ex10_277.htm


    
      

    

    Exhibit
      10.27.7

     

    FIRST
      AMENDMENT TO LEASE
      AGREEMENT

     

    THIS
      FIRST AMENDMENT TO LEASE AGREEMENT (this "Amendment") is made
      by and between LAPORTE RETIREMENT L.L.C., an Indiana limited liability company
      ("Landlord"),
and SUMMERVILLE
      2 LLC, a Delaware limited liability company ("Tenant"),
      effective as of the date of mutual execution and delivery ("Contract
      Date").

     

    Background:

     

    A.            Landlord
      and Tenant are parties to that certain Lease Agreement effective April 1, 2005
      (the "Lease"),
pursuant
      to which Tenant leased certain land and improvements and related
      personal property located at 2002 Andrew Avenue, LaPorte, Indiana 46350 and
      commonly known as Brentwood Assisted Living Community, as more particularly
      described in the Lease (the "Premises").

     

    B.            Landlord,
      at Landlord's sole cost and expense, has agreed to construct additional
      improvements to the Premises (the "Improvements"),
      increasing the Premises (measured in residential capacity) by 22 assisted
      living units, 28 Alzheimer-care units, and 16 independent-living villas.
      Additionally, Landlord, at Landlord's sole cost and expense, has agreed to
      purchase and install in the Improvements certain furniture, fixtures and
      equipment, as more particularly described on Exhibit "B" attached
      hereto (the "FF&E"). The Premises subject to the Lease shall include the
      Improvements together with the FF&E (collectively, the "Addition") effective
      as of the Occupancy Date (as defined below). Tenant has agreed to terms as
      set
      forth below as to the procedure for construction of the Addition and for the
      modification of rent and other Tenant obligations in connection
      therewith.

     

    NOW,
      THEREFORE, in consideration of the mutual promises herein, and for good and
      valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, Landlord and Tenant, intending to be legally bound, hereby agree
      as follows:

     

    1.            Capitalized
      Terms.
Capitalized terms used but not defined herein shall have the respective
      meanings ascribed to such terms in the Lease.

     

    2.           Construction
      of Addition.
Subject to Paragraph 2(a) below, Landlord, at its sole

     

    cost
      and
      expense, shall (a) construct the Improvements in accordance with the plans
      attached as Exhibit
      "A" hereto (the "Plans"),
and
      (b)
      obtain and install in the Improvements the FF&E (collectively, the "Construction").
The
      FF&E shall be the property of Landlord and shall, in accordance with
      Paragraph 3 below, become part of the Leased Property under the
      Lease.

     

    (a)           Amendment
      Conditioned Upon
      HUD Financing. Landlord's obligation to construct the Addition is
      contingent upon and subject to the closing of an amendment to the existing
      Mortgage applicable to the Facility as insured by the U.S. Department of Housing
      and Urban Development (HUD) under Section 232 of the National Housing Act (the
      "Loan Closing").
If
      the
      Loan Closing does not occur by the Outside Date (as defined below), Tenant
      shall
      have the right to terminate this Amendment upon written notice to Landlord
      given
      not later than twenty (20) days after the Outside Date, in which event this
      Amendment shall be null and void and of no further force and effect and neither
      party shall have any further rights or obligations hereunder except as may
      otherwise be expressly provided herein.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    (b)            Permits
      And Approvals.
Except as otherwise expressly set forth herein, Landlord shall, at its
      sole cost and expense, obtain all required licenses, certificates, permits,
      fees
      and inspections associated with the Addition (collectively, the "Approvals");
provided,
      that in accordance with Paragraph 5 below, Tenant shall be
      responsible for the operations-related requirements for amendment of the
      existing license of the Facility as a "Residential Care Facility" under Indiana
      law (Indiana Administrative Code 410-16.2-5-1, hereafter, the "ALF Licensing
      Law") to permit the operation of the assisted living and Alzheimer care portions
      of the Improvements (the "License Amendment");
      Landlord's responsibility for the License Amendment shall be limited
      to
      the construction of the Addition in accordance with the requirements of the
      ALF
      Licensing Law. Landlord shall, in consultation with Tenant, submit the Plans
      and
      other construction-related documentation for the Addition as required under
      the
      ALF Licensing Law (the "Construction Documents")
      to the Indiana Department of Health (from which the License Amendment
      must be obtained; hereafter, the "Licensing Authority"),
      in coordination with Tenant's submission to the Licensing Authority
      of
      documentation relating to the staffing of the assisted living and Alzheimer
      care
      portions of the Improvements and other operational requirements for obtaining
      the License Amendment. Landlord shall be responsible for obtaining approval
      of
      the Construction Documents from the Licensing Authority as required for the
      License Amendment and Tenant shall be responsible for obtaining approval from
      the Licensing Authority for all operational matters required for the License
      Amendment.

     

    (c)           Completion.
      Landlord shall
      use its best efforts to obtain HUD and Mortgagee approval as required for the
      Loan Closing, to cause the Loan Closing to occur, and to obtain a building
      permit authorizing the Construction, within one-hundred-eighty (180) days from
      the Contract Date (the "Outside Date").
From
      and after the Outside Date, provided that the Loan Closing has occurred and
      Landlord has obtained the building permit authorizing the Construction, Landlord
      shall use its best efforts to complete the Construction and obtain the necessary
      Approvals to authorize Tenant's occupancy and use of the Addition for provision
      of accommodations and care for Residents (such Approvals, not including the
      License Amendment, are referred to hereafter as the "Certificate of
      Occupancy").
The "Occupancy
      Date" shall mean the date Landlord completes the Addition in accordance
      with the terms and conditions of this Amendment and Landlord delivers to Tenant
      a Certificate of Occupancy for the Improvements. Landlord shall cause the
      Addition to be completed in accordance with the terms and conditions of this
      Amendment and deliver a Certificate of Occupancy to Tenant for the Improvements
      within twelve (12) months following the Outside Date (the "Completion Period").
      In the event that Landlord has not caused the Loan Closing to occur,
      and
      obtained the building permit authorizing the Construction, by the Outside Date,
      Tenant shall either terminate this Amendment in accordance with Paragraph 2(a)
      above or the parties will agree to extend the Outside Date.

     

    (d)            Tenant's
      Operations/Entry To
      Improvements During Construction. Landlord covenants and agrees that
      during the Construction it will use diligent efforts to minimize interference
      with Tenant's operations at the existing Premises. Tenant covenants and agrees
      that during the Construction (until the Occupancy Date) it will use diligent
      efforts to prevent its employees and Residents of the Facility, as well as
      prospective Residents or other Tenant invitees, from entering the Improvements.
      Tenant shall hold Landlord harmless from any loss arising from Residents or
      Tenant's employees entering the Improvements prior to the Occupancy Date, except
      to the extent such loss is caused by the negligence or willful misconduct of
      Landlord.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    3.             Amendment
      of Lease.
Effective upon the Occupancy Date, the Lease shall be amended
      as follows:

     

    (a)            All
      references to the "Premises," the "Leased Premises" and the "Leased Property"
      in
      the Lease shall be amended to include the Addition.

     

    (b)            All
      references to "Equipment" in the Lease shall be amended to include the
      FF&E.

     

    (c)            The
      amount of the annual Base Rent payable by Tenant under the Lease
      shall be increased by 1.21 times Landlord's annual mortgage payment payable
      pursuant to the HUD mortgage for construction of the Improvements based upon
      total development costs (per the line items in Exhibit D), Landlord equity
      of
      not less then ten percent (10%) of the
      HUD
      mortgage amount, and the actual fixed interest rate of the HUD mortgage (such
      amount referred to herein as the "Increased Base Rent"); provided, however,
      notwithstanding anything to the contrary herein and notwithstanding the actual
      development costs or HUD mortgage interest rate, in no event shall the Increased
      Base Rent exceed $658,542; provided, further, that the Increased Base Rent
      shall
      not be subject to adjustment pursuant to Section 6.1(A) of the Lease until
      occupancy of the Addition reaches 90% for three (3) consecutive
      months.

     

    4.             Commencement
      Date.
The commencement date with respect to Tenant's obligation
      to pay the Increased Base Rent shall be the day after the Occupancy
      Date.

     

    5.            License
      Application.
Subject to Landlord's responsibility for construction-related matters
      as
      stated in Paragraph 2(b) above, Tenant shall be responsible, at its sole cost
      and expense, for obtaining the License Amendment from the appropriate state
      assisted living licensing agencies as required for Tenant to operate the
      assisted living and Alzheimer care portions of the Addition and, in connection
      therewith, for preparation and submission of any and all applications and other
      materials required by such licensing agencies, together with payment of any
      and
      all application fees, charges and expenses related thereto. Landlord agrees
      to
      cooperate fully with Tenant in connection therewith.

     

    6.            Security
      Deposit. Not
      later than five (5) business days following the date that Landlord provides
      written notice to Tenant that the Loan Closing has occurred and Landlord has
      received all Approvals required to commence construction of the Improvements,
      Tenant shall pay Landlord an additional security deposit in the amount of Two
      Hundred Thirty-Eight Thousand and No/100 Dollars ($238,000.00) and the term
      "Security Deposit" under the Lease shall be amended to include such amount;
      provided, however, that in the event the Occupancy Date has not occurred within
      the Completion Period, such additional security deposit shall be immediately
      returned to Tenant and any of Landlord's carrying costs with respect to the
      Addition from and after Completion Period shall not be added to the calculation
      of Increased Base Rent provided in Paragraph 3(c) above; further provided,
      that
      if the Construction is delayed by any willful act or neglect of Tenant, or
      the
      Occupancy Date is delayed by fire, adverse weather conditions not reasonably
      anticipatable, unavoidable casualties, or acts of God, then the Completion
      Period shall be extended a period of time equal to the delay caused by said
      facts provided that Landlord has furnished Tenant prompt written notice
      following the occurrence of any such event.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    7.           Marketing
      Allowance.
On or before the Occupancy Date, as the funds are received by Landlord
      from the HUD construction loan, shall pay to Tenant, in cash, such amounts
      as
      Landlord receives under the HUD construction loan as a marketing allowance
      to
      assist Tenant with its pre occupancy marketing costs. Notwithstanding anything
      herein or in the Lease to the contrary, as of the date of this Amendment, Tenant
      shall be permitted to market and lease space in the Addition to prospective
      tenants, subject to the restriction stated in Paragraph 2(d) above as to entry
      prior to the Occupancy Date.

     

    8.           Suspension
      Of Rent Ratio
      Requirements. The terms of Section 4.2 of the Lease shall be suspended
      for a period of fourteen (14) months following the beginning of the next
      calendar month after the month in which the Occupancy Date occurs.

     

    9.           Landlord's
      Construction
      Warranties/Post-Construction Procedure. Exhibit "C"  attached
      hereto and made a part hereof defines Landlord's Construction Warranties (as
      such term is defined in Exhibit "C") and the
      inspection/approval procedure to be followed in completion of the
      Construction.

     

    10.           Representations.
      Landlord represents, warrants and covenants that: (a) as of the Occupancy
      Date, Landlord shall be the sole owner of the Leased Property (as such term
      is
      amended by this Amendment); (b) the Addition shall be leased to Tenant free
      and
      clear of any and all liens, encumbrances, conditions or restrictions which
      would
      impair or restrict Tenant's use and possession thereof for the purposes
      permitted under the Lease (as amended hereby); and (c) the Addition shall be
      defect-free for a period of one (1) year in accordance with Exhibit "C" and
      Landlord shall assign to Tenant any warranties provided to Landlord in
      connection with the Addition.

     

    11.           No
      Brokers. Each
      party represents and warrants to the other that such party has dealt with no
      broker, agent or other person in connection with this Amendment and that no
      broker, agent or other person brought about this Amendment, and each party
      agrees to indemnify, defend and hold the other party harmless from and against
      any claims by any other broker, agent or other person claiming a commission
      or
      other form of compensation by with regard to this Amendment.

     

    12.           Other
      Terms. All of
      the other terms, covenants and conditions of the Lease not inconsistent herewith
      shall remain in full force and effect and unchanged hereby. In the case of
      any
      inconsistencies between the terms and conditions contained in the Lease and
      the
      terms and conditions contained herein, the terms and conditions contained herein
      shall control

     

    13.            Governing
      Law. This
      Amendment shall be governed by and construed in accordance with the laws of
      the
      State of Indiana.

     

    14.            No
      Other Amendments.
Except as amended hereby, the Lease remains in full force and effect
      and
      without any amendment or modification.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    15.    Counterparts.
This
      Amendment may be executed by the parties hereto in separate counterparts, all
      of
      which, when delivered, shall together constitute one and the same instrument,
      and a facsimile copy shall be deemed to be as sufficient as an original for
      all
      purposes.

     

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    IN
      WITNESS WHEREOF, the parties have executed this Amendment as of the day and
      year
      first above written.

     

    
      	 	
              LANDLORD:

            
	 	 	 
	 	
              LAPORTE
                RETIREMENT L.L.C.,

            
	 	
              an
                Indiana limited liability company

            
	 	 	 
	 	
              By: 

            	
              /s/
                Charles M. Loeser

            
	 	 	
              Name:
                Charles M. Loeser

            
	 	 	
              Title:
                Secretary

            
	
               

            	 	 
	
               

            	 	 
	 	
              TENANT:

            
	 	 	 
	 	
              SUMMERVILLE
                2 LLC,

            
	 	
              a
                Delaware limited liability company

            
	 	 	 
	 	
              By: 

            	
               
                /s/ Granger Cobb

            
	 	 	 
	 	 	
              Name:
                Granger Cobb

            
	 	 	
              Title:
                President