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First Amendment To Lease - SUN HEALTHCARE GROUP INC - 11-14-1996

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First Amendment To Lease - SUN HEALTHCARE GROUP INC - 11-14-1996 Powered By Docstoc
					FIRST AMENDMENT TO LEASE THIS AGREEMENT is made and entered into as of the 1st day of August, 1996 by and between Sumner Nursing Home, L.L.C., an Illinois limited liability company ("Lessor") and Sunrise Healthcare Corporation, a New Mexico corporation ("Lessee"). RECITALS A. Lessor and Lessee are parties to that Lease Agreement dated April 26, 1994 (the "Lease") with respect to the long term care facility located in Sumner, Illinois and known as Pine Lawn Manor Care Center (the "Facility"). B. The Lease reflects that the Facility has 106 beds and provides for the payment of a specified rent with respect thereto. C. The Lease contemplated that Lessee might suffer a reduction in the licensed bed capacity of the Facility in the first Lease Year and contemplated a reduction in the rent related thereto. D. The licensed bed capacity of the Facility was not reduced during the first Lease Year for the reasons anticipated by Lessor and Lessee, but Lessee was later advised by the State of Illinois that it will lose 10 of the licensed beds at the Facility for reasons beyond the reasonable control of Lessee. E. The Lease provides that Lessee cannot reduce the licensed bed capacity of the Facility without the consent of the Lessor, which consent the Lessor is willing to grant. F. Lessor further recognizes, as it did at the time of the execution of the Lease, that the loss of ten (10) beds may adversely affect Lessee's income at the Facility and thus has agreed to a reduction in the rent to address the same. G. Lessor and Lessee are desirous of documenting the amendments to the Lease to reflect the reduction in bed capacity and rent. H. The Lease provides that it can only be amended by written instrument signed by Lessor and Lessee. NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants of the parties set forth herein, IT IS HEREBY AGREED AS FOLLOWS:

AGREEMENT 1. The Lease is hereby amended in all respects to reflect that the Facility is a 96 bed developmentally disabled and/or intermediate care nursing home facility. 2. The Rent schedule set forth in Section 4.1 is hereby deleted in its entirety and the following is substituted in lieu thereof:
Initial Term -----------1st Lease Year 2nd Lease Year May 1, 1996 -July 31, 1996 August 1, 1996 -April 30, 1997 Annual Rent ----------$280,000.00 $287,000.00 Monthly Rent -----------$23,333.00 $23,917.00

N/A

$24,515.00

N/A

$23,414.00

AGREEMENT 1. The Lease is hereby amended in all respects to reflect that the Facility is a 96 bed developmentally disabled and/or intermediate care nursing home facility. 2. The Rent schedule set forth in Section 4.1 is hereby deleted in its entirety and the following is substituted in lieu thereof:
Initial Term -----------1st Lease Year 2nd Lease Year May 1, 1996 -July 31, 1996 August 1, 1996 -April 30, 1997 4th Lease Year 5th Lease Year 6th Lease Year 7th Lease Year 8th Lease Year 9th Lease Year 10th Lease Year First Extended Term ------------------11th Lease Year 12th Lease Year 13th Lease Year 14th Lease Year 15th Lease Year $342,336.00 $350,892.00 $359,664.00 $368,652.00 $377,868.00 $28,528.00 $29,241.00 $29,972.00 $30,721.00 $31,489.00 Annual Rent ----------$280,000.00 $287,000.00 Monthly Rent -----------$23,333.00 $23,917.00

N/A

$24,515.00

N/A $287,988.00 $295,188.00 $302,568.00 $310,140.00 $317,892.00 $325,836.00 $333,984.00

$23,414.00 $23,999.00 $24,599.00 $25,214.00 $25,845.00 $26,491.00 $27,153.00 $27,832.00

Second Extended Term -------------------16th Lease Year 17th Lease Year $387,312.00 $396,996.00 Annual Rent ----------18th Lease Year 19th Lease Year 20th Lease Year Third Extended Term ------------------21st Lease Year $438,216.00 $36,518.00 $406,920.00 $417,096.00 $427,524.00 $32,276.00 $33,083.00 Monthly Rent -----------$33,910.00 $34,758.00 $35,627.00

Second Extended Term -------------------16th Lease Year 17th Lease Year $387,312.00 $396,996.00 Annual Rent ----------18th Lease Year 19th Lease Year 20th Lease Year Third Extended Term ------------------21st Lease Year 22nd Lease Year 23rd Lease Year 24th Lease Year 25th Lease Year $438,216.00 $449,172.00 $460,404.00 $471,912.00 $483,708.00 $36,518.00 $37,431.00 $38,367.00 $39,326.00 $40,309.00 $406,920.00 $417,096.00 $427,524.00 $32,276.00 $33,083.00 Monthly Rent -----------$33,910.00 $34,758.00 $35,627.00

3. Except as specifically set forth herein the Lease shall remain in full force and effect as originally executed. 4. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the day and year first set forth above. SUMNER NURSING HOME, L.L.C. By: Its: SUNRISE HEALTHCARE CORPORATION By: Its:

EXHIBIT 10.4 SECOND AMENDMENT TO LEASE THIS SECOND AMENDMENT TO LEASE (this "AMENDMENT") is made this 1st day of June, 1996, by and between East Mesa Associates Limited Partnership, an Illinois limited partnership ("LESSOR"), and Sunrise Healthcare Corporation, a New Mexico corporation, d/b/a Moonrise Healthcare Corporation ("LESSEE"). WITNESSETH WHEREAS, Lessor and Lessee are parties to that certain Lease Agreement dated September 30, 1990, as

IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the day and year first set forth above. SUMNER NURSING HOME, L.L.C. By: Its: SUNRISE HEALTHCARE CORPORATION By: Its:

EXHIBIT 10.4 SECOND AMENDMENT TO LEASE THIS SECOND AMENDMENT TO LEASE (this "AMENDMENT") is made this 1st day of June, 1996, by and between East Mesa Associates Limited Partnership, an Illinois limited partnership ("LESSOR"), and Sunrise Healthcare Corporation, a New Mexico corporation, d/b/a Moonrise Healthcare Corporation ("LESSEE"). WITNESSETH WHEREAS, Lessor and Lessee are parties to that certain Lease Agreement dated September 30, 1990, as amended by that certain Amendment to Lease Agreement dated October 31, 1994 (the Lease Agreement, as so amended, is hereinafter referred to as the "LEASE"), demising a track of land improved with a residential care facility (the "DEMISED PREMISES") commonly known as East Mesa Care Center located in Mesa, Arizona as more particularly described in Exhibit A attached hereto. WHEREAS, the parties hereto desire to delete the purchase option granted to Lessee thereunder. NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows: 1. DEFINED TERMS. All terms used herein shall have a meaning ascribed to them in the Lease, except as specifically provided herein. 2. DELETION OF PURCHASE OPTION. Article XXXIV of the Lease is hereby deleted in its entirety. 3. LEASE IN FULL FORCE AND EFFECT. In the event of any conflict between the Lease and this Amendment, the term, conditions and provisions of this Amendment shall govern and, except as herein expressly amended, all of the terms, covenants and conditions and provisions of the Lease shall continue in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be signed by persons authorized to do so on behalf of each of them respectively as of the date set forth above. LESSOR: EAST MESA ASSOCIATES LIMITED PARTNERSHIP, an Illinois limited partnership By

EXHIBIT 10.4 SECOND AMENDMENT TO LEASE THIS SECOND AMENDMENT TO LEASE (this "AMENDMENT") is made this 1st day of June, 1996, by and between East Mesa Associates Limited Partnership, an Illinois limited partnership ("LESSOR"), and Sunrise Healthcare Corporation, a New Mexico corporation, d/b/a Moonrise Healthcare Corporation ("LESSEE"). WITNESSETH WHEREAS, Lessor and Lessee are parties to that certain Lease Agreement dated September 30, 1990, as amended by that certain Amendment to Lease Agreement dated October 31, 1994 (the Lease Agreement, as so amended, is hereinafter referred to as the "LEASE"), demising a track of land improved with a residential care facility (the "DEMISED PREMISES") commonly known as East Mesa Care Center located in Mesa, Arizona as more particularly described in Exhibit A attached hereto. WHEREAS, the parties hereto desire to delete the purchase option granted to Lessee thereunder. NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows: 1. DEFINED TERMS. All terms used herein shall have a meaning ascribed to them in the Lease, except as specifically provided herein. 2. DELETION OF PURCHASE OPTION. Article XXXIV of the Lease is hereby deleted in its entirety. 3. LEASE IN FULL FORCE AND EFFECT. In the event of any conflict between the Lease and this Amendment, the term, conditions and provisions of this Amendment shall govern and, except as herein expressly amended, all of the terms, covenants and conditions and provisions of the Lease shall continue in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be signed by persons authorized to do so on behalf of each of them respectively as of the date set forth above. LESSOR: EAST MESA ASSOCIATES LIMITED PARTNERSHIP, an Illinois limited partnership By Zev Karkomi, a General Partner By Harvey Angell, a General Partner LESSEE: SUNRISE HEALTHCARE CORPORATION, a New Mexico corporation, d/b/a Moonrise Healthcare Corporation By Its

EXHIBIT A

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be signed by persons authorized to do so on behalf of each of them respectively as of the date set forth above. LESSOR: EAST MESA ASSOCIATES LIMITED PARTNERSHIP, an Illinois limited partnership By Zev Karkomi, a General Partner By Harvey Angell, a General Partner LESSEE: SUNRISE HEALTHCARE CORPORATION, a New Mexico corporation, d/b/a Moonrise Healthcare Corporation By Its

EXHIBIT A LEGAL DESCRIPTION OF THE DEMISED PREMISES The part of the Southeast quarter of Section 22, Township 1 North, Range 6 East of the Gila and Salt River Base and Meridian, designated as Tract E-1 on the Plat of Venture Out and Mesa Unit One according to Book 127 of Maps, page 21, records of Maricopa County, Arizona EXCEPT the North 200 feet thereof.

Exhibit 11.1 SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1995 1996 19 --------------------------(In thousands, except per share data) PRIMARY: Shares outstanding at beginning of period Weighted average shares issued pursuant to: Acquisition agreements Employee benefit plans Conversion of 6-1/2% Convertible Subordinated Debentures due 2003 Weighted average shares repurchased Dilutive effect of outstanding stock options 46,023 -38 --------47,116 609 7 --515 ------47,916 63 61 45,0 5 1 1,5 (1,592) 531 -----9 ----

Weighted average number of common and common equivalent shares outstanding

46,061 -----------

48,247 -------------

46,979 -----------

48,1 -------

Net earnings (loss) before extraordinary

EXHIBIT A LEGAL DESCRIPTION OF THE DEMISED PREMISES The part of the Southeast quarter of Section 22, Township 1 North, Range 6 East of the Gila and Salt River Base and Meridian, designated as Tract E-1 on the Plat of Venture Out and Mesa Unit One according to Book 127 of Maps, page 21, records of Maricopa County, Arizona EXCEPT the North 200 feet thereof.

Exhibit 11.1 SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1995 1996 19 --------------------------(In thousands, except per share data) PRIMARY: Shares outstanding at beginning of period Weighted average shares issued pursuant to: Acquisition agreements Employee benefit plans Conversion of 6-1/2% Convertible Subordinated Debentures due 2003 Weighted average shares repurchased Dilutive effect of outstanding stock options 46,023 -38 --------47,116 609 7 --515 ------47,916 63 61 45,0 5 1 1,5 (1,592) 531 -----9 ----

Weighted average number of common and common equivalent shares outstanding

46,061 -----------

48,247 -------------

46,979 -----------

48,1 -------

Net earnings (loss) before extraordinary loss on early extinguishment of debt (1) Extraordinary loss

($5,562) ------($5,562) -----------

$16,415 -------$16,415 -------------

$26,143 ------$26,143 -----------

$35,7 3,4 ---$32,3 -------

Net earnings (loss) (1)

Net earnings before extraordinary loss per common and common equivalent share (1) Extraordinary loss Net earnings per common and common equivalent share (1)

($0.12) ------($0.12) -----------

$0.34 -------$0.34 -------------

$0.56 ------$0.56 -----------

$0. 0. ---$0. -------

(Continued on next page)

Exhibit 11.1 SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES

Exhibit 11.1 SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1995 1996 19 --------------------------(In thousands, except per share data) PRIMARY: Shares outstanding at beginning of period Weighted average shares issued pursuant to: Acquisition agreements Employee benefit plans Conversion of 6-1/2% Convertible Subordinated Debentures due 2003 Weighted average shares repurchased Dilutive effect of outstanding stock options 46,023 -38 --------47,116 609 7 --515 ------47,916 63 61 45,0 5 1 1,5 (1,592) 531 -----9 ----

Weighted average number of common and common equivalent shares outstanding

46,061 -----------

48,247 -------------

46,979 -----------

48,1 -------

Net earnings (loss) before extraordinary loss on early extinguishment of debt (1) Extraordinary loss

($5,562) ------($5,562) -----------

$16,415 -------$16,415 -------------

$26,143 ------$26,143 -----------

$35,7 3,4 ---$32,3 -------

Net earnings (loss) (1)

Net earnings before extraordinary loss per common and common equivalent share (1) Extraordinary loss Net earnings per common and common equivalent share (1)

($0.12) ------($0.12) -----------

$0.34 -------$0.34 -------------

$0.56 ------$0.56 -----------

$0. 0. ---$0. -------

(Continued on next page)

Exhibit 11.1 SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (CONTINUED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1995 1996 1995 ------------------------------(In thousands, except per share data) FULLY DILUTED: Weighted average number of common and common equivalent shares used in primary calculation Additional dilutive effect of

46,061

48,247

46,979

48,131

Exhibit 11.1 SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (CONTINUED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1995 1996 1995 ------------------------------(In thousands, except per share data) FULLY DILUTED: Weighted average number of common and common equivalent shares used in primary calculation Additional dilutive effect of stock options Assumed conversion of dilutive convertible debentures

46,061

48,247

46,979

48,131

--

--

14

--

--------

4,714 -------

4,714 -------

4,795 -------

Fully diluted weighted average number of common and common equivalent shares outstanding

46,061 ------------($5,562)

52,961 ------------$16,415

51,707 ------------$26,143

52,926 ------------$35,752

Net earnings before extraordinary loss used in primary calculation (1) Adjustment for reduced interest expense, net of interest expense related to additional borrowings to fund cash portion of merger consideration assumed paid on conversion of dilutive convertible debentures and net of related income tax benefits

--------

850 -------

2,568 -------

2,485 -------

Adjusted net earnings (loss) before extraordinary loss used in fully diluted calculation Extraordinary loss Net earnings (loss) (1)

(5,562) -------($5,562) -------------

17,265 -------$17,265 -------------

28,711 -------$28,711 -------------

38,237 3,413 ------$34,824 -------------

Fully diluted net earnings before extraordinary loss per common and common equivalent share (1) Extraordinary loss on early extinguishment of debt

($0.12)

$0.33

$0.56

$0.72

--------

--------

--------

0.06 -------

Fully diluted net earnings per common and common equivalent share (1)

($0.12) -------------

$0.33 -------------

$0.56 -------------

$0.66 -------------

(1) For financial reporting purposes, a pro forma provision for income taxes has been reflected in the computation of earnings per share to present taxes on the results of operations for Golden Care for the period from January 1, 1995 to May 5, 1995, as if Golden Care had not elected S corporation status and was subject to and liable for Federal and state income taxes prior to the termination of its S corporation status. Golden Care terminated its S corporation status for Federal and state income tax purposes upon merging with the Company on May 5, 1995.

ARTICLE 5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE SUN HEALTHCARE GROUP, INC. SEPTEMBER 30, 1996 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED

9 MOS DEC 31 1996 JAN 01 1996 SEP 30 1996 21,420 0 266,416 13,873 0 346,330 230,750 0 1,099,728 124,300 400,067 0 0 512 572,514 1,099,728 0 986,251 0 811,210 0 4,967 18,987 57,072 30,929 26,143 0 0 0 26,143 0.56 0.56

ARTICLE 5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE SUN HEALTHCARE GROUP, INC. SEPTEMBER 30, 1996 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED

9 MOS DEC 31 1996 JAN 01 1996 SEP 30 1996 21,420 0 266,416 13,873 0 346,330 230,750 0 1,099,728 124,300 400,067 0 0 512 572,514 1,099,728 0 986,251 0 811,210 0 4,967 18,987 57,072 30,929 26,143 0 0 0 26,143 0.56 0.56