LEASE
AGREEMENT
THIS AGREEMENT (the "Lease") is made and entered
into this 10th day of
October, 1996 by and between EMERITUS CORPORATION,
a Washington corporation ("Tenant"), and LM
CHELMSFORD ASSISTED LIVING, LLC, a Massachusetts
limited liability company ("Landlord").
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 Letter attached hereto as Exhibit B and
incorporated herein by this reference (the "Work
Letter"), subject to those encumbrances and other
matters of record set forth on Exhibit C attached
hereto and incorporated herein by this reference
(the "Permitted Encumbrances"). The Real Property,
the Improvements and the Personal Property
(defined below) shall collectively constitute the
"Premises." Included within the Improvements is
the non-exclusive right to use that certain
Secondary Access Road as shown on Exhibit D-1
attached hereto which is located in part on the
Real Property and in part on the adjacent Lot 1
(as shown on Exhibit D) and which shall provide
vehicular access for emergency vehicles to and
from the Facility and Technology Drive (the
"Secondary Access Road"). Tenant's right to use
the Secondary Access Road shall be shared only
with those tenants and occupants of said Lot 1 as
described and deDned in Section 1.5.4 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 Letter, 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 deOned 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 l.3. INTENTIONALLY OMITED.
Section 1.4. INTENTIONALLY OMITTED.
Section 1.5. Future Development.
Section 1.5.1. Tenant hereby acknowledges
tbat 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 as "Lot 3" (the "Adjacent Land")
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 ndlord'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
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 Ihing specifically) or which may be at
any time applicable to any portion of the Premises
or any use thereof. T qndlord 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. Any failure by the owner and/or operator
of the Adjacent Land to comply with the provisions
of Sections 1.5.1 and 1.5.2 (it being the
responsibility of the Landlord to notify any such
owner and operator of the same) shall be deemed a
default by Landlord hereunder.
Section 1.5.2. 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 aff'liate 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. Any failure by the
owner and/or operator of the Adjacent Land to
comply with the provisions of Sections 1.5.1 and
1.5.2 (it being the responsibility of the Landlord
to notify any such owner and operator of the same)
shall be deemed a default by Landlord hereunder.
Section 1.5.3. As an alternative to Sections
1.5.1 and 1.5.2 hereof, at Landlord's election,
but in any event upon the sale of the Adjacent
Land, Landlord shall cause its aff'liate to record
in the coungr recorder's offce, prior to said
sale, restrictive covenants consistent with the
provisions of Sections 1.5.1 and 1.5.2 and in form
and substance reasonably approved by Tenant. Upon
the recording of such restrictive covenants, as
reasonably approved by Tenant, Sections 1.5.1 and
1.5.2 shall be of no further force or effect and
shall be automatically deemed deleted from this
Lease.
Sectior1 1.5.4. Tenant hereby acknowledges
that Landlord reserves the right to grant to any
owner or occupant of Lot 1 (as shown on Exhibit D)
a non-exclusive easement over the Secondary Access
Road shown on Exibit D-1 attached hereto
permitting the owner or occupant of Lot 1 to use
such Secondary Access Road for emergency vehicles
and for delivery vehicles, provided that the
owner/occupant of Lot 1 shall be responsible for
marntenance of the Secondary Access Road,
including the portion located on the Real Property
and that the owner of Lot 1 grants for the benefit
of Lot 2 non-exclusive easement rights to use the
portion of such Secondary Access Road located on
Lot 1 for emergency vehicles. The terms of such
easement shall be subject to the reasonable
approval of Tenant.
2
Section 1.5.5. Tenant hereby acknowledges
that Landlord reserves the right, but only in the
event that Lot 4 has not been provided with access
to a public road approved by the Chelmsford
Planning Board, to grant to any owner or occupant
of Lot 4, as shown on Exhibit D, the non-exclusive
right of access over the driveway serving the
Premises as shown on Exhibit D-1 as well as the
right to extend such driveway to Lot 4 as shown on
Exhibit D (at no expense to Tenant), provided that
such easement imposes on the grantee the
obligation to share in maintenance costs of the
shared driveway located on the Premises on a pro
rata basis based on the number of units
constructed on Lot 4 in relation to the total
number of units constructed, in the aggregate, on
the Premises and Lot 4. The terms of such easement
shall be subject to the reasonable approval of
Tenant.
Section 2. TERM.
Section 2.1. INITIA1 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 at least
fffteen (15) months prior to the expiration of the
ffrst 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; except as explicitly provided in this
Section 2.2, Tenant's intent to comply with FASB
13 shall not affect any of the rights or
obligations of Landlord and Tenant as set forth in
this 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
earlier than the date one hundred twenty (120)
days following the date Tenant receives Landlord's
written notice designating said Early
3
Termination Effective Date. The parties further
acknowledge that this Lease is being entered into
in conjunction with those certain three (3) other
Lease Agreements, one of which relates to a parcel
of real property located in Rocky Hill,
Connecticut and is by and between Tenant and LM
Rocky Hill Assisted Living Limited Partnership, a
Delaware limited partnership (the "Rocky Hill
Lease") 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 liabiliq
company (the "Auburn Lease"), and the third of
which relates to a parcel of real property located
in Louisville, Kentucky and is by and between
Tenant and LM Louisville Assisted Living LLC, a
Delaware limited liability company (the
"Louisville Lease"). The Rocky Hill Lease, 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 of its right to
terminate any of the Rocky Hill Lease, 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 and
a termination of this Lease pursuant to this
Section 2.2 shall operate to terminate each of the
Rocky Hill Lease, Auburn Lease and the Louisville
Lease
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 which amount is
$6,900,000.
"CR" means a coverage ratio of 1.20.
"DC" means a debt constant equal to the
greater of (a) 9.64% and (b) Landlord's costof
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.
The parties hereto agree that when all the
components of the above formula are known, the
parties hereto shall execute a written memorandum
setting forth the Basic Rent.
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 writting to
Landlord's reasonable satisfaction that Tenant has
used $250,000 of Tenant's own funds to make up
4
operating deficits, Tenant shall have the right to
pay to Landlord in full satisfaction of its
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 constrution 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 automadcally 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 Resene 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 consttuction 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 modfied 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, fum
or corporation at such other address as Landlord
may designate by notice in wridag 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 Inidal 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 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 somedmes referred to
collecdvely
5
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"), 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 l0, 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, and (iii)
such other provisions of this Lease which
expressly provide 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 shall be due 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 interest or late charges shall
conshtute 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 (0 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 effecdve 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 Stadshcs 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 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 T
qndlord'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.
6
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 sumtnary 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 respecdve 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. I
qndlord 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 ophon 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 dme periods set forth in this Section.
Section 3.5. TAXES.
Section 3.5.1. Tenant shall pay directly to
the applicable taxing authority, by the applicable
due date, all "Taxes" (as that term is defined
below) for each ffscal 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.
Any interest or penalties which accrue as a
result of Tenant's failure to make such payment
within the time required by this Article 3 shall
be the sole responsibility and obligation of
Tenant. In the event Landlord receives any xxxx
for Taxes with respect to the Premises, Landlord
shall promptly deliver to Tenant a copy of the
same. "Taxes" shall mean all real estate taxes,
general and special assessments, personal property
taxes, license fees and other public charges which
are assessed, levied, confirmed, or imposed upon
the Premises or imposed upon the operation of
Tenant's business 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 Terms (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 authoriq, a
part of which is already included within the
Inidal Lease Term or any Renewal Term and a part
of which is included in a period of dme before or
after the Inidal Lease Term or any Renewal Term,
shall be adjusted pro rata between Landlord and
Tenant and each parq 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 validty 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
7
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.
Section 3.5.5. Tenant shall have, and
Landlord hereby irrevocably grants to Tenant, the
power and authoriq, 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 penaldes or
interest thereon received by Landlord but
previously paid or reimbursed in full by Tenant.
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
fnally determined in such proceedings, the payment
of which may have been deferred during the
prosecution of such proceedings, together with any
costs, fees, interest, penaldes 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 eshmated Taxes, then Landlord
may so nodfy Tenant and Tenant shall cause such'
monthly payments to be made in to an impound
account as directed by said Facility Mortgagee or
Landlord, 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
compedog projects, the demand for assisted living
housing, the operadng 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 enddes 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.
8
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 an assisted
living residence and to use its best efforts to
obtain within thirty (30) days after the
Substantial Completion date the necessary
certification for the operation of the Facility as
an assisted living residence 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 said certification
at Tenant's expense. In addition, in the event
that any certification or license held by Tenant
lapses, expires or is canceled, revoked or
suspended, then Tenant shall immediately notify
Landlord. Notwithstanding the foregoing, Landlord
acknowledges and understands that the Executive
Off'ce of Elder Affairs for the Commonwealth of
Massachusetts has only recently enacted
regulations governing the certification of
assisted living residences and that said
regulations have not been in place long enough so
as to permit the executive off'ce of Elder Affairs
to establish definidve procedures for the
implementation of said regulations. Accordingly,
in the event Tenant is unable, despite its best
efforts, to obtain said certification within said
thirty (30) day period, Tenant shall not be deemed
in default hereunder, provided that Tenant is
proceeding with all necessary due diligence and is
condnuing to exercise its best efforts, to obtain
said cardfication from the Executive Office of
Elder Affairs as soon as possible.
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 which will cause the
cancellation of any insurance policy covering the
Premises or any part thereof, nor shall Tenant
sell or permit to be kept, used or sold in or
about the Premises any ardcle which may be
prohibited by the standard form of fire 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 or the
Tenant.
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 accredidng 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, unless such alteration
would be of no benefit to Landlord at the end of
the Term due to Landlord's use of the facility for
a use other than senior housing (in which case the
entire cost of the alteration shall be borne by
Tenant). 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. SURVEYS 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.
9
Section 4.6. EVIRONMENTAL 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
of any hazardous substances upon the Premises or
off-site, but only to the extent 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. Landlord shall have the
right to enter the Premises to perform an
environmental site assessment at any time upon
prior written notice to Tenant as long as such
environmental site assessment does not
unreasonably interfere with Tenant's operation of
the facility and Landlord pays the cost thereof.
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 seq., as amended,
the Resource Conservation and Recovery Act of
1976, 42 U.S.C. Section 2601 et seq., as amended,
the regulations promulgated thereunder, the
Massachusetts Oil and Hazardous Material Release
Prevention and Response Act, M.G.L. c. 21E; and
the Massachusetts Hazardous Waste Management Act,
M.G.L. c. 21C. 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 (collectdvely,
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 condnuing 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 officer
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
cerdficate from the chief financial officer of the
Tenant, in form acceptable to the Facility
Mortgagee, providing occupancy data (including
unit rents) for the Facility.
10
(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 M 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 and the
right to provide all financial statements and
information to any Facility Mortgagee.
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:
(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 quantides 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, but
Landlord shall not incur any other expense under
this Lease with respect to any maintenance, care,
operation, repair, replacement, alteration,
addition, change or substitution of or to the
Premises, except as expressly provided for in this
Lease.
11
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 witbheld at Landlord'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 suefi
Alterations do not constitute a "Major
Alteration". A "Major Alteration" shall mean an
alteration to the Improvements which is eshmated
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
significant 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, (iu) materially lessen the usable area
of the building, or (iv) not be consistent with
the use 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 dme 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 wridng the reasons for
such disapproval with reasonable specificity. If
Tenant fails to obtain Landlord's prior written
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 notified, 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 (i) within
fifteen (15) 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
wridug 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 dme 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. Except as set forth below, Landlord shall
not be responsible in any manner for any
suspension, interruphon or curtailment of any
services or udlides to the Premises regardless of
the
12
cause thereof, and no such suspension, interruphon
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
construcdve eviction. Notwithstanding the
foregoing, Landlord shall be liable for any direct
damages due to an interruption of any services or
udlides caused by Landlord or its affiliate or
agents, and if such interruphon 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 undl such services or udlides
are restored. Landlord shall cause its affiliate
to make every reasonable effort, when constructing
the Future Development, to avoid any interruphon
of services or udlides to the Premises.
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 or
lien. If Landlord exercises that option it shall
notify Tenant in writting prior to discharging
such judgment or lien and any amounts paid by
Landlord, together with interest from the time of
expenditure by Landlord, at the rate specified in
Section 3.2.3 hereof, 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 Massachusetts law as a
result of construction done at the Premises at
Tenant's request shall extend to the interest of
Landlord in tbe 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. Notbing in this Lease
shall be construed as a consent on Landlord's part
to subject Landlord's estate in the Premises to
any lien.
Section 8. NON-LIABILITY 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 respecdve
officers, directors, servants, agents, customers,
contractors, employees or invitees, including
without limitation, (i) their use or non-use of
the Premises, or the condition thereof; or (ii)
the conduct of Tenant's business or from any
activity, work or things done, permitted or
suffered by Tenant in or about the Premises or
elsewhere; or (iii) any breach or default in the
performance of any obligation on their part to be
performed under the terms of this Lease; or (iv)
any negligence of Tenant, or
13
any of Tenant's agents, contractors or employees;
or (v) the performance on behalf of Tenant of any
labor or service, or the furnishing of any
materials to the Premises and Tenant 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
off'cers, 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.
Tenant hereby agrees that, subject to the
provisions of Section 11 of Exhibit B hereto, and
except with respect to Landlord's own negligence
or wilful misconduct and/or that of its agents,
Landlord shall not be liable for injury to
Tenant's business or any loss of income therefrom
or for damage to the goods, wares, or other
property of Tenant, Tenant's employees, invitees,
sublessees, customers or any other person in or
about the Premises, nor shall Landlord be liable
for injury to the Tenant, Tenant's employees,
agents or contractors whether such damage or
injury is caused by or results from fire, steam,
electricity, gas, water or rain or from the
breakage, leakage, obstruction or other defects of
pipes or from the sprinklers, wires, appliances,
plumbing, air conditioning or lighdog fixtures, or
from any other cause whether the said damage or
injury results from conditions arising upon the
Premises or from other sources or places and
regardless of whether the cause of such damage or
injury or the means of repairing the same is
inaccessible to Tenant.
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 members, any individuals or
entices 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, except that the foregoing limitation
shall not apply with respect to Landlord's
liability following an assignment of this Lease
for acts, omissions or claims arising prior to
such assignment, as provided in Section 15.3
hereof. 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 Commonwealth of Massachusetts,
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 notified 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 and any
Facility Mortgagee.
14
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 lidgation 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, casualdes and condagencies
(including boi1er 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 dme 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 condngent
liability as a result of compliance with then
exisdug applicable legal requirements. Such
insurance will be subject only to such deduchbles
as are from time to dme reasonably approved by
Landlord based on the then current pracdee 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) 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 Ihbility
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 nodfied Tenant, as
additional insureds with respect to any claim
arising from Tenant's use, occupancy, repair or
operation of the Premises;
(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 Ihbility of $15,000,000,
applying in excess of the coverages listed in (a),
(b) and (d) above.
15
(f) Professional Ihbility 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 Ihbility 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 .
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 as is
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.
Sectiorl 10. DAMAGE AND DESTRUCTION.
Sectior1 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"), all insurance proceeds
shall be paid to Landlord and 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. In
the event that insurance proceeds are not adequate
or unavailable, due solely to Tenant's failure to
comply with its insurance obligations set forth in
this Lease, then Tenant sball pay to Landlord an
amount equal to the insurance proceeds which
Landlord would have received had Tenant so
complied with its insurance obligations (minus any
insurance proceeds actually received by
Landlord). lf, 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
16
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 CASUALTY
DURING LAST TWO LEASE YEARS AND UNINSURED
CASUALTY. 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) resuldog 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
termluate 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 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, T qndlord 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 ophon,
then (i) Landlord's termination notice shall be
void, (ii) Tenant shall be deemed to have
irrevocably exercised its renewal ophon and waived
any right to termmste its renewal notice in
connection therewith which it would otherwise have
pursuant to the penuldmate sentence of Section 3.4
hereof, (iii) the next upcoming Renewal Term shall
automadcally 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 substandally 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 substandally
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 SecdQIl
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
17
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 be operated on a commercially
pracdcable 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 facilides, 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
Casualq, 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 endtled 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 effecdve 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 pracdcable basis as a senior housing
with assisted living services facility of the type
and quality exisdng 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
facilides, or walkways affected by such loss.
Section 11.2. TAKING OF A PORTION. If during
the Lease Term, a portion of the Premises mdlor
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
18
with assisted Ihing services facility of the type
and quality exisdag and licensed prior to the
taking has been or must be reduced, Tenant shall
be endtled 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
facilides 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. EVENT OF DEFAULT. The occurrence
of any of the events, acts or circumstances
described in this Section 12.1 shall conshtute an
Event of Default under this Lease.
Section 12.1.1. Failure by Tenant to pay in
full any rent payable under this Lease when due
and the condnuance 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 obsewe,
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,
12.1.4. 12.1.6. 12.1.7 and 12.1.8), 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
renew, or pending revocation, suspension,
termination, probation, restriction, limitation
of, or refusal to renew, any certification which
materially affects the ability of the Tenant to
operate the Facility in the absence of 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 certification within ten (10) days of
revocation or other such action on such license.
Section 12.1.6. The failure to use best
efforts to obtain the necessary certification to
operate and actually open the Facility for
business within thirty (30) days after the
Substantial Completion date.
Section 12.1.7. The delivery by Tenant to
Landlord or any Facility Mortgagee (or their
designees) of a financial statement which is
materially false or misleading.
19
Section 12.1.8. Any purported assignment or
sublease of all or substantially all of the
Premises by Tenant without all necessary written
consents (to the extent any consent is required
pursuant to this Lease).
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
ophon, 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 endre 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 dme after any such terrnination,
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 dme or
from dme 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
conshtuted 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
relethng.
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 loss, 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 relets 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 deduchng 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.
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
20
estimate of expenses to be incurred in connection
with reletdag the Premises, including, without
limitation, all repossession costs, brokerage
commissions, legal expenses, reasonable attorneys'
fees, alteration 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 subshtuted 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 there occurs an
Event of Default under Section 12.1.S hereof, then
Landlord shall have the right to submit on behalf
of Tenant to any licensing authority a correcdve
or remedial plan in order to stay a license
revocation or similar proceeding. 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 Journa-l 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
21
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 "Affliate"). Tenant shall give Landlord notice
of any such assignment or sublethug, and shall
give to Landlord, concurrently with such
assignmeDt, an executed original assignment and
assumption agreement wherein such assignee agrees
to be bound by the terms and conditions of this
Lease. The inidal 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.
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 endq that is not an Affiliate with
the prior written consent of T andlord; 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 nodfy Tenant in wridng within said 15 day
period, Landlord shall be deemed to have consented
to said assignment or sublease. Landlord's written
consent to any subletting of the Premises by
Tenant shall not constitute an acknowledgment that
no default then exists under this Lease of the
obligations to be performed by Tenant nor shall
such consent be deemed a waiver of any then
existing default, except as may be otherwise
stated by Landlord at the dme.
22
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 and assumes all of Landlord's remaining
obligations under this Lease. An assignment by
Landlord upon a conveyance of the Premises, which
complies with the provisions of this Section 15.3,
shall terminate any liabiliq of Landlord pursuant
to this Lease with respect to acts, omissions or
claims arising after the effecdve date of such
assignment and assumption. Landlord shall remain
liable to Tenant for Landlord's or its agents
acts, omissions or claims arising prior to the
effective date of such assignment and assumption.
Notwithstanding the failure of Landlord to obtain
said written 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 15.6. 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 applicable,
naming Landlord, Tenant and any mortgagee as
additional insureds. Any such commercial sublease
which does not meet the foregoing qualiffcations
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 15.7. 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 dme after the occurrence of an
Event of Default hereunder, Landlord may require
any assignee or sublessee to attorn to Landlord
and 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, provided
however that Landlord shall not be liable for any
prepaid rents or security deposits paid by any
sublessees to Tenant or for any other prior
defaults of Tenant under such sublease. No consent
to assigument or collection of rent by Landlord
directly from any assignee or
23
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
wridog and shall be delivered to the pardes 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 Cerdfied Mail, postage prepaid
return receipt requested, by hand delivery, by
overnight courier or by facsimile transmission:
To Landlord: LM Chelmsford Assisted Living
LLC
c/o LMP Retirement Properties, Inc.
00 Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone No.:
Facsimile No.:
Attn.: Xx. Xxxx X. Xxxxxx, Xx.,
President
with a copy to: MSC Assisted Living LLC
c/o AMRESCO Advisors, Inc.,
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attn.: Xx. Xxxxxxx X. Xxxxxx
with a copy to: Xxxxxxx, Procter & Xxxx
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attn: Xxxxxxxxx XxXxxxxxx, Esq.
with a copy to: Xxxxxx & Xxxxxx, LLP
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 0000
Telephone No.: 000 000-0000
Facsimile No.: 000 000-0000
Attn.: Xxxx X. Xxxxxx, Esq.
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
24
Tenant is not in default hereunder beyond
applicable notice and cure periods. Neither such
mortgagee nor purchaser shall be liable for the
acts of the prior Landlord, bound by any prepaid
rent (paid more than one month in advance),
subject to offsets or defenses against the prior
landlord, or bound by any amendments to this Lease
without its consent. 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
PreTnises 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 wil1 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
Section 17.5. RENT ASSIGNMENT. If from time
to time Landlord assigns this Lease or the rents
payable hereunder to any person or entiq, 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 whUe it
holds Landlord's interest in the Premises or is a
mortgagee in possession of the Premises.
Section 17.6. NOTICE TO MORTGEE. 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 thirq (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 parq baneficiary which may be accepted
by taking a mortgage of the Premises.
25
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. During the last
year of the Term, Landlord shall have the right to
post a "for rent" sign at the Premises provided
such sign shall be similar in size and aesthetic
quality to such other signs used in similar senior
housing developments and which sign shall be
subject to Tenant's reasonable approval.
Section 19. REPRESENTATIONS AND WARRANTIES.
Section 19.1 TENANT'S REPRESENTATIONS AND
WARRANTIES. Tenant represents, warrants and
covenants to T qndlord as follows:
(a) Tenant is a corporation duly organized
and validly existing under the laws of the State
of Washington, is duly authorized to transact
business in the Commonwealth of Massachusetts 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 liability company
duly organized and validly existing under the laws
of the Commonwealth of Massachusetts.
(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 STATEMENT. 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 Section 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 furrliture, 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. At any time during the
last six (6) months prior to tbe expiration or
termination of the Lease Term, or after the Term
has ended, Landlord may have an environmental
assessment of the Premises peRormed, at Landlord's
sole cost and expense. Tenant shall peRorm, at it
sole cost and expense, any cleanup or remedial
work required applicable laws and recommended by
the consultant that performed the environmental
assessment to remove, mitigate or remediate any
hazardous substances contamination of the Premises
which, based on such envirormental assessment, is
determined (or reasonably concluded) to have been
introduced by Tenant or its agents, employees,
contractors, or invitees. Prior to surrendering
possession of the
26
Premises, Tenant shall also remove to the extent
required by applicable laws and to the extent
installed by Tenant any personal property,
equipment, fixture and/or storage device or vessel
on or about the Premises which is contaminated by
or which contains hazardous substances.
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 Commonwealth of
Massachusetts.
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.
Section 22.6. WAIVER. The failure of either
party to insist upon strict peRormance 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 T Psm in a form
acceptable to Landlord and Tenant. The Memorandum
shall be recorded in the public records of
Middlesex County, Massachusetts. 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, and each indemnifies
the other with respect to any claim by any
purported broker arising from the actions of such
indemnifying party.
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's Mortgagee if
required under the terms of the Facility Mortgage.
27
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
stmctured, 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, Tenant 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
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.
Section 22.17. USE OF UNION LABOR. Tenant
covenants and agrees that, for so long as MSC
Assisted Living LLC is a Facility Mortgagee, or a
member of Landlord or its successors or assigns,
with respect to any and all alterations,
improvements and/or additions that are made to the
Premises, where the carpentry labor component of
the budget for such alteration, improvement or
addition exceeds $10,000, then Tenant's
contractors and mechanics for such work as is
customarily performed by a member of the
Massachusetts State Council of Carpenters shall be
subject to or covered by the standard collective
bargaining agreements then applicable with locals
aff'liated with the Massachusetts State Council of
Carpenters. If the contractor or mechanics are not
parties to or covered by the aforesaid collective
bargaining agreements, then the Landlord shall
have the right, upon twenty-four (24) hours
written notice to the Tenant, to order Tenant to
cease all work on the Premises (which cease-work
order and the enforcement thereof shall be
Landlord's sole remedy for Tenant's failure to
comply with this Section 22.1.7), in which event,
all work then in progress shall be halted and
shall not be recommenced until and unless the
Tenant's contractors, workers, and mechanics
become subject to or covered by the aforesaid
collective bargaining agreements. Provided that
Tenant has not)fied Landlord prior to or following
commencement of such work as to its plans to use
union or non-union carpentry labor, then Landlord
shall have a period of thirty (30) days from
receipt of such notice to exercise its enforcement
rights under this Section 22.17, and shall be
deemed to have waived such rights if not exercised
within such thirty (30) days, unless Tenant
informs Landlord of its intent to use union
carpentry labor and then uses non-union carpentry
labor, in which case Landlord's rights under this
Section 22.17 shall not be deemed waived. Any
subleases of all or any portion of the Premises
shall also contain the foregoing provision.
Section 22.18. WAIVER OF TRIAL BY JURY. THE
PARTIES HERETO WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY
PARTY(IES) ON ANY MATTER ARISING OUT OF OR IN ANY
WAY CONNECTED Wll H I HIS LEASE OR THE
RELATIONSHIP OF 1lIE PARTES CREATED HEREUNDER.
28
IN WITNESS WHEREOF, the parties hereby
execute this Lease Agreement on the day and year
first written above.
LANDLORD: LM CHELMSFORD ASSISTED LIVING LLC
Leggatt XxXxxx Retirement
Properties, LLC,
its
Managing Member
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
29
