EXHIBIT 10.148
FIRST AMENDMENT TO MASTER LEASE AGREEMENT
THIS FIRST AMENDMENT TO MASTER LEASE AGREEMENT ("Amendment") is made
and entered into as of the 31st day of December, 2005, by and between
EMERALD-CEDAR HILLS, INC. a Florida corporation, EMERALD-GOLFVIEW, INC. a
Florida corporation, EMERALD-SOUTHERN PINES, INC. a Florida corporation and
EMERALD-GOLFCREST, INC., a Florida corporation (herein collectively called the
"Lessor") and SENIOR CARE FLORIDA LEASING, LLC, a Delaware limited liability
company (herein called the "Lessee").
RECITALS
WHEREAS, Lessor owns certain real property located in the State of
Florida as more particularly described on EXHIBITS A-1 THROUGH A-4 attached
hereto on which there are located four (4) existing fully licensed nursing home
facilities owned and operated by Lessor (collectively, the "Leased Properties");
WHEREAS, Lessor and Lessee have entered into a Master Lease Agreement
dated as of April 1, 2003 (the "Lease"), whereby Lessor has leased the Leased
Properties to Lessee;
WHEREAS, the Lease is scheduled to expire at midnight on December 31,
2005; and
WHEREAS, Lessor and Lessee desire to extend the terms of the Lease upon
the terms, covenants and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties to this Amendment hereby
covenant and agree as follows:
1. Amendment Definitions. Any capitalized term used but not defined in
this Amendment will have the meaning assigned to such term in the Lease. Section
1.3 of the Lease is amended to add the following additional definitions:
"CPI" or "Consumer Price Index": As of any date, the United
States Department of Labor, Bureau of Labor Statistics Revised Consumer
Price Index for All Urban Consumers (1982=84=100), U.S. City Average,
All Items, or, if that index is not available at the time in question,
the index designated by such Department as the successor to such index,
and if there is no index so designated, an index for an area in the
United States that most closely corresponds to the entire United
States, published by such Department, or if none, by any other
instrumentality of the United States, calculated in this Lease as the
CPI attributable to the month three months prior to the applicable date
herein (e.g., the CPI used to calculate
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the adjustment in Base Rent as of January 1, 2006, shall be the CPI for
the month of October, 2005, compared to the CPI for the month of
October, 2004."
"Qualified Capital Expenditures: Expenditures capitalized on
the books of Lessee for alterations, renovations, repairs and
replacements to the Facilities including without limitation any of the
following:
Replacement of furniture, fixtures and equipment, including
refrigerators, ranges, major appliances, bathroom fixtures, doors
(exterior and interior), central air conditioning and heating
systems (including cooling towers, water chilling units, furnaces,
boilers and fuel storage tanks) and major replacement of siding;
major roof replacements, including major replacements of gutters,
down spouts, xxxxx and soffits; major repairs and replacements of
plumbing and sanitary systems; overhaul of elevator systems; major
repaving, resurfacing and sealcoating of sidewalks, parking lots and
driveways; repainting of entire building exterior; but excluding
additions, normal maintenance and repairs. For purposes of this
definition, "additions" shall mean any expansion of a Facility,
including the construction of a new wing or a new story on an
existing Facility."
2. Extension of Term. The definition of "Term Expiration Date" as
defined in Section 1.3 of the Lease is hereby deleted and the following inserted
in lieu thereof:
"Term Expiration Date: February 28, 2010."
3. Modification of Base Rent. The definition of "Base Rent" as defined
in Section 1.3 of the Lease is hereby deleted and the following inserted in lieu
thereof:
"Base Rent: (i) From the Commencement Date through December
31, 2005, the base rent shall be calculated on the basis of One Million
Four Hundred Ninety-Eight Thousand and No/100 Dollars ($1,498,000.00)
per annum, payable in equal monthly installments of One Hundred
Twenty-Four Thousand Eight Hundred Thirty-Three and 34/100 Dollars
($124,833.34) each. Base Rent for any partial Lease Year shall be
pro-rated based on the number of days elapsed in such Lease Year.
(ii) For each year Lease Year commencing January 1, 2006 and
continuing through February 28, 2010, Base Rent shall be the lesser of
(A) $1,498,000.00 increased by a percentage equal to two (2) times the
percentage increase in the CPI (if positive) from January 1, 2005 to
January 1, 2006 and the first day of each succeeding Lease Year, as
applicable and (B) the following amounts for each calendar year:
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Lease Year Base Rent
---------- ---------
2006 $1,542,940
2007 $1,589,228
2008 $1,636,905
2009 $1,686,012
2010 $1,736,592
Under no circumstances will the Base Rent decrease. Base Rent for any
partial Lease Year shall be pro-rated based on the number of days
elapsed in such Lease Year. Base Rent shall continue to be paid in
equal monthly installments."
4. Lease Year. The definition of "Lease Year" as defined in Section 1.3
of the Lease is hereby deleted and the following inserted in lieu thereof:
"Lease Year: A period of twelve (12) successive calendar
months commencing on the Commencement Date (as defined in Article 2
hereof) and on the same date in each successive calendar year through
December 31, 2005. As of January 1, 2006, a new Lease Year shall
commence and continue for a period of twelve (12) successive calendar
months and on January 1st of each successive calendar year until the
Term Expiration Date or date of earlier termination of this Lease as
provided herein."
5. Payments in the event of a Rent Adjustment. Section 4.2 of the Lease
is hereby deleted and the following inserted in lieu thereof:
"4.2 Payments in the event of Rent Adjustment. Base Rent shall
be adjusted on January 1, 2006, and each January 1 thereafter
throughout the Term of this Lease. In the event this Lease provides for
adjustment of the Base Rent on any basis that requires a determination
of Base Rent which cannot be made on or before the due date of the
first installment of Base Rent following the Adjustment Date, Lessee
shall continue to pay the Base Rent at the rate previously in effect
until Lessor gives Lessee Notice of its determination of the adjusted
Base Rent. Upon such determination, the Base Rent shall be
retroactively adjusted as of the Adjustment Date. On or before the
second (2nd) Payment Date for Base Rent following receipt by Lessee of
Lessors' Notice of the adjustment, Lessee shall make an additional
payment of Base Rent in such amount as will bring the Base Rent, as
adjusted, current on or before such (2nd) Payment Date, plus interest
on the amount of such additional payment (i.e. the difference between
the monthly installment of Base Rent before and after the increase as
of the Adjustment Date, divided by thirty (30) and
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multiplied by the number of days between the Adjustment Date and the
date of payment by Lessee) at the Prime Rate from the Adjustment Date
through the date of such additional payment, and thereafter Lessee
shall pay the adjusted Base Rent in correspondingly adjusted monthly
installments until the Base Rent is next adjusted as required herein.
This Section 4.2 shall survive the expiration or termination of this
Lease with respect to any adjustment which is not known or fully paid
as of the date of the expiration or termination.
The reference to "Additional Rent" in the definition of "Rent"
under Section 1.3 and in Section 4.3, or elsewhere in this Lease are
hereby deleted, and Exhibit C is hereby deleted and no longer a part of
this Lease."
6. General Insurance Requirements. Article 11 of the Lease is hereby
deleted and the following inserted in lieu thereof:
"11.1 General Insurance Requirements. Lessee shall keep the
Leased Properties, and all property located in or on the Leased
Properties, including any personal property of Lessors and Lessee's
Personal Property, insured with insurance meeting the following
requirements: (a) all insurance shall be written by companies
authorized to do insurance business in the applicable States and having
a rating classification of not less than A- and a financial size
category of "Class VII" or larger, according to the then most recent
issue of Best's Key Rating Guide; (b) all policies must name Lessors as
an additional insured, and name as an additional insured any Facility
Mortgagee by way of a standard form of mortgagee's loss payable
endorsement in use in the applicable States and in accordance with any
such other requirements as may be established by such Facility
Mortgagee; (c) casualty losses must be payable to Lessors or Lessee as
provided in Article 12, and loss adjustments shall require the written
consent of Lessors, any Facility Mortgagee, and, provided no Event of
Default has occurred and is continuing at the time, Lessee, which
consent shall not be unreasonably withheld by either Lessors or Lessee;
(d) each insurer must agree that it will give Lessors and any Facility
Mortgagee at least thirty (30) days written notice before its policy
shall be altered, allowed to expire or canceled; (e) the amount of any
deductible or retention must be approved by Lessors prior to the
issuance of any policy, which approval will not be unreasonably
withheld, conditioned or delayed; and (f) the form of all policies
shall be approved by Lessors and any existing Facility Mortgagee, whose
approval shall not unreasonably be withheld, conditioned or delayed,
provided that such policies conform to the requirements of this Article
11. Notwithstanding the foregoing, Lessee may obtain so-called
"umbrella" policies, comprehensive liability policies and professional
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liability policies of insurance from non-admitted surplus line carriers
acceptable to Lessors.
11.2 Risks to be Insured. The policies covering the Leased
Properties and Lessee's Personal Property shall insure against the
following risks:
11.2.1 Loss or damage by fire, vandalism and
malicious mischief, earthquake, extended coverage perils commonly known
as "Special Risk," and all physical loss perils normally included in
such Special Risk insurance, including but not limited to sprinkler
leakage, in an amount not less than one hundred percent (100%) of
Replacement Cost (provided that earthquake coverage may have a sublimit
coverage of $5,000,000.00);
11.2.2 Loss or damage by explosion of steam boilers,
pressure vessels or similar apparatus in such amounts as may be
required by Lessors from time to time;
11.2.3 Business interruption insurance or a blanket
earnings and expense coverage endorsement covering risk of loss during
reconstruction necessitated by the occurrence of any of the hazards
described in Sections 11.2.1 or 11.2.2 (but in no event for a period
less than twelve (12) months) in an amount sufficient to prevent
Lessors and Lessee from becoming a co-insurer;
11.2.4 Claims for personal injury or property damage
under a policy of commercial general public liability insurance with a
combined single limit per occurrence in respect of bodily injury and
death and property damage of One Million Dollars ($1,000,000.00), and
an aggregate limitation of Three Million Dollars ($3,000,000.00), with
a minimum One Million Dollar ($1,000,000.00) excess policy, which
insurance shall insure Lessee's contractual liability to Lessors under
the indemnity provisions of Article 18 of this Lease, and if written on
a "claims-made" basis, Lessee shall also provide continuous liability
coverage for claims arising during the Term either by obtaining an
endorsement providing for an extended reporting period reasonably
acceptable to Lessors in the event such policy is canceled or not
renewed for any reason whatsoever, or by obtaining "tail" insurance
coverage providing coverage for a period of at least three (3) years
beyond the expiration of the Term;
11.2.5 Claims arising out of malpractice in an amount
of not less than Two Million Dollars ($2,000,000.00) for each person
and for each occurrence and, if written on a "claims-made" basis,
Lessee shall also provide continuous liability coverage for claims
during the Term either
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by obtaining an endorsement providing for an extended reporting period
reasonably acceptable to Lessors in the event such policy is canceled
or not renewed for any reason whatsoever, or by obtaining "tail"
insurance coverage providing coverage for a period of at least three
(3) years beyond the expiration of the Term;
11.2.6 Flood (with respect to any portions of the
Leased Properties located in whole or in party within a designated
flood plain area) and such other hazards and in such amounts as may be
customary for comparable properties in the area up to the maximum limit
that can be obtained under the Federal Flood Insurance Program;
11.2.7 During such time as Lessee is constructing any
improvements, (i) workers compensation insurance and employers'
liability insurance covering all persons employed in connection with
the improvements in statutory limits, (ii) builder's risk insurance,
completed value form, covering all physical loss, in an amount
satisfactory to Lessors, and (iii) such other insurance, in such
amounts, as Lessors deem necessary to protect Lessors' interest in the
Leased Properties from any act or omission of Lessee's contractors or
subcontractors, and certificates of insurance evidencing such coverage,
in form satisfactory to Lessors, shall be presented to Lessors prior to
the commencement of construction of such improvements;
11.2.8 Primary automobile liability insurance with
limits of One Million Dollars ($1,000,000.00) per occurrence each for
owned and non-owned hired vehicles.
11.3 Payment of Premiums; Copies of Policies; Certificates.
Lessee shall pay when due all of the premiums for the insurance
required by this Lease, and shall deliver to Lessors and to any
Facility Mortgagee requesting such evidence, certificates of insurance
in form satisfactory to Lessors and such Facility Mortgagee.
Satisfactory evidence of insurance required by this Lease or
certificates thereof shall be delivered to Lessors prior to their
effective date (and, with respect to any renewal policy, Lessee will
use commercially reasonable efforts to provide the same within twenty
(20) days but in all events not less than five (5) Business Days prior
to the expiration of the existing policy) with copies of such policies
to be provided as available, and in the event of the failure of Lessee
either to carry the required insurance or pay the premiums therefor, or
to deliver copies of policies or certificates to Lessors as required,
Lessors shall be entitled, but shall have no obligation, to obtain such
insurance an pay the premiums therefor when due, which premiums shall
be repayable to Lessors upon written demand therefor as Additional
Charges which Lessee shall be deemed to and does hereby agree to pay.
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11.4 Premiums Deposits. If any provision of a Facility
Mortgage requires deposits of premiums for insurance to be made with
the Facility Mortgagee, Lessee shall pay to Lessors monthly the amounts
required and Lessors shall transfer such amounts to the Facility
Mortgagee, unless, pursuant to written direction by Lessors, Lessee
makes such deposits directly with the Facility Mortgagee.
11.5 Umbrella Policies. If Lessee chooses to carry umbrella
liability coverage to obtain the limits of liability required under
this Lease, the umbrella policies must provide coverage in the same
manner as the primary commercial general liability policy and must
contain no exclusions in addition to, or limitations materially
different than, those of the primary policy.
11.6 Additional Insurance. In addition to the insurance
described above, Lessee shall maintain such insurance as may be
required from time to time by any Facility Mortgagee, and shall at all
times comply with all laws with respect to worker's compensation
insurance coverage.
11.7 No Liability; Waiver of Subrogation. Lessors shall have
no liability to Lessee, and, provided Lessee provides the insurance
required of it by this Lease, Lessee shall have no liability to
Lessors, regardless of the cause, for any loss or expense resulting
from or in connection with damages to or the destruction or other loss
of any Leased Property or Lessee's Personal Property, and neither party
will have any right or claim against the other for any such loss or
expense by way of subrogation. Each insurance policy carried by either
party covering any of the Leased Properties and Lessee's Personal
Property, including without limitation, contents, fire and casualty
insurance, shall contain an express waiver of any right of subrogation
on the party of the insurer against the other party. Lessee shall pay
any additional costs or charges for obtaining such waiver.
11.8 Increase in Limits. From time to time, but not more often
than once every two (2) years, in the event that Lessors shall
reasonably determine that the limits of the commercial general
liability insurance then carried are insufficient, Lessors shall give
Lessee Notice of acceptable increased limits for such insurance to be
carried; and Lessee shall then obtain and maintain such insurance with
such increased limits unless and until further increase as permitted
under the provisions of this Section. Lessors' determination of
increased limits shall be accompanied by a description of the basis for
such determination.
11.9 Blanket Policy. Any insurance required by this Lease may
be provided by so-called blanket policies of insurance carried by
Lessee, provided, however, that the coverage afforded Lessors thereby
may not
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thereby be less than or materially different from that which would be
provided by a separate policies meeting the requirements of this Lease,
and provided further that such policies meet the requirements of all
Facility Mortgages.
11.10 No Separate Insurance.
11.10.1 Lessee shall not on its own initiative or
pursuant to the request or requirement of any third party, take out
separate insurance concurrent in form or contributing in the event of
loss with that required by this Lease, to be furnished by, or which may
be reasonably be required to be furnished by, Lessee, or increase the
amount of any then existing insurance by securing an additional policy
or additional policies, unless all parties having an insurable interest
in the subject matter of the insurance, including in all cases Lessors
and all Facility Mortgagees, are named therein as additional insureds,
and losses are payable thereunder in the same manner as losses are
payable under this Lease.
11.10.2 Nothing herein shall prohibit Lessee, upon
Notice to Lessors, from (i) securing insurance required to be carried
hereby with higher limits of liability than required in this Lease, or
(ii) securing insurance against risks not required to be insured
pursuant to this Lease, and as to such insurance, Lessors and any
Facility Mortgagee need not be included therein as additional insureds,
nor must losses thereunder be payable in the same manner as losses are
payable under this Lease, except to the extent required to avoid a
default under a Facility Mortgage or any other encumbrance.
11.10.3 Lessor acknowledges that the liability
insurance coverage and the malpractice insurance coverage required
pursuant to Sections 11.2.4 and 11.2.5 of the Lease, are currently
unavailable generally in the nursing home industry at commercially
affordable rates and that Lessee currently maintains and has in place
general liability and malpractice insurance with single limit coverage
of Two Hundred Fifty Thousand Dollars ($250,000.00) per occurrence and
Five Hundred Thousand Dollars ($500,000.00) cumulative, with a
deductible of Twenty Five Thousand Dollars ($25,000.00). Lessor hereby
agrees that, the provisions of Sections 11.2.4 and 11.2.5 of the Lease
to the contrary notwithstanding, until such time as the insurance
coverage required therein is generally available in the nursing home
industry at commercially affordable rates, Lessee shall not be required
to obtain the coverages required therein. Lessee shall not be deemed to
be in default of the provisions of Section 11 of the Leases as a result
thereof. Lessee shall provide Lessor, on an annual basis, information
from its insurance carrier and from comparable insurance carriers of
the costs of insurance
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premiums to meet Lessor's insurance requirements. At such time as the
premium amounts for required coverage quoted in this Article are
commercially affordable, Lessee shall immediately purchase any and all
insurance policies necessary to meet the requirements of Sections
11.2.4 and 11.2.5 of the Lease. This provision does not relieve Lessee
from its agreement of indemnity under Article 18 of the Lease (or
elsewhere in this Lease) nor does it modify the provisions thereof.
Notwithstanding the foregoing, Lessee acknowledges and agrees that
Lessor shall have the right to withhold its consent to any proposed
Permitted Assignment unless the permitted assignee agrees to provide
the insurance coverage required by the provisions of Sections 11.2.4
and 11.2.5 of the Lease."
7. Article 23. An Article 23 shall be inserted into the Lease and
provide as follows:
"23.1 Minimum Qualified Capital Expenditures. Each Lease Year,
Lessee shall expend with respect to each Leased Facility at least Three
Hundred Fifty Dollars ($350.00) and NO/100 per licensed bed for
Qualified Capital Expenditures to improve the applicable Facility,
which amount shall be increased each Lease Year, beginning the January
1, 2007 Lease Year, in proportion to increases in the CPI from the
Commencement Date to the commencement of each such Lease Year ("Minimum
Qualified Capital Expenditures"). If Lessee expends with respect to any
Facility more than the Minimum Qualified Capital Expenditures in any
Lease Year, the excess Minimum Qualified Capital Expenditures shall be
credited against Lessee's Minimum Qualified Capital Expenditures
required with respect to such Facility for the next Lease Year, and if
the amount of the credit exceeds Lessee's Minimum Qualified Capital
Expenditures required with respect to such Facility for the next Lease
Year, such excess shall be credited against Lessee's Minimum Qualified
Capital Expenditures required with respect to such Facility for the
following Lease Years. At least annually, at the request of Lessors,
Lessors and Lessee shall review the capital expenditures budgets and
reasonably agree on modifications, if any, required by changed
circumstances and the changed conditions of the Leased Properties."
8. Execution and Counterparts. This Amendment may be executed in any
number of counterparts, each of which, when so executed and delivered, shall be
deemed to be an original, but when taken together shall constitute one and the
same Amendment.
9. Headings. Section headings used in this Amendment are for
convenience of reference only and shall not affect the construction of the
Amendment.
10. Enforceability of Lease. Except as expressly and specifically set
forth herein, the Lease remains unmodified and in full force and effect. In the
event of any
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discrepancy between Lease and this Amendment, the terms and conditions of this
Amendment will control and the Lease is deemed amended to conform hereto.
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IN WITNESS WHEREOF, the parties have executed this Amendment by their
duly authorized officers as of the date first above written.
LESSOR: LESSEE:
------ ------
Emerald-Cedar Hills, Inc., Senior Care Florida Leasing, LLC
a Florida corporation a Delaware limited liability company
By: /s/ R. Xxxxx Xxxxxx By: /s/ Xxxxxxx X. Council III
-------------------------- --------------------------------
Name: R. Xxxxx Xxxxxx Name: Xxxxxxx X. Council III
------------------------ ------------------------------
Its: President Its: President
------------------------ -------------------------------
Emerald-Golfview, Inc.,
a Florida corporation
By: /s/ R. Xxxxx Xxxxxx
--------------------------
Name: R. Xxxxx Xxxxxx
------------------------
Its: President
------------------------
Emerald-Southern Pines, Inc.,
a Florida corporation
By: /s/ R. Xxxxx Xxxxxx
--------------------------
Name: R. Xxxxx Xxxxxx
------------------------
Its: President
------------------------
Emerald-Golfcrest, Inc.,
a Florida corporation
By: /s/ R. Xxxxx Xxxxxx
--------------------------
Name: R. Xxxxx Xxxxxx
------------------------
Its: President
------------------------
OMEGA HEALTHCARE INVESTORS, INC., ACKNOWLEDGES AND CONSENTS TO THE TERMS OF
THIS AMENDMENT.
Omega Healthcare Investors, Inc.,
a Maryland corporation
By: /s/ Xxxxxx X. Xxxxx
--------------------------
Name: Xxxxxx X. Xxxxx
------------------------
Its: Chief Operating Officer
-----------------------
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ACKNOWLEDGMENT
The undersigned consents to the transactions contemplated by this
Amendment, ratifies and affirms its Guaranty dated as of April 1, 2003, on the
same terms and conditions in effect prior to this Amendment.
GUARANTORS:
----------
Advocat, Inc.,
a Delaware corporation
By: /s/ Xxxxxxx X. Council III
--------------------------------
Name: Xxxxxxx X. Council III
------------------------------
Its: President
-------------------------------
Diversicare Management Services, Co.,
a Tennessee corporation
By: /s/ Xxxxxxx X. Council III
--------------------------------
Name: Xxxxxxx X. Council III
------------------------------
Its: President
-------------------------------
Advocat Finance, Inc.
a Delaware corporation
By: /s/ Xxxxxxx X. Council III
--------------------------------
Name: Xxxxxxx X. Council III
------------------------------
Its: President
-------------------------------
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