FIRST AMENDMENT TO LEASE AND WORKING CAPITAL AGREEMENT
THIS AGREEMENT is made and entered into as of the 2nd day of July, 2002
by and between Sacramento County Assisted, LLC ("Landlord") and Emeritus
Corporation ("Tenant").
RECITALS
A. By Lease Agreement dated February 21, 2002 Landlord leased to RAL, Inc.
("RAL") the residential care facility for the elderly located at 000 Xxxxxxxxxx
Xxx, Xxxxxx, Xxxxxxxxxx and commonly known as Willow Creek (the "Facility").
B. By Working Capital Agreement dated February 21, 2002, 2002 Landlord
agreed , subject to certain terms and conditions, to provide to RAL any working
capital needed in connection with the operation of the Facility in the event the
cash receipts of the Facility are not, at any time, sufficient to pay all of the
expenses incurred by RAL in the operation of the Facility.
C. By Assignment and Assumption Agreement and Release of even date
herewith, RAL assigned to Tenant and Tenant took and assumed from RAL all of
RAL's right, title and interest in and to and obligations under the Lease and
the Working Capital Agreement and Landlord released RAL from any liability
thereunder from and after the Effective Date (as defined below).
D. Landlord and Tenant are now interested in amending in certain respects
the Lease and the Working Capital Agreement as of the Effective Date.
E. Each of the Lease and the Working Capital Agreement provides that it may
be amended by written instrument signed by the parties thereto.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants of the parties set forth herein, IT IS HEREBY AGREED AS FOLLOWS:
1. LEASE AMENDMENTS. The Lease shall be and hereby is amended as follows:
(a) Section 3.1 is hereby deleted in its entirety and the following inserted
in lieu thereof:
The term of this Lease (the "Term") shall commence on the date on which Tenant
is licensed to operate the Facility (the "Commencement Date"). This Agreement
may be terminated by either Landlord or Tenant, with or without cause, at any
time upon giving (i) at least ninety (90) days' written notice to the other
party if the notice to terminate ("Termination Notice") is being delivered
within the first twelve month period following the Commencement Date; (ii); at
least sixty (60) days' written notice to the other party if the Termination
Notice is being delivered within the second twelve month period following the
Commencement Date and (iii) at least thirty (30) days' written notice to the
other party if the Termination Notice is being delivered more than twenty-four
months following the Commencement Date. This Agreement shall also terminate in
the event that the Facility is sold by Landlord during the term of this Lease;
or upon the destruction of or substantial damage to the Facility by any cause,
or the taking of all or a substantial portion of the Facility by eminent domain,
in either case making it impossible or impractical to continue operation of the
Facility.
(b) Section 3.2 of the Lease is hereby deleted in its entirety.
(c) Section 4.1 is hereby amended by inserting the following at the end:
PROVIDED, HOWEVER, NOTHING HEREIN SHALL BE CONSTRUED AS LIMITING LANDLORD'S
OBLIGATIONS UNDER THE WORKING CAPITAL AGREEMENT.
(d) Section 5.1 is hereby deleted in its entirety and the following
inserted in lieu thereof:
Tenant shall pay Landlord a monthly rent (the "Base Monthly Rent") during each
month (or portion thereof) of the Lease Year included within the term of this
Lease, without deduction, set off, prior notice or demand. Base Monthly Rent
for the term of the Lease shall be equal to the net profits of the Facility
after the payment to Tenant of an operating fee in an amount equal to five
percent (5%) of the gross revenues of the Facility (the "Operating Fee"). For
purposes of this Agreement, "gross revenues" mean all revenues generated by the
operation of the Facility, but shall not include proceeds from the sale of
Facility equipment or the Facility, any insurance or condemnation proceeds or
any other proceeds from a capital event. If the Term of this Lease commences or
terminates, other than on the first day of the month, the revenues upon which
the Tenant's Operating Fee is calculated shall be prorated in proportion to the
number of days in the month in which the Term commences or terminates. The
Operating Fee provided for herein shall be disbursed by Tenant to itself out of
the Facility Checking Account (as defined below).
(e) Section 5.2 is hereby deleted in its entirety and the following inserted
in lieu thereof:
Base Monthly Rent shall be paid in arrears by the twentieth (20th) day of each
month commencing with the first month after the month in which the Commencement
Date occurs.
(f) Section 5.3 is hereby amended by deleting the phrase "in advance."
(g) Section 8.3 is hereby deleted in its entirety and the following inserted
in lieu thereof:
In connection with the operation of the Facility and notwithstanding anything to
the contrary set forth herein, Tenant's use and operation of the Facility shall
at all times be subject to the following terms and conditions (all of which
shall control in the event of a conflict between this Section 8.3 and any other
provision of this Lease):
A. Operational Policies and Forms. Tenant shall develop and implement such
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operational policies and procedures as may be appropriate for the effective
operation of the Facility, including but not limited to all policies and
procedures necessary to ensure the ongoing licensure of the Facility and
compliance with the terms of residency agreements.
B. Charges. Tenant shall establish schedules of recommended charges,
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including all special charges for services rendered to the residents at the
Facility.
C. Information. Tenant shall develop any informational material, mass media
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releases, and other related publicity materials, which are necessary or
appropriate for the operation of the Facility. The cost of all such materials
shall be commercially reasonable and be deemed to be an expense of the Facility
and shall be payable from the Facility Checking Account (as defined below).
D. Regulatory Compliance. Tenant shall use commercially reasonable efforts
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to obtain and maintain all licenses, permits, qualifications and approvals from
any applicable governmental or regulatory authority that are necessary for the
operation of the Facility and shall manage the operations of the Facility in
compliance with all applicable laws and regulations and in accordance with all
licenses, permits, qualifications and approvals; provided, however, Tenant shall
not be deemed to be in default of its obligations under this Section 8.3(D)
in the event (i) of the citation of any deficiency or deficiencies which do not
result in the threatened revocation of the licensure or Medicaid certification
of, or the imposition of a ban on admissions at, the Facility (which deficiency
or deficiencies Tenant shall cause to be timely corrected in accordance with a
plan of correction approved by the applicable regulatory authority), (ii) Tenant
is duly contesting the application of any law to the operation of the Facility
and compliance with such law is stayed during the period that such contest is
pending or (iii) compliance with law requires the expenditure of funds which
require the approval of Landlord and for which Landlord refuses or fails to
provide such approval. Within 48 hours of receipt thereof, Tenant shall provide
Landlord with copies by fax, overnight mail, email or other comparable means of
expedited transmission of any written notice regarding the licensure, occupancy
or operation of the Facility which it receives from any governmental authority
having jurisdiction over the Facility. In addition, Landlord shall have the
right to approve, which approval shall not be unreasonably withheld, any plan of
correction developed by Tenant with respect to any survey which threatens
revocation of the licensure or Medicaid certification of, or a ban on admissions
at or the imposition of civil or criminal penalties against, the Facility and to
approve the election by Tenant to contest the application of any law to the
operation of the Facility.
E. Capital Repairs, Replacements and Improvements: Tenant shall make all
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capital repairs, replacements and improvements necessary for the efficient and
effective operation of the Facility and its compliance with law unless doing so
involves an expenditure requiring Landlord's approval in accordance with the
terms of this Agreement and Landlord fails to provide such approval. The cost
of such capital repairs, replacements and improvements shall be within the
line-by-line budgetary limit for each item as set forth in the then approved
annual capital budget prepared by Tenant and approved by Landlord pursuant to
Section 8.3(L); provided, however, Tenant shall not be deemed to be in default
of its obligations under this Section 8.3(E) in the event the cost of such
repairs, replacements and/or improvements exceeds the applicable budgetary limit
allocated on a line item basis for such repairs, replacements and/or
improvements in the applicable capital budget provided such repairs,
replacements and/or improvements are (a) of such an emergency nature that
Landlord's prior notice and approval is not feasible in order to adequately
protect the Facility and the health and safety of the occupants or (b) the cost
of such repairs, replacements and/or improvements are less than $10,000 in any
one instance but do not exceed in the aggregate $25,000 for any fiscal year. Any
other capital expenditures for repairs, replacements or improvements that exceed
such budgetary limits shall be subject to the prior approval of the Landlord,
which approval shall not be unreasonably withheld; provided, however, Landlord
shall not be deemed to have unreasonably withheld its approval if (i) Landlord
lacks the financial resources to cover the cost of such capital repair,
replacement or improvement or (ii) the cost of such capital repair, replacement
or improvement will exceed $25,000 individually or in the aggregate with other
unbudgeted capital repairs, replacements or improvements undertaken by Tenant in
the same fiscal year. In performing the foregoing repairs, replacements and
improvements Tenant shall use the Facility's on site maintenance personnel as
and where possible and shall otherwise contract with qualified third parties to
provide the necessary services and shall undertake the same or cause the same to
be undertaken in a xxxxxxx like and lien free manner.
F. Accounting.
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i. Tenant shall, at its expense, provide accounting support to the Facility.
Landlord acknowledges and agrees that such accounting support shall not
include the preparation of Landlord's financial statements or securities
filings. In addition, Tenant shall reflect in the financial statement for the
Facility any accounting adjustments provided to Tenant by Landlord, provided
that Tenant shall have no liability or responsibility with respect to the
appropriateness of accounting adjustments provided to Tenant by Landlord.
Tenant shall not be required to reflect in the financial statements for the
Facility any corporate accounting adjustments provided to Tenant by Landlord
until such time as Tenant fully understands the rationale for such adjustment.
ii. All accounting procedures and systems utilized in providing said support
shall be in accordance with the operating capital and cash programs
developed by Tenant, which programs shall conform to generally accepted
accounting principles ("GAAP") and shall not materially distort income or loss.
iii. In addition, Tenant shall prepare timely and file or cause to be
prepared and filed timely all payroll tax returns, sales and use tax returns,
real and personal property tax returns and local or state gross receipts and/or
business and occupation tax returns at Tenant's sole cost and expense and Tenant
shall cause to be paid timely all of the taxes reflected on such returns as
being due, which taxes shall be Facility Expenses and shall be paid out of the
Facility Checking Account. In the event that Tenant fails to timely file
required returns or reports or to timely pay taxes, Tenant shall be solely
responsible for payment of any resulting penalties and/or interest and such
penalties and interest shall not be considered Facility Expenses, provided,
however, that Tenant shall not be responsible for paying any resulting penalties
or interest if (i) Landlord receives the tax reports for such taxes from the
taxing authority and Landlord fails to furnish the tax reports to Tenant within
a reasonable period of time prior to the date on which the tax reports are due,
or (ii) there are insufficient funds available in the Facility Checking Account
to pay the taxes when due and Landlord fails to comply with a timely request by
Tenant to provide the necessary funds to pay the taxes when due. All other tax
returns, including Landlord's local, state or federal income or informational
tax returns and state corporate franchise tax returns shall be prepared by
Landlord or its designee and the taxes and other payments due thereunder shall
be the sole responsibility of Landlord.
iv. Nothing herein shall preclude Tenant from delegating to a third party a
portion of the accounting duties provided for in this Section; provided, that
such delegation shall not relieve Tenant from ultimate liability for the timely
and complete performance of the obligations provided for herein or for the
expense thereof, it being understood that Tenant shall bear the expense of such
third party to whom Tenant delegates any such accounting duties that are the
obligation of Tenant under this Section. Landlord acknowledges and agrees that
in the event Tenant retains one or more qualified third parties to review the
real and/or personal property tax returns or utility bills of the Facility or
other third party charges in an effort to effect cost savings for the Facility,
the fees and expenses of such third parties shall be Facility Expenses and shall
be paid out of the Facility Checking Account.
G. Reports. Tenant shall prepare and provide to Landlord any reasonable
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operational information with respect to the Facility which may from time to time
be specifically requested by Landlord, including any information needed to
assist Landlord in completing the tax returns for which it is responsible under
Section 8.3(F) and in complying with the reporting requirements described in
Exhibit E. In addition, within thirty (30) days after the end of each calendar
month, Tenant shall provide Landlord with an unaudited balance sheet of the
Facility, dated the last day of such month, and an unaudited statement of income
and expenses for such month and for the fiscal year to date relating to the
operation of the Facility showing trends, the variance between the actual and
budgeted operating results of the Facility for said month and with a rent roll
and census report for the month indicating the number of units occupied and the
number of units vacant. Such monthly reports shall also show summary and
itemization of accounts receivable for the Facility and report of collection
action(s) taken and status of any collection action(s). Furthermore, Tenant
shall prepare and provide to Landlord such other reports and information as
Landlord shall reasonably request. Upon request, Tenant shall cooperate with
Landlord or Landlord's certified public accountant in the event Landlord elects,
or is required, to have audited annual financial statements prepared. The
financial statements prepared by Tenant shall be prepared in accordance with
generally accepted accounting principles ("GAAP), consistently applied, this
Agreement, and the procedures and practices provided for in this Agreement.
H. Bank Accounts. Tenant acknowledges and agrees that a checking account
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has been opened in the name of Landlord (the "Facility Checking Account") and
that during the term of this Lease Tenant shall deposit in the Facility Checking
Account all money received during the term of this Lease in the course of
the operation of the Facility; provided, however, that during the term hereof,
withdrawals and payments from the Facility Checking Account shall be made only
on checks signed by a person or persons authorized by Tenant. The Facility
Checking Account will be an interest-bearing account if an interest-bearing
account is available. Landlord shall be given notice as to the identity of said
authorized signatories. Withdrawals from the Facility Checking Account shall be
made first to pay the Tenant's Operating Fee, and, thereafter, to pay all costs
and expenses associated with the ownership or operation of the Facility (each a
"Facility Expense" and any two or more the "Facility Expenses") including,
without limitation, any principal and interest payments due in connection with
any loan secured by a mortgage on the Facility, payroll, insurance, supplies,
services and taxes (but excluding Tenant's corporate and regional overhead and
all federal, state and local income taxes assessed against Owner), all in such
order of priority as Tenant deems appropriate to the commercially reasonable
operation of the Facility; provided, however, if a lender providing financing
for the facility requires the Operating Fee to be subordinated to debt service
payments then Tenant will not pay the Operating Fee unless and until such debt
service has been paid. Facility Expenses shall also include a pro rata portion
of any expenses incurred by Tenant for the benefit of the Facility, as well as
any other facilities operated by Tenant (the "Other Benefited Facility"),
provided the method used to calculate the portion of such expenses which are
allocated to the Facility is consistent with the method used by Tenant to
allocate such costs to the other Benefited Facilities.
I. Personnel. All of the on-site personnel of the Facility, including the
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community director, business Tenant and the "wellness director", if applicable,
shall be the employees of Tenant but the salaries, bonuses, commissions, state
and federal payroll and social security tax obligations and benefits paid to or
on behalf of such on-site employees shall be deemed to be included in the
Facility Expenses and thus shall be paid from the Facility Checking Account. All
matters pertaining to the employment, supervision, compensation, promotion
and discharge of such employees are the responsibility of Tenant, which is in
all respects the employer of such employees. Tenant shall fully comply with all
federal, state, county, municipal and other governmental laws, ordinances,
regulations and orders having to do with anti-discrimination, workmen's
compensation, employer's liability insurance, social security, unemployment
insurance, hours of labor, wages, working conditions, immigration and all other
employer-employee related subjects (including without limitation, tax
withholding and information reporting requirements) and shall not do any act,
nor knowingly permit any act to be done that would constitute a violation of any
or all of such laws, ordinances, regulations or orders. Tenant shall indemnify
and hold Landlord harmless from and against any and all claims, penalties,
liabilities and expenses of whatsoever kind and nature which may be asserted by
any governmental body or by any person claiming to be aggrieved by reason of any
act or failure to act by Tenant in accordance with or in violation of any said
laws, ordinances, regulations or orders, so long as such act or failure to act
is not caused or directed by Landlord. All personnel responsible for providing
services pursuant to the terms of this Agreement shall be direct employees of
Tenant and Tenant shall, for purposes of such employment relationship, be acting
as an independent contractor and not as an agent or employee of Landlord.
Unbudgeted costs and expenses of employees or consultants that are not on-site
Facility personnel shall be treated as Facility Expenses only if approved in
writing in advance by the Landlord, which approval shall not be unreasonably
withheld. If Landlord terminates this Agreement, Landlord shall have the right
(but not the obligation) to offer to hire any one or more of the on-site
employees of Tenant.
J. Supplies and Equipment: Tenant shall purchase supplies and non-capital
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equipment needed to operate the Facility within the budgetary limits set forth
in the annual operating budget. In purchasing said supplies and equipment, if
possible without Tenant incurring personal liability for the cost of such
supplies and equipment, Tenant shall take advantage of any national or group
purchasing agreements to which Tenant may be a party.
K. Legal Proceedings. Unless otherwise directed by the Landlord, Tenant
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shall, through its legal counsel (whose identity and rates shall be subject to
Landlord's approval), coordinate all legal matters and proceedings with
Landlord's counsel and, subject to the direction and/or approval of Landlord,
shall take any and all appropriate steps to protect and/or litigate to a final
decision in an appropriate court or forum any violation, order, rule or
regulation affecting the Facility and its operations or any claim, loss,
violation or cause of action relating to the Facility. Tenant shall not settle
any litigation without the prior approval of Landlord. Tenant shall promptly
notify Landlord in writing of any written demand letters received by Tenant
which threaten litigation related to the Facility or any legal or administrative
proceedings that are filed involving the Facility. All of the costs
reasonably incurred in such litigation shall be deemed Facility Expenses and
shall be reimbursed to Landlord from the funds in the Facility Checking Account
if previously paid by Landlord or shall be paid from the funds in the Facility
Checking Account if not previously paid by Landlord. Nothing herein shall be
construed as precluding Landlord from seeking to recover from Tenant the fees
and expenses described in this Section 8.3(K) to the extent Tenant is otherwise
liable therefore under the default or indemnification provisions of this
Agreement; however, it is understood that no expenses shall be paid from the
Facility Checking Account for any litigation commenced by the Tenant against the
Landlord.
L. Budgets: The Facility shall be operated on a fiscal year of January 1
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through December 31. Landlord and Tenant have agreed prior to the Commencement
Date on an operating budget and capital budget for the period from the
Commencement Date through December 31, 2002. On or before December 31 of each
calendar year, Tenant shall prepare and submit to Landlord for its review and
approval, which approval shall not be unreasonably withheld, an annual operating
budget, an annual capital expenditure budget, and an annual cash flow
projection for the Facility. The annual operating budget and capital
expenditure budget shall be prepared using the format set forth in Exhibit F.
In the event a budget has not been agreed upon by the beginning of the fiscal
year, the operating results of the prior fiscal year shall serve as the budget
for the following fiscal year unless and until the new budget is agreed upon.
M. Collection of Accounts: Tenant shall issue bills and collect accounts
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and monies owed for goods and services furnished by the Facility during the term
of this Agreement, including, but not limited to, enforcing the rights of
Landlord and the Facility as creditor under any contract or in connection with
the rendering of any services; provided, however, that any expenses reasonably
incurred by Tenant in so doing shall be Facility Expenses and payable out of the
Facility Checking Account. In addition, upon request by Landlord, Tenant shall
issue bills and collect accounts and monies owed for goods and services
furnished by the Facility prior to the Commencement Date; provided, however,
regardless of any standard of performance set forth in this Agreement, Landlord
acknowledges and agrees that there can be no assurances that Tenant will be able
to collect any or all of such accounts receivable.
N. Contracts. Tenant shall negotiate and enter into any and all contracts
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necessary from time to time in connection with the day to day operation of the
Facility including, but not limited to, contracts for water, electricity,
natural gas, telephone, sewer, cleaning, trash removal, pest control and
extermination, cable, elevator and boiler maintenance, pharmacy services,
therapy services and other appropriate ancillary services and contracts for the
provision of various services which are designed to identify potential cost
savings to the Facility, such as utility and tax xxxx review services; provided
that such contracts can be terminated by the Landlord on no more than 90 days'
notice. Any contract which cannot be terminated on no more than 90 days' notice
shall require the approval of Landlord before the same may be executed by
Tenant, which approval shall not be unreasonably withheld. Tenant shall have
the right to contract with entities which are owned by or under common ownership
with Tenant provided the terms of any such contracts are no less favorable than
the terms then offered by unrelated third parties for the same or similar goods
or services.
O. Tenant's and Landlord's Representative. Tenant hereby appoints Xxxxx
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Xxxxx (the "Tenant's Representative") as the person employed by Tenant with whom
Landlord shall interact and upon whose decisions Landlord shall be
authorized to rely, and Landlord hereby appoints Xxxx Xxxxxxx (the "Landlord's
Representative") as the person employed by Landlord with whom Tenant shall
interact and upon whose decisions Tenant shall be authorized to rely, with
respect to the performance by Tenant of its duties hereunder. Tenant shall have
the right from time to time during the term of this Agreement to replace the
Tenant's Representative upon written notice to Landlord designating the
replacement Tenant's Representative and Landlord shall have the right from time
to time during the term of this Agreement to replace the Landlord's
Representative upon written notice to Tenant designating the replacement
Landlord's Representative. Nothing herein shall be construed as imposing any
personal liability on the Tenant's Representative or Landlord's Representative
with respect to the acts or omissions of Tenant or Landlord, respectively, under
this Agreement.
P. Standard of Performance: In performing its obligations under this Lease,
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Tenant shall manage the Facility as a licensed residential care facility
for the elderly (i) to the standard and in the same manner as management
services are provided by other qualified and licensed third party professional
health care facility Tenants of facilities comparable to the Facility, and (ii)
in accordance with the terms of this Agreement, including, but not limited to,
the limitations set forth herein on operating and capital expenditures, and the
policies adopted by, and resources available to, the Facility.
Q. Force Majeure: Tenant will not be deemed to be in violation of this
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Lease or the Working Capital Agreement if it is prevented from performing any of
its obligations hereunder for any reason beyond its control, including,
without limitation, strikes, shortages, acts of terrorism, war, acts of God,
lack of Landlord's financial resources, unreasonable interference by Landlord
with Tenant's performance of its duties hereunder, or any statute, regulation or
rule of federal, state or local government or agency thereof.
R. Proprietary Materials. Landlord acknowledges and agrees that the systems,
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methods, procedures and controls employed by Tenant and any written
materials, computer software or policies developed by Tenant to document the
same are to remain the property of Tenant and are not, at any time during or
after the term of this Agreement, to be utilized, distributed, copied or
otherwise employed or acquired by Landlord, except as authorized by Tenant,
provided, however, that upon request of Landlord Tenant shall negotiate in good
faith the terms and conditions upon which Landlord may be permitted by Tenant to
use, without payment, such systems, methods, procedures, controls, materials,
software or brochures for a limited transitional period following the
termination of this Agreement, which terms and conditions shall be satisfactory
to both Tenant and Landlord in their respective discretion. However, in the
event of a termination of this Lease, for a period of thirty (30) days after
such termination Landlord shall be permitted to use systems, methods, software
as may be reasonably necessary for Landlord to generate records and reports with
data from the term of this Lease.
(h) The following is hereby inserted as Article 13 of the Lease:
Tenant shall indemnify, defend and hold harmless Landlord and its owners,
directors, officers and employees from any and all third party claims, demands,
causes of action, losses, damages, fines, penalties, liabilities, costs and
expenses, including reasonable attorneys' fees and court costs sustained or
incurred by or asserted against any one or more of them by reason of or arising
out of Uncovered Tenant Actions. As used in this Section XII, "Uncovered Tenant
Actions" means (a) Tenant's breach of the duties and obligations required to be
performed by Tenant pursuant to this Agreement, (b) acts by Tenant outside the
scope of Tenant's authority under this Lease, or (c) the negligence or willful
misconduct of Tenant or its agents or employees. Landlord agrees to indemnify,
defend and hold harmless Tenant and its shareholders, directors, officers and
employees from any and all third party claims, demands, causes of action,
losses, damages, fines, penalties, liabilities, costs and expenses, including
attorneys' fees and court costs (except to the extent covered by insurance
carried by Tenant or required to be carried by Tenant pursuant to this Lease)
sustained or incurred by or asserted against any one or more of them relating to
the Facility that results from the negligence or willful misconduct of Landlord
in performing its obligations under this Lease or from a breach of this Lease by
the Landlord. THE INDEMNITIES BY LANDLORD AND TENANT IN THIS ARTICLE 13
SPECIFICALLY APPLY TO NEGLIGENCE AND EVENTS FOR WHICH THERE IS STRICT LIABILITY
BY THE INDEMNIFIED PERSONS, TO THE EXTENT THE RESULTING CLAIM, DEMAND CAUSE OF
ACTION, LOSS, DAMAGE, FINE PENALTY, LIABILITY, COST OR EXPENSE IS WITHIN THE
SCOPE OF THE INDEMNITY. Notwithstanding any other provision of this Lease to the
contrary, each party's obligation to indemnify, defend and hold harmless the
other party shall survive the termination of this Lease.
(i) Article 14 is hereby deleted in its entirety and the following inserted
in lieu thereof:
Tenant, as agent for the Landlord and at the sole cost and expense of
Landlord, shall obtain and keep in force adequate insurance as outlined below:
A. All Risk, or other broad form coverage property insurance,
insuring full replacement value. Such insurance shall also include, but not be
limited to, business interruption and extra expense coverage, for a period of
not less than six months. Tenant shall also maintain earthquake and flood
hazard coverage at an amount equal to full replacement cost of the Facility.
B. Commercial general liability insurance, against any third party
claims for bodily injury or property damage. Such insurance shall also include
coverage for contractual liability as respects this Agreement. Limits of such
coverage should not be less than $1,000,000 per occurrence, with a minimum of
$2,000,000 per location aggregate.
C. Professional Liability Insurance with limits of such coverage
that are not less than $1,000,000 per occurrence, with a minimum of $2,000,000
per location aggregate.
D. Business Auto Liability for third party bodily injury or
property damage for facility vehicles including owned, hired and non-owned auto
liability for $1,000,000 combined single limit. Coverage shall be extended to
cover physical damage to facility vehicles.
E. Umbrella/Excess Commercial General Liability and Professional Services
Liability in the amount of $10,000,000 per occurrence.
F. Workers' Compensation coverage with statutory limits and
Employers' Liability insurance coverage with minimum limits of $1,000,000 per
occurrence.
G. Crime insurance to cover employee dishonesty, theft of money and
security loss in limits of not less than $1,000,000
For all such insurance as deemed necessary above, it is agreed and understood
that Tenant shall continuously maintain the same at the sole cost and expense of
Landlord, and that all premiums, deductibles and uninsured losses with respect
to such policies shall be deemed to be Facility Expenses. Tenant shall provide
Landlord with evidence of all insurance, naming Landlord as an additional
insured on policies B, C, D, and E above, and subject to the requirements of a
lender, loss payee as respect the property policies. Such evidence of insurance
shall give the Landlord at least thirty (30) days prior notice of cancellation
or any material change to policies.
Tenant shall also assist Landlord to procure such other insurance coverages
as may be required by a lender for the Facility. Tenant shall, at its sole cost
and expense, maintain commercial general liability insurance for its operations.
Tenant agrees to furnish Landlord with evidence of such insurance or with
duplicate copies of such policies.
(j) Section 17.11 is hereby deleted in its entirety and the following is
inserted in lieu thereof:
Tenant shall have the right to assign to Landlord's lender, as security for
Landlord's obligations to such Lender, all payments of rent from any subletting
of all or part of the Premises as permitted by this Lease.
(k) Section 18.1 is hereby amended by inserting the following at the
end of the lead in paragraph:
; provided, however, Tenant shall not be in default of its obligations hereunder
in the event such default is due to a default by Landlord in its obligations
under the Working Capital Agreement of even date herewith between Landlord and
Tenant or as a result of the failure of Landlord to provide any consent which
Tenant is required to secure hereunder or under the Working Capital Agreement.
(l) Section 18.2.5 is hereby amended by inserting the following at the end
thereof: "provided such Tenant is provided with such indemnities with respect
thereto as it deems to be reasonably necessary."
(m) Article 24 is hereby deleted in its entirety and replaced with the
reporting requirements set forth in Section 8.3 hereof.
(n) Section 26.2 is hereby amended by inserting the phrase "without
Landlord's consent" after the word "fails" in the first line.
(o) Section 26.3 is hereby amended by inserting the phrase "without
Landlord's consent" after the word "fails" in the first line.
(p) For purposes of the agreement, Tenant's address for notice purposes from
and after the Effective Date shall be 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
XX 00000, Attn: Xxxxxxx X. Xxxxxxxxxx, with copy to The Xxxxxxxxx Group PLLC,
0000 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx, XX 00000, Attention Xxxxx X. Xxxxxxxxx.
(q) The first sentence of Section 29.16 is hereby revised to read as
follows:
"The Persons executing this Lease on behalf of Tenant represent and warrant
to Landlord that such persons have been duly authorized by the Board of
Directors of Tenant to enter into the transaction provided for in this Lease and
the Working Capital Agreement and to carry out the terms thereof.
(r) Any and all references in the Lease to the Working Capital
Agreement shall mean the Working Capital Agreement as assigned to Tenant and as
amended by this Amendment to Lease and Working Capital Agreement and any and all
references in the Lease to Tenant shall mean RAL or Emeritus as the context may
required and any and all references to the Facility being an assisted living
facility shall mean the facility licensed under California law as a residential
care facility for the elderly.
2. WORKING CAPITAL AGREEMENT AMENDMENTS. The Working Capital Agreement
shall be amended as follows:
(a) Section 1(a) is hereby amended by (I) inserting the phrase
"including the Operating Fee due and payable to Tenant under the terms of the
Lease" at the end of the second sentence, (II) replacing "$25,000" in the third
sentence with "$25,000" and (III) deleting the last two sentences in their
entirety.
(b) Section 1(c) is hereby deleted in its entirety.
(c) Section 1(d) is hereby deleted in its entirety.
(d) Section 1(g) is hereby amended as follows: (I) to insert the phrase "or
the failure of Landlord to provide any consent which Tenant is required to
secure hereunder or under the Lease and (II) delete clause (ii) and renumber
clause (iii) as clause (ii) and (III) revise renumbered to clause (ii) to read
as follows: "and which do not otherwise arise from or relate to the operation of
the Facility by Tenant prior to the expiration or earlier termination of the
Lease and (IV) by inserting the following as a new sentence. Nothing in this
Agreement shall preclude Landlord from invoking its indemnity rights pursuant to
Section 4 with respect to any amounts advanced by Landlord to meet the operating
needs of the Facility as required by the terms of this Agreement.
(e) Section 2 is hereby amended by deleting the phrase "notwithstanding
anything contained in the Services Agreement to the contrary."
(f) Any and all references in the Working Capital Agreement to the
Lease shall mean the Lease as assigned to Tenant and as amended by this
Amendment to Lease and Working Capital Agreement and any and all references in
the Working Capital Agreement to the Tenant shall mean RAL or Emeritus as the
context may require and any and all references to the Facility being an assisted
living facility shall mean the facility licensed under California law as a
residential care facility for the elderly.
3. NO OTHER AMENDMENTS. Except as specifically set forth herein, the Lease
and the working Capital agreement shall remain in full force and effect as
originally executed by Landlord and Tenant.
4. EFFECTIVE DATE. This Agreement shall be effective as of July 2, 2002.
5. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute but one and the same instrument.
6. ENTIRETY. This Agreement represents the entire and final agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior negotiations, discussions or writings with respect thereto. This
Agreement may not be amended or modified nor may any provision hereof be waived
except by written instrument signed by the parties hereto.
7. ATTORNEYS FEES. In the event of a dispute among the parties hereto with
respect to the interpretation or enforcement of the terms hereof, the prevailing
party shall be entitled to collect from the other its reasonable costs and
attorneys fees, including its costs and fees on appeal.
8. CONSTRUCTION. Both parties acknowledge that they have participated in
the drafting and negotiation of this Agreement. Accordingly, in the event of a
dispute among the parties hereto with respect to the interpretation or
enforcement of the terms hereof no provision shall be construed so as to favor
or disfavor either party hereto.
9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the day
and year first set forth above.
EMERITUS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx
Xxxxxxx X. Xxxxxxxxxx
Its: _________________________________
SACRAMENTO COUNTY ASSISTED, LLC
By: /s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
Its: ______________________________
