ex10_27-4.htm


    
      
        

      

    

    
      Exhibit
        10.27.4

       

      FIRST
        AMENDMENT TO LEASE
        AGREEMENT

       

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

       

      Background:

       

      A.            Landlord
        and Tenant are parties to that certain Lease Agreement effective November
1, 2004
        (the "Lease"), pursuant
        to
        which Tenant leased certain land and improvements and related personal property
        located at 1420 St. Mary's Circle, Hobart, Indiana 46342 and commonly known
        as
        Brentwood Assisted Living Community, as more particularly described in the
        Lease
        (the "Premises").

       

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

       

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

       

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

       

      2.           Construction
        of Addition.
Subject to Paragraph 2(a) below, Landlord, at its sole cost
        and
        expense, shall (a) construct the Improvements in accordance with the plans
        attached as Exhibit
        "A" hereto (the "Plans"),
and
        (b)
        obtain and install in the Improvements the FF&E (collectively, the "Construction").
The
        FF&E shall be the property of Landlord and shall, in accordance with
        Paragraph 3 below, become part of the Leased Property under the
        Lease.

       

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


      
        
          
          

        

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

       

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

       

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


      
        
          
          

        

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

       

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

       

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

       

      (c)          
        The amount of the annual Base Rent payable by Tenant under the Lease
        shall be increased by 1.21 times Landlord's annual mortgage payment payable
        pursuant to the HUD mortgage for construction of the Improvements based upon
        total development costs (per the line items in Exhibit D), Landlord equity
        of
        not less then ten percent (10%) of the
        HUD
        mortgage amount, and the actual fixed interest rate of the HUD mortgage (such
        amount referred to herein as the "Increased Base Rent"); provided, however,
        notwithstanding anything to the contrary herein and notwithstanding the actual
        development costs or HUD mortgage interest rate, in no event shall the Increased
        Base Rent exceed $495,711; provided, further, that the Increased Base Rent
        shall
        not be subject to adjustment pursuant to Section 6.1(A) of the Lease until
        occupancy of the Addition reaches 90% for three (3) consecutive
        months.

       

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

       

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

       

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

       

      
        
          
          

        

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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


      
        
          
          

        

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

       

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

         

      

      
        
          	 	
                  LANDLORD:

                
	 	 	 
	 	
                  HOBART
                    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

                


        

      

       

    

     

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