FOURTH AMENDMENT TO MASTER LEASE AND SECURITY AGREEMENT (Pool 1)
|
Exhibit
10.11
|
FOURTH
AMENDMENT TO
(Pool
1)
THIS
FOURTH AMENDMENT TO MASTER LEASE AND SECURITY AGREEMENT (Pool
1)
(the
“Amendment”)
is
entered into as of June
30,
2005 by and among NATIONWIDE
HEALTH PROPERTIES, INC.,
a
Maryland corporation (“NHP”),
and
NH
TEXAS PROPERTIES LIMITED PARTNERSHIP,
a Texas
limited partnership (“NH
Texas”)
(collectively, “Landlord”);
ARC
PINEGATE, L.P.,
a
Tennessee limited partnership, ARC
PEARLAND, L.P.,
a
Tennessee limited partnership, TRINITY
TOWERS LIMITED PARTNERSHIP,
a
Tennessee
limited
partnership, ARC
LAKEWAY, L.P., a
Tennessee limited partnership (“ARC
Lakeway”),
ARC
SPRING SHADOW, L.P., a
Tennessee limited partnership, ARC
SHADOWLAKE, L.P.,
a
Tennessee limited partnership, ARC
WILLOWBROOK, L.P.,
a
Tennessee limited partnership (“ARC
Willowbrook”),
ARC
PARK REGENCY, INC.,
a
Tennessee corporation, and ARC
PARKLANE, INC.,
a
Tennessee corporation (individually
and collectively, “Existing
Tenant”);
ARC
▇▇▇▇▇▇▇▇ Hills, L.P.,
a
Tennessee limited partnership (“ARC
▇▇▇▇▇▇▇▇ Hills”),
and
ARC
▇▇▇▇▇ ▇▇▇▇, LLC,
a
Tennessee limited liability company (“ARC
▇▇▇▇▇ ▇▇▇▇”)
(individually and collectively, “Additional
Tenants”
and,
together with Existing Tenant, “Tenant”);
and
AMERICAN
RETIREMENT CORPORATION,
a
Tennessee corporation (“Guarantor”).
R
E C I T A L S
A. Landlord
and Existing Tenant have entered into that certain Master Lease and Security
Agreement (Pool 1) dated as of July 9, 2002, as amended by (i) that certain
First Amendment to Master Lease and Security Agreement (Pool 1) dated as of
July
9, 2002, (ii) that certain Second Amendment to Master Lease and Security
Agreement (Pool 1) dated as of July 1, 2003, and (iii) that certain
Third
Amendment to Master Lease and Security Agreement (Pool 1) dated as of July
7,
2004 (the “Original
Lease”).
Initially capitalized terms used but not otherwise defined in this Amendment
shall have the meanings given to them in the Original Lease. The Original Lease,
as amended, modified and revised by this Amendment, may be hereinafter referred
to as the “Master
Lease”
herein.
B. Landlord
or certain Affiliates of Landlord, as landlord (collectively, “Pool
2 Landlord”),
and
Tenant or certain Affiliates of Tenant, as tenant (collectively “Pool
2 Tenant”),
have
entered into that certain Master Lease and Security Agreement (Pool 2) dated
as
of July 9, 2002, as amended by (i) that certain First Amendment to Master Lease
and Security Agreement (Pool 2) dated to be effective as of July 9, 2002, (ii)
that certain Second Amendment to Master Lease and Security Agreement (Pool
2)
dated as of July 1, 2003, and (iii) that certain Third Amendment to Master
Lease
and Security Agreement (Pool 2) of even date herewith (the “Pool
2 Lease”).
C. Pursuant
to that certain Letter of Credit Agreement dated as of July 9, 2002, executed
by
Landlord, Pool 2 Landlord, Tenant and Pool 2 Tenant (the “LC
Agreement”),
Tenant and Pool 2 Tenant posted with Landlord and Pool 2 Landlord one or more
letters of credit as partial collateral for the performance of Tenant’s and Pool
2 Tenant’s obligations under the Original Lease and the Pool 2
Lease.
1
D.
Pursuant
to that certain Guaranty of Master Lease and Security Agreement and Letter
of
Credit Agreement dated as of July 9, 2002, executed by Guarantor (the
“Guaranty”),
Guarantor guaranteed to Landlord and to Pool 2 Landlord, respectively, Tenant’s
obligations under the Original Lease and Pool 2 Tenant’s obligations under the
Pool 2 Lease
E. Concurrently
herewith, (i) NH Texas is selling to ARC Lakeway and ARC Willowbrook the
Facilities commonly known as Homewood at Lakeway located at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ (the “Lakeway
Facility”)
and
Willowbrook located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇ (the “Willowbrook
Facility”
and,
collectively with the Lakeway Facility, the “Removed
Facilities”)
and,
(ii) Landlord is acquiring from ARC ▇▇▇▇▇▇▇▇ Hills and ARC ▇▇▇▇▇ ▇▇▇▇
(x) that certain real property, all improvements thereon and all
appurtenances thereto commonly known as ▇▇▇▇▇ ▇▇▇▇ and located at ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the “▇▇▇▇▇
▇▇▇▇ Facility”),
and
(y) that certain real property, all improvements thereon and all
appurtenances thereto commonly known as ▇▇▇▇▇▇▇▇ Hills and located at ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the “▇▇▇▇▇▇▇▇
Hills Facility”),
the
legal descriptions of which are attached as Exhibit A
(collectively, the “Additional
Facilities”).
F. In
connection with the transactions described in Recital
E
above,
Landlord, Existing Tenant and Additional Tenants have agreed to remove the
Removed Facilities from the Premises and to add the Additional Facilities to
the
Premises under the Original Lease.
G. Accordingly,
Landlord, Guarantor and Tenant wish to amend the Original Lease to, among other
things, (i) remove the Removed Facilities from the Premises under the
Original Lease, (ii) join Additional Tenants to the Master Lease and
the LC
Agreement, (iii) add the Additional Facilities to the Premises under
the
Original Lease, and (iv) 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 Agreement.
A
G R E E M E N T
NOW,
THEREFORE,
in
consideration of the foregoing Recitals, which by this reference are
incorporated herein, and of other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, Landlord and Tenant agree as
follows:
1. Joinder
of Additional Tenants; Addition of Additional Premises. Additional
Tenants are hereby joined to the Master Lease and the LC Agreement as a
collective Tenant thereunder. The Additional Facilities and associated Landlord
Personal Property are hereby added to the Premises demised under the Master
Lease.
2. Amendment
to Original Lease.
The
Original Lease is amended, modified and revised as follows:
(a) The
Original Lease is hereby amended in all respects necessary to confirm that
each
of the Removed Facilities and all property relating thereto shall, from and
after the date hereof, no longer be included as part of the “Facilities” or as
part of the “Premises” under the Original Lease.
2
(b) Section
2.1
of the
Original Lease is hereby deleted in its entirety and the following substituted
therefor:
“2.1 Initial
Term Minimum Rent.
During
the Initial Term, Tenant shall pay to Landlord Minimum Rent of (a) Nine Million
Eight Hundred Twenty-Eight Thousand Seven Hundred Fifty Dollars ($9,828,750)
annually for each Lease Year through and including the Lease Year ending June
30, 2011, and (b) Nine Million Six Hundred Forty-Two Thousand Seven Hundred
Fifty Dollars ($9,642,750) annually for each Lease Year thereafter, plus, in
any
Lease Year in which due, Development Rent (as defined below) as provided in
Section 2.1.3. Such Minimum Rent with respect to each month shall be paid by
wire transfer in advance and in equal monthly installments of (x) Eight Hundred
Nineteen Thousand Sixty-Two and 50/100 Dollars ($819,062.50) for each month
in
each Lease Year through and including the Lease Year ending June 30, 2011,
and
(y) Eight Hundred Three Thousand Five Hundred Sixty-Two and 50/100 Dollars
($803,562.50) for each month in each Lease Year thereafter, plus any Development
Rent then due pursuant to Section 2.1.3, on the first business day of each
such
calendar month.”
(c) Section
2.2.5
of the
Original Lease is hereby deleted in its entirety and the following substituted
therefor:
“2.2.5 As
used
herein, “Landlord’s
Adjusted Investment”
in the
Premises shall mean Landlord’s Original Investment (as hereinafter defined in
this Section 2.2.5) multiplied at the end of each Lease Year, commencing on
June
30, 2006, by a percentage equal to one hundred percent (100%) plus one-half
(½)
of the CPI Increase (as defined in Section 2.2.6 below) for such Lease Year.
As
used herein, “Landlord’s Original Investment” shall mean One Hundred Eight
Million Three Hundred Sixty-Seven Thousand Four Hundred Twenty-Nine Dollars
($108,367,429), as increased by (A) any amount paid by Landlord pursuant to
Section 5.7 below on or after July 1, 2005, and as decreased by (B) any net
award paid to Landlord pursuant to Section 13.2 below on or after July 1, 2005,
any portion thereof allocable to any Facility sold to Tenant pursuant to Section
5.4 or otherwise on or after July 1, 2005, all as applicable and as may be
otherwise increased or decreased pursuant to any other provision of the Lease
as
a result of any matter arising on or after July 1, 2005, provided that, with
respect to the computation of “Landlord’s
Adjusted Investment”
for any
Lease Year, any increase or decrease made to “Landlord’s
Original Investment”
as a
result of clause
(A)
or
clause
(B)
above
shall first become effective during the Lease Year in which such increase or
decrease occurred and the computation of “Landlord’s
Adjusted Investment”
made at
the end of such Lease Year shall include such increase or decrease.
3
(d) Section
2.3.4
of the
Original Lease is hereby deleted in its entirety and the following substantial
therefor:
“2.3.4 The
“Base
Year”
shall
mean with respect to each Lease Year during the Initial Term commencing July
1,
2005, the twelve month period commencing on July 1, 2001 and ending on June
30,
2002, with Gross Revenues for such Base Year being agreed to equal the amount
of
Twenty-Seven Million Three Hundred Sixty Thousand Dollars ($27,360,000). The
“Base
Year”
with
respect to any Renewal Term, shall mean the first Lease Year of such Renewal
Term.”
(e) For
purposes of comparing the Total Rent due during the Lease Year (and each quarter
during such Lease Year) commencing July 1, 2005 and ending June 30, 2006 to
the
Total Rent due in the immediately preceding quarterly or annual period pursuant
to Section 2.5 of the Original Lease, the increase in Minimum Rent in the amount
of One Hundred Thirty-Eight Thousand Seven Hundred Fifty Dollars ($138,750)
annually, shall be ignored.
(f) Section
4.10
of the
Original Lease is hereby deleted in its entirety and the following substituted
therefor:
“4.10 Reimbursement
of Landlord’s Insurance Costs.
During
any Lease Year or portion thereof in which Tenant is not in compliance with
the
other provisions of this Section 4, Tenant shall reimburse Landlord, within
ten
(10) days of Landlord’s demand therefor, for the costs of the premiums of the
general liability and environmental insurance policies maintained by Landlord,
or contributions to self-insurance in lieu thereof, in connection with the
Premises, which amount shall not exceed in any Lease Year the amount of One
Hundred Thousand Dollars ($100,000) when aggregated with such amounts as may
be
due under the Pool 2 Lease and that certain Lease and Security Agreement
(Heritage Club) dated as of July 1, 2003, as amended by that First Amendment
to
Master Lease and Security Agreement dated as of July 1, 2005 (the “Heritage Club
Lease”), as adjusted at the end of each Lease Year for increases in the CPI
since July 1, 2005. Tenant shall have no right to receive any proceeds or other
benefits from any such insurance. The foregoing shall not in any way imply
that
Landlord shall, or impose any duty on Landlord to: (a) waive any Event of
Default that may arise as a result of Tenant’s failure to comply with the other
provisions of this Section 4, or (b) obtain or maintain any such general
liability or environmental insurance with respect to the Premises.”
(g) The
following is hereby added to and incorporated into the Original Lease as Section
5.9 thereof:
4
“5.9 Capital
Improvements.
Commencing upon the first release of any Security Deposit and Collateral
pursuant to Section 11.3 (the “CapEx
Reserve Commencement Date”),
Tenant, Pool 2 Tenant and “Tenant” (as defined in the Heritage Club Lease) shall
make, in the aggregate, annual expenditures for capital improvements to the
Facilities, the “Facilities” (as defined in the Pool 2 Lease) and the “Facility”
(as defined in the Heritage Club Lease) equal to one and three-fourths
percent (1.75%) of the “Gross Revenues”, as calculated in the aggregate
under this Lease, the Pool 2 Lease and the Heritage Club Lease (the
“Aggregate
Gross Revenues”),
for
the applicable “Lease Year” under this Lease, the Pool 2 Lease and/or the
Heritage Club Lease, as applicable, or the applicable portion thereof in the
case of the first “Lease Year” hereunder or thereunder in which this obligation
commences (the “Required Tenant
Capital Expenditures”).
Concurrently with each quarterly payment of Additional Rent after the CapEx
Reserve Commencement Date, Tenant shall deliver to Landlord in a form mutually
agreed upon by Landlord and Tenant, a certificate, certified by an officer
or
general partner of Tenant, as applicable, setting forth the actual year-to-date
expenditures for capital improvements to the Facilities, the “Facilities” (as
defined in the Pool 2 Lease) and the “Facility” (as defined in the Heritage Club
Lease) made by Tenant, Pool 2 Tenant and “Tenant” (as defined in the Heritage
Club Lease) as of the end of the applicable quarter. If such actual year-to-date
expenditures for capital improvements are less than one and three-fourths
percent (1.75%) of year-to-date Aggregate Gross Revenues for such Lease
Year under this Lease, the Pool 2 Lease and/or the Heritage Club Lease, as
applicable, or such applicable portion thereof in the case of the first “Lease
Year” hereunder or thereunder in which this obligation commences, Tenant, Pool 2
Tenant and “Tenant” (as defined in the Heritage Club Lease) shall, in the
aggregate, deposit with Landlord, Pool 2 Landlord and “Landlord” (as defined in
the Heritage Club Lease) an amount equal to such deficiency, and such funds
(the
“CapEx
Funds”)
shall
be impounded with Landlord, Pool 2 Landlord and “Landlord” (as defined in the
Heritage Club Lease), in the aggregate, in accordance with Section 5.10
of
this Lease, the Pool 2 Lease and the Heritage Club Lease. Each and every capital
improvement funded by Tenant, Pool 2 Tenant and “Tenant” (as defined in the
Heritage Club Lease) in accordance with this Section 5.9 or with use of CapEx
Funds, as provided under Section 5.10 of this Lease, the Pool 2 Lease and the
Heritage Club Lease, shall immediately become a part of the Premises, the
“Premises” (as defined in the Pool 2 Lease) or the “Premises” (as defined in the
Heritage Club Lease), as the case may be, and shall belong to Landlord, Pool
2
Landlord and “Landlord” (as defined in the Heritage Club Lease), as the case may
be, subject to the terms and conditions of this Lease, the Pool 2 Lease or
the
Heritage Club Lease, as applicable. Notwithstanding the foregoing, if, at any
time after the CapEx Reserve Commitment Date, the Security Deposit and
Collateral is restored to one hundred percent (100%) of its original requirement
under this Lease, the Pool 2 Lease and the Heritage Club Lease in accordance
with the provisions of Section 11.3 under this Lease, the Pool 2 Lease and
the
Heritage Club Lease, the obligations under Section 5.9 of this Lease, the Pool
2
Lease and the Heritage Club Lease shall be suspended until any Security Deposit
and Collateral is thereafter released under this Lease, the Pool 2 Lease and/or
the Heritage Club Lease in accordance with such Section 11.3.”
(h) The
following is hereby added to and incorporated into the Original Lease as Section
5.10 thereof:
5
“5.10
CapEx Funds. Any
CapEx
Funds shall be held by Landlord, Pool 2 Landlord and “Landlord” (as defined in
the Heritage Club Lease), and shall be applied for the purposes of making
capital improvements to the Facilities, the “Facilities” (as defined in the Pool
2 Lease) and the “Facility” (as defined in the Heritage Club Lease) (the
“CapEx
Reserve”).
From
time to time, but not more often than twice in any calendar month and provided
that no Event of Default is then continuing, Landlord, Pool 2 Landlord and/or
“Landlord” (as defined in the Heritage Club Lease), as the case may be, will
disburse to Tenant, Pool 2 Tenant and/or “Tenant” (as defined in the Heritage
Club Lease) amounts from the CapEx Reserve, subject to the following conditions:
(A)
the
costs incurred by Tenant, Pool 2 Tenant and/or “Tenant” (as defined in the
Heritage Club Lease), as the case may be, shall be for the purposes of making
capital improvements to the Facilities, the “Facilities” (as defined in the Pool
2 Lease) and/or the “Facility” (as defined in the Heritage Club Lease); and
(B)
the
request for disbursement shall be accompanied with such invoices or purchase
orders evidencing the expenditure by Tenant, Pool 2 Tenant and/or “Tenant” (as
defined in the Heritage Club Lease), as the case may be, as Landlord, Pool
2
Landlord and/or “Landlord” (as defined in the Heritage Club Lease), as
applicable, may reasonably require. Landlord, Pool 2 Landlord and/or “Landlord”
(as defined in the Heritage Club Lease), as the case may be, shall make the
reimbursements to Tenant, Pool 2 Tenant and/or “Tenant” (as defined in the
Heritage Club Lease), as applicable, required hereunder within fourteen (14)
days after satisfaction of all conditions to such disbursement. Upon reasonable
advance request, Landlord, Pool 2 Landlord and/or “Landlord” (as defined in the
Heritage Club Lease), as the case may be, may require Tenant, Pool 2 Tenant
and/or “Tenant” (as defined in the Heritage Club Lease), as applicable, to
procure mechanic’s lien waivers, in form and substance reasonably satisfactory
to Landlord, Pool 2 Landlord and/or “Landlord” (as defined in the Heritage Club
Lease), as the case may be, (if such waivers are then available in the
applicable State in which the subject Facility is located), in connection with
any capital improvements in excess of One Hundred Thousand Dollars ($100,000).
Any amount remaining in the CapEx Reserve at the expiration of the “Term” (as
such term is defined hereunder, under the Pool 2 Lease and under the Heritage
Club Lease) under all of this Lease, the Pool 2 Lease and the Heritage Club
Lease, and/or the earlier termination hereof or thereof, shall be retained
by
Landlord, Pool 2 Landlord and/or “Landlord” (as defined in the Heritage Club
Lease), as the case may be, as additional or supplemental “Total Rent” (as such
terms is defined hereunder, under the Pool 2 Lease and under the Heritage Club
Lease) hereunder or thereunder.”
(i) Section
7.4
of the
Original Lease is hereby deleted in its entirety and the following substituted
therefor:
“7.4 Intangible
Property.
The
term “Intangible Property” means documents, chattel paper, contract rights,
residency agreements, management agreements, medical records, patient files,
confidential patient materials, general intangibles, choses in action, now
owned
or hereafter acquired by Tenant (including any right to any refund of any taxes
or other charges heretofore or hereafter paid to any governmental authority)
arising from or in connection with Tenant’s operation or use of the Premises;
all licenses and permits now owned or hereinafter acquired by Tenant, necessary
or desirable for Tenant’s use of the Premises under this Lease, including
without limitation, if applicable, any certificate of need or other similar
certificate; and the right to use any trade or other name now or hereafter
associated with the operation of the Premises by Tenant, including, without
limitation, the names “▇▇▇▇▇▇▇▇ Hills,”“Parklane West,”“Pinegate,”“▇▇▇▇▇
▇▇▇▇,”“Pearland,”“Park Regency,”“Shadowlake,”“Trinity Towers” and “Spring
Shadows,” but excluding any corporate names or logos used by Tenant. For
purposes of this Lease, the term “Intangible Property” shall not include
accounts receivable, negotiable instruments, rights to payment from third
parties, security deposits, utility deposits, proprietary software, training
manuals, or general corporate trademarks, service marks, logos, insignia, books
or records of Tenant, or the tradenames “American Retirement
Corporation,”“ARC,”“Homewood” or any derivation thereof.
6
(j) The
following is hereby added to and incorporated into the Original Lease as Section
9.7 thereof:
“9.7 Financial
Covenants Calculations.
Within
forty-five (45) days of the end of each of the first three quarters of the
fiscal year of Guarantor and Tenant, and within ninety (90) days of the end
of
the fiscal year of Guarantor and Tenant, Tenant shall deliver to Landlord the
calculations of the “Rent Coverage Ratio”, the “Fixed Charge Coverage Ratio” and
“Book Net Worth” (all as defined in Section 11.3), together with all necessary
support documentation with respect to such calculations as reasonably required
by Landlord, and accompanied by an Officer’s Certificate (collectively, the
“Financial
Covenants Calculations”).”
(k) The
following is hereby added to and incorporated into the Original Lease as
Section 11.3 thereof:
“11.3 Security
Deposit and Collateral Release.
Provided the threshold Financial Covenants (as hereinafter defined) set forth
below with respect to a particular Level (i.e., ▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇ or
Level 4) have been met, the amount of the original Security Deposit and
Collateral required hereunder shall be released in twenty-five
percent (25%) increments, as set forth below, for any fiscal quarter
in
which the threshold Financial Covenants pertaining to a particular Level have
been satisfied; provided however,
that
if, at any time after the release of any Security Deposit and Collateral at
a
particular Level, the requisite threshold of Financial Covenants pertaining
to
such Level is not maintained, as evidenced by the most recent Financial
Covenants Calculations, then the Security Deposit and Collateral shall be
restored by Tenant, Pool 2 Tenant and “Tenant” (as defined in the Heritage Club
Lease), within five (5) days of the delivery of the Financial Covenants
Calculations to Landlord, to the amount that was held by Landlord, Pool 2
Landlord and “Landlord” (as defined in the Heritage Club Lease) prior to any
release of the Security Deposit and Collateral in accordance with such Level
until such future time, if any, that the applicable threshold Financial
Covenants pertaining to such Level are once again satisfied. The “Financial
Covenants”
shall
mean the satisfaction of all of the following with respect to any particular
Level release threshold:
|
Level
|
Threshold
Rent
Coverage
Ratio
|
Threshold
Fixed
Charge
Coverage
Ratio
|
Threshold
Book
Net
Worth
|
%
of Original
Security
Deposit
and
Collateral
required
hereunder
to
be
released
|
||||
|
1
2
3
4
|
1.25x
1.35x
1.40x
1.45x
|
1.35x
1.35x
1.40x
1.40x
|
$100
Million
$100
Million
$100
Million
$100
Million
|
25%
50%
75%
100%
|
7
Upon
the
exercise by Tenant of any Renewal Term in accordance with Section 1.2 of this
Lease, Tenant shall increase the amount of the Security Deposit and Collateral
to the amount required by Section 1.2.3 of this Lease, and such amount shall
thereafter be deemed to be the “original Security Deposit and Collateral”
required under the Lease; provided,
however,
that
Landlord shall immediately release to Tenant (or excuse Tenant from depositing
with Landlord) that portion of the new amount that would have theretofore been
released if the increased “original Security Deposit and Collateral” amount had
initially been the “original Security Deposit and Collateral” amount required
under such Section 1.2.3.
As
used
herein, (i) “Rent
Coverage Ratio”
shall
mean, as of the end of any fiscal quarter of Tenant, Pool 2 Tenant and “Tenant”
(as defined in the Heritage Club Lease), the ratio of (A) “Portfolio
EBITDAR-X”
to (B)
“Portfolio
Rent Expense”
with
use of the following defined terms:
“Portfolio
EBITDAR-X”
shall
be calculated as (a) the trailing six (6)-month Portfolio EBITDARM
minus
(b) an
amount equal to six percent (6%) of the trailing six (6)-month
Portfolio Gross Revenues;
“Portfolio
EBITDARM”
shall
mean, as of the end of any fiscal quarter, the aggregate net income of Tenant,
Pool 2 Tenant and “Tenant” (as defined in the Heritage Club Lease) for such
trailing six (6)-month period to the extent derived from the collective
operation of the Premises as defined herein, the “Premises” as defined under the
Pool 2 Lease (the “Pool
2 Premises”)
and
the “Premises” as defined under the Heritage Club Lease (the “Heritage
Club Premises”),
adjusted to add thereto, to the extent allocable to the Premises, the Pool
2
Premises or the Heritage Club Premises, as applicable, without duplication,
(a)
interest expense, (b) income tax expense, (c) depreciation and
amortization expense, (d) rental expense, and (e) management
fee
expenses, in each case determined in accordance with GAAP;
8
“Portfolio
Gross Revenues”
shall
mean, as of the end of any fiscal quarter, the aggregate amount of “Gross
Revenues” as defined herein with respect to the Premises, the “Gross Revenues”
as defined in the Pool 2 Lease with respect to the Pool 2 Premises and the
“Gross Revenues”, as such term is defined herein, and calculated with respect to
the Heritage Club Premises, in each case, for the trailing six (6)-month period;
“Portfolio
Rent Expense”
shall
mean, as of the end of any fiscal quarter, the aggregate amount of “Total Rent”
(as defined herein or therein) payable by Tenant under this Lease, by Pool
2
Tenant under the Pool 2 Lease and by “Tenant” (as defined in the Heritage Club
Lease) under the Heritage Club Lease, in each case, during the trailing six
(6)-month period.
(ii)“Fixed
Charge Coverage Ratio”
shall
mean, as of the end of any fiscal quarter of Guarantor, the ratio of (A)
“Portfolio
EBITDAR”
to (B)
“Portfolio
Fixed Charges”
with
use of the following defined terms:
“Portfolio
EBITDAR”
shall
mean, as of the end of any fiscal quarter of Guarantor, the aggregate net income
of Guarantor and its subsidiaries, as determined in accordance with GAAP on
a
consolidated basis, during the trailing six (6)-month period, adjusted to add
thereto, without duplication, (a) interest expense, (b) income tax expense,
(c)
depreciation and amortization expense, and (d) rental expense, as determined
in
accordance with GAAP on a consolidated basis, during such trailing six (6)-month
period, and as further adjusted to add thereto or subtract therefrom (I) any
gains or losses arising from the sale of assets or (II) any items of income
or
expense which are deemed to be “extraordinary” in accordance with GAAP, and any
other non-cash, non-recurring charges and expenses. As used herein,
“non-recurring charges and expenses” means expenditures or charges that (i) have
not been incurred within the prior two years, and (ii) are not reasonably likely
to recur within the subsequent two year period.
“Portfolio
Fixed Charges”
shall
mean, as of the end of any fiscal quarter of Guarantor, the sum of (a) all
net
lease expenses, (b) all interest expenses (including the interest component
of
rentals under capitalized leases), exclusive of prepayment fees or one-time
loan
fees or similar expenses, (c) all scheduled principal amortization payments
under indebtedness or capitalized leases, exclusive of balloon payments due
on
maturity or expiration, as applicable, (d) all dividends paid on preferred
stock, and (e) all mandatory distributions of earnings to shareholders, for
Guarantor and its subsidiaries, as determined on a consolidated basis in
accordance with GAAP, during the trailing six (6)-month period.
9
(iii)
“Book
Net Worth”
shall
mean, as of the end of any fiscal quarter of Guarantor, as determined on a
consolidated basis in accordance with GAAP with respect to Guarantor and its
subsidiaries, (a) the total assets of such parties, minus
(b) the
total liabilities of such parties.
(l) Schedule
1
attached
to the Original Lease is hereby deleted in its entirety and Schedule 1
attached
hereto is substituted therefor. In furtherance thereof, ARC Lakeway, L.P.,
a
Tennessee limited partnership, and ARC Willowbrook, L.P., a Tennessee limited
partnership, are hereby released from all liability under the Original Lease
that arises or accrues on or after the date of this Amendment.
(m) Schedule
2
attached
to the Original Lease is hereby deleted in its entirety and Schedule 2
attached
hereto is substituted therefor.
(n) The
reference to “Homewood at Lakeway” on the front page of Exhibit
A
(item
number 2), the metes and bounds legal description for “Homewood at Lakeway”
attached as Exhibit
A-3
and the
reference to “Homewood at Lakeway” as item 2 on Exhibit
C
are
hereby deleted.
(o) The
reference to “Willowbrook” on the front page of Exhibit
A
(item
number 7), the metes and bounds legal description for “Willowbrook” attached as
Exhibit A-15
and the
reference to “Willowbrook” as item 7 on Exhibit
C
are
hereby deleted.
(p) Exhibit
A
attached
hereto is hereby added to Exhibit
A
of the
Original Lease.
(q) Exhibit C
attached
hereto is hereby added to Exhibit C
of the
Original Lease.
3. Reaffirmation
of Obligations.
(a) Notwithstanding
the modifications to the Original Lease contained herein, Tenant and Landlord
each hereby acknowledges and reaffirms its obligations under the Master Lease
and all other documents executed by such party in connection
therewith.
(b) Notwithstanding
the modifications to the Original 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 Original Lease or any terms or conditions
contained therein, shall mean such Original Lease or such terms or conditions
as
modified by this Amendment.
4. Interpretation;
Governing Law.
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.
This Amendment shall be governed by and construed in accordance with the
internal laws of the State of California without regard to rules concerning
the
choice of law.
10
5. 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.
6. Incorporation
of Recitals.
The
Recitals to this Amendment are incorporated hereby by reference.
7. 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.
8. 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.
9. Effect
of Amendment.
Except
as
specifically amended pursuant to the terms of this Amendment, the terms and
conditions of the Original 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 Original Lease, the terms of this Amendment shall govern
and prevail.
10. Costs;
Expenses.
All
costs and expenses incurred by Tenant or Landlord with respect to the
preparation, negotiation and execution of this Amendment and all other
documentation related to this Amendment shall be paid by Tenant. To the extent
Landlord pays any such costs or expenses, Tenant shall reimburse Landlord for
such costs and expenses immediately upon Landlord’s demand
therefor.
11. 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.
11
IN
WITNESS WHEREOF,
this
Amendment has been executed as of the date first above written.
|
TENANT:
ARC
PINEGATE, L.P.,
a
Tennessee limited partnership
By: ARC
Tennessee GP, Inc.,
a
Tennessee corporation,
its
general partner
By:
Name:
Title:
|
|
|
ARC
PEARLAND, L.P.,
a
Tennessee limited partnership
By: ARC
Tennessee GP, Inc.,
a
Tennessee corporation,
its
general partner
By:
Name:
Title:
|
|
|
TRINITY
TOWERS LIMITED PARTNERSHIP,
a
Tennessee limited partnership
By: ARC
Corpus Christi, LLC,
a
Tennessee corporation,
its
general partner
By:
Name:
Title:
|
S-1
|
ARC
LAKEWAY, L.P.,
a
Tennessee limited partnership
By: ARC
Tennessee GP, Inc.,
a
Tennessee corporation,
its
general partner
By:
Name:
Title:
|
|
|
ARC
SPRING SHADOW, L.P.,
a
Tennessee limited partnership
By: ARC
Tennessee GP, Inc.,
a
Tennessee corporation,
its
general partner
By:
Name:
Title:
|
|
|
ARC
SHADOWLAKE, L.P.,
a
Tennessee limited partnership
By: ARC
Tennessee GP, Inc.,
a
Tennessee corporation,
its
general partner
By:
Name:
Title:
|
S-2
|
ARC
WILLOWBROOK, L.P.,
a
Tennessee limited partnership
By: ARC
Tennessee GP, Inc.,
a
Tennessee corporation,
its
general partner
By:
Name:
Title:
|
|
|
ARC
PARK REGENCY, INC.,
a
Tennessee corporation
By:
Name:
Title:
|
|
|
ARC
PARKLANE, INC.,
a
Tennessee corporation
By:
Name:
Title:
|
|
|
ARC
▇▇▇▇▇▇▇▇ HILLS, L.P.,
a
Tennessee limited partnership
By: ARC
Tennessee GP, Inc.,
a
Tennessee corporation,
its
general partner
By:
Name:
Title:
|
S-3
|
ARC
▇▇▇▇▇ ▇▇▇▇, LLC,
a
Tennessee limited liability company
By:
Name:
Title:
|
|
|
LANDLORD:
NATIONWIDE
HEALTH PROPERTIES, INC.,
a
Tennessee corporation
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President and Chief
Investment Officer
NH
TEXAS PROPERTIES LIMITED PARTNERSHIP,
a
Texas limited partnership
By: MLD
TEXAS CORPORATION,
a Texas corporation
Its General Partner
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President and
Chief Investment
Officer
GUARANTOR:
AMERICAN
RETIREMENT CORPORATION,
a
Tennessee corporation
By:
Name: ________
Title:
|
S-4
SCHEDULE
1
LANDLORD
AND TENANT ENTITIES
Landlord
1. NATIONWIDE
HEALTH PROPERTIES, INC.,
a
Maryland corporation
|
2.
|
NH
TEXAS PROPERTIES LIMITED PARTNERSHIP,
|
a
Texas
limited partnership
Tenant
|
1.
|
ARC
PINEGATE, L.P.,
a
Tennessee limited partnership
|
|
2.
|
ARC
PEARLAND, L.P.,
a
Tennessee limited partnership
|
|
3.
|
TRINITY
TOWERS LIMITED PARTNERSHIP,
a
Tennessee
limited partnership
|
|
4.
|
ARC
SPRING SHADOW, L.P., a
Tennessee limited partnership
|
|
5.
|
ARC
SHADOWLAKE, L.P.,
a
Tennessee limited partnership
|
|
6.
|
ARC
PARK REGENCY, INC.,
a
Tennessee corporation
|
|
7.
|
ARC
PARKLANE, INC.,
a
Tennessee corporation
|
|
8.
|
ARC
▇▇▇▇▇▇▇▇ HILLS, L.P., a
Tennessee limited partnership
|
|
9.
|
ARC
▇▇▇▇▇ ▇▇▇▇, LLC,
a
Tennessee limited liability company
|
Schedule
1-1
SCHEDULE
2
LOCATION
OF FACILITIES AND FACILITY INFORMATION
|
Facility
|
Facility
Location
|
No.
of Beds/Units
|
Type
of Personal Care Facility
|
|
|
1.
|
Hampton
at
Spring
Shadow
|
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
(▇▇▇▇▇▇ ▇▇▇▇▇▇), ▇▇▇▇▇ ▇▇▇▇▇
|
52
Personal Care Beds
15
Memory Impaired Beds
|
Personal
Care and
Memory
Impaired Facilities
|
|
2.
|
Trinity
Towers
|
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇),
▇▇▇▇▇
▇▇▇▇▇
|
76
Nursing Facility Beds
84
Personal Care Facility Unit
(Type
A Large) Beds
196
Independent Living Facility Units
15
Dementia Care Units
|
Nursing
Personal
Care
Independent
Living and
Dementia
Care Facilities
|
|
3.
|
Homewood
at Pearland
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
(▇▇▇▇▇▇ ▇▇▇▇▇▇), ▇▇▇▇▇ ▇▇▇▇▇
|
15
Independent Beds
52
Personal Care Beds
15
Memory Impaired Beds
|
Personal
Care
Independent
Living and
Memory
Impaired Facilities
|
|
4.
|
Homewood
at Pinegate
|
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
(▇▇▇▇▇▇ ▇▇▇▇▇▇), ▇▇▇▇▇ ▇▇▇▇▇
|
80
Personal Care Beds
15
Memory Impaired Beds
|
Personal
Care and
Memory
Impaired Facilities
|
|
5.
|
Hampton
at Shadowlake
|
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
(▇▇▇▇▇▇ ▇▇▇▇▇▇), ▇▇▇▇▇ ▇▇▇▇▇
|
79
Personal Care Beds
17
Memory Enhancement Beds
|
Personal
Care and
Memory
Enhancement
Facilities
|
|
6.
|
Park
Regency
|
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
|
120
Independent Living Units
(w/
a la carte AL care)
and
66 Nursing Beds
|
Independent
Living,
Personal
Care
and
Nursing Care
|
|
7.
|
Parklane
West
|
▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
|
17
Assisted Living Beds
and
124 Nursing Beds
|
Personal
Care
and
Nursing Care
|
|
8.
|
▇▇▇▇▇▇▇▇
Hills
|
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
|
74
Assisted Living Beds and 17 Memory Impaired Beds
|
Personal
Care and Memory
Impaired
Facilities
|
|
9.
|
▇▇▇▇▇
▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
|
15
Independent Living Beds
63
Assisted Living Beds
27
Memory Impaired Beds
|
Personal
Care Independent
Living
and Memory Impaired
Facilities
|
Schedule
2-1
EXHIBIT
A
Legal
Descriptions of the Facilities
(Attached)
Exhibit
A-1
EXHIBIT
C
Permitted
Exceptions
|
Facility
|
Permitted
Exceptions
|
|
|
1.
|
▇▇▇▇▇▇▇▇
Hills
|
1. The
standard printed exceptions, conditions and exclusions from coverage
contained in the standard coverage owner’s title policy then prevailing in
use at the title company which consummates the sale
transaction.
2. Any
matters which an accurate survey of the Premises may show.
3. Exceptions .
4. Such
other matters burdening the Premises which were created with the
consent
or knowledge of Tenant or arising out of Tenant’s acts or
omissions.
|
|
2.
|
▇▇▇▇▇
▇▇▇▇
|
1. The
standard printed exceptions, conditions and exclusions from coverage
contained in the standard coverage owner’s title policy then prevailing in
use at the title company which consummates the sale
transaction.
2. Any
matters which an accurate survey of the Premises may show.
3. Exceptions .
4. Such
other matters burdening the Premises which were created with the
consent
or knowledge of Tenant or arising out of Tenant’s acts or
omissions.
|
Exhibit
C-1