AMENDED AND RESTATED LEASE AGREEMENT
THIS AMENDED AND RESTATED LEASE AGREEMENT
(the "Lease") is made and entered into this 26th
day of February, 1996 by and between EMERITUS
CORPORATION, a Washington corporation ("Tenant"),
and LM ROCKY HILL ASSISTED LIVING LIMITED
PARTNERSHIP, formerly known as LM ROCKY HILL I
LIMITED PARTNERSHIP, a Delaware limited
partnership ("Landlord").
Reference is made to a certain Lease
Agreement dated the 4th day of October, 1995
between Tenant and Landlord (the "Original
Lease").
WHEREAS, Landlord and Tenant wish to amend
and restate in full the terms and conditions of
the Original Lease;
NOW, THEREFORE, in consideration of the
mutual undertakings and covenants hereinafter
contained and the acts to be performed hereunder,
Landlord and Tenant hereby agree to restate in
full the Original Lease as set forth below:
Section 1. THE PREMISES.
Section 1.1. FACILITY. Landlord hereby
demises and leases to Tenant and Tenant hereby
leases and takes from Landlord, the real property
described in Exhibit A hereto (the "Real
Property"), together with those certain
improvements (the "Improvements") to be
constructed by Landlord thereon consisting of a
senior housing facility with assisted living
services (the "Facility") as more particularly
described and provided for in the Construction
Work LeKer aaached hereto as Exhibit "B" and
incorporated herein by this reference (the "Work
Xxxxx"), subject to those encumbrances and other
mauers of record set forth on Exhibit ``C" aKached
hereto and incorporated herein by this reference
(the "Permiaed Encumbrances"). The Real Property,
the Improvements and the Personal Property
(defined below) shall collectively constitute the
"'Premises." Included within the Improvements is
that certain access road as shown on Exhibit "D"
aaached hereto_which shall provide vehicular_
access to and from the Facility and Cold Spring
Road (the "Access Road"). Tenant's right to use
the Access Road shall be shared only with those
tenants and occupants of the "Future Development"
on the "Adjacent Land" as described and defined in
Section 1.5 below.
Section 1.2. PERSONAL PROPERTY. Landlord
hereby further demises and leases to Tenant, and
Tenant hereby leases and takes from Landlord, all
equipment, furniture, furnishings, and fixtures
which are to be installed as part of the
Improvements pursuant to the "Working Drawings and
Specifications" (as that term is defined in the
Work Letter) approved by Landlord and Tenant, as
provided for in the Work Leaer, together with any
additional items added thereto from time to time
by written agreement between Landlord and Tenant
(such equipment, furniture, furnishings and
fixtures, together with all additions thereto or
replacements thereof will hereinafter be referred
to as the "Personal Property"). If any equipment,
in addition to the Personal Property, is necessary
or convenient to operate the Facility, all such
additional equipment shall be acquired by and at
the cost of Tenant and the same shall be and
remain the property of Tenant in accordance with
the terms of Section 1.2.1 below.
Section 1.2.1. Tenant shall keep all of the
Personal Property in good working order and
condition at Tenant's sole cost and expense, and
at the expiration or termination of the Lease Term
(as defined below) shall return and deliver all of
such property to Landlord in good working order
and condition, reasonable wear and tear excepted.
If necessary for the proper operation of the
Facility, Tenant shall, during the Lease Term,
replace part or all of the items of Personal
Property which have been damaged or destroyed or
become worn out or obsolete, and such replacement
shall be at
the sole cost of Tenant, but any such equipment
which has been acquired for the purpose of
replacing Personal Property previously provided by
Landlord shall be and remain the property of
Landlord. Tenant may place additional property on
the Premises (not required for replacement of
property covered in this Lease), and the same
shall be and remain the property of Tenant
("Tenant's Equipment").
Section 1.2.2. Landlord agrees upon request
of Tenant to subordinate any statutory or
Landlord's lien that Landlord may have to any
security interest granted by the Tenant to secure
a purchase money obligation or an acquisition
lease of any of Tenant's Equipment acquired by
Tenant pursuant to Section 1.2.1.
Section 1.3. ACQUISITION OF PROPERTY/GROUND
LEASE. Tenant hereby acknowledges and understands
that Landlord does not own the Real Property but
is the tenant pursuant to a ground lease of the
Real Property from LM Rocky Hill Land Holding
Limited Partnership dated of even date herewith
(the "Ground Lease"). Tenant hereby agrees that,
despite the fact that the Original Lease is dated
prior to the Ground Lease, this Lease shall be
deemed a sublease between Landlord and Tenant,
subject to the terms of the Ground Lease. The
Ground Lease has been reviewed by Tenant.
Section 1.4. INTENTIONALLY OMITTED.
Section 1.5. FUTURE DEVELOPMENT.
Section 1.5.1. Tenant hereby acknowledges
that an affiliate of Landlord intends (but shall
not be obligated) to further develop land adjacent
to the Real Property identified on Exhibit "D"
attached hereto xx "Xxxxx 0" (xxx "Xxxxxxxx Xxxx")
by constructing thereon one or more buildings
together with associated parking areas, driveways,
utility installations and other related
improvements (the "Future Development"). Tenant
agrees to cooperate with Landlord's affiliate in
connection with any such Future Development by
providing any necessary temporary construction
easements, provided that said easements do not
interfere with the construction of the
Improvements, unreasonably interfere with the use
of the Access Road, or interfere with the
operation of Tenant's business from the Premises,
reduce the available parking for the Facility,
obstruct Tenant's access to the Facility and/or
interfere with the quiet
enjoyment of Tenant's residents. Landlord
covenants and agrees that any such Future
Development shall (i) be of the same or better
quality of construction as the Improvements
constructed hereunder, (ii) consist of an
architectural style and appearance which would be
compatible and aesthetically consistent with the
appearance of the Improvements constructed
hereunder, (iii) not result in any relocation or
decrease in the parking facilities constructed
hereunder for the Improvements, all of which
parking hereunder shall remain for the exclusive
use of the Facility, (iv) not result in any
additional cost or expense to Tenant, and (v) not
create or result in, any noncompliance of the
Facility or associated improvements with any
statutes, codes, regulations, ordinances, or
orders of any agencies which regulate or are
responsible for approving or accrediting senior
housing with assisted living services (and
assisted living specifically) or which may be at
any time applicable to any portion of the
Premises, the Access Road or any use thereof.
Landlord agrees that its affiliate shall not
deliver a substantially completed Future
Development to the occupant thereof within one
year of the Rent Commencement Date hereunder, nor
permit any marketing of said Future Development
facility within said one year period.
Section 1.5.2. The Real Property and the
Adjacent Land currently comprise (collectively)
one legal lot; Landlord reserves the right, in its
discretion, but shall not be obligated in any way,
to subdivide such lot to create two or more
separate legal lots, with the Real Property to be
a stand alone legal lot, in connection with its
plan for the Future
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Development, provided that any such subdivision
does not (i) diminish in size or use the Real
Property and/or (ii) impose upon Tenant and/or the
Facility any conditions relating to Tenant's use
of and operations on the Real Property. In the
event of any such subdivision, all references
herein to the "Real Property" shall continue to
mean the Real Property described on Exhibit A and
the parties agree, if necessary, at the request of
either, to execute an amendment to this Lease
which clarifies the description of the Real
Property hereunder. Landlord shall deliver a copy
of any proposed subdivision plan to Tenant not
less than ten (10) days prior to any submission by
Landlord of the proposed subdivision to any
governmental authority. In connection with any
such subdivision, Landlord agrees to grant or
reserve for the benefit of the Real Property such
easements and rights of way as shall be necessary
or as Tenant may reasonably require. Landlord and
Tenant agree to mutually cooperate in connection
with the preparation and execution of easement
agreements and any further documents necessary
for_ establishing rights to use the Access Road
and common utilities and for the sharing of any
costs associated therewith and with any common
landscaping, all consistent with the provisions of
this Lease.
Section 1.5.3. From and after the Rent
Commencement Date, Tenant shall be responsible, at
its sole cost and expense, for maintaining and
repairing the Access Road (including repaving as
necessary) for snow removal and for maintaining
all landscaping for the Real Property, except that
from and after the commencement of construction of
the Future Development, Landlord shall cause its
affiliate to (i) reimburse Tenant, on a monthly
basis, for fifty-eight percent (58%) ("Landlord's
Proportionate Share") of all costs and expenses
attributable to the use, maintenance and repair of
the Access Road, (ii) promptly repair, at its sole
cost and expense, any damage caused to the Access
Road by any of Landlord's affiliate's construction
activities with respect to the Future Development,
and (iii) pay for any additional improvements to
the Access Road which may be necessary or required
in connection with any subdivision of the Real
Property and Adjacent Land or the construction of
the Future Development. Tenant shall, at no time,
have any responsibility whatsoever with respect to
the maintenance of the Adjacent Land. Until such
time as the Adjacent Land has been improved with
the Future Development, Landlord covenants and
agrees, at Landlord's sole cost and expense, to
perform routine weed abatement and trash removal
as necessary to keep and maintain the Adjacent
Land in a clean and sightly condition. In
connection with Landlord's design and construction
of the Future Development, Landlord shall cause
the Future Development to be professionally
landscaped consistent with the quality of
landscaping installed for the Improvements
hereunder. Upon completion of the Future
Development, Landlord shall cause its affiliate to
keep and maintain or shall cause the occupant of
the Future Development or any successor to
Landlord's affiliate's interest therein, to keep
and maintain, all such landscaping installed at
the Adjacent Land in a good and sightly condition.
Section 1.5.4. In the event of any sale of
the Adjacent Land, Landlord shall cause its
affiliate to record in the county recorder's
office, prior to said sale, restrictive covenants
consistent with the provisions of this Section 1.5
and in form and substance reasonably approved by
Tenant. Any failure by the owner and/or operator
of the Adjacent Land to comply with the provisions
of Section 1.5 (it being the responsibility of the
Landlord to notify any such owner and operator of
the same), or by the ground lessor under the
ground lease to enforce the provisions of Section
1.5 through its ground lease of the Adjacent Land,
shall be deemed a default by Landlord hereunder.
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Section 2. Term.
Section 2.1. INITIAL LEASE TERM. Subject to
the provisions of Section 2.1.1, the term of this
Lease shall commence on the date of execution as
first set forth above (the "Commencement Date")
and shall continue for a period of twenty (20)
years following the "Rent Commencement Date" (as
that term is defined below), subject to (i) the
right of Tenant to extend the term as provided for
in Section 2. 1.1 below and (ii) any earlier
termination by either party, as permitted herein
(the "Initial Lease Term"). Notwithstanding the
foregoing in the event the Lease Term expires on
any day other than the last day of a calendar
month, the Lease Term shall be automatically
extended by the number of days necessary to cause
the Lease Term to expire on the last day of the
month.
Section 2.1.1. Tenant shall have the right to
renew this Lease beyond the Initial Lease Term for
two (2) successive ten (10) year renewal terms
(the "Renewal Terms" and together with the Initial
Lease Term, the "Lease Term") by giving notice of
the exercise of its renewal option at least
fifteen (15) months prior to the expiration of the
Initial Lease Term with respect to the exercise of
the first such renewal option, and prior to the
expiration of the first Renewal Term with respect
to the exercise of the second renewal option. In
the event Tenant is in default on the date of the
giving of notice of its intent to renew the Lease,
the notice shall be ineffective; in the event
Tenant is in default on the date the applicable
Renewal Term is to commence, then the Renewal Term
shall not commence and this Lease shall expire as
of the end of the Initial Lease Term or the
applicable Renewal Term. Tenant shall have no
right to renew this Lease beyond the expiration of
the final Renewal Term. During each Renewal Term
all of the terms and conditions of this Lease
shall continue to apply, except that there shall
be an adjustment to the amount of Basic Rent as
provided for in Section 3.4 below.
Section 2.2. RIGHT TO TERMINATE. Landlord
acknowledges and understands that it is Tenant's
intent that this Lease comply with Rule 13 of the
Financial Accounting Standards Board ("FASB 13")
in order to permit Tenant, for accounting
purposes, to treat this Lease as an operating
lease. For that purpose, Landlord hereby agrees
that, notwithstanding anything to the contrary
contained herein, Tenant may elect to terminate
this Lease effective as of the expiration of the
sixteenth (16th) Lease Year of the Term by giving
Landlord written notice of its election not later
than the expiration of the ninth (9th) Lease Year
of the Term (the "Termination Notice"). Tenant
shall not, however, have the right to terminate
this Lease if Tenant shall be in default hereunder
either at the time of delivery of the Termination
Notice or as of the effective date of termination.
If Tenant fails for any reason to deliver the
Termination Notice by the expiration of the ninth
(9th) Lease Year, Tenant's right to so terminate
this Lease shall not have expired or be deemed to
have been waived until such time as (i) Landlord
not)fies Tenant in writing that the date for the
delivery of the Termination Notice is past due
(the "Reminder Notice") and (ii) Tenant shall have
failed, within thirty (30) days following Tenant's
receipt of the Reminder Notice, to have delivered
to Landlord the Termination Notice. In the event
Tenant exercises its right to terminate this Lease
pursuant to the foregoing, Landlord shall have the
right, exercisable by written notice to Tenant, to
select an effective termination date earlier than
the expiration of the sixteenth (16th) Lease Year
(the "Early Termination Effective Date"), provided
that the Early Termination Effective Date shall
not be early than the date one hundred twenty
(120) days following the date Tenant receives
Landlord's written notice designating said Early
Termination Effective Date. The parties further
acknowledge that this Lease is being entered into
in conjunction with those certain two (2) other
Lease Agreements, one of which relates to a parcel
of real property located in Auburn, Massachusetts
and is by and between Tenant and LM Auburn
Assisted Living LLC, a Massachusetts limited
liability company (the "Auburn Lease") and the
other of which relates to a parcel of real
property
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located in Louisville, Kentucky and is by and
between Ten_nt and LM Louisville Assisted Living
LLC, a Delaware limited liability company (the
"Louisville Lease"). The Auburn Lease and the
Louisville Lease each include a provision
comparable to this Section 2.2 which permits
Tenant to terminate each such lease early. The
exercise by Tenant to terminate either the Auburn
Lease and/or the Louisville Lease pursuant to any
such comparable provision thereof shall also be
deemed an election by Tenant to terminate the Term
of this Lease pursuant to the terms of this
Section 2.2 regardless of whether or not Tenant
has delivered the Termination Notice hereunder.
Section 3. RENT.
Section 3.1. BASIC RENT. During the Initial
Lease Term, the annual rent due hereunder (the
"Basic Rent") shall be determined according to the
following formula:
Basic Rent
= TPC x CR x DC
"TPC" means the "Total Project Cost" as that
term is defined in the Work Letter.
"CR" means a coverage ratio of 1.20.
"DC" means a debt constant equal to
Landlord's cost of funds calculated at the time
Landlord secures a commitment for permanent
financing which meets the following criteria: (i)
interest shall be at a fixed rate, (ii) the loan
shall be non-recourse to Landlord, subject to
customary exceptions (e.g. recourse for
environmental liability and violations of the
American Disabilities Act), (iii) the term of the
loan shall be for 10 years, (iv) the loan shall be
amortized over a term of 22 years, (v) the
principal amount of the loan shall be not more
than one hundred percent (100%) of the Total
Project Cost. Landlord shall keep Tenant apprised
with respect to its efforts to secure permanent
financing and Tenant may participate in the
process of obtaining such financing.
Pursuant to the above formula, (i) the Total
Project Cost has been determined to be $6,549,485,
based upon the project cost budget set forth on
Exhibit B-2 attached hereto, (ii) the debt
constant ("DC'') has been set at ______ and (iii)
the Basic Rent is hereby set at $_______ per year,
subject to the provisions of Sections 3.3, 3.4 and
Section 3. 1.2.
Section 3.1.1. The obligation to pay the
Basic Rent and Additional Rent shall commence on
the earlier of (i) the date of Substantial
Completion or (ii) the date upon which Tenant
moves into the Facility and commences to occupy
the Premises (other than for the purpose of
constructing any tenant improvements) (the "Rent
Commencement Date"). Basic Rent shall be paid in
advance in equal monthly installments on the tenth
day of each month; provided, however, that the
first monthly payment shall be due on the tenth
day after the Substantial Completion. For purposes
of this Lease, a Lease Year shall be the twelve
(12) month period commencing on the date of
Substantial Completion. In the event the date of
Substantial Completion shall be other than the
first day of the month, Tenant shall pay to
Landlord a pro rata portion of rent for the month.
Section 3. 1.2. Notwithstanding any other
provisions of this Lease Agreement to the
contrary, from and after the Rent Commencement
Date until the Maturity Date of Landlord's
construction loan, to the extent that Tenant's Net
Operating Income from the Facility is less than
the monthly Basic Rent owed to Landlord (the
difference being the "Net Operating Deficiency"),
after Tenant demonstrates in writing to Landlord's
reasonable satisfaction that Tenant has used
$250,000 of Tenant's own funds to make up
operating deficits, Tenant shall have the right to
pay to Landlord in full satisfaction of its
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monthly Basic Rent obligation (subject to the
provisions of this Section 3.1.2), its monthly Net
Operating Income from the Facility for the prior
month and Landlord may draw down the balance of
its monthly Basic Rent from "Rent-up Reserve
Funds" (as hereinafter defined). The "Rent-up
Reserve Funds" shall mean the amount of Two
Hundred Fifty Thousand Dollars ($250,000), set
aside by Landlord's construction lender for such
purpose and funded on a monthly basis upon
requisitions by Landlord with proceeds from
Landlord's construction loan. Tenant's right
pursuant to this Section 3.1.2 to pay less than
the full monthly Basic Rent then due (a) shall be
contingent upon Landlord's construction lender's
actual funding of the Rent-up Reserve Funds and
the continued availability thereof based on the
construction lender's requirements and conditions
set forth in the pertinent loan documents and (b)
shall automatically terminate upon the depletion
of the Rent-up Reserve Funds or if for any other
reason any or all of such Rentup Reserve Funds
become unavailable to Landlord. If in any month,
Tenant has paid its monthly Net Operating Income
from the previous month but Landlord is unable to
draw the remaining Basic Rent due from the Rent-up
Reserve Funds, then Tenant shall pay to Landlord
such remaining Basic Rent due within five (5) days
of written notice from Landlord. If such Rent-up
Reserve Funds become unavailable to Landlord as a
result of a default in its construction loan,
which default is not caused by the default of
Tenant hereunder, then Basic Rent shall be
adjusted prospectively (i.e., from the date such
funds become unavailable due to such Landlord
default) (but not retroactively) by reducing Total
Project Cost by such portion (or all) of the
$250,000 Rent-up Reserve Funds as are not
available to Tenant. If the Rent-up Reserve Funds
are temporarily unavailable due to a Landlord
default, but such funds become available again due
to Landlord's cure, then Basic Rent shall not be
adjusted. In the event that, during the term of
Landlord's construction loan, Net Operating Income
is equal to or greater than the monthly Basic Rent
so that there is no longer a monthly Net Operating
Deficiency, prior to the full disbursement of the
Rent-up Reserve Funds, then Tenant may direct
Landlord to, and upon receipt of said direction
from Tenant Landlord shall draw down any unfunded
amount of the Rent-up Reserve Funds to reimburse
Tenant for amounts expended by it for operating
deficits prior to its exercise of rights under
this Section 3.1.2. In the event that Tenant
elects not to draw down the full $250,000 Rent-up
Reserve Funds, then Tenant shall so notify
Landlord and Total Project Cost shall be reduced
by the amount which Tenant elects not to draw down
and Basic Rent shall be adjusted prospectively
(but not retroactively), provided that once Tenant
has so not)fied Landlord, it may not thereafter
have the benefit of this Section 3.1.2. In any
month where the Tenant exercises its rights under
this Section 3.1.2, its payment of its monthly Net
Operating Income from the previous month shall be
accompanied by an accounting of income and
expenses for such previous month, certified by the
President of Tenant as true and correct and
calculated in compliance with generally accepted
accounting principles, consistently applied. For
purposes of this Section, "Net Operating Income"
shall mean Tenant's net income from continuing
operations at the Facility before debt service
(which net income shall not include depreciation,
amortization, non cash expenses, or any
extraordinary or non-recurring items of income or
loss).
Section 3.2. PAYMENT OF BASIC RENT. Except as
specifically provided for herein, the Basic Rent
shall be payable without offset, abatement or
other deduction to Landlord at the address set
forth in Section 16, or to such other person, firm
or corporation at such other address as Landlord
may designate by notice in writing to Tenant.
Section 3.2.1. This Lease is intended to be
triple net to Landlord, and Tenant shall pay to
Landlord, net throughout the Initial Lease Term
and any Renewal Term, the Basic Rent prescribed by
Section 3.1., free of any offset, abatement, or
other deduction, except as may be expressly set
forth herein. Except as may otherwise be expressly
set forth herein, Landlord shall not be required
to make any payment of any kind with
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respect to the Premises and Tenant agrees to pay
as they become due and payable all costs,
expenses, and obligations of every kind relating
to the Premises whether usual or unusual, ordinary
or extraordinary, foreseen or unforeseen, which
may arise or become due following the Rent
Commencement Date (the "Additional Rent"). (Basic
Rent and Additional Rent are sometimes referred to
collectively herein as "Rent"). Notwithstanding
the foregoing, Landlord shall be responsible for
making all payments due with respect to any
mortgage or deed of trust secured by the Premises
(the "Facility Mortgage") or any ground leasehold
interest of Landlord under the Ground Lease,
Landlord's costs associated with the Adjacent
Land, as provided herein, and all income taxes
assessed against Landlord, and all estate,
succession or inheritance taxes of Landlord.
Section 3.2.2. This Lease shall continue in
full force and effect, and the obligations of
Tenant hereunder shall not be released, discharged
or otherwise affected except as specifically set
forth in (i) Section 10, regarding damage to or
destruction of the Premises or any part thereof,
(ii) Section 11, regarding the taking of the
Premises or any part thereof by condemnation,
requisition or otherwise for any reason, (iii)
Section 17.2, regarding curing of mortgage
defaults and (iv) such other provisions of this
Lease which expressly provided for any abatement
or termination rights granted in favor of Tenant.
Section 3.2.3. If any payment of any sums
required to be paid by Tenant to Landlord under
this Lease and payments made by Landlord under any
provision hereof for which Landlord is entitled to
reimbursement by Tenant is not paid when due or
within ten (10) days after written notice of
nonpayment from Landlord, interest at the "Prime
Rate" plus two percent (2 %) per annum, to
Landlord from the original date due until actually
paid. No failure by Landlord to insist upon the
strict performance by Tenant of Tenant's
obligation to pay late charges shall constitute a
waiver by Landlord of its rights to enforce the
provisions of this Section in any instance
thereafter occurring.
Section 3.3. RENT INCREASES. Effective as of
the expiration of each sixty (60) month period
during the Term commencing from the Rent
Commencement Date, the Basic Rent shall be
adjusted upward by an amount equal to the greater
of (i) one-half of the increase in the Consumer
Price Index (as that term is defined below)
determined in the manner provided for below, and
(ii) ten percent (10%) of the Basic Rent payable
by Tenant hereunder as of the date immediately
preceding the effective date of the rent
adjustment; provided, however, in no event shall
the Basic Rent be increased on any adjustment date
by more than fifteen percent (15%) of the Basic
Rent in effect as of the date immediately
preceding the effective date of adjustment.
As used herein the term "Consumer Price
Increase" shall mean the United States Department
of Labor, Bureau of Labor Statistics Consumer
Price Index, All Urban Consumers, All Items, for
Northeast Urban (1982-1984 = 100). If at any time
there shall not exist the Consumer Price Index in
the same format as recited in this Section 3.3,
Landlord shall substitute any official index
published by the Bureau of Labor Statistics or
successor or similar governmental agency, as may
then be in existence and shall be most equivalent
thereto. The increase in the Consumer Price Index
shall be determined by according to the percentage
increase, if any, between the index published and
in effect ninety (90) days preceding the
adjustment date and the index published and in
effect ninety (90) days preceding the Rent
Commencement Date.
Section 3.4. RENT DURING THE RENEWAL TERMS.
As of the commencement of each Renewal Term the
Basic Rent shall be adjusted to equal the greater
of (a) the Basic Rent payable during the last
Lease Year prior to the Renewal Term or (b) the
then prevailing Fair Market Rental (as defined
below) for the Premises. As used herein, the term
"Fair Market Rental" for the Premises shall mean
the rental that
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Landlord could obtain from a third party desiring
to lease the Premises for the Renewal Term and
shall be based on the Premises in its "as is"
condition, provided that the Facility has been
maintained in accordance with the terms of this
Lease. Landlord shall send to Tenant, within
fifteen (15) days following Landlord's receipt of
Tenant's notice exercising the renewal option,
written notice setting forth Landlord's
determination of the Fair Market Rental for the
Renewal Term. If Tenant objects to Landlord's
determination of the Fair Market Rental for the
Premises, Tenant shall notify Lessor within
fifteen (15) days of Tenant's receipt of
Landlord's notice. If Tenant fails to notify
Landlord within said fifteen (15) day period,
Tenant shall be deemed to have approved Landlord's
determination of the Fair Market Rental.
If Tenant objects to Landlord's
determination, Landlord and Tenant shall each
appoint its own qualified MAI appraiser, with
nationally recognIzed credentials in the field of
senior housing with assisted living services, with
substantial experience in senior housing with
assisted living services, to appraise the Premises
within forty-five (45) days of Tenant's objection
(the "Landlord's Appraisal" and "Tenant's
Appraisal") for the purpose of determining the
Fair Market Rental. If either party fails to
employ and pay an MAI appraiser to determine the
Fair Market Rental and/or fails to submit its
appraisal to the other within said forty-five (45)
days together with a written summary of the
methods used and the data collected, the remaining
party's appraisal shall be accepted as the Fair
Market Rental. If Landlord's Appraisal and
Tenant's Appraisal differ by (i) less than ten
percent (10%), the average of the two shall be the
Fair Market Rental for the Premises, or (ii) more
than ten percent (10%), Landlord and Tenant shall
promptly instruct its respective appraiser to
jointly appoint a third MAI appraiser with similar
credentials and experience, who shall within
fifteen (15) days of his selection select the one
of the two appraisals which most accurately
defines Fair Market Rental. The third appraiser
shall not have the power to amend, modify,
compromise, or average the first two appraisals.
Landlord and Tenant shall each pay the cost of its
own appraiser and one-half (1/2) of the cost of
the third appraiser. In the event the Basic Rent
for the Renewal Term is determined by the
appraisal procedure described above, Tenant shall
have the right to terminate Tenant's exercise of
the renewal option by written notice delivered to
Landlord delivered at any time within twenty (20)
days following Tenant's receipt of written notice
regarding the third appraiser's Fair Market Rental
determination. Time is of the essence for all of
the time periods set forth in this Section.
Section 3.5. TAXES.
Section 3.5.1. Landlord shall use its best
efforts to cause the Real Property and the
Improvements to be separately assessed and/or
valued from the Adjacent Land and any improvements
constructed thereon. For as long during the Term
hereof as that is the case, Tenant shall pay
directly to the applicable taxing authority, by
the applicable due date, all "Taxes" (as that term
is defined below) for each fiscal period wholly
included in the Lease Term (and a prorated amount
thereof for partial years occurring during the
first and last Lease Years of the Lease Term)
assessed with respect to the Premises, which
payments shall be deemed additional rent
hereunder, in addition to the basic rent
hereinbefore set forth.
In the event that, for any portion of the
Term, the Premises and Adjacent Land are not
separately assessed, Tenant shall pay to Landlord,
as Additional Rent, for each fiscal period wholly
included in the Lease Terrn (and a prorated amount
thereof for partial years occurring during the
first and last Lease Years of the Lease Term) (i)
One Hundred percent (100%) of all "Taxes" (as that
term is defined below) attributable to the value
of the Improvements and all Personal Property and
(ii) Forty-two percent (42%) of all taxes
attributable to the value of the Real Property.
Notwithstanding anything to the contrary contained
herein, upon Landlord's commencement of
construction of the Future
8
Development, Tenant's proportionate liability
hereunder for any real estate taxes and
assessments properly attributable to the Access
Road shall equal forty-two percent (42%) thereof.
Any interest or penalties which accrue as a result
of Tenant's failure to make such payment within
the time required by this Article 5 shall be the
sole responsibility and obligation of Tenant. At
such time as Landlord receives any xxxx for Taxes,
Landlord shall promptly notify Tenant and Tenant
agrees to pay to Landlord at least one (1)
business day prior to delinquency Tenant's share
of such Taxes calculated ii the manner provided
for above. "Taxes" shall mean all real estate
taxes, general and special assessments, personal
property taxes, and other public charges which are
assessed, levied, confirmed, or imposed upon the
Premises during the Lease Term, and all sales
taxes and other taxes that are now or hereafter
may be payable in connection with the Basic Rent
payable hereunder during the Initial Lease Term
and any Renewal Term (other than income taxes
owing by Landlord as a result of Tenant's payment
of Basic Rent hereunder and principal and interest
payments owing to Landlord's Mortgagee).
Section 3.5.2. Any taxes and assessments
relating to a fiscal period of any authority, a
part of which is already included within the
Initial Lease Term or any Renewal Term and a part
of which is included in a period of time before or
after the Initial Lease Term or any Renewal Term,
shall be adjusted pro rata between Landlord and
Tenant and each party shall be responsible for its
pro rata share of any such taxes and assessments.
Section 3.5.3. Nothing herein shall require
Tenant to pay income taxes assessed against
Landlord, or estate, succession or inheritance
taxes of Landlord.
Section 3.5.4. Tenant may contest, in is own
name or in the name of Landlord, with Landlord's
cooperation, which Landlord agrees to give, the
legality or validity of any such tax or assessment
or of any law under which the same shall be
imposed. This must be done in good faith, with due
diligence, and at Tenant's own expense. If Tenant
does so contest such tax or assessment beyond the
time limit for payment thereof by Tenant, Tenant
shall either pay such amount under protest or
procure and maintain a stay of all proceedings
with adequate bond to enforce collection of such
tax or assessment. Once such action is taken by
Tenant, Tenant shall not be considered to be in
default hereunder with respect thereto.
Notwithstanding anything to the contrary, Tenant
shall not exercise its contest rights in
contravention of any of the terms and conditions
of any Facility Mortgage. Landlord shall also have
the right, at Landlord's sole cost and expense, to
contest in good faith and with due diligence any
assessment with respect to the Real Property
or-the Future Development.
Section 3.5.5. Tenant shall have, and
Landlord hereby irrevocably grants to Tenant, the
power and authority, at Tenant's cost to make and
file and prosecute any statement or report or
claim for refund which may be required or
permitted by law, as the basis of or in connection
with the assessment, determination, equalization,
reduction or payment of any and every tax or
assessment or license or charge which Tenant is
required to pay or discharge hereunder.
Section 3.5.6. Landlord shall not be required
to join in any proceedings referred to in this
Section, unless the provisions of any law, rule or
regulation at the time in effect shall require
that such proceedings be brought by and/or in the
name of Landlord, in which event Landlord shall
join in such proceedings or permit the same to be
brought in its name. Landlord shall not ultimately
be subjected to any liability for the payment of
any costs or expenses in connection with any such
proceedings, and Tenant will indemnify, defend and
save harmless Landlord from any such costs and
expenses. Tenant shall be entitled to any refund
of any taxes and assessments and penalties or
interest thereon received by Landlord but
previously paid or reimbursed in full by Tenant.
9
Section 3.5.7. Upon the termination of any
such proceeding, Tenant shall pay the amount of
such taxes and assessments or part thereof as
finally determined in such proceedings, the
payment of which may have been deferred during the
prosecution of such proceedings, together with any
costs, fees, interest, penaltie_ or other
liabilities in Connection therewith.
Section 3.5.8. Notwithstanding any other
provision of Section 3.5 to the contrary, in the
event that any Facility Mortgagee requires the
monthly escrow of estimated Taxes, then Tenant
shall cause such monthly payments to be made in to
an impound account as directed by said Facility
Mortgagee, provided that all interest accruing on
funds deposited in to said account shall accrue
for the benefit of Tenant.
Section 4. USE OF THE PREMISES/COMPLIANCE
WITH LAWS.
Section 4.1. PERMITTED USES. The Premises may
be used only for senior housing with assisted
living services and for no other purpose. Tenant
agrees that such use shall not change, for the
term of Landlord's construction loan and for the
term of any permanent loan, unless such change is
approved by the applicable Facility Mortgagee. The
approval of a Facility Mortgagee shall not be
unreasonably withheld, provided that, in
considering a request for a change in use, the
Facility Mortgagee may consider the market
feasibility of any proposed use, the existence of
competing projects, the demand for assisted living
housing, the operating history of the Facility and
similar criteria. Tenant assumes full
responsibility for confirming that such use is
permitted under all laws, statutes, ordinances,
regulations, and orders governing the Real
Property and for obtaining any certificate of
need, license or other authorization required to
operate such use and/or to provide assisted living
services within the Facility (provided that it
shall be Landlord's obligation to obtain the
necessary building permit and certificate of
occupancy for the Improvements and for assuring
that the Improvements constructed by Landlord
comply with all applicable laws, statutes,
ordinances, rules, regulations, orders,
restrictions and other governmental requirements
of any governmental entities and divisions having
regulatory authority over Tenant and the
Improvements by virtue of the health care business
conducted by Tenant). Landlord makes no
representation or warranty as to the compliance of
such use under any such laws, statutes,
ordinances, regulations, and orders governing the
Real Property and/or insurance requirements. Any
failure by Tenant to obtain or maintain any
required authorization or approval (other than by
reason of Landlord's failure to cause the
Improvements to be constructed so as to comply
with the licensure/approval requirements as
required of Landlord herein) shall not affect
Tenant's obligation to pay Rent or any other
obligation hereunder.
Section 4.2. OPERATING APPROVALS. Tenant
covenants upon execution of this Lease to proceed
with all due diligence to comply with all
not)fication and reporting requirements imposed on
an operator or proposed operator of a managed
residential community and to obtain prior to the
Rent Commencement Date all approvals needed to
operate the Facility and to provide assisted
living services therein under applicable state and
federal law and shall maintain the same in full
force and effect throughout the Lease Term.
Landlord agrees to assist Tenant as reasonably
necessary to obtain such approvals at Tenant's
expense.
Section 4.3. COMPLIANCE WITH INSURANCE. After
the Commencement Date, Tenant shall neither use
nor permit to be used the Premises, or any part
thereof for any purpose wh ch will cause the
cancellation of any insurance policy covering the
Premises or any part thereef, nor shall Tenant
sell or permit to be kept, used or sold in or
about the Premises any article which may be
prohibited by the standard form of fire
10
insurance policies. Tenant shall, at its sole
cost, comply with all of the requirements
pertaining to the Premises of any insurance
organization or company necessary for the
maintenance of insurance, as herein provided,
covering the Premises.
Section 4.4. WASTE/COMPLIANCE WITH LAWS.
Tenant covenants and agrees that the Premises
shall not be used for any unlawful purpose. Tenant
shall not commit or suffer to be committed any
waste on the Premises, nor shall Tenant cause or
permit any nuisance thereon. Tenant further
covenants and agrees that Tenant's use of the
Premises and maintenance, alteration, and
operation thereof shall at all times conform to
all applicable and lawful local, state, and
federal laws, ordinances, and regulations,
including orders of agencies which regulate or are
responsible for accrediting senior housing with
assisted living services. Tenant shall make such
alterations to the Premises (whether capital or
non-capital in nature) as may become necessary
after the Rent Commencement Date to maintain the
Premises in compliance with applicable laws. If a
change in law requires alterations of a capital
nature during the last three (3) years of the
Term, then Tenant shall pay the cost thereof but
may amortize same over its useful life under
generally accepted accounting principles and, upon
Lease termination, Landlord shall reimburse Tenant
for that portion of the cost attributable to the
remaining useful life. Tenant may, however,
contest the legality or applicability of any such
legal requirements. This must be done in good
faith, with due diligence, without prejudice to
Landlord's rights hereunder, and at Tenant's own
expense. While such a contest is pending Tenant
shall not be considered in default under this
Section 4.4. Notwithstanding anything to the
contrary, Tenant shall not exercise its rights to
contest under this Section in contravention of the
terms and conditions of any mortgage which may be
secured by the Facility.
Section 4.5. SURVEVS AND INSPECTIONS. Upon
written request, Tenant shall deliver to Landlord
a copy of the results of all surveys,
investigations and inspections of the Facility and
its operation performed by state or federal
authorities.
Section 4.6. ENVIRONMENTAL COMPLIANCE.
Section 4.6.1. Tenant shall use the Premises
in compliance with all applicable Environmental
Laws (as defined below). Tenant shall not
generate, store or use any Hazardous Materials in
or on the Premises, nor permit any Person to do so
on the Premises, except those customarily
generated, stored and used in the operation of a
senior housing facility with assisted living
services, and then only in compliance with all
Environmental Laws (as defined below), insurance
requirements and applicable industry standards.
Tenant shall not dispose of Hazardous Materials on
the Premises (or permit any person to do so) to
any other location except a properly licensed
disposal facility and then only in compliance with
all applicable Environmental Laws. Tenant shall,
at its sole cost and expense, promptly remove or
clean up any hazardous substances introduced onto
the Premises by Tenant or with its permission or
at its sufferance. Such removal or cleanup shall
be in compliance with all applicable Environmental
Laws. Tenant hereby agrees to indemnify and hold
Landlord and any Facility Mortgagee harmless and
agrees to defend Landlord and any Facility
Mortgagee from all losses, damages, claims and
liabilities and fines, including costs and
reasonable attorneys' fees, of any nature
whatsoever in connection with the actual presence
upon the Premises of any hazardous substance
introduced by Tenant. For purposes hereof, the
term "Environmental Laws" shall mean any and all
applicable governmental laws, regulations and
requirements relating to environmental and
occupational health and safety matters and
hazardous materials, substances or wastes (as
defined from time to time under any applicable
federal, state or local laws, regulations or
ordinances). The provisions of this Section 4.6
shall survive the expiration or earlier
termination of this Lease.
11
Section 4.6.2. HAZARDOUS MATERIALS. The term
"hazardous materials" shall mean any chemical,
substance, waste, material, gas or emission which
is deemed hazardous, toxic, a pollutant, or a
contaminant under any statute, ordinance, by-law,
rule, regulation, executive order or other
administrative order, judgement, decree,
injunction or other judicial order of or by any
governmental authority, now or hereafter in
effect, relating to pollution or protection of
human health or the environment. By way of
illustration and not limitation, "Hazardous
Materials" includes asbestos, radioactive
materials, and "oil", "hazardous materials",
"hazardous waste", "hazardous substance" and
"toxic material" as defined in the Comprehensive
Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 et =., as amended, the
Resource Conservation and Recovery Act of 1976, 42
U.S.C. Section 2601 et =., as amended, the
regulations promulgated thereunder, and Title 22a
of the Connecticut General Statutes and the
regulations promulgated thereunder.
Section 5. FACILITY MORTGAGEE REQUIREMENTS.
In order to satisfy the requirements of Landlord's
construction lender and/or permanent lender
holding a Facility Mortgage (collectively,
together with their successors and assigns,
"Facility Mortgagee") Tenant hereby agrees as
follows:
Section 5.1. From and after the Rent
Commencement Date, Tenant shall provide Landlord
with the following financial statements and
information on a continuing basis:
(a) Within ninety (90) days after the end of
each calendar year, a statement of income and
expenses for the year then ended, and separate
financial statements on the operations of the
Facility certified by the chief financial offficer
of the Tenant to be true and correct.
(b) Within forty-five (45) days after the end
of each calendar year quarter, and within fifteen
(15) days after the request of a Facility
Mortgagee (but not more often than monthly), in
either case after the Rent Commencement Date, a
certificate from the chief financial officer of
the Tenant, in form acceptable to the Facility
Mortgagee, providing occupancy data (including
unit rents) for the Facility.
(c) Within forty-five (45) days after the end
of each calendar quarter, following the Rent
Commencement Date, a current year-to-date
operating statement for the Facility as of the end
of such quarter and the quarterly financial
statement for the Facility in the form and detail
set forth in Exhibit H hereto, properly completed
and certified by the Tenant to be true and
correct.
(d) Within three (3) days of the receipt by
the Tenant or the Facility, any and all notices
(regardless of form) from any licensing and/or
certifying agency that such license or
certification (held by Tenant or other service
provider) is being revoked, downgraded or
suspended or that action is pending or being
considered to revoke or suspend the license,
certification, permits or any rights thereunder
(held by Tenant or other service provider) and any
license and certification survey reports or
statements of deficiencies (with plans of
correction attached thereto).
The Landlord reserves the right to require
from Tenant supporting or back-up information with
respect to items (a) through (d) above.
Section 5.2. CONDUCT OF BUSINESS. Upon the
Rent Commencement Date, Tenant shall cause the
Facility to be properly operated as a senior
housing with assisted living services facility and
for no other uses. Without limiting the foregoing,
Tenant shall:
12
(a) maintain the standard of care for the
residents of the Facility at all times at a level
necessary to insure quality care for the residents
of the Facility;
(b) maintain aufficient inventory and
equipment of types and quantities at the Facility
to enable Tenant adequately to perform all
operations at the Facility.
Section 5.3. RESIDENCY AGREEMENTS. Tenant
shall establish as policy and will request and use
its best efforts to require that any and all
residents or other persons for which the Tenant
(or an agency retained by Tenant) provides
services execute and deliver to the Tenant a
residency agreement. Tenant has submitted to
Landlord its form of residency agreement;
Landlord's consent shall not be required for
changes to or modifications of such residency
agreement over the term of this Lease.
Section 6. MAINTENANCE, REPAIR, ALTERATIONS
AND UTILITIES.
Section 6.1. TENANT'S MAINTENANCE. Tenant
shall, at its own cost, and without expense to the
Landlord, maintain the Premises, including all
sidewalks, buildings, building systems, water,
sewer and other utility lines on the Real Property
serving the Facility, surface parking lots,
exterior lighting and improvements of any kind
which may be a part thereof in good, sanitary and
neat order, condition and repair, ordinary wear
and tear, casualty, condemnation and acts of God
excepted. Tenant's obligations shall include,
without limitation, replacements of structural
components, roof and building systems, and other
necessary capital expenditures, as required by the
previous sentence. Tenant shall maintain the
Premises in such a manner as may be necessary to
operate the Facility in accordance with applicable
state and/or federal laws or regulations. Tenant
shall perform all interior and exterior painting,
and maintain the grounds of the Facility in a good
and sightly appearance. Notwithstanding the
foregoing, Tenant shall not be responsible for any
repairs or alterations to the Improvements which
are required as a result of any patent or latent
defects in Landlord's construction of the
Improvements, all of which repairs and alterations
shall be the obligation of Landlord in accordance
with and to the extent set forth in Landlord's
warranty as set forth in the Work Letter.
Section 6.2. ALTERATIONS. Tenant will not
remove or demolish any improvement or building
which is part of the Premises or any portion
thereof or allow it to be removed or demolished,
without the prior written consent of Landlord,
which may be withheld at Landlords's sole
discretion. Notwithstanding the foregoing,
Landlord agrees that Tenant shall be permitted to
make any changes or alterations in or to the
Premises without the requirement of obtaining
Landlord's consent therefor, provided that such
Alterations do not constitute a "Major
Alteration". A "Major Alteration" shall mean an
alteration to the Improvements which is estimated
to cost more than $100,000 and involves: (a)
alteration, removal, cutting, or adding to any
structural component of the building (including,
without limitation, walls, exterior windows,
roofs, or floor slabs or any building system), (b)
an alteration to non-residential areas which has a
sign)ficant adverse effect on services which are
provided to residents, or (c) changing any
category within the unit mix by more than twenty
percent (20%). Tenant agrees not to make any Major
Alterations to the Premises without first
obtaining the Landlord's written consent thereto,
which consent shall not be unreasonably withheld,
and subject to Tenant's compliance with all of the
remaining qualifications set forth in this Section
6.2. It shall be deemed reasonable for Landlord to
withhold its consent to a Major Alteration for the
following reasons, among others: such Major
Alteration would (i) materially and adversely
affect the character, value, usefulness or
rentability of the building or the Premises or any
part thereof or any of the facilities, equipment
or improvements therein, (ii) weaken or impair
(temporarily or permanently) the structure of the
building, (iii) materially lessen the usable area
of the building, or (iv) not be consistent with
the use
13
permitted hereunder by any future occupant.
Landlord shall respond to Tenant's request for
approval within thirty (30) days of Landlord's
receipt of complete plans and specifications.
Landlord's failure to respond within the
applicable time period set forth in the preceding
sentence shall be deemed to be approval of the
proposed Major Alterations. If Landlord
disapproves any proposed Major Alterations,
Landlord shall set forth in writing the reasons
for such disapproval with reasonable specificity.
If Tenant fails to obtain Landlord's prior wriKen
consent for any Major Alteration, and such consent
is required under: this Lease or Tenant fails to
notify Landlord in writing of any Alteration, then
such alteration must be removed/restored at the
end of the Lease Term. With respect to any
alteration for which Tenant requests Landlord's
consent (as required hereunder) or of which
Landlord is otherwise not)fied, said alteration
shall not be required to be removed/restored by
Tenant at the end of the term unless Landlord
reasonably specifies the same for removal in a
notice delivered to Tenant either within ten (10)
days after receipt of Tenant's notice of the
alteration, or (ii) within the applicable 30-day
period during which Landlord shall respond to
Tenant's request for approval of plans and
specifications. Without limitation, Landlord shall
be deemed reasonable in requiring
removal/restoration for any of the reasons listed
as (i) through (iv) above. All alterations,
including any Major Alteration consented to by
Landlord, shall be in quality and class at least
equal to the original work and shall meet all
building and fire codes, and all other applicable
codes, rules, regulations, laws and ordinances.
Tenant also agrees to maintain builder's risk
insurance and shall cause its contractors to carry
the types of insurance as a prudent owner or
tenant would require. Landlord shall have the
right to approve the plans and specifications for
any Major Alteration, which approval shall not be
unreasonably withheld or delayed. Regardless of
whether the Landlord's consent is required
hereunder, Tenant agrees to notify Landlord in
writing of the proposed alteration prior to the
commencement of any construction.
Section 6.3. CAPITAL RESERVES. In order to
satisfy the requirements of the Facility
Mortgagee, Tenant shall pay, as additional rent
hereunder, from and after the Rent Commencement
Date, into a capital reserve fund, the amount of
$12.50 per unit per month, or $12,000 per year,
which funds shall be deposited into an interest
bearing escrow account to be disbursed from time
to time in accordance with an escrow agreement
approved by Tenant and such Facility Mortgagee to
pay for replacements and correction of deferred
maintenance items. Any funds remaining in the
account at Lease expiration shall be returned to
Tenant.
Section 6.4. UTILITIES. Tenant shall pay all
charges for water, electricity, gas, sewage,
waste, trash and garbage disposal, telephone,
cable television, and other services furnished to
the Premises from and after the Rent Commencement
Date. Included therein is the "sewer connection
charge", amortized over fifteen (15) years, with
interest thereon at six percent (6%), as more
specifically set forth in an Agreement between
Landlord and The Metropolitan District of
Connecticut. Except as set forth below, Landlord
shall not be responsible in any manner for any
suspension, interruption or curtailment of any
services or utilities to the Premises regardless
of the cause thereof, and no such suspension,
interruption or curtailment shall give rise to any
claim for abatement of Rent or other compensation
to Tenant from Landlord, nor may Tenant claim any
damages on account thereof, nor shall this Lease
or any obligation of Tenant hereunder be affected
thereby, nor shall Tenant claim the same as a
constructive eviction. Notwithstanding the
foregoing, Landlord shall be liable for any direct
damages due to an interruption of any services or
utilities caused by Landlord or its affiliate or
agents, and if such interruption caused by
Landlord or its affiliate or agents causes the
Premises to be untenantable for more than three
(3) days then the Rent shall xxxxx until such
services or utilities are restored. Landlord shall
cause its affiliate to make every reasonable
effort, when constructing the Future Development,
to avoid any interruption of services or utilities
to the Premises.
14
Section 7. LIENS AGAINST THE PREMISES.
Section 7.1. LIENS. Tenant will not permit the
Premises to become subject-to any lien, charge, or
encumbrance. Tenant shall maintain the Premises
free from all orders, notices, and violations
filed or entered by any public or quasi-public
authorities. Notwithstanding the foregoing, in the
event any such lien, charge, or encumbrance is
imposed, Tenant may contest any such lien, charge,
encumbrance, order, notice or violation, provided
that Tenant causes same to be bonded within
forty-five (45) days of the filing of such lien.
This must be done in good faith, with due
diligence and at Tenant's own expense and Tenant
shall not be considered in default of the
provisions of this Section 7.1 as a result of such
contest.
Section 7.2. LANDLORD'S RIGHTS. Should a
judgment on any lien, charge, encumbrance, order,
notice or, violation be rendered against the
Premises for any work
performed by or for Tenant (other than the
construction of the Improvements by Landlord
hereunder) or any person claiming through or under
Tenant and should Tenant fail to discharge such
judgment or take action to protest such judgment,
Landlord shall have the right, but not the
obligation, to discharge said judgment. If
Landlord exercises that option, any amounts paid
by Landlord shall be due from Tenant as additional
rent. Such additional rent shall be due and
payable on the next date after the expense is
incurred that Basic Rent is otherwise due.
Section 7.3 MECHANIC'S LIENS. Tenant shall
take all reasonable steps necessary to ensure that
no lien arising under Connecticut law as a result
of construction done at the Premises at Tenant's
request shall extend to the interest of Landlord
in the Premises. Tenant shall pay all costs
incurred by Tenant in connection with the
construction, alteration, demolition, maintenance
and repair of any and all improvements on the
Premises. Should a lien or claim of lien be filed
against the Landlord's interest in the Premises by
any contractor, subcontractor, mechanic, laborer,
materialman or any other person whomsoever
retained by Tenant, Tenant shall, within sixty
(60) days after the filing thereof, cause the same
to be discharged of record.
Section 8. NON-LIABILITV AND INDEMNIFICATION.
Section 8.1. TENANT'S INDEMNITY. During the
Term, Tenant agrees to defend, protect, indemnify
and save harmless Landlord and any Facility
Mortgagee from and against all claims arising out
of or connected with the use and occupancy of the
Premises by Tenant, any person claiming by,
through or under Tenant, or their respective
officers, directors, servants, agents, customers,
contractors, employees or invitees and shall pay
all costs and expenses incurred by Landlord and
any Facility Mortgagee in connection with such
claims, including without limitation, court costs
and reasonable attorney's fees for trial and
appellate proceedings. Landlord and any Facility
Mortgagee shall be protected hereby from all
claims arising during the Term from loss of or
damage to property, or death or personal or bodily
injury to persons except to the extent such loss,
damage, death or injury is caused by the
negligence or willful actions of Landlord or any
person claiming by, through or under Landlord, or
their respective officers, directors, servants,
agents, customers, contractors, employees or
invitees in which case Landlord shall be fully
responsible therefor and shall indemnify, defend
and hold harmless Tenant with respect thereto in
accordance with the-terms of Section 8.2. The
provisions of this Section shall survive the
termination or expiration or earlier termination
of this Lease.
15
Section 8.2. LANDLORD. Landlord will
indemnify, defend and hold harmless Tenant from
any and all costs, expenses and liability,
including, without limitation, court costs and
reasonable attorney's fees for trial and appellate
proceedings, which it may incur in connection with
the performance by Landlord of its obligations
hereunder, including, without limitation, the
construction and completion of the Improvements.
The provisions of this Section shall survive the
expiration or earlier termination or expiration of
this Lease, provided that claims also covered by
Landlord's limited warranty set forth in the Work
Letter shall be subject to the limitations set
forth in such limited warranty.
Section 8.3 LIMITATION ON LIABILITY. It is
expressly agreed by the parties that in no case
shall Landlord (or its partners any individuals or
entities comprising Landlord) be personally
liable, under any express or implied covenant,
agreement or provision of this Lease, for any
damages whatsoever to Tenant beyond Landlord's
interest in the Premises. Neither party hereto
shall be liable to the other for indirect or
consequential damages.
Section 9. INSURANCE.
Section 9.1. All insurance policies required
by this Section 9 shall be issued by a good and
solvent insurance company or companies licensed to
do business in the State of Connecticut, with a
rating of "A XII" or higher by Bests, selected by
Tenant and reasonably satisfactory to Landlord,
and shall include Landlord and each mortgagee of
which Landlord has not)fied Tenant as additional
insureds as their interests may appear. Tenant
shall provide a copy of binders for insurance
policies conforming to the requirements of this
Lease for Landlord's review at least thirty (30)
days prior to the estimated completion date.
Tenant agrees to deliver certificates of such
insurance to Landlord as of the Rent Commencement
Date and thereafter not less than thirty (30) days
prior to the expiration of any such policy. Such
insurance shall not be canceled, materially
changed, or non-renewed without thirty (30) days'
written notice to Landlord.
Landlord and Tenant shall each give prompt
notice to the other of all losses, damages or
injuries to any person or damage to any property
which may in any way be related to this Lease and
for which a claim might be made against the other
party. Each party shall promptly report to the
other party all such claims, whether related to
matters insured or uninsured. Landlord and Tenant
shall assist and cooperate with any insurance
company in the adjustment or litigation of all
claims and losses arising under this Lease.
Section 9.2. PROPERTY INSURANCE. From and
after the Rent Commencement Date, Tenant shall
obtain and keep in force throughout the Lease
Term, at its expense, "all-risk" property
insurance upon the Improvements against fire and
such other hazards, casualties and contingencies
(including boiler and machinery coverage on a
comprehensive basis) as are from time to time
customarily covered by all-risk policies for
similar buildings used for similar purposes as
Tenant is then making of the Facility with
endorsements insuring against earthquake and
subsidence. The limit of such insurance shall
never be less than 100% of the actual replacement
cost at the time and place of loss, and the policy
shall include an agreed amount endorsement. This
policy shall include coverage for increased cost
of construction, demolition and contingent
liability as a result of compliance with then
existing applicable legal requirements. Such
insurance will be subject only to such deductibles
as are from time to time reasonably approved by
Landlord based on the then current practice for
similar buildings used for senior housing with
assisted living services located within the
vicinity of the Real Property (Tenant agreeing to
pay to Landlord, upon demand as Additional Rent,
the amount of any such deductible following any
casualty loss). The policy shall include rent
continuation coverage payable to Landlord,
notwithstanding abatement of Tenant's Rent, of no
less than eighteen (18)
16
months rent (including Base Rent and Additional
Rent). All such policies shall name Landlord as
the Named Insured and each Facility Mortgagee as a
loss payee as its interest may appear.
In the event that Landlord receives a notice
of cancellation of such insurance policy or
policies without a corresponding notice regarding
the issuance of new insurance prior to the
effective date of such cancellation, Landlord may,
in addition to and without thereby waiving any
other remedies, pay the premiums necessary to
prevent such cancellation and xxxx Tenant
therefor. Tenant shall reimburse Landlord therefor
by paying such amount, together with interest at
the rate set forth in Section 3.2.3, to Landlord,
as Additional Rent, within five (5) days after
demand therefor by Landlord.
Section 9.3. LIABILITY INSURANCE. Tenant
shall provide or cause to be provided at its
expense, and keep in force during the Lease Term:
(a) Commercial general liability insurance
(without any so-called employee exclusion or the
like) in an amount reasonably required by Landlord
from time to time based on the then current
practice for similar buildings used for senior
housing with assisted living services located
within the vicinity of the Real Property, but in
any event not less than the greater of (i) One
Million Dollars ($1,000,000.00) per occurrence,
$2,000,000 aggregate, or (ii) the liability
coverage typically carried by Tenant in similar
facilities, including contractual liability
coverage. Such policy shall name Tenant as a named
insured and Landlord and each Facility Mortgagee
of which Landlord has not)fied Tenant, as
additional insureds with respect to any claim
arising from Tenant's use, occupancy, repair or
operation of the Premises; and property
(b) Comprehensive automobile liability
insurance including personal injury and property
damage in the amount of a combined single limit of
$1,000,000 each occurrence. Coverage must include
owned, leased, hired and non-owned vehicles;
(c) Worker's compensation and occupational
disease insurance with statutory limits;
(d) Employer's liability insurance with a
limit not less than $500,000; and
(e) Excess liability policy in umbrella form
with a minimum limit of liability of $15,000,000,
applying in excess of the coverages listed in (a),
(b) and (d) above.
(f) Professional liability insurance in the
amount of One Million Dollars ($1,000,000) per
occurrence, which shall be written on an
occurrence basis.
All liability insurance shall be on an
occurrence basis. Tenant may not elect to carry
claims made commercial general liability insurance
unless occurrence coverage is generally
unavailable at commercially reasonable rates in
the marketplace. Tenant's insurance shall state
that it is primary and not contributing with any
insurance purchased by Landlord. Tenant's
insurance shall also state that it is severable
with respect to all insureds under the policy and
that acts of one insured will not abrogate
coverage for other insureds.
Section 9.4 PERSONAL PROPERTY INSURANCE.
Tenant shall obtain and keep in force throughout
the Lease Term, at its expense, `'all-risk"
property insurance on its personal property,
including but not limited to furniture, fixtures,
machinery and equipment, for the full replacement
cost .
17
Section 9.5. MORTGAGEE'S OTHER REQUIREMENTS.
Tenant shall maintain any other insurance
reasonably required by the holder of a Facility
Mortgagee, which reasonableness standard shall be
based on industry standards of lenders whose loans
are secured by senior housing with assisted living
services properties similar in nature to the
Premises, and on any such other insurance be
generally available at commercially reasonable
rates.
Section 9.6. BLANKET INSURANCE. Nothing
contained in this Section 9 shall prohibit
Landlord or Tenant from obtaining a policy or
policies of blanket insurance which may cover
other properties of Landlord or Tenant provided
that (a) any such blanket policy expressly
allocates to the Premises not less than the amount
of insurance required hereunder to be maintained
and (b) such blanket policy shall not diminish the
obligations to insure hereunder, so that proceeds
from such policies shall be an amount no less than
the proceeds that would be available under a
separate policy.
Section 9.7. WAIVER OF SUBROGATION. Landlord
and Tenant, each for itself and its insurer,
hereby waive all claims and rights against the
other and their respective officers, directors,
employees, contractors, servants, and agents, for
any damage to or destruction of real or personal
property of Landlord or Tenant to the extent
covered by the insurance required to be maintained
hereunder. All property insurance policies carried
at any time during the Lease Term by either party
covering the Premises shall include a clause to
the effect that such waiver of subrogation shall
not adversely affect or impair such policies or
prejudice the rights of the insureds to recover
thereunder. The provisions of this Section 9.7
shall survive the expiration or earlier
termination of this Lease.
Section 10. DAMAGE AND DESTRUCTION.
Section 10.1. REPAIR OR RESTORATION AFTER
MAJOR CASUALTY. In the event that any part of the
Improvements or the Personal Property shall be
damaged or destroyed by fire or other casualty for
which Tenant is required to maintain insurance
hereunder and the cost to repair such casualty is
greater than $200,000, (any such event being
called a "Major Casualty"), Landlord shall
promptly replace, repair and restore the same as
nearly as possible to its condition immediately
prior to such Major Casualty, in accordance with
all of the terms, covenants and conditions and
other requirements of this Lease and any mortgage
applicable in the event of such Major Casualty.
If, pursuant to this Section 10, Landlord shall be
obligated to make repairs, the Premises shall be
so replaced, repaired and restored as to be
substantially the same character as prior to such
Major Casualty. The Plans and Specifications for
such restoration shall be first submitted to and
approved in writing by Tenant, which approval
shall not be unreasonably withheld. Tenant may
elect to retain, at its expense, an independent
architect, reasonably approved by Landlord, who
shall oversee such repairing, restoring or
replacing. Tenant covenants that it will give to
Landlord prompt written notice of any casualty
affecting the Premises or any portion thereof.
Section 10.2. EXCEPTION FOR MAJOR CASUALTV
DURING LAST TWO LEASE YEARS AND UNINSURED
CASUALTV. Notwithstanding the foregoing, in the
event of (a) a Major Casualty occurring during the
last two Lease Years of the Initial Term or any
Renewal Term or (b) resulting from a flood,
nuclear accident, war or other event for which
Tenant is not obligated to maintain insurance
hereunder and which, in the reasonable opinion of
Landlord, Tenant and Facility Mortgagee, renders
the Premises unsuitable for Tenant's use as a
senior housing with assisted living services
facility as operated by Tenant prior to the
Casualty, then Landlord or Tenant shall have the
right to terminate this Lease upon written notice
to the other and, in such event, all insurance
proceeds attributable to the Real Property,
Improvements and Personal Property shall be
18
payable to the Facility Mortgagee or, if none, to
Landlord and all insurance proceeds attributable
to Tenant's Equipment shall be payable to Tenant.
Each party's termination rights under this Section
shall be exercised by written notice to the other
party sent within thirty (30) days after the
occurrence of the destruction or damage. Any
termination notice sent by Landlord or Tenant
shall take effect thirty (30) days after mailing
thereof. If, however, Landlord sends such
termination notice to Tenant during the last two
Lease years (other than for an uninsured
casualty), and within such 30-day period Tenant
sends Landlord written notice exercising Tenant's
next upcoming extension option, then (i)
Landlord's termination notice shall be void, (ii)
Tenant shall be deemed to have irrevocably
exercised its renewal option and waived any right
to terminate its renewal notice in connection
therewith, (iii) the next upcoming Renewal Term
shall automatically be added to the then current
portion of the Lease Term, and (iv) Landlord shall
make the repairs and restorations required by this
Section.
Section 10.3. FAILURE BY LANDLORD TO COMPLETE
REPAIRS. In the event that (a) Landlord has not
procured the necessary permits and approvals for
the restoration and/or has not commenced repair
and restoration of the Premises within 180 days of
the date of the Major Casualty, or (b) Landlord's
work is not thereafter substantiaIly completed
within twelve (12) months following commencement
of repair and restoration, then, in either event,
Tenant may give written notice to Landlord and any
Facility Mortgagee of Tenant's intention to
terminate this Lease or assume responsibility for
completion of such repair and restoration of the
Premises unless the same is commenced or
substantially completed (as the case may be)
within thirty (30) days of the date on which such
notice is given. If Landlord or any Facility
Mortgagee fails to so commence or to substantially
complete (as the case may be) such repair and
restoration within such 30-day period, then
immediately upon the expiration of such 30-day
period, Tenant shall have the right to either
terminate this Lease by written notice to Landlord
or the right, but not the obligation, to assume
responsibility for such repair and restoration and
Landlord shall make available to Tenant use of all
insurance proceeds available therefor, subject to
the terms of Section 6 hereof and the terms of any
Facility Mortgage
governing insurance proceeds. Landlord agrees to
use its best efforts to negotiate as part of the
loan documents with any mortgagee, the right to
apply insurance proceeds to the repair and
restoration of the Improvements. If, despite such
best efforts, the prior approval of any Facility
Mortgagee or other Mortgagee is required for
conducting any repair or restoration hereunder
(whether by Landlord or by Tenant), Landlord
agrees to use its best efforts to secure such
approval and the right to apply the insurance
proceeds thereto.
Section 10.4. TERMINATION. Notwithstanding
anything to the contrary contained in this Section
10, Landlord shall not be obligated to rebuild
following a Major Casualty if the repairs or
reconstruction of the damage cannot be made under
existing laws, ordinances, statutes or regulations
of any governmental authority applicable thereto.
In the event Landlord is unable to rebuild in
accordance with the provisions hereof, and such
casualty causes the premises to be rendered
unsuitable for use as a senior housing with
assisted living services facility, then this Lease
shall terminate effective thirty (30) days after
the damage occurs and Tenant shall remit insurance
proceeds in its possession to any Facility
Mortgagee or, if none, to Landlord within ten (10)
days of said Lease termination date free and clear
of all liens or claims and shall promptly, at its
own expense, remove from the Premises any of
Tenant's Equipment not so damaged or destroyed.
Section 10.5. RENDERED UNSUITABLE. For the
purposes of this Section 10, the Facility shall be
deemed to have been rendered unsuitable for use as
a senior housing with assisted living services
facility if, in the good faith judgment of
Landlord, Tenant and any Facility Mortgagee,
reasonably exercised, the Facility cannot after
any such loss
19
be operated on a commercially practicable basis as
a senior housing with assisted living services
facility of the type and quality existing and
licensed immediately prior to such loss, taking
into account, among other relevant factors, the
number of licensed and operational beds, dining
and kitchen facilities, parking lots, driveways,
or walkways affected by such loss.
SECTION 10.6. REPAIR OR RESTORATION AFTER
MINOR CASUALTY. In the event that any part of the
Improvements or Personal Property shall be damaged
or destroyed by fire or other casualty and the
cost to repair such casualty is $200,000 or less
(a "Minor Casualty"), then Tenant shall promptly
repair and restore the same as nearly as possible
to its condition immediately prior to such Minor
Casualty, in accordance with all of the applicable
terms, covenants and conditions
and other requirements of this Lease and the
requirements of any Facility Mortgagee in the
event of such Minor Casualty, and Tenant shall be
entitled to the use of all insurance proceeds
available therefor, subject to the terms of such
Facility Mortgage.
Section 10.7. ABATEMENT OF RENT. This Lease
shall remain in full force and effect during the
period of any repair and restoration; provided,
however, Tenant's obligation to pay Rent shall be
equitably abated to reflect the nature and extent
to which such casualty event has rendered the
Premises unusable by Tenant. For purposes of
applying the foregoing abatement provision, the
parties shall take into account the impact of the
casualty (and subsequent repairs) on Tenant's
ability to provide to its residents any services
which are significant to Tenant's operations of a
senior housing facility with assisted living
services of the type and quality which was
operated prior to the Casualty.
Section 10.8. Tenant hereby acknowledges
that, notwithstanding any provision in this
Section 10, the terms and provisions of any
Facility Mortgagee shall govern with respect to
the settlement of insurance claims and
availability of insurance proceeds for
restoration.
Section 11. CONDEMNATION.
Section 11. 1. TAKING OF WHOLE.
Section 11.1.1. If, during the Lease Term, so
much of the Premises are taken or condemned in fee
for a public or quasi-public use that in the
reasonable judgement of Landlord, Tenant and
Facility Mortgagee the Premises are rendered
unsuitable for use as senior housing with assisted
living services, this Lease shall terminate.
Termination will be effective without entry or
notice. Termination shall occur as of the day when
possession is required to be surrendered to the
taking or condemning authority.
Section 11.1.2. For purposes of this Section
11, the Premises shall be deemed to have been
rendered unsuitable for use as a senior housing
with assisted living services facility if, in the
good faith judgment of Landlord, Tenant and any
Facility Mortgagee reasonably exercised, the
Premises after such loss cannot be operated on a
commercially practicable basis as a senior housing
with assisted living services facility of the type
and quality existing and licensed immediately
prior to such loss taking into account, among
other relevant factors, the number of licensed
beds and/or parking lots, driveways, dining and
kitchen facilities, or walkways affected by such
loss.
Section 11.2. TAKING OF A PORTION. If during
the Lease Term, a portion of the Premises and/or
the Facility is taken or condemned in fee for a
public or quasi-public use such that the Facility
is not rendered unsuitable for use as a senior
housing with assisted living services facility,
this Lease shall not terminate. If, however, as a
result of the taking, the number of beds available
for operation of the Facility as a senior housing
20
with assisted living services facility of the type
and quality existing and licensed prior to the
taking has been or must be reduced, Tenant shall
be entitled to an abatement of rent. The rent
abatement shall be to the extent that is fair,
just and equitable to both Tenant and Landlord,
taking into consideration, among other relevant
factors, the number of licensed beds and/or
parking lots, driveways, dining and kitchen
facilities or walkways affected by such loss.
Section 11.3. DAMAGES FOR TAKING. All damages
awarded in connection with the taking of the
Premises shall vest in Landlord but the immediate
payment and use of such damage award shall be
governed by the provisions of any Facility
Mortgage. In the event of a partial taking where
the Lease is not terminated, subject to the
provisions of any Leasehold Mortgage, Landlord
shall apply or make available to Tenant that
portion of the proceeds reasonably necessary for
the repair or reconstruction of the Premises.
Notwithstanding anything to the contrary contained
in any Facility Mortgage or related document, all
damages awarded (or otherwise sought by Tenant) in
connection with the taking of Tenant's Equipment,
and all moving and relocation costs, shall vest in
Tenant.
Section 12. DEFAULT. The occurrence of any of
the events, acts or circumstances described in
this Section 12.1 shall constitute an Event of
Default under this Lease.
Section 12.1.1. EVENTS OF DEFAULT. Failure by
Tenant to pay in full any rent payable under this
Lease when due and the continuance of such failure
for ten (10) days after Landlord has given Tenant
written notice of such failure.
Section 12.1.2. Failure by Tenant to observe,
perform or comply with any of the terms, covenant,
agreements or conditions contained in this Lease
(other than as specified in Section 12.1.1,L2. 1.4
and 12.1.6), and the continuance of such failure
for thirty (30) days after Landlord has given
Tenant written notice of such failure. If Tenant
has promptly commenced and diligently pursued
remedial action within said thirty (30) day period
but has been unable to cure its default (except
for any default that can be reasonably cured by
the payment of money) prior to the expiration
thereof, said thirty (30) day period shall be
extended for the minimum time reasonably required
for the completion of Tenant's remedial action.
Section 12.1.3. The making by Tenant of an
assignment for the benefit of its creditors or the
commencement of proceedings in a court of
competent jurisdiction for the reorganization,
liquidation or involuntary dissolution of Tenant
or for the adjudication of Tenant as a bankrupt or
insolvent or for the appointment of a receiver of
the property of Tenant which, with respect to any
involuntary proceedings, are not dismissed and any
receiver, trustee or liquidator appointed therein
is not discharged, within ninety (90) days after
the institution thereof.
Section 12.1.4. The abandonment of the
Premises by Tenant other than as a result of the
damage, destruction or taking thereof.
Section 12.1.5. The involuntary, imposed or
required revocation, suspension, termination,
probation, restriction, limitation or refusal to
re-new, or pending revocation, suspension,
termination, probation, restriction, limitation
of, or refusal to renew, any license or permit
which materially affects the ability of the Tenant
to operate the Facility in the absence of (i) the
submittal by Tenant of any corrective or remedial
plan the effect of which is to stay any such
revocation, suspension, termination, probation,
restriction, time limitation or refusal to renew
any license or permit, or, (ii) in
21
the case of any assisted living service provider
license, the replacement of Tenant with another
provider approved by Landlord and any Facility
Mortgagee in their reasonable discretion within
ten (10) days of revocation or other such action
on such license.
Section 12.1.6. The failure to open the
Facility for business within thirty (30) days
after the Substantial Completion date.
Section 13. LANDLORD'S REMEDIES: DAMAGES ON
DEFAULT.
Section 13.1. LANDLORD'S REMEDIES. If an
Event of Default shall occur, Landlord may, at its
option, give to Tenant a written notice
terminating this Lease upon a date specified in
such notice, which date shall be not less than ten
(10) business days after the date of receipt by
Tenant of such notice from Landlord, and upon the
date specified in said notice, the term and estate
hereby vested in Tenant shall cease and any and
all other right, title and interest of Tenant
hereunder shall likewise cease without further
notice or lapse of time, as fully and with like
effect as if the entire Lease Term had elapsed,
but Tenant shall continue to be liable to Landlord
as hereinafter provided.
Section 13.2. SURRENDER. Upon any termination
of this Lease as the result of an Event of
Default, Tenant shall quit and peacefully
surrender the Premises to Landlord, and Landlord,
upon or at any time after any such termination,
may without further notice, enter the Premises and
possess itself thereof by summary proceedings or
otherwise, and may dispossess Tenant and remove
Tenant and all other personal property from the
premises and may have, hold and enjoy the Premises
and the right to receive all rental income of and
from the same.
Section 13.3. RIGHT TO RELET. At any time or
from time to time after any such termination,
Landlord may relet the premises or any part
thereof, in the name of Landlord or otherwise, for
such term or terms (which may be greater or less
than the period which would otherwise have
constituted the balance of the Lease Term) and on
such conditions (which may include concessions or
free rent) as Landlord, in its reasonable
discretion, may determine and may collect and
receive the rents therefor. Landlord shall in no
way be responsible or liable for any failure to
relet the Premises or any part thereof, or for any
failure to collect any rent due upon any such
reletting.
Section 13.4. SURVIVAL OF COVENANTS: DAMAGES.
In the event of any such termination Tenant shall
pay to Landlord the Rent up to the date of such
termination. No such termination of this Lease
shall relieve Tenant of its liability and
obligations under this Lease and such liability
and obligations shall survive any such
termination. Tenant shall indemnify and hold
Landlord harmless from all 10ss, cost, expense,
damage or liability arising out of or in
connection with such termination, including
reasonable attorney's fees.
If this Lease is terminated for Tenant's
Event of Default, then unless and until Landlord
elects lump sum damages described in the
succeeding paragraphs of this Section, Tenant
shall pay on the last day of each calendar month
until the stated expiration date all Basic Rent
and Additional Rent which would have been due for
such month if this Lease had not been terminated.
If, however, Landlord re-lets the Premises, there
shall be credited against such obligation each
month the amount actually received by Landlord
from such reletting during such month on account
of such month, after first deducting all expenses
incurred in connection with such reletting,
including, without limitation, all repossession
costs, brokerage commissions, legal expenses,
reasonable attorneys' fees, alteration costs, and
expenses of preparation for such reletting.
22
At any time after such termination,
and regardless of whether Tenant has made any
payments to Landlord pursuant to the preceding
provisions of this Section, Tenant shall pay to
Landlord, on demand, as damages for Tenant's Event
of Default, the difference between
(1) the aggregate Rent which would have been
payable under this Lease by Tenant from the date
Landlord last received full Rent payments from
Tenant (whether pursuant to the preceding
paragraph or earlier) until the stated expiration
date, minus
(2) the fair and reasonable rental value of
the Premises for the same period determined as of
the date Landlord elects such damages, taking into
account market conditions and the likelihood of
reletting the premises, less Landlord's reasonable
estimate of expenses to be incurred in connection
with reletting the Premises, including, without
limitation, all repossession costs, brokerage
commissions, legal expenses, reasonable attorneys'
fees, alternation costs, and expenses of
preparation for such reletting;
with the amounts in the preceding clauses (1) and
(2) discounted to present value using the Federal
Reserve discount rate as in effect on the date on
which Landlord makes such demand.
If the Premises or any part thereof are relet
by Landlord for the period prior to the stated
expiration date, or any part thereof, before
presentation of proof of such damage any court,
commission or tribunal, the amount of rent
reserved upon such reletting shall be, prima
facie, the fair and reasonable rental value for
the part or the whole of the Premises so relet
during the term of the reletting.
Section 13.5. LIQUIDATED DAMAGES. In lieu of
recovery by Landlord of sums payable under the
foregoing provisions of Section 13.4 or any other
damages resulting from Tenant's Event of Default,
Landlord may by written notice to Tenant, at any
time after this Lease is terminated, elect to
recover, and Tenant shall thereupon pay, as
liquidated damages, an amount equal to the
aggregate of the Rent accrued during the
twenty-four (24) months prior to such termination
plus the amount of Rent accrued and unpaid at the
time of termination and less the amount of any
recovery by Landlord under the foregoing
provisions of this Section up to the date of
payment of such liquidated damages; provided,
however, if such notice is given less than
twenty-four (24) months before the stated
expiration date, then liquidated damages shall be
measured by the number of months remaining until
the stated expiration date.
Except as to the terms of the liquidated
damages provision set forth above, nothing herein
shall limit or prejudice the right of Landlord to
prove and obtain an amount equal to the maximum
allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in
which, such damages are to be proved, whether or
not such amount be greater, equal to, or less than
the amount of the difference referred to above.
Section 13.6. RIGHT TO EQUITABLE RELIEF. In
the event there shall occur an Event of Default or
threatened Event of Default Landlord shall be
entitled to enjoin such Event of Default or
threatened Event of Default.
Section 13.7. RIGHT TO SELF HELP. If an Event
of Default shall occur and be continuing, Landlord
shall have the right, but shall not be obligated,
to enter upon the Premises and to perform such
obligation notwithstanding the fact that no
specific provision for such substituted
performance by Landlord is made in this Lease with
respect to such Event of Default. In the event
Tenant fails to comply with Section 4.2, or
23
there occurs an Event of Default under Section
12.1.5 hereof, then Landlord shall have the right
to submit on behalf of Tenant to any licensing
authority a corrective or remedial plan in order
to stay a license revocation or similar proceeding
and the right to contract directly on behalf of
Tenant with a licensed assisted living service
provider for the provision of such services to the
Facility and Tenant shall cooperate with such
service provider so as to permit the smooth
operation of the Facility and Tenant hereby
appoints Landlord its attorney-in-fact for the
purposes of this Section 13.7 only. In performing
such obligation, Landlord may make any payment of
money or perform any other act. The aggregate of
(i) all sums so paid by Landlord, (ii) interest on
such sums at the "Prime Rate" as published in The
Wall Street Journal on the day on which demand for
payment is made by Landlord as hereinafter
provided plus two percent (2%) per annum, and
(iii) all necessary incidental costs and expenses
in connection with the performance of any such act
by Landlord, shall be deemed to be Rent under this
Lease and shall be payable to Landlord immediately
upon demand. Landlord may exercise the foregoing
rights without waiving any other of its rights or
releasing Tenant from any of its obligations under
this Lease.
Section 13.8. FURTHER REMEDIES. Except as
otherwise provided in this Lease, Landlord shall
have the right to invoke any right and remedy
allowed at law or in equity or by statute or
otherwise, and nothing in this Lease shall require
Landlord to elect any remedy for an Event of
Default by Tenant hereunder, and all rights herein
provided shall be cumulative with one another and
with any other rights and remedies which Landlord
may have at law or in equity in the case of such
an Event of Default. Landlord's remedies under
this Section 13 shall survive the early
termination of this Lease.
Section 14. QUIET ENJOYMENT.
Landlord covenants and agrees that, so long as
Tenant observes and performs all of the covenants,
conditions, and stipulations of this Lease, Tenant
may lawfully and quietly hold, occupy and enjoy
the Premises during the Lease Term.
Notwithstanding the foregoing, Landlord and Tenant
hereby acknowledge that the kinds of
inconveniences or disruptions to Tenant which
would normally be associated with a nearby
construction project, if caused by the
construction of the Future Development, shall not
constitute a breach of the covenant of quiet
enjoyment, provided that Landlord shall take all
reasonable measures to minimize disruptions to
Tenant and to Tenant's residents, taking into
account the nature of Tenant's use of the
Premises.
Section 15. ASSIGNMENT AND SUBLETTING.
Section 15.1. AFFILIATES. Tenant may, without
prior approval from Landlord, assign its rights
and obligations under this Lease to any parent
corporation or any sister or subsidiary
corporation whose ownership is at least 51% in
common with Tenant and of which Tenant has control
(an "Affiliate"). Tenant shall give Landlord
notice of any such assignment or subletting, and
shall give to Landlord, concurrently with such
assignment, an executed original assignment and
assumption agreement wherein such assignee agrees
to be bound by the terms and conditions of this
Lease. The initial public offering of stock by
Tenant and any subsequent sale or transfer of any
stock of Tenant shall not be deemed to be an
assignment hereunder requiring Landlord's consent
pursuant to this Section 15. Tenant shall not be
required to obtain the consent of Landlord with
respect to a merger, consolidation or other
reorganization provided that, in any of such
events (i) the successor to Tenant has a net worth
computed in accordance with GAAP at least equal to
the net worth of the Tenant named herein and (ii)
the successor to Tenant has experience in the
assisted living housing industry at least
comparable to that of the named Tenant.
24
Section 15.2. LANDLORD'S CONSENT. Provided
that there is then no outstanding Event of
Default, Tenant may sublease the Premises or
assign its rights and obligations under this Lease
to a person or entity that is not an Affiliate
with the prior written consent of Landlord; such
consent shall not be unreasonably withheld, unless
a Facility Mortgagee has approval rights in its
loan documents over such assignment rights and the
Facility Mortgagee retains the right to exercise
its sole discretion, in which case the standard
for Landlord shall also be "at its sole
discretion". If Tenant wishes to assign this Lease
and Landlord's consent is required hereunder,
Tenant shall deliver to Landlord (i) a true and
complete copy of the proposed instrument of
assignment containing all of the terms and
conditions of such proposed assortment, (ii)
information as to the identity and experience of
the assignee as Landlord may reasonably require,
(iii) such financial information concerning the
proposed assignee as Landlord may reasonably
require, and (iv) a written agreement, in form
reasonably approved by Landlord, between such
proposed assignee and Landlord in which such
proposed assignee agrees with Landlord to perform
and observe all of the terms, covenants and
conditions of this Lease from and after the date
of such assignment, all of which Landlord may
consider in determining whether to grant its
consent. Landlord agrees to notify Tenant within
fifteen (15) days following delivery of the
foregoing information, as to whether or not
Landlord shall grant its consent. If Landlord
fails to notify Tenant in writing within said 15
day period, Landlord shall be deemed to have
consented to said assignment or sublease.
If Landlord consents to an assignment, then
prior to such assignee taking occupancy of the
Premises, Tenant shall deliver to Landlord an
original of the fully-executed instrument of
assignment and of the agreement described in
clause (iv) of the preceding paragraph of this
Section.
Section 15.3. LANDLORD'S ASSIGNMENT RIGHTS.
Landlord may at any time assign its rights and
obligations under this Lease, provided, however,
that Landlord shall furnish to Tenant a written
statement from Landlord's assignee that such
assignee recognizes all of Tenant's rights under
this Lease. Notwithstanding the failure of
Landlord to obtain said recognition from
Landlord's assignee, any assignment of Landlord's
rights and obligations shall be subject to
Tenant's rights under this Lease.
Section 15.4. SUBSEQUENT ASSIGNMENTS OR
SUBLEASES. No assignment or subletting that is
approved pursuant to this Section 15 shall be
deemed to remove any subsequent assignment or
subletting from the provisions of this Section 15,
it being the intent hereof that every assignment
and subletting, whenever occurring, shall require
the same approval as is set forth herein for an
original assignment or subletting.
Section 15.5. RESIDENTIAL LEASES.
Notwithstanding anything to the contrary contained
herein, Tenant shall be permitted, without
obtaining Landlord's consent, to sublease
individual assisted living units. Tenant shall
provide to Landlord a copy of Tenant's standard
form residential lease and any subsequent changes
which may be made to the standard form.
Section 15.5. COMMERCIAL LEASES. Landlord
acknowledges and understands that Tenant may enter
into one or more commercial subleases covering
portions of the Premises with subtenants who shall
provide certain specialized services and amenities
to the residents of the Facility (e.g. beauty
parlor, convenience store, bank outlet).
Notwithstanding anything to the contrary contained
herein, Tenant shall be permitted to enter
subleases for such purposes without obtaining
Landlord's consent, provided that (i) the term of
such sublease is not greater than five (5) years,
(ii) the square footage to be subleased does not
exceed three thousand (3,000) square feet (iii)
such sublease shall be terminated by the
termination or expiration of this Lease and (iv)
such sublessees shall carry appropriate liability,
including malpractice insurance, if
25
applicable, naming Landlord, Tenant and any
mortgagee as additional insureds. Any such
commercial sublease which does not meet the
foregoing qualifications shall require Landlord's
prior consent, which shall not be unreasonably
withheld or delayed. Upon the request of Landlord,
Tenant shall provide copies of any such executed
subleases to Landlord.
Section 15.6. EFFECT OF ASSIGNMENT OR
SUBLETTING. In all events, notwithstanding any
assignment or subletting permitted hereunder,
Tenant's liability to Landlord shall remain direct
and primary. Any assignee of Tenant's interest in
the Premises shall be deemed to have agreed
directly with Landlord to be jointly and severally
liable with Tenant for the performance of Tenant's
obligations hereunder and such assignee shall upon
request execute and deliver such instruments as
Landlord reasonably requests in confirmation
thereof (and agrees that its failure to do so
shall be subject to the default provisions of this
Lease). At any time after the occurrence of an
Event of Default hereunder, Landlord may collect
rent and other charges from any assignee or
sublessee (and upon notice any assignee or
sublessee shall pay such sums directly to
Landlord) and apply the amount collected to the
rent and other charges herein reserved. No consent
to assignment or collection of rent by Landlord
directly from any assignee or sublessee or failure
so to collect such rent shall be deemed a waiver
of the provisions of this Section 15, an
acceptance of such assignee or sublessee as a
tenant
hereunder, or a release of Tenant from direct and
primary liability for the performance of all of
the covenants of this Lease.
Section 16. NOTICES. All notices provided for
in this Lease or related to this Lease shall be in
writing and shall be delivered to the parties at
the addresses set forth below. All such notices or
other papers or instruments related to this Lease
shall be deemed aufficiently served or delivered
on the date of receipt or refusal of delivery,
provided that they are sent by United States
Registered or Certified Mail, postage prepaid
return receipt requested, by hand delivery, by
overnight courier or by facsimile transmission:
To Landlord: LM Rocky Hill Assisted Living
Limited Partnership
c/o LMP Retirement
Properties, Inc.
00 Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx
00000
Telephone No.: (617)
000-0000
Facsimile No.: (617)
422-7099
Attn.: Xx. Xxxx X.
Xxxxxx, Xx., President
with a copy to: Xxxxxxx, Procter & Xxxx
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile No.: (617)
227-8591
Telephone No.: (617)
000-0000
Attn: Xxxxxxxxx XxXxxxxxx,
Esq.
with a copy to: Fleet National Bank
000 Xxxxxxxxxxx
Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attn: Xx. Xxxxx X. Xxxxx
26
To Tenant: Emeritus Corporation
Market Place One
0000 Xxxxxxx Xxxxxx,
Xxxxx 000
Xxxxxxx, XX 00000
Telephone No.:
0000000000
Facsimile No.:
206443-5432
Attn: Xx. Xxx Xxxxxxxxxx,
President
Both Landlord and Tenant may change the
address or the name of the addressee applicable to
subsequent notices by giving notice as provided
above.
Section 17. MORTGAGEE PROTECTIONS.
Section 17.1. ATTORNMENT. Tenant covenants
and agrees that, if by reason of a default upon
the part of the Landlord in the performance of any
of the terms and conditions of any mortgage, the
estate of Landlord thereunder is terminated by
summary disposition proceedings or otherwise,
Tenant will attorn to the then Facility Mortgagee
or the purchaser in such foreclosure proceedings,
as the case may be, and will recognize such
Facility Mortgagee or such purchaser as the
Landlord under this Lease; provided, however, that
the holder of such mortgage or the purchaser in
foreclosure proceedings agrees in writing not to
disturb Tenant's quiet enjoyment of the Premises
so long as Tenant is not in default hereunder
beyond applicable notice and cure periods. Tenant
covenants and agrees to execute and deliver, at
any time and from time to time, upon reasonable
request of Landlord or the holder of such mortgage
or the purchaser in foreclosure, any instrument
which may be necessary to evidence such
attornment.
Section 17.2. CURE RIGHTS. Tenant shall have
the right to cure any default by Landlord in the
payment of any amounts due under any mortgage
secured by the Premises, provided that Tenant
shall not have the right to offset any such sums
against rent due later under the terms of this
Lease.
Section 17.3. ESTOPPEL STATEMENTS. The
parties hereto shall, at any time and from time to
time upon not less than ten (10) days prior
written notice from the other party, execute,
acknowledge and deliver to such other party, in
form reasonably satisfactory to such other party
or to such other party's mortgagee, a written
statement certifying (if true) that this Lease is
unmodified and in fall force and effect (or if
there have been modifications stating the nature
thereof), that such other party is not in default
hereunder (or specifying the nature of any
default), the date to which rental and other
charges have been paid and such other information
as may be reasonably required by such other party.
It is intended that any such statement delivered
pursuant to this subsection may be relied upon by
any prospective purchaser or mortgagee of the
Premises and their respective successors and
assigns.
Section 17.4. SUBORDINATION. This Lease
shall, at the request and option of the holder of
any Facility Mortgage, be subordinated to the lien
of any Facility Mortgage, so long as Landlord
shall provide Tenant at Landlord's expense with a
Non-Disturbance Agreement from Landlord's
mortgagee providing that Tenant's tenancy under
this Lease Agreement will not be disturbed so long
as Tenant is not in default under this Lease and
in the event of a default by Landlord and
foreclosure under the Facility Mortgage,
Landlord's mortgagee or any purchaser at a
foreclosure sale will take title to the Premises
subject to Tenant's rights under this Lease and
will not disturb Tenant's possession of the
Premises as long as Tenant is not then or
thereafter in default hereunder.
27
Section 17.5. RENT ASSIGNMENT. If from time
to time Landlord assigns this Lease or the rents
payable hereunder to any person or entity, whether
such assignment is conditional in nature or
otherwise, such assignment shall not be deemed an
assumption by the assignee of any obligations of
Landlord; but the assignee shall be responsible
only for non-performance of Landlord's obligations
which occur after it succeeds to and only while it
holds Landlord's interest in the Premises or is a
mortgagee in possession of the Premises.
Section 17.6. NOTICE TO MORTGAGEE. No act or
failure to act on the part of Landlord which would
entitle Tenant under the terms of this Lease, or
by law, to be relieved of Tenant's obligations
hereunder or to terminate this Lease, shall result
in a release or termination of such obligations or
a termination of this Lease unless (i) Tenant
shall have first given written notice of
Landlord's act or failure to act to each of the
holders under any Facility Mortgage specifying the
act or failure to act on the part of Landlord
which could or would give basis to Tenant's
rights; and (ii) such mortgage holder, after
receipt of such notice, has failed or refused to
correct or cure the condition complained of within
a reasonable time thereafter; but nothing
contained in this Section shall be deemed to
impose any obligation on any such mortgage holder
to correct or cure any such condition. Tenant's
obligation to send a notice to Landlord's
mortgagee in the preceding sentence shall be
limited to mortgagees of which Landlord has
supplied Tenant with names and addresses.
"Reasonable time" as used above shall mean a
period of not less than thirty (30) days and shall
include (but not be limited to) a reasonable time
to obtain possession of the Premises if the
mortgagee elects to do so and a reasonable time to
correct or cure the condition if such condition is
determined to exist. The agreements in this Lease
with respect to the rights and powers of a
mortgagee constitute a continuing offer to any
such third party baneficiary which may be accepted
by taking a mortgage of the Premises.
Section 18. LANDLORD INSPECTION. Landlord
may, enter upon the Premises during normal
business hours and upon prior reasonable notice
for the purpose of inspecting the same.
Section 19. REPRESENTATIONS AND WARRANTIES.
Section 19.1 TENANT'S REPRESENTATIONS AND
WARRANTIES. Tenant represents, warrants and
covenants to Landlord as follows:
(a) Tenant is a corporation duly organized
and validly existing under the laws of the State
of Washington, is duly authorized to tfansact
business in the state of - Connecticut and is in
good standing under the laws of the state of
Washington.
(b) Tenant has full right and power to enter
into, or perform its obligations under this Lease
and has taken all requisite action to authorize
the execution, delivery and performance of this
Lease.
Section 19.2. LANDLORD'S REPRESENTATIONS AND
WARRANTIES. Landlord represents, warrants and
covenants to Tenant as follows:
(a) Landlord is a limited partnership duly
organized and validly existing under the laws of
the State of Delaware.
28
(b) Landlord has full right and power to
enter into this Lease and has taken all requisite
action to authorize the execution, delivery and
performance of this Lease and to carry out the
transactions contemplated herein.
Section 20. FINANCIAL STATEMENTS. Tenant
shall furnish to Landlord, from time to time,
within a reasonable time after its demand, (a)
current financial statements of Tenant and (b)
current financial statements for the operations of
the Facility.
Section 21. SURRENDER. Upon Lease
termination, Tenant shall quit and surrender the
Premises free and clear of all tenants, occupants,
liens, and encumbrances whatsoever except (i)
Permitted Exceptions and (ii) encumbrances
restrictions or reservations caused by or
consented to in writing by Landlord. Tenant shall,
subject to the provisions of Sections 10 and 11
hereof, surrender the Premises to Landlord broom
clean and in good order, condition and repair,
reasonable wear and tear excepted, with all
Tenant's signs, furniture, trade fixtures,
equipment and other personal property removed. Any
of Tenant's furniture, trade fixtures, equipment
or other personal property which is not removed
from the Premises by the termination date shall be
deemed abandoned to Landlord and Landlord may
dispose of the same as it sees fit, at Tenant's
expense. All alterations which Landlord has
designated in writing for removal by Tenant
pursuant to Section 6.2 shall be removed by Tenant
except that if having so designated an alteration
for removal, Landlord thereafter gives notice to
Tenant at least six (6) months before the
expiration of the Lease Term that Landlord would
be willing to let such alteration remain after the
expiration of the Lease Term, then Tenant may
elect whether to remove such alteration or leave
it as part of the Premises upon the expiration of
the Lease Term. Tenant shall repair any damage
caused by the removal of any alterations or any of
Tenant's furniture, trade fixtures, equipment or
other personal property and restore the building
or the surface of the Real Property, as the case
may be, to substantially the condition in which it
was prior to such removal.
Section 22 MISCELLANEOUS.
Section 22.1. CAPTIONS. The captions in this
Lease are for convenience of reference only. In no
way do those captions define, limit or describe
the scope or intent of this Lease;
Section 22.2. INTERPRETATION. Words showing
number shall be taken to include both the singular
and the plural forms. Words showing gender shall
be taken to include masculine, feminine and
neuter.
Section 22.3. SUCCESSORS AND ASSIGNS. Subject
to the restrictions on transfers set forth herein,
this Lease shall inure to the benefit of and be
binding upon Landlord and Tenant and their
respective successors and assigns. The definition
of "Landlord" and "Tenant" herein refer to the
Landlord and Tenant at the time in question.
Section 22.4. GOVERNING LAW. This Lease shall
be governed, construed, and enforced in accordance
with the laws of the State of Connecticut.
Section 22.5. ENTIRE AGREEMENT. This Lease
represents the entirety of the agreement among the
parties hereto and shall be deemed to supersede
any prior discussions or agreements among the
parties hereto. This Lease may not be amended or
modified except by written instrument signed by
the parties hereto.
29
Section 22.6. WAIVER. The failure of either
party to insist upon strict performance of any of
the covenants, agreements, terms and conditions of
this Lease in any one or snore instances shall not
be construed as a waiver or relinquishment of any
such covenant, agreement, terms, or condition and
the same shall remain in full force and effect.
Section 22.7. ATTORNEY'S FEES. In the event
either party brings an action to enforce any of
the terms hereof or in connection herewith, the
prevailing party in such action shall be entitled
to and the losing party agrees to pay the
reasonable attorneys' fees and expenses, including
attorneys' fees and expenses of appellate
proceedings, of the prevailing party.
Section 22.8. MEMORANDUM. Landlord and Tenant
shall execute a Memorandum of this Lease in a form
acceptable to Landlord and Tenant. The Memorandum
shall be recorded in the public records of Rocky
Hill, Connecticut. Landlord and Tenant shall share
the cost of recording.
Section 22.9. UNENFORCEABLE PROVISION. Each
term and provision of this Lease shall be enforced
to the fullest extent permitted by law. Should any
term or provision of this Lease, or the
application thereof, prove illegal or
unenforceable, the remainder of this Lease shall
still be valid and enforced.
Section 22.10. BROKER. Landlord and Tenant
each represent to the other that there are no
claims for brokerage or other commissions or
finder's or other similar fees in connection with
the transactions contemplated by this Lease
insofar as such claims shall be based on
arrangements or agreements made by or on behalf of
the party so representing.
Section 22.11. AMENDMENTS. Neither this Lease
nor any provision hereof may be changed, waived,
discharged or terminated orally, but only by an
instrument in writing signed by the parties hereto
and approved in writing by Landlord'sMortgagee if
required under the terms of the Facility Mortgage.
Section 22.12. COUNTERPARTS. This Lease may
be executed in any number of counterparts, each of
which shall be deemed to be an original and all of
which together shall comprise but a single
instrument.
Section 22.13. APPLYING PROVISIONS. No
provision of this Lease shall be construed against
or interpreted to the disadvantage of either
Landlord or Tenant by any court or other
governmental or judicial authority by reason of
such party's having or being deemed to have
structured, written, drafted or dictated such
provisions.
Section 22.14. TIME OF ESSENCE. Time is of
the essence of this Lease.
Section 22.15. RELATIONSHIP OF PARTIES.
Nothing in this Lease shall be construed to render
or constitute Landlord in any way or for any
purpose a partner, joint venturer or associate in
any relationship with Tenant other than that as
Landlord and Tenant, nor shall this Lease be
construed to authorize either party to act as
agent for the other party except as expressly
provided to the contrary in this Lease.
Section 22.16. HOLDING OVER. If Tenant
occupies the Premises after the Lease expiration
date without having entered into a new lease of
the Premises with Landlord, Tenan. shall be a
tenant-at-sufferance only subject to all of the
terms and provisions of this Lease except that,
after a holdover of sixty (60) days after Lease
30
expiration, the Basic Rent shall be one hundred
fifty percent (150%) of the Basic Rent during the
last Lease Year. Such a holding over, even if with
the consent of Landlord, shall not constitute an
extension or renewal of this Lease.
IN WITNESS WHEREOF, the parties hereby
execute this Lease Agreement on the day and year
first written above.
LANDLORD: LM ROCKY HILL ASSISTED LIVING
LIMITED
PARTNERSHIP, a Delaware limited partnership
By: LMP Retirement Properties,
Inc.,
General Partner
By: /s/ Xxxx X. Xxxxxx, Xx.
--------------------------------------
Its: President
TENANT: EMERITUS CORPORATION,
a
Washington corporation,
f.k.a Assisted Living of America, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------------------
Its: President
31
