8-K: Current report filing
Published on June 2, 2009
FIRST
AMENDMENT TO LOAN AGREEMENT
(Maryland Acquisition
Loan)
BETWEEN
OHI ASSET
III (PA) TRUST, as Lender
and
BEL PRE
LEASING CO., LLC
RIDGE
(MD) LEASING CO, LLC
MARLBORO
LEASING CO., LLC
FAYETTE
LEASING CO., LLC
LIBERTY
LEASING CO., LLC
HOWARD
LEASING CO., LLC
PALL MALL
LEASING CO., LLC
WASHINGTON
(MD) LEASING CO., LLC
MARYLAND
NH ASSET, LLC
as
Borrowers
and
OMG RE
HOLDINGS, LLC
OMG
RE LEASING CO., LLC
OMG ASSET
OWNERSHIP, LLC
HEALTH
CARE FACILITY MANAGEMENT, LLC
RESIDENT
CARE CONSULTING, LLC
as Parent
Guarantors
Dated: March
15, 2009
FIRST
AMENDMENT TO LOAN AGREEMENT
(Maryland Acquisition
Loan)
This
First Amendment to Loan Agreement (“Agreement”) is dated
as of March 15,2009, and is by and among OHI ASSET III (PA) TRUST, a Maryland
business trust (“Lender”), and BEL PRE
LEASING CO., LLC, an Ohio limited liability company, RIDGE (MD) LEASING CO.,
LLC, an Ohio limited liability company, MARLBORO LEASING CO., LLC, an Ohio
limited liability company, FAYETTE LEASING CO., LLC, an Ohio limited liability
company, LIBERTY LEASING CO., LLC, an Ohio limited liability company, HOWARD
LEASING CO., LLC, an Ohio limited liability company, PALL MALL LEASING CO., LLC,
an Ohio limited liability company, WASHINGTON (MD) LEASING
CO., LLC, an Ohio limited liability company, and MARYLAND NH ASSET, LLC, an Ohio
limited liability company (each a “Borrower”, and
collectively, as the “Borrowers”) and OMG
RE HOLDINGS, LLC, an Ohio limited liability company (“RE Holdings”), OMG RE
LEASING CO, LLC, an Ohio limited liability company (“RE Leasing”), and OMG
ASSET OWNERSHIP, LLC, an Ohio limited liability company (“AO”), HEALTH CARE
FACILITY MANAGEMENT, LLC, an Ohio limited liability company (“HCFM”), and RESIDENT
CARE CONSULTING, LLC, an Ohio limited liability company (“RCC”, and together
with RE Holdings, RE Leasing, AO, and HCFM each a “Parent Guarantor” and
collectively, the “Parent
Guarantors”).
RECITALS:
A. Borrowers
and Parent Guarantors have executed and delivered to Lender a Loan Agreement
dated April 18, 2008 (the “Existing Loan Agreement”)
pursuant to which Lender has made a loan (the “Loan”) to
Borrowers. The Loan is evidenced by the Note and secured by the
Loan Documents (as defined below).
B. Pursuant
to 2.9 of the Existing Loan Agreement, on the Loan Closing Date, Borrowers and
Lender escrowed the Northwest Funds in contemplation of the acquisition of the
Northwest Facility at a later date.
C. Borrowers
have determined that they will not be acquiring the Northwest Facility and, as a
result, Borrowers are entitled to the release from escrow of the Northwest Funds
and the Northwest Allocation Funds.
D. Pursuant
to Section 2.9 of the Existing Loan Agreement, upon release to Borrowers of the
Northwest Funds and the Northwest Allocation Funds, Borrowers were obligated to
repay such funds to Lender.
E. Borrowers
and Lender have agreed to (i) the repayment of the Northwest Funds to Lender,
and (ii) the addition of the Northwest Allocation Funds to the Escrowed Capex
Funds to be held and disbursed pursuant to Section 2.8 of the Existing Loan
Agreement.
F. Lender
and the Borrowers desire to amend the Existing Loan Agreement as set forth in
this Amendment.
NOW THEREFORE, the parties agree as
follows:
1. Definitions.
(a) Any
capitalized term used but not defined in this Amendment will have the meaning
assigned to such term in the Existing Loan Agreement.
(b) The
following definitions defined in §2.1 of the Existing Loan Agreement are hereby
amended in their entirety as follows:
Facility or Facilities: The
skilled nursing facilities referred to below, each of which is located on a
parcel of real property described in Deeds of Trust:
|
Facility
|
Owner
|
Operator
|
|
Bel
Pre Health & Rehabilitation Center
2601
Bel Pre Road
Silver
Spring MD 20906
|
Maryland
NH Asset, LLC
|
Bel
Pre Leasing Co., LLC
|
|
Ellicott
City Health & Rehabilitation Center
3000
N. Ridge Road
Ellicott
City MD 21043
|
Maryland
NH Asset, LLC
|
Ridge
(MD) Leasing Co., LLC
|
|
Forestville
Health & Rehabilitation Center
7420
Marlboro Pike
Forestville
MD 20747
|
Maryland
NH Asset, LLC
|
Marlboro
Leasing Co., LLC
|
|
Franklin
Square Health & Rehabilitation Center
1217
W. Fayette Street
Baltimore
MD 21223
|
Maryland
NH Asset, LLC
|
Fayette
Leasing Co., LLC
|
|
Liberty
Heights Health & Rehabilitation Center
4017
Liberty Heights Avenue
Baltimore
MD 21207
|
Maryland
NH Asset, LLC
|
Liberty
Leasing Co., LLC
|
|
Marley
Neck Health & Rehabilitation Center
7575
E. Howard Road
Glen
Burnie MD 21060
|
Maryland
NH Asset, LLC
|
Howard
Leasing Co., LLC
|
|
South
River Health & Rehabilitation Center
144
Washington Road
Edgewater
MD 21037
|
Maryland
NH Asset, LLC
|
Washington
(MD) Leasing Co., LLC
|
2. Section
2.8. Section 2.8 of the Existing Loan Agreement is hereby
amended and restated in its entirety as follows:
2.8 Escrowed Capital
Improvements Funds. As of the date of this Amendment,
Lender and Borrowers have escrowed with the Title Company a portion of the Loan
equal to Three Million Seven Hundred Seventy Five Thousand Dollars ($3,775,000)
(the “Escrowed Capex
Funds”) pursuant to an escrow agreement in form and substance acceptable
to Borrowers and Lender. Borrowers shall propose the specific
Escrow Improvements for Lender’s approval, which approval shall not be
unreasonably withheld, conditioned or delayed. After receipt of
approval as to any specific Escrowed Improvement, the Borrowers shall promptly
undertake, and complete each such Escrowed Improvement on or before December 31,
2009; provided, however, that with respect to Scheduled Improvements to the Bel
Pre Health & Rehabilitation Center and Marley Neck Health &
Rehabilitation Center to be funded from the $1,400,000 added to the Escrowed
Capex Funds on December 2, 2008, such Scheduled Improvement shall be completed
on or before December 31, 2010. Upon written certification from
Borrowers to Lender that an Scheduled Improvement has been completed, in whole
or in part, and upon compliance with the procedures set forth below, so long as
no Event of Default or Unmatured Event of Default has occurred and is
continuing, Borrowers may withdraw an amount of Escrowed Capex Funds equal to
the amount set forth on Schedule 2.8 for such Scheduled
Improvement. Any amounts so paid to Borrowers by Lender shall be used
first to pay the costs of the Scheduled Improvements. To the extent
the actual cost of a Scheduled Improvement exceeds the amount set forth on
Schedule 2.8 for such Scheduled Improvement, then Borrowers shall pay such cost
themselves.
(a) Borrowers
may not request disbursement of the Escrowed Capex Funds more than once per
month;
(b) With
each request for disbursement, Borrowers shall deliver a certification from an
officer of Borrowers that no Event of Default or Unmatured Event of Default
exists;
(c) The
Scheduled Improvements shall be done pursuant to plans and specifications and a
cost statement approved by Lender;
(d) After
the first disbursement to Borrowers, sworn statements and lien waivers in an
amount at least equal to the amount of funds previously paid to Borrowers (or
lien subordination agreements pursuant to Maryland law) or such other adequate
evidence of payment shall be delivered to Lender and the Title Company from all
contractors, subcontractors and material suppliers covering all labor and
materials invoiced prior to the date of the previous disbursement;
(e) Borrowers
shall deliver to Lender such other evidence as Lender reasonably may request,
from time to time during the course of the work on the Scheduled Improvements,
of compliance with the approved plans and specifications, of the cost of work
and of the total amount needed to complete the Scheduled Improvements, and
showing that there are no liens against the Facilities arising in connection
with the work with respect to which the cost statement delivered to, and
approved by, Lender does not provide for their payment; and
(f) At
the election of Lender, the funds may be disbursed by the Title Company to
Borrowers or to the persons entitled to receive payment thereof from
Borrowers.
3. Section
2.9. Section 2.9 is hereby amended and restated in its
entirety as follows:
2.9 Northwest.
(a) Escrow of Northwest
Funds. On the Loan Closing Date, Lender escrowed a portion of
the Loan equal to Four Million Nine Hundred Thousand Dollars ($4,900,000) plus
certain closing costs (the “Northwest Funds”)
with the Title Company pursuant to the terms of the Northwest Escrow
Agreement. Notwithstanding anything in this Agreement or the
Note to the contrary, Borrowers shall not pay interest on the Northwest Funds
until the earlier of (i) the release of the Northwest Funds to Sellers (as
defined in the Northwest Escrow Agreement) or (ii) the date that is ninety (90)
days after the Loan Closing Date; provided, however, that all interest earned on
the Northwest Funds shall be paid over to Lender during such ninety (90)
period. On December 2, 2008, Lender received from the Title
Company the sum of $49,056.22 as interest on the Northwest
Funds. Lender and Borrowers agree to allocate the interest on the
Northwest Funds as follows: $19,628.02 to Lender and $29,878.20 to
Borrowers. As such, concurrently with the date of this Amendment,
Lender shall pay over by wire transfer of immediate funds to Borrowers the sum
of $29,878.20.
(b) Repayment of Northwest
Funds. As of the date of this Amendment, (i) Owner determined
it would not acquire the Northwest Facility, (ii) Borrowers have caused the
Northwest Funds to be paid directly to Lender, (iii) the Northwest Funds have
been applied by Lender to the outstanding principal balance of the Loan, and
(iv) Lender has not charged Borrowers with a Prepayment Premium in connection
with such payment.
(c) Northwest Allocation
Funds. Borrowers and Lender originally contemplated that, if
the Northwest Facility were not acquired, that the difference between $1,449,518
less that portion of the Northwest Allocation Funds actually received by Lender
would be reallocated among the remaining Facilities in proportion to the number
of licensed beds at each remaining Facility bears to the total number of
licensed beds at all Facilities, which reallocation would also have increased
the Third Year Release Payment and the Seventh Year Release Payment in the
amount reallocated to such Facilities. However, instead of such
repayment and reallocation, Borrowers and Lenders have agreed to contribute the
Northwest Allocation Funds in the amount of $1,400,000 to the Escrowed Capex
Funds as set forth in Section 2 of this Amendment.
4. Section
3.4. Section 3.4 of the Existing Loan Agreement is hereby
amended and restated in its entirety as follows:
3.3 Release of Certain
Facilities during First Three Years.
(a) On or
before the third anniversary of the Closing, provided that (i) no Event of
Default has occurred and is continuing under the Loan Documents, (ii) no
Unmatured Event of Default has occurred and is continuing, and (iii) Borrowers
are selling the Facility or Facilities to an unrelated third party, upon the
payment to Lender of the applicable release payment set forth below (each a
“Three Years Release
Payment”), Lender would agree to release the applicable Facility listed
below (each a “Three
Years Facility”) from the lien of the Loan Documents. No
Prepayment Premium would be payable in connection with such prepayment and
release. The initial release prices (to be increased by any
reallocations as discussed below or any funded capex under Section 2.8)
are:
|
Facility
Name
|
Initial
Release Payment
|
|||
|
Liberty
Heights Health & Rehabilitation Center
4017
Liberty Heights Avenue
Baltimore
MD 21207
|
$ | 7,870,070.28 | ||
|
Franklin
Square Health & Rehabilitation Center
1217
W. Fayette Street
Baltimore
MD 21223
|
$ | 10,689,070.16 | ||
Each
Third Year Release Payment will increase 2.5% per year (compounding) on each
anniversary of the Closing and pursuant to subparagraph (b) below.
(b) If, after
exercising reasonable efforts to sell any Three Years Facility, Borrowers are
unable to find a buyer willing to pay an amount sufficient to satisfy the
applicable Three Years Release Payment, then Lender will accept as a Three Years
Release Payment a lower release payment provided that: (i) the release payment
is no less than 50% of the otherwise applicable Third Year Release Payment, and
(ii) after giving effect to the sale of the Facility and the pay down of the
Loan, the Borrowers remain in compliance with the Cash Flow Coverage Ratio and
Combined Cash Flow Coverage Ratio required as of the date of the
payment. The difference between the actual release payment and
the Three Years Release Payment shall be reallocated among the remaining
Facilities in proportion to the number of licensed beds at each remaining
Facility bears to the total number of licensed beds at all Facilities, which
reallocation shall also increase the Third Year Release Payment under this
Section and the Seventh Year Release Payment under Section 3.4 in the amount
reallocated to such Facilities.
(c) Borrowers
must sell the Facilities to unrelated third parties in order for the Facilities
to be released from the lien of the Loan Documents pursuant to this
Section.
(d) Upon
payment of the applicable Third Year Release Payment, the amount of the Security
Deposit required under this Agreement and the Master Lease will be reduced by an
amount equal to (i) the amount of the applicable Third Year Release Payment
actually paid to Lender multiplied by (ii) the
Interest Rate divided
by (iii) four (4).
(e) Upon
payment of the applicable Third Year Release Payment, Lender shall release the
applicable Facility from the Option to Purchase.
5. Section
3.4. Section 3.4 of the Existing Loan Agreement is hereby
amended and restated in its entirety as follows:
3.4 Release of Certain
Facilities after Seven Years.
(a) During
the one year period commencing on the seventh anniversary of the Closing,
provided that (i) no Event of Default has occurred and is continuing under the
loan documents, (ii) no Unmatured Event of Default has occurred and is
continuing, (iii) the prepayment is made concurrently with respect to all such
Facilities (to the extent they have not previously been released as provided for
in Section 3.3), and (iv) the Lessee Purchase Option is closed concurrently,
upon the payment to Seller of $41,402,379.96 (as such amount may be increased or
reduced pursuant to Sections 3.3(b) and 3.4(b), the “Seventh Year Release
Payment”), Seller will release the Facilities listed below from the lien
of the Loan Documents. No Prepayment Premium would be payable in
connection with such prepayment and release. Borrowers would not be
obligated to sell the Facilities in connection with such prepayment and
release. The Facilities covered by this Section are as
follows:
|
Bel
Pre Health & Rehabilitation Center
2601
Bel Pre Road
Silver
Spring MD 20906
|
|
Liberty
Heights Health & Rehabilitation Center
4017
Liberty Heights Avenue
Baltimore
MD 21207
|
|
Marley
Neck Health & Rehabilitation Center
7575
E. Howard Road
Glen
Burnie MD 21060
|
|
Franklin
Square Health & Rehabilitation Center
1217
W. Fayette Street
Baltimore
MD 21223
|
(b) The
Seventh Year Release Payment will be reduced by the amount any Third Year
Release Payment paid in connection with any of the Seventh Year Facilities which
are also Third Year Facilities.
(c) If
Borrowers do not sell or otherwise transfer the Facilities to third parties, but
instead continue to own and operate them, then upon payment of the Seventh Year
Release Payment and release of the Seventh Year Facilities from the lien of the
Loan Documents, the ownership of the applicable Borrowers which own or operate
such Facilities shall be transferred such that HCREH and the Parent Guarantors
no longer own or control such Borrowers. Upon such transfer, Lender
will release such Borrowers from their obligations arising under the Loan
Document and their guaranty of the Master Lease and the City View
Loan.
(d) Upon
payment of the Seventh Year Release Payment, the amount of the Security Deposit
required under this Agreement and the Master Lease will be reduced by an amount
equal to (i) the amount of the Seventh Year Release Payment actually paid to
Lender multiplied by
(ii) the Interest Rate divided
by (iii) four (4).
(e) Upon
payment of the Seventh Year Release Payment, Lender shall release the Facilities
covered by this Section from the Option to Purchase.
6. Representations and
Warranties.
(a) Each of
Borrower and Parent Guarantor hereby confirms and makes all of the
representations and warranties set forth in the Loan Agreement and other Loan
Documents with respect to such Borrower or Parent Guarantor, this Amendment and
the Loan Documents as of the date hereof and confirms that they are true and
correct in all material respects.
(b) Each of
Borrower and Parent Guarantor hereby represents and warrants as of the date of
this Amendment as follows: (i) it is duly incorporated or organized,
validly existing and in good standing under the laws of its jurisdiction of
organization; (ii) the execution, delivery and performance by it of this
Amendment and the Loan Documents, as applicable, are within its powers, have
been duly authorized, and do not contravene (A) its articles of organization,
operating agreement, or other organizational documents, or (B) any
applicable law; (iii) no consent, license, permit, approval or authorization of,
or registration, filing or declaration with any Governmental Authority or other
Person (except for those that have already been obtained), is required in
connection with the execution, delivery, performance, validity or enforceability
of this Amendment or the Loan Documents, as applicable, by or against it; (iv)
this Amendment and the Loan Documents, as applicable, have been duly executed
and delivered by it; (v) this Amendment and the Loan Documents, as applicable,
constitute its legal, valid and binding obligations enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally or by general principles of equity;
(vi) it is not in default under the Loan Agreement and no Event of Default
or Unmatured Event of Default exists, has occurred or is continuing, and (vii)
Lender has fully performed all of its obligations under each of the Loan
Documents through the date of this Agreement, and Lender is in full compliance
with its obligations under each of the Loan Documents.
7. Expenses of Lender.
Borrowers shall pay all reasonable expenses of Lender incurred in connection
with this Amendment, including reasonable attorneys fees and
expenses.
8. Execution and
Counterparts. This Amendment may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but when taken together shall constitute one and the same
Amendment.
9. Entire
Agreement. This Amendment, together with the other Loan
Documents, constitute the entire agreement of the parties in respect of the
subject matter described herein. This Amendment may not be changed or
modified except by an agreement in writing signed by the Lender and the
Borrowers hereto.
10. Headings. Section
headings used in this Amendment are for reference only and shall not affect the
construction of the Amendment.
11. Enforceability. Except
as expressly and specifically set forth herein, the Existing Loan Agreement
remains unmodified and in full force and effect. In the event of any
discrepancy between the Existing Loan Agreement and this Amendment, the terms
and conditions of this Amendment will control and the Existing Loan Agreement is
deemed amended to conform hereto.
[SIGNATURES APPEAR ON
FOLLOWING PAGES]
Signature
Page to
FIRST
AMENDMENT TO LOAN AGREEMENT
(Maryland Acquisition
Loan)
LENDER:
OHI ASSET
III (PA) TRUST
|
|
By:
|
OHI
Asset (PA), LLC, a Delaware limited liability company, its sole
trustee
|
By: Omega
Healthcare Investors, a Maryland
corporation,
its sole member
By: /s/ Daniel J.
Booth
Name: Daniel
J. Booth
Title: Chief
Operating Officer
THE STATE
OF
MARYLAND )
)
COUNTY
OF
BALTIMORE )
This
instrument was acknowledged before me on the 13th day of March, 2009, by
Daniel J. Booth, the Chief Operating Officer of Omega Healthcare Investors,
Inc., a Maryland corporation, the sole member of OHI Asset (PA), LLC, a Delaware
limited liability company, the sole trustee of OHI Asset III (PA) Trust, a
Maryland business trust, on behalf of said business trust.
Judith A.
Jacobs
Notary
Public, Baltimore County,
MD
My
commission expires: May 12, 2012
Page
S- 1 of S-3
Signature
Page to
FIRST
AMENDMENT TO LOAN AGREEMENT
(Maryland Acquisition
Loan)
BORROWERS:
BEL PRE
LEASING CO., LLC
RIDGE
(MD) LEASING CO., LLC
MARLBORO
LEASING CO., LLC
FAYETTE
LEASING CO., LLC
LIBERTY
LEASING CO., LLC
HOWARD
LEASING CO., LLC
PALL MALL
LEASING CO., LLC
WASHINGTON
(MD) LEASING CO., LLC
MARYLAND
NH ASSET, LLC
By: /s/ Charles R.
Stoltz
Name: Charles
R. Stoltz
Title: CFO
and Treasurer
PARENT GUARANTORS:
OMG RE HOLDINGS,
LLC
OMG
RE LEASING CO., LLC
OMG ASSET
OWNERSHIP, LLC
HEALTH
CARE FACILITY MANAGEMENT, LLC
RESIDENT
CARE CONSULTING, LLC
By: /s/ Charles R.
Stoltz
Name: Charles
R. Stoltz
Title: CFO
and Treasurer
Page
S-2 of S-3
Signature
Page to
FIRST
AMENDMENT TO LOAN AGREEMENT
(Maryland Acquisition
Loan)
STATE OF
Ohio )
)
ss.
COUNTY OF
Hamilton )
The
foregoing instrument was acknowledged before me this 2nd day of
March 2009, by Charles R. Stoltz, who is the CFO and Treasurer of the limited
liability companies listed above, on behalf of all such limited liability
companies.
Kathleen M.
Portman
Notary
Public, Hamilton
County, Ohio
My
commission expires: March 28, 2012
Page
S- 3 of S-3
List
of Exhibits to
FIRST
AMENDMENT TO LOAN AGREEMENT
(Maryland Acquisition
Loan)
EXHIBITS
C Scheduled
Improvements
FIRST
AMENDMENT TO LOAN AGREEMENT
(Maryland Acquisition
Loan)
EXHIBIT
C
SCHEDULED
IMPROVEMENTS
|
Facility
|
Address
|
City
|
ST
|
Allocation
of $3.775M CAP-EX (1)
|
|||
|
Bel
Pre Health & Rehabilitation Center
|
2601
Bel Pre Road
|
Silver
Spring
|
MD
|
1,050,000.00 | |||
|
Ellicott
City Health & Rehabilitation Center
|
3000
N. Ridge Road
|
Ellicott
City
|
MD
|
300,000.00 | |||
|
Forestville
Health & Rehabilitation Center
|
7420
Marlboro Pike
|
Forestville
|
MD
|
425,000.00 | |||
|
Franklin
Square Health & Rehabilitation Center (Fayette)
|
1217
W. Fayette Street
|
Baltimore
|
MD
|
400,000.00 | |||
|
Liberty
Heights Health & Rehabilitation Center
|
4017
Liberty Heights Avenue
|
Baltimore
|
MD
|
300,000.00 | |||
|
Marley
Neck Health & Rehabilitation Center
|
7575
E. Howard Road
|
Glen
Burnie
|
MD
|
1,050,000.00 | |||
|
South
River Health & Rehabilitation Center
|
144
Washington Road
|
Edgewater
|
MD
|
250,000.00 | |||
|
Total
|
$ | 3,775,000 | |||||
(1) Specific
improvements, budgets, and plans must be approved prior to the commencement of
any improvement.
Exhibit
C – Page 1 of 1