Exhibit 2.1
OPERATIONS TRANSFER AGREEMENT
Between
EXTENDICARE HOMES, INC.
EXTENDICARE HEALTH FACILITIES, INC.
(collectively "EXTENDICARE")
And
SENIOR HEALTH PROPERTIES-TEXAS, INC.
Senior Health-Brownfield, LLC
Senior Health-Crosbyton, LLC
Senior Health-Dalworth LLC
Senior Health-Floydada, LLC
Senior Health-▇▇▇▇▇▇▇▇ LLC
Senior Health-Lakeside, LLC
Senior Health-Lockney, LLC
Senior Health-Meadowbrook, LLC
Senior Health-Northwood, LLC
Senior Health-River Valley, LLC
Senior Health-Texoma, LLC
Senior Health-Tulia, LLC
(collectively the "Subtenants")
-------
Senior Health-Alamo, LLC
Senior Health-Bremond, LLC
Senior Health-Richland, LLC
Senior Health-Villa Haven, LLC
(collectively the "Tenants")
TABLE OF CONTENTS
PAGE
1. Lease and Sublease Agreements.............................................2
1.1. Leases.............................................................2
1.2 Subleases..........................................................2
1.2.1 Consent of Primary Landlord to Subleases....................2
1.3 Concho Lease.......................................................3
2. Transfer Of Operations....................................................3
2.1. Effective Date of Operations Transfer..............................3
2.2. Compliance with Laws. Texas Licensure. Medicare and
Medicaid Programs..................................................3
3. Contracts.................................................................4
3.1. Assignment and Assumption of Liabilities...........................4
3.2. Assignment and Assumption of Contracts.............................4
3.3. Excluded Contracts.................................................4
4. Employment Matters........................................................5
4.1. Employees..........................................................5
4.2. Benefits...........................................................5
4.3 Health Insurance...................................................5
4.4. 401(k).............................................................6
5. Accounts Receivable: Post Closing Date Collection Procedures..............6
6. Resident Trust Funds......................................................6
7. Earn Out Purchase Price...................................................6
8. Closing Date and Place....................................................6
9. Conditions Precedent to Closing...........................................7
9.1 Conditions Precedent to the Parties' Obligation to Close............7
9.1.1 Compliance with Agreement...................................7
9.1.2 Licenses....................................................7
9.1.3 Government Payments.........................................7
10. Prorations and Prepayments................................................7
11. Medicare and Medicaid.....................................................8
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TABLE OF CONTENTS
PAGE
12. Limited Cash Flow Support.................................................8
13. Management Agreement......................................................8
14. General Provisions........................................................9
14.1 Expenses...........................................................9
14.2 Public Announcements...............................................9
14.3 Confidentiality....................................................9
14.4 Notices...........................................................10
14.5 Further Assurances................................................11
14.6 Waiver............................................................11
14.7 Entire Agreement and Modification.................................12
14.8 Assignments, Successors, and No Third Party Rights................12
14.9 Severability......................................................12
14.10 Section Headings, Construction....................................12
14.11 Governing Law.....................................................13
14.12 Counterparts......................................................13
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LIST OF EXHIBITS
A Leased and Subleased Facilities
1.1 Lease Agreement
1.2 Sublease Agreement
3.2 Assignment and Assumption of Contracts Agreement
3.3 Excluded Contracts
4.3 Limited Health Insurance Coverage
5 Post Closing Procedures
7 Earn Out Purchase Price Calculation
12 Limited and Contingent Cash Flow Support
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OPERATIONS TRANSFER AGREEMENT
This operations transfer agreement (the "Agreement") is entered into
effective this 1st day of October, 2001 between Extendicare Homes, Inc. ("EHI")
and Extendicare Health Facilities, Inc., Milwaukee, WI (collectively
"Extendicare") and Senior Health Properties-Texas, Inc., a Texas not for profit
corporation, Chambersburg, PA ("Senior") and each of the seventeen limited
liability companies set forth as tenants (the "Tenants") and subtenants (the
"Subtenants") on Exhibit A attached hereto.
WHEREAS, EHFI is the owner and operator of four (4) skilled care nursing
facilities described on the attached Exhibit A (collectively the "Leased
Facilities") and EHI is the tenant of twelve (12) skilled care nursing
facilities and EHFI is the tenant of one skilled care nursing facility (the
"Concho Facility") described on the attached Exhibit A (collectively the
"Subleased Facilities") (collectively referred to hereafter as the "Facilities")
in the state of Texas; and
WHEREAS, Senior is in the business of owning, leasing and operating skilled
care nursing facilities; and
WHEREAS, Extendicare desires to lease the Leased Facilities and to sublease
the Subleased Facilities to the Tenants and Subtenants desires to lease the
Leased Facilities and to sublease the Subleased Facilities from Extendicare
pursuant to the terms, covenants and conditions of this Agreement; and
WHEREAS, Extendicare desires to transfer, assign and convey all of the
operations of the Facilities as skilled nursing facilities to the Tenants and
Subtenants, and the Tenants and Subtenants desire to accept, purchase and assume
the operations relating to the operation of the Facilities as skilled nursing
facilities from Extendicare;
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NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged between the parties including without
limitation the rights and benefits described in this Agreement, the parties
hereby covenant and agree as follows:
1. LEASE AND SUBLEASE AGREEMENTS.
1.1. LEASES. EHFI shall lease to the limited liability company
subsidiaries of Senior identified as the Tenants on Exhibit A and the Tenants
shall lease from EHFI the Leased Facilities pursuant to the terms, covenants and
conditions set forth in the form of lease agreement attached hereto as Exhibit
1.1 (the "Lease Agreement"). The Lease Agreement contains the terms, covenants
and conditions to be set forth in separate Lease Agreements for each of the
Tenants.
1.2 SUBLEASES. EHI and EHFI shall sublease to the limited liability
company subsidiaries of Senior identified as Subtenants on Exhibit A and the
Subtenants shall sublease from EHI and EHFI the Subleased Facilities pursuant to
the terms, covenants and conditions set forth in the form of sublease agreement
attached hereto as Exhibit 1.2 (the "Sublease Agreement"). The Sublease
Agreement contains the terms, covenants and conditions to be set forth in
separate Sublease Agreements for each of the Subleased Facilities.
1.2.1 CONSENT OF PRIMARY LANDLORD TO SUBLEASES. The Sublease
Agreements are conditioned upon the parties thereto obtaining the written
consent of the landlord named in the main lease agreement(s) (the "Primary
Landlord"). The parties hereby covenant and agree to use good faith efforts to
obtain the consent of the Primary Landlord(s) on or before the Closing Date.
Senior, the Tenants and Subtenants covenant and agree to cooperate with
Extendicare and the Primary Landlords in obtaining such consent including
without limitation providing any financial information requested by the Primary
Landlord and executing any
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document reasonably requested by the Primary Landlord as long as such document
does not increase the financial obligations of Senior, the Tenants or the
Subtenants pursuant to this Agreement or the Sublease Agreements.
1.3 CONCHO LEASE. EHFI shall assign to Senior Health-Concho, LLC that
certain Nursing Home Lease Agreement dated April 20, 2001 between the ▇▇▇▇▇▇▇▇▇
▇▇▇▇ Partnership, L.P., as the landlord, and EHFI, as the tenant, for the
property generally described as the Concho Health and Rehabilitation Center, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, as amended pursuant to that certain Letter
Agreement dated September 25, 2001 between the parties. The Concho Lease
terminates on October 30, 2001.
2. TRANSFER OF OPERATIONS.
2.1. EFFECTIVE DATE OF OPERATIONS TRANSFER. The Tenants and Subtenants
shall become the operators and licensees of the Facilities effective at 12:01
a.m. on October 1, 2001 (the "Closing Date"). On and after such Closing Date,
such Tenants and Subtenants shall operate the Facilities solely as skilled
nursing facilities and for no other purpose whatsoever.
2.2. COMPLIANCE WITH LAWS. TEXAS LICENSURE. MEDICARE AND MEDICAID
PROGRAMS. Between the date hereof and the Closing Date Senior, the Tenants and
Subtenants shall take any and all actions at Senior's sole cost and expense, to
cause the Tenants and Subtenants to become the duly licensed operators of the
Facilities on the Closing Date including without limitation obtaining any and
all licenses, permits, approvals, certifications and other required consents
pursuant to all applicable federal, state and local laws, rules, ordinances,
orders and regulations including without limitation licensure by the state of
Texas and certification by the Medicare and Medicaid programs (the "Laws").
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3. CONTRACTS.
3.1. ASSIGNMENT AND ASSUMPTION OF LIABILITIES. On the Closing Date the
applicable Tenants and Subtenants shall assume any and all liabilities relating
to the operation of their respective Facility as skilled care nursing facilities
and each shall severally indemnify, defend and hold Extendicare, including
without limitation, Extendicare's shareholders, officers, directors and
employees, harmless from any and all such liabilities which are incurred on and
after the Closing Date. Extendicare shall retain those liabilities relating to
the operation of the Facilities which have occurred prior to the Closing Date
and shall indemnify, defend and hold Senior, the Tenants and Subtenants and
their members, creditors, managers, officers and employees harmless from any and
all such liabilities.
3.2. ASSIGNMENT AND ASSUMPTION OF CONTRACTS. On the Closing Date
Extendicare shall assign to the applicable Tenant and Subtenant and such
applicable Tenant and Subtenant shall assume from Extendicare pursuant to the
terms of the Assignment and Assumption Agreement form attached hereto as Exhibit
3.2 (the "Assignment and Assumption Agreement") all of the agreements relating
to the operation of their respective Facility including without limitation those
certain agreements with Virtual Care Provider, Inc. ("VCP") and Fiscal Services
Group, Inc. ("FSG") relating to certain information technology and financial
processing services provided by VCP and FSG to the Facilities. Senior, the
Tenants and Subtenants acknowledge that both VCP and Partners are affiliated
companies of Extendicare.
3.3. EXCLUDED CONTRACTS. Certain contracts to be identified on the
attached Exhibit 3.3 ("Excluded Contracts") shall not be assigned. However, the
applicable Tenants and Subtenants hereby covenant and agree to be fully
responsible for the performance of the terms, covenants and conditions of such
contracts pertaining to such Tenants' and Subtenants' Facility
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including the payment of any and all amounts due pursuant thereto. Such payments
shall be made directly to Extendicare who shall make such payments to the
vendors of such Excluded Contracts.
4. EMPLOYMENT MATTERS.
4.1. EMPLOYEES. Extendicare shall terminate all of the Facilities'
employees effective as of 11:59 PM on September 30, 2001 and the applicable
Tenants and Subtenants shall extend offers of employment to all such terminated
employees effective as of the Closing Date.
4.2. BENEFITS. The applicable Tenants and Subtenants shall assume all
liability for accrued vacation, sick, holiday and paid time off days of all
employees hired by such Tenants and Subtenants and Extendicare shall have no
liability whatsoever for the payment of such benefits. The Tenants and
Subtenants shall severally indemnify, defend and hold Extendicare and its
shareholders, directors, officers and employees harmless from any liability
relating to such benefits. Neither Senior nor such Tenants or Subtenants shall
be liable for any unemployment, wrongful termination or other claims arising by
virtue of employment by Extendicare prior to the Closing Date and Extendicare
shall indemnify, defend and hold Senior and the Tenants and Subtenants, their
members, managers, directors, officers and employees harmless from any liability
relating to such claims.
4.3 HEALTH INSURANCE. Senior and/or the Tenants and Subtenants shall
offer to all Facility employees the same or substantially similar health
insurance coverages which are currently offered to such Facility employees by
Extendicare. There shall not be imposed any waiting periods or pre-existing
condition exclusions on such facility employees. The parties have agreed on
providing certain limited health insurance benefits to covered employees as
described in Exhibit 4.3.
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4.4. 401(K). Extendicare shall distribute the account balances in the
Extendicare 401(k) Savings Plan, in accordance with applicable laws to those
individuals who were employees of the Facilities prior to the Closing Date as
soon as administratively practicable following the Closing Date.
5. ACCOUNTS RECEIVABLE: POST CLOSING DATE COLLECTION PROCEDURES. The
parties covenant and agree that the collection of accounts receivable shall be
undertaken in accordance with the policies and procedures set forth on the
attached Exhibit 5 ("Post Closing Procedures").
6. RESIDENT TRUST FUNDS. On the Closing Date, all amounts deposited in
trust with Extendicare by or on behalf of the residents of the Facilities
("Resident Trust Funds") together with the complete books and records accounting
for the Resident Trust Funds shall be delivered to the respective Tenants and
Subtenants.
7. EARN OUT PURCHASE PRICE. Senior and each of the Tenants and
Subtenants, jointly and severally, hereby covenant and agree to pay, to
Extendicare as the purchase price (the "Purchase Price") for the Texas nursing
home business being sold pursuant to this Agreement including the going concern
value of the Texas nursing facility operations and the improvements, furniture,
furnishings, equipment, supplies, inventory, contract rights and other business
property located at the Facilities, the following amounts in the manner and at
the times set forth on the attached Exhibit 7 (the "Purchase Price
Calculation").
8. CLOSING DATE AND PLACE. The various transactions contemplated by this
Agreement shall close and become effective on or before October 1, 2001 (the
"Closing Date"). In the event that the transactions described herein do not
close on the Closing Date, the parties agree that such failure shall not be
cause for automatic termination of this Agreement but, in such event, the
parties shall continue to work in good faith exercising due diligence to close
the
6
transactions as soon as practicable after the Closing Date with an effective
date of October 1, 2001.
9. CONDITIONS PRECEDENT TO CLOSING.
9.1 CONDITIONS PRECEDENT TO THE PARTIES' OBLIGATION TO CLOSE. The
obligation of the parties to close the transactions described herein is subject
to the satisfaction of each of the following conditions (any of which may be
waived by either of the parties, in whole or in part):
9.1.1 COMPLIANCE WITH AGREEMENT. All of the covenants and
obligations set forth herein to be performed on or prior to the Closing Date
have been performed.
9.1.2 LICENSES. The Tenants and Subtenants have obtained all
required licenses and certifications to lease, sublease, and operate the
Facilities as skilled nursing facilities with the number of licensed beds
currently existing and has been certified as a provider pursuant to the Medicare
and Medicaid programs.
9.1.3 GOVERNMENT PAYMENTS. The necessary approvals have been
obtained to assure no disruption in Medicare and Medicaid payments to the
Facilities.
10. PRORATIONS AND PREPAYMENTS. On the Closing Date, all prepaid revenues,
expenses and costs associated with those contracts and agreements to be assigned
by Extendicare and assumed by the Tenants and Subtenants along with real estate
taxes, personal property taxes, and other taxes and charges relating to the
operation of the Facilities and any prepayments, deposits and other amounts
received by Extendicare for room, board and other resident services shall be
prorated on a daily basis as of the Closing Date, credited to the parties or, if
appropriate, charged against the Rent to be paid by the Tenants and Subtenants
pursuant to the Leases and Subleases. In the event that such amounts cannot be
adequately determined on the Closing
7
Date, such amounts shall be estimated on the Closing Date and adjusted as
promptly as practicable thereafter, but no later than sixty (60) days after the
Closing Date.
11. MEDICARE AND MEDICAID. Extendicare acknowledges that amounts may be
due and owing to the Medicaid or Medicare programs with respect to the operation
of the Facilities prior to the Closing Date, which have not yet been determined
and which may require payment after Closing Date, pursuant to the preparation of
cost reports or cost report audits, claims for recoupment of overpayments,
fines, civil monetary penalties, late charges, assessments or any other matter.
Extendicare shall pay such amounts immediately upon notice or demand by Senior,
the Medicaid office of the Agency, the Health Care Financing Administration or
other governmental agency or authority having jurisdiction, except to the extent
that such amounts are being contested diligently and in good faith by
appropriate proceedings which operate to toll collection of such amounts. As
provided in this Agreement, Extendicare shall hold Senior, the Tenants,
Subtenants and their members, managers, directors, officers and employees
harmless from any such liabilities and shall pay any and all demands by or on
behalf of the Medicaid or Medicare programs.
12. LIMITED CASH FLOW SUPPORT. For a two year period commencing October 1,
2001 through September 30, 2003, unless this Agreement is sooner terminated, and
subject to the performance by Senior, the Tenants and Subtenants of the terms,
covenants and conditions set forth in this section, Extendicare agrees to
provide to Senior specific limited and contingent working capital cash flow
support as described on Exhibit 12 ("Limited and Contingent Cash Flow Support").
13. MANAGEMENT AGREEMENT. Senior shall enter into a certain management
agreement with Transition Health Services of Texas, L.L.C. for the management of
the Facilities.
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14. GENERAL PROVISIONS.
14.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the contemplated transactions, including all fees and expenses of
agents, representatives, counsel, and accountants. In the event of termination
of this Agreement, the obligation of each party to pay its own expenses will be
subject to any rights of such party arising from a breach of this Agreement by
another party. Notwithstanding the above, Extendicare has agreed to advance to
Senior the total amount of $75,000.00 to cover the costs incurred by Senior for
due diligence activities including without limitation professional legal and
accounting services (the "Due Diligence Fees Advance"). The Due Diligence Fees
Advance shall be repaid to Extendicare on or before December 31, 2003 out of
available cash flow from the Facilities.
14.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the contemplated transactions will
be issued, if at all, at such time and in such manner as the parties mutually
determine, unless otherwise required by legal requirements. Unless consented to
by the other parties in advance or required by legal requirements, prior to the
Closing Date each party shall keep this Agreement strictly confidential and may
not make any disclosure of this Agreement to any Person. The parties will
consult with each other concerning the means by which the Facilities' employees,
customers, and suppliers and others having dealings with the Facilities will be
informed of the contemplated transactions.
14.3 CONFIDENTIALITY. Between the date of this Agreement and the
Closing Date, the parties will maintain in confidence, and will cause their
respective directors, officers, employees, agents, and advisors to maintain in
confidence, and not use to the detriment of
9
another party any written, oral, or other information obtained in confidence
from another party in connection with this Agreement or the contemplated
transactions, unless (a) such information is already known to such party or to
others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of the such party (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the contemplated
transactions or (c) the furnishing or use of such information is required by
legal proceedings. If the contemplated transactions are not consummated, each
party will return or destroy as much of such written information as the other
part may reasonably request.
14.4 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand in person, (b) sent by telecopier (with written
confirmation of delivery) or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested) in each
case to the appropriate addresses and telecopier numbers set forth below (or to
such other addresses and telecopier numbers as a party may designate by notice
to the other parties):
Extendicare: Extendicare Health Services, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
10
Senior: Senior Health Properties-Texas, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
With a copy to: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
14.5 FURTHER ASSURANCES. The parties agree to furnish, upon request,
such further information to execute and deliver such other documents, and to do
such other acts and things, all as the other party may reasonably request for
the purpose of carrying out the intent of this Agreement.
14.6 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
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14.7 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by all parties.
14.8 ASSIGNMENTS, SUCCESSORS, AND NO THIRD PARTY RIGHTS. Neither party
may assign any of its rights under this Agreement without the prior consent of
the other party, which will not be unreasonably withheld. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Notwithstanding the foregoing, no assignment shall relieve the
assigning party from any covenant or liability under this Agreement. Nothing
expressed or referred to in this Agreement will be construed to give any person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
14.9 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain inn full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
14.10 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or
12
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
14.11 GOVERNING LAW. This Agreement will be governed by the laws of
the State of Wisconsin without regard to conflicts of laws principles.
14.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement,
being fully authorized and empowered to do so and to bind their respective
entities thereto, as of the Effective Date set forth herein .
Extendicare Health Facilities, Inc. Senior Health Properties-Texas, Inc.
Extendicare Homes, Inc. Senior Health-Brownfield, LLC
Senior Health-Crosbyton, LLC
By: Senior Health-Dalworth LLC
------------------------------- Senior Health-Floydada, LLC
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Senior Health-▇▇▇▇▇▇▇▇ LLC
Title Senior Vice President Senior Health-Lakeside, LLC
Senior Health-Lockney, LLC
Senior Health-Meadowbrook, LLC
Senior Health-Northwood, LLC
Senior Health-River Valley, LLC
Senior Health-Texoma, LLC
Senior Health-Tulia, LLC
Senior Health-Alamo, LLC
Senior Health-Bremond, LLC
Senior Health-Richland, LLC
Senior Health-Villa Haven, LLC
By:
-------------------------------
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
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OPERATIONS TRANSFER AGREEMENT ("AGREEMENT")
BETWEEN
EXTENDICARE HOMES, INC. ET AL. ("EXTENDICARE")
AND
SENIOR HEALTH PROPERTIES-TEXAS, INC. ET AL. ("SENIOR")
DATED AS OF OCTOBER 1, 2001
--------------------
EXHIBIT A
--------------------
LIST OF TEXAS LEASES AND SUBLEASES
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OPERATIONS TRANSFER AGREEMENT ("AGREEMENT")
BETWEEN
EXTENDICARE HOMES, INC. ET AL. ("EXTENDICARE")
AND
SENIOR HEALTH PROPERTIES-TEXAS, INC. ET AL. ("SENIOR")
DATED AS OF OCTOBER 1, 2001
--------------------
EXHIBIT 1.1
--------------------
FORM OF LEASE AGREEMENT
16
OPERATING LEASE
EXTENDICARE HEALTH FACILITIES, INC.
Landlord
AND
SENIOR HEALTH-ALAMO, LLC
Tenant
Dated as of October 1, 2001
--------------------------------------------
FACILITY:
ALAMO HEIGHTS HEALTH & REHABILITATION CENTER
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
--------------------------------------------
TABLE OF CONTENTS
Article Page
LIST OF EXHIBITS................................................................................................vii
LEASE.............................................................................................................1
ARTICLE I.........................................................................................................1
1. Leased Property; Term...........................................................................1
1.1 Land............................................................................................1
1.2 Leased Improvements.............................................................................1
1.3 Related Rights..................................................................................1
1.4 Fixtures........................................................................................1
1.5 Personal Property...............................................................................1
ARTICLE II........................................................................................................2
2. Definitions.....................................................................................2
2.1 Additional Charges..............................................................................2
2.2 Affiliate.......................................................................................2
2.3 Award...........................................................................................2
2.4 Business Day....................................................................................2
2.5 Commencement Date...............................................................................2
2.6 Condemnation, Condemnor.........................................................................3
2.7 Date of Taking..................................................................................3
2.8 Encumbrance.....................................................................................3
2.9 Event of Default................................................................................3
2.10 Facility........................................................................................3
2.11 Facility Mortgage...............................................................................3
2.12 Facility Mortgagee..............................................................................3
2.13 Fixtures........................................................................................3
2.14 Impositions.....................................................................................3
2.15 Insurance Requirements..........................................................................4
2.16 Intended Use....................................................................................4
2.17 Land............................................................................................4
2.18 Landlord........................................................................................4
2.19 Lease...........................................................................................4
2.19A Lease Year......................................................................................4
2.20 Leased Improvements; Leased Property............................................................4
2.21 Legal Requirements..............................................................................4
2.22 [Intentionally Left Blank]......................................................................4
2.23 Officer's Certificate...........................................................................4
2.24 Overdue Rate....................................................................................4
2.25 Payment Date....................................................................................4
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2.26 Personal Property...............................................................................5
2.27 Prime Rate......................................................................................5
2.28 Rent............................................................................................5
2.29 Taking..........................................................................................5
2.30 Tenant..........................................................................................5
2.31 Term............................................................................................5
2.32 Unavoidable Delays..............................................................................5
2.33 Unsuitable For Its Intended Use.................................................................5
2.34 Use.............................................................................................5
ARTICLE III.......................................................................................................5
3.1 Rent and Additional Charges.....................................................................5
3.1.1 Rent...................................................................................5
3.1.2 Additional Charges.....................................................................6
3.2 Net Lease.......................................................................................6
ARTICLE IV........................................................................................................6
4.1 Payment of Impositions..........................................................................6
4.2 Notice of Impositions...........................................................................7
4.3 Adjustment of Impositions.......................................................................7
4.4 Utility Charges.................................................................................7
4.5 Insurance Premiums..............................................................................8
ARTICLE V.........................................................................................................8
5.1 No Termination, Abatement.......................................................................8
5.2 Abatement Procedures............................................................................8
ARTICLE VI........................................................................................................8
6.1 Ownership of the Leased Property................................................................8
6.2 Personal Property...............................................................................8
6.3 Transfer of Personal Property to Landlord.......................................................9
6.4 Purchases of Personal Property by Tenant........................................................9
ARTICLE VII.......................................................................................................9
7.1 Condition of the Leased Property................................................................9
7.2 Use of the Leased Property......................................................................9
7.2.1 Approvals, Licenses, Certifications....................................................9
7.2.2 Use As Licensed Skilled Nursing Facility..............................................10
7.2.3 Waste.................................................................................10
7.2.4 Adverse Use...........................................................................10
7.2.5 Environmental Compliance..............................................................10
ARTICLE VIII.....................................................................................................11
8.1 Compliance with Legal and Insurance Requirements, Instruments..................................11
8.2 Legal Requirement Covenants....................................................................12
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ARTICLE IX.......................................................................................................12
9.1 Maintenance and Repair.........................................................................12
9.1.1 Maintenance and Repair................................................................12
9.1.2 Landlord's Obligations................................................................12
9.1.3 Contractors. Liens...................................................................13
9.1.4 Condition Upon Surrender..............................................................13
9.2 Encroachments and Restrictions.................................................................13
ARTICLE X........................................................................................................14
10. Construction of Capital Additions to the Leased Property.......................................14
ARTICLE XI.......................................................................................................14
11. Liens..........................................................................................14
ARTICLE XII......................................................................................................14
12. Permitted Contests.............................................................................14
ARTICLE XIII.....................................................................................................15
13.1 General Insurance Requirements.................................................................15
13.2 No Separate Insurance..........................................................................15
ARTICLE XIV......................................................................................................15
14.1 Insurance Proceeds.............................................................................15
14.2 Reconstruction in the Event of Damage or Destruction Covered by
Insurance......................................................................................16
14.2.1 Destruction: Facility Rendered Unsuitable............................................16
14.2.2 Destruction: Facility Not Rendered Unsuitable........................................16
14.2.3 Costs in Excess of Proceeds...........................................................16
14.3 Reconstruction in the Event of Damage or Destruction Not Covered by
Insurance......................................................................................16
14.4 Abatement of Rent..............................................................................17
14.5 Waiver.........................................................................................17
ARTICLE XV.......................................................................................................17
15. Condemnation...................................................................................17
15.1 Definitions....................................................................................17
15.1.1 Condemnation..........................................................................17
15.1.2 Date of Taking........................................................................17
15.1.3 Award.................................................................................17
15.1.4 Condemnor.............................................................................17
15.2 Parties' Rights and Obligations................................................................17
15.3 Total Taking...................................................................................17
15.4 Partial Taking.................................................................................17
15.5 Restoration....................................................................................17
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15.6 Award - Distribution...........................................................................18
15.6.1.........................................................................................18
15.6.2.........................................................................................18
15.7 Temporary Taking...............................................................................18
ARTICLE XVI......................................................................................................18
16.1 Events of Default..............................................................................18
16.1.1 Event of Default......................................................................18
16.1.2 Payment Default.......................................................................18
16.1.3 Nonpayment Default....................................................................18
16.1.4 Bankruptcy, Insolvency................................................................18
16.1.5 Assignment, Subletting................................................................19
16.1.6 Liquidation or Dissolution............................................................19
16.1.7 Action Against Leasehold Interest.....................................................19
16.1.8 Discontinuation of Operations.........................................................19
16.1.9 Breach of Representations or Warranties...............................................19
16.1.10 Termination of License: Penalties and Fines..........................................20
16.2 Certain Remedies...............................................................................20
16.2.1 Remedies Available....................................................................20
16.2.2.........................................................................................21
16.3 Waiver.........................................................................................21
16.4 Application of Funds...........................................................................21
ARTICLE XVII.....................................................................................................21
17. Landlord's Right to Cure Tenant's Default......................................................21
ARTICLE XVIII [ARTICLE XVIII INTENTIONALLY LEFT BLANK]...........................................................21
ARTICLE XIX [ARTICLE XIX INTENTIONALLY LEFT BLANK]...............................................................21
ARTICLE XX.......................................................................................................22
20. Holding Over.......................................................................................22
ARTICLE XXI [ARTICLE XXI INTENTIONALLY LEFT BLANK]...............................................................22
ARTICLE XXII [ARTICLE XXII INTENTIONALLY LEFT BLANK].............................................................22
ARTICLE XXIII....................................................................................................22
23.1 Indemnification of Landlord....................................................................22
23.2 Indemnification of Tenant......................................................................23
23.3 Survival.......................................................................................23
ARTICLE XXIV.....................................................................................................23
24. Subletting and Assignment......................................................................23
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ARTICLE XXV......................................................................................................24
25. Officer's Certificates, Financial Statements, and Disclosures..................................24
25.1 Estoppel Certificate...........................................................................24
25.2 Financial Statements...........................................................................24
25.3 Additional Information.........................................................................25
ARTICLE XXVI.....................................................................................................25
26. Landlord's Right to Inspect....................................................................25
ARTICLE XXVII....................................................................................................26
27. No Waiver......................................................................................26
ARTICLE XXVIII...................................................................................................26
28. Remedies Cumulative............................................................................26
ARTICLE XXIX.....................................................................................................26
29. Acceptance of Surrender........................................................................26
ARTICLE XXX [ARTICLE XXX INTENTIONALLY LEFT BLANK]...............................................................26
ARTICLE XXXI.....................................................................................................26
31. Conveyance by Landlord.........................................................................26
ARTICLE XXXII....................................................................................................26
32. Quiet Enjoyment................................................................................26
ARTICLE XXXIII...................................................................................................27
33. Notices........................................................................................27
33.1 Notice To Tenant...............................................................................27
33.2 Notice To Landlord.............................................................................27
ARTICLE XXXIV [ARTICLE XXXIV INTENTIONALLY LEFT BLANK]...........................................................28
ARTICLE XXXV.....................................................................................................28
35.1 Landlord May Grant Liens.......................................................................28
35.2 Tenant's Right to Cure.........................................................................28
35.3 Breach by Landlord.............................................................................29
ARTICLE XXXVI....................................................................................................29
36. Miscellaneous..................................................................................29
36.1 Survival. Modification. Successors and Assigns...............................................29
36.2 Exculpation of Landlord........................................................................29
36.3 Exculpation of Tenant..........................................................................29
36.4 Transfers of Licenses Upon Termination.........................................................30
36.5 Captions.......................................................................................30
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36.6 Non-Waiver.....................................................................................30
36.7 Severability. Entire Agreement................................................................30
36.8 Time of Essence................................................................................31
36.9 Collection of Rent.............................................................................31
36.10 Remedies Cumulative............................................................................31
36.11 Governing Law..................................................................................31
36.12 Authority of Parties...........................................................................31
36.13 Transfer of Landlord's Interest................................................................31
36.14 No Partnership or Joint Venture................................................................31
ARTICLE XXXVII...................................................................................................31
37. Attornment: Subordination.....................................................................31
37.1 Tenant Subordination...........................................................................31
37.2 Estoppel Agreement.............................................................................32
37.3 Attorney In Fact Appointment...................................................................32
37.4 Tenant Attornment..............................................................................32
37.5 Notice of Default to Landlord's Mortgages......................................................32
ARTICLE XXXVIII..................................................................................................32
38. Re-Entry During Term...........................................................................32
ARTICLE XXXIX [ARTICLE XXXIX INTENTIONALLY LEFT BLANK]...........................................................33
ARTICLE XXXX.....................................................................................................33
40. Healthcare Licensing, Surveys, Compliance Notices..............................................33
ARTICLE XXXXI....................................................................................................33
41. Right of First Refusal.........................................................................33
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ix
x
LIST OF EXHIBITS
Exhibit 1.1 Legal Description
Exhibit 16.1.1 Other Texas Leases and Subleases
xi
LEASE
THIS LEASE ("Lease") is dated as of October 1, 2001, and is between
Extendicare Health Facilities, Inc., a Wisconsin corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Landlord"), a Texas limited liability company, and
Senior Health-Alamo, LLC, ("Tenant"), a Texas limited liability company, having
its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
ARTICLE I
1. LEASED PROPERTY; TERM.
Upon and subject to the terms and conditions hereinafter set forth,
Landlord hereby rents and leases to Tenant and Tenant hereby rents and leases
from Landlord all of Landlord's rights and interest in and to the following real
and personal property (collectively, the "Leased Property"):
1.1 LAND. The real property described in Exhibit 1.1 attached hereto (the
"Land");
1.2 LEASED IMPROVEMENTS. All buildings, structures, Fixtures (as
hereinafter defined) and other improvements of every kind including, but not
limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits
and lines (on-site and off-site), parking areas and roadways appurtenant to such
buildings and structures presently situated upon the Land (collectively the
"Leased Improvements");
1.3 RELATED RIGHTS. All easements, rights and appurtenances relating to the
Land and the Leased Improvements (collectively the "Related Rights");
1.4 FIXTURES. All permanently affixed equipment, machinery, fixtures, and
other items of real and/or personal property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Leased Improvements, including, without
limitation, all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air and water
pollution control, waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection equipment, and
built-in oxygen and vacuum systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the parties hereto to constitute real
estate, together with all replacements, modifications, alterations and additions
thereto, but specifically excluding all items included within the category of
Personal Property as defined below (collectively the "Fixtures");
1.5 PERSONAL PROPERTY. All machinery, equipment, furniture, furnishings,
movable walls or partitions, trade fixtures or other tangible personal property,
used or useful in Tenant's business on the Leased Property, including without
limitation all items of furniture, furnishings, equipment, together with all
replacements, modifications, alterations, and additions thereto including
without limitation any and all replacements and additions of personal property
made by Tenant during the
1
term at Tenant's cost and expense except items, if any, included within the
definition of Fixtures but excluding (a) any Personal Property which is being
leased by the Tenant pursuant to an Equipment Lease as defined below (b) cash
and equivalents, (c) manuals, forms or related documents containing information
proprietary to Landlord, including, without limitation, operational, nursing,
administrative, policy/procedure and other similar manuals, and (d) any and all
software programs, systems, methods, functions and documentation relating
thereto ("Software Programs") which have been developed by Landlord or
Landlord's affiliated companies including without limitation Virtual Care
Provider, Inc. and any Software Programs which are owned by third-party vendors
and have been licensed to Landlord or Landlord's affiliated companies
(collectively the "Personal Property");
To have and to hold for a term of five (5) years (the "Term") commencing on
October 1, 2001 (the "Commencement Date") and ending at11:59 p.m. on September
30, 2006 (the "Expiration Date"), unless this Lease is sooner terminated as
hereinafter provided.
ARTICLE II
2. DEFINITIONS. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as at the time applicable, (iii) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease and (iv) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision:
2.1 ADDITIONAL CHARGES: As defined in Article III.
2.2 AFFILIATE: When used with respect to any corporation, the term
"Affiliate" shall mean any person which, directly or indirectly, controls or is
controlled by or is under common control with such corporation. For the purposes
of this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
through the ownership of voting securities, partnership interests, membership
interests or other equity interests.
2.3 AWARD: As defined in Article XV.
2.4 BUSINESS DAY: Each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which national banks are authorized, or obligated, by law
or executive order, to close.
2.5 COMMENCEMENT DATE: As defined in Article I.
2.6 CONDEMNATION, CONDEMNOR: As defined in Article XV.
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2.7 DATE OF TAKING: As defined in Article XV.
2.8 ENCUMBRANCE: As defined in Article XXXVI.
2.9 EVENT OF DEFAULT: As defined in Article XVI.
2.10 FACILITY: The skilled nursing facility currently operated on the
Leased Property generally described as Alamo Heights Health & Rehabilitation
Center, a duly licensed 237 bed skilled nursing facility which beds are all
currently licensed and useable.
2.11 FACILITY MORTGAGE: As defined in Article XIII.
2.12 FACILITY MORTGAGEE: As defined in Article XIII.
2.13 FIXTURES: As defined in Article I.
2.14 IMPOSITIONS: Collectively, all taxes (including, without limitation,
all capital stock and franchise taxes of Landlord, all ad valorem, sales and
use, single business, gross receipts, transaction privilege, rent or similar
taxes), assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not to be completed within the Term), ground rents,
water, sewer or other rents and charges, excises, tax levies, fees (including,
without limitation, license, permit, inspection, authorization and similar
fees), and all other governmental charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Leased Property and/or the Rent or Additional Rent
(including all interest and penalties thereon due to any failure in payment by
Tenant), which at any time during or in respect of the Term hereof may be
assessed or imposed on or in respect of or be a lien upon (a) Landlord or
Landlord's interest in the Leased Property, (b) the Leased Property or any part
thereof or any rent therefrom or any estate, right, title or interest therein,
or (c) any occupancy, operation, use or possession of, or sales from, or
activity conducted on, or in connection with the Leased Property or the leasing
or use of the Leased Property or any part thereof; provided, however, nothing
contained in this Lease shall be construed to require Tenant to pay (1) any tax
based on net income (whether denominated as a franchise or capital stock or
other tax) imposed on Landlord or any other person or (2) any transfer, or net
revenue tax of Landlord or any other person or (3) any tax imposed with respect
to the sale, exchange or other disposition by Landlord of any Leased Property or
the proceeds thereof, or (4), except as expressly provided elsewhere in this
Lease, any principal or interest on any assumed indebtedness on the Leased
Property, except to the extent that any tax, assessment, tax levy or charge,
which Tenant is obligated to pay pursuant to the first sentence of this
definition and which is in effect at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (1) or (2) is levied, assessed or imposed expressly in lieu thereof.
2.15 INSURANCE REQUIREMENTS: All terms of any insurance policy required by
this Lease and all requirements of the issuer of any such policy.
2.16 INTENDED USE: As defined in Section 7.2.2 below
3
2.17 LAND: As defined in Article I.
2.18 LANDLORD: As defined in the Preamble.
2.19 LEASE: As defined in the Preamble.
2.19A LEASE YEAR: "Lease Year" shall mean a consecutive 12 calendar month
period commencing on the Commencement Date of this Lease and ending on the day
immediately preceding the anniversary of said Commencement Date. In the event
that the Commencement Date is not the first day of a month, the Lease Year shall
include the period from the Commencement Date through the end of the month in
which the Commencement Date occurs and for that Lease Year the Lease Year shall
be a 12 consecutive month period plus the additional period from the
Commencement Date to the end of the month in which the Commencement Date occurs.
2.20 LEASED IMPROVEMENTS; LEASED PROPERTY: Each as defined in Article I.
2.21 LEGAL REQUIREMENTS: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting either the Leased Property, the construction,
use or alteration thereof, or the ownership and/or operation of the Facility as
a skilled nursing facility and any related services whether now or hereafter
enacted and in force, including without limitation any and all laws relating to
the licensure of the Facility as a skilled nursing facility and the
certification of the Facility under the Medicare and State Medicaid programs,
including any which may (i) require repairs, modifications or alterations in or
to the Leased Property or (ii) in any way adversely affect the use and enjoyment
thereof, and all permits, licenses and authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments, either of record or known to Tenant (other than encumbrances
created by Landlord without the consent of Tenant), at any time in force
affecting the Leased Property (collectively hereafter the "Laws").
2.22 [INTENTIONALLY LEFT BLANK].
2.23 OFFICER'S CERTIFICATE: A certificate of Tenant signed by an officer
authorized to so sign by the board of directors or by-laws.
2.24 OVERDUE RATE: On any date, a rate equal to 4% above the Prime Rate,
but in no event greater than the maximum rate then permitted under applicable
law.
2.25 PAYMENT DATE: Any due date for the payment of the installments of
Rent, Additional Charges or any other sums payable under this Lease.
2.26 PERSONAL PROPERTY: As defined in Article I.
2.27 PRIME RATE: On any date, a rate equal to the annual rate on such date
announced by Bank of America, N.A. to be its prime rate for 90-day unsecured
loans to its corporate borrowers
4
of the highest credit standing.
2.28 RENT: The amounts described in Article III.
2.29 TAKING: A taking or voluntary conveyance during the Term hereof of all
or part of the Leased Property, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of any condemnation
or other eminent domain proceeding affecting the Leased Property whether or not
the same shall have actually been commenced.
2.30 TENANT: As defined in the Preamble.
2.31 TERM: As defined in Article I.
2.32 UNAVOIDABLE DELAYS: Delays due to strikes, lockouts, inability to
procure materials, power failure, acts of God, governmental restrictions, enemy
action, civil commotion, fire, unavoidable casualty or other causes beyond the
control of the party responsible for performing an obligation hereunder,
provided that lack of funds shall not be deemed a cause beyond the control of
either party hereto unless such lack of funds is caused by the failure of the
other party hereto to perform any obligations of such party, under this Lease or
any guaranty of this Lease.
2.33 UNSUITABLE FOR ITS INTENDED USE: A state or condition of the Facility
such that by reason of damage or destruction, or a partial taking by
condemnation, in the good faith judgment of Landlord and Tenant, reasonably
exercised, the Facility cannot be operated on a commercially practicable basis
for its Intended Use taking into account, among other relevant factors, the
number of usable beds affected by such damage or destruction or partial taking.
2.34 USE: As defined in 7.2.2.
ARTICLE III
3.1 RENT AND ADDITIONAL CHARGES. Tenant will pay to Landlord or directly to
the appropriate entity in the case of Impositions and Additional Charges in
lawful money of the United States of America which shall be legal tender for the
payment of public and private debts at Landlord's address set forth above or at
such other place or to such other person, firms or corporations as Landlord from
time to time may designate in writing, Rent (as defined below), and Additional
Charges (as defined below) during the Term, as follows:
3.1.1 RENT. The Tenant hereby covenants and agrees to pay to the
Landlord, without any deduction or setoff whatsoever and without any demand or
notice, the fixed annual rent (subject to annual adjustments described below) in
the amount of Six Hundred Eighty-Seven Thousand Dollars ($687,000) ("Annual
Rent"). The Fixed Annual Rent shall be paid in equal consecutive monthly
installments of Fifty-Seven Thousand Two Hundred Fifty Dollars ($57,250), in
advance on or before the fifth day of each month, time being of the essence
("Monthly Rent"). The Monthly Rent shall be adjusted with any adjustment to the
Annual Rent. All payments shall be made to Landlord at the address set forth in
the notice section hereof or at such other place as the Landlord
5
may designate from time to time in writing. In the event that the first and last
months of the Term are not full calendar months, the Monthly Rent for such
months shall be prorated.
The Annual Rent shall be increased on the anniversary date of each year
during the Term of this Lease by an amount equal to the percentage increase, if
any, in the average Medicaid per diem received by the Facility since the
Commencement Date of the Lease and, thereafter, by the average Medicaid per diem
received by the Facility since the date of the last Annual Rent increase. The
increases shall be set forth in an Addendum to the Lease.
3.1.2 ADDITIONAL CHARGES. In addition to the Rent, (1) Tenant will also
pay and discharge as and when due and payable all other amounts, liabilities,
obligations and Impositions which Tenant assumes or agrees to pay under this
Lease including without limitation all Impositions and charges, costs and
expenses described in Section 2.22, plus sales tax, and (2) in the event of any
failure on the part of Tenant to pay any of those items referred to in clause
(1) above, Tenant will also promptly pay and discharge every fine, penalty,
interest and cost which may be added for non-payment or late payment of such
items (the items referred to in clauses (1) and (2) above being referred to
herein collectively as the "Additional Charges"), and Landlord shall have all
legal, equitable and contractual rights, powers and remedies provided either in
this Lease or by statute or otherwise in the case of non-payment of the
Additional Charges as in the case of non-payment of the Rent. If any installment
of Rent, or Additional Charges (but only as to those Additional Charges which
are payable directly to Landlord) shall not be paid within three (3) Business
Days after its due date, Tenant will pay Landlord on demand, as Additional
Charges, a late charge (to the extent permitted by law) computed at the Overdue
Rate (or at the maximum rate permitted by law, whichever is the lesser) on the
amount of such installment, from the due date of such installment to the date of
payment thereof. To the extent that Tenant pays any Additional Charges to
Landlord pursuant to any requirement of this Lease, Tenant shall be relieved of
its obligation to pay such Additional Charges to the entity to which they would
otherwise be due.
3.2 NET LEASE. The Rent shall be paid absolutely net to Landlord, so that
this Lease shall yield to Landlord the full amount of Rent and Additional
Charges throughout the Term. It is the express intent of the Landlord and Tenant
that each and every cost and expense of using, operating, maintaining or holding
any interest in the Leased Property (except any federal, state, or local taxes
payable by Landlord on the Rent received by Landlord from its leasing of the
Leased Property) be Tenant's sole cost and responsibility whether foreseen or
unforeseen, ordinary or extraordinary.
ARTICLE IV
4.1 PAYMENT OF IMPOSITIONS. Subject to Article XII relating to permitted
contests, Tenant will pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible, and will simultaneously with
such payment, furnish to Landlord copies of official receipts or other
satisfactory proof evidencing such payments. Tenant's obligation to pay such
Impositions shall be deemed absolutely fixed upon the date such Impositions
become a lien upon the Leased Property or any part thereof. If any such
Imposition may, at the option of the taxpayer, lawfully be paid in installments
(whether or not interest shall accrue on the unpaid balance of such Imposition),
Tenant
6
may exercise the option to pay the same (and any accrued interest on the
unpaid balance of such Imposition) in installments and in such event, shall pay
such installments during the Term hereof (subject to Tenant's right of contest
pursuant to the provisions of Article XII) as the same respectively become due
and before any fine, penalty, premium, further interest or cost may be added
thereto. Landlord, at its expense, shall, to the extent permitted by applicable
law, prepare and file all tax returns and reports as may be required by
governmental authorities in respect of Landlord's net income, gross receipts,
franchise taxes and taxes on its capital stock, and Tenant, at its expense,
shall, to the extent permitted by applicable laws and regulations, prepare and
file all other tax returns and reports in respect of any Imposition as may be
required by governmental authorities. If any refund shall be due from any taxing
authority in respect of any Imposition paid by Tenant, the same shall be paid
over to or retained by Tenant if no Event of Default shall have occurred
hereunder and be continuing. Any such funds retained by Landlord due to an Event
of Default shall be applied as provided in Article XVI. Landlord and Tenant
shall, upon request of the other, provide such data as is maintained by the
party to whom the request is made with respect to the Leased Property as may be
necessary to prepare any required returns and reports. In the event governmental
authorities classify any property covered by this Lease as personal property,
Tenant shall file all personal property tax returns in such jurisdictions where
it may legally so file. Landlord, to the extent it possesses the same, and
Tenant, to the extent it possesses the same, will provide the other party, upon
request, with cost and depreciation records necessary for filing returns for any
property so classified as personal property. Where Landlord is legally required
to file personal property tax returns, Tenant will be provided with copies of
assessment notices indicating a value in excess of the reported value in
sufficient time for Tenant to file a protest. Tenant may, upon notice to
Landlord, at Tenant's option and at Tenant's sole cost and expense, protest,
appeal, or institute such other proceedings as Tenant may deem appropriate to
effect a reduction of real estate or personal property assessments and Landlord,
at Tenant's expense as aforesaid, shall fully cooperate with Tenant in such
protest, appeal, or other action. ▇▇▇▇▇▇▇▇ for reimbursement by Tenant to
Landlord of personal property taxes shall be accompanied by copies of a ▇▇▇▇
therefor and payments thereof which identify the personal property with respect
to which such payments are made.
4.2 NOTICE OF IMPOSITIONS. Landlord shall give prompt notice to Tenant of
all Impositions payable by Tenant hereunder of which Landlord at any time has
knowledge, but Landlord's failure to give any such notice shall in no way
diminish Tenant's obligations hereunder to pay such Impositions.
4.3 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Landlord and Tenant, whether or not such Imposition is imposed
before or after such termination, and Tenant's obligation to pay its prorated
share thereof shall survive such termination.
4.4 UTILITY CHARGES. Tenant will pay or cause to be paid all charges for
electricity, power, gas, oil, water and all other utilities used in the Leased
Property during the Term.
4.5 INSURANCE PREMIUMS. Tenant will pay or cause to be paid all premiums
for the insurance coverage required to be maintained pursuant to Article XIII
during the Term.
ARTICLE V
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5.1 NO TERMINATION, ABATEMENT. Except as otherwise specifically provided in
this Lease, Tenant, to the extent permitted by law, shall remain bound by this
Lease in accordance with its terms and shall neither take any action without the
consent of Landlord to modify, surrender or terminate the same, nor seek nor be
entitled to any abatement, deduction, deferment or reduction of Rent, or set-off
against the Rent, nor shall the respective obligations of Landlord and Tenant be
otherwise affected by reason of (a) any damage to, or destruction of, any Leased
Property or any portion thereof from whatever cause or any Taking of the Leased
Property or any portion thereof, (b) the lawful or unlawful prohibition of, or
restriction upon, Tenant's use of the Leased Property, or any portion thereof,
the interference with such use by any person, corporation, partnership or other
entity, or by reason of eviction by paramount title; (c) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting Landlord or any assignee or transferee
of Landlord, or (d) for any other cause whether similar or dissimilar to any of
the foregoing other than a discharge of Tenant from any such obligations as a
matter of law.
5.2 ABATEMENT PROCEDURES. In the event of a partial taking as described in
Section 15.4, temporary taking as described in Section 15.7, or damage to or
destruction of the Leased Property as described in Sections 14.2 and 14.3, which
taking, damage or destruction does not render the Leased Property Unsuitable for
its Primary Intended Use, the Lease shall not terminate, but the Rent shall be
abated in the manner and to the extent that is fair, just and equitable to both
Tenant and Landlord, taking into consideration, among other relevant factors,
the number of usable beds affected by such partial taking or damage or
destruction.
ARTICLE VI
6.1 OWNERSHIP OF THE LEASED PROPERTY. Tenant acknowledges that the Leased
Property is the property of Landlord and that Tenant has only the right to the
exclusive possession and use of the Leased Property upon the terms and
conditions of this Lease.
6.2 PERSONAL PROPERTY. After the Commencement of this Lease, Tenant may
(and shall as provided herein below), at its expense, install, affix, assemble
or place on any portion of the Land or in any of the Leased Improvements, any
items of personal property (for purposes of this Article VI the "New Personal
Property"; as used in any other Article of this Lease, Personal Property
includes all personal property, including New Personal Property), and such New
Personal Property and replacements thereof, shall be at all times the property
of Tenant, free and clear of all liens subject to Landlord's rights set forth in
Section 6.3 hereof. Tenant shall provide and maintain during the entire Lease
Term all Personal Property and New Personal Property, including, without
limitation, all personal property necessary in order to operate the Facility in
compliance with all licensure and certification requirements, in compliance with
all applicable Legal Requirements and Insurance Requirements and otherwise in
accordance with customary practice in the industry for the Intended Use. Upon
expiration or termination of the Lease, Tenant will, at its expense, restore the
Leased Property to the condition required by Section 9.1.4.
6.3 TRANSFER OF PERSONAL PROPERTY TO LANDLORD. Upon the expiration or
earlier
8
termination of this Lease, all Personal Property including New Personal Property
shall become the property of Landlord, if not already owned by Landlord, and
Tenant shall execute all documents and take any actions reasonably necessary to
evidence such ownership.
6.4 PURCHASES OF PERSONAL PROPERTY BY TENANT. Nothing in this Lease shall
prohibit Tenant from purchasing or leasing personal property for use in the
Facility subject to Landlord's prior written approval. In such event such
personal property shall be deemed New Personal Property.
ARTICLE VII
7.1 CONDITION OF THE LEASED PROPERTY. Tenant acknowledges receipt and
delivery of possession of the Leased Property and that Tenant has examined and
otherwise has full knowledge of the condition of the Leased Property prior to
the execution and delivery of this Lease and has found the same to be in good
order and repair and satisfactory for its purposes hereunder. Tenant is leasing
the Leased Property "AS IS" in its present condition. Tenant waives any claim or
action against Landlord in respect of the condition of the Leased Property.
Landlord MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF
THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE,
DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT
THE LEASED PROPERTY HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO TENANT.
7.2 USE OF THE LEASED PROPERTY.
7.2.1 APPROVALS, LICENSES, CERTIFICATIONS. Landlord represents that it
has full power and authority to lease the Leased Property subject to the
fulfillment of any conditions precedent set forth herein and subject to
compliance by the Tenant with Tenant's obligations set forth herein. Tenant
covenants that it will proceed with all due diligence and will obtain prior to
the Commencement Date and maintain throughout the Term all approvals, licenses,
certifications and accreditations needed to use and operate the Leased Property
and the Facility under applicable local, state and federal law, including but
not limited to Laws relating to the licensure of the Facility and Medicare
and/or Medicaid certification for its Intended Use (defined below). Tenant
shall, within 48 hours of receipt, forward to the Landlord a complete and
legible copy of any and all violation(s), or noncompliance notice(s), surveys,
deficiencies, and other notices from licensing, certification, accreditation,
and government agencies and insurance carriers relating to the Leased Property.
Tenant shall immediately correct any and all matters set forth in such notice(s)
and provide Landlord with copies of any plans of correction, letters and
documentation relating to such correction and any other information requested by
Landlord.
7.2.2 USE AS LICENSED SKILLED NURSING FACILITY. After the
Commencement Date and during the entire Term, Tenant shall use the Leased
Property and the improvements thereon solely as a licensed skilled nursing
facility and for no other use or purpose ("Intended Use" or "Use"). Tenant shall
not use the Leased Property or any portion thereof for any other use without the
prior written consent of Landlord, which consent may be withheld in the sole
discretion of Landlord. No
9
use shall be made or permitted to be made of the Leased Property, and no acts
shall be done, which will cause the cancellation of any insurance policy
covering the Leased Property or any part thereof, nor shall Tenant sell or
otherwise provide to residents or patients therein, or permit to be kept, used
or sold in or about the Leased Property any article which may be prohibited by
law or by the standard form of fire insurance policies, or any other insurance
policies required to be carried hereunder, or fire underwriters regulations.
Tenant shall, at its sole cost, comply in all material respects with all Legal
Requirements applicable to the possession and use of the Leased Property for its
Intended Use as a nursing facility with the number of licensed beds described
herein.
Tenant covenants and agrees that during the Term it shall operate
continuously the Leased Property as a duly licensed and certified skilled
nursing facility and to maintain its certifications for reimbursement and
licensure and its accreditation, if compliance with accreditation standards is
required to maintain the operations of the Facility and if a failure to comply
would adversely affect operations of the Facility. Tenant covenants and agrees
to take any and all actions, at tenant's sole cost and expense, to maintain the
Facility during the Term as a duly licensed Facility for the number of beds, the
licenses, certifications, and accreditations in effect or retroactive to the
Commencement Date and upon expiration or earlier termination to deliver the
Leased Property to Landlord fully licensed, certified and accredited asa skilled
nursing facility duly licensed for the number of beds as of the Commencement
Date and certified for participation in the Medicare and Medicaid programs. Upon
termination of this Lease for any reason, Tenant will return the Leased Property
including without limitation the Facility and all operations conducted at the
Facility qualified and sufficient for licensing by all governmental agencies
having jurisdiction over the Facility as a skilled care nursing facility. The
Leased Property shall be surrendered in good, operable order, condition and
repair. Tenant shall cooperate to assure that the Facility is turned over to the
Landlord or the Landlord's designee in condition suitable to have the operations
at the Facility continue without disruption as a skilled care nursing facility
duly licensed and certified by the Medicare and Medicaid programs.
7.2.3 WASTE. Tenant shall not commit or suffer to be committed any
waste on the Leased Property, or in the Facility, nor shall Tenant cause or
permit any nuisance thereon.
7.2.4 ADVERSE USE. Tenant shall neither suffer nor permit the Leased
Property or any portion thereof, including any Capital Addition, or Personal
Property, to be used in such a manner as (i) might reasonably tend to impair
Landlord's title thereto or to any portion thereof, or (ii) may reasonably make
possible a claim or claims of adverse usage or adverse possession by the public,
as such, or of implied dedication of the Leased Property or any portion thereof.
7.2.5 ENVIRONMENTAL COMPLIANCE. (i) Tenant hereby agrees that as a
material inducement to Landlord entering into this Lease, Tenant covenants that
Tenant shall not cause or permit any "hazardous substance" (as hereinafter
defined) to be placed, held, located or disposed of in, on or at the Leased
Property or any part thereof and neither the Leased Property, nor any part
thereof shall ever be used as a dump site or a storage site (whether permanent
or temporary) for any hazardous substance during the term of this Lease.
(ii) Tenant hereby agrees, to indemnify Landlord and Landlord's
Mortgagee
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and hold Landlord and Landlords Mortgagee harmless from and against
any and all losses, liabilities, including, without limitation, strict
liability, damages, injuries, expenses, including, without limitation,
reasonable attorney's fees, costs of any settlement or judgment and
claims of any and every kind whatsoever paid, incurred or suffered by,
or asserted against Landlord or Landlord's Mortgagee by any person or
entity or governmental agency for, with respect to, or as a direct or
indirect result of, the presence on or under or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releasing from
the Leased Property of any hazardous substance, including, without
limitation, any losses, liabilities, including, without limitation,
strict liability, damages, injuries, expenses, including, without
limitation, reasonable attorney's fees, costs of any settlement or
judgment or claims asserted or arising under the Comprehensive
Environmental Response, Compensation and Liability Act, any so-called
federal, state or local "super fund" or "super lien" laws or other
statute, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability, including, without
limitation, strict liability, or standards of conduct concerning any
hazardous substance.
(iii) For purposes of this Lease, hazardous substances shall mean
and include those elements or compounds which are contained in the
list of hazardous substances adopted by the United States
Environmental Protection Agency ("EPA") or the list of toxic
pollutants designated by Congress or the EPA or which are defined as
hazardous, toxic, pollutant, infectious or radioactive by any other
federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing
liability or standards of conduct concerning, any hazardous, toxic or
dangerous waste, substance or material, as now or at anytime hereafter
in effect other than those elements or compounds which are not present
on the Leased Property in such amounts and/or quantities so as to be a
regulated element or compound by the EPA or any other federal, state
or local government entity.
ARTICLE VIII
8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS, INSTRUMENTS. Subject
to Article XII regarding permitted contests, Tenant, at its expense, will
promptly (a) comply with all Laws, Legal Requirements and Insurance Requirements
in respect of the Intended Use, operation, maintenance, repair and restoration
of the Leased Property, whether or not compliance therewith shall require
structural changes in any of the Leased Improvements or interfere with the use
and enjoyment of the Leased Property and (b) procure, maintain and comply with
all licenses, certificates of need, provider agreements, conditions of
participation, accreditation standards and other authorizations required for
Intended Use of the Leased Property then being made, and for the proper
erection, installation, operation and maintenance of the Leased Property or any
part thereof, including without limitation any capital additions.
8.2 LEGAL REQUIREMENT COVENANTS. Tenant covenants and agrees that the
Leased Property shall not be used for any unlawful purpose nor shall Tenant
permit any unlawful activity to take place in, on or about the Leased Property.
Tenant further covenants and agrees that Tenant's
11
use of the Leased Property and maintenance, alteration, and operation of the
same, and all parts thereof, shall at all times conform to all Laws and Legal
Requirements unless the same are held by a court of competent jurisdiction to be
unlawful. Tenant may, however, upon prior written notice to and the prior
written consent of the Landlord contest the legality or applicability of any
such Laws or Legal Requirement, or any licensure or certification decision if
Tenant maintains such action in good faith, with due diligence, without
prejudice to Landlord's rights hereunder, and at Tenant's sole cost and expense.
If by the terms of any such Laws or Legal Requirement, compliance therewith
pending the prosecution of any such proceeding may legally be delayed without
the occurrence of any lien, charge or liability of any kind against the Facility
or Tenant's leasehold interest therein and without subjecting Tenant or Landlord
to any liability, civil or criminal, for failure so to comply therewith, Tenant
may delay compliance therewith until the final determination of such proceeding.
If any lien, charge or civil or criminal liability would be incurred by reason
of any such delay, Tenant, on the prior written consent of Landlord, may
nonetheless contest as aforesaid and delay as aforesaid provided that such delay
would not subject Landlord to criminal liability or civil damages, fines,
penalties or forfeitures of any nature or kind and Tenant both (a) furnishes to
Landlord security reasonably satisfactory to Landlord against any loss or injury
by reason of such contest or delay, and (b) prosecutes the contest with due
diligence and in good faith.
ARTICLE IX
9.1 MAINTENANCE AND REPAIR.
9.1.1 MAINTENANCE AND REPAIR. Tenant, at its expense, will keep the
Leased Property and all private roadways, sidewalks and curbs appurtenant
thereto and which are under Tenant's control in good order and repair (whether
or not the need for such repairs occurs as a result of Tenant's use, any prior
use, the elements or the age of the Leased Property, or any portion thereof),
and, except as otherwise provided in Article XIV, with reasonable promptness,
make all necessary and appropriate repairs and replacements thereto of every
kind and nature, whether interior or exterior, structural or non-structural,
ordinary or extraordinary, foreseen or unforeseen or arising by reason of a
condition existing prior to the commencement of the Term of this Lease
(concealed or otherwise). All repairs shall, to the extent reasonably
achievable, be at least equivalent in quality to the original work. Tenant shall
not take or omit to take any action, the taking or omission of which might
materially impair the value or the usefulness of the Leased Property or any part
thereof for its Intended Use.
9.1.2 LANDLORD'S OBLIGATIONS. Landlord shall not under any
circumstances be required to build or rebuild any improvements on the Leased
Property, or to make any repairs, replacements, alterations, restorations or
renewals of any nature or description to the Leased Property, whether interior
or exterior, ordinary or extraordinary, structural or non-structural, foreseen
or unforeseen, or to make any expenditure whatsoever with respect thereto, in
connection with this Lease, or to maintain the Leased Property in any way.
Tenant hereby waives, to the extent permitted by law, the right to make repairs
at the expense of Landlord pursuant to any law in effect at the time of the
execution of this Lease or hereafter enacted.
9.1.3 CONTRACTORS. LIENS. Nothing contained in this Lease and no action
or
12
inaction by Landlord shall be construed as (i) constituting the consent or
request of Landlord, expressed or implied, to any contractor, subcontractor,
laborer, materialman or vendor to or for the performance of any labor or
services or the furnishing of any materials or other property for the
construction, alteration, addition, repair or demolition of or to the Leased
Property or any part thereof, or (ii) giving Tenant any right, power or
permission to contract for or permit the performance of any labor or services or
the furnishing of any materials or other property as Landlord's Agent or in such
fashion as would permit the making of any claim against Landlord in respect
thereof or to make any agreement that may create, or in any way be the basis
for, any right, title, interest, lien, claim or other encumbrance upon the
estate of Landlord in the Leased Property, or any portion thereof.
9.1.4 CONDITION UPON SURRENDER. Tenant shall, upon the expiration or
prior termination of the Term, vacate and surrender the Leased Property to
Landlord in the condition in which the Leased Property was originally received
from Landlord, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Lease, and except for ordinary
wear and tear (subject to the obligation of Tenant to maintain the Leased
Property in good order and repair during the entire Term of the Lease).
9.2 ENCROACHMENTS AND RESTRICTIONS. If, as a result of action or inaction
by or on behalf of Tenant, any of the Leased Improvements shall, at any time,
encroach upon any property, street or right-of-way adjacent to the Leased
Property, or shall violate the agreements or conditions contained in any lawful
restrictive covenant or other agreement affecting the Leased Property, or any
part thereof, or shall impair the rights of others under any easement or
right-of-way to which the Leased Property is subject, then promptly upon the
request of Landlord or at the behest of any person affected by any such
encroachment, violation or impairment, Tenant shall, at its, expense, subject to
its right to contest the existence of any encroachment, violation or impairment
and in such case, in the event of an adverse final determination, either
(i)obtain valid and effective waivers or settlements of all claims, liabilities
and damages resulting from each such encroachment, violation or impairment,
whether the same shall affect Landlord or Tenant or (ii)make such changes in the
Leased Improvements, and take such other actions, as Tenant in the good faith
exercise of its judgment deems reasonably practicable, to remove such
encroachment, and to end such violation or impairment, including, if necessary,
the alteration of any of the Leased Improvements, and in any event take all such
actions as may be necessary in order to be able to continue the operation of the
Leased Improvements for the Intended Use substantially in the manner and to the
extent the Leased Improvements were operated prior to the assertion of such
violation or encroachment. Any such alteration shall be made in conformity with
the applicable requirements of Article X. Tenant's obligations under this
Section 9.2 shall be in addition to and shall in no way discharge or diminish
any obligation of any insurer under any policy of title or other insurance and
Tenant shall be entitled to a credit for any sums recovered by Landlord under
any such policy of title or other insurance.
ARTICLE X
10. CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY. Without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld by Landlord, Tenant shall make no structural alterations or repairs on
the Leased Property and shall not enlarge or reduce the size of the Facility. No
capital addition shall be made which would tie in or connect any Leased
13
Improvements on the Leased Property with any other improvements on property
adjacent to or near the Leased Property (and not part of the land covered by
this Lease) including, without limitation, tie-ins of buildings or other
structures or utilities, unless Tenant shall have obtained the prior written
approval of Landlord, which approval may be granted or withheld in Landlord's
sole discretion.
ARTICLE XI
11. LIENS. Subject to the provision of Article XII relating to permitted
contests, Tenant shall not directly or indirectly create or allow to remain, and
shall promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) restrictions, liens and other, encumbrances which are consented to in
advance in writing by Landlord, (c) liens for those taxes of Landlord which
Tenant is not required to pay hereunder, (d) liens for Impositions or for sums
resulting from noncompliance with Legal Requirements so long as (1) the same are
not yet past due and payable or are payable without the addition of any fine or
penalty or (2) such liens are in the process of being contested as permitted by
Article XII, and (e) liens of mechanics, laborers, materialmen, suppliers or
vendors for sums either disputed or not yet due, provided that (1) the payment
of such sums shall not be postponed under any related contract for more than
thirty (30) days after the completion of the action giving rise to such lien and
such reserve or other appropriate provisions as shall be required by law or
generally accepted accounting principles shall have been made therefor or (2)
any such liens are in the process of being contested as permitted by Article
XII.
ARTICLE XII
12. PERMITTED CONTESTS. Tenant, on its own or on Landlord's behalf (or in
Landlord's name), but at Tenant's expense, may contest, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition or any Legal
Requirement or Insurance Requirement or any lien, attachment, levy, encumbrance,
charge or claim not otherwise permitted by Article XI, provided that (a) in the
case of an unpaid Imposition, lien, attachment, levy, encumbrance, charge or
claim, the commencement and continuation of such proceedings shall suspend the
collection thereof from Landlord and from the Leased Property, (b) neither the
Leased Property nor any Rent therefrom nor any part thereof or interest therein
would be in any immediate danger of being sold, forfeited, attached or lost, (c)
in the case of a Legal Requirement, Landlord would not be in any immediate
danger of civil or criminal liability for failure to comply therewith pending
the outcome of such proceedings, (d) in the event that any such contest shall
involve a sum of money or potential loss in excess of Fifty Thousand ($50,000)
Dollars, then Tenant shall deliver to Landlord and its counsel an opinion of
Tenant's counsel to the effect set forth in clauses (a), (b) and (c), to the
extent applicable; provided however, that the requirement of delivery of such
opinion of Tenant's counsel may be waived by the Landlord upon prior written
request of the Tenant, (e) in the case of a Legal Requirement and/or an
Imposition, lien, encumbrance or charge, Tenant shall give such reasonable
security as may be demanded by Landlord to insure ultimate payment of the same
and to prevent any sale or forfeiture of the affected Leased Property or the
Rent by reason of such non-payment or noncompliance, provided, however, the
provisions of this Article XII shall not be construed to permit Tenant to
contest the payment of Rent
14
(except as to contests concerning the method of computation or the basis of levy
of any Imposition or the basis for the assertion of any other claim) or any
other sums payable by Tenant to Landlord hereunder, (f) in the case of an
Insurance Requirement, the coverage required by Article XIII shall be
maintained, and (g) if such contest be finally resolved against Landlord or
Tenant, Tenant shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or comply with the applicable Legal Requirement or Insurance
Requirement. Landlord, at Tenant's expense, shall execute and deliver to Tenant
such authorizations and other documents as may reasonably be required in any
such contest, and, if reasonably requested by Tenant or if Landlord so desires,
Landlord shall join as a party therein. Tenant shall indemnify, defend, and save
Landlord harmless against any liability, cost or expense of any kind that may be
imposed upon Landlord in connection with any such contest and any loss resulting
therefrom.
ARTICLE XIII
13.1 GENERAL INSURANCE REQUIREMENTS. During the Term of this Lease, Tenant
shall at all times keep the Leased Property, and all property located in or on
the Leased Property, including all Personal Property, insured with the kinds and
amounts of insurance required pursuant to all Legal Requirements. This insurance
shall be written by companies authorized to do insurance business in the State
in which the Leased Property is located. The policies must name Landlord and
Landlord's Mortgagee as an additional insured.
13.2 NO SEPARATE INSURANCE. Tenant shall not, on Tenant's own initiative or
pursuant to the request or requirement of any third party, take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article, to be furnished by, or which may reasonably be
required to be furnished by, Tenant, or increase the amounts of any then
existing insurance by securing an additional policy or additional policies,
unless all parties having an insurable interest in the subject matter of the
insurance, including in all cases Landlord and all Facility Mortgagees, are
included therein as additional insureds, and the loss is payable under said
insurance in the same manner as losses are payable under this Lease. Tenant
shall immediately notify Landlord of the taking out of any such separate
insurance or of the increasing of any of the amounts of the then existing
insurance by securing an additional policy or additional policies.
ARTICLE XIV
14.1 INSURANCE PROCEEDS. All proceeds payable by reason of any loss or
damage to the Leased Property, or any portion thereof, and insured under any
policy of insurance required by Article XIII of this Lease shall be paid to
Landlord and held by Landlord in trust or, if such proceeds exceed $1,000,000,
held in trust by a third party trustee and shall be made available for
reconstruction or repair, as the case may be, of any damage to or destruction of
the Leased Property, or any portion thereof, and shall be paid out by Landlord
from time to time for the reasonable costs of such reconstruction or repair. Any
excess proceeds of insurance remaining after the completion of the restoration
or reconstruction of the Leased Property (or in the event neither Landlord nor
Tenant is required or elects to repair and restore, all such insurance proceeds)
shall be retained by Landlord free and clear upon completion of any such repair
and restoration except as otherwise specifically
15
provided below in this Article XIV. All salvage resulting from any risk covered
by insurance shall belong to Landlord. The parties agree that to the extent the
Landlord's mortgage lender imposes terms which are different from the terms
described herein, the terms of such Lender's Mortgage shall.
14.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE.
14.2.1 DESTRUCTION: FACILITY RENDERED UNSUITABLE. If during the Lease
Term, the Leased Property is totally or partially destroyed from a risk covered
by the insurance described in Article XIII and the Facility thereby is rendered
Unsuitable for Its Intended Use, Tenant shall either (A) promptly restore the
Facility to substantially the same condition as existed immediately before the
damage or destruction, or (B) offer to acquire the Leased Property from
Landlord. In the event Landlord does not accept Tenant's offer to so purchase
the Leased Property, Tenant may either withdraw its offer to purchase the Leased
Property and proceed to restore the Facility to substantially the same condition
as existed immediately before the damage or destruction or terminate the Lease
and Landlord shall be entitled to retain the insurance proceeds. In the event
Tenant performs such restoration of the facility, it shall be entitled to
insurance proceeds paid in connection with the destruction up to the amount paid
by Tenant for such restoration.
14.2.2 DESTRUCTION: FACILITY NOT RENDERED UNSUITABLE. If during the
Lease Term, the Leased Improvements, Personal Property and/or the Fixtures are
totally or partially destroyed from a risk covered by the insurance described in
Article XIII, but the Facility is not thereby rendered Unsuitable for its
Intended Use, Tenant shall promptly restore the Facility to substantially the
same condition as existed immediately before the damage or destruction. Such
damage or destruction shall not terminate this Lease.
14.2.3 COSTS IN EXCESS OF PROCEEDS. If the cost of the repair or
restoration exceeds the amount of proceeds received by Landlord from the
insurance required under Article XIII, Tenant shall be obligated to contribute
any excess amounts needed to restore the Facility. Such difference shall be paid
by Tenant to Landlord to be held in trust together with any other insurance
proceeds for application to the cost of repair and restoration unless this Lease
shall terminate pursuant to this Article XIV.
14.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY
INSURANCE. If during the Lease Term, the Facility is totally or materially
destroyed from a risk not covered by the insurance described in Article XIII,
whether or not such damage or destruction renders the Facility Unsuitable for
Its Primary Intended Use, Tenant shall restore the Facility to substantially the
same condition it was in immediately before such damage or destruction and such
damage or destruction shall not terminate this Lease.
14.4 ABATEMENT OF RENT. This Lease shall remain in full force and effect
and Tenant's obligation to make rent payments and to pay all other charges
required by this Lease shall remain unabated except to the extent provided
otherwise in Section 5.2 above.
14.5 WAIVER. Tenant hereby waives any statutory rights of termination which
may arise by reason of any damage or destruction of the Facility which Landlord
is obligated to restore or may restore under any of the provisions of this
Lease.
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ARTICLE XV
15. CONDEMNATION.
15.1 DEFINITIONS.
15.1.1 CONDEMNATION. "Condemnation" means (a) the exercise of any
governmental power, whether by legal proceedings or otherwise, by a Condemnor,
and (b) a voluntary sale or transfer by Landlord to any Condemnor, either under
threat of condemnation or while legal proceedings for condemnation are pending.
15.1.2 DATE OF TAKING. "Date of Taking" means the date the Condemnor
has the right to possession of the property being condemned.
15.1.3 AWARD. "Award" means all compensation, sums or anything of value
awarded, paid or received on a total or partial condemnation.
15.1.4 CONDEMNOR. "Condemnor" means any public or quasi-public
authority, or private corporation or individual, having the power of
condemnation.
15.2 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
taking of all or any part of the Leased Property or any interest in this Lease
by condemnation, the rights and obligations of the parties shall be determined
by this Article XV.
15.3 TOTAL TAKING. If the Leased Property is totally taken by condemnation,
this Lease shall terminate on the Date of Taking.
15.4 PARTIAL TAKING. If a portion of the Leased Property is taken by
condemnation, this Lease shall remain in effect if the Facility is not thereby
rendered Unsuitable for Its Primary Intended Use, but if the Facility is thereby
rendered Unsuitable for its Primary Intended Use, this Lease shall terminate on
the Date of Taking. If as the result of any such partial taking by condemnation,
this Lease is not terminated as provided above, Tenant shall be entitled to
abatement of rent as provided in Section 5.2.
15.5 RESTORATION. If there is a partial taking of the Leased Property and
this Lease remains in full force and effect pursuant to Section 15.4, Landlord
at its cost shall accomplish all necessary restoration up to but not exceeding
the amount of the award payable to Landlord, as provided herein.
15.6 AWARD - DISTRIBUTION. The entire Award shall belong to and be paid to
Landlord, except that, subject to the rights of the Facility Mortgagees, Tenant
shall be entitled to receive from the Award, if and to the extent such Award
specifically includes such item, the following:
15.6.1 A sum attributable to the value, if any, of the leasehold
interest of Tenant under this Lease, including, if any, relocation payments.
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15.6.2 Provided, however, that in any event Landlord shall receive from
the Award, subject to the rights of the Facility Mortgagees, no less than the
greater at the time of such Award of the fair market value of the Leased
Property or the purchase price referred to in Exhibit 34.1.
15.7 TEMPORARY TAKING. The taking of the Leased Property, or any part
thereof, by military or other public authority shall constitute a taking by
condemnation only when the use and occupancy by the taking authority has
continued for longer than six (6) months. During any such six (6) month period
all the provisions of this Lease shall remain in full force and effect except
that the Minimum Rent shall be abated or reduced during such period of taking as
provided in Section 5.2.
ARTICLE XVI
16.1 EVENTS OF DEFAULT. If any one or more of the following events
(individually, an "Event of Default") shall occur:
16.1.1 EVENT OF DEFAULT. An Event of Default shall occur under this
Lease, or
16.1.2 PAYMENT DEFAULT. If Tenant shall fail to make payment of the
Rent or other amounts payable by Tenant under this Lease when the same becomes
due and payable and such failure is not cured by Tenant within a period of five
(5) business days after receipt by Tenant of notice thereof from Landlord, or
16.1.3 NONPAYMENT DEFAULT. If Tenant shall fail to observe or perform
any other term, covenant or condition of this Lease and such failure is not
cured by Tenant within a period of ten (10) days after receipt by Tenant of
notice thereof from Landlord, unless such failure cannot with due diligence be
cured within a period of ten (10) days, in which case such failure shall not be
deemed to continue if Tenant proceeds promptly and with due diligence to cure
the failure and diligently completes the curing thereof, or
16.1.4 BANKRUPTCY, INSOLVENCY. If Tenant shall:
(i) admit in writing its inability to pay its debts generally as
they become due,
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency act,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or of the
whole or any substantial part of its property, or
(v) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other applicable
law or statute of the United States of America or any State thereof,
or
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(vi) if Tenant shall, on a petition in bankruptcy filed against
it, be adjudicated a bankrupt or a court of competent jurisdiction
shall enter an order or decree appointing, without the consent of
Tenant, a receiver of Tenant or of the whole or substantially all of
its property, or approving a petition filed against it seeking
reorganization or arrangement of Tenant under the Federal bankruptcy
laws or any other applicable law or statute of the United States of
America or any State thereof, or
16.1.5 ASSIGNMENT, SUBLETTING. Assign, sublet or otherwise transfer
this Lease or the Facility or Leased Property without Landlord's consent as
required by Section 24 hereof.
16.1.6 LIQUIDATION OR DISSOLUTION. If Tenant shall be liquidated or
dissolved, or shall begin proceedings toward such liquidation or dissolution, or
shall, in any manner, permit the sale or divestiture of substantially all its
assets other than in connection with a merger or consolidation of Tenant into,
or a sale of substantially all of Tenant's assets to, another corporation,
unless the survivor of such merger or the purchaser of such assets shall assume
all of Tenant's obligations under this Lease by a written instrument, in form
and substance reasonably satisfactory to Landlord, Landlord is provided an
opinion of counsel, reasonably satisfactory to Landlord and addressed to
Landlord stating that such instrument of assumption is valid, binding and
enforceable against the parties thereto in accordance with its terms (subject to
usual bankruptcy and other creditors' rights exceptions), or
16.1.7 ACTION AGAINST LEASEHOLD INTEREST. If the estate or interest of
Tenant in the Leased Property or any part thereof shall be levied upon or
attached in any proceeding and the same shall not be vacated or discharged
within the later of ninety (90) days after commencement thereof or 30 days after
receipt by Tenant of notice thereof from Landlord, (unless Tenant shall be
contesting such lien or attachment in good faith in accordance with Article XII
hereof), or
16.1.8 DISCONTINUATION OF OPERATIONS. If, except as a result of damage,
destruction or a partial or complete condemnation, Tenant voluntarily ceases
operations on the Leased Property for a period in excess of one (1) day, or
16.1.9 BREACH OF REPRESENTATIONS OR WARRANTIES. If any of the
representations or warranties proves to be untrue when made in any material
respect which materially and adversely affects Landlord, and which is not cured
within ten (10) days after receipt by Tenant of notice from Landlord thereof,
or, if not susceptible of being cured within the ten (10) days, Tenant has
commenced to cure within ten (10) days after notice thereof and has thereafter
diligently proceeded to cure such default in the representation or warranty.
16.1.10 TERMINATION OF LICENSE: PENALTIES AND FINES. If Tenant receives
any violation or noncompliance notices from any authority having jurisdiction
over the Leased Property or the Facility, is threatened by such authority with
loss of licensure or certification for the Facility, is fined or penalized by
such authority or is threatened with the imposition at a fine or penalty by such
authority, then, and in any such event, Landlord may terminate this Lease by
giving Tenant not less
19
than five (5) days' notice of such termination and upon the expiration of the
time fixed in such notice, the Term shall terminate and all rights of Tenant
under this Lease shall cease. Landlord shall have all rights at law and in
equity available to Landlord as a result of Tenant's breach of this Lease.
Tenant shall, to the extent permitted by law, pay as Additional Charges
all costs and expenses incurred by or on behalf of Landlord, including, without
limitation, reasonable attorneys' fees and expenses, as a result of any Event of
Default hereunder.
16.2 CERTAIN REMEDIES.
16.2.1 REMEDIES AVAILABLE. If an Event of Default shall have occurred
(and the event giving rise to such Event of Default has not been cured within
the curative period relating thereto as set forth in Section 16.1 above) and be
continuing, in addition to any other rights or remedies Landlord may have,
Landlord shall have the option to exercise any one or more of the following
remedies, it being agreed that pursuit of any remedy provided in this Lease
shall not preclude pursuit of any other remedy or remedies herein provided or
provided by law, and that any of such remedies may be pursued regardless of
whether or not the Default continues to exist and whether or not Landlord
accepts or has accepted Rent subsequent to the occurrence of such Default:
(a) Terminate this Lease by written notice to Tenant, in which event
Tenant shall immediately surrender possession of the Leased Property to Landlord
and Landlord may reenter and repossess the Leased Property, and, at Landlord's
option, all personal property, fixtures and equipment in the Leased Property
shall thereupon become the property of Landlord; and, in connection therewith,
Landlord may use such force as may be necessary, without being guilty of
trespass, forcible entry, detainer or other tort.
(b) With or without terminating this Lease, and without notice to
Tenant, Landlord, at its option, exercisable in Landlord's sole discretion, may
enter upon the Leased Premises, change the locks, and attempt to re-let the
Leased Premises, without advertisement, by private negotiations and for any term
and rental rate which Landlord in its sole discretion determines. Tenant shall
not be liable to Landlord for the deficiency, if any, between all rent and other
amounts due hereunder for the entire Term hereof and the Rent paid by the new
lessee applicable to the remaining Term hereof (or any part thereof).
(c) Pursue any and all other rights and remedies available at law or
in equity.
16.2.2 Each right and remedy provided for in this Lease shall be
cumulative and shall be in addition to every other right or remedy provided for
in this Lease or now or hereafter existing at law or in equity or by statute or
otherwise, and the exercise or beginning of the exercise by Landlord of any one
or more of the rights or remedies provided for in this Lease or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Landlord of any and all other rights and
remedies provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise.
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16.3 WAIVER. If this Lease is terminated pursuant to Section 16.1, Tenant
waives, to the extent permitted by applicable law, (a) any right of redemption,
re-entry or repossession, (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this Article XVI, and
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt.
16.4 APPLICATION OF FUNDS. Any payments received by Landlord under any of
the provisions of this Lease during the existence or continuance of any Event of
Default (and such payment is made to Landlord rather than Tenant due to the
existence of an Event of Default) shall be applied to Tenant's obligations in
the order which Landlord may determine or as may be prescribed by the laws of
the State of Texas.
ARTICLE XVII
17. LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT. If Tenant shall fail to make
any payment or to perform any act required to be made or performed under this
Lease, and to cure the same within the relevant time periods provided in Section
16.1, Landlord, after notice to and demand upon Tenant, and without waiving or
releasing any obligation or Default, may (but shall be under no obligation to)
at any time thereafter make such payment or perform such act for the account and
at the expense of Tenant, and may, to the extent permitted by law, enter upon
the Leased Property for such purpose and take all such action thereon as, in
Landlord's opinion, may be necessary or appropriate therefor. No such entry
shall be deemed an eviction of Tenant. All sums so paid by Landlord and all
costs and expenses (including, without limitation, reasonable attorneys' fees
and expenses, in each case, to the extent permitted by law) so incurred,
together with a late charge thereon (to the extent permitted by law) at the
Overdue Rate from the date on which such sums or expenses are paid or incurred
by Landlord, shall be paid by Tenant to Landlord on demand. The obligations of
Tenant and rights of Landlord contained in this Article shall survive the
expiration or earlier termination of this Lease.
ARTICLE XVIII
[ARTICLE XVIII INTENTIONALLY LEFT BLANK]
ARTICLE XIX
[ARTICLE XIX INTENTIONALLY LEFT BLANK]
ARTICLE XX
20. HOLDING OVER. If Tenant shall for any reason remain in possession of
the Leased Property after the expiration of the Term or earlier termination of
the Term hereof, such possession shall be as a month-to-month tenant at double
the Rent provided for herein. During such period of month-to-month-to-month
tenancy, Tenant shall be obligated to perform and observe all of the terms,
covenants and conditions of this Lease, but shall have no rights hereunder other
than the right, to the extent given by law to month-to-month tenancies, to
continue its occupancy and use of the Leased
21
Property. Nothing contained herein shall constitute the consent, express or
implied, of Landlord to the holding over of Tenant after the expiration or
earlier termination of this Lease.
ARTICLE XXI
[ARTICLE XXI INTENTIONALLY LEFT BLANK]
ARTICLE XXII
[ARTICLE XXII INTENTIONALLY LEFT BLANK]
ARTICLE XXIII
23.1 INDEMNIFICATION OF LANDLORD. Notwithstanding the existence of any
insurance provided for in Article XIII, and without regard to the policy limits
of any such insurance, Tenant will protect, indemnify, save harmless and defend
Landlord from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses), to the extent permitted by law,
imposed upon or incurred by or asserted against Landlord by reason of: (a) any
accident, injury to or death of persons or loss of or damage to property
occurring on or about the Leased Property or adjoining sidewalks, including
without limitation any claims of negligence, violation of resident rights,
professional malpractice or other claims, (b) any use, occupancy, possession,
misuse, non-use, condition, maintenance or repair by Tenant of the Leased
Property, (c) any Impositions (which are the obligations of Tenant to pay
pursuant to the applicable provisions of this Lease), (d) any failure on the
part of Tenant to perform or comply with any of the terms of this Lease, (e) any
claims, damages, losses relating to the operation of the Facility including
without limitation employment related claims, (f) any act, omission or
negligence of Tenant, its agents, employees, invitees and others claiming by
through or under Tenant. Any amounts which become payable by Tenant under this
Section shall be paid within ten (10) days after liability therefor on the part
of Tenant is determined by litigation or otherwise, and if not timely paid,
shall bear a late charge (to the extent permitted by law) at the Overdue Rate
from the date of such determination to the date of payment. Tenant, at its
expense, shall contest, resist and defend any such claim, action or proceeding
asserted or instituted against Landlord or may compromise or otherwise dispose
of the same subject to Landlord's prior written approval. To the extent Tenant
makes payments to Landlord under this Article XXIII, Tenant shall become
subrogated to the rights of Landlord for insurance proceeds. Nothing herein
shall be construed as indemnifying Landlord against its own negligent acts or
omissions or willful misconduct.
23.2 INDEMNIFICATION OF TENANT. For the period prior to the Term of this
Agreement, notwithstanding the existence of any insurance provided for in
Article XIII, and without regard to the policy limits of any such insurance,
Landlord will protect, indemnify, save harmless and defend Tenant from and
against all liabilities, obligations, claims damages, penalties, causes of
action, costs and expenses (including, without limitation, reasonable attorneys'
fees and expenses), to the extent
22
permitted by law, imposed upon or incurred by or asserted against Tenant by
reason of: (a) any accident, injury to or death of persons or loss of or damage
to property occurring on or about the Leased Property or adjoining sidewalks,
including without limitation any claims of negligence, violation of resident
rights, professional malpractice or other claims occurring prior to the Term of
this Agreement, (b) any use, occupancy, possession, misuse, non-use, condition,
maintenance or repair by Landlord of the Leased Property occurring prior to the
Term of this Agreement, (c) any Impositions (which are the obligations of
Landlord to pay pursuant to the applicable provisions of this Lease) occurring
prior to the Term of this Agreement, (d) any failure on the part of the Landlord
to perform or comply with any of the terms of this Lease or any other agreement
with Tenant, (e) any claims, damages, losses relating to the operation of the
Facility including without limitation employment related claims, occurring prior
to the Term of this Agreement, (f) any act, omission or negligence of Landlord,
its agents, employees, invitees and others claiming by through or under Landlord
occurring prior to the Term of this Agreement, and (g) any matter raised in any
regulatory survey by any federal or state agency concerning the Facility for the
period prior to the Term of this Agreement. Any amounts which become payable by
Landlord under this Section shall be paid within ten (10) days after liability
therefor on the part of the Landlord is determined by litigation or otherwise,
and if not timely paid, shall bear a late charge (to the extent permitted by
law) at the Overdue Rate from the date of such determination to the date of
payment. Landlord, at is expense, shall contest, resist and defend any such
claim, action or proceeding asserted or instituted against Tenant or may
compromise or otherwise dispose of the same as Landlord sees fit. To the extent
Landlord makes payments to Tenant under this Article XXIII, Landlord shall
become subrogated to the rights of Tenant for insurance proceeds. Nothing herein
shall be construed as indemnifying Tenant against its own negligent acts or
omissions or willful misconduct.
23.3 SURVIVAL. Tenant's and Landlord's liability for a breach of the
provisions of this Article arising during the Term hereof shall survive any
termination of this Lease.
ARTICLE XXIV
24. SUBLETTING AND ASSIGNMENT. Tenant shall not, without the prior written
consent of Landlord, which consent Landlord may withhold in its sole discretion,
and Landlord's Mortgagee, convey, pledge, mortgage, encumber or assign this
Lease or any interest hereunder, whether voluntary or by operation of law,
sublease the Leased Premises or any part thereof, or permit the use of the
Leased Premises or any portion thereof by any party other than Tenant, including
any affiliated entity of Tenant. Consent to any assignment or sublease shall not
constitute a waiver of this provision with respect to any other assignment or
sublease, and all later assignments or subleases shall be made likewise only
with the prior written consent of Landlord and Landlord's Mortgagee. Any
subtenant, assignee or successor of Tenant, at the option of Landlord, shall
become directly liable to Landlord for all obligations of Tenant hereunder, but
no transfer, sublease or assignment by Tenant shall relieve Tenant of any
liability hereunder.
ARTICLE XXV
25. OFFICER'S CERTIFICATES, FINANCIAL STATEMENTS, AND DISCLOSURES.
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25.1 ESTOPPEL CERTIFICATE. At any time and from time to time upon Tenant's
receipt of not less than ten (10) days prior written request by Landlord, Tenant
will furnish to Landlord an Officer's Certificate certifying that this Lease is
unmodified and in full force and effect (or that this Lease is in full force and
effect as modified and setting forth the modifications) and the dates to which
the Rent has been paid. Any such certificate furnished pursuant to this Section
may be relied upon by Landlord and any prospective purchaser of the Leased
Property.
25.2 FINANCIAL STATEMENTS. Tenant will furnish the following financial
statements to Landlord:
(i) Within 90 days after the end of each of Tenant's fiscal
years, a copy of the audited (if available, otherwise unaudited)
consolidated balance sheets of Tenant and its consolidated
subsidiaries as of the end of such fiscal year, and related audited
consolidated (if available, otherwise unaudited) consolidated
statements of income, changes in common stock and undistributed
profits and changes in the financial position of Tenant and its
consolidated subsidiaries for such fiscal year, prepared in accordance
with generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved;
(ii) Within 90 days after the end of each of Tenant's fiscal
years, and together with the documents furnished in accordance with
clause (i), an Officer's Certificate stating that to the best of the
signer's knowledge and belief after making due inquiry, Tenant is not
in default in the performance or observance of any of the terms of
this Lease, or if Tenant shall be in default to its knowledge,
specifying all such defaults, the nature thereof, and the steps being
taken to remedy the same;
(iii) Within 30 days after the end of each of Tenant's quarters,
quarterly consolidated financial reports Tenant produces for reporting
purposes and detailed statements of income and detailed operational
statistics regarding occupancy rates, patient mix and patient rates by
type for the Facility; and
(iv) Within 90 days after the end of each of Tenant's fiscal
years, a copy of each cost report filed with the appropriate
governmental agency for each of the Facilities (and all amendments
thereto whether contemporaneously or subsequently filed thereto);
25.3 ADDITIONAL INFORMATION. Tenant shall furnish the following Additional
Information to Landlord:
(i) Within ten (10) days of receipt thereof, copies of all
surveys (complaint, annual or otherwise), along with all accompanying
letters, exhibits and information relating thereto and copies of any
notices from any governmental agency
24
relating to an investigation of Tenant's operations including without
limitation HCFA, the OIG, the FBI, the State Medicated Fraud division,
performed by the appropriate governmental agencies for licensing or
certification purposes, and any plan of correction thereto; and
(ii) With reasonable promptness, such other information
respecting the financial condition and affairs of Tenant and the
Facility as Landlord may reasonably request from time to time; and
(iii) Furnish to Landlord, within thirty (30) days of receipt a
copy of any licensing or other agency survey or report and any
statement of deficiencies and/or any other report indicating that any
action is pending or being considered to downgrade the Facility to a
substandard category, and within the time period required by the
particular agency for furnishing a plan of correction also furnish or
cause to be furnished to Landlord a copy of the plan of correction or
other response generated as a result of such survey or report for the
Facility, and correct or cause to be corrected any deficiency, the
curing of which is a condition of continued licensure or for full
participation in any applicable reimbursement program;
(iv) The Landlord further reserves the right to require such
other information relating to the financial affairs or operations of
the Tenant and the Facility at such other times as Landlord shall
reasonably require (including monthly or more frequently), and Tenant
agrees to provide such information to Landlord within three (3) days
from request. All financial statements must be in such form and detail
as the Landlord shall from time to time reasonably request, provided,
however, that Landlord will make reasonable efforts to use Tenant's
existing forms of reports for all purposes.
ARTICLE XXVI
26. LANDLORD'S RIGHT TO INSPECT. Tenant shall permit Landlord and its
authorized representatives to inspect the Leased Property during usual business
hours subject to any security, health, safety or confidentiality requirements of
Tenant or any governmental agency or insurance requirement relating to the
Leased Property, or imposed by law or applicable regulations.
ARTICLE XXVII
27. NO WAIVER. No failure by Landlord or Tenant to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
25
ARTICLE XXVIII
28. REMEDIES CUMULATIVE. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Landlord or Tenant now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy and the exercise or beginning of the exercise by Landlord or Tenant
or any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Landlord or Tenant of any or all of such
other rights, powers and remedies.
ARTICLE XXIX
29. ACCEPTANCE OF SURRENDER. No surrender to Landlord of this Lease or of
the Leased Property or any part of any thereof, or of any interest therein,
shall be valid or effective unless agreed to and accepted in writing by Landlord
and no act by Landlord or any representative or agent of Landlord, other than
such a written acceptance by Landlord, shall constitute an acceptance of any
such surrender.
ARTICLE XXX
[ARTICLE XXX INTENTIONALLY LEFT BLANK]
ARTICLE XXXI
31. CONVEYANCE BY LANDLORD. Landlord may convey, transfer or assign this
Lease or the Leased Property without the Tenant's consent.
ARTICLE XXXII
32. QUIET ENJOYMENT. So long as Tenant shall pay all Rent as the same
becomes due and shall fully comply with all of the terms of this Lease and fully
perform its obligations hereunder, Tenant shall peaceably and quietly have, hold
and enjoy the Leased Property for the Term hereof, free of any claim or other
action by Landlord or anyone claiming by, through or under Landlord, but subject
to all liens and encumbrances of record as of the date hereof or hereafter
consented to by Tenant. No failure by Landlord to comply with the foregoing
covenant shall give Tenant any right to cancel or terminate this Lease or ▇▇▇▇▇,
reduce or make a deduction from or offset against the Rent or any other sum
payable under this Lease, or to fail to perform any other obligation of Tenant
hereunder. Notwithstanding the foregoing, Tenant shall have the right, by
separate and independent action to pursue any claim it may have against Landlord
as a result of a breach by Landlord of the covenant of quiet enjoyment contained
in this Section.
ARTICLE XXXIII
33. NOTICES. All notices, demands, requests, consents, approvals and other
26
communications hereunder shall be in writing and delivered or mailed (by
registered or certified mail, return receipt requested and postage prepaid),
addressed to the respective parties, as follows:
33.1 NOTICE TO TENANT.
if to Tenant:
At: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
33.2 NOTICE TO LANDLORD:
if to Landlord:
At: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or to such other address as either party may hereafter designate, and shall be
effective upon receipt.
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ARTICLE XXXIV
[ARTICLE XXXIV INTENTIONALLY LEFT BLANK]
ARTICLE XXXV
35.1 LANDLORD MAY GRANT LIENS. Without the consent of Tenant, Landlord may,
subject to the terms and conditions set forth below in this Section 35.1, from
time to time, directly or indirectly, create or otherwise cause to exist any
lien, encumbrance or title retention agreement ("Encumbrance") upon the Leased
Property, or any portion thereof or interest therein, whether to secure any
borrowing or other means of financing or refinancing. Any such Encumbrance shall
contain the right to prepay (whether or not subject to a prepayment penalty) and
shall provide that it is subject to the rights of Tenant under this Lease,
including the rights of Tenant to acquire the Leased Property pursuant to the
applicable provisions of this Lease, except that Tenant's right of first refusal
to purchase the Leased Property shall not be applicable upon a foreclosure sale
or transfer in lieu thereof; provided, however, that any such purchaser or
transferee shall take title subject to Tenant's rights to acquire the Leased
Property. Any lender which takes an interest in the Leased Property pursuant to
this Article (a) shall agree to give Tenant the same notice, if any, given to
Landlord of any default or acceleration of any obligation underlying any such
mortgage or any sale in foreclosure under such mortgage, (b) shall agree to
permit Tenant to cure any such default on Landlord's behalf within any
applicable cure period, and Tenant shall be reimbursed by Landlord for any and
all out-of-pocket costs incurred to effect any such cure (including reasonable
attorneys' fees), and (c) shall agree to permit Tenant to appear by its
representative and to bid at any sale in foreclosure made with respect to any
such mortgage.
35.2 TENANT'S RIGHT TO CURE. Subject to the provisions of Section 35.3, if
Landlord shall breach any covenant to be performed by it under this Lease,
Tenant, after notice to and demand upon Landlord, without waiving or releasing
any obligation hereunder, and in addition to all other remedies available to
Tenant, may (but shall be under no obligation at any time thereafter to) make
such payment or perform such act for the account and at the expense of Landlord.
The rights of Tenant hereunder to cure and to secure payment from Landlord in
accordance with this Section 35.2 shall survive the termination of this Lease
with respect to the Leased Property.
35.3 BREACH BY LANDLORD. It shall be a breach of this Lease if Landlord
shall fail to observe or perform any term, covenant or condition of this Lease
on its part to be performed and such failure shall continue for a period of
thirty (30) days after notice thereof from Tenant (or such shorter time as may
be required in order to protect the health or welfare of any patients or other
residents of the Leased Property), unless such failure cannot with due diligence
be cured within a period of thirty (30) days, in which case such failure shall
not be deemed to continue if Landlord, within said thirty (30) day period,
proceeds promptly and with due diligence to cure the failure and diligently
completes the curing thereof. The time within which Landlord shall be obligated
to cure any such failure shall also be subject to extension of time due to the
occurrence of any Unavoidable Delay.
28
ARTICLE XXXVI
36. MISCELLANEOUS.
36.1 SURVIVAL. MODIFICATION. SUCCESSORS AND ASSIGNS. Anything contained in
this Lease to the contrary notwithstanding, all claims against, and liabilities
of, the Tenant or Landlord arising prior to any date of termination of this
Lease shall survive such termination. If any late charges or similar costs
provided for in any provision of this Lease are based upon a rate in excess of
the maximum rate permitted by applicable law, the parties agree that such
charges shall be fixed at the maximum permissible rate. Neither this Lease nor
any provision hereof may be changed, waived, discharged or terminated except by
an instrument in writing and in recordable form signed by Landlord and Tenant.
All the terms and provisions of this Lease shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
36.2 EXCULPATION OF LANDLORD. Tenant specifically agrees to look solely to
Landlord's interest in the Leased Property for recovery of any judgment from
Landlord, it being specifically agreed that no shareholder, director, officer,
member, partner, or employee of Landlord shall ever be personally liable for any
such judgment or for the payment of any monetary obligation to Tenant. The
provision contained in the foregoing sentence is not intended to, and shall not,
limit any right that Tenant might otherwise have to obtain injunctive relief
against Landlord or Landlord's successors in interest, or any action not
involving the personal liability of Landlord (original or successor).
Furthermore, except as otherwise expressly provided herein, in no event
shall Landlord (original or successor) ever be liable to Tenant for any indirect
or consequential damages suffered by Tenant from whatever cause.
36.3 EXCULPATION OF TENANT. Landlord specifically agrees to look solely to
Tenant's interest in the Leased Property for recovery of any judgment from
Tenant, it being specifically agreed that no shareholder, director, officer,
manager, member, partner, or employee of Tenant shall ever be personally liable
for any such judgment or for the payment of any monetary obligation to Landlord.
The provision contained in the foregoing sentence is not intended to, and shall
not, limit any right that Landlord might otherwise have to obtain injunctive
relief against Tenant or Tenant's successors in interest, or any action not
involving the personal liability of Tenant (original or successor).
Furthermore, except as otherwise expressly provided herein, in no event
shall Tenant (original or successor) ever be liable to Landlord for any indirect
or consequential damages suffered by Landlord from whatever cause.
36.4 TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Landlord's option, Tenant shall use its best efforts
to transfer to Landlord or Landlord's nominee and Tenant shall cooperate with
Landlord or Landlord's nominee in connection with the processing by Landlord or
Landlord's nominee of, any applications for all licenses, operating permits and
other governmental authorization and all contracts, including contracts with
governmental or quasi-governmental entities which may be necessary for the
operation of the Facility;
29
provided that the costs and expenses of any such transfer or the processing of
any such application shall be paid by Landlord or Landlord's nominee.
Notwithstanding anything in this Lease or elsewhere to the contrary, under no
circumstances shall Landlord be obligated to seek or effectuate such a transfer
or application therefore.
36.5 CAPTIONS. Titles, Captions and Notations appearing in this instrument
are provided merely for ease of reference, and the parties hereto expressly
acknowledge and agree that such notations and titles do not constitute a part of
this Lease, have no legal effect whatsoever in determining the rights or
obligations of the parties, and shall have no bearing upon the meaning or
interpretation of this agreement or any portion of it.
36.6 NON-WAIVER. The failure by Landlord, whether once or more, to act upon
a specific breach of any term, covenant or condition herein contained shall not
be deemed to be a waiver of such term, covenant, or condition nor of any
subsequent breach of the same or any other term, covenant or condition herein
contained. Any subsequent acceptance of Rent hereunder by Landlord shall not be
deemed to be a waiver of any preceding breach by Tenant of any term, covenant or
condition of this Lease other than the failure of Tenant timely to pay the
particular rental so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such rent. No covenant, term or
condition of this Lease shall be deemed to have been waived by Landlord unless
such waiver shall be specifically expressed in writing by Landlord.
36.7 SEVERABILITY. ENTIRE AGREEMENT. If any term, covenant or condition of
this Lease or the application thereof to any person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term, covenant, or condition to persons or circumstances
other than those which or to which such may be held invalid or unenforceable,
shall not be affected thereby, and each term, covenant or condition of this
Lease shall be valid and enforceable to the fullest extent permitted by law.
Except for any exhibits, attachments, plats, or other documents as may be
affixed hereto, made a part hereof, and properly identified herewith, this Lease
constitutes the entire contract between the parties, and shall not be otherwise
affected by any other purported undertaking whether written or oral.
36.8 TIME OF ESSENCE. Time shall be deemed to be of the essence with
respect to all provisions of this Lease including without limitation all
provisions relating to the payment of Rent, Impositions, Additional Charges,
Additional Rent, and payments to third parties required to be made by the Tenant
in order to comply with the provisions of this Lease. The fact that the phrase
"time shall be deemed of the essence" or language of similar import has not been
included in every section relating to the payment or performance of obligations
shall not be deemed or construed to indicate that the parties did not intend to
have time be deemed of the essence with respect to such payment or performance.
36.9 COLLECTION OF RENT. No termination of this Lease prior to the normal
ending thereof, by lapse of time or otherwise, shall affect Landlord's right to
collect Rent and all other amounts due Landlord in accordance with the terms of
this Lease.
30
36.10 REMEDIES CUMULATIVE. All rights, powers, privileges and remedies
conferred hereunder upon the parties hereto shall be cumulative but not
restrictive to those given by law.
36.11 GOVERNING LAW. The laws of the State of Texas shall govern the
interpretation, validity, performance and enforcement of this Lease, but not
including its conflict of laws rules.
36.12 AUTHORITY OF PARTIES. If Tenant signs as an entity, each person
executing this Lease on behalf of Tenant does hereby covenant and warrant that
Tenant is a duly authorized and existing entity, that Tenant has and is
qualified to do business in the State of Texas and that the entity has full
right and authority to enter into this Lease and that each person signing on
behalf of such entity is authorized to do so.
36.13 TRANSFER OF LANDLORD'S INTEREST. Nothing herein shall in any way
prohibit or restrict Landlord from conveying all or a portion of its right,
title and interest in the Leased Premises and to this Lease to a third party or
to an affiliate of Landlord. Upon any transfer of Landlord's interest in the
Leased Premises and in this Lease to a third party or affiliate of Landlord,
such transferee shall become "Landlord" hereunder and the transferor Landlord
shall have no further obligations hereunder.
36.14 NO PARTNERSHIP OR JOINT VENTURE. This Lease shall not be considered
in any manner a partnership agreement joint venture between Landlord and Tenant.
ARTICLE XXXVII
37. ATTORNMENT: SUBORDINATION.
37.1 TENANT SUBORDINATION. Tenant accepts this Lease subject and
subordinate to any Mortgage, Deed of Trust, Deed to Secure Debt or any other
hypothecation or security now or hereafter placed upon the Leased Premises (any
such instrument hereinafter called a "Mortgage") and to any and all advances
made on the security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. If any holder of a Mortgage (herein
"Landlord's Mortgagee") shall elect to have this Lease prior to the lien of its
Mortgage, and shall give written notice thereof to Tenant, this Lease shall be
deemed prior to such Mortgage, whether this Lease is dated prior or subsequent
to the date of said Mortgage, or the date of recording thereof.
37.2 ESTOPPEL AGREEMENT. Although the provisions of this Article 37 shall
be self-operative, Tenant agrees, upon request of Landlord or Landlord's
Mortgagee, to execute any estoppel certificates and other documents required to
effectuate any attornment, subordination or to make this Lease prior to the lien
of any Mortgage. Tenant's failure to execute such documents within ten (10) days
after written demand shall constitute a material default by Tenant hereunder,
or, at Landlord's option, Landlord shall execute such documents on behalf of
Tenant's attorney-in-fact.
37.3 ATTORNEY IN FACT APPOINTMENT. Tenant does hereby make, constitute and
31
irrevocably appoint Landlord as Tenant's attorney-in-fact and in Tenant's name,
place and stead, to execute such documents in accordance with this Article 37
such power of attorney being coupled with an interest.
37.4 TENANT ATTORNMENT. If by reason of a default under the Mortgage upon
the Leased Premises, the interest of Landlord in the Leased Premises is
terminated, the Tenant will attorn to Landlord's Mortgagee at Landlord's
mortgagee's sole option (or to any person or entity to which the Leased Premises
is conveyed by such holder) and will recognize such holder, person or entity as
Tenant's landlord under this Lease. Tenant further waives the provision of any
statute or rule of law now or hereafter in effect which may give or purport to
give Tenant any right of election to terminate this Lease or to surrender
possession of the Leased Premises in the event any proceeding is brought by
Landlord's Mortgagee to terminate the interest of the Landlord in the Leased
Premises, and agrees that this Lease shall not be affected in any way whatsoever
by such proceeding.
37.5 NOTICE OF DEFAULT TO LANDLORD'S MORTGAGES. If the Landlord defaults
under this Lease, Tenant, before taking advantage of any rights or remedies
granted to Tenant or by law, shall notify in writing, certified mail, return
receipt requested, any Landlord's Mortgagee which holds a Mortgage and who has
requested Tenant so to do and given Tenant its mailing address and Tenant shall
allow Landlord's Mortgagee, at Landlord's Mortgagee's sole option, ten (10) days
following receipt of such notice (plus any additional time that may be
reasonably necessary) within which to cure such default. The time given to
Landlord's Mortgagee to cure Landlord's default shall not run concurrently with
any time granted to Landlord to cure such default, but shall run form the later
of Landlord's Mortgagee's receipt of notice from Tenant of Landlord's default or
the expiration of the time period, if any, given to Landlord to cure such
default. Landlord's Mortgagee may, but shall not be obligated to, cure such
default, and Tenant shall accept any such cure by Landlord's Mortgagee.
ARTICLE XXXVIII
38. RE-ENTRY DURING TERM. Landlord, its agents, officers or assigns, and
Landlord's Mortgagee, shall have the right to enter the Leased Premises upon
reasonable prior notice except in emergencies during normal working hours
throughout the term of the Lease for the following purposes: inspecting the
general condition and state of repair of the Leased Property; showing the Leased
Property to any interested party; taking any emergency action which Landlord
deems necessary to protect the Leased Property; inspecting the Leased Property
as required by governmental agencies or insurance companies; or for any other
reasonable purposes. Landlord's right of re-entry and right to inspect the
Leased Property shall be subject to the privacy rights of residents and
regulations pertaining to confidentiality of resident records.
ARTICLE XXXIX
[ARTICLE XXXIX INTENTIONALLY LEFT BLANK]
ARTICLE XXXX
32
40. HEALTHCARE LICENSING, SURVEYS, COMPLIANCE NOTICES. Tenant shall give
Landlord prompt written notice of (a) any notice of loss of Joint Commission or
Accreditation of Healthcare Organizations accreditation, loss of participation
under any material reimbursement program or loss of applicable and material
health care licenses at the Facility and (b) any other material deficiency
notice, compliance order of adverse report issued by any governmental authority
or accreditation commission having jurisdiction over licensing, accreditation or
operation of the Facility or by any governmental authority or private insurance
company pursuant to a provider agreement, which, if not promptly complied with
or cured, would be reasonably likely to result in a material adverse effect on
Tenant.
ARTICLE XXXXI
41. RIGHT OF FIRST REFUSAL. If at any time during the Term of this Lease
Landlord , or any of its affiliated entities, shall receive an offer to sell the
Leased Property, or to enter into a lease of the Leased Property, Tenant shall
have a Right of First Refusal to purchase the Leased Premises or to renew this
Lease on the same terms and conditions as are offered to the Landlord or any of
its affiliates in such Offer to Purchase or Lease. Upon Landlord's notifications
of an offer to purchase or lease of the Leased Property, Landlord shall, within
ten (10) days of such notice, give written notice to Tenant of the proposed
terms and conditions. Tenant shall have fifteen (15) days after written
notification from the Landlord to advise Landlord of its intentions to purchase
the Leased Premises or renew the Lease. In the event Tenant determines not to
exercise its Right of First Refusal, Landlord shall be free to sell the Leased
Premises or lease the Leased Property to the other party on the same terms and
conditions as set forth in the notice provided to Tenant. In the event that the
terms and conditions of the proposed purchase or lease are changed, Landlord
shall advise Tenant in writing of the proposed changes and Tenant shall have
another fifteen (15) days in which to make a determination as to whether to
exercise its Right of First Refusal. In the event the Tenant notifies the
Landlord that the Tenant shall purchase the Leased Property pursuant to its
Right of First Refusal the closing of such purchase shall take place within 120
days from the receipt of such written notice from the Tenant.
33
IN WITNESS WHEREOF, the parties have caused this Lease to be executed and
their respective corporate seals, if any, to be hereunto affixed and attested by
their respective officers thereunto duly authorized.
Landlord: Tenant:
Extendicare Health Facilities, Inc. Senior Health-Alamo, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Senior Vice President
State of Wisconsin By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
County of Milwaukee -----------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
The foregoing instrument was acknowledged
before me this 25th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Senior State of Pennsylvania
County of Philadelphia
Vice-President of Extendicare Health
Facilities, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ The foregoing instrument was
-------------------------------- acknowledged before me this 26th
Notary Public, State of Wisconsin day of September, 2001 by
My commission expires 11-2-2003. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as the President
of
-----------------------------,
on behalf of the corporation.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Notary Public, State of
Pennsylvania
My commission (is permanent)
(expires on 10-31-02)
[Notarial Seal] [Notarial Seal]
EXHIBIT 1.1
TO
LEASE AGREEMENT DATED AS OF OCTOBER 1, 2001
BETWEEN
EXTENDICARE HEALTH FACILITIES, INC., LANDLORD
AND
SENIOR HEALTH-ALAMO, LLC, TENANT
LEGAL DESCRIPTION
EXHIBIT 16.1.1
TO
LEASE AGREEMENT DATED AS OF OCTOBER 1, 2001
BETWEEN
EXTENDICARE HEALTH FACILITIES, INC.,, LANDLORD
AND
SENIOR HEALTH-ALAMO, LLC, TENANT
OTHER TEXAS LEASES AND SUBLEASES
OPERATING LEASE
EXTENDICARE HEALTH FACILITIES, INC.
Landlord
AND
SENIOR HEALTH-BREMOND, LLC
Tenant
Dated as of October 1, 2001
-----------------------------------------
FACILITY:
BREMOND NURSING AND REHABILITATION CENTER
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
-----------------------------------------
TABLE OF CONTENTS
Article Page
------- ----
LIST OF EXHIBITS................................................................................................vii
LEASE.............................................................................................................1
ARTICLE I.........................................................................................................1
1. Leased Property; Term...........................................................................1
1.1 Land............................................................................................1
1.2 Leased Improvements.............................................................................1
1.3 Related Rights..................................................................................1
1.4 Fixtures........................................................................................1
1.5 Personal Property...............................................................................1
ARTICLE II........................................................................................................2
2. Definitions.....................................................................................2
2.1 Additional Charges..............................................................................2
2.2 Affiliate.......................................................................................2
2.3 Award...........................................................................................2
2.4 Business Day....................................................................................2
2.5 Commencement Date...............................................................................2
2.6 Condemnation, Condemnor.........................................................................3
2.7 Date of Taking..................................................................................3
2.8 Encumbrance.....................................................................................3
2.9 Event of Default................................................................................3
2.10 Facility........................................................................................3
2.11 Facility Mortgage...............................................................................3
2.12 Facility Mortgagee..............................................................................3
2.13 Fixtures........................................................................................3
2.14 Impositions.....................................................................................3
2.15 Insurance Requirements..........................................................................4
2.16 Intended Use....................................................................................4
2.17 Land............................................................................................4
2.18 Landlord........................................................................................4
2.19 Lease...........................................................................................4
2.19A Lease Year......................................................................................4
2.20 Leased Improvements; Leased Property............................................................4
2.21 Legal Requirements..............................................................................4
2.22 [Intentionally Left Blank]......................................................................4
2.23 Officer's Certificate...........................................................................4
2.24 Overdue Rate....................................................................................4
2.25 Payment Date....................................................................................4
i
Article Page
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2.26 Personal Property...............................................................................5
2.27 Prime Rate......................................................................................5
2.28 Rent............................................................................................5
2.29 Taking..........................................................................................5
2.30 Tenant..........................................................................................5
2.31 Term............................................................................................5
2.32 Unavoidable Delays..............................................................................5
2.33 Unsuitable For Its Intended Use.................................................................5
2.34 Use.............................................................................................5
ARTICLE III.......................................................................................................5
3.1 Rent and Additional Charges.....................................................................5
3.1.1 Rent...................................................................................5
3.1.2 Additional Charges.....................................................................6
3.2 Net Lease.......................................................................................6
ARTICLE IV........................................................................................................6
4.1 Payment of Impositions..........................................................................6
4.2 Notice of Impositions...........................................................................7
4.3 Adjustment of Impositions.......................................................................7
4.4 Utility Charges.................................................................................7
4.5 Insurance Premiums..............................................................................8
ARTICLE V.........................................................................................................8
5.1 No Termination, Abatement.......................................................................8
5.2 Abatement Procedures............................................................................8
ARTICLE VI........................................................................................................8
6.1 Ownership of the Leased Property................................................................8
6.2 Personal Property...............................................................................8
6.3 Transfer of Personal Property to Landlord.......................................................9
6.4 Purchases of Personal Property by Tenant........................................................9
ARTICLE VII.......................................................................................................9
7.1 Condition of the Leased Property................................................................9
7.2 Use of the Leased Property......................................................................9
7.2.1 Approvals, Licenses, Certifications....................................................9
7.2.2 Use As Licensed Skilled Nursing Facility..............................................10
7.2.3 Waste.................................................................................10
7.2.4 Adverse Use...........................................................................10
7.2.5 Environmental Compliance..............................................................10
ARTICLE VIII.....................................................................................................11
8.1 Compliance with Legal and Insurance Requirements, Instruments..................................11
8.2 Legal Requirement Covenants....................................................................12
ii
Article Page
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ARTICLE IX.......................................................................................................12
9.1 Maintenance and Repair.........................................................................12
9.1.1 Maintenance and Repair................................................................12
9.1.2 Landlord's Obligations................................................................12
9.1.3 Contractors. Liens...................................................................13
9.1.4 Condition Upon Surrender..............................................................13
9.2 Encroachments and Restrictions.................................................................13
ARTICLE X........................................................................................................14
10. Construction of Capital Additions to the Leased Property.......................................14
ARTICLE XI.......................................................................................................14
11. Liens..........................................................................................14
ARTICLE XII......................................................................................................14
12. Permitted Contests.............................................................................14
ARTICLE XIII.....................................................................................................15
13.1 General Insurance Requirements.................................................................15
13.2 No Separate Insurance..........................................................................15
ARTICLE XIV......................................................................................................15
14.1 Insurance Proceeds.............................................................................15
14.2 Reconstruction in the Event of Damage or Destruction Covered by
Insurance......................................................................................16
14.2.1 Destruction: Facility Rendered Unsuitable............................................16
14.2.2 Destruction: Facility Not Rendered Unsuitable........................................16
14.2.3 Costs in Excess of Proceeds...........................................................16
14.3 Reconstruction in the Event of Damage or Destruction Not Covered by
Insurance......................................................................................16
14.4 Abatement of Rent..............................................................................17
14.5 Waiver.........................................................................................17
ARTICLE XV.......................................................................................................17
15. Condemnation...................................................................................17
15.1 Definitions....................................................................................17
15.1.1 Condemnation..........................................................................17
15.1.2 Date of Taking........................................................................17
15.1.3 Award.................................................................................17
15.1.4 Condemnor.............................................................................17
15.2 Parties' Rights and Obligations................................................................17
15.3 Total Taking...................................................................................17
15.4 Partial Taking.................................................................................17
15.5 Restoration....................................................................................17
iii
Article Page
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15.6 Award--Distribution............................................................................18
15.6.1.........................................................................................18
15.6.2 18
15.7 Temporary Taking...............................................................................18
ARTICLE XVI......................................................................................................18
16.1 Events of Default..............................................................................18
16.1.1 Event of Default......................................................................18
16.1.2 Payment Default.......................................................................18
16.1.3 Nonpayment Default....................................................................18
16.1.4 Bankruptcy, Insolvency................................................................18
16.1.5 Assignment, Subletting................................................................19
16.1.6 Liquidation or Dissolution............................................................19
16.1.7 Action Against Leasehold Interest.....................................................19
16.1.8 Discontinuation of Operations.........................................................19
16.1.9 Breach of Representations or Warranties...............................................19
16.1.10 Termination of License: Penalties and Fines..........................................20
16.2 Certain Remedies...............................................................................20
16.2.1 Remedies Available....................................................................20
16.2.2.........................................................................................21
16.3 Waiver.........................................................................................21
16.4 Application of Funds...........................................................................21
ARTICLE XVII.....................................................................................................21
17. Landlord's Right to Cure Tenant's Default......................................................21
ARTICLE XVIII [ARTICLE XVIII INTENTIONALLY LEFT BLANK]...........................................................21
ARTICLE XIX [ARTICLE XIX INTENTIONALLY LEFT BLANK]...............................................................21
ARTICLE XX.......................................................................................................22
20. Holding Over.......................................................................................22
ARTICLE XXI [ARTICLE XXI INTENTIONALLY LEFT BLANK]...............................................................22
ARTICLE XXII [ARTICLE XXII INTENTIONALLY LEFT BLANK].............................................................22
ARTICLE XXIII....................................................................................................22
23.1 Indemnification of Landlord....................................................................22
23.2 Indemnification of Tenant......................................................................23
23.3 Survival.......................................................................................23
ARTICLE XXIV.....................................................................................................23
24. Subletting and Assignment......................................................................23
iv
Article Page
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ARTICLE XXV......................................................................................................24
25. Officer's Certificates, Financial Statements, and Disclosures..................................24
25.1 Estoppel Certificate...........................................................................24
25.2 Financial Statements...........................................................................24
25.3 Additional Information.........................................................................25
ARTICLE XXVI.....................................................................................................25
26. Landlord's Right to Inspect....................................................................25
ARTICLE XXVII....................................................................................................26
27. No Waiver......................................................................................26
ARTICLE XXVIII...................................................................................................26
28. Remedies Cumulative............................................................................26
ARTICLE XXIX.....................................................................................................26
29. Acceptance of Surrender........................................................................26
ARTICLE XXX [ARTICLE XXX INTENTIONALLY LEFT BLANK]...............................................................26
ARTICLE XXXI.....................................................................................................26
31. Conveyance by Landlord.........................................................................26
ARTICLE XXXII....................................................................................................26
32. Quiet Enjoyment................................................................................26
ARTICLE XXXIII...................................................................................................27
33. Notices........................................................................................27
33.1 Notice To Tenant...............................................................................27
33.2 Notice To Landlord.............................................................................27
ARTICLE XXXIV [ARTICLE XXXIV INTENTIONALLY LEFT BLANK]...........................................................28
ARTICLE XXXV.....................................................................................................28
35.1 Landlord May Grant Liens.......................................................................28
35.2 Tenant's Right to Cure.........................................................................28
35.3 Breach by Landlord.............................................................................29
ARTICLE XXXVI....................................................................................................29
36. Miscellaneous..................................................................................29
36.1 Survival. Modification. Successors and Assigns...............................................29
36.2 Exculpation of Landlord........................................................................29
36.3 Exculpation of Tenant..........................................................................29
36.4 Transfers of Licenses Upon Termination.........................................................30
36.5 Captions.......................................................................................30
v
Article Page
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36.6 Non-Waiver.....................................................................................30
36.7 Severability. Entire Agreement................................................................30
36.8 Time of Essence................................................................................31
36.9 Collection of Rent.............................................................................31
36.10 Remedies Cumulative............................................................................31
36.11 Governing Law..................................................................................31
36.12 Authority of Parties...........................................................................31
36.13 Transfer of Landlord's Interest................................................................31
36.14 No Partnership or Joint Venture................................................................31
ARTICLE XXXVII...................................................................................................31
37. Attornment: Subordination.....................................................................31
37.1 Tenant Subordination...........................................................................31
37.2 Estoppel Agreement.............................................................................32
37.3 Attorney In Fact Appointment...................................................................32
37.4 Tenant Attornment..............................................................................32
37.5 Notice of Default to Landlord's Mortgages......................................................32
ARTICLE XXXVIII..................................................................................................32
38. Re-Entry During Term...........................................................................32
ARTICLE XXXIX [ARTICLE XXXIX INTENTIONALLY LEFT BLANK]...........................................................33
ARTICLE XXXX.....................................................................................................33
40. Healthcare Licensing, Surveys, Compliance Notices..............................................33
ARTICLE XXXXI....................................................................................................33
41. Right of First Refusal.........................................................................33
vi
vii
viii
ix
x
LIST OF EXHIBITS
----------------
Exhibit 1.1 Legal Description
Exhibit 16.1.1 Other Texas Leases and Subleases
xi
LEASE
THIS LEASE ("Lease") is dated as of October 1, 2001, and is between
Extendicare Health Facilities, Inc., a Wisconsin corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Landlord"), a Texas limited liability company, and
Senior Health-Bremond, LLC, ("Tenant"), a Texas limited liability company,
having its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
ARTICLE I
1. LEASED PROPERTY; TERM.
Upon and subject to the terms and conditions hereinafter set forth,
Landlord hereby rents and leases to Tenant and Tenant hereby rents and leases
from Landlord all of Landlord's rights and interest in and to the following real
and personal property (collectively, the "Leased Property"):
1.1 LAND. The real property described in Exhibit 1.1 attached hereto (the
"Land");
1.2 LEASED IMPROVEMENTS. All buildings, structures, Fixtures (as
hereinafter defined) and other improvements of every kind including, but not
limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits
and lines (on-site and off-site), parking areas and roadways appurtenant to such
buildings and structures presently situated upon the Land (collectively the
"Leased Improvements");
1.3 RELATED RIGHTS. All easements, rights and appurtenances relating to the
Land and the Leased Improvements (collectively the "Related Rights");
1.4 FIXTURES. All permanently affixed equipment, machinery, fixtures, and
other items of real and/or personal property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Leased Improvements, including, without
limitation, all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air and water
pollution control, waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection equipment, and
built-in oxygen and vacuum systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the parties hereto to constitute real
estate, together with all replacements, modifications, alterations and additions
thereto, but specifically excluding all items included within the category of
Personal Property as defined below (collectively the "Fixtures");
1.5 PERSONAL PROPERTY. All machinery, equipment, furniture, furnishings,
movable walls or partitions, trade fixtures or other tangible personal property,
used or useful in Tenant's business on the Leased Property, including without
limitation all items of furniture, furnishings, equipment, together with all
replacements, modifications, alterations, and additions thereto including
without limitation any and all replacements and additions of personal property
made by Tenant during the
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term at Tenant's cost and expense except items, if any, included within the
definition of Fixtures but excluding (a) any Personal Property which is being
leased by the Tenant pursuant to an Equipment Lease as defined below (b) cash
and equivalents, (c) manuals, forms or related documents containing information
proprietary to Landlord, including, without limitation, operational, nursing,
administrative, policy/procedure and other similar manuals, and (d) any and all
software programs, systems, methods, functions and documentation relating
thereto ("Software Programs") which have been developed by Landlord or
Landlord's affiliated companies including without limitation Virtual Care
Provider, Inc. and any Software Programs which are owned by third-party vendors
and have been licensed to Landlord or Landlord's affiliated companies
(collectively the "Personal Property");
To have and to hold for a term of five (5) years (the "Term") commencing on
October 1, 2001 (the "Commencement Date") and ending at11:59 p.m. on September
30, 2006 (the "Expiration Date"), unless this Lease is sooner terminated as
hereinafter provided.
ARTICLE II
2. DEFINITIONS. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as at the time applicable, (iii) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease and (iv) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision:
2.1 ADDITIONAL CHARGES: As defined in Article III.
2.2 AFFILIATE: When used with respect to any corporation, the term
"Affiliate" shall mean any person which, directly or indirectly, controls or is
controlled by or is under common control with such corporation. For the purposes
of this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
through the ownership of voting securities, partnership interests, membership
interests or other equity interests.
2.3 AWARD: As defined in Article XV.
2.4 BUSINESS DAY: Each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which national banks are authorized, or obligated, by law
or executive order, to close.
2.5 COMMENCEMENT DATE: As defined in Article I.
2.6 CONDEMNATION, CONDEMNOR: As defined in Article XV.
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2.7 DATE OF TAKING: As defined in Article XV.
2.8 ENCUMBRANCE: As defined in Article XXXVI.
2.9 EVENT OF DEFAULT: As defined in Article XVI.
2.10 FACILITY: The skilled nursing facility currently operated on the
Leased Property generally described as Bremond Nursing and Rehabilitation
Center, a duly licensed 90 bed skilled nursing facility which beds are all
currently licensed and useable.
2.11 FACILITY MORTGAGE: As defined in Article XIII.
2.12 FACILITY MORTGAGEE: As defined in Article XIII.
2.13 FIXTURES: As defined in Article I.
2.14 IMPOSITIONS: Collectively, all taxes (including, without limitation,
all capital stock and franchise taxes of Landlord, all ad valorem, sales and
use, single business, gross receipts, transaction privilege, rent or similar
taxes), assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not to be completed within the Term), ground rents,
water, sewer or other rents and charges, excises, tax levies, fees (including,
without limitation, license, permit, inspection, authorization and similar
fees), and all other governmental charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Leased Property and/or the Rent or Additional Rent
(including all interest and penalties thereon due to any failure in payment by
Tenant), which at any time during or in respect of the Term hereof may be
assessed or imposed on or in respect of or be a lien upon (a) Landlord or
Landlord's interest in the Leased Property, (b) the Leased Property or any part
thereof or any rent therefrom or any estate, right, title or interest therein,
or (c) any occupancy, operation, use or possession of, or sales from, or
activity conducted on, or in connection with the Leased Property or the leasing
or use of the Leased Property or any part thereof; provided, however, nothing
contained in this Lease shall be construed to require Tenant to pay (1) any tax
based on net income (whether denominated as a franchise or capital stock or
other tax) imposed on Landlord or any other person or (2) any transfer, or net
revenue tax of Landlord or any other person or (3) any tax imposed with respect
to the sale, exchange or other disposition by Landlord of any Leased Property or
the proceeds thereof, or (4), except as expressly provided elsewhere in this
Lease, any principal or interest on any assumed indebtedness on the Leased
Property, except to the extent that any tax, assessment, tax levy or charge,
which Tenant is obligated to pay pursuant to the first sentence of this
definition and which is in effect at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (1) or (2) is levied, assessed or imposed expressly in lieu thereof.
2.15 INSURANCE REQUIREMENTS: All terms of any insurance policy required by
this Lease and all requirements of the issuer of any such policy.
2.16 INTENDED USE: As defined in Section 7.2.2 below
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2.17 LAND: As defined in Article I.
2.18 LANDLORD: As defined in the Preamble.
2.19 LEASE: As defined in the Preamble.
2.19A LEASE YEAR: "Lease Year" shall mean a consecutive 12 calendar month
period commencing on the Commencement Date of this Lease and ending on the day
immediately preceding the anniversary of said Commencement Date. In the event
that the Commencement Date is not the first day of a month, the Lease Year shall
include the period from the Commencement Date through the end of the month in
which the Commencement Date occurs and for that Lease Year the Lease Year shall
be a 12 consecutive month period plus the additional period from the
Commencement Date to the end of the month in which the Commencement Date occurs.
2.20 LEASED IMPROVEMENTS; LEASED PROPERTY: Each as defined in Article I.
2.21 LEGAL REQUIREMENTS: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting either the Leased Property, the construction,
use or alteration thereof, or the ownership and/or operation of the Facility as
a skilled nursing facility and any related services whether now or hereafter
enacted and in force, including without limitation any and all laws relating to
the licensure of the Facility as a skilled nursing facility and the
certification of the Facility under the Medicare and State Medicaid programs,
including any which may (i) require repairs, modifications or alterations in or
to the Leased Property or (ii) in any way adversely affect the use and enjoyment
thereof, and all permits, licenses and authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments, either of record or known to Tenant (other than encumbrances
created by Landlord without the consent of Tenant), at any time in force
affecting the Leased Property (collectively hereafter the "Laws").
2.22 [INTENTIONALLY LEFT BLANK].
2.23 OFFICER'S CERTIFICATE: A certificate of Tenant signed by an officer
authorized to so sign by the board of directors or by-laws.
2.24 OVERDUE RATE: On any date, a rate equal to 4% above the Prime Rate,
but in no event greater than the maximum rate then permitted under applicable
law.
2.25 PAYMENT DATE: Any due date for the payment of the installments of
Rent, Additional Charges or any other sums payable under this Lease.
2.26 PERSONAL PROPERTY: As defined in Article I.
2.27 PRIME RATE: On any date, a rate equal to the annual rate on such date
announced by Bank of America, N.A. to be its prime rate for 90-day unsecured
loans to its corporate borrowers
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of the highest credit standing.
2.28 RENT: The amounts described in Article III.
2.29 TAKING: A taking or voluntary conveyance during the Term hereof of all
or part of the Leased Property, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of any condemnation
or other eminent domain proceeding affecting the Leased Property whether or not
the same shall have actually been commenced.
2.30 TENANT: As defined in the Preamble.
2.31 TERM: As defined in Article I.
2.32 UNAVOIDABLE DELAYS: Delays due to strikes, lockouts, inability to
procure materials, power failure, acts of God, governmental restrictions, enemy
action, civil commotion, fire, unavoidable casualty or other causes beyond the
control of the party responsible for performing an obligation hereunder,
provided that lack of funds shall not be deemed a cause beyond the control of
either party hereto unless such lack of funds is caused by the failure of the
other party hereto to perform any obligations of such party, under this Lease or
any guaranty of this Lease.
2.33 UNSUITABLE FOR ITS INTENDED USE: A state or condition of the Facility
such that by reason of damage or destruction, or a partial taking by
condemnation, in the good faith judgment of Landlord and Tenant, reasonably
exercised, the Facility cannot be operated on a commercially practicable basis
for its Intended Use taking into account, among other relevant factors, the
number of usable beds affected by such damage or destruction or partial taking.
2.34 USE: As defined in 7.2.2.
ARTICLE III
3.1 RENT AND ADDITIONAL CHARGES. Tenant will pay to Landlord or directly
to the appropriate entity in the case of Impositions and Additional Charges in
lawful money of the United States of America which shall be legal tender for the
payment of public and private debts at Landlord's address set forth above or at
such other place or to such other person, firms or corporations as Landlord from
time to time may designate in writing, Rent (as defined below), and Additional
Charges (as defined below) during the Term, as follows:
3.1.1 RENT. The Tenant hereby covenants and agrees to pay to the
Landlord, without any deduction or setoff whatsoever and without any demand or
notice, the fixed annual rent (subject to annual adjustments described below) in
the amount of Two Hundred Eighteen Thousand Dollars ($218,000) ("Annual Rent").
The Fixed Annual Rent shall be paid in equal consecutive monthly installments of
Eighteen Thousand One Hundred Sixty-Seven Dollars ($18,167), in advance on or
before the fifth day of each month, time being of the essence ("Monthly Rent").
The Monthly Rent shall be adjusted with any adjustment to the Annual Rent. All
payments shall be made to Landlord at the address set forth in the notice
section hereof or at such other place as the Landlord
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may designate from time to time in writing. In the event that the first and last
months of the Term are not full calendar months, the Monthly Rent for such
months shall be prorated.
The Annual Rent shall be increased on the anniversary date of each year
during the Term of this Lease by an amount equal to the percentage increase, if
any, in the average Medicaid per diem received by the Facility since the
Commencement Date of the Lease and, thereafter, by the average Medicaid per diem
received by the Facility since the date of the last Annual Rent increase. The
increases shall be set forth in an Addendum to the Lease.
3.1.2 ADDITIONAL CHARGES. In addition to the Rent, (1) Tenant will
also pay and discharge as and when due and payable all other amounts,
liabilities, obligations and Impositions which Tenant assumes or agrees to pay
under this Lease including without limitation all Impositions and charges, costs
and expenses described in Section 2.22, plus sales tax, and (2) in the event of
any failure on the part of Tenant to pay any of those items referred to in
clause (1) above, Tenant will also promptly pay and discharge every fine,
penalty, interest and cost which may be added for non-payment or late payment of
such items (the items referred to in clauses (1) and (2) above being referred to
herein collectively as the "Additional Charges"), and Landlord shall have all
legal, equitable and contractual rights, powers and remedies provided either in
this Lease or by statute or otherwise in the case of non-payment of the
Additional Charges as in the case of non-payment of the Rent. If any installment
of Rent, or Additional Charges (but only as to those Additional Charges which
are payable directly to Landlord) shall not be paid within three (3) Business
Days after its due date, Tenant will pay Landlord on demand, as Additional
Charges, a late charge (to the extent permitted by law) computed at the Overdue
Rate (or at the maximum rate permitted by law, whichever is the lesser) on the
amount of such installment, from the due date of such installment to the date of
payment thereof. To the extent that Tenant pays any Additional Charges to
Landlord pursuant to any requirement of this Lease, Tenant shall be relieved of
its obligation to pay such Additional Charges to the entity to which they would
otherwise be due.
3.2 NET LEASE. The Rent shall be paid absolutely net to Landlord, so that
this Lease shall yield to Landlord the full amount of Rent and Additional
Charges throughout the Term. It is the express intent of the Landlord and Tenant
that each and every cost and expense of using, operating, maintaining or holding
any interest in the Leased Property (except any federal, state, or local taxes
payable by Landlord on the Rent received by Landlord from its leasing of the
Leased Property) be Tenant's sole cost and responsibility whether foreseen or
unforeseen, ordinary or extraordinary.
ARTICLE IV
4.1 PAYMENT OF IMPOSITIONS. Subject to Article XII relating to permitted
contests, Tenant will pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible, and will simultaneously with
such payment, furnish to Landlord copies of official receipts or other
satisfactory proof evidencing such payments. Tenant's obligation to pay such
Impositions shall be deemed absolutely fixed upon the date such Impositions
become a lien upon the Leased Property or any part thereof. If any such
Imposition may, at the option of the taxpayer, lawfully be paid in installments
(whether or not interest shall accrue on the unpaid balance of such Imposition),
Tenant
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may exercise the option to pay the same (and any accrued interest on the unpaid
balance of such Imposition) in installments and in such event, shall pay such
installments during the Term hereof (subject to Tenant's right of contest
pursuant to the provisions of Article XII) as the same respectively become due
and before any fine, penalty, premium, further interest or cost may be added
thereto. Landlord, at its expense, shall, to the extent permitted by applicable
law, prepare and file all tax returns and reports as may be required by
governmental authorities in respect of Landlord's net income, gross receipts,
franchise taxes and taxes on its capital stock, and Tenant, at its expense,
shall, to the extent permitted by applicable laws and regulations, prepare and
file all other tax returns and reports in respect of any Imposition as may be
required by governmental authorities. If any refund shall be due from any taxing
authority in respect of any Imposition paid by Tenant, the same shall be paid
over to or retained by Tenant if no Event of Default shall have occurred
hereunder and be continuing. Any such funds retained by Landlord due to an Event
of Default shall be applied as provided in Article XVI. Landlord and Tenant
shall, upon request of the other, provide such data as is maintained by the
party to whom the request is made with respect to the Leased Property as may be
necessary to prepare any required returns and reports. In the event governmental
authorities classify any property covered by this Lease as personal property,
Tenant shall file all personal property tax returns in such jurisdictions where
it may legally so file. Landlord, to the extent it possesses the same, and
Tenant, to the extent it possesses the same, will provide the other party, upon
request, with cost and depreciation records necessary for filing returns for any
property so classified as personal property. Where Landlord is legally required
to file personal property tax returns, Tenant will be provided with copies of
assessment notices indicating a value in excess of the reported value in
sufficient time for Tenant to file a protest. Tenant may, upon notice to
Landlord, at Tenant's option and at Tenant's sole cost and expense, protest,
appeal, or institute such other proceedings as Tenant may deem appropriate to
effect a reduction of real estate or personal property assessments and Landlord,
at Tenant's expense as aforesaid, shall fully cooperate with Tenant in such
protest, appeal, or other action. ▇▇▇▇▇▇▇▇ for reimbursement by Tenant to
Landlord of personal property taxes shall be accompanied by copies of a ▇▇▇▇
therefor and payments thereof which identify the personal property with respect
to which such payments are made.
4.2 NOTICE OF IMPOSITIONS. Landlord shall give prompt notice to Tenant of
all Impositions payable by Tenant hereunder of which Landlord at any time has
knowledge, but Landlord's failure to give any such notice shall in no way
diminish Tenant's obligations hereunder to pay such Impositions.
4.3 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Landlord and Tenant, whether or not such Imposition is imposed
before or after such termination, and Tenant's obligation to pay its prorated
share thereof shall survive such termination.
4.4 UTILITY CHARGES. Tenant will pay or cause to be paid all charges for
electricity, power, gas, oil, water and all other utilities used in the Leased
Property during the Term.
4.5 INSURANCE PREMIUMS. Tenant will pay or cause to be paid all premiums
for the insurance coverage required to be maintained pursuant to Article XIII
during the Term.
ARTICLE V
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5.1 NO TERMINATION, ABATEMENT. Except as otherwise specifically provided
in this Lease, Tenant, to the extent permitted by law, shall remain bound by
this Lease in accordance with its terms and shall neither take any action
without the consent of Landlord to modify, surrender or terminate the same, nor
seek nor be entitled to any abatement, deduction, deferment or reduction of
Rent, or set-off against the Rent, nor shall the respective obligations of
Landlord and Tenant be otherwise affected by reason of (a) any damage to, or
destruction of, any Leased Property or any portion thereof from whatever cause
or any Taking of the Leased Property or any portion thereof, (b) the lawful or
unlawful prohibition of, or restriction upon, Tenant's use of the Leased
Property, or any portion thereof, the interference with such use by any person,
corporation, partnership or other entity, or by reason of eviction by paramount
title; (c) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Landlord or any assignee or transferee of Landlord, or (d) for any
other cause whether similar or dissimilar to any of the foregoing other than a
discharge of Tenant from any such obligations as a matter of law.
5.2 ABATEMENT PROCEDURES. In the event of a partial taking as described in
Section 15.4, temporary taking as described in Section 15.7, or damage to or
destruction of the Leased Property as described in Sections 14.2 and 14.3, which
taking, damage or destruction does not render the Leased Property Unsuitable for
its Primary Intended Use, the Lease shall not terminate, but the Rent shall be
abated in the manner and to the extent that is fair, just and equitable to both
Tenant and Landlord, taking into consideration, among other relevant factors,
the number of usable beds affected by such partial taking or damage or
destruction.
ARTICLE VI
6.1 OWNERSHIP OF THE LEASED PROPERTY. Tenant acknowledges that the Leased
Property is the property of Landlord and that Tenant has only the right to the
exclusive possession and use of the Leased Property upon the terms and
conditions of this Lease.
6.2 PERSONAL PROPERTY. After the Commencement of this Lease, Tenant may
(and shall as provided herein below), at its expense, install, affix, assemble
or place on any portion of the Land or in any of the Leased Improvements, any
items of personal property (for purposes of this Article VI the "New Personal
Property"; as used in any other Article of this Lease, Personal Property
includes all personal property, including New Personal Property), and such New
Personal Property and replacements thereof, shall be at all times the property
of Tenant, free and clear of all liens subject to Landlord's rights set forth in
Section 6.3 hereof. Tenant shall provide and maintain during the entire Lease
Term all Personal Property and New Personal Property, including, without
limitation, all personal property necessary in order to operate the Facility in
compliance with all licensure and certification requirements, in compliance with
all applicable Legal Requirements and Insurance Requirements and otherwise in
accordance with customary practice in the industry for the Intended Use. Upon
expiration or termination of the Lease, Tenant will, at its expense, restore the
Leased Property to the condition required by Section 9.1.4.
6.3 TRANSFER OF PERSONAL PROPERTY TO LANDLORD. Upon the expiration or
earlier
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termination of this Lease, all Personal Property including New Personal Property
shall become the property of Landlord, if not already owned by Landlord, and
Tenant shall execute all documents and take any actions reasonably necessary to
evidence such ownership.
6.4 PURCHASES OF PERSONAL PROPERTY BY TENANT. Nothing in this Lease shall
prohibit Tenant from purchasing or leasing personal property for use in the
Facility subject to Landlord's prior written approval. In such event such
personal property shall be deemed New Personal Property.
ARTICLE VII
7.1 CONDITION OF THE LEASED PROPERTY. Tenant acknowledges receipt and
delivery of possession of the Leased Property and that Tenant has examined and
otherwise has full knowledge of the condition of the Leased Property prior to
the execution and delivery of this Lease and has found the same to be in good
order and repair and satisfactory for its purposes hereunder. Tenant is leasing
the Leased Property "AS IS" in its present condition. Tenant waives any claim or
action against Landlord in respect of the condition of the Leased Property.
Landlord MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF
THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE,
DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT
THE LEASED PROPERTY HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO TENANT.
7.2 USE OF THE LEASED PROPERTY.
7.2.1 APPROVALS, LICENSES, CERTIFICATIONS. Landlord represents that
it has full power and authority to lease the Leased Property subject to the
fulfillment of any conditions precedent set forth herein and subject to
compliance by the Tenant with Tenant's obligations set forth herein. Tenant
covenants that it will proceed with all due diligence and will obtain prior to
the Commencement Date and maintain throughout the Term all approvals, licenses,
certifications and accreditations needed to use and operate the Leased Property
and the Facility under applicable local, state and federal law, including but
not limited to Laws relating to the licensure of the Facility and Medicare
and/or Medicaid certification for its Intended Use (defined below). Tenant
shall, within 48 hours of receipt, forward to the Landlord a complete and
legible copy of any and all violation(s), or noncompliance notice(s), surveys,
deficiencies, and other notices from licensing, certification, accreditation,
and government agencies and insurance carriers relating to the Leased Property.
Tenant shall immediately correct any and all matters set forth in such notice(s)
and provide Landlord with copies of any plans of correction, letters and
documentation relating to such correction and any other information requested by
Landlord.
7.2.2 USE AS LICENSED SKILLED NURSING FACILITY. After the
Commencement Date and during the entire Term, Tenant shall use the Leased
Property and the improvements thereon solely as a licensed skilled nursing
facility and for no other use or purpose ("Intended Use" or "Use"). Tenant shall
not use the Leased Property or any portion thereof for any other use without the
prior written consent of Landlord, which consent may be withheld in the sole
discretion of Landlord. No
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use shall be made or permitted to be made of the Leased Property, and no acts
shall be done, which will cause the cancellation of any insurance policy
covering the Leased Property or any part thereof, nor shall Tenant sell or
otherwise provide to residents or patients therein, or permit to be kept, used
or sold in or about the Leased Property any article which may be prohibited by
law or by the standard form of fire insurance policies, or any other insurance
policies required to be carried hereunder, or fire underwriters regulations.
Tenant shall, at its sole cost, comply in all material respects with all Legal
Requirements applicable to the possession and use of the Leased Property for its
Intended Use as a nursing facility with the number of licensed beds described
herein.
Tenant covenants and agrees that during the Term it shall operate
continuously the Leased Property as a duly licensed and certified skilled
nursing facility and to maintain its certifications for reimbursement and
licensure and its accreditation, if compliance with accreditation standards is
required to maintain the operations of the Facility and if a failure to comply
would adversely affect operations of the Facility. Tenant covenants and agrees
to take any and all actions, at tenant's sole cost and expense, to maintain the
Facility during the Term as a duly licensed Facility for the number of beds, the
licenses, certifications, and accreditations in effect or retroactive to the
Commencement Date and upon expiration or earlier termination to deliver the
Leased Property to Landlord fully licensed, certified and accredited asa skilled
nursing facility duly licensed for the number of beds as of the Commencement
Date and certified for participation in the Medicare and Medicaid programs. Upon
termination of this Lease for any reason, Tenant will return the Leased Property
including without limitation the Facility and all operations conducted at the
Facility qualified and sufficient for licensing by all governmental agencies
having jurisdiction over the Facility as a skilled care nursing facility. The
Leased Property shall be surrendered in good, operable order, condition and
repair. Tenant shall cooperate to assure that the Facility is turned over to the
Landlord or the Landlord's designee in condition suitable to have the operations
at the Facility continue without disruption as a skilled care nursing facility
duly licensed and certified by the Medicare and Medicaid programs.
7.2.3 WASTE. Tenant shall not commit or suffer to be committed any
waste on the Leased Property, or in the Facility, nor shall Tenant cause or
permit any nuisance thereon.
7.2.4 ADVERSE USE. Tenant shall neither suffer nor permit the Leased
Property or any portion thereof, including any Capital Addition, or Personal
Property, to be used in such a manner as (i) might reasonably tend to impair
Landlord's title thereto or to any portion thereof, or (ii) may reasonably make
possible a claim or claims of adverse usage or adverse possession by the public,
as such, or of implied dedication of the Leased Property or any portion thereof.
7.2.5 ENVIRONMENTAL COMPLIANCE. (i) Tenant hereby agrees that as a
material inducement to Landlord entering into this Lease, Tenant covenants that
Tenant shall not cause or permit any "hazardous substance" (as hereinafter
defined) to be placed, held, located or disposed of in, on or at the Leased
Property or any part thereof and neither the Leased Property, nor any part
thereof shall ever be used as a dump site or a storage site (whether permanent
or temporary) for any hazardous substance during the term of this Lease.
(ii) Tenant hereby agrees, to indemnify Landlord and
Landlord's Mortgagee
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and hold Landlord and Landlords Mortgagee harmless from and
against any and all losses, liabilities, including, without
limitation, strict liability, damages, injuries, expenses,
including, without limitation, reasonable attorney's fees,
costs of any settlement or judgment and claims of any and
every kind whatsoever paid, incurred or suffered by, or
asserted against Landlord or Landlord's Mortgagee by any
person or entity or governmental agency for, with respect to,
or as a direct or indirect result of, the presence on or under
or the escape, seepage, leakage, spillage, discharge,
emission, discharging or releasing from the Leased Property of
any hazardous substance, including, without limitation, any
losses, liabilities, including, without limitation, strict
liability, damages, injuries, expenses, including, without
limitation, reasonable attorney's fees, costs of any
settlement or judgment or claims asserted or arising under the
Comprehensive Environmental Response, Compensation and
Liability Act, any so-called federal, state or local "super
fund" or "super lien" laws or other statute, ordinance, code,
rule, regulation, order or decree regulating, relating to or
imposing liability, including, without limitation, strict
liability, or standards of conduct concerning any hazardous
substance.
(iii) For purposes of this Lease, hazardous
substances shall mean and include those elements or compounds
which are contained in the list of hazardous substances
adopted by the United States Environmental Protection Agency
("EPA") or the list of toxic pollutants designated by Congress
or the EPA or which are defined as hazardous, toxic,
pollutant, infectious or radioactive by any other federal,
state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or
imposing liability or standards of conduct concerning, any
hazardous, toxic or dangerous waste, substance or material, as
now or at anytime hereafter in effect other than those
elements or compounds which are not present on the Leased
Property in such amounts and/or quantities so as to be a
regulated element or compound by the EPA or any other federal,
state or local government entity.
ARTICLE VIII
8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS, INSTRUMENTS. Subject
to Article XII regarding permitted contests, Tenant, at its expense, will
promptly (a) comply with all Laws, Legal Requirements and Insurance Requirements
in respect of the Intended Use, operation, maintenance, repair and restoration
of the Leased Property, whether or not compliance therewith shall require
structural changes in any of the Leased Improvements or interfere with the use
and enjoyment of the Leased Property and (b) procure, maintain and comply with
all licenses, certificates of need, provider agreements, conditions of
participation, accreditation standards and other authorizations required for
Intended Use of the Leased Property then being made, and for the proper
erection, installation, operation and maintenance of the Leased Property or any
part thereof, including without limitation any capital additions.
8.2 LEGAL REQUIREMENT COVENANTS. Tenant covenants and agrees that the
Leased Property shall not be used for any unlawful purpose nor shall Tenant
permit any unlawful activity to take place in, on or about the Leased Property.
Tenant further covenants and agrees that Tenant's
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use of the Leased Property and maintenance, alteration, and operation of the
same, and all parts thereof, shall at all times conform to all Laws and Legal
Requirements unless the same are held by a court of competent jurisdiction to be
unlawful. Tenant may, however, upon prior written notice to and the prior
written consent of the Landlord contest the legality or applicability of any
such Laws or Legal Requirement, or any licensure or certification decision if
Tenant maintains such action in good faith, with due diligence, without
prejudice to Landlord's rights hereunder, and at Tenant's sole cost and expense.
If by the terms of any such Laws or Legal Requirement, compliance therewith
pending the prosecution of any such proceeding may legally be delayed without
the occurrence of any lien, charge or liability of any kind against the Facility
or Tenant's leasehold interest therein and without subjecting Tenant or Landlord
to any liability, civil or criminal, for failure so to comply therewith, Tenant
may delay compliance therewith until the final determination of such proceeding.
If any lien, charge or civil or criminal liability would be incurred by reason
of any such delay, Tenant, on the prior written consent of Landlord, may
nonetheless contest as aforesaid and delay as aforesaid provided that such delay
would not subject Landlord to criminal liability or civil damages, fines,
penalties or forfeitures of any nature or kind and Tenant both (a) furnishes to
Landlord security reasonably satisfactory to Landlord against any loss or injury
by reason of such contest or delay, and (b) prosecutes the contest with due
diligence and in good faith.
ARTICLE IX
9.1 MAINTENANCE AND REPAIR.
9.1.1 MAINTENANCE AND REPAIR. Tenant, at its expense, will keep the
Leased Property and all private roadways, sidewalks and curbs appurtenant
thereto and which are under Tenant's control in good order and repair (whether
or not the need for such repairs occurs as a result of Tenant's use, any prior
use, the elements or the age of the Leased Property, or any portion thereof),
and, except as otherwise provided in Article XIV, with reasonable promptness,
make all necessary and appropriate repairs and replacements thereto of every
kind and nature, whether interior or exterior, structural or non-structural,
ordinary or extraordinary, foreseen or unforeseen or arising by reason of a
condition existing prior to the commencement of the Term of this Lease
(concealed or otherwise). All repairs shall, to the extent reasonably
achievable, be at least equivalent in quality to the original work. Tenant shall
not take or omit to take any action, the taking or omission of which might
materially impair the value or the usefulness of the Leased Property or any part
thereof for its Intended Use.
9.1.2 LANDLORD'S OBLIGATIONS. Landlord shall not under any
circumstances be required to build or rebuild any improvements on the Leased
Property, or to make any repairs, replacements, alterations, restorations or
renewals of any nature or description to the Leased Property, whether interior
or exterior, ordinary or extraordinary, structural or non-structural, foreseen
or unforeseen, or to make any expenditure whatsoever with respect thereto, in
connection with this Lease, or to maintain the Leased Property in any way.
Tenant hereby waives, to the extent permitted by law, the right to make repairs
at the expense of Landlord pursuant to any law in effect at the time of the
execution of this Lease or hereafter enacted.
9.1.3 CONTRACTORS. LIENS. Nothing contained in this Lease and no
action or
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inaction by Landlord shall be construed as (i) constituting the consent or
request of Landlord, expressed or implied, to any contractor, subcontractor,
laborer, materialman or vendor to or for the performance of any labor or
services or the furnishing of any materials or other property for the
construction, alteration, addition, repair or demolition of or to the Leased
Property or any part thereof, or (ii) giving Tenant any right, power or
permission to contract for or permit the performance of any labor or services or
the furnishing of any materials or other property as Landlord's Agent or in such
fashion as would permit the making of any claim against Landlord in respect
thereof or to make any agreement that may create, or in any way be the basis
for, any right, title, interest, lien, claim or other encumbrance upon the
estate of Landlord in the Leased Property, or any portion thereof.
9.1.4 CONDITION UPON SURRENDER. Tenant shall, upon the expiration or
prior termination of the Term, vacate and surrender the Leased Property to
Landlord in the condition in which the Leased Property was originally received
from Landlord, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Lease, and except for ordinary
wear and tear (subject to the obligation of Tenant to maintain the Leased
Property in good order and repair during the entire Term of the Lease).
9.2 ENCROACHMENTS AND RESTRICTIONS. If, as a result of action or inaction
by or on behalf of Tenant, any of the Leased Improvements shall, at any time,
encroach upon any property, street or right-of-way adjacent to the Leased
Property, or shall violate the agreements or conditions contained in any lawful
restrictive covenant or other agreement affecting the Leased Property, or any
part thereof, or shall impair the rights of others under any easement or
right-of-way to which the Leased Property is subject, then promptly upon the
request of Landlord or at the behest of any person affected by any such
encroachment, violation or impairment, Tenant shall, at its, expense, subject to
its right to contest the existence of any encroachment, violation or impairment
and in such case, in the event of an adverse final determination, either
(i)obtain valid and effective waivers or settlements of all claims, liabilities
and damages resulting from each such encroachment, violation or impairment,
whether the same shall affect Landlord or Tenant or (ii)make such changes in the
Leased Improvements, and take such other actions, as Tenant in the good faith
exercise of its judgment deems reasonably practicable, to remove such
encroachment, and to end such violation or impairment, including, if necessary,
the alteration of any of the Leased Improvements, and in any event take all such
actions as may be necessary in order to be able to continue the operation of the
Leased Improvements for the Intended Use substantially in the manner and to the
extent the Leased Improvements were operated prior to the assertion of such
violation or encroachment. Any such alteration shall be made in conformity with
the applicable requirements of Article X. Tenant's obligations under this
Section 9.2 shall be in addition to and shall in no way discharge or diminish
any obligation of any insurer under any policy of title or other insurance and
Tenant shall be entitled to a credit for any sums recovered by Landlord under
any such policy of title or other insurance.
ARTICLE X
10. CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY. Without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld by Landlord, Tenant shall make no structural alterations or repairs on
the Leased Property and shall not enlarge or reduce the size of the Facility. No
capital addition shall be made which would tie in or connect any Leased
13
Improvements on the Leased Property with any other improvements on property
adjacent to or near the Leased Property (and not part of the land covered by
this Lease) including, without limitation, tie-ins of buildings or other
structures or utilities, unless Tenant shall have obtained the prior written
approval of Landlord, which approval may be granted or withheld in Landlord's
sole discretion.
ARTICLE XI
11. LIENS. Subject to the provision of Article XII relating to permitted
contests, Tenant shall not directly or indirectly create or allow to remain, and
shall promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) restrictions, liens and other, encumbrances which are consented to in
advance in writing by Landlord, (c) liens for those taxes of Landlord which
Tenant is not required to pay hereunder, (d) liens for Impositions or for sums
resulting from noncompliance with Legal Requirements so long as (1) the same are
not yet past due and payable or are payable without the addition of any fine or
penalty or (2) such liens are in the process of being contested as permitted by
Article XII, and (e) liens of mechanics, laborers, materialmen, suppliers or
vendors for sums either disputed or not yet due, provided that (1) the payment
of such sums shall not be postponed under any related contract for more than
thirty (30) days after the completion of the action giving rise to such lien and
such reserve or other appropriate provisions as shall be required by law or
generally accepted accounting principles shall have been made therefor or (2)
any such liens are in the process of being contested as permitted by Article
XII.
ARTICLE XII
12. PERMITTED CONTESTS. Tenant, on its own or on Landlord's behalf (or in
Landlord's name), but at Tenant's expense, may contest, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition or any Legal
Requirement or Insurance Requirement or any lien, attachment, levy, encumbrance,
charge or claim not otherwise permitted by Article XI, provided that (a) in the
case of an unpaid Imposition, lien, attachment, levy, encumbrance, charge or
claim, the commencement and continuation of such proceedings shall suspend the
collection thereof from Landlord and from the Leased Property, (b) neither the
Leased Property nor any Rent therefrom nor any part thereof or interest therein
would be in any immediate danger of being sold, forfeited, attached or lost, (c)
in the case of a Legal Requirement, Landlord would not be in any immediate
danger of civil or criminal liability for failure to comply therewith pending
the outcome of such proceedings, (d) in the event that any such contest shall
involve a sum of money or potential loss in excess of Fifty Thousand ($50,000)
Dollars, then Tenant shall deliver to Landlord and its counsel an opinion of
Tenant's counsel to the effect set forth in clauses (a), (b) and (c), to the
extent applicable; provided however, that the requirement of delivery of such
opinion of Tenant's counsel may be waived by the Landlord upon prior written
request of the Tenant, (e) in the case of a Legal Requirement and/or an
Imposition, lien, encumbrance or charge, Tenant shall give such reasonable
security as may be demanded by Landlord to insure ultimate payment of the same
and to prevent any sale or forfeiture of the affected Leased Property or the
Rent by reason of such non-payment or noncompliance, provided, however, the
provisions of this Article XII shall not be construed to permit Tenant to
contest the payment of Rent
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(except as to contests concerning the method of computation or the basis of levy
of any Imposition or the basis for the assertion of any other claim) or any
other sums payable by Tenant to Landlord hereunder, (f) in the case of an
Insurance Requirement, the coverage required by Article XIII shall be
maintained, and (g) if such contest be finally resolved against Landlord or
Tenant, Tenant shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or comply with the applicable Legal Requirement or Insurance
Requirement. Landlord, at Tenant's expense, shall execute and deliver to Tenant
such authorizations and other documents as may reasonably be required in any
such contest, and, if reasonably requested by Tenant or if Landlord so desires,
Landlord shall join as a party therein. Tenant shall indemnify, defend, and save
Landlord harmless against any liability, cost or expense of any kind that may be
imposed upon Landlord in connection with any such contest and any loss resulting
therefrom.
ARTICLE XIII
13.1 GENERAL INSURANCE REQUIREMENTS. During the Term of this Lease, Tenant
shall at all times keep the Leased Property, and all property located in or on
the Leased Property, including all Personal Property, insured with the kinds and
amounts of insurance required pursuant to all Legal Requirements. This insurance
shall be written by companies authorized to do insurance business in the State
in which the Leased Property is located. The policies must name Landlord and
Landlord's Mortgagee as an additional insured.
13.2 NO SEPARATE INSURANCE. Tenant shall not, on Tenant's own initiative or
pursuant to the request or requirement of any third party, take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article, to be furnished by, or which may reasonably be
required to be furnished by, Tenant, or increase the amounts of any then
existing insurance by securing an additional policy or additional policies,
unless all parties having an insurable interest in the subject matter of the
insurance, including in all cases Landlord and all Facility Mortgagees, are
included therein as additional insureds, and the loss is payable under said
insurance in the same manner as losses are payable under this Lease. Tenant
shall immediately notify Landlord of the taking out of any such separate
insurance or of the increasing of any of the amounts of the then existing
insurance by securing an additional policy or additional policies.
ARTICLE XIV
14.1 INSURANCE PROCEEDS. All proceeds payable by reason of any loss or
damage to the Leased Property, or any portion thereof, and insured under any
policy of insurance required by Article XIII of this Lease shall be paid to
Landlord and held by Landlord in trust or, if such proceeds exceed $1,000,000,
held in trust by a third party trustee and shall be made available for
reconstruction or repair, as the case may be, of any damage to or destruction of
the Leased Property, or any portion thereof, and shall be paid out by Landlord
from time to time for the reasonable costs of such reconstruction or repair. Any
excess proceeds of insurance remaining after the completion of the restoration
or reconstruction of the Leased Property (or in the event neither Landlord nor
Tenant is required or elects to repair and restore, all such insurance proceeds)
shall be retained by Landlord free and clear upon completion of any such repair
and restoration except as otherwise specifically
15
provided below in this Article XIV. All salvage resulting from any risk covered
by insurance shall belong to Landlord. The parties agree that to the extent the
Landlord's mortgage lender imposes terms which are different from the terms
described herein, the terms of such Lender's Mortgage shall.
14.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE.
14.2.1 DESTRUCTION: FACILITY RENDERED UNSUITABLE. If during the Lease
Term, the Leased Property is totally or partially destroyed from a risk covered
by the insurance described in Article XIII and the Facility thereby is rendered
Unsuitable for Its Intended Use, Tenant shall either (A) promptly restore the
Facility to substantially the same condition as existed immediately before the
damage or destruction, or (B) offer to acquire the Leased Property from
Landlord. In the event Landlord does not accept Tenant's offer to so purchase
the Leased Property, Tenant may either withdraw its offer to purchase the Leased
Property and proceed to restore the Facility to substantially the same condition
as existed immediately before the damage or destruction or terminate the Lease
and Landlord shall be entitled to retain the insurance proceeds. In the event
Tenant performs such restoration of the facility, it shall be entitled to
insurance proceeds paid in connection with the destruction up to the amount paid
by Tenant for such restoration.
14.2.2 DESTRUCTION: FACILITY NOT RENDERED UNSUITABLE. If during the
Lease Term, the Leased Improvements, Personal Property and/or the Fixtures are
totally or partially destroyed from a risk covered by the insurance described in
Article XIII, but the Facility is not thereby rendered Unsuitable for its
Intended Use, Tenant shall promptly restore the Facility to substantially the
same condition as existed immediately before the damage or destruction. Such
damage or destruction shall not terminate this Lease.
14.2.3 COSTS IN EXCESS OF PROCEEDS. If the cost of the repair or
restoration exceeds the amount of proceeds received by Landlord from the
insurance required under Article XIII, Tenant shall be obligated to contribute
any excess amounts needed to restore the Facility. Such difference shall be paid
by Tenant to Landlord to be held in trust together with any other insurance
proceeds for application to the cost of repair and restoration unless this Lease
shall terminate pursuant to this Article XIV.
14.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY
INSURANCE. If during the Lease Term, the Facility is totally or materially
destroyed from a risk not covered by the insurance described in Article XIII,
whether or not such damage or destruction renders the Facility Unsuitable for
Its Primary Intended Use, Tenant shall restore the Facility to substantially the
same condition it was in immediately before such damage or destruction and such
damage or destruction shall not terminate this Lease.
14.4 ABATEMENT OF RENT. This Lease shall remain in full force and effect
and Tenant's obligation to make rent payments and to pay all other charges
required by this Lease shall remain unabated except to the extent provided
otherwise in Section 5.2 above.
14.5 WAIVER. Tenant hereby waives any statutory rights of termination which
may arise by reason of any damage or destruction of the Facility which Landlord
is obligated to restore or may restore under any of the provisions of this
Lease.
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ARTICLE XV
15. CONDEMNATION.
15.1 DEFINITIONS.
15.1.1 CONDEMNATION. "Condemnation" means (a) the exercise of any
governmental power, whether by legal proceedings or otherwise, by a Condemnor,
and (b) a voluntary sale or transfer by Landlord to any Condemnor, either under
threat of condemnation or while legal proceedings for condemnation are pending.
15.1.2 DATE OF TAKING. "Date of Taking" means the date the Condemnor
has the right to possession of the property being condemned.
15.1.3 AWARD. "Award" means all compensation, sums or anything of
value awarded, paid or received on a total or partial condemnation.
15.1.4 CONDEMNOR. "Condemnor" means any public or quasi-public
authority, or private corporation or individual, having the power of
condemnation.
15.2 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
taking of all or any part of the Leased Property or any interest in this Lease
by condemnation, the rights and obligations of the parties shall be determined
by this Article XV.
15.3 TOTAL TAKING. If the Leased Property is totally taken by condemnation,
this Lease shall terminate on the Date of Taking.
15.4 PARTIAL TAKING. If a portion of the Leased Property is taken by
condemnation, this Lease shall remain in effect if the Facility is not thereby
rendered Unsuitable for Its Primary Intended Use, but if the Facility is thereby
rendered Unsuitable for its Primary Intended Use, this Lease shall terminate on
the Date of Taking. If as the result of any such partial taking by condemnation,
this Lease is not terminated as provided above, Tenant shall be entitled to
abatement of rent as provided in Section 5.2.
15.5 RESTORATION. If there is a partial taking of the Leased Property and
this Lease remains in full force and effect pursuant to Section 15.4, Landlord
at its cost shall accomplish all necessary restoration up to but not exceeding
the amount of the award payable to Landlord, as provided herein.
15.6 AWARD--DISTRIBUTION. The entire Award shall belong to and be paid to
Landlord, except that, subject to the rights of the Facility Mortgagees, Tenant
shall be entitled to receive from the Award, if and to the extent such Award
specifically includes such item, the following:
15.6.1 A sum attributable to the value, if any, of the leasehold
interest of Tenant under this Lease, including, if any, relocation payments.
17
15.6.2 Provided, however, that in any event Landlord shall receive
from the Award, subject to the rights of the Facility Mortgagees, no less than
the greater at the time of such Award of the fair market value of the Leased
Property or the purchase price referred to in Exhibit 34.1.
15.7 TEMPORARY TAKING. The taking of the Leased Property, or any part
thereof, by military or other public authority shall constitute a taking by
condemnation only when the use and occupancy by the taking authority has
continued for longer than six (6) months. During any such six (6) month period
all the provisions of this Lease shall remain in full force and effect except
that the Minimum Rent shall be abated or reduced during such period of taking as
provided in Section 5.2.
ARTICLE XVI
16.1 EVENTS OF DEFAULT. If any one or more of the following events
(individually, an "Event of Default") shall occur:
16.1.1 EVENT OF DEFAULT. An Event of Default shall occur under this
Lease, or
16.1.2 PAYMENT DEFAULT. If Tenant shall fail to make payment of the
Rent or other amounts payable by Tenant under this Lease when the same becomes
due and payable and such failure is not cured by Tenant within a period of five
(5) business days after receipt by Tenant of notice thereof from Landlord, or
16.1.3 NONPAYMENT DEFAULT. If Tenant shall fail to observe or perform
any other term, covenant or condition of this Lease and such failure is not
cured by Tenant within a period of ten (10) days after receipt by Tenant of
notice thereof from Landlord, unless such failure cannot with due diligence be
cured within a period of ten (10) days, in which case such failure shall not be
deemed to continue if Tenant proceeds promptly and with due diligence to cure
the failure and diligently completes the curing thereof, or
16.1.4 BANKRUPTCY, INSOLVENCY. If Tenant shall:
(i) admit in writing its inability to pay its debts generally
as they become due,
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency act,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or of
the whole or any substantial part of its property, or
(v) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other applicable
law or statute of the United States of America or any State thereof, or
18
(vi) if Tenant shall, on a petition in bankruptcy filed
against it, be adjudicated a bankrupt or a court of competent
jurisdiction shall enter an order or decree appointing, without the
consent of Tenant, a receiver of Tenant or of the whole or
substantially all of its property, or approving a petition filed
against it seeking reorganization or arrangement of Tenant under the
Federal bankruptcy laws or any other applicable law or statute of the
United States of America or any State thereof, or
16.1.5 ASSIGNMENT, SUBLETTING. Assign, sublet or otherwise transfer
this Lease or the Facility or Leased Property without Landlord's consent as
required by Section 24 hereof.
16.1.6 LIQUIDATION OR DISSOLUTION. If Tenant shall be liquidated or
dissolved, or shall begin proceedings toward such liquidation or dissolution, or
shall, in any manner, permit the sale or divestiture of substantially all its
assets other than in connection with a merger or consolidation of Tenant into,
or a sale of substantially all of Tenant's assets to, another corporation,
unless the survivor of such merger or the purchaser of such assets shall assume
all of Tenant's obligations under this Lease by a written instrument, in form
and substance reasonably satisfactory to Landlord, Landlord is provided an
opinion of counsel, reasonably satisfactory to Landlord and addressed to
Landlord stating that such instrument of assumption is valid, binding and
enforceable against the parties thereto in accordance with its terms (subject to
usual bankruptcy and other creditors' rights exceptions), or
16.1.7 ACTION AGAINST LEASEHOLD INTEREST. If the estate or interest
of Tenant in the Leased Property or any part thereof shall be levied upon or
attached in any proceeding and the same shall not be vacated or discharged
within the later of ninety (90) days after commencement thereof or 30 days after
receipt by Tenant of notice thereof from Landlord, (unless Tenant shall be
contesting such lien or attachment in good faith in accordance with Article XII
hereof), or
16.1.8 DISCONTINUATION OF OPERATIONS. If, except as a result of
damage, destruction or a partial or complete condemnation, Tenant voluntarily
ceases operations on the Leased Property for a period in excess of one (1) day,
or
16.1.9 BREACH OF REPRESENTATIONS OR WARRANTIES. If any of the
representations or warranties proves to be untrue when made in any material
respect which materially and adversely affects Landlord, and which is not cured
within ten (10) days after receipt by Tenant of notice from Landlord thereof,
or, if not susceptible of being cured within the ten (10) days, Tenant has
commenced to cure within ten (10) days after notice thereof and has thereafter
diligently proceeded to cure such default in the representation or warranty.
16.1.10 TERMINATION OF LICENSE: PENALTIES AND FINES. If Tenant
receives any violation or noncompliance notices from any authority having
jurisdiction over the Leased Property or the Facility, is threatened by such
authority with loss of licensure or certification for the Facility, is fined or
penalized by such authority or is threatened with the imposition at a fine or
penalty by such authority, then, and in any such event, Landlord may terminate
this Lease by giving Tenant not less
19
than five (5) days' notice of such termination and upon the expiration of the
time fixed in such notice, the Term shall terminate and all rights of Tenant
under this Lease shall cease. Landlord shall have all rights at law and in
equity available to Landlord as a result of Tenant's breach of this Lease.
Tenant shall, to the extent permitted by law, pay as Additional Charges
all costs and expenses incurred by or on behalf of Landlord, including, without
limitation, reasonable attorneys' fees and expenses, as a result of any Event of
Default hereunder.
16.2 CERTAIN REMEDIES.
16.2.1 REMEDIES AVAILABLE. If an Event of Default shall have occurred
(and the event giving rise to such Event of Default has not been cured within
the curative period relating thereto as set forth in Section 16.1 above) and be
continuing, in addition to any other rights or remedies Landlord may have,
Landlord shall have the option to exercise any one or more of the following
remedies, it being agreed that pursuit of any remedy provided in this Lease
shall not preclude pursuit of any other remedy or remedies herein provided or
provided by law, and that any of such remedies may be pursued regardless of
whether or not the Default continues to exist and whether or not Landlord
accepts or has accepted Rent subsequent to the occurrence of such Default:
(a) Terminate this Lease by written notice to Tenant, in
which event Tenant shall immediately surrender possession of the Leased Property
to Landlord and Landlord may reenter and repossess the Leased Property, and, at
Landlord's option, all personal property, fixtures and equipment in the Leased
Property shall thereupon become the property of Landlord; and, in connection
therewith, Landlord may use such force as may be necessary, without being guilty
of trespass, forcible entry, detainer or other tort.
(b) With or without terminating this Lease, and without
notice to Tenant, Landlord, at its option, exercisable in Landlord's sole
discretion, may enter upon the Leased Premises, change the locks, and attempt to
re-let the Leased Premises, without advertisement, by private negotiations and
for any term and rental rate which Landlord in its sole discretion determines.
Tenant shall not be liable to Landlord for the deficiency, if any, between all
rent and other amounts due hereunder for the entire Term hereof and the Rent
paid by the new lessee applicable to the remaining Term hereof (or any part
thereof).
(c) Pursue any and all other rights and remedies
available at law or in equity.
16.2.2 Each right and remedy provided for in this Lease shall be
cumulative and shall be in addition to every other right or remedy provided for
in this Lease or now or hereafter existing at law or in equity or by statute or
otherwise, and the exercise or beginning of the exercise by Landlord of any one
or more of the rights or remedies provided for in this Lease or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Landlord of any and all other rights and
remedies provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise.
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16.3 WAIVER. If this Lease is terminated pursuant to Section 16.1, Tenant
waives, to the extent permitted by applicable law, (a) any right of redemption,
re-entry or repossession, (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this Article XVI, and
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt.
16.4 APPLICATION OF FUNDS. Any payments received by Landlord under any of
the provisions of this Lease during the existence or continuance of any Event of
Default (and such payment is made to Landlord rather than Tenant due to the
existence of an Event of Default) shall be applied to Tenant's obligations in
the order which Landlord may determine or as may be prescribed by the laws of
the State of Texas.
ARTICLE XVII
17. LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT. If Tenant shall fail to
make any payment or to perform any act required to be made or performed under
this Lease, and to cure the same within the relevant time periods provided in
Section 16.1, Landlord, after notice to and demand upon Tenant, and without
waiving or releasing any obligation or Default, may (but shall be under no
obligation to) at any time thereafter make such payment or perform such act for
the account and at the expense of Tenant, and may, to the extent permitted by
law, enter upon the Leased Property for such purpose and take all such action
thereon as, in Landlord's opinion, may be necessary or appropriate therefor. No
such entry shall be deemed an eviction of Tenant. All sums so paid by Landlord
and all costs and expenses (including, without limitation, reasonable attorneys'
fees and expenses, in each case, to the extent permitted by law) so incurred,
together with a late charge thereon (to the extent permitted by law) at the
Overdue Rate from the date on which such sums or expenses are paid or incurred
by Landlord, shall be paid by Tenant to Landlord on demand. The obligations of
Tenant and rights of Landlord contained in this Article shall survive the
expiration or earlier termination of this Lease.
ARTICLE XVIII
[ARTICLE XVIII INTENTIONALLY LEFT BLANK]
ARTICLE XIX
[ARTICLE XIX INTENTIONALLY LEFT BLANK]
ARTICLE XX
20. HOLDING OVER. If Tenant shall for any reason remain in possession of
the Leased Property after the expiration of the Term or earlier termination of
the Term hereof, such possession shall be as a month-to-month tenant at double
the Rent provided for herein. During such period of month-to-month-to-month
tenancy, Tenant shall be obligated to perform and observe all of the terms,
covenants and conditions of this Lease, but shall have no rights hereunder other
than the right, to the extent given by law to month-to-month tenancies, to
continue its occupancy and use of the Leased
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Property. Nothing contained herein shall constitute the consent, express or
implied, of Landlord to the holding over of Tenant after the expiration or
earlier termination of this Lease.
ARTICLE XXI
[ARTICLE XXI INTENTIONALLY LEFT BLANK]
ARTICLE XXII
[ARTICLE XXII INTENTIONALLY LEFT BLANK]
ARTICLE XXIII
23.1 INDEMNIFICATION OF LANDLORD. Notwithstanding the existence of any
insurance provided for in Article XIII, and without regard to the policy limits
of any such insurance, Tenant will protect, indemnify, save harmless and defend
Landlord from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses), to the extent permitted by law,
imposed upon or incurred by or asserted against Landlord by reason of: (a) any
accident, injury to or death of persons or loss of or damage to property
occurring on or about the Leased Property or adjoining sidewalks, including
without limitation any claims of negligence, violation of resident rights,
professional malpractice or other claims, (b) any use, occupancy, possession,
misuse, non-use, condition, maintenance or repair by Tenant of the Leased
Property, (c) any Impositions (which are the obligations of Tenant to pay
pursuant to the applicable provisions of this Lease), (d) any failure on the
part of Tenant to perform or comply with any of the terms of this Lease, (e) any
claims, damages, losses relating to the operation of the Facility including
without limitation employment related claims, (f) any act, omission or
negligence of Tenant, its agents, employees, invitees and others claiming by
through or under Tenant. Any amounts which become payable by Tenant under this
Section shall be paid within ten (10) days after liability therefor on the part
of Tenant is determined by litigation or otherwise, and if not timely paid,
shall bear a late charge (to the extent permitted by law) at the Overdue Rate
from the date of such determination to the date of payment. Tenant, at its
expense, shall contest, resist and defend any such claim, action or proceeding
asserted or instituted against Landlord or may compromise or otherwise dispose
of the same subject to Landlord's prior written approval. To the extent Tenant
makes payments to Landlord under this Article XXIII, Tenant shall become
subrogated to the rights of Landlord for insurance proceeds. Nothing herein
shall be construed as indemnifying Landlord against its own negligent acts or
omissions or willful misconduct.
23.2 INDEMNIFICATION OF TENANT. For the period prior to the Term of this
Agreement, notwithstanding the existence of any insurance provided for in
Article XIII, and without regard to the policy limits of any such insurance,
Landlord will protect, indemnify, save harmless and defend Tenant from and
against all liabilities, obligations, claims damages, penalties, causes of
action, costs and expenses (including, without limitation, reasonable attorneys'
fees and expenses), to the extent
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permitted by law, imposed upon or incurred by or asserted against Tenant by
reason of: (a) any accident, injury to or death of persons or loss of or damage
to property occurring on or about the Leased Property or adjoining sidewalks,
including without limitation any claims of negligence, violation of resident
rights, professional malpractice or other claims occurring prior to the Term of
this Agreement, (b) any use, occupancy, possession, misuse, non-use, condition,
maintenance or repair by Landlord of the Leased Property occurring prior to the
Term of this Agreement, (c) any Impositions (which are the obligations of
Landlord to pay pursuant to the applicable provisions of this Lease) occurring
prior to the Term of this Agreement, (d) any failure on the part of the Landlord
to perform or comply with any of the terms of this Lease or any other agreement
with Tenant, (e) any claims, damages, losses relating to the operation of the
Facility including without limitation employment related claims, occurring prior
to the Term of this Agreement, (f) any act, omission or negligence of Landlord,
its agents, employees, invitees and others claiming by through or under Landlord
occurring prior to the Term of this Agreement, and (g) any matter raised in any
regulatory survey by any federal or state agency concerning the Facility for the
period prior to the Term of this Agreement. Any amounts which become payable by
Landlord under this Section shall be paid within ten (10) days after liability
therefor on the part of the Landlord is determined by litigation or otherwise,
and if not timely paid, shall bear a late charge (to the extent permitted by
law) at the Overdue Rate from the date of such determination to the date of
payment. Landlord, at is expense, shall contest, resist and defend any such
claim, action or proceeding asserted or instituted against Tenant or may
compromise or otherwise dispose of the same as Landlord sees fit. To the extent
Landlord makes payments to Tenant under this Article XXIII, Landlord shall
become subrogated to the rights of Tenant for insurance proceeds. Nothing herein
shall be construed as indemnifying Tenant against its own negligent acts or
omissions or willful misconduct.
23.3 SURVIVAL. Tenant's and Landlord's liability for a breach of the
provisions of this Article arising during the Term hereof shall survive any
termination of this Lease.
ARTICLE XXIV
24. SUBLETTING AND ASSIGNMENT. Tenant shall not, without the prior written
consent of Landlord, which consent Landlord may withhold in its sole discretion,
and Landlord's Mortgagee, convey, pledge, mortgage, encumber or assign this
Lease or any interest hereunder, whether voluntary or by operation of law,
sublease the Leased Premises or any part thereof, or permit the use of the
Leased Premises or any portion thereof by any party other than Tenant, including
any affiliated entity of Tenant. Consent to any assignment or sublease shall not
constitute a waiver of this provision with respect to any other assignment or
sublease, and all later assignments or subleases shall be made likewise only
with the prior written consent of Landlord and Landlord's Mortgagee. Any
subtenant, assignee or successor of Tenant, at the option of Landlord, shall
become directly liable to Landlord for all obligations of Tenant hereunder, but
no transfer, sublease or assignment by Tenant shall relieve Tenant of any
liability hereunder.
ARTICLE XXV
25. OFFICER'S CERTIFICATES, FINANCIAL STATEMENTS, AND DISCLOSURES.
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25.1 ESTOPPEL CERTIFICATE. At any time and from time to time upon Tenant's
receipt of not less than ten (10) days prior written request by Landlord, Tenant
will furnish to Landlord an Officer's Certificate certifying that this Lease is
unmodified and in full force and effect (or that this Lease is in full force and
effect as modified and setting forth the modifications) and the dates to which
the Rent has been paid. Any such certificate furnished pursuant to this Section
may be relied upon by Landlord and any prospective purchaser of the Leased
Property.
25.2 FINANCIAL STATEMENTS. Tenant will furnish the following financial
statements to Landlord:
(i) Within 90 days after the end of each of Tenant's fiscal
years, a copy of the audited (if available, otherwise unaudited)
consolidated balance sheets of Tenant and its consolidated
subsidiaries as of the end of such fiscal year, and related audited
consolidated (if available, otherwise unaudited) consolidated
statements of income, changes in common stock and undistributed
profits and changes in the financial position of Tenant and its
consolidated subsidiaries for such fiscal year, prepared in accordance
with generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved;
(ii) Within 90 days after the end of each of Tenant's fiscal
years, and together with the documents furnished in accordance with
clause (i), an Officer's Certificate stating that to the best of the
signer's knowledge and belief after making due inquiry, Tenant is not
in default in the performance or observance of any of the terms of
this Lease, or if Tenant shall be in default to its knowledge,
specifying all such defaults, the nature thereof, and the steps being
taken to remedy the same;
(iii) Within 30 days after the end of each of Tenant's quarters,
quarterly consolidated financial reports Tenant produces for reporting
purposes and detailed statements of income and detailed operational
statistics regarding occupancy rates, patient mix and patient rates by
type for the Facility; and
(iv) Within 90 days after the end of each of Tenant's fiscal
years, a copy of each cost report filed with the appropriate
governmental agency for each of the Facilities (and all amendments
thereto whether contemporaneously or subsequently filed thereto);
25.3 ADDITIONAL INFORMATION. Tenant shall furnish the following Additional
Information to Landlord:
(i) Within ten (10) days of receipt thereof, copies of all
surveys (complaint, annual or otherwise), along with all accompanying
letters, exhibits and information relating thereto and copies of any
notices from any governmental agency
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relating to an investigation of Tenant's operations including without
limitation HCFA, the OIG, the FBI, the State Medicated Fraud division,
performed by the appropriate governmental agencies for licensing or
certification purposes, and any plan of correction thereto; and
(ii) With reasonable promptness, such other information
respecting the financial condition and affairs of Tenant and the
Facility as Landlord may reasonably request from time to time; and
(iii) Furnish to Landlord, within thirty (30) days of receipt a
copy of any licensing or other agency survey or report and any
statement of deficiencies and/or any other report indicating that any
action is pending or being considered to downgrade the Facility to a
substandard category, and within the time period required by the
particular agency for furnishing a plan of correction also furnish or
cause to be furnished to Landlord a copy of the plan of correction or
other response generated as a result of such survey or report for the
Facility, and correct or cause to be corrected any deficiency, the
curing of which is a condition of continued licensure or for full
participation in any applicable reimbursement program;
(iv) The Landlord further reserves the right to require such
other information relating to the financial affairs or operations of
the Tenant and the Facility at such other times as Landlord shall
reasonably require (including monthly or more frequently), and Tenant
agrees to provide such information to Landlord within three (3) days
from request. All financial statements must be in such form and detail
as the Landlord shall from time to time reasonably request, provided,
however, that Landlord will make reasonable efforts to use Tenant's
existing forms of reports for all purposes.
ARTICLE XXVI
26. LANDLORD'S RIGHT TO INSPECT. Tenant shall permit Landlord and its
authorized representatives to inspect the Leased Property during usual business
hours subject to any security, health, safety or confidentiality requirements of
Tenant or any governmental agency or insurance requirement relating to the
Leased Property, or imposed by law or applicable regulations.
ARTICLE XXVII
27. NO WAIVER. No failure by Landlord or Tenant to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
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ARTICLE XXVIII
28. REMEDIES CUMULATIVE. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Landlord or Tenant now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy and the exercise or beginning of the exercise by Landlord or Tenant
or any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Landlord or Tenant of any or all of such
other rights, powers and remedies.
ARTICLE XXIX
29. ACCEPTANCE OF SURRENDER. No surrender to Landlord of this Lease or of
the Leased Property or any part of any thereof, or of any interest therein,
shall be valid or effective unless agreed to and accepted in writing by Landlord
and no act by Landlord or any representative or agent of Landlord, other than
such a written acceptance by Landlord, shall constitute an acceptance of any
such surrender.
ARTICLE XXX
[ARTICLE XXX INTENTIONALLY LEFT BLANK]
ARTICLE XXXI
31. CONVEYANCE BY LANDLORD. Landlord may convey, transfer or assign this
Lease or the Leased Property without the Tenant's consent.
ARTICLE XXXII
32. QUIET ENJOYMENT. So long as Tenant shall pay all Rent as the same
becomes due and shall fully comply with all of the terms of this Lease and fully
perform its obligations hereunder, Tenant shall peaceably and quietly have, hold
and enjoy the Leased Property for the Term hereof, free of any claim or other
action by Landlord or anyone claiming by, through or under Landlord, but subject
to all liens and encumbrances of record as of the date hereof or hereafter
consented to by Tenant. No failure by Landlord to comply with the foregoing
covenant shall give Tenant any right to cancel or terminate this Lease or ▇▇▇▇▇,
reduce or make a deduction from or offset against the Rent or any other sum
payable under this Lease, or to fail to perform any other obligation of Tenant
hereunder. Notwithstanding the foregoing, Tenant shall have the right, by
separate and independent action to pursue any claim it may have against Landlord
as a result of a breach by Landlord of the covenant of quiet enjoyment contained
in this Section.
ARTICLE XXXIII
33. NOTICES. All notices, demands, requests, consents, approvals and other
26
communications hereunder shall be in writing and delivered or mailed (by
registered or certified mail, return receipt requested and postage prepaid),
addressed to the respective parties, as follows:
33.1 NOTICE TO TENANT.
if to Tenant:
At: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
33.2 NOTICE TO LANDLORD:
if to Landlord:
At:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or to such other address as either party may hereafter designate, and shall be
effective upon receipt.
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ARTICLE XXXIV
[ARTICLE XXXIV INTENTIONALLY LEFT BLANK]
ARTICLE XXXV
35.1 LANDLORD MAY GRANT LIENS. Without the consent of Tenant, Landlord may,
subject to the terms and conditions set forth below in this Section 35.1, from
time to time, directly or indirectly, create or otherwise cause to exist any
lien, encumbrance or title retention agreement ("Encumbrance") upon the Leased
Property, or any portion thereof or interest therein, whether to secure any
borrowing or other means of financing or refinancing. Any such Encumbrance shall
contain the right to prepay (whether or not subject to a prepayment penalty) and
shall provide that it is subject to the rights of Tenant under this Lease,
including the rights of Tenant to acquire the Leased Property pursuant to the
applicable provisions of this Lease, except that Tenant's right of first refusal
to purchase the Leased Property shall not be applicable upon a foreclosure sale
or transfer in lieu thereof; provided, however, that any such purchaser or
transferee shall take title subject to Tenant's rights to acquire the Leased
Property. Any lender which takes an interest in the Leased Property pursuant to
this Article (a) shall agree to give Tenant the same notice, if any, given to
Landlord of any default or acceleration of any obligation underlying any such
mortgage or any sale in foreclosure under such mortgage, (b) shall agree to
permit Tenant to cure any such default on Landlord's behalf within any
applicable cure period, and Tenant shall be reimbursed by Landlord for any and
all out-of-pocket costs incurred to effect any such cure (including reasonable
attorneys' fees), and (c) shall agree to permit Tenant to appear by its
representative and to bid at any sale in foreclosure made with respect to any
such mortgage.
35.2 TENANT'S RIGHT TO CURE. Subject to the provisions of Section 35.3, if
Landlord shall breach any covenant to be performed by it under this Lease,
Tenant, after notice to and demand upon Landlord, without waiving or releasing
any obligation hereunder, and in addition to all other remedies available to
Tenant, may (but shall be under no obligation at any time thereafter to) make
such payment or perform such act for the account and at the expense of Landlord.
The rights of Tenant hereunder to cure and to secure payment from Landlord in
accordance with this Section 35.2 shall survive the termination of this Lease
with respect to the Leased Property.
35.3 BREACH BY LANDLORD. It shall be a breach of this Lease if Landlord
shall fail to observe or perform any term, covenant or condition of this Lease
on its part to be performed and such failure shall continue for a period of
thirty (30) days after notice thereof from Tenant (or such shorter time as may
be required in order to protect the health or welfare of any patients or other
residents of the Leased Property), unless such failure cannot with due diligence
be cured within a period of thirty (30) days, in which case such failure shall
not be deemed to continue if Landlord, within said thirty (30) day period,
proceeds promptly and with due diligence to cure the failure and diligently
completes the curing thereof. The time within which Landlord shall be obligated
to cure any such failure shall also be subject to extension of time due to the
occurrence of any Unavoidable Delay.
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ARTICLE XXXVI
36. MISCELLANEOUS.
36.1 SURVIVAL. MODIFICATION. SUCCESSORS AND ASSIGNS. Anything contained in
this Lease to the contrary notwithstanding, all claims against, and liabilities
of, the Tenant or Landlord arising prior to any date of termination of this
Lease shall survive such termination. If any late charges or similar costs
provided for in any provision of this Lease are based upon a rate in excess of
the maximum rate permitted by applicable law, the parties agree that such
charges shall be fixed at the maximum permissible rate. Neither this Lease nor
any provision hereof may be changed, waived, discharged or terminated except by
an instrument in writing and in recordable form signed by Landlord and Tenant.
All the terms and provisions of this Lease shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
36.2 EXCULPATION OF LANDLORD. Tenant specifically agrees to look solely to
Landlord's interest in the Leased Property for recovery of any judgment from
Landlord, it being specifically agreed that no shareholder, director, officer,
member, partner, or employee of Landlord shall ever be personally liable for any
such judgment or for the payment of any monetary obligation to Tenant. The
provision contained in the foregoing sentence is not intended to, and shall not,
limit any right that Tenant might otherwise have to obtain injunctive relief
against Landlord or Landlord's successors in interest, or any action not
involving the personal liability of Landlord (original or successor).
Furthermore, except as otherwise expressly provided herein, in no event
shall Landlord (original or successor) ever be liable to Tenant for any indirect
or consequential damages suffered by Tenant from whatever cause.
36.3 EXCULPATION OF TENANT. Landlord specifically agrees to look solely to
Tenant's interest in the Leased Property for recovery of any judgment from
Tenant, it being specifically agreed that no shareholder, director, officer,
manager, member, partner, or employee of Tenant shall ever be personally liable
for any such judgment or for the payment of any monetary obligation to Landlord.
The provision contained in the foregoing sentence is not intended to, and shall
not, limit any right that Landlord might otherwise have to obtain injunctive
relief against Tenant or Tenant's successors in interest, or any action not
involving the personal liability of Tenant (original or successor).
Furthermore, except as otherwise expressly provided herein, in no event
shall Tenant (original or successor) ever be liable to Landlord for any indirect
or consequential damages suffered by Landlord from whatever cause.
36.4 TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Landlord's option, Tenant shall use its best efforts
to transfer to Landlord or Landlord's nominee and Tenant shall cooperate with
Landlord or Landlord's nominee in connection with the processing by Landlord or
Landlord's nominee of, any applications for all licenses, operating permits and
other governmental authorization and all contracts, including contracts with
governmental or quasi-governmental entities which may be necessary for the
operation of the Facility;
29
provided that the costs and expenses of any such transfer or the processing of
any such application shall be paid by Landlord or Landlord's nominee.
Notwithstanding anything in this Lease or elsewhere to the contrary, under no
circumstances shall Landlord be obligated to seek or effectuate such a transfer
or application therefore.
36.5 CAPTIONS. Titles, Captions and Notations appearing in this instrument
are provided merely for ease of reference, and the parties hereto expressly
acknowledge and agree that such notations and titles do not constitute a part of
this Lease, have no legal effect whatsoever in determining the rights or
obligations of the parties, and shall have no bearing upon the meaning or
interpretation of this agreement or any portion of it.
36.6 NON-WAIVER. The failure by Landlord, whether once or more, to act upon
a specific breach of any term, covenant or condition herein contained shall not
be deemed to be a waiver of such term, covenant, or condition nor of any
subsequent breach of the same or any other term, covenant or condition herein
contained. Any subsequent acceptance of Rent hereunder by Landlord shall not be
deemed to be a waiver of any preceding breach by Tenant of any term, covenant or
condition of this Lease other than the failure of Tenant timely to pay the
particular rental so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such rent. No covenant, term or
condition of this Lease shall be deemed to have been waived by Landlord unless
such waiver shall be specifically expressed in writing by Landlord.
36.7 SEVERABILITY. ENTIRE AGREEMENT. If any term, covenant or condition of
this Lease or the application thereof to any person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term, covenant, or condition to persons or circumstances
other than those which or to which such may be held invalid or unenforceable,
shall not be affected thereby, and each term, covenant or condition of this
Lease shall be valid and enforceable to the fullest extent permitted by law.
Except for any exhibits, attachments, plats, or other documents as may be
affixed hereto, made a part hereof, and properly identified herewith, this Lease
constitutes the entire contract between the parties, and shall not be otherwise
affected by any other purported undertaking whether written or oral.
36.8 TIME OF ESSENCE. Time shall be deemed to be of the essence with
respect to all provisions of this Lease including without limitation all
provisions relating to the payment of Rent, Impositions, Additional Charges,
Additional Rent, and payments to third parties required to be made by the Tenant
in order to comply with the provisions of this Lease. The fact that the phrase
"time shall be deemed of the essence" or language of similar import has not been
included in every section relating to the payment or performance of obligations
shall not be deemed or construed to indicate that the parties did not intend to
have time be deemed of the essence with respect to such payment or performance.
36.9 COLLECTION OF RENT. No termination of this Lease prior to the normal
ending thereof, by lapse of time or otherwise, shall affect Landlord's right to
collect Rent and all other amounts due Landlord in accordance with the terms of
this Lease.
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36.10 REMEDIES CUMULATIVE. All rights, powers, privileges and remedies
conferred hereunder upon the parties hereto shall be cumulative but not
restrictive to those given by law.
36.11 GOVERNING LAW. The laws of the State of Texas shall govern the
interpretation, validity, performance and enforcement of this Lease, but not
including its conflict of laws rules.
36.12 AUTHORITY OF PARTIES. If Tenant signs as an entity, each person
executing this Lease on behalf of Tenant does hereby covenant and warrant that
Tenant is a duly authorized and existing entity, that Tenant has and is
qualified to do business in the State of Texas and that the entity has full
right and authority to enter into this Lease and that each person signing on
behalf of such entity is authorized to do so.
36.13 TRANSFER OF LANDLORD'S INTEREST. Nothing herein shall in any way
prohibit or restrict Landlord from conveying all or a portion of its right,
title and interest in the Leased Premises and to this Lease to a third party or
to an affiliate of Landlord. Upon any transfer of Landlord's interest in the
Leased Premises and in this Lease to a third party or affiliate of Landlord,
such transferee shall become "Landlord" hereunder and the transferor Landlord
shall have no further obligations hereunder.
36.14 NO PARTNERSHIP OR JOINT VENTURE. This Lease shall not be considered
in any manner a partnership agreement joint venture between Landlord and Tenant.
ARTICLE XXXVII
37. ATTORNMENT: SUBORDINATION.
37.1 TENANT SUBORDINATION. Tenant accepts this Lease subject and
subordinate to any Mortgage, Deed of Trust, Deed to Secure Debt or any other
hypothecation or security now or hereafter placed upon the Leased Premises (any
such instrument hereinafter called a "Mortgage") and to any and all advances
made on the security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. If any holder of a Mortgage (herein
"Landlord's Mortgagee") shall elect to have this Lease prior to the lien of its
Mortgage, and shall give written notice thereof to Tenant, this Lease shall be
deemed prior to such Mortgage, whether this Lease is dated prior or subsequent
to the date of said Mortgage, or the date of recording thereof.
37.2 ESTOPPEL AGREEMENT. Although the provisions of this Article 37 shall
be self-operative, Tenant agrees, upon request of Landlord or Landlord's
Mortgagee, to execute any estoppel certificates and other documents required to
effectuate any attornment, subordination or to make this Lease prior to the lien
of any Mortgage. Tenant's failure to execute such documents within ten (10) days
after written demand shall constitute a material default by Tenant hereunder,
or, at Landlord's option, Landlord shall execute such documents on behalf of
Tenant's attorney-in-fact.
37.3 ATTORNEY IN FACT APPOINTMENT. Tenant does hereby make, constitute and
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irrevocably appoint Landlord as Tenant's attorney-in-fact and in Tenant's name,
place and stead, to execute such documents in accordance with this Article 37
such power of attorney being coupled with an interest.
37.4 TENANT ATTORNMENT. If by reason of a default under the Mortgage upon
the Leased Premises, the interest of Landlord in the Leased Premises is
terminated, the Tenant will attorn to Landlord's Mortgagee at Landlord's
mortgagee's sole option (or to any person or entity to which the Leased Premises
is conveyed by such holder) and will recognize such holder, person or entity as
Tenant's landlord under this Lease. Tenant further waives the provision of any
statute or rule of law now or hereafter in effect which may give or purport to
give Tenant any right of election to terminate this Lease or to surrender
possession of the Leased Premises in the event any proceeding is brought by
Landlord's Mortgagee to terminate the interest of the Landlord in the Leased
Premises, and agrees that this Lease shall not be affected in any way whatsoever
by such proceeding.
37.5 NOTICE OF DEFAULT TO LANDLORD'S MORTGAGES. If the Landlord defaults
under this Lease, Tenant, before taking advantage of any rights or remedies
granted to Tenant or by law, shall notify in writing, certified mail, return
receipt requested, any Landlord's Mortgagee which holds a Mortgage and who has
requested Tenant so to do and given Tenant its mailing address and Tenant shall
allow Landlord's Mortgagee, at Landlord's Mortgagee's sole option, ten (10) days
following receipt of such notice (plus any additional time that may be
reasonably necessary) within which to cure such default. The time given to
Landlord's Mortgagee to cure Landlord's default shall not run concurrently with
any time granted to Landlord to cure such default, but shall run form the later
of Landlord's Mortgagee's receipt of notice from Tenant of Landlord's default or
the expiration of the time period, if any, given to Landlord to cure such
default. Landlord's Mortgagee may, but shall not be obligated to, cure such
default, and Tenant shall accept any such cure by Landlord's Mortgagee.
ARTICLE XXXVIII
38. RE-ENTRY DURING TERM. Landlord, its agents, officers or assigns, and
Landlord's Mortgagee, shall have the right to enter the Leased Premises upon
reasonable prior notice except in emergencies during normal working hours
throughout the term of the Lease for the following purposes: inspecting the
general condition and state of repair of the Leased Property; showing the Leased
Property to any interested party; taking any emergency action which Landlord
deems necessary to protect the Leased Property; inspecting the Leased Property
as required by governmental agencies or insurance companies; or for any other
reasonable purposes. Landlord's right of re-entry and right to inspect the
Leased Property shall be subject to the privacy rights of residents and
regulations pertaining to confidentiality of resident records.
ARTICLE XXXIX
[ARTICLE XXXIX INTENTIONALLY LEFT BLANK]
ARTICLE XXXX
32
40. HEALTHCARE LICENSING, SURVEYS, COMPLIANCE NOTICES. Tenant shall give
Landlord prompt written notice of (a) any notice of loss of Joint Commission or
Accreditation of Healthcare Organizations accreditation, loss of participation
under any material reimbursement program or loss of applicable and material
health care licenses at the Facility and (b) any other material deficiency
notice, compliance order of adverse report issued by any governmental authority
or accreditation commission having jurisdiction over licensing, accreditation or
operation of the Facility or by any governmental authority or private insurance
company pursuant to a provider agreement, which, if not promptly complied with
or cured, would be reasonably likely to result in a material adverse effect on
Tenant.
ARTICLE XXXXI
41. RIGHT OF FIRST REFUSAL. If at any time during the Term of this Lease
Landlord , or any of its affiliated entities, shall receive an offer to sell the
Leased Property, or to enter into a lease of the Leased Property, Tenant shall
have a Right of First Refusal to purchase the Leased Premises or to renew this
Lease on the same terms and conditions as are offered to the Landlord or any of
its affiliates in such Offer to Purchase or Lease. Upon Landlord's notifications
of an offer to purchase or lease of the Leased Property, Landlord shall, within
ten (10) days of such notice, give written notice to Tenant of the proposed
terms and conditions. Tenant shall have fifteen (15) days after written
notification from the Landlord to advise Landlord of its intentions to purchase
the Leased Premises or renew the Lease. In the event Tenant determines not to
exercise its Right of First Refusal, Landlord shall be free to sell the Leased
Premises or lease the Leased Property to the other party on the same terms and
conditions as set forth in the notice provided to Tenant. In the event that the
terms and conditions of the proposed purchase or lease are changed, Landlord
shall advise Tenant in writing of the proposed changes and Tenant shall have
another fifteen (15) days in which to make a determination as to whether to
exercise its Right of First Refusal. In the event the Tenant notifies the
Landlord that the Tenant shall purchase the Leased Property pursuant to its
Right of First Refusal the closing of such purchase shall take place within 120
days from the receipt of such written notice from the Tenant.
33
IN WITNESS WHEREOF, the parties have caused this Lease to be executed and
their respective corporate seals, if any, to be hereunto affixed and attested by
their respective officers thereunto duly authorized.
Landlord: Tenant:
Extendicare Health Facilities, Inc. Senior Health-Bremond, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Senior Vice President
State of Wisconsin By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
County of Milwaukee ----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
The foregoing instrument was acknowledged Its: President
before me this 25th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Senior
Vice-President of Extendicare Health State of Pennsylvania
Facilities, Inc. County of Philadelphia
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ The foregoing instrument was acknowledged
---------------------------------------- before me this 26th day of September, 2001
Notary Public, State of Wisconsin by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as the President of
My commission expires 11-2-2003.
--------------------------------------,
on behalf of the corporation.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Notary Public, State of Pennsylvania
My commission (is permanent)
(expires on 10-31-02)
[Notarial Seal] [Notarial Seal]
EXHIBIT 1.1
TO
LEASE AGREEMENT DATED AS OF OCTOBER 1, 2001
BETWEEN
EXTENDICARE HEALTH FACILITIES, INC., LANDLORD
AND
SENIOR HEALTH-BREMOND, LLC, TENANT
LEGAL DESCRIPTION
EXHIBIT 16.1.1
TO
LEASE AGREEMENT DATED AS OF OCTOBER 1, 2001
BETWEEN
EXTENDICARE HEALTH FACILITIES, INC.,, LANDLORD
AND
SENIOR HEALTH-BREMOND, LLC, TENANT
OTHER TEXAS LEASES AND SUBLEASES
OPERATING LEASE
EXTENDICARE HEALTH FACILITIES, INC.
Landlord
AND
SENIOR HEALTH-RICHLAND, LLC
Tenant
Dated as of October 1, 2001
FACILITY:
RICHLAND HILLS NURSING & REHABILITATION CENTER
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
TABLE OF CONTENTS
Article Page
------- ----
LIST OF EXHIBITS................................................................................................vii
LEASE.............................................................................................................1
ARTICLE I.........................................................................................................1
1. Leased Property; Term...........................................................................1
1.1 Land............................................................................................1
1.2 Leased Improvements.............................................................................1
1.3 Related Rights..................................................................................1
1.4 Fixtures........................................................................................1
1.5 Personal Property...............................................................................1
ARTICLE II........................................................................................................2
2. Definitions.....................................................................................2
2.1 Additional Charges..............................................................................2
2.2 Affiliate.......................................................................................2
2.3 Award...........................................................................................2
2.4 Business Day....................................................................................2
2.5 Commencement Date...............................................................................2
2.6 Condemnation, Condemnor.........................................................................3
2.7 Date of Taking..................................................................................3
2.8 Encumbrance.....................................................................................3
2.9 Event of Default................................................................................3
2.10 Facility........................................................................................3
2.11 Facility Mortgage...............................................................................3
2.12 Facility Mortgagee..............................................................................3
2.13 Fixtures........................................................................................3
2.14 Impositions.....................................................................................3
2.15 Insurance Requirements..........................................................................4
2.16 Intended Use....................................................................................4
2.17 Land............................................................................................4
2.18 Landlord........................................................................................4
2.19 Lease...........................................................................................4
2.19A Lease Year......................................................................................4
2.20 Leased Improvements; Leased Property............................................................4
2.21 Legal Requirements..............................................................................4
2.22 [Intentionally Left Blank]......................................................................4
2.23 Officer's Certificate...........................................................................4
2.24 Overdue Rate....................................................................................4
2.25 Payment Date....................................................................................4
i
2.26 Personal Property...............................................................................5
2.27 Prime Rate......................................................................................5
2.28 Rent............................................................................................5
2.29 Taking..........................................................................................5
2.30 Tenant..........................................................................................5
2.31 Term............................................................................................5
2.32 Unavoidable Delays..............................................................................5
2.33 Unsuitable For Its Intended Use.................................................................5
2.34 Use.............................................................................................5
ARTICLE III.......................................................................................................5
3.1 Rent and Additional Charges.....................................................................5
3.1.1 Rent...................................................................................5
3.1.2 Additional Charges.....................................................................6
3.2 Net Lease.......................................................................................6
ARTICLE IV........................................................................................................6
4.1 Payment of Impositions..........................................................................6
4.2 Notice of Impositions...........................................................................7
4.3 Adjustment of Impositions.......................................................................7
4.4 Utility Charges.................................................................................7
4.5 Insurance Premiums..............................................................................8
ARTICLE V.........................................................................................................8
5.1 No Termination, Abatement.......................................................................8
5.2 Abatement Procedures............................................................................8
ARTICLE VI........................................................................................................8
6.1 Ownership of the Leased Property................................................................8
6.2 Personal Property...............................................................................8
6.3 Transfer of Personal Property to Landlord.......................................................9
6.4 Purchases of Personal Property by Tenant........................................................9
ARTICLE VII.......................................................................................................9
7.1 Condition of the Leased Property................................................................9
7.2 Use of the Leased Property......................................................................9
7.2.1 Approvals, Licenses, Certifications....................................................9
7.2.2 Use As Licensed Skilled Nursing Facility..............................................10
7.2.3 Waste.................................................................................10
7.2.4 Adverse Use...........................................................................10
7.2.5 Environmental Compliance..............................................................10
ARTICLE VIII.....................................................................................................11
8.1 Compliance with Legal and Insurance Requirements, Instruments..................................11
8.2 Legal Requirement Covenants....................................................................12
ii
ARTICLE IX.......................................................................................................12
9.1 Maintenance and Repair.........................................................................12
9.1.1 Maintenance and Repair................................................................12
9.1.2 Landlord's Obligations................................................................12
9.1.3 Contractors. Liens...................................................................13
9.1.4 Condition Upon Surrender..............................................................13
9.2 Encroachments and Restrictions.................................................................13
ARTICLE X........................................................................................................14
10. Construction of Capital Additions to the Leased Property.......................................14
ARTICLE XI.......................................................................................................14
11. Liens..........................................................................................14
ARTICLE XII......................................................................................................14
12. Permitted Contests.............................................................................14
ARTICLE XIII.....................................................................................................15
13.1 General Insurance Requirements.................................................................15
13.2 No Separate Insurance..........................................................................15
ARTICLE XIV......................................................................................................15
14.1 Insurance Proceeds.............................................................................15
14.2 Reconstruction in the Event of Damage or Destruction Covered by
Insurance......................................................................................16
14.2.1 Destruction: Facility Rendered Unsuitable............................................16
14.2.2 Destruction: Facility Not Rendered Unsuitable........................................16
14.2.3 Costs in Excess of Proceeds...........................................................16
14.3 Reconstruction in the Event of Damage or Destruction Not Covered by
Insurance......................................................................................16
14.4 Abatement of Rent..............................................................................17
14.5 Waiver.........................................................................................17
ARTICLE XV.......................................................................................................17
15. Condemnation...................................................................................17
15.1 Definitions....................................................................................17
15.1.1 Condemnation..........................................................................17
15.1.2 Date of Taking........................................................................17
15.1.3 Award.................................................................................17
15.1.4 Condemnor.............................................................................17
15.2 Parties' Rights and Obligations................................................................17
15.3 Total Taking...................................................................................17
15.4 Partial Taking.................................................................................17
15.5 Restoration....................................................................................17
iii
15.6 Award - Distribution...........................................................................18
15.6.1.........................................................................................18
15.6.2.........................................................................................18
15.7 Temporary Taking...............................................................................18
ARTICLE XVI......................................................................................................18
16.1 Events of Default..............................................................................18
16.1.1 Event of Default......................................................................18
16.1.2 Payment Default.......................................................................18
16.1.3 Nonpayment Default....................................................................18
16.1.4 Bankruptcy, Insolvency................................................................18
16.1.5 Assignment, Subletting................................................................19
16.1.6 Liquidation or Dissolution............................................................19
16.1.7 Action Against Leasehold Interest.....................................................19
16.1.8 Discontinuation of Operations.........................................................19
16.1.9 Breach of Representations or Warranties...............................................19
16.1.10 Termination of License: Penalties and Fines..........................................20
16.2 Certain Remedies...............................................................................20
16.2.1 Remedies Available....................................................................20
16.2.2.........................................................................................21
16.3 Waiver.........................................................................................21
16.4 Application of Funds...........................................................................21
ARTICLE XVII.....................................................................................................21
17. Landlord's Right to Cure Tenant's Default......................................................21
ARTICLE XVIII [ARTICLE XVIII INTENTIONALLY LEFT BLANK]...........................................................21
ARTICLE XIX [ARTICLE XIX INTENTIONALLY LEFT BLANK]...............................................................21
ARTICLE XX.......................................................................................................22
20. Holding Over.......................................................................................22
ARTICLE XXI [ARTICLE XXI INTENTIONALLY LEFT BLANK]...............................................................22
ARTICLE XXII [ARTICLE XXII INTENTIONALLY LEFT BLANK].............................................................22
ARTICLE XXIII....................................................................................................22
23.1 Indemnification of Landlord....................................................................22
23.2 Indemnification of Tenant......................................................................23
23.3 Survival.......................................................................................23
ARTICLE XXIV.....................................................................................................23
24. Subletting and Assignment......................................................................23
iv
ARTICLE XXV......................................................................................................24
25. Officer's Certificates, Financial Statements, and Disclosures..................................24
25.1 Estoppel Certificate...........................................................................24
25.2 Financial Statements...........................................................................24
25.3 Additional Information.........................................................................25
ARTICLE XXVI.....................................................................................................25
26. Landlord's Right to Inspect....................................................................25
ARTICLE XXVII....................................................................................................26
27. No Waiver......................................................................................26
ARTICLE XXVIII...................................................................................................26
28. Remedies Cumulative............................................................................26
ARTICLE XXIX.....................................................................................................26
29. Acceptance of Surrender........................................................................26
ARTICLE XXX [ARTICLE XXX INTENTIONALLY LEFT BLANK]...............................................................26
ARTICLE XXXI.....................................................................................................26
31. Conveyance by Landlord.........................................................................26
ARTICLE XXXII....................................................................................................26
32. Quiet Enjoyment................................................................................26
ARTICLE XXXIII...................................................................................................27
33. Notices........................................................................................27
33.1 Notice To Tenant...............................................................................27
33.2 Notice To Landlord.............................................................................27
ARTICLE XXXIV [ARTICLE XXXIV INTENTIONALLY LEFT BLANK]...........................................................28
ARTICLE XXXV.....................................................................................................28
35.1 Landlord May Grant Liens.......................................................................28
35.2 Tenant's Right to Cure.........................................................................28
35.3 Breach by Landlord.............................................................................29
ARTICLE XXXVI....................................................................................................29
36. Miscellaneous..................................................................................29
36.1 Survival. Modification. Successors and Assigns...............................................29
36.2 Exculpation of Landlord........................................................................29
36.3 Exculpation of Tenant..........................................................................29
36.4 Transfers of Licenses Upon Termination.........................................................30
36.5 Captions.......................................................................................30
v
36.6 Non-Waiver.....................................................................................30
36.7 Severability. Entire Agreement................................................................30
36.8 Time of Essence................................................................................31
36.9 Collection of Rent.............................................................................31
36.10 Remedies Cumulative............................................................................31
36.11 Governing Law..................................................................................31
36.12 Authority of Parties...........................................................................31
36.13 Transfer of Landlord's Interest................................................................31
36.14 No Partnership or Joint Venture................................................................31
ARTICLE XXXVII...................................................................................................31
37. Attornment: Subordination.....................................................................31
37.1 Tenant Subordination...........................................................................31
37.2 Estoppel Agreement.............................................................................32
37.3 Attorney In Fact Appointment...................................................................32
37.4 Tenant Attornment..............................................................................32
37.5 Notice of Default to Landlord's Mortgages......................................................32
ARTICLE XXXVIII..................................................................................................32
38. Re-Entry During Term...........................................................................32
ARTICLE XXXIX [ARTICLE XXXIX INTENTIONALLY LEFT BLANK]...........................................................33
ARTICLE XXXX.....................................................................................................33
40. Healthcare Licensing, Surveys, Compliance Notices..............................................33
ARTICLE XXXXI....................................................................................................33
41. Right of First Refusal.........................................................................33
vi
vii
viii
ix
x
LIST OF EXHIBITS
Exhibit 1.1 Legal Description
Exhibit 16.1.1 Other Texas Leases and Subleases
xi
LEASE
THIS LEASE ("Lease") is dated as of October 1, 2001, and is between
Extendicare Health Facilities, Inc., a Wisconsin corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Landlord"), a Texas limited liability company, and
Senior Health-Richland, LLC, ("Tenant"), a Texas limited liability company,
having its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
ARTICLE I
1. LEASED PROPERTY; TERM.
Upon and subject to the terms and conditions hereinafter set forth,
Landlord hereby rents and leases to Tenant and Tenant hereby rents and leases
from Landlord all of Landlord's rights and interest in and to the following real
and personal property (collectively, the "Leased Property"):
1.1 LAND. The real property described in Exhibit 1.1 attached hereto (the
"Land");
1.2 LEASED IMPROVEMENTS. All buildings, structures, Fixtures (as
hereinafter defined) and other improvements of every kind including, but not
limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits
and lines (on-site and off-site), parking areas and roadways appurtenant to such
buildings and structures presently situated upon the Land (collectively the
"Leased Improvements");
1.3 RELATED RIGHTS. All easements, rights and appurtenances relating to
the Land and the Leased Improvements (collectively the "Related Rights");
1.4 FIXTURES. All permanently affixed equipment, machinery, fixtures, and
other items of real and/or personal property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Leased Improvements, including, without
limitation, all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air and water
pollution control, waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection equipment, and
built-in oxygen and vacuum systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the parties hereto to constitute real
estate, together with all replacements, modifications, alterations and additions
thereto, but specifically excluding all items included within the category of
Personal Property as defined below (collectively the "Fixtures");
1.5 PERSONAL PROPERTY. All machinery, equipment, furniture, furnishings,
movable walls or partitions, trade fixtures or other tangible personal property,
used or useful in Tenant's business on the Leased Property, including without
limitation all items of furniture, furnishings, equipment, together with all
replacements, modifications, alterations, and additions thereto including
without limitation any and all replacements and additions of personal property
made by Tenant during the
1
term at Tenant's cost and expense except items, if any, included within the
definition of Fixtures but excluding (a) any Personal Property which is being
leased by the Tenant pursuant to an Equipment Lease as defined below (b) cash
and equivalents, (c) manuals, forms or related documents containing information
proprietary to Landlord, including, without limitation, operational, nursing,
administrative, policy/procedure and other similar manuals, and (d) any and all
software programs, systems, methods, functions and documentation relating
thereto ("Software Programs") which have been developed by Landlord or
Landlord's affiliated companies including without limitation Virtual Care
Provider, Inc. and any Software Programs which are owned by third-party vendors
and have been licensed to Landlord or Landlord's affiliated companies
(collectively the "Personal Property");
To have and to hold for a term of five (5) years (the "Term") commencing on
October 1, 2001 (the "Commencement Date") and ending at11:59 p.m. on September
30, 2006 (the "Expiration Date"), unless this Lease is sooner terminated as
hereinafter provided.
ARTICLE II
2. DEFINITIONS. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as at the time applicable, (iii) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease and (iv) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision:
2.1 ADDITIONAL CHARGES: As defined in Article III.
2.2 AFFILIATE: When used with respect to any corporation, the term
"Affiliate" shall mean any person which, directly or indirectly, controls or is
controlled by or is under common control with such corporation. For the purposes
of this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
through the ownership of voting securities, partnership interests, membership
interests or other equity interests.
2.3 AWARD: As defined in Article XV.
2.4 BUSINESS DAY: Each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which national banks are authorized, or obligated, by law
or executive order, to close.
2.5 COMMENCEMENT DATE: As defined in Article I.
2.6 CONDEMNATION, CONDEMNOR: As defined in Article XV.
2
2.7 DATE OF TAKING: As defined in Article XV.
2.8 ENCUMBRANCE: As defined in Article XXXVI.
2.9 EVENT OF DEFAULT: As defined in Article XVI.
2.10 FACILITY: The skilled nursing facility currently operated on the
Leased Property generally described as Richland Hills Nursing & Rehabilitation
Center, a duly licensed 92 bed skilled nursing facility which beds are all
currently licensed and useable.
2.11 FACILITY MORTGAGE: As defined in Article XIII.
2.12 FACILITY MORTGAGEE: As defined in Article XIII.
2.13 FIXTURES: As defined in Article I.
2.14 IMPOSITIONS: Collectively, all taxes (including, without limitation,
all capital stock and franchise taxes of Landlord, all ad valorem, sales and
use, single business, gross receipts, transaction privilege, rent or similar
taxes), assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not to be completed within the Term), ground rents,
water, sewer or other rents and charges, excises, tax levies, fees (including,
without limitation, license, permit, inspection, authorization and similar
fees), and all other governmental charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Leased Property and/or the Rent or Additional Rent
(including all interest and penalties thereon due to any failure in payment by
Tenant), which at any time during or in respect of the Term hereof may be
assessed or imposed on or in respect of or be a lien upon (a) Landlord or
Landlord's interest in the Leased Property, (b) the Leased Property or any part
thereof or any rent therefrom or any estate, right, title or interest therein,
or (c) any occupancy, operation, use or possession of, or sales from, or
activity conducted on, or in connection with the Leased Property or the leasing
or use of the Leased Property or any part thereof; provided, however, nothing
contained in this Lease shall be construed to require Tenant to pay (1) any tax
based on net income (whether denominated as a franchise or capital stock or
other tax) imposed on Landlord or any other person or (2) any transfer, or net
revenue tax of Landlord or any other person or (3) any tax imposed with respect
to the sale, exchange or other disposition by Landlord of any Leased Property or
the proceeds thereof, or (4), except as expressly provided elsewhere in this
Lease, any principal or interest on any assumed indebtedness on the Leased
Property, except to the extent that any tax, assessment, tax levy or charge,
which Tenant is obligated to pay pursuant to the first sentence of this
definition and which is in effect at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (1) or (2) is levied, assessed or imposed expressly in lieu thereof.
2.15 INSURANCE REQUIREMENTS: All terms of any insurance policy required by
this Lease and all requirements of the issuer of any such policy.
2.16 INTENDED USE: As defined in Section 7.2.2 below
3
2.17 LAND: As defined in Article I.
2.18 LANDLORD: As defined in the Preamble.
2.19 LEASE: As defined in the Preamble.
2.19A LEASE YEAR: "Lease Year" shall mean a consecutive 12 calendar month
period commencing on the Commencement Date of this Lease and ending on the day
immediately preceding the anniversary of said Commencement Date. In the event
that the Commencement Date is not the first day of a month, the Lease Year shall
include the period from the Commencement Date through the end of the month in
which the Commencement Date occurs and for that Lease Year the Lease Year shall
be a 12 consecutive month period plus the additional period from the
Commencement Date to the end of the month in which the Commencement Date occurs.
2.20 LEASED IMPROVEMENTS; LEASED PROPERTY: Each as defined in Article I.
2.21 LEGAL REQUIREMENTS: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting either the Leased Property, the construction,
use or alteration thereof, or the ownership and/or operation of the Facility as
a skilled nursing facility and any related services whether now or hereafter
enacted and in force, including without limitation any and all laws relating to
the licensure of the Facility as a skilled nursing facility and the
certification of the Facility under the Medicare and State Medicaid programs,
including any which may (i) require repairs, modifications or alterations in or
to the Leased Property or (ii) in any way adversely affect the use and enjoyment
thereof, and all permits, licenses and authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments, either of record or known to Tenant (other than encumbrances
created by Landlord without the consent of Tenant), at any time in force
affecting the Leased Property (collectively hereafter the "Laws").
2.22 [INTENTIONALLY LEFT BLANK].
2.23 OFFICER'S CERTIFICATE: A certificate of Tenant signed by an officer
authorized to so sign by the board of directors or by-laws.
2.24 OVERDUE RATE: On any date, a rate equal to 4% above the Prime Rate,
but in no event greater than the maximum rate then permitted under applicable
law.
2.25 PAYMENT DATE: Any due date for the payment of the installments of
Rent, Additional Charges or any other sums payable under this Lease.
2.26 PERSONAL PROPERTY: As defined in Article I.
2.27 PRIME RATE: On any date, a rate equal to the annual rate on such date
announced by Bank of America, N.A. to be its prime rate for 90-day unsecured
loans to its corporate borrowers
4
of the highest credit standing.
2.28 RENT: The amounts described in Article III.
2.29 TAKING: A taking or voluntary conveyance during the Term hereof of all
or part of the Leased Property, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of any condemnation
or other eminent domain proceeding affecting the Leased Property whether or not
the same shall have actually been commenced.
2.30 TENANT: As defined in the Preamble.
2.31 TERM: As defined in Article I.
2.32 UNAVOIDABLE DELAYS: Delays due to strikes, lockouts, inability to
procure materials, power failure, acts of God, governmental restrictions, enemy
action, civil commotion, fire, unavoidable casualty or other causes beyond the
control of the party responsible for performing an obligation hereunder,
provided that lack of funds shall not be deemed a cause beyond the control of
either party hereto unless such lack of funds is caused by the failure of the
other party hereto to perform any obligations of such party, under this Lease or
any guaranty of this Lease.
2.33 UNSUITABLE FOR ITS INTENDED USE: A state or condition of the Facility
such that by reason of damage or destruction, or a partial taking by
condemnation, in the good faith judgment of Landlord and Tenant, reasonably
exercised, the Facility cannot be operated on a commercially practicable basis
for its Intended Use taking into account, among other relevant factors, the
number of usable beds affected by such damage or destruction or partial taking.
2.34 USE: As defined in 7.2.2.
ARTICLE III
3.1 RENT AND ADDITIONAL CHARGES. Tenant will pay to Landlord or directly
to the appropriate entity in the case of Impositions and Additional Charges in
lawful money of the United States of America which shall be legal tender for the
payment of public and private debts at Landlord's address set forth above or at
such other place or to such other person, firms or corporations as Landlord from
time to time may designate in writing, Rent (as defined below), and Additional
Charges (as defined below) during the Term, as follows:
3.1.1 RENT. The Tenant hereby covenants and agrees to pay to the
Landlord, without any deduction or setoff whatsoever and without any demand or
notice, the fixed annual rent (subject to annual adjustments described below) in
the amount of Two Hundred Sixty-Seven Thousand Dollars ($267,000) ("Annual
Rent"). The Fixed Annual Rent shall be paid in equal consecutive monthly
installments of Twenty-Two Thousand Two Hundred Fifty Dollars ($22,250), in
advance on or before the fifth day of each month, time being of the essence
("Monthly Rent"). The Monthly Rent shall be adjusted with any adjustment to the
Annual Rent. All payments shall be made to Landlord at the address set forth in
the notice section hereof or at such other place as the Landlord
5
may designate from time to time in writing. In the event that the first and last
months of the Term are not full calendar months, the Monthly Rent for such
months shall be prorated.
The Annual Rent shall be increased on the anniversary date of each
year during the Term of this Lease by an amount equal to the percentage
increase, if any, in the average Medicaid per diem received by the Facility
since the Commencement Date of the Lease and, thereafter, by the average
Medicaid per diem received by the Facility since the date of the last Annual
Rent increase. The increases shall be set forth in an Addendum to the Lease.
3.1.2 ADDITIONAL CHARGES. In addition to the Rent, (1) Tenant will
also pay and discharge as and when due and payable all other amounts,
liabilities, obligations and Impositions which Tenant assumes or agrees to pay
under this Lease including without limitation all Impositions and charges, costs
and expenses described in Section 2.22, plus sales tax, and (2) in the event of
any failure on the part of Tenant to pay any of those items referred to in
clause (1) above, Tenant will also promptly pay and discharge every fine,
penalty, interest and cost which may be added for non-payment or late payment of
such items (the items referred to in clauses (1) and (2) above being referred to
herein collectively as the "Additional Charges"), and Landlord shall have all
legal, equitable and contractual rights, powers and remedies provided either in
this Lease or by statute or otherwise in the case of non-payment of the
Additional Charges as in the case of non-payment of the Rent. If any installment
of Rent, or Additional Charges (but only as to those Additional Charges which
are payable directly to Landlord) shall not be paid within three (3) Business
Days after its due date, Tenant will pay Landlord on demand, as Additional
Charges, a late charge (to the extent permitted by law) computed at the Overdue
Rate (or at the maximum rate permitted by law, whichever is the lesser) on the
amount of such installment, from the due date of such installment to the date of
payment thereof. To the extent that Tenant pays any Additional Charges to
Landlord pursuant to any requirement of this Lease, Tenant shall be relieved of
its obligation to pay such Additional Charges to the entity to which they would
otherwise be due.
3.2 NET LEASE. The Rent shall be paid absolutely net to Landlord, so that
this Lease shall yield to Landlord the full amount of Rent and Additional
Charges throughout the Term. It is the express intent of the Landlord and Tenant
that each and every cost and expense of using, operating, maintaining or holding
any interest in the Leased Property (except any federal, state, or local taxes
payable by Landlord on the Rent received by Landlord from its leasing of the
Leased Property) be Tenant's sole cost and responsibility whether foreseen or
unforeseen, ordinary or extraordinary.
ARTICLE IV
4.1 PAYMENT OF IMPOSITIONS. Subject to Article XII relating to permitted
contests, Tenant will pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible, and will simultaneously with
such payment, furnish to Landlord copies of official receipts or other
satisfactory proof evidencing such payments. Tenant's obligation to pay such
Impositions shall be deemed absolutely fixed upon the date such Impositions
become a lien upon the Leased Property or any part thereof. If any such
Imposition may, at the option of the taxpayer, lawfully be paid in installments
(whether or not interest shall accrue on the unpaid balance of such Imposition),
Tenant
6
may exercise the option to pay the same (and any accrued interest on the unpaid
balance of such Imposition) in installments and in such event, shall pay such
installments during the Term hereof (subject to Tenant's right of contest
pursuant to the provisions of Article XII) as the same respectively become due
and before any fine, penalty, premium, further interest or cost may be added
thereto. Landlord, at its expense, shall, to the extent permitted by applicable
law, prepare and file all tax returns and reports as may be required by
governmental authorities in respect of Landlord's net income, gross receipts,
franchise taxes and taxes on its capital stock, and Tenant, at its expense,
shall, to the extent permitted by applicable laws and regulations, prepare and
file all other tax returns and reports in respect of any Imposition as may be
required by governmental authorities. If any refund shall be due from any taxing
authority in respect of any Imposition paid by Tenant, the same shall be paid
over to or retained by Tenant if no Event of Default shall have occurred
hereunder and be continuing. Any such funds retained by Landlord due to an Event
of Default shall be applied as provided in Article XVI. Landlord and Tenant
shall, upon request of the other, provide such data as is maintained by the
party to whom the request is made with respect to the Leased Property as may be
necessary to prepare any required returns and reports. In the event governmental
authorities classify any property covered by this Lease as personal property,
Tenant shall file all personal property tax returns in such jurisdictions where
it may legally so file. Landlord, to the extent it possesses the same, and
Tenant, to the extent it possesses the same, will provide the other party, upon
request, with cost and depreciation records necessary for filing returns for any
property so classified as personal property. Where Landlord is legally required
to file personal property tax returns, Tenant will be provided with copies of
assessment notices indicating a value in excess of the reported value in
sufficient time for Tenant to file a protest. Tenant may, upon notice to
Landlord, at Tenant's option and at Tenant's sole cost and expense, protest,
appeal, or institute such other proceedings as Tenant may deem appropriate to
effect a reduction of real estate or personal property assessments and Landlord,
at Tenant's expense as aforesaid, shall fully cooperate with Tenant in such
protest, appeal, or other action. ▇▇▇▇▇▇▇▇ for reimbursement by Tenant to
Landlord of personal property taxes shall be accompanied by copies of a ▇▇▇▇
therefor and payments thereof which identify the personal property with respect
to which such payments are made.
4.2 NOTICE OF IMPOSITIONS. Landlord shall give prompt notice to Tenant of
all Impositions payable by Tenant hereunder of which Landlord at any time has
knowledge, but Landlord's failure to give any such notice shall in no way
diminish Tenant's obligations hereunder to pay such Impositions.
4.3 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Landlord and Tenant, whether or not such Imposition is imposed
before or after such termination, and Tenant's obligation to pay its prorated
share thereof shall survive such termination.
4.4 UTILITY CHARGES. Tenant will pay or cause to be paid all charges for
electricity, power, gas, oil, water and all other utilities used in the Leased
Property during the Term.
4.5 INSURANCE PREMIUMS. Tenant will pay or cause to be paid all premiums
for the insurance coverage required to be maintained pursuant to Article XIII
during the Term.
ARTICLE V
7
5.1 NO TERMINATION, ABATEMENT. Except as otherwise specifically provided
in this Lease, Tenant, to the extent permitted by law, shall remain bound by
this Lease in accordance with its terms and shall neither take any action
without the consent of Landlord to modify, surrender or terminate the same, nor
seek nor be entitled to any abatement, deduction, deferment or reduction of
Rent, or set-off against the Rent, nor shall the respective obligations of
Landlord and Tenant be otherwise affected by reason of (a) any damage to, or
destruction of, any Leased Property or any portion thereof from whatever cause
or any Taking of the Leased Property or any portion thereof, (b) the lawful or
unlawful prohibition of, or restriction upon, Tenant's use of the Leased
Property, or any portion thereof, the interference with such use by any person,
corporation, partnership or other entity, or by reason of eviction by paramount
title; (c) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Landlord or any assignee or transferee of Landlord, or (d) for any
other cause whether similar or dissimilar to any of the foregoing other than a
discharge of Tenant from any such obligations as a matter of law.
5.2 ABATEMENT PROCEDURES. In the event of a partial taking as described in
Section 15.4, temporary taking as described in Section 15.7, or damage to or
destruction of the Leased Property as described in Sections 14.2 and 14.3, which
taking, damage or destruction does not render the Leased Property Unsuitable for
its Primary Intended Use, the Lease shall not terminate, but the Rent shall be
abated in the manner and to the extent that is fair, just and equitable to both
Tenant and Landlord, taking into consideration, among other relevant factors,
the number of usable beds affected by such partial taking or damage or
destruction.
ARTICLE VI
6.1 OWNERSHIP OF THE LEASED PROPERTY. Tenant acknowledges that the Leased
Property is the property of Landlord and that Tenant has only the right to the
exclusive possession and use of the Leased Property upon the terms and
conditions of this Lease.
6.2 PERSONAL PROPERTY. After the Commencement of this Lease, Tenant may
(and shall as provided herein below), at its expense, install, affix, assemble
or place on any portion of the Land or in any of the Leased Improvements, any
items of personal property (for purposes of this Article VI the "New Personal
Property"; as used in any other Article of this Lease, Personal Property
includes all personal property, including New Personal Property), and such New
Personal Property and replacements thereof, shall be at all times the property
of Tenant, free and clear of all liens subject to Landlord's rights set forth in
Section 6.3 hereof. Tenant shall provide and maintain during the entire Lease
Term all Personal Property and New Personal Property, including, without
limitation, all personal property necessary in order to operate the Facility in
compliance with all licensure and certification requirements, in compliance with
all applicable Legal Requirements and Insurance Requirements and otherwise in
accordance with customary practice in the industry for the Intended Use. Upon
expiration or termination of the Lease, Tenant will, at its expense, restore the
Leased Property to the condition required by Section 9.1.4.
6.3 TRANSFER OF PERSONAL PROPERTY TO LANDLORD. Upon the expiration or
earlier
8
termination of this Lease, all Personal Property including New Personal Property
shall become the property of Landlord, if not already owned by Landlord, and
Tenant shall execute all documents and take any actions reasonably necessary to
evidence such ownership.
6.4 PURCHASES OF PERSONAL PROPERTY BY TENANT. Nothing in this Lease shall
prohibit Tenant from purchasing or leasing personal property for use in the
Facility subject to Landlord's prior written approval. In such event such
personal property shall be deemed New Personal Property.
ARTICLE VII
7.1 CONDITION OF THE LEASED PROPERTY. Tenant acknowledges receipt and
delivery of possession of the Leased Property and that Tenant has examined and
otherwise has full knowledge of the condition of the Leased Property prior to
the execution and delivery of this Lease and has found the same to be in good
order and repair and satisfactory for its purposes hereunder. Tenant is leasing
the Leased Property "AS IS" in its present condition. Tenant waives any claim or
action against Landlord in respect of the condition of the Leased Property.
Landlord MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF
THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE,
DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT
THE LEASED PROPERTY HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO TENANT.
7.2 USE OF THE LEASED PROPERTY.
7.2.1 APPROVALS, LICENSES, CERTIFICATIONS. Landlord represents that it
has full power and authority to lease the Leased Property subject to the
fulfillment of any conditions precedent set forth herein and subject to
compliance by the Tenant with Tenant's obligations set forth herein. Tenant
covenants that it will proceed with all due diligence and will obtain prior to
the Commencement Date and maintain throughout the Term all approvals, licenses,
certifications and accreditations needed to use and operate the Leased Property
and the Facility under applicable local, state and federal law, including but
not limited to Laws relating to the licensure of the Facility and Medicare
and/or Medicaid certification for its Intended Use (defined below). Tenant
shall, within 48 hours of receipt, forward to the Landlord a complete and
legible copy of any and all violation(s), or noncompliance notice(s), surveys,
deficiencies, and other notices from licensing, certification, accreditation,
and government agencies and insurance carriers relating to the Leased Property.
Tenant shall immediately correct any and all matters set forth in such notice(s)
and provide Landlord with copies of any plans of correction, letters and
documentation relating to such correction and any other information requested by
Landlord.
7.2.2 USE AS LICENSED SKILLED NURSING FACILITY. After the Commencement
Date and during the entire Term, Tenant shall use the Leased Property and the
improvements thereon solely as a licensed skilled nursing facility and for no
other use or purpose ("Intended Use" or "Use"). Tenant shall not use the Leased
Property or any portion thereof for any other use without the prior written
consent of Landlord, which consent may be withheld in the sole discretion of
Landlord. No
9
use shall be made or permitted to be made of the Leased Property, and no acts
shall be done, which will cause the cancellation of any insurance policy
covering the Leased Property or any part thereof, nor shall Tenant sell or
otherwise provide to residents or patients therein, or permit to be kept, used
or sold in or about the Leased Property any article which may be prohibited by
law or by the standard form of fire insurance policies, or any other insurance
policies required to be carried hereunder, or fire underwriters regulations.
Tenant shall, at its sole cost, comply in all material respects with all Legal
Requirements applicable to the possession and use of the Leased Property for its
Intended Use as a nursing facility with the number of licensed beds described
herein.
Tenant covenants and agrees that during the Term it shall operate
continuously the Leased Property as a duly licensed and certified skilled
nursing facility and to maintain its certifications for reimbursement and
licensure and its accreditation, if compliance with accreditation standards is
required to maintain the operations of the Facility and if a failure to comply
would adversely affect operations of the Facility. Tenant covenants and agrees
to take any and all actions, at tenant's sole cost and expense, to maintain the
Facility during the Term as a duly licensed Facility for the number of beds, the
licenses, certifications, and accreditations in effect or retroactive to the
Commencement Date and upon expiration or earlier termination to deliver the
Leased Property to Landlord fully licensed, certified and accredited asa skilled
nursing facility duly licensed for the number of beds as of the Commencement
Date and certified for participation in the Medicare and Medicaid programs. Upon
termination of this Lease for any reason, Tenant will return the Leased Property
including without limitation the Facility and all operations conducted at the
Facility qualified and sufficient for licensing by all governmental agencies
having jurisdiction over the Facility as a skilled care nursing facility. The
Leased Property shall be surrendered in good, operable order, condition and
repair. Tenant shall cooperate to assure that the Facility is turned over to the
Landlord or the Landlord's designee in condition suitable to have the operations
at the Facility continue without disruption as a skilled care nursing facility
duly licensed and certified by the Medicare and Medicaid programs.
7.2.3 WASTE. Tenant shall not commit or suffer to be committed any
waste on the Leased Property, or in the Facility, nor shall Tenant cause or
permit any nuisance thereon.
7.2.4 ADVERSE USE. Tenant shall neither suffer nor permit the Leased
Property or any portion thereof, including any Capital Addition, or Personal
Property, to be used in such a manner as (i) might reasonably tend to impair
Landlord's title thereto or to any portion thereof, or (ii) may reasonably make
possible a claim or claims of adverse usage or adverse possession by the public,
as such, or of implied dedication of the Leased Property or any portion thereof.
7.2.5 ENVIRONMENTAL COMPLIANCE. (i) Tenant hereby agrees that as a
material inducement to Landlord entering into this Lease, Tenant covenants that
Tenant shall not cause or permit any "hazardous substance" (as hereinafter
defined) to be placed, held, located or disposed of in, on or at the Leased
Property or any part thereof and neither the Leased Property, nor any part
thereof shall ever be used as a dump site or a storage site (whether permanent
or temporary) for any hazardous substance during the term of this Lease.
(ii) Tenant hereby agrees, to indemnify Landlord and Landlord's
Mortgagee
10
and hold Landlord and Landlords Mortgagee harmless from and against
any and all losses, liabilities, including, without limitation, strict
liability, damages, injuries, expenses, including, without limitation,
reasonable attorney's fees, costs of any settlement or judgment and
claims of any and every kind whatsoever paid, incurred or suffered by,
or asserted against Landlord or Landlord's Mortgagee by any person or
entity or governmental agency for, with respect to, or as a direct or
indirect result of, the presence on or under or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releasing from
the Leased Property of any hazardous substance, including, without
limitation, any losses, liabilities, including, without limitation,
strict liability, damages, injuries, expenses, including, without
limitation, reasonable attorney's fees, costs of any settlement or
judgment or claims asserted or arising under the Comprehensive
Environmental Response, Compensation and Liability Act, any so-called
federal, state or local "super fund" or "super lien" laws or other
statute, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability, including, without
limitation, strict liability, or standards of conduct concerning any
hazardous substance.
(iii) For purposes of this Lease, hazardous substances shall mean
and include those elements or compounds which are contained in the
list of hazardous substances adopted by the United States
Environmental Protection Agency ("EPA") or the list of toxic
pollutants designated by Congress or the EPA or which are defined as
hazardous, toxic, pollutant, infectious or radioactive by any other
federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing
liability or standards of conduct concerning, any hazardous, toxic or
dangerous waste, substance or material, as now or at anytime hereafter
in effect other than those elements or compounds which are not present
on the Leased Property in such amounts and/or quantities so as to be a
regulated element or compound by the EPA or any other federal, state
or local government entity.
ARTICLE VIII
8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS, INSTRUMENTS. Subject
to Article XII regarding permitted contests, Tenant, at its expense, will
promptly (a) comply with all Laws, Legal Requirements and Insurance Requirements
in respect of the Intended Use, operation, maintenance, repair and restoration
of the Leased Property, whether or not compliance therewith shall require
structural changes in any of the Leased Improvements or interfere with the use
and enjoyment of the Leased Property and (b) procure, maintain and comply with
all licenses, certificates of need, provider agreements, conditions of
participation, accreditation standards and other authorizations required for
Intended Use of the Leased Property then being made, and for the proper
erection, installation, operation and maintenance of the Leased Property or any
part thereof, including without limitation any capital additions.
8.2 LEGAL REQUIREMENT COVENANTS. Tenant covenants and agrees that the
Leased Property shall not be used for any unlawful purpose nor shall Tenant
permit any unlawful activity to take place in, on or about the Leased Property.
Tenant further covenants and agrees that Tenant's
11
use of the Leased Property and maintenance, alteration, and operation of the
same, and all parts thereof, shall at all times conform to all Laws and Legal
Requirements unless the same are held by a court of competent jurisdiction to be
unlawful. Tenant may, however, upon prior written notice to and the prior
written consent of the Landlord contest the legality or applicability of any
such Laws or Legal Requirement, or any licensure or certification decision if
Tenant maintains such action in good faith, with due diligence, without
prejudice to Landlord's rights hereunder, and at Tenant's sole cost and expense.
If by the terms of any such Laws or Legal Requirement, compliance therewith
pending the prosecution of any such proceeding may legally be delayed without
the occurrence of any lien, charge or liability of any kind against the Facility
or Tenant's leasehold interest therein and without subjecting Tenant or Landlord
to any liability, civil or criminal, for failure so to comply therewith, Tenant
may delay compliance therewith until the final determination of such proceeding.
If any lien, charge or civil or criminal liability would be incurred by reason
of any such delay, Tenant, on the prior written consent of Landlord, may
nonetheless contest as aforesaid and delay as aforesaid provided that such delay
would not subject Landlord to criminal liability or civil damages, fines,
penalties or forfeitures of any nature or kind and Tenant both (a) furnishes to
Landlord security reasonably satisfactory to Landlord against any loss or injury
by reason of such contest or delay, and (b) prosecutes the contest with due
diligence and in good faith.
ARTICLE IX
9.1 MAINTENANCE AND REPAIR.
9.1.1 MAINTENANCE AND REPAIR. Tenant, at its expense, will keep the
Leased Property and all private roadways, sidewalks and curbs appurtenant
thereto and which are under Tenant's control in good order and repair (whether
or not the need for such repairs occurs as a result of Tenant's use, any prior
use, the elements or the age of the Leased Property, or any portion thereof),
and, except as otherwise provided in Article XIV, with reasonable promptness,
make all necessary and appropriate repairs and replacements thereto of every
kind and nature, whether interior or exterior, structural or non-structural,
ordinary or extraordinary, foreseen or unforeseen or arising by reason of a
condition existing prior to the commencement of the Term of this Lease
(concealed or otherwise). All repairs shall, to the extent reasonably
achievable, be at least equivalent in quality to the original work. Tenant shall
not take or omit to take any action, the taking or omission of which might
materially impair the value or the usefulness of the Leased Property or any part
thereof for its Intended Use.
9.1.2 LANDLORD'S OBLIGATIONS. Landlord shall not under any
circumstances be required to build or rebuild any improvements on the Leased
Property, or to make any repairs, replacements, alterations, restorations or
renewals of any nature or description to the Leased Property, whether interior
or exterior, ordinary or extraordinary, structural or non-structural, foreseen
or unforeseen, or to make any expenditure whatsoever with respect thereto, in
connection with this Lease, or to maintain the Leased Property in any way.
Tenant hereby waives, to the extent permitted by law, the right to make repairs
at the expense of Landlord pursuant to any law in effect at the time of the
execution of this Lease or hereafter enacted.
9.1.3 CONTRACTORS. LIENS. Nothing contained in this Lease and no
action or
12
inaction by Landlord shall be construed as (i) constituting the consent or
request of Landlord, expressed or implied, to any contractor, subcontractor,
laborer, materialman or vendor to or for the performance of any labor or
services or the furnishing of any materials or other property for the
construction, alteration, addition, repair or demolition of or to the Leased
Property or any part thereof, or (ii) giving Tenant any right, power or
permission to contract for or permit the performance of any labor or services or
the furnishing of any materials or other property as Landlord's Agent or in such
fashion as would permit the making of any claim against Landlord in respect
thereof or to make any agreement that may create, or in any way be the basis
for, any right, title, interest, lien, claim or other encumbrance upon the
estate of Landlord in the Leased Property, or any portion thereof.
9.1.4 CONDITION UPON SURRENDER. Tenant shall, upon the expiration or
prior termination of the Term, vacate and surrender the Leased Property to
Landlord in the condition in which the Leased Property was originally received
from Landlord, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Lease, and except for ordinary
wear and tear (subject to the obligation of Tenant to maintain the Leased
Property in good order and repair during the entire Term of the Lease).
9.2 ENCROACHMENTS AND RESTRICTIONS. If, as a result of action or inaction
by or on behalf of Tenant, any of the Leased Improvements shall, at any time,
encroach upon any property, street or right-of-way adjacent to the Leased
Property, or shall violate the agreements or conditions contained in any lawful
restrictive covenant or other agreement affecting the Leased Property, or any
part thereof, or shall impair the rights of others under any easement or
right-of-way to which the Leased Property is subject, then promptly upon the
request of Landlord or at the behest of any person affected by any such
encroachment, violation or impairment, Tenant shall, at its, expense, subject to
its right to contest the existence of any encroachment, violation or impairment
and in such case, in the event of an adverse final determination, either
(i)obtain valid and effective waivers or settlements of all claims, liabilities
and damages resulting from each such encroachment, violation or impairment,
whether the same shall affect Landlord or Tenant or (ii)make such changes in the
Leased Improvements, and take such other actions, as Tenant in the good faith
exercise of its judgment deems reasonably practicable, to remove such
encroachment, and to end such violation or impairment, including, if necessary,
the alteration of any of the Leased Improvements, and in any event take all such
actions as may be necessary in order to be able to continue the operation of the
Leased Improvements for the Intended Use substantially in the manner and to the
extent the Leased Improvements were operated prior to the assertion of such
violation or encroachment. Any such alteration shall be made in conformity with
the applicable requirements of Article X. Tenant's obligations under this
Section 9.2 shall be in addition to and shall in no way discharge or diminish
any obligation of any insurer under any policy of title or other insurance and
Tenant shall be entitled to a credit for any sums recovered by Landlord under
any such policy of title or other insurance.
ARTICLE X
10. CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY. Without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld by Landlord, Tenant shall make no structural alterations or repairs on
the Leased Property and shall not enlarge or reduce the size of the Facility. No
capital addition shall be made which would tie in or connect any Leased
13
Improvements on the Leased Property with any other improvements on property
adjacent to or near the Leased Property (and not part of the land covered by
this Lease) including, without limitation, tie-ins of buildings or other
structures or utilities, unless Tenant shall have obtained the prior written
approval of Landlord, which approval may be granted or withheld in Landlord's
sole discretion.
ARTICLE XI
11. LIENS. Subject to the provision of Article XII relating to permitted
contests, Tenant shall not directly or indirectly create or allow to remain, and
shall promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) restrictions, liens and other, encumbrances which are consented to in
advance in writing by Landlord, (c) liens for those taxes of Landlord which
Tenant is not required to pay hereunder, (d) liens for Impositions or for sums
resulting from noncompliance with Legal Requirements so long as (1) the same are
not yet past due and payable or are payable without the addition of any fine or
penalty or (2) such liens are in the process of being contested as permitted by
Article XII, and (e) liens of mechanics, laborers, materialmen, suppliers or
vendors for sums either disputed or not yet due, provided that (1) the payment
of such sums shall not be postponed under any related contract for more than
thirty (30) days after the completion of the action giving rise to such lien and
such reserve or other appropriate provisions as shall be required by law or
generally accepted accounting principles shall have been made therefor or (2)
any such liens are in the process of being contested as permitted by Article
XII.
ARTICLE XII
12. PERMITTED CONTESTS. Tenant, on its own or on Landlord's behalf (or in
Landlord's name), but at Tenant's expense, may contest, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition or any Legal
Requirement or Insurance Requirement or any lien, attachment, levy, encumbrance,
charge or claim not otherwise permitted by Article XI, provided that (a) in the
case of an unpaid Imposition, lien, attachment, levy, encumbrance, charge or
claim, the commencement and continuation of such proceedings shall suspend the
collection thereof from Landlord and from the Leased Property, (b) neither the
Leased Property nor any Rent therefrom nor any part thereof or interest therein
would be in any immediate danger of being sold, forfeited, attached or lost, (c)
in the case of a Legal Requirement, Landlord would not be in any immediate
danger of civil or criminal liability for failure to comply therewith pending
the outcome of such proceedings, (d) in the event that any such contest shall
involve a sum of money or potential loss in excess of Fifty Thousand ($50,000)
Dollars, then Tenant shall deliver to Landlord and its counsel an opinion of
Tenant's counsel to the effect set forth in clauses (a), (b) and (c), to the
extent applicable; provided however, that the requirement of delivery of such
opinion of Tenant's counsel may be waived by the Landlord upon prior written
request of the Tenant, (e) in the case of a Legal Requirement and/or an
Imposition, lien, encumbrance or charge, Tenant shall give such reasonable
security as may be demanded by Landlord to insure ultimate payment of the same
and to prevent any sale or forfeiture of the affected Leased Property or the
Rent by reason of such non-payment or noncompliance, provided, however, the
provisions of this Article XII shall not be construed to permit Tenant to
contest the payment of Rent
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(except as to contests concerning the method of computation or the basis of levy
of any Imposition or the basis for the assertion of any other claim) or any
other sums payable by Tenant to Landlord hereunder, (f) in the case of an
Insurance Requirement, the coverage required by Article XIII shall be
maintained, and (g) if such contest be finally resolved against Landlord or
Tenant, Tenant shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or comply with the applicable Legal Requirement or Insurance
Requirement. Landlord, at Tenant's expense, shall execute and deliver to Tenant
such authorizations and other documents as may reasonably be required in any
such contest, and, if reasonably requested by Tenant or if Landlord so desires,
Landlord shall join as a party therein. Tenant shall indemnify, defend, and save
Landlord harmless against any liability, cost or expense of any kind that may be
imposed upon Landlord in connection with any such contest and any loss resulting
therefrom.
ARTICLE XIII
13.1 GENERAL INSURANCE REQUIREMENTS. During the Term of this Lease, Tenant
shall at all times keep the Leased Property, and all property located in or on
the Leased Property, including all Personal Property, insured with the kinds and
amounts of insurance required pursuant to all Legal Requirements. This insurance
shall be written by companies authorized to do insurance business in the State
in which the Leased Property is located. The policies must name Landlord and
Landlord's Mortgagee as an additional insured.
13.2 NO SEPARATE INSURANCE. Tenant shall not, on Tenant's own initiative or
pursuant to the request or requirement of any third party, take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article, to be furnished by, or which may reasonably be
required to be furnished by, Tenant, or increase the amounts of any then
existing insurance by securing an additional policy or additional policies,
unless all parties having an insurable interest in the subject matter of the
insurance, including in all cases Landlord and all Facility Mortgagees, are
included therein as additional insureds, and the loss is payable under said
insurance in the same manner as losses are payable under this Lease. Tenant
shall immediately notify Landlord of the taking out of any such separate
insurance or of the increasing of any of the amounts of the then existing
insurance by securing an additional policy or additional policies.
ARTICLE XIV
14.1 INSURANCE PROCEEDS. All proceeds payable by reason of any loss or
damage to the Leased Property, or any portion thereof, and insured under any
policy of insurance required by Article XIII of this Lease shall be paid to
Landlord and held by Landlord in trust or, if such proceeds exceed $1,000,000,
held in trust by a third party trustee and shall be made available for
reconstruction or repair, as the case may be, of any damage to or destruction of
the Leased Property, or any portion thereof, and shall be paid out by Landlord
from time to time for the reasonable costs of such reconstruction or repair. Any
excess proceeds of insurance remaining after the completion of the restoration
or reconstruction of the Leased Property (or in the event neither Landlord nor
Tenant is required or elects to repair and restore, all such insurance proceeds)
shall be retained by Landlord free and clear upon completion of any such repair
and restoration except as otherwise specifically
15
provided below in this Article XIV. All salvage resulting from any risk covered
by insurance shall belong to Landlord. The parties agree that to the extent the
Landlord's mortgage lender imposes terms which are different from the terms
described herein, the terms of such Lender's Mortgage shall.
14.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE.
14.2.1 DESTRUCTION: FACILITY RENDERED UNSUITABLE. If during the Lease
Term, the Leased Property is totally or partially destroyed from a risk covered
by the insurance described in Article XIII and the Facility thereby is rendered
Unsuitable for Its Intended Use, Tenant shall either (A) promptly restore the
Facility to substantially the same condition as existed immediately before the
damage or destruction, or (B) offer to acquire the Leased Property from
Landlord. In the event Landlord does not accept Tenant's offer to so purchase
the Leased Property, Tenant may either withdraw its offer to purchase the Leased
Property and proceed to restore the Facility to substantially the same condition
as existed immediately before the damage or destruction or terminate the Lease
and Landlord shall be entitled to retain the insurance proceeds. In the event
Tenant performs such restoration of the facility, it shall be entitled to
insurance proceeds paid in connection with the destruction up to the amount paid
by Tenant for such restoration.
14.2.2 DESTRUCTION: FACILITY NOT RENDERED UNSUITABLE. If during the
Lease Term, the Leased Improvements, Personal Property and/or the Fixtures are
totally or partially destroyed from a risk covered by the insurance described in
Article XIII, but the Facility is not thereby rendered Unsuitable for its
Intended Use, Tenant shall promptly restore the Facility to substantially the
same condition as existed immediately before the damage or destruction. Such
damage or destruction shall not terminate this Lease.
14.2.3 COSTS IN EXCESS OF PROCEEDS. If the cost of the repair or
restoration exceeds the amount of proceeds received by Landlord from the
insurance required under Article XIII, Tenant shall be obligated to contribute
any excess amounts needed to restore the Facility. Such difference shall be paid
by Tenant to Landlord to be held in trust together with any other insurance
proceeds for application to the cost of repair and restoration unless this Lease
shall terminate pursuant to this Article XIV.
14.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY
INSURANCE. If during the Lease Term, the Facility is totally or materially
destroyed from a risk not covered by the insurance described in Article XIII,
whether or not such damage or destruction renders the Facility Unsuitable for
Its Primary Intended Use, Tenant shall restore the Facility to substantially the
same condition it was in immediately before such damage or destruction and such
damage or destruction shall not terminate this Lease.
14.4 ABATEMENT OF RENT. This Lease shall remain in full force and effect
and Tenant's obligation to make rent payments and to pay all other charges
required by this Lease shall remain unabated except to the extent provided
otherwise in Section 5.2 above.
14.5 WAIVER. Tenant hereby waives any statutory rights of termination which
may arise by reason of any damage or destruction of the Facility which Landlord
is obligated to restore or may restore under any of the provisions of this
Lease.
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ARTICLE XV
15. CONDEMNATION.
15.1 DEFINITIONS.
15.1.1 CONDEMNATION. "Condemnation" means (a) the exercise of any
governmental power, whether by legal proceedings or otherwise, by a Condemnor,
and (b) a voluntary sale or transfer by Landlord to any Condemnor, either under
threat of condemnation or while legal proceedings for condemnation are pending.
15.1.2 DATE OF TAKING. "Date of Taking" means the date the Condemnor
has the right to possession of the property being condemned.
15.1.3 AWARD. "Award" means all compensation, sums or anything of
value awarded, paid or received on a total or partial condemnation.
15.1.4 CONDEMNOR. "Condemnor" means any public or quasi-public
authority, or private corporation or individual, having the power of
condemnation.
15.2 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
taking of all or any part of the Leased Property or any interest in this Lease
by condemnation, the rights and obligations of the parties shall be determined
by this Article XV.
15.3 TOTAL TAKING. If the Leased Property is totally taken by condemnation,
this Lease shall terminate on the Date of Taking.
15.4 PARTIAL TAKING. If a portion of the Leased Property is taken by
condemnation, this Lease shall remain in effect if the Facility is not thereby
rendered Unsuitable for Its Primary Intended Use, but if the Facility is thereby
rendered Unsuitable for its Primary Intended Use, this Lease shall terminate on
the Date of Taking. If as the result of any such partial taking by condemnation,
this Lease is not terminated as provided above, Tenant shall be entitled to
abatement of rent as provided in Section 5.2.
15.5 RESTORATION. If there is a partial taking of the Leased Property and
this Lease remains in full force and effect pursuant to Section 15.4, Landlord
at its cost shall accomplish all necessary restoration up to but not exceeding
the amount of the award payable to Landlord, as provided herein.
15.6 AWARD - DISTRIBUTION. The entire Award shall belong to and be paid to
Landlord, except that, subject to the rights of the Facility Mortgagees, Tenant
shall be entitled to receive from the Award, if and to the extent such Award
specifically includes such item, the following:
15.6.1 A sum attributable to the value, if any, of the leasehold
interest of Tenant under this Lease, including, if any, relocation payments.
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15.6.2 Provided, however, that in any event Landlord shall receive
from the Award, subject to the rights of the Facility Mortgagees, no less than
the greater at the time of such Award of the fair market value of the Leased
Property or the purchase price referred to in Exhibit 34.1.
15.7 TEMPORARY TAKING. The taking of the Leased Property, or any part
thereof, by military or other public authority shall constitute a taking by
condemnation only when the use and occupancy by the taking authority has
continued for longer than six (6) months. During any such six (6) month period
all the provisions of this Lease shall remain in full force and effect except
that the Minimum Rent shall be abated or reduced during such period of taking as
provided in Section 5.2.
ARTICLE XVI
16.1 EVENTS OF DEFAULT. If any one or more of the following events
(individually, an "Event of Default") shall occur:
16.1.1 EVENT OF DEFAULT. An Event of Default shall occur under this
Lease, or
16.1.2 PAYMENT DEFAULT. If Tenant shall fail to make payment of the
Rent or other amounts payable by Tenant under this Lease when the same becomes
due and payable and such failure is not cured by Tenant within a period of five
(5) business days after receipt by Tenant of notice thereof from Landlord, or
16.1.3 NONPAYMENT DEFAULT. If Tenant shall fail to observe or perform
any other term, covenant or condition of this Lease and such failure is not
cured by Tenant within a period of ten (10) days after receipt by Tenant of
notice thereof from Landlord, unless such failure cannot with due diligence be
cured within a period of ten (10) days, in which case such failure shall not be
deemed to continue if Tenant proceeds promptly and with due diligence to cure
the failure and diligently completes the curing thereof, or
16.1.4 BANKRUPTCY, INSOLVENCY. If Tenant shall:
(i) admit in writing its inability to pay its debts generally as
they become due,
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency act,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or of the
whole or any substantial part of its property, or
(v) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other applicable
law or statute of the United States of America or any State thereof,
or
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(vi) if Tenant shall, on a petition in bankruptcy filed against
it, be adjudicated a bankrupt or a court of competent jurisdiction
shall enter an order or decree appointing, without the consent of
Tenant, a receiver of Tenant or of the whole or substantially all of
its property, or approving a petition filed against it seeking
reorganization or arrangement of Tenant under the Federal bankruptcy
laws or any other applicable law or statute of the United States of
America or any State thereof, or
16.1.5 ASSIGNMENT, SUBLETTING. Assign, sublet or otherwise transfer
this Lease or the Facility or Leased Property without Landlord's consent as
required by Section 24 hereof.
16.1.6 LIQUIDATION OR DISSOLUTION. If Tenant shall be liquidated or
dissolved, or shall begin proceedings toward such liquidation or dissolution, or
shall, in any manner, permit the sale or divestiture of substantially all its
assets other than in connection with a merger or consolidation of Tenant into,
or a sale of substantially all of Tenant's assets to, another corporation,
unless the survivor of such merger or the purchaser of such assets shall assume
all of Tenant's obligations under this Lease by a written instrument, in form
and substance reasonably satisfactory to Landlord, Landlord is provided an
opinion of counsel, reasonably satisfactory to Landlord and addressed to
Landlord stating that such instrument of assumption is valid, binding and
enforceable against the parties thereto in accordance with its terms (subject to
usual bankruptcy and other creditors' rights exceptions), or
16.1.7 ACTION AGAINST LEASEHOLD INTEREST. If the estate or interest of
Tenant in the Leased Property or any part thereof shall be levied upon or
attached in any proceeding and the same shall not be vacated or discharged
within the later of ninety (90) days after commencement thereof or 30 days after
receipt by Tenant of notice thereof from Landlord, (unless Tenant shall be
contesting such lien or attachment in good faith in accordance with Article XII
hereof), or
16.1.8 DISCONTINUATION OF OPERATIONS. If, except as a result of
damage, destruction or a partial or complete condemnation, Tenant voluntarily
ceases operations on the Leased Property for a period in excess of one (1) day,
or
16.1.9 BREACH OF REPRESENTATIONS OR WARRANTIES. If any of the
representations or warranties proves to be untrue when made in any material
respect which materially and adversely affects Landlord, and which is not cured
within ten (10) days after receipt by Tenant of notice from Landlord thereof,
or, if not susceptible of being cured within the ten (10) days, Tenant has
commenced to cure within ten (10) days after notice thereof and has thereafter
diligently proceeded to cure such default in the representation or warranty.
16.1.10 TERMINATION OF LICENSE: PENALTIES AND FINES. If Tenant
receives any violation or noncompliance notices from any authority having
jurisdiction over the Leased Property or the Facility, is threatened by such
authority with loss of licensure or certification for the Facility, is fined or
penalized by such authority or is threatened with the imposition at a fine or
penalty by such authority, then, and in any such event, Landlord may terminate
this Lease by giving Tenant not less
19
than five (5) days' notice of such termination and upon the expiration of the
time fixed in such notice, the Term shall terminate and all rights of Tenant
under this Lease shall cease. Landlord shall have all rights at law and in
equity available to Landlord as a result of Tenant's breach of this Lease.
Tenant shall, to the extent permitted by law, pay as Additional
Charges all costs and expenses incurred by or on behalf of Landlord, including,
without limitation, reasonable attorneys' fees and expenses, as a result of any
Event of Default hereunder.
16.2 CERTAIN REMEDIES.
16.2.1 REMEDIES AVAILABLE. If an Event of Default shall have occurred
(and the event giving rise to such Event of Default has not been cured within
the curative period relating thereto as set forth in Section 16.1 above) and be
continuing, in addition to any other rights or remedies Landlord may have,
Landlord shall have the option to exercise any one or more of the following
remedies, it being agreed that pursuit of any remedy provided in this Lease
shall not preclude pursuit of any other remedy or remedies herein provided or
provided by law, and that any of such remedies may be pursued regardless of
whether or not the Default continues to exist and whether or not Landlord
accepts or has accepted Rent subsequent to the occurrence of such Default:
(a) Terminate this Lease by written notice to Tenant, in which
event Tenant shall immediately surrender possession of the Leased Property to
Landlord and Landlord may reenter and repossess the Leased Property, and, at
Landlord's option, all personal property, fixtures and equipment in the Leased
Property shall thereupon become the property of Landlord; and, in connection
therewith, Landlord may use such force as may be necessary, without being guilty
of trespass, forcible entry, detainer or other tort.
(b) With or without terminating this Lease, and without notice to
Tenant, Landlord, at its option, exercisable in Landlord's sole discretion, may
enter upon the Leased Premises, change the locks, and attempt to re-let the
Leased Premises, without advertisement, by private negotiations and for any term
and rental rate which Landlord in its sole discretion determines. Tenant shall
not be liable to Landlord for the deficiency, if any, between all rent and other
amounts due hereunder for the entire Term hereof and the Rent paid by the new
lessee applicable to the remaining Term hereof (or any part thereof).
(c) Pursue any and all other rights and remedies available at law
or in equity.
16.2.2 Each right and remedy provided for in this Lease shall be
cumulative and shall be in addition to every other right or remedy provided for
in this Lease or now or hereafter existing at law or in equity or by statute or
otherwise, and the exercise or beginning of the exercise by Landlord of any one
or more of the rights or remedies provided for in this Lease or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Landlord of any and all other rights and
remedies provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise.
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16.3 WAIVER. If this Lease is terminated pursuant to Section 16.1, Tenant
waives, to the extent permitted by applicable law, (a) any right of redemption,
re-entry or repossession, (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this Article XVI, and
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt.
16.4 APPLICATION OF FUNDS. Any payments received by Landlord under any of
the provisions of this Lease during the existence or continuance of any Event of
Default (and such payment is made to Landlord rather than Tenant due to the
existence of an Event of Default) shall be applied to Tenant's obligations in
the order which Landlord may determine or as may be prescribed by the laws of
the State of Texas.
ARTICLE XVII
17. LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT. If Tenant shall fail to
make any payment or to perform any act required to be made or performed under
this Lease, and to cure the same within the relevant time periods provided in
Section 16.1, Landlord, after notice to and demand upon Tenant, and without
waiving or releasing any obligation or Default, may (but shall be under no
obligation to) at any time thereafter make such payment or perform such act for
the account and at the expense of Tenant, and may, to the extent permitted by
law, enter upon the Leased Property for such purpose and take all such action
thereon as, in Landlord's opinion, may be necessary or appropriate therefor. No
such entry shall be deemed an eviction of Tenant. All sums so paid by Landlord
and all costs and expenses (including, without limitation, reasonable attorneys'
fees and expenses, in each case, to the extent permitted by law) so incurred,
together with a late charge thereon (to the extent permitted by law) at the
Overdue Rate from the date on which such sums or expenses are paid or incurred
by Landlord, shall be paid by Tenant to Landlord on demand. The obligations of
Tenant and rights of Landlord contained in this Article shall survive the
expiration or earlier termination of this Lease.
ARTICLE XVIII
[ARTICLE XVIII INTENTIONALLY LEFT BLANK]
ARTICLE XIX
[ARTICLE XIX INTENTIONALLY LEFT BLANK]
ARTICLE XX
20. HOLDING OVER. If Tenant shall for any reason remain in possession of
the Leased Property after the expiration of the Term or earlier termination of
the Term hereof, such possession shall be as a month-to-month tenant at double
the Rent provided for herein. During such period of month-to-month-to-month
tenancy, Tenant shall be obligated to perform and observe all of the terms,
covenants and conditions of this Lease, but shall have no rights hereunder other
than the right, to the extent given by law to month-to-month tenancies, to
continue its occupancy and use of the Leased
21
Property. Nothing contained herein shall constitute the consent, express or
implied, of Landlord to the holding over of Tenant after the expiration or
earlier termination of this Lease.
ARTICLE XXI
[ARTICLE XXI INTENTIONALLY LEFT BLANK]
ARTICLE XXII
[ARTICLE XXII INTENTIONALLY LEFT BLANK]
ARTICLE XXIII
23.1 INDEMNIFICATION OF LANDLORD. Notwithstanding the existence of any
insurance provided for in Article XIII, and without regard to the policy limits
of any such insurance, Tenant will protect, indemnify, save harmless and defend
Landlord from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses), to the extent permitted by law,
imposed upon or incurred by or asserted against Landlord by reason of: (a) any
accident, injury to or death of persons or loss of or damage to property
occurring on or about the Leased Property or adjoining sidewalks, including
without limitation any claims of negligence, violation of resident rights,
professional malpractice or other claims, (b) any use, occupancy, possession,
misuse, non-use, condition, maintenance or repair by Tenant of the Leased
Property, (c) any Impositions (which are the obligations of Tenant to pay
pursuant to the applicable provisions of this Lease), (d) any failure on the
part of Tenant to perform or comply with any of the terms of this Lease, (e) any
claims, damages, losses relating to the operation of the Facility including
without limitation employment related claims, (f) any act, omission or
negligence of Tenant, its agents, employees, invitees and others claiming by
through or under Tenant. Any amounts which become payable by Tenant under this
Section shall be paid within ten (10) days after liability therefor on the part
of Tenant is determined by litigation or otherwise, and if not timely paid,
shall bear a late charge (to the extent permitted by law) at the Overdue Rate
from the date of such determination to the date of payment. Tenant, at its
expense, shall contest, resist and defend any such claim, action or proceeding
asserted or instituted against Landlord or may compromise or otherwise dispose
of the same subject to Landlord's prior written approval. To the extent Tenant
makes payments to Landlord under this Article XXIII, Tenant shall become
subrogated to the rights of Landlord for insurance proceeds. Nothing herein
shall be construed as indemnifying Landlord against its own negligent acts or
omissions or willful misconduct.
23.2 INDEMNIFICATION OF TENANT. For the period prior to the Term of this
Agreement, notwithstanding the existence of any insurance provided for in
Article XIII, and without regard to the policy limits of any such insurance,
Landlord will protect, indemnify, save harmless and defend Tenant from and
against all liabilities, obligations, claims damages, penalties, causes of
action, costs and expenses (including, without limitation, reasonable attorneys'
fees and expenses), to the extent
22
permitted by law, imposed upon or incurred by or asserted against Tenant by
reason of: (a) any accident, injury to or death of persons or loss of or damage
to property occurring on or about the Leased Property or adjoining sidewalks,
including without limitation any claims of negligence, violation of resident
rights, professional malpractice or other claims occurring prior to the Term of
this Agreement, (b) any use, occupancy, possession, misuse, non-use, condition,
maintenance or repair by Landlord of the Leased Property occurring prior to the
Term of this Agreement, (c) any Impositions (which are the obligations of
Landlord to pay pursuant to the applicable provisions of this Lease) occurring
prior to the Term of this Agreement, (d) any failure on the part of the Landlord
to perform or comply with any of the terms of this Lease or any other agreement
with Tenant, (e) any claims, damages, losses relating to the operation of the
Facility including without limitation employment related claims, occurring prior
to the Term of this Agreement, (f) any act, omission or negligence of Landlord,
its agents, employees, invitees and others claiming by through or under Landlord
occurring prior to the Term of this Agreement, and (g) any matter raised in any
regulatory survey by any federal or state agency concerning the Facility for the
period prior to the Term of this Agreement. Any amounts which become payable by
Landlord under this Section shall be paid within ten (10) days after liability
therefor on the part of the Landlord is determined by litigation or otherwise,
and if not timely paid, shall bear a late charge (to the extent permitted by
law) at the Overdue Rate from the date of such determination to the date of
payment. Landlord, at is expense, shall contest, resist and defend any such
claim, action or proceeding asserted or instituted against Tenant or may
compromise or otherwise dispose of the same as Landlord sees fit. To the extent
Landlord makes payments to Tenant under this Article XXIII, Landlord shall
become subrogated to the rights of Tenant for insurance proceeds. Nothing herein
shall be construed as indemnifying Tenant against its own negligent acts or
omissions or willful misconduct.
23.3 SURVIVAL. Tenant's and Landlord's liability for a breach of the
provisions of this Article arising during the Term hereof shall survive any
termination of this Lease.
ARTICLE XXIV
24. SUBLETTING AND ASSIGNMENT. Tenant shall not, without the prior written
consent of Landlord, which consent Landlord may withhold in its sole discretion,
and Landlord's Mortgagee, convey, pledge, mortgage, encumber or assign this
Lease or any interest hereunder, whether voluntary or by operation of law,
sublease the Leased Premises or any part thereof, or permit the use of the
Leased Premises or any portion thereof by any party other than Tenant, including
any affiliated entity of Tenant. Consent to any assignment or sublease shall not
constitute a waiver of this provision with respect to any other assignment or
sublease, and all later assignments or subleases shall be made likewise only
with the prior written consent of Landlord and Landlord's Mortgagee. Any
subtenant, assignee or successor of Tenant, at the option of Landlord, shall
become directly liable to Landlord for all obligations of Tenant hereunder, but
no transfer, sublease or assignment by Tenant shall relieve Tenant of any
liability hereunder.
ARTICLE XXV
25. OFFICER'S CERTIFICATES, FINANCIAL STATEMENTS, AND DISCLOSURES.
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25.1 ESTOPPEL CERTIFICATE. At any time and from time to time upon Tenant's
receipt of not less than ten (10) days prior written request by Landlord, Tenant
will furnish to Landlord an Officer's Certificate certifying that this Lease is
unmodified and in full force and effect (or that this Lease is in full force and
effect as modified and setting forth the modifications) and the dates to which
the Rent has been paid. Any such certificate furnished pursuant to this Section
may be relied upon by Landlord and any prospective purchaser of the Leased
Property.
25.2 FINANCIAL STATEMENTS. Tenant will furnish the following financial
statements to Landlord:
(i) Within 90 days after the end of each of Tenant's fiscal
years, a copy of the audited (if available, otherwise unaudited)
consolidated balance sheets of Tenant and its consolidated
subsidiaries as of the end of such fiscal year, and related audited
consolidated (if available, otherwise unaudited) consolidated
statements of income, changes in common stock and undistributed
profits and changes in the financial position of Tenant and its
consolidated subsidiaries for such fiscal year, prepared in accordance
with generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved;
(ii) Within 90 days after the end of each of Tenant's fiscal
years, and together with the documents furnished in accordance with
clause (i), an Officer's Certificate stating that to the best of the
signer's knowledge and belief after making due inquiry, Tenant is not
in default in the performance or observance of any of the terms of
this Lease, or if Tenant shall be in default to its knowledge,
specifying all such defaults, the nature thereof, and the steps being
taken to remedy the same;
(iii) Within 30 days after the end of each of Tenant's quarters,
quarterly consolidated financial reports Tenant produces for reporting
purposes and detailed statements of income and detailed operational
statistics regarding occupancy rates, patient mix and patient rates by
type for the Facility; and
(iv) Within 90 days after the end of each of Tenant's fiscal
years, a copy of each cost report filed with the appropriate
governmental agency for each of the Facilities (and all amendments
thereto whether contemporaneously or subsequently filed thereto);
25.3 ADDITIONAL INFORMATION. Tenant shall furnish the following Additional
Information to Landlord:
(i) Within ten (10) days of receipt thereof, copies of all
surveys (complaint, annual or otherwise), along with all accompanying
letters, exhibits and information relating thereto and copies of any
notices from any governmental agency
24
relating to an investigation of Tenant's operations including without
limitation HCFA, the OIG, the FBI, the State Medicated Fraud division,
performed by the appropriate governmental agencies for licensing or
certification purposes, and any plan of correction thereto; and
(ii) With reasonable promptness, such other information
respecting the financial condition and affairs of Tenant and the
Facility as Landlord may reasonably request from time to time; and
(iii) Furnish to Landlord, within thirty (30) days of receipt a
copy of any licensing or other agency survey or report and any
statement of deficiencies and/or any other report indicating that any
action is pending or being considered to downgrade the Facility to a
substandard category, and within the time period required by the
particular agency for furnishing a plan of correction also furnish or
cause to be furnished to Landlord a copy of the plan of correction or
other response generated as a result of such survey or report for the
Facility, and correct or cause to be corrected any deficiency, the
curing of which is a condition of continued licensure or for full
participation in any applicable reimbursement program;
(iv) The Landlord further reserves the right to require such
other information relating to the financial affairs or operations of
the Tenant and the Facility at such other times as Landlord shall
reasonably require (including monthly or more frequently), and Tenant
agrees to provide such information to Landlord within three (3) days
from request. All financial statements must be in such form and detail
as the Landlord shall from time to time reasonably request, provided,
however, that Landlord will make reasonable efforts to use Tenant's
existing forms of reports for all purposes.
ARTICLE XXVI
26. LANDLORD'S RIGHT TO INSPECT. Tenant shall permit Landlord and its
authorized representatives to inspect the Leased Property during usual business
hours subject to any security, health, safety or confidentiality requirements of
Tenant or any governmental agency or insurance requirement relating to the
Leased Property, or imposed by law or applicable regulations.
ARTICLE XXVII
27. NO WAIVER. No failure by Landlord or Tenant to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
25
ARTICLE XXVIII
28. REMEDIES CUMULATIVE. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Landlord or Tenant now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy and the exercise or beginning of the exercise by Landlord or Tenant
or any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Landlord or Tenant of any or all of such
other rights, powers and remedies.
ARTICLE XXIX
29. ACCEPTANCE OF SURRENDER. No surrender to Landlord of this Lease or of
the Leased Property or any part of any thereof, or of any interest therein,
shall be valid or effective unless agreed to and accepted in writing by Landlord
and no act by Landlord or any representative or agent of Landlord, other than
such a written acceptance by Landlord, shall constitute an acceptance of any
such surrender.
ARTICLE XXX
[ARTICLE XXX INTENTIONALLY LEFT BLANK]
ARTICLE XXXI
31. CONVEYANCE BY LANDLORD. Landlord may convey, transfer or assign this
Lease or the Leased Property without the Tenant's consent.
ARTICLE XXXII
32. QUIET ENJOYMENT. So long as Tenant shall pay all Rent as the same
becomes due and shall fully comply with all of the terms of this Lease and fully
perform its obligations hereunder, Tenant shall peaceably and quietly have, hold
and enjoy the Leased Property for the Term hereof, free of any claim or other
action by Landlord or anyone claiming by, through or under Landlord, but subject
to all liens and encumbrances of record as of the date hereof or hereafter
consented to by Tenant. No failure by Landlord to comply with the foregoing
covenant shall give Tenant any right to cancel or terminate this Lease or ▇▇▇▇▇,
reduce or make a deduction from or offset against the Rent or any other sum
payable under this Lease, or to fail to perform any other obligation of Tenant
hereunder. Notwithstanding the foregoing, Tenant shall have the right, by
separate and independent action to pursue any claim it may have against Landlord
as a result of a breach by Landlord of the covenant of quiet enjoyment contained
in this Section.
ARTICLE XXXIII
33. NOTICES. All notices, demands, requests, consents, approvals and other
26
communications hereunder shall be in writing and delivered or mailed (by
registered or certified mail, return receipt requested and postage prepaid),
addressed to the respective parties, as follows:
33.1 NOTICE TO TENANT.
if to Tenant:
At: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
33.2 NOTICE TO LANDLORD:
if to Landlord:
At: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or to such other address as either party may hereafter designate, and shall be
effective upon receipt.
27
ARTICLE XXXIV
[ARTICLE XXXIV INTENTIONALLY LEFT BLANK]
ARTICLE XXXV
35.1 LANDLORD MAY GRANT LIENS. Without the consent of Tenant, Landlord may,
subject to the terms and conditions set forth below in this Section 35.1, from
time to time, directly or indirectly, create or otherwise cause to exist any
lien, encumbrance or title retention agreement ("Encumbrance") upon the Leased
Property, or any portion thereof or interest therein, whether to secure any
borrowing or other means of financing or refinancing. Any such Encumbrance shall
contain the right to prepay (whether or not subject to a prepayment penalty) and
shall provide that it is subject to the rights of Tenant under this Lease,
including the rights of Tenant to acquire the Leased Property pursuant to the
applicable provisions of this Lease, except that Tenant's right of first refusal
to purchase the Leased Property shall not be applicable upon a foreclosure sale
or transfer in lieu thereof; provided, however, that any such purchaser or
transferee shall take title subject to Tenant's rights to acquire the Leased
Property. Any lender which takes an interest in the Leased Property pursuant to
this Article (a) shall agree to give Tenant the same notice, if any, given to
Landlord of any default or acceleration of any obligation underlying any such
mortgage or any sale in foreclosure under such mortgage, (b) shall agree to
permit Tenant to cure any such default on Landlord's behalf within any
applicable cure period, and Tenant shall be reimbursed by Landlord for any and
all out-of-pocket costs incurred to effect any such cure (including reasonable
attorneys' fees), and (c) shall agree to permit Tenant to appear by its
representative and to bid at any sale in foreclosure made with respect to any
such mortgage.
35.2 TENANT'S RIGHT TO CURE. Subject to the provisions of Section 35.3, if
Landlord shall breach any covenant to be performed by it under this Lease,
Tenant, after notice to and demand upon Landlord, without waiving or releasing
any obligation hereunder, and in addition to all other remedies available to
Tenant, may (but shall be under no obligation at any time thereafter to) make
such payment or perform such act for the account and at the expense of Landlord.
The rights of Tenant hereunder to cure and to secure payment from Landlord in
accordance with this Section 35.2 shall survive the termination of this Lease
with respect to the Leased Property.
35.3 BREACH BY LANDLORD. It shall be a breach of this Lease if Landlord
shall fail to observe or perform any term, covenant or condition of this Lease
on its part to be performed and such failure shall continue for a period of
thirty (30) days after notice thereof from Tenant (or such shorter time as may
be required in order to protect the health or welfare of any patients or other
residents of the Leased Property), unless such failure cannot with due diligence
be cured within a period of thirty (30) days, in which case such failure shall
not be deemed to continue if Landlord, within said thirty (30) day period,
proceeds promptly and with due diligence to cure the failure and diligently
completes the curing thereof. The time within which Landlord shall be obligated
to cure any such failure shall also be subject to extension of time due to the
occurrence of any Unavoidable Delay.
28
ARTICLE XXXVI
36. MISCELLANEOUS.
36.1 SURVIVAL. MODIFICATION. SUCCESSORS AND ASSIGNS. Anything contained in
this Lease to the contrary notwithstanding, all claims against, and liabilities
of, the Tenant or Landlord arising prior to any date of termination of this
Lease shall survive such termination. If any late charges or similar costs
provided for in any provision of this Lease are based upon a rate in excess of
the maximum rate permitted by applicable law, the parties agree that such
charges shall be fixed at the maximum permissible rate. Neither this Lease nor
any provision hereof may be changed, waived, discharged or terminated except by
an instrument in writing and in recordable form signed by Landlord and Tenant.
All the terms and provisions of this Lease shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
36.2 EXCULPATION OF LANDLORD. Tenant specifically agrees to look solely to
Landlord's interest in the Leased Property for recovery of any judgment from
Landlord, it being specifically agreed that no shareholder, director, officer,
member, partner, or employee of Landlord shall ever be personally liable for any
such judgment or for the payment of any monetary obligation to Tenant. The
provision contained in the foregoing sentence is not intended to, and shall not,
limit any right that Tenant might otherwise have to obtain injunctive relief
against Landlord or Landlord's successors in interest, or any action not
involving the personal liability of Landlord (original or successor).
Furthermore, except as otherwise expressly provided herein, in no event
shall Landlord (original or successor) ever be liable to Tenant for any indirect
or consequential damages suffered by Tenant from whatever cause.
36.3 EXCULPATION OF TENANT. Landlord specifically agrees to look solely to
Tenant's interest in the Leased Property for recovery of any judgment from
Tenant, it being specifically agreed that no shareholder, director, officer,
manager, member, partner, or employee of Tenant shall ever be personally liable
for any such judgment or for the payment of any monetary obligation to Landlord.
The provision contained in the foregoing sentence is not intended to, and shall
not, limit any right that Landlord might otherwise have to obtain injunctive
relief against Tenant or Tenant's successors in interest, or any action not
involving the personal liability of Tenant (original or successor).
Furthermore, except as otherwise expressly provided herein, in no event
shall Tenant (original or successor) ever be liable to Landlord for any indirect
or consequential damages suffered by Landlord from whatever cause.
36.4 TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Landlord's option, Tenant shall use its best efforts
to transfer to Landlord or Landlord's nominee and Tenant shall cooperate with
Landlord or Landlord's nominee in connection with the processing by Landlord or
Landlord's nominee of, any applications for all licenses, operating permits and
other governmental authorization and all contracts, including contracts with
governmental or quasi-governmental entities which may be necessary for the
operation of the Facility;
29
provided that the costs and expenses of any such transfer or the processing of
any such application shall be paid by Landlord or Landlord's nominee.
Notwithstanding anything in this Lease or elsewhere to the contrary, under no
circumstances shall Landlord be obligated to seek or effectuate such a transfer
or application therefore.
36.5 CAPTIONS. Titles, Captions and Notations appearing in this instrument
are provided merely for ease of reference, and the parties hereto expressly
acknowledge and agree that such notations and titles do not constitute a part of
this Lease, have no legal effect whatsoever in determining the rights or
obligations of the parties, and shall have no bearing upon the meaning or
interpretation of this agreement or any portion of it.
36.6 NON-WAIVER. The failure by Landlord, whether once or more, to act upon
a specific breach of any term, covenant or condition herein contained shall not
be deemed to be a waiver of such term, covenant, or condition nor of any
subsequent breach of the same or any other term, covenant or condition herein
contained. Any subsequent acceptance of Rent hereunder by Landlord shall not be
deemed to be a waiver of any preceding breach by Tenant of any term, covenant or
condition of this Lease other than the failure of Tenant timely to pay the
particular rental so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such rent. No covenant, term or
condition of this Lease shall be deemed to have been waived by Landlord unless
such waiver shall be specifically expressed in writing by Landlord.
36.7 SEVERABILITY. ENTIRE AGREEMENT. If any term, covenant or condition of
this Lease or the application thereof to any person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term, covenant, or condition to persons or circumstances
other than those which or to which such may be held invalid or unenforceable,
shall not be affected thereby, and each term, covenant or condition of this
Lease shall be valid and enforceable to the fullest extent permitted by law.
Except for any exhibits, attachments, plats, or other documents as may be
affixed hereto, made a part hereof, and properly identified herewith, this Lease
constitutes the entire contract between the parties, and shall not be otherwise
affected by any other purported undertaking whether written or oral.
36.8 TIME OF ESSENCE. Time shall be deemed to be of the essence with
respect to all provisions of this Lease including without limitation all
provisions relating to the payment of Rent, Impositions, Additional Charges,
Additional Rent, and payments to third parties required to be made by the Tenant
in order to comply with the provisions of this Lease. The fact that the phrase
"time shall be deemed of the essence" or language of similar import has not been
included in every section relating to the payment or performance of obligations
shall not be deemed or construed to indicate that the parties did not intend to
have time be deemed of the essence with respect to such payment or performance.
36.9 COLLECTION OF RENT. No termination of this Lease prior to the normal
ending thereof, by lapse of time or otherwise, shall affect Landlord's right to
collect Rent and all other amounts due Landlord in accordance with the terms of
this Lease.
30
36.10 REMEDIES CUMULATIVE. All rights, powers, privileges and remedies
conferred hereunder upon the parties hereto shall be cumulative but not
restrictive to those given by law.
36.11 GOVERNING LAW. The laws of the State of Texas shall govern the
interpretation, validity, performance and enforcement of this Lease, but not
including its conflict of laws rules.
36.12 AUTHORITY OF PARTIES. If Tenant signs as an entity, each person
executing this Lease on behalf of Tenant does hereby covenant and warrant that
Tenant is a duly authorized and existing entity, that Tenant has and is
qualified to do business in the State of Texas and that the entity has full
right and authority to enter into this Lease and that each person signing on
behalf of such entity is authorized to do so.
36.13 TRANSFER OF LANDLORD'S INTEREST. Nothing herein shall in any way
prohibit or restrict Landlord from conveying all or a portion of its right,
title and interest in the Leased Premises and to this Lease to a third party or
to an affiliate of Landlord. Upon any transfer of Landlord's interest in the
Leased Premises and in this Lease to a third party or affiliate of Landlord,
such transferee shall become "Landlord" hereunder and the transferor Landlord
shall have no further obligations hereunder.
36.14 NO PARTNERSHIP OR JOINT VENTURE. This Lease shall not be considered
in any manner a partnership agreement joint venture between Landlord and Tenant.
ARTICLE XXXVII
37. ATTORNMENT: SUBORDINATION.
37.1 TENANT SUBORDINATION. Tenant accepts this Lease subject and
subordinate to any Mortgage, Deed of Trust, Deed to Secure Debt or any other
hypothecation or security now or hereafter placed upon the Leased Premises (any
such instrument hereinafter called a "Mortgage") and to any and all advances
made on the security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. If any holder of a Mortgage (herein
"Landlord's Mortgagee") shall elect to have this Lease prior to the lien of its
Mortgage, and shall give written notice thereof to Tenant, this Lease shall be
deemed prior to such Mortgage, whether this Lease is dated prior or subsequent
to the date of said Mortgage, or the date of recording thereof.
37.2 ESTOPPEL AGREEMENT. Although the provisions of this Article 37 shall
be self-operative, Tenant agrees, upon request of Landlord or Landlord's
Mortgagee, to execute any estoppel certificates and other documents required to
effectuate any attornment, subordination or to make this Lease prior to the lien
of any Mortgage. Tenant's failure to execute such documents within ten (10) days
after written demand shall constitute a material default by Tenant hereunder,
or, at Landlord's option, Landlord shall execute such documents on behalf of
Tenant's attorney-in-fact.
37.3 ATTORNEY IN FACT APPOINTMENT. Tenant does hereby make, constitute and
31
irrevocably appoint Landlord as Tenant's attorney-in-fact and in Tenant's name,
place and stead, to execute such documents in accordance with this Article 37
such power of attorney being coupled with an interest.
37.4 TENANT ATTORNMENT. If by reason of a default under the Mortgage upon
the Leased Premises, the interest of Landlord in the Leased Premises is
terminated, the Tenant will attorn to Landlord's Mortgagee at Landlord's
mortgagee's sole option (or to any person or entity to which the Leased Premises
is conveyed by such holder) and will recognize such holder, person or entity as
Tenant's landlord under this Lease. Tenant further waives the provision of any
statute or rule of law now or hereafter in effect which may give or purport to
give Tenant any right of election to terminate this Lease or to surrender
possession of the Leased Premises in the event any proceeding is brought by
Landlord's Mortgagee to terminate the interest of the Landlord in the Leased
Premises, and agrees that this Lease shall not be affected in any way whatsoever
by such proceeding.
37.5 NOTICE OF DEFAULT TO LANDLORD'S MORTGAGES. If the Landlord defaults
under this Lease, Tenant, before taking advantage of any rights or remedies
granted to Tenant or by law, shall notify in writing, certified mail, return
receipt requested, any Landlord's Mortgagee which holds a Mortgage and who has
requested Tenant so to do and given Tenant its mailing address and Tenant shall
allow Landlord's Mortgagee, at Landlord's Mortgagee's sole option, ten (10) days
following receipt of such notice (plus any additional time that may be
reasonably necessary) within which to cure such default. The time given to
Landlord's Mortgagee to cure Landlord's default shall not run concurrently with
any time granted to Landlord to cure such default, but shall run form the later
of Landlord's Mortgagee's receipt of notice from Tenant of Landlord's default or
the expiration of the time period, if any, given to Landlord to cure such
default. Landlord's Mortgagee may, but shall not be obligated to, cure such
default, and Tenant shall accept any such cure by Landlord's Mortgagee.
ARTICLE XXXVIII
38. RE-ENTRY DURING TERM. Landlord, its agents, officers or assigns, and
Landlord's Mortgagee, shall have the right to enter the Leased Premises upon
reasonable prior notice except in emergencies during normal working hours
throughout the term of the Lease for the following purposes: inspecting the
general condition and state of repair of the Leased Property; showing the Leased
Property to any interested party; taking any emergency action which Landlord
deems necessary to protect the Leased Property; inspecting the Leased Property
as required by governmental agencies or insurance companies; or for any other
reasonable purposes. Landlord's right of re-entry and right to inspect the
Leased Property shall be subject to the privacy rights of residents and
regulations pertaining to confidentiality of resident records.
ARTICLE XXXIX
[ARTICLE XXXIX INTENTIONALLY LEFT BLANK]
ARTICLE XXXX
32
40. HEALTHCARE LICENSING, SURVEYS, COMPLIANCE NOTICES. Tenant shall give
Landlord prompt written notice of (a) any notice of loss of Joint Commission or
Accreditation of Healthcare Organizations accreditation, loss of participation
under any material reimbursement program or loss of applicable and material
health care licenses at the Facility and (b) any other material deficiency
notice, compliance order of adverse report issued by any governmental authority
or accreditation commission having jurisdiction over licensing, accreditation or
operation of the Facility or by any governmental authority or private insurance
company pursuant to a provider agreement, which, if not promptly complied with
or cured, would be reasonably likely to result in a material adverse effect on
Tenant.
ARTICLE XXXXI
41. RIGHT OF FIRST REFUSAL. If at any time during the Term of this Lease
Landlord , or any of its affiliated entities, shall receive an offer to sell the
Leased Property, or to enter into a lease of the Leased Property, Tenant shall
have a Right of First Refusal to purchase the Leased Premises or to renew this
Lease on the same terms and conditions as are offered to the Landlord or any of
its affiliates in such Offer to Purchase or Lease. Upon Landlord's notifications
of an offer to purchase or lease of the Leased Property, Landlord shall, within
ten (10) days of such notice, give written notice to Tenant of the proposed
terms and conditions. Tenant shall have fifteen (15) days after written
notification from the Landlord to advise Landlord of its intentions to purchase
the Leased Premises or renew the Lease. In the event Tenant determines not to
exercise its Right of First Refusal, Landlord shall be free to sell the Leased
Premises or lease the Leased Property to the other party on the same terms and
conditions as set forth in the notice provided to Tenant. In the event that the
terms and conditions of the proposed purchase or lease are changed, Landlord
shall advise Tenant in writing of the proposed changes and Tenant shall have
another fifteen (15) days in which to make a determination as to whether to
exercise its Right of First Refusal. In the event the Tenant notifies the
Landlord that the Tenant shall purchase the Leased Property pursuant to its
Right of First Refusal the closing of such purchase shall take place within 120
days from the receipt of such written notice from the Tenant.
33
IN WITNESS WHEREOF, the parties have caused this Lease to be executed and
their respective corporate seals, if any, to be hereunto affixed and attested by
their respective officers thereunto duly authorized.
Landlord: Tenant:
Extendicare Health Facilities, Inc. Senior Health-Richland, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------- ----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Senior Vice President Its: President
State of Wisconsin State of Pennsylvania
County of Milwaukee County of Philadelphia
The foregoing instrument was acknowledged The foregoing instrument was acknowledged
before me this 25th day of September, 2001 before me this 26th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Senior Vice-President by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as the President of
of Extendicare Health Facilities, Inc. ______________________________________,
on behalf of the corporation.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------- ----------------------------------------
Notary Public, State of Wisconsin Notary Public, State of Pennsylvania
My commission expires 11-2-2003. My commission (is permanent)
(expires on 10-31-02)
[Notarial Seal] [Notarial Seal]
EXHIBIT 1.1
TO
LEASE AGREEMENT DATED AS OF OCTOBER 1, 2001
BETWEEN
EXTENDICARE HEALTH FACILITIES, INC., LANDLORD
AND
SENIOR HEALTH-RICHLAND, LLC, TENANT
LEGAL DESCRIPTION
EXHIBIT 16.1.1
TO
LEASE AGREEMENT DATED AS OF OCTOBER 1, 2001
BETWEEN
EXTENDICARE HEALTH FACILITIES, INC., LANDLORD
AND
SENIOR HEALTH-RICHLAND, LLC, TENANT
OTHER TEXAS LEASES AND SUBLEASES
OPERATING LEASE
EXTENDICARE HEALTH FACILITIES, INC.
Landlord
AND
SENIOR HEALTH-VILLA HAVEN, LLC
Tenant
Dated as of October 1, 2001
------------------------------------------
FACILITY:
VILLA HAVEN HEALTH & REHABILITATION CENTER
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------------
TABLE OF CONTENTS
Article Page
------- ----
LIST OF EXHIBITS.............................................................vii
LEASE..........................................................................1
ARTICLE I......................................................................1
1. Leased Property; Term..............................................1
1.1 Land...............................................................1
1.2 Leased Improvements................................................1
1.3 Related Rights.....................................................1
1.4 Fixtures...........................................................1
1.5 Personal Property..................................................1
ARTICLE II.....................................................................2
2. Definitions........................................................2
2.1 Additional Charges.................................................2
2.2 Affiliate..........................................................2
2.3 Award..............................................................2
2.4 Business Day.......................................................2
2.5 Commencement Date..................................................2
2.6 Condemnation, Condemnor............................................3
2.7 Date of Taking.....................................................3
2.8 Encumbrance........................................................3
2.9 Event of Default...................................................3
2.10 Facility...........................................................3
2.11 Facility Mortgage..................................................3
2.12 Facility Mortgagee.................................................3
2.13 Fixtures...........................................................3
2.14 Impositions........................................................3
2.15 Insurance Requirements.............................................4
2.16 Intended Use.......................................................4
2.17 Land...............................................................4
2.18 Landlord...........................................................4
2.19 Lease..............................................................4
2.19A Lease Year.........................................................4
2.20 Leased Improvements; Leased Property...............................4
2.21 Legal Requirements.................................................4
2.22 [Intentionally Left Blank].........................................4
2.23 Officer's Certificate..............................................4
2.24 Overdue Rate.......................................................4
2.25 Payment Date.......................................................4
i
TABLE OF CONTENTS
Article Page
------- ----
2.26 Personal Property..................................................5
2.27 Prime Rate.........................................................5
2.28 Rent...............................................................5
2.29 Taking.............................................................5
2.30 Tenant.............................................................5
2.31 Term...............................................................5
2.32 Unavoidable Delays.................................................5
2.33 Unsuitable For Its Intended Use....................................5
2.34 Use................................................................5
ARTICLE III....................................................................5
3.1 Rent and Additional Charges........................................5
3.1.1 Rent.......................................................5
3.1.2 Additional Charges.........................................6
3.2 Net Lease..........................................................6
ARTICLE IV.....................................................................6
4.1 Payment of Impositions.............................................6
4.2 Notice of Impositions..............................................7
4.3 Adjustment of Impositions..........................................7
4.4 Utility Charges....................................................7
4.5 Insurance Premiums.................................................8
ARTICLE V......................................................................8
5.1 No Termination, Abatement..........................................8
5.2 Abatement Procedures...............................................8
ARTICLE VI.....................................................................8
6.1 Ownership of the Leased Property...................................8
6.2 Personal Property..................................................8
6.3 Transfer of Personal Property to Landlord..........................9
6.4 Purchases of Personal Property by Tenant...........................9
ARTICLE VII....................................................................9
7.1 Condition of the Leased Property...................................9
7.2 Use of the Leased Property.........................................9
7.2.1 Approvals, Licenses, Certifications........................9
7.2.2 Use As Licensed Skilled Nursing Facility..................10
7.2.3 Waste.....................................................10
7.2.4 Adverse Use...............................................10
7.2.5 Environmental Compliance..................................10
ARTICLE VIII..................................................................11
8.1 Compliance with Legal and Insurance Requirements, Instruments.....11
8.2 Legal Requirement Covenants.......................................12
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TABLE OF CONTENTS
Article Page
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ARTICLE IX....................................................................12
9.1 Maintenance and Repair............................................12
9.1.1 Maintenance and Repair....................................12
9.1.2 Landlord's Obligations....................................12
9.1.3 Contractors. Liens........................................13
9.1.4 Condition Upon Surrender..................................13
9.2 Encroachments and Restrictions....................................13
ARTICLE X.....................................................................14
10. Construction of Capital Additions to the Leased Property..........14
ARTICLE XI....................................................................14
11. Liens.............................................................14
ARTICLE XII...................................................................14
12. Permitted Contests................................................14
ARTICLE XIII..................................................................15
13.1 General Insurance Requirements....................................15
13.2 No Separate Insurance.............................................15
ARTICLE XIV...................................................................15
14.1 Insurance Proceeds................................................15
14.2 Reconstruction in the Event of Damage or Destruction
Covered by Insurance..............................................16
14.2.1 Destruction: Facility Rendered Unsuitable.................16
14.2.2 Destruction: Facility Not Rendered Unsuitable.............16
14.2.3 Costs in Excess of Proceeds...............................16
14.3 Reconstruction in the Event of Damage or Destruction
Not Covered by Insurance..........................................16
14.4 Abatement of Rent.................................................17
14.5 Waiver............................................................17
ARTICLE XV....................................................................17
15. Condemnation......................................................17
15.1 Definitions.......................................................17
15.1.1 Condemnation..............................................17
15.1.2 Date of Taking............................................17
15.1.3 Award.....................................................17
15.1.4 Condemnor.................................................17
15.2 Parties' Rights and Obligations...................................17
15.3 Total Taking......................................................17
15.4 Partial Taking....................................................17
15.5 Restoration.......................................................17
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TABLE OF CONTENTS
Article Page
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15.6 Award--Distribution...............................................18
15.6.1............................................................18
15.6.2............................................................18
15.7 Temporary Taking..................................................18
ARTICLE XVI...................................................................18
16.1 Events of Default.................................................18
16.1.1 Event of Default..........................................18
16.1.2 Payment Default...........................................18
16.1.3 Nonpayment Default........................................18
16.1.4 Bankruptcy, Insolvency....................................18
16.1.5 Assignment, Subletting....................................19
16.1.6 Liquidation or Dissolution................................19
16.1.7 Action Against Leasehold Interest.........................19
16.1.8 Discontinuation of Operations.............................19
16.1.9 Breach of Representations or Warranties...................19
16.1.10 Termination of License: Penalties and Fines...............20
16.2 Certain Remedies..................................................20
16.2.1 Remedies Available........................................20
16.2.2............................................................21
16.3 Waiver............................................................21
16.4 Application of Funds..............................................21
ARTICLE XVII..................................................................21
17. Landlord's Right to Cure Tenant's Default.........................21
ARTICLE XVIII [ARTICLE XVIII INTENTIONALLY LEFT BLANK]........................21
ARTICLE XIX [ARTICLE XIX INTENTIONALLY LEFT BLANK]............................21
ARTICLE XX....................................................................22
20. Holding Over......................................................22
ARTICLE XXI [ARTICLE XXI INTENTIONALLY LEFT BLANK]............................22
ARTICLE XXII [ARTICLE XXII INTENTIONALLY LEFT BLANK]..........................22
ARTICLE XXIII.................................................................22
23.1 Indemnification of Landlord.......................................22
23.2 Indemnification of Tenant.........................................23
23.3 Survival..........................................................23
ARTICLE XXIV..................................................................23
24. Subletting and Assignment.........................................23
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TABLE OF CONTENTS
Article Page
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ARTICLE XXV...................................................................24
25. Officer's Certificates, Financial Statements, and Disclosures.....24
25.1 Estoppel Certificate..............................................24
25.2 Financial Statements..............................................24
25.3 Additional Information............................................25
ARTICLE XXVI..................................................................25
26. Landlord's Right to Inspect.......................................25
ARTICLE XXVII.................................................................26
27. No Waiver.........................................................26
ARTICLE XXVIII................................................................26
28. Remedies Cumulative...............................................26
ARTICLE XXIX..................................................................26
29. Acceptance of Surrender...........................................26
ARTICLE XXX [ARTICLE XXX INTENTIONALLY LEFT BLANK]............................26
ARTICLE XXXI..................................................................26
31. Conveyance by Landlord............................................26
ARTICLE XXXII.................................................................26
32. Quiet Enjoyment...................................................26
ARTICLE XXXIII................................................................27
33. Notices...........................................................27
33.1 Notice To Tenant..................................................27
33.2 Notice To Landlord................................................27
ARTICLE XXXIV [ARTICLE XXXIV INTENTIONALLY LEFT BLANK]........................28
ARTICLE XXXV..................................................................28
35.1 Landlord May Grant Liens..........................................28
35.2 Tenant's Right to Cure............................................28
35.3 Breach by Landlord................................................29
ARTICLE XXXVI.................................................................29
36. Miscellaneous.....................................................29
36.1 Survival. Modification. Successors and Assigns....................29
36.2 Exculpation of Landlord...........................................29
36.3 Exculpation of Tenant.............................................29
36.4 Transfers of Licenses Upon Termination............................30
36.5 Captions..........................................................30
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TABLE OF CONTENTS
Article Page
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36.6 Non-Waiver........................................................30
36.7 Severability. Entire Agreement....................................30
36.8 Time of Essence...................................................31
36.9 Collection of Rent................................................31
36.10 Remedies Cumulative...............................................31
36.11 Governing Law.....................................................31
36.12 Authority of Parties..............................................31
36.13 Transfer of Landlord's Interest...................................31
36.14 No Partnership or Joint Venture...................................31
ARTICLE XXXVII................................................................31
37. Attornment: Subordination.........................................31
37.1 Tenant Subordination..............................................31
37.2 Estoppel Agreement................................................32
37.3 Attorney In Fact Appointment......................................32
37.4 Tenant Attornment.................................................32
37.5 Notice of Default to Landlord's Mortgages.........................32
ARTICLE XXXVIII...............................................................32
38. Re-Entry During Term..............................................32
ARTICLE XXXIX [ARTICLE XXXIX INTENTIONALLY LEFT BLANK]........................33
ARTICLE XXXX..................................................................33
40. Healthcare Licensing, Surveys, Compliance Notices.................33
ARTICLE XXXXI.................................................................33
41. Right of First Refusal............................................33
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vii
viii
ix
x
LIST OF EXHIBITS
Exhibit 1.1 Legal Description
Exhibit 16.1.1 Other Texas Leases and Subleases
xi
LEASE
THIS LEASE ("Lease") is dated as of October 1, 2001, and is between
Extendicare Health Facilities, Inc., a Wisconsin corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Landlord"), a Texas limited liability company, and
Senior Health-Villa Haven, LLC ("Tenant"), a Texas limited liability company,
having its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
ARTICLE I
1. LEASED PROPERTY; TERM.
Upon and subject to the terms and conditions hereinafter set forth,
Landlord hereby rents and leases to Tenant and Tenant hereby rents and leases
from Landlord all of Landlord's rights and interest in and to the following real
and personal property (collectively, the "Leased Property"):
1.1 LAND. The real property described in Exhibit 1.1 attached hereto (the
"Land");
1.2 LEASED IMPROVEMENTS. All buildings, structures, Fixtures (as
hereinafter defined) and other improvements of every kind including, but not
limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits
and lines (on-site and off-site), parking areas and roadways appurtenant to such
buildings and structures presently situated upon the Land (collectively the
"Leased Improvements");
1.3 RELATED RIGHTS. All easements, rights and appurtenances relating to
the Land and the Leased Improvements (collectively the "Related Rights");
1.4 FIXTURES. All permanently affixed equipment, machinery, fixtures, and
other items of real and/or personal property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Leased Improvements, including, without
limitation, all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air and water
pollution control, waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection equipment, and
built-in oxygen and vacuum systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the parties hereto to constitute real
estate, together with all replacements, modifications, alterations and additions
thereto, but specifically excluding all items included within the category of
Personal Property as defined below (collectively the "Fixtures");
1.5 PERSONAL PROPERTY. All machinery, equipment, furniture, furnishings,
movable walls or partitions, trade fixtures or other tangible personal property,
used or useful in Tenant's business on the Leased Property, including without
limitation all items of furniture, furnishings, equipment, together with all
replacements, modifications, alterations, and additions thereto including
without limitation any and all replacements and additions of personal property
made by Tenant during the
1
term at Tenant's cost and expense except items, if any, included within the
definition of Fixtures but excluding (a) any Personal Property which is being
leased by the Tenant pursuant to an Equipment Lease as defined below (b) cash
and equivalents, (c) manuals, forms or related documents containing information
proprietary to Landlord, including, without limitation, operational, nursing,
administrative, policy/procedure and other similar manuals, and (d) any and all
software programs, systems, methods, functions and documentation relating
thereto ("Software Programs") which have been developed by Landlord or
Landlord's affiliated companies including without limitation Virtual Care
Provider, Inc. and any Software Programs which are owned by third-party vendors
and have been licensed to Landlord or Landlord's affiliated companies
(collectively the "Personal Property");
To have and to hold for a term of five (5) years (the "Term") commencing on
October 1, 2001 (the "Commencement Date") and ending at11:59 p.m. on September
30, 2006 (the "Expiration Date"), unless this Lease is sooner terminated as
hereinafter provided.
ARTICLE II
2. DEFINITIONS. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as at the time applicable, (iii) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease and (iv) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision:
2.1 ADDITIONAL CHARGES: As defined in Article III.
2.2 AFFILIATE: When used with respect to any corporation, the term
"Affiliate" shall mean any person which, directly or indirectly, controls or is
controlled by or is under common control with such corporation. For the purposes
of this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
through the ownership of voting securities, partnership interests, membership
interests or other equity interests.
2.3 AWARD: As defined in Article XV.
2.4 BUSINESS DAY: Each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which national banks are authorized, or obligated, by law
or executive order, to close.
2.5 COMMENCEMENT DATE: As defined in Article I.
2.6 CONDEMNATION, CONDEMNOR: As defined in Article XV.
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2.7 DATE OF TAKING: As defined in Article XV.
2.8 ENCUMBRANCE: As defined in Article XXXVI.
2.9 EVENT OF DEFAULT: As defined in Article XVI.
2.10 FACILITY: The skilled nursing facility currently operated on the
Leased Property generally described as Villa Haven Health and Rehabilitation
Center, a duly licensed 92 bed skilled nursing facility which beds are all
currently licensed and useable.
2.11 FACILITY MORTGAGE: As defined in Article XIII.
2.12 FACILITY MORTGAGEE: As defined in Article XIII.
2.13 FIXTURES: As defined in Article I.
2.14 IMPOSITIONS: Collectively, all taxes (including, without limitation,
all capital stock and franchise taxes of Landlord, all ad valorem, sales and
use, single business, gross receipts, transaction privilege, rent or similar
taxes), assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not to be completed within the Term), ground rents,
water, sewer or other rents and charges, excises, tax levies, fees (including,
without limitation, license, permit, inspection, authorization and similar
fees), and all other governmental charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Leased Property and/or the Rent or Additional Rent
(including all interest and penalties thereon due to any failure in payment by
Tenant), which at any time during or in respect of the Term hereof may be
assessed or imposed on or in respect of or be a lien upon (a) Landlord or
Landlord's interest in the Leased Property, (b) the Leased Property or any part
thereof or any rent therefrom or any estate, right, title or interest therein,
or (c) any occupancy, operation, use or possession of, or sales from, or
activity conducted on, or in connection with the Leased Property or the leasing
or use of the Leased Property or any part thereof; provided, however, nothing
contained in this Lease shall be construed to require Tenant to pay (1) any tax
based on net income (whether denominated as a franchise or capital stock or
other tax) imposed on Landlord or any other person or (2) any transfer, or net
revenue tax of Landlord or any other person or (3) any tax imposed with respect
to the sale, exchange or other disposition by Landlord of any Leased Property or
the proceeds thereof, or (4), except as expressly provided elsewhere in this
Lease, any principal or interest on any assumed indebtedness on the Leased
Property, except to the extent that any tax, assessment, tax levy or charge,
which Tenant is obligated to pay pursuant to the first sentence of this
definition and which is in effect at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (1) or (2) is levied, assessed or imposed expressly in lieu thereof.
2.15 INSURANCE REQUIREMENTS: All terms of any insurance policy required by
this Lease and all requirements of the issuer of any such policy.
2.16 INTENDED USE: As defined in Section 7.2.2 below
3
2.17 LAND: As defined in Article I.
2.18 LANDLORD: As defined in the Preamble.
2.19 LEASE: As defined in the Preamble.
2.19A LEASE YEAR: "Lease Year" shall mean a consecutive 12 calendar month
period commencing on the Commencement Date of this Lease and ending on the day
immediately preceding the anniversary of said Commencement Date. In the event
that the Commencement Date is not the first day of a month, the Lease Year shall
include the period from the Commencement Date through the end of the month in
which the Commencement Date occurs and for that Lease Year the Lease Year shall
be a 12 consecutive month period plus the additional period from the
Commencement Date to the end of the month in which the Commencement Date occurs.
2.20 LEASED IMPROVEMENTS; LEASED PROPERTY: Each as defined in Article I.
2.21 LEGAL REQUIREMENTS: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting either the Leased Property, the construction,
use or alteration thereof, or the ownership and/or operation of the Facility as
a skilled nursing facility and any related services whether now or hereafter
enacted and in force, including without limitation any and all laws relating to
the licensure of the Facility as a skilled nursing facility and the
certification of the Facility under the Medicare and State Medicaid programs,
including any which may (i) require repairs, modifications or alterations in or
to the Leased Property or (ii) in any way adversely affect the use and enjoyment
thereof, and all permits, licenses and authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments, either of record or known to Tenant (other than encumbrances
created by Landlord without the consent of Tenant), at any time in force
affecting the Leased Property (collectively hereafter the "Laws").
2.22 [INTENTIONALLY LEFT BLANK].
2.23 OFFICER'S CERTIFICATE: A certificate of Tenant signed by an officer
authorized to so sign by the board of directors or by-laws.
2.24 OVERDUE RATE: On any date, a rate equal to 4% above the Prime Rate,
but in no event greater than the maximum rate then permitted under applicable
law.
2.25 PAYMENT DATE: Any due date for the payment of the installments of
Rent, Additional Charges or any other sums payable under this Lease.
2.26 PERSONAL PROPERTY: As defined in Article I.
2.27 PRIME RATE: On any date, a rate equal to the annual rate on such date
announced by Bank of America, N.A. to be its prime rate for 90-day unsecured
loans to its corporate borrowers
4
of the highest credit standing.
2.28 RENT: The amounts described in Article III.
2.29 TAKING: A taking or voluntary conveyance during the Term hereof of all
or part of the Leased Property, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of any condemnation
or other eminent domain proceeding affecting the Leased Property whether or not
the same shall have actually been commenced.
2.30 TENANT: As defined in the Preamble.
2.31 TERM: As defined in Article I.
2.32 UNAVOIDABLE DELAYS: Delays due to strikes, lockouts, inability to
procure materials, power failure, acts of God, governmental restrictions, enemy
action, civil commotion, fire, unavoidable casualty or other causes beyond the
control of the party responsible for performing an obligation hereunder,
provided that lack of funds shall not be deemed a cause beyond the control of
either party hereto unless such lack of funds is caused by the failure of the
other party hereto to perform any obligations of such party, under this Lease or
any guaranty of this Lease.
2.33 UNSUITABLE FOR ITS INTENDED USE: A state or condition of the Facility
such that by reason of damage or destruction, or a partial taking by
condemnation, in the good faith judgment of Landlord and Tenant, reasonably
exercised, the Facility cannot be operated on a commercially practicable basis
for its Intended Use taking into account, among other relevant factors, the
number of usable beds affected by such damage or destruction or partial taking.
2.34 USE: As defined in 7.2.2.
ARTICLE III
3.1 RENT AND ADDITIONAL CHARGES. Tenant will pay to Landlord or directly
to the appropriate entity in the case of Impositions and Additional Charges in
lawful money of the United States of America which shall be legal tender for the
payment of public and private debts at Landlord's address set forth above or at
such other place or to such other person, firms or corporations as Landlord from
time to time may designate in writing, Rent (as defined below), and Additional
Charges (as defined below) during the Term, as follows:
3.1.1 RENT. The Tenant hereby covenants and agrees to pay to the Landlord,
without any deduction or setoff whatsoever and without any demand or notice, the
fixed annual rent (subject to annual adjustments described below) in the amount
of Three Hundred Nine Thousand Dollars ($309,000.00) ("Annual Rent"). The Fixed
Annual Rent shall be paid in equal consecutive monthly installments of
Twenty-Five Thousand Seven Hundred Fifty Dollars ($25,750.00), in advance on or
before the fifth day of each month, time being of the essence ("Monthly Rent").
The Monthly Rent shall be adjusted with any adjustment to the Annual Rent. All
payments shall be made to Landlord at the address set forth in the notice
section hereof or at such other place as the Landlord
5
may designate from time to time in writing. In the event that the first and last
months of the Term are not full calendar months, the Monthly Rent for such
months shall be prorated.
The Annual Rent shall be increased on the anniversary date of each
year during the Term of this Lease by an amount equal to the percentage
increase, if any, in the average Medicaid per diem received by the Facility
since the Commencement Date of the Lease and, thereafter, by the average
Medicaid per diem received by the Facility since the date of the last Annual
Rent increase. The increases shall be set forth in an Addendum to the Lease.
3.1.2 ADDITIONAL CHARGES. In addition to the Rent, (1) Tenant will also pay
and discharge as and when due and payable all other amounts, liabilities,
obligations and Impositions which Tenant assumes or agrees to pay under this
Lease including without limitation all Impositions and charges, costs and
expenses described in Section 2.22, plus sales tax, and (2) in the event of any
failure on the part of Tenant to pay any of those items referred to in clause
(1) above, Tenant will also promptly pay and discharge every fine, penalty,
interest and cost which may be added for non-payment or late payment of such
items (the items referred to in clauses (1) and (2) above being referred to
herein collectively as the "Additional Charges"), and Landlord shall have all
legal, equitable and contractual rights, powers and remedies provided either in
this Lease or by statute or otherwise in the case of non-payment of the
Additional Charges as in the case of non-payment of the Rent. If any installment
of Rent, or Additional Charges (but only as to those Additional Charges which
are payable directly to Landlord) shall not be paid within three (3) Business
Days after its due date, Tenant will pay Landlord on demand, as Additional
Charges, a late charge (to the extent permitted by law) computed at the Overdue
Rate (or at the maximum rate permitted by law, whichever is the lesser) on the
amount of such installment, from the due date of such installment to the date of
payment thereof. To the extent that Tenant pays any Additional Charges to
Landlord pursuant to any requirement of this Lease, Tenant shall be relieved of
its obligation to pay such Additional Charges to the entity to which they would
otherwise be due.
3.2 NET LEASE. The Rent shall be paid absolutely net to Landlord, so that
this Lease shall yield to Landlord the full amount of Rent and Additional
Charges throughout the Term. It is the express intent of the Landlord and Tenant
that each and every cost and expense of using, operating, maintaining or holding
any interest in the Leased Property (except any federal, state, or local taxes
payable by Landlord on the Rent received by Landlord from its leasing of the
Leased Property) be Tenant's sole cost and responsibility whether foreseen or
unforeseen, ordinary or extraordinary.
ARTICLE IV
4.1 PAYMENT OF IMPOSITIONS. Subject to Article XII relating to permitted
contests, Tenant will pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible, and will simultaneously with
such payment, furnish to Landlord copies of official receipts or other
satisfactory proof evidencing such payments. Tenant's obligation to pay such
Impositions shall be deemed absolutely fixed upon the date such Impositions
become a lien upon the Leased Property or any part thereof. If any such
Imposition may, at the option of the taxpayer, lawfully be paid in installments
(whether or not interest shall accrue on the unpaid balance of such Imposition),
Tenant
6
may exercise the option to pay the same (and any accrued interest on the
unpaid balance of such Imposition) in installments and in such event, shall pay
such installments during the Term hereof (subject to Tenant's right of contest
pursuant to the provisions of Article XII) as the same respectively become due
and before any fine, penalty, premium, further interest or cost may be added
thereto. Landlord, at its expense, shall, to the extent permitted by applicable
law, prepare and file all tax returns and reports as may be required by
governmental authorities in respect of Landlord's net income, gross receipts,
franchise taxes and taxes on its capital stock, and Tenant, at its expense,
shall, to the extent permitted by applicable laws and regulations, prepare and
file all other tax returns and reports in respect of any Imposition as may be
required by governmental authorities. If any refund shall be due from any taxing
authority in respect of any Imposition paid by Tenant, the same shall be paid
over to or retained by Tenant if no Event of Default shall have occurred
hereunder and be continuing. Any such funds retained by Landlord due to an Event
of Default shall be applied as provided in Article XVI. Landlord and Tenant
shall, upon request of the other, provide such data as is maintained by the
party to whom the request is made with respect to the Leased Property as may be
necessary to prepare any required returns and reports. In the event governmental
authorities classify any property covered by this Lease as personal property,
Tenant shall file all personal property tax returns in such jurisdictions where
it may legally so file. Landlord, to the extent it possesses the same, and
Tenant, to the extent it possesses the same, will provide the other party, upon
request, with cost and depreciation records necessary for filing returns for any
property so classified as personal property. Where Landlord is legally required
to file personal property tax returns, Tenant will be provided with copies of
assessment notices indicating a value in excess of the reported value in
sufficient time for Tenant to file a protest. Tenant may, upon notice to
Landlord, at Tenant's option and at Tenant's sole cost and expense, protest,
appeal, or institute such other proceedings as Tenant may deem appropriate to
effect a reduction of real estate or personal property assessments and Landlord,
at Tenant's expense as aforesaid, shall fully cooperate with Tenant in such
protest, appeal, or other action. ▇▇▇▇▇▇▇▇ for reimbursement by Tenant to
Landlord of personal property taxes shall be accompanied by copies of a ▇▇▇▇
therefor and payments thereof which identify the personal property with respect
to which such payments are made.
4.2 NOTICE OF IMPOSITIONS. Landlord shall give prompt notice to Tenant of
all Impositions payable by Tenant hereunder of which Landlord at any time has
knowledge, but Landlord's failure to give any such notice shall in no way
diminish Tenant's obligations hereunder to pay such Impositions.
4.3 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Landlord and Tenant, whether or not such Imposition is imposed
before or after such termination, and Tenant's obligation to pay its prorated
share thereof shall survive such termination.
4.4 UTILITY CHARGES. Tenant will pay or cause to be paid all charges for
electricity, power, gas, oil, water and all other utilities used in the Leased
Property during the Term.
4.5 INSURANCE PREMIUMS. Tenant will pay or cause to be paid all premiums
for the insurance coverage required to be maintained pursuant to Article XIII
during the Term.
ARTICLE V
7
5.1 NO TERMINATION, ABATEMENT. Except as otherwise specifically provided
in this Lease, Tenant, to the extent permitted by law, shall remain bound by
this Lease in accordance with its terms and shall neither take any action
without the consent of Landlord to modify, surrender or terminate the same, nor
seek nor be entitled to any abatement, deduction, deferment or reduction of
Rent, or set-off against the Rent, nor shall the respective obligations of
Landlord and Tenant be otherwise affected by reason of (a) any damage to, or
destruction of, any Leased Property or any portion thereof from whatever cause
or any Taking of the Leased Property or any portion thereof, (b) the lawful or
unlawful prohibition of, or restriction upon, Tenant's use of the Leased
Property, or any portion thereof, the interference with such use by any person,
corporation, partnership or other entity, or by reason of eviction by paramount
title; (c) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Landlord or any assignee or transferee of Landlord, or (d) for any
other cause whether similar or dissimilar to any of the foregoing other than a
discharge of Tenant from any such obligations as a matter of law.
5.2 ABATEMENT PROCEDURES. In the event of a partial taking as described in
Section 15.4, temporary taking as described in Section 15.7, or damage to or
destruction of the Leased Property as described in Sections 14.2 and 14.3, which
taking, damage or destruction does not render the Leased Property Unsuitable for
its Primary Intended Use, the Lease shall not terminate, but the Rent shall be
abated in the manner and to the extent that is fair, just and equitable to both
Tenant and Landlord, taking into consideration, among other relevant factors,
the number of usable beds affected by such partial taking or damage or
destruction.
ARTICLE VI
6.1 OWNERSHIP OF THE LEASED PROPERTY. Tenant acknowledges that the Leased
Property is the property of Landlord and that Tenant has only the right to the
exclusive possession and use of the Leased Property upon the terms and
conditions of this Lease.
6.2 PERSONAL PROPERTY. After the Commencement of this Lease, Tenant may
(and shall as provided herein below), at its expense, install, affix, assemble
or place on any portion of the Land or in any of the Leased Improvements, any
items of personal property (for purposes of this Article VI the "New Personal
Property"; as used in any other Article of this Lease, Personal Property
includes all personal property, including New Personal Property), and such New
Personal Property and replacements thereof, shall be at all times the property
of Tenant, free and clear of all liens subject to Landlord's rights set forth in
Section 6.3 hereof. Tenant shall provide and maintain during the entire Lease
Term all Personal Property and New Personal Property, including, without
limitation, all personal property necessary in order to operate the Facility in
compliance with all licensure and certification requirements, in compliance with
all applicable Legal Requirements and Insurance Requirements and otherwise in
accordance with customary practice in the industry for the Intended Use. Upon
expiration or termination of the Lease, Tenant will, at its expense, restore the
Leased Property to the condition required by Section 9.1.4.
6.3 TRANSFER OF PERSONAL PROPERTY TO LANDLORD. Upon the expiration or
earlier
8
termination of this Lease, all Personal Property including New Personal Property
shall become the property of Landlord, if not already owned by Landlord, and
Tenant shall execute all documents and take any actions reasonably necessary to
evidence such ownership.
6.4 PURCHASES OF PERSONAL PROPERTY BY TENANT. Nothing in this Lease shall
prohibit Tenant from purchasing or leasing personal property for use in the
Facility subject to Landlord's prior written approval. In such event such
personal property shall be deemed New Personal Property.
ARTICLE VII
7.1 CONDITION OF THE LEASED PROPERTY. Tenant acknowledges receipt and
delivery of possession of the Leased Property and that Tenant has examined and
otherwise has full knowledge of the condition of the Leased Property prior to
the execution and delivery of this Lease and has found the same to be in good
order and repair and satisfactory for its purposes hereunder. Tenant is leasing
the Leased Property "AS IS" in its present condition. Tenant waives any claim or
action against Landlord in respect of the condition of the Leased Property.
Landlord MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF
THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE,
DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT
THE LEASED PROPERTY HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO TENANT.
7.2 USE OF THE LEASED PROPERTY.
7.2.1 APPROVALS, LICENSES, CERTIFICATIONS. Landlord represents that it
has full power and authority to lease the Leased Property subject to the
fulfillment of any conditions precedent set forth herein and subject to
compliance by the Tenant with Tenant's obligations set forth herein. Tenant
covenants that it will proceed with all due diligence and will obtain prior to
the Commencement Date and maintain throughout the Term all approvals, licenses,
certifications and accreditations needed to use and operate the Leased Property
and the Facility under applicable local, state and federal law, including but
not limited to Laws relating to the licensure of the Facility and Medicare
and/or Medicaid certification for its Intended Use (defined below). Tenant
shall, within 48 hours of receipt, forward to the Landlord a complete and
legible copy of any and all violation(s), or noncompliance notice(s), surveys,
deficiencies, and other notices from licensing, certification, accreditation,
and government agencies and insurance carriers relating to the Leased Property.
Tenant shall immediately correct any and all matters set forth in such notice(s)
and provide Landlord with copies of any plans of correction, letters and
documentation relating to such correction and any other information requested by
Landlord.
7.2.2 USE AS LICENSED SKILLED NURSING FACILITY. After the Commencement
Date and during the entire Term, Tenant shall use the Leased Property and the
improvements thereon solely as a licensed skilled nursing facility and for no
other use or purpose ("Intended Use" or "Use"). Tenant shall not use the Leased
Property or any portion thereof for any other use without the prior written
consent of Landlord, which consent may be withheld in the sole discretion of
Landlord. No
9
use shall be made or permitted to be made of the Leased Property, and no acts
shall be done, which will cause the cancellation of any insurance policy
covering the Leased Property or any part thereof, nor shall Tenant sell or
otherwise provide to residents or patients therein, or permit to be kept, used
or sold in or about the Leased Property any article which may be prohibited by
law or by the standard form of fire insurance policies, or any other insurance
policies required to be carried hereunder, or fire underwriters regulations.
Tenant shall, at its sole cost, comply in all material respects with all Legal
Requirements applicable to the possession and use of the Leased Property for its
Intended Use as a nursing facility with the number of licensed beds described
herein.
Tenant covenants and agrees that during the Term it shall operate
continuously the Leased Property as a duly licensed and certified skilled
nursing facility and to maintain its certifications for reimbursement and
licensure and its accreditation, if compliance with accreditation standards is
required to maintain the operations of the Facility and if a failure to comply
would adversely affect operations of the Facility. Tenant covenants and agrees
to take any and all actions, at tenant's sole cost and expense, to maintain the
Facility during the Term as a duly licensed Facility for the number of beds, the
licenses, certifications, and accreditations in effect or retroactive to the
Commencement Date and upon expiration or earlier termination to deliver the
Leased Property to Landlord fully licensed, certified and accredited asa skilled
nursing facility duly licensed for the number of beds as of the Commencement
Date and certified for participation in the Medicare and Medicaid programs. Upon
termination of this Lease for any reason, Tenant will return the Leased Property
including without limitation the Facility and all operations conducted at the
Facility qualified and sufficient for licensing by all governmental agencies
having jurisdiction over the Facility as a skilled care nursing facility. The
Leased Property shall be surrendered in good, operable order, condition and
repair. Tenant shall cooperate to assure that the Facility is turned over to the
Landlord or the Landlord's designee in condition suitable to have the operations
at the Facility continue without disruption as a skilled care nursing facility
duly licensed and certified by the Medicare and Medicaid programs.
7.2.3 WASTE. Tenant shall not commit or suffer to be committed any
waste on the Leased Property, or in the Facility, nor shall Tenant cause or
permit any nuisance thereon.
7.2.4 ADVERSE USE. Tenant shall neither suffer nor permit the Leased
Property or any portion thereof, including any Capital Addition, or Personal
Property, to be used in such a manner as (i) might reasonably tend to impair
Landlord's title thereto or to any portion thereof, or (ii) may reasonably make
possible a claim or claims of adverse usage or adverse possession by the public,
as such, or of implied dedication of the Leased Property or any portion thereof.
7.2.5 ENVIRONMENTAL COMPLIANCE. (i) Tenant hereby agrees that as a
material inducement to Landlord entering into this Lease, Tenant covenants that
Tenant shall not cause or permit any "hazardous substance" (as hereinafter
defined) to be placed, held, located or disposed of in, on or at the Leased
Property or any part thereof and neither the Leased Property, nor any part
thereof shall ever be used as a dump site or a storage site (whether permanent
or temporary) for any hazardous substance during the term of this Lease.
(ii) Tenant hereby agrees, to indemnify Landlord and Landlord's
Mortgagee
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and hold Landlord and Landlords Mortgagee harmless from and against
any and all losses, liabilities, including, without limitation, strict
liability, damages, injuries, expenses, including, without limitation,
reasonable attorney's fees, costs of any settlement or judgment and
claims of any and every kind whatsoever paid, incurred or suffered by,
or asserted against Landlord or Landlord's Mortgagee by any person or
entity or governmental agency for, with respect to, or as a direct or
indirect result of, the presence on or under or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releasing from
the Leased Property of any hazardous substance, including, without
limitation, any losses, liabilities, including, without limitation,
strict liability, damages, injuries, expenses, including, without
limitation, reasonable attorney's fees, costs of any settlement or
judgment or claims asserted or arising under the Comprehensive
Environmental Response, Compensation and Liability Act, any so-called
federal, state or local "super fund" or "super lien" laws or other
statute, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability, including, without
limitation, strict liability, or standards of conduct concerning any
hazardous substance.
(iii) For purposes of this Lease, hazardous substances shall mean
and include those elements or compounds which are contained in the
list of hazardous substances adopted by the United States
Environmental Protection Agency ("EPA") or the list of toxic
pollutants designated by Congress or the EPA or which are defined as
hazardous, toxic, pollutant, infectious or radioactive by any other
federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing
liability or standards of conduct concerning, any hazardous, toxic or
dangerous waste, substance or material, as now or at anytime hereafter
in effect other than those elements or compounds which are not present
on the Leased Property in such amounts and/or quantities so as to be a
regulated element or compound by the EPA or any other federal, state
or local government entity.
ARTICLE VIII
8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS, INSTRUMENTS. Subject
to Article XII regarding permitted contests, Tenant, at its expense, will
promptly (a) comply with all Laws, Legal Requirements and Insurance Requirements
in respect of the Intended Use, operation, maintenance, repair and restoration
of the Leased Property, whether or not compliance therewith shall require
structural changes in any of the Leased Improvements or interfere with the use
and enjoyment of the Leased Property and (b) procure, maintain and comply with
all licenses, certificates of need, provider agreements, conditions of
participation, accreditation standards and other authorizations required for
Intended Use of the Leased Property then being made, and for the proper
erection, installation, operation and maintenance of the Leased Property or any
part thereof, including without limitation any capital additions.
8.2 LEGAL REQUIREMENT COVENANTS. Tenant covenants and agrees that the
Leased Property shall not be used for any unlawful purpose nor shall Tenant
permit any unlawful activity to take place in, on or about the Leased Property.
Tenant further covenants and agrees that Tenant's
11
use of the Leased Property and maintenance, alteration, and operation of the
same, and all parts thereof, shall at all times conform to all Laws and Legal
Requirements unless the same are held by a court of competent jurisdiction to be
unlawful. Tenant may, however, upon prior written notice to and the prior
written consent of the Landlord contest the legality or applicability of any
such Laws or Legal Requirement, or any licensure or certification decision if
Tenant maintains such action in good faith, with due diligence, without
prejudice to Landlord's rights hereunder, and at Tenant's sole cost and expense.
If by the terms of any such Laws or Legal Requirement, compliance therewith
pending the prosecution of any such proceeding may legally be delayed without
the occurrence of any lien, charge or liability of any kind against the Facility
or Tenant's leasehold interest therein and without subjecting Tenant or Landlord
to any liability, civil or criminal, for failure so to comply therewith, Tenant
may delay compliance therewith until the final determination of such proceeding.
If any lien, charge or civil or criminal liability would be incurred by reason
of any such delay, Tenant, on the prior written consent of Landlord, may
nonetheless contest as aforesaid and delay as aforesaid provided that such delay
would not subject Landlord to criminal liability or civil damages, fines,
penalties or forfeitures of any nature or kind and Tenant both (a) furnishes to
Landlord security reasonably satisfactory to Landlord against any loss or injury
by reason of such contest or delay, and (b) prosecutes the contest with due
diligence and in good faith.
ARTICLE IX
9.1 MAINTENANCE AND REPAIR.
9.1.1 MAINTENANCE AND REPAIR. Tenant, at its expense, will keep the
Leased Property and all private roadways, sidewalks and curbs appurtenant
thereto and which are under Tenant's control in good order and repair (whether
or not the need for such repairs occurs as a result of Tenant's use, any prior
use, the elements or the age of the Leased Property, or any portion thereof),
and, except as otherwise provided in Article XIV, with reasonable promptness,
make all necessary and appropriate repairs and replacements thereto of every
kind and nature, whether interior or exterior, structural or non-structural,
ordinary or extraordinary, foreseen or unforeseen or arising by reason of a
condition existing prior to the commencement of the Term of this Lease
(concealed or otherwise). All repairs shall, to the extent reasonably
achievable, be at least equivalent in quality to the original work. Tenant shall
not take or omit to take any action, the taking or omission of which might
materially impair the value or the usefulness of the Leased Property or any part
thereof for its Intended Use.
9.1.2 LANDLORD'S OBLIGATIONS. Landlord shall not under any
circumstances be required to build or rebuild any improvements on the Leased
Property, or to make any repairs, replacements, alterations, restorations or
renewals of any nature or description to the Leased Property, whether interior
or exterior, ordinary or extraordinary, structural or non-structural, foreseen
or unforeseen, or to make any expenditure whatsoever with respect thereto, in
connection with this Lease, or to maintain the Leased Property in any way.
Tenant hereby waives, to the extent permitted by law, the right to make repairs
at the expense of Landlord pursuant to any law in effect at the time of the
execution of this Lease or hereafter enacted.
9.1.3 CONTRACTORS. LIENS. Nothing contained in this Lease and no
action or
12
inaction by Landlord shall be construed as (i) constituting the consent or
request of Landlord, expressed or implied, to any contractor, subcontractor,
laborer, materialman or vendor to or for the performance of any labor or
services or the furnishing of any materials or other property for the
construction, alteration, addition, repair or demolition of or to the Leased
Property or any part thereof, or (ii) giving Tenant any right, power or
permission to contract for or permit the performance of any labor or services or
the furnishing of any materials or other property as Landlord's Agent or in such
fashion as would permit the making of any claim against Landlord in respect
thereof or to make any agreement that may create, or in any way be the basis
for, any right, title, interest, lien, claim or other encumbrance upon the
estate of Landlord in the Leased Property, or any portion thereof.
9.1.4 CONDITION UPON SURRENDER. Tenant shall, upon the expiration or
prior termination of the Term, vacate and surrender the Leased Property to
Landlord in the condition in which the Leased Property was originally received
from Landlord, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Lease, and except for ordinary
wear and tear (subject to the obligation of Tenant to maintain the Leased
Property in good order and repair during the entire Term of the Lease).
9.2 ENCROACHMENTS AND RESTRICTIONS. If, as a result of action or inaction
by or on behalf of Tenant, any of the Leased Improvements shall, at any time,
encroach upon any property, street or right-of-way adjacent to the Leased
Property, or shall violate the agreements or conditions contained in any lawful
restrictive covenant or other agreement affecting the Leased Property, or any
part thereof, or shall impair the rights of others under any easement or
right-of-way to which the Leased Property is subject, then promptly upon the
request of Landlord or at the behest of any person affected by any such
encroachment, violation or impairment, Tenant shall, at its, expense, subject to
its right to contest the existence of any encroachment, violation or impairment
and in such case, in the event of an adverse final determination, either
(i)obtain valid and effective waivers or settlements of all claims, liabilities
and damages resulting from each such encroachment, violation or impairment,
whether the same shall affect Landlord or Tenant or (ii)make such changes in the
Leased Improvements, and take such other actions, as Tenant in the good faith
exercise of its judgment deems reasonably practicable, to remove such
encroachment, and to end such violation or impairment, including, if necessary,
the alteration of any of the Leased Improvements, and in any event take all such
actions as may be necessary in order to be able to continue the operation of the
Leased Improvements for the Intended Use substantially in the manner and to the
extent the Leased Improvements were operated prior to the assertion of such
violation or encroachment. Any such alteration shall be made in conformity with
the applicable requirements of Article X. Tenant's obligations under this
Section 9.2 shall be in addition to and shall in no way discharge or diminish
any obligation of any insurer under any policy of title or other insurance and
Tenant shall be entitled to a credit for any sums recovered by Landlord under
any such policy of title or other insurance.
ARTICLE X
10. CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY. Without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld by Landlord, Tenant shall make no structural alterations or repairs on
the Leased Property and shall not enlarge or reduce the size of the Facility. No
capital addition shall be made which would tie in or connect any Leased
13
Improvements on the Leased Property with any other improvements on property
adjacent to or near the Leased Property (and not part of the land covered by
this Lease) including, without limitation, tie-ins of buildings or other
structures or utilities, unless Tenant shall have obtained the prior written
approval of Landlord, which approval may be granted or withheld in Landlord's
sole discretion.
ARTICLE XI
11. LIENS. Subject to the provision of Article XII relating to permitted
contests, Tenant shall not directly or indirectly create or allow to remain, and
shall promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) restrictions, liens and other, encumbrances which are consented to in
advance in writing by Landlord, (c) liens for those taxes of Landlord which
Tenant is not required to pay hereunder, (d) liens for Impositions or for sums
resulting from noncompliance with Legal Requirements so long as (1) the same are
not yet past due and payable or are payable without the addition of any fine or
penalty or (2) such liens are in the process of being contested as permitted by
Article XII, and (e) liens of mechanics, laborers, materialmen, suppliers or
vendors for sums either disputed or not yet due, provided that (1) the payment
of such sums shall not be postponed under any related contract for more than
thirty (30) days after the completion of the action giving rise to such lien and
such reserve or other appropriate provisions as shall be required by law or
generally accepted accounting principles shall have been made therefor or (2)
any such liens are in the process of being contested as permitted by Article
XII.
ARTICLE XII
12. PERMITTED CONTESTS. Tenant, on its own or on Landlord's behalf (or in
Landlord's name), but at Tenant's expense, may contest, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition or any Legal
Requirement or Insurance Requirement or any lien, attachment, levy, encumbrance,
charge or claim not otherwise permitted by Article XI, provided that (a) in the
case of an unpaid Imposition, lien, attachment, levy, encumbrance, charge or
claim, the commencement and continuation of such proceedings shall suspend the
collection thereof from Landlord and from the Leased Property, (b) neither the
Leased Property nor any Rent therefrom nor any part thereof or interest therein
would be in any immediate danger of being sold, forfeited, attached or lost, (c)
in the case of a Legal Requirement, Landlord would not be in any immediate
danger of civil or criminal liability for failure to comply therewith pending
the outcome of such proceedings, (d) in the event that any such contest shall
involve a sum of money or potential loss in excess of Fifty Thousand ($50,000)
Dollars, then Tenant shall deliver to Landlord and its counsel an opinion of
Tenant's counsel to the effect set forth in clauses (a), (b) and (c), to the
extent applicable; provided however, that the requirement of delivery of such
opinion of Tenant's counsel may be waived by the Landlord upon prior written
request of the Tenant, (e) in the case of a Legal Requirement and/or an
Imposition, lien, encumbrance or charge, Tenant shall give such reasonable
security as may be demanded by Landlord to insure ultimate payment of the same
and to prevent any sale or forfeiture of the affected Leased Property or the
Rent by reason of such non-payment or noncompliance, provided, however, the
provisions of this Article XII shall not be construed to permit Tenant to
contest the payment of Rent
14
(except as to contests concerning the method of computation or the basis of levy
of any Imposition or the basis for the assertion of any other claim) or any
other sums payable by Tenant to Landlord hereunder, (f) in the case of an
Insurance Requirement, the coverage required by Article XIII shall be
maintained, and (g) if such contest be finally resolved against Landlord or
Tenant, Tenant shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or comply with the applicable Legal Requirement or Insurance
Requirement. Landlord, at Tenant's expense, shall execute and deliver to Tenant
such authorizations and other documents as may reasonably be required in any
such contest, and, if reasonably requested by Tenant or if Landlord so desires,
Landlord shall join as a party therein. Tenant shall indemnify, defend, and save
Landlord harmless against any liability, cost or expense of any kind that may be
imposed upon Landlord in connection with any such contest and any loss resulting
therefrom.
ARTICLE XIII
13.1 GENERAL INSURANCE REQUIREMENTS. During the Term of this Lease, Tenant
shall at all times keep the Leased Property, and all property located in or on
the Leased Property, including all Personal Property, insured with the kinds and
amounts of insurance required pursuant to all Legal Requirements. This insurance
shall be written by companies authorized to do insurance business in the State
in which the Leased Property is located. The policies must name Landlord and
Landlord's Mortgagee as an additional insured.
13.2 NO SEPARATE INSURANCE. Tenant shall not, on Tenant's own initiative or
pursuant to the request or requirement of any third party, take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article, to be furnished by, or which may reasonably be
required to be furnished by, Tenant, or increase the amounts of any then
existing insurance by securing an additional policy or additional policies,
unless all parties having an insurable interest in the subject matter of the
insurance, including in all cases Landlord and all Facility Mortgagees, are
included therein as additional insureds, and the loss is payable under said
insurance in the same manner as losses are payable under this Lease. Tenant
shall immediately notify Landlord of the taking out of any such separate
insurance or of the increasing of any of the amounts of the then existing
insurance by securing an additional policy or additional policies.
ARTICLE XIV
14.1 INSURANCE PROCEEDS. All proceeds payable by reason of any loss or
damage to the Leased Property, or any portion thereof, and insured under any
policy of insurance required by Article XIII of this Lease shall be paid to
Landlord and held by Landlord in trust or, if such proceeds exceed $1,000,000,
held in trust by a third party trustee and shall be made available for
reconstruction or repair, as the case may be, of any damage to or destruction of
the Leased Property, or any portion thereof, and shall be paid out by Landlord
from time to time for the reasonable costs of such reconstruction or repair. Any
excess proceeds of insurance remaining after the completion of the restoration
or reconstruction of the Leased Property (or in the event neither Landlord nor
Tenant is required or elects to repair and restore, all such insurance proceeds)
shall be retained by Landlord free and clear upon completion of any such repair
and restoration except as otherwise specifically
15
provided below in this Article XIV. All salvage resulting from any risk covered
by insurance shall belong to Landlord. The parties agree that to the extent the
Landlord's mortgage lender imposes terms which are different from the terms
described herein, the terms of such Lender's Mortgage shall.
14.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE.
14.2.1 DESTRUCTION: FACILITY RENDERED UNSUITABLE. If during the Lease
Term, the Leased Property is totally or partially destroyed from a risk covered
by the insurance described in Article XIII and the Facility thereby is rendered
Unsuitable for Its Intended Use, Tenant shall either (A) promptly restore the
Facility to substantially the same condition as existed immediately before the
damage or destruction, or (B) offer to acquire the Leased Property from
Landlord. In the event Landlord does not accept Tenant's offer to so purchase
the Leased Property, Tenant may either withdraw its offer to purchase the Leased
Property and proceed to restore the Facility to substantially the same condition
as existed immediately before the damage or destruction or terminate the Lease
and Landlord shall be entitled to retain the insurance proceeds. In the event
Tenant performs such restoration of the facility, it shall be entitled to
insurance proceeds paid in connection with the destruction up to the amount paid
by Tenant for such restoration.
14.2.2 DESTRUCTION: FACILITY NOT RENDERED UNSUITABLE. If during the
Lease Term, the Leased Improvements, Personal Property and/or the Fixtures are
totally or partially destroyed from a risk covered by the insurance described in
Article XIII, but the Facility is not thereby rendered Unsuitable for its
Intended Use, Tenant shall promptly restore the Facility to substantially the
same condition as existed immediately before the damage or destruction. Such
damage or destruction shall not terminate this Lease.
14.2.3 COSTS IN EXCESS OF PROCEEDS. If the cost of the repair or
restoration exceeds the amount of proceeds received by Landlord from the
insurance required under Article XIII, Tenant shall be obligated to contribute
any excess amounts needed to restore the Facility. Such difference shall be paid
by Tenant to Landlord to be held in trust together with any other insurance
proceeds for application to the cost of repair and restoration unless this Lease
shall terminate pursuant to this Article XIV.
14.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY
INSURANCE. If during the Lease Term, the Facility is totally or materially
destroyed from a risk not covered by the insurance described in Article XIII,
whether or not such damage or destruction renders the Facility Unsuitable for
Its Primary Intended Use, Tenant shall restore the Facility to substantially the
same condition it was in immediately before such damage or destruction and such
damage or destruction shall not terminate this Lease.
14.4 ABATEMENT OF RENT. This Lease shall remain in full force and effect
and Tenant's obligation to make rent payments and to pay all other charges
required by this Lease shall remain unabated except to the extent provided
otherwise in Section 5.2 above.
14.5 WAIVER. Tenant hereby waives any statutory rights of termination which
may arise by reason of any damage or destruction of the Facility which Landlord
is obligated to restore or may restore under any of the provisions of this
Lease.
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ARTICLE XV
15. CONDEMNATION.
15.1 DEFINITIONS.
15.1.1 CONDEMNATION. "Condemnation" means (a) the exercise of any
governmental power, whether by legal proceedings or otherwise, by a Condemnor,
and (b) a voluntary sale or transfer by Landlord to any Condemnor, either under
threat of condemnation or while legal proceedings for condemnation are pending.
15.1.2 DATE OF TAKING. "Date of Taking" means the date the Condemnor
has the right to possession of the property being condemned.
15.1.3 AWARD. "Award" means all compensation, sums or anything of
value awarded, paid or received on a total or partial condemnation.
15.1.4 CONDEMNOR. "Condemnor" means any public or quasi-public
authority, or private corporation or individual, having the power of
condemnation.
15.2 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
taking of all or any part of the Leased Property or any interest in this Lease
by condemnation, the rights and obligations of the parties shall be determined
by this Article XV.
15.3 TOTAL TAKING. If the Leased Property is totally taken by condemnation,
this Lease shall terminate on the Date of Taking.
15.4 PARTIAL TAKING. If a portion of the Leased Property is taken by
condemnation, this Lease shall remain in effect if the Facility is not thereby
rendered Unsuitable for Its Primary Intended Use, but if the Facility is thereby
rendered Unsuitable for its Primary Intended Use, this Lease shall terminate on
the Date of Taking. If as the result of any such partial taking by condemnation,
this Lease is not terminated as provided above, Tenant shall be entitled to
abatement of rent as provided in Section 5.2.
15.5 RESTORATION. If there is a partial taking of the Leased Property and
this Lease remains in full force and effect pursuant to Section 15.4, Landlord
at its cost shall accomplish all necessary restoration up to but not exceeding
the amount of the award payable to Landlord, as provided herein.
15.6 AWARD--DISTRIBUTION. The entire Award shall belong to and be paid to
Landlord, except that, subject to the rights of the Facility Mortgagees, Tenant
shall be entitled to receive from the Award, if and to the extent such Award
specifically includes such item, the following:
15.6.1 A sum attributable to the value, if any, of the leasehold
interest of Tenant under this Lease, including, if any, relocation payments.
17
15.6.2 Provided, however, that in any event Landlord shall receive
from the Award, subject to the rights of the Facility Mortgagees, no less than
the greater at the time of such Award of the fair market value of the Leased
Property or the purchase price referred to in Exhibit 34.1.
15.7 TEMPORARY TAKING. The taking of the Leased Property, or any part
thereof, by military or other public authority shall constitute a taking by
condemnation only when the use and occupancy by the taking authority has
continued for longer than six (6) months. During any such six (6) month period
all the provisions of this Lease shall remain in full force and effect except
that the Minimum Rent shall be abated or reduced during such period of taking as
provided in Section 5.2.
ARTICLE XVI
16.1 EVENTS OF DEFAULT. If any one or more of the following events
(individually, an "Event of Default") shall occur:
16.1.1 EVENT OF DEFAULT. An Event of Default shall occur under this
Lease, or
16.1.2 PAYMENT DEFAULT. If Tenant shall fail to make payment of the
Rent or other amounts payable by Tenant under this Lease when the same becomes
due and payable and such failure is not cured by Tenant within a period of five
(5) business days after receipt by Tenant of notice thereof from Landlord, or
16.1.3 NONPAYMENT DEFAULT. If Tenant shall fail to observe or perform
any other term, covenant or condition of this Lease and such failure is not
cured by Tenant within a period of ten (10) days after receipt by Tenant of
notice thereof from Landlord, unless such failure cannot with due diligence be
cured within a period of ten (10) days, in which case such failure shall not be
deemed to continue if Tenant proceeds promptly and with due diligence to cure
the failure and diligently completes the curing thereof, or
16.1.4 BANKRUPTCY, INSOLVENCY. If Tenant shall:
(i) admit in writing its inability to pay its debts generally as
they become due,
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency act,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or of the
whole or any substantial part of its property, or
(v) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other applicable
law or statute of the United States of America or any State thereof,
or
18
(vi) if Tenant shall, on a petition in bankruptcy filed against
it, be adjudicated a bankrupt or a court of competent jurisdiction
shall enter an order or decree appointing, without the consent of
Tenant, a receiver of Tenant or of the whole or substantially all of
its property, or approving a petition filed against it seeking
reorganization or arrangement of Tenant under the Federal bankruptcy
laws or any other applicable law or statute of the United States of
America or any State thereof, or
16.1.5 ASSIGNMENT, SUBLETTING. Assign, sublet or otherwise transfer
this Lease or the Facility or Leased Property without Landlord's consent as
required by Section 24 hereof.
16.1.6 LIQUIDATION OR DISSOLUTION. If Tenant shall be liquidated or
dissolved, or shall begin proceedings toward such liquidation or dissolution, or
shall, in any manner, permit the sale or divestiture of substantially all its
assets other than in connection with a merger or consolidation of Tenant into,
or a sale of substantially all of Tenant's assets to, another corporation,
unless the survivor of such merger or the purchaser of such assets shall assume
all of Tenant's obligations under this Lease by a written instrument, in form
and substance reasonably satisfactory to Landlord, Landlord is provided an
opinion of counsel, reasonably satisfactory to Landlord and addressed to
Landlord stating that such instrument of assumption is valid, binding and
enforceable against the parties thereto in accordance with its terms (subject to
usual bankruptcy and other creditors' rights exceptions), or
16.1.7 ACTION AGAINST LEASEHOLD INTEREST. If the estate or interest of
Tenant in the Leased Property or any part thereof shall be levied upon or
attached in any proceeding and the same shall not be vacated or discharged
within the later of ninety (90) days after commencement thereof or 30 days after
receipt by Tenant of notice thereof from Landlord, (unless Tenant shall be
contesting such lien or attachment in good faith in accordance with Article XII
hereof), or
16.1.8 DISCONTINUATION OF OPERATIONS. If, except as a result of
damage, destruction or a partial or complete condemnation, Tenant voluntarily
ceases operations on the Leased Property for a period in excess of one (1) day,
or
16.1.9 BREACH OF REPRESENTATIONS OR WARRANTIES. If any of the
representations or warranties proves to be untrue when made in any material
respect which materially and adversely affects Landlord, and which is not cured
within ten (10) days after receipt by Tenant of notice from Landlord thereof,
or, if not susceptible of being cured within the ten (10) days, Tenant has
commenced to cure within ten (10) days after notice thereof and has thereafter
diligently proceeded to cure such default in the representation or warranty.
16.1.10 TERMINATION OF LICENSE: PENALTIES AND FINES. If Tenant
receives any violation or noncompliance notices from any authority having
jurisdiction over the Leased Property or the Facility, is threatened by such
authority with loss of licensure or certification for the Facility, is fined or
penalized by such authority or is threatened with the imposition at a fine or
penalty by such authority, then, and in any such event, Landlord may terminate
this Lease by giving Tenant not less
19
than five (5) days' notice of such termination and upon the expiration of the
time fixed in such notice, the Term shall terminate and all rights of Tenant
under this Lease shall cease. Landlord shall have all rights at law and in
equity available to Landlord as a result of Tenant's breach of this Lease.
Tenant shall, to the extent permitted by law, pay as Additional
Charges all costs and expenses incurred by or on behalf of Landlord, including,
without limitation, reasonable attorneys' fees and expenses, as a result of any
Event of Default hereunder.
16.2 CERTAIN REMEDIES.
16.2.1 REMEDIES AVAILABLE. If an Event of Default shall have occurred
(and the event giving rise to such Event of Default has not been cured within
the curative period relating thereto as set forth in Section 16.1 above) and be
continuing, in addition to any other rights or remedies Landlord may have,
Landlord shall have the option to exercise any one or more of the following
remedies, it being agreed that pursuit of any remedy provided in this Lease
shall not preclude pursuit of any other remedy or remedies herein provided or
provided by law, and that any of such remedies may be pursued regardless of
whether or not the Default continues to exist and whether or not Landlord
accepts or has accepted Rent subsequent to the occurrence of such Default:
(a) Terminate this Lease by written notice to Tenant, in which
event Tenant shall immediately surrender possession of the Leased Property to
Landlord and Landlord may reenter and repossess the Leased Property, and, at
Landlord's option, all personal property, fixtures and equipment in the Leased
Property shall thereupon become the property of Landlord; and, in connection
therewith, Landlord may use such force as may be necessary, without being guilty
of trespass, forcible entry, detainer or other tort.
(b) With or without terminating this Lease, and without notice
to Tenant, Landlord, at its option, exercisable in Landlord's sole discretion,
may enter upon the Leased Premises, change the locks, and attempt to re-let the
Leased Premises, without advertisement, by private negotiations and for any term
and rental rate which Landlord in its sole discretion determines. Tenant shall
not be liable to Landlord for the deficiency, if any, between all rent and other
amounts due hereunder for the entire Term hereof and the Rent paid by the new
lessee applicable to the remaining Term hereof (or any part thereof).
(c) Pursue any and all other rights and remedies available at
law or in equity.
16.2.2 Each right and remedy provided for in this Lease shall be
cumulative and shall be in addition to every other right or remedy provided for
in this Lease or now or hereafter existing at law or in equity or by statute or
otherwise, and the exercise or beginning of the exercise by Landlord of any one
or more of the rights or remedies provided for in this Lease or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Landlord of any and all other rights and
remedies provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise.
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16.3 WAIVER. If this Lease is terminated pursuant to Section 16.1,
Tenant waives, to the extent permitted by applicable law, (a) any right of
redemption, re-entry or repossession, (b) any right to a trial by jury in the
event of summary proceedings to enforce the remedies set forth in this Article
XVI, and (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt.
16.4 APPLICATION OF FUNDS. Any payments received by Landlord under any
of the provisions of this Lease during the existence or continuance of any Event
of Default (and such payment is made to Landlord rather than Tenant due to the
existence of an Event of Default) shall be applied to Tenant's obligations in
the order which Landlord may determine or as may be prescribed by the laws of
the State of Texas.
ARTICLE XVII
17. LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT. If Tenant shall fail to
make any payment or to perform any act required to be made or performed under
this Lease, and to cure the same within the relevant time periods provided in
Section 16.1, Landlord, after notice to and demand upon Tenant, and without
waiving or releasing any obligation or Default, may (but shall be under no
obligation to) at any time thereafter make such payment or perform such act for
the account and at the expense of Tenant, and may, to the extent permitted by
law, enter upon the Leased Property for such purpose and take all such action
thereon as, in Landlord's opinion, may be necessary or appropriate therefor. No
such entry shall be deemed an eviction of Tenant. All sums so paid by Landlord
and all costs and expenses (including, without limitation, reasonable attorneys'
fees and expenses, in each case, to the extent permitted by law) so incurred,
together with a late charge thereon (to the extent permitted by law) at the
Overdue Rate from the date on which such sums or expenses are paid or incurred
by Landlord, shall be paid by Tenant to Landlord on demand. The obligations of
Tenant and rights of Landlord contained in this Article shall survive the
expiration or earlier termination of this Lease.
ARTICLE XVIII
[ARTICLE XVIII INTENTIONALLY LEFT BLANK]
ARTICLE XIX
[ARTICLE XIX INTENTIONALLY LEFT BLANK]
ARTICLE XX
20. HOLDING OVER. If Tenant shall for any reason remain in possession of
the Leased Property after the expiration of the Term or earlier termination of
the Term hereof, such possession shall be as a month-to-month tenant at double
the Rent provided for herein. During such period of month-to-month-to-month
tenancy, Tenant shall be obligated to perform and observe all of the terms,
covenants and conditions of this Lease, but shall have no rights hereunder other
than the right, to the extent given by law to month-to-month tenancies, to
continue its occupancy and use of the Leased
21
Property. Nothing contained herein shall constitute the consent, express or
implied, of Landlord to the holding over of Tenant after the expiration or
earlier termination of this Lease.
ARTICLE XXI
[ARTICLE XXI INTENTIONALLY LEFT BLANK]
ARTICLE XXII
[ARTICLE XXII INTENTIONALLY LEFT BLANK]
ARTICLE XXIII
23.1 INDEMNIFICATION OF LANDLORD. Notwithstanding the existence of any
insurance provided for in Article XIII, and without regard to the policy limits
of any such insurance, Tenant will protect, indemnify, save harmless and defend
Landlord from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses), to the extent permitted by law,
imposed upon or incurred by or asserted against Landlord by reason of: (a) any
accident, injury to or death of persons or loss of or damage to property
occurring on or about the Leased Property or adjoining sidewalks, including
without limitation any claims of negligence, violation of resident rights,
professional malpractice or other claims, (b) any use, occupancy, possession,
misuse, non-use, condition, maintenance or repair by Tenant of the Leased
Property, (c) any Impositions (which are the obligations of Tenant to pay
pursuant to the applicable provisions of this Lease), (d) any failure on the
part of Tenant to perform or comply with any of the terms of this Lease, (e) any
claims, damages, losses relating to the operation of the Facility including
without limitation employment related claims, (f) any act, omission or
negligence of Tenant, its agents, employees, invitees and others claiming by
through or under Tenant. Any amounts which become payable by Tenant under this
Section shall be paid within ten (10) days after liability therefor on the part
of Tenant is determined by litigation or otherwise, and if not timely paid,
shall bear a late charge (to the extent permitted by law) at the Overdue Rate
from the date of such determination to the date of payment. Tenant, at its
expense, shall contest, resist and defend any such claim, action or proceeding
asserted or instituted against Landlord or may compromise or otherwise dispose
of the same subject to Landlord's prior written approval. To the extent Tenant
makes payments to Landlord under this Article XXIII, Tenant shall become
subrogated to the rights of Landlord for insurance proceeds. Nothing herein
shall be construed as indemnifying Landlord against its own negligent acts or
omissions or willful misconduct.
23.2 INDEMNIFICATION OF TENANT. For the period prior to the Term of this
Agreement, notwithstanding the existence of any insurance provided for in
Article XIII, and without regard to the policy limits of any such insurance,
Landlord will protect, indemnify, save harmless and defend Tenant from and
against all liabilities, obligations, claims damages, penalties, causes of
action, costs and expenses (including, without limitation, reasonable attorneys'
fees and expenses), to the extent
22
permitted by law, imposed upon or incurred by or asserted against Tenant by
reason of: (a) any accident, injury to or death of persons or loss of or damage
to property occurring on or about the Leased Property or adjoining sidewalks,
including without limitation any claims of negligence, violation of resident
rights, professional malpractice or other claims occurring prior to the Term of
this Agreement, (b) any use, occupancy, possession, misuse, non-use, condition,
maintenance or repair by Landlord of the Leased Property occurring prior to the
Term of this Agreement, (c) any Impositions (which are the obligations of
Landlord to pay pursuant to the applicable provisions of this Lease) occurring
prior to the Term of this Agreement, (d) any failure on the part of the Landlord
to perform or comply with any of the terms of this Lease or any other agreement
with Tenant, (e) any claims, damages, losses relating to the operation of the
Facility including without limitation employment related claims, occurring prior
to the Term of this Agreement, (f) any act, omission or negligence of Landlord,
its agents, employees, invitees and others claiming by through or under Landlord
occurring prior to the Term of this Agreement, and (g) any matter raised in any
regulatory survey by any federal or state agency concerning the Facility for the
period prior to the Term of this Agreement. Any amounts which become payable by
Landlord under this Section shall be paid within ten (10) days after liability
therefor on the part of the Landlord is determined by litigation or otherwise,
and if not timely paid, shall bear a late charge (to the extent permitted by
law) at the Overdue Rate from the date of such determination to the date of
payment. Landlord, at is expense, shall contest, resist and defend any such
claim, action or proceeding asserted or instituted against Tenant or may
compromise or otherwise dispose of the same as Landlord sees fit. To the extent
Landlord makes payments to Tenant under this Article XXIII, Landlord shall
become subrogated to the rights of Tenant for insurance proceeds. Nothing herein
shall be construed as indemnifying Tenant against its own negligent acts or
omissions or willful misconduct.
23.3 SURVIVAL. Tenant's and Landlord's liability for a breach of the
provisions of this Article arising during the Term hereof shall survive any
termination of this Lease.
ARTICLE XXIV
24. SUBLETTING AND ASSIGNMENT. Tenant shall not, without the prior written
consent of Landlord, which consent Landlord may withhold in its sole discretion,
and Landlord's Mortgagee, convey, pledge, mortgage, encumber or assign this
Lease or any interest hereunder, whether voluntary or by operation of law,
sublease the Leased Premises or any part thereof, or permit the use of the
Leased Premises or any portion thereof by any party other than Tenant, including
any affiliated entity of Tenant. Consent to any assignment or sublease shall not
constitute a waiver of this provision with respect to any other assignment or
sublease, and all later assignments or subleases shall be made likewise only
with the prior written consent of Landlord and Landlord's Mortgagee. Any
subtenant, assignee or successor of Tenant, at the option of Landlord, shall
become directly liable to Landlord for all obligations of Tenant hereunder, but
no transfer, sublease or assignment by Tenant shall relieve Tenant of any
liability hereunder.
ARTICLE XXV
25. OFFICER'S CERTIFICATES, FINANCIAL STATEMENTS, AND DISCLOSURES.
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25.1 ESTOPPEL CERTIFICATE. At any time and from time to time upon Tenant's
receipt of not less than ten (10) days prior written request by Landlord, Tenant
will furnish to Landlord an Officer's Certificate certifying that this Lease is
unmodified and in full force and effect (or that this Lease is in full force and
effect as modified and setting forth the modifications) and the dates to which
the Rent has been paid. Any such certificate furnished pursuant to this Section
may be relied upon by Landlord and any prospective purchaser of the Leased
Property.
25.2 FINANCIAL STATEMENTS. Tenant will furnish the following financial
statements to Landlord:
(i) Within 90 days after the end of each of Tenant's fiscal
years, a copy of the audited (if available, otherwise unaudited)
consolidated balance sheets of Tenant and its consolidated
subsidiaries as of the end of such fiscal year, and related audited
consolidated (if available, otherwise unaudited) consolidated
statements of income, changes in common stock and undistributed
profits and changes in the financial position of Tenant and its
consolidated subsidiaries for such fiscal year, prepared in accordance
with generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved;
(ii) Within 90 days after the end of each of Tenant's fiscal
years, and together with the documents furnished in accordance with
clause (i), an Officer's Certificate stating that to the best of the
signer's knowledge and belief after making due inquiry, Tenant is not
in default in the performance or observance of any of the terms of
this Lease, or if Tenant shall be in default to its knowledge,
specifying all such defaults, the nature thereof, and the steps being
taken to remedy the same;
(iii) Within 30 days after the end of each of Tenant's quarters,
quarterly consolidated financial reports Tenant produces for reporting
purposes and detailed statements of income and detailed operational
statistics regarding occupancy rates, patient mix and patient rates by
type for the Facility; and
(iv) Within 90 days after the end of each of Tenant's fiscal
years, a copy of each cost report filed with the appropriate
governmental agency for each of the Facilities (and all amendments
thereto whether contemporaneously or subsequently filed thereto);
25.3 ADDITIONAL INFORMATION. Tenant shall furnish the following Additional
Information to Landlord:
(i) Within ten (10) days of receipt thereof, copies of all
surveys (complaint, annual or otherwise), along with all accompanying
letters, exhibits and information relating thereto and copies of any
notices from any governmental agency
24
relating to an investigation of Tenant's operations including without
limitation HCFA, the OIG, the FBI, the State Medicated Fraud division,
performed by the appropriate governmental agencies for licensing or
certification purposes, and any plan of correction thereto; and
(ii) With reasonable promptness, such other information
respecting the financial condition and affairs of Tenant and the
Facility as Landlord may reasonably request from time to time; and
(iii) Furnish to Landlord, within thirty (30) days of receipt a
copy of any licensing or other agency survey or report and any
statement of deficiencies and/or any other report indicating that any
action is pending or being considered to downgrade the Facility to a
substandard category, and within the time period required by the
particular agency for furnishing a plan of correction also furnish or
cause to be furnished to Landlord a copy of the plan of correction or
other response generated as a result of such survey or report for the
Facility, and correct or cause to be corrected any deficiency, the
curing of which is a condition of continued licensure or for full
participation in any applicable reimbursement program;
(iv) The Landlord further reserves the right to require such
other information relating to the financial affairs or operations of
the Tenant and the Facility at such other times as Landlord shall
reasonably require (including monthly or more frequently), and Tenant
agrees to provide such information to Landlord within three (3) days
from request. All financial statements must be in such form and detail
as the Landlord shall from time to time reasonably request, provided,
however, that Landlord will make reasonable efforts to use Tenant's
existing forms of reports for all purposes.
ARTICLE XXVI
26. LANDLORD'S RIGHT TO INSPECT. Tenant shall permit Landlord and its
authorized representatives to inspect the Leased Property during usual business
hours subject to any security, health, safety or confidentiality requirements of
Tenant or any governmental agency or insurance requirement relating to the
Leased Property, or imposed by law or applicable regulations.
ARTICLE XXVII
27. NO WAIVER. No failure by Landlord or Tenant to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
25
ARTICLE XXVIII
28. REMEDIES CUMULATIVE. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Landlord or Tenant now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy and the exercise or beginning of the exercise by Landlord or Tenant
or any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Landlord or Tenant of any or all of such
other rights, powers and remedies.
ARTICLE XXIX
29. ACCEPTANCE OF SURRENDER. No surrender to Landlord of this Lease or of
the Leased Property or any part of any thereof, or of any interest therein,
shall be valid or effective unless agreed to and accepted in writing by Landlord
and no act by Landlord or any representative or agent of Landlord, other than
such a written acceptance by Landlord, shall constitute an acceptance of any
such surrender.
ARTICLE XXX
[ARTICLE XXX INTENTIONALLY LEFT BLANK]
ARTICLE XXXI
31. CONVEYANCE BY LANDLORD. Landlord may convey, transfer or assign this
Lease or the Leased Property without the Tenant's consent.
ARTICLE XXXII
32. QUIET ENJOYMENT. So long as Tenant shall pay all Rent as the same
becomes due and shall fully comply with all of the terms of this Lease and fully
perform its obligations hereunder, Tenant shall peaceably and quietly have, hold
and enjoy the Leased Property for the Term hereof, free of any claim or other
action by Landlord or anyone claiming by, through or under Landlord, but subject
to all liens and encumbrances of record as of the date hereof or hereafter
consented to by Tenant. No failure by Landlord to comply with the foregoing
covenant shall give Tenant any right to cancel or terminate this Lease or ▇▇▇▇▇,
reduce or make a deduction from or offset against the Rent or any other sum
payable under this Lease, or to fail to perform any other obligation of Tenant
hereunder. Notwithstanding the foregoing, Tenant shall have the right, by
separate and independent action to pursue any claim it may have against Landlord
as a result of a breach by Landlord of the covenant of quiet enjoyment contained
in this Section.
ARTICLE XXXIII
33. NOTICES. All notices, demands, requests, consents, approvals and other
26
communications hereunder shall be in writing and delivered or mailed (by
registered or certified mail, return receipt requested and postage prepaid),
addressed to the respective parties, as follows:
33.1 NOTICE TO TENANT.
if to Tenant:
At: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
33.2 NOTICE TO LANDLORD:
if to Landlord:
At: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or to such other address as either party may hereafter designate, and shall be
effective upon receipt.
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ARTICLE XXXIV
[ARTICLE XXXIV INTENTIONALLY LEFT BLANK]
ARTICLE XXXV
35.1 LANDLORD MAY GRANT LIENS. Without the consent of Tenant, Landlord may,
subject to the terms and conditions set forth below in this Section 35.1, from
time to time, directly or indirectly, create or otherwise cause to exist any
lien, encumbrance or title retention agreement ("Encumbrance") upon the Leased
Property, or any portion thereof or interest therein, whether to secure any
borrowing or other means of financing or refinancing. Any such Encumbrance shall
contain the right to prepay (whether or not subject to a prepayment penalty) and
shall provide that it is subject to the rights of Tenant under this Lease,
including the rights of Tenant to acquire the Leased Property pursuant to the
applicable provisions of this Lease, except that Tenant's right of first refusal
to purchase the Leased Property shall not be applicable upon a foreclosure sale
or transfer in lieu thereof; provided, however, that any such purchaser or
transferee shall take title subject to Tenant's rights to acquire the Leased
Property. Any lender which takes an interest in the Leased Property pursuant to
this Article (a) shall agree to give Tenant the same notice, if any, given to
Landlord of any default or acceleration of any obligation underlying any such
mortgage or any sale in foreclosure under such mortgage, (b) shall agree to
permit Tenant to cure any such default on Landlord's behalf within any
applicable cure period, and Tenant shall be reimbursed by Landlord for any and
all out-of-pocket costs incurred to effect any such cure (including reasonable
attorneys' fees), and (c) shall agree to permit Tenant to appear by its
representative and to bid at any sale in foreclosure made with respect to any
such mortgage.
35.2 TENANT'S RIGHT TO CURE. Subject to the provisions of Section 35.3, if
Landlord shall breach any covenant to be performed by it under this Lease,
Tenant, after notice to and demand upon Landlord, without waiving or releasing
any obligation hereunder, and in addition to all other remedies available to
Tenant, may (but shall be under no obligation at any time thereafter to) make
such payment or perform such act for the account and at the expense of Landlord.
The rights of Tenant hereunder to cure and to secure payment from Landlord in
accordance with this Section 35.2 shall survive the termination of this Lease
with respect to the Leased Property.
35.3 BREACH BY LANDLORD. It shall be a breach of this Lease if Landlord
shall fail to observe or perform any term, covenant or condition of this Lease
on its part to be performed and such failure shall continue for a period of
thirty (30) days after notice thereof from Tenant (or such shorter time as may
be required in order to protect the health or welfare of any patients or other
residents of the Leased Property), unless such failure cannot with due diligence
be cured within a period of thirty (30) days, in which case such failure shall
not be deemed to continue if Landlord, within said thirty (30) day period,
proceeds promptly and with due diligence to cure the failure and diligently
completes the curing thereof. The time within which Landlord shall be obligated
to cure any such failure shall also be subject to extension of time due to the
occurrence of any Unavoidable Delay.
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ARTICLE XXXVI
36. MISCELLANEOUS.
36.1 SURVIVAL. MODIFICATION. SUCCESSORS AND ASSIGNS. Anything contained in
this Lease to the contrary notwithstanding, all claims against, and liabilities
of, the Tenant or Landlord arising prior to any date of termination of this
Lease shall survive such termination. If any late charges or similar costs
provided for in any provision of this Lease are based upon a rate in excess of
the maximum rate permitted by applicable law, the parties agree that such
charges shall be fixed at the maximum permissible rate. Neither this Lease nor
any provision hereof may be changed, waived, discharged or terminated except by
an instrument in writing and in recordable form signed by Landlord and Tenant.
All the terms and provisions of this Lease shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
36.2 EXCULPATION OF LANDLORD. Tenant specifically agrees to look solely to
Landlord's interest in the Leased Property for recovery of any judgment from
Landlord, it being specifically agreed that no shareholder, director, officer,
member, partner, or employee of Landlord shall ever be personally liable for any
such judgment or for the payment of any monetary obligation to Tenant. The
provision contained in the foregoing sentence is not intended to, and shall not,
limit any right that Tenant might otherwise have to obtain injunctive relief
against Landlord or Landlord's successors in interest, or any action not
involving the personal liability of Landlord (original or successor).
Furthermore, except as otherwise expressly provided herein, in no
event shall Landlord (original or successor) ever be liable to Tenant for any
indirect or consequential damages suffered by Tenant from whatever cause.
36.3 EXCULPATION OF TENANT. Landlord specifically agrees to look solely to
Tenant's interest in the Leased Property for recovery of any judgment from
Tenant, it being specifically agreed that no shareholder, director, officer,
manager, member, partner, or employee of Tenant shall ever be personally liable
for any such judgment or for the payment of any monetary obligation to Landlord.
The provision contained in the foregoing sentence is not intended to, and shall
not, limit any right that Landlord might otherwise have to obtain injunctive
relief against Tenant or Tenant's successors in interest, or any action not
involving the personal liability of Tenant (original or successor).
Furthermore, except as otherwise expressly provided herein, in no
event shall Tenant (original or successor) ever be liable to Landlord for any
indirect or consequential damages suffered by Landlord from whatever cause.
36.4 TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Landlord's option, Tenant shall use its best efforts
to transfer to Landlord or Landlord's nominee and Tenant shall cooperate with
Landlord or Landlord's nominee in connection with the processing by Landlord or
Landlord's nominee of, any applications for all licenses, operating permits and
other governmental authorization and all contracts, including contracts with
governmental or quasi-governmental entities which may be necessary for the
operation of the Facility;
29
provided that the costs and expenses of any such transfer or the processing of
any such application shall be paid by Landlord or Landlord's nominee.
Notwithstanding anything in this Lease or elsewhere to the contrary, under no
circumstances shall Landlord be obligated to seek or effectuate such a transfer
or application therefore.
36.5 CAPTIONS. Titles, Captions and Notations appearing in this instrument
are provided merely for ease of reference, and the parties hereto expressly
acknowledge and agree that such notations and titles do not constitute a part of
this Lease, have no legal effect whatsoever in determining the rights or
obligations of the parties, and shall have no bearing upon the meaning or
interpretation of this agreement or any portion of it.
36.6 NON-WAIVER. The failure by Landlord, whether once or more, to act upon
a specific breach of any term, covenant or condition herein contained shall not
be deemed to be a waiver of such term, covenant, or condition nor of any
subsequent breach of the same or any other term, covenant or condition herein
contained. Any subsequent acceptance of Rent hereunder by Landlord shall not be
deemed to be a waiver of any preceding breach by Tenant of any term, covenant or
condition of this Lease other than the failure of Tenant timely to pay the
particular rental so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such rent. No covenant, term or
condition of this Lease shall be deemed to have been waived by Landlord unless
such waiver shall be specifically expressed in writing by Landlord.
36.7 SEVERABILITY. ENTIRE AGREEMENT. If any term, covenant or condition of
this Lease or the application thereof to any person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term, covenant, or condition to persons or circumstances
other than those which or to which such may be held invalid or unenforceable,
shall not be affected thereby, and each term, covenant or condition of this
Lease shall be valid and enforceable to the fullest extent permitted by law.
Except for any exhibits, attachments, plats, or other documents as may
be affixed hereto, made a part hereof, and properly identified herewith, this
Lease constitutes the entire contract between the parties, and shall not be
otherwise affected by any other purported undertaking whether written or oral.
36.8 TIME OF ESSENCE. Time shall be deemed to be of the essence with
respect to all provisions of this Lease including without limitation all
provisions relating to the payment of Rent, Impositions, Additional Charges,
Additional Rent, and payments to third parties required to be made by the Tenant
in order to comply with the provisions of this Lease. The fact that the phrase
"time shall be deemed of the essence" or language of similar import has not been
included in every section relating to the payment or performance of obligations
shall not be deemed or construed to indicate that the parties did not intend to
have time be deemed of the essence with respect to such payment or performance.
36.9 COLLECTION OF RENT. No termination of this Lease prior to the normal
ending thereof, by lapse of time or otherwise, shall affect Landlord's right to
collect Rent and all other amounts due Landlord in accordance with the terms of
this Lease.
30
36.10 REMEDIES CUMULATIVE. All rights, powers, privileges and remedies
conferred hereunder upon the parties hereto shall be cumulative but not
restrictive to those given by law.
36.11 GOVERNING LAW. The laws of the State of Texas shall govern the
interpretation, validity, performance and enforcement of this Lease, but not
including its conflict of laws rules.
36.12 AUTHORITY OF PARTIES. If Tenant signs as an entity, each person
executing this Lease on behalf of Tenant does hereby covenant and warrant that
Tenant is a duly authorized and existing entity, that Tenant has and is
qualified to do business in the State of Texas and that the entity has full
right and authority to enter into this Lease and that each person signing on
behalf of such entity is authorized to do so.
36.13 TRANSFER OF LANDLORD'S INTEREST. Nothing herein shall in any way
prohibit or restrict Landlord from conveying all or a portion of its right,
title and interest in the Leased Premises and to this Lease to a third party or
to an affiliate of Landlord. Upon any transfer of Landlord's interest in the
Leased Premises and in this Lease to a third party or affiliate of Landlord,
such transferee shall become "Landlord" hereunder and the transferor Landlord
shall have no further obligations hereunder.
36.14 NO PARTNERSHIP OR JOINT VENTURE. This Lease shall not be considered
in any manner a partnership agreement joint venture between Landlord and Tenant.
ARTICLE XXXVII
37. ATTORNMENT: SUBORDINATION.
37.1 TENANT SUBORDINATION. Tenant accepts this Lease subject and
subordinate to any Mortgage, Deed of Trust, Deed to Secure Debt or any other
hypothecation or security now or hereafter placed upon the Leased Premises (any
such instrument hereinafter called a "Mortgage") and to any and all advances
made on the security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. If any holder of a Mortgage (herein
"Landlord's Mortgagee") shall elect to have this Lease prior to the lien of its
Mortgage, and shall give written notice thereof to Tenant, this Lease shall be
deemed prior to such Mortgage, whether this Lease is dated prior or subsequent
to the date of said Mortgage, or the date of recording thereof.
37.2 ESTOPPEL AGREEMENT. Although the provisions of this Article 37 shall
be self-operative, Tenant agrees, upon request of Landlord or Landlord's
Mortgagee, to execute any estoppel certificates and other documents required to
effectuate any attornment, subordination or to make this Lease prior to the lien
of any Mortgage. Tenant's failure to execute such documents within ten (10) days
after written demand shall constitute a material default by Tenant hereunder,
or, at Landlord's option, Landlord shall execute such documents on behalf of
Tenant's attorney-in-fact.
37.3 ATTORNEY IN FACT APPOINTMENT. Tenant does hereby make, constitute and
31
irrevocably appoint Landlord as Tenant's attorney-in-fact and in Tenant's name,
place and stead, to execute such documents in accordance with this Article 37
such power of attorney being coupled with an interest.
37.4 TENANT ATTORNMENT. If by reason of a default under the Mortgage upon
the Leased Premises, the interest of Landlord in the Leased Premises is
terminated, the Tenant will attorn to Landlord's Mortgagee at Landlord's
mortgagee's sole option (or to any person or entity to which the Leased Premises
is conveyed by such holder) and will recognize such holder, person or entity as
Tenant's landlord under this Lease. Tenant further waives the provision of any
statute or rule of law now or hereafter in effect which may give or purport to
give Tenant any right of election to terminate this Lease or to surrender
possession of the Leased Premises in the event any proceeding is brought by
Landlord's Mortgagee to terminate the interest of the Landlord in the Leased
Premises, and agrees that this Lease shall not be affected in any way whatsoever
by such proceeding.
37.5 NOTICE OF DEFAULT TO LANDLORD'S MORTGAGES. If the Landlord defaults
under this Lease, Tenant, before taking advantage of any rights or remedies
granted to Tenant or by law, shall notify in writing, certified mail, return
receipt requested, any Landlord's Mortgagee which holds a Mortgage and who has
requested Tenant so to do and given Tenant its mailing address and Tenant shall
allow Landlord's Mortgagee, at Landlord's Mortgagee's sole option, ten (10) days
following receipt of such notice (plus any additional time that may be
reasonably necessary) within which to cure such default. The time given to
Landlord's Mortgagee to cure Landlord's default shall not run concurrently with
any time granted to Landlord to cure such default, but shall run form the later
of Landlord's Mortgagee's receipt of notice from Tenant of Landlord's default or
the expiration of the time period, if any, given to Landlord to cure such
default. Landlord's Mortgagee may, but shall not be obligated to, cure such
default, and Tenant shall accept any such cure by Landlord's Mortgagee.
ARTICLE XXXVIII
38. RE-ENTRY DURING TERM. Landlord, its agents, officers or assigns, and
Landlord's Mortgagee, shall have the right to enter the Leased Premises upon
reasonable prior notice except in emergencies during normal working hours
throughout the term of the Lease for the following purposes: inspecting the
general condition and state of repair of the Leased Property; showing the Leased
Property to any interested party; taking any emergency action which Landlord
deems necessary to protect the Leased Property; inspecting the Leased Property
as required by governmental agencies or insurance companies; or for any other
reasonable purposes. Landlord's right of re-entry and right to inspect the
Leased Property shall be subject to the privacy rights of residents and
regulations pertaining to confidentiality of resident records.
ARTICLE XXXIX
[ARTICLE XXXIX INTENTIONALLY LEFT BLANK]
ARTICLE XXXX
32
40. HEALTHCARE LICENSING, SURVEYS, COMPLIANCE NOTICES. Tenant shall give
Landlord prompt written notice of (a) any notice of loss of Joint Commission or
Accreditation of Healthcare Organizations accreditation, loss of participation
under any material reimbursement program or loss of applicable and material
health care licenses at the Facility and (b) any other material deficiency
notice, compliance order of adverse report issued by any governmental authority
or accreditation commission having jurisdiction over licensing, accreditation or
operation of the Facility or by any governmental authority or private insurance
company pursuant to a provider agreement, which, if not promptly complied with
or cured, would be reasonably likely to result in a material adverse effect on
Tenant.
ARTICLE XXXXI
41. RIGHT OF FIRST REFUSAL. If at any time during the Term of this Lease
Landlord , or any of its affiliated entities, shall receive an offer to sell the
Leased Property, or to enter into a lease of the Leased Property, Tenant shall
have a Right of First Refusal to purchase the Leased Premises or to renew this
Lease on the same terms and conditions as are offered to the Landlord or any of
its affiliates in such Offer to Purchase or Lease. Upon Landlord's notifications
of an offer to purchase or lease of the Leased Property, Landlord shall, within
ten (10) days of such notice, give written notice to Tenant of the proposed
terms and conditions. Tenant shall have fifteen (15) days after written
notification from the Landlord to advise Landlord of its intentions to purchase
the Leased Premises or renew the Lease. In the event Tenant determines not to
exercise its Right of First Refusal, Landlord shall be free to sell the Leased
Premises or lease the Leased Property to the other party on the same terms and
conditions as set forth in the notice provided to Tenant. In the event that the
terms and conditions of the proposed purchase or lease are changed, Landlord
shall advise Tenant in writing of the proposed changes and Tenant shall have
another fifteen (15) days in which to make a determination as to whether to
exercise its Right of First Refusal. In the event the Tenant notifies the
Landlord that the Tenant shall purchase the Leased Property pursuant to its
Right of First Refusal the closing of such purchase shall take place within 120
days from the receipt of such written notice from the Tenant.
33
IN WITNESS WHEREOF, the parties have caused this Lease to be executed
and their respective corporate seals, if any, to be hereunto affixed and
attested by their respective officers thereunto duly authorized.
Landlord: Tenant:
Extendicare Health Facilities, Inc. Senior Health-Villa Haven, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------- --------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Senior Vice President Its: President
State of Wisconsin State of Pennsylvania
County of Milwaukee County of Philadelphia
The foregoing instrument was acknowledged The foregoing instrument was acknowledged
before me this 25th day of September, 2001 before me this 26th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Senior by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as the President of
Vice-President of Extendicare Health
Facilities, Inc. --------------------------------------,
on behalf of the corporation.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------- ---------------------------------------
Notary Public, State of Wisconsin Notary Public, State of Pennsylvania
My commission expires 11/2/2003. My commission (is permanent)
(expires on 10-31-02)
[Notarial Seal] [Notarial Seal]
EXHIBIT 1.1
TO
LEASE AGREEMENT DATED AS OF OCTOBER 1, 2001
BETWEEN
EXTENDICARE HEALTH FACILITIES, INC., LANDLORD
AND
SENIOR HEALTH-VILLA HAVEN, LLC, TENANT
LEGAL DESCRIPTION
EXHIBIT 16.1.1
TO
LEASE AGREEMENT DATED AS OF OCTOBER 1, 2001
BETWEEN
EXTENDICARE HEALTH FACILITIES, INC.,, LANDLORD
AND
SENIOR HEALTH-VILLA HAVEN, LLC, TENANT
OTHER TEXAS LEASES AND SUBLEASES
OPERATIONS TRANSFER AGREEMENT ("AGREEMENT")
BETWEEN
EXTENDICARE HOMES, INC. ET AL. ("EXTENDICARE")
AND
SENIOR HEALTH PROPERTIES-TEXAS, INC. ET AL. ("SENIOR")
DATED AS OF OCTOBER 1, 2001
-----------------
EXHIBIT 1.2
-----------------
FORM OF SUBLEASE AGREEMENT
17
SUBLEASE
EXTENDICARE HOMES, INC.
LANDLORD
AND
SENIOR HEALTH-BROWNFIELD, LLC
TENANT
DATED AS OF October 1, 2001
--------------------------------------------
Facility:
Brownfield Rehabilitation & Care Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
--------------------------------------------
1
TABLE OF CONTENTS
PAGE
----
1. Leased Property: Rental Payments.......................................................................2
2. Subtenant Obligations...................................................................................2
3. Term: Renewal...........................................................................................3
3.1 Term.......................................................................................3
3.2 Renewal of Extension of Term...............................................................3
4. Additional Sublease Rental; Net Sublease................................................................4
5. Default.................................................................................................5
6. Subtenant Indemnity; Insurance; Waiver of Subrogation...................................................6
7. Use; Compliance with Law................................................................................7
7.1 Use........................................................................................7
7.2 Compliance.................................................................................7
8. Assignment and Subletting...............................................................................8
9. Inspection; Alterations.................................................................................9
10. Termination............................................................................................10
11. Sublandlord's Obligations..............................................................................10
12. Costs and Expenses in the Event of Default.............................................................10
13. Late Payment Charge....................................................................................11
14. Notices................................................................................................11
15. Accord and Satisfaction................................................................................12
16. Entire Agreement.......................................................................................12
17. Modifications..........................................................................................12
18. Consents...............................................................................................13
19. Multiple Originals.....................................................................................13
20. Authority..............................................................................................13
21. Entry by Sublandlord...................................................................................13
22. Non-Waiver.............................................................................................13
23. Relationship of Parties................................................................................13
24. Interpretation.........................................................................................14
25. Sublandlord's Indemnity................................................................................14
26. Personal Property......................................................................................14
i
TABLE OF CONTENTS
(continued)
PAGE
----
27. Conditions to Commencement Date........................................................................15
28. Additional Information to be Furnished by Subtenant....................................................15
28.1 Consolidated Annual Financial Statements.................................................15
28.2 Officer's Certificate....................................................................16
28.3 Consolidated Quarterly Financial Statements..............................................16
28.4 Cost Reports.............................................................................16
28.5 Surveys and Investigations Information...................................................16
28.6 Additional Information...................................................................17
29. Cross Default..........................................................................................17
30. Estoppel Certificate...................................................................................17
31. Transfers of Licenses Upon Termination.................................................................18
ii
EXHIBITS
--------
EXHIBITS
--------
A. Lease
B Texas Sublease & Leases
SUBLEASE AGREEMENT
THIS SUBLEASE (the "Sublease") is entered into as of the 1st day of
October, 2001 by and between Extendicare Homes, Inc. (f/k/a Unicare Homes, Inc),
a Delaware corporation, having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Sublandlord") and Senior Health-Brownfield, LLC, a
Texas limited liability company, having its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subtenant").
RECITALS:
The Sublandlord, as tenant, entered into a lease agreement with Triple S
Investment Company, a Wisconsin general partnership, Milwaukee, WI as the
Landlord which has been modified from time to time (the "Prime Landlord") for
the lease of the real and personal property generally described as the
Brownfield Rehabilitation & Care Center nursing facility (the "Facility")
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. (The real and personal
property being sublet pursuant to this Sublease is all of the Leased Property
described in the Prime Lease and is hereafter referred to as the "Leased
Property"). A copy of the Prime Lease including all exhibits, modifications and
amendments thereto is attached hereto as Exhibit A and incorporated herein by
reference. The lease including all exhibits, modifications and amendments
thereto is referred to herein as either the "Lease" or the "Prime Lease".
The Sublandlord desires to sublet the entire Leased Property to the
Subtenant and the Subtenant desires to sublet the entire Leased Property from
the Sublandlord pursuant to the terms, covenants and conditions set forth in
this Sublease.
NOW, THEREFORE, in consideration of the terms, covenants, conditions and
agreements contained herein and in any exhibits attached hereto, the Sublandlord
and the Subtenant (hereafter collectively referred to as the "parties") agree as
follows:
1. LEASED PROPERTY: RENTAL PAYMENTS. Sublandlord hereby subleases to
Subtenant, and Subtenant hereby subleases from Sublandlord, the Leased Property
subject to all terms, covenants and conditions contained in the Lease, except as
otherwise set forth in this Sublease. To the extent not inconsistent with this
Sublease, the terms of the Lease are hereby incorporated into this Sublease by
reference. Sublandlord shall have all of the rights of the Prime Landlord under
the Lease. In no event shall the Subtenant have the right to receive any
payments due from the Prime Landlord to the Sublandlord under the Lease.
2. SUBTENANT OBLIGATIONS. The Subtenant hereby covenants and agrees to
observe and perform each and every term, covenant, promise, condition and
obligation, imposed upon the Sublandlord, as tenant, under the Lease including
without limitation, the payment obligations of the Sublandlord, as tenant, under
the Lease . Such payment obligations of the Subtenant shall include without
limitation the payment , in the amounts and at the times called for in the
Lease, of all rental, additional rental, taxes, assessments, late charges,
license and permit fees, utilities, governmental charges, insurance premiums,
and capital improvement commitments. The Subtenant's obligations to perform the
terms, covenants and conditions described in the Lease are in addition to any
and all additional obligations of the Subtenant set forth in this Sublease
including any and all additional obligations for payment and performance. It is
the intent of the parties that on and after the Commencement Date, the
Sublandlord shall have absolutely no liability for the performance of the
tenant's obligations under the Lease and that all such
2
obligations are hereby assumed and shall be performed by the Subtenant. The
Subtenant shall make payments due under the Lease directly to the Prime Landlord
on or prior to the due date therefore and shall provide evidence of such payment
to the Sublandlord concurrently with delivering such payment to the Prime
Landlord.
3. TERM: RENEWAL.
3.1 TERM. The term of this Sublease shall be for the period beginning
on October 1, 2001 (the "Commencement Date") and ending at 11:59 p.m. on the
date of expiration of such Lease (the "Expiration Date") unless sooner
terminated pursuant to the provisions of this Sublease (the "Term").
Notwithstanding any provision herein to the contrary, this Sublease shall
automatically terminate upon the expiration or earlier termination of the Lease
for any reason or as provided in this Sublease.
3.2 RENEWAL OF EXTENSION OF TERM. If, at the end of the then-current
term of the Lease the Prime Landlord offers or agrees to renew or extend the
term of the Lease, (the "Renewal Right") the Sublandlord agrees to offer to the
Subtenant the right to renew or extend the term of this Sublease on the terms,
covenants and conditions as such Renewal Right has been offered to the
Sublandlord provided that the Prime Landlord consents to the renewal or
extension of this Sublease. The renewal or extension of this Sublease shall also
include the terms, covenants and conditions of this Sublease including without
limitation the terms relating to the payment of Additional Sublease Rental which
shall be negotiated and agreed upon between the parties to this Sublease and
included in any modification of this Sublease. If the Subtenant desires to renew
or extend the term of this Sublease, it shall so notify the Sublandlord in
writing, at least (10) business days prior to the time that the Sublandlord has
been given to exercise such
3
Renewal Right with the Prime Landlord. The Sublandlord and the Subtenant shall
execute a modification of this Sublease in form and substance satisfactory to
the Sublandlord reflecting such extension. In the event that the Subtenant does
not so notify the Sublandlord in the manner and within the time set forth
herein, time being deemed of the essence, any right of the Subtenant to extend
the term of the Sublease shall be automatically terminated and, thereafter,
Sublandlord shall have no obligation or liability whatsoever to the Subtenant
regarding such Renewal Right and the Term of this Sublease shall automatically
expire at the expiration of the then current term. In the event that this
Sublease is terminated for any reason prior to the expiration of the then
current term, the obligations of the Sublandlord regarding such Renewal Right
and the right of the Subtenant to extend the term of the Sublease shall also
terminate and be of no further force and effect.
4. ADDITIONAL SUBLEASE RENTAL; NET SUBLEASE. In addition to the
Subtenant's obligation for payment of the rent, additional rent and other
charges under the Lease, as additional consideration to the Sublandlord for
entering into this Sublease, the Subtenant hereby covenants and agrees to pay to
the Sublandlord a fixed annual Rental of Twenty-Five Thousand Dollars ($25,000).
The Additional Sublease Rental shall be paid in equal monthly installment
of Two Thousand Eighty-Three and 33/100 Dollars ($2,083.33) per month in advance
without demand, delay, set off or deduction of any nature or kind whatsoever on
or before the fifth (5th) day of each month. A partial month's payment of the
Additional Sublease Rental shall be due and payable on the Commencement Date if
the Commencement Date is other than the first day of a month. The Additional
Sublease Rental shall be paid to the Sublandlord at the address set forth
4
in the Notice section of this Sublease and time shall be deemed of the essence
with respect to such payments.
This Sublease is and shall be deemed and construed to be an absolutely net
Sublease and all payments to be made by the Subtenant pursuant to this Sublease
shall be net to the Sublandlord in each year during the Term. Subtenant shall
pay all costs, expenses and obligations of every kind whatsoever relating to the
Leased Property and does hereby indemnify, defend and hold Sublandlord harmless
of, from and against all such costs, expenses and obligations.
5. DEFAULT. Upon the nonpayment by Subtenant of any rent, additional
rent, or other payments when due, under the Lease or this Sublease or any
failure of Subtenant to perform any of its other covenants or agreements
required to be performed by Subtenant under the Lease or this Sublease, or any
default by Subtenant or any affiliate of Subtenant in the payment or performance
of any obligation under any other agreement, note or undertaking with
Sublandlord, after five (5) days written notice of any default in regard to
rent, additional rent, additional Sublease rental or any other indebtedness and
after ten (10) days written notice of any other default, Sublandlord shall have
all remedies available at law or in equity, including, without limitation, the
right, at its option, to reenter the Facility and take possession of the Leased
Property without terminating this Sublease, remove the Subtenant and all persons
holding under Subtenant from the Facility and retake possession of the Leased
Property, accelerate all rentals due hereunder for the remaining Term of this
Sublease, and/or to terminate this Sublease and reenter and repossess the
Facility and all the Leased Property; provided, however, that such reentry,
repossession and/or termination shall not constitute an acceptance or surrender
of this
5
Sublease or the Leased Property or a waiver of any of the Sublandlord's rights
or remedies, including without limitation, the right to relet the Leased
Property, or any part thereof, for the benefit of the Subtenant and to recover
all damages of every kind for Subtenant's default.
6. SUBTENANT INDEMNITY; INSURANCE; WAIVER OF SUBROGATION. Subtenant shall
indemnify, defend and hold Sublandlord and all affiliates and its parent company
harmless from any and all damages, costs, losses and expenses (including
reasonable attorney fees) resulting in any way from Subtenant's occupancy and/or
use of the Leased Property, or the breach of any obligation of Subtenant as set
out in the Lease or this Sublease. Subtenant shall carry, at Subtenant's
expense, insurance insuring the Leased Property in full compliance with all
applicable laws, rules, regulations governing the possession occupancy, and use
of the Leased Property as a skilled nursing facility. ("Insurance Obligations").
Subtenant shall also insure its fixtures, equipment, inventory and other
personal property located in, on or about the Facility in an amount at least
equal to the full replacement value thereof. No later than the Commencement Date
and thereafter on each anniversary date of the Commencement Date, Subtenant
shall provide Sublandlord with certificates evidencing the existence of such
insurance naming the Prime Landlord, Sublandlord and any lenders of the Prime
Landlord or the Sublandlord as additional named insureds, which certificates
shall require the insurance carrier to give the Prime Landlord and Sublandlord
at least thirty (30) days written notice of any cancellation or material
amendment to such insurance policies.
Sublandlord and Subtenant hereby waive any and all rights of recovery
against each other for any loss or damage to the Leased Property on account of
fire or other casualty or for injuries sustained on or about the Facility or the
Leased Property to the extent such loss or damage is or
6
would be covered by the insurance required to be carried by each party
hereunder, even if such coverage is not actually maintained. Such waiver shall
also apply to the extent of any deductible maintained by either party under its
insurance policies. It is understood that this waiver applies to any loss or
damage regardless of the cause, including, without limitation, if caused by the
negligence of Sublandlord, Subtenant or their respective employees, agents,
assigns or sublessees.
Notwithstanding anything contained herein to the contrary, the Subtenant
shall not be obligated to purchase the professional liability and/or medical
malpractice insurance described in the Lease.
7. USE; COMPLIANCE WITH LAW.
7.1 USE. The Leased Property shall be continuously occupied and used
solely by the Subtenant and solely for the operation of a nursing facility duly
licensed by the state of Texas for the level of care and the number of licensed
beds as of the Commencement Date and duly certified by the Medicare and Medicaid
programs and for no other purpose whatsoever.
7.2 COMPLIANCE. In addition to the obligations imposed under the
Lease, Subtenant shall obey, observe and promptly comply with all laws, rules,
regulations and ordinances which shall be applicable, now or at any time during
the Term, to the possession, use and occupancy of the Leased Property and the
operation of the Facility as a duly licensed Texas nursing facility at the level
of care and the number of licensed beds as of the Commencement Date. Subtenant
shall promptly comply with all laws, orders, rules, rulings and directives of
any governmental authority or agency having jurisdiction of the Facility and the
Leased Property.
7
Subtenant shall not store, use, discharge or dispose of any hazardous or toxic
substances, pollutants, contaminants or any other substances regulated by any
state or federal statute (collectively "Contaminants") on the Leased Property
other than in the ordinary course of its business. In addition to any
obligations imposed by the Lease, Subtenant shall be solely responsible for the
costs of removing or cleaning any Contaminants found on the Leased Property and
caused by Subtenant.
8. ASSIGNMENT AND SUBLETTING. Subtenant shall not have any right to, nor
shall Subtenant attempt to, assign its interest in this Sublease or any portion
thereof or any interest in the Leased Property or any portion thereof
voluntarily or by operation of law and shall not have any right to nor attempt
to sell, transfer, sublet or license all or any portion of the Leased Property
without the prior written consent of the Sublandlord and Prime Landlord.
Sublandlord's and the Prime Landlord's consent or approval may be granted or
withheld in their sole discretion. The transfer of fifty percent (50%) or more
of either the voting stock or membership interests held by Subtenant or its
affiliated entities whether in one or a series of transactions, shall be
considered a prohibited assignment, sale, transfer or subletting hereunder
requiring Sublandlord's and the Prime Landlord's prior written consent. Any
purported or attempted assignment, sale, transfer or subletting, without
Sublandlord's and the Prime Landlord's prior written consent, shall be null and
void and constitute a default by Subtenant under this Sublease. Any permitted
assignee or sublessee of Subtenant shall expressly assume Subtenant's
liabilities and obligations under this Sublease and the Lease. No assignment,
subleasing, sale, transfer or licensing shall release Subtenant from any of its
obligations under this Sublease or the Lease. Subtenant shall not mortgage or
otherwise encumber its leasehold
8
interest or the Leased Property without the prior written consent of Sublandlord
and the Prime Landlord which either or both may withhold in their sole
discretion. This Sublease shall not be construed as an assignment of
Sublandlord's interest in the Lease, and Subtenant shall not have the right to
negotiate any modification or amendments to the Lease.
9. INSPECTION; ALTERATIONS. Subtenant has inspected the Leased Property,
and is satisfied that the Leased Property is acceptable to Subtenant for all of
its purposes and uses, and accepts the same in "AS IS" condition, without any
warranties, representations or obligation from the Sublandlord or the Prime
Landlord to make any repairs, replacements, alterations, additions,
installations or improvements whatsoever. Subtenant shall not expand or make or
install any additions, renovations, alterations, improvements, or changes in or
to the Leased Property, or any part thereof without Sublandlord's and Prime
Landlord's prior written consent. Any permitted work shall be performed by the
Subtenant in a good and workmanlike manner at the sole expense of Subtenant.
Subtenant shall not permit, create, incur or impose or cause or suffer others to
permit, create, incur or impose any lien or other obligation against the Leased
Property or any interest therein by reason of any work upon the Leased Property,
and Subtenant shall indemnify, defend and hold Sublandlord and the Prime
Landlord harmless of and from any and all claims or demands by any contractor,
subcontractor, materialman, laborer or any other third person against the Leased
Property, Subtenant's interest in the Leased Property or any interest therein
relating to or arising because of any work performed thereon. As between
Sublandlord and Subtenant, any improvements or additions upon the Leased
Property at the expiration of this Sublease shall be deemed a part of the Leased
Property and be and remain the property of the Sublandlord.
9
10. TERMINATION. Notwithstanding anything contained herein to the
contrary, the existence of this Sublease is dependent and conditioned upon the
continued existence of the Lease, and in the event of the termination of the
Lease for any reason, this Sublease, at Sublandlord's option, shall thereupon be
terminated without the need for further action and without liability to
Sublandlord. If Subtenant is not in default under the terms and conditions
hereof, any such termination shall be without liability between Sublandlord and
Subtenant, except for such liability theretofore accruing or as otherwise
provided herein; however, if Subtenant is in default, the provisions hereof
including those of default shall control as to Subtenant's liability and shall
survive the termination of the Sublease.
11. SUBLANDLORD'S OBLIGATIONS. Sublandlord shall have no duty of any
nature or kind whatsoever to perform any obligations of the Prime Landlord under
the Lease and shall under no circumstances be responsible for or liable to
Subtenant for any default, failure or delay on the part of the Prime Landlord in
the performance of any obligations of the Prime Landlord under the Lease. No
such default of Prime Landlord shall affect this Sublease or waive or defer the
performance of any of Subtenant's obligations hereunder; provided, however, that
in the event of such default or failure by the Prime Landlord, Sublandlord
agrees, upon written notice from Subtenant, and at Subtenant's expense, to make
demand upon the Prime Landlord to perform its obligations under the Lease.
12. COSTS AND EXPENSES IN THE EVENT OF DEFAULT. Subtenant shall pay all
costs and expenses, including reasonable attorneys' fees, that may be incurred
by Sublandlord in enforcing the provisions of this Sublease or in enforcing
Prime Landlord's obligations under the Lease if requested to do so by Subtenant.
10
13. LATE PAYMENT CHARGE. In the event any amounts due from Subtenant under
this Sublease are not paid when due, such amounts shall bear interest from and
after the due date to the date of payment in full at an annual rate of eighteen
percent (18%).
14. NOTICES. Any notice, demand, request, consent, approval or
communication that either party desires or is required to give to the other
party or any other person hereunder shall be in writing and shall be deemed to
be properly served if (i) sent by certified mail with return receipt requested,
(ii) sent by receipted overnight delivery service, or (iii) personally delivered
to the address set forth below. The effective date of any such notice shall be
the date which is stamped by the United States Post Office on the envelope
enclosing same, the date of the receipt for the overnight delivery or the date
on which personal delivery is made, whichever is applicable. Any notice sent by
Subtenant to Prime Landlord shall also be sent concurrently to Sublandlord.
Until changed by written notice from the appropriate party to the other, the
addresses of the parties are as follows:
(a) Sublandlord: Extendicare Homes, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
Copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
11
(b) Subtenant:
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Copy to: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
15. ACCORD AND SATISFACTION. No payment by Subtenant or receipt by
Sublandlord of a lesser amount than the full amount of any payments to be made
by Subtenant hereunder shall be deemed to be other than on account of the
earliest stipulated unpaid installment thereof, and no endorsement or statement
on any check or letter accompanying any check or payment shall be deemed to be
an accord and satisfaction, and Sublandlord may accept such check or payment
without prejudice of Sublandlord's right to recover the full amount due
hereunder or pursue any other remedy available to Sublandlord.
16. ENTIRE AGREEMENT. This Sublease and all exhibits referred to herein
constitutes the entire agreement and understanding of the parties with respect
to the matters contained in this Sublease and supersedes all other agreements
between and representations by the parties with respect to such matters.
Subtenant is not relying upon any representations, market analysis, projections,
reports or warranties of the Sublandlord or the Prime Landlord.
17. MODIFICATIONS. No changes, amendments or modifications of this
Sublease shall be effective or enforceable unless made in writing and executed
by the parties hereto and the Prime Landlord.
12
18. CONSENTS. Whenever Sublandlord's consent is required by the terms of
this Sublease, Prime Landlord's consent shall also be obtained if so required by
the terms of the Lease or this Sublease. The consent by Sublandlord or Prime
Landlord to any act by Subtenant requiring Sublandlord's or Prime Landlord's
consent shall not waive or render unnecessary Sublandlord's consent to any
subsequent similar act by Subtenant.
19. MULTIPLE ORIGINALS. This Sublease may be executed simultaneously in
multiple originals, each of which shall be deemed an original, without the
production of the other such originals.
20. AUTHORITY. The individuals executing this Sublease on behalf of the
Sublandlord and Subtenant respectively represent and warrant to the other that
their respective entities are in good standing under the laws of the state in
which the Leased Property is located and they have full right and authority to
enter into the Sublease, bind their respective entities to the performance of
their obligations hereunder.
21. ENTRY BY SUBLANDLORD. Sublandlord and its representatives shall have
the right, at all reasonable times, to enter upon the Leased Property for the
purposes of examining and inspecting the same; provided, however, this section
shall not be construed as imposing any obligation upon Sublandlord to inspect
the Leased Property.
22. NON-WAIVER. Any assent, expressed or implied, by Sublandlord to any
breach of any covenant or condition herein contained shall not be construed as
an assent or waiver of any such covenant or condition generally or of any
subsequent breach thereof.
23. RELATIONSHIP OF PARTIES. Nothing contained herein shall be deemed or
construed to create a joint venture or partnership relationship between
Sublandlord and Subtenant.
13
24. INTERPRETATION. This Sublease shall be interpreted in a fair and
impartial manner without regard to such factors as the party that drafted this
Sublease or the relative bargaining power of the parties.
25. SUBLANDLORD'S INDEMNITY. The Sublandlord covenants and agrees to
defend, indemnify and hold Subtenant harmless from any liabilities incurred with
respect to the Leased Property and the operation thereof by the Sublandlord
prior to the Commencement Date of this Sublease except to the extent such
liabilities have been assumed by Subtenant pursuant to this Sublease or other
written agreement.
26. PERSONAL PROPERTY. In addition to the obligations of the Subtenant
pursuant to the Prime Lease, the Subtenant shall repair, replace and improve the
personal property and equipment used in the operation of the Leased Property as
a skilled care nursing facility in order to provide the quality of care
presently provided to the residents of the Facility and as is required by the
laws and regulations of the state of Texas and the Medicare and Medicaid
programs. To the extent that the Subtenant replaces any existing personal
property and equipment with new personal property and equipment during the Term
such personal property and equipment shall be of the same or better quality as
currently exists (the "Replacement Property"). Such Replacement Property shall,
upon installation and delivery to the Facility, become the property of the
Sublandlord and shall remain at the Facility upon the expiration or earlier
termination of the Sublease. Subtenant shall execute and deliver to the
Sublandlord upon expiration or termination of this Sublease any including
without limitation bills of sale and title transfer documents relating to such
Replacement Property. There shall be no liens, security interests or other
encumbrances placed on such Replacement Property.
14
27. CONDITIONS TO COMMENCEMENT DATE. The Commencement Date of this
Sublease and the obligations of the parties shall be conditioned upon the
fulfillment or waiver, in writing, of the following conditions: (a) the
execution and delivery by the Prime Landlord of the consent to this Sublease on
or prior to the Commencement Date and compliance with any conditions set forth
therein which the Prime Landlord requires be fulfilled prior to the Commencement
Date; and (b) the Subtenant being licensed by the state of Texas to operate the
facility at the level of care and for the number of beds currently licensed; and
(c) the Subtenant obtaining the approval of the Medicare and Medicaid program
certifying the Subtenant as a provider under such programs.
28. ADDITIONAL INFORMATION TO BE FURNISHED BY SUBTENANT. In addition to
the financial and other information required to be provided to the Prime
Landlord pursuant to the Lease, (a copy of which shall be provided concurrently
to the Sublandlord) the Subtenant shall provide to the Sublandlord the following
information at the times and in the formats described below:
28.1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS. Within 90 days after
the end of each of Subtenant's fiscal years, a copy of the audited (if
available, otherwise unaudited with the audited statements to be provided when
available) consolidated balance sheets of Subtenant and its consolidated
subsidiaries as of the end of such fiscal year, and related audited (if
available, otherwise unaudited) consolidated statements of income, changes in
common stock and undistributed profits and changes in financial position of
Subtenant and its consolidated subsidiaries for such fiscal year, prepared in
accordance with generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved.
15
28.2 OFFICER'S CERTIFICATE. Within 90 days after the end of each of
Subtenant's fiscal years, and together with the documents furnished in
accordance with section 29.1, an officer's certificate stating that to the best
of such officer's knowledge and belief after making due inquiry, Subtenant is
not in default in the performance or observance of any of the terms of this
Sublease, or if Tenant shall be in default to such officer's knowledge,
specifying all such defaults, the nature thereof, and the steps being taken to
remedy the same;
28.3 CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS. Within 30 days after
the end of each of Subtenant's quarters, quarterly consolidated financial
reports Subtenant produces for reporting purposes and detailed statements of
income and detailed operational statistics regarding occupancy rates, patient
mix and patient rates by type for the Facility; and
28.4 COST REPORTS. Within 90 days after the end of each of Subtenant's
fiscal years, a copy of each Medicare and Medicaid cost report filed with the
appropriate governmental agency for the Facility (and all amendments thereto
whether contemporaneously or subsequently filed thereto);
28.5 SURVEYS AND INVESTIGATIONS INFORMATION.. Within seventy two (72)
hours of receipt a copy of any licensing or other agency survey or report and
any statement of deficiencies and/or any other report indicating that any action
is pending or being considered to downgrade the Facility to a substandard
category, and within the time period required by the particular agency for
furnishing a plan of correction also furnish or cause to be furnished to
Sublandlord a copy of the plan of correction or other response generated as a
result of such survey or report for the Facility, and correct or cause to be
corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in any applicable
16
reimbursement program. Copies of any notices from any governmental agency
relating to an investigation of Subtenant's operations at the Facility including
without limitation HCFA, the OIG, the FBI, the State Medicaid Fraud division,
and any plan of correction responding thereto; and
28.6 ADDITIONAL INFORMATION. The Sublandlord further reserves the
right to require such other information relating to the financial affairs or
operations of the Subtenant and the Facility at such other times as Sublandlord
shall reasonably require (including monthly or more frequently), and Subtenant
agrees to provide such information to Sublandlord within five (5) business days
from request. All financial statements must be in such form and detail as the
Sublandlord shall from time to time reasonably request, provided, however, that
Sublandlord will make reasonable efforts to use Subtenant's existing forms of
reports for all purposes.
29. CROSS DEFAULT. The parties acknowledge that they are, concurrently
herewith, entering into Additional Sublease Agreements and certain Lease
Agreements relating to skilled care nursing facilities in the state of Texas
specifically described on the attached EXHIBIT D (the "Texas Sublease and
Leases"). The parties covenant and agree that in the event of a default by the
Subtenant pursuant to this Sublease the Sublandlord shall have the right and
option to declare a default in the other Texas Subleases and Leases and shall
have all available remedies, including, without limitation, the right to
terminate such Texas Subleases and Leases.
30. ESTOPPEL CERTIFICATE. At any time during the Term and from time to
time upon the request of the Sublandlord the Subtenant shall deliver to the
Sublandlord or Sublandlord's lender within ten (10) business days from receipt
of such request an estoppel certificate signed by an officer of the Subtenant
certifying that this Sublease is unmodified and in full force and
17
effect (or is in full force and effect as modified and setting forth the
modifications) that neither Sublandlord nor Subtenant are in default of the
Sublease or if such default exists setting forth such default and the dates to
which the payments due pursuant to this Sublease and the Lease have been paid.
31. TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Sublandlord's option, Subtenant shall use its best
efforts to transfer to Sublandlord or Sublandlord's nominee, and Subtenant shall
cooperate with Sublandlord or Sublandlord's nominee in connection with the
processing by Sublandlord or Sublandlord's nominee of, any applications for all
licenses, operating permits and other governmental authorization and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary for the operations of the Facility; provided that the
costs and expenses of any such transfer or the processing of any such
application shall be paid by Sublandlord or Sublandlord's nominee.
Notwithstanding anything in this Sublease or elsewhere to the contrary, under no
circumstances shall Sublandlord be obligated to seek or effectuate such a
transfer or application therefore.
18
IN WITNESS WHEREOF, the parties have caused this Sublease to be executed
and their respective corporate seals, if any, to be hereunto affixed and
attested by their respective officers thereunto duly authorized.
Sublandlord: Subtenant:
Extendicare Homes, Inc. Senior Health-▇▇▇▇▇▇▇▇▇▇, LLC
By:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Senior Vice President
State of Wisconsin State of Pennsylvania
County of Milwaukee County of Philadelphia
The foregoing instrument was acknowledged The foregoing instrument was acknowledged
before me this 25th day of September, 2001 before me this 26th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Vice President by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President on behalf
of Extendicare Homes, Inc. of the corporation.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------- ----------------------------------------
Notary Public, State of Wisconsin Notary Public, State of Pennsylvania
My commission expires 11-2-2003. My commission expires: 10-31-02
[Notarial Seal] [Notarial Seal]
19
SUBLEASE
EXTENDICARE HOMES, INC.
LANDLORD
AND
SENIOR HEALTH-CROSBYTON, LLC
TENANT
DATED AS OF October 1, 2001
--------------------------------------------
Facility:
Crosbyton Nursing and Rehabilitation Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
--------------------------------------------
1
TABLE OF CONTENTS
PAGE
----
1. Leased Property: Rental Payments.......................................................................2
2. Subtenant Obligations...................................................................................2
3. Term: Renewal...........................................................................................3
3.1 Term.......................................................................................3
3.2 Renewal of Extension of Term...............................................................3
4. Additional Sublease Rental; Net Sublease................................................................4
5. Default.................................................................................................5
6. Subtenant Indemnity; Insurance; Waiver of Subrogation...................................................6
7. Use; Compliance with Law................................................................................7
7.1 Use........................................................................................7
7.2 Compliance.................................................................................7
8. Assignment and Subletting...............................................................................8
9. Inspection; Alterations.................................................................................9
10. Termination............................................................................................10
11. Sublandlord's Obligations..............................................................................10
12. Costs and Expenses in the Event of Default.............................................................10
13. Late Payment Charge....................................................................................11
14. Notices................................................................................................11
15. Accord and Satisfaction................................................................................12
16. Entire Agreement.......................................................................................12
17. Modifications..........................................................................................12
18. Consents...............................................................................................13
19. Multiple Originals.....................................................................................13
20. Authority..............................................................................................13
21. Entry by Sublandlord...................................................................................13
22. Non-Waiver.............................................................................................13
23. Relationship of Parties................................................................................13
24. Interpretation.........................................................................................14
25. Sublandlord's Indemnity................................................................................14
26. Personal Property......................................................................................14
i
TABLE OF CONTENTS
(continued)
PAGE
----
27. Conditions to Commencement Date........................................................................15
28. Additional Information to be Furnished by Subtenant....................................................15
28.1 Consolidated Annual Financial Statements.................................................15
28.2 Officer's Certificate....................................................................16
28.3 Consolidated Quarterly Financial Statements..............................................16
28.4 Cost Reports.............................................................................16
28.5 Surveys and Investigations Information...................................................16
28.6 Additional Information...................................................................17
29. Cross Default..........................................................................................17
30. Estoppel Certificate...................................................................................17
31. Transfers of Licenses Upon Termination.................................................................18
ii
EXHIBITS
EXHIBITS
--------
A. L b ease
B Texas Sublease & Leases
SUBLEASE AGREEMENT
THIS SUBLEASE (the "Sublease") is entered into as of the 1st day of
October, 2001 by and between Extendicare Homes, Inc. (f/k/a Unicare Homes, Inc),
a Delaware corporation, having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Sublandlord") and Senior Health-Crosbyton, LLC, a
Texas limited liability company, having its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subtenant").
RECITALS:
The Sublandlord, as tenant, entered into a lease agreement with Triple S
Investment Company, a Wisconsin general partnership, Milwaukee, WI as the
Landlord which has been modified from time to time (the "Prime Landlord") for
the lease of the real and personal property generally described as the Crosbyton
Nursing and Rehabilitation Center nursing facility (the "Facility") located at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. (The real and personal property being
sublet pursuant to this Sublease is all of the Leased Property described in the
Prime Lease and is hereafter referred to as the "Leased Property"). A copy of
the Prime Lease including all exhibits, modifications and amendments thereto is
attached hereto as Exhibit A and incorporated herein by reference. The lease
including all exhibits, modifications and amendments thereto is referred to
herein as either the "Lease" or the "Prime Lease".
The Sublandlord desires to sublet the entire Leased Property to the
Subtenant and the Subtenant desires to sublet the entire Leased Property from
the Sublandlord pursuant to the terms, covenants and conditions set forth in
this Sublease.
NOW, THEREFORE, in consideration of the terms, covenants, conditions and
agreements contained herein and in any exhibits attached hereto, the Sublandlord
and the Subtenant (hereafter collectively referred to as the "parties") agree as
follows:
1. LEASED PROPERTY: RENTAL PAYMENTS. Sublandlord hereby subleases to
Subtenant, and Subtenant hereby subleases from Sublandlord, the Leased Property
subject to all terms, covenants and conditions contained in the Lease, except as
otherwise set forth in this Sublease. To the extent not inconsistent with this
Sublease, the terms of the Lease are hereby incorporated into this Sublease by
reference. Sublandlord shall have all of the rights of the Prime Landlord under
the Lease. In no event shall the Subtenant have the right to receive any
payments due from the Prime Landlord to the Sublandlord under the Lease.
2. SUBTENANT OBLIGATIONS. The Subtenant hereby covenants and agrees to
observe and perform each and every term, covenant, promise, condition and
obligation, imposed upon the Sublandlord, as tenant, under the Lease including
without limitation, the payment obligations of the Sublandlord, as tenant, under
the Lease . Such payment obligations of the Subtenant shall include without
limitation the payment , in the amounts and at the times called for in the
Lease, of all rental, additional rental, taxes, assessments, late charges,
license and permit fees, utilities, governmental charges, insurance premiums,
and capital improvement commitments. The Subtenant's obligations to perform the
terms, covenants and conditions described in the Lease are in addition to any
and all additional obligations of the Subtenant set forth in this Sublease
including any and all additional obligations for payment and performance. It is
the intent of the parties that on and after the Commencement Date, the
Sublandlord shall have absolutely no liability for the performance of the
tenant's obligations under the Lease and that all such
2
obligations are hereby assumed and shall be performed by the Subtenant. The
Subtenant shall make payments due under the Lease directly to the Prime Landlord
on or prior to the due date therefore and shall provide evidence of such payment
to the Sublandlord concurrently with delivering such payment to the Prime
Landlord.
3. TERM: RENEWAL.
3.1 TERM. The term of this Sublease shall be for the period beginning
on October 1, 2001 (the "Commencement Date") and ending at 11:59 p.m. on the
date of expiration of such Lease (the "Expiration Date") unless sooner
terminated pursuant to the provisions of this Sublease (the "Term").
Notwithstanding any provision herein to the contrary, this Sublease shall
automatically terminate upon the expiration or earlier termination of the Lease
for any reason or as provided in this Sublease.
3.2 RENEWAL OF EXTENSION OF TERM. If, at the end of the then-current
term of the Lease the Prime Landlord offers or agrees to renew or extend the
term of the Lease, (the "Renewal Right") the Sublandlord agrees to offer to the
Subtenant the right to renew or extend the term of this Sublease on the terms,
covenants and conditions as such Renewal Right has been offered to the
Sublandlord provided that the Prime Landlord consents to the renewal or
extension of this Sublease. The renewal or extension of this Sublease shall also
include the terms, covenants and conditions of this Sublease including without
limitation the terms relating to the payment of Additional Sublease Rental which
shall be negotiated and agreed upon between the parties to this Sublease and
included in any modification of this Sublease. If the Subtenant desires to renew
or extend the term of this Sublease, it shall so notify the Sublandlord in
writing, at least (10) business days prior to the time that the Sublandlord has
been given to exercise such
3
Renewal Right with the Prime Landlord. The Sublandlord and the Subtenant shall
execute a modification of this Sublease in form and substance satisfactory to
the Sublandlord reflecting such extension. In the event that the Subtenant does
not so notify the Sublandlord in the manner and within the time set forth
herein, time being deemed of the essence, any right of the Subtenant to extend
the term of the Sublease shall be automatically terminated and, thereafter,
Sublandlord shall have no obligation or liability whatsoever to the Subtenant
regarding such Renewal Right and the Term of this Sublease shall automatically
expire at the expiration of the then current term. In the event that this
Sublease is terminated for any reason prior to the expiration of the then
current term, the obligations of the Sublandlord regarding such Renewal Right
and the right of the Subtenant to extend the term of the Sublease shall also
terminate and be of no further force and effect.
4. ADDITIONAL SUBLEASE RENTAL; NET SUBLEASE. In addition to the
Subtenant's obligation for payment of the rent, additional rent and other
charges under the Lease, as additional consideration to the Sublandlord for
entering into this Sublease, the Subtenant hereby covenants and agrees to pay to
the Sublandlord a fixed annual Rental of -0- Dollars ($-0-).
The Additional Sublease Rental shall be paid in equal monthly installment
of -0- Dollars ($-0-) per month in advance without demand, delay, set off or
deduction of any nature or kind whatsoever on or before the fifth (5th) day of
each month. A partial month's payment of the Additional Sublease Rental shall be
due and payable on the Commencement Date if the Commencement Date is other than
the first day of a month. The Additional Sublease Rental shall be paid to the
Sublandlord at the address set forth in the Notice section of this Sublease and
time shall be deemed of the essence with respect to such payments.
4
This Sublease is and shall be deemed and construed to be an absolutely net
Sublease and all payments to be made by the Subtenant pursuant to this Sublease
shall be net to the Sublandlord in each year during the Term. Subtenant shall
pay all costs, expenses and obligations of every kind whatsoever relating to the
Leased Property and does hereby indemnify, defend and hold Sublandlord harmless
of, from and against all such costs, expenses and obligations.
5. DEFAULT. Upon the nonpayment by Subtenant of any rent, additional
rent, or other payments when due, under the Lease or this Sublease or any
failure of Subtenant to perform any of its other covenants or agreements
required to be performed by Subtenant under the Lease or this Sublease, or any
default by Subtenant or any affiliate of Subtenant in the payment or performance
of any obligation under any other agreement, note or undertaking with
Sublandlord, after five (5) days written notice of any default in regard to
rent, additional rent, additional Sublease rental or any other indebtedness and
after ten (10) days written notice of any other default, Sublandlord shall have
all remedies available at law or in equity, including, without limitation, the
right, at its option, to reenter the Facility and take possession of the Leased
Property without terminating this Sublease, remove the Subtenant and all persons
holding under Subtenant from the Facility and retake possession of the Leased
Property, accelerate all rentals due hereunder for the remaining Term of this
Sublease, and/or to terminate this Sublease and reenter and repossess the
Facility and all the Leased Property; provided, however, that such reentry,
repossession and/or termination shall not constitute an acceptance or surrender
of this Sublease or the Leased Property or a waiver of any of the Sublandlord's
rights or remedies,
5
including without limitation, the right to relet the Leased Property, or any
part thereof, for the benefit of the Subtenant and to recover all damages of
every kind for Subtenant's default.
6. SUBTENANT INDEMNITY; INSURANCE; WAIVER OF SUBROGATION. Subtenant shall
indemnify, defend and hold Sublandlord and all affiliates and its parent company
harmless from any and all damages, costs, losses and expenses (including
reasonable attorney fees) resulting in any way from Subtenant's occupancy and/or
use of the Leased Property, or the breach of any obligation of Subtenant as set
out in the Lease or this Sublease. Subtenant shall carry, at Subtenant's
expense, insurance insuring the Leased Property in full compliance with all
applicable laws, rules, regulations governing the possession occupancy, and use
of the Leased Property as a skilled nursing facility. ("Insurance Obligations").
Subtenant shall also insure its fixtures, equipment, inventory and other
personal property located in, on or about the Facility in an amount at least
equal to the full replacement value thereof. No later than the Commencement Date
and thereafter on each anniversary date of the Commencement Date, Subtenant
shall provide Sublandlord with certificates evidencing the existence of such
insurance naming the Prime Landlord, Sublandlord and any lenders of the Prime
Landlord or the Sublandlord as additional named insureds, which certificates
shall require the insurance carrier to give the Prime Landlord and Sublandlord
at least thirty (30) days written notice of any cancellation or material
amendment to such insurance policies.
Sublandlord and Subtenant hereby waive any and all rights of recovery
against each other for any loss or damage to the Leased Property on account of
fire or other casualty or for injuries sustained on or about the Facility or the
Leased Property to the extent such loss or damage is or would be covered by the
insurance required to be carried by each party hereunder, even if such
6
coverage is not actually maintained. Such waiver shall also apply to the extent
of any deductible maintained by either party under its insurance policies. It is
understood that this waiver applies to any loss or damage regardless of the
cause, including, without limitation, if caused by the negligence of
Sublandlord, Subtenant or their respective employees, agents, assigns or
sublessees.
Notwithstanding anything contained herein to the contrary, the Subtenant
shall not be obligated to purchase the professional liability and/or medical
malpractice insurance described in the Lease.
7. USE; COMPLIANCE WITH LAW.
7.1 USE. The Leased Property shall be continuously occupied and used
solely by the Subtenant and solely for the operation of a nursing facility duly
licensed by the state of Texas for the level of care and the number of licensed
beds as of the Commencement Date and duly certified by the Medicare and Medicaid
programs and for no other purpose whatsoever.
7.2 COMPLIANCE. In addition to the obligations imposed under the
Lease, Subtenant shall obey, observe and promptly comply with all laws, rules,
regulations and ordinances which shall be applicable, now or at any time during
the Term, to the possession, use and occupancy of the Leased Property and the
operation of the Facility as a duly licensed Texas nursing facility at the level
of care and the number of licensed beds as of the Commencement Date. Subtenant
shall promptly comply with all laws, orders, rules, rulings and directives of
any governmental authority or agency having jurisdiction of the Facility and the
Leased Property. Subtenant shall not store, use, discharge or dispose of any
hazardous or toxic substances,
7
pollutants, contaminants or any other substances regulated by any state or
federal statute (collectively "Contaminants") on the Leased Property other than
in the ordinary course of its business. In addition to any obligations imposed
by the Lease, Subtenant shall be solely responsible for the costs of removing or
cleaning any Contaminants found on the Leased Property and caused by Subtenant.
8. ASSIGNMENT AND SUBLETTING. Subtenant shall not have any right to, nor
shall Subtenant attempt to, assign its interest in this Sublease or any portion
thereof or any interest in the Leased Property or any portion thereof
voluntarily or by operation of law and shall not have any right to nor attempt
to sell, transfer, sublet or license all or any portion of the Leased Property
without the prior written consent of the Sublandlord and Prime Landlord.
Sublandlord's and the Prime Landlord's consent or approval may be granted or
withheld in their sole discretion. The transfer of fifty percent (50%) or more
of either the voting stock or membership interests held by Subtenant or its
affiliated entities whether in one or a series of transactions, shall be
considered a prohibited assignment, sale, transfer or subletting hereunder
requiring Sublandlord's and the Prime Landlord's prior written consent. Any
purported or attempted assignment, sale, transfer or subletting, without
Sublandlord's and the Prime Landlord's prior written consent, shall be null and
void and constitute a default by Subtenant under this Sublease. Any permitted
assignee or sublessee of Subtenant shall expressly assume Subtenant's
liabilities and obligations under this Sublease and the Lease. No assignment,
subleasing, sale, transfer or licensing shall release Subtenant from any of its
obligations under this Sublease or the Lease. Subtenant shall not mortgage or
otherwise encumber its leasehold interest or the Leased Property without the
prior written consent of Sublandlord and the Prime
8
Landlord which either or both may withhold in their sole discretion. This
Sublease shall not be construed as an assignment of Sublandlord's interest in
the Lease, and Subtenant shall not have the right to negotiate any modification
or amendments to the Lease.
9. INSPECTION; ALTERATIONS. Subtenant has inspected the Leased Property,
and is satisfied that the Leased Property is acceptable to Subtenant for all of
its purposes and uses, and accepts the same in "AS IS" condition, without any
warranties, representations or obligation from the Sublandlord or the Prime
Landlord to make any repairs, replacements, alterations, additions,
installations or improvements whatsoever. Subtenant shall not expand or make or
install any additions, renovations, alterations, improvements, or changes in or
to the Leased Property, or any part thereof without Sublandlord's and Prime
Landlord's prior written consent. Any permitted work shall be performed by the
Subtenant in a good and workmanlike manner at the sole expense of Subtenant.
Subtenant shall not permit, create, incur or impose or cause or suffer others to
permit, create, incur or impose any lien or other obligation against the Leased
Property or any interest therein by reason of any work upon the Leased Property,
and Subtenant shall indemnify, defend and hold Sublandlord and the Prime
Landlord harmless of and from any and all claims or demands by any contractor,
subcontractor, materialman, laborer or any other third person against the Leased
Property, Subtenant's interest in the Leased Property or any interest therein
relating to or arising because of any work performed thereon. As between
Sublandlord and Subtenant, any improvements or additions upon the Leased
Property at the expiration of this Sublease shall be deemed a part of the Leased
Property and be and remain the property of the Sublandlord.
9
10. TERMINATION. Notwithstanding anything contained herein to the
contrary, the existence of this Sublease is dependent and conditioned upon the
continued existence of the Lease, and in the event of the termination of the
Lease for any reason, this Sublease, at Sublandlord's option, shall thereupon be
terminated without the need for further action and without liability to
Sublandlord. If Subtenant is not in default under the terms and conditions
hereof, any such termination shall be without liability between Sublandlord and
Subtenant, except for such liability theretofore accruing or as otherwise
provided herein; however, if Subtenant is in default, the provisions hereof
including those of default shall control as to Subtenant's liability and shall
survive the termination of the Sublease.
11. SUBLANDLORD'S OBLIGATIONS. Sublandlord shall have no duty of any
nature or kind whatsoever to perform any obligations of the Prime Landlord under
the Lease and shall under no circumstances be responsible for or liable to
Subtenant for any default, failure or delay on the part of the Prime Landlord in
the performance of any obligations of the Prime Landlord under the Lease. No
such default of Prime Landlord shall affect this Sublease or waive or defer the
performance of any of Subtenant's obligations hereunder; provided, however, that
in the event of such default or failure by the Prime Landlord, Sublandlord
agrees, upon written notice from Subtenant, and at Subtenant's expense, to make
demand upon the Prime Landlord to perform its obligations under the Lease.
12. COSTS AND EXPENSES IN THE EVENT OF DEFAULT. Subtenant shall pay all
costs and expenses, including reasonable attorneys' fees, that may be incurred
by Sublandlord in enforcing the provisions of this Sublease or in enforcing
Prime Landlord's obligations under the Lease if requested to do so by Subtenant.
10
13. LATE PAYMENT CHARGE. In the event any amounts due from Subtenant under
this Sublease are not paid when due, such amounts shall bear interest from and
after the due date to the date of payment in full at an annual rate of eighteen
percent (18%).
14. NOTICES. Any notice, demand, request, consent, approval or
communication that either party desires or is required to give to the other
party or any other person hereunder shall be in writing and shall be deemed to
be properly served if (i) sent by certified mail with return receipt requested,
(ii) sent by receipted overnight delivery service, or (iii) personally delivered
to the address set forth below. The effective date of any such notice shall be
the date which is stamped by the United States Post Office on the envelope
enclosing same, the date of the receipt for the overnight delivery or the date
on which personal delivery is made, whichever is applicable. Any notice sent by
Subtenant to Prime Landlord shall also be sent concurrently to Sublandlord.
Until changed by written notice from the appropriate party to the other, the
addresses of the parties are as follows:
(a) Sublandlord: Extendicare Homes, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
Copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
11
(b) Subtenant:
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Copy to: Blank Rome Comisky & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
15. ACCORD AND SATISFACTION. No payment by Subtenant or receipt by
Sublandlord of a lesser amount than the full amount of any payments to be made
by Subtenant hereunder shall be deemed to be other than on account of the
earliest stipulated unpaid installment thereof, and no endorsement or statement
on any check or letter accompanying any check or payment shall be deemed to be
an accord and satisfaction, and Sublandlord may accept such check or payment
without prejudice of Sublandlord's right to recover the full amount due
hereunder or pursue any other remedy available to Sublandlord.
16. ENTIRE AGREEMENT. This Sublease and all exhibits referred to herein
constitutes the entire agreement and understanding of the parties with respect
to the matters contained in this Sublease and supersedes all other agreements
between and representations by the parties with respect to such matters.
Subtenant is not relying upon any representations, market analysis, projections,
reports or warranties of the Sublandlord or the Prime Landlord.
17. MODIFICATIONS. No changes, amendments or modifications of this
Sublease shall be effective or enforceable unless made in writing and executed
by the parties hereto and the Prime Landlord.
12
18. CONSENTS. Whenever Sublandlord's consent is required by the terms of
this Sublease, Prime Landlord's consent shall also be obtained if so required by
the terms of the Lease or this Sublease. The consent by Sublandlord or Prime
Landlord to any act by Subtenant requiring Sublandlord's or Prime Landlord's
consent shall not waive or render unnecessary Sublandlord's consent to any
subsequent similar act by Subtenant.
19. MULTIPLE ORIGINALS. This Sublease may be executed simultaneously in
multiple originals, each of which shall be deemed an original, without the
production of the other such originals.
20. AUTHORITY. The individuals executing this Sublease on behalf of the
Sublandlord and Subtenant respectively represent and warrant to the other that
their respective entities are in good standing under the laws of the state in
which the Leased Property is located and they have full right and authority to
enter into the Sublease, bind their respective entities to the performance of
their obligations hereunder.
21. ENTRY BY SUBLANDLORD. Sublandlord and its representatives shall have
the right, at all reasonable times, to enter upon the Leased Property for the
purposes of examining and inspecting the same; provided, however, this section
shall not be construed as imposing any obligation upon Sublandlord to inspect
the Leased Property.
22. NON-WAIVER. Any assent, expressed or implied, by Sublandlord to any
breach of any covenant or condition herein contained shall not be construed as
an assent or waiver of any such covenant or condition generally or of any
subsequent breach thereof.
23. RELATIONSHIP OF PARTIES. Nothing contained herein shall be deemed or
construed to create a joint venture or partnership relationship between
Sublandlord and Subtenant.
13
24. INTERPRETATION. This Sublease shall be interpreted in a fair and
impartial manner without regard to such factors as the party that drafted this
Sublease or the relative bargaining power of the parties.
25. SUBLANDLORD'S INDEMNITY. The Sublandlord covenants and agrees to
defend, indemnify and hold Subtenant harmless from any liabilities incurred with
respect to the Leased Property and the operation thereof by the Sublandlord
prior to the Commencement Date of this Sublease except to the extent such
liabilities have been assumed by Subtenant pursuant to this Sublease or other
written agreement.
26. PERSONAL PROPERTY. In addition to the obligations of the Subtenant
pursuant to the Prime Lease, the Subtenant shall repair, replace and improve the
personal property and equipment used in the operation of the Leased Property as
a skilled care nursing facility in order to provide the quality of care
presently provided to the residents of the Facility and as is required by the
laws and regulations of the state of Texas and the Medicare and Medicaid
programs. To the extent that the Subtenant replaces any existing personal
property and equipment with new personal property and equipment during the Term
such personal property and equipment shall be of the same or better quality as
currently exists (the "Replacement Property"). Such Replacement Property shall,
upon installation and delivery to the Facility, become the property of the
Sublandlord and shall remain at the Facility upon the expiration or earlier
termination of the Sublease. Subtenant shall execute and deliver to the
Sublandlord upon expiration or termination of this Sublease any including
without limitation bills of sale and title transfer documents relating to such
Replacement Property. There shall be no liens, security interests or other
encumbrances placed on such Replacement Property.
14
27. CONDITIONS TO COMMENCEMENT DATE. The Commencement Date of this
Sublease and the obligations of the parties shall be conditioned upon the
fulfillment or waiver, in writing, of the following conditions: (a) the
execution and delivery by the Prime Landlord of the consent to this Sublease on
or prior to the Commencement Date and compliance with any conditions set forth
therein which the Prime Landlord requires be fulfilled prior to the Commencement
Date; and (b) the Subtenant being licensed by the state of Texas to operate the
facility at the level of care and for the number of beds currently licensed; and
(c) the Subtenant obtaining the approval of the Medicare and Medicaid program
certifying the Subtenant as a provider under such programs.
28. ADDITIONAL INFORMATION TO BE FURNISHED BY SUBTENANT. In addition to
the financial and other information required to be provided to the Prime
Landlord pursuant to the Lease, (a copy of which shall be provided concurrently
to the Sublandlord) the Subtenant shall provide to the Sublandlord the following
information at the times and in the formats described below:
28.1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS. Within 90 days after
the end of each of Subtenant's fiscal years, a copy of the audited (if
available, otherwise unaudited with the audited statements to be provided when
available) consolidated balance sheets of Subtenant and its consolidated
subsidiaries as of the end of such fiscal year, and related audited (if
available, otherwise unaudited) consolidated statements of income, changes in
common stock and undistributed profits and changes in financial position of
Subtenant and its consolidated subsidiaries for such fiscal year, prepared in
accordance with generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved.
15
28.2 OFFICER'S CERTIFICATE. Within 90 days after the end of each of
Subtenant's fiscal years, and together with the documents furnished in
accordance with section 29.1, an officer's certificate stating that to the best
of such officer's knowledge and belief after making due inquiry, Subtenant is
not in default in the performance or observance of any of the terms of this
Sublease, or if Tenant shall be in default to such officer's knowledge,
specifying all such defaults, the nature thereof, and the steps being taken to
remedy the same;
28.3 CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS. Within 30 days after
the end of each of Subtenant's quarters, quarterly consolidated financial
reports Subtenant produces for reporting purposes and detailed statements of
income and detailed operational statistics regarding occupancy rates, patient
mix and patient rates by type for the Facility; and
28.4 COST REPORTS. Within 90 days after the end of each of Subtenant's
fiscal years, a copy of each Medicare and Medicaid cost report filed with the
appropriate governmental agency for the Facility (and all amendments thereto
whether contemporaneously or subsequently filed thereto);
28.5 SURVEYS AND INVESTIGATIONS INFORMATION.. Within seventy two (72)
hours of receipt a copy of any licensing or other agency survey or report and
any statement of deficiencies and/or any other report indicating that any action
is pending or being considered to downgrade the Facility to a substandard
category, and within the time period required by the particular agency for
furnishing a plan of correction also furnish or cause to be furnished to
Sublandlord a copy of the plan of correction or other response generated as a
result of such survey or report for the Facility, and correct or cause to be
corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in any applicable
16
reimbursement program. Copies of any notices from any governmental agency
relating to an investigation of Subtenant's operations at the Facility including
without limitation HCFA, the OIG, the FBI, the State Medicaid Fraud division,
and any plan of correction responding thereto; and
28.6 ADDITIONAL INFORMATION. The Sublandlord further reserves the
right to require such other information relating to the financial affairs or
operations of the Subtenant and the Facility at such other times as Sublandlord
shall reasonably require (including monthly or more frequently), and Subtenant
agrees to provide such information to Sublandlord within five (5) business days
from request. All financial statements must be in such form and detail as the
Sublandlord shall from time to time reasonably request, provided, however, that
Sublandlord will make reasonable efforts to use Subtenant's existing forms of
reports for all purposes.
29. CROSS DEFAULT. The parties acknowledge that they are, concurrently
herewith, entering into Additional Sublease Agreements and certain Lease
Agreements relating to skilled care nursing facilities in the state of Texas
specifically described on the attached EXHIBIT D (the "Texas Sublease and
Leases"). The parties covenant and agree that in the event of a default by the
Subtenant pursuant to this Sublease the Sublandlord shall have the right and
option to declare a default in the other Texas Subleases and Leases and shall
have all available remedies, including, without limitation, the right to
terminate such Texas Subleases and Leases.
30. ESTOPPEL CERTIFICATE. At any time during the Term and from time to
time upon the request of the Sublandlord the Subtenant shall deliver to the
Sublandlord or Sublandlord's lender within ten (10) business days from receipt
of such request an estoppel certificate signed by an officer of the Subtenant
certifying that this Sublease is unmodified and in full force and
17
effect (or is in full force and effect as modified and setting forth the
modifications) that neither Sublandlord nor Subtenant are in default of the
Sublease or if such default exists setting forth such default and the dates to
which the payments due pursuant to this Sublease and the Lease have been paid.
31. TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Sublandlord's option, Subtenant shall use its best
efforts to transfer to Sublandlord or Sublandlord's nominee, and Subtenant shall
cooperate with Sublandlord or Sublandlord's nominee in connection with the
processing by Sublandlord or Sublandlord's nominee of, any applications for all
licenses, operating permits and other governmental authorization and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary for the operations of the Facility; provided that the
costs and expenses of any such transfer or the processing of any such
application shall be paid by Sublandlord or Sublandlord's nominee.
Notwithstanding anything in this Sublease or elsewhere to the contrary, under no
circumstances shall Sublandlord be obligated to seek or effectuate such a
transfer or application therefore.
18
IN WITNESS WHEREOF, the parties have caused this Sublease to be executed
and their respective corporate seals, if any, to be hereunto affixed and
attested by their respective officers thereunto duly authorized.
Sublandlord: Subtenant:
Extendicare Homes, Inc. Senior Health-Crosbyton, LLC
By:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Senior Vice President
State of Wisconsin State of Pennsylvania
County of Milwaukee County of Philadelphia
The foregoing instrument was acknowledged The foregoing instrument was acknowledged
before me this 25th day of September, 2001 before me this 26th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Vice President by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President on behalf
of Extendicare Homes, Inc. of the corporation.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------- ----------------------------------------
Notary Public, State of Wisconsin Notary Public, State of Pennsylvania
My commission expires 11-2-2003. My commission expires: 10-31-02
[Notarial Seal] [Notarial Seal]
19
SUBLEASE
EXTENDICARE HOMES, INC.
LANDLORD
AND
SENIOR HEALTH-DALWORTH, LLC
TENANT
DATED AS OF October 1, 2001
--------------------------------------------
Facility:
Dalworth Nursing & Rehabilitation Center
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
--------------------------------------------
1
TABLE OF CONTENTS
PAGE
----
1. Leased Property: Rental Payments.......................................................................2
2. Subtenant Obligations...................................................................................2
3. Term: Renewal...........................................................................................3
3.1 Term.......................................................................................3
3.2 Renewal of Extension of Term...............................................................3
4. Additional Sublease Rental; Net Sublease................................................................4
5. Default.................................................................................................5
6. Subtenant Indemnity; Insurance; Waiver of Subrogation...................................................6
7. Use; Compliance with Law................................................................................7
7.1 Use........................................................................................7
7.2 Compliance.................................................................................7
8. Assignment and Subletting...............................................................................8
9. Inspection; Alterations.................................................................................9
10. Termination............................................................................................10
11. Sublandlord's Obligations..............................................................................10
12. Costs and Expenses in the Event of Default.............................................................10
13. Late Payment Charge....................................................................................11
14. Notices................................................................................................11
15. Accord and Satisfaction................................................................................12
16. Entire Agreement.......................................................................................12
17. Modifications..........................................................................................12
18. Consents...............................................................................................13
19. Multiple Originals.....................................................................................13
20. Authority..............................................................................................13
21. Entry by Sublandlord...................................................................................13
22. Non-Waiver.............................................................................................13
23. Relationship of Parties................................................................................13
24. Interpretation.........................................................................................14
25. Sublandlord's Indemnity................................................................................14
26. Personal Property......................................................................................14
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TABLE OF CONTENTS
(continued)
PAGE
----
27. Conditions to Commencement Date........................................................................15
28. Additional Information to be Furnished by Subtenant....................................................15
28.1 Consolidated Annual Financial Statements.................................................15
28.2 Officer's Certificate....................................................................16
28.3 Consolidated Quarterly Financial Statements..............................................16
28.4 Cost Reports.............................................................................16
28.5 Surveys and Investigations Information...................................................16
28.6 Additional Information...................................................................17
29. Cross Default..........................................................................................17
30. Estoppel Certificate...................................................................................17
31. Transfers of Licenses Upon Termination.................................................................18
ii
EXHIBITS
EXHIBITS
--------
A. Lease
B Texas Sublease & Leases
SUBLEASE AGREEMENT
THIS SUBLEASE (the "Sublease") is entered into as of the 1st day of
October, 2001 by and between Extendicare Homes, Inc. (f/k/a Unicare Homes, Inc),
a Delaware corporation, having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Sublandlord") and Senior Health-Dalworth, LLC, a Texas
limited liability company, having its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subtenant").
RECITALS:
The Sublandlord, as tenant, entered into a lease agreement with Triple S
Investment Company, a Wisconsin general partnership, Milwaukee, WI as the
Landlord which has been modified from time to time (the "Prime Landlord") for
the lease of the real and personal property generally described as the Dalworth
Nursing and Rehabilitation Center nursing facility (the "Facility") located at
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. (The real and personal property
being sublet pursuant to this Sublease is all of the Leased Property described
in the Prime Lease and is hereafter referred to as the "Leased Property"). A
copy of the Prime Lease including all exhibits, modifications and amendments
thereto is attached hereto as Exhibit A and incorporated herein by reference.
The lease including all exhibits, modifications and amendments thereto is
referred to herein as either the "Lease" or the "Prime Lease".
The Sublandlord desires to sublet the entire Leased Property to the
Subtenant and the Subtenant desires to sublet the entire Leased Property from
the Sublandlord pursuant to the terms, covenants and conditions set forth in
this Sublease.
NOW, THEREFORE, in consideration of the terms, covenants, conditions
and agreements contained herein and in any exhibits attached hereto, the
Sublandlord and the Subtenant (hereafter collectively referred to as the
"parties") agree as follows:
1. LEASED PROPERTY: RENTAL PAYMENTS. Sublandlord hereby subleases to
Subtenant, and Subtenant hereby subleases from Sublandlord, the Leased Property
subject to all terms, covenants and conditions contained in the Lease, except as
otherwise set forth in this Sublease. To the extent not inconsistent with this
Sublease, the terms of the Lease are hereby incorporated into this Sublease by
reference. Sublandlord shall have all of the rights of the Prime Landlord under
the Lease. In no event shall the Subtenant have the right to receive any
payments due from the Prime Landlord to the Sublandlord under the Lease.
2. SUBTENANT OBLIGATIONS. The Subtenant hereby covenants and agrees to
observe and perform each and every term, covenant, promise, condition and
obligation, imposed upon the Sublandlord, as tenant, under the Lease including
without limitation, the payment obligations of the Sublandlord, as tenant, under
the Lease . Such payment obligations of the Subtenant shall include without
limitation the payment , in the amounts and at the times called for in the
Lease, of all rental, additional rental, taxes, assessments, late charges,
license and permit fees, utilities, governmental charges, insurance premiums,
and capital improvement commitments. The Subtenant's obligations to perform the
terms, covenants and conditions described in the Lease are in addition to any
and all additional obligations of the Subtenant set forth in this Sublease
including any and all additional obligations for payment and performance. It is
the intent of the parties that on and after the Commencement Date, the
Sublandlord shall have absolutely no liability for the performance of the
tenant's obligations under the Lease and that all such
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obligations are hereby assumed and shall be performed by the Subtenant. The
Subtenant shall make payments due under the Lease directly to the Prime Landlord
on or prior to the due date therefore and shall provide evidence of such payment
to the Sublandlord concurrently with delivering such payment to the Prime
Landlord.
3. TERM: RENEWAL.
3.1 TERM. The term of this Sublease shall be for the period beginning
on October 1, 2001 (the "Commencement Date") and ending at 11:59 p.m. on the
date of expiration of such Lease (the "Expiration Date") unless sooner
terminated pursuant to the provisions of this Sublease (the "Term").
Notwithstanding any provision herein to the contrary, this Sublease shall
automatically terminate upon the expiration or earlier termination of the Lease
for any reason or as provided in this Sublease.
3.2 RENEWAL OF EXTENSION OF TERM. If, at the end of the then-current
term of the Lease the Prime Landlord offers or agrees to renew or extend the
term of the Lease, (the "Renewal Right") the Sublandlord agrees to offer to the
Subtenant the right to renew or extend the term of this Sublease on the terms,
covenants and conditions as such Renewal Right has been offered to the
Sublandlord provided that the Prime Landlord consents to the renewal or
extension of this Sublease. The renewal or extension of this Sublease shall also
include the terms, covenants and conditions of this Sublease including without
limitation the terms relating to the payment of Additional Sublease Rental which
shall be negotiated and agreed upon between the parties to this Sublease and
included in any modification of this Sublease. If the Subtenant desires to renew
or extend the term of this Sublease, it shall so notify the Sublandlord in
writing, at least (10) business days prior to the time that the Sublandlord has
been given to exercise such
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Renewal Right with the Prime Landlord. The Sublandlord and the Subtenant shall
execute a modification of this Sublease in form and substance satisfactory to
the Sublandlord reflecting such extension. In the event that the Subtenant does
not so notify the Sublandlord in the manner and within the time set forth
herein, time being deemed of the essence, any right of the Subtenant to extend
the term of the Sublease shall be automatically terminated and, thereafter,
Sublandlord shall have no obligation or liability whatsoever to the Subtenant
regarding such Renewal Right and the Term of this Sublease shall automatically
expire at the expiration of the then current term. In the event that this
Sublease is terminated for any reason prior to the expiration of the then
current term, the obligations of the Sublandlord regarding such Renewal Right
and the right of the Subtenant to extend the term of the Sublease shall also
terminate and be of no further force and effect.
4. ADDITIONAL SUBLEASE RENTAL; NET SUBLEASE. In addition to the
Subtenant's obligation for payment of the rent, additional rent and other
charges under the Lease, as additional consideration to the Sublandlord for
entering into this Sublease, the Subtenant hereby covenants and agrees to pay to
the Sublandlord a fixed annual Rental of Fifty-Three Thousand Dollars ($53,000).
The Additional Sublease Rental shall be paid in equal monthly installment
of Four Thousand Four Hundred Sixteen and 67/100 Dollars ($4,416.67) per month
in advance without demand, delay, set off or deduction of any nature or kind
whatsoever on or before the fifth (5th) day of each month. A partial month's
payment of the Additional Sublease Rental shall be due and payable on the
Commencement Date if the Commencement Date is other than the first day of a
month. The Additional Sublease Rental shall be paid to the Sublandlord at the
address set
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forth in the Notice section of this Sublease and time shall be deemed of the
essence with respect to such payments.
This Sublease is and shall be deemed and construed to be an absolutely net
Sublease and all payments to be made by the Subtenant pursuant to this Sublease
shall be net to the Sublandlord in each year during the Term. Subtenant shall
pay all costs, expenses and obligations of every kind whatsoever relating to the
Leased Property and does hereby indemnify, defend and hold Sublandlord harmless
of, from and against all such costs, expenses and obligations.
5. DEFAULT. Upon the nonpayment by Subtenant of any rent, additional
rent, or other payments when due, under the Lease or this Sublease or any
failure of Subtenant to perform any of its other covenants or agreements
required to be performed by Subtenant under the Lease or this Sublease, or any
default by Subtenant or any affiliate of Subtenant in the payment or performance
of any obligation under any other agreement, note or undertaking with
Sublandlord, after five (5) days written notice of any default in regard to
rent, additional rent, additional Sublease rental or any other indebtedness and
after ten (10) days written notice of any other default, Sublandlord shall have
all remedies available at law or in equity, including, without limitation, the
right, at its option, to reenter the Facility and take possession of the Leased
Property without terminating this Sublease, remove the Subtenant and all persons
holding under Subtenant from the Facility and retake possession of the Leased
Property, accelerate all rentals due hereunder for the remaining Term of this
Sublease, and/or to terminate this Sublease and reenter and repossess the
Facility and all the Leased Property; provided, however, that such reentry,
repossession and/or termination shall not constitute an acceptance or surrender
of this
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Sublease or the Leased Property or a waiver of any of the Sublandlord's rights
or remedies, including without limitation, the right to relet the Leased
Property, or any part thereof, for the benefit of the Subtenant and to recover
all damages of every kind for Subtenant's default.
6. SUBTENANT INDEMNITY; INSURANCE; WAIVER OF SUBROGATION. Subtenant shall
indemnify, defend and hold Sublandlord and all affiliates and its parent company
harmless from any and all damages, costs, losses and expenses (including
reasonable attorney fees) resulting in any way from Subtenant's occupancy and/or
use of the Leased Property, or the breach of any obligation of Subtenant as set
out in the Lease or this Sublease. Subtenant shall carry, at Subtenant's
expense, insurance insuring the Leased Property in full compliance with all
applicable laws, rules, regulations governing the possession occupancy, and use
of the Leased Property as a skilled nursing facility. ("Insurance Obligations").
Subtenant shall also insure its fixtures, equipment, inventory and other
personal property located in, on or about the Facility in an amount at least
equal to the full replacement value thereof. No later than the Commencement Date
and thereafter on each anniversary date of the Commencement Date, Subtenant
shall provide Sublandlord with certificates evidencing the existence of such
insurance naming the Prime Landlord, Sublandlord and any lenders of the Prime
Landlord or the Sublandlord as additional named insureds, which certificates
shall require the insurance carrier to give the Prime Landlord and Sublandlord
at least thirty (30) days written notice of any cancellation or material
amendment to such insurance policies.
Sublandlord and Subtenant hereby waive any and all rights of recovery
against each other for any loss or damage to the Leased Property on account of
fire or other casualty or for injuries sustained on or about the Facility or the
Leased Property to the extent such loss or damage is or
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would be covered by the insurance required to be carried by each party
hereunder, even if such coverage is not actually maintained. Such waiver shall
also apply to the extent of any deductible maintained by either party under its
insurance policies. It is understood that this waiver applies to any loss or
damage regardless of the cause, including, without limitation, if caused by the
negligence of Sublandlord, Subtenant or their respective employees, agents,
assigns or sublessees.
Notwithstanding anything contained herein to the contrary, the Subtenant
shall not be obligated to purchase the professional liability and/or medical
malpractice insurance described in the Lease.
7. USE; COMPLIANCE WITH LAW.
7.1 USE. The Leased Property shall be continuously occupied and used
solely by the Subtenant and solely for the operation of a nursing facility duly
licensed by the state of Texas for the level of care and the number of licensed
beds as of the Commencement Date and duly certified by the Medicare and Medicaid
programs and for no other purpose whatsoever.
7.2 COMPLIANCE. In addition to the obligations imposed under the
Lease, Subtenant shall obey, observe and promptly comply with all laws, rules,
regulations and ordinances which shall be applicable, now or at any time during
the Term, to the possession, use and occupancy of the Leased Property and the
operation of the Facility as a duly licensed Texas nursing facility at the level
of care and the number of licensed beds as of the Commencement Date. Subtenant
shall promptly comply with all laws, orders, rules, rulings and directives of
any governmental authority or agency having jurisdiction of the Facility and the
Leased Property.
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Subtenant shall not store, use, discharge or dispose of any hazardous or toxic
substances, pollutants, contaminants or any other substances regulated by any
state or federal statute (collectively "Contaminants") on the Leased Property
other than in the ordinary course of its business. In addition to any
obligations imposed by the Lease, Subtenant shall be solely responsible for the
costs of removing or cleaning any Contaminants found on the Leased Property and
caused by Subtenant.
8. ASSIGNMENT AND SUBLETTING. Subtenant shall not have any right to, nor
shall Subtenant attempt to, assign its interest in this Sublease or any portion
thereof or any interest in the Leased Property or any portion thereof
voluntarily or by operation of law and shall not have any right to nor attempt
to sell, transfer, sublet or license all or any portion of the Leased Property
without the prior written consent of the Sublandlord and Prime Landlord.
Sublandlord's and the Prime Landlord's consent or approval may be granted or
withheld in their sole discretion. The transfer of fifty percent (50%) or more
of either the voting stock or membership interests held by Subtenant or its
affiliated entities whether in one or a series of transactions, shall be
considered a prohibited assignment, sale, transfer or subletting hereunder
requiring Sublandlord's and the Prime Landlord's prior written consent. Any
purported or attempted assignment, sale, transfer or subletting, without
Sublandlord's and the Prime Landlord's prior written consent, shall be null and
void and constitute a default by Subtenant under this Sublease. Any permitted
assignee or sublessee of Subtenant shall expressly assume Subtenant's
liabilities and obligations under this Sublease and the Lease. No assignment,
subleasing, sale, transfer or licensing shall release Subtenant from any of its
obligations under this Sublease or the Lease. Subtenant shall not mortgage or
otherwise encumber its leasehold
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interest or the Leased Property without the prior written consent of Sublandlord
and the Prime Landlord which either or both may withhold in their sole
discretion. This Sublease shall not be construed as an assignment of
Sublandlord's interest in the Lease, and Subtenant shall not have the right to
negotiate any modification or amendments to the Lease.
9. INSPECTION; ALTERATIONS. Subtenant has inspected the Leased Property,
and is satisfied that the Leased Property is acceptable to Subtenant for all of
its purposes and uses, and accepts the same in "AS IS" condition, without any
warranties, representations or obligation from the Sublandlord or the Prime
Landlord to make any repairs, replacements, alterations, additions,
installations or improvements whatsoever. Subtenant shall not expand or make or
install any additions, renovations, alterations, improvements, or changes in or
to the Leased Property, or any part thereof without Sublandlord's and Prime
Landlord's prior written consent. Any permitted work shall be performed by the
Subtenant in a good and workmanlike manner at the sole expense of Subtenant.
Subtenant shall not permit, create, incur or impose or cause or suffer others to
permit, create, incur or impose any lien or other obligation against the Leased
Property or any interest therein by reason of any work upon the Leased Property,
and Subtenant shall indemnify, defend and hold Sublandlord and the Prime
Landlord harmless of and from any and all claims or demands by any contractor,
subcontractor, materialman, laborer or any other third person against the Leased
Property, Subtenant's interest in the Leased Property or any interest therein
relating to or arising because of any work performed thereon. As between
Sublandlord and Subtenant, any improvements or additions upon the Leased
Property at the expiration of this Sublease shall be deemed a part of the Leased
Property and be and remain the property of the Sublandlord.
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10. TERMINATION. Notwithstanding anything contained herein to the
contrary, the existence of this Sublease is dependent and conditioned upon the
continued existence of the Lease, and in the event of the termination of the
Lease for any reason, this Sublease, at Sublandlord's option, shall thereupon be
terminated without the need for further action and without liability to
Sublandlord. If Subtenant is not in default under the terms and conditions
hereof, any such termination shall be without liability between Sublandlord and
Subtenant, except for such liability theretofore accruing or as otherwise
provided herein; however, if Subtenant is in default, the provisions hereof
including those of default shall control as to Subtenant's liability and shall
survive the termination of the Sublease.
11. SUBLANDLORD'S OBLIGATIONS. Sublandlord shall have no duty of any
nature or kind whatsoever to perform any obligations of the Prime Landlord under
the Lease and shall under no circumstances be responsible for or liable to
Subtenant for any default, failure or delay on the part of the Prime Landlord in
the performance of any obligations of the Prime Landlord under the Lease. No
such default of Prime Landlord shall affect this Sublease or waive or defer the
performance of any of Subtenant's obligations hereunder; provided, however, that
in the event of such default or failure by the Prime Landlord, Sublandlord
agrees, upon written notice from Subtenant, and at Subtenant's expense, to make
demand upon the Prime Landlord to perform its obligations under the Lease.
12. COSTS AND EXPENSES IN THE EVENT OF DEFAULT. Subtenant shall pay all
costs and expenses, including reasonable attorneys' fees, that may be incurred
by Sublandlord in enforcing the provisions of this Sublease or in enforcing
Prime Landlord's obligations under the Lease if requested to do so by Subtenant.
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13. LATE PAYMENT CHARGE. In the event any amounts due from Subtenant under
this Sublease are not paid when due, such amounts shall bear interest from and
after the due date to the date of payment in full at an annual rate of eighteen
percent (18%).
14. NOTICES. Any notice, demand, request, consent, approval or
communication that either party desires or is required to give to the other
party or any other person hereunder shall be in writing and shall be deemed to
be properly served if (i) sent by certified mail with return receipt requested,
(ii) sent by receipted overnight delivery service, or (iii) personally delivered
to the address set forth below. The effective date of any such notice shall be
the date which is stamped by the United States Post Office on the envelope
enclosing same, the date of the receipt for the overnight delivery or the date
on which personal delivery is made, whichever is applicable. Any notice sent by
Subtenant to Prime Landlord shall also be sent concurrently to Sublandlord.
Until changed by written notice from the appropriate party to the other, the
addresses of the parties are as follows:
(a) Sublandlord: Extendicare Homes, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
Copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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(b) Subtenant:
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Copy to: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
15. ACCORD AND SATISFACTION. No payment by Subtenant or receipt by
Sublandlord of a lesser amount than the full amount of any payments to be made
by Subtenant hereunder shall be deemed to be other than on account of the
earliest stipulated unpaid installment thereof, and no endorsement or statement
on any check or letter accompanying any check or payment shall be deemed to be
an accord and satisfaction, and Sublandlord may accept such check or payment
without prejudice of Sublandlord's right to recover the full amount due
hereunder or pursue any other remedy available to Sublandlord.
16. ENTIRE AGREEMENT. This Sublease and all exhibits referred to herein
constitutes the entire agreement and understanding of the parties with respect
to the matters contained in this Sublease and supersedes all other agreements
between and representations by the parties with respect to such matters.
Subtenant is not relying upon any representations, market analysis, projections,
reports or warranties of the Sublandlord or the Prime Landlord.
17. MODIFICATIONS. No changes, amendments or modifications of this
Sublease shall be effective or enforceable unless made in writing and executed
by the parties hereto and the Prime Landlord.
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18. CONSENTS. Whenever Sublandlord's consent is required by the terms of
this Sublease, Prime Landlord's consent shall also be obtained if so required by
the terms of the Lease or this Sublease. The consent by Sublandlord or Prime
Landlord to any act by Subtenant requiring Sublandlord's or Prime Landlord's
consent shall not waive or render unnecessary Sublandlord's consent to any
subsequent similar act by Subtenant.
19. MULTIPLE ORIGINALS. This Sublease may be executed simultaneously in
multiple originals, each of which shall be deemed an original, without the
production of the other such originals.
20. AUTHORITY. The individuals executing this Sublease on behalf of the
Sublandlord and Subtenant respectively represent and warrant to the other that
their respective entities are in good standing under the laws of the state in
which the Leased Property is located and they have full right and authority to
enter into the Sublease, bind their respective entities to the performance of
their obligations hereunder.
21. ENTRY BY SUBLANDLORD. Sublandlord and its representatives shall have
the right, at all reasonable times, to enter upon the Leased Property for the
purposes of examining and inspecting the same; provided, however, this section
shall not be construed as imposing any obligation upon Sublandlord to inspect
the Leased Property.
22. NON-WAIVER. Any assent, expressed or implied, by Sublandlord to any
breach of any covenant or condition herein contained shall not be construed as
an assent or waiver of any such covenant or condition generally or of any
subsequent breach thereof.
23. RELATIONSHIP OF PARTIES. Nothing contained herein shall be deemed or
construed to create a joint venture or partnership relationship between
Sublandlord and Subtenant.
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24. INTERPRETATION. This Sublease shall be interpreted in a fair and
impartial manner without regard to such factors as the party that drafted this
Sublease or the relative bargaining power of the parties.
25. SUBLANDLORD'S INDEMNITY. The Sublandlord covenants and agrees to
defend, indemnify and hold Subtenant harmless from any liabilities incurred with
respect to the Leased Property and the operation thereof by the Sublandlord
prior to the Commencement Date of this Sublease except to the extent such
liabilities have been assumed by Subtenant pursuant to this Sublease or other
written agreement.
26. PERSONAL PROPERTY. In addition to the obligations of the Subtenant
pursuant to the Prime Lease, the Subtenant shall repair, replace and improve the
personal property and equipment used in the operation of the Leased Property as
a skilled care nursing facility in order to provide the quality of care
presently provided to the residents of the Facility and as is required by the
laws and regulations of the state of Texas and the Medicare and Medicaid
programs. To the extent that the Subtenant replaces any existing personal
property and equipment with new personal property and equipment during the Term
such personal property and equipment shall be of the same or better quality as
currently exists (the "Replacement Property"). Such Replacement Property shall,
upon installation and delivery to the Facility, become the property of the
Sublandlord and shall remain at the Facility upon the expiration or earlier
termination of the Sublease. Subtenant shall execute and deliver to the
Sublandlord upon expiration or termination of this Sublease any including
without limitation bills of sale and title transfer documents relating to such
Replacement Property. There shall be no liens, security interests or other
encumbrances placed on such Replacement Property.
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27. CONDITIONS TO COMMENCEMENT DATE. The Commencement Date of this
Sublease and the obligations of the parties shall be conditioned upon the
fulfillment or waiver, in writing, of the following conditions: (a) the
execution and delivery by the Prime Landlord of the consent to this Sublease on
or prior to the Commencement Date and compliance with any conditions set forth
therein which the Prime Landlord requires be fulfilled prior to the Commencement
Date; and (b) the Subtenant being licensed by the state of Texas to operate the
facility at the level of care and for the number of beds currently licensed; and
(c) the Subtenant obtaining the approval of the Medicare and Medicaid program
certifying the Subtenant as a provider under such programs.
28. ADDITIONAL INFORMATION TO BE FURNISHED BY SUBTENANT. In addition to
the financial and other information required to be provided to the Prime
Landlord pursuant to the Lease, (a copy of which shall be provided concurrently
to the Sublandlord) the Subtenant shall provide to the Sublandlord the following
information at the times and in the formats described below:
28.1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS. Within 90 days after
the end of each of Subtenant's fiscal years, a copy of the audited (if
available, otherwise unaudited with the audited statements to be provided when
available) consolidated balance sheets of Subtenant and its consolidated
subsidiaries as of the end of such fiscal year, and related audited (if
available, otherwise unaudited) consolidated statements of income, changes in
common stock and undistributed profits and changes in financial position of
Subtenant and its consolidated subsidiaries for such fiscal year, prepared in
accordance with generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved.
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28.2 OFFICER'S CERTIFICATE. Within 90 days after the end of each of
Subtenant's fiscal years, and together with the documents furnished in
accordance with section 29.1, an officer's certificate stating that to the best
of such officer's knowledge and belief after making due inquiry, Subtenant is
not in default in the performance or observance of any of the terms of this
Sublease, or if Tenant shall be in default to such officer's knowledge,
specifying all such defaults, the nature thereof, and the steps being taken to
remedy the same;
28.3 CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS. Within 30 days after
the end of each of Subtenant's quarters, quarterly consolidated financial
reports Subtenant produces for reporting purposes and detailed statements of
income and detailed operational statistics regarding occupancy rates, patient
mix and patient rates by type for the Facility; and
28.4 COST REPORTS. Within 90 days after the end of each of Subtenant's
fiscal years, a copy of each Medicare and Medicaid cost report filed with the
appropriate governmental agency for the Facility (and all amendments thereto
whether contemporaneously or subsequently filed thereto);
28.5 SURVEYS AND INVESTIGATIONS INFORMATION. Within seventy two (72)
hours of receipt a copy of any licensing or other agency survey or report and
any statement of deficiencies and/or any other report indicating that any action
is pending or being considered to downgrade the Facility to a substandard
category, and within the time period required by the particular agency for
furnishing a plan of correction also furnish or cause to be furnished to
Sublandlord a copy of the plan of correction or other response generated as a
result of such survey or report for the Facility, and correct or cause to be
corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in any applicable
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reimbursement program. Copies of any notices from any governmental agency
relating to an investigation of Subtenant's operations at the Facility including
without limitation HCFA, the OIG, the FBI, the State Medicaid Fraud division,
and any plan of correction responding thereto; and
28.6 ADDITIONAL INFORMATION. The Sublandlord further reserves the
right to require such other information relating to the financial affairs or
operations of the Subtenant and the Facility at such other times as Sublandlord
shall reasonably require (including monthly or more frequently), and Subtenant
agrees to provide such information to Sublandlord within five (5) business days
from request. All financial statements must be in such form and detail as the
Sublandlord shall from time to time reasonably request, provided, however, that
Sublandlord will make reasonable efforts to use Subtenant's existing forms of
reports for all purposes.
29. CROSS DEFAULT. The parties acknowledge that they are, concurrently
herewith, entering into Additional Sublease Agreements and certain Lease
Agreements relating to skilled care nursing facilities in the state of Texas
specifically described on the attached EXHIBIT D (the "Texas Sublease and
Leases"). The parties covenant and agree that in the event of a default by the
Subtenant pursuant to this Sublease the Sublandlord shall have the right and
option to declare a default in the other Texas Subleases and Leases and shall
have all available remedies, including, without limitation, the right to
terminate such Texas Subleases and Leases.
30. ESTOPPEL CERTIFICATE. At any time during the Term and from time to
time upon the request of the Sublandlord the Subtenant shall deliver to the
Sublandlord or Sublandlord's lender within ten (10) business days from receipt
of such request an estoppel certificate signed by an officer of the Subtenant
certifying that this Sublease is unmodified and in full force and
17
effect (or is in full force and effect as modified and setting forth the
modifications) that neither Sublandlord nor Subtenant are in default of the
Sublease or if such default exists setting forth such default and the dates to
which the payments due pursuant to this Sublease and the Lease have been paid.
31. TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Sublandlord's option, Subtenant shall use its best
efforts to transfer to Sublandlord or Sublandlord's nominee, and Subtenant shall
cooperate with Sublandlord or Sublandlord's nominee in connection with the
processing by Sublandlord or Sublandlord's nominee of, any applications for all
licenses, operating permits and other governmental authorization and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary for the operations of the Facility; provided that the
costs and expenses of any such transfer or the processing of any such
application shall be paid by Sublandlord or Sublandlord's nominee.
Notwithstanding anything in this Sublease or elsewhere to the contrary, under no
circumstances shall Sublandlord be obligated to seek or effectuate such a
transfer or application therefore.
18
IN WITNESS WHEREOF, the parties have caused this Sublease to be executed
and their respective corporate seals, if any, to be hereunto affixed and
attested by their respective officers thereunto duly authorized.
Sublandlord: Subtenant:
Extendicare Homes, Inc. Senior Health-Dalworth, LLC
By:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Senior Vice President
State of Wisconsin State of Pennsylvania
County of Milwaukee County of Philadelphia
The foregoing instrument was acknowledged The foregoing instrument was acknowledged
before me this 25th day of September, 2001 before me this 26th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Vice President by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President on behalf
of Extendicare Homes, Inc. of the corporation.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------- ----------------------------------------
Notary Public, State of Wisconsin Notary Public, State of Pennsylvania
My commission expires 11-2-2003. My commission expires: 10-31-02
[Notarial Seal] [Notarial Seal]
19
SUBLEASE
EXTENDICARE HOMES, INC.
LANDLORD
AND
SENIOR HEALTH-FLOYDADA, LLC
TENANT
DATED AS OF October 1, 2001
----------------------------------------
Facility:
Floydada Rehabilitation and Care Center
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
----------------------------------------
1
TABLE OF CONTENTS
PAGE
1. Leased Property: Rental Payments.......................................................................2
2. Subtenant Obligations...................................................................................2
3. Term: Renewal...........................................................................................3
3.1 Term.......................................................................................3
3.2 Renewal of Extension of Term...............................................................3
4. Additional Sublease Rental; Net Sublease................................................................4
5. Default.................................................................................................5
6. Subtenant Indemnity; Insurance; Waiver of Subrogation...................................................6
7. Use; Compliance with Law................................................................................7
7.1 Use........................................................................................7
7.2 Compliance.................................................................................7
8. Assignment and Subletting...............................................................................8
9. Inspection; Alterations.................................................................................9
10. Termination............................................................................................10
11. Sublandlord's Obligations..............................................................................10
12. Costs and Expenses in the Event of Default.............................................................10
13. Late Payment Charge....................................................................................11
14. Notices................................................................................................11
15. Accord and Satisfaction................................................................................12
16. Entire Agreement.......................................................................................12
17. Modifications..........................................................................................12
18. Consents...............................................................................................13
19. Multiple Originals.....................................................................................13
20. Authority..............................................................................................13
21. Entry by Sublandlord...................................................................................13
22. Non-Waiver.............................................................................................13
23. Relationship of Parties................................................................................13
24. Interpretation.........................................................................................14
25. Sublandlord's Indemnity................................................................................14
26. Personal Property......................................................................................14
i
TABLE OF CONTENTS
(continued)
PAGE
27. Conditions to Commencement Date........................................................................15
28. Additional Information to be Furnished by Subtenant....................................................15
28.1 Consolidated Annual Financial Statements.................................................15
28.2 Officer's Certificate....................................................................16
28.3 Consolidated Quarterly Financial Statements..............................................16
28.4 Cost Reports.............................................................................16
28.5 Surveys and Investigations Information...................................................16
28.6 Additional Information...................................................................17
29. Cross Default..........................................................................................17
30. Estoppel Certificate...................................................................................17
31. Transfers of Licenses Upon Termination.................................................................18
ii
EXHIBITS
EXHIBITS
--------
A. Lease
B Texas Sublease & Leases
SUBLEASE AGREEMENT
THIS SUBLEASE (the "Sublease") is entered into as of the 1st day of
October, 2001 by and between Extendicare Homes, Inc. (f/k/a Unicare Homes, Inc),
a Delaware corporation, having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Sublandlord") and Senior Health-Floydada, LLC, a Texas
limited liability company, having its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subtenant").
RECITALS:
The Sublandlord, as tenant, entered into a lease agreement with Triple S
Investment Company, a Wisconsin general partnership, Milwaukee, WI as the
Landlord which has been modified from time to time (the "Prime Landlord") for
the lease of the real and personal property generally described as the Floydada
Rehabilitation and Care Center nursing facility (the "Facility") located at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. (The real and personal property being sublet
pursuant to this Sublease is all of the Leased Property described in the Prime
Lease and is hereafter referred to as the "Leased Property"). A copy of the
Prime Lease including all exhibits, modifications and amendments thereto is
attached hereto as Exhibit A and incorporated herein by reference. The lease
including all exhibits, modifications and amendments thereto is referred to
herein as either the "Lease" or the "Prime Lease".
The Sublandlord desires to sublet the entire Leased Property to the
Subtenant and the Subtenant desires to sublet the entire Leased Property from
the Sublandlord pursuant to the terms, covenants and conditions set forth in
this Sublease.
NOW, THEREFORE, in consideration of the terms, covenants, conditions and
agreements contained herein and in any exhibits attached hereto, the Sublandlord
and the Subtenant (hereafter collectively referred to as the "parties") agree as
follows:
1. LEASED PROPERTY: RENTAL PAYMENTS. Sublandlord hereby subleases to
Subtenant, and Subtenant hereby subleases from Sublandlord, the Leased Property
subject to all terms, covenants and conditions contained in the Lease, except as
otherwise set forth in this Sublease. To the extent not inconsistent with this
Sublease, the terms of the Lease are hereby incorporated into this Sublease by
reference. Sublandlord shall have all of the rights of the Prime Landlord under
the Lease. In no event shall the Subtenant have the right to receive any
payments due from the Prime Landlord to the Sublandlord under the Lease.
2. SUBTENANT OBLIGATIONS. The Subtenant hereby covenants and agrees to
observe and perform each and every term, covenant, promise, condition and
obligation, imposed upon the Sublandlord, as tenant, under the Lease including
without limitation, the payment obligations of the Sublandlord, as tenant, under
the Lease . Such payment obligations of the Subtenant shall include without
limitation the payment , in the amounts and at the times called for in the
Lease, of all rental, additional rental, taxes, assessments, late charges,
license and permit fees, utilities, governmental charges, insurance premiums,
and capital improvement commitments. The Subtenant's obligations to perform the
terms, covenants and conditions described in the Lease are in addition to any
and all additional obligations of the Subtenant set forth in this Sublease
including any and all additional obligations for payment and performance. It is
the intent of the parties that on and after the Commencement Date, the
Sublandlord shall have absolutely no liability for the performance of the
tenant's obligations under the Lease and that all such
2
obligations are hereby assumed and shall be performed by the Subtenant. The
Subtenant shall make payments due under the Lease directly to the Prime Landlord
on or prior to the due date therefore and shall provide evidence of such payment
to the Sublandlord concurrently with delivering such payment to the Prime
Landlord.
3. TERM: RENEWAL.
3.1 TERM. The term of this Sublease shall be for the period beginning
on October 1, 2001 (the "Commencement Date") and ending at 11:59 p.m. on the
date of expiration of such Lease (the "Expiration Date") unless sooner
terminated pursuant to the provisions of this Sublease (the "Term").
Notwithstanding any provision herein to the contrary, this Sublease shall
automatically terminate upon the expiration or earlier termination of the Lease
for any reason or as provided in this Sublease.
3.2 RENEWAL OF EXTENSION OF TERM. If, at the end of the then-current
term of the Lease the Prime Landlord offers or agrees to renew or extend the
term of the Lease, (the "Renewal Right") the Sublandlord agrees to offer to the
Subtenant the right to renew or extend the term of this Sublease on the terms,
covenants and conditions as such Renewal Right has been offered to the
Sublandlord provided that the Prime Landlord consents to the renewal or
extension of this Sublease. The renewal or extension of this Sublease shall also
include the terms, covenants and conditions of this Sublease including without
limitation the terms relating to the payment of Additional Sublease Rental which
shall be negotiated and agreed upon between the parties to this Sublease and
included in any modification of this Sublease. If the Subtenant desires to renew
or extend the term of this Sublease, it shall so notify the Sublandlord in
writing, at least (10) business days prior to the time that the Sublandlord has
been given to exercise such
3
Renewal Right with the Prime Landlord. The Sublandlord and the Subtenant shall
execute a modification of this Sublease in form and substance satisfactory to
the Sublandlord reflecting such extension. In the event that the Subtenant does
not so notify the Sublandlord in the manner and within the time set forth
herein, time being deemed of the essence, any right of the Subtenant to extend
the term of the Sublease shall be automatically terminated and, thereafter,
Sublandlord shall have no obligation or liability whatsoever to the Subtenant
regarding such Renewal Right and the Term of this Sublease shall automatically
expire at the expiration of the then current term. In the event that this
Sublease is terminated for any reason prior to the expiration of the then
current term, the obligations of the Sublandlord regarding such Renewal Right
and the right of the Subtenant to extend the term of the Sublease shall also
terminate and be of no further force and effect.
4. ADDITIONAL SUBLEASE RENTAL; NET SUBLEASE. In addition to the Subtenant's
obligation for payment of the rent, additional rent and other charges under the
Lease, as additional consideration to the Sublandlord for entering into this
Sublease, the Subtenant hereby covenants and agrees to pay to the Sublandlord a
fixed annual Rental of -0- Dollars ($-0-).
The Additional Sublease Rental shall be paid in equal monthly installment
of -0- Dollars ($-0-) per month in advance without demand, delay, set off or
deduction of any nature or kind whatsoever on or before the fifth (5th) day of
each month. A partial month's payment of the Additional Sublease Rental shall be
due and payable on the Commencement Date if the Commencement Date is other than
the first day of a month. The Additional Sublease Rental shall be paid to the
Sublandlord at the address set forth in the Notice section of this Sublease and
time shall be deemed of the essence with respect to such payments.
4
This Sublease is and shall be deemed and construed to be an absolutely net
Sublease and all payments to be made by the Subtenant pursuant to this Sublease
shall be net to the Sublandlord in each year during the Term. Subtenant shall
pay all costs, expenses and obligations of every kind whatsoever relating to the
Leased Property and does hereby indemnify, defend and hold Sublandlord harmless
of, from and against all such costs, expenses and obligations.
5. DEFAULT. Upon the nonpayment by Subtenant of any rent, additional rent,
or other payments when due, under the Lease or this Sublease or any failure of
Subtenant to perform any of its other covenants or agreements required to be
performed by Subtenant under the Lease or this Sublease, or any default by
Subtenant or any affiliate of Subtenant in the payment or performance of any
obligation under any other agreement, note or undertaking with Sublandlord,
after five (5) days written notice of any default in regard to rent, additional
rent, additional Sublease rental or any other indebtedness and after ten (10)
days written notice of any other default, Sublandlord shall have all remedies
available at law or in equity, including, without limitation, the right, at its
option, to reenter the Facility and take possession of the Leased Property
without terminating this Sublease, remove the Subtenant and all persons holding
under Subtenant from the Facility and retake possession of the Leased Property,
accelerate all rentals due hereunder for the remaining Term of this Sublease,
and/or to terminate this Sublease and reenter and repossess the Facility and all
the Leased Property; provided, however, that such reentry, repossession and/or
termination shall not constitute an acceptance or surrender of this Sublease or
the Leased Property or a waiver of any of the Sublandlord's rights or remedies,
5
including without limitation, the right to relet the Leased Property, or any
part thereof, for the benefit of the Subtenant and to recover all damages of
every kind for Subtenant's default.
6. SUBTENANT INDEMNITY; INSURANCE; WAIVER OF SUBROGATION. Subtenant shall
indemnify, defend and hold Sublandlord and all affiliates and its parent company
harmless from any and all damages, costs, losses and expenses (including
reasonable attorney fees) resulting in any way from Subtenant's occupancy and/or
use of the Leased Property, or the breach of any obligation of Subtenant as set
out in the Lease or this Sublease. Subtenant shall carry, at Subtenant's
expense, insurance insuring the Leased Property in full compliance with all
applicable laws, rules, regulations governing the possession occupancy, and use
of the Leased Property as a skilled nursing facility. ("Insurance Obligations").
Subtenant shall also insure its fixtures, equipment, inventory and other
personal property located in, on or about the Facility in an amount at least
equal to the full replacement value thereof. No later than the Commencement Date
and thereafter on each anniversary date of the Commencement Date, Subtenant
shall provide Sublandlord with certificates evidencing the existence of such
insurance naming the Prime Landlord, Sublandlord and any lenders of the Prime
Landlord or the Sublandlord as additional named insureds, which certificates
shall require the insurance carrier to give the Prime Landlord and Sublandlord
at least thirty (30) days written notice of any cancellation or material
amendment to such insurance policies.
Sublandlord and Subtenant hereby waive any and all rights of recovery
against each other for any loss or damage to the Leased Property on account of
fire or other casualty or for injuries sustained on or about the Facility or the
Leased Property to the extent such loss or damage is or would be covered by the
insurance required to be carried by each party hereunder, even if such
6
coverage is not actually maintained. Such waiver shall also apply to the extent
of any deductible maintained by either party under its insurance policies. It is
understood that this waiver applies to any loss or damage regardless of the
cause, including, without limitation, if caused by the negligence of
Sublandlord, Subtenant or their respective employees, agents, assigns or
sublessees.
Notwithstanding anything contained herein to the contrary, the Subtenant
shall not be obligated to purchase the professional liability and/or medical
malpractice insurance described in the Lease.
7. USE; COMPLIANCE WITH LAW.
7.1 USE. The Leased Property shall be continuously occupied and used
solely by the Subtenant and solely for the operation of a nursing facility duly
licensed by the state of Texas for the level of care and the number of licensed
beds as of the Commencement Date and duly certified by the Medicare and Medicaid
programs and for no other purpose whatsoever.
7.2 COMPLIANCE. In addition to the obligations imposed under the Lease,
Subtenant shall obey, observe and promptly comply with all laws, rules,
regulations and ordinances which shall be applicable, now or at any time during
the Term, to the possession, use and occupancy of the Leased Property and the
operation of the Facility as a duly licensed Texas nursing facility at the level
of care and the number of licensed beds as of the Commencement Date. Subtenant
shall promptly comply with all laws, orders, rules, rulings and directives of
any governmental authority or agency having jurisdiction of the Facility and the
Leased Property. Subtenant shall not store, use, discharge or dispose of any
hazardous or toxic substances,
7
pollutants, contaminants or any other substances regulated by any state or
federal statute (collectively "Contaminants") on the Leased Property other than
in the ordinary course of its business. In addition to any obligations imposed
by the Lease, Subtenant shall be solely responsible for the costs of removing or
cleaning any Contaminants found on the Leased Property and caused by Subtenant.
8. ASSIGNMENT AND SUBLETTING. Subtenant shall not have any right to, nor
shall Subtenant attempt to, assign its interest in this Sublease or any portion
thereof or any interest in the Leased Property or any portion thereof
voluntarily or by operation of law and shall not have any right to nor attempt
to sell, transfer, sublet or license all or any portion of the Leased Property
without the prior written consent of the Sublandlord and Prime Landlord.
Sublandlord's and the Prime Landlord's consent or approval may be granted or
withheld in their sole discretion. The transfer of fifty percent (50%) or more
of either the voting stock or membership interests held by Subtenant or its
affiliated entities whether in one or a series of transactions, shall be
considered a prohibited assignment, sale, transfer or subletting hereunder
requiring Sublandlord's and the Prime Landlord's prior written consent. Any
purported or attempted assignment, sale, transfer or subletting, without
Sublandlord's and the Prime Landlord's prior written consent, shall be null and
void and constitute a default by Subtenant under this Sublease. Any permitted
assignee or sublessee of Subtenant shall expressly assume Subtenant's
liabilities and obligations under this Sublease and the Lease. No assignment,
subleasing, sale, transfer or licensing shall release Subtenant from any of its
obligations under this Sublease or the Lease. Subtenant shall not mortgage or
otherwise encumber its leasehold interest or the Leased Property without the
prior written consent of Sublandlord and the Prime
8
Landlord which either or both may withhold in their sole discretion. This
Sublease shall not be construed as an assignment of Sublandlord's interest in
the Lease, and Subtenant shall not have the right to negotiate any modification
or amendments to the Lease.
9. INSPECTION; ALTERATIONS. Subtenant has inspected the Leased Property,
and is satisfied that the Leased Property is acceptable to Subtenant for all of
its purposes and uses, and accepts the same in "AS IS" condition, without any
warranties, representations or obligation from the Sublandlord or the Prime
Landlord to make any repairs, replacements, alterations, additions,
installations or improvements whatsoever. Subtenant shall not expand or make or
install any additions, renovations, alterations, improvements, or changes in or
to the Leased Property, or any part thereof without Sublandlord's and Prime
Landlord's prior written consent. Any permitted work shall be performed by the
Subtenant in a good and workmanlike manner at the sole expense of Subtenant.
Subtenant shall not permit, create, incur or impose or cause or suffer others to
permit, create, incur or impose any lien or other obligation against the Leased
Property or any interest therein by reason of any work upon the Leased Property,
and Subtenant shall indemnify, defend and hold Sublandlord and the Prime
Landlord harmless of and from any and all claims or demands by any contractor,
subcontractor, materialman, laborer or any other third person against the Leased
Property, Subtenant's interest in the Leased Property or any interest therein
relating to or arising because of any work performed thereon. As between
Sublandlord and Subtenant, any improvements or additions upon the Leased
Property at the expiration of this Sublease shall be deemed a part of the Leased
Property and be and remain the property of the Sublandlord.
9
10. TERMINATION. Notwithstanding anything contained herein to the contrary,
the existence of this Sublease is dependent and conditioned upon the continued
existence of the Lease, and in the event of the termination of the Lease for any
reason, this Sublease, at Sublandlord's option, shall thereupon be terminated
without the need for further action and without liability to Sublandlord. If
Subtenant is not in default under the terms and conditions hereof, any such
termination shall be without liability between Sublandlord and Subtenant, except
for such liability theretofore accruing or as otherwise provided herein;
however, if Subtenant is in default, the provisions hereof including those of
default shall control as to Subtenant's liability and shall survive the
termination of the Sublease.
11. SUBLANDLORD'S OBLIGATIONS. Sublandlord shall have no duty of any nature
or kind whatsoever to perform any obligations of the Prime Landlord under the
Lease and shall under no circumstances be responsible for or liable to Subtenant
for any default, failure or delay on the part of the Prime Landlord in the
performance of any obligations of the Prime Landlord under the Lease. No such
default of Prime Landlord shall affect this Sublease or waive or defer the
performance of any of Subtenant's obligations hereunder; provided, however, that
in the event of such default or failure by the Prime Landlord, Sublandlord
agrees, upon written notice from Subtenant, and at Subtenant's expense, to make
demand upon the Prime Landlord to perform its obligations under the Lease.
12. COSTS AND EXPENSES IN THE EVENT OF DEFAULT. Subtenant shall pay all
costs and expenses, including reasonable attorneys' fees, that may be incurred
by Sublandlord in enforcing the provisions of this Sublease or in enforcing
Prime Landlord's obligations under the Lease if requested to do so by Subtenant.
10
13. LATE PAYMENT CHARGE. In the event any amounts due from Subtenant under
this Sublease are not paid when due, such amounts shall bear interest from and
after the due date to the date of payment in full at an annual rate of eighteen
percent (18%).
14. NOTICES. Any notice, demand, request, consent, approval or
communication that either party desires or is required to give to the other
party or any other person hereunder shall be in writing and shall be deemed to
be properly served if (i) sent by certified mail with return receipt requested,
(ii) sent by receipted overnight delivery service, or (iii) personally delivered
to the address set forth below. The effective date of any such notice shall be
the date which is stamped by the United States Post Office on the envelope
enclosing same, the date of the receipt for the overnight delivery or the date
on which personal delivery is made, whichever is applicable. Any notice sent by
Subtenant to Prime Landlord shall also be sent concurrently to Sublandlord.
Until changed by written notice from the appropriate party to the other, the
addresses of the parties are as follows:
(a) Sublandlord: Extendicare Homes, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
Copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
11
(b) Subtenant: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Copy to: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
15. ACCORD AND SATISFACTION. No payment by Subtenant or receipt by
Sublandlord of a lesser amount than the full amount of any payments to be made
by Subtenant hereunder shall be deemed to be other than on account of the
earliest stipulated unpaid installment thereof, and no endorsement or statement
on any check or letter accompanying any check or payment shall be deemed to be
an accord and satisfaction, and Sublandlord may accept such check or payment
without prejudice of Sublandlord's right to recover the full amount due
hereunder or pursue any other remedy available to Sublandlord.
16. ENTIRE AGREEMENT. This Sublease and all exhibits referred to herein
constitutes the entire agreement and understanding of the parties with respect
to the matters contained in this Sublease and supersedes all other agreements
between and representations by the parties with respect to such matters.
Subtenant is not relying upon any representations, market analysis, projections,
reports or warranties of the Sublandlord or the Prime Landlord.
17. MODIFICATIONS. No changes, amendments or modifications of this Sublease
shall be effective or enforceable unless made in writing and executed by the
parties hereto and the Prime Landlord.
12
18. CONSENTS. Whenever Sublandlord's consent is required by the terms of
this Sublease, Prime Landlord's consent shall also be obtained if so required by
the terms of the Lease or this Sublease. The consent by Sublandlord or Prime
Landlord to any act by Subtenant requiring Sublandlord's or Prime Landlord's
consent shall not waive or render unnecessary Sublandlord's consent to any
subsequent similar act by Subtenant.
19. MULTIPLE ORIGINALS. This Sublease may be executed simultaneously in
multiple originals, each of which shall be deemed an original, without the
production of the other such originals.
20. AUTHORITY. The individuals executing this Sublease on behalf of the
Sublandlord and Subtenant respectively represent and warrant to the other that
their respective entities are in good standing under the laws of the state in
which the Leased Property is located and they have full right and authority to
enter into the Sublease, bind their respective entities to the performance of
their obligations hereunder.
21. ENTRY BY SUBLANDLORD. Sublandlord and its representatives shall have
the right, at all reasonable times, to enter upon the Leased Property for the
purposes of examining and inspecting the same; provided, however, this section
shall not be construed as imposing any obligation upon Sublandlord to inspect
the Leased Property.
22. NON-WAIVER. Any assent, expressed or implied, by Sublandlord to any
breach of any covenant or condition herein contained shall not be construed as
an assent or waiver of any such covenant or condition generally or of any
subsequent breach thereof.
23. RELATIONSHIP OF PARTIES. Nothing contained herein shall be deemed or
construed to create a joint venture or partnership relationship between
Sublandlord and Subtenant.
13
24. INTERPRETATION. This Sublease shall be interpreted in a fair and
impartial manner without regard to such factors as the party that drafted this
Sublease or the relative bargaining power of the parties.
25. SUBLANDLORD'S INDEMNITY. The Sublandlord covenants and agrees to
defend, indemnify and hold Subtenant harmless from any liabilities incurred with
respect to the Leased Property and the operation thereof by the Sublandlord
prior to the Commencement Date of this Sublease except to the extent such
liabilities have been assumed by Subtenant pursuant to this Sublease or other
written agreement.
26. PERSONAL PROPERTY. In addition to the obligations of the Subtenant
pursuant to the Prime Lease, the Subtenant shall repair, replace and improve the
personal property and equipment used in the operation of the Leased Property as
a skilled care nursing facility in order to provide the quality of care
presently provided to the residents of the Facility and as is required by the
laws and regulations of the state of Texas and the Medicare and Medicaid
programs. To the extent that the Subtenant replaces any existing personal
property and equipment with new personal property and equipment during the Term
such personal property and equipment shall be of the same or better quality as
currently exists (the "Replacement Property"). Such Replacement Property shall,
upon installation and delivery to the Facility, become the property of the
Sublandlord and shall remain at the Facility upon the expiration or earlier
termination of the Sublease. Subtenant shall execute and deliver to the
Sublandlord upon expiration or termination of this Sublease any including
without limitation bills of sale and title transfer documents relating to such
Replacement Property. There shall be no liens, security interests or other
encumbrances placed on such Replacement Property.
14
27. CONDITIONS TO COMMENCEMENT DATE. The Commencement Date of this Sublease
and the obligations of the parties shall be conditioned upon the fulfillment or
waiver, in writing, of the following conditions: (a) the execution and delivery
by the Prime Landlord of the consent to this Sublease on or prior to the
Commencement Date and compliance with any conditions set forth therein which the
Prime Landlord requires be fulfilled prior to the Commencement Date; and (b) the
Subtenant being licensed by the state of Texas to operate the facility at the
level of care and for the number of beds currently licensed; and (c) the
Subtenant obtaining the approval of the Medicare and Medicaid program certifying
the Subtenant as a provider under such programs.
28. ADDITIONAL INFORMATION TO BE FURNISHED BY SUBTENANT. In addition to the
financial and other information required to be provided to the Prime Landlord
pursuant to the Lease, (a copy of which shall be provided concurrently to the
Sublandlord) the Subtenant shall provide to the Sublandlord the following
information at the times and in the formats described below:
28.1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS. Within 90 days after the
end of each of Subtenant's fiscal years, a copy of the audited (if available,
otherwise unaudited with the audited statements to be provided when available)
consolidated balance sheets of Subtenant and its consolidated subsidiaries as of
the end of such fiscal year, and related audited (if available, otherwise
unaudited) consolidated statements of income, changes in common stock and
undistributed profits and changes in financial position of Subtenant and its
consolidated subsidiaries for such fiscal year, prepared in accordance with
generally accepted accounting principles applied on a basis consistently
maintained throughout the period involved.
15
28.2 OFFICER'S CERTIFICATE. Within 90 days after the end of each of
Subtenant's fiscal years, and together with the documents furnished in
accordance with section 29.1, an officer's certificate stating that to the best
of such officer's knowledge and belief after making due inquiry, Subtenant is
not in default in the performance or observance of any of the terms of this
Sublease, or if Tenant shall be in default to such officer's knowledge,
specifying all such defaults, the nature thereof, and the steps being taken to
remedy the same;
28.3 CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS. Within 30 days after
the end of each of Subtenant's quarters, quarterly consolidated financial
reports Subtenant produces for reporting purposes and detailed statements of
income and detailed operational statistics regarding occupancy rates, patient
mix and patient rates by type for the Facility; and
28.4 COST REPORTS. Within 90 days after the end of each of Subtenant's
fiscal years, a copy of each Medicare and Medicaid cost report filed with the
appropriate governmental agency for the Facility (and all amendments thereto
whether contemporaneously or subsequently filed thereto);
28.5 SURVEYS AND INVESTIGATIONS INFORMATION. Within seventy two (72)
hours of receipt a copy of any licensing or other agency survey or report and
any statement of deficiencies and/or any other report indicating that any action
is pending or being considered to downgrade the Facility to a substandard
category, and within the time period required by the particular agency for
furnishing a plan of correction also furnish or cause to be furnished to
Sublandlord a copy of the plan of correction or other response generated as a
result of such survey or report for the Facility, and correct or cause to be
corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in any applicable
16
reimbursement program. Copies of any notices from any governmental agency
relating to an investigation of Subtenant's operations at the Facility including
without limitation HCFA, the OIG, the FBI, the State Medicaid Fraud division,
and any plan of correction responding thereto; and
28.6 ADDITIONAL INFORMATION. The Sublandlord further reserves the right
to require such other information relating to the financial affairs or
operations of the Subtenant and the Facility at such other times as Sublandlord
shall reasonably require (including monthly or more frequently), and Subtenant
agrees to provide such information to Sublandlord within five (5) business days
from request. All financial statements must be in such form and detail as the
Sublandlord shall from time to time reasonably request, provided, however, that
Sublandlord will make reasonable efforts to use Subtenant's existing forms of
reports for all purposes.
29. CROSS DEFAULT. The parties acknowledge that they are, concurrently
herewith, entering into Additional Sublease Agreements and certain Lease
Agreements relating to skilled care nursing facilities in the state of Texas
specifically described on the attached EXHIBIT D (the "Texas Sublease and
Leases"). The parties covenant and agree that in the event of a default by the
Subtenant pursuant to this Sublease the Sublandlord shall have the right and
option to declare a default in the other Texas Subleases and Leases and shall
have all available remedies, including, without limitation, the right to
terminate such Texas Subleases and Leases.
30. ESTOPPEL CERTIFICATE. At any time during the Term and from time to time
upon the request of the Sublandlord the Subtenant shall deliver to the
Sublandlord or Sublandlord's lender within ten (10) business days from receipt
of such request an estoppel certificate signed by an officer of the Subtenant
certifying that this Sublease is unmodified and in full force and effect (or is
in full force and
17
effect as modified and setting forth the modifications) that neither Sublandlord
nor Subtenant are in default of the Sublease or if such default exists setting
forth such default and the dates to which the payments due pursuant to this
Sublease and the Lease have been paid.
31. TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Sublandlord's option, Subtenant shall use its best
efforts to transfer to Sublandlord or Sublandlord's nominee, and Subtenant shall
cooperate with Sublandlord or Sublandlord's nominee in connection with the
processing by Sublandlord or Sublandlord's nominee of, any applications for all
licenses, operating permits and other governmental authorization and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary for the operations of the Facility; provided that the
costs and expenses of any such transfer or the processing of any such
application shall be paid by Sublandlord or Sublandlord's nominee.
Notwithstanding anything in this Sublease or elsewhere to the contrary, under no
circumstances shall Sublandlord be obligated to seek or effectuate such a
transfer or application therefore.
18
IN WITNESS WHEREOF, the parties have caused this Sublease to be executed
and their respective corporate seals, if any, to be hereunto affixed and
attested by their respective officers thereunto duly authorized.
Sublandlord: Subtenant:
Extendicare Homes, Inc. Senior Health-Floydada, LLC
By:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Senior Vice President
State of Wisconsin State of Pennsylvania
County of Milwaukee County of Philadelphia
The foregoing instrument was acknowledged The foregoing instrument was acknowledged
before me this 25th day of September, 2001 before me this 26th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Vice President of by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President on behalf of the
Extendicare Homes, Inc. corporation.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------- ----------------------------------------
Notary Public, State of Wisconsin Notary Public, State of Pennsylvania
My commission expires 11-2-2003. My commission expires: 10-31-02
[Notarial Seal] [Notarial Seal]
19
SUBLEASE
EXTENDICARE HOMES, INC.
LANDLORD
AND
SENIOR HEALTH-▇▇▇▇▇▇▇▇, LLC
TENANT
DATED AS OF October 1, 2001
Facility:
▇▇▇▇▇▇▇▇ Court Health and Rehabilitation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
1
TABLE OF CONTENTS
PAGE
----
1. Leased Property: Rental Payments.......................................................................2
2. Subtenant Obligations...................................................................................2
3. Term: Renewal...........................................................................................3
3.1 Term...........................................................................................3
3.2 Renewal of Extension of Term...................................................................3
4. Additional Sublease Rental; Net Sublease................................................................4
5. Default.................................................................................................5
6. Subtenant Indemnity; Insurance; Waiver of Subrogation...................................................6
7. Use; Compliance with Law................................................................................7
7.1 Use............................................................................................7
7.2 Compliance.....................................................................................7
8. Assignment and Subletting...............................................................................8
9. Inspection; Alterations.................................................................................9
10. Termination............................................................................................10
11. Sublandlord's Obligations..............................................................................10
12. Costs and Expenses in the Event of Default.............................................................10
13. Late Payment Charge....................................................................................11
14. Notices................................................................................................11
15. Accord and Satisfaction................................................................................12
16. Entire Agreement.......................................................................................12
17. Modifications..........................................................................................12
18. Consents...............................................................................................13
19. Multiple Originals.....................................................................................13
20. Authority..............................................................................................13
21. Entry by Sublandlord...................................................................................13
22. Non-Waiver.............................................................................................13
23. Relationship of Parties................................................................................13
24. Interpretation.........................................................................................14
25. Sublandlord's Indemnity................................................................................14
26. Personal Property......................................................................................14
i
PAGE
----
27. Conditions to Commencement Date........................................................................15
28. Additional Information to be Furnished by Subtenant....................................................15
28.1 Consolidated Annual Financial Statements.....................................................15
28.2 Officer's Certificate........................................................................16
28.3 Consolidated Quarterly Financial Statements..................................................16
28.4 Cost Reports.................................................................................16
28.5 Surveys and Investigations Information.......................................................16
28.6 Additional Information.......................................................................17
29. Cross Default..........................................................................................17
30. Estoppel Certificate...................................................................................17
31. Transfers of Licenses Upon Termination.................................................................18
ii
EXHIBITS
EXHIBITS
--------
A. Lease
B Texas Sublease & Leases
SUBLEASE AGREEMENT
THIS SUBLEASE (the "Sublease") is entered into as of the 1st day of
October, 2001 by and between Extendicare Homes, Inc. (f/k/a Unicare Homes, Inc),
a Delaware corporation, having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Sublandlord") and Senior Health-▇▇▇▇▇▇▇▇, LLC, a Texas
limited liability company, having its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subtenant").
RECITALS:
The Sublandlord, as tenant, entered into a lease agreement with Triple S
Investment Company, a Wisconsin general partnership, Milwaukee, WI as the
Landlord which has been modified from time to time (the "Prime Landlord") for
the lease of the real and personal property generally described as the ▇▇▇▇▇▇▇▇
Court Health and Rehabilitation nursing facility (the "Facility") located at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. (The real and personal property being
sublet pursuant to this Sublease is all of the Leased Property described in the
Prime Lease and is hereafter referred to as the "Leased Property"). A copy of
the Prime Lease including all exhibits, modifications and amendments thereto is
attached hereto as Exhibit A and incorporated herein by reference. The lease
including all exhibits, modifications and amendments thereto is referred to
herein as either the "Lease" or the "Prime Lease".
The Sublandlord desires to sublet the entire Leased Property to the
Subtenant and the Subtenant desires to sublet the entire Leased Property from
the Sublandlord pursuant to the terms, covenants and conditions set forth in
this Sublease.
NOW, THEREFORE, in consideration of the terms, covenants, conditions and
agreements contained herein and in any exhibits attached hereto, the Sublandlord
and the Subtenant (hereafter collectively referred to as the "parties") agree as
follows:
1. LEASED PROPERTY: RENTAL PAYMENTS. Sublandlord hereby subleases to
Subtenant, and Subtenant hereby subleases from Sublandlord, the Leased Property
subject to all terms, covenants and conditions contained in the Lease, except as
otherwise set forth in this Sublease. To the extent not inconsistent with this
Sublease, the terms of the Lease are hereby incorporated into this Sublease by
reference. Sublandlord shall have all of the rights of the Prime Landlord under
the Lease. In no event shall the Subtenant have the right to receive any
payments due from the Prime Landlord to the Sublandlord under the Lease.
2. SUBTENANT OBLIGATIONS. The Subtenant hereby covenants and agrees to
observe and perform each and every term, covenant, promise, condition and
obligation, imposed upon the Sublandlord, as tenant, under the Lease including
without limitation, the payment obligations of the Sublandlord, as tenant, under
the Lease . Such payment obligations of the Subtenant shall include without
limitation the payment , in the amounts and at the times called for in the
Lease, of all rental, additional rental, taxes, assessments, late charges,
license and permit fees, utilities, governmental charges, insurance premiums,
and capital improvement commitments. The Subtenant's obligations to perform the
terms, covenants and conditions described in the Lease are in addition to any
and all additional obligations of the Subtenant set forth in this Sublease
including any and all additional obligations for payment and performance. It is
the intent of the parties that on and after the Commencement Date, the
Sublandlord shall have absolutely no liability for the performance of the
tenant's obligations under the Lease and that all such
2
obligations are hereby assumed and shall be performed by the Subtenant. The
Subtenant shall make payments due under the Lease directly to the Prime Landlord
on or prior to the due date therefore and shall provide evidence of such payment
to the Sublandlord concurrently with delivering such payment to the Prime
Landlord.
3. TERM: RENEWAL.
3.1 TERM. The term of this Sublease shall be for the period beginning
on October 1, 2001 (the "Commencement Date") and ending at 11:59 p.m. on the
date of expiration of such Lease (the "Expiration Date") unless sooner
terminated pursuant to the provisions of this Sublease (the "Term").
Notwithstanding any provision herein to the contrary, this Sublease shall
automatically terminate upon the expiration or earlier termination of the Lease
for any reason or as provided in this Sublease.
3.2 RENEWAL OF EXTENSION OF TERM. If, at the end of the then-current
term of the Lease the Prime Landlord offers or agrees to renew or extend the
term of the Lease, (the "Renewal Right") the Sublandlord agrees to offer to the
Subtenant the right to renew or extend the term of this Sublease on the terms,
covenants and conditions as such Renewal Right has been offered to the
Sublandlord provided that the Prime Landlord consents to the renewal or
extension of this Sublease. The renewal or extension of this Sublease shall also
include the terms, covenants and conditions of this Sublease including without
limitation the terms relating to the payment of Additional Sublease Rental which
shall be negotiated and agreed upon between the parties to this Sublease and
included in any modification of this Sublease. If the Subtenant desires to renew
or extend the term of this Sublease, it shall so notify the Sublandlord in
writing, at least (10) business days prior to the time that the Sublandlord has
been given to exercise such
3
Renewal Right with the Prime Landlord. The Sublandlord and the Subtenant shall
execute a modification of this Sublease in form and substance satisfactory to
the Sublandlord reflecting such extension. In the event that the Subtenant does
not so notify the Sublandlord in the manner and within the time set forth
herein, time being deemed of the essence, any right of the Subtenant to extend
the term of the Sublease shall be automatically terminated and, thereafter,
Sublandlord shall have no obligation or liability whatsoever to the Subtenant
regarding such Renewal Right and the Term of this Sublease shall automatically
expire at the expiration of the then current term. In the event that this
Sublease is terminated for any reason prior to the expiration of the then
current term, the obligations of the Sublandlord regarding such Renewal Right
and the right of the Subtenant to extend the term of the Sublease shall also
terminate and be of no further force and effect.
4. ADDITIONAL SUBLEASE RENTAL; NET SUBLEASE. In addition to the
Subtenant's obligation for payment of the rent, additional rent and other
charges under the Lease, as additional consideration to the Sublandlord for
entering into this Sublease, the Subtenant hereby covenants and agrees to pay to
the Sublandlord a fixed annual Rental of Forty-Five Thousand Dollars ($45,000).
The Additional Sublease Rental shall be paid in equal monthly installment
of Three Thousand Seven Hundred Fifty Dollars ($3,750) per month in advance
without demand, delay, set off or deduction of any nature or kind whatsoever on
or before the fifth (5th) day of each month. A partial month's payment of the
Additional Sublease Rental shall be due and payable on the Commencement Date if
the Commencement Date is other than the first day of a month. The
4
Additional Sublease Rental shall be paid to the Sublandlord at the address set
forth in the Notice section of this Sublease and time shall be deemed of the
essence with respect to such payments.
This Sublease is and shall be deemed and construed to be an absolutely net
Sublease and all payments to be made by the Subtenant pursuant to this Sublease
shall be net to the Sublandlord in each year during the Term. Subtenant shall
pay all costs, expenses and obligations of every kind whatsoever relating to the
Leased Property and does hereby indemnify, defend and hold Sublandlord harmless
of, from and against all such costs, expenses and obligations.
5. DEFAULT. Upon the nonpayment by Subtenant of any rent, additional
rent, or other payments when due, under the Lease or this Sublease or any
failure of Subtenant to perform any of its other covenants or agreements
required to be performed by Subtenant under the Lease or this Sublease, or any
default by Subtenant or any affiliate of Subtenant in the payment or performance
of any obligation under any other agreement, note or undertaking with
Sublandlord, after five (5) days written notice of any default in regard to
rent, additional rent, additional Sublease rental or any other indebtedness and
after ten (10) days written notice of any other default, Sublandlord shall have
all remedies available at law or in equity, including, without limitation, the
right, at its option, to reenter the Facility and take possession of the Leased
Property without terminating this Sublease, remove the Subtenant and all persons
holding under Subtenant from the Facility and retake possession of the Leased
Property, accelerate all rentals due hereunder for the remaining Term of this
Sublease, and/or to terminate this Sublease and reenter and repossess the
Facility and all the Leased Property; provided, however, that such reentry,
repossession and/or termination shall not constitute an acceptance or surrender
of this
5
Sublease or the Leased Property or a waiver of any of the Sublandlord's rights
or remedies, including without limitation, the right to relet the Leased
Property, or any part thereof, for the benefit of the Subtenant and to recover
all damages of every kind for Subtenant's default.
6. SUBTENANT INDEMNITY; INSURANCE; WAIVER OF SUBROGATION. Subtenant shall
indemnify, defend and hold Sublandlord and all affiliates and its parent company
harmless from any and all damages, costs, losses and expenses (including
reasonable attorney fees) resulting in any way from Subtenant's occupancy and/or
use of the Leased Property, or the breach of any obligation of Subtenant as set
out in the Lease or this Sublease. Subtenant shall carry, at Subtenant's
expense, insurance insuring the Leased Property in full compliance with all
applicable laws, rules, regulations governing the possession occupancy, and use
of the Leased Property as a skilled nursing facility. ("Insurance Obligations").
Subtenant shall also insure its fixtures, equipment, inventory and other
personal property located in, on or about the Facility in an amount at least
equal to the full replacement value thereof. No later than the Commencement Date
and thereafter on each anniversary date of the Commencement Date, Subtenant
shall provide Sublandlord with certificates evidencing the existence of such
insurance naming the Prime Landlord, Sublandlord and any lenders of the Prime
Landlord or the Sublandlord as additional named insureds, which certificates
shall require the insurance carrier to give the Prime Landlord and Sublandlord
at least thirty (30) days written notice of any cancellation or material
amendment to such insurance policies.
Sublandlord and Subtenant hereby waive any and all rights of recovery
against each other for any loss or damage to the Leased Property on account of
fire or other casualty or for injuries sustained on or about the Facility or the
Leased Property to the extent such loss or damage is or
6
would be covered by the insurance required to be carried by each party
hereunder, even if such coverage is not actually maintained. Such waiver shall
also apply to the extent of any deductible maintained by either party under its
insurance policies. It is understood that this waiver applies to any loss or
damage regardless of the cause, including, without limitation, if caused by the
negligence of Sublandlord, Subtenant or their respective employees, agents,
assigns or sublessees.
Notwithstanding anything contained herein to the contrary, the Subtenant
shall not be obligated to purchase the professional liability and/or medical
malpractice insurance described in the Lease.
7. USE; COMPLIANCE WITH LAW.
7.1 USE. The Leased Property shall be continuously occupied and used
solely by the Subtenant and solely for the operation of a nursing facility duly
licensed by the state of Texas for the level of care and the number of licensed
beds as of the Commencement Date and duly certified by the Medicare and Medicaid
programs and for no other purpose whatsoever.
7.2 COMPLIANCE. In addition to the obligations imposed under the
Lease, Subtenant shall obey, observe and promptly comply with all laws, rules,
regulations and ordinances which shall be applicable, now or at any time during
the Term, to the possession, use and occupancy of the Leased Property and the
operation of the Facility as a duly licensed Texas nursing facility at the level
of care and the number of licensed beds as of the Commencement Date. Subtenant
shall promptly comply with all laws, orders, rules, rulings and directives of
any governmental authority or agency having jurisdiction of the Facility and the
Leased Property.
7
Subtenant shall not store, use, discharge or dispose of any hazardous or toxic
substances, pollutants, contaminants or any other substances regulated by any
state or federal statute (collectively "Contaminants") on the Leased Property
other than in the ordinary course of its business. In addition to any
obligations imposed by the Lease, Subtenant shall be solely responsible for the
costs of removing or cleaning any Contaminants found on the Leased Property and
caused by Subtenant.
8. ASSIGNMENT AND SUBLETTING. Subtenant shall not have any right to, nor
shall Subtenant attempt to, assign its interest in this Sublease or any portion
thereof or any interest in the Leased Property or any portion thereof
voluntarily or by operation of law and shall not have any right to nor attempt
to sell, transfer, sublet or license all or any portion of the Leased Property
without the prior written consent of the Sublandlord and Prime Landlord.
Sublandlord's and the Prime Landlord's consent or approval may be granted or
withheld in their sole discretion. The transfer of fifty percent (50%) or more
of either the voting stock or membership interests held by Subtenant or its
affiliated entities whether in one or a series of transactions, shall be
considered a prohibited assignment, sale, transfer or subletting hereunder
requiring Sublandlord's and the Prime Landlord's prior written consent. Any
purported or attempted assignment, sale, transfer or subletting, without
Sublandlord's and the Prime Landlord's prior written consent, shall be null and
void and constitute a default by Subtenant under this Sublease. Any permitted
assignee or sublessee of Subtenant shall expressly assume Subtenant's
liabilities and obligations under this Sublease and the Lease. No assignment,
subleasing, sale, transfer or licensing shall release Subtenant from any of its
obligations under this Sublease or the Lease. Subtenant shall not mortgage or
otherwise encumber its leasehold
8
interest or the Leased Property without the prior written consent of Sublandlord
and the Prime Landlord which either or both may withhold in their sole
discretion. This Sublease shall not be construed as an assignment of
Sublandlord's interest in the Lease, and Subtenant shall not have the right to
negotiate any modification or amendments to the Lease.
9. INSPECTION; ALTERATIONS. Subtenant has inspected the Leased Property,
and is satisfied that the Leased Property is acceptable to Subtenant for all of
its purposes and uses, and accepts the same in "AS IS" condition, without any
warranties, representations or obligation from the Sublandlord or the Prime
Landlord to make any repairs, replacements, alterations, additions,
installations or improvements whatsoever. Subtenant shall not expand or make or
install any additions, renovations, alterations, improvements, or changes in or
to the Leased Property, or any part thereof without Sublandlord's and Prime
Landlord's prior written consent. Any permitted work shall be performed by the
Subtenant in a good and workmanlike manner at the sole expense of Subtenant.
Subtenant shall not permit, create, incur or impose or cause or suffer others to
permit, create, incur or impose any lien or other obligation against the Leased
Property or any interest therein by reason of any work upon the Leased Property,
and Subtenant shall indemnify, defend and hold Sublandlord and the Prime
Landlord harmless of and from any and all claims or demands by any contractor,
subcontractor, materialman, laborer or any other third person against the Leased
Property, Subtenant's interest in the Leased Property or any interest therein
relating to or arising because of any work performed thereon. As between
Sublandlord and Subtenant, any improvements or additions upon the Leased
Property at the expiration of this Sublease shall be deemed a part of the Leased
Property and be and remain the property of the Sublandlord.
9
10. TERMINATION. Notwithstanding anything contained herein to the
contrary, the existence of this Sublease is dependent and conditioned upon the
continued existence of the Lease, and in the event of the termination of the
Lease for any reason, this Sublease, at Sublandlord's option, shall thereupon be
terminated without the need for further action and without liability to
Sublandlord. If Subtenant is not in default under the terms and conditions
hereof, any such termination shall be without liability between Sublandlord and
Subtenant, except for such liability theretofore accruing or as otherwise
provided herein; however, if Subtenant is in default, the provisions hereof
including those of default shall control as to Subtenant's liability and shall
survive the termination of the Sublease.
11. SUBLANDLORD'S OBLIGATIONS. Sublandlord shall have no duty of any
nature or kind whatsoever to perform any obligations of the Prime Landlord under
the Lease and shall under no circumstances be responsible for or liable to
Subtenant for any default, failure or delay on the part of the Prime Landlord in
the performance of any obligations of the Prime Landlord under the Lease. No
such default of Prime Landlord shall affect this Sublease or waive or defer the
performance of any of Subtenant's obligations hereunder; provided, however, that
in the event of such default or failure by the Prime Landlord, Sublandlord
agrees, upon written notice from Subtenant, and at Subtenant's expense, to make
demand upon the Prime Landlord to perform its obligations under the Lease.
12. COSTS AND EXPENSES IN THE EVENT OF DEFAULT. Subtenant shall pay all
costs and expenses, including reasonable attorneys' fees, that may be incurred
by Sublandlord in enforcing the provisions of this Sublease or in enforcing
Prime Landlord's obligations under the Lease if requested to do so by Subtenant.
10
13. LATE PAYMENT CHARGE. In the event any amounts due from Subtenant under
this Sublease are not paid when due, such amounts shall bear interest from and
after the due date to the date of payment in full at an annual rate of eighteen
percent (18%).
14. NOTICES. Any notice, demand, request, consent, approval or
communication that either party desires or is required to give to the other
party or any other person hereunder shall be in writing and shall be deemed to
be properly served if (i) sent by certified mail with return receipt requested,
(ii) sent by receipted overnight delivery service, or (iii) personally delivered
to the address set forth below. The effective date of any such notice shall be
the date which is stamped by the United States Post Office on the envelope
enclosing same, the date of the receipt for the overnight delivery or the date
on which personal delivery is made, whichever is applicable. Any notice sent by
Subtenant to Prime Landlord shall also be sent concurrently to Sublandlord.
Until changed by written notice from the appropriate party to the other, the
addresses of the parties are as follows:
(a) Sublandlord: Extendicare Homes, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
Copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
11
(b) Subtenant: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Copy to: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
15. ACCORD AND SATISFACTION. No payment by Subtenant or receipt by
Sublandlord of a lesser amount than the full amount of any payments to be made
by Subtenant hereunder shall be deemed to be other than on account of the
earliest stipulated unpaid installment thereof, and no endorsement or statement
on any check or letter accompanying any check or payment shall be deemed to be
an accord and satisfaction, and Sublandlord may accept such check or payment
without prejudice of Sublandlord's right to recover the full amount due
hereunder or pursue any other remedy available to Sublandlord.
16. ENTIRE AGREEMENT. This Sublease and all exhibits referred to herein
constitutes the entire agreement and understanding of the parties with respect
to the matters contained in this Sublease and supersedes all other agreements
between and representations by the parties with respect to such matters.
Subtenant is not relying upon any representations, market analysis, projections,
reports or warranties of the Sublandlord or the Prime Landlord.
17. MODIFICATIONS. No changes, amendments or modifications of this
Sublease shall be effective or enforceable unless made in writing and executed
by the parties hereto and the Prime Landlord.
12
18. CONSENTS. Whenever Sublandlord's consent is required by the terms of
this Sublease, Prime Landlord's consent shall also be obtained if so required by
the terms of the Lease or this Sublease. The consent by Sublandlord or Prime
Landlord to any act by Subtenant requiring Sublandlord's or Prime Landlord's
consent shall not waive or render unnecessary Sublandlord's consent to any
subsequent similar act by Subtenant.
19. MULTIPLE ORIGINALS. This Sublease may be executed simultaneously in
multiple originals, each of which shall be deemed an original, without the
production of the other such originals.
20. AUTHORITY. The individuals executing this Sublease on behalf of the
Sublandlord and Subtenant respectively represent and warrant to the other that
their respective entities are in good standing under the laws of the state in
which the Leased Property is located and they have full right and authority to
enter into the Sublease, bind their respective entities to the performance of
their obligations hereunder.
21. ENTRY BY SUBLANDLORD. Sublandlord and its representatives shall have
the right, at all reasonable times, to enter upon the Leased Property for the
purposes of examining and inspecting the same; provided, however, this section
shall not be construed as imposing any obligation upon Sublandlord to inspect
the Leased Property.
22. NON-WAIVER. Any assent, expressed or implied, by Sublandlord to any
breach of any covenant or condition herein contained shall not be construed as
an assent or waiver of any such covenant or condition generally or of any
subsequent breach thereof.
23. RELATIONSHIP OF PARTIES. Nothing contained herein shall be deemed or
construed to create a joint venture or partnership relationship between
Sublandlord and Subtenant.
13
24. INTERPRETATION. This Sublease shall be interpreted in a fair and
impartial manner without regard to such factors as the party that drafted this
Sublease or the relative bargaining power of the parties.
25. SUBLANDLORD'S INDEMNITY. The Sublandlord covenants and agrees to
defend, indemnify and hold Subtenant harmless from any liabilities incurred with
respect to the Leased Property and the operation thereof by the Sublandlord
prior to the Commencement Date of this Sublease except to the extent such
liabilities have been assumed by Subtenant pursuant to this Sublease or other
written agreement.
26. PERSONAL PROPERTY. In addition to the obligations of the Subtenant
pursuant to the Prime Lease, the Subtenant shall repair, replace and improve the
personal property and equipment used in the operation of the Leased Property as
a skilled care nursing facility in order to provide the quality of care
presently provided to the residents of the Facility and as is required by the
laws and regulations of the state of Texas and the Medicare and Medicaid
programs. To the extent that the Subtenant replaces any existing personal
property and equipment with new personal property and equipment during the Term
such personal property and equipment shall be of the same or better quality as
currently exists (the "Replacement Property"). Such Replacement Property shall,
upon installation and delivery to the Facility, become the property of the
Sublandlord and shall remain at the Facility upon the expiration or earlier
termination of the Sublease. Subtenant shall execute and deliver to the
Sublandlord upon expiration or termination of this Sublease any including
without limitation bills of sale and title transfer documents relating to such
Replacement Property. There shall be no liens, security interests or other
encumbrances placed on such Replacement Property.
14
27. CONDITIONS TO COMMENCEMENT DATE. The Commencement Date of this
Sublease and the obligations of the parties shall be conditioned upon the
fulfillment or waiver, in writing, of the following conditions: (a) the
execution and delivery by the Prime Landlord of the consent to this Sublease on
or prior to the Commencement Date and compliance with any conditions set forth
therein which the Prime Landlord requires be fulfilled prior to the Commencement
Date; and (b) the Subtenant being licensed by the state of Texas to operate the
facility at the level of care and for the number of beds currently licensed; and
(c) the Subtenant obtaining the approval of the Medicare and Medicaid program
certifying the Subtenant as a provider under such programs.
28. ADDITIONAL INFORMATION TO BE FURNISHED BY SUBTENANT. In addition to
the financial and other information required to be provided to the Prime
Landlord pursuant to the Lease, (a copy of which shall be provided concurrently
to the Sublandlord) the Subtenant shall provide to the Sublandlord the following
information at the times and in the formats described below:
28.1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS. Within 90 days after
the end of each of Subtenant's fiscal years, a copy of the audited (if
available, otherwise unaudited with the audited statements to be provided when
available) consolidated balance sheets of Subtenant and its consolidated
subsidiaries as of the end of such fiscal year, and related audited (if
available, otherwise unaudited) consolidated statements of income, changes in
common stock and undistributed profits and changes in financial position of
Subtenant and its consolidated subsidiaries for such fiscal year, prepared in
accordance with generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved.
15
28.2 OFFICER'S CERTIFICATE. Within 90 days after the end of each of
Subtenant's fiscal years, and together with the documents furnished in
accordance with section 29.1, an officer's certificate stating that to the best
of such officer's knowledge and belief after making due inquiry, Subtenant is
not in default in the performance or observance of any of the terms of this
Sublease, or if Tenant shall be in default to such officer's knowledge,
specifying all such defaults, the nature thereof, and the steps being taken to
remedy the same;
28.3 CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS. Within 30 days after
the end of each of Subtenant's quarters, quarterly consolidated financial
reports Subtenant produces for reporting purposes and detailed statements of
income and detailed operational statistics regarding occupancy rates, patient
mix and patient rates by type for the Facility; and
28.4 COST REPORTS. Within 90 days after the end of each of Subtenant's
fiscal years, a copy of each Medicare and Medicaid cost report filed with the
appropriate governmental agency for the Facility (and all amendments thereto
whether contemporaneously or subsequently filed thereto);
28.5 SURVEYS AND INVESTIGATIONS INFORMATION.. Within seventy two (72)
hours of receipt a copy of any licensing or other agency survey or report and
any statement of deficiencies and/or any other report indicating that any action
is pending or being considered to downgrade the Facility to a substandard
category, and within the time period required by the particular agency for
furnishing a plan of correction also furnish or cause to be furnished to
Sublandlord a copy of the plan of correction or other response generated as a
result of such survey or report for the Facility, and correct or cause to be
corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in any applicable
16
reimbursement program. Copies of any notices from any governmental agency
relating to an investigation of Subtenant's operations at the Facility including
without limitation HCFA, the OIG, the FBI, the State Medicaid Fraud division,
and any plan of correction responding thereto; and
28.6 ADDITIONAL INFORMATION. The Sublandlord further reserves the
right to require such other information relating to the financial affairs or
operations of the Subtenant and the Facility at such other times as Sublandlord
shall reasonably require (including monthly or more frequently), and Subtenant
agrees to provide such information to Sublandlord within five (5) business days
from request. All financial statements must be in such form and detail as the
Sublandlord shall from time to time reasonably request, provided, however, that
Sublandlord will make reasonable efforts to use Subtenant's existing forms of
reports for all purposes.
29. CROSS DEFAULT. The parties acknowledge that they are, concurrently
herewith, entering into Additional Sublease Agreements and certain Lease
Agreements relating to skilled care nursing facilities in the state of Texas
specifically described on the attached EXHIBIT D (the "Texas Sublease and
Leases"). The parties covenant and agree that in the event of a default by the
Subtenant pursuant to this Sublease the Sublandlord shall have the right and
option to declare a default in the other Texas Subleases and Leases and shall
have all available remedies, including, without limitation, the right to
terminate such Texas Subleases and Leases.
30. ESTOPPEL CERTIFICATE. At any time during the Term and from time to
time upon the request of the Sublandlord the Subtenant shall deliver to the
Sublandlord or Sublandlord's lender within ten (10) business days from receipt
of such request an estoppel certificate signed by an officer of the Subtenant
certifying that this Sublease is unmodified and in full force and
17
effect (or is in full force and effect as modified and setting forth the
modifications) that neither Sublandlord nor Subtenant are in default of the
Sublease or if such default exists setting forth such default and the dates to
which the payments due pursuant to this Sublease and the Lease have been paid.
31. TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Sublandlord's option, Subtenant shall use its best
efforts to transfer to Sublandlord or Sublandlord's nominee, and Subtenant shall
cooperate with Sublandlord or Sublandlord's nominee in connection with the
processing by Sublandlord or Sublandlord's nominee of, any applications for all
licenses, operating permits and other governmental authorization and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary for the operations of the Facility; provided that the
costs and expenses of any such transfer or the processing of any such
application shall be paid by Sublandlord or Sublandlord's nominee.
Notwithstanding anything in this Sublease or elsewhere to the contrary, under no
circumstances shall Sublandlord be obligated to seek or effectuate such a
transfer or application therefore.
18
IN WITNESS WHEREOF, the parties have caused this Sublease to be executed
and their respective corporate seals, if any, to be hereunto affixed and
attested by their respective officers thereunto duly authorized.
Sublandlord: Subtenant:
Extendicare Homes, Inc. Senior Health-▇▇▇▇▇▇▇▇, LLC
By:
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------ ------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Its: Senior Vice President
State of Wisconsin State of Pennsylvania
County of Milwaukee County of Philadelphia
The foregoing instrument was acknowledged The foregoing instrument was acknowledged
before me this 25th day of September, 2001 before me this 26th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Vice President of by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President on behalf of the
Extendicare Homes, Inc. corporation.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------ ------------------------------------
Notary Public, State of Wisconsin Notary Public, State of Pennsylvania
My commission expires 11-2-2003. My commission expires: 10-31-02
[Notarial Seal] [Notarial Seal]
19
SUBLEASE
EXTENDICARE HOMES, INC.
LANDLORD
AND
SENIOR HEALTH-LAKESIDE, LLC
TENANT
DATED AS OF October 1, 2001
-----------------------------------------
Facility:
Lakeside Rehabilitation and Care Center
▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
-----------------------------------------
1
TABLE OF CONTENTS
PAGE
1. Leased Property: Rental Payments.......................................................................2
2. Subtenant Obligations...................................................................................2
3. Term: Renewal...........................................................................................3
3.1 Term.......................................................................................3
3.2 Renewal of Extension of Term...............................................................3
4. Additional Sublease Rental; Net Sublease................................................................4
5. Default.................................................................................................5
6. Subtenant Indemnity; Insurance; Waiver of Subrogation...................................................6
7. Use; Compliance with Law................................................................................7
7.1 Use........................................................................................7
7.2 Compliance.................................................................................7
8. Assignment and Subletting...............................................................................8
9. Inspection; Alterations.................................................................................9
10. Termination............................................................................................10
11. Sublandlord's Obligations..............................................................................10
12. Costs and Expenses in the Event of Default.............................................................10
13. Late Payment Charge....................................................................................11
14. Notices................................................................................................11
15. Accord and Satisfaction................................................................................12
16. Entire Agreement.......................................................................................12
17. Modifications..........................................................................................12
18. Consents...............................................................................................13
19. Multiple Originals.....................................................................................13
20. Authority..............................................................................................13
21. Entry by Sublandlord...................................................................................13
22. Non-Waiver.............................................................................................13
23. Relationship of Parties................................................................................13
24. Interpretation.........................................................................................14
25. Sublandlord's Indemnity................................................................................14
26. Personal Property......................................................................................14
i
TABLE OF CONTENTS
(continued)
PAGE
27. Conditions to Commencement Date........................................................................15
28. Additional Information to be Furnished by Subtenant....................................................15
28.1 Consolidated Annual Financial Statements.................................................15
28.2 Officer's Certificate....................................................................16
28.3 Consolidated Quarterly Financial Statements..............................................16
28.4 Cost Reports.............................................................................16
28.5 Surveys and Investigations Information...................................................16
28.6 Additional Information...................................................................17
29. Cross Default..........................................................................................17
30. Estoppel Certificate...................................................................................17
31. Transfers of Licenses Upon Termination.................................................................18
ii
EXHIBITS
EXHIBITS
--------
A. Lease
B Texas Sublease & Leases
SUBLEASE AGREEMENT
THIS SUBLEASE (the "Sublease") is entered into as of the 1st day of
October, 2001 by and between Extendicare Homes, Inc. (f/k/a Unicare Homes, Inc),
a Delaware corporation, having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Sublandlord") and Senior Health-Lakeside, LLC, a Texas
limited liability company, having its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subtenant").
RECITALS:
The Sublandlord, as tenant, entered into a lease agreement with Triple S
Investment Company, a Wisconsin general partnership, Milwaukee, WI as the
Landlord which has been modified from time to time (the "Prime Landlord") for
the lease of the real and personal property generally described as the Lakeside
Rehabilitation and Care Center nursing facility (the "Facility") located at ▇▇▇▇
- ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. (The real and personal property being sublet
pursuant to this Sublease is all of the Leased Property described in the Prime
Lease and is hereafter referred to as the "Leased Property"). A copy of the
Prime Lease including all exhibits, modifications and amendments thereto is
attached hereto as Exhibit A and incorporated herein by reference. The lease
including all exhibits, modifications and amendments thereto is referred to
herein as either the "Lease" or the "Prime Lease".
The Sublandlord desires to sublet the entire Leased Property to the
Subtenant and the Subtenant desires to sublet the entire Leased Property from
the Sublandlord pursuant to the terms, covenants and conditions set forth in
this Sublease.
NOW, THEREFORE, in consideration of the terms, covenants, conditions and
agreements contained herein and in any exhibits attached hereto, the Sublandlord
and the Subtenant (hereafter collectively referred to as the "parties") agree as
follows:
1. LEASED PROPERTY: RENTAL PAYMENTS. Sublandlord hereby subleases to
Subtenant, and Subtenant hereby subleases from Sublandlord, the Leased Property
subject to all terms, covenants and conditions contained in the Lease, except as
otherwise set forth in this Sublease. To the extent not inconsistent with this
Sublease, the terms of the Lease are hereby incorporated into this Sublease by
reference. Sublandlord shall have all of the rights of the Prime Landlord under
the Lease. In no event shall the Subtenant have the right to receive any
payments due from the Prime Landlord to the Sublandlord under the Lease.
2. SUBTENANT OBLIGATIONS. The Subtenant hereby covenants and agrees to
observe and perform each and every term, covenant, promise, condition and
obligation, imposed upon the Sublandlord, as tenant, under the Lease including
without limitation, the payment obligations of the Sublandlord, as tenant, under
the Lease . Such payment obligations of the Subtenant shall include without
limitation the payment , in the amounts and at the times called for in the
Lease, of all rental, additional rental, taxes, assessments, late charges,
license and permit fees, utilities, governmental charges, insurance premiums,
and capital improvement commitments. The Subtenant's obligations to perform the
terms, covenants and conditions described in the Lease are in addition to any
and all additional obligations of the Subtenant set forth in this Sublease
including any and all additional obligations for payment and performance. It is
the intent of the parties that on and after the Commencement Date, the
Sublandlord shall have absolutely no liability for the performance of the
tenant's obligations under the Lease and that all such
2
obligations are hereby assumed and shall be performed by the Subtenant. The
Subtenant shall make payments due under the Lease directly to the Prime Landlord
on or prior to the due date therefore and shall provide evidence of such payment
to the Sublandlord concurrently with delivering such payment to the Prime
Landlord.
3. TERM: RENEWAL.
3.1 TERM. The term of this Sublease shall be for the period beginning
on October 1, 2001 (the "Commencement Date") and ending at 11:59 p.m. on the
date of expiration of such Lease (the "Expiration Date") unless sooner
terminated pursuant to the provisions of this Sublease (the "Term").
Notwithstanding any provision herein to the contrary, this Sublease shall
automatically terminate upon the expiration or earlier termination of the Lease
for any reason or as provided in this Sublease.
3.2 RENEWAL OF EXTENSION OF TERM. If, at the end of the then-current
term of the Lease the Prime Landlord offers or agrees to renew or extend the
term of the Lease, (the "Renewal Right") the Sublandlord agrees to offer to the
Subtenant the right to renew or extend the term of this Sublease on the terms,
covenants and conditions as such Renewal Right has been offered to the
Sublandlord provided that the Prime Landlord consents to the renewal or
extension of this Sublease. The renewal or extension of this Sublease shall also
include the terms, covenants and conditions of this Sublease including without
limitation the terms relating to the payment of Additional Sublease Rental which
shall be negotiated and agreed upon between the parties to this Sublease and
included in any modification of this Sublease. If the Subtenant desires to renew
or extend the term of this Sublease, it shall so notify the Sublandlord in
writing, at least (10) business days prior to the time that the Sublandlord has
been given to exercise such
3
Renewal Right with the Prime Landlord. The Sublandlord and the Subtenant shall
execute a modification of this Sublease in form and substance satisfactory to
the Sublandlord reflecting such extension. In the event that the Subtenant does
not so notify the Sublandlord in the manner and within the time set forth
herein, time being deemed of the essence, any right of the Subtenant to extend
the term of the Sublease shall be automatically terminated and, thereafter,
Sublandlord shall have no obligation or liability whatsoever to the Subtenant
regarding such Renewal Right and the Term of this Sublease shall automatically
expire at the expiration of the then current term. In the event that this
Sublease is terminated for any reason prior to the expiration of the then
current term, the obligations of the Sublandlord regarding such Renewal Right
and the right of the Subtenant to extend the term of the Sublease shall also
terminate and be of no further force and effect.
4. ADDITIONAL SUBLEASE RENTAL; NET SUBLEASE. In addition to the Subtenant's
obligation for payment of the rent, additional rent and other charges under the
Lease, as additional consideration to the Sublandlord for entering into this
Sublease, the Subtenant hereby covenants and agrees to pay to the Sublandlord a
fixed annual Rental of Forty-Three Thousand Dollars ($43,000).
The Additional Sublease Rental shall be paid in equal monthly installment
of Three Thousand Five Hundred Eighty-Three and 34/100 Dollars ($3,583.34) per
month in advance without demand, delay, set off or deduction of any nature or
kind whatsoever on or before the fifth (5th) day of each month. A partial
month's payment of the Additional Sublease Rental shall be due and payable on
the Commencement Date if the Commencement Date is other than the first day of a
month. The Additional Sublease Rental shall be paid to the Sublandlord at the
4
address set forth in the Notice section of this Sublease and time shall be
deemed of the essence with respect to such payments.
This Sublease is and shall be deemed and construed to be an absolutely net
Sublease and all payments to be made by the Subtenant pursuant to this Sublease
shall be net to the Sublandlord in each year during the Term. Subtenant shall
pay all costs, expenses and obligations of every kind whatsoever relating to the
Leased Property and does hereby indemnify, defend and hold Sublandlord harmless
of, from and against all such costs, expenses and obligations.
5. DEFAULT. Upon the nonpayment by Subtenant of any rent, additional rent,
or other payments when due, under the Lease or this Sublease or any failure of
Subtenant to perform any of its other covenants or agreements required to be
performed by Subtenant under the Lease or this Sublease, or any default by
Subtenant or any affiliate of Subtenant in the payment or performance of any
obligation under any other agreement, note or undertaking with Sublandlord,
after five (5) days written notice of any default in regard to rent, additional
rent, additional Sublease rental or any other indebtedness and after ten (10)
days written notice of any other default, Sublandlord shall have all remedies
available at law or in equity, including, without limitation, the right, at its
option, to reenter the Facility and take possession of the Leased Property
without terminating this Sublease, remove the Subtenant and all persons holding
under Subtenant from the Facility and retake possession of the Leased Property,
accelerate all rentals due hereunder for the remaining Term of this Sublease,
and/or to terminate this Sublease and reenter and repossess the Facility and all
the Leased Property; provided, however, that such reentry, repossession and/or
termination shall not constitute an acceptance or surrender of this
5
Sublease or the Leased Property or a waiver of any of the Sublandlord's rights
or remedies, including without limitation, the right to relet the Leased
Property, or any part thereof, for the benefit of the Subtenant and to recover
all damages of every kind for Subtenant's default.
6. SUBTENANT INDEMNITY; INSURANCE; WAIVER OF SUBROGATION. Subtenant shall
indemnify, defend and hold Sublandlord and all affiliates and its parent company
harmless from any and all damages, costs, losses and expenses (including
reasonable attorney fees) resulting in any way from Subtenant's occupancy and/or
use of the Leased Property, or the breach of any obligation of Subtenant as set
out in the Lease or this Sublease. Subtenant shall carry, at Subtenant's
expense, insurance insuring the Leased Property in full compliance with all
applicable laws, rules, regulations governing the possession occupancy, and use
of the Leased Property as a skilled nursing facility. ("Insurance Obligations").
Subtenant shall also insure its fixtures, equipment, inventory and other
personal property located in, on or about the Facility in an amount at least
equal to the full replacement value thereof. No later than the Commencement Date
and thereafter on each anniversary date of the Commencement Date, Subtenant
shall provide Sublandlord with certificates evidencing the existence of such
insurance naming the Prime Landlord, Sublandlord and any lenders of the Prime
Landlord or the Sublandlord as additional named insureds, which certificates
shall require the insurance carrier to give the Prime Landlord and Sublandlord
at least thirty (30) days written notice of any cancellation or material
amendment to such insurance policies.
Sublandlord and Subtenant hereby waive any and all rights of recovery
against each other for any loss or damage to the Leased Property on account of
fire or other casualty or for injuries sustained on or about the Facility or the
Leased Property to the extent such loss or damage is or
6
would be covered by the insurance required to be carried by each party
hereunder, even if such coverage is not actually maintained. Such waiver shall
also apply to the extent of any deductible maintained by either party under its
insurance policies. It is understood that this waiver applies to any loss or
damage regardless of the cause, including, without limitation, if caused by the
negligence of Sublandlord, Subtenant or their respective employees, agents,
assigns or sublessees.
Notwithstanding anything contained herein to the contrary, the Subtenant
shall not be obligated to purchase the professional liability and/or medical
malpractice insurance described in the Lease.
7. USE; COMPLIANCE WITH LAW.
7.1 USE. The Leased Property shall be continuously occupied and used
solely by the Subtenant and solely for the operation of a nursing facility duly
licensed by the state of Texas for the level of care and the number of licensed
beds as of the Commencement Date and duly certified by the Medicare and Medicaid
programs and for no other purpose whatsoever.
7.2 COMPLIANCE. In addition to the obligations imposed under the Lease,
Subtenant shall obey, observe and promptly comply with all laws, rules,
regulations and ordinances which shall be applicable, now or at any time during
the Term, to the possession, use and occupancy of the Leased Property and the
operation of the Facility as a duly licensed Texas nursing facility at the level
of care and the number of licensed beds as of the Commencement Date. Subtenant
shall promptly comply with all laws, orders, rules, rulings and directives of
any governmental authority or agency having jurisdiction of the Facility and the
Leased Property.
7
Subtenant shall not store, use, discharge or dispose of any hazardous or toxic
substances, pollutants, contaminants or any other substances regulated by any
state or federal statute (collectively "Contaminants") on the Leased Property
other than in the ordinary course of its business. In addition to any
obligations imposed by the Lease, Subtenant shall be solely responsible for the
costs of removing or cleaning any Contaminants found on the Leased Property and
caused by Subtenant.
8. ASSIGNMENT AND SUBLETTING. Subtenant shall not have any right to, nor
shall Subtenant attempt to, assign its interest in this Sublease or any portion
thereof or any interest in the Leased Property or any portion thereof
voluntarily or by operation of law and shall not have any right to nor attempt
to sell, transfer, sublet or license all or any portion of the Leased Property
without the prior written consent of the Sublandlord and Prime Landlord.
Sublandlord's and the Prime Landlord's consent or approval may be granted or
withheld in their sole discretion. The transfer of fifty percent (50%) or more
of either the voting stock or membership interests held by Subtenant or its
affiliated entities whether in one or a series of transactions, shall be
considered a prohibited assignment, sale, transfer or subletting hereunder
requiring Sublandlord's and the Prime Landlord's prior written consent. Any
purported or attempted assignment, sale, transfer or subletting, without
Sublandlord's and the Prime Landlord's prior written consent, shall be null and
void and constitute a default by Subtenant under this Sublease. Any permitted
assignee or sublessee of Subtenant shall expressly assume Subtenant's
liabilities and obligations under this Sublease and the Lease. No assignment,
subleasing, sale, transfer or licensing shall release Subtenant from any of its
obligations under this Sublease or the Lease. Subtenant shall not mortgage or
otherwise encumber its leasehold
8
interest or the Leased Property without the prior written consent of Sublandlord
and the Prime Landlord which either or both may withhold in their sole
discretion. This Sublease shall not be construed as an assignment of
Sublandlord's interest in the Lease, and Subtenant shall not have the right to
negotiate any modification or amendments to the Lease.
9. INSPECTION; ALTERATIONS. Subtenant has inspected the Leased Property,
and is satisfied that the Leased Property is acceptable to Subtenant for all of
its purposes and uses, and accepts the same in "AS IS" condition, without any
warranties, representations or obligation from the Sublandlord or the Prime
Landlord to make any repairs, replacements, alterations, additions,
installations or improvements whatsoever. Subtenant shall not expand or make or
install any additions, renovations, alterations, improvements, or changes in or
to the Leased Property, or any part thereof without Sublandlord's and Prime
Landlord's prior written consent. Any permitted work shall be performed by the
Subtenant in a good and workmanlike manner at the sole expense of Subtenant.
Subtenant shall not permit, create, incur or impose or cause or suffer others to
permit, create, incur or impose any lien or other obligation against the Leased
Property or any interest therein by reason of any work upon the Leased Property,
and Subtenant shall indemnify, defend and hold Sublandlord and the Prime
Landlord harmless of and from any and all claims or demands by any contractor,
subcontractor, materialman, laborer or any other third person against the Leased
Property, Subtenant's interest in the Leased Property or any interest therein
relating to or arising because of any work performed thereon. As between
Sublandlord and Subtenant, any improvements or additions upon the Leased
Property at the expiration of this Sublease shall be deemed a part of the Leased
Property and be and remain the property of the Sublandlord.
9
10. TERMINATION. Notwithstanding anything contained herein to the contrary,
the existence of this Sublease is dependent and conditioned upon the continued
existence of the Lease, and in the event of the termination of the Lease for any
reason, this Sublease, at Sublandlord's option, shall thereupon be terminated
without the need for further action and without liability to Sublandlord. If
Subtenant is not in default under the terms and conditions hereof, any such
termination shall be without liability between Sublandlord and Subtenant, except
for such liability theretofore accruing or as otherwise provided herein;
however, if Subtenant is in default, the provisions hereof including those of
default shall control as to Subtenant's liability and shall survive the
termination of the Sublease.
11. SUBLANDLORD'S OBLIGATIONS. Sublandlord shall have no duty of any nature
or kind whatsoever to perform any obligations of the Prime Landlord under the
Lease and shall under no circumstances be responsible for or liable to Subtenant
for any default, failure or delay on the part of the Prime Landlord in the
performance of any obligations of the Prime Landlord under the Lease. No such
default of Prime Landlord shall affect this Sublease or waive or defer the
performance of any of Subtenant's obligations hereunder; provided, however, that
in the event of such default or failure by the Prime Landlord, Sublandlord
agrees, upon written notice from Subtenant, and at Subtenant's expense, to make
demand upon the Prime Landlord to perform its obligations under the Lease.
12. COSTS AND EXPENSES IN THE EVENT OF DEFAULT. Subtenant shall pay all
costs and expenses, including reasonable attorneys' fees, that may be incurred
by Sublandlord in enforcing the provisions of this Sublease or in enforcing
Prime Landlord's obligations under the Lease if requested to do so by Subtenant.
10
13. LATE PAYMENT CHARGE. In the event any amounts due from Subtenant under
this Sublease are not paid when due, such amounts shall bear interest from and
after the due date to the date of payment in full at an annual rate of eighteen
percent (18%).
14. NOTICES. Any notice, demand, request, consent, approval or
communication that either party desires or is required to give to the other
party or any other person hereunder shall be in writing and shall be deemed to
be properly served if (i) sent by certified mail with return receipt requested,
(ii) sent by receipted overnight delivery service, or (iii) personally delivered
to the address set forth below. The effective date of any such notice shall be
the date which is stamped by the United States Post Office on the envelope
enclosing same, the date of the receipt for the overnight delivery or the date
on which personal delivery is made, whichever is applicable. Any notice sent by
Subtenant to Prime Landlord shall also be sent concurrently to Sublandlord.
Until changed by written notice from the appropriate party to the other, the
addresses of the parties are as follows:
(a) Sublandlord: Extendicare Homes, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and
General Counsel
Copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
11
(b) Subtenant: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Copy to: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
15. ACCORD AND SATISFACTION. No payment by Subtenant or receipt by
Sublandlord of a lesser amount than the full amount of any payments to be made
by Subtenant hereunder shall be deemed to be other than on account of the
earliest stipulated unpaid installment thereof, and no endorsement or statement
on any check or letter accompanying any check or payment shall be deemed to be
an accord and satisfaction, and Sublandlord may accept such check or payment
without prejudice of Sublandlord's right to recover the full amount due
hereunder or pursue any other remedy available to Sublandlord.
16. ENTIRE AGREEMENT. This Sublease and all exhibits referred to herein
constitutes the entire agreement and understanding of the parties with respect
to the matters contained in this Sublease and supersedes all other agreements
between and representations by the parties with respect to such matters.
Subtenant is not relying upon any representations, market analysis, projections,
reports or warranties of the Sublandlord or the Prime Landlord.
17. MODIFICATIONS. No changes, amendments or modifications of this Sublease
shall be effective or enforceable unless made in writing and executed by the
parties hereto and the Prime Landlord.
12
18. CONSENTS. Whenever Sublandlord's consent is required by the terms of
this Sublease, Prime Landlord's consent shall also be obtained if so required by
the terms of the Lease or this Sublease. The consent by Sublandlord or Prime
Landlord to any act by Subtenant requiring Sublandlord's or Prime Landlord's
consent shall not waive or render unnecessary Sublandlord's consent to any
subsequent similar act by Subtenant.
19. MULTIPLE ORIGINALS. This Sublease may be executed simultaneously in
multiple originals, each of which shall be deemed an original, without the
production of the other such originals.
20. AUTHORITY. The individuals executing this Sublease on behalf of the
Sublandlord and Subtenant respectively represent and warrant to the other that
their respective entities are in good standing under the laws of the state in
which the Leased Property is located and they have full right and authority to
enter into the Sublease, bind their respective entities to the performance of
their obligations hereunder.
21. ENTRY BY SUBLANDLORD. Sublandlord and its representatives shall have
the right, at all reasonable times, to enter upon the Leased Property for the
purposes of examining and inspecting the same; provided, however, this section
shall not be construed as imposing any obligation upon Sublandlord to inspect
the Leased Property.
22. NON-WAIVER. Any assent, expressed or implied, by Sublandlord to any
breach of any covenant or condition herein contained shall not be construed as
an assent or waiver of any such covenant or condition generally or of any
subsequent breach thereof.
23. RELATIONSHIP OF PARTIES. Nothing contained herein shall be deemed or
construed to create a joint venture or partnership relationship between
Sublandlord and Subtenant.
13
24. INTERPRETATION. This Sublease shall be interpreted in a fair and
impartial manner without regard to such factors as the party that drafted this
Sublease or the relative bargaining power of the parties.
25. SUBLANDLORD'S INDEMNITY. The Sublandlord covenants and agrees to
defend, indemnify and hold Subtenant harmless from any liabilities incurred with
respect to the Leased Property and the operation thereof by the Sublandlord
prior to the Commencement Date of this Sublease except to the extent such
liabilities have been assumed by Subtenant pursuant to this Sublease or other
written agreement.
26. PERSONAL PROPERTY. In addition to the obligations of the Subtenant
pursuant to the Prime Lease, the Subtenant shall repair, replace and improve the
personal property and equipment used in the operation of the Leased Property as
a skilled care nursing facility in order to provide the quality of care
presently provided to the residents of the Facility and as is required by the
laws and regulations of the state of Texas and the Medicare and Medicaid
programs. To the extent that the Subtenant replaces any existing personal
property and equipment with new personal property and equipment during the Term
such personal property and equipment shall be of the same or better quality as
currently exists (the "Replacement Property"). Such Replacement Property shall,
upon installation and delivery to the Facility, become the property of the
Sublandlord and shall remain at the Facility upon the expiration or earlier
termination of the Sublease. Subtenant shall execute and deliver to the
Sublandlord upon expiration or termination of this Sublease any including
without limitation bills of sale and title transfer documents relating to such
Replacement Property. There shall be no liens, security interests or other
encumbrances placed on such Replacement Property.
14
27. CONDITIONS TO COMMENCEMENT DATE. The Commencement Date of this Sublease
and the obligations of the parties shall be conditioned upon the fulfillment or
waiver, in writing, of the following conditions: (a) the execution and delivery
by the Prime Landlord of the consent to this Sublease on or prior to the
Commencement Date and compliance with any conditions set forth therein which the
Prime Landlord requires be fulfilled prior to the Commencement Date; and (b) the
Subtenant being licensed by the state of Texas to operate the facility at the
level of care and for the number of beds currently licensed; and (c) the
Subtenant obtaining the approval of the Medicare and Medicaid program certifying
the Subtenant as a provider under such programs.
28. ADDITIONAL INFORMATION TO BE FURNISHED BY SUBTENANT. In addition to the
financial and other information required to be provided to the Prime Landlord
pursuant to the Lease, (a copy of which shall be provided concurrently to the
Sublandlord) the Subtenant shall provide to the Sublandlord the following
information at the times and in the formats described below:
28.1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS. Within 90 days after the
end of each of Subtenant's fiscal years, a copy of the audited (if available,
otherwise unaudited with the audited statements to be provided when available)
consolidated balance sheets of Subtenant and its consolidated subsidiaries as of
the end of such fiscal year, and related audited (if available, otherwise
unaudited) consolidated statements of income, changes in common stock and
undistributed profits and changes in financial position of Subtenant and its
consolidated subsidiaries for such fiscal year, prepared in accordance with
generally accepted accounting principles applied on a basis consistently
maintained throughout the period involved.
15
28.2 OFFICER'S CERTIFICATE. Within 90 days after the end of each of
Subtenant's fiscal years, and together with the documents furnished in
accordance with section 29.1, an officer's certificate stating that to the best
of such officer's knowledge and belief after making due inquiry, Subtenant is
not in default in the performance or observance of any of the terms of this
Sublease, or if Tenant shall be in default to such officer's knowledge,
specifying all such defaults, the nature thereof, and the steps being taken to
remedy the same;
28.3 CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS. Within 30 days after
the end of each of Subtenant's quarters, quarterly consolidated financial
reports Subtenant produces for reporting purposes and detailed statements of
income and detailed operational statistics regarding occupancy rates, patient
mix and patient rates by type for the Facility; and
28.4 COST REPORTS. Within 90 days after the end of each of Subtenant's
fiscal years, a copy of each Medicare and Medicaid cost report filed with the
appropriate governmental agency for the Facility (and all amendments thereto
whether contemporaneously or subsequently filed thereto);
28.5 SURVEYS AND INVESTIGATIONS INFORMATION.. Within seventy two (72)
hours of receipt a copy of any licensing or other agency survey or report and
any statement of deficiencies and/or any other report indicating that any action
is pending or being considered to downgrade the Facility to a substandard
category, and within the time period required by the particular agency for
furnishing a plan of correction also furnish or cause to be furnished to
Sublandlord a copy of the plan of correction or other response generated as a
result of such survey or report for the Facility, and correct or cause to be
corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in any applicable
16
reimbursement program. Copies of any notices from any governmental agency
relating to an investigation of Subtenant's operations at the Facility including
without limitation HCFA, the OIG, the FBI, the State Medicaid Fraud division,
and any plan of correction responding thereto; and
28.6 ADDITIONAL INFORMATION. The Sublandlord further reserves the right
to require such other information relating to the financial affairs or
operations of the Subtenant and the Facility at such other times as Sublandlord
shall reasonably require (including monthly or more frequently), and Subtenant
agrees to provide such information to Sublandlord within five (5) business days
from request. All financial statements must be in such form and detail as the
Sublandlord shall from time to time reasonably request, provided, however, that
Sublandlord will make reasonable efforts to use Subtenant's existing forms of
reports for all purposes.
29. CROSS DEFAULT. The parties acknowledge that they are, concurrently
herewith, entering into Additional Sublease Agreements and certain Lease
Agreements relating to skilled care nursing facilities in the state of Texas
specifically described on the attached EXHIBIT D (the "Texas Sublease and
Leases"). The parties covenant and agree that in the event of a default by the
Subtenant pursuant to this Sublease the Sublandlord shall have the right and
option to declare a default in the other Texas Subleases and Leases and shall
have all available remedies, including, without limitation, the right to
terminate such Texas Subleases and Leases.
30. ESTOPPEL CERTIFICATE. At any time during the Term and from time to time
upon the request of the Sublandlord the Subtenant shall deliver to the
Sublandlord or Sublandlord's lender within ten (10) business days from receipt
of such request an estoppel certificate signed by an officer of the Subtenant
certifying that this Sublease is unmodified and in full force and
17
effect (or is in full force and effect as modified and setting forth the
modifications) that neither Sublandlord nor Subtenant are in default of the
Sublease or if such default exists setting forth such default and the dates to
which the payments due pursuant to this Sublease and the Lease have been paid.
31. TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Sublandlord's option, Subtenant shall use its best
efforts to transfer to Sublandlord or Sublandlord's nominee, and Subtenant shall
cooperate with Sublandlord or Sublandlord's nominee in connection with the
processing by Sublandlord or Sublandlord's nominee of, any applications for all
licenses, operating permits and other governmental authorization and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary for the operations of the Facility; provided that the
costs and expenses of any such transfer or the processing of any such
application shall be paid by Sublandlord or Sublandlord's nominee.
Notwithstanding anything in this Sublease or elsewhere to the contrary, under no
circumstances shall Sublandlord be obligated to seek or effectuate such a
transfer or application therefore.
18
IN WITNESS WHEREOF, the parties have caused this Sublease to be executed
and their respective corporate seals, if any, to be hereunto affixed and
attested by their respective officers thereunto duly authorized.
Sublandlord: Subtenant:
Extendicare Homes, Inc. Senior Health-Lakeside, LLC
By:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Senior Vice President
State of Wisconsin State of Pennsylvania
County of Milwaukee County of Philadelphia
The foregoing instrument was acknowledged The foregoing instrument was acknowledged
before me this 25th day of September, 2001 before me this 26th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Vice President by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President on behalf
of Extendicare Homes, Inc. of the corporation.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------- ----------------------------------------
Notary Public, State of Wisconsin Notary Public, State of Pennsylvania
My commission expires 11-2-2003. My commission expires: 10-31-02
[Notarial Seal] [Notarial Seal]
19
SUBLEASE
EXTENDICARE HOMES, INC.
LANDLORD
AND
SENIOR HEALTH-LOCKNEY, LLC
TENANT
DATED AS OF October 1, 2001
----------------------------------------
Facility:
Lockney Health and Rehabilitation Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
----------------------------------------
1
TABLE OF CONTENTS
PAGE
----
1. Leased Property: Rental Payments..........................................2
2. Subtenant Obligations.....................................................2
3. Term: Renewal.............................................................3
3.1 Term............................................................3
3.2 Renewal of Extension of Term....................................3
4. Additional Sublease Rental; Net Sublease..................................4
5. Default...................................................................5
6. Subtenant Indemnity; Insurance; Waiver of Subrogation.....................6
7. Use; Compliance with Law..................................................7
7.1 Use.............................................................7
7.2 Compliance......................................................7
8. Assignment and Subletting.................................................8
9. Inspection; Alterations...................................................9
10. Termination..............................................................10
11. Sublandlord's Obligations................................................10
12. Costs and Expenses in the Event of Default...............................10
13. Late Payment Charge......................................................11
14. Notices..................................................................11
15. Accord and Satisfaction..................................................12
16. Entire Agreement.........................................................12
17. Modifications............................................................12
18. Consents.................................................................13
19. Multiple Originals.......................................................13
20. Authority................................................................13
21. Entry by Sublandlord.....................................................13
22. Non-Waiver...............................................................13
23. Relationship of Parties..................................................13
24. Interpretation...........................................................14
25. Sublandlord's Indemnity..................................................14
26. Personal Property........................................................14
i
TABLE OF CONTENTS
(continued)
PAGE
----
27. Conditions to Commencement Date..........................................15
28. Additional Information to be Furnished by Subtenant......................15
28.1 Consolidated Annual Financial Statements......................15
28.2 Officer's Certificate.........................................16
28.3 Consolidated Quarterly Financial Statements...................16
28.4 Cost Reports..................................................16
28.5 Surveys and Investigations Information........................16
28.6 Additional Information........................................17
29. Cross Default............................................................17
30. Estoppel Certificate.....................................................17
31. Transfers of Licenses Upon Termination...................................18
ii
EXHIBITS
EXHIBITS
--------
A. Lease
B Texas Sublease & Leases
SUBLEASE AGREEMENT
THIS SUBLEASE (the "Sublease") is entered into as of the 1st day of
October, 2001 by and between Extendicare Homes, Inc. (f/k/a Unicare Homes, Inc),
a Delaware corporation, having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Sublandlord") and Senior Health-Lockney, LLC, a Texas
limited liability company, having its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subtenant").
RECITALS:
The Sublandlord, as tenant, entered into a lease agreement with Triple S
Investment Company, a Wisconsin general partnership, Milwaukee, WI as the
Landlord which has been modified from time to time (the "Prime Landlord") for
the lease of the real and personal property generally described as the Lockney
Health and Rehabilitation Center nursing facility (the "Facility") located at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. (The real and personal property being
sublet pursuant to this Sublease is all of the Leased Property described in the
Prime Lease and is hereafter referred to as the "Leased Property"). A copy of
the Prime Lease including all exhibits, modifications and amendments thereto is
attached hereto as Exhibit A and incorporated herein by reference. The lease
including all exhibits, modifications and amendments thereto is referred to
herein as either the "Lease" or the "Prime Lease".
The Sublandlord desires to sublet the entire Leased Property to the
Subtenant and the Subtenant desires to sublet the entire Leased Property from
the Sublandlord pursuant to the terms, covenants and conditions set forth in
this Sublease.
NOW, THEREFORE, in consideration of the terms, covenants, conditions and
agreements contained herein and in any exhibits attached hereto, the Sublandlord
and the Subtenant (hereafter collectively referred to as the "parties") agree as
follows:
1. LEASED PROPERTY: RENTAL PAYMENTS. Sublandlord hereby subleases to
Subtenant, and Subtenant hereby subleases from Sublandlord, the Leased Property
subject to all terms, covenants and conditions contained in the Lease, except as
otherwise set forth in this Sublease. To the extent not inconsistent with this
Sublease, the terms of the Lease are hereby incorporated into this Sublease by
reference. Sublandlord shall have all of the rights of the Prime Landlord under
the Lease. In no event shall the Subtenant have the right to receive any
payments due from the Prime Landlord to the Sublandlord under the Lease.
2. SUBTENANT OBLIGATIONS. The Subtenant hereby covenants and agrees to
observe and perform each and every term, covenant, promise, condition and
obligation, imposed upon the Sublandlord, as tenant, under the Lease including
without limitation, the payment obligations of the Sublandlord, as tenant, under
the Lease . Such payment obligations of the Subtenant shall include without
limitation the payment , in the amounts and at the times called for in the
Lease, of all rental, additional rental, taxes, assessments, late charges,
license and permit fees, utilities, governmental charges, insurance premiums,
and capital improvement commitments. The Subtenant's obligations to perform the
terms, covenants and conditions described in the Lease are in addition to any
and all additional obligations of the Subtenant set forth in this Sublease
including any and all additional obligations for payment and performance. It is
the intent of the parties that on and after the Commencement Date, the
Sublandlord shall have absolutely no liability for the performance of the
tenant's obligations under the Lease and that all such
2
obligations are hereby assumed and shall be performed by the Subtenant. The
Subtenant shall make payments due under the Lease directly to the Prime Landlord
on or prior to the due date therefore and shall provide evidence of such payment
to the Sublandlord concurrently with delivering such payment to the Prime
Landlord.
3. TERM: RENEWAL.
3.1 TERM. The term of this Sublease shall be for the period beginning
on October 1, 2001 (the "Commencement Date") and ending at 11:59 p.m. on the
date of expiration of such Lease (the "Expiration Date") unless sooner
terminated pursuant to the provisions of this Sublease (the "Term").
Notwithstanding any provision herein to the contrary, this Sublease shall
automatically terminate upon the expiration or earlier termination of the Lease
for any reason or as provided in this Sublease.
3.2 RENEWAL OF EXTENSION OF TERM. If, at the end of the then-current
term of the Lease the Prime Landlord offers or agrees to renew or extend the
term of the Lease, (the "Renewal Right") the Sublandlord agrees to offer to the
Subtenant the right to renew or extend the term of this Sublease on the terms,
covenants and conditions as such Renewal Right has been offered to the
Sublandlord provided that the Prime Landlord consents to the renewal or
extension of this Sublease. The renewal or extension of this Sublease shall also
include the terms, covenants and conditions of this Sublease including without
limitation the terms relating to the payment of Additional Sublease Rental which
shall be negotiated and agreed upon between the parties to this Sublease and
included in any modification of this Sublease. If the Subtenant desires to renew
or extend the term of this Sublease, it shall so notify the Sublandlord in
writing, at least (10) business days prior to the time that the Sublandlord has
been given to exercise such
3
Renewal Right with the Prime Landlord. The Sublandlord and the Subtenant shall
execute a modification of this Sublease in form and substance satisfactory to
the Sublandlord reflecting such extension. In the event that the Subtenant does
not so notify the Sublandlord in the manner and within the time set forth
herein, time being deemed of the essence, any right of the Subtenant to extend
the term of the Sublease shall be automatically terminated and, thereafter,
Sublandlord shall have no obligation or liability whatsoever to the Subtenant
regarding such Renewal Right and the Term of this Sublease shall automatically
expire at the expiration of the then current term. In the event that this
Sublease is terminated for any reason prior to the expiration of the then
current term, the obligations of the Sublandlord regarding such Renewal Right
and the right of the Subtenant to extend the term of the Sublease shall also
terminate and be of no further force and effect.
4. ADDITIONAL SUBLEASE RENTAL; NET SUBLEASE. In addition to the
Subtenant's obligation for payment of the rent, additional rent and other
charges under the Lease, as additional consideration to the Sublandlord for
entering into this Sublease, the Subtenant hereby covenants and agrees to pay to
the Sublandlord a fixed annual Rental of -0- Dollars ($-0-).
The Additional Sublease Rental shall be paid in equal monthly installment
of -0- Dollars ($-0-) per month in advance without demand, delay, set off or
deduction of any nature or kind whatsoever on or before the fifth (5th) day of
each month. A partial month's payment of the Additional Sublease Rental shall be
due and payable on the Commencement Date if the Commencement Date is other than
the first day of a month. The Additional Sublease Rental shall be paid to the
Sublandlord at the address set forth in the Notice section of this Sublease and
time shall be deemed of the essence with respect to such payments.
4
This Sublease is and shall be deemed and construed to be an absolutely net
Sublease and all payments to be made by the Subtenant pursuant to this Sublease
shall be net to the Sublandlord in each year during the Term. Subtenant shall
pay all costs, expenses and obligations of every kind whatsoever relating to the
Leased Property and does hereby indemnify, defend and hold Sublandlord harmless
of, from and against all such costs, expenses and obligations.
5. DEFAULT. Upon the nonpayment by Subtenant of any rent, additional
rent, or other payments when due, under the Lease or this Sublease or any
failure of Subtenant to perform any of its other covenants or agreements
required to be performed by Subtenant under the Lease or this Sublease, or any
default by Subtenant or any affiliate of Subtenant in the payment or performance
of any obligation under any other agreement, note or undertaking with
Sublandlord, after five (5) days written notice of any default in regard to
rent, additional rent, additional Sublease rental or any other indebtedness and
after ten (10) days written notice of any other default, Sublandlord shall have
all remedies available at law or in equity, including, without limitation, the
right, at its option, to reenter the Facility and take possession of the Leased
Property without terminating this Sublease, remove the Subtenant and all persons
holding under Subtenant from the Facility and retake possession of the Leased
Property, accelerate all rentals due hereunder for the remaining Term of this
Sublease, and/or to terminate this Sublease and reenter and repossess the
Facility and all the Leased Property; provided, however, that such reentry,
repossession and/or termination shall not constitute an acceptance or surrender
of this Sublease or the Leased Property or a waiver of any of the Sublandlord's
rights or remedies,
5
including without limitation, the right to relet the Leased Property, or any
part thereof, for the benefit of the Subtenant and to recover all damages of
every kind for Subtenant's default.
6. SUBTENANT INDEMNITY; INSURANCE; WAIVER OF SUBROGATION. Subtenant shall
indemnify, defend and hold Sublandlord and all affiliates and its parent company
harmless from any and all damages, costs, losses and expenses (including
reasonable attorney fees) resulting in any way from Subtenant's occupancy and/or
use of the Leased Property, or the breach of any obligation of Subtenant as set
out in the Lease or this Sublease. Subtenant shall carry, at Subtenant's
expense, insurance insuring the Leased Property in full compliance with all
applicable laws, rules, regulations governing the possession occupancy, and use
of the Leased Property as a skilled nursing facility. ("Insurance Obligations").
Subtenant shall also insure its fixtures, equipment, inventory and other
personal property located in, on or about the Facility in an amount at least
equal to the full replacement value thereof. No later than the Commencement Date
and thereafter on each anniversary date of the Commencement Date, Subtenant
shall provide Sublandlord with certificates evidencing the existence of such
insurance naming the Prime Landlord, Sublandlord and any lenders of the Prime
Landlord or the Sublandlord as additional named insureds, which certificates
shall require the insurance carrier to give the Prime Landlord and Sublandlord
at least thirty (30) days written notice of any cancellation or material
amendment to such insurance policies.
Sublandlord and Subtenant hereby waive any and all rights of recovery
against each other for any loss or damage to the Leased Property on account of
fire or other casualty or for injuries sustained on or about the Facility or the
Leased Property to the extent such loss or damage is or would be covered by the
insurance required to be carried by each party hereunder, even if such
6
coverage is not actually maintained. Such waiver shall also apply to the extent
of any deductible maintained by either party under its insurance policies. It is
understood that this waiver applies to any loss or damage regardless of the
cause, including, without limitation, if caused by the negligence of
Sublandlord, Subtenant or their respective employees, agents, assigns or
sublessees.
Notwithstanding anything contained herein to the contrary, the Subtenant
shall not be obligated to purchase the professional liability and/or medical
malpractice insurance described in the Lease.
7. USE; COMPLIANCE WITH LAW.
7.1 USE. The Leased Property shall be continuously occupied and used
solely by the Subtenant and solely for the operation of a nursing facility duly
licensed by the state of Texas for the level of care and the number of licensed
beds as of the Commencement Date and duly certified by the Medicare and Medicaid
programs and for no other purpose whatsoever.
7.2 COMPLIANCE. In addition to the obligations imposed under the
Lease, Subtenant shall obey, observe and promptly comply with all laws, rules,
regulations and ordinances which shall be applicable, now or at any time during
the Term, to the possession, use and occupancy of the Leased Property and the
operation of the Facility as a duly licensed Texas nursing facility at the level
of care and the number of licensed beds as of the Commencement Date. Subtenant
shall promptly comply with all laws, orders, rules, rulings and directives of
any governmental authority or agency having jurisdiction of the Facility and the
Leased Property. Subtenant shall not store, use, discharge or dispose of any
hazardous or toxic substances,
7
pollutants, contaminants or any other substances regulated by any state or
federal statute (collectively "Contaminants") on the Leased Property other than
in the ordinary course of its business. In addition to any obligations imposed
by the Lease, Subtenant shall be solely responsible for the costs of removing or
cleaning any Contaminants found on the Leased Property and caused by Subtenant.
8. ASSIGNMENT AND SUBLETTING. Subtenant shall not have any right to, nor
shall Subtenant attempt to, assign its interest in this Sublease or any portion
thereof or any interest in the Leased Property or any portion thereof
voluntarily or by operation of law and shall not have any right to nor attempt
to sell, transfer, sublet or license all or any portion of the Leased Property
without the prior written consent of the Sublandlord and Prime Landlord.
Sublandlord's and the Prime Landlord's consent or approval may be granted or
withheld in their sole discretion. The transfer of fifty percent (50%) or more
of either the voting stock or membership interests held by Subtenant or its
affiliated entities whether in one or a series of transactions, shall be
considered a prohibited assignment, sale, transfer or subletting hereunder
requiring Sublandlord's and the Prime Landlord's prior written consent. Any
purported or attempted assignment, sale, transfer or subletting, without
Sublandlord's and the Prime Landlord's prior written consent, shall be null and
void and constitute a default by Subtenant under this Sublease. Any permitted
assignee or sublessee of Subtenant shall expressly assume Subtenant's
liabilities and obligations under this Sublease and the Lease. No assignment,
subleasing, sale, transfer or licensing shall release Subtenant from any of its
obligations under this Sublease or the Lease. Subtenant shall not mortgage or
otherwise encumber its leasehold interest or the Leased Property without the
prior written consent of Sublandlord and the Prime
8
Landlord which either or both may withhold in their sole discretion. This
Sublease shall not be construed as an assignment of Sublandlord's interest in
the Lease, and Subtenant shall not have the right to negotiate any modification
or amendments to the Lease.
9. INSPECTION; ALTERATIONS. Subtenant has inspected the Leased Property,
and is satisfied that the Leased Property is acceptable to Subtenant for all of
its purposes and uses, and accepts the same in "AS IS" condition, without any
warranties, representations or obligation from the Sublandlord or the Prime
Landlord to make any repairs, replacements, alterations, additions,
installations or improvements whatsoever. Subtenant shall not expand or make or
install any additions, renovations, alterations, improvements, or changes in or
to the Leased Property, or any part thereof without Sublandlord's and Prime
Landlord's prior written consent. Any permitted work shall be performed by the
Subtenant in a good and workmanlike manner at the sole expense of Subtenant.
Subtenant shall not permit, create, incur or impose or cause or suffer others to
permit, create, incur or impose any lien or other obligation against the Leased
Property or any interest therein by reason of any work upon the Leased Property,
and Subtenant shall indemnify, defend and hold Sublandlord and the Prime
Landlord harmless of and from any and all claims or demands by any contractor,
subcontractor, materialman, laborer or any other third person against the Leased
Property, Subtenant's interest in the Leased Property or any interest therein
relating to or arising because of any work performed thereon. As between
Sublandlord and Subtenant, any improvements or additions upon the Leased
Property at the expiration of this Sublease shall be deemed a part of the Leased
Property and be and remain the property of the Sublandlord.
9
10. TERMINATION. Notwithstanding anything contained herein to the
contrary, the existence of this Sublease is dependent and conditioned upon the
continued existence of the Lease, and in the event of the termination of the
Lease for any reason, this Sublease, at Sublandlord's option, shall thereupon be
terminated without the need for further action and without liability to
Sublandlord. If Subtenant is not in default under the terms and conditions
hereof, any such termination shall be without liability between Sublandlord and
Subtenant, except for such liability theretofore accruing or as otherwise
provided herein; however, if Subtenant is in default, the provisions hereof
including those of default shall control as to Subtenant's liability and shall
survive the termination of the Sublease.
11. SUBLANDLORD'S OBLIGATIONS. Sublandlord shall have no duty of any
nature or kind whatsoever to perform any obligations of the Prime Landlord under
the Lease and shall under no circumstances be responsible for or liable to
Subtenant for any default, failure or delay on the part of the Prime Landlord in
the performance of any obligations of the Prime Landlord under the Lease. No
such default of Prime Landlord shall affect this Sublease or waive or defer the
performance of any of Subtenant's obligations hereunder; provided, however, that
in the event of such default or failure by the Prime Landlord, Sublandlord
agrees, upon written notice from Subtenant, and at Subtenant's expense, to make
demand upon the Prime Landlord to perform its obligations under the Lease.
12. COSTS AND EXPENSES IN THE EVENT OF DEFAULT. Subtenant shall pay all
costs and expenses, including reasonable attorneys' fees, that may be incurred
by Sublandlord in enforcing the provisions of this Sublease or in enforcing
Prime Landlord's obligations under the Lease if requested to do so by Subtenant.
10
13. LATE PAYMENT CHARGE. In the event any amounts due from Subtenant under
this Sublease are not paid when due, such amounts shall bear interest from and
after the due date to the date of payment in full at an annual rate of eighteen
percent (18%).
14. NOTICES. Any notice, demand, request, consent, approval or
communication that either party desires or is required to give to the other
party or any other person hereunder shall be in writing and shall be deemed to
be properly served if (i) sent by certified mail with return receipt requested,
(ii) sent by receipted overnight delivery service, or (iii) personally delivered
to the address set forth below. The effective date of any such notice shall be
the date which is stamped by the United States Post Office on the envelope
enclosing same, the date of the receipt for the overnight delivery or the date
on which personal delivery is made, whichever is applicable. Any notice sent by
Subtenant to Prime Landlord shall also be sent concurrently to Sublandlord.
Until changed by written notice from the appropriate party to the other, the
addresses of the parties are as follows:
(a) Sublandlord: Extendicare Homes, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
Copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
11
(b) Subtenant: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Copy to: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
15. ACCORD AND SATISFACTION. No payment by Subtenant or receipt by
Sublandlord of a lesser amount than the full amount of any payments to be made
by Subtenant hereunder shall be deemed to be other than on account of the
earliest stipulated unpaid installment thereof, and no endorsement or statement
on any check or letter accompanying any check or payment shall be deemed to be
an accord and satisfaction, and Sublandlord may accept such check or payment
without prejudice of Sublandlord's right to recover the full amount due
hereunder or pursue any other remedy available to Sublandlord.
16. ENTIRE AGREEMENT. This Sublease and all exhibits referred to herein
constitutes the entire agreement and understanding of the parties with respect
to the matters contained in this Sublease and supersedes all other agreements
between and representations by the parties with respect to such matters.
Subtenant is not relying upon any representations, market analysis, projections,
reports or warranties of the Sublandlord or the Prime Landlord.
17. MODIFICATIONS. No changes, amendments or modifications of this
Sublease shall be effective or enforceable unless made in writing and executed
by the parties hereto and the Prime Landlord.
12
18. CONSENTS. Whenever Sublandlord's consent is required by the terms of
this Sublease, Prime Landlord's consent shall also be obtained if so required by
the terms of the Lease or this Sublease. The consent by Sublandlord or Prime
Landlord to any act by Subtenant requiring Sublandlord's or Prime Landlord's
consent shall not waive or render unnecessary Sublandlord's consent to any
subsequent similar act by Subtenant.
19. MULTIPLE ORIGINALS. This Sublease may be executed simultaneously in
multiple originals, each of which shall be deemed an original, without the
production of the other such originals.
20. AUTHORITY. The individuals executing this Sublease on behalf of the
Sublandlord and Subtenant respectively represent and warrant to the other that
their respective entities are in good standing under the laws of the state in
which the Leased Property is located and they have full right and authority to
enter into the Sublease, bind their respective entities to the performance of
their obligations hereunder.
21. ENTRY BY SUBLANDLORD. Sublandlord and its representatives shall have
the right, at all reasonable times, to enter upon the Leased Property for the
purposes of examining and inspecting the same; provided, however, this section
shall not be construed as imposing any obligation upon Sublandlord to inspect
the Leased Property.
22. NON-WAIVER. Any assent, expressed or implied, by Sublandlord to any
breach of any covenant or condition herein contained shall not be construed as
an assent or waiver of any such covenant or condition generally or of any
subsequent breach thereof.
23. RELATIONSHIP OF PARTIES. Nothing contained herein shall be deemed or
construed to create a joint venture or partnership relationship between
Sublandlord and Subtenant.
13
24. INTERPRETATION. This Sublease shall be interpreted in a fair and
impartial manner without regard to such factors as the party that drafted this
Sublease or the relative bargaining power of the parties.
25. SUBLANDLORD'S INDEMNITY. The Sublandlord covenants and agrees to
defend, indemnify and hold Subtenant harmless from any liabilities incurred with
respect to the Leased Property and the operation thereof by the Sublandlord
prior to the Commencement Date of this Sublease except to the extent such
liabilities have been assumed by Subtenant pursuant to this Sublease or other
written agreement.
26. PERSONAL PROPERTY. In addition to the obligations of the Subtenant
pursuant to the Prime Lease, the Subtenant shall repair, replace and improve the
personal property and equipment used in the operation of the Leased Property as
a skilled care nursing facility in order to provide the quality of care
presently provided to the residents of the Facility and as is required by the
laws and regulations of the state of Texas and the Medicare and Medicaid
programs. To the extent that the Subtenant replaces any existing personal
property and equipment with new personal property and equipment during the Term
such personal property and equipment shall be of the same or better quality as
currently exists (the "Replacement Property"). Such Replacement Property shall,
upon installation and delivery to the Facility, become the property of the
Sublandlord and shall remain at the Facility upon the expiration or earlier
termination of the Sublease. Subtenant shall execute and deliver to the
Sublandlord upon expiration or termination of this Sublease any including
without limitation bills of sale and title transfer documents relating to such
Replacement Property. There shall be no liens, security interests or other
encumbrances placed on such Replacement Property.
14
27. CONDITIONS TO COMMENCEMENT DATE. The Commencement Date of this
Sublease and the obligations of the parties shall be conditioned upon the
fulfillment or waiver, in writing, of the following conditions: (a) the
execution and delivery by the Prime Landlord of the consent to this Sublease on
or prior to the Commencement Date and compliance with any conditions set forth
therein which the Prime Landlord requires be fulfilled prior to the Commencement
Date; and (b) the Subtenant being licensed by the state of Texas to operate the
facility at the level of care and for the number of beds currently licensed; and
(c) the Subtenant obtaining the approval of the Medicare and Medicaid program
certifying the Subtenant as a provider under such programs.
28. ADDITIONAL INFORMATION TO BE FURNISHED BY SUBTENANT. In addition to
the financial and other information required to be provided to the Prime
Landlord pursuant to the Lease, (a copy of which shall be provided concurrently
to the Sublandlord) the Subtenant shall provide to the Sublandlord the following
information at the times and in the formats described below:
28.1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS. Within 90 days after
the end of each of Subtenant's fiscal years, a copy of the audited (if
available, otherwise unaudited with the audited statements to be provided when
available) consolidated balance sheets of Subtenant and its consolidated
subsidiaries as of the end of such fiscal year, and related audited (if
available, otherwise unaudited) consolidated statements of income, changes in
common stock and undistributed profits and changes in financial position of
Subtenant and its consolidated subsidiaries for such fiscal year, prepared in
accordance with generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved.
15
28.2 OFFICER'S CERTIFICATE. Within 90 days after the end of each of
Subtenant's fiscal years, and together with the documents furnished in
accordance with section 29.1, an officer's certificate stating that to the best
of such officer's knowledge and belief after making due inquiry, Subtenant is
not in default in the performance or observance of any of the terms of this
Sublease, or if Tenant shall be in default to such officer's knowledge,
specifying all such defaults, the nature thereof, and the steps being taken to
remedy the same;
28.3 CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS. Within 30 days after
the end of each of Subtenant's quarters, quarterly consolidated financial
reports Subtenant produces for reporting purposes and detailed statements of
income and detailed operational statistics regarding occupancy rates, patient
mix and patient rates by type for the Facility; and
28.4 COST REPORTS. Within 90 days after the end of each of Subtenant's
fiscal years, a copy of each Medicare and Medicaid cost report filed with the
appropriate governmental agency for the Facility (and all amendments thereto
whether contemporaneously or subsequently filed thereto);
28.5 SURVEYS AND INVESTIGATIONS INFORMATION.. Within seventy two (72)
hours of receipt a copy of any licensing or other agency survey or report and
any statement of deficiencies and/or any other report indicating that any action
is pending or being considered to downgrade the Facility to a substandard
category, and within the time period required by the particular agency for
furnishing a plan of correction also furnish or cause to be furnished to
Sublandlord a copy of the plan of correction or other response generated as a
result of such survey or report for the Facility, and correct or cause to be
corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in any applicable
16
reimbursement program. Copies of any notices from any governmental agency
relating to an investigation of Subtenant's operations at the Facility including
without limitation HCFA, the OIG, the FBI, the State Medicaid Fraud division,
and any plan of correction responding thereto; and
28.6 ADDITIONAL INFORMATION. The Sublandlord further reserves the
right to require such other information relating to the financial affairs or
operations of the Subtenant and the Facility at such other times as Sublandlord
shall reasonably require (including monthly or more frequently), and Subtenant
agrees to provide such information to Sublandlord within five (5) business days
from request. All financial statements must be in such form and detail as the
Sublandlord shall from time to time reasonably request, provided, however, that
Sublandlord will make reasonable efforts to use Subtenant's existing forms of
reports for all purposes.
29. CROSS DEFAULT. The parties acknowledge that they are, concurrently
herewith, entering into Additional Sublease Agreements and certain Lease
Agreements relating to skilled care nursing facilities in the state of Texas
specifically described on the attached EXHIBIT D (the "Texas Sublease and
Leases"). The parties covenant and agree that in the event of a default by the
Subtenant pursuant to this Sublease the Sublandlord shall have the right and
option to declare a default in the other Texas Subleases and Leases and shall
have all available remedies, including, without limitation, the right to
terminate such Texas Subleases and Leases.
30. ESTOPPEL CERTIFICATE. At any time during the Term and from time to
time upon the request of the Sublandlord the Subtenant shall deliver to the
Sublandlord or Sublandlord's lender within ten (10) business days from receipt
of such request an estoppel certificate signed by an officer of the Subtenant
certifying that this Sublease is unmodified and in full force and
17
effect (or is in full force and effect as modified and setting forth the
modifications) that neither Sublandlord nor Subtenant are in default of the
Sublease or if such default exists setting forth such default and the dates to
which the payments due pursuant to this Sublease and the Lease have been paid.
31. TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Sublandlord's option, Subtenant shall use its best
efforts to transfer to Sublandlord or Sublandlord's nominee, and Subtenant shall
cooperate with Sublandlord or Sublandlord's nominee in connection with the
processing by Sublandlord or Sublandlord's nominee of, any applications for all
licenses, operating permits and other governmental authorization and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary for the operations of the Facility; provided that the
costs and expenses of any such transfer or the processing of any such
application shall be paid by Sublandlord or Sublandlord's nominee.
Notwithstanding anything in this Sublease or elsewhere to the contrary, under no
circumstances shall Sublandlord be obligated to seek or effectuate such a
transfer or application therefore.
18
IN WITNESS WHEREOF, the parties have caused this Sublease to be executed
and their respective corporate seals, if any, to be hereunto affixed and
attested by their respective officers thereunto duly authorized.
Sublandlord: Subtenant:
Extendicare Homes, Inc. Senior Health-Lockney, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------- -------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Its: Senior Vice President
State of Wisconsin State of Pennsylvania
County of Milwaukee County of Philadelphia
The foregoing instrument was acknowledged The foregoing instrument was acknowledged
before me this 25th day of September, 2001 before me this 26th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Vice President by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President on behalf
of Extendicare Homes, Inc. of the corporation.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------- ----------------------------------------
Notary Public, State of Wisconsin Notary Public, State of Pennsylvania
My commission expires 11-2-2003. My commission expires: 10-31-02
[Notarial Seal] [Notarial Seal]
19
SUBLEASE
EXTENDICARE HOMES, INC.
LANDLORD
AND
SENIOR HEALTH-MEADOWBROOK, LLC
TENANT
DATED AS OF October 1, 2001
------------------------------------
Facility:
Meadowbrook Care Center
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
------------------------------------
1
TABLE OF CONTENTS
PAGE
1. Leased Property: Rental Payments.......................................................................2
2. Subtenant Obligations...................................................................................2
3. Term: Renewal...........................................................................................3
3.1 Term.......................................................................................3
3.2 Renewal of Extension of Term...............................................................3
4. Additional Sublease Rental; Net Sublease................................................................4
5. Default.................................................................................................5
6. Subtenant Indemnity; Insurance; Waiver of Subrogation...................................................6
7. Use; Compliance with Law................................................................................7
7.1 Use........................................................................................7
7.2 Compliance.................................................................................7
8. Assignment and Subletting...............................................................................8
9. Inspection; Alterations.................................................................................9
10. Termination............................................................................................10
11. Sublandlord's Obligations..............................................................................10
12. Costs and Expenses in the Event of Default.............................................................10
13. Late Payment Charge....................................................................................11
14. Notices................................................................................................11
15. Accord and Satisfaction................................................................................12
16. Entire Agreement.......................................................................................12
17. Modifications..........................................................................................12
18. Consents...............................................................................................13
19. Multiple Originals.....................................................................................13
20. Authority..............................................................................................13
21. Entry by Sublandlord...................................................................................13
22. Non-Waiver.............................................................................................13
23. Relationship of Parties................................................................................13
24. Interpretation.........................................................................................14
25. Sublandlord's Indemnity................................................................................14
26. Personal Property......................................................................................14
i
TABLE OF CONTENTS
(continued)
PAGE
27. Conditions to Commencement Date........................................................................15
28. Additional Information to be Furnished by Subtenant....................................................15
28.1 Consolidated Annual Financial Statements.................................................15
28.2 Officer's Certificate....................................................................16
28.3 Consolidated Quarterly Financial Statements..............................................16
28.4 Cost Reports.............................................................................16
28.5 Surveys and Investigations Information...................................................16
28.6 Additional Information...................................................................17
29. Cross Default..........................................................................................17
30. Estoppel Certificate...................................................................................17
31. Transfers of Licenses Upon Termination.................................................................18
ii
EXHIBITS
EXHIBITS
--------
A. Lease
B. Texas Sublease & Leases
SUBLEASE AGREEMENT
THIS SUBLEASE (the "Sublease") is entered into as of the 1st day of
October, 2001 by and between Extendicare Homes, Inc. (f/k/a Unicare Homes, Inc),
a Delaware corporation, having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Sublandlord") and Senior Health-Meadowbrook, LLC, a
Texas limited liability company, having its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subtenant").
RECITALS:
The Sublandlord, as tenant, entered into a lease agreement with Triple S
Investment Company, a Wisconsin general partnership, Milwaukee, WI as the
Landlord which has been modified from time to time (the "Prime Landlord") for
the lease of the real and personal property generally described as the
Meadowbrook Care Center nursing facility (the "Facility") located at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. (The real and personal property being sublet
pursuant to this Sublease is all of the Leased Property described in the Prime
Lease and is hereafter referred to as the "Leased Property"). A copy of the
Prime Lease including all exhibits, modifications and amendments thereto is
attached hereto as Exhibit A and incorporated herein by reference. The lease
including all exhibits, modifications and amendments thereto is referred to
herein as either the "Lease" or the "Prime Lease".
The Sublandlord desires to sublet the entire Leased Property to the
Subtenant and the Subtenant desires to sublet the entire Leased Property from
the Sublandlord pursuant to the terms, covenants and conditions set forth in
this Sublease.
NOW, THEREFORE, in consideration of the terms, covenants, conditions and
agreements contained herein and in any exhibits attached hereto, the Sublandlord
and the Subtenant (hereafter collectively referred to as the "parties") agree as
follows:
1. LEASED PROPERTY: RENTAL PAYMENTS. Sublandlord hereby subleases to
Subtenant, and Subtenant hereby subleases from Sublandlord, the Leased Property
subject to all terms, covenants and conditions contained in the Lease, except as
otherwise set forth in this Sublease. To the extent not inconsistent with this
Sublease, the terms of the Lease are hereby incorporated into this Sublease by
reference. Sublandlord shall have all of the rights of the Prime Landlord under
the Lease. In no event shall the Subtenant have the right to receive any
payments due from the Prime Landlord to the Sublandlord under the Lease.
2. SUBTENANT OBLIGATIONS. The Subtenant hereby covenants and agrees to
observe and perform each and every term, covenant, promise, condition and
obligation, imposed upon the Sublandlord, as tenant, under the Lease including
without limitation, the payment obligations of the Sublandlord, as tenant, under
the Lease . Such payment obligations of the Subtenant shall include without
limitation the payment , in the amounts and at the times called for in the
Lease, of all rental, additional rental, taxes, assessments, late charges,
license and permit fees, utilities, governmental charges, insurance premiums,
and capital improvement commitments. The Subtenant's obligations to perform the
terms, covenants and conditions described in the Lease are in addition to any
and all additional obligations of the Subtenant set forth in this Sublease
including any and all additional obligations for payment and performance. It is
the intent of the parties that on and after the Commencement Date, the
Sublandlord shall have absolutely no liability for the performance of the
tenant's obligations under the Lease and that all such
2
obligations are hereby assumed and shall be performed by the Subtenant. The
Subtenant shall make payments due under the Lease directly to the Prime Landlord
on or prior to the due date therefore and shall provide evidence of such payment
to the Sublandlord concurrently with delivering such payment to the Prime
Landlord.
3. TERM: RENEWAL.
3.1 TERM. The term of this Sublease shall be for the period beginning
on October 1, 2001 (the "Commencement Date") and ending at 11:59 p.m. on the
date of expiration of such Lease (the "Expiration Date") unless sooner
terminated pursuant to the provisions of this Sublease (the "Term").
Notwithstanding any provision herein to the contrary, this Sublease shall
automatically terminate upon the expiration or earlier termination of the Lease
for any reason or as provided in this Sublease.
3.2 RENEWAL OF EXTENSION OF TERM. If, at the end of the then-current
term of the Lease the Prime Landlord offers or agrees to renew or extend the
term of the Lease, (the "Renewal Right") the Sublandlord agrees to offer to the
Subtenant the right to renew or extend the term of this Sublease on the terms,
covenants and conditions as such Renewal Right has been offered to the
Sublandlord provided that the Prime Landlord consents to the renewal or
extension of this Sublease. The renewal or extension of this Sublease shall also
include the terms, covenants and conditions of this Sublease including without
limitation the terms relating to the payment of Additional Sublease Rental which
shall be negotiated and agreed upon between the parties to this Sublease and
included in any modification of this Sublease. If the Subtenant desires to renew
or extend the term of this Sublease, it shall so notify the Sublandlord in
writing, at least (10) business days prior to the time that the Sublandlord has
been given to exercise such
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Renewal Right with the Prime Landlord. The Sublandlord and the Subtenant shall
execute a modification of this Sublease in form and substance satisfactory to
the Sublandlord reflecting such extension. In the event that the Subtenant does
not so notify the Sublandlord in the manner and within the time set forth
herein, time being deemed of the essence, any right of the Subtenant to extend
the term of the Sublease shall be automatically terminated and, thereafter,
Sublandlord shall have no obligation or liability whatsoever to the Subtenant
regarding such Renewal Right and the Term of this Sublease shall automatically
expire at the expiration of the then current term. In the event that this
Sublease is terminated for any reason prior to the expiration of the then
current term, the obligations of the Sublandlord regarding such Renewal Right
and the right of the Subtenant to extend the term of the Sublease shall also
terminate and be of no further force and effect.
4. ADDITIONAL SUBLEASE RENTAL; NET SUBLEASE. In addition to the Subtenant's
obligation for payment of the rent, additional rent and other charges under the
Lease, as additional consideration to the Sublandlord for entering into this
Sublease, the Subtenant hereby covenants and agrees to pay to the Sublandlord a
fixed annual Rental of Twenty-Eight Thousand Dollars ($28,000).
The Additional Sublease Rental shall be paid in equal monthly installment
of Two Thousand Three Hundred Thirty-Three and 33/100 Dollars ($2,333.33) per
month in advance without demand, delay, set off or deduction of any nature or
kind whatsoever on or before the fifth (5th) day of each month. A partial
month's payment of the Additional Sublease Rental shall be due and payable on
the Commencement Date if the Commencement Date is other than the first day of a
month. The Additional Sublease Rental shall be paid to the Sublandlord at the
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address set forth in the Notice section of this Sublease and time shall be
deemed of the essence with respect to such payments.
This Sublease is and shall be deemed and construed to be an absolutely net
Sublease and all payments to be made by the Subtenant pursuant to this Sublease
shall be net to the Sublandlord in each year during the Term. Subtenant shall
pay all costs, expenses and obligations of every kind whatsoever relating to the
Leased Property and does hereby indemnify, defend and hold Sublandlord harmless
of, from and against all such costs, expenses and obligations.
5. DEFAULT. Upon the nonpayment by Subtenant of any rent, additional rent,
or other payments when due, under the Lease or this Sublease or any failure of
Subtenant to perform any of its other covenants or agreements required to be
performed by Subtenant under the Lease or this Sublease, or any default by
Subtenant or any affiliate of Subtenant in the payment or performance of any
obligation under any other agreement, note or undertaking with Sublandlord,
after five (5) days written notice of any default in regard to rent, additional
rent, additional Sublease rental or any other indebtedness and after ten (10)
days written notice of any other default, Sublandlord shall have all remedies
available at law or in equity, including, without limitation, the right, at its
option, to reenter the Facility and take possession of the Leased Property
without terminating this Sublease, remove the Subtenant and all persons holding
under Subtenant from the Facility and retake possession of the Leased Property,
accelerate all rentals due hereunder for the remaining Term of this Sublease,
and/or to terminate this Sublease and reenter and repossess the Facility and all
the Leased Property; provided, however, that such reentry, repossession and/or
termination shall not constitute an acceptance or surrender of this
5
Sublease or the Leased Property or a waiver of any of the Sublandlord's rights
or remedies, including without limitation, the right to relet the Leased
Property, or any part thereof, for the benefit of the Subtenant and to recover
all damages of every kind for Subtenant's default.
6. SUBTENANT INDEMNITY; INSURANCE; WAIVER OF SUBROGATION. Subtenant shall
indemnify, defend and hold Sublandlord and all affiliates and its parent company
harmless from any and all damages, costs, losses and expenses (including
reasonable attorney fees) resulting in any way from Subtenant's occupancy and/or
use of the Leased Property, or the breach of any obligation of Subtenant as set
out in the Lease or this Sublease. Subtenant shall carry, at Subtenant's
expense, insurance insuring the Leased Property in full compliance with all
applicable laws, rules, regulations governing the possession occupancy, and use
of the Leased Property as a skilled nursing facility. ("Insurance Obligations").
Subtenant shall also insure its fixtures, equipment, inventory and other
personal property located in, on or about the Facility in an amount at least
equal to the full replacement value thereof. No later than the Commencement Date
and thereafter on each anniversary date of the Commencement Date, Subtenant
shall provide Sublandlord with certificates evidencing the existence of such
insurance naming the Prime Landlord, Sublandlord and any lenders of the Prime
Landlord or the Sublandlord as additional named insureds, which certificates
shall require the insurance carrier to give the Prime Landlord and Sublandlord
at least thirty (30) days written notice of any cancellation or material
amendment to such insurance policies.
Sublandlord and Subtenant hereby waive any and all rights of recovery
against each other for any loss or damage to the Leased Property on account of
fire or other casualty or for injuries sustained on or about the Facility or the
Leased Property to the extent such loss or damage is or
6
would be covered by the insurance required to be carried by each party
hereunder, even if such coverage is not actually maintained. Such waiver shall
also apply to the extent of any deductible maintained by either party under its
insurance policies. It is understood that this waiver applies to any loss or
damage regardless of the cause, including, without limitation, if caused by the
negligence of Sublandlord, Subtenant or their respective employees, agents,
assigns or sublessees.
Notwithstanding anything contained herein to the contrary, the Subtenant
shall not be obligated to purchase the professional liability and/or medical
malpractice insurance described in the Lease.
7. USE; COMPLIANCE WITH LAW.
7.1 USE. The Leased Property shall be continuously occupied and used
solely by the Subtenant and solely for the operation of a nursing facility duly
licensed by the state of Texas for the level of care and the number of licensed
beds as of the Commencement Date and duly certified by the Medicare and Medicaid
programs and for no other purpose whatsoever.
7.2 COMPLIANCE. In addition to the obligations imposed under the Lease,
Subtenant shall obey, observe and promptly comply with all laws, rules,
regulations and ordinances which shall be applicable, now or at any time during
the Term, to the possession, use and occupancy of the Leased Property and the
operation of the Facility as a duly licensed Texas nursing facility at the level
of care and the number of licensed beds as of the Commencement Date. Subtenant
shall promptly comply with all laws, orders, rules, rulings and directives of
any governmental authority or agency having jurisdiction of the Facility and the
Leased Property.
7
Subtenant shall not store, use, discharge or dispose of any hazardous or toxic
substances, pollutants, contaminants or any other substances regulated by any
state or federal statute (collectively "Contaminants") on the Leased Property
other than in the ordinary course of its business. In addition to any
obligations imposed by the Lease, Subtenant shall be solely responsible for the
costs of removing or cleaning any Contaminants found on the Leased Property and
caused by Subtenant.
8. ASSIGNMENT AND SUBLETTING. Subtenant shall not have any right to, nor
shall Subtenant attempt to, assign its interest in this Sublease or any portion
thereof or any interest in the Leased Property or any portion thereof
voluntarily or by operation of law and shall not have any right to nor attempt
to sell, transfer, sublet or license all or any portion of the Leased Property
without the prior written consent of the Sublandlord and Prime Landlord.
Sublandlord's and the Prime Landlord's consent or approval may be granted or
withheld in their sole discretion. The transfer of fifty percent (50%) or more
of either the voting stock or membership interests held by Subtenant or its
affiliated entities whether in one or a series of transactions, shall be
considered a prohibited assignment, sale, transfer or subletting hereunder
requiring Sublandlord's and the Prime Landlord's prior written consent. Any
purported or attempted assignment, sale, transfer or subletting, without
Sublandlord's and the Prime Landlord's prior written consent, shall be null and
void and constitute a default by Subtenant under this Sublease. Any permitted
assignee or sublessee of Subtenant shall expressly assume Subtenant's
liabilities and obligations under this Sublease and the Lease. No assignment,
subleasing, sale, transfer or licensing shall release Subtenant from any of its
obligations under this Sublease or the Lease. Subtenant shall not mortgage or
otherwise encumber its leasehold
8
interest or the Leased Property without the prior written consent of Sublandlord
and the Prime Landlord which either or both may withhold in their sole
discretion. This Sublease shall not be construed as an assignment of
Sublandlord's interest in the Lease, and Subtenant shall not have the right to
negotiate any modification or amendments to the Lease.
9. INSPECTION; ALTERATIONS. Subtenant has inspected the Leased Property,
and is satisfied that the Leased Property is acceptable to Subtenant for all of
its purposes and uses, and accepts the same in "AS IS" condition, without any
warranties, representations or obligation from the Sublandlord or the Prime
Landlord to make any repairs, replacements, alterations, additions,
installations or improvements whatsoever. Subtenant shall not expand or make or
install any additions, renovations, alterations, improvements, or changes in or
to the Leased Property, or any part thereof without Sublandlord's and Prime
Landlord's prior written consent. Any permitted work shall be performed by the
Subtenant in a good and workmanlike manner at the sole expense of Subtenant.
Subtenant shall not permit, create, incur or impose or cause or suffer others to
permit, create, incur or impose any lien or other obligation against the Leased
Property or any interest therein by reason of any work upon the Leased Property,
and Subtenant shall indemnify, defend and hold Sublandlord and the Prime
Landlord harmless of and from any and all claims or demands by any contractor,
subcontractor, materialman, laborer or any other third person against the Leased
Property, Subtenant's interest in the Leased Property or any interest therein
relating to or arising because of any work performed thereon. As between
Sublandlord and Subtenant, any improvements or additions upon the Leased
Property at the expiration of this Sublease shall be deemed a part of the Leased
Property and be and remain the property of the Sublandlord.
9
10. TERMINATION. Notwithstanding anything contained herein to the contrary,
the existence of this Sublease is dependent and conditioned upon the continued
existence of the Lease, and in the event of the termination of the Lease for any
reason, this Sublease, at Sublandlord's option, shall thereupon be terminated
without the need for further action and without liability to Sublandlord. If
Subtenant is not in default under the terms and conditions hereof, any such
termination shall be without liability between Sublandlord and Subtenant, except
for such liability theretofore accruing or as otherwise provided herein;
however, if Subtenant is in default, the provisions hereof including those of
default shall control as to Subtenant's liability and shall survive the
termination of the Sublease.
11. SUBLANDLORD'S OBLIGATIONS. Sublandlord shall have no duty of any nature
or kind whatsoever to perform any obligations of the Prime Landlord under the
Lease and shall under no circumstances be responsible for or liable to Subtenant
for any default, failure or delay on the part of the Prime Landlord in the
performance of any obligations of the Prime Landlord under the Lease. No such
default of Prime Landlord shall affect this Sublease or waive or defer the
performance of any of Subtenant's obligations hereunder; provided, however, that
in the event of such default or failure by the Prime Landlord, Sublandlord
agrees, upon written notice from Subtenant, and at Subtenant's expense, to make
demand upon the Prime Landlord to perform its obligations under the Lease.
12. COSTS AND EXPENSES IN THE EVENT OF DEFAULT. Subtenant shall pay all
costs and expenses, including reasonable attorneys' fees, that may be incurred
by Sublandlord in enforcing the provisions of this Sublease or in enforcing
Prime Landlord's obligations under the Lease if requested to do so by Subtenant.
10
13. LATE PAYMENT CHARGE. In the event any amounts due from Subtenant under
this Sublease are not paid when due, such amounts shall bear interest from and
after the due date to the date of payment in full at an annual rate of eighteen
percent (18%).
14. NOTICES. Any notice, demand, request, consent, approval or
communication that either party desires or is required to give to the other
party or any other person hereunder shall be in writing and shall be deemed to
be properly served if (i) sent by certified mail with return receipt requested,
(ii) sent by receipted overnight delivery service, or (iii) personally delivered
to the address set forth below. The effective date of any such notice shall be
the date which is stamped by the United States Post Office on the envelope
enclosing same, the date of the receipt for the overnight delivery or the date
on which personal delivery is made, whichever is applicable. Any notice sent by
Subtenant to Prime Landlord shall also be sent concurrently to Sublandlord.
Until changed by written notice from the appropriate party to the other, the
addresses of the parties are as follows:
(a) Sublandlord: Extendicare Homes, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and
General Counsel
Copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
11
(b) Subtenant: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Copy to: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
15. ACCORD AND SATISFACTION. No payment by Subtenant or receipt by
Sublandlord of a lesser amount than the full amount of any payments to be made
by Subtenant hereunder shall be deemed to be other than on account of the
earliest stipulated unpaid installment thereof, and no endorsement or statement
on any check or letter accompanying any check or payment shall be deemed to be
an accord and satisfaction, and Sublandlord may accept such check or payment
without prejudice of Sublandlord's right to recover the full amount due
hereunder or pursue any other remedy available to Sublandlord.
16. ENTIRE AGREEMENT. This Sublease and all exhibits referred to herein
constitutes the entire agreement and understanding of the parties with respect
to the matters contained in this Sublease and supersedes all other agreements
between and representations by the parties with respect to such matters.
Subtenant is not relying upon any representations, market analysis, projections,
reports or warranties of the Sublandlord or the Prime Landlord.
17. MODIFICATIONS. No changes, amendments or modifications of this Sublease
shall be effective or enforceable unless made in writing and executed by the
parties hereto and the Prime Landlord.
12
18. CONSENTS. Whenever Sublandlord's consent is required by the terms of
this Sublease, Prime Landlord's consent shall also be obtained if so required by
the terms of the Lease or this Sublease. The consent by Sublandlord or Prime
Landlord to any act by Subtenant requiring Sublandlord's or Prime Landlord's
consent shall not waive or render unnecessary Sublandlord's consent to any
subsequent similar act by Subtenant.
19. MULTIPLE ORIGINALS. This Sublease may be executed simultaneously in
multiple originals, each of which shall be deemed an original, without the
production of the other such originals.
20. AUTHORITY. The individuals executing this Sublease on behalf of the
Sublandlord and Subtenant respectively represent and warrant to the other that
their respective entities are in good standing under the laws of the state in
which the Leased Property is located and they have full right and authority to
enter into the Sublease, bind their respective entities to the performance of
their obligations hereunder.
21. ENTRY BY SUBLANDLORD. Sublandlord and its representatives shall have
the right, at all reasonable times, to enter upon the Leased Property for the
purposes of examining and inspecting the same; provided, however, this section
shall not be construed as imposing any obligation upon Sublandlord to inspect
the Leased Property.
22. NON-WAIVER. Any assent, expressed or implied, by Sublandlord to any
breach of any covenant or condition herein contained shall not be construed as
an assent or waiver of any such covenant or condition generally or of any
subsequent breach thereof.
23. RELATIONSHIP OF PARTIES. Nothing contained herein shall be deemed or
construed to create a joint venture or partnership relationship between
Sublandlord and Subtenant.
13
24. INTERPRETATION. This Sublease shall be interpreted in a fair and
impartial manner without regard to such factors as the party that drafted this
Sublease or the relative bargaining power of the parties.
25. SUBLANDLORD'S INDEMNITY. The Sublandlord covenants and agrees to
defend, indemnify and hold Subtenant harmless from any liabilities incurred with
respect to the Leased Property and the operation thereof by the Sublandlord
prior to the Commencement Date of this Sublease except to the extent such
liabilities have been assumed by Subtenant pursuant to this Sublease or other
written agreement.
26. PERSONAL PROPERTY. In addition to the obligations of the Subtenant
pursuant to the Prime Lease, the Subtenant shall repair, replace and improve the
personal property and equipment used in the operation of the Leased Property as
a skilled care nursing facility in order to provide the quality of care
presently provided to the residents of the Facility and as is required by the
laws and regulations of the state of Texas and the Medicare and Medicaid
programs. To the extent that the Subtenant replaces any existing personal
property and equipment with new personal property and equipment during the Term
such personal property and equipment shall be of the same or better quality as
currently exists (the "Replacement Property"). Such Replacement Property shall,
upon installation and delivery to the Facility, become the property of the
Sublandlord and shall remain at the Facility upon the expiration or earlier
termination of the Sublease. Subtenant shall execute and deliver to the
Sublandlord upon expiration or termination of this Sublease any including
without limitation bills of sale and title transfer documents relating to such
Replacement Property. There shall be no liens, security interests or other
encumbrances placed on such Replacement Property.
14
27. CONDITIONS TO COMMENCEMENT DATE. The Commencement Date of this Sublease
and the obligations of the parties shall be conditioned upon the fulfillment or
waiver, in writing, of the following conditions: (a) the execution and delivery
by the Prime Landlord of the consent to this Sublease on or prior to the
Commencement Date and compliance with any conditions set forth therein which the
Prime Landlord requires be fulfilled prior to the Commencement Date; and (b) the
Subtenant being licensed by the state of Texas to operate the facility at the
level of care and for the number of beds currently licensed; and (c) the
Subtenant obtaining the approval of the Medicare and Medicaid program certifying
the Subtenant as a provider under such programs.
28. ADDITIONAL INFORMATION TO BE FURNISHED BY SUBTENANT. In addition to the
financial and other information required to be provided to the Prime Landlord
pursuant to the Lease, (a copy of which shall be provided concurrently to the
Sublandlord) the Subtenant shall provide to the Sublandlord the following
information at the times and in the formats described below:
28.1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS. Within 90 days after the
end of each of Subtenant's fiscal years, a copy of the audited (if available,
otherwise unaudited with the audited statements to be provided when available)
consolidated balance sheets of Subtenant and its consolidated subsidiaries as of
the end of such fiscal year, and related audited (if available, otherwise
unaudited) consolidated statements of income, changes in common stock and
undistributed profits and changes in financial position of Subtenant and its
consolidated subsidiaries for such fiscal year, prepared in accordance with
generally accepted accounting principles applied on a basis consistently
maintained throughout the period involved.
15
28.2 OFFICER'S CERTIFICATE. Within 90 days after the end of each of
Subtenant's fiscal years, and together with the documents furnished in
accordance with section 29.1, an officer's certificate stating that to the best
of such officer's knowledge and belief after making due inquiry, Subtenant is
not in default in the performance or observance of any of the terms of this
Sublease, or if Tenant shall be in default to such officer's knowledge,
specifying all such defaults, the nature thereof, and the steps being taken to
remedy the same;
28.3 CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS. Within 30 days after
the end of each of Subtenant's quarters, quarterly consolidated financial
reports Subtenant produces for reporting purposes and detailed statements of
income and detailed operational statistics regarding occupancy rates, patient
mix and patient rates by type for the Facility; and
28.4 COST REPORTS. Within 90 days after the end of each of Subtenant's
fiscal years, a copy of each Medicare and Medicaid cost report filed with the
appropriate governmental agency for the Facility (and all amendments thereto
whether contemporaneously or subsequently filed thereto);
28.5 SURVEYS AND INVESTIGATIONS INFORMATION. Within seventy two (72)
hours of receipt a copy of any licensing or other agency survey or report and
any statement of deficiencies and/or any other report indicating that any action
is pending or being considered to downgrade the Facility to a substandard
category, and within the time period required by the particular agency for
furnishing a plan of correction also furnish or cause to be furnished to
Sublandlord a copy of the plan of correction or other response generated as a
result of such survey or report for the Facility, and correct or cause to be
corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in any applicable
16
reimbursement program. Copies of any notices from any governmental agency
relating to an investigation of Subtenant's operations at the Facility including
without limitation HCFA, the OIG, the FBI, the State Medicaid Fraud division,
and any plan of correction responding thereto; and
28.6 ADDITIONAL INFORMATION. The Sublandlord further reserves the right
to require such other information relating to the financial affairs or
operations of the Subtenant and the Facility at such other times as Sublandlord
shall reasonably require (including monthly or more frequently), and Subtenant
agrees to provide such information to Sublandlord within five (5) business days
from request. All financial statements must be in such form and detail as the
Sublandlord shall from time to time reasonably request, provided, however, that
Sublandlord will make reasonable efforts to use Subtenant's existing forms of
reports for all purposes.
29. CROSS DEFAULT. The parties acknowledge that they are, concurrently
herewith, entering into Additional Sublease Agreements and certain Lease
Agreements relating to skilled care nursing facilities in the state of Texas
specifically described on the attached EXHIBIT D (the "Texas Sublease and
Leases"). The parties covenant and agree that in the event of a default by the
Subtenant pursuant to this Sublease the Sublandlord shall have the right and
option to declare a default in the other Texas Subleases and Leases and shall
have all available remedies, including, without limitation, the right to
terminate such Texas Subleases and Leases.
30. ESTOPPEL CERTIFICATE. At any time during the Term and from time to time
upon the request of the Sublandlord the Subtenant shall deliver to the
Sublandlord or Sublandlord's lender within ten (10) business days from receipt
of such request an estoppel certificate signed by an officer of the Subtenant
certifying that this Sublease is unmodified and in full force and effect (or is
in full force and
17
effect as modified and setting forth the modifications) that neither Sublandlord
nor Subtenant are in default of the Sublease or if such default exists setting
forth such default and the dates to which the payments due pursuant to this
Sublease and the Lease have been paid.
31. TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Sublandlord's option, Subtenant shall use its best
efforts to transfer to Sublandlord or Sublandlord's nominee, and Subtenant shall
cooperate with Sublandlord or Sublandlord's nominee in connection with the
processing by Sublandlord or Sublandlord's nominee of, any applications for all
licenses, operating permits and other governmental authorization and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary for the operations of the Facility; provided that the
costs and expenses of any such transfer or the processing of any such
application shall be paid by Sublandlord or Sublandlord's nominee.
Notwithstanding anything in this Sublease or elsewhere to the contrary, under no
circumstances shall Sublandlord be obligated to seek or effectuate such a
transfer or application therefore.
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IN WITNESS WHEREOF, the parties have caused this Sublease to be executed
and their respective corporate seals, if any, to be hereunto affixed and
attested by their respective officers thereunto duly authorized.
Sublandlord: Subtenant:
Extendicare Homes, Inc. Senior Health-Meadowbrook, LLC
By:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Senior Vice President
State of Wisconsin State of Pennsylvania
County of Milwaukee County of Philadelphia
The foregoing instrument was acknowledged The foregoing instrument was acknowledged
before me this 25th day of September, 2001 before me this 26th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Vice President of by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President on behalf of the
Extendicare Homes, Inc. corporation.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------- ------------------------------------------
Notary Public, State of Wisconsin Notary Public, State of Pennsylvania
My commission expires 11-2-2003. My commission expires: 10-31-02
[Notarial Seal] [Notarial Seal]
19
SUBLEASE
EXTENDICARE HOMES, INC.
LANDLORD
AND
SENIOR HEALTH-NORTHWOOD, LLC
TENANT
DATED AS OF October 1, 2001
Facility:
Northwood Health Care Center
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
1
TABLE OF CONTENTS
PAGE
----
1. Leased Property: Rental Payments.......................................................................2
2. Subtenant Obligations...................................................................................2
3. Term: Renewal...........................................................................................3
3.1 Term...........................................................................................3
3.2 Renewal of Extension of Term...................................................................3
4. Additional Sublease Rental; Net Sublease................................................................4
5. Default.................................................................................................5
6. Subtenant Indemnity; Insurance; Waiver of Subrogation...................................................6
7. Use; Compliance with Law................................................................................7
7.1 Use............................................................................................7
7.2 Compliance.....................................................................................7
8. Assignment and Subletting...............................................................................8
9. Inspection; Alterations.................................................................................9
10. Termination............................................................................................10
11. Sublandlord's Obligations..............................................................................10
12. Costs and Expenses in the Event of Default.............................................................10
13. Late Payment Charge....................................................................................11
14. Notices................................................................................................11
15. Accord and Satisfaction................................................................................12
16. Entire Agreement.......................................................................................12
17. Modifications..........................................................................................12
18. Consents...............................................................................................13
19. Multiple Originals.....................................................................................13
20. Authority..............................................................................................13
21. Entry by Sublandlord...................................................................................13
22. Non-Waiver.............................................................................................13
23. Relationship of Parties................................................................................13
24. Interpretation.........................................................................................14
25. Sublandlord's Indemnity................................................................................14
26. Personal Property......................................................................................14
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PAGE
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27. Conditions to Commencement Date........................................................................15
28. Additional Information to be Furnished by Subtenant....................................................15
28.1 Consolidated Annual Financial Statements.....................................................15
28.2 Officer's Certificate........................................................................16
28.3 Consolidated Quarterly Financial Statements..................................................16
28.4 Cost Reports.................................................................................16
28.5 Surveys and Investigations Information.......................................................16
28.6 Additional Information.......................................................................17
29. Cross Default..........................................................................................17
30. Estoppel Certificate...................................................................................17
31. Transfers of Licenses Upon Termination.................................................................18
ii
EXHIBITS
EXHIBITS
--------
A. Lease
B. Texas Sublease & Leases
SUBLEASE AGREEMENT
THIS SUBLEASE (the "Sublease") is entered into as of the 1st day of
October, 2001 by and between Extendicare Homes, Inc. (f/k/a Unicare Homes, Inc),
a Delaware corporation, having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Sublandlord") and Senior Health-Northwood, LLC, a
Texas limited liability company, having its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subtenant").
RECITALS:
The Sublandlord, as tenant, entered into a lease agreement with Triple S
Investment Company, a Wisconsin general partnership, Milwaukee, WI as the
Landlord which has been modified from time to time (the "Prime Landlord") for
the lease of the real and personal property generally described as the Northwood
Health Care Center nursing facility (the "Facility") located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇. (The real and personal property being sublet
pursuant to this Sublease is all of the Leased Property described in the Prime
Lease and is hereafter referred to as the "Leased Property"). A copy of the
Prime Lease including all exhibits, modifications and amendments thereto is
attached hereto as Exhibit A and incorporated herein by reference. The lease
including all exhibits, modifications and amendments thereto is referred to
herein as either the "Lease" or the "Prime Lease".
The Sublandlord desires to sublet the entire Leased Property to the
Subtenant and the Subtenant desires to sublet the entire Leased Property from
the Sublandlord pursuant to the terms, covenants and conditions set forth in
this Sublease.
NOW, THEREFORE, in consideration of the terms, covenants, conditions and
agreements contained herein and in any exhibits attached hereto, the Sublandlord
and the Subtenant (hereafter collectively referred to as the "parties") agree as
follows:
1. LEASED PROPERTY: RENTAL PAYMENTS. Sublandlord hereby subleases to
Subtenant, and Subtenant hereby subleases from Sublandlord, the Leased Property
subject to all terms, covenants and conditions contained in the Lease, except as
otherwise set forth in this Sublease. To the extent not inconsistent with this
Sublease, the terms of the Lease are hereby incorporated into this Sublease by
reference. Sublandlord shall have all of the rights of the Prime Landlord under
the Lease. In no event shall the Subtenant have the right to receive any
payments due from the Prime Landlord to the Sublandlord under the Lease.
2. SUBTENANT OBLIGATIONS. The Subtenant hereby covenants and agrees to
observe and perform each and every term, covenant, promise, condition and
obligation, imposed upon the Sublandlord, as tenant, under the Lease including
without limitation, the payment obligations of the Sublandlord, as tenant, under
the Lease . Such payment obligations of the Subtenant shall include without
limitation the payment , in the amounts and at the times called for in the
Lease, of all rental, additional rental, taxes, assessments, late charges,
license and permit fees, utilities, governmental charges, insurance premiums,
and capital improvement commitments. The Subtenant's obligations to perform the
terms, covenants and conditions described in the Lease are in addition to any
and all additional obligations of the Subtenant set forth in this Sublease
including any and all additional obligations for payment and performance. It is
the intent of the parties that on and after the Commencement Date, the
Sublandlord shall have absolutely no liability for the performance of the
tenant's obligations under the Lease and that all such
2
obligations are hereby assumed and shall be performed by the Subtenant. The
Subtenant shall make payments due under the Lease directly to the Prime Landlord
on or prior to the due date therefore and shall provide evidence of such payment
to the Sublandlord concurrently with delivering such payment to the Prime
Landlord.
3. TERM: RENEWAL.
3.1 TERM. The term of this Sublease shall be for the period beginning
on October 1, 2001 (the "Commencement Date") and ending at 11:59 p.m. on the
date of expiration of such Lease (the "Expiration Date") unless sooner
terminated pursuant to the provisions of this Sublease (the "Term").
Notwithstanding any provision herein to the contrary, this Sublease shall
automatically terminate upon the expiration or earlier termination of the Lease
for any reason or as provided in this Sublease.
3.2 RENEWAL OF EXTENSION OF TERM. If, at the end of the then-current
term of the Lease the Prime Landlord offers or agrees to renew or extend the
term of the Lease, (the "Renewal Right") the Sublandlord agrees to offer to the
Subtenant the right to renew or extend the term of this Sublease on the terms,
covenants and conditions as such Renewal Right has been offered to the
Sublandlord provided that the Prime Landlord consents to the renewal or
extension of this Sublease. The renewal or extension of this Sublease shall also
include the terms, covenants and conditions of this Sublease including without
limitation the terms relating to the payment of Additional Sublease Rental which
shall be negotiated and agreed upon between the parties to this Sublease and
included in any modification of this Sublease. If the Subtenant desires to renew
or extend the term of this Sublease, it shall so notify the Sublandlord in
writing, at least (10) business days prior to the time that the Sublandlord has
been given to exercise such
3
Renewal Right with the Prime Landlord. The Sublandlord and the Subtenant shall
execute a modification of this Sublease in form and substance satisfactory to
the Sublandlord reflecting such extension. In the event that the Subtenant does
not so notify the Sublandlord in the manner and within the time set forth
herein, time being deemed of the essence, any right of the Subtenant to extend
the term of the Sublease shall be automatically terminated and, thereafter,
Sublandlord shall have no obligation or liability whatsoever to the Subtenant
regarding such Renewal Right and the Term of this Sublease shall automatically
expire at the expiration of the then current term. In the event that this
Sublease is terminated for any reason prior to the expiration of the then
current term, the obligations of the Sublandlord regarding such Renewal Right
and the right of the Subtenant to extend the term of the Sublease shall also
terminate and be of no further force and effect.
4. ADDITIONAL SUBLEASE RENTAL; NET SUBLEASE. In addition to the
Subtenant's obligation for payment of the rent, additional rent and other
charges under the Lease, as additional consideration to the Sublandlord for
entering into this Sublease, the Subtenant hereby covenants and agrees to pay to
the Sublandlord a fixed annual Rental of Forty-Two Thousand Dollars ($42,000).
The Additional Sublease Rental shall be paid in equal monthly installment
of Three Thousand Five Hundred Dollars ($3,500) per month in advance without
demand, delay, set off or deduction of any nature or kind whatsoever on or
before the fifth (5th) day of each month. A partial month's payment of the
Additional Sublease Rental shall be due and payable on the Commencement Date if
the Commencement Date is other than the first day of a month. The
4
Additional Sublease Rental shall be paid to the Sublandlord at the address set
forth in the Notice section of this Sublease and time shall be deemed of the
essence with respect to such payments.
This Sublease is and shall be deemed and construed to be an absolutely net
Sublease and all payments to be made by the Subtenant pursuant to this Sublease
shall be net to the Sublandlord in each year during the Term. Subtenant shall
pay all costs, expenses and obligations of every kind whatsoever relating to the
Leased Property and does hereby indemnify, defend and hold Sublandlord harmless
of, from and against all such costs, expenses and obligations.
5. DEFAULT. Upon the nonpayment by Subtenant of any rent, additional
rent, or other payments when due, under the Lease or this Sublease or any
failure of Subtenant to perform any of its other covenants or agreements
required to be performed by Subtenant under the Lease or this Sublease, or any
default by Subtenant or any affiliate of Subtenant in the payment or performance
of any obligation under any other agreement, note or undertaking with
Sublandlord, after five (5) days written notice of any default in regard to
rent, additional rent, additional Sublease rental or any other indebtedness and
after ten (10) days written notice of any other default, Sublandlord shall have
all remedies available at law or in equity, including, without limitation, the
right, at its option, to reenter the Facility and take possession of the Leased
Property without terminating this Sublease, remove the Subtenant and all persons
holding under Subtenant from the Facility and retake possession of the Leased
Property, accelerate all rentals due hereunder for the remaining Term of this
Sublease, and/or to terminate this Sublease and reenter and repossess the
Facility and all the Leased Property; provided, however, that such reentry,
repossession and/or termination shall not constitute an acceptance or surrender
of this
5
Sublease or the Leased Property or a waiver of any of the Sublandlord's rights
or remedies, including without limitation, the right to relet the Leased
Property, or any part thereof, for the benefit of the Subtenant and to recover
all damages of every kind for Subtenant's default.
6. SUBTENANT INDEMNITY; INSURANCE; WAIVER OF SUBROGATION. Subtenant shall
indemnify, defend and hold Sublandlord and all affiliates and its parent company
harmless from any and all damages, costs, losses and expenses (including
reasonable attorney fees) resulting in any way from Subtenant's occupancy and/or
use of the Leased Property, or the breach of any obligation of Subtenant as set
out in the Lease or this Sublease. Subtenant shall carry, at Subtenant's
expense, insurance insuring the Leased Property in full compliance with all
applicable laws, rules, regulations governing the possession occupancy, and use
of the Leased Property as a skilled nursing facility. ("Insurance Obligations").
Subtenant shall also insure its fixtures, equipment, inventory and other
personal property located in, on or about the Facility in an amount at least
equal to the full replacement value thereof. No later than the Commencement Date
and thereafter on each anniversary date of the Commencement Date, Subtenant
shall provide Sublandlord with certificates evidencing the existence of such
insurance naming the Prime Landlord, Sublandlord and any lenders of the Prime
Landlord or the Sublandlord as additional named insureds, which certificates
shall require the insurance carrier to give the Prime Landlord and Sublandlord
at least thirty (30) days written notice of any cancellation or material
amendment to such insurance policies.
Sublandlord and Subtenant hereby waive any and all rights of recovery
against each other for any loss or damage to the Leased Property on account of
fire or other casualty or for injuries sustained on or about the Facility or the
Leased Property to the extent such loss or damage is or
6
would be covered by the insurance required to be carried by each party
hereunder, even if such coverage is not actually maintained. Such waiver shall
also apply to the extent of any deductible maintained by either party under its
insurance policies. It is understood that this waiver applies to any loss or
damage regardless of the cause, including, without limitation, if caused by the
negligence of Sublandlord, Subtenant or their respective employees, agents,
assigns or sublessees.
Notwithstanding anything contained herein to the contrary, the Subtenant
shall not be obligated to purchase the professional liability and/or medical
malpractice insurance described in the Lease.
7. USE; COMPLIANCE WITH LAW.
7.1 USE. The Leased Property shall be continuously occupied and used
solely by the Subtenant and solely for the operation of a nursing facility duly
licensed by the state of Texas for the level of care and the number of licensed
beds as of the Commencement Date and duly certified by the Medicare and Medicaid
programs and for no other purpose whatsoever.
7.2 COMPLIANCE. In addition to the obligations imposed under the
Lease, Subtenant shall obey, observe and promptly comply with all laws, rules,
regulations and ordinances which shall be applicable, now or at any time during
the Term, to the possession, use and occupancy of the Leased Property and the
operation of the Facility as a duly licensed Texas nursing facility at the level
of care and the number of licensed beds as of the Commencement Date. Subtenant
shall promptly comply with all laws, orders, rules, rulings and directives of
any governmental authority or agency having jurisdiction of the Facility and the
Leased Property.
7
Subtenant shall not store, use, discharge or dispose of any hazardous or toxic
substances, pollutants, contaminants or any other substances regulated by any
state or federal statute (collectively "Contaminants") on the Leased Property
other than in the ordinary course of its business. In addition to any
obligations imposed by the Lease, Subtenant shall be solely responsible for the
costs of removing or cleaning any Contaminants found on the Leased Property and
caused by Subtenant.
8. ASSIGNMENT AND SUBLETTING. Subtenant shall not have any right to, nor
shall Subtenant attempt to, assign its interest in this Sublease or any portion
thereof or any interest in the Leased Property or any portion thereof
voluntarily or by operation of law and shall not have any right to nor attempt
to sell, transfer, sublet or license all or any portion of the Leased Property
without the prior written consent of the Sublandlord and Prime Landlord.
Sublandlord's and the Prime Landlord's consent or approval may be granted or
withheld in their sole discretion. The transfer of fifty percent (50%) or more
of either the voting stock or membership interests held by Subtenant or its
affiliated entities whether in one or a series of transactions, shall be
considered a prohibited assignment, sale, transfer or subletting hereunder
requiring Sublandlord's and the Prime Landlord's prior written consent. Any
purported or attempted assignment, sale, transfer or subletting, without
Sublandlord's and the Prime Landlord's prior written consent, shall be null and
void and constitute a default by Subtenant under this Sublease. Any permitted
assignee or sublessee of Subtenant shall expressly assume Subtenant's
liabilities and obligations under this Sublease and the Lease. No assignment,
subleasing, sale, transfer or licensing shall release Subtenant from any of its
obligations under this Sublease or the Lease. Subtenant shall not mortgage or
otherwise encumber its leasehold
8
interest or the Leased Property without the prior written consent of Sublandlord
and the Prime Landlord which either or both may withhold in their sole
discretion. This Sublease shall not be construed as an assignment of
Sublandlord's interest in the Lease, and Subtenant shall not have the right to
negotiate any modification or amendments to the Lease.
9. INSPECTION; ALTERATIONS. Subtenant has inspected the Leased Property,
and is satisfied that the Leased Property is acceptable to Subtenant for all of
its purposes and uses, and accepts the same in "AS IS" condition, without any
warranties, representations or obligation from the Sublandlord or the Prime
Landlord to make any repairs, replacements, alterations, additions,
installations or improvements whatsoever. Subtenant shall not expand or make or
install any additions, renovations, alterations, improvements, or changes in or
to the Leased Property, or any part thereof without Sublandlord's and Prime
Landlord's prior written consent. Any permitted work shall be performed by the
Subtenant in a good and workmanlike manner at the sole expense of Subtenant.
Subtenant shall not permit, create, incur or impose or cause or suffer others to
permit, create, incur or impose any lien or other obligation against the Leased
Property or any interest therein by reason of any work upon the Leased Property,
and Subtenant shall indemnify, defend and hold Sublandlord and the Prime
Landlord harmless of and from any and all claims or demands by any contractor,
subcontractor, materialman, laborer or any other third person against the Leased
Property, Subtenant's interest in the Leased Property or any interest therein
relating to or arising because of any work performed thereon. As between
Sublandlord and Subtenant, any improvements or additions upon the Leased
Property at the expiration of this Sublease shall be deemed a part of the Leased
Property and be and remain the property of the Sublandlord.
9
10. TERMINATION. Notwithstanding anything contained herein to the
contrary, the existence of this Sublease is dependent and conditioned upon the
continued existence of the Lease, and in the event of the termination of the
Lease for any reason, this Sublease, at Sublandlord's option, shall thereupon be
terminated without the need for further action and without liability to
Sublandlord. If Subtenant is not in default under the terms and conditions
hereof, any such termination shall be without liability between Sublandlord and
Subtenant, except for such liability theretofore accruing or as otherwise
provided herein; however, if Subtenant is in default, the provisions hereof
including those of default shall control as to Subtenant's liability and shall
survive the termination of the Sublease.
11. SUBLANDLORD'S OBLIGATIONS. Sublandlord shall have no duty of any
nature or kind whatsoever to perform any obligations of the Prime Landlord under
the Lease and shall under no circumstances be responsible for or liable to
Subtenant for any default, failure or delay on the part of the Prime Landlord in
the performance of any obligations of the Prime Landlord under the Lease. No
such default of Prime Landlord shall affect this Sublease or waive or defer the
performance of any of Subtenant's obligations hereunder; provided, however, that
in the event of such default or failure by the Prime Landlord, Sublandlord
agrees, upon written notice from Subtenant, and at Subtenant's expense, to make
demand upon the Prime Landlord to perform its obligations under the Lease.
12. COSTS AND EXPENSES IN THE EVENT OF DEFAULT. Subtenant shall pay all
costs and expenses, including reasonable attorneys' fees, that may be incurred
by Sublandlord in enforcing the provisions of this Sublease or in enforcing
Prime Landlord's obligations under the Lease if requested to do so by Subtenant.
10
13. LATE PAYMENT CHARGE. In the event any amounts due from Subtenant under
this Sublease are not paid when due, such amounts shall bear interest from and
after the due date to the date of payment in full at an annual rate of eighteen
percent (18%).
14. NOTICES. Any notice, demand, request, consent, approval or
communication that either party desires or is required to give to the other
party or any other person hereunder shall be in writing and shall be deemed to
be properly served if (i) sent by certified mail with return receipt requested,
(ii) sent by receipted overnight delivery service, or (iii) personally delivered
to the address set forth below. The effective date of any such notice shall be
the date which is stamped by the United States Post Office on the envelope
enclosing same, the date of the receipt for the overnight delivery or the date
on which personal delivery is made, whichever is applicable. Any notice sent by
Subtenant to Prime Landlord shall also be sent concurrently to Sublandlord.
Until changed by written notice from the appropriate party to the other, the
addresses of the parties are as follows:
(a) Sublandlord: Extendicare Homes, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
Copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
11
(b) Subtenant: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Copy to: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
15. ACCORD AND SATISFACTION. No payment by Subtenant or receipt by
Sublandlord of a lesser amount than the full amount of any payments to be made
by Subtenant hereunder shall be deemed to be other than on account of the
earliest stipulated unpaid installment thereof, and no endorsement or statement
on any check or letter accompanying any check or payment shall be deemed to be
an accord and satisfaction, and Sublandlord may accept such check or payment
without prejudice of Sublandlord's right to recover the full amount due
hereunder or pursue any other remedy available to Sublandlord.
16. ENTIRE AGREEMENT. This Sublease and all exhibits referred to herein
constitutes the entire agreement and understanding of the parties with respect
to the matters contained in this Sublease and supersedes all other agreements
between and representations by the parties with respect to such matters.
Subtenant is not relying upon any representations, market analysis, projections,
reports or warranties of the Sublandlord or the Prime Landlord.
17. MODIFICATIONS. No changes, amendments or modifications of this
Sublease shall be effective or enforceable unless made in writing and executed
by the parties hereto and the Prime Landlord.
12
18. CONSENTS. Whenever Sublandlord's consent is required by the terms of
this Sublease, Prime Landlord's consent shall also be obtained if so required by
the terms of the Lease or this Sublease. The consent by Sublandlord or Prime
Landlord to any act by Subtenant requiring Sublandlord's or Prime Landlord's
consent shall not waive or render unnecessary Sublandlord's consent to any
subsequent similar act by Subtenant.
19. MULTIPLE ORIGINALS. This Sublease may be executed simultaneously in
multiple originals, each of which shall be deemed an original, without the
production of the other such originals.
20. AUTHORITY. The individuals executing this Sublease on behalf of the
Sublandlord and Subtenant respectively represent and warrant to the other that
their respective entities are in good standing under the laws of the state in
which the Leased Property is located and they have full right and authority to
enter into the Sublease, bind their respective entities to the performance of
their obligations hereunder.
21. ENTRY BY SUBLANDLORD. Sublandlord and its representatives shall have
the right, at all reasonable times, to enter upon the Leased Property for the
purposes of examining and inspecting the same; provided, however, this section
shall not be construed as imposing any obligation upon Sublandlord to inspect
the Leased Property.
22. NON-WAIVER. Any assent, expressed or implied, by Sublandlord to any
breach of any covenant or condition herein contained shall not be construed as
an assent or waiver of any such covenant or condition generally or of any
subsequent breach thereof.
23. RELATIONSHIP OF PARTIES. Nothing contained herein shall be deemed or
construed to create a joint venture or partnership relationship between
Sublandlord and Subtenant.
13
24. INTERPRETATION. This Sublease shall be interpreted in a fair and
impartial manner without regard to such factors as the party that drafted this
Sublease or the relative bargaining power of the parties.
25. SUBLANDLORD'S INDEMNITY. The Sublandlord covenants and agrees to
defend, indemnify and hold Subtenant harmless from any liabilities incurred with
respect to the Leased Property and the operation thereof by the Sublandlord
prior to the Commencement Date of this Sublease except to the extent such
liabilities have been assumed by Subtenant pursuant to this Sublease or other
written agreement.
26. PERSONAL PROPERTY. In addition to the obligations of the Subtenant
pursuant to the Prime Lease, the Subtenant shall repair, replace and improve the
personal property and equipment used in the operation of the Leased Property as
a skilled care nursing facility in order to provide the quality of care
presently provided to the residents of the Facility and as is required by the
laws and regulations of the state of Texas and the Medicare and Medicaid
programs. To the extent that the Subtenant replaces any existing personal
property and equipment with new personal property and equipment during the Term
such personal property and equipment shall be of the same or better quality as
currently exists (the "Replacement Property"). Such Replacement Property shall,
upon installation and delivery to the Facility, become the property of the
Sublandlord and shall remain at the Facility upon the expiration or earlier
termination of the Sublease. Subtenant shall execute and deliver to the
Sublandlord upon expiration or termination of this Sublease any including
without limitation bills of sale and title transfer documents relating to such
Replacement Property. There shall be no liens, security interests or other
encumbrances placed on such Replacement Property.
14
27. CONDITIONS TO COMMENCEMENT DATE. The Commencement Date of this
Sublease and the obligations of the parties shall be conditioned upon the
fulfillment or waiver, in writing, of the following conditions: (a) the
execution and delivery by the Prime Landlord of the consent to this Sublease on
or prior to the Commencement Date and compliance with any conditions set forth
therein which the Prime Landlord requires be fulfilled prior to the Commencement
Date; and (b) the Subtenant being licensed by the state of Texas to operate the
facility at the level of care and for the number of beds currently licensed; and
(c) the Subtenant obtaining the approval of the Medicare and Medicaid program
certifying the Subtenant as a provider under such programs.
28. ADDITIONAL INFORMATION TO BE FURNISHED BY SUBTENANT. In addition to
the financial and other information required to be provided to the Prime
Landlord pursuant to the Lease, (a copy of which shall be provided concurrently
to the Sublandlord) the Subtenant shall provide to the Sublandlord the following
information at the times and in the formats described below:
28.1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS. Within 90 days after
the end of each of Subtenant's fiscal years, a copy of the audited (if
available, otherwise unaudited with the audited statements to be provided when
available) consolidated balance sheets of Subtenant and its consolidated
subsidiaries as of the end of such fiscal year, and related audited (if
available, otherwise unaudited) consolidated statements of income, changes in
common stock and undistributed profits and changes in financial position of
Subtenant and its consolidated subsidiaries for such fiscal year, prepared in
accordance with generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved.
15
28.2 OFFICER'S CERTIFICATE. Within 90 days after the end of each of
Subtenant's fiscal years, and together with the documents furnished in
accordance with section 29.1, an officer's certificate stating that to the best
of such officer's knowledge and belief after making due inquiry, Subtenant is
not in default in the performance or observance of any of the terms of this
Sublease, or if Tenant shall be in default to such officer's knowledge,
specifying all such defaults, the nature thereof, and the steps being taken to
remedy the same;
28.3 CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS. Within 30 days after
the end of each of Subtenant's quarters, quarterly consolidated financial
reports Subtenant produces for reporting purposes and detailed statements of
income and detailed operational statistics regarding occupancy rates, patient
mix and patient rates by type for the Facility; and
28.4 COST REPORTS. Within 90 days after the end of each of Subtenant's
fiscal years, a copy of each Medicare and Medicaid cost report filed with the
appropriate governmental agency for the Facility (and all amendments thereto
whether contemporaneously or subsequently filed thereto);
28.5 SURVEYS AND INVESTIGATIONS INFORMATION. Within seventy two (72)
hours of receipt a copy of any licensing or other agency survey or report and
any statement of deficiencies and/or any other report indicating that any action
is pending or being considered to downgrade the Facility to a substandard
category, and within the time period required by the particular agency for
furnishing a plan of correction also furnish or cause to be furnished to
Sublandlord a copy of the plan of correction or other response generated as a
result of such survey or report for the Facility, and correct or cause to be
corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in any applicable
16
reimbursement program. Copies of any notices from any governmental agency
relating to an investigation of Subtenant's operations at the Facility including
without limitation HCFA, the OIG, the FBI, the State Medicaid Fraud division,
and any plan of correction responding thereto; and
28.6 ADDITIONAL INFORMATION. The Sublandlord further reserves the
right to require such other information relating to the financial affairs or
operations of the Subtenant and the Facility at such other times as Sublandlord
shall reasonably require (including monthly or more frequently), and Subtenant
agrees to provide such information to Sublandlord within five (5) business days
from request. All financial statements must be in such form and detail as the
Sublandlord shall from time to time reasonably request, provided, however, that
Sublandlord will make reasonable efforts to use Subtenant's existing forms of
reports for all purposes.
29. CROSS DEFAULT. The parties acknowledge that they are, concurrently
herewith, entering into Additional Sublease Agreements and certain Lease
Agreements relating to skilled care nursing facilities in the state of Texas
specifically described on the attached EXHIBIT D (the "Texas Sublease and
Leases"). The parties covenant and agree that in the event of a default by the
Subtenant pursuant to this Sublease the Sublandlord shall have the right and
option to declare a default in the other Texas Subleases and Leases and shall
have all available remedies, including, without limitation, the right to
terminate such Texas Subleases and Leases.
30. ESTOPPEL CERTIFICATE. At any time during the Term and from time to
time upon the request of the Sublandlord the Subtenant shall deliver to the
Sublandlord or Sublandlord's lender within ten (10) business days from receipt
of such request an estoppel certificate signed by an officer of the Subtenant
certifying that this Sublease is unmodified and in full force and
17
effect (or is in full force and effect as modified and setting forth the
modifications) that neither Sublandlord nor Subtenant are in default of the
Sublease or if such default exists setting forth such default and the dates to
which the payments due pursuant to this Sublease and the Lease have been paid.
31. TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Sublandlord's option, Subtenant shall use its best
efforts to transfer to Sublandlord or Sublandlord's nominee, and Subtenant shall
cooperate with Sublandlord or Sublandlord's nominee in connection with the
processing by Sublandlord or Sublandlord's nominee of, any applications for all
licenses, operating permits and other governmental authorization and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary for the operations of the Facility; provided that the
costs and expenses of any such transfer or the processing of any such
application shall be paid by Sublandlord or Sublandlord's nominee.
Notwithstanding anything in this Sublease or elsewhere to the contrary, under no
circumstances shall Sublandlord be obligated to seek or effectuate such a
transfer or application therefore.
18
IN WITNESS WHEREOF, the parties have caused this Sublease to be executed
and their respective corporate seals, if any, to be hereunto affixed and
attested by their respective officers thereunto duly authorized.
Sublandlord: Subtenant:
Extendicare Homes, Inc. Senior Health-Northwood, LLC
By:
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------ ------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Its: Senior Vice President
State of Wisconsin State of Pennsylvania
County of Milwaukee County of Philadelphia
The foregoing instrument was acknowledged The foregoing instrument was acknowledged
before me this 25th day of September, 2001 before me this 26th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Vice President of by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President on behalf of the
Extendicare Homes, Inc. corporation.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------ ------------------------------
Notary Public, State of Wisconsin Notary Public, State of Pennsylvania
My commission expires 11-2-2003. My commission expires: 10-31-02
[Notarial Seal] [Notarial Seal]
19
SUBLEASE
EXTENDICARE HOMES, INC.
LANDLORD
AND
SENIOR HEALTH-RIVER VALLEY, LLC
TENANT
DATED AS OF October 1, 2001
-------------------------------------------
Facility:
River Valley Health & Rehabilitation Center
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
-------------------------------------------
1
TABLE OF CONTENTS
PAGE
----
1. Leased Property: Rental Payments..........................................2
2. Subtenant Obligations.....................................................2
3. Term: Renewal.............................................................3
3.1 Term...........................................................3
3.2 Renewal of Extension of Term...................................3
4. Additional Sublease Rental; Net Sublease..................................4
5. Default...................................................................5
6. Subtenant Indemnity; Insurance; Waiver of Subrogation.....................6
7. Use; Compliance with Law..................................................7
7.1 Use............................................................7
7.2 Compliance.....................................................7
8. Assignment and Subletting.................................................8
9. Inspection; Alterations...................................................9
10. Termination..............................................................10
11. Sublandlord's Obligations................................................10
12. Costs and Expenses in the Event of Default...............................10
13. Late Payment Charge......................................................11
14. Notices..................................................................11
15. Accord and Satisfaction..................................................12
16. Entire Agreement.........................................................12
17. Modifications............................................................12
18. Consents.................................................................13
19. Multiple Originals.......................................................13
20. Authority................................................................13
21. Entry by Sublandlord.....................................................13
22. Non-Waiver...............................................................13
23. Relationship of Parties..................................................13
24. Interpretation...........................................................14
25. Sublandlord's Indemnity..................................................14
26. Personal Property........................................................14
i
TABLE OF CONTENTS
(continued)
PAGE
----
27. Conditions to Commencement Date..........................................15
28. Additional Information to be Furnished by Subtenant......................15
28.1 Consolidated Annual Financial Statements......................15
28.2 Officer's Certificate.........................................16
28.3 Consolidated Quarterly Financial Statements...................16
28.4 Cost Reports..................................................16
28.5 Surveys and Investigations Information........................16
28.6 Additional Information........................................17
29. Cross Default............................................................17
30. Estoppel Certificate.....................................................17
31. Transfers of Licenses Upon Termination...................................18
ii
EXHIBITS
EXHIBITS
--------
A. Lease
B Texas Sublease & Leases
SUBLEASE AGREEMENT
THIS SUBLEASE (the "Sublease") is entered into as of the 1st day of
October, 2001 by and between Extendicare Homes, Inc. (f/k/a Unicare Homes, Inc),
a Delaware corporation, having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Sublandlord") and Senior Health-River Valley, LLC, a
Texas limited liability company, having its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subtenant").
RECITALS:
The Sublandlord, as tenant, entered into a lease agreement with Triple S
Investment Company, a Wisconsin general partnership, Milwaukee, WI as the
Landlord which has been modified from time to time (the "Prime Landlord") for
the lease of the real and personal property generally described as the River
Valley Health & Rehabilitation Center nursing facility (the "Facility") located
at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. (The real and personal property
being sublet pursuant to this Sublease is all of the Leased Property described
in the Prime Lease and is hereafter referred to as the "Leased Property"). A
copy of the Prime Lease including all exhibits, modifications and amendments
thereto is attached hereto as Exhibit A and incorporated herein by reference.
The lease including all exhibits, modifications and amendments thereto is
referred to herein as either the "Lease" or the "Prime Lease".
The Sublandlord desires to sublet the entire Leased Property to the
Subtenant and the Subtenant desires to sublet the entire Leased Property from
the Sublandlord pursuant to the terms, covenants and conditions set forth in
this Sublease.
NOW, THEREFORE, in consideration of the terms, covenants, conditions and
agreements contained herein and in any exhibits attached hereto, the Sublandlord
and the Subtenant (hereafter collectively referred to as the "parties") agree as
follows:
1. LEASED PROPERTY: RENTAL PAYMENTS. Sublandlord hereby subleases to
Subtenant, and Subtenant hereby subleases from Sublandlord, the Leased Property
subject to all terms, covenants and conditions contained in the Lease, except as
otherwise set forth in this Sublease. To the extent not inconsistent with this
Sublease, the terms of the Lease are hereby incorporated into this Sublease by
reference. Sublandlord shall have all of the rights of the Prime Landlord under
the Lease. In no event shall the Subtenant have the right to receive any
payments due from the Prime Landlord to the Sublandlord under the Lease.
2. SUBTENANT OBLIGATIONS. The Subtenant hereby covenants and agrees to
observe and perform each and every term, covenant, promise, condition and
obligation, imposed upon the Sublandlord, as tenant, under the Lease including
without limitation, the payment obligations of the Sublandlord, as tenant, under
the Lease . Such payment obligations of the Subtenant shall include without
limitation the payment , in the amounts and at the times called for in the
Lease, of all rental, additional rental, taxes, assessments, late charges,
license and permit fees, utilities, governmental charges, insurance premiums,
and capital improvement commitments. The Subtenant's obligations to perform the
terms, covenants and conditions described in the Lease are in addition to any
and all additional obligations of the Subtenant set forth in this Sublease
including any and all additional obligations for payment and performance. It is
the intent of the parties that on and after the Commencement Date, the
Sublandlord shall have absolutely no liability for the performance of the
tenant's obligations under the Lease and that all such
2
obligations are hereby assumed and shall be performed by the Subtenant. The
Subtenant shall make payments due under the Lease directly to the Prime Landlord
on or prior to the due date therefore and shall provide evidence of such payment
to the Sublandlord concurrently with delivering such payment to the Prime
Landlord.
3. TERM: RENEWAL.
3.1 TERM. The term of this Sublease shall be for the period beginning
on October 1, 2001 (the "Commencement Date") and ending at 11:59 p.m. on the
date of expiration of such Lease (the "Expiration Date") unless sooner
terminated pursuant to the provisions of this Sublease (the "Term").
Notwithstanding any provision herein to the contrary, this Sublease shall
automatically terminate upon the expiration or earlier termination of the Lease
for any reason or as provided in this Sublease.
3.2 RENEWAL OF EXTENSION OF TERM. If, at the end of the then-current
term of the Lease the Prime Landlord offers or agrees to renew or extend the
term of the Lease, (the "Renewal Right") the Sublandlord agrees to offer to the
Subtenant the right to renew or extend the term of this Sublease on the terms,
covenants and conditions as such Renewal Right has been offered to the
Sublandlord provided that the Prime Landlord consents to the renewal or
extension of this Sublease. The renewal or extension of this Sublease shall also
include the terms, covenants and conditions of this Sublease including without
limitation the terms relating to the payment of Additional Sublease Rental which
shall be negotiated and agreed upon between the parties to this Sublease and
included in any modification of this Sublease. If the Subtenant desires to renew
or extend the term of this Sublease, it shall so notify the Sublandlord in
writing, at least (10) business days prior to the time that the Sublandlord has
been given to exercise such
3
Renewal Right with the Prime Landlord. The Sublandlord and the Subtenant shall
execute a modification of this Sublease in form and substance satisfactory to
the Sublandlord reflecting such extension. In the event that the Subtenant does
not so notify the Sublandlord in the manner and within the time set forth
herein, time being deemed of the essence, any right of the Subtenant to extend
the term of the Sublease shall be automatically terminated and, thereafter,
Sublandlord shall have no obligation or liability whatsoever to the Subtenant
regarding such Renewal Right and the Term of this Sublease shall automatically
expire at the expiration of the then current term. In the event that this
Sublease is terminated for any reason prior to the expiration of the then
current term, the obligations of the Sublandlord regarding such Renewal Right
and the right of the Subtenant to extend the term of the Sublease shall also
terminate and be of no further force and effect.
4. ADDITIONAL SUBLEASE RENTAL; NET SUBLEASE. In addition to the
Subtenant's obligation for payment of the rent, additional rent and other
charges under the Lease, as additional consideration to the Sublandlord for
entering into this Sublease, the Subtenant hereby covenants and agrees to pay to
the Sublandlord a fixed annual Rental of -0- Dollars ($-0-).
The Additional Sublease Rental shall be paid in equal monthly installment
of -0- Dollars ($-0-) per month in advance without demand, delay, set off or
deduction of any nature or kind whatsoever on or before the fifth (5th) day of
each month. A partial month's payment of the Additional Sublease Rental shall be
due and payable on the Commencement Date if the Commencement Date is other than
the first day of a month. The Additional Sublease Rental shall be paid to the
Sublandlord at the address set forth in the Notice section of this Sublease and
time shall be deemed of the essence with respect to such payments.
4
This Sublease is and shall be deemed and construed to be an absolutely net
Sublease and all payments to be made by the Subtenant pursuant to this Sublease
shall be net to the Sublandlord in each year during the Term. Subtenant shall
pay all costs, expenses and obligations of every kind whatsoever relating to the
Leased Property and does hereby indemnify, defend and hold Sublandlord harmless
of, from and against all such costs, expenses and obligations.
5. DEFAULT. Upon the nonpayment by Subtenant of any rent, additional
rent, or other payments when due, under the Lease or this Sublease or any
failure of Subtenant to perform any of its other covenants or agreements
required to be performed by Subtenant under the Lease or this Sublease, or any
default by Subtenant or any affiliate of Subtenant in the payment or performance
of any obligation under any other agreement, note or undertaking with
Sublandlord, after five (5) days written notice of any default in regard to
rent, additional rent, additional Sublease rental or any other indebtedness and
after ten (10) days written notice of any other default, Sublandlord shall have
all remedies available at law or in equity, including, without limitation, the
right, at its option, to reenter the Facility and take possession of the Leased
Property without terminating this Sublease, remove the Subtenant and all persons
holding under Subtenant from the Facility and retake possession of the Leased
Property, accelerate all rentals due hereunder for the remaining Term of this
Sublease, and/or to terminate this Sublease and reenter and repossess the
Facility and all the Leased Property; provided, however, that such reentry,
repossession and/or termination shall not constitute an acceptance or surrender
of this Sublease or the Leased Property or a waiver of any of the Sublandlord's
rights or remedies,
5
including without limitation, the right to relet the Leased Property, or any
part thereof, for the benefit of the Subtenant and to recover all damages of
every kind for Subtenant's default.
6. SUBTENANT INDEMNITY; INSURANCE; WAIVER OF SUBROGATION. Subtenant shall
indemnify, defend and hold Sublandlord and all affiliates and its parent company
harmless from any and all damages, costs, losses and expenses (including
reasonable attorney fees) resulting in any way from Subtenant's occupancy and/or
use of the Leased Property, or the breach of any obligation of Subtenant as set
out in the Lease or this Sublease. Subtenant shall carry, at Subtenant's
expense, insurance insuring the Leased Property in full compliance with all
applicable laws, rules, regulations governing the possession occupancy, and use
of the Leased Property as a skilled nursing facility. ("Insurance Obligations").
Subtenant shall also insure its fixtures, equipment, inventory and other
personal property located in, on or about the Facility in an amount at least
equal to the full replacement value thereof. No later than the Commencement Date
and thereafter on each anniversary date of the Commencement Date, Subtenant
shall provide Sublandlord with certificates evidencing the existence of such
insurance naming the Prime Landlord, Sublandlord and any lenders of the Prime
Landlord or the Sublandlord as additional named insureds, which certificates
shall require the insurance carrier to give the Prime Landlord and Sublandlord
at least thirty (30) days written notice of any cancellation or material
amendment to such insurance policies.
Sublandlord and Subtenant hereby waive any and all rights of recovery
against each other for any loss or damage to the Leased Property on account of
fire or other casualty or for injuries sustained on or about the Facility or the
Leased Property to the extent such loss or damage is or would be covered by the
insurance required to be carried by each party hereunder, even if such
6
coverage is not actually maintained. Such waiver shall also apply to the extent
of any deductible maintained by either party under its insurance policies. It is
understood that this waiver applies to any loss or damage regardless of the
cause, including, without limitation, if caused by the negligence of
Sublandlord, Subtenant or their respective employees, agents, assigns or
sublessees.
Notwithstanding anything contained herein to the contrary, the Subtenant
shall not be obligated to purchase the professional liability and/or medical
malpractice insurance described in the Lease.
7. USE; COMPLIANCE WITH LAW.
7.1 USE. The Leased Property shall be continuously occupied and used
solely by the Subtenant and solely for the operation of a nursing facility duly
licensed by the state of Texas for the level of care and the number of licensed
beds as of the Commencement Date and duly certified by the Medicare and Medicaid
programs and for no other purpose whatsoever.
7.2 COMPLIANCE. In addition to the obligations imposed under the
Lease, Subtenant shall obey, observe and promptly comply with all laws, rules,
regulations and ordinances which shall be applicable, now or at any time during
the Term, to the possession, use and occupancy of the Leased Property and the
operation of the Facility as a duly licensed Texas nursing facility at the level
of care and the number of licensed beds as of the Commencement Date. Subtenant
shall promptly comply with all laws, orders, rules, rulings and directives of
any governmental authority or agency having jurisdiction of the Facility and the
Leased Property. Subtenant shall not store, use, discharge or dispose of any
hazardous or toxic substances,
7
pollutants, contaminants or any other substances regulated by any state or
federal statute (collectively "Contaminants") on the Leased Property other than
in the ordinary course of its business. In addition to any obligations imposed
by the Lease, Subtenant shall be solely responsible for the costs of removing or
cleaning any Contaminants found on the Leased Property and caused by Subtenant.
8. ASSIGNMENT AND SUBLETTING. Subtenant shall not have any right to, nor
shall Subtenant attempt to, assign its interest in this Sublease or any portion
thereof or any interest in the Leased Property or any portion thereof
voluntarily or by operation of law and shall not have any right to nor attempt
to sell, transfer, sublet or license all or any portion of the Leased Property
without the prior written consent of the Sublandlord and Prime Landlord.
Sublandlord's and the Prime Landlord's consent or approval may be granted or
withheld in their sole discretion. The transfer of fifty percent (50%) or more
of either the voting stock or membership interests held by Subtenant or its
affiliated entities whether in one or a series of transactions, shall be
considered a prohibited assignment, sale, transfer or subletting hereunder
requiring Sublandlord's and the Prime Landlord's prior written consent. Any
purported or attempted assignment, sale, transfer or subletting, without
Sublandlord's and the Prime Landlord's prior written consent, shall be null and
void and constitute a default by Subtenant under this Sublease. Any permitted
assignee or sublessee of Subtenant shall expressly assume Subtenant's
liabilities and obligations under this Sublease and the Lease. No assignment,
subleasing, sale, transfer or licensing shall release Subtenant from any of its
obligations under this Sublease or the Lease. Subtenant shall not mortgage or
otherwise encumber its leasehold interest or the Leased Property without the
prior written consent of Sublandlord and the Prime
8
Landlord which either or both may withhold in their sole discretion. This
Sublease shall not be construed as an assignment of Sublandlord's interest in
the Lease, and Subtenant shall not have the right to negotiate any modification
or amendments to the Lease.
9. INSPECTION; ALTERATIONS. Subtenant has inspected the Leased Property,
and is satisfied that the Leased Property is acceptable to Subtenant for all of
its purposes and uses, and accepts the same in "AS IS" condition, without any
warranties, representations or obligation from the Sublandlord or the Prime
Landlord to make any repairs, replacements, alterations, additions,
installations or improvements whatsoever. Subtenant shall not expand or make or
install any additions, renovations, alterations, improvements, or changes in or
to the Leased Property, or any part thereof without Sublandlord's and Prime
Landlord's prior written consent. Any permitted work shall be performed by the
Subtenant in a good and workmanlike manner at the sole expense of Subtenant.
Subtenant shall not permit, create, incur or impose or cause or suffer others to
permit, create, incur or impose any lien or other obligation against the Leased
Property or any interest therein by reason of any work upon the Leased Property,
and Subtenant shall indemnify, defend and hold Sublandlord and the Prime
Landlord harmless of and from any and all claims or demands by any contractor,
subcontractor, materialman, laborer or any other third person against the Leased
Property, Subtenant's interest in the Leased Property or any interest therein
relating to or arising because of any work performed thereon. As between
Sublandlord and Subtenant, any improvements or additions upon the Leased
Property at the expiration of this Sublease shall be deemed a part of the Leased
Property and be and remain the property of the Sublandlord.
9
10. TERMINATION. Notwithstanding anything contained herein to the
contrary, the existence of this Sublease is dependent and conditioned upon the
continued existence of the Lease, and in the event of the termination of the
Lease for any reason, this Sublease, at Sublandlord's option, shall thereupon be
terminated without the need for further action and without liability to
Sublandlord. If Subtenant is not in default under the terms and conditions
hereof, any such termination shall be without liability between Sublandlord and
Subtenant, except for such liability theretofore accruing or as otherwise
provided herein; however, if Subtenant is in default, the provisions hereof
including those of default shall control as to Subtenant's liability and shall
survive the termination of the Sublease.
11. SUBLANDLORD'S OBLIGATIONS. Sublandlord shall have no duty of any
nature or kind whatsoever to perform any obligations of the Prime Landlord under
the Lease and shall under no circumstances be responsible for or liable to
Subtenant for any default, failure or delay on the part of the Prime Landlord in
the performance of any obligations of the Prime Landlord under the Lease. No
such default of Prime Landlord shall affect this Sublease or waive or defer the
performance of any of Subtenant's obligations hereunder; provided, however, that
in the event of such default or failure by the Prime Landlord, Sublandlord
agrees, upon written notice from Subtenant, and at Subtenant's expense, to make
demand upon the Prime Landlord to perform its obligations under the Lease.
12. COSTS AND EXPENSES IN THE EVENT OF DEFAULT. Subtenant shall pay all
costs and expenses, including reasonable attorneys' fees, that may be incurred
by Sublandlord in enforcing the provisions of this Sublease or in enforcing
Prime Landlord's obligations under the Lease if requested to do so by Subtenant.
10
13. LATE PAYMENT CHARGE. In the event any amounts due from Subtenant under
this Sublease are not paid when due, such amounts shall bear interest from and
after the due date to the date of payment in full at an annual rate of eighteen
percent (18%).
14. NOTICES. Any notice, demand, request, consent, approval or
communication that either party desires or is required to give to the other
party or any other person hereunder shall be in writing and shall be deemed to
be properly served if (i) sent by certified mail with return receipt requested,
(ii) sent by receipted overnight delivery service, or (iii) personally delivered
to the address set forth below. The effective date of any such notice shall be
the date which is stamped by the United States Post Office on the envelope
enclosing same, the date of the receipt for the overnight delivery or the date
on which personal delivery is made, whichever is applicable. Any notice sent by
Subtenant to Prime Landlord shall also be sent concurrently to Sublandlord.
Until changed by written notice from the appropriate party to the other, the
addresses of the parties are as follows:
(a) Sublandlord: Extendicare Homes, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
Copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
11
(b) Subtenant:
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Copy to: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
15. ACCORD AND SATISFACTION. No payment by Subtenant or receipt by
Sublandlord of a lesser amount than the full amount of any payments to be made
by Subtenant hereunder shall be deemed to be other than on account of the
earliest stipulated unpaid installment thereof, and no endorsement or statement
on any check or letter accompanying any check or payment shall be deemed to be
an accord and satisfaction, and Sublandlord may accept such check or payment
without prejudice of Sublandlord's right to recover the full amount due
hereunder or pursue any other remedy available to Sublandlord.
16. ENTIRE AGREEMENT. This Sublease and all exhibits referred to herein
constitutes the entire agreement and understanding of the parties with respect
to the matters contained in this Sublease and supersedes all other agreements
between and representations by the parties with respect to such matters.
Subtenant is not relying upon any representations, market analysis, projections,
reports or warranties of the Sublandlord or the Prime Landlord.
17. MODIFICATIONS. No changes, amendments or modifications of this
Sublease shall be effective or enforceable unless made in writing and executed
by the parties hereto and the Prime Landlord.
12
18. CONSENTS. Whenever Sublandlord's consent is required by the terms of
this Sublease, Prime Landlord's consent shall also be obtained if so required by
the terms of the Lease or this Sublease. The consent by Sublandlord or Prime
Landlord to any act by Subtenant requiring Sublandlord's or Prime Landlord's
consent shall not waive or render unnecessary Sublandlord's consent to any
subsequent similar act by Subtenant.
19. MULTIPLE ORIGINALS. This Sublease may be executed simultaneously in
multiple originals, each of which shall be deemed an original, without the
production of the other such originals.
20. AUTHORITY. The individuals executing this Sublease on behalf of the
Sublandlord and Subtenant respectively represent and warrant to the other that
their respective entities are in good standing under the laws of the state in
which the Leased Property is located and they have full right and authority to
enter into the Sublease, bind their respective entities to the performance of
their obligations hereunder.
21. ENTRY BY SUBLANDLORD. Sublandlord and its representatives shall have
the right, at all reasonable times, to enter upon the Leased Property for the
purposes of examining and inspecting the same; provided, however, this section
shall not be construed as imposing any obligation upon Sublandlord to inspect
the Leased Property.
22. NON-WAIVER. Any assent, expressed or implied, by Sublandlord to any
breach of any covenant or condition herein contained shall not be construed as
an assent or waiver of any such covenant or condition generally or of any
subsequent breach thereof.
23. RELATIONSHIP OF PARTIES. Nothing contained herein shall be deemed or
construed to create a joint venture or partnership relationship between
Sublandlord and Subtenant.
13
24. INTERPRETATION. This Sublease shall be interpreted in a fair and
impartial manner without regard to such factors as the party that drafted this
Sublease or the relative bargaining power of the parties.
25. SUBLANDLORD'S INDEMNITY. The Sublandlord covenants and agrees to
defend, indemnify and hold Subtenant harmless from any liabilities incurred with
respect to the Leased Property and the operation thereof by the Sublandlord
prior to the Commencement Date of this Sublease except to the extent such
liabilities have been assumed by Subtenant pursuant to this Sublease or other
written agreement.
26. PERSONAL PROPERTY. In addition to the obligations of the Subtenant
pursuant to the Prime Lease, the Subtenant shall repair, replace and improve the
personal property and equipment used in the operation of the Leased Property as
a skilled care nursing facility in order to provide the quality of care
presently provided to the residents of the Facility and as is required by the
laws and regulations of the state of Texas and the Medicare and Medicaid
programs. To the extent that the Subtenant replaces any existing personal
property and equipment with new personal property and equipment during the Term
such personal property and equipment shall be of the same or better quality as
currently exists (the "Replacement Property"). Such Replacement Property shall,
upon installation and delivery to the Facility, become the property of the
Sublandlord and shall remain at the Facility upon the expiration or earlier
termination of the Sublease. Subtenant shall execute and deliver to the
Sublandlord upon expiration or termination of this Sublease any including
without limitation bills of sale and title transfer documents relating to such
Replacement Property. There shall be no liens, security interests or other
encumbrances placed on such Replacement Property.
14
27. CONDITIONS TO COMMENCEMENT DATE. The Commencement Date of this
Sublease and the obligations of the parties shall be conditioned upon the
fulfillment or waiver, in writing, of the following conditions: (a) the
execution and delivery by the Prime Landlord of the consent to this Sublease on
or prior to the Commencement Date and compliance with any conditions set forth
therein which the Prime Landlord requires be fulfilled prior to the Commencement
Date; and (b) the Subtenant being licensed by the state of Texas to operate the
facility at the level of care and for the number of beds currently licensed; and
(c) the Subtenant obtaining the approval of the Medicare and Medicaid program
certifying the Subtenant as a provider under such programs.
28. ADDITIONAL INFORMATION TO BE FURNISHED BY SUBTENANT. In addition to
the financial and other information required to be provided to the Prime
Landlord pursuant to the Lease, (a copy of which shall be provided concurrently
to the Sublandlord) the Subtenant shall provide to the Sublandlord the following
information at the times and in the formats described below:
28.1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS. Within 90 days after
the end of each of Subtenant's fiscal years, a copy of the audited (if
available, otherwise unaudited with the audited statements to be provided when
available) consolidated balance sheets of Subtenant and its consolidated
subsidiaries as of the end of such fiscal year, and related audited (if
available, otherwise unaudited) consolidated statements of income, changes in
common stock and undistributed profits and changes in financial position of
Subtenant and its consolidated subsidiaries for such fiscal year, prepared in
accordance with generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved.
15
28.2 OFFICER'S CERTIFICATE. Within 90 days after the end of each of
Subtenant's fiscal years, and together with the documents furnished in
accordance with section 29.1, an officer's certificate stating that to the best
of such officer's knowledge and belief after making due inquiry, Subtenant is
not in default in the performance or observance of any of the terms of this
Sublease, or if Tenant shall be in default to such officer's knowledge,
specifying all such defaults, the nature thereof, and the steps being taken to
remedy the same;
28.3 CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS. Within 30 days after
the end of each of Subtenant's quarters, quarterly consolidated financial
reports Subtenant produces for reporting purposes and detailed statements of
income and detailed operational statistics regarding occupancy rates, patient
mix and patient rates by type for the Facility; and
28.4 COST REPORTS. Within 90 days after the end of each of Subtenant's
fiscal years, a copy of each Medicare and Medicaid cost report filed with the
appropriate governmental agency for the Facility (and all amendments thereto
whether contemporaneously or subsequently filed thereto);
28.5 SURVEYS AND INVESTIGATIONS INFORMATION.. Within seventy two (72)
hours of receipt a copy of any licensing or other agency survey or report and
any statement of deficiencies and/or any other report indicating that any action
is pending or being considered to downgrade the Facility to a substandard
category, and within the time period required by the particular agency for
furnishing a plan of correction also furnish or cause to be furnished to
Sublandlord a copy of the plan of correction or other response generated as a
result of such survey or report for the Facility, and correct or cause to be
corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in any applicable
16
reimbursement program. Copies of any notices from any governmental agency
relating to an investigation of Subtenant's operations at the Facility including
without limitation HCFA, the OIG, the FBI, the State Medicaid Fraud division,
and any plan of correction responding thereto; and
28.6 ADDITIONAL INFORMATION. The Sublandlord further reserves the
right to require such other information relating to the financial affairs or
operations of the Subtenant and the Facility at such other times as Sublandlord
shall reasonably require (including monthly or more frequently), and Subtenant
agrees to provide such information to Sublandlord within five (5) business days
from request. All financial statements must be in such form and detail as the
Sublandlord shall from time to time reasonably request, provided, however, that
Sublandlord will make reasonable efforts to use Subtenant's existing forms of
reports for all purposes.
29. CROSS DEFAULT. The parties acknowledge that they are, concurrently
herewith, entering into Additional Sublease Agreements and certain Lease
Agreements relating to skilled care nursing facilities in the state of Texas
specifically described on the attached EXHIBIT D (the "Texas Sublease and
Leases"). The parties covenant and agree that in the event of a default by the
Subtenant pursuant to this Sublease the Sublandlord shall have the right and
option to declare a default in the other Texas Subleases and Leases and shall
have all available remedies, including, without limitation, the right to
terminate such Texas Subleases and Leases.
30. ESTOPPEL CERTIFICATE. At any time during the Term and from time to
time upon the request of the Sublandlord the Subtenant shall deliver to the
Sublandlord or Sublandlord's lender within ten (10) business days from receipt
of such request an estoppel certificate signed by an officer of the Subtenant
certifying that this Sublease is unmodified and in full force
17
and effect (or is in full force and effect as modified and setting forth the
modifications) that neither Sublandlord nor Subtenant are in default of the
Sublease or if such default exists setting forth such default and the dates to
which the payments due pursuant to this Sublease and the Lease have been paid.
31. TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Sublandlord's option, Subtenant shall use its best
efforts to transfer to Sublandlord or Sublandlord's nominee, and Subtenant shall
cooperate with Sublandlord or Sublandlord's nominee in connection with the
processing by Sublandlord or Sublandlord's nominee of, any applications for all
licenses, operating permits and other governmental authorization and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary for the operations of the Facility; provided that the
costs and expenses of any such transfer or the processing of any such
application shall be paid by Sublandlord or Sublandlord's nominee.
Notwithstanding anything in this Sublease or elsewhere to the contrary, under no
circumstances shall Sublandlord be obligated to seek or effectuate such a
transfer or application therefore.
18
IN WITNESS WHEREOF, the parties have caused this Sublease to be executed
and their respective corporate seals, if any, to be hereunto affixed and
attested by their respective officers thereunto duly authorized.
Sublandlord: Subtenant:
Extendicare Homes, Inc. Senior Health-River Valley, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------- ----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Its: Senior Vice President
State of Wisconsin State of Pennsylvania
County of Milwaukee County of Philadelphia
The foregoing instrument was acknowledged The foregoing instrument was acknowledged
before me this 25th day of September, 2001 before me this 26th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Vice President by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President on behalf
of Extendicare Homes, Inc. of the corporation.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------- ----------------------------------------
Notary Public, State of Wisconsin Notary Public, State of Pennsylvania
My commission expires 11-2-2003. My commission expires: 10-31-02
[Notarial Seal] [Notarial Seal]
19
SUBLEASE
EXTENDICARE HOMES, INC.
LANDLORD
AND
SENIOR HEALTH-TEXOMA, LLC
TENANT
DATED AS OF October 1, 2001
---------------------------------------
Facility:
Texoma Specialty Care Center
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
---------------------------------------
1
TABLE OF CONTENTS
PAGE
----
1. Leased Property: Rental Payments.......................................................................2
2. Subtenant Obligations...................................................................................2
3. Term: Renewal...........................................................................................3
3.1 Term...........................................................................................3
3.2 Renewal of Extension of Term...................................................................3
4. Additional Sublease Rental; Net Sublease................................................................4
5. Default.................................................................................................5
6. Subtenant Indemnity; Insurance; Waiver of Subrogation...................................................6
7. Use; Compliance with Law................................................................................7
7.1 Use............................................................................................7
7.2 Compliance.....................................................................................7
8. Assignment and Subletting...............................................................................8
9. Inspection; Alterations.................................................................................9
10. Termination............................................................................................10
11. Sublandlord's Obligations..............................................................................10
12. Costs and Expenses in the Event of Default.............................................................10
13. Late Payment Charge....................................................................................11
14. Notices................................................................................................11
15. Accord and Satisfaction................................................................................12
16. Entire Agreement.......................................................................................12
17. Modifications..........................................................................................12
18. Consents...............................................................................................13
19. Multiple Originals.....................................................................................13
20. Authority..............................................................................................13
21. Entry by Sublandlord...................................................................................13
22. Non-Waiver.............................................................................................13
23. Relationship of Parties................................................................................13
24. Interpretation.........................................................................................14
25. Sublandlord's Indemnity................................................................................14
26. Personal Property......................................................................................14
i
TABLE OF CONTENTS
(continued)
PAGE
----
27. Conditions to Commencement Date........................................................................15
28. Additional Information to be Furnished by Subtenant....................................................15
28.1 Consolidated Annual Financial Statements.....................................................15
28.2 Officer's Certificate........................................................................16
28.3 Consolidated Quarterly Financial Statements..................................................16
28.4 Cost Reports.................................................................................16
28.5 Surveys and Investigations Information.......................................................16
28.6 Additional Information.......................................................................17
29. Cross Default..........................................................................................17
30. Estoppel Certificate...................................................................................17
31. Transfers of Licenses Upon Termination.................................................................18
ii
EXHIBITS
EXHIBITS
--------
A. Lease
B. Texas Sublease & Leases
SUBLEASE AGREEMENT
THIS SUBLEASE (the "Sublease") is entered into as of the 1st day of
October, 2001 by and between Extendicare Homes, Inc. (f/k/a Unicare Homes, Inc),
a Delaware corporation, having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Sublandlord") and Senior Health-Texoma, LLC, a Texas
limited liability company, having its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subtenant").
RECITALS:
The Sublandlord, as tenant, entered into a lease agreement with Triple S
Investment Company, a Wisconsin general partnership, Milwaukee, WI as the
Landlord which has been modified from time to time (the "Prime Landlord") for
the lease of the real and personal property generally described as the Texoma
Specialty Care Center nursing facility (the "Facility") located at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. (The real and personal property being sublet pursuant
to this Sublease is all of the Leased Property described in the Prime Lease and
is hereafter referred to as the "Leased Property"). A copy of the Prime Lease
including all exhibits, modifications and amendments thereto is attached hereto
as Exhibit A and incorporated herein by reference. The lease including all
exhibits, modifications and amendments thereto is referred to herein as either
the "Lease" or the "Prime Lease".
The Sublandlord desires to sublet the entire Leased Property to the
Subtenant and the Subtenant desires to sublet the entire Leased Property from
the Sublandlord pursuant to the terms, covenants and conditions set forth in
this Sublease.
NOW, THEREFORE, in consideration of the terms, covenants, conditions and
agreements contained herein and in any exhibits attached hereto, the Sublandlord
and the Subtenant (hereafter collectively referred to as the "parties") agree as
follows:
1. LEASED PROPERTY: RENTAL PAYMENTS. Sublandlord hereby subleases to
Subtenant, and Subtenant hereby subleases from Sublandlord, the Leased Property
subject to all terms, covenants and conditions contained in the Lease, except as
otherwise set forth in this Sublease. To the extent not inconsistent with this
Sublease, the terms of the Lease are hereby incorporated into this Sublease by
reference. Sublandlord shall have all of the rights of the Prime Landlord under
the Lease. In no event shall the Subtenant have the right to receive any
payments due from the Prime Landlord to the Sublandlord under the Lease.
2. SUBTENANT OBLIGATIONS. The Subtenant hereby covenants and agrees to
observe and perform each and every term, covenant, promise, condition and
obligation, imposed upon the Sublandlord, as tenant, under the Lease including
without limitation, the payment obligations of the Sublandlord, as tenant, under
the Lease . Such payment obligations of the Subtenant shall include without
limitation the payment , in the amounts and at the times called for in the
Lease, of all rental, additional rental, taxes, assessments, late charges,
license and permit fees, utilities, governmental charges, insurance premiums,
and capital improvement commitments. The Subtenant's obligations to perform the
terms, covenants and conditions described in the Lease are in addition to any
and all additional obligations of the Subtenant set forth in this Sublease
including any and all additional obligations for payment and performance. It is
the intent of the parties that on and after the Commencement Date, the
Sublandlord shall have absolutely no liability for the performance of the
tenant's obligations under the Lease and that all such
2
obligations are hereby assumed and shall be performed by the Subtenant. The
Subtenant shall make payments due under the Lease directly to the Prime Landlord
on or prior to the due date therefore and shall provide evidence of such payment
to the Sublandlord concurrently with delivering such payment to the Prime
Landlord.
3. TERM: RENEWAL.
3.1 TERM. The term of this Sublease shall be for the period beginning
on October 1, 2001 (the "Commencement Date") and ending at 11:59 p.m. on the
date of expiration of such Lease (the "Expiration Date") unless sooner
terminated pursuant to the provisions of this Sublease (the "Term").
Notwithstanding any provision herein to the contrary, this Sublease shall
automatically terminate upon the expiration or earlier termination of the Lease
for any reason or as provided in this Sublease.
3.2 RENEWAL OF EXTENSION OF TERM. If, at the end of the then-current
term of the Lease the Prime Landlord offers or agrees to renew or extend the
term of the Lease, (the "Renewal Right") the Sublandlord agrees to offer to the
Subtenant the right to renew or extend the term of this Sublease on the terms,
covenants and conditions as such Renewal Right has been offered to the
Sublandlord provided that the Prime Landlord consents to the renewal or
extension of this Sublease. The renewal or extension of this Sublease shall also
include the terms, covenants and conditions of this Sublease including without
limitation the terms relating to the payment of Additional Sublease Rental which
shall be negotiated and agreed upon between the parties to this Sublease and
included in any modification of this Sublease. If the Subtenant desires to renew
or extend the term of this Sublease, it shall so notify the Sublandlord in
writing, at least (10) business days prior to the time that the Sublandlord has
been given to exercise such
3
Renewal Right with the Prime Landlord. The Sublandlord and the Subtenant shall
execute a modification of this Sublease in form and substance satisfactory to
the Sublandlord reflecting such extension. In the event that the Subtenant does
not so notify the Sublandlord in the manner and within the time set forth
herein, time being deemed of the essence, any right of the Subtenant to extend
the term of the Sublease shall be automatically terminated and, thereafter,
Sublandlord shall have no obligation or liability whatsoever to the Subtenant
regarding such Renewal Right and the Term of this Sublease shall automatically
expire at the expiration of the then current term. In the event that this
Sublease is terminated for any reason prior to the expiration of the then
current term, the obligations of the Sublandlord regarding such Renewal Right
and the right of the Subtenant to extend the term of the Sublease shall also
terminate and be of no further force and effect.
4. ADDITIONAL SUBLEASE RENTAL; NET SUBLEASE. In addition to the
Subtenant's obligation for payment of the rent, additional rent and other
charges under the Lease, as additional consideration to the Sublandlord for
entering into this Sublease, the Subtenant hereby covenants and agrees to pay to
the Sublandlord a fixed annual Rental of Sixty-Nine Thousand Dollars ($69,000).
The Additional Sublease Rental shall be paid in equal monthly installment
of Five Thousand Seven Hundred Fifty Dollars ($5,750) per month in advance
without demand, delay, set off or deduction of any nature or kind whatsoever on
or before the fifth (5th) day of each month. A partial month's payment of the
Additional Sublease Rental shall be due and payable on the Commencement Date if
the Commencement Date is other than the first day of a month. The
4
Additional Sublease Rental shall be paid to the Sublandlord at the address set
forth in the Notice section of this Sublease and time shall be deemed of the
essence with respect to such payments.
This Sublease is and shall be deemed and construed to be an absolutely net
Sublease and all payments to be made by the Subtenant pursuant to this Sublease
shall be net to the Sublandlord in each year during the Term. Subtenant shall
pay all costs, expenses and obligations of every kind whatsoever relating to the
Leased Property and does hereby indemnify, defend and hold Sublandlord harmless
of, from and against all such costs, expenses and obligations.
5. DEFAULT. Upon the nonpayment by Subtenant of any rent, additional
rent, or other payments when due, under the Lease or this Sublease or any
failure of Subtenant to perform any of its other covenants or agreements
required to be performed by Subtenant under the Lease or this Sublease, or any
default by Subtenant or any affiliate of Subtenant in the payment or performance
of any obligation under any other agreement, note or undertaking with
Sublandlord, after five (5) days written notice of any default in regard to
rent, additional rent, additional Sublease rental or any other indebtedness and
after ten (10) days written notice of any other default, Sublandlord shall have
all remedies available at law or in equity, including, without limitation, the
right, at its option, to reenter the Facility and take possession of the Leased
Property without terminating this Sublease, remove the Subtenant and all persons
holding under Subtenant from the Facility and retake possession of the Leased
Property, accelerate all rentals due hereunder for the remaining Term of this
Sublease, and/or to terminate this Sublease and reenter and repossess the
Facility and all the Leased Property; provided, however, that such reentry,
repossession and/or termination shall not constitute an acceptance or surrender
of this
5
Sublease or the Leased Property or a waiver of any of the Sublandlord's rights
or remedies, including without limitation, the right to relet the Leased
Property, or any part thereof, for the benefit of the Subtenant and to recover
all damages of every kind for Subtenant's default.
6. SUBTENANT INDEMNITY; INSURANCE; WAIVER OF SUBROGATION. Subtenant shall
indemnify, defend and hold Sublandlord and all affiliates and its parent company
harmless from any and all damages, costs, losses and expenses (including
reasonable attorney fees) resulting in any way from Subtenant's occupancy and/or
use of the Leased Property, or the breach of any obligation of Subtenant as set
out in the Lease or this Sublease. Subtenant shall carry, at Subtenant's
expense, insurance insuring the Leased Property in full compliance with all
applicable laws, rules, regulations governing the possession occupancy, and use
of the Leased Property as a skilled nursing facility. ("Insurance Obligations").
Subtenant shall also insure its fixtures, equipment, inventory and other
personal property located in, on or about the Facility in an amount at least
equal to the full replacement value thereof. No later than the Commencement Date
and thereafter on each anniversary date of the Commencement Date, Subtenant
shall provide Sublandlord with certificates evidencing the existence of such
insurance naming the Prime Landlord, Sublandlord and any lenders of the Prime
Landlord or the Sublandlord as additional named insureds, which certificates
shall require the insurance carrier to give the Prime Landlord and Sublandlord
at least thirty (30) days written notice of any cancellation or material
amendment to such insurance policies.
Sublandlord and Subtenant hereby waive any and all rights of recovery
against each other for any loss or damage to the Leased Property on account of
fire or other casualty or for injuries sustained on or about the Facility or the
Leased Property to the extent such loss or damage is or
6
would be covered by the insurance required to be carried by each party
hereunder, even if such coverage is not actually maintained. Such waiver shall
also apply to the extent of any deductible maintained by either party under its
insurance policies. It is understood that this waiver applies to any loss or
damage regardless of the cause, including, without limitation, if caused by the
negligence of Sublandlord, Subtenant or their respective employees, agents,
assigns or sublessees.
Notwithstanding anything contained herein to the contrary, the Subtenant
shall not be obligated to purchase the professional liability and/or medical
malpractice insurance described in the Lease.
7. USE; COMPLIANCE WITH LAW.
7.1 USE. The Leased Property shall be continuously occupied and used
solely by the Subtenant and solely for the operation of a nursing facility duly
licensed by the state of Texas for the level of care and the number of licensed
beds as of the Commencement Date and duly certified by the Medicare and Medicaid
programs and for no other purpose whatsoever.
7.2 COMPLIANCE. In addition to the obligations imposed under the
Lease, Subtenant shall obey, observe and promptly comply with all laws, rules,
regulations and ordinances which shall be applicable, now or at any time during
the Term, to the possession, use and occupancy of the Leased Property and the
operation of the Facility as a duly licensed Texas nursing facility at the level
of care and the number of licensed beds as of the Commencement Date. Subtenant
shall promptly comply with all laws, orders, rules, rulings and directives of
any governmental authority or agency having jurisdiction of the Facility and the
Leased Property.
7
Subtenant shall not store, use, discharge or dispose of any hazardous or toxic
substances, pollutants, contaminants or any other substances regulated by any
state or federal statute (collectively "Contaminants") on the Leased Property
other than in the ordinary course of its business. In addition to any
obligations imposed by the Lease, Subtenant shall be solely responsible for the
costs of removing or cleaning any Contaminants found on the Leased Property and
caused by Subtenant.
8. ASSIGNMENT AND SUBLETTING. Subtenant shall not have any right to, nor
shall Subtenant attempt to, assign its interest in this Sublease or any portion
thereof or any interest in the Leased Property or any portion thereof
voluntarily or by operation of law and shall not have any right to nor attempt
to sell, transfer, sublet or license all or any portion of the Leased Property
without the prior written consent of the Sublandlord and Prime Landlord.
Sublandlord's and the Prime Landlord's consent or approval may be granted or
withheld in their sole discretion. The transfer of fifty percent (50%) or more
of either the voting stock or membership interests held by Subtenant or its
affiliated entities whether in one or a series of transactions, shall be
considered a prohibited assignment, sale, transfer or subletting hereunder
requiring Sublandlord's and the Prime Landlord's prior written consent. Any
purported or attempted assignment, sale, transfer or subletting, without
Sublandlord's and the Prime Landlord's prior written consent, shall be null and
void and constitute a default by Subtenant under this Sublease. Any permitted
assignee or sublessee of Subtenant shall expressly assume Subtenant's
liabilities and obligations under this Sublease and the Lease. No assignment,
subleasing, sale, transfer or licensing shall release Subtenant from any of its
obligations under this Sublease or the Lease. Subtenant shall not mortgage or
otherwise encumber its leasehold
8
interest or the Leased Property without the prior written consent of Sublandlord
and the Prime Landlord which either or both may withhold in their sole
discretion. This Sublease shall not be construed as an assignment of
Sublandlord's interest in the Lease, and Subtenant shall not have the right to
negotiate any modification or amendments to the Lease.
9. INSPECTION; ALTERATIONS. Subtenant has inspected the Leased Property,
and is satisfied that the Leased Property is acceptable to Subtenant for all of
its purposes and uses, and accepts the same in "AS IS" condition, without any
warranties, representations or obligation from the Sublandlord or the Prime
Landlord to make any repairs, replacements, alterations, additions,
installations or improvements whatsoever. Subtenant shall not expand or make or
install any additions, renovations, alterations, improvements, or changes in or
to the Leased Property, or any part thereof without Sublandlord's and Prime
Landlord's prior written consent. Any permitted work shall be performed by the
Subtenant in a good and workmanlike manner at the sole expense of Subtenant.
Subtenant shall not permit, create, incur or impose or cause or suffer others to
permit, create, incur or impose any lien or other obligation against the Leased
Property or any interest therein by reason of any work upon the Leased Property,
and Subtenant shall indemnify, defend and hold Sublandlord and the Prime
Landlord harmless of and from any and all claims or demands by any contractor,
subcontractor, materialman, laborer or any other third person against the Leased
Property, Subtenant's interest in the Leased Property or any interest therein
relating to or arising because of any work performed thereon. As between
Sublandlord and Subtenant, any improvements or additions upon the Leased
Property at the expiration of this Sublease shall be deemed a part of the Leased
Property and be and remain the property of the Sublandlord.
9
10. TERMINATION. Notwithstanding anything contained herein to the
contrary, the existence of this Sublease is dependent and conditioned upon the
continued existence of the Lease, and in the event of the termination of the
Lease for any reason, this Sublease, at Sublandlord's option, shall thereupon be
terminated without the need for further action and without liability to
Sublandlord. If Subtenant is not in default under the terms and conditions
hereof, any such termination shall be without liability between Sublandlord and
Subtenant, except for such liability theretofore accruing or as otherwise
provided herein; however, if Subtenant is in default, the provisions hereof
including those of default shall control as to Subtenant's liability and shall
survive the termination of the Sublease.
11. SUBLANDLORD'S OBLIGATIONS. Sublandlord shall have no duty of any
nature or kind whatsoever to perform any obligations of the Prime Landlord under
the Lease and shall under no circumstances be responsible for or liable to
Subtenant for any default, failure or delay on the part of the Prime Landlord in
the performance of any obligations of the Prime Landlord under the Lease. No
such default of Prime Landlord shall affect this Sublease or waive or defer the
performance of any of Subtenant's obligations hereunder; provided, however, that
in the event of such default or failure by the Prime Landlord, Sublandlord
agrees, upon written notice from Subtenant, and at Subtenant's expense, to make
demand upon the Prime Landlord to perform its obligations under the Lease.
12. COSTS AND EXPENSES IN THE EVENT OF DEFAULT. Subtenant shall pay all
costs and expenses, including reasonable attorneys' fees, that may be incurred
by Sublandlord in enforcing the provisions of this Sublease or in enforcing
Prime Landlord's obligations under the Lease if requested to do so by Subtenant.
10
13. LATE PAYMENT CHARGE. In the event any amounts due from Subtenant under
this Sublease are not paid when due, such amounts shall bear interest from and
after the due date to the date of payment in full at an annual rate of eighteen
percent (18%).
14. NOTICES. Any notice, demand, request, consent, approval or
communication that either party desires or is required to give to the other
party or any other person hereunder shall be in writing and shall be deemed to
be properly served if (i) sent by certified mail with return receipt requested,
(ii) sent by receipted overnight delivery service, or (iii) personally delivered
to the address set forth below. The effective date of any such notice shall be
the date which is stamped by the United States Post Office on the envelope
enclosing same, the date of the receipt for the overnight delivery or the date
on which personal delivery is made, whichever is applicable. Any notice sent by
Subtenant to Prime Landlord shall also be sent concurrently to Sublandlord.
Until changed by written notice from the appropriate party to the other, the
addresses of the parties are as follows:
(a) Sublandlord: Extendicare Homes, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
Copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
11
(b) Subtenant: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Copy to: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
15. ACCORD AND SATISFACTION. No payment by Subtenant or receipt by
Sublandlord of a lesser amount than the full amount of any payments to be made
by Subtenant hereunder shall be deemed to be other than on account of the
earliest stipulated unpaid installment thereof, and no endorsement or statement
on any check or letter accompanying any check or payment shall be deemed to be
an accord and satisfaction, and Sublandlord may accept such check or payment
without prejudice of Sublandlord's right to recover the full amount due
hereunder or pursue any other remedy available to Sublandlord.
16. ENTIRE AGREEMENT. This Sublease and all exhibits referred to herein
constitutes the entire agreement and understanding of the parties with respect
to the matters contained in this Sublease and supersedes all other agreements
between and representations by the parties with respect to such matters.
Subtenant is not relying upon any representations, market analysis, projections,
reports or warranties of the Sublandlord or the Prime Landlord.
17. MODIFICATIONS. No changes, amendments or modifications of this
Sublease shall be effective or enforceable unless made in writing and executed
by the parties hereto and the Prime Landlord.
12
18. CONSENTS. Whenever Sublandlord's consent is required by the terms of
this Sublease, Prime Landlord's consent shall also be obtained if so required by
the terms of the Lease or this Sublease. The consent by Sublandlord or Prime
Landlord to any act by Subtenant requiring Sublandlord's or Prime Landlord's
consent shall not waive or render unnecessary Sublandlord's consent to any
subsequent similar act by Subtenant.
19. MULTIPLE ORIGINALS. This Sublease may be executed simultaneously in
multiple originals, each of which shall be deemed an original, without the
production of the other such originals.
20. AUTHORITY. The individuals executing this Sublease on behalf of the
Sublandlord and Subtenant respectively represent and warrant to the other that
their respective entities are in good standing under the laws of the state in
which the Leased Property is located and they have full right and authority to
enter into the Sublease, bind their respective entities to the performance of
their obligations hereunder.
21. ENTRY BY SUBLANDLORD. Sublandlord and its representatives shall have
the right, at all reasonable times, to enter upon the Leased Property for the
purposes of examining and inspecting the same; provided, however, this section
shall not be construed as imposing any obligation upon Sublandlord to inspect
the Leased Property.
22. NON-WAIVER. Any assent, expressed or implied, by Sublandlord to any
breach of any covenant or condition herein contained shall not be construed as
an assent or waiver of any such covenant or condition generally or of any
subsequent breach thereof.
23. RELATIONSHIP OF PARTIES. Nothing contained herein shall be deemed or
construed to create a joint venture or partnership relationship between
Sublandlord and Subtenant.
13
24. INTERPRETATION. This Sublease shall be interpreted in a fair and
impartial manner without regard to such factors as the party that drafted this
Sublease or the relative bargaining power of the parties.
25. SUBLANDLORD'S INDEMNITY. The Sublandlord covenants and agrees to
defend, indemnify and hold Subtenant harmless from any liabilities incurred with
respect to the Leased Property and the operation thereof by the Sublandlord
prior to the Commencement Date of this Sublease except to the extent such
liabilities have been assumed by Subtenant pursuant to this Sublease or other
written agreement.
26. PERSONAL PROPERTY. In addition to the obligations of the Subtenant
pursuant to the Prime Lease, the Subtenant shall repair, replace and improve the
personal property and equipment used in the operation of the Leased Property as
a skilled care nursing facility in order to provide the quality of care
presently provided to the residents of the Facility and as is required by the
laws and regulations of the state of Texas and the Medicare and Medicaid
programs. To the extent that the Subtenant replaces any existing personal
property and equipment with new personal property and equipment during the Term
such personal property and equipment shall be of the same or better quality as
currently exists (the "Replacement Property"). Such Replacement Property shall,
upon installation and delivery to the Facility, become the property of the
Sublandlord and shall remain at the Facility upon the expiration or earlier
termination of the Sublease. Subtenant shall execute and deliver to the
Sublandlord upon expiration or termination of this Sublease any including
without limitation bills of sale and title transfer documents relating to such
Replacement Property. There shall be no liens, security interests or other
encumbrances placed on such Replacement Property.
14
27. CONDITIONS TO COMMENCEMENT DATE. The Commencement Date of this
Sublease and the obligations of the parties shall be conditioned upon the
fulfillment or waiver, in writing, of the following conditions: (a) the
execution and delivery by the Prime Landlord of the consent to this Sublease on
or prior to the Commencement Date and compliance with any conditions set forth
therein which the Prime Landlord requires be fulfilled prior to the Commencement
Date; and (b) the Subtenant being licensed by the state of Texas to operate the
facility at the level of care and for the number of beds currently licensed; and
(c) the Subtenant obtaining the approval of the Medicare and Medicaid program
certifying the Subtenant as a provider under such programs.
28. ADDITIONAL INFORMATION TO BE FURNISHED BY SUBTENANT. In addition to
the financial and other information required to be provided to the Prime
Landlord pursuant to the Lease, (a copy of which shall be provided concurrently
to the Sublandlord) the Subtenant shall provide to the Sublandlord the following
information at the times and in the formats described below:
28.1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS. Within 90 days after
the end of each of Subtenant's fiscal years, a copy of the audited (if
available, otherwise unaudited with the audited statements to be provided when
available) consolidated balance sheets of Subtenant and its consolidated
subsidiaries as of the end of such fiscal year, and related audited (if
available, otherwise unaudited) consolidated statements of income, changes in
common stock and undistributed profits and changes in financial position of
Subtenant and its consolidated subsidiaries for such fiscal year, prepared in
accordance with generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved.
15
28.2 OFFICER'S CERTIFICATE. Within 90 days after the end of each of
Subtenant's fiscal years, and together with the documents furnished in
accordance with section 29.1, an officer's certificate stating that to the best
of such officer's knowledge and belief after making due inquiry, Subtenant is
not in default in the performance or observance of any of the terms of this
Sublease, or if Tenant shall be in default to such officer's knowledge,
specifying all such defaults, the nature thereof, and the steps being taken to
remedy the same;
28.3 CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS. Within 30 days after
the end of each of Subtenant's quarters, quarterly consolidated financial
reports Subtenant produces for reporting purposes and detailed statements of
income and detailed operational statistics regarding occupancy rates, patient
mix and patient rates by type for the Facility; and
28.4 COST REPORTS. Within 90 days after the end of each of Subtenant's
fiscal years, a copy of each Medicare and Medicaid cost report filed with the
appropriate governmental agency for the Facility (and all amendments thereto
whether contemporaneously or subsequently filed thereto);
28.5 SURVEYS AND INVESTIGATIONS INFORMATION.. Within seventy two (72)
hours of receipt a copy of any licensing or other agency survey or report and
any statement of deficiencies and/or any other report indicating that any action
is pending or being considered to downgrade the Facility to a substandard
category, and within the time period required by the particular agency for
furnishing a plan of correction also furnish or cause to be furnished to
Sublandlord a copy of the plan of correction or other response generated as a
result of such survey or report for the Facility, and correct or cause to be
corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in any applicable
16
reimbursement program. Copies of any notices from any governmental agency
relating to an investigation of Subtenant's operations at the Facility including
without limitation HCFA, the OIG, the FBI, the State Medicaid Fraud division,
and any plan of correction responding thereto; and
28.6 ADDITIONAL INFORMATION. The Sublandlord further reserves the
right to require such other information relating to the financial affairs or
operations of the Subtenant and the Facility at such other times as Sublandlord
shall reasonably require (including monthly or more frequently), and Subtenant
agrees to provide such information to Sublandlord within five (5) business days
from request. All financial statements must be in such form and detail as the
Sublandlord shall from time to time reasonably request, provided, however, that
Sublandlord will make reasonable efforts to use Subtenant's existing forms of
reports for all purposes.
29. CROSS DEFAULT. The parties acknowledge that they are, concurrently
herewith, entering into Additional Sublease Agreements and certain Lease
Agreements relating to skilled care nursing facilities in the state of Texas
specifically described on the attached EXHIBIT D (the "Texas Sublease and
Leases"). The parties covenant and agree that in the event of a default by the
Subtenant pursuant to this Sublease the Sublandlord shall have the right and
option to declare a default in the other Texas Subleases and Leases and shall
have all available remedies, including, without limitation, the right to
terminate such Texas Subleases and Leases.
30. ESTOPPEL CERTIFICATE. At any time during the Term and from time to
time upon the request of the Sublandlord the Subtenant shall deliver to the
Sublandlord or Sublandlord's lender within ten (10) business days from receipt
of such request an estoppel certificate signed by an officer of the Subtenant
certifying that this Sublease is unmodified and in full force and
17
effect (or is in full force and effect as modified and setting forth the
modifications) that neither Sublandlord nor Subtenant are in default of the
Sublease or if such default exists setting forth such default and the dates to
which the payments due pursuant to this Sublease and the Lease have been paid.
31. TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Sublandlord's option, Subtenant shall use its best
efforts to transfer to Sublandlord or Sublandlord's nominee, and Subtenant shall
cooperate with Sublandlord or Sublandlord's nominee in connection with the
processing by Sublandlord or Sublandlord's nominee of, any applications for all
licenses, operating permits and other governmental authorization and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary for the operations of the Facility; provided that the
costs and expenses of any such transfer or the processing of any such
application shall be paid by Sublandlord or Sublandlord's nominee.
Notwithstanding anything in this Sublease or elsewhere to the contrary, under no
circumstances shall Sublandlord be obligated to seek or effectuate such a
transfer or application therefore.
18
IN WITNESS WHEREOF, the parties have caused this Sublease to be executed
and their respective corporate seals, if any, to be hereunto affixed and
attested by their respective officers thereunto duly authorized.
Sublandlord: Subtenant:
Extendicare Homes, Inc. Senior Health-Texoma, LLC
By:
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------- ---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Its: Senior Vice President
State of Wisconsin State of Pennsylvania
County of Milwaukee County of Philadelphia
The foregoing instrument was acknowledged The foregoing instrument was acknowledged
before me this 25th day of September, 2001 before me this 26th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Vice President of by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President on behalf of the
Extendicare Homes, Inc. corporation.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------- ---------------------------------
Notary Public, State of Wisconsin Notary Public, State of Pennsylvania
My commission expires 11-2-2003. My commission expires: 10-31-02
[Notarial Seal] [Notarial Seal]
19
SUBLEASE
EXTENDICARE HOMES, INC.
LANDLORD
AND
SENIOR HEALTH-TULIA, LLC
TENANT
DATED AS OF October 1, 2001
--------------------------------------
Facility:
Tulia Health and Rehabilitation Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇
--------------------------------------
1
TABLE OF CONTENTS
PAGE
----
1. Leased Property: Rental Payments.........................................2
2. Subtenant Obligations.....................................................2
3. Term: Renewal.............................................................3
3.1 Term...........................................................3
3.2 Renewal of Extension of Term...................................3
4. Additional Sublease Rental; Net Sublease..................................4
5. Default...................................................................5
6. Subtenant Indemnity; Insurance; Waiver of Subrogation.....................6
7. Use; Compliance with Law..................................................7
7.1 Use............................................................7
7.2 Compliance.....................................................7
8. Assignment and Subletting.................................................8
9. Inspection; Alterations...................................................9
10. Termination..............................................................10
11. Sublandlord's Obligations................................................10
12. Costs and Expenses in the Event of Default...............................10
13. Late Payment Charge......................................................11
14. Notices..................................................................11
15. Accord and Satisfaction..................................................12
16. Entire Agreement.........................................................12
17. Modifications............................................................12
18. Consents.................................................................13
19. Multiple Originals.......................................................13
20. Authority................................................................13
21. Entry by Sublandlord.....................................................13
22. Non-Waiver...............................................................13
23. Relationship of Parties..................................................13
24. Interpretation...........................................................14
25. Sublandlord's Indemnity..................................................14
26. Personal Property........................................................14
i
TABLE OF CONTENTS
(continued)
PAGE
----
27. Conditions to Commencement Date..........................................15
28. Additional Information to be Furnished by Subtenant......................15
28.1 Consolidated Annual Financial Statements......................15
28.2 Officer's Certificate.........................................16
28.3 Consolidated Quarterly Financial Statements...................16
28.4 Cost Reports..................................................16
28.5 Surveys and Investigations Information........................16
28.6 Additional Information........................................17
29. Cross Default............................................................17
30. Estoppel Certificate.....................................................17
31. Transfers of Licenses Upon Termination...................................18
ii
EXHIBITS
EXHIBITS
A. Lease
B. Texas Sublease & Leases
SUBLEASE AGREEMENT
THIS SUBLEASE (the "Sublease") is entered into as of the 1st day of
October, 2001 by and between Extendicare Homes, Inc. (f/k/a Unicare Homes, Inc),
a Delaware corporation, having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Sublandlord") and Senior Health-Tulia, LLC, a Texas
limited liability company, having its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Subtenant").
RECITALS:
The Sublandlord, as tenant, entered into a lease agreement with Triple S
Investment Company, a Wisconsin general partnership, Milwaukee, WI as the
Landlord which has been modified from time to time (the "Prime Landlord") for
the lease of the real and personal property generally described as the Tulia
Health and Rehabilitation Center nursing facility (the "Facility") located at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇. (The real and personal property being sublet
pursuant to this Sublease is all of the Leased Property described in the Prime
Lease and is hereafter referred to as the "Leased Property"). A copy of the
Prime Lease including all exhibits, modifications and amendments thereto is
attached hereto as Exhibit A and incorporated herein by reference. The lease
including all exhibits, modifications and amendments thereto is referred to
herein as either the "Lease" or the "Prime Lease".
The Sublandlord desires to sublet the entire Leased Property to the
Subtenant and the Subtenant desires to sublet the entire Leased Property from
the Sublandlord pursuant to the terms, covenants and conditions set forth in
this Sublease.
NOW, THEREFORE, in consideration of the terms, covenants, conditions and
agreements contained herein and in any exhibits attached hereto, the Sublandlord
and the Subtenant (hereafter collectively referred to as the "parties") agree as
follows:
1. LEASED PROPERTY: RENTAL PAYMENTS. Sublandlord hereby subleases to
Subtenant, and Subtenant hereby subleases from Sublandlord, the Leased Property
subject to all terms, covenants and conditions contained in the Lease, except as
otherwise set forth in this Sublease. To the extent not inconsistent with this
Sublease, the terms of the Lease are hereby incorporated into this Sublease by
reference. Sublandlord shall have all of the rights of the Prime Landlord under
the Lease. In no event shall the Subtenant have the right to receive any
payments due from the Prime Landlord to the Sublandlord under the Lease.
2. SUBTENANT OBLIGATIONS. The Subtenant hereby covenants and agrees to
observe and perform each and every term, covenant, promise, condition and
obligation, imposed upon the Sublandlord, as tenant, under the Lease including
without limitation, the payment obligations of the Sublandlord, as tenant, under
the Lease. Such payment obligations of the Subtenant shall include without
limitation the payment, in the amounts and at the times called for in the
Lease, of all rental, additional rental, taxes, assessments, late charges,
license and permit fees, utilities, governmental charges, insurance premiums,
and capital improvement commitments. The Subtenant's obligations to perform the
terms, covenants and conditions described in the Lease are in addition to any
and all additional obligations of the Subtenant set forth in this Sublease
including any and all additional obligations for payment and performance. It is
the intent of the parties that on and after the Commencement Date, the
Sublandlord shall have absolutely no liability for the performance of the
tenant's obligations under the Lease and that all such
2
obligations are hereby assumed and shall be performed by the Subtenant. The
Subtenant shall make payments due under the Lease directly to the Prime Landlord
on or prior to the due date therefore and shall provide evidence of such payment
to the Sublandlord concurrently with delivering such payment to the Prime
Landlord.
3. TERM: RENEWAL.
3.1 TERM. The term of this Sublease shall be for the period beginning
on October 1, 2001 (the "Commencement Date") and ending at 11:59 p.m. on the
date of expiration of such Lease (the "Expiration Date") unless sooner
terminated pursuant to the provisions of this Sublease (the "Term").
Notwithstanding any provision herein to the contrary, this Sublease shall
automatically terminate upon the expiration or earlier termination of the Lease
for any reason or as provided in this Sublease.
3.2 RENEWAL OF EXTENSION OF TERM. If, at the end of the then-current
term of the Lease the Prime Landlord offers or agrees to renew or extend the
term of the Lease, (the "Renewal Right") the Sublandlord agrees to offer to the
Subtenant the right to renew or extend the term of this Sublease on the terms,
covenants and conditions as such Renewal Right has been offered to the
Sublandlord provided that the Prime Landlord consents to the renewal or
extension of this Sublease. The renewal or extension of this Sublease shall also
include the terms, covenants and conditions of this Sublease including without
limitation the terms relating to the payment of Additional Sublease Rental which
shall be negotiated and agreed upon between the parties to this Sublease and
included in any modification of this Sublease. If the Subtenant desires to renew
or extend the term of this Sublease, it shall so notify the Sublandlord in
writing, at least (10) business days prior to the time that the Sublandlord has
been given to exercise such
3
Renewal Right with the Prime Landlord. The Sublandlord and the Subtenant shall
execute a modification of this Sublease in form and substance satisfactory to
the Sublandlord reflecting such extension. In the event that the Subtenant does
not so notify the Sublandlord in the manner and within the time set forth
herein, time being deemed of the essence, any right of the Subtenant to extend
the term of the Sublease shall be automatically terminated and, thereafter,
Sublandlord shall have no obligation or liability whatsoever to the Subtenant
regarding such Renewal Right and the Term of this Sublease shall automatically
expire at the expiration of the then current term. In the event that this
Sublease is terminated for any reason prior to the expiration of the then
current term, the obligations of the Sublandlord regarding such Renewal Right
and the right of the Subtenant to extend the term of the Sublease shall also
terminate and be of no further force and effect.
4. ADDITIONAL SUBLEASE RENTAL; NET SUBLEASE. In addition to the
Subtenant's obligation for payment of the rent, additional rent and other
charges under the Lease, as additional consideration to the Sublandlord for
entering into this Sublease, the Subtenant hereby covenants and agrees to pay to
the Sublandlord a fixed annual Rental of -0- Dollars ($-0-).
The Additional Sublease Rental shall be paid in equal monthly installment
of -0- Dollars ($-0-) per month in advance without demand, delay, set off or
deduction of any nature or kind whatsoever on or before the fifth (5th) day of
each month. A partial month's payment of the Additional Sublease Rental shall be
due and payable on the Commencement Date if the Commencement Date is other than
the first day of a month. The Additional Sublease Rental shall be paid to the
Sublandlord at the address set forth in the Notice section of this Sublease and
time shall be deemed of the essence with respect to such payments.
4
This Sublease is and shall be deemed and construed to be an absolutely net
Sublease and all payments to be made by the Subtenant pursuant to this Sublease
shall be net to the Sublandlord in each year during the Term. Subtenant shall
pay all costs, expenses and obligations of every kind whatsoever relating to the
Leased Property and does hereby indemnify, defend and hold Sublandlord harmless
of, from and against all such costs, expenses and obligations.
5. DEFAULT. Upon the nonpayment by Subtenant of any rent, additional
rent, or other payments when due, under the Lease or this Sublease or any
failure of Subtenant to perform any of its other covenants or agreements
required to be performed by Subtenant under the Lease or this Sublease, or any
default by Subtenant or any affiliate of Subtenant in the payment or performance
of any obligation under any other agreement, note or undertaking with
Sublandlord, after five (5) days written notice of any default in regard to
rent, additional rent, additional Sublease rental or any other indebtedness and
after ten (10) days written notice of any other default, Sublandlord shall have
all remedies available at law or in equity, including, without limitation, the
right, at its option, to reenter the Facility and take possession of the Leased
Property without terminating this Sublease, remove the Subtenant and all persons
holding under Subtenant from the Facility and retake possession of the Leased
Property, accelerate all rentals due hereunder for the remaining Term of this
Sublease, and/or to terminate this Sublease and reenter and repossess the
Facility and all the Leased Property; provided, however, that such reentry,
repossession and/or termination shall not constitute an acceptance or surrender
of this Sublease or the Leased Property or a waiver of any of the Sublandlord's
rights or remedies,
5
including without limitation, the right to relet the Leased Property, or any
part thereof, for the benefit of the Subtenant and to recover all damages of
every kind for Subtenant's default.
6. SUBTENANT INDEMNITY; INSURANCE; WAIVER OF SUBROGATION. Subtenant shall
indemnify, defend and hold Sublandlord and all affiliates and its parent company
harmless from any and all damages, costs, losses and expenses (including
reasonable attorney fees) resulting in any way from Subtenant's occupancy and/or
use of the Leased Property, or the breach of any obligation of Subtenant as set
out in the Lease or this Sublease. Subtenant shall carry, at Subtenant's
expense, insurance insuring the Leased Property in full compliance with all
applicable laws, rules, regulations governing the possession occupancy, and use
of the Leased Property as a skilled nursing facility. ("Insurance Obligations").
Subtenant shall also insure its fixtures, equipment, inventory and other
personal property located in, on or about the Facility in an amount at least
equal to the full replacement value thereof. No later than the Commencement Date
and thereafter on each anniversary date of the Commencement Date, Subtenant
shall provide Sublandlord with certificates evidencing the existence of such
insurance naming the Prime Landlord, Sublandlord and any lenders of the Prime
Landlord or the Sublandlord as additional named insureds, which certificates
shall require the insurance carrier to give the Prime Landlord and Sublandlord
at least thirty (30) days written notice of any cancellation or material
amendment to such insurance policies.
Sublandlord and Subtenant hereby waive any and all rights of recovery
against each other for any loss or damage to the Leased Property on account of
fire or other casualty or for injuries sustained on or about the Facility or the
Leased Property to the extent such loss or damage is or would be covered by the
insurance required to be carried by each party hereunder, even if such
6
coverage is not actually maintained. Such waiver shall also apply to the extent
of any deductible maintained by either party under its insurance policies. It is
understood that this waiver applies to any loss or damage regardless of the
cause, including, without limitation, if caused by the negligence of
Sublandlord, Subtenant or their respective employees, agents, assigns or
sublessees.
Notwithstanding anything contained herein to the contrary, the Subtenant
shall not be obligated to purchase the professional liability and/or medical
malpractice insurance described in the Lease.
7. USE; COMPLIANCE WITH LAW.
7.1 USE. The Leased Property shall be continuously occupied and used
solely by the Subtenant and solely for the operation of a nursing facility duly
licensed by the state of Texas for the level of care and the number of licensed
beds as of the Commencement Date and duly certified by the Medicare and Medicaid
programs and for no other purpose whatsoever.
7.2 COMPLIANCE. In addition to the obligations imposed under the
Lease, Subtenant shall obey, observe and promptly comply with all laws, rules,
regulations and ordinances which shall be applicable, now or at any time during
the Term, to the possession, use and occupancy of the Leased Property and the
operation of the Facility as a duly licensed Texas nursing facility at the level
of care and the number of licensed beds as of the Commencement Date. Subtenant
shall promptly comply with all laws, orders, rules, rulings and directives of
any governmental authority or agency having jurisdiction of the Facility and the
Leased Property. Subtenant shall not store, use, discharge or dispose of any
hazardous or toxic substances,
7
pollutants, contaminants or any other substances regulated by any state or
federal statute (collectively "Contaminants") on the Leased Property other than
in the ordinary course of its business. In addition to any obligations imposed
by the Lease, Subtenant shall be solely responsible for the costs of removing or
cleaning any Contaminants found on the Leased Property and caused by Subtenant.
8. ASSIGNMENT AND SUBLETTING. Subtenant shall not have any right to, nor
shall Subtenant attempt to, assign its interest in this Sublease or any portion
thereof or any interest in the Leased Property or any portion thereof
voluntarily or by operation of law and shall not have any right to nor attempt
to sell, transfer, sublet or license all or any portion of the Leased Property
without the prior written consent of the Sublandlord and Prime Landlord.
Sublandlord's and the Prime Landlord's consent or approval may be granted or
withheld in their sole discretion. The transfer of fifty percent (50%) or more
of either the voting stock or membership interests held by Subtenant or its
affiliated entities whether in one or a series of transactions, shall be
considered a prohibited assignment, sale, transfer or subletting hereunder
requiring Sublandlord's and the Prime Landlord's prior written consent. Any
purported or attempted assignment, sale, transfer or subletting, without
Sublandlord's and the Prime Landlord's prior written consent, shall be null and
void and constitute a default by Subtenant under this Sublease. Any permitted
assignee or sublessee of Subtenant shall expressly assume Subtenant's
liabilities and obligations under this Sublease and the Lease. No assignment,
subleasing, sale, transfer or licensing shall release Subtenant from any of its
obligations under this Sublease or the Lease. Subtenant shall not mortgage or
otherwise encumber its leasehold interest or the Leased Property without the
prior written consent of Sublandlord and the Prime
8
Landlord which either or both may withhold in their sole discretion. This
Sublease shall not be construed as an assignment of Sublandlord's interest in
the Lease, and Subtenant shall not have the right to negotiate any modification
or amendments to the Lease.
9. INSPECTION; ALTERATIONS. Subtenant has inspected the Leased Property,
and is satisfied that the Leased Property is acceptable to Subtenant for all of
its purposes and uses, and accepts the same in "AS IS" condition, without any
warranties, representations or obligation from the Sublandlord or the Prime
Landlord to make any repairs, replacements, alterations, additions,
installations or improvements whatsoever. Subtenant shall not expand or make or
install any additions, renovations, alterations, improvements, or changes in or
to the Leased Property, or any part thereof without Sublandlord's and Prime
Landlord's prior written consent. Any permitted work shall be performed by the
Subtenant in a good and workmanlike manner at the sole expense of Subtenant.
Subtenant shall not permit, create, incur or impose or cause or suffer others to
permit, create, incur or impose any lien or other obligation against the Leased
Property or any interest therein by reason of any work upon the Leased Property,
and Subtenant shall indemnify, defend and hold Sublandlord and the Prime
Landlord harmless of and from any and all claims or demands by any contractor,
subcontractor, materialman, laborer or any other third person against the Leased
Property, Subtenant's interest in the Leased Property or any interest therein
relating to or arising because of any work performed thereon. As between
Sublandlord and Subtenant, any improvements or additions upon the Leased
Property at the expiration of this Sublease shall be deemed a part of the Leased
Property and be and remain the property of the Sublandlord.
9
10. TERMINATION. Notwithstanding anything contained herein to the
contrary, the existence of this Sublease is dependent and conditioned upon the
continued existence of the Lease, and in the event of the termination of the
Lease for any reason, this Sublease, at Sublandlord's option, shall thereupon be
terminated without the need for further action and without liability to
Sublandlord. If Subtenant is not in default under the terms and conditions
hereof, any such termination shall be without liability between Sublandlord and
Subtenant, except for such liability theretofore accruing or as otherwise
provided herein; however, if Subtenant is in default, the provisions hereof
including those of default shall control as to Subtenant's liability and shall
survive the termination of the Sublease.
11. SUBLANDLORD'S OBLIGATIONS. Sublandlord shall have no duty of any
nature or kind whatsoever to perform any obligations of the Prime Landlord under
the Lease and shall under no circumstances be responsible for or liable to
Subtenant for any default, failure or delay on the part of the Prime Landlord in
the performance of any obligations of the Prime Landlord under the Lease. No
such default of Prime Landlord shall affect this Sublease or waive or defer the
performance of any of Subtenant's obligations hereunder; provided, however, that
in the event of such default or failure by the Prime Landlord, Sublandlord
agrees, upon written notice from Subtenant, and at Subtenant's expense, to make
demand upon the Prime Landlord to perform its obligations under the Lease.
12. COSTS AND EXPENSES IN THE EVENT OF DEFAULT. Subtenant shall pay all
costs and expenses, including reasonable attorneys' fees, that may be incurred
by Sublandlord in enforcing the provisions of this Sublease or in enforcing
Prime Landlord's obligations under the Lease if requested to do so by Subtenant.
10
13. LATE PAYMENT CHARGE. In the event any amounts due from Subtenant under
this Sublease are not paid when due, such amounts shall bear interest from and
after the due date to the date of payment in full at an annual rate of eighteen
percent (18%).
14. NOTICES. Any notice, demand, request, consent, approval or
communication that either party desires or is required to give to the other
party or any other person hereunder shall be in writing and shall be deemed to
be properly served if (i) sent by certified mail with return receipt requested,
(ii) sent by receipted overnight delivery service, or (iii) personally delivered
to the address set forth below. The effective date of any such notice shall be
the date which is stamped by the United States Post Office on the envelope
enclosing same, the date of the receipt for the overnight delivery or the date
on which personal delivery is made, whichever is applicable. Any notice sent by
Subtenant to Prime Landlord shall also be sent concurrently to Sublandlord.
Until changed by written notice from the appropriate party to the other, the
addresses of the parties are as follows:
(a) Sublandlord: Extendicare Homes, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
Copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
11
(b) Subtenant: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Copy to: Blank Rome Comisky & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
15. ACCORD AND SATISFACTION. No payment by Subtenant or receipt by
Sublandlord of a lesser amount than the full amount of any payments to be made
by Subtenant hereunder shall be deemed to be other than on account of the
earliest stipulated unpaid installment thereof, and no endorsement or statement
on any check or letter accompanying any check or payment shall be deemed to be
an accord and satisfaction, and Sublandlord may accept such check or payment
without prejudice of Sublandlord's right to recover the full amount due
hereunder or pursue any other remedy available to Sublandlord.
16. ENTIRE AGREEMENT. This Sublease and all exhibits referred to herein
constitutes the entire agreement and understanding of the parties with respect
to the matters contained in this Sublease and supersedes all other agreements
between and representations by the parties with respect to such matters.
Subtenant is not relying upon any representations, market analysis, projections,
reports or warranties of the Sublandlord or the Prime Landlord.
17. MODIFICATIONS. No changes, amendments or modifications of this
Sublease shall be effective or enforceable unless made in writing and executed
by the parties hereto and the Prime Landlord.
12
18. CONSENTS. Whenever Sublandlord's consent is required by the terms of
this Sublease, Prime Landlord's consent shall also be obtained if so required by
the terms of the Lease or this Sublease. The consent by Sublandlord or Prime
Landlord to any act by Subtenant requiring Sublandlord's or Prime Landlord's
consent shall not waive or render unnecessary Sublandlord's consent to any
subsequent similar act by Subtenant.
19. MULTIPLE ORIGINALS. This Sublease may be executed simultaneously in
multiple originals, each of which shall be deemed an original, without the
production of the other such originals.
20. AUTHORITY. The individuals executing this Sublease on behalf of the
Sublandlord and Subtenant respectively represent and warrant to the other that
their respective entities are in good standing under the laws of the state in
which the Leased Property is located and they have full right and authority to
enter into the Sublease, bind their respective entities to the performance of
their obligations hereunder.
21. ENTRY BY SUBLANDLORD. Sublandlord and its representatives shall have
the right, at all reasonable times, to enter upon the Leased Property for the
purposes of examining and inspecting the same; provided, however, this section
shall not be construed as imposing any obligation upon Sublandlord to inspect
the Leased Property.
22. NON-WAIVER. Any assent, expressed or implied, by Sublandlord to any
breach of any covenant or condition herein contained shall not be construed as
an assent or waiver of any such covenant or condition generally or of any
subsequent breach thereof.
23. RELATIONSHIP OF PARTIES. Nothing contained herein shall be deemed or
construed to create a joint venture or partnership relationship between
Sublandlord and Subtenant.
13
24. INTERPRETATION. This Sublease shall be interpreted in a fair and
impartial manner without regard to such factors as the party that drafted this
Sublease or the relative bargaining power of the parties.
25. SUBLANDLORD'S INDEMNITY. The Sublandlord covenants and agrees to
defend, indemnify and hold Subtenant harmless from any liabilities incurred with
respect to the Leased Property and the operation thereof by the Sublandlord
prior to the Commencement Date of this Sublease except to the extent such
liabilities have been assumed by Subtenant pursuant to this Sublease or other
written agreement.
26. PERSONAL PROPERTY. In addition to the obligations of the Subtenant
pursuant to the Prime Lease, the Subtenant shall repair, replace and improve the
personal property and equipment used in the operation of the Leased Property as
a skilled care nursing facility in order to provide the quality of care
presently provided to the residents of the Facility and as is required by the
laws and regulations of the state of Texas and the Medicare and Medicaid
programs. To the extent that the Subtenant replaces any existing personal
property and equipment with new personal property and equipment during the Term
such personal property and equipment shall be of the same or better quality as
currently exists (the "Replacement Property"). Such Replacement Property shall,
upon installation and delivery to the Facility, become the property of the
Sublandlord and shall remain at the Facility upon the expiration or earlier
termination of the Sublease. Subtenant shall execute and deliver to the
Sublandlord upon expiration or termination of this Sublease any including
without limitation bills of sale and title transfer documents relating to such
Replacement Property. There shall be no liens, security interests or other
encumbrances placed on such Replacement Property.
14
27. CONDITIONS TO COMMENCEMENT DATE. The Commencement Date of this
Sublease and the obligations of the parties shall be conditioned upon the
fulfillment or waiver, in writing, of the following conditions: (a) the
execution and delivery by the Prime Landlord of the consent to this Sublease on
or prior to the Commencement Date and compliance with any conditions set forth
therein which the Prime Landlord requires be fulfilled prior to the Commencement
Date; and (b) the Subtenant being licensed by the state of Texas to operate the
facility at the level of care and for the number of beds currently licensed; and
(c) the Subtenant obtaining the approval of the Medicare and Medicaid program
certifying the Subtenant as a provider under such programs.
28. ADDITIONAL INFORMATION TO BE FURNISHED BY SUBTENANT. In addition to
the financial and other information required to be provided to the Prime
Landlord pursuant to the Lease, (a copy of which shall be provided concurrently
to the Sublandlord) the Subtenant shall provide to the Sublandlord the following
information at the times and in the formats described below:
28.1 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS. Within 90 days after
the end of each of Subtenant's fiscal years, a copy of the audited (if
available, otherwise unaudited with the audited statements to be provided when
available) consolidated balance sheets of Subtenant and its consolidated
subsidiaries as of the end of such fiscal year, and related audited (if
available, otherwise unaudited) consolidated statements of income, changes in
common stock and undistributed profits and changes in financial position of
Subtenant and its consolidated subsidiaries for such fiscal year, prepared in
accordance with generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved.
15
28.2 OFFICER'S CERTIFICATE. Within 90 days after the end of each of
Subtenant's fiscal years, and together with the documents furnished in
accordance with section 29.1, an officer's certificate stating that to the best
of such officer's knowledge and belief after making due inquiry, Subtenant is
not in default in the performance or observance of any of the terms of this
Sublease, or if Tenant shall be in default to such officer's knowledge,
specifying all such defaults, the nature thereof, and the steps being taken to
remedy the same;
28.3 CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS. Within 30 days after
the end of each of Subtenant's quarters, quarterly consolidated financial
reports Subtenant produces for reporting purposes and detailed statements of
income and detailed operational statistics regarding occupancy rates, patient
mix and patient rates by type for the Facility; and
28.4 COST REPORTS. Within 90 days after the end of each of Subtenant's
fiscal years, a copy of each Medicare and Medicaid cost report filed with the
appropriate governmental agency for the Facility (and all amendments thereto
whether contemporaneously or subsequently filed thereto);
28.5 SURVEYS AND INVESTIGATIONS INFORMATION. Within seventy two (72)
hours of receipt a copy of any licensing or other agency survey or report and
any statement of deficiencies and/or any other report indicating that any action
is pending or being considered to downgrade the Facility to a substandard
category, and within the time period required by the particular agency for
furnishing a plan of correction also furnish or cause to be furnished to
Sublandlord a copy of the plan of correction or other response generated as a
result of such survey or report for the Facility, and correct or cause to be
corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in any applicable
16
reimbursement program. Copies of any notices from any governmental agency
relating to an investigation of Subtenant's operations at the Facility including
without limitation HCFA, the OIG, the FBI, the State Medicaid Fraud division,
and any plan of correction responding thereto; and
28.6 ADDITIONAL INFORMATION. The Sublandlord further reserves the
right to require such other information relating to the financial affairs or
operations of the Subtenant and the Facility at such other times as Sublandlord
shall reasonably require (including monthly or more frequently), and Subtenant
agrees to provide such information to Sublandlord within five (5) business days
from request. All financial statements must be in such form and detail as the
Sublandlord shall from time to time reasonably request, provided, however, that
Sublandlord will make reasonable efforts to use Subtenant's existing forms of
reports for all purposes.
29. CROSS DEFAULT. The parties acknowledge that they are, concurrently
herewith, entering into Additional Sublease Agreements and certain Lease
Agreements relating to skilled care nursing facilities in the state of Texas
specifically described on the attached EXHIBIT D (the "Texas Sublease and
Leases"). The parties covenant and agree that in the event of a default by the
Subtenant pursuant to this Sublease the Sublandlord shall have the right and
option to declare a default in the other Texas Subleases and Leases and shall
have all available remedies, including, without limitation, the right to
terminate such Texas Subleases and Leases.
30. ESTOPPEL CERTIFICATE. At any time during the Term and from time to
time upon the request of the Sublandlord the Subtenant shall deliver to the
Sublandlord or Sublandlord's lender within ten (10) business days from receipt
of such request an estoppel certificate signed by an officer of the Subtenant
certifying that this Sublease is unmodified and in full force and
17
effect (or is in full force and effect as modified and setting forth the
modifications) that neither Sublandlord nor Subtenant are in default of the
Sublease or if such default exists setting forth such default and the dates to
which the payments due pursuant to this Sublease and the Lease have been paid.
31. TRANSFERS OF LICENSES UPON TERMINATION. Upon the expiration or earlier
termination of the Term, at Sublandlord's option, Subtenant shall use its best
efforts to transfer to Sublandlord or Sublandlord's nominee, and Subtenant shall
cooperate with Sublandlord or Sublandlord's nominee in connection with the
processing by Sublandlord or Sublandlord's nominee of, any applications for all
licenses, operating permits and other governmental authorization and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary for the operations of the Facility; provided that the
costs and expenses of any such transfer or the processing of any such
application shall be paid by Sublandlord or Sublandlord's nominee.
Notwithstanding anything in this Sublease or elsewhere to the contrary, under no
circumstances shall Sublandlord be obligated to seek or effectuate such a
transfer or application therefore.
18
IN WITNESS WHEREOF, the parties have caused this Sublease to be executed
and their respective corporate seals, if any, to be hereunto affixed and
attested by their respective officers thereunto duly authorized.
Sublandlord: Subtenant:
Extendicare Homes, Inc. Senior Health-Tulia, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------- ----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Its: Senior Vice President
State of Wisconsin State of Pennsylvania
County of Milwaukee County of Philadelphia
The foregoing instrument was acknowledged The foregoing instrument was acknowledged
before me this 25th day of September, 2001 before me this 26th day of September, 2001
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the Vice President by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President on behalf
of Extendicare Homes, Inc. of the corporation.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------- ----------------------------------------
Notary Public, State of Wisconsin Notary Public, State of Pennsylvania
My commission expires 11-2-2003. My commission expires: 10-31-02
[Notarial Seal] [Notarial Seal]
19
OPERATIONS TRANSFER AGREEMENT ("AGREEMENT")
BETWEEN
EXTENDICARE HOMES, INC. ET AL. ("EXTENDICARE")
AND
SENIOR HEALTH PROPERTIES-TEXAS, INC. ET AL. ("SENIOR")
DATED AS OF OCTOBER 1, 2001
--------------------
EXHIBIT 3.2
--------------------
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
18
OPERATIONS TRANSFER AGREEMENT ("AGREEMENT")
BETWEEN
EXTENDICARE HOMES, INC. ET AL. ("EXTENDICARE")
AND
SENIOR HEALTH PROPERTIES-TEXAS, INC. ET AL. ("SENIOR")
DATED AS OF OCTOBER 1, 2001
--------------------
EXHIBIT 3.3
--------------------
LIST OF EXCLUDED CONTRACTS
19
OPERATIONS TRANSFER AGREEMENT ("AGREEMENT")
BETWEEN
EXTENDICARE HOMES, INC. ET AL. ("EXTENDICARE")
AND
SENIOR HEALTH PROPERTIES-TEXAS, INC. ET AL. ("SENIOR")
DATED AS OF OCTOBER 1, 2001
--------------------
EXHIBIT 4.3
--------------------
LIMITED HEALTH INSURANCE COVERAGE
20
OPERATIONS TRANSFER AGREEMENT (THE "AGREEMENT")
EFFECTIVE AS OF OCTOBER 1, 2001
AMONG
EXTENDICARE HOMES, INC. ET AL. ("EHI")
AND
SENIOR HEALTH PROPERTIES-TEXAS, INC. ET AL. ("SENIOR")
--------------------
EXHIBIT 5
--------------------
POST CLOSING PROCEDURES
The purpose of these Post Closing Procedures is to establish the payroll,
accounting and collection procedures to be followed after the Closing Date.
Capitalized terms contained in these Post Closing Procedures shall have the same
meaning as such terms have in the Agreement unless otherwise specifically
defined in these Post Closing Procedures.
1. PAYROLL. EHI will total all payroll hours through 11:00 p.m. on
September 30, 2001. EHI shall be responsible for the accurate preparation of
payroll checks, and checks for the payment of all wages and benefits due as a
result of EHI's termination of its employees as of 11:00 p.m. on September 30,
2001. EHI shall distribute checks to such employees on or before October 21,
2001. Senior will cooperate with EHI's reasonable requests regarding
administrative tasks or supply the information needed to process the EHI payroll
checks described above.
2. ACCOUNTS PAYABLE. All Accounts Payable invoices pertaining to activity
through and including September 30, 2001 are to be vouchered and processed by
EHI for payment.
Page 1
3. UNIDENTIFIED POST CLOSING OBLIGATIONS. EHI will make available a cash
account in the amount of $100,000 per facility to be used in accordance with the
provisions of Section 12 of the Agreement.
4. ACCOUNTS RECEIVABLE. The following procedures are to be followed by
the parties regarding the accounts receivable that are due to EHI for services
and products provided prior to October 1, 2001.
GENERAL REQUIREMENTS. Each Tenant and Subtenant shall assume responsibility
for the billing for and collection of payments due on all resident accounts for
services and products provided by each Tenant and Subtenant on or after the
Closing Date. EHI shall retain title to all accounts receivable due for services
and products provided on and prior to September 30, 2001 and it will be EHI's
responsibility to collect same. However, each Tenant and Subtenant shall
cooperate and use its best efforts to assist EHI in EHI's efforts to collect
such accounts receivable. Each Tenant and Subtenant shall have no liability for
EHI's uncollectible receivables. In order to facilitate such collection efforts,
EHI shall deliver to each Tenant and Subtenant on or before the Closing Date, a
schedule identifying all account receivable balances owing for the period prior
to the Closing Date (but only as of the end of the calendar month immediately
preceding the Closing Date). On or before October 21, 2001, EHI shall deliver to
each Tenant and Subtenant a schedule which identifies the account receivable
balances due to EHI as of the Closing Date. All monies that are received by the
Facility (e.g., cash, checks, Social Security benefits, or Medicaid payment)
from a resident, or on behalf of a resident who has an outstanding account
receivable balance with EHI on the Closing Date, will be deposited into EHI's
bank accounts. If the monies so received include payments for account receivable
balances owed to both EHI and each Tenant and/or Subtenant, each Tenant and/or
Subtenant
Page 2
shall initially deposit such payments in its own bank account and, shall, within
thirty (30) days of each month-end provide both a reconciliation of those
amounts and a remittance to EHI for those monies properly due to EHI. If monies
are not remitted to EHI within sixty (60) days of collection, each Tenant and
Subtenant will pay EHI interest on the funds retained at eight percent (8%) per
annum in addition to other remedies available to EHI.
(A) PRIVATE PAYERS. Each Tenant and Subtenant agrees to first apply
any payments received for private pay balances during the period October through
December, 2001, to reduce the pre-Closing Date balances of said private-pay
residents unless said payments expressly indicate that they relate to
post-Closing Date services, in which case they shall be retained by each Tenant
and Subtenant. Each Tenant and Subtenant will provide a monthly accounting of
payments deposited into its bank accounts for payments made by private
nongovernmental non-insurance payers which are for services rendered prior to
the Closing Date. Such monthly accounting will be accompanied by disbursement to
EHI, if applicable, by each Tenant and Subtenant.
(B) THIRD PARTY PAYERS.
(i) Any third party payment received after the Closing Date
which represents payment for services provided prior to the Closing Date, shall
be immediately deposited into Senior's accounts. Senior will provide EHI a
monthly accounting of such payments for each and every month in which payments
are received.
(ii) In the event a third party payment is received for services
provided both prior to and after the Closing Date, these funds will be deposited
into each Tenant and Subtenant's accounts and disbursed as follows: Each Tenant
and Subtenant will provide, within thirty (30) days following the end of each
and every month in which such payments are received,
Page 3
a monthly accounting of payments deposited into each Tenant and Subtenant's bank
accounts for payments after the Closing Date, along with copies of remittance
advices from the third party. Notwithstanding the foregoing, if a third party
payment is made solely for services rendered by EHI, then each Tenant and
Subtenant shall deposit such payment into EHI's accounts.
(iii) All amounts received after the Closing Date, if any, which
represent supplemental Social Security payments to residents will be applied to
the time period to which they relate, unless otherwise required by applicable
law.
(iv) The Facility's bookkeepers will provide deposit slips and
checks for those payments received on EHI's behalf so that EHI can update its
accounts receivable files for payments received.
(c) OTHER FUNDS. All other funds received by each Tenant and
Subtenant after the Closing Date, to the extent received as a payment, refund or
reimbursement for services or products provided by EHI prior to the Closing
Date, shall be deposited into EHI's accounts.
5. EHI will provide each Tenant and Subtenant a listing by resident of
all monies received on or prior to the Closing Date for all goods and services
to be provided after the Closing Date. Each Tenant and Subtenant shall receive
payment on the Closing Date for said prepaid amounts.
6. EHI shall not notify any third party payer or resident that monies for
services rendered are to be submitted to EHI. Payments from such third party
payer or resident due to EHI shall be remitted according to the procedure set
forth in these Post Closing Procedures. EHI shall work with each Tenant and
Subtenant to resolve any other accounting problems that may arise and each
Tenant and Subtenant agrees to work with EHI.
Page 4
7. Any and all funds received by each Tenant and Subtenant arising out of
EHI's operation of the Facility prior to the Closing Date shall be paid to EHI
as provided herein, and if not provided for herein, within a time period to be
agreed between the parties. Any and all funds received by EHI arising out of
each Tenant and Subtenant's operation of the Facility after the Closing Date
shall be paid to each Tenant and Subtenant as provided herein, and if not
provided for herein, within a time period to be agreed between the parties.
-----------------------------------
Page 5
OPERATIONS TRANSFER AGREEMENT ("AGREEMENT")
BETWEEN
EXTENDICARE HOMES, INC. ET AL. ("EXTENDICARE")
AND
SENIOR HEALTH PROPERTIES-TEXAS, INC. ET AL. ("SENIOR")
DATED AS OF OCTOBER 1, 2001
--------------------
EXHIBIT 7
--------------------
PURCHASE PRICE CALCULATION AND PAYMENT
-------------------------------------------------
The purchase price to be paid to Extendicare by Senior pursuant to the
Operations Transfer Agreement shall be calculated and paid as follows (all
capitalized terms in this Exhibit shall have the same meaning as such terms have
in the Agreement):
1. Within ninety (90) days of the close of the fiscal year of each Tenant
and Subtenant, which is represented to be December 31st (the "Fiscal Year"),
Senior shall calculate or cause to be calculated the Free Cash Flow, as defined
below, available, if any, from each of the Facilities.
2. Free Cash Flow shall mean for purposes hereof the earnings generated
from all operations and activities conducted in, on, or from the Facilities,
before deduction for interest, taxes, depreciation, Amortization, Rents,
Management Fees and Insurance, in accordance with generally accepted accounting
principles (the "Earnings") less the following amounts:
(a) the rental paid by the Subtenant if the Facility is a Subleased
Facility; and then
(b) a consulting fee in the aggregate amount of $50,000 for all
Facilities payable to Senior. The parties shall allocate a portion of the
$50,000 payment to each specific Facility; and then
(c) an oversight management fee payable to Senior Health Management,
LLC in the total aggregate amount of $100,000 for all Facilities. The parties
shall allocate a portion of the $100,000 payment to each specific Facility; and
then
(d) an insurance reserve equal to $300 per licensed and useable bed
for the Facility; and then
(e) the interest, if any, paid (not accrued) on any working capital
loans obtained by the Facility or by Senior for use at the Facility; and then
(f) a capital replacement reserve equal to $275 per licensed and
useable bed for the Facility; and then
(g) a management fee paid to Transition Health Management LLC (but
not to any assignee or successor in interest to Transition Health Management
LLC) in an amount not to exceed 2.5% of the net Revenue of the Facility
calculated in accordance with generally accepted accounting principles; and then
(h) the fee paid to Fiscal Services Group, Inc. pursuant to
agreements for providing accounting and financial services and products in an
amount not to exceed 1.25% of the net Revenue of the Facility calculated in
accordance with generally accepted accounting principles; and then
(i) the fee paid to Virtual Care Providers, Inc. pursuant to
Agreements for providing data processing and information technology services and
products in an amount not to exceed 1.25% of the net Revenue of the Facility
calculated in accordance with generally accepted accounting principles; and then
(j) the rental paid by the Tenant if the Facility is a Leased
Facility and any additional rent paid to sublessor if the Facility is a
Subleased Building.
3. In the event that there is positive Free Cash Flow generated as
provided above, Senior and the applicable Tenant or Subtenant, shall pay to
Extendicare ninety percent (90%) of such Free Cash Flow as the Purchase Price
within thirty (30) days following the calculation of the Free Cash Flow of
within 120 days following the close of the Facility's Fiscal Year, whichever is
the first to occur.
4. All payments of the Purchase Price shall be made by Senior and the
Tenants or the Subtenants without notice or demand to Extendicare at the address
for Extendicare set forth in the Notice section of the Agreement or such other
address as designated by Extendicare. Extendicare shall have the right to assign
any and all of its right to receipt of the Purchase Price, in whole or in part.
-----------------------------------
OPERATIONS TRANSFER AGREEMENT ("AGREEMENT")
BETWEEN
EXTENDICARE HOMES, INC. ET AL. ("EXTENDICARE")
AND
SENIOR HEALTH PROPERTIES-TEXAS, INC. ET AL. ("SENIOR")
DATED AS OF OCTOBER 1, 2001
--------------------
EXHIBIT 12
--------------------
LIMITED AND CONTINGENT CASH FLOW SUPPORT
1. LIMITED PERIOD. For a two year period commencing October 1, 2001
through September 30, 2003, unless this Agreement is sooner terminated, or
unless the funds described in Section 2(a) through (d) have been exhausted prior
to September 30, 2003 and subject to the performance by Senior, the Tenants and
Subtenants of the terms, covenants and conditions set forth in this section,
Extendicare agrees to provide to Senior specific limited and contingent working
capital cash flow support, as described herein.
2. MONTHLY CALCULATION OF CASH FLOW. On a basis not less than monthly,
the cash flow projection shall be calculated (using generally accepted
accounting principles) for each Facility and if such calculation results in a
negative cash flow projection for the month for which the calculation was made,
the negative cash flow needs shall be funded, solely from the following sources,
solely in the following order of priority: (a) first, from the cash balances
existing in the Facility's accounts; then, if needed, (b) from existing lines of
credit and cash resources from affiliates, banks or other third party sources
(excluding the sources described below); then, if needed, (c) from the
collection of the Facility accounts receivables existing as of October 1, 2001
from all of the 17 Facilities as described in the Post Closing Procedures; and
then, if needed, (d) from the Post Closing Obligations Cash Account (as
described in the Post Closing Procedures) which will be funded as and when
needed by Extendicare up to an amount not to exceed $100,000 per Facility (the
"Post Closing Obligations Cash Account").
3. DOCUMENTATION. In the event that the Facility accesses either the
Facility Accounts Receivable Account and/or the Post Closing Obligations Cash
Account, any amounts so accessed by the Facility shall be documented by the
execution and delivery by Senior of a secured promissory note(s) calling for
interest at the floating prime rate announced from time to time by the Bank of
America and shall provide for repayment by Senior out of the cash flow
subsequently generated by the combined Facilities until the Notes have been paid
in full. Senior shall not have the right to access either the Facility Accounts
Receivable Account or the Post Closing Obligations Cash Account until Senior has
delivered the secured promissory note(s), a general business security agreement
in the personal property including accounts receivables of all the Facilities,
the guarantees of payment by the Tenants and Subtenants and such other documents
reasonably required by Extendicare in form and substance required by
Extendicare.
4. USE OF FUNDS. Any and all amounts advanced pursuant to this procedure
shall be used by Senior solely and exclusively to fund the actual amount of
Facility negative cash flow identified as the result of the monthly calculation
and for no other purpose whatsoever including without limitation the payment of
any claims, judgments, settlements, awards, costs, fees including attorney's
fees, relating to or arising out of any claims or litigation at the Facility
including any settlements, arbitrations or mediations. In the event the actual
cash flow needs turn out to be less than projected, any amounts in excess of the
projected amounts shall be returned to the proper account.
2
5. The obligations of Extendicare to provide limited and contingent cash
support are solely and exclusively as set forth herein and Extendicare has no
further obligation to fund any negative cash flow relating to the Facilities.
Further, Extendicare's obligations shall expire and be deemed fully performed at
the earliest to occur of either (a) the exhaustion of the funds described in
section 2(a) through (d) hereof, or (b) September 30, 2003, or (c) earlier
termination of this obligation resulting from the default of Senior in the
performance of the terms, covenants or agreements of the Agreement.
3