LEASE
(ROCKY RIVER)
DATED MAY 21, 1998
EXECUTED BY
LTC-OHIO, INC., A DELAWARE CORPORATION,
DOING BUSINESS IN OHIO AS
LTC PROPERTIES-OHIO, INC.,
as Lessor
and
KARRINGTON OPERATING COMPANY, INC., AN OHIO CORPORATION,
as Lessee
TABLE OF CONTENTS
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 1 -
1.1 Leased Property. . . . . . . . . . . . . . . . . . . . . . . . . . .- 1 -
1.2 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 2 -
1.3 Contingencies. . . . . . . . . . . . . . . . . . . . . . . . . . . .- 2 -
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 3 -
2. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 3 -
ARTICLE III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 8 -
3.1 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 8 -
3.1.1 Minimum Rent . . . . . . . . . . . . . . . . . . . . . . .- 8 -
3.1.2 Adjustment to Rent . . . . . . . . . . . . . . . . . . . .- 8 -
3.2 Additional Charges . . . . . . . . . . . . . . . . . . . . . . . . .- 9 -
3.3 Net Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 9 -
3.4 Late Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 9 -
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 10 -
4.1 Payment of Impositions . . . . . . . . . . . . . . . . . . . . . . - 10 -
4.2 Notice of Impositions. . . . . . . . . . . . . . . . . . . . . . . - 11 -
4.3 Utility Charges. . . . . . . . . . . . . . . . . . . . . . . . . . - 11 -
4.4 Insurance Premiums . . . . . . . . . . . . . . . . . . . . . . . . - 11 -
4.5 Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 11 -
ARTICLE V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -
5.1 No Termination, Abatement, etc . . . . . . . . . . . . . . . . . . - 12 -
5.2 Abatement Procedures . . . . . . . . . . . . . . . . . . . . . . . - 12 -
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 13 -
6.1 Ownership of the Leased Property . . . . . . . . . . . . . . . . . - 13 -
6.2 Lessee's Alterations . . . . . . . . . . . . . . . . . . . . . . . - 13 -
6.3 Lessee's Personal Property . . . . . . . . . . . . . . . . . . . . - 13 -
6.4 Consumable Inventory . . . . . . . . . . . . . . . . . . . . . . . - 13 -
ARTICLE VII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
7.1 Condition of Leased Property . . . . . . . . . . . . . . . . . . . - 14 -
7.2 Use of the Leased Property . . . . . . . . . . . . . . . . . . . . - 14 -
7.3 Preservation of Gross Revenues . . . . . . . . . . . . . . . . . . - 15 -
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 16 -
8.1 Compliance with Legal and Insurance Requirements, Instruments,
etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 16 -
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8.2 Legal Requirement Covenants. . . . . . . . . . . . . . . . . . . . - 16 -
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 17 -
9.1 Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . - 17 -
9.2 Expenditures to Comply with Law; Construction of Additional
Improvements Pursuant to Certificate of Need . . . . . . . . . . . - 19 -
9.3 Encroachments, Restrictions, etc . . . . . . . . . . . . . . . . . - 19 -
ARTICLE X. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -
10.1 Lessee's Obligations for Hazardous Materials . . . . . . . . . . . - 20 -
10.2 Definition of Hazardous Materials. . . . . . . . . . . . . . . . . - 20 -
ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 21 -
11.1 No Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 21 -
11.2 Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . . . - 22 -
ARTICLE XII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 22 -
12. Permitted Contests . . . . . . . . . . . . . . . . . . . . . . . . - 22 -
ARTICLE XIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 23 -
13.1 General Insurance Requirements . . . . . . . . . . . . . . . . . . - 23 -
13.2 Replacement Cost . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
13.3 Additional Insurance . . . . . . . . . . . . . . . . . . . . . . . - 24 -
13.4 Waiver of Subrogation. . . . . . . . . . . . . . . . . . . . . . . - 24 -
13.5 Form Satisfactory, etc . . . . . . . . . . . . . . . . . . . . . . - 25 -
13.6 Increase in Limits . . . . . . . . . . . . . . . . . . . . . . . . - 25 -
13.7 Blanket Policy . . . . . . . . . . . . . . . . . . . . . . . . . . - 25 -
13.8 No Separate Insurance. . . . . . . . . . . . . . . . . . . . . . . - 25 -
13.9 Continuous Coverage. . . . . . . . . . . . . . . . . . . . . . . . - 26 -
ARTICLE XIV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 26 -
14.1 Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . - 26 -
14.2 Reconstruction in the Event of Damage or Destruction Covered
by Insurance Proceeds. . . . . . . . . . . . . . . . . . . . . . . - 26 -
14.3 Reconstruction in the Event of Damage or Destruction Not
Covered by Insurance . . . . . . . . . . . . . . . . . . . . . . . - 27 -
14.4 Lessee's Property. . . . . . . . . . . . . . . . . . . . . . . . . - 27 -
14.5 Restoration of Lessee's Property . . . . . . . . . . . . . . . . . - 27 -
14.6 No Abatement of Rent . . . . . . . . . . . . . . . . . . . . . . . - 27 -
14.7 Damage Near End of Term. . . . . . . . . . . . . . . . . . . . . . - 27 -
14.8 Termination of Option to Extend. . . . . . . . . . . . . . . . . . - 28 -
14.9 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
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ARTICLE XV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
15. Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
15.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
15.2 Parties' Rights and Obligations. . . . . . . . . . . . . . . . . . - 28 -
15.3 Total Condemnation . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
15.4 Allocation of Portion of Award . . . . . . . . . . . . . . . . . . - 29 -
15.5 Partial Taking . . . . . . . . . . . . . . . . . . . . . . . . . . - 29 -
15.6 Temporary Taking . . . . . . . . . . . . . . . . . . . . . . . . . - 29 -
ARTICLE XVI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 30 -
16.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . - 30 -
16.2 Certain Remedies . . . . . . . . . . . . . . . . . . . . . . . . . - 32 -
16.3 Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 33 -
16.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 34 -
16.5 Application of Funds . . . . . . . . . . . . . . . . . . . . . . . - 34 -
ARTICLE XVII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 34 -
17. Lessor's Right to Cure Lessee's Default. . . . . . . . . . . . . . - 34 -
ARTICLE XVIII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 35 -
18.1 Options to Extend. . . . . . . . . . . . . . . . . . . . . . . . . - 35 -
18.2 Minimum Rent During Extended Terms . . . . . . . . . . . . . . . . - 35 -
ARTICLE XIX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 36 -
19. Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . - 36 -
ARTICLE XX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 36 -
20. Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . - 36 -
ARTICLE XXI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 36 -
21. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . - 36 -
ARTICLE XXII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 37 -
22. Subletting and Assignment. . . . . . . . . . . . . . . . . . . . . - 37 -
22.1 Attornment. . . . . . . . . . . . . . . . . . . . . . . . . . - 38 -
22.2 Sublease Limitation . . . . . . . . . . . . . . . . . . . . . - 39 -
ARTICLE XXIII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 39 -
23. Officer's Certificates and Financial Statements; Lease
Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 39 -
23.1 Officer's Certificates and Financial Statements.. . . . . . . - 39 -
23.2 Lease Covenants . . . . . . . . . . . . . . . . . . . . . . . - 39 -
ARTICLE XXIV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 40 -
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24. Lessor's Right to Inspect. . . . . . . . . . . . . . . . . . . . . - 40 -
ARTICLE XXV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 40 -
25. No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 40 -
ARTICLE XXVI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 41 -
26. Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . - 41 -
ARTICLE XXVII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 41 -
27. Acceptance of Surrender. . . . . . . . . . . . . . . . . . . . . . - 41 -
ARTICLE XXVIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 41 -
28. No Merger of Title . . . . . . . . . . . . . . . . . . . . . . . . - 41 -
ARTICLE XXIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 41 -
29. Conveyance by Lessor . . . . . . . . . . . . . . . . . . . . . . . - 41 -
ARTICLE XXX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 41 -
30. Quiet Enjoyment. . . . . . . . . . . . . . . . . . . . . . . . . . - 41 -
ARTICLE XXXI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 42 -
31. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 42 -
ARTICLE XXXII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 43 -
32.1 Lessor May Grant Liens . . . . . . . . . . . . . . . . . . . . . . - 43 -
32.2 Lessee's Right to Cure . . . . . . . . . . . . . . . . . . . . . . - 43 -
32.3 Default by Lessor. . . . . . . . . . . . . . . . . . . . . . . . . - 43 -
ARTICLE XXXIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 44 -
33. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . - 44 -
33.1 Survival of Obligations . . . . . . . . . . . . . . . . . . . - 44 -
33.2 Late Charges; Interest. . . . . . . . . . . . . . . . . . . . - 44 -
33.3 Limits of Lessor's Liability. . . . . . . . . . . . . . . . . - 44 -
33.4 Limits of Lessee's Liability. . . . . . . . . . . . . . . . . - 44 -
33.5 Transfer of Operations. . . . . . . . . . . . . . . . . . . . - 45 -
33.6 Addendum, Amendments and Exhibits . . . . . . . . . . . . . . - 45 -
33.7 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . - 45 -
33.8 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 45 -
33.9 Days. . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 45 -
33.10 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . - 45 -
33.11 Applicable Law; Venue. . . . . . . . . . . . . . . . . . - 45 -
33.12 Successors and Assigns . . . . . . . . . . . . . . . . . - 45 -
33.13 Recordation. . . . . . . . . . . . . . . . . . . . . . . - 45 -
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33.14 Prior and Future Agreements. . . . . . . . . . . . . . . - 45 -
33.15 Partial Invalidity . . . . . . . . . . . . . . . . . . . - 46 -
33.16 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . - 46 -
33.17 Authority of Lessor and Lessee . . . . . . . . . . . . . - 46 -
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33.18 Relationship of the Parties. . . . . . . . . . . . . . . - 46 -
33.19 Counterparts . . . . . . . . . . . . . . . . . . . . . . - 46 -
33.20 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . - 47 -
33.21 New Combined Lease . . . . . . . . . . . . . . . . . . . - 47 -
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LEASE
This LEASE (the "Lease") is made as of the 21st day of May, 1998, by
and between LTC-OHIO, INC., a Delaware corporation, doing business in Ohio as
LTC Properties-Ohio, Inc., herein called "Lessor", and KARRINGTON OPERATING
COMPANY, INC., an Ohio corporation, herein called "Lessee", subject to the
terms, conditions and contingencies set forth below.
ARTICLE I
1.1 LEASED PROPERTY. Upon and subject to the terms and
conditions hereinafter set forth, Lessor leases to Lessee, and Lessee rents and
hires from Lessor all of the following (the "Leased Property"):
(i) The real property situated in the State of
Ohio and more particularly described in Exhibit "A" attached hereto, as the same
may be supplemented or modified from time to time (the "Land");
(ii) 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");
(iii) All easements, rights and appurtenances
relating to the Land and the Leased Improvements;
(iv) All permanently affixed equipment,
machinery, fixtures, and other items of real and/or personal property, including
all components thereof, 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, all of which to the greatest extent permitted by the law,
are hereby deemed by the parties hereto to constitute real estate, together with
all replacements, modifications, alterations and additions thereto, to the
extent acquired by Lessor pursuant to the "Purchase Agreement" as defined in
Article II hereof (collectively the "Fixtures"); and
(v) All personal tangible and intangible
property comprising the "Personal Property" and/or the "Intangible Property"
acquired by Lessor pursuant to the Purchase Agreement.
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The Leased Property includes that certain assisted living
facility located in the City of Rocky River, County of Cuyahoga, State of Ohio
and commonly known as Karrington of Rocky River at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇. Notwithstanding the foregoing, the Leased Property shall not
include any property not acquired by Lessor from the Seller pursuant to the
Purchase Agreement. The Leased Property is demised subject to all covenants,
conditions, restrictions, easements, and other matters of record, and all other
matters that affect title, zoning and any other matters set forth in that
certain Title Policy issued by Chicago Title Company concurrently with Lessor's
purchase of the Leased Property and all matters disclosed in the ALTA survey
obtained in connection with such title insurance (collectively the "Permitted
Title Matters").
1.2 TERM. The initial term of the Lease (the "Initial
Term") shall be the period commencing on the closing (the "Closing") whereby
Lessor acquires fee title to the Leased Property under the Purchase Agreement
(the "Commencement Date") and expiring on April 30, 2018. Lessee has the right
to extend the term of this Lease, at Lessee's option, as provided in Article
XVIII, below. (The Initial Term plus all validly exercised options to extend,
if any, shall be referred to herein as the "Term"). Lessor and Lessee agree to
execute a memorandum setting forth the Commencement Date.
1.3 CONTINGENCIES.
1.3.1 ACQUISITION OF LEASED PROPERTY. Lessee
acknowledges and agrees that, at the time of executing this Lease, Lessor does
not own the Leased Property, but Lessor has a right to purchase the Leased
Property pursuant to the Purchase Agreement. This Lease, and all obligations
hereunder of either party, are contingent upon Lessor's acquisition of the fee
simple interest in the Leased Property. Therefore, if the Leased Property has
not been transferred to Lessor on or before the Outside Closing Date (as that
term is defined in the Purchase Agreement), or by such later date as Lessor, in
its sole discretion may permit, this Lease shall be null and void and of no
force or effect whatsoever, and both Lessor and Lessee shall be relieved of all
responsibility under the Lease.
1.3.2 CROSS DEFAULT WITH OTHER LEASES. Lessor and
Lessee acknowledge and agree that this Lease is to be cross-defaulted with the
Related Leases and every other lease now or hereafter entered into between
Lessor (or any of its Affiliates) and Lessee (or any of its Affiliates) with
respect to any assisted living facility (collectively, the "Other Leases"), each
of which shall (if Lessor so requests) be specifically amended to confirm that
they are cross-defaulted as additional security for Lessee's performance under
this Lease. However, the cross-default provisions of this Paragraph shall be
effective regardless of whether Lessor requests the aforesaid specific
amendments.
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ARTICLE II
2. DEFINITIONS. For all purposes of this Lease, except as
otherwise expressly provided, (i) the terms defined in this Article II have the
meanings assigned to them in this Article II 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 at the time applicable; and (iii) 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, Paragraph or other subdivision:
ADDITIONAL CHARGES. As defined in Article III.
AFFILIATE. When used with respect to any corporation, the
term "Affiliate" shall mean any person or entity (including any trust) 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 or other equity interests. For the
purposes of this definition, "person" shall mean any natural person, trust,
partnership, corporation, joint venture or other legal entity.
BUSINESS DAY. Each Monday, Tuesday, Wednesday, Thursday, and
Friday, which is not a day on which national banks in the State of Ohio are
authorized or obligated, by law or executive order, to close.
C.P.I. As defined in Paragraph 3.1.
CALENDAR YEAR. The period from January 1 through and
including December 31 in the same calendar year.
CODE. The Internal Revenue Code of 1986, as amended, and all
regulations issued thereunder.
CONSOLIDATED FINANCIALS. For any Fiscal Year or other
accounting period for Lessee and its consolidated subsidiaries, statements of
earnings and retained earnings and of changes in financial position for such
period and the related balance sheet as at the end of such period, together with
the notes thereto, all audited by a certified public accountant and in
reasonable detail and setting forth in comparative form the corresponding
figures for the corresponding period in the preceding Fiscal Year, and prepared
in accordance with generally accepted accounting principles.
CONSOLIDATED NET WORTH. At any time, the sum of the following
for Lessee and its
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consolidated subsidiaries, on a consolidated basis determined in accordance
with generally accepted accounting principles:
(1) the amount of capital or stated capital
(after deducting the cost of any shares held in its treasury), plus
(2) the amount of capital surplus and retained
earnings (or, in the case of a capital or retained earnings deficit, minus the
amount of such deficit), minus
(3) the sum of the following (without
duplication of deductions in respect of items already deducted in arriving at
surplus and retained earnings): (a) unamortized debt discount and expense; and
(b) any write-up in the book value of assets resulting from a revaluation
thereof subsequent to the most recent Consolidated Financials prior to the date
thereof, except (i) any net write-up in value of foreign currency in accordance
with generally accepted accounting principles; and (ii) any write-up resulting
from a reversal of a reserve for bad debts or depreciation and any write-up
resulting from a change in methods of accounting for inventory.
ENCUMBRANCE. As defined in Article XXXII.
EVENT OF DEFAULT. As defined in Article XVI.
EXTENDED TERM. As defined in Article XVIII.
FACILITY. That certain assisted living facility which is part
of the Leased Property as defined in Article I, above, inclusive of the Land,
Leased Improvements, Fixtures, Personal Property and Intangible Property
pertaining to such Facility.
FACILITY MORTGAGE. As defined in Article XIII.
FACILITY MORTGAGEE. As defined in Article XIII.
FISCAL YEAR. The twelve (12) month period from January 1
through the following December 31.
FIXTURES. As defined in Article I.
IMPOSITIONS. Collectively, all taxes (including, without
limitation, all ad valorem, sales and use, single business, gross receipts,
transaction, privilege, rent taxes, bed taxes or fees or any other taxes as the
same relate to or are imposed upon Lessee or Lessor or the business conducted
upon the Leased Property), 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,
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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, Lessor, or the
business conducted thereon by Lessee (including all interest and penalties
thereon due to any failure in payment by Lessee), and all increases in all the
above from any cause whatsoever, including reassessment, which at any time prior
to, during or in respect of the Term may be assessed or imposed on or in respect
of or be a lien upon (a) Lessor's interest in the Leased Property or any part
thereof; (b) the Leased Property or any part thereof, including without
limitation any Personal Property located thereon or used in connection
therewith, 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 by Lessee. Without
limiting the foregoing, the term "Imposition" shall include any sales tax on
rents paid under this Lease or by residents of the Facility (including, but not
limited to, rental receipts taxes), bed taxes, depreciation recapture, any other
taxes (except for the specific exclusions stated below), fees or charges imposed
by the State of Ohio and any potential subdivision thereof relating to the
Facility or the Leased Property, this Lease, or rents received under this Lease,
whether relating to any period prior to or after the Commencement Date.
Provided, however, nothing contained in this Lease shall be construed to require
Lessee to pay (1) the following taxes and fees to the extent they relate to
Lessor's business generally (as opposed to relating specifically to Lessor's
ownership of the Facility, lease thereof to Lessee or income therefrom): any
federal, state or local income tax of Lessor, taxes based on outstanding
corporate shares of Lessor or Lessor's equity or capitalization, regardless of
whether denominated as an income tax, franchise tax, capital tax or otherwise;
(2) any income or capital gain tax imposed with respect to the sale, exchange or
other disposition by Lessor of any Leased Property or the proceeds thereof; or
(3) estate, inheritance, gift taxes or documentary transfer taxes.
INSURANCE REQUIREMENTS. All terms of any insurance policy
required by this Lease and all requirements of the issuer of any such policy.
LAND. As defined in Article I.
LEASE. As defined in the Preamble.
LEASE YEAR. Any twelve (12) month period from May 1 to each
following April 30 during the Term. In the case of the beginning of the Initial
Term, the provision "Lease Year" shall mean the period from the Commencement
Date (defined in Paragraph 1.2, above) to April 30, 1999; in the case of the end
of the Term, the provision "Lease Year" shall mean the period from the last May
1 to occur during the Term to the date of expiration of the Lease.
LEASED IMPROVEMENTS; LEASED PROPERTY. Each as defined in
Article I.
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 or the
construction, use or alteration thereof whether now or hereafter
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enacted and in force, 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 thereto, and all covenants, agreements,
restrictions, and encumbrances contained in any instruments, either of record
or known to Lessee, at any time in force affecting the Leased Property.
LESSEE. Karrington Operating Company, Inc. an Ohio
corporation (and any assignee permitted subject to the terms and conditions in
this Lease).
LESSEE'S PERSONAL PROPERTY. All machinery, equipment,
furniture, furnishings, movable walls or partitions, computers, or trade
fixtures or other personal property, and consumable inventory and supplies,
owned by Lessee and used or useful in Lessee's business on the Leased Property
and located thereon, including without limitation, all items of furniture,
furnishings, equipment, supplies and inventory, except items (i) included within
the definition of Fixtures; and (ii) personal property described in Paragraph
1.1(v), above.
LESSOR. LTC-Ohio, Inc., a Delaware corporation, doing
business in Ohio as LTC Properties-Ohio, Inc., and its successors and assigns.
MINIMUM RENT. As defined in Article III.
NOTICE. A notice given pursuant to Article XXXI hereof.
OFFICER'S CERTIFICATE. A certificate of Lessee signed by (i)
the Chief Executive Officer or the President or any authorized Vice President;
AND (ii) the secretary, or another officer authorized by appropriate resolution
to so sign by the Board of Directors. Any signature required above may be
substituted with a signature of another person whose power and authority to act
has been authorized by an appropriate corporate resolution.
OTHER LEASES. As defined in Paragraph 1.3.2.
OVERDUE RATE. On any date, a rate equal to the Prime Rate
(defined below), plus two percent (2%); provided, however, that it is the intent
of Lessor and Lessee that the Overdue Rate (and all other interest rates
provided for hereunder) be in strict compliance with applicable usury laws of
the State of Ohio, and that in the event the Overdue Rate (or other interest
rate provided for hereunder) shall be deemed to exceed that permitted to be
charged by the laws of the State of Ohio, any and all excess sums collected by
Lessor shall be credited against the Rent payable under this Lease or if there
is no Rent due, promptly refunded to Lessee.
PAYMENT DATE. Any due date for the payment of the
installments of Minimum Rent or any other payments required under this Lease.
PRIMARY INTENDED USE. As defined in Paragraph 7.2.2.
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PRIME RATE. On any date, a rate equal to the annual rate on
such date as may be published by The Wall Street Journal as the prime rate in
its listing of "Money Rates."
PURCHASE AGREEMENT. That certain Agreement of Purchase and
Sale and Joint Escrow Instructions, dated as of May 12, 1998, by and between
Lessee as the "Seller" and Lessor as the "Buyer," providing for Lessor's
acquisition of the Leased Property at the Purchase Price and as more fully
described therein.
PURCHASE PRICE. Lessor's Purchase Price for the Leased
Property pursuant to (and as defined in) the Purchase Agreement.
RELATED LEASES. Those certain leases between Lessor, as
"Lessor", and Lessee, as "Lessee," enumerated on Exhibit "B", attached hereto.
RENT. Any and all monetary obligations of Lessee owing under
this Lease.
SUBSIDIARIES. Corporations, of which either Lessee or Lessor
owns, directly or indirectly, more than 50% of the voting stock (individually, a
"Subsidiary").
TERM. Collectively, the Initial Term plus any Extended Terms,
as the context may require, unless earlier terminated pursuant to the provisions
hereof.
UNSUITABLE FOR ITS PRIMARY INTENDED USE. A state of condition
of the Facility such that by reason of damage or destruction, or a partial
taking by Condemnation, in the good faith judgment of Lessor and Lessee,
reasonably exercised, the Facility cannot be operated on a commercially
practicable basis for its Primary Intended Use taking into account, among other
relevant factors, the number of usable units affected by such damage or
destruction or partial Condemnation.
UNAVOIDABLE DELAYS. Delays due to strikes, lock-outs,
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 available to Lessor
results from Lessee's failure to perform any of its obligations under this
Lease.
The above does not include all the definitions to be used in
this Lease. Various definitions of other terms are included in the other
Articles of this Lease.
ARTICLE III
3.1 RENT.
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3.1.1 MINIMUM RENT. Lessee will pay to Lessor in
lawful money of the United States of America which shall be legal tender for the
payment of public and private debts at Lessor's address set forth hereinbelow or
at such other place or to such other person, firms or corporations as Lessor
from time-to-time may designate in a Notice, a rent (the "Minimum Rent"), during
the Term, as follows:
(a) INITIAL TERM. The initial annual
Minimum Rent for the first Lease Year of the Initial Term shall be an amount
equal to Seven Hundred Fourteen Thousand Four Hundred Five and 25/100 Dollars
($714,405.25). The Minimum Rent shall be subject to increase as and when
provided below in this Article III. The Minimum Rent, as the same may be
increased hereunder, shall be paid in advance in equal, consecutive monthly
installments on the first day of each calendar month of the Term without demand,
abatement, setoff or notice. Minimum Rent shall be prorated for any partial
month or year at the beginning or end of the Term; and
(b) EXTENDED TERMS. The Minimum Rent
during the Extended Terms shall be as stated in Article XVIII, below.
3.1.2 ADJUSTMENT TO RENT. Commencing on May 1,
1999 ("Rent Adjustment Date") and continuing thereafter on each subsequent
anniversary of the Rent Adjustment Date during the Initial Term and each
Extended Term, the Minimum Rent shall be increased (but never decreased) in an
amount equal to the annual Minimum Rent payable under this Lease for the
immediately preceding twelve (12) month period increased by one hundred fifty
percent (150%) of the cumulative increase in the Consumer Price Index, published
as the "CPI-U" Index by the Bureau of Labor Statistics of the Department of
Labor, U.S. Cities Average, All Items (1982-84=100) in the manner calculated on
the date of this Lease ("C.P.I.") from the date two (2) months prior to the
immediately preceding Rent Adjustment Date (or in the case of the initial Rent
Adjustment Date, the C.P.I. from March 1998) to the date two (2) months prior to
then current Rent Adjustment Date. Notwithstanding the foregoing, in no event
shall any INCREASE TO Minimum Rent in any Lease Year exceed two percent (2.0%)
of the Minimum Rent (as adjusted) payable for the immediately preceding twelve
(12) month period (or in the case of the initial Rent Adjustment Date, the
increase, if any, to Minimum Rent in the first Lease Year shall not exceed
$14,288.11). In no event shall the Minimum Rent be reduced by reason of the
adjustment to Minimum Rent set forth in this Paragraph 3.1.2. If the CPI Index
is no longer published, or if the format or components of the CPI Index are
materially changed after the Commencement Date, Lessor in its reasonable
judgment shall substitute an index which is published by the Bureau of Labor
Statistics or similar agency and which is most nearly equivalent to the Index in
effect on the Commencement Date.
3.2 ADDITIONAL CHARGES. In addition to the Minimum Rent,
(1) Lessee will also pay and discharge as and when due and payable all other
amounts, liabilities, obligations and Impositions which Lessee assumes, is
obligated or agrees to pay under this Lease, and (2) in the event of any failure
on the part of Lessee to pay any of those items referred to in clause (1) above,
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Lessee 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 Lessor 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. If
any elements of Additional Charges shall not be paid within five (5) Business
Days after its due date and Lessor pays any such amount (which Lessor shall have
the right, but not the obligation, to do), then, in addition to Lessor's other
rights and remedies, Lessee will pay Lessor on demand, as Additional Charges,
interest on such unpaid Additional Charges computed at the Overdue Rate from the
date that Lessor pays such amount to the date that Lessor receives reimbursement
from Lessee. To the extent that Lessee pays any Additional Charges to Lessor
pursuant to any requirement of this Lease, Lessee shall be relieved of its
obligation to pay such Additional Charges to the entity to which they would
otherwise be due.
3.3 NET LEASE. Subject to the provisions of Article V,
below, without limiting any provision of this Lease, the Rent shall be paid
absolutely net to Lessor, so that this Lease shall yield to Lessor the full
amount of the installments of Minimum Rent and Additional Charges throughout the
Term, all as more fully set forth in Articles III, IV, VIII, IX and XIII, and
other provisions of this Lease.
3.4 LATE CHARGE. LESSEE HEREBY ACKNOWLEDGES THAT LATE
PAYMENT BY LESSEE TO LESSOR OF RENT (INCLUDING MINIMUM RENT AND ADDITIONAL
CHARGES, BUT EXCLUDING LATE CHARGES) OR OTHER SUMS DUE HEREUNDER WILL CAUSE
LESSOR TO INCUR COSTS NOT CONTEMPLATED BY THIS LEASE, THE EXACT AMOUNT OF WHICH
WILL BE EXTREMELY DIFFICULT TO ASCERTAIN. SUCH COSTS INCLUDE, BUT ARE NOT
LIMITED TO, PROCESSING AND ACCOUNTING CHARGES. ACCORDINGLY, IF ANY INSTALLMENT
OF RENT (INCLUDING MINIMUM RENT AND ADDITIONAL CHARGES, BUT EXCLUDING LATE
CHARGES) OR ANY OTHER SUM DUE FROM LESSEE SHALL NOT BE RECEIVED BY LESSOR WHEN
THE SAME BECOMES DUE AND PAYABLE AND SUCH FAILURE IS NOT CURED WITHIN FIVE (5)
BUSINESS DAYS AFTER NOTICE THEREOF FROM LESSOR, THEN LESSEE SHALL PAY TO LESSOR
A LATE CHARGE EQUAL TO FIVE PERCENT (5%) OF SUCH OVERDUE AMOUNT. THE PARTIES
HEREBY AGREE THAT SUCH LATE CHARGE REPRESENTS A FAIR AND REASONABLE ESTIMATE OF
THE COSTS LESSOR WILL INCUR BY REASON OF LATE PAYMENT BY LESSEE. ACCEPTANCE OF
SUCH LATE CHARGE BY LESSOR SHALL IN NO EVENT CONSTITUTE A WAIVER OF LESSEE'S
DEFAULT OR BREACH WITH RESPECT TO SUCH OVERDUE AMOUNT, NOR PREVENT LESSOR FROM
EXERCISING ANY OF THE OTHER RIGHTS AND REMEDIES GRANTED UNDER THIS LEASE.
ARTICLE IV
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4.1 PAYMENT OF IMPOSITIONS. Subject to Article XII
relating to permitted contests, Lessee will pay, or cause to be paid, all
Impositions coming due prior to or during the Term, or which relate to any
period within the Term or prior to the Term, before any fine, penalty, interest
or cost may be added for non-payment (or earlier if required by any taxing
authority), such payments to be made directly to the taxing authorities where
feasible, and upon written request will promptly furnish to Lessor copies of
official receipts or other satisfactory proof evidencing such payments.
Lessee's obligation to pay Impositions shall be deemed absolutely fixed upon the
date such Impositions become a lien upon the Leased Property or any part
thereof. If any Imposition may, at the option of the taxpayer, lawfully
(without penalty) be paid in installments (whether or not interest shall accrue
on the unpaid balance of such Imposition), Lessee 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 Lessee'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. Lessee, at its expense,
shall, to the extent required or permitted by Legal Requirements, prepare and
file all 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, the same shall be paid over to or
retained by Lessee if no Event of Default shall have occurred hereunder and be
continuing, but if such Event of Default has occurred and is continuing (I.E.,
it has not been cured), such refund shall be paid to Lessor and utilized to cure
any such continuing Event of Default. After fully curing such Event of Default,
any excess funds from such refund shall be paid by Lessor to Lessee. Any such
funds retained by Lessor, as provided above, shall be applied as provided in
Article XVI. Lessor and Lessee 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, Lessee shall file all personal property tax
returns in such jurisdictions where it must legally so file. Lessor, to the
extent it possesses the same, and Lessee, 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 Lessor is legally required to file personal property tax
returns, Lessee will provide to Lessor copies of assessment notices indicating a
value in excess of the reported value in sufficient time for Lessor to file a
protest. Lessee may, upon notice to Lessor, at Lessee's option and at Lessee's
sole cost and expense, protest, appeal or institute such proceedings as Lessee
may deem appropriate to effect a reduction of real estate or personal property
assessments and Lessor, at Lessee's sole cost and expense as aforesaid, shall
fully cooperate with Lessee in such protest, appeal, or other action, provided
that Lessee may not withhold payments pending such challenges except under the
conditions set forth in Article XII. ▇▇▇▇▇▇▇▇ for reimbursement by Lessee to
Lessor 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. Lessor shall have the right, once any Event of
Default has occurred hereunder (and irrespective of whether such Event of
Default is continuing or has been cured), to require that Lessee pay to Lessor
1/12th of the annual Impositions each month concurrently with the payment of
Minimum Rent; provided that, during any period when such payments are being
made, Lessor agrees (a) to pay, or cause to be paid, all
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such Impositions prior to delinquency, and (b) upon written request from
Lessee, to account to Lessee for all payments then on deposit. Unless Lessee
is notified by Lessor otherwise, Lessee shall pay all "Impositions" directly
to the appropriate taxing or other authorities to which payments are due, and
upon written request Lessee shall provide Lessor written evidence and notice
that all such payments have been made. Without limiting any of the other
indemnities set forth in this Lease, Lessee hereby agrees to defend,
indemnify, protect and hold harmless Lessor in connection with any
"Impositions" that relate to any time prior to or during the Term, and Lessee
acknowledges and agrees that it will not make claims against, or otherwise
look to, Lessor to reimburse Lessee for payments made relating to any period
prior to the Commencement Date.
4.2 NOTICE OF IMPOSITIONS. Lessor shall give prompt
Notice to Lessee for all Impositions payable by Lessee hereunder of which Lessor
has knowledge, but Lessor's failure to give any such Notice shall in no way
diminish Lessee's obligations hereunder to pay such Impositions, but such
failure shall obviate any default hereunder for a reasonable time after Lessee
receives notice (from any source) of any Imposition which it is obligated to
pay. However, notwithstanding the foregoing, it shall be Lessee's sole duty to
inquire and determine all of the Impositions for which it is liable as provided
herein and shall promptly pay such Impositions when due, and Lessor shall have
no duty of inquiry concerning Impositions.
4.3 UTILITY CHARGES. Lessee will pay or cause to be paid
all charges for electricity, power, gas, oil, water, sewer connection and all
other utilities used in or for the Leased Property during the Term.
4.4 INSURANCE PREMIUMS. Lessee will pay or cause to be
paid all premiums for the insurance coverage required to be maintained pursuant
to Article XIII during the Term.
4.5 PAYABLES. Lessee acknowledges and agrees that prior
to the Rent Commencement Date, certain liabilities and other obligations were
incurred arising from the development, construction and operation of the
Facility for which Lessee is and shall remain entirely responsible and liable,
and Lessor shall have no responsibility, liability or obligation whatsoever with
respect to the same. Therefore, Lessee agrees as part of this Lease to pay all
liabilities and obligations concerning the Facility, whether arising before or
after the Rent Commencement Date.
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ARTICLE V
5.1 NO TERMINATION, ABATEMENT, ETC. Except as
specifically provided under Article XV hereunder, Lessee shall not be entitled
to any abatement, deduction, deferment or reduction of Rent, or set-off against
the Rent, nor shall the respective obligations of Lessor and Lessee be otherwise
affected by reasons of (a) any damage to, or destruction of, any Leased Property
or any portion thereof; (b) the lawful or unlawful prohibition of, or
restriction upon, Lessee'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 claim which Lessee
has or might have against Lessor or by reason of any default or breach of any
warranty by Lessor under this Lease or any other agreement between Lessor and
Lessee, or to which Lessor and Lessee are parties; (d) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding-up or other proceedings affecting Lessor or any assignee or transferee
of Lessor; or (e) for any other cause whether similar or dissimilar to any of
the foregoing other than a discharge of Lessee from any such obligations as a
matter of law. Lessee hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(i) modify, surrender or terminate this Lease or quit or surrender the Leased
Property or any portion thereof; or (ii) entitle Lessee to any abatement,
reduction, suspension or deferment of the Rent payable under this Lease except
as specifically provided in Article XV hereunder. The obligations of Lessor and
Lessee hereunder shall be separate and independent covenants and agreements and
the Rent due under this Lease shall continue to be payable in all events,
irrespective of Lessor's performance or non-performance under this Lease, unless
the obligations to pay the same shall be terminated pursuant to the express
provisions of this Lease or by termination of this Lease other than by reason of
an Event of Default.
5.2 ABATEMENT PROCEDURES. In the event Lessee is
entitled to an abatement of Minimum Rent under Paragraph 15.3 (by reason of a
total Condemnation of the Facility), the Minimum Rent shall be abated as
provided in Paragraph 15.3. In the event Lessee is entitled to an abatement of
Minimum Rent under Paragraph 15.5 (by reason of any partial Condemnation of the
Facility as provided hereunder), the Lease shall not terminate but the Minimum
Rent shall be abated in proportion to the reduced capacity of the Leased
Property for the use made of the same by Lessee at the time of the Condemnation
(I.E., the reduction in the number of residents the Leased Property can
accommodate under standards existing immediately prior to the Condemnation). If
Lessor and Lessee are unable to agree upon the amount of such abatement within
thirty (30) days after any partial taking as provided under Article XV, the
matter shall be submitted by either party to a court of competent jurisdiction
for resolution, but Lessee during such resolution shall continue to perform its
obligations hereunder, including, but not limited to, payment of that portion of
the Minimum Rent which is not then in dispute.
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ARTICLE VI
6.1 OWNERSHIP OF THE LEASED PROPERTY. Lessee
acknowledges and agrees that the Leased Property is the property of Lessor and
that Lessee has only the right to the exclusive possession and use of the Leased
Property upon the terms and conditions of this Lease.
6.2 LESSEE'S ALTERATIONS. Lessee shall not make any
modifications, alterations or improvements, whether by addition or deletion, to
the Leased Improvements or any portion thereof (collectively, "Alterations")
without Lessor's prior written consent; provided, however that Lessee may, at
its sole cost and expense, make non-structural Alterations to the interior of
the Leased Improvements so long as the total cost thereof is less than One
Hundred Fifty Thousand and 00/100 Dollars ($150,000) during any Lease Year
unless approved in advance in writing by Lessor. Any Alterations by Lessee
during the Term of this Lease shall be done in a good and workmanlike manner,
with good and sufficient materials, and in compliance with law. Lessee will not
make any Alteration or other improvement that may materially impair the value or
the usefulness of the Leased Property or any part thereof for its Primary
Intended Use. Subject to the provisions of Article XI, all Alterations and
other improvements shall be lien free (I.E., without mechanics', materialmen's
or other liens). Lessee shall promptly upon completion thereof furnish Lessor
with as-built plans and specifications therefor. Lessee shall, at its sole cost
and expense, repair and restore the Leased Property as and when required under
Paragraph 9.1.
6.3 LESSEE'S PERSONAL PROPERTY. Lessee may (and shall as
provided hereinbelow), at its expense, install, assemble or place on any parcels
of the Land or in any of the Leased Improvements, any items of Lessee's Personal
Property, and Lessee may, subject to the conditions set forth below, remove the
same upon the expiration or any prior termination of the Term. Lessee shall
provide and maintain during the entire Term all such Lessee's Personal Property
as shall be 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 Primary Intended Use. All of
Lessee's Personal Property not removed by Lessee within twenty (20) days
following the expiration or earlier termination of this Lease shall be
considered abandoned by Lessee and may be used, appropriated, sold, destroyed,
or otherwise disposed of by Lessor without first giving notice thereof to Lessee
and without any payment to Lessee and without any obligation to account
therefor. Lessee shall, within twenty (20) days following the expiration or
earlier termination of this Lease, at its sole cost and expense, repair any
damage to the Land or the Leased Improvements occasioned by the installation,
maintenance or removal of Lessee's Personal Property, and restore the Land or
Leased Improvements to its condition immediately prior to any such installation.
6.4 CONSUMABLE INVENTORY. Lessor and Lessee acknowledge
that certain inventory, including consumables, at the Facility, as of the
Commencement Date (Consumable Inventory") will be completely consumed or
otherwise disposed of during the course of Lessee's operation of the Facility.
Lessee agrees that, at the end of the Term or earlier termination of the
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Lease, it shall replace and restore the Consumable Inventory to the type and
amount (with the same value) as that existing as of the Commencement Date,
and as may otherwise be sufficient to fully equip the Facility for its
operation and maintenance as may be customary for properties comparable to
the Leased Property in the State of Ohio.
ARTICLE VII
7.1 CONDITION OF LEASED PROPERTY. Lessee acknowledges
receipt and delivery of possession of the Leased Property and further
acknowledges that Lessee has examined and otherwise has 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
it purposes hereunder. Lessee represents and warrants that the Personal
Property (as defined in Paragraph 1.1(v) hereof) includes all equipment and
property required under applicable federal and state law to operate the Facility
at full capacity. Lessee is leasing the Leased Property "AS-IS" in its present
condition. Lessee waives any claim or action against Lessor in respect of the
condition of the Leased Property. LESSOR MAKES NO WARRANTY OR REPRESENTATIONS,
EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF,
EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR THE MATERIAL OR
WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE
TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT THE LEASED PROPERTY HAS BEEN
INSPECTED BY LESSEE AND IS SATISFACTORY TO IT. WITHOUT LIMITING THE FOREGOING,
IT SHALL BE LESSEE'S RESPONSIBILITY TO DETERMINE THE AMOUNT OF REIMBURSEMENT AND
OTHER PAYMENTS THAT IT IS ENTITLED TO RECEIVE FROM THE FEDERAL, STATE OR LOCAL
GOVERNMENTS AND LESSEE'S OBLIGATIONS UNDER THIS LEASE SHALL NOT BE MODIFIED,
CHANGED OR OTHERWISE BE REDUCED IN THE EVENT THAT LESSEE HAS INCORRECTLY
ANALYZED THE AMOUNTS TO BE PAID TO LESSEE BY ANY GOVERNMENT OR AGENCY THEREOF.
7.2 USE OF THE LEASED PROPERTY.
7.2.1 Lessee covenants that it will obtain and
will at all times during the Term maintain all approvals needed to use and
operate the Leased Property and the Facility under applicable federal, state and
local law, including, but not limited to, licensure and Medicaid certification,
if and as applicable. Lessee shall provide to Lessor, at Lessor's request a
copy of any report or survey conducted by any federal, state or local government
entity regarding the quality of care at the Facility, and any other such
information or documents concerning the operation of the Facility.
7.2.2 After the Commencement Date and during the
entire Term, Lessee shall use or cause to be used the Leased Property as an
assisted living facility licensed (if applicable) by the State of Ohio and uses
incidental to the foregoing, including without limitation
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home health services provided in accordance with and as contemplated under
Paragraph 22, below (the particular such use to which the Leased Property is
put at any particular time is herein referred to as the "Primary Intended
Use"). Lessee shall not use the Leased Property or any portion thereof for
any other use without the prior written consent of Lessor, which consent may
be withheld in Lessor's sole and absolute discretion. No use shall be made
of the Leased Property, and no acts shall be done, which will cause the
cancellation of any insurance policy to residents 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
underwriter's regulations. Lessee shall, at its sole cost, comply with all
of the requirements pertaining to the Leased Property or other improvements
of any insurance board, association, organization, or company necessary for
the maintenance of insurance, as herein provided, covering the Leased
Property and Lessee's Personal Property.
7.2.3 Lessee covenants and agrees that subject to
damage, destruction and condemnation described in Articles XIV and XV, during
the Term it will operate continuously the entirety of the Leased Property in
accordance with its Primary Intended Use, provided that Lessee may cease
operations for more than ten (10) days (i) if Lessee obtains Lessor's prior
written approval, and (ii) so long as such cessation of operations does not
impair or threaten the status or effectiveness of the operating license or other
certification for operating the Facility in accordance with its Primary Intended
Use.
7.2.4 Lessee shall not commit or suffer to be
committed any waste on the Leased Property, or in the Facility nor shall Lessee
cause or permit any nuisance thereon.
7.2.5 Lessee shall neither suffer nor permit the
Leased Property or any portion thereof, including Lessee's Personal Property, to
be used in such a manner as (i) might reasonably tend to impair Lessor's (or
Lessee's, as the case may be) 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.
7.2.6 Lessee covenants and agrees that during the
Term it will maintain all licenses, approvals, permits and certifications for
reimbursement, licensure and as otherwise required for operating the Facility in
accordance with its Primary Intended Use.
7.3 PRESERVATION OF GROSS REVENUES. Lessee acknowledges
that a fair return to Lessor on its investment in the Leased Property is
dependent, in part, on the concentration of the Leased Property during the Term
of the assisted living business of Lessee and its Affiliates in the geographical
area of the Leased Property. Lessee further acknowledges that diversion of
residents and/or patients, as applicable, from the Facility to other facilities
or institutions owned, operated or managed, whether directly or indirectly, by
Lessee or its Affiliates will have a material adverse impact on the value and
utility of the Leased Property. Accordingly, Lessor and Lessee agree as
follows:
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7.3.1 During the Term neither Lessee nor any of
its Affiliates, directly or indirectly, shall operate, own, manage or have any
interest in or otherwise participate in or receive revenues from any other
facility or institution providing services or similar goods to those provided in
connection with the Facility and the Primary Intended Use, within a four (4)
mile radius outward from the outside boundary of the Facility. All distances
shall be measured on a straight line rather than on a driving distance basis.
In the event that any portion of such other facility or institution is located
within such restricted area, the entire facility or institution shall be deemed
located within such restricted area.
7.3.2 During the Term, Lessee shall not recommend
or solicit the removal or transfer of any resident or patient from any Facility
to other facility or institution; provided however that the provisions of this
Paragraph 7.3.2 shall not apply to removals or transfers required for medically
appropriate reasons, or required during the period of reconstruction or
restoration, if any, permitted after any casualty event pursuant to Article XIV
below or after any Condemnation pursuant to Article XV below.
ARTICLE VIII
8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS,
INSTRUMENTS, ETC. Subject to Article XII relating to permitted contests,
Lessee, at its sole cost and expense, will promptly (a) comply with all
applicable Legal Requirements and Insurance Requirements in respect of the 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 and other authorizations, if any, required for any
use of the Leased Property and Lessee's Personal Property then being made, and
for the proper erection, installation, operation, and maintenance of the Leased
Property or any part thereof.
8.2 LEGAL REQUIREMENT COVENANTS. Lessee covenants and
agrees that the Leased Property and Lessee's Personal Property shall not be used
for any unlawful purpose. Lessee further warrants and represents that Lessee
has obtained all necessary governmental approvals and has given all necessary
notices to allow Lessee to operate the Facility and all of the Leased Property
for its Primary Intended Use. Lessee shall acquire and maintain all licenses,
certificates, permits, provider agreements and other authorizations and
approvals needed to operate the Facility and the Leased Property in its
customary manner for the Primary Intended Use, and any other use conducted on
the Leased Property as may be permitted by Lessor from time-to-time hereunder.
Lessee further covenants and agrees that Lessee's use of the Leased Property and
maintenance, alteration and operation of the same, and all parts thereof, shall
at all times conform to all applicable federal, state and local laws,
ordinances, rules, and regulations unless the same are held by a court of
competent jurisdiction to be unlawful. Lessee, may, however, upon prior written
notice to Lessor, contest the legality or applicability of any such law,
ordinance, rule, or regulation, or any licensure or certification decision if
Lessee maintains such action in good faith, with due
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diligence, without prejudice to Lessor's rights hereunder, and at Lessee's
own expense. If by the terms of any such law, ordinance, rule or regulation,
compliance therewith pending the prosecution of any such proceeding may
legally be delayed without the incurrence of any fine, charge or liability of
any kind against the Leased Property, including the Facility, or Lessee's
leasehold interest therein and without subjecting Lessor to any liability,
civil or criminal, for failure so to comply therewith, Lessee 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, Lessee, on the prior written consent of Lessor, may
nonetheless contest as aforesaid and delay as aforesaid provided that such
delay would not subject Lessor to criminal liability and Lessee both (a)
furnishes to Lessor security reasonably satisfactory to Lessor against any
loss or injury by reason of such contest or delay; and (b) prosecutes the
contest continuously, with due diligence and in good faith.
ARTICLE IX
9.1 MAINTENANCE AND REPAIR.
9.1.1 Lessee, at its sole cost and expense, will
keep the Leased Property and all portions thereof and Lessee's Personal Property
and all private roadways, sidewalks and curbs appurtenant thereto and which are
under Lessee's control in good order and repair (whether or not the need for
such repairs occurs as a result of Lessee'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 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 Date (concealed or otherwise). All repairs shall, to the extent
reasonably achievable, be at least equivalent in quality to the original work.
Lessee will not take or omit to take any action the taking or omission of which
may materially impair the value or the usefulness of the Leased Property or any
part thereof for its Primary Intended Use. Any repair work performed by Lessee
shall be paid for so that no lien (I.E., mechanics', materialmen's or other
liens) shall attach to the Leased Property, subject to Article XII.
9.1.2 Lessor 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 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. Lessee hereby waives, to the extent permitted
by law, the right to make repairs at the expense of Lessor pursuant to any law
in effect at the time of the execution of this Lease or hereafter enacted.
Lessor shall have the right to give, record and post, as appropriate, notices of
non-responsibility (or similar notices) under any mechanics' or materialmen's
lien laws now or hereafter existing.
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9.1.3 Nothing contained in this Lease and no
action or inaction by Lessor shall be construed as (i) constituting the consent
or request of Lessor, express or implied, to any contractor, sub-contractor,
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 Lessee 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 in such fashion as would
permit the making of any claim against Lessor 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 Lessor in the
Leased Property, or any portion thereof. Lessor shall have the right to give,
record and post, as appropriate, notices of non-responsibility (or similar
notices) under any mechanics' or materialsmen's lien laws now or hereafter
existing.
9.1.4 Unless Lessor shall convey any of the Leased
Property to Lessee pursuant to the provisions of this Lease, and subject to the
provisions of Paragraph 6.3 regarding Lessee's Personal Property, upon the
expiration or prior termination of the Term, all the Leased Property, including
all Fixtures and Personal Property located thereon, and any Alterations,
repairs, restorations, additions or improvements otherwise made by or for
Lessee, shall be Lessor's property and shall be vacated and surrendered to
Lessor in the condition in which the Leased Property was originally received
from Lessor, and in the same type and amount (with the same depreciated value)
as that existing as of the Commencement Date, except as repaired, rebuilt,
restored, altered or added to as permitted or required under this Lease, and as
otherwise sufficient to fully equip the Facility for its operation and
maintenance as may be customary for properties comparable to the Leased Property
in the County of Cuyahoga, Ohio, and except for ordinary wear and tear (subject
to the obligation of Lessee to maintain the Leased Property) in good order and
repair without compensation to Lessee; provided however that, at the election of
Lessor, exercisable by notice to Lessee, Lessee shall, at Lessee's sole cost and
expense, prior to the expiration or prior termination of the Term, remove from
the Leased Property any Fixtures, Personal Property, Alterations or other
improvements to the Leased Property or any portion thereof that were not
consented to in advance in writing by Lessor, irrespective of whether Lessor's
consent was required hereunder, and Lessee shall repair any damage to the Leased
Property occasioned by the installation, maintenance or removal of the same, and
restore the Leased Property to its condition immediately prior to such
installation. Notwithstanding the foregoing, if this Lease is terminated
pursuant to Paragraph 14.7 due to damage or destruction during the last 24
months of the Term (as described in Paragraph 14.7), then, unless the damag or
destruction was due to Lessee's negligent acts or omissions or willful
misconduct, at the end of the Term (shortened due to the damage and destruction)
Lessee shall not be obligated to repair any items that were damaged; provided
that nothing contained herein shall affect Lessee's obligation to maintain the
Leased Property in good order and repair during the entire Term. Additionally,
Lessor shall own and may remove, at the end of the Term (or at the earlier
termination of this Lease), all patient records and other records in connection
with the Facility, and in connection with the transfer of such records, Lessee
shall take all necessary action to insure full compliance with any and all
patient confidentiality, patient-physician privileges or any duly enacted
"Patient's ▇▇▇▇ of Rights" or similar applicable laws or regulations.
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9.2 EXPENDITURES TO COMPLY WITH LAW; CONSTRUCTION OF
ADDITIONAL IMPROVEMENTS PURSUANT TO CERTIFICATE OF NEED. Without limiting
Lessee's other obligations, during the Term of this Lease, Lessee will, at its
expense, make whatever expenditures (including, but not limited to capital and
non-capital expenditures) that are required to conform the Leased Property to
such standards as may from time-to-time be required by Federal Medicaid (Title
19) assisted living programs, as and if applicable, or any other applicable
programs or legislation, or capital improvements required by any other
governmental agency having jurisdiction over the Leased Property as a condition
of the continued operation of the Leased Property during the Term (as extended)
as an assisted living residence or other health-care related facility, approved
for Medicaid and similar programs as and if applicable, pursuant to present or
future laws of governmental regulation.
9.3 ENCROACHMENTS, RESTRICTIONS, ETC. If 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 Lessor at the behest of any person
affected by any such encroachment, violation or impairment, Lessee shall, at its
sole cost and expense, (and after Lessor's prior approval) subject to Lessee's
right to ▇▇▇ ▇▇▇▇▇▇'▇ predecessors in title with respect thereto or to contest
the existence of any such 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 Lessor or the Leased Property; or (ii) make such changes in the
Leased Improvements, and take such other actions, as Lessee 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 Primary Intended Use substantially in the manner and
to the extent the Leased Improvements were operated prior to the assertion of
such violation, impairment or encroachment. Any such alteration shall be made
in conformity with the applicable requirements of Paragraph 6.2 (provided that
Lessor shall not unreasonably withhold its consent) and this Article IX.
Lessee's obligations under this Paragraph 9.3 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.
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ARTICLE X
10.1 LESSEE'S OBLIGATIONS FOR HAZARDOUS MATERIALS. Lessee
shall, at its sole cost and expense, take all actions as required to cause the
Leased Property including, but not limited to, the Land and all Leased
Improvements, to be free and clear of the presence of all Hazardous Materials
during the Term; provided, however, that Lessee shall be entitled to use and
maintain Hazardous Materials on the Leased Property of types and in the
quantities commonly used in assisted living facilities in the State of Ohio and
which have been used, stored and disposed of in compliance with all applicable
laws. In this connection, Lessee shall, upon its discovery, belief or suspicion
of the presence of Hazardous Materials on, in or under any part of the Leased
Property, including, but not limited to, the Land and all Leased Improvements in
violation of the preceding sentence, immediately notify Lessor and, at no
expense to Lessor, cause any such Hazardous Materials to be removed immediately,
in compliance with all applicable laws and in a manner causing the least
disruption of or interference with the operation of Lessee's business. Lessee
hereby agrees to fully indemnify, protect, defend and hold harmless Lessor from
any costs, damages, claims, liability or loss of any kind or nature arising out
of or in any way in connection with the presence, suspected presence, removal or
remediation of Hazardous Materials in, on, or about the Leased Property, or any
part thereof. Lessee acknowledges that it has received and reviewed a Phase I
Environmental Site Assessment prepared by ATC Associates, Inc. dated December
31, 1997 for the Facility (the "Environmental Report"). Without limiting
Lessee's other obligations under this Lease, Lessee agrees, at Lessee's sole
cost, to fully comply with all recommendations set forth in the Environmental
Report or any other environmental report (including, without limitation, any UST
System Closure Reports prepared by GETCO Environmental Consultants.) Lessee's
obligations hereunder shall apply to all Hazardous Materials, irrespective of
when they arose or were discovered and therefore will include any Hazardous
Materials that existed prior to, at, or after the Commencement Date and during
the Term.
10.2 DEFINITION OF HAZARDOUS MATERIALS. For purposes
of this Lease, "Hazardous Materials" shall mean (1) any flammables, explosive
or radioactive materials, hazardous wastes, toxic substances or related
materials including, without limitation, substances defined as "hazardous
substances," "hazardous materials", "toxic substances" or "solid waste" in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. Sec. 9601, ET SEQ.; the hazardous Materials
Transportation Act, 49 U.S.C. Section 1801, ET SEQ.; the Toxic Substances
Control Act, 15 U.S.C., Section 2601 ET SEQ.; the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Section 6901 ET SEQ.; Occupational Safety and
Health Act, 29 U.S.C. Section 651, ET SEQ.; and in comparable State of Ohio and
local laws and ordinances, and the regulations now or hereafter adopted,
published and/or promulgated pursuant thereto; (2) those substances listed in
the United States Department of Transportation Table (49 C.F.R. 172.101 and
amendments thereto) or by the Environmental Protection Agency (or any
successor agency) as hazardous substances (40 C.F.R. Part 302 and amendments
thereto); (3) those substances defined as "hazardous wastes," "hazardous
substances" or "toxic substances" in any similar federal, state or local laws
or in the regulations adopted and publications promulgated pursuant to any of
the
- 20 -
foregoing laws or which otherwise are regulated by any governmental
authority, agency, department, commission, board or instrumentality of the
United States of America, the State of Ohio or any political subdivision
thereof, (4) any pollutant or contaminant or hazardous, dangerous or toxic
chemicals, materials, or substances within the meaning of any other
applicable federal, state, or local law, regulation, ordinance, or
requirement (including consent decrees and administrative orders) relating to
or imposing liability or standards of conduct concerning any hazardous, toxic
or dangerous waste, substance or material, all as amended; (5) petroleum or
any by-products thereof; (6) any radioactive material, including any source,
special nuclear or by-product material as defined at 42 U.S.C. Sections 2011
ET SEQ., as amended, and in the regulations adopted and publications
promulgated pursuant to said law; (7) asbestos in any form or condition; and
(8) polychlorinated biphenyls. "Environmental Laws" means and includes any
law, ordinance, statute, rule, code, order, approval, regulation or
requirement now or hereinafter in effect relating to land use, air, soil,
surface water, groundwater (including the protection, cleanup, removal,
remediation or damage thereof), human health and safety or any other
environmental matter, including, without limitation, the following laws as
the same may be amended from time to time: Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C.
Section 9601, ET SEQ.; Federal Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, ET SEQ.; Clean Water Act, 33 U.S.C. Section 1251,
ET SEQ.; Toxic Substances Control Act, 15 U.S.C. Section 2601, ET SEQ.;
Refuse Act, 33 U.S.C. Section 407; Occupational Safety and Health Act, 29
U.S.C. Section 651, ET SEQ.; Clean Air Act, 42 U.S.C. Section 7401,
ET SEQ.; and comparable Ohio laws; and any and all similar state and local
laws and ordinances and the regulations now or hereafter adopted, published
and/or promulgated pursuant thereto.
ARTICLE XI
11.1 NO LIENS. Subject to the provisions of Article XII
relating to permitted contests, Lessee will not directly or indirectly,
voluntarily or by operation of law, create or allow to remain and will promptly
discharge at its expense any lien, mortgage, encumbrance, attachment, title
retention agreement, or claim upon the Leased Property or any portion thereof,
or Lessee's interest under this Lease or any attachment, levy, claim, or
encumbrance in respect of the Rent, not including however, (a) this Lease; (b)
restrictions, liens and other encumbrances created or allowed pursuant to the
provisions of Paragraph 11.2 below; (c) liens for those taxes of Lessor which
Lessee is not required to pay hereunder; (d) subleases permitted by Article
XXIII; (e) liens for Impositions or for sums resulting from non-compliance with
Legal Requirements so long as (1) the same are not yet 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; (f) liens of mechanics,
laborers, materialmen, suppliers or vendors for sums either disputed or not yet
due, provided that in the case of disputed sums any such liens are in the
process of being contested as permitted by Article XII; (g) any liens which are
the responsibility of Lessor pursuant to the provisions of Article XXXIII of
this Lease; (h) the Permitted Title Matters (defined in Paragraph 1.1 above);
and (i) any other matters that have been consented to in advance in writing by
Lessor.
11.2 PERMITTED LIENS. Lessee may borrow funds to finance
all or any part of the
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cost of any Alterations or other improvements permitted or required under
this Lease to the extent and upon such terms and conditions as may be
approved in advance in writing by Lessor in Lessor's sole discretion, subject
to Lessor's right of first refusal to finance such Alterations or other
improvements upon commercially reasonable terms and conditions; provided,
however, that Lessor's approval shall not be required for any borrowing of
funds that does not result in a lien, mortgage, encumbrance or other claim
affecting the Leased Property or Lessee's interest under this Lease.
Notwithstanding the foregoing, Lessee may grant security interests
encumbering specific items of Lessee's Personal Property (but not fixtures
attached to the Land) in favor of the lessors of or purchase-money lenders
for said items of Lessee's Personal Property, so long as such personal
property is permitted on the Land or in the Leased Improvements under
Paragraph 6.3 hereunder and is not owned by or subject to any claim or right
of Lessor.
ARTICLE XII
12. PERMITTED CONTESTS. Lessee shall have the right to contest
the amount or validity of any Imposition or any Legal Requirement or
Insurance Requirement or any lien, attachment, levy, encumbrance, charge or
claim ("Claims") not otherwise permitted by Article XI, by appropriate legal
proceedings in good faith and with due diligence, and to delay payment if
legally permitted. Any such legal proceeding (and delay in payment) shall
operate to extend the time for performance of Lessee's covenants to pay such
charges hereunder only so long as such Claims are in the process of being
diligently contested as permitted in this Article XII and such legal
proceedings (and delay in payment) do not cause the sale of the Leased
Property, or any part thereof, to satisfy the same or cause Lessor or Lessee
to be in default under any mortgage or deed of trust encumbering the Leased
Property or any interest therein; provided that such legal proceedings (and
delay in payment) shall not otherwise be deemed or construed as relieving,
modifying or extending Lessee's covenants to pay or its covenants to cause to
be paid any such charges at the time and in the manner provided for under
this Lease. Upon the reasonable request of Lessor, Lessee shall provide to
Lessor reasonable security satisfactory to Lessor, in Lessor's reasonable
discretion, to assure the payment of all Claims which may be assessed against
the Leased Property or any portion thereof together with interest and
penalties, if any, thereon. Lessor agrees to join in any such proceedings if
the same be required to legally prosecute such contest of the validity of
such Claims; provided, however, that Lessor shall not thereby be subjected to
any liability for the payment of any costs or expenses in connection with any
proceedings brought by Lessee; and Lessee covenants to indemnify and save
harmless Lessor from any such costs or expenses. In the event that Lessee
fails to pay any Claims when due or, upon Lessor's request, to provide the
security therefor as provided in this Article XII and to diligently prosecute
any contest of the same, Lessor may, upon thirty (30) days advance written
Notice to Lessee, pay such charges together with any interest and penalties
and the same shall be repayable by Lessee to Lessor at the next Payment Date
provided for in this Lease. Provided, however, that should Lessor reasonably
determine that the giving of such Notice would risk loss to the Leased
Property or cause damage to Lessor, then Lessor shall give such written
Notice as is practical under the circumstances. Lessee shall be entitled to
any refund of any Claims and such charges and penalties or interest thereon
which have been paid by Lessee or paid by Lessor and for which Lessor has
been fully reimbursed.
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ARTICLE XIII
13.1 GENERAL INSURANCE REQUIREMENTS. Subject to the
provisions of Paragraph 13.8, during the Term, Lessee shall at all times keep
the Leased Property, and all portions thereof and all property located in or
on the Leased Property, including Lessee's Personal Property, insured with
the kinds and amounts of insurance described below. 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 Lessor as a
loss payee and additional insured. Losses shall be payable to Lessor or
Lessee as provided in Article XIV. In addition, upon Lessor's written
request, the policies shall name as mortgagee, loss payee and additional
insured the holder ("Facility Mortgagee") of any mortgage, deed of trust or
other security agreement and any other Encumbrance placed on the Leased
Property or any portion thereof in accordance with the provisions of Article
XXXII ("Facility Mortgage") by way of a standard form of mortgagee's loss
payable endorsement. Any loss adjustment shall require the written consent
of Lessor, Lessee, and each Facility Mortgagee. Evidence of insurance shall
be deposited with Lessor and, if requested, with any Facility Mortgagee(s).
If any provision of any Facility Mortgage requires deposits of premiums for
insurance to be made with such Facility Mortgagee, or, pursuant to written
direction by Lessor upon the occurrence of any Event of Default hereunder
(and irrespective of whether such Event of Default is continuing or has been
cured), Lessee shall make such deposits directly with such Facility Mortgagee
or with Lessor, as required, provided that during any period when such
deposits are being made, the Facility Mortgagee or Lessor (depending on which
party collects such deposits) agrees (a) to pay the premiums on a timely
basis, and (b) upon written request from Lessee, to account to Lessee for all
funds then on deposit. The policies on the Leased Property, including the
Leased Improvements, Fixtures and Lessee's Personal Property, shall insure
against the following risks:
13.1.1 Loss or damage by fire, vandalism and
malicious mischief, extended coverage perils commonly known as "All Risk,"
and all physical loss perils normally included in such All Risk insurance,
including, but not limited to, sprinkler leakage, in an amount not less than
one hundred percent (100%) of the then full replacement cost thereof (as
defined below in Paragraph 13.2);
13.1.2 Loss or damage by explosion of steam
boilers, pressure vessels or similar apparatus, now or hereafter installed in
the Facility, if any, in such amounts with respect to any one accident as may
be reasonably requested by Lessor from time-to-time;
13.1.3 Business interruption insurance policy
covering risk of loss during the first twelve (12) months of reconstruction
necessitated by the occurrence of any of the hazards described in Paragraph
13.1.1 or 13.1.2 in an amount sufficient to prevent Lessor from becoming a
co-insurer.
13.1.4 Claims for personal injury or property
damage under a policy of
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comprehensive general public liability insurance with amounts not less than
One Million Dollars ($1,000,000) per occurrence, and with an annual aggregate
of Three Million Dollars ($3,000,000);
13.1.5 Claims arising out of malpractice or
other professional actions or omissions under a policy of professional
liability insurance with amounts not less than One Million Dollars
($1,000,000) per occurrence, and with an annual aggregate of Three Million
Dollars ($3,000,000);
13.1.6 Flood (if any of the Leased Improvements
are located in whole or in part within a flood plain area, as designated by
any governmental or other responsible agency and if such insurance is
available pursuant to applicable law) and such other hazards and in such
amounts as may be customary for comparable properties in the area; and
13.2 REPLACEMENT COST. The term "full replacement
cost" as used herein, shall mean the actual replacement cost of the Leased
Property requiring replacement from time-to-time including an increased cost
of construction endorsement, less exclusions provided in the standard form of
fire insurance policy in the state where the Leased Property is located.
Lessor and Lessee agree that as of the Commencement Date the full replacement
cost shall be deemed to be the "Purchase Price" less the value of the Land.
In the event either party believes that full replacement cost (the then
replacement cost less such exclusions) has increased or decreased at any time
during the Term, it shall have the right to have such full replacement cost
redetermined.
13.3 ADDITIONAL INSURANCE. In addition to the
insurance described above, Lessee shall maintain such additional insurance as
may be reasonably required from time-to-time by Lessor or any Facility
Mortgagee (to the extent available in the state where the Leased Property is
located) and shall further at all times maintain adequate worker's
compensation insurance coverage for all persons employed by Lessee on the
Leased Property or any portion thereof. Such worker's compensation insurance
shall be in accordance with the requirements of applicable federal, state and
local law.
13.4 WAIVER OF SUBROGATION. All insurance policies
carried by either party covering the Leased Property, the Fixtures, the
Facility, or Lessee's Personal Property including without limitations,
contents, fire and casualty insurance, shall expressly waive any right of
subrogation on the part of the insurer against the other party. The parties
hereto agree that their policies will include such waiver clause or
endorsement so long as the same are obtainable without extra cost, and in the
event of such an extra charge the other party, at its election, may pay the
same, but shall not be obligated to do so. Upon written request, each party
shall provide the other party with a copy of each insurance policy with the
waiver clause or endorsement attached.
13.5 FORM SATISFACTORY, ETC. All of the policies of
insurance referred to in this Article XIII shall be written in a form
reasonably satisfactory to Lessor and by insurance companies reasonably
satisfactory to Lessor. Subject to the foregoing, Lessor agrees that it will
not unreasonably withhold its approval as to the form of the policies of
insurance or as to the insurance
-24-
companies selected by Lessee. Lessee shall pay all of the premiums therefor,
and deliver such policies or certificates thereof to Lessor prior to their
effective date (and, with respect to any renewal policy, prior to the
expiration of the existing policy), and in the event of the failure of Lessee
either to effect such insurance as herein called for or to pay the premiums
therefor, or to deliver such policies or certificates thereof to Lessor at
the times required, Lessor shall be entitled, but shall have no obligation,
to effect such insurance and pay the premiums therefor, which premiums shall
be repayable by Lessee to Lessor upon written demand therefor, and failure to
repay the same shall constitute an Event of Default within the meaning of
Paragraph 16.1(c). Each insurer mentioned in this Article XIII shall agree,
by endorsement on the policy or policies issued by it, or by independent
instrument furnished to Lessor, that will give to Lessor (and to any Facility
Mortgagee, if required by the same) thirty (30) days written notice before
the policy or policies in questions shall be altered, allowed to expire or
cancel.
13.6 INCREASE IN LIMITS. In the event that Lessor or a
Facility Mortgagee shall at any time reasonably deem the limits of the
personal injury or property damage public liability insurance then carried to
be insufficient, Lessee shall thereafter carry the insurance with increased
limits until further change pursuant to the provisions of this Paragraph;
provided that if Lessor desires to increase the limits of insurance, and such
is not pursuant to the request of a Facility Mortgagee, then Lessor may not
demand an increase in limits above the limits generally consistent with the
requirements of owners of assisted living facilities in the State of Ohio.
13.7 BLANKET POLICY. Notwithstanding anything to the
contrary contained in this Article XIII, Lessee's obligations to carry the
insurance provided for herein may be brought within the coverage of a
so-called blanket policy or policies of insurance carried and maintained by
Lessee; provided, however, that the coverage afforded Lessor will not be
reduced or diminished or otherwise be different from that which would exist
under a separate policy meeting all other requirements of this Lease by
reason of the use of such blanket policy of insurance, and provided further
that the requirements of this Article XIII are otherwise satisfied.
13.8 NO SEPARATE INSURANCE. Lessee shall not on
Lessee'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 or
which may reasonably be required to be furnished, by Lessee or increase the
amount of any then existing insurance by securing any additional policy or
additional policies, unless all parties having an insurable interest in the
subject matter of the insurance, including in all cases Lessor 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 the Lease. Lessee shall immediately notify Lessor of the taking out of
any such separate insurance or of the increasing of any of the amount of the
then existing insurance.
13.9 CONTINUOUS COVERAGE. Lessee shall assure that
there is no gap in the insurance coverage provided in connection with the
Facility at or after the Commencement Date and, therefore, the insurance
provided by Lessee shall be continuous, with the types and amounts of
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coverage, described herein to be applicable on the Commencement Date. To the
extent there is not full, complete and continuous coverage for all issues, no
matter when arising, claimed or occurring, Lessee shall, at its sole cost,
obtain such insurance.
ARTICLE XIV
14.1 INSURANCE PROCEEDS. All proceeds payable by reason of any
loss of or damage to the Leased Property, or any portion thereof, which is
insured under any policy of insurance required by Article XIII of the Lease,
where the total proceeds paid by the insurer are less than $125,000.00, shall
be paid to Lessee and applied to the reconstruction or repair, as the case
may be, of any damage to or destruction of the Leased Property, or any
portion thereof. All proceeds payable by reason of any loss of or damage to
the Leased Property, or any portion thereof, which is insured under any
policy of insurance required by Article XIII of this Lease where the total
proceeds paid by the insurer are equal to or in excess of $125,000.00 shall
be paid to Lessor and held by Lessor in trust (subject to the provisions of
Paragraph 14.7) 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 Lessor 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 shall go to Lessee, provided the Lease
is in force and there exists no uncured Event of Default; otherwise such
excess shall be paid to Lessor for application as set forth in Article XVI
hereof. In the event neither Lessor nor Lessee is required or elects to
repair and restore, and the Lease is terminated as described in Paragraph
14.7, all such insurance proceeds shall be retained by Lessor. All salvage
resulting from any risk covered by insurance shall belong to Lessor except
that any salvage relating to Lessee's Personal Property shall belong to
Lessee.
14.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED
BY INSURANCE PROCEEDS.
14.2.1 Except as provided in Paragraph 14.7, if
during the Term, the Facility or any portion of the Leased Property is
totally or partially destroyed by a risk covered by the insurance described
in Article XIII and whether or not the Facility is rendered Unsuitable for
Its Primary Intended Use, Lessee shall restore the Leased Property to
substantially the same condition as existed immediately before the damage or
destruction. Lessee shall be entitled to the insurance proceeds for the
purpose of such repair and restoration.
14.2.2 If the cost of the repair or restoration
exceeds the amount of proceeds received by Lessee or Lessor from the
insurance required under Article XIII as provided in Paragraph 14.1, above,
Lessee shall be obligated to restore the Leased Property and pay the extra
cost therefor, provided that, prior to commencing the repair and restoration,
Lessee shall either (i) contribute any excess amount needed to restore the
Leased Property, or (ii) provide Lessor with satisfactory evidence that such
funds are, and throughout the entire period of reconstruction will be,
available. If Lessee contributes such excess in cash, such excess shall be
paid by Lessee to Lessor
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to be held in trust, together with any insurance proceeds, for application to
the cost of repair and restoration.
14.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR
DESTRUCTION NOT COVERED BY INSURANCE. Except as provided in Paragraph 14.7
below, if during the Term the Facility or any portion of the Leased Property
is damaged or destroyed irrespective of the extent of the damage from a risk
not covered by the insurance described in Article XIII, whether or not such
damage or renders the Facility Unsuitable for Its Primary Intended Use,
Lessee shall restore the Leased Property 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 LESSEE'S PROPERTY. All insurance proceeds payable
by reason of any loss of or damage to any of Lessee's Personal Property shall
be paid to Lessee, and Lessee shall hold such insurance proceeds in trust to
pay the cost of repairing or replacing damaged Lessee's Personal Property.
Any proceeds in excess of the cost of repairing or replacing any such
Lessee's Personal Property shall belong to Lessee.
14.5 RESTORATION OF LESSEE'S PROPERTY. Without
limiting Lessee's obligation to restore the Leased Property as provided in
Paragraphs 14.2 and 14.3, Lessee shall also pay the cost to restore all
Alterations and other improvements made by Lessee which Lessee elects to
restore, including Lessee's Personal Property to the extent that Lessee's
Personal Property is necessary to the operation of the Leased Property for
its Primary Intended Use in accordance with applicable Legal Requirements.
14.6 NO ABATEMENT OF RENT. This Lease shall remain in
full force and effect and Lessee's obligation to make rental payments and to
pay all other charges required by this Lease shall remain unabated during any
period required for repair and restoration.
14.7 DAMAGE NEAR END OF TERM. Notwithstanding any
provisions of Paragraph 14.2 or 14.3 appearing to be contrary, if damage to
or destruction of the Facility occurs during the last six (6) months of the
Term (in calculating such 6 months, any Extended Terms as to which Lessee
exercised its option prior to or after the occurrence of such damage or
destruction shall be included), and if such damage or destruction cannot be
fully repaired and restored within six (6) months immediately following the
date of damage or destruction, then Lessor and Lessee shall each have the
right to terminate this Lease by giving written notice to the other within
thirty (30) days after the date of damage or destruction. If the Lease so
terminates as provided in this Paragraph 14.7, and unless the damage or
destruction was due to Lessee's negligent acts or omissions or willful
misconduct, Lessee shall have no responsibility to repair or restore the
damaged or destroyed Facility. Upon the termination of this Lease the
Minimum Rent payable by Lessee hereunder with regard to the Facility shall be
apportioned as of the date this Lease is terminated.
14.8 TERMINATION OF OPTION TO EXTEND. Any termination
of this Lease pursuant to this Article XIV shall cause any unexercised
options to extend the Lease under Article XVIII to
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be terminated and without further force or effect.
14.9 WAIVER. Lessee hereby waives any statutory rights
of termination which may arise by reason of any damage to or destruction of
the Leased Property or any portion thereof which Lessor is obligated to
restore or may restore under any of the provisions of this Lease.
ARTICLE XV
15. CONDEMNATION.
15.1 DEFINITIONS.
15.1.1 "Condemnation" means (a) the exercise of
any governmental power, whether by legal proceedings or otherwise, by a
Condemnor; (b) a voluntary sale or transfer by Lessor to any Condemnor,
either under threat of Condemnation or while legal proceedings for
Condemnation are pending.
15.1.2 "Date of Taking" means the date the
Condemnor has the right to possession of the property being condemned.
15.1.3 "Award" means all compensation, sums or
anything of value awarded, paid or received on a total or partial Condemnation.
15.1.4 "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 Facility, 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 CONDEMNATION. If title to the fee of the whole
of the Facility shall be taken or condemned by any Condemnor, this Lease shall
cease and terminate as of the Date of Condemnation by said Condemnor. If title
to the fee of less than the whole of the Leased Property shall be so taken or
condemned, which nevertheless renders the Facility Unsuitable for Its Primary
Intended Use, as reasonably determined by Lessor and Lessee, Lessee and Lessor
shall each have the option by written Notice to the other, at any time at or
prior to the taking of possession by, or the date of vesting of title in, such
Condemnor, whichever first occurs, to terminate this Lease as of the date of the
occurrence of such first event. If such Notice has timely been given, this
Lease shall thereupon cease and terminate. Upon the termination of this Lease
in accordance with this Paragraph 15.3, the Minimum Rent payable by Lessee
hereunder shall be apportioned as of the date the Lease terminates.
15.4 ALLOCATION OF PORTION OF AWARD. The total Award
made with respect to all or any portion of the Leased Property or for loss of
rent, or for loss of business, whether or not
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beyond the Term of this Lease, or for the loss of value of the leasehold
(including the bonus value of the Lease) shall be solely the property of and
payable to Lessor and Lessee hereby assigns to Lessor any and all rights in
such Award; provided, however, that Lessee shall be entitled to make a
separate claim for the taking of Lessee's Personal Property and relocation
expense as long as any such claim will not in any way diminish Lessor's
Award, or for any other loss that can be awarded to Lessee separately from
Lessor's claim and which will not in any respect whatsoever diminish or
threaten to diminish the total amounts to be awarded to Lessor, as set forth
above or otherwise. To the extent Lessee's claim may thereafter reduce
Lessor's claim, Lessee shall, and hereby does, assign its claim to Lessor.
In any Condemnation proceedings, each of the Lessor and Lessee shall seek its
own claim in conformity herewith, at its own expense.
15.5 PARTIAL TAKING. If title to the fee of less than
the whole of any Facility shall be so taken or condemned, and the Facility is
still suitable for its Primary Intended Use, as reasonably determined by
Lessor and Lessee, or if Lessee or Lessor shall be so entitled, but shall not
elect to terminate this Lease as provided in Paragraph 15.3 hereof, Lessee,
at its own cost and expense (subject to Lessor's contribution described
below), shall with all reasonable dispatch restore the untaken portion of any
Leased Improvements on the Leased Property so that such Leased Improvements
shall constitute a complete architectural unit of the same general character
and condition (as nearly as may be possible under the circumstances) as the
Leased Improvements existed immediately prior to such Condemnation. Lessor
shall contribute to the cost of restoration that part of its Award as is
reasonably necessary to accomplish such restoration, provided, however, the
amount of such contribution shall not exceed the cost of restoration. The
Minimum Rent shall be reduced as set forth in Paragraph 5.2.
15.6 TEMPORARY TAKING. Lessee agrees that if, at any
time after the date hereof, the whole or any part of the Leased Property or
of Lessee's interest under this Lease, shall be Condemned by any Condemnor
for its temporary use or occupancy, this Lease shall not terminate by reason
thereof, and Lessee shall continue to pay, in the manner and at the times
herein specified, the full amounts of Minimum Rent and Additional Charges.
Except only to the extent that Lessee may be prevented from doing so pursuant
to the terms of the order of the Condemnor, Lessee shall also continue to
perform and observe all of the other terms, covenants, conditions and
obligations hereof, on the part of the Lessee to be performed and observed,
as though such Condemnation had not occurred. In the event of any such
Condemnation as in this Paragraph 15.6 described, the entire amount of any
such Award made for such temporary use, whether paid by way of damages, rent
or otherwise, shall be paid to Lessee to the extent attributable to any
period within the Term (as extended by any already exercised options to
extend or options thereafter timely exercised if applicable). Lessee
covenants that upon the termination of any such period of temporary use or
occupancy as set forth in this Paragraph 15.6, it will, at its sole cost and
expense, restore the Leased Property as nearly as may be reasonably possible,
to the condition in which the same was immediately prior to the Condemnation,
unless such period of temporary use or occupancy shall extend beyond the
expiration of the Term, in which case Lessee shall not be required to make
such restoration, and in such case, Lessee shall contribute to the cost of
such restoration that portion of its entire Award which is specifically
allocated to such restoration in the judgment or order of the
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court, if any.
ARTICLE XVI
16.1 EVENTS OF DEFAULT. Any one or more of the following
events shall be an "Event of Default":
(a) if Lessee fails to make payment of the Rent
payable by Lessee under this Lease when the same becomes due and payable and
such failure is not cured by Lessee within a period of five (5) business days
after Notice thereof from Lessor; or
(b) if Lessee fails to observe or perform any
other term, covenant or condition of this Lease and such failure is not cured by
Lessee within a period of thirty (30) days after Notice thereof from Lessor,
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 an Event of Default if
Lessee proceeds promptly and with due diligence to cure the failure and
diligently completes the curing thereof. No Event of Default (other than a
failure to make payment of money) shall be deemed to exist under this clause (b)
during any time the curing thereof is prevented by an Unavoidable Delay,
provided that upon the cessation of such Unavoidable Delay, Lessee shall remedy
such default without further delay; or
(c) if Lessee (or any of its Affiliates) commits
an "Event of Default" under any of the Related Leases or any of the Other
Leases. Without limiting the foregoing, if Lessee commits an "Event of Default"
under this Lease, Lessee (and its Affiliates) shall thereby be in default (and
shall therefore have committed an "Event of Default") under all of the Related
Leases and the Other Leases; or
(d) if Lessee does any of the following:
(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 law;
(iii) make a general 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
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America or any state thereof; or
(e) if Lessee, on a petition in bankruptcy filed
against it, is adjudicated a bankrupt or an order for relief thereunder is
entered against it or a court of competent jurisdiction shall enter an order or
decree appointing, without the consent of Lessee, a receiver for Lessee or of
the whole or substantially all of its property or the Facility, or approving a
petition filed against Lessee seeking reorganization or arrangement of Lessee
under the Federal bankruptcy laws or other applicable law or statute of the
United States of America or any state thereof, and such judgment, order or
decree shall not be vacated or set aside within ninety (90) days from the date
of the entry thereof; or
(f) if Lessee 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 of its assets
other than in connection with a merger or consolidation of Lessee into, or a
sale of substantially all of Lessee's assets to, another corporation, provided
any such actions shall also constitute an Event of Default unless: (i) the
survivor of such merger or the purchaser of such assets shall assume all of
Lessee's obligations under this Lease by a written instrument, in form and
substance reasonably satisfactory to Lessor, 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 creditor's
rights exceptions); and (ii) immediately after giving effect to any such merger,
consolidation or sale, Lessee or the other corporation (if not Lessee) surviving
the same shall have a Consolidated Net Worth of not less than Twenty Six Million
Five Hundred Thousand Dollars ($26,500,000) and a debt to equity ratio of not
more than four to one (4.0:1.0), all as to be set forth in an Officer's
Certificate and delivered to Lessor within a reasonable period of time after
such merger, consolidation or sale; or
(g) if the estate or interest of Lessee in the
Leased Property or any part thereof be levied upon or attached in a proceeding
and the same shall not be vacated or discharged within the later of ninety (90)
days after commencement thereof or thirty (30) days after Notice thereof from
Lessor (unless Lessee shall be contesting such lien or attachment in good faith
in accordance with Article XII hereof), or a mechanic's or similar lien is filed
with respect to the Leased Property and is not released or bonded around for a
period exceeding sixty (60) days after Lessee first has knowledge of the lien
having been filed; or
(h) if, except as a result of damage,
destruction or a partial or total Condemnation, or Unavoidable Delay, Lessee
voluntarily ceases operations at the Facility for a period in excess of ten (10)
days; provided that Lessee may cease operations for more than ten (10) days (i)
if Lessee obtains Lessor's prior written approval, and (ii) so long as such
cessation of operations does not impair or threaten the status or effectiveness
of the operating license or other certification for operating the Facility in
accordance with its Primary Intended Use; or
(i) if any of Lessee's representations,
covenants or warranties expressly set forth in this Lease (or financial
statements provided to Lessor) proves to be untrue when made
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in any material respect which materially and adversely affects Lessor; or
(j) if Lessee attempts to assign or sublease, in
violation of the provisions of this Lease;
(k) if Lessee fails to maintain in effect an
operator's license required to operate the Facility, or if Lessee otherwise
ceases to maintain in effect any license, permit, certificate or approval
necessary or otherwise required to operate the Facility in accordance with its
Primary Intended Use; or
(l) if Lessee and/or Karrington violates any of
the Lease Covenants described in Paragraph 23.2 hereof.
Upon the occurrence of an Event of Default, in addition to all
of Lessor's other remedies, Lessor may terminate this Lease by giving Lessee not
less than ten (10) business days Notice of such termination and upon the
expiration of the time fixed in such Notice, the Term shall terminate and all
rights of Lessee under this Lease shall cease.
In the event litigation is commenced with respect to any
alleged default under this Lease, the prevailing party in such litigation shall
receive, in addition to its damages incurred, such sum as the court shall
determine as its reasonable attorneys' fees, and all costs and expenses incurred
in connection therewith, including reasonable attorneys' fees and costs incurred
on appeal.
16.2 CERTAIN REMEDIES. Lessor shall have remedies and rights
provided in law and equity as a result of an Event of Default, including, to the
extent permitted by applicable Ohio law, the right to appoint a receiver as a
matter of strict right without regard to the solvency of Lessee, for the purpose
of preserving the Leased Property and any portion thereof, preventing waste,
protecting and otherwise enforcing any and all of Lessor's rights under this
Lease and for any and all other purposes for which a receiver is allowed under
the laws of the State of Ohio. Lessee hereby waives the right to notice of any
hearing with respect to the appointment of a receiver and waives the requirement
for the posting of a bond by any receiver. Without limiting the foregoing, if
an Event of Default occurs (and the event giving rise to such Event of Default
has not been cured within the curative period, if any, relating thereto as set
forth in this Lease) whether or not this Lease has been terminated pursuant to
Paragraph 16.1, Lessee shall, to the extent permitted by law, and if required by
Lessor to so do, immediately surrender to Lessor the Leased Property pursuant to
the provisions of Paragraph 16.1 and quit the same and Lessor may enter upon and
repossess the Leased Property, in person, by agent or by a court-appointed
receiver, by reasonable force, summary proceedings, ejectment or otherwise, and
may remove Lessee and all other persons and any and all personal property from
the Leased Property subject to rights of any residents (and their property) and
to any requirements of law. Without limiting all other rights and remedies of
Lessor under this Lease and under law, Lessor shall have the right to accelerate
all Rent and therefore, upon Lessee's default, at Lessor's option, all such Rent
shall become immediately due and payable in accordance with Paragraph 16.3,
below. Further, without limiting all other rights and remedies
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of Lessor under this Lease and under law, Lessor shall be entitled to recover
from Lessee, and Lessee shall therefore be liable for, all costs of
recovering possession (including without limitation all costs associated with
any receiver) and renovating the Leased Property or any portion thereof for a
new lessee and all other costs of any reletting or attempted reletting,
including, but not limited to, brokerage fees and reasonable attorneys fees,
except as limited by Paragraph 16.3 below.
16.3 DAMAGES. Neither (i) the termination of this Lease
pursuant to Section 16.1, (ii) the repossession of the Leased Property; (iii)
the failure of Lessor, notwithstanding reasonable good faith efforts, to relet
the Leased Property; nor (iv) the reletting of all or any portion thereof, shall
relieve Lessee of its liability and obligations hereunder, all of which shall
survive any such termination, repossession or reletting (except for proceeds
received on subletting). In the event of any such termination, Lessee shall
forthwith pay to Lessor all Rent due and payable with respect to the Leased
Property to and including the date of such termination.
(a) Lessor shall not be deemed to have
terminated this Lease unless Lessor delivers written Notice to Lessee of such
election. If Lessor voluntarily elects to terminate this Lease upon an Event of
Default, then in addition to all remedies available to Lessor, Lessor may
recover the sum of:
(i) the worth at the time of award of
the unpaid Rent which had been earned at the time of termination;
(ii) the worth at the time of award of
the amount by which the unpaid Rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
Lessee proves could have been reasonably avoided;
(iii) the worth at the time of award of
the amount by which the unpaid Rent for the balance of the Term after the time
of award exceeds the amount of such rental loss that Lessee proves could be
reasonably avoided; and
(iv) any other amount necessary to
compensate Lessor for all the detriment proximately caused by Lessee's failure
to perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom.
The "worth at the time of award" of the
amounts referred to in subparagraphs (i) and (ii) above is computed by allowing
interest at the Overdue Rate. The worth at the time of award of the amount
referred to in subparagraph (iii) is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%).
(b) Without limiting Lessor's other remedies
provided herein and provided by law, Lessor may continue the Lease in effect
after Lessee's breach and abandonment and recover Rent as it becomes due,
provided that, in such event, Lessee has the right to sublet or
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assign subject only to reasonable conditions imposed by Lessor. Accordingly,
without termination of Lessee's right to possession of the Leased Property,
Lessor may demand and recover each installment of Rent and other sums payable
by Lessee to Lessor under the Lease as the same becomes due and payable,
which Rent and other sums shall bear interest at the maximum interest rate
permitted in accordance with the laws of the State of Ohio (or the Overdue
Rate, whichever is lower), from the date when due until paid, and Lessor may
enforce, by action or otherwise, any other term or covenant of this Lease.
If Lessor elects to recover each installment of Rent as it becomes due, then
Lessor may file any number of lawsuits for the recovery of the amounts due
hereunder.
16.4 WAIVER. If this Lease is terminated pursuant to
Paragraph 16.1, Lessee waives, to the extent permitted by applicable law, the
benefit of any laws now or hereafter in force exempting property from liability
for rent or for debt.
16.5 APPLICATION OF FUNDS. Any payments received by
Lessor under any of the provisions of this Lease during the existence or
continuance of any Event of Default shall be applied to Lessee's obligations in
the order which Lessor may determine or as may be prescribed by the laws of the
State of Ohio.
ARTICLE XVII
17. LESSOR'S RIGHT TO CURE LESSEE'S DEFAULT. If Lessee fails 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, if any,
provided under this Lease, Lessor, after thirty (30) days Notice to and demand
upon Lessee, and without waiving or releasing any obligation of Lessee 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 Lessee,
and may, to the extent permitted by law, enter upon the Leased Property for such
purpose and take all such action thereon as, in Lessor's opinion, may be
necessary or appropriate therefor. Provided, however, that should Lessor
reasonably determine that the giving of such Notice would risk loss to the
Leased Property or any portion thereof or cause damage to Lessor, then Lessor
shall give such written Notice as is practical under the circumstances. No such
entry shall be deemed an eviction of Lessee. In exercising any remedy under
this Article XVII, Lessor shall use its good faith efforts not to violate any
rights of residents of the Facility. All sums so paid by Lessor and all costs
and expenses (including, without limitation, reasonable attorneys' fees and
expenses, in each case) so incurred, together with a late charge thereon (to the
extent permitted by law) at the Overdue Rate from the date on which sums or
expenses are paid or incurred by Lessor, shall be paid by Lessee to Lessor on
demand. The obligations of Lessee and rights of Lessor contained in this
Article shall survive the expiration or earlier termination of this Lease.
ARTICLE XVIII
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18.1 OPTIONS TO EXTEND. Provided there exists no uncured
Event of Default under any of this Lease, the Related Leases and the Other
Leases at the time Lessee exercises any option to extend (in accordance with
this Article XVIII), Lessee will have the right to extend this Lease for two (2)
periods of ten (10) years each (each such additional term shall be referred to
herein as an "Extended Term"), commencing immediately following the end of the
Initial Term or the immediately preceding Extended Term, as the case may be;
provided, however, that notwithstanding anything stated in this Paragraph 18.1
or elsewhere in this Lease, Lessee shall not be entitled to exercise its option
to extend this Lease for any Extended Term (and any such option to extend shall
automatically expire and terminate) unless Lessee concurrently exercises its
option to extend all the Related Leases for the same period, as provided in
Article XVIII of the Related Leases. The Lease during any Extended Term shall
be on the same terms and conditions as during the Initial Term, except that the
Minimum Rent shall be determined as set forth in Paragraph 18.2 below. In the
event Lessee desires to exercise any option to extend granted in this Article
XVIII, Lessee shall give Landlord written notice ("Notice to Extend") not less
than one hundred eighty (180) days prior to the expiration of the Initial Term
or the immediately preceding Extended Term, as the case may be. If Lessee fails
to give Lessor any such notice, then Lessor shall give Lessee written notice
that Lessor has not received Lessee's Notice to Extend. If Lessee fails to
deliver to Lessor the Notice to Extend within ten (10) days thereafter, Lessee
shall be deemed to have elected not to extend this Lease and the Related Leases,
such option to extend and all future options to extend granted in this Article
XVIII or in the Related Leases shall be null and void and of no further force or
effect.
18.2 MINIMUM RENT DURING EXTENDED TERMS. The Minimum Rent
at the commencement of each Extended Term shall be Minimum Rent, as determined
below.
(a) The Minimum Rent for the first year of the
first Extended Term shall be $1,061,569 and shall be increased annually
thereafter in accordance with the method described in Paragraph 3.1.2, above.
(b) The Minimum Rent for the first year of the
second Extended Term shall be $1,294,046 and shall be increased annually
thereafter in accordance with the method described in Paragraph 3.1.2, above.
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ARTICLE XIX
19. HOLDING OVER. If Lessee 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 during which time Lessee shall pay as rental each
month, one and one-quarter times the aggregate of (i) one-twelfth of the
aggregate Minimum Rent payable with respect to the last Lease Year of the
Term; (ii) all Additional Charges accruing during the month; and (iii) all
other sums payable by Lessee pursuant to the provisions of this Lease.
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
Leased Property. Nothing contained 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.
ARTICLE XX
20. RISK OF LOSS. During the Term of this Lease, the risk of loss
or of decrease in the enjoyment and beneficial use of the Leased Property in
consequence of the damage or destruction thereof by fire, the elements,
casualties, thefts, riots, wars or otherwise, or in consequence of foreclosures,
attachments, levies or executions (other than those caused by or through Lessor)
is assumed by Lessee, and Lessor shall in no event be answerable or accountable
therefor, nor shall any of the events mentioned in this Paragraph entitle Lessee
to any abatement of Rent except as specifically provided in this Lease, or any
right to terminate this Lease, except as provided in Paragraph 14.7, above.
Without limiting the foregoing, Lessor shall not be liable for injury or damage
to the person or goods, wares, merchandise or other property of Lessee, Lessee's
employees, contractors, invitees, customers, or any other person in or about the
Leased Premises, whether such damage or injury is caused by or results from
fire, steam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of pipes, fire sprinklers, wires, appliances,
plumbing, air conditioning, or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Leased Premises or upon other portions of the Land, or any part thereof, or from
other sources or places, and regardless of whether the cause of such damage or
injury or the means of repairing the same is accessible or not. Lessor shall
not be liable for any damages arising from any act or neglect of Lessee, or any
other party named above. Lessor shall, however, remain liable for any damages
arising from Lessor's own gross negligence or willful misconduct.
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ARTICLE XXI
21. INDEMNIFICATION. Notwithstanding the existence of any
insurance provided for in Article XIII, and without regard to the policy limits
of any such insurance, Lessee will protect, indemnify, hold harmless and defend
Lessor from and against all liabilities, obligations, claims, demands damages,
penalties, causes of action, costs, and expenses (including, without limitation,
actual reasonable attorneys' fees and expenses), to the extent permitted by law,
imposed upon or incurred by or asserted against Lessor by reason of any of the
following (except to the extent solely attributable to Lessor's gross negligence
or willful misconduct): (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 malpractice, whether
arising in connection with events occurring prior to or after the Commencement
Date hereunder (except to the extent such events occur after the expiration of
this Lease); (b) any occupancy, use, misuse, non-use, condition, maintenance, or
repair by Lessee of the Leased Property; (c) any Impositions (which are the
obligations of Lessee to pay pursuant to the applicable provisions of this
Lease, which include any Impositions arising prior to the Commencement Date);
(d) any failure on the part of Lessee to perform or comply with any of the terms
of this Lease, (e) the non-performance of any of the terms and provisions of any
and all existing and future subleases of the Leased Property to be performed by
the landlord (Lessee) thereunder; (f) any Hazardous Materials, as defined in
Paragraph 10.2, above that now or hereafter during the Term may be located in,
on or around, or affecting, any part of the Land or Leased Improvements; (g) any
and all other matters pertaining to the Leased Property or the operation of the
Facility after the date of this Lease during the Term, including without
limitation compliance with or failure to comply with the provisions of Section 8
of the United States Housing Act of 1937, and the provisions of the Fair Housing
Amendments Act of 1988, each as amended from time to time; (h) any liability
relating to the construction or development of the Facility, including patent or
latent defects in the Facility, whether arising in connection with events
occurring prior to or after the Commencement Date hereunder, including without
limitation compliance with or failure to comply with the provisions of the
federal Americans with Disabilities Act, as amended from time to time; and (i)
third party claims of any kind relating to the Leased Property, the Facility,
the operations at the Facility or otherwise, and any and all other matters
whatsoever relating to the Leased Property, the assisted living facility located
thereon and the operation thereof. Any amounts which became payable by Lessee
under this Paragraph shall be paid within ten (10) days of the date the same
becomes due 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. Lessee, at its expense, shall contest, resist and defend any
such claim, action or proceeding asserted or instituted against Lessor or may
compromise or otherwise dispose of the same as Lessee sees fit, at Lessee's sole
cost, but after consultation with and approval by Lessor, which approval shall
not be unreasonably withheld or delayed. Nothing herein shall be construed as
indemnifying Lessor against its own gross negligence or willful misconduct.
Lessee's liability for a breach of the provisions of this article arising during
the Term hereof shall survive any termination of this Lease.
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ARTICLE XXII
22. SUBLETTING AND ASSIGNMENT. Except as provided hereinbelow to
the contrary, Lessee may not assign, sublease or sublet, encumber, appropriate,
pledge or otherwise transfer, the Lease or the leasehold or other interest in
the Leased Property without Lessor's prior written consent, which consent may be
withheld or granted in Lessor's sole and absolute discretion; provided, however,
that Lessee may from time to time during the Term of this Lease enter into
rental agreements with residents of the Facility, and execute any documents
necessary in connection therewith, without obtaining Lessor's prior consent.
Notwithstanding the foregoing provisions of this Paragraph 22, (a) Lessee and
its permitted assigns shall be entitled, at any time without first obtaining the
consent of Lessor, to sublease up to the greater of (i) 2,000 square feet, or
(ii) ten percent (10%) of the total square footage of the Facility, to any
person or entity providing any services related or ancillary to the operation of
the Facility or in connection with the provision of home health services both
within and outside the Facility; (b) so long as Lessee is lessee under this
Lease, Lessee shall be entitled, at any time without first obtaining the consent
of Lessor to sell, assign and convey to Karrington Health, Inc., an Ohio
corporation ("Karrington"), either (i) all (but not less than all) of Lessee's
leasehold interest in all of the Leased Property or (ii) all of the issued and
outstanding stock of Lessee; and (c) in the event that there occurs a change in
control in respect to the ownership of Karrington, whether by merger, sale, or
transfer of substantially all of Karrington's assets (other than in the ordinary
course of Karrington's business) or otherwise, including without limitation the
acquisition by any one person or entity of thirty-five percent (35%) or more of
the issued and outstanding stock of Karrington (any of the foregoing, a "Change
of Control"), and so long as the surviving entity at the conclusion of such
Change of Control has a net worth of Twenty Six Million Five Hundred Thousand
Dollars ($26,500,000) or more and a debt to equity ratio of not more than four
to one (4.0:1.0) (which net worth and debt to equity ratio are greater than or
substantially similar to Karrington's as of the date hereof), Karrington or
Lessee, as the case may be, shall be entitled, without first obtaining the
consent of Lessor, to assign all of its right, title and interest in and to this
Lease to said surviving entity, so long as, under any of the scenarios described
in this Paragraph 22, Lessor is notified of such assignment or conveyance in
writing within five (5) business days thereafter. Upon Lessor's consent, (w) in
the case of a subletting, the sublessee shall comply with the provisions of
Paragraph 22.2, (x) in the case of an assignment, the assignee shall assume in
writing and agree to keep and perform all of the terms of this Lease on the part
of Lessee to be kept and performed and shall be, and become, jointly and
severally liable with Lessee for the performance thereof, (y) an original
counterpart of each sublease and assignment and assumption, duly executed by
Lessee and such sublessee or assignee, as the case may be, in form and substance
satisfactory to Lessor, shall be delivered promptly to Lessor, and (z) in case
of either an assignment or subletting, Lessee shall remain primarily liable, as
principal rather than as surety, for the prompt payment of the Rent and for the
performance and observance of all of the covenants and conditions to be
performed by Lessee hereunder.
22.1 ATTORNMENT. Lessee shall insert in each sublease
permitted under Paragraph 22 provisions to that effect that (i) such sublease is
subject and subordinate to all of the terms and provisions of this Lease and to
the rights of Lessor hereunder; (ii) in the event this Lease shall terminate
before the expiration of such sublease, the sublessee thereunder will, at
Lessor's option,
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attorn to Lessor and waive any right the sublessee may have to terminate the
sublease or to surrender possession thereunder, as a result of the
termination of this Lease; and (iii) in the event the sublessee receives a
written Notice from Lessor or Lessor's assignees, if any, stating that Lessee
is in default under this Lease, the sublessee shall thereafter be obligated
to pay all rentals accruing under said sublease directly to the party giving
such Notice, or as such party may direct. All rents received from the
sublessee by Lessor or Lessor's assignees, if any, as the case may be, shall
be credited against amounts owing by Lessee under this Lease.
22.2 SUBLEASE LIMITATION. Anything contained in this
Lease to the contrary notwithstanding, Lessee shall not sublet the Leased
Property on any basis such that the rental to be paid by the sublessee
thereunder would be based, in whole or in part, on either (i) the income or
profits derived by the business activities of the sublessee; or (ii) any other
formula such that any portion of the sublease rental received by Lessor would
fail to qualify as Arents from real property" within the meaning of Paragraph
856(d) of the Code, or any similar or successor provision thereto.
ARTICLE XXIII
23. OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS; LEASE
COVENANTS.
23.1 OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS.
(a) At any time from time-to-time upon not less
than twenty (20) days Notice by Lessor, Lessee will furnish to Lessor 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), the date to which the Rent has been paid and
such other information concerning this Lease as may be reasonably requested by
Lessor. Any such certificate furnished pursuant to this Paragraph may be relied
upon by Lessor and any prospective purchaser or lender of the Leased Property.
(b) In addition to all other obligations to
provide financial information contained in the Lease, Lessee will furnish the
following statements to Lessor:
(i) within one hundred twenty (120) days
after the end of each Lease Year, an Officer's Certificate stating that to the
best of the signer's knowledge and belief after making reasonable inquiry,
Lessee is not in default in the performance or observance of any of the terms of
this Lease, or if Lessee shall be in default to its knowledge, specifying all
such defaults, the nature thereof, and the steps being taken to remedy the same,
and
(ii) with reasonable promptness, such other
information respecting the financial condition and affairs of Lessee as Lessor
may reasonably request from time-to-time.
(c) Within one hundred twenty (120) days after
the end of each Fiscal Year, Lessee agrees to provide to Lessor Consolidated
Financials of Lessee for such Fiscal Year.
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23.2 LEASE COVENANTS. Lessee warrants, covenants and represents to
Lessor that prior to December 31, 1999, Karrington shall not undertake or
accomplish any of the following: (a) buy back any of the stock of Karrington;
(b) declare a dividend to Karrington stockholders; or (c) repay any loan or
other indebtedness to any current or former directors, officers, shareholders or
affiliates of Karrington; provided, however, that Karrington shall be allowed to
do any of the foregoing only up to a total combined amount equal to or less than
fifty percent (50%) of a total amount of equity funding actually received by
Karrington from the Commencement Date through December 31, 1999.
Notwithstanding the foregoing, Karrington shall be entitled, prior to December
31, 1999, to do any of the following: (d) repay to JMAC the Four Million Dollar
($4,000,000) bridge loan entered into on or about April 1, 1998, so long as the
entire outstanding balance of such bridge loan has been used substantially in
accordance with the use of proceeds attached to this Lease as Exhibit "D", (e)
grant to JMAC the right to convert to equity in Karrington all or any portion of
its existing debt to Karrington, in the approximate amount of Seven Million Five
Hundred Thousand Dollars ($7,500,000); and (f) upon a Change of Control of
Karrington, so long as the surviving entity at the conclusion of such Change of
Control has a net worth of Twenty-Six Million Five Hundred Thousand Dollars
($26,500,000) or more and a debt to equity ratio of not more than four to one
(4.0:1.0), Karrington shall be entitled to pay off any and all debts which it
may have to JMAC. Lessee acknowledges and agrees that Lessor has entered into
this Lease in material reliance on the foregoing warranties, covenants and
representations (the "Lease Covenants"). Lessee further acknowledges that
certain of the Lease Covenants concern the activities of Karrington rather than
Lessee and that any violation or breach of any of the Lease Covenants, whether
by Lessee or Karrington shall be an Event of Default hereunder.
ARTICLE XXIV
24. LESSOR'S RIGHT TO INSPECT. Lessee shall permit Lessor and its
authorized representatives to inspect the Leased Property on at least one (1)
Business Day's prior notice during usual business hours subject to any security,
health, safety, or confidentiality requirements of Lessee or any governmental
agency or insurance requirement relating to the Leased Property, or imposed by
law or applicable regulations. Lessor shall take reasonable steps to avoid
interference with the residents.
ARTICLE XXV
25. NO WAIVER. The waiver by Lessor or Lessee of any term,
covenant or condition in this Lease shall not be deemed to be a waiver of any
other term, covenant or condition or any subsequent waiver of the same or any
other term, covenant or condition contained in this Lease. The subsequent
acceptance of rent hereunder by Lessor or any payment by Lessee shall not be
deemed to be a waiver of any preceding default of any term, covenant or
condition of this Lease, other than the failure to pay the particular amount so
received and accepted, regardless of the knowledge of any preceding default at
the time of the receipt or acceptance.
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ARTICLE XXVI
26. REMEDIES CUMULATIVE. To the extent permitted by law, each
legal, equitable or contractual right, power and remedy of Lessor 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 Lessor of any one or
more of such rights, powers and remedies shall not preclude the simultaneous or
subsequent exercise by Lessor of any or all of such other rights, powers and
remedies.
ARTICLE XXVII
27. ACCEPTANCE OF SURRENDER. No surrender to Lessor of this Lease
or of the Leased Property or any part thereof, or of any interest therein, shall
be valid or effective unless agreed to and accepted in writing by Lessor and no
act by Lessor or any representative or agent of Lessor, other than such a
written acceptance by Lessor, shall constitute an acceptance of any such
surrender.
ARTICLE XXVIII
28. NO MERGER OF TITLE. There shall be no merger of this Lease or
of the leasehold estate created hereby by reason of the fact that the same
person, firm, corporation, or other entity may acquire, own or hold, directly or
indirectly, (a) this Lease or the leasehold estate created hereby or any
interest in this Lease or such leasehold estate; and (b) the fee estate in the
Leased Property.
ARTICLE XXIX
29. CONVEYANCE BY LESSOR. If Lessor or any successor owner of the
Leased Property shall transfer or assign Lessor's title or interest in the
Leased Property or this Lease other than as security for a debt, and provided
the new owner has agreed in writing for the benefit of Lessee to recognize this
Lease and be bound by all of the terms and conditions hereof, Lessor shall
thereupon be released from all future liabilities and obligations of Lessor
under this Lease arising or accruing from and after the date of such transfer or
assignment and all such future liabilities and obligations shall thereupon be
binding upon the new owner.
ARTICLE XXX
30. QUIET ENJOYMENT. So long as Lessee shall pay all Rent as the
same becomes due and shall comply with all of the terms of this Lease and
perform its obligations hereunder, and except for any claims, actions, liens or
encumbrances arising from the acts or omissions of Lessee or otherwise from
events occurring prior to the Commencement Date hereunder, Lessee shall
peaceably and quietly have, hold and enjoy the Leased Property for the Term
hereof, free of any claim or other action by Lessor or anyone claiming by,
through or under Lessor, but subject to all liens and encumbrances of record as
of the date hereof or hereafter
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consented to by Lessee. Except as otherwise provided in this Lease, no
failure by Lessor to comply with the foregoing covenant or any covenant of
this Lease shall give Lessee any right to ▇▇▇▇▇, reduce or made 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 Lessee hereunder.
ARTICLE XXXI
31. NOTICES. All notices, demands, requests, consents, approvals,
and other communications ("Notice" or "Notices") hereunder shall be in writing
and personally served upon an Executive Officer of the party being served or
mailed (by registered or certified mail, return receipt requested and postage
prepaid), overnight delivery service addressed to the respective parties, as
follows:
(a) If to Lessee: Karrington Operating Company, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Chief Financial Officer
with a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(b) If to Lessor: LTC-Ohio, Inc.
c/o LTC Properties, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
with a copy to: LTC Properties, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
and: ▇▇▇▇▇▇▇▇▇, Wolff, Aronson, ▇▇▇▇▇▇▇
& ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or to such other address as either party may hereafter designate by a Notice
pursuant to this Paragraph. Personally delivered Notice (including Notices sent
by overnight delivery service) shall be effective upon receipt, and Notice given
by mail shall be completed five (5) days after the time of deposit in the U.S.
Mail system. For the purposes hereof, the term "Executive Officer" shall
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mean the Chairman of the Board of Directors, the President, any Vice
President, or the Secretary of the corporation upon which service is to be
made.
ARTICLE XXXII
32.1 LESSOR MAY GRANT LIENS. Lessor may, subject to
the terms and conditions set forth below in this Paragraph 32.1, from
time-to-time, directly or indirectly, create or otherwise cause to exist any
lien or encumbrance or any other change of title ("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
Lessee under this Lease, provided that any holder of an Encumbrance shall (a)
give Lessee the same notice, if any, given to Lessor of any default or
acceleration of any obligation underlying any such mortgage or any sale in
foreclosure under such mortgage; (b) permit Lessee to cure any such default
on Lessor's behalf within any applicable cure period, and Lessee shall be
reimbursed by Lessor or shall be entitled to offset against Minimum Rent
payments next accruing or coming due for any and all costs incurred in
effecting such cure, including, without limitation, out-of-pocket costs
incurred to effect any such cure (including reasonable attorneys' fees); (c)
permit Lessee to appear and to bid at any sale in foreclosure made with
respect to any such mortgage, and (d) provide that in the event of
foreclosure or other possession of the Leased Property by the Mortgagee, that
the Mortgagee shall be bound by the terms and provisions of this lease. Upon
the reasonable request of Lessor, Lessee shall execute an agreement to the
effect that this Lease shall be subject and subordinate to the lien of a new
mortgage on the Leased Property and that in the event of any default or
foreclosure under such mortgage, Lessee shall attorn to the new mortgagee,
and as otherwise requested by Lessor; provided that the proposed mortgagee
execute a non-disturbance agreement recognizing this Lease and agreeing, for
itself and its successor and assigns, to comply with the provisions of this
Article XXXII.
32.2 LESSEE'S RIGHT TO CURE. Subject to the provisions of
Paragraph 32.3, if Lessor breaches any covenant to be performed by it under this
Lease, Lessee, after Notice to and demand upon Lessor, without waiving or
releasing any obligation hereunder, and in addition to any other remedies
available to Lessee, 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 Lessor. All sums so paid by Lessee and all costs and expenses
(including, without limitation, reasonable attorneys' fees) so incurred,
together with interest thereon (at the Overdue Rate) from the date on which such
sums or expenses are paid or incurred by Lessee, shall be paid by Lessor to
Lessee on demand, but may not be offset by Lessee against Minimum Rent payments.
The rights of Lessee hereunder to cure and to secure payment from Lessor in
accordance with this Paragraph 32.2 shall survive the termination of this Lease.
32.3 DEFAULT BY LESSOR. It shall be a default of this
Lease if Lessor fails 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 ten (10) days after Notice thereof from Lessee in the case of
a monetary default or thirty (30) days after Notice thereof from Lessee (or
such shorter time as
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may be required in order to protect the health or welfare of any patients or
other residents of the Leased Property) in the case of a non-monetary
default, unless in the case of a non-monetary default 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 Lessor, within said
thirty (30) day period, proceeds promptly, continuously and with due
diligence to cure the failure and diligently completes the curing thereof.
The time within which Lessor shall be obligated to cure any such failure
shall also be subject to extension of time due to the occurrence of any
Unavoidable Delay.
ARTICLE XXXIII
33. MISCELLANEOUS.
33.1 SURVIVAL OF OBLIGATIONS. Anything contained in
this Lease to the contrary notwithstanding, all claims against, and
liabilities of, Lessee or Lessor arising prior to, or in connection with any
event occurring prior to, the date of any expiration or termination of this
Lease or the date of Lessee's surrender of possession of the Leased Property,
whichever is later, shall survive such termination or surrender of possession.
33.2 LATE CHARGES; INTEREST. If any interest rate
provided for in any provision of this Lease is 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.
33.3 LIMITS OF LESSOR'S LIABILITY. Lessee specifically
agrees to look solely to the assets of Lessor for recovery of any judgment
against Lessor, it being specifically agreed that no constituent shareholder,
officer or director of Lessor shall ever be personally liable for any such
judgment or the payment of any monetary obligation to Lessee. The provision
contained in the foregoing sentence is not intended to, and shall not, limit
any right that Lessee might otherwise have to obtain injunctive relief
against Lessor or Lessor's successors in interest, or any action not
involving the personal liability of Lessor (original or successor).
Additionally, Lessor shall be exonerated from any further liability under
this Lease upon Lessor's transfer or other divestiture of its ownership of
the Leased Property, provided that the assignee or grantee shall expressly
assume in writing the obligations of Lessor hereunder. Furthermore, in no
event shall Lessor (original or successor) ever be liable to Lessee for any
indirect or consequential damages suffered by Lessee from whatever cause.
33.4 LIMITS OF LESSEE'S LIABILITY. Lessor specifically
agrees to look solely to the assets of Lessee for recovery of any judgment
against Lessee, it being specifically agreed that no constituent shareholder,
officer or director of Lessee shall ever be personally liable for any such
judgment or the payment of any monetary obligation to Lessor. The provision
contained in the foregoing sentence is not intended to, and shall not, limit
any right that Lessor might otherwise have to obtain injunctive relief
against Lessee or Lessee's successors in interest, or any action not
involving the personal liability of Lessee (original or successor).
Furthermore, in no event shall Lessee (original or successor) ever be liable
to Lessor for any indirect or consequential damages suffered by Lessor from
whatever cause.
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33.5 TRANSFER OF OPERATIONS. At Lessor's request, upon
the expiration or earlier termination of the Term, Lessee shall use its best
efforts to transfer to Lessor or Lessor's nominee (or to cooperate with Lessor
or Lessor's nominee in connection with the processing by Lessor or Lessor's
nominee of any applications for) all licenses, operating permits and other
governmental authorizations and all contracts, including contracts with
governmental or quasi-governmental entities which may be necessary for the
operation of the Facility; provided that the costs and expenses of any such
transfer or the processing of any such application shall be paid by Lessor or
Lessor's nominee.
33.6 ADDENDUM, AMENDMENTS AND EXHIBITS. Any addendum,
amendments and exhibits attached to this Lease are hereby incorporated in this
Lease and made a part of this Lease.
33.7 HEADINGS. The headings and paragraph titles in this
Lease are not a part of this Lease and shall have no effect upon the
construction or interpretation of any part of this Lease.
33.8 TIME. Time is of the essence of this Lease and each
and all of its provisions.
33.9 DAYS. Unless otherwise expressly indicated herein,
any reference to "days" in this Lease shall be deemed to refer to calendar days.
33.10 RENT. Each and every monetary obligation under this
Lease shall be deemed to be "Rent" under this Lease and for all other purposes
under law.
33.11 APPLICABLE LAW; VENUE. This Lease shall be governed
by and construed in accordance with the laws of the State of Ohio, but not
including its conflicts of laws rules; thus the law that will apply is the law
applicable to a transaction solely within the State of Ohio. Notwithstanding
the application of the laws of the State of Ohio, each party hereto hereby
irrevocably submits itself to the jurisdiction of the state courts of the State
of California and to the jurisdiction of the United States District Court for
the Central District of California, for the purpose of any suit, action or other
proceeding arising out of or based upon this Lease or the subject matter hereof
brought by either party hereto and such suit, action or other proceedings shall
be conducted in the State or Federal courts located in Los Angeles, California.
33.12 SUCCESSORS AND ASSIGNS. The covenants and conditions
contained in this Lease shall, subject to the provisions regarding assignment
(Article XXII), apply to and bind the heirs, successors, executors,
administrators, and assigns of Lessor and Lessee.
33.13 RECORDATION. Lessor and Lessee shall execute with
appropriate acknowledgments and record in the Official Records of the county in
which the Leased Property is located, that certain Memorandum of Lease in the
form and content of Exhibit "C" attached hereto. Lessor and Lessee shall
equally share the cost of recording the Memorandum of Lease. In no
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event shall this Lease otherwise be recorded.
33.14 PRIOR AND FUTURE AGREEMENTS. This Lease contains all
of the agreements of Lessor and Lessee with respect to any matter covered or
mentioned in this Lease, and no prior agreements or understanding pertaining to
any such matters shall be effective for any purpose. No provision of this Lease
may be amended or supplemented except by an agreement in writing signed by both
Lessor and Lessee or their respective successors in interest. This Lease shall
not be effective or binding on any party until fully executed by both Lessor and
Lessee.
33.15 PARTIAL INVALIDITY. Any provision of this Lease
which shall be held by a court of competent jurisdiction to be invalid, void or
illegal shall in no way affect, impair or invalidate any other provision or term
of this Lease, and such other provision or terms shall remain in full force and
effect.
33.16 ATTORNEYS' FEES. In the event of any action or
proceeding brought by one party against the other under this Lease, the
prevailing party shall be entitled to recover its reasonable attorneys' fees
in such action or proceeding from the other party, including all attorneys'
fees incurred in connection with any appeals, and any post-judgment
attorneys' fees incurred in efforts to collect on any judgment.
33.17 AUTHORITY OF LESSOR AND LESSEE. Lessor and Lessee
each hereby represent and warrant that the individuals signing on its behalf
are duly authorized to execute and deliver this Lease on behalf of the
corporation, in accordance with the bylaws of the corporation, and that this
Lease is binding upon the corporation.
33.18 RELATIONSHIP OF THE PARTIES. Nothing contained in
this Lease shall be deemed or construed by Lessor or Lessee, nor by any third
party, as creating the relationship of principal and agent or a partnership,
or a joint venture by Lessor or Lessee, it being understood and agreed that
no provision contained in this Lease nor any acts of Lessor and Lessee shall
be deemed to create any relationship other than the relationship of landlord
and tenant.
33.19 COUNTERPARTS. This Lease may be executed in one
or more separate counterparts, each of which, once they are executed, shall
be deemed to be an original. Such counterparts shall be and constitute one
and the same instrument.
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33.20 BROKERS. Lessor and Lessee each warrants that it
has had no dealings with any real estate broker or agent in connection with
the negotiation of this Lease and it knows of no real estate broker or agent
who is entitled to a commission in connection with this Lease. Lessor and
Lessee hereby agree to indemnify the other and to hold the other harmless
from and against any and all costs, expenses, claims, damages, suits,
including attorneys' fees, in any way resulting from claims or demands for
commissions or other compensation from any real estate brokers claiming
through such party with respect to this Lease.
33.21 NEW COMBINED LEASE. The parties agree that at any
time during the Term of this Lease, upon the written request of Lessor,
Lessor and Lessee shall execute a new lease merging this Lease and the lease
entered into concurrently herewith or hereafter between the Lessor and Lessee
for that certain assisted living facility commonly known as Karrington on
Presque Isle Bay located in the City of Erie, State of Pennsylvania. The new
combined lease for both facilities shall incorporate all of the same terms
and conditions as set forth in each individual lease and shall provide for
the aggregation of all payments due under each lease.
WHEREFORE, each of the parties has accepted and agreed by affixing
their respective authorized signatures below as of the date first above
written.
[SIGNATURE CONTINUED ON NEXT PAGE]
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[SIGNATURE CONTINUED FROM PREVIOUS PAGE]
"LESSOR"
SIGNED AND ACKNOWLEDGED LTC-OHIO, INC.,
IN THE PRESENCE OF: A DELAWARE CORPORATION,
DOING BUSINESS IN OHIO AS
LTC PROPERTIES-OHIO, INC.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------ ------------------------------
ITS: Senior V.P. and
PRINTED NAME: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ General Counsel
---------------------- -----------------------------
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
PRINTED NAME: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
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ACKNOWLEDGEMENT
STATE OF CALIFORNIA )
----------- ) SS.
COUNTY OF LOS ANGELES )
------------
The foregoing instrument was acknowledged before me on this 22nd day
-----
of May , 1998, by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President and General Counsel
----- ----------------- ----------------------------------------
of LTC-OHIO, Inc., a Delaware corporation, on behalf of the corporation.
--------------- --------------------
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Notary Public
My Commission Expires: June 22, 1999
[SEAL]
ACKNOWLEDGEMENT
STATE OF OHIO )
-------- ) SS.
COUNTY OF FRANKLIN )
-----------
The foregoing instrument was acknowledged before me on this 26th day
------
of May, 1998, by ▇▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President and General Counsel of
---- ------------- -----------------------------------------
Karrington Operating Company, Inc., a Ohio Corporation, on behalf of the
---------------------------------- ----------------
corporation.
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Notary Public
My Commission Expires:
[SEAL]
9/29/99
-------------------
This Instrument Prepared by: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇, Wolff, Aronson, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
[SIGNATURE CONTINUED FROM PREIVUOUS PAGE]
"LESSOR"
Signed and acknowledged LTC-OHIO, INC.,
in the presence of: a Delaware corporation, doing business in
Ohio as LTC Properties-Ohio, Inc.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------- -------------------------------
Printed Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Its: Senior V.P.-General Council
--------------- --------------------------------
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Printed Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
ACKNOWLEDGEMENT
STATE OF CALIFORNIA )
----------- ) SS.
COUNTY OF LOS ANGELES )
------------
The foregoing instrument was acknowledged before me on this 22nd day
-----
of May , 1998, by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President and General Counsel
----- ----------------- ----------------------------------------
of LTC-OHIO, Inc., a Delaware corporation, on behalf of the corporation.
--------------- --------------------
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Notary Public
My Commission Expires: June 22, 1999
[SEAL]
ACKNOWLEDGEMENT
STATE OF OHIO )
-------- ) SS.
COUNTY OF FRANKLIN )
-----------
The foregoing instrument was acknowledged before me on this 26th day
------
of May, 1998, by ▇▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President and General Counsel of
---- ------------- -----------------------------------------
Karrington Operating Company, Inc., an Ohio Corporation, on behalf of the
---------------------------------- ----------------
corporation.
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Notary Public
My Commission Expires: [SEAL]
9/29/99
-------------------
This Instrument Prepared by: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇, Wolff, Aronson, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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INDEX OF EXHIBITS
Exhibit "AA" - Legal Description
Exhibit "AB" - Related Leases
Exhibit "AC" - Memorandum of Lease
Exhibit "AD" - Approved Use of Proceeds
EXHIBIT A
Legal Description
Rocky River Real Property
EXHIBIT "B"
RELATED LEASES*
1. That certain Lease and Sublease dated April 21, 1998 by and between
LTC-Ohio, Inc., as "Lessor and Sublessor", and Karrington Operating
Company, Inc., as "Lessee and Sublessee", for those four (4) assisted
living facilities commonly known as Karrington on the Scioto,
Karrington Place, Karrington at ▇▇▇▇▇▇ Creek and Karrington of Bexley
and located in the City of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇
of Worthington and City of Bexley, respectively, all in the State of
Ohio.
2. That certain Lease dated ______ __, by and between LTC-Ohio, Inc., as
"Lessor", and Karrington Operating Company, Inc., as "Lessee", for that
certain assisted living facility commonly known as Karrington on
Presque Isle Bay located in the City of Erie, State of Pennsylvania.
*The Related Leases referenced above will be modified in writing in the future
if Lessor and Lessee enter into a lease (or leases) of property in addition to
or in substitution of any of the aforementioned Related Leases.