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EXHIBIT 10.2
FIRST AMENDMENT TO OMEGA NEW MASTER LEASE
THIS FIRST AMENDMENT TO OMEGA NEW MASTER LEASE ("First Amendment") is
dated as of February 1, 1999 and is entered into by OMEGA HEALTHCARE INVESTORS,
INC., a Maryland corporation, having its principal office at 000 Xxxxxxx Xxx,
Xxxxx 000, Xxx Xxxxx, Xxxxxxxx 00000 ("Lessor"), and the entities designated
Lessees on the signature page hereof (each a "Lessee" and collectively,
"Lessees").
RECITALS
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This First Amendment is made and entered into with reference to the
following recitals:
A. Capitalized terms used and not otherwise defined herein have the
respective meanings given them in the Omega New Master Lease (as
hereinafter defined).
B. Pursuant to the Orders under Bankruptcy Code Sections 363(f) and
365 (i) Approving Sale Leaseback Transaction Regarding Signature
Facilities entered by the United States Bankruptcy Court for the
District of Arizona in the jointly-administered Chapter 11 cases
In Re: Unison HealthCare Corporation (Case Nos.
B-98-06583-PHX-GBN through B-98-06612-PHX-GBN) and In Re:
BritWill Investments-I, Inc. (Case Nos. B-98-0173-PHX-GBN through
B-98-1075-PHX-GBN)("Cases"), effective December 31, 1998, Lessor
acquired the Signature Facilities and Lessor and the Signature
Subsidiaries entered into a lease of the Signature Facilities
("Omega New Master Lease").
C. In accordance with Debtors' First Amended Joint Plan of
Reorganization dated October 15, 1998, as amended ("Plan"), which
was confirmed with respect to the Cases effective January 31,
1999, the Omega New Master Lease (as amended) shall encompass,
assume, restate and supercede the Existing Leases of the Britwill
Indiana Facilities, BritWill-II November 1993 Facilities and
BritWill-II December 1994 Facilities.
X. Xxxxxx and Lessees are entering into this First Amendment for the
purpose of adding Brit Indiana and Brit-II as Lessees,
accomplishing such assumption of the Existing Leases and amending
certain provisions of the Omega New Master Lease.
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties to this First Amendment agree as follows:
1. The BritWill Indiana Facilities, BritWill-II November 1993
Facilities and BritWill-1994 Facilities are hereby added to the
Omega New Master Lease.
2. Each of the Existing Leases is hereby assumed, amended,
supplemented, superseded and replaced by the Omega New Master
Lease, subject only to the provisions of Section 4 hereof with
respect to the Indiana Returned Facilities.
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3. Lessees acknowledge and agree that they are jointly and severally
liable to Lessor for the payment of all amounts due Lessor from,
and the performance of all obligations of, any one or more or all
of the Lessees under the Omega New Master Lease, as set forth
therein.
4. Upon the terms and conditions set forth in the Indiana Returned
Facilities Agreement, BritWill Indiana has agreed to release and
relinquish to Lessor any and all right, title and interest in and
to the Indiana Returned Facilities, and Lessor has agreed to
terminate the Omega New Master Lease with respect to the Indiana
Returned Facilities, after the Indiana Returned Facilities
License Transfer. Pending the Indiana Returned Facilities
Transfer, notwithstanding anything to the contrary elsewhere in
the Omega New Master Lease:
a. All revenue and expenses in connection with the ownership and
operation of the Indiana Returned Facilities which accrue during
the Interim Operating Period shall be for the account and
liability of Lessor. Lessees shall disburse Indiana Returned
Facilities Gross Revenue in the following order of priority:
First, to pay the Indiana Returned Facilities Interim
Manager a management fee of five percent (5%) of
Indiana Returned Facilities Gross Revenue, which fee
shall accrue if not paid at any time during the
Interim Operating Period and shall be payable in the
first order of priority out of Indiana Returned
Facilities Gross Revenue in succeeding months, and if
not paid during the Interim Operating Period shall be
paid by Lessor as soon as the amount accrued and
unpaid shall be determined;
Next, to pay Indiana Returned Facilities Operating
Expenses that accrue and become due during the Interim
Operating Period, as and when the payment of the same
is due without penalty or interest (operating expenses
that accrue prior to the Interim Operating Period
being the responsibility of Brit Indiana, and not
Lessor, as set forth in the Indiana Returned
Facilities Agreement);
Next, to pay Additional Charges with respect to the
Indiana Returned Facilities which accrue and become
payable during the Interim Operating Period
(Additional Charges with respect to the Indiana
Returned Facilities that accrue prior to the Interim
Operating Period being the responsibility of Brit
Indiana, and not Lessor, as set forth in the Indiana
Returned Facilities Agreement);
Next, to pay to Lessor the Indiana Returned Facilities
Net Cash Flow, if any. Indiana Returned Facilities Net
Cash Flow for a calendar month, if any, shall be paid
to Lessor within fifteen (15) business days after the
same has been determined, subject to reasonable and
appropriate reserves approved by Lessor for the
payment of future Indiana Returned Facilities
Operating Expenses that are reasonably expected to
accrue and become due and payable during the Interim
Operating Period, provided, however, that any and all
Indiana Returned Facilities Net Cash Flow that has not
been previously paid to Lessor on or before the
Indiana Returned Facilities Lease Termination Date
shall be paid to Lessor within fifteen (15) business
days
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after such date, except that any such Indiana Returned
Facilities Net Cash Flow received by Lessees after the
Indiana Returned Facilities Lease Termination Date
shall be paid to Lessor within fifteen (15) Business
Days after receipt thereof.
If Gross Revenues are insufficient to pay any Indiana
Returned Facilities Operating Expense or Additional
Charge which accrues and is payable during the Interim
Operating Period as and when such Indiana Returned
Facilities Expense or Additional Charge becomes due,
upon Notice Lessor shall supply Lessees with such
additional funds as are necessary for such payment.
b. Except for the payment thereof in the order of
priority set forth in the preceding subparagraph out
of, and only to the extent of, available Indiana
Returned Facilities Gross Revenue, Lessees shall not
be responsible for the payment of Additional Charges
that are payable and accrue with respect to the
Indiana Returned Facilities during the Interim
Operating Period, provided, however, that Lessees
shall give Lessor such Notice as is feasible of the
due date and the amount of any Additional Charges
which accrue and are due during such period and which
exceed the Indiana Returned Facilities Gross Revenues
available to Lessees for the payment thereof on or
before the date on which such Additional Charges are
due and payable without penalty. Lessees shall have no
obligation to pay with respect to the Indiana Returned
Facilities the site inspection fee required under
Section 3.2 of the Omega New Master Lease or any other
fee, charge or expense except as otherwise set forth
in this First Amendment.
c. The failure of Lessees to pay with respect to the
Indiana Returned Facilities any amount due, other than
Indiana Returned Facilities Net Cash Flow payable to
Lessor, or to perform any act required under the
Lease, during the Interim Operating Period, shall not
constitute an Event of Default if at the time such
amount is due or such act is required to be performed
sufficient Indiana Returned Facilities Gross Revenues
are not available to Lessees to enable Lessees to pay
such amount or to pay for the performance of such act
and Lessor, after receipt of timely Notice from
Lessees, fails to provide Lessees with such additional
funds as may be necessary at the time to pay such
amount or pay for the performance of such act,
provided, however, that a violation by Lessees during
such period of any Legal Requirement or Insurance
Requirement applicable to the Indiana Returned
Facilities, resulting from willful misconduct or gross
negligence on the part of Lessees, beyond any
applicable grace or cure period provided in the Omega
New Master Lease shall constitute an Event of Default
as provided in Section 16.1.17.
d. No Obligation or Right to Make Capital Improvements
Lessees shall have neither the right nor the
obligation to make any capital improvements to the
Indiana Returned Facilities without the express
written approval of Lessor, whether or not made
necessary as a result of a Legal Requirement
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or an Insurance Requirement, damage from a casualty, a
Taking or deterioration, and without Lessor's prior
written approval Lessees shall only be obligated to
make such capital repairs and restoration as may
reasonably be required in an emergency in which time
does not permit Lessees to obtain such written
approval, and Lessor shall promptly reimburse Lessees
for the reasonable cost of any such emergency repairs.
Lessor alone shall in its discretion decide whether or
not to repair, restore and rebuild an Indiana Returned
Facility following a casualty. In the event of a
casualty that prevents carrying on the normal
operation of an Indiana Returned Facility for any
period in excess of five (5) business days, and if,
upon Notice from Lessees, Lessor does not make
arrangements reasonably satisfactory to Lessees to
cause the damaged property within thirty (30) days of
the date of the casualty to be restored to the extent
that the interference with the normal operation of
such Facility is eliminated, Lessees shall have the
right to terminate this Lease as to the damaged
Indiana Returned Facility upon at least fifteen (15)
days prior written notice to Lessor. Notwithstanding
the foregoing, Lessees may take any action reasonably
required of Lessees to maintain the licenses to
operate the Indiana Returned Facilities as healthcare
providers until such time as Lessees are relieved of
any and all obligations thereunder with respect to the
Indiana Returned Facilities, and Lessees shall not be
liable to Lessor for any such reasonable actions
taken.
e. No Right to Proceeds of Insurance and Condemnation
Awards. Except for the purpose of paying any Accrued
Fees, Lessees shall have no right to retain any Net
Proceeds received or receivable with respect to the
Indiana Returned Facilities.
f. No Right or Obligation to Contest. Lessees shall
neither be required nor permitted to engage in any
contest of any Legal Requirement or Insurance
Requirement applicable to the Indiana Returned
Facilities without prior Notice to, and the approval
of, Lessor.
g. Management Agreement Approved. Lessor hereby approves
the Indiana Returned Facilities Interim Management
Agreement between Lessees and Indiana Returned
Facilities Interim Manager dated February 1, 1999. Any
amendment of the Indiana Returned Facilities
Management Agreement shall be ineffective without the
prior, written approval of the parties hereto.
h. Authority and Responsibility of Lessees. The current
licensee of the Indiana Returned Facilities shall
remain the responsible licensee thereof and as such
shall retain complete responsibility and legal
liability for all the patient care and for the overall
supervision and control of the business, assets and
properties which are part of the Indiana Returned
Facilities.
i. Interpretation of Omega New Master Lease with Respect
to Indiana Returned Facilities. Lessor and Lessees
originally intended the Indiana Returned Facilities
Lease Termination Date to be January 31, 1999.
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Because processing of required licensure applications
is not complete, Lessor and Lessees are agreeing to
include the Indiana Returned Facilities among the
Facilities covered by the Omega New Master Lease. The
intent of Lessor and Lessees with respect to the
Indiana Returned Facilities is to give Lessor from and
after February 1, 1999 the same economic benefit, and
to impose upon Lessor the same economic burdens, as if
the Indiana Returned Facilities were not included in
the Omega New Master Lease, and Lessor and Lessees
intend that the Omega New Master Lease be interpreted
and construed consistent with the foregoing intent and
with the provisions of the Indiana Returned Facilities
Agreement.
j. Indemnification of Lessees. Lessor shall protect,
indemnify, save harmless and defend Lessees, their
principals, officers, directors and agents and
employees for, from and against all liabilities,
obligations, claims, damages, penalties, causes of
action, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses),
to the extent permitted by law, imposed upon or
incurred by or asserted against Lessees or any of them
by reason of the inclusion of the Indiana Returned
Facilities as Facilities leased under the Omega New
Master Lease during the Interim Operating Period,
excluding any such liabilities, obligations, claims,
damages, penalties, causes of action, costs and
expenses (including, without limitation, reasonable
attorneys' fees and expenses) arising out of the gross
negligence or willful misconduct of Lessees or Manager
or the agents or employees of Lessees or Manager.
k. Termination of Lease with Respect to Indiana Returned
Facilities. The Omega New Master Lease shall terminate
with respect to the Indiana Returned Facilities on the
Indiana Returned Facilities Lease Termination Date.
Lessees shall have the right to terminate this Lease
as to the Indiana Returned Facilities on the Indiana
Returned Facilities Termination Date by Notice to
Lessor if Lessor fails to provide funds to Lessees for
the payment of Accrued Management Fees, Indiana
Returned Facilities Operating Expenses and Additional
Charges as required under Section 4.a., above or any
other sums due from Lessor with respect to the Indiana
Returned Facilities, within five (5) Business Days
after a Notice from Lessees' as to the amount and
purpose of such funds.
Except as hereinabove provided, the terms and conditions of
the Omega New Master Lease shall be fully applicable to the Indiana Returned
Facilities until the Indiana Returned Facilities Lease Termination Date without
further modification or amendment.
5. The definitions set forth in Article II of the Omega New Master
Lease are amended as follows:
Accrued Fees: Fees payable to the Indiana Returned
Facilities Interim Manager under the Indiana Returned
Facilities Interim Management Agreement and this First
Amendment which are due as provided herein but are unpaid.
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Additional Texas Facilities Land: The real property
described in Exhibit K-1, Exhibit K-2 and Exhibit K-3 attached to
this Lease.
Effective Date: As to the Signature Facilities,
December 31, 1998; as to the BritWill Indiana Facilities,
BritWill-II November 1993 Facilities and BritWill-II December 1994
Facilities, February 1, 1999.
Indiana Returned Facilities Agreement: The Indiana
Returned Facilities Agreement between Lessor and BritWill Indiana
dated as of the date of this First Amendment.
Indiana Returned Facilities Gross Revenue: The Gross
Revenues received or receivable from or by reason of the operation
of the Indiana Returned Facilities during the Interim Operating
Period.
Indiana Returned Facilities Interim Management
Agreement: The Indiana Returned Facilities Interim Management
Agreement between Lessees and Indiana Returned Facilities Interim
Manager of even date herewith.
Indiana Returned Facilities Interim Manager: RainTree
Healthcare Corporation.
Indiana Returned Facilities Lease Termination Date:
The earlier of (a) the last day of the month in which the operation
of the Indiana Returned Facilities may lawfully be transferred to
an entity of Lessor's choice which has been legally licensed to
operate the Indiana Returned Facilities, (b) the date which is ten
(10) Business Days after a Notice from Lessees to Lessor in which
Lessees elect to terminate the Omega New Master Lease as to the
Indiana Returned Facilities pursuant to Section 4.k., above and (c)
September 1, 1999.
Indiana Returned Facilities License Transfer: The
transfer to Lessor's designee, or issuance directly to Lessor's
designee, as the case may be, of all licenses and permits required
for the continuation of the operation of the Indiana Returned
Facilities in the manner in which such Facilities are being
operated on February 1, 1999, provided, however, that Lessees shall
have no obligation to incur any costs in connection with any
transfer or direct issuance to Lessor's designee of such licenses
and permits.
Indiana Returned Facilities Net Cash Flow: For the
Interim Operating Period, Indiana Returned Facilities Gross Revenue
minus Indiana Returned Facilities Operating Expenses.
Indiana Returned Facilities Operating Expenses:
Expenses which accrue and are payable in the ordinary course of
business during the Interim Operating Period for the operation of
the Indiana Returned Facilities.
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Interim Operating Period: The period from February 1,
1999 through the Indiana Returned Facilities Lease Termination
Date.
Omega Master Lease Guarantee: The New Omega Master
Lease Guarantee dated December 31, 1998.
6. Section 8.3.1.3 of the Omega New Master Lease is amended to read
as follows:
Lessees' Consolidated Current Ratio. At all times during the Term
(including any Extended Term), Lessees shall maintain Lessees'
Consolidated Current Ratio of at least 1.2.
7. Section 8.3.1.4 of the Omega New Master Lease is amended to read
as follows:
Lessees' Consolidated Fixed Charge Ratio. Lessees shall maintain
a Lessees' Consolidated Fixed Charge Ratio for 1999 of at least
1.4, for 2000 of at least 1.5 and at all times after January 1,
2001 of at least 1.55.
8. Section 8.3.1.5 of the Omega New Master Lease is amended to read
as follows:
Limitation of Distributions. In or with respect to Lease Year
1999 and any subsequent Lease Year, excluding the distribution of
the proceeds of Omega's Signature Facilities Investment, Lessees
shall not pay or distribute to their shareholders or any
Affiliate in the form of dividends, fees for management in excess
of those fees Lessees are required by the terms of the Management
Agreement to pay, or for any other services or reimbursements for
shareholder expenditures or overhead on behalf of Lessees unless
(A) after any and all such payments and distributions (i)
Lessees' Consolidated Tangible Net Worth equals or exceeds the
amount required by Section 8.3.1.2 above, and (ii) Lessees'
Consolidated Current Ratio is at least 1.2, and (B) Lessees have
maintained, for the four (4) calendar quarters immediately
preceding any such payments and distributions, a Lessees'
Consolidated Fixed Charge Ratio as required by Section 8.3.1.4.
9. Section 13 of the Omega New Master Lease is amended by the
addition of the following Subsection 13.9:
"13.9. The insurance provided by Lessees pursuant to Section
13.1.4 shall be written on an 'occurrence' and not a 'claims made
basis. In the event that the insurance provided by Lessees
pursuant to Section 13.1.5 is written on a 'claims made' basis,
Lessees shall also provide continuous coverage for claims arising
during the Term either by obtaining an endorsement providing for
an extended reporting period reasonably acceptable to Lessor in
the event such policy is canceled or not renewed for any reason
whatsoever, or by obtaining 'tail' insurance coverage converting
such policy to an 'occurrence' basis policy providing coverage
for a period of at least three (3) years beyond the expiration of
the Term."
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10. Exhibit H "Minimum Rent" is amended to read in its entirety as
set forth on attached EXHIBIT A.
11. The Minimum Rent for the BritWill Indiana Group of Facilities,
the BritWill-II November 1993 Group of Facilities and the
BritWill-II December 1994 Group of Facilities for the Stub
Period, the monthly installments thereof payable on or before the
twelfth (12th) day of each calendar month during the Stub Period
and the Minimum Rent for the Stub Period annualized for each such
Group of Facilities shall be:
GROUP OF FACILITIES MINIMUM RENT FOR MONTHLY INSTALLMENT MINIMUM RENT FOR STUB
STUB PERIOD PAYABLE DURING PERIOD ANNUALIZED
STUB PERIOD
BritWill Indiana Facilities $1,061,675.23 $96,515.93 $1,158,191.16
BritWill-II November 1993 Facilities $1,092,693.58 $99,335.78 $1,192,029.36
BritWill-II December 1994 Facilities $569,024.72 $51,729.52 $620,754.24
11. Except as expressly amended hereby, the Omega New Master Lease is
in full force and effect without amendment or modification.
SIGNATURE PAGES FOLLOW
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IN WITNESS WHEREOF, the parties have executed this Lease by their duly
authorized officers as of the date first above written.
LESSOR:
Omega Healthcare Investors, Inc.,
a Maryland corporation
By:
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Name:
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Title:
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LESSEES:
BritWill Indiana Partnership,
an Arizona general partnership
By: BritWill Investments-I, Inc.,
a Delaware corporation, its
General Partner
By:
Name:
Title:
BritWill Investments-II, Inc.,
a Delaware corporation
By:
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Name:
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Title:
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Amberwood Court, Inc., a
Colorado corporation
By:
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Name:
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Title:
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The Arbors Health Care
Center, Inc.,
an Arizona corporation
By:
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Name:
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Title:
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Xxxxxxxxxx House, Inc., a
Colorado corporation
By:
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Name:
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Title:
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Xxxxxxxxxxx Nursing Center, Inc.,
a Colorado corporation
By:
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Name:
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Title:
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Los Xxxxx, Inc., a Colorado
corporation
By:
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Name:
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Title:
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Pueblo Norte, Inc., a Colorado
corporation
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By:
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Name:
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Title:
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Rio Verde Nursing Center, Inc.,
a Colorado corporation
By:
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Name:
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Title:
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