Heritage
AMENDMENT NO. 3 TO LEASE AGREEMENT
THIS AMENDMENT NO. 3 TO LEASE AGREEMENT (this "Amendment No. 3")
is made this 3 day of September, 1998, by and between HERITAGE
ASSOCIATES LIMITED PARTNERSHIP, a Maryland limited partnership (the
"Landlord"), and ET-SUB MERIDIAN LIMITED PARTNERSHIP, L.L.P., a
Virginia limited liability partnership ("Tenant").
RECITALS
A. Landlord and Meridian Healthcare, Inc. (formerly known as MHC
Acquisition Corporation), a Pennsylvania corporation ("Meridian"),
entered into a Lease Agreement dated as of November 30, 1993 (the
"Original Lease Agreement"), wherein Landlord leased to Meridian certain
real property and the improvements thereon known as Meridian Nursing
Center-Heritage, located in Baltimore County, Maryland, as more
particularly described in Exhibit A attached hereto (the "Property"),
upon the terms and conditions set forth in the Lease.
B. The Original Lease Agreement previously has been amended by that
certain Amendment No. 1 to Lease Agreement dated as of August 1, 1994
("Amendment No. 1") and that certain Amendment No. 2 to Lease Agreement
dated as of August 1, 1994 ("Amendment No. 2"; the Original Lease
Agreement as amended by Amendment No. 1 and Amendment No. 2 hereinafter
shall be known as the "Lease Agreement").
C. By Assignment of Lease Agreement of even date herewith, Meridian
has assigned all of its right, title and interest as tenant under the
Lease to Tenant.
D. Landlord and Tenant now desire to amend certain terms and
conditions of the Lease Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises hereinafter
set forth, Landlord and Tenant hereby agree as follows:
1. The foregoing Recitals are hereby incorporated herein by
reference. The defined terms used in the Lease Agreement shall have
the same meaning when used herein, unless a contrary intent is indicated.
2. Landlord and Tenant agree that the fair market value of that
portion of the Premises leased by Tenant that consists of personal
property accounts (including any personal property that will be treated
as property of the Landlord under Section 13.01 of the Lease Agreement)
for less than ten percent (10%) of the aggregate fair market value of
the Premises.
3. Section 1.02 of the Lease Agreement hereby is deleted in its
entirety and in lieu thereof is inserted the following:
Section 1.02 The term of the Lease (the "Initial Term")
commenced on November 30, 1993 (the "Commencement Date") and
shall end onMarch 1, 2009.
4. Section 1.03 of the Lease Agreement hereby is deleted in its
entirety and in lieu thereof is inserted the following:
Section 1.03 Tenant shall have the option to renew this Lease
for one ten (10) year term (the "Renewal Term") provided that Tenant
shall give Landlord notice of intent to renew at least twelve (12)
months prior to the expiration of the Initial Term and that Tenant
shall not be in default beyond any applicable notice and cure
periods hereunder. The Renewal Term shall begin on the day after
the Initial Term ends and shall end on the tenth anniversary of the
last day of the Initial Term. The Initial Term and the Renewal Term
are hereinafter collectively referred to as the "Term". The Initial
Term and Renewal Term shall be extended if necessary to allow Tenant
to exercise its rights under the last two sentences of Paragraph 2.A.
of the Purchase Option.
5. Section 2.01 of the Lease Agreement hereby is deleted in its
entirety and in lieu thereof is inserted the following:
Section 2.01 The amounts required to be paid pursuant to this
Section 2.01 are called "Basic Rent". For each Lease Year (as
defined in Article 31) commencing with the Lease Year that
commences on the date hereof and continuing until the end of the
Initial Term, Tenant shall pay to Landlord in lawful money of the
United States of America, or by check subject to collection, at the
address of Landlord specified above or at such other place as
Landlord may from time to time designate, without any deduction or
offset, the amounts set forth on Exhibit B hereto. For each Lease
Year during the Renewal Term, if any, the Basic Rent shall be the
greatest of (a) the amounts set forth on Exhibit B hereto, (b) the
amount that would provide a debt service coverage of 1.3:1 on a loan
in the principal amount of the outstanding balance under the Loan
Documents on the first day of the Renewal Term, at the then
prevailing interest rate, having a fully amortizing schedule of
25 years or (c) the Fair Rental Value (as defined in Article 31).
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Basic Rent shall be payable in advance in equal monthly
installments due on the first day of each calendar month during
the Term.
So long as any amounts are outstanding to German American
Capital Corporation or any successor or assignee thereof (the
"Lender") under those certain Note, Deed of Trust/Mortgage, Loan
Agreement or other documents executed in connection with the loan
(the "Loan") from Lender to Landlord of even date herewith
(collectively, the "Loan Documents"), Tenant shall make all
payments of Basic Rent, additional rent, and all escrows, impounds,
and reserves as required by Lender pursuant to the Loan Documents
into the "Deposit Account" established pursuant to that certain
Deposit Account Agreement dated of even date herewith among
Landlord, the Lender and the Deposit Bank (as defined therein),
whether or not any of such escrows, impounds, or reserves are
otherwise specifically required under the terms of this Lease.
6. Section 4.02.A. of the Lease Agreement hereby is amended to
insert the following at the end of the paragraph:
; provided, however, that if proceeds of insurance payable by
reason of any loss or damage to the Leased Property are less than
$100,000, such amount shall be paid to Tenant only.
7. Section 8.03 of the Lease Agreement hereby is amended to delete
the first sentence and in lieu thereof is inserted the following:
Anything herein to the contrary notwithstanding, in the event
the Premises is totally or partially destroyed and cannot be used
as a nursing home, and the Premises cannot be fully repaired or
restored within a nine (9) month period from the date of damage or
destruction to substantially the same condition as existed
immediately before the damage or destruction, then Tenant shall
have the right and option to either (A) terminate this Lease by
giving Landlord notice of such termination within sixty (60) days
after the date of such damage or destruction, and the effective
date shall be thirty (30) days following such notice of termination
or (B) exercise the Purchase Option (as defined in Section 31.01)
within sixty (60) days after the date of such damage or destruction,
and Tenant shall be entitled to receive, and Landlord shall assign
to Tenant all of its right, title and interest in any insurance
proceeds applicable to the Premises.
8. Section 8.06 of the Lease Agreement is hereby deleted in its
entirety.
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9. Section 11.01 of the Lease Agreement hereby is amended by the
deletion of the last sentence therefrom.
10. Notwithstanding Section 13.03 or Article 24 of the Lease
Agreement to the contrary, Landlord acknowledges that Tenant itself
shall not be obligated to operate a nursing home on the Premises or
to maintain a license to operate a nursing home on the Premises;
provided, however, that Tenant agrees that during the term of the Lease
Agreement it will sublease the Premises to an entity that will operate a
nursing home on the Premises and that such sublease will require the
subtenant to maintain a license to operate a nursing home on the Premises.
11. Section 17.04 of the Lease Agreement hereby is amended by the
deletion of the second sentence thereof.
12. Section 22.01 of the Lease Agreement hereby is modified to
require each party to deliver the certificate described in said Section
22.01 within twenty (20) days after written request therefor.
13. The notice address for Tenant set forth in Section 23.01 of
the Lease Agreement hereby is modified and restated in its entirety to
read as follows:
If to Tenant:
ET Sub-Meridian Limited Partnership, L.L.P.
c/o ET Meridian, L.L.C.
101 East State Street
Suite 100
Kennett Square, Pennsylvania 19348
Attention: Edward B. Romanov, Jr.
Sole Member
With a required copy to:
Hogan & Hartson L.L.P.
8300 Greensboro Drive
McLean, Virginia 22102
Attention: Lee E. Berner, Esq.
14. The notice address for Landlord set forth in Section 23.01 of
the Lease Agreement hereby is modified and restated in its entirety to
read as follows:
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If to Landlord:
c/o Fairmount Associates, Inc.
515 Fairmount Avenue, Suite 900
Towson, Maryland 21286
With a required copy to:
Piper & Marbury L.L.P.
36 South Charles Street
Baltimore, Maryland 21201
Attention: Edward J. Levin, Esq.
15. Section 31.01C of the Lease Agreement hereby is deleted in
its entirety and in lieu thereof is inserted the following:
"Fee Mortgagee" and "Fee Mortgage" mean the holder and the
mortgage lien respectively of any mortgage or deed of trust
secured by Landlord's fee simple interest in the Premises
existing on the date of Amendment and any future such future
holder and lien approved by Tenant in its sole and absolute
discretion.
16. The definition of "Lease Year" set forth in Section 31.01F
of the Lease Agreement hereby is amended by the insertion, at the end
thereof, of the following:
Notwithstanding the foregoing, the Lease Year that commenced
on December 1, 1997 shall terminate on the date prior to the date
hereof. Commencing on the date hereof, "Lease Year" shall mean
each one year period that commences on the month and day hereof
and ends on the month and day immediately preceding the month and
day hereof in the following year, or, in the case of the final
Lease Year, ends on the last day of the Term.
17. In the event there is a default under the Loan Documents
caused by a default by Tenant's subtenant under any sublease agreement
and the Premises is released from lien imposed by the Loan Documents,
Tenant shall be responsible for the payment of any and all costs of the
release of the Premises pursuant to the terms and conditions of the
Loan Documents, including, but not limited to, the cost of any
prepayment penalty and defeasance costs.
18. The following covenants are hereby added to the Lease
Agreement:
(a) Landlord agrees that it will not consent to a request by Lender
for any additional reserves under the terms and conditions of
the Loan Documents without the consent of Tenant; and
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(b) Landlord agrees that it will not consent to a request by Lender
for any additional reporting requirements under the terms and
conditions of the Loan Documents without the consent of Tenant.
19. Notwithstanding anything to the contrary contained in the Lease
Agreement, the Lease Agreement and all of the terms and provisions thereof
shall be subject and subordinate to the terms and provisions of that certain
Four Party Subordination, Non-Disturbance and Attornment Agreement dated of
even date herewith among German American Capital Corporation, a Maryland
corporation (the Fee Mortgagee on the date hereof), Landlord, Tenant and
Meridian.
20. The terms of the Lease Agreement, except as expressly modified
hereby, shall remain in full force and effect and are hereby ratified and
confirmed by the Landlord and Tenant. All references in the Lease Agreement
and in all other documents and instruments executed and delivered in
connection therewith hereinafter shall be deemed to be a reference to the
Lease Agreement as amended by this Amendment.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the undersigned have executed this Amendment
No. 3 to Lease Agreement or have caused this Amendment No. 3 to Lease
Agreement to be duly executed as of the day and year first above
written.
LANDLORD:
HERITAGE ASSOCIATES LIMITED
PARTNERSHIP, a Maryland limited
partnership
By: MHC Holding Company SPV #3, a
Maryland corporation, general
partner
By: /s/ Elizabeth K. Hochwarth
Name: Elizabeth K. Hochwarth
Title: Vice President
TENANT:
ET SUB-MERIDIAN LIMITED
PARTNERSHIP, L.L.P., a Virginia
limited liability partnership
By: ET Meridian, L.L.C., a Delaware
limited liability company,
general partner
By: /s/ Edward B. Romanov, Jr.
Edward B. Romanov, Jr.
Managing Member
[Continued on following page]
STATE OF NEW YORK: )
) to-wit:
COUNTY OF NEW YORK: )
BE IT REMEMBERED, that on this 2nd day of September, 1998,
before me, the subscriber, a Notary Public authorized to take
acknowledgments and proofs in the County and State aforesaid,
personally appeared Elizabeth K. Hochwarth who acknowledged himself/
herself to be the Vice President of MHC Holding Company SPV #3, general
partner of Heritage Associates Limited Partnership, a Maryland limited
partnership and that he/she, being authorized to do so, executed the
foregoing instrument, as such general partner on behalf of the said
Partnership.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Kimberley J. Frank
Notary Public
My Commission Expires:
[NOTARIAL SEAL]
STATE OF NEW YORK: )
) to-wit:
COUNTY OF NEW YORK: )
BE IT REMEMBERED, that on this 2nd day of September, 1998,
before me, the subscriber, a Notary Public authorized to take
acknowledgments and proofs in the County and State aforesaid,
personally appeared Edward B. Romanov, Jr., who acknowledged himself
to be the managing member of ET Meridian, L.L.C., general partner of
ET Sub-Meridian Limited Partnership, L.L.P., a Virginia limited
liability partnership and that he, being authorized to do so,
executed the foregoing instrument, as such general partner on behalf
of the said Partnership.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Kimberley J. Frank
Notary Public
My Commission Expires:
[NOTARIAL SEAL]
EXHIBIT A
Legal Description
BEGINNING for the same on the North side of German Hill Road at the
corner of Lot No. 6 running thence Westerly along the German Hill Road
204.96 feet to the whole outline of the property conveyed to the Cityco
Realty Company by Ambrose Hessler thence Northerly along said outline
450.66 feet to Lot No. 38 thence Easterly along Lot No. 38, 207.93 feet
to Lot No. 7 thence Southerly along Lots Nos. 7 and 6, 491.13 feet to
the place of beginning.
BEING known and designated as Lot No. 5 on a Plat entitled "Beverly
Farms" which plat is recorded among the Plat Records of Baltimore
County in Plat Book W.P.C. No. 4, folio 80.
The improvements thereon being known as No. 7308 German Hill Road.
SAVING AND EXCEPTING THEREFROM all that strip of land of irregular
dimensions containing 0.1764 acres, more or less, which was granted
and conveyed by August H. Koch and Catherine Koch, his wife, to Baltimore
County, Maryland, for the widening of German Hill Road by Deed dated
March 5, 1964 and recorded among the Land Records of Baltimore County in
Liber R.R.G. 4276, folio 285; reference to which Deed and Plat attached
thereto is made for a more complete description thereof.
Exhibit B
Heritage
Rent for year ending Annualized Monthly
Ending August 31, Rent Rent
- -------------------- ---------- -----------
1999 720,214 60,017.83
2000 720,214 60,017.83
2001 720,214 60,017.83
2002 720,214 60,017.83
2003 720,214 60,017.83
2004 720,214 60,017.83
2005 720,214 60,017.83
2006 720,214 60,017.83
2007 720,214 60,017.83
2008 906,589 75,549.08
Renewal rent if renewal rent is 2.5% per year compounded annually
starting 9/1/98
Initial Genesis Rent Renewal Rent
- -------------------- ------------
1,688,354 2,161,236