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Exhibit 10.2
FIRST AMENDMENT TO SECOND SERIES MASTER INVESTMENT AGREEMENT
AND AGREEMENT REGARDING SECOND SERIES
CONSTRUCTION SCHEDULES, COMPLETION DATES, AND BUDGETS
THIS FIRST AMENDMENT TO SECOND SERIES MASTER INVESTMENT AGREEMENT AND
AGREEMENT REGARDING SECOND SERIES CONSTRUCTION SCHEDULES, COMPLETION DATES, AND
BUDGETS (this "Amendment") is made by and between BALANCED CARE CORPORATION
("BCC"), BCC DEVELOPMENT AND MANAGEMENT CO. ("Developer"), a Delaware
corporation, C&G HEALTHCARE AT PENSACOLA, L.L.C., C&G HEALTHCARE AT TALLAHASSEE,
L.L.C., C&G HEALTHCARE AT HAGERSTOWN, L.L.C., C&G HEALTHCARE AT XXXXXXX CITY,
L.L.C., and C&G HEALTHCARE AT TEAY'S VALLEY, L.L.C. (such Delaware limited
liability companies being hereinafter individually referred to as a "Tenant" and
collectively as "Tenants"), and NATIONWIDE HEALTH PROPERTIES, INC., a Maryland
corporation ("NHP"), and joined herein by XXXXX X. XXXXXX ("Xxxxxx"), solely for
the purposes of acknowledging the changes in the Transaction Documents (defined
below) set forth in this Amendment and reaffirming his obligations under the
Note Guaranties (defined below).
RECITALS:
A. NHP, the Tenants (as individual tenants under separate leases),
and/or BCC have previously entered into a series of five (5) transactions, as
specifically set forth in Exhibit "A" of the Master Agreement (defined below)
(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 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 ("First Lease Amendment"), made effective as of the respective
execution dates of the Leases, and are to be further amended pursuant to the
provisions of a Second Amendment to Lease and Security Agreements ("Second Lease
Amendment"), being entered into contemporaneous herewith; as additional
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security for the obligations of Tenants under each respective Lease, BCC entered
into certain shortfall funding agreements and option agreements with the
Tenants, and certain corresponding working capital assurance agreements with NHP
(collectively, the "Capital Agreements"), whereby BCC agreed to make working
capital loans to the applicable Tenant, and as further security, NHP is 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; (iii) 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; (iv) 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; (v) 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 (collectively, the "Development
Guaranties"), (vi) 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"),
(vii) BCC indemnified NHP with respect to possible environmental hazards on each
applicable Property by means of environmental indemnification agreements
(collectively, the "Environmental Indemnifications"), and (viii) NHP, 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
(collectively, the "Refusal Agreements") (hereinafter individually referred to
as a "Refusal Agreement" and collectively referred to as the "Refusal
Agreements"), (x) in order to assist Tenants with ceratin startup costs, NHP
made loans (hereinafter individually referred to as a "Senior Loan" and
collectively referred to as the "Senior Loans") to the Tenants pursuant to the
terms of certain promissory notes, certain guarantees made by Xxxxxx for the
benefit of NHP of repayment of up to fifteen percent (15%) of the principal of
such Senior Loans (collectively, the "Note Guaranties"), and other related
security documents (such notes, Note Guaranties, and
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other security documents being hereinafter collectively referred to as the
"Senior Loan Documents"), and (xi) the parties hereto previously entered into
that certain Second Series Master Investment Agreement (the "Master Agreement"),
dated March 27, 1998, whereby the parties agreed that certain provisions related
to NHP's maximum investment, cross default, cross renewal, purchase options,
development fees, and budgets would govern all the Transactions. The documents
and instruments defined or described in this Paragraphs A. and B. of these
Recitals are hereinafter collectively referred to as the "Transaction
Documents".
C. Due to unforeseen delays in construction of some of the Facilities,
revisions to the Budgets, and changes in NHP's Maximum Investment (as defined in
the Master Agreement), the parties have agreed to establish new Construction
Schedules and Completion Dates with respect to the delayed Facilities, establish
new Budgets for all the Facilities, and permit certain increases in NHP's
Maximum Investment.
D. It has been determined by the parties that it is necessary and
desirable to amend the Master Agreement in the manner set forth in this
Amendment.
NOW, THEREFORE, taking the foregoing paragraphs A through D (the
"Recitals") into account, and in consideration of the mutual covenants,
agreements, and conditions set forth herein and in the Transaction Documents
described in the Recitals, and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Definitions. All provisions of the Transaction Documents described
in the Recitals 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 which are defined terms in such documents shall have
the same meaning in this Amendment (except as otherwise defined pursuant to the
changes set forth in this Amendment).
2. Amendments to Lease. The parties hereto hereby acknowledge and agree
to be bound by the terms and provisions of the First Lease Amendment and the
Second Lease Amendment.
3. Construction Schedules, Completion Dates, and Budgets. The parties
hereto hereby acknowledge that some of the Facilities (i) have not been
completed in accordance with the Construction Schedule (as defined in Section
2.2 of the respective Development Agreements) originally provided to NHP with
respect to each of
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such Facilities, (ii) have not been completed within thirteen (13) months after
the Execution Date of the Development Agreement related to each of such
Facilities (as required under Section 2.5 of the respective Development
Agreements), and/or (iii) that the Budgets for some or all of the Facilities
have been or will be exceeded, or have otherwise changed, from the Budgets
originally approved by NHP. The owners, names and locations of all the
Facilities, together with the original execution dates of the related
Development Agreements and the actual or newly scheduled completion dates
(hereinafter collectively referred to as the "New Completion Dates") for all the
Facilities are set forth in Exhibit "A" attached hereto and incorporated herein
for all purposes. With respect to any Facility which has not been completed
(hereinafter individually referred to as an "Incomplete Facility") as of the
Effective Date (defined below) of this Agreement, the parties hereto hereby
agree to waive any and all penalties related to Developer's failure to complete
such Facility in accordance with the original Construction Schedule for such
Facility or by the originally required Completion Date for such Facility. The
parties hereto hereby further agree that, notwithstanding anything in the
Development Agreements or the Leases to the contrary, (a) the term "Completion
Date", for purposes of the Master Agreement, the Development Agreements and the
Leases, shall mean the New Completion Dates set forth with respect to each
Facility in Exhibit "A" hereof, (b) the term "Construction Schedule", for
purposes of any Development Agreement related to an Incomplete Facility, shall
mean the Construction Schedule set forth with respect to such Incomplete
Facility in Exhibit "B" attached hereto and incorporated herein for all
purposes, and (c) the term "Budgets", for purposes of the Master Agreement and
any Development Agreement, shall mean and refer to those certain amended and
restated Budgets for each Facility set forth in Exhibit "C" attached hereto and
incorporated herein for all purposes.
4. Increases in NHP's Maximum Investment.
(a) The parties hereby acknowledge and agree that the Budgets attached
hereto as Exhibit "C" shall include amounts ("Equipment Amounts") for additional
funds for new equipment, furniture, furnishings and other personal property
(hereinafter collectively referred to as the "New Equipment") purchased or to be
purchased on behalf of NHP by Developer, and then leased under the Leases to the
respective Tenants for use at the respective Facilities. The portion of the
Equipment Amounts set aside for each respective Facility shall be clearly set
forth in the Budgets attached as Exhibit "C" hereof. Applications for Payment
for the New Equipment shall be made by Developer in the manner required under
and in compliance with Paragraph 2.11(e) and the
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other provisions of applicable Development Agreements. Effective as of the date
of payment, any amounts paid by NHP for New Equipment at each Facility shall be
treated as a Development Advance under the Development Agreement for such
Facility, and correspondingly, under the respective Leases (for all purposes,
including, without limitation, calculation of Minimum Rent accruing or payable
thereunder) as advances under such Development Agreements for Work and as
increases in Landlord's Investment in such Facility, regardless of whether such
Facility is an Incomplete Facility or is already operating. For purposes of the
Master Agreement, the term "NHP's Maximum Investment" shall be treated for all
purposes as having been increased by the Equipment Amounts. For purposes of the
Development Agreements, the maximum permitted Development Advance shall be
treated for all purposes as having been increased by that portion of the
Equipment Amounts attributable to the Facility to which such Development
Agreement relates.
(b) The parties hereby acknowledge that, pursuant to the Capital
Agreements between BCC and the Tenants, BCC or a BCC Affiliate (as defined in
Appendix 1 to the Capital Agreements) has the option to purchase all the equity
ownership interests in, or assets of, each individual Tenant. The Parties hereby
agree that in connection with the purchase by BCC or a BCC Affiliate of all of
the equity ownership interests in, or assets of, a Tenant, BCC shall have the
option to require, subject to the conditions set forth below in this Paragraph
4(b), that NHP increase the Landlord's Investment (as defined in the applicable
Lease) in such Tenant's Lease by a lump sum (the "Working Capital Payoff") equal
to the principal amount then outstanding on the Senior Loan made by NHP to such
Tenant, together with all accrued but unpaid interest thereon and all other
amounts due and payable to NHP under the applicable Senior Loan Documents. The
Working Capital Payoff shall be advanced by NHP to pay in full the applicable
Senior Loan, and all other amounts then due and owing in connection with such
Senior Loan to NHP; provided, however, NHP shall be under no obligation to
advance such Working Capital Payoff unless (i) no uncured Event of Default
exists under the applicable Lease or any other Leases or Transaction Documents,
and (ii) BCC or a BCC Affiliate has exercised the right to acquire all of the
equity ownership interests in, or assets of, the applicable Tenant. The Working
Capital Payoff shall be advanced by NHP on the date that BCC or a BCC Affiliate
closes the purchase of the equity ownership interests in, or all of the assets
of, the applicable Tenant. Upon advancing the Working Capital Payoff amount, all
amounts due and owing to NHP in connection with the applicable Senior Loan shall
be paid in full from such Working Capital Payoff, all obligations of the Tenant
under the applicable Senior Loan Documents shall be extinguished,
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and the Landlord's Investment under the applicable Lease shall be increased (as
of the date that the Working Capital Payoff is advanced) on a dollar for dollar
basis by the amount of the Working Capital Payoff. For purposes of the Master
Agreement, the term "NHP's Maximum Investment" shall be treated for all purposes
as having been increased by the Working Capital Payoff.
5. Miscellaneous. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document. This Amendment shall be binding upon the
successors and permitted assigns of the parties hereto (and the Affiliates of
such parties, successors, and permitted assigns). This Amendment shall be
construed and enforced in accordance with the internal laws of the State of
Texas, without regard to the rules governing choice of law. The parties hereto
agree that venue for any and all lawsuits related to this Amendment shall be in
Xxxxxx County, Texas.
This Amendment is made effective as of June 30, 1999 (the "Effective
Date").
"NHP"
NATIONWIDE HEATH PROPERTIES, INC.,
a Maryland corporation
By: /s/ Xxxx X. Xxxxx (SEAL)
Name: Xxxx X. Xxxxx
Title: Vice President
"BCC"
BALANCED CARE CORPORATION,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx (SEAL)
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President and
Legal Counsel
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"Developer"
BCC DEVELOPMENT AND MANAGEMENT CO.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx (SEAL)
Name: Xxxxx X. Xxxxxx
Title: Vice President and
Secretary
"Tenants"
C&G HEALTHCARE AT PENSACOLA,
L.L.C., a Delaware limited
liability company
By: /s/ Xxxxx X. Xxxxxx (SEAL)
Name: Xxxxx X. Xxxxxx
Title: Sole Member and President
C&G HEALTHCARE AT TALLAHASSEE,
L.L.C., a Delaware limited
liability company
By: /s/ Xxxxx X. Xxxxxx (SEAL)
Name: Xxxxx X. Xxxxxx
Title: Sole Member and President
C&G HEALTHCARE AT HAGERSTOWN,
L.L.C., a Delaware limited
liability company
By: /s/ Xxxxx X. Xxxxxx (SEAL)
Name: Xxxxx X. Xxxxxx
Title: Sole Member and President
C&G HEALTHCARE AT XXXXXXX CITY,
L.L.C., a Delaware limited
liability company
By: /s/ Xxxxx X. Xxxxxx (SEAL)
Name: Xxxxx X. Xxxxxx
Title: Sole Member and President
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C&G HEALTHCARE AT TEAY'S VALLEY,
L.L.C., a Delaware limited
liability company
By: /s/ Xxxxx X. Xxxxxx (SEAL)
Name: Xxxxx X. Xxxxxx
Title: Sole Member and President
Joined herein by Xxxxx X. Xxxxxx, the sole member of Elder Care
Operators, LLC, solely for the purposes of acknowledging the changes in the
Transaction Documents set forth in this Amendment and reaffirming his
obligations under the Note Guaranties.
/s/ Xxxxx X. Xxxxxx
XXXXX X. XXXXXX, individually
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