Document:

Exhibit

Exhibit 10.133

 FIRST AMENDMENT TO SUBLEASE AGREEMENT

THIS FIRST AMENDMENT TO SUBLEASE AGREEMENT (the “Amendment”) is made and entered into as of the 1st day of September, 2015, by and among ADK BONTERRA/PARKVIEW, LLC, a Georgia limited liability company (“Sublessor”), 2801 FELTON AVENUE, L.P., a Georgia limited partnership (“Bonterra Sublessee”), and 460 AUBURN AVENUE, L.P., a Georgia limited partnership (“Parkview Sublessee”) (Bonterra Sublessee and Parkview Sublessee are collectively referred to as “Sublessees”).  

W I T N E S S E T H:

WHEREAS, Sublessor and Sublessees have entered into that certain Sublease Agreement dated July 20, 2015 (the “Existing Sublease” and together with this Amendment, the “Sublease”); and

WHEREAS, Sublessor and Sublessees desire to amend the Existing Sublease as hereinafter set forth.
    
NOW, THEREFORE, for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, paid by each party to the other, the receipt and sufficiency of which are hereby acknowledged, and the mutual covenants and benefits flowing between the parties, Sublessor and Sublessees, intending to be legally bound, do hereby covenant and agree as follows:

1.    Capitalized Terms.  Unless otherwise defined herein, all capitalized words and phrases used herein shall have the same meanings ascribed to them in the Existing Sublease.  The “Existing Master Lease’ shall mean that certain Third Amended and Restated Multiple Facilities Lease, dated as of October 29, 2010, as amended pursuant to that certain First Amendment to Third Amended and Restated Multiple Facilities Lease, dated June 14, 2013, and that certain Second Amendment to Third Amended and Restated Multiple Facilities Lease, dated as of September 1, 2015.
2.    Subordination.  Section 5 of the Existing Sublease is hereby amended by deleting the Section in its entirety and by adding the following in lieu thereof.
5.    Subordination.  This Sublease is subject and subordinate to the Existing Master Lease.  Except as provided in Section 26(b) below, all applicable terms and conditions of the Existing Master Lease are incorporated into and made a part of this Sublease as if Sublessees were the Lessee under the Existing Master Lease.  Without limiting the general nature of the immediately preceding sentence, Sublessees acknowledge and agree that Sublessees will protect, indemnify, save harmless and defend Lessor in accordance with Article XXI of the Existing Master Lease as if Sublessees were the Lessee under the Existing Master Lease.  If any of the terms of this Sublease and the Existing Master Lease conflict, the terms of the Existing Master Lease will govern.  Sublessor shall not agree with Lessor to terminate 

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the Existing Master Lease without first having obtained the prior written consent of Sublessees.  Such prior written consent of Sublessees shall not be required for such termination if Lessor agrees to lease the Facilities directly to Sublessees upon the terms and conditions of the Sublease.  Unless expressly provided for in this Sublease to the contrary, Sublessees assume and agree to perform the Sublessor’s obligations under the Existing Master Lease during the term of this Sublease, except that the obligation to pay Base Rent and Additional Charges to Lessor under the Existing Master Lease shall remain the obligation of Sublessor and shall be considered performed by Sublessees upon payment of Base Rent and Additional Charges due under this Sublease.  Sublessees shall not cause or suffer any act of negligence that will violate any of the provisions of the Existing Master Lease. If the Existing Master Lease terminates for any reason, this Sublease shall terminate and the parties shall be relieved from all liabilities and obligations under this Sublease; provided, however, that if this Sublease is terminated by Lessor due to a default of Sublessor or Sublessees under the Existing Master Lease or under this Sublease, the defaulting party shall be liable to the non-defaulting party for all damage suffered by the non-defaulting party as a result of the termination.

3.    Initial Term:  Section 6 of the Existing Sublease is hereby amended by deleting the first sentence in its entirety and by adding the following in lieu thereof:
Subject to the provisions of Section 3 above, the initial term of this Sublease shall commence on the Commencement Date (as hereinafter defined) and continue until midnight April 30, 2025, unless sooner terminated as provided in this Sublease or upon termination of the Existing Master Lease (the “Initial Term”).
4.    Security Deposit.  Section 13 of the Existing Sublease is hereby amended by deleting the second sentence thereof in its entirety and by adding the following in lieu thereof:

The Security Deposit shall be paid in twelve (12) equal monthly payments of $14,167.00 each commencing on the first day of the second Lease Year and continuing on the first day of each month thereafter until paid in full.      
5.    Insurance.  Section 22 of the Existing Sublease is hereby amended by deleting the Section in its entirety and by adding the following in lieu thereof:
22.    Insurance.  Sublessees shall name Lessor, Sublessor and AdCare Health Systems, Inc. as additional insureds under all general liability and professional liability insurance policies to be provided by Sublessees under the Existing Master Lease.
6.    Entire Agreement.  Section 24 of the Existing Sublease is hereby amended by deleting the Section in its entirety and by adding the following in lieu thereof:
24.    Entire Agreement.  This Sublease, the Sublease Consent Agreement, dated as of September 1, 2015, among Sublessees, Sublessor, Lessor, et al. (the 

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“Sublease Consent Agreement”), and the “Transaction Documents”, as defined in the Sublease Consent Agreement, set forth the entire agreement between Sublessor and Sublessees concerning the Leased Properties and, except for the operations transfer agreements to be entered into between the licensed operators of the Facilities, there are no other agreements, either oral or written, between the parties relating to the Leased Properties.
7.    Existing Master Lease Provisions Not Incorporated.  Section 26(b) of the Existing  Sublease is hereby amended by deleting such subsection in its entirety and by adding the following in lieu thereof:
(b)    Existing Master Lease Provisions Not Incorporated.  Notwithstanding the foregoing or any other provision of this Sublease to the contrary, the following Sections of the Existing Master Lease are amended as follows as they relate to the Sublessees: 
Section 7.3 (Certain Environmental Matters) – Where obligations under Section 7.3 of the Existing Master Lease are limited by “Pre-Existing Hazardous Substances” or “Pre-Existing Environmental Conditions”, Sublessees’ obligations will be limited to “Pre-Existing Hazardous Substances” or “Pre-Existing Environmental Conditions” existing prior to Commencement Date (as defined in the Existing Sublease);
Section 8.2.1 (Lessee’s Tangible Net Worth) – Sublessees will not be required to comply with Section 8.2.1 of the Existing Master Lease;
Section 8.2.2 (Guarantor’s Tangible Net Worth) – the Sublease Guarantors, Wellington Healthcare Services III, L.P. (“New Guarantor”) will not be required to comply with Section 8.2.2; 
Section 8.2.3 (Cash Flow to Rent Ratio) –  Sublessor’s and Sublessees’ consolidated Cash Flow to Rent Ratio will not be required to comply with the requirements of Section 8.2.3 until the twelve month period ending September 30, 2016 but Sublessor will continue to be required to meet Section 8.2.3 as if the Sublease had not been signed;
Section 8.5 (Other Facilities) – Except for the following Facilities, Sublessees will be required to comply with Section 8.5:  (i) 560 Saint Charles Avenue, NE, Atlanta, Georgia, and (ii) 2920 Pharr Court South, NW, Atlanta, Georgia.  Bombay Lane Partners, LLC, an Affiliate of Sublessees, provides administrative services to such Facilities but does not own, operate or manage such Facilities;
Section 23.1(a) (Annual Financial Statements) – Sublessees must provide Financial Statements but will only be required to provide reviewed or audited Financial Statements if available; and

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Section 39.1 – Security Deposit. 
For the avoidance of doubt, Sublessor’s obligations under the Existing Master Lease are not amended.
8.    Roof Repairs.  The Existing Sublease is further amended by adding the following new Section 29 at the end thereof:  

29.  Roof Repairs.  Notwithstanding any provision in this Sublease, Sublessor agrees, at its expense, to adequately repair or replace (if necessary) the roofs at both Facilities within ninety (90) days of the Commencement Date.  
9.    Survey Deficiencies.  Sublessor shall indemnify, save harmless and defend Sublessees from and against all liabilities, obligations, claims, damages, penalties, costs and expenses (including, without limitation, defense costs, costs of corrective action and civil monetary penalties) arising from or relating to any survey deficiencies cited as immediate jeopardy which relate to the roof at either Facility and which occur during the period from the Commencement Date through December 31, 2015.
10.    Agreement in Effect.  Except as herein specifically provided, all other terms and provisions of the Existing Sublease shall remain in full force and effect, and are hereby ratified and reaffirmed by the parties.

[Signatures on Following Page]

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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first above written.

 
SUBLESSOR:

ADK BONTERRA/PARKVIEW, LLC
a Georgia limited liability company 

 
By:    /s/ William McBride
Name:    William McBride
Title:    Manager

[Signatures continued on following page]

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[SIGNATURE PAGE TO FIRST AMENDMENT TO SUBLEASE AGREEMENT]

SUBLESSEES:

BONTERRA SUBLESSEE:

2801 FELTON AVENUE, L.P.,
a Georgia limited partnership  

By:       /s/ James J. Andrews
Name:  James J. Andrews 
Title:    President

PARKVIEW SUBLESSEE:

460 AUBURN AVENUE, L.P.,
a Georgia limited partnership  

By:       /s/ James J. Andrews
Name:  James J. Andrews 
Title:    President

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Exhibit 10.134

 SECOND AMENDED AND RESTATED NOTE 

	
		
	U.S. $301,404.20
	November 2, 2015

FOR VALUE RECEIVED, the undersigned, RIVERCHASE VILLAGE ADK, LLC, a Georgia limited liability company (“Riverchase”), promises to pay to the order of ADCARE HEALTH SYSTEMS, INC., a Georgia corporation (“AdCare”), the principal sum of THREE HUNDRED ONE THOUSAND FOUR HUNDRED FOUR AND 20/100 DOLLARS ($301,404.20) (the “Principal”).  

The unpaid Principal of this Note (the “Note”) shall not bear interest. 

The Principal balance shall be paid upon the closing of the sale of the Riverchase Facility.  All capitalized but undefined terms used in this paragraph shall have the meanings set forth in that certain Agreement dated as of February 28, 2014, as amended, between Christopher F. Brogdon and his affiliated entities, on the one hand, and AdCare and its affiliated entities, on the other hand. 

Riverchase acknowledges and agrees that all amounts due under this Note are due and payable as stated herein, and AdCare has no obligation to renew or extend this Note. 
ADDITIONAL COVENANTS:
1.Default.  
a.Each of the following shall be a default (“Default”) under this Note:
(a)failure of Riverchase to pay any amount due hereunder, or any part hereof, or any extension or renewal hereof, within five (5) days of the due date; or 
(b)Riverchase's failure to perform or comply with any of the covenants or agreements contained herein.
b.If this Note is placed in the hands of one or more attorneys for collection or in the hands of one or more attorneys for representation of AdCare in connection with any bankruptcy, probate or other court or by any other legal proceedings, Riverchase shall pay the fees and expenses of such attorneys in addition to the full amount due hereon, whether or not litigation is commenced.
c.    In the event (i) that there occurs any Default hereunder; or (ii) that Riverchase shall become insolvent or make an assignment for the benefit of its creditors; or (iii) that a petition is filed or any other proceeding is commenced under the Federal Bankruptcy Act or any state insolvency statute by or against Riverchase; or  (iv) that a receiver or similar person is appointed for Riverchase; then, in any such event, the entire unpaid Principal balance due hereon and all accrued interest at the option of the holder hereof shall become immediately due and payable without any notice or demand.  Failure to exercise this option shall not constitute a waiver of the right to exercise the same in the event of any subsequent Default.

2.Prepayment.  Riverchase may prepay this Note at any time without premium or penalty. 
3.Waivers by Riverchase and Others.  Riverchase and all endorsers, sureties and guarantors hereof hereby severally waive presentment for payment, notice of non-payment, protest, and notice of protest, and diligence in enforcing payment hereof, and consent that the time of payment may be extended without notice.  The makers, endorsers, guarantors, and sureties executing this Note also waive any and all defenses which they may have upon the ground of any extension of time of payment which may be given by the holder of this indebtedness to any of the undersigned, or to any other person assuming payment hereof.
4.Amendments, Modifications and Waiver.  No amendment, modification or waiver of any provision of this Note, nor consent to any departure by Riverchase therefrom, shall be effective unless the same shall be in a writing signed by AdCare, and then only in the specific instance and for the purpose for which given.  No failure or delay on the part of AdCare to exercise any right under this Note shall operate as a waiver thereof, nor shall any single or partial exercise by AdCare of any right under this Note preclude any other or further exercise thereof, or the exercise of any other right. Each and every right granted to AdCare under this Note or allowed to it at law or in equity shall be deemed cumulative and such remedies may be exercised from time to time concurrently or consecutively at AdCare's option. 
5.Payment.  All payments due under this Note shall be paid to AdCare at such place as AdCare may direct.  Whenever a payment is due on a day other than a business day (all days except Saturday, Sunday and legal holidays under federal or Georgia law), the maturity thereof shall be extended to the next succeeding business day.  If any amount due hereunder is not paid within ten (10) days of the date when due, Riverchase agrees to pay an administrative and late charge equal to the lesser of (a) five percent (5%) on and in addition to the amount of such overdue amount, or (b) the maximum charges allowable under applicable law. 
6.Notices.  All notices or other communications required or otherwise given pursuant to this Note shall be in writing and shall be delivered by hand delivery or nationally recognized overnight courier to the following addresses: 
If to Riverchase:         
Riverchase Village ADK, LLC 
Two Buckhead Plaza
3050 Peachtree Road NW, Suite 355
Atlanta, Georgia 30305
Attention: Christopher F. Brogdon 

If to AdCare:            
AdCare Health Systems, Inc.
Two Buckhead Plaza
3050 Peachtree Road NW, Suite 355
Atlanta, Georgia 30305            
Attention: CEO 

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7.Paragraph Headings.  Paragraph headings are inserted for convenience of reference only, do not form part of this Note and shall be disregarded for purposes of the interpretation of the terms of this Note.
8.Time of Essence.  Time is of the essence with respect to each and every covenant and obligation of Riverchase under this Note.
9.Governing Law.  THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA.  TO THE FULLEST EXTENT PERMITTED BY LAW, RIVERCHASE HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIMS TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS NOTE.

[Signature on Following Page]

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IN WITNESS WHEREOF, Riverchase has executed this Note as of the date first written above. 

RIVERCHASE VILLAGE ADK, LLC:

By:    /s/ Christopher F. Brogdon
            Christopher F. Brogdon
Title:    Manager

 

 

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