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Exhibit 10.11
AMENDMENT TO LEASE
This Amendment to Lease ("Amendment") is entered into as of the First
day of March, 1994, by and between SOUTH BAY SANITARIUM AND CONVALESCENT
HOSPITAL, a partnership ("Landlord") and SUMMIT CARE-CALIFORNIA, INC., a
California corporation doing business as Bay Crest Care Center and the
successor in interest to GARNET CONVALESCENT HOSPITAL, INC., a California
corporation ("Tenant"), for the purpose of amending and modifying that certain
lease dated March 1, 1980 (the "Lease") , between Landlord and Tenant.
The terms and provisions of the Lease except as hereby amended are
hereby incorporated herein by reference, as if fully set forth herein. All
capitalized undefined terms used herein shall have the same meanings as set
forth in the Lease.
RECITALS
The parties acknowledge that the Lease is in full force and effect and
wish to amend the Lease to extend the term, provide for rental payments and
grant to Tenant rights of renewal and a right of first refusal, all as
hereinafter set forth.
NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto hereby agree as follows:
AMENDMENT
1. Term
Section 2, "Term", is hereby deleted and amended to provide as follows:
"The term of this Lease, as hereby amended ("Lease Term"), shall
commence April 1, 1994 and shall expire, unless sooner terminated, at
midnight February 28, 2010."
2. Options to Renew
Section 30, "Option to Renew" is hereby deleted and amended to provide as
follows:
"Provided Tenant is not then in default hereunder, Tenant is hereby
granted an option to renew this Lease under the same terms, provisions
and covenants (so far as applicable) as herein contained, including
rental adjustment as provided in paragraph 4, as amended, for an
additional term of five (5)
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years (the "Extended Term") to commence on March 1, 2010 and end on
February 28, 2015. The option shall be exercised by notice, setting
forth Tenant's election to exercise the option, delivered to Landlord
not less than sixty (60) days prior to the expiration of the Term.
Upon exercise, such additional period shall be deemed to be an
extension of the Lease Term for the purposes of this Lease."
3. Rent
Paragraphs 4(A) , 4(B) , 4(C) and 4(D) of Section 4, "Rent", are hereby
deleted and amended to provide as follows:
A. During the period commencing on April 1, 1994 and ending on
February 28, 1995 (the "First Adjustment Period"), Tenant
shall pay Landlord as Minimum Monthly Rent for the Premises a
sum equal to Eleven Thousand Eight Hundred Dollars and 00/100
($11,800.00) before the first day of each and every month
during the First Adjustment Period.
B. During the period commencing on March 1, 1995 and ending on
February 27, 1997 (the "Second Adjustment Period") Tenant
shall pay Landlord as Minimum Monthly Rent for the Premises a
sum equal to Sixteen Thousand Nine Hundred Sixty Six Dollars
and 67/100 ($16,966.67) before the first day of each and every
month during the Second Adjustment Period.
C. During the period commencing on March 1, 1997 and ending on
February 28, 2010 (the "Third Adjustment Period") Tenant shall
pay Landlord as Minimum Monthly Rent for the Premises a sum
equal to Eighteen Thousand Eight Hundred Dollars and 00/100
($18,800.00) before the first day of each and every month of
the Third Adjustment Period, subject to annual increases as
set forth in subparagraph 4(D) below.
D. The Minimum Monthly Rent provided for in Paragraph C above
shall be subject to adjustment effective March 1, 1996 and
annually each first day of March thereafter (the "adjustment
date") as follows:
The base for computing the adjustment is the Consumer Price
Index (All Items) for the Los Angeles-Long Beach Metropolitan Area,
published by the United States Department of Labor, Bureau of Labor
Statistics ("Index"), which is published for the closest date on or
before March 1, 1995 ("Beginning Index"). If the Index for the
closest date on or before the adjustment date ("Extension Index") has
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increased over the Beginning Index, the Minimum Monthly Rent for the
next twelve (12) months until the next annual adjustment shall be set
by multiplying the then-current monthly rent by a fraction, the
numerator of which is the Extension Index and the denominator of which
is the Beginning Index. Provided, however, that in no event shall the
annual adjustment to the Minimum Monthly Rent be less than three
percent (3%) nor more than six percent (6%) of the then-current
Minimum Monthly Rent. On adjustment of the Minimum Monthly Rent as
provided for in this Amendment, the parties shall immediately confirm
to each other in writing the new Minimum Monthly Rent.
If the Index is discontinued or revised during the Lease Term,
such other government index or computation with which it is replaced
shall be used in order to obtain substantially the same result as
would be obtained if the Index had not been discontinued or revised."
This lease is what is commonly called a "triple net lease", it being
understood that Landlord shall receive the Rent set forth in this paragraph
free and clear of any and all impositions, taxes, liens, charges, or expenses
of any nature whatsoever in connection with its ownership and leasing of the
Premises. Tenant at its cost shall maintain the premises in good condition and
Landlord shall have no responsibility to maintain the premises. In addition to
the Rent provided in this paragraph, Tenant shall pay to the parties
respectively entitled thereto all impositions, taxes, insurance premiums and
operating charges, including maintenance and repairs charges.
4. Section 13, Insurance, is hereby amended to provide that the policies
of insurance maintained pursuant to this section shall have deductible
provisions (a) in amounts reasonable for and in accordance with the Tenant's
financial capability, (b) subject to the deductible levels established by the
insurance industry marketplace at the time of inception of said insurance
policies and renewals thereof, and (c) which shall be for the account of and
payable by Tenant.
In addition, Tenant, at its sole cost and expense, shall purchase and
maintain earthquake insurance to cover the physical premises and contents.
Coverage is to be written on a replacement cost basis.
5. Section 16, Assignment and Subletting, is hereby amended to delete
reference to the merger or consolidation of Tenant or to the transfer or sale
of a controlling percentage of the capital stock of Tenant as requiring the
consent of Landlord. Landlord hereby acknowledges that Tenant is a publicly
held corporation, and that the merger or consolidation of Tenant or changes in
the
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ownership of the outstanding capital stock of Tenant shall not require
Landlord's consent.
6. Right of First Refusal.
If Landlord at any time determines to sell all or any part of the Premises
(whether or not in response to an offer from a third party), Landlord shall
notify Tenant of the terms on which Landlord will be willing to sell.
If Tenant, within thirty (30) days after Landlord's notice, indicates
in writing its agreement to purchase the Premises or a part of the Premises on
the terms stated in the Landlord's notice, Landlord shall sell and convey the
Premises or a part of the Premises to Tenant on the terms stated in the notice.
If Tenant does not indicate its agreement within thirty (30) days, Landlord
thereafter shall have the right to sell and convey the Premises or a part of
the Premises to third party on the same terms stated in the notice. If
Landlord does not thereafter sell and convey the Premises to a third party on
the same terms stated in the Landlord's notice to Tenant, within ninety (90)
days, any further transaction will be deemed to be a new determination by
Landlord to sell and convey the premises or a part of the Premises and the
provisions of this Section shall apply.
If Tenant purchases all of the Premises, this Lease shall terminate on
the date title vests in Tenant. If Tenant shall purchase a part of the
Premises, this Lease as to the part purchased shall terminate on the date title
vests in Tenant, and the Minimum Monthly Rent shall be reduced in the same
ratio that the value of the Premises before the purchase bears to the value of
the Premises covered by the Lease immediately after the purchase.
III. EFFECT OF AMENDMENT
Except as expressly amended or modified herein the Lease shall remain
in full force and effect.
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IN WITNESS WHEREOF, the undersigned have executed this Lease as of the
date first set forth above.
LANDLORD
SOUTH BAY SANITARIUM AND
CONVALESCENT HOSPITAL
a partnership
By:
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Its:
TENANT
SUMMIT CARE-CALIFORNIA
a California corporation
By:
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Its: Vice President Finance
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