1
EXHIBIT 10.5
LEASE WITH OPTION TO PURCHASE
THIS LEASE WITH OPTION TO PURCHASE ("Lease") made and entered this
16th day of January, 1997, by and between Cherokee Assisted Living, L.L.C.
("Cherokee L.L.C."), a Limited Liability Company organized under the laws of
the state of Missouri, and Nevada Independent Living, L.L.C. ("Nevada,
L.L.C."), a Limited Liability Company organized under the laws of the state of
Missouri (Cherokee, L.L.C. and Nevada, L.L.C. are sometimes hereinafter
referred to collectively as "Lessor"), and Balanced Care Corporation, a
Delaware corporation, or its permitted assigns ("Lessee").
WITNESSETH:
Lessor and Lessee, in consideration of the rentals hereinafter
reserved and the agreements, conditions and covenants hereinafter contained,
and intending to be legally bound hereby, covenant and agree as follows:
1. THE PREMISES. Cherokee, L.L.C. hereby leases to Lessee or its
permitted assigns all of the operating assets of the facility known as Cherokee
Residential Care Center ("Cherokee"), situate at 3540 East Cherokee,
Springfield, ▇▇▇▇▇▇ County, Missouri including, but not limited to the land,
buildings, furniture, fixtures, machinery, equipment, inventory, supplies,
accounts receivable, licenses, including but not limited to a certain assisted
living license under which Cherokee is currently operating, trademarks, logos,
trade names, customer lists, advertising materials, contract rights and leases
in connection therewith the real property and personal property of Cherokee are
described with particularity in Exhibits A and B); Nevada L.L.C. leases to
Lessee or its permitted assigns all of the operating assets of the facility
known as Nevada Park Terrace Apartments ("Nevada"), situate on Highland Street,
Nevada, ▇▇▇▇▇▇ County, Missouri, including, but not limited to the land,
buildings, furniture, fixtures, machinery, equipment, inventory, supplies,
accounts receivable, licenses, including but not limited to a certain assisted
living license under which Nevada is currently operating, trademarks, logos,
trade names, customer lists, advertising materials, contract rights and leases
in connection therewith (the real property and personal property of Nevada are
described with particularity in Exhibits C and D, respectively) (the land, the
facilities and all of the operating assets of Cherokee, L.L.C. and Nevada,
L.L.C., as defined herein, are collectively referred to as the "Assets") (the
facilities at Cherokee and Nevada, together with the Assets are sometimes
referred to collectively as the "Premises").
2. TERM. This Lease shall be for a term of three (3) years, beginning
February 1, 1997 and ending January 31, 2000 (the "Initial Term"). Lessee shall
have the option to extend the Initial Term for two additional one-year periods
(each, an "Extended Term") (hereinafter, the Initial Term, together with the
Extended Terms, if any, may be collectively referred to as the
Page 1
2
"Term"). Lessee's extension options shall be exercised by Lessee by giving
written notice to Lessor of each such extension 60 days prior to the end of the
then existing Term. During each Extended Term, the terms and conditions of this
Lease shall continue in full force and effect.
3. RENT. Lessee shall pay rent to Cherokee, L.L.C. in monthly
installments of $15,500.00 for the first six-month period of the Initial Term
and $15,500 for the second six-month period of the Initial Term. Beginning the
second year of the Initial Term, Lessee's monthly rent to Cherokee, L.L.C.
shall be increased by 3%, compounded each year on each anniversary of the
commencement date of the Lease. Lessee shall pay rent to Nevada, L.L.C. in
monthly installments of $11,000 for the first year of the Initial Term and
$15,500 for the second year of the Initial Term. Beginning the third year of
the Initial Term, Lessee's monthly rent to Nevada, L.L.C. shall be increased by
3%, compounded each year, on each anniversary of the commencement date of the
Lease. Each monthly installment shall be due on or before the first day of
each calendar month for the ensuing month in lawful money of the United States.
Lessee's liability for rent under this Lease shall cease when the Lease expires
by its terms or upon closing pursuant to Lessee's election to exercise its
Purchase Option, as defined in Section 23 herein.
4. USE. The Premises shall be used to provide independent and/or
assisted living services and such other uses necessary or incidental to such
use ("Intended Use"). Lessee shall maintain and operate Cherokee and Nevada in
compliance with all ordinances, laws, rules, regulations and procedures and any
municipality, county or state government or any bureau or department thereof.
5. ACCOUNTS. All accounts receivable which are earned on or before
January 31, 1997 shall remain the property of Lessor, pro rata, and all
accounts receivable which are earned after January 31, 1997 shall be the
property of Lessee, pro rata. All accounts payable incurred on or before
January 31, 1997 shall remain the liability of Lessor, pro rata, and all
accounts payable incurred after January 31, 1997 shall be the liability of
Lessee, pro rata.
6. USES PROHIBITED. Lessee shall not use the Premises for purposes
other than Lessee's Intended Use, and no use shall be made or permitted to be
made, nor acts done, which will increase the existing rate of insurance upon
the Premises, or cause cancellation of insurance policies covering the
Premises.
7. ASSIGNMENT AND SUBLETTING. Lessee may assign or sublet this Lease
to one or more of its wholly-owned subsidiaries, without advance notice to
Lessor. Lessee shall notify Lessor in writing of such assignment or sublet.
8. LEGAL REQUIREMENTS. Lessee shall comply with all federal, state,
county, municipal or other governmental statutes, laws, rules, policies, codes,
guidance, orders, regulations, ordinances, permits, licenses, covenants,
conditions, restrictions, judgments, decrees and injunctions affecting, whether
now or hereinafter enacted and in force, occasioned by or affecting Lessee, the
Premises or Lessee's Intended Use of the Premises (collectively, the "Legal
Requirements").
Page 2
3
9. MAINTENANCE, REPAIRS, ALTERATIONS. Lessee shall make all necessary
repairs and shall maintain the Premises in good order and repair (ordinary wear
and tear excepted), including but not limited to the heating and air
conditioning system, plumbing written consent of Lessor, which consent will not
be unreasonably withheld.
10. ENTRY AND INSPECTION. Lessee shall permit Lessor or Lessor's
agents to enter upon the Premises at reasonable times and upon reasonable
notice to inspect the same.
11. INDEMNIFICATION OF LESSOR. Lessee shall protect, indemnify, save
harmless and defend Lessor from and against all liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses, including
reasonable attorneys' fees, imposed upon or incurred by or asserted against
Lessor by reason of: (i) any accident, injury to or death of persons or loss of
or damage to property occurring on or about the Premises during the term of
this Lease; (ii) any use, misuse, condition, maintenance or repair of the
Premises (for which Lessee is obligated to perform under this Lease); (iii) any
failure or non-performance on the part of Lessee to comply with the provisions
of this Lease; (iv) any claim for malpractice, negligence or misconduct
committed by any person on or working for Lessee on the Premises and (v) the
violation of any Legal Requirement.
12. POSSESSION. Lessee shall be entitled to immediate possession.
13. INSURANCE. Lessee, at its expense, shall maintain medical
professional liability insurance and commercial general liability insurance
covering bodily injury or property damage insuring Lessee and Lessor with
minimum coverage not less than the applicable industry standards. Lessee's
insurance may be blanket insurance covering the Premises as well as other
Premises owned or operated by lessee or its subsidiaries or affiliates;
provided, however, the coverage afforded Lessor will not be diminished or
reduced or otherwise be different from that which would exist if provided under
a separate policy of insurance. Lessee shall pay the premiums therefor, and
upon lessor's request, shall deliver such policies or certificates thereof to
Lessor. Each insurer shall agree, by endorsement to the policy, that it will
give Lessor not less than ten (10) days' written notice before the policy or
policies shall be altered, allowed to expire or canceled.
All proceeds payable by reason of any loss or damage to the Premises,
or any portion thereof, under any policy of insurance required to be paid
hereunder shall be paid to Lessor for the reasonable costs of reconstruction or
repair, as the case may be. Any excess proceeds of insurance remaining after
completion of restoration, reconstruction or refurbishing of the Premises (or
in the event that no repair or restoration is elected or required, all such
insurance proceeds ) shall be released to Lessee, provided Lessee is not
otherwise in default hereunder.
To the maximum extent permitted by insurance policies which may be
owned by Lessor or Lessee, Lessee and Lessor waive any and all rights of
subrogation which might otherwise exist.
14. TAXES. Lessee shall be responsible for all real estate and
personal property taxes associated with the Assets which accrue during the Term
of the Lease.
Page 3
4
15. UTILITIES. Lessee agrees that it shall be responsible for the
payment of all utilities, including water, gas, electricity, heat and other
services delivered to the Premises.
16. SIGNS. Lessor reserves the exclusive right to the roof, side and
rear walls of the Premises. Lessee shall not construct any projecting sign or
awning without the prior written consent of Lessor which consent may be
withheld in the sole and absolute discretion of Lessor.
17. ABANDONMENT OF PREMISES. Lessee shall not vacate or abandon the
Premises at any time during the Term hereof, and if Lessee shall abandon or
vacate the Premises, or be dispossessed by process of law, or otherwise, any
personal property belonging to Lessee left upon the Premises shall be deemed to
be abandoned, at the option of Lessor.
18. CONDEMNATION. If any part of the Premises shall be taken or
condemned for public use, and a part thereof remains which is susceptible of
occupation hereunder, this Lease shall, as to the part taken, terminate as of
the day immediately preceding the date upon which the condemnor acquires
possession, and thereafter Lessee shall be required to pay such proportion of
the rent for the remaining Term as the value of the Premises remaining bears to
the total value of the Premises at the date of condemnation; provided, however,
that Lessor may at its option, terminate this Lease as of the day immediately
preceding the date upon which the condemnor acquires possession. In the event
that the demised Premises are condemned in whole, or that such portion is
condemned that the remainder is not susceptible for use hereunder, this Lease
shall terminate upon the day immediately preceding the date upon which the
condemnor acquires possession. All sums which may be payable on account of any
condemnation shall belong to Lessor; provided, however, that Lessee shall be
entitled to retain any amount awarded to Lessee for Lessee's trade fixtures and
moving expenses.
19. TRADE FIXTURES. Any and all improvements made to the Premises
during the Term hereof shall belong to Lessor, except trade fixtures of Lessee,
unless Lessee purchases the Assets pursuant to the Option hereunder. Lessee may
upon termination hereof remove all of Lessee's trade fixtures, but shall repair
or pay for all repairs necessary for damages to the Premises occasioned by
removal.
20. DESTRUCTION OF PREMISES. If, during the Term of this Lease, said
Premises are damaged to the extent that they are wholly untenantable, Lessor
may, at its option, terminate this Lease by giving Lessee written notice
thereof within thirty (30) days after such damage, and prepaid rent from the
date of such damage shall be refunded. If Lessee has provided Lessor with the
Exercise Notice as herein defined prior to the destruction of the Premises,
Lessee may withdraw its Exercise Notice, at its option, by giving Lessor
written notice, within fifteen days of the destruction of the Premises, of
Lessee's withdrawal of said Exercise Notice and shall have no further
obligation with respect to the Option.
If said Premises shall be damaged to the extent that they are wholly
untenantable and the same cannot be restored to a condition substantially as
good as prior to said damage within sixty (60) days, Lessee may terminate this
Lease by giving Lessor thirty (30) days' written notice of its intent to
terminate, and in case of such termination, Lessee shall be entitled to a
refund of prepaid rent from the date of damage.
Page 4
5
In case said Premises are damaged, but not rendered wholly
untenantable, the rent shall ▇▇▇▇▇ proportionately until the Premises are
restored and Lessor shall repair the same as promptly as possible; provided,
however, that if it is not restored within sixty (60) days, Lessee may, at its
election, terminate the Lease by giving Lessor thirty (30) days written notice
of its intention to do so.
If in the case of destruction of the Premises as aforesaid neither
party elects to terminate the Lease as above provided, Lessor shall restore the
same with all reasonable speed and for that purpose shall have the right to
enter the said Premises for the purpose of restoring the Premises.
21. INSOLVENCY. In the event that a receiver shall be appointed to
take over the business of Lessee, or in the event that Lessee shall make a
general assignment for the benefit of creditors, or Lessee shall take or suffer
any action under any insolvency or bankruptcy act, the same shall constitute
breach of this Lease by Lessee.
22. REMEDY UPON DEFAULT. Lessee's failure to pay any monthly
installment of rent within seven days of the date it is due shall constitute a
default hereunder. If said rent remains unpaid seven (7) days after written
notice of such default is given to Lessee or if after thirty (30) days written
notice setting forth any default by Lessee in the performance of any other
covenant, agreement, or condition contained in this Lease by Lessee such
default shall continue, Lessor shall have the right to re-enter and take
possession of the Premises, and Lessee shall peacefully surrender possession
thereof and all rights and interests of Lessee shall cease and terminate but
nothing herein contained shall affect Lessor's right of the rent for the Term
specified. Upon taking possession hereunder, Lessor may, at its election,
terminate and end this Lease by giving Lessee written notice thereof, or Lessor
may relet the Premises and Lessee shall be liable for and will pay as it
accrues, the difference in the rental for the balance of the Term. Lessee shall
pay to Lessor any late fee incurred by Lessor to its lender caused by Lessee's
failure to timely pay its monthly installment of rent.
23. SECURITY. Lessor does not require a security deposit.
24. LESSEE'S OPTION TO PURCHASE. Lessee shall have the exclusive right
to purchase the Assets ("Purchase Option"), but only if (a) at the time of
exercise of the Purchase Option and on the date of closing thereon, there then
exists no default under the Lease, as hereinafter defined; and (b) Lessee
strictly complies with the provisions of this Section 23.
(a) Lessee may exercise the Purchase Option during the Initial
Term or during any one of the Renewal Terms, by providing Lessor written notice
of its intent to purchase the Assets ("Exercise Notice") at least sixty days
prior to any one-year anniversary from the date of this Lease. The Exercise
Notice shall specify the date, time and place of the settlement (the
"Settlement"). Settlement shall be made on or before the 30th day (the
"Settlement Date") following the date of the Exercise Notice, said time to be
of the essence of this Agreement, unless extended by mutual consent in writing
signed by the parties hereto. Upon the exercise by Lessee of the Purchase
Option in accordance with the provisions of this Agreement, this Agreement
shall become a binding contract of sale by and between Lessor and Lessee.
Page 5
6
(b) The purchase price for the Premises will be mutually agreed
upon by the parties but in no event during the first three years of the lease
term will it exceed $4,100,000 (the "Purchase Price"). After the expiration of
the third year of the lease term, a purchase price shall be negotiated between
the parties hereto. The Purchase Price shall be paid by Lessee at the time of
closing, by certified, cashier's, treasurer's or bank check or wire transfer.
(c) If the Purchase Option is exercised by Lessee in accordance
with the terms hereof, Lessor shall convey good and marketable absolute fee
simple title to the Assets, free and clear of all claims, liens and
encumbrances, except for Permitted Exceptions, to Lessee by executing and
delivering at closing a general warranty deed, in the case of real property,
and a ▇▇▇▇ of sale and assignment, in the case of personal property. The
transfer or conveyance of the Premises shall include all right, title and
interest, if any, of Lessor in and to any land lying in the bed of any street
opened or proposed in front of or adjoining the Premises to the centerline
thereof.
(d) Lessee and Lessor represent and warrant that no finder's fee
or brokerage commission will be payable in connection with the Lease or the
Lessee's purchase of the Premises pursuant to the Purchase Option hereunder.
Each party shall defend, indemnify and save the other party harmless from any
liability for any finder's fee or broker's fee or commission agreed to by the
indemnifying party in connection with the sale or purchase of the Premises or
any part thereof. The indemnity obligations of this section shall survive
termination or expiration of this Lease and Settlement.
25. LESSEE'S CONTINGENCIES. Lessor acknowledges and agrees that,
following Lessee's providing Lessor with the Exercise Notice, Lessee's
obligation to purchase the Premises at Settlement are expressly contingent and
conditioned upon the satisfaction of each of the following express conditions
precedent on or prior to Settlement:
(a) Lessor shall have performed each and all of the covenants and
obligations required to be performed by Lessor on or prior to Settlement.
(b) Each and all of the representations and warranties of Lessor
hereunder shall be true and correct on and as of the Settlement Date, as though
given on the Settlement Date.
(c) At its own cost and expense, Lessee shall have received and
approved a commitment for title insurance (the "Title Commitment") issued by a
title insurer acceptable to Lessee at regular rates showing good and
indefeasible title to the Premises in fee simple vested in Lessee as of
Settlement, subject only to liens for taxes, assessments and governmental
charges not yet past due and payable or delinquent and such other title
exceptions and Lessee and/or Lessee's financing source(s) may approve in their
reasonable discretion (the "Permitted Exceptions"). Such title insurance
policy, when issued, shall be in a form and amount, and shall include such
coverage and endorsements, as required by Lessee and/or Lessee's financing
source(s) in their reasonable discretion.
(d) At its own cost and expense, Lessee shall have received and
approved an ALTA survey of the Premises (the "Survey"), in a form and content
acceptable to Lessee and/or
Page 6
7
Lessee's financing source(s) in their reasonable discretion, which Survey shall
be certified to Lessee, Lessee's financing source(s) and Lessee's title insurer
as being true and accurate.
(e) Lessee shall have received confirmation acceptable to Lessee
in its reasonable discretion from all governmental authorities or otherwise
satisfied itself that (i) all utilities, including without limitation,
telephone, gas, electric power, sewer, storm sewer and water are or will be
available to service the Premises; (ii) such utilities are or will be adequate
for Lessee's intended use of the Premises and (iii) the means of ingress and
egress, access to public streets and drainage facilities are or will be
adequate for Lessee's intended use of the Premises.
(f) Lessee shall have received confirmation acceptable to Lessee
in its reasonable discretion from all governmental authorities or otherwise
satisfied itself that (i) the applicable zoning ordinances, the general plans,
the plot plans, the subdivisions and all other land use regulations of the
applicable municipal jurisdictions and all covenants, conditions and
restrictions, if any, affecting the Premises permit the transfer of the
Property and Lessee's intended use thereof as a matter of right for an
unlimited time period and not merely as a non-conforming use or (ii) the
Premises can be rezoned, if necessary, in order to permit the transfer of the
Premises and Lessee's intended use thereof as a matter of right for an
unlimited time period and not merely as a non-conforming use.
(g) At its own cost and expense, Lessee shall have received and
approved a written report from a qualified geotechnical or engineering firm
acceptable to Lessee, in form and content acceptable to Lessee and/or Lessee's
financing source(s) in their reasonable discretion, concerning the presence,
handling, treatment and disposal of Hazardous Substances (as defined below) in,
on or under the Premises.
(h) No condemnation or eminent domain proceedings shall be pending
or threatened with respect to the Premises.
(i) Lessee shall have received a written binding commitment from a
real estate investment trust or other financing source(s) to provide the
necessary financing for Lessee's purchase of the Premises under terms and
conditions satisfactory to Lessee in its sole and absolute discretion.
(j) Lessee shall have received approval by its board of directors
of the transactions contemplated in this Lease.
If any of the foregoing express conditions precedent are not satisfied
(including without limitation approval or acceptance by Lessee where indicated)
or waived on or before Settlement, upon written notice to Lessor, Lessee may,
in Lessee's discretion, terminate the Option and its obligation to purchase the
Premises shall cease.
26. LESSOR'S CONTINGENCIES. Lessee acknowledges and agrees that upon
its providing Lessor with the Exercise Notice, Lessor's obligations and
liabilities hereunder, are expressly contingent and conditioned upon the
satisfaction of each of the following express conditions precedent on or prior
to Settlement:
Page 7
8
(a) Lessee shall have performed each and all of the covenants
and obligations required to be performed by Lessee on or prior to Settlement.
(b) Each and all of the representations and warranties of Lessee
hereunder shall be true and correct on and as of the Settlement Date, as though
given on the Settlement Date.
If any of the foregoing express conditions precedent are not satisfied
or waived on or before Settlement, upon written notice to Lessee, Lessor, at
Lessor's option, may terminate the Purchase Option and its obligation to convey
the Premises to Lessee at Settlement shall cease.
27. LESSOR'S REPRESENTATIONS AND WARRANTIES. Lessor represents and
warrants to Lessee as follows:
(a) Lessor has the full power, authority and legal right to
execute and deliver and perform and observe the provisions of this Lease,
including the Purchase Option and all other instruments provided for herein and
the Exhibits hereto to which Lessor is a party, and to otherwise carry out the
transactions contemplated hereunder and thereunder.
(b) This Lease has been, and on the Settlement Date any other
instruments provided for herein and the Exhibits hereto to which Lessor is a
party will have been, duly executed and delivered by Lessor, and constitute and
will constitute the valid and binding obligations of Lessor enforceable against
Lessor in accordance with their respective terms.
(c) The execution and delivery of this Lease and all other
instruments provided for herein and the Exhibits hereto to which Lessor is a
party, compliance with the provisions hereof and thereof and the consummation
of the transactions contemplated herein and therein will not result in (i) the
breach or violation of (A) any law, statute, rule or regulation of any court or
governmental authority now in effect and applicable to Lessor or the Premises,
(B) any judgment, order or decree of any court or governmental authority
binding on Lessor or the Premises or (C) any contract, instrument or other
Lease to which Lessor is a party or by which Lessor is bound or (ii) the
creation of any lien upon the Premises (other than pursuant to this Lease and
the Permitted Exceptions).
(d) Lessor is solvent and there are no actions, proceedings or
investigations, including without limitation eminent domain, condemnation or
bankruptcy proceedings, pending or threatened, against or affecting Lessor or
the Premises, seeking to enjoin or challenge the ability of Lessor to carry out
the transactions contemplated hereunder or under any of the other instruments
provided for herein and in the Exhibits hereto to which Lessor is a party, or
which in any way challenge, affect or would challenge or affect Lessor's
ownership of the Premises.
(e) Lessor has good and marketable absolute fee simple title to
the Premises described on Exhibit A, free and clear of all liens, claims or
encumbrances (except for the Permitted Exceptions).
(f) (i) There are no underground tanks or hazardous substances
(as defined in the Comprehensive Environmental Response, Compensation and
Liability Act, as amended), solid
Page 8
9
wastes, hazardous wastes or any other substance for which any governmental
authority with jurisdiction over Lessor or the Premises requires special
handling in its generation, handling, use, collection, storage, treatment or
disposal (collectively, the "Hazardous Substances") currently located on the
Premises, no such tanks have ever been located on the Premises and no such
Hazardous Substances have ever been present, used, stored, treated, released
from or disposed of on the Premises; (ii) no enforcement, cleanup, removal or
other governmental or regulatory actions have, at any time, been instituted or,
to the best of Lessor's knowledge, threatened with respect to the Premises;
(iii) there is no current or, to the best of Lessor's knowledge, prior
violation or state of noncompliance with any environmental law relating to
Hazardous Substances with respect to the Premises; (iv) no claims have been
made or, to the best of Lessor's knowledge, threatened by any third party with
respect to the Premises relating to damage, contribution, cost recovery,
compensation, loss or injury resulting or related to any Hazardous Substances
and (v) to the best of Lessor's knowledge, there are no current, and have been
no, businesses engaged in the storage, treatment or disposal of Hazardous
Substances on any Premises adjacent to the Premises.
(g) The Premises is not located within an area of special risk
with respect to natural or man-made disasters or hazards, including any flood
hazard area.
(h) There are no adverse geological or soil conditions affecting
the Premises.
(i) The land upon which Cherokee and Nevada each sit constitute
legal lots or parcels which for all purposes may be mortgaged, conveyed and
otherwise dealt with as separate lots or parcels and are taxed as separate
parcels.
(j) The premises are zoned __________, and Lessor does not have
any knowledge of any law, ordinance, regulation, general plan, plot plan,
subdivision or other applicable land use regulation or any private covenant,
condition or restriction which would prevent the Premises from being
transferred or used by Lessee for Lessee's intended use pursuant to this Lease
or prevent the Premises from being rezoned, if necessary, in order to permit
Lessee's intended use of the Premises.
(k) On or prior to Settlement (i) all utilities, including
without limitation, telephone, gas, electric power, sewer, storm sewer and
water are or will be available to service the Premises; (ii) such utilities are
or will be adequate for Lessee's intended use of the Premises and (iii) the
means of ingress and egress, access to public streets and drainage facilities
are or will be adequate for Lessee's intended use of the Premises.
(l) Lessor is not a "foreign person" as that term is defined in
the U.S. Internal Revenue Code and the regulations thereunder.
(m) No person or entity other than Lessee has any right to
possession of or option to acquire the Premises, or any part thereof.
These representations and warranties shall be true and correct in all
respects on and as of Settlement. Should any such warranty or representation be
false, inaccurate or misleading at
Page 9
10
Settlement, then Lessee, at its option, may terminate the Option and its
obligation to purchase the Premises at Settlement shall cease.
28. LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee represents and
warrants to Lessor as follows:
(a) Lessee is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, is duly qualified and
authorized to do business in the state of Missouri and has full power,
authority and legal right to execute and deliver and to perform and observe the
provisions of this Lease and all other instruments provided for herein and the
Exhibits hereto to which Lessee is a party, and to otherwise carry out the
transactions contemplated hereunder and thereunder.
(b) This Lease has been, and on the Settlement Date any other
instruments provided for herein and the Exhibits hereto to which Lessee is a
party will have been, duly authorized, executed and delivered by Lessee, and
constitute and will constitute the valid and binding obligations of Lessee
enforceable against Lessee in accordance with their respective terms.
(c) The execution and delivery of this Lease and all other
instruments provided for herein and the Exhibits hereto to which Lessee is a
party, compliance with the provisions hereof and thereof and the consummation
of the transactions contemplated herein and therein will not result in (i) the
breach or violation of (A) any law, statute, rule or regulation of any court or
governmental authority now in effect and applicable to Lessee; (B) the articles
of incorporation and bylaws of Lessee; (C) any judgment, order or decree of any
court or governmental authority binding on Lessee or (D) any instrument,
contract or other Lease to which Lessee is a party or by which Lessee is bound.
These representations and warranties shall be true and correct in all
respects on and as of Settlement. Should any such representation and warranty
be false, inaccurate or misleading at Settlement, then Lessor, at its option,
may terminate the Purchase Option and its obligation to sell the Premises at
Settlement shall cease.
29. ADDITIONAL COVENANTS OF LESSOR. Lessor further covenants and
agrees as follows:
(a) Except as may otherwise be provided herein, Lessor shall not
enter into any other Lease, option to purchase, or grant any easement, license
or other encumbrance with respect to the Premises, or permit the Premises to be
encumbered in any way unless such lease, easement, license or encumbrance will
be terminated prior to Settlement or is created with the prior written consent
of Lessee.
(b) Upon request, Lessor shall furnish to the title company
selected by Lessee such documentation as may be required by it to issue a title
insurance policy without exception as to the capacity, authority and execution
of this Lease and all other instruments provided for herein and the Exhibits
hereto to which Lessor is a party.
Page 10
11
(c) Lessor shall produce, execute and/or deliver all other
consents, instruments, certificates, documents and information to which Lessee
may be entitled under any other provisions of this Lease or that Lessee may
reasonably request in order to complete the Settlement, including but not
limited to lien certificates, tax certificates and FIRPTA certificates.
30. PROPRIETARY INFORMATION. In order to facilitate the transaction
contemplated, each party may deem it necessary to disclose to the other party
certain of its proprietary and/or confidential information. As used herein, the
term "proprietary and/or confidential information" shall mean all information
of, or relating to, such party that is not generally available or disclosed to
the public, including, but not limited to, financial information, proprietary
systems and methods for the delivery of services. Each party acknowledges that
all such information constitutes confidential and/or proprietary information of
such other party and agrees it will (i) keep such information confidential in
accordance with the terms of this Lease and to the extent permitted by law,
(ii) use such information solely for the purpose of performing its obligations
hereunder, (iii) disclose such information only to those employees and agents
who require such information to perform their obligations hereunder or in
connection herewith and (iv) not otherwise disclose or make use of such
information except in accordance with the terms of this Lease and to the extent
required by law.
31. NON-COMPETITION.
(a) The following definitions shall apply to this Section 30:
(i) Business Activities. "Business Activities" shall include
managing, leasing, owning, operating or providing consulting
services to skilled nursing facilities, assisted living or
personal care centers, residential care facilities, independent
living apartments for the elderly, subacute care operations,
pharmacies, home health agencies, or physical therapy, speech
therapy and/or occupational therapy agencies within the
ninety-mile geographic area surrounding any facility owned by
Lessee or its subsidiary.
(ii) Business Contacts. "Business Contacts" shall include
(A) those persons or entities that Lessee personnel sold to,
solicited or serviced during the Term of the Lease and for five
(5) years after Lessee's purchase of the Assets hereunder, if
any, and (B) those persons or entities about which Lessor had
access to Proprietary Information (as defined in Section hereof)
during the Term of the Lease and for five (5) years after
Lessee's purchase of the Assets hereunder, if any.
(b) Restriction on Solicitation. During the Term of this Lease
and for five years after Lessee's purchase of the Assets, if any, Lessor agrees
not to do any of the following: (i) directly or indirectly solicit or encourage
any Business Contact to deal with Lessor or any other person or entity other
than Lessee in connection with any Business Activities, or assist or aid others
to do so; (ii) directly or indirectly solicit or encourage other personnel
subject to the provisions of this Section 30 to engage in any of the activities
restricted in this Lease; or
Page 11
12
(iii) directly or indirectly solicit or encourage for Lessor's benefit or the
benefit of others the employment or services of any then-present Lessor of
Lessee.
(c) Restriction on Unfair Competition. During the Term of this
Lease and for five (5) years after Lessee's purchase of the Assets hereunder,
if any, Lessor agrees not to do any of the following within a twenty (20) mile
geographic are surrounding Cherokee and Nevada, with the exception of Fosters
RCF: (i) directly or indirectly own an interest in, manage, or control a
business engaged in the Business Activities; or (ii) otherwise engage in the
business Activities in a fashion which competes with Lessee or the
Subsidiaries; or (iii) provide to a competitor of Lessee consulting service or
services as a Lessor, partner or owner, which services relate to the Business
Activities.
32. INTERPRETATION. It is expressly understood and agreed that
although Lessor considers the restrictions contained in Sections 29 and 30
hereof reasonable for the purpose of preserving for Lessee and/or Lessee's
proprietary rights, business value as a going concern and goodwill, if a final
judicial determination is made by a court having jurisdiction that the time or
any other restriction contained in Sections 29 or 30 is an unenforceable
restriction against Lessor, the provision containing such restriction shall not
be rendered void but shall be deemed amended to apply as to such maximum time
and territory and to such other extent as such court may judicially determine
or indicate to be reasonable.
33. REMEDIES.
(a) Lessor expressly agrees to indemnify and hold harmless
Lessee, its subsidiaries and affiliates, directors and officers from and with
respect to any and all loss, damage, expense or cost (including reasonable
attorneys' fees and disbursements attendant thereto) arising out of or in any
way connected with Lessor's material breach of any covenant herein contained.
(b) Lessor acknowledges and agrees that Lessee's remedy at law
for a breach or threatened breach of any of the provisions of Sections 29 or 30
hereof would be inadequate and, in recognition of this fact, in the event of a
breach or threatened breach by Lessor of any of the provisions of Sections 29
or 30 hereof it is agreed that, in addition to its remedy at law, Lessee shall
be entitled to equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable
remedy which may then be available. Lessor acknowledges that the granting of a
temporary injunction, temporary restraining order or permanent injunction
merely prohibiting the use of Proprietary Information would not be an adequate
remedy on breach or threatened breach, and consequently agrees, on any such
breach or threatened breach, to the granting of injunctive relief prohibiting
Lessor's engaging in any Business Activities other than as specifically
provided for in this Agreement. Nothing herein contained shall be construed as
prohibiting Lessee from pursuing any other remedies available to it for such
breach or threatened breach.
34. ENVIRONMENTAL INDEMNITY. Lessor agrees to indemnify, defend and
hold Lessee and Lessee's Agents harmless from any claims, judgments, damages,
penalties, fines, costs, or losses (including reasonable fees for attorneys,
consultants, and experts) that arise as a
Page 12
13
result of the presence in or on the Premises of any toxic or Hazardous
Substances arising from any activity of Lessor or during Lessor's ownership of
the Premises. Without limiting the generality of the foregoing, Lessor's
indemnity obligation shall include costs incurred in connection with any site
investigation or any remedial, removal, or restoration work required by any
local, state, or federal agency because of the presence or suspected presence
of Hazardous Substances on or under the said Premises, whether in the soil,
groundwater, air, or any other receptor, but shall not include incidental or
consequential damages.
35. COUNTERPARTS. This Lease may be executed in one (1) or more
counterparts. Each full counterpart shall be deemed an original, but all such
counterparts together shall constitute one and the same instrument.
36. FORMAL TENDER WAIVED. Formal tender of the executed general
warranty deed, the ▇▇▇▇ of sale and assignment and the Purchase Price are
hereby waived; provided, however, that such waiver shall not relieve Lessor of
Lessor's obligation to deliver the general warranty deed and Lessee of Lessee's
obligation to pay the Purchase Price.
37. RECORDATION. This Lease shall not be recorded. Immediately upon
the execution and delivery of this Lease by the parties hereto, Lessor and
Lessee shall execute and cause to be recorded in each of the Offices of the
___________________________ in and for the Counties of ▇▇▇▇▇▇ and ▇▇▇▇▇▇,
Missouri, a Memorandum of Option to Purchase Real Estate in the form of Exhibit
E attached hereto.
38. ATTORNEY'S FEES. In case suit should be brought for recovery of
the Premises, or for any sum due hereunder, or because of any act which may
arise out of the possession of the Premises, by either party the prevailing
party shall be entitled to all costs incurred in connection with such action,
including reasonable attorneys' fees.
39. WAIVER. No failure of Lessor to enforce any term hereof shall be
deemed to be a waiver thereof.
40. NOTICES. All notices and other communications given or made
pursuant to this Lease shall be in writing and shall be deemed to have been
duly given or made (i) the second business day after the date of mailing, if
delivery by registered or certified mail, postage prepaid, (ii) upon delivery,
if hand-delivered, (iii) upon delivery, if sent by prepaid courier, with a
record of receipt, or (iv) the next day after the date of dispatch, if sent by
cable, telegram, facsimile or telecopy (with a copy simultaneously sent by
registered or certified mail, postage prepaid, return receipt requested), to
the parties at the following addresses:
If to Lessor, to:
Cherokee Assisted Living, L.L.C.
Nevada Independent Living, L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Page 13
14
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lessee, to:
Balanced Care Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ Breed
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
41. HOLDING OVER. If Lessee shall for any reason remain in possession
of the Premises after the expiration or earlier termination of the Term of this
Lease, such possession shall become a month-to-month tenancy during which time
Lessee shall pay rent each month in an amount equal to twice the rent payable
during the prior Term. During such period of month-to-month tenancy, Lessee
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 Premises. Nothing herein shall constitute the consent,
express or implied, of Lessor to the holding over of Lessee after the
expiration or earlier termination of this Lease.
42. TIME. Time is of the essence of this Lease.
43. ENTIRE LEASE. The foregoing constitutes the entire Lease between
the parties and may be modified only by a writing signed by both parties.
44. GOVERNING LAW. The transaction contemplated herein shall be
governed by the laws of the State of Missouri.
Page 14
15
IN WITNESS WHEREOF, intending to be legally bound hereby, the
parties hereto have executed this Lease as of the date first set forth above.
LESSOR:
Witness/Attest Cherokee Assisted Living, L.L.C., a Missouri
limited liability company
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------- -------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Title: Manage Member
Witness/Attest Nevada Independent Living, L.L.C., a Missouri
limited liability company
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------- ---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Title: Manage Member
LESSEE:
Witness/Attest Balanced Care Corporation, a Delaware
corporation
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------- ------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Title: CEO
Page 15