ex10_262.htm


    
      

    

    Exhibit
      10.26.2


     

    FIRST
      AMENDMENT TO MASTER LEASE

    


    


    This
      FIRST AMENDMENT TO MASTER LEASE (the "Amendment")
is entered into as of December  1 , 2006 (the
"Effective Date") by and among
NATIONWIDE
      HEALTH PROPERTIES, INC., a Maryland corporation
("Landlord"); SUMMERVILLE AT CAMELOT PLACE LLC,
      a Delaware limited liability company, SUMMERVILLE AT
HILLEN VALE LLC, a Delaware limited liability company,
      and SUMMERVILLE AT LAKEVIEW LLC, a Delaware limited liability
      company (individually and collectively, "Existing Tenant"); SUMMERVILLE
      AT RIDGEWOOD GARDENS LLC, a Delaware limited liability company
("Additional Tenant" and, together with Existing Tenant,
"Tenant"); and SUMMERVILLE SENIOR LIVING,
      INC.,
a Delaware corporation ("Guarantor").

    


    RECITALS

    


    A.            Landlord,
      as lessor, and Existing Tenant, as lessee, are parties to that certain Master
      Lease dated as of October 2, 2006 (the "Master Lease"),
pursuant to which, among other things, Landlord leases to
      Existing
      Tenant the "Premises" described therein. Initially capitalized terms used but
      not otherwise defined in this Amendment shall have the meanings given to them
      in
      the Master Lease.

    


    B.    In
      connection
      with the Master Lease, Landlord and Existing Tenant are also parties to that
      certain Letter of Credit Agreement of even date with the Original Lease (the
      "LC
Agreement"), pursuant to which, among other things, Existing
      Tenant posted with Landlord the Letter or Letters of Credit described therein
      as
      partial collateral for the performance of its obligations under the Master
      Lease.

    


    C.           Pursuant
      to that certain Amended and Restated Guaranty of Lease of even date with the
      Original Lease (the "Guaranty"), Guarantor, among other things,
      guaranteed to Landlord the performance by Existing Tenant of its obligations
      under the Master Lease and LC Agreement.

    


    D.           Pursuant
      to that certain Purchase and Sale Agreement dated as of October 5, 2006
("Purchase Agreement") by and among Landlord, as buyer, and
      Ridgewood Gardens Health Investors, LLC, a Virginia limited liability company,
      and Salem Realty Investors, L.L.C., a North Carolina limited liability company,
      collectively as seller (collectively, "Seller"), Landlord
      agreed to acquire, among other things, fee title to that certain real property
      located at 2001 Ridgewood Drive in Salem, Virginia and all improvements thereon,
      which is presently operated as a seventy-four (74) unit, seventy-eight (78)
      bed
      assisted living facility (the "Additional
      Facility").

    


    E.     Additional
      Tenant desires to lease the Additional Facility from Landlord upon the closing
      of Landlord's acquisition thereof. Accordingly, Landlord and Tenant desire
      to
      amend the Master Lease to, among other things: (i) join the Additional Tenant
      to
      the Master Lease, (ii) add the Additional Facility to the Premises demised
      thereunder, and (iii) make certain other revisions and modifications, all as
      more particularly set forth herein. In connection therewith, Guarantor desires
      to affirm to Landlord its obligations under the Guaranty notwithstanding the
      amendment of the Master Lease set forth in this Amendment.

    


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    AGREEMENT

    


    NOW,
      THEREFORE, taking into account the foregoing Recitals, and in
      consideration of the mutual covenants and agreements contained herein, and
      for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereto agree as follows:

    


    1.           Joinder
      of Additional Tenant; Addition of Additional Premises. Additional
      Tenant is hereby joined to the Master Lease as a Tenant thereunder. The
      Additional. Facility and associated Landlord Personal Property are hereby added
      to the Premises demised under the Master Lease.

    


    2.           Amendments
      to Master Lease. The Master Lease is hereby
      specifically

    amended
      as set forth in this Section 2.

    


    (a)           Exhibit
      A and Exhibit B attached hereto are hereby added to and incorporated
      into Exhibit A and Exhibit B, respectively, of the Master
      Lease.

    


    (b)           Schedule
      1 and Schedule 2 of the Master Lease are hereby deleted in their
      entirety and substituted with Schedule 1 and Schedule 2 attached
      hereto.

    


    (c)            Section
      2.1(a),and and .(cl
      of the Master
      Lease are hereby deleted and substituted with
      the
      following:

    


    "2.1
      Initial Term Rent.

    


    (a)    During
      the
      Initial Term, the annual "Minimum Rent" shall be an
amount
      equal to the sum of (i) Landlord's Camelot Investment multiplied by
eight and sixty one-hundredths percent (8.60%),
      (ii) Landlord's Lakeview/HillenVale Investment multiplied by
eight and seventy one-hundredths percent (8.70%),
and
      (iii) Landlord's Ridgewood Investment multiplied by eight and
      seventy one-hundredths percent (8.70%) (each rate, the
"Lease Rate" for such Facility), payable in
      advance in twelve
      (12) equal monthly installments. Commencing with the second (2nd) Lease Year
      and
      continuing thereafter during the Term (excluding the first Lease Year of any
      Renewal Term), Tenant agrees to pay "Additional Rent" to
      Landlord monthly in advance together with the payment of Minimum Rent. Such
      Additional Rent (which shall be expressed as an annual amount but shall be
      payable in equal monthly installments) shall be equal to the sum of (i) the
      Additional Rent for the immediately preceding Lease Year and (ii) the product
      of
      (A) the Minimum Rent and Additional Rent due for the immediately preceding
      Lease
      Year and (B) the lesser of (x) three percent (3.0%) or (y) a percentage equal
      to
      five (5) times the percentage increase (the "CPI Increase") in
      the United States Department of Labor, Bureau of Labor Statistics Consumer
      Price
      Index for All Urban Wage Earners and Clerical Workers, United States Average,
      Subgroup "All Items" (1982 –1984 =100) (the "CPI"). In no event shall the CPI
      Increase be a negative number. The applicable CPI Increase shall be calculated
      annually for each Lease Year by comparing the CPI in effect on the first
      calendar day of the Lease Year for which Additional Rent is being calculated
      to
      the first calendar day of the immediately preceding Lease Year.

    


    
      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

    


    (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),p/us any amounts advanced
      by
      Landlord pursuant to Section 8.6  with respect to the Camelot
      Facility, plus any other amount that, in accordance with any other term
      or provision of this Master Lease, is to be added to Landlord's Camelot
      Investment, and minus any amount that, in accordance with any term or
      provision of this Master Lease, is to be subtracted from Landlord's Camelot
      Investment; (ii) "Landlord's Lakeview/HillenVale
      Investment" means Landlord's investment in (A) the Facility located at
      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; and A "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.

    


    (c)           Concurrently
      with any increase or decrease in Landlord's Camelot Investment, Landlord's
      Lakeview/HillenVale Investment and/or Landlord's Ridgewood Investment during
      the
      Term as described in Section 2.1(b), the Rent then due and payable for
      the balance of the applicable Lease Year and Term shall be recalculated and
      reset based on the adjusted amount of Landlord's Camelot Investment, Landlord's
      Lakeview/HillenVale Investment and/or Landlord's Ridgewood Investment, as the
      case may be."

    


    
      
        
          
          

        

        
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    (d)            The
      dollar amount of the "Security Deposit" set forth in Section
      4(a) of the Master Lease is hereby amended and restated to read
"Five Hundred Seventy-Three Thousand Three Hundred
      Twenty-Five Dollars ($573,325)".

    


    (e)            Section
      4(c) and (d) of the Master Lease are hereby deleted and substituted
      with the following, and the following Section 4(e) and (f) are
      hereby added and incorporated into the Master Lease:

    


    "4.    Security
      Deposit: Guaranty.

    


    (c)            If
      at any time following January 31, 2011, the Camelot Rent Coverage Ratio is
      less
      than 1.20 to 1, Tenant shall from time to time make deposits, which may be
      in
      the form of cash or supplemental letters of credit meeting the requirements
      of
      the Letter of Credit Agreement (the "Camelot Supplemental Deposits"),
to Landlord pursuant to Section 4(e) until such time as the
      total amount of the Security Deposit is increased as a result of such Camelot
      Supplemental Deposits by the amount of One Hundred Fifty-One Thousand
      Four Hundred Thirty-Five Dollars ($151,435); provided, however,
      Tenant's obligation to make such Camelot Supplemental Deposits shall not apply
      with respect to any Measuring Period for which the Camelot Rent Coverage Ratio
      equals or exceeds 1.20 to 1. As used herein, "Camelot Rent Coverage
Ratio" means, as of the date of determination,
      the
      ratio of (i) the EBITDARM for the Camelot Facility for the Measuring Period,
      minus (A) an assumed management fee equal to five percent (5%) of the
      Gross Revenues generated during such Measuring Period from the Camelot Facility,
      and (B) one-half of the applicable annual CapEx Amount for the Camelot Facility
      at the commencement of the Measuring Period, multiplied by the
      aggregate number of assisted living units at the Camelot Facility, to (ii)
      the
      total amount of the Minimum Rent and Additional Rent due with respect to the
      Camelot Facility for the Measuring Period pursuant to the terms of this Master
      Lease.

    


    (d)            If
      at any time following June 30, 2010, the Ridgewood Rent Coverage Ratio is less
      than 1.20 to 1, Tenant shall from time to time make deposits, which maybe in
      the
      form of cash or supplemental letters of credit meeting the requirements of
      the
      Letter of Credit Agreement (the "Ridgewood Supplemental
Deposits"), to Landlord pursuant to Section 4(e)
until such time as the total amount
      of the Security Deposit is increased as
      a result of such Supplemental Deposits by the amount of Eighty-Four
      Thousand Seven Hundred Fifty Dollars ($84,750); provided, however,
      Tenant's obligation to make such Ridgewood Supplemental Deposits shall not
      apply
      with respect to any Measuring Period for which the Ridgewood Rent Coverage
      Ratio
      equals or exceeds 1.20 to 1. As used herein, "Ridgewood Rent Coverage
      Ratio" means, as of the date of determination, the ratio of (i) the
      EBITDARM for the Ridgewood Facility for the Measuring Period, minus (A)
      an assumed management fee equal to five percent (5%) of the Gross Revenues
      generated during such Measuring Period from the Ridgewood Facility, and (B)
      one-half of the applicable annual CapEx Amount for the Ridgewood Facility at
      the
      commencement of the Measuring Period, multiplied by the aggregate
      number of assisted living units at the Ridgewood Facility, to (ii) the total
      amount of the Minimum Rent and Additional Rent due with respect to the Ridgewood
      Facility for the Measuring Period pursuant to the terms of this Master
      Lease.

    


    
      
        
          
          

        

        
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    (e)            The
      Supplemental Deposits to be made by Tenant in accordance with Section 4(c)
and (d) above shall be due on the thirtieth (30th)
      day of each
      calendar month (or last day of the month, in the case of February) following
      the
      Measuring Period in which the actual Camelot Rent Coverage Ratio or Ridgewood
      Rent Coverage Ratio, as applicable, fails to equal or exceed 1.20 to 1. The
      Supplemental Deposits shall be equal to five percent (5%) of the Gross Revenues
      from the Camelot Facility or Ridgewood Facility, as applicable, for the calendar
      month immediately preceding the date on which each Supplemental Deposit is
      due
      or such lesser amount as is required to fulfill the requirements of Section
      4(c) and (d) above.

    


    (f)            As
      used herein, "Gross Revenues" means all of the revenues of the
      applicable Facility or Facilities other than the proceeds of the sale of any
      of
      the applicable Facility's or Facilities' equipment which has become worn out
      or
      obsolete, all insurance awards and condemnation proceeds, sales, use and
      occupancy or other taxes on receipts required to be accounted for by Tenant
      to
      governmental authorities and non­recurring revenues as reasonably approved
      by Landlord. As used herein, "EBITDARM" means, for any
      Measuring Period, the net income (or loss) of Tenant for such Measuring Period
      to the extent derived from the operation of the applicable Facility or
      Facilities, adjusted to add thereto any amounts deducted in determining such
      net
      income (or loss) for (v) interest expense, (w) income tax expense, (x)
      depreciation and amortization expense, (y) rental expense, and (z) management
      fee expense, in each case determined in conformity with generally accepted
      accounting principles, consistently applied."

    


    (f)            The
      second sentence of Section 8.3 of the Master Lease is hereby deleted and
      substituted with the following:

    


    "As
      used
      herein, the "Applicable Annual Reserve" means:

    


    
      	
              Age
                of Facility (Years)

            	 	
              Applicable
                Annual Reserve

            
	 	 	
              >
                80 Units

            	
              <80
                Units

            
	
              Zero
                through Three

            	 	
              $
                200.00

            	
              $
                300.00

            
	
              Four
                through Seven

            	 	
              $
                300.00

            	
              $
                400.00

            
	
              Eight
                or more Years

            	 	
              $
                450.00

            	
               
                $ 550.00"

            


    

    


    (g)            The
      third sentence of  Section 13.4 of the Master Lease is hereby
      deleted and substituted with the following:

    


    "All
      sums
      so paid by Landlord and all necessary and incidental costs and expenses
      (including reasonable attorneys' fees and expenses) incurred in connection
      with
      the performance of any such act by it, together with interest at the Agreed
      Rate
      from the date of the making of such payment or the incurring of such costs
      and
      expenses, shall at Landlord's option either be payable by Tenant to Landlord
      on
      demand or added to Landlord's Camelot Investment, Landlord's Lakeview/HillenVale
      Investment, and/or Landlord's Ridgewood Investment, as the case
      maybe."

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (h)            The
      forth sentence of Section 18 of the Master Lease is hereby deleted and
substituted
      with the following:

    


    "In
      the
      event this Master Lease is terminated as to any Facility under this Section
      18, then the Minimum Rent and Additional Rent due hereunder shall be shall
      be reduced by the product of (x) the amount of the then current Minimum Rent
      and
      Additional Rent, and (y) a fraction, the numerator of which is the amount
      received by Landlord as a result of the Complete Taking and the denominator
      of
      which is the sum of Landlord's Camelot Investment, Landlord's
      Lakeview/HillenVale Investment and Landlord's Ridgewood
      Investment."

    


    2.            Tax
      Impound and CapEx-Expenditures. From
      and after the date Landlord acquires fee title to the Ridgewood Facility, the
      Ridgewood Facility shall be added as a portion of the Premises leased to Tenant
      under the terms of the Master Lease. Accordingly, with each payment of Minimum
      Rent payable by Tenant with respect to the Ridgewood Facility, Tenant shall
      make
      tax impound deposits and CapEx Reserve deposits for the Ridgewood Facility
      in
      accordance with the terms of Section 5.2 and Section 8.3 of the
      Master Lease.

    


    3.            Amendment
      to LC Agreement. hi the LC Agreement and Exhibit A to the LC
      Agreement, all references to "Four Hundred Three Thousand Eight Hundred
      Twenty-Five Dollars ($403,825)" as the Letter of Credit Amount are hereby
      deleted and replaced with "Five Hundred Seventy-Three Thousand Three Hundred
      Twenty-Five Dollars ($573,325)".

    


    4.           Enforcement
      of Rights. Landlord has the right to enforce the covenants,
      representations and warranties of Seller under the Purchase Agreement with
      respect to the Additional Facility; provided, however, Landlord agrees upon
      request of Tenant either to enforce the same against Seller at Tenant's cost
      and
      expense or, to the extent assignable, to assign its rights thereto in order
      to
      enable Tenant to enforce the same against Seller.

    


    5.           Reaffirmation
      of Obligations.

    


    (a)           Notwithstanding
      the amendments to the Master Lease contained herein, Tenant and Landlord each
      hereby acknowledges and reaffirms its respective obligations under the Master
      Lease (as modified hereby), the LC Agreement and all other documents executed
      by
      such party in connection therewith.

    


    (b)           Notwithstanding
      the amendments to the Master Lease contained herein, Guarantor hereby
      acknowledges and reaffirms its obligations under the Guaranty and all documents
      executed by Guarantor in connection therewith, and further agrees that any
      reference made in the Guaranty to the Master Lease or any terms or conditions
      contained therein shall mean such Master Lease or such terms or conditions
      as
      amended by this Amendment.

    


    
      
        
          
          

        

        
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    6.           Interpretation.
      This Amendment shall be construed as a whole and in accordance
      with
      its fair meaning. Headings are for convenience only and shall not be used in
      construing meaning.

    


    7.    Further
      Instruments. Each party will, whenever and as often as it shall be
reasonably
      requested so to do by another party, cause to be executed, acknowledged or
      delivered any and all such further instruments and documents as may be necessary
      or proper, in the reasonable opinion of the requesting party, in order to carry
      out the intent and purpose of this Amendment.

    


    8.           Incorporation
      of Recitals. The Recitals to this Amendment are incorporated hereby
      by reference.

    


    9.           Counterparts.
      This Amendment may be executed in counterparts, all of which
      executed counterparts shall together constitute a single document. Signature
      pages may be detached from the counterparts and attached to a single copy of
      this document to physically form one document.

    


    10.          Attorneys'
      Fees. In the event of any dispute or litigation concerning the
      enforcement, validity or interpretation of this Amendment, or any part thereof,
      the losing party shall pay all costs, charges, fees and expenses (including
      reasonable attorneys' fees) paid or incurred by the prevailing party, regardless
      of whether any action or proceeding is initiated relative to such dispute and
      regardless of whether any such litigation is prosecuted to
      judgment.

    


    11.          Effect
      of Amendment. Except as specifically amended pursuant to the terms
      of this Amendment, the terms and conditions of the Master Lease shall remain
      unmodified and in full force and effect. In the event of any inconsistencies
      between the terms of this Amendment and any terms of the Master Lease, the
      terms
      of this Amendment shall govern and prevail.

    


    12.          Entire
      Agreement. This Amendment contains the entire agreement between the
parties
      relating to the subject matters contained herein. Any oral representations
      or
      statements concerning the subject matters herein shall be of no force or
      effect.

    


    
      
        
          
          

        

        
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      IN
        WITNESS WHEREOF, the parties have executed this
        Amendment as of the date first above written.

    

    
      


    

    
      	
              TENANT: 

            	 
	 	 	 
	
              SUMMERVILLE
                AT CAMELOT PLACE LLC,

            	 
	
              a
                Delaware limited liability company

            	 
	 	 	 
	
              By:

            	
              /s/
                Granger Cobb

            	 
	 	
              Granger
                Cobb

            	 
	 	
              President

            	 
	 	 	 
	
              SUMMERVILLE
                AT HILLEN VALE LLC,

            	 
	
              a
                Delaware limited liability company

            	 
	 	 	 
	
              By:

            	
              /s/
                Granger Cobb

            	 
	 	
              Granger
                Cobb

            	 
	 	
              President

            	 
	 	 	 
	
              SUMMERVILLE
                AT LAKEVIEW LLC,

            	 
	
              a
                Delaware limited liability company

            	 
	 	 	 
	
              By:

            	
              /s/
                Granger Cobb

            	 
	 	
              Granger
                Cobb

            	 
	 	
              President

            	 
	 	 	 
	
              SUMMERVILLE
                AT RIDGEWOOD GARDENS LLC,

            	 
	
              a
                Delaware limited liability company

            	 
	 	 	 
	
              By:

            	
              /s/
                Granger Cobb

            	 
	 	
              Granger
                Cobb

            	 
	 	
              President

            	 
	 	 	 
	
              GUARANTOR:

            	 
	 	 	 
	
              SUMMERVILLE
                SENIOR LIVING, INC.,

            	 
	
              a
                Delaware corporation 

            	 
	 	 	 
	
              By:

            	
              /s/
                Granger Cobb

            	 
	 	
              Granger
                Cobb

            	 
	 	
              President

            	 
	 	 	 
	
              LANDLORD;

            	 
	 	 	 
	
              NATIONWIDE
                HEALTH PROPERTIES, INC.,

            	 
	
              a
                Maryland corporation

            	 
	 	 	 
	
              By:

            	
              /s/
                David Snyder

            	 
	
              Name:

            	
              David
                Snyder

            	 
	
              Title:

            	
              Vice
                President & Controller

            	 


    

    


    
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