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Exhibit 10.8
AMENDMENT NO. 1
TO
LOAN AND SECURITY AGREEMENT
originally dated as of April 22, 1999
by and among
BALANCED CARE CORPORATION,
BCC AT HERMITAGE PARK CARE CENTER, INC.,
BCC AT LEBANON CARE CENTER, INC.,
BCC AT LEBANON PARK MANOR, INC.,
BCC AT MT. XXXXXX XXXX CARE CENTER, INC.,
BCC AT MT. XXXXXX XXXX CARE CENTER WEST, INC.,
BCC AT NEVADA PARK CARE CENTER, INC.,
BCC AT NIXA PARK CENTER, INC.,
BCC AT REPUBLIC PARK CENTER, INC.,
BCC AT SPRINGFIELD CARE CENTER, INC.,
XXXXX MANAGEMENT INC.,
BCC AT DARLINGTON, INC.,
BALANCED CARE AT EYERS GROVE, INC.,
BALANCED CARE AT XXXXXX, INC.,
BALANCED CARE AT XXXXXX, INC.,
BALANCED CARE AT NORTH RIDGE, INC.
and
HCFP FUNDING, INC.
Amended as of July 1, 1999
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AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT (this "Amendment")
is made as of this 1st day of July, 1999, by and among BALANCED CARE
CORPORATION, a Delaware corporation, BCC AT HERMITAGE PARK CARE CENTER, INC., a
Delaware corporation, BCC AT LEBANON CARE CENTER, INC., a Delaware corporation,
BCC AT LEBANON PARK MANOR, INC., a Delaware corporation, BCC AT MT. XXXXXX XXXX
CARE CENTER, INC., a Delaware corporation, BCC AT MT. XXXXXX XXXX CARE CENTER
WEST, INC., a Delaware corporation, BCC AT NEVADA PARK CARE CENTER, INC., a
Delaware corporation, BCC AT NIXA PARK CENTER, INC., a Delaware corporation, BCC
AT REPUBLIC PARK CENTER, INC., a Delaware corporation, BCC AT SPRINGFIELD CARE
CENTER, INC., a Delaware corporation, XXXXX MANAGEMENT INC., a Missouri
corporation, BCC AT DARLINGTON, INC., a Delaware corporation, BALANCED CARE AT
EYERS GROVE, INC., a Delaware corporation, BALANCED CARE AT XXXXXX, INC., a
Delaware corporation, BALANCED CARE AT XXXXXX, INC., a Delaware corporation,
BALANCED CARE AT NORTH RIDGE, INC., a Delaware corporation (collectively and
individually, the "Borrower"), and HCFP FUNDING, INC., a Delaware corporation
(the "Lender").
RECITALS
A. Pursuant to that certain Loan and Security Agreement dated April 22,
1999 by and among Borrower and Lender (as amended hereby and as further amended,
modified and restated from time to time, collectively, the "Loan Agreement"),
the Lender agreed to make available to the Borrower a revolving credit facility
(the "Loan").
B. Borrower has requested that Lender agree to make certain changes to
the terms of the Loan Agreement, and Lender has agreed to do so provided (among
other things) that Borrower executes and delivers this Amendment and otherwise
complies with the agreements set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the terms and
conditions set forth in this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Lender and Borrower hereby agree as follows:
Section 1. Definitions. Unless otherwise defined herein, all
capitalized terms herein shall have the meanings assigned to such terms in the
Loan Agreement.
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Section 2. Amendments to the Loan Agreement. Borrower and Lender hereby
agree to amend and modify the provisions of the Loan Agreement as follows:
2.1. The definition of "EBITDA" set forth in Section 1.1 is hereby
deleted in its entirety and the following new section is inserted in lieu
thereof (with the revised portions thereof being underlined below):
"EBITDA. "EBITDA" means, the sum of the following, calculated
individually with respect to each Real Estate Borrower, and
then added together for all Real Estate Borrowers, as
determined in accordance with GAAP and reflected in Borrower's
most current consolidated financial statements: (a) net income
(after rental expense with respect to each Leasehold
Facility), plus (b) interest expense, plus (c) depreciation
and amortization, plus (d) income tax expense, plus (e) fifty
percent (50%) of the management fee expense, for either (i)
the twelve (12) most recently completed calendar months, or
(ii) the six (6) most recently completed calendar months on an
annualized basis, provided that if Borrower elects the option
described in subparagraph (ii), such option shall apply
throughout the Loan Term and Borrower may not elect the option
described in subparagraph (i) at any time thereafter. If any
Property has a negative EBITDA for any period, then for
purposes of this definition, EBITDA for that period for such
Property shall equal zero. For purposes of this definition,
management fee expense shall be limited as described in
Section 7.6 hereof."
2.2. Section 2.1(d) is hereby deleted in its entirety and the following
new section is inserted in lieu thereof (with the revised portions thereof being
underlined below):
"(d) The maximum aggregate principal balance of all Revolving
Credit Loans outstanding at any time hereunder shall not
exceed the
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Borrowing Base. The Borrowing Base shall equal the sum of the
following: (i) with respect to each Property covered by a
first priority fee simple Mortgage in favor of Lender other
than the Property owned by Balanced Care at North Ridge, Inc.
d/b/a Outlook Pointe at Northridge (hereinafter "Northridge"),
an amount not to exceed eighty five percent (85%) of the
product of 8.0 times EBITDA, plus (ii) with respect to
Northridge only, an amount not to exceed eighty five percent
(85%) of the product of 8.5 times EBITDA, plus (iii) with
respect to each Leasehold Facility, an amount not to exceed
the lesser of eighty five percent (85%) of the product of 5.0
times EBITDA, or eighty five percent (85%) of the product of
the number of years remaining under the applicable lease times
EBITDA (such formulas described in subparagraphs (i), (ii) and
(iii) above being referred to herein as the "Real Estate
Borrowing Base"); plus (ii) eighty five percent (85%) of the
Qualified Accounts due and owing from any Medicaid/Medicare
Insurer or other Account Debtor (such formula being referred
to herein as the "Accounts Receivable Borrowing Base").
Notwithstanding the foregoing, that portion of the Real Estate
Borrowing Base attributable to the Leasehold Borrowers shall
not exceed fifteen percent (15%) of the Real Estate Borrowing
Base, and any advances made against any of the Leasehold
Facilities shall be conditioned upon Lender obtaining a
written agreement from the applicable fee owner, which
agreement shall provide appropriate consents and lease
protection deemed appropriate by Lender in its sole credit
judgment. Calculation of the Borrowing Base shall be subject
to Lender's reasonable review."
2.3. Section 2.4(b) is hereby deleted in its entirety and the following
new section is inserted in lieu thereof (with the revised portion thereof being
underlined below):
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"(b) For so long as the Loan is available to Borrower,
Borrower unconditionally shall pay Lender a monthly usage fee
(the "Usage Fee") equal to .021% of the average amount by
which the Maximum Loan Amount exceeds the average amount of
the outstanding principal balance of the Revolving Credit
Loans during the preceding month. The Usage Fee shall be
payable monthly in arrears on the first Business Day of each
successive calendar month."
2.4. Section 2.8(c) is hereby deleted in its entirety and the following
new section is inserted in lieu thereof:
"(c) Upon at least thirty (30) days prior written notice to
Lender (the "Termination Notice Period"), Borrower may
terminate this Agreement before the third annual anniversary
of the Closing Date, provided that, at the effective date of
such termination, Borrower shall pay to Lender (in addition to
the then outstanding principal, accrued interest and other
Obligations owing under the terms of this Agreement and any
other Loan Documents) as liquidated damages for the loss of
bargain and not as a penalty, an amount equal to (i) three
percent (3%) of the Maximum Loan Amount if the effective date
of such termination by Borrower is on or before the first
anniversary of the Closing Date, (ii) two percent (2%) of the
Maximum Loan Amount if the effective date of such termination
by Borrower is after the first anniversary of the Closing Date
and before the second anniversary of the Closing Date, and
(iii) one percent (1%) of the Maximum Loan Amount if the
effective date of such termination by Borrower is after the
second anniversary of the Closing Date and before the third
anniversary of the Closing Date."
2.5. A new Section 6.27 is hereby added as follows:
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Section 6.27 Debt Service Coverage Ratio. At the end of each calendar
month throughout the Loan Term, Borrower (as defined below for purposes
of this Section 6.27 only, taken as a whole) shall have maintained a
Debt Service Coverage Ratio (hereinafter defined) of at least 1.1:1.0.
As used herein, "Debt Service Coverage Ratio" means the ratio of (a)
EBITDA to (ii) Debt Service (hereinafter defined). The Debt Service
Coverage Ratio shall be measured on a monthly basis beginning with the
month ending June, 1999 and continuing until the Obligations are repaid
in full and the Loan Agreement is terminated. As used herein, "Debt
Service" means, for any given period, all regularly scheduled principal
and interest payments due under all loans to Borrower from Lender, plus
all payments on operating and capital leases, and any other debt
permitted pursuant to the terms of the Loan Documents or otherwise
permitted in writing by Lender. For purposes of this Section 6.27,
Borrower means, BCC at Darlington, Inc., Balanced Care at Eyers Grove,
Inc., Balanced Care at Xxxxxx, Inc., Balanced Care at Xxxxxx, Inc. and
Balanced Care at Northridge, Inc.
Section 3. Representations and Warranties; No Event of Default. Each
Borrower hereby confirms that all of the representations and warranties set
forth in the Loan Agreement are true and correct, except as previously disclosed
to Lender in writing. To the Borrower's best knowledge, no Event of Default has
occurred.
Section 4. Fees. In consideration of Lender's agreement to enter into
this Amendment, Borrower hereby agrees to pay to Lender a document preparation,
due diligence and legal fee equal to $3,000.00 (the "Fee"), which Fee shall be
(a) due and payable by Borrower on the date of its execution and delivery of
this Amendment, and (b) constitute a portion of the Obligations evidenced by the
Note and secured by the Loan Agreement and other Loan Documents. Borrower hereby
authorizes Lender to deduct the Fee from the proceeds of the Loan.
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Section 5. Enforceability. This Amendment constitutes the legal, valid
and binding obligation of each Borrower, and is enforceable against each
Borrower in accordance with its terms.
Section 6. Effective Date. This Amendment shall be effective upon (a)
execution and delivery to Lender of this Amendment by each Borrower and Lender,
and (b) payment by Borrower of the Fee.
Section 7. Reference to the Effect on the Loan Agreement.
(a) Upon the effectiveness of this Amendment, each reference
in the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of similar import shall mean and be a reference to the Loan Agreement as
amended by this Amendment.
(b) Except as specifically amended above, the Loan Agreement,
and all other Loan Documents, shall remain in full force and effect, and are
hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided in this Amendment, operate as
a waiver of any right, power or remedy of Lender, nor constitute a waiver of any
provision of the Loan Agreement, or any other documents, instruments and
agreements executed or delivered in connection with the Loan Agreement.
Section 8. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Maryland.
Section 9. Headings. Section headings in this Amendment are included
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
Section 10. Counterparts. This Amendment may be executed in
counterparts, and both counterparts taken together shall be deemed to constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment to
be executed as of the date first written above.
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LENDER:
ATTEST: HCFP FUNDING, INC.
a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxx Xxxxxxxxxx Name: Xxxxxxx X. Xxxxxxx
Title: Associate General Title: Vice President
Counsel
BORROWER:
ATTEST: BALANCED CARE CORPORATION
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxx X. Xxxxxxxxx
Title: Secretary Title: Chairman of the Board,
President and Chief
Executive Officer
ATTEST: BCC AT HERMITAGE PARK CARE CENTER,
INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Title: Vice President and
Assistant Secretary Secretary
ATTEST: BCC AT LEBANON CARE CENTER, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Title: Vice President and
Assistant Secretary Secretary
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ATTEST: BCC AT LEBANON PARK MANOR, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Title: Vice President and
Assistant Secretary Secretary
ATTEST: BCC AT MT. XXXXXX XXXX CARE CENTER, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Title: Vice President and
Assistant Secretary Secretary
ATTEST: BCC AT MT. XXXXXX XXXX CARE CENTER
WEST, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Title: Vice President and
Assistant Secretary Secretary
ATTEST: BCC AT NEVADA PARK CARE CENTER, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Title: Vice President and
Assistant Secretary Secretary
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ATTEST: BCC AT NIXA PARK CENTER, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Title: Vice President and
Assistant Secretary Secretary
ATTEST: BCC AT REPUBLIC PARK CENTER, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Title: Vice President and
Assistant Secretary Secretary
ATTEST: BCC AT SPRINGFIELD CARE CENTER, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Title: Vice President and
Assistant Secretary Secretary
ATTEST: XXXXX MANAGEMENT, INC.
a Missouri corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Title: Vice President and
Assistant Secretary Secretary
ATTEST: BCC AT DARLINGTON, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Title: Vice President and
Assistant Secretary Secretary
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ATTEST: BALANCED CARE AT EYERS GROVE, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Title: Vice President and
Assistant Secretary Secretary
ATTEST: BALANCED CARE AT XXXXXX, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Title: Vice President and
Assistant Secretary Secretary
ATTEST: BALANCED CARE AT XXXXXX, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Title: Vice President and
Assistant Secretary Secretary
ATTEST: BALANCED CARE AT NORTH RIDGE, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx [SEAL]
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Title: Vice President and
Assistant Secretary Secretary
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