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2nd Amend. To 1st Series Lease & Security Agreement

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Sectors: Health Products and Services
Effective Date: March 27, 1998
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SECOND AMENDMENT TO FIRST SERIES
LEASE AND SECURITY AGREEMENTS


THIS SECOND AMENDMENT TO FIRST SERIES LEASE AND SECURITY AGREEMENTS (hereinafter designated "Amendment") is made by and between ELDER CARE OPERATORS OF YORK, LLC ("York"), a Delaware limited liability company, ELDER CARE OPERATORS OF LAKEMONT FARMS, LLC ("Lakemont Farms"), a Delaware limited liability company, ELDER CARE OPERATORS OF HILLIARD, LLC ("Hilliard"), a Delaware limited liability company, ELDER CARE OPERATORS OF MURFREESBORO, LLC ("Murfreesboro"), a Delaware limited liability company, ELDER CARE OPERATORS OF BRISTOL, LLC ("Bristol"), a Delaware limited liability company, ELDER CARE OPERATORS OF AKRON, LLC ("Akron"), a Delaware limited liability company (York, Lakemont Farms, Hilliard, Murfreesboro, Bristol, and Akron being hereinafter sometimes individually referred to as a "Tenant" and collectively referred to as the "Tenants"), and NATIONWIDE HEALTH PROPERTIES, INC., a Maryland corporation ("NHP") and MLD DELAWARE TRUST ("MLD"), a Delaware business trust, and joined herein by BALANCED CARE CORPORATION ("BCC"), a Delaware corporation, and ELDER CARE OPERATORS, LLC ("Elder Care"), a Delaware limited liability company, solely for purposes of acknowledging and consenting to this Amendment, based upon the following facts:


Recitals


A. NHP (as landlord under 4 separate leases), MLD (as landlord under 2 separate leases), the Tenants (as individual tenants under separate leases), Elder Care, and/or BCC have previously entered into a series of six (6) transactions, as specifically set forth in Exhibit "A" attached hereto and included herein for all purposes as though fully set forth (hereinafter individually referred to as a "Transaction" and collectively referred to as the "Transactions"), each of which included the purchase, lease, and development of certain tracts or parcels of real property, together with all improvements thereon, all personal property to be leased therewith, and all appurtenances thereto (hereinafter individually referred to as a "Property" and collectively referred to as the "Properties").


B. As a part of the Transactions, (i) the Properties were each leased from NHP or MLD by the applicable Tenant, pursuant to the terms and conditions set forth in a lease and security agreement (hereinafter individually referred to as a "Lease" and collectively referred to as the "Leases"), which Leases were all amended pursuant to the provisions of a First Amendment to Lease and Security Agreements, entered into by and between all the


1 2 parties hereto and made effective as of the respective execution dates of the Leases; (ii) Elder Care, which owns all or part of the membership interests in each of the Tenants, guaranteed the obligations of the applicable Tenants under each of the Leases pursuant to a lease guaranty (collectively, the "Lease Guaranties"); (iii) as additional security for the obligations of Tenants under each respective Lease, BCC entered into working capital assurance agreements with NHP or MLD (collectively, the "Capital Agreements"), whereby BCC agreed to make working capital loans to the applicable Tenant, and as further security, NHP or MLD are party to deposit pledge agreements (collectively, the "Deposit Agreements") whereby each applicable Tenant pledges a minimum amount of capital as a working capital reserve for its operations; (iv) each Property has been or is being developed, used, and licensed (by the State in which such Property is located) as an assisted living facility, personal care home, independent living facility, or similar adult care facility (hereinafter individually referred to as a "Facility" and collectively referred to as the "Facilities"), including any applicable ancillary services for independent living, skilled nursing, rehabilitation, or Alzheimer's or dementia care; (v) BCC DEVELOPMENT AND MANAGEMENT CO. ("Developer"), a Delaware corporation wholly owned by BCC, acted or is acting as developer of each of the Properties, pursuant to the terms and conditions of development agreements (hereinafter individually referred to as a "Development Agreement" and collectively referred to as the "Development Agreements") entered into by and between Developer and NHP or MLD; (vi) BCC guaranteed the obligations of Developer under each respective Development Agreement and the completion of all improvements contemplated in such Development Agreements, pursuant to a guaranty agreement with NHP or MLD (collectively, the "Development Guaranties"), (vii) each of the Tenants entered into a management agreement with a newly formed subsidiary of BCC, whereby such BCC subsidiary agreed to manage the respective Facility on behalf of the respective Tenant (such BCC subsidiaries being hereinafter collectively referred to as the "Managers"), (viii) BCC indemnified NHP or MLD with respect to possible environmental hazards on each applicable Property by means of environmental indemnification agreements (collectively, the "Environmental Indemnifications"), and (ix) NHP or MLD, as applicable, granted rights of first refusal to BCC with respect to any proposed sales of the Properties, by means of right of first refusal agreements (hereinafter individually referred to as a "Refusal Agreement" and collectively referred to as the "Refusal Agreements").


C. Due to changing market conditions, NHP, Akron, Elder Care, and BCC have mutually determined it is not practical to


2 3 continue the development of a Facility on the Akron, Ohio Property at this time.


D. It has been determined by the parties that it is necessary and desirable to amend each of the Leases in the manner set forth in this Amendment.


Amendment


NOW, THEREFORE, the parties to this Amendment hereby agree to amend the Leases as follows:


1. Definitions. All provisions of the Leases, as previously amended, shall remain in full force and effect as if restated herein, except as such provisions may clearly conflict with the terms of this Amendment, and any words or phrases (other than as amended in Section 2 of this Amendment) which are defined terms in the Leases shall have the same meaning in this Amendment as such words or phrases have in the Leases.


2. Amendment of Section 2.1.2 of the Leases. Notwithstanding any other provision of any of the Leases to the contrary, the parties hereto, in their respective capacities as Landlord, Tenant, and/or guarantor under the respective Leases, agree that the current language of Section 2.1.2 of each of the Leases is hereby deleted in its entirety and replaced with the following language:


"2.1.2 Post-Construction Minimum Rent.


(i) If the Reset Date occurs prior to April
19, 1999, then for the period beginning with the Reset Date
and ending at 12:00 P.M. on April 18, 1999, the monthly
Minimum Rent with respect to the total of (A) the Land Cost
plus (B) all advanc
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