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EXHIBIT 10.26
GUARANTY OF PAYMENT AND PERFORMANCE
THIS GUARANTY OF PAYMENT AND PERFORMANCE ("this Guaranty") made as of
the ________________________, by _____________________________________
_________________________ ("Guarantor"), in favor of _________________
_________________________________________________ (the "Lender").
R E C I T A L S:
Pursuant to Loan Agreement of even date herewith (as the same may
hereafter be amended, the "Loan Agreement") between ___________________________
________________________________ (the "Borrower"), and Lender, Lender has agreed
to make a loan to the Borrower in the principal amount of ______________________
_______________________ Dollars ($_______________) (the "Loan"), provided as one
of the conditions therefor Lender requires that the Guarantor guarantee the Loan
Obligations (as defined in the Loan Agreement), now existing or hereafter
incurred, owing to the Lender pursuant to the respective Loan Documents (as
defined in the Loan Agreement; capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Loan Agreement).
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, and in
order to induce the Lender to make the Loan, and as security for the Loan
Obligations, including, but not limited to, the payment of the principal,
interest and other charges pursuant to the Promissory Note executed by the
Borrower evidencing the Loan (as the same may hereafter be extended, renewed,
modified or amended, the "Note"), (b) the payment of all expenses, charges and
other amounts from time to time owning to Lender pursuant to the Note, the Loan
Agreement, and the other Loan Documents, and (c) the performance of all
covenants, agreements and other obligations from time to time owing to or for
the benefit of, Lender pursuant to the Loan Documents, the Guarantor agrees and
covenants with Lender and represents and warrants to Lender as follows:
l. Guarantee of Loan Obligations. Guarantor hereby unconditionally and
unlimitedly guarantees to the Lender (a) the due, regular, and punctual payment
and performance of the Loan Obligations, including, but not limited to, (i) the
payment obligations
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of the Note, and (ii) the indemnity obligations of the Loan Documents (which
guaranty shall survive concurrently with such indemnity obligations); (b) upon
the failure of the Borrower timely to pay or perform any of the Loan
Obligations, the payment of all reasonable costs and expenses incurred by Lender
in paying or performing such Loan Obligations (but Lender shall not be required
to pay or perform such Loan Obligations); and (c) all reasonable costs,
attorneys' fees, and expenses that may be incurred by the Lender by reason of a
Default by the Borrower, including reasonable fees and expenses in any appellate
or bankruptcy proceedings.
Upon any Event of Default pursuant to any of the Loan Documents, the
Guarantor unconditionally promises to pay to the Lender such amounts as are
necessary to cure the Event of Default, or at the option of the Lender, the
Guarantor agrees to pay the outstanding Loan Obligations in full.
This Guaranty is unconditional except as expressly set forth herein,
and the Guarantor agrees that the Lender, upon the occurrence of an Event of
Default pursuant to any of the Loan Documents, shall not be required to assert
any claim or cause of action against the Borrower before asserting any claim or
cause of action against the Guarantor under this Guaranty. The Guarantor further
agrees that the Lender shall not be required to pursue or foreclose on any
Collateral that it may receive from the Borrower or others as security for any
of the Loan Obligations before making a claim or asserting a cause of action
against the Guarantor under this Guaranty.
The failure of the Lender to perfect its security interest in any of
the Collateral as set forth in any of the Loan Documents or any other collateral
now or hereafter securing all or any part of the Loan Obligations shall not
release the Guarantor from its liabilities and obligations hereunder.
Notice of acceptance of this Guaranty and of any Default by the
Borrower is hereby waived by the Guarantor, except to the extent notice is
otherwise expressly required by the Loan Documents. Presentment, protest,
demand, and notice of protest and demand, and notice of receipt of any and all
Collateral, and of the exercise of possessory remedies or foreclosure on any and
all Collateral received by the Lender from the Borrower or the Guarantor are
hereby waived. All settlements, compromises, compositions, accounts stated, and
agreed balances in good faith between any primary or secondary obligors on any
accounts received as Collateral shall be binding upon the Guarantor.
This Guaranty shall not be affected, modified, or impaired by the
voluntary or involuntary liquidation, dissolution, sale or other disposition of
all or substantially all of the assets, marshalling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangements, composition with creditors or readjustment of, or
other similar proceedings affecting the Borrower or the Guarantor, or any
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of the assets belonging to any of them, nor shall this Guaranty be affected,
modified, or impaired by the invalidity of the Note or any of the other Loan
Documents.
Without notice to the Guarantor, without the consent of the Guarantor,
and without affecting or limiting the Guarantor's liability hereunder, the
Lender may:
(a) grant the Borrower extensions of time for payment of the
Obligations or any part thereof;
(b) renew any of the Obligations or make further advances to Borrower;
(c) grant the Borrower extensions of time for performance of agreements
or other indulgences;
(d) at any time release any or all of the Collateral, or any mortgage,
deed of trust or security interest in any Collateral, that now or hereafter
secures any of the Loan Obligations;
(e) compromise, settle, release, or terminate any or all of the
obligations, covenants, or agreements of the Borrower under the Note or other
Loan Documents;
(f) at any time release other any guarantor from their guarantees of
any of the Obligations; and
(g) with the Borrower's written consent modify or amend any
obligations, covenant, or agreement of the Borrower as set forth in its Note or
any of the other Loan Documents (and such amendments shall nevertheless be
binding upon Guarantor)
This Guaranty shall continue to be effective, or be reinstated, as the
case may be, if at any time any whole or partial payment or performance of any
Loan Obligations is or is sought to be rescinded or must otherwise be restored
or returned by the Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or Guarantor upon or as a result
of the appointment of a receiver, intervenor, or conservator of, or trustee or
similar officer for, the Borrower or either guarantor of or for any substantial
part of its, his or her property, or otherwise, all as though such payments and
performance had not been made. This Guaranty shall not be affected in any way by
the transfer or other disposition of any of the Collateral described in and
granted to Lender pursuant to the Loan Documents, whether by deed, operation of
law, or otherwise.
2. Representations and Warranties of the Guarantor. To induce the
Lender to make the Loan to Borrower, the Guarantor represents and warrants to
the Lender as follows:
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(a) Power to Incur Obligations. The Guarantor has full power
and unrestricted right to enter into this Guaranty and to incur the obligations
provided for herein and the execution and delivery of this Guaranty has been
authorized by all required corporate action.
(b) Conflicts. This Guaranty does not violate, conflict with
or constitute any default under any decree, judgment, or any other agreement or
instrument binding upon Guarantor or the articles of incorporation or bylaws of
Guarantor.
(c) Pending Matters. No action or investigation is pending, or
to the best of Guarantor's knowledge, threatened before or by any state or
federal court or administrative agency which might result in any material
adverse change in the financial condition operations or prospects of Guarantor.
Guarantor is not in violation of any agreement, the violation of which might
reasonably be expected to have a materially adverse effect on their business or
assets, and Guarantor is not in violation of any order, judgment, or decree of
any state or federal court.
(d) Financial Statements Accurate. All financial statements
heretofore or hereafter provided by the Guarantor are true and complete in all
material respects as of their respective dates and fairly present the financial
condition of the Guarantor, and there are no liabilities, direct or indirect,
fixed or contingent, as of the respective dates of such statements which are not
reflected therein or in the notes thereto or in a written certificate delivered
with such statements. The financial statements of the Guarantor are prepared on
a consistent basis from year to year. There has been no material adverse change
in the financial condition, operations, or prospects of Guarantor since the
dates of such statements except as fully disclosed in writing with the delivery
of such statements.
(e) No Defaults or Restrictions. There is no declared default
under any agreement or instrument that caused or would cause a material adverse
effect on the business, properties, and financial operations or condition of
Guarantor.
(f) Payment of Taxes. Guarantor has filed all federal, state,
and local tax returns which are required to be filed and have paid, or made
adequate provision for the payment of, all taxes which have or may become due
pursuant to said return or to assessments received by Guarantor.
(g) Disclosure. Neither the Guaranty nor any other document,
financial statement, credit information, certificate or statement required
herein to be furnished to Lender by Guarantor in connection with the Guaranty
contains any untrue, incorrect or misleading statement of material fact. All
representations and warranties made herein or any certificate or other document
delivered to Lender by or on behalf of Guarantor pursuant to or in connection
with this Guaranty shall be deemed to have been relied upon by Lender
notwithstanding any
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investigation heretofore or hereafter made by Lender or on its behalf, and shall
survive the making of the Loan.
(h) Organization. Guarantor is a Delaware corporation duly
organized and validly existing and is duly qualified and in good standing in
each jurisdiction in which its business or assets makes its qualification
necessary.
(i) Stock Ownership. On the date hereof, the capital stock of
Guarantor is owned as set forth in Exhibit A.
3. Affirmative Covenants of the Guarantor. The Guarantor covenants and
agrees that so long as the Loan Obligations are outstanding, they shall comply
with each of the following affirmative covenants:
(a) Payment of Loan/Performance of Loan Obligations. Within
five (5) business days of Lender's demand thereof, duly and punctually pay or
cause to be paid the principal and interest of the Note in accordance with their
terms and duly and punctually pay or cause to be paid or performed all Loan
Obligations.
(b) Payment of Taxes. Pay and discharge all taxes,
assessments, and governmental charges or levies imposed upon him or it,
including, without limitation, all current tax liabilities of all kinds, all
required withholdings of income taxes of employees, all required old age and
unemployment contributions, and all so-called provider taxes.
(c) Reporting Requirements. From time to time upon request,
furnish to Lender such information regarding the business affairs, finances, and
conditions of the Guarantor and its properties in such detail as the Lender
reasonably may request; will furnish to Lender, as soon as available and in any
event furnish to Lender such financial reports and statements as set forth in
the Loan Agreement.
(d) Payment of Indebtedness. Pay duly and punctually or cause
to be paid, all principal and interest of any indebtedness of Guarantor legally
due to its creditors, comply with and perform all conditions terms and
obligations of the notes and other instruments evidencing such indebtedness and
any mortgages, deeds of trust, security agreements and other instruments
evidencing security for such indebtedness.
(e) Notice of Loss. Notify Lender of any event causing a loss
or reduction in value of a Guarantor's assets which has a material adverse
effect on Guarantor's net worth.
(f) Existence. Maintain its existence and, in each
jurisdiction in which its business or assets makes qualification necessary, its
qualification and good standing.
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(g) Financial Covenants.
(a) Throughout the Term of the Loan, Guarantor shall
maintain the following:
(i) a ratio of consolidated current assets to
consolidated current liabilities equal to or greater than 1.0 to 1.0;
(ii) a tangible net worth equal to or greater than
$5,000,000.00, unless otherwise approved (or waived) by Lender, approval of
which shall not be unreasonably withheld (for purposes of this Section
3(g)(a)(ii), the line item identified as "Mandatorily Redeemable Preferred B
Stock" reflected on Guarantor's consolidated financial statement shall be
included in Guarantor's shareholder's equity).
(iii) a Consolidated Cash Flow Coverage not less than
1.0 to 1.0.
"Consolidated Cash Flow Coverage" shall mean a ratio of (i) earnings
before interest, taxes, depreciation, amortization, rent and home office expense
minus an assumed five percent (5%) management fee to (ii) all interest and rent
payments.
(b) Comply with all other requirements and covenants
to be maintained and performed by Guarantor pursuant to the Loan.
4. Negative Covenant of the Guarantor. So long as any of the Loan
Obligations are outstanding, Guarantor shall not, without Lender's prior
approval:
(a) Changes in Accounting. Change its method of accounting to
one inconsistent with the method heretofore used by the Guarantor, provided that
Lender's consent to such a change will not be unreasonably withheld.
(b) Merger, Consolidation, Etc. Enter in any merger,
consolidation or similar transaction, or 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 or hereafter acquired).
(c) Transfer of Stock. Permit the transfer of any of its
capital stock which would cause a change in control of Guarantor other than
transfer in connection with a registered public offering or transfer to family
members upon such stockholder's death.
5. Events of Default. Guarantor's violation of any covenant set forth
in paragraph 4 hereof, or Guarantor's failure to properly and timely perform or
observe any covenant or
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condition set forth in this Guaranty (other than that in paragraph 4) which is
not cured within any applicable cure period as set forth herein or, if no cure
period is specified therefor, is not cured within thirty (30) days of Lender's
notice to Guarantor of such default, or the falsity of any representation or
warranty herein or in any financial statement, certificate or other information
heretofore or hereafter provided by Guarantor to Lender, shall constitute an
"Event of Default" hereunder and under each of the Loan Documents. The foregoing
provision or any other provision requiring or providing for notice or demand
from Lender is deemed eliminated if Lender is prevented from giving such notice
or demand by bankruptcy or other applicable law, and the Event of Default shall
occur on the occurrence of such event or condition if not cured within any
applicable period measured from he occurrence of such event or condition rather
than from notice or demand.
6. Subordination. Guarantor expressly subordinates its right to
payments of any indebtedness owing from Borrower to Guarantor, whether now
existing or arising at any time in the future (including, but not limited to,
rights to payment arising by virtue of any subrogation or indemnification upon
payment by Guarantor of amounts due from Borrower to Lender), to the prior right
of Lender to receive or require payment in full of the Loan Obligations, until
such time as the Loan Obligations are fully paid (and including interest
accruing on the Note after any petition under the Bankruptcy Code which
post-petition interest Guarantor agrees shall remain a claim that is prior and
superior to claim of Guarantor notwithstanding any contrary practice, custom or
ruling in proceedings under the Bankruptcy Code generally) and such payments are
final and not subject to refund or rescission under bankruptcy or other
applicable law. Furthermore, upon the occurrence of an Event of Default under
the Loan Documents, Guarantor agrees not to accept any payment or satisfaction
of any kind of indebtedness of Borrower to the Guarantor or any security for
such indebtedness. If Guarantor should receive any such payment, satisfaction or
security for any indebtedness of Borrower to the Guarantor, the Guarantor agrees
to deliver the same promptly to Lender in the form received, endorsed, or
assigned as may be appropriate for application on account of, or as security
for, the Loan Obligations and until so delivered, agrees to hold the same in
trust for Lender.
7. Successors and Assigns. This Guaranty shall be binding upon, and
inure to the benefit of, the parties hereto and their respective heirs, legal
representatives, successors, and assigns.
8. Severability. In the event that any provision hereof is deemed to be
invalid by reason of the operation of any law or by reason of the interpretation
placed thereon by any court, this Guaranty shall be construed as not containing
such provisions and the invalidity of such provisions shall not affect other
provisions hereof which are otherwise lawful and valid and which shall remain in
full force and effect.
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9. Notices. Any notice or other communication required or permitted to
be given pursuant to this Guaranty or by applicable law shall be in writing and
shall be deemed received (a) on the date delivered, if delivered in person or
department specified below, (b) three (3) days after depositing the same in the
U.S. Mail, certified or registered, with return receipt requested, or (c) one
(1) day following the date deposited with Federal Express or other national
overnight carrier, and in each case addressed as follows:
If to Guarantor:
▇▇. ▇▇▇▇▇ ▇▇▇▇▇
Balanced Care Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Balanced Care Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Lender to:
Capstone Capital of Pennsylvania, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Any party may change its address to another single address by notice
given as herein provided, except that any change of address must be actually
received in order to be effective.
10. Waivers. The failure by the Lender at any time or times hereafter
to require strict performance by the Guarantor of any of the provisions,
warranties, terms, and conditions contained herein or in any other agreement,
document, or instrument now or hereafter executed by Guarantor and delivered to
the Lender shall not waive, affect, or diminish any right of the Lender
hereafter to demand strict compliance or performance therewith and with respect
to any other provisions, warranties, terms, and conditions contained in such
agreements, documents, and instruments, and any waiver of any default shall not
waive or affect any other default, whether prior or subsequent thereto and
whether of the same or a different type. None of the
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warranties, conditions, provisions, and terms contained in this Guaranty or in
any agreement, document, or instrument now or hereafter executed by Guarantor
and delivered to the Lender shall be deemed to have been waived by any act or
knowledge of the Lender, its agents, officers, or employees, but only by an
instrument in writing, signed by an officer of the Lender, and directed to the
Guarantor specifying such waiver.
11. Expenses. If, at any time or times hereafter, the Lender employs
counsel to advise or provide other representation with respect to this Guaranty
or any other agreement, document, or instrument heretofore, now, or hereafter
executed by Guarantor and delivered to the Lender with respect to the Borrower
or the Loan Obligations, or to commence, defend, or intervene, file a petition,
complaint, answer, motion, or any other pleading or take any other action in or
with respect to any suit or proceeding relating to this Guaranty or any other
agreement, instrument, or document heretofore, now, or hereafter executed by
Guarantor and delivered to the Lender with respect to the Borrower or the Loan
Obligations, or to represent the Lender in any litigation with respect to the
affairs of a Guarantor or to enforce any rights of the Lender or obligations of
Guarantor or any other person, firm, or corporation that may be obligated to the
Lender by virtue of this Guaranty, or any other agreement, document, or
instrument heretofore or hereafter delivered to the Lender by or for the benefit
of Guarantor with respect to the Borrower or the Loan Obligations, then in any
such event, all of the reasonable attorneys' fees actually incurred arising from
such services, including fees in any appellate or bankruptcy proceedings, and
any other reasonable expenses, costs, and charges relating to this Guaranty, the
Borrower or the Loan Obligations, shall constitute additional obligation of the
Guarantor payable on demand.
12. Singular and Plural. Singular terms shall include the plural forms,
and vice versa.
13. Entire Agreement; Counterparts. This Guaranty constitutes the
entire agreement and supersedes all prior agreements and understandings both
oral and written, between the parties with respect to the subject matter hereof.
This Agreement may be executed in counterparts which together shall constitute
one instrument. It shall not be necessary for all parties to sign the same
counterpart.
14. Applicable Law; Jurisdiction. THE VALIDITY, INTERPRETATION,
ENFORCEMENT, AND EFFECT OF THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAWS OF THE STATE OF ALABAMA. THE LENDER'S PRINCIPAL PLACE OF
BUSINESS IS LOCATED IN JEFFERSON COUNTY IN THE STATE OF ALABAMA, AND GUARANTOR
AGREES THAT THIS GUARANTY SHALL BE HELD BY LENDER AT SUCH PRINCIPAL PLACE OF
BUSINESS, AND THE HOLDING OF THIS GUARANTY BY LENDER THEREAT SHALL CONSTITUTE
SUFFICIENT MINIMUM CONTACTS OF GUARANTOR WITH JEFFERSON COUNTY AND THE STATE OF
ALABAMA FOR THE PURPOSE OF CONFERRING JURISDICTION UPON THE FEDERAL AND STATE
COURTS PRESIDING IN SUCH COUNTY AND STATE. THE GUARANTOR CONSENTS THAT ANY LEGAL
ACTION OR PROCEEDING ARISING HEREUNDER MAY BE
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BROUGHT IN THE CIRCUIT COURT OF THE STATE OF ALABAMA, IN JEFFERSON COUNTY,
ALABAMA OR THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA
AND ASSENT AND SUBMIT TO THE PERSONAL JURISDICTION OF ANY SUCH COURTS IN ANY
SUCH ACTION OR PROCEEDING. NOTHING HEREIN SHALL LIMIT THE JURISDICTION OF ANY
OTHER COURT.
15. Jury Trial Waiver. GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING OUT OF OR IN ANY WAY RELATED TO THIS GUARANTY OR THE LOAN, OR (B) IN ANY
WAY CONNECTED WITH OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF
LENDER AND/OR BORROWER AND GUARANTOR WITH RESPECT TO THE LOAN DOCUMENTS OR IN
CONNECTION WITH THIS GUARANTY OR THE EXERCISE OF ANY PARTY'S RIGHTS AND REMEDIES
UNDER THIS GUARANTY OR OTHERWISE, OR THE CONDUCT OR THE RELATIONSHIP OF THE
PARTIES HERETO, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER
ARISING AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, GUARANTOR AGREES
THAT LENDER MAY FILE A COPY OF THIS GUARANTY WITH ANY COURT AS WRITTEN EVIDENCE
OF THE KNOWING, VOLUNTARY, AND BARGAINED AGREEMENT OF GUARANTOR IRREVOCABLY TO
WAIVE ITS RIGHTS TO TRIAL BY JURY AS AN INDUCEMENT OF LENDER TO MAKE THE LOAN,
AND THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY DISPUTE OR CONTROVERSY
WHATSOEVER (WHETHER OR NOT MODIFIED HEREIN) BETWEEN GUARANTOR AND LENDER SHALL
INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT
A JURY.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the
day and year first above written.
BALANCED CARE CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
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SCHEDULE TO EXHIBIT 10.26 FILED PURSUANT TO INSTRUCTION 2 TO ITEM 601(a) OF
REGULATION S-K
GUARANTY OF PAYMENT AND PERFORMANCE
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PROJECT BORROWER PARTIES LOAN AMOUNT DATE
------- -------- ------- ----------- ----
Raleigh, NC Balanced Care
at North Ridge, Inc. Capstone Capital $8,600,000.00 12/1/97
Corporation
(Lender) and Balanced
Care Corporation
(Guarantor)
Millville, PA Balanced Care Capstone Capital of $1,031,675.00 1/2/98
at Eyers Grove, Inc. Pennsylvania, Inc.
(Lender) and Balanced Care
Corporation (Guarantor)
Bloomsburg, PA Balanced Care Capstone Capital of $4,568,325.00 1/2/98
at Bloomsburg II, Inc. Pennsylvania, Inc.
(Lender) and Balanced Care
Corporation (Guarantor)