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Exhibit 10.8
FORM OF SHORTFALL FUNDING AGREEMENT
DATED AS OF JUNE 30, 1998
____________________________________, a Delaware corporation
("LESSEE") and Balanced Care Corporation, a Delaware corporation ("BCC"), agree
as follows:
Witnesseth:
WHEREAS, Lessee executed and delivered that certain Facility
Lease Agreement dated as of the date hereof (the "LEASE") whereby Lessee leased
from MEDITRUST COMPANY LLC, a Delaware limited liability company (the "LESSOR")
property, together with all improvements built or to be built thereon, located
in _____________________________, as more fully described in the Lease (the
"PROPERTY"); and
WHEREAS, the Lessee and __________________________________, a
Delaware corporation (the "MANAGEMENT FIRM") have entered into a Management
Agreement dated as of the date hereof (the "MANAGEMENT AGREEMENT") whereby
Lessee has appointed the Management Firm as the exclusive manager and operator
of an adult care residence on the Property (the "PROJECT"); and
WHEREAS, BCC, the Lessee, TC Realty Holding Company, a
Delaware corporation (the "Parent") and the Lessor have entered into that
certain Working Capital Assurance Agreement dated as of the date hereof (the
"WORKING CAPITAL AGREEMENT"), whereby, among other matters, BCC has agreed to
provide credit support to Lessor by funding loans to Lessee to cover certain
Shortfalls (as defined in the Working Capital Agreement); and
WHEREAS, Lessor, Lessee and BCC have entered into a
Subordination and Standstill Agreement dated as of the date hereof (the
"SUBORDINATION AGREEMENT") whereby BCC has agreed to subordinate all loans
advanced hereunder and under the Working Capital Agreement to the obligations of
Lessee to Lessor under the Lease and the other Lease Documents (as defined under
the Lease); and
WHEREAS, BCC is willing to fund loans to Lessee covering
Shortfalls only on the terms and conditions provided in this Agreement, subject
to the terms of the Working Capital Agreement and the Subordination Agreement;
and
WHEREAS, Lessee has granted to Lessor that certain Line of
Credit Leasehold Deed of Trust and Security Agreement dated as of the date
hereof (the "FIRST DEED OF TRUST"), whereby Lessee has granted to Lessor a first
priority security interest in Lessee's leasehold interest in the Lease as more
fully provided in the First Deed of Trust.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the Lessee and BCC agree as follows:
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ARTICLE I
LOANS
SECTION 1.01 ADVANCES. Upon complete depletion of the Working
Capital Reserve (as defined under the Working Capital Agreement), and to the
extent thereafter of any Shortfall, BCC agrees to advance from time to time
funds to the Lessee or the Lessor on behalf of the Lessee, as the case may be,
in increments of no less than an aggregate of $25,000 and no more frequently
than monthly, upon the terms and conditions provided herein (each advance being
an "ADVANCE" and collectively, the "ADVANCES"). Advances shall be evidenced by
one or more promissory notes in the form attached hereto as Exhibit A (the
"NOTES"). The Notes shall be payable upon demand. Interest shall accrue on the
Notes at the rate of 2% over the Prime Rate as announced from time to time in
the Wall Street Journal (or, in the event of the discontinuance of the
publishing of the Prime Rate in the Wall Street Journal, such other source as
the parties may agree), and shall be payable in arrears on the first day of each
calendar quarter. All sums owed under the Notes and hereunder to BCC, and all
other obligations and covenants of the Lessee and the Parent under the
Transaction Documents (as hereinafter defined) which are owed to BCC or any
affiliate of BCC, together with all interest payable under the Transaction
Documents and all other costs and expenses payable by Lessee or Parent to or for
the benefit of BCC or any affiliate of BCC (including without limitation
indemnification and defense obligations) are referred to herein as the
"OBLIGATIONS".
SECTION 1.02 TRANSACTION DOCUMENTS. In addition to the Notes,
and to better secure the performance of Lessee hereunder and prompt payment
under the Notes and other sums which may become due and owing from Lessee to
BCC, Lessee has executed and delivered the following:
(i) the Working Capital Agreement;
(ii) Line of Credit Leasehold Deed of Trust and
Security Agreement in the form attached
hereto as Exhibit B encumbering the Lessee's
leasehold interest in the Property in favor
of BCC (the "SECOND DEED OF TRUST"); and
(iii) such other documents, certificates,
affidavits and instrument as BCC may
reasonably request.
In addition to the foregoing documents, the Parent, the sole
shareholder of the Lessee, has executed and delivered to BCC
an Option Agreement (the "OPTION AGREEMENT") substantially in
the form attached hereto as Exhibit C, whereby such equity
owner has agreed that BCC shall have an option to purchase the
equity interest of such equity owner in Lessee, on the terms
and conditions provided therein.
This Agreement, together with the Notes, the Working Capital Agreement, the
Second Deed of Trust, the Management Agreement, the Option Agreement and the
other documents, certificates, financing statements, affidavits and instruments
executed by Lessee in connection with this Agreement, as any of the same may be
amended, modified or supplemented from time to time, are collectively referred
to herein as "Transaction Documents". Initially capitalized terms used herein
that are not otherwise defined shall have the meanings ascribed to such terms in
the Lease.
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SECTION 1.03 PAYMENTS AND COMPUTATIONS. In no event shall the
amount of interest due or payable pursuant to any Transaction Document exceed
the maximum rate of interest allowed by applicable law and, in the event any
such payment is inadvertently paid by the Lessee or inadvertently received by
BCC, then such excess sum shall be credited as a payment of principal due under
the Notes. It is the express intention of the parties hereto that the Lessee not
pay to BCC, directly or indirectly, in any manner whatsoever, interest in excess
of that which may be lawfully paid by the Lessee.
SECTION 1.04 INTENTION. It is the intention of BCC and Lessee
that, subject to the provisions of applicable law: (i) the Management Firm
operate the Project pursuant to the Management Agreement and that Lessee act as
a passive investor with respect to the Project, (ii) Lessee include on its
financial statements all revenue and losses with respect to the Project during
the term of this Agreement for accounting purposes, and (iii) Advances made
hereunder and all other Obligations be secured, pursuant to the Second Deed of
Trust, solely by the assets of Lessee (including without limitation the Lessee's
leasehold interest in the Lease) and the Option, but subject to the rights of
Lessor under the Lease and the other Lease Documents (as defined in the Lease),
regardless of any bankruptcy, insolvency, receivership or similar proceedings
instituted by or against Lessee or the Parent. 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 under
this Agreement or the Transaction Documents; provided, however, no provision
contained herein or in any other Transaction Document shall diminish in any
manner the obligations of Parent (as shareholder of Lessee) under the Option
Agreement.
ARTICLE II
CONDITIONS TO ACCEPTANCE OF TRANSACTION DOCUMENTS
SECTION 2.01 CONDITIONS PRECEDENT TO ADVANCES. The obligations
of BCC to accept delivery of the Transaction Documents are subject to the
condition precedent that BCC receives the following, in form and substance
satisfactory to BCC:
(a) the Note(s);
(b) the Working Capital Agreement;
(c) the Second Deed of Trust;
(d) the Option Agreement;
(e) the Management Agreement;
(f) a certificate of the Secretary of State of the State
of Delaware stating that the Lessee is duly organized, validly existing and in
good standing in such State;
(g) a certified copy of the by-laws of the Lessee,
together with certified resolutions of the Lessee granting the power to Lessee
to enter into and perform the Transaction Documents;
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(h) all other Transaction Documents; and
(i) such other affidavits, documents, certificates,
statements and instruments as BCC may reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 REPRESENTATIONS AND WARRANTIES OF THE LESSEE. The
Lessee represents and warrants to BCC as follows, which representations and
warrants shall be true and correct to the best knowledge of Lessee as of the
date hereof, as of the date of each Advance and as of each date thereafter until
all Obligations are satisfied in full:
(a) ORGANIZATION; QUALIFICATION. Each of the Parent and the
Lessee is a corporation, duly formed, validly existing and in good standing
under the laws of the State of Delaware; and each of the Parent and the Lessee
has the power and authority to own its properties and to carry on its business
as now being and hereafter proposed to be conducted.
(b) POWER; AUTHORITY. The execution, delivery and performance
by each of the Parent and the Lessee of the Transaction Documents to which it is
a party are within each of the Parent's and the Lessee's power and have been
duly authorized by all necessary action, and this Agreement and the other
Transaction Documents to which it is a party have been duly executed and
delivered by the duly authorized officer or member of each of the Lessee and the
Parent.
(c) APPROVAL OR CONSENTS. No approval or consent of any
foreign, domestic, federal, state or local authority is required for the due
execution, delivery and performance by each of the Parent and the Lessee of any
Transaction Document to which it is a party and the execution, delivery and
performance by each of the Parent and the Lessee of the Transaction Documents to
which it is a party do not conflict with, and will not result in the breach of
or default under any contract, agreement or other document or instrument to
which the Parent and/or the Lessee is a party or by which its or their
properties are bound.
(d) BINDING OBLIGATIONS. This Agreement and the other
Transaction Documents to which the Lessee and/or the Parent are a party are
legal, valid and binding obligations of the Lessee and/or the Parent (as
applicable) enforceable against the Lessee and/or the Parent (as applicable) in
accordance with their respective terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
generally the enforcement of creditors' rights.
(e) LITIGATION. There is no pending or, to the best of
Lessee's knowledge, threatened action, suit or proceeding against or affecting
the Lessee or the Parent before any court, governmental agency or arbitrator.
(f) APPLICABLE LAW. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which the Lessee and/or
the Parent
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are a party, and the borrowings hereunder, do not and will not, by the passage
of time, the giving of notice or otherwise, violate any law, rule or regulation
of any governmental body applicable to the Lessee and/or the Parent.
(g) TITLE AND CONDITION OF ASSETS. The Lessee has good,
marketable and legal title to, or a valid leasehold interest in, its properties
and assets.
(h) LIENS. None of the properties and assets of the Lessee or
the Parent are subject to any lien, security interest or other charge or
encumbrance, other than Permitted Encumbrances, the First Deed of Trust,
security interests, pledges and assignments granted by the Lessee or the Parent
to the Lessor pursuant to the express provisions of the Lease and other Lease
Documents, and liens and encumbrances in favor of BCC as provided herein
(collectively, "Permitted Liens"), and the execution, delivery and performance
by each of the Parent and the Lessee of the Transaction Documents to which it is
a party will neither result in the creation of any lien, security interest or
other charge or encumbrance upon any of the Lessee's and/or the Parent's
properties or assets (other than the Permitted Liens), nor cause a default under
any agreements to which Lessee and/or the Parent are a party.
(i) SECURITY. Upon the consummation of this transaction, BCC
will have a mortgage lien in the Lessee's leasehold interest in the Lease and a
security interest in the stock of the Lessee owned by the Parent pursuant to the
Option Agreement which lien or security interest BCC may perfect.
(j) TAX RETURNS AND PAYMENTS. All federal, state and other tax
returns of each of the Parent and the Lessee required by law to be filed have
been duly filed, and all federal, state and other taxes, assessments and other
governmental charges or levies upon the Lessee and its properties, income,
profits and assets which are due and payable have been paid.
(k) NO EMPLOYEES. Neither the Parent nor the Lessee has
employees for which either are required to comply with the Employment Retirement
Income Security Act of 1974.
(l) ABSENCE OF DEFAULTS. No event has occurred, which has not
been remedied, cured or waived, which constitutes, or which with the passage of
time or giving of notice or both would constitute, an event of default under any
Transaction Document or which constitutes or which with the passage of time or
giving of notice or both would constitute a default or event of default by
either the Parent or the Lessee under any agreement or judgment, decree or
order, to which either the Parent or the Lessee are a party or by which either
the Parent or the Lessee or any of their respective properties may be bound.
(m) ACCURACY AND COMPLETENESS OF INFORMATION. All written
information, reports and other papers and data furnished to BCC were, at the
time the same were so furnished, complete and correct in all material respects,
to the extent necessary to give BCC a true and accurate knowledge of the subject
matter, or, in the case of financial statements, present fairly, in accordance
with GAAP consistently applied throughout the periods involved, the financial
position of the persons involved as at the date thereof and the results of
operations for such periods. No document furnished or written statement made to
BCC in connection with the execution of this Agreement or any
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of the other Transaction Documents contains or will contain any untrue statement
of a fact material to the credit worthiness of the Lessee or fails to state a
material fact necessary in order to make the statements contained therein not
materially misleading.
(n) SUBSIDIARIES. The Lessee does not own, directly or
indirectly, of record or beneficially, any of the voting stock of any class or
classes of, or any other voting interests of, any corporation, partnership,
limited partnership, limited liability company, trust or other entity.
(o) INVESTMENT COMPANY. Neither the Parent nor the Lessee is
an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
(p) PUBLIC UTILITY COMPANY. Neither the Parent nor the Lessee
is a "holding company" or a "subsidiary company", or an "affiliate" of a
"holding company", within the meaning of the Public Holding Company Act of 1935,
as amended.
(q) SECURITIES REPRESENTATIONS. Neither Parent, Lessee nor any
agent, broker, dealer or other person or entity has offered or sold any equity
interests in Parent or Lessee in violation of the Securities Act of 1933, as
amended ("1933 ACT") or any state securities laws. All owners of equity
interests in Parent are accredited investors as defined in Regulation D
promulgated under the 1933 Act.
ARTICLE IV
COVENANTS OF THE LESSEE
SECTION 4.01 AFFIRMATIVE COVENANTS. (a) Subject in all
respects to Section 4.01(b) below, and so long as this Agreement shall remain in
effect, the Lessee will:
(i) COMPLIANCE WITH LAWS; ETC. Comply, in all material
respects with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments and governmental charges imposed upon it or
upon its property.
(ii) MAINTENANCE OF INSURANCE. Maintain or contract to be
maintained, with premiums fully paid, with responsible and reputable insurance
companies or associations, such insurance in such amounts and covering such
risks as is required to be carried under the Lease, and all such policies
evidencing such insurance shall name BCC and Lessor as additional insureds
thereunder. Lessee shall also maintain insurance of sufficient types and amounts
to comply with all other laws, regulations and rules, of any government entity
exercising jurisdiction over Lessee. All insurance policies shall provide for
notice of nonrenewal and notice of extension to BCC and Lessor, and shall not be
terminated, amended or modified without 30 days prior written notice to BCC and
Lessor. Lessee shall provide BCC with evidence of all insurance, including
renewals or extensions of such insurance, promptly after receiving such
insurance.
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(iii) NOTICE OF LITIGATION AND OTHER MATTERS. Promptly give
notice to BCC of the following: (A) any actions, suits or proceedings instituted
against the Lessee; (B) any change in the chief executive office, principal
place of business or location of the books and records of the Lessee and (C) the
occurrence of a default or an event of default under this Agreement or the other
Transaction Documents.
(iv) MAINTENANCE OF PROPERTY. In addition to, and not in
derogation of, the requirements of any of the other Transaction Documents, (A)
protect and preserve all of its properties, (B) maintain in good repair, working
order and condition all of its tangible properties, and (C) from time to time
make or cause to be made all needed and appropriate repairs, renewals,
replacements and additions to such properties so that the business carried on in
connection therewith may be properly and advantageously conducted at all times,
as reasonably may be determined by BCC.
(v) PRESERVATION OF EXISTENCE AND SIMILAR MATTERS. Preserve
and maintain its existence under the laws of the state of its formation, and
preserve and maintain its rights, franchises, licenses and privileges in such
state as a corporation and shall qualify and remain qualified and authorized to
do business in such state.
(vi) BUSINESS. At all times endeavor to carry on its business
in the most efficient manner possible under the circumstances and engage only in
the Primary Intended Use (as defined in the Lease).
(vii) FURTHER ASSURANCES. At BCC's request, from time to time,
execute, acknowledge or take such further action as BCC may reasonably require
to effectuate the purposes of this Agreement and the purposes of the other
Transaction Documents.
(b) Notwithstanding anything to the contrary contained in
Section 4.01(a), Lessee shall not be in default hereunder to the extent that the
obligations described in this Section 4.01(a) are required to be performed by
the Developer under any Lease Document or the Management Firm under the
Management Agreement. Pursuant to the Management Agreement, the Management Firm
(as defined in the Management Agreement) has agreed to fulfill Lessee's
obligations as set forth in Section 4.01(a)(i), 4.01(a)(ii), 4.01(a)(iv) and
4.01(a)(vi) of this Agreement, as well as all other obligations of the Lessee
applicable to the operation of the Facility as provided in the Lease Documents.
SECTION 4.02 NEGATIVE COVENANTS. So long as BCC shall have any
commitment or Obligation hereunder or under the other Transaction Documents owed
to it, the Lessee will not, without the prior written consent of BCC:
(a) LIENS CREATED BY LESSEE. Create or suffer to exist any
lien, security interest or other charge or encumbrance, or any other type of
preferential arrangement, upon or with respect to any of its properties, whether
now owned or hereafter acquired, or assign any right to receive income, other
than Permitted Liens.
(b) DISTRIBUTIONS. Except as otherwise expressly provided in
the Working Capital Assurance Agreement or any of the other Lease Documents,
make any distribution of cash or other property to any equity holder, or declare
or pay any dividend or distribution on any securities of the Lessee.
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(c) OTHER BUSINESS. Engage in any business venture or enter
into any agreement with respect to any business venture, except as expressly
provided in the Transaction Documents with respect to the Project.
(d) TRANSFER OF ASSETS. Convey, transfer, lease, sublease,
assign or otherwise dispose of (whether in one transaction or in a series of
transactions) any of its assets (whether now owned or hereafter acquired) to, or
acquire all or substantially all of the assets of, any person, business venture
or entity.
(e) INDEBTEDNESS FOR BORROWED MONEY. Create, assume,
guaranty or otherwise become or remain obligated in respect of, or permit or
suffer to exist or to be created, assumed or incurred or to be outstanding, any
indebtedness, except indebtedness incurred to the Lessor or BCC under the Lease
Documents or the Transaction Documents, and indebtedness otherwise permitted
under the Lease.
(f) CREATION OF AFFILIATES. Form, organize or participate in
the formation or organization of any entity, or make any investment in any newly
formed or existing entity, person or business venture.
(g) LOANS. Extend credit to or make any advance, loan or
contribution to any person, business venture or entity.
(h) GOVERNANCE DOCUMENTS. Amend, supplement or otherwise
modify the terms of the Articles of Incorporation or the by-laws of the Lessee
in any way without the prior written consent of BCC, which consent shall not be
unreasonably withheld or delayed.
(i) OTHER TRANSACTIONS WITH LESSOR. Enter into any
transaction with Lessor or any affiliate or related party to or with Lessor,
other than those transactions contemplated by the Lease Documents; provided,
however, this provision shall in no manner prevent the directors or officers of
the Lessee or officers, directors or shareholders of the Parent from entering
into transactions and agreements with affiliates of the shareholder of the
Lessor.
(j) TRANSFERS OF EQUITY INTERESTS. Except as otherwise may
be provided in the Stock Pledge Agreement, permit any equity holder in Lessee to
transfer all or any portion of such person's equity interest in Lessee to a
party that does not as of the date hereof hold an equity interest in the Lessee.
(k) AMEND LEASE DOCUMENTS. (i) Amend, terminate, supplement
or otherwise modify any Lease Document, (ii) waive any default or potential
event of default by Lessor under any Lease Document, (iii) declare a default or
event of default under any Lease Document, (iv) exercise any right to acquire
the Property or extend the term of the Lease or (v) exercise any right to cancel
the Lease as a result of a casualty or condemnation with respect to the Project,
or otherwise.
(l) MERGERS AND CONSOLIDATIONS. Merge or consolidate with,
purchase all or any substantial part of the assets of, or otherwise acquire any
business or any firm, association, corporation or other business organization or
division thereof.
(m) ISSUANCE OF SECURITIES. Except for the common stock of
the
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Lessee that has been issued and outstanding as of the date hereof, issue any
capital stock or options, warrants or other rights to purchase any capital stock
or any securities convertible or exchangeable for shares of such stock, or
commit to do any of the foregoing.
(n) MORTGAGE LIEN. Challenge or disaffirm the validity or
perfection of the mortgage lien held by BCC in Lessee's leasehold interest in
the Lease.
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.01 EVENTS OF DEFAULT. Each of the following events
shall constitute an event of default hereunder, whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment or order of any court or any order,
rule or regulation of any governmental or nongovernmental body:
(a) The Lessee shall fail to make any payment of principal or
interest, as stated in the Notes, when due ("Monetary Default"); or
(b) Any representation or warranty made by either of the
Parent or the Lessee under or in connection with any Transaction Document shall
prove to have been incorrect or misleading in any material respect when made; or
(c) Either of the Lessee or the Parent shall fail to perform
or observe any term, covenant or agreement contained in the Lease Documents or
in any Transaction Document, on its or their part to be performed or observed
beyond the applicable cure period; or
(d) Either of the Lessee or the Parent shall generally not pay
its or their debts when due; or
(e) Either of the Parent or the Lessee shall admit in writing
its or their inability to pay its or their debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against either of the Parent or the Lessee seeking to
adjudicate it or them a bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or composition
of either of the Parent or the Lessee of any of its or their debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for either of the Parent or the Lessee or for
any substantial part of its or their property; or either of the Parent or the
Lessee shall take any action to authorize any of the actions set forth above in
this subsection; or
(f) Any nonappealable judgment or order for the payment of
money in excess of $100,000 shall be rendered against either the Parent or the
Lessee and the same shall not be discharged within 30 days after entry; or
(g) A warrant or writ of attachment or execution or similar
process shall be issued against any property of the Lessee which exceeds
$100,000 in value and such warrant or process shall continue undischarged or
unstayed for ten consecutive days; or
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(h) Any material provision of any Transaction Document to
which either of the Parent or the Lessee is a party shall for any reason cease
to be valid and binding on the Lessee or the Parent (as applicable), or the
Lessee or the Parent shall so state in writing; or
(i) The Second Deed of Trust shall for any reason cease to
create a valid and perfected security interest in any of the collateral covered
thereby, subject in priority only to the Permitted Liens.
ARTICLE VI
REMEDIES
SECTION 6.01 APPLICABLE PROVISIONS UPON OCCURRENCE OF AN EVENT
OF DEFAULT. Upon the occurrence of an event of default, but subject to the terms
of the Working Capital Agreement and the Subordination Agreement, the following
provisions shall apply:
(a) ACCELERATOR AND TERMINATION:
(i) Automatic. Upon the occurrence of an event of
default specified in Section 5.01(e), the principal of, and
the interest on, the Notes at the time outstanding, and all
other amounts owed to BCC under this Agreement and any of the
other Transaction Documents, shall become automatically due
and payable without presentment, demand, protest, or other
notice of any kind all of which are expressly waived, anything
in this Agreement or the other Transaction Documents to the
contrary notwithstanding.
(ii) Optional. If any other event of default shall
have occurred, and in every such event, BCC may do the
following: declare the principal of, and interest on, the
Notes at the time outstanding, and all other amounts owed to
BCC under this Agreement and the other Transaction Documents,
to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment,
demand, protest or other notice of any kind, all of which are
expressly waived, anything in this Agreement or the other
Transaction Documents to the contrary notwithstanding.
(b) BCC'S RIGHT TO ENTER PROPERTY. Subject to applicable
laws and rights of the residents, BCC may enter upon the Property and any
premises on which collateral may be located and, without resistance or
interference by the Lessee, take physical possession of any or all thereof and
maintain such possession on such premises or move the same or any part thereof
to such other place or places as BCC shall choose, without being liable to the
Lessee on account of any loss, damage or depreciation that may occur as a result
thereof.
(c) ASSEMBLY. The Lessee shall, upon request of and
without charge to BCC, assemble the collateral and maintain or deliver it into
the possession of BCC or
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any agent or representative of BCC at such place or places as BCC may designate.
(d) COLLATERAL PLACEMENT. BCC may, at the expense of the
Lessee, cause any of the collateral to be placed in a public or field warehouse,
and BCC shall not be liable to the Lessee on account of any loss, damage or
depreciation that may occur as a result thereof.
(e) USE OF PREMISES. BCC may, without payment of any rent
or any other charge, enter the Property and, without breach of peace, until BCC
completes the enforcement of its rights in the collateral, take possession of
the Property or place custodians in exclusive control thereof, remain on such
premises and use the same and any of the Lessee's equipment, for the purpose of
(i) operating the Project and (ii) collecting any accounts receivable.
(f) OTHER RIGHTS. BCC may exercise any and all of its
rights and remedies available under the other Transaction Documents, as well as
those available in law or in equity.
(g) CASH COLLATERAL. BCC may apply any cash collateral to
the payment of any obligations owing by the Lessee to BCC in any order in which
BCC may elect or use such cash in connection with the exercise of any of its
other rights hereunder or under any of the other Transaction Documents.
(h) RIGHTS AS A SECURED CREDITOR. BCC may exercise all of
the rights and remedies of a secured party under the Uniform Commercial Code as
in effect in the Commonwealth of Pennsylvania, and under any other applicable
law, including, without limitation, the right without notice except as specified
and with or without taking possession thereof, to sell the Collateral or any
part thereof in one or more parcels at public or private sale at any location
chosen by BCC, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as BCC may deem commercially reasonable. The
Lessee agrees that, to the extent notice of sale shall be required by law, at
least 20 days notice to the Lessee of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification, but notice given in any other reasonable manner or at any other
reasonable time shall constitute reasonable notification. BCC shall not be
obligated to make any sale of collateral regardless of notice of sale having
been given. BCC may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
(i) RIGHT TO FORECLOSE. BCC may foreclose upon the Lease,
take immediate possession of the Project and Property and operate the Property,
all in accordance with the terms and conditions of the Second Deed of Trust.
Provided, however, BCC shall exercise its rights hereunder only in conformance
with the Working Capital Agreement and the Subordination Agreement.
SECTION 6.02 APPLICATION OF PROCEEDS. All proceeds from each
sale of, or other realization upon, all or any part of the Collateral following
an event of default shall be applied or paid over as follows:
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(a) First: to the payment of all costs and expenses incurred
in connection with such sale or other realization, including, without
limitation, the expenses described in Section 8.07 herein;
(b) Second: to the payment of the interest due upon the
Notes;
(c) Third: to the payment of the principal due upon the Notes
or any other payments owed to BCC under the Transaction Documents; and
(d) Fourth: the balance (if any) of such proceeds shall be
paid to the Lessee subject to any duty imposed by law or otherwise to the holder
of any subordinate lien in the Collateral known to BCC and subject to the
direction of a court of competent jurisdiction.
The Lessee shall remain liable and will pay, on demand, any
deficiency remaining in respect of the Obligations owing by the Lessee to BCC
after the application of proceeds set forth above together with interest thereon
at a rate per annum equal to the highest rate then payable hereunder.
SECTION 6.03 MISCELLANEOUS PROVISIONS CONCERNING REMEDIES.
(a) RIGHTS CUMULATIVE. The rights and remedies of BCC under
this Agreement and each of the other Transaction Documents shall be cumulative
and not exclusive of any rights or remedies which it would otherwise have. In
exercising its rights and remedies BCC may be selective and no failure or delay
by BCC in exercising any right shall operate as a waiver of it, nor shall any
single or partial exercise of any power or right preclude its other or further
exercise of any other power or right.
(b) WAIVER OF MARSHALLING. The Lessee hereby waives any right
to require any marshalling of assets and any similar right.
(c) LIMITATION OF LIABILITY. Nothing contained in this Article
VI or elsewhere in this Agreement or in any other Transaction Documents shall be
construed as requiring or obligating BCC or any agent or designee thereof to
make any demand, or to make any inquiry as to the nature or sufficiency of any
payment received by it, or to present or file any claim or notice or take any
action, with respect to any account or any other Collateral or the moneys due or
to become due under the Notes or any other Transaction Documents or in
connection therewith, or to take any steps necessary to preserve any rights
against prior parties and neither BCC nor any of its agents or designees shall
have any liability to the Lessee for actions taken pursuant to this Article VI,
any other provision of this Agreement or any other Transaction Documents, except
as otherwise provided by law.
(d) WAIVER OF DEFENSES. Lessee hereby waives any and all
defenses, either by way of set-off as to matters arising prior to the date
hereof or any other defenses, which Lessee presently believes it has or which
Lessee may have in the future relating to monetary defaults under this Agreement
or any other Transaction Document.
ARTICLE VII
ADDITIONAL AGREEMENTS
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SECTION 7.01 RIGHT TO CURE DEFAULTS UNDER LEASE DOCUMENTS.
Lessee shall give BCC immediate notice of a default or an event of default under
any Lease Document received from Lessor. BCC shall have the right, but not the
obligation, to cure such default or event of default. To the extent that BCC
shall expend sums to cure any such default or event of default, such sums shall
be deemed Advances hereunder, payable upon demand.
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 AMENDMENTS, ETC. No amendment or waiver of any
provision of any Transaction Document, nor consent to any departure by the
Lessee therefrom, shall in any event be effective unless the same shall be in
writing and signed by BCC and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
SECTION 8.02 NOTICES, ETC. All notices and other
communications provided for under this Agreement or any other Transaction
Document shall be in writing and mailed or delivered, if to the Lessee, at its
address of: 0000 XXX Xxxxxxxxx, Xxxxx 0000, Xxxx Xxxxx Xxxxxxx, XX 00000, Attn.
Xxxxx X. Xxxxxxx, or, if to BCC, at its address of: c/o BCC Development and
Management Co., 0000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxxxx, XX 00000, or at
such other address as shall be designated by such party in a written notice to
the other party from time to time. All such notices and communications shall,
when mailed, be effective two days after being deposited in the mail, and when
sent by telecopy shall be effective upon receipt of confirmation.
SECTION 8.03 NO WAIVER; REMEDIES. No failure on the part of
BCC to exercise, and no delay in exercising, any right under this Agreement or
any other Transaction Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any right under this Agreement or any other
Transaction Document preclude any other or further exercise thereof or the
exercise of any other right. The remedies provided in this Agreement and the
other Transaction Documents are cumulative and not exclusive of any remedies
provided by law.
SECTION 8.04 CERTAIN TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistently applied, except as otherwise stated herein. Unless otherwise
specified, a reference in this Agreement to a particular section, subsection or
exhibit is a reference to that section, subsection or exhibit of this Agreement.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and pronouns stated in
the masculine, feminine or neuter gender shall include the masculine, the
feminine and the neuter.
SECTION 8.05 JURISDICTION. SUBJECT TO THE TERMS OF THE WORKING
CAPITAL AGREEMENT, THE LESSEE HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY PENNSYLVANIA COURT OR FEDERAL COURT SITTING IN PENNSYLVANIA
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE OTHER TRANSACTION DOCUMENTS TO WHICH THE LESSEE IS A PARTY, AND THE
LESSEE HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH PENNSYLVANIA COURT OR IN SUCH
FEDERAL COURT. THE LESSEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT
MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF SUCH ACTION OR PROCEEDING. THE LESSEE IRREVOCABLY CONSENTS TO THE SERVICE OF
COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE
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SERVED IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS
TO THE LESSEE AT ITS ADDRESS SPECIFIED IN SECTION 8.02. THE LESSEE AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF BCC TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF BCC TO
BRING ANY ACTION OR PROCEEDING AGAINST THE LESSEE OR ITS PROPERTY IN THE COURTS
OF OTHER JURISDICTIONS.
SECTION 8.06 PERFORMANCE OF LESSEE'S DUTIES. The Lessee's
obligations under this Agreement and the other Transaction Documents to which it
is a party shall be performed by the Lessee at its sole cost and expense. If the
Lessee shall fail to do any act or thing which it has covenanted to do under
this Agreement or any of the other Transaction Documents to which it is a party,
BCC may, but shall not be obligated to, do the same or cause it to be done
either in the name of BCC or in the name and on behalf of the Lessee, and the
Lessee hereby irrevocably authorizes BCC so to act. BCC hereby acknowledges that
under the Management Agreement, the Management Firm, an affiliate of BCC, has
agreed to perform, on behalf of Lessee, all obligations and duties of Lessee
under the Lease Documents and the Transaction Documents related to the operation
of the Facility.
SECTION 8.07 INDEMNIFICATION. The Lessee agrees to reimburse
BCC for all costs and expenses, including reasonable counsel fees and
disbursements, incurred, and to indemnify and hold BCC harmless from and against
all losses suffered by BCC in connection with:
(a) any claim, and the prosecution or defense thereof arising
out of or in any way connected with this Agreement or any of the other
Transaction Documents or any action or inaction on the part of BCC in connection
with this Agreement and the other Transaction Documents,
(b) any and all uncollected items, including without
limitation, all checks or other negotiable instruments returned to BCC for
insufficient funds, returned to BCC after the date of this Agreement, and
(c) any claim, debt, demand, loss, damage, action, cause of
action, liability, cost and expense or suit of any kind or nature whatsoever,
brought against or incurred by BCC, in any manner arising out of or, directly or
indirectly, related to or connected with the operation of the Lessee's business
or sale thereto.
The Lessee shall indemnify BCC as provided herein upon demand
and in immediately available funds.
Notwithstanding anything to the contrary contained in this
Section 8.07, the Lessee shall have no indemnification obligation under this
Section 8.07 in the event that the claim for which the indemnification has
arisen results from a breach of a duty or obligation of the Lessee under the
Lease Documents or the Transaction Documents that has been delegated to the
Management Firm (as defined in the Management Agreement) under the terms and
conditions of the Management Agreement.
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SECTION 8.08 INJUNCTIVE RELIEF. The Lessee recognizes that, in
the event the Lessee fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement or any of the other Transaction
Documents to which it is a party, any remedy of law may prove to be inadequate
relief to BCC; therefore, the Lessee agrees that BCC shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving actual damages.
SECTION 8.09. ENTIRE AGREEMENT. This Agreement, and the other
documents, instruments and certificates executed and delivered in connection
herewith and explicitly contemplated hereby, including, without limitation, the
Transaction Documents constitute the entire agreement and understanding between
the parties hereto with respect to the transactions set forth herein, and
supersede all prior written or oral agreements or understandings between the
parties with respect to such matters.
SECTION 8.10 TITLES AND CAPTIONS. Titles and captions of
Articles, sections and subsections in this Agreement are for convenience only,
and neither limit nor amplify the provisions of this Agreement.
SECTION 8.11 BINDING EFFECT. This Agreement shall be binding
upon and inure to the benefit of the Lessee and BCC and their respective
successors and assigns, except that no Lessee shall have the right to assign its
rights hereunder or any interest herein.
SECTION 8.12 GOVERNING LAW. SUBJECT TO THE WORKING CAPITAL
AGREEMENT, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA EXCLUDING ITS CONFLICTS OF
LAWS.
SECTION 8.13 EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which when so executed, shall be
deemed to be an original and all of which, when taken together, shall constitute
but one and the same agreement.
SECTION 8.14 WAIVERS.
(a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR
CONTROVERSY BETWEEN THE LESSEE AND BCC WOULD BE BASED ON DIFFICULT AND COMPLEX
ISSUES OF LAW AND FACT. ACCORDINGLY THE LESSEE AND BCC HEREBY WAIVE TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR TRIBUNAL
IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST THE LESSEE ARISING OUT OF THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR BY REASON OF ANY OTHER CAUSE OR
DISPUTE WHATSOEVER BETWEEN THE LESSEE AND BCC OF ANY KIND OR NATURE, WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE, AND WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND LESSEE AND BCC HEREBY AGREE AND CONSENT THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE DECIDED BY A COURT TRIAL, IF BCC SO CHOOSES, WITHOUT JURY
AND BCC OR LESSEE MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN
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EVIDENCE OF THE CONSENT OF THE LESSEE TO THE WAIVER OF THE RIGHT TO TRIAL BY
JURY.
(b) FURTHER, THE LESSEE WAIVES THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS.
(c) THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF
COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF.
SECTION 8.15 ENFORCEABILITY. If any provision of this
Agreement or any other Transaction Document is held to be unenforceable for any
reason, all other provisions of this Agreement and the other Transaction
Documents shall be deemed valid and enforceable to the fullest extent possible.
To the extent permitted by applicable law, the parties hereto hereby waive any
provision of law that renders any term or provision hereof invalid or
unenforceable in any respect.
SECTION 8.16 INCONSISTENCIES BETWEEN TRANSACTION DOCUMENTS. To
the extent any terms or conditions of the Transaction Documents are inconsistent
with or more restrictive than the terms of this Agreement, the terms of this
Agreement shall control.
SECTION 8.17 THIRD PARTY BENEFICIARY. Without limiting any of
the terms of the Working Capital Agreement, BCC and the Lessee acknowledge and
agree that the Lessor is intended to be a third party beneficiary of the terms
and conditions set forth in Section 6.01, Section 8.05, Section 8.12, and
Section 8.18 of this Agreement and any other terms and/or conditions relating to
the Lessor, the Working Capital Agreement and/or the Subordination Agreement set
forth herein. Accordingly, the Lessor shall be entitled to enforce the same to
the fullest extent, and in all respects, as if the Lessor were a party hereto.
SECTION 8.18 WORKING CAPITAL AGREEMENT AND SUBORDINATION
AGREEMENT. The provisions of this Agreement shall be subject to the provisions
of the Working Capital Agreement and the Subordination Agreement. In the event
that any terms or conditions of this Agreement or any of the other Transaction
Documents are inconsistent with or more restrictive than the terms of the
Working Capital Agreement or the Subordination Agreement, the terms of the
Working Capital Agreement and Subordination Agreement shall control.
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OMITTED EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Second Deed of Trust
Exhibit C Form of Option Agreement
