Exhibit 10.12
E X E C U T E D
Brier Oak Convalescent Lease
LEASE AGREEMENT
by and among
BERNARD BUBMAN, ARNOLD & ELAINE FRIEDMAN
AS TRUSTEES FOR THE
ARNOLD & ELAINE FRIEDMAN FAMILY TRUST OF SEPTEMBER 7TH, 1993,
IRENE WEISS AND SUNSET MOTEL AND DEVELOPMENT CO.,
Collectively as Lessor
and
BRIER OAK CONVALESCENT, INC.
a California Corporation
as Lessee
Dated Effective as of February 1, 1995
Brier Oak Convalescent Lease
TABLE OF CONTENTS
PAGE
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1. Description of the Premises.......................................... 1
2. Term................................................................. 1
2.1 Term............................................................ 1
3. Consideration for Execution of Lease................................. 1
4. Rent................................................................. 2
4.1 Initial Rent.................................................... 2
4.2 Cost of Living Adjustments...................................... 2
4.3 Payment of Monthly Rent......................................... 2
5. Additional Rent...................................................... 3
6. Security Deposit..................................................... 3
7. Insurance............................................................ 3
7.1 Property Insurance.............................................. 3
7.2 Liability and Malpractice Insurance............................. 4
7.3 Business Interruption and Worker's Compensation Insurance....... 4
7.4 Insurance Policies.............................................. 4
7.5 Waiver of Subrogation........................................... 5
7.6 Indemnity....................................................... 5
7.7 Warranties; Exemption of Lessor from Liability.................. 5
8. Use of Premises...................................................... 6
8.1 Use; Change In Beds............................................. 6
8.2 Conditions on Use............................................... 7
9. Alterations.......................................................... 9
10. Abandonment of Premises.............................................. 9
11. Repairs.............................................................. 9
12. Acceptance of Premises; Surrender.................................... 10
13. Compliance with Law.................................................. 10
14. Assignment, Subletting, Prior Consent................................ 10
14.1 Lessor's Consent Required...................................... 10
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14.2 Sublease or Assignment by Consent.............................. 11
14.3 Expiration of Lessor's Consent................................. 12
14.4 Assignment and Sublease Limitations and Conditions............. 12
14.5 Security Deposit on Assignment or Sublease..................... 13
14.6 Assignment of Partnership's Interests, Corporate Stock, etc.... 13
14.7 Lessor's Rights Prevail and Reserved........................... 14
14.8 Assumption by Assignee, Lessee's Continued Responsibility...... 14
14.9 No Waiver...................................................... 14
14.10 Attorney's Fees................................................ 14
14.11 Intercorporate Transfers....................................... 14
14.12 Insolvency..................................................... 15
15. Transfer by Lessor................................................... 16
16. Damage or Destruction; Obligation to Rebuild......................... 16
17. Real Property Taxes.................................................. 20
17.1 Payment of Taxes............................................... 20
17.2 Definition of "Real Property" Tax.............................. 20
17.3 Joint Assessment............................................... 20
17.4 Personal Property Taxes........................................ 20
18. Utilities............................................................ 21
19. Defaults; Remedies................................................... 21
19.1 Defaults........................................................ 21
19.2 Lessor's Remedies............................................... 21
19.3 Default by Lessor............................................... 24
19.4 Late Charges.................................................... 24
20. Surrender of Lease................................................... 24
21. Attorney's Fees...................................................... 25
22. Notices.............................................................. 25
23. Waiver............................................................... 25
24. Condemnation......................................................... 26
25. Holding Over......................................................... 26
26. Successors........................................................... 26
27. Inventory............................................................ 26
28. Lessor's Access...................................................... 27
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29. Certification........................................................ 27
30. Subordination........................................................ 27
31. Guaranty............................................................. 28
32. Time................................................................. 28
33. Captions............................................................. 28
34. Use of Tradename and License......................................... 28
35. Authority of Lessee's Signatories.................................... 29
36. Severability......................................................... 30
Brier Oak Convalescent Lease
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is made and entered into effective as of
the first (1st) day of February, 1995, by and between BERNARD BUBMAN ("Bubman"),
ARNOLD & ELAINE FRIEDMAN AS TRUSTEES FOR THE ARNOLD & ELAINE FRIEDMAN FAMILY
TRUST OF SEPTEMBER 7TH, 1993 ("Friedman"), IRENE WEISS ("Weiss") (hereinafter
Bubman, Friedman and Weiss are collectively referred to as "BFW") and SUNSET
MOTEL AND DEVELOPMENT CO., a General Partnership ("Sunset"; hereinafter, BFW and
Sunset are collectively referred to as "Lessor"), and BRIER OAK CONVALESCENT,
INC. a California corporation (hereinafter referred to as "Lessee").
IT IS AGREED BETWEEN THE PARTIES AS FOLLOWS:
1. Description of the Premises.
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The Lessor leases to the Lessee, and the Lessee hires from the Lessor, on
the terms and conditions hereinafter set forth, those certain improved,
furnished and equipped premises situated in the County of Los Angeles, State of
California, located at 5154 Sunset Boulevard (hereinafter referred to as the
"Premises"). The Premises include the above-described real property and
improvements therein consisting of a one hundred fifty-nine (159) bed skilled
nursing facility (the "Licensed Facility") and furnishings, fixtures and
equipment constituting part of the Premises as per inventory attached hereto as
Exhibit "A" (or replacements thereof) and by this reference made a part hereof
(collectively, "FF&E").
2. Term.
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2.1 Term. The term of this Lease shall be for ten (10) years, commencing
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effective as of February 1,1995 (the "Commencement Date" hereinafter) and
terminating on January 31, 2005, unless earlier terminated as provided herein
(the "Term").
3. Consideration for Execution of Lease.
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For and in consideration of the granting of this Lease by Lessor to
Lessee, Lessee unconditionally agrees to pay to Lessor, a non-refundable lease
execution fee of Three Hundred Eighteen Thousand Dollars ($318,000) (i.e.,
$2,000 per bed) ("Lease Execution Fee"), payable in three installments
("Installments") as follows: (i) a first payment of One Hundred Fifty-Nine
Thousand Dollars ($159,000) due and payable immediately upon execution of this
Lease; (ii) a second payment of Seventy-Nine Thousand Five Hundred Dollars
($79,500) due and payable on April 1,1996; and (iii) a final payment of Seventy
Nine Thousand Five Hundred Dollars ($79,500) due and payable on April 1,1997.
Such payments shall accrue interest, at the then maximum rate of interest
permitted by law, only if Lessee fails to pay any of such Installments by the
applicable due date. Lessee agrees to execute a promissory note reflecting the
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payment obligation and terms set forth in this Paragraph 3 in substantially the
form attached hereto as Exhibit "B" and acknowledges and agrees that any breach
of the terms of this Paragraph 3 or the Note shall be a material default of the
Lessee's obligations hereunder.
In no event shall any part of said Lease Execution Fee be returned to
Lessee and shall be considered fully earned by Lessor upon execution of this
Lease by Lessee and Lessor. The Lease Execution Fee is not intended to be and is
not provided or accepted as liquidated damages or as security for the
performance of this Lease, but as payment and consideration for the execution of
this Lease by Lessor.
4. Rent.
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4.1 Initial Rent. Lessee shall pay rent to Lessor on the first day of each
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month during the Term in equal monthly payments of initial base rent of
Forty-Two Thousand One Hundred Thirty-Five Dollars ($42,135) ("Base Rent").
4.2 Cost of Living Adjustments. Beginning on the first day of the second
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Lease year (i.e. February 1, 1996) and the corresponding date of every Lease
year thereafter during the Term (each such date referred to hereinafter as an
"Adjustment Date"), the Base Rent due hereunder shall be increased to reflect
increases in the cost of living as reflected by changes in the Consumer Price
Index ("CPI") for all urban consumers for Los Angeles-Anaheim-Riverside (base
year 1982-84), published by the United States Department of Labor, Bureau of
Labor Statistics (the "Index"). On each Adjustment Date the Base Rent for the
new Lease year shall be computed by multiplying the initial monthly Base Rent
(i.e. $42,135) by a fraction, the numerator of which is the Index figure
published for the most nearly prior ending December to the respective Adjustment
Date (the "Extension Index") and the denominator of which is the lndex figure
published for December 1994 (153.4) (the "Beginning Index"). In no event shall
the Base Rent on any Adjustment Date be less than the Base Rent in effect for
the preceding Lease year. If the Index is changed so that the base year differs
from that in effect as of the Lease Commencement Date of this Lease, the Index
shall be converted in accordance with conversion factors published by the United
States Department of Labor, Bureau of Labor Statistics. If the Index is
discontinued or revised during the Term, such other government index or
computation with which it is replaced shall be used in order to obtain
substantially the same result as would be obtained if the Index had not been
discontinued or revised. ln the absence of any replacement index, the parties
shall agree upon another source of information to determine changes in the
purchasing power of United States currency in the city in which the Premises are
located, and if they are unable to agree, such issue shall be submitted to
binding arbitration by and pursuant to the rules of the American Arbitration
Association.
4.3 Payment of Monthly Rent. The monthly rent payable to Lessor under
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Paragraph 4.1 shall be paid to Bubman, Friedman, Weiss and Sunset c/o East West
Bank, at 2496 Glendale Blvd., Los Angeles, California 90039-3240, Account Number
60003303799, or as directed in writing by Lessor, which payment instructions
Lessor expects to modify after the Commencement Date.
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5. Additional Rent.
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This Lease is what is commonly called a "Net, Net, Net Lease," it being
understood that Lessor shall receive the rent set forth in Paragraph 4 free and
clear of any and all other impositions, taxes, liens, charges or expenses of any
nature whatsoever in connection with the ownership and operation of the
Premises. In addition to the rent reserved by Paragraph 4, Lessee shall pay to
the parties respectively entitled thereto all impositions, insurance premiums,
operating charges, maintenance charges, construction costs, and any other
charges, costs and expenses which arise or may be contemplated under any
provisions of this Lease during the Term hereof. All of such charges, costs and
expenses shall constitute additional rent hereunder, and upon the failure of
Lessee to pay any of such costs, charges or expenses, Lessor shall have the same
rights and remedies as otherwise provided in this Lease for the failure of
Lessee to pay rent. It is the intention of the parties hereto that this Lease
shall not be terminable for any reason by the Lessee, and that Lessee shall in
no event be entitled to any abatement of or reduction in rent payable hereunder,
except as herein expressly provided. Any present or future law to the contrary
shall not alter this agreement of the parties.
6. Security Deposit.
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No security deposit shall be required hereunder except in the case of a
sublease or assignment by Lessee, in accordance with Paragraph 14.5 of this
Agreement.
7. Insurance.
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7.1 Property Insurance. Lessee shall, at its own cost and expense, procure
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a policy of fire, extended coverage, vandalism, malicious mischief, sprinkler
leakage, and special extended perils (all risk), insurance on the Premises and
all buildings, other improvements and all personal property now or hereafter
located or erected thereon with Lessor as beneficiary, in an amount of the full
replacement cost thereof. Said insurance shall provide for payment for loss
thereunder to Lessor, and to the holder of the first mortgage or deed of trust
on the Premises, as their interests may appear. If Lessee shall fail to procure
and maintain said insurance Lessor may, but shall not be required to, procure
and maintain the same, but at the expense of Lessee. Lessee shall immediately
reimburse Lessor for any such premiums paid by Lessor, together with interest
thereon at the then maximum rate of interest permitted by law per annum from the
date said premiums are paid by Lessor. No use shall be made or permitted to be
made of the Premises, nor acts done, which will increase the rate of insurance
upon the Premises, or any part hereof, nor shall Lessee keep, or permit to be
kept, or used in or about the Premises, any article which may be prohibited by
the standard form of fire insurance policies. Lessee shall at its sole cost and
expense, comply with any and all requirements pertaining to the Premises of any
insurance organization or company, necessary for the maintenance of reasonable
fire and public liability insurance covering the Premises.
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7.2 Liability and Malpractice Insurance. The Lessee shall obtain and keep
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in force during the Term of this Lease policies of comprehensive public
liability insurance, with contractual liability endorsement insuring the
indemnity set forth in Paragraph 7.5, insuring Lessor and Lessee against
liability arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be in an amount
of not less than $2,000,000 (or such greater amount as may hereafter prevail in
the industry from time to time) for injury to or death of one person in any one
accident or occurrence and in an amount of not less than $2,000,000 (or such
greater amount as may hereafter prevail in the industry from time to time) for
injury to or death of more than one person in any one accident or occurrence.
Such insurance shall further insure Lessor and Lessee against liability for
property damage of at least $150,000 (or such greater amount as may hereafter
prevail in the industry from time to time). The limits of said insurance shall
not, however, limit the liability of Lessee hereunder. The limits of such policy
shall be increased from time to time to the limits of the standard public
liability policy being used in the health care industry, but in no event shall
be reduced below the limits set forth above in this Paragraph 7.2. If Lessee
shall fail to procure and maintain said insurance Lessor may, but shall not be
required to, procure and maintain the same, but at the expense of Lessee. Lessee
shall immediately reimburse Lessor for any such premiums paid by Lessor,
together with interest thereon at the then maximum rate of interest permitted by
law per annum from the date said premiums are paid by Lessor.
Lessee shall also obtain and keep in force during the Term of this Lease
adequate malpractice insurance covering the acts and operations of the Lessee
and its agents, servants, representatives and employees on the Premises with
coverage and deductible amounts as are hereafter prevailing or customary in the
industry from time to time.
7.3 Business Interruption and Worker's Compensation Insurance. Lessee
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shall, at its sole expense, maintain in force during the Term business
interruption insurance covering "loss of rents" hereunder, in an amount equal to
at least six (6) months advance rent owing from time to time under this Lease,
covering Lessee's operation of its business at the Premises. Lessee shall assign
the proceeds of such business interruption insurance to Lessor. Lessee shall
also, at its sole expense, maintain during the Term adequate worker's
compensation insurance covering all workmen, employees and others engaged in or
upon the Premises, in such amounts and pursuant to such policies as required by
applicable legal requirements existing from time to time under applicable state
and federal law.
7.4 Insurance Policies. Insurance required hereunder shall be issued by
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companies authorized to do business in California with a financial rating of B+
or better in the most recent edition of "Best's Insurance Guide." The Lessee
shall deliver to the Lessor copies of policies of such insurance or certificates
evidencing the existence and amounts of such insurance with loss
payable/co-insured clauses satisfactory to Lessor on or before the Commencement
Date, and shall throughout the Term deliver to Lessor, no later than twenty (20)
business days prior to the expiration of each policy's coverage period, copies
of written confirmation from the applicable insurance carrier
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confirming renewal of all such policies; provided, however, that Lessor shall
have the right to review the actual renewed policies from time to time upon five
(5) days' advance written request of Lessee. No such policy shall be cancelable
or subject to reduction of coverage or other modification except after ten (10)
working days prior written notice to Lessor. All public liability insurance, and
the property damage insurance, required hereunder shall include insurance of
performance by Lessee of the indemnity provisions of Paragraph 7.6 of this
Lease.
7.5 Waiver of Subrogation. Lessee and Lessor each hereby waive any and all
---------------------
rights of recovery against the other, or against the officers, employees, agents
and representatives of the other, for loss of or damage to such waiving party or
its property or the property of others under its control to the extent that such
loss or damage is insured against under any insurance policy in force at the
time of such loss or damage. The Lessee shall, upon obtaining the policies of
insurance required hereunder, give written notice to the insurance carrier or
carriers with a copy to Lessor that the foregoing mutual waiver of subrogation
is contained in this Lease. Lessee shall cause such insurance policies obtained
by it to provide that the insurance company waives all right of recovery by way
of subrogation against either party in connection with any damage covered by any
policy.
7.6 Indemnity. Lessee shall indemnify and hold harmless Lessor from and
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against any and all claims arising from Lessee's use of the Premises, or from
the conduct of Lessee's business or from any activity, work or things done,
permitted or suffered by Lessee in or about the Premises or elsewhere, and shall
further indemnify and hold harmless Lessor from and against any and all claims
arising from any breach or default in the performance of any obligation on
Lessee's part to be performed under the terms of this Lease, or arising from any
negligent or willful acts of the Lessee, or any of Lessee's agents, contractors,
or employees, and from and against all costs, attorney's fees, expenses and
liabilities incurred in the defense of any such claim; Lessee, upon notice from
Lessor, shall defend the same at Lessee's expense by counsel satisfactory to
Lessor. Lessee, as a material part of the consideration to Lessor, hereby
assumes all risk of damage to property or injury to persons, in, upon or about
the Premises arising from any cause and Lessee hereby waives all claims in
respect thereof against Lessor.
7.7 Warranties: Exemption of Lessor from Liability. Lessor does not make,
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and has not made, representations or warranties, express or implied, nor does
Lessor make any representation or warranty herein regarding the condition of the
Premises or any part thereof. Lessee, not Lessor, shall be fully responsible for
the costs of and for effectuating any and all alterations, repairs and
replacements required to be made by all governmental authorities having
jurisdiction for the continued licensing and certification of the Licensed
Facility, as well as all alterations and replacements required to maintain and
preserve the Premises in the condition called for herein throughout the Term.
Initials of Lessee
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Lessee hereby agrees that Lessor shall not be liable for injury to
Lessee's business or any loss of income therefrom or for damage to the goods,
wares, merchandise or other property of Lessee, Lessee's employees, invitees,
customers, or any other person in or about the Premises, nor shall Lessor be
liable for injury to the person of Lessee, Lessee's patients, employees, agents,
contractors or subcontractors, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, sprinklers, wires, appliances,
plumbing, air conditioning or lighting fixtures, or from any other cause,
whether said damage or injury results from conditions arising upon the Premises,
the furniture and equipment or upon other portions of the building of which the
Premises are a part, or from other sources or places, and regardless of whether
the cause of such damage or injury or the means of repairing the same is
inaccessible to Lessee.
8. Use of Premises.
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8.1 Use: Change In Beds. Lessee shall use the Premises only for the
-------------------
purposes of conducting thereon the operation of a licensed 159 bed convalescent
hospital, skilled nursing facility. Lessee shall obtain and maintain at its
expense all licenses and permits required by law to operate such Licensed
Facility. Lessee shall not decrease or increase the number of beds, except as
otherwise permitted herein. Lessee may increase the number of beds up to but not
to exceed ten (10) additional beds within the building which now contains the
159 bed facility, provided that all of the following conditions are satisfied:
(a) Lessee shall submit to Lessor, two (2) sets of the final plans
and specifications for all additional improvements and alterations to be made to
the facility in order to add the additional beds. One set of the final plans and
specifications shall be sent to each of the parties designated in Paragraph 23
of this Lease for receiving notices on behalf of Lessor.
(b) Said plans and specifications shall be subject to the approval of
Lessor, which approval shall not be unreasonably withheld. Lessor shall have a
period of sixty (60) days from receipt of said plans and specifications to
approve or disapprove such plans and specifications. If either Lessor (i.e. BFW
or Sunset) fails to notify Lessee of such approval or disapproval within said
sixty (60) day period, it shall be deemed that Lessor has disapproved said plans
and specifications.
(c) If Lessor approves such plans and specific additional
improvements and alterations pursuant to the provisions of Subparagraph 8.1(b)
above, then Lessee, at its sole expense, shall construct such additional
improvements and alterations in accordance with the plans and specifications
approved by Lessor. Lessee shall keep the Premises, including, but not limited
to the FF&E therein and the property in which the Premises are situated, free
from any liens arising out of any work performed, materials furnished or
obligations incurred by Lessee. Lessee shall commence construction of such
additional improvements and alterations within ninety (90) days after Lessor
shall have approved such plans and specifications and shall diligently prosecute
same to completion.
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(d) If Lessee increases the number of beds at the Premises in
accordance with this Paragraph 8.1, then upon completion of such additional
improvements and alterations, the monthly rent payable under Paragraph 4 of
this Lease shall be increased by an amount equal to Two Hundred Sixty-Five
Dollars ($265) multiplied by the number of beds to be added. Such additional
rent shall commence immediately upon the completion of such additional
improvements and alterations, and if that completion occurs on a day other than
the first day of any month, the additional rent for that month shall be prorated
on a per diem basis for the balance of the month, but shall be due and payable,
in accordance with Paragraph 4.3 of this Lease, not later than the first day of
the following month.
(e) Any and all additions, improvements and alterations made by
Lessee or Lessor under the foregoing provisions shall become part of the realty
and belong to Lessor.
(f) No construction of such additional improvements and alterations
shall endanger the existing Licensed Facility or the licenses or certifications
to operate same and no such construction shall take place without the consent,
approval and permission of all governmental authorities having jurisdiction.
8.2 Conditions on Use. Lessee's use of the Premises shall be in
-----------------
accordance with the following requirements:
(a) Lessee shall not commit, or suffer to be committed, any waste
upon the said Premises or any part thereof, or any nuisance.
(b) Lessee shall maintain at all times during the Term, including any
extension of holdover periods, all governmental licenses, permits and
authorizations necessary for the establishment and operation of the Premises as
the Licensed Facility in the city of Los Angeles, County of Los Angeles, State
of California and participation as a provider under Medicare, Medi-Cal, or other
such legislation and regulations (collectively, "Required Licenses"). Lessee
shall not, without the prior written consent of Lessor, effect any change in the
license category or status of the Premises or any part thereof or in the number
of licensed beds thereat (except in accordance with Paragraph 8.1 of this
Lease). Lessee agrees that if it is notified, or otherwise learns or believes,
that the Department of Health Services ("DHS") or other governmental authorities
(collectively, "Agencies"; singularly, an "Agency") intends to close the
Licensed Facility, require transfer of patients of the Licensed Facility or
suspend, revoke or terminate any Required Licenses, Lessee will fully cooperate
with Lessor, DHS and any other applicable Agencies to take any and all actions
necessary to preempt and avoid such closure, transfer or loss of Required
Licensure. If such closure, transfer or loss of Required Licensure is imminent,
Lessee shall permit Lessor or other party acceptable to Lessor and the
applicable Agencies to immediately assume management of the Licensed Facility
under a management arrangement with Lessee.
(c) Lessee shall furnish to Lessor promptly upon receipt by Lessee,
copies of all correspondence, surveys, etc. received by Lessee from, and/or sent
by Lessee to,
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any and all Agencies, including but not limited to DHS and the agencies
regulating Medicare and Medi-Cal certification of the Premises, reimbursement
and/or provider agreements relating to any and all Class A or Class AA citations
or any threat or implementation of revocation, suspension or reduction of the
Facility's license or decertification of the Facility under Medicare or
Medi-Cal. Lessee shall also furnish to Lessor copies of all plans of correction
and all correspondence related thereto submitted to any such Agencies
concurrently with such submission related to any such events requiring notice
hereunder. All notices required pursuant to this Subparagraph 8(c) shall be
provided as soon as reasonably possible, not later then 5 days following each
such action or event for which notice is required.
(d) Lessee shall not use, generate, manufacture, disturb, store or
dispose of on, under or about the Premises or transfer to or from the Premises
any flammable explosives, radioactive materials, hazardous wastes, toxic
substances or related materials (collectively "Hazardous Substances") except
that Lessee may store, use and dispose of such substances that are customarily
used in skilled nursing facilitates in California provided they are stored, used
and disposed of in full compliance with all applicable laws, rules and
regulations. As used in this Lease, Hazardous Substances shall include, but not
be limited to, substances defined as "hazardous substances", "hazardous
materials", or "toxic substances" in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et
seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et
seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq.; the Clean Water Act, 33 U.S.C. Section 466 et seq.; the Superfund
Amendment and Reauthorization Act of 1986, Public Law 99-499, 100 Stat. 1613;
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., as amended;
and those materials and substances of a similar nature regulated or restricted
under any laws of the United States or State of California and in regulations
adopted and publications promulgated pursuant to said laws.
(e) During the Term of this Lease, Lessor shall have the right to
receive any operating and financial statements otherwise prepared by Lessee
throughout the Term, if required by any third party ("Requested Statements") as
a condition to such third party agreeing to lend funds to Lessor or to purchase
all or part of Lessor's interests in the Premises. Upon Lessor's receipt of a
request from such third party lender or purchaser for such Requested Statements,
Lessor shall tender a written request to Lessee for such Requested Statements
and Lessee, upon receipt of such request, shall deliver such Requested
Statements to Lessor as soon thereafter as reasonably possible but in any case
within fifteen (15) working days after receipt of such request. Such third party
requiring the Requested Statements shall execute a reasonable confidentiality
agreement with Lessee pursuant to which it shall agree not to disclose the
Requested Statements or information therein.
(f) Lessee shall take all steps appropriate to promote and maintain a
high level of patient census at the Premises consistent with law and ethical
standards governing the operation of skilled nursing facilities. Lessee shall
not transfer patients from the Licensed Facility, except for reasons of health,
family request and/or
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convenience of or at the request of the patient. Without limiting the foregoing,
Lessee also agrees not to solicit or encourage patients of the Licensed Facility
or their families to undertake a transfer of any such patients to any other
facilities during the last year of the Term.
9. Alterations.
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Lessee shall not make, or suffer to be made, any alterations that will
jeopardize or affect the license or certification of said Premises, or any part
thereof. Also, Lessee shall not make, or suffer to be made, any major
alterations to the physical structure of the Premises, or any part thereof,
without the written consent of the Lessor first had and obtained, and any
additions to, or alterations of the Premises, shall become at once a part of the
realty and belong to Lessor. If Lessee makes any major alterations or repairs to
the Premises as permitted under this Lease, the alterations or repairs shall not
be commenced until two (2) days after Lessor has received notice from Lessee
stating the date the installation of the alterations or repairs is to commence
so that Lessor can post and record an appropriate notice of non-responsibility.
Lessee shall keep the Premises, including, but not limited to the FF&E therein
and the property in which the Premises are situated, free from any liens arising
out of any work performed, material furnished, or obligations incurred by the
Lessee. Lessee shall have the right to contest the correctness or validity of
any such lien if Lessee provides reasonable security therefor as may be required
by Lessor or Lessor's lender. Nothing contained herein shall imply or constitute
any consent or agreement by Lessor to any alterations, construction or
improvements of the Premises or to subject the Premises to any liability under
any mechanic's or other lien law.
10. Abandonment of Premises.
-----------------------
Lessee shall not vacate or abandon the Premises at any time during the
Term, and if Lessee shall abandon, vacate, or surrender said Premises, or be
dispossessed by process of law, or otherwise, any personal property belonging to
Lessee and left on the Premises shall be deemed to be abandoned, at the option
of Lessor, except such property as may be mortgaged to Lessor.
11. Repairs.
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Lessee shall, at its sole cost, keep, replace and maintain the Premises,
personal property and appurtenances and every part thereof, including, without
limitation, exterior walls, roof and plumbing, heating, air conditioning,
ventilating, electrical, lighting facilities and FF&E within the Premises,
windows and skylights, sidewalks adjacent to said Premises, the interior of the
Premises, any parking lots and yard, and every other portion of the Premises, in
good and sanitary order, condition and repair. If from time to time during the
Term any item or items of FF&E cannot be effectively repaired or are determined
by Lessee as not worth repairing, Lessee shall at its sole cost replace such
items of FF&E with substitutes of a quality equivalent to the quality of such
replaced items as of the Commencement Date. The replaced FF&E may be removed by
Lessee without Lessor's prior consent and shall, upon removal and replacement,
become the
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Brier Oak Convalescent Lease
property of Lessee. Lessor shall have no duty, obligation, or liability,
whatsoever to care for or maintain the Premises, or any part thereof, as stated
in this Paragraph and Lessee waives the provisions of Civil Code (S)(S) 1941 and
1942 with respect to Lessor's obligations for tenantability of the Premises, and
Lessee's right to make repairs and deduct the expenses of such repairs from
rent. Lessee agrees to assign to Lessor all warranties, express and implied,
running in its favor from any contractor, subcontractors, and suppliers who
performs any work on the Premises, provided that Lessee shall be able to enforce
such warranties while this Lease is in effect, and Lessee is not in default
hereunder, but if Lessee shall fail to enforce such warranties, upon demand of
Lessor, Lessor may enforce such warranties.
12. Acceptance of Premises; Surrender.
---------------------------------
By entry hereunder, the Lessee will have accepted the Premises, including
but not limited to the FF&E therein, as being in good and sanitary order,
condition and repair and agrees on the last day of the Term, or sooner
termination of this Lease, to surrender to Lessor the Premises including any
remaining or replacement FF&E, with all appurtenances thereto, in the same
condition as when received at the Commencement Date referred to in Paragraph 2
hereof, reasonable use and wear thereof and damage by fire, act of God or by the
elements excepted, and to return to Lessor all then existing patient contracts
(and all rights thereunder to continue caring for such patients), patient
records and any other documents of every kind whatsoever necessary to enable
Lessor or a new lessee to continue operation of the Licensed Facility and to
remove all of Lessee's signs from the Premises.
13. Compliance with Law.
-------------------
Lessee shall, at its sole cost and expense, comply with all of the
requirements of all municipal, state and federal authorities now in force, or
which may hereafter be in force, pertaining to the Premises, and shall
faithfully observe in the use of the Premises all municipal ordinances and state
and federal statutes now in force or which may hereafter be in force. The
judgment of any court of competent jurisdiction, or the admission of Lessee in
any action or proceeding against Lessee, whether Lessor be a party thereto or
not, that Lessee has violated any such ordinances or statute in the use of the
Premises, shall be conclusive of that fact as between Lessor and Lessee.
14. Assignment, Subletting, Prior Consent.
-------------------------------------
14.1 Lessor's Consent Required. Lessee, for itself, its heirs,
-------------------------
distributees, executors, administrators, legal representatives, successors and
assigns, expressly covenants that, except as permitted by this Paragraph 14,
Lessee shall not assign, mortgage or encumber this Lease, nor sublet, nor
suffer, nor permit the Premises or any part thereof to be used or occupied by
others (except patients of the Licensed Facility), without the prior written
consent of Lessor in each instance. If this Lease be assigned, or if the
Premises or any part thereof be sublet or occupied by anyone other than Lessee
and its patients, Lessor may, after default by Lessee, collect rent from the
assignee, subtenant or occupant, and apply the amount collected, less costs of
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Brier Oak Convalescent Lease
collection, including attorney's fees, to the rent herein reserved, but no
assignment, subletting, occupancy or collection shall be deemed a waiver of the
provisions hereof, the acceptance of the assignee, subtenant or occupant as
tenant, or a release of Lessee from the further performance by Lessee of
covenants on the part of Lessee herein contained. The consent by Lessor to an
assignment or subletting shall not in any way be construed to relieve Lessee or
any subtenant or assignee thereof from having to obtain the express consent in
writing of Lessor to any further assignment or subletting. In no event shall any
subtenant or assignee of Lessee assign or encumber its sublease or further
sublet all or any portion of its sublet space, or otherwise suffer or permit the
sublet space or any part thereof to be used or occupied by others, without
Lessor's prior written consent in each instance as addressed below.
14.2 Sublease or Assignment by Consent. If Lessee shall at any time or
---------------------------------
times during the Term desire to assign all or any portion of its rights, and
responsibilities under this Lease or sublet all or part of the Premises, Lessee
shall give notice ("Transfer Notice") thereof to Lessor, which notice shall be
accompanied by (i) a conformed or photostatic copy of the proposed assignment or
sublease, (ii) a statement setting forth in reasonable detail the identity of
the proposed assignee or subtenant, the nature of its business and its proposed
use of the Premises, and (iii) current financial and credit information with
respect to the proposed assignee or subtenant, including, without limitation,
its most recent financial statements. Lessor may from time to time designate, by
written notice to Lessee, one or more parties to whom any such Transfer Notice
is to be delivered, and upon any such designation such Transfer Notice shall be
delivered to Lessor care of such designated party or parties. Providing that
this Lease is in full force and effect, Lessor's consent (which must be in
writing and in form reasonably satisfactory to Lessee and Lessor) to the
proposed assignment or sublease shall not be unreasonably withheld or delayed,
provided that in Lessor's reasonable judgment:
(a) the proposed assignee or subtenant is engaged in a business
related to, and the Premises or the relevant part thereof will be used in a
manner which is limited to, the use expressly permitted under this Lease; and
(b) the proposed assignee or subtenant has the financial and business
experience to lawfully operate the Licensed Facility on the Premises and adhere
to the terms of the assignment or sublease and the terms of this Lease which are
made applicable to the assignment or sublease.
Lessor shall provide Lessee with written notice of its decision
concerning the proposed assignment or sublease within ten (10) working days of
its receipt of the Transfer Notice; provided, however, that if Lessor is unable
to obtain decisions concerning the proposed assignment or sublease from all
required Lessor parties within such ten (10) working day period, despite
reasonable efforts to do so, Lessor may upon written notice to Lessee extend the
required period for providing such decision for an additional five (5) working
days. If Lessor does not respond to Lessee's request for such consent within
such ten (10) or fifteen (15) working day period, as applicable, Lessor shall be
deemed to have consented to the proposed assignment or subletting.
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Brier Oak Convalescent Lease
Each subletting and assignment pursuant to this Paragraph 14 shall
be subject to all of the covenants, agreements, terms, provisions and conditions
contained in this Lease. The provisions of any such sublease or assignment may
not be modified or terminated (except in accordance with its terms as approved
by Lessor) without Lessor's consent. Notwithstanding any such subletting or
assignment and/or acceptance of rent or additional rent by Lessor from any
subtenant, or assignee, Lessee shall, and will remain fully liable for the
payment of the fixed rent and additional rent due to and to become due hereunder
and for the performance of all the covenants, agreements, terms, provisions and
conditions contained in this Lease on the part of Lessee to be performed and all
acts and omissions of any licensee or subtenant or assignee or anyone claiming
under or through any subtenant or assignee which shall be in violation of any of
the obligations of this Lease, and any such violation shall be deemed a
violation by Lessee. Lessee further agrees that notwithstanding any such
subletting or assignment, no other and further subletting of the Premises or
assignment of the Lease by Lessee or any person claiming through or under Lessee
shall or will be made except upon compliance with and subject to the provisions
of this Paragraph 14.
14.3 Expiration of Lessor's Consent. In the event that Lessor consents or
------------------------------
is deemed to have consented to a proposed assignment or sublease, but Lessee
fails to execute and deliver the assignment or sublease to which Lessor
consented within 90 days after Lessor's giving of such consent, then Lessee must
again comply with all of the provisions and conditions of this Paragraph 14
before assigning this Lease or subletting all or part of the Premises.
14.4 Assignment and Sublease Limitations and Conditions. With respect to
--------------------------------------------------
each and every assignment or sublease authorized by Lessor under the provisions
of this Lease, it is further agreed:
(a) No subletting shall be for a term ending later than one day prior
to the expiration date of this Lease.
(b) No sublease shall be valid, and no subtenant shall take possession
of the Premises or any part thereof, until an executed counterpart of such
sublease has been delivered to Lessor.
(c) Each sublease shall provide that it is subject and subordinate to
this Lease and to the matters to which this Lease is or shall be subordinate. In
the event of termination, reentry or dispossession of Lessee by Lessor under
this Lease Lessor may, at its option, take over all of the right, title and
interest of Lessee, as sublessor, under such sublease, and such subtenant shall,
at Lessor's option, attorn to Lessor pursuant to the then executory provisions
of such sublease, except that Lessor shall not (i) be liable for any previous
act or omission of Lessee under such sublease, (ii) be subject to any offset,
not expressly provided in such sublease, which theretofore accrued to such
subtenant against Lessee, (iii) be bound by any previous modification of such
sublease not previously accepted by Lessor in writing after submission of such
proposed modification in writing to Lessor, or by any prepayment of more than
one
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Brier Oak Convalescent Lease
month's rent, or (iv) be liable for the return of any security deposit not
actually held by Lessor.
14.5 Security Deposit on Assignment or Sublease. If the Lessor shall give
------------------------------------------
its consent to any assignment of this Lease, or to any sublease, Lessee shall in
consideration therefor deposit or cause to be deposited with Lessor a sum equal
to four (4) times the then current monthly rent owing hereunder
("Assignment/Sublease Deposit") to be held as a security deposit hereunder. If
Lessee, or a subtenant or assignee thereof, fails to pay rent or other charges
due hereunder, or otherwise defaults with respect to any provision of this
Lease, Lessor may use, apply or retain all or any portion of the
Assignment/Sublease Deposit for the payment of any rent or other charge in
default or for the payment of any other sum to which Lessor may become obligated
by reason of Lessee's, or the assignee's or subtenant's, default, or to
compensate Lessor for any loss or damage which Lessor may suffer thereby. If
Lessor so uses or applies all or any portion of the Assignment/Sublease Deposit,
Lessee shall within ten (10) days after written demand therefor deposit or cause
to be deposited cash with Lessor in an amount sufficient to restore the
Assignment/Sublease Deposit to the full amount hereinabove stated. Lessor shall
not be required to keep the Assignment/Sublease Deposit separate from its
general accounts. If Lessee performs all of Lessee's obligations hereunder, the
Assignment/Sublease Deposit, or so much thereof as has not theretofore been
applied by Lessor hereunder, shall be returned, without payment of interest or
other amount for its use by Lessor, to Lessee or its designee forthwith after
the expiration of the Term and Lessee and any assignee or subtenant has vacated
the Premises.
14.6 Assignment of Partnership's Interests, Corporate Stock, etc. If any
-----------------------------------------------------------
of the following shall occur it shall be deemed a voluntary assignment of this
Lease and the provisions of this Paragraph 14 shall apply to such voluntary
assignment:
(a) if Lessee is a partnership, a withdrawal or change, voluntary,
involuntary or by operation of law, of an aggregate of (in one or more
transfers) fifty-one percent (51%) or more of the partnership, or the
dissolution of the partnership;
(b) if Lessee consists of more than one person, a purported
assignment, voluntary, involuntary or by operation of law, from one person to
another;
(c) if Lessee is a corporation, any dissolution, merger,
consolidation or other reorganization of Lessee (provided that the result is a
change in the controlling percentage ownership of Lessee), or the sale or other
transfer of a controlling percentage of the capital stock of Lessee, or the sale
of an aggregate of (in one or more transfers) at least 51% of the value of the
assets of Lessee, or the sale of an aggregate of (in one or more transfers) at
least 51% of the value of the assets of Lessee, shall be deemed a voluntary
assignment. The phrase "controlling percentage" means the ownership of, and the
right to vote, stock possessing an aggregate of (in one or more transfers) at
least 51% of the total combined voting power of all classes of Lessee's capital
stock issued, outstanding, and entitled to vote for the election of directors.
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Brier Oak Convalescent Lease
This paragraph shall not apply to corporations the stock of which is
traded on an exchange or over the counter.
14.7 Lessor's Rights Prevail and Reserved. The Lessor's rights as set
------------------------------------
forth in this Paragraph 14 shall prevail over any inconsistent language in any
sublease or assignment to which Lessor has consented hereunder. Lessor reserves
all of its rights hereunder from the grant of the Leasehold estate to Lessee
hereunder.
14.8 Assumption by Assignee, Lessee's Continued Responsibility. Any
---------------------------------------------------------
assignment or transfer, whether made with or without Lessor's consent pursuant
to this Paragraph 14, shall be made only if, and shall not be effective until
the assignee shall execute, acknowledge and deliver to Lessor an agreement
whereby the assignee shall assume the obligations of this Lease on the part of
Lessee to be performed or observed and whereby the assignee shall agree that the
provisions of this Paragraph 14 shall, notwithstanding such assignment or
transfer, continue to be binding upon it in respect of all future assignments
and transfers. The original named Lessee covenants that, notwithstanding any
assignment or transfer, whether or not in violation of the provisions. of this
Lease, and notwithstanding the acceptance of fixed rent and/or additional rent
by Lessor from an assignee, transferee or any other party, the original named
Lessee shall remain fully liable for the payment of the fixed rent and
additional rent and for the other obligations of this Lease on the part of
Lessee to be performed or observed.
14.9 No Waiver. The joint and several liability of Lessee and any
---------
immediate or remote successor in interest of Lessee and the due performance of
the obligations of this Lease on Lessee's part to be performed or observed shall
not be discharged, released or impaired in any respect by any agreement or
stipulation made by Lessor modifying any of the obligations of this Lease
(provided such modifications do not adversely affect the rights and obligations
of Lessee or extend the duration of its obligations), or by any waiver or
failure of Lessor to enforce any of the obligations of this Lease. The failure
of a permitted subtenant or assignee (other than Lessor or a subtenant or
assignee of Lessor) to pay the rent or perform its obligations shall not affect
Lessee's obligations under this Lease for which Lessee will remain liable under
this Lease after such sublease or assignment.
14.10 Attorney's Fees. If Lessee requests Lessor to consent to a proposed
---------------
assignment or subletting or other transaction subject to the provisions of
Paragraph 14.1, Lessee shall pay to Lessor, whether or not consent is ultimately
given, Lessor's reasonable attorney's fees, not to exceed $1,000, incurred in
connection with review of each such request; provided, however, that the
foregoing cap on Lessor's attorney's fees subject to reimbursement hereunder
shall not apply to any legal services required in connection with reviewing,
negotiating or developing any documentation that may be required or requested by
or on behalf of the proposed assignee or sublessee, including without limitation
any lessee or assignee developed or requested consents, estoppel certificates,
non-disturbance agreements or memorandum of sublessee or assignment.
14.11 Intercorporate Transfers. Notwithstanding the foregoing provisions
------------------------
of this Paragraph 14, the original Lessee hereunder, Brier Oak Convalescent,
Inc., may,
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Brier Oak Convalescent Lease
without the consent of Lessor, assign this Lease or sublet the Premises to any
corporation controlling, controlled by or under common control with Brier Oak
Convalescent, Inc. provided that Brier Oak Convalescent, Inc. shall remain
liable for the performance of Lessee's obligations hereunder and that the
assignee or sublessee confirms in writing to Lessor that it has assumed and will
be liable for the performance of such obligations.
14.12 Insolvency.
----------
(a) Either (i) the appointment of a receiver to take possession of
all or substantially all of the assets of Lessee, or (ii) a general assignment
by Lessee for the benefit of creditors, or (iii) any action taken or suffered by
or against Lessee under any insolvency or bankruptcy act shall constitute a
breach of this Lease by Lessee.
(b) If this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the
"Bankruptcy Code"), any and all monies or other considerations payable or
otherwise to be delivered in connection with such assignment shall be paid or
delivered to Lessor, shall be and remain the exclusive property to Lessor and
shall not constitute property of Lessee or of the estate of Lessee within the
meaning of the Bankruptcy Code.
(c) If this Lease is proposed to be assigned pursuant to the
provisions of the Bankruptcy Code to any person or entity who shall have made a
bona fide offer to accept an assignment of this Lease on terms acceptable to
Lessee, the notice of such proposed assignment setting forth (i) the name and
address of such person, (ii) all of the terms and conditions of such offer, and
(iii) the adequate assurance to be provided Lessor to assure such person's
future performance under the Lease, including, without limitation, the assurance
referred to in Section 365(f)(b)(2) of the Bankruptcy Code, shall be given to
Lessor by the assignee no later than twenty (20) days after receipt by Lessee,
but in any event not later than ten (10) days prior to the date that Lessee
shall make application to a court of competent jurisdiction for authority and
approval to enter into such assignment and assumption, and Lessor shall
thereupon have the prior right and option, to be exercised by notice to Lessee
given at any time prior to the effective date of such proposed assignment, to
accept an assignment of this Lease upon the same terms and conditions and for
the same consideration, if any, as the bona fide offer made by such person, less
any brokerage commissions which may be payable out of the consideration to be
paid by such person for the assignment of this Lease.
(d) Any person or entity to which this Lease is assigned pursuant to
the provisions of the Bankruptcy Code shall be deemed without further act or
deed to have assumed all of the obligations arising under this Lease on and
after the date of such assignment. Any such assignee shall upon demand execute
and deliver to Lessor an instrument confirming such assumption.
(e) Lessee irrevocably: (i) assigns to Lessor, effective immediately
upon any default by Lessee of any of the terms of this Lease without further act
or deed, as security for Lessee's obligations under this Lease, all rent, fees
and other receivables
Page 15
Brier Oak Convalescent Lease
after such damage or destruction after best efforts of Lessee to obtain same and
through no fault of Lessee, and the cost to repair the damage or destruction
exceeds $275,000, Lessee shall have the option for thirty (30) days, commencing
on the expiration of such ninety (90) day period, of canceling this Lease
subject to Lessor's right to avoid cancellation as set forth below in this
Paragraph. Lessee shall exercise such option by sixty (60) days' advance written
notice to Lessor within said thirty (30) day period ("Insurance Cancellation
Notice"). Should Lessor elect not to avoid cancellation, as set forth in
Paragraph 16(b)(iii) below, Lessor shall return to Lessee any
Assignment/Sublease Deposit held by Lessor in accordance with Paragraph 14.5 of
this Lease and Lessee shall assign to Lessor any and all of its rights to the
proceeds under any and all applicable insurance policies.
(iii) Notwithstanding the foregoing, Lessor shall have the right to
elect, by written notice to Lessee within thirty (30) days following its receipt
of the Insurance Cancellation Notice, to advance to Lessee those proceeds that
should have been paid to Lessee pursuant to the insurance policy covering the
Covered Damages ("Advanced Proceeds") with respect to that portion of the
Covered Damages which exceeds $275,000.00, and upon such election by Lessor and
payment to Lessee of the Advanced Proceeds within sixty (60) days after Lessor's
receipt of the Insurance Cancellation Notice, the Lease shall be fully
reinstated and Lessee's election to cancel the Lease shall be of no further
force and effect. If Lessor elects to reinstate the Lease by paying the Advanced
Proceeds, Lessee shall fully assign to Lessor any and all of its rights to the
Insurance Proceeds and the right to seek recovery of the same from any
applicable insurance carrier. Lessee shall cooperate, at no cost to it, with the
Lessor in seeking recovery of the Advanced Proceeds for the benefit of Lessor.
Lessor fully understands that should it elect to avail itself of the right to
pay the Advanced Proceeds, the assignment of Lessee's rights as against any
insurance company, is being made by the Lessee to the Lessor without warranty,
representation, or recourse to the Lessee, other than the representation the
insurance claim has been made by Lessee in good faith, should Lessor, for any
reason whatsoever, be unsuccessful in obtaining reimbursement of the Advanced
Proceeds. Lessor understands that its sole recourse after the assignment of
rights is made by the Lessee to the Lessor, shall be as against the applicable
insurance carrier, and the Lessor shall have no further rights as against the
Lessee whatsoever, said rights to reimbursement being expressly waived by the
Lessor. Lessor's election to provide the Advanced Proceeds shall not be
construed as an independent determination by Lessor that the damage or
destruction for which the Lessor has provided Advanced Proceeds constitutes
Covered Damage. Any such determination shall be made in accordance with the
provisions of the relevant insurance policy maintained under Paragraph 7.
(iv) In the event Lessee shall recover any amounts of Insurance
Proceeds after issuing an Insurance Cancellation Notice, but prior to the
decision by Lessor to provide Advanced Proceeds and prior to any assignment of
Lessee's rights as against any insurance company, Lessee shall provide notice of
such receipt of funds to Lessor within forty-eight (48) hours of any such
receipt of funds, as set forth in Paragraph 22 of this Lease.
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Brier Oak Convalescent Lease
(v) Beginning on the first day of the second Lease Year (i.e.
February 1, 1996) and the corresponding date of every Lease year thereafter
during the Term the maximum Cost of damage or destruction repair for which
Lessee is responsible ($275,000) shall be increased to reflect any increases in
the cost of living, as reflected by increases in the Consumer Price Index
("CPI"), calculated consistent with the methodology set forth in Paragraph 4.2
of this Lease.
(vi) In the event Lessor shall recover monies from any insurer which
constitute Insurance Proceeds, said monies shall be disbursed in accordance with
the following priorities: (1) to payment of costs of litigation and attorneys'
fees incurred in obtaining the Insurance Proceeds; (2) to reduce any amounts
provided to Lessee as Advanced Proceeds; and (3) to reimburse Lessee for amounts
expended towards repair of damage or destruction.
(c) The Insurance Proceeds or Advanced Proceeds shall be made available
to Lessee for use in payment of the cost and expense of the repair; provided,
however, that such proceeds may be made available to Lessee subject to
reasonable conditions including, but not limited to, architect's certification
of costs and retention of a percentage of such proceeds pending final notice of
completion. Lessor may require that Lessee provide, at Lessee's sole cost and
expense, a lien and completion bond to insure against mechanics' or
materialmen's liens arising out of the repair, and to insure completion of the
repair. In the event that the insurance proceeds are insufficient to cover the
cost of the repair, then any amount in excess thereof required to complete the
repair shall be paid by Lessee, provided, however, anything herein to the
contrary notwithstanding, in the event loss or destruction occurs to the
structure on the Premises representing more than a destruction of 50% (fifty
percent) of the structure within the last two years of the Term of this Lease,
it shall be optional, to be exercised by notice in writing to Lessor, within
thirty (30) days following such casualty for Lessee to: (i) assign to Lessor any
of its rights to the proceeds of any insurance policy which insures against this
type of loss responsible for the destruction of 50% (fifty percent) or more to
the structure on the Premises, and thereby Lessee shall be released of any
further obligations under the terms and conditions of this Lease and the same
shall be deemed to have effectively been terminated and canceled; or (ii) to
repair or rebuild the damage and continue the Lease.
(d) Notwithstanding the foregoing, with respect to each incident of
damage or destruction to the Premises from time to time resulting from
earthquake activity, the Lessor and Lessee agree as follows (with a single
"incident" being defined as an earthquake and all aftershocks occurring within
ninety (90) days after the initial earthquake):
(i) Lessee shall be responsible for, and shall insure or
self-insure for the costs of, repairing, restoring, replacing and rebuilding the
Premises, or any parts thereof, damaged from earthquake activity (collectively
"Earthquake Repairs") involving a cost of up to Two Hundred Seventy-Five
Thousand Dollars ($275,000) ("Base Repair Amount");
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Brier Oak Convalescent Lease
(ii) If Earthquake Repairs involve a cost of greater than the
Base Repair Amount but not in excess of Five Hundred Fifty Thousand Dollars
($550,000) ("Ceiling Repair Amount"), Lessor may elect within thirty (30) days
of the damage to continue the Lease by paying for all costs of Earthquake
Repairs in excess of the Base Repair Amount ("Excess Repair Amount" being
defined as damages in excess of $275,000 and up to $550,000) (which Base Repair
Amount shall in all cases remain Lessee's obligation) with no extension of the
Term. If Lessor does not elect to conduct such repairs at its cost in accordance
with the immediately preceding sentence, either Lessor or Lessee may elect to
continue the Lease and have Lessee pay for both the Base Repair Amount and
Excess Repair Amount, in which case the original Term shall be extended by the
number of years (or fraction thereof rounded to the nearest number of months)
resulting from dividing the Excess Repair Amount by One Hundred Twenty-Five
Thousand Dollars ($125,000) ("Extension Factor').
(iii) If Earthquake Repairs involve a cost greater than the
Ceiling Repair Amount, either Lessor or Lessee, in its sole and absolute
discretion, may elect to terminate the Lease upon thirty (30) days advance
written notice to the other party unless Lessor and Lessee mutually agree within
thirty (30) days of the damage upon the terms for repairing such damages.
However, even if the Lease is terminated as a result of damage resulting in
costs in excess of the Ceiling Repair Amount, Lessee shall make a one-time
payment of the Base Repair Amount to Lessor, within five (5) days of either
Party's termination notice in accordance with this subsection (iii).
(iv) Any Earthquake Repairs to be conducted in accordance with
this Section 16(d) shall be commenced within a reasonable time after such damage
or destruction and shall be diligently prosecuted to completion by Lessee in
accordance with the repair obligations set forth in Paragraph 16(a) and the
first two sentences of Paragraph 16(b) except that the source for funding of
such repairs shall be dictated by the terms of this Paragraph 16(d) rather than
those prior paragraphs.
(v) Beginning on the first day of the second Lease year (i.e.
----
February 1, 1996) and the corresponding date of every Lease year thereafter
during the Term the dollar amounts specified above in this Paragraph 16(d),
including the amounts designated as the Base Repair Amount, Excess Repair
Amount, Ceiling Repair Amount and Extension Factor, shall be increased to
reflect any increases in the cost of living, as reflected by increases in the
Consumer Price Index ("CPI"), calculated consistent with the methodology set
forth in Paragraph 4.2 of this Lease.
Notwithstanding the foregoing, nothing in this Paragraph 16(d) is
intended to, or shall be deemed to, reflect an intent by any of the Parties that
any repair, compliance or other obligations, of whatever nature, of Lessee
hereunder not related to Earthquake Repairs, are in any way unreasonable in
relation to the original Term of the Lease or otherwise. Instead, the Parties
acknowledge and agree that the terms contained in this Paragraph 16(d) are a
unique compromise related to the unique threat of earthquakes relating to the
Premises, and that it is the Parties' clear and unqualified intent that all
repair, compliance and other obligations of Lessee hereunder other than those
set forth
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Brier Oak Convalescent Lease
in this Paragraph 16(d) are not obligations shared by Lessor, and are not
otherwise qualified, except as expressly stated herein.
17. Real Property Taxes.
-------------------
17.1 Payment of Taxes. Lessee shall pay all real property taxes applicable
----------------
to the Premises during the Term of this Lease. All such payments shall be made
at least ten (10) days prior to the delinquency date of such payment. Lessee
shall promptly furnish Lessor with satisfactory evidence that such taxes have
been paid. If any such taxes paid by Lessee shall cover any period of time after
the expiration of the Term hereof, Lessee's share of such taxes shall be
equitably prorated to cover only the period of time within the tax fiscal year
during which this Lease shall be in effect, and Lessor shall reimburse Lessee to
the extent required. If Lessee shall fail to pay any such taxes, Lessor shall
have the right to pay the same, in which case Lessee shall repay such amount to
Lessor with Lessee's next rent installment together with interest at the then
maximum rate of interest permitted by law per annum. Non-delinquent real
property and personal property taxes shall be prorated between Lessor and Lessee
as of the date of expiration of the Term of this Lease.
17.2 Definition of "Real Property" Tax. As used herein, the term "real
---------------------------------
property tax" shall include any form of assessment, license fee, commercial
rental tax, levy, penalty, or tax (other than inheritance or estate taxes)
imposed by any authority having the direct or indirect power to tax, including
any city, county, state or federal government, or any school, agricultural,
lighting, drainage or other improvement district thereof, as against any legal
or equitable interest of Lessor in the Premises or in the real property of which
the Premises are a part, as against Lessor's right to rent or other income
therefrom, or as against Lessor's business of leasing the Premises.
If at any time during the Term, the State of California or any political
subdivision of the state, including any county, city, city and county, public
corporation, district, or any other political entity or public corporation of
this state, levies or assesses against Lessor a tax, fee, or excise: (i) on
rents, (ii) on the square footage of the Premises, (iii) on the act of entering
into this Lease, (iv) on the occupancy of Lessee, or any other tax, fee, or
excise, however, described, including, without limitation, a so-called value
added tax, as a direct substitution in whole or in part for, or in addition to,
any real property taxes, Lessee shall pay, before delinquency, that tax, fee, or
excise.
17.3 Joint Assessment. If the Premises are not separately assessed,
----------------
Lessee's liability shall be an equitable proportion of the real property taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by the parties from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available.
17.4 Personal Property Taxes. Lessee shall pay, prior to delinquency, all
-----------------------
taxes assessed against and levied upon all other personal property contained in
the Premises, including all FF&E. When possible, Lessee shall cause said
personal property to be assessed and billed separately from the real property of
Lessor.
Page 20
Brier Oak Convalescent Lease
18. Utilities.
---------
Lessee shall pay for all water, gas, heat, light, power, telephone and
other utilities and services supplied to the Premises, together with any taxes
thereon.
19. Defaults: Remedies.
------------------
19.1 Defaults. The occurrence of any one or more of the following events
--------
shall constitute a default and breach of this Lease by Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of three (3) business days after written
notice thereof from Lessor to Lessee.
(c) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed by
Lessee, other than described in the other subparagraphs of this Paragraph 19.1,
where such failure shall continue for a period of thirty (30) days after written
notice thereof from Lessor to Lessee; provided, however, that if the nature of
Lessee's default is such that more than thirty (30) days are reasonably required
for its cure, no breach shall occur if Lessee commences said cure within said
thirty (30) day period and thereafter diligently prosecutes such cure to
completion.
(d) (i) The making by Lessee of any general assignment, or
general arrangement for the benefit of creditors; (ii) the filing by or against
Lessee or the guarantors of this Lease, Mr. Robert Snukal and Mrs. Sheila Snukal
("Guarantors"), of a petition to have Lessee or either or both of the Guarantors
adjudged bankrupt or a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Lessee
or the Guarantors, the same is dismissed within sixty (60) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
the assets of any or all of the Guarantors or all of the Lessee's assets located
at the Premises or of Lessee's interest in this Lease, where possession is not
restored to the Guarantors or Lessee within thirty (30) days of such
appointment; or (iv) the attachment, execution or other judicial seizure of
substantially all of the assets of any or all of the Guarantors or all of the
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where such seizure is not discharged within thirty (30) days of such attachment,
execution or seizure; or
(e) The loss of any Required License to operate the Licensed
Facility at the Premises.
19.2 Lessor's Remedies. If any default by Lessee shall continue
-----------------
uncured, following notice of default as required by the Lease, for the period
applicable to the default under the Lease, Lessor shall have the following
remedies in addition to all
Page 21
Brier Oak Convalescent Lease
other rights and remedies provided by law or equity, to which Lessor may resort
cumulatively or in the alternative:
(a) Lessor may, at Lessor's election, terminate this Lease by
giving Lessee notice of termination. On the giving of the notice, all Lessee's
rights in the Premises and in all improvements, furniture and equipment shall
terminate. Promptly after notice of termination, Lessee shall surrender and
vacate the Premises and all improvements, furniture and equipment in broom clean
condition, and Lessor may reenter and take possession of the Premises and all
remaining improvements, furniture and equipment and eject all parties in
possession or eject some and not others or eject none. Termination under this
Paragraph shall not relieve Lessee for the payment of any sums then due to
Lessor for any claim or damages previously accrued or then accruing against
Lessee.
(b) Lessor may, at Lessor's election, reenter the Premises, and,
without terminating this Lease, and at any time and from time to time relet the
Premises or improvements, furniture or equipment or any part or parts of them
for the account and in the name of Lessee. Lessor may, at Lessor's election
eject all persons or eject some and not others or eject none. Lessor shall apply
all rents from reletting as in the provision on assignment of subrents
hereinbelow set forth. Any reletting may be for the remainder of the Lease Term
or for a longer or shorter period. Lessor may execute any leases made under this
provision in Lessee's name and shall be entitled to all rents from the use,
operation, or occupancy of the Premises or improvements, furniture or equipment
or both. Lessee shall nevertheless pay to Lessor on the due date specified in
this Lease the equivalent of all sums required of Lessee under this Lease, plus
Lessor's expenses, less the avails of any reletting or attornment. No act by or
on behalf of Lessor under this provision shall constitute a termination of this
Lease unless Lessor gives Lessee notice of termination.
(c) Lessor may, at Lessor's election use Lessee's personal property
and trade fixtures or any of such property and fixtures, if any, without
compensation and without liability for use or damage, or store them for the
account and at the cost of Lessee. The election of one remedy for any one item
shall not foreclose an election of any other remedy for another item or for the
same item at a later time.
(d) Lessor, which is hereby granted the remedy provided by Civil
Code ss.1951.4, shall be entitled at Lessor's election to each installment of
rent or to any combination of any installments for any period before
termination, plus interest at the then maximum rate of interest permitted by law
per year from the due date of each installment. Lessor shall make reasonable
efforts to mitigate Lessee's liability under this provision.
(e) In the event that Lessor terminates Lessee's right to
possession because of a breach of this Lease, this Lease shall thereupon
terminate and upon such termination, Lessor may recover from Lessee:
Page 22
Brier Oak Convalescent Lease
(i) the worth at the time of award of the unpaid rent
(including charges equivalent to rent) which had been earned at the time of
termination,
(ii) the worth at the time of award of the amount by which the
unpaid rent (including charges equivalent to rent) which would have been earned
after termination until the time of award exceeds the amount of such rental loss
that Lessee proves could have been reasonably avoided,
(iii) the worth at the time of the award of the amount by which
the unpaid rent (including charges equivalent to rent) for the balance of the
Term after the time of award exceeds the amount of such rental loss that Lessee
proves could be reasonably avoided,
(iv) any other amount necessary to compensate Lessor for all
the detriment proximately caused by Lessee's failure to perform his obligations
under the Lease or which in the ordinary course of things would be likely to
result therefrom, including, but not limited to, the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises or any part thereof, reasonable
attorney's fees and any real estate commission actually paid or incurred.
The "worth at the time of award" of the amounts referred to in (i)
and (ii) above shall include interest at the maximum rate an individual is
permitted by law to charge. The "worth at the time of award" of the amount
referred to in (iii) above shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1 %). Nothing in this paragraph shall affect the right of
Lessor to indemnification for liability arising prior to the termination of the
Lease for personal injuries or property damage as provided in this Lease.
Nothing herein provided shall affect Lessor's rights under Chapter 4 (commencing
with Section 1159) of Title 3 of Part 3 of the Code of Civil Procedure relating
to actions for unlawful detainer, forcible entry and forcible detainer.
(f) Lessee assigns to Lessor all subrents and other sums falling
due from subtenant and licensees (herein called subtenants) during any period in
which Lessor has the right under this Lease, whether exercised or not, to
reenter the Premises for Lessee's default, and Lessee shall not have any rights
to such sums during that period. Lessor may, at Lessor's election, either as
attorney in fact of Lessee, or through a receiver appointed on Lessor's
application, reenter the Premises and improvements with or without process of
law, without terminating this Lease and either or both collect these sums or
bring action for the recovery of the sums directly from such obligors. Lessor
shall receive and collect all subrents and avails from reletting, applying them:
first, to the payment of reasonable expenses (including attorney's fees or
broker's commissions or both) paid or incurred by or on behalf of Lessor in
recovering possession, placing the Premises and improvements, furniture and
equipment in good condition, and repairing or altering the Premises or
improvements, furniture and equipment for reletting; second, to the reasonable
expense of securing new Lessees; third, to the fulfillment of Lessee's covenants
to the end of the Term; and fourth, to
Page 23
Brier Oak Convalescent Lease
Lessee. Lessee shall nevertheless pay to Lessor, on the due dates specified in
this Lease, the equivalent of all sums required of Lessee under this Lease, plus
Lessor's expenses, less the avails of the sums assigned and actually collected
under this provision. Lessor may proceed to collect either the assigned sums or
Lessee's balances or both, and any installment or installments of them, either
before or after expiration of the Lease Term, but the period of limitation shall
not begin to run on Lessee's payments until the due date of the final
installment to which Lessor is entitled, nor shall it begin to run on payments
of the assigned sums until the due date of the final installment due from the
respective obligors.
19.3 Default by Lessor. Lessor shall not be considered in default under
-----------------
this Lease unless Lessor fails to perform obligations required of Lessor within
a reasonable time, but in no event later than thirty (30) days after written
notice by Lessee to Lessor and to the holder of any first mortgage or deed of
trust covering the Premises whose name and address shall have theretofore been
furnished to Lessee in writing, specifying wherein Lessor has failed to perform
such obligation; provided, however, that if the nature of Lessor's obligation is
such that more than thirty (30) days are required for performance then Lessor
shall not be in default if Lessor commences performance within such thirty (30)
day period and thereafter diligently prosecutes the same to completion.
19.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
------------
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed on Lessor by the
terms of any mortgage or trust deed covering the Premises. Accordingly, if any
installment of rent or any other sum due from Lessee shall not be received by
Lessor or Lessor's designee within ten (10) days after such amount shall be due,
Lessee shall pay to lessor a late charge equal to ten percent (10%) of the
overdue amount, plus the then maximum rate of interest permitted by law per
----
annum of such overdue amount. The parties hereby agree that such late charge
represents a fair and reasonable estimate of costs Lessor will incur by reason
of late payment by Lessee. Acceptance of such late charge by Lessor shall in no
event constitute a waiver of Lessee's default with respect to such overdue
amount, nor prevent Lessor from exercising any of the other rights and remedies
available to Lessor.
20. Surrender of Lease.
------------------
The voluntary or other surrender of this Lease by Lessee, or a mutual
cancellation thereof, shall not work a merger, and shall at the option of
Lessor, terminate all or any existing sublease or subtenancies, or may, at the
option of Lessor, operate as an assignment to it of any or all such subleases or
subtenancies.
Page 24
Brier Oak Convalescent Lease
21. Attorney's Fees.
---------------
In case a suit shall be brought for an unlawful detainer of the said
Premises, for the recovery of any rent due under the provisions of this Lease,
or because of the breach of any other covenant herein contained on the part of
either party to be kept or performed, the prevailing party shall be entitled to
a reasonable attorney's fees and legal costs incurred in such suit or
arbitration and any appeal therein which shall be fixed by the court or arbiter,
as applicable.
22. Notices.
-------
All notices to be given to Lessee may be given in writing personally or by
depositing the same in the United States mail, certified or registered, postage
prepaid, and addressed to Lessee at the said Premises, whether or not Lessee has
departed from, abandoned, or vacated the said Premises.
Notices to Lessor shall be given in the same manner, its address for this
purpose, until further notice being:
Bernard Bubman
16161 Roscoe Boulevard
Suite 206
North Hills, California 91343
and
Fredric Frankel
1476 Rising Glen Rd.
Los Angeles, California 90069
Any party may change its address for the purpose of this paragraph by giving
written notice of such change to the other parties in the manner described
herein.
23. Waiver.
------
The waiver by Lessor of any breach of any term, covenant, or condition
herein contained shall not be deemed to be a waiver of such term, covenant, or
condition on any subsequent breach of the same or any other term, covenant, or
condition, herein contained. The subsequent acceptance of rent hereunder by
Lessor shall not be deemed to be a waiver of any preceding breach by Lessor of
any term, covenant, or condition of this Lease, other than the failure of Lessee
to pay the particular rental so accepted, regardless of Lessor's knowledge of
such preceding breach at the time of acceptance of such rent.
Page 25
Brier Oak Convalescent Lease
24. Condemnation.
------------
If any part of the Premises shall be taken or condemned for a public or
quasi-public use, and a part thereof remains which is susceptible of occupation
hereunder, this Lease shall, as to the part so taken, terminate as of the date
title shall vest in the condemnor, and the rent payable hereunder shall be
adjusted so that the Lessee shall be required to pay for the remainder of the
Term only such portion of such rent as the value of the part remaining after the
condemnation bears to the value of the entire Premises at the date of
condemnation, provided the condemned portion does not reduce bed capacity below
100 (one hundred) beds or condemnation of more than 50% (fifty percent) of
dietary areas; in the event that the condemned area herein mentioned shall
exceed reduction of bed capacity below 100 (one hundred) or reduction of the
dietary areas below 50% (fifty percent), Lessee shall have the option for 30
days after the taking to terminate this Lease as of the date when the Lessee no
longer has effective use of the demised Premises as herein this Lease provided
for. Upon such reduction Lessor also shall have the option to terminate this
Lease as of the date when title to the part so condemned vests in the condemnor.
If a part or all of the leased Premises be taken or condemned, all compensation
awarded upon such condemnation or taking shall go to the Lessor, and the Lessee
shall have no claim thereto, and the Lessee hereby irrevocably assigns and
transfers to the Lessor any right to compensation or damages to which the Lessee
may become entitled during the Term hereof by reason of the condemnation of all,
or a part, of the leased Premises.
25. Holding Over.
------------
Any holding over after the expiration of the Term of this Lease or earlier
termination hereof, with the consent of Lessor, shall be construed to be a
tenancy from month to month, at a rental rate equal to 110% of the rental last
owing during the Term of this Lease, and shall otherwise be on the terms and
conditions herein specified, so far as applicable.
26. Successors.
----------
The covenants and conditions herein contained shall, subject to the
provisions as to assignment, apply to and bind the heirs, successors, executors,
administrators, and assigns of the parties hereto.
27. Inventory.
---------
Two days prior to the expiration or earlier termination of the Term
hereof, the parties hereto shall jointly take an inventory of all expendable
items used in the operation of the skilled nursing facility, including but not
limited to food stuff, maintenance supplies, linen, medical central supplies and
FF&E. The Lessor shall have the option, but not the obligation, exercisable by
written notice to Lessee prior to the expiration or earlier termination of the
Term, to purchase all of such expendable items and supplies (the FF&E already
being owned by Lessor), and pay to Lessee on
Page 26
Brier Oak Convalescent Lease
the expiration or termination date of the Lease a sum equal to Lessee's cost for
those items included in such inventory.
28. Lessor's Access.
---------------
Lessor and Lessor's agents shall have the right to enter the Premises
during business hours, without unreasonably disturbing the operation of the
facility on the Premises, for the purpose of inspecting the same, showing the
same to prospective purchasers, or lenders, making such alterations, repairs,
improvements or additions to the Premises or to the building of which they are a
part as Lessor may deem necessary or desirable and posting notices of
non-responsibility for alterations, additions and repairs. Lessor may at any
time place on or about the Premises any ordinary "For Sale" signs and Lessor may
at any time during the last one-hundred twenty (120) days of the Term hereof
place on or about the Premises any ordinary "For Lease" signs, all without
rebate of rent or liability to Lessee.
29. Certification.
-------------
Lessee shall, without charge, at any time and from time to time hereafter,
within ten (10) business days after written request by Lessor, certify by
written instrument duly executed and acknowledged to any mortgagee or purchaser,
or proposed mortgagee or proposed purchaser, or any other person or company
specified in such request: (i) as to whether this Lease has been supplemented or
amended, and if so, the substance and manner of such supplement or amendment;
(ii) as to the validity and force and effect of this Lease, in accordance with
its tenor as then constituted; (iii) as to the existence of any default
thereunder; (iv) as to the existence of any offsets, counter-claims or defenses
thereto on the part of Lessee; (v) as to the commencement and expiration dates
of the Term of this lease; (vi) the amount of minimum monthly rent, the dates to
which the rent has been paid in advance and the amount of any security deposit
or prepaid rent; and (vii) as to any other matters as may reasonably be so
requested. Any such certificate may be relied upon by Lessor and any other
person or company to whom the same may be exhibited or delivered and the
contents of such certificate shall be binding on the party executing the same.
Failure to deliver the certificate within the ten (10) day period shall be
conclusive upon the Lessee for the benefit of the Lessor and any successor of
Lessor that this Lease is in full force and effect and has not been modified
except as may be represented by the Lessor.
30. Subordination.
-------------
This Lease shall be, and is hereby declared to be, wholly junior, inferior
and subordinate to the lien or charge of any mortgage or deed of trust which may
be at any time hereafter created by Lessor covering the Premises or any
property, or interest or estate of Lessor in property of which the Premises are
a part; provided, however, that if pursuant to the provisions of any such
mortgage or deed of trust the mortgagee or beneficiary thereunder should elect
by the terms of any such mortgage or deed of trust to cause the same to be
subordinate to this Lease either alone or in conjunction with any other leases
covering the property or interest or estate in property mortgaged or
Page 27
Brier Oak Convalescent Lease
encumbered by such mortgage or deed of trust and of which the Premises
constitute a part, Lessee agrees that this Lease shall in such event be and
become prior and paramount to the lien or charge of such mortgage or deed of
trust and shall not in such event be terminated or extinguished in the event of
any foreclosure or sale on foreclosure of said mortgage or deed of trust.
Notwithstanding the above, no subordination of this Lease to any future
mortgage or deed of trust shall be required of Lessee under this Lease unless
Lessee first obtains from the lender a written agreement that provides that as
long as Lessee performs its obligations under this Lease, no foreclosure of,
deed given in lien of foreclosure of, or sale under the mortgage or deed of
trust, and no steps or procedures taken thereunder shall affect Lessee's rights
under this Lease.
Lessee shall execute the written agreement and any other documents
required by any lender to accomplish the purpose of this Paragraph 32 and if
applicable shall attorn to any purchaser at any foreclosure sale or to any
grantee or transferee designated in any deed given in lieu of foreclosure.
31. Guaranty.
--------
This Lease shall not be effective and shall have no force or effect unless
and until Mr. Robert Snukal and Mrs. Sheila Snukal, as joint and several
Guarantors, execute guarantees in the form which is attached hereto as Exhibit
"D" and made a part hereof by reference and delivers same to Lessor.
32. Time.
----
Time is of the essence of this Lease.
33. Captions.
--------
The title or headings to the paragraphs of this Lease are not a part of
the Lease, and shall have no effect upon the construction or interpretation of
any part thereof.
34. Use of Tradename and License.
----------------------------
Upon termination of this Lease either by expiration of the Term or in
accordance with the terms hereof or by law, Lessee shall no longer use the name
"Brier Oak Terrace Convalescent Center" or any similar name or any license or
permits to operate the facility on the Premises.
Lessee shall execute such documents as may be required to accomplish the
foregoing restrictions and assignments.
Page 28
Brier Oak Convalescent Lease
35. Authority of Lessee's Signatories.
---------------------------------
In the event that Lessee is not an individual, the persons executing this
Lease on behalf of Lessee represent and warrant to Lessor that: (i) if Lessee is
a partnership, Lessee's partnership agreement authorizes such persons to execute
this Lease on behalf of Lessee and commit the Lessee hereto; (ii) if Lessee is a
corporation, such persons are executing this Lease pursuant to a resolution of
the Lessee's board of directors approving such execution and authorizing such
persons to execute the Lease on behalf of the Lessee and to commit the Lessee
hereto. Concurrently with Lessee's execution of this Lease, Lessee shall deliver
to Lessor a copy of Lessee's partnership agreement or statement of partnership
or certificate of limited partnership or certified copy of a board of director's
resolution and such other corporate documents as reasonably requested by Lessor,
as the case may be, confirming such authorizations.
Page 29
Brier Oak Convalescent Lease
36. Severability.
------------
The unenforceability, invalidity or illegality of any portion of this
Lease shall not render any other portions unenforceable, invalid or illegal.
37. Counterparts. This Lease may be executed in two or more counterparts, each
------------
of which shall be deemed an original, but all of which shall constitute one and
the same instrument.
LESS0R: SUNSET MOTEL AND
DEVELOPMENT CO., a General
/s/ Bernard Bubman Partnership
- ----------------------
BERNARD BUBMAN
By:
-----------------------
/s/ Irene Weiss FREDRIC FRANKEL, as Trustee of
- ------------------- the FREDERIC R. AND
IRENE WEISS GERTRUDE J. FRANKEL LIVING
TRUST,
dated March 22, 1983
General Partner
ARNOLD & ELAINE FRIEDMAN AS
TRUSTEES FOR THE ARNOLD &
ELAINE FRIEDMAN FAMILY TRUST By:
OF SEPTEMBER 7th, 1993 ------------------------
GERTRUDE FRANKEL, as Trustee
of the FREDERIC R. AND
GERTRUDE J. FRANKEL LIVING
By: /s/ Arnold Friedman, Tr. TRUST,
------------------------- dated March 22, 1983
ARNOLD FRIEDMAN, Trustee General Partner
By: /s/ Elaine Friedman, Tr.
-------------------------
ELAINE FRIEDMAN, Trustee
Page 30
Brier Oak Convalescent Lease
36. Severability.
------------
The unenforceability, invalidity or illegality of any portion of this
Lease shall not render any other portions unenforceable, invalid or illegal.
37. Counterparts. This Lease may be executed in two or more counterparts, each
------------
of which shall be deemed an original, but all of which shall constitute one and
the same instrument.
LESS0R: SUNSET MOTEL AND
DEVELOPMENT CO., a General
Partnership
By: /s/ Fredric Frankel
- ----------------------- -------------------------
BERNARD BUBMAN FREDRIC FRANKEL, as Trustee of
the FREDERIC R. AND
- ----------------------- GERTRUDE J. FRANKEL LIVING
IRENE WEISS TRUST,
dated March 22, 1983
General Partner
ARNOLD & ELAINE FRIEDMAN AS
TRUSTEES FOR THE ARNOLD &
ELAINE FRIEDMAN FAMILY TRUST By: /s/ Gertrude Frankel
OF SEPTEMBER 7th, 1993 ----------------------
GERTRUDE FRANKEL, as Trustee
of the FREDERIC R. AND
GERTRUDE J. FRANKEL LIVING
By: TRUST,
------------------------ dated March 22, 1983
ARNOLD FRIEDMAN, Trustee General Partner
By:
-----------------------
ELAINE FRIEDMAN, Trustee
Page 30
Brier Oak Convalescent Lease
By: /s/ Julia Herman Zalkind
----------------------------
JULIA HERMAN ZALKIND, as
Successor Co-Trustee of the
MOLLY HERMAN LIVING
TRUST,
dated July 7, 1993, as amended
By: /s/ Michael Herman
------------------------------
MICHAEL HERMAN, as Successor
Co-Trustee of the
MOLLY HERMAN LIVING
TRUST,
dated July 7, 1983
By:
-----------------------------
STANLEY FLEISHMAN, as trustee
of the Fleishman Family Trust,
General Partner
By:
-----------------------------
DORIS FLEISHMAN, as
trustee of the Fleishman Family
Trust,
General Partner
LESSEE:
BRIER OAK CONVALESCENT, Inc., a
California corporation
By:
-----------------------------
President
-------------
By:
-----------------------------
Secretary
-------------
Page 31
Brier Oak Convalescent Lease
By:
----------------------------
JULIA HERMAN ZALKIND, as
Successor Co-Trustee of the
MOLLY HERMAN LIVING
TRUST,
dated July 7, 1993, as amended
By:
----------------------------
MICHAEL HERMAN, as Successor
Co-Trustee of the
MOLLY HERMAN LIVING
TRUST,
dated July 7, 1983
By: /s/ Stanley Fleishman
------------------------------
STANLEY FLEISHMAN, as trustee
of the Fleishman Family Trust,
General Partner
By: /s/ Doris Fleishman
------------------------------
DORIS FLEISHMAN, as
trustee of the Fleishman Family
Trust,
General Partner
LESSEE:
BRIER OAK CONVALESCENT, Inc., a
California corporation
By:
------------------------------
----------------- President
By:
------------------------------
----------------- Secretary
Page 31
Brier Oak Convalescent Lease
By:
-----------------------------
JULIA HERMAN ZALKIND, as
Successor Co-Trustee of the
MOLLY HERMAN LIVING
TRUST,
dated July 7, 1993, as amended
By:
-----------------------------
MICHAEL HERMAN, as Successor
Co-Trustee of the
MOLLY HERMAN LIVING
TRUST,
dated July 7, 1983
By:
-------------------------------
STANLEY FLEISHMAN, as trustee
of the Fleishman Family Trust,
General Partner
By:
-------------------------------
DORIS FLEISHMAN, as trustee
of the Fleishman Family Trust,
General Partner
LESSEE:
BRIER OAK CONVALESCENT, Inc., a
California corporation
By: [ILLEGIBLE SIGNATURE]
--------------------------------
President
--------------------
By: [ILLEGIBLE SIGNATURE]
--------------------------------
Secretary
---------------------
Page 31
SECURED PROMISSORY NOTE
-----------------------
$159,000.00 Los Angeles, California
February 1, 1995
----------
FOR VALUE RECEIVED, the undersigned, BRIER OAK CONVALESCENT,
INC., a California corporation ("Maker"), promises to pay to BERNARD BUBMAN,
-----
ARNOLD FRIEDMAN, IRENE WEISS AND SUNSET MOTEL AND DEVELOPMENT CO., a general
partnership (collectively, "Holders"), or order, at Bubman, Friedman, Weiss and
-------
Sunset c/o East West Bank, 2496 Glendale Blvd. L.A. CA 90039 or at such other
-----------------------------------------------------
place as may be designated in writing by the Holders of this Secured Promissory
Note (this "Note"), the principal sum of ONE HUNDRED FIFTY NINE THOUSAND DOLLARS
($159,000.00), together with interest from the date hereof on the unpaid
principal balance at a rate equal to the lesser of (i) ten percent (10%) per
annum or (ii) the maximum rate of interest from time to time permitted by law.
Interest chargeable hereunder shall be calculated on the basis of a three
hundred sixty five (365) day year for actual days elapsed.
This Note has been issued pursuant to that certain Lease
Agreement, of even date herewith (the "Agreement"), between Maker and Holders,
---------
and all of the terms, covenants and conditions of the Agreement, as the
Agreement may from time to time be amended (including all exhibits and schedules
thereto), and all other instruments evidencing and/or securing the indebtedness
hereunder are hereby made part of this Note and are deemed incorporated herein
in full. The occurrence or existence of a default under the Agreement, including
the failure to pay any installment of principal and/or interest in full on the
due date thereof under this Note, or a default as defined in any other
instruments securing and/or evidencing this indebtedness, shall constitute an
"Event of Default" under this Note and shall entitle Holders, at their option,
----------------
to accelerate the then outstanding indebtedness hereunder and take such other
action as may be provided for in the Agreement.
Principal shall be due and payable on the dates and in the
manner as follows:
a. A payment of Seventy Nine Thousand Five
Hundred Dollars ($79,500.00) due and payable
on April 1, 1996; and
b. A payment of Seventy Nine Thousand Five
Hundred Dollars ($79,500.00) due and payable
on April 1, 1997.
Interest shall be due and payable on the dates and in the
manner as follows:
a. If the indebtedness on this Note is not
accelerated and if Maker shall pay both
scheduled principal payments on a timely
basis, Holders agree to waive payment by
Maker of all interest accruing under this
Note.
b. If Maker shall pay the first installment of
principal on a timely basis, but fails to
pay the second installment of principal on a
timely basis (or if the indebtedness on this
Note is accelerated), Holders agree to waive
payment by Maker of interest accruing for
the period from the date of this Note
through March 31, 1996, and interest accrued
on the unpaid principal amount of this Note
for the period from April 1, 1996 to
April 1, 1997 (or such earlier date on
which the indebtedness on this Note may be
accelerated) shall be due and payable on
such date.
c. If Maker shall fail to pay the first
installment of principal on a timely basis,
interest accrued on the unpaid principal
amounts of this Note on April 1, 1996 and
April 1, 1997 shall be due and payable on
such dates, unless the indebtedness on this
Note is accelerated, in which case interest
accrued as of the date of acceleration shall
be due and payable on such date.
A late charge of five percent (5%) of any installment of
principal or interest, or such maximum lesser amount permitted by law, will be
charged any such installment unpaid on its due date and shall be immediately due
and payable by Maker to Holders.
Maker may prepay the principal balance due under this Note at
any time.
All payments hereunder are to be applied first to the payment
of Holders' costs, fees, and expenses under the Agreement or in connection with
the enforcement of its rights under this Note, second to the payment of accrued
interest, and thereafter to the payment of principal. All principal and interest
due hereunder is payable in lawful money of the United States of America.
Maker, for itself and its legal representatives, successors
and assigns, expressly waives presentment, protest, demand, notice of dishonor,
notice of non-payment, notice of maturity, notice of protest, presentment for
the purpose of accelerating maturity, and diligence in collection, and consents
and agrees that Holders may release or surrender, exchange or substitute any
collateral security now held or which may hereafter be held as security for the
payment of this Note, without affecting the enforceability of this Note or the
indebtedness evidenced hereby.
IT IS EXPRESSLY AGREED THAT IF MAKER FAILS TO PAY ANY PAYMENT
OF PRINCIPAL OR INTEREST AS ABOVE PROVIDED, OR UPON THE OCCURRENCE OF ANY OTHER
DEFAULT UNDER THE TERMS OR CONDITIONS OF THE AGREEMENT OR UNDER ANY OTHER
INSTRUMENTS SECURING AND/OR EVIDENCING MAKER'S OBLIGATIONS UNDER THE AGREEMENT,
OR UPON THE TERMINATION OF THE AGREEMENT, THEN THE UNPAID PRINCIPAL BALANCE OF
THIS NOTE, TOGETHER WITH ALL INTEREST ACCRUED THEREON, SHALL THEREUPON BE
IMMEDIATELY DUE AND PAYABLE AT THE OPTION OF THE HOLDERS HEREOF, WITHOUT
PRESENTMENT, DEMAND, PROTEST OR NOTICE
2
OF PROTEST OF ANY KIND, ALL OF WHICH ARE HEREBY EXPRESSLY WAIVED. IT IS FURTHER
UNDERSTOOD AND AGREED THAT THIS NOTE IS SECURED BY, AMONG OTHER THINGS, THE
SECURITY INTERESTS GRANTED BY MAKER IN THE AGREEMENT, AND ALL OF THE COVENANTS,
CONDITIONS, WARRANTIES, REPRESENTATIONS, AND AGREEMENTS CONTAINED IN THE
AGREEMENT, OR IN ANY OTHER AGREEMENT BETWEEN MAKER AND HOLDERS WHICH IS EXECUTED
IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREUNDER OR UNDER THE
AGREEMENT, ARE HEREBY INCORPORATED HEREIN AND MADE A PART HEREOF.
MAKER AND HOLDERS EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING RELATING TO THIS NOTE OR ANY DOCUMENTS CONTEMPLATED HEREIN.
In the event it should become necessary to employ counsel to
collect this Note, Maker agrees to pay the reasonable attorneys' fees and costs
of the holder hereof, whether or not suit is brought. This Note and all
transactions hereunder and/or evidenced hereby shall be governed by, construed
under and enforced in accordance with the internal laws of the State of
California (without reference to principles of conflicts of law). This Note may
not be changed, modified, amended or terminated orally and the provisions hereof
may not be waived by Holders unless in writing.
BRIER OAK CONVALESCENT, INC.,
a California corporation
By: [ILLEGIBLE SIGNATURE]
------------------------
Title: President
------------------
3
GUARANTY OF LEASE AGREEMENT AND SECURED PROMISSORY NOTE
-------------------------------------------------------
This Guaranty of Lease Agreement and Secured Promissory Note
(the "Guaranty") is entered into as of Feb. 1 , 1995, by Robert Snukal and
-------- ------
Sheila Snukal, husband and wife (collectively, the "Guarantors"), for the
----------
benefit of Bernard Bubman, Arnold Friedman, Irene Weiss and Sunset Motel and
Development Co., a partnership (the "Lessors").
-------
RECITALS
A. Concurrently herewith, the Lessors and Brier Oak Convalescent, Inc.,
a California corporation ("Brier Oak"), as lessee, have entered into that
---------
certain Lease Agreement dated as of Feb. 1, 1995 (the "Lease as Agreement")
------------------
whereby Brier Oak leases certain real property from the Lessors. Certain of
Brier Oak's obligations under the Lease Agreement are evidenced by a Secured
Promissory Note dated as of Feb. 1, 1995 (the "Note") payable to the order of
------
the Lessors. The Lease Agreement and the Note are collectively referred to as
the "Documents".
---------
B. Under the Lease Agreement, Brier Oak grants a security interest in
certain of its property to secure its obligations to Lessors.
C. Guarantors acknowledge that they have a financial interest in Brier
Oak and will obtain material financial benefits from Brier Oak's lease of
property under the Lease Agreement.
D. Guarantors acknowledge that Lessors would not have entered into the
Lease Agreement in the absence of this Guaranty.
GUARANTY
1. In consideration of the execution of the Documents by the
Lessors and as a material inducement to the Lessors to execute the Documents,
Guarantors, jointly and severally, unconditionally and irrevocably guarantee, to
the Lessors, their successors and assigns, without deduction by reason of
setoff, defense or counterclaim, the full and timely payment by Brier Oak of all
rentals and all other sums payable by Brier Oak under the Documents and the full
and timely performance by Brier Oak of each and every one of the terms,
conditions and covenants of the Documents to be kept and performed by Brier Oak
(collectively, "Brier Oak's Obligations"). This Guaranty shall be binding
-----------------------
(jointly and severally) and enforceable against Guarantors, and their heirs,
personal representatives, successors and assigns.
2. Guarantors represent and warrant to the Lessors that they
are each residents of California and that neither is a debtor in proceedings
under the Bankruptcy Code.
3. If Brier Oak shall at any time default in the payment,
performance or observance of any of the terms, conditions or covenants in the
Documents contained on Brier
Oak's part to be kept, performed or observed, Guarantors will pay, keep, perform
and observe same, as the case may be.
4. Any act of the Lessors consisting of a waiver of any of the terms
or conditions of the Documents, or the giving of any consent to any matter or
thing relating to the Documents, or the granting of any extensions of time to
Brier Oak, may be done without notice to Guarantors and without releasing
Guarantors from any of their obligations hereunder or otherwise affecting same.
5. The terms of the Documents may be altered, modified, changed,
extended or renewed by agreement between the Lessors and Brier Oak, or by a
course of conduct, and the Documents may be assigned by the Lessors or any
assignee of the Lessors, c by Brier Oak or any successor thereto, without
consent or notice to Guarantors and this Guaranty shall thereupon and thereafter
guarantee the performance of Brier Oak or any such successor thereto under the
Documents as so changed, altered, modified, assigned, extended or renewed.
6. Without authorization from or notice to Guarantors, the Lessors
and Brier Oak may alter, compromise or change the time or manner of payment or
performance of any or all of Brier Oak's Obligations, may release or add any one
or more guarantors, sureties or endorsers in respect of any of Brier Oak's
Obligations, and may take and hold collateral to secure payment, performance,
discharge and satisfaction of any or all of Brier Oak's Obligations, may
foreclose upon or otherwise realize all or any part of any such collateral in
any order, and may release all of or any part of any such collateral, all
without impairing, affecting or otherwise exonerating any of the covenants,
agreements, duties or obligations of Guarantors hereunder. No exercise or non-
exercise by the Lessors of any right or remedy hereby given to the Lessors, no
dealing by the Lessors with Guarantors or with any other guarantor, endorser or
surety in respect of any of Brier Oak's Obligations, or with all or part of any
collateral securing any of Brier Oak's Obligations, and no change, impairment or
suspension of any right or remedy of the Lessors shall in any way impair or
affect any of Guarantors' covenants, agreements, duties or obligations hereunder
or give Guarantors any recourse against the Lessors.
7. This Guaranty guarantees the payment by Guarantors of any and all
amounts due or owing at any time from Brier Oak with respect to any and all of
Brier Oak's Obligations notwithstanding any payments made or any settlement of
account or any other thing whatsoever; and no payments made by or on behalf of
Guarantors shall discharge, diminish or otherwise affect the continuing
liability of Guarantors hereunder or otherwise, unless and until each of Brier
Oak's Obligations has been fully, effectively and irrevocably paid, performed,
satisfied and discharged. Guarantors hereby waive all right of subrogation and
all benefit of or right to participate in any security now or hereafter held by
the Lessors for the payment, performance, satisfaction or discharge of any of
Brier Oak's Obligations or otherwise. Notwithstanding anything to the contrary
in this Guaranty, or in any other agreement or instrument to which Guarantors
are a party, Guarantors hereby: (a) expressly
2
and irrevocably waive, to the fullest extent possible, on behalf of themselves
and their successors and assigns (including any surety), any and all rights at
law or in equity to subrogation, to reimbursement, to exoneration, to
contribution, to indemnification, to setoff or to any other rights that could
accrue to a surety against a principal, to a guarantor against a maker or
obligor, to an accommodation party against the party accommodated, to a holder
or transferee against a maker, or to the holder of any claim against any person,
and which Guarantors may have or hereafter acquire against Brier Oak as a result
of Guarantors' execution, delivery or performance of this Guaranty, or any other
documents to which Guarantors are a party or otherwise; (b) expressly and
irrevocably waive any "claim" (as such term is defined in the United States
Bankruptcy Code) of any kind against Brier Oak, and further agree that they
shall not have or assert any rights with respect to any such claim against any
person (including any surety), either directly or as an attempted setoff to any
action commenced against Guarantors by the Lessors; and (c) acknowledge and
agree (i) that this waiver is intended to benefit the Lessors and shall not
limit or otherwise affect Guarantors' liability hereunder or the enforceability
of this Guaranty, and (ii) that the Lessors and their successors and assigns are
intended third party beneficiaries of the waivers and agreements set forth in
this sentence and their rights under this sentence shall survive payment and
performance in full of Brier Oak's Obligations. If a claim is made upon any
person at any time for disgorgement, repayment or recovery of any amount or
amounts or other consideration or value received from any source whatsoever in
payment, performance, satisfaction or discharge of, or otherwise on account of,
any of Brier Oak's Obligations, and if such person repays any such amounts,
value or consideration or otherwise becomes liable for all or any part of such
claim by reason of (a) any judgment, decree or order of any court or
administrative body having competent jurisdiction, (b) any settlement or
compromise of any such claim (provided, if such claim does not arise in the
context of insolvency or bankruptcy, that any such settlement or compromise is
made with the consent of Guarantors), or (c) the bankruptcy, insolvency or
reorganization of Brier Oak of any endorser, guarantor, surety or other obligor
in respect of any of Brier Oak's Obligations, Guarantors shall be and remain
liable hereunder for the amount, value or consideration so repaid, or for which
such person otherwise is liable, to the same extent as if such amount, value or
consideration never had been received by such person, all notwithstanding any
termination hereof or the cancellation of any agreement, instrument or document
evidencing any of Brier Oak's Obligations. By virtue of this Guaranty,
Guarantors hereby expressly assume any and all risks of a bankruptcy, insolvency
or reorganization with respect to Brier Oak. Notwithstanding any other provision
of this Guaranty or anything to the contrary contained in the Documents,
Guarantors' obligations under this Guaranty shall be continuing obligations and
shall survive until Brier Oak's Obligations are fully, effectively and
irrevocably paid, performed, satisfied and discharged.
8. Guarantors agree that they may be joined in any action against
Brier Oak in connection with Brier Oak's Obligations under the Documents and
recovery may be had against Guarantors in any such action. The Lessors may
enforce the obligations of Guarantors hereunder without previous notice to or
demand upon either Brier Oak or Guarantors and
3
without first taking any action whatsoever against Brier Oak or its successors
and assigns, or pursuing any other remedy or applying any security it may hold.
9. Guarantors hereby expressly waive, relinquish and release any
right, defense, protection, claim of exoneration or other claim, and any right
to assert any right, defense, protection, claim of exoneration or other claim,
in any action brought on this Guaranty or otherwise:
(a) based upon California Civil Code 2809 or otherwise, that any
obligation of Guarantors under this Guaranty is larger in amount or in other
respects more burdensome than that of Brier Oak, or that any such obligation of
Guarantors is reducible in proportion to any of Brier Oak's Obligations;
(b) based upon California Civil Code Section 2810 or otherwise,
that for any reason there is no liability upon the part of Brier Oak under any
of the Documents at the time of the execution of any of the Documents, or that
the liability of Brier Oak under any of the Documents thereafter ceases for any
reason other than the full, effective and irrevocable payment, performance,
satisfaction and discharge of such liability or that the Lessors has recovered
any res that formed all or part of the consideration for any of the Documents
except only to the extent that any of Brier Oak's Obligations;
(c) based upon California Civil Code Section 2819 or otherwise,
that any original Brier Oak Obligation has been altered in any respect without
Guarantors' consent (whether or not by any act of the Lessors), or that the
remedies or rights of the Lessors against Brier Oak in respect thereto, have
been in any way impaired or suspended;
(d) based upon California Civil Code Section 2839 or otherwise,
that performance of any or all of Brier Oak's Obligations, or any offer of such
performance, exonerates Guarantors except only to the extent that any of Brier
Oak's Obligations are fully, effectively and irrevocably paid, performed,
satisfied or discharged;
(e) based upon California Civil Code Section 2845 or otherwise,
that Guarantors may require the Lessors to proceed against Brier Oak or to
pursue any other remedy in the Lessors' power that Guarantors cannot pursue or
that would lighten Guarantors' burden, or that the Lessors has neglected so to
proceed against Brier Oak, or to purse any such other remedy;
(f) based upon California Civil Code Section 2846 or otherwise,
that Guarantors may compel Brier Oak to perform any of Brier Oak's Obligations
when due, whether as a condition precedent to any liability of Guarantors or
otherwise;
(g) based upon California Civil Code Section 2847 or otherwise,
that if Guarantors satisfy any of Brier Oak's Obligations (or any part thereof),
whether with or
4
without legal proceedings, Brier Oak is bound to reimburse what Guarantors have
disbursed, whether or not including any necessary costs and expenses;
(h) based upon California Civil Code Section 2848 or otherwise,
that Guarantors, upon satisfying or discharging all or any part of any of Brier
Oak's Obligations, are entitled to enforce any remedy that the Lessors then have
against Brier Oak, whether to the extent of reimbursing what Guarantors have
expended or otherwise, or to require any or all of any co-sureties of Guarantors
to contribute thereto;
(i) based upon California Civil Code Section 2849 or otherwise,
that Guarantors are entitled to the benefit of any security held for the
performance of Brier Oak's Obligations, whether any such security is held by the
Lessors, or by any co-surety of Guarantors, or otherwise, and whether any such
security was held at the time of Guarantors' entering into this Guaranty or
acquired afterwards, and whether Guarantors were aware of any such security or
not;
(j) based upon California Civil Code Section 2850 or otherwise,
that as to any property of Guarantors that has been hypothecated with property
of Brier Oak, Guarantors are entitled to have the property of Brier Oak first
applied to the discharge of any or all of Brier Oak's Obligations;
(k) based upon California Civil Code Section 2855 or otherwise,
that an arbitration award rendered against Brier Oak alone shall not be, be
deemed to be, or utilized as, an award against the Guarantors;
(l) based upon California Civil Code Section 2899 or otherwise,
that the Lessors must resort to property upon which the Lessors have a lien in
any particular order, or must otherwise marshal any such liens;
(m) based upon California Civil Code Section 3433 or otherwise,
that Guarantors may require the Lessors to seek satisfaction from funds to which
Guarantors have no claim or must otherwise marshal assets;
(n) otherwise based upon any of the sections of the California
Civil Code referred to in this paragraph 9; or
(o) based upon any other action or circumstance that might
otherwise constitute a legal or equitable discharge, defense or exoneration of a
guarantor or surety.
Without limiting the generality of the foregoing, Guarantors hereby expressly
waive (a) notice of the acceptance of this Guaranty by any person, (b) notice of
Brier Oak's Obligations now existing or that may hereafter exist, (c) notice of
demand for payment or performance, or notice of default or nonpayment or
nonperformance, under the Documents (or any of them) or otherwise in respect of
any of Brier Oak's Obligations, and (d) all other notices to which
5
Guarantors might otherwise be entitled in connection with this Guaranty, the
Documents (or any of them) or otherwise in respect of Brier Oak's Obligations.
10. Guarantors hereby expressly waive (a) any right to require the
Lessors, as a condition precedent to the enforcement of the Guaranty or
otherwise, to exhaust any security for the payment, performance, satisfaction or
discharge of Brier Oak's Obligations under the Documents (or any of them) in any
manner, or to pursue any other rights or remedies that the Lessors currently or
hereafter may have against Guarantors, or any other guarantors, payors,
endorsers or sureties of the Documents (or any of them) or Brier Oak's
Obligations, whether such rights exist in law, in equity, by contract, by
statute or otherwise, it being agreed by Guarantors that this Guaranty is and
constitutes an absolute, unconditional and irrevocable guarantee by Guarantors
of payment and the performance and not of collection, that failure of the
Lessors to exercise any rights or remedies they have or may have against
Guarantors shall in no way abrogate, impair, nullify, terminate or otherwise
affect the obligations of Guarantors under this Guaranty, and that the liability
of Guarantors hereunder is and shall be direct, absolute, unconditional and
irrevocable, or (b) any defense arising by reason of the termination or other
cessation of any of Brier Oak's Obligations for any cause whatsoever other than
full, effective and irrevocable payment, performance, satisfaction or discharge
of any liability or obligation comprising any of Brier Oak's Obligations.
11. Guarantors' liability hereunder shall continue notwithstanding, and
shall be unaltered, unaffected and unimpaired by (a) the bankruptcy, insolvency,
reorganization, merger, liquidation, dissolution, winding-up or cessation of
existence of Brier Oak, (b) any fraudulent, illegal or improper act by Brier
Oak, or (c) any payment made on Brier Oak's Obligations that the recipient
repays or is liable to repay to Brier Oak pursuant to any court order or as
otherwise required by law. Guarantors hereby waive and relinquish any
entitlement to claim or assert that a finding or liquidation of damages by a
bankruptcy court administering a bankruptcy proceeding of Brier Oak constitutes
collateral estoppel or res judicata as to the Lessors' claims against Guarantors
and Guarantors covenants not to assert any such claim of collateral estoppel or
res judicata in any action or legal proceeding brought by the Lessors.
12. Guarantors hereby covenant and agree that the failure by the
Lessors to file or enforce a claim against Guarantors (either in administration,
bankruptcy or other proceedings of Guarantors or any other person or otherwise)
shall not affect Guarantors' liability hereunder nor shall Guarantors be
released from liability hereunder if recovery from Brier Oak, any other
guarantor, payor, endorser or surety in respect of any of Brier Oak's
Obligations becomes barred by any statute of limitations (other than by
application of any statute of limitations to any breach by Guarantors of its
obligations under this Guaranty).
13. Guarantors hereby waive and agree not to exercise or take advantage
of the defense of any applicable statue of limitations (as any such statute of
limitations may apply to any of the Documents and/or to any Brier Oak's
Obligations, but not as any such statute of limitations may apply directly to
any actions or claims under this Guaranty) in any action
6
hereunder or for the collection or payment or performance of any of Brier Oak's
Obligations. In the event that the maturity of any of Brier Oak's Obligations is
accelerated by bankruptcy or otherwise, such maturity shall also be accelerated
for purposes of this Guaranty (and the guarantee of Guarantors hereunder), and
without demand or notice to Guarantors.
14. The obligations of Guarantors hereunder are independent of Brier
Oak's Obligations under the Documents (and each of them) and of any security for
or other guarantee of Brier Oak's Obligations. The Lessors may maintain an
action against Guarantors upon this Guaranty, whether or not Brier Oak is joined
therein or a separate action is brought against Brier Oak. The rights of the
Lessors hereunder are cumulative and shall not be exhausted by the exercise of
any of its rights hereunder or otherwise against Guarantors or by any number of
successive actions unless and until all of Brier Oak's Obligations have been
fully, effectively and irrevocably paid, performed, satisfied and/or discharged,
and each of Guarantors' obligations hereunder has been fully, effectively and
irrevocably paid, performed, satisfied and discharged.
15. If Brier Oak's Obligations guaranteed hereby are also directly or
indirectly guaranteed by any other person, by guarantee of the Documents (or any
of them) or otherwise, the obligations of such other person and Guarantors'
obligations hereunder shall be deemed to be joint and several, and neither the
existence of any such other guarantee nor the release of any such other
guarantor, any settlement with such other guarantor, or the revocation or
impairment of such other guarantee, shall directly or indirectly in any manner
operate to prejudice any of the rights, privileges, preferences and remedies of
the Lessors against Guarantors hereunder. The Lessors may proceed directly
against Guarantors hereunder without proceeding against any such other guarantor
irrespective of, and without regard to, any actions, suits or proceedings that
are or may be initiated, undertaken or maintained by the Lessors against any
such other guarantor.
16. Without limiting the generality of any of the provisions hereof,
and notwithstanding anything to the contrary contained in this Guaranty, or the
Documents, Guarantors hereby recognize, acknowledge and agree that the
covenants, agreements, duties, and obligations of Guarantors under this Guaranty
are absolute, unconditional and irrevocable, and shall not, directly or
indirectly, in any manner whatsoever be exonerated, discharged, abrogated,
impaired, nullified, suspended, terminated, released or otherwise affected by
any event, condition, circumstance, transaction (regardless of form) or act
(including, without limitation, any alteration, modification, compromise,
waiver, surrender or release of any covenant, agreement, duty or obligation
under the Documents or otherwise comprising part of or included in any of Brier
Oak's Obligations or of any person guaranteeing, giving security for or who is
otherwise directly or indirectly liable for the payment, performance, discharge
or satisfaction of all or any of Brier Oak's Obligations, any bankruptcy or
insolvency of, or any disability affecting Brier Oak, any liquidation,
dissolution, winding-up, termination or other cessation of existence of Brier
Oak or any failure to deliver any notice to Guarantors), which might otherwise
constitute a legal, equitable or other exoneration, release or discharge of a
guarantor or surety (or similarly situated person) under applicable law.
7
17. Guarantors hereby covenant and agree to, and shall, indemnify,
defend and hold harmless the Lessors from and against any and all losses,
liabilities, damages, claims, demands, obligations, actions, settlements, costs
and expenses (including, without limitation, court costs and attorneys' fees)
that the Lessors may suffer, sustain, incur, pay, expend or lay out by virtue,
as a result of or in respect of, in connection with or based upon or arising out
of, directly or indirectly, each and every breach by Guarantors of any of Brier
Oak's Obligations and any or all of the covenants, agreements, representations,
warranties, duties or obligations of Guarantors under the Documents or under
this Guaranty.
18. In the event that any action, suit, or other proceeding is brought
by the Lessors to enforce the obligations of Guarantors under this Guaranty, the
prevailing party shall be entitled to recover all of such party's costs and
expenses (including, without limitation, court costs and reasonable attorneys'
fees) incurred in each and ever such action, suit or other proceeding, including
any and all appeals or petitions therefrom.
19. Guarantors may not assign any of its rights, or delegate any of its
duties or obligations, hereunder without the prior written consent of the
Lessors, and any such assignment or delegation without such prior written
consent of the Lessors shall be void ab initio and of no legal force or effect
whatsoever.
20. This Guaranty shall terminate, if at all, only upon the full,
effective and irrevocable payment, performance, discharge and satisfaction of
each and all of Brier Oak's Obligations and the full, effective and irrevocable
performance by Guarantors of each and all of its covenants, agreements, duties
and obligations under this Guaranty.
21. THIS GUARANTY HAS BEEN MADE AND ENTERED INTO IN THE STATE OF
CALIFORNIA, AND THE INTERNAL SUBSTANTIVE LAWS (AS DISTINGUISHED FROM THE CHOICE
OF LAW RULES) OF SAID STATE SHALL GOVERN THE VALIDITY AND INTERPRETATION HEREOF,
AND THE PERFORMANCE BY GUARANTORS OF ITS DUTIES AND OBLIGATIONS HEREUNDER.
WHENEVER POSSIBLE, EACH PROVISION OF THIS GUARANTY SHALL BE INTERPRETED IN SUCH
MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW. IF ANY PROVISION OF
THIS GUARANTY SHALL BE INVALID OR UNENFORCEABLE UNDER APPLICABLE LAW, SUCH
PROVISION SHALL BE INEFFECTIVE ONLY TO THE EXTENT OF SUCH INVALIDITY OR
UNENFORCEABILITY WITHOUT INVALIDATING OR RENDERING UNENFORCEABLE THE REMAINDER
OF SUCH PROVISIONS OR OF THE REMAINING PROVISIONS OF THIS GUARANTY.
22. The term "Lessors" as used herein shall refer to the Lessors and
also to any assignee of any of the Lessors or any successor in interest to any
of the Lessors, whether by assignment or otherwise.
8
23. The term "Brier Oak" as used herein refers to Brier Oak and also to
any assignee of Brier Oak or any successor in interest to Brier Oak, whether by
assignment or otherwise.
24. This instrument constitutes the entire agreement between Guarantors
and the Lessors with respect to the subject matter hereof, superseding all prior
oral or written agreements or understandings with respect thereto, and may not
be changed, modified, discharged or terminated in any manner other than by an
agreement in writing signed by Guarantors and the Lessors.
IN WITNESS WHEREOF, Guarantors have executed this Guaranty.
RECEIPT OF A TRUE COPY OF THIS GUARANTY IS HEREBY ACKNOWLEDGE
BY THE UNDERSIGNED.
GUARANTORS: /s/ Robert Snukal
- ---------- -------------------------------------------
Robert Snukal
Address: 11900 W. Olympic Blvd # 680
---------------------------
Los Angeles ,CA 90064
---------------------------
/s/ Sheila Snukal
-------------------------------------------
Sheila Snukal
Address: 11900 W. Olympic Blvd # 680
---------------------------
Los Angeles, CA 90064
---------------------------
9