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EXHIBIT 10.9
LEASE AGREEMENT
BETWEEN
HEALTH CARE REIT, INC.
AND
STERLING HOUSE CORPORATION
SEPTEMBER _____, 1995
STERLING HOUSE OF PONCA CITY
PONCA CITY, OKLAHOMA
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LEASE AGREEMENT
This Lease Agreement ("Lease" or "Agreement") is made effective as of
the _____ day of September, 1995 (the "Effective Date") between HEALTH CARE
REIT, INC., a corporation organized under the laws of the State of Delaware
("Landlord"), having its principal office located at One SeaGate, Suite 1950,
P.O. Box 1475, Toledo, Ohio 43603, and STERLING HOUSE CORPORATION, a corporation
organized under the laws of the State of Kansas ("Tenant"), having its chief
executive office located at 453 South Webb Road, Suite 500, Wichita, Kansas
67207.
R E C I T A L S
A. As of the date hereof, Landlord acquired the Leased Property
(defined below) from Sterling Partners, L.L.C., a Kansas limited liability
company ("Seller"), and paid the Acquisition Amount (defined below) to Seller.
Seller is an affiliate of Tenant.
B. Landlord desires to lease the Leased Property to Tenant and Tenant
desires to lease the Leased Property from Landlord upon the terms set forth in
this Lease.
NOW, THEREFORE, Landlord and Tenant agree as follows:
ARTICLE 1: LEASED PROPERTY, TERM AND DEFINITIONS
1.1 Leased Property. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the following property:
(a) The land described in Exhibit A attached hereto (the
"Land").
(b) All buildings, structures, and other improvements,
including without limitation, sidewalks, alleys, utility pipes, conduits, and
lines, parking areas, and roadways, now or hereafter situated upon the Land (the
"Improvements").
(c) All easements, rights and other appurtenances relating to
the Land and Improvements (the "Appurtenances").
(d) All permanently affixed equipment, machinery, fixtures,
and other items of real and personal property, including all components thereof,
located in, or used in connection with, and permanently affixed to or
incorporated into the Improvements, including without limitation, all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, and built-in oxygen and vacuum
systems, all of which, to the greatest extent permitted by law, are hereby
deemed by the parties hereto to constitute real estate, together with all
replacements, modifications, alterations and additions thereto but specifically
excluding all items included within the category of Personal Property as defined
below (collectively the "Fixtures").
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(e) All machinery, equipment, furniture, furnishings, movable
walls or partitions, computers, trade fixtures, consumable inventory and
supplies, and other personal property purchased by Landlord and used or useful
in Tenant's business on the Leased Property, including without limitation, all
items of furniture, furnishings, equipment, supplies and inventory listed on
Exhibit B attached hereto and the replacements therefor, except items, if any,
included within the definition of Fixtures (collectively the "Personal
Property"). The Land, Improvements, Appurtenances, and Fixtures and Personal
Property are hereinafter referred to as the "Leased Property".
SUBJECT, HOWEVER, to all easements, liens, encumbrances, restrictions,
agreements, and other title matters existing as of the date hereof as listed on
Exhibit B attached hereto (the "Permitted Exceptions").
1.2 Term. The initial term ("Initial Term") of this Lease commences on
the Effective Date and expires at 12:00 Midnight Eastern Time on September 30,
2006 (the "Expiration Date"); provided, however, that Tenant has options to
renew the Lease pursuant to Article 12.
1.3 Definitions. Except as otherwise expressly provided, [i] the terms
defined in this section have the meanings assigned to them in this section and
include the plural as well as the singular; [ii] all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as of the time applicable; and [iii]
the words "herein", "hereof", and "hereunder" and similar words refer to this
Lease as a whole and not to any particular section.
"Acquisition Amount" means $1,650,000.00.
"ADA" means the federal statute entitled Americans with Disabilities
Act, 42 U.S.C. Section 12101, et seq.
"Affiliate" means any person, corporation, partnership, trust, or other
legal entity that, directly or indirectly, controls, or is controlled by, or is
under common control with Tenant. "Control" (and the correlative meanings of
the terms "controlled by" and "under common control with") means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such entity. "Affiliate" includes, without
limitation, each Related Company and Related Tenant.
"Annual Financial Statements" means [i] for the Tenant, the audited
balance sheet and statement of income for the most recent fiscal year or an
individual facility and consolidated basis and an audited operating statement
for the Facility for the most recent fiscal year; [ii] for each Guarantor, an
annual unaudited financial statement; and [iii] or each Related Company, the
compiled balance sheet and statement of income for the most recent fiscal year.
"Base Rent" has the meaning set forth in Section 2.1, as increased from
time to time pursuant to Section 2.2.
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"Business Day" means any day other than a Saturday, Sunday, or national
holiday.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time. The terms "disposal"
and "release" as used in this Agreement shall have the meaning set forth in
CERCLA.
"Closing" means the closing of the purchase of the Leased Property by
Landlord and the lease of the Leased Property to Tenant.
"Commencement Date" means the Effective Date if such date is the first
day of a month, and if it is not, the first day of the first month following the
Effective Date.
"Commitment" means the Restated Commitment Letter from Landlord to
Corridor dated as of August 29, 1995, as amended from time to time.
"Contingent Interest Agreement" means the Contingent Interest Agreement
effective as of December 29, 1994 between Landlord and Corridor as the same has
been or may be amended from time to time.
"Corridor" means Corridor Properties, L.L.C., a limited liability
company organized under the laws of the State of Kansas.
"Effective Date" is the date hereof as first set forth above.
"Environmental Laws" means all federal, state, and local ecological,
wetlands, and other environmental laws and regulations, as amended from time to
time, including but not limited to [i] CERCLA; [ii] the Resource Conservation
and Recovery Act; [iii] the Hazardous Materials Transportation Act; [iv] the
Clean Air Act; [v] Clean Water Act; [vi] the Toxic Substances Control Act; and
[vii] the Safe Water Drinking Act.
"Event of Default" has the meaning set forth in Section 8.1.
"Expiration Date" has the meaning set forth in Section 1.2.
"Extended Term" has the meaning set forth in Section 12.3(a).
"Facility" means the assisted living facility known as Sterling House
of Ponca City and located on the Leased Property.
"Financial Statements" means [i] the annual balance sheet and statement
of income of Tenant for the year ended December 31, 1994; [ii] the financial
statement of Timothy Buchanan dated as of August 15, 1995 and of Steven L. Vick
dated as of June 30, 1995; [iii] the unaudited consolidated quarterly balance
sheet and statement of income of Tenant and each Related Company for the period
ended June 30, 1995; and [iv] operating statements for each Facility as of June
30, 1995.
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"Government Authorizations" means all permits, licenses, approvals,
consents, and authorizations required to comply with all Legal Requirements,
including but not limited to, [i] zoning permits, variances, exceptions, special
use permits, conditional use permits, and consents; [ii] if applicable, the
permits, licenses, provider agreements and approvals required for licensure and
operation of an assisted living facility certified as a provider under the
federal Medicare and state Medicaid programs, [iii] environmental, ecological,
coastal, wetlands, air, and water permits, licenses, and consents; [iv] curb
cut, subdivision, land use, and planning permits, licenses, approvals and
consents; [v] building, sign, fire, health, and safety permits, licenses,
approvals, and consents; and [vi] architectural reviews, approvals, and consents
required under restrictive covenants.
"Guarantor" means Timothy J. Buchanan and Steven L. Vick, individually
and collectively.
"Hazardous Materials" means any substance [i] the presence of which
poses a hazard to the health or safety of persons on or about the Land including
but not limited to asbestos containing materials; [ii] which requires removal or
remediation under any Environmental Law, including without limitation any
substance which is toxic, explosive, flammable, radioactive, or otherwise
hazardous; or [iii] which is regulated under or classified under any
Environmental Law as hazardous or toxic including but not limited to any
substance within the meaning of "hazardous substance", "hazardous material",
"hazardous waste", "toxic substance", "regulated substance", "solid waste", or
"pollutant" as defined in any Environmental Law.
"Impositions" has the meaning set forth in Section 3.2.
"Increaser Rate" means 22.5 basis points per year; provided, however,
that if the IPO Conditions are satisfied, the "Increaser Rate" shall be 20 basis
points per year.
"Initial Term" has the meaning set forth in Section 1.2.
"IPO" means the initial public offering of common stock of Tenant or
any Affiliate of Tenant or any successor of the foregoing resulting from a
"roll-up" of the Tenant and/or one or more of its Affiliates.
"IPO Conditions" means completion of the IPO by December 31, 1995, with
net proceeds to the public company (Tenant or any Affiliate or successor of
Tenant) of at least $17,500,000, issuance to Landlord of shares of the public
company's common stock with a value of $988,000 having the registration and sale
rights described in the Commitment and payment by Tenant to Landlord of the
$500,000 modification fee and payment of all costs and expenses incurred by
Landlord in connection with the modifications.
"Issuer" means one or more financial institutions satisfactory to
Landlord issuing the Letter of Credit and the Equity Letter of Credit (if
applicable) and such Issuer's successors and
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assigns. Any "Issuer" shall have a Lace Financial Service Rating of "C+" or
higher at all times throughout the Term.
"Lease Advance" means [i] the first Lease Advance by Landlord in the
Acquisition Amount for the acquisition of the Leased Property or [ii] any other
advance of funds by Landlord to Tenant pursuant to the term of this Lease.
"Lease Advance Amount" means the amount of any Lease Advance. The
Acquisition Amount is the first Lease Advance Amount.
"Lease Advance Date" means the date on which Landlord makes a Lease
Advance.
"Lease Amount" is an aggregate concept and means the sum of the Lease
Advance Amounts outstanding at the applicable time.
"Lease Payments" means the sum of the Base Rent payments (as increased
from time to time) for the applicable period.
"Lease Rate" means the annual rate used to determine Base Rent for each
Lease Advance. The Lease Rate is the sum of the applicable Rate Index plus the
applicable Rate Spread, computed using the 365/360 method. The Lease Rate
includes any accrued Increaser Rate. On each Renewal Date, the Lease Rate will
be reset for the Lease Amount based upon the applicable Rate Index plus the
applicable Rate Spread in effect on the Rate Determination Date for such Renewal
Date.
"Lease Year" means each consecutive period of 365 or 366 days
throughout the Term. The first Lease Year commences on the Commencement Date and
expires on the day before the first anniversary of the Commencement Date.
"Legal Requirements" means all laws, regulations, rules, orders, writs,
injunctions, decrees, certificates, requirements, agreements, conditions of
participation and standards of any federal, state, county, municipal or other
governmental entity, administrative agency, insurance underwriting board,
architectural control board, private third-party payor, accreditation
organization, or any restrictive covenants applicable to the development,
construction, condition and operation of each Facility by Tenant, including but
not limited to, [i] zoning, building, fire, health, safety, sign, and
subdivision regulations and codes; [ii] certificate of need laws, if applicable;
[iii] licensure to operate as an assisted living facility; [iv] Medicare and
Medicaid certification requirements, if applicable; [v] the ADA; [vi] any
Environmental Laws; and [vii] requirements, conditions and standards for
participation in third-party payer insurance programs.
"Letter of Credit" means one or more irrevocable and transferable
Letters of Credit in the aggregate amount equal to 2.5% of the Lease Amount
issued by Issuer in favor of Landlord as security for the Lease and in form
acceptable to Lender, and any amendments thereto or replacements or
substitutions therefor.
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"Material Obligation" means [i] any indebtedness secured by a lien,
deed of trust or mortgage on any of the Leased Property and any agreement
relating thereto; [ii] any obligation or agreement that is material to the
construction or operation of the Facility; [iii] any indebtedness or capital
lease of Tenant that has an outstanding principal balance of at least $100,000
in any one instance or at least $250,000 in the aggregate and any agreement
relating thereto; [iv] any obligation to or agreement with the Issuer relating
to the Letter of Credit; and [v] any sublease of the Leased Property.
"Periodic Financial Statements" means [i] unaudited balance sheet and
statement of income of Tenant and each Related Company for the most recent
quarter; and [ii] unaudited financial statement of each Guarantor as of the date
specified by Lender.
"Permitted Exceptions" means the exceptions to title set forth on
Exhibit B.
"Permitted Liens" means [i] liens granted to Landlord; [ii] liens
customarily incurred by Tenant in the ordinary course of business for items not
delinquent including mechanic's liens and deposits and charges under worker's
compensation laws; [iii] liens for taxes and assessments not yet due and
payable; [iv] any lien, charge, or encumbrance which is being contested in good
faith pursuant to this Agreement; [v] the Permitted Exceptions; and [vi]
purchase money financing and capitalized equipment leases for the acquisition of
personal property provided, however, that Landlord obtains a nondisturbance
agreement from the purchase money lender or equipment lessor in form and
substance as may be satisfactory to Landlord if the original cost of the
equipment exceeds $50,000.00.
"Phase I Lease" means each lease, now or hereafter existing, between
Landlord and Corridor, or any successor or assign of Corridor, relating to the 7
assisted living facilities located in Bartlesville, Oklahoma, Midwest City,
Oklahoma, Stillwater, Oklahoma, Enid, Oklahoma, Oklahoma City, Oklahoma,
Shawnee, Oklahoma and Chickasha, Oklahoma and this Lease, as amended from time
to time.
"Phase I Tenant" means each Tenant under any Phase I Lease.
"Phase II Lease" means each lease, now or hereafter existing, between
Landlord and Tenant or any Affiliate relating to the 9th through 16th assisted
living facilities (or other similar facilities) developed by Tenant or any
Affiliate in association with Landlord, as amended from time to time.
"Phase II Tenant" means each Tenant under any Phase II Lease.
"Phase III Lease" means each Lease, now or hereafter existing, between
Landlord and Tenant or any Affiliate relating to the 17th through 24th assisted
living facilities (or other similar facilities) developed by Tenant or any
Affiliate in association with Landlord, as amended from time to time.
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"Phase III Tenant" means each Tenant under any Phase III Lease.
"Pro Forma Statement" means a financial forecast for the Facility for
the next 5 year period prepared in accordance with the standards for forecasts
established by the American Institute of Certified Public Accountants.
"Rate Determination Date" means the date on which the value for the
Rate Index is established for computing any Lease Rate. For any Lease Advances
made during the Initial Term, the Rate Determination Date is the Lease Advance
Date. For any Renewal Date, the Rate Determination Date is the last Business Day
of the current Term.
"Rate Index" means the yield quoted in the Wall Street Journal on the
applicable Rate Determination Date for the most actively traded United States
Treasury Notes having the nearest equivalent maturity date to the Expiration
Date or the expiration date for the current Renewal Term, as applicable. For any
Lease Advance other than the first Lease Advance, the yield shall be computed
based upon the remainder of the Initial Term or Renewal Term, as applicable.
"Rate Spread" means the rate spread from time to time used to calculate
the Lease Rate applicable to any Lease Advance. The Rate Spread is [i] 400 basis
points for the Initial Term; [ii] 625 basis points for the first Renewal Term;
[iii] 737.5 basis points for the second Renewal Term; and [iv] 850 basis points
for the third Renewal Term; provided, however, that upon satisfaction of the IPO
Conditions, the Rate Spread for the Initial Term shall be 375 basis points and
the Rate Spread for each Renewal Term shall be computed in accordance with
Section 12.2(c).
"Receivables" means [i] all of Tenant's rights to receive payment for
providing resident care and services as set forth in any accounts, contract
rights, and instruments, and [ii] those documents, chattel paper, inventory
proceeds, provider agreements, participation agreements, ledger sheets, files,
records, computer programs, tapes, and agreements relating to Tenant's rights to
receive payment for providing resident care services.
"Related Company" means Avanti Group, Inc., a Kansas corporation;
Sterling Management Company, Inc., a Kansas corporation; Sterling Holdings,
Inc., a Kansas corporation; Corridor Properties, L.L.C., a Kansas limited
liability company; and Buchanan Homes, Inc., a Kansas corporation, individually
and collectively, and each successor and assign thereof.
"Related Lease" means any Phase I Lease, Phase II Lease or Phase III
Lease.
"Related Tenant" means any Phase I Tenant, Phase II Tenant or Phase III
Tenant.
"Renewal Date" means the date on which the Lease Rate is reset and will
be the first day of each Renewal Term.
"Renewal Option" has the meaning set forth in Section 12.1.
"Renewal Rate" means the Lease Rate established for any Renewal Date
and is the sum of the applicable Rate Index and applicable Rate Spread.
"Renewal Term" has the meaning set forth in Section 12.1.
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"Overdue Rate" has the meaning set forth in Section 8.6.
"State" means the State of Oklahoma.
"Tenant's Obligations" means all payment and performance obligations of
Tenant under this Lease and all documents executed by Tenant in connection with
this Lease.
"Term" means the Initial Term and each Renewal Term.
ARTICLE 2: RENT
2.1 Base Rent. Tenant shall pay Landlord base rent ("Base Rent") in
advance in consecutive monthly installments payable on the first day of each
month during the Term commencing on the Commencement Date. If the Effective Date
is not the first day of a month, Tenant shall pay Landlord Base Rent on the
Effective Date for the partial month, i.e. for the period commencing on the
Effective Date and ending on the day before the Commencement Date. The Base Rent
for the Initial Term will be computed monthly and will be equal to 1/12th of the
sum of the products of each Lease Advance times the Lease Rate for each Lease
Advance. The Base Rent for each Renewal Term will be computed in accordance
with Section 12.2.
2.2 Increase of Lease Rate and Base Rent. Commencing on the first
anniversary of the Commencement Date and on each anniversary thereafter
throughout the Term (including any Renewal Term and Extended Term), the Lease
Rate will increase by the applicable Increaser Rate. On each date that the Lease
Rate is increased, the Base Rent will be increased accordingly and will be equal
to 1/12th of the sum of the products of each Lease Advance times the Lease Rate
(including the applicable Increaser Rate) for each Lease Advance.
2.3 Additional Rent. In addition to Base Rent, Tenant shall pay all
other amounts, liabilities, obligations and Impositions which Tenant assumes or
agrees to pay under this Lease and any fine, penalty, interest, charge and cost
which may be added for nonpayment or late payment of such items (collectively
the "Additional Rent"). The Base Rent and Additional Rent are hereinafter
referred to as "Rent". Landlord shall have all legal, equitable and contractual
rights, powers and remedies provided either in this Lease or by statute or
otherwise in the case of nonpayment of the Rent.
2.4 Place of Payment of Rent. Tenant shall make all payments of Rent at
the Landlord's address set forth in the first paragraph of this Lease or at such
other place as Landlord may designate from time to time.
2.5 Net Lease. This Lease shall be deemed and construed to be an
"absolute net lease", and Tenant shall pay all Rent and other charges and
expenses in connection with the Leased
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Property throughout the Term, without abatement, deduction or set-off.
2.6 No Termination, Abatement, Etc. Except as otherwise specifically
provided in this Lease, Tenant shall remain bound by this Lease in accordance
with its terms. Tenant shall not, without the consent of Landlord, modify,
surrender or terminate the Lease, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off against the Rent. Except
as expressly provided in this Lease, the obligations of Landlord and Tenant
shall not be affected by reason of [i] any damage to, or destruction of, the
Leased Property or any part thereof from whatever cause or any Taking (as
hereinafter defined) of the Leased Property or any part thereof; [ii] the lawful
or unlawful prohibition of, or restriction upon, Tenant's use of the Leased
Property, or any part thereof, the interference with such use by any person,
corporation, partnership or other entity, or by reason of eviction by paramount
title (subject to the provisions of Article 10); [iii] any claim which Tenant
has or might have against Landlord or by reason of any default or breach of any
warranty by Landlord under this Lease or any other agreement between Landlord
and Tenant, or to which Landlord and Tenant are parties; [iv] any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceeding affecting Landlord or any assignee or transferee
of Landlord; or [v] any other cause, whether similar or dissimilar to any of the
foregoing, other than a discharge of Tenant from any such obligations as a
matter of law. Except as otherwise specifically provided in this Lease, Tenant
hereby specifically waives all rights, arising from any occurrence whatsoever,
which may now or hereafter be conferred upon it by law [a] to modify, surrender
or terminate this Lease or quit or surrender the Leased Property or any portion
thereof; or [b] entitling Tenant to any abatement, reduction, suspension or
deferment of the Rent or other sums payable by Tenant hereunder. The obligations
of Landlord and Tenant hereunder shall be separate and independent covenants and
agreements and the Rent and all other sums payable by Tenant hereunder shall
continue to be payable in all events unless the obligations to pay the same
shall be terminated pursuant to the express provisions of this Lease or by
termination of this Lease other than by reason of an Event of Default.
2.7 Computational Method. Landlord and Tenant acknowledge that all
rates under this Lease will be computed based on the actual number of days
elapsed over a 360-day year (365/360 method).
2.8 Commitment Fee. On the Effective Date, Tenant shall pay a
commitment fee to Landlord in an amount equal to 1% of the Acquisition Amount.
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ARTICLE 3: IMPOSITIONS AND UTILITIES
3.1 Payment of Impositions. Tenant shall pay, as Additional Rent, all
Impositions that may be levied or become a lien on the Leased Property or any
part thereof at any time (whether prior to or during the Term), without regard
to prior ownership of said Leased Property, before any fine, penalty, interest,
or cost is incurred; provided, however, Tenant may contest any Imposition in
accordance with Section 3.7. Tenant shall deliver to Landlord [i] not more than
5 days after the due date of each Imposition, copies of the invoice for such
Imposition and the check delivered for payment thereof; and [ii] not more than 5
business days after receipt thereof, a copy of the official receipt evidencing
such payment or other proof of payment satisfactory to Landlord. Tenant's
obligation to pay such Impositions shall be deemed absolutely fixed upon the
date such Impositions become a lien upon the Leased Property or any part
thereof. Tenant, at its expense, shall prepare and file all tax returns and
reports in respect of any Imposition as may be required by governmental
authorities. Tenant shall be entitled to any refund due from any taxing
authority if no Event of Default shall have occurred hereunder and be
continuing. Landlord shall be entitled to any refund from any taxing authority
if an Event of Default has occurred and is continuing. Any refunds retained by
Landlord due to an Event of Default shall be applied as provided in Section 8.8.
Landlord and Tenant shall, upon request of the other, provide such data as is
maintained by the party to whom the request is made with respect to the Leased
Property as may be necessary to prepare any required returns and reports. In the
event governmental authorities classify any property covered by this Lease as
personal property, Tenant shall file all personal property tax returns in such
jurisdictions where it may legally so file. Landlord, to the extent it possesses
the same, and Tenant, to the extent it possesses the same, will provide the
other party, upon request, with cost and depreciation records necessary for
filing returns for any property so classified as personal property. Where
Landlord is legally required to file personal property tax returns, Tenant will
be provided with copies of assessment notices indicating a value in excess of
the reported value in sufficient time for Tenant to file a protest. Tenant may,
upon notice to Landlord, at Tenant's option and at Tenant's sole cost and
expense, protest, appeal, or institute such other proceedings as Tenant may deem
appropriate to effect a reduction of real estate or personal property
assessments and Landlord, at Tenant's expense as aforesaid, shall fully
cooperate with Tenant in such protest, appeal, or other action. Tenant shall
reimburse Landlord for all personal property taxes paid by Landlord within 30
days after receipt of billings accompanied by copies of a bill therefor and
payments thereof which identify the personal property with respect to which such
payments are made. Impositions imposed in respect to the tax-fiscal period
during which the Term terminates shall be adjusted and prorated between Landlord
and Tenant, whether or not such Imposition is imposed before or after such
termination, and Tenant's obligation to pay its prorated share thereof shall
survive such termination.
3.2 Definition of Impositions. "Impositions" means, collectively, [i]
taxes (including without limitation, all capital stock and franchise taxes of
Landlord imposed by the State or any governmental entity in the State due to
this lease transaction or Landlord's ownership of the Leased Property and the
income arising therefrom, or due to Landlord being considered as doing business
in the State because of Landlord's ownership of the Leased Property or lease
thereof to Tenant), all real estate and personal property ad valorem, sales and
use, business or occupation, single business, gross receipts, transaction
privilege, rent or similar taxes); [ii] assessments
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(including without limitation, all assessments for public improvements or
benefits, whether or not commenced or completed prior to the date hereof and
whether or not to be completed with the Term); [iii] ground rents, water, sewer
or other rents and charges, excises, tax levies, and fees (including without
limitation, license, permit, inspection, authorization and similar fees); [iv]
all taxes imposed on Tenant's operations of the Leased Property, including
without limitation, employee withholding taxes, income taxes and intangible
taxes; [v] all real property conveyance taxes, transfer fees, deed stamps and
similar charges imposed by the State or any governmental entity in the State
with respect to the conveyance of the Leased Property from Tenant to Landlord
(if applicable) and from Landlord to Tenant; and [vi] all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of the Leased Property or
any part thereof and/or the Rent (including all interest and penalties thereon
due to any failure in payment by Tenant), which at any time prior to, during or
in respect of the Term hereof may be assessed or imposed on or in respect of or
be a lien upon [a] Landlord or Landlord's interest in the Leased Property or any
part thereof; [b] the Leased Property or any part thereof or any rent therefrom
or any estate, right, title or interest therein; or [c] any occupancy,
operation, use or possession of, or sales from, or activity conducted on, or in
connection with the Leased Property or the leasing or use of the Leased Property
or any part thereof. Tenant shall not, however, be required to pay any tax based
on net income (whether denominated as a franchise or capital stock or other tax)
imposed on Landlord by any governmental entity other than as described in clause
[i] above.
3.3 Escrow of Impositions. If an Event of Default occurs and while it
remains uncured, Tenant shall, at Landlord's election, deposit with Landlord on
the first day of each month a sum equal to 1/12th of the Impositions assessed
against the Leased Property for the preceding tax year, which sums shall be used
by Landlord toward payment of such Impositions. Tenant, on demand, shall pay to
Landlord any additional funds necessary to pay and discharge the obligations of
Tenant pursuant to the provisions of this Section. The receipt by Landlord of
the payment of such Impositions by and from Tenant shall only be as an
accommodation to Tenant, the mortgagees, and the taxing authorities, and shall
not be construed as rent or income to Landlord, Landlord serving, if at all,
only as a conduit for delivery purposes.
3.4 Utilities. Tenant shall pay, or cause to be paid, as Additional
Rent, all taxes, assessments, charges, deposits, and bills for utilities,
including without limitation charges for water, gas, oil, sanitary and storm
sewer, electricity, telephone service, and trash collection, which may be
charged against the occupant of the Improvements during the Term. If an Event of
Default occurs and while it remains uncured, Tenant shall, at Landlord's
election, deposit with Landlord on the first day of each month a sum equal to
1/12th of the amount of the annual utility expenses for the preceding Lease
Year, which sums shall be used by Landlord to pay such utilities. Tenant shall,
on demand, pay to Landlord any additional amount needed to pay such utilities.
Landlord's receipt of such payments shall only be an accommodation to Tenant and
the utility companies and shall not constitute rent or income to Landlord.
Tenant shall at all times maintain that amount of heat necessary to ensure
against the freezing of water lines. Tenant hereby agrees to indemnify and hold
Landlord harmless from and against any liability or damages to the utility
systems and the Leased Property that may result from Tenant's failure to
maintain sufficient heat in the Improvements.
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3.5 Discontinuance of Utilities. Landlord will not be liable for
damages to person or property or for injury to, or interruption of, business for
any discontinuance of utilities nor will such discontinuance in any way be
construed as an eviction of Tenant or cause an abatement of rent or operate to
release Tenant from any of Tenant's obligations under this Lease.
3.6 Business Expenses. Tenant shall promptly pay all expenses and costs
incurred in connection with the operation of the Facility on the Leased
Property, including without limitation, employee benefits, employee vacation and
sick pay, consulting fees, and expenses for inventory and supplies.
3.7 Permitted Contests. Tenant, on its own or on Landlord's behalf (or
in Landlord's name), but at Tenant's expense, may contest, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition or any Legal
Requirement or insurance requirement or any lien, attachment, levy, encumbrance,
charge or claim provided that [i] in the case of an unpaid Imposition, lien,
attachment, levy, encumbrance, charge or claim, the commencement and
continuation of such proceedings shall suspend the collection thereof from
Landlord and from the Leased Property; [ii] neither the Leased Property nor any
Rent therefrom nor any part thereof or interest therein would be in any
immediate danger of being sold, forfeited, attached or lost; [iii] in the case
of a Legal Requirement, Landlord would not be in any immediate danger of civil
or criminal liability for failure to comply therewith pending the outcome of
such proceedings; [iv] in the event that any such contest shall involve a sum of
money or potential loss in excess of $50,000.00, Tenant shall deliver to
Landlord and its counsel an opinion of Tenant's counsel to the effect set forth
in clauses [i], [ii] and [iii], to the extent applicable; [v] in the case of a
Legal Requirement and/or an Imposition, lien, encumbrance or charge, Tenant
shall give such reasonable security as may be demanded by Landlord to insure
ultimate payment of the same and to prevent any sale or forfeiture of the
affected Leased Property or the Rent by reason of such nonpayment or
noncompliance; provided, however, the provisions of this Section shall not be
construed to permit Tenant to contest the payment of Rent (except as to contests
concerning the method of computation or the basis of levy of any Imposition or
the basis for the assertion of any other claim) or any other sums payable by
Tenant to Landlord hereunder; [vi] in the case of an insurance requirement, the
coverage required by Article 4 shall be maintained; and [vii] if such contest be
finally resolved against Landlord or Tenant, Tenant shall, as Additional Rent
due hereunder, promptly pay the amount required to be paid, together with all
interest and penalties accrued thereon, or comply with the applicable Legal
Requirement or insurance requirement. Landlord, at Tenant's expense, shall
execute and deliver to Tenant such authorizations and other documents as may be
reasonably required in any such contest, and, if reasonably requested by Tenant
or if Landlord so desires, Landlord shall join as a party therein. Tenant hereby
agrees to indemnify and save Landlord harmless from and against any liability,
cost or expense of any kind that may be imposed upon Landlord in connection with
any such contest and any loss resulting therefrom.
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ARTICLE 4: INSURANCE
4.1 Property Insurance. At Tenant's expense, Tenant shall maintain in
full force and effect a property insurance policy or policies insuring the
Leased Property against the following:
(a) Loss or damage commonly covered by a "Special Form" policy
insuring against physical loss or damage to the Improvements and Personal
Property, including but not limited to, risk of loss from fire and other
hazards, collapse, transit coverage, vandalism, malicious mischief, theft,
earthquake (if the Leased Property is in earthquake zone 1 or 2) and sinkholes
(if usually recommended in the area of the Leased Property). The policy shall be
in the amount of the full replacement value (as defined in Section 4.5) of the
Improvements and Personal Property and shall contain a deductible amount
acceptable to Landlord. Landlord shall be named as an additional insured. The
policy shall include a stipulated value endorsement or agreed amount endorsement
and endorsements for contingent liability for operations of building laws,
demolition costs, and increased cost of construction.
(b) If applicable, loss or damage by explosion of steam
boilers, pressure vessels, or similar apparatus, now or hereafter installed on
the Leased Property, in commercially reasonable amounts acceptable to Landlord.
(c) Consequential loss of rents and income coverage insuring
against all "Special Form" risk of physical loss or damage with limits and
deductible amounts acceptable to Landlord covering risk of loss during the first
9 months of reconstruction, and containing an endorsement for extended period of
indemnity of at least 6 months, and shall be written with a stipulated amount
coverage if available at a reasonable premium.
(d) If the Leased Property is located, in whole or in part, in
a federally designated 100-year flood plain area, flood insurance for the
Improvements in an amount equal to the lesser of [i] the full replacement value
of the Improvements; or [ii] the maximum amount of insurance available for the
Improvements under all federal and private flood insurance programs.
(e) Loss or damage caused by the breakage of plate glass in
commercially reasonable amounts acceptable to Landlord.
(f) Loss or damage commonly covered by blanket crime insurance
including employee dishonesty, loss of paper currency, depositor's forgery, and
loss of property of patients accepted by Tenant for safekeeping, in commercially
reasonable amounts acceptable to the Landlord.
4.2 Liability Insurance. At Tenant's expense, Tenant shall maintain
liability insurance against the following:
(a) Claims for personal injury or property damage commonly
covered by comprehensive general liability insurance with endorsements for
incidental malpractice,
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contractual, personal injury, owner's protective liability, voluntary medical
payments, products and completed operations, broad form property damage, and
extended bodily injury, with commercially reasonable amounts for bodily injury,
property damage, and voluntary medical payments acceptable to Landlord, but with
a combined single limit of not less than $5,000,000.00 per occurrence.
(b) Claims for personal injury and property damage commonly
covered by comprehensive automobile liability insurance, covering all owned and
non-owned automobiles, with commercially reasonable amounts for bodily injury,
property damage, and for automobile medical payments acceptable to Landlord, but
with a combined single limit of not less than $5,000,000.00 per occurrence.
(c) Claims for personal injury commonly covered by medical
malpractice insurance in commercially reasonable amounts acceptable to Landlord.
(d) Claims commonly covered by worker's compensation insurance
for all persons employed by Tenant on the Leased Property. Such worker's
compensation insurance shall be in accordance with the requirements of all
applicable local, state, and federal law.
4.3 Builder's Risk Insurance. In connection with any construction,
Tenant shall maintain in full force and effect a builder's completed value risk
policy ("Builder's Risk Policy") of insurance in a nonreporting form insuring
against all "Special Form" risk of physical loss or damage to the Improvements,
including but not limited to, risk of loss from fire and other hazards,
collapse, transit coverage, vandalism, malicious mischief, theft, earthquake (if
Leased Property is in earthquake zone 1 or 2) and sinkholes (if usually
recommended in the area of the Leased Property). The Builder's Risk Policy shall
include endorsements providing coverage for building materials and supplies and
temporary premises. The Builder's Risk Policy shall be in the amount of the full
replacement value of the Improvements and shall contain a deductible amount
acceptable to Landlord. Landlord shall be named as an additional insured. The
Builder's Risk Policy shall include an endorsement permitting initial occupancy.
4.4 Insurance Requirements. The following provisions shall apply to all
insurance coverages required hereunder:
(a) The form and substance of all policies shall be subject to
the approval of Landlord, which approval will not be unreasonably withheld.
(b) The carriers of all policies shall have a Best's Rating of
"A" or better and a Best's Financial Category of IX or higher and shall be
authorized to do insurance business in the State.
(c) Tenant shall be the "named insured" and Landlord shall be
an "additional insured" on each liability policy. On all property and casualty
policies, Landlord and Tenant shall be joint loss payees.
(d) Tenant shall deliver to Landlord certificates or policies
showing the
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required coverages and endorsements. The policies of insurance shall provide
that the policy may not be cancelled or not renewed, and no material change or
reduction in coverage may be made, without at least 30 days' prior written
notice to Landlord.
(e) The policies shall contain a severability of interest
and/or cross-liability endorsement, provide that the acts or omissions of Tenant
or Landlord will not invalidate the coverage of the other party, and provide
that Landlord shall not be responsible for payment of premiums.
(f) All casualty loss adjustment shall require the written
consent of Landlord and Tenant, as their interests may appear.
(g) At least 30 days prior to the expiration of each policy,
Tenant shall deliver to Landlord satisfactory evidence of payment of the annual
renewal premium. No later than the expiration date of each policy, Tenant shall
deliver to Landlord a certificate showing renewal of such policy and payment of
the annual renewal premium.
4.5 Replacement Value. The term "full replacement value" means the
actual replacement cost thereof from time to time including increased cost of
construction endorsement, with no reductions or deductions. Tenant shall, in
connection with each annual policy renewal, deliver to Landlord a
redetermination of the full replacement value by the insurer or an endorsement
indicating that the Leased Property is insured for its full replacement value.
If Tenant makes any Permitted Alterations (as hereinafter defined) to the Leased
Property, Landlord may have such full replacement value redetermined at any time
after such Permitted Alterations are made, regardless of when the full
replacement value was last determined.
4.6 Blanket Policy. Notwithstanding anything to the contrary contained
in this Section, Tenant may carry the insurance required by this Article under a
blanket policy of insurance, provided that the coverage afforded Tenant will not
be reduced or diminished or otherwise be different from that which would exist
under a separate policy meeting all of the requirements of this Lease.
4.7 No Separate Insurance. Tenant shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required in
this Article, or increase the amounts of any then existing insurance, by
securing an additional policy or additional policies, unless all parties having
an insurable interest in the subject matter of the insurance, including Landlord
and any mortgagees, are included therein as additional insureds or loss payees,
the loss is payable under said insurance in the same manner as losses are
payable under this Lease, and such additional insurance is not prohibited by the
existing policies of insurance. Tenant shall immediately notify Landlord of the
taking out of such separate insurance or the increasing of any of the amounts of
the existing insurance by securing an additional policy or additional policies.
4.8 Waiver of Subrogation. Each party hereto hereby waives any and
every claim which arises or may arise in its favor and against the other party
hereto during the Term for any and all loss of, or damage to, any of its
property located within or upon, or constituting a part
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of, the Leased Property, which loss or damage is covered by valid and
collectible insurance policies, to the extent that such loss or damage is
recoverable under such policies. Said mutual waiver shall be in addition to, and
not in limitation or derogation of, any other waiver or release contained in
this Lease with respect to any loss or damage to property of the parties hereto.
Inasmuch as the said waivers will preclude the assignment of any aforesaid claim
by way of subrogation (or otherwise) to an insurance company (or any other
person), each party hereto agrees immediately to give each insurance company
which has issued to it policies of insurance, written notice of the terms of
said mutual waivers, and to have such insurance policies properly endorsed, if
necessary, to prevent the invalidation of said insurance coverage by reason of
said waivers, so long as such endorsement is available at a reasonable cost.
4.9 Mortgages. The following provisions shall apply if
Landlord now or hereafter places a mortgage on the Leased Property or any part
thereof: [i] Tenant shall obtain a standard form of lender's loss payable clause
insuring the interest of the mortgagee; [ii] Tenant shall deliver evidence of
insurance to such mortgagee; [iii] loss adjustment of claims in excess of $5,000
shall require the consent of the mortgagee; and [iv] Tenant shall provide such
other information and documents as may be required by the mortgagee.
4.10 Escrows. After an Event of Default occurs hereunder and
until such Event of Default is cured, Tenant shall make such periodic payments
of insurance premiums in accordance with Landlord's requirements after receipt
of notice thereof from Landlord.
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ARTICLE 5: INDEMNITY
5.1 Tenant's Indemnification. Tenant hereby indemnifies and agrees to
hold harmless Landlord, any successors or assigns of Landlord, and Landlord's
and such successor's and assign's directors, officers, employees and agents from
and against any and all demands, claims, causes of action, fines, penalties,
damages (including consequential damages), losses, liabilities (including strict
liability), judgments, and expenses (including, without limitation, reasonable
attorneys' fees, court costs, and the costs set forth in Section 8.7) incurred
in connection with or arising from: [i] the use or occupancy of the Leased
Property by Tenant or any persons claiming under Tenant; [ii] any activity,
work, or thing done, or permitted or suffered by Tenant in or about the Leased
Property; [iii] any acts, omissions, or negligence of Tenant or any person
claiming under Tenant, or the contractors, agents, employees, invitees, or
visitors of Tenant or any such person; [iv] any breach, violation, or
nonperformance by Tenant or any person claiming under Tenant or the employees,
agents, contractors, invitees, or visitors of Tenant or of any such person, of
any term, covenant, or provision of this Lease or any law, ordinance, or
governmental requirement of any kind including, without limitation, any failure
to comply with any applicable requirements under the ADA; [v] any injury or
damage to the person, property or business of Tenant, its employees, agents,
contractors, invitees, visitors, or any other person entering upon the Leased
Property; and [vi] any construction, alterations, changes or demolition of any
Facility performed by or contracted for Tenant or its employees, agents or
contractors. If any action or proceeding is brought against Landlord, its
employees, or agents by reason of any such claim, Tenant, upon notice from
Landlord, will defend the claim at Tenant's expense with counsel reasonably
satisfactory to Landlord. All amounts payable to Landlord under this section
shall be payable on written demand and any such amounts which are not paid
within 10 days after demand therefor by Landlord shall bear interest at the
Overdue Rate. In case any action, suit or proceeding is brought against Tenant
by reason of any such occurrence, Tenant shall use its best efforts to defend
such action, suit or proceeding.
5.1.1 Notice of Claim. Landlord shall notify Tenant in writing of any
claim or action brought against Landlord in which indemnity may be sought
against Tenant pursuant to this section. Such notice shall be given in
sufficient time to allow Tenant to defend or participate in such claim or
action.
5.1.2 Survival of Covenants. The covenants of Tenant contained in this
section shall remain in full force and effect after the termination of this
Agreement until the expiration of the period stated in the applicable statute of
limitations during which a claim or cause of action may be brought and payment
in full or the satisfaction of such claim or cause of action and of all expenses
and charges incurred by Landlord relating to the enforcement of the provisions
herein specified.
5.1.3 Reimbursement of Expenses. Unless prohibited by law, Tenant
hereby agrees to pay to Landlord all of the reasonable fees, charges and
reasonable out-of-pocket expenses related to the Facility and required hereby,
or incurred by Landlord in enforcing the provisions of this Agreement.
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5.2 Environmental Indemnity; Audits.
5.2.1 Indemnification. Tenant hereby indemnifies and agrees to hold
harmless Landlord, any successors to Landlord's interest in this Lease, and
Landlord's and such successors' directors, officers, employees and agents from
and against any losses, claims, damages (including consequential damages),
penalties, fines, liabilities (including strict liability), costs (including
cleanup and recovery costs), and expenses (including expenses of litigation and
reasonable attorneys' fees) incurred by Landlord or any other indemnitee or
assessed against the Leased Property by virtue of any claim or lien by any
governmental or quasi-governmental unit, body, or agency, or any third party,
for cleanup costs or other costs pursuant to any Environmental Law. Tenant's
indemnity shall survive the termination of this Lease. Provided, however, Tenant
shall have no indemnity obligation with respect to [i] Hazardous Materials first
introduced to the Leased Property subsequent to the date that Tenant's occupancy
of the Leased Property shall have fully terminated; or [ii] Hazardous Materials
introduced to the Leased Property by Landlord, its agent, employees, successors
or assigns. If at any time during the Term of this Lease any governmental
authority notifies Landlord or Tenant of a violation of any Environmental Law or
Landlord reasonably believes that a Facility may violate any Environmental Law,
Landlord may require one or more environmental audits of the Leased Premises, in
such form, scope and substance as specified by Landlord, at Tenant's expense.
Tenant shall, within 30 days after receipt of an invoice from Landlord,
reimburse Landlord for all costs and expenses incurred in reviewing any
environmental audit, including without limitation, reasonable attorneys' fees
and costs.
5.3 Limitation of Landlord's Liability. Landlord, its agents, and
employees, will not be liable for any loss, injury, death, or damage (including
consequential damages) to persons, property, or Tenant's business occasioned by
theft, act of God, public enemy, injunction, riot, strike, insurrection, war,
court order, requisition, order of governmental body or authority, fire,
explosion, falling objects, steam, water, rain or snow, leak or flow of water
(including water from the elevator system), rain or snow from the Leased
Property or into the Leased Property or from the roof, street, subsurface or
from any other place, or by dampness or from the breakage, leakage, obstruction,
or other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, or lighting fixtures of the Leased Property, or from construction,
repair, or alteration of the Leased Property or from any acts or omissions of
any other occupant or visitor of the Leased Property, or from any other cause
beyond Landlord's control.
ARTICLE 6: USE AND ACCEPTANCE OF PREMISES
6.1 Use of Leased Property. Tenant shall use and occupy the Leased
Property exclusively as an assisted living facility and for all lawful and
licensed ancillary uses, and for no other purpose without the prior written
consent of the Landlord. Tenant shall obtain and maintain all approvals,
licenses, and consents needed to use and operate the Leased Property as herein
permitted. Tenant shall deliver to Landlord complete copies of surveys,
examinations, certification and licensure inspections, compliance certificates,
and other similar reports issued to Tenant by any governmental agency within 10
days after Tenant's receipt of each item.
6.2 Acceptance of Leased Property. Tenant acknowledges that [i] Tenant
and its
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agents have had an opportunity to inspect the Leased Property; [ii] Tenant has
found the Leased Property fit for Tenant's use; [iii] Landlord will deliver the
Leased Property to Tenant in "as-is" condition; [iv] Landlord is not obligated
to make any improvements or repairs to the Leased Property; and [v] the roof,
walls, foundation, heating, ventilating, air conditioning, telephone, sewer,
electrical, mechanical, elevator, utility, plumbing, and other portions of the
Leased Property are in good working order. Tenant waives any claim or action
against Landlord with respect to the condition of the Leased Property. LANDLORD
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE
LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, OR AS TO QUALITY OF
THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL
SUCH RISKS ARE TO BE BORNE BY TENANT.
6.3 Conditions of Use and Occupancy. Tenant agrees that during the Term
it shall use and keep the Leased Property in a careful, safe and proper manner;
not commit or suffer waste thereon; not use or occupy the Leased Property for
any unlawful purposes; not use or occupy the Leased Property or permit the same
to be used or occupied, for any purpose or business deemed extrahazardous on
account of fire or otherwise; keep the Leased Property in such repair and
condition as may be required by the Board of Health, or other city, state or
federal authorities, free of all cost to Landlord; not permit any acts to be
done which will cause the cancellation, invalidation, or suspension of any
insurance policy; and permit Landlord and its agents to enter upon the Leased
Property at all reasonable times to examine the condition thereof.
ARTICLE 7: REPAIRS AND MECHANICS' LIENS
7.1 Maintenance. Tenant shall maintain, repair, and replace the Leased
Property, including without limitation, all structural and nonstructural repairs
and replacements to the roof, foundations, exterior walls, parking areas,
sidewalks, water, sewer, and gas connections, pipes, and mains. Tenant shall
pay, as Additional Rent, the full cost of maintenance, repairs, and
replacements. Tenant shall maintain all drives, sidewalks, parking areas, and
lawns on or about the Leased Property in a clean and orderly condition, free of
accumulations of dirt, rubbish, snow and ice. Tenant shall permit Landlord to
inspect the Leased Property at all reasonable times, and shall implement all
reasonable suggestions of the Landlord as to the maintenance and replacement of
the Leased Property.
7.2 Required Alterations. Tenant shall, at Tenant's sole cost and
expense, make any additions, changes, improvements or alterations to the Leased
Property, including structural alterations, which may be required by any
governmental authorities, including those required to maintain licensure or
certification under the Medicare and Medicaid programs (if so certified),
whether such changes are required by Tenant's use, changes in the law,
ordinances, or governmental regulations, defects existing as of the date of this
Lease, or any other cause whatever. All such additions, changes, improvements or
alterations shall be deemed to be Permitted Alterations and shall comply with
all laws requiring such alterations and with the provisions of Section 16.4.
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7.3 Mechanic's Liens. Tenant shall have no authority to permit or
create a lien against Landlord's interest in the Leased Property, and upon
Landlord's request, Tenant shall post notices during construction or file such
documents as may be required to protect Landlord's interest in the Leased
Property against liens. Tenant hereby agrees to defend, indemnify, and hold
Landlord harmless from and against any mechanic's liens against the Leased
Property by reason of work, labor, services or materials supplied or claimed to
have been supplied on or to the Leased Property. Tenant shall remove, bond-off,
or otherwise obtain the release of any mechanic's lien filed against the Leased
Property within 10 days after the filing thereof; provided, however, that Tenant
shall have the right to contest in good faith and with due diligence the
validity of any such lien upon furnishing such security or indemnity as may be
reasonably required by Landlord. Tenant shall pay all Landlord's expenses in
connection therewith, including without limitation, damages, interest, court
costs and reasonable attorneys' fees.
7.4 Replacements of Fixtures and Personal Property. Tenant shall not
remove Fixtures and Personal Property from the Leased Property except to replace
the Fixtures and Personal Property by other similar items of equal quality and
value. Items being replaced by Tenant may be removed and shall become the
property of Tenant and items replacing the same shall be and remain the property
of Landlord. Tenant shall execute, upon written request from Landlord, any and
all documents necessary to evidence Landlord's ownership of the Personal
Property and replacements therefor. Tenant may finance replacements for the
Fixtures and Personal Property by equipment lease or by a security agreement and
financing statement if the equipment lessor or lender has entered into a
nondisturbance agreement with Landlord upon terms and conditions reasonably
acceptable to Landlord, including without limitation, the following: [a]
Landlord shall have the right (but not the obligation) to assume such security
agreement or equipment lease upon the occurrence of an Event of Default under
this Lease; [b] the equipment lessor or lender shall notify Landlord of any
default by Tenant under the equipment lease or security agreement and give
Landlord a reasonable opportunity to cure such default; and [c] Landlord shall
have the right to assign its rights under the equipment lease, security
agreement, or nondisturbance agreement. Tenant shall, within 30 days after
receipt of an invoice from Landlord, reimburse Landlord for all costs and
expenses incurred in reviewing and approving the equipment lease, security
agreement, and nondisturbance agreement, including without limitation,
reasonable attorneys' fees and costs.
ARTICLE 8: DEFAULTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the
following shall be an event of default ("Event of Default") hereunder:
(a) Tenant fails to pay in full any installment of Rent, or
any other monetary obligation payable by Tenant under this Lease (including the
Option Price) within 3 business days after Tenant is given written notice of
such failure, which written notice shall be given, at Landlord's option, at any
time after the expiration of 10 days from the date such payment is due;
provided, however, that if Tenant receives two notices of default during any one
year period, regardless of any subsequent cure of such default, thereafter
Landlord shall not be obligated to give Tenant written notice of any failure to
make any such payments, and it shall be an Event of Default
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if Tenant fails to pay any installment of Rent or any other monetary obligation
payable by Tenant under this Lease within 10 days after such payment is due.
(b) [Deleted]
(c) Borrower or Guarantor (where applicable) fails to comply
with any covenant set forth in Article 14, Section 15.6, Section 15.7 or Article
20 of this Lease.
(d) Tenant fails to observe and perform any other covenant,
condition or agreement under this Lease to be performed by Tenant and [i] such
failure continues for a period of 30 days after written notice thereof is given
to Tenant by Landlord; or [ii] if, by reason of the nature of such default, the
same cannot be remedied within said 30 days, Tenant fails to proceed with
diligence reasonably satisfactory to Landlord after receipt of the notice to
cure the same or, in any event, fails to cure such default within 90 days after
receipt of the notice. The foregoing notice and cure provisions do not apply to
any Event of Default otherwise specifically described in any other subsection
of Section 8.1.
(e) Tenant abandons or vacates the Leased Property or any
material part thereof or ceases to do business for any reason.
(f) [i] The filing by Tenant of a petition under 11 U.S.C. or
the commencement of a bankruptcy or similar proceeding by Tenant; [ii] the
failure by Tenant within 60 days to dismiss an involuntary bankruptcy petition
or other commencement of a bankruptcy, reorganization or similar proceeding
against Tenant, or to lift or stay any execution, garnishment or attachment of
such consequence as will impair its ability to carry on its operation at the
Leased Property; [iii] the entry of an order for relief under 11 U.S.C. in
respect of Tenant; [iv] any assignment by Tenant for the benefit of its
creditors; [v] the entry by Tenant into an agreement of composition with its
creditors; [vi] the approval by a court of competent jurisdiction of a petition
applicable to Tenant in any proceeding for its reorganization instituted under
the provisions of any state or federal bankruptcy, insolvency, or similar laws;
[vii] appointment by final order, judgment, or decree of a court of competent
jurisdiction of a receiver of a whole or any substantial part of the properties
of Tenant (provided such receiver shall not have been removed or discharged
within 60 days of the date of his qualification).
(g) [i] Any receiver, administrator, custodian or other person
takes possession or control of any of the Leased Property and continues in
possession for 60 days; [ii] any writ against any of the Leased Property is not
released within 60 days; [iii] any judgment is rendered or proceedings are
instituted against the Leased Property or Tenant which affect the Leased
Property or any part thereof, which is not dismissed for 60 days (except as
otherwise provided in this Section); [iv] all or a substantial part of the
assets of Tenant or Guarantor are attached, seized, subjected to a writ or
distress warrant, or are levied upon, or come into the possession of any
receiver, trustee, custodian, or assignee for the benefit of creditors; [v]
Tenant or Guarantor is enjoined, restrained, or in any way prevented by court
order (other than ex parte order) from conducting all or a substantial part of
its business or affairs; or [vi] except as otherwise permitted hereunder, a
final notice of lien, levy or assessment is filed of record with respect to all
or
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any part of the Leased Property or any property of Tenant located at the
Leased Property and is not dismissed, discharged, or bonded-off within 30 days
or is not otherwise addressed pursuant to Section 7.3.
(h) Any representation or warranty made by Tenant, Guarantor
or any Related Company in this Lease or any other document executed in
connection with this Lease, any guaranty of or other security for this Lease, or
any report, certificate, application, financial statement or other instrument
furnished by Tenant, Guarantor or any Related Company pursuant hereto or thereto
shall prove to be false, misleading or incorrect in any material respect as of
the date made.
(i) Tenant, any Guarantor, or any Affiliate defaults on any
indebtedness or obligation to Landlord, including, without limitation, any lease
with Landlord, or Tenant defaults on any Material Obligation, and any applicable
grace or cure period with respect to default under such indebtedness or
obligation expires without such default having been cured. This provision
applies to all such indebtedness and obligations as they may be amended,
modified, extended, or renewed from time to time.
(j) The occurrence of any change in Tenant's leasehold
interest in the Leased Property, or any change in the or management of Tenant,
except as permitted under Section 14.6 hereof, without the prior written consent
of Landlord.
(k) Any guarantor of the Lease dies, dissolves, terminates, is
adjudicated incompetent, files a petition in bankruptcy, or is adjudicated
insolvent under 11 U.S.C. or any other insolvency law, or fails to comply with
any covenant or requirement of such guarantor set forth in this Lease or in the
guaranty of such guarantor, and Tenant fails to deliver to Landlord within 60
days or 10 days before the deadline for making any claim against the estate of
the guarantor, whichever is less, (i) a substitute guaranty from a guarantor
that has a net worth at least equal to that of the affected guarantor; that is,
in Landlord's reasonable discretion, at least as creditworthy as the existing
guarantor; and that is otherwise reasonably satisfactory to Landlord; or (ii)
other collateral reasonably satisfactory to Landlord.
(l) The license for the Facility or any other Government
Authorization, is cancelled, suspended or otherwise invalidated, notice of
impending revocation proceedings is received and Tenant fails to diligently
contest such proceeding, or any reduction occurs in the number of licensed units
at the Facility.
8.2 Remedies. Landlord may exercise any one or more of the following
remedies upon the occurrence of an Event of Default:
(a) Landlord may re-enter and take possession of the Leased
Property without terminating the Lease, and lease the Leased Property for the
account of Tenant, holding Tenant liable for all costs of the Landlord in
reletting the Leased Property and for the difference in the amount received by
such reletting and the amounts payable by Tenant under the Lease.
(b) Landlord may terminate this Lease, exclude Tenant from
possession
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of the Leased Property and use efforts to lease the Leased Property to others,
holding Tenant liable for the difference in the amounts received from such
reletting and the amounts payable by Tenant under the Lease.
(c) Landlord may re-enter the Leased Property and have,
repossess and enjoy the Leased Property as if the Lease had not been made, and
in such event, Tenant and its successors and assigns shall remain liable for any
contingent or unliquidated obligations or sums owing at the time of such
repossession.
(d) Landlord may have access to and inspect, examine and make
copies of the books and records and any and all accounts, data and income tax
and other returns of Tenant insofar as they pertain to the Leased Property.
(e) Landlord may accelerate all of the unpaid Rent hereunder
so that the aggregate Rent for the unexpired term of this Lease becomes
immediately due and payable.
(f) Landlord may take whatever action at law or in equity as
may appear necessary or desirable to collect the Rent and other amounts payable
under the Lease then due and thereafter to become due, or to enforce performance
and observance of any obligations, agreements or covenants of Tenant under the
Commitment and this Lease, and may exercise all of Landlord's remedies set forth
in the Commitment and this Lease.
(g) With respect to the Collateral and Landlord's security
interest therein, Landlord may exercise all of its rights as secured party under
Article 9 of the Uniform Commercial Code as adopted in the State. Landlord may
sell the Collateral by public or private sale upon 5 days notice to Tenant.
Tenant agrees that a commercially reasonable manner of disposition of the
Collateral shall include, without limitation and at the option of Landlord, a
sale of the Collateral, in whole or in part, concurrently with the sale of the
Leased Property.
(h) Landlord may obtain control over and collect the
Receivables and apply the proceeds of the collections to satisfaction of
Tenant's Obligations unless prohibited by law. Tenant appoints Landlord or its
designee as attorney for Tenant with powers [i] to receive, to indorse, to sign
and/or to deliver, in Tenant's name or Landlord's name, any and all checks,
drafts, and other instruments for the payment of money relating to the
Receivables, and to waive demand, presentment, notice of dishonor, protest, and
any other notice with respect to any such instrument; [ii] to sign Tenant's name
on any invoice or bill of lading relating to any Receivable, drafts against
account debtors, assignments and verifications of Receivables, and notices to
account debtors; [iii] to send verifications of Receivables to any account
debtor; and [iv] to do all other acts and things necessary to carry out this
Lease. Landlord shall not be liable for any omissions, commissions, errors of
judgment, or mistakes in fact or law made in the exercise of any such powers. At
Landlord's option, Tenant shall [i] provide Landlord a full accounting of all
amounts received on account of Receivables with such frequency and in such form
as Landlord may require, either with or without applying all collections on
Receivables in payment of Tenant's Obligations or [ii] deliver to Landlord on
the day of receipt all such collections in the form received and duly indorsed
by Tenant. At Landlord's request, Tenant shall institute any action or enter
into any settlement
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determined by Landlord to be necessary to obtain recovery or redress from any
account debtor in default of Receivables. Landlord may give notice of its
security interest in the Receivables to any or all account debtors with
instructions to make all payments on Receivables directly to Landlord, thereby
terminating Tenant's authority to collect Receivables. After terminating
Tenant's authority to enforce or collect Receivables, Landlord shall have the
right to take possession of any or all Receivables and records thereof and is
hereby authorized to do so, and only Landlord shall have the right to collect
and enforce the Receivables. Prior to the occurrence of an Event of Default, at
Tenant's cost and expense, but on behalf of Landlord and for Landlord's account,
Tenant shall collect or otherwise enforce all amounts unpaid on Receivables and
hold all such collections in trust for Landlord, but Tenant may commingle such
collections with Tenant' own funds, until Tenant's authority to do so has been
terminated, which may be done only after an Event of Default. Notwithstanding
any other provision hereof, Landlord does not assume any of Tenant's obligations
under any Receivable, and Landlord shall not be responsible in any way for the
performance of any of the terms and conditions thereof by Tenant.
(i) Without waiving any prior or subsequent Event of Default,
Landlord may waive any Event of Default or, with or without waiving any Event of
Default, remedy any default.
(j) Landlord may terminate its obligation to disburse Lease
Advances.
(k) Landlord may enter and take possession of the Land and
Facility without terminating the Lease and complete construction and renovation
of the Improvements (or any part thereof) and perform the obligations of Tenant
under the Lease Documents. Without limiting the Construction Documents
generality of the foregoing and for the purposes aforesaid, Tenant hereby
appoints Landlord its lawful attorney-in-fact with full power to do any of the
following: [i] complete construction, renovation and equipping of the
Improvements in the name of Tenant; [ii] use unadvanced funds remaining under
the Maximum Lease Amount, or funds that may be reserved, escrowed, or set aside
for any purposes hereunder at any time, or to advance funds in excess of the
Maximum Lease Amount, to complete the Improvements; [iii] make changes in the
Plans and Specifications that shall be necessary or desirable to complete the
Improvements in substantially the manner contemplated by the Plans and
Specifications; [iv] retain or employ new general contractors, subcontractors,
architects, engineers, and inspectors as shall be required for said purposes;
[v] pay, settle, or compromise all existing bills and claims, which may be liens
or security interests, or to avoid such bills and claims becoming liens against
the Facility or security interest against fixtures or equipment, or as may be
necessary or desirable for the completion of the construction and equipping of
the Improvements or for the clearance of title; [vi] execute all applications
and certificates, in the name of Tenant, that may be required by any of the
Construction Documents; [vii] do any and every act that Tenant might do in its
own behalf, to prosecute and defend all actions or proceedings in connection
with the Improvements; and [viii] to execute, deliver and file all applications
and other documents and take any and all actions necessary to transfer the
operations of the Facility to Landlord or Landlord's designee. This power of
attorney is a power coupled with an interest and cannot be revoked.
8.3 Right of Set-Off. Landlord may, and is hereby authorized by Tenant
to, at
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any time and from time to time without advance notice to Tenant (any such notice
being expressly waived by Tenant), set-off and apply any and all sums held by
Landlord, any indebtedness of Landlord to Tenant, and any claims by Tenant
against Landlord, against any obligations of Tenant hereunder and against any
claims by Landlord against Tenant, whether or not such obligations or claims of
Tenant are matured and whether or not Landlord has exercised any other remedies
hereunder. The rights of Landlord under this Section are in addition to any
other rights and remedies Landlord may have against Tenant.
8.4 Performance of Tenant's Covenants. Landlord may perform any
obligation of Tenant which Tenant has failed to perform within 5 days after
Landlord has sent a written notice to Tenant informing it of its specific
failure. Tenant shall reimburse Landlord on demand, as Additional Rent, for any
expenditures thus incurred by Landlord and shall pay interest thereon at the
Overdue Rate (as defined in Section 8.6).
8.5 Late Payment Charge. Tenant acknowledges that any default in the
payment of any installment of Rent payable hereunder will result in loss and
additional expense to Landlord in servicing any indebtedness of Landlord secured
by the Leased Property, handling such delinquent payments, and meeting its other
financial obligations, and because such loss and additional expense is extremely
difficult and impractical to ascertain, Tenant agrees that in the event any Rent
payable to Landlord hereunder is not paid within 10 days after the due date,
Tenant shall pay a late charge of 5% of the amount of the overdue payment as a
reasonable estimate of such loss and expenses, unless applicable law requires a
lesser charge, in which event the maximum rate permitted by such law may be
charged by Landlord. The 10 day grace period set forth in this Section shall not
extend the time for payment of Rent or the period for curing any default or
constitute a waiver of such default.
8.6 Interest. In addition to the late payment charge, any payment not
made by Tenant within 10 days after the due date shall thereafter bear interest
at the rate (the "Overdue Rate") of the greater of [i] 18.5% per annum; or [ii]
2.5% per annum above the Lease Rate then in effect; provided, however, that at
no time will Tenant be required to pay interest at a rate higher than the
maximum legal rate and, provided further, that if a court of competent
jurisdiction determines that any other charges payable under this Lease are
deemed to be interest, the Overdue Rate shall be adjusted to ensure that the
aggregate interest payable under this Lease does not accrue at a rate in excess
of the maximum legal rate. Tenant shall not be required to pay interest upon any
late payment fees assessed pursuant to Section 8.5.
8.7 Litigation; Attorneys' Fees. Within 5 days after Tenant has
knowledge of any litigation or other proceeding that may be instituted against
Tenant, against the Leased Property to secure or recover possession thereof, or
that may affect the title to or the interest of Landlord in the Leased Property,
Tenant shall give written notice thereof to Landlord. Tenant shall pay all
reasonable costs and expenses incurred by Landlord in enforcing or preserving
Landlord's rights under this Lease, whether or not an Event of Default has
actually occurred or has been declared and thereafter cured, including without
limitation, [i] the fees, expenses, and costs of any litigation, receivership,
administrative, bankruptcy, insolvency or other similar proceeding; [ii]
reasonable attorney, paralegal, consulting and witness fees and disbursements,
whether in house counsel or
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outside counsel; and [iii] the expenses, including without limitation, lodging,
meals, and transportation, of Landlord and its employees, agents, attorneys, and
witnesses in preparing for litigation, administrative, bankruptcy, insolvency or
other similar proceedings and attendance at hearings, depositions, and trials in
connection therewith. All such costs, charges and fees payable by Tenant shall
be deemed to be Additional Rent under this Lease.
8.8 Escrows and Application of Payments. As security for the
performance of its obligations hereunder, Tenant hereby assigns to Landlord all
its right, title, and interest in and to all monies escrowed with Landlord under
this Lease and all deposits with utility companies, taxing authorities and
insurance companies; provided, however, that Landlord shall not exercise its
rights hereunder until an Event of Default has occurred. Any payments received
by Landlord under any provisions of this Lease during the existence or
continuance of an Event of Default shall be applied to Tenant's obligations in
the order which Landlord may determine.
8.9 Remedies Cumulative. The remedies of Landlord herein are cumulative
to and not in lieu of any other remedies available to Landlord at law or in
equity. The use of any one remedy shall not be taken to exclude or waive the
right to use any other remedy.
ARTICLE 9: DAMAGE AND DESTRUCTION
9.1 Notice of Casualty. If the Leased Property shall be destroyed, in
whole or in part, or damaged by fire, flood, windstorm or other casualty (a
"Casualty"), Tenant shall give written notice thereof to the Landlord within one
business day after the occurrence of the Casualty. Within 15 days after the
occurrence of the Casualty or as soon thereafter as such information is
reasonably available to Tenant, Tenant shall provide the following information
to Landlord: [i] the date of the Casualty; [ii] the nature of the Casualty;
[iii] a description of the damage or destruction caused by the Casualty
including the type of Leased Property damaged and the area of the Improvements
damaged; [iv] a preliminary estimate of the cost to repair, rebuild, restore or
replace the Leased Property; [v] a preliminary estimate of the schedule to
complete the repair, rebuilding, restoration or replacement of the Leased
Property; [vi] a description of the anticipated property insurance claim
including the name of the insurer, the insurance coverage limits, the deductible
amount, the expected settlement amount, and the expected settlement date; and
[vii] a description of the business interruption claim including the name of the
insurer, the insurance coverage limits, the deductible amount, the expected
settlement amount, and the expected settlement date. Within 5 days after request
from Landlord, Tenant will provide Landlord with copies of all correspondence to
the insurer and any other information reasonably requested by Landlord.
9.2 Substantial Destruction.
9.2.1 If the Improvements are substantially destroyed at any time other
than during the final 18 months of the Initial Term or any Renewal Term, Tenant
shall promptly rebuild and restore the Leased Property in accordance with
Sections 9.4 through 9.9 and Landlord shall make the insurance proceeds
available to Tenant for such restoration. The term "substantially destroyed"
means any casualty resulting in the loss of use of 50% or more of the licensed
beds or units at any Facility.
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9.2.2 If the Improvements are substantially destroyed during the final
18 months of the Initial Term or any Renewal Term, Tenant shall have the option
to either [i] rebuild the Leased Property in accordance with Sections 9.4
through 9.9; or [ii] terminate this Lease; subject, however, to the following
conditions. In order for Tenant to elect to rebuild the Leased Property, Tenant
must satisfy the following conditions within 60 days after the occurrence of the
damage: [i] Tenant must give irrevocable notice to Landlord of Tenant's election
to rebuild and Tenant's election to either [a] renew this Lease pursuant to
Section 9.2.3 (if the damage occurred during the Initial Term or the first or
second Renewal Term), or [b] exercise its option to purchase the Leased Property
pursuant to Section 9.2.4; and [ii] if Tenant elects to renew this Lease, each
Phase I Tenant must give irrevocable notice to Landlord that such Phase I Tenant
elects to renew its respective Phase I Lease or, if Tenant elects to exercise
its option to purchase, each Phase I Tenant must give irrevocable notice to
Landlord that such Phase I Tenant elects to purchase the Leased Property subject
to its respective Phase I Lease. In order for Tenant to elect to terminate this
Lease, Tenant must give irrevocable notice to Landlord, within 60 days after the
occurrence of the damage, of Tenant's election to terminate this Lease;
provided, however, that Tenant shall pay to Landlord all Rent and all other
obligations accrued under this Lease through the effective date of termination
and, if the amount of insurance proceeds received or to be received by Landlord
is less than the Lease Amount, Tenant shall pay to Landlord the amount by which
the Lease Amount exceeds the amount of insurance proceeds. Termination of this
Lease shall not be effective until all such amounts have been paid by Tenant to
Landlord and the insurance proceeds have been paid to Landlord. If the
Improvements are substantially destroyed during the final 18 months of the third
Renewal Term, Tenant shall have the option to either [i] rebuild the Leased
Property and exercise its option to purchase as set forth above, provided that
each Phase I Tenant elects to purchase its respective Leased Property as set
forth above; or [ii] terminate this Lease as set forth above. The failure of
Tenant to give Landlord notice of Tenant's election within 60 days after the
occurrence of the damage shall constitute an Event of Default under this Lease
and Tenant shall be liable to Landlord for all Rent and other obligations under
this Lease and the amount, if any, by which the Lease Amount exceeds the amount
of insurance proceeds received by Landlord.
9.2.3 If the Improvements are substantially destroyed during the final
18 months of the Initial Term or the first or second Renewal Term and if Tenant
and each Phase I Tenant give irrevocable notice to Landlord of its respective
election to renew, the current Term of each Phase I Lease shall continue until
its expiration date and the 5 year Renewal Term shall commence on the day
following the expiration date. All other terms of each Phase I Lease for the
Renewal Term shall be in accordance with Article 12 of such Phase I Lease. The
Leased Property will be restored by Tenant in accordance with Sections 9.4
through 9.9.
9.2.4 If the Improvements are substantially destroyed during the final
18 months of the Initial Term or any Renewal Term and if Tenant and each Phase I
Tenant give irrevocable notice to Landlord of its respective election to
purchase its respective Leased Property, the Option Price will be determined in
accordance with Section 13.2 and the Fair Market Value will be determined in
accordance with Section 13.3. For purposes of determining the Fair Market Value,
the Leased Property will valued as if it had been restored to be equal in value
to the Leased Property existing immediately prior to the occurrence of the
damage. All other terms of the option to purchase shall
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be in accordance with Article 13 of each Phase I Lease. Landlord shall hold the
insurance proceeds until the closing of the purchase of the Leased Property and
at closing shall deliver the proceeds to Tenant.
9.3 Partial Destruction. If the Leased Property is not substantially
destroyed, then Tenant shall comply with the provisions of Section 9.4 and
Landlord shall make the insurance proceeds available to Tenant for such
restoration.
9.4 Restoration. Tenant shall promptly repair, rebuild, or restore the
Leased Property, at Tenant's expense, so as to make the Leased Property at least
equal in value to the Leased Property existing immediately prior to such
occurrence and as nearly similar to it in character as is practicable and
reasonable. Before beginning such repairs or rebuilding, or letting any
contracts in connection with such repairs or rebuilding, Tenant will submit for
Landlord's approval, which approval Landlord will not unreasonably withhold or
delay, plans and specifications meeting the requirements of Section 16.2 for
such repairs or rebuilding. Promptly after receiving Landlord's approval of the
plans and specifications and receiving the proceeds of insurance, Tenant will
begin such repairs or rebuilding and will prosecute the repairs and rebuilding
to completion with diligence, subject, however, to strikes, lockouts, acts of
God, embargoes, governmental restrictions, and other causes beyond Tenant's
reasonable control. Landlord will make available to Tenant the proceeds of any
fire or other casualty insurance paid to Landlord for such repair or rebuilding
as the same progresses. Tenant shall be responsible for collection of the
insurance proceeds, subject to Landlord's prior reasonable consent to any
settlement, and Tenant shall bear all costs of collection, including attorney's
fees. Payments will be made against properly certified vouchers of a competent
architect in charge of the work and approved by Landlord. Prior to commencing
the repairing or rebuilding, Tenant shall deliver to Landlord for Landlord's
approval a schedule setting forth the estimated monthly draws for such work.
Landlord will contribute to such payments out of the insurance proceeds an
amount equal to the proportion that the total net amount received by Landlord
from insurers bears to the total estimated cost of the rebuilding or repairing,
multiplied by the payment by Tenant on account of such work. Landlord may,
however, withhold 10% from each payment due subcontractors until the work is
completed and proof has been furnished to Landlord that no lien or liability has
attached or will attach to the Leased Property or to Landlord in connection with
such repairing or rebuilding. Upon the completion of rebuilding and the
furnishing of such proof, the balance of the net proceeds of such insurance
payable to Tenant on account of such repairing or rebuilding will be paid to
Tenant. Tenant will obtain and deliver to Landlord a temporary or final
certificate of occupancy before the Leased Property is reoccupied for any
purpose. Tenant shall complete such repairs or rebuilding in accordance with the
building codes and all applicable laws, ordinances, regulations, or orders of
any state, municipal, or other public authority affecting the repairs or
rebuilding, and also in accordance with all requirements of the insurance rating
organization, or similar body. Any remaining proceeds of insurance after such
restoration will be Tenant's property.
9.5 Insufficient Proceeds. If the proceeds of any insurance settlement
are not sufficient to pay the costs of such repair, rebuilding or restoration in
full, Tenant shall deposit with Landlord at Landlord's option, and within 20
days of Landlord's request, an amount sufficient in Landlord's reasonable
judgment to complete such repair, rebuilding or restoration. Tenant shall
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not, by reason of the deposit or payment, be entitled to any reimbursement from
Landlord or diminution in or postponement of the payment of the Rent.
9.6 Not Trust Funds. Notwithstanding anything herein or at law or
equity to the contrary, none of the insurance proceeds paid to Landlord as
herein provided shall be deemed trust funds, and Landlord shall be entitled to
dispose of such proceeds as provided in this Article 9. Tenant expressly assumes
all risk of loss, including a decrease in the use, enjoyment or value, of the
Leased Property from any casualty whatsoever, whether or not insurable or
insured against.
9.7 Landlord's Inspection. During the progress of such repairs or
rebuilding, Landlord and its architects and engineers may, from time to time,
inspect the Leased Property and will be furnished, if required by them, with
copies of all plans, shop drawings, and specifications relating to such repairs
or rebuilding. Tenant will keep all plans, shop drawings, and specifications at
the building, and Landlord and its architects and engineers may examine them at
all reasonable times. If, during such repairs or rebuilding, Landlord and its
architects and engineers determine that the repairs or rebuilding are not being
done in accordance with the approved plans and specifications, Landlord will
give prompt notice in writing to Tenant, specifying in detail the particular
deficiency, omission, or other respect in which Landlord claims such repairs or
rebuilding do not accord with the approved plans and specifications. Upon the
receipt of any such notice, Tenant will cause corrections to be made to any
deficiencies, omissions, or such other respect. Tenant's obligations to supply
insurance, according to Article 4, will be applicable to any repairs or
rebuilding under this Section.
9.8 Landlord's Costs. Tenant shall, within 30 days after receipt of an
invoice from Landlord, pay the costs, expenses, and fees of any architect or
engineer employed by Landlord to review any plans and specifications and to
supervise and approve any construction, or for any services rendered by such
architect or engineer to Landlord as contemplated by any of the provisions of
this Lease, or for any services performed by Landlord's attorneys in connection
therewith. With respect to any inspections by the architect or engineer employed
by Landlord, Tenant shall pay no more than $500 per day plus out of pocket
expenses for travel, lodging, food and transportation.
9.9 No Rent Abatement. Rent will not abate pending the repairs or
rebuilding of the Leased Property.
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ARTICLE 10: CONDEMNATION
10.1 Total Taking. If, by exercise of the right of eminent domain or by
conveyance made in response to the threat of the exercise of such right
("Taking"), the entire Leased Property is taken, or so much of the Leased
Property is taken that the Leased Property cannot be used by Tenant for the
purposes for which it was used immediately before the Taking, then this Lease
will end on the earlier of the vesting of title to the Leased Property in the
condemning authority or the taking of possession of the Leased Property by the
condemning authority. All damages awarded for such Taking under the power of
eminent domain shall be the property of the Landlord, whether such damages shall
be awarded as compensation for diminution in value of the leasehold or the fee
of the Leased Property.
10.2 Partial Taking. If, after a Taking, so much of the Leased Property
remains that the Leased Property can be used for substantially the same purposes
for which it was used immediately before the Taking, then [i] this Lease will
end as to the part taken on the earlier of the vesting of title to the Leased
Property in the condemning authority or the taking of possession of the Leased
Property by the condemning authority; [ii] at its cost, Tenant shall restore so
much of the Leased Property as remains to a sound architectural unit
substantially suitable for the purposes for which it was used immediately before
the Taking, using good workmanship and new, first-class materials; [iii] upon
completion of the restoration, Landlord will pay Tenant the lesser of the net
award made to Landlord on the account of the Taking (after deducting from the
total award, attorneys', appraisers', and other fees and costs incurred in
connection with the obtaining of the award and amounts paid to the holders of
mortgages secured by the Leased Property), or Tenant's actual out-of-pocket
costs of restoring the Leased Property; and [iv] Landlord shall be entitled to
the balance of the net award. The restoration shall be completed in accordance
with Sections 9.4, 9.5, 9.7, 9.8 and 9.9 with such provisions deemed to apply to
condemnation instead of casualty. casualty.
10.3 Condemnation Proceeds Not Trust Funds. Notwithstanding anything in
this Lease or at law or equity to the contrary, none of the condemnation award
paid to Landlord shall be deemed trust funds, and Landlord shall be entitled to
dispose of such proceeds as provided in this Article 10. Borrower expressly
assumes all risk of loss, including a decrease in the use, enjoyment, or value,
of the Leased Property from any Condemnation.
ARTICLE 11: TENANT'S PROPERTY
11.1 Tenant's Property. Tenant shall install, place, and use on the
Leased Property such fixtures, furniture, equipment, inventory and other
personal property in addition to the Personal Property as may be required or as
Tenant may, from time to time, deem necessary or useful to operate the Leased
Property for its permitted purposes. All fixtures, furniture, equipment,
inventory, and other personal property installed, placed, or used on the Leased
Property which is owned by Tenant or leased by Tenant from third parties is
hereinafter referred to as "Tenant's Property".
11.2 Requirements for Tenant's Property. Tenant shall comply with all
of the following requirements in connection with Tenant's Property:
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(a) Tenant shall, at Tenant's sole cost and expense, maintain,
repair, and replace Tenant's Property.
(b) Tenant shall, at Tenant's sole cost and expense, keep
Tenant's Property insured against loss or damage by fire, vandalism and
malicious mischief, sprinkler leakage, earthquake, and other physical loss
perils commonly covered by fire and extended coverage, boiler and machinery, and
difference in conditions insurance in an amount not less than 90% of the then
full replacement cost thereof. Tenant shall use the proceeds from any such
policy for the repair and replacement of Tenant's Property.
(c) Tenant shall pay all taxes applicable to Tenant's
Property.
(d) If Tenant's Property is damaged or destroyed by fire or
any other cause, Tenant shall promptly repair or replace Tenant's Property
unless Landlord elects to terminate this Lease pursuant to Section 9.2.2.
(e) Unless an Event of Default or any event which, with the
giving of notice or lapse of time, or both, would constitute an Event of Default
has occurred, Tenant may remove Tenant's Property from the Leased Property from
time to time provided that [i] the items removed are not required to operate the
Leased Property as a licensed assisted living facility (unless such items are
being replaced by Tenant); and [ii] Tenant repairs any damage to the Leased
Property resulting from the removal of Tenant's Property.
(f) Tenant shall not, without the prior written consent of
Landlord or as otherwise provided in this Lease, remove any Tenant's Property or
Leased Property. Tenant shall, at Landlord's option, remove Tenant's Property
upon the termination or expiration of this Lease and shall repair any damage to
the Leased Property resulting from the removal of Tenant's Property. If Tenant
fails to remove Tenant's Property within 30 days after request by Landlord, then
Tenant shall be deemed to have abandoned Tenant's Property, Tenant's Property
shall become the property of Landlord, and Landlord may remove, store and
dispose of Tenant's Property. In such event, Tenant shall have no claim or right
against Landlord for such property or the value thereof regardless of the
disposition thereof by Landlord. Tenant shall pay Landlord, upon demand, all
expenses incurred by Landlord in removing, storing, and disposing of Tenant's
Property and repairing any damage caused by such removal. Tenant's obligations
hereunder shall survive the termination or expiration of this Lease.
(g) Tenant shall perform its obligations under any equipment
lease or security agreement for Tenant's Property. For equipment loans or leases
for equipment having an original cost in excess of $50,000.00, Tenant shall
cause such equipment lessor or lender to enter into a nondisturbance agreement
with Landlord upon terms and conditions acceptable to Landlord, including
without limitation, the following: [i] Landlord shall have the right (but not
the obligation) to assume such equipment lease or security agreement upon the
occurrence of an Event of Default by Tenant hereunder; [ii] such equipment
lessor or lender shall notify Landlord of any default by Tenant under the
equipment lease or security agreement and give Landlord a reasonable
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opportunity to cure such default; and [iii] Landlord shall have the right to
assign its interest in the equipment lease or security agreement and
nondisturbance agreement. Tenant shall, within 30 days after receipt of an
invoice from Landlord, reimburse Landlord for all costs and expenses incurred in
reviewing and approving the equipment lease, security agreement and
nondisturbance agreement, including without limitation, reasonable attorneys'
fees and costs.
ARTICLE 12: RENEWAL OPTIONS
12.1 Renewal Options. Tenant has the option to renew ("Renewal Option")
this Lease for 3 consecutive 5 year renewal terms (each a "Renewal Term").
Tenant can exercise the Renewal Option only upon satisfaction of the following
conditions:
(a) There shall be no uncured Event of Default, or any event
which with the passage of time or giving of notice would constitute an Event of
Default, at the time Tenant exercises its Renewal Option nor on the date the
Renewal Term is to commence.
(b) Tenant shall give Landlord irrevocable written notice of
renewal ("Renewal Notice") no later than the date which is [i] 90 days prior to
the expiration date of the then current Term; or [ii] if applicable, 15 days
after the occurrence of the substantial destruction of the Improvements as set
forth in Sections 9.2.2 and 9.2.3.
(c) Each Phase I Tenant shall concurrently give irrevocable
notice of renewal for each Phase I Lease.
12.2 Effect of Renewal. The following terms and conditions will be
applicable if Tenant renews the Lease:
(a) Effective Date. The effective date of any Renewal Term
will be the first day after the expiration date of the then current Term. The
first day of each Renewal Term is also referred to as the Renewal Date.
(b) Lease Amount. Effective as of each Renewal Date, a single
Lease Amount will be computed by summing all Lease Advance Amounts (including
the Acquisition Amount).
(c) Lease Rate. Effective as of each Renewal Date, a single
Lease Rate will be computed equal to the Renewal Rate. If the IPO Conditions
were not satisfied, the Renewal Rate will be the sum of the Rate Index on the
Rate Determination Date plus the applicable Rate Spread as set forth in the
definition of "Rate Spread".
If the IPO Conditions have been satisfied, the Renewal Rate
for each Renewal Term shall be the fair market value lease rate for this type of
lease as determined in accordance with the following provisions. The parties
shall attempt to determine the fair market value lease rate by mutual agreement
within 15 days after the date Tenant gives the Renewal Notice. If the parties do
not agree on such lease rate within the 15 day period, the appraisal
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procedure set forth in Section 13.3 shall be used. The appraisers shall be
instructed to appraise the fair market value lease rate as a financing lease
rate for a health care facility of the same type as the Facility and shall take
into account the lease rate then being charged by Landlord to tenants of
comparable creditworthiness for comparable facilities. The appraised rates
submitted by the three appraisers shall be ranked from highest to lowest, the
rate (highest or lowest) which is furthest from the middle rate shall be
discarded, and the remaining two appraised rates shall be averaged to arrive at
the appraised lease rate. The Renewal Rate shall be the appraised lease rate
provided, however, that Landlord shall not be obligated to renew this Lease at a
Renewal Rate less than the lease rate then being charged by Landlord to tenants
of comparable creditworthiness for comparable facilities.
(d) Increaser Rate. The Increaser Rate will be 22.5 basis
points per year; provided, however, that if the IPO Conditions are satisfied,
the Increaser Rate shall be 20 basis points per year.
(e) Base Rent. Effective as of the Renewal Date, the Base Rent
will be changed to equal 1/12th of the product of [i] the Lease Amount on the
Renewal Date times [ii] the new Lease Rate equal to the Renewal Rate.
(f) Other Terms and Conditions. Except for the modifications
set forth in this Section 12.2, all other terms and conditions of the Lease will
remain the same for the Renewal Term.
12.3 Effect of Non-Renewal or Expiration of Lease. The following terms
and conditions will be applicable if Tenant does not renew this Lease or
exercise its Option to Purchase by the expiration date for the then current
Term:
(a) Extension of Current Term. The current Term will be
extended (the "Extended Term") for 180 days; provided, however, that the
Extended Term will expire on such earlier date of the closing of the sale
pursuant to the Option to Purchase.
(b) Lease Payments. During the Extended Term, Tenant shall
continue to make monthly payments of Rent (including Base Rent) based upon the
then existing Lease Rate.
ARTICLE 13: RIGHT OF FIRST REFUSAL
13.1 Right of First Refusal. Tenant shall have the right of first
refusal to purchase the Leased Property during the Term of this Lease. If at any
time during the Term, Landlord shall receive a bona fide offer ("Offer") from a
third person for the purchase of the Leased Property, which Offer Landlord
desires to accept, Landlord shall promptly deliver to Tenant a copy of such
Offer. Tenant shall have the right for a period of 60 days thereafter to elect
to purchase the Leased Property on the same terms and conditions as those set
forth in the Offer. If Tenant elects to purchase the Leased Property, Tenant
must give written notice thereof to Landlord no later than the 60th day after
the date Landlord delivers the Offer to Tenant.
13.2 No Exercise. If Tenant does not elect to exercise its right of
first refusal as
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set forth in Section 13.1, Landlord shall be free to sell and convey the Leased
Property to the third party purchaser in accordance with the terms and
provisions of the Offer. In the event that Landlord does not consummate the sale
of the Leased Property to such purchaser, Tenant's right of first refusal under
this Article 13 shall remain applicable to subsequent bonafide offers from third
persons.
ARTICLE 14: NEGATIVE COVENANTS
Until Tenant's Obligations shall have been performed in full, Tenant
and Guarantor covenant and agree that Tenant (and Guarantor where applicable)
shall not do any of the following without the prior written consent of Landlord:
14.1 No Debt. Tenant shall not create, incur, assume, or permit to
exist any indebtedness relating to the Facility other than [i] trade debt
incurred in the ordinary course of Tenant's business; [ii] indebtedness relating
to the Letter of Credit; [iii] indebtedness that is secured by any Permitted
Lien; [iv] unsecured indebtedness for working capital in an amount not to exceed
$25,000 per facility and $600,000 in the aggregate for the facilities operated
by Tenant or Corridor and financed by Landlord; and [v] unsecured indebtedness
for working capital in any amount for facilities not financed by Landlord.
14.2 No Liens. Tenant shall not create, incur, or permit to exist any
lien, charge, encumbrance, easement or restriction upon the Leased Property or
any lien upon or pledge of any interest in Tenant, except for Permitted Liens.
14.3 No Guaranties. Tenant shall not create, incur, assume, or permit
to exist any guarantee of any loan or other indebtedness except for the
endorsement of negotiable instruments for collection in the ordinary course of
business; provided, however, that the foregoing provision shall not apply if the
IPO Conditions are satisfied.
14.4 No Transfer. Tenant shall not sell, lease, sublease, mortgage,
convey, assign or otherwise transfer any legal or equitable interest in the
Leased Property or any part thereof, except for transfers made in connection
with any Permitted Lien.
14.5 No Dissolution. Tenant shall not dissolve, liquidate, merge,
consolidate or terminate its existence or sell, assign, lease, or otherwise
transfer (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired). No
Related Company shall dissolve, liquidate, merge, consolidate or terminate its
existence or sell, assign, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired), or issue any notes or
securities, if such action would have a material adverse effect on the condition
or performance of Tenant or the Facility. Notwithstanding the foregoing, Tenant
and any Related Company are permitted to enter into a "roll-up" of any such
entities into a single entity in order to facilitate the IPO; provided, however,
that the publicly held company (whether Tenant or any successor or Affiliate)
shall be liable for the payment and performance of all obligations of Tenant
under this Lease.
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14.6 No Change in Management. Neither Timothy J. Buchanan nor Steven L.
Vick shall cease to be an active principal officer and executive manager of
Tenant unless the replacement officers are qualified and experienced in the
management of assisted living facilities or other similar facilities and the
replacements are reasonably acceptable to, and reasonably approved in advance
by, Landlord.
14.7 No Investments. Tenant shall not purchase or otherwise acquire,
hold, or invest in securities (whether capital stock or instruments evidencing
indebtedness) of or make loans or advances to any person, including, without
limitation, any Guarantor, any Affiliate, or any shareholder, member or partner
of Tenant, Guarantor or any Affiliate, except for cash balances temporarily
invested in short-term or money market securities.
14.8 Contracts. Tenant shall not execute or modify any material
contracts or agreements with respect to any Facility except for contracts and
modifications approved by Landlord. Contracts made in the ordinary course of
business or in an amount less than $150,000.00 shall not be considered
"material" for purposes of this paragraph.
14.9 Subordination of Payments to Affiliates. After the occurrence of
an Event of Default and until such Event of Default is cured, Tenant shall not
make any payments or distributions (including, without limitation, salary,
bonuses, fees, principal, interest, dividends, liquidating distributions,
management fees, cash flow distributions or lease payments) to Guarantor, any
Affiliate, or any shareholder, member or partner of Tenant, Guarantor or any
Affiliate.
14.10 Change of Location or Name. Without at least 10 business days
advance written notice to Landlord, Tenant shall not change any of the
following: [i] the location of the principal place of business or chief
executive office of Tenant, or any office where any of Tenant's books and
records are maintained; or [ii] the name under which Tenant conducts any of its
business or operations.
14.11 Limits on Management Fees. Tenant shall not pay management fees
or pay any compensation in the nature of or in lieu of management fees in excess
of 8% of annual revenues. Landlord may, at Tenant's request, and after Tenant
has provided such information as Landlord may require, approve a change in the
management fees payable during any particular fiscal year.
ARTICLE 15: AFFIRMATIVE COVENANTS
15.1 Perform Obligations. Tenant shall perform all of its obligations
under this Lease, the Government Authorizations, the Permitted Exceptions, and
all Legal Requirements.
15.2 Proceedings to Enjoin or Prevent Construction. If any proceedings
are filed seeking to enjoin or otherwise prevent or declare invalid or unlawful
Tenant's construction, occupancy, maintenance, or operation of the Facility or
any portion thereof, Tenant will cause such proceedings to be vigorously
contested in good faith, and in the event of an adverse ruling or decision,
prosecute all allowable appeals therefrom, and will, without limiting the
generality of the
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foregoing, resist the entry or seek the stay of any temporary or permanent
injunction that may be entered, and use its best efforts to bring about a
favorable and speedy disposition of all such proceedings and any other
proceedings.
15.3 Documents and Information.
15.3.1 Furnish Documents. Tenant and the Related Companies shall
periodically during the term of the Lease deliver to Landlord the Annual
Financial Statements, Periodic Financial Statements and other documents
described on Exhibit C within the specified time periods. With each delivery of
Annual Financial Statements and Periodic Financial Statements to Landlord,
Tenant shall also deliver to Landlord a certificate signed by the Chief
Financial Officer of Tenant and an Annual Facility Financial Report or Quarterly
Facility Financial Report, as applicable, all in the form of Exhibit D. In
addition, Tenant shall deliver to Landlord the Annual Facility Financial Report
(based upon internal financial statements) within 60 days after the end of each
fiscal year.
15.3.2 Furnish Information. Tenant shall [i] promptly supply Landlord
with such information concerning its financial condition, affairs and property,
as Landlord may reasonably request from time to time hereafter; [ii] promptly
notify Landlord in writing of any condition or event that constitutes a breach
or event of default of any term, condition, warranty, representation, or
provisions of this Agreement or any other agreement, and of any material adverse
change in its financial condition; [iii] maintain a standard and modern system
of accounting; [iv] permit Landlord or any of its agent or representatives to
have access to and to examine all of its books and records regarding the
financial condition of each Facility at any time or times hereafter during
business hours and after reasonable oral or written notice; and [v] permit
Landlord to copy and make abstracts from any and all of said books and records.
15.3.3 Further Assurances and Information. Tenant shall, on request of
Landlord from time to time, execute, deliver, and furnish documents as may be
necessary to fully consummate the transactions contemplated under this
Agreement. Within 15 days after a request from Landlord, Tenant shall provide to
Landlord such additional information regarding Tenant, Tenant's financial
condition or any Facility as Landlord, or any existing or proposed creditor of
Landlord, or any auditor or underwriter of Landlord, may require from time to
time, including, without limitation, a current Tenant's Certificate and Schedule
of Financial Information in the form of Exhibit D.
15.3.4 Material Communications. Tenant shall transmit to Landlord,
within 5 business days after receipt thereof, any material communication
affecting a Facility, this Lease, the Legal Requirements or the Government
Authorizations, and Tenant will promptly respond to Landlord's inquiry with
respect to such information. Tenant shall promptly notify Landlord in writing
after Tenant has knowledge of any potential, threatened or existing litigation
or proceeding against, or investigation of, Tenant, Guarantor, a Related Company
or any Facility that may affect the right to operate the Facility or Landlord's
title to the Facility or Tenant's interest therein. Without otherwise limiting
the term "material" as used in the preceding sentence, any litigation or
proceeding involving a claim of $50,000 or more or involving a threatened or
alleged violation of an Environmental Law shall be deemed to be material.
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15.3.5 Requirements for Financial Statements. Tenant and the Related
Companies shall meet the following requirements in connection with the
preparation of the financial statements: [i] all audited financial statements
shall be prepared in accordance with general accepted accounting principles
consistently applied; [ii] all unaudited financial statements shall be prepared
in a manner substantially consistent with prior audited and unaudited financial
statements submitted to Landlord; [iii] all financial statements shall fairly
present the financial condition and performance for the relevant period in all
material respects; [iv] the financial statements shall include all notes to the
financial statements and a complete schedule of contingent liabilities and
transactions with Affiliates; and [v] the audited financial statements shall
contain an unqualified opinion.
15.3.6 Confidentiality. Landlord shall use reasonable efforts not to
disclose the information provided by Tenant under this Section 15.3; provided,
however, that Landlord may disclose such information to any person or entity to
whom Landlord is required to make such disclosure; to governmental authorities;
and to any other person or entity having a legitimate business interest in the
Landlord, including, but not limited to, regulators, auditors, accountants,
attorneys, investors, underwriters, rating agencies, bond or surety companies,
and lenders of Landlord (including, but not limited to, collateral pool lenders
and line of credit lenders).
15.4 Compliance With Laws. Tenant shall comply with all Legal
Requirements and keep all Government Authorizations in full force and effect.
Tenant shall pay when due all taxes and governmental charges of every kind and
nature that are assessed or imposed upon Tenant at any time during the term of
the Lease, including, without limitation, all income, franchise, capital stock,
property, sales and use, business, intangible, employee withholding, and all
taxes and charges relating to Tenant's business and operations. Tenant shall be
solely responsible for compliance with all Legal Requirements, including the
ADA, and Landlord shall have no responsibility for such compliance.
15.5 Broker's Commission. Tenant shall indemnify Landlord from claims
of brokers retained or used by Tenant arising by the execution hereof or the
consummation of the transactions contemplated hereby and from expenses incurred
by Landlord in connection with any such claims (including attorneys' fees).
15.6 Existence and Change in Ownership. Tenant shall maintain its
existence throughout the term of this Agreement. Until the IPO is completed, any
change in the ownership interest of Steven L. Vick, Timothy J. Buchanan or any
Related Company in Tenant, directly or indirectly, other than any change in
ownership relating to the IPO, shall require Landlord's prior written consent.
15.7 Financial Covenants. The defined terms used in this section are
defined in Section 15.7.1. The following financial covenants shall be met
throughout the term of this Lease:
15.7.1 Definitions.
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(a) "Cash Flow" means the net income of Tenant as reflected on
the income statement of Tenant plus [i] the amount of the provision for
depreciation and amortization; [ii] the amount of the provision for management
fees; plus [iii] the amount of the provision for income taxes; plus [iv] the
amount of the provision for Rent payments; minus [v] an imputed management fee
equal to 8% of revenues (net of contractual allowances); and minus [vi] an
imputed replacement reserve of $300.00 per unit at the Facility, per year.
(b) "Coverage Ratio" is the ratio of [i] Cash Flow for each
applicable period; [ii] to the Rent payments due pursuant to this Lease for the
applicable period.
(c) "Net Worth" means an amount equal to the total
consolidated fair market value of the tangible assets of the entity (excluding
good will and other intangible assets) minus the total consolidated liabilities
of such entity.
15.7.2 Coverage Ratio. Tenant shall maintain a Coverage Ratio of not
less than 1.25 to 1.0 for each fiscal quarter during the second full year that
the Facility is operational and for each year thereafter; provided, however,
that after two or more of Tenant's assisted living facilities financed by
Landlord are in their second full year of operation, the Coverage Ratio for any
one or more facilities may be as low as 1.15 to 1.0 if the collective Coverage
Ratio for all such facilities (that are in operation at least one year) is at
least 1.25 to 1.0.
15.7.3 Net Worth. Until the IPO Conditions are satisfied, Guarantor
shall maintain a combined Net Worth of at least $1,200,000.
15.7.4 Working Capital. Until the IPO Conditions are satisfied, Tenant
shall maintain working capital of at least $25,000 for each facility financed by
Landlord.
ARTICLE 16: ALTERATIONS, CAPITAL
IMPROVEMENTS, AND SIGNS
16.1 Prohibition on Alterations and Improvements. Except for Permitted
Alterations (as hereinafter defined), Tenant shall not make any structural or
nonstructural changes, alterations, additions and/or improvements (hereinafter
collectively referred to as "Alterations") to the Leased Property.
16.2 Approval of Alterations. If Tenant desires to perform any
Permitted Alterations, Tenant shall deliver to Landlord plans, specifications,
drawings, and such other information as may be reasonably requested by Landlord
(collectively the "Plans and Specifications") showing in reasonable detail the
scope and nature of the Alterations that Tenant desires to perform. It is the
intent of the parties hereto that the level of detail shall be comparable to
that which is referred to in the architectural profession as "design development
drawings" as opposed to working or biddable drawings. Landlord agrees not to
unreasonably delay its review of the Plans and Specifications. Within 30 days
after receipt of an invoice, Tenant shall reimburse Landlord for all costs and
expenses incurred by Landlord in reviewing and, if required, approving or
disapproving the Plans and Specifications, inspecting the Leased Property, and
otherwise
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monitoring compliance with the terms of this Article 16. Tenant shall comply
with the requirements of Section 16.4 in making any Permitted Alterations.
16.3 Permitted Alterations. Permitted Alterations means any one of the
following: [i] Alterations approved by Landlord; [ii] Alterations required under
Section 7.2; [iii] Alterations having a total cost of less than $100,000; or
[iv] repairs, rebuilding and restoration required or undertaken pursuant to
Section 9.4.
16.4 Requirements for Permitted Alterations. Tenant shall comply with
all of the following requirements in connection with any Permitted Alterations:
(a) The Permitted Alterations shall be made in accordance with
the approved Plans and Specifications.
(b) The Permitted Alterations and the installation thereof
shall comply with all applicable legal requirements and insurance requirements.
(c) The Permitted Alterations shall be done in a good and
workmanlike manner, shall not impair the value or the structural integrity of
the Leased Property, and shall be free and clear of all mechanic's liens.
(d) Tenant shall, at Tenant's expense, obtain a builder's
completed value risk policy of insurance insuring against all risks of physical
loss, including collapse and transit coverage, in a nonreporting form, covering
the total value of the work performed, and equipment, supplies, and materials,
and insuring initial occupancy. Landlord and any mortgagee of Landlord shall be
additional insureds of such policy. Landlord shall have the right to approve the
form and substance of such policy.
(e) Tenant shall pay the premiums required to increase the
amount of the insurance coverages required by Article 4 to reflect the increased
value of the Improvements resulting from installation of the Permitted
Alterations, and shall deliver to Landlord a certificate evidencing the increase
in coverage.
(f) Tenant shall, not later than 60 days after completion of
the Permitted Alterations, deliver to Landlord a revised "as-built" survey of
the Leased Property if the Permitted Alterations altered the Land or
"foot-print" of the Improvements and an "as-built" set of Plans and
Specifications for the Permitted Alterations in form and substance satisfactory
to Landlord.
(g) Tenant shall, not later than 30 days after Landlord sends
an invoice, reimburse Landlord for any reasonable costs and expenses, including
attorneys' fees and architects' and engineers' fees, incurred in connection with
reviewing and approving the Permitted Alterations and ensuring Tenant's
compliance with the requirements of this Section. The fee for Landlord's
consulting engineer is $500.00 per day plus out-of-pocket expenses for travel,
lodging, food and transportation.
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16.5 Ownership and Removal of Permitted Alterations. The Permitted
Alterations shall become a part of the Leased Property, owned by Landlord, and
leased to Tenant subject to the terms and conditions of this Lease. Tenant shall
not be required or permitted to remove any Permitted Alterations.
16.6 Signs. Tenant may, at its own expense, erect and maintain
identification signs at the Leased Property, provided such signs comply with all
laws, ordinances, and regulations. Upon the termination or expiration of this
Lease, Tenant shall, within 30 days after notice from Landlord, remove the signs
and restore the Leased Property to its original condition.
ARTICLE 17: IPO AND SECURITY
17.1 Guaranty and Stock Pledge. This Lease is jointly and severally
guaranteed for 10% of the Acquisition Amount by the Guarantors pursuant to an
Unconditional and Continuing Lease Guaranty ("Guaranty") and is secured by
pledges of the Guarantors' interests in Sterling Management Company, Sterling
Holdings, Inc., Sterling House Corporation and Buchanan Construction Company
pursuant to one or more stock pledge agreements ("Stock Pledge"). If the IPO
Conditions are satisfied, Landlord shall terminate the Guaranty and all other
guaranties of Guarantor in favor of Landlord, release the Stock Pledge and all
other stock pledges given to Landlord, return all pledged securities to
Guarantor and terminate the Contingent Interest Agreement.
17.2 Contingent Interest Agreement. In anticipation of the IPO
Conditions being satisfied, Landlord has agreed to postpone issuance of
additional interests in Corridor to Landlord pursuant to the Contingent Interest
Agreement for lease financings closed between August 15, 1995 and December 31,
1995. If the IPO Conditions are not satisfied, Tenant shall transfer its
interest under this Lease and all existing Related Leases to Corridor and
Corridor will amend the Contingent Interest Agreement to provide Landlord its
corresponding interests in Corridor based upon the lease amounts financed by
Landlord through December 31, 1995. The transfer and amendment shall be
completed by March 31, 1996. Tenant's failure to comply with the foregoing
requirement shall constitute an immediate Event of Default under this Lease.
17.3 Expenses. Tenant shall pay all costs and expenses, including,
without limitation, attorney's fees and expenses, incurred by Landlord in
connection with any of the actions and modifications required under this Article
17.
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ARTICLE 18: ASSIGNMENT AND
SALE OF LEASED PROPERTY
18.1 Prohibition on Assignment and Subletting. Tenant acknowledges that
Landlord has entered into this Lease in reliance on the personal services and
business expertise of Tenant. Tenant may not assign, sublet, mortgage,
hypothecate, pledge, or transfer any interest in this Lease, or in the Leased
Property, in whole or in part, without the prior written consent of Landlord,
which Landlord may withhold in its sole and absolute discretion. The following
transactions will be deemed an assignment or sublease requiring Landlord's prior
written consent: [i] an assignment by operation of law; [ii] an imposition
(whether or not consensual) of a lien, mortgage, or encumbrance upon Tenant's
interest in the Lease; [iii] an arrangement (including but not limited to,
management agreements, concessions, licenses, and easements) which allows the
use or occupancy of all or part of the Leased Property by anyone other than
Tenant, Sterling Management Company, Inc. or any other permitted manager; and
[iv] a change of ownership of Tenant except as permitted under Section 15.6.
Landlord's consent to any assignment or sublease will not release Tenant (or any
guarantor) from its payment and performance obligations under this Lease, but
rather Tenant, any guarantor, and Tenant's assignee or sublessee will be jointly
and severally liable for such payment and performance. An assignment or sublease
without the prior written consent of Landlord will be void at the Landlord's
option. Landlord's consent to one assignment or sublease will not waive the
requirement of its consent to any subsequent assignment or sublease.
18.2 Requests for Landlord's Consent to Assignment, Sublease or
Management Agreement. If Tenant requests Landlord's consent to a specific
assignment, sublease, or management agreement, Tenant shall give Landlord [i]
the name and address of the proposed assignee, subtenant or manager; [ii] a copy
of the proposed assignment, sublease or management agreement; [iii] reasonably
satisfactory information about the nature, business and business history of the
proposed assignee, subtenant, or manager and its proposed use of the Leased
Property; and [iv] banking, financial, and other credit information, and
references about the proposed assignee, subtenant or manager sufficient to
enable Landlord to determine the financial responsibility and character of the
proposed assignee, subtenant or manager. Any assignment, sublease or management
agreement shall contain provisions to the effect that [a] such assignment,
sublease or management agreement is subject and subordinate to all of the terms
and provisions of this Lease and to the rights of Landlord; [b] such assignment,
sublease or management agreement may not be modified without the prior written
consent of Landlord not to be unreasonably withheld or delayed; [c] if this
Lease shall terminate before the expiration of such assignment, sublease or
management agreement, the assignee, subtenant or manager thereunder will, at
Landlord's option, attorney to Landlord and waive any right the assignee,
subtenant or manager may have to terminate the assignment, sublease or
management agreement or surrender possession thereunder as a result of the
termination of this Lease; and [d] if the assignee, subtenant or manager
receives a written notice from Landlord stating that Tenant is in default under
this Lease, the assignee, subtenant or manager shall thereafter pay all rentals
or payments under the assignment, sublease or management agreement directly to
Landlord until such default has been cured. Tenant hereby collaterally assigns
to Landlord, as security for the performance of its obligations hereunder, all
of Tenant's right, title, and interest in and to any assignment, sublease or
management agreement now or hereafter existing for all or part of the Leased
Property. Tenant shall, at the request of Landlord,
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execute such other instruments or documents as Landlord may request to evidence
this collateral assignment. If Landlord, in its sole and absolute discretion,
consents to such assignment, sublease, or management agreement, such consent
shall not be effective until [i] a fully executed copy of the instrument of
assignment, sublease or management agreement has been delivered to Landlord;
[ii] in the case of an assignment, Landlord has received a written instrument in
which the assignee has assumed and agreed to perform all of Tenant's obligations
under the Lease; and [iii] Tenant has paid to Landlord a fee in the amount of
$1,500.00; and [iv] Landlord has received reimbursement from Tenant or the
assignee for all reasonable attorneys' fees and expenses and all other
reasonable out-of-pocket expenses incurred in connection with determining
whether to give its consent, giving its consent and all matters relating to the
assignment.
18.3 Agreements with Residents. Notwithstanding Section 18.1, Tenant
may enter into an occupancy agreement with residents of the Leased Property
without the prior written consent of Landlord provided that [i] the agreement
does not provide for lifecare services; [ii] Tenant may not collect rent for
more than one month in advance except that Tenant may collect security deposits
in an amount that does not exceed two months rent; and [iii] all residents of
the Leased Property are accurately shown in Tenant's accounting records.
18.4 Sale of Leased Property. If Landlord or any subsequent owner of
the Leased Property sells the Leased Property, its liability for the performance
of its agreements in this Lease will end on the date of the sale of the Leased
Property, and Tenant will look solely to the purchaser for the performance of
those agreements. Landlord shall remain liable to Tenant for any breach of this
Lease by Landlord that occurs during the period of Landlord's ownership of the
Leased Property. For purposes of this Section, any holder of a mortgage or
security agreement which affects the Leased Property at any time, and any
landlord under any lease to which this Lease is subordinate at any time, will be
a subsequent owner of the Leased Property when it succeeds to the interest of
Landlord or any subsequent owner of the Leased Property.
18.5 Assignment by Landlord. Landlord may transfer, assign, mortgage,
collaterally assign, or otherwise dispose of Landlord's interest in this Lease
or the Leased Property.
ARTICLE 19: HOLDOVER AND SURRENDER
19.1 Holding Over. Should Tenant, with or without the express or
implied consent of Landlord, continue to hold and occupy the Leased Property
after the expiration of the Term, such holding over beyond the Term and the
acceptance or collection of Rent by the Landlord shall operate and be construed
as creating a tenancy from month-to-month and not for any other term whatsoever.
Said month-to-month tenancy may be terminated by Landlord by giving Tenant 10
days written notice, and at any time thereafter Landlord may re-enter and take
possession of the Leased Property.
19.2 Surrender. Except for [i] Permitted Alterations; [ii] normal and
reasonable wear and tear (subject to the obligation of Tenant to maintain the
Leased Property in good order and repair during the Term); and [iii] damage and
destruction not required to be repaired by Tenant, Tenant shall surrender and
deliver up the Leased Property at the expiration or termination of the
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Term in as good order and condition as of the Commencement Date.
ARTICLE 20: LETTER OF CREDIT
20.1 Terms of Letter of Credit. As security for the performance of its
obligations hereunder, Tenant shall provide Landlord with the Letter of Credit
at the Closing. Tenant shall maintain the Letter of Credit in favor of Landlord
until Tenant's Obligations are performed in full. The Letter of Credit shall
permit partial draws and shall permit drawing upon presentation of a draft drawn
on the issuer and a certificate signed by Landlord stating that an Event of
Default has occurred under this Lease. The Letter of Credit shall be for an
initial term of one year and shall be automatically renewed annually for
successive terms of at least one year unless Landlord receives notice from the
Issuer, by certified mail, at least 60 days prior to the expiry date then in
effect that the Letter of Credit will not be extended for an additional one-year
period.
20.2 Replacement Letter of Credit. Tenant shall provide a replacement
Letter of Credit which satisfies the requirements of Section 20.1 from an Issuer
acceptable to Landlord within 30 days after the occurrence of any of the
following: [i] Landlord's receipt of notice from the Issuer that the Letter of
Credit will not be extended for an additional one-year period; [ii] Landlord
gives notice to Tenant that the Lace Financial Service Rating of the Issuer is
less than a "C+"; or [iii] Landlord gives notice to Tenant of the admission by
Issuer in writing of its inability to pay its debts generally as they become
due, or Issuer's filing of a petition in bankruptcy or petitions to take
advantage of any insolvency act, making an assignment for the benefit of its
creditors, consenting to the appointment of a receiver of itself or of the whole
or any substantial part of its property, or filing a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state thereof.
Tenant's failure to comply with the requirements of this Section shall be an
immediate Event of Default without any notice (other than as provided for in the
section), cure or grace period.
20.3 Draws. Landlord may draw under the Letter of Credit upon the
occurrence of an Event of Default hereunder. Any such draw shall not cure an
Event of Default. Landlord shall have the right, but not the obligation, to
apply all or any portion of the proceeds from the Letter of Credit to pay all or
any portion of [i] all Rent and other charges and expenses payable by Tenant
under this Lease; plus [ii] all expenses and costs incurred by Landlord in
enforcing or preserving Landlord' rights under this Lease or any security for
the Lease, including without limitation, [a] the fees, expenses, and costs of
any litigation, receivership, administrative, bankruptcy, insolvency, or other
similar proceeding; [b] attorney, paralegal, consulting and witness fees and
disbursements; and [c] the expenses, including without limitation, lodging,
meals and transportation of Landlord and its employees, agents, attorneys, and
witnesses in preparing for litigation, administrative, bankruptcy, insolvency,
or similar proceedings and attendance at hearings, depositions, and trials in
connection therewith.
With respect to any portion of the Letter of Credit proceeds that is
not applied to payment of Tenant's Obligations, Landlord shall have the option
to either [i] deposit the proceeds into an interest-bearing account with a
financial institution chosen by Landlord ("LC Account"); or [ii] require Tenant
to obtain a replacement Letter of Credit satisfactory to Landlord, with the
Letter
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of Credit proceeds made available to Tenant to secure Tenant's reimbursement
obligation for the Letter of Credit. All interest accruing on the LC Account
shall be paid to Landlord and may, from time to time, be withdrawn from the LC
Account by Landlord. At any time and from time to time until Tenant's
Obligations are performed in full, Landlord may apply all or any portion of the
funds held in the LC Account to payment of all or any portion of Tenant's
Obligations. Within 10 days after any such payment from the LC Account, Landlord
shall give written notice to Tenant describing the amount of such payment and
how it was applied to Tenant's Obligations.
Upon the occurrence of either [i] Landlord's receipt of a replacement
Letter of Credit that satisfies the requirements of Section 20.1 and is issued
by an Issuer acceptable to Landlord; or [ii] the date on which all of Tenant's
Obligations are performed in full, Landlord shall pay the principal balance of
the LC Account (including any accrued interest) to Tenant.
20.4 Partial Draws. Upon the occurrence of a monetary Event of Default
under this Lease, Landlord may, at its option, make a partial draw on the Letter
of Credit in an amount not to exceed the amount of Tenant's monetary obligations
under this Lease then past due. If Landlord then applies the proceeds from such
partial draw on the Letter of Credit to payment of all or any portion of
Tenant's monetary obligations then past due, Tenant shall, within 10 days after
notice from Landlord of such partial draw and payment, cause the amount of the
Letter of Credit to be reinstated to the amount in effect prior to such partial
draw. Tenant's failure to comply with the requirements of this section shall be
an immediate Event of Default under the Loan Documents without any notice (other
than as provided for in this section), cure or grace period. Landlord's rights
under this Section 20.4 are in addition to, and not in limitation of, Landlord's
rights under Section 20.3.
20.5 Substitute Letter of Credit. Tenant may, from time to time,
deliver to Landlord a substitute Letter of Credit meeting the requirements of
this Agreement and issued by an Issuer acceptable to Landlord. Upon Landlord's
approval of the substitute Letter of Credit, Landlord shall release the previous
Letter of Credit to the Tenant.
ARTICLE 21: QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT AND ESTOPPEL CERTIFICATES
21.1 Quiet Enjoyment. So long as Tenant performs all of its obligations
under this Lease, Tenant's possession of the Leased Property will not be
disturbed by Landlord.
21.2 Subordination. Subject to the terms and conditions of this
section, this Lease and Tenant's rights under this Lease are subordinate to any
ground lease or underlying lease, first mortgage, first deed of trust, or other
first lien against the Leased Property, together with any renewal,
consolidation, extension, modification or replacement thereof, which now or at
any subsequent time affects the Leased Property or any interest of Landlord in
the Leased Property, except to the extent that any such instrument expressly
provides that this Lease is superior. The foregoing subordination provision is
expressly conditioned upon any lessor or mortgagee being obligated and bound to
recognize Tenant as the tenant under this Lease, and such lessor or mortgagee
shall have no right to disturb Tenant's possession, use and occupancy of the
Leased Property or Tenant's enjoyment of its rights under this Lease unless and
until an Event of Default
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occurs hereunder. Any foreclosure action or proceeding by any mortgagee with
respect to the Leased Property shall not affect Tenant's rights under this Lease
and shall not terminate this Lease unless and until an Event of Default occurs
hereunder. The foregoing provisions will be self-operative, and no further
instrument will be required in order to effect them. However, Tenant shall
execute, acknowledge and deliver to Landlord, at any time and from time to time
upon demand by Landlord, such documents as may be requested by Landlord or any
mortgagee or any holder of any mortgage or other instrument described in this
Section, to confirm or effect any such subordination, provided that any such
document shall include a non-disturbance provision as set forth in this section
satisfactory to Tenant. Any mortgagee of the Leased Property shall be deemed to
be bound by the non-disturbance provision set forth in this section. If Tenant
fails or refuses to execute, acknowledge, and deliver any such document within
20 days after written demand, Landlord may execute acknowledge and deliver any
such document on behalf of Tenant as Tenant's attorney-in-fact. Tenant hereby
constitutes and irrevocably appoints Landlord, its successors and assigns, as
Tenant's attorney-in-fact to execute, acknowledge, and deliver on behalf of
Tenant any documents described in this Section. This power of attorney is
coupled with an interest and is irrevocable.
21.3 Attornment. If any holder of any mortgage, indenture, deed of
trust, or other similar instrument described in Section 21.2 succeeds to
Landlord's interest in the Leased Property, Tenant will pay to such holder all
Rent subsequently payable under this Lease. Tenant shall, upon request of anyone
succeeding to the interest of Landlord, automatically become the tenant of, and
attorn to, such successor in interest without changing this Lease. The successor
in interest will not be bound by [i] any payment of Rent for more than one month
in advance; [ii] any amendment or modification of this Lease thereafter made
without its consent as provided in this Lease; [iii] any claim against Landlord
arising prior to the date on which the successor succeeded to Landlord's
interest; or [iv] any claim or offset of Rent against the Landlord. Upon request
by Landlord or such successor in interest and without cost to Landlord or such
successor in interest, Tenant will execute, acknowledge and deliver an
instrument or instruments confirming the attornment. If Tenant fails or refuses
to execute, acknowledge, and deliver any such instrument within 20 days after
written demand, then Landlord or such successor in interest will be entitled to
execute, acknowledge, and deliver any document on behalf of Tenant as Tenant's
attorney-in-fact. Tenant hereby constitutes and irrevocably appoints Landlord,
its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any such document. This power of
attorney is coupled with an interest and is irrevocable.
21.4 Estoppel Certificates. At the request of Landlord or any mortgagee
or purchaser of the Leased Property, Tenant shall execute, acknowledge, and
deliver an estoppel certificate, in recordable form, in favor of Landlord or any
mortgagee or purchaser of the Leased Property certifying the following: [i] that
the Lease is unmodified and in full force and effect, or if there have been
modifications that the same is in full force and effect as modified and stating
the modifications; [ii] the date to which Rent and other charges have been paid;
[iii] whether Tenant or Landlord is in default or whether there is any fact or
condition which, with notice or lapse of time, or both, would constitute a
default, and specifying any existing default, if any; [iv] that Tenant has
accepted and occupies the Leased Property; [v] that Tenant has no defenses,
set-offs, deductions, credits, or counterclaims against Landlord, if that be the
case, or specifying such that exist; and [vi] such other information as may
reasonably be requested by Landlord or any mortgagee or
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purchaser. Any purchaser or mortgagee may rely on this estoppel certificate. If
Tenant fails to deliver the estoppel certificates to Landlord within 10 days
after the request of the Landlord, then Tenant shall be deemed to have certified
that [a] the Lease is in full force and effect and has not been modified, or
that the Lease has been modified as set forth in the certificate delivered to
Tenant; [b] Tenant has not prepaid any Rent or other charges except for the
current month; [c] Tenant has accepted and occupies the Leased Property; [d]
neither Tenant nor Landlord is in default nor is there any fact or condition
which, with notice or lapse of time, or both, would constitute a default; and
[e] Tenant has no defenses, set-offs, deductions, credits, or counterclaims
against Landlord. Tenant hereby irrevocably appoints Landlord as Tenant's
attorney-in-fact to execute, acknowledge, and deliver on Tenant's behalf any
estoppel certificate to which Tenant does not object within 10 days after
Landlord sends the certificate to Tenant. This power of attorney is coupled with
an interest and is irrevocable.
ARTICLE 22: REPRESENTATIONS AND WARRANTIES
Tenant hereby makes the following representations and warranties, as of
the Effective Date, to Landlord and acknowledges that Landlord is granting the
Lease in reliance upon such representations and warranties. Tenant's
representations and warranties shall survive the Closing and, except to the
extent made as of a specific date, shall continue in full force and effect until
Tenant's Obligations have been performed in full.
22.1 Organization and Good Standing. Tenant is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Kansas.
22.2 Power and Authority. Tenant has the power and authority to
execute, deliver and perform this Lease. Tenant has taken all requisite action
necessary to authorize the execution, delivery and performance of Tenant's
obligations under this Lease.
22.3 Enforceability. This Lease constitutes a legal, valid, and binding
obligation of Tenant enforceable in accordance with its terms.
22.4 Government Authorizations. Each Facility is in compliance with all
Legal Requirements. Exhibit E attached hereto contains a complete list of all
Government Authorizations required for the operation of each Facility as of the
Effective Date. All Government Authorizations are in full force and effect.
Tenant holds all Government Authorizations necessary for the Facility's
operation as an assisted living facility.
22.5 Financial Statements. Tenant has furnished Landlord with true,
correct, and complete copies of the Financial Statements. The Financial
Statements fairly present the financial position of Tenant, the Related
Companies and Guarantor as applicable, as of the respective dates and the
results of operations for the periods then ended in conformance with generally
accepted accounting principles applied on a basis consistent with prior periods.
The Financial Statements and other information furnished to Landlord are true,
complete and correct and, as of the Effective Date, no material adverse change
has occurred since the furnishing of such statements and information. As of the
Effective Date, the Financial Statements and other information do not contain
any untrue statement or omission of a material fact and are not misleading in
any material
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respect. Tenant, the Related Companies and Guarantor are solvent, and no
bankruptcy, insolvency, or similar proceeding is pending or contemplated by or,
to the knowledge of Tenant, against Tenant, the Related Companies or Guarantor.
22.6 No Litigation. As of the Effective Date and except as disclosed on
Exhibit F, [i] there are no actions or suits, or any proceedings or
investigations by any governmental agency or regulatory body pending against
Tenant, Guarantor or any Facility; [ii] Tenant has not received notice of any
threatened actions, suits, proceedings or investigations against Tenant,
Guarantor or the Facility at law or in equity, or before any governmental board,
agency or authority which, if determined adversely to Tenant or Guarantor, would
materially and adversely affect the Facility or title to the Facility (or any
part thereof), the right to operate the Facility as presently operated, or the
financial condition of Tenant or Guarantor; [iii] there are no unsatisfied or
outstanding judgments against Tenant, Guarantor or any Facility; [iv] there is
no labor dispute materially and adversely affecting the operation or business
conducted by Tenant, Guarantor, or any Facility; and [v] Tenant does not have
knowledge of any facts or circumstances which might reasonably form the basis
for any such action, suit, or proceeding.
22.7 Consents. The execution, delivery and performance of this Lease
will not require any consent, approval, authorization, order, or declaration of,
or any filing or registration with, any court, any federal, state, or local
governmental or regulatory authority, or any other person or entity, the absence
of which would materially impair the ability of Tenant to operate the Facility
as presently operated.
22.8 No Violation. The execution, delivery and performance of this
Lease [i] do not and will not conflict with, and do not and will not result in a
breach of the Articles of Incorporation or Bylaws of Tenant; [ii] do not and
will not conflict with, and do not and will not result in a breach of, and do
not and will not constitute a default under (or an event which, with or without
notice or lapse of time, or both, would constitute a default under), any of the
terms, conditions or provisions of any agreement or other instrument or
obligation to which Tenant is a party or by which its assets are bound; and
[iii] do not and will not violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Tenant or the Facility.
22.9 Reports and Statements. All reports, statements, certificates and
other data furnished by or on behalf of Tenant, the Related Companies or
Guarantor to Landlord in connection with this Lease, and all representations and
warranties made herein or in any certificate or other instrument delivered in
connection herewith and therewith, are true and correct in all material respects
and do not omit to state any material fact or circumstance necessary to make the
statements contained herein or therein, in light of the circumstances under
which they are made, not misleading as of the date of such report, statement,
certificate or other data. The copies of all agreements and instruments
submitted to Landlord, including, without limitation, all agreements relating to
management of the Facility, the Letter of Credit, and Tenant's working capital
are true, correct and complete copies and include all amendments and
modifications of such agreements.
22.10 ERISA. All plans (as defined in Section 4021(a) of the Employee
Retirement Income Security Act of 1974, as amended or supplemented from time to
time ("ERISA")) for which
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Tenant is an "employer" or a "substantial employer" (as defined in Sections 3(5)
and 4001(a)(2) of ERISA, respectively) are in compliance with ERISA and the
regulations and published interpretations thereunder. To the extent Tenant
maintains a qualified defined benefit pension plan: [i] there exists no
accumulated funding deficiency; [ii] no reportable event and no prohibited
transaction has occurred; [iii] no lien has been filed or threatened to be filed
by the Pension Benefit Guaranty Corporation established pursuant to Subtitle A
of Title IV of ERISA; and [iv] Tenant has not been deemed to be a substantial
employer.
22.11 Chief Executive Office. Tenant maintains its chief executive
office and its books and records at the address set forth in the introductory
paragraph of this agreement.
22.12 Other Name or Entities. Except as disclosed herein, none of
Tenant's business is conducted through any corporate subsidiary, unincorporated
association or other entity and Tenant has not, within the six years preceding
the date of this agreement [i] changed its name, [ii] used any name other than
the name stated at the beginning of this agreement, or [iii] merged or
consolidated with, or acquired any of the assets of, any corporation or other
business except for the matters set forth on Exhibit H.
22.13 Parties in Possession. Except as disclosed on Exhibit B, there
are no parties in possession of any Leased Property or any portion thereof as
managers, lessees, tenants at sufferance, or trespassers.
22.14 Access. Access to the Land is directly from a dedicated public
right-of-way without any easement. To the knowledge of Tenant, there is no fact
or condition which would result in the termination or reduction of the current
access to and from the Land to such right-of-way.
22.15 Utilities. There are available at the Land gas, municipal water,
and sanitary sewer lines, storm sewers, electrical and telephone services in
operating condition which are adequate for the operation of each Facility at a
reasonable cost. The Land has direct access to utility lines located in a
dedicated public right-of-way without any easement. As of the Effective Date,
there is no pending or, to the knowledge of Tenant, threatened governmental or
third party proceeding which would impair or result in the termination of such
utility availability.
22.16 Condemnation and Assessments. As of the Effective Date, Tenant
has not received notice of, and there are no pending or, to the best of Tenant's
knowledge, threatened, condemnation, assessment or similar proceedings affecting
or relating to any Facility, or any portion thereof, or any utilities, sewers,
roadways or other public improvements serving the Facility.
22.17 Zoning. As of the Effective Date, [i] the use and operation of
each Facility as a 33-unit assisted living facility is a permitted use under the
applicable zoning code; [ii] except as disclosed on Exhibit E hereto, no special
use permits, conditional use permits, variances, or exceptions have been granted
or are needed for such use of each Facility; [iii] the Land is not located in
any special districts such as historical districts or overlay districts; and
[iv] each Facility
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has been constructed in accordance with and complies with all applicable zoning
laws, including but not limited to, dimensional, parking, setback, screening,
landscaping, sign and curb cut requirements.
22.18 Pro Forma Statement. Tenant has delivered to Landlord a true,
correct and complete copy of the Pro Forma Statement. The Pro Forma Statement
shows Tenant's reasonable expectation of the most likely results of Facility
operations for the 5 year period commencing on the anticipated Effective Date.
22.19 Environmental Matters. During the period of Tenant's ownership of
the Leased Property, if any, and to the best of Tenant's knowledge after
diligent inquiry, for the period Tenant did not own the Leased Property, [i] the
Leased Property is in compliance with all Environmental Laws; [ii] there were no
releases of Hazardous Materials on, from, or under the Leased Property, except
in compliance with all Environmental Laws; [iii] no Hazardous Materials have
been, are or will be used, generated, stored, or disposed of on the Leased
Property, except in compliance with all Environmental Laws; [iv] no permit is or
has been required to be obtained by Tenant from the Environmental Protection
Agency or any similar agency or department of any state or local government for
the use or maintenance of any Improvements; and [v] no summons, citation or
inquiry has been made by any such environmental unit, body or agency or a third
party demanding any right of recovery for payment or reimbursement for costs
incurred under CERCLA or any other Environmental Laws and the Land is not
subject to the lien of any such agency. "Disposal" and "release" shall have the
meanings set forth in CERCLA. To the best of Tenant's knowledge, all underground
storage tanks located on the Leased Property, if any, have been removed in
accordance with all applicable federal, state and local laws and regulations and
all necessary closure reports have been filed with the appropriate governmental
agencies.
22.20 Leases and Contracts. As of the Effective Date and except as
disclosed on Exhibit G, there are no leases or contracts (including but not
limited to, insurance contracts, maintenance contracts, construction contracts,
employee benefit plans, employment contracts, equipment leases, security
agreements, architect agreements, and management contracts) to which Tenant or
Guarantor is a party relating to any part of the ownership, operation,
possession, construction, management or administration of the Land or the
Facility.
22.21 No Default. As of the Effective Date, [i] there is no existing
Event of Default under this Lease; and [ii] no event has occurred which, with
the giving of notice or the passage of time, or both, would constitute or result
in such an Event of Default. Except as disclosed to Landlord in writing, neither
Tenant nor any Affiliate is in default, after expiration of any applicable grace
period, under any financing documents relating to the First 15 Properties or the
MMR Facilities (as each is defined in the Commitment) or under any financing
documents relating to any loan from Landlord to Corridor or any lease from
Landlord to Tenant to Corridor.
22.22 Condition of Facility. To the best of Tenant's knowledge, all of
the mechanical and electrical systems, heating and air-conditioning systems,
plumbing, water and sewer systems, and all other items of mechanical equipment
or appliances are in good working order, condition and repair, are of sufficient
size and capacity to service the Facility as presently
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operated, and conform with all applicable ordinances and regulations, and with
all building, zoning, fire, safety, and other codes, laws and orders. The
Improvements, including the roof and foundation, are structurally sound and free
from leaks and other defects.
22.23 Compliance with Laws. To the best of Tenant's knowledge, there is
no violation of, or noncompliance with, [i] any laws, orders, rules or
regulations, ordinances or codes of any kind or nature whatsoever relating to
the Facility or the ownership or operation thereof (including without
limitation, building, fire, health, occupational safety and health, zoning and
land use, planning and environmental laws, orders, rules and regulations); [ii]
any covenants, conditions, restrictions or agreements affecting or relating to
the ownership, use or occupancy of the Facility; or [iii] any order, writ,
regulation or decree relating to any matter referred to in [i] or [ii] above.
ARTICLE 23: FUTURE PROJECTS
23.1 Obligation for Future Projects. Subject to the requirements, terms
and conditions of the Commitment and this Lease, Landlord has committed to
finance up to 24 assisted living facilities to be developed by Tenant and its
Affiliates ("Tenant Projects"). Landlord's obligation to provide financing for
each Tenant Project is subject to the satisfaction of Landlord's due diligence
requirements and the closing conditions set forth in the Commitment. Tenant and
its Affiliates are obligated to close a total of 24 financings for Tenant
Projects with Landlord.
ARTICLE 24: SECURITY INTEREST
24.1 Collateral. Tenant hereby grants to Landlord a security interest
in the following described property, whether now owned or hereafter acquired by
Tenant (the "Collateral"), to secure the payment and performance of Tenant's
obligations under this Lease:
(a) All machinery, furniture, equipment, trade fixtures,
appliances, inventory and all other goods (as "equipment," "inventory" and
"goods" are defined for purposes of Article 9 ("Article 9") of the Uniform
Commercial Code as adopted in the State) now or hereafter located in or on or
used or usable in connection with the Land, Improvements, or Fixtures and
replacements, additions, and accessions thereto, including without limitation
those items which are to become fixtures or which are building supplies and
materials to be incorporated into an Improvement or Fixture.
(b) All accounts, contract rights, general intangibles,
instruments, documents, and chattel paper [as "accounts", "contract rights",
"general intangibles", "instruments", "documents", and "chattel paper", are
defined for purposes of Article 9] now or hereafter arising in connection with
the business located in or on or used or usable in connection with the Land,
Improvements, or Fixtures, and replacements, additions, and accessions thereto.
(c) All franchises, permits, licenses, operating rights,
certifications, approvals, consents, authorizations and other general
intangibles regarding the use, occupancy or operation of the Improvements, or
any part thereof, including without limitation, certificates of need, state
health care facility licenses, and Medicare and Medicaid provider agreements, to
the
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extent permitted by law.
(d) Unless expressly prohibited by the terms thereof, all
contracts, agreements, contract rights and materials relating to the design,
construction or operation of the Improvements, including but not limited to,
plans, specifications, drawings, blueprints, models, mock-ups, brochures,
flyers, advertising and promotional materials and mailing lists.
(e) All ledger sheets, files, records, computer programs,
tapes, other electronic data processing materials, and other documentation
relating to the preceding listed property or otherwise used or usable in
connection with the Land and Improvements.
(f) The products and proceeds of the preceding listed
property, including without limitation cash and non-cash proceeds, proceeds of
proceeds, and insurance proceeds.
24.2 Additional Documents. At the request of Landlord, Tenant shall
execute additional security agreements, financing statements, and such other
documents as may be requested by Landlord to maintain and perfect such security
interest. Tenant hereby irrevocably appoints Landlord, its successors and
assigns, as Tenant's attorney-in-fact to execute, acknowledge, deliver and file
such documents on behalf of Tenant. This power of attorney is coupled with an
interest and is irrevocable.
24.3 Notice of Sale. With respect to any sale or other disposition of
any of the Collateral after the occurrence of an Event of Default, Landlord and
Tenant agree that the giving of 5 days notice by Landlord, sent by overnight
delivery, postage prepaid, to Borrower's notice address designating the time and
place of any public sale or the time after which any private sale or other
intended disposition of such Collateral is to be made, shall be deemed to be
reasonable notice thereof and Tenant waives any other notice with respect
thereto.
ARTICLE 25: MISCELLANEOUS
25.1 Notices. Landlord and Tenant hereby agree that all notices,
demands, requests, and consents (hereinafter "notices") required to be given
pursuant to the terms of this Lease shall be in writing, shall be addressed to
the addresses set forth in the introductory paragraph of this Lease, and shall
be served by [i] personal delivery; [ii] United States mail, postage prepaid; or
[iii] nationally recognized overnight courier; provided, however, that any
notice of an Event of Default shall be served by (i) personal delivery; (ii)
certified United States mail, postage prepaid, return receipt requested; or
(iii) nationally recognized overnight courier. A copy of any notice given to
Tenant shall be sent to David Crockett, Esq., The Amidon House, 1005 N. Market,
Wichita, Kansas 67214-2971, but the failure to give the notice required by this
sentence shall not affect the validity or effectiveness of the notices to Tenant
hereunder. All notices shall be deemed to be given upon the earlier of actual
receipt or 3 business days after mailing, or one business day after deposit with
the overnight courier. Any notices meeting the requirements of this Section
shall be effective, regardless of whether or not actually received. Landlord or
Tenant may change its notice address at any time by giving the other party
notice of such change.
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25.2 Advertisement of Leased Property. In the event the parties hereto
have not executed a renewal Lease within 120 days prior to the expiration of
this Lease, or Tenant has not exercised its Option to Purchase, then Landlord or
its agent shall have the right to enter the Leased Property at all reasonable
times for the purpose of exhibiting the Leased Property to others and to place
upon the Leased Property for and during the period commencing 120 days prior to
the expiration of this Lease, "for sale" or "for rent" notices or signs.
25.3 Entire Agreement. The Commitment and this Lease constitute the
entire agreement between Landlord and Tenant with respect to the subject matter
hereof. No representations, warranties, and agreements have been made by
Landlord except as set forth in the Commitment and this Lease. If there is any
direct conflict between the terms and provisions of the Commitment and the terms
of this Lease, this Lease shall govern. Tenant hereby reaffirms the Commitment
and all provisions thereof. The Commitment shall survive the execution of this
Lease.
25.4 Severability. If any term or provision of this Lease is held to be
invalid or unenforceable, such holding shall not affect the remainder of this
Lease and the same shall remain in full force and effect, unless such holding
substantially deprives Tenant of the use of the Leased Property or Landlord of
the rents herein reserved, in which event this Lease shall forthwith terminate
as if by expiration of the Term.
25.5 Captions and Headings. The captions and headings are inserted only
as a matter of convenience and for reference and in no way define, limit or
describe the scope of this Lease or the intent of any provision hereof.
25.6 Governing Law. This Lease shall be construed under the laws of the
State.
25.7 Memorandum of Lease. Tenant shall not record this Lease. Tenant
may, however, record a memorandum of lease approved by Landlord.
25.8 Waiver. No waiver by Landlord of any condition or covenant herein
contained, or of any breach of any such condition or covenant, shall be held or
taken to be a waiver of any subsequent breach of such covenant or condition, or
to permit or excuse its continuance or any future breach thereof or of any
condition or covenant, nor shall the acceptance of Rent by Landlord at any time
when Tenant is in default in the performance or observance of any condition or
covenant herein be construed as a waiver of such default, or of Landlord's right
to terminate this Lease or exercise any other remedy granted herein on account
of such existing default.
25.9 Binding Effect. This Lease will be binding upon and inure to the
benefit of the heirs, successors, personal representatives, and permitted
assigns of Landlord and Tenant.
25.10 Power of Attorney. Effective upon the occurrence and during the
continuance of an Event of Default, Tenant hereby irrevocably and
unconditionally appoints Landlord, or Landlord's authorized officer, agent,
employee or designee, as Tenant's true and lawful
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attorney-in-fact, to act for Tenant in Tenant's name, place, and stead, to
execute, deliver and file all applications and any and all other necessary
documents or things to effect the issuance, transfer, reinstatement, renewal
and/or extension of any and all Governmental Authorizations issued to Tenant or
applied for by Tenant in connection with Tenant's operation of each Facility, to
permit any transferee to operate each Facility under the Governmental
Authorizations, and to do any and all other acts incidental to any of the
foregoing. Tenant irrevocably and unconditionally grants to Landlord as its
attorney-in-fact full power and authority to do and perform every act necessary
and proper to be done in the exercise of any of the foregoing powers as fully as
Tenant might or could do if personally present or acting, with full power of
substitution, hereby ratifying and confirming all that said attorney shall
lawfully do or cause to be done by virtue hereof. This power of attorney is
coupled with an interest and is irrevocable prior to the full performance of
Tenant's Obligations. Except in the case of an emergency, Landlord shall give
Tenant 3 business days prior written notice before acting on behalf of Tenant
pursuant to this power of attorney.
25.11 No Offer. Landlord's submission of this Lease to Tenant is not an
offer to lease the Leased Property, or an agreement by Landlord to reserve the
Leased Property for Tenant. Landlord will not be bound to Tenant until Tenant
has duly executed and delivered duplicate original leases to Landlord, and
Landlord has duly executed and delivered one of these duplicate original leases
to Tenant.
25.12 Modification. This Lease may only be modified by a writing signed
by both Landlord and Tenant except for the automatic extension(s) of the Term
pursuant to Section 1.2. All references to this Lease, whether in this Lease or
in any other document or instrument, shall be deemed to incorporate all
amendments, modifications and renewals of this Lease, made after the date
hereof. If Tenant requests Landlord's consent to any change in ownership, merger
or consolidation of Tenant or Guarantor, any assumption of the Lease, or any
modification of the Lease, Tenant shall provide Landlord all relevant
information and documents sufficient to enable Landlord to evaluate the request.
In connection with any such request, Tenant shall pay to Landlord a fee in the
amount of $1,500.00 and shall pay all of Landlord's reasonable attorney's fees
and expenses and other reasonable out-of-pocket expenses incurred in connection
with Landlord's evaluation of Tenant's request, the preparation of any documents
and amendments, the subsequent amendment of any documents between Landlord and
its collateral pool lenders (if applicable), and all related matters.
25.13 Lender's Modification. Tenant acknowledges that Landlord may
mortgage the Leased Property or use the Leased Property as collateral for a
collateralized mortgage obligations or Real Estate Mortgage Investment Companies
(REMICS). If any mortgage lender of Landlord desires any modification of this
Lease, Tenant agrees to consider such modification in good faith and to execute
an amendment of this Lease if Tenant finds such modification acceptable.
25.14 No Merger. The surrender of this Lease by Tenant or the
cancellation of this Lease by agreement of Tenant and Landlord or the
termination of this Lease on account of Tenant's default will not work a merger,
and will, at Landlord's option, terminate any subleases or operate as an
assignment to Landlord of any subleases. Landlord's option under this paragraph
will be exercised by notice to Tenant and all known subtenants of the Leased
Property.
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25.15 Laches. No delay or omission by either party hereto to exercise
any right or power accruing upon any noncompliance or default by the other party
with respect to any of the terms hereof shall impair any such right or power or
be construed to be a waiver thereof.
25.16 Construction of Lease. This Lease has been prepared by Landlord
and its professional advisors and reviewed by Tenant and its professional
advisors. Landlord, Tenant, and their advisors believe that this Lease is the
product of all their efforts, that it expresses their agreement, and agree that
it shall not be interpreted in favor of either Landlord or Tenant or against
either Landlord or Tenant merely because of their efforts in preparing it.
25.17 Counterparts. This Lease may be executed in multiple
counterparts, each of which shall be deemed an original hereof.
25.18 Lease Guaranty. The payment of Rent and the performance of
Tenant's obligations under this Lease are guaranteed for 10% of the Lease Amount
by Guarantor pursuant to a Lease Guaranty of even date and secured by a stock
pledge made by Guarantor in favor of Landlord pursuant to a Stock Pledge
Agreement of even date, subject to being released pursuant to Section 17.1.
25.19 Custody of Escrow Funds. Any funds paid to Landlord in escrow
hereunder may be held by Landlord or, at Landlord's election, by a financial
institution, the deposits or accounts of which are insured or guaranteed by a
federal or state agency. The funds shall not be deemed to be held in trust, may
be commingled with the general funds of Landlord or such other institution, and
shall not bear interest.
25.20 Landlord's Status as a REIT. Tenant acknowledges that Landlord
has now and may hereafter elect to be taxed as a real estate investment trust
("REIT") under the Internal Revenue Code.
25.21 Exhibits. The following exhibits are attached hereto and
incorporated herein:
Exhibit A: Legal Description
Exhibit B: Permitted Exceptions
Exhibit C: Documents to be Delivered
Exhibit D: Certificate and Facility Financial Report
Exhibit E: Government Authorizations
Exhibit F: Pending Litigation
Exhibit G: List of Leases and Contracts
Exhibit H: Business and Name Changes
25.22 Waiver of Jury Trial. Landlord and Tenant waive trial by jury in
any action, proceeding or counterclaim brought by either of them against the
other on all matters arising out of this Lease or the use and occupancy of the
Leased Property (except claims for personal injury or
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property damage). If Landlord commences any summary proceeding for nonpayment of
Rent, Tenant will not interpose, and waives the right to interpose, any
counterclaim in any such proceeding.
25.23 Attorney's Fees and Expenses. Tenant shall pay to Landlord all
reasonable costs and expenses incurred by Landlord in administering this Lease
and the security for this Lease, enforcing or preserving Landlord's rights under
this Lease and the security for this Lease, and in all matters of collection,
whether or not an Event of Default has actually occurred or has been declared
and thereafter cured, including but not limited to, [a] reasonable attorney's
and paralegal's fees and disbursements; [b] the fees and expenses of any
litigation, administrative, bankruptcy, insolvency, receivership and any other
similar proceeding; [c] court costs; [d] the expenses of Landlord, its
employees, agents, attorneys and witnesses in preparing for litigation,
administrative, bankruptcy, insolvency and other proceedings and for lodging,
travel, and attendance at meetings, hearings, depositions, and trials; and [e]
consulting and witness fees incurred by Landlord in connection with any
litigation or other proceeding.
25.24 CONSENT TO JURISDICTION. TENANT HEREBY IRREVOCABLY SUBMITS AND
CONSENTS TO THE NON-EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL
COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO, SEDGWICK COUNTY, KANSAS OR
KAY COUNTY, OKLAHOMA FOR ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
MATTER ARISING FROM OR RELATED TO [I] THE COMMITMENT; [II] THIS LEASE; OR [III]
ANY DOCUMENT EXECUTED BY TENANT IN CONNECTION WITH THIS LEASE. TENANT HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT TENANT MAY EFFECTIVELY DO SO, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR
PROCEEDING. TENANT AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
TENANT AND ANY GUARANTOR AGREE NOT TO INSTITUTE ANY LEGAL ACTION OR
PROCEEDING AGAINST LANDLORD OR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT OR
PROPERTY OF LANDLORD, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THE
COMMITMENT, THIS LEASE OR ANY RELATED DOCUMENT IN ANY COURT OTHER THAN A STATE
OR FEDERAL COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO, SEDGWICK COUNTY,
KANSAS OR KAY COUNTY, OKLAHOMA.
TENANT HEREBY CONSENTS TO SERVICE OF PROCESS BY LANDLORD IN ANY MANNER
AND IN ANY JURISDICTION PERMITTED BY LAW. NOTHING HEREIN SHALL AFFECT OR IMPAIR
LANDLORD'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW, OR
LANDLORD'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST TENANT OR THE
PROPERTY OF TENANT OR ANY GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION.
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25.25 Survival. The following provisions shall survive termination of
the Lease: Article 9 (Damage & Destruction), Article 10 (Condemnation); Article
16 (Alterations); and Section 25.28 (Survival).
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this
Lease or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
Signed and acknowledged
in the presence of: HEALTH CARE REIT, INC.
Signature ________________________ By:____________________________
Print Name________________________
Title:____________________
Signature ________________________
Print Name________________________
STERLING HOUSE CORPORATION
Signature ________________________ By:____________________________
Print Name________________________
Title:____________________
Signature ________________________
Print Name________________________ Tax I.D. No.:__________________
STATE OF OHIO )
) Section:
COUNTY OF LUCAS )
The foregoing instrument was acknowledged before me this _____ day of
_____________, 19____ by ___________________________, the _________________ of
Health Care REIT, Inc., a Delaware corporation, on behalf of the corporation.
-------------------------------
Notary Public
My Commission Expires:_____________________ [SEAL]
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STATE OF KANSAS )
) Section:
COUNTY OF SEDGWICK )
The foregoing instrument was acknowledged before me this _____ day of
______________________, 19____ by ___________________
___________________________, the _________________ of Sterling House
Corporation, a Kansas corporation, on behalf of the corporation.
-------------------------------
Notary Public
My Commission Expires:_____________________ [SEAL]
THIS INSTRUMENT PREPARED BY:
Diane V. Davis, Esq.
Shumaker, Loop & Kendrick
1000 Jackson Street
Toledo, Ohio 43624
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CONSENT AND AGREEMENT OF RELATED COMPANIES
The undersigned Related Companies hereby consent to the foregoing Lease
Agreement and agree to be bound by all provisions therein applicable to the
undersigned, including, without limitation, Sections 14.5, 14.7, 14.9, 15.3,
15.6, Article 17 and Article 23.
Executed and delivered as of the Effective Date.
STERLING MANAGEMENT
AVANTI GROUP, INC. INCORPORATED
By:___________________________ By:____________________________
Title:___________________ Title:____________________
STERLING HOLDINGS, INC.
By:____________________________
Title:____________________
CORRIDOR PROPERTIES, L.L.C.
By: Sterling House Corporation,
Manager
By:_______________________
Title:_______________
BUCHANAN HOMES, INC.
By:____________________________
Title:____________________
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