FIRST AMENDMENT TO LEASE AGREEMENT
Exhibit
10.27.4
FIRST
AMENDMENT TO LEASE
AGREEMENT
THIS
FIRST AMENDMENT TO LEASE AGREEMENT (this "Amendment") is made
by and between HOBART RETIREMENT L.L.C., an Indiana limited liability company
("Landlord"),
and SUMMERVILLE 2 LLC, a Delaware limited liability company ("Tenant"),
effective as of the date of mutual execution and delivery ("Contract
Date").
Background:
A. Landlord
and Tenant are parties to that certain Lease Agreement effective November
1, 2004
(the "Lease"), pursuant
to
which Tenant leased certain land and improvements and related personal property
located at 0000 Xx. Xxxx'x Xxxxxx, Xxxxxx, Xxxxxxx 00000 and commonly known
as
Brentwood Assisted Living Community, as more particularly described in the
Lease
(the "Premises").
B. Landlord,
at Landlord's sole cost and expense, has agreed to construct additional
improvements to the Premises (the "Improvements"),
increasing the Premises (measured in residential capacity) by 22 assisted
living units and 28 Alzheimer-care units. Additionally, Landlord, at Landlord's
sole cost and expense, has agreed to purchase and install in the Improvements
certain furniture, fixtures and equipment, as more particularly described
on
Exhibit "B"
attached
hereto (the "FF&E"). The Premises subject to the Lease shall
include the Improvements together with the FF&E (collectively, the "Addition") effective
as of the Occupancy Date (as defined below). Tenant has agreed to terms as
set
forth below as to the procedure for construction of the Addition and for
the
modification of rent and other Tenant obligations in connection
therewith.
NOW,
THEREFORE, in consideration of the mutual promises herein, and for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Landlord and Tenant, intending to be legally bound, hereby
agree
as follows:
1. Capitalized
Terms.
Capitalized terms used but not defined herein shall have the respective
meanings ascribed to such terms in the Lease.
2. Construction
of Addition.
Subject to Paragraph 2(a) below, Landlord, at its sole cost
and
expense, shall (a) construct the Improvements in accordance with the plans
attached as Exhibit
"A" hereto (the "Plans"),
and
(b)
obtain and install in the Improvements the FF&E (collectively, the "Construction").
The
FF&E shall be the property of Landlord and shall, in accordance with
Paragraph 3 below, become part of the Leased Property under the
Lease.
(a) Amendment
Conditioned Upon
HUD Financing. Landlord's obligation to construct the Addition is
contingent upon and subject to the closing of an amendment to the existing
Mortgage applicable to the Facility as insured by the U.S. Department of
Housing
and Urban Development (HUD) under Section 232 of the National Housing Act
(the
"Loan Closing").
If
the
Loan Closing does not occur by the Outside Date (as defined below), Tenant
shall
have the right to terminate this Amendment upon written notice to Landlord
given
not later than twenty (20) days after the Outside Date, in which event this
Amendment shall be null and void and of no further force and effect and neither
party shall have any further rights or obligations hereunder except as may
otherwise be expressly provided herein.
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(b) Permits
And Approvals.
Except as otherwise expressly set forth herein, Landlord shall, at
its
sole cost and expense, obtain all required licenses, certificates, permits,
fees
and inspections associated with the Addition (collectively, the "Approvals");
provided, that in accordance with Paragraph 5 below, Tenant shall
be
responsible for the operations-related requirements for amendment of the
existing license of the Facility as a "Residential Care Facility" under Indiana
law (Indiana Administrative Code 410-16.2-5-1, hereafter, the "ALF Licensing
Law") to permit the operation of the assisted living and Alzheimer care portions
of the Improvements (the "License Amendment");
Landlord's responsibility for the License Amendment shall be limited
to
the construction of the Addition in accordance with the requirements of the
ALF
Licensing Law. Landlord shall, in consultation with Tenant, submit the Plans
and
other construction-related documentation for the Addition as required under
the
ALF Licensing Law (the "Construction
Documents")
to the Indiana Department of Health (from which the License Amendment
must be obtained; hereafter, the "Licensing Authority"),
in coordination with Tenant's submission to the Licensing Authority
of
documentation relating to the staffing of the assisted living and Alzheimer
care
portions of the Improvements and other operational requirements for obtaining
the License Amendment. Landlord shall be responsible for obtaining approval
of
the Construction Documents from the Licensing Authority as required for the
License Amendment and Tenant shall be responsible for obtaining approval
from
the Licensing Authority for all operational matters required for the License
Amendment.
(c)
Completion. Landlord shall use its best efforts to obtain HUD and
Mortgagee approval as required for the Loan Closing, to cause the Loan Closing
to occur, and to obtain a building permit authorizing the Construction, within
one-hundred-eighty (180) days from the Contract Date (the "Outside Date").
From
and after the Outside Date, provided that the Loan Closing has occurred and
Landlord has obtained the building permit authorizing the Construction, Landlord
shall use its best efforts to complete the Construction and obtain the necessary
Approvals to authorize Tenant's occupancy and use of the Addition for provision
of accommodations and care for Residents (such Approvals, not including the
License Amendment, are referred to hereafter as the "Certificate of
Occupancy").
The "Occupancy
Date" shall mean the date Landlord completes the Addition in accordance
with the terms and conditions of this Amendment and Landlord delivers to
Tenant
a Certificate of Occupancy for the Improvements. Landlord shall cause the
Addition to be completed in accordance with the terms and conditions of this
Amendment and deliver a Certificate of Occupancy to Tenant for the Improvements
within twelve (12) months following the Outside Date (the "Completion Period").
In the event that Landlord has not caused the Loan Closing to occur,
and
obtained the building permit authorizing the Construction, by the Outside
Date,
Tenant shall either terminate this Amendment in accordance with Paragraph
2(a)
above or the parties will agree to extend the Outside Date.
(d)
Tenant's
Operations/Entry To Improvements During Construction. Landlord covenants
and agrees that during the Construction it will use diligent efforts to minimize
interference with Tenant's operations at the existing Premises. Tenant covenants
and agrees that during the Construction (until the Occupancy Date) it will
use
diligent efforts to prevent its employees and Residents of the Facility,
as well
as prospective Residents or other Tenant invitees, from entering the
Improvements. Tenant shall hold Landlord harmless from any loss arising from
Residents or Tenant's employees entering the Improvements prior to the Occupancy
Date, except to the extent such loss is caused by the negligence or willful
misconduct of Landlord.
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3. Amendment
of Lease.
Effective upon the Occupancy Date, the Lease shall be amended
as follows:
(a)
All references to the "Premises," the "Leased Premises" and the
"Leased Property" in the Lease shall be amended to include the
Addition.
(b) All
references to "Equipment" in the Lease shall be amended to include the
FF&E.
(c)
The amount of the annual Base Rent payable by Tenant under the Lease
shall be increased by 1.21 times Landlord's annual mortgage payment payable
pursuant to the HUD mortgage for construction of the Improvements based upon
total development costs (per the line items in Exhibit D), Landlord equity
of
not less then ten percent (10%) of the
HUD
mortgage amount, and the actual fixed interest rate of the HUD mortgage (such
amount referred to herein as the "Increased Base Rent"); provided, however,
notwithstanding anything to the contrary herein and notwithstanding the actual
development costs or HUD mortgage interest rate, in no event shall the Increased
Base Rent exceed $495,711; provided, further, that the Increased Base Rent
shall
not be subject to adjustment pursuant to Section 6.1(A) of the Lease until
occupancy of the Addition reaches 90% for three (3) consecutive
months.
4. Commencement
Date.
The commencement date with respect to Tenant's obligation
to pay the Increased Base Rent shall be the day after the Occupancy
Date.
5. License
Application.
Subject to Landlord's responsibility for construction-related matters
as
stated in Paragraph 2(b) above, Tenant shall be responsible, at its sole
cost
and expense, for obtaining the License Amendment from the appropriate state
assisted living licensing agencies as required for Tenant to operate the
assisted living and Alzheimer care portions of the Addition and, in connection
therewith, for preparation and submission of any and all applications and
other
materials required by such licensing agencies, together with payment of any
and
all application fees, charges and expenses related thereto. Landlord agrees
to
cooperate fully with Tenant in connection therewith.
6. Security
Deposit. Not
later than five (5) business days following the date that Landlord provides
written notice to Tenant that the Loan Closing has occurred and Landlord
has
received all Approvals required to commence construction of the Improvements,
Tenant shall pay Landlord an additional security deposit in the amount of
Two
Hundred Thirty-Eight Thousand and No/100 Dollars ($238,000.00) and the term
"Security Deposit" under the Lease shall be amended to include such amount;
provided, however, that in the event the Occupancy Date has not occurred
within
the Completion Period, such additional security deposit shall be immediately
returned to Tenant and any of Landlord's carrying costs with respect to the
Addition from and after Completion Period shall not be added to the calculation
of Increased Base Rent provided in Paragraph 3(c) above; further provided,
that
if the Construction is delayed by any willful act or neglect of Tenant, or
the
Occupancy Date is delayed by fire, adverse weatherconditions not reasonably
anticipatable, unavoidable casualties, or acts of God, then the Completion
Period shall be extended a period of time equal to the delay caused by said
facts provided that Landlord has furnished Tenant prompt written notice
following the occurrence of any such event.
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7. Marketing
Allowance.
On or before the Occupancy Date, as the funds are received by Landlord
from the HUD construction loan, shall pay to Tenant, in cash, such amounts
as
Landlord receives under the HUD construction loan as a marketing allowance
to
assist Tenant with its pre occupancy marketing costs. Notwithstanding anything
herein or in the Lease to the contrary, as of the date of this Amendment,
Tenant
shall be permitted to market and lease space in the Addition to prospective
tenants, subject to the restriction stated in Paragraph 2(d) above as to
entry
prior to the Occupancy Date.
8.
Suspension Of
Rent Ratio
Requirements. The terms of Section 4.2 of the Lease shall be suspended
for a period of fourteen (14) months following the beginning of the next
calendar month after the month in which the Occupancy Date occurs.
9.
Landlord's Construction
Warranties/Post-Construction Procedure. Exhibit "C"attached
hereto and made a part hereof defines Landlord's Construction Warranties
(as
such term is defined in Exhibit "C") and the
inspection/approval procedure to be followed in completion of the
Construction.
10. Representations.
Landlord represents, warrants and covenants that: (a) as of the Occupancy
Date, Landlord shall be the sole owner of the Leased Property (as such term
is
amended by this Amendment); (b) the Addition shall be leased to Tenant free
and
clear of any and all liens, encumbrances, conditions or restrictions which
would
impair or restrict Tenant's use and possession thereof for the purposes
permitted under the Lease (as amended hereby); and (c) the Addition shall
be
defect-free for a period of one (1) year in accordance with Exhibit
"C" and Landlord shall assign to Tenant any warranties
provided to Landlord in connection with the Addition.
11. No
Brokers. Each
party represents and warrants to the other that such party has dealt
with no broker, agent or other person in connection with this Amendment and
that
no broker, agent or other person brought about this Amendment, and each party
agrees to indemnify, defend and hold the other party harmless from and against
any claims by any other broker, agent or other person claiming a commission
or
other form of compensation by with regard to this Amendment.
12. Other
Terms. All of
the other terms, covenants and conditions of the Lease not inconsistent
herewith shall remain in full force and effect and unchanged hereby. In the
case
of any inconsistencies between the terms and conditions contained in the
Lease
and the terms and conditions contained herein, the terms and conditions
contained herein shall control
13. Governing
Law. This
Amendment shall be governed by and construed in accordance with the laws
of the
State of Indiana.
14.
No Other Amendments.
Except as amended hereby, the Lease remains in full force and effect
and
without any amendment or modification.
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15.
Counterparts.
This Amendment may be executed by the parties hereto in separate
counterparts, all of which, when delivered, shall together constitute one
and
the same instrument, and a facsimile copy shall be deemed to be as sufficient
as
an original for all purposes.
[signatures
appear on next page]
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IN
WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year
first above written.
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LANDLORD:
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HOBART
RETIREMENT L.L.C.,
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an
Indiana limited liability company
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By:
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/s/
Xxxxxxx X. Xxxxxx
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Name:
Xxxxxxx X. Xxxxxx
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Title:
Secretary
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TENANT:
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SUMMERVILLE
2 LLC,
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a
Delaware limited liability company
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By:
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/s/
Xxxxxxx Xxxx
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Name:
Xxxxxxx Xxxx
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Title:
President
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