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EXHIBIT 10.55
SHORTFALL FUNDING AGREEMENT
DATED AS OF DECEMBER 19, 1997
TC Realty of Altoona, Inc., a Delaware corporation ("LESSEE") and Balanced
Care Corporation, a Delaware corporation ("BCC"), agree as follows:
Witnesseth:
WHEREAS, Lessee executed and delivered that certain First Amended and
Restated Facility Lease Agreement dated as of December 19, 1997 (the "LEASE")
whereby Lessee leased from MEDITRUST ACQUISITION CORPORATION II, a Delaware
corporation (the "LESSOR") property, together with all improvements built or to
be built thereon, located in Xxxxx County, Pennsylvania, as more fully described
in the Lease (the "PROPERTY"); and
WHEREAS, the Lessee and BCC at Altoona, Inc., a Delaware corporation (the
"MANAGEMENT FIRM") have entered into a Management Agreement dated as of December
19, 1997 (the "MANAGEMENT AGREEMENT") whereby Lessee has appointed the
Management Firm as the exclusive manager and operator of a personal care
home/assisted living facility 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 December 19, 1997 (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 December 19, 1997 (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 Open End Leasehold
Mortgage and Security Agreement dated as of December 19, 1997 (the "FIRST
LEASEHOLD MORTGAGE"), 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 Leasehold Mortgage.
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) Open-End Leasehold Mortgage 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 LEASEHOLD
MORTGAGE"); 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 Leasehold Mortgage, 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 Leasehold Mortgage, 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 Leasehold Mortgage;
(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
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Transaction Documents;
(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
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Agreement and the other Transaction Documents to which the Lessee and/or the
Parent 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 Leasehold Mortgage, 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 lien in the
stock of the Lessee owned by the Parent pursuant to the Option Agreement which
liens 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
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written statement made to BCC in connection with the execution of this Agreement
or any 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 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 Leasehold Mortgage 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 Leasehold Mortgage.
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.
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ARTICLE VII
ADDITIONAL AGREEMENTS
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.
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: 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
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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 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
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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.
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
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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
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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IN WITNESS WHEREOF, the parties hereto, intending to be legally
bound, have caused this Agreement to be executed by their respective officers or
authorized agents as of the date first above written.
WITNESS/ATTEST: TC REALTY OF ALTOONA, INC.
By: /s/ Signature Illegible
------------------------------ --------------------------------
Title:
-----------------------------
WITNESS/ATTEST: BALANCED CARE CORPORATION
By: /s/ Signature Illegible
------------------------------ --------------------------------
Title:
-----------------------------
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EXHIBIT A
FORM OF NOTE ATTACHED
19
PROMISSORY NOTE
_____________, 199_
FOR VALUE RECEIVED, and intending to be legally bound hereby, TC REALTY OF
ALTOONA, INC., a Delaware Corporation ("MAKER"), promises to pay to the order of
Balanced Care Corporation, a Delaware corporation ("Payee"), in lawful money of
the United States of America, the principal sum of ____________ Dollars and
__/100 ($_______.__), together with interest thereon from and after the date
hereof at the rate specified herein.
If not sooner paid, Maker shall pay the entire principal amount outstanding
hereunder upon demand. If not sooner paid, the accrued interest on the principal
amount outstanding under this Note shall be immediately due and payable in
arrears on the first day of each calendar quarter.
This Note is made in connection with advances made by Payee to Maker
pursuant to the provisions of that certain Shortfall Funding Agreement by and
between Maker and Payee dated as of December 19, 1997 (the "SHORTFALL
AGREEMENT"), the terms of which are incorporated herein by reference, including
without limitation the limitations of liability set forth in Section 1.04 of
such Shortfall Agreement providing that in no event shall the directors or
officers of the Maker or the shareholders, directors or officers of the TC
Realty Holding Company, a Delaware corporation (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 Note; 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 (as defined in the Shortfall Agreement).
Certain of the advances to be made hereunder shall be advanced directly to
Meditrust Acquisition Corporation II (the "Lessor") in accordance with the
provisions of the Working Capital Agreement (as defined in the Shortfall
Agreement).
Interest on the outstanding principal balance hereunder shall accrue at a
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 holder may determine)
(the "CONTRACTUAL RATE"); provided, however, that upon an Event of Default (as
defined in the Shortfall Agreement), whether by acceleration or otherwise,
interest shall accrue at the Contractual Rate plus two percent (2%) per annum
(the "DEFAULT RATE") until all sums due hereunder are paid. Interest shall
continue to accrue after the entry of judgment at the Default Rate until all
sums due hereunder and/or under the judgment are paid.
Maker waives presentment, demand, notice, protest, all rights of set-off or
counterclaim, and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note and the Shortfall
Agreement.
So long as Payee is the holder hereof, Payee's books and records shall be
presumed, except in the case of manifest error, to accurately evidence at all
times all amounts outstanding under this Note and the date and amount of each
payment made pursuant hereto.
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The prompt and faithful performance of all of Maker's obligations
hereunder, including without limitation time of payment, is of the essence of
this Note.
Payee shall be entitled to exercise any right notwithstanding any prior
exercise, failure to exercise or delay in exercising any such right.
Payee shall retain the lien of any judgment entered on account of the
indebtedness evidenced hereby, as well as any security interest previously
granted to secure repayment of the indebtedness evidenced hereby, and Maker
warrants that Maker has no defense whatsoever to any action or proceeding that
may be brought to enforce or realize on such judgment or security interest.
If any provision hereof shall for any reason be held invalid or
unenforceable, no other provision shall be affected thereby, and this Note shall
be construed as if the invalid or unenforceable provision had never been a part
of it.
The rights and privileges of Payee contained in this Note shall inure to
the benefit of its successors and assigns, and the duties of Maker shall bind
all heirs, personal representatives, successors and assigns.
This Note shall in all respects be governed by the laws of the Commonwealth
of Pennsylvania.
THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS OF A SUBORDINATION AND
STANDSTILL AGREEMENT DATED AS OF DECEMBER 19, 1997 BY AND AMONG THE PAYEE, MAKER
AND MEDITRUST ACQUISITION CORPORATION II. A COPY OF SAID SUBORDINATION AND
STANDSTILL AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST OF ANY HOLDER OF THIS
NOTE FROM MEDITRUST ACQUISITION CORPORATION II, 000 XXXXX XXXXXX, XXXXXXX
XXXXXXX, XX 00000.
Witness the due execution hereof.
WITNESS/ATTEST: TC REALTY OF ALTOONA, INC.
By:
------------------------------- ---------------------------------
Title:
------------------------------- ------------------------------
-2-
21
Schedule to Exhibit 10.55 filed pursuant to Instruction 2 to Item 601(a) of
Regulation S-K
Shortfall Funding Agreement
Project Lease Property Location Date
------- ------- ----------------- ----
Blytheville, AR TC Realty of Blytheville, Mississippi County 12/19/97
Inc. AR
Maumelle, AR TC Realty of Maumelle, Pulaski County, 12/19/97
Inc. AR
Mountain Home, AR TC Realty of Mountain Xxxxxx County, 12/19/97
Home Inc. AR
Pocahontas, AR TC Realty of Pocahontas, Xxxxxxxx County, 12/19/97
Inc. AR
Sherwood, AR TC Realty of Sherwood, Pulaski County, 12/19/97
Inc. AR
Reading, PA TC Realty of Reading Berks County 12/19/97
Inc. PA
Martinsburg, WV Black Box of Martinsburg, Berkeley County 12/31/97
Inc. WV
Dillsburg, PA Black Box of Dillsburg, York County 12/31/97
Inc. PA
Peckville, PA Black Box of Peckville, Lackawanna County 12/31/97
Inc. PA
Lewisburg, PA Black Box of Lewisburg, Union County 12/19/97
Inc. PA
Berwick, PA TC Realty of Berwick, Columbia County 1/7/98
Inc. PA
Chippewa, PA TC Realty of Chippewa, Beaver County 1/7/98
Inc. PA
Lewistown, PA TC Realty of Lewistown, Mifflin County 1/7/98
Inc.
