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Exhibit 10.2
Loan No. 99-407
SENIOR HOUSING RIDER
THIS SENIOR HOUSING RIDER is attached to and made a part of that
certain Loan Agreement dated as of the 30th day of December, 1999, among
BALANCED CARE REALTY AT STATE COLLEGE, INC., a Delaware corporation, BALANCED
CARE REALTY AT ALTOONA, INC., a Delaware corporation, BALANCED CARE REALTY AT
LEWISTOWN, INC., a Delaware corporation, BALANCED CARE REALTY AT READING, INC.,
a Delaware corporation, BALANCED CARE REALTY AT BERWICK, INC., a Delaware
corporation, BALANCED CARE REALTY AT PECKVILLE, INC., a Delaware corporation,
BALANCED CARE REALTY AT SCRANTON, INC., a Delaware corporation, BALANCED CARE
REALTY AT MARTINSBURG, INC., a Delaware corporation, BALANCED CARE REALTY AT
MAUMELLE, INC., a Delaware corporation, BALANCED CARE REALTY AT SHERWOOD, INC.,
a Delaware corporation, BALANCED CARE REALTY AT MOUNTAIN HOME, INC., a Delaware
corporation, and BALANCED CARE REALTY AT MANSFIELD, INC., a Delaware corporation
(collectively, "Borrower"), the undersigned operators and XXXXXX HEALTHCARE
FINANCE, INC., a Delaware corporation (Xxxxxx Healthcare Finance, Inc. and its
successors and assigns are hereinafter referred to as "Lender"). To the extent
of any conflict between the terms and provisions of this Rider and the terms and
provisions of the Loan Agreement, the terms and provisions of this Rider shall
govern and control the rights and obligations of the parties.
R-1. All terms not defined in this Rider shall have the meanings
ascribed to such terms as set forth in the Loan Agreement.
R-2. The following representations, warranties and covenants are
hereby added to the representations, warranties and covenants contained in the
Loan Agreement.
Each Borrower represents, covenants, and warrants, as of the date
hereof and through the term of Loan, as follows:
(a) Each Borrower, together with the Balanced Care Corporation
Affiliate which is the Manager of each of the Properties and the
Improvements thereon, and if applicable, the Master Lessee of each
Property in whose name the Licenses are issued (collectively, the
"Operator"), are using and operating their respective the Properties and
Improvements (collectively, the "Facilities") as assisted and/or
independent senior housing and/or Alzheimer's facilities, together with
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outpatient rehabilitation services, each Facility having the number of
beds/units set forth on Exhibit A to the Loan Agreement (as modified from
time to time with Lender's consent, which consent shall not be
unreasonably withheld, the "Licensed Use"). Operator and each Borrower
complies, and throughout the term of the Loan will comply in all material
respects, with all federal, state and local laws, regulations, quality and
safety standards, accreditation standards and requirements of the
applicable state department of health or other applicable state regulatory
agency (each a "DOH") and all other federal, state or local governmental
authorities including those relating to the quality and adequacy of
medical care, distribution of pharmaceuticals, rate setting, equipment,
personnel, operating policies, additions to facilities and services and
fee splitting. Each Facility which is owned, leased or operated by a
Borrower or Operator shall be operated at all times in compliance in all
material respects with such laws and requirements.
(b) All governmental licenses, permits, regulatory agreements or
other approvals or agreements necessary or desirable for the Licensed Use
of each Facility are held by a Borrower or Operator in the name of the
Borrower or Operator as required under applicable law and are in full
force and effect, including, if required, a valid certificate of need
("CON") or similar certificate, license, or approval issued by the DOH for
the requisite number of beds and units in each Facility, and a provider
agreement or other required documentation of approved provider status for
each provider payment or reimbursement program listed in Exhibit R-1
hereto, if applicable; provided, however, rehabilitation services are
provided at some or all of the Facilities by third parties, each of whom
has the necessary licenses to perform such services at a Facility. All
required permits, certificates, licenses and governmental approvals
necessary for operation of each Facility for the Licensed Use are listed
on Exhibit R-1 hereto (collectively, the "Licenses"). So long as the Loan
remains outstanding, each Borrower (and Operator) shall operate its
Facility or cause its Facility to be operated in a manner such that the
Licenses shall remain in full force and effect. True and complete copies
of the Licenses have been delivered to Lender.
(c) The Licenses for each Facility, including without limitation, if
applicable, the CON:
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(i) May not be, and have not been, and will not be transferred
to any location other than that Facility; provided, however, the
CON's for the Arkansas Facilities were acquired from other
facilities;
(ii) Are not now and will not be pledged as collateral
security for any other loan or indebtedness; and
(iii) Are held free and will remain free from restrictions or
known conflicts which would materially impair the use or operation
of the Facility for the Licensed Use, and shall not be provisional,
probationary or restricted in any way.
(d) Neither any Borrower nor Operator shall:
(i) Rescind, withdraw, revoke, amend, modify, supplement, or
otherwise alter the nature, tenor or scope of the Licenses for any
Facility;
(ii) Amend or otherwise change any Facility's authorized
units/beds capacity and/or the number of units/beds approved by the
DOH; except that, subject to Lender's consent, which consent shall
not be unreasonably withheld or delayed, a Borrower may change the
allocation of beds/units between assisted living and independent
living;
(iii) Replace or transfer all or any part of a Facility's
units or beds to another site or location; or
(iv) Voluntarily transfer or encourage the transfer of any
resident of a Facility to any other facility not subject to a
Mortgage, unless such transfer is at the request of the resident or
is for reasons relating to the health, required level of medical
care or safety of the resident to be transferred.
(e) If and when a Borrower or Operator participates in any Medicare
or Medicaid or other third party payor program with respect to a Facility,
that Facility will remain in compliance in all material respects with all
requirements for participation in Medicare and Medicaid, including the
Medicare and Medicaid Patient Protection Act of 1987. Each Facility is and
will remain in conformance in all material
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respects with all insurance, reimbursement and cost reporting
requirements, and, if applicable, has a current provider agreement which
is in full force and effect under Medicare and Medicaid.
(f) There is no, and during the term of the Loan there shall be no,
threatened, existing or pending revocation, suspension, termination,
probation, material restriction, material limitation, or nonrenewal
affecting any Borrower, Operator or any Facility or any participation or
provider agreement with any third-party payor, including Medicare,
Medicaid, Blue Cross and/or Blue Shield, and any other private commercial
insurance managed care and employee assistance program (such programs, the
"Third-Party Payors' Programs") to which a Borrower or Operator may
presently be subject with respect to a Facility, or at any time hereafter
is subject. All Medicaid, Medicare, and private insurance cost reports and
financial reports submitted by a Borrower or Operator, if any, are and
will be materially accurate and complete and have not been and will not be
misleading in any material respects. No cost reports for any Facility
remain open or unsettled.
(g) None of the Borrowers, Operator, or any Facility is or will be
the subject of any proceeding by any governmental agency, and no notice of
any violation has been or will be issued by a governmental agency that
would, directly or indirectly, or with the passage of time:
(i) Have a material adverse impact on a Borrower's or
Operator's ability to accept and/or retain patients or operate any
Facility for its Licensed Use or result in the imposition of a
material fine, a sanction having a material impact on a Borrower, a
lower rate certification or a lower reimbursement rate for services
rendered to eligible patients;
(ii) Modify, limit or annul or result in the transfer,
suspension, revocation or imposition of probationary use of any of
the Licenses; or
(iii) If applicable, affect a Borrower's or Operator's
continued participation in the Medicaid or Medicare programs or any
other of the Third-Party Payors' Programs, or any successor programs
thereto, at current rate certifications.
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(h) Each Facility and the use thereof complies and will continue to
comply in all material respects with all applicable local, state and
federal building codes, fire codes, health care, senior housing and other
regulatory requirements (the "Physical Plant Standards") and no waivers of
Physical Plant Standards exist at any Facility, except those that are
described on Exhibit R-2 attached hereto.
(i) No Facility has received a "Level A" (or equivalent) violation,
and no statement of charges or deficiencies has been made or penalty
enforcement action has been undertaken against any Facility, Operator or a
Borrower, or against any officer, director, partner, member or stockholder
of Operator or a Borrower by any governmental agency during the last three
calendar years, and there have been no violations over the past three
years which have threatened any Facility's, any Operator's or a Borrower's
certification for participation in Medicare or Medicaid or the other
Third-Party Payors' Programs.
(j) There are no current, pending or outstanding Medicaid, Medicare
or Third-Party Payors' Programs reimbursement audits or appeals pending at
any Facility, and there are no years that are subject to audit.
(k) There are no current or pending Medicaid or Medicare or
Third-Party Payors' Programs recoupment efforts at any Facility. No
Borrower is a participant in any federal program whereby any governmental
agency may have the right to recover funds by reason of the advance of
federal funds, including those authorized under the Xxxx-Xxxxxx Act (42
U.S.C. 291, et seq.).
(l) No Borrower will pledge its receivables as collateral security
for any other loan or indebtedness.
(m) There are no and there will remain no patient or resident care
agreements with patients or residents which deviate in any material
adverse respect from the form agreements which have been delivered to and
approved by Lender pursuant to Section 3.7 of the Loan Agreement.
(n) All patient or resident records at each Facility, including
patient or resident trust fund accounts, are true and correct in all
material respects, and will remain true and correct in all material
respects.
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(o) Any agreement relating to the general management, and operation
of any Facility (each a "Management and Operating Agreement") and the
manager or operator thereunder shall be subject to Lender's reasonable
approval and no Management and Operating Agreement shall be modified,
amended or terminated without Lender's prior consent, which consent shall
not be unreasonably withheld. In the event any Management and Operating
Agreement is terminated or in the event of foreclosure or other
acquisition of a Facility by Lender or its designee or any purchaser at a
foreclosure sale, Borrower, Lender, any subsequent operator or any
subsequent purchaser need not obtain a CON prior to applying for and
receiving Medicare or Medicaid payments.
(p) No Borrower shall, nor shall any Facility or Operator, other
than in the normal course of business, change the terms of any of the
Third-Party Payors' Programs now or hereinafter in effect or their normal
billing payment or reimbursement policies and procedures with respect
thereto (including the amount and timing of finance charges, fees and
write-offs).
(q) From time to time, upon the request of Lender, regardless of
whether or not an Event of Default has occurred hereunder or under the
other Loan Documents, each Borrower shall, and shall cause Operator to
complete, execute and deliver to Lender any applications, notices,
documentation, and other information necessary or desirable, in Lender's
judgment, to permit Lender or its designee (including a receiver) to
obtain, maintain or renew any one or more of the Licenses for a Facility
(or to become the owner of the existing Licenses for a Facility) and to
the extent permitted by applicable law to obtain any other provider
agreements, licenses or governmental authorizations then necessary or
desirable for the operation of a Facility by Lender or its designee for
its Licensed Use (including, without limitation, any applications for
change of ownership of the existing Licenses or change of control of the
owner of the existing Licenses). Upon an occurrence of an Event of
Default, to the extent permitted by applicable law, (i) Lender is hereby
authorized (without the consent of any Borrower or Operator) to submit any
such applications, notices, documentation or other information which a
Borrower caused to be delivered to Lender in accordance with the above
provisions to the applicable governmental authorities, or to take such
other steps
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as Lender may deem advisable to obtain, maintain or renew any License or
other license or governmental authorization in connection with the
operation of any Facility for its Licensed Use, and each Borrower agrees
to cooperate and to cause Operator to cooperate with Lender in connection
with the same and (ii) each Borrower, upon demand by Lender, shall take
any action and cause Operator to take any action necessary or desirable,
in Lender's sole judgment, to permit Lender or its designee (including a
receiver) to use, operate and maintain each Facility for its Licensed Use.
If any Borrower fails to comply with the provisions of this subsection (q)
for any reason whatsoever, such Borrower hereby irrevocably appoints
Lender and its designee as such Borrower's attorney-in-fact, with full
power of substitution, to take any action and execute any documents and
instruments necessary or desirable in Lender's sole judgment to permit
Lender or its designee to undertake Borrower's obligations under this
subsection (q), including without limitation, obtaining any licenses or
governmental authorizations then required for the operation of a Facility
by Lender or its designee for its Licensed Use. The foregoing power of
attorney is coupled with an interest and is irrevocable and Lender may
exercise its rights thereunder in addition to any other remedies which
Lender may have against any Borrower or Guarantor as a result of a
Borrower's breach of the obligations contained in this subsection (q).
(r) Each Borrower and Operator shall at all times comply in all
material respects with all obligations under the contracts and leases with
residents of each Facility, and no Borrower shall commit or permit any
default by a Borrower or Operator thereunder. Each Borrower hereby
indemnifies and holds harmless Lender and agrees to defend Lender (with
counsel reasonably acceptable to Lender) from and against (collectively,
the "Indemnified Claims") any (i) claims, proceedings or causes of action
brought by any resident of a Facility, and (ii) loss, damage, cost or
expense, including reasonable attorneys' fees, incurred or suffered by
Lender as a result of any (x) breach by a Borrower or Operator of any
contract or lease with a resident of a Facility or (y) violation of any
license or any federal, state or local law governing a Facility or the
use, operation or maintenance thereof for its Licensed Use.
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(s) Notwithstanding the foregoing or any other provision of this
Senior Housing Rider to the contrary, if through the exercise of Lender's
rights under the Loan Documents or otherwise, Lender or an affiliate of
Lender shall take permanent possession and control of any Facility,
Borrower shall not be liable to Lender for any Indemnified Claims which
first arose after the date ("Transfer Date") Lender or an affiliate of
Lender took permanent possession and control of that Facility if (but only
if) the following conditions are fully satisfied:
(i) None of any Borrower, Guarantor, any Affiliate of Borrower
or Guarantor or any agent, employee or contractor of any of the
foregoing contributed, by act or omission, to the cause, existence,
or occurrence of such Indemnified Claims; and
(ii) The events or state of facts resulting (or with the
passage of time eventually permanently resulting) in any such
Indemnified Claims did not exist prior to the Transfer Date.
(t) Notwithstanding any of the foregoing provisions of this Senior
Housing Rider to the contrary, Lender, Borrower and Operator agree that
with respect to each of the seven Facilities located in Pennsylvania (the
"Pennsylvania Facilities"),
(i) at the Closing, the Licenses for such Facility will be in
the name of the Master Lessee thereof, not in the name of the
Manager thereof or the Borrower which owns such Facility (an
"Owner");
(ii) promptly after Closing, each Owner and Master Lessee of
such Facility will seek a determination from the DOH that the
Licenses for each Facility do not need to be transferred to the
Owner as a result of (A) the termination of the Master Lease of such
Facility and the existing Management Agreement with respect to such
Facility, concurrently with (B) the execution of a new Management
Agreement in substantially the same form as has been approved by
Lender and exists as of the date hereof at the Facilities which are
not Pennsylvania Facilities (a "New Management Agreement"), whereby
the Master Lessee will be the Manager of such Facility and will
continue as the holder of the Licenses for such Facility;
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(iii) if the DOH indicates that it will not provide the
requested determination (or fails to provide it in a timely manner),
then such Owner will use diligent efforts to have the Licenses for
such Facility reissued in the name of such Owner, at which time the
Master Lease and existing Management Agreement with respect to such
Facility shall be terminated, and a New Management Agreement entered
into between the Owner and either the former Master Lessee or the
prior Manager;
(iv) simultaneously with an Owner entering into a New
Management Agreement, it (and the Manager thereunder) shall enter
into an Agreement Regarding Management Agreement and Waiver of
Property Management and Broker's Liens in favor of Lender in
substantially the form entered into by the Borrowers and Managers
which own or manage the Facilities which are not Pennsylvania
Facilities on the date hereof (each, an "ARM Agreement");
(v) if by March 15, 2000,
(A) all seven of the Master Leases have not been
terminated, or
(B) there have not been seven New Management Agreements
and seven new ARM Agreements entered into as contemplated
above, or
(C) the DOH has not either issued a new License in the
Owner's name or issued the determination described in clause
(ii) above, for each of the seven Pennsylvania facilities,
then, such circumstances shall constitute an Event of Default under
the Loan Agreement.
BORROWER:
BALANCED CARE REALTY AT STATE COLLEGE, INC.,
a Delaware corporation
By/s/Xxxxx X. Xxxxx
Its VP-CFO
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BALANCED CARE REALTY AT ALTOONA, INC., a
Delaware corporation
By/s/Xxxxx X. Xxxxx
Name Xxxxx X. Xxxxx
Its VP-CFO
BALANCED CARE REALTY AT LEWISTOWN, INC., a
Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
BALANCED CARE REALTY AT READING, INC., a
Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
BALANCED CARE REALTY AT BERWICK, INC., a
Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
BALANCED CARE REALTY AT PECKVILLE, INC., a
Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
BALANCED CARE REALTY AT SCRANTON, INC., a
Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
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BALANCED CARE REALTY AT MARTINSBURG, INC., a
Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
BALANCED CARE REALTY AT MAUMELLE, INC., a
Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
BALANCED CARE REALTY AT SHERWOOD, INC., a
Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
BALANCED CARE REALTY AT MOUNTAIN HOME, INC.,
a Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
BALANCED CARE REALTY AT MANSFIELD, INC., a
Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
OPERATORS:
BCC AT STATE COLLEGE, INC.,
a Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
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TC REALTY OF ALTOONA, INC.,
a Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
TC REALTY OF LEWISTOWN, INC.,
a Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
TC REALTY OF READING, INC.,
a Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
TC REALTY OF BERWICK, INC.,
a Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
BLACK BOX OF PECKVILLE, INC.,
a Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
TC REALTY CORPORATION III,
a Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
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BALANCED CARE AT MARTINSBURG, INC.,
a Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
BALANCED CARE AT MAUMELLE, INC.,
a Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
BALANCED CARE AT SHERWOOD, INC.,
a Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
BALANCED CARE AT MOUNTAIN HOME, INC.,
a Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
TC REALTY CORPORATION II,
a Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
BCC DEVELOPMENT AND MANAGEMENT CO., a
Delaware corporation
By/s/Xxxxx X. Xxxxx
Its
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BCC AT ALTOONA, INC., a Delaware
corporation
By/s/Xxxxx X. Xxxxx
Its
BALANCED CARE AT LEWISTOWN, INC., a Delaware
corporation
By/s/Xxxxx X. Xxxxx
Its
BCC AT READING, INC., a Delaware
corporation
By/s/Xxxxx X. Xxxxx
Its
BALANCED CARE AT BERWICK, INC., a Delaware
corporation
By/s/Xxxxx X. Xxxxx
Its
BALANCED CARE AT PECKVILLE, INC., a Delaware
corporation
By/s/Xxxxx X. Xxxxx
Its
BCC AT SCRANTON, INC., a Delaware
corporation
By/s/Xxxxx X. Xxxxx
Its
