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Home My WebLink About01-07080 ~~,'" '''. ,~,,, if i"J?'--C""~" '1 ~.,.. l " 1... WHITE AND WILLIAMS LLP By: Steven E. Ostrow, Esquire Dawn L. Vahey, Esquire Identification Nos.: 50568, 87934 1800 One Liberty Place Philadelphia, Pl\ 19103-7395 (215) 864-7000 Attorneys for Plaintiff PENNSYLVANIA BCC PROPERTIES, INC. One SeaGate, Suite 1500 P.O. Box 1475 Toledo OH 43603, COURT OF COMMON PLEAS, OF CUMBERLl\ND COUNTY PENNSYLVANIA Plaintiff No. C\ - 7aPb C;()~L T~ v. FINANCIAL CARE INVESTORS OF LEBANON, LLC 1215 Manor Drive Mechanicsburg, PA 17055, Defendant NOTICE TO DEFEND You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this complaint and notice are served, by entering a written appearance personally or by attorney and filing in writing with the court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the court without further notice for any money claimed in the complaint or for any other claim or relief requested by the plaintiff. You may lose money or property or other rights important to you. Doc#: 1257509 vI "'JW"'~.. . ", " "..'.',"- -->~ .. "'"""7' ' , ,~,<.. ,~ < - ......' ~ . ./ " F ~ " ":-'f!_':O;WJ'!"'~!Jil'ii:. . YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Doc#: 1257509 vi , , ~ <;"-' ~- ,- , North Penn Legal Services 168 E. 5th Street Bloomsburg, PA 17815 Phone: (570) 784-8760 ,. ,_ '}",~. c_ ,'_ ~"'\' _., 0, < r , ,--- -- '" -. - - ~" , "-,-"" .."., ,U~~ ~, THIS IS NOT AN ARBITRATION MATTER WIDTE AND WILLIAMS LLP By: Steven E. Ostrow, Esquire Dawn L. Vahey, Esquire Identification Nos.: 50568; 87934 1800 One Liberty Place Philadelphia, PA 19103-7395 (215) 864-7000 Attorneys for Plaintiff Plaintiff COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA No. 0\-70;0 e()~l~~ PENNSYLVANIA BCC PROPERTIES, INC. One SeaGate, Suite 1500 P.O. Box 1475 Toledo OH 43603, v. FINANCIAL CARE INVESTORS OF LEBANON, LLC 1215 Manor Drive Mechanicsburg, PA 17055, Defendant COMPLAINT IN CIVIL ACTION Plaintiff, Pennsylvania BCC Properties, Inc. ("Lender"), by and through the undersigned counsel, files this civil action to enforce certain loan documents, and in support thereof avers as follows: 1. Lender is a Pennsylvania corporation with an office located at One SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio, 43603. 2. Defendant, Financial Care Investors of Lebanon, LLC ("Borrower"), is a Doc#: 1257234 v2 l.fi,~'F.;'rlt1 , .~.",~.". , ,"~ .''''':"''1", ''''],,_,_ ., '--,- "~ ''', ~ .' ^",,'.<.=__' c.,,-- -;itt. ... Delaware limited liability company, with an office located at 1215 Manor Drive, Mechanicsburg, Pennsylvania 17055. 3. Lender extended to Financial Care Investors, LLC ("Original Borrower") a loan up to the amount of $686,800.00 ("Loan"). The Loan is evidenced by a Note (the "Note") and subject to the terms of a Loan Agreement ("Loan Agreement"), each dated as of September 22, 1998, and executed and delivered by the Original Borrower. True and correct copies of the Note and Loan Agreement are attached hereto as Exhibits "A" and "B", respectively, and made a part hereof. 4. The Loan is secured by, inter alia, a Security Agreement dated as of September 22, 1998 ("Security Agreement"), executed by the Borrower. A true and correct copy of the Security Agreement is attached hereto as Exhibit "C" and made a part hereof. 5. The Original Borrower and Lender amended the Loan Agreement pursuant to the terms of the First Amendment to Loan Agreement dated as of September 30, 1999 ("First Amendment"). A true and correct copy of the First Amendment is attached hereto as Exhibit "D" and made a part hereof. 6. Lender and Borrower entered into a Second Amended and Restated Loan Agreement dated as of October 31, 2000 ("Restated Loan Agreement"). A true and correct copy of the Restated Loan Agreement is attached hereto as Exhibit "E" and made a part hereof. 7 . Pursuant to the Restated Loan Agreement, Borrower executed and delivered to Lender an Amended and Restated Note dated October 31, 2000 ("Restated Note") in the stated DoC#: 1257234 v2 -2- i__";~""'Wl'ffll'J. ,,0,_ ":'-.1",,,,,,,,, < "-."'--,,,,, ,"' ,~ '. ~, ,<~ 1 ~ '",~ ,:,'1."_'- 4. principal amount of $686,800.00. A true and correct copy of the Note is attached hereto as Exhibit "F" and made a part hereof. Except as otherwise defmed in this Complaint, each capitalized term used in this Complaint shall have the meaning set forth in the Restated Loan Agreement or the Restated Note. The Note, Loan Agreement, Security Agreernent, First Amendment, Restated Loan Agreement and Restated Note are hereinafter collectively referred to as the "Loan Documents." COUNT I (Breach of Loan Documents) 8. Lender incorporates herein by reference the averments set forth in paragraphs 1 through 7 above as if said averments were set forth in full. 9. Pursuant to the Restated Note, Borrower is required to make monthly payments of principal and interest computed in accordance with the applicable provisions of the Restated Note and the Restated Loan Agreement. 10. Pursuant to the applicable provisions of Section 20 of the Restated Note, Borrower also is required to pay Lender (a) interest at the Default Rate following the occurrence of an Event of Default, and (b) attorneys fees, costs of suit and other litigation expenses incurred by Lender to enforce the Loan Documents. 11. Pursuant to Article 7 of the Restated Loan Agreement, the Loan Documents contain cross-default provisions such that a default shall occur under all Loan Documents upon the occurrence of: (a) a default under anyone of the Loan Documents; and (b) defaults by Borrower or any Affiliate on any indebtedness or obligation to Lender or any Lender Affiliate Doc#: 1257234 v2 -3- ,'~::r,:i . , ". ,. :y, ',' ,O,!__ "';.' "._ ~I" . "., ',~ "-.-' "-','..' ,."- '~', ,~, , . ~ ~ii' or any Affiliate Obligation, or any Transaction Documents (the foregoing obligations, indebtedness and/or agreements are hereinafter collectively referred to as the "Transaction Obligations"). 12. Events of Default have occurred under the Loan Documents beyond any applicable grace or cure periods as a result of, inter alia, anyone or more of the following: a. Borrower's failure to pay numerous monthly payments and other amounts under the Restated Note within ten (10) days after such payments were due; and b. Defaults under the Transaction Obligations, including without limitation events of default under: (i) the Lease Documents; and (ii) the Second Amended and Restated Loan Agreement dated as of October 31, 2000, between Lender and Financial Care Investors of Loyalsock, LLC, and the "Loan Documents" (as defmed therein). 13. As a result of the aforesaid Events of Default, Lender has exercised its right to declare immediately due and payable the outstanding principal balance of the Loan and Restated Note and all accrued and unpaid interest thereon, with all such amounts to bear interest at the Default Rate from the date of the Event of Default until paid, including the period following the entry of judgment. True and correct copies of Lender's notices of loan acceleration and default and demands for payment are attached hereto as Exhibit "G" and made a part hereof. 14. Borrower has failed to make payment as demanded by Lender. 15. There is presently due and owing under the Loan Documents at least the sum of $774,578.76, together with continuing interest at the Default Rate and attorneys fees, costs of suit and litigation expenses. The per diem amount of interest at the Default Rate is $398.11. DoC#: 1257234 v2 -4- 1,:['~~"j"'WIJi'W~.~~, < 0 , L,._. " ~," I'r.' '~"'7-" ,., '^ "" ~,~ " " .... WHEREFORE, Lender demands judgment in its favor and against Borrower: (a) for the sum of $774,578.76, together with interest at the Default Rate or $398.11 per diem from December 1, 2001 until the date of payment, including the period following the entry of judgment; (b) for an award of reasonable attorney's fees, costs of suit and litigation expenses; and (c) for such other and further relief as this Court deems just and appropriate. COUNT II (Foreclosure of Collateral) 16. Lender incorporates herein by reference the averments in paragraphs 1 through 15 above as if said averments were set forth in full. 17. Pursuant to the Security Agreement, Borrower granted to Lender perfected, first liens and security interests in the Collateral, as security for the Loan and the Obligations. 18. Pursuant to the applicable provisions of the Security Agreement and the Pennsylvania Uniform Commercial Code, Lender is entitled to foreclose upon and sell the Collateral to satisfy the balance due under the Loan and the Loan Documents. WHEREFORE, Lender dernands judgment in its favor and against Borrower: (a) fixing the sum of $774,578.76, together with interest at the ,Default Rate at the per diem rate of $398.11, until the date of payment, including the period following the entry of judgment, as the amounts due under the Security Agreernent and directing that Lender be paid the aforesaid amounts; (b) for an award of reasonable attorney's fees, costs of suit and litigation expenses; (c) directing that the Collateral be assembled and sold at public sale as provided under the Security Agreement and the Pennsylvania Uniform Commercial Code to satisfy the aforesaid Doc#: 1257234 v2 -5- -fi0""'~"':>-3>""c J"l"",,,, , ~ '1','''' -- ,0 _, ~, '_H' ,,__,0.. -;. ~<___ ' _,. ~" - ,~ ~ .. :'];;0"= ~" .' .. amounts due Lender under the Security Agreement; and (d) for such other and further relief as this Court deems just and appropriate. Respectfully submitted, WHITE AND WILLIAMS LLP BY}} M Steven E. Ostrow, Esquire Dawn L. Vahey, Esquire Attorneys for Plaintiff Dated: December 17, 2001 Doc#: 1257234 v2 -6- ":'m<~~~~, ~"',,~, ,', '"' <~; '~-.-. " . I'" "'" ~.', "p'''' 1,' e , , ,0 ,~ " ~~"..... g;;~i " ~. .. VERIFICATION The undersigned, subject to the penalties of 18 Pa.C.S. Section 4904, relating to unsworn falsification to authorities, states that she is an officer and/or representative of the plaintiff in this action; she is authorized to make this Verification on Plaintiff's behalf, and that the facts set forth in the foregoing Complaint are true and correct to the best of her knowledge, information and belief. Lc~ Erin C. Ibele '~W~Tr1; ~ "~_"',,~ ,"0,'" ,>,__'" _Y,"<, "~--"i1"'----- .",'" ,"."T,., ""~'''' - "-"",~-,~" ~- ~f . , $"'~.'jI!'1" ., NOTE $686,800.00 September 22, 1998 Toledo, Ohio FOR VALUE RECEIVED, FINANCIAL CARE INVESTORS, LLC, a limited liability company organized under the laws of the State of Delaware ("Borrower"), shall pay to the order of PENNSYLVANIA BCC PROPERTIES, INC., a corporation organized under the laws of the State of Pennsylvania ("Lender''), the principal sum of Six Hundred Eighty-Six Thousand Eight Hundred Dollars ($686,800.00), or so much thereof as shall have been advanced to Borrower, with interest on so much thereof as shall from time to time be outstanding at the rate of interest set forth below, until fully paid. This note is given pursuant to the Loan Agreement of even date between Borrower and Lender, as amended from time to time (the "Loan Agreement'') and is subject to the provisions thereof. Advances under this note shall be made in accordance with ~2.5 of the Loan Agreement. The definitions in the Loan Agreement shall be applicable to any capitalized terms herein that are not otherwise defined. If there is any conflict between the tenus of the Loan Agreement and the tenns of this note, the provisions of the Loan Agreement shall control. 1. Definitions. "Business Day" means any day which is not a Saturday or Sunday or a public holiday under the laws of the United States of America or the State of Ohio. "Collateral Document" means any document providing security for or guarantee of repayment of this note. "Default Rate" means 18.5% per annum. "Initial Rate" means 14% per annum. --.. "Lease" means the Lease Agreement between Lender and Tenant dated as of this date, as amended from time to time. "Loan Advance" means each advance ofloan proceeds under this note. "Maturity Date" means the earlier of [i] the closing of the exercise of the Equity Option or the Asset Purchase Option (as defined in the Lease); or [ii] the date on which the Lease terminates. "Net Cash Flow" has the meaning set forth in the Loan Agreement. "Tenant" means Financial Care Investors of Lebanon, LLC, a limited liability company organized under the laws of the State of Delaware. clr\hcri\Jebanon\note 10/29/98 -~",,,,,. - , y-' ~ff , "Third Anniversary" means the third anniversary of the date on which the Facility opens for business. 2. Interest Rate. ( a) Initial Rate. Interest shall accrue on the principal amount outstanding frorn and after the date of each Loan Advance at the Initial Rate. (b) Default Rate. After the occurrence and during the continuance of an Event of Default, Borrower shall pay interest on this note, and on any judgment on this note, at the Default Rate. (c) Computation Method. All interest rates shall be calculated based on the actual number of days elapsed over a 360-day year (365/360 method). 3. Payments. Borrower, or Manager on behalf of Borrower, shall make payments in accordance with the following: (a) Borrower shall pay all of the Net Cash Flow (if any) to Lender no later than the 15th day of each month until the outstanding balance of this note and all amounts payable by Borrower to Lender under the Loan Documents have been paid in full. No later than the 15th day of each month, Borrower (or Manager) shall deliver to Lender a reconciliation statement in accordance with 95.5 of the Loan Agreement. 1 (b) If the Net Cash Flow paid to Lender in anyone month is less than the accrued interest on this note or ifno Net Cash Flow is paid in anyone month, payment of the balance of the accrued interest shall be deferred until the earlier of [i] the date on which there is available Net Cash Flow to pay such accrued and unpaid interest; or [ii] the date on which interest is payable under 93( c). (c) If this note has not been paid in full by the Third Anniversary, monthly payments of principal and interest (based upon amortization over the balance of the term of the Lease) shall cormnence on the first day of the first month following the Third Anniversary and.shall be paid on the first day of each month thereafter. Net Cash Flow shall continue to be paid . in accordance with 93(a) and applied pursuant to 96 hereof. (d) On the Maturity Date or upon prepayment of this note, Borrower shall pay the outstanding principal balance of this note, all accrued and unpaid interest and all charges, expenses and other amounts payable by Borrower to Lender. 4. Method and Place of Payment. Borrower shall make all payments on this note at One SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio 43603, or at such other place as the holder hereof may designate in writing. Borrower shall make all payments in lawful money of the United States of America in irmnediately available funds. clr\bcri\lebanon \note -2- 10/29/98 ">~'m'W'0'W _ " ^', <~,~ 0' ^'l' ,~.., 0, ~,. , 5. Prepayment. Borrower may prepay all or any portion of the outstanding principal balance of this note, all accrued and unpaid interest and all charges, expenses and other amounts payable by Borrower to Lender at any time without payment of any prepayment fee. 6. Application of Payments. All payments and other amounts received by Lender shall be credited as follows: [i] first, to any charges, costs, expenses and fees payable by Borrower under this note or the Loan Agreement, or incurred by Lender for the protection of any c^!1ateral securing the payment of this note, if not paid by Borrower by the due date; [H] second, to interest on the foregoing amounts at the Default Rate from the due date or date of payment by Lender, as the case may be; [iii] third, to accrued but unpaid interest on this note; [iv] fourth, to the principal amount outstanding; and [ v] the balance, if any, to Borrower. 7. Default. The occurrence of an Event of Default under the Loan Agreement shall be an Event of Default hereunder. 8. Acceleration. Upon the occurrence of any Event of Default, in addition to all other remedies under the Loan Agreement, any security for or guarantee of this note, and at law or in equity, at the option of Lender [i] the outstanding principal balance of this note, all accrued :md unpaid interest thereon and all other amounts payable by Borrower to Lender shall be immediately due :md payable, and [ii] all such amounts shall bear interest at the Default Rate from the date of the Event of Default until paid. Lender may exercise either or both options without notice or demand of any kind. 9. Governing Law. Ibis note shall be governed by and construed in accordance with the internal laws of the State of Pennsylvania, without giving effect to the conflict oflaws rules thereof. 10. Time is of the Essence. Time is of the essence in the payment of this note. All grace periods in the Loan Agreement and any Collateral Document that apply to a default shall run concurrently. ' 11. Holidays. If any installment of this note becomes due on a day which is not a Business Day, Borrower may pay the installment on the next succeeding day on which banking institutions are open. 12. Waivers. None of the following shall be a course of dealing, estoppel, waiver or the like on which any party to this note or any Collateral Document may rely: [i] Lender's acceptance of one or more late or partial payments; [ii] Lender's forbearance from exercising any right or remedy under this note or any Collateral Document; or [Hi] Lender's forbearance frorn exercising any right or remedy under this note or any Collateral Document on any one or more occasions. Lender's exercise of any rights or remedies or a part of a right or remedy on one or more occasions shall not preclude Lender from exercising the right or remedy at any other time. Lender's rights and remedies under this note, the Collateral Documents, and the law :md equity are cumulative to, but independent of, each other. clrlhcn'llebanonlnote -3- 10129/98 ;0;'7'\"1," ~~__ "', ',",__ , ,,~ ", r'" ~: 13. Representations. Each party to this note and each Collateral Document: [i] acknowledges that Lender would not have extended the credit evidenced by this note and will not continue to extend the credit but for the obligations of each; [ii] warrants that each has executed this note or Collateral Documents to induce Lender to extend and to continue to extend the credit; [iii] warrants that each has received good and valuable consideration for executing this note or any Collateral Document; and [iv] warrants that none have executed this note or any Collateral Document in reliance upon the existence of the security for or guaranty or promise of the payment of this note. 14. Indulgences. Without notice, Lender may do or refrain from doing anything affecting this note or any Collateral Document, as many times as Lender desires, including the following [i) granting or not granting any indulgences to anyone liable for payment of this note or to anyone liable under any Collateral Document; [ii] releasing any security or anyone or any property from liability on this note or any Collateral Document; [iii] amending this note or any Collateral Document, including extending the time for payment of this note, in accordance the terms of such Collateral Documents. 15. No Release of Liability. No obligations of any party to this note shall be affected by [i] any default in this note or any Collateral Document when accepted by Lender or arising any time thereafter; [ii} the unenforceability of or defect in this note or in any Collateral Document or any interest conveyed by any Collateral Document; [iii] any decline in the value of any interest in any property conveyed by any Collateral Document; or, [iv] the death, incompetence, insolvency, dissolution, liquidation or winding up of affairs of any party to this note or any Collateral Document or the start of insolvency proceedings by or against any such party. EACH PARTY TO ANY COLLATERAL DOCUMENT WAIVES ALL SURETYSIDP AND OTHER SIMILAR DEFENSES. No party to this note or any Collateral Document may enforce any right of subrogation or contribution unless and until this note is paid in full and waives all rights of subrogation against any party that is subject to insolvency proceedings unless and until this note is paid in full. 16. Notices. All notices, demands, requests and consents (hereinafter "notices") given pursuant to this note shall be in writing, and shall be served by [i} personal delivery, [ii] United States Mail, postage prepaid; or [iii] nationally recognized overnight courier to the following addresses: To Borrower: Financial Care Investors, LLC 5021 Louise Drive, Suite 200 Mechanicsburg, Pennsylvania To Lender: Pennsylvania BCC Properties, Inc. One SeaGate, Suite 1500 P.O. Box 1475 Toledo, Ohio 43603 ~I notic~s shall be de~ed to be gi~en upon the earlier of actual receipt or three days after deposit ill the Umted States maIl or one busmess day after deposit with the ovemight courier. All notices c1r\hcri\Jebanon\note -4- 10/29/98 _oo."=-0l'!3"'&;, 4".__ - ;,e. " , . "'r'"~~'=~ I' . .. , shall also be delivered to Balanced Care in accordance with 98.5 of the Loan Agreement. Balanced Care, Lender and Borrower rnay change their notice address at any time by giving the other party written notice of such change. 17. Representation and Warranty Regarding Business Purpose. Borrower represents and warrants that the loan evidenced by this note is for business purposes only and not for personal, family, household, or agricultural purposes. 18. Protest. Except as otherwise expressly provided in the Loan Agreement, each party to this note jointly and severally waives protest, notice of protest, demand, dishonor or default, presentment for payment, notice of intent to declare this note immediately due and payable, notice of declaration that this note is immediately due and payable in full, all other notices, and all demands. 19. Savings Clause. The intention of Lender and Borrower is to comply with the laws of the State of Pennsylvania concerning the rate of interest on this note. Notwithstanding any other provision in this note or in any other document given in connection with this note, Borrower shall not be required to pay interest in excess ofthe maximum lawful rate. To the extent the amount of interest provided in this note ever exceeds the maximum lawful rate (the "Excess Interest"), [i] the provisions of this paragraph shall govem and control; [ii] Borrower shall not be obligated to pay any Excess Interest; [iii] any Excess Interest that Lender may have received shall be credited against the then outstanding balance due under this note and, if the Excess Interest exceeds the outstanding balance, the excess amount shall be refunded to Borrower; [iv] the rate of interest under this note shall be automatically reduced to the maximum lawful rate and this note and any other documents given in connection therewith shall be deemed refonned and modified to reflect such reduction; and [v] subject to the foregoing provisions of this paragraph, Borrower shall have no action or remedy against Lender for any damages whatsoever or any defense to enforcement of the note or any other documents given in connection therewith arising out of the payment or collection of any Excess Interest. In determining whether interest paid or payable on this note exceeds the maximum lawful rate, Borrower agrees to spread the total amount of interest throughout the entire contemplated term of this note. 20. Attorney's Fees and Expenses. Borrower shall pay to Lender all reasonable costs and expenses incurred by Lender in administering the Loan and the security for the Loan, enforcing or preserving Lender's rights under this note, the Loan Agreement or any Collateral Document, and in all matters of collection, whether or not an Event of Default has actually occurred or has been declared and thereafter cured, including but not limited to, [i] attorney's and paralegal's fees and disbursements; [ii] the fees and expenses of any litigation, administrative, bankruptcy, insolvency, receivership and any other similar proceeding; [iii] court costs; [iv] the expenses of Lender, its employees, agents, attorneys and witnesses in preparing for litigation, administrative, bankruptcy, insolvency and other proceedings and for lodging, travel, and attendance at meetings, hearings, depositions, and trials; and [v] consulting and witness fees incurred by Lender in connection with any litigation or other proceeding, but excluding Lender's internal bookkeeping and routine loan servicing costs. clr\hcri\lebanon\note - 5- 10/29/98 /vw<,,:'ti."*""" r !< "~ '# , 21. Severability. If any clause, provision, section or article of this note is ruled invalid by any court of competent jurisdiction, the invalidity of such clause, provision, section, or article shall not affect any of the remaining provisions hereof. 22. Assignment. Borrower shall not assign its rights nor delegate its obligations under this note. 23. Amendment. Thi~ note may not be amended except in writing signed by Borrower and Lender. All references to this note, whether in this note or in any other document or instrument, shall be deemed to incorporate all amendments, modifications, and renewals of this note and all substitutions made therefor after the date hereof. 24. CONSENT TO JURISDICTION. BORROWER HEREBY IRREVOCABLY SUBMITS AND CONSENTS TO THE NON-EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING JURISDICTION OVER LUCAS COUNTY, OIDO OR LEBANON COUNTY, PENNSYLVANIA FOR ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO [I] THE TERM SHEET FOR THE LOAN EVIDENCED BY THIS NOTE; [II] TIDS NOTE; OR [III] ANY LOAN DOCUMENT EXECUTED IN CONNECTION WITH TIDS NOTE. BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT BORROWER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. BORROWER AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST LENDER OR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT OR PROPERTY OF LENDER, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THE TERM SHEET, TIDS NOTE OR ANY LOAN DOCUMENT IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT HAVING JURISDICTION OVER LUCAS COUNTY, OIDO. BORROWER HEREBY CONSENTS TO SERVICE OF PROCESS BY LENDER IN ANY MANNER AND IN ANY JURISDICTION PERMITTED BY LAW. NOTHING HEREIN SHALL AFFECT OR IMPAIR LENDER'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW, OR LENDER'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR THE PROPERTY OF BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. 25. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY KNOWINGLY AND VOLUNTARILY WAIVES THE RIGHT TO A JURY TRIAL IN ANY ACTION, PROCEEDING OR COUNTERCLAIMS ARISING OUT OF OR RELATING TO THIS NOTE. clr\hcri\lebanon\note - 6- 10/29/98 ,,9'~~r. .< ~,' ~~ 7' I . ~- 'I~ '~'O "'"' , '~1;jj~.. " ~". , "" "' , '.~ ' '. 26. Loan Agreement. This note is subject in all respects to the Loan Agreement, including, without limitation the provisions of 98.14 thereof. [THE REMAINDER OF TillS PAGE IS INTENTIONALLY LEFT BLANK] clrlhcri~ebanon\note -7 - 10/29/98 ..H ; ~~~~."- ,~, " > , -. d".'. - '. I IN WITNESS WHEREOF, the undersigned has executed this note effective as of the date first set forth above. FIN~ INVESTORS, LLC By: ~;2~ ____ Title:_llrian L. Barth olr\hcrNebanonlnote - 8- 10/29/98 '0$~.....d!)to/11<'!1" _ ~ ."' ,~__ ? r '" , " ,- < ',:J[; l:, , ". ~'" '7-1'_' _ ~, ;, 'to . . JJ;_.t '~ LOAN AGREEMENT BETWEEN PENNSYLVANIA BCC PROPERTIES, INC. AND FINANCIAL CARE INVESTORS, LLC September 22, 1998 Lebanon, Pennsylvania I , I. TABLE OF CONTENTS SECTION PAGE ARTICLE 1: PURPOSE AND DEFINITIONS .............................................................................1 ~:; ~:~~~~.:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ~ 1.3 Incorporation of Amendments .....................................................................................5 1.4 Exhibits... ...................................................................................................................... 5 ARTICLE 2: LOAN AND LOAN DOCUMENTS ........................................................................5 2.1 Obligation to Lend......................................... ............................................................... 5 2.2 Obligation to Repay......................................................................................................5 2.2.1 Tenn of the Loan............................................... ............................... ....... ......... 5 2.2.2 Interest and Payments ...................................................................................... 5 2.3 Use of Proceeds .................................... ........................................................................5 2.4 Loan Expenses .............................................................................................................. 5 2.5 Disbursements ...... ......................................................................................... ............... 6 2.5.1 Loan Advances ................................ ............................ ..................................... 6 2.5.2 Disbursement Schedule ................................................................. ................... 6 2.5.3 Standby Termination.. ................ ................ ...................................... ........ ........ 6 2.5.4 Collateral Account ......................... ....................................... ........................... 6 2.5.5 Manager................. .... .............. ...................................................... ........ .......... 6 2.6 Closing ........................................................................................................... ......... ...... 6 ARTICLE 3: CONDITIONS PRECEDENT TO DISBURSEMENT ......................................... 6 3.1 Conditions Precedent to Initial Disbursement .............................................................6 3.1.1 Lender's Documents ........................................................................................ 7 3.1.2 Organizational Documents .............................................................................. 7 3.1.3 Budget and Schedule........................................................................................ 7 3.1.4 Legal Opinion............................ ........................................... ............................ 7 3.1.5 Equity Contribution ......................................................................................... 7 3.1.6 Other Closing Requirements............................................................................ 7 3.2 Conditions Precedent to Each Disbursement............................................................... 7 3.2.1 Disbursement Voucher.................... .................................................................7 3.2.2 Post-Closing Obligations .................................................................................7 3.2.3 Damage and Destruction..................................................................................7 3.2.4 No Event of Default 7 ......................................................................................... ARTICLE 4: BORROWER'S REPRESENTATIONS AND WARRANTIES .........................8 4.1 Organization and Good Standing ................................................................................. 8 4.2 Power and Authority..................................................................................................... 8 ,!f;;l~J., "', . 'I :'1 "0 ,? ., . r 'I<~~ 4.3 Enforceability ...............................................................................................................8 4.4 No Violation .................................................... .................................. ........................... 8 4.5 No Litigation................................................................................................................. 8 4.6 Reports, Statements and Copies ................................................................................... 9 4.7 No Default..................................................................................................................... 9 4.8 ERlSA...........................................................................................................................9 4.9 Chief Executive Office ................................................................................................. 9 ARTICLE 5: AFFIRMATIVE COVENANTS ..............................................................................9 5.1 Perform Obligations .....................................................................................................9 5.2 Documents and Information......................................................................................... 9 5.2.1 Furnish Documents .......................................................................................... 9 5.2.2 Furnish Information ...............,......................................................................... 9 5.2.3 Further Assurances and Information .............................................................10 5.2.4 Material Communications........................................................ ......................1 0 5.2.5 Requirements for Financial Statements......................................................... 10 5.3 Broker's Commission........................................ ......... .................. ..............................1 0 5.4 Existence..................................................................................................................... 10 5.5 Net Cash Flow ............................................................................................................11 5.6 Cash Management .................................. ....................................................................11 ARTICLE 6: NEGATIVE COVENANTS ....................................................................................11 6.1 No Debt...................................................................... .................................................11 6.2 No Liens.................................... .................................................................................. II 6.3 No Guaranties .............................................................................................................11 6.4 No Dissolution............................................................................................................11 6.5 No Change in Ownership ...........................................................................................12 6.6 No Investments ...........................................................................................................12 6.7 Subordination of Payments ........................................................................................12 6.8 Change of Location or Name .....................................................................................12 6.9 No Amendments .........................................................................................................12 ARTICLE 7: DEFAULT AND REMEDIES ................................................................................12 7.1 7.2 Event of Default 12 .......................................................................................................... Remedies on Default ............................................................. .....................................14 7.2.1 Acceleration 14 ................................................................................................... 7.2.2 Other Remedies 14 .............................................................................................. 7 .2.3 Waiver ............................................................................................................14 7.2.4 Terminate Disbursement................................................................................14 ARTICLE 8: MISCELLANEOUS.................................................................................................14 8.1 Advances by Lender ...................................................................................................14 8.2 [Deleted] .....................................................................................................................14 ck\hcn\lebanon1Joanagmt. (ii) 1113/98 ';.'!;~<"^-,~, ~~, "l. " _.,,"r "". . , ~ 8.3 Construction of Rights and Remedies and Waiver of Notice and Consent ..............14 8.3.1 Applicability................................................................................................... 1 5 8.3.2 Waiver of Notices and Consent to Remedies................................................ 15 8.3.3 Cumulative Rights .........................................................................................15 8.3.4 Extension or Modification ofLoan................................................................15 8.3.5 Right to Select Security .................................................................................15 8.3.6 Forbearance Not a Waiver .............................................................................1 5 8.3.7 No Waiver ......................................................................................................15 8.3.8 No Continuing Waivers .................................................................................15 8.3.9 [Deleted] ......................................................................................................... 15 8.3.10 No Release......................................................................................................16 8.4 Assignment .................................................................................................................16 8.4.1 Assignment by Lender ...................................................................................16 8.4.2 Assignment by Borrower ...............................................................................16 8.5 Notices.................. .......................... ........................................ ....... ............. ......... ....... 16 8.6 Entire Agreement.................................. ......................................................................16 8.7 Severability .................................................................................................................16 8.8 Captions. and Headings .................... ...........................................................................17 8.9 Governing Law ...........................................................................................................17 8.10 Binding Effect.............................................................................................................17 8.11 Modification ...............................................................................................................17 8.12 Construction of Agreement ........................................................................................17 8.13 Counterparts....... ......................................................................................................... 17 8.14 No Third-Party Beneficiary Rights ............................................................................17 8.15 Lender's Authority to Furnish Copies of Loan Documents ......................................18 8.16 Lender Merely a Lender .............................................................................................18 8.16.1 No Agency................................ .................................................... ..................18 8.16.2 No Obligation to Pay .....................................................................................18 8.16.3 No Responsibility for Construction............................................................... 18 8.17 Substitution of Borrower and/or Tenant. ...................................................................18 EXHmIT A: DISBURSEMENT SCHEDULE EXHmIT B: DISBURSEMENT VOUCHER EXHmIT C: WORKING CAPITAL BUDGET EXHmIT D: PENDING LITIGATION EXHIBIT E: DOCUMENTS TO BE DELIVERED EXHmIT F: BORROWER'S CERTIFICATE clr\bcn"\Jebanon\loanagmt (iii) IJ13198 "~~J~ - ,-, , . -" --~ 11 -~.. . LOAN AGREEMENT TIDS LOAN AGREEMENT ("Agreement") is made and entered into effective as of September 22, 1998 (the "Effective Date") between FINANCIAL CARE INVESTORS, LLC, a limited liability company organized under the laws of the State of Delaware (the "Borrower"), having its chief executive office at 5021 Louise Drive, Suite 200, Mechanicsburg, Pennsylvania, and PENNSYLVANIA BCC PROPERTIES, INC., a corporation organized under the laws of the State of Pennsylvania (the "Lender"), having an address of One SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio 43603. RECIT ALS: A. Lender has leased to Financial Care Investors of Lebanon, LLC, a limited liability company organized under the laws of the State of Delaware ("Tenant"), certain real property pursuant to a Lease Agreement made between Lender and Tenant dated as of the Effective Date. Borrower is the sole member of Tenant. B. Lender has agreed to provide a loan to Borrower ("Loan"), subject to the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and the premises contained herein, the parties, intending to be legally bound hereby, agree as follows: ARTICLE 1: PURPOSE AND DEFINITIONS 1.1 Purpose. The purpose of this Agreement is to establish the Loan with Lender for the financing as set forth above. 1.2 DefInitions. Except as otherwise expressly provided, [i] the terms defined in this section have the meanings assigned to them in this section and include the plural as well as the singular; [ii] all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as of the time applicable; and [iii] the words "herein", "hereof', and "hereunder" and similar words refer to this Agreement as a whole and not to any particular section. "Affiliate" means any person, corporation, partnership, limited liability company, trust, or other legal entity that, directly or indirectly, controls, or is controlled by, or is under common control with Borrower. "Control" (and the correlative meanings of the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity. "Affiliate" includes, without limitation, any corporation, partnership or limited liability company (now or hereafter existing) of which the equity interest is owned by anyone or more Affiliates or by the members of Borrower. "Affiliate Loan" means each loan extended by Lender or any Lender Affiliate to an Affiliate. clr\hcri\lebanon\loanagmt 1 113/98 :~U!ll,~",= c. " c, ,~' 'c , ""~.,.".,. ~ '. , T ! ..,~~..: ," " '" " co ~~ ." "Affiliate Obligation" means all indebtedness and obligations of Borrower and any Affiliate to Lender or any Lender Affiliate now existing or hereafter arising, including, without limitation, the Lease Documents, indebtedness evidenced by promissory notes, lease agreements, guaranties or otherwise and obligations under such indebtedness documents and all other documents executed by Borrower or any Affiliate in connection therewith, and any extensions, modifications, substitutions or renewals thereof. "Annual Financial Statements" means the unaudited balance sheet and statement of income of Borrower for the most recent fiscal year. "Balanced Care" means Balanced Care Corporation, a corporation organized under the laws ofthe State of Delaware. "Borrower" means Financial Care Investors, LLC, a limited liability company organized under the laws of the State of Delaware, its successors and permitted assigns. "Business Day" means any day which is not a Saturday or Sunday or a public holiday under the laws of the United States of America or the State of Ohio. "Closing" means the closing of the Loan. "Collateral Account" has the meaning set forth in the Deposit Agreement. "Credit Facility Commitment" means the Commitment Letter for lease financing issued by Health Care REIT, Inc. and accepted by Borrower, dated September 22, 1998 and as amended from time to time. "Current Phase" has the meaning set forth in the Lease. "Deposit Agreement" has the meaning set forth in the Shortfall Agreement. "Disbursement Schedule" means the Disbursement Schedule attached hereto as Exhibit A setting forth Borrower's estimate of the dates and amounts of the disbursements required hereunder. "Disbursement Voucher" means Borrower's written request for a Loan Advance set forth on the form attached hereto as Exhibit B. "Effective Date" means the date ofthis Agreement. "Event of Default" has the meaning set forth in 97.1. "Facility" has the meaning set forth in the Lease. "Lease" means the Lease Agreement between Lender and Tenant dated as of the Effective Date, as amended from time to time. ch\hcri\lebanon\loanagmt -2- 11/3/98 'J'. . ,.",,",,~, ._~(< ~ -I' - -1'-'" 0_ " .I~ IOO',~ '.'~'~_.," "Lease Documents" means the Lease and all other documents executed by Tenant in connection with the Lease, each as amended from time to time. "Leased Property" has the meaning set forth in the Lease. "Lender" means Pennsylvania BCC Properties, Inc., a corporation organized under the laws of the State of Pennsylvania, its successors and assigns. "Lender Affiliate" means any person, corporation, partnership, limited liability company, trust or other legal entity that, directly or indirectly, controls or is controlled by, or is under common control with Lender. "Control" (and the correlative meanings of the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity. "Lender Affiliate" includes without limitation, Health Care REIT, Inc., HCN BCC Properties, Inc. and any affiliate of Health Care REIT, Inc. "Loan" means the loan by Lender to Borrower in the amount up to the Loan Amount. "Loan Amount" means $686,800.00. "Loan Advance" means each advance of proceeds of the Loan. "Loan Commitment" means the term sheet for the Loan issued by Health Care REIT, Inc. and accepted by Borrower, dated as of September 22, 1998 and as amended from time to time. "Loan Documents" means [i] this Agreement; [ii] the Note; [iii] the Security Agreement between Tenant and' Lender dated as of the Effective Date; and [iv] all other documents and instruments executed by Borrower in connection with the Loan, each as amended from time to time. "Loan Expenses" means all reasonable costs and expenses incurred by Lender in investigating, making and administering the Loan, including but not limited to, [i] attorneys' and paralegals' fees md costs; and [ii] travel, transportation, food, and lodging costs and expenses incurred by Lender and Lender's attorneys and paralegals, but excluding Lender's internal bookkeeping and routine loan servicing costs. "Management Agreement" means the Management Agreement between Manager and Tenant. "Manager" means Balanced Care at Lebanon, Inc., a corporation organized under the laws ofthe State of Delaware. "Member" means Brad E. Hollinger. clr\hcri\lebanon\loanagmt - 3 - !l13/98 ... , I --" '1- ,_ .,..".",-ffi! "Net Cash Flow" means the net income of Tenant for the preceding month as shown on Tenant's income statement, plus [i] the amount of the provision for depreciation and amortization, plus [ii] all net insurance proceeds, if any, after payment from proceeds of all out-of-pocket claims or losses, minus [iii] the rent payments under the Lease, minus [iv] the payments of principal and interest due under Section 3(c) of the Note, and minus [v] the customary and ordinary operating expenses incurred in connection with the Facility operations in accordance with the Working Capital Budget, including, without limitation, all fees payable to Manager under the Management Agreement. For purposes of this definition, the "income" of Tenant shaH be deemed to include all cash received by Tenant from whatever source. Each income statement shall be prepared in a manner consistent with the prior income statements of such entity. "Note" means the Note of even date made by Borrower in favor of Lender for a principal amount equal to the Loan Amount, and any extensions, modifications, substitutions or renewals thereof. "Organizational Documents" means [i] for a corporation, its Articles of Incorporation certified by the Secretary of State of the state of organization, as amended to date, and its Bylaws certified by an officer of such corporation, as amended to date; [ii] for a limited partnership, its Certificate of Partnership certified by the Secretary of State of the state of organization, as amended to date, and its Limited Partnership Agreement certified by the general partner of such partnership, as amended to date; and [iii] for a limited liability company, its Certificate of Organization certified by the Secretary of State of the State of Organization, as amended to date and its Operating Agreement certified by the managing member of such limited liability company, as amended to date. "Periodic Financial Statements" means the unaudited balance sheet and statement of income of Borrower for the most recent month and quarter. "Shortfall Agreement" means the ShortfaH Funding Agreement among Borrower, Tenant and Balanced Care Corporation, dated as of the Effective Date and as amended from time to time. "State" means the State of Pennsylvania. "Tenant" means Financial Care Investors of Lebanon, LLC, a limited liability company organized under the laws of the State of Delaware. "Transaction Documents" means the Loan Documents, Lease Documents, the Management Agreement, and all agreements and documents made between Borrower or Tenant and Balanced Care or by Borrower or Tenant in favor of Balanced Care, including, without limitation, the Shortfall Agreement, the Option Agreement, all Promissory Notes, the Open End Leasehold Mortgage and Security Agreement, the Deposit Agreement and the Equity Pledge Agreement; provided, however, Transaction Documents refer only to agreements and documents entered into in connection with any lease within the Current Phase that includes the Lease. "Working Capital Budget" means the three year budget of the working capital and operating expenses for the Facility, prepared by Manager and approved by Lender, a copy of which clr\hcri\lebanon\loanagmt -4- 1113/98 ^~"'-':"r~<-;_,,'-""_~'" "".', " 1 -, -, '~', is attached hereto as Exhibit C, and as revised from time to time, subject to the prior written approval of Lender which shall not be unreasonably withheld. 1.3 Incorporation of Amendments. The definition of any agreement, document, or instrument set forth in this Agreement or in any other Loan Document shall be deemed to incorporate all amendments, modifications, and renewals thereof and all substitutions and replacements therefor. 1.4 Exhibits. The following exhibits are attached hereto and incorporated herein: Exhibit A: Exhibit B: Exhibit C: Exhibit D: Exhibit E: Exhibit F: Disbursement Schedule Disbursement Voucher Working Capital Budget Pending Litigation Documents to be Delivered Certificate ARTICLE 2: LOAN AND LOAN DOCUMENTS ~ ,-) 2.1 Obligation to Lend. Subject to the terms and upon the conditions set forth in the Loan Documents, Lender shall lend to Borrower up to the Loan Amount. The indebtedness of Borrower to Lender for the Loan is evidenced by the Note. 2.2 Obligation to Repay. Borrower shall repay the Loan in accordance with the tenns of the Note and the other Loan Documents. 2.2.1 Term of the Loan. The term of the Loan will expire on the Maturity Date set forth in the Note. 2.2.2 Interest and Payments. Borrower shall make payments in accordance with the Note at the rate set forth in the Note. 2.3 Use of Proceeds. All Loan Advances (less closing costs) shall be used by Borrower solely to fund its capital contribution to Tenant which will be used by Tenant solely to fund 85% of the Equity Contribution (as defined in the Credit Facility Commitment) for the Facility. In accordance with the Management Agreement, Manager will use the Loan Advances exclusively for the working capital needs ofthe Facility in accordance with the Working Capital Budget. 2.4 Loan Expenses. At the Closing, Borrower shall payor reimburse Lender for any Loan Expenses incurred up to the Effective Date. Within 30 days after receipt of an invoice therefor, Borrower shall reimburse Lender for any Loan Expenses incurred by Lender. Lender shall apply proceeds of the Loan, up to the Loan Amount, to pay the Loan Expenses. 2.5 Disbursements. 2.5.1 Loan Advances. For each Loan Advance, Manager, on behalf of Borrower, shall submit to Lender and Borrower a Disbursement Voucher. The amount of each Loan Advance shall be equal clr\hcri\lebanon\loanagmt - 5 - 1113/98 '~&-"'--"'~ .~- ,< ,. ~:'~f"j, to 85% of the amount of the current Funding that is required under the Shortfall Agreement; provided, however, that disbursement of each Loan Advance shall be pro rata with the funding by Borrower and Tenant of Tenant's 15% Equity Contribution in accordance with the Shortfall Agreement. Lender may make disbursements from time to time but shall not be obligated to disburse more frequently than once in each calendar month and shall not be obligated to disburse until at least seven Business Days following receipt of a Disbursement Voucher. 2.5.2 Disbursement Schedule. Manager estimates that the schedule of Loan Advances will be in accordance with the Disbursement Schedule; provided, however, the actual disbursement dates shall be determined by the dates on which Manager submits a Disbursement Voucher in accordance with the working capital needs of the Facility. 2.5.3 Standby Termination. Lender's obligation to make Loan Advances pursuant to this Agreement shall terminate on the Maturity Date set forth in the Note, unless terminated earlier pursuant to an Event of Default. 2.5.4 Collateral Account. Until the Deposit Agreement is terminated, all Loan Advances shall be deposited by Lender into the Collateral Account and shall be subject in all respects to the Deposit Agreement. Balanced Care and Lender are the secured parties under the Deposit Agreement. 2.5.5 Manager. Upon the termination of the Management Agreement, all provisions in this Agreement relating to the Manager shall terminate and Loan Advances will be made to Borrower or its designee and all obligations of Manager hereunder shall be performed by Borrower or such other party approved by Lender. 2.6 Closing. The Closing shall occur on the Effective Date. Lender may elect to close by exchanging executed counterparts of one or more of the Loan Documents and other closing documents by mail or a national courier service, or by te1ecopier followed by exchanging documents by mail or national courier service. ARTICLE 3: CONDITIONS PRECEDENT TO DISBURSEMENT 3.1 Conditions Precedent to Initial Disbursement. Borrower shall comply with, and Lender's obligation to disburse the first Loan Advance shall be conditioned upon Borrower's performance of the following conditions precedent: 3.1.1 Lender's Documents. Borrower shall have delivered to Lender fully executed originals of the Transaction Documents and a Disbursement Voucher. 3.1.2 Organizational Documents. Borrower shall have delivered to Lender copies of Borrower's Organizational Documents, in form and substance satisfactory to Lender, and Borrower's resolutions authorizing the Transaction Documents, certified by Borrower to be true and complete and not revoked or amended since the respective dates thereof. 3.1.3 Budget and Schedule. Borrower shall have delivered to Lender the Working Capital Budget and the Disbursement Schedule in form and substance reasonably satisfactory to Lender. ctr\hcn"\lebanon\loanagmt -6- 1113/98 -'-",,', ~. " ',", p,',.,:" -. T" - T''''''''l'' 3.1.4 Lega1Opinion. Borrower shall have delivered to Lender an opinion of Borrower's counsel in form and substance satisfactory to Lender. 3.1.5 Equity Contribution. Tenant shall have funded its pro rata share of the 15% Equity Contribution in accordance with ~2.5.1 hereof. 3.1.6 Other Closing Requirements. Borrower shall have satisfied the requirements of ~ 3.2.4 and all other closing requirements of the Transaction Documents and the Loan Commitment. 3.2 Conditions Precedent to Each Disbursement. Borrower shall comply with, and Lender's obligation to disburse each Loan Advance after the first Loan Advance shall be conditioned upon Borrower's performance ofthe following conditions precedent: 3.2.1 Disbursement Voucher. Manager shall have delivered to Lender a Disbursement Voucher in accordance with ~2.5.1. 3.2.2 Post-Closing Obligations. Borrower shall have satisfied all post-closing obligations under the Loan Documents to be performed as of the date of such Loan Advance request. 3.2.3 Damage and Destruction. The Facility for which the Loan Advance is drawn shall not have been substantially or materially damaged or destroyed, in whole or in part, by fire or other casualty nor shall eminent domain proceedings have been threatened or be pending with respect to a substantial or material part of the Facility. 3.2.4 No Event of Default. There shall be no uncured Event of Default under any Transaction Document or any event which with the giving of notice or the passage of time would constitute an Event of Default. ARTICLE 4: BORROWER'S REPRESENTATIONS AND WARRANTIES Borrower hereby makes the following representations and warranties, as of the Effective Date and the date of each Loan Advance, to Lender and acknowledges that Lender is making the Loan in reliance upon such representations and warranties. Borrower's representations and warranties shall survive the Closing and, except as specifically provided below, shall continue in full force and effect until Borrower has repaid the Loan in full and performed all other obligations under the Loan Documents. 4.1 Organization and Good Standing. Borrower is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. 4.2 Power and Authority. Borrower has the power and authority to execute, deliver, and perform Borrower's obligations under the Transaction Documents and has taken all requisite action to authorize the execution, delivery and performance of Borrower's obligations under such documents. clr\hcn\lebanon\loanagmt - 7 - 1113/98 ':';:" ~ , d,_" V " ~~~ 4.3 Enfurceability. The Transaction Documents constitute valid and binding obligations of Borrower enforceable in accordance with their terms, except as enforceability may be limited by creditor's rights laws, equitable principles and the effect of judicial discretion. 4.4 No Violation. The execution, delivery and performance of the Transaction Documents and the consummation of the transactions contemplated by the Transaction Documents [i] do not conflict with and will not conflict with, and do not result and will not result in a breach of Borrower's Organizational Documents; [ii] do not conflict with and will not conflict with, and do not result and will not result in a breach of, or constitute or will constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under any of the terms, conditions or provisions of any agreement or other instrument or obligation to which Borrower is a party or by which its assets are bound; and [iii] to Borrower's actual knowledge, do not violate any order, writ, injunction, decree, statute, rule or regulation applicable to Borrower. 4.5 No Litigation. Except as disclosed on Exhibit D, [i] there are no actions, suits, proceedings or, to Borrower's actual knowledge, investigations by any govemmental agency or regulatory body pending against Borrower; [ii] Borrower has not received written notice of any threatened actions, suits or proceeding or investigations against Borrower at law or in equity, or before any governmental board, agency or authority which, if determined adversely to Borrower, would materially and adversely affect the financial condition of Borrower; [iii] there are no unsatisfied or outstanding judgments against Borrower; [iv] there is no labor dispute materially and adversely affecting the operation or business conducted by Borrower; and [v] Borrower does not have knowledge of any facts or circumstances which might reasonably form the basis for any such action, suit, or proceeding. 4.6 Reports, Statements and Copies. All reports, statements, certificates and other data furnished by Borrower to Lender in connection with the Transaction Documents, or the transactions contemplated thereunder, and all representations and warranties made therein, or any certificate or other instrument delivered in connection therewith, are true and correct in all material respects and do not omit to state any material fact or circumstance necessary to make the statements contained therein, in light of the circumstances under which they are made, not misleading as of the date of such information, reports, statements or certificates. The copies of all agreements and instruments submitted to Lender are true, correct and complete copies and include all amendments and modifications of such agreements. 4.7 No Default. As of the Effective Date, there is no existing Event of Default by Borrower or Tenant under the Transaction Documents and no event has occurred which, with the giving of notice or the passage oftime, would constitute or result in such an Event of Default. 4.8 ERISA. All plans [as defined in ~4021(a) of the Employee Retirement Income Security Act of 1974 as amended or supplemented from time to time ("ERISA")] for which Borrower is an "employer" or a "substantial employer" [as defined in ~~3(5) and 4001(a)(2) of ERISA, respectively] are in compliance with ERISA and the regulations and published interpretations thereunder. To the extent Borrower maintains a qualified defmed benefit pension plan: [i] there exists no accumulated funding deficiency; [ii] no reportable event and no prohibited transaction has occurred; [iii] no lien has been filed or, to Borrower's actual knowledge, threatened to be filed by c1r\hcri\lebanon\loanagmt -8- 11I3/98 ,:,4%;""""_,,._m ~", '1' '^'",,! ., - ,"..,." the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA; and [iv] Borrower has not been deemed to be a substantial employer as of the Effective Date. 4.9 Chief Executive Office. Borrower maintains its chief executive office and its books and records at the address set forth in the introductory paragraph of this Agreement. ARTICLE 5: AFFIRMATIVE COVENANTS 5.1 Perform Obligations. Borrower shall perform all its obligations under the Transaction Documents. 5.2 Documents and Information. 5.2.1 Furnish Documents. Borrower shall periodically during the term of the Loan deliver to Lender the Annual Financial Statements, Periodic Financial Statements and other documents described on Exhibit E within the specified time periods. With each delivery of Annual Financial Statements and Periodic Financial Statements to Lender, Borrower shall also deliver to Lender a certificate signed by Member in the form of Exhibit F. 5.2.2 Furnish Information. Borrower shall [i] within ten business days after any request therefor, supply Lender with such information concerning its [mancial condition, affairs and property, as Lender may reasonably request from time to time hereafter; [ii] promptly notify Lender in writing of any condition or event that constitutes a breach or event of default of any term, condition, warranty, representation, or provisions of any Loan Document or any other Transaction Document; [iii] maintain a standard and modem system of accounting; [iv] permit Lender or any of its agents or representatives to have access to and to examine all of its books and records regarding the financial condition of Borrower at any time or times hereafter during business hours; and [v] permit Lender to copy and make abstracts from any and all of said books and records, provided that such copies and abstracts shall not be made available by Lender to anyone other than to governmental authorities, attorneys, auditors, underwriters, credit rating agencies and such other persons for which there is a legitimate business purpose for such disclosure. 5.2.3 Further Assurances and Information. Borrower shall, on request of Lender from time to time, execute, deliver, and furnish documents as may be necessary to fully consummate the transactions contemplated under this Agreement. Within ten business days after a request from Lender, Borrower shall provide to Lender such additional information regarding Borrower or Borrower's financial condition as Lender, or any existing or proposed creditor of Lender, or any auditor or underwriter of Lender, may require from time to time. 5.2.4 Material Communications. Borrower shall transmit to Lender, within five business days after receipt thereof, any communication that may materially and adversely affect Borrower, any existing Facility, the Loan Documents or the Lease Documents and Borrower will promptly respond to Lender's inquiry with respect to such communication. Upon receipt of written notice thereof, Borrower shall promptly notify Lender in writing of any threatened or existing litigation or proceeding against, or investigation of, Borrower or any Facility that may materially and adversely affect the right to operate the Facility or title to the Facility or Lender's interest therein. c1nhcn\lebanon\loanagmt -9- 1113/98 "'f~"fm:HJ"" - - 1 _,~ }' ,f.',- " 5.2.5 Requirements for Financial Statements. Borrower shall meet the following requirements in connection with the preparation of the financial statements: [i) all audited financial statements (if any) shall be prepared in accordance with generally accepted accounting principles consistently applied; [ii) all unaudited financial statements shall be prepared in a manner substantially consistent with prior audited and unaudited financial statements submitted to Lender; [iii) all financial statements shall fairly present the financial condition and performance of Borrower for the relevant i"riod in all material respects; [iv) the financial statements shall include all notes to the audited financial statements and a complete schedule of contingent liabilities and transactions with Affiliates; and [v] the audited financial statements shall contain an unqualified opinion. 5.3 Broker's Commission. Borrower and Lender each represent that it has not incurred an obligation to any broker in connection with the Loan. 5.4 Existence. Borrower shall maintain its existence throughout the term of this Agreement and every other Transaction Document. 5.5 Net Cash Flow. All Net Cash Flow of Tenant shall be paid by Borrower and Manager, on behalf of Tenant, to Lender by the fifteenth day of each month. No later than the fifteenth day of each month, Manager shall deliver to Lender a reconciliation statement of the gross revenues, operating expenses, payroll taxes, reserves, depreciation, debt service, rent payments, amortization, net insurance proceeds, development fees, management fees and Net Cash Flow of Tenant and evidence that the Net Cash Flow of Tenant has been paid in accordance with this ~5.5. The reconciliation statement shall be in a form reasonably satisfactory to Lender. 5.6 Cash Management. At any time [i] after the occurrence of any default hereunder and until such default is cured, or [ii) when Lender has reason to believe that Tenant or Manager has failed to comply with ~5.5 above, Lender may require that all cash payments to Borrower and to Manager on behalf of Tenant, from any source and of whatever nature, be paid directly to Lender or Lender's agent ("Lender Payee"). Upon receipt of such funds, Lender Payee shall [i] pay all taxes, debt service and approved operating expenses and reserves of Tenant in accordance with the Working Capital Budget; and [ii] retain an amount equal to the Net Cash Flow of Tenant for payment on the Note. Upon notice from Lender, Borrower and Manager shall [i) enter into a Cash Management Agreement with Lender in accordance with the foregoing, in form and substance reasonably satisfactory to Lender; and [ii] give written notice to all facility residents and all other' payors of cash payments to Borrower and Manager that payments should be sent to an address designated by Lender Payee effective as ofthe date of the notice. ARTICLE 6: NEGATIVE COVENANTS Until the Loan has been paid in fun, Borrower shall not do any of the following without the prior written consent of Lender which shall not be unreasonably withheld: 6.1 No Debt. Borrower shan not create, incur, assume, or permit to exist any indebtedness other than indebtedness incurred under the Transaction Documents. dr\hcn\1ebanoo\loanagmt -10 - 1l/3198 ;!~,~}';i~~,%,~", ,",.."_ '" ~, "~ ~_ , _ ,'.,.cr -, _~ .,,- ". " . -, 6.2 No Liens. Borrower shall not create, incur, or permit to exist any lien upon or pledge of any interest in Borrower except pursuant to the Transaction Documents. 6.3 No Guaranties. Borrower shall not create, incur, assume, or permit to exist any guarantee of any loan or other indebtedness except for the endorsement of negotiable instruments for collection in the ordinary course of business. 6.4 No Di:,:,olution. Borrower shall not dissolve, liquidate, merge, consolidate or terminate its existence or, except pursuant to and in accordance with the Transaction Documents, sell, assign, lease, or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired). 6.5 No Change in Ownership. No change shall occur in the ownership of any equity interest in Borrower except for transfers pursuant to and in accordance with the Transaction Documents or in accordance with 98.17 hereof. 6.6 No Investments. Except for investments in tenants of leases included within the Current Phase, Borrower shall not purchase or otherwise acquire, hold, or invest in securities (whether capital stock or instruments evidencing indebtedness) of or make loans or advances to any person, including, without limitation, any shareholder, partner or member of Borrower. 6.7 Subordination of Payments. Borrower shall not make any payments or distributions (including, without limitation, salary, bonuses, fees, principal, interest, dividends, liquidating distributions, management fees, cash flow distributions or lease payments) to any Affiliate or any shareholder, member or partner of Borrower or any Affiliate, or any family member of any such shareholder, member or partner. As long as there is no existing, uncured Event of Default, Borrower may pay the management fees pursuant to the Transaction Documents and Borrower may make distributions to Member of Option Payments received in accordance with the terms of the Option Agreement (as defined in the Lease). 6.8 Change of Location or Name. Borrower shall not change any of the following: [i] the location of the principal place of business or chief executive office of Borrower, or any office where any of Borrower's books and records are maintained; or [ii] the name under which Borrower conducts any of its business or operations, until Borrower has given Lender 30 days' advance notice and has executed and delivered to Lender all UCC financing statements, amendments and other documents reasonably requested by Lender in counection with such change. 6.9 No Ameadments. Borrower shall not consent or agree to any amendment, modification, alteration or termination of any Transaction Document. ARTICLE 7: DEFAULT AND REMEDIES 7.1 Event of Default. Anyone or more of the following events shall constitute an "Event of Default" hereunder: c1r\hcri\lebanon\loanagmt - 11 - 1I13/98 c1;~Jil~"._~~_ ~.,.-.~ I ~_ _ ! , _Il", - ,,, ,1. ,,~-_ 1- =.""" ~ >".\ 'c/,!,_:' .., 7.1.1 Borrower or Manager fails to pay all Net Cash Flow to Lender or any other monetary obligation payable by Borrower or Manager under the Loan Documents within 10 days after the date that such payment is due. 7.1.2 Borrower fails to comply with any covenant set forth in ~5.4 or Article 6 and Borrower or Manager fails to comply with any covenant set forth in ~~2.3, 5.5 and 5.6 of this Agreement. 7.1.3 Borrower fails to (l~~erve and perform any other covenant, condition or agreement under the Loan Documents to be performed by Borrower and [i] continuance of such failure for a period of 30 days after written notice thereof is given to the Borrower by the Lender; or [ii] if, by reason of the nature of such default the same cannot be remedied within the said 30 days, Borrower fails to proceed with reasonable diligence (reasonably satisfactory to Lender) after receipt of the notice to cure the same or, in any event, fails to cure such default within 60 days after receipt of the notice. The foregoing notice and cure provisions do not apply to any Event of Default otherwise specifically described in any other subsection of ~7.1. 7.1.4 [i] The filing by Borrower of a petition under 11 U.S.C. or the commencement of a bankruptcy or similar proceeding by Borrower; [ii] the failure by Borrower within 60 days to dismiss any involuntary bankruptcy petition or other commencement of a bankruptcy, reorganization or similar proceeding against Borrower or to lift or stay any execution, garnishment or attachment of the Facility; [iii] the entry of an order for relief under 11 U.S.C. in respect of Borrower; [iv] assignment by Borrower for the benefit of its creditors; [v] the entry by Borrower into an agreement of composition with its creditors; [vi] the approval by a court of competent jurisdiction of a petition applicable to Borrower in any proceeding for its reorganization instituted under the provisions of any state or federal bankruptcy, insolvency, or similar laws; or [vii] appointment by final order, judgment or decree of a court of competent jurisdiction of a receiver of the whole or any substantial part of the properties of Borrower (provided such receiver shall not have been removed or discharged within 60 days of the date of his qualification). 7.1.5 [i] Any receiver, administrator, custodian or other person takes possession or control of all or part of any Facility and continues in possession for 60 days; [ii] any writ against all or part of any Facility is not released within 60 days; [Hi] any final, non-appealable judgment is rendered against all or part of any Facility, any Affiliate or Borrower and which is undismissed for 60 days (except as otherwise provided in this section); [iv] all or a substantial part of the assets of Borrower are attached, seized, subjected to a writ or distress warrant, or are levied upon, or come into the possession of any receiver, trustee, custodian, or assignee for the benefit of creditors and are not released within 60 days; [v] Borrower is enjoined, restrained, or in any way prevented by court order, or any proceeding is filed or commenced seeking to enjoin, restrain, or in any way prevent Borrower from conducting all or a substantial part of its business or affairs and such proceeding is not released within 60 days; or [vi] if a notice of lien, levy, or assessment is filed of record with respect to all or any part of the property of Borrower and is not dismissed within 30 days. 7.1.6. Any representation or warranty made by Borrower in the Transaction Documents, any secunty for the Loan, or any report, certificate, application, fmancial statement or other instrument furnished by Borrower pursuant hereto or thereto shall prove to be false, misleading or incorrect in any material respect as of the date made. c1t1.hcri\lehanoo\loanagmt - 12- 1113198 ".~" " ~~ ..=,".[ --~-, .." ~~- ~~""1 ~ , -\':' y, 8.2 [Deleted] 8.3 Construction of Rights and Remedies and Waiver of Notice and Consent. 8.3.1 Applicability. The provisions of this ~8.3 shan apply to all rights and remedies provided by any Loan Document or by law or equity. 8.3.2 Waiver of Notices and Consent to Remedies. Unless otherwise expressly provided herein, any right or remedy may be pursued without notice to or further consent of Borrower, both of which Borrower waives. 8.3.3 Cumulative Rights. Each right or remedy under the Loan Documents is distinct from but cumulative to each other right or remedy and may be exercised independently of, concurrently with, or successively to any other rights and remedies. 8.3.4 Extension or Modification of Loan. No extension of time for or modification of amortization of the Loan shan release the liability or bar the availability of any right or remedy against Borrower or any successor in interest, and Lender shall not be required to commence proceedings against Borrower or any successor or to extend time for payment or otherwise to modify amortization of the Loan by reason of any demand by Borrower or any successor. 8.3.5 Right to Select Security. Lender has the right to proceed at its election against an secllrity or against any item or items of such security from time to time, and no action against any item or items of security shan bar subsequent actions against any item or items of security. 8.3.6 Forbearance Not a Waiver. No forbearance in exercising any right or remedy shall operate as a waiver thereof; no forbearance in exercising any right or remedy on anyone or more occasion shan operate as a waiver thereof on any further occasion; and no single or partial exercise of any right or remedy shan preclude any other exercise thereof or the exercise of any other right or remedy. 8.3.7 No Waiver. Failure by Lender to insist upon the strict performance of any of the covenants and agreements herein set forth or to exercise any rights or remedies upon default by Borrower hereunder shall not be considered or taken as a waiver or relinquishment for the future of the right to insist upon and to enforce by mandamus or other appropriate legal or equitable remedy strict compliance by Borrower with an of the covenants and conditions hereof, or of the rights to exercise any such rights or remedies, if such default by Borrower is continued or repeated. To the extent permitted by law, any two or more of such rights or remedies may be exercised at the same time. 8.3.8 No Continuing Waivers. If any covenant or agreement contained in the Loan Documents is breached by Borrower and thereafter waived by Lender, such waiver shan be limited to the particular breach so waived and shan not be deemed to waive any other breach hereunder. No waiver shall be binding unless it is in writing and signed by Lender. No course of dealing between Lender and Borrower, nor any delay nor omission on the part of Lender in exercising any rights under the Loan Documents, shall operate as a waiver. c1r\hcriUebanon\loanagmt - 14- 11/3/98 - -,-~,,[ \l!ii,,: - -___~_'" ~ ~ " ,.- -s'" _~ <',0 _ .,.' ~___, _. 8.3.9 [Deleted] 8.3.10 No Release. Borrower and any other person now or hereafter obligated for the payment or performance of all or any part of the Note shall not be released from paying and performing under the Note by reason of [i] the failure of Lender to comply with any request of Borrower (or of any other person so obligated), to take action to enforce any of the provisions of the Loan Documents, or [ii] the release, regardless of consideration, of the obligations of any person liable for payment or performance of the Note, or any part thereof, or [iii] any agreement or stipulation extending the time of payment or modifying the tenns of the Note, and in the event of such agreement or stipulation, Borrower and all such other persons shall continue to be liable under such documents, as amended by such agreement or stipulation, unless expressly released and discharged in writing by Lender. 8.4 Assignment. 8.4.1 Assignment by Lender. Lender may assign, negotiate, pledge, or transfer this Agreement, the Note and all other Loan Documents to any Lender Affiliate or any other person or entity. 8.4.2 Assignment by Borrower. Borrower shall not assign or attempt to assign its rights nor delegate its obligations under the Loan Documents except in accordance with ~8.17 hereof. 8.5 Notices. All notices, demands, requests, and consents (hereinafter "notices") given pursuant to the terms of this Agreement shall be in writing, shall be addressed to the addresses set forth in the introductory paragraph of this Agreement and shall be served by [i) personal delivery; [ii] United States mail, postage prepaid; or [iii] nationally recognized overnight courier. All notices shall be deemed to be given upon the earlier of actual receipt or three days after deposit in the United States mail or one business day after deposit with the overnight courier. All notices sent pursuant to this Agreement or any other Loan Document shall be simultaneously sent to Balanced Care at its address as set forth in the Shortfall Agreement. Any notices meeting the requirements of this section shall be effective, regardless of whether or not actually received. Balanced Care, Lender and Borrower may change their notice address at any time by giving the other party notice of such change. 8.6 Entire Agreement. This Agreement and the other Loan Documents constitute the entire agreement between Borrower and Lender relating to the subject matter hereof. No representations, warranties, and agreements have been made by Lender except as set forth in this Agreement and the other Loan Documents. If there is any conflict between the terms and provisions of the Loan Commitment and the terms of this Agreement, this Agreement shall govern. 8.7 Severability. If any term or provision of this Agreement is held or deemed by Lender to be invalid or unenforceable, such holding shall not affect the remainder of this Agreement and the same shall remain in full force and effect. 8.8 Captions and Headings. The captions and headings are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Agreement or the intent of any provision thereof. clrlhcn'\lebanonlloanagmt - 15 - 1113/98 . - - -,-or,";" " -I~-'"~ !M 8.9 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State, without giving effect to the conflict oflaws rules thereof. 8.10 Binding Effect. This Agreement will be binding upon and inure to the benefit of the heirs, successors, personal representatives, and permitted assigns of Lender and Borrower. 8.11 Modification. This Agreement may only be modified by a writing signed by both Lender and Borrower. All references to this Agreement, whether in this Agreement or in any other document or instrument, shall be deemed to incorporate all amendments, modifications, and renewals of this Agreement made after the date hereof. If Borrower requests Lender's consent to any change in ownership, merger or consolidation of Borrower, any assumption ofthe Loan, or any modification of the Loan Documents, Borrower shall provide Lender all relevant information and documents sufficient to enable Lender to evaluate the request. In connection with any such request, Borrower shall pay to Lender a fee in the amount of $2,500.00 and shall pay all of Lender's reasonable attorney's fees and expenses and other reasonable out-of-pocket expenses incurred in connection with Lender's evaluation of Borrower's request, the preparation of any documents and amendments, the subsequent amendment of any documents between Lender and its collateral pool lenders (if applicable), and all related matters. In connection with any proposed change in the ownership of Borrower or Tenant, or an assumption of the Loan and Lease, relating to a proposed substitution of Borrower and Tenant, Lender's fee shall be limited to $2,500 for all modifications and consents relating to the Current Phase and made concurrently. 8.12 Construction of Agreement. This Agreement has been prepared by Lender and its professional advisors and reviewed by Borrower and its professional advisors. Lender, Borrower and their advisors believe that this Agreement is the product of all their efforts, it expresses their agreement, and that it shall not be interpreted in favor of either Lender or Borrower or against either Lender or Borrower merely because of their efforts in preparing it. 8.13 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original hereof. 8.14 No Third-Party Beneficiary Rights. Except for Balanced Care, no pefson not a party to this Agreement shall have or enjoy any rights hereunder and all third-party beneficiary rights are expressly negated. Without limiting the generality of the foregoing, no one other than Borrower, Manager and Balanced Care shall have any rights to obtain or compel a disbursement of proceeds of the Loan hereunder. Notwithstanding any provision to the contrary contained herein or in any other Loan Document, [i] Balanced Care is a third-party beneficiary of this Agreement and the other Loan Documents, [ii] no Loan Document shall be amended without the prior written consent of Balanced Care, and [iii] Balanced Care shall have the right to enforce the provisions of this Agreement. 8.15 Lender's Authority to Furnish Copies of Loan Documents. Lender may exhibit or furnish the Loan Documents or copies thereof to any potential transferee of the Loan Documents (whether such transfer is absolute or collateral), to any govemmental or regulatory authority in connection with any legal, administrative or regulatory proceedings requiring the disclosure of the terms of the clr\hcn\Jebanon\loanagmt - 16- 1113198 01I!~~,tJ~~ -f" -,_" ~~ ,_,>::'~"'.,,-- I" -'- -I, , "., -I ~ Loan Documents, to Lender's attorneys, auditors and underwriters, and to any other person or entity for which there is a legitimate business purpose for such disclosure. 8.16 Lender Merely a Lender. 8.16.1 No Agency. Lender is not and will not be in any way the agent for or trustee of Borrower. Lender does not intend to act in any way for or on behalf of Borrower in disbursing the proceeds of the Loan. Lender does not intend to be and is not and will not be responsible for the completi0:' of any improvements erected or to be erected upon the Leased Property; the payment of bills or any other details in connection with the Leased Property and improvements; any plans and specifications prepared in connection with the Leased Property and improvements; or Borrower's relations with any contractors, subcontractors, materialmen, or laborers performing work or supplying materials for the Leased Property and improvements. 8.16.2 No Obligation to Pay. This Agreement is not to be construed by Borrower or anyone furnishing labor, materials, or any other work or product for improving the Leased Property as an agreement upon the part of Lender to assure that anyone will be paid for furnishing such labor, materials, or any other work or product. 8.16.3 No Responsibility for Construction. Lender is not responsible for construction of the improvements. Notwithstanding inspection of the Leased Property and the improvements, Lender assumes no responsibility for the quality of construction or workmanship or for the architectural or structural soundness of any improvements to be erected upon the Leased Property or for the adherence to or approval of any plans and specifications in connection therewith or for any improvements. 8.17 Substitution of Borrower and/or Tenant. Notwithstanding any provision to the contrary in the Loan Documents or Lease Documents, if [i] Member desires to transfer the equity interest in Borrower, [ii] Borrower desires to assign its rights and obligations under the Loan Documents, [iii] Borrower desires to transfer the equity interest in Tenant, or [iv] Tenant desires to assign its rights and obligations under the Lease Documents, in each case to a person or entity ("Transferee") that is not an Affiliate of Borrower, Member, Tenant or Balanced Care and in which Borrower, Member, Tenant and Balanced Care hold no equity interest, the following conditions shall apply: (a) The prior written consent of Lender shall be required but shall not be unreasonably withheld. Lender's review of the proposed Transferee shall include application of Lender's customary underwriting standards. (b) Lender shall have received such documents, instruments, letter of credit amendments and amendments to the Loan Documents and Lease Documents as Lender may reasonably request in connection with such transfer. ( c) All parties shall reasonably cooperate and take such actions as may be reasonably requested in order to facilitate the transfer to the Transferee. c)r\hcri\lebanon\]oanagmt - 17- 1113/98 't'!l;,lJ,:~_1, .,-'. _ _ ::"T,__,__,_'~,T_,~"r -- " -1- , ~- ., -'-~ ~"'- . , , ~ (d) Lender shall have received reimbursement from Balanced Care for all attorneys' fees and expenses and all other reasonable out-of-pocket expenses incurred in connection with the foregoing. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK] clr\hcri\lebanon\loanagmt - 18 - lJl3/98 i_,;;~~o_<_",_ "_._,,, """'''''-'. ". -- '.' ,- 'r t! '- ~" - "I' ,~./MilI! ,m 'llt.}i;j!,:'1l''l IN WITNESS WHEREOF, Lender and Borrower have executed and delivered this Agreement effective as of the Effective Date. LENDER: INC. PENNSYLVANIA BCC PROPERTIES, By: (!1.-~1\; L Y.k~( _ Title: VleE PRESIDENT AND CCRPORAfE SECRETARY BORROWER: FI~ INVESTORS, LLC By' .2~ Tax LD. No. Title: Brian L. Barth AGREEMENT OF MANAGER The undersigned Manager shall comply with all provisions and perform all obligations applicable to Manager set forth in the foregoing Loan Agreement, including, without limitation, ~~2.3, 2.5, 2.7,5.2.1,5.5 and 56. BALANCED CARE AT LEBANON, INC. BY:~~ ------ Title:Y ~:I:"::~~~.~\p0.(ber c1r\hcri\Iebanon\loanagmt - 19- 10130198 " ,-, . _~ '" r" _ - P.o" . , .-,-- ~ "' r" ,,- , - , ~ ,"1 - ~ -" ,'-"" --" .- ~---- clr\hcri\lebanon\loanagmt -'1'XlIll:_~_ ".. " "',-".' :?;P~ .'-, _,' .~ ~"r EXHIBIT A: DISBURSEMENT SCHEDULE [Balanced Care to provide] 11/3/98 '-1 ,w, ~"' I~ I: t ~ ". , ,'c'f~<l;~,!\lJ~_ ~,~ 00 ~","""" CIl :i 'tl Gl .c U en .. c Gl E II> f! :I .0 III Q ~s:e n Q ~ os"H c. Wi:::J.c C- o C IV .0 GI ..J I ... U GI 0' .. Q. . $I i H ! fi1 ~ .. Jl I! 8~~~~8a~~~~~~~~~~~~~~~ ~ ~ciri~~;~.~~ O~~io~g~~~~ . ~t'f ~ 10;1 NN r:I ~ . = ~Uj;"~~~~;$ ...r...~ g ~2 ~~ f; - ,; ::10 oft ~ 2 ~ o OO~E_O~OOO~ "~i ~ ~ i5 ~ ~~ " 0; '" ~ c C~!!~~~O~OS ~~ i:i ;j :;I " ~ ~ ~ o OO~~O ~R " ... . ~ o 000100 ~~ ~ ~ ~ o 008~O "';S. -;;; n '" ~ " OO~~O ~lf s oog:go ~ ~ -:~. " ~ " ooo~o :it. -~ N ~ c oog~o "'... -;e ~ "8:;:"\'l"8~~oo o,..,..f,I<Z;IiS.... ... J!!'sa'ri':~cD~ ~ " ~ ) i ~ 8~ ... '" ODDen ~ N 00 <; 8' II ,; ~ ooog g~ 0; N m Q ,.: :1 ,; N ooo~ ~ 2~ ~ ;; ~ n <6 ~ ooo~ ~ ,; 8" ... ,.: :;I ~ ooe<o &l .-; s" ~ c. ... ~ ~ i 0. 0008 ~ 80 ". 8 m :T " ... o~o; g e "c m ::! ..: ~ iH~O 'i!!~ g!!ge~ ri"':N- 7. ~ N ~ ~ ~~se~~i~~~ ~~~!~~S~~~~ ~ (') "1..t C'OIl';; <0 ., ~ N;: .. i " ~ ~ . . .:: r < .~ u < ~ lh~ ~~~t ~& ~ liE ;t eifel -J.I~ ~ 0 ;~~~i~;ii~jl~!Ri J-~I~l I o~~~e~w= c~~. ~~ ~~i~ ~ ]!~!i1~ii!~!!i]~~ ~gj~ ~ ! i u r ~ ."'\< -" . I ~ , '3~~,~';r,;j';\~ EXHIBIT B: DISBURSEMENT VOUCHER ,19_ Pennsylvania BCC Properties, Inc. One SeaGate, Suite 1500 P.O. Box 1475 Toledo, Ohio 43603 Attention: Erin C. lbele Re: Loan Agreement (the "Agreement") between Financial Care Investors, LLC ("Borrower") and Pennsylvania BCC Properties, Inc. ("Lender") Dear Ms. lbele: Manager, on behalf of Borrower, hereby requests a disbursement in the amount of $ to be made on or about , 19_ (which is at least business days following Lender's receipt of this Disbursement Voucher). All terms used in this request are defined in the Agreement and have the meanings given in the Agreement. Manager hereby certifies to Lender as follows: (a) At the date hereof, no suit or proceeding at law or in equity and no proceeding of any govemmenta1 body has been instituted or, to the knowledge of Manager, is threatened, which, in either case, would have a material adverse effect on the financial condition or business operation of the Facility. (b) At the date hereof, no Event of Default has occurred and is continuing, and no event known to Manager has occurred which, upon the service of notice and/or the lapse of time, would constitute an Event of Default under any Transaction Document. (c) A Funding is required under the Shortfall Agreement in the amount of $ ("Funding Amount"). The amount of this disbursement request equals 85% of the Funding Amount. The remaining 15% of the Funding Amount is being concurrently fimded by a capital contribution from Borrower to Tenant and fimding by Tenant of its equity contribution to the Collateral Account. (d) The representations and warranties of Balanced Care and Manager, and to Manager's knowledge, of Borrower in the Transaction Documents are true and correct as of this date. ch\hcn'\lebanon~oanagmt 11/3/98 "'~ ,< r " ,'" ~" < '-~- "'- ~, , ~^ Manager, on behalf of Borrower, hereby authorizes you to disburse the proceeds of this disbursement directly to the Collateral Account in accordance with the Shortfall Agreement and Deposit Agreement. Manager covenants and agrees that said proceeds will be paid in accordance with the Shortfall Agreement. BALANCED CARE AT LEBANON, INC. By: Title: clr\hcri\lebanon\Joanagmt -2- 1I/3198 ;~.'I',~jf;~ ''',_~' " ~ " ;.- ., !A~l. ,,"_~_ The foregoing draw request IS approved by Lender on this _ day of ,19_. PENNSYLVANIA BCC PROPERTIES, INC. By: Title: clr\hcn\Iebanon\Joanagmt -3- 11/3/98 T" I """ ,~, <. , .L) '. 'C""_. ~ < , ,.' "."-~ ~ ~I~ - d';t~'""'~h''''^'~"' ,,,,,.,,.,~,, . .,- clrlhcri~ebanon~oanagmt .~)~:~4iJ.~,~ '.'", 'C." -_"_ EXHIBIT C: WORKING CAPITAL BUDGET [BALANCED CARE TO PROVIDE] r , ",.. ""~ ,.c. I" .", ~, 1113/98 ~~ 1- . -~, ~~ 08"''''......'or In In 0 0 It) ",Ioi I,t)InCOr'J-......,,:1 z;g' o NM-"'-:!gl bog ~~I:=~~'~~ z;l!' N'" n 0 0 n....... c.'!.'=t~~"tQ).J ".J to CO r") 'Ill" ... C'\rI"-. :.!: - CD - at to- M t-..,.Q)I i;t-:u .n":":viN..tI":' '$.'-- ~ ~ NlOrl ~:.jN:1 .-'!) "'''3 1t)~"ltN "N; ~ ;. c (")""'('101- .~~ "'''i M VN"'- N. ~'" -a[ !~. 1Uu. :~~ III~ II> 1 ;, IL. I r o 0 It) \t) n cole; '! ~ Ie l!3 ~ ! 1! C;;llQlj ~ ~ """'00~""8" 0 80.... <016....",. 0 '.... N"'''' -, ~ 0 . "'l...._ "'l . -:'''!J ~ co. -: "{ -. ....~"'~ cacaO'! "'~("). ~~.!I -"'--"'~I~ '$.!!G> -0...."'-....:8. ;;~! ..:o-d;'~..:..,-I... , ... 0 "''''~....''' ~ ",E~ M'IlOMVt-...C'oI. . MI:QM t-N!f "'EZ N N- N CUE -N- :; cuez -N- .1 e .;1 e l! ... ' J a.. . ... g g888O:ili~~ ! 000080lof g 0000"''''8'1 000~ 0!1 o~"'''''''liIJ . 0 oo"''''~-o lnVJO "'glQ .., '" ",n cO ~-li ~ oo"-=tOo;~C") ~ri~"':"';~'co ~ "':NrifJi~~l""l CO;!;:;l-"''''~ 0 ~~N~t>>NI~ n-COQ)ClDN- ~ 1"")- "'lr CD MNN- co' , . --I 1'1: .. ,- "'...~ogo .........goo 0>8:0>080 mil! Q-~ ll!1!!1!! ~e 11! 1!!~_!2 ~_MCDO) fl)O)::N co 'D0l= I(lCO -=-- _::--- - cCcc c~"2c ~~ilii ~iilli -::-VeG.JCD c:5i~_EE CD cn-- ".-:a;;; ES..!i:C:3 ~~hd -;;;;i!:.5c! C;;::~E~i!: CD >__;:::._ ~>;.-e:;. lIJg:.5::::.-- ::. -~l'- ~ ~.E'i~rf C.E~~~;J s:s;Jl!"~ ::::.j"IG..... '" ::::.-11.... co 'i~c5Occ5 <Ii ~l!~~~~ ~~cOoc 9 dOfi!"iiCi ~ oOJ!."'..!!~ oajj~:!!]j _-:s:;:- ~~'g.~it.~ gI'- a. a'- QI g>>"a. ~ Q. is.. 5 g'.Eg.~",~ Z ~,_ <00 IU ra .- .; U U U (J cCU (J(J g '- C U U'(J III c .. 8.X.CI~o.th Iii......"'.. II!:; CDQ.~CC\~ D.os-C::C; o 2.5 ,;;;5 .5 ~ a,.D.c:5:S:c ~ g!~~~~ 0 oO'-'l!'-- !~-!o-!~ Q)!-eo~~ ....~o~oo z ~~~3:.~~ toaa..o~oo 0 ~ii3: 3:3: m II:: ~ii3: 3:3: :; ~.5:iii~"E= ,::S-;;~"E:5 ~ .~.S!Vi~"E.s , U.LL..-Nr-:J'" .... u..~-NM'I3' u..L1..-Nn.. ~~~ oo"'~""-"'Il z;g> It) It) Ln U') CD Mi~" '" '" ... ... 0> :8' ""1 g g 0; ~ m;~ N,....N -" . '$.~~ "'.....<o-\() N ~..._":.~."!.q"w (gCOco......CONN d;',,;,,;,,:,;"'1-i '$.'-~ lli":ri..nc.J'lli,n"i, ",,,c ..." In-~~M...eoll In"'!) -.ff:J anCOUlN ar ~'" n N- =1 - ",,,, MTN- .NI ~u.; III" :Mii u. "'IIl"'~M"'C LU OOlll..,-....j"'] , ~ ~ ~ III ", ... ... :8 ''':It>' 0 gg 0"'......., 0 ..... N "'" ro,.......,/ 0 ..... N CQ M co'l ".!f co - 0 tP.JtO '$...!!S COlD.... NOO ~.!! at- COCOClO.....Q)NN ;;ee U;g~~~~ ~11 --OOo)a)M':"lt ':ON~N'<I;~:ll1 In 0, ",Eo r') g;J c-, M (Q NI..... ::l~J (")co.. r--N II "'ez N N.... .~ "'EZ -N- :& - N - Ii. e ii;;, 0 I . 0 II. ... ;' ... i lL . ... I 0, OgOOlttanOI C> 0000:il iil'o" 0 o oooU'>lt)lo:i ~ Q "''''Nt-.Oj 0 ooo:!: ~o' ~ o C 10 ':J N '.....0 o to- U) co N'''' 0 Il)U'lVl "-OJ I.C!~~ _~~~i ~ g~~~.::;;1~ ..;, ...:N-.ri....:...... ~; ...... N 10 - U') CD',,-' S ,.., - "'-- to CD N.OlI ... - 1iil .... cO "'iN; MU'lM_ ~ NN- "'" :I Clt-N..- :;g, ~ ... w. , " " . ~I "''''Sloog O)O)gooo "'o>O>goo :S ~~~~liSo; l!!11!:::e~e !i!:!S?!~_e~ " '" lDOl_N co lnQ)::N~GO c 0 .!!:l! ---- - -'0'-- ---- -:; -c-- -c:-- -c-- r .... c.. li e -:=.-lielili CG)CC: :pili ~~~S.s~ :='-:='-"E~~ a.n c5jE_EE cCs_ Oc es"fn;tnut Ee;;Q;cnr; CDQ) ctlI"jji- '" .... e.s=~cu: c " .. C;;"'>~:>:" -u;~>~~ , oOE cuGti:::-C;C UtGtC-=Cl; -;;tn~c>::' =ml!! >>;;:Jj';':;:::' II) >__::::,._ cu cu i:_ C s: ~.s}"i;~~ '>>::::.~:::;;.::::. l!.><- gi~:!P ge ~ d ~ o u " ~l't!""...f! ~..'" ~..CQOC ~~caOO - . :r ~..oooo o III a: l!c-~-- ..."""-Ci-- .. - 0 o IV mea CioS~:J!ii U...._ en g-a ~'g. 'd t! CC.!!!-:::!!~ eiD ;l!! W tng"a.:;-a-a. Ol'-a.-"= ~ c_~u(.)CQ . ~._ 1'\10 ~ IV :z ~~li'8~i' da:a. i: E: U () :.: 'c co 0(,) '1 ceu uu l!G ~cUCDD'o.O' u 8,cuoC'Jt.")C) ~ ~~~.~F~ 'iG '" a.Q.c-5c;r:; ~ og-S;~.5!i ee:g~-8:g o !!:;;; 'l! ....- U.c c UJ !f2i!:(;-!:i!: 0 ! _o....of c=~ .... ~~~~~~ ~~~~~~ IE D.~~s:-2~ ....~ '" :II:: . ;j~~ Ul -CQ So ~ .g:.s-;;-g'E= g ~c:-'O'1:I.c <( .~.!:-;j'2"E:S __ctlIc...._ U.U.-l'4M'lf' l1.lL-Nr-:J... 0, \L\1._Nt""fd- -:'''~!J'l,.'r. .- ~,. -~ ,.. ~"- ~l"'" ~-- . ~ -. . ",""'-~ .~.~ r-~'~"~ g>t :;~fr~ clr\hcn\lebanon\loanagmt , " -,r EXHIBIT D: PENDING LITIGATION None 11/3/98 ,,,' -,' -~ ~, - :t?:~'~' EXHIBIT E: DOCUMENTS TO BE DELIVERED Borrower shall deliver each of the following documents to Lender no later than the date specified for each document: 1. each fiscal year. Annual Financial Statement of Borrower - within 90 days after the end of 2. Periodic Financial Statement of Borrower - within 45 days after the end of each quarter and 30 days after the end of each month. 3. Borrower's Certificate - with each delivery of Borrower's financial statements. 4. Federal tax returns of Borrower - within 15 days after the filing of the return. If the filing date is extended, also provide a copy of the extension application within 15 days after filing. c1r\hcn'\lebanon~oanagmt Il/JI98 '"';)r\1'f;~",_", ~, .,., ~ _ r --"".' ,!",..," - !'5f.!i:',#' ;:"~- EXHIBIT F: BORROWER'S CERTIFICATE Report Period: Commencing and ending Loan: $ loan made by Pennsylvania BCC Properties, Inc. ("Lender") to Financial Care Investors, LLC ("Borrower") I hereby certify to Lender as follows: 1. The attached [specify audited or unaudited and annual or quarterly, and if consolidated, so state] financial statements of Borrower [i] have been prepared in accordance with generally accepted accounting principles consistently applied; [ii] have been prepared in a manner substantially consistent with prior financial statements submitted to Lender; and [iii] fairly present the financial condition and performance of Borrower in all material respects. 2. To the best of my knowledge, Borrower was in compliance with all of the provIsions of the Loan Agreement and all other Loan Documents executed by Borrower in connection with the Loan at all times during the Report Period, and no default, or any event which with the passage of time or the giving of notice or both would constitute a default, has occurred under the Loan Documents. Executed this _ day of Name: Title: c1r1hcn'\lebanonUoanagmt 1113/98 'c'_' _,~" e."" -"'C_',"- " , . SECURITY AGREEMENT TIllS SECURITY AGREEMENT ("Agreement") is made as of September 22, 1998 between FINANCIAL CARE INVESTORS OF LEBANON, LLC, a limited liability company organized under the laws of the State of Delaware ("Grantor"), having its chief executive office at 5021 Louise Drive, Suite 200, Mechanicsburg, Pennsylvania, and PENNSYLVANIA BCC PROPERTIES, INC., a Pennsylvania corporation ("Lender"), having an address of One SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio 43603-1475. RECITALS A. Lender is extending a loan to Financial Care Investors, LLC ("Borrower") in an amount of up to $686,800.00 ("Loan") pursuant to the terms of a Loan Agreement between Lender and Borrower of even date ("Loan Agreement"). The Loan is evidenced by a promissory note made by Borrower in favor of Lender of even date ("Note"). B. The Loan Agreement sets forth, among other things, the tenns and conditions under which Lender is obligated to advance Loan proceeds and may make nonobligatory advances, all of which are secured by this Agreement. The Loan Agreement is incorporated herein and made a part hereof as though fully rewritten herein, including defined tenns unless otherwise defined herein. A copy of the Loan Agreement is maintained at the offices of Lender and may be inspected by interested persons. The definitions in the Loan Agreement shall be applicable to any capitalized terms herein that are not otherwise defined. C. Borrower owns all of the equity interest in Grantor. The proceeds of the Loan will be used by Borrower solely to fund Borrower's capital contribution to Grantor which funds will be used by Grantor to fund its equity contribution for development of the Facility (as defined in the Loan Agreement). D. Lender has required as a condition of its granting the Loan to. Borrower that Grantor grant Lender a security interest in certain personal property now owned or hereafter acquired by Grantor, including, without limitation, contract rights, accounts receivable and general intangibles. Grantor acknowledges and agrees that it will be benefited by the Loan and that Grantor is willing to grant Lender a security interest in all of the Collateral (as hereinafter defmed). NOW, THEREFORE, as an inducement to Lender to make the Loan and in consideration thereof, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor, intending to be legally bound hereby, agrees as follows: 1. DEFINITIONS. 1.1 All terms defined by the Uniform Commercial Code as adopted in the State of Pennsylvania shall have the meanings given by the Uniform Commercial Code, unless otherwise stated. clr\hcn \lebanon \security 10/29/98 '}"I~~l,'~'_~"c. .~,h;, " ," . ~ ~ " ,'" !: _OJ' - ~- " ~.~, - r--""'. . ~\~..".n.. 1.2 "Collateral" means: the following property of Grantor, whether now existing or hereafter arising or acquired: (a) All accounts, accounts receivable, contract rights, checks, notes, drafts, instruments, documents and chattel paper. (b) All general intangibles, including licenses, operating rights, permits, franchises, trademarks, trade names, customer lists, brochures, promotional materials, mailing lists, and all other property and rights of Grantor not otherwise part of the Collateral. (c) All contracts, agreements and contract rights, including, without limitation, aU rights of Grantor under the Shortfall Funding Agreement made among Grantor, Borrower and Balanced Care Corporation, as amended from time to time. (d) All ledger sheets, files, records, correspondence, computer programs, tapes, other electronic data processing materials and other documentation relating to property otherwise listed herein as Collateral. ( e) All products and proceeds of any property listed herein as Collateral, including noncash proceeds, proceeds of proceeds, and proceeds of any insurance. 1.3 "Loan Documents" means the Loan Agreement, Note, this Agreement and all other documents and agreements made in connection with the Loan, as amended, modified, renewed or extended from time to time. 1.4 "Obligations" means all indebtedness, liabilities and obligations of Borrower and Grantor to Lender now existing or hereafter arising, including, but not limited to, all principal, interest, charges, expenses and all other amounts payable by Borrower under the Loan Documents and all covenants and obligations of Borrower and Grantor under the Loan Documents. "Obligations" includes obligations that are direct or indirect, secured or unsecured, joint or several, absolute or contingent, due or to become due, regardless of whether or not they are evidenced or disputed, and regardless of how they arise or, if evidenced, how they are evidenced. 2. PURPOSE. 2.1 Grant of Security Interest. Grantor grants to Lender a security interest in the Collateral to secure payment and performance of the Obligations. 2.2 Consideration. Grantor makes this Agreement in consideration for the Obligations, which Grantor acknowledges will provide a benefit to Grantor. Grantor expressly acknowledges that the consideration for the grant of the security interest hereunder is adequate and waives any defense to the enforcement of the security interest granted herein based upon lack or inadequacy of consideration. 2.3 Future Advances. TIris Agreement secures all advances made to Grantor and value given after this date, whether or not made or given pursuant to an existing commitment. clMcri\1ebanon'oecurity 2 1009198 ^\'~I!!,!~ l~ .. "_, "'" ..~~~ " >, ' 'r" cory' -~, ~,-, - ., :i"~Jf' T ,', =. ~,.~=~ ,~ . 3. TERM. 3.1 ~. This Agreement shall terminate on the date when the Obligations are paid in full. 3.2 Termination of Financinl! Statements. Upon complete satisfaction of all Obligations secured by this Agreement, Lender shall give Grantor termination statements and other documentation that will enable Grantor to terminate financing statements filed under this Agreement. 4. REPRESENTATIONS AND WARRANTIES. 4.1 following: Renresentations and Warranties of Grantor. Grantor represents and warrants the 4.1.1 Grantor is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Grantor has the power and authority to execute, deliver and perform Grantor's obligations under this Agreement. The execution and delivery of this Agreement and the performance of Grantor's obligations hereunder have been du1y authorized. This Agreement constitutes the legal, valid and binding obligation of Grantor, enforceable against Grantor according to its terms. 4.1.2 No agreement to which Grantor is a party and no law will be contravened by the execution, delivery or performance of this Agreement. There is no litigation or any proceedings by any public body, agency or authority pending or threatened, the outcome of which might materially and adversely affect the Collateral or the continued operations of Grantor. 4.1.3 Except for liens granted and financing statements executed pursuant to any of the Transaction Documents, (a) Grantor has good title to its Collateral, free of all liens and encumbrances; (b) no other person, firm, corporation, entity or govemmental authority has or claims any interest in or relating to any Collateral; and (c) no adverse financing statements are on file against any Collateral. 4.2 Survival. All representations and warranties contained herein shall survive the execution and delivery of this Agreement and shall be effective continuously until this Agreement terminates. 5. AFFIRMATIVE COVENANTS. 5.1 InsDection and Information. Grantor shall (a) give Lender full access at all reasonable times to the Collateral and to Grantor's books and records for purposes of auditing, checking, inspecting, abstracting and copying; (b) permit agents of Lender to enter upon Grantor's premises at any reasonable time for any of the preceding pwposes; and (c) provide Lender such financial statements and other data pertaining to Grantor or the Collateral as Lender may reasonably cblhcn'>lebanon\securily 3 10/29/98 .'!~~,fJi,.~ _ q__ ,"""'_' , -, 'I oe. . _ .. ,~, .~ "'I ~ ;t-lfJcto,'",'---"'~_-'--""-- n -__F, ,---~" "- .--' f request; provided, however, Lender shall use reasonable efforts to minimize disturbance to Facility operations. 5.2 Further Assistance. Grantor shall execute and deliver any additional documents reasonably requested by Lender to carry out this Agreement. 5.3 [Intentionally Deleted] 5.4 Reoroductions for Financinl! Statements. A carbon, photographic or other reproduction of this Agreement or a financing statement shall be sufficient as a financing statement and may be filed as such by Lender. 5.5 No Liabilitv. Except for its grossly negligent or willful acts or omissions, Lender shall not be liable for any of the following, regardless of whether or not the Collateral concerned is in the possession of Lender; (a) any error or omission or delay of any kind occurring in the settlement, collection or payment of any Collateral or any instrument received in payment of any Collateral; (b) any increases in or profits on any Collateral or any money received from any Collateral; ( c) any claims, damages or expenses of whatever nature arising out of or related to this Agreement, regardless of merit; and (d) any claims, damages or expenses, including attorneys' fees and litigation expenses, resulting from any of the foregoing in any way. 5.6 Defend Collateral. Grantor shall defend the Collateral and Lender's interest in the Collateral against all claims, demands and defenses, regardless of merit, and shall hold Lender harmless from all expenses arising out of any such claims, demands or defenses, including reasonable expenses for attorneys' fees and litigation costs. 5.7 Preservation and Protection. At Grantor's expense, Grantor shall (a) maintain such books and records of Collateral as Lender may reasonably require; (b) protect the Collateral for Lender's account; (c) immediately notify Lender in writing of any proposed change in Grantor's chief executive office or any other place of business or the location of Collateral before such change OCCtml; and (d) do all that Lender may reasonably request to preserve Collateral. 5.8 No Further Security Interests. Except as otherwise provided in the Transaction Documents, Grantor shall not pledge or grant any other security interests in the Collateral without Lender's written consent. 5.9 Disclosnre of Securitv Interest. Grantor shall (a) disclose in a manner satisfactory to Lender, Lender's security interest in the Collateral on all ledgers, cards, books of account and other records and documents relating to the Collateral; (b) permit Lender to verify all Collateral; and (c) not, without the prior express written consent of Lender, forgive, reduce, liquidate, sell or modify any Collateral, except in the ordinary course of business. 6. DEFAULT AND REMEDIES. 6.1 Default. The occurrence of any of the following shall constitute an Event of Default under this Agreement: ' c\rJ",ri\lebaoon'security 4 10/29/98 -"q,,,?- .-- >. ,'" -,,""..,'" , ? ,~ , "" .'~ f-~ ;jW'" , ,,_. ~-,& 6.1.1 The occurrence of an Event of Default under the Loan Agreement or any other Loan Document. 6.1.2 Any failure by Grantor or Borrower to pay any amount due Lender hereunder when due. 6.1.3 Except as provided in Section 6.1.2, any failure by Grantor to perform any agreement, to meet any condition or fulfill any obligation contained in this Agreement within 30 days after written notice of such failure from Lender; provided that if the failure is of a nature that cannot be remedied within said 30 days, such failure shall not constitute an Event of Default so long as Grantor proceeds with diligence (reasonably satisfactory to Lender) to cure the failure and, in any event, cures such failure within 60 days after receipt of Lender's notice. 6.1.4 Any representation or warranty contained herein or made hereafter by Grantor to Lender proves to be untrue or false in any material respect. 6.1.5 (a) The filing by Grantor ofa petition under 11 U.S.C. or the commencement of a bankruptcy or similar proceeding by Grantor; (b)the failure by Grantor within 30 days to dismiss any involuntary bankruptcy petition or other commencement of a bankruptcy, reorganization or similar proceeding against Grantor or to lift or stay any execution, garnis1unent or attachment of the Collateral; (c) the entry of an order for relief under 11 U.S.C. in respect of Grantor; (d) any assignment by Grantor for the benefit of its creditors; ( e) the entry by Grantor into an agreement of composition with its creditors; (f) the approval by a court of competent jurisdiction of a petition applicable to Grantor in any proceeding for its reorganization instituted under the provisions of any state or federal bankruptcy, insolvency, or similar laws; or (g) appointment by fmal order, judgment or decree of a court of competent jurisdiction of a receiver of the whole or any substantial part of the properties of Grantor, provided such receiver shall not have been removed or 1 discharged within 45 days of the date of appointment. 6.1.6 (a) Any final, non-appealable judgment is rendered or proceedings are instituted against all or part of the Collateral or Grantor which affect all or part of the Collateral and which is undismissed for 60 days; (b) all or a substantial part of the assets of Grantor are attached, seized, subjected to a writ or distress warrant or are levied upon or come into the possession of any receiver, trustee, custodian or assignee for the benefit of creditors and are not released within 60 days; or (c) Grantor is enjoined, restrained, or in any way prevented by court order, or any proceeding is filed or commenced seeking to enjoin, restrain or in any way prevent Grantor, from conducting all or a substantial part of its business or affairs and such proceeding is not released 1 within 60 days. 6.2 Remedies. Upon the occurrence of an Event of Default, Lender may exercise any one or more of the following rights and remedies: 6.2.1 Exercise any right that Lender may have under the Loan Agreement or any Loan Document. .lIlhcri\lebanon\security 5 10129198 So",.," ,',~ -.' ~': _ '" ,., ,~ ., .,,', ";;~'- '- ' ~" "I"'""""""" ~?"'P"':":f'"~'.O'jJ'C.-:~ 'T""'<J"'='T' ~'~'". - 6.2.2 Incur reasonable expenses (including attorneys' fees and litigation costs) to exercise any remedy or right. 6.2.3 Obtain control over the Collateral by requmng Grantor or anyone in possession of the Collateral to assemble the Collateral and make it available to Lender at a reasonably convenient place designated by Lender, exercising Lender's rights under this Agreement or taking possession of the Collateral with or without judicial process. 6.2.4 Retain the Collateral in full satisfaction of the Obligations secured by this Agreement or dispose of the Collateral and apply the proceeds of the disposition to payment of outstanding Obligations after all expenses incurred by Lender in obtaining control and disposing of the Collateral have been paid. 6.2.5 Without waiving any prior or subsequent default, waive any default or, with or without waiving any default, remedy any default. 6.2.6 Exercise any other right or remedy that a secured party has under law or in equity, including, but not limited to, all rights and remedies under the Uniform Commercial Code. 6.3 Processinl!: Collateral. Lender may do whatever Lender determines is commercially reasonable to prepare any Collateral for disposition and to dispose of any Collateral. Grantor shall not do anything that would restrict Lender's rights to process or dispose of Collateral. 6.4 Collection. 6.4.1 Grantor shall (regardless of whether an Event of Default has occurred), at Grantor's expense, but on behalf of Lender and in trust for Lender, collect all the Collateral and hold all such collections, unless Lender exercises its option under Section 6.4.2. Unless Lender elects otherwise, Grantor may commingle collections of Collateral with Grantor's own funds. 6.4.2 At Lender's option, but only after an Event of Default has occurred and while it is continuing, Grantor shall (a) deliver to Lender on the date of receipt all amounts collected on the Collateral in whatever fonn received and duly endorsed by Grantor, or (b) provide Lender a full accounting of all amounts collected on the Collateral with such frequency and in such form as Lender may require. 6.4.3 If any account debtor defaults in the payment of any Collateral, Grantor shall, at Lender's request, institute any action or enter into any settlement Lender determines is desirable or necessary to obtain recovery or redress from the account debtor. 6.4.4 After an Event of Default has occurred and while it is continuing, Lender may give notice of its security interest in the Collateral to any account debtors or any other party claiming an interest in the Collateral and may instruct any such account debtor or other party to remit all payments on the Collateral directly to Lender. clrlhcnilebanonlsecurity 6 10/29198 zeqa ~~,- -,,,", , '" .". , ..",", .~. . ,= I" ~~r"~= ;~~v~.;,-, tr~~rU-l""""-'c'^-'-";--'" ,'-"'-~-. "~ . . , 6.4.5 After exercising its option under Section 6.4.2 or after giving or attempting to give any notice described in Section 6.4.4, Lender may take possession of any or all the Collateral and only Lender, at its option, may collect the Collateral. In exercising its rights to collect the Collateral, Lender may (a) collect any of the Collateral in its own name or in the name of Grantor; (b) collect the Collateral by suit or by any other lawful manner; (c) compromise, settle or enforce for cash, credit or otherwise the Collateral; (d) grant extensions of time for payment or performance or any other indulgences to anyone on the Collateral; (e) release any account debtor or anyone else from any liability on the Collateral; (f) accept the return of goods represented by any Collateral; or (g) do anything else that Lender is permitted to do under any provision of law or of this Agreement. 6.4.6 Grantor appoints Lender as its attorney-in-fact for Grantor with power (a) to receive, to endorse, to sign and to deliver any and all checks, drafts and other instrwnents for the payment of the Collateral and to waive on behalf of Grantor demand, presentment, notice of dishonor, protest and any other notice for any instrwnent so endorsed; (b) to sign Grantor's name on drafts against account debtors, assignments and verifications of the Collateral and notices to account debtors; ( c) to send verifications of the Collateral to any account debtor; (d) to notify the postal authorities to change the address for delivery of mail addressed to Grantor to any address that Lender may designate; and (e) to do all other acts necessary to carry out this Agreement. Lender shall not be liable for any acts of omission or commission nor for any error of judgment or mistake in fact or law made in exercising any of the listed powers. This power of attorney is irrevocable for the term of this Agreement and is coupled with an interest. 6.4.7 Lender may incur any costs and expenses, including reasonable attorneys' fees and litigation expenses, that Lender deems reasonably necessary or desirable in collecting any Collateral, all of which shall be paid by Grantor. 6.4.8 Lender may exercise its rights under this Subsection 6.4, regardless of whether an Event of Default has occurred. This express acknowledgment does not limit other rights of Lender under this Agreement, under any other agreement, at law or in equity. 6.4.9 To the extent applicable, all provisions of this 96.4 shall apply to Manager as well as Grantor. 6.5 Account for Proceeds and Cash. Lender may require all proceeds from the disposition of Collateral, all collections of the Collateral and all Collateral on deposit with Lender to be deposited into an account over which Lender alone has the power to withdraw funds. Lender may require Grantor to deposit all proceeds and collections into such an account immediately upon receipt. Lender shall apply the balance of such an account to payment of the Obligations in such amounts and at such times as Lender determines is desirable. "Collateral" includes an account established under this section. The provisions of this 96.5 are subject to the terms of the Deposit Agreement. 6.6 Advances bv Lender: Default Rate. 6.6.1 Lender may incur or payor advance costs or expenses (a) that Lender is authorized or has the right (but not necessarily the obligation) to incur under this Agreement or any ch\hcnlJebanon\security 7 10/29/98 "~-I;M_,',: """_ . _~ " t.. _;k , _~_,_ ;""',---- ''1; , . ~, ~-~- "",,C1"IT',llr""d""~" '.", law; (b) in exercising any right or remedy under this Agreement or in taking any action that Lender is authorized to take under this Agreement; (c) required to be paid by Grantor, but which Grantor fails to pay upon demand; and (d) from which Grantor is required to hold Lender harmless, but from which Grantor fails to hold Lender harmless. 6.6.2 Grantor shall pay to Lender upon demand any costs, expenses or advances incurred or paid by Lender under Section 6.6.1 plus interest at the Default Rate specified in the Note from the date of disbursement by Lender. 6.7 Construction: Waiver. 6.7.1 This Section 6 applies to all rights and remedies under this Agreement, under any Loan Docunlent, at law or in equity. 6.7.2 ANY RIGHT OR REMEDY MAY BE PURSUED WITHOUT NOTICE TO OR FURTHER CONSENT OF GRANTOR, BOTH OF WHICH GRANTOR WAIVES. GRANTOR WAIVES ALL SURETYSHIP AND SIMILAR DEFENSES. 6.7.3 Each right or remedy is distinct from but cumulative to each other right or remedy and may be exercised independently of, concurrently with or successively to, any other right and remedy. 6.7.4 No extension of time for or modification of amortization of any Obligations shall release the liability of or bar the availability of any right or remedy against Grantor, any successor in interest or any security for the Obligations. Lender shall not be required to commence proceedings against Grantor or any successor or any item or items of security for the Obligations or to extend time for payment or otherwise to modify amortization of any Obligations secured by this Agreement before exercising any right or remedy. 6.7.5 At Lender's option, Lender may proceed against any Collateral or any other security granted to secure the Obligations together or proceed against any item or items of such security in any order. No action against any item or items of security shall bar subsequent actions against any other item or items of security. 6.7.6 No forbearance in exercising any right or remedy shall be a waiver of the right or remedy; no forbearance in exercising any right or remedy on anyone or more occasions shall be a waiver of the right or remedy on any future occasion; and no single or partial exercise of any right or remedy shall preclude any other exercise of the right or remedy or the exercise of any other right or remedy. 7. MISCELLANEOUS. 7.1 ResDonsibilitv for Collateral. Lender does not assume any of Grantor's obligations under any Collateral and shall not be responsible in any way for Grantor's performance with respect to any Collateral. clJlhcri\lebanon\security 8 10129/98 ;-.'~"___~_O,,, ~. . I-~ ~,t<:T ''.I' "-"N ~Jr"1 ,mn I -, f 7.2 Notices. All notices given pursuant to the tenns of this Agreement shaH be in writing, shaH be addressed at the addresses set forth for Grantor and Lender in this Agreement, and shall be served by (a) personal delivery; (b) United States mail, postage prepaid; or (c) nationally recognized overnight courier. All such notices shall be deemed to be given upon the earlier of actual receipt or three days after deposit in the United States mail or one business day after deposit with the overnight courier, Any notices meeting the requirements of this section shall be effective, regardless of whether or not actually received. All notices given hereunder shall also be given to Balanced Care in accordance with ~8.5 of the Loan Agreement. Lender, Balanced Care or Grantor may change its notice address at any time by giving the other party notice of such change. 7.3 ApJ;llicable Law. This Agreement shall be construed and interpreted under the intemallaws of the State of Pennsylvania without giving effect to the conflict oflaws rules thereof. 7.4 Bindinl! Effect. This Agreement shall be binding upon Grantor and Grantor's successors and assigns, and shall be binding upon and inure to the benefit of Lender and its successors and assigns. This Agreement may be amended only by a written amendment signed by Lender and by Grantor. 7.s Severability. If any provision of this Agreement or the application of any provision to any party or circumstance is adjudged invalid or unenforceable to any extent, the application of the remainder of the provision to the party or circumstance, the application of the provision to other parties or circumstances and the application of the remainder of this Agreement shall not be affected. Each provision of this Agreement shall be valid and enforceable to the fullest extent pelmitted by law. 7.6 Interoretation. Where appropriate, the number of all words in this Agreement shall be both singular and plural. If there is any conflict between the terms of this Agreement and the terms of the Loan Agreement, the provisions of the Loan Agreement shall control. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] clrlhcri\lebanon\security 9 lOI2W98 ~~.~_,~ ",~_ w"~' - 7__ -I- ~~' - ~" I~ " ."".....~~ tr~ . . IN WITNESS WHEREOF, the parties have executed and delivered this Agreement effective as of date set forth above. FINANCIAL CARE INVESTORS OF LEBANON, LLC By: Fin~qZ Title: Brian L. Barth PENNSYLVANIA BCC PROPERTIES, INC. By:_C~"J L };){;k- Title: VICE PRESIOEf>.;[ AND cnQDOPATFSECRETARY clr'l1cri\lebanon\security 10 10129/98 :~)r!~" ,,-,;". ,"",~~_, "'__.,~ ." , r '~I ~ '-"'f"" ~ -~ i;?:<JO'T"'[lIf '~<"~ ,~^". . . ' , FIRST AMENDMENT TO LOAN AGREEMENT THISJIRST AMENDMENT TO LOAN AGREEMENT ("Amendment") is made effective as ofthe~ day of '3: 1J 1999 ("Effective Date") between PENNSYLVANIA BCC PROPERTIES, INC., a co oration organized under the laws of the State of Pennsylvania ("Lender"), having its principal office located at One SeaGate, Suite 1500, P.O. Box 1475, Toledo, 'Ohio 43603, and FINANCIAL CARE INVESTORS, LLC, a limited liability company organized under the laws of the State of Delaware ("Borrower"), having its principal office located at 1350 Old Bayshore Highway, Suite 300, Burlingame, California 94010. RE efT ALS A. Lender has extended to Borrower a loan up to the amount of $686,800.00 ("Loan"). The Loan is evidenced by a Note ("Note") and subject to the terms of a Loan Agreement ("Loan Agreement"), each dated as of September 22, 1998. The Loan is secured by a security interest granted by Financial Care Investors of Lebanon, LLC, a limited liability company organized under the laws of the State of Delaware ("Tenant") under a Security Agreement dated as of September 22, 1998 ("Security Agreement"). The Note, Loan Agreement, and Security Agreement may be collectively called the "Loan Documents". B. Lender has leased to Tenant property located in Lebanon, Pennsylvania ("Property") pursuant to a Lease Agreement dated as of September 22, 1998 as amended by a First Amendment to Lease Agreement of even date ("Lease"). Tenant intends to operate a 60-unit (66- bed) personal care facility ("Facility") on the Property. C. Under a Shortfall Funding Agreement among Balanced Care Corporation, Tenant and Borrower, Borrower agreed to contribute capital to Tenant to fund the working capital needs of Tenant. Borrower agreed to borrow 85% of the working capital needs of Tenant through the Loan ("Senior Loan Capital Portion"). Borrower also agreed to fund the remaining 15% as an equity contribution ("Equity Capital Portion"). The Senior Loan Capital Portion and the Equity Capital Portion collectively constitute the Working Capital Reserve. D. The sole member of Borrower, Brad E. Hollinger, now desires to withdraw as the nominal holder of the equity interests of Borrower so as to permit a group of investors to purchase 100% of the equity interests and to make certain investments in Borrower ("Equity Purchase"). Lender has consented to the Equity Purchase subject to certain conditions including but not limited to modifications to the Loan Agreement, Lease, and other documents. E. In connection with the Equity Purchase, BCC Development and Management Co. has agreed to make loans to Borrower to fund a portion of the Equity Capital Portion of Tenant's working capital needs ("BCC Loans"). F. Borrower and Lender desire to amend the Loan Agreement to reflect certain changes in the terms ofthe Loan Agreement related to the Equity Purchase and the BCC Loans. clr\hcri\lebanon\firstamendment.loanagml 10121/99 .~TJf_.: ,_.,U.~] ::--' ,. _ ',', ~,,,o'''' '.'~ . ", r--r " ~-:'-'''''', - '. ' "~'.'~ ., 'I ~ tli''''';r -~& --, , . . NOW THEREFORE, in consideration of the foregoing recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows. 1. Principal Place of Business. Borrower's chief executive office as stated in the introductory paragraph of the Loan Agreement is amended to read as follows: "1350 Old , Bayshore Highway, Suite 300, Burlingame, California 94010". 2. Definitions. Any capitalized terms not defined in this Amendment shall have the meaning set forth in the Loan Agreement. (a) Section 1.2 of the Loan Agreement is amended to substitute the following definitions: "Affiliate" means any person, corporation, partnership, limited liability company, trust, or other legal entity that, directly or indirectly, controls, or is controlled by, or is under common control with Borrower. "Control" (and the correlative meanings of the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity. "Affiliate" includes, without limitation, any corporation, partnership or limited liability company (now or hereafter existing) of which the equity interest is owned by anyone or more Affiliates or by the members of Borrower. "Affiliate" does not include any Member individually or the Members collectively. "Member" means F. David Carr and Jan E. Mercer, Co-Trustees of the Carr Living Trust dated January 17, 1992; James A. Diebold, an individual resident of Pennsylvania; Gary James, an individual resident of Pennsylvania; the Robert Smith and Nancy Smith 1993 Family Trust; and Edward R. Stolman and Carolyn S. Sto1man, Trustees, or their successors in trust under the Sto1man Family Revolvable Trust ult/a dated November 29, 1994, individually and collectively. "Transaction Documents" means the Loan Documents, Lease Documents, the Management Agreement, the BCC Loan Documents, and all agreements and documents made between Borrower or Tenant and Balanced Care or by Borrower or Tenant in favor of Balanced Care, including, without limitation, the Shortfall Agreement, the Option Agreement, all Promissory Notes, the Open End Leasehold Mortgage and Security Agreement, the Deposit Agreement and the Equity Pledge Agreement; provided, however, Trans,/ction Documents refer only to agreements and documents entered into in connection with any lease within the Current Phase that includes the Lease. definitions: (b) Section 1.2 of the Loan Agreement IS amended to add the following clr\hcn\Jebanon\firstamendment.loanagmt -2- 10/21/99 ~<. ....",~;;. . ~- " - r~ . .'C -"', ~ .~ -',- .r- _.0 ~--I ,~ '. ",,,,.' ~ "i1',~__~ . "BCC Loan" means any loan extended by BCC Development and Management Co. to Borrower to fund a portion of the Equity Capital Portion of Tenant's working capital needs. "BCC Loan Documents" means the Loan Agreement and Note executed by Borrower in connection with a BCC Loan. 3. Financial Documents. The last sentence of Section 5.2.1 of the Loan Agreement is amended to read in its entirety as follows: With each delivery of Annual Financial Statements and Periodic Financial Statements to Lender, Borrower shall also deliver to Lender a certificate signed by the managing member of Borrower in the form of Exhibit F. 4. Working Caoital Budget. Exhibit C of the Loan Agreement, Working Capital Budget, is amended to substitute the Exhibit C attached hereto and made a part hereof. 5. Affirmation. Except as specifically modified by this Amendment, the terms and provisions of the Loan Agreement are hereby affirmed and shall remain in full force and effect. 6. Binding Effect. This Amendment shall be binding upon and inure to the benefit ofthe successors and permitted assigns of Lender and Borrower. 7. Reoresentations and Warranties. Borrower affirms all representations and warranties contained in the Loan Agreement as ofthe Effective Date. 8. Further Modification. The Loan Agreement may be further modified only by a writing signed by Lender and Borrower. 9. Counteroarts. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original hereof. 10. Consent of Manager. This Amendment shall have no force or effect unless and until Manager has executed the Consent set forth below. [THE REMAINDER OF THIS PAGE IS lNTENTIONALL Y LEFT BLANK] clr\hcri\lebanon\firstamendment.loanagmt -3- 10/21/99 ...". , I" c," ~\"'" "~ . ~1"_, ~ ~ ~I ,- 'it."t]" , :i;T~l,n, -- . - ~-~, IN WITNESS WHEREOF, Lender and Borrower have executed this Amendment as of the date first set forth above. clr\hcn'\lebanon\firstamendmentloanagmt ,., T'-- I'~ PENNSYLVANIA INC. By: ~~ BCC PROPERTIES, [~ Title: VICE PRESIDENT AND CORP9AA"FE 3l!Cru: IAHY FINANCIAL CARE INVESTORS, LLC By: S-1 Title: ~r_.- 10121/99 ~ ~- f~":- y IN WITNESS WHEREOF, Lender and Borrower have executed this Amendment as of the date first set forth above. PENNSYLVANIA BCC PROPERTIES, INC. By: Title: ANAN~O"cL___ By. 1 _ !'o ( , Title: ;lIMilf y"" clr\hcn'\1ebanon\fustamendment.loanagmt S-1 10121199 "-:"'."":"" ^" -~ - ': I~ - r ' , . ,~_ U"; ~c' _', .c i---' . 'i""1IiUT"^^-""'"'' . CONSENT OF MANAGER Manager hereby [i] consents to the foregoing Amendment; [ii] agrees to be bound by the terms and provisions of the Amendment to the extent applicable to Manager; [iii] affirms the Management Agreement which shaH remain in full force and effect; and [iv] waives any suretyship defenses arising in connection with the Amendment. BALANCED CAREt; LEBANON, INC. By: ~' ~.6~ Title: ROBIN L BARBER VICE PRESIOENT AND 5ECRI: I ARY clr\hcri\lebanon\tirstamendment.loanagmt '~., . ~~., ""-". ~ ->00,- ,~.. - ,'- T"""'" ''"'''',- .,''1''''_' I ""~'liir'"'''' ' ". ~ " ,,~, ," clr\hcri\Jebanon\firstamendment.loanagmt EXHIBIT C: WORKING CAPITAL BUDGET lOl?lIQQ , 1<:--' - ~ r' -, . ". ~" i,~'~Iili.n ~ -~~~= -,~'". - EXHIBIT C: WORKING CAPITAL BUDGET clr\hcri\lebanon\firstamendment.loanagmt .i'-!li'!J?I"",. c , ___,,~, ~ .. ... , '-,,," "",,,-, 10n.l/QQ " , ,i"'!IT r'r"" ~- .., .., '" .~-, ~ . -' f I n If ~ ~ " " ~ i r' g ~ i ~'1.~'1.::.:n:n 0 ~:E8:E~:E~ii! ~ ~a. ~ a.""CJ~ Z2 Ii:_. 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SECOND AMENDED AND RESTATED LOAN AGREEMENT THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT ("Agreement") is made and entered into effective as of October 31, 2000 (the "Effective Date") between FINANCIAL CARE INVESTORS OF LEBANON, LLC, a limited liability company organized under the laws of the State of Delaware (the "Borrower or "Tenant"), having its chief executive office at 1215 Manor Drive, Mechanicsburg, Pennsylvania, 17055 and PENNSYLVANIA BCC PROPERTIES,INC., a corporation organized under the laws of the Commonwealth of Pennsylvania (the "Lender"), having an address of One SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio 43603. R E C I TAL S: A. Lender has leased to Borrower certain real property pursuant to a Lease Agreement made between Lender and Borrower dated as of September 22, 1998, as amended by a First Amendment to Lease Agreement dated as of September 30, 1999 ("Lease"). B. In connection with the Lease, Lender extended a loan ("Loan") to Financial Care Investors, LLC ("Original Borrower") pursuant to a Loan Agreement made between Lender and Original Borrower dated as of September 22, 1998, as amended by a First Amendment to Loan Agreement dated as of September 30, 1999 ("Loan Agreement".) At the time the Loan was extended, Original Borrower was the sole member of Tenant. C. Original Borrower has now assigned its membership interest in Tenant to Balanced Care at Lebanon, Inc. In connection with the assignment, Tenant has agreed to assume responsibility for repayment of the Loan. Borrower has executed an Amended and Restated Note to evidence its obligation to repay the Loan. Lender and Borrower have agreed to amend and restate the Loan Agreement to reflect these changes. NOW, THEREFORE, in consideration of the mutual covenants and the premises contained herein, the parties, intending to be legally bound hereby, agree as follows: ARTICLE 1: PURPOSE AND DEFINITIONS 1,1 Empn5e. The purpose of this Agreement is to establish the Loan with Lender for the financing as set forth above. 1.2 n,,~nitions. Except as otherwise expressly provided, [i] the terms defined in this section have the meanings assigned to them in this section and include the plural as well as the singular; [ii] all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as of the time applicable; and [iii] the words "herein", "hereof', and "hereunder" and similar words refer to this Agreement as a whole and not to any particular section. c 1 r\hcri\! co: ban01l \:JJllended. res la ttd .10:1 11U gmt 11/29/00 --~,t,., '-,- ~- . ~-":"'" ~ , I-~ - '. <', -~ - ".' - . I ;;:~~"""""'C~-~ "Affiliate" means any person, corporation, partnership, limited liability company, trust, or other legal entity that, directly or indirectly, controls, or is controlled by, or is under common control with Borrower. "Control" (and the cOITelative meanings of the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity. "Affiliate" includes, without limitation, any corporation, partnership or limited liability company (now or hereafter existing) of which the equity interest is owned by anyone or more Affiliates or by the members of Borrower. "Affiliate Loan" means each loan extended by Lender or any Lender Affiliate to an Affiliate. "Affiliate Obligation" means all indebtedness and obligations of Borrower and any Affiliate to Lender or any Lender Affiliate now existing or hereafter arising, including, without limitation, the Lease Documents, indebtedness evidenced by promissory notes, lease agreements, guaranties or otherwise and obligations under such indebtedness doctunents and all other documents executed by Borrower or any Affiliate in connection therewith, and any extensions, modifications, substitutions or renewals thereof. "Aunua1 Financial Statements" means the unaudited balance sheet and statement of income of Borrower for the most recent fiscal year. "Balanced Care" means Balanced Care Corporation, a corporation organized under the laws of the State of Delaware. "Borrower" means Financial Care Investors of Lebanon, LLC, a limited liability company organized under the laws of the State of Delaware, its successors and permitted assigns. "Business Day" means any day which is not a Saturday or Sunday or a public holiday under the laws of the United States of America or the State of Ohio. "Closing" means the closing of the Loan. "Current Phase" has the meaning set forth in the Lease. "Disbursement Schedule" means the Disbursement Schedule attached hereto as Exhibit A setting forth Borrower's estimate of the dates and amounts of the disbursements required hereunder. "Disbursement Voucher" means Borrower's written request for a Loan Advance set forth on the form attached hereto as Exhibit B. "Effective Date" means the date of this Agreement. "Event of Default" has the meaning set forth in 97.1. "Facility" has the meaning set forth in the Lease. clr\hcri\lebanon\amended.restated_loanagmt - 2 - 11/29/00 :-'kL-,,,, .-,',~ ' ~ itt'''''C''- ' -"l~.,.._" _.~- "Guarantor" means Balanced Care. "Lease" means the Lease Agreement between Lender and Tenant dated as of September 22, 1998, as amended by a First Amendment to Lease dated as of September 30, 1999, as further amended from time to time. "Lease Documents" means the Lease and all other documents executed by Tenant in connection with the Lease, each as amended from time to time. "Leased Property" has the meaning set forth in the Lease. "Lender" means Pennsylvania BCC Properties, Inc., a corporation organized under the laws of the Commonwealth of Pennsylvania, its successors and assigns. "Lender Affiliate" means any person, corporation, partnership, limited liability company, trust or other legal entity that, directly or indirectly, controls or is controlled by, or is under common control with Lender. "Control" (and the correlative meanings of the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity. "Lender Affiliate" includes without limitation, Health Care REIT, Inc., HCN BCC Holdings, Inc. and any affiliate of Health Care REIT, Inc. "Loan" means the loan by Lender to Borrower in the amount up to the Loan Amount. "Loan Amount" means $686,800.00. "Loan Advance" means each advance of proceeds of the Loan. "Loan Commitment" means the term sheet for the Loan issued by Health Care REIT, Inc. dated as of September 22, 1998 and as amended from time to time. "Loan Documents" means [i) this Agreement; [ii] the Note; [iii] the Security Agreement between Tenant and Lender dated as of September 22, 1998 ("Security Agreement"); and [iv] all other documents and instruments executed by Borrower in connection with the Loan, each as amended from time to time. "Loan Expenses" means all reasonable costs and expenses incurred by Lender in investigating, making and administering the Loan, including but not limited to, [i) attorneys' and paralegals' fees and costs; and [ii] travel, transportation, food, and lodging costs and expenses incurred by Lender and Lender's attorneys and paralegals, but excluding Lender's internal bookkeeping and routine loan servicing costs. "Management Agreement" means the Management Agreement between Manager and Tenant. clr\hcri\lebanon\amended.restated.loanagmt - 3 - I 1/29/00 --, ^~-"..,' . .,.-- ;t.j~' . ~m "Manager" means Balanced Care at Lebanon, Inc., a corporation organized under the laws ofthe State of Delaware. "Member" means Manager. "Note" means the Amended and Restated Note of even date made by Borrower in favor of Lender for a principal amount equal to the Loan Amount, and any extensions, modifications, substitutions or renewals thereof. "Organizational Documents" means [i] for a corporation, its Articles of Incorporation certified by the Secretary of State of the state of organization, as amended to date, and its Bylaws certified by an officer of such corporation, as amended to date; [ii] for a limited partnership, its Certificate of Partnership certified by the Secretary of State of the state of organization, as amended to date, and its Limited Partnership Agreement certified by the general partner of such partnership, as amended to date; and [iii] for a limited liability company, its Certificate of Organization certified by the Secretary of State of the State of Organization, as amended to date and its Operating Agreement certified by the managing member of such limited liability company, as amended to date. "Periodic Financial Statements" means the unaudited balance sheet and statement of income of Borrower for the most recent month and quarter. "State" means the Commonwealth of Pennsylvania. "Tenant" means Bon'ower. "Transaction Documents" means the Loan Documents, Lease Documents, the Management Agreement, and all agreements and documents made between Borrower and Balanced Care or Manager or by Borrower in favor of Balanced Care or Manager; provided, however, Transaction Documents refer only to agreements and documents entered into in connection with any lease within the Current Phase that includes the Lease. "Working Capital Budget" means the three year budget of the working capital and operating expenses for the Facility, prepared by Manager and approved by Lender, a copy of which is attached hereto as Exhibit C, and as revised from time to time, subject to the prior written approval of Lender which shall not be unreasonably withheld. 1.3 Incorporation of Amennments. The definition of any agreement, document, or instrument set forth in this Agreement or in any other Loan Document shall be deemed to incorporate all amendments, modifications, and renewals thereof and all substitutions and replacements therefor. 1.4 Fxhihits, The following exhibits are attached hereto and incorporated herein: Exhibit A: Exhibit B: Exhibit C: Disbursement Schedule Disbursement Voucher Working Capital Budget clr\hcri\lebanon\amended.resluted.loanagmt - 4- 11/29/00 ~'~~-m '_,',..' ,,' _ ^ "'-T"-:"""'~: "" - ,- 'l~""'.'~'- . Exhibit D: Exhibit E: Exhibit F: Pending Litigation Documents to be Delivered Certificate ARTICLE 2: LOAN AND LOAN DOCUMENTS 2.1 Ohligation to T p,nn. Subject to the terms and upon the conditions set forth in the Loan Documents, Lender shall lend to Borrower up to the Loan Amount. The indebtedness of Borrower to Lender for the Loan is evidenced by the Note. 2.2 Ohligation to Rp,pay. Borrower shall repay the Loan in accordance with the terms of the Note and the other Loan Documents. 2.2.1 Tp,rm ofthp, T oan. The term of the Loan will expire on the Maturity Date set forth in the Note. 2.2.2 Tntp,rp"t ann Paymp,nt,. Borrower shall make payments in accordance with the Note at the rate set forth in the Note. 2.3 T j", of Pmcp,p,n,. All Loan Advances (less closing costs) shall be used by Borrower solely to fund the Working Capital needs of Borrower for the Facility. In accordance with the Management Agreement, Manager will use the Loan Advances exclusively for the working capital needs of the Facility in accordance with the Working Capital Budget. 2.4 T oan Fxpp,n,p". At the Closing, Borrower shall payor reimburse Lender for any Loan Expenses incurred up to the Effective Date. Within 30 days after receipt of an invoice therefor, Borrower shall reimburse Lender for any Loan Expenses incurred by Lender. Lender shall apply proceeds of the Loan, up to the Loan Amount, to pay the Loan Expenses. 2.5 Di,hnr,p,mp,nt,. 2.5.1 T om, Anvancp,~. For each Loan Advance, Manager, on behalf of Borrower, shall submit to Lender and Borrower a Disbursement Voucher. The amount of each Loan Advance shall be equal to 100% of the amount requested. Lender may make disbursements from time to time but shall not be obligated to disburse more frequently than once in each calendar month and shall not be obligated to disburse until at least seven Business Days following receipt of a Disbursement Voucher. 2.5.2 Di~hnr~p,mp,nt ~chp,nlllp,. Manager estimates that the schedule of Loan Advances will be in accordance with the Disbursement Schedule; provided, however, the actual disbursement dates shall be determined by the dates on which Manager submits a Disbursement Voucher in accordance with the working capital needs ofthe Facility. 2.5.3 ~tanrlhy Tp,rmination. Lender's obligation to make Loan Advances pursuant to this Agreement shall terminate on the Maturity Date set forth in the Note, unless terminated earlier pursuant to an Event of Default. clr\hcri\llCbullllll\amcllded .restated.loanugmt - 5 - 11129/00 ,:;.~".- .y,,~ ". I' " .<' , ~ [~"". 2.5.4 [Intentionally Deleted). 2.5.5 MHnHeer. Upon the termination of the Management Agreement, all provisions in this Agreement relating to the Manager shall terminate and Loan Advances will be made to Borrower or its designee and all obligations of Manager hereunder shall be performed by Borrower or such other party approved by Lender. 2.6 r.ln~ine" The Closing shall occur on September 22, 1998. Lender may elect to close by exchanging executed counterparts of one or more of the Loan Documents and other closing documents by mail or a national courier service, or by telecopier followed by exchanging documents by mail or national courier service. ARTICLE 3: CONDITIONS PRECEDENT TO DISBURSEMENT 3.1 r.nnclitinn~ Prececlent tn TnitiHll)i~hnr~ement. Borrower shall comply with, and Lender's obligation to disburse the first Loan Advance shall be conditioned upon Borrower's performance of the following conditions precedent: 3.1.1 T encler'~ l)ncnment~. Borrower shall have delivered to Lender fully executed originals of the Transaction Documents and a Disbursement Voucher. 3.1.2 DrgHni7Ht;nn~1l)ncnment~. Borrower shall have delivered to Lender copies of Borrower's Organizational Documents, in fonn and substance satisfactory to Lender, and Borrower's resolutions authorizing the Transaction Documents, certified by Borrower to be true and complete and not revoked or amended since the respective dates thereof. 3.1.3 Rncleet ~ncl Scheclnle. Borrower shall have delivered to Lender the Working Capital Budget and the Disbursement Schedule in form and substance reasonably satisfactory to Lender. 3.1.4 I ee~1 Opin;nn. Borrower shall have delivered to Lender an opinion of Borrower's counsel in form and substance satisfactory to Lender. 3.1.5 [Intentionally Deleted]. 3.1.6 Other C:ln~ine ReqJlirement~. Borrower shall have satisfied the requirements of S 3.2.4 and all other closing requirements ofthe Transaction Documents and the Loan Commitment. 3.2 C:nnclitinn~ Prececlent tn FHch l)i~hllf~ement. Borrower shall comply with, and Lender's obligation to disburse each Loan Advance after the first Loan Advance shall be conditioned upon Borrower's perfoITI1lli1ce of the following conditions precedent: 3.2.1 Dishnr~P1l1el1t Vnl1cher Manager shall have delivered to Lender a Disbursement Voucher in accordance with il2.5.1. clr\hcri\lebonon\omended.reslated.loanagmt - 6- ] ]/29100 ':'~'. 117.. ;1,. ," .c< ' - " ~ ~ ~.,. - '., <". ry'~ ,f[ ,~ ' Y. ~~~ 3.2.2 Po<t-r.lo<ing Ohligation<.' Borrower shall have satisfied all post-closing obligations under the Loan Documents to be performed as ofthe date of such Loan Advance request. 3.2.3 Damage anti De<tmction. The Facility for which the Loan Advance is drawn shall not have been substantially or materially damaged or destroyed, in whole or in part, by fire or other casualty nor shall eminent domain proceedings have been threatened or be pending with respect to a substantial or material part of the Facility. 3.2.4 No Fvent of Defanlt. There shall be no uncured Event of Default under any Transaction Document or any event which with the giving of notice or the passage oftime would constitute an Event of Default. ARTICLE 4: BORROWER'S REPRESENTATIONS AND WARRANTIES Borrower hereby makes the following representations and warranties, as of the Effective Date and the date of each Loan Advance, to Lender and acknowledges that Lender is making the Loan in reliance upon such representations and warranties. Borrower's representations and warranties shall survive the Closing and, except as specifically provided below, shall continue in full force and effect until Borrower has repaid the Loan in full and performed all other obligations under the Loan Documents. 4.1 Oreani7ation anti Gooti Stantiing Borrower is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. 4.2 Power anti Authority Borrower has the power and authority to execute, deliver, and perform Borrower's obligations under the Transaction Documents and has taken all requisite action to authorize the execution, delivery and performance of Borrower's obligations under such documents. 4.3 Fnforceahility. The Transaction Documents constitute valid and binding obligations of Borrower enforceable in accordance with their terms, except as enforceability may be limited by creditor's rights laws, equitable principles and the effect of judicia 1 discretion. 4.4 No Violation. The execution, delivery and perfOlmance of the Transaction Documents and the consummation of the transactions contemplated by the Transaction Documents [i) do not conflict with and will not conflict with, and do not result and will not result in a breach of Borrower's Organizational Documents; [ii] do not conflict with and will not conflict with, and do not result and will not result in a breach of, or constitute or will constitute a default (or an event which, WIth notice or lapse of time, or both, would constitute a default) under any of the terms, conditions or provisions of any agreement or other instrument or obligation to which Borrower is a party or by which its assets are bound; and [iii] to Borrower's actual knowledge, do not violate any order, writ, injunction, decree, statute, rule or regulation applicable to Borrower. 4.5 blo T itiEetion. Except as disclosed on Exhibit D, [i) there are no actions, suits, proceedings or, to Borrower's actual knowledge, investigations by any govemmenta1 agency or regulatory body pending against Borrower; [ii] Borrower has not received written notice of any threatened actions, cJ r\hcri\leban on \amende d .l'esta ted .1oanagmt -7 - 1]/29100 ';\l!~~ ... ~~ "~,- , I.' .,e .~~ " '" ~ "' ~^-F' . '0'4 suits or proceeding or investigations against Borrower at law or in equity, or before any governmental board, agency or authority which, if determined adversely to Borrower, would materially and adversely affect the financial condition of Borrower; [iii] there are no unsatisfied or outstanding judgments against Borrower; [iv] there is no labor dispute materially and adversely affecting the operation or business conducted by Borrower; and [v] Borrower does not have knowledge of any facts or circumstances which might reasonably form the basis for any such action, suit, or proceeding. 4.6 Report'. St"tement, "nO ropie,. All reports, statements, certificates and other data nlmished by Borrower to Lender in connection with the Transaction Documents, or the transactions contemplated thereunder, and all representations and warranties made therein, or any certificate or other instmment delivered in connection therewith, are tme and correct in all material respects and do not omit to state any material fact or circunlstance necessary to make the statements contained therein, in light of the circumstances under which they are made, not misleading as of the date of such information, reports, statements or certificates. The copies of all agreements and instmments submitted to Lender are true, correct and complete copies and include all amendments and modifications of such agreements. 4.7 No DefmJit. As of the Effective Date, there is no existing Event of Default by Borrower under the Transaction Documents and no event has occurred which, with the giving of notice or the passage of time, would constitute or result in such an Event of Default. 4.8 ERTSA. All plans [as defined in 94021(a) ofthe Employee Retirement Income Security Act of 1974 as amended or supplemented from time to time ("ERISA")] for which Borrower is an "employer" or a "substantial employer" [as defined in 993(5) and 4001(a)(2) of ERISA, respectively] are in compliance with ERISA and the regulations and published interpretations thereunder. To the extent Borrower maintains a qualified defined benefit pension plan: [i] there exists no accumulated funding deficiency; [ii] no reportable event and no prohibited transaction has occurred; [iii] no lien has been filed or, to Borrower's actual knowledge, threatened to be filed by the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA; and [iv] Borrower has not been deemed to be a substantial employer as of the Effective Date. 4.9 rhief Exec-lltive omc-e. Borrower maintains its chief executive office and its books and records at the address set forth in the introductory paragraph of this Agreement. ARTICLE 5: AFFIRMATIVE COVENANTS 5.1 Perform Ohliz"tion,_ Borrower shall perform all its obligations under the Transaction Documents, 5.2 DOC-limen!, "nO TnformMion. 5.2.1 Fllmi,h Doc-llment,. Borrower shall periodically during the term of the Loan deliver to Lender the Annual Financial Statements, Periodic Financial Statements and other documents described on Exhibit E within the specified time periods. With each delivery of Annual Financial c1r\hcri\lebanon\amended.restated.loanagmt - 8- 1l/29/00 "-1J.L:L~,..,._, i'L''''1' =.. , "'" ~:"-- ,~ Statements and Periodic Financial Statements to Lender, Borrower shall also deliver to Lender a certificate signed by Member in the form of Exhibit F. 5.2.2 FUllliRh Tnfonmtion. Borrower shall [i] within ten business days after any request therefor, supply Lender with such information concerning its financial condition, affairs and property, as Lender may reasonably request from time to time hereafter; [ii] promptly notify Lender in writing of any condition or event that constitutes a breach or event of default of any term, condition, warranty, representation, or provisions of any Loan Document or any other Transaction Document; [iii] maintain a standard and modem system of accounting; [iv] permit Lender or any of its agents or representatives to have access to and to examine all of its books and records regarding the financial condition of Borrower at any time or times hereafter during business hours; and [v] permit Lender to copy and make abstracts from any and all of said books and records, provided that such copies and abstracts shall not be made available by Lender to anyone other than to govemmenta1 authorities, attorneys, auditors, underwriters, credit rating agencies and such other persons for which there is a legitimate business purpose for such disclosure. 5.2.3 Furth"r ARRnr"nCeR and Tnformation. Borrower shall, on request of Lender from time to time, execute, deliver, and furnish documents as may be necessary to fully consummate the transactions contemplated under this Agreement. Within ten business days after a request from Lender, Borrower shall provide to Lender such additional information regarding Borrower or Borrower's financial condition as Lender, or any existing or proposed creditor of Lender, or any auditor or underwriter of Lender, may require from time to time. 5.2.4 M"teri"l f:ol1ll1l11nicMionR Borrower shall transmit to Lender, within five business days after receipt thereof, any communication that may materially and adversely affect Borrower, any existing Facility, the Loan Documents or the Lease Documents and Borrower will promptly respond to Lender's inquiry with respect to such communication. Upon receipt of written notice thereof, Borrower shall promptly notify Lender in writing of any threatened or existing litigation or proceeding against, or investigation of, Borrower or any Facility that may materially and adversely affect the right to operate the Facility or title to the Facility or Lender's interest therein. 5.2.5 Re~llire1l1entR for Fin"nci"l ~t"te111entR, Borrower shall meet the following requirements in connection with the preparation of the financial statements: [i] all audited fmancia1 statements (if any) shall be prepared in accordance with generally accepted accounting principles consistently applied; [ii] all unaudited financial statements shall be prepared in a manner substantially consistent with prior audited and unaudited financial statements submitted to Lender; [iii] all financial statements shall fairly present the financial condition and perfornlance of Borrower for the relevant period in all material respects; [iv] the financial statements shall include all notes to the audited financial statements and a complete schedule of contingent liabilities and transactions with Affiliates; and [v] the audited financial statements shall contain an unqualified opinion. 5.3 Rroker'R f:0111111iRR;on. Borrower and Lender each represent that it has not incurred an obligation to any broker in connection with the Loan. 5.4 FxiRtence, Borrower shall maintain its existence throughout the term of this Agreement and every other Transaction Document. c lr\hcri\le banon \amended.restated.l oanagmt - 9 - 11/29/00 .-,i\1'~;l~~,.~ ~"'~.,- "N, _ ^! J _"..,..., _.~ . __ eo o _~ """ . ~ , r~ ",,"""'"" t~~''''''~ -~ .,.., - 5.5 [Intentionally Deleted]. 5.6 [Intentionally Deleted]. ARTICLE 6: NEGATIVE COVENANTS Until the Loan has been paid in full, Borrower shall not do any of the following without the prior written consent of Lender which shall not be umeasonably withheld: 6.1 No n"ht. Borrower shall not create, incur, assume, or permit to exist any indebtedness other than indebtedness incun'ed lmder the Transaction Documents. 6.2 No T .i"TIS. Borrower shall not create, incur, or permit to exist any lien upon or pledge of any interest in Borrower except pursuant to the Transaction Documents. 6.3 No Glloronti",. Borrower shall not create, incur, assume, or permit to exist any guarantee of any loan or other indebtedness except for the endorsement of negotiable instruments for collection in the ordinary course of business. 6.4 No ni"oll1tion. Borrower shall not dissolve, liquidate, merge, consolidate or terminate its existence or, except pursuant to and in accordance with the Transaction Documents, sell, assign, lease, or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired). 6.5 No rhonE" in Own""hip. No change shall occur in the ownership of any equity interest in Borrower except for transfers pursuant to and in accordance with the Transaction Documents or in accordance with 98.17 hereof. 6.6 No Tnv",tm"nt,. Except for investments in tenants of leases included within the Current Phase, Borrower shall not purchase or otherwise acquire, hold, or invest in securities (whether capital stock or instmments evidencing indebtedness) of or make loans or advances to any person, including, without limitation, any shareholder, partner or member of Borrower. 6.7 SlIhorclinotion of Poym"nt,. Borrower shall not make any payments or distributions (including, without limitation, salary, bonuses, fees, principal, interest, dividends, liquidating distributions, management fees, cash flow distributions or lease payments) to any Affiliate or any shareholder, member or partner of Borrower or any Affiliate, or any family member of any such shareholder, member or partner. As long as there is no existing, uncured Event of Default, Borrower may pay the management fees pursuant to the Transaction Documents. 6.8 rhonE" of T .ocMion or Nom". Borrower shall not change any of the following: [i] the location of the principal place of business or chief executive office of Borrower, or any office where any of Borrower's books and records are maintained; or [ii] the name under which Borrower conducts any of its business or operations, until Borrower has given Lender 30 days' advance <: Ir\hcri\lcbanon\nmended.restaled.loan<lgmt - 10- 11/29/00 0r"'''''"_"_~ ~ ~~~ - 'I I' ~ - " ~t~;)~,m;"" ".'~-~ .~ ."....'.... ~ "" notice and has executed and delivered to Lender all UCC financing statements, amendments and other documents reasonably requested by Lender in connection with such change. 6.9 No Amenoments. Borrower shall not consent or agree to any amendment, modification, alteration or termination of any Transaction Document. ARTICLE 7: DEFAULT AND REMEDIES 7.1 Rvent of Def",1I1. Anyone or more of the following events shall constitute an "Event of Default" hereunder: 7.1.1 Borrower or Manager fails to pay any amounts to Lender under the Note or any other ' monetary obligation payable by Borrower or Manager under the Loan Documents within 10 days after the date that such payment is due. 7.1.2 Borrower fails to comply with any covenant set forth in ~5.4 or Article 6 and Borrower or Manager fails to comply with any covenant set forth in ~2.3 ofthis Agreement. 7.1.3 Borrower fails to observe and perform any other covenant, condition or agreement under the Loan Documents to be performed by Borrower and [i] continuance of such failure for a period of 30 days after written notice thereof is given to the Borrower by the Lender; or [ii] if, by reason of the nature of such default the same cannot be remedied within the said 30 days, Borrower fails to proceed with reasonable diligence (reasonably satisfactory to Lender) after receipt of the notice to cure the same or, in any event, fails to cure such default within 60 days after receipt of the notice. The foregoing notice and cure provisions do not apply to any Event of Default otherwise specifically described in any other subsection of ~7.1. 7.1.4 [i] The filing by Borrower of a petition under 11 U.S.c. or the commencement of a bankruptcy or similar proceeding by Borrower; [ii] the failure by Borrower within 60 days to dismiss any involuntary bankruptcy petition or other commencement of a bankruptcy, reorganization or similar proceeding against Borrower or to lift or stay any execution, garnishment or attachment of the Facility; [iii] the entry of an order for relief under 11 U.S.C. in respect of Borrower; [iv] assignment by Borrower for the benefit of its creditors; [v] the entry by Borrower into an agreement of composition with its creditors; [vi] the approval by a court of competent jurisdiction of a petition applicable to Borrower in any proceeding for its reorganization instituted under the provisions of any state or federal bankruptcy, insolvency, or similar laws; or [vii] appointment by final order, judgment or decree of a court of competent jurisdiction of a receiver of the whole or any substantial part of the properties of Borrower (provided such receiver shall not have been removed or discharged within 60 days of the date of his qualification). 7.1.5 [i] Any receiver, administrator, custodian or other person takes possession or control of all or part of any Facility and continues in possession for 60 days; [ii] any writ against all or part of any Facility is not released within 60 days; [iii] any final, non-appealable judgment is rendered against all or part of any Facility, any Affiliate or Borrower and which is undismissed for 60 days (except as otherwise provided in this section); [iv] all or a substantial part ofthe assets of Borrower an; alt.lchcd, seized, subjected to a writ or distress warrant, or are levied upon, or come into the c1r\hcri\lebanoll\lmended ,I'es!::tted.loanagmt - 11 - ] ]/29/00 "" r ,n..u __ ~ .'W'~ e n"_'_ I' -" """ r 'r;. "~~.~ " ,~ n,'.~" possession of any receiver, trustee, custodian, or assignee for the benefit of creditors and are not released within 60 days; [v] Borrower is enjoined, restrained, or in any way prevented by court order, or any proceeding is filed or commenced seeking to enjoin, restrain, or in any way prevent Borrower from conducting all or a substantial part of its business or affairs and such proceeding is not released within 60 days; or [vi] if a notice of lien, levy, or assessment is filed of record with respect to all or any part of the property of Borrower and is not dismissed within 30 days. 7.1.6 Any representation or warranty made by Borrower in the Transaction Documents, any security for the Loan, or any report, certificate, application, financial statement or other instrument furnished by Borrower pursuant hereto or thereto shall prove to be false, misleading or incorrect in any material respect as ofthe date made. 7, 1.7 Borrower or any Affiliate defaults on any indebtedness or obligation to Lender or any Lender Affiliate, any agreement with Lender or any Lender Affiliate or any Affiliate Obligation, or Borrower defaults under any Transaction Document, (in each case limited to the indebtedness, obligations, agreements and documents relating to the Current Phase) and any applicable grace or cure period with respect to default under such indebtedness, obligation or agreement expires without such default having been cured. This provision applies to all such indebtedness, obligations and agreements as they may be amended, modified, extended, or renewed from time to time. 7.1.8 Any guarantor (if any) of the Loan dies, dissolves, terminates, is adjudicated incompetent, files a petition in bankruptcy, or is adjudicated insolvent under II U.S.C. or any other insolvency law, or fails to comply with any covenant or requirement set forth in the guaranty of such guarantor, and in the case of the death or incompetency of a personal guarantor only, Borrower fails within 30 days to deliver to Lender a substitute guaranty or other collateral reasonably satisfactory to Lender. 7.2 Remeclies on Def3111t. Whenever any Event of Default occurs, Lender may, in addition to any other remedies under the Loan Documents, at law or in equity, take anyone or more of the following remedial steps concurrently or successively: 7.2.1 A""eleration. Lender may declare the Loan to be immediately due and payable, without presentment of any kind, demand, notice of dishonor, protest, or other notice of any kind, all of which Borrower hereby waives. 7.2.2 Other Remeclies. Lender may take whatever action at law or in equity as may appear necessary or desirable to collect any monies then due and/or thereafter to become due. 7.2.3 Waiver. Without waiving any prior or subsequent Event of Default, Lender may waive any Event of Default or, with or without waiving ~ny Event of Default, remedy any default. 7.2.4 Terminate Dishnrsement. Lender may terminate its obligation to disburse Loan proceeds. clr\hcri\lebanon\amended .restatecl.loanagmt - 12- ] ]/29/00 ~~'<l'_'_'> _ ._'._ - . "'I ~ , ,~r___'_ r"'"~ il/"-" - ARTICLE 8: MISCELLANEOUS 8.1 Aov"nc", hy T "no"r. At any time and from time to time, Lender may incur and/or pay and/or advance costs or expenses: [i] which Lender, is authorized or has the right (but not necessarily the obligation) to incnr or may incur under any Loan Document or any law; [ii] in exercising any right or remedy provided under any Loan Document or in taking any action which Lender is authorized to take under any Loan Document; [iii] which are required to be paid by Borrower under any Loan Document, but which Borrower fails to pay upon demand; or [iv] from which Borrower is required to hold Lender harmless under any Loan Document, but from which Borrower fails to hold Lender harmless. Any costs, expenses, or advances incurred or paid by Lender as described in this 98.1 shall become pmi of the Loan and, upon demand, shall be paid to Lender together with interest thereon at the Default Rate from the date of disbursement by Lender. 8.2 [Intentionally Deleted). 8.3 rOllSt"",tion ofRieJ1t~ ano Remeoi,,~ "no W"iv"r of No tic" "no ron~"nt. 8.3.1 Applic"hility. The provisions of this 98.3 shall apply to all rights and remedies provided by any Loan Document or by law or equity. 8.3.2 W"iver ofNotice~ "no ron~ent to Remeoie~, Unless otherwise expressly provided herein, any right or remedy may be pursued without notice to or further consent of Borrower, both of which Borrower waives. 8.3.3 rllmlllMive RiEht~. Each right or remedy under the Loan Documents is distinct from but cumulative to each other right or remedy and may be exercised independently of, concurrently with, or successively to any other rights and remedies. 8.3.4 Fxten~ion or MooificMion of T O"Il. No extension of time for or modification of amortization of the Loan shall release the liability or bar the availability of any right or remedy against Borrower or any successor in interest, and Lender shall not be required to commence proceedings against Borrower or any successor or to extend time for payment or otherwise to modifY amortization of the Loan by reason of any demand by Borrower or any successor. 8.3.5 Rieht to Select Secllrity. Lender has the right to proceed at its election against all security or against any item or items of such security from time to time, and no action against any item or items of security shall bar subsequent actions against any item or items of security. 8.3.6 Forhe"r"nce Not" W"iver. No forbearance in exercising any right or remedy shall operate as a waiver thereof; no forbearance in exercising any right or remedy on anyone or more occasion shall operate as a waiver thereof on any further occasion; and no single or partial exercise of any right or remedy shall preclude any other exercise thereof or the exercise of any other right or remedy. 8.3.7 No W"iver. Faihlre by Lender to insist upon the strict performance of any of the covenants and agreements herein set forth or to exercise any rights or remedies upon default by Borrower cir\hcri\lebanon\amended.restated.loanagmt - 13- J 1/29/00 ,)~-: :If!i, 'J ~_ """--..,.,.;= ~~I"""' , _ I.' 1~" ~~~ e; - hereunder shall not be considered or taken as a waiver or relinquishment for the future of the right to insist upon and to enforce by mandamus or other appropriate legal or equitable remedy strict compliance by Borrower with all of the covenants and conditions hereof, or ofthe rights to exercise any such rights or remedies, if such default by Borrower is continued or repeated. To the extent permitted by law, any two or more of such rights or remedies may be exercised at the same time. 8.3.8 No Continning W~iver.. If any covenant or agreement contained in the Loan Documents is breached by Borrower and thereafter waived by Lender, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. No waiver shall be binding unless it is in writing and signed by Lender. No course of dealing between Lender and Borrower, nor any delay nor omission on the part of Lender in exercising any rights under the Loan Documents, shall operate as a waiver. 8.3.9 [Intentionally Deleted]. 8.3.10 No Re1e~.e. Borrower and any other person now or hereafter obligated for the payment or performance of all or any part of the Note shall not be released from paying and performing under the Note by reason of [i] the failure of Lender to comply with any request of Borrower (or of any other person so obligated), to take action to enforce any of the provisions of the Loan Documents, or [ii] the release, regardless of consideration, of the obligations of any person liable for payment or performance of the Note, or any part thereof, or [iii] any agreement or stipulation extending the time of payment or modifying the terms of the Note, and in the event of such agreement or stipulation, Borrower and all such other persons shall continue to be liable under such documents, as amended by such agreement or stipulation, unless expressly released and discharged in writing by Lender. 8.4 B.sienlllent, 8.4.1 Assienl1lent hy T em)er. Lender may assign, negotiate, pledge, or transfer this Agreement, the Note ard all other Loan Documents to any Lender Affiliate or any other person or entity. 8.4.2 As.iV'l1lent hy Rorrower. Borrower shall not assign or attempt to assign its rights nor delegate its obligations under the Loan Documents except in accordance with 98.17 hereof. 8.5 Nol ice.. All notices, demands, requests, and consents (hereinafter "notices") given pursuant to the terms of this Agreement shall be in writing, shall be addressed to the addresses set forth in the introductory paragraph of this Agreement and shall be served by [i] personal delivery; [ii] United States mail, postage prepaid; or [iii] nationally recognized overnight courier. All notices shall be deemed to be given upon the earlier of actual receipt or three days after deposit in the United States mail or one business day after deposit with the overnight courier. All notices sent pursuant to this Agreement or any other Loan Document shall be simultaneously sent to Balanced Care at its address as set forth in the Shortfall Agreement. Any notices meeting the requirements of this section shall be effective, regardless of whether or not actually received. Balanced Care, Lender and Borrower may change their notice address at any time by giving the other party notice of such change. clr\hcn\lebanon\amended.restated.lo11nagmt - 14- 11/29/00 'J1~" ',~ ' , _ -1'":<''' - I ~~':';;.o"o , ","'" ~ ~_~ _, ,- ".,"",,-, _~ ~ <' 8.6 Fnt;r" A gr""m"nt. This Agreement and the other Loan Documents constitute the entire agreement between Borrower and Lender relating to the subject matter hereof. No representations, warranties, and agreements have been made by Lender except as set forth in this Agreement and the other Loan Documents. If there is any conflict between the terms and provisions of the Loan Commitment and the terms of this Agreement, this Agreement shall govern. 8.7 S"v"rahility. If any term or provision of this Agreement is held or deemed by Lender to be invalid or unenforceable, such holding shall not affect the remainder of this Agreement and the same shall remain in full force and effect. 8.8 rap/iom amI Heaelings. The captions and headings are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Agreement or the intent of any provision thereof. 8.9 Governine Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State, without giving effect to the conflict of laws rules thereof. 8.10 Hineline Fffed. This Agreement will be binding upon and inure to the benefit of the heirs, successors, personal representatives, and permitted assigns of Lender and Borrower. 8.11 Moelifieation. This Agreement may only be modified by a writing signed by both Lender and Borrower. All references to this Agreement, whether in this Agreement or in any other document or instrument, shall be deemed to incorporate all amendments, modifications, and renewals of this Agreement made after the date hereof. If Borrower requests Lender's consent to any change in ownership, merger or consolidation of Borrower, any assumption ofthe Loan, or any modification of the Loan Documents, Borrower shall provide Lender all relevant information and documents sufficient to enable Lender to evaluate the request. In connection with any such request, BOlTOwer shall pay to Lender a fee in the amount of $2,500.00 and shall pay all of Lender's reasonable attorney's fees and expenses and other reasonable out-of-pocket expenses incurred in connection with Lender's evaluation of Borrower's request, the preparation of any documents and amendments, the subsequent amendment of any documents between Lender and its collateral pool lenders (if applicable), and all related matters. In connection with any proposed change in the ownership of Borrower, or an assumption of the Loan and Lease, relating to a proposed substitution of Borrower, Lender's fee shall be limited to $2,500 for all modifications and consents relating to the Current Phase and made concurrently. 8,12 rons/mo/ion of AE;w"m""t. This Agreement has been prepared by Lender and its professional advisors and reviewed by Bon'ower and its professional advisors. Lender, Borrower and their advisors believe that this Agreement is the product of all ,their efforts, it expresses their agreement, and that it shall not be interpreted in favor of either Lender or Borrower or against either Lender or Borrower merely because of their efforts in preparing it. 8.13 COllnt"rparts, This Agreement may be executed in multiple counterparts, each of which shall be deemed an original hereof. c Ir'.lKri\lcb;lil,)i1 \:Illlcnded reslJtcd,loanagmt - 15 - 11/29/00 ""~,~J .<' t ,_ ~ ~ ,~", I ' . . ~" ..,. - --'-_11__"'''''_'' ~~ -,~- Wi~JS~"'''t'"' . . '. -1"-1: '---r"'"""" ,',,,,,f~A'"'''' ~~~., ~ I 8.14 No Thini- PHrty Renefi"im-y R i &t~. Except for Balanced Care, no person not a party to this Agreement shall have or enjoy any rights hereunder and all third-party beneficiary rights are expressly negated. Without limiting the generality of the foregoing, no one other than Borrower, Manager and Balanced Care shall have any rights to obtain or compel a disbursement of proceeds of the Loan hereunder. Notwithstanding any provision to the contrary contained herein or in any other Loan Document, [i] Balanced Care is a third-party beneficiary of this Agreement and the other Loan Documents, [ii] no Loan Document shall be amended without the prior written consent of Balanced Care, and [iii] Balanced Care shall have the right to enforce the provisions of this Agreement. 8.15 T.ender'~ Anthority to Fnmish C:opie~ ofT ,0Hn no"nment~. Lender may exhibit or furnish the Loan Documents or copies thereof to any potential transferee of the Loan Documents (whether such transfer is absolute or collateral), to any governmental or regulatory authority in connection with any legal, administrative or regulatory proceedings requiring the disclosure of the terms of the Loan Documents, to Lender's attorneys, auditors and underwriters, and to any other person or entity for which there is a legitimate business purpose for such disclosure. 8.16 Tender Merely H T.ender 8.16.1 No Aeen"y, Lender is not and will not be in any way the agent for or trustee of Borrower. Lender does not intend to act in any way for or on behalf of Borrower in disbursing the proceeds of the Loan. Lender does not intend to be and is not and will not be responsible for the completion of any improvements erected or to be erected upon the Leased Property; the payment of bills or any other details in connection with the Leased Property and improvements; any plans and specifications prepared in connection with the Leased Property and improvements; or Borrower's relations with any contractors, subcontractors, materialmen, or laborers performing work or supplying materials for the Leased Property and improvements. 8.16.2 No OhliEHtion to PHY. This Agreement is not to be construed by Borrower or anyone furnishing labor, materials, or any other work or product for improving the Leased Property as an agreement upon the part of Lender to assure that anyone will be paid for furnishing such labor, materials, or any other work or product. 8.16.3 No Re~pon~ihility for C:onstmetion. Lender is not responsible for construction of the improvements. Notwithstanding inspection of the Leased Property and the improvements, Lender assumes no responsibility for the quality of construction or workmanship or for the architectural or structural soundness of any improvements to be erected upon the Leased Property or for the adherence to or approval of any plans and specifications in cOlUlection therewith or for any improvements. 8.17 S"hstillltion nfRolTower H"cl/or Te"""l. Notwithstanding any provision to the contrary in the Loan Documents or Lease Documents, if [i] Member desires to transfer the equity interest in Borrower, [ii] Borrower desires to assign its rights and obligations under the Loan Documents, or [iii] Tenant desires to assign its rights and obligations under the Lease Documents, in each case to a person or entity ("Transferee") that is not an Affiliate of Borrower, Member, Tenant or Balanced e lr\hcri\] eb~lIlon \amended. restated Joana gmt - 16- 11/29/00 'i:l1iJI,~.mT", ~~ - ~~ " ~_ _ .t>.~1 ~ , .'\I_'.',r,. r4~~ ~ ~ \if..~<":~' ~ ~" . ~,-~ -_~ _~' "~ '0 ~ Care and in which Borrower, Member, Tenant and Balanced Care hold no equity interest, the following conditions shall apply: (a) The prior written consent of Lender shall be required but shall not be unreasonably withheld. Lender's review of the proposed Transferee shall include application of Lender's customary underwriting standards. (b) Lender shall have received such documents, instruments, letter of credit amendments and amendments to the Loan Documents and Lease Documents as Lender may reasonably request in cOlmection with such transfer. (c) All parties shall reasonably cooperate and take such actions as may be reasonably requested in order to facilitate the transfer to the Transferee. (d) Lender shall have received reimbursement from Balanced Care for all attorneys' fees and expenses and all other reasonable out-of-pocket expenses incurred in connection with the foregoing. 8.18 A ffirmation of SeclI1ity Agreement. Borrower affirms that the Security Agreement secures repayment of the Loan as evidenced by the Amended and Restated Note and subject to the terms of this Agreement. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK] clr\hcri\lebanon\amended.restated.loanagmt - 17 - 11/29/00 :-~1V1-- ~_.".!\ll!~^ .- ~ - ~"--I ' I"r '-I ' ~-- 1-- ;'{"'"'4"~1TI1IT" ' ".f "","".. '" '" ' EXHIBIT A: DISBURSEMENT SCHEDULE [Borrower to provide] clr\hcri\loyalsock\amended.rest;J ted.1 oanagmt ] 1122/00 ;.1tI@{~.~.~ " ,~~, ,~+,'!, " ~~ I ". ' -, '" -, ',-.~'-". -~- ~~ T"~~" Go"" -"~ - - , - --~. IN WITNESS WHEREOF, Lender and Borrower have executed and delivered this Agreement effective as ofthe Effective Date. LENDER: PENNSYLVANIA BCC PROPERTIES, INC. By: ~(~ T. I VICE PRESIDENT AND lt e: C'''flPOIlA1:E SLCffl':T>IIl , BORROWER: FINANCIAL CARE INVESTORS OF LEBANON, LLC By: Vk,1~ Robin L. Barber Vice President and Secretary AGRF,RMRNT OF MANAGF.R The undersigned Manager shall comply with all provisions and perform all obligations applicable to Manager set forth in the foregoing Loan Agreement, including, without limitation, {i{i2.3, 2.5, and 5.2.1. BALANCED CARE AT LEBANON, INC. By: ~ X~b~-__ Robin L. Barber Vice President and Secretary clr\hcri\lebanon\amended.restated.loanagmt - 18 - 11/22/00 -";,..-~,,, ;<^ _J. .,_ "~ '.,' I~ -,"J -- _ - '" "- . i;:J7''t'M'~M~' ,~'~"~ "=""'-""~ - ,""rn' ~~~ .'~JJLI;: - 1~ i!'6~ d . o 0 " ~5 1 - 0 0 . . d!l!l~ t t Ii! l! · 1~ 0 0 . i! H.~ ;; ~ ~t - - 5J _00:: '-11 . ' , 2~~! : : ~i'l S li <> 0 - - ii"~ ; ; i: 51 .o~. I!i~h~ ~ .: !i.Wii . . . If.~ ~ ou~ E . 51 10.' d~Hl! if . ~ ~! l S 1~ ! 0 i! . i5'6~"; ...... l! II> ;l. . IIp1 ii. : !i . _IS ~!! =: t: :: : : -I~ll~ . " ~ ll..~oili -.:110;;;'; ~. ESr~ ~H!!OO! hili · · lil_liOO!; lUll · · ~I' <> <> <> C> hN ;;flU ~ ~ i"j ~ - (J!:cs . t: ~ :: 0(- : ~ ~ H II ~wt ! ! ! . 1 Ii - ~ a 1 ti . ~ ~ ... ~;~i: S ~ i t ~! - . . h~s ~ s 0 s ~~s~ 6 ~ R ~ . - I... 'l~ ri ~ " ". "IJ R i i I i f Ii J L )1 .iIJ'<JiI' ~ . --j"" o } , & ii . if I i: I , it it I fhli j HIli uH.!f u"lf'z "& t ,-. IUtUI jH!~U !{'Uh1fl! L "!H . Uh"I!~ rlil};1 z hzlilf ~I!; ~ a i!',f'I' jiLlh! :IU"&~I tJUHgj jlwHu , 1,_l'lliM:MIIII~",,! -. ~ l , ; ~ ~ z ~ J I f z ~ ~ . : I I . o , - ~'-' = ~5S'0'*~'--"'=" ,.~~_,~ _ C~ " '0_. EXHIBIT B: DISBURSEMENT VOUCHER ,20_ Pennsylvania BCC Properties, Inc. One SeaGate, Suite 1500 P.O. Box 1475 Toledo, Ohio 43603 Attention: Erin C. Ibe1e Re: Loan Agreement (the "Agreement") between Financial Care Investors of Lebanon, LLC ("Borrower") and Pennsylvania BCC Properties, Inc. ("Lender") Dear Ms. Ibe1e: Manager, on behalf of Borrower, hereby requests a disbursement in the amount of $ to be made on or about , 20 (which is at least business days following Lender's receipt of this Disbursement Voucher). All terms used in this request are defined in the Agreement and have the meanings given in the Agreement. Manager hereby certifies to Lender as follows: (a) At the date hereof, no suit or proceeding at law or in equity and no proceeding of any governmental body has been instituted or, to the knowledge of Manager, is threatened, which, in either case, would have a material adverse effect on the financial condition or business operation of the Facility. (b) At the date hereof, no Event of Default has occurred and is continuing, and no event known to Manager has occurred which, upon the service of notice and/or the lapse of time, would constitute an Event of Default under any Transaction Document. (c) A Funding is required under the Shortfall Agreement in the amount of $ ("Funding Amount"). Cd) The representations and warranties of Balanced Care and Manager, and to Manager's knowledge, of Borrower in the Transaction Documents are tnle and correct as of this date. BALANCED CARE AT LEBANON, INC. By: clr\hcri\!ebanon\amended.restated.loanagmt 11/29/00 '"l_-,~t'" - r~.,'" 1,- , '~ ~ , ~~ ~,~ 1:ci:""'-~'- -><- OW" i;_~~, c Ir\hcri\le banan \amended. restated.1 oanagmt - T~' 1_~ - 2- " Title: ] ]/29/00 1'- r!'""f"~~rilllfi~~~'."="-' "'~ "''"''0''__ "'-"'" -~- ~_";'0 ~. - The foregoing draw request IS approved by Lender on this _ day of ,20_ PENNSYLVANIA BCC PROPERTIES, INC. By: Title: clr\hcri\lebanon\amended.restated.loanagmt - 3 - 11/29/00 -_Y_{l!).~l!'<'~;'~, " ,,,,,,,,,,",, -,~ I, " ," ....' (\~~f'-''''''='''"V :,"2.:Ptlll",.,c<___ ~'''W.''''''''''''-' ~' ",..- _~_ EXHIBIT C: WORKING CAPITAL BUDGET clr\hcri\lebanon\amended.restated.loanagmt 1, .,""., ,. ~~ 'I"'!' 11/29100 ""f ,. Vl~ g (3 .~ 2: &$ 0"" t= g ~ .~!:Q E - ..It: .~ ~ U :::l o . ~ ~co ~ UCs " "' '- ~ I=G ~ U~u '0 ~ tlIJ 1j Us:: l=:-5~ ~ ~ 0 m~~ ;tT~_., ,., >'.~ ~~. ~ boo gOon on"'~o #. boo on on 0 oonSo #. boo on on '" M_3'" 0 . 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Z',-..,-.. ! 1:: c i:: i:: ?_v ~~~ s:: E E t; t; .gj ~ ~;a QJ \) 'U .;:::; .:::;:. ;> > :>- ~a1.E 65e .E~; 3:3:~ __ t'<l t'<l Rl!ll ~I~ eolS 0"'$:1 'E3~ gf r; .~ .~ .~ '&- .;:: ,S 'U U U U V-t>i;I b!lt>i;I~ 0. 15. ~ S 5 J:: e "e:g ~ ~-B c.. .... 0 0 0 0 .~]~~f:; l.L.l.L.............NM"t <: 0.. :i o z <: '" '" .0 ~onon Nr-N 'O"'r- .,-i ~ 0 ~ "" on on on r-Nr- ",,,,r- ~oo ,....OOr') _ N o o o ,.;' '" r- '" 000 000 on on on r-: N' ~ '" - r- NN <; '" ~'" ~O'>- on 0; 'C __v -;:::: c: .... V ~ ~ ~ ~ ~ ~ ~ e Se3: ~ - . ~ ~ D Qc5~ ~,5'g. ';:; E U ""' p. 00 g.~E J:d:-g ~23 ~U::_ '" u o v: :;: ;;. o .0 - on 00 ~o M _ on .,.N '" .,rN' 00 N _ '" on"'~o '0 ~ on "'N 0 r;t$c:i: .,; "'oD r- - '" .., 0080 oon 0 "'''' 0 N~"": ~ '" '" '" - r- '" ~ 't 000 ~eS? Non", , , EEE v 0 V g g g ~ ~ ~ V V V > > > .5.5.E -~- ~ ~ ~ !! f'3 Rl ODes ~~~ . . . uuu c>o eo eo e e " :g~~ o 0 0 "~,, " - - N~'" "#. C ~ on 00 oo::;Z E e '" "#.000 \f) .- C 5-:.0 "' " u. '* c~ on 0 0 OOgjZ E o 0; on on M r- N_ "''''''' ~g~ -N 8 on Z- '" .., 000 ooon on">N f'-~ N~N ~ _ '" NN "''''~O ",r- 0 "'''' 0 M"": N' ",r- '" - '0 .., oon~'" on r- _ ~ '0 _ 0:: -:t~ .<::{ '0 '" _ _ '" '" 000 S?e52 Nv>", . , . --- c c c V " V g g g ~ ~ ~ V V V > > > .5.5.E ~~~ ~ ~ ~ !! !! !! ClClCl :3'3'Ei &- 'g.l Uuu ~~~ ~~:g 000 ~""" ......-g 'E oS ......N.......-:t oo"'~r- - on '0 r-'" _ .,-iN ~ N- N '" "''''aN ~'O '" r-", '" viN' r-: ""r- '" - ~ '" oon~on on N _ '" r- _ "':.,-i ...: r- '" N _ '" '" 000 eeS2 Nonoo , , , Ooz- e " e V V V g g E ~ ~ ~ ~ ~ ~ .E.E.E 'i''i''; f'3 ~ ~ 000 :g'33 ~'g.'g. uuu b!l 0000 ~.E .E ...i:~ ~~~ c: ~ ;;: N~'" ,~. '~~~~.~~r!'_'~~~ 1: ~ 8 '" ~ o ;;: "'''' ~g: V)!c - " cEg V V ~ g E V '" ti ~ V v- ~>'-' c..s~ 3:~0 !! !!~ c Q:~ ~bD~ '6 ,E U 8.5~ ~ fr:.g 0:;d:6 ~~~ u::w::.... onon", N r- '0 '0"'''' vi"":N ~'" on on'" r-Noo '" '0 00 ~oN "''''''' _ N o o "1 N 00 '" 000 ooon ononr- r-:'N'...) ~ _ 00 N N '" 't "'''' 't'" on 0; 1: ui " Cl '" '" <: o " ___O<l.l C E ~ E'; <L> - ~ > :a~.E > " - e.~~ ~ ~ a 00'5 ~.E'g. '2 c U ~g.~ ~p:.;;: ci:: 0: 6 E'W~ i.i:L'i:...... E '" . e . .9 -0 V ~ ~ '" " " " E 5' " o :; '" V ~ o .c '" U . ~~ --<>=" 124'''" '"~ 0 -- EXHIBIT D: PENDING LITIGATION (Lebanon) Notol;" R Dnnlop v Ontlook Point" M T ."honon In May, 2000, we were served with a Complaint filed by Natalie Dunlap with the Pennsylvania Human Relations Commission (PHRC) and the EEOC. Dunlap alleges that she was placed on probationary status and subsequently terminated on December 13, 1999, because of her gender (female), and the fact that she was five months pregnant at the time. At one point, Dunlap did present Doctor's restrictions (due to her pregnancy) to the Community Director, and she alleges that she was told she was "placed on probation because sickness due to pregnancy." Our Community Director vehemently denies that she ever indicated that Dunlap was placed on probation due to any type of restrictions. In fact, we have documentation establishing that corrective action was initiated on more than one occasion prim: to Dunlap ever providing us with any type of work restrictions. In addition, her work restrictions would not have substantially impaired her ability to do the job in any event. We believe Dunlap was simply not a very good employee. Dunlap was finally terminated some time after she did provide our Community Director with restrictions from her doctor. Our Community Director denies that there was any connection between Dunlap's restrictions and the decision to terminate her. We have filed and Answer, Position Statement, and supporting documents with the PHRC. The outcome of this matter cannot be guaranteed, but we feel it is unlikely that Dunlap will prevail in this case. At this time, we are waiting for an initial ruling by the PHRC. If Dunlap ever prevails in this case, it is possible that the claim would then exceed $25,000.00. clr\l1cri\lebanlll1\amended.restated.louoagmt ] 1/29/00 ~)?1~-i1~'~" - r~ ~ _._ 1- ,-' C' - l:r~' .C" EXHIBIT E: DOCUMENTS TO BE DELIVERED Borrower shall deliver each of the following documents to Lender no later than the date specified for each document: 1. each fiscal year. Annual Financial Statement of Borrower - within 90 days after the end of 2, Periodic Financial Statement of Borrower - within 45 days after the end of each quarter and 30 days after the end of each month. 3. Borrower's Certificate - with each delivery of Borrower's financial statements. 4. Federal tax returns of Borrower - within 15 days after the filing of the return. If the filing date is extended, also provide a copy of the extension application within 15 days after filing. c1r\hcri\lebanon\amended.rcstated.loanagmt 11/29/00 ~"lr~n.",-~ __^ -'1',' 1'_" - ,~,~ ~r .~ Ji'.'-': . EXHIBIT F: BORROWER'S CERTIFICATE Report Period: Commencing and ending Loan: $ loan made by Pennsylvania BCC Properties, Inc. ("Lender") to Financial Care Investors of Lebanon, LLC ("Borrower") I hereby certifY to Lender as follows: 1. The attached [specifY m"iit"c1 or nn"nc1itec1 and "nmml or qn"rte.r1y, and if ~on'oli(""t,,c1, so state] financial statements of Borrower [i] have been prepared in accordance with generally accepted accounting principles consistently applied; [ii] have been prepared in a manner substantially consistent with prior financial. statements submitted to Lender; and [iii] fairly present the financial condition and performance of Borrower in all material respects. 2. To the best of my knowledge, Borrower was in compliance with all of the provIsIons of the Loan Agreement and all otller Loan Documents executed by Borrower in connection with the Loan at all times during the Report Period, and no default, or any event which with the passage of time or the giving of notice or both would constitute a default, has occurred under the Loan Documents. Executed this _ day of Name: Title: clr\hcri\/ebanon \amended .restated.loanagmi 11/29100 "~,-,~;r'<_r . -~ 1'" -'7- l~', o. ." j,,,','2{<i ""r'llr 'j"'--- ~""","-,~,,-- . - -,- '-,- - - --~ - ~- .' AMENDED AND RESTATED NOTE $686,800.00 October 31, 2000 Mechanicsburg, Pennsylvania FOR VALUE RECEIVED, FINANCIAL CARE INVESTORS OF LEBANON, LLC, a limited liability company organized under the laws of the State of Delaware ("Borrower"), shall pay to the order of PENNSYLVANIA BCC PROPERTIES, INC., a corporation organized under the laws of the State of Pennsylvania ("Lender"), the principal sum of Six Hundred Eighty- Six Thousand Eight Hundred Dollars ($686,800.00), or so much thereof as shall have been advanced hereunder, with interest on so much thereof as shall from time to time be outstanding at the rate of interest set forth below, until fully paid. This note is given pursuant to the Loan Agreement dated as of September 22, 1998 between Financial Care Investors, LLC and Lender, as amended by a First Amendment to Loan Agreement dated as of September 30, 1999, as amended and restated by a Second Amended and Restated Loan Agreement between Borrower and Lender of even date herewith, and as fllliher amended Ii'om time to time (the "Loan Agreement") and is subject to the provisions thereof. Advances under this note shall be made in accordance with 92.5 of the Loan Agreement. The delinitions in the Loan Agreement shall be applicable to any capitalized temlS herein that are not otherwise defined. If there is any conflict between the terms of the Loan Agreement and the terms of this note, the provisions of the Loan Agreement shall control. This Amended and Restated Note ("note") is made by Borrower in full substitution of a note made by Financial Care Investors, LLC in favor of Lender in the original principal amount of $686,800.00 dated as of September 22, 1998 ("Original Note"). This note constitutes an assumption of the existing indebtedness by Borrower and a modification and renewal of the existing indebtedness evidenced by the Original Note. This note does not cancel the existing indebtedness evidenced by the Original Note. 1. Definitions. "Amendment Date" mcans October 31, 2000. "Amortization Date" means November 1 2004 , . "Business Day" means any day which is not a Saturday or Sunday or a public holiday under the laws of the United States of America or the State of Ohio. "Collateral Document" means any document providing security for or guarantee of repayment of this note. "Default Rate" means] 8.5% per annum. "Initial Rate" IllCCll1S 14'1;) per annum. clrIJlCri\leb:lnon\allll:mled ,restated .1101l: I Jl21100 ~~~~LllI~ ~', "~ "~"'I' , -,' ,"" ~ ~~-T-' ~= ,"" '~i{j" '-";"";":'~r'~-i'~-' "''-jf~!l'ff'r.---''''; '-,,-.'~,~;; "--, h_, ,,"-"'-' J ,.,-. "Lease" means the Lease Agreement between Lender and Borrower dated September 22, 1998, as amended by a First Amendment to Lease dated as of September 30, 1999, and as further amended from time to time. "Loan Advance" means each advance ofIoan proceeds under this note. "Maturity Date" means the earlier of [i) November 1, 2008; or [ii] the date on which Tenant acquires fee simplc title to the Facility pursuant to Option to Purchase the Facility under the Lease. "Mortgage" means the leasehold mortgage from Tenant for the benefit of Lender and Health Care REIT, Inc. on the leasehold interest of Tenant arising under the Lease, any amendment thereto or substitutions or rcplacements thereof "Security Agreement" means the Security Agreement dated September 22, 1998 between Lender and Borrower, as amended from time to time. 2. Inllerp<;t R:llle, (a) Inltl:1I R:llp. Interest shall accrue on the principal amount outstanding from and after the date of eaeh Loan Advance at the Initial Rate. (b) f)pGllIlt Rolle. After the occurrence and during the continuance ofan Event of Default, Bon'ower shall pay interest on this note, and on any judgment on this note, at the Default Rate. (c) r'olllpllt:lIion Methocl. All interest rates shall be calculated based on the actual number of days elapsed over a 360-day year (365/360 method). 3. Poyn1f'nl<;. 8orrower, or Manager on behalf of Borrower, shall make payments in accordance with the following: (a) COllllllencing December 1, 2000 and on the first day of each month thereafter to and including the Amortization Date, Borrower shall pay accrued interest only on the outstanding principal balance at the Initial Rate for the period commencing on the Amendment Date and ending on the day before the Am0l1ization Date. (b) Commencing on the first day of the first month after the Amortization Date and on the first day of each month thereafter until the Maturity Date, Borrower shall make monthly payments of principal and interest in an amount sufficient to fully amortize the outstanding principal balance of this note during the period conm1encing on the Amortization Date at the applicable interest rate then in effect based upon a 4-year amortization period. l: 1 r\hcl"i\leb::mon\nmended,re~t:llt::d.nllle - 2- 11/21100 ;,1~,,,, ,___ . ~ ~ ..._-",-- ~'I " , ,- -f' r' :!;-F"~""':-'~~""""'~Jl[- ~-"'" ~,,- _ 0' ,,,~ (c) On the Maturity Date or upon prepayment of this note, BOlTower shall pay the outstanding principal balance of this note, all accrued and unpaid interest and all charges, expenses and other amounts payable by BOlTower to Lender. 4. Methoc1 ~nd Pbcp of P~yment. BOlTower shall make all payments on this note at One SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio 43603, or at such other place as the holder hereof may designate in writing. Borrower shall make all payments in lawful money of the United States of America in immediately available funds. 5. Prep~ynlPnt. Borrower may prepay all or any portion of the outstanding principal balance of this note, all accrued and unpaid interest and all charges, expenses and other amounts payable by Borrower to Lender at any time without payment of any prepayment fee. 6. Application of Payments. All payments and other amounts received by Lender shalI be credited as follows: (iJ first, to any charges, costs, expenses and fees payable by BOlTOwer under this note or the Loan Agreement, or incuned by Lender for the protection of any collateral securing the payment of this note, if not paid by Bonower by the due date; (ii] second, to interest on the foregoing amounts at the Default Rate from the due date or date of payment by Lender, as the case may be; (iii] third. to accrued but unpaid interest on this note; (ivJ fOUl1h, to the principal amount outstanding; ancl (v] the balance, if any, to Borrower. 7. Oefmllt. The OCCUITence of an Event of Default under the Loan Agreement shall be an Event of Default hereunder. 8. Acceleration Upon the OCCUlTence of any Event of Default, in addition to all other remedies under the Loan Agreement, any security for or guarantee of this note, and at law or in equity, at the option of Lender (i) the outstanding principal balance of this note, all accrued and unpaid interest thereon and all other amounts payable by Bonower to Lender shall be inmlediately due and payable, and [iiJ ,111 such amounts shall bear interest at the Default Rate from the clate of the Event of Default until paid. Lender may exercise either or both options without notice or demand of any kind. 9. Govelllin~ I aw This note shall be governed by and construed in accordance with the internal laws of thc State of Pennsylvania, without giving effect to the conflict oflaws rules thereof. 10. Time is oflllP P"ence, Time is of the essence in the payment of this note. All grace periods in the Loan Agreement ancl any Collateral Document that apply to a default shall run concurrently. 11. Holic1ays. If any installment of this note becomes due on a day which is not a Business Day, Borrower may pay thc installment on the next succeeding day on which banking institutions are open. 12. wmver or the like W:Jivers. None of the lallowing shall be a course of dealing, estoppel, on which any party to this note or any Collateral Document may rely: c I r\hcl"I '-I t' b:l rlllt1 \:lll1t'l1tk:J , I"C~ t:1 h:d. note o . ~ - 11/21/00 "H~'"r ,?- ,,~14~_ , . r ~F1'~ ,~ ]-', -- " -" ~" ,-, " ~"~ I~ "- ~--- ]_\(""1'1"' :----- ;tl~_ -~-"- -.. =, ^,,-, [i] Lender's acceptance of one or morc late or patiial payments; [ii] Lender's forbearance from exercising any right or remedy under this note or any Collateral Document; or [iii] Lender's forbearance from exercising any right or remedy under this note or any Collateral Document on any one or more occasions. Lender's exercise of any rights or remedies or a part of a right or remedy on one or more occasions shall not prcclude Lender from exercising the right or remedy at any other time. Lender's rights and remedies under this note, the Collateral Documents, and the law and equity are cumulative to, but independent of, each other. 13. Rpprp.sentations. Each party to this note and each Collateral Document: [i] acknowledges that Lender would not have extended the credit evidenced by this note and will not continue to extend the credit but for the obligations of each; [ii] warrants that each has executed this note or Collateral Documents to induce Lender to extend and to continue to extend the credit; [iii] warrants that each has received good and valuable consideration for executing this note or any Collateral Document; and [iv] warrants that none have executed this note or any Collateral Document in reliance upon the existence of the security for or guaranty or promise of the payment of this note. 14. Inrlnl!Cp.nc<,s, \Vithout notice, Lender may do or refrain from doing anything affecting this note or any Collateral Documcnt. as many times as Lender desires, including the following [i] granting or not granting any indulgences to anyone liable for payment of this note or to anyone liable under any Collateral Document; [ii] releasing any security or anyone or any property from liability on this note or any Collateral Document; [iii] amending this note or any Collateral Document, including cxtending (hc time for payment of this note, in accordance the tem1S of such Collateral Documents. 15. No Rpl"ase or I iahility, No obligations of any party to this note shall be affected by [i] any default in this note or any Collateral Document when accepted by Lender or arising any time thereafter; [ii] the unenforceability of or defect in this note or in any Collateral Document or any interest conveyed by any Collateral Document; [iii] any decline in the value of any interest in any property convcyed by any Collateral Document; or, [iv] the death, incompetence, insolvency. dissolution, liquidation or winding up of affairs of any party to this note or any Collateral Documcnt or thc start of insolvency proceedings by or against any such party. EACH PARTY TO ANY COLLATERAL DOCUMENT WAIVES ALL SURETYSHIP AND OTHER SIMILAR DEFENSES. No party to this note or any Collateral Document may enforce any right of subrogation or conll~ibution unless and until this note is paid in full and waives all rights of subrogation against an)' pan)' that is subject to insolvency proceedings unless and until this note is paid in full. 16. Noticps. Allnolices, demands, requests and consents (hereinafter "notices") given pursuant to this note shall be in writing, and shall be served by [i] personal delivery, [ii] United States Mail, postage prepaid; or [iii] nationally recognized overnight courier to the following addresses: clr\hct'i"Il'l1~l1l11l\amendcJ, reSlUlcd_ll\ lto: -4 - t lJ2l!OO - ""-- I"" - " :'l""'f~'1~'-"" - . .-,~ ~- " ~.. . To Bon-ower: Financial Care Investors of Lebanon, LLC 1215 Manor Drive Mechanicsburg, Pennsylvania 17055 To Lender: Pennsyl\'ania BCC Properties, Inc. One SeaGate, Suite 1500 P.O. Box 1475 Toledo, Ohio 43603 All notices shall be deemed to be given upon the earlier of actual receipt or three days after deposit in the United States mail or one business day after deposit with the overnight com1er. All notices shall also be delivered to Balanced Care in accordance with 98.5 of the Loan Agreement. Balanced Care, Lender and Borrower may change their notice address at any time by giving the other party written notice of such change. 17. Representntion :1I1il W:lITnnly Repnrilinp Rllsiness Pllrpose, Borrower represents and warrants that the loan evidenced by this note is for business purposes only and not for personal, family, household, or agricultural purposes. 18. Protest. Except as otherwise expressly provided in the Loan Agreement, each party to this note jointly and severally waives protest, notice of protest, demand, dishonor or default, presentment for payment, notice of intent to declare this note immediately due and payable, notice of declaration that this note is immediately due and payable in full, all other notices, and all demands. 19. Snvines rl:lIIse. The intention of Lender and Bon-ower is to comply with the laws of the State of Pennsylvania concerning the rate of interest on this note. Notwithstanding any other provision in this note or in any other document given in connection with this note, BOll'OWer shall not be required to pay interest in excess of the maximum lawful rate. To the extent the amount of interest provided in this note ever exceeds the maximum lawful rate (the "Excess Interest"), [i] the provisions of this paragraph shall govem and control; [ii] Bon-ower shall not be obligated to pay any Excess Interest; [iii] any Excess Interest that Lender may have received shall be credited against the then outstanding balance due under this note and, if the Excess Interest exceeds the outstanding balance. the excess amount shall be refunded to Bon-ower; [iv] the rate of interest under this note shall be automatically reduced to the maximum lawful rate and this note and any other documents given in connection therewith shall be deemed reformed and modified to reflect such reduction; and [v] subject to the foregoing provisions of this paragraph, BOlTower shall have no action or remedy against Lender for any damages whatsoever or any defense to enforcement of the note or any other documents given in cOID1ection therewith arising out of the payment or collection of any Excess I nterest. In detem1ining whether interest paid or payable on this note exceeds the maximum lawful mte, Borrower agrees to spread the total amount of interest throughout the entire contemplated term of this note. c 1 r\hc ri\ 1 c banon \a mel1 ded. rcsta tcd .IlO It: - 5- 11/21/00 "ii. ,~ ~ ~~-r~. -'" I ,'~ ~." -" y'"'" - ;~i"'~~~N1if"triJJ:iIif""~ c,_, -~~,.. ,.-~,,-~^- ,,~,~, ~ " .". ~. . . . 20. Attol1ley's Fees "llrl Fxpellses. Borrower shall pay to Lender all reasonable costs and expenses incurred by Lender in administering the Loan and the security for the Loan, enforcing or preserving Lender's rights under this note, the Loan Agreement or any Collateral Document, and in all matters of collection, whether or not an Event of Default has actually occurred or has been declared and thereafter cured, including but not limited to, [i] attorney's and paralegal's fees and disbursements; [ii] the lees and expenses of any litigation, administrative, bankmptcy, insolvency, receivership and any other similar proceeding; [iii] court costs; [iv] the expenses of Lender, its employees, agents, attorneys and witnesses in preparing for litigation, administrative, bankruptcy, insolvency and othe!' proccedings and for lodging, travel, and attendance at meetings, hearings, depositions, and trials; and [v] consulting and witness fees incurred by Lender in cOlU1ection with any litigation or other proceeding, but excluding Lender's internal bookkeeping and routine loan servicing costs. 21. Severahility If any clause, provision, section or article of this note is ruled invalid by any co11l1 of competent jurisdiction, the invalidity of such clause, provision, section, or article shall not affect any of the remaining provisions hereof. 22. under this note. Assi~lllllellt. Borrower shall not assign its rights nor delegate its obligations 23. Amendment. This note may not be amended except in writing signed by Borrower and Lender. All references to this note, whether in this note or in any other document or instrument, shall be deemed to incorporate all amendments, modifications, and renewals of this note and all substitutions made therefor after the date hereof. 24. ('ONSFNT TO II rRIST)j(,TTON. BORROWER HEREBY IRREVOCABLY SUBMITS AND CONSENTS TO THE NON-EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO OR LEBANON COUNTY, PENNSYLVANIA FOR ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO [I] THE TERM SHEET FOR THE LOAN EVIDENCED BY THIS NOTE; [II] THIS NOTE; OR [lll] ANY LOAN DOCUMENT EXECUTED IN CONNECTION WITH THIS NOTE. BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT BORROWER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURlSDICTION BY SUIT ON THE .JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LA W. BORROWER AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST LENDER OR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT OR PROPERTY OF LENDER. CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THE TERt"l SHEET, THIS NOTE OR ANY LOAN DOCUMENT IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO. clr\hcri\ll'b;J110Il\alllcl1tkd.rt:sl:lt~'d I1n1<: - (, - 11/21100 '-'~~" , "~ .--, ,,~II'" I ,"~ ..~. r' - - !" j~',"'1:;rr'''' . ~." '-, ~ BORROWER HEREBY CONSENTS TO SERVICE OF PROCESS BY LENDER IN ANY MANNER AND IN ANY JURISDICTION PERMITTED BY LAW. NOTHING HEREIN SHALL AFFECT OR IMPAIR LENDER'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW, OR LENDER'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR THE PROPERTY OF BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. 25. W A TVFR OF n IRY TRT AT. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY KNOWINGLY AND VOLUNTARILY WAIVES THE RIGHT TO A JURY TRIAL IN ANY ACTION, PROCEEDING OR COUNTERCLAIMS ARISING OUT OF OR RELATING TO THIS NOTE. 26. I ();1Il A:"wment. This note is subject in all respects to the Loan Agreement, including, without limitation the provisions of *8.14 thereof. 27. SeclIrity' """ronly. This note is secured by the Security Agreement and the Mortgage. This note is guaranteed by Balanced Care Corporation. (THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK) c! r\hc rl\1 e b:lll 011 \amended . res la led _ no 1 e - 7 - 11/21/00 "i[-mf. ". ,,., - ~ , -YI'- ~ ", .. ~~" , "." ,_i f':[-"'-"{'r .,_" ,~~' r.~' _< __ , .. ~ I " IN WITNESS WHEREOF, the undersigned has executed this note effective as of , the date first set forth above. FINANCIAL CARE INVESTORS OF LEBANON, LLC ~ ;c0eJ~ Robin L. Barber Vice President and Secretary By: ACCEPTANCE BY LENDER The foregoing Amended and Restated Note is hereby accepted by Lender in full substitution for the Original Note (as defined herein). The Original Note (but not the indebtedness evidenced by the Original Note) is hereby canceled. Executed as of ,2000. PENNSYLVANIA BCC PROPERTIES, INC. By: ~ c~ . \lICE PRESIDENT AND Title: CocPORATE SECRETARV cI r\ he ri\l e ba non \3 mended. resla led. tlOle - 8 - 11121/00 ')1 ~ ..,..,,.,.;.l"!W'lIJ __,_~""" r~,,_~~ .~ t, , -', - -,..- "~m .. . . JHfea1lfu VIA FEDERAL EXPRESS OVERNIGHT MAIL February 20, 2001 Financial Care Investors of Lebanon, LLC 1215 Manor Drive Mechanicsburg, Pennsylvania 17055 RE: Pellllsylvania BCC Properties, 1I1c. ("Lender'? - Loan to Financial Care Investors of Lebanon, LLC ("Borrower'?; Notice of Default. Notice of Acceleratio1l and De11la1ld for PaV11Ie1lt Dear Sir or Madam: NOTICE OF DEFAULT, NOTICE OF ACCELERATION AND DEMAND FOR PAYMENT Please refer to the Loan Agreement specified on the attached Schedule A made between Lender and Borrower and the Note made by Borrower in favor of Lender as listed on Schedule A. Except as otherwise defined herein, each capitalized term used herein shall have the meaning set forth in the Loan Agreement or the Note. ' This letter shall serve as written notice that the following Events of Default have occurred and are continuing pursuant to the Loan Agreement and the Note: 1. Borrower has failed to pay accrued interest under the Loan Agreement and the Note within ten (10) days after such payments were due. This is an Event of Default under Articles 2 and 7 of the Loan Agreement and Section 3 of the Note. 2." Borrower and certain Affiliates of Borrower have defaulted under indebtedness or obligations to or agreements with Lender or a Lender Affiliate. This is an Event of Default under Article 7 of the Loan Agreement. Other covenant violations or Events of Default may currently exist. Failure to specify an existing covenant violation or Event of Default in this letter shall not constitute a waiver of such covenant violation or Event of Default. Any forbearance by Lender in exercising any right or remedy pursuant to any Event of Default shall not operate as a waiver of such Event of Default clr\hcri\lebanon\notice.loan 2120/01 Heallh Care REIT, Inc. * One SeaGate . Suite 1500 . P.O. Box 1475 . Toledo, Ohio 43603-1475 . Telephone {4191247-2800 . Telecopier(419) 247-2826 ':::i!jH :., _ _ ~~~ll,(;iV,_ _ _, ".,"_ "'I'" I" :~ . -~ '0-1~ '^' I " . Financial Care Investors of Lebanon, LLC February 20,2001 Page 2 and all of Lender's rights and remedies are hereby reserved. Pursuant to the Loan Agreement, Borrower is liable for any and all costs, expenses and fees (including reasonable attorneys' fees) incurred by Lender in enforcing the Loan Agreement. The Events of Default listed above do not require any notice or cure period and each Event of Default listed above constitutes an immediate Event of Default. As a result of the foregoing Events of Default, Lender may exercise all of its rights and remedies under the Loan Agreement and Note, at law or in equity. In addition, Lender may pursue its rights and remedies against Balanced Care Corporation ("Guarantor"). Without waiving any other rights or remedies it has under the Loan Agreement or the Note, Lender hereby exercises its right to immediately accelerate all amounts due under the Loan Agreement and the Note. This letter constitutes Lender's written Notice of Acceleration as required under the Loan Agreement and Lender hereby demands that J;3orrower immediately pay Lender all amounts due under the Loan Agreement. As of February I, 2001, Borrower owes Lender the amount of $693,676.03 under the Loan Agreement plus interest in the amount of $267.01 per day thereafter. Lender demands that Borrower immediately pay to Lender the entire amount owed. We trust that these serious matters will receive your immediate attention. Sincerely, PENNSYLVANIA BGC PROPERTIES, INC. /<d-/;?-'L 'George L. Chapman J- Chairman, CEO & President cc: Balanced Care Corporation at the address listed on the attached Schedule B (via Federal Express Overnight Mail) Steven 1. Adelkoff (via Federal Express Overnight Mail) Cynthia L. Rerucha David J. Coyle Michael L. Berustein (via facsimile) J effiey A. Liesemer (via facsimile) Thomas C. Rogers (via facsimile) Steven E. Ostrow (via facsimile) , elr\hcri\1ebanon\notice.loan 2120/01 :"'K~lWn ",^ ,~~, "., . ' ~, 'I ' - 1""1-' ,; , ""~ i:~",~,'li",~ C",~,,~'" p' .,'" ". "'":~~r"'r ,~-,'".,'~, ""'"", .' "H'~ ~^" - . ~ . . . Financial Care Investors of Lebanon, LLC __ ~~cri\lebanon\notice.lOan ci _~~.,")JHII:lillllm'll!'li.II!ffi"""'!ilJr. ~ 1Pl1 SCHEDULE A 'C8a.tAgreem~n( !;g~9;,NlJte<<" "'1;"-.''-'.''+':'' "", .V>>""-'2-"j-"",,,-. "",..: f~" "?(D 't' :\""'" 't/?i)f-<~ ate ~~~~1:P":;\- :'/:::;:'~.:.::'-- . a eJ ;:y,." Second Amended Amended and and Restated Restated Note Loan Agreement (10/31/00) (10/31/00) I' ~, <.' :,', "",:.;-;J.". " - "'-'";,',"-" Amount' $686,800.00 Security Agreement and Leasehold Mortgage 2120/01 =" ~ rL..'''~~~ "'~~-;- ~''''~'''J:4l '''''':'~'_--'- -~lJr ~ -~" . -,=< A,. --;', -'I -~~>, ~, .. ' . . SCHEDULE B Balanced Care Corporation c/o BCC Development and Management Co. 1215 Manor Drive Mechanicsburg, Pennsylvania 17055 Attention: Legal Department clr\hcri\lebanon\notice.loan 2/20101 .._)1:';;,~:--,,~,~~~ ' . - - e__, j" , ' iii ~. ,~ r""",_,,,,',,"'" ""Illi'lan'.",',,""" '" ,_" Il _.~L--"T!.Tf.r'i'T~t'~^'--r:'wl1~'~~I~:iw_f~f:'~ti{' . . ?f (J -4l. .(Q f! ~ <:- J:: Y'l t-( () 8 ~ ~ , ........ () lI') c ~. ........ ~; -.-' ("'.,., ...() .....:J I:> (), iRrn ::-J ~ ~ ;'1 <:) ~:.--;; . " ~ -c":,! fl.- ".-,-- --t:: ,,' C:') ~---:: i~ ::::: " } ';7 " C:::-J p'''l~_^ <"" "....,.,_I~ ..,~Jl~__~ :U__.:,.. ~ ,..=<IJI!!ji.IlI",_,-~_,JJJ~~,\i;-~~_~~UiRJ.~~~~~~W.~';f.ij01": ;(, F"i~;;'-'~' ". ~1U SHERIFF'S RETURN - REGULAR CASE NO: 2001-07080 P COMMONWEALTH OF PE~SYLVANIA: COUNTY OF CUMBERLAND PENNSYLVANIA BCC PROPERTIES IN VS FINANCIAL CARE INVESTORS OF DOUGLAS DONS EN , Sheriff or Deputy Sheriff of Cumberland County, Pennsylvania, who being duly sworn according to law, was served upon says, the within COMPLAINT & NOTICE the FINANCIAL CARE INVESTORS OF LEBANON LLC DEFENDANT , at 1536:00 HOURS, on the 26th day of December, 2001 at 1215 MANOR DRIVE by handing to MECHANICSBURG, PA 17055 ROBIN BARBER, VICE PRESIDENT a true and attested copy of COMPLAINT & NOTICE together with and at the same time directing Her attention to the contents thereof. Sheriff's Costs: Docketing Service Affidavit Surcharge 18.00 8.45 .00 10.00 .00 36.45 Sworn and Subscribed to before me this ~<t::: day of G:ri;~ A.D. a. 1vt.J I" . ~ rothonotary~ ~ "'::>r"',i'~'''W''1''<f'>'ffl'1~~,_"1~ , .1l!1f " 'I " So Answers: r"~~ R. Thomas Kline 12/27/2001 WHITE AND WILLIAMS By: Q~ _ ~eputy Sheriff ~I ,~" ',',,"""17', JLi1-!' U!i_ ! . WIllTE AND WILLIAMS LLP By: Steven E. Ostrow, Esquire Dawn L. Vahey, Esquire Identification No.: 50568, 8794 1800 One Liberty Place Philadelphia, PA 19103-7395 (215) 864-7000 Attorneys for Plaintiff PENNSYLVANIA BCC PROPERTIES, INC. One SeaGate, Suite 1500 P.O. Box 1475 Toledo OH 43603, COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYL VANIA Plaintiff No.200l-07080P v. Defendant. I:) C> 0 C '" " s: .." :.:~ "tn:;:, rrt :~l;D mnl Q'.) Z:1: , ZC N ----rn {J);''':; (J'\ /;0 eo ':]<':) "'- -0 -',-- ,-~ ~o :::e: >----li C2B -0 {,..} 6i;';n >c ~ :.J1 ~ Xl ():) -< FINANCIAL CARE INVESTORS OF LEBANON, LLC 1215 Manor Drive Mechanicsburg, PA 17055 PRAECIPE TO DISCONTINUE ACTION TO THE PROTHONOTARY: Kindly discontinue without prejudice the above-captioned action pursuant to Pa.R.Civ.P. 229(a). Dated: February 26, 2002 WHITE AND WILLIAMS By:i!- ~i-- Steven E. Ostrow, Esquire Doc#: 1277038 vI "'-:I:(i!liJ , '", .~,,,~< ,,~~ "" " ~ ,--,- .,,1 ,-' ." ., '__.' - _'nO.. ""'" ". , " ,- . ~", " -- .r ,-'" c.... .' , wmTE AND WILLIAMS LLP By: Steven E. Ostrow, Esquire Dawn L. Vahey, Esquire Identification No.: 50S68, 8794 1800 One Liberty Place Philadelphia, PA 19103-7395 (21S) 864-7000 Attorneys for Plaintiff PENNSYLVANIA BCC PROPERTIES, INC. One SeaGate, Suite IS00 P.O. Box 1475 Toledo OH 43603, COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff (') c: ~ "., '"0 OJ rnrn z:x; zs:; ~i~ !;2o ZQ =U yc:. ~ '~ o '71 No.200l-07080P o N -" ,." CP N 0" (J.) ., i'T~\p "elll! ,;;)Q --, ' ""~JC} j::t\ '.;; ?') C:J'll --I "1:::- :0 -< v. FINANCIAL CARE INVESTORS OF LEBANON, LLC 1215 Manor Drive Mechanicsburg, PA 170S5 -0 :x Defendant. CERTIFICATE OF SERVICE I, Dawn L. Vahey, Esquire, hereby certify that on February 26, 2002 I caused a true and correct copy of Plaintiffs, Pennsylvania BCC Properties, Inc. 's, Praecipe to Discontinue Action, to be served via first class mail, postage pre-paid upon the following: FINANCIAL CARE INVESTORS OF LEBANON, LLC 1215 Manor Drive Mechanicsburg, PA 170S5 Dated: February 26, 2002 ~t/VJ Dawn L. Vahey, Esquire ~/ WHITE AND WILLIAMS I:LP 1800 One Liberty Place Philadelphia, PA 19103 Telephone: (215) 864-6808 Doc#: 1277037 v <~~, ,."-",, ,.'Y' .."_,"_,,~,, '."'f c '>'"_~ ~ ,0..',' "^ ,,",.-, , ,'. -~- , ~~ ~~, ,. ~ . ,