FIRST AMENDMENT TO MASTER LEASE
Exhibit
10.26.2
FIRST
AMENDMENT TO MASTER LEASE
This
FIRST AMENDMENT TO MASTER LEASE (the "Amendment")
is entered into as of December 1 , 2006 (the
"Effective Date") by and among
NATIONWIDE
HEALTH PROPERTIES, INC., a Maryland corporation
("Landlord"); SUMMERVILLE AT CAMELOT PLACE LLC,
a Delaware limited liability company, SUMMERVILLE AT
XXXXXX VALE LLC, a Delaware limited liability company,
and SUMMERVILLE AT LAKEVIEW LLC, a Delaware limited liability
company (individually and collectively, "Existing Tenant"); SUMMERVILLE
AT RIDGEWOOD GARDENS LLC, a Delaware limited liability company
("Additional Tenant" and, together with Existing Tenant,
"Tenant"); and SUMMERVILLE SENIOR LIVING,
INC.,
a Delaware corporation ("Guarantor").
RECITALS
A. Landlord,
as lessor, and Existing Tenant, as lessee, are parties to that certain Master
Lease dated as of October 2, 2006 (the "Master Lease"),
pursuant to which, among other things, Landlord leases to
Existing
Tenant the "Premises" described therein. Initially capitalized terms used but
not otherwise defined in this Amendment shall have the meanings given to them
in
the Master Lease.
B. In
connection
with the Master Lease, Landlord and Existing Tenant are also parties to that
certain Letter of Credit Agreement of even date with the Original Lease (the
"LC
Agreement"), pursuant to which, among other things, Existing
Tenant posted with Landlord the Letter or Letters of Credit described therein
as
partial collateral for the performance of its obligations under the Master
Lease.
C. Pursuant
to that certain Amended and Restated Guaranty of Lease of even date with the
Original Lease (the "Guaranty"), Guarantor, among other things,
guaranteed to Landlord the performance by Existing Tenant of its obligations
under the Master Lease and LC Agreement.
D. Pursuant
to that certain Purchase and Sale Agreement dated as of October 5, 2006
("Purchase Agreement") by and among Landlord, as buyer, and
Ridgewood Gardens Health Investors, LLC, a Virginia limited liability company,
and Salem Realty Investors, L.L.C., a North Carolina limited liability company,
collectively as seller (collectively, "Seller"), Landlord
agreed to acquire, among other things, fee title to that certain real property
located at 0000 Xxxxxxxxx Xxxxx in Salem, Virginia and all improvements thereon,
which is presently operated as a seventy-four (74) unit, seventy-eight (78)
bed
assisted living facility (the "Additional
Facility").
E. Additional
Tenant desires to lease the Additional Facility from Landlord upon the closing
of Landlord's acquisition thereof. Accordingly, Landlord and Tenant desire
to
amend the Master Lease to, among other things: (i) join the Additional Tenant
to
the Master Lease, (ii) add the Additional Facility to the Premises demised
thereunder, and (iii) make certain other revisions and modifications, all as
more particularly set forth herein. In connection therewith, Guarantor desires
to affirm to Landlord its obligations under the Guaranty notwithstanding the
amendment of the Master Lease set forth in this Amendment.
AGREEMENT
NOW,
THEREFORE, taking into account the foregoing Recitals, and in
consideration of the mutual covenants and agreements contained herein, and
for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties hereto agree as follows:
1. Joinder
of Additional Tenant; Addition of Additional Premises. Additional
Tenant is hereby joined to the Master Lease as a Tenant thereunder. The
Additional. Facility and associated Landlord Personal Property are hereby added
to the Premises demised under the Master Lease.
2. Amendments
to Master Lease. The Master Lease is hereby
specifically
amended
as set forth in this Section 2.
(a) Exhibit
A and Exhibit B attached hereto are hereby added to and incorporated
into Exhibit A and Exhibit B, respectively, of the Master
Lease.
(b) Schedule
1 and Schedule 2 of the Master Lease are hereby deleted in their
entirety and substituted with Schedule 1 and Schedule 2 attached
hereto.
(c) Section
2.1(a),and and .(cl
of the Master
Lease are hereby deleted and substituted with
the
following:
"2.1
Initial Term Rent.
(a) During
the
Initial Term, the annual "Minimum Rent" shall be an
amount
equal to the sum of (i) Landlord's Camelot Investment multiplied by
eight and sixty one-hundredths percent (8.60%),
(ii) Landlord's Lakeview/HillenVale Investment multiplied by
eight and seventy one-hundredths percent (8.70%),
and
(iii) Landlord's Ridgewood Investment multiplied by eight and
seventy one-hundredths percent (8.70%) (each rate, the
"Lease Rate" for such Facility), payable in
advance in twelve
(12) equal monthly installments. Commencing with the second (2nd) Lease Year
and
continuing thereafter during the Term (excluding the first Lease Year of any
Renewal Term), Tenant agrees to pay "Additional Rent" to
Landlord monthly in advance together with the payment of Minimum Rent. Such
Additional Rent (which shall be expressed as an annual amount but shall be
payable in equal monthly installments) shall be equal to the sum of (i) the
Additional Rent for the immediately preceding Lease Year and (ii) the product
of
(A) the Minimum Rent and Additional Rent due for the immediately preceding
Lease
Year and (B) the lesser of (x) three percent (3.0%) or (y) a percentage equal
to
five (5) times the percentage increase (the "CPI Increase") in
the United States Department of Labor, Bureau of Labor Statistics Consumer
Price
Index for All Urban Wage Earners and Clerical Workers, United States Average,
Subgroup "All Items" (1982 –1984 =100) (the "CPI"). In no event shall the CPI
Increase be a negative number. The applicable CPI Increase shall be calculated
annually for each Lease Year by comparing the CPI in effect on the first
calendar day of the Lease Year for which Additional Rent is being calculated
to
the first calendar day of the immediately preceding Lease Year.
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(b) As
used herein, (i) "Landlord's Camelot Investment" means
Landlord's investment in the Facility located at 00-X Xxxxxxx Xxxx, Xxxxxx,
Xxxx
(the "Camelot Facility") in the amount of Ten Million Six
Hundred Sixty-Five Thousand Dollars ($10,665,000),p/us any amounts advanced
by
Landlord pursuant to Section 8.6 with respect to the Camelot
Facility, plus any other amount that, in accordance with any other term
or provision of this Master Lease, is to be added to Landlord's Camelot
Investment, and minus any amount that, in accordance with any term or
provision of this Master Lease, is to be subtracted from Landlord's Camelot
Investment; (ii) "Landlord's Lakeview/HillenVale
Investment" means Landlord's investment in (A) the Facility located at
0000 Xxxxxxxx Xxxxxxxx, Xxxxxxxxx, Xxxx (the "Lakeview Facility"),
and (B) the Facility located at 0000 Xxxxxx Xxxx,
Xx.
Xxxxxx, Xxxx (the "HillenVale Facility"), in the aggregate
amount of Twenty-Two Million Two Hundred Eighty Thousand Dollars
($22,280,000), plus any amounts advanced by Landlord
pursuant to Section 8.6 with respect to the Lakeview Facility and/or
HillenVale Facility, plus any other amount that, in accordance with any
other term or provision of this Master Lease, is to be added to Landlord's
Lakeview/HillenVale Investment, and minus any amount that, in
accordance with any term or provision of this Master Lease, is to be subtracted
from Landlord's Lakeview/HillenVale Investment; and A "Landlord's
Ridgewood Investment" means Landlord's investment in the Facility
located at 0000 Xxxxxxxxx Xxxxx, Xxxxx, Xxxxxxxx (the "Ridgewood
Facility") in the amount of Eleven Million Two Hundred Thousand Dollars
($11,200,000), plus any amounts advanced by Landlord
pursuant to Section 8.6 with respect to the Ridgewood
Facility, plus any other amount that, in accordance with any other term
or provision of this Master Lease, is to be added to Landlord's Ridgewood
Investment, and minus any amount that, in accordance with any term or
provision of this Master Lease, is to be subtracted from Landlord's Ridgewood
Investment.
(c) Concurrently
with any increase or decrease in Landlord's Camelot Investment, Landlord's
Lakeview/HillenVale Investment and/or Landlord's Ridgewood Investment during
the
Term as described in Section 2.1(b), the Rent then due and payable for
the balance of the applicable Lease Year and Term shall be recalculated and
reset based on the adjusted amount of Landlord's Camelot Investment, Landlord's
Lakeview/HillenVale Investment and/or Landlord's Ridgewood Investment, as the
case may be."
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(d) The
dollar amount of the "Security Deposit" set forth in Section
4(a) of the Master Lease is hereby amended and restated to read
"Five Hundred Seventy-Three Thousand Three Hundred
Twenty-Five Dollars ($573,325)".
(e) Section
4(c) and (d) of the Master Lease are hereby deleted and substituted
with the following, and the following Section 4(e) and (f) are
hereby added and incorporated into the Master Lease:
"4. Security
Deposit: Guaranty.
(c) If
at any time following January 31, 2011, the Camelot Rent Coverage Ratio is
less
than 1.20 to 1, Tenant shall from time to time make deposits, which may be
in
the form of cash or supplemental letters of credit meeting the requirements
of
the Letter of Credit Agreement (the "Camelot Supplemental Deposits"),
to Landlord pursuant to Section 4(e) until such time as the
total amount of the Security Deposit is increased as a result of such Camelot
Supplemental Deposits by the amount of One Hundred Fifty-One Thousand
Four Hundred Thirty-Five Dollars ($151,435); provided, however,
Tenant's obligation to make such Camelot Supplemental Deposits shall not apply
with respect to any Measuring Period for which the Camelot Rent Coverage Ratio
equals or exceeds 1.20 to 1. As used herein, "Camelot Rent Coverage
Ratio" means, as of the date of determination,
the
ratio of (i) the EBITDARM for the Camelot Facility for the Measuring Period,
minus (A) an assumed management fee equal to five percent (5%) of the
Gross Revenues generated during such Measuring Period from the Camelot Facility,
and (B) one-half of the applicable annual CapEx Amount for the Camelot Facility
at the commencement of the Measuring Period, multiplied by the
aggregate number of assisted living units at the Camelot Facility, to (ii)
the
total amount of the Minimum Rent and Additional Rent due with respect to the
Camelot Facility for the Measuring Period pursuant to the terms of this Master
Lease.
(d) If
at any time following June 30, 2010, the Ridgewood Rent Coverage Ratio is less
than 1.20 to 1, Tenant shall from time to time make deposits, which maybe in
the
form of cash or supplemental letters of credit meeting the requirements of
the
Letter of Credit Agreement (the "Ridgewood Supplemental
Deposits"), to Landlord pursuant to Section 4(e)
until such time as the total amount
of the Security Deposit is increased as
a result of such Supplemental Deposits by the amount of Eighty-Four
Thousand Seven Hundred Fifty Dollars ($84,750); provided, however,
Tenant's obligation to make such Ridgewood Supplemental Deposits shall not
apply
with respect to any Measuring Period for which the Ridgewood Rent Coverage
Ratio
equals or exceeds 1.20 to 1. As used herein, "Ridgewood Rent Coverage
Ratio" means, as of the date of determination, the ratio of (i) the
EBITDARM for the Ridgewood Facility for the Measuring Period, minus (A)
an assumed management fee equal to five percent (5%) of the Gross Revenues
generated during such Measuring Period from the Ridgewood Facility, and (B)
one-half of the applicable annual CapEx Amount for the Ridgewood Facility at
the
commencement of the Measuring Period, multiplied by the aggregate
number of assisted living units at the Ridgewood Facility, to (ii) the total
amount of the Minimum Rent and Additional Rent due with respect to the Ridgewood
Facility for the Measuring Period pursuant to the terms of this Master
Lease.
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(e) The
Supplemental Deposits to be made by Tenant in accordance with Section 4(c)
and (d) above shall be due on the thirtieth (30th)
day of each
calendar month (or last day of the month, in the case of February) following
the
Measuring Period in which the actual Camelot Rent Coverage Ratio or Ridgewood
Rent Coverage Ratio, as applicable, fails to equal or exceed 1.20 to 1. The
Supplemental Deposits shall be equal to five percent (5%) of the Gross Revenues
from the Camelot Facility or Ridgewood Facility, as applicable, for the calendar
month immediately preceding the date on which each Supplemental Deposit is
due
or such lesser amount as is required to fulfill the requirements of Section
4(c) and (d) above.
(f) As
used herein, "Gross Revenues" means all of the revenues of the
applicable Facility or Facilities other than the proceeds of the sale of any
of
the applicable Facility's or Facilities' equipment which has become worn out
or
obsolete, all insurance awards and condemnation proceeds, sales, use and
occupancy or other taxes on receipts required to be accounted for by Tenant
to
governmental authorities and nonrecurring revenues as reasonably approved
by Landlord. As used herein, "EBITDARM" means, for any
Measuring Period, the net income (or loss) of Tenant for such Measuring Period
to the extent derived from the operation of the applicable Facility or
Facilities, adjusted to add thereto any amounts deducted in determining such
net
income (or loss) for (v) interest expense, (w) income tax expense, (x)
depreciation and amortization expense, (y) rental expense, and (z) management
fee expense, in each case determined in conformity with generally accepted
accounting principles, consistently applied."
(f) The
second sentence of Section 8.3 of the Master Lease is hereby deleted and
substituted with the following:
"As
used
herein, the "Applicable Annual Reserve" means:
|
Age
of Facility (Years)
|
Applicable
Annual Reserve
|
||
|
>
80 Units
|
<80
Units
|
||
|
Zero
through Three
|
$
200.00
|
$
300.00
|
|
|
Four
through Seven
|
$
300.00
|
$
400.00
|
|
|
Eight
or more Years
|
$
450.00
|
$ 550.00"
|
|
(g) The
third sentence of Section 13.4 of the Master Lease is hereby
deleted and substituted with the following:
"All
sums
so paid by Landlord and all necessary and incidental costs and expenses
(including reasonable attorneys' fees and expenses) incurred in connection
with
the performance of any such act by it, together with interest at the Agreed
Rate
from the date of the making of such payment or the incurring of such costs
and
expenses, shall at Landlord's option either be payable by Tenant to Landlord
on
demand or added to Landlord's Camelot Investment, Landlord's Lakeview/HillenVale
Investment, and/or Landlord's Ridgewood Investment, as the case
maybe."
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(h) The
forth sentence of Section 18 of the Master Lease is hereby deleted and
substituted
with the following:
"In
the
event this Master Lease is terminated as to any Facility under this Section
18, then the Minimum Rent and Additional Rent due hereunder shall be shall
be reduced by the product of (x) the amount of the then current Minimum Rent
and
Additional Rent, and (y) a fraction, the numerator of which is the amount
received by Landlord as a result of the Complete Taking and the denominator
of
which is the sum of Landlord's Camelot Investment, Landlord's
Lakeview/HillenVale Investment and Landlord's Ridgewood
Investment."
2. Tax
Impound and CapEx-Expenditures. From
and after the date Landlord acquires fee title to the Ridgewood Facility, the
Ridgewood Facility shall be added as a portion of the Premises leased to Tenant
under the terms of the Master Lease. Accordingly, with each payment of Minimum
Rent payable by Tenant with respect to the Ridgewood Facility, Tenant shall
make
tax impound deposits and CapEx Reserve deposits for the Ridgewood Facility
in
accordance with the terms of Section 5.2 and Section 8.3 of the
Master Lease.
3. Amendment
to LC Agreement. hi the LC Agreement and Exhibit A to the LC
Agreement, all references to "Four Hundred Three Thousand Eight Hundred
Twenty-Five Dollars ($403,825)" as the Letter of Credit Amount are hereby
deleted and replaced with "Five Hundred Seventy-Three Thousand Three Hundred
Twenty-Five Dollars ($573,325)".
4. Enforcement
of Rights. Landlord has the right to enforce the covenants,
representations and warranties of Seller under the Purchase Agreement with
respect to the Additional Facility; provided, however, Landlord agrees upon
request of Tenant either to enforce the same against Seller at Tenant's cost
and
expense or, to the extent assignable, to assign its rights thereto in order
to
enable Tenant to enforce the same against Seller.
5. Reaffirmation
of Obligations.
(a) Notwithstanding
the amendments to the Master Lease contained herein, Tenant and Landlord each
hereby acknowledges and reaffirms its respective obligations under the Master
Lease (as modified hereby), the LC Agreement and all other documents executed
by
such party in connection therewith.
(b) Notwithstanding
the amendments to the Master Lease contained herein, Guarantor hereby
acknowledges and reaffirms its obligations under the Guaranty and all documents
executed by Guarantor in connection therewith, and further agrees that any
reference made in the Guaranty to the Master Lease or any terms or conditions
contained therein shall mean such Master Lease or such terms or conditions
as
amended by this Amendment.
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6. Interpretation.
This Amendment shall be construed as a whole and in accordance
with
its fair meaning. Headings are for convenience only and shall not be used in
construing meaning.
7. Further
Instruments. Each party will, whenever and as often as it shall be
reasonably
requested so to do by another party, cause to be executed, acknowledged or
delivered any and all such further instruments and documents as may be necessary
or proper, in the reasonable opinion of the requesting party, in order to carry
out the intent and purpose of this Amendment.
8. Incorporation
of Recitals. The Recitals to this Amendment are incorporated hereby
by reference.
9. Counterparts.
This Amendment may be executed in counterparts, all of which
executed counterparts shall together constitute a single document. Signature
pages may be detached from the counterparts and attached to a single copy of
this document to physically form one document.
10. Attorneys'
Fees. In the event of any dispute or litigation concerning the
enforcement, validity or interpretation of this Amendment, or any part thereof,
the losing party shall pay all costs, charges, fees and expenses (including
reasonable attorneys' fees) paid or incurred by the prevailing party, regardless
of whether any action or proceeding is initiated relative to such dispute and
regardless of whether any such litigation is prosecuted to
judgment.
11. Effect
of Amendment. Except as specifically amended pursuant to the terms
of this Amendment, the terms and conditions of the Master Lease shall remain
unmodified and in full force and effect. In the event of any inconsistencies
between the terms of this Amendment and any terms of the Master Lease, the
terms
of this Amendment shall govern and prevail.
12. Entire
Agreement. This Amendment contains the entire agreement between the
parties
relating to the subject matters contained herein. Any oral representations
or
statements concerning the subject matters herein shall be of no force or
effect.
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IN
WITNESS WHEREOF, the parties have executed this
Amendment as of the date first above written.
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