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EXHIBIT 10.7
LEASE AGREEMENT
BETWEEN
HEALTH CARE REIT, INC.
AND
ALTERNATIVE LIVING SERVICES, INC.
JANUARY 22, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
SARASOTA, FLORIDA
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LEASE AGREEMENT
This Lease Agreement ("Lease" or "Agreement") is made
effective as of the 22nd day of January, 1996 (the "Effective Date") between
HEALTH CARE REIT, INC., a corporation organized under the laws of the State of
Delaware ("Landlord"), having its principal office located at ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, and ALTERNATIVE LIVING SERVICES, INC.,
a corporation organized under the laws of the State of Delaware ("Tenant"),
having its chief executive office located at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
R E C I T A L S
A. As of the date hereof, Landlord acquired the Leased
Property (defined below) from Tenant. Landlord paid the Acquisition Amount
(defined below).
B. Landlord desires to lease the Leased Property to Tenant and
Tenant desires to lease the Leased Property from Landlord upon the terms set
forth in this Lease.
NOW, THEREFORE, Landlord and Tenant agree as follows:
ARTICLE 1: LEASED PROPERTY, TERM AND DEFINITIONS
1.1 Leased Property. Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord the following property:
(a) The land described in Exhibit A attached hereto
(the "Land").
(b) All buildings, structures, and other
improvements, including without limitation, sidewalks, alleys, utility pipes,
conduits, and lines, parking areas, and roadways, now or hereafter situated upon
the Land (the "Improvements").
(c) All easements, rights and other appurtenances
relating to the Land and Improvements (the "Appurtenances").
(d) All permanently affixed equipment, machinery,
fixtures, and other items of real and personal property, including all
components thereof, located in, or used in connection with, and permanently
affixed to or incorporated into the Improvements, including without limitation,
all furnaces, boilers, heaters, electrical equipment, heating, plumbing,
lighting, ventilating, refrigerating, incineration, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, and built-in oxygen
and vacuum systems, all of which, to the greatest extent permitted by law, are
hereby deemed by the parties hereto to constitute real estate, together with all
replacements, modifications, alterations and additions thereto but specifically
excluding all items included within the category of Personal Property as defined
below (collectively the "Fixtures").
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(e) All machinery, equipment, furniture, furnishings,
movable walls or partitions, computers, trade fixtures, consumable inventory and
supplies, and other personal property used or useful in Tenant's business on the
Leased Property, including without limitation, all items of furniture,
furnishings, equipment, supplies and inventory listed on Exhibit B attached
hereto and the replacements therefor, except items, if any, included within the
definition of Fixtures (collectively the "Personal Property").
SUBJECT, HOWEVER, to all easements, liens, encumbrances,
restrictions, agreements, and other title matters existing as of the date hereof
as listed on Exhibit B attached hereto (the "Permitted Exceptions").
1.2 Term. The initial term ("Initial Term") of this Lease
commences on the Effective Date and expires at 12:00 Midnight Eastern Time on
January 31, 2006 (the "Expiration Date"); provided, however, that Tenant has one
or more options to renew the Lease pursuant to Article 12.
1.3 Definitions. Except as otherwise expressly provided, [i]
the terms defined in this section have the meanings assigned to them in this
section and include the plural as well as the singular; [ii] all accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles as of the time
applicable; and [iii] the words "herein", "hereof", and "hereunder" and similar
words refer to this Lease as a whole and not to any particular section.
"Acquisition Amount" means $3,650,000.00.
"ADA" means the federal statute entitled Americans with
Disabilities Act, 42 U.S.C.Section 12101, et seq.
"Affiliate" means any person, corporation, partnership,
limited liability company, trust, or other legal entity that, directly or
indirectly, controls, or is controlled by, or is under common control with
Tenant. "Control" (and the correlative meanings of the terms "controlled by" and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such entity.
"Affiliate Facility" means the adult congregate living
facility known as Clare Bridge of Bradenton located in Bradenton, Florida.
"Affiliate Lease" means the lease made between Landlord and
Tenant for the Affiliate Facility, as amended, modified, extended or renewed
from time to time.
"Annual Financial Statements" means the audited balance sheet
and statement of income for the most recent fiscal year and an unaudited
operating statement for the Facility for the most recent fiscal year certified
by the chief financial officer of Tenant to be accurate and to fairly present
the financial condition of the Facility.
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"Base Rent" has the meaning set forth in Section 2.1, as
increased from time to time pursuant to Section 2.2.
"Business Day" means any day other than a Saturday, Sunday, or
national holiday.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time. The terms
"disposal" and "release" as used in this Agreement shall have the meaning set
forth in CERCLA.
"Closing" means the closing of the purchase of the Leased
Property by Landlord and the lease of the Leased Property to Tenant.
"Commencement Date" means the Effective Date if such date is
the first day of a month, and if it is not, the first day of the first month
following the Effective Date.
"Effective Date" means the date of this Lease.
"Environmental Laws" means all federal, state, and local
ecological, wetlands, and other environmental laws and regulations, as amended
from time to time, including but not limited to [i] CERCLA; [ii] the Resource
Conservation and Recovery Act; [iii] the Hazardous Materials Transportation Act;
[iv] the Clean Air Act; [v] Clean Water Act; [vi] the Toxic Substances Control
Act; and [vii] the Safe Water Drinking Act.
"Event of Default" has the meaning set forth in Section 8.1.
"Expiration Date" has the meaning set forth in Section 1.2.
"Facility" means the adult congregate living facility known as
Clare Bridge of Sarasota and located on the Leased Property.
"Fair Market Value" has the meaning set forth in Section 13.3.
"Financial Statements" means [i] the audited annual balance
sheet and statement of income of Tenant for the years ended December 31, 1993
and December 31, 1994; and [ii] the unaudited quarterly balance sheet and
statement of income of Tenant for the period ended September 30, 1995.
"Government Authorizations" means all permits, licenses,
approvals, consents, and authorizations required to comply with all Legal
Requirements, including but not limited to, [i] zoning permits, variances,
exceptions, special use permits, conditional use permits, and consents; [ii] the
permits, licenses, provider agreements and approvals required for licensure and
operation of an adult congregate living facility certified as a provider under
the federal Medicare and state Medicaid programs; [iii] environmental,
ecological, coastal, wetlands, air, and water permits, licenses, and consents;
[iv] curb cut, subdivision, land use, and planning permits, licenses,
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approvals and consents; [v] building, sign, fire, health, and safety permits,
licenses, approvals, and consents; and [vi] architectural reviews, approvals,
and consents required under restrictive covenants.
"Hazardous Materials" means any substance [i] the presence of
which poses a hazard to the health or safety of persons on or about the Land
including but not limited to asbestos containing materials; [ii] which requires
removal or remediation under any Environmental Law, including without limitation
any substance which is toxic, explosive, flammable, radioactive, or otherwise
hazardous; or [iii] which is regulated under or classified under any
Environmental Law as hazardous or toxic including but not limited to any
substance within the meaning of "hazardous substance", "hazardous material",
"hazardous waste", "toxic substance", "regulated substance", "solid waste", or
"pollutant" as defined in any Environmental Law.
"Impositions" has the meaning set forth in Section 3.2.
"Increaser Rate" means 20 basis points per year.
"Initial Term" has the meaning set forth in Section 1.2.
"Issuer" means a financial institution satisfactory to
Landlord issuing the Letter of Credit and such Issuer's successors and assigns.
Any "Issuer" shall have a Lace Financial Service Rating of "C+" or higher at all
times throughout the Term.
"Lease Advance" means [i] the first Lease Advance by Landlord
in the Acquisition Amount for the acquisition of the Leased Property or [ii] any
other advance of funds by Landlord to Tenant pursuant to the term of this Lease.
"Lease Advance Amount" means the amount of any Lease Advance.
The Acquisition Amount is the first Lease Advance Amount.
"Lease Advance Date" means the date on which Landlord makes a
Lease Advance.
"Lease Amount" is an aggregate concept and means the sum of
the Lease Advance Amounts outstanding at the applicable time.
"Lease Payments" means the sum of the Base Rent payments (as
increased from time to time) for the applicable period.
"Lease Rate" means the annual rate used to determine Base Rent
for each Lease Advance. The Lease Rate is the sum of the applicable Rate Index
plus the applicable Rate Spread, computed using the 365/360 method. The Lease
Rate includes any accrued Increaser Rate. On each Renewal Date, the Lease Rate
will be reset for the Lease Amount based upon the applicable Rate Index plus the
applicable Rate Spread in effect on the Rate Determination Date for such Renewal
Date.
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"Lease Year" means each consecutive period of 365 or 366 days
throughout the Term. The first Lease Year commences on the Commencement Date and
expires on the day before the first anniversary of the Commencement Date.
"Leased Property" means, collectively, the Land, Improvements,
Appurtenances, Fixtures and Personal Property.
"Legal Requirements" means all laws, regulations, rules,
orders, writs, injunctions, decrees, certificates, requirements, agreements,
conditions of participation and standards of any federal, state, county,
municipal or other governmental entity, administrative agency, insurance
underwriting board, architectural control board, private third-party payor,
accreditation organization, or any restrictive covenants applicable to the
development, construction, condition and operation of the Facility by Tenant,
including but not limited to, [i] zoning, building, fire, health, safety, sign,
and subdivision regulations and codes; [ii] certificate of need laws; [iii]
licensure to operate as an adult congregate living facility; [iv] Medicare and
Medicaid certification requirements; [v] the ADA; [vi] any Environmental Laws;
and [vii] requirements, conditions and standards for participation in
third-party payer insurance programs.
"Letter of Credit" means an irrevocable and transferable
Letter of Credit in an amount initially equal to 5% of the Lease Amount (and
subject to increase as provided in Section 15.7 or reduction as provided in
Section 20.6), issued by Issuer in favor of Landlord as security for the Lease
and in form acceptable to Lender, and any amendments thereto or replacements or
substitutions therefor.
"Material Obligation" means [i] any indebtedness secured by a
security interest in or a lien, deed of trust or mortgage on any of the Leased
Property (or any part thereof, including any Personal Property) and any
agreement relating thereto; [ii] any obligation or agreement that is material to
the construction or operation of the Facility or that is material to Tenant's
business or financial condition; [iii] any indebtedness or capital lease of
Tenant that has an outstanding principal balance of at least $50,000.00 and any
agreement relating thereto; [iv] any obligation to or agreement with the Issuer
relating to the Letter of Credit; and [v] any sublease of the Leased Property.
"Option Price" has the meaning set forth in Section 13.2.
"Option to Purchase" has the meaning set forth in Section
13.1.
"Periodic Financial Statements" means [i] unaudited balance
sheet and statement of income of Tenant for the most recent quarter; and [ii]
unaudited operating statement for the Facility for the most recent month.
"Permitted Exceptions" means the exceptions to title set forth
on Exhibit B.
"Permitted Liens" means [i] liens granted to Landlord; [ii]
liens customarily incurred by Tenant in the ordinary course of business for
items not delinquent including mechanic's liens
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and deposits and charges under worker's compensation laws; [iii] liens for taxes
and assessments not yet due and payable; [iv] any lien, charge, or encumbrance
which is being contested in good faith pursuant to this Agreement; [v] the
Permitted Exceptions; and [vi] purchase money financing and capitalized
equipment leases for the acquisition of personal property provided, however,
that Landlord obtains a nondisturbance agreement from the purchase money lender
or equipment lessor in form and substance as may be satisfactory to Landlord if
the original cost of the equipment exceeds $50,000.00.
"Pro Forma Statement" means a financial forecast for the
Facility for the next 5 year period prepared in accordance with the diligence
requirements for forecasts established by the American Institute of Certified
Public Accountants.
"Purchase Notice" has the meaning set forth in Section 13.1.
"Rate Determination Date" means the date on which the value
for the Rate Index is established for computing any Lease Rate. For any Lease
Advances made during the Initial Term, the Rate Determination Date is the Lease
Advance Date. For any Renewal Date, the Rate Determination Date is the last
Business Day of the current Term.
"Rate Index" means the yield quoted in the Wall Street Journal
on the applicable Rate Determination Date for the most actively traded United
States Treasury Notes having the nearest equivalent maturity date to the
Expiration Date or the expiration date for the current Renewal Term, as
applicable. For any Lease Advance other than the first Lease Advance, the yield
shall be computed based upon the remainder of the Initial Term or Renewal Term,
as applicable.
"Rate Spread" means the rate spread from time to time used to
calculate the Lease Rate applicable to any Lease Advance. The Rate Spread is [i]
4.00% for the Initial Term; [ii] for the first Renewal Term, the greater of [a]
the sum of the Lease Rate in effect at the end of the Initial Term plus 20 basis
points, or [b] 6.00% ; [iii] for the second Renewal Term, the greater of [a] the
sum of the Lease Rate in effect at the end of the first Renewal Term plus 20
basis points, or [b] 7.00%; and [iv] for the third Renewal Term, the greater of
[a] the sum of the Lease Rate in effect at the end of the Second Renewal Term
plus 20 basis points, or [b] 8.00%.
"Receivables" means [i] all of Tenant's rights to receive
payment for providing resident care and services at the Facility as set forth in
any accounts, contract rights, and instruments, and [ii] those documents,
chattel paper, inventory proceeds, provider agreements, participation
agreements, ledger sheets, files, records, computer programs, tapes, and
agreements relating to Tenant's rights to receive payment for providing resident
care services at the Facility.
"Renewal Date" means the first day of each Renewal Term.
"Renewal Option" has the meaning set forth in Section 12.1.
"Renewal Rate" means the Lease Rate established for any
Renewal Date and is the sum of the applicable Rate Index and applicable Rate
Spread.
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"Renewal Term" has the meaning set forth in Section 12.1.
"Overdue Rate" has the meaning set forth in Section 8.6.
"State" means the State of Florida.
"Tenant's Obligations" means all payment and performance
obligations of Tenant under this Lease and all documents executed by Tenant in
connection with this Lease.
"Tenant's Organizational Documents" means the Articles of
Incorporation of Tenant certified by the Secretary of State of the state of
organization, as amended to date and the Bylaws of Tenant certified by Tenant,
as amended to date.
"Term" means the Initial Term and each Renewal Term.
ARTICLE 2: RENT
2.1 Base Rent. Tenant shall pay Landlord base rent ("Base
Rent") in advance in consecutive monthly installments payable on the first day
of each month during the Term commencing on the Commencement Date. If the
Effective Date is not the first day of a month, Tenant shall pay Landlord Base
Rent on the Effective Date for the partial month, i.e. for the period commencing
on the Effective Date and ending on the day before the Commencement Date. The
Base Rent for the Initial Term will be computed monthly and will be equal to
1/12th of the sum of the products of each Lease Advance times the Lease Rate for
each Lease Advance. The Base Rent for each Renewal Term will be computed in
accordance with Section 12.2.
2.2 Increase of Lease Rate and Base Rent. Commencing on the
first anniversary of the Commencement Date and on each anniversary thereafter
throughout the Term (including any Renewal Term and Extended Term), the Lease
Rate will increase by the applicable Increaser Rate. On each date that the Lease
Rate is increased, the Base Rent will be increased accordingly and will be equal
to 1/12th of the sum of the products of each Lease Advance times the Lease Rate
(including the applicable Increaser Rate) for each Lease Advance.
2.3 Additional Rent. In addition to Base Rent, Tenant shall
pay all other amounts, liabilities, obligations and Impositions which Tenant
assumes or agrees to pay under this Lease and any fine, penalty, interest,
charge and cost which may be added for nonpayment or late payment of such items
(collectively the "Additional Rent"). The Base Rent and Additional Rent are
hereinafter referred to as "Rent". Landlord shall have all legal, equitable and
contractual rights, powers and remedies provided either in this Lease or by
statute or otherwise in the case of nonpayment of the Rent.
2.4 Place of Payment of Rent. Tenant shall make all payments
of Base Rent and any Additional Rent required to be paid to Landlord at the
Landlord's address set forth in the first paragraph of this Lease or at such
other place as Landlord may designate from time to time. If
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delivery is by overnight mail, the address for Landlord shall be ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
2.5 Net Lease. This Lease shall be deemed and construed to be
an "absolute net lease", and Tenant shall pay all Rent and other charges and
expenses in connection with the Leased Property throughout the Term, without
abatement, deduction or set-off.
2.6 No Termination, Abatement, Etc. Except as otherwise
specifically provided in this Lease, Tenant shall remain bound by this Lease in
accordance with its terms. Tenant shall not, without the consent of Landlord,
modify, surrender or terminate the Lease, nor seek nor be entitled to any
abatement, deduction, deferment or reduction of Rent, or set-off against the
Rent. Except as expressly provided in this Lease, the obligations of Landlord
and Tenant shall not be affected by reason of [i] any damage to, or destruction
of, the Leased Property or any part thereof from whatever cause or any Taking
(as hereinafter defined) of the Leased Property or any part thereof; [ii] the
lawful or unlawful prohibition of, or restriction upon, Tenant's use of the
Leased Property, or any part thereof, the interference with such use by any
person, corporation, partnership or other entity, or by reason of eviction by
paramount title; [iii] any claim which Tenant has or might have against Landlord
or by reason of any default or breach of any warranty by Landlord under this
Lease or any other agreement between Landlord and Tenant, or to which Landlord
and Tenant are parties; [iv] any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceeding affecting Landlord or any assignee or transferee of Landlord; or [v]
any other cause, whether similar or dissimilar to any of the foregoing, other
than a discharge of Tenant from any such obligations as a matter of law. If
Landlord's mortgagee at any time notifies Tenant to pay Rent directly to the
mortgagee, Tenant shall be entitled to rely upon such notice. Except as
otherwise specifically provided in this Lease, Tenant hereby specifically waives
all rights, arising from any occurrence whatsoever, which may now or hereafter
be conferred upon it by law [a] to modify, surrender or terminate this Lease or
quit or surrender the Leased Property or any portion thereof; or [b] entitling
Tenant to any abatement, reduction, suspension or deferment of the Rent or other
sums payable by Tenant hereunder. The obligations of Landlord and Tenant
hereunder shall be separate and independent covenants and agreements and the
Rent and all other sums payable by Tenant hereunder shall continue to be payable
in all events 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.
2.7 Computational Method. Landlord and Tenant acknowledge that
all rates under this Lease will be computed based on the actual number of days
elapsed over a 360-day year (365/360 method).
2.8 Commitment Fee. On the Effective Date, Tenant shall pay a
commitment fee to Landlord in an amount equal to 1/2% of the Acquisition Amount.
ARTICLE 3: IMPOSITIONS AND UTILITIES
3.1 Payment of Impositions. Tenant shall pay, as Additional
Rent, all
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Impositions that may be levied or become a lien on the Leased Property or any
part thereof at any time (whether prior to or during the Term), without regard
to prior ownership of said Leased Property, before any fine, penalty, interest,
or cost is incurred; provided, however, Tenant may contest any Imposition in
accordance with Section 3.7. Tenant shall deliver to Landlord [i] not more than
5 days after the due date of each Imposition, copies of the invoice for such
Imposition and the check delivered for payment thereof; and [ii] not more than
30 days after the due date of each Imposition, a copy of the official receipt
evidencing such payment or other proof of payment satisfactory to Landlord.
Tenant's obligation to pay such Impositions shall be deemed absolutely fixed
upon the date such Impositions become a lien upon the Leased Property or any
part thereof. Tenant, at its expense, shall prepare and file all tax returns and
reports in respect of any Imposition as may be required by governmental
authorities. Tenant shall be entitled to any refund due from any taxing
authority if no Event of Default shall have occurred hereunder and be
continuing. Landlord shall be entitled to any refund from any taxing authority
if an Event of Default has occurred and is continuing. Any refunds retained by
Landlord due to an Event of Default shall be applied as provided in Section 8.8.
Landlord and Tenant shall, upon request of the other, provide such data as is
maintained by the party to whom the request is made with respect to the Leased
Property as may be necessary to prepare any required returns and reports. In the
event governmental authorities classify any property covered by this Lease as
personal property, Tenant shall file all personal property tax returns in such
jurisdictions where it may legally so file. Landlord, to the extent it possesses
the same, and Tenant, to the extent it possesses the same, will provide the
other party, upon request, with cost and depreciation records necessary for
filing returns for any property so classified as personal property. Where
Landlord is legally required to file personal property tax returns, Tenant will
be provided with copies of assessment notices indicating a value in excess of
the reported value in sufficient time for Tenant to file a protest. Tenant may,
upon notice to Landlord, at Tenant's option and at Tenant's sole cost and
expense, protest, appeal, or institute such other proceedings as Tenant may deem
appropriate to effect a reduction of real estate or personal property
assessments and Landlord, at Tenant's expense as aforesaid, shall fully
cooperate with Tenant in such protest, appeal, or other action. Tenant shall
reimburse Landlord for all personal property taxes paid by Landlord within 30
days after receipt of ▇▇▇▇▇▇▇▇ accompanied by copies of a ▇▇▇▇ therefor and
payments thereof which identify the personal property with respect to which such
payments are made. Impositions imposed in respect to the tax-fiscal period
during which the Term terminates shall be adjusted and prorated between Landlord
and Tenant, whether or not such Imposition is imposed before or after such
termination, and Tenant's obligation to pay or Landlord's obligation to refund
its prorated share thereof shall survive such termination.
3.2 Definition of Impositions. "Impositions" means,
collectively, [i] taxes (including without limitation, all capital stock and
franchise taxes of Landlord imposed by the State or any governmental entity in
the State due to this lease transaction or Landlord's ownership of the Leased
Property and the income arising therefrom, or due to Landlord being considered
as doing business in the State because of Landlord's ownership of the Leased
Property or lease thereof to Tenant), all real estate and personal property ad
valorem, sales and use, business or occupation, single business, gross receipts,
transaction privilege, rent or similar taxes); [ii] 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 with the Term); [iii] ground rents, water, sewer or other rents and
charges, excises, tax levies, and fees
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(including without limitation, license, permit, inspection, authorization and
similar fees); [iv] all taxes imposed on Tenant's operations of the Leased
Property, including without limitation, employee withholding taxes, income taxes
and intangible taxes; [v] all taxes imposed by the State or any governmental
entity in the State with respect to the conveyance of the Leased Property by
Landlord to Tenant or Tenant's designee, including without limitation,
conveyance taxes and capital gains taxes; and [vi] 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 or
any part thereof and/or the Rent (including all interest and penalties thereon
due to any failure in payment by Tenant), which at any time prior to, during or
in respect of the Term hereof may be assessed or imposed on or in respect of or
be a lien upon [a] Landlord or Landlord's interest in the Leased Property or any
part thereof; [b] the Leased Property or any part thereof or any rent therefrom
or any estate, right, title or interest therein; or [c] any occupancy,
operation, use or possession of, or sales from, or activity conducted on, or in
connection with the Leased Property or the leasing or use of the Leased Property
or any part thereof. Tenant shall not, however, be required to pay any tax based
on net income (whether denominated as a franchise or capital stock or other tax)
imposed on Landlord by any governmental entity other than as described in clause
[i] above.
3.3 Escrow of Impositions. If an Event of Default occurs and
while it remains uncured, Tenant shall, at Landlord's election, deposit with
Landlord on the first day of each month a sum equal to 1/12th of the Impositions
assessed against the Leased Property for the preceding tax year, which sums
shall be used by Landlord toward prompt payment of such Impositions. Tenant, on
demand, shall pay to Landlord any additional funds necessary to pay and
discharge the obligations of Tenant pursuant to the provisions of this Section.
The receipt by Landlord of the payment of such Impositions by and from Tenant
shall only be as an accommodation to Tenant, the mortgagees, and the taxing
authorities, and shall not be construed as rent or income to Landlord, Landlord
serving, if at all, only as a conduit for delivery purposes.
3.4 Utilities. Tenant shall pay, as Additional Rent, all
taxes, assessments, charges, deposits, and bills for utilities, including
without limitation charges for water, gas, oil, sanitary and storm sewer,
electricity, telephone service, and trash collection, which may be charged
against the occupant of the Improvements during the Term. If an Event of Default
occurs and while it remains uncured, Tenant shall, at Landlord's election,
deposit with Landlord on the first day of each month a sum equal to 1/12th of
the amount of the annual utility expenses for the preceding Lease Year, which
sums shall be used by Landlord to promptly pay such utilities. Tenant shall, on
demand, pay to Landlord any additional amount needed to pay such utilities.
Landlord's receipt of such payments shall only be an accommodation to Tenant and
the utility companies and shall not constitute rent or income to Landlord.
Tenant shall at all times maintain that amount of heat necessary to ensure
against the freezing of water lines. Tenant hereby agrees to indemnify and hold
Landlord harmless from and against any liability or damages to the utility
systems and the Leased Property that may result from Tenant's failure to
maintain sufficient heat in the Improvements unless the failure arises from
Landlord's failure to make prompt payment of utility expenses to the extent that
funds for such expenses have been deposited with Landlord under this section.
3.5 Discontinuance of Utilities. Landlord will not be liable
for damages to
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person or property or for injury to, or interruption of, business for any
discontinuance of utilities nor will such discontinuance in any way be construed
as an eviction of Tenant or cause an abatement of rent or operate to release
Tenant from any of Tenant's obligations under this Lease unless Landlord has
failed to make prompt payment of utility expenses to the extent that funds for
such expenses have been deposited with Landlord under Section 3.4 above.
3.6 Business Expenses. Tenant shall promptly pay all expenses
and costs incurred in connection with the operation of the Facility on the
Leased Property, including without limitation, employee benefits, employee
vacation and sick pay, consulting fees, and expenses for inventory and supplies.
3.7 Permitted Contests. Tenant, on its own or on Landlord's
behalf (or in Landlord's name), but at Tenant's expense, may contest, by
appropriate legal proceedings conducted in good faith and with due diligence,
the amount or validity or application, in whole or in part, of any Imposition or
any Legal Requirement or insurance requirement or any lien, attachment, levy,
encumbrance, charge or claim provided that [i] in the case of an unpaid
Imposition, lien, attachment, levy, encumbrance, charge or claim, the
commencement and continuation of such proceedings shall suspend the collection
thereof from Landlord and from the Leased Property; [ii] neither the Leased
Property nor any Rent therefrom nor any part thereof or interest therein would
be in any immediate danger of being sold, forfeited, attached or lost; [iii] in
the case of a Legal Requirement, Landlord would not be in any immediate danger
of civil or criminal liability for failure to comply therewith pending the
outcome of such proceedings; [iv] in the event that any such contest shall
involve a sum of money or potential loss in excess of $50,000.00, Tenant shall
deliver to Landlord and its counsel an opinion of Tenant's counsel to the effect
set forth in clauses [i], [ii] and [iii], to the extent applicable; [v] in the
case of a Legal Requirement and/or an Imposition, lien, encumbrance or charge,
Tenant shall give such reasonable security as may be demanded by Landlord to
insure ultimate payment of the same and to prevent any sale or forfeiture of the
affected Leased Property or the Rent by reason of such nonpayment or
noncompliance; provided, however, the provisions of this Section shall not be
construed to permit Tenant to contest the payment of Rent (except as to contests
concerning the method of computation or the basis of levy of any Imposition or
the basis for the assertion of any other claim) or any other sums payable by
Tenant to Landlord hereunder; [vi] in the case of an insurance requirement, the
coverage required by Article 4 shall be maintained; and [vii] if such contest be
finally resolved against Landlord or Tenant, Tenant shall, as Additional Rent
due hereunder, promptly pay the amount required to be paid, together with all
interest and penalties accrued thereon, or comply with the applicable Legal
Requirement or insurance requirement. Landlord, at Tenant's expense, shall
execute and deliver to Tenant such authorizations and other documents as may be
reasonably required in any such contest, and, if reasonably requested by Tenant
or if Landlord so desires, Landlord shall join as a party therein. Tenant hereby
agrees to indemnify and save Landlord harmless from and against any liability,
cost or expense of any kind that may be imposed upon Landlord in connection with
any such contest and any loss resulting therefrom.
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ARTICLE 4: INSURANCE
4.1 Property Insurance. At Tenant's expense, Tenant shall
maintain in full force and effect a property insurance policy or policies
insuring the Leased Property against the following:
(a) Loss or damage commonly covered by a "Special
Form" policy insuring against physical loss or damage to the Improvements and
Personal Property, including but not limited to, risk of loss from fire and
other hazards, collapse, transit coverage, vandalism, malicious mischief, theft,
earthquake (if the Leased Property is in earthquake zone 1 or 2) and sinkholes
(if usually recommended in the area of the Leased Property). The policy shall be
in the amount of the full replacement value (as defined in Section 4.5) of the
Improvements and Personal Property and shall contain a deductible amount
acceptable to Landlord. Landlord shall be named as an additional insured. The
policy shall include a stipulated value endorsement or agreed amount endorsement
and endorsements for contingent liability for operations of building laws,
demolition costs, and increased cost of construction.
(b) If applicable, loss or damage by explosion of
steam boilers, pressure vessels, or similar apparatus, now or hereafter
installed on the Leased Property, in commercially reasonable amounts acceptable
to Landlord.
(c) Consequential loss of rents and income coverage
insuring against all "Special Form" risk of physical loss or damage with limits
and deductible amounts acceptable to Landlord covering risk of loss during the
first 9 months of reconstruction, and containing an endorsement for extended
period of indemnity of at least 6 months, and shall be written with a stipulated
amount of coverage if available at a reasonable premium.
(d) If the Leased Property is located, in whole or in
part, in a federally designated 100-year flood plain area, flood insurance for
the Improvements in an amount equal to the lesser of [i] the full replacement
value of the Improvements; or [ii] the maximum amount of insurance available for
the Improvements under all federal and private flood insurance programs.
(e) Loss or damage caused by the breakage of plate
glass in commercially reasonable amounts acceptable to Landlord.
(f) Loss or damage commonly covered by blanket crime
insurance including employee dishonesty, loss of money orders or paper currency,
depositor's forgery, and loss of property of patients accepted by Tenant for
safekeeping, in commercially reasonable amounts acceptable to the Landlord.
4.2 Liability Insurance. At Tenant's expense, Tenant shall
maintain liability insurance against the following:
(a) Claims for personal injury or property damage
commonly covered by comprehensive general liability insurance with endorsements
for incidental malpractice,
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contractual, personal injury, owner's protective liability, voluntary medical
payments, products and completed operations, broad form property damage, and
extended bodily injury, with commercially reasonable amounts for bodily injury,
property damage, and voluntary medical payments acceptable to Landlord, but with
a combined single limit of not less than $5,000,000.00 per occurrence.
(b) Claims for personal injury and property damage
commonly covered by comprehensive automobile liability insurance, covering all
owned and non-owned automobiles, with commercially reasonable amounts for bodily
injury, property damage, and for automobile medical payments acceptable to
Landlord, but with a combined single limit of not less than $5,000,000.00 per
occurrence.
(c) Claims for personal injury commonly covered by
medical malpractice insurance in commercially reasonable amounts acceptable to
Landlord.
(d) Claims commonly covered by worker's compensation
insurance for all persons employed by Tenant on the Leased Property. Such
worker's compensation insurance shall be in accordance with the requirements of
all applicable local, state, and federal law.
4.3 Builder's Risk Insurance. In connection with any
construction, Tenant shall maintain in full force and effect a builder's
completed value risk policy ("Builder's Risk Policy") of insurance in a
nonreporting form insuring against all "Special Form" risk of physical loss or
damage to the Improvements, including but not limited to, risk of loss from fire
and other hazards, collapse, transit coverage, vandalism, malicious mischief,
theft, earthquake (if Leased Property is in earthquake zone 1 or 2) and
sinkholes (if usually recommended in the area of the Leased Property). The
Builder's Risk Policy shall include endorsements providing coverage for building
materials and supplies and temporary premises. The Builder's Risk Policy shall
be in the amount of the full replacement value of the Improvements and shall
contain a deductible amount acceptable to Landlord. Landlord shall be named as
an additional insured. The Builder's Risk Policy shall include an endorsement
permitting initial occupancy.
4.4 Insurance Requirements. The following provisions shall
apply to all insurance coverages required hereunder:
(a) The form and substance of all policies shall be
subject to the approval of Landlord, which approval will not be unreasonably
withheld.
(b) The carriers of all policies shall have a Best's
Rating of "A" or better and a Best's Financial Category of X or higher and shall
be authorized to do insurance business in the State.
(c) Tenant shall be the "named insured" and Landlord
shall be an "additional insured" on each liability policy. On all property and
casualty policies, Landlord and Tenant shall be joint loss payees.
(d) Tenant shall deliver to Landlord certificates or
policies showing the
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required coverages and endorsements. The policies of insurance shall provide
that the policy may not be cancelled or not renewed, and no material change or
reduction in coverage may be made, without at least 30 days' prior written
notice to Landlord.
(e) The policies shall contain a severability of
interest and/or cross-liability endorsement, provide that the acts or omissions
of Tenant or Landlord will not invalidate the coverage of the other party, and
provide that Landlord shall not be responsible for payment of premiums.
(f) All loss adjustment shall require the written
consent of Landlord and Tenant, as their interests may appear.
(g) At least 30 days prior to the expiration of each
policy, Tenant shall deliver to Landlord a certificate showing renewal of such
policy and payment of the annual premium therefor.
4.5 Replacement Value. The term "full replacement value" means
the actual replacement cost thereof from time to time including increased cost
of construction endorsement, with no reductions or deductions. Tenant shall, in
connection with each annual policy renewal, deliver to Landlord a
redetermination of the full replacement value by the insurer or an endorsement
indicating that the Leased Property is insured for its full replacement value.
If Tenant makes any Permitted Alterations (as hereinafter defined) to the Leased
Property, Landlord may have such full replacement value redetermined at any time
after such Permitted Alterations are made, regardless of when the full
replacement value was last determined.
4.6 Blanket Policy. Notwithstanding anything to the contrary
contained in this Section, Tenant may carry the insurance required by this
Article under a blanket policy of insurance, provided that the coverage afforded
Tenant will not be reduced or diminished or otherwise be different from that
which would exist under a separate policy meeting all of the requirements of
this Lease.
4.7 No Separate Insurance. Tenant shall not take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article, or increase the amounts of any then existing
insurance, by securing an additional policy or additional policies, unless all
parties having an insurable interest in the subject matter of the insurance,
including Landlord and any mortgagees, are included therein as additional
insureds or loss payees, the loss is payable under said insurance in the same
manner as losses are payable under this Lease, and such additional insurance is
not prohibited by the existing policies of insurance. Tenant shall immediately
notify Landlord of the taking out of such separate insurance or the increasing
of any of the amounts of the existing insurance by securing an additional policy
or additional policies.
4.8 Waiver of Subrogation. Each party hereto hereby waives any
and every claim which arises or may arise in its favor and against the other
party hereto during the Term for any and all loss of, or damage to, any of its
property located within or upon, or constituting a part of, the Leased Property,
which loss or damage is covered by valid and collectible insurance
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policies, to the extent that such loss or damage is recoverable under such
policies. Said mutual waiver shall be in addition to, and not in limitation or
derogation of, any other waiver or release contained in this Lease with respect
to any loss or damage to property of the parties hereto. Inasmuch as the said
waivers will preclude the assignment of any aforesaid claim by way of
subrogation (or otherwise) to an insurance company (or any other person), each
party hereto agrees immediately to give each insurance company which has issued
to it policies of insurance, written notice of the terms of said mutual waivers,
and to have such insurance policies properly endorsed, if necessary, to prevent
the invalidation of said insurance coverage by reason of said waivers, so long
as such endorsement is available at a reasonable cost.
4.9 Mortgages. The following provisions shall apply if
Landlord now or hereafter places a mortgage on the Leased Property or any part
thereof: [i] Tenant shall obtain a standard form of lender's loss payable clause
insuring the interest of the mortgagee; [ii] Tenant shall deliver evidence of
insurance to such mortgagee; [iii] loss adjustment shall require the consent of
the mortgagee which consent shall not be unreasonably withheld; and [iv] Tenant
shall provide such other information and documents as may be reasonably required
by the mortgagee.
4.10 Escrows. After an Event of Default occurs hereunder and
is continuing, Tenant shall make such periodic payments of insurance premiums in
accordance with Landlord's requirements after receipt of notice thereof from
Landlord.
ARTICLE 5: INDEMNITY
5.1 Tenant's Indemnification. Tenant hereby indemnifies and
agrees to hold harmless Landlord, any successors or assigns of Landlord, and
Landlord's and such successor's and assign's directors, officers, employees and
agents from and against any and all demands, claims, causes of action, fines,
penalties, damages (including consequential damages), losses, liabilities
(including strict liability), judgments, and expenses (including, without
limitation, reasonable attorneys' fees, court costs, and the costs set forth in
Section 8.7) incurred in connection with or arising from: [i] the use or
occupancy of the Leased Property by Tenant or any persons claiming under Tenant;
[ii] any activity, work, or thing done, or permitted or suffered by Tenant in or
about the Leased Property; [iii] any acts, omissions, or negligence of Tenant or
any person claiming under Tenant, or the contractors, agents, employees,
invitees, or visitors of Tenant or any such person; [iv] any breach, violation,
or nonperformance by Tenant or any person claiming under Tenant or the
employees, agents, contractors, invitees, or visitors of Tenant or of any such
person, of any term, covenant, or provision of this Lease or any law, ordinance,
or governmental requirement of any kind including, without limitation, any
failure to comply with any applicable requirements under the ADA; [v] any injury
or damage to the person, property or business of Tenant, its employees, agents,
contractors, invitees, visitors, or any other person entering upon the Leased
Property; and [vi] any construction, alterations, changes or demolition of the
Facility performed by or contracted for Tenant or its employees, agents or
contractors. Provided, however, that Tenant shall have no indemnity obligation
with respect to matters, liabilities, obligations, claims, damages, penalties,
causes of actions, costs and expenses caused by Landlord's gross negligence or
willful misconduct. If any action or proceeding is brought against Landlord, its
employees, or agents by reason of any such claim, Tenant, upon notice from
Landlord, will defend the claim at Tenant's
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expense with counsel reasonably satisfactory to Landlord. All amounts payable to
Landlord under this section shall be payable on written demand and any such
amounts which are not paid within 10 days after demand therefor by Landlord
shall bear interest at the Overdue Rate. In case any action, suit or proceeding
is brought against Tenant by reason of any such occurrence, Tenant shall use its
best efforts to defend such action, suit or proceeding.
5.1.1 Notice of Claim. Landlord shall notify Tenant in writing
of any claim or action brought against Landlord in which indemnity may be sought
against Tenant pursuant to this section. Such notice shall be given in
sufficient time to allow Tenant to defend or participate in such claim or
action, but the failure to give such notice in sufficient time shall not
constitute a defense hereunder nor in any way impair the obligations of Tenant
under this section unless the failure to give such notice precludes Tenant's
defense of any such action.
5.1.2 Survival of Covenants. The covenants of Tenant contained
in this section shall remain in full force and effect after the termination of
this Agreement until the expiration of the period stated in the applicable
statute of limitations during which a claim or cause of action may be brought
and payment in full or the satisfaction of such claim or cause of action and of
all expenses and charges incurred by Landlord relating to the enforcement of the
provisions herein specified.
5.1.3 Reimbursement of Expenses. Unless prohibited by law,
Tenant hereby agrees to pay to Landlord all of the reasonable fees, charges and
reasonable out-of-pocket expenses related to the Facility and required hereby,
or incurred by Landlord in enforcing the provisions of this Agreement.
5.2 Environmental Indemnity; Audits.
5.2.1 Indemnification. Tenant hereby indemnifies and agrees to
hold harmless Landlord, any successors to Landlord's interest in this Lease, and
Landlord's and such successors' directors, officers, employees and agents from
and against any losses, claims, damages (including consequential damages),
penalties, fines, liabilities (including strict liability), costs (including
cleanup and recovery costs), and expenses (including expenses of litigation and
reasonable attorneys' fees) incurred by Landlord or any other indemnitee or
assessed against the Leased Property by virtue of any claim or lien by any
governmental or quasi-governmental unit, body, or agency, or any third party,
for cleanup costs or other costs pursuant to any Environmental Law. Tenant's
indemnity shall survive the termination of this Lease. Provided, however, Tenant
shall have no indemnity obligation with respect to [i] Hazardous Materials first
introduced to the Leased Property subsequent to the date that Tenant's occupancy
of the Leased Property shall have fully terminated; or [ii] Hazardous Materials
introduced to the Leased Property by Landlord, its agent, employees, successors
or assigns. If at any time during the Term of this Lease any governmental
authority notifies Landlord or Tenant of a violation of any Environmental Law or
Landlord reasonably believes that a Facility may violate any Environmental Law,
Landlord may require one or more environmental audits of the Leased Premises, in
such form, scope and substance as specified by Landlord, at Tenant's expense.
Tenant shall, within 30 days after receipt of an invoice from Landlord,
reimburse Landlord for all costs and expenses incurred in reviewing any
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environmental audit, including without limitation, reasonable attorneys' fees
and costs.
5.3 Limitation of Landlord's Liability. Landlord, its agents,
and employees, will not be liable for any loss, injury, death, or damage
(including consequential damages) to persons, property, or Tenant's business
occasioned by theft, act of God, public enemy, injunction, riot, strike,
insurrection, war, court order, requisition, order of governmental body or
authority, fire, explosion, falling objects, steam, water, rain or snow, leak or
flow of water (including water from the elevator system), rain or snow from the
Leased Property or into the Leased Property or from the roof, street, subsurface
or from any other place, or by dampness or from the breakage, leakage,
obstruction, or other defects of the pipes, sprinklers, wires, appliances,
plumbing, air conditioning, or lighting fixtures of the Leased Property, or from
construction, repair, or alteration of the Leased Property or from any acts or
omissions of any other occupant or visitor of the Leased Property, or from any
other cause beyond Landlord's control. The foregoing limitation does not apply
to loss, injury, death or damage caused by Landlord's gross negligence or
willful misconduct.
ARTICLE 6: USE AND ACCEPTANCE OF PREMISES
6.1 Use of Leased Property. Tenant shall use and occupy the
Leased Property exclusively as an adult congregate living facility and for all
lawful and licensed ancillary uses, and for no other purpose without the prior
written consent of the Landlord which consent shall not be unreasonably
withheld. Tenant shall obtain and maintain all approvals, licenses, and consents
needed to use and operate the Leased Property as herein permitted. Tenant shall
deliver to Landlord complete copies of surveys, examinations, certification and
licensure inspections, compliance certificates, and other similar reports issued
to Tenant by any governmental agency within 10 days after Tenant's receipt of
each item.
6.2 Acceptance of Leased Property. Tenant acknowledges that
[i] Tenant and its agents have had an opportunity to inspect the Leased
Property; [ii] Tenant has found the Leased Property fit for Tenant's use; [iii]
Landlord will deliver the Leased Property to Tenant in "as-is" condition; [iv]
Landlord is not obligated to make any improvements or repairs to the Leased
Property; and [v] the roof, walls, foundation, heating, ventilating, air
conditioning, telephone, sewer, electrical, mechanical, elevator, utility,
plumbing, and other portions of the Leased Property are in good working order.
Tenant waives any claim or action against Landlord with respect to the condition
of the Leased Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS
FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR
OTHERWISE, OR AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR
PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
6.3 Conditions of Use and Occupancy. Tenant agrees that during
the Term it shall use and keep the Leased Property in a careful, safe and proper
manner; not commit or suffer waste thereon; not use or occupy the Leased
Property for any unlawful purposes; not use or occupy the Leased Property or
permit the same to be used or occupied, for any purpose or business deemed
extrahazardous on account of fire or otherwise; keep the Leased Property in such
repair and
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condition as may be required by the Board of Health, or other city, state or
federal authorities, free of all cost to Landlord; not permit any acts to be
done which will cause the cancellation, invalidation, or suspension of any
insurance policy; and permit Landlord and its agents to enter upon the Leased
Property at all reasonable times to examine the condition thereof and
accompanied by a representative of Tenant to the extent such a representative is
available.
ARTICLE 7: REPAIRS AND MECHANICS' LIENS
7.1 Maintenance. Tenant shall maintain, repair, and replace
the Leased Property, including without limitation, all structural and
nonstructural repairs and replacements to the roof, foundations, exterior walls,
parking areas, sidewalks, water, sewer, and gas connections, pipes, and mains.
Tenant shall pay, as Additional Rent, the full cost of maintenance, repairs, and
replacements. Tenant shall maintain all drives, sidewalks, parking areas, and
lawns on or about the Leased Property in a clean and orderly condition, free of
accumulations of dirt, rubbish, snow and ice. Tenant shall permit Landlord to
inspect the Leased Property at all reasonable times, and shall implement all
reasonable suggestions of the Landlord as to the maintenance and replacement of
the Leased Property.
7.2 Required Alterations. Tenant shall, at Tenant's sole cost
and expense, make any additions, changes, improvements or alterations to the
Leased Property, including structural alterations, which may be required by any
governmental authorities, including those required to maintain licensure or
certification under the Medicare and Medicaid programs (to the extent Tenant is
participating in such programs), whether such changes are required by Tenant's
use, changes in the law, ordinances, or governmental regulations, defects
existing as of the date of this Lease, or any other cause whatever. All such
additions, changes, improvements or alterations shall be deemed to be Permitted
Alterations and shall comply with all laws requiring such alterations and with
the provisions of Section 16.4.
7.3 Mechanic's Liens. Tenant shall have no authority to permit
or create a lien against Landlord's interest in the Leased Property, and Tenant
shall post notices or file such documents, to the extent permitted by law, as
may be required to protect Landlord's interest in the Leased Property against
liens. Tenant hereby agrees to defend, indemnify, and hold Landlord harmless
from and against any mechanic's liens against the Leased Property by reason of
work, labor, services or materials supplied or claimed to have been supplied on
or to the Leased Property. Tenant shall remove, bond-off, or otherwise obtain
the release of any mechanic's lien filed against the Leased Property within 10
days after Tenant receives notice of the filing thereof. Tenant shall pay all
expenses in connection therewith, including without limitation, damages,
interest, court costs and reasonable attorneys' fees.
7.4 Replacements of Fixtures and Personal Property. Tenant
shall not remove Fixtures and Personal Property from the Leased Property except
to replace the Fixtures and Personal Property by other similar items of equal
quality and value. Items being replaced by Tenant may be removed and shall
become the property of Tenant and items replacing the same shall be and remain
the property of Landlord. Tenant shall execute, upon written request from
Landlord, any and all documents necessary to evidence Landlord's ownership of
the Personal
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Property and replacements therefor. Tenant may finance replacements for the
Fixtures and Personal Property by equipment lease or by a security agreement and
financing statement and if the original cost of the equipment exceeds
$50,000.00, Tenant must obtain the following: [i] Landlord's consent to the
terms and conditions of the equipment lease or security agreement; and [ii] a
nondisturbance agreement from the equipment lessor or lender upon terms and
conditions reasonably acceptable to Landlord for, including without limitation,
the following: [a] Landlord shall have the right (but not the obligation) to
assume such security agreement or equipment lease upon the occurrence of an
Event of Default under this Lease; [b] the equipment lessor or lender shall
notify Landlord of any default by Tenant under the equipment lease or security
agreement and give Landlord a reasonable opportunity to cure such default; and
[c] Landlord shall have the right to assign its rights under the equipment
lease, security agreement, or nondisturbance agreement. Tenant shall, within 30
days after receipt of an invoice from Landlord, reimburse Landlord for all costs
and expenses incurred in reviewing and approving the equipment lease, security
agreement, and nondisturbance agreement, including without limitation,
reasonable attorneys' fees and costs.
ARTICLE 8: DEFAULTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of
the following shall be an event of default ("Event of Default") hereunder:
(a) Tenant fails to pay in full any installment of
Rent, or any other monetary obligation payable by Tenant under this Lease
(including the Option Price), within 10 days after such payment is due.
(b) Landlord gives Tenant three or more notices of
non-payment of Rent (after expiration of the 10 day grace period) in any Lease
Year.
(c) Tenant fails to comply with any covenant set
forth in Article 14, Section 15.6, Section 15.7 or Article 20 of this Lease.
(d) Tenant fails to observe and perform any other
covenant, condition or agreement under this Lease to be performed by Tenant and
[i] such failure continues for a period of 30 days after written notice thereof
is given to Tenant by Landlord; or [ii] if, by reason of the nature of such
default, the same cannot be remedied within said 30 days, Tenant fails to
proceed with diligence reasonably satisfactory to Landlord after receipt of the
notice to cure the same or, if Tenant does proceed diligently, Tenant fails to
cure such default within 90 days after receipt of the notice. The foregoing
notice and cure provisions do not apply to any Event of Default otherwise
specifically described in any other subsection of Section 8.1.
(e) Tenant abandons or vacates the Leased Property or
any material part thereof or ceases to do business or ceases to exist for any
reason for any one or more days except as a result of condemnation or casualty.
(f) [i] The filing by Tenant of a petition under 11
U.S.C. or the commencement of a bankruptcy or similar proceeding by Tenant; [ii]
the failure by Tenant within
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60 days to dismiss an involuntary bankruptcy petition or other commencement of a
bankruptcy, reorganization or similar proceeding against Tenant, or to lift or
stay any execution, garnishment or attachment of such consequence as will impair
its ability to carry on its operation at the Leased Property; [iii] the entry of
an order for relief under 11 U.S.C. in respect of Tenant; [iv] any assignment by
Tenant for the benefit of its creditors; [v] the entry by Tenant into an
agreement of composition with its creditors; [vi] the approval by a court of
competent jurisdiction of a petition applicable to Tenant in any proceeding for
its reorganization instituted under the provisions of any state or federal
bankruptcy, insolvency, or similar laws; [vii] appointment by final order,
judgment, or decree of a court of competent jurisdiction of a receiver of a
whole or any substantial part of the properties of Tenant (provided such
receiver shall not have been removed or discharged within 60 days of the date of
his qualification).
(g) [i] Any receiver, administrator, custodian or
other person takes possession or control of any of the Leased Property and
continues in possession for 60 days; [ii] any writ against any of the Leased
Property is not released within 60 days; [iii] any judgment is rendered or
proceedings are instituted against the Leased Property or Tenant which affect
the Leased Property or any part thereof, which is not dismissed for 60 days
(except as otherwise provided in this Section); [iv] all or a substantial part
of the assets of Tenant are attached, seized, subjected to a writ or distress
warrant, or are levied upon, or come into the possession of any receiver,
trustee, custodian, or assignee for the benefit of creditors; [v] Tenant is
enjoined, restrained, or in any way prevented by court order, or any proceeding
is filed or commenced seeking to enjoin, restrain or in any way prevent Tenant
from conducting all or a substantial part of its business or affairs; or [vi]
except as otherwise permitted hereunder, a final notice of lien, levy or
assessment is filed of record with respect to all or any part of the Leased
Property or any property of Tenant located at the Leased Property and is not
dismissed, discharged, or bonded-off within 30 days.
(h) Any representation or warranty made by Tenant in
this Lease or any other document executed in connection with this Lease, any
guaranty of or other security for this Lease, or any report, certificate,
application, financial statement or other instrument furnished by Tenant
pursuant hereto or thereto shall prove to be false, misleading or incorrect in
any material respect as of the date made.
(i) Tenant defaults on any indebtedness or obligation
to Landlord under this Lease or the Affiliate Lease, or Tenant receives notice
of acceleration of payment in connection with any Material Obligation unless
Tenant can demonstrate to Landlord that such acceleration will not cause Tenant
to be in violation of Section 15.7. This provision applies to all such
indebtedness, obligations and agreements as they may be amended, modified,
extended, or renewed from time to time.
(j) The occurrence of any change in Tenant's
leasehold interest in the Leased Property, or any material change in the control
of Tenant, directly or indirectly, at any time prior to Tenant's initial public
offering, without the prior written consent of Landlord.
(k) The license for the Facility or any other
Government Authorization,
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is cancelled, suspended or otherwise invalidated, notice of impending revocation
proceedings is received and Tenant fails to diligently contest such proceeding,
or any reduction occurs in the number of licensed beds or units at the Facility
in excess of 3%.
8.2 Remedies. Landlord may exercise any one or more of the
following remedies upon the occurrence of an Event of Default:
(a) Landlord may re-enter and take possession of the
Leased Property without terminating the Lease, and lease the Leased Property for
the account of Tenant at a commercially reasonable rate, holding Tenant liable
for all costs of the Landlord in reletting the Leased Property and for the
difference in the amount received by such reletting and the amounts payable by
Tenant under the Lease.
(b) Landlord may terminate this Lease, exclude Tenant
from possession of the Leased Property and use efforts to lease the Leased
Property to others at a commercially reasonable rate, holding Tenant liable for
the difference in the amounts received from such reletting and the amounts
payable by Tenant under the Lease.
(c) Landlord may re-enter the Leased Property and
have, repossess and enjoy the Leased Property as if the Lease had not been made,
and in such event, Tenant and its successors and assigns shall remain liable for
any contingent or unliquidated obligations or sums owing at the time of such
repossession.
(d) Landlord may have access to and inspect, examine
and make copies of the books and records and any and all accounts, data and
income tax and other returns of Tenant insofar as they pertain to the Leased
Property.
(e) Landlord may accelerate all of the unpaid Rent
hereunder so that the aggregate Rent for the unexpired term of this Lease
becomes immediately due and payable.
(f) Landlord may take whatever action at law or in
equity as may appear necessary or desirable to collect the Rent and other
amounts payable under the Lease then due and thereafter to become due, or to
enforce performance and observance of any obligations, agreements or covenants
of Tenant under this Lease.
(g) With respect to the Collateral and Landlord's
security interest therein, Landlord may exercise all of its rights as secured
party under Article 9 of the Uniform Commercial Code as adopted in the State.
Landlord may sell the Collateral by public or private sale upon 10 days notice
to Tenant. Tenant agrees that a commercially reasonable manner of disposition of
the Collateral shall include, without limitation and at the option of Landlord,
a sale of the Collateral, in whole or in part, concurrently with the sale of the
Leased Property.
(h) Landlord may obtain control over and collect the
Receivables and apply the proceeds of the collections to satisfaction of
Tenant's Obligations unless prohibited by law. Tenant appoints Landlord or its
designee as attorney for Tenant with powers [i] to receive, to
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indorse, to sign and/or to deliver, in Tenant's name or Landlord's name, any and
all checks, drafts, and other instruments for the payment of money relating to
the Receivables, and to waive demand, presentment, notice of dishonor, protest,
and any other notice with respect to any such instrument; [ii] to sign Tenant's
name on any invoice or ▇▇▇▇ of lading relating to any Receivable, drafts against
account debtors, assignments and verifications of Receivables, and notices to
account debtors; [iii] to send verifications of Receivables to any account
debtor; and [iv] to do all other acts and things necessary to carry out this
Lease. Landlord shall not be liable for any omissions, commissions, errors of
judgment, or mistakes in fact or law made in the exercise of any such powers
provided Lender's exercise of such powers is commercially reasonable. At
Landlord's option, Tenant shall [i] provide Landlord a full accounting of all
amounts received on account of Receivables with such frequency and in such form
as Landlord may require, either with or without applying all collections on
Receivables in payment of Tenant's Obligations or [ii] deliver to Landlord on
the day of receipt all such collections in the form received and duly indorsed
by Tenant. At Landlord's request, Tenant shall institute any action or enter
into any settlement determined by Landlord to be necessary to obtain recovery or
redress from any account debtor in default of Receivables. Landlord may give
notice of its security interest in the Receivables to any or all account debtors
with instructions to make all payments on Receivables directly to Landlord,
thereby terminating Tenant's authority to collect Receivables. After terminating
Tenant's authority to enforce or collect Receivables, Landlord shall have the
right to take possession of any or all Receivables and records thereof and is
hereby authorized to do so, and only Landlord shall have the right to collect
and enforce the Receivables. Prior to the occurrence of an Event of Default, at
Tenant's cost and expense, but on behalf of Landlord and for Landlord's account,
Tenant shall collect or otherwise enforce all amounts unpaid on Receivables and
hold all such collections in trust for Landlord, but Tenant may commingle such
collections with Tenant's own funds, until Tenant's authority to do so has been
terminated, which may be done only after an Event of Default. Notwithstanding
any other provision hereof, Landlord does not assume any of Tenant's obligations
under any Receivable, and Landlord shall not be responsible in any way for the
performance of any of the terms and conditions thereof by Tenant.
(i) Without waiving any prior or subsequent Event of
Default, Landlord may waive any Event of Default or, with or without waiving any
Event of Default, remedy any default.
(j) Landlord may terminate its obligation to disburse
Lease Advances.
8.3 Right of Set-Off. After an Event of Default occurs
hereunder and is continuing, Landlord may, and is hereby authorized by Tenant
to, at any time and from time to time without advance notice to Tenant (any such
notice being expressly waived by Tenant), set-off and apply any and all sums
held by Landlord, any indebtedness of Landlord to Tenant, and any claims by
Tenant against Landlord, against any obligations of Tenant hereunder and against
any claims by Landlord against Tenant, whether or not such obligations or claims
of Tenant are matured and whether or not Landlord has exercised any other
remedies hereunder. The rights of Landlord under this Section are in addition to
any other rights and remedies Landlord may have against Tenant.
8.4 Performance of Tenant's Covenants. Landlord may perform
any obligation
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of Tenant which Tenant has failed to perform within 10 days after Landlord has
sent a written notice to Tenant informing it of its specific failure. Tenant
shall reimburse Landlord on demand, as Additional Rent, for any expenditures
thus incurred by Landlord and shall pay interest thereon at the Overdue Rate (as
defined in Section 8.6).
8.5 Late Payment Charge. Tenant acknowledges that any default
in the payment of any installment of Rent payable hereunder will result in loss
and additional expense to Landlord in servicing any indebtedness of Landlord
secured by the Leased Property, handling such delinquent payments, and meeting
its other financial obligations, and because such loss and additional expense is
extremely difficult and impractical to ascertain, Tenant agrees that in the
event any Rent payable to Landlord hereunder is not paid within 10 days after
the due date, Tenant shall pay a late charge of 5% of the amount of the overdue
payment as a reasonable estimate of such loss and expenses, unless applicable
law requires a lesser charge, in which event the maximum rate permitted by such
law may be charged by Landlord. The 10 day grace period set forth in this
Section shall not extend the time for payment of Rent or the period for curing
any default or constitute a waiver of such default.
8.6 Interest. In addition to the late payment charge, any
payment not made by Tenant within 10 days after the due date shall thereafter
bear interest at the rate (the "Overdue Rate") of the greater of [i] 18.5% per
annum; or [ii] 2.5% per annum above the Lease Rate then in effect; provided,
however, that at no time will Tenant be required to pay interest at a rate
higher than the maximum legal rate and, provided further, that if a court of
competent jurisdiction determines that any other charges payable under this
Lease are deemed to be interest, the Overdue Rate shall be adjusted to ensure
that the aggregate interest payable under this Lease does not accrue at a rate
in excess of the maximum legal rate. Tenant shall not be required to pay
interest upon any late payment fees assessed pursuant to Section 8.5.
8.7 Litigation; Attorneys' Fees. Within 5 days after Tenant
has knowledge of any litigation or other proceeding that may be instituted
against Tenant that is material to the construction or operation of the Facility
or that is material to Tenant's business or financial condition, against the
Leased Property to secure or recover possession thereof, or that may affect the
title to or the interest of Landlord in the Leased Property, Tenant shall give
written notice thereof to Landlord. Tenant shall pay all reasonable costs and
expenses incurred by Landlord in enforcing or preserving Landlord's rights under
this Lease, whether or not an Event of Default has actually occurred or has been
declared and thereafter cured, including without limitation, [i] the fees,
expenses, and costs of any litigation, receivership, administrative, bankruptcy,
insolvency or other similar proceeding; [ii] reasonable attorney, paralegal,
consulting and witness fees and disbursements, whether in house counsel or
outside counsel; and [iii] the expenses, including without limitation, lodging,
meals, and transportation, of Landlord and its employees, agents, attorneys, and
witnesses in preparing for litigation, administrative, bankruptcy, insolvency or
other similar proceedings and attendance at hearings, depositions, and trials in
connection therewith. All such costs, charges and fees payable by Tenant shall
be deemed to be Additional Rent under this Lease.
8.8 Escrows and Application of Payments. As security for the
performance of
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its obligations hereunder, Tenant hereby assigns to Landlord all its right,
title, and interest in and to all monies escrowed with Landlord under this Lease
and all deposits with utility companies, taxing authorities and insurance
companies; provided, however, that Landlord shall not exercise its rights
hereunder until an Event of Default has occurred. Any payments received by
Landlord under any provisions of this Lease during the existence or continuance
of an Event of Default shall be applied to Tenant's obligations in the order
which Landlord may determine.
8.9 Remedies Cumulative. The remedies of Landlord herein are
cumulative to and not in lieu of any other remedies available to Landlord at law
or in equity. The use of any one remedy shall not be taken to exclude or waive
the right to use any other remedy.
ARTICLE 9: DAMAGE AND DESTRUCTION
9.1 Notice of Casualty. If the Leased Property shall be
destroyed, in whole or in part, or damaged by fire, flood, windstorm or other
casualty (a "Casualty"), Tenant shall give written notice thereof to the
Landlord within 3 business days after the occurrence of the Casualty. Within 15
days after the occurrence of the Casualty or as soon thereafter as such
information is reasonably available to Tenant, Tenant shall provide the
following information to Landlord: [i] the date of the Casualty; [ii] the nature
of the Casualty; [iii] a description of the damage or destruction caused by the
Casualty including the type of Leased Property damaged and the area of the
Improvements damaged; [iv] a preliminary estimate of the cost to repair,
rebuild, restore or replace the Leased Property; [v] a preliminary estimate of
the schedule to complete the repair, rebuilding, restoration or replacement of
the Leased Property; [vi] a description of the anticipated property insurance
claim including the name of the insurer, the insurance coverage limits, the
deductible amount, the expected settlement amount, and the expected settlement
date; and [vii] a description of the business interruption claim including the
name of the insurer, the insurance coverage limits, the deductible amount, the
expected settlement amount, and the expected settlement date. Within five days
after request from Landlord, Tenant will provide Landlord with copies of all
correspondence to the insurer and any other information reasonably requested by
Landlord.
9.2 Substantial Destruction.
9.2.1 If the Improvements are substantially destroyed at any
time other than during the final 18 months of the Initial Term or any Renewal
Term, Tenant shall promptly rebuild and restore the Leased Property in
accordance with Section 9.4 and Landlord shall make the insurance proceeds
available to Tenant for such restoration. The term "Substantially Destroyed"
means any casualty resulting in the loss of use of 35% or more of the licensed
beds at any one Facility.
9.2.2 If the Improvements are substantially destroyed during
the final 18 months of the Initial Term or any Renewal Term, Landlord may elect
to terminate this Lease or terminate this Lease and all Affiliate Leases, at
Landlord's option, and retain the insurance proceeds unless Tenant exercises its
option to renew as set forth in Section 9.2.3 or exercises its option to
purchase as set forth in Section 9.2.4. If Landlord elects to terminate,
Landlord shall give notice ("Termination Notice") of its election to terminate
this Lease (or this Lease and all Affiliate Leases, if elected by Landlord)
within 30 days after receipt of Tenant's notice of the damage. If Tenant does
not exercise its option
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to renew under Section 9.2.3 or its option to purchase under Section 9.2.4
within 15 days after delivery of the Termination Notice, this Lease (or this
Lease and all Affiliate Leases, if elected by Landlord) shall terminate on the
15th day after delivery of the Termination Notice. If this Lease (or this Lease
and all Affiliate Leases, if elected by Landlord) is so terminated, Tenant shall
be liable to Landlord for all Rent and all other obligations accrued under this
Lease through the effective date of termination and each Affiliate shall be
liable to Landlord for all Rent and all other obligations accrued under its
respective Affiliate Lease through the effective date of termination.
9.2.3 If the Improvements are substantially destroyed during
the final 18 months of the Initial Term or the first or second Renewal Term and
Landlord gives the Termination Notice, Tenant shall have the option to renew
this Lease. Tenant shall give Landlord irrevocable notice of Tenant's election
to renew, and Tenant shall give irrevocable notice of renewal of the Affiliate
Lease, within 15 days after delivery of the Termination Notice. If Tenant elects
to renew, the Renewal Term will be in effect for the balance of the then current
Term plus a 5 year period. The Renewal Term will commence on the third day
following Landlord's receipt of Tenant's and notice of renewal. All other terms
of this Lease for the Renewal Term shall be in accordance with Article 12. The
Leased Property will be restored by Tenant in accordance with the provisions of
this Article 9 regarding partial destruction.
9.2.4 If the Improvements are substantially destroyed during
the final 18 months of the Initial Term or any Renewal Term and Landlord gives
the Termination Notice, Tenant shall have the option to purchase the Leased
Property. Tenant shall give Landlord notice of Tenant's election to purchase,
and if required by Landlord, Tenant shall give notice of its election to
purchase the Affiliate Facility, within 15 days after delivery of the
Termination Notice. If Tenant elects to purchase the Leased Property and the
Affiliate Facility, the Option Price will be determined in accordance with
Section 13.2 and the Fair Market Value will be determined in accordance with
Section 13.3. For purposes of determining the Fair Market Value, the Leased
Property will be valued as if it had been restored to be equal in value to the
Leased Property existing immediately prior to the occurrence of the damage. All
other terms of the option to purchase shall be in accordance with Article 13.
Landlord shall hold the insurance proceeds until the closing of the purchase of
the Leased Property and at closing shall deliver the proceeds to Tenant.
9.3 Partial Destruction. If the Leased Property is not
substantially destroyed, then Tenant shall comply with the provisions of Section
9.4 and Landlord shall make the insurance proceeds available to Tenant for such
restoration.
9.4 Restoration. Tenant shall promptly repair, rebuild, or
restore the Leased Property, at Tenant's expense, so as to make the Leased
Property at least equal in value to the Leased Property existing immediately
prior to such occurrence and as nearly similar to it in character as is
practicable and reasonable. Before beginning such repairs or rebuilding, or
letting any contracts in connection with such repairs or rebuilding, Tenant will
submit for Landlord's approval, which approval Landlord will not unreasonably
withhold or delay, plans and specifications meeting the requirements of Section
16.2 for such repairs or rebuilding. Promptly after receiving Landlord's
approval of the plans and specifications and receiving the proceeds of
insurance, Tenant will begin such repairs or rebuilding and will prosecute the
repairs and rebuilding
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to completion with diligence, subject, however, to strikes, lockouts, acts of
God, embargoes, governmental restrictions, and other causes beyond Tenant's
reasonable control. Landlord will make available to Tenant the net proceeds of
any fire or other casualty insurance paid to Landlord for such repair or
rebuilding as the same progresses, after deduction of any costs of collection,
including reasonable attorneys' fees. Tenant may assume primary responsibility
for collection of the proceeds in consultation with Landlord. Payments will be
made against properly certified vouchers of a competent architect in charge of
the work and approved by Landlord. Prior to commencing the repairing or
rebuilding, Tenant shall deliver to Landlord for Landlord's approval a schedule
setting forth the estimated monthly draws for such work. Landlord will
contribute to such payments out of the insurance proceeds an amount equal to the
proportion that the total net amount received by Landlord from insurers bears to
the total estimated cost of the rebuilding or repairing, multiplied by the
payment by Tenant on account of such work. Landlord may, however, withhold 10%
from each payment until the work is completed and proof has been furnished to
Landlord that no lien or liability has attached or will attach to the Leased
Property or to Landlord in connection with such repairing or rebuilding. Upon
the completion of rebuilding and the furnishing of such proof, the balance of
the net proceeds of such insurance payable to Tenant on account of such
repairing or rebuilding will be paid to Tenant. Tenant will obtain and deliver
to Landlord a temporary or final certificate of occupancy before the Leased
Property is reoccupied for any purpose. Tenant shall complete such repairs or
rebuilding free and clear of mechanic's or other liens, and in accordance with
the building codes and all applicable laws, ordinances, regulations, or orders
of any state, municipal, or other public authority affecting the repairs or
rebuilding, and also in accordance with all requirements of the insurance rating
organization, or similar body. Any remaining proceeds of insurance after such
restoration will be Tenant's property.
9.5 Insufficient Proceeds. If the proceeds of any insurance
settlement are not sufficient to pay the costs of Tenant's repair, rebuilding or
restoration under Section 9.4 in full, Tenant shall deposit with Landlord at
Landlord's option, and within 10 days of Landlord's request, an amount
sufficient in Landlord's reasonable judgment to complete such repair, rebuilding
or restoration. Tenant shall not, by reason of the deposit or payment, be
entitled to any reimbursement from Landlord or diminution in or postponement of
the payment of the Rent.
9.6 Not Trust Funds. Notwithstanding anything herein or at law
or equity to the contrary, none of the insurance proceeds paid to Landlord as
herein provided shall be deemed trust funds, and Landlord shall be entitled to
dispose of such proceeds as provided in this Article 9. Tenant expressly assumes
all risk of loss, including a decrease in the use, enjoyment or value, of the
Leased Property from any casualty whatsoever, whether or not insurable or
insured against.
9.7 Landlord's Inspection. During the progress of such repairs
or rebuilding, Landlord and its architects and engineers may, from time to time,
inspect the Leased Property and will be furnished, if required by them, with
copies of all plans, shop drawings, and specifications relating to such repairs
or rebuilding. Tenant will keep all plans, shop drawings, and specifications at
the building, and Landlord and its architects and engineers may examine them at
all reasonable times. If, during such repairs or rebuilding, Landlord and its
architects and engineers determine that the repairs or rebuilding are not being
done in accordance with the approved plans and specifications, Landlord will
give prompt notice in writing to Tenant, specifying in detail the
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particular deficiency, omission, or other respect in which Landlord claims such
repairs or rebuilding do not accord with the approved plans and specifications.
Upon the receipt of any such notice, Tenant will cause corrections to be made to
any deficiencies, omissions, or such other respect. Tenant's obligations to
supply insurance, according to Article 4, will be applicable to any repairs or
rebuilding under this Section.
9.8 Landlord's Costs. Tenant shall, within 30 days after
receipt of an invoice from Landlord, pay the reasonable costs, expenses, and
fees of any architect or engineer employed by Landlord to review any plans and
specifications and to supervise and approve any construction, or for any
services rendered by such architect or engineer to Landlord as contemplated by
any of the provisions of this Lease, or for any services performed by Landlord's
attorneys in connection therewith.
9.9 No Rent Abatement. Except to the extent that business
interruption insurance proceeds are received by Landlord, rent will not ▇▇▇▇▇
pending the repairs or rebuilding of the Leased Property.
ARTICLE 10: CONDEMNATION
10.1 Total Taking. If, by exercise of the right of eminent
domain or by conveyance made in response to the threat of the exercise of such
right ("Taking"), the entire Leased Property is taken, or so much of the Leased
Property is taken that the Leased Property cannot be used by Tenant for the
purposes for which it was used immediately before the Taking, then this Lease
will end on the earlier of the vesting of title to the Leased Property in the
condemning authority or the taking of possession of the Leased Property by the
condemning authority. All damages awarded for such Taking under the power of
eminent domain shall be the property of the Landlord except for damages awarded
to Tenant as compensation for diminution in value of the leasehold of the Leased
Property. If this Lease is terminated with respect to the Facility subject to a
taking as described in this section, Landlord may, at its option, terminate the
Affiliate Lease.
10.1.2 If the entire Lease Property is taken during the final
18 months of the Initial Term or any Renewal Term and Landlord elects to
terminate the Affiliate Lease, Tenant shall have the option to purchase the
Affiliate Facility. Tenant shall give Landlord notice of Tenant's election to
purchase within 15 days after delivery of the notice of Landlord's intent to
terminate. If Tenant elects to purchase the Affiliate Facility, the Option Price
will be determined in accordance with Section 13.2 and the Fair Market Value
will be determined in accordance with Section 13.3. All other terms of the
option to purchase shall be in accordance with Article 13.
10.2 Partial Taking. If, after a Taking, so much of the Leased
Property remains that the Leased Property can be used for substantially the same
purposes for which it was used immediately before the Taking, then [i] this
Lease will end as to the part taken on the earlier of the vesting of title to
the Leased Property in the condemning authority or the taking of possession of
the Leased Property by the condemning authority; [ii] at its cost and to the
extent of the proceeds, Tenant shall restore so much of the Leased Property as
remains to a sound architectural unit
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substantially suitable for the purposes for which it was used immediately before
the Taking, using good workmanship and new, first-class materials; [iii] upon
completion of the restoration, Landlord will pay Tenant the lesser of the net
award made to Landlord on the account of the Taking (after deducting from the
total award, attorneys', appraisers', and other reasonable fees and costs
incurred in connection with the obtaining of the award and amounts paid to the
holders of mortgages secured by the Leased Property), or Tenant's actual
out-of-pocket costs of restoring the Leased Property; and [iv] Landlord shall be
entitled to the balance of the net award. The restoration shall be completed in
accordance with Section Section 9.4, 9.5, 9.7, 9.8 and 9.9 with such provisions
deemed to apply to condemnation instead of casualty.
10.3 Condemnation Proceeds Not Trust Funds. Notwithstanding
anything in this Lease or at law or equity to the contrary, none of the
condemnation award paid to Landlord shall be deemed trust funds, and Landlord
shall be entitled to dispose of such proceeds as provided in this Article 10.
Tenant expressly assumes all risk of loss, including a decrease in the use,
enjoyment, or value, of the Leased Property from any Condemnation.
ARTICLE 11: TENANT'S PROPERTY
11.1 Tenant's Property. Tenant shall install, place, and use
on the Leased Property such fixtures, furniture, equipment, inventory and other
personal property in addition to the Personal Property as may be required or as
Tenant may, from time to time, deem necessary or useful to operate the Leased
Property for its permitted purposes. All fixtures, furniture, equipment,
inventory, and other personal property installed, placed, or used on the Leased
Property which is owned by Tenant or leased by Tenant from third parties is
hereinafter referred to as "Tenant's Property".
11.2 Requirements for Tenant's Property. Tenant shall comply
with all of the following requirements in connection with Tenant's Property:
(a) Tenant shall, at Tenant's sole cost and expense,
maintain, repair, and replace Tenant's Property.
(b) Tenant shall, at Tenant's sole cost and expense,
keep Tenant's Property insured against loss or damage by fire, vandalism and
malicious mischief, sprinkler leakage, earthquake, and other physical loss
perils commonly covered by fire and extended coverage, boiler and machinery, and
difference in conditions insurance in an amount not less than 90% of the then
full replacement cost thereof. Tenant shall use the proceeds from any such
policy for the repair and replacement of Tenant's Property. The insurance shall
meet the requirements of Section 4.3.
(c) Tenant shall pay all taxes applicable to Tenant's
Property.
(d) If Tenant's Property is damaged or destroyed by
fire or any other cause, Tenant shall promptly repair or replace Tenant's
Property unless Landlord elects to terminate this Lease pursuant to Section
9.2.2.
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(e) Unless an Event of Default or any event which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default has occurred, Tenant may remove Tenant's Property from the Leased
Property from time to time provided that [i] the items removed are not required
to operate the Leased Property as a licensed adult congregate living facility
(unless such items are being replaced by Tenant); and [ii] Tenant repairs any
damage to the Leased Property resulting from the removal of Tenant's Property.
(f) Tenant shall not, without the prior written
consent of Landlord or as otherwise provided in this Lease, remove any Tenant's
Property or Leased Property. Tenant shall, at Landlord's option, remove Tenant's
Property upon the termination or expiration of this Lease and shall repair any
damage to the Leased Property resulting from the removal of Tenant's Property.
If Tenant fails to remove Tenant's Property within 30 days after request by
Landlord, then Tenant shall be deemed to have abandoned Tenant's Property,
Tenant's Property shall become the property of Landlord, and Landlord may
remove, store and dispose of Tenant's Property. In such event, Tenant shall have
no claim or right against Landlord for such property or the value thereof
regardless of the disposition thereof by Landlord. Tenant shall pay Landlord,
upon demand, all expenses incurred by Landlord in removing, storing, and
disposing of Tenant's Property and repairing any damage caused by such removal.
Tenant's obligations hereunder shall survive the termination or expiration of
this Lease.
(g) Tenant shall perform its obligations under any
equipment lease or security agreement for Tenant's Property. For equipment loans
or leases for equipment having an original cost in excess of $50,000.00, Tenant
shall cause such equipment lessor or lender to enter into a nondisturbance
agreement with Landlord upon terms and conditions acceptable to Landlord,
including without limitation, the following: [i] Landlord shall have the right
(but not the obligation) to assume such equipment lease or security agreement
upon the occurrence of an Event of Default by Tenant hereunder; [ii] such
equipment lessor or lender shall notify Landlord of any default by Tenant under
the equipment lease or security agreement and give Landlord a reasonable
opportunity to cure such default; and [iii] Landlord shall have the right to
assign its interest in the equipment lease or security agreement and
nondisturbance agreement. Tenant shall, within 30 days after receipt of an
invoice from Landlord, reimburse Landlord for all costs and expenses incurred in
reviewing and approving the equipment lease, security agreement and
nondisturbance agreement, including without limitation, reasonable attorneys'
fees and costs.
ARTICLE 12: RENEWAL OPTIONS
12.1 Renewal Options. Tenant has the option to renew ("Renewal
Option") this Lease for 3 consecutive 5 year renewal terms (each a "Renewal
Term"). Tenant can exercise the Renewal Option only upon satisfaction of the
following conditions:
(a) There shall be no uncured Event of Default, or
any event which with the passage of time or giving of notice would constitute an
Event of Default, at the time Tenant exercises its Renewal Option nor on the
date the Renewal Term is to commence.
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(b) Tenant shall give Landlord written notice of
renewal no later than the date which is [i] 90 days prior to the expiration date
of the then current Term; or [ii] 15 days after Landlord's delivery of the
Termination Notice as set forth in Section 9.2.3. Such notice shall be
irrevocable except to the extent that an event occurs which under the provisions
of this Lease would permit Tenant to terminate this Lease and Tenant so elects
to terminate this Lease.
(c) Tenant shall concurrently give irrevocable notice
of renewal for the Affiliate Lease.
12.2 Effect of Renewal. The following terms and conditions
will be applicable if Tenant renews the Lease:
(a) Effective Date. Except as otherwise provided in
Section 9.2.3, the effective date of any Renewal Term will be the first day
after the expiration date of the then current Term. The first day of each
Renewal Term is also referred to as the Renewal Date.
(b) Lease Amount. Effective as of the Renewal Date, a
single Lease Amount will be computed by summing all Lease Advance Amounts
(including the Acquisition Amount).
(c) Lease Rate. Effective as of the Renewal Date, a
single Lease Rate will be computed equal to the Renewal Rate. The Renewal Rate
will be the sum of the Rate Index on the Rate Determination Date plus the
applicable Rate Spread.
(d) Increaser Rate. The Increaser Rate will be 20
basis points per year.
(e) Base Rent. Effective as of the Renewal Date, the
Base Rent will be changed to equal 1/12th of the product of [i] the Lease Amount
on the Renewal Date times [ii] the new Lease Rate equal to the Renewal Rate.
(f) Other Terms and Conditions. Except for the
modifications set forth in this Section 12.2, all other terms and conditions of
the Lease will remain the same for the Renewal Term.
ARTICLE 13: OPTION TO PURCHASE
13.1 Option to Purchase. Landlord hereby grants to Tenant an
option to purchase ("Option to Purchase") all of the Leased Property (but not
any part thereof) in accordance with the terms and conditions of this Article
13. Tenant may exercise its Option to Purchase only by giving an irrevocable
notice of Tenant's election to purchase the Leased Property ("Purchase Notice")
in accordance with the following:
(a) During years 8, 9 and 10 the Initial Term and
during any Renewal Term, Tenant must give a Purchase Notice no earlier than the
date which is 270 days, and no later
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than the date which is 120 days, prior to [i] the end of the Initial Term, or
[ii] the expiration date of the then current Term of this Lease and the
Affiliate Lease.
(b) If the Improvements are substantially destroyed
during the final 18 months of the Initial Term or any Renewal Term, Tenant must
give a Purchase Notice within 15 days after Landlord gives the Termination
Notice pursuant to Section 9.2.4.
Tenant shall have no right to exercise the Option to Purchase other than in
accordance with subparagraph [a] or [b].
13.1.2 In the event that the accounting treatment for this
Lease does not permit Tenant to have a fair market value option to purchase the
Facility, Tenant shall have a right of first refusal to purchase the Facility
(or the Affiliate Facility as applicable). If at any time during the Term,
Landlord shall receive a bona fide offer ("Offer") from a third person for the
purchase of the Leased Property, which Offer Landlord desires to accept,
Landlord shall promptly deliver to Tenant a copy of such Offer. Tenant shall
have the right for a period of 60 days thereafter to elect to purchase the
Leased Property on the same terms and conditions as those set forth in the
Offer. If Tenant elects to purchase the Leased Property, Tenant must give
written notice thereof to Landlord no later than the 60th day after the date
Landlord delivers the Offer to Tenant. If Tenant does not elect to exercise its
right of first refusal as set forth in this section, Landlord shall be free to
sell and convey the Leased Property to the third party purchaser in accordance
with the terms and provisions of the Offer, subject to this Lease. In the event
that Landlord does not consummate the sale of the Leased Property to such
purchaser, Tenant's right of first refusal under this section shall remain
applicable to subsequent bona fide offers from third persons.
13.2 Option Price. The option price ("Option Price") will be
the Fair Market Value of the Leased Property determined pursuant to Section
13.3; provided, however, that the Option Price shall not be less than the Lease
Amount. Notwithstanding any provision in this Lease to the contrary, Tenant
shall have the right to revoke its Purchase Notice within 10 days after the
Option Price has been determined if the Option Price is not acceptable to Tenant
or Tenant may revoke to the extent that an event occurs which under the
provisions of this Lease would permit Tenant to terminate this Lease and Tenant
so elects to terminate this Lease. In addition to the Option Price, Tenant shall
pay all closing costs and expenses in connection with the transfer of the Leased
Property to Tenant including but not limited to the following: [a] real property
conveyance or transfer fees or deed stamps; [b] title search fees, title
insurance commitment fees, and title insurance premiums; [c] survey fees; [d]
environmental assessment fees; [e] recording fees; [f] reasonable attorneys'
fees of Landlord's counsel; [g] fees of any escrow agent; and [h] all amounts,
costs, expenses, charges, Additional Rent and other items payable by Tenant to
Landlord including but not limited to enforcement costs as set forth in Section
8.7.
13.3 Fair Market Value. The fair market value (the "Fair
Market Value") of the Leased Property shall be determined as follows.
13.3.1 The parties shall attempt to determine the Fair Market
Value by mutual agreement within 15 days after giving the Purchase Notice.
However, if the parties do not agree on
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the Fair Market Value within such 15 day period, the following provisions shall
apply.
13.3.2 Landlord and Tenant shall each give the other party
notice of the name of an acceptable appraiser 15 days after giving of the
Purchase Notice. The two appraisers will then select a third appraiser within an
additional 5 days. Each appraiser must demonstrate to the reasonable
satisfaction of both Landlord and Tenant that it has significant experience in
appraising properties similar to the Leased Property. Within 5 days after
designation, each appraiser shall submit a resume to Landlord and Tenant setting
forth such appraiser's qualifications including education and experience with
similar properties. A notice of objections to the qualifications of any
appraiser shall be given within 10 days after receipt of such resume. If a party
fails to timely object to the qualifications of an appraiser, then the appraiser
shall be conclusively deemed satisfactory. If a party gives a timely notice of
objection to the qualifications of an appraiser, then the disqualified appraiser
shall be replaced by an appraiser selected by the qualified appraisers or, if
all appraisers are disqualified, then by an appraiser selected by a commercial
arbitrator acceptable to Landlord and Tenant.
13.3.3 The Fair Market Value shall be determined by the
appraisers within 60 days thereafter as follows. Each of the appraisers shall be
instructed to prepare an appraisal of the Leased Property in accordance with the
following instructions:
The Leased Property is to be valued upon the three
conventional approaches to estimate value known as the Income,
Sales Comparison and Cost Approaches. Once the approaches are
completed, the appraiser correlates the individual approaches
into a final value conclusion.
The three approaches to estimate value are summarized as follows:
INCOME APPROACH: This valuation approach recognizes that the
value of the operating tangible and intangible asset can be
represented by the expected economic viability of the business
giving returns on and of the assets and shall use a management
fee of 7%.
SALES COMPARISON APPROACH: This valuation approach is based
upon the principal of substitution. When a facility is
replaceable in the market, the market approach assumes that
value tends to be set at the price of acquiring an equally
desirable substitute facility. Since healthcare market
conditions change and frequently are subject to regulatory and
financing environments, adjustments need to be considered.
These adjustments also consider the operating differences such
as services and demographics.
COST APPROACH: This valuation approach estimates the value of
the tangible assets only. Value is represented by the market
value of the
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land plus the depreciated reproduction cost of all
improvements and equipment.
In general, the Income and Sales Comparison Approaches are considered the best
representation of value because they cover both tangibles and intangible assets,
consider the operating characteristics of the business and have the most
significant influence on attracting potential investors.
The appraised values submitted by the three appraisers shall be ranked from
highest value to middle value to lowest value, the appraised value (highest or
lowest) which is furthest from the middle appraised value shall be discarded,
and the remaining two appraised values shall be averaged to arrive at the Fair
Market Value.
13.3.4 In the event of any condemnation, similar taking or
threat thereof with respect to any part of the Leased Property or any insured or
partially insured casualty loss to any part of the Leased Property after Tenant
has exercised an Option to Purchase, but before settlement, the Fair Market
Value of the Leased Property shall be redetermined as provided in this Section
13.3 to give effect to such condemnation, taking or loss.
13.3.5 Tenant shall pay, or reimburse Landlord for, all costs
and expenses in connection with the appraisals.
13.4 Closing. The purchase of the Leased Property by Tenant
shall close on a date agreed to by Landlord and Tenant which shall be not less
than 60 days after Landlord's receipt of the Purchase Notice and not more than
60 days after the Fair Market Value of the Leased Property has been determined.
At the closing, Tenant shall pay the Option Price and all closing costs in
immediately available funds and Landlord shall convey title to the Leased
Property to Tenant by a transferable and recordable limited warranty deed and
limited warranty ▇▇▇▇ of sale. The warranties provided for in such documents
shall not be limited by any limitations upon Landlord's liability as provided in
this Lease. Landlord shall also execute those affidavits reasonably required by
the title company for the issuance of an owner's policy of title insurance.
13.5 Failure to Close Option. If Tenant for any reason fails
to purchase the Leased Property after Tenant has given the Purchase Notice, then
Tenant shall pay Landlord all costs and expenses incurred by Landlord as a
result of the failure to close including costs of unwinding swap transactions or
other interest rate protection devices and preparing for the closing. Tenant
shall continue to be obligated as lessee hereunder for the remainder of the Term
(including the Extended Term as set forth in Section 12.3).
13.6 Failure to Exercise Option to Purchase and Renewal
Option. If Tenant for any reason does not exercise its Option to Purchase or
Renewal Option in accordance with the terms and conditions of this Lease before
the expiration of the then current Term, Tenant shall be deemed to have
forfeited its equity contribution and all proprietary and ownership interest in
the Leased Property.
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ARTICLE 14: NEGATIVE COVENANTS
Until Tenant's Obligations shall have been performed in full,
Tenant covenants and agrees that Tenant shall not do any of the following
without the prior written consent of Landlord which consent shall not be
unreasonably withheld:
14.1 No Debt. Tenant shall not create, incur, assume, or
permit to exist any indebtedness related to the Facility other than [i] trade
debt incurred in the ordinary course of Tenant's business; [ii] indebtedness for
Facility working capital purposes in an amount not to exceed $150,000.00; [iii]
indebtedness relating to the Letter of Credit; [iv] indebtedness that is secured
by any Permitted Lien; and [v] unsecured indebtedness that will not cause Tenant
to be in violation of Section 15.7.
14.2 No Liens. Tenant shall not create, incur, or permit to
exist any lien, charge, encumbrance, easement or restriction upon the Leased
Property or any lien upon or pledge of any interest in Tenant related to the
Facility, except for Permitted Liens.
14.3 No Guaranties. Tenant shall not create, incur, assume, or
permit to exist any guarantee of any loan or other indebtedness except for the
endorsement of negotiable instruments for collection in the ordinary course of
business or guarantees that will not cause Tenant to be in violation of Section
15.7.
14.4 No Transfer. Tenant shall not sell, lease, sublease,
mortgage, convey, assign or otherwise transfer any legal or equitable interest
in the Leased Property or any part thereof, except for transfers made in
connection with any Permitted Lien and transfers to an Affiliate.
14.5 No Dissolution. Tenant or Manager shall not dissolve,
liquidate, merge, consolidate or terminate its existence or sell, assign, lease,
or otherwise transfer (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) except for mergers, consolidations or other structural
changes in Tenant that will not cause Tenant to be in violation of Section 15.7.
14.6 No Change in Control. No material change shall occur in
the control of Tenant at any time prior to Tenant's initial public offering.
14.7 No Investments. Tenant shall not purchase or otherwise
acquire, hold, or invest in securities (whether capital stock or instruments
evidencing indebtedness) of or make loans or advances to any person, including,
without limitation, any Affiliate, or any shareholder, member or partner of
Tenant, or any Affiliate, except for cash balances temporarily invested in
short-term or money market securities and investments or loans that will not
cause Tenant to be in violation of Section 15.7.
14.8 Contracts. Tenant shall not execute or modify any
material contracts or agreements with respect to the Facility except for
contracts and modifications approved by Landlord. Contracts made in the ordinary
course of business and in an amount less than $50,000.00
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shall not be considered "material" for purposes of this paragraph.
14.9 Subordination of Payments to Affiliates. After the
occurrence of an Event of Default and until such Event of Default is cured,
Tenant shall not make any payments or distributions (including, without
limitation, salary, bonuses, fees, principal, interest, dividends, liquidating
distributions, management fees, cash flow distributions or lease payments) to
any Affiliate, or any shareholder, member or partner of Tenant or any Affiliate.
14.10 Change of Location or Name. Tenant shall not change any
of the following without giving Landlord at least 60 days' advance written
notice: [i] the location of the principal place of business or chief executive
office of Tenant, or any office where any of Tenant's books and records are
maintained; or [ii] the name under which Tenant conducts any of its business or
operations.
ARTICLE 15: AFFIRMATIVE COVENANTS
15.1 Perform Obligations. Tenant shall perform all of its
obligations under this Lease, the Government Authorizations, the Permitted
Exceptions, and all Legal Requirements. If applicable, Tenant shall take all
necessary action to obtain all Government Authorizations required for the
operation of the Facility as soon as possible after the Effective Date.
15.2 Proceedings to Enjoin or Prevent Construction. If any
proceedings are filed seeking to enjoin or otherwise prevent or declare invalid
or unlawful Tenant's construction, occupancy, maintenance, or operation of the
Facility or any portion thereof, Tenant will cause such proceedings to be
vigorously contested in good faith, and in the event of an adverse ruling or
decision, prosecute all allowable appeals therefrom, and will, without limiting
the generality of the foregoing, resist the entry or seek the stay of any
temporary or permanent injunction that may be entered, and use its best efforts
to bring about a favorable and speedy disposition of all such proceedings and
any other proceedings.
15.3 Documents and Information.
15.3.1 Furnish Documents. Tenant shall periodically during the
term of the Lease deliver to Landlord the Annual Financial Statements, Periodic
Financial Statements and other documents described on Exhibit C within the
specified time periods. With each delivery of Annual Financial Statements and
Periodic Financial Statements to Landlord, Tenant shall also deliver to Landlord
a certificate signed by the Chief Financial Officer of Tenant, an Annual
Facility Financial Report or Quarterly Facility Financial Report, as applicable,
and a Quarterly Facility Accounts Receivable Aging Report all in the form of
Exhibit D. In addition, Tenant shall deliver to Landlord the Annual Facility
Financial Report and a Quarterly Facility Accounts Receivable Aging Report
(based upon internal financial statements) within 90 days after the end of each
fiscal year.
15.3.2 Furnish Information. Tenant shall [i] promptly supply
Landlord with such information concerning its financial condition, affairs and
property, as Landlord may reasonably request from time to time hereafter; [ii]
promptly notify Landlord in writing of any condition or
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event that constitutes a breach or event of default of any term, condition,
warranty, representation, or provisions of this Agreement or any other
agreement, and of any material adverse change in its financial condition; [iii]
maintain a standard and modern system of accounting; [iv] permit Landlord or any
of its agent or representatives to have access to and to examine all of its
books and records regarding the financial condition of the Facility at any time
or times hereafter during business hours and after reasonable written notice;
and [v] permit Landlord to copy and make abstracts from any and all of said
books and records.
15.3.3 Further Assurances and Information. Tenant shall, on
request of Landlord from time to time, execute, deliver, and furnish documents
as may be necessary to fully consummate the transactions contemplated under this
Agreement. Within 15 days after a request from Landlord, Tenant shall provide to
Landlord such additional information regarding Tenant, Tenant's financial
condition or the Facility as Landlord, or any existing or proposed creditor of
Landlord, or any auditor or underwriter of Landlord, may reasonably require from
time to time, including, without limitation, a current Tenant's Certificate and
Schedule of Financial Information in the form of Exhibit D.
15.3.4 Material Communications. Tenant shall transmit to
Landlord, within 5 business days after receipt thereof, any material
communication affecting a Facility, this Lease, the Legal Requirements or the
Government Authorizations, and Tenant will promptly respond to Landlord's
inquiry with respect to such information. Tenant shall promptly notify Landlord
in writing after Tenant has knowledge of any potential, threatened or existing
litigation or proceeding against, or investigation of, Tenant or the Facility
that may affect the right to operate the Facility or Landlord's title to the
Facility or Tenant's interest therein.
15.3.5 Requirements for Financial Statements. Tenant shall
meet the following requirements in connection with the preparation of the
financial statements: [i] all audited financial statements shall be prepared in
accordance with general accepted accounting principles; [ii] all unaudited
financial statements shall be prepared in a manner substantially consistent with
prior audited and unaudited financial statements submitted to Landlord; [iii]
all financial statements shall fairly present the financial condition and
performance for the relevant period in all material respects; [iv] the financial
statements shall include all notes to the financial statements and a complete
schedule of contingent liabilities and transactions with Affiliates; and [v] the
audited financial statements shall contain an unqualified opinion, except to the
extent such opinion references a change in treatment made in accordance with
general accepted accounting principles.
15.4 Compliance With Laws. Tenant shall comply with all Legal
Requirements and keep all Government Authorizations in full force and effect.
Tenant shall pay when due all taxes and governmental charges of every kind and
nature that are assessed or imposed upon Tenant at any time during the term of
the Lease, including, without limitation, all income, franchise, capital stock,
property, sales and use, business, intangible, employee withholding, and all
taxes and charges relating to Tenant's business and operations. Tenant shall be
solely responsible for compliance with all Legal Requirements, including the
ADA, and Landlord shall have no responsibility for such compliance.
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15.5 Broker's Commission. Tenant and Landlord shall indemnify
each other from claims of brokers arising by the execution hereof or the
consummation of the transactions contemplated hereby and from expenses incurred
by Landlord or Tenant in connection with any such claims (including attorneys'
fees).
15.6 Existence and Change in Control. Tenant shall maintain
its existence throughout the term of this Agreement. Any material change in the
control of Tenant, directly or indirectly prior to Tenant's initial public
offering, shall require Landlord's prior written consent, which consent shall
not be unreasonably withheld.
15.7 Financial Covenants. The defined terms used in this
section are defined in Section 15.7.1. The following financial covenants shall
be met throughout the term of this Lease; provided, however, if Tenant fails to
meet the covenant contained in Section 15.7.2, such failure shall not be an
Event of Default under this Lease provided that Tenant increases the Letter of
Credit by an amount that would effectively reduce the Lease Amount (for
calculation purposes only) to an amount that would permit Tenant to be in
compliance with the covenant. If Tenant increases the Letter of Credit amount,
the increase must remain in place until the Coverage Ratio is satisfied by
Tenant (without adjustment to the Lease Amount) for 2 consecutive quarters. If
Tenant fails to meet the covenant contained in Section 15.7.4, such failure
shall not be an Event of Default under this Lease provided that Tenant increases
the amount of the Letter of Credit by an amount equal to 2.5% of the Lease
Amount. The increase in the Letter of Credit must remain in place until the
current ratio is satisfied by Tenant for 2 consecutive quarters.
15.7.1 Definitions.
(a) "Cash Flow" means the net income of Tenant as
reflected on the income statement of Tenant plus [i] the amount of the provision
for depreciation and amortization; [ii] the amount of the provision for
management fees; plus [iii] the amount of the provision for income taxes; plus
[iv] the amount of the provision for Rent payments and interest and lease
payments, if any; minus [v] an imputed management fee equal to 5% of revenues
(net of contractual allowances); and minus [vi] an imputed replacement reserve
of $300.00 per licensed unit at the Facility, per year.
(b) "Coverage Ratio" is the ratio of [i] Cash Flow
for each applicable period; [ii] to the Rent payments due pursuant to this Lease
and all other debt service of Tenant and lease payments relating to the Leased
Property for the applicable period.
(c) "Net Worth" means an amount equal to the total
consolidated fair market value of the tangible assets of the entity (excluding
good will and other intangible assets) minus the total consolidated liabilities
of such entity.
15.7.2 Coverage Ratio. Tenant shall maintain for each fiscal
quarter a Coverage Ratio with respect to the Facility of not less than 1.25 to
1.00 for the second full year that the Facility is operational and for each year
thereafter. Landlord shall determine the Coverage Ratio based upon the Financial
Statements certified by the chief financial officer of Tenant to be accurate
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and to fairly present the financial condition of the Facility.
15.7.3 Shareholders' Equity. Tenant and its consolidated
subsidiaries shall maintain combined shareholders' equity and subordinated debt
of at least $10,000,000.00.
15.7.4 Current Ratio. Tenant and its consolidated subsidiaries
shall maintain for each fiscal quarter a ratio of current assets to current
liabilities of not less than 1.25 to 1.00 for the second full year that the
Facility is operational and for each year thereafter.
15.7.5 Minimum Cash Requirement. Tenant shall maintain cash
and cash equivalents with at least $500,000.00.
15.7.6 Working Capital. Tenant shall maintain available
working capital for the Facility in the amount not less than $100,000.00. The
available working capital may be included as part of the cash requirement under
Section 15.7.5.
ARTICLE 16: ALTERATIONS, CAPITAL
IMPROVEMENTS, AND SIGNS
16.1 Prohibition on Alterations and Improvements. Except for
Permitted Alterations (as hereinafter defined), Tenant shall not make any
structural or nonstructural changes, alterations, additions and/or improvements
(hereinafter collectively referred to as "Alterations") to the Leased Property.
16.2 Approval of Alterations. If Tenant desires to perform any
Permitted Alterations, Tenant shall deliver to Landlord plans, specifications,
drawings, and such other information as may be reasonably requested by Landlord
(collectively the "Plans and Specifications") showing in reasonable detail the
scope and nature of the Alterations that Tenant desires to perform. It is the
intent of the parties hereto that the level of detail shall be comparable to
that which is referred to in the architectural profession as "design development
drawings" as opposed to working or biddable drawings. Landlord agrees not to
unreasonably delay its review of the Plans and Specifications. Landlord's
failure to respond within 60 days of receipt of the Plans and Specifications
shall be deemed to constitute Landlord's approval. Within 30 days after receipt
of an invoice, Tenant shall reimburse Landlord for all costs and expenses
incurred by Landlord in reviewing and, if required, approving or disapproving
the Plans and Specifications, inspecting the Leased Property, and otherwise
monitoring compliance with the terms of this Article 16. Tenant shall comply
with the requirements of Section 16.4 in making any Permitted Alterations.
16.3 Permitted Alterations. Permitted Alterations means any
one of the following: [i] Alterations approved by Landlord; [ii] Alterations
required under Section 7.2; [iii] Alterations having a total cost of less than
$25,000.00; or [iv] repairs, rebuilding and restoration required or undertaken
pursuant to Section 9.4.
16.4 Requirements for Permitted Alterations. Tenant shall
comply with all of the following requirements in connection with any Permitted
Alterations:
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(a) The Permitted Alterations shall be made in
accordance with the approved Plans and Specifications.
(b) The Permitted Alterations and the installation
thereof shall comply with all applicable legal requirements and insurance
requirements.
(c) The Permitted Alterations shall be done in a good
and workmanlike manner, shall not impair the value or the structural integrity
of the Leased Property, and shall be free and clear of all mechanic's liens.
(d) For any Permitted Alterations having a total cost
of $100,000.00 or more, Tenant shall deliver to Landlord a payment and
performance bond, with a surety acceptable to Landlord, in an amount equal to
the estimated cost of the Permitted Alterations, guaranteeing the completion of
the work free and clear of liens and in accordance with the approved Plans and
Specifications, and naming Landlord and any mortgagee of Landlord as joint
obligees on such bond.
(e) Tenant shall, at Tenant's expense, obtain a
builder's completed value risk policy of insurance insuring against all risks of
physical loss, including collapse and transit coverage, in a nonreporting form,
covering the total value of the work performed, and equipment, supplies, and
materials, and insuring initial occupancy. Landlord and any mortgagee of
Landlord shall be additional insureds of such policy. Landlord shall have the
right to approve the form and substance of such policy.
(f) Tenant shall pay the premiums required to
increase the amount of the insurance coverages required by Article 4 to reflect
the increased value of the Improvements resulting from installation of the
Permitted Alterations, and shall deliver to Landlord a certificate evidencing
the increase in coverage.
(g) Tenant shall, not later than 60 days after
completion of the Permitted Alterations, deliver to Landlord a revised
"as-built" survey of the Leased Property if the Permitted Alterations altered
the Land or "foot-print" of the Improvements and an "as-built" set of Plans and
Specifications for the Permitted Alterations in form and substance satisfactory
to Landlord.
(h) Tenant shall, not later than 30 days after
Landlord sends an invoice, reimburse Landlord for any reasonable costs and
expenses, including attorneys' fees and architects' and engineers' fees,
incurred in connection with reviewing and approving the Permitted Alterations
and ensuring Tenant's compliance with the requirements of this Section. The
daily fee for Landlord's consulting engineer is $750.00.
16.5 Ownership and Removal of Permitted Alterations. The
Permitted Alterations shall become a part of the Leased Property, owned by
Landlord, and leased to Tenant subject to the terms and conditions of this
Lease. Tenant shall not be required or permitted to remove any Permitted
Alterations.
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16.6 Signs. Tenant may, at its own expense, erect and maintain
identification signs at the Leased Property, provided such signs comply with all
laws, ordinances, and regulations. Upon the termination or expiration of this
Lease, Tenant shall, within 30 days after notice from Landlord, remove the signs
and restore the Leased Property to its original condition.
ARTICLE 17: [RESERVED]
ARTICLE 18: ASSIGNMENT AND
SALE OF LEASED PROPERTY
18.1 Prohibition on Assignment and Subletting. Tenant
acknowledges that Landlord has entered into this Lease in reliance on the
personal services and business expertise of Tenant. Tenant may not assign,
sublet, mortgage, hypothecate, pledge, or transfer any interest in this Lease,
or in the Leased Property, in whole or in part, except to an Affiliate of Tenant
without the prior written consent of Landlord, which Landlord may withhold in
its sole and absolute discretion to the extent permitted by law. The following
transactions will be deemed an assignment or sublease requiring Landlord's prior
written consent: [i] an assignment by operation of law; [ii] an imposition
(whether or not consensual) of a lien, mortgage, or encumbrance upon Tenant's
interest in the Lease; [iii] an arrangement (including but not limited to,
management agreements, concessions, licenses, and easements) which allows the
use or occupancy of all or part of the Leased Property by anyone other than
Tenant; and [iv] a material change in control of Tenant prior to Tenant's
initial public offering. Landlord's consent to any assignment or sublease will
not release Tenant (or any guarantor) from its payment and performance
obligations under this Lease, but rather Tenant, any guarantor, and Tenant's
assignee or sublessee will be jointly and severally liable for such payment and
performance. An assignment or sublease without the prior written consent of
Landlord will be void at the Landlord's option. Landlord's consent to one
assignment or sublease will not waive the requirement of its consent to any
subsequent assignment or sublease.
18.2 Requests for Landlord's Consent to Assignment, Sublease
or Management Agreement. If Tenant requests Landlord's consent to a specific
assignment, sublease, or management agreement, Tenant shall give Landlord [i]
the name and address of the proposed assignee, subtenant or manager; [ii] a copy
of the proposed assignment, sublease or management agreement; [iii] reasonably
satisfactory information about the nature, business and business history of the
proposed assignee, subtenant, or manager and its proposed use of the Leased
Property; and [iv] banking, financial, and other credit information, and
references about the proposed assignee, subtenant or manager sufficient to
enable Landlord to determine the financial responsibility and character of the
proposed assignee, subtenant or manager. Any assignment, sublease or management
agreement shall contain provisions to the effect that [a] such assignment,
sublease or management agreement is subject and subordinate to all of the terms
and provisions of this Lease and to the rights of Landlord; [b] such assignment,
sublease or management agreement may not be modified without the prior written
consent of Landlord not to be unreasonably withheld or delayed; [c] if this
Lease shall terminate before the expiration of such assignment, sublease or
management agreement, the assignee, subtenant or manager thereunder will, at
Landlord's option, attorn to Landlord and waive any right the assignee,
subtenant or manager may have to terminate the
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assignment, sublease or management agreement or surrender possession thereunder
as a result of the termination of this Lease; and [d] if the assignee, subtenant
or manager receives a written notice from Landlord stating that Tenant is in
default under this Lease, the assignee, subtenant or manager shall thereafter
pay all rentals or payments under the assignment, sublease or management
agreement directly to Landlord until such default has been cured. Tenant hereby
collaterally assigns to Landlord, as security for the performance of its
obligations hereunder, all of Tenant's right, title, and interest in and to any
assignment, sublease or management agreement now or hereafter existing for all
or part of the Leased Property. Tenant shall, at the request of Landlord,
execute such other instruments or documents as Landlord may request to evidence
this collateral assignment. If Landlord, in its sole and absolute discretion,
consents to such assignment, sublease, or management agreement, such consent
shall not be effective until [i] a fully executed copy of the instrument of
assignment, sublease or management agreement has been delivered to Landlord;
[ii] in the case of an assignment, Landlord has received a written instrument in
which the assignee has assumed and agreed to perform all of Tenant's obligations
under the Lease; and [iii] Tenant has paid to Landlord a fee in the amount of
$2,500.00; and [iv] Landlord has received reimbursement from Tenant or the
assignee for all reasonable attorneys' fees and expenses and all other
reasonable out-of-pocket expenses incurred in connection with determining
whether to give its consent, giving its consent and all matters relating to the
assignment.
18.3 Agreements with Residents. Notwithstanding Section 18.1,
Tenant may enter into an occupancy agreement with residents of the Leased
Property without the prior written consent of Landlord provided that [i] the
agreement does not provide for lifecare services; [ii] Tenant may not collect
rent for more than two months in advance; and [iii] all residents of the Leased
Property are accurately shown in Tenant's accounting records.
18.4 Sale of Leased Property. If Landlord or any subsequent
owner of the Leased Property sells the Leased Property, its liability for the
performance of its agreements in this Lease will end on the date of the sale of
the Leased Property, and Tenant will look solely to the purchaser for the
performance of those agreements. For purposes of this Section, any holder of a
mortgage or security agreement which affects the Leased Property at any time,
and any landlord under any lease to which this Lease is subordinate at any time,
will be a subsequent owner of the Leased Property when it succeeds to the
interest of Landlord or any subsequent owner of the Leased Property.
18.5 Assignment by Landlord. Landlord may transfer, assign,
mortgage, collaterally assign, or otherwise dispose of Landlord's interest in
this Lease or the Leased Property.
ARTICLE 19: HOLDOVER AND SURRENDER
19.1 Holding Over. Should Tenant, with or without the express
or implied consent of Landlord, continue to hold and occupy the Leased Property
after the expiration of the Term, such holding over beyond the Term and the
acceptance or collection of Rent by the Landlord shall operate and be construed
as creating a tenancy from month-to-month and not for any other term whatsoever.
Said month-to-month tenancy may be terminated by Landlord by giving Tenant 10
days written notice, and at any time thereafter Landlord may re-enter and take
possession of the Leased Property.
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19.2 Surrender. Except for [i] Permitted Alterations; [ii]
normal and reasonable wear and tear (subject to the obligation of Tenant to
maintain the Leased Property in good order and repair during the Term); and
[iii] damage and destruction not required to be repaired by Tenant, Tenant shall
surrender and deliver up the Leased Property at the expiration or termination of
the Term in as good order and condition as of the Commencement Date.
ARTICLE 20: LETTER OF CREDIT
20.1 Terms of Letter of Credit. As security for the
performance of its obligations hereunder, Tenant shall provide Landlord with the
Letter of Credit at the Closing. Tenant shall maintain the Letter of Credit in
favor of Landlord until Tenant's Obligations are performed in full. The Letter
of Credit shall permit partial draws and shall permit drawing upon presentation
of a draft drawn on the issuer and a certificate signed by Landlord stating that
an Event of Default has occurred under this Lease. The Letter of Credit shall be
for an initial term of one year and shall be automatically renewed annually for
successive terms of at least one year unless Landlord receives notice from the
Issuer, by certified mail, at least 60 days prior to the expiry date then in
effect that the Letter of Credit will not be extended for an additional one-year
period.
20.2 Replacement Letter of Credit. Tenant shall provide a
replacement Letter of Credit which satisfies the requirements of Section 20.1
from an Issuer acceptable to Landlord within 30 days after the occurrence of any
of the following: [i] Landlord's receipt of notice from the Issuer that the
Letter of Credit will not be extended for an additional one-year period; [ii]
Landlord gives notice to Tenant that the Lace Financial Service Rating of the
Issuer is less than a "C+"; or [iii] Landlord gives notice to Tenant of the
admission by Issuer in writing of its inability to pay its debts generally as
they become due, or Issuer's filing of a petition in bankruptcy or petitions to
take advantage of any insolvency act, making an assignment for the benefit of
its creditors, consenting to the appointment of a receiver of itself or of the
whole or any substantial part of its property, or filing a petition or answer
seeking reorganization or arrangement under the federal bankruptcy laws or any
other applicable law or statute of the United States of America or any state
thereof. Tenant's failure to comply with the requirements of this Section shall
be an immediate Event of Default without any notice (other than as provided for
in the section), cure or grace period.
20.3 Draws. Landlord may draw under the Letter of Credit upon
the occurrence of an Event of Default hereunder. Any such draw shall not cure an
Event of Default. Landlord shall have the right, but not the obligation, to
apply all or any portion of the proceeds from the Letter of Credit to pay all or
any portion of [i] all Rent and other charges and expenses payable by Tenant
under this Lease; plus [ii] all expenses and costs incurred by Landlord in
enforcing or preserving Landlord's rights under this Lease or any security for
the Lease, including without limitation, [a] the fees, expenses, and costs of
any litigation, receivership, administrative, bankruptcy, insolvency, or other
similar proceeding; [b] attorney, paralegal, consulting and witness fees and
disbursements; and [c] the expenses, including without limitation, lodging,
meals and transportation of Landlord and its employees, agents, attorneys, and
witnesses in preparing for litigation, administrative, bankruptcy, insolvency,
or similar proceedings and attendance at hearings, depositions, and trials in
connection therewith.
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With respect to any portion of the Letter of Credit proceeds
that is not applied to payment of Tenant's Obligations, Landlord shall have the
option to either [i] deposit the proceeds into an interest-bearing account with
a financial institution chosen by Landlord ("LC Account"); or [ii] require
Tenant to obtain a replacement Letter of Credit satisfactory to Landlord, with
the Letter of Credit proceeds made available to Tenant to secure Tenant's
reimbursement obligation for the Letter of Credit. All interest accruing on the
LC Account shall be paid to Landlord and may, from time to time, be withdrawn
from the LC Account by Landlord. At any time and from time to time until
Tenant's Obligations are performed in full, Landlord may apply all or any
portion of the funds held in the LC Account to payment of all or any portion of
Tenant's Obligations. Within 10 days after any such payment from the LC Account,
Landlord shall give written notice to Tenant describing the amount of such
payment and how it was applied to Tenant's Obligations.
Upon the occurrence of either [i] Landlord's receipt of a
replacement Letter of Credit that satisfies the requirements of Section 20.1 and
is issued by an Issuer acceptable to Landlord; or [ii] the date on which all of
Tenant's Obligations are performed in full, Landlord shall pay the principal
balance of the LC Account (but not any accrued interest) to Tenant.
20.4 Partial Draws. Upon the occurrence of a monetary Event of
Default under this Lease, Landlord may, at its option, make a partial draw on
the Letter of Credit in an amount not to exceed the amount of Tenant's monetary
obligations under this Lease then past due. If Landlord then applies the
proceeds from such partial draw on the Letter of Credit to payment of all or any
portion of Tenant's monetary obligations then past due, Tenant shall, within 10
days after notice from Landlord of such partial draw and payment, cause the
amount of the Letter of Credit to be reinstated to the amount in effect prior to
such partial draw. Tenant's failure to comply with the requirements of this
section shall be an immediate Event of Default under the Loan Documents without
any notice (other than as provided for in this section), cure or grace period.
Landlord's rights under this Section 20.4 are in addition to, and not in
limitation of, Landlord's rights under Section 20.3.
20.5 Substitute Letter of Credit. Tenant may, from time to
time, deliver to Landlord a substitute Letter of Credit meeting the requirements
of this Agreement and issued by an Issuer acceptable to Landlord. Upon
Landlord's approval of the substitute Letter of Credit, Landlord shall release
the previous Letter of Credit to the Tenant.
20.6 Reduction in Letter of Credit Amount. The amount of the
Letter of Credit may be reduced by Tenant from 5% of the Lease Amount to 2.5% of
the Lease Amount after the Coverage Ratio equals or exceeds 1.35 to 1 for 4
consecutive quarters.
ARTICLE 21: QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT AND ESTOPPEL CERTIFICATES
21.1 Quiet Enjoyment. So long as Tenant performs all of its
obligations under this Lease, Tenant's possession of the Leased Property will
not be disturbed by Landlord.
21.2 Subordination. Subject to the terms and conditions of
this section, this
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Lease and Tenant's rights under this Lease are subordinate to any ground lease
or underlying lease, first mortgage, first deed of trust, or other first lien
against the Leased Property, together with any renewal, consolidation,
extension, modification or replacement thereof, which now or at any subsequent
time affects the Leased Property or any interest of Landlord in the Leased
Property, except to the extent that any such instrument expressly provides that
this Lease is superior. The foregoing subordination provision is expressly
conditioned upon any lessor or mortgagee being obligated and bound to recognize
Tenant as the tenant under this Lease, and such lessor or mortgagee shall have
no right to disturb Tenant's possession, use and occupancy of the Leased
Property or Tenant's enjoyment of its rights under this Lease unless and until
an Event of Default occurs hereunder. Any foreclosure action or proceeding by
any mortgagee with respect to the Leased Property shall not affect Tenant's
rights under this Lease and shall not terminate this Lease unless and until an
Event of Default occurs hereunder. The foregoing provisions will be
self-operative, and no further instrument will be required in order to effect
them. However, Tenant shall execute, acknowledge and deliver to Landlord, at any
time and from time to time upon demand by Landlord, such documents as may be
requested by Landlord or any mortgagee or any holder of any mortgage or other
instrument described in this Section, to confirm or effect any such
subordination, provided that any such document shall include a non-disturbance
provision as set forth in this section satisfactory to Tenant. Any mortgagee of
the Leased Property shall be deemed to be bound by the non-disturbance provision
set forth in this section. If Tenant fails or refuses to execute, acknowledge,
and deliver any such document within 20 days after written demand, Landlord may
execute acknowledge and deliver any such document on behalf of Tenant as
Tenant's attorney-in-fact. Tenant hereby constitutes and irrevocably appoints
Landlord, its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any documents described in this
Section. This power of attorney is coupled with an interest and is irrevocable.
21.3 Attornment. If any holder of any mortgage, indenture,
deed of trust, or other similar instrument described in Section 21.2 succeeds to
Landlord's interest in the Leased Property, Tenant will pay to such holder all
Rent subsequently payable under this Lease. Tenant shall, upon request of anyone
succeeding to the interest of Landlord, automatically become the tenant of, and
attorn to, such successor in interest without changing this Lease. The successor
in interest will not be bound by [i] any payment of Rent for more than one month
in advance; [ii] any amendment or modification of this Lease thereafter made
without its consent as provided in this Lease provided that Tenant has knowledge
that Landlord's interest has been transferred and that such successor in
interest's consent is required; [iii] any claim against Landlord arising prior
to the date on which the successor succeeded to Landlord's interest; or [iv] any
claim or offset of Rent against the Landlord. Upon request by Landlord or such
successor in interest and without cost to Landlord or such successor in
interest, Tenant will execute, acknowledge and deliver an instrument or
instruments confirming the attornment. If Tenant fails or refuses to execute,
acknowledge, and deliver any such instrument within 20 days after written
demand, then Landlord or such successor in interest will be entitled to execute,
acknowledge, and deliver any document on behalf of Tenant as Tenant's
attorney-in-fact. Tenant hereby constitutes and irrevocably appoints Landlord,
its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any such document. This power of
attorney is coupled with an interest and is irrevocable.
21.4 Estoppel Certificates. At the request of Landlord or any
mortgagee or
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purchaser of the Leased Property, Tenant shall execute, acknowledge, and deliver
an estoppel certificate, in recordable form, in favor of Landlord or any
mortgagee or purchaser of the Leased Property certifying the following: [i] that
the Lease is unmodified and in full force and effect, or if there have been
modifications that the same is in full force and effect as modified and stating
the modifications; [ii] the date to which Rent and other charges have been paid;
[iii] whether Tenant or Landlord is in default or whether there is any fact or
condition which, with notice or lapse of time, or both, would constitute a
default, and specifying any existing default, if any; [iv] that Tenant has
accepted and occupies the Leased Property; [v] that Tenant has no defenses,
set-offs, deductions, credits, or counterclaims against Landlord, if that be the
case, or specifying such that exist; and [vi] such other information as may
reasonably be requested by Landlord or any mortgagee or purchaser. Any purchaser
or mortgagee may rely on this estoppel certificate. If Tenant fails to deliver
the estoppel certificates to Landlord within 10 days after the request of the
Landlord, then Tenant shall be deemed to have certified that [a] the Lease is in
full force and effect and has not been modified, or that the Lease has been
modified as set forth in the certificate delivered to Tenant; [b] Tenant has not
prepaid any Rent or other charges except for the current month; [c] Tenant has
accepted and occupies the Leased Property; [d] to Tenant's knowledge, neither
Tenant nor Landlord is in default nor is there any fact or condition which, with
notice or lapse of time, or both, would constitute a default; and [e] to
Tenant's knowledge, Tenant has no defenses, set-offs, deductions, credits, or
counterclaims against Landlord. Tenant hereby irrevocably appoints Landlord as
Tenant's attorney-in-fact to execute, acknowledge, and deliver on Tenant's
behalf any estoppel certificate to which Tenant does not object within the time
period specified in Landlord's transmittal of the certificate to Tenant which
time period cannot be less than 10 days. This power of attorney is coupled with
an interest and is irrevocable.
ARTICLE 22: REPRESENTATIONS AND WARRANTIES
Tenant hereby makes the following representations and
warranties, as of the Effective Date, to Landlord and acknowledges that Landlord
is granting the Lease in reliance upon such representations and warranties.
Tenant's representations and warranties shall survive the Closing and, except to
the extent made as of a specific date, shall continue in full force and effect
until Tenant's Obligations have been performed in full.
22.1 Organization and Good Standing. Tenant is a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Delaware and is qualified to do business in and is in good standing
under the laws of the State.
22.2 Power and Authority. Tenant has the power and authority
to execute, deliver and perform this Lease. Tenant has taken all requisite
action necessary to authorize the execution, delivery and performance of
Tenant's obligations under this Lease.
22.3 Enforceability. This Lease constitutes a legal, valid,
and binding obligation of Tenant enforceable in accordance with its terms.
22.4 Government Authorizations. The Facility is in compliance
with all Legal Requirements. Exhibit E attached hereto contains a complete list
of all Government Authorizations
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required for the operation of the Facility as of the Effective Date. All
Government Authorizations are in full force and effect. Tenant holds all
Government Authorizations necessary for the operation of the Facility as an
adult congregate living facility.
22.5 Financial Statements. Tenant has furnished Landlord with
true, correct, and complete copies of the Financial Statements. The Financial
Statements fairly present the financial position of Tenant as of the respective
dates and the results of operations for the periods then ended in conformance
with generally accepted accounting principles applied on a basis consistent with
prior periods. The Financial Statements and other information furnished to
Landlord are true, complete and correct and, as of the Effective Date, no
material adverse change has occurred since the furnishing of such statements and
information. As of the Effective Date, the Financial Statements and other
information do not contain any untrue statement or omission of a material fact
and are not misleading in any material respect. Tenant is solvent, and no
bankruptcy, insolvency, or similar proceeding is pending or contemplated by or,
to the knowledge of Tenant, against Tenant. Notwithstanding anything to the
contrary set forth in this Lease, Landlord hereby acknowledges that Tenant has
advised Landlord that Tenant intends to write off approximately $600,000 in
capitalized pre-opening costs on its 1995 Financial Statements and intends to
net capitalized costs of approximately $1,000,000.00 relating to Tenant's May,
1995 financing transaction against its shareholders' equity account (resulting
in a reduction of paid in capital and elimination of these capitalized costs
from Tenant's assets) even though preliminary financial information and
Financial Statements delivered to Landlord reflected a different treatment for
such costs, and Landlord has agreed that such different treatment is acceptable
to Landlord and not a default hereunder.
22.6 Condition of Facility. To the best of Tenant's knowledge,
all of the mechanical and electrical systems, heating and air-conditioning
systems, plumbing, water and sewer systems, and all other items of mechanical
equipment or appliances are in good working order, condition and repair, are of
sufficient size and capacity to service the Facility as presently operated, and
conform with all applicable ordinances and regulations, and with all building,
zoning, fire, safety, and other codes, laws and orders. The Improvements,
including the roof and foundation, are structurally sound and free from leaks
and other defects.
22.7 Compliance with Laws. To the best of Tenant's knowledge,
there is no violation of, or noncompliance with, [i] any laws, orders, rules or
regulations, ordinances or codes of any kind or nature whatsoever relating to
the Facility or the ownership or operation thereof (including without
limitation, building, fire, health, occupational safety and health, zoning and
land use, planning and environmental laws, orders, rules and regulations); [ii]
any covenants, conditions, restrictions or agreements affecting or relating to
the ownership, use or occupancy of the Facility; or [iii] any order, writ,
regulation or decree relating to any matter referred to in [i] or [ii] above.
22.8 No Litigation. As of the Effective Date and except as
disclosed on Exhibit F, [i] there are no actions or suits, or any proceedings or
investigations by any governmental agency or regulatory body pending against
Tenant or the Facility; [ii] Tenant has not received notice of any threatened
actions, suits, proceedings or investigations against Tenant or the Facility at
law or in equity, or before any governmental board, agency or authority which,
if determined adversely to
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Tenant, would materially and adversely affect the Facility or title to the
Facility (or any part thereof), the right to operate the Facility as presently
operated, or the financial condition of Tenant; [iii] there are no unsatisfied
or outstanding judgments against Tenant or the Facility; [iv] there is no labor
dispute materially and adversely affecting the operation or business conducted
by Tenant or the Facility; and [v] Tenant has not been notified in writing of
any facts or circumstances which might reasonably form the basis for any such
action, suit, or proceeding.
22.9 Consents. The execution, delivery and performance of this
Lease will not require any consent, approval, authorization, order, or
declaration of, or any filing or registration with, any court, any federal,
state, or local governmental or regulatory authority, or any other person or
entity, the absence of which would materially impair the ability of Tenant to
operate the Facility as presently operated except for the post-acquisition
filing for licensure of the Facility.
22.10 No Violation. The execution, delivery and performance of
this Lease [i] do not and will not conflict with, and do not and will not result
in a breach of the Articles of Incorporation or Bylaws of Tenant; [ii] do not
and will not conflict with, and do not and will not result in a breach of, and
do not and will not constitute a default under (or an event which, with or
without notice or lapse of time, or both, would constitute a default under), any
of the terms, conditions or provisions of any agreement or other instrument or
obligation to which Tenant is a party or by which its assets are bound; and
[iii] do not and will not violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Tenant or the Facility.
22.11 Reports and Statements. All reports, statements,
certificates and other data furnished by or on behalf of Tenant to Landlord in
connection with this Lease, and all representations and warranties made herein
or in any certificate or other instrument delivered in connection herewith and
therewith, are true and correct in all material respects and do not omit to
state any material fact or circumstance necessary to make the statements
contained herein or therein, in light of the circumstances under which they are
made, not misleading as of the date of such report, statement, certificate or
other data. The copies of all agreements and instruments submitted to Landlord,
including, without limitation, all agreements relating to management of the
Facility, the Letter of Credit, and Tenant's working capital are true, correct
and complete copies and include all amendments and modifications of such
agreements.
22.12 ERISA. All plans (as defined in Section 4021(a) of the
Employee Retirement Income Security Act of 1974, as amended or supplemented from
time to time ("ERISA")) for which Tenant is an "employer" or a "substantial
employer" (as defined in Section Section 3(5) and 4001(a)(2) of ERISA,
respectively) are in compliance with ERISA and the regulations and published
interpretations thereunder. To the extent Tenant maintains a qualified defined
benefit pension plan: [i] there exists no accumulated funding deficiency; [ii]
no reportable event and no prohibited transaction has occurred; [iii] no lien
has been filed or threatened to be filed by the Pension Benefit Guaranty
Corporation established pursuant to Subtitle A of Title IV of ERISA; and [iv]
Tenant has not been deemed to be a substantial employer.
22.13 Chief Executive Office. Tenant maintains its chief
executive office and its books and records at the address set forth in the
introductory paragraph of this agreement. Tenant
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does not conduct any of its business or operations other than at its chief
executive office, at the Facility and the following locations: ▇▇▇▇▇▇ Club -
Sarasota, Florida; Clare Bridge of Bradenton - Bradenton, Florida; ▇▇▇▇▇▇▇▇
House - Ann Arbor, Michigan; ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ - ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇;
▇▇▇▇▇▇▇▇ House - Lansing, Michigan; Stonefield - Madison, Wisconsin; Clare
Bridge - Brookfield, Wisconsin; Wynfield - Madison, Wisconsin; Wynwood -
Brookfield, Wisconsin; ▇▇▇▇▇▇▇▇ House - Farmington Hills, Michigan; Northhampton
Manor - Richboro, Pennsylvania; ▇▇▇▇▇▇▇▇ House - Utica, Michigan; and
Naperville, Illinois.
22.14 Other Name or Entities. Tenant has not, since the
incorporation of Tenant, [i] changed its name, [ii] used any name other than the
name stated at the beginning of this agreement, or other than names under which
Tenant's facilities do business, such as the name of the Facility, or [iii]
merged or consolidated with, or acquired any of the assets of, any corporation
or other business, other than acquisitions of operating facilities.
22.15 Parties in Possession. Except as disclosed on Exhibit B,
there are no parties in possession of any Leased Property or any portion thereof
as managers, lessees, tenants at sufferance, or trespassers.
22.16 Access. Access to the Land is directly from a dedicated
public right-of-way without any easement. To the knowledge of Tenant, there is
no fact or condition which would result in the termination or reduction of the
current access to and from the Land to such right-of-way.
22.17 Utilities. There are available at the Land gas,
municipal water, and sanitary sewer lines, storm sewers, electrical and
telephone services in operating condition which are adequate for the operation
of the Facility at a reasonable cost. The Land has direct access to utility
lines located in a dedicated public right-of-way without any easement. As of the
Effective Date, there is no pending or, to the knowledge of Tenant, threatened
governmental or third party proceeding which would impair or result in the
termination of such utility availability.
22.18 Condemnation and Assessments. As of the Effective Date,
Tenant has not received notice of, and there are no pending or, to the best of
Tenant's knowledge, threatened, condemnation, assessment or similar proceedings
affecting or relating to the Facility, or any portion thereof, or any utilities,
sewers, roadways or other public improvements serving the Facility.
22.19 Zoning. As of the Effective Date, [i] the use and
operation of the Facility as an adult congregate living facility is a permitted
use under the applicable zoning code; [ii] except as disclosed on Exhibit E
hereto, no special use permits, conditional use permits, variances, or
exceptions have been granted or are needed for such use of the Facility; [iii]
the Land is not located in any special districts such as historical districts or
overlay districts; and [iv] the Facility has been constructed in accordance with
and complies with all applicable zoning laws, including but not limited to,
dimensional, parking, setback, screening, landscaping, sign and curb cut
requirements.
22.20 Pro Forma Statement. Tenant has delivered to Landlord a
true, correct and complete copy of the Pro Forma Statement. Subject to the
matter referenced in Section 22.5, the Pro
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Forma Statement shows Tenant's reasonable expectation of the results of Facility
operations for the next 5 year period.
22.21 Environmental Matters. During the period of Tenant's
ownership of the Leased Property, if any, and based on the environmental audit
provided to Landlord by Tenant, for the period Tenant did not own the Leased
Property, [i] the Leased Property is in compliance with all Environmental Laws;
[ii] there were no releases of Hazardous Materials on, from, or under the Leased
Property, except in compliance with all Environmental Laws; [iii] no Hazardous
Materials have been, are or will be used, generated, stored, or disposed of on
the Leased Property, except in compliance with all Environmental Laws; [iv] no
permit is or has been required to be obtained by Tenant from the Environmental
Protection Agency or any similar agency or department of any state or local
government for the use or maintenance of any Improvements; and [v] no summons,
citation or inquiry has been made by any such environmental unit, body or agency
or a third party demanding any right of recovery for payment or reimbursement
for costs incurred under CERCLA or any other Environmental Laws and the Land is
not subject to the lien of any such agency. "Disposal" and "release" shall have
the meanings set forth in CERCLA. To the best of Tenant's knowledge, all
underground storage tanks located on the Leased Property, if any, have been
removed in accordance with all applicable federal, state and local laws and
regulations and all necessary closure reports have been filed with the
appropriate governmental agencies.
22.22 Leases and Contracts. As of the Effective Date and
except as disclosed on Exhibit G, there are no leases or contracts (including
but not limited to, insurance contracts, maintenance contracts, construction
contracts, employee benefit plans, employment contracts, equipment leases,
security agreements, architect agreements, and management contracts) to which
Tenant is a party relating to any part of the ownership, operation, possession,
construction, management or administration of the Land or the Facility.
22.23 No Default. As of the Effective Date, [i] there is no
existing Event of Default under this Lease; and [ii] no event has occurred
which, with the giving of notice or the passage of time, or both, would
constitute or result in such an Event of Default.
ARTICLE 23: [RESERVED]
ARTICLE 24: SECURITY INTEREST
24.1 Collateral. Tenant hereby grants to Landlord a security
interest in the following described property, whether now owned or hereafter
acquired by Tenant (the "Collateral"), to secure the payment and performance of
Tenant's obligations under this Lease:
(a) All machinery, furniture, equipment, trade
fixtures, appliances, inventory and all other goods (as "equipment," "inventory"
and "goods" are defined for purposes of Article 9 ("Article 9") of the Uniform
Commercial Code as adopted in the State) now or hereafter located in or on or
used or usable in connection with the Land, Improvements, or Fixtures and
replacements, additions, and accessions thereto, including without limitation
those items which are to become fixtures or which are building supplies and
materials to be incorporated into an
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Improvement or Fixture.
(b) All accounts, contract rights, general
intangibles, instruments, documents, and chattel paper [as "accounts", "contract
rights", "general intangibles", "instruments", "documents", and "chattel paper",
are defined for purposes of Article 9] now or hereafter arising in connection
with the business located in or on or used or usable in connection with the
Land, Improvements, or Fixtures, and replacements, additions, and accessions
thereto.
(c) All franchises, permits, licenses, operating
rights, certifications, approvals, consents, authorizations and other general
intangibles regarding the use, occupancy or operation of the Improvements, or
any part thereof, including without limitation, certificates of need, state
health care facility licenses, and Medicare and Medicaid provider agreements, to
the extent permitted by law.
(d) Unless expressly prohibited by the terms thereof,
all contracts, agreements, contract rights and materials relating to the design,
construction or operation of the Improvements, including but not limited to,
plans, specifications, drawings, blueprints, models, mock-ups, brochures,
flyers, advertising and promotional materials and mailing lists.
(e) All ledger sheets, files, records, computer
programs, tapes, other electronic data processing materials, and other
documentation relating to the preceding listed property or otherwise used or
usable in connection with the Land and Improvements.
(f) The products and proceeds of the preceding listed
property, including without limitation cash and non-cash proceeds, proceeds of
proceeds, and insurance proceeds.
24.2 Additional Documents. At the request of Landlord, Tenant
shall execute additional security agreements, financing statements, and such
other documents as may be requested by Landlord to maintain and perfect such
security interest. Tenant hereby irrevocably appoints Landlord, its successors
and assigns, as Tenant's attorney-in-fact to execute, acknowledge, deliver and
file such documents on behalf of Tenant. This power of attorney is coupled with
an interest and is irrevocable.
24.3 Notice of Sale. With respect to any sale or other
disposition of any of the Collateral after the occurrence of an Event of
Default, Landlord and Tenant agree that the giving of 5 days notice by Landlord,
sent by overnight delivery, postage prepaid, to Tenant's notice address
designating the time and place of any public sale or the time after which any
private sale or other intended disposition of such Collateral is to be made,
shall be deemed to be reasonable notice thereof and Tenant waives any other
notice with respect thereto.
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ARTICLE 25: MISCELLANEOUS
25.1 Notices. Landlord and Tenant hereby agree that all
notices, demands, requests, and consents (hereinafter "notices") required to be
given pursuant to the terms of this Lease shall be in writing, shall be
addressed to the addresses set forth in the introductory paragraph of this
Lease, and shall be served by [i] personal delivery; [ii] certified mail, return
receipt requested, postage prepaid; or [iii] nationally recognized overnight
courier. All notices shall be deemed to be given upon the earlier of actual
receipt or 3 days after mailing, or one business day after deposit with the
overnight courier. Any notices meeting the requirements of this Section shall be
effective, regardless of whether or not actually received. Landlord or Tenant
may change its notice address at any time by giving the other party notice of
such change.
25.2 Advertisement of Leased Property. In the event the
parties hereto have not executed a renewal Lease within 120 days prior to the
expiration of this Lease, or Tenant has not exercised its Option to Purchase,
then Landlord or its agent shall have the right to enter the Leased Property at
all reasonable times for the purpose of exhibiting the Leased Property to others
and to place upon the Leased Property for and during the period commencing 120
days prior to the expiration of this Lease, "for sale" or "for rent" notices or
signs.
25.3 Entire Agreement. This Lease contains the entire
agreement between Landlord and Tenant with respect to the subject matter hereof.
No representations, warranties, and agreements have been made by Landlord except
as set forth in this Lease.
25.4 Severability. If any term or provision of this Lease is
held or deemed by Landlord to be invalid or unenforceable, such holding shall
not affect the remainder of this Lease and the same shall remain in full force
and effect, unless such holding substantially deprives Tenant of the use of the
Leased Property or Landlord of the rents herein reserved, in which event this
Lease shall forthwith terminate as if by expiration of the Term.
25.5 Captions and Headings. The captions and headings are
inserted only as a matter of convenience and for reference and in no way define,
limit or describe the scope of this Lease or the intent of any provision hereof.
25.6 Governing Law. This Lease shall be construed under the
laws of the State.
25.7 Memorandum of Lease. Tenant shall not record this Lease.
Tenant may, however, record a memorandum of lease approved by Landlord.
25.8 Waiver. No waiver by Landlord of any condition or
covenant herein contained, or of any breach of any such condition or covenant,
shall be held or taken to be a waiver of any subsequent breach of such covenant
or condition, or to permit or excuse its continuance or any future breach
thereof or of any condition or covenant, nor shall the acceptance of Rent by
Landlord at any time when Tenant is in default in the performance or observance
of any condition or covenant herein be construed as a waiver of such default, or
of Landlord's right to terminate this Lease or exercise any other remedy granted
herein on account of such existing default.
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25.9 Binding Effect. This Lease will be binding upon and inure
to the benefit of the heirs, successors, personal representatives, and permitted
assigns of Landlord and Tenant.
25.10 Power of Attorney. Effective upon [i] the occurrence and
during the continuance of an Event of Default or upon, [ii] termination of the
Lease without Tenant exercising its Option to Purchase, Tenant hereby
irrevocably and unconditionally appoints Landlord, or Landlord's authorized
officer, agent, employee or designee, as Tenant's true and lawful
attorney-in-fact, to act for Tenant in Tenant's name, place, and stead, to
execute, deliver and file all applications and any and all other necessary
documents or things to effect the issuance, transfer, reinstatement, renewal
and/or extension of any and all Governmental Authorizations issued to Tenant or
applied for by Tenant in connection with Tenant's operation of the Facility, to
permit any transferee to operate the Facility under the Governmental
Authorizations, and to do any and all other acts incidental to any of the
foregoing. Tenant irrevocably and unconditionally grants to Landlord as its
attorney-in-fact full power and authority to do and perform every act necessary
and proper to be done in the exercise of any of the foregoing powers as fully as
Tenant might or could do if personally present or acting, with full power of
substitution, hereby ratifying and confirming all that said attorney shall
lawfully do or cause to be done by virtue hereof. This power of attorney is
coupled with an interest and is irrevocable prior to the full performance of
Tenant's Obligations. Except in the case of an emergency, Landlord shall give
Tenant 3 business days prior written notice before acting on behalf of Tenant
pursuant to this power of attorney.
25.11 No Offer. Landlord's submission of this Lease to Tenant
is not an offer to lease the Leased Property, or an agreement by Landlord to
reserve the Leased Property for Tenant. Landlord will not be bound to Tenant
until Tenant has duly executed and delivered duplicate original leases to
Landlord, and Landlord has duly executed and delivered one of these duplicate
original leases to Tenant.
25.12 Modification. This Lease may only be modified by a
writing signed by both Landlord and Tenant. All references to this Lease,
whether in this Lease or in any other document or instrument, shall be deemed to
incorporate all amendments, modifications and renewals of this Lease, made after
the date hereof. If Tenant requests Landlord's consent to any change in
ownership, merger or consolidation of Tenant or Guarantor, any assumption of the
Lease, or any modification of the Lease, Tenant shall provide Landlord all
relevant information and documents sufficient to enable Landlord to evaluate the
request. In connection with any such request, Tenant shall pay to Landlord a fee
in the amount of $2,500.00 and shall pay all of Landlord's reasonable attorney's
fees and expenses and other reasonable out-of-pocket expenses incurred in
connection with Landlord's evaluation of Tenant's request, the preparation of
any documents and amendments, the subsequent amendment of any documents between
Landlord and its collateral pool lenders (if applicable), and all related
matters.
25.13 Lender's Modification. Tenant acknowledges that Landlord
may mortgage the Leased Property or use the Leased Property as collateral for a
collateralized mortgage obligations or Real Estate Mortgage Investment Companies
(REMICS). If any mortgage lender of Landlord desires any modification of this
Lease, Tenant agrees to consider such modification in
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good faith and to execute an amendment of this Lease if Tenant finds such
modification acceptable in Tenant's reasonable discretion provided such
modification does not materially diminish Tenant's rights under the Lease.
25.14 No Merger. The surrender of this Lease by Tenant or the
cancellation of this Lease by agreement of Tenant and Landlord or the
termination of this Lease on account of Tenant's default will not work a merger,
and will, at Landlord's option, terminate any subleases or operate as an
assignment to Landlord of any subleases. Landlord's option under this paragraph
will be exercised by notice to Tenant and all known subtenants of the Leased
Property.
25.15 Laches. No delay or omission by either party hereto to
exercise any right or power accruing upon any noncompliance or default by the
other party with respect to any of the terms hereof shall impair any such right
or power or be construed to be a waiver thereof.
25.16 Limitation on Tenant's Recourse. Tenant's sole recourse
against Landlord, and any successor to the interest of Landlord in the Leased
Property, is to the interest of Landlord, and any such successor, in the Leased
Property. Tenant will not have any right to satisfy any judgment which it may
have against the Landlord, or any such successor, from any other assets of
Landlord, or any such successor. In this Section, the terms "Landlord" and
"successor" include the shareholders, venturers, and partners of "Landlord" and
"successor" and the officers, directors, and employees of the same. The
provisions of this Section are not intended to limit Tenant's right to seek
injunctive relief or specific performance.
25.17 Construction of Lease. This Lease has been prepared by
Landlord and its professional advisors and reviewed by Tenant and its
professional advisors. Landlord, Tenant, and their advisors believe that this
Lease is the product of all their efforts, that it expresses their agreement,
and agree that it shall not be interpreted in favor of either Landlord or Tenant
or against either Landlord or Tenant merely because of their efforts in
preparing it.
25.18 Counterparts. This Lease may be executed in multiple
counterparts, each of which shall be deemed an original hereof.
25.19 Custody of Escrow Funds. Any funds paid to Landlord in
escrow hereunder may be held by Landlord or, at Landlord's election, by a
financial institution, the deposits or accounts of which are insured or
guaranteed by a federal or state agency. The funds shall not be deemed to be
held in trust, may be commingled with the general funds of Landlord or such
other institution, and shall not bear interest.
25.20 Landlord's Status as a REIT. Tenant acknowledges that
Landlord has now and may hereafter elect to be taxed as a real estate investment
trust ("REIT") under the Internal Revenue Code.
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25.21 Exhibits. The following exhibits are attached hereto and
incorporated herein:
Exhibit A: Legal Description
Exhibit B: Permitted Exceptions
Exhibit C: Documents to be Delivered
Exhibit D: Certificate and Facility Financial Reports
Exhibit E: Government Authorizations
Exhibit F: Pending Litigation
Exhibit G: List of Leases and Contracts
25.22 Waiver of Jury Trial. Landlord and Tenant waive trial by
jury in any action, proceeding or counterclaim brought by either of them against
the other on all matters arising out of this Lease or the use and occupancy of
the Leased Property (except claims for personal injury or property damage). If
Landlord commences any summary proceeding for nonpayment of Rent, Tenant will
not interpose, and waives the right to interpose, any counterclaim in any such
proceeding.
25.23 Attorney's Fees and Expenses. Tenant shall pay to
Landlord all reasonable costs and expenses incurred by Landlord in administering
this Lease and the security for this Lease, enforcing or preserving Landlord's
rights under this Lease and the security for this Lease, and in all matters of
collection, whether or not an Event of Default has actually occurred or has been
declared and thereafter cured, including but not limited to, [a] reasonable
attorney's and paralegal's fees and disbursements; [b] the fees and expenses of
any litigation, administrative, bankruptcy, insolvency, receivership and any
other similar proceeding; [c] court costs; [d] the expenses of Landlord, its
employees, agents, attorneys and witnesses in preparing for litigation,
administrative, bankruptcy, insolvency and other proceedings and for lodging,
travel, and attendance at meetings, hearings, depositions, and trials; and [e]
consulting and witness fees incurred by Landlord in connection with any
litigation or other proceeding. All references in this Lease to attorney's fees
shall include reasonable attorney's fees incurred in connection with appellate
proceedings.
25.24 Survival. The following provisions shall survive
termination of the Lease: Article 9 (Damage & Destruction), Article 10
(Condemnation); Article 16 (Alterations); and Section 25.24 (Survival).
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this
Lease or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
Signed and acknowledged
in the presence of: HEALTH CARE REIT, INC.
Signature By:
-------------------------- ------------------------------
Print Name
------------------------- Title:
---------------------------
Signature
--------------------------
Print Name
-------------------------
STATE OF OHIO )
) SS:
COUNTY OF ▇▇▇▇▇ )
The foregoing instrument was acknowledged before me this _____
day of _____________, 1996 by ___________________________, the _________________
of Health Care REIT, Inc., a Delaware corporation, on behalf of the corporation.
-------------------------------
Notary Public
My Commission Expires:_____________________ [SEAL]
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ALTERNATIVE LIVING SERVICES, INC.
Signature By:
-------------------------- ------------------------------
Print Name
------------------------- Title:
---------------------------
Signature
-------------------------- Tax I.D. No:
Print Name ---------------------
-------------------------
STATE OF ________________ )
) SS:
COUNTY OF ________________ )
The foregoing instrument was acknowledged before me this _____
day of ______________________, 1996 by ___________________
___________________________, the _________________ of Alternative Living
Services, Inc., a Delaware corporation, on behalf of the corporation.
-------------------------------
Notary Public
My Commission Expires:_____________________ [SEAL]
THIS INSTRUMENT PREPARED BY:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ESQ.
▇▇▇▇▇▇▇▇, LOOP & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
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