EXHIBIT 10.17
AMENDMENT NO. 3 TO MASTER OPERATING LEASE
This amendment NO. 3 to MASTER OPERATING Lease (this "AMENDMENT") is made
as of August 1, 2005, by and between NHR/OP, L.P., a Delaware limited
partnership ("LANDLORD") and National HealthCare Corporation ("TENANT"), under
the following circumstances:
WHEREAS, Landlord and Tenant are parties to that certain Master Operating
Lease dated as of December 29, 1997, as amended by that certain Amendment No. 1
to Master Operating Lease effective as of January 1, 2000, and as amended by
Amendment No. 2 to Master Operating Lease effective as of October 1, 2000 (as
amended, the "MASTER LEASE"), whereby Landlord has leased to Tenant the
"Properties Leased" (as defined in the Master Lease), which Properties Leased
are described on Schedule A to the Master Lease (the "PREMISES"); and
WHEREAS, pursuant to the Amendment No. 2, Tenant terminated the "Florida
Leases" (as defined in the Amendment No. 2) but continued to guarantee the
payment obligations under the Florida Leases and negotiate with new tenants on
Landlord's behalf; and
WHEREAS, Landlord and Tenant desire to enter into this Amendment in order
to extend and modify certain terms of the Master Lease.
NOW THEREFORE, in consideration of the premises and the agreements and
covenants contained herein, Landlord and Tenant agree that the Master Lease is
amended and modified as follows:
1. Pursuant to Section 1.03 of the Master Lease, Tenant has elected to
exercise its option to extend the Term of the Master Lease for two (2)
additional periods of five (5) years each. Therefore, the Term is hereby
extended for an additional period of ten (10) years and zero (0) months (the
"EXTENDED TERM"), commencing January 1, 2008 (the "EXTENDED TERM COMMENCEMENT
DATE") and expiring on December 31, 2017.
2. In the event Tenant pays for or has previously paid for the addition
of any beds (the "ADDITIONAL BEDS") at a "Leased Property" (as defined in the
Master Lease), then an additional amount of rent shall be paid to Landlord (the
"EXPANSION RENT"). The Expansion Rent shall be calculated as a monthly amount,
which is one-twelfth (1/12) of 0.75% of the Cost paid by Tenant commencing on
the later of: (a) the date of this Amendment, or (b) the date of licensure of
the Additional Beds, and prorated on a daily basis for the first month owed and
due on the first day of the month in advance thereafter. Revenues produced from
any such addition shall be excluded from any percentage rent (the "REVENUE
ESCALATOR") calculations contained in the Master Lease or in the Short-Form
Operating Lease for that Leased Property. In the event the Master Lease or a
Short-Form Operating Lease for such a Leased Property is terminated (except for
the bankruptcy of Tenant), then Landlord shall purchase the Additional Beds at a
purchase price equal to the lesser of: (i) the appraised value of the addition,
or (ii) the Cost incurred by Tenant plus fifty percent (50%) of any appraised
value increase over Cost. In such event, Tenant shall finance the purchase, by
Landlord, over a two year period at the 30-day prime rate of interest as
announced from time to time by The Wall Street Journal. No principal payments
shall be due until the maturity of any such financing. For purposes of this
Amendment, "Cost" shall mean the actual expenditures by Tenant on which Tenant
shall pay Expansion Rent, but excluding furniture, fixtures and equipment. All
furniture, fixtures and moveable equipment shall continue to be the property of
Tenant. For purposes of this paragraph, the "appraised value" shall be
determined by an MAI appraisal of the entire Leased Property then allocated to
the Additional Beds on an average per square foot appraised value. Landlord
acknowledges and agrees that it shall not unreasonably withhold its consent to
any future expansion and/or the addition of any Additional Beds to any Leased
Property in the future.
3. Landlord and Tenant acknowledge and agree that Tenant plans to add
Additional Beds to the Leased Properties described on Exhibit A attached hereto
and Landlord agrees to the expansion of Additional Beds to such Leased
Properties.
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4. In the event there are mandated staffing increases in the State of
Florida, which are funded by the State, Medicaid revenue attributable to such
staffing increases will be deleted from both the base year and any subsequent
years' revenue for purposes of calculating the Revenue Escalator.
5. Option to Renew Term. (a) Provided that no Event of Default has
occurred under the Master Lease and provided that Tenant has not given Landlord
a six (6) month notice of termination on or before the end of the Extended Term,
Tenant shall be deemed to have extended the Term of this Master Lease for an
additional ten (10) years subsequent to the Extended Term (the "SECOND EXTENDED
TERM"). The Second Extended Term shall be on and subject to the same terms,
covenants and conditions as herein contained, except for Base Rent, which shall
be determined as hereinafter provided.
(b) Annual Base Rent for the Second Extended Term shall be an
amount equal to the "Fair Market Base Rental Rate", as determined by Landlord.
Landlord shall notify Tenant in writing of its determination of Fair Market Base
Rental Rate and the new proposed Base Rent at least ninety (90) days prior to
the end of the Extended Term. If, within forty-five (45) days after Tenant's
receipt of Landlord's notice and proposal, Tenant does not agree in writing to
Landlord's proposal or a modified version thereof subsequently approved by
Landlord in writing, Tenant by written notice to Landlord, may withdraw its
exercise of the option for the Second Extended Term at any time prior to or
within thirty (30) days after the expiration of such forty-five (45) day period,
and this option shall be canceled and of no further force and effect. If Tenant
does not withdraw its exercise of the option by the end of such thirty (30) day
period, then the new Base Rent and provisions for periodic adjustment for the
Second Extended Term shall be in accordance with the terms of Landlord's
proposal as set forth in its notice to Tenant or, if applicable, any subsequent
modified proposal approved in writing by both Landlord and Tenant.
6. Landlord and Tenant acknowledge and agree that the remaining
Short-Form Operating Leases have been assigned to various subsidiaries of Tenant
pursuant to prior agreements.
7. Except as amended by this Amendment, the Master Lease is not
otherwise amended, and the Master Lease remains in full force and effect, as
amended hereby. In the event of a conflict between the terms of this Amendment
and the terms of the Master Lease, the terms of this Amendment shall control.
Defined terms used in this Amendment not defined herein shall have the meaning
set forth in the Master Lease.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of
the date first above written.
LANDLORD:
NHR/OP, L.P., A DELAWARE LIMITED PARTNERSHIP
By: NHR/Delaware, Inc., its General Partner
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Xxxxxx X. Xxxxx, President
TENANT:
NATIONAL HEALTHCARE CORPORATION, A DELAWARE
CORPORATION
By: /s/ R. Xxxxxxx Xxxxxx
--------------------------------------------
R. Xxxxxxx Xxxxxx,
Senior Vice-President
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EXHIBIT A
Leased Properties To Receive Additional Beds
NHC HealthCare, Xxxxxxx
NHC HealthCare, Garden City
NHC HealthCare, Parklane
NHC HealthCare, Farragut
AdamsPlace
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