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Exhibit 10.26.3
SECOND AMENDMENT TO MASTER LEASE
This
SECOND AMENDMENT TO MASTER LEASE (the
"Amendment") is entered into as of January 2,
2007 (the "Effective Date") by and among
NATIONWIDE HEALTH PROPERTIES, INC., a
Maryland corporation, and NHP McCLAIN, LLC, a
Delaware limited liability company (collectively,
"Landlord"); SUMMERVILLE AT CAMELOT
PLACE LLC, a Delaware limited liability company,
SUMMERVILLE AT HILLEN VALE
LLC, a Delaware limited liability company,
SUMMERVILLE AT LAKEVIEW LLC, a Delaware
limited liability company, and SUMMERVILLE AT
RIDGEWOOD GARDENS LLC, a Delaware limited
liability company (individually and collectively,
"Existing Tenant"); SUMMERVILLE AT NORTH HILLS
LLC, a Delaware limited liability company, and
THE INN AT MEDINA LLC, a Delaware limited
liability company (collectively, the "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, as amended by that certain First Amendment to Master
Lease (the "First Amendment") dated as of
December 1, 2006 (as amended, 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
dated as of October 2, 2006, as amended by the First Amendment
(as amended, 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 dated as of October 2, 2006, as amended by the First
Amendment (as amended, 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.
Additional
Tenant, as buyer, and North Hills Management Co., Inc., an Ohio
corporation, The Inn at Medina Management Company, Inc., an Ohio
corporation, and The Inn at Medina Limited, an Ohio limited
liability company (collectively, "Seller"), have
entered into that certain Residential Facility Purchase Agreement
dated as of December 7, 2006 (the "Purchase
Agreement"), pursuant to the terms and conditions
of which Additional Tenant has agreed to acquire, among other
things, fee title to (i) that certain real property located at 1575
Bowers Lane, Zanesville, Ohio and all improvements thereon, which
is presently operated as a one hundred-three (103) unit assisted
living facility, and (ii) that certain real property located at 100
High Point Drive, Medina, Ohio and all improvements thereon, which
is presently operated as a ninety (90) unit assisted living
facility (collectively, the "Additional
Facilities").
E.
Additional Tenant has agreed to assign its rights to
purchase the Additional Facilities to Landlord pursuant to the
terms and conditions of that certain Assignment of Purchase
Agreement dated of even date herewith between Additional
Tenant and Landlord.
F.
Additional Tenant desires to lease the Additional
Facilities 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
Additional Tenant to the Master Lease, (ii) add the Additional
Facilities 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 affiim 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, Exhibits B-1 and B-2 and Exhibit F
attached hereto are hereby added to and incorporated into
Exhibit A, Exhibit B and Exhibit F 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 f_cj 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%), (iii)
Landlord's Ridgewood Investment multiplied by
eight and seventy one-hundredths percent
(8.70%), and Landlord's North Hills/Medina
Investment multiplied by eight and fifty
one-hundredths percent (8.50%) (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.
(b) As
used herein, (i) "Landlord's Camelot
Investment" means Landlord's
investment in the Facility located at 49-A Leisure Lane,
Medina, Ohio (the "Camelot Facility") in the
amount of Ten Million Six Hundred Sixty-Five Thousand Dollars
($10,665,000), plus 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 4000
Lakeview Crossing, Groveport, Ohio (the "Lakeview
Facility"), and (B) the Facility
located at 1615 Yauger Road, Mt. Vernon, Ohio (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; (iii)
"Landlord's Ridgewood Investment" means Landlord's
investment in the Facility located at 2001 Ridgewood Drive,
Salem, Virginia (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, and (iv) "Landlord's
North Hills/Medina Investment" means Landlord's
investment in (X) the Facility located at 1575 Bowers Lane,
Zanesville, Ohio (the "North Hills
Facility"), and (Y) the Facility located at 100 High
Point Drive, Medina, Ohio (the "Medina
Facility"), in the aggregate amount of Twenty-Five
Million Six Hundred Thirteen Thousand Dollars
($25,613,000), plus any amounts
advanced by Landlord pursuant to Section 8.6 with
respect to the North Hills Facility and/or the Medina
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 North Hills/Medina Investment, and
minus any amount that, in accordance with any term or
provision of this Master Lease, is to be subtracted from
Landlord's North Hills/Medina Investment.
(c) Concurrently
with any increase or decrease in Landlord's Camelot
Investment,
Landlord's Lakeview/HillenVale Investment, Landlord's
Ridgewood Investment and/or Landlord's North Hills/Medina
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,
Landlord's Ridgewood Investment and/or Landlord's North
Hills/Medina Investment, as the case may be."
(d)
Section 4 of the Master Lease is hereby deleted in its
entirety and substituted with the
following:
"4. Security
Deposit: Guaranty.
(a) Pursuant
to the parties' concurrent Letter of Credit
Agreement, Tenant shall deposit with Landlord and
maintain during the Term one (1) or more letters of credit in
an undrawn face amount equal to Seven Hundred
Fifty-Four Thousand Seven Hundred Fifty
Dollars ($754,750) as a "Security
Deposit" against the faithful performance by Tenant
of its obligations under this Master Lease.
(b) Notwithstanding
the foregoing, (i) at the end of the first Lease Year the
amount of the Security Deposit shall be increased by the
amount of $325,960 if the Lakeview/HillenVale
Rent Coverage Ratio is less than 1.01 to 1; and (ii) at the
end of the second Lease Year the amount of the Security
Deposit shall be increased by the amount of
$162,980 if the Lakeview/HillenVale Rent
Coverage Ratio is less than 1.26 to 1. As used herein,
"Lakeview/HillenVale Rent Coverage Ratio"
means, as of the date of determination, the ratio of (i) the
EBITDARM (as hereinafter defined) for the Lakeview Facility
and HillenVale Facility for the immediately preceding two
calendar quarters (a "Measuring Period"),
minus (A) an assumed management fee equal to five
percent (5%) of the Gross Revenues (as
hereinafter defined) generated during such Measuring Period
from the Lakeview Facility and HillenVale Facility, and (B)
one-half of the applicable annual CapEx Amount (as defined in
Section 8.3 below) for the Lakeview Facility and HillenVale
Facility at the commencement of the Measuring Period,
multiplied by the aggregate number of assisted living
units at the Lakeview Facility and HillenVale Facility, to
(ii) the total amount of the Minimum Rent and Additional Rent
due with respect to the Lakeview Facility and HillenVale
Facility for the Measuring Period pursuant to the terms of
this Master Lease.
(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
Se
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