such failure to Purchaser;
(vii) by Purchaser if Seller materially breaches or fails
to fulfill its obligations under this Agreement,
which breach or failure continues and remains uncured
for 15 consecutive calendar days after Purchaser
gives written notice of such failure to Seller;
(viii) by Seller if Purchaser fails to pay the Escrow Amount
on the date on which this Agreement is executed; or
(ix) by Seller if after using commercially reasonable best
efforts it is unable to terminate before the Closing
Date, on terms and conditions favorable to Seller in
its absolute discretion, that certain Management
Services Agreement by and between Seller and
Servicmaster Management Services, L.P., dated October
27, 1998, and which provides for the provision of
management services and certain other materials,
supplies and equipment, as defined therein; provided,
however, if Seller elects to exercise its termination
rights under this subsection, Purchaser at its option
may assume this Management Services Agreement under
Section 2.1.3 and Schedule 2.1.3 in which case
Seller's termination rights hereunder will be
automatically rescinded. Purchaser must exercise its
right to assume the Management Services Agreement
hereunder in writing upon 7 days written notice from
Seller.
(x) by either Party as otherwise specifically provided
for in this Agreement.
provided, however, that no Party then in material breach of any of its
obligations hereunder shall have the right to terminate pursuant to this Section
13.1.
13.2. Return of Documents. If this Agreement is terminated for any
reason permitted by this Agreement, each Party shall return to the other Party
all documents and copies thereof which shall have been furnished to it by such
other Party or, with the agreement of the other Party, shall destroy all such
documents and copies thereof.
13.3. Remedies. Except as otherwise provided in this Agreement, if this
Agreement is terminated by Purchaser or Seller as permitted under Section 13.1
and not as a result of a breach, such termination shall be without liability of
any Party. If a Party terminates this Agreement as a result of a breach by the
other Party, the nonbreaching Party, in addition to other available rights or
remedies now or hereafter existing at law or in equity, shall be entitled to
reimbursement from the breaching Party for all expenses (including reasonable
legal fees) incurred by the nonbreaching Party in connection with this Agreement
and the transactions contemplated hereby.
<PAGE> 43
ARTICLE XIV. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
14.1. Survival of Representations and Warranties. All representations
and warranties of the Parties shall survive 24 months from the Closing Date (the
"Survival Date"). Notwithstanding the foregoing, there shall be no termination
of any such representation or warranty as to which a claim has been asserted
prior to the termination of such survival period, and the duration of the
survival of the representations and warranties shall not limit or shorten any
applicable statute of limitations for claims by the Parties.
14.2. Indemnification by Seller. Seller shall indemnify, defend, save
and hold Purchaser and its officers, directors, employees, agents and Affiliates
(collectively, "Purchaser Indemnitees") harmless from and against all demands,
claims, allegations, assertions, actions or causes of action, assessments,
losses, damages, deficiencies, liabilities, costs and expenses (including
reasonable legal fees, interest, penalties, and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing and whether or not
any such demands, claims, allegations, etc., of third parties are meritorious;
collectively, "Purchaser Damages") asserted against, imposed upon, resulting to,
required to be paid by, or incurred by any Purchaser Indemnitees, directly or
indirectly, in connection with, arising out of, or which would not have occurred
but for, (i) a breach of any representation or warranty made by such Seller in
this Agreement, in any certificate or document furnished pursuant hereto by such
Seller or any Other Agreements or Ancillary Agreement to which Seller is a party
and any Retained Liability, (ii) a breach or nonfulfillment of any covenant or
agreement made by Seller in this Agreement or in any Ancillary Agreement to
which Seller is a party, (iii) any and all Retained Liabilities, (iv) any
liability or expense relating to any matter set forth in Schedules 6.7, 6.11 and
6.20, (v) any material discrepancy in the balance of any trust funds of
residents/patients relating to periods prior to the Closing Date; (vi) any and
all liabilities of any nature whatsoever (other than Assumed Liabilities)
arising out of Seller's operation of the business prior to the Closing Date; and
(vii) liability resulting from any breach or default by Seller under any of the
Facility Leases. This indemnification by Seller in clause (i), relating to a
breach of any representation or warranty, shall not apply to any claim made more
than 24 months from the Closing Date.
14.3. Indemnification by Purchaser. Purchaser shall indemnify, defend,
save and hold Seller and its officers, directors, Employees, Affiliates and
agents (collectively, "Seller Indemnitees") harmless from and against any and
all demands, claims, actions or causes of action, assessments, losses, damages,
deficiencies, liabilities, costs and expenses (including reasonable legal fees,
interest, penalties, and all reasonable amounts paid in investigation, defense
or settlement of any of the foregoing and whether or not any such demands,
claims, allegations, etc., of third parties are meritorious; collectively,
"Seller Damages") asserted against, imposed upon, resulting to, required to be
paid by, or incurred by any Seller Indemnitee, directly or indirectly, in
connection with, arising out of, or which would not have occurred but for, (i) a
breach of any representation or warranty made by Purchaser in this Agreement or
in any certificate or document furnished pursuant hereto by Purchaser or any
Other Agreements or Ancillary Agreement
<PAGE> 44
to which Purchaser is a party, (ii) a breach or nonfulfillment of any covenant
or agreement made by Purchaser in this Agreement or in any Ancillary Agreement
to which Purchaser is a party, (iii) any and all Assumed Liabilities and (iv)
any and all liabilities of any nature whatsoever arising out of Purchaser's
operation of the business after the Closing Date. This indemnification by
Purchaser in clause (i), relating to a breach of any representation or warranty,
shall not apply to any claim made more than 24 months from the Closing Date.
14.4. Notice of Claims. If any Purchaser Indemnitee or Seller
Indemnitee (an "Indemnified Party") believes that it has suffered or incurred or
will suffer or incur any Purchaser Damages or Seller Damages, as the case may be
("Damages") for which it is entitled to indemnification under this Article XIV,
such Indemnified Party shall so notify the Party from whom indemnification is
being claimed (the "Indemnifying Party") with reasonable promptness and
reasonable particularity in light of the circumstances then existing. If any
action at law or suit in equity is instituted by or against a third party with
respect to which any Indemnified Party intends to claim any Damages, such
Indemnified Party shall promptly notify the Indemnifying Party of such action or
suit. The failure of an Indemnified Party to give any notice required by this
Section shall not affect any of such Party's rights under this Article XIV or
otherwise except and to the extent that such failure is actually prejudicial to
the rights or obligations of the Indemnified Party.
14.5. Third Party Claims. The Indemnified Party shall have the right to
conduct and control, through counsel of its choosing, the defense of any third
party claim, action or suit, and the Indemnified Party may compromise or settle
the same, provided that the Indemnified Party shall give the Indemnifying Party
advance notice of any proposed compromise or settlement. The Indemnified Party
shall permit the Indemnifying Party to participate in the defense of any such
action or suit through counsel chosen by the Indemnifying Party, provided that
the fees and expenses of such counsel shall be borne by the Indemnifying Party.
If the Indemnified Party permits the Indemnifying Party to undertake, conduct
and control the conduct and settlement of such action or suit, the Indemnifying
Party shall not thereby permit to exist any Encumbrance upon any asset of the
Indemnified Party; the Indemnifying Party shall not consent to any settlement
that does not include as an unconditional term thereof the giving of a complete
release from liability with respect to such action or suit to the Indemnified
Party; the Indemnifying Party shall permit the Indemnified Party to participate
in such conduct or settlement through counsel chosen by the Indemnified Party;
and the Indemnifying Party shall agree promptly to reimburse the Indemnified
Party for the full amount of any Damages including fees and expenses of counsel
for the Indemnified Party incurred after giving the foregoing notice to the
Indemnifying Party and prior to the assumption of the conduct and control of
such action or suit by the Indemnifying Party.
14.6. Threshold. No indemnification shall be made under Section 14.2 or
14.3 with respect to any breach of any representation or warranty until the
aggregate amount of respective Purchaser or Seller Damages thereunder exceeds
$15,000 and then only to
<PAGE> 45
the extent of the excess above such amount. The limits imposed by this Section
shall not apply to breaches under Article 12 of this Agreement.
14.7. Cooperation. Upon request, the Parties agree to work in good
faith and provide needed information to resolve matters that may effect both
Parties.
ARTICLE XV. GENERAL
15.1. Expenses. Except as otherwise provided in this Agreement, and
whether or not the transactions herein contemplated shall be consummated,
Purchaser and Seller shall pay their own fees, expenses and disbursements,
including the fees and expenses of their respective counsel, accountants and
other experts in connection with the subject matter of this Agreement and all
other costs and expenses incurred in performing and complying with all
conditions to be performed under this Agreement.
15.2. Publicity. All notices to third parties and all other publicity
concerning the transactions contemplated by this Agreement shall be jointly
planned and coordinated by and between Purchaser and Seller. Except as may be
required by law or the rules or regulations of the Securities and Exchange
Commission or the American Stock Exchange, no Party shall act unilaterally in
this regard without prior written approval of the other Party, such approval not
to be unreasonably withheld. Purchaser acknowledges that Seller is obligated to
make certain disclosures under the securities laws and the rules of the American
Stock Exchange and consents to such disclosures that Seller in good faith makes
with respect hereto.
15.3. Binding Effect; Benefits. This Agreement shall inure to the
benefit of the Parties hereto, and shall be binding upon the Parties hereto and
their respective successors and assigns. Nothing in this Agreement, express or
implied, is intended to confer on any Person other than the Parties hereto, or
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
15.4. Notices. All notices, requests, demands, elections and other
communications which either Party to this Agreement may be required to give
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally, by a reputable courier service which requires a signature
upon delivery, or by mailing the same by registered or certified first class
mail, postage prepaid, return receipt requested, to the Party to whom the same
is so given or made. Such notice, request, demand, waiver, election or other
communication will be deemed to
<PAGE> 46
have been given as of the date so delivered or electronically transmitted or two
days after mailing thereof.
15.4.1. Notice to Seller.
If to Seller, to:
Balanced Care Corporation
1215 Manor Drive
Mechanicsburg, PA 17055
Attn: Brad E. Hollinger
Chairman and CEO
Fax: (717) 796-6278
With a required copy to:
Balanced Care Corporation
1215 Manor Drive
Mechanicsburg, PA 17055
Attn: Robin L. Barber, Esquire
Senior Vice President and Counsel
Fax: (717) 796-6294
15.4.2. Notice to Purchaser.
If to Purchaser, to:
Christian Health Care of Missouri, Inc.
302 S. 7th Street, Suite B
Rogers, Arkansas 72756
Attn: Allen Kilgore
Fax: (501) 631-7338
With a required copy to:
Ball & Mourton, Ltd., PLLC
E.J. Ball Plaza - 112 W. Center, Suite 700
Fayetteville, Arkansas 72702
Attn: Rayburn W. Green, Esquire
Fax: (501) 442-6233
or to such other addresses as such Party shall have specified by notice to the
other Party hereto.
15.5. Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto), the Other Agreements, and the Ancillary Agreements and
documents delivered at Closing pursuant hereto and thereto constitute the entire
agreement and understanding between the Parties hereto as to the matters set
forth herein and therein and supersede and revoke all prior agreements and
understandings, oral and written, between the Parties
<PAGE> 47
hereto or thereto or otherwise with respect to the subject matter hereof or
thereof. No change, amendment, termination or attempted waiver of any of the
provisions hereof shall thereof be binding upon any Party unless set forth in an
instrument in writing signed by the Party to be bound or their respective
successors in interest.
15.6. Confidentiality Agreement. Notwithstanding Section 15.5, the
Confidentiality Agreement dated July 2, 1999 between Purchaser and Seller shall
not be revoked or superseded by this Agreement and shall continue to be binding
upon the Parties in accordance with the terms and conditions of such
Confidentiality Agreement.
15.7. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument. A counterpart may
consist of a signature page of this Agreement.
15.8. Headings. The article, section and other headings contained in
this Agreement are for reference purposes only and shall not be deemed to be a
part of this Agreement or to affect the meaning or interpretation of this
Agreement.
15.9. Construction. Within this Agreement, the singular shall include
the plural and the plural shall include the singular, and any gender shall
include all other genders, all as the meaning and the context of this Agreement
shall require.
15.10. Governing Law. The validity and interpretation of this Agreement
shall be construed in accordance with, and governed by, the internal laws of the
State of Missouri, without regard to principles of conflicts of laws.
15.11. Cooperation. The Parties hereto shall cooperate fully at their
own expense, except as otherwise provided in this Agreement, with each other and
their respective counsel and accountants in connection with all steps to be
taken as part of their obligations under this Agreement.
15.12. Severability. If any term, covenant, condition or provision of
this Agreement or the application thereof to any circumstance shall be invalid
or unenforceable to any extent, the remaining terms, covenants, conditions and
provisions of this Agreement shall not be affected thereby and each remaining
term, covenant, condition and provision of this Agreement shall be valid and
shall be enforceable to the fullest extent permitted by law. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only as broad as is enforceable.
15.13. Attorneys' Fees. If a dispute arises among the Parties as a
result of which an action is commenced to interpret or enforce any of the terms
of this Agreement, the nonprevailing Party shall pay the prevailing Party's
reasonable out-of-pocket attorneys' fees, costs and expenses incurred in
connection with the prosecution or defense of such action.
15.14. Successors and Assigns. The covenants, agreements, and
conditions contained herein or granted hereby shall be binding upon and shall
inure to the benefit of
<PAGE> 48
Purchaser and Seller, and each of their respective successors and permitted
assigns. Seller shall not assign, or otherwise transfer, any interest in this
Agreement to any other Person (other than as collateral security) without the
prior written consent of Purchaser, which consent shall not unreasonably be
withheld. Purchaser may assign and transfer its interest in this Agreement only
with Seller's consent, which consent shall not be unreasonably withheld, to any
of Purchaser's Affiliates or to one or more special purpose financing vehicles;
provided, however, without the consent of Seller, Purchaser may direct Seller to
transfer the Purchased Assets and Real Property to another Person as Purchaser's
nominee and the receipt of the Real Property or Purchased Assets by any such
nominee shall be deemed an acceptance by such nominee to be bound to all of
Purchaser's obligations hereunder. In addition, each Party will promptly provide
to the Other Party a copy of any such assignment, and each Party agrees to
execute and deliver any consents reasonably required by the Other Party in
connection therewith, provided such assignment does not expand any of the
obligations and liabilities hereunder of any Party. Notwithstanding any
permitted assignment of this Agreement, each Party shall remain liable to the
other Party, as the case may be, for all obligations and liabilities to be
performed by or on behalf of the assigning Party hereunder.
[THE NEXT PAGE FOLLOWING IS THE SIGNATURE PAGE]
<PAGE> 49
IN WITNESS WHEREOF, intending to be legally bound hereby, the Parties
have caused this Agreement to be signed in their respective names by an officer
thereof duly authorized as of the date first above written.
WITNESS: PURCHASER:
CHRISTIAN HEALTH CARE OF
MISSOURI, INC.
/s/ John F. Duggan By: /s/ Allen Kilgore
- ------------------------------ ---------------------------------
Name: Allen K. Kilgore
Title: President
/s/ Ray Green
- ------------------------------
WITNESS: SELLER:
BALANCED CARE CORPORATION, for
itself and for each of the Subsidiaries
/s/ John F. Duggan By: /s/ Brad E. Hollinger
- ------------------------------- ----------------------------------
Name: Brad E. Hollinger
Title: Chairman and CEO
/s/ Clint T. Fegan
- -------------------------------
<PAGE> 1
Exhibit 10.2
JOHN F. DUGGAN, ESQUIRE
DIRECTOR OF LEGAL AFFAIRS
DIRECT DIAL: (717) 796-6143
VIA FEDERAL EXPRESS
October 21, 1999
Rayburn W. Green
Ball & Mourton, Ltd., PLLC
E.J. Ball Plaza
112 W. Center, Suite 700
Fayetteville, Arkansas 72702
Re: Acquisition of Balanced Care Corporation's Missouri Assets or Lease
Rights and Operations - Asset Purchase Agreement - First Amendment
Dear Ray:
As we discussed today, the purpose of this letter is to memorialize in
writing our understanding of the following amendment to the Asset Purchase
Agreement (the "Agreement"):
Balanced Care Corporation, for itself and for each of its Subsidiaries
("Seller") and Christian Health Care of Missouri, Inc. ("Buyer") hereby agree
that the last sentence of Section 7.7 is changed to read as follows: "The
Parties agree to finalize the form and content of the Lease Guaranty Fee
Agreement on terms mutually acceptable to both Parties within 28 days after the
date of execution of this Agreement."
If this amendment meets with your approval, please have the Seller
acknowledge below and return this letter amendment to my attention. If you have
any questions, please let me know. Thank you for your consideration.
Very truly yours,
/s/ John F. Duggan
John F. Duggan
Acknowledged, Agreed to and Accepted:
SELLER: PURCHASER:
BALANCED CARE CORPORATION, CHRISTIAN HEALTH CARE OF
for itself and for each of the Subsidiaries MISSOURI, INC.
By:/s/Brad E. Hollinger By: /s/Allen Kilgore
Name: Brad E. Hollinger Name: Allen Kilgore
Title: Chairman & CEO Title: President
<PAGE> 2
Rayburn W. Green, Esquire
October 21, 1999
Page 2
cc: Brad E. Hollinger
Clint T. Fegan
Robin L. Barber, Esquire
Lorie A. Taylor
<PAGE> 1
Exhibit 10.3
SECOND AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT (this "Amendment") is
entered into this 30th day of November, 1999, between Balanced Care Corporation,
a Delaware corporation ("BCC"), for itself and for each of its subsidiaries
(each a "Subsidiary" and collectively the "Subsidiaries," and together with BCC
the "Seller") listed on Exhibit A, each with corporate offices at 1215 Manor
Drive, Mechanicsburg, PA 17055 except as otherwise set forth on Exhibit A; and
Christian Health Care of Missouri, Inc., a Missouri nonprofit corporation, with
offices at 302 S. 7th Street, Suite B, Rogers, Arkansas 72765, or its permitted
nominees ("Purchaser").
RECITALS:
WHEREAS, Seller and Purchaser entered into that certain Asset Purchase
Agreement dated as of October 15, 1999 (the "Asset Purchase Agreement") relating
to the purchase and sale of certain assets more particularly described therein;
WHEREAS, Seller and Purchaser entered into that First Amendment to Asset
Purchase Agreement dated as of October 21, 1999 (the "First Addendum").
Hereinafter, the Asset Purchase Agreement and the First Addendum shall
hereinafter collectively be referred to as the Asset Purchase Agreement; and
WHEREAS, the parties have agreed to amend certain provisions of the Asset
Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration paid by each of the
parties hereto to the other, the receipt and sufficiency of which is hereby
acknowledged and in consideration of the covenants and agreements set forth
herein, the parties hereto agree as follows:
1. Undefined Terms. Any term used but not defined herein shall have the
meaning ascribed to such term in the Asset Purchase Agreement.
2. Amendment of Article I. (a) Article I of the Asset Purchase Agreement is
hereby amended to add the following definitions:
1.33A "Guaranty" shall mean that certain Agreement of Guaranty,
Suretyship, and Indemnity dated as of the Closing Date referenced in
Section 3.1.2 whereby the Purchaser shall unconditionally guarantee the
Purchaser's obligations under the terms and conditions of the Promissory
Note and the Second Promissory Note. The Guaranty shall be in a form
mutually agreeable between BCC and Purchaser.
1.45A-1 "Meditrust" shall mean Meditrust Corporation, a Delaware
corporation, together with its affiliates and their respective successors
and assigns, including, without limitation, Meditrust Mortgage
Investments, Inc.
<PAGE> 2
1.54A "Prepayment" shall have the meaning given to such term in Section
11.10.
1.54B "Promissory Note" shall mean that certain promissory note dated as
of the Closing Date referenced in Section 3.1.2 made by Purchaser payable
to the order of BCC in the original principal amount of $525,000, having
such other terms and conditions as are more specifically set forth
therein. The Promissory Note shall be in a form mutually agreeable between
BCC and Purchaser.
1.65A "Second Mortgage" shall mean that certain deed of trust dated as of
the Closing Date referenced in Section 3.1.2 granted by Purchaser in favor
of BCC encumbering the Owned Facilities and securing the Purchaser's
obligations under the Second Promissory Note and Guaranty, having such
other terms and conditions as are more specifically set forth therein. The
lien of the Second Mortgage shall be subordinate only to the lien of the
deed of trust granted by Purchaser in favor of its lender. The Second
Mortgage shall be in a form mutually agreeable between BCC and Purchaser.
1.65B "Second Promissory Note" shall mean that certain promissory note
dated as of the Closing Date referenced in Section 3.1.2 made by Purchaser
payable to the order of BCC in the original principal amount of
$2,000,000, having such other terms and conditions as are more
specifically set forth therein. The Second Promissory Note shall be in a
form mutually agreeable between BCC and Purchaser.
(b) Section 1.46 of Article I is hereby amended and restated in its entirety to
read as follows:
1.46 "Other Agreements" shall mean the Lease Guaranty Fee Agreement(s)
(if necessary and required due to the guaranty obligations of BCC
required by Seller's landlords and lenders), the Second Promissory
Note, the Second Mortgage and the other agreements set forth on
Schedule 1.46, including any other agreements executed and delivered
under or in connection therewith.
3. Amendment of Section 2.1.2. Section 2.1.2 of the Asset Purchase Agreement is
hereby amended and restated in its entirety to read as follows:
2.1.2 Equipment, Machinery and Other Tangible Personal Property. All
machinery, equipment, leasehold improvements, automobiles, supplies, office
furniture and office equipment, computing and telecommunications equipment and
other items of personal property that are owned or leased by Seller located at
any of the Facilities or the Seller's regional office headquarters in
Springfield, Missouri and used in connection with the Business, including but
not limited to those described in Schedule 2.1.2 hereto.
2
<PAGE> 3
4. Amendment of Section 3.1.2. Section 3.1.2 of the Asset Purchase Agreement is
hereby amended and restated in its entirety to read as follows:
3.1.2 Form of Payment. The Purchase Price (subject to any adjustments as
set forth in Schedule 2.1.3) shall be paid by Purchaser as follows:
(i) Escrow Amount. $250,000 (the "Escrow Amount") to be paid
by Purchaser to Escrow Agent on the date of execution of
this Agreement and held by Escrow Agent pursuant to the
terms and subject to the conditions of the Deposit Escrow
Agreement and this Agreement. The Seller and Purchaser
shall simultaneously herewith enter into a Deposit Escrow
Agreement substantially in the form attached to Exhibit C
hereto.
(ii) Cash Consideration. $6,425,000 in cash (Purchase Price less
the Escrow Amount, less the original principal amount of the
Promissory Note, less the original principal amount of the
Second Promissory Note), by wire transfer of immediately
available funds to BCC at the time of Closing.
(iii) Promissory Note. At Closing, Purchaser shall deliver the
Promissory Note to BCC in the original principal amount of
$525,000 (unless Purchaser, in its sole discretion, agrees to
pay the entire Purchase Price in cash consideration at
Closing). The Promissory Note shall provide for the payment of
interest at a rate equal to ten percent (10%) per annum.
Commencing on the 1st day of the first calendar month
immediately following Closing and continuing on the first day
of each month for the next forty-eight (48) months, Purchaser
shall make payments of principal and interest on the
outstanding principal amount of the Promissory Note based on
an amortization of forty-eight (48) months. On the maturity
date, all principal and accrued but unpaid interest under the
Promissory Note shall be immediately due and payable in full.
In addition and as additional security for the repayment of
the Promissory Note, the principal(s) of Purchaser and Seller
shall enter into the Guaranty.
(iv) Second Promissory Note. At Closing, Purchaser shall deliver
the Second Promissory Note to BCC in the original principal
amount of $2,000,000 (unless Purchaser, in its sole
discretion, agrees to pay the entire Purchase Price in cash
consideration at Closing). The Second Promissory Note shall
provide for the payment of interest at a rate equal to eight
and three/quarters percent (8.75%) per annum. Commencing on
the 1st day of the first calendar month immediately following
Closing and continuing on the first day of each month
thereafter including June 1, 2000, Purchaser shall make
payments of interest only on the outstanding principal
3
<PAGE> 4
amount of the Second Promissory Note. Commencing on July 1,
2000 and continuing thereafter on the first day of each month
including June 1, 2002, Purchaser shall make payments of
principal and interest on the outstanding principal amount of
the Second Promissory Note based on an amortization of
twenty-four (24) months. On June 1, 2002, all principal and
accrued but unpaid interest under the Second Promissory Note
shall be immediately due and payable in full. Notwithstanding
the foregoing, in the event Purchaser pays off the existing
lease and loan obligations in favor of Meditrust with respect
to the Facilities, all principal and accrued but unpaid
interest under the Second Promissory Note shall be immediately
due and payable in full. There will be no penalty for
prepayment under the Second Promissory Note. As additional
security for the repayment of the Second Promissory Note, the
principal(s) of Purchaser shall enter into the Guaranty. In
addition and as additional security for the repayment of the
Second Promissory Note, Purchaser shall use commercially
reasonable efforts to obtain approval from its lender for
Purchaser to grant the Second Mortgage in favor of BCC.
5. Amendment of Section 7.7. The last sentence of Section 7.7 is hereby amended
and restated in its entirety to read as follows:
The Parties agree to finalize the form and content of the Lease Guaranty
Fee Agreement on terms mutually acceptable to both Parties on or before
Closing.
6. Amendment of Article XI. A new Section 11.10 is hereby added to Article XI,
which reads in its entirety as follows:
11.10. Prepayment of Hawthorn Loan. On the Closing Date, Purchaser
shall make a prepayment on Seller's behalf on the $41,385,000 loan from
Meditrust to Hawthorn Health Properties, Inc. in an amount equal to
$4,000,000 (the "Prepayment"). In the event Closing does not occur, the
Prepayment shall be returned by Meditrust to Purchaser. Notwithstanding
the foregoing, in the event Meditrust does not require or otherwise waives
the Prepayment requirement at Closing, Purchaser shall be required to pay
Seller $2,000,000 in cash consideration at Closing in lieu of entering
into the Second Promissory Note as contemplated and set forth in Section
3.1.2(iv) above.
7. Counterparts. This Amendment may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. A counterpart may consist
of a signature page of this Agreement.
8. Successors and Assigns. This Amendment shall be binding upon the parties
hereto and their respective successors and assigns.
4
<PAGE> 5
9. Force and Effect of Amendment. Except as specifically amended, modified or
supplemented as set forth in this Amendment, the Asset Purchase Agreement
remains in full force and effect and is hereby ratified by the parties hereto
and thereto.
10. Governing Law. The validity and interpretation of this Amendment shall be
construed in accordance with, and governed by, the internal laws of the State of
Missouri, without regard to principles of conflicts of laws.
[THE NEXT PAGE FOLLOWING IS THE SIGNATURE PAGE]
5
<PAGE> 6
IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
hereto have caused this Amendment to be signed in their respective names by an
officer thereof duly authorized as of the date first above written.
WITNESS: PURCHASER:
CHRISTIAN HEALTH CARE OF MISSOURI, INC.
/s/ Ray Green By: /s/ Allen Kilgore
- ------------- -----------------------
Name: Allen D. Kilgore
/s/ Title: President
- -------------
WITNESS: SELLER:
BALANCED CARE CORPORATION, for itself and
for each of the Subsidiaries
/s/ John F. Duggan By: /s/ Brad E. Hollinger
- ------------------ -------------------------
Name: Brad E. Hollinger
/s/ Angie A. Kelly Title: Chairman & CEO
- ------------------
6
<PAGE> 1
Exhibit 10.4
JOHN F. DUGGAN, ESQUIRE
DIRECTOR OF LEGAL AFFAIRS
DIRECT DIAL: (717) 796-6143
VIA FACSIMILE AND FEDERAL EXPRESS
December 31, 1999
Rayburn W. Green
Ball & Mourton, Ltd., PLLC
E.J. Ball Plaza
112 W. Center, Suite 700
Fayetteville, Arkansas 72702
Re: Acquisition of Balanced Care Corporation's Missouri Assets or
Lease Rights and Operations - Asset Purchase Agreement - Third
Amendment
Dear Ray:
As we discussed today, the purpose of this letter is to memorialize in
writing our understanding of the following amendment to the Asset Purchase
Agreement (the "Agreement"):
Balanced Care Corporation, for itself and for each of its Subsidiaries
("Seller") and Christian Health Care of Missouri, Inc. ("Buyer") hereby agree
that Section 5.1(ii) is changed to read as follows: "(ii) January 7, 2000
(the "Closing")."
If this amendment meets with your approval, please have the Seller
acknowledge below and return this letter amendment to Robin Barber. If you have
any questions, please let me know. Thank you for your consideration.
Acknowledged, Agreed to and Accepted:
SELLER: PURCHASER:
BALANCED CARE CORPORATION, CHRISTIAN HEALTH CARE OF
for itself and for each of its Subsidiaries MISSOURI, INC.
By:/s/Brad E. Hollinger By:/s/Allen D. Kilgore
Name: Brad E. Hollinger Allen D. Kilgore
Title: Chairman & CEO President
<PAGE> 1
Exhibit 10.5
DEBORAH MYERS WELSH, ESQUIRE
LEGAL COUNSEL
DIRECT DIAL: (717) 796-6147
VIA FACSIMILE AND FEDERAL EXPRESS
January 7, 2000
Rayburn W. Green
Ball & Mourton, Ltd., PLLC
E.J. Ball Plaza
112 W. Center, Suite 700
Fayetteville, Arkansas 72702
Re: Acquisition of Balanced Care Corporation's Missouri Assets or
Lease Rights and Operations - Asset Purchase Agreement - Fourth
Amendment
Dear Ray:
As we discussed today, the purpose of this letter is to memorialize in
writing our understanding of the following amendment to the Asset Purchase
Agreement (the "Agreement"):
Balanced Care Corporation, for itself and for each of its Subsidiaries
("Seller") and Christian Health Care of Missouri, Inc. ("Buyer") hereby agree
that Section 5.1(ii) is changed to read as follows: "(ii) January 11, 2000
(the "Closing")."
The parties further agree that, within ten (10) days of the Closing, they
will agree upon a pro-rata calculation for receivables for the month of January.
If this amendment meets with your approval, please have the Seller
acknowledge below and return this letter amendment to Deborah Myers Welsh at the
address below. If you have any questions, please let me know.
Thank you for your consideration.
Acknowledged, Agreed to and Accepted:
SELLER: PURCHASER:
BALANCED CARE CORPORATION, CHRISTIAN HEALTH CARE OF
for itself and for each of its Subsidiaries MISSOURI, INC.
By:/s/Brad E. Hollinger By: /s/Allen D. Kilgore
Brad E. Hollinger Allen D. Kilgore
Chairman and CEO President
<PAGE> 1
Exhibit 10.6
PROMISSORY NOTE
(FIRST)
PRINCIPAL AMOUNT: $525,000 DATE: JANUARY 12, 2000
Christian Health Care of Missouri, Inc., a Missouri nonprofit
corporation, Christian Health Care Terraces, Inc., a Missouri nonprofit
corporation, Regional Care of Nevada, LLC, a Missouri limited liability company,
Regional Care of Republic, LLC, a Missouri limited liability company, and
Cornerstone Health Care, Inc., a Missouri corporation (hereinafter collectively
referred to as "Maker"), do hereby jointly and severally promise to pay to the
order of Balanced Care Corporation, a Delaware corporation ("Payee"), with its
principal place of business at 1215 Manor Drive, Mechanicsburg, PA 17055, or at
such other place as Payee may from time to time designate in writing, in lawful
money of the United States of America, in immediately available funds the
principal sum of $525,000 plus interest from and after the date hereof on the
unpaid balance hereof at the Applicable Interest Rate, as defined below. Maker
shall pay forty-eight (48) equal monthly installments of principal and interest
on the 1st day of each calendar month commencing February 1, 2000, and
continuing on the 1st day of each calendar month thereafter up to and including
January 1, 2004. The balance of any principal sum remaining, together with all
accrued but unpaid interest, shall be immediately due and payable in full on
January 1, 2004, or upon earlier maturity hereof whether by acceleration or
otherwise (the "Maturity Date").
Any capitalized term used but not defined herein shall have the
meaning ascribed to such term in that certain Asset Purchase Agreement (as
amended) dated as of October 15, 1999 by and between Maker and Payee.
The term "Applicable Interest Rate" means from the date of this Note
through and including the Maturity Date, a fixed rate of ten percent (10%) per
annum. All interest payable hereunder shall be calculated on the basis of a
365-day year.
Maker may prepay this Note in whole or in part at any time, and from
time to time, without premium or penalty. All payments made hereunder shall be
applied first to amounts due other than interest and principal, then to accrued
but unpaid interest and then to principal.
The following events shall be Events of Default under this Note:
(i) failure to make any payment on this Note within
twenty (20) days after the date on which the same shall become due;
(ii) any breach by Maker under the Guaranty (as defined
below) or Lease Guaranty Fee Agreement; or
<PAGE> 2
(iii) adjudication of Maker as bankrupt or insolvent, or
entry of an order, remaining unstayed by appeal or otherwise for ninety
(90) days, appointing a receiver or trustee for Maker, or for all or any
of its property, or approving a petition seeking reorganization or relief
under the bankruptcy or other similar laws of the United States or of any
state or of any other competent jurisdiction, or the filing by Maker of a
petition seeking any of the foregoing or consenting thereto, or the filing
of a petition to take advantage of any debtors' law, or making a general
assignment for the benefit of creditors, or admitting in writing its
inability to pay its debts as they mature.
Upon and during the continuance of any Event of Default, Payee may
at any time by notice to Maker declare the unpaid principal of this Note and all
interest then accrued thereon to be due, and such principal and interest shall
thereupon be immediately due and payable without presentment, protest, demand or
other notice (except as provided herein), provided, however, that upon an Event
of Default described in clause (iii), above, the entire balance of this Note
shall thereupon be immediately due and payable in full without any action or
demand by Payee. Thereafter, interest shall continue to accrue on the amount due
hereunder at the Applicable Interest Rate and shall be payable upon demand.
Maker further agrees, to the extent not prohibited by applicable
law, to pay to Payee all reasonable costs and expenses incurred by Payee in the
collection of this Note, including reasonable attorneys' fees, costs and
expenses.
This Note is secured by, and the Payee is entitled to the benefits
of, an Agreement of Guaranty and Suretyship (the "Guaranty") made by Allen D.
Kilgore, individually, in favor of Payee. Any holder of this Note is entitled to
the benefits of the Guaranty to which reference is hereby made and may exercise
the remedies provided for thereby or otherwise available in respect thereof.
Maker waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note (except as provided herein), and agrees that
the liability of Maker shall not be in any manner affected by any indulgence,
extension of time, renewal, waiver or notification granted or consented to by
Payee. No delay or omission on the part of the Payee in exercising any right
hereunder shall operate as a waiver of such right or of any other right under
this Note. A waiver on any one occasion shall not be construed as a bar to or
waiver of any such future right and/or remedy on any future occasion.
In the event any payment required by this Note is deemed to be
usurious, the amount so required to be paid shall be the maximum legal amount
and any amount in excess of said legal amount shall be deemed for all purposes
whatsoever as applied toward reduction of the principal indebtedness hereunder.
If any provision of this Note shall be illegal, invalid or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not be affected and shall remain in full force and effect as
though such illegal, invalid or unenforceable provision was not included in this
Note.
2
<PAGE> 3
In any action on this Note, Payee or its assignee need not produce
or file the original of this Note, but need only produce or file a photocopy of
this Note certified by Payee or such assignee to be a true and correct copy of
this Note.
This Note shall be binding on and inure to the benefit of each of
Payee and Maker, and their respective successors and assigns, except Maker shall
have no right to assign any rights or interests under this Note without the
prior written consent of Payee, which consent, based on Payee's own internal
credit evaluation policy and procedures, shall not be unreasonably withheld,
delayed or otherwise conditioned.
THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF MISSOURI,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAWS.
THE MAKER HEREBY AGREES THAT THE UNITED STATES DISTRICT COURT FOR
THE WESTERN DISTRICT OF MISSOURI OR, TO THE EXTENT REQUIRED BY APPLICABLE LAW,
ANY MISSOURI STATE COURT, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES PERTAINING DIRECTLY OR INDIRECTLY TO THIS NOTE.
THE PROVISIONS OF THIS NOTE MAY BE AMENDED OR REVISED ONLY BY AN
INSTRUMENT IN WRITING SIGNED BY THE MAKER AND PAYEE. THIS NOTE EMBODIES THE
FINAL, ENTIRE AGREEMENT OF MAKER AND PAYEE AND SUPERSEDES ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF MAKER AND PAYEE. THERE ARE NO ORAL AGREEMENTS
BETWEEN MAKER AND PAYEE.
[THIS REMAINING SPACE INTENTIONALLY LEFT BLANK]
[THE NEXT PAGE FOLLOWING IS THE SIGNATURE PAGE]
3
<PAGE> 4
IN WITNESS WHEREOF, and intending to be jointly and severally legally
bound, Maker has executed and sealed this Note as of the date set forth above.
WITNESS/ATTEST: MAKER:
CHRISTIAN HEALTH CARE OF MISSOURI,
INC.
By: /s/ Ray Green By: /s/ Allen D. Kilgore
- ----------------- ------------------------
Name: Rayburn W. Green Allen D. Kilgore
Title: Attorney President
WITNESS/ATTEST: MAKER:
CHRISTIAN HEALTH CARE
TERRACES, INC.
By: /s/ Ray Green By: /s/ Allen D. Kilgore
- ----------------- ------------------------
Name: Rayburn W. Green Allen D. Kilgore
Title: Attorney President
WITNESS/ATTEST: MAKER:
REGIONAL CARE OF NEVADA, LLC
By: /s/ Ray Green By: /s/ Allen D. Kilgore
- ----------------- ------------------------
Name: Rayburn W. Green Allen D. Kilgore
Title: Attorney President
WITNESS/ATTEST: MAKER:
REGIONAL CARE OF REPUBLIC, LLC
By: /s/ Ray Green By: /s/ Allen D. Kilgore
- ----------------- ------------------------
Name: Rayburn W. Green Allen D. Kilgore
Title: Attorney President
WITNESS/ATTEST: MAKER:
CORNERSTONE HEALTH CARE, INC.
By: /s/ Ray Green By: /s/ Allen D. Kilgore
- ----------------- ------------------------
Name: Rayburn W. Green Allen D. Kilgore
Title: Attorney President
4
<PAGE> 5
ACKNOWLEDGMENT
STATE OF ARKANSAS
COUNTY OF WASHINGTON
BE IT REMEMBERED, that on this day came before the undersigned, a Notary
Public duly commissioned and acting, Allen D. Kilgore, to me well known or
satisfactorily proven, as the President, of Christian Health Care of Missouri,
Inc., a Missouri nonprofit corporation, who stated that he was authorized to
execute and deliver this Promissory Note (First) on behalf of such corporation,
and further stated that he had executed and delivered this Promissory Note
(First), on behalf of such corporation, for the consideration and purposes set
forth herein.
WITNESS my signature and seal as a Notary Public on January 4th, 2000.
My Commission Expires:
Susan Bass
--------------------------
9-1-2009 Notary Public
5
<PAGE> 6
ACKNOWLEDGMENT
STATE OF ARKANSAS
COUNTY OF WASHINGTON
BE IT REMEMBERED, that on this day came before the undersigned, a Notary
Public duly commissioned and acting, Allen D. Kilgore, to me well known or
satisfactorily proven, as the President, of Christian Health Care Terraces,
Inc., a Missouri nonprofit corporation, who stated that he was authorized to
execute and deliver this Promissory Note (First) on behalf of such corporation,
and further stated that he had executed and delivered this Promissory Note
(First), on behalf of such corporation, for the consideration and purposes set
forth herein.
WITNESS my signature and seal as a Notary Public on January 4th, 2000.
My Commission Expires:
Susan Bass
----------
9-1-2009 Notary Public
6
<PAGE> 7
ACKNOWLEDGMENT
STATE OF ARKANSAS
COUNTY OF WASHINGTON
BE IT REMEMBERED, that on this day came before the undersigned, a Notary
Public duly commissioned and acting, Allen D. Kilgore, to me well known or
satisfactorily proven, as the President, of Regional Care of Nevada, LLC, a
Missouri limited liability company, who stated that he was authorized to execute
and deliver this Promissory Note (First) on behalf of such corporation, and
further stated that he had executed and delivered this Promissory Note (First),
on behalf of such corporation, for the consideration and purposes set forth
herein.
WITNESS my signature and seal as a Notary Public on January 4th, 2000.
My Commission Expires:
Susan Bass
----------
9-1-2009 Notary Public
7
<PAGE> 8
ACKNOWLEDGMENT
STATE OF ARKANSAS
COUNTY OF WASHINGTON
BE IT REMEMBERED, that on this day came before the undersigned, a Notary
Public duly commissioned and acting, Allen D. Kilgore, to me well known or
satisfactorily proven, as the President, Regional Care of Republic, LLC, a
Missouri limited liability company, who stated that he was authorized to execute
and deliver this Promissory Note (First) on behalf of such corporation, and
further stated that he had executed and delivered this Promissory Note (First),
on behalf of such corporation, for the consideration and purposes set forth
herein.
WITNESS my signature and seal as a Notary Public on January 4th, 2000.
My Commission Expires:
Susan Bass
-----------
9-1-2009 Notary Public
8
<PAGE> 9
ACKNOWLEDGMENT
STATE OF ARKANSAS
COUNTY OF WASHINGTON
BE IT REMEMBERED, that on this day came before the undersigned, a Notary
Public duly commissioned and acting, Allen D. Kilgore, to me well known or
satisfactorily proven, as the President, of Cornerstone Health Care, Inc., a
Missouri corporation, who stated that he was authorized to execute and deliver
this Promissory Note (First) on behalf of such corporation, and further stated
that he had executed and delivered this Promissory Note (First), on behalf of
such corporation, for the consideration and purposes set forth herein.
WITNESS my signature and seal as a Notary Public on January 4th, 2000.
My Commission Expires:
Susan Bass
----------
9-1-2009 Notary Public
9
<PAGE> 1
Exhibit 10.7
PROMISSORY NOTE
(SECOND)
PRINCIPAL AMOUNT: $2,000,000 DATE: JANUARY 12, 2000
Christian Health Care of Missouri, Inc., a Missouri nonprofit
corporation, Christian Health Care Terraces, Inc., a Missouri nonprofit
corporation, Regional Care of Nevada, LLC, a Missouri limited liability company,
Regional Care of Republic, LLC, a Missouri limited liability company, and
Cornerstone Health Care, Inc., a Missouri corporation (hereinafter collectively
referred to as "Maker"), do hereby jointly and severally promise to pay to the
order of Balanced Care Corporation, a Delaware corporation ("Payee"), with its
principal place of business at 1215 Manor Drive, Mechanicsburg, PA 17055, or at
such other place as Payee may from time to time designate in writing, in lawful
money of the United States of America, in immediately available funds the
principal sum of $2,000,000 plus interest from and after the date hereof on the
unpaid balance hereof at the Applicable Interest Rate, as defined below. Maker
shall make six (6) equal monthly installments of interest only on the
outstanding principal sum on the first day of each calendar month commencing
February 1, 2000, and continuing on the 1st day of each calendar month
thereafter up to and including July 1, 2000. Maker shall thereafter pay
twenty-four (24) equal monthly installments of principal and interest based on a
twenty-four (24) month amortization period commencing August 1, 2000, and
continuing on the 1st day of each calendar month thereafter up to and including
July 1, 2002. The balance of any principal sum remaining, together with all
accrued but unpaid interest, shall be immediately due and payable in full on
July 1, 2002, or upon earlier maturity hereof whether by acceleration or
otherwise (the "Maturity Date"). Notwithstanding the foregoing Maturity Date and
payment terms, in the event Maker pays off the existing lease and loan
obligations in favor of Meditrust with respect to the Meditrust Leased
Facilities, the balance of any principal sum remaining, together with all
accrued but unpaid interest, shall be immediately due and payable in full.
Any capitalized term used but not defined herein shall have the
meaning ascribed to such term in that certain Asset Purchase Agreement (as
amended) dated as of October 15, 1999 by and between Maker and Payee.
The term "Applicable Interest Rate" means from the date of this Note
through and including the Maturity Date, a fixed rate of eight and
three/quarters percent (8.75%) per annum. All interest payable hereunder shall
be calculated on the basis of a 365-day year.
Maker may prepay this Note in whole or in part at any time, and from
time to time, without premium or penalty. All payments made hereunder shall be
applied first to amounts due other than interest and principal, then to accrued
but unpaid interest and then to principal.
<PAGE> 2
The following events shall be Events of Default under this Note:
(i) failure to make any payment on this Note within
twenty (20) days after the date on which the same shall become due;
(ii) any breach by Maker under the Guaranty (as defined
below) or Lease Guaranty Fee Agreement; or
(iii) adjudication of Maker as a bankrupt or insolvent,
or entry of an order, remaining unstayed by appeal or otherwise for ninety
(90) days, appointing a receiver or trustee for Maker, or for all or any
of its property, or approving a petition seeking reorganization or relief
under the bankruptcy or other similar laws of the United States or of any
state or of any other competent jurisdiction, or the filing by Maker of a
petition seeking any of the foregoing or consenting thereto, or the filing
of a petition to take advantage of any debtors' law, or making a general
assignment for the benefit of creditors, or admitting in writing its
inability to pay its debts as they mature.
Upon and during the continuance of any Event of Default, Payee may
at any time by notice to Maker declare the unpaid principal of this Note and all
interest then accrued thereon to be due, and such principal and interest shall
thereupon be immediately due and payable without presentment, protest, demand or
other notice (except as provided herein), provided, however, that upon an Event
of Default described in clause (iii), above, the entire balance of this Note
shall thereupon be immediately due and payable in full without any action or
demand by Payee. Thereafter, interest shall continue to accrue on the amount due
hereunder at the Applicable Interest Rate and shall be payable upon demand.
Maker further agrees, to the extent not prohibited by applicable
law, to pay to Payee all reasonable costs and expenses incurred by Payee in the
collection of this Note, including reasonable attorneys' fees, costs and
expenses.
This Note is secured by, and the Payee is entitled to the benefits
of, an Agreement of Guaranty and Suretyship (the "Guaranty") made by Allen D.
Kilgore, individually, in favor of Payee; and, additionally, a separate Deed of
Trust for each of the Owned Facilities, made by Regional Care of Nevada, LLC, in
the one instance, and Regional Care of Republic, LLC, in the other instance,
each in favor of the Payee. Any holder of this Note is entitled to the benefits
of the Guaranty and each Deed of Trust to which reference is hereby made and may
exercise the remedies provided for thereby or otherwise available in respect
thereof.
Maker waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note (except as provided herein), and agrees that
the liability of Maker shall not be in any manner affected by any indulgence,
extension of time, renewal, waiver or notification granted or consented to by
Payee. No delay or omission on the part of the Payee in exercising any right
hereunder shall operate as a waiver of such right or of any other right under
this Note. A waiver on any one occasion shall not be construed as a bar to or
waiver of any such future right and/or remedy on any future occasion.
In the event any payment required by this Note is deemed to be
usurious, the amount so required to be paid shall be the maximum legal amount
and any amount in excess of said legal amount shall be deemed for all purposes
whatsoever as applied toward reduction of the principal indebtedness hereunder.
2
<PAGE> 3
If any provision of this Note shall be illegal, invalid or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not be affected and shall remain in full force and effect as
though such illegal, invalid or unenforceable provision was not included in this
Note.
In any action on this Note, Payee or its assignee need not produce
or file the original of this Note, but need only produce or file a photocopy of
this Note certified by Payee or such assignee to be a true and correct copy of
this Note.
This Note shall be binding on and inure to the benefit of each of
Payee and Maker, and their respective successors and assigns, except Maker shall
have no right to assign any rights or interests under this Note without the
prior written consent of Payee, which consent, based on Payee's own internal
credit evaluation policy and procedures, shall not be unreasonably withheld,
delayed, or otherwise conditioned.
THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF MISSOURI,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAWS.
THE PARTIES HEREBY AGREE THAT THE UNITED STATES DISTRICT COURT FOR
THE WESTERN DISTRICT OF MISSOURI OR, TO THE EXTENT REQUIRED BY APPLICABLE LAW,
ANY MISSOURI STATE COURT, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES PERTAINING DIRECTLY OR INDIRECTLY TO THIS
GUARANTY AGREEMENT.
THE PROVISIONS OF THIS NOTE MAY BE AMENDED OR REVISED ONLY BY AN
INSTRUMENT IN WRITING SIGNED BY THE MAKER AND PAYEE. THIS NOTE EMBODIES THE
FINAL, ENTIRE AGREEMENT OF MAKER AND PAYEE AND SUPERSEDES ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF MAKER AND PAYEE. THERE ARE NO ORAL AGREEMENTS
BETWEEN MAKER AND PAYEE.
[THIS REMAINING SPACE INTENTIONALLY LEFT BLANK]
[THE NEXT PAGE FOLLOWING IS THE SIGNATURE PAGE]
3
<PAGE> 4
IN WITNESS WHEREOF, and intending to be jointly and severally
legally bound, Maker has executed and sealed this Note as of the date set forth
above.
WITNESS/ATTEST: MAKER:
CHRISTIAN HEALTH CARE OF MISSOURI,
INC.
By: /s/ Ray Green By: /s/ Allen D. Kilgore
- ----------------- ---------------------
Name: Rayburn W. Green Allen D. Kilgore
Title: Attorney President
WITNESS/ATTEST: MAKER:
CHRISTIAN HEALTH CARE
TERRACES, INC.
By: /s/ Ray Green By: /s/ Allen D. Kilgore
- ----------------- ---------------------
Name: Rayburn W. Green Allen D. Kilgore
Title: Attorney President
WITNESS/ATTEST: MAKER:
REGIONAL CARE OF NEVADA, LLC
By: /s/ Ray Green By: /s/ Allen D. Kilgore
- ----------------- ---------------------
Name: Rayburn W. Green Allen D. Kilgore
Title: Attorney President
WITNESS/ATTEST: MAKER:
REGIONAL CARE OF REPUBLIC, LLC
By: /s/ Ray Green By: /s/ Allen D. Kilgore
- ----------------- ---------------------
Name: Rayburn W. Green Allen D. Kilgore
Title: Attorney President
WITNESS/ATTEST: MAKER:
CORNERSTONE HEALTH CARE, INC.
By: /s/ Ray Green By: /s/ Allen D. Kilgore
- ----------------- ---------------------
Name: Rayburn W. Green Allen D. Kilgore
Title: Attorney President
4
<PAGE> 5
ACKNOWLEDGMENT
STATE OF ARKANSAS
COUNTY OF WASHINGTON
BE IT REMEMBERED, that on this day came before the undersigned, a Notary
Public duly commissioned and acting, Allen D. Kilgore, to me well known or
satisfactorily proven, as the President, of Christian Health Care of Missouri,
Inc., a Missouri nonprofit corporation, who stated that he was authorized to
execute and deliver this Promissory Note (First) on behalf of such corporation,
and further stated that he had executed and delivered this Promissory Note
(First), on behalf of such corporation, for the consideration and purposes set
forth herein.
WITNESS my signature and seal as a Notary Public on January 4th, 2000.
My Commission Expires:
Rebecca C. Bercher
-------------------------
9-1-2009 Notary Public
5
<PAGE> 6
ACKNOWLEDGMENT
STATE OF ARKANSAS
COUNTY OF WASHINGTON
BE IT REMEMBERED, that on this day came before the undersigned, a Notary
Public duly commissioned and acting, Allen D. Kilgore, to me well known or
satisfactorily proven, as the President, of Christian Health Care Terraces,
Inc., a Missouri nonprofit corporation, who stated that he was authorized to
execute and deliver this Promissory Note (First) on behalf of such corporation,
and further stated that he had executed and delivered this Promissory Note
(First), on behalf of such corporation, for the consideration and purposes set
forth herein.
WITNESS my signature and seal as a Notary Public on January 4th, 2000.
My Commission Expires:
Rebecca C. Bercher
-------------------------
9-1-2009 Notary Public
6
<PAGE> 7
ACKNOWLEDGMENT
STATE OF ARKANSAS
COUNTY OF WASHINGTON
BE IT REMEMBERED, that on this day came before the undersigned, a Notary
Public duly commissioned and acting, Allen D. Kilgore, to me well known or
satisfactorily proven, as the President, of Regional Care of Nevada, LLC, a
Missouri limited liability company, who stated that he was authorized to execute
and deliver this Promissory Note (First) on behalf of such corporation, and
further stated that he had executed and delivered this Promissory Note (First),
on behalf of such corporation, for the consideration and purposes set forth
herein.
WITNESS my signature and seal as a Notary Public on January 4th, 2000.
My Commission Expires:
Rebecca C. Bercher
-------------------------
9-1-2009 Notary Public
7
<PAGE> 8
ACKNOWLEDGMENT
STATE OF ARKANSAS
COUNTY OF WASHINGTON
BE IT REMEMBERED, that on this day came before the undersigned, a Notary
Public duly commissioned and acting, Allen D. Kilgore, to me well known or
satisfactorily proven, as the President, Regional Care of Republic, LLC, a
Missouri limited liability company, who stated that he was authorized to execute
and deliver this Promissory Note (First) on behalf of such corporation, and
further stated that he had executed and delivered this Promissory Note (First),
on behalf of such corporation, for the consideration and purposes set forth
herein.
WITNESS my signature and seal as a Notary Public on January 4th, 2000.
My Commission Expires:
Rebecca C. Bercher
-------------------------
9-1-2009 Notary Public
8
<PAGE> 9
ACKNOWLEDGMENT
STATE OF ARKANSAS
COUNTY OF WASHINGTON
BE IT REMEMBERED, that on this day came before the undersigned, a Notary
Public duly commissioned and acting, Allen D. Kilgore, to me well known or
satisfactorily proven, as the President, of Cornerstone Health Care, Inc., a
Missouri corporation, who stated that he was authorized to execute and deliver
this Promissory Note (First) on behalf of such corporation, and further stated
that he had executed and delivered this Promissory Note (First), on behalf of
such corporation, for the consideration and purposes set forth herein.
WITNESS my signature and seal as a Notary Public on January 4th, 2000.
My Commission Expires:
Rebecca C. Bercher
-------------------
9-1-2009 Notary Public
9
<PAGE> 1
EXHIBIT 10.8
OMNIBUS ASSIGNMENT AND ASSUMPTION AGREEMENT,
AMENDMENT OF LOAN DOCUMENTS, AMENDMENT OF LEASE DOCUMENTS,
TERMINATION OF LEASE DOCUMENTS, CONSENT TO ASSIGNMENT AND
CONFIRMATION OF GUARANTIES
THIS OMNIBUS ASSIGNMENT AND ASSUMPTION AGREEMENT, AMENDMENT OF LOAN
DOCUMENTS, AMENDMENT OF LEASE DOCUMENTS, TERMINATION OF LEASE DOCUMENTS, CONSENT
TO ASSIGNMENT AND CONFIRMATION OF GUARANTIES is made as of January 12, 2000 by
and among (i) HAWTHORN HEALTH PROPERTIES, INC., a California corporation
("Hawthorn"), NATIONAL CARE CENTERS OF HERMITAGE, INC., a Missouri corporation
("Hermitage"), NATIONAL CARE CENTERS, INC., a Missouri corporation ("National
Care Centers"), NATIONAL CARE CENTERS OF LEBANON, INC., a Missouri corporation
("National Care Centers-Lebanon"), SPRINGFIELD RETIREMENT VILLAGE, INC., a
Missouri corporation ("Springfield"), NATIONAL CARE CENTERS OF NIXA, INC., a
Missouri corporation ("Nixa"), NATIONAL CARE CENTERS OF SPRINGFIELD, INC., a
Missouri corporation ("National Care Centers-Springfield") and MT. VERNON PARK
CARE CENTER WEST, INC., a Missouri corporation ("Mt. Vernon" and collectively
with Hawthorn, Hermitage, National Care Centers, National Care Centers-Lebanon,
Springfield, Nixa and National Care Centers-Springfield, the "Borrowers"), (ii)
BCC AT LEBANON CARE CENTER, INC., a Delaware corporation ("BCC-Lebanon Care"),
BCC AT LEBANON PARK MANOR, INC., a Delaware corporation ("BCC-Lebanon Park"),
BCC AT NIXA PARK CENTER, INC., a Delaware corporation ("BCC-Nixa"), BCC AT
SPRINGFIELD CARE CENTER, INC., a Delaware corporation ("BCC-Springfield"), BCC
AT MT. VERNON PARK CARE CENTER, INC., a Delaware corporation ("BCC-Mt. Vernon
Park"), BCC AT MT. VERNON PARK CARE CENTER WEST, INC., a Delaware corporation
("BCC-Mt. Vernon West") and BCC AT HERMITAGE PARK CARE CENTER, INC., a Delaware
corporation ( "BCC-Hermitage" and collectively, with BCC-Lebanon Care,
BCC-Lebanon Park, BCC-Nixa, BCC-Springfield, BCC-Mt Vernon Park and BCC-Mt.
Vernon West, the "Balanced Care Lessees"), (iii) BALANCED CARE CORPORATION, a
Delaware corporation ("Balanced Care") and DIXON MANAGEMENT, INC., a Missouri
corporation ("Dixon" and collectively with Balanced Care, the "Balanced Care
Guarantors"), (iv) MEDITRUST MORTGAGE INVESTMENTS, INC., a Delaware corporation
(the "Lender"), (v) CHRISTIAN HEALTH CARE OF MISSOURI, INC., a Missouri
nonprofit corporation (the "Purchaser") and CORNERSTONE PROPERTIES INVESTMENT
II, LLC, a Missouri limited liability company ("CPI"), (vi) CORNERSTONE HEALTH
CARE, INC., a Missouri corporation ("Cornerstone"), (vii) CHRISTIAN HEALTH CARE
PERSONNEL SERVICES, INC., a Missouri nonprofit corporation ("CHC-Personnel"),
(viii) CHRISTIAN HEALTH CARE, INC., an Arkansas nonprofit corporation ("CHC"),
(ix) CHRISTIAN HEALTH CARE OF HERMITAGE, INC., a Missouri nonprofit corporation
("CHC-Hermitage"), CHRISTIAN HEALTH CARE OF LEBANON NORTH, INC., a Missouri
nonprofit corporation ("CHC-Lebanon North"), CHRISTIAN HEALTH CARE OF
SPRINGFIELD WEST PARK, INC. ("CHC-Springfield West Park"), a Missouri nonprofit
corporation,
<PAGE> 2
CHRISTIAN HEALTH CARE OF SPRINGFIELD WEST, INC., a Missouri nonprofit
corporation ("CHC-Springfield West"), CHRISTIAN HEALTH CARE OF LEBANON SOUTH,
INC., a Missouri nonprofit corporation ("CHC-Lebanon South"), CHRISTIAN HEALTH
CARE OF SPRINGFIELD EAST, INC., a Missouri nonprofit corporation
("CHC-Springfield East") and CHRISTIAN HEALTH CARE OF NIXA, INC., a Missouri
nonprofit corporation ("CHC-Nixa" and collectively with CHC-Hermitage,
CHC-Lebanon North, CHC-Springfield West Park, CHC-Springfield West, CHC-Lebanon
South and CHC-Springfield East, the "CHC Lessees") and (x) ALINGTON D. KILGORE
of Rogers, Arkansas ("Kilgore").
WITNESSETH:
WHEREAS, the Lender made a loan to the Borrowers (the "Hawthorn Loan"),
in the original principal amount of FORTY-ONE MILLION THREE HUNDRED EIGHTY-FIVE
THOUSAND DOLLARS ($41,385,000), which loan is evidenced by that certain
Promissory Note, dated as of August 30, 1996, made by the Borrowers to the order
of the Lender (the "Note");
WHEREAS, the Note is referred to in that certain Loan Agreement, dated
as of August 30, 1996, as amended, by and among the Borrowers and the Lender
(the "Loan Agreement") and is in all respects subject to the provisions thereof,
and all capitalized terms used herein and not expressly defined herein shall
have the same meanings ascribed to such terms in the Loan Agreement;
WHEREAS, the obligations of the Borrowers under the Loan Documents are
secured, in part, by the Deeds of Trust which encumber the Mortgaged Property;
WHEREAS, simultaneous with the execution and delivery of the Loan
Documents, the Balanced Care Lessees and the Borrowers executed and delivered,
or caused to be executed and delivered, (i) the BCC Missouri Leases, relating to
certain premises that (a) are more fully described in the BCC Missouri Leases
and (b) consist of all or a portion of the Mortgaged Property and (ii) the
remainder of the BCC Missouri Lease Documents;
WHEREAS, as security for the BCC Missouri Leases, the Balanced Care
Guarantors have executed and delivered, or caused to be executed and delivered,
guaranties of the Lease Obligations (as defined in the BCC Missouri Leases)
relating to each of the BCC Missouri Leases (collectively, the "BCC Missouri
Lease Guaranties") and certain other BCC Missouri Lease Documents;
WHEREAS, as a condition of the consummation of the Hawthorn Loan, the
Lender required the execution and delivery of (i) the Lease Subordination
Agreements, which, among other things, subordinate the BCC Missouri Leases to
the liens of the Deeds of Trust and the
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<PAGE> 3
other Loan Documents, (ii) the Assignments of Leases, pursuant to which, among
other things, Hermitage, National Care Centers, National Care Centers-Lebanon,
Springfield, Nixa, National Care Centers-Springfield and Mt. Vernon
(collectively, the "Hawthorn Subsidiaries") assigned to the Lender all of their
right, title and interest in the BCC Missouri Leases and the BCC Missouri Lease
Guaranties and directed (a) the Balanced Care Lessees to pay all "Rent" as
defined under the BCC Missouri Leases and (b) the Balanced Care Guarantors to
pay all amounts due under the BCC Missouri Lease Guaranties to the Lender (for
application towards the Loan Obligations in accordance with the terms of the
Loan Documents) and (iii) the Omnibus Assignment of Contracts, pursuant to
which, among other things, (a) the Hawthorn Subsidiaries assigned all of their
right, title and interest in and to all of the BCC Missouri Lease Documents
(other than the BCC Missouri Leases and the BCC Missouri Lease Guaranties, which
were assigned to the Lender pursuant to the Assignments of Leases) to the
Lender, (b) the Borrowers, the Balanced Care Lessees and the Balanced Care
Guarantors acknowledged that the Lender, as the successor in interest to the
Hawthorn Subsidiaries under the BCC Missouri Lease Documents, is entitled to
exercise all of the Hawthorn Subsidiaries' respective duties, covenants,
obligations, rights (including, without limitation, the exercise of any right of
approval or consent) and/or remedies under the BCC Missouri Lease Documents,
other than the purchase options granted pursuant to Section 18.4 of each of the
BCC Missouri Leases and (c) the Hawthorn Subsidiaries directed the Balanced Care
Lessees and the Balanced Care Guarantors to perform all of their respective
obligations under the BCC Missouri Lease Documents for the benefit of the
Lender;
WHEREAS, the Balanced Care Lessees and the Balanced Care Guarantors
desire to transfer, and the Purchaser desires to acquire certain assets,
including, without limitation, the Balanced Care Lessees' interests in the BCC
Missouri Leases, on the terms and conditions set forth in that certain Asset
Purchase Agreement, dated as of October 15, 1999, as amended, by and among
Balanced Care (on behalf of itself and certain subsidiaries) and the Purchaser
(the "BCC/CHC Purchase Agreement");
WHEREAS, the Purchaser has assigned its rights and obligations with
respect to the Facilities under the BCC/CHC Purchase Agreement to the CHC
Lessees (which are Subsidiaries of CHC) and, accordingly, the CHC Lessees will
acquire the lessee's interests in the BCC Missouri Leases from the Balanced Care
Lessees in accordance with the terms of the BCC/CHC Purchase Agreement
(collectively, the "BCC/CHC Lease Assignments");
WHEREAS, the Purchaser has assigned its other rights and obligations
under the BCC/CHC Purchase Agreement relating to the Leased Property (as defined
under the BCC Missouri Leases) to CPI;
WHEREAS, simultaneously with the execution and delivery of this
Agreement and the consummation of the BCC/CHC Lease Assignments, (I) the CHC
Lessees and Cornerstone (which is wholly-owned and controlled by Kilgore) will
execute and deliver the Cornerstone Management Agreements (as hereafter
defined), pursuant to which Cornerstone shall be
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<PAGE> 4
engaged by the CHC Lessees to manage the Facilities, (II) the CHC Lessees and
CHC-Personnel (which is wholly-owned and controlled by Kilgore) shall execute
and deliver the Employment Lease Agreements (as hereinafter defined), pursuant
to which CHC-Personnel shall provide certain employment services to the CHC
Lessees with regard to the Facilities and (III) the CHC Lessees shall execute
and deliver the Equipment Leases (as hereinafter defined), pursuant to which,
the CHC Lessees shall lease from CPI the tangible personal property required to
operate the Facilities (which tangible personal property CPI acquired
simultaneously with the execution and delivery hereof from the Balanced Care
Lessees pursuant to the BCC/CHC Purchase Agreement);
WHEREAS, the Balanced Care Lessees and the Balanced Care Guarantors
(collectively, the "Balanced Care Entities") shall derive direct and indirect
benefits from the consummation of the BCC/CHC Lease Assignments and the other
transactions contemplated by the BCC/CHC Purchase Agreement;
WHEREAS, the Purchaser, CPI, CHC, the CHC-Lessees, CHC-Personnel,
Cornerstone and Kilgore (collectively, the "CHC Group") shall derive direct and
indirect benefits from the consummation of the BCC/CHC Lease Assignments and the
other transactions contemplated under the BCC/CHC Purchase Agreement and the
execution and delivery (and subsequent performance of the obligations under) the
Cornerstone Management Agreements and the Employment Lease Agreements;
WHEREAS, pursuant to the Loan Documents and the BCC Missouri Lease
Documents, the consents of the Lender and the Hawthorn Subsidiaries are required
for the BCC/CHC Lease Assignments; and
WHEREAS, as a condition of their consent to the BCC/CHC Lease
Assignments, the Lender and the Borrowers have required that the parties hereto
execute and deliver this Agreement and that the conditions and covenants set
forth herein be satisfied.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in consideration of the mutual
covenants set forth herein, the parties hereto hereby agree as follows:
1. DEFINITIONS: For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, the terms defined
in this Section have the meanings ascribed to them in this Section:
AFFILIATED PARTY SUBORDINATION AGREEMENTS: Collectively, the Affiliated
Party Subordination Agreements as defined under the BCC Missouri Leases.
BALANCED CARE: As defined in the preamble of this Agreement and its
successors and assigns.
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<PAGE> 5
BALANCED CARE ENTITIES: As defined in the preamble of this Agreement.
BALANCED CARE GUARANTORS: As defined in the preamble of this Agreement
and their respective successors and assigns.
BALANCED CARE LESSEES: As defined in the preamble of this Agreement and
their respective successors and assigns.
BCC/CHC LEASE ASSIGNMENTS: As defined in the preamble of this
Agreement.
BCC/CHC PURCHASE AGREEMENT: As defined in the preamble of this
Agreement.
BCC-HERMITAGE: As defined in the preamble of this Agreement and its
successors and assigns.
BCC-LEBANON CARE: As defined in the preamble of this Agreement and its
successors and assigns.
BCC-LEBANON PARK: As defined in the preamble of this Agreement and its
successors and assigns.
BCC MISSOURI LEASE GUARANTIES: As defined in the preamble (including,
without limitation, the Hermitage Guaranties, the Lebanon Care Guaranties, the
Lebanon Park Guaranties, the Mt. Vernon Guaranties, the Nixa Guaranties, the
Springfield Guaranties and the West Park Guaranties).
BCC MISSOURI LEASE OBLIGATIONS: Collectively, the Lease Obligations as
defined under the BCC Missouri Leases.
BCC MISSOURI LEASES: Collectively, the Hermitage Lease, the Lebanon
Care Lease, the Lebanon Park Lease, the Mt. Vernon Lease, the Nixa Lease, the
Springfield Lease and the West Park Lease.
BCC-MT. VERNON PARK: As defined in the preamble and its successors and
assigns.
BCC-MT. VERNON WEST: As defined in the preamble of this Agreement and
its successors and assigns.
BCC-NIXA: As defined in the preamble of this Agreement and its
successors and assigns.
BCC-SPRINGFIELD: As defined in the preamble of this Agreement and its
successors and assigns.
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<PAGE> 6
BORROWERS: As defined in the preamble of this Agreement and their
respective successors and assigns.
BUSINESS DAY: Any day which is not a Saturday or a Sunday or a public
holiday under the laws of the United States of America or the state of Missouri.
CHC: As defined in the preamble of this Agreement and its successors
and assigns.
CHC GROUP: As defined in the preamble of this Agreement and its
successors and assigns.
CHC-HERMITAGE: As defined in the preamble of this Agreement and its
successors and assigns.
CHC-LEBANON NORTH: As defined in the preamble of this Agreement and its
successors and assigns.
CHC-LEBANON SOUTH: As defined in the preamble of this Agreement and its
successors and assigns.
CHC-LESSEES: As defined in the preamble of this Agreement and their
respective successors and assigns.
CHC-NIXA: As defined in the preamble of this Agreement and its
successors and assigns.
CHC-PERSONNEL: As defined in the preamble of this Agreement and its
successors and assigns.
CHC-SPRINGFIELD EAST: As defined in the preamble of this Agreement and
its successors and assigns.
CHC-SPRINGFIELD WEST: As defined in the preamble of this Agreement and
its successors and assigns.
CHC-SPRINGFIELD WEST PARK: As defined in the preamble of this Agreement
and its successors and assigns.
CORNERSTONE: As defined in the preamble of this Agreement and its
successors and assigns.
CORNERSTONE MANAGEMENT AGREEMENTS: Collectively, the seven (7) separate
Management Agreements of even date by and between the CHC Lessees and
Cornerstone.
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<PAGE> 7
CPI: As defined in the preamble of this Agreement and its successors
and assigns.
CROSS-DEFAULT AGREEMENT: As defined in Section 28 of this Agreement.
DIXON: As defined in the preamble of this Agreement and its successors
and assigns.
EMPLOYMENT LEASE AGREEMENTS: Collectively, the seven (7) separate
Employee Leasing Agreements of even date by and between the CHC Lessees and
CHC-Personnel.
EQUIPMENT LEASES: Collectively, the seven (7) separate Equipment Leases
of even date by and between the CHC Lessees and CPI.
HAWTHORN: As defined in the preamble of this Agreement and its
successors and assigns.
HAWTHORN LOAN: As defined in the preamble of this Agreement.
HAWTHORN SUBSIDIARIES: As defined in the preamble of this Agreement and
their respective successors and assigns.
HERMITAGE: As defined in the preamble of this Agreement and its
successors and assigns.
HERMITAGE ASSIGNMENT OF LEASES: The Assignment of Leases and Rents,
dated as of August 30, 1996, date granted by Hermitage to the Lender.
HERMITAGE FACILITY: The "Facility" as defined under the Hermitage
Lease.
HERMITAGE GUARANTIES: Collectively, the "Guaranties" as defined under
the Hermitage Lease.
HERMITAGE INDEMNIFIED MATTERS: As defined in Section 20 of this
Agreement.
HERMITAGE INDEMNITEE: As defined in Section 20 of this Agreement.
HERMITAGE INDEMNITOR: As defined in Section 20 of this Agreement.
HERMITAGE LEASE: The Facility Lease Agreement, dated as of August 30,
1996, as amended, by and between Hermitage and BCC-Hermitage.
HERMITAGE LEASE DOCUMENTS: Collectively, the "Lease Documents" as
defined under the Hermitage Lease.
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<PAGE> 8
HERMITAGE PLEDGE AGREEMENT: The Pledge Agreement as defined in the
Hermitage Lease.
INTERCREDITOR AGREEMENT: That certain Intercreditor Agreement of even
date by and between the Lender, the Borrowers and the Bank of Bentonville.
KILGORE: As defined in the preamble of this Agreement and his heirs,
administrators, executors, legal representatives, successors and assigns.
LEASE DEFAULT: As defined under the BCC Missouri Leases.
LEBANON CARE ASSIGNMENT OF LEASES: The Assignment of Leases and Rents,
dated as of August 30, 1996, granted by National Care Centers to the Lender.
LEBANON CARE FACILITY: The "Facility" as defined under the Lebanon Care
Lease.
LEBANON CARE GUARANTIES: Collectively, the "Guaranties" as defined
under the Lebanon Care Lease.
LEBANON CARE INDEMNIFIED MATTERS: As defined in Section 21 of this
Agreement.
LEBANON CARE INDEMNITEE: As defined in Section 21 of this Agreement.
LEBANON CARE INDEMNITOR: As defined in Section 21 of this Agreement.
LEBANON CARE LEASE: The Facility Lease Agreement, dated as of August
30, 1996, as amended, by and between National Care Centers and BCC-Lebanon Care.
LEBANON CARE LEASE DOCUMENTS: Collectively, the "Lease Documents" as
defined under the Lebanon Care Lease.
LEBANON CARE PLEDGE AGREEMENT: The Pledge Agreement as defined in the
Lebanon Care Lease.
LEBANON PARK ASSIGNMENT OF LEASES: The Assignment of Leases and Rents,
dated as of August 30, 1996, granted by National Care Centers-Lebanon to the
Lender.
LEBANON PARK FACILITY: The "Facility" as defined under the Lebanon Park
Lease.
LEBANON PARK GUARANTIES: Collectively, the "Guaranties" as defined
under the Lebanon Park Lease.
LEBANON PARK INDEMNIFIED MATTERS: As defined in Section 22 of this
Agreement.
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<PAGE> 9
LEBANON PARK INDEMNITEE: As defined in Section 22 of this Agreement.
LEBANON PARK INDEMNITOR: As defined in Section 22 of this Agreement.
LEBANON PARK LEASE: The Facility Lease Agreement, dated as of August
30, 1996, as amended, by and between National Care Centers-Lebanon and
BCC-Lebanon Park.
LEBANON PARK LEASE DOCUMENTS: Collectively, the "Lease Documents" as
defined under the Lebanon Park Lease.
LEBANON PARK PLEDGE AGREEMENT: The Pledge Agreement as defined in the
Lebanon Park Lease.
LENDER: As defined in the preamble of this Agreement and its successors
and assigns.
LOAN AGREEMENT: As defined in the preamble of this Agreement.
LONG TERM: Long Term Pharmaceutical Care, Inc., a Missouri corporation
and its successors and assigns.
MT. VERNON: As defined of this Agreement in the preamble and its
successors and assigns.
MT. VERNON ASSIGNMENT OF LEASES: The Assignment of Leases and Rents,
dated as of August 30, 1996, granted by Springfield to the Lender.
MT. VERNON FACILITY: The "Facility" as defined under the Mt. Vernon
Lease.
MT. VERNON GUARANTIES: Collectively, the "Guaranties" as defined under
the Mt. Vernon Lease.
MT. VERNON INDEMNIFIED MATTERS: As defined in Section 23 of this
Agreement.
MT. VERNON INDEMNITEE: As defined in Section 23 of this Agreement.
MT. VERNON INDEMNITOR: As defined in Section 23 of this Agreement.
MT. VERNON LEASE: The Facility Lease Agreement, dated as of August 30,
1996, as amended, by and between Springfield and BCC-Mt. Vernon Park.
MT. VERNON LEASE DOCUMENTS: Collectively, the "Lease Documents" as
defined under the Mt. Vernon Lease.
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MT. VERNON PLEDGE AGREEMENT: The Pledge Agreement as defined in the Mt.
Vernon Lease.
NATIONAL CARE CENTERS: As defined in the preamble of this Agreement and
its successors and assigns.
NATIONAL CARE CENTERS-LEBANON: As defined in the preamble of this
Agreement and its successors and assigns.
NATIONAL CARE CENTERS-SPRINGFIELD: As defined in the preamble of this
Agreement and its successors and assigns.
NIXA: As defined in the preamble of this Agreement and its successors
and assigns.
NIXA ASSIGNMENT OF LEASES: The Assignment of Leases and Rents, dated as
of August 30, 1996, granted by Nixa to the Lender.
NIXA FACILITY: The "Facility" as defined under the Nixa Lease.
NIXA GUARANTIES: Collectively, the "Guaranties" as defined under the
Nixa Lease.
NIXA INDEMNIFIED MATTERS: As defined in Section 24 of this Agreement.
NIXA INDEMNITEE: As defined in Section 24 of this Agreement.
NIXA INDEMNITOR: As defined in Section 24 of this Agreement.
NIXA LEASE: The Facility Lease Agreement, dated as of August 30, 1996,
as amended, by and between Nixa and BCC-Nixa.
NIXA LEASE DOCUMENTS: Collectively, the "Lease Documents" as defined
under the Nixa Lease.
NIXA PLEDGE AGREEMENT: The Pledge Agreement as defined in the Nixa
Lease.
NOTE: As defined in the preamble of this Agreement.
PLEDGE AGREEMENTS: Collectively, the Hermitage Pledge Agreement, the
Lebanon Care Pledge Agreement, the Lebanon Park Pledge Agreement, the Mt. Vernon
Pledge Agreement, the Nixa Pledge Agreement, the Springfield Pledge Agreement
and the West Park Pledge Agreement.
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PURCHASER: As defined in the preamble of this Agreement and its
successors and assigns.
REQUIRED LEASE GUARANTIES: As defined in Section 28 of this Agreement.
REQUIRED LOAN GUARANTIES: As defined in Section 28 of this Agreement.
REQUIRED PREPAYMENT: As defined in Section 28 of this Agreement.
SHAREHOLDERS: As defined in Section 38 of this Agreement.
SPRINGFIELD: As defined in the preamble of this Agreement and its
successors and assigns.
SPRINGFIELD ASSIGNMENT OF LEASES: The Assignment of Leases and Rents,
dated as of August 30, 1996, granted by National Care Centers-Springfield to the
Lender.
SPRINGFIELD FACILITY: The "Facility" as defined under the Springfield
Lease.
SPRINGFIELD GUARANTIES: Collectively, the "Guaranties" as defined under
the Springfield Lease.
SPRINGFIELD INDEMNIFIED MATTERS: As defined in Section 25 of this
Agreement.
SPRINGFIELD INDEMNITEE: As defined in Section 25 of this Agreement.
SPRINGFIELD INDEMNITOR: As defined in Section 25 of this Agreement.
SPRINGFIELD LEASE: That certain Facility Lease Agreement, dated as of
August 30, 1996, as amended, by and between National Care Centers-Springfield
and BCC-Springfield.
SPRINGFIELD LEASE DOCUMENTS: Collectively, the "Lease Documents" as
defined under the Springfield Lease.
SPRINGFIELD PLEDGE AGREEMENT: The Pledge Agreement as defined under the
Springfield Lease.
TRANSACTION DOCUMENTS: Collectively, the BCC/CHC Purchase Agreement and
all other documents and instruments now or hereafter executed and/or delivered
in connection with the BCC/CHC Lease Assignments, including, without limitation,
all documents required by the Lender to be executed and delivered to the Lender
as a condition of its consent to the BCC/CHC Lease Assignments, including,
without limitation, the Required Lease Guaranties and the Required Loan
Guaranties.
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WAKEFIELD: As defined in Section 38 of this Agreement.
WEST PARK ASSIGNMENT OF LEASES: The Assignment of Leases and Rents,
dated as of August 30, 1996, granted by Mt. Vernon to the Lender.
WEST PARK FACILITY: The "Facility" as defined under the West Park
Lease.
WEST PARK GUARANTIES: Collectively, the "Guaranties" as defined under
the West Park Lease.
WEST PARK INDEMNIFIED MATTERS: As defined in Section 26 of this
Agreement.
WEST PARK INDEMNITEE: As defined in Section 26 of this Agreement.
WEST PARK INDEMNITOR: As defined in Section 26 of this Agreement.
WEST PARK LEASE: The Facility Lease Agreement, dated as of August 30,
1996, as amended, by and between Mt. Vernon and BCC-Mt. Vernon Park West.
WEST PARK LEASE DOCUMENTS: Collectively, the "Lease Documents" as
defined under the West Park Lease.
WEST PARK PLEDGE AGREEMENT: The Pledge Agreement as defined under the
West Park Lease.
2. REPRESENTATIONS BY THE BORROWERS: The Borrowers hereby represent and
warrant to the CHC Lessees and the Lender that:
A. To the best knowledge and belief of the Borrowers, there is no
default by any of the Hawthorn Subsidiaries or any of the Balanced Care Lessees
now existing under any of the BCC Missouri Lease Documents and there exists no
state of facts which, with the giving of notice or lapse of time or both, would
constitute a default under any of the BCC Missouri Lease Documents or which has
given rise to a current dispute between any of the Hawthorn Subsidiaries and any
Balanced Care Lessee. No notices of default have been sent to any Balanced Care
Lessee or received by any Hawthorn Subsidiary relating to any such default
which, as of the date hereof, remains uncured or has not been waived. None of
the BCC Missouri Lease Documents are presently in arbitration or litigation and,
to the best knowledge and belief of the Borrowers, none of the Balanced Care
Lessees, as of the date hereof, has any charge, lien, claim or offset under the
BCC Missouri Lease Documents or otherwise against the Rent or other amounts due
or to become due under the BCC Missouri Lease Documents.
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<PAGE> 13
B. Other than BCC/CHC Lease Assignments, the Hawthorn Subsidiaries have
received no written notice of, and have no actual knowledge of, any purported
assignment, hypothecation, subletting, pledge or other transfer of any tenant's
interest under any of the BCC Missouri Lease Documents.
C. Each Borrower is duly authorized to make and enter into this
Agreement. This Agreement has been duly executed and delivered by each Borrower,
and is a legal, valid and binding obligation of each Borrower, enforceable in
accordance with its terms.
D. The execution, delivery and performance of this Agreement and the
consummation of the transactions hereby 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 any Borrower
under any of the Permits or Contracts or any other contract, mortgage, lien,
lease, agreement, instrument, franchise, arbitration award, judgment, decree,
bank loan or credit agreement, trust indenture or other instrument to which any
Borrower is a party or by which any Borrower or all or any portion of the
Mortgaged Property may be bound or affected.
E. 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 of the execution
and delivery of this Agreement by any of the Borrowers and the performance of
such Borrower's obligations hereunder or as a condition to the validity
(assuming the due authorization, execution and delivery of this Agreement by all
other parties hereto) and enforceability of this Agreement.
F. Other than in the Loan Documents, the Hawthorn Subsidiaries have not
assigned, hypothecated, sublet, pledged or otherwise transferred any landlord's
interest under any of the BCC Missouri Lease Documents.
3. REPRESENTATIONS BY THE BALANCED CARE LESSEES: The Balanced Care
Lessees hereby represent and warrant to the Hawthorn Subsidiaries, the CHC
Lessees and the Lender that:
A. The Balanced Care Lessees are the current holders of all of the
tenants' right, title and interest under the BCC Missouri Lease Documents, and
none of the Balanced Care Lessees has assigned, hypothecated, pledged or
otherwise transferred all or any portion of their interests under any of the BCC
Missouri Lease Documents.
B. There exists no default by any landlord or any tenant now existing
under any of the BCC Missouri Lease Documents, nor have any notices of default
been sent to any landlord or received by any of the Balanced Care Lessees
relating to any such default which, as of the
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<PAGE> 14
date hereof, remains uncured or has not been waived, and, to the best knowledge
and belief of the Balanced Care Lessees, there exists no state of facts which,
with the giving of notice or lapse of time or both, would constitute a default
under any of the BCC Missouri Lease Documents or which has given rise to a
current dispute between any landlord and any tenant thereunder. None of the BCC
Missouri Lease Documents are presently in arbitration or litigation and none of
the Balanced Care Lessees, as of the date hereof, has any charge, lien, claim or
offset under the BCC Missouri Lease Documents or otherwise against the Rent or
other amounts due or to become due under the BCC Missouri Lease Documents.
C. Except for the Assignments of Leases and the Omnibus Assignment of
Contracts, the Balanced Care Lessees have received no written notice of, and
have no actual knowledge of, any purported assignment, hypothecation,
subletting, pledge or other transfer of the landlords' interests under the BCC
Missouri Lease Documents.
D. Each Balanced Care Lessee is duly authorized to make and enter into
this Agreement and to carry out the transactions contemplated in and under the
Transaction Documents. This Agreement and each Transaction Document to which any
Balanced Care Lessee is a party have been duly executed and delivered by such
Balanced Care Lessee, and each is a legal, valid and binding obligation of such
Balanced Care Lessee, enforceable in accordance with its terms.
E. The execution, delivery and performance of this Agreement and the
Transaction Documents 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 any Balanced Care Lessee 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 any Balanced Care Lessee is a party or by which any Balanced
Care Lessee or all or any portion of the Mortgaged Property may be bound or
affected and do not violate or contravene any Legal Requirement.
F. 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 of, the execution
and delivery of this Agreement or any of the Transaction Documents by any
Balanced Care Lessee and the performance of such Balanced Care Lessee's
obligations thereunder or as a condition to the validity (assuming the due
authorization, execution and delivery of this Agreement and the Transaction
Documents by all other applicable parties thereto) and enforceability of this
Agreement and/or the Transaction Documents.
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<PAGE> 15
4. REPRESENTATIONS BY THE BALANCED CARE GUARANTORS: The Balanced Care
Guarantors hereby represent and warrant to the Hawthorn Subsidiaries, the CHC
Lessees and the Lender that:
A. Each Balanced Care Guarantor is duly authorized to make and enter
into this Agreement and to carry out the transactions contemplated in and under
this Agreement and the Transaction Documents. This Agreement and each
Transaction Document to which any Balanced Care Guarantor is a party have been
duly executed and delivered by such Balanced Care Guarantor, and each is a
legal, valid and binding obligation of such Balanced Care Guarantor, enforceable
in accordance with its terms.
B. The execution, delivery and performance of this Agreement and the
Transaction Documents 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 any Balanced Care Guarantor 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 such Balanced Care Guarantor is a party or by which such
Balanced Care Guarantor may be bound and do not violate or contravene any Legal
Requirement.
C. 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 of the execution
and delivery of this Agreement or any of the Transaction Documents by any
Balanced Care Guarantor and the performance of such Balanced Care Guarantor's
obligations thereunder or as a condition to the validity (assuming the due
authorization, execution and delivery of this Agreement and the Transaction
Documents by all other applicable parties thereto) and enforceability of this
Agreement and/or the Transaction Documents.
D. Balanced Care has delivered true and correct copies of the Loan
Documents and the BCC Missouri Lease Documents to CHC.
5. REPRESENTATIONS BY THE CHC LESSEES AND KILGORE: The CHC Lessees and
Kilgore hereby represent and warrant to the Lender, the Hawthorn Subsidiaries,
the Balanced Care Lessees and the Balanced Care Guarantors that:
A. Each CHC Lessee is a nonprofit corporation duly organized, validly
existing and in good standing under the laws of the State of Missouri. Each CHC
Lessee has all requisite corporate power to own and operate its properties and
to carry on its purpose as now conducted and as proposed to be conducted (under
the BCC Missouri Lease Documents, subsequent to the consummation of the BCC/CHC
Lease Assignments) and is duly qualified to
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<PAGE> 16
transact business and is in good standing in each jurisdiction where such
qualification is necessary or desirable in order to carry out its purpose as
presently conducted and as proposed to be conducted. As of the date of this
Agreement, none of the CHC Lessees has any Subsidiaries and none of the CHC
Lessees is a member of any partnership or joint venture.
CHC is the sole member of each of the CHC Lessees.
B. Each CHC Lessee is duly authorized to make and enter into this
Agreement and to carry out the transactions contemplated in and under this
Agreement, the BCC Missouri Lease Documents and the Transaction Documents. This
Agreement and each Transaction Document to which any CHC Lessee is a party have
been duly executed and delivered by such CHC Lessee, and each is a legal, valid
and binding obligation of such CHC Lessee, enforceable in accordance with its
terms.
C. The execution, delivery and performance of this Agreement and the
Transaction Documents 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 any member of the CHC Group under any of the
Permits or Contracts or any other contract, mortgage, lien, lease, agreement,
instrument, franchise, arbitration award, judgment, decree, bank loan or credit
agreement, trust indenture or other instrument to which any member of the CHC
Group is a party or by which any member of the CHC Group or all or any portion
of the Mortgaged Property may be bound or affected and do not violate or
contravene any Legal Requirement.
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 of the execution
and delivery of this Agreement or any of the Transaction Documents by any member
of the CHC Group and the performance of such member's obligations thereunder or
as a condition to the validity (assuming the due authorization, execution and
delivery of this Agreement and the Transaction Documents by all other applicable
parties thereto) and enforceability of this Agreement and/or the Transaction
Documents and, subject to the terms of the Intercreditor Agreement, the first
priority of any Liens granted by the CHC Lessees under the BCC Missouri Lease
Documents (by virtue of the BCC/CHC Lease Assignments), except the filing of
financing statements with appropriate Governmental Authorities.
E. Each member of the CHC Group is financially solvent and there are no
actions, suits, investigations or proceedings including, without limitation,
outstanding federal or state tax liens, garnishments or insolvency or bankruptcy
proceedings, pending or, to the best of knowledge and belief of the CHC Lessees
and Kilgore, threatened:
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<PAGE> 17
(i) against or affecting any member of the CHC Group, which if
adversely resolved to such member of the CHC Group, would materially
adversely affect the ability of any of the foregoing to perform their
respective obligations under this Agreement or any of the Transaction
Documents; or
(ii) which may involve or affect the validity, priority or
enforceability of this Agreement or any of the Transaction Documents,
at law or in equity, or before or by any arbitrator or Governmental
Authority.
F. No member of the CHC Group is a party to any agreement the terms of
which now have, or, as far as can be reasonably foreseen, may have, a material
adverse affect on its respective financial condition or business or on the
operation of the Mortgaged Property.
G. After giving effect to the consummation of the transactions
contemplated by this Agreement and the Transaction Documents, each member of the
CHC Group:
(i) will be able to pay its debts as they become due;
(ii) will have sufficient funds and capital to carry on its
business as now conducted or as contemplated to be conducted (in
accordance with the terms of the BCC Missouri Lease Documents);
(iii) will own property having a value both at fair valuation
and at present fair saleable value greater than the amount required to
pay its debts as they become due; and
(iv) will not be rendered insolvent as determined by
applicable law.
H. No member of the CHC Group is delinquent or claimed to be delinquent
under any obligation for the payment of borrowed money.
I. None of the CHC Lessees has created, incurred, guaranteed, endorsed,
assumed or suffered to exist any liability (whether direct or contingent) for
borrowed money from any member of the CHC Group or any other Affiliate that is
not fully subordinated to the BCC Missouri Lease Obligations pursuant to the
Affiliated Party Subordination Agreements.
J. The financial statements of any member of the CHC Group given to the
Lender in connection with the execution and delivery of this Agreement were
true, complete and accurate, in all material respects, and fairly presented the
financial condition of each such member of the CHC Group as of the date thereof
and for the periods covered thereby, having been prepared in accordance with
GAAP, except as reflected in the notes thereto and such financial statements
disclosed all liabilities, including, without limitation, contingent
liabilities, of each such member of the CHC Group. There has been no material
adverse change since
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such date with respect to the tangible net worth of any member of the CHC Group
or with respect to any other matters contained in such financial statements, nor
have any additional material liabilities, including, without limitation,
contingent liabilities, of any member of the CHC Group arisen or been incurred
or asserted since such date.
K. Neither this Agreement, nor any of the Transaction Documents, nor
any certificate, agreement, statement or other document, including, without
limitation, any financial statements concerning the financial condition of any
member of the CHC Group, furnished to or to be furnished to the Lender or any of
its attorneys in connection with the transactions contemplated by this Agreement
or any of the Transaction Documents, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to prevent all statements contained herein and therein from
being misleading in any material respect. There is no fact within the special
knowledge of any member of the CHC Group which has not been disclosed herein or
in writing to the Lender that materially adversely affects, or in the future,
insofar as the CHC Lessees can reasonably foresee, may materially adversely
affect the business, properties, assets or condition, financial or otherwise, of
any member of the CHC Group or the Mortgaged Property.
L. There are no Management Agreements in force and effect as of the
date hereof, except the Cornerstone Management Agreements.
6. ASSIGNMENT BY BCC-HERMITAGE: BCC-Hermitage hereby assigns,
transfers, sets over and conveys to CHC-Hermitage all of BCC-Hermitage's right,
title and interest in, to and under the Hermitage Lease and the other Hermitage
Lease Documents, including, without limitation, the documents listed on EXHIBIT
A attached hereto and incorporated herein by reference; but, excluding, however,
the Hermitage Pledge Agreement.
7. ASSIGNMENT BY BCC-LEBANON CARE: BCC-Lebanon Care hereby assigns,
transfers, sets over and conveys to CHC-Lebanon North all of BCC-Lebanon Care's
right, title and interest in, to and under the Lebanon Care Lease and the other
Lebanon Care Lease Documents, including, without limitation, the documents
listed on EXHIBIT B attached hereto and incorporated herein by reference; but,
excluding, however, the Lebanon Care Pledge Agreement.
8. ASSIGNMENT BY BCC-LEBANON PARK: BCC-Lebanon Park hereby assigns,
transfers, sets over and conveys to CHC-Lebanon South all of BCC-Lebanon Park's
right, title and interest in, to and under the Lebanon Park Lease and the other
Lebanon Park Lease Documents, including, without limitation, the documents
listed on EXHIBIT C attached hereto and incorporated herein by reference; but,
excluding, however, the Lebanon Park Pledge Agreement.
9. ASSIGNMENT BY BCC-MT VERNON PARK: BCC-Mt. Vernon Park hereby
assigns, transfers, sets over and conveys to CHC-Springfield West all of BCC-Mt.
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Vernon Park's right, title and interest in, to and under the Mt.Vernon Lease and
the other Mt.Vernon Lease Documents, including, without limitation, the
documents listed on EXHIBIT D attached hereto and incorporated herein by
reference; but, excluding, however, the Mt. Vernon Pledge Agreement.
10. ASSIGNMENT BY BCC-NIXA: BCC-Nixa hereby assigns, transfers, sets
over and conveys to CHC-Nixa all of BCC-Nixa's right, title and interest in, to
and under the Nixa Lease and the other Nixa Lease Documents, including, without
limitation, the documents listed on EXHIBIT E attached hereto and incorporated
herein by reference; but, excluding, however, the Nixa Pledge Agreement.
11. ASSIGNMENT BY BCC-SPRINGFIELD: BCC-Springfield hereby assigns,
transfers, sets over and conveys to CHC-Springfield East all of
BCC-Springfield's right, title and interest in, to and under the Springfield
Lease and the other Springfield Lease Documents, including, without limitation,
the documents listed on EXHIBIT F attached hereto and incorporated herein by
reference; but, excluding, however, the Springfield Pledge Agreement.
12. ASSIGNMENT BY BCC-MT. VERNON WEST: BCC-Mt. Vernon West hereby
assigns, transfers, sets over and conveys to CHC-Springfield West Park all of
BCC-Mt. Vernon West's right, title and interest in, to and under the West Park
Lease and the other West Park Lease Documents, including, without limitation,
the documents listed on EXHIBIT G attached hereto and incorporated herein by
reference; but, excluding, however, the West Park Pledge Agreement.
13. ASSUMPTION BY CHC-HERMITAGE: CHC-Hermitage does hereby assume and
agree to perform all of BCC-Hermitage's obligations with respect to the
Hermitage Lease and the other Hermitage Lease Documents (excluding, however, the
Hermitage Pledge Agreement) accruing from and after the date hereof.
BCC-Hermitage shall remain liable for all of BCC-Hermitage's obligations with
respect to the Hermitage Lease and the other Hermitage Lease Documents accruing
prior to the date hereof.
14. ASSUMPTION BY CHC-LEBANON NORTH: CHC-Lebanon North does hereby
assume and agree to perform all of BCC-Lebanon Care's obligations with respect
to the Lebanon Care Lease and the other Lebanon Care Lease Documents (excluding,
however, the Lebanon Care Pledge Agreement) accruing from and after the date
hereof. BCC-Lebanon Care shall remain liable for all of BCC-Lebanon Care's
obligations with respect to the Lebanon Care Lease and the other Lebanon Care
Lease Documents accruing prior to the date hereof.
15. ASSUMPTION BY CHC-LEBANON SOUTH: CHC-Lebanon South does hereby
assume and agree to perform all of BCC-Lebanon Park's obligations with respect
to the Lebanon Park Lease and the other Lebanon Park Lease Documents (excluding,
however, the Lebanon Park Pledge Agreement) accruing from and after the date
hereof. BCC-Lebanon Park
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shall remain liable for all of BCC-Lebanon Park's obligations with respect to
the Lebanon Park Lease and the other Lebanon Park Lease Documents accruing prior
to the date hereof.
16. ASSUMPTION BY CHC-SPRINGFIELD WEST: CHC-Springfield West does
hereby assume and agree to perform all of BCC-Mt. Vernon Park's obligations with
respect to the Mt. Vernon Lease and the other Mt. Vernon Lease Documents
(excluding, however, the Mt. Vernon Pledge Agreement) accruing from and after
the date hereof. BCC-Mt. Vernon Park shall remain liable for all of BCC-Mt.
Vernon Park's obligations with respect to the Mt. Vernon Lease and the other Mt.
Vernon Lease Documents accruing prior to the date hereof.
17. ASSUMPTION BY CHC-NIXA: CHC-Nixa does hereby assume and agree to
perform all of BCC-Nixa's obligations with respect to the Nixa Lease and the
other Nixa Lease Documents (excluding, however, the Nixa Pledge Agreement)
accruing from and after the date hereof. BCC-Nixa shall remain liable for all of
BCC-Nixa's obligations with respect to the Nixa Lease and the other Nixa Lease
Documents accruing prior to the date hereof.
18. ASSUMPTION BY CHC-SPRINGFIELD EAST: CHC-Springfield East does
hereby assume and agree to perform all of BCC-Springfield's obligations with
respect to the Springfield Lease and the other Springfield Lease Documents
(excluding, however, the Springfield Pledge Agreement) accruing from and after
the date hereof. BCC-Springfield shall remain liable for all of
BCC-Springfield's obligations with respect to the Springfield Lease and the
other Springfield Lease Documents accruing prior to the date hereof.
19. ASSUMPTION BY CHC-SPRINGFIELD WEST PARK: CHC-Springfield West Park
does hereby assume and agree to perform all of BCC-Mt. Vernon West's obligations
with respect to the West Park Lease and the other West Park Lease Documents
(excluding, however, the West Park Pledge Agreement) accruing from and after the
date hereof. BCC-Mt. Vernon West shall remain liable for all of BCC-Mt. Vernon
West's obligations with respect to the West Park Lease and the other West Park
Lease Documents accruing prior to the date hereof.
20. HERMITAGE INDEMNIFICATION: BCC-Hermitage and CHC-Hermitage agree to
protect, indemnify, defend and hold harmless each other from and against any and
all of the following matters (collectively, the "Hermitage Indemnified
Matters"): claims, demands, actions, lawsuits, proceedings, judgments,
liabilities, losses, costs, damages and expenses (including reasonable
attorneys' fees and costs) directly or indirectly arising out of or related to
any breach or default in such party's obligations under Section 13 of this
Agreement and the enforcement of the provisions of this Section. BCC-Hermitage
and CHC-Hermitage each agree to promptly notify the other in writing upon
learning of any such claim or cause of action.
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In the event that any action, suit or proceeding is brought against
either BCC-Hermitage or CHC-Hermitage (the "Hermitage Indemnitee") with respect
to any Hermitage Indemnified Matter, the action, suit or proceeding shall, at
the written election made by the other party (the "Hermitage Indemnitor") within
fifteen (15) Business Days after the Hermitage Indemnitor's receipt of written
notice of the commencement of such action, suit or proceeding, be defended by
the Hermitage Indemnitor (including all proceedings on appeal or for review in
connection therewith) at the Hermitage Indemnitor's expense and liability.
Pending the Hermitage Indemnitor's election hereunder, the Hermitage Indemnitee
shall have the right to employ its own counsel to file a request for an
extension of time to file an answer, or to file an answer if the Hermitage
Indemnitor fails to have its counsel file an answer within three (3) Business
Days prior to the expiration of the period within which an answer must be filed,
as such period may be extended. The Hermitage Indemnitee shall have the right to
employ its own counsel, for the duration of such action, suit or proceeding, but
the fees and expenses of such counsel shall be at the expense of the Hermitage
Indemnitee unless the Hermitage Indemnitor has not elected within the required
time period to defend any such action, suit or proceeding, or unless the actions
or inactions by counsel retained by the Hermitage Indemnitor appear reasonably
likely to result in a judgment against the Hermitage Indemnitee because of a
failure to defend the action in a reasonably prudent manner (the burden to prove
the same by a preponderance of the evidence to rest with the Hermitage
Indemnitee), in which event the Hermitage Indemnitor shall pay such counsel's
fees and expenses. The Hermitage Indemnitor shall keep the Hermitage Indemnitee
reasonably informed of any action, suit or proceeding at all stages thereof,
whether or not it is represented by its own counsel. The provisions of this
Section shall not impair, limit, restrict, abridge or reduce the respective
indemnification obligations of Balanced Care, the Balanced Care Entities and the
CHC Group pursuant to the Asset Purchase Agreement and the Transaction
Documents.
The provisions of this Section shall survive the Closing of the
transactions contemplated by this Agreement.
21. LEBANON CARE INDEMNIFICATION: BCC-Lebanon Care and CHC-Lebanon
North agree to protect, indemnify, defend and hold harmless each other from and
against any and all of the following matters (collectively, the "Lebanon Care
Indemnified Matters"): claims, demands, actions, lawsuits, proceedings,
judgments, liabilities, losses, costs, damages and expenses (including
reasonable attorneys' fees and costs) directly or indirectly arising out of or
related to any breach or default in such party's obligations under Section 14 of
this Agreement and the enforcement of the provisions of this Section. BCC-
Lebanon Care and CHC-Lebanon North each agree to promptly notify the other in
writing upon learning of any such claim or cause of action.
In the event that any action, suit or proceeding is brought against
either BCC-Lebanon Care or CHC-Lebanon North (the "Lebanon Care Indemnitee")
with respect to any Lebanon Care Indemnified Matter, the action, suit or
proceeding shall, at the written election made by
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the other party (the "Lebanon Care Indemnitor") within fifteen (15) Business
Days after the Lebanon Care Indemnitor's receipt of written notice of the
commencement of such action, suit or proceeding, be defended by the Lebanon Care
Indemnitor (including all proceedings on appeal or for review in connection
therewith) at the Lebanon Care Indemnitor's expense and liability. Pending the
Lebanon Care Indemnitor's election hereunder, the Lebanon Care Indemnitee shall
have the right to employ its own counsel to file a request for an extension of
time to file an answer, or to file an answer if the Lebanon Care Indemnitor
fails to have its counsel file an answer within three (3) Business Days prior to
the expiration of the period within which an answer must be filed, as such
period may be extended. The Lebanon Care Indemnitee shall have the right to
employ its own counsel, for the duration of such action, suit or proceeding, but
the fees and expenses of such counsel shall be at the expense of the Lebanon
Care Indemnitee unless the Lebanon Care Indemnitor has not elected within the
required time period to defend any such action, suit or proceeding, or unless
the actions or inactions by counsel retained by the Lebanon Care Indemnitor
appear reasonably likely to result in a judgment against the Lebanon Care
Indemnitee because of a failure to defend the action in a reasonably prudent
manner (the burden to prove the same by a preponderance of the evidence to rest
with the Lebanon Care Indemnitee), in which event the Lebanon Care Indemnitor
shall pay such counsel's fees and expenses. The Lebanon Care Indemnitor shall
keep the Lebanon Care Indemnitee reasonably informed of any action, suit or
proceeding at all stages thereof, whether or not it is represented by its own
counsel. The provisions of this Section shall not impair, limit, restrict,
abridge or reduce the respective indemnification obligations of Balanced Care,
the Balanced Care Entities and the CHC Group pursuant to the Asset Purchase
Agreement and the Transaction Documents.
The provisions of this Section shall survive the Closing of the
transactions contemplated by this Agreement.
22. LEBANON PARK INDEMNIFICATION: BCC-Lebanon Park and CHC-Lebanon
South agree to protect, indemnify, defend and hold harmless each other from and
against any and all of the following matters (collectively, the "Lebanon Park
Indemnified Matters"): claims, demands, actions, lawsuits, proceedings,
judgments, liabilities, losses, costs, damages and expenses (including
reasonable attorneys' fees and costs) directly or indirectly arising out of or
related to any breach or default in such party's obligations under Section 15 of
this Agreement and the enforcement of the provisions of this Section.
BCC-Lebanon Park and CHC-Lebanon South each agree to promptly notify the other
in writing upon learning of any such claim or cause of action.
In the event that any action, suit or proceeding is brought against
either BCC-Lebanon Park or CHC-Lebanon South (the "Lebanon Park Indemnitee")
with respect to any Lebanon Park Indemnified Matter, the action, suit or
proceeding shall, at the written election made by the other party (the "Lebanon
Park Indemnitor") within fifteen (15) Business Days after the Lebanon Park
Indemnitor's receipt of written notice of the commencement of such action, suit
or proceeding, be defended by the Lebanon Park Indemnitor (including all
proceedings on
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appeal or for review in connection therewith) at the Lebanon Park Indemnitor's
expense and liability. Pending the Lebanon Park Indemnitor's election hereunder,
the Lebanon Park Indemnitee shall have the right to employ its own counsel to
file a request for an extension of time to file an answer, or to file an answer
if the Lebanon Park Indemnitor fails to have its counsel file an answer within
three (3) Business Days prior to the expiration of the period within which an
answer must be filed, as such period may be extended. The Lebanon Park
Indemnitee shall have the right to employ its own counsel, for the duration of
such action, suit or proceeding, but the fees and expenses of such counsel shall
be at the expense of the Lebanon Park Indemnitee unless the Lebanon Park
Indemnitor has not elected within the required time period to defend any such
action, suit or proceeding, or unless the actions or inactions by counsel
retained by the Lebanon Park Indemnitor appear reasonably likely to result in a
judgment against the Lebanon Park Indemnitee because of a failure to defend the
action in a reasonably prudent manner (the burden to prove the same by a
preponderance of the evidence to rest with the Lebanon Park Indemnitee), in
which event the Lebanon Park Indemnitor shall pay such counsel's fees and
expenses. The Lebanon Park Indemnitor shall keep the Lebanon Park Indemnitee
reasonably informed of any action, suit or proceeding at all stages thereof,
whether or not it is represented by its own counsel. The provisions of this
Section shall not impair, limit, restrict, abridge or reduce the respective
indemnification obligations of Balanced Care, the Balanced Care Entities and the
CHC Group pursuant to the Asset Purchase Agreement and the Transaction
Documents.
The provisions of this Section shall survive the Closing of the
transactions contemplated by this Agreement.
23. MT. VERNON INDEMNIFICATION: BCC-Mt. Vernon Park and CHC-Springfield
West agree to protect, indemnify, defend and hold harmless each other from and
against any and all of the following matters (collectively, the "Mt. Vernon
Indemnified Matters"): claims, demands, actions, lawsuits, proceedings,
judgments, liabilities, losses, costs, damages and expenses (including
reasonable attorneys' fees and costs) directly or indirectly arising out of or
related to any breach or default in such party's obligations under Section 16 of
this Agreement and the enforcement of the provisions of this Section. BCC-Mt.
Vernon Park and CHC-Springfield West each agree to promptly notify the other in
writing upon learning of any such claim or cause of action.
In the event that any action, suit or proceeding is brought against
either BCC-Mt. Vernon Park or CHC-Springfield West (the "Mt. Vernon Indemnitee")
with respect to any Mt. Vernon Indemnified Matter, the action, suit or
proceeding shall, at the written election made by the other party (the "Mt.
Vernon Indemnitor") within fifteen (15) Business Days after the Mt. Vernon
Indemnitor's receipt of written notice of the commencement of such action, suit
or proceeding, be defended by the Mt. Vernon Indemnitor (including all
proceedings on appeal or for review in connection therewith) at the Mt. Vernon
Indemnitor's expense and liability. Pending the Mt. Vernon Indemnitor's election
hereunder, the Mt. Vernon Indemnitee shall have the right to employ its own
counsel to file a request for an
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<PAGE> 24
extension of time to file an answer, or to file an answer if the Mt. Vernon
Indemnitor fails to have its counsel file an answer within three (3) Business
Days prior to the expiration of the period within which an answer must be filed,
as such period may be extended. The Mt. Vernon Indemnitee shall have the right
to employ its own counsel, for the duration of such action, suit or proceeding,
but the fees and expenses of such counsel shall be at the expense of the Mt.
Vernon Indemnitee unless the Mt. Vernon Indemnitor has not elected within the
required time period to defend any such action, suit or proceeding, or unless
the actions or inactions by counsel retained by the Mt. Vernon Indemnitor appear
reasonably likely to result in a judgment against the Mt. Vernon Indemnitee
because of a failure to defend the action in a reasonably prudent manner (the
burden to prove the same by a preponderance of the evidence to rest with the Mt.
Vernon Indemnitee), in which event the Mt. Vernon Indemnitor shall pay such
counsel's fees and expenses. The Mt. Vernon Indemnitor shall keep the Mt. Vernon
Indemnitee reasonably informed of any action, suit or proceeding at all stages
thereof, whether or not it is represented by its own counsel. The provisions of
this Section shall not impair, limit, restrict, abridge or reduce the respective
indemnification obligations of Balanced Care, the Balanced Care Entities and the
CHC Group pursuant to the Asset Purchase Agreement and the Transaction
Documents.
The provisions of this Section shall survive the Closing of the
transactions contemplated by this Agreement.
24. NIXA INDEMNIFICATION: BCC-Nixa and CHC-Nixa agree to protect,
indemnify, defend and hold harmless each other from and against any and all of
the following matters (collectively, the "Nixa Indemnified Matters"): claims,
demands, actions, lawsuits, proceedings, judgments, liabilities, losses, costs,
damages and expenses (including reasonable attorneys' fees and costs) directly
or indirectly arising out of or related to any breach or default in such party's
obligations under Section 17 of this Agreement and the enforcement of the
provisions of this Section. BCC-Nixa and CHC-Nixa each agree to promptly notify
the other in writing upon learning of any such claim or cause of action.
In the event that any action, suit or proceeding is brought against
either BCC-Nixa or CHC-Nixa (the "Nixa Indemnitee") with respect to any Nixa
Indemnified Matter, the action, suit or proceeding shall, at the written
election made by the other party (the "Nixa Indemnitor") within fifteen (15)
Business Days after the Nixa Indemnitor's receipt of written notice of the
commencement of such action, suit or proceeding, be defended by the Nixa
Indemnitor (including all proceedings on appeal or for review in connection
therewith) at the Nixa Indemnitor's expense and liability. Pending the Nixa
Indemnitor's election hereunder, the Nixa Indemnitee shall have the right to
employ its own counsel to file a request for an extension of time to file an
answer, or to file an answer if the Nixa Indemnitor fails to have its counsel
file an answer within three (3) Business Days prior to the expiration of the
period within which an answer must be filed, as such period may be extended. The
Nixa Indemnitee shall have the right to employ its own counsel, for the duration
of such action, suit or proceeding, but the fees and expenses of such counsel
shall be at the expense of the Nixa
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Indemnitee unless the Nixa Indemnitor has not elected within the required time
period to defend any such action, suit or proceeding, or unless the actions or
inactions by counsel retained by the Nixa Indemnitor appear reasonably likely to
result in a judgment against the Nixa Indemnitee because of a failure to defend
the action in a reasonably prudent manner (the burden to prove the same by a
preponderance of the evidence to rest with the Nixa Indemnitee), in which event
the Nixa Indemnitor shall pay such counsel's fees and expenses. The Nixa
Indemnitor shall keep the Nixa Indemnitee reasonably informed of any action,
suit or proceeding at all stages thereof, whether or not it is represented by
its own counsel. The provisions of this Section shall not impair, limit,
restrict, abridge or reduce the respective indemnification obligations of
Balanced Care, the Balanced Care Entities and the CHC Group pursuant to the
Asset Purchase Agreement and the Transaction Documents.
The provisions of this Section shall survive the Closing of the
transactions contemplated by this Agreement.
25. SPRINGFIELD INDEMNIFICATION: BCC-Springfield and CHC-Springfield
East agree to protect, indemnify, defend and hold harmless each other from and
against any and all of the following matters (collectively, the "Springfield
Indemnified Matters"): claims, demands, actions, lawsuits, proceedings,
judgments, liabilities, losses, costs, damages and expenses (including
reasonable attorneys' fees and costs) directly or indirectly arising out of or
related to any breach or default in such party's obligations under Section 18 of
this Agreement and the enforcement of the provisions of this Section.
BCC-Springfield and CHC-Springfield East each agree to promptly notify the other
in writing upon learning of any such claim or cause of action.
In the event that any action, suit or proceeding is brought against
either BCC-Springfield and CHC-Springfield East (the "Springfield Indemnitee")
with respect to any Indemnified Matter, the action, suit or proceeding shall, at
the written election made by the other party (the "Springfield Indemnitor")
within fifteen (15) Business Days after the Springfield Indemnitor's receipt of
written notice of the commencement of such action, suit or proceeding, be
defended by the Springfield Indemnitor (including all proceedings on appeal or
for review in connection therewith) at the Springfield Indemnitor's expense and
liability. Pending the Springfield Indemnitor's election hereunder, the
Springfield Indemnitee shall have the right to employ its own counsel to file a
request for an extension of time to file an answer, or to file an answer if the
Springfield Indemnitor fails to have its counsel file an answer within three (3)
Business Days prior to the expiration of the period within which an answer must
be filed, as such period may be extended. The Springfield Indemnitee shall have
the right to employ its own counsel, for the duration of such action, suit or
proceeding, but the fees and expenses of such counsel shall be at the expense of
the Springfield Indemnitee unless the Springfield Indemnitor has not elected
within the required time period to defend any such action, suit or proceeding,
or unless the actions or inactions by counsel retained by the Springfield
Indemnitor appear reasonably likely to result in a judgment against the
Springfield Indemnitee because of a failure to defend the action in a reasonably
prudent manner (the
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burden to prove the same by a preponderance of the evidence to rest with the
Springfield Indemnitee), in which event the Springfield Indemnitor shall pay
such counsel's fees and expenses. The Springfield Indemnitor shall keep the
Springfield Indemnitee reasonably informed of any action, suit or proceeding at
all stages thereof, whether or not it is represented by its own counsel. The
provisions of this Section shall not impair, limit, restrict, abridge or reduce
the respective indemnification obligations of Balanced Care, the Balanced Care
Entities and the CHC Group pursuant to the Asset Purchase Agreement and the
Transaction Documents.
The provisions of this Section shall survive the Closing of the
transactions contemplated by this Agreement.
26. WEST PARK INDEMNIFICATION: BCC-Mt. Vernon West and CHC-Springfield
West Park agree to protect, indemnify, defend and hold harmless each other from
and against any and all of the following matters (collectively, the "West Park
Indemnified Matters"): claims, demands, actions, lawsuits, proceedings,
judgments, liabilities, losses, costs, damages and expenses (including
reasonable attorneys' fees and costs) directly or indirectly arising out of or
related to any breach or default in such party's obligations under Section 19 of
this Agreement and the enforcement of the provisions of this Section. BCC-Mt.
Vernon West and CHC-Springfield West Park each agree to promptly notify the
other in writing upon learning of any such claim or cause of action.
In the event that any action, suit or proceeding is brought against
either BCC-Mt. Vernon West and CHC-Springfield West Park (the "West Park
Indemnitee") with respect to any West Park Indemnified Matter, the action, suit
or proceeding shall, at the written election made by the other party (the "West
Park Indemnitor") within fifteen (15) Business Days after the West Park
Indemnitor's receipt of written notice of the commencement of such action, suit
or proceeding, be defended by the West Park Indemnitor (including all
proceedings on appeal or for review in connection therewith) at the West Park
Indemnitor's expense and liability. Pending the West Park Indemnitor's election
hereunder, the West Park Indemnitee shall have the right to employ its own
counsel to file a request for an extension of time to file an answer, or to file
an answer if the West Park Indemnitor fails to have its counsel file an answer
within three (3) Business Days prior to the expiration of the period within
which an answer must be filed, as such period may be extended. The West Park
Indemnitee shall have the right to employ its own counsel, for the duration of
such action, suit or proceeding, but the fees and expenses of such counsel shall
be at the expense of the West Park Indemnitee unless the West Park Indemnitor
has not elected within the required time period to defend any such action, suit
or proceeding, or unless the actions or inactions by counsel retained by the
West Park Indemnitor appear reasonably likely to result in a judgment against
the West Park Indemnitee because of a failure to defend the action in a
reasonably prudent manner (the burden to prove the same by a preponderance of
the evidence to rest with the West Park Indemnitee), in which event the West
Park Indemnitor shall pay such counsel's fees and expenses. The West Park
Indemnitor shall keep the West Park Indemnitee reasonably
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informed of any action, suit or proceeding at all stages thereof, whether or not
it is represented by its own counsel. The provisions of this Section shall not
impair, limit, restrict, abridge or reduce the respective indemnification
obligations of Balanced Care, the Balanced Care Entities and the CHC Group
pursuant to the Asset Purchase Agreement and the Transaction Documents.
The provisions of this Section shall survive the Closing of the
transactions contemplated by this Agreement.
27. CONSENT FROM THE BORROWERS AND THE LENDER: In consideration of the
Lender agreeing to consent to the BCC/CHC Lease Assignments and as a condition
precedent to the effectiveness of this Agreement, the Lender requires that prior
to the consummation of the BCC/CHC Lease Assignments:
A. An amount not less than Four Million Dollars ($4,000,000) shall be
paid to the Lender to be applied toward the Hawthorn Loan (the "Required
Prepayment"). Notwithstanding anything to the contrary set forth in the Loan
Documents, no Prepayment Fee shall be due and payable as a consequence of the
Required Prepayment.
B. Balanced Care, CHC, CPI and Kilgore shall execute and deliver to the
Lender joint and several guaranties of the Loan Obligations, pursuant to
guaranties in form and substance acceptable to the Lender (collectively, the
"Required Loan Guaranties").
C. CHC, CPI and Kilgore shall execute and deliver to the Lender (in its
capacity as the assignee under the Assignment of Leases) joint and several
guaranties of the BCC Missouri Lease Obligations, pursuant to guaranties in form
and substance acceptable to the Lender (collectively, the "Required Lease
Guaranties").
D. Balanced Care and those Affiliates that have entered into
transactions with any Meditrust Entities shall have executed and delivered to
the Lender and the other applicable Meditrust Entities, a cross-default
agreement in form and substance acceptable to the Lender and such Meditrust
Entities (the "Cross-Default Agreement"), confirming that a Loan Default under
any of the Loan Documents will trigger a default under the transaction documents
with such Affiliates of Balanced Care.
Subject to the satisfaction of the conditions set forth above, the
Lender hereby consents to the BCC/CHC Lease Assignments. Without limiting any of
the provisions set forth in the Omnibus Assignment of Contracts, the Borrowers
hereby consent to and waive any and all objections to the BCC/CHC Lease
Assignments and the Lender's consent to the BCC/CHC Lease Assignments.
28. AMENDMENT OF LOAN DOCUMENTS:
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A. AMENDMENT OF LOAN AGREEMENT. After giving effect to the BCC/CHC
Lease Assignments (consummated by virtue of the execution and delivery of this
Agreement and the satisfaction of the conditions set forth therein), the
Hawthorn Borrowers and the Lender hereby agree that:
(i) Exhibit B of the Loan Agreement is hereby amended by
adding the following definition immediately following the definition of
Approval Date:
ARKANSAS OFFICE: 5305 Village Parkway, Suite 12, Rogers, Arkansas
72758
(ii) The definition of "Borrowing Group" set forth in Exhibit
B of the Loan Agreement is hereby deleted in its entirety and is
restated to read as follows:
BORROWING GROUP: Collectively, the Borrowers, any
guarantor of the Loan Obligations, any Lessee, any Lease
Guarantor, any Manager, CHC-Missouri and CHC-Personnel.
(iii) The definitions "Current Manager," "Current Management
Agreement" and "Current Manager's Principal Place of Business" set
forth in Exhibit B of the Loan Agreement are hereby deleted in their
entirety and all references in the Loan Agreement to such terms are
hereby deleted in their entirety.
(iv) Exhibit B of the Loan Agreement is hereby amended by
adding the following definitions immediately following the definition
of "Champus":
CHC: Christian Health Care, Inc., an
Arkansas nonprofit corporation and its respective
successors and assigns.
CHC/BCC ASSET PURCHASE AGREEMENT: That
certain Asset Purchase Agreement, dated as of October
15, 1999, as amended, by and among Balanced Care (on
behalf of itself and certain subsidiaries) and
CHC-Missouri.
CHC/BCC ASSET PURCHASE DOCUMENTS:
Collectively, the CHC/BCC Asset Purchase Agreement
and all other documents and instruments now or
hereafter executed and/or delivered in connection
therewith or pursuant thereto.
CHC-HERMITAGE: Christian Health Care of
Hermitage, Inc., a Missouri nonprofit corporation and
its respective successors and assigns.
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CHC-LEBANON NORTH: Christian Health Care of
Lebanon North, Inc., a Missouri nonprofit corporation
and its respective successors and assigns.
CHC-LEBANON SOUTH: Christian Health Care of
Lebanon South, Inc., a Missouri nonprofit corporation
and its respective successors and assigns.
CHC-LESSEES: Collectively, CHC-Hermitage,
CHC-Lebanon North, CHC-Lebanon South, CHC-Nixa,
CHC-Springfield East, CHC- Springfield Park,
CHC-Springfield West Park and their respective
successors and assigns.
CHC-MISSOURI: Christian Health Care of
Missouri, Inc., a Missouri nonprofit corporation and
its respective successors and assigns.
CHC-NIXA: Christian Health Care of Nixa,
Inc., a Missouri nonprofit corporation and its
respective successors and assigns.
CHC-PERSONNEL: Christian Health Care
Personnel Services, Inc., a Missouri nonprofit
corporation and its respective successors and
assigns.
CHC-SPRINGFIELD EAST: Christian Health Care
of Springfield East, Inc., a Missouri nonprofit
corporation and its respective successors and
assigns.
CHC-SPRINGFIELD WEST: Christian Health Care
of Springfield West, Inc., a Missouri nonprofit
corporation and its respective successors and
assigns.
CHC-SPRINGFIELD WEST PARK: Christian Health
Care of Springfield West Park, Inc., a Missouri
nonprofit corporation and its respective successors
and assigns.
(v) Exhibit B of the Loan Agreement is hereby amended by
adding the following definition immediately following the definition of
"Contracts":
CORNERSTONE: Cornerstone Health Care, Inc.,
a Missouri corporation and its respective successors
and assigns.
(vi) Clause (iii) and (iv) in Section 3.6 of the Loan
Agreement is hereby deleted in its entirety.
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(vii) Section 6.3.01 A of the Loan Agreement is hereby deleted
in its entirety and is restated to read as follows:
a copy of the Consolidated Financials for CHC
(including, supplemental schedules for the CHC
Lessees), for the preceding fiscal year, certified
and audited by, and with the unqualified opinion of,
independent certified public accountants acceptable
to the Lender and certified as true and correct by
CHC (and, without limiting anything else contained
herein, the Consolidated Financials for CHC shall
contain a detailed balance sheet for each Facility as
of the last day of such fiscal year and a statement
of earnings from such properties for such fiscal year
showing, among other things, all rents and other
income therefrom and all expenses paid or incurred in
connection with the operation of such properties);
(viii) Section 6.3.04 of the Loan Agreement is hereby deleted
in its entirety and is restated to read as follows:
Within forty-five (45) days after the end of each of
their respective fiscal quarters, unaudited
Consolidated Financials for each CHC Lessee certified
as true and correct by such CHC Lessee.
(ix) Section 6.3.06 of the Loan Agreement is hereby deleted in
its entirety.
(x) Section 6.7 of the Loan Agreement is hereby deleted in its
entirety and is restated to read as follows:
The Borrowers shall provide the Lender thirty (30)
days' prior written notice of any change of their
Principal Place of Business from their current
Principal Place of Business. The Borrowers shall
maintain the Collateral, including without
limitation, all books and records relating to the
Borrowers' businesses, at solely at their Principal
Place of Business, the Mortgaged Property and/or at
the Arkansas Office. The Borrowers shall not (A)
remove the Collateral, including, without limitation,
any books or records relating to the Collateral
and/or the Borrowers' businesses from the Mortgaged
Property, their Principal Place of Business and/or
the Arkansas Office or (B) relocate their Principal
Place of Business until after receipt of a
certificate from the Lender, signed by an officer
thereof, stating that the Lender has, to its
satisfaction, obtained all documentation that it
deems necessary or desirable to obtain, maintain,
perfect and confirm the first priority security
interests granted in the Loan Documents.
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<PAGE> 31
(xi) Section 6.19 of the Loan Agreement is hereby deleted in
its entirety and is restated to read as follows:
Pursuant to the BCC Missouri Leases, the CHC Lessees
(as the successors in interest to the Balanced Care
Lessees) have been granted options to purchase the
Mortgaged Property and the issued and outstanding
shares of the capital stock of the Hawthorn
Subsidiaries (collectively, the "Purchase Options").
Notwithstanding anything to the contrary contained in
the BCC Missouri Leases or the Omnibus Assignment of
Contracts, the Purchase Options may be exercised in
accordance with their terms, subject to the liens of
the Loan Documents, provided, that, at the time of
exercise and at the time of the consummation of the
applicable transaction(s), no Loan Default exists,
nor any event which, with the giving of notice and/or
the passage of time, would constitute a Loan Default
and provided, further, that, in connection with the
consummation of the applicable transaction(s), (I)
the Loan Documents are amended and restated, to
reflect the then current ownership structure of the
Mortgaged Property and the Borrowers, in forms
reasonably acceptable to the Lender and substantially
similar to the Loan Documents and (II) the Borrowing
Group shall execute and deliver such other
instruments, certificates and agreements, in form and
substance acceptable to the Lender, that are
necessary and/or reasonably requested by the Lender
to effectuate the consummation of the applicable
transaction(s).
(xii) References to the terms "Balanced Care Lessee" and
"Balanced Care Lessees" set forth in Section 5.1.12 E, Section 5.1.13 A
and Section 8 of the Loan Agreement are hereby deleted in their
entirety and are replaced with the terms "CHC Lessee" and CHC Lessees,"
respectively.
(xiii) Subsection 10V of the Loan Agreement is hereby deleted
in its entirety.
(xiv) Subsection 10X of the Loan Agreement is hereby deleted
in its entirety.
(xv) The first sentence of Section 12.11 of the Loan Agreement
is hereby deleted in its entirety and is restated to read as follows:
This Agreement and the other Loan Documents are
solely for the benefit of the Lender, its successors,
assigns and participants (if any), the Meditrust
Entities, the Indemnified Parties and the Borrowing
Group, and except as otherwise expressly set forth in
any of the Loan Documents, nothing contained therein
shall confer upon anyone other
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than such parties any right to insist upon or to
enforce the performance or observance of any of the
obligations contained therein.
(xvi) Section 12.13 of the Loan Agreement is hereby deleted in
its entirety and is restated to read as follows:
Any notice, request, demand, statement or
consent made hereunder or under any of the other Loan
Documents 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 provisions 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 the Borrowers: Hawthorn Health Properties, Inc.
c/o J. Gray Beverley, Jr.
1225 Park Avenue, Apt. 17A
New York, NY 10128
Attn: President
With copies to: LeBoeuf, Lamb, Greene & MacRae
One Embarcadero Center, Suite 400
San Francisco, CA 94111
Attn: Graham Taylor, Esq.
and
Christian Health Care, Inc.
5303 Village Parkway
Suite 12
Rogers, Arkansas 72758
Attn: President
and
Ball & Mourton, Ltd., PLLC
E.J. Ball Plaza
112 W. Center, Suite 700
Fayetteville, Arkansas 72702
Attn: Rayburn W. Green, Esq.
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<PAGE> 33
If to the Lender: Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham Heights, Massachusetts 02494
Attn: President
With copies to: Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham Heights, Massachusetts 02494
Attn: General Counsel
and
Nutter, McClennen & Fish, LLP
One International Place
Boston, Massachusetts 02110-2699
Attn: Marianne Ajemian, Esq.
or at such other place as either party hereto may
from time to time hereafter designate to the other in
writing. Any notice given to the Borrowers by the
Lender at any time shall not imply that such notice
or any further or similar notice was or is required.
B. AMENDMENT OF ENVIRONMENTAL INDEMNITY AGREEMENT. After giving effect
to the BCC/CHC Lease Assignments (consummated by virtue of the execution and
delivery of this Agreement and the satisfaction of the conditions set forth
herein) the Borrowers, Balanced Care, CHC, Kilgore and the Lender hereby agree
that (I) the Environmental Indemnity Agreement (as defined under the Loan
Agreement) is hereby amended by adding Balanced Care, CHC and Kilgore as parties
thereto and (II) the definition of "Indemnitors" set forth in the Environmental
Indemnity Agreement is hereby amended to include Balanced Care, CHC and Kilgore.
C. AMENDMENT OF THE NOTE. After giving effect to the BCC/CHC Lease
Assignments (consummated by virtue of the execution and delivery of this
Agreement and the satisfaction of the conditions set forth herein) the Borrowers
and the Lender hereby agree that subparagraph (b) in the Note is hereby deleted
in its entirety and amended and restated to read as follows:
b. commencing on October 1, 1997 and on the first day of
each calendar month thereafter through and including
January 1, 2000, the Makers shall pay to the Holder
equal monthly installments of principal and interest
in arrears [based upon a thirty (30) year
amortization schedule with interest accruing on the
outstanding principal balance at the Interest Rate];
on February 1, 2000, the Makers shall pay to the
Holder a
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payment of interest only accruing on the outstanding
principal balance at the Interest Rate and commencing
on March 1, 2000 and on the first day of each
calendar month thereafter through and including
August 1, 2006, the Makers shall pay to the Holder
monthly installments of principal and interest in
arrears, in the amount of $347,295.80, with interest
accruing on the outstanding principal balance at the
Interest Rate.
29. AMENDMENT OF LEASE DOCUMENTS:
A. OMNIBUS AMENDMENT OF BCC MISSOURI LEASES. After giving effect to the
BCC/CHC Lease Assignments (consummated by virtue of the execution and delivery
of this Agreement and the satisfaction of the conditions set forth herein) and
without limiting the provisions of the Omnibus Assignment of Contracts or any of
the Assignments of Leases, the Hawthorn Subsidiaries, the CHC Lessees and the
Lender hereby agree that:
(i) The definition of Affiliated Party Subordination
Agreements set forth in Section 2.1 of each of the BCC Missouri Leases
is hereby deleted in its entirety and restated to read as follows:
AFFILIATED PARTY SUBORDINATION AGREEMENTS:
Collectively, (i) the Affiliated Party Subordination
Agreement of even date by and among Lessee, the
Balanced Care Lessees, the Guarantors and Lessor,
(ii) the Affiliated Party Subordination Agreement as
defined under the Hawthorn Loan Agreement and (iii)
the five (5) separate Affiliated Party Subordination
Agreements of even date by and among Lessee, the
Balanced Care Lessees, the Guarantors, Lessor and the
other Hawthorn Subsidiaries.
(ii) The definition of Cash Flow set forth in Section 2.1 of
each of the BCC Missouri Leases is hereby deleted in its entirety and
restated to read as follows:
CASH FLOW: The Consolidated Net Income (or
Consolidated Net Loss) before federal and state income taxes
for any period plus (I) the amount of the provision for
depreciation and amortization actually deducted on the books
of the applicable Person for the purposes of computing such
Consolidated Net Income (or Consolidated Net Loss) for the
period involved, plus (II) with respect to the CHC Lessees,
BCC Rent and interest on all other Indebtedness which is fully
subordinated to the BCC Lease Obligations plus (III) with
respect to the CHC Lessees, any payments with respect to
Indebtedness and/or any other obligations (including, without
limitation, management fees) which are fully subordinated to
the BCC Lease Obligations pursuant to the BCC Lease Affiliated
Party Subordination Agreements.
(iii) Section 2.1 of each of the BCC Missouri Leases is hereby
amended by adding the following definition:
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CHC LESSEES: As defined in the Hawthorn Loan Agreement.
(iv) The definitions of "Current Manager" and "Current
Management Agreement" set forth on Section 2.1 of each of the Missouri
Leases are hereby deleted in their entirety and all references in the
BCC Missouri Leases to such terms are hereby deleted.
(v) The definition of Debt Coverage Ratio set forth in Section
2.1 of each of the BCC Missouri Leases is hereby deleted in its
entirety and restated to read as follows:
DEBT COVERAGE RATIO: The ratio of (I) Cash Flow for
each applicable period to (II) with respect to the CHC
Lessees, the total of all BCC Rent paid or payable during such
period or accrued for such period.
(vi) The definition of Guaranties set forth in Section 2.1 of
each of the BCC Missouri Leases is hereby deleted in its entirety and
restated to read as follows:
GUARANTIES: Collectively, the Balanced Care Guaranty,
the Dixon Guaranty and any other guaranty of the Lease
Obligations executed and delivered by any Guarantor.
(vii) The definition of Guarantors set forth in Section 2.1 of
each of the BCC Missouri Leases is hereby deleted in its entirety and
restated to read as follows:
GUARANTORS: Collectively, Balanced Care, the BCC
Subsidiary Guarantors and any other guarantor of the Lease
Obligations.
(viii) Section 1.2 of each of the BCC Missouri Leases is
hereby amended by adding the following definitions:
KILGORE: Alington D. Kilgore of Rogers, Arkansas.
TERMINATION PROVISION: As defined in Section 18.4.14
(ix) The second, third, fourth and fifth sentences of Section
10.1.3 of each of the BCC Missouri Leases are hereby deleted in their
entirety.
(x) The words "the Dixon Facility, the Pharmacies, the Nevada
Facility or the Republic Facility" are hereby deleted from Section
10.1.16 of each of the BCC Missouri Leases.
(xi) Section 10.1.28 of each of the BCC Missouri Leases is
hereby deleted in its entirety and is hereby restated to read as
follows:
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<PAGE> 36
10.1.28 PRINCIPAL PLACE OF BUSINESS. The principal place of
business and chief executive office of Lessee is located at
5305 Village Parkway, Suite 12, Rogers, Arkansas 72758 (the
"Principal Place of Business").
(xii) Section 11.2 .1 (a) of each of the BCC Missouri Leases
is hereby deleted in its entirety and is hereby restated to read as
follows:
(a) ANNUAL STATEMENTS. Within one hundred (100) days
after the end of each of their respective fiscal years, (I) a
copy of the Consolidated Financials for each of (X) CHC
(including supplemental schedules for Lessee and the other CHC
Lessees) and (Y) any Sublessee for the preceding fiscal year,
certified and audited by, and with the unqualified opinion of,
independent certified public accountants acceptable to Lessor
and certified as true and correct by CHC or the applicable
Sublessee, as the case may be (and, without limiting anything
else contained herein, the Consolidated Financials for CHC
shall include a detailed balance sheet for the Hawthorn
Facilities as of the last day of such fiscal year and a
statement of earnings from such properties for such fiscal
year showing, among other things, all rents and other income
therefrom and all expenses paid or incurred in connection with
the operation of such properties); (II) separate statements,
certified as true and correct by Lessee, the Guarantors and
each Sublessee, stating whether, to the best of the signer's
knowledge and belief after making due inquiry, Lessee, each of
the Guarantors or such Sublessee, as the case may be, is in
default in the performance or observance of any of the terms
of this Lease or any of the other Lease Documents and, if so,
specifying all such defaults, the nature thereof and the steps
being taken to immediately remedy the same; (III) a copy of
all letters from the independent certified accountants engaged
to perform the annual audits referred to above, directed to
the management of CHC, Lessee, any other CHC Lessee, any
Guarantor or Sublessee, as the case may be, regarding the
existence of any reportable conditions or material weaknesses
and (IV) a statement certified as true and correct by Lessee
setting forth all Subleases as of the last day of such fiscal
year, the respective areas demised thereunder, the names of
the Sublessees thereunder, the respective expiration dates of
such Subleases, the respective rentals provided for therein,
and such other information pertaining to the Subleases as may
be reasonably requested by Lessor.
(xiii) Section 11.2 .1 (d) of each of the BCC Missouri Leases
is hereby deleted in its entirety and is hereby restated to read as
follows:
(d) QUARTERLY STATEMENTS OF CHC. Within fifty (50)
days after the end of each Fiscal Quarter, unaudited
Consolidated Financials for CHC certified as true and correct
by CHC.
(xiv) Section 11.3 of each of the BCC Missouri Leases is
hereby deleted in its entirety and is hereby restated to read as
follows:
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11.3 FINANCIAL COVENANTS. Lessee covenants and agrees
that, throughout the Term and as long as Lessee is in
possession of the Leased Property:
11.3.1 RENT COVERAGE RATIO OF LESSEE.
Commencing with the first Fiscal Quarter after the
Commencement Date and for each Fiscal Quarter
thereafter during the remainder of the Term, the
CHC Lessees shall maintain a combined Debt
Coverage Ratio with respect to the Hawthorn
Mortgaged Property equal to or greater than 1.25
to 1.
11.3.2 CURRENT RATIO. The CHC Lessees shall
maintain, at all times, a ratio of Consolidated
Current Assets to Consolidated Current Liabilities
equal to or greater than 1 to 1.
(xi) Article 18 of each of the Missouri Leases is hereby
amended by adding the following Section 18.4.14:
18.4.14 TERMINATION OF OPTION.
Notwithstanding anything to the contrary set forth
herein or in any of the other BCC Lease Documents,
in the event that the CHC Lessees fail to acquire
the Hawthorn Mortgaged Property, pursuant to that
certain Option Agreement, dated as of January __,
2000, by and among the Hawthorn Subsidiaries and
the CHC Lessees, on or before October 1, 2000, the
Purchase Option relating to the Mortgaged Property
(but, not the Purchase Option relating to the
stock of the Hawthorn Subsidiaries) shall
automatically expire (the "Termination
Provision"); provided, however, that,
notwithstanding the foregoing Termination
Provision, if such failure to acquire the Hawthorn
Mortgaged Property shall result from the gross
negligence or willful misconduct by any of the
Hawthorn Subsidiaries (or any of their respective
successors and assigns), the Purchase Option
relating to the Mortgaged Property shall remain in
force and effect and may be exercised and enforced
in accordance with the terms hereof without regard
to the foregoing Termination Provision.
B. OMNIBUS AMENDMENT OF AFFILIATED PARTY SUBORDINATION AGREEMENTS.
After giving effect to the BCC/CHC Lease Assignments (consummated by virtue of
the execution and delivery of this Agreement and the satisfaction of the
conditions set forth herein)and without limiting the provisions of the Omnibus
Assignment of Contracts, the parties hereto hereby agree that (I) each
Affiliated Party Subordination Agreement is hereby amended by adding the
Purchaser, Cornerstone, CHC-Personnel, CPI, CHC, the Balanced Care Lessees and
Kilgore as parties thereto, (II) the definition of "Affiliated Parties" set
forth in each such Affiliated Party Subordination Agreement is hereby amended to
include the Purchaser,
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Cornerstone, CHC-Personnel, CPI, CHC, the Balanced Care Lessees and Kilgore and
(III) each such Affiliated Party Subordination Agreement is amended to delete
all references to the Current Manager and the Current Management Agreement.
As a consequence of the foregoing, (1) Cornerstone acknowledges and
agrees that all amounts now or hereafter owed to Cornerstone by any CHC Lessee
(including, without limitation, all fees and other amounts now or hereafter owed
under the Cornerstone Management Agreements) are subordinated to the BCC
Missouri Lease Obligations, (2) CHC-Personnel acknowledges and agrees that all
amounts now or hereafter owed to CHC-Personnel by any CHC Lessee (including,
without limitation, all amounts now or hereafter owed under the Employment Lease
Agreements) are subordinated to the BCC Missouri Lease Obligations, (3) the
Balanced Care Entities acknowledge and agree that all amounts now or hereafter
owed to any Balanced Care Entity by any CHC Lessee are subordinated to the BCC
Lease Obligations and (4) CPI acknowledges and agrees that all amounts now or
hereafter owed to CPI by any CHC Lessee (including, without limitation, all fees
and other amounts now or hereafter owed under the Equipment Leases) are
subordinated to the BCC Missouri Lease Obligations.
D. OMNIBUS AMENDMENT OF ENVIRONMENTAL INDEMNITY AGREEMENTS. After
giving effect to the BCC/CHC Lease Assignments and without limiting the
provisions of the Omnibus Assignment of Contracts, the Hawthorn Subsidiaries,
the CHC Lessees, CHC, Cornerstone, CHC-Personnel, Kilgore and the Lender hereby
agree that (I) each Environmental Indemnity Agreement (as defined under each of
the BCC Missouri Leases) is hereby amended by adding the CHC, CPI, Cornerstone,
CHC-Personnel and Kilgore as parties thereto and (II) the definition of
"Indemnitors" set forth in each such Environmental Indemnity Agreement is hereby
amended to include CHC, CPI, Cornerstone, CHC-Personnel and Kilgore.
E. OMNIBUS AMENDMENT OF SECURITY AGREEMENTS. After giving effect to the
BCC/CHC Lease Assignments (consummated by virtue of the execution and delivery
of this Agreement and the satisfaction of the conditions set forth herein) and
without limiting the provisions of the Omnibus Assignment of Contracts, the
Hawthorn Subsidiaries, the CHC Lessees and the Lender hereby agree that clause
(viii) of Section 1.1 of each Security Agreement (as defined under each of the
BCC Missouri Leases) is hereby deleted in its entirety and is restated to read
as follows:
(viii) all of the Debtor's rights to use, in perpetuity,
in connection with the operation of the Leased
Property, any name now, hereafter or previously
used in connection with the operation of the
Leased Property and the good will of the Debtor
with respect thereto.
F. OMNIBUS AMENDMENT OF BCC MISSOURI LEASE DOCUMENTS. After giving
effect to the BCC/CHC Lease (consummated by virtue of the execution and delivery
of this Agreement and the satisfaction of the conditions set forth herein) and
without limiting the provisions of the Assignments of Leases and/or the Omnibus
Assignment of Contracts, the
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parties hereto agree that whenever notice is required to be given under any of
the BCC Missouri Lease Documents, such notice shall be addressed as follows:
IF TO THE BALANCE CARE the applicable Balanced Care Guarantor
GUARANTORS: 1215 Manor Drive
Mechanicsburg, PA 17055
Attn: President
WITH COPIES TO: Balanced Care Corporation
1215 Manor Drive
Mechanicsburg, PA 17055
Attn: General Counsel
Kirkpatrick & Lockhart LLP
1500 Henry W. Oliver Building
535 Smithfield Street
Pittsburgh, PA 15222-2312
Attn: Steven J. Adelkoff, Esq.
IF TO ANY CHC LESSEE: the applicable CHC Lessee
5303 Village Parkway
Suite 12
Rogers, Arkansas 72758
Attn: President
WITH A COPY TO: Ball & Mourton, Ltd., PLLC
E.J. Ball Plaza
112 W. Center, Suite 700
Fayetteville, Arkansas 72702
Attn: Rayburn W. Green, Esq.
IF TO ANY HAWTHORN the applicable Hawthorn Subsidiary
SUBSIDIARY: c/o J. Gray Beverley, Jr.
1225 Park Avenue, Apt. 17A
New York, NY 10128
Attn: President
WITH A COPY TO: LeBoeuf, Lamb, Greene & MacRae
One Embarcadero Center, Suite 400
San Francisco, CA 94104
Attn: Graham Taylor, Esq.
30. TERMINATION OF PLEDGE AGREEMENTS: Without limiting the terms of the
Omnibus Assignment of Contracts, the Hawthorn Subsidiaries, Balanced Care, the
Balanced Care Lessees and the Lender hereby acknowledge and agree that the
Pledge
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<PAGE> 40
Agreements are hereby terminated without further recourse to any party
thereunder (except as may be expressly set forth therein).
31. RATIFICATION FROM THE BALANCED CARE GUARANTORS: The Balanced Care
Guarantors each hereby (I) ratifies and confirms the Loan Documents and the BCC
Missouri Lease Documents to which it is a party, (II) agrees to remain fully
bound by the Loan Documents and the BCC Missouri Lease Documents to which it is
a party, (III) confirms that the Loan Documents and BCC Missouri Lease Documents
to which it is a party remain in full force and effect, except as otherwise
expressly provided herein and (IV) , without limiting the foregoing, confirms
that the BCC Missouri Lease Guaranties remain in full force and effect,
unaffected by the execution and delivery of this Agreement and/or the
consummation of the BCC/CHC Lease Assignments.
32. GOVERNING LAW: This Agreement shall be construed, and the rights
and obligations of the parties hereto shall be determined, in accordance with
the laws of the Commonwealth of Massachusetts.
The Borrowers, the Balanced Care Entities, the Purchaser, Cornerstone,
CHC-Personnel, CHC, the CHC Lessees and Kilgore hereby consent to personal
jurisdiction in the courts of the Commonwealth of Massachusetts and the United
States District Court for the District 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 (A) this Agreement and/or (B) the Lender's relationship with
any member of the Borrowing Group or the CHC Group in connection with the
transactions evidenced by the Transaction Documents, the BCC Missouri Lease
Documents and/or the Loan Documents.
33. AMENDMENTS: The parties hereto acknowledge and agree that the
Agreement shall not amend, abridge, limit, modify, release, terminate or
otherwise affect any of the provisions of any of the Loan Documents and/or any
of the BCC Missouri Lease Documents, except as expressly set forth herein.
34. REFERENCES: Without limiting the provisions set forth in Section
12.17 of the Loan Agreement, the Borrowers, Balanced Care, CHC, Kilgore and the
Lender acknowledge and agree that (I) that all references to the Loan Agreement,
the Affiliated Party Subordination Agreement, any of the Lease Subordination
Agreements and/or the Omnibus Assignment of Contracts set forth in any of the
Loan Documents shall include the Loan Agreement, the Affiliated Party
Subordination Agreement, the Lease Subordination Agreements and/or the Omnibus
Assignment of Contracts, as affected by this Agreement and (II) this Agreement
shall be included within the definition of Loan Documents.
Without limiting the provisions set forth in Section 24.13 of the BCC
Missouri Leases, the Borrowers, the Balanced Care Guarantors, CHC, the CHC
Lessees, Kilgore and the Lender acknowledge and agree that (A) all references to
any of the BCC Missouri Lease Documents set forth in any of the BCC Missouri
Lease Documents shall include the BCC
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Missouri Lease Documents, as affected by this Agreement and (B) this Agreement
shall be included with the definition of BCC Missouri Lease Documents.
35. 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, or the scope or intent of, this Agreement or any part hereof.
36. TIME OF THE ESSENCE: Time is of the essence of each and every term,
condition, covenant and warranty set forth in this Agreement and in the other
Loan Documents.
37. COUNTERPARTS: This Agreement and the other Loan Documents may be
executed in one or more counterparts, each of which taken together shall
constitute an original and all of which shall constitute one and the same
instrument.
38. OPTION AGREEMENT: Reference is made to that certain Option
Agreement of even date herewith by and among the Hawthorn Subsidiaries and the
CHC Lessees. Notwithstanding anything to the contrary set forth in the Loan
Documents, the Lender hereby acknowledges and agrees that, to the extent that
the execution and delivery of such Option Agreement constitutes an Event of
Default under any of the Loan Documents, the Lender hereby waives any such Event
of Default (the "Limited Waiver"); provided, however, that, the Hawthorn
Subsidiaries and the CHC Lessees acknowledge and agree that notwithstanding the
foregoing Limited Waiver, the Lender has not consented to such Option Agreement,
nor the performance by the Hawthorn Subsidiaries of their respective obligations
thereunder and, without limiting the foregoing, in no event shall (A) the Lender
be bound by the terms of such Option Agreement and (B) neither the execution and
delivery of such Option Agreement nor the Limited Waiver shall be deemed to
amend, abridge, limit, modify, release, terminate or otherwise affect any of the
provisions of any of the Loan Documents (including, without limitation, the
Lender's right to exercise any rights and/or remedies arising under any of the
Loan Documents should any of the Hawthorn Subsidiaries perform (or seek to
perform) any of their respective obligations under such Option Agreement.
[The remainder of this page was intentionally left blank]
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<PAGE> 42
EXECUTED as a sealed instrument as of the day and year first above
mentioned.
<TABLE>
<CAPTION>
WITNESS: LENDER:
<S> <C>
MEDITRUST MORTGAGE INVESTMENTS, INC.,
a Delaware corporation
/s/Annemarie Wasniewski By:/s/Michael S. Benjamin
Name:Annemarie Wasniewski Name:Michael S. Benjamin
Title:Senior Vice President
WITNESS: BORROWERS:
HAWTHORN HEALTH PROPERTIES, INC., a
California corporation
/s/Gloriana M. Calhoun By: /s/J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name: J. Gray Beverley, Jr.
Title: President
WITNESS: NATIONAL CARE CENTERS OF HERMITAGE,
INC., a Missouri Corporation
/s/Gloriana M. Calhoun By: /s/J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name: J. Gray Beverley, Jr.
Title: President
</TABLE>
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<PAGE> 43
<TABLE>
<S> <C>
WITNESS: NATIONAL CARE CENTERS, INC., a Missouri
corporation
/s/Gloriana M. Calhoun By: /s/J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name: J. Gray Beverley, Jr.
Title: President
WITNESS: NATIONAL CARE CENTERS OF LEBANON, INC.,
a Missouri corporation
/s/Gloriana M. Calhoun By: /s/J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name: J. Gray Beverley, Jr.
Title: President
WITNESS: SPRINGFIELD RETIREMENT VILLAGE, INC., a
Missouri corporation
/s/Gloriana M. Calhoun By: /s/J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name: J. Gray Beverley, Jr.
Title: President
WITNESS: NATIONAL CARE CENTERS OF NIXA, INC., a
Missouri corporation
/s/Gloriana M. Calhoun By: /s/J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name: J. Gray Beverley, Jr.
Title: President
</TABLE>
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<PAGE> 44
<TABLE>
<S> <C>
WITNESS: NATIONAL CARE CENTERS OF SPRINGFIELD,
INC., a Missouri corporation
/s/Gloriana M. Calhoun By: /s/J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name: J. Gray Beverley, Jr.
Title: President
WITNESS: MT. VERNON PARK CARE CENTER WEST, INC.,
a Missouri corporation
/s/Gloriana M. Calhoun By: /s/J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name: J. Gray Beverley, Jr.
Title: President
WITNESS: BALANCED CARE LESSEES:
BCC AT LEBANON CARE CENTER, INC., a
Delaware corporation
/s/ Jaynelle D. Covert By:/s/Robin L. Barber
Name: Jaynelle D. Covert Name: Robin L. Barber
Title: Vice President and Secretary
WITNESS: BCC AT LEBANON PARK MANOR, INC., a
Delaware corporation
/s/ Jaynelle D. Covert By:/s/Robin L. Barber
Name: Jaynelle D. Covert Name: Robin L. Barber
Title: Vice President and Secretary
</TABLE>
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<PAGE> 45
<TABLE>
<S> <C>
WITNESS: BCC AT NIXA PARK CENTER, INC., a Delaware
corporation
/s/ Jaynelle D. Covert By:/s/Robin L. Barber
Name: Jaynelle D. Covert Name: Robin L. Barber
Title: Vice President and Secretary
WITNESS: BCC AT SPRINGFIELD CARE CENTER, INC., a
Delaware corporation
/s/ Jaynelle D. Covert By:/s/Robin L. Barber
Name: Jaynelle D. Covert Name: Robin L. Barber
Title: Vice President and Secretary
WITNESS: BCC AT MT. VERNON PARK CARE CENTER,
INC., a Delaware corporation
/s/ Jaynelle D. Covert By:/s/Robin L. Barber
Name: Jaynelle D. Covert Name: Robin L. Barber
Title: Vice President and Secretary
WITNESS: BCC AT MT. VERNON PARK CARE CENTER
WEST, INC., a Delaware corporation
/s/ Jaynelle D. Covert By:/s/Robin L. Barber
Name: Jaynelle D. Covert Name: Robin L. Barber
Title: Vice President and Secretary
</TABLE>
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<PAGE> 46
<TABLE>
<S> <C>
WITNESS: BCC AT HERMITAGE PARK CARE CENTER,
INC., a Delaware corporation
/s/ Jaynelle D. Covert By:/s/Robin L. Barber
Name: Jaynelle D. Covert Name: Robin L. Barber
Title: Vice President and Secretary
BALANCED CARE GUARANTORS:
WITNESS: 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
WITNESS: DIXON MANAGEMENT, INC., a Missouri
corporation
/s/ Jaynelle D. Covert By:/s/Robin L. Barber
Name: Jaynelle D. Covert Name: Robin L. Barber
Title: Vice President and Secretary
</TABLE>
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<PAGE> 47
<TABLE>
<S> <C>
WITNESS: PURCHASER:
CHRISTIAN HEALTH CARE OF MISSOURI, INC.,
a Missouri nonprofit corporation
/s/Rayburn W. Green By:Allen Kilgore
Name:Rayburn W. Green Name:Allen D. Kilgore
Title:President
WITNESS: CPI:
CORNERSTONE PROPERTIES INVESTMENT II,
LLC, a Missouri limited liability company
/s/Rayburn W. Green By:Allen Kilgore
Name:Rayburn W. Green Name:Allen D. Kilgore
Title:President
WITNESS: CORNERSTONE:
CORNERSTONE HEALTH CARE, INC., a Missouri
corporation
/s/Rayburn W. Green By:Allen Kilgore
Name:Rayburn W. Green Name:Allen D. Kilgore
Title:President
WITNESS: CHC-PERSONNEL:
CHRISTIAN HEALTH CARE PERSONNEL
SERVICES, INC., a Missouri corporation
/s/Rayburn W. Green By:Allen Kilgore
Name:Rayburn W. Green Name:Allen D. Kilgore
Title:President
</TABLE>
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<PAGE> 48
<TABLE>
<S> <C>
WITNESS: CHC:
CHRISTIAN HEALTH CARE, INC., an Arkansas
nonprofit corporation
/s/Rayburn W. Green By:Allen Kilgore
Name:Rayburn W. Green Name:Allen D. Kilgore
Title:President
WITNESS: CHC LESSEES:
CHRISTIAN HEALTH CARE OF HERMITAGE,
INC., a Missouri nonprofit corporation
/s/Rayburn W. Green By:Allen Kilgore
Name:Rayburn W. Green Name:Allen D. Kilgore
Title:President
WITNESS: CHRISTIAN HEALTH CARE OF LEBANON
NORTH, INC., a Missouri nonprofit corporation
/s/Rayburn W. Green By:Allen Kilgore
Name:Rayburn W. Green Name:Allen D. Kilgore
Title:President
WITNESS: CHRISTIAN HEALTH CARE OF SPRINGFIELD
WEST PARK, INC., a Missouri nonprofit corporation
/s/Rayburn W. Green By:Allen Kilgore
Name:Rayburn W. Green Name:Allen D. Kilgore
Title:President
</TABLE>
-48-
<PAGE> 49
<TABLE>
<S> <C>
WITNESS: CHRISTIAN HEALTH CARE OF SPRINGFIELD
WEST, INC., a Missouri nonprofit corporation
/s/Rayburn W. Green By:Allen Kilgore
Name:Rayburn W. Green Name:Allen D. Kilgore
Title:President
WITNESS: CHRISTIAN HEALTH CARE OF LEBANON
SOUTH, INC., a Missouri nonprofit corporation
/s/Rayburn W. Green By:Allen Kilgore
Name:Rayburn W. Green Name:Allen D. Kilgore
Title:President
WITNESS: CHRISTIAN HEALTH CARE OF SPRINGFIELD
EAST, INC., a Missouri nonprofit corporation
/s/Rayburn W. Green By:Allen Kilgore
Name:Rayburn W. Green Name:Allen D. Kilgore
Title:President
WITNESS: CHRISTIAN HEALTH CARE OF NIXA, INC., a
Missouri corporation
/s/Rayburn W. Green By:Allen Kilgore
Name:Rayburn W. Green Name:Allen D. Kilgore
Title:President
</TABLE>
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<PAGE> 50
<TABLE>
<S> <C>
WITNESS: KILGORE:
/s/Rayburn W. Green /s/Allen Kilgore
Name:Rayburn W. Green Alington D. Kilgore
</TABLE>
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<PAGE> 51
EXHIBIT A
Lease Documents Assigned by BCC at Hermitage Park Care Center, Inc.
1. Facility Lease Agreement, dated as of August 30, 1996, as amended, by
and between Hermitage and BCC-Hermitage.
2. Collateral Assignment of Permits, Approvals, Licenses and Contracts,
dated as of August 30, 1996, granted by BCC-Hermitage for the benefit
of Hermitage.
3. Security Agreement, dated as of August 30, 1996, by and between
Hermitage and BCC-Hermitage.
4. Environmental Indemnity Agreement, dated as of August 30, 1996, by and
among Hermitage, BCC-Hermitage and the Balanced Care Guarantors.
5. The "Affiliated Party Subordination Agreements" as defined under the
Hermitage Lease.
6. Lease Subordination Agreement, dated as of August 30, 1996, by and
among BCC-Hermitage, Hermitage and the Lender.
7. Omnibus Assignment of Contracts, dated as of August 30, 1996, by and
among the Borrowers, the Balanced Care Lessees, the Balanced Care
Guarantors, Long Term, the Lender and the Shareholders.
8. All other "Lease Documents", as defined under the Hermitage Lease, to
which BCC- Hermitage is a party (excluding, however, the Hermitage
Pledge Agreement).
<PAGE> 52
EXHIBIT B
Lease Documents Assigned by BCC at Lebanon Care Center, Inc.
1. Facility Lease Agreement, dated as of August 30, 1996, as amended, by
and between National Care Centers and BCC-Lebanon Care.
2. Collateral Assignment of Permits, Approvals, Licenses and Contracts,
dated as of August 30, 1996, granted by BCC-Lebanon Care for the
benefit of National Care Centers.
3. Security Agreement, dated as of August 30, 1996, by and between
National Care Centers and BCC-Lebanon Care.
4. Environmental Indemnity Agreement, dated as of August 30, 1996, by and
among National Care Centers, BCC-Lebanon Care and the Balanced Care
Guarantors.
5. The "Affiliated Party Subordination Agreements" as defined under the
Lebanon Care Lease.
6. Lease Subordination Agreement, dated as of August 30, 1996, by and
among BCC-Lebanon Care, National Care Centers and the Lender.
7. Omnibus Assignment of Contracts, dated as of August 30, 1996, by and
among the Borrowers, the Balanced Care Lessees, the Balanced Care
Guarantors, Long Term, the Lender and the Shareholders.
8. All other "Lease Documents", as defined under the Lebanon Care Lease,
to which BCC-Lebanon is a party (excluding, however, the Lebanon Care
Pledge Agreement).
<PAGE> 53
EXHIBIT C
Lease Documents Assigned by BCC at Lebanon Park Manor, Inc.
1. Facility Lease Agreement, dated as of August 30, 1996, as amended, by
and between National Care Centers-Lebanon and BCC-Lebanon Park.
2. Collateral Assignment of Permits, Approvals, Licenses and Contracts,
dated as of August 30, 1996, granted by BCC-Lebanon Park for the
benefit of National Care Centers-Lebanon.
3. Security Agreement, dated as of August 30, 1996, by and between
National Care Centers-Lebanon and BCC-Lebanon Park.
4. Environmental Indemnity Agreement, dated as of August 30, 1996, by and
among National Care Centers-Lebanon, BCC-Lebanon Park and the Balanced
Care Guarantors.
5. The "Affiliated Party Subordination Agreements" as defined under the
Lebanon Park Lease.
6. Lease Subordination Agreement, dated as of August 30, 1996, by and
among BCC-Lebanon Park, National Care Centers-Lebanon and the Lender.
7. Omnibus Assignment of Contracts, dated as of August 30, 1996, by and
among the Borrowers, the Balanced Care Lessees, the Balanced Care
Guarantors, Long Term, the Lender and the Shareholders.
8. All other "Lease Documents", as defined under the Lebanon Park Lease,
to which BCC-Lebanon Park is a party (excluding, however, the Lebanon
Park Pledge Agreement).
<PAGE> 54
EXHIBIT D
Lease Documents Assigned by BCC at Mt. Vernon Park Care Center, Inc.
1. Facility Lease Agreement, dated as of August 30, 1996, as amended, by
and between Springfield and BCC-Mt. Vernon Park.
2. Collateral Assignment of Permits, Approvals, Licenses and Contracts,
dated as of August 30, 1996, granted by BCC-Mt. Vernon Park for the
benefit of Springfield.
3. Security Agreement, dated as of August 30, 1996, by and between
Springfield and BCC-Mt. Vernon Park.
4. Environmental Indemnity Agreement, dated as of August 30, 1996, by and
among Springfield, BCC-Mt. Vernon Park and the Balanced Care
Guarantors.
5. The "Affiliated Party Subordination Agreements" as defined under the
Mt. Vernon Lease.
6. Lease Subordination Agreement, dated as of August 30, 1996, by and
among BCC-Mt. Vernon Park, Springfield and the Lender.
7. Omnibus Assignment of Contracts, dated as of August 30, 1996, by and
among the Borrowers, the Balanced Care Lessees, the Balanced Care
Guarantors, Long Term, the Lender and the Shareholders.
8. All other "Lease Documents", as defined in the Mt. Vernon Lease, to
which BCC-Mt. Vernon Park is a party (excluding, however, the Mt.
Vernon Pledge Agreement).
<PAGE> 55
EXHIBIT E
Lease Documents Assigned by BCC at Nixa Park Center, Inc.
1. Facility Lease Agreement, dated as of August 30, 1996, as amended, by
and between Nixa and BCC-Nixa.
2. Collateral Assignment of Permits, Approvals, Licenses and Contracts,
dated as of August 30, 1996, granted by BCC-Nixa for the benefit of
Nixa.
3. Security Agreement, dated as of August 30, 1996, by and between Nixa
and BCC- Nixa.
4. Environmental Indemnity Agreement, dated as of August 30, 1996, by and
among Nixa, BCC-Nixa and the Balanced Care Guarantors.
5. The "Affiliated Party Subordination Agreements" as defined under the
Nixa Lease.
6. Lease Subordination Agreement, dated as of August 30, 1996, by and
among BCC-Nixa, Nixa and the Lender.
7. Omnibus Assignment of Contracts, dated as of August 30, 1996, by and
among the Borrowers, the Balanced Care Lessees, the Balanced Care
Guarantors, Long Term, the Lender and the Shareholders.
8. All other "Lease Documents", as defined under the Nixa Lease, to which
BCC-Nixa is a party (excluding, however, the Nixa Pledge Agreement).
<PAGE> 56
EXHIBIT F
Lease Documents Assigned by BCC at Springfield Care Center, Inc.
1. Facility Lease, dated as of August 30, 1996, as amended, by and between
National Care Centers-Springfield and BCC-Springfield.
2. Collateral Assignment of Permits, Approvals, Licenses and Contracts,
dated as of August 30, 1996, granted by BCC-Springfield for the benefit
of National Care Centers-Springfield.
3. Security Agreement, dated as of August 30, 1996, by and between
National Care Centers-Springfield and BCC-Springfield.
4. Environmental Indemnity Agreement, dated as of August 30, 1996, by and
among National Care Centers-Springfield, BCC-Springfield and the
Balanced Care Guarantors.
5. The "Affiliated Party Subordination Agreements" as defined under the
Springfield Lease.
6. Lease Subordination Agreement, dated as of August 30, 1996, by and
among BCC-Springfield, National Care Centers-Springfield and the
Lender.
7. Omnibus Assignment of Contracts, dated as of August 30, 1996, by and
among the Borrowers, the Balanced Care Lessees, the Balanced Care
Guarantors, Long Term, the Lender and the Shareholders.
8. All other "Lease Documents", as defined under the Springfield Lease, to
which BCC-Springfield is a party (excluding, however, the Springfield
Pledge Agreement).
<PAGE> 57
EXHIBIT G
Lease Documents Assigned by BCC at Mt. Vernon Park Care Center West, Inc.
1. Facility Lease Agreement, dated August 30, 1996, as amended, by and
between Mt. Vernon and BCC-Mt.Vernon Park West.
2. Collateral Assignment of Permits, Approvals, Licenses and Contracts,
dated as of August 30, 1996, granted by BCC-Mt. Vernon Park West for
the benefit of Mt. Vernon.
3. Security Agreement, dated as of August 30, 1996, by and between Mt.
Vernon and BCC-Mt. Vernon Park West.
4. Environmental Indemnity Agreement, dated as of August 30, 1996, by and
among Mt. Vernon, BCC-Mt. Vernon West and the Balanced Care Guarantors.
5. The "Affiliated Party Subordination Agreements" as defined under the
West Park Lease.
6. Lease Subordination Agreement, dated as of August 30, 1996, by and
among BCC-Mt. Vernon Park West, Mt. Vernon and the Lender.
7. Omnibus Assignment of Contracts, dated as of August 30, 1996, by and
among the Borrowers, the Balanced Care Lessees, the Balanced Care
Guarantors, Long Term, the Lender and the Shareholders.
8. All other "Lease Documents", as defined under the West Park Lease, to
which BCC-Mt. Vernon West is a party (excluding, however, the West Park
Pledge Agreement).
<PAGE> 1
Exhibit 10.9
GUARANTY
(BCC)
TO: MEDITRUST MORTGAGE INVESTMENTS, INC.
1. GUARANTY OF PAYMENT AND PERFORMANCE OF OBLIGATIONS. For value
received and hereby acknowledged and as an inducement to MEDITRUST MORTGAGE
INVESTMENTS, INC., a Delaware corporation, having its principal office at 197
First Avenue, Needham Heights, Massachusetts 02494 (hereinafter referred to as
the "Lender") to enter into that certain Omnibus Assignment and Assumption
Agreement, Amendment of Loan Documents, Amendment of Lease Documents,
Termination of Lease Documents, Consent to Assignment and Confirmation of
Guaranties, of even date herewith, by and among (i) Hawthorn Health Properties,
Inc., National Care Centers of Hermitage, Inc., National Care Centers, Inc.,
National Care Centers of Lebanon, Inc., Springfield Retirement Village, Inc.,
National Care Centers of Nixa, Inc., National Care Centers of Springfield, Inc.,
and Mt. Vernon Park Care Center West, Inc., (ii) BCC at Lebanon Care Center,
Inc., BCC at Lebanon Park Manor, Inc., BCC at Nixa Park Center, Inc., BCC at
Springfield Care Center, Inc., BCC at Mt. Vernon Park Care Center, Inc., BCC at
Mt. Vernon Park Care Center West, Inc., and BCC at Hermitage Park Care Center,
Inc., (iii) Balanced Care Corporation, and Dixon Management, Inc., (iv)
Meditrust Mortgage Investments, Inc., (v) Christian Health Care of Missouri,
Inc., (vi) Cornerstone Health Care, Inc., (vii) Cornerstone Properties
Investment II, LLC, (viii) Christian Health Care Personnel Services, Inc., (ix)
Christian Health Care, Inc., (x) Christian Health Care of Hermitage, Inc.,
Christian Health Care of Lebanon North, Inc., Christian Health Care of
Springfield West Park, Inc. Christian Health Care of Springfield West, Inc.,
Christian Health Care of Lebanon South, Inc., Christian Health Care of
Springfield East, Inc., and Christian Health Care of Nixa, Inc., and (xi)
Alington D. Kilgore (the "Omnibus Assignment and Consent"), the undersigned,
BALANCED CARE CORPORATION, a Delaware corporation, having its principal place of
business at 1215 Manor Drive, Mechanicsburg, PA 17055 (the "Guarantor"), being
the sole shareholder of each of the Balanced Care Lessees (as defined under the
Omnibus Assignment and Consent) and certain other subsidiaries, and, as such,
deriving a substantial benefit from the consummation of the BCC/CHC Lease
Assignments (as defined under the Omnibus Assignment and Consent) and the other
transactions described under the BCC/CHC Purchase Agreement (as defined under
the Omnibus Assignment and Consent), hereby unconditionally guarantees to the
Lender the full payment and performance of the "Loan Obligations", as such term
is defined under the Loan Agreement (as defined under the Omnibus Assignment and
Consent).
<PAGE> 2
This Guaranty is an absolute, unconditional and continuing guaranty of
the full and punctual payment and performance of the Loan Obligations and not
merely of their collectibility, and is in no way conditioned upon any
requirement that the Lender first collect or attempt to collect the Loan
Obligations or any portion thereof from the Borrowers (as defined under the Loan
Agreement) or from any endorser, surety or other guarantor of any of the same or
resort to any security or other means of obtaining the payment and/or
performance of any of the Loan Obligations that the Lender now has or may
acquire after the date hereof, or upon any other contingency whatsoever. Upon
any Loan Default (as defined in the Loan Agreement), the Loan Obligations and
all liabilities and obligations of the Guarantor to the Lender, hereunder or
otherwise, shall, at the option of the Lender, become immediately due and
payable to the Lender without further demand or notice of any nature, all of
which are expressly waived by the Guarantor. Payments by the Guarantor hereunder
may be required by the Lender on any number of occasions. This Guaranty shall
continue in full force and effect until the complete payment and performance of
all of the Loan Obligations.
All payments hereunder received by the Lender shall be applied by the
Lender, without any marshalling of assets, towards the payment and/or
performance of the Loan Obligations and any other indebtedness of the Guarantor
hereunder in such order as the Lender, in its sole and absolute discretion, may
determine.
2. DEFINED TERMS. Capitalized terms used herein and not otherwise
specifically defined herein shall have the same meanings ascribed to such terms
in the Loan Agreement.
3. THE GUARANTOR'S FURTHER AGREEMENTS TO PAY. The Guarantor further
agrees, as the principal obligor and not as a guarantor, to pay to the Lender
forthwith upon demand, in funds immediately available to the Lender, all costs
and expenses, including without limitation, court costs and attorneys' fees and
expenses and court costs, reasonably incurred or expended by the Lender in
connection with the collection or enforcement of the Obligations and the
enforcement of all of the other obligations hereunder. Any amounts owed to the
Lender under this Section 3 shall be a demand obligation and, if not paid within
ten (10) days after demand, shall thereafter, to the extent then permitted by
applicable law, bear interest at the Advances Rate until the date of payment.
The provisions of this Section 3 shall survive the foreclosure of any Deed of
Trust.
4. LIABILITY OF THE GUARANTOR. This Guaranty is unlimited and the
Guarantor shall be jointly and severally liable with every endorser, surety or
other guarantor of any or all of the Loan Obligations and the continuation of
this Guaranty shall not be affected by the termination, discontinuance, release
or modification of any agreement from (a) any such endorser, surety or guarantor
and/or (b) any other endorser, surety or guarantor of any of the other
Obligations. Nothing contained herein or otherwise shall require the Lender to
make demand upon or join the Borrowers or any such endorser, surety or guarantor
or other party in any suit brought upon this Guaranty; and the Guarantor hereby
waives any right to require marshalling or
-2-
<PAGE> 3
exhaustion of any remedy against any collateral, other property, or any other
Person primarily or secondarily liable.
5. THE LENDER FREEDOM TO DEAL WITH THE BORROWERS AND OTHER PARTIES.
Except as otherwise expressly provided herein, the Lender shall be at liberty,
without giving notice to or obtaining the assent of the Guarantor and without
relieving the Guarantor of any liability hereunder, to deal with the Borrowers
and with each other Person who now is or after the date hereof becomes liable in
any manner for any of the Obligations in such manner as the Lender, in its sole
and absolute discretion, deems fit. The Lender and the other Meditrust Entities
have full authority (in their sole and absolute discretion) to do any or all of
the following things, none of which shall discharge or affect the Guarantor's
liability hereunder:
(a) extend credit, make loans and afford other financial accommodations
to any of the Borrowers and/or any of the Related Parties at such times, in such
amounts and on such terms as the Lender may approve; provided, however, that if
such credit, loans or other financial accommodations (i) increase, in any
material respect, the Obligations or (ii) are cross-defaulted with the Loan
Documents, the Lender shall not take any such action without first obtaining the
consent of the Guarantor (which consent shall not be unreasonably withheld,
delayed or conditioned).
(b) after receipt of the prior written consent of the Guarantor (which
consent shall not be unreasonably withheld, conditioned or delayed), modify,
amend or vary, in any material respect, the terms of any of the Obligations or
any instrument relating to or securing the same, and without limitation, this
Guaranty shall survive the foreclosure of the Deeds of Trust;
(c) grant extensions or renewals of any present or future indebtedness;
(d) grant time, waivers and other indulgences in respect of any of the
Obligations;
(e) vary, exchange, release or discharge, wholly or partially, or delay
or abstain from perfecting and enforcing any security or guaranty or other means
of obtaining payment of any of the Obligations which the Lender or any of the
other Meditrust Entities now has or acquires after the date hereof;
(f) take or omit to take any of the actions referred to in any
instrument evidencing, securing or relating to any of the Obligations or any
actions under this Guaranty;
(g) fail, omit or delay to enforce, assert or exercise any right, power
or remedy conferred on the Lender or any of the other Meditrust Entities in this
Guaranty or in any other instrument evidencing, securing or relating to any of
the Obligations or take or refrain from taking any other action;
-3-
<PAGE> 4
(h) accept partial payments from any of the Borrowers, any other member
of the Borrowing Group, any of the Related Parties or any other Person;
(i) after receipt of the prior written consent of the Guarantor (which
consent shall not be unreasonably withheld, conditioned or delayed), release or
discharge, wholly or partially, any of the Borrowers, any other member of the
Borrowing Group, any of the Related Parties and/or any other Person now or
hereafter primarily or secondarily liable for the Obligations (or any portion
thereof);
(j) accept additional collateral for the payment of any Obligations;
(k) after receipt of the prior written consent of the Guarantor (which
consent shall not be unreasonably withheld, conditioned or delayed), compromise
or make any settlement or other arrangement with any of the Borrowers, any other
member of the Borrowing Group, any of the Related Parties or any other Person
referred to in clause (i) above; and
(l) consent to and participate in the proceeds of any assignment, trust
or mortgage for the benefit of creditors.
6. UNENFORCEABILITY OF OBLIGATIONS; INVALIDITY OF SECURITY OR OTHER
GUARANTIES. The obligations of the Guarantor hereunder shall not be affected by
any change in the beneficial ownership of any of the Borrowers, any other member
of the Borrowing Group or any of the Related Parties, by reason of any
disability of any of the Borrowers, any other member of the Borrowing Group or
any Related Party or by any other circumstance (other than the complete payment
and performance of the Loan Obligations) which might constitute a defense
available to, or a discharge of, any of the Borrowers, any other member of the
Borrowing Group or any of the Related Parties in respect of any of the
Obligations. If for any reason now or hereafter any of the Borrowers, any other
member of the Borrowing Group or any of the Related Parties has no legal
existence or is under no legal obligation to discharge any of the Obligations
undertaken or purported to be undertaken by it or on its behalf, or if any of
the moneys included in the Obligations have become irrecoverable from any of the
Borrowers, any other member of the Borrowing Group or any Related Party by
operation of law or for any other reason, this Guaranty shall nevertheless be
binding on the Guarantor and the Guarantor shall remain unconditionally liable
for the complete payment and performance of the Loan Obligations. This Guaranty
shall be in addition to any other guaranty or other security for the
Obligations, and it shall not be prejudiced or rendered unenforceable by the
invalidity of any such other guaranty or security. This Guaranty shall continue
to be effective or be reinstated, as the case may be, if, at any time, any
payment of any of the Obligations is rescinded or must otherwise be returned by
the Lender or any of the other Meditrust Entities, upon the insolvency,
bankruptcy or reorganization of any of the Borrowers or any of the Related
Parties or otherwise, all as though such payment had not been made.
-4-
<PAGE> 5
It shall not be necessary for the Lender to inquire into the power of
the Borrowers or anyone acting or purporting to act on their behalf, and any
Loan Obligation made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder. The Guarantor hereby indemnifies the
Lender and agrees to save it harmless against any damages or expenses suffered
by the Lender should any representation contained herein prove untrue in any
material respect. The aforesaid indemnification agreement shall include, without
limitation, attorneys' fees and expenses and court costs reasonably incurred by
the Lender in connection with the enforcement of said indemnification.
The indemnity provisions of this Section 6 shall survive the complete
payment and performance of the Obligations and the foreclosure of the Deeds of
Trust.
7. NO CONTEST WITH THE LENDER. No set-off, counterclaim, reduction or
diminution of any obligation, or any claim or defense of any kind or nature
which the Guarantor has or may have against any of the Borrowers, any other
member of the Borrowing Group, any of the Related Parties or the Lender shall be
available hereunder to the Guarantor. The Guarantor shall not assert and hereby
waives any right whatsoever that the Guarantor may have at law or in equity,
including, without limitation, any right of subrogation or to seek contribution,
indemnification or any other form of reimbursement from the Borrowers, any other
endorser, surety or guarantor of any of the Obligations or any other Person now
or hereafter primarily or secondarily liable for any of the Obligations;
provided, however, notwithstanding the foregoing or any other provision to the
contrary contained herein, in any other Loan Document, upon the payment in full
of the Loan Obligations and the expiration of ninety (90) days thereafter
without the filing of any proceedings under the Bankruptcy Code by or against
any Borrower or any member of the Borrowing Group, the Guarantor shall
nonetheless have the right of subrogation, and the right to seek contribution,
indemnification and reimbursement against Borrowers and any one or more of the
other members of the Borrowing Group and the Related Parties to the fullest
extent permitted under applicable laws in connection with amounts paid hereunder
or under any other guaranty or suretyship agreement provided to Lender by the
Guarantor or any Affiliate of the Guarantor. The Guarantor shall not, in any
proceedings under the Bankruptcy Code or insolvency proceedings of any nature,
prove in competition with the Lender in respect of any payment hereunder or be
entitled to have the benefit of any counterclaim or proof of claim or dividend
or payment by or on behalf of any of the Borrowers, any other member of the
Borrowing Group or any of the Related Parties or the benefit of any other
security for any Obligation which, now or hereafter, the Guarantor may hold in
competition with the Lender.
8. SET-OFF. In addition to any rights now or hereafter granted under
any agreement or applicable law and not by way of limitation of any such rights,
upon the occurrence of any Loan Default, including, without limitation, any
default by the Guarantor hereunder, the Lender and the other Meditrust Entities
are hereby authorized at any time or from time to time, without presentment,
demand, protest or other notice of any kind to the Guarantor or to any other
Person, all of which are hereby expressly waived, to set off and to appropriate
and apply
-5-
<PAGE> 6
any and all deposits and any other indebtedness at any time held by or owing to
the Lender (or any of the other Meditrust Entities) to or for the credit or the
account of the Guarantor against and on account of the obligations and
liabilities of the Guarantor to the Lender or any of the other Meditrust
Entities under this Guaranty or otherwise, irrespective of whether or not the
Lender or any of the other Meditrust Entities shall have made any demand
hereunder or under any Related Party Agreement and although said obligations,
liabilities or claims, or any of them, may then be contingent or unmatured and
without regard to the availability or adequacy of other collateral. The
Guarantor also grants to the Lender (and the other Meditrust Entities) a
security interest in all of the Guarantor's deposits, securities and other
property at any time and from time to time, in the possession of the Lender (or
any of the other Meditrust Entities) and, upon the occurrence of any Loan
Default, the Lender and the other Meditrust Entities may exercise all rights and
remedies of a secured party under the Massachusetts Uniform Commercial Code. The
Lender and the other Meditrust Entities shall have no duty to take steps to
preserve rights against prior parties as to such securities or other property.
The Guarantor hereby agrees that all collateral now or hereafter
granted as security for any indebtedness of the Guarantor to the Lender and/or
the other Meditrust Entities shall be deemed to be additional collateral
securing the Obligations.
9. GENERAL PROVISIONS; RULES OF CONSTRUCTION. The provisions set forth
in Section 6.10 and Section 12 of the Loan Agreement are hereby incorporated
herein by reference, mutatis, mutandis and shall be applicable to this Guaranty
as if set forth in full herein.
10. ACKNOWLEDGMENT. Without limiting any of the other provisions set
forth herein, the Guarantor acknowledges and agrees that the execution and
delivery of this Guaranty shall not amend, abridge, limit, modify, release,
terminate or otherwise affect any of the provisions of any of the BCC Missouri
Lease Guaranties (as defined under the Omnibus Assignment and Consent).
-6-
<PAGE> 7
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as an
instrument under seal as of the 12th day of January, 2000.
<TABLE>
<S> <C>
WITNESS: GUARANTOR:
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
</TABLE>
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<PAGE> 1
Exhibit 10.10
TERMINATION AGREEMENT
THIS AGREEMENT is made as of the 12th day of January, 2000 by and among
(i) MEDITRUST MORTGAGE INVESTMENTS, INC., a Delaware corporation ("MMI") and NEW
MEDITRUST COMPANY LLC, a Delaware limited liability company, a Delaware limited
liability company ("New Meditrust" and together with MMI, the "Meditrust
Entities"), (ii) HAWTHORN HEALTH PROPERTIES, INC., a California corporation
("Hawthorn"), NATIONAL CARE CENTERS OF HERMITAGE, INC., a Missouri corporation
("Hermitage"), NATIONAL CARE CENTERS, INC., a Missouri corporation ("National
Care Centers"), NATIONAL CARE CENTERS OF LEBANON, INC., a Missouri corporation
("National Care Centers-Lebanon"), SPRINGFIELD RETIREMENT VILLAGE, INC., a
Missouri corporation ("Springfield"), NATIONAL CARE CENTERS OF NIXA, INC., a
Missouri corporation ("Nixa"), NATIONAL CARE CENTERS OF SPRINGFIELD, INC., a
Missouri corporation ("National Care Centers-Springfield") and MT. VERNON PARK
CARE CENTER WEST, INC., a Missouri corporation ("Mt. Vernon" and collectively
with Hawthorn, Hermitage, National Care Centers, National Care Centers-Lebanon,
Springfield, Nixa and National Care Centers-Springfield, the "Borrowers"), (III)
BALANCED CARE CORPORATION, a Delaware corporation ("BCC") and DIXON MANAGEMENT,
INC., a Missouri corporation ("Dixon" and collectively with BCC, the "Balanced
Care Guarantors") and (IV) BALANCED CARE AT STAFFORD, INC., a Delaware
corporation (the "Potomac Point Lessee").
W I T N E S S E T H
WHEREAS, MMI is the holder of the lender's interest under the "Loan
Documents" as such term is defined under that certain Loan Agreement, dated as
of August 6, 1996, as amended, by and among MMI and the Borrowers (the "Hawthorn
Loan Agreement") and all capitalized terms used herein and not otherwise defined
herein shall have the same meanings ascribed to such terms under the Hawthorn
Loan Agreement;
WHEREAS, at the request of BCC, MMI was requested to consent to certain
transactions contemplated by that certain Asset Purchase Agreement, dated as of
October 15, 1999, as amended, by and among BCC (on behalf of itself and certain
subsidiaries) and Christian Health Care of Missouri, Inc. (the "BCC/CHC Purchase
Agreement");
WHEREAS, MMI was willing to consent to the transactions contemplated by
the BCC/CHC Purchase Agreement, subject to (i) the satisfaction of certain
conditions more particularly set forth in that certain Omnibus Assignment and
Assumption Agreement, Amendment of Loan Documents, Amendment of Lease Documents,
Termination of Lease Documents, Consent to Assignment and Confirmation of
Guaranties of even date herewith by and among the Borrowers, the wholly-ownned
Subsidiaries of BCC identified on Exhibit K of the Loan Agreement (the "Balanced
Care Lessee"), the Balanced Care Guarantors, MMI, Christian Health Care of
Missouri, Inc. (the "Purchaser"), Cornerstone Properties Investment II, LLC
("CPI"), Cornerstone Health Care, Inc. ("Cornerstone"), Christian Health Care
<PAGE> 2
Personnel Services, Inc. ("CHC-Personnel"), Christian Health Care, Inc. ("CHC"),
Christian Health Care of Hermitage, Inc., Christian Health Care of Lebanon
North, Inc., Christian Health Care of Springfield West Park, Inc., Christian
Heal Care of Springfield West, Inc., Christian Health Care of Lebanon South,
Inc., Christian Health Care of Springfield East, Inc., Christian Health Care of
Nixa, Inc. and Alington D. Kilgore (the "Consent"), including, without
limitation, the execution and delivery by BCC of a guaranty (the "BCC Loan
Guaranty") of the Loan Obligations and the execution and delivery of that
certain Cross-Default Agreement of even date herewith by and among the Meditrust
Entities, BCC and the Potomac Point Lessee (the "Cross-Default Agreement"); and
WHEREAS, the Balanced Care Guarantors, the Potomac Point Lessee and the
Borrowers shall receive direct and indirect benefits from the consummation of
the transactions contemplated by the BCC/CHC Asset Purchase Agreement.
NOW, THEREFORE, for One Dollar ($1.00) and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, and in
consideration of the mutual covenants set forth herein, the parties hereto
hereby agree as follows:
1. Notwithstanding anything to the contrary set forth in the BCC Loan
Guaranty, MMI acknowledges and agrees that the BCC Loan Guaranty shall terminate
upon the Termination Date (as hereinafter defined) unless (i) a Loan Default or
a Lease Default (as defined under any of the BCC Missouri Leases) has occurred
as of the Termination Date (and has not been waived in writing by MMI) or (ii)
any event, condition and/or state of facts then exists which, with notice and/or
the passage of time, could constitute a Loan Default or Lease Default (and has
not been waived in writing by MMI). Notwithstanding anything to the contrary set
forth in the BCC Lease Guaranties (as such term is hereinafter defined) and
without limiting the terms and provisions of the Omnibus Assignment of
Contracts, the Assignments of Leases or any of the other Loan Documents, the
Borrowers and MMI acknowledge and agree that the BCC Lease Guaranties shall
terminate upon the earlier to occur of (a) the complete payment and performance
of the Loan Obligations or (b) Termination Date unless (x) a Loan Default or a
Lease Default has occurred as of the Termination Date (and has not been waived
in writing by MMI) or (y) any event, condition and/or state of facts then exists
which, with notice and/or the passage of time, could constitute a Loan Default
or Lease Default (and has not been waived in writing by MMI). Without limiting
the terms of the Cross Default Agreement, the Meditrust Entities, BCC and the
Potomac Point Lessee acknowledge and agree that the Cross Default Agreement
shall terminate upon the Termination Date unless (i) a Loan Default or a Lease
Default has occurred as of the Termination Date (and has not been waived in
writing by MMI) or (ii) any event, condition and/or state of facts then exists
which, with notice and/or the passage of time, could constitute a Loan Default
or Lease Default (and has not been waived in writing by MMI).
As used herein, the term "Termination Date" shall mean the later to
occur of (a) December 31, 2000 or (b) the date upon which the Facilities have
achieved a combined Debt
-2-
<PAGE> 3
Coverage Ratio (as hereinafter defined) for the prior fiscal quarter equal to or
greater than 1.1 to 1 (as evidenced by attested Consolidated Financials relating
to the CHC Lessees).
As used herein, the term "Debt Coverage Ratio" shall mean the ratio of
(x) Cash Flow (as hereinafter defined) for each applicable period to (y) the
total of all BCC Rent (as defined under the BCC Missouri Leases) paid or payable
during such period or accrued for such period.
As used herein, the term "Cash Flow" shall mean the Consolidated Net
Income (as defined under the BCC Missouri Leases) or Consolidated Net Loss (as
defined under the BCC Missouri Leases) before federal and state income taxes for
any period plus BCC Rent. Notwithstanding the foregoing, in calculating
Consolidated Net Income or Consolidated Net Loss for the CHC Lessees for any
fiscal quarter, the CHC Lessees shall include, as an expense, the greater of (1)
the aggregate amount of the management fees payable to Cornerstone under the
Management Agreements (as defined under the Consent) for such quarter or (2)
five percent (5%) of the aggregate Gross Revenues (as hereinafter defined)
generated at the Facilities during such fiscal quarter.
As used herein, the term "Gross Revenues" shall collectively refer to
all revenues generated by reason of the operation of the Facilities, whether or
not directly or indirectly received or to be received by the CHC Lessees,
including, without limitation, all patient revenues received or receivable for
the use of, or otherwise by reason of, all rooms, beds and other facilities
provided, meals served, services performed, space or facilities subleased or
goods sold on or from any Facility and further including, without limitation,
except as otherwise specifically provided below, any consideration received
under any subletting, licensing, or other arrangements with any Person relating
to the possession or use of any Facility and all revenues from all ancillary
services provided at or relating to any Facility.
To the extent that any Facility is subleased or occupied by an
Affiliate of any CHC Lessee, Gross Revenues shall include the Gross Revenues of
such sublessee with respect to the premises demised under the applicable
sublease (i.e., the Gross Revenues generated from the operations conducted on
such subleased portion of the applicable Facility) and the rent received or
receivable from such sublessee pursuant to such subleases shall be excluded from
Gross Revenues for all such purposes. As to any sublease between any CHC Lessee
and a non-Affiliate of such CHC Lessee, only the rental actually received by the
applicable CHC Lessee from such non-Affiliate shall be included in Gross
Revenues.
As used herein, the term "BCC Lease Guaranties" shall refer
collectively to those certain guaranties executed and delivered by any Balanced
Care Guarantor for the benefit of the Hawthorn Subsidiaries guarantying the BCC
Missouri Lease Obligations.
2. Notwithstanding anything to the contrary set forth in the BCC Lease
Guaranties or the BCC Loan Guaranty (collectively, the "Guaranties"), but
subject to the terms of the
-3-
<PAGE> 4
paragraph below and without limiting the terms of the Omnibus Assignment of
Contracts and/or the Assignment of Leases, each of the Meditrust Entities and
the Hawthorn Subsidiaries agree that upon the occurrence of Loan Default or a
Lease Default (the date upon which MMI or any of the Hawthorn Subsidiaries, as
applicable, notifies any Balanced Care Guarantor, in writing, that any such
default has occurred is hereinafter referred to as a "Trigger Date"), prior to
any Meditrust Entity or any Hawthorn Subsidiary pursuing any of its respective
rights and/or remedies against any Balanced Care Guarantor and/or the Potomac
Point Lessee, MMI and, to the extent applicable, the Hawthorn Subsidiaries shall
use good faith and reasonable efforts to pursue their respective rights and/or
remedies against (i) the Borrowers (under the Loan Documents), (ii) the CHC
Lessees (under the BCC Missouri Lease Documents) and/or (iii) CHC, CPI and/or
Kilgore (under the Loan Documents and/or the BCC Missouri Lease Documents) for
three (3) months (such three month period commencing upon the Trigger Date is
hereinafter referred to as the "Limitation Period"). After the expiration of the
Limitation Period, subject to the terms of the Omnibus Assignment of Contracts
and the Assignment of Leases, the Meditrust Entities and, to the extent
applicable, the Hawthorn Subsidiaries may pursue their respective rights and/or
remedies against the Balanced Care Guarantors and/or the Potomac Point Lessee
concurrently and/or successively with, or instead of, pursuing any of their
rights and/or remedies against (a) the Borrowers under the Loan Documents and
(b) the CHC Lessees, CHC, CPI and/or Kilgore (collectively, the "CHC Group"), as
the case may be, under any of the Loan Documents and/or the BCC Missouri Lease
Documents, as the case may be. Notwithstanding the foregoing agreement by MMI
and, to the extent applicable, the Hawthorn Subsidiaries to pursue their rights
and remedies as set forth in the first sentence of this Section 2, the Balanced
Care Guarantors and the Potomac Point Lessee specifically acknowledge and agree
that (x) MMI and, to the extent applicable, the Hawthorn Subsidiaries are not
required to exhaust any or all of their respective rights and/or remedies
against (1) the Borrowers or any of the collateral securing the Loan during the
Limitation Period or (2) the CHC Group or any of the collateral securing the BCC
Missouri Leases during the Limitation Period, (y) MMI and, to the extent
applicable, the Hawthorn Subsidiaries may determine, in their sole and absolute
discretion, which rights and/or remedies they shall pursue against the Borrowers
and/or any member of the CHC Group during the Limitation Period and (z) good
faith settlement discussions and/or negotiations with the Borrowers and the CHC
Group during the Limitation Period shall fulfill the obligations of MMI and the
Hawthorn Subsidiaries to pursue their respective rights and remedies against the
Borrowers and/or the CHC Group during the Limitation Period.
Notwithstanding the foregoing, but subject to the terms of the Omnibus
Assignment of Contracts and the Assignment of Leases, the Meditrust Entities and
the Hawthorn Subsidiaries may pursue their respective rights and/or remedies
against any Balanced Care Guarantor and/or the Potomac Point Lessee at any time,
including without limitation, during the Limitation Period, if (i) any Borrower
or any member of the CHC Group shall (a) voluntarily be adjudicated bankrupt or
insolvent, (b) seek or consent to the appointment of a receiver or trustee for
itself or for all or any portion of the Mortgaged Property (c) file a petition
seeking relief under the bankruptcy or other similar laws of the United States,
any state or any
-4-
<PAGE> 5
jurisdiction, (d) make a general assignment for the benefit of creditors or (e)
be unable to pay its debts as such debts mature, (ii) any court shall enter an
order, judgment or decree appointing, without the applicable Borrower's consent
or the applicable member of the CHC Group's consent, as the case may be, a
receiver or trustee for such Borrower or for all or any portion of the Mortgaged
Property or for such member of the CHC Group (or any of its properties) or
approving a petition filed against any Borrower or any member of the CHC Group
which seeks relief under the bankruptcy or other similar laws of the United
States, any state or any jurisdiction, and such order, judgment or decree shall
remain in force, undischarged or unstayed, sixty (60) days after it is entered,
(iii) any Borrower or any member of the CHC Group (or any of their respective
Affiliates), or any Person claiming by or through any Borrower or any member of
the CHC Group ever commences or joins in any suit or other proceeding against
MMI and/or any of the Hawthorn Subsidiaries whether or not relating to the
Mortgaged Property and/or the execution, delivery and performance of any of the
Loan Documents and/or any of the BCC Missouri Lease Documents, (iv) any
proceeding is commenced by any creditor of any Borrower or any member of the CHC
Group which may involve or result in the taking of possession of any property
held by any Borrower or any member of the CHC Group or the foreclosure thereof.
3. Notwithstanding anything to the contrary set forth herein or in any
of the Assignments of Leases or any of the other Loan Documents, the Borrowers,
the Balanced Care Guarantors and the Potomac Point Lessee acknowledge that MMI
is the successor in interest to Hawthorn Subsidiaries under the BCC Missouri
Lease Documents and is entitled to exercise all of the duties, covenants,
obligations, rights (including, without limitation, the exercise of any right of
approval or consent) and/or remedies of the Hawthorn Subsidiaries under the BCC
Missouri Lease Documents, other than the purchase options granted pursuant to
Section 18.4 of the BCC Missouri Leases.
4. Except as expressly set forth herein, this Agreement shall not be
deemed to amend, abridge, limit, modify, release, terminate or otherwise affect
any of the provisions of the Loan Documents or the BCC Missouri Lease Documents.
5. This Agreement shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns.
6. This Agreement shall remain in full force and effect until the
complete payment and performance of the Loan Obligations.
7. This Agreement shall be construed, and the rights and obligations of
the parties hereto shall be determined, in accordance with the laws of the
Commonwealth of Massachusetts. The Borrowers, the Balanced Care Guarantors and
the Potomac Point Lessee hereby consent to personal jurisdiction in the courts
of the Commonwealth of Massachusetts and the United States District Court for
the District of Massachusetts as well as to the jurisdiction of all courts from
which an appeal may be taken from the aforesaid courts, for the
-5-
<PAGE> 6
purpose of any suit, action or other proceeding arising out of or with respect
to this Agreement.
8. This Agreement may be executed in one or more counterparts, each of
which taken together shall constitute an original and all of which shall
constitute one and the same instrument.
[The remainder of this page is intentionally left blank]
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the day and year first above written.
WITNESS: MEDITRUST ENTITIES:
- -------- -------------------
MEDITRUST MORTGAGE INVESTMENTS, INC., a
Delaware corporation
/s/ Annemarie Wasniewski By: /s/Michael S. Benjamin
Name: Annemarie Wasniewski Name: Michael S. Benjamin
Title: Senior Vice President
NEW MEDITRUST COMPANY, LLC, a Delaware
limited liability company
/s/ Annemarie Wasniewski By: /s/Michael S. Benjamin
Name: Annemarie Wasniewski Name: Michael S. Benjamin
Title: Senior Vice President
WITNESS: BORROWERS:
- -------- ----------
HAWTHORN HEALTH PROPERTIES, INC., a
California corporation
/s/ Gloriana M Calhoun By: J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name: J. Gray Beverley, Jr.
Title: President
-7-
<PAGE> 8
WITNESS: NATIONAL CARE CENTERS OF HERMITAGE,
- -------- INC., a Missouri Corporation
/s/ Gloriana M Calhoun By: J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name: J. Gray Beverley, Jr.
Title: President
WITNESS: NATIONAL CARE CENTERS, INC., a Missouri
- -------- corporation
/s/ Gloriana M Calhoun By: J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name: J. Gray Beverley, Jr.
Title: President
WITNESS: NATIONAL CARE CENTERS OF LEBANON, INC.,
- -------- a Missouri corporation
/s/ Gloriana M Calhoun By: J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name: J. Gray Beverley, Jr.
Title: President
WITNESS: SPRINGFIELD RETIREMENT VILLAGE, INC., a
- -------- Missouri corporation
/s/ Gloriana M Calhoun By: J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name: J. Gray Beverley, Jr.
Title: President
-8-
<PAGE> 9
WITNESS: NATIONAL CARE CENTERS OF NIXA, INC., a
- -------- Missouri corporation
/s/ Gloriana M Calhoun By: J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name: J. Gray Beverley, Jr.
Title: President
WITNESS: NATIONAL CARE CENTERS OF SPRINGFIELD,
- -------- INC., a Missouri corporation
/s/ Gloriana M Calhoun By: J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name: J. Gray Beverley, Jr.
Title: President
WITNESS: MT. VERNON PARK CARE CENTER WEST, INC.,
- -------- a Missouri corporation
/s/ Gloriana M Calhoun By: J. Gray Beverley, Jr.
Name: Gloriana M. Calhoun Name:J. Gray Beverley, Jr.
Title: President
WITNESS: POTOMAC POINT LESSEE:
- -------- ---------------------
BALANCED CARE AT STAFFORD, INC., a
Delaware corporation
/s/ Jaynelle D. Covert By: /s/Robin L. Barber
Name: Jaynelle D. Covert Name: Robin L. Barber
Title: Vice President and Secretary
-9--
<PAGE> 10
WITNESS: BALANCED CARE GUARANTORS:
- -------- -------------------------
BALANCED CARE CORPORATION, a
Delaware corporation
/s/ Jaynelle D. Covert By: /s/Robin L. Barber
Name: Jaynelle D. Covert Name: Robin L. Barber
Title: Vice President and Secretary
DIXON MANAGEMENT, INC., a Delaware
corporation
/s/ Jaynelle D. Covert By: /s/Robin L. Barber
Name: Jaynelle D. Covert Name: Robin L. Barber
Title: Vice President and Secretary
-10-
<PAGE> 1
Exhibit 10.11
CROSS-DEFAULT AGREEMENT
THIS CROSS-DEFAULT AGREEMENT is made as of the 12th day of January,
2000 by and among (i) BALANCED CARE AT STAFFORD, INC., a Delaware corporation
(the "Potomac Point Lessee"); (ii) NEW MEDITRUST COMPANY LLC, a Delaware limited
liability company (the "Lessor"), successor by merger to Meditrust Company LLC,
a Delaware limited liability company (the "Original Lessor"); (iii) MEDITRUST
MORTGAGE INVESTMENTS, INC., a Delaware corporation ("MMI") and (iv) BALANCED
CARE CORPORATION, a Delaware corporation ("BCC").
W I T N E S S E T H
WHEREAS, the Lessor is the holder of the landlord's interest under that
certain Facility Lease Agreement, dated as of June 30, 1998, by and between the
Original Lessor and the Potomac Point Lessee relating to a certain adult care
residence located in Stafford County, Virginia (the "Potomac Point Lease");
WHEREAS, BCC, the sole shareholder of the Potomac Point Lessee,
guaranteed the Lease Obligations (as defined under the Potomac Point Lease)
pursuant to that certain Guaranty, dated as of June 30, 1998 executed for the
benefit of the Original Lessor and its successors and assigns (the "Potomac
Point Guaranty");
WHEREAS, MMI is the holder of the lender's interest under the "Loan
Documents" as such term is defined under that certain Loan Agreement, dated as
of August 6, 1996, as amended (the "Hawthorn Loan Agreement"), by and among (i)
MMI and (ii) Hawthorn Health Properties, Inc., a California corporation,
National Care Centers of Hermitage, Inc., a Missouri corporation, National Care
Centers, Inc., a Missouri corporation, National Care Centers of Lebanon, Inc., a
Missouri corporation, Springfield Retirement Village, Inc., a Missouri
corporation, National Care Centers of Nixa, Inc., a Missouri corporation,
National Care Centers of Springfield, Inc., a Missouri corporation and Mt.
Vernon Park Care Center West, Inc., a Missouri corporation (the "Hawthorn
Borrowers");
WHEREAS, at the request of BCC, MMI (an affiliate of the Lessor) was
requested to consent to certain transactions contemplated by that certain Asset
Purchase Agreement, dated as of October 15, 1999, as amended, by and among BCC
(on behalf of itself and certain subsidiaries) and Christian Health Care of
Missouri, Inc. (the "BCC/CHC Purchase Agreement");
WHEREAS, MMI was willing to consent to the transactions contemplated by
the BCC/CHC Purchase Agreement, subject to the satisfaction of certain
conditions, including, without limitation, the execution and delivery by BCC of
a guaranty of the Loan Obligations (as defined under the Hawthorn Loan
Agreement) and the execution and delivery of this Agreement; and
<PAGE> 2
WHEREAS, BCC and its subsidiary, the Potomac Point Lessee, will receive
direct and indirect benefits from the consummation of the transactions
contemplated by the BCC/CHC Purchase Agreement.
NOW, THEREFORE, in order to induce MMI to consent to the transactions
contemplated by the BCC/CHC Asset Purchase Agreement, and in consideration
therefor, and for One Dollar ($1.00) and other good and valuable consideration,
the receipt and sufficiency of which are acknowledged, and in consideration of
the mutual covenants set forth herein, the parties hereto hereby agree as
follows:
1. From the date hereof until the earlier to occur of (a) the
Termination Date (as defined under that certain Termination Agreement, of even
date herewith by and among MMI, the Lessor, the Hawthorn Borrowers, BCC, Dixon
Management, Inc. and the Potomac Point Lessee) or (b) such time, if any, as the
Leased Property (as defined under the Potomac Point Lease) is transferred to the
Buyer (as hereinafter defined) or any of the Buyer's Title Designees (as
hereinafter defined) pursuant to that certain Option Agreement, dated as of
December 30, 1999, by and among the Lessor, IPC Advisors S.a.r.l., a Luxembourg
corporation and BCC (the "Option Agreement"), the parties hereto acknowledge and
agree that the occurrence of an Event of Default as defined under the Hawthorn
Loan Agreement shall constitute an Event of Default under Potomac Point Lease.
Notwithstanding the foregoing, in the event that, (i) solely as a consequence of
any Seller Default (as defined under the Option Agreement), the Buyer or any of
the Buyer's Title Designees do not acquire the Leased Property in accordance
with the terms of the Option Agreement and that is the only reason that the
Leased Property is not transferred to the Buyer or any of the Buyer's Title
Designees in accordance with the terms of the Option Agreement [recognizing that
a failure to transfer the Leased Property to the Buyer or any of the Buyer's
Title Designees in accordance with the terms of the Option Agreement may result
from other causes, such as a determination by the Buyer to refrain from
exercising any or all of its Option Rights (as defined under the Option
Agreement) and/or a Buyer Default (as defined under the Option Agreement)] and
(ii) the Buyer or the Buyer's Title Designees have acquired all other portions
of the Land (as defined under the Option Agreement) not affected by any Seller
Default, then, upon the occurrence of the events described in the foregoing
clauses (i) and (ii) (the "Termination Event"), this Agreement shall terminate.
As used herein, the terms "Land", "Buyer" and "Title Designees" shall
have the same meanings as ascribed to such terms under the Option Agreement.
2. This Agreement shall be deemed to amend the Potomac Point Lease
solely as expressly set forth herein and, as amended hereby, the Potomac Point
Lessee hereby ratifies, approves and confirms the Potomac Point Lease, in every
respect as of the date hereof and agrees that the Potomac Point Lease is valid,
binding and in full force and effect.
-2-
<PAGE> 3
3. This Agreement shall not be deemed to amend, abridge, limit, modify,
release, terminate or otherwise affect any of the provisions of the Potomac
Point Guaranty. Without limiting the foregoing, BCC hereby confirms that the
Potomac Point Guaranty remains in full force and effect, unaffected by the
execution and delivery of this Agreement.
4. This Agreement shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns.
5. This Agreement shall remain in full force and effect until the
earlier to occur of (i) the conveyance of all of the Land to the Buyer or the
Buyer's Title Designees in accordance with the terms of the Option Agreement,
(ii) the Termination Event, (iii) the complete payment and performance of the
Loan Obligations or (iv) the complete payment and performance of the Lease
Obligations.
6. This Agreement shall be construed, and the rights and obligations of
the parties hereto shall be determined, in accordance with the laws of the
Commonwealth of Massachusetts. BCC and the Potomac Point Lessee hereby consent
to personal jurisdiction in the courts of the Commonwealth of Massachusetts and
the United States District Court for the District 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.
7. This Agreement may be executed in one or more counterparts, each of
which taken together shall constitute an original and all of which shall
constitute one and the same instrument.
[The remainder of this page is intentionally left blank]
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the day and year first above written.
WITNESS: BALANCED CARE AT STAFFORD, INC., a
- -------- Delaware corporation
/s/ Jaynelle D. Covert By: /s/ Robin L. Barber
Name: Jaynelle D. Covert Name: Robin L. Barber
Title: Vice President and Secretary
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
NEW MEDITRUST COMPANY LLC, a Delaware
limited liability company
/s/ Annemarie Wasniewski By: /s/Michael S. Benjamin
Name: Annemarie Wasniewski Name: Michael S. Benjamin
Title: Senior Vice President
MEDITRUST MORTGAGE INVESTMENTS, INC., a
Delaware corporation
/s/ Annemarie Wasniewski By: /s/Michael S. Benjamin
Name: Annemarie Wasniewski Name: Michael S. Benjamin
Title: Senior Vice President
-4-
