EXHIBIT 10.1
LA BREA CONVALESCENT INVESTMENTS
8417 BEVERLY BOULEVARD, SUITE 205
LOS ANGELES, CALIFORNIA 90048
(213) 651-1100
March 27, 1997
Mr. Robert Snukal, President
c/o Fountain View Management
11900 W. Olympic Blvd., No. 680
Los Angeles, CA 90064
RE: Hancock Park Convalescent Hospital
Hancock Park Retirement Hotel
Gentlemen:
Please have this letter serve as confirmation that on this date we received, by
certified mail, your letter dated March 26, 1997 informing us that you are
exercising the option to renew your leasing the above noted facilities.
Very truly yours,
/s/ Sanford Deutsch
Sanford Deutsch
LEASE OF HANCOCK PARK CONVALESCENT HOSPITAL
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LEASE OF HANCOCK PARK CONVALESCENT HOSPITAL
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TABLE OF CONTENTS
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PAGE
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PRINCIPALS NAMED................................................... 1
RECITALS........................................................... 1
1. DESCRIPTION OF LEASED PROPERTY..................................... 2
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1.1 Convalescent Hospital......................................... 2
1.2 Hospital Equipment............................................ 2
1.3 References.................................................... 2
2. TENANT'S ACCEPTANCE OF LEASED PROPERTY............................. 3
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3. TERM............................................................... 3
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4. RENT............................................................... 4
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4.1 Minimum Monthly Rent.......................................... 4
4.2 Adjustment to Minimum Monthly Rent............................ 4
4.3 Additional Rent............................................... 8
5. TAXES PAID BY TENANT............................................... 9
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6. SECURITY DEPOSIT................................................... 12
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7. LESSOR'S NAME...................................................... 15
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8. USE................................................................ 16
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9. INSURANCE HAZARDS.................................................. 18
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10. COMPLIANCE WITH LAW................................................ 18
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11. WASTE.............................................................. 20
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12. ALTERATIONS AND ADDITIONS.......................................... 20
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13. UTILITIES.......................................................... 22
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14. REPAIRS............................................................ 22
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15. SURRENDER UPON TERMINATION......................................... 23
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16. DAMAGE OR DESTRUCTION.............................................. 24
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16.1 Risk of Loss................................................. 24
16.2 TENANT'S Obligation to Repair and Rebuild.................... 25
16.3 Loss Covered by Insurance.................................... 26
17. TENANT'S INSURANCE................................................. 28
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17.1 Required Coverage............................................ 28
17.2 Full Insurable Value......................................... 30
17.3 Names Insured................................................ 30
17.4 Miscellaneous Requirements of Policies....................... 31
17.5 TENANT'S Obligations, Rights and Remedies
of LESSOR................................................... 32
17.6 Insurance and Exercise of Rights of First
Refusal..................................................... 33
18. LESSOR TO BE HELD HARMLESS......................................... 34
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18.1 Indemnity.................................................... 34
18.2 Exemption of Lessor from Liability........................... 35
19. ENTRY BY LESSOR.................................................... 35
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20. BOOKS AND RECORDS.................................................. 36
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21. ABANDONMENT OF LEASED PROPERTY..................................... 36
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21.1 Trade Fixtures............................................... 36
22. ASSIGNMENT OR SUBLETTING........................................... 37
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23. INVOLUNTARY ASSIGNMENT............................................. 38
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24. DEFAULT............................................................ 40
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24.1 TENANT'S Default............................................. 40
24.2 LESSOR'S Remedies............................................ 40
(a) Re-Entry Without Termination............................ 41
(b) Termination............................................. 42
(c) Receiver................................................ 44
(d) Cure at TENANT'S Expense................................ 44
25. INTEREST ON UNPAID RENT OR OTHER SUMS DUE.......................... 44
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26. LATE CHARGES AND OTHER COSTS....................................... 44
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27. LESSOR'S DEFAULT................................................... 45
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28. CONDEMNATION....................................................... 45
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29. FINANCIAL STATEMENT OF TENANT...................................... 47
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30. BINDING ON SUCCESSORS.............................................. 47
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31. HOLDING OVER....................................................... 47
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32. ESTOPPEL CERTIFICATE............................................... 48
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33. SUBORDINATION...................................................... 49
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34. COVENANT OF AUTHORITY AND QUIET POSSESSION......................... 49
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35. WAIVER............................................................. 50
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36. ABSOLUTE ASSIGNMENT OF RENTS....................................... 51
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37. OPTION TO EXTEND................................................... 51
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38. RIGHT OF FIRST REFUSAL TO PURCHASE LEASED PROPERTY................. 52
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39. TRANSFER OF LESSOR'S INTEREST...................................... 56
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40. NOTICES............................................................ 56
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41. SURRENDER OF LEASE NOT MERGER...................................... 57
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42. ATTORNEYS' FEES.................................................... 58
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43. PROHIBITION AGAINST RECORDING LEASE OR MEMORANDUM OF LEASE......... 58
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44. DESIGNATION OF AGENT FOR SERVICE OF PROCESS........................ 58
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45. QUITCLAIM DEED..................................................... 59
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46. CONSENT OF PARTIES................................................. 60
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47. RENT PAYABLE IN U.S. MONEY......................................... 60
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48. REAL ESTATE BROKERS; FINDERS....................................... 60
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49. EXHIBITS........................................................... 60
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50. APPLICABLE LAW..................................................... 60
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51. SINGULAR AND PLURAL................................................ 60
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52. SEVERABILITY....................................................... 60
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53. CROSS-DEFAULT...................................................... 61
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54. ADDITIONAL REQUIREMENT OF ASSIGNMENT
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OR SUBLETTING...................................................... 61
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SIGNATURE PAGE.................................................... 61
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LEASE OF HANCOCK PARK CONVALESCENT HOSPITAL
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THIS LEASE is a revision of the Lease signed May 19, 1987, by and between:
LA BREA CONVALESCENT INVESTMENTS, a California partnership,
hereinafter referred to as ..... "LESSOR" and the following persons,
jointly and severally:
A.I.B. CORPORATION, a California corporation, hereinafter referred to
as ........... A.I.B., and
ROBERT SNUKAL and SHEILA SNUKAL, husband and wife, hereinafter
referred to as ............... "SNUKAL."
SNUKAL, and A.I.B. are hereinafter referred to, jointly and severally,
as ......................... "TENANT"
RECITALS
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A. LESSOR is the owner of those certain premises with improvements
and appurtenances thereon situated in the City of Los Angeles, County of Los
Angeles, State of California, commonly designated at 505 North La Brea
Avenue, Los Angeles, California.
B. LESSOR is willing to lease to TENANT, and TENANT is willing to
lease from LESSOR, upon the terms and conditions hereinafter set forth, the
real and personal property hereinafter described, on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, IT IS AGREED BY AND BETWEEN THE PARTIES HERETO as
follows:
DESCRIPTION OF LEASED PROPERTY
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LESSOR hereby leases to TENANT, and TENANT leases from LESSOR, upon
the terms and conditions hereinafter set forth, the following real and personal
property:
1
LESSOR hereby leases to TENANT, and TENANT leases from LESSOR, upon the
terms and conditions hereinafter set forth, the following real and personal
property:
1.1. Convalescent Hospital. Those certain premises with improvements
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thereon, situated in the City and County of Los Angeles, State of California,
commonly designated as 505 North La Brea Avenue, Los Angeles, California, on
which there was erected and there is presently operating a skilled nursing
facility, which present operation is known as HANCOCK PARK CONVALESCENT
HOSPITAL, and which real property is more particularly described in EXHIBIT
"1,,, attached hereto and incorporated herein by reference, and is hereinafter
referred to as .......... "HOSPITAL"
1.2. Hospital Equipment. All of the furniture, furnishings,
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fixtures and equipment presently being used in the operation of HOSPITAL, as
more particularly described and itemized in EXHIBIT "2", attached hereto and
incorporated herein by reference and hereinafter referred to as "HOSPITAL
EQUIPMENT"
1.3. References:
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(a) HOSPITAL and HOSPITAL EQUIPMENT are hereinafter collectively
referred to as ...................... "HOSPITAL FACILITY"
(b) HOSPITAL is hereinafter collectively referred to as .............
"REAL PROPERTY"
(c) HOSPITAL EQUIPMENT is hereinafter collectively referred to as
....................... "PERSONAL PROPERTY"
(d) HOSPITAL, and HOSPITAL EQUIPMENT is hereinafter collectively
referred
2
to as ........................... "LEASED PROPERTY"
2. TENANT'S ACCEPTANCE OF LEASED PROPERTY
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2.1. TENANT accepts the LEASED PROPERTY and each and every part thereof in
their state and condition as of the date hereof and without any representation
or warranty by LESSOR as to the condition of such property or as to the use
which may be made thereof except as may otherwise be set forth herein. TENANT
is fully aware of the state and condition of the LEASED PROPERTY and of the
operation thereof.
2.2. LESSOR shall not be responsible for any latent defect in the REAL
PROPERTY nor shall LESSOR be responsible for any change of condition in LEASED
PROPERTY, and the rent, additional rent and/or any sum payable by TENANT
hereunder shall in no case be withheld, diminished or abated on account of any
reason whatsoever, including but not limited to, any defect in or use being made
of the LEASED PROPERTY, any change in the condition or use thereof, any damage
occurring thereto, or the existence with respect thereto of any violations of
the laws or regulations of any governmental authority.
2.3. TENANT acknowledges that HOSPITAL is licensed as a 141 bed skilled
nursing facility and that HOSPITAL is now occupied by less than 141 patients or
residents respectively, and further that some rooms and suites are being used or
have been modified for use on a private or semi-private basis.
3. TERM
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The term of the within Lease shall be for ten (10) years, commencing August
1, 1988 and terminating on July 31, 1998, unless sooner terminated as
hereinafter provided.
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4. RENT
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4.1. Minimum Rent. Monthly rent shall be payable by TENANT to LESSOR
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in lawful money of the United States, without abatement, deduction, set-off,
prior notice or demand, at such place or places that may be designated from time
to time by LESSOR, in monthly installments, payable on the first day of each
month, in advance, commencing August 1, 1988, and continuing thereafter on
the first of every month until the end of the term of this Lease, or any
extension thereof, in the following amounts for the thirty month periods
specified below; provided, however that the minimum monthly rent shall be
subject to adjustments in accordance with the provisions of Paragraph 4.2:
Minimum Monthly Rent
Adjustment (Subject to
Thirty Month Periods of Term Per Paragraph 4.2)
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First: Aug. 1, 1988 to Dec. 31, 1990 $24,265
Jan. 1, 1991 to Jan. 31, 1991 $27,000
Second: Feb. 1, 1991 to July 31, 1993 $27,900
Third: Aug. 1, 1993 to Jan. 31, 1996 $29,100
Fourth: Feb. 1, 1996 to July 31, 1998 $30,600
Thirty Month Periods of Minimum Monthly Rent
(Extended) Term
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Fifth: Aug. 1, 1998 to To be calculated and adjusted
Jan. 31, 2001 pursuant to paragraph 4.2(d)
Sixth: Feb. 1, 2001 to To be calculated and adjusted
July 31, 2003 pursuant to paragraph 4.2(e)
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4.2. Adjustment to Minimum Monthly Rent.
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(a) Definitions As used herein the following definitions shall
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apply:
(1) "Index" shall mean the Consumer Price Index for All Urban
Consumers, Los Angeles, Long Beach, Anaheim, metropolitan area, 1967 equal 100,
published by the Bureau of Labor Statistics of the United States Department of
Labor.
(2) "Adjustment Date(s)" shall mean February 1, 1991, August
1, 1993, February 1, 1996, August 1, 1998 and Feb. 1, 2001.
(3) "Applicable Base Date(s)" shall mean the first month of
the Thirty Month Period preceding the Adjustment Date, as follows:
Adjustment Date Applicable Base Date
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February 1, 1991 August 1988
August 1, 1993 February 1991
February 1, 1996 August 1993
August 1, 1998 February 1996
February 1, 2001 August 1998
(4) "Thirty Month Period" shall mean the six thirty month
periods specified in Paragraph 4.1 above.
(5) "Percentage Increase of Index" shall mean the percentage
increase in the Index between the Applicable Base Date and the Adjustment Date
equal to a fraction, the numerator of which shall be the Index on such
Adjustment Date minus the Index on the Applicable Base Date; and the denominator
of the fraction shall be the Index for the Applicable Base Date.
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(b) Changes or Revisions to Index. If the Index is changed so that
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the base year differs from that in effect when the term commences, the Index
shall be converted in accordance with the conversion factor 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.
(c) Adjustment to Minimum Rent During Initial Term. The minimum
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monthly rent for the Second, Third and Fourth Thirty Month Periods shall be
subject to adjustment as follows:
(1) Second Thirty Month Period. If the Percentage Increase
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of Index on the Adjustment Date, that is, February 1, 1991, shall be 10% or
greater, then the monthly rent for the Second Thirty Month period shall be
$28,350 per month, which is an increase of 5% above the monthly rent for the
First Thirty Month Period. In no event shall the monthly rent for the Second
Thirty Month Period be less than $27,900.
(2) Third Thirty Month Period. If the Percentage Increase of
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Index on the Adjustment Date, that is, August 1, 1993, shall be 12% or greater,
then, the monthly rent for the Third Thirty Month Period shall be an amount
equal to the sum of the minimum monthly rent for the second thirty month period,
as adjusted in accordance with Paragraph 4.2(c)(l), plus 6% of said amount. In
no event shall the monthly rent for Third Thirty Month Period be less than
$29,100 per month.
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(3) Fourth Thirty Month Period. If the Percentage Increase of
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Index on the Adjustment Date, that is February 1, 1996, shall be 14% or greater,
then, the monthly rent for the Fourth Thirty Month Period shall be an amount
equal to the sum of the minimum monthly rent for the Third Thirty Month Period,
as adjusted in accordance with Paragraph 4.2(c)(2) above, plus an amount equal
to 7% of said amount. In no event shall the monthly rent for the Fourth Thirty
Month Period be less than $30,600 per month.
(d) Fifth Thirty Month Period (Extended Term) The minimum monthly
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rent for the Fifth Thirty Month Period, (from August 1, 1998 to January 31,
2001), shall be an amount equal to the sum of the minimum monthly rent for the
Fourth Thirty Month Period, as adjusted pursuant to paragraph 4.2(c)(3) above,
plus the greater of:
(1) One half of the Percentage Increase of Index on the
Adjustment Date, that is, August 1, 1998 multiplied by said minimum monthly rent
for the Fourth Thirty Month Period, as adjusted pursuant to Paragraph 4.2(c);
or,
(2) $2,400.
(e) Sixth Thirty Month Period (Extended Term). The minimum monthly
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rent for the Sixth Thirty Month Period, (from February 1, 2001, to July 31,
2003), shall be an amount equal to the minimum monthly rent for the Fifth Thirty
Month Period, as determined pursuant to paragraph 4.2(d) above, plus the greater
of:
(1) One-half of the percentage Increase of Index on the
Adjustment Date, that is, February 1, 2001,
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multiplied by said minimum monthly rent for the Fifth Thirty Month Period as
determined pursuant to paragraph 4.2(d) above; or
(2) $3,000.
(f) Example. An example of the computation of the adjustment and
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determination of the minimum monthly rent is set forth below:
Example
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Thirty Rent for Thirty Month
Month Adjustment Percentage Period Starting with
Period Date Increase of Index Adjustment Date
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First N/A N/A $27,000
Second Feb. 1, 1991 11% $28,350 (i)
Third Aug. 1, 1993 15% 30,051 (ii)
Fourth Feb. 1, 1996 13% 30,600 (iii)
Fifth: August 1, 1998 10% 33,000 (iv)
Sixth: February 1, 2001 20% 36,300 (v)
(i) 27,000 x 5% = 1,350 + 27,000 = 28,350
(ii) 28,350 x 6% = 1,701 + 28,350 = 30,051
(iii) Percentage increase of Index less than 14% - minimum monthly rent
applies.
(iv) Adjusted monthly rent for Fourth Thirty Month Period plus $2,400 = 30,600
+ 2,400 = 33,000, which is greater than adjusted monthly rent for Fourth Thirty
Month Period plus 1/2 Percentage Increase of Index: $30,600 + (5% x 30,600) =
32,130
(v) Adjusted monthly rent for Fifth Thirty Month Period plus 1/2 Percentage
Increase of Index = 33,000 + (10% x 33,000) = 36,300, which is greater than
adjusted monthly rent for Fifth Thirty Month Period plus $3,000: 33,000 + 3,000
= 36,000.
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(g) The minimum monthly rent as adjusted pursuant to paragraph 4.2 is
sometimes referred to herein as "basic rent" or the "Monthly Rent".
4.3. Additional Rent This Lease is what is commonly called a "net net net
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lease", it being understood that LESSOR shall receive the basic rent set forth
in Paragraph 4 free and clear of any and all other obligations, impositions,
taxes, liens, assessments, fees or other charges in lieu of taxes, rental taxes,
license fees, penalties that may accrue thereon in the event of TENANT'S failure
to pay such amounts (including but not limited to late charges, interest and
penalties incurred for late payment of property taxes), charges or expenses of
any nature whatsoever in connection with the ownership and operation of the
LEASED PROPERTY. In addition to the basic rent, TENANT shall pay to the parties
respectively entitled thereto all taxes, 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 or incurred with respect to the activities in
connection with the LEASED PROPERTY during the term hereof. All of such charges,
costs and expenses shall constitute additional rent and upon the failure of
TENANT 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
TENANT to pay basic rent. It is the intention of the parties hereto that this
Lease shall not be terminable for any reason by the TENANT, and that TENANT
shall in no event be entitled to any abatement of or reduction in rent payable
hereunder, except as
9
herein expressly provided. Any present or future law to the contrary shall not
alter this agreement of the parties.
5. TAXES PAID BY TENANT
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5.1. TENANT, in addition to the basic rent provided for herein, shall pay
all real property taxes, personal property taxes and assessments upon the
LEASED PROPERTY, and upon any improvements, additions or replacements thereof,
which are applicable to the Lease term. All taxes assessed prior to, but
payable in whole or in installments after the effective date of the Lease term,
and all taxes assessed during the term but payable in whole or in installments
after the Lease term, shall be adjusted and prorated, so that LESSOR shall pay
its prorated share for the period prior to and for the period subsequent to the
Lease term.
5.2. LESSOR shall submit to TENANT the real property tax bills, personal
property tax bill and any assessments, upon receipt thereof by LESSOR, TENANT
shall pay such property tax bills, personal property tax bill or assessments
directly to the payee thereof at least ten (10) days prior to the delinquency
date; such procedure to continue during the whole term of this Lease, subject to
such proration for the initial and the last year's taxes or assessments as may
be necessary. TENANT shall promptly forward to LESSOR upon TENANT'S receipt
thereof, copies of receipts or cancelled checks in payment thereof. TENANT
shall, at its cost, provide LESSOR with a tax reporting service through a title
company selected by LESSOR.
If LESSOR'S Lender requires LESSOR to impound real property taxes on a
periodic basis during the term, TENANT, on notice from LESSOR indicating this
requirement, shall pay a sum of money
10
toward its liability under this LEASE to LESSOR on a periodic basis in
accordance with the Lender's requirements. LESSOR shall impound the tax payments
received from TENANT in accordance with the requirements of Lender.
5.3. As used herein, the term "real property tax" shall include any form
of assessment, license fee, 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 REAL PROPERTY or any
part thereof, as against LESSOR,S right to rent or other income therefrom, or as
against LESSOR,S business of leasing the LEASED PROPERTY or any part thereof.
5.4. 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 or of the United States, levies or assesses against
LESSOR a tax, fee, or excise on rents, on the square footage of the REAL
PROPERTY, on the act of entering into this Lease, or on the occupancy of TENANT,
or any other charge, tax, fee, or excise, however described, as a direct
substitution in whole or in part for, or in addition to, any real property
taxes, TENANT shall pay before delinquency that charge, tax, fee, or excise on
rents.
5.5. (a) TENANT or LESSOR shall have the right at its own cost and expense
to contest the validity of any such tax, or assessment provided that no acts
shall be done which create a
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penalty or accrue interest.
(b) LESSOR shall not be required to join in any proceeding or contest
brought by TENANT unless the provisions of any law require that the proceeding
or contest be brought by or in the name of LESSOR or any owner of the Premises.
In that case, LESSOR shall join in the proceeding or contest or permit it to be
brought in LESSOR'S name as long as LESSOR is not required to bear any cost.
TENANT, on final determination of the proceeding or contest, shall immediately
pay or discharge any decision or judgment rendered, together with all costs,
charges, interest, penalties incidental to the decision or judgment.
(c) If TENANT does not pay the real property taxes when due and TENANT
seeks a reduction or contests them as provided in this paragraph, before the
commencement of the proceeding or contest TENANT shall furnish to LESSOR a
surety bond issued by an insurance company qualified to do business in
California. The amount of the bond shall equal one hundred fifty per percent
(150%) of the total amount of real property taxes in dispute. The bond shall
hold LESSOR and the REAL PROPERTY harmless from any damage arising out of the
proceeding or contest and shall insure the payment of any judgment that may be
rendered.
5.6. LESSOR warrants and represents to TENANT that there are no outstanding
special or general assessments against the REAL PROPERTY.
5.7. In the event that the real property taxes upon the LEASED PROPERTY
shall be increased by reason of any sale or transfer of the LEASED PROPERTY, or
any part thereof pursuant to paragraph 38.3 of this Lease, then and in that
event, TENANT and
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LESSOR shall each pay one-half of the amount of said increase.
6. SECURITY DEPOSIT
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6.1. TENANT shall not be required to deposit any security deposit with
LESSOR; except:
(a) In the event TENANT shall assign its interest in this Lease or
sublet all or any part of the LEASED PROPERTY, then, and in that event, as an
additional condition to LESSOR'S consent to such assignment or sublease, LESSOR
may require that such assignee or subtenant (other than an assignee or subtenant
pursuant to paragraph 22.4) deposit a security deposit with LESSOR in the amount
and on the terms and conditions set forth in this Article 6; or
(b) In the event TENANT shall be in breach or default of its
obligations to pay any rent, additional rent or any other sum payable by TENANT
under this Lease on more than three occasions during the term or any extended
term hereof, TENANT shall, upon ten days written notice to TENANT deposit a
security deposit with LESSOR in the amount and on the terms and conditions set
forth in this Article 6.
6.2. If required pursuant to Paragraph 6.1 above, TENANT shall deposit with
LESSOR the sum of ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00) as
security for the full and faithful performance by TENANT of all of the terms,
conditions and provisions of this Lease required to be performed by TENANT.
6.3. LESSOR may use, apply or retain the whole or any part of the security
so deposited to the extent required for the payment of any rent, additional rent
or other sum or sums as to which TENANT is in default, or for any sum which
LESSOR may
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expend or be required to expend in accordance with the terms of this Lease by
reason of TENANT'S default in respect to any of the terms of this Lease,
including, but not limited to, any damages or deficiency in the re-letting of
the LEASED PROPERTY or any part thereof, whether such damages or deficiency
accrued before or after summary proceedings or other legal or equitable
proceedings or other re-entry by LESSOR.
6.4. In the event that TENANT shall have fully and faithfully complied with
all of the terms and conditions of this Lease, the security deposit, without any
interest thereon, shall be returned to TENANT after the date fixed at the end of
the Lease term and after delivery of possession of the LEASED PROPERTY to LESSOR
pursuant to the terms of this Lease.
6.5. (a) In the event of a sale by LESSOR of the LEASED PROPERTY to a third
party other than TENANT, LESSOR shall have the right to transfer the security to
the vendee, provided the vendee shall be obligated to place said security
deposit in a separate account maintained in trust and to return said security
deposit upon the same terms and conditions as in this Lease provided, and upon
the opening of such separate account, the LESSOR shall be released from all
liability for the return of such security. TENANT shall look solely to the new
lessor for the return of such security.
(b) In the event of a sale by LESSOR to one or more of the partners of
LESSOR or an entity in which one or more of the partners of LESSOR own at least
a fifty percent (50%) beneficial interest, then and in that event LESSOR shall
have the right to transfer the security to the vendee, provided the vendee
assumes
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the obligation to hold and return said security deposit upon the same terms and
conditions as in this Lease provided, and upon such assumption, the selling
partners of LESSOR shall be released from all liability for the return of such
security. TENANT shall look solely to the new lesser for the return of such
security. In such event, the security deposit shall not be required to be
deposited in a trust account as set forth in (a) above.
6.6. Provided that TENANT has not during the term of this Lease been in
default or delinquent in the performance of all of the terms and conditions of
this Lease, in the event that TENANT shall purchase the LEASED PROPERTY pursuant
to the "right of first refusal" set forth in Article 39 of this Lease, then and
in that event the security deposit, if any, shall be applied to the balance of
the initial cash down payment for the purchase of the LEASED PROPERTY by TENANT
after, and in addition to, any part of the down payment required to be deposited
in escrow.
6.7. TENANT shall not assign or encumber the monies deposited as security,
and neither LESSOR nor its successor or assigns shall be bound by any such
assignment or encumbrance; except to assignees or transferees approved in
accordance with this Lease.
6.8. In the event any federal or state law, statute, rule, regulation,
ruling or order shall, during the term of this Lease, provide that interest
shall be paid by LESSOR to TENANT on account of LESSOR holding the security
deposit, then TENANT does hereby waive the right to receive such payment or if
such interest is paid, then and in that event, TENANT shall, within ten (10)
days, after receipt thereof, pay to LESSOR, as
15
additional rent hereunder, a sum equal to the amount of the interest that such
laws, statutes, rules, regulations or orders provide shall be paid by LESSOR.
7. LESSOR'S NAME
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7.1. TENANT acknowledges that the names HANCOCK PARK, HANCOCK PARK
CONVALESCENT HOSPITAL and HANCOCK PARK RETIREMENT HOTEL, or any name similar
thereto or a derivative thereof, when used in connection with the operation of
HOSPITAL, HOTEL or any other facility or business engaged in providing
convalescent or skilled nursing care or retirement care or board and care are
the sole and exclusive property of LESSOR.
7.2. LESSOR hereby grants to TENANT, for the term of this Lease or any
renewal or extension thereof, the right to use said names in connection with the
operation and use of HOSPITAL And HOTEL and for no other purpose. The right to
use said names shall terminate upon (a) expiration of the Lease; or (b)
termination of the Lease; or (c) termination of TENANT'S right to possession; or
(d) a change in use of the LEASED PROPERTY or portion thereof.
7.3. Nothing herein contained shall require HANCOCK PARK CONVALESCENT
HOSPITAL, INC. or HANCOCK PARK RETIREMENT HOTEL to change their names during the
term of this Lease, nor shall they be prevented from conducting and maintaining
bank accounts under said names and depositing funds therein and withdrawing
funds therefrom.
7.4. TENANT shall not license, assign or permit anyone else taking or
claiming through or under it to use such names without LESSOR'S prior written
consent which shall not be unreasonably
16
withheld.
8. USE
---
8.1. LESSOR is leasing the HOSPITAL FACILITY to TENANT for the purpose of
operating a skilled nursing facility on the HOSPITAL premises, and HOSPITAL
FACILITY is being leased to TENANT for said purpose only. TENANT may convert the
use of the HOSPITAL FACILITY to a licensed or unlicensed residential care home
with LESSOR'S prior written consent which shall not be unreasonably withheld.
8.2. TENANT shall not use or permit LEASED PROPERTY, or any part thereof,
to be used for any purpose or purposes other than the respective purposes for
which LEASED PROPERTY is hereby leased. TENANT shall not take any act or suffer
or permit any licensing change which would alter, change or reduce any use of
the LEASED PROPERTY permitted hereunder. TENANT shall not take any act or suffer
or permit any change in the configuration of the LEASED PROPERTY which would
alter, change or reduce the potential occupancy of the LEASED PROPERTY.
8.3. TENANT acknowledges that it knows that: a license is required to
operate HOSPITAL FACILITY as a skilled nursing facility on the HOSPITAL
premises; the license of the present TENANT to operate a HOSPITAL FACILITY is
not transferable, and the TENANT will have to obtain its own license to operate
HOSPITAL FACILITY as a skilled nursing facility on the HOSPITAL premises. The
failure of TENANT to obtain any one or more required permit, license or other
authority or approval shall no eliminate TENANT'S obligations under this Lease.
8.4. TENANT shall not remove the PERSONAL PROPERTY, any
17
part thereof, or any improvement, alteration, addition or replacement thereof
during the term of this Lease or any renewal or extension of this Lease;
provided TENANT may remove particular items of PERSONAL PROPERTY with the
consent in writing of LESSOR, where such removal is required to repair same.
8.5. Neither TENANT nor any sublessee, assignee nor any other person or
firm operating, occupying or managing HOSPITAL FACILITY shall enter into any
lifetime care agreement or any lease or other term arrangement in excess of six
(6) months, nor shall they accept any prepaid rent, fees, deposits or other
compensation in excess of an aggregate of FIFTY THOUSAND AND NO/100 DOLLARS
($50,000.00) for all occupants or patients or in excess of an aggregate of TEN
THOUSAND AND NO/lOO DOLLARS ($10,000.00) for any other person or entity;
provided, however, that in no event shall TENANT enter into any agreement or
accept any funds except in accordance with all applicable laws, ordinances,
statutes, regulations or other authority.
8.6. TENANT and TENANT'S sublessees, licensees and assignees or other
persons or firms operating or managing HOSPITAL FACILITY shall promptly inform
LESSOR in writing of any damage or destruction to any part of the LEASED
PROPERTY in excess of TWO THOUSAND AND NO/1OO DOLLARS ($2,000.00), and of any
notice or claim of violation of any law, statute, building code, ordinance, rule
or regulation or other matter concerning or affecting the LEASED PROPERTY.
9. INSURANCE HAZARDS
-----------------
No use shall be made or permitted to be made of the LEASED PROPERTY or
any part thereof, nor acts done, which will cause a
18
cancellation of any insurance policy covering said buildings, or any part
thereof, nor shall TENANT sell, or permit to be kept, used, or sold, in or about
REAL PROPERTY, any article which may be prohibited by the standard form of fire
insurance policies. TENANT shall, at its sole cost and expense, comply with any
and all requirements pertaining to LEASED PROPERTY, of any insurance
organization or company, necessary for the maintenance of reasonable fire and
extended coverage, public liability or other insurance required to be provided
hereunder covering said LEASED PROPERTY or the operations thereon.
10. COMPLIANCE WITH LAW
-------------------
10.1. TENANT shall, at its sole cost and expense, comply promptly with all
laws, statutes, ordinances, rules, regulations, orders and requirements of all
municipal, county, state and federal authorities now in force, or which may
hereafter be in force, pertaining to or regulating the use or maintenance of the
LEASED PROPERTY with respect to the operation or business on the LEASED PROPERTY
in effect from time to time as permitted under the provisions of this Lease, and
TENANT shall faithfully observe in the use and maintenance of the LEASED
PROPERTY all municipal, county, state and federal laws, statutes, rules,
ordinances, regulations and received requirements now in force or which may
hereafter be in force.
10.2. The final judgment of any court of competent jurisdiction or the
admission of TENANT in any action or proceeding against TENANT, whether LESSOR
be a party thereto or not, that TENANT has violated any such law, ordinance,
rule, regulation, order, statute or requirement in the use of the
19
LEASED PROPERTY shall be conclusive as between LESSOR and TENANT.
10.3. TENANT acknowledges that a skilled nursing facility, commonly called
a "convalescent hospital" and a licensed residential care home are unique
facilities and that a substantial violation of governmental requirements with
respect to such unique facilities can cause severe damage to such facilities,
including but not limited to the reputation, good will and economic viability of
such facilities. Therefore, TENANT acknowledges and agrees that the failure of
TENANT to perform its obligations and duties under this Article 10 is a material
breach of and default under this Lease, that such failure may result in
substantial injury and damage to LESSOR, and that TENANT shall be liable to
LESSOR for any and all damages, whether direct or consequential that may be
suffered, incurred or sustained by LESSOR on account of such breach or default
including, but not limited to, reasonable attorneys, fees, injury and damage to
the name and reputation of LESSOR; notwithstanding the foregoing TENANT may
promptly in good faith change the use in accordance with Article 8 hereof.
10.4. TENANT shall, within twenty-four (24) hours of receipt of notice of
any Class A violation of the California Health & Safety Code, any violation,
order or proceeding which directly places in jeopardy the continued licensing of
the HOSPITAL as a skilled nursing facility for which the HOSPITAL is presently
licensed or places in jeopardy the continued certification of TENANT as a
Medicare or Medi-Cal provider, give written notice to LESSOR by certified mail
return receipt requested. Such notice shall include a copy of all applicable
20
documents. The failure of TENANT to comply with this Section 10.4 shall be a
material non-curable default under this Lease.
11. WASTE
-----
TENANT shall not commit, or suffer to be committed, any waste upon the
LEASED PROPERTY, or any nuisance, nor shall TENANT use, permit or suffer any use
of the LEASED PROPERTY which would tend to create waste or any nuisance.
12. ALTERATIONS AND ADDITIONS
-------------------------
12.1. TENANT shall not, without LESSOR'S prior written consent, change the
configuration of or move any walls in HOSPITAL or make any alterations,
improvements, additions, or utility installations in, on or about the LEASED
PROPERTY, except that TENANT may make non-structural alterations the cost of
which do not exceed FIFTY THOUSAND AND NO/lOO DOLLARS ($50,000.00) in the
aggregate. As used in this Article 12, the term "utility installations" shall
include, but not be limited to, bus ducting, power panels, fluorescent fixtures,
space heaters, conduits and wiring. As a condition to giving such consent,
LESSOR may require that TENANT agree to remove any such alterations,
improvements, additions or utility installations at the expiration of the term,
and to restore the LEASED PROPERTY to its prior condition. As a further
condition to giving such consent, LESSOR may require TENANT to provide LESSOR,
at TENANT'S sole cost and expense, with a lien and completion bond in an amount
equal to one and one-half (1-1/2) times the estimated cost of such alterations,
improvements, or additions to insure LESSOR against any liability for mechanics,
and materialmen's liens and to insure completion of the work.
21
12.2. TENANT shall pay, when due all claims for labor or materials
furnished or alleged to have been furnished to or for TENANT at or for use in,
on or adjacent to the LEASED PROPERTY, which claims are or may be secured by any
mechanics, or materialmen's, lien against the LEASED PROPERTY, or any interest
therein. TENANT shall give LESSOR not less than ten (10) days, notice prior to
the commencement of any work in, on or adjacent to the LEASED PROPERTY, and
LESSOR shall have the right to post notices of non-responsibility in or on the
REAL PROPERTY as provided by law.
12.3. Unless LESSOR requires their removal, as set forth in Paragraph
12.1, all alterations, improvements, additions, and replacements to or of the
LEASED PROPERTY and all utility installations (whether or not such utility
installations constitute trade fixtures of TENANT), which may be made on the
LEASED PROPERTY, shall become the property of LESSOR and remain upon and be
surrendered with the LEASED PROPERTY at the expiration of the term. TENANT'S own
machinery and equipment other than:
(a) That which is affixed to the REAL PROPERTY so that it cannot be
removed without substantial damage to the REAL PROPERTY; and
(b) All alterations, improvements, additions, and replacements of
the LEASED PROPERTY and all utility installations; shall remain the property of
TENANT and may be removed by TENANT subject to the provisions of Article 15.
13. UTILITIES
---------
13.1. TENANT shall pay for all water, gas, heat, light,
22
steam, electricity, power, telephone and other utilities and services supplied
to the LEASED PROPERTY, together with any taxes thereon. LESSOR shall not be
required to furnish to TENANT any facilities, services or utilities of any kind.
13.2. TENANT shall, at the commencement of the term of this Lease, cause
all of the utilities supplied to the LEASED PROPERTY, to be transferred and
billed directly to TENANT, which shall include all water, gas, heat, light,
power, telephone service and other utilities.
14. REPAIRS
-------
14.1. TENANT shall, at its own costs and expense, make all necessary
repairs, replacements and improvements to the LEASED PROPERTY and to the pipes,
heating or cooling system, plumbing system, window glass, fixtures and other
appliances and appurtenances belonging thereto, all equipment used in connection
with the LEASED PROPERTY, and the sidewalks, curbs, and vaults adjoining or
appurtenant to the REAL PROPERTY. Such repairs, replacements and improvements,
interior and exterior, ordinary as well as extraordinary, and structural as well
as non-structural, shall be made promptly, as and when necessary, including
but not limited to any repairs, replacements or improvements required by any
appropriate governmental authority. All repairs replacements and improvements
shall be in quality and class at least equal to the original work.
14.2. TENANT hereby waives all rights to make repairs at the expense of
LESSOR as provided in Section 1942 of the Civil Code of the State of California,
and all rights provided for by Section 1941 of said Civil Code. LESSOR shall
have no obligation
23
or duty to make any repairs, replacements or improvements of whatsoever kind or
nature.
14.3. If TENANT fails to perform TENANT'S obligation under this Article
14, LESSOR may at its option (but shall not be required to) enter upon the REAL
PROPERTY, after three (3) days, prior written notice to TENANT, and make such
repairs and replacements, and the cost thereof together with interest thereon at
the rate of ten percent (10%) per annum shall become due and payable as
additional rent to LESSOR, together with TENANT'S next rental installment.
15. SURRENDER UPON TERMINATION.
--------------------------
15.1. TENANT shall vacate and surrender the LEASED PROPERTY and any
additions to or replacements thereof in good order and repair, ordinary wear and
tear excepted, in a condition acceptable to all governing or licensing
authorities and TENANT shall remove all of its property therefrom so that LESSOR
can take possession of the LEASED PROPERTY not later than noon on the day upon
which this Lease or any extension thereof expires, whether upon notice or by
holdover or otherwise, or any sooner termination of this Lease.
15.2. LESSOR shall have the same rights to enforce this covenant by
summary proceedings, ejectment and for damages or otherwise as for the breach of
any other condition or covenant of this Lease.
15.3. TENANT may at any time prior to or upon the termination of this
Lease or any renewal or extension thereof, remove from the REAL PROPERTY,
TENANT'S own equipment and machinery except for all alterations, improvements,
additions and
24
replacements of or to the LEASED PROPERTY and all utility installations,
provided, however, that such property owned by TENANT is removed without
substantial injury to the LEASED PROPERTY.
15.4. No injury shall be considered substantial if it is promptly
corrected by restoration to the condition prior to the installation of such
property, if so requested by LESSOR. Any such property not removed shall become
the property of LESSOR.
16. DAMAGE OR DESTRUCTION
---------------------
16.1. Risk of Loss. No damage or destruction, whether partial or total, to
------------
the LEASED PROPERTY, or any part thereof, or any substitute therefor, or any of
the equipment, fixtures and machinery used in the operation and maintenance
thereof, by fire, wind, storm, or any other cause whatsoever, whether or not
such damage or destruction is covered by insurance under this Lease, shall
entitle TENANT to surrender possession of the LEASED PROPERTY, or any part
thereof, to terminate this Lease, to violate any of its provisions, or to cause
any rebate or abatement in rent then due or thereafter becoming due under the
terms hereof.
Notwithstanding the foregoing, in the event as a result of any such damage
or destruction of the LEASED PROPERTY, TENANT is required by any governmental
authority to remove more than fifty percent (50%) of the patients occupying REAL
PROPERTY at the time of damage or destruction, the following shall apply: (a) in
the event TENANT is unable to obtain rental or business interruption insurance,
then the monthly basic rent shall, until the sooner of the repair of such damage
or destruction or the expiration of six
25
(6) months from the date thereof be decreased to an amount equal to one-half
(1/2) of the payments required under notes secured by deeds of trust encumbering
all or any part of the REAL PROPERTY, or (b) in the event TENANT'S business
interruption or rental insurance is in an amount less than one hundred percent
(100%) of the monthly basic rent then in effect, TENANT shall until the sooner
of the repair of such damage or destruction or the expiration of six (6) months
from the date thereof pay monthly basic rent in an amount equal to the amount of
such insurance plus one-half (1/2) of the difference between the basic rent then
in effect and the amount of such insurance. In either of such events, TENANT
shall pay all additional rent or other sums hereunder.
16.2 TENANT'S Obligation to Repair and Rebuild.
-----------------------------------------
(a) In case of any such damage or destruction to the LEASED PROPERTY,
or any part thereof, by wind, fire, storm or any cause whatsoever, whether
partial or total, whether or not such damage or destruction is covered by
insurance, TENANT will, at its own cost and expense and at such time and upon
the conditions set forth in this Article 16, restore, repair, replace, rebuild,
or alter the same as nearly as possible to the condition such property was in
immediately prior to such damage or destruction.
(b) Such restoration, repair, replacement, rebuilding, or alteration
shall be commenced within a reasonable time after such damage or destruction.
After such work has been commenced, it shall be prosecuted to completion with
reasonable diligence.
16.3. Loss Covered by Insurance.
-------------------------
(a) In the event such damage or destruction is covered
26
by insurance, all insurance money received by LESSOR, holder of any security
interest, beneficiary or mortgagee on account of such damage or destruction
(with the consent of and subject to the rights of the holder of any security
interest, including but not limited to, the beneficiary of any deed of trust and
the mortgagee under any mortgage against the REAL PROPERTY, PERSONAL PROPERTY or
any part thereof) less the cost, if any, of such recovery, shall be applied by
LESSOR or such holder, beneficiary or mortgagee to the payment of the cost of
such restoration, repair, replacement, rebuilding, or alteration (hereinafter
referred to as the "work"), including expenditures made for temporary repairs or
for the protection of property pending the completion of permanent restoration,
repair, replacement, rebuilding, or a1teration to the LEASED PROPERTY, and shall
be paid out, as hereinafter provided, from time to time, as such work
progresses, upon the written request of TENANT, which shall be accompanied by
the following:
(i) A certificate of the architect, engineer, or licensed building
contractor in charge of the work, dated not more than thirty (30) days prior to
such request, setting forth that the sum then requested either has been paid by
TENANT or is justly due to contractors, sub-contractors, materialmen, engineers,
architects, or other persons (whose names and addresses shall be stated), who
have rendered services or furnished materials for certain work. Such certificate
shall give a brief description of such services and materials, shall list the
several amounts so paid or due to each of such persons, shall state the fair
value of such work at the date of the
27
requisition, and shall state that no part of such expenditures has been or is
being made the basis for any other request for payment. Such certificate shall
state also that except for the amounts listed therein, there is no outstanding
indebtedness known to such architect, engineer or contractor after due inquiry,
which is then due for labor, wages, materials, supplies, or services in
connection with such work which, if unpaid, might become the basis of a vendor's
mechanic's, laborer's, materialman's or similar lien upon such work or upon the
LEASED PROPERTY, or any part thereof.
(ii) An affidavit sworn to by TENANT that all materials and all
property constituting the work described in such certificate of the architect,
engineer or contractor are free and clear of all mortgages, liens, charges or
encumbrances, except encumbrances, if any, securing indebtedness due to persons
specified in such certificate which are to be discharged upon payment of such
indebtedness.
(b) At the written request of TENANT, and upon compliance with and subject
to the foregoing provisions of this Paragraph 16.3, LESSOR shall request such
holder, beneficiary or mortgagee to pay, out of such insurance money to the
persons named in such certificate, the respective amounts stated in such
certificate to be due to them, or shall pay to the TENANT the amount stated in
such certificate to have been paid by TENANT; provided, however, that such
payments shall not exceed in amount the fair value of the relevant work as
stated in such certificate.
(c) Notwithstanding the foregoing provisions of this
28
Paragraph 16.3, any insurance monies in the hands of LESSOR or such beneficiary,
mortgagee shall not be required to be paid out if, at the time of the request
for payment, the TENANT is in default in the performance of any term, covenant
or condition of this Lease as to which notice of default has been given until
such default is remedied unless the payment of said moneys is reasonably
required with respect to the correcting of said default.
17. TENANT'S INSURANCE
------------------
17.1. Required Coverage. TENANT shall keep the LEASED PROPERTY and each
-----------------
and every part thereof and the operation of the HOSPITAL FACILITY insured
throughout the term of this Lease against the following:
(a) Loss or damage by fire and such other risks as may be included in
the broadest form of extended coverage insurance, as is hereinafter specifically
defined, from time to time available in amounts sufficient to prevent LESSOR or
TENANT from becoming a co-insurer within the terms of the applicable policies,
and in any event, in an amount not less than one hundred percent (100%) of the
then full insurable value.
(b) Loss or damage from leakage of sprinkler systems now or hereafter
installed in the buildings on the REAL PROPERTY in an amount not less than one
hundred percent (100%) of the then full insurable value.
(c) Loss or damage by explosion of steam boilers, pressure vessels,
or similar apparatus, now or hereafter installed in the buildings on the REAL
PROPERTY, in such limits with respect to any one accident as may be reasonably
requested
29
by LESSOR from time to time.
(d) Loss of rental and or business interruption insurance covering
risk of loss due to the occurrence of any of the hazards described in the
preceding sub-paragraphs of this paragraph 17.1, in an amount sufficient to
prevent the LESSOR from becoming a coinsurer, but in any event, in an amount not
less than one hundred percent (100%) of the then full basic rental income of
eighteen (18) months, including all other charges to be paid hereunder, such
policy or policies to be obtained and paid for by TENANT as frequently as
required.
(e) Claims for personal injury and/or property damage, under a policy
of comprehensive general public liability insurance against any liability
arising out of the ownership, use, occupancy or maintenance of the LEASED
PROPERTY and all areas appurtenant thereto, with such limits as may reasonably
be requested by LESSOR from time to time, but not less than ONE MILLION AND
NO/100 DOLLARS ($1,000,000.00) for injury to or death of any one person in any
one accident or occurrence and in an amount of not less than TWO MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00) for injury to or death of
more than one person in any one accident or occurrence and ONE MILLION AND
NO/100 DOLLARS ($1,000,000.00) for property damage or in such other reasonable
amounts requested by LESSOR from time to time.
(f) Against such other hazards and in such amounts as the holder of
any security interest, mortgage or deed of trust to which this LEASE is
subordinate may reasonably require from time to time pursuant to the provisions
of said security interest, mortgages and deeds of trust.
30
(g) Against claims, losses and damages under a policy of full
coverage plate glass insurance.
(h) Any and all risks covered by a full coverage policy of workman's
or worker's compensation insurance under the laws of the State of California.
(i) Against all risks under a full coverage policy of malpractice
insurance or other such insurance covering the operation of HOSPITAL FACILITY,
with such limits as may reasonably be requested by LESSOR from time to time, but
not less than ONE MILLION AND NO/100 DOLLARS ($1,000,000.00).
17.2. Full Insurable Value. The term "full insurable value" shall mean
--------------------
the actual replacement cost, less physical depreciation, excluding foundation
and excavation costs. The full insurable value shall be determined whenever
reasonably requested by TENANT, by a qualified appraiser selected and paid by
TENANT and acceptable to LESSOR. The finding of such appraiser shall not be
binding without the written approval of LESSOR, which approval shall not be
unreasonably withheld.
17.3. Named Insured.
-------------
(a) The rental value insurance policy above described shall name only
LESSOR as the insured. However, TENANT may furnish a combined rental and use and
occupancy or business interruption policy, provided that LESSOR shall be named
as the insured and the first payee with respect to an amount equal to the annual
fixed rent and real estate taxes and additional rent, and TENANT shall be named
as the payee with respect to any remaining proceeds for business interruption
insurance. Any payments actually received by LESSOR under the rental value
31
insurance or business interruption insurance policy or policies, shall be
applied by LESSOR toward the rentals or other sums due or payable by TENANT in
the order determine by LESSOR.
(b) All other policies of insurance shall name LESSOR and TENANT as
the insureds, as their respective interests may appear. At the request of
LESSOR, any insurance policy shall be made payable to the holders of any
security interest, mortgage or deeds of trust to which this Lease is at any time
subordinate, as the interest of such holders may appear.
17.4. Miscellaneous Requirements of Policies.
--------------------------------------
(a) All insurance provided for in this Lease shall be effected under
enforceable policies issued by insurers of recognized responsibility licensed to
do business in this State and rated AAA by "Best's Insurance Guide".
(b) All policies shall contain an agreement by the Insurers:
(i) That any loss shall be payable to LESSOR or the holders of
any security interest, mortgage or deeds of trust to which this Lease is
subordinate, as the interest of such holders may appear, notwithstanding any act
or negligence of TENANT which might otherwise result in the forfeiture of such
insurance;
(ii) That such policies shall not be cancelled or subject to
reduction of coverage or other modification except after ten (10) days written
notice to LESSOR and to the holders of any mortgage or deed of trust to whom
loss may be payable and
(iii) That the coverage afforded thereby shall not be affected by
the performance of any work in or about the REAL
32
PROPERTY.
(c) If TENANT provides any insurance required by this Lease in the
form of a blanket policy, TENANT shall furnish satisfactory proof that such
blanket policy complies in all respects with the provisions of this Lease, and
that the coverage thereunder is at least equal to the coverage which would be
provided under a separate policy covering only the LEASED PROPERTY.
17.5. TENANT'S Obligations. Rights and Remedies of LESSOR.
----------------------------------------------------
(a) TENANT agrees that it will pay all premiums and charges on all
of the insurance required to be carried by it, promptly when same become due and
to furnish LESSOR with satisfactory evidence of the payment of the premium of
any policy within ten (10) days after such premium shall become due and payable,
and if TENANT shall fail to pay such premiums and charges when due, or fail to
furnish satisfactory evidence of payment of premiums on any policy, or fail to
place or maintain such insurance, then LESSOR may, without having the obligation
to do so, place such insurance or pay the premiums and charges therefor, and in
the event of such payment by LESSOR, the amount paid may, at the option of
LESSOR, be added as additional rent to the installment of rent next accruing, or
to any subsequent installment and shall be collectible as additional rent in the
same manner and with the same remedies as if it had been originally reserved and
designated as rent.
(b) All policies of insurance herein provided, or certificates
thereof, at the option of LESSOR, shall be delivered to LESSOR not later than
ten (10) days from the commencement of
33
the term of this Lease, accompanied by evidence satisfactory to LESSOR that the
premiums thereon have been paid for at least one (1) year, and thereafter, upon
the renewal period or periods, further satisfactory evidence is to be submitted
to LESSOR that the premiums for the next ensuing period (never less than for one
(1) year on such insurance policies have been paid.)
(c) Within ten (10) days after the expiration of any policy, TENANT
shall deliver the original renewal policy for such insurance to LESSOR, or
LESSOR may, but shall not be required to order such insurance and charge the
cost thereof to TENANT to be added as additional rent to the installment of rent
next accruing or to any subsequent installment and shall be payable and
collectible as additional rent in the same manner and with the same rights and
remedies as if it had been originally reserved and designated as rent.
(d) Nothwithstanding the time provided for delivery of policies or
certificates of insurance, such insurance coverage shall be provided at all
times and there shall be no time when any such policy is not in effect.
17.6 Insurance and Exercise of Rights of First Refusal. In the event
-------------------------------------------------
TENANT shall exercise the right of first refusal to purchase the LEASED
PROPERTY, as provided in Article 39 hereinbelow, as additional security for
any promissory note and deed of trust to be issued by Buyer to Seller, the
Buyer, so long as such promissory note secured by deed of trust shall not have
been fully paid and discharged, shall maintain the same type of insurance
policies as are provided hereinabove, excepting only that the amount to be
insured for the business interruption, use
34
and occupancy, shall be not less per month than the monthly payments of interest
and principal under such promissory note and deed of trust to be paid by Buyer
to Seller for a period of eighteen (18) months; and such proceeds of business
interruption insurance policies and all other policies as shall be received by
Seller, shall be applied towards the monthly principal and interest payments due
him under the note and deed of trust in inverse order.
18. LESSOR TO BE HELD HARMLESS
--------------------------
18.1. Indemnity. As a material consideration to be rendered to LESSOR,
---------
TENANT shall indemnify and hold harmless LESSOR from and against any and all
claims arising from TENANT'S use of the LEASED PROPERTY, or from the conduct of
TENANT'S business or from any activity, work or things done, permitted or
suffered by TENANT in or about the REAL PROPERTY 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 TENANT'S part
to be performed under the terms of this Lease, or arising from any negligence of
the TENANT, or any of TENANT,S agents, contractors, employees, assignees,
sublessees, business invitees or other persons or entities taking through or
under TENANT, and from and against all costs, attorney's fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon; and in case any action or proceeding be brought
against LESSOR by reason of any such claim, TENANT upon notice from LESSOR shall
defend the same at TENANT'S expense by counsel satisfactory to LESSOR. TENANT,
as a material part of the
35
consideration to LESSOR, hereby assumes all risk of damage to property or injury
to persons, in, upon or about the REAL PROPERTY arising from any cause, and
TENANT hereby waives all claims in respect thereof against LESSOR.
18.2. Exemption of Lessor from Liability. TENANT, as a material
----------------------------------
consideration to be rendered to LESSOR, hereby agrees that LESSOR shall not be
liable for injury to TENANT'S business or any loss of income therefrom or for
damage to the goods, wares, merchandise or other property of TENANT, TENANT'S
employees, invitees, customers, or any other person in or about the LEASED
PROPERTY, nor shall LESSOR be liable for injury to the person of TENANT,
TENANT'S employees, agents or contractors, for any reason whatsoever, 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 LEASED PROPERTY, 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 or beyond the control of TENANT.
19. ENTRY BY LESSOR.
---------------
TENANT shall permit LESSOR and his agents to enter into and upon REAL
PROPERTY at all reasonable times for the purpose of inspecting the LEASED
PROPERTY, even though LESSOR has no duty with respect thereto, or, if TENANT
shall default in its duty to do so, for the purpose of maintaining the LEASED
PROPERTY, or any
36
part thereof, or for the purpose of making repairs, alterations, or additions to
any other portion of the LEASED PROPERTY, including the erection and maintenance
of such scaffolding, canopies, fences and props as may be required, or for the
purpose of posting notices of non-liability for alterations, additions, or
repairs, and if as a result of TENANT'S default without any rebate of rent and
without any liability to TENANT for any loss of occupation or quiet enjoyment of
the LEASED PROPERTY thereby occasioned.
20. BOOKS AND RECORDS.
-----------------
20.1. TENANT shall keep and maintain on the REAL PROPERTY full and
complete medical records covering all patients in HOSPITAL and all other records
required to be maintained by or provided under MEDI-CARE, MEDI-CAL or any other
governmental authority for a period of at least seven (7) years, and TENANT
shall cause all its assignees, sub-tenants, licensees and agents to do the same.
20.2. Upon any default by TENANT, and within three (3) days after written
request to do so, TENANT shall cause all such records and all books of account,
and subsidiary ledgers or journals with respect to the operations at the LEASED
PROPERTY to be available to LESSOR or its representatives at the office at the
REAL PROPERTY and LESSOR shall have the right to copy, inspect and audit (by its
representatives, employees or agents) such books of account and other records.
TENANT and TENANT'S sub-tenants, assignees, licensees and agents shall upon such
three (3) days notice by LESSOR, make all such records available for said
examination, provided that if TENANT or any person or
37
entity taking by or through TENANT is charged with any violation of law or
LESSOR reasonably believes any such violation exists, inspection may be made
forthwith upon demand.
21. ABANDONMENT OF LEASED PROPERTY
------------------------------
21.1. Trade Fixtures. TENANT shall not vacate or abandon the LEASED
--------------
PROPERTY or cease operating a business thereon permissible under the provisions
of Article 8; and if TENANT shall abandon, vacate, or surrender the LEASED
PROPERTY, or be dispossessed by process of law, or otherwise, any personal
property belonging to TENANT and left on the REAL PROPERTY shall be deemed to be
abandoned, at the option of LESSOR.
22. ASSIGNMENT OR SUBLETTING
------------------------
22.1. TENANT shall not assign this Lease, or any interest therein, and
shall not sublet the LEASED PROPERTY or any part thereof, or any right or
privilege appurtenant thereto, or suffer any other person (the agents and
servants of TENANT excepted) to occupy or use the LEASED PROPERTY, or any
portion thereof, without the written consent of LESSOR first had and obtained,
which consent shall not be unreasonably withheld.
22.2. Any assignee of this Lease shall be required, prior to such
assignment to execute an agreement required by LESSOR assuming TENANT'S
obligations under this Lease.
22.3. If any TENANT is a corporation, any dissolution merger,
consolidation or other reorganization of the corporate TENANT, or the sale or
transfer of a controlling percentage of the capital stock of the corporate
TENANT, or the sale of at least 51% of the value of the assets of the corporate
TENANT, shall be deemed an assignment requiring the prior written consent
38
of LESSOR. The phrase "controlling percentage" means the ownership of, and the
right to vote, stock possessing at least 51% of the total combined voting power
of all classes of the corporate TENANT'S capital stock issued, outstanding, and
entitled to vote for the election of directors. Any change in the controlling
percentage shall also be deemed an assignment requiring LESSOR'S prior written
consent. If any TENANT is a partnership, a withdrawal or change, voluntary,
involuntary or by operation of law, of the partners owning 51% or more of the
partnership, or the dissolution of the partnership shall be deemed an assignment
requiring LESSOR'S prior written consent.
22.4. TENANT shall have the right, without LESSOR'S prior written consent,
to assign this Lease or to sublet the LEASED PROPERTY to a corporation of which
ROBERT SNUKAL is the owner of at least 51% of the outstanding capital stock
provided that the corporation executes an agreement required by LESSOR assuming
TENANT'S obligations under this Lease and that LESSOR is notified not less than
thirty days prior to such assignment or subletting.
22.5. A consent to one assignment, subletting, occupation, or use by
another person shall not be deemed to be a consent to any subsequent assignment,
subletting, occupation, or use by the same or another person. Any such
assignment or subletting and/or any attempted such assignment or subletting
without such written consent of LESSOR shall be void and shall be a non-curable
default under this Lease, and LESSOR may, at its option, terminate this Lease
upon three (3) days, written notice to TENANT at any time after such actual or
attempted assignment or subletting and without regard to TENANT'S prior
knowledge
39
thereof.
23. INVOLUNTARY ASSIGNMENT
----------------------
23.1. No interest of TENANT in this Lease shall be assignable by operation
of law (including, without limitation, the transfer of this Lease by will or
intestacy) . Each of the following acts shall be considered an involuntary
assignment:
(a) If TENANT is or becomes bankrupt or insolvent, makes an
assignment for the benefit of creditors, or institutes a proceeding under the
Bankruptcy Act in which TENANT is the bankrupt, or an involuntary proceeding is
brought against TENANT under the Bankruptcy Act; or, if TENANT is a partnership
or consists of more than one person or entity, if any partner of the partnership
or other person or entity is or becomes bankrupt or insolvent, or makes an
assignment for the benefit of creditors;
(b) If a writ of attachment or execution is levied on this Lease;
(c) If, in any proceeding or action to which TENANT is a party, a
receiver is appointed with authority to take possession of the LEASED PROPERTY
or any part thereof;
(d) If a writ of attachment or execution is levied on the LEASED
PROPERTY or any part thereof, TENANT shall have thirty (30) days in which to
cause the attachment or execution to be removed. If any involuntary proceeding
in bankruptcy is brought against TENANT, or if a receiver is appointed, TENANT
cure shall have sixty (60) days in which to have the involuntary proceeding
dismissed or the receiver removed.
23.2. Except as provided in paragraph 23.3 an involuntary assignment shall
constitute a material default by TENANT under
40
this Lease, and LESSOR shall have the right to elect to terminate this Lease, in
which case this Lease shall not be treated as an asset of TENANT. Such right to
terminate this Lease shall be in addition to and cumulative with such other
rights and remedies that LESSOR may have hereunder or as may now be or hereafter
provided by law.
23.3. The death of both ROBERT SNUKAL and SHEILA SNUKAL and the transfer
of their interest in this Lease by will or intestacy (except a transfer by the
estate of one of them to the survivor of them) shall be an involuntary
assignment of this Lease, but shall not be a default hereunder. In the event of
the death of both ROBERT SNUKAL and SHEILA SNUKAL this Lease shall not be
treated as an asset of such TENANTS and LESSOR shall have the right to elect to
terminate this Lease within sixty (60) days after receipt by LESSOR of written
notice of the death of both ROBERT SNUKAL and SHEILA SNUKAL without further
liability by TENANTS.
24. DEFAULT
-------
24.1. TENANT'S Default. The occurrence of any of the following shall
----------------
constitute a default by TENANT:
(a) Failure to pay rent, additional rent or any other sum
or sums payable by TENANT hereunder when due, if the failure continues for three
(3) days after notice has been given to TENANT.
(b) Abandonment and vacation of the REAL PROPERTY or the
PERSONAL PROPERTY.
(c) Failure to perform any other provision of this Lease
if the failure to perform is not cured within ten (10)
41
days after notice has been given to TENANT. Provided, that if the default is
under Article 16.2 hereof and such default cannot reasonably be cured within ten
(10) days, TENANT shall not be in default of this Lease if TENANT commences to
the default within the ten (10) day period and diligently and in good faith
continues to cure the default.
24.2. LESSOR'S Remedies. In the event of a default by TENANT under
this Lease, LESSOR shall have the following remedies, these remedies are not
exclusive; they are cumulative and are in addition to any remedies now or later
allowed by law and in addition to any other rights and remedies of LESSOR under
any provision of this Lease:
(a) Re-Entry Without Termination. LESSOR shall have the immediate
right of re-entry and may remove all persons and property from the REAL
PROPERTY; such property may be removed and stored in a public warehouse or
elsewhere at the cost of, and for the account of TENANT.
(i) Should LESSOR elect to re-enter, as herein provided, or
should he take possession pursuant to legal proceedings or pursuant to any
notice provided for by law, LESSOR may either terminate this Lease or LESSOR may
from time to time, without terminating this Lease, relet the REAL PROPERTY
and/or the PERSONAL PROPERTY, or any part thereof, for such term or terms
(which may be for a term extending beyond the term of this Lease) and at such
rental or rentals and upon such other terms and conditions as LESSOR in his sole
discretion may deem advisable with the right to make repairs to said REAL
PROPERTY and PERSONAL PROPERTY; upon each such re-letting
42
(ii) TENANT shall be liable immediately to pay to LESSOR:
(aa) All costs LESSOR incurs in reletting the LEASED
PROPERTY, including, without limitation, broker's commissions, expenses of
remodeling the LEASED PROPERTY required by the reletting, expenses of repairing
the LEASED PROPERTY and like costs. Reletting can be for a period shorter or
longer than the remaining terms of this Lease; and
(bb) The amount, if any, by which the rent, additional
rent and all other sums reserved in this Lease from the period of such re-
letting (up to but not beyond the term of this Lease) exceeds the amount agreed
to be paid as rent for the LEASED PROPERTY for such reletting, payable monthly;
or
(iii) At the option of LESSOR, rents received by such
LESSOR from such reletting shall be applied: first, to the payment of any
indebtedness, other than rent due hereunder from TENANT to LESSOR; second, to
the payment of any costs and expenses of such reletting and of such repairs;
third, to the payment of rent due and unpaid hereunder and the residue, if any,
shall be held by LESSOR and applied in payment of future rent as the same may
become due and payable hereunder.
(iv) If TENANT has been credited with any rent to be
received by such reletting under this paragraph 24 and such rent shall not be
promptly paid to LESSOR by the new tenant, or if such rentals received from
such reletting under this paragraph 24.2 during any month be less than that to
be paid during that month by TENANT hereunder, TENANT shall pay any such
43
deficiency to LESSOR. Such deficiency shall be calculated and paid monthly.
(v) No such re-entry or taking possession of said Premises
by LESSOR shall be construed as an election on LESSOR'S part to terminate this
Lease unless a written notice of such intention be given to TENANT or unless the
termination thereof be decreed by a court of competent jurisdiction.
Notwithstanding any such reletting without termination, LESSOR may at any time
thereafter elect to terminate this Lease for such previous breach and such re-
entry by LESSOR.
(b) Termination. LESSOR may terminate this Lease and TENANT'S
-----------
right to possession of the LEASED PROPERTY, or any part thereof, at any time.
No act by LESSOR other than giving written notice to TENANT shall terminate this
Lease. Acts of maintenance, efforts to relet the LEASED PROPERTY, or the
appointment of a receiver on LESSOR'S initiative to protect LESSOR'S interest
under this Lease shall not constitute a termination of TENANT'S right to
possession. On termination, LESSOR has the right to recover from TENANT:
(i) The worth, at the time of the award of the unpaid rent that
had been earned at the time of termination of this Lease;
(ii) The worth, at the time of the award of the amount by
which the unpaid rent that would have been earned after the date of termination
of this Lease until the time of award exceeds the amount of the loss of rent
that TENANT proves could have been reasonably avoided;
(iii) The worth, at the time of the award, of
44
the amount by which the unpaid rent for the balance of the term after the time
of award exceeds the amount of the loss of rent that TENANT proves could have
been reasonably avoided; and
(iv) Any other amount, and court costs, necessary to
compensate LESSOR for all detriment proximately caused by TENANT'S default.
(v) "The worth, at the time of the award," as used in
subparagraph (b)(i) and (b)(ii) of this paragraph 24.2, is to be computed by
allowing interest at the rate of ten percent (10%) per annum. "The worth, at the
time of the award," as referred to in subparagraph (b) (iii) of this paragraph
24.2, is to be computed by discounting the amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of the award, plus one
percent (1%).
(c) Receiver. LESSOR shall have the right to have a receiver
--------
appointed to collect rent and conduct TENANT'S business. If a receiver be
appointed at the instance of LESSOR in any action against TENANT to take
possession of said Premises and/or to collect the rents or profits derived
therefrom, the receiver may, if it be necessary or convenient in order to
collect such rents and profits, conduct the business of TENANT then being
carried on at the REAL PROPERTY and may take possession of any personal
property belonging to TENANT and used in the conduct of such business, and may
use the same in conducting such business at the REAL PROPERTY without
compensation of TENANT for such use. Neither the application for the
appointment of such receiver, nor the appointment of such a receiver, shall be
construed as an election on LESSOR,S part to
45
terminate this Lease unless a written notice of such intention is given to
TENANT.
(d) Cure at TENANT'S Expense. LESSOR can cure any default at
------------------------
TENANT'S cost. If LESSOR at any time, by reason of TENANT'S default, pays any
sum or does any act that requires the payment of any sum, the sum paid by LESSOR
shall be due immediately from TENANT to LESSOR at the time the sum is paid, and
if paid at a later date shall bear interest at the rate of ten percent (10%) per
annum from the date the sum is paid by LESSOR until LESSOR is reimbursed by
TENANT. The sum, together, with interest on it, shall be additional rent.
25. INTEREST ON UNPAID RENT OR OTHER SUMS DUE.
-----------------------------------------
Rent or other sums due hereunder from TENANT to LESSOR, not paid when due
shall bear interest at the rate of ten percent (10%) per annum from the date due
until paid.
26. LATE CHARGES AND OTHER COSTS
----------------------------
TENANT acknowledges that late payment by TENANT to LESSOR of rent will
cause TENANT to incur costs not contemplated by this Lease. Such costs include,
without limitation, such things as processing and accounting charges, late
charges, foreclosure costs and other such costs that may be imposed on LESSOR by
the terms of any encumbrance, or note secured by an encumbrance covering the
LEASED PROPERTY or any part thereof. Therefore, if any installment of rent due
from TENANT is not received by LESSOR when due, TENANT shall pay to LESSOR all
obligations, losses, costs, or expenses charged to or incurred by LESSOR with
respect to debts, charges, fees, permits, liens, expenses or encumbrances
relating to the LEASED PROPERTY or any part thereof. Such sum
46
shall be paid within three (3) days after written notice given to TENANT by
LESSOR.
27. LESSOR'S DEFAULT
----------------
Provided that TENANT has then paid all rent or other sums required to be
paid by it and in the event any mortgagee or beneficiary of any note secured by
deed of trust or mortgage, on the REAL PROPERTY or any part thereof shall
commence foreclosure proceedings as a result of LESSOR'S wrongful failure to
make any interest or principal payment due thereunder, then and in such event
TENANT shall have the right, but not the obligation, to pay such sum as may be
required to bring such indebtedness current and to pay any foreclosure costs in
connection therewith, and to set off the amount so paid against the next ensuing
installments of fixed rent due from TENANT to LESSOR. Thereafter, all such rent
shall be paid directly to LESSOR.
28. CONDEMNATION
------------
28.1. If any part of the REAL PROPERTY 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 TENANT 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 REAL PROPERTY at the date of
condemnation; but in the event the remainder is so diminished so that the
economic feasibility of operating the facility is unreasonably diminished as to
TENANT, either LESSOR or TENANT shall have the option to
47
terminate this Lease as of the date when title to the part so condemned vests in
the condemnor by written notice to the other within ten (10) days after title
vests in the condemnor.
28.2. If all the Demised Premises, or such part thereof be taken or
condemned so that there does not remain a portion susceptible for occupation
hereunder, as hereinabove described, this Lease shall thereupon terminate. If a
part or all of the REAL PROPERTY be taken or condemned, all compensation awarded
upon such condemnation or taking which does not relate to TENANT'S personal
property shall go to the LESSOR, and the TENANT shall have no claim thereto, and
the TENANT hereby irrevocably assigns and transfers to the LESSOR any right to
compensation or damages to which the TENANT may become entitled during the term
hereof by reason of the condemnation of all, or a part of the REAL PROPERTY.
28.3. Each party waives the provisions of Code of Civil Procedure
Section 1265.130 allowing either party to petition the superior court to
terminate this Lease in the event of a partial taking of the REAL PROPERTY.
29. FINANCIAL STATEMENT OF TENANT
-----------------------------
As a further condition to the execution of this Lease by LESSOR to TENANT,
TENANT agrees that it shall submit to LESSOR or cause to be submitted to LESSOR,
the most recent financial statement (not more than one year old) of the
operation of TENANT or any person or entity holding under or through it, and of
HOSPITAL FACILITY which shall be submitted within five (5) days after written
request therefor given (a) after a default under the Lease, or (b) in connection
with an attempt to finance or
48
refinance the LEASED PROPERTY or any part thereof by LESSOR. Such financial
statement shall be certified by TENANT to be true and correct to the best of
its knowledge. Said financial statements shall include at the very least, the
following:
29.1. A balance sheet as of the day of said financial statement; and
29.2. A profit and loss statement for each period of operation of TENANT
and facility.
30. BINDING ON SUCCESSORS
---------------------
The covenants and conditions herein contained shall, subject to the
provisions as to assignment, apply to and bind and inure to the benefit of the
heirs, successors, executors, administrators and assigns of all of the parties
hereto; and all of the parties hereto shall be jointly and severally liable
hereunder.
31. HOLDING OVER
------------
Any holding over after the expiration of the term, or any extended term
without the written consent of LESSOR, shall be construed to be a tenancy from
month to month, at a monthly rental of a sum equal to fifty percent, (50%)
greater than the highest monthly rent due at any time during the Lease and shall
otherwise be on the terms and conditions herein specified, so far as applicable.
32. ESTOPPEL CERTIFICATE
--------------------
32.1. TENANT shall at any time upon not less than ten (10) days, prior
written notice from LESSOR execute, acknowledge and deliver to LESSOR a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if
49
modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect) and the date to which the
rent and other charges are paid in advance, if any, and (ii) acknowledging that
there are not, to TENANT'S knowledge, any uncured defaults on the part of LESSOR
hereunder, or specifying such defaults if any are claimed. Any such statement
may be conclusively relied upon by any prospective purchaser or encumbrancer of
the LEASED PROPERTY.
32.2. TENANT'S failure to deliver such statement within such time shall be
conclusive upon TENANT (a) that this Lease is in full force and effect, without
modification except as may be represented by LESSOR, (b) that there are no
uncured defaults in LESSOR'S performance.
32.3 If LESSOR desires to finance or refinance the LEASED PROPERTY, or
any part thereof, TENANT hereby agrees to deliver to any lender designated by
LESSOR such financial statements of TENANT as may be reasonably required by
such lender. Such statements shall include the past three (3) year's financial
statements of TENANT. All such financial statements shall be received by
LESSOR in confidence and shall be used only for the purposes herein set forth.
33. SUBORDINATION
-------------
33.1. This Lease is and shall be subordinate to any encumbrance now of
record or recorded after the date of this Lease affecting the REAL PROPERTY.
Such subordination is effective without any further act of TENANT. TENANT shall
from time to time on request from LESSOR execute and deliver any documents or
instruments that may be required by a lender to
50
effectuate any subordination. If LESSOR fails to execute and deliver any such
documents or instruments, TENANT irrevocably constitutes and appoints LESSOR as
TENANT'S special attorney-in-fact to execute and deliver any such documents or
instruments.
33.2. Notwithstanding the foregoing provisions of this Article 33, with
respect to encumbrances recorded after the date of this Lease, LESSOR shall as a
condition to such subordination obtain a written agreement from the lender under
such encumbrance that provides substantially the following:
"As long as TENANT performs its obligations under this Lease, no
foreclosure of, deed given in lieu of foreclosure of, or sale under the
encumbrance, and no steps or procedures taken under the encumbrance, shall
affect TENANT,S rights under this LEASE."
TENANT shall attorn to any purchaser at any foreclosure sale, or to any grantee
or transferee designated in any deed given in lieu of foreclosure. TENANT shall
execute the written agreement and any other documents required by the lender to
accomplish the purposes of this Article.
34. COVENANT OF AUTHORITY AND QUIET POSSESSION LESSOR covenants and warrants
------------------------------------------
that LESSOR has full right and lawful authority to enter into this Lease for the
full term aforesaid, and that subject to the terms of this Lease, TENANT upon
full performance of each and every provision hereof shall peaceably and quietly
have, hold and enjoy the LEASED PROPERTY throughout the leased term and any
extensions thereof, without any disturbance from the LESSOR or from any person
claiming through the LESSOR. TENANT may at its own expense obtain a policy of
leasehold title
51
insurance, which policy shall show that LESSOR is the owner of the REAL
PROPERTY.
35. WAIVER
------
35.1. No delay or omission in the exercise of any right or remedy of
LESSOR shall impair such a right or remedy or be construed as a waiver by
LESSOR.
35.2. The receipt and acceptance by LESSOR of any rent or other sum due
LESSOR hereunder shall not constitute a waiver of any other breach or default by
TENANT; it shall constitute only a waiver of timely payment for the particular
rent or other sum payable involved regardless of LESSOR'S knowledge of such
preceding breach at the time of acceptance of such rent or other sum.
35.3. No act or conduct of LESSOR, including, without limitation, the
acceptance of the keys to the REAL PROPERTY, shall constitute an acceptance of
the surrender of the LEASED PROPERTY, or any part thereof, by TENANT before the
expiration of the term. Only a notice from LESSOR to TENANT shall constitute
acceptance of the surrender of the LEASED PROPERTY and accomplish a termination
of the Lease.
35.4. LESSOR'S consent to or approval of any act by TENANT requiring
LESSOR'S consent or approval shall not be deemed to waive or render unnecessary
LESSOR,S consent to or approval of any subsequent act by TENANT.
35.5. Any waiver by LESSOR of any default, or breach by TENANT must be in
writing and shall not be a waiver of any other breach or default concerning the
same or any other provision of the Lease.
52
36. ABSOLUTE ASSIGNMENT OF RENTS
----------------------------
TENANT shall upon execution of this Lease execute, acknowledge and deliver
to LESSOR an absolute assignment of rents in the form attached hereto as EXHIBIT
"5".
37. OPTION TO EXTEND
-----------------
37.1. Provided that TENANT has not, on more than three occasions during
the term hereof, and, is not then in breach or in default of its obligation to
pay rent, additional rent or any other sum payable by TENANT under this Lease or
in material breach or default under any of the other terms, covenants and
conditions of this Lease, TENANT may extend the term of this Lease for one (1)
additional five (5) year period ("Extended Term") from and after the end of the
initial term of this Lease by giving written notice to LESSOR at least one (1)
year, but not more than two (2) years prior to the expiration of the original
term. Provided, further, that if TENANT is delinquent in the payment of any
rent, additional rent or other amount payable under this Lease or is in material
breach or default under this Lease at any time after giving such notice, the
Extended Term shall not commence and this Lease shall expire at the end of the
initial term.
37.2. TENANT shall have no other right to extend the term of this Lease.
37.3. The Extended Term shall be on the same terms and conditions as the
initial term of this Lease except that the minimum monthly rent and adjustments
thereto for the extended term shall be payable in monthly installments
determined in accordance with paragraphs 4.2(d) and (e) above.
53
38. RIGHT OF FIRST REFUSAL TO PURCHASE LEASED PROPERTY
--------------------------------------------------
Provided that TENANT is not then in breach or default under any of the
terms, covenants and conditions of this LEASE and has not been in material
breach or default on more than three (3) occasions during the term of this
Lease, TENANT is hereby given and shall have a right of first refusal to
purchase the LEASED PROPERTY (the Real Property described in EXHIBITS 1 and the
Personal Property described in EXHIBIT 2) on the following terms and conditions:
38.1. In the event LESSOR receives a bona fide written offer to purchase
all of the LEASED PROPERTY from a prospective purchaser, which bona fide offer
LESSOR desires to accept, LESSOR shall give written notice thereof, together
with full and complete copies of all such offers to TENANT.
38.2. Upon receipt of said written notice, TENANT shall have the option to
purchase the LEASED PROPERTY for the price and upon the same terms and
conditions as said bona fide offer, except as otherwise provided herein.
38.3. Notwithstanding anything to the contrary herein, TENANT shall not
have the right of first refusal or option to purchase the REAL PROPERTY in the
event of a sale or transfer of the REAL PROPERTY or any part thereof among
LESSOR, any partner of LESSOR, (hereinafter collectively, "Beneficial
Owner(s)"), any other Beneficial owner, spouse of a Beneficial Owner, descendant
of a Beneficial Owner, spouse of a descendant of a Beneficial Owner or any
corporation, partnership or trust, the shares or beneficial interest of which is
owned by any of the foregoing persons or entities.
38.4. Said option shall be exercised by: (i) giving written notice to
LESSOR of such desire to exercise the option to purchase within fifteen (15)
days after receipt of the written notice giving rise to the option, and (ii) the
preparation and execution of the escrow instructions at City National Bank,
Beverly Hills, by TENANT no later than ten (10) days after exercise of such
option, which escrow instructions shall provide for closing thereof within the
time specified in the offer of the bona fide purchaser or ninety (90) days after
the giving of the original notice by LESSOR, whichever is later. The initial
cash down payment required shall be the greater of the amount provided in the
bona fide file offer or $100,000 and shall be deposited in escrow no later than
five (5) working days after exercise of the option.
38.5. Said right of first refusal shall terminate as to all subsequent
sales at the expiration of the term of this Lease, or upon the sooner
termination of this Lease or TENANT'S right to possession hereunder. In the
event the TENANT fails to exercise the option to purchase arising out of a bona
fide written offer from a prospective purchaser, then LESSOR may thereupon sell
the LEASED PROPERTY in accordance with the bona fide offer to purchase and upon
such sale TENANT'S rights to purchase under this Article shall be terminated and
be of no further force or effect for any further sale. Provided, however, that
TENANT'S rights hereunder shall continue in effect if the original LESSOR does
not consummate such sale.
38.6. If TENANT purchases the LEASED PROPERTY, this Lease shall terminate
on the date title vests in TENANT.
38.7. The failure of TENANT to deposit the initial cash down payment
required to be deposited pursuant to paragraph 38.4 after exercising an option
to purchase the LEASED PROPERTY shall be a material non-curable default under
this Lease.
38.8. PRIOR TO ENTERING INTO THIS LEASE, LESSOR AND TENANT HAVE BEEN
CONCERNED WITH THE FACT THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY LESSOR IN
THE EVENT THAT TENANT FAILS TO CONSUMMATE A PURCHASE OF THE LEASED PROPERTY
AFTER EXERCISING AN OPTION TO PURCHASE THE LEASED PROPERTY. WITH THE FLUCTUATION
IN LAND VALUES, THE UNPREDICTABLE STATE OF THE ECONOMY AND OF GOVERNMENTAL
REGULATIONS, THE FLUCTUATING MONEY MARKET FOR REAL ESTATE LOANS OF ALL TYPES AND
OTHER FACTORS WHICH DIRECTLY EFFECT THE VALUE AND MARKETABILITY OF THE LEASED
PROPERTY IT IS REALIZED BY THE PARTIES THAT IT WOULD BE EXTREMELY DIFFICULT AND
IMPRACTICABLE, IF NOT IMPOSSIBLE, TO ASCERTAIN WITH ANY DEGREE OF CERTAINTY THE
AMOUNT OF DAMAGES WHICH WOULD BE SUFFERED BY LESSOR IN THE EVENT OF TENANT,S
BREACH OF ITS OBLIGATION TO PURCHASE THE LEASED PROPERTY AFTER EXERCISING AN
OPTION TO PURCHASE THE LEASED PROPERTY UNDER THIS LEASE. THE PARTIES HAVING MADE
DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL COMPENSATORY DAMAGES
LESSOR WOULD SUFFER IN THE EVENT OF TENANT,S BREACH, IT IS HEREBY AGREED THAT
THE REASONABLE VALUE OF SAID DAMAGES IS THE SUM OF ONE HUNDRED THOUSAND DOLLARS
($100,000), AND IN THE EVENT OF TENANT'S BREACH OF ITS OBLIGATION UNDER THIS
LEASE TO PURCHASE THE LEASED PROPERTY AFTER EXERCISING AN OPTION THEREFORE UNDER
THIS ARTICLE 38, LESSOR SHALL, AS ITS SOLE REMEDY, BE ENTITLED TO SUCH SUM AS
LIQUIDATED DAMAGES. THE RIGHT TO RECEIVE SUCH LIQUIDATED DAMAGES SHALL BE
LESSOR'S SOLE REMEDY IN THE EVENT OF
TENANT'S BREACH HEREUNDER. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
LESSOR HEREBY EXPRESSLY WAIVES THE RIGHT TO SPECIFICALLY ENFORCE TENANT'S
OBLIGATION TO PURCHASE THE LEASED PROPERTY AFTER EXERCISING AN OPTION TO
PURCHASE THE LEASED PROPERTY UNDER THIS ARTICLE 38.
TENANT: LESSOR
By /s/ Robert Snukal LA BREA CONVALESCENT INVESTMENTS,
-----------------------------
ROBERT SNUKAL a partnership
By
_________________________________
/s/ Sheila Snukal By /s/ Sanford Deutsch
- ------------------------------- ----------------------------------
SHEILA SNUKAL
A.I.B. CORPORATION,
a corporation
By /s/ Robert Snukal
-----------------------------
57
39. TRANSFER OF LESSOR'S INTEREST
-----------------------------
The term "LESSOR" as used in this Lease so far as covenants and obligations
on the part of the LESSOR are concerned shall be limited to mean and include
only the owner or owners at the time in question of the fee of the LEASED
PROPERTY, and in the event of any transfer or transfer of the title to such fee,
the LESSOR herein named (and in case of any subsequent transfers or conveyances
the then grantor) shall be automatically freed and relieved from and after the
date of such transfer or conveyance of all liability as respects the performance
of any covenants or obligations on the part of the LESSOR contained in this
Lease thereafter to be performed, provided that any funds in the hands of such
LESSOR or the then grantor at the time of such transfer, in which the TENANT has
an interest, shall be turned over to the grantee and any amount then due and
payable to the TENANT by the LESSOR or the then grantor under any provision of
this Lease, shall be paid to the TENANT, and provided further that the grantee
assumes and agrees in writing to perform the obligations of LESSOR under this
Lease, it being intended hereby that the covenants and obligations contained in
this Lease on the part of the LESSOR shall, subject as aforesaid, be binding on
the LESSOR, its successors and assigns, only during and in respect of their
respective successive periods of ownership. Notwithstanding the foregoing, the
liability of LESSOR or any member thereof shall be limited to LESSOR'S equity
in the LEASED PROPERTY and there shall be no personal liability with respect
thereto.
40. NOTICES
-------
40.1. TO TENANT: All notices to be given to TENANT may be
58
given in writing personally or by depositing the same in the United States mail,
postage prepaid, certified or registered mail, and addressed to TENANT at the
HOSPITAL, whether or not TENANT has departed from, abandoned or vacated the
Premises, with a copy to:
David B. Bloom
3325 Wilshire Blvd.
9th Floor
Los Angeles, CA900l0
or at such other addresses (not to exceed two) as TENANT or any of them may
designate from time to time.
40.2. To LESSOR: All notices to be given to LESSOR shall be given to him
in writing by depositing the same in the United States mail, postage prepaid,
certified or registered mail, and addressed to LESSOR as follows:
LA BREA CONVALESCENT INVESTMENTS Attention:
SANFORD DEUTSCH 8417 Beverly Boulevard
Suite 205
Los Angeles, CA90048
with a copy to:
ELLIOT L. SHELTON
Shea & Gould
1800 Avenue of the Stars
Los Angeles, CA90067
or at such other address or addresses (not to exceed two) as LESSOR may instruct
TENANT from time to time. Notices shall be deemed communicated within forty (40)
hours from the time of mailing if mailed in accordance with this paragraph 40.
41. SURRENDER OF LEASE NOT MERGER
-----------------------------
The voluntary or other surrender of this Lease by TENANT, or a mutual
cancellation thereof, shall not work a merger, and shall, at the option of
LESSOR, terminate all or any existing
59
subleases, subtenancies, or other rights to use or occupy the LEASED PROPERTY or
any part thereof, or may, at the option of LESSOR, operate as an assignment to
him of any or all such subleases, subtenancies or other rights to use or occupy
the LEASED PROPERTY or any part thereof.
42. ATTORNEYS, FEES
---------------
42.1. If either party becomes a party to any litigation concerning this
Lease or the LEASED PROPERTY, or any business or activity conducted thereon by
reason of any act or omission of the other party or its authorized
representatives, and not by any act or omission of the party that becomes a
party to that litigation, or any act or omission of its authorized
representatives, the party that causes the other party to become involved in the
litigation shall be liable to that party for reasonable attorneys, fees and
court costs incurred by it in the litigation.
42.2. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Lease, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any of the provisions
of this Lease, the successful or prevailing party or parties shall be entitled
to recover reasonable attorneys, fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
43. PROHIBITION AGAINST RECORDING LEASE OR MEMORANDUM OF LEASE
----------------------------------------------------------
Neither this Lease nor any memorandum thereof shall be recorded. A
violation or breach hereof shall be considered a non-curable default.
60
44. DESIGNATION OF AGENT FOR SERVICE OF PROCESS
-------------------------------------------
44.1. Any TENANT and any sublessee or assignee under this Lease that is a
partnership, limited partnership, corporation, trust or other entity shall upon
the execution of this Lease or any sublease or assignment thereof:
(a) Designate an agent for service of process in the County of Los
Angeles, State of California, in accordance with the laws of the State of
California;
(b) Within ten (10) days after such designation, or any amendment,
modification, substitution or cancellation thereof, furnish LESSOR with a
certified copy of such designation, amendment, modification, substitution or
cancellation; and
(c) Notify LESSOR in writing of the names and addresses of its
officers, and the address of its principal place of business in the State of
California, and in the State where it maintains its principal place of business.
Within ten (10) days after any change in such officers or addresses, TENANT, or
such assignee or sublessee shall give LESSOR written notice thereof.
44.2. Any TENANT and any sublessee or assignee under this Lease that is an
individual shall upon the execution of this Lease and upon any assignment
thereof give written notice to LESSOR of his residence and business address and
of any subsequent change thereof. If such TENANT, sublessee or assignee is not a
resident of the State of California, he shall in addition to the foregoing,
designate an agent for service of process in the County of Los Angeles, State of
California, and within ten (10) days of the date of said designation or any
amendment, modification, substitution or cancellation thereof
61
furnish LESSOR with a certified copy of such designation, or any amendment
modification, substitution or cancellation thereof.
45. QUITCLAIM DEED
--------------
TENANT shall execute and deliver to LESSOR on the expiration or termination
of this Lease, immediately on LESSOR'S request, a quitclaim deed to the REAL
PROPERTY, the Lease and/or the PERSONAL PROPERTY, in recordable form,
designating LESSOR as transferee.
46. CONSENT OF PARTIES
------------------
Whenever consent or approval of either party is required, that party shall
not unreasonably withhold such consent or approval.
47. RENT PAYABLE IN U.S. MONEY
--------------------------
Rent and all other sums payable under this Lease must be paid in lawful
money of the United States of America.
48. REAL ESTATE BROKERS; FINDERS
----------------------------
Each party represents that it has not had dealings with any real estate
broker, finder, or other person, with respect to this Lease in any manner. Each
party shall hold harmless the other party from all damages resulting from any
claims that may be asserted against the other party by any broker, finder, or
other person, with whom the other party has or purportedly has dealt.
49. EXHIBITS
--------
All exhibits referred to are attached to this Lease and incorporated by
reference.
50. APPLICABLE LAW
--------------
This Lease shall be construed and interpreted in accordance with the laws
of the State of California.
62
51. SINGULAR AND PLURAL
-------------------
When required by the context of this Lease, the singular shall include the
plural.
52. SEVERABILITY
------------
The unenforceability, invalidity, or illegality of any provision shall not
render the other provisions unenforceable, invalid or illegal.
53. CROSS-DEFAULT
-------------
As material consideration for this Lease, LESSEE has entered and executed a
second Lease with LESSOR dated May 19, 1987 leasing property commonly known as
515 North La Brea Avenue, Los Angeles, California. The occurrence of any breach
or event of default by LESSEE under said second Lease shall be an event of
default under this Lease, entitling LESSOR to invoke the Default Clause of this
Lease.
54. ADDITIONAL REQUIREMENT OF ASSIGNMENT OR SUBLETTING
--------------------------------------------------
LESSOR shall have the right, as a condition of consenting to an assignment
or sublease, to require the second Lease entered between LESSOR and LESSEE
covering property commonly known as 515 North La Brea Avenue, Los Angeles,
California, be assigned or sublet simultaneously with this Lease by the same
assignee or sublessee.
63
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
date first above written.
LESSOR: LESSEE:
LA BREA CONVALESCENT INVESTMENTS, A.I.B. Corporation A
Partnership a California Corporation
By /s/ [SIGNATURE ILLEGIBLE] By /s/ Robert Snukal
----------------------------- ---------------------------
Robert Snukal, President
By /s/ [SIGNATURE ILLEGIBLE] By /s/ Sheila Snukal
----------------------------- ---------------------------
Secretary
/s/ Robert Snukal
-----------------------------
ROBERT SNUKAL
/s/ Sheila Snukal
-----------------------------
SHEILA SNUKAL
64
DESCRIPTION OF HOSPITAL EQUIPMENT
---------------------------------
To be Attached
EXHIBIT 2
DESCRIPTION OF HOSPITAL
-----------------------
Lots 19, 20, 21 and 22 of Tract No. 6740, Sheets 1 and 2, in the City of Los
Angeles, County of Los Angeles, State of California, as per Map recorded in Book
98, pages 98 and 99 of Maps, in the office of the County Recorder of said
County.
EXHIBIT "1"
Recording requested by and
when recorded return to:
ELLIOT L. SHELTON
Shea & Gould
1800 Avenue of the Stars
Suite 500
Los Angeles, California 90067
ABSOLUTE ASSIGNMENT OF RENTS
----------------------------
ROBERT SNUKAL, SHEILA SNUKAL, and A.I.B. CORPORATION, a California corporation,
("Assignor") is the Tenant of the real property located in the County of Los
Angeles, State of California, commonly known as 505 North La Brea Blvd., Los
Angeles, California and more particularly described in Exhibit "A" attached
hereto and made a part hereof ("Property").
For value received, Assignor hereby grants, transfers and assigns to LA BREA
CONVALESCENT INVESTMENT! a partnership (Assignee") all rents, income, royalties,
issues and profits due or to become due hereafter for the occupancy or use of
the Property (such rents, royalties, issues and profits being hereinafter
collectively called "Rents").
Assignor warrants that Assignor is the Tenant of the Property pursuant to a
lease dated May 19, 1987 by and between Assignor, as Tenant and Assignee, as
Lessor ("Lease"), that Assignor is the lawful owner of all Rents from Property
now due or to become due from any lessee, sublessee, tenant, assignee, licensee
or concessionaire of Assignor; that Assignor has the right to make this
Assignment; that full title and right to receive all Rents, due or to become
due, are vested in Assignee by reason of this Assignment; that property and
Rents are free from any liens, encumbrances, claims or setoffs of every kind
whatsoever and that no prior or other assignment of Rents has been given by
Assignor.
Assignor appoints Assignee its true, lawful and irrevocable attorney
to demand, receive and enforce payment, to give receipts, releases and
satisfactions, and to sue, either in the name of Assignor or in the name of
Assignee, for all Rents.
EXHIBIT "3"
Page 1 of 3
Assignor Consents that without further notice and without releasing
the liability of Assignor, Assignee may, at Assignee's discretion agree to give
grace or indulgence in the collection of any such Rents and grant extensions of
time for the payment of the same before, at or after maturity.
Assignor agrees that Assignee may proceed against Assignor hereunder
without joining any tenant or other party to the obligation to pay Rents covered
hereunder; that cessation of the liability of any tenant or other party to pay
Rents for any reason other than full payment shall not in any way affect the
liability of Assignor under this Assignment.
Assignee does not assume any of Assignor's obligations under Lease,
any lease agreement, or tenancy, or any other agreement to pay any Rent assigned
hereunder, and Assignor agrees (a) to keep and perform all obligations under
such agreements or tenancies and to save Assignee harmless from the consequences
of any failure to do so including reasonable counsel fees incurred by Assignee;
and (b) to preserve the Property free and clear of liens and encumbrances.
Assignor agrees that Assignor will not assign any interest in any
lease agreement or tenancy or any other agreement to pay any Rent assigned
hereunder; that notice of this Assignment may be given to any tenant, or party
to any such agreement at any time at Assignee's option; and that, in the event
any payment under such agreement or tenancy is made to Assignor, Assignor will
promptly transmit such payment to Assignee in the same form as it is received by
Assignor, except that Assignor will endorse to Assignee instruments which are
payable to Assignor.
Assignor agrees that, as long as this Assignment is in force, Assignor
will give a copy of this Assignment to each and every lessee, tenant, or other
person obligated to pay Rent as to Property during the term hereof and will
secure the execution by each such lessee, tenant, or other person of an
acknowledgment of this Assignment.
Assignor agrees that Assignee shall be entitled to deduct and retain
from any monies received by it hereunder for its services or that of any agents
in collecting said monies a just and reasonable compensation.
Notwithstanding any other provision of this Assignment to the
contrary, Assignee shall not collect any rents whatsoever, or exercise any of
the other rights herein granted to Assignee, so long as Assignor is not in
default in the payment of rent or property taxes under the terms of Lease. In
the event, Assignor defaults in the performance of any of Assignor's obligations
under, Lease, Assignee shall be free to pursue all of Assignee's rights under
this Assignment in addition to such other rights of Assignor under Lease or as
provided by law.
EXHIBIT "3"
Page 2 of 3
Notwithstanding any provision of this Assignment to the contrary, upon
the happening of any default under Lease, Assignee may exercise each and all of
the rights, remedies and powers herein granted, with or without demanding
possession of the Property, and with or without commencing legal proceedings to
recover possession of the Property.
Failure of Assignee at any time or from time to time to enforce this
Assignment shall not in any manner prevent its subsequent enforcement, such
Assignee not being obligated to collect anything hereunder, but being
accountable only for sums actually collected.
This Assignment is irrevocable and shall remain in full force and
effect until and unless there is payment in full of all obligations owned by
Assignor to Assignee on the Property, including but not limited to Lease.
ASSIGNEE: ASSIGNOR:
- -------- --------
LA BREA CONVALESCENT A.I.B. Corporation
INVESTMENTS, a partnership a California Corporation
By /s/ Robert Snukal
----------------------------
Robert Snukal, President
By____________________________
By /s/ Sheila Snukal
----------------------------
Sheila Snukal, Secretary
By____________________________
EXHIBIT "3"
Page 3 of 3
Consent, Agreement, and Acknowledgement
---------------------------------------
July 30, 1997
To: La Brea Convalescent Investments
Attn: Sanford Deutsch
8417 Beverly Boulevard
Suite 205
Los Angeles, CA 90048
Dear Gentlemen:
My wife and I are the owners of 100% of the capital stock of AIB Corp., a
California corporation ("AIB"). AIB is a party to a Stock Purchase and
Contribution Agreement (the "Agreement"). Pursuant to the terms of the Agreement
at the time of closing, ownership of 100% of AIB's capital stock will be
transferred (the "Transfer") to Fountain View Holdings, Inc., a Delaware
corporation ("Holdings"), which will be a wholly-owned subsidiary of Fountain
View, Inc., a Delaware corporation ("Fountain View"). In addition, in connection
with the transactions contemplated by the Agreement, we will assign our
interests in the Lease to AIB (together with the Transfer, the "Assignment").
Immediately after the consummation of the transactions contemplated by the
Agreement, my wife and myself will retain voting and operational control of AIB,
we will control the Board of Directors of Fountain View by electing three of the
five proposed Directors of Fountain View, and we will continue to lead AIB's
management team, and Robert Snukal will continue as the Chief Executive Officer
of AIB Corp., Holdings, and Fountain View. The Board of Directors shall be
comprised of myself, my wife, and a third individual to be nominated by us; the
other two seats on the Board of Directors will be nominees of Heritage Fund II
Investment Corporation. Further, my wife and I will retain voting control of
50.1% of the common stock of Fountain View, Inc.
Pursuant to Sections 22.1 and 22.3 of the Lease Agreement dated May 19, 1997
(the "Lease") between La Brea Convalescent Investments, a California
partnership, as Lessor ("Lessor") and AIB and us, as Lessees ("Lessees"), your
written consent is required to the Assignment referred to herein. Further, by
their signature to this document and in connection with your consenting to the
Assignment, Holdings and Fountain View, agree to assume all of the terms,
covenants, conditions, and obligations of the Lessee to be performed under the
Lease, upon the closing. Additionally, Holdings, Fountain View, AIB, my wife and
myself, also agree to the following:
A. In addition to the Lease for the Leased Property located at
505 North La Brea Avenue,
Los Angeles, California, ("505 Lease") Lessees Robert Snukal and
Sheila Snukal, and their affiliate, B.I.A., are also the Lessees under
a lease from Lessor of the adjoining and connected Leased Property
commonly known as 515 North La Brea, Los Angeles, California ("515
Lease"). The "Leased Property" under each of these two leases are
together referred to herein as the "Leased Properties". Lessee agrees
that because of the nature, physical configuration and other factors
affecting the Leased Properties and the businesses thereon, the Leased
Properties are not severable from each other for purposes of the 505
Lease and the 515 Lease ("Leases"); and it is and has always been the
intention of Lessor and the Lessee under each of the Leases that the
Lessee under any one of the Leases shall not have the right under any
circumstances whatsoever to terminate or reject, including a rejection
under the Bankruptcy code, any one of the Leases, without concurrently
terminating or rejecting the other one of the Leases, and in the event
one of the Leases shall be terminated or rejected by Lessee, it shall
constitute a default under the other Lease.
B. Lessee may not exercise the right of first refusal under paragraph 38
of the 505 Lease, unless Lessee simultaneously exercises the right of
first refusal under paragraph 38 of the 515 Lease.
We therefore would appreciate you executing this Consent, Agreement, and
Acknowledgement with respect to the following:
1. A true and correct copy of the Lease between AIB and Robert and Sheila
Snukal, as Lessees, and La Brea Convalescent Investments, a California
partnership, as lessor, dated May 19, 1997 is attached hereto as
Exhibit A.
2. As of the date hereof, (i) there exist no known defaults by any of the
Lessees, (ii) Lessees are in full compliance with the terms of the
Lease and (iii) the Lease is in effect as of the date hereof.
3. We hereby consent to the Assignment, effective as of the date hereof,
provided however, that in no event shall Lessees, AIB, Robert and
Sheila Snukal, be released from Lessees' obligations under the Lease,
and they agree
that they will continue to be primarily obligated on the Lease and
that in the event of a breach or default thereunder, Lessor may
commence legal proceedings against said Lessees, without first
proceeding against any Assignee.
If you have any questions or require clarification, please do not hesitate to
contact us.
AIB Corp.
/s/ Robert Snukal By: /s/ Robert Snukal
- ---------------------------- ---------------------------
Robert Snukal Robert Snukal, President
Fountain View Holdings, Inc.,
/s/ Sheila Snukal a Delaware corporation
- ----------------------------
Sheila Snukal
By: /s/ Robert Snukal
---------------------------
Robert Snukal, President
Fountain View, Inc.,
a Delaware corporation
By: /s/ Robert Snukal
---------------------------
Robert Snukal, President
Based on the truth of the facts, representations, and statements set forth
herein, by AIB, Robert and Sheila Snukal, Fountain View Holdings, Inc., a
Delaware corporation, and Fountain View, Inc., a Delaware corporation, we agree
to and consent to the Asssignment referred to herein.
Executed this 30th day of July, 1997.
La Brea Convalescent Investments,
a California partnership
By: /s/ Sanford Deutsch
-------------------------------
By: /s/ [SIGNATURE ILLEGIBLE]
-------------------------------