1
Exhibit 10.13
AMENDMENT TO MASTER LEASE AGREEMENT
THIS AMENDMENT TO MASTER LEASE AGREEMENT ("Amendment") is
dated as of October 1, 2000 between HEALTH CARE REIT, INC., a corporation
organized under the laws of the State of Delaware "HCRI" and "Landlord"), having
its principal office located at Xxx XxxXxxx, Xxxxx 0000, X.X. Xxx 0000, Xxxxxx,
Xxxx 00000, and BALANCED CARE AT MERRILLVILLE, INC., a corporation organized
under the laws of the State of Delaware ("Tenant") having its chief executive
office located at 0000 Xxxxx Xxxxx, Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
R E C I T A L S
A. Landlord and Tenant entered into a Master Lease Agreement
of even date ("Lease") of the Leased Property (as defined in the Lease).
B. In the case of the Merrillville Facility (as defined in the
Lease), Landlord originally leased the Merrillville Facility to Summerville
Assisted Living, Inc. ("Prior Tenant"). Landlord and Tenant are entering into
the Lease following Landlord's termination of the Leasehold Interest of Prior
Tenant. To avoid interruption of the operation of the Merrillville Facility,
Tenant agreed to enter into the Lease without the opportunity to do a full and
complete due diligence investigation of the Merrillville Facility. As a result
of these circumstances, Landlord and Tenant have agreed to make certain
modifications to the Lease.
C. Landlord and Tenant desire to amend the Lease as set forth
herein.
NOW, THEREFORE, in consideration of the foregoing recitals
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows.
1. Definitions. Any capitalized terms not defined in this
Amendment shall have the meaning set forth in the Lease.
2. Tenant's Obligations. The definition of "Tenant's
Obligations" in Section 1.4 of the Lease is hereby amended to read in its
entirety as follows:
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"Tenant's Obligations" means all payment and performance
obligations of Tenant under this Lease, the Working Capital
Loan, and all documents executed by Tenant in connection
with this Lease or the Working Capital Loan.
3. Working Capital Loan. Section 1.4 of the Lease is hereby
amended to add the following:
"Working Capital Loan" means the loan extended by HCRI to
Tenant for working capital purposes.
4. Rent. Section 2.1 of the Lease is hereby amended to add the
following subsections (a) and (b):
(a) During Lease Years 1-3 inclusive, Tenant shall pay the
Base Rent in an amount calculated as if the Lease Rate
equaled five percent (5%) per annum, computed using the
365/360 method and the balance of the Base Rent shall be
deemed to be a Lease Advance.
(b) On or before the 15th day of each month commencing with
the month following the Commencement Date and continuing
through the end of Lease Year 3, Tenant shall [i] pay all
its Net Cash Flow to Landlord; and [ii] deliver to Landlord
a reconciliation statement of the gross revenues, operating
expenses, management fee, and Working Capital Loan debt
service, including calculation of the aggregate Net Cash
Flow. As used herein, "Net Cash Flow" means the gross
revenue of Tenant arising from the Facility as reflected on
the income statement of Tenant minus [i] the operating
expenses for the Facilities (including payroll taxes); [ii]
the management fees actually paid by Tenant as provided
herein; [iii] amounts paid to Landlord under the Working
Capital Loan; and [iv] amounts paid to Landlord pursuant to
Section 2.1(a) above. Landlord
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shall apply the Net Cash Flow payments first to reduce the
Lease Amount to the extent Lease Advances have been made
pursuant to Section 2.1(a), second to the outstanding
balance of the Loan in the manner provided in the Loan
Agreement, and third to Tenant.
5. Impositions. Article 3 of the Lease is hereby amended to
provide that Tenant shall only be responsible for payment of Impositions and
utilities on or after the Contract Date.
6. Tenant's Indemnification. Section 5.1 of the Lease is
hereby amended to exclude claims [i] arising from Landlord's negligence and
willful misconduct from the matters subject to Tenant's indemnity obligation;
and [ii] acts of any prior tenant. Landlord acknowledges and agrees that for
purposes of this section, prior tenants of the Facility will not be deemed to be
parties claiming through Tenant.
7. Environmental Indemnification. Clause [i] of Section 5.2.1
of the Lease is hereby amended to read as follows:
Hazardous Materials first introduced to the Leased Property
prior to the Occupancy Date or subsequent to the date that
Tenant's occupancy of the Leased Property shall have fully
terminated;
8. Acceptance of Leased Premises. Section 6.2 of the Lease is
hereby amended to delete clauses [i], [ii], and [v].
9. Default. Section 8.1 of the Lease is hereby amended to add
the following subsection (l):
(l) Tenant fails to perform any obligations under the note
evidencing the Working Capital Loan or the loan agreement
executed in connection with the Working Capital Loan.
10. Early Option Period. Article 13 of the Lease is hereby
amended to add the following Section 13.6:
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Notwithstanding any provision to the contrary contained in
this Article 13, Tenant may exercise the Option to Purchase
the Merrillville Facility during Lease Years 4-7, inclusive
("Early Option Period") subject to the same terms and
conditions of this Article 13 except that [i] the required
Purchase Notice shall be given at any time during the Early
Option Period; and [ii] the Option Price shall be the
greater of [a] the applicable Base Amount increased by 50%
of the amount of any Lease Advance for capital expenditures
and 100% of the amount of any other Lease Advance
(excluding the Initial Lease Advance) ("Base Price"); or
[b] the sum of [1] the Base Price plus [2] the lesser of
[A] $400,000.00 and [B] the difference between the Fair
Market Value and the Base Price. For purposes of this
section, the Base Amount for Lease Year 4 shall be
$5,500,000.00; Lease Year 5 shall be $5,150,000.00. Lease
Year 6 shall be $4,750,000.00; and Lease Year 7 shall be
$4,360,000.00.
After the expiration of the Early Option Period, Tenant's
Option to Purchase shall be governed solely by Section
13.1-Section 13.5.
11. Management Agreement. Article 14 of the Lease is hereby
amended to add the following Section 14.11:
Any management agreement entered into by Tenant is subject
to the prior approval of Landlord, which approval will not
be unreasonably withheld. Landlord has approved the
Management Agreement to be entered into between Manager and
Tenant.
12. No Debt. Section 14.1 of the Lease is hereby amended to
add the following clause: "[iii] indebtedness in favor of Landlord under the
Working Capital Loan".
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13. Compliance With Lease Documents. Section 15.4 of the Lease
is hereby amended to add the following:
Notwithstanding any provisions to the contrary in the Lease
or any other Lease Documents, Landlord shall not hold
Tenant responsible for, or declare a default based on, the
Facility's noncompliance with any provisions relating to
the Facility contained under the Lease or any other Lease
Documents, caused by or arising from the actions or failure
to act of the Prior Tenant or existing on the Occupancy
Date provided that Tenant gives Landlord notice of the
noncompliance promptly following discovery of such
noncompliance. Upon each anniversary of the Occupancy Date,
Tenant shall notify Landlord in writing of the status of
any matters that have arisen under this section and
Landlord and Tenant shall endeavor in good faith to develop
a mutually acceptable plan to achieve compliance.
14. Cash Flow. Section 15.7.1(a)[iv] of the Lease is hereby
amended to read in its entirety as follows:
[iv] the amount of the provision for Rent payments, and
interest and lease payments, if any, and principal and
interest payments for the Working Capital Loan;
15. Coverage Ratio. Section 15.7.2 of the Lease is hereby
amended to read in its entirety as follows:
Tenant shall maintain a Coverage Ratio of not less than
1.25 to 1.00 commencing with the first fiscal quarter
following the third anniversary of the Commencement Date
and for each fiscal quarter thereafter.
16. Occupancy Census; Net Operating Income. The Lease is
hereby amended to add Exhibit J attached to this
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Amendment. In addition, Article 15 of the Lease is hereby amended to add a new
Section 15.7.6 as follows:
During Lease Years 1-3, inclusive, the Facility shall
maintain an occupancy census and net operating income equal
to or greater than the amounts contained on Exhibit J.
17. Licenses. Article 15 is hereby amended to add the
following Section 15.9:
15.9 Licenses. Tenant shall apply for the appropriate
license to operate the Facility within 30 days after the
Occupancy Date. Tenant shall also deliver all required
notices to the appropriate licensing authorities within the
time periods required by law. Tenant shall deliver copies
of the foregoing applications and notices to Landlord
promptly following submission and shall deliver to Landlord
copies of the licenses following issuance to Tenant.
18. Subleases. Section 18.1 is hereby amended to add the
following:
Notwithstanding the forgoing, Tenant may enter into a
Management Agreement for the Facility that will terminate
upon issuance of a license to Tenant to operate the
Facility.
19. Representations and Warranties. Article 22 of the Lease is
hereby amended to [i] delete subsection 22.6 (Condition of Facility), 22.7
(Compliance with Laws), 22.8 (No Litigation) (Facility representations only),
22.15-19 (Parties in Possession, Access, Utilities, Condemnation and
Assessments, and Zoning), 22.21 (Environmental Matters), and 22.23 (No Default);
and [ii] make all representations and warranties effective as of the Occupancy
Date. The representations and warranties contained in Section 22.4 shall be
limited to Governmental Authorizations relating to licensure only.
20. Capital Expenditures. Article 25 of the Lease is hereby
amended to add the following Section 25.28:
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25.28 Capital Expenditures. Landlord shall provide funds in
the amount of up to $100,000.00 for Facility capital
expenditures ("Capital Expenditures Allocation").
Disbursement of the Capital Expenditures Allocation is
subject to Landlord's reasonable approval of the scope of
work, budget, construction and disbursement schedules,
contractor and construction agreements as submitted by
Tenant.
(a) Disbursement. Tenant shall provide a collateral
assignment of any construction contract to Landlord and the
contractor shall consent to the assignment. Landlord shall
make disbursement to Tenant from time to time up to the
amount of the Capital Expenditures Allocation, provided,
for each disbursement, no Event of Default has occurred and
is continuing. Disbursements will be made at least eight
business days but not more than 12 business days following
Tenant's request and delivery to Landlord of such
documentation as Landlord shall reasonably request
concerning the disbursement, including but not limited to a
description of the work and an estimate of the cost of the
work to be performed. Each disbursement of the Capital
Expenditures Allocation shall be a Lease Advance.
21. Prior Tenant Obligations. Article 25 of the Lease is
hereby amended to add the following Section 25.29:
25.29 Landlord's Indemnification.
25.29.1 Provided Tenant complies with Section 25.29.2 and
subject to terms of Section 25.29.2, Landlord shall
indemnify and hold harmless Tenant, and any successor or
assignee of Tenant, from and against any and all demands,
claims causes of action, fines,
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penalties, damages (including consequential damages),
losses, liabilities (including strict liability),
judgments, and expenses (including, without limitation,
reasonable attorney's fees, court costs, and the costs set
forth in Section 8.7) that Tenant may incur, or become
responsible for, as a result of a claim by any person or
entity, based upon, or arising out of [i] obligations of
Prior Tenant to pay amounts owed to an equipment lessor or
lender for equipment at the Facility ("Equipment Claims");
[ii] obligations of Prior Tenant to pay amounts owed to a
vendor providing goods and services to the Facility,
including but not limited to utility providers ("Vendor's
Claims"); [iii] a resident's occupancy of the Facility
prior to the date that Tenant took occupancy of the
Facility, including but not limited to attorneys fees, in
connection with litigation filed against Tenant or
Guarantor or any of their respective representatives,
employees or agents in connection with any litigation or
claim filed in connection with Xxxxxxxx Xxxxxxx, a resident
at the Facility; [iv] the use, maintenance, operation and
occupancy of the Facility prior to the Occupancy Date; or
[v] any claim or lien by any governmental or
quasi-governmental unit, body or agency or any third party
for [a] clean-up costs or other costs pursuant to any
violation of Environmental Laws arising from a release that
occurred prior to the Occupancy Date, or [b] costs pursuant
to a violation of any Legal Requirement that occurred prior
to the Occupancy Date or the condition of the Facility
existing prior to the Occupancy Date ("Facility Claim").
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25.29.2 Landlord's obligation to indemnify Tenant under
Section 25.29.2 is subject to and conditioned upon [i] with
respect to an Equipment Claim and a Vendor Claim, Tenant's
entering into new equipment contracts/leases and new vendor
contracts and not assuming the existing equipment
contract/lease or vendor contract giving rise to the
Equipment or Vendor Claim; [ii] with respect to any claim
hereunder, Tenant's maintaining insurance coverage as
required under the terms of this Lease; [iii] with respect
to any claim hereunder, Tenant's pursuing any and all
available insurance coverage; [iv] with respect to any
claim hereunder, Tenant's diligently pursuing a defense of
any claim; and [v] with respect to a Facility Claim,
Tenant's diligently investigating the condition of the
Facility after the Occupancy Date and promptly notifying
Landlord of any potential problems.
22. Exhibits. Tenant and Landlord acknowledge that Exhibits D
and I of the Lease are preliminary or incomplete based on information provided
by Prior Tenant. Consequently, Tenant shall provide updated exhibits to Landlord
within 120 days after the Occupancy Date. Upon Landlord's approval of the
exhibits, the Lease shall be deemed amended to include the updated exhibits.
23. Records. Landlord has delivered to Tenant certain
documents and reports in the possession of Landlord, its professionals or
agents, in connection with the operation of the Facility ("Records"). Tenant
acknowledges that Landlord does not verify the accuracy of the Records and the
Records were delivered pursuant to a confidentiality letter agreement between
Landlord and Tenant.
24. Cooperation. Landlord does hereby covenant to reasonably
cooperate with Tenant in effectuating a re-licensure of the Facility and a
smooth and orderly transition of the operations thereof from the Prior Tenant to
Tenant.
25. Scope of Amendment. The terms of this Amendment applicable
to the "Facility" or the "Leased Property" apply only
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to the Merrillville Facility. To the extent that the Lease is amended to include
additional properties, this Amendment shall not apply to such properties unless
specifically provided in such amendment.
26. Affirmation. Except as specifically modified by this
amendment, the terms and provisions of the Lease are hereby affirmed and shall
remain in full force and effect.
27. Binding Effect. This Amendment will be binding upon and
inure to the benefit of the successors and permitted assigns of Landlord and
Tenant.
28. Further Modification. The Lease may be further modified
only by writing signed by Landlord and Tenant.
29. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original hereof, but all of which
will constitute one and the same document.
30. Consent of Guarantor. This Amendment shall have no force
or effect unless and until each Guarantor has executed the Consent of Guarantor
set forth below.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Landlord and Tenant have executed this
Amendment as of the date first set forth above.
Signed and acknowledged
in the presence of HEALTH CARE REIT, INC.
Signature /s/ Xxxx X. Xxxxx By: /s/ Xxxx X. Xxxxx
Print Name Xxxx X. Xxxxx
Title: Vice President and
Signature /s/ Xxxxxxxx X. Xxxxxxxx Corporate Secretary
Print Name Xxxxxxxx X. Xxxxxxxx
BALANCED CARE AT MERRILLVILLE, INC.
Signature /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
Print Name Xxxxx X. Xxxxxx Xxxxx X. Xxxxxx
Title: Vice President and
Signature /s/ Xxxxx Xxxxxx Secretary
Print Name Xxxxx Xxxxxx
STATE OF OHIO )
) SS:
COUNTY OF XXXXX )
The foregoing instrument was acknowledged before me this 7th
day of November, 2000 by Xxxx X. Xxxxx, the Vice President and Corporate
Secretary of Health Care REIT, Inc., a Delaware corporation, on behalf of the
corporation.
/s/ Xxxx X. Xxxxx
Notary Public
My Commission Expires:_____________________ [SEAL]
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COMMONWEALTH OF PENNSYLVANIA )
) SS:
COUNTY OF CUMBERLAND )
The foregoing instrument was acknowledged before me this 1st
day of November, 2000 by Xxxxx X. Xxxxxx, the Vice President and Secretary of
Balanced Care at Merrillville, Inc., a Delaware corporation, on behalf of the
corporation.
/s/ Xxxxxxxx X. Xxxxxx
Notary Public
My Commission Expires: June 21, 2004 [SEAL]
THIS INSTRUMENT PREPARED BY:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxxxx, Loop & Xxxxxxxx, LLP
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
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CONSENT OF GUARANTOR
In connection with the Unconditional and Continuing Guaranty
("Guaranty") made by the undersigned Guarantor in favor of Landlord dated as of
October 1, 2000, the undersigned Guarantor hereby [i] consents to the foregoing
Amendment to Master Lease Agreement ("Amendment"), [ii] agrees to be bound by
the terms and provisions of the Amendment to the extent applicable to the
undersigned pursuant to its Guaranty, [iii] affirms the Guaranty which shall
remain in full force and effect, and [iv] waive any suretyship defenses arising
in connection with the Amendment. All capitalized terms not defined herein shall
have the meaning set forth in the foregoing Amendment.
BALANCED CARE CORPORATION
By: /s/Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Title: Senior Vice President,
Legal Counsel and Assistant
Secretary
