SIXTH AMENDMENT TO AMENDED AND RESTATED MASTER LEASE
Back
to 10-Q
SIXTH
AMENDMENT TO AMENDED AND RESTATED MASTER LEASE
THIS
SIXTH AMENDMENT TO AMENDED AND RESTATED MASTER LEASE (this “Amendment”) is dated
as of March ___, 2007 (the “Effective Date”), and is among
HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation (“HCP”), HCPI
TRUST, a Maryland real estate trust (“HCP Trust”), EMERITUS REALTY V, LLC, a
Delaware limited liability company (“ER-V”), ESC-LA
CASA GRANDE, LLC, a Delaware limited liability company
(“La
Casa Grande”) and TEXAS HCP HOLDING, L.P., a Delaware limited partnership
(“Texas HCP,” and together with HCP, HCP Trust, ER-V and La Casa Grande,
“Lessor”), on the one hand, and EMERITUS CORPORATION, a Washington corporation
(“Emeritus”), ESC III, L.P., a Washington limited partnership d/b/a TEXAS-ESC
III, L.P. (“Texas ESC”), EMERITUS
PROPERTIES II, INC.,
a
Washington corporation (“Emeritus II”), EMERITUS
PROPERTIES III, INC.,
a
Washington corporation (“Emeritus III”), EMERITUS
PROPERTIES V, INC.,
a
Washington corporation (“Emeritus V”), EMERITUS
PROPERTIES XIV, LLC,
a
Washington limited liability company (“Emeritus XIV”), ESC-BOZEMAN,
LLC,
a
Washington limited liability company (“ESC Bozeman”) and ESC-NEW
PORT XXXXXX, LLC,
a
Washington limited liability company (“ESC New Port Xxxxxx”) (collectively and
jointly and severally, as “Lessee”), on
the
other hand, with respect to the following:
RECITALS
A. Lessor
is
the current “Lessor” and Lessee is the current “Lessee” pursuant to that certain
Amended and Restated Master Lease dated as of September 18, 2002 (the “Original
Master Lease”), as amended by that certain First Amendment to Amended and
Restated Master Lease dated August 31, 2003 (the “First Amendment”), that
certain Second Amendment to Amended and Restated Master Lease dated January
26,
2004 (the “Second Amendment”), that certain Third Amendment to Amended and
Restated Master Lease dated April 22, 2004 (the “Third Amendment”), that certain
Fourth Amendment to Amended and Restated Master Lease dated July 30, 2004 (the
“Fourth Amendment”), and that certain Fifth Amendment to Amended and Restated
Master Lease dated December 13, 2005 (the “Fifth Amendment,” and together with
the First Amendment, Second Amendment, Third Amendment, Fourth Amendment and
Fifth Amendment and the Original Master Lease, the “Master Lease”), covering the
Leased Property of thirty-five (35) separate Alzheimer’s care, congregate care,
assisted-living and/or skilled nursing care Facilities, all as more particularly
described in the Master Lease. All capitalized terms used in this Amendment
and
not defined or modified herein shall have the meanings assigned to such terms
in
the Master Lease.
B. The
obligations of Lessee under the Lease are guaranteed pursuant to that certain
Guaranty of Obligations dated as of July 28, 2004 (as amended and reaffirmed
from time to time, the “Guaranty”), executed by Xxxxxx X. Xxxx, an individual
(“Guarantor”), in favor of Lessor, as “Owner.”
C. Upon
and
subject to the terms of that certain Purchase and Sale Agreement and Joint
Escrow Instructions dated as of March __, 2007 (as the same may be amended
or
modified from time to time in accordance with the terms thereof, the “SC
Purchase Agreement”), between HCP Trust, as “Seller,” and Emeritus, as “Buyer,”
HCP Trust has agreed to sell to Emeritus and Emeritus has agreed to buy from
HCP
Trust, the Leased Property of the Easley, SC
(Countryside)
Facility, the Easley, SC (Summit Place) Facility and the Spartanburg, SC
Facility (collectively, the “SC Purchased Facilities,” and each a “SC Purchased
Facility”).
D. In
connection with the “Closing” of the transactions contemplated by the SC
Purchase Agreement, and as a condition thereto, Lessor and Lessee desire to
amend the Master Lease (i) to remove from the Leased Property thereof the Land,
Leased Improvements, Related Rights, Fixtures, and Lessor’s Personal Property
relating to each of the SC Purchased Facilities, (ii) to terminate the Lease
with respect thereto (but not the Leased Property of any other Facility) and
(iii) to amend the Master Lease in certain other particulars, all as more
particularly set forth herein.
AMENDMENT
NOW,
THEREFORE, in consideration of the foregoing and other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Amendment
and Termination With Respect to the SC Purchased Facilities.
As of
the Effective Date, the Master Lease is hereby amended to remove all references
to the SC Purchased Facilities, and each of them, and the Master Lease shall
be
terminated with respect to the Leased Property of each of the SC Purchased
Facilities. The provisions of Section 5.2 of the Original Master Lease shall
apply with respect to such termination of the Lease with respect to each of
the
SC Purchased Facilities. Notwithstanding the foregoing, the following
obligations of Lessee under the Master Lease, shall be preserved and continue
subsequent to the Effective Date:
(a) Lessee
shall remain responsible for and shall indemnify and hold Lessor harmless from
and against any and all claims, liabilities, damages, actions and causes of
action, costs and expenses, including reasonable attorneys’ fees, for which
Lessee is responsible pursuant to the Master Lease with respect to the SC
Purchased Facilities, and each of them, and which accrue or have accrued before
the Effective Date; and
(b) Lessee
shall remain responsible for all obligations of the “Lessee” under the Master
Lease which accrue or have accrued before the Effective Date until full and
complete payment and/or performance of the same, including payment of all Rent
with respect to the SC Purchased Facilities through the Effective
Date.
2. Cash
Security Deposit.
Lessor
and Lessee acknowledge that as of February 1, 2007, Lessee had on deposit with
Lessor pursuant to Article XXI of the Original Master Lease a Cash Security
Deposit in the approximate amount of $5,554,524, of which approximately
$1,401,195 was allocable to the SC Purchased Properties. In addition, as of
February 22, 2007, the accrued and unpaid interest on such Cash Security Deposit
was approximately $1,925,637. Notwithstanding anything to the contrary in
Article XXI of the Original Master Lease, as amended to date, Lessor and Lessee
agree as follows:
(a) Upon
the
Closing under the SC Purchase Agreement, Lessee shall be entitled to cause
Lessor to apply all or a portion of the sum of the following to the purchase
price payable under the SC Purchase Agreement: (i) that portion of the Cash
Security Deposit allocable to the SC Properties, plus (ii) all accrued and
unpaid interest on the entire Cash Security
2
Deposit
as of the Closing Date, plus (iii) up to an additional $1,158,000.00 of the
Cash
Security Deposit.
(b)
The
amount of such additional portion of the current Cash Security Deposit which
Lessee elects to apply towards the purchase price payable under the SC Purchase
Agreement pursuant to clause (iii) of subsection (a) above and the SC Purchase
Agreement shall be referred to herein as the “Security Amount Deficit.”
Commencing on the first (1st)
day of
the first full calendar month following the Closing under the SC Purchase
Agreement, and on or before the first (1st)
day of
each calendar month thereafter, Lessee shall replenish the Security Amount
Deficit by either depositing with Lessor one or more letters of credit or cash
pursuant to Article XXI of the Original Master Lease in amount not less than
$20,000 per month until the Security Amount Deficit is fully restored and Lessee
has on deposit with Lessor either one or more letters of credit or a Cash
Security Deposit in aggregate amount equal to the applicable Letter of Credit
Amount for each Facility remaining subject to the terms of the Master Lease,
as
hereby amended. Lessor and Lessee acknowledge and agree that Lessee shall not
be
entitled to receive any accrued interest payable on any portion of the Cash
Security Deposit pursuant to Article XXI of the Original Master Lease, as
amended, until such time as the Security Amount Deficit is fully restored and
Lessee has on deposit with Lessor either one or more letters of credit or a
Cash
Security Deposit in aggregate amount equal to the applicable Letter of Credit
Amount for each Facility remaining subject to the terms of the Master Lease,
as
hereby amended, and all such accrued interest otherwise payable under the Master
Lease on such Cash Security Deposit shall be retained by Lessor as part of
the
Cash Security Deposit.
(c) From
and
after the Effective Date, the phrase “at an annual rate equal to nine percent
(9%)” appearing in Section 21.5 of the Original Master Lease shall be amended to
read “at an annual rate equal to the
Federal Funds Target Rate in effect from time to time.” For purposes of such
Section 21.5 of the Original Master Lease, as hereby amended, “Federal Funds
Target Rate” shall mean the applicable “target rate” or “intended federal funds
rate” as announced from time to time by the Federal Open Markets Committee (or
any successor thereto) (the “FOMC”) for overnight federal fund loans between
depository institutions that are members of the Federal Reserve System of the
United States, or if such “target rate” or “intended federal funds rate” ceases
to be established or announced by the FOMC, such other comparable rate as
reasonably selected by Lessor.
3. Financial
Statements.
(a)In
lieu
of the financial reporting requirements set forth in Section 25.1.2(c) of the
Original Master Lease, from and after the Effective Date of this Amendment,
Lessee shall furnish to Lessor within forty-five (45) days after the end of
each
month from and after the Effective Date of this Amendment, all unaudited monthly
financial reports for each Facility that Lessee produces for reporting purposes
and detailed statements of income and detailed operational statistics regarding
occupancy rates, patient and resident mix and patient and resident rates by
type
for each such Facility for each calendar month. Lessee agrees to provide updated
unaudited Facility financial reports within (60) days of each calendar
quarter-end and within (90) days of each year-end should any adjustments impact
any Facility.
3
(b) A
new
Section 25.3 is hereby added to the Original Master Lease to read in its
entirety as follows:
“25.3 Lessee’s
Submission of Certificates/Statements in Electronic Format.
Lessee
shall be obligated to furnish Lessor with all certificates and statements
required under this Article XXV by (i) delivery of printed copies of the same
to
Lessor at its address set forth in Article XXXIII below or any other address
that Lessor may from time to time designate in writing and (ii) electronic
delivery of the same to Lessor in Microsoft® Office Excel format (or such other
format as Lessor may from time to time reasonably require) at any electronic
mail address that Lessor may from time to time designate in
writing.”
4. Representations
and Warranties of Lessee.
As of
the Effective Date hereof, each Lessee represents and warrants to the Lessor
as
follows:
(a) Lessee
is
duly organized and validly existing under the laws of its state of
organization/formation, is qualified to do business and in good standing in
the
State and has full power, authority and legal right to execute and deliver
this
Amendment and to perform and observe the provisions of this Amendment to be
observed and/or performed by Lessee.
(b) This
Amendment has been duly authorized, executed and delivered by Lessee, and
constitutes and will constitute the valid and binding obligations of Lessee
enforceable against Lessee in accordance with its terms, except as such
enforceability may be limited by creditors rights, laws and general principles
of equity.
(c) Lessee
is
solvent, has timely and accurately filed all tax returns required to be filed
by
Lessee, and is not in default in the payment of any taxes levied or assessed
against Lessee or any of its assets, or subject to any judgment, order, decree,
rule or regulation of any governmental authority which would, in each case
or in
the aggregate, adversely affect Lessee’s condition, financial or otherwise, or
Lessee’s prospects or the Leased Property.
(d) No
consent, approval or other authorization of, or registration, declaration or
filing with, any governmental authority is required for the due execution and
delivery of this Amendment, or for the performance by or the validity or
enforceability of this Amendment against Lessee.
(e) The
execution and delivery of this Amendment and compliance with the provisions
hereof will not result in (i) a breach or violation of (A) any Legal Requirement
applicable to Lessee or any Facility now in effect; (B) the organizational
or
charter documents of such party; (C) any judgment, order or decree of any
governmental authority binding upon Lessee; or (D) any agreement or instrument
to which Lessee is a counterparty or by which it is bound; or (ii) the
acceleration of any obligation of Lessee.
5. Reaffirmation
of Master Lease.
Lessor
and Lessee hereby acknowledge, agree and reaffirm that the Master Lease, as
hereby amended, is and the parties intend the same for all purposes to be
treated as a single, integrated and indivisible agreement and economic unit.
6. Full
Force and Effect; Counterparts; Facsimile Signatures.
Except
as hereby amended, the Master Lease shall remain in full force and effect
(including with respect to
4
the
Leased Property of the balance of the Facilities). This Amendment may be
executed in any number of counterparts, all of which shall constitute one and
the same instrument. Telecopied signatures may be used in place of original
signatures on this Amendment, and Lessor and Lessee both intend to be bound
by
the signatures of the telecopied document.
[Signatures
on Next Page]
5
IN
WITNESS WHEREOF, the parties have caused this Amendment to be executed and
attested by their respective officers, members or partners thereunto duly
authorized.
“LESSOR”
HEALTH
CARE PROPERTY INVESTORS, INC.,
a
Maryland corporation
By: /s/
Xxxxx
X. Xxxx
Its: Senior
Vice President
HCPI
TRUST,
a
Maryland real estate trust
By:
/s/
Xxxxx X. Xxxx
Its: Senior
Vice President
TEXAS
HCP
HOLDING, L.P.,
a
Delaware limited partnership
By: Texas
HCP
G.P., Inc.,
a
Delaware corporation,
its
general partner
By:
/s/
Xxxxx X. Xxxx
Its:
Senior Vice President
EMERITUS
REALTY V, LLC,
a
Delaware limited liability company
By: Health
Care Property Investors, Inc.,
a
Maryland corporation,
its
sole
member
By:
/s/
Xxxxx X. Xxxx
Its:
Senior Vice President
ESC-LA
CASA GRANDE, LLC, a
a
Delaware limited liability company
By: Health
Care Property Investors, Inc.,
a
Maryland corporation,
its
sole
member
By:
/ s/
Xxxxx X. Xxxx
Its:
Senior Vice President
S-1
“LESSEE”
EMERITUS
CORPORATION,
a
Washington corporation
By: /s/
Xxxx
Xxxxxxxxxx
Its: Director
of Real Estate and Legal Affairs
ESC
III,
L.P.,
a
Washington limited partnership
d.b.a.
Texas - ESC III, L.P.
By: ESC
X.X.
XX, Inc.,
a
Washington corporation,
its
general partner
By:
/s/
Xxxx Xxxxxxxxxx
Its:
Director of Real Estate and Legal Affairs
EMERITUS
PROPERTIES II, INC.,
a
Washington corporation
By: /s/
Xxxx
Xxxxxxxxxx
Its: Director
of Real Estate and Legal Affairs
EMERITUS
PROPERTIES III, INC.,
a
Washington corporation
By: /s/
Xxxx
Xxxxxxxxxx
Its:
Director
of Real Estate and Legal Affairs
EMERITUS
PROPERTIES V, INC.,
a
Washington corporation
By: /s/
Xxxx
Xxxxxxxxxx
Its: Director
of Real Estate and Legal Affairs
EMERITUS
PROPERTIES XIV, LLC,
a
Washington limited liability company
|
By:
|
EMERITUS
CORPORATION,
|
a
Washington corporation
By:
/s/
Xxxx Xxxxxxxxxx
Its:
Director of Real Estate and Legal Affairs
S-2
ESC-BOZEMAN,
LLC,
a
Washington limited liability company
|
By:
|
EMERITUS
CORPORATION,
|
a
Washington corporation
By:
/s/
Xxxx Xxxxxxxxxx
Its: Director
of Real Estate and Legal Affairs
ESC-NEW
PORT XXXXXX, LLC,
a
Washington limited liability company
|
By:
|
EMERITUS
CORPORATION,
|
a
Washington corporation
By:
/s/
Xxxx Xxxxxxxxxx
Its: Director
of Real Estate and Legal Affairs
S-3
CONSENT,
REAFFIRMATION AND AGREEMENT OF GUARANTOR
The
undersigned Guarantor hereby (i) reaffirms all of its obligations under the
Guaranty, (ii) consents to the foregoing Amendment, and (iii) agrees that the
Guaranty as hereby reaffirmed, and shall extend to the Master Lease, as so
amended.
/s/
Xxxxxx X. Xxxx
Xxxxxx
X.
Xxxx, an individual
S-4
