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EXHIBIT 10.54
OPTION AGREEMENT
THIS OPTION AGREEMENT (THE "AGREEMENT") is made and entered into as of the
19th day of December, 1997 by and between TC Realty Holding Company, a Delaware
Corporation ("OPTIONOR") and Balanced Care Corporation, a Delaware corporation,
or its successors and assigns ("BCC").
WITNESSETH:
WHEREAS, Optionor is the owner of 100 shares (THE "EQUITY INTERESTS") of TC
Realty of Altoona, Inc., a Delaware corporation (THE "COMPANY"), which Equity
Interests are evidenced by stock certificate number 1 of the Company, and
represent 100% of the equity ownership in the Company; and
WHEREAS, the Company is the Lessee under that certain First Amended and
Restated Facility Lease Agreement dated as of December 19, 1997 (THE "LEASE")
between MEDITRUST ACQUISITION CORPORATION II, a Delaware corporation (THE
"LESSOR") and the Company for property located in Xxxxx County, Pennsylvania, as
more fully described in the Lease (THE "PROPERTY"); and
WHEREAS, the Company has entered into that certain Management Agreement
dated as of December 19, 1997 (THE "MANAGEMENT AGREEMENT") with BCC at Altoona,
Inc., a Delaware Corporation (THE "MANAGER") whereby the Manager shall operate
for the benefit of the Company a personal care home/assisted living facility on
the Property (THE "PROJECT"); and
WHEREAS, the Optionor, the Lessor and the Company have entered into that
certain Stock Pledge Agreement dated as of December 19, 1997 (the "STOCK PLEDGE
AGREEMENT"), whereby Optionor has pledged to the Lessor a first lien security
interest in the Equity Interests; and, if and when the Equity Interests are
purchased from Optionor pursuant to this Agreement, such purchaser shall
expressly assume all obligations of Optionor under the Stock Pledge Agreement;
and
WHEREAS, the Company, the Lessor, the Optionor and BCC have entered into
that certain Working Capital Assurance Agreement dated as of December 19, 1997
(THE "WORKING CAPITAL AGREEMENT") whereby, among other matters, BCC has agreed
to fund certain Shortfalls (as defined in the Working Capital Agreement) by
making loans to the Company, as more fully described in the Working Capital
Agreement; and
WHEREAS, BCC and the Company have entered into a Shortfall Funding
Agreement dated as of December 19, 1997 (THE "SHORTFALL AGREEMENT") whereby,
among other matters, BCC has agreed to fund certain Shortfalls by making loans
to the Company, as more fully provided in the Shortfall Agreement; and
WHEREAS, BCC, the Lessor and the Company have entered into that certain
Subordination and Standstill Agreement dated as of December 19, 1997 (the
"SUBORDINATION AGREEMENT") whereby BCC has agreed, on the terms and conditions
provided in the Subordination Agreement, to subordinate certain interests of BCC
to the interests of the Lessor; and
WHEREAS, pursuant to the Management Agreement, Notes (as defined in the
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Shortfall Agreement) and Shortfall Agreement, in no event shall the directors or
officers of the Lessee or the shareholders, directors or officers of the Parent
ever be personally liable to BCC or any affiliate of BCC or any third party for
the payment and/or performance of any obligations or liabilities thereunder.
WHEREAS, BCC is willing to enter into the Shortfall Agreement, and all
other Transaction Documents (as defined in the Shortfall Agreement) of which BCC
is a party, only if Optionor executes and delivers an option agreement whereby
BCC or its successors and assigns may acquire all of the Equity Interests of the
Optionor, on the terms and conditions provided herein.
NOW, THEREFORE, for valuable consideration, the receipt of which is hereby
acknowledged, and intending to be legally bound, the parties hereto do hereby
agree as follows:
1. DEFINED TERMS/INTERPRETATIONS. As used herein, unless the context
otherwise requires: (a) the terms defined herein shall have the meaning set
forth herein for all purposes; (b) references to "Section" are to a section
hereof; (c) "include", "includes" and "including" are deemed to be followed by
"without limitation" whether or not they are in fact followed by such word or
words of like import; (d) "writing", "written" and comparable terms refer to
printing, typing, lithography and other means of reproducing words in a visible
form; (e) "hereof", "herein", "hereunder" and comparable terms refer to the
entirety of this Agreement and not to any particular section hereof; (f)
references to any gender include references to all genders; (g) references to an
agreement or other instrument or statute or regulation are referred to as
amended and supplemented from time to time and, in the case of a statute or
regulation, any successor provisions thereof; (h) the headings of the various
Sections hereof are for convenience of reference only and shall not modify,
define or limit any of the terms or provisions hereof; and (i) initially
capitalized terms not otherwise defined herein shall have the meanings ascribed
to such terms in the Shortfall Agreement.
2 GRANT OF OPTION/CONSIDERATION. (a) Subject to the terms of the Stock
Pledge Agreement and Section 19.4 of the Lease, Optionor hereby grants to BCC an
option (the "OPTION") to purchase all of Optionor's right, title and interest in
and to the Equity Interests on the terms and conditions provided herein. The
Purchase Price (as defined below) for the Equity Interests shall be paid to
Optionor on the Closing Date (as hereinafter defined) in immediately available
funds. The Option shall be exercisable by providing written notice to Optionor
on or before the tenth anniversary after the date of this Agreement (the "OPTION
TERM"); PROVIDED, HOWEVER, IN NO EVENT SHALL BCC BE ENTITLED TO EXERCISE ITS
OPTION SO LONG AS ANY AMOUNTS ARE OUTSTANDING UNDER THAT CERTAIN DEMAND
PROMISSORY NOTE OF EVEN DATE HEREWITH IN THE ORIGINAL PRINCIPAL AMOUNT OF
$123,822 MADE BY XXXXX X. XXXXXXX TO THE ORDER OF LESSOR.
(b) In consideration of the grant of the Option, BCC shall pay to Optionor
the following sums (the "OPTION PAYMENTS"), as follows: (i) on or before July 1,
1998, BCC shall pay the sum of $75,000 to Optionor, (ii) on or before January 1,
1999, BCC shall pay the sum of $25,000 to Optionor and (iii) on or before
January 1, 2000 and on or before January 1 of each successive year thereafter
until the expiration of the Option Term, BCC shall pay to Optionor the sum of
$50,000 per annum. Option Payments shall be made to Optionor without demand or
notice.
(c) Until BCC provides written notice of its exercise of the Option, BCC
shall be under no obligation whatsoever to purchase the Equity Interests or
exercise the Option, and shall not otherwise have any liability whatsoever
hereunder in connection with the purchase of the Equity Interests.
(d) The "Purchase Price" as used herein shall mean an amount equal to (A)
the total amount funded into the Working Capital Reserve as Borrowings (as
defined in Section 3(b)
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below), plus (B) an amount which, when combined with all
Option Payments made under Section 2(b) above, equals $250,000, plus (C) the
outstanding principal balance, together with all accrued but unpaid interest,
with respect to Advances made under the Shortfall Agreement, together with all
other sums then due and owing to BCC or an affiliate of BCC under the Shortfall
Agreement and the other Transaction Documents (such amounts stated in Subsection
(C) being referred to herein as the "BCC PAY-OFF AMOUNT"). It is the intent of
the parties hereto that the Purchase Price shall include all amounts referred to
in (B) of this Section 2(d), all amounts owing to BCC in connection with the BCC
Pay-Off Amount and all amounts owing in connection with Borrowings.
3. CLOSING . (a) Subject to the satisfaction of the conditions set forth in
Section 19.4 of the Lease, the closing of the purchase of the Equity Interests
(the "Closing") shall take place at such time and location in Pennsylvania as
shall be designated by BCC upon three (3) days prior written notice to Optionor
(the "Closing Date"). At the Closing (i) BCC shall deliver (A) the Purchase
Price and (B) an agreement in form and substance reasonably satisfactory to
Optionor and Lessor whereby the purchaser of the Equity Interests expressly
assumes all obligations of Optionor under the Stock Pledge Agreement and (ii)
Optionor shall deliver to BCC (A) the certificate representing the original
Equity Interests, together with such powers and other instruments as BCC may
request, (B) such pay-off letters or other evidence of the outstanding amounts
due the Lessor in connection with Borrowings and (C) the certificate of an
appropriate officer of the Company stating that the transfer of the Equity
Interests to BCC has been recorded on the books and records of the Company, and
affirming to BCC such additional matters as BCC may reasonably request.
Additionally, both BCC and Optionor shall take such further actions and execute
and deliver such further documents and instruments as either party may
reasonably request. At the Closing, BCC and Optionor shall deliver a mutual
release agreement in form and substance acceptable to Optionor and BCC, pursuant
to which Optionor and BCC shall release each other from claims under the
Transaction Documents (the "MUTUAL RELEASE"). Provided, however, that BCC shall
provide such Mutual Release only in the event that (w) the Equity Interests are
conveyed to BCC free and clear of all liens, encumbrances and restrictions
(except Permitted Liens and the security interest granted to the Lessor pursuant
to the Stock Pledge Agreement), (x) the Company has not incurred other
liabilities or indebtedness except as otherwise expressly contemplated in the
Transaction Documents, (y) no default on the part of Optionor or Company under
this or any other Transaction Document shall have occurred, nor any event which,
with the giving of notice and/or the passage of time, could result in a default
under this or any other Transaction Document, and (z) the Mutual Release shall
not encompass those matters described in subsections (w), (x) and (y) hereof.
(b) Notwithstanding anything to the contrary contained herein or in the
other Transaction Documents, if and to the extent that the Working Capital
Reserve is borrowed by the Optionor (such borrowings, together with all
interest, penalties and other costs and fees assessed or incurred in connection
therewith, are referred to herein as the "BORROWINGS"), the Borrowings shall be
repaid in full from the Purchase Price at the Closing. Optionor shall give BCC
prior written notice before making any Borrowings, detailing the amount thereof.
BCC shall have the right at the Closing to pay from the Purchase Price the total
amount outstanding with respect to the Borrowings. Such Borrowings shall be
contributed by Optionor to Lessee as an equity contribution of Optionor to
Lessee and in no event shall the Borrowings be deemed in any manner indebtedness
of Lessee to Optionor. Without limiting the generality of the foregoing, in
connection with the exercise of the Option, BCC and Optionor agree that, at the
time the Stock Transfer (as defined in the Lease) is consummated, any amounts
then due under the Note (as defined in the Lease) shall be paid in accordance
with the terms thereof from the Purchase Price.
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(c) Notwithstanding anything to the contrary contained herein, in the other
Transaction Documents or in the Lease Documents, in addition to the repayment of
Borrowings from the Purchase Price as provided in Section 3(b) above, the BCC
Pay-off Amount shall be paid in full by Optionor to BCC at the Closing from the
Purchase Price.
4. COVENANTS OF OPTIONOR/LEGEND. (a) Optionor shall not (i) sell, assign,
convey, pledge, encumber or otherwise transfer (by operation of law or
otherwise) any of Optionor's rights, title or interest under, in or to the
Equity Interests, other than as set forth herein or as expressly provided in the
Transaction Documents, the Lease or the Stock Pledge Agreement in favor of
Lessor, (ii) cause or permit the Company to merge, consolidate, dissolve,
liquidate, change its capital structure, issue new or substitute equity
interests (including the issuance of warrants) or sell all or any portion of the
Company's assets, (iii) cause or permit the Company to otherwise take any action
that with the passage of time and/or the giving of notice would constitute a
default under or a breach of any covenant or provision of the Shortfall
Agreement, the Lease Documents or the other Transaction Documents, or (iv)
challenge or disaffirm the validity or perfection of the lien held by BCC in the
Equity Interests.
(b) Optionor shall cause the Company to place the following legend on all
certificates representing Equity Interests:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
OPTION TO PURCHASE IN FAVOR OF BALANCED CARE CORPORATION AND
ITS SUCCESSORS AND ASSIGNS, AS MORE FULLY SET FORTH IN THAT
CERTAIN OPTION AGREEMENT DATED AS OF DECEMBER 19, 1997.
(c) To secure the obligations of the Optionor hereunder, Optionor hereby
grants and pledges to BCC a lien in the Equity Interests, subject to the lien of
the Lessor as provided in the Stock Pledge Agreement. Notwithstanding the
foregoing, BCC acknowledges and agrees that BCC may not exercise any rights or
remedies with respect to such lien in the Equity Interests without the prior
written consent of the Lessor, which consent maybe withheld in the Lessor's sole
and absolute discretion. The Lessor may enforce the provisions of the foregoing
sentence as a third party beneficiary.
(d) Optionor shall permit the Manager to request Loan Proceeds from the
Lender (as such terms are defined in the Note) in accordance with the Note to
fund operating deficits with respect to the Facility (as defined in the Lease).
5. REPRESENTATIONS AND WARRANTIES. Optionor represents and warrants to BCC
that (i) Optionor is the sole and exclusive owner of the Equity Interests free
and clear of all liens, encumbrances and restrictions (except Permitted Liens
and the security interest granted to the Lessor pursuant to the Stock Pledge
Agreement), and Optionor's ownership interest in the Equity Interests is
appropriately noted and documented on the books and records of the Company, (ii)
all shareholders of the Optionor are accredited investors as that term is
defined in Regulation D promulgated under the 1933 Act, (iii) no other person or
entity holds any equity interests in the Company, (iv) the Equity Interests have
been duly issued to Optionor, are fully paid and nonassessable, (vi) Optionor
has the full right and power to transfer and convey the Equity Interests, enter
into this Option Agreement and sell the Equity Interests to BCC without
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the need to obtain the consent or joinder of any party (other than the Lessor),
(vi) each shareholder of Optionor has had the opportunity to ask all questions
of BCC, the Company and any other person or entity necessary or desirable
concerning Optionor's investment in the Equity Interests, (vii) each shareholder
of Optionor has the requisite knowledge and sophistication to make an informed
decision regarding the risks and merits of an investment in the Optionor and the
Company, and has not relied on any oral or written statements of BCC or any
party affiliated with BCC in connection with Optionor's investment in the
Company, (viii) each shareholder of Optionor understands that the Equity
Interests will be deemed restricted securities within the meaning of the 1933
Act (and state securities laws), the Equity Interests are non-transferable and
each shareholder of Optionor must be able to bear the economic risks of
ownership of the Equity Interests for an indefinite period of time, and (ix) the
representations and warranties contained in Article III of the Shortfall
Agreement are true and correct to the best knowledge of Optionor in every
material respect. The provisions of this Section shall survive the Closing and
purchase of the Equity Interests.
6. NO WAIVER. No failure or delay on the part of BCC in exercising any
right, remedy, power or privilege hereunder shall operate as a waiver thereof or
of any other right, remedy, power or privilege of BCC hereunder or under any
other Transaction Document; nor shall any single or partial exercise of any such
right, remedy, power or privilege preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege.
7. GOVERNING LAW/BINDING EFFECT. This Agreement shall be deemed to be a
contract under the laws of the Commonwealth of Pennsylvania and for all purposes
shall be governed by and construed in accordance with the laws of said
Commonwealth, excepting its rules and laws relating to conflicts of law. The
rights and obligations of the parties hereunder shall be binding upon and inure
to the benefit of the parties hereto and their heirs, personal representatives,
successors and assigns.
8. ASSIGNMENT. Except for the pledge of the Equity Interests to the Lessor
pursuant to the Stock Pledge Agreement, Optionor may not assign, pledge,
hypothecate or otherwise transfer its rights, obligations and duties hereunder
without the prior written consent of BCC. Subject to the terms of the Working
Capital Agreement and the Subordination Agreement, BCC shall have the right to
transfer and assign its rights, obligations and duties hereunder to any
affiliate or third party without the consent of the Optionor.
9. DEFAULT. (a) In the case of default by Optionor hereunder, BCC shall be
entitled, after ten (10) days prior written notice to Optionor, to (a) seek an
action in specific performance and/or (b) seek such other relief, including
without limitation an action at law for damages, as may be available. Optionor
shall pay all reasonable counsel fees of BCC in connection with enforcing any
rights or benefits of BCC hereunder or under the other Transaction Documents.
The rights and remedies of BCC under this Option Agreement are cumulative and
not exclusive of any rights or remedies which it may otherwise have.
(b) In the case of default by BCC hereunder, Optionor shall be entitled,
after ten (10) days prior written notice to BCC, to seek such relief, including
without limitation an action at law for damages, as may be available to
Optionor. Without limiting the foregoing, in the event that BCC fails to pay any
Option Payment to the Optionor within ten (10) days after the date that such
Option Payment is due, BCC agrees, upon behalf of itself and its subsidiaries,
that the Optionor shall have the right, at any time thereafter, to exercise any
or all of the following remedies upon written notice to BCC: (i) to cause the
Company to terminate the Management Agreement and (ii) terminate this Agreement;
all without recourse to the Optionor or the Company. In addition, in the event
of any such termination of this Agreement, to the extent any Advances have been
made under the Shortfall Agreement or any other sums are then due and owing to
BCC or an affiliate of BCC under the Shortfall Agreement and/or any of the other
Transaction Documents, the then outstanding BCC Pay-Off Amount shall be
forgiven. BCC shall pay all reasonable counsel fees of Optionor in connection
with enforcing any rights or benefits of Optionor hereunder. The rights and
remedies of Optionor under this Option Agreement are cumulative and not
exclusive of any rights or remedies which it may otherwise have.
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10. MISCELLANEOUS.
(a) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered in person,
Federal Express or other recognized overnight courier or sent by registered or
certified U.S. mail, return receipt requested or sent by facsimile or telecopy
transmission and addressed:
(i) If to the Optionor, at:
0000 XXX Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000
(ii) If to BCC, at
0000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxxxx, XX 00000
or to such other address or facsimile number as a party may designate by notice
to the other parties hereto.
A notice or other communication shall be deemed to be duly received:
(a) if sent by hand or telegram or express service, when left at the
address of the recipient;
(b) if sent by registered or certified U.S. mail, return receipt
requested, the second day after mailing; and
(c) if sent by facsimile, upon receipt by the sender of an
acknowledgment or transmission report generated by the machine
from which the facsimile was sent indicating that the facsimile
was sent in its entirety to the recipient's facsimile number;
PROVIDED THAT if a notice or other communication is served by hand or by
telegram, or is received by telex or facsimile on a day which is not a business
day, or after 5:00 P.M. on any business day at the addressee's location, such
notice or communication shall be deemed to be duly received by the recipient at
9:00 A.M. on the first business day thereafter.
(b) Entire Agreement. This Agreement, together with all other Transaction
Documents and Lease Documents, contains the entire understanding among the
parties hereto with respect to its subject matter and supersedes any prior
understandings or agreements between the parties with respect to such subject
matter.
(c) Amendments. Subject to the terms of the Lease Documents, this Agreement
may be modified or amended only by a written instrument executed by the Company,
BCC and Optionor.
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(d) Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
(e) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute but a single instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement
as of the day and year first above written.
WITNESS/ATTEST: TC REALTY HOLDING COMPANY
By: /s/ Signature Illegible
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Title:
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WITNESS/ATTEST: BALANCED CARE CORPORATION
By: /s/ Signature Illegible
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Title:
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Subject to the terms and conditions contained herein, in the Lease, in the
Stock Pledge Agreement and all other Lease Documents, the Lessor hereby consents
to the terms and provisions of this Option Agreement and agrees, upon the
consummation of the Stock Transfer (as defined in the Lease) in accordance with
the terms of Section 19.4 of the Lease, to enter into a mutual release agreement
in form and substance acceptable to Optionor and Lessor, pursuant to which the
Optionor and the Lessor shall release each other from claims under the
Transaction Documents.
WITNESS/ATTEST: MEDITRUST ACQUISITION CORPORATION II
By: /s/ Signature Illegible
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Title:
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The undersigned hereby acknowledges and consents to the provisions of
Section 9(b) of the Option Agreement specifically set forth in Section 9(b).
BALANCED CARE AT ALTOONA, INC.
By:
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Title:
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Schedule to Exhibit 10.54 filed pursuant to Instruction 2 to Item 601(a) of
Regulation S-K
Option Agreement
Project Parties Property Location Date
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Blytheville, AR TC Realty Holding Co. Mississippi County 12/19/97
(Optionor) AR
Balanced Care Corp.
Maumelle, AR TC Realty Holding Co. Pulaski County 12/19/97
(Optionor) AR
Balanced Care Corp.
Mountain Home, AR TC Realty Holding Co. Xxxxxx County 12/19/97
(Optionor) AR
Balanced Care Corp.
Pocahontas, AR TC Realty Holding Co. Xxxxxxxx County 12/19/97
(Optionor) AR
Balanced Care Corp.
Sherwood, AR TC Realty Holding Co. Pulaski County 12/19/97
(Optionor) AR
Balanced Care Corp.
Reading, PA TC Realty Holding Co. Berks County 12/19/97
(Optionor) PA
Balanced Care Corp.
Martinsburg, WV Black Box Holding Co. Berkely County 12/31/97
(Optionor) WV
Balanced Care Corp.
Dillsburg, PA Black Box Holding Co. York County 12/31/97
(Optionor) PA
Balanced Care Corp.
Peckville, PA Black Box Holding Co. Lackawanna County 12/31/97
(Optionor) PA
Balanced Care Corp.
Lewisburg, PA Black Box Holding Co. Union County 12/31/97
(Optionor) PA
Balanced Care Corp.
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Berwick, PA TC Realty Holding Co. Columbia County 1/7/98
(Optionor) PA
Balanced Care Corp.
Chippewa, PA TC Realty Holding Co. Beaver County 1/7/98
(Optionor) PA
Balanced Care Corp.
Lewistown, PA TC Realty Holding Co Mifflin County 1/7/98
(Optionor) PA
Balanced Care Corp.
