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EXHIBIT 10.15
LEASE AGREEMENT
THIS LEASE AGREEMENT made and entered into this 1st day of June, 1997, by and
between G&L Gardens, LLC., an Arizona Limited Liability Company the "Lessor",
and Capital Senior Management 1, Inc., a Texas Corporation, the "Lessee".
W I T N E S E T H
WHEREAS, Lessor owns a 98 bed Intermediate Care Nursing and Alzheimers facility
located in Phoenix, Arizona known as Maryland Gardens Care Center, which
together with any other improvements now hereafter located on the tract and all
easements, tenements, hereditament, buildings, appurtenances and any and all
furnishings, fixtures and equipment and supplies used in conjunction therewith
are hereinafter referred to as the "Leased Premises";
WHEREAS, the Lessor owns furnishings, furniture, equipment, fixtures and
supplies to be used in or about the Leased Premises which are enumerated on
Exhibit "A" (hereinafter collectively referred to as the "Personal Property");
WHEREAS, Lessee has agreed to lease the Leased Premises and Personal Property
from Lessor pursuant to the terms and conditions of this lease (the "Lease");
NOW, THEREFORE, in consideration of the rents hereinafter specified and the
covenants, terms and conditions hereinafter contained, the parties do hereby
agree as follows:
1. Leased Premises and Personal Property. Lessor, for and in
consideration of the rent, and covenants and agreements hereinafter
reserved, mentioned and contained on the part of the Lessee, its
successors and assigns, to be paid, kept and performed, does hereby
Lease unto Lessee the Leased Premises together with the Personal
Property to be used in and upon the Leased Premises for the term
hereinafter specified, for use and operation therein and thereon of a
nursing home and Alzheimers facility.
2. Term of Lease. The term of this Lease shall be for a period of
fourteen (14) months commencing on June 1, 1997, (the "Commencement
Date"), and shall expire at midnight on July 31, 1998, unless sooner
terminated as hereinafter provided.
3. Rent. Lessee shall pay to Lessor after payment of all expenses,
(including the monthly management fee) the monthly rental for the
Leased Premises (the "Rent") in the amount of $30,000 in June, July
and September, 1997, and $35,000 per month thereafter.
Notwithstanding the above, it is agreed that no
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rental payments will be due in August of 1997 and May of 1998. All
rent payments shall be paid by the fifth day of each month.
4. License and Certifications. Lessee will use its best efforts to take
all affirmative action required by all federal, state, county and
local governmental authorities having jurisdiction over Lessee, the
services it provides and the facilities it operates, to obtain,
maintain, and retain all necessary, and appropriate certificates,
licenses, and other approvals for operation of the Leased Premises.
5. Payment of Taxes and Assessments.
a. Generally. Lessee will pay or cause to be paid, all taxes and
assessments, which during the term of this Lease may have
been, or may be assessed, levied, confirmed, imposed upon and
become due and payable out of or in respect of, or become a
lien on the Leased Premises or any part thereof (hereinafter
collectively referred to as "Taxes and Assessments").
Notwithstanding the foregoing, Lessee will be under no
obligation, however, to pay interest or principal on any debt
of Lessor secured by the Property, any franchise or income tax
payable by Lessor (including income or similar tax on net
income of Lessor derived from this Lease), any gift,
inheritance, transfer estate or succession tax by reason of
any present or future law which may be enacted during the term
of this Lease.
b. Contest. Lessee shall have the right to contest the amount or
validity, in whole or in part, of any Taxes and Assessments by
appropriate proceedings diligently conducted in good faith.
6. Occupancy and Use of Premises.
a. Use of Premises. During the term of this Lease, the Leased
Premises shall be used and occupied by Lessee for an
Intermediate Care Nursing and Alzheimers Facility.
b. Status at Termination. Upon termination of this Lease for any
reason, Lessee will return to Lessor the Leased Premises and
transfer all applicable licenses and permits to Lessor.
7. Utilities. Lessee will contract in its own name and pay all charges
for water, gas, sewer, electricity, light, heat air conditioning,
power telephone, waste removal or other services used by, rendered or
supplied to Lessee in connection with the Leased Premises. However,
Lessee may contest any such utility charges.
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8. Insurance.
a. General Coverage Requirements. Lessee, at its sole cost and
expense, will insure and keep insured with responsible
insurance companies authorized to do business in the State in
which the Leased Premises is located, the Leased Premises and
all alterations, extension and improvements thereto and
replacements thereof, as well as all personal property of
Lessee located on the Leased Premises, against loss or damage
by fire and the risks contemplated within the extended
coverage endorsement (as such endorsement in the broadest form
may customarily be written in such jurisdiction from time to
time) and against such other risks as may be reasonably
required by Lessor or by any lender holding a mortgage
superior to this Lease, but in no event in an amount more than
the full insurable value of the Leased Premises, or an amount
which, if the Leased Premises were substantially or totally
destroyed, would provide sufficient proceeds to completely
repair or replace the Leased Premises, as such amounts may
change from time to time. Lessee will pay the premium for
such insurance as it becomes due and will deliver to Lessor
copies of all such policies of insurance as it becomes due and
will deliver to Lessor copies of all such policies of
insurance with due proof of payment of premiums at least ten
(10) days prior to expiration of the policies; provided,
however, at the commencement of the Initial Term of this
Lease, Lessee shall have the option to keep in force the fire
and other policies of Lessor, if any, then in force until
their respective expiration dates, and if kept in force, the
premiums for such policies will be prorated and adjusted
between Lessor and Lessee as of the date of the commencement
of the Initial Term of this Lease, and similar adjustment and
proration will be made in respect to any such policies taken
out by Lessee and in existence at the end of the term of this
Lease. All policies of fire and other insurance will be for
the benefit of, and with loss payable to Lessor, Lessee and
any lender holding a mortgage superior to this Lease, as their
interests may appear. The interest of any such lender will be
covered by the customary mortgagee endorsement used in the
jurisdiction in which the Leased Premises is located.
b. Specific Coverage Requirements. Lessee shall also, at
Lessee's sole cost and expense, cause to be issued and shall
maintain during the entire term of this Lease the following:
i. Lessee will carry and maintain at all times during
the term of this Lease insurance against claims for
personal injury or property damage under a policy of
general liability insurance or a combination of
General Liability and Commercial Umbrella Liability
policies in an amount of at least Three Million
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and No/100 dollars ($3,000,000.00) per occurrence and
One Hundred Thousand and No/100 Dollars ($100,000.00)
(but in no event less than the requirements of
Lessor's lenders) or the reasonable recommendations of
any qualified insurance consultant retained by
Lessor. Lessee will also carry adequate workmen's
compensation insurance and business interruption
insurance equal to one years rental payments.
ii. Lessee will carry and maintain at all times during
the term of this Lease professional liability or
"malpractice" insurance to the extent of not less
than Three Million Dollars ($3,000,000.00) per
occurrence, Three Million Dollars ($3,000,000.00) per
year.
iii. Lessee, at its sole cost and expense, will maintain
such other usual and customary polices of insurance
in such amounts as may be reasonably required by
Lessor's lenders, including but not limited to, any
automobile liability insurance, boiler insurance or
flood insurance required by said lenders; provided
that such insurance is available at commercially
reasonable rates.
c. Policy Requirements. All policies of insurance shall provide
that they shall not be canceled, terminated, reduced or
materially modified without at least thirty (30) days prior
written notice to Lessor and Lessee.
d. Delivery of Policies. The originals or binder of all
insurance policies required by this Article shall be delivered
to Lessor upon request.
9. Repairs and Maintenance.
a. Lessee's Duties to Repair. Throughout the term of this Lease,
Lessee, at its sole cost and expense, will keep and maintain,
or cause to be kept and maintained, the Leased Premises
(including the grounds) and the Personal Property in good
order and condition without waste and in a suitable state of
repair at least comparable to that which existed immediately
prior to the Commencement Date (ordinary wear and tear
excepted). However, Lessee shall not be responsible for any
maintenance and repairs which are not of a routine nature.
Instead, Lessor shall be responsible for all structural
repairs and replacements and material capital expenditures,
such as repairs and replacements to the building, roof, and
major mechanical systems, changes to the parking, grading and
other matters concerning the land on which the improvements
are located, and other non-routine repairs and replacements.
Additionally, Lessor shall fund the renovations listed under
Exhibit "B" under the time limits set forth in said Exhibit.
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b. Replacement of Personal Property. Lessee shall have the
right, at any time and from time to time, to remove and
dispose of any Personal Property which may have become
obsolete or unfit for use, or which is no longer useful in the
operation of the Leased Premises.
10. Alterations and Demolition. Lessee will not remove or demolish any
improvement or building which is part of the Leased Premises or any
portion thereof or allow it to be removed or demolished, without the
prior written consent of the Lessor, which consent shall not be
unreasonably withheld. Subject to the terms of any mortgage secured
by the Leased Premises, Lessee agrees that it will not make, authorize
or permit to be made, any changes or alterations in or to the Leased
Premise in excess of $20,000.00 without first obtaining the Lessor's
written consent thereto.
11. Discharge of Liens.
a. General. Lessee will not create or permit to be created or to
remain, and Lessee will discharge, any lien, encumbrance or
charge levied on account of any mechanic's, laborer's or
materialman's lien of any conditional sale, security agreement
or chattel mortgage, or otherwise, which might be or become a
lien, encumbrance or charge upon the Leased Premises or any
part thereof, or the income therefrom or the Personal
Property, for work or materials or Personal Property furnished
or supplied to, or claimed to have been supplied to or at the
request of Lessee.
b. Cure by Lessee. If any mechanic's laborer's, materialman's or
other lien caused or charged to Lessee shall at any time be
filed against the Leased Premises or Personal Property, Lessee
shall have the right to contest such lien or charge, provided,
Lessee within thirty (30) days after notice of the filing
thereof, will cause the same to be discharged or record or in
lieu thereof to secure Lessor against said lien by deposit
with Lessor of such security as may be reasonably demanded by
Lessor to protect against such lien.
12. Inspection of Premises by Lessor. At any time after twenty-four (24)
hours notice to Lessee, during reasonable business hours, Lessor
and/or its authorized representative shall have the right to enter
and inspect the Leased Premises. Lessor agrees that the person or
persons upon entering and inspecting the Leased Premises will cause as
little inconvenience to the Lessee as may reasonably be possible under
the circumstances.
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13. Condemnation.
a. Generally. Lessor and Lessee shall immediately notify the
other party as soon as either becomes aware of any attempt to
acquire by condemnation, as hereinafter defined, the entire
premises, or any portion thereof. As used in this section,
the word "Condemnation" and grammatical variations thereof
made to fit the grammatical usage, means any taking of any
interest in the premises or the improvements to the premises
by right to eminent domain or any purchase of any such
interest in lieu of such taking.
b. Termination on Entire Taking. In the event the entire
premises at any one facility is taken by Condemnation, the
Lease shall terminate with regard to that facility and expire
as of the date possession is taken. A partial taking of a
portion of any facility which is so extensive as to render the
remainder of the facility economically unsuitable for its
primary intended use under this Lease, in Lessee's reasonable
business judgment, shall be deemed an entire taking, and this
Lease shall terminate.
c. Restoration. If there is partial taking of the Leased
Premises and this Lease is not terminated pursuant to
Paragraph 12 (b), above, this Lease shall remain in full force
and effect and the Lessor, at its cost, shall accomplish all
necessary restoration to the extent reasonably practicable, up
to but not exceeding the amount of the award payable to Lessor
as a result of such taking.
14. Covenants, Warranties and Representations of Lessor.
a. Lessor covenants, warrants and represents that is has fee
simple title to the Leased Premises and the Personal Property,
free and clear of any and all liens, mortgages, claims, rights
of parties in possession and any other claims or rights except
as specifically set forth on Exhibit "C" attached hereto.
x. Xxxxxx represents and warrants that there presently is no
claim or litigation pending or, to the best knowledge of
Lessor, threatened against Lessor or which would have the
effect of preventing or terminating this Lease or the quiet
enjoyment of the Leased Premises or the Personal Property by
the Lessee.
x. Xxxxxx represents and warrants that it has the full power and
authority to enter into this Lease.
d. To the best of its actual knowledge, Lessor represents and
warrants that there presently exits in good standing such
licenses and permits as are
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necessary to operate this facility according to all applicable
federal and state statues and ordinances, including
specifically the Reimbursement Plan and all Medicare/Medicaid
regulations.
15. Covenants, Warranties, and Representations of Lessee.
a. Lessee represents and warrants that it has the full power and
authority to enter into this Lease.
b. Lessee covenants that it will promptly apply for such licenses
and permits as are necessary in order for it to operate the
Leased Premises in accordance with the Reimbursement Plan and
applicable Medicare/Medicaid regulations.
16. Events of Default. The following acts or events shall be deemed to be
an event of default (an "Event of Default"):
a. The failure by Lessee to pay when due any rental payment or
part thereof, under the provisions of the Lease, when such
failure shall continue for a period of thirty (30) days after
the due date thereof, and for a period of ten (10) business
days after written notice from Lessor;
b. The failure of Lessee to perform, or the violation by Lessee
of any material covenants, terms conditions or provisions of
this Lease, other than those relating to the payment of money
if such failure or violation shall not be cured within thirty
(30) days after notice thereof by Lessor to Lessee, unless
such failure by its nature cannot be cured within such thirty
(30) days in which case Lessee shall not be deemed in defaults
so long as Lessee commenced the cure of such failure within
such thirty (30) days and diligently prosecutes such cure to
completion;
c. The filing of Lessee of a voluntary petition in bankruptcy,
any adjudication that the Lessee is bankrupt, or the
appointment of a trustee or receiver of the properties of the
Lessee;
d. The abandonment of the Leased Premises by Lessee.
e. The failure of Lessor to perform, or the violation by Lessor
of any material covenants, terms conditions or provisions of
this Lease, if such failure or violation shall not be cured
within thirty (30) days after notice thereof by Lessee to
Lessor, unless such failure by its nature cannot be cured
within such thirty (30) days in which case Lessor shall not be
deemed in default so long as Lessor commenced the cure of such
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failure within such thirty (30) days and diligently prosecutes
such cure to completion;
17. Lessor's Remedies Upon Default.
a. Termination of Lease or Right of Possession. If an Event of
Default occurs on the part of the Lessee, Lessor may, if it so
elects, and as its sole and exclusive remedy, upon ten (10)
days prior written notice to Lessee of such election, and with
or without any demand whatsoever upon Lessee, forthwith
terminate this Lease and Lessee's right to possession of the
Leased Premises. Upon any such termination of this Lease,
Lessee shall vacate the Leased Premises immediately, and shall
quietly and peaceably deliver possession thereof to Lessor,
and Lessee hereby grants to Leased Premises in such event with
or without process of law and to repossess the Leased Premises
and Personal Property as the Lessor's former estate. In the
event of any such termination of this Lease or the Lessee's
right to occupy the Leased Premises, the Lessor shall again
have possession and enjoyment of the Leased Premises and
Personal Property to the extent as if this Lease had not been
made, and thereupon this Lease and everything herein contained
on the part of Lessee to be done and performed shall cease and
terminate.
b. Assignment of Licenses and Permits. In the event of any Event
of Default and if Lessor elects to terminate this Lease or to
terminate Lessee's right to possession of the Leased Premises,
then all licenses, certifications, permits and authorizations
issued by any governmental agency, body or authority in
connection with or relating to the Leased Premises and the
nursing home operated thereon shall be deemed as being
assigned to Lessor to the extent permitted by applicable state
and federal law. Lessee shall deliver all such subsequent
reimbursement checks for periods following the date of
termination to Lessor immediately upon receipt thereof by
Lessee. Lessor shall also have the right to continue to
utilize the telephone number and name used by Lessee in
connection with the operation of the nursing home located on
the Leased Premises. To the extent permitted by applicable
state and federal law, this Lease shall be deemed and
construed as an assignment for purposes of vesting in Lessor
all right, title and interest in and to (i) all licenses,
certifications, permits and authorizations obtained in
concoction with the operation of the nursing home located on
the Leased Premises and (ii) the name and telephone number
used in connection with the operation of the nursing home
located on the Leased Premises. Upon demand by Lessor, Lessee
hereby agrees to take such other action and execute such other
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documents as may be necessary in order to vest in Lessor all
right, title and interest to the items specified herein.
18. Lessor's Remedies Upon Default: If an Event of Default occurs on the
part of the Lessor, Lessee may, if it so elects, upon ten (10) days
prior written notice to Lessor of such election, and with or without
any demand whatsoever upon Lessor, forthwith terminate this Lease.
Lessor shall remain responsible for any management fees or other
expenses due and owing to Lessee as of the date of termination of the
Lease, including reasonable attorney fees if needed to collect such
fees.
19. Right of Termination.
Lessee shall have the right to terminate this Lease for any reason
upon thirty (30) day notice to Lessor.
20. Assignment.
a. Lessee. Except to an affiliate of Lessee, Lessee shall not
assign all or any part of Lessee's rights under this Lease
(including the option rights) or sublet the whole or any part
of the premises without the written consent of Lessor. Any
consent which may be given to Lessee shall not release Lessee
from its obligations under this Lease. If consent is once
given by Lessor assignment of this Lease, or any interest
therein, Lessor shall not be barred to refuse to consent to
any further assignment.
x. Xxxxxx. Lessor shall have at all times the right to assign
its rights under this Lease, provided, however, that in the
event of such assignment Lessor shall also assign all sums
held on behalf of tenant, and all assignee shall assume
Lessor's obligations under the Lease.
21. Holdover. If Lessee shall occupy the Leased Premises with the consent
of Lessor after the expiration or other termination of this Lease and
rent is accepted, such occupancy and payment shall be construed as an
extension of this Lease for the terms of one (1) month only from the
date of expiration, and occupation and payment thereafter shall
operate to extend the terms of this Lease for but one (1) month at a
time unless other terms of such extensions are executed in writing
signed by the parties. In such event, if either Lessor or Lessee
desires to terminate said occupancy at the end of any month after the
expiration of this Lease, the party desiring to terminate the same
shall give the other party at least thirty (30) days written notice to
that effect.
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22. Miscellaneous.
a. Quiet Enjoyment. Lessee shall lawfully and quietly hold,
occupy and enjoy the Leased Premises during the term of this
Lease, without hindrance by Lessor or by any other person or
persons claiming under Lessor.
b. Attorney's Fees. In case litigation is instituted, arising
directly or indirectly out of this Agreement, the losing party
shall pay to the prevailing party its reasonable attorney's
fees, together with all expenses which may reasonably incur in
taking such action including, but not limited to, costs
incurred in searching records, the costs of title reports and
expert witness fees, and anticipated post judgment collection
services. If an appeal is taken from any judgment or decree
of the trial cost, the losing party shall pay the prevailing
party in the appeal its reasonable attorney's fees in such
appeal.
c. Estoppel Letter. Each party agrees that any time, and from
time to time, upon not less that ten (10) days prior written
request from the other party, to execute, acknowledge and
deliver to the other party a statement in writing, certifying
that this Lease is unmodified and in full force and effect (or
if there have been modifications, that the same is in full
force and effect a modified, and stating the modifications),
the dates to which the rent, taxes, and assessments, if any,
have been paid, the amount of any additional rent held by
Lessor, and whether the Lease is then in default or whether
any events have occurred which, with the giving of notice or
the passage of time, or both, could constitute a default
hereunder, it being intended that any such statement delivered
pursuant to this paragraph may be relied upon by any
prospective assignee, mortgage or purchase of the fee interest
in the Leased Premises or of this Lease.
d. Headings. The headings and titles in this Lease are inserted
only as a matter of convenience and for reference and in no
ways define, limit or describe the scope or intent of this
Lease, nor in any way affect this Lease.
e. Integration and Modifications. This Lease contains the entire
agreement between the parties and any executory agreement
hereafter made shall be ineffective to change, modify or
discharge it in whole or in part unless such executory
agreement is in writing and signed by the party against whom
enforcement of the change, modification or discharge is
sought. This Lease cannot be changed orally or terminated
orally.
f. Binding Effect. Except as otherwise herein expressly
provided, the covenants, conditions and agreements in this
Lease shall bind and insure to the benefit of the Lessor and
Lessee and their respective successors and assigns.
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g. Grammatical Changes. All nouns and pronouns and any
variations thereof shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the identity of the
person or persons, firm or firms, corporation or corporations,
entity or entities or any other thing or things may require.
h. Severability. If any term or provision of this Lease shall to
any extent be held invalid or unenforceable, the remaining
terms and provisions of this Lease shall not be affected
thereby, but each term and provision shall be valid and be
enforced to the fullest extent permitted by law.
i. Jurisdiction and Venue. The laws of Arizona shall govern this
validity, performance and enforcement of the Lease.
j. Financial Statements. Within thirty (30) days after the end
of each month, Lessee shall furnish to Lessor copies of
monthly financial statements for Leased Premises.
k. Indemnification. Lessee will indemnify, defend and hold
Lessor harmless from any liability, damages, costs and
expenses, including but not limited to reasonable attorney's
fees, from any gross negligence or willful misconduct by
Lessee. Lessor will indemnify, defend and hold Lessee
harmless from any liability, damages, costs and expenses,
including but not limited to reasonable attorneys' fees, for
anything relating to the Leased Premises which arises from the
gross negligence or willful misconduct of Lessor, its agents,
or employees.
23. Notices. All notices, demands or requests which may or are required
to be given by either party to the other shall be in writing and shall
be sent by United States certified mail, return receipt requested,
addressed to the other party hereto at the address set forth below:
If to Lessor: Xxxx Xxxxxxxxx
Senior Vice President
G&L Realty Corporation
000 X. Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
If to Lessee: Xxxxx X. Xxxxxxxx
Vice President
Capital Senior Management I, Inc.
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
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Any party may from time to time change such addresses by notifying all
other parties in writing by certified or registered mail, postage
prepaid, of the change. Notices mailed as set forth above shall be
deemed given and received forty eight (48) hours after such deposit in
the mail.
24. Prorates of Operations. Revenues and expenses of the Leased Premises
at the commencement and termination of the Lease shall accrue to the
benefit of the Leased Premises.
25. Right of First Refusal. Lessee shall have a right of first refusal to
match any bona fide offer of purchase received by, and acceptable to
Lessor. Lessor shall give to Lessee full details in writing of any
such offer which is acceptable to Lessor at least thirty (30) days
prior to the anticipated sale. Lessee shall have fourteen (14) days
from receipt of such notice in which to notify Lessor of its desire to
purchase the Leased Premises on the same terms and conditions as set
forth in the written notification. If Lessee does not exercise its
right to purchase the Leased Premises, Lessor shall have sixty (60)
days in which to complete such sale on the same terms as set forth in
the written notification. If Lessor shall sell the Leased Premises to
a third party as herein provided during the term of this Lease, Lessor
shall pay Lessee severance compensation in amount equal to the then
current monthly management fee times the number of months remaining in
the term of the Lease, but no greater than four months. For purposes
of this paragraph, the monthly management fee shall be 5% of gross
revenues.
26. Nonrecourse. This Agreement shall be nonrecourse to Lessee. The
preceding sentence shall not apply to any liability or obligation of
Lessee which results from or arises out of the gross negligence,
willful misconduct, misappropriation of funds or fraud of or by
Lessee. Additionally, no officer or director of Lessee shall have any
personal liability hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be signed by
persons authorized to do so on behalf of each of them respectively the day and
year first above written.
LESSOR:
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BY: /s/ XXXX X. XXXXXXXXX
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G & L Gardens, LLC
LESSEE:
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BY: /s/ XXXXX X. XXXXXXXX, V.P.
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