LEASE
(ERIE, PENNSYLVANIA)
DATED JUNE 30, 1998
EXECUTED BY
MISSOURI RIVER CORPORATION,
A DELAWARE CORPORATION,
as Lessor
and
KARRINGTON OPERATING COMPANY, INC., AN OHIO CORPORATION,
as Lessee
TABLE OF CONTENTS
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 -
1.1 Leased Property. . . . . . . . . . . . . . . . . . . . . . . . . - 1 -
1.2 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
1.3 Contingencies. . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
2. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
ARTICLE III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
3.1 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
3.1.1 Minimum Rent . . . . . . . . . . . . . . . . . . . . . - 8 -
3.1.2 Adjustment to Rent . . . . . . . . . . . . . . . . . . - 8 -
3.2 Additional Charges . . . . . . . . . . . . . . . . . . . . . . . - 9 -
3.3 Net Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
3.4 Late Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 10 -
4.1 Payment of Impositions . . . . . . . . . . . . . . . . . . . . .- 10 -
4.2 Notice of Impositions. . . . . . . . . . . . . . . . . . . . . .- 11 -
4.3 Utility Charges. . . . . . . . . . . . . . . . . . . . . . . . .- 11 -
4.4 Insurance Premiums . . . . . . . . . . . . . . . . . . . . . . .- 11 -
4.5 Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 11 -
ARTICLE V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 12 -
5.1 No Termination, Abatement, etc . . . . . . . . . . . . . . . . .- 12 -
5.2 Abatement Procedures . . . . . . . . . . . . . . . . . . . . . .- 12 -
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 13 -
6.1 Ownership of the Leased Property . . . . . . . . . . . . . . . .- 13 -
6.2 Lessee's Alterations . . . . . . . . . . . . . . . . . . . . . .- 13 -
6.3 Lessee's Personal Property . . . . . . . . . . . . . . . . . . .- 13 -
6.4 Consumable Inventory . . . . . . . . . . . . . . . . . . . . . .- 13 -
ARTICLE VII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 14 -
7.1 Condition of Leased Property . . . . . . . . . . . . . . . . . .- 14 -
7.2 Use of the Leased Property . . . . . . . . . . . . . . . . . . .- 14 -
7.3 Preservation of Gross Revenues . . . . . . . . . . . . . . . . .- 15 -
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 16 -
8.1 Compliance with Legal and Insurance Requirements,
Instruments, etc . . . . . . . . . . . . . . . . . . . . . . . .- 16 -
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8.2 Legal Requirement Covenants. . . . . . . . . . . . . . . . . . .- 16 -
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 17 -
9.1 Maintenance and Repair . . . . . . . . . . . . . . . . . . . . .- 17 -
9.2 Expenditures to Comply with Law; Construction of Additional
Improvements Pursuant to Certificate of Need . . . . . . . . . .- 19 -
9.3 Encroachments, Restrictions, etc . . . . . . . . . . . . . . . .- 19 -
ARTICLE X. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 20 -
10.1 Lessee's Obligations for Hazardous Materials . . . . . . . . . .- 20 -
10.2 Definition of Hazardous Materials. . . . . . . . . . . . . . . .- 20 -
ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 21 -
11.1 No Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 21 -
11.2 Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . .- 22 -
ARTICLE XII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 22 -
12. Permitted Contests . . . . . . . . . . . . . . . . . . . . . . .- 22 -
ARTICLE XIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 23 -
13.1 General Insurance Requirements . . . . . . . . . . . . . . . . .- 23 -
13.2 Replacement Cost . . . . . . . . . . . . . . . . . . . . . . . .- 24 -
13.3 Additional Insurance . . . . . . . . . . . . . . . . . . . . . .- 24 -
13.4 Waiver of Subrogation. . . . . . . . . . . . . . . . . . . . . .- 24 -
13.5 Form Satisfactory, etc . . . . . . . . . . . . . . . . . . . . .- 25 -
13.6 Increase in Limits . . . . . . . . . . . . . . . . . . . . . . .- 25 -
13.7 Blanket Policy . . . . . . . . . . . . . . . . . . . . . . . . .- 25 -
13.8 No Separate Insurance. . . . . . . . . . . . . . . . . . . . . .- 25 -
13.9 Continuous Coverage. . . . . . . . . . . . . . . . . . . . . . .- 26 -
ARTICLE XIV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 26 -
14.1 Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . .- 26 -
14.2 Reconstruction in the Event of Damage or Destruction Covered
by Insurance Proceeds. . . . . . . . . . . . . . . . . . . . . .- 26 -
14.3 Reconstruction in the Event of Damage or Destruction Not
Covered by Insurance . . . . . . . . . . . . . . . . . . . . . .- 27 -
14.4 Lessee's Property. . . . . . . . . . . . . . . . . . . . . . . .- 27 -
14.5 Restoration of Lessee's Property . . . . . . . . . . . . . . . .- 27 -
14.6 No Abatement of Rent . . . . . . . . . . . . . . . . . . . . . .- 27 -
14.7 Damage Near End of Term. . . . . . . . . . . . . . . . . . . . .- 27 -
14.8 Termination of Option to Extend. . . . . . . . . . . . . . . . .- 28 -
14.9 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 28 -
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ARTICLE XV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 28 -
15. Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . .- 28 -
15.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . .- 28 -
15.2 Parties' Rights and Obligations. . . . . . . . . . . . . . . . .- 28 -
15.3 Total Condemnation . . . . . . . . . . . . . . . . . . . . . . .- 28 -
15.4 Allocation of Portion of Award . . . . . . . . . . . . . . . . .- 29 -
15.5 Partial Taking . . . . . . . . . . . . . . . . . . . . . . . . .- 29 -
15.6 Temporary Taking . . . . . . . . . . . . . . . . . . . . . . . .- 29 -
ARTICLE XVI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 30 -
16.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . .- 30 -
16.2 Certain Remedies . . . . . . . . . . . . . . . . . . . . . . . .- 32 -
16.3 Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 33 -
16.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 34 -
16.5 Application of Funds . . . . . . . . . . . . . . . . . . . . . .- 34 -
ARTICLE XVII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 34 -
17. Lessor's Right to Cure Lessee's Default. . . . . . . . . . . . .- 34 -
ARTICLE XVIII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 35 -
18.1 Options to Extend. . . . . . . . . . . . . . . . . . . . . . . .- 35 -
18.2 Minimum Rent During Extended Terms . . . . . . . . . . . . . . .- 35 -
ARTICLE XIX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 36 -
19. Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . .- 36 -
ARTICLE XX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 36 -
20. Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . .- 36 -
ARTICLE XXI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 36 -
21. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . .- 36 -
ARTICLE XXII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 37 -
22. Subletting and Assignment. . . . . . . . . . . . . . . . . . . .- 37 -
22.1 Attornment. . . . . . . . . . . . . . . . . . . . . . . . .- 38 -
22.2 Sublease Limitation . . . . . . . . . . . . . . . . . . . .- 39 -
ARTICLE XXIII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 39 -
23. Officer's Certificates and Financial Statements; Lease
Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . .- 39 -
23.1 Officer's Certificates and Financial Statements.. . . . . .- 39 -
23.2 Lease Covenants . . . . . . . . . . . . . . . . . . . . . .- 39 -
ARTICLE XXIV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 40 -
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24. Lessor's Right to Inspect. . . . . . . . . . . . . . . . . . . .- 40 -
ARTICLE XXV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 40 -
25. No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . .- 40 -
ARTICLE XXVI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 41 -
26. Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . .- 41 -
ARTICLE XXVII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 41 -
27. Acceptance of Surrender. . . . . . . . . . . . . . . . . . . . .- 41 -
ARTICLE XXVIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 41 -
28. No Merger of Title . . . . . . . . . . . . . . . . . . . . . . .- 41 -
ARTICLE XXIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 41 -
29. Conveyance by Lessor . . . . . . . . . . . . . . . . . . . . . .- 41 -
ARTICLE XXX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 41 -
30. Quiet Enjoyment. . . . . . . . . . . . . . . . . . . . . . . . .- 41 -
ARTICLE XXXI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 42 -
31. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 42 -
ARTICLE XXXII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 43 -
32.1 Lessor May Grant Liens . . . . . . . . . . . . . . . . . . . . .- 43 -
32.2 Lessee's Right to Cure . . . . . . . . . . . . . . . . . . . . .- 43 -
32.3 Default by Lessor. . . . . . . . . . . . . . . . . . . . . . . .- 43 -
ARTICLE XXXIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 44 -
33. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . .- 44 -
33.1 Survival of Obligations. . . . . . . . . . . . . . . . . .- 44 -
33.2 Late Charges; Interest . . . . . . . . . . . . . . . . . .- 44 -
33.3 Limits of Lessor's Liability . . . . . . . . . . . . . . .- 44 -
33.4 Limits of Lessee's Liability . . . . . . . . . . . . . . .- 44 -
33.5 Transfer of Operations . . . . . . . . . . . . . . . . . .- 45 -
33.6 Addendum, Amendments and Exhibits. . . . . . . . . . . . .- 45 -
33.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . .- 45 -
33.8 Time . . . . . . . . . . . . . . . . . . . . . . . . . . .- 45 -
33.9 Days . . . . . . . . . . . . . . . . . . . . . . . . . . .- 45 -
33.10 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . .- 45 -
33.11 Applicable Law; Venue. . . . . . . . . . . . . . . . . . .- 45 -
33.12 Successors and Assigns . . . . . . . . . . . . . . . . . .- 45 -
33.13 Recordation. . . . . . . . . . . . . . . . . . . . . . . .- 45 -
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33.14 Prior and Future Agreements. . . . . . . . . . . . . . . .- 45 -
33.15 Partial Invalidity . . . . . . . . . . . . . . . . . . . .- 46 -
33.16 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . .- 46 -
33.17 Authority of Lessor and Lessee . . . . . . . . . . . . . .- 46 -
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33.18 Relationship of the Parties. . . . . . . . . . . . . . . .- 46 -
33.19 Counterparts . . . . . . . . . . . . . . . . . . . . . . .- 46 -
33.20 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . .- 47 -
33.21 New Combined Lease . . . . . . . . . . . . . . . . . . . .- 47 -
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LEASE
This LEASE (the "Lease") is made as of the 20th day of June, 1998,
by and between MISSOURI RIVER CORPORATION, a Delaware corporation, herein
called "Lessor", and KARRINGTON OPERATING COMPANY, INC., an Ohio
corporation, herein called "Lessee", subject to the terms, conditions and
contingencies set forth below.
ARTICLE I
1.1 LEASED PROPERTY. Upon and subject to the terms
and conditions hereinafter set forth, Lessor leases to Lessee, and Lessee
rents and hires from Lessor all of the following (the "Leased Property"):
(i) The real property situated in the
Commonwealth of Pennsylvania and more particularly described in Exhibit "A"
attached hereto, as the same may be supplemented or modified from time to
time (the "Land");
(ii) All buildings, structures, Fixtures (as
hereinafter defined) and other improvements of every kind including, but
not limited to, alleyways and connecting tunnels, sidewalks, utility pipes,
conduits and lines (on-site and off-site), parking areas and roadways
appurtenant to such buildings and structures presently situated upon the
Land (collectively, the "Leased Improvements");
(iii) All easements, rights and appurtenances
relating to the Land and the Leased Improvements;
(iv) All permanently affixed equipment,
machinery, fixtures, and other items of real and/or personal property,
including all components thereof, permanently affixed to or incorporated
into the Leased 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, all of which to
the greatest extent permitted by the law, are hereby deemed by the parties
hereto to constitute real estate, together with all replacements,
modifications, alterations and additions thereto, to the extent acquired by
Lessor pursuant to the "Purchase Agreement" as defined in Article II hereof
(collectively the "Fixtures"); and
(v) All personal tangible and intangible
property comprising the "Personal Property" and/or the "Intangible
Property" acquired by Lessor pursuant to the Purchase Agreement.
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The Leased Property includes that certain assisted living
facility located in the City of Erie, County of Erie, Commonwealth of
Pennsylvania and commonly known as Karrington at Presque Isle Bay at 0000
X. Xxxxxxxx Xxxxxxx, Xxxx, Xxxxxxxxxxxx 00000. Notwithstanding the
foregoing, the Leased Property shall not include any property not acquired
by Lessor from the Seller pursuant to the Purchase Agreement. The Leased
Property is demised subject to all covenants, conditions, restrictions,
easements, and other matters of record, and all other matters that affect
title, zoning and any other matters set forth in that certain Title Policy
issued by Chicago Title Company concurrently with Lessor's purchase of the
Leased Property and all matters disclosed in the ALTA survey obtained in
connection with such title insurance (collectively the "Permitted Title
Matters").
1.2 TERM. The initial term of the Lease (the
"Initial Term") shall be the period commencing on the closing (the
"Closing") whereby Lessor acquires fee title to the Leased Property under
the Purchase Agreement (the "Commencement Date") and expiring on April 30,
2018. Lessee has the right to extend the term of this Lease, at Lessee's
option, as provided in Article XVIII, below. (The Initial Term plus all
validly exercised options to extend, if any, shall be referred to herein as
the "Term"). Lessor and Lessee agree to execute a memorandum setting forth
the Commencement Date.
1.3 CONTINGENCIES.
1.3.1 ACQUISITION OF LEASED PROPERTY. Lessee
acknowledges and agrees that, at the time of executing this Lease, Lessor
does not own the Leased Property, but Lessor has a right to purchase the
Leased Property pursuant to the Purchase Agreement. This Lease, and all
obligations hereunder of either party, are contingent upon Lessor's
acquisition of the fee simple interest in the Leased Property. Therefore,
if the Leased Property has not been transferred to Lessor on or before the
Outside Closing Date (as that term is defined in the Purchase Agreement),
or by such later date as Lessor, in its sole discretion may permit, this
Lease shall be null and void and of no force or effect whatsoever, and both
Lessor and Lessee shall be relieved of all responsibility under the Lease.
1.3.2 CROSS DEFAULT WITH OTHER LEASES. Lessor
and Lessee acknowledge and agree that this Lease is to be cross-defaulted
with the Related Leases and every other lease now or hereafter entered into
between Lessor (or any of its Affiliates) and Lessee (or any of its
Affiliates) with respect to any assisted living facility (collectively, the
"Other Leases"), each of which shall (if Lessor so requests) be specifically
amended to confirm that they are cross-defaulted as additional security for
Lessee's performance under this Lease. However, the cross-default provisions
of this Paragraph shall be effective regardless of whether Lessor requests
the aforesaid specific amendments.
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ARTICLE II
2. DEFINITIONS. For all purposes of this Lease, except as
otherwise expressly provided, (i) the terms defined in this Article II have
the meanings assigned to them in this Article II 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 at the time applicable; and (iii) the words
"herein", "hereof" and "hereunder" and other words of similar import refer
to this Lease as a whole and not to any particular Article, Paragraph or
other subdivision:
ADDITIONAL CHARGES. As defined in Article III.
AFFILIATE. When used with respect to any corporation,
the term "Affiliate" shall mean any person or entity (including any trust)
which, directly or indirectly, controls or is controlled by or is under
common control with such corporation. For the purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by"
and "under common control with"), as used with respect to any person, shall
mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person, through
the ownership of voting securities, partnership interests or other equity
interests. For the purposes of this definition, "person" shall mean any
natural person, trust, partnership, corporation, joint venture or other
legal entity.
BUSINESS DAY. Each Monday, Tuesday, Wednesday, Thursday,
and Friday, which is not a day on which national banks in the Commonwealth
of Pennsylvania are authorized or obligated, by law or executive order, to
close.
C.P.I. As defined in Paragraph 3.1.
CALENDAR YEAR. The period from January 1 through and
including December 31 in the same calendar year.
CODE. The Internal Revenue Code of 1986, as amended, and
all regulations issued thereunder.
CONSOLIDATED FINANCIALS. For any Fiscal Year or other
accounting period for Lessee and its consolidated subsidiaries, statements
of earnings and retained earnings and of changes in financial position for
such period and the related balance sheet as at the end of such period,
together with the notes thereto, all audited by a certified public
accountant and in reasonable detail and setting forth in comparative form
the corresponding figures for the corresponding period in the preceding
Fiscal Year, and prepared in accordance with generally accepted accounting
principles.
CONSOLIDATED NET WORTH. At any time, the sum of the
following for Lessee and its
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consolidated subsidiaries, on a consolidated basis determined in accordance
with generally accepted accounting principles:
(1) the amount of capital or stated capital
(after deducting the cost of any shares held in its treasury), plus
(2) the amount of capital surplus and retained
earnings (or, in the case of a capital or retained earnings deficit, minus
the amount of such deficit), minus
(3) the sum of the following (without
duplication of deductions in respect of items already deducted in arriving
at surplus and retained earnings): (a) unamortized debt discount and
expense; and (b) any write-up in the book value of assets resulting from a
revaluation thereof subsequent to the most recent Consolidated Financials
prior to the date thereof, except (i) any net write-up in value of foreign
currency in accordance with generally accepted accounting principles; and
(ii) any write-up resulting from a reversal of a reserve for bad debts or
depreciation and any write-up resulting from a change in methods of
accounting for inventory.
ENCUMBRANCE. As defined in Article XXXII.
EVENT OF DEFAULT. As defined in Article XVI.
EXTENDED TERM. As defined in Article XVIII.
FACILITY. That certain assisted living facility which is
part of the Leased Property as defined in Article I, above, inclusive of
the Land, Leased Improvements, Fixtures, Personal Property and Intangible
Property pertaining to such Facility.
FACILITY MORTGAGE. As defined in Article XIII.
FACILITY MORTGAGEE. As defined in Article XIII.
FISCAL YEAR. The twelve (12) month period from January 1
through the following December 31.
FIXTURES. As defined in Article I.
IMPOSITIONS. Collectively, all taxes (including, without
limitation, all ad valorem, sales and use, single business, gross receipts,
transaction, privilege, rent taxes, bed taxes or fees or any other taxes as
the same relate to or are imposed upon Lessee or Lessor or the business
conducted upon the Leased Property), assessments (including, without
limitation, all assessments for public improvements or benefits, whether or
not commenced or completed prior to the date hereof and whether or not to
be completed within the Term), ground rents, water, sewer or other rents
and charges, excises, tax levies, fees (including, without limitation,
license, permit, inspection,
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authorization and similar fees), and 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, Lessor, or
the business conducted thereon by Lessee (including all interest and
penalties thereon due to any failure in payment by Lessee), and all increases
in all the above from any cause whatsoever, including reassessment, which at
any time prior to, during or in respect of the Term may be assessed or
imposed on or in respect of or be a lien upon (a) Lessor's interest in the
Leased Property or any part thereof; (b) the Leased Property or any part
thereof, including without limitation any Personal Property located thereon
or used in connection therewith, 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 by
Lessee. Without limiting the foregoing, the term "Imposition" shall include
any sales tax on rents paid under this Lease or by residents of the Facility
(including, but not limited to, rental receipts taxes), bed taxes,
depreciation recapture, any other taxes (except for the specific exclusions
stated below), fees or charges imposed by the Commonwealth of Pennsylvania
and any potential subdivision thereof relating to the Facility or the Leased
Property, this Lease, or rents received under this Lease, whether relating to
any period prior to or after the Commencement Date. Provided, however,
nothing contained in this Lease shall be construed to require Lessee to pay
(1) the following taxes and fees to the extent they relate to Lessor's
business generally (as opposed to relating specifically to Lessor's ownership
of the Facility, lease thereof to Lessee or income therefrom): any federal,
state or local income tax of Lessor, taxes based on outstanding corporate
shares of Lessor or Lessor's equity or capitalization, regardless of whether
denominated as an income tax, franchise tax, capital tax or otherwise; (2)
any income or capital gain tax imposed with respect to the sale, exchange or
other disposition by Lessor of any Leased Property or the proceeds thereof;
or (3) estate, inheritance, gift taxes or documentary transfer taxes.
INSURANCE REQUIREMENTS. All terms of any insurance
policy required by this Lease and all requirements of the issuer of any
such policy.
LAND. As defined in Article I.
LEASE. As defined in the Preamble.
LEASE YEAR. Any twelve (12) month period from May 1 to
each following April 30 during the Term. In the case of the beginning of
the Initial Term, the provision "Lease Year" shall mean the period from the
Commencement Date (defined in Paragraph 1.2, above) to April 30, 1999; in
the case of the end of the Term, the provision "Lease Year" shall mean the
period from the last May 1 to occur during the Term to the date of
expiration of the Lease.
LEASED IMPROVEMENTS; LEASED PROPERTY. Each as defined in
Article I.
LEGAL REQUIREMENTS. All federal, state, county,
municipal, and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees, and injunctions affecting
either the Leased Property or the construction, use or alteration thereof
whether now or hereafter
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enacted and in force, including any which may (i) require repairs,
modifications or alterations in or to the Leased Property; or (ii) in any way
adversely affect the use and enjoyment thereof, and all permits, licenses and
authorizations and regulations thereto, and all covenants, agreements,
restrictions, and encumbrances contained in any instruments, either of record
or known to Lessee, at any time in force affecting the Leased Property.
LESSEE. Karrington Operating Company, Inc. an Ohio
corporation (and any assignee permitted subject to the terms and conditions
in this Lease).
LESSEE'S PERSONAL PROPERTY. All machinery, equipment,
furniture, furnishings, movable walls or partitions, computers, or trade
fixtures or other personal property, and consumable inventory and supplies,
owned by Lessee and used or useful in Lessee's business on the Leased
Property and located thereon, including without limitation, all items of
furniture, furnishings, equipment, supplies and inventory, except items (i)
included within the definition of Fixtures; and (ii) personal property
described in Paragraph 1.1(v), above.
LESSOR. Missouri River Corporation, a Delaware
corporation, and its successors and assigns.
MINIMUM RENT. As defined in Article III.
NOTICE. A notice given pursuant to Article XXXI hereof.
OFFICER'S CERTIFICATE. A certificate of Lessee signed by
(i) the Chief Executive Officer or the President or any authorized Vice
President; AND (ii) the secretary, or another officer authorized by
appropriate resolution to so sign by the Board of Directors. Any signature
required above may be substituted with a signature of another person whose
power and authority to act has been authorized by an appropriate corporate
resolution.
OTHER LEASES. As defined in Paragraph 1.3.2.
OVERDUE RATE. On any date, a rate equal to the Prime
Rate (defined below), plus two percent (2%); provided, however, that it is
the intent of Lessor and Lessee that the Overdue Rate (and all other
interest rates provided for hereunder) be in strict compliance with
applicable usury laws of the Commonwealth of Pennsylvania, and that in the
event the Overdue Rate (or other interest rate provided for hereunder)
shall be deemed to exceed that permitted to be charged by the laws of the
Commonwealth of Pennsylvania, any and all excess sums collected by Lessor
shall be credited against the Rent payable under this Lease or if there is
no Rent due, promptly refunded to Lessee.
PAYMENT DATE. Any due date for the payment of the
installments of Minimum Rent or any other payments required under this
Lease.
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PRIMARY INTENDED USE. As defined in Paragraph 7.2.2.
PRIME RATE. On any date, a rate equal to the annual rate
on such date as may be published by The Wall Street Journal as the prime
rate in its listing of "Money Rates."
PURCHASE AGREEMENT. That certain Agreement of Purchase
and Sale and Joint Escrow Instructions, dated as of May 12, 1998, by and
between Lessee as the "Seller" and Lessor (via assignment from LTC-Ohio,
Inc., doing business in Ohio as LTC Properties-Ohio, Inc.), as the "Buyer,"
providing for Lessor's acquisition of the Leased Property at the Purchase
Price and as more fully described therein.
PURCHASE PRICE. Lessor's Purchase Price for the Leased
Property pursuant to (and as defined in) the Purchase Agreement.
RELATED LEASES. Those certain leases between Lessor, as
"Lessor", and Lessee, as "Lessee," enumerated on Exhibit "B", attached
hereto.
RENT. Any and all monetary obligations of Lessee owing
under this Lease.
SUBSIDIARIES. Corporations, of which either Lessee or
Lessor owns, directly or indirectly, more than 50% of the voting stock
(individually, a "Subsidiary").
TERM. Collectively, the Initial Term plus any Extended
Terms, as the context may require, unless earlier terminated pursuant to
the provisions hereof.
UNSUITABLE FOR ITS PRIMARY INTENDED USE. A state of
condition of the Facility such that by reason of damage or destruction, or
a partial taking by Condemnation, in the good faith judgment of Lessor and
Lessee, reasonably exercised, the Facility cannot be operated on a
commercially practicable basis for its Primary Intended Use taking into
account, among other relevant factors, the number of usable units affected
by such damage or destruction or partial Condemnation.
UNAVOIDABLE DELAYS. Delays due to strikes, lock-outs,
inability to procure materials, power failure, acts of God, governmental
restrictions, enemy action, civil commotion, fire, unavoidable casualty or
other causes beyond the control of the party responsible for performing an
obligation hereunder; provided that lack of funds shall not be deemed a
cause beyond the control of either party hereto unless such lack of funds
available to Lessor results from Lessee's failure to perform any of its
obligations under this Lease.
The above does not include all the definitions to be used
in this Lease. Various definitions of other terms are included in the
other Articles of this Lease.
ARTICLE III
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3.1 RENT.
3.1.1 MINIMUM RENT. Lessee will pay to
Lessor in lawful money of the United States of America which shall be legal
tender for the payment of public and private debts at Lessor's address set
forth hereinbelow or at such other place or to such other person, firms or
corporations as Lessor from time-to-time may designate in a Notice, a rent
(the "Minimum Rent"), during the Term, as follows:
(a) INITIAL TERM. The initial
annual Minimum Rent for the first Lease Year of the Initial Term shall be
an amount equal to Seven Hundred Seventy Thousand Two Hundred Nineteen and
75/100 Dollars ($770,219.75). The Minimum Rent shall be subject to
increase as and when provided below in this Article III. The Minimum Rent,
as the same may be increased hereunder, shall be paid in advance in equal,
consecutive monthly installments on the first day of each calendar month of
the Term without demand, abatement, setoff or notice. Minimum Rent shall
be prorated for any partial month or year at the beginning or end of the
Term; and
(b) EXTENDED TERMS. The Minimum
Rent during the Extended Terms shall be as stated in Article XVIII, below.
3.1.2 ADJUSTMENT TO RENT. Commencing on May
1, 1999 ("Rent Adjustment Date") and continuing thereafter on each
subsequent anniversary of the Rent Adjustment Date during the Initial Term
and each Extended Term, the Minimum Rent shall be increased (but never
decreased) in an amount equal to the annual Minimum Rent payable under this
Lease for the immediately preceding twelve (12) month period increased by
one hundred fifty percent (150%) of the cumulative increase in the Consumer
Price Index, published as the "CPI-U" Index by the Bureau of Labor
Statistics of the Department of Labor, U.S. Cities Average, All Items
(1982-84'100) in the manner calculated on the date of this Lease ("C.P.I.")
from the date two (2) months prior to the immediately preceding Rent
Adjustment Date (or in the case of the initial Rent Adjustment Date, the
C.P.I. from March 1998) to the date two (2) months prior to then current
Rent Adjustment Date. Notwithstanding the foregoing, in no event shall any
INCREASE TO Minimum Rent in any Lease Year exceed two percent (2.0%) of the
Minimum Rent (as adjusted) payable for the immediately preceding twelve
(12) month period (or in the case of the initial Rent Adjustment Date, the
increase, if any, to Minimum Rent in the first Lease Year shall not exceed
$15,404.40). In no event shall the Minimum Rent be reduced by reason of
the adjustment to Minimum Rent set forth in this Paragraph 3.1.2. If the
CPI Index is no longer published, or if the format or components of the CPI
Index are materially changed after the Commencement Date, Lessor in its
reasonable judgment shall substitute an index which is published by the
Bureau of Labor Statistics or similar agency and which is most nearly
equivalent to the Index in effect on the Commencement Date.
3.2 ADDITIONAL CHARGES. In addition to the Minimum
Rent, (1) Lessee will also pay and discharge as and when due and payable
all other amounts, liabilities, obligations and
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Impositions which Lessee assumes, is obligated or agrees to pay under this
Lease, and (2) in the event of any failure on the part of Lessee to pay any
of those items referred to in clause (1) above, Lessee will also promptly pay
and discharge every fine, penalty, interest and cost which may be added for
non-payment or late payment of such items (the items referred to in clauses
(1) and (2) above being referred to herein collectively as the "Additional
Charges"), and Lessor 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 non-payment of the Additional Charges. If any elements of
Additional Charges shall not be paid within five (5) Business Days after its
due date and Lessor pays any such amount (which Lessor shall have the right,
but not the obligation, to do), then, in addition to Lessor's other rights
and remedies, Lessee will pay Lessor on demand, as Additional Charges,
interest on such unpaid Additional Charges computed at the Overdue Rate from
the date that Lessor pays such amount to the date that Lessor receives
reimbursement from Lessee. To the extent that Lessee pays any Additional
Charges to Lessor pursuant to any requirement of this Lease, Lessee shall be
relieved of its obligation to pay such Additional Charges to the entity to
which they would otherwise be due.
3.3 NET LEASE. Subject to the provisions of Article
V, below, without limiting any provision of this Lease, the Rent shall be
paid absolutely net to Lessor, so that this Lease shall yield to Lessor the
full amount of the installments of Minimum Rent and Additional Charges
throughout the Term, all as more fully set forth in Articles III, IV, VIII,
IX and XIII, and other provisions of this Lease.
3.4 LATE CHARGE. LESSEE HEREBY ACKNOWLEDGES THAT
LATE PAYMENT BY LESSEE TO LESSOR OF RENT (INCLUDING MINIMUM RENT AND
ADDITIONAL CHARGES, BUT EXCLUDING LATE CHARGES) OR OTHER SUMS DUE HEREUNDER
WILL CAUSE LESSOR TO INCUR COSTS NOT CONTEMPLATED BY THIS LEASE, THE EXACT
AMOUNT OF WHICH WILL BE EXTREMELY DIFFICULT TO ASCERTAIN. SUCH COSTS
INCLUDE, BUT ARE NOT LIMITED TO, PROCESSING AND ACCOUNTING CHARGES.
ACCORDINGLY, IF ANY INSTALLMENT OF RENT (INCLUDING MINIMUM RENT AND
ADDITIONAL CHARGES, BUT EXCLUDING LATE CHARGES) OR ANY OTHER SUM DUE FROM
LESSEE SHALL NOT BE RECEIVED BY LESSOR WHEN THE SAME BECOMES DUE AND
PAYABLE AND SUCH FAILURE IS NOT CURED WITHIN FIVE (5) BUSINESS DAYS AFTER
NOTICE THEREOF FROM LESSOR, THEN LESSEE SHALL PAY TO LESSOR A LATE CHARGE
EQUAL TO FIVE PERCENT (5%) OF SUCH OVERDUE AMOUNT. THE PARTIES HEREBY
AGREE THAT SUCH LATE CHARGE REPRESENTS A FAIR AND REASONABLE ESTIMATE OF
THE COSTS LESSOR WILL INCUR BY REASON OF LATE PAYMENT BY LESSEE.
ACCEPTANCE OF SUCH LATE CHARGE BY LESSOR SHALL IN NO EVENT CONSTITUTE A
WAIVER OF LESSEE'S DEFAULT OR BREACH WITH RESPECT TO SUCH OVERDUE AMOUNT,
NOR PREVENT LESSOR FROM EXERCISING ANY OF THE OTHER RIGHTS AND REMEDIES
GRANTED UNDER THIS LEASE.
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ARTICLE IV
4.1 PAYMENT OF IMPOSITIONS. Subject to Article XII
relating to permitted contests, Lessee will pay, or cause to be paid, all
Impositions coming due prior to or during the Term, or which relate to any
period within the Term or prior to the Term, before any fine, penalty,
interest or cost may be added for non-payment (or earlier if required by
any taxing authority), such payments to be made directly to the taxing
authorities where feasible, and upon written request will promptly furnish
to Lessor copies of official receipts or other satisfactory proof
evidencing such payments. Lessee's obligation to pay Impositions shall be
deemed absolutely fixed upon the date such Impositions become a lien upon
the Leased Property or any part thereof. If any Imposition may, at the
option of the taxpayer, lawfully (without penalty) be paid in installments
(whether or not interest shall accrue on the unpaid balance of such
Imposition), Lessee may exercise the option to pay the same (and any
accrued interest on the unpaid balance of such Imposition) in installments
and in such event, shall pay such installments during the Term hereof
(subject to Lessee's right of contest pursuant to the provisions of Article
XII) as the same respectively become due and before any fine, penalty,
premium, further interest or cost may be added thereto. Lessee, at its
expense, shall, to the extent required or permitted by Legal Requirements,
prepare and file all tax returns and reports in respect of any Imposition
as may be required by governmental authorities. If any refund shall be due
from any taxing authority in respect of any Imposition, the same shall be
paid over to or retained by Lessee if no Event of Default shall have
occurred hereunder and be continuing, but if such Event of Default has
occurred and is continuing (I.E., it has not been cured), such refund shall
be paid to Lessor and utilized to cure any such continuing Event of
Default. After fully curing such Event of Default, any excess funds from
such refund shall be paid by Lessor to Lessee. Any such funds retained by
Lessor, as provided above, shall be applied as provided in Article XVI.
Lessor and Lessee 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, Lessee shall file all personal
property tax returns in such jurisdictions where it must legally so file.
Lessor, to the extent it possesses the same, and Lessee, 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 Lessor is legally required to file
personal property tax returns, Lessee will provide to Lessor copies of
assessment notices indicating a value in excess of the reported value in
sufficient time for Lessor to file a protest. Lessee may, upon notice to
Lessor, at Lessee's option and at Lessee's sole cost and expense, protest,
appeal or institute such proceedings as Lessee may deem appropriate to
effect a reduction of real estate or personal property assessments and
Lessor, at Lessee's sole cost and expense as aforesaid, shall fully
cooperate with Lessee in such protest, appeal, or other action, provided
that Lessee may not withhold payments pending such challenges except under
the conditions set forth in Article XII. Xxxxxxxx for reimbursement by
Lessee to Lessor of personal property taxes shall be accompanied by copies
of a xxxx therefor and payments thereof which identify the personal
property with respect to which such payments are made. Lessor shall have
the right, once any Event of Default has occurred hereunder (and
irrespective of whether such Event of Default is continuing or has been
cured), to require that Lessee pay to Lessor 1/12th of the annual
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Impositions each month concurrently with the payment of Minimum Rent;
provided that, during any period when such payments are being made, Lessor
agrees (a) to pay, or cause to be paid, all such Impositions prior to
delinquency, and (b) upon written request from Lessee, to account to Lessee
for all payments then on deposit. Unless Lessee is notified by Lessor
otherwise, Lessee shall pay all "Impositions" directly to the appropriate
taxing or other authorities to which payments are due, and upon written
request Lessee shall provide Lessor written evidence and notice that all
such payments have been made. Without limiting any of the other
indemnities set forth in this Lease, Lessee hereby agrees to defend,
indemnify, protect and hold harmless Lessor in connection with any
"Impositions" that relate to any time prior to or during the Term, and
Lessee acknowledges and agrees that it will not make claims against, or
otherwise look to, Lessor to reimburse Lessee for payments made relating to
any period prior to the Commencement Date.
4.2 NOTICE OF IMPOSITIONS. Lessor shall give prompt
Notice to Lessee for all Impositions payable by Lessee hereunder of which
Lessor has knowledge, but Lessor's failure to give any such Notice shall in
no way diminish Lessee's obligations hereunder to pay such Impositions, but
such failure shall obviate any default hereunder for a reasonable time
after Lessee receives notice (from any source) of any Imposition which it
is obligated to pay. However, notwithstanding the foregoing, it shall be
Lessee's sole duty to inquire and determine all of the Impositions for
which it is liable as provided herein and shall promptly pay such
Impositions when due, and Lessor shall have no duty of inquiry concerning
Impositions.
4.3 UTILITY CHARGES. Lessee will pay or cause to be
paid all charges for electricity, power, gas, oil, water, sewer connection
and all other utilities used in or for the Leased Property during the Term.
4.4 INSURANCE PREMIUMS. Lessee will pay or cause to
be paid all premiums for the insurance coverage required to be maintained
pursuant to Article XIII during the Term.
4.5 PAYABLES. Lessee acknowledges and agrees that
prior to the Rent Commencement Date, certain liabilities and other
obligations were incurred arising from the development, construction and
operation of the Facility for which Lessee is and shall remain entirely
responsible and liable, and Lessor shall have no responsibility, liability
or obligation whatsoever with respect to the same. Therefore, Lessee
agrees as part of this Lease to pay all liabilities and obligations
concerning the Facility, whether arising before or after the Rent
Commencement Date.
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ARTICLE V
5.1 NO TERMINATION, ABATEMENT, ETC. Except as
specifically provided under Article XV hereunder, Lessee shall not be
entitled to any abatement, deduction, deferment or reduction of Rent, or
set-off against the Rent, nor shall the respective obligations of Lessor
and Lessee be otherwise affected by reasons of (a) any damage to, or
destruction of, any Leased Property or any portion thereof; (b) the lawful
or unlawful prohibition of, or restriction upon, Lessee's use of the Leased
Property, or any portion thereof, the interference with such use by any
person, corporation, partnership or other entity, or by reason of eviction
by paramount title; (c) any claim which Lessee has or might have against
Lessor or by reason of any default or breach of any warranty by Lessor
under this Lease or any other agreement between Lessor and Lessee, or to
which Lessor and Lessee are parties; (d) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution,
winding-up or other proceedings affecting Lessor or any assignee or
transferee of Lessor; or (e) for any other cause whether similar or
dissimilar to any of the foregoing other than a discharge of Lessee from
any such obligations as a matter of law. Lessee hereby specifically waives
all rights, arising from any occurrence whatsoever, which may now or
hereafter be conferred upon it by law to (i) modify, surrender or terminate
this Lease or quit or surrender the Leased Property or any portion thereof;
or (ii) entitle Lessee to any abatement, reduction, suspension or deferment
of the Rent payable under this Lease except as specifically provided in
Article XV hereunder. The obligations of Lessor and Lessee hereunder shall
be separate and independent covenants and agreements and the Rent due under
this Lease shall continue to be payable in all events, irrespective of
Lessor's performance or non-performance under this Lease, 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.
5.2 ABATEMENT PROCEDURES. In the event Lessee is
entitled to an abatement of Minimum Rent under Paragraph 15.3 (by reason of
a total Condemnation of the Facility), the Minimum Rent shall be abated as
provided in Paragraph 15.3. In the event Lessee is entitled to an
abatement of Minimum Rent under Paragraph 15.5 (by reason of any partial
Condemnation of the Facility as provided hereunder), the Lease shall not
terminate but the Minimum Rent shall be abated in proportion to the reduced
capacity of the Leased Property for the use made of the same by Lessee at
the time of the Condemnation (I.E., the reduction in the number of
residents the Leased Property can accommodate under standards existing
immediately prior to the Condemnation). If Lessor and Lessee are unable to
agree upon the amount of such abatement within thirty (30) days after any
partial taking as provided under Article XV, the matter shall be submitted
by either party to a court of competent jurisdiction for resolution, but
Lessee during such resolution shall continue to perform its obligations
hereunder, including, but not limited to, payment of that portion of the
Minimum Rent which is not then in dispute.
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ARTICLE VI
6.1 OWNERSHIP OF THE LEASED PROPERTY. Lessee
acknowledges and agrees that the Leased Property is the property of Lessor
and that Lessee has only the right to the exclusive possession and use of
the Leased Property upon the terms and conditions of this Lease.
6.2 LESSEE'S ALTERATIONS. Lessee shall not make any
modifications, alterations or improvements, whether by addition or
deletion, to the Leased Improvements or any portion thereof (collectively,
"Alterations") without Lessor's prior written consent; provided, however
that Lessee may, at its sole cost and expense, make non-structural
Alterations to the interior of the Leased Improvements so long as the total
cost thereof is less than One Hundred Fifty Thousand and 00/100 Dollars
($150,000) during any Lease Year unless approved in advance in writing by
Lessor. Any Alterations by Lessee during the Term of this Lease shall be
done in a good and workmanlike manner, with good and sufficient materials,
and in compliance with law, and shall be made pursuant to contracts under
which the contractor and all subcontractors shall have waived the right to
file any such liens and evidence of thereof shall have been filed with the
office of the prothonotary for the County of Erie, indexed in accordance
with applicable law and a copy thereof delivered to the Lessor. Lessee
will not make any Alteration or other improvement that may materially
impair the value or the usefulness of the Leased Property or any part
thereof for its Primary Intended Use. Subject to the provisions of Article
XI, all Alterations and other improvements shall be lien free (I.E.,
without mechanics', materialmen's or other liens). Lessee shall promptly
upon completion thereof furnish Lessor with as-built plans and
specifications therefor. Lessee shall, at its sole cost and expense,
repair and restore the Leased Property as and when required under Paragraph
9.1.
6.3 LESSEE'S PERSONAL PROPERTY. Lessee may (and
shall as provided hereinbelow), at its expense, install, assemble or place
on any parcels of the Land or in any of the Leased Improvements, any items
of Lessee's Personal Property, and Lessee may, subject to the conditions
set forth below, remove the same upon the expiration or any prior
termination of the Term. Lessee shall provide and maintain during the
entire Term all such Lessee's Personal Property as shall be necessary in
order to operate the Facility in compliance with all licensure and
certification requirements, in compliance with all applicable Legal
Requirements and Insurance Requirements and otherwise in accordance with
customary practice in the industry for the Primary Intended Use. All of
Lessee's Personal Property not removed by Lessee within twenty (20) days
following the expiration or earlier termination of this Lease shall be
considered abandoned by Lessee and may be used, appropriated, sold,
destroyed, or otherwise disposed of by Lessor without first giving notice
thereof to Lessee and without any payment to Lessee and without any
obligation to account therefor. Lessee shall, within twenty (20) days
following the expiration or earlier termination of this Lease, at its sole
cost and expense, repair any damage to the Land or the Leased Improvements
occasioned by the installation, maintenance or removal of Lessee's Personal
Property, and restore the Land or Leased Improvements to its condition
immediately prior to any such installation.
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6.4 CONSUMABLE INVENTORY. Lessor and Lessee
acknowledge that certain inventory, including consumables, at the Facility,
as of the Commencement Date ("Consumable Inventory") will be completely
consumed or otherwise disposed of during the course of Lessee's operation of
the Facility. Lessee agrees that, at the end of the Term or earlier
termination of the Lease, it shall replace and restore the Consumable
Inventory to the type and amount (with the same value) as that existing as of
the Commencement Date, and as may otherwise be sufficient to fully equip the
Facility for its operation and maintenance as may be customary for properties
comparable to the Leased Property in the Commonwealth of Pennsylvania.
ARTICLE VII
7.1 CONDITION OF LEASED PROPERTY. Lessee
acknowledges receipt and delivery of possession of the Leased Property and
further acknowledges that Lessee has examined and otherwise has knowledge
of the condition of the Leased Property prior to the execution and delivery
of this Lease and has found the same to be in good order and repair and
satisfactory for it purposes hereunder. Lessee represents and warrants
that the Personal Property (as defined in Paragraph 1.1(v) hereof) includes
all equipment and property required under applicable federal and state law
to operate the Facility at full capacity. Lessee is leasing the Leased
Property "AS-IS" in its present condition. Lessee waives any claim or
action against Lessor in respect of the condition of the Leased Property.
LESSOR MAKES NO WARRANTY OR REPRESENTATIONS, EXPRESS OR IMPLIED, IN RESPECT
OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR
USE, DESIGN OR CONDITION FOR THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR
PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE.
LESSEE ACKNOWLEDGES THAT THE LEASED PROPERTY HAS BEEN INSPECTED BY LESSEE
AND IS SATISFACTORY TO IT. WITHOUT LIMITING THE FOREGOING, IT SHALL BE
LESSEE'S RESPONSIBILITY TO DETERMINE THE AMOUNT OF REIMBURSEMENT AND OTHER
PAYMENTS THAT IT IS ENTITLED TO RECEIVE FROM THE FEDERAL, STATE OR LOCAL
GOVERNMENTS AND LESSEE'S OBLIGATIONS UNDER THIS LEASE SHALL NOT BE
MODIFIED, CHANGED OR OTHERWISE BE REDUCED IN THE EVENT THAT LESSEE HAS
INCORRECTLY ANALYZED THE AMOUNTS TO BE PAID TO LESSEE BY ANY GOVERNMENT OR
AGENCY THEREOF.
7.2 USE OF THE LEASED PROPERTY.
7.2.1 Lessee covenants that it will obtain
and will at all times during the Term maintain all approvals needed to use
and operate the Leased Property and the Facility under applicable federal,
state and local law, including, but not limited to, licensure and Medicaid
certification, if and as applicable. Lessee shall provide to Lessor, at
Lessor's request a copy of any report or survey conducted by any federal,
state or local government entity regarding the quality of care at the
Facility, and any other such information or documents concerning the
operation of the Facility.
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7.2.2 After the Commencement Date and during
the entire Term, Lessee shall use or cause to be used the Leased Property
as an assisted living facility licensed (if applicable) by the Commonwealth
of Pennsylvania and uses incidental to the foregoing, including without
limitation home health services provided in accordance with and as
contemplated under Paragraph 22, below (the particular such use to which
the Leased Property is put at any particular time is herein referred to as
the "Primary Intended Use"). Lessee shall not use the Leased Property or
any portion thereof for any other use without the prior written consent of
Lessor, which consent may be withheld in Lessor's sole and absolute
discretion. No use shall be made of the Leased Property, and no acts shall
be done, which will cause the cancellation of any insurance policy to
residents therein, or permit to be kept, used or sold in or about the
Leased Property any article which may be prohibited by law or by the
standard form of fire insurance policies, or any other insurance policies
required to be carried hereunder, or fire underwriter's regulations.
Lessee shall, at its sole cost, comply with all of the requirements
pertaining to the Leased Property or other improvements of any insurance
board, association, organization, or company necessary for the maintenance
of insurance, as herein provided, covering the Leased Property and Lessee's
Personal Property.
7.2.3 Lessee covenants and agrees that
subject to damage, destruction and condemnation described in Articles XIV
and XV, during the Term it will operate continuously the entirety of the
Leased Property in accordance with its Primary Intended Use, provided that
Lessee may cease operations for more than ten (10) days (i) if Lessee
obtains Lessor's prior written approval, and (ii) so long as such cessation
of operations does not impair or threaten the status or effectiveness of
the operating license or other certification for operating the Facility in
accordance with its Primary Intended Use.
7.2.4 Lessee shall not commit or suffer to be
committed any waste on the Leased Property, or in the Facility nor shall
Lessee cause or permit any nuisance thereon.
7.2.5 Lessee shall neither suffer nor permit
the Leased Property or any portion thereof, including Lessee's Personal
Property, to be used in such a manner as (i) might reasonably tend to
impair Lessor's (or Lessee's, as the case may be) title thereto or to any
portion thereof; or (ii) may reasonably make possible a claim or claims of
adverse usage or adverse possession by the public, as such, or of implied
dedication of the Leased Property or any portion thereof.
7.2.6 Lessee covenants and agrees that during
the Term it will maintain all licenses, approvals, permits and
certifications for reimbursement, licensure and as otherwise required for
operating the Facility in accordance with its Primary Intended Use.
7.3 PRESERVATION OF GROSS REVENUES. Lessee
acknowledges that a fair return to Lessor on its investment in the Leased
Property is dependent, in part, on the concentration of the Leased Property
during the Term of the assisted living business of Lessee and its
Affiliates in the
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geographical area of the Leased Property. Lessee further acknowledges that
diversion of residents and/or patients, as applicable, from the Facility to
other facilities or institutions owned, operated or managed, whether directly
or indirectly, by Lessee or its Affiliates will have a material adverse
impact on the value and utility of the Leased Property. Accordingly, Lessor
and Lessee agree as follows:
7.3.1 During the Term neither Lessee nor any
of its Affiliates, directly or indirectly, shall operate, own, manage or
have any interest in or otherwise participate in or receive revenues from
any other facility or institution providing services or similar goods to
those provided in connection with the Facility and the Primary Intended
Use, within a four (4) mile radius outward from the outside boundary of the
Facility. All distances shall be measured on a straight line rather than
on a driving distance basis. In the event that any portion of such other
facility or institution is located within such restricted area, the entire
facility or institution shall be deemed located within such restricted
area.
7.3.2 During the Term, Lessee shall not
recommend or solicit the removal or transfer of any resident or patient
from any Facility to other facility or institution; provided however that
the provisions of this Paragraph 7.3.2 shall not apply to removals or
transfers required for medically appropriate reasons, or required during
the period of reconstruction or restoration, if any, permitted after any
casualty event pursuant to Article XIV below or after any Condemnation
pursuant to Article XV below.
ARTICLE VIII
8.1 COMPLIANCE WITH LEGAL AND INSURANCE
REQUIREMENTS, INSTRUMENTS, ETC. Subject to Article XII relating to
permitted contests, Lessee, at its sole cost and expense, will promptly (a)
comply with all applicable Legal Requirements and Insurance Requirements in
respect of the use, operation, maintenance, repair, and restoration of the
Leased Property, whether or not compliance therewith shall require
structural changes in any of the Leased Improvements or interfere with the
use and enjoyment of the Leased Property; and (b) procure, maintain and
comply with all licenses, certificates of need, provider agreements and
other authorizations, if any, required for any use of the Leased Property
and Lessee's Personal Property then being made, and for the proper
erection, installation, operation, and maintenance of the Leased Property
or any part thereof.
8.2 LEGAL REQUIREMENT COVENANTS. Lessee covenants
and agrees that the Leased Property and Lessee's Personal Property shall
not be used for any unlawful purpose. Lessee further warrants and
represents that Lessee has obtained all necessary governmental approvals
and has given all necessary notices to allow Lessee to operate the Facility
and all of the Leased Property for its Primary Intended Use. Lessee shall
acquire and maintain all licenses, certificates, permits, provider
agreements and other authorizations and approvals needed to operate the
Facility and the Leased Property in its customary manner for the Primary
Intended Use, and any other use conducted on the Leased Property as may be
permitted by Lessor from time-to-time hereunder. Lessee further covenants
and agrees that Lessee's use of the Leased Property and maintenance,
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alteration and operation of the same, and all parts thereof, shall at all
times conform to all applicable federal, state and local laws, ordinances,
rules, and regulations unless the same are held by a court of competent
jurisdiction to be unlawful. Lessee, may, however, upon prior written
notice to Lessor, contest the legality or applicability of any such law,
ordinance, rule, or regulation, or any licensure or certification decision
if Lessee maintains such action in good faith, with due diligence, without
prejudice to Lessor's rights hereunder, and at Lessee's own expense. If by
the terms of any such law, ordinance, rule or regulation, compliance
therewith pending the prosecution of any such proceeding may legally be
delayed without the incurrence of any fine, charge or liability of any kind
against the Leased Property, including the Facility, or Lessee's leasehold
interest therein and without subjecting Lessor to any liability, civil or
criminal, for failure so to comply therewith, Lessee may delay compliance
therewith until the final determination of such proceeding. If any lien,
charge or civil or criminal liability would be incurred by reason of any
such delay, Lessee, on the prior written consent of Lessor, may nonetheless
contest as aforesaid and delay as aforesaid provided that such delay would
not subject Lessor to criminal liability and Lessee both (a) furnishes to
Lessor security reasonably satisfactory to Lessor against any loss or
injury by reason of such contest or delay; and (b) prosecutes the contest
continuously, with due diligence and in good faith.
ARTICLE IX
9.1 MAINTENANCE AND REPAIR.
9.1.1 Lessee, at its sole cost and expense,
will keep the Leased Property and all portions thereof and Lessee's Personal
Property and all private roadways, sidewalks and curbs appurtenant thereto
and which are under Lessee's control in good order and repair (whether or not
the need for such repairs occurs as a result of Lessee's use, any prior use,
the elements or the age of the Leased Property, or any portion thereof), and,
except as otherwise provided in Article XIV, with reasonable promptness, make
all necessary and appropriate repairs thereto of every kind and nature,
whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen or arising by reason of a condition
existing prior to the Commencement Date (concealed or otherwise). All
repairs shall, to the extent reasonably achievable, be at least equivalent in
quality to the original work. Lessee will not take or omit to take any
action the taking or omission of which may materially impair the value or the
usefulness of the Leased Property or any part thereof for its Primary
Intended Use. Any repair work performed by Lessee shall be paid for so that
no lien (I.E., mechanics', materialmen's or other liens) shall attach to the
Leased Property, subject to Article XII.
9.1.2 Lessor shall not under any
circumstances be required to build or rebuild any improvements on the
Leased Property, or to make any repairs, replacements, alterations,
restorations, or renewals of any nature or description to the Leased
Property, whether ordinary or extraordinary, structural or non-structural,
foreseen or unforeseen, or to make any expenditure whatsoever with respect
thereto, in connection with this Lease, or to maintain the Leased Property
in any way. Lessee hereby waives, to the extent permitted by law, the
right to
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make repairs at the expense of Lessor pursuant to any law in effect at the
time of the execution of this Lease or hereafter enacted. Lessor shall have
the right to give, record and post, as appropriate, notices of
non-responsibility (or similar notices) under any mechanics' or materialmen's
lien laws now or hereafter existing.
9.1.3 Nothing contained in this Lease and no
action or inaction by Lessor shall be construed as (i) constituting the
consent or request of Lessor, express or implied, to any contractor,
sub-contractor, laborer, materialman, or vendor to or for the performance of
any labor or services or the furnishing of any materials or other property
for the construction, alteration, addition, repair, or demolition of, or to
the Leased Property or any part thereof; or (ii) giving Lessee any right,
power or permission to contract for or permit the performance of any labor or
services or the furnishing of any materials or other property in such fashion
as would permit the making of any claim against Lessor in respect thereof or
to make any agreement that may create, or in any way be the basis for any
right, title, interest, lien, claim, or other encumbrance upon the estate of
Lessor in the Leased Property, or any portion thereof. Lessor shall have the
right to give, record and post, as appropriate, notices of non-responsibility
(or similar notices) under any mechanics' or materialsmen's lien laws now or
hereafter existing.
9.1.4 Unless Lessor shall convey any of the
Leased Property to Lessee pursuant to the provisions of this Lease, and
subject to the provisions of Paragraph 6.3 regarding Lessee's Personal
Property, upon the expiration or prior termination of the Term, all the
Leased Property, including all Fixtures and Personal Property located
thereon, and any Alterations, repairs, restorations, additions or
improvements otherwise made by or for Lessee, shall be Lessor's property
and shall be vacated and surrendered to Lessor in the condition in which
the Leased Property was originally received from Lessor, and in the same
type and amount (with the same depreciated value) as that existing as of
the Commencement Date, except as repaired, rebuilt, restored, altered or
added to as permitted or required under this Lease, and as otherwise
sufficient to fully equip the Facility for its operation and maintenance as
may be customary for properties comparable to the Leased Property in the
County of Erie, Pennsylvania, and except for ordinary wear and tear
(subject to the obligation of Lessee to maintain the Leased Property) in
good order and repair without compensation to Lessee; provided however
that, at the election of Lessor, exercisable by notice to Lessee, Lessee
shall, at Lessee's sole cost and expense, prior to the expiration or prior
termination of the Term, remove from the Leased Property any Fixtures,
Personal Property, Alterations or other improvements to the Leased Property
or any portion thereof that were not consented to in advance in writing by
Lessor, irrespective of whether Lessor's consent was required hereunder,
and Lessee shall repair any damage to the Leased Property occasioned by the
installation, maintenance or removal of the same, and restore the Leased
Property to its condition immediately prior to such installation.
Notwithstanding the foregoing, if this Lease is terminated pursuant to
Paragraph 14.7 due to damage or destruction during the last 6 months of the
Term (as described in Paragraph 14.7), then, unless the daage or
destruction was due to Lessee's negligent acts or omissions or willful
misconduct, at the end of the Term (shortened due to the damage and
destruction) Lessee shall not be obligated to repair any items that were
damaged; provided that nothing contained herein shall affect Lessee's
obligation to maintain the Leased Property in good order and repair during
the entire
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Term. Additionally, Lessor shall own and may remove, at the end
of the Term (or at the earlier termination of this Lease), all patient
records and other records in connection with the Facility, and in
connection with the transfer of such records, Lessee shall take all
necessary action to insure full compliance with any and all patient
confidentiality, patient-physician privileges or any duly enacted
"Patient's Xxxx of Rights" or similar applicable laws or regulations.
9.2 EXPENDITURES TO COMPLY WITH LAW; CONSTRUCTION OF
ADDITIONAL IMPROVEMENTS PURSUANT TO CERTIFICATE OF NEED. Without limiting
Lessee's other obligations, during the Term of this Lease, Lessee will, at
its expense, make whatever expenditures (including, but not limited to
capital and non-capital expenditures) that are required to conform the
Leased Property to such standards as may from time-to-time be required by
Federal Medicaid (Title 19) assisted living programs, as and if applicable,
or any other applicable programs or legislation, or capital improvements
required by any other governmental agency having jurisdiction over the
Leased Property as a condition of the continued operation of the Leased
Property during the Term (as extended) as an assisted living residence or
other health-care related facility, approved for Medicaid and similar
programs as and if applicable, pursuant to present or future laws of
governmental regulation.
9.3 ENCROACHMENTS, RESTRICTIONS, ETC. If any of the
Leased Improvements shall, at any time, encroach upon any property, street
or right-of-way adjacent to the Leased Property, or shall violate the
agreements or conditions contained in any lawful restrictive covenant or
other agreement affecting the Leased Property, or any part thereof, or
shall impair the rights of others under any easement or right-of-way to
which the Leased Property is subject, then promptly upon the request of
Lessor at the behest of any person affected by any such encroachment,
violation or impairment, Lessee shall, at its sole cost and expense, (and
after Lessor's prior approval) subject to Lessee's right to xxx Xxxxxx'x
predecessors in title with respect thereto or to contest the existence of
any such encroachment, violation or impairment and, in such case, in the
event of an adverse final determination, either (i) obtain valid and
effective waivers or settlements of all claims, liabilities and damages
resulting from each such encroachment, violation or impairment, whether the
same shall affect Lessor or the Leased Property; or (ii) make such changes
in the Leased Improvements, and take such other actions, as Lessee in the
good faith exercise of its judgment deems reasonably practicable, to remove
such encroachment, and to end such violation or impairment, including, if
necessary, the alteration of any of the Leased Improvements, and in any
event take all such actions as may be necessary in order to be able to
continue the operation of the Leased Improvements for the Primary Intended
Use substantially in the manner and to the extent the Leased Improvements
were operated prior to the assertion of such violation, impairment or
encroachment. Any such alteration shall be made in conformity with the
applicable requirements of Paragraph 6.2 (provided that Lessor shall not
unreasonably withhold its consent) and this Article IX. Lessee's
obligations under this Paragraph 9.3 shall be in addition to and shall in
no way discharge or diminish any obligation of any insurer under any policy
of title or other insurance.
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ARTICLE X
10.1 LESSEE'S OBLIGATIONS FOR HAZARDOUS MATERIALS.
Lessee shall, at its sole cost and expense, take all actions as required
to cause the Leased Property including, but not limited to, the Land and
all Leased Improvements, to be free and clear of the presence of all
Hazardous Materials during the Term; provided, however, that Lessee shall
be entitled to use and maintain Hazardous Materials on the Leased Property
of types and in the quantities commonly used in assisted living facilities
in the Commonwealth of Pennsylvania and which have been used, stored and
disposed of in compliance with all applicable laws. In this connection,
Lessee shall, upon its discovery, belief or suspicion of the presence of
Hazardous Materials on, in or under any part of the Leased Property,
including, but not limited to, the Land and all Leased Improvements in
violation of the preceding sentence, immediately notify Lessor and, at no
expense to Lessor, cause any such Hazardous Materials to be removed
immediately, in compliance with all applicable laws and in a manner causing
the least disruption of or interference with the operation of Lessee's
business. Lessee hereby agrees to fully indemnify, protect, defend and
hold harmless Lessor from any costs, damages, claims, liability or loss of
any kind or nature arising out of or in any way in connection with the
presence, suspected presence, removal or remediation of Hazardous Materials
in, on, or about the Leased Property, or any part thereof. Lessee
acknowledges that it has received and reviewed a Phase I Environmental Site
Assessment dated August 1996, and related supplemental reports and letters
prepared by Urban Engineers of Erie, Inc. and a Subsurface Exploration and
Foundation Engineering Report dated August 23, 1996, prepared by
Geotechnical Consultants, Inc. for the Facility (collectively, the
"Environmental Reports"). Without limiting Lessee's other obligations
under this Lease, Lessee agrees, at Lessee's sole cost, to fully comply
with all recommendations set forth in the Environmental Reports or any
other environmental report. Lessee's obligations hereunder shall apply to
all Hazardous Materials, irrespective of when they arose or were discovered
and therefore will include any Hazardous Materials that existed prior to,
at, or after the Commencement Date and during the Term.
10.2 DEFINITION OF HAZARDOUS MATERIALS. For purposes
of this Lease, "Hazardous Materials" shall mean (1) any flammables, explosive
or radioactive materials, hazardous wastes, toxic substances or related
materials including, without limitation, substances defined as "hazardous
substances," "hazardous materials", "toxic substances" or "solid waste" in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. Sec. 9601, ET SEQ.; the hazardous Materials
Transportation Act, 49 U.S.C. Section 1801, ET SEQ.; the Toxic Substances
Control Act, 15 U.S.C., Section 2601 ET SEQ.; the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Section 6901 ET SEQ.; Occupational Safety and
Health Act, 29 U.S.C. Section 651, ET SEQ.; and in comparable Commonwealth of
Pennsylvania and local laws and ordinances, and the regulations now or
hereafter adopted, published and/or promulgated pursuant thereto; (2) those
substances listed in the United States Department of Transportation Table (49
C.F.R. 172.101 and amendments thereto) or by the Environmental Protection
Agency (or any successor agency) as hazardous substances (40 C.F.R. Part 302
and amendments thereto); (3) those substances defined as "hazardous wastes,"
"hazardous substances" or "toxic substances" in any similar federal, state or
local laws or in the regulations adopted and publications promulgated
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pursuant to any of the foregoing laws or which otherwise are regulated by any
governmental authority, agency, department, commission, board or
instrumentality of the United States of America, the Commonwealth of
Pennsylvania or any political subdivision thereof, (4) any pollutant or
contaminant or hazardous, dangerous or toxic chemicals, materials, or
substances within the meaning of any other applicable federal, state, or
local law, regulation, ordinance, or requirement (including consent decrees
and administrative orders) relating to or imposing liability or standards of
conduct concerning any hazardous, toxic or dangerous waste, substance or
material, all as amended; (5) petroleum or any by-products thereof; (6) any
radioactive material, including any source, special nuclear or by-product
material as defined at 42 U.S.C. Sections 2011 ET SEQ., as amended, and in
the regulations adopted and publications promulgated pursuant to said law;
(7) asbestos in any form or condition; and (8) polychlorinated biphenyls.
"Environmental Laws" means and includes any law, ordinance, statute, rule,
code, order, approval, regulation or requirement now or hereinafter in effect
relating to land use, air, soil, surface water, groundwater (including the
protection, cleanup, removal, remediation or damage thereof), human health
and safety or any other environmental matter, including, without limitation,
the following laws as the same may be amended from time to time:
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), 42 U.S.C. Section 9601, ET SEQ.; Federal Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, ET SEQ.; Clean Water Act, 33 U.S.C.
Section 1251, ET SEQ.; Toxic Substances Control Act, 15 U.S.C. Section 2601,
ET SEQ.; Refuse Act, 33 U.S.C. Section 407; Occupational Safety and Health
Act, 29 U.S.C. Section 651, ET SEQ.; Clean Air Act, 42 U.S.C. Section 7401,
ET SEQ.; and comparable Pennsylvania laws; and any and all similar state and
local laws and ordinances and the regulations now or hereafter adopted,
published and/or promulgated pursuant thereto.
ARTICLE XI
11.1 NO LIENS. Subject to the provisions of Article
XII relating to permitted contests, Lessee will not directly or indirectly,
voluntarily or by operation of law, create or allow to remain and will
promptly discharge at its expense any lien, mortgage, encumbrance,
attachment, title retention agreement, or claim upon the Leased Property or
any portion thereof, or Lessee's interest under this Lease or any
attachment, levy, claim, or encumbrance in respect of the Rent, not
including however, (a) this Lease; (b) restrictions, liens and other
encumbrances created or allowed pursuant to the provisions of Paragraph
11.2 below; (c) liens for those taxes of Lessor which Lessee is not
required to pay hereunder; (d) subleases permitted by Article XXIII; (e)
liens for Impositions or for sums resulting from non-compliance with Legal
Requirements so long as (1) the same are not yet payable or are payable
without the addition of any fine or penalty, or (2) such liens are in the
process of being contested as permitted by Article XII; (f) liens of
mechanics, laborers, materialmen, suppliers or vendors for sums either
disputed or not yet due, provided that in the case of disputed sums any
such liens are in the process of being contested as permitted by Article
XII; (g) any liens which are the responsibility of Lessor pursuant to the
provisions of Article XXXIII of this Lease; (h) the Permitted Title Matters
(defined in Paragraph 1.1 above); and (i) any other matters that have been
consented to in advance in writing by Lessor.
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11.2 PERMITTED LIENS. Lessee may borrow funds to
finance all or any part of the cost of any Alterations or other
improvements permitted or required under this Lease to the extent and upon
such terms and conditions as may be approved in advance in writing by
Lessor in Lessor's sole discretion, subject to Lessor's right of first
refusal to finance such Alterations or other improvements upon commercially
reasonable terms and conditions; provided, however, that Lessor's approval
shall not be required for any borrowing of funds that does not result in a
lien, mortgage, encumbrance or other claim affecting the Leased Property or
Lessee's interest under this Lease. Notwithstanding the foregoing, Lessee
may grant security interests encumbering specific items of Lessee's
Personal Property (but not fixtures attached to the Land) in favor of the
lessors of or purchase-money lenders for said items of Lessee's Personal
Property, so long as such personal property is permitted on the Land or in
the Leased Improvements under Paragraph 6.3 hereunder and is not owned by
or subject to any claim or right of Lessor.
ARTICLE XII
12. PERMITTED CONTESTS. Lessee shall have the right to
contest the amount or validity of any Imposition or any Legal Requirement
or Insurance Requirement or any lien, attachment, levy, encumbrance, charge
or claim ("Claims") not otherwise permitted by Article XI, by appropriate
legal proceedings in good faith and with due diligence, and to delay
payment if legally permitted. Any such legal proceeding (and delay in
payment) shall operate to extend the time for performance of Lessee's
covenants to pay such charges hereunder only so long as such Claims are in
the process of being diligently contested as permitted in this Article XII
and such legal proceedings (and delay in payment) do not cause the sale of
the Leased Property, or any part thereof, to satisfy the same or cause
Lessor or Lessee to be in default under any mortgage or deed of trust
encumbering the Leased Property or any interest therein; provided that such
legal proceedings (and delay in payment) shall not otherwise be deemed or
construed as relieving, modifying or extending Lessee's covenants to pay or
its covenants to cause to be paid any such charges at the time and in the
manner provided for under this Lease. Upon the reasonable request of
Lessor, Lessee shall provide to Lessor reasonable security satisfactory to
Lessor, in Lessor's reasonable discretion, to assure the payment of all
Claims which may be assessed against the Leased Property or any portion
thereof together with interest and penalties, if any, thereon. Lessor
agrees to join in any such proceedings if the same be required to legally
prosecute such contest of the validity of such Claims; provided, however,
that Lessor shall not thereby be subjected to any liability for the payment
of any costs or expenses in connection with any proceedings brought by
Lessee; and Lessee covenants to indemnify and save harmless Lessor from any
such costs or expenses. In the event that Lessee fails to pay any Claims
when due or, upon Lessor's request, to provide the security therefor as
provided in this Article XII and to diligently prosecute any contest of the
same, Lessor may, upon thirty (30) days advance written Notice to Lessee,
pay such charges together with any interest and penalties and the same
shall be repayable by Lessee to Lessor at the next Payment Date provided
for in this Lease. Provided, however, that should Lessor reasonably
determine that the giving of such Notice would risk loss to the Leased
Property or cause damage to Lessor, then Lessor shall give such written
Notice as is practical under the circumstances. Lessee shall be entitled
to any refund of any Claims and such charges and penalties or interest
thereon which have been paid by Lessee or paid by
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Lessor and for which Lessor has been fully reimbursed.
ARTICLE XIII
13.1 GENERAL INSURANCE REQUIREMENTS. Subject to the provisions of
Paragraph 13.8, during the Term, Lessee shall at all times keep the Leased
Property, and all portions thereof and all property located in or on the
Leased Property, including Lessee's Personal Property, insured with the kinds
and amounts of insurance described below. This insurance shall be written by
companies authorized to do insurance business in the state in which the
Leased Property is located. The policies must name Lessor as a loss payee
and additional insured. Losses shall be payable to Lessor or Lessee as
provided in Article XIV. In addition, upon Lessor's written request, the
policies shall name as mortgagee, loss payee and additional insured the
holder ("Facility Mortgagee") of any mortgage, deed of trust or other
security agreement and any other Encumbrance placed on the Leased Property or
any portion thereof in accordance with the provisions of Article XXXII
("Facility Mortgage") by way of a standard form of mortgagee's loss payable
endorsement. Any loss adjustment shall require the written consent of
Lessor, Lessee, and each Facility Mortgagee. Evidence of insurance shall be
deposited with Lessor and, if requested, with any Facility Mortgagee(s). If
any provision of any Facility Mortgage requires deposits of premiums for
insurance to be made with such Facility Mortgagee, or, pursuant to written
direction by Lessor upon the occurrence of any Event of Default hereunder
(and irrespective of whether such Event of Default is continuing or has been
cured), Lessee shall make such deposits directly with such Facility Mortgagee
or with Lessor, as required, provided that during any period when such
deposits are being made, the Facility Mortgagee or Lessor (depending on which
party collects such deposits) agrees (a) to pay the premiums on a timely
basis, and (b) upon written request from Lessee, to account to Lessee for all
funds then on deposit. The policies on the Leased Property, including the
Leased Improvements, Fixtures and Lessee's Personal Property, shall insure
against the following risks:
13.1.1 Loss or damage by fire, vandalism and malicious
mischief, extended coverage perils commonly known as "All Risk," and all
physical loss perils normally included in such All Risk insurance, including,
but not limited to, sprinkler leakage, in an amount not less than one hundred
percent (100%) of the then full replacement cost thereof (as defined below in
Paragraph 13.2);
13.1.2 Loss or damage by explosion of steam boilers, pressure
vessels or similar apparatus, now or hereafter installed in the Facility, if
any, in such amounts with respect to any one accident as may be reasonably
requested by Lessor from time-to-time;
13.1.3 Business interruption insurance policy covering risk
of loss during the first twelve (12) months of reconstruction necessitated by
the occurrence of any of the hazards described in Paragraph 13.1.1 or 13.1.2
in an amount sufficient to prevent Lessor from becoming a co-insurer.
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13.1.4 Claims for personal injury or property damage under a
policy of comprehensive general public liability insurance with amounts not
less than One Million Dollars ($1,000,000) per occurrence, and with an annual
aggregate of Three Million Dollars ($3,000,000);
13.1.5 Claims arising out of malpractice or other
professional actions or omissions under a policy of professional liability
insurance with amounts not less than One Million Dollars ($1,000,000) per
occurrence, and with an annual aggregate of Three Million Dollars
($3,000,000);
13.1.6 Flood (if any of the Leased Improvements are located
in whole or in part within a flood plain area, as designated by any
governmental or other responsible agency and if such insurance is available
pursuant to applicable law) and such other hazards and in such amounts as may
be customary for comparable properties in the area; and
13.2 REPLACEMENT COST. The term "full replacement cost" as used
herein, shall mean the actual replacement cost of the Leased Property
requiring replacement from time-to-time including an increased cost of
construction endorsement, less exclusions provided in the standard form of
fire insurance policy in the state where the Leased Property is located.
Lessor and Lessee agree that as of the Commencement Date the full replacement
cost shall be deemed to be the "Purchase Price" less the value of the Land.
In the event either party believes that full replacement cost (the then
replacement cost less such exclusions) has increased or decreased at any time
during the Term, it shall have the right to have such full replacement cost
redetermined.
13.3 ADDITIONAL INSURANCE. In addition to the insurance described
above, Lessee shall maintain such additional insurance as may be reasonably
required from time-to-time by Lessor or any Facility Mortgagee (to the extent
available in the state where the Leased Property is located) and shall
further at all times maintain adequate worker's compensation insurance
coverage for all persons employed by Lessee on the Leased Property or any
portion thereof. Such worker's compensation insurance shall be in accordance
with the requirements of applicable federal, state and local law.
13.4 WAIVER OF SUBROGATION. All insurance policies carried by
either party covering the Leased Property, the Fixtures, the Facility, or
Lessee's Personal Property including without limitations, contents, fire and
casualty insurance, shall expressly waive any right of subrogation on the
part of the insurer against the other party. The parties hereto agree that
their policies will include such waiver clause or endorsement so long as the
same are obtainable without extra cost, and in the event of such an extra
charge the other party, at its election, may pay the same, but shall not be
obligated to do so. Upon written request, each party shall provide the other
party with a copy of each insurance policy with the waiver clause or
endorsement attached.
13.5 FORM SATISFACTORY, ETC. All of the policies of insurance
referred to in this Article XIII shall be written in a form reasonably
satisfactory to Lessor and by insurance companies reasonably satisfactory to
Lessor. Subject to the foregoing, Lessor agrees that it will not
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unreasonably withhold its approval as to the form of the policies of
insurance or as to the insurance companies selected by Lessee. Lessee shall
pay all of the premiums therefor, and deliver such policies or certificates
thereof to Lessor prior to their effective date (and, with respect to any
renewal policy, prior to the expiration of the existing policy), and in the
event of the failure of Lessee either to effect such insurance as herein
called for or to pay the premiums therefor, or to deliver such policies or
certificates thereof to Lessor at the times required, Lessor shall be
entitled, but shall have no obligation, to effect such insurance and pay the
premiums therefor, which premiums shall be repayable by Lessee to Lessor upon
written demand therefor, and failure to repay the same shall constitute an
Event of Default within the meaning of Paragraph 16.1(c). Each insurer
mentioned in this Article XIII shall agree, by endorsement on the policy or
policies issued by it, or by independent instrument furnished to Lessor, that
will give to Lessor (and to any Facility Mortgagee, if required by the same)
thirty (30) days written notice before the policy or policies in questions
shall be altered, allowed to expire or cancel.
13.6 INCREASE IN LIMITS. In the event that Lessor or a Facility
Mortgagee shall at any time reasonably deem the limits of the personal injury
or property damage public liability insurance then carried to be
insufficient, Lessee shall thereafter carry the insurance with increased
limits until further change pursuant to the provisions of this Paragraph;
provided that if Lessor desires to increase the limits of insurance, and such
is not pursuant to the request of a Facility Mortgagee, then Lessor may not
demand an increase in limits above the limits generally consistent with the
requirements of owners of assisted living facilities in the Commonwealth of
Pennsylvania.
13.7 BLANKET POLICY. Notwithstanding anything to the contrary
contained in this Article XIII, Lessee's obligations to carry the insurance
provided for herein may be brought within the coverage of a so-called blanket
policy or policies of insurance carried and maintained by Lessee; provided,
however, that the coverage afforded Lessor will not be reduced or diminished
or otherwise be different from that which would exist under a separate policy
meeting all other requirements of this Lease by reason of the use of such
blanket policy of insurance, and provided further that the requirements of
this Article XIII are otherwise satisfied.
13.8 NO SEPARATE INSURANCE. Lessee shall not on Lessee's own
initiative or pursuant to the request or requirement of any third party take
out separate insurance concurrent in form or contributing in the event of
loss with that required in this Article, to be furnished or which may
reasonably be required to be furnished, by Lessee or increase the amount of
any then existing insurance by securing any additional policy or additional
policies, unless all parties having an insurable interest in the subject
matter of the insurance, including in all cases Lessor and all Facility
Mortgagees, are included therein as additional insureds, and the loss is
payable under said insurance in the same manner as losses are payable under
the Lease. Lessee shall immediately notify Lessor of the taking out of any
such separate insurance or of the increasing of any of the amount of the then
existing insurance.
13.9 CONTINUOUS COVERAGE. Lessee shall assure that there is no gap
in the insurance coverage provided in connection with the Facility at or
after the Commencement Date
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and, therefore, the insurance provided by Lessee shall be continuous, with
the types and amounts of coverage, described herein to be applicable on the
Commencement Date. To the extent there is not full, complete and continuous
coverage for all issues, no matter when arising, claimed or occurring, Lessee
shall, at its sole cost, obtain such insurance.
ARTICLE XIV
14.1 INSURANCE PROCEEDS. All proceeds payable by reason of any
loss of or damage to the Leased Property, or any portion thereof, which is
insured under any policy of insurance required by Article XIII of the Lease,
where the total proceeds paid by the insurer are less than $125,000.00, shall
be paid to Lessee and applied to the reconstruction or repair, as the case
may be, of any damage to or destruction of the Leased Property, or any
portion thereof. All proceeds payable by reason of any loss of or damage to
the Leased Property, or any portion thereof, which is insured under any
policy of insurance required by Article XIII of this Lease where the total
proceeds paid by the insurer are equal to or in excess of $125,000.00 shall
be paid to Lessor and held by Lessor in trust (subject to the provisions of
Paragraph 14.7) and shall be made available for reconstruction or repair, as
the case may be, of any damage to or destruction of the Leased Property, or
any portion thereof, and shall be paid out by Lessor from time-to-time for
the reasonable costs of such reconstruction or repair. Any excess proceeds
of insurance remaining after the completion of the restoration or
reconstruction of the Leased Property shall go to Lessee, provided the Lease
is in force and there exists no uncured Event of Default; otherwise such
excess shall be paid to Lessor for application as set forth in Article XVI
hereof. In the event neither Lessor nor Lessee is required or elects to
repair and restore, and the Lease is terminated as described in Paragraph
14.7, all such insurance proceeds shall be retained by Lessor. All salvage
resulting from any risk covered by insurance shall belong to Lessor except
that any salvage relating to Lessee's Personal Property shall belong to
Lessee.
14.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE PROCEEDS.
14.2.1 Except as provided in Paragraph 14.7, if during the
Term, the Facility or any portion of the Leased Property is totally or
partially destroyed by a risk covered by the insurance described in Article
XIII and whether or not the Facility is rendered Unsuitable for Its Primary
Intended Use, Lessee shall restore the Leased Property to substantially the
same condition as existed immediately before the damage or destruction.
Lessee shall be entitled to the insurance proceeds for the purpose of such
repair and restoration.
14.2.2 If the cost of the repair or restoration exceeds the
amount of proceeds received by Lessee or Lessor from the insurance required
under Article XIII as provided in Paragraph 14.1, above, Lessee shall be
obligated to restore the Leased Property and pay the extra cost therefor,
provided that, prior to commencing the repair and restoration, Lessee shall
either (i) contribute any excess amount needed to restore the Leased
Property, or (ii) provide Lessor with satisfactory evidence that such funds
are, and throughout the entire period of reconstruction will be,
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available. If Lessee contributes such excess in cash, such excess shall be
paid by Lessee to Lessor to be held in trust, together with any insurance
proceeds, for application to the cost of repair and restoration.
14.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT
COVERED BY INSURANCE. Except as provided in Paragraph 14.7 below, if during
the Term the Facility or any portion of the Leased Property is damaged or
destroyed irrespective of the extent of the damage from a risk not covered by
the insurance described in Article XIII, whether or not such damage or
renders the Facility Unsuitable for Its Primary Intended Use, Lessee shall
restore the Leased Property to substantially the same condition it was in
immediately before such damage or destruction and such damage or destruction
shall not terminate this Lease.
14.4 LESSEE'S PROPERTY. All insurance proceeds payable by reason
of any loss of or damage to any of Lessee's Personal Property shall be paid
to Lessee, and Lessee shall hold such insurance proceeds in trust to pay the
cost of repairing or replacing damaged Lessee's Personal Property. Any
proceeds in excess of the cost of repairing or replacing any such Lessee's
Personal Property shall belong to Lessee.
14.5 RESTORATION OF LESSEE'S PROPERTY. Without limiting Lessee's
obligation to restore the Leased Property as provided in Paragraphs 14.2 and
14.3, Lessee shall also pay the cost to restore all Alterations and other
improvements made by Lessee which Lessee elects to restore, including
Lessee's Personal Property to the extent that Lessee's Personal Property is
necessary to the operation of the Leased Property for its Primary Intended
Use in accordance with applicable Legal Requirements.
14.6 NO ABATEMENT OF RENT. This Lease shall remain in full force
and effect and Lessee's obligation to make rental payments and to pay all
other charges required by this Lease shall remain unabated during any period
required for repair and restoration.
14.7 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of
Paragraph 14.2 or 14.3 appearing to be contrary, if damage to or destruction
of the Facility occurs during the last six (6) months of the Term (in
calculating such 6 months, any Extended Terms as to which Lessee exercised
its option prior to or after the occurrence of such damage or destruction
shall be included), and if such damage or destruction cannot be fully
repaired and restored within six (6) months immediately following the date of
damage or destruction, then Lessor and Lessee shall each have the right to
terminate this Lease by giving written notice to the other within thirty (30)
days after the date of damage or destruction. If the Lease so terminates as
provided in this Paragraph 14.7, and unless the damage or destruction was due
to Lessee's negligent acts or omissions or willful misconduct, Lessee shall
have no responsibility to repair or restore the damaged or destroyed
Facility. Upon the termination of this Lease the Minimum Rent payable by
Lessee hereunder with regard to the Facility shall be apportioned as of the
date this Lease is terminated.
14.8 TERMINATION OF OPTION TO EXTEND. Any termination of this
Lease pursuant
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to this Article XIV shall cause any unexercised options to extend the Lease
under Article XVIII to be terminated and without further force or effect.
14.9 WAIVER. Lessee hereby waives any statutory rights of
termination which may arise by reason of any damage to or destruction of the
Leased Property or any portion thereof which Lessor is obligated to restore
or may restore under any of the provisions of this Lease.
ARTICLE XV
15. CONDEMNATION.
15.1 DEFINITIONS.
15.1.1 "Condemnation" means (a) the exercise of any
governmental power, whether by legal proceedings or otherwise, by a
Condemnor; (b) a voluntary sale or transfer by Lessor to any Condemnor,
either under threat of Condemnation or while legal proceedings for
Condemnation are pending.
15.1.2 "Date of Taking" means the date the Condemnor has
the right to possession of the property being condemned.
15.1.3 "Award" means all compensation, sums or anything
of value awarded, paid or received on a total or partial Condemnation.
15.1.4 "Condemnor" means any public or quasi-public
authority, or private corporation or individual, having the power of
Condemnation.
15.2 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is
any taking of all or any part of the Facility, the Leased Property or any
interest in this Lease by Condemnation, the rights and obligations of the
parties shall be determined by this Article XV.
15.3 TOTAL CONDEMNATION. If title to the fee of the whole of the
Facility shall be taken or condemned by any Condemnor, this Lease shall cease
and terminate as of the Date of Condemnation by said Condemnor. If title to
the fee of less than the whole of the Leased Property shall be so taken or
condemned, which nevertheless renders the Facility Unsuitable for Its Primary
Intended Use, as reasonably determined by Lessor and Lessee, Lessee and
Lessor shall each have the option by written Notice to the other, at any time
at or prior to the taking of possession by, or the date of vesting of title
in, such Condemnor, whichever first occurs, to terminate this Lease as of the
date of the occurrence of such first event. If such Notice has timely been
given, this Lease shall thereupon cease and terminate. Upon the termination
of this Lease in accordance with this Paragraph 15.3, the Minimum Rent
payable by Lessee hereunder shall be apportioned as of the date the Lease
terminates.
15.4 ALLOCATION OF PORTION OF AWARD. The total Award made with
respect to all
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or any portion of the Leased Property or for loss of rent, or for loss of
business, whether or not beyond the Term of this Lease, or for the loss of
value of the leasehold (including the bonus value of the Lease) shall be
solely the property of and payable to Lessor and Lessee hereby assigns to
Lessor any and all rights in such Award; provided, however, that Lessee shall
be entitled to make a separate claim for the taking of Lessee's Personal
Property and relocation expense as long as any such claim will not in any way
diminish Lessor's Award, or for any other loss that can be awarded to Lessee
separately from Lessor's claim and which will not in any respect whatsoever
diminish or threaten to diminish the total amounts to be awarded to Lessor,
as set forth above or otherwise. To the extent Lessee's claim may thereafter
reduce Lessor's claim, Lessee shall, and hereby does, assign its claim to
Lessor. In any Condemnation proceedings, each of the Lessor and Lessee shall
seek its own claim in conformity herewith, at its own expense.
15.5 PARTIAL TAKING. If title to the fee of less than the whole of
any Facility shall be so taken or condemned, and the Facility is still
suitable for its Primary Intended Use, as reasonably determined by Lessor and
Lessee, or if Lessee or Lessor shall be so entitled, but shall not elect to
terminate this Lease as provided in Paragraph 15.3 hereof, Lessee, at its own
cost and expense (subject to Lessor's contribution described below), shall
with all reasonable dispatch restore the untaken portion of any Leased
Improvements on the Leased Property so that such Leased Improvements shall
constitute a complete architectural unit of the same general character and
condition (as nearly as may be possible under the circumstances) as the
Leased Improvements existed immediately prior to such Condemnation. Lessor
shall contribute to the cost of restoration that part of its Award as is
reasonably necessary to accomplish such restoration, provided, however, the
amount of such contribution shall not exceed the cost of restoration. The
Minimum Rent shall be reduced as set forth in Paragraph 5.2.
15.6 TEMPORARY TAKING. Lessee agrees that if, at any time after
the date hereof, the whole or any part of the Leased Property or of Lessee's
interest under this Lease, shall be Condemned by any Condemnor for its
temporary use or occupancy, this Lease shall not terminate by reason thereof,
and Lessee shall continue to pay, in the manner and at the times herein
specified, the full amounts of Minimum Rent and Additional Charges. Except
only to the extent that Lessee may be prevented from doing so pursuant to the
terms of the order of the Condemnor, Lessee shall also continue to perform
and observe all of the other terms, covenants, conditions and obligations
hereof, on the part of the Lessee to be performed and observed, as though
such Condemnation had not occurred. In the event of any such Condemnation as
in this Paragraph 15.6 described, the entire amount of any such Award made
for such temporary use, whether paid by way of damages, rent or otherwise,
shall be paid to Lessee to the extent attributable to any period within the
Term (as extended by any already exercised options to extend or options
thereafter timely exercised if applicable). Lessee covenants that upon the
termination of any such period of temporary use or occupancy as set forth in
this Paragraph 15.6, it will, at its sole cost and expense, restore the
Leased Property as nearly as may be reasonably possible, to the condition in
which the same was immediately prior to the Condemnation, unless such period
of temporary use or occupancy shall extend beyond the expiration of the Term,
in which case Lessee shall not be required to make such restoration, and in
such case, Lessee shall contribute to the cost of such restoration that
portion of
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its entire Award which is specifically allocated to such restoration in the
judgment or order of the court, if any.
ARTICLE XVI
16.1 EVENTS OF DEFAULT. Any one or more of the following events
shall be an AEvent of Default":
(a) if Lessee fails to make payment of the Rent payable by
Lessee under this Lease when the same becomes due and payable and such
failure is not cured by Lessee within a period of five (5) business days
after Notice thereof from Lessor; or
(b) if Lessee fails to observe or perform any other term,
covenant or condition of this Lease and such failure is not cured by Lessee
within a period of thirty (30) days after Notice thereof from Lessor, unless
such failure cannot with due diligence be cured within a period of thirty
(30) days, in which case such failure shall not be deemed an Event of Default
if Lessee proceeds promptly and with due diligence to cure the failure and
diligently completes the curing thereof. No Event of Default (other than a
failure to make payment of money) shall be deemed to exist under this clause
(b) during any time the curing thereof is prevented by an Unavoidable Delay,
provided that upon the cessation of such Unavoidable Delay, Lessee shall
remedy such default without further delay; or
(c) if Lessee (or any of its Affiliates) commits an "Event of
Default" under any of the Related Leases or any of the Other Leases. Without
limiting the foregoing, if Lessee commits an "Event of Default" under this
Lease, Lessee (and its Affiliates) shall thereby be in default (and shall
therefore have committed an "Event of Default") under all of the Related
Leases and the Other Leases; or
(d) if Lessee does any of the following:
(i) admit in writing its inability to pay its debts
generally as they become due;
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency law;
(iii) make a general assignment for the benefit of its
creditors;
(iv) consent to the appointment of a receiver of itself
or of the whole or any substantial part of its
property; or
(v) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any
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other applicable law or statute of the United States
of America or any state thereof; or
(e) if Lessee, on a petition in bankruptcy filed against it,
is adjudicated a bankrupt or an order for relief thereunder is entered
against it or a court of competent jurisdiction shall enter an order or
decree appointing, without the consent of Lessee, a receiver for Lessee or of
the whole or substantially all of its property or the Facility, or approving
a petition filed against Lessee seeking reorganization or arrangement of
Lessee under the Federal bankruptcy laws or other applicable law or statute
of the United States of America or any state thereof, and such judgment,
order or decree shall not be vacated or set aside within ninety (90) days
from the date of the entry thereof; or
(f) if Lessee shall be liquidated or dissolved, or shall
begin proceedings toward such liquidation or dissolution, or shall, in any
manner, permit the sale or divestiture of substantially all of its assets
other than in connection with a merger or consolidation of Lessee into, or a
sale of substantially all of Lessee's assets to, another corporation,
provided any such actions shall also constitute an Event of Default unless:
(i) the survivor of such merger or the purchaser of such assets shall assume
all of Lessee's obligations under this Lease by a written instrument, in form
and substance reasonably satisfactory to Lessor, stating that such instrument
of assumption is valid, binding and enforceable against the parties thereto
in accordance with its terms (subject to usual bankruptcy and other
creditor's rights exceptions); and (ii) immediately after giving effect to
any such merger, consolidation or sale, Lessee or the other corporation (if
not Lessee) surviving the same shall have a Consolidated Net Worth of not
less than Twenty Six Million Five Hundred Thousand Dollars ($26,500,000) and
a debt to equity ratio of not more than four to one (4.0:1.0), all as to be
set forth in an Officer's Certificate and delivered to Lessor within a
reasonable period of time after such merger, consolidation or sale; or
(g) if the estate or interest of Lessee in the Leased
Property or any part thereof be levied upon or attached in a proceeding and
the same shall not be vacated or discharged within the later of ninety (90)
days after commencement thereof or thirty (30) days after Notice thereof from
Lessor (unless Lessee shall be contesting such lien or attachment in good
faith in accordance with Article XII hereof), or a mechanic's or similar lien
is filed with respect to the Leased Property and is not released or bonded
around for a period exceeding sixty (60) days after Lessee first has
knowledge of the lien having been filed; or
(h) if, except as a result of damage, destruction or a
partial or total Condemnation, or Unavoidable Delay, Lessee voluntarily
ceases operations at the Facility for a period in excess of ten (10) days;
provided that Lessee may cease operations for more than ten (10) days (i) if
Lessee obtains Lessor's prior written approval, and (ii) so long as such
cessation of operations does not impair or threaten the status or
effectiveness of the operating license or other certification for operating
the Facility in accordance with its Primary Intended Use; or
(i) if any of Lessee's representations, covenants or
warranties expressly
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set forth in this Lease (or financial statements provided to Lessor) proves
to be untrue when made in any material respect which materially and adversely
affects Lessor; or
(j) if Lessee attempts to assign or sublease, in violation of
the provisions of this Lease;
(k) if Lessee fails to maintain in effect an operator's
license required to operate the Facility, or if Lessee otherwise ceases to
maintain in effect any license, permit, certificate or approval necessary or
otherwise required to operate the Facility in accordance with its Primary
Intended Use; or
(l) if Lessee and/or Karrington violates any of the Lease
Covenants described in Paragraph 23.2 hereof.
Upon the occurrence of an Event of Default, in addition to all of
Lessor's other remedies, Lessor may terminate this Lease by giving Lessee not
less than ten (10) business days Notice of such termination and upon the
expiration of the time fixed in such Notice, the Term shall terminate and all
rights of Lessee under this Lease shall cease.
In the event litigation is commenced with respect to any alleged
default under this Lease, the prevailing party in such litigation shall
receive, in addition to its damages incurred, such sum as the court shall
determine as its reasonable attorneys' fees, and all costs and expenses
incurred in connection therewith, including reasonable attorneys' fees and
costs incurred on appeal.
16.2 CERTAIN REMEDIES. Lessor shall have remedies and rights
provided in law and equity as a result of an Event of Default, including, to
the extent permitted by applicable Pennsylvania law, the right to appoint a
receiver as a matter of strict right without regard to the solvency of
Lessee, for the purpose of preserving the Leased Property and any portion
thereof, preventing waste, protecting and otherwise enforcing any and all of
Lessor's rights under this Lease and for any and all other purposes for which
a receiver is allowed under the laws of the Commonwealth of Pennsylvania.
Lessee hereby waives the right to notice of any hearing with respect to the
appointment of a receiver and waives the requirement for the posting of a
bond by any receiver. Without limiting the foregoing, if an Event of Default
occurs (and the event giving rise to such Event of Default has not been cured
within the curative period, if any, relating thereto as set forth in this
Lease) whether or not this Lease has been terminated pursuant to Paragraph
16.1, Lessee shall, to the extent permitted by law, and if required by Lessor
to so do, immediately surrender to Lessor the Leased Property pursuant to the
provisions of Paragraph 16.1 and quit the same and Lessor may enter upon and
repossess the Leased Property, in person, by agent or by a court-appointed
receiver, by reasonable force, summary proceedings, ejectment or otherwise,
and may remove Lessee and all other persons and any and all personal property
from the Leased Property subject to rights of any residents (and their
property) and to any requirements of law. Without limiting all other rights
and remedies of Lessor under this Lease and under law, Lessor shall have the
right to accelerate all Rent and therefore, upon Lessee's default, at
Lessor's option,
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all such Rent shall become immediately due and payable in accordance with
Paragraph 16.3, below. Further, without limiting all other rights and
remedies of Lessor under this Lease and under law, Lessor shall be entitled
to recover from Lessee, and Lessee shall therefore be liable for, all costs
of recovering possession (including without limitation all costs associated
with any receiver) and renovating the Leased Property or any portion thereof
for a new lessee and all other costs of any reletting or attempted reletting,
including, but not limited to, brokerage fees and reasonable attorneys fees,
except as limited by Paragraph 16.3 below.
16.3 DAMAGES. Neither (i) the termination of this Lease
pursuant to Section 16.1, (ii) the repossession of the Leased Property; (iii)
the failure of Lessor, notwithstanding reasonable good faith efforts, to
relet the Leased Property; nor (iv) the reletting of all or any portion
thereof, shall relieve Lessee of its liability and obligations hereunder, all
of which shall survive any such termination, repossession or reletting
(except for proceeds received on subletting). In the event of any such
termination, Lessee shall forthwith pay to Lessor all Rent due and payable
with respect to the Leased Property to and including the date of such
termination.
(a) Lessor shall not be deemed to have terminated this
Lease unless Lessor delivers written Notice to Lessee of such election. If
Lessor voluntarily elects to terminate this Lease upon an Event of Default,
then in addition to all remedies available to Lessor, Lessor may recover the
sum of:
(i) the worth at the time of award of the unpaid
Rent which had been earned at the time of termination;
(ii) the worth at the time of award of the amount
by which the unpaid Rent which would have been earned after termination until
tthe time of award exceeds the amount of such rental loss that Lessee proves
could have been reasonably avoided;
(iii) the worth at the time of award of the amount
by which the unpaid Rent for the balance of the Term after the time of award
exceeds the amount of such rental loss that Lessee proves could be reasonably
avoided; and
(iv) any other amount necessary to compensate
Lessor for all the detriment proximately caused by Lessee's failure to
perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom.
The "worth at the time of award" of the amounts
referred to in subparagraphs (i) and (ii) above is computed by allowing
interest at the Overdue Rate. The worth at the time of award of the amount
referred to in subparagraph (iii) is computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1%).
(b) Without limiting Lessor's other remedies provided
herein and
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provided by law, Lessor may continue the Lease in effect after Lessee's
breach and abandonment and recover Rent as it becomes due, provided that, in
such event, Lessee has the right to sublet or assign subject only to
reasonable conditions imposed by Lessor. Accordingly, without termination of
Lessee's right to possession of the Leased Property, Lessor may demand and
recover each installment of Rent and other sums payable by Lessee to Lessor
under the Lease as the same becomes due and payable, which Rent and other
sums shall bear interest at the maximum interest rate permitted in accordance
with the laws of the Commonwealth of Pennsylvania (or the Overdue Rate,
whichever is lower), from the date when due until paid, and Lessor may
enforce, by action or otherwise, any other term or covenant of this Lease.
If Lessor elects to recover each installment of Rent as it becomes due, then
Lessor may file any number of lawsuits for the recovery of the amounts due
hereunder.
16.4 WAIVER. If this Lease is terminated pursuant to Paragraph
16.1, Lessee waives, to the extent permitted by applicable law, the benefit
of any laws now or hereafter in force exempting property from liability for
rent or for debt.
16.5 APPLICATION OF FUNDS. Any payments received by Lessor
under any of the provisions of this Lease during the existence or continuance
of any Event of Default shall be applied to Lessee's obligations in the order
which Lessor may determine or as may be prescribed by the laws of the
Commonwealth of Pennsylvania.
ARTICLE XVII
17. LESSOR'S RIGHT TO CURE LESSEE'S DEFAULT. If Lessee fails
to make any payment or to perform any act required to be made or performed
under this Lease, and to cure the same within the relevant time periods, if
any, provided under this Lease, Lessor, after thirty (30) days Notice to and
demand upon Lessee, and without waiving or releasing any obligation of Lessee
or default, may (but shall be under no obligation to) at any time thereafter
make such payment or perform such act for the account and at the expense of
Lessee, and may, to the extent permitted by law, enter upon the Leased
Property for such purpose and take all such action thereon as, in Lessor's
opinion, may be necessary or appropriate therefor. Provided, however, that
should Lessor reasonably determine that the giving of such Notice would risk
loss to the Leased Property or any portion thereof or cause damage to Lessor,
then Lessor shall give such written Notice as is practical under the
circumstances. No such entry shall be deemed an eviction of Lessee. In
exercising any remedy under this Article XVII, Lessor shall use its good
faith efforts not to violate any rights of residents of the Facility. All
sums so paid by Lessor and all costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses, in each case) so
incurred, together with a late charge thereon (to the extent permitted by
law) at the Overdue Rate from the date on which sums or expenses are paid or
incurred by Lessor, shall be paid by Lessee to Lessor on demand. The
obligations of Lessee and rights of Lessor contained in this Article shall
survive the expiration or earlier termination of this Lease.
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ARTICLE XVIII
18.1 OPTIONS TO EXTEND. Provided there exists no uncured Event
of Default under any of this Lease, the Related Leases and the Other Leases
at the time Lessee exercises any option to extend (in accordance with this
Article XVIII), Lessee will have the right to extend this Lease for two (2)
periods of ten (10) years each (each such additional term shall be referred
to herein as an "Extended Term"), commencing immediately following the end of
the Initial Term or the immediately preceding Extended Term, as the case may
be; provided, however, that notwithstanding anything stated in this Paragraph
18.1 or elsewhere in this Lease, Lessee shall not be entitled to exercise its
option to extend this Lease for any Extended Term (and any such option to
extend shall automatically expire and terminate) unless Lessee concurrently
exercises its option to extend all the Related Leases for the same period, as
provided in Article XVIII of the Related Leases. The Lease during any
Extended Term shall be on the same terms and conditions as during the Initial
Term, except that the Minimum Rent shall be determined as set forth in
Paragraph 18.2 below. In the event Lessee desires to exercise any option to
extend granted in this Article XVIII, Lessee shall give Landlord written
notice ("Notice to Extend") not less than one hundred eighty (180) days prior
to the expiration of the Initial Term or the immediately preceding Extended
Term, as the case may be. If Lessee fails to give Lessor any such notice,
then Lessor shall give Lessee written notice that Lessor has not received
Lessee's Notice to Extend. If Lessee fails to deliver to Lessor the Notice
to Extend within ten (10) days thereafter, Lessee shall be deemed to have
elected not to extend this Lease and the Related Leases, such option to
extend and all future options to extend granted in this Article XVIII or in
the Related Leases shall be null and void and of no further force or effect.
18.2 MINIMUM RENT DURING EXTENDED TERMS. The Minimum Rent at
the commencement of each Extended Term shall be Minimum Rent, as determined
below.
(a) The Minimum Rent for the first year of the first
Extended Term shall be $1,144,506.03 and shall be increased annually
thereafter in accordance with the method described in Paragraph 3.1.2, above.
(b) The Minimum Rent for the first year of the second
Extended Term shall be $1,395,146.47 and shall be increased annually
thereafter in accordance with the method described in Paragraph 3.1.2, above.
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ARTICLE XIX
19. HOLDING OVER. If Lessee shall for any reason remain in
possession of the Leased Property after the expiration of the Term or earlier
termination of the Term hereof, such possession shall be as a month-to-month
tenant during which time Lessee shall pay as rental each month, one and
one-quarter times the aggregate of (i) one-twelfth of the aggregate Minimum
Rent payable with respect to the last Lease Year of the Term; (ii) all
Additional Charges accruing during the month; and (iii) all other sums
payable by Lessee pursuant to the provisions of this Lease. During such
period of month-to-month tenancy, Lessee shall be obligated to perform and
observe all of the terms, covenants and conditions of this Lease, but shall
have no rights hereunder other than the right, to the extent given by law to
month-to-month tenancies, to continue its occupancy and use of the Leased
Property. Nothing contained herein shall constitute the consent, express or
implied, of Lessor to the holding over of Lessee after the expiration or
earlier termination of this Lease.
ARTICLE XX
20. RISK OF LOSS. During the Term of this Lease, the risk of
loss or of decrease in the enjoyment and beneficial use of the Leased
Property in consequence of the damage or destruction thereof by fire, the
elements, casualties, thefts, riots, wars or otherwise, or in consequence of
foreclosures, attachments, levies or executions (other than those caused by
or through Lessor) is assumed by Lessee, and Lessor shall in no event be
answerable or accountable therefor, nor shall any of the events mentioned in
this Paragraph entitle Lessee to any abatement of Rent except as specifically
provided in this Lease, or any right to terminate this Lease, except as
provided in Paragraph 14.7, above. Without limiting the foregoing, Lessor
shall not be liable for injury or damage to the person or goods, wares,
merchandise or other property of Lessee, Lessee's employees, contractors,
invitees, customers, or any other person in or about the Leased Premises,
whether such damage or injury is caused by or results from fire, steam,
electricity, gas, water or rain, or from the breakage, leakage, obstruction
or other defects of pipes, fire sprinklers, wires, appliances, plumbing, air
conditioning, or lighting fixtures, or from any other cause, whether the said
injury or damage results from conditions arising upon the Leased Premises or
upon other portions of the Land, or any part thereof, or from other sources
or places, and regardless of whether the cause of such damage or injury or
the means of repairing the same is accessible or not. Lessor shall not be
liable for any damages arising from any act or neglect of Lessee, or any
other party named above. Lessor shall, however, remain liable for any
damages arising from Lessor's own gross negligence or willful misconduct.
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ARTICLE XXI
21. INDEMNIFICATION. Notwithstanding the existence of any
insurance provided for in Article XIII, and without regard to the policy
limits of any such insurance, Lessee will protect, indemnify, hold harmless
and defend Lessor from and against all liabilities, obligations, claims,
demands damages, penalties, causes of action, costs, and expenses (including,
without limitation, actual reasonable attorneys' fees and expenses), to the
extent permitted by law, imposed upon or incurred by or asserted against
Lessor by reason of any of the following (except to the extent solely
attributable to Lessor's gross negligence or willful misconduct): (a) any
accident, injury to or death of persons or loss of or damage to property
occurring on or about the Leased Property or adjoining sidewalks, including
without limitation any claims of malpractice, whether arising in connection
with events occurring prior to or after the Commencement Date hereunder
(except to the extent such events occur after the expiration of this Lease);
(b) any occupancy, use, misuse, non-use, condition, maintenance, or repair by
Lessee of the Leased Property; (c) any Impositions (which are the obligations
of Lessee to pay pursuant to the applicable provisions of this Lease, which
include any Impositions arising prior to the Commencement Date); (d) any
failure on the part of Lessee to perform or comply with any of the terms of
this Lease, (e) the non-performance of any of the terms and provisions of any
and all existing and future subleases of the Leased Property to be performed
by the landlord (Lessee) thereunder; (f) any Hazardous Materials, as defined
in Paragraph 10.2, above that now or hereafter during the Term may be located
in, on or around, or affecting, any part of the Land or Leased Improvements;
(g) any and all other matters pertaining to the Leased Property or the
operation of the Facility after the date of this Lease during the Term,
including without limitation compliance with or failure to comply with the
provisions of Section 8 of the United States Housing Act of 1937, and the
provisions of the Fair Housing Amendments Act of 1988, each as amended from
time to time; (h) any liability relating to the construction or development
of the Facility, including patent or latent defects in the Facility, whether
arising in connection with events occurring prior to or after the
Commencement Date hereunder, including without limitation compliance with or
failure to comply with the provisions of the federal Americans with
Disabilities Act, as amended from time to time; and (i) third party claims of
any kind relating to the Leased Property, the Facility, the operations at the
Facility or otherwise, and any and all other matters whatsoever relating to
the Leased Property, the assisted living facility located thereon and the
operation thereof. Any amounts which became payable by Lessee under this
Paragraph shall be paid within ten (10) days of the date the same becomes due
and if not timely paid, shall bear a late charge (to the extent permitted by
law) at the Overdue Rate from the date of such determination to the date of
payment. Lessee, at its expense, shall contest, resist and defend any such
claim, action or proceeding asserted or instituted against Lessor or may
compromise or otherwise dispose of the same as Lessee sees fit, at Lessee's
sole cost, but after consultation with and approval by Lessor, which approval
shall not be unreasonably withheld or delayed. Nothing herein shall be
construed as indemnifying Lessor against its own gross negligence or willful
misconduct. Lessee's liability for a breach of the provisions of this
article arising during the Term hereof shall survive any termination of this
Lease.
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ARTICLE XXII
22. SUBLETTING AND ASSIGNMENT. Except as provided hereinbelow
to the contrary, Lessee may not assign, sublease or sublet, encumber,
appropriate, pledge or otherwise transfer, the Lease or the leasehold or
other interest in the Leased Property without Lessor's prior written consent,
which consent may be withheld or granted in Lessor's sole and absolute
discretion; provided, however, that Lessee may from time to time during the
Term of this Lease enter into rental agreements with residents of the
Facility, and execute any documents necessary in connection therewith,
without obtaining Lessor's prior consent. Notwithstanding the foregoing
provisions of this Paragraph 22, (a) Lessee and its permitted assigns shall
be entitled, at any time without first obtaining the consent of Lessor, to
sublease up to the greater of (i) 2,000 square feet, or (ii) ten percent
(10%) of the total square footage of the Facility, to any person or entity
providing any services related or ancillary to the operation of the Facility
or in connection with the provision of home health services both within and
outside the Facility; (b) so long as Lessee is lessee under this Lease,
Lessee shall be entitled, at any time without first obtaining the consent of
Lessor to sell, assign and convey to Karrington Health, Inc., an Ohio
corporation ("Karrington"), either (i) all (but not less than all) of
Lessee's leasehold interest in all of the Leased Property or (ii) all of the
issued and outstanding stock of Lessee; and (c) in the event that there
occurs a change in control in respect to the ownership of Karrington, whether
by merger, sale, or transfer of substantially all of Karrington's assets
(other than in the ordinary course of Karrington's business) or otherwise,
including without limitation the acquisition by any one person or entity of
thirty-five percent (35%) or more of the issued and outstanding stock of
Karrington (any of the foregoing, a "Change of Control"), and so long as the
surviving entity at the conclusion of such Change of Control has a net worth
of Twenty Six Million Five Hundred Thousand Dollars ($26,500,000) or more and
a debt to equity ratio of not more than four to one (4.0:1.0) (which net
worth and debt to equity ratio are greater than or substantially similar to
Karrington's as of the date hereof), Karrington or Lessee, as the case may
be, shall be entitled, without first obtaining the consent of Lessor, to
assign all of its right, title and interest in and to this Lease to said
surviving entity, so long as, under any of the scenarios described in this
Paragraph 22, Lessor is notified of such assignment or conveyance in writing
within five (5) business days thereafter. Upon Lessor's consent, (w) in the
case of a subletting, the sublessee shall comply with the provisions of
Paragraph 22.2, (x) in the case of an assignment, the assignee shall assume
in writing and agree to keep and perform all of the terms of this Lease on
the part of Lessee to be kept and performed and shall be, and become, jointly
and severally liable with Lessee for the performance thereof, (y) an original
counterpart of each sublease and assignment and assumption, duly executed by
Lessee and such sublessee or assignee, as the case may be, in form and
substance satisfactory to Lessor, shall be delivered promptly to Lessor, and
(z) in case of either an assignment or subletting, Lessee shall remain
primarily liable, as principal rather than as surety, for the prompt payment
of the Rent and for the performance and observance of all of the covenants
and conditions to be performed by Lessee hereunder.
22.1 ATTORNMENT. Lessee shall insert in each sublease
permitted under Paragraph 22 provisions to that effect that (i) such sublease
is subject and subordinate to all of the terms and provisions of this Lease
and to the rights of Lessor hereunder; (ii) in the event this Lease shall
terminate before the expiration of such sublease, the sublessee thereunder
will, at Lessor's option,
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attorn to Lessor and waive any right the sublessee may have to terminate the
sublease or to surrender possession thereunder, as a result of the
termination of this Lease; and (iii) in the event the sublessee receives a
written Notice from Lessor or Lessor's assignees, if any, stating that Lessee
is in default under this Lease, the sublessee shall thereafter be obligated
to pay all rentals accruing under said sublease directly to the party giving
such Notice, or as such party may direct. All rents received from the
sublessee by Lessor or Lessor's assignees, if any, as the case may be, shall
be credited against amounts owing by Lessee under this Lease.
22.2 SUBLEASE LIMITATION. Anything contained in this Lease to
the contrary notwithstanding, Lessee shall not sublet the Leased Property on
any basis such that the rental to be paid by the sublessee thereunder would
be based, in whole or in part, on either (i) the income or profits derived by
the business activities of the sublessee; or (ii) any other formula such that
any portion of the sublease rental received by Lessor would fail to qualify
as Arents from real property" within the meaning of Paragraph 856(d) of the
Code, or any similar or successor provision thereto.
ARTICLE XXIII
23. OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS; LEASE
COVENANTS.
23.1 OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS.
(a) At any time from time-to-time upon not less than
twenty (20) days Notice by Lessor, Lessee will furnish to Lessor an Officer's
Certificate certifying that this Lease is unmodified and in full force and
effect (or that this Lease is in full force and effect as modified and
setting forth the modifications), the date to which the Rent has been paid
and such other information concerning this Lease as may be reasonably
requested by Lessor. Any such certificate furnished pursuant to this
Paragraph may be relied upon by Lessor and any prospective purchaser or
lender of the Leased Property.
(b) In addition to all other obligations to provide
financial information contained in the Lease, Lessee will furnish the
following statements to Lessor:
(i) within one hundred twenty (120) days after the
end of each Lease Year, an Officer's Certificate stating that to the best of
the signer's knowledge and belief after making reasonable inquiry, Lessee is
not in default in the performance or observance of any of the terms of this
Lease, or if Lessee shall be in default to its knowledge, specifying all such
defaults, the nature thereof, and the steps being taken to remedy the same,
and
(ii) with reasonable promptness, such other
information respecting the financial condition and affairs of Lessee as
Lessor may reasonably request from time-to-time.
(c) Within one hundred twenty (120) days after the end of
each Fiscal Year, Lessee agrees to provide to Lessor Consolidated Financials
of Lessee for such Fiscal Year.
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23.2 LEASE COVENANTS. Lessee warrants, covenants and
represents to Lessor that prior to December 31, 1999, Karrington shall not
undertake or accomplish any of the following: (a) buy back any of the stock
of Karrington; (b) declare a dividend to Karrington stockholders; or (c)
repay any loan or other indebtedness to any current or former directors,
officers, shareholders or affiliates of Karrington; provided, however, that
Karrington shall be allowed to do any of the foregoing only up to a total
combined amount equal to or less than fifty percent (50%) of a total amount
of equity funding actually received by Karrington from the Commencement Date
through December 31, 1999. Notwithstanding the foregoing, Karrington shall
be entitled, prior to December 31, 1999, to do any of the following: (d)
repay to JMAC the Four Million Dollar ($4,000,000) bridge loan entered into
on or about April 1, 1998, so long as the entire outstanding balance of such
bridge loan has been used substantially in accordance with the use of
proceeds attached to this Lease as Exhibit "D", (e) grant to JMAC the right
to convert to equity in Karrington all or any portion of its existing debt to
Karrington, in the approximate amount of Seven Million Five Hundred Thousand
Dollars ($7,500,000); and (f) upon a Change of Control of Karrington, so
long as the surviving entity at the conclusion of such Change of Control has
a net worth of Twenty-Six Million Five Hundred Thousand Dollars ($26,500,000)
or more and a debt to equity ratio of not more than four to one (4.0:1.0),
Karrington shall be entitled to pay off any and all debts which it may have
to JMAC. Lessee acknowledges and agrees that Lessor has entered into this
Lease in material reliance on the foregoing warranties, covenants and
representations (the "Lease Covenants"). Lessee further acknowledges that
certain of the Lease Covenants concern the activities of Karrington rather
than Lessee and that any violation or breach of any of the Lease Covenants,
whether by Lessee or Karrington shall be an Event of Default hereunder.
ARTICLE XXIV
24. LESSOR'S RIGHT TO INSPECT. Lessee shall permit Lessor and
its authorized representatives to inspect the Leased Property on at least one
(1) Business Day's prior notice during usual business hours subject to any
security, health, safety, or confidentiality requirements of Lessee or any
governmental agency or insurance requirement relating to the Leased Property,
or imposed by law or applicable regulations. Lessor shall take reasonable
steps to avoid interference with the residents.
ARTICLE XXV
25. NO WAIVER. The waiver by Lessor or Lessee of any term,
covenant or condition in this Lease shall not be deemed to be a waiver of any
other term, covenant or condition or any subsequent waiver of the same or any
other term, covenant or condition contained in this Lease. The subsequent
acceptance of rent hereunder by Lessor or any payment by Lessee shall not be
deemed to be a waiver of any preceding default of any term, covenant or
condition of this Lease, other than the failure to pay the particular amount
so received and accepted, regardless of the knowledge of any preceding
default at the time of the receipt or acceptance.
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ARTICLE XXVI
26. REMEDIES CUMULATIVE. To the extent permitted by law, each
legal, equitable or contractual right, power and remedy of Lessor now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right,
power and remedy and the exercise or beginning of the exercise by Lessor of
any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Lessor of any or all of such other
rights, powers and remedies.
ARTICLE XXVII
27. ACCEPTANCE OF SURRENDER. No surrender to Lessor of this
Lease or of the Leased Property or any part thereof, or of any interest
therein, shall be valid or effective unless agreed to and accepted in writing
by Lessor and no act by Lessor or any representative or agent of Lessor,
other than such a written acceptance by Lessor, shall constitute an
acceptance of any such surrender.
ARTICLE XXVIII
28. NO MERGER OF TITLE. There shall be no merger of this
Lease or of the leasehold estate created hereby by reason of the fact that
the same person, firm, corporation, or other entity may acquire, own or hold,
directly or indirectly, (a) this Lease or the leasehold estate created hereby
or any interest in this Lease or such leasehold estate; and (b) the fee
estate in the Leased Property.
ARTICLE XXIX
29. CONVEYANCE BY LESSOR. If Lessor or any successor owner of
the Leased Property shall transfer or assign Lessor's title or interest in
the Leased Property or this Lease other than as security for a debt, and
provided the new owner has agreed in writing for the benefit of Lessee to
recognize this Lease and be bound by all of the terms and conditions hereof,
Lessor shall thereupon be released from all future liabilities and
obligations of Lessor under this Lease arising or accruing from and after the
date of such transfer or assignment and all such future liabilities and
obligations shall thereupon be binding upon the new owner.
ARTICLE XXX
30. QUIET ENJOYMENT. So long as Lessee shall pay all Rent as
the same becomes due and shall comply with all of the terms of this Lease and
perform its obligations hereunder, and except for any claims, actions, liens
or encumbrances arising from the acts or omissions of Lessee or otherwise
from events occurring prior to the Commencement Date hereunder, Lessee shall
peaceably and quietly have, hold and enjoy the Leased Property for the Term
hereof, free of any claim or other action by Lessor or anyone claiming by,
through or under Lessor, but subject to all liens and encumbrances of record
as of the date hereof or hereafter
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consented to by Lessee. Except as otherwise provided in this Lease, no
failure by Lessor to comply with the foregoing covenant or any covenant of
this Lease shall give Lessee any right to xxxxx, reduce or made a deduction
from or offset against the Rent or any other sum payable under this Lease, or
to fail to perform any other obligation of Lessee hereunder.
ARTICLE XXXI
31. NOTICES. All notices, demands, requests, consents,
approvals, and other communications ("Notice" or "Notices") hereunder shall
be in writing and personally served upon an Executive Officer of the party
being served or mailed (by registered or certified mail, return receipt
requested and postage prepaid), overnight delivery service addressed to the
respective parties, as follows:
(a) If to Lessee: Karrington Operating Company, Inc.
000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx,
Chief Financial Officer
with a copy to: Xxxxxxx & Xxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. XxXxxxxx, Esq.
(b) If to Lessor: Missouri River Corporation
c/o LTC Properties, Inc.
000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx
with a copy to: LTC Properties, Inc.
000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
and: Xxxxxxxxx, Wolff, Aronson, Xxxxxxx & Xxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
or to such other address as either party may hereafter designate by a Notice
pursuant to this Paragraph. Personally delivered Notice (including Notices
sent by overnight delivery service) shall be effective upon receipt, and
Notice given by mail shall be completed five (5) days after the time of
deposit in the U.S. Mail system. For the purposes hereof, the term
AExecutive Officer" shall
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mean the Chairman of the Board of Directors, the President, any Vice
President, or the Secretary of the corporation upon which service is to be
made.
ARTICLE XXXII
32.1 LESSOR MAY GRANT LIENS. Lessor may, subject to
the terms and conditions set forth below in this Paragraph 32.1, from
time-to-time, directly or indirectly, create or otherwise cause to exist any
lien or encumbrance or any other change of title ("Encumbrance") upon the
Leased Property, or any portion thereof or interest therein, whether to
secure any borrowing or other means of financing or refinancing. Any such
Encumbrance shall contain the right to prepay (whether or not subject to a
prepayment penalty) and shall provide that it is subject to the rights of
Lessee under this Lease, provided that any holder of an Encumbrance shall (a)
give Lessee the same notice, if any, given to Lessor of any default or
acceleration of any obligation underlying any such mortgage or any sale in
foreclosure under such mortgage; (b) permit Lessee to cure any such default
on Lessor's behalf within any applicable cure period, and Lessee shall be
reimbursed by Lessor or shall be entitled to offset against Minimum Rent
payments next accruing or coming due for any and all costs incurred in
effecting such cure, including, without limitation, out-of-pocket costs
incurred to effect any such cure (including reasonable attorneys' fees); (c)
permit Lessee to appear and to bid at any sale in foreclosure made with
respect to any such mortgage, and (d) provide that in the event of
foreclosure or other possession of the Leased Property by the Mortgagee, that
the Mortgagee shall be bound by the terms and provisions of this lease. Upon
the reasonable request of Lessor, Lessee shall execute an agreement to the
effect that this Lease shall be subject and subordinate to the lien of a new
mortgage on the Leased Property and that in the event of any default or
foreclosure under such mortgage, Lessee shall attorn to the new mortgagee,
and as otherwise requested by Lessor; provided that the proposed mortgagee
execute a non-disturbance agreement recognizing this Lease and agreeing, for
itself and its successor and assigns, to comply with the provisions of this
Article XXXII.
32.2 LESSEE'S RIGHT TO CURE. Subject to the
provisions of Paragraph 32.3, if Lessor breaches any covenant to be
performed by it under this Lease, Lessee, after Notice to and demand upon
Lessor, without waiving or releasing any obligation hereunder, and in
addition to any other remedies available to Lessee, may (but shall be under
no obligation at any time thereafter to) make such payment or perform such
act for the account and at the expense of Lessor. All sums so paid by
Lessee and all costs and expenses (including, without limitation,
reasonable attorneys' fees) so incurred, together with interest thereon (at
the Overdue Rate) from the date on which such sums or expenses are paid or
incurred by Lessee, shall be paid by Lessor to Lessee on demand, but may
not be offset by Lessee against Minimum Rent payments. The rights of
Lessee hereunder to cure and to secure payment from Lessor in accordance
with this Paragraph 32.2 shall survive the termination of this Lease.
32.3 DEFAULT BY LESSOR. It shall be a default of
this Lease if Lessor fails to observe or perform any term, covenant or
condition of this Lease on its part to be performed, and such failure shall
continue for a period of ten (10) days after Notice thereof from Lessee in
the case of a monetary default or thirty (30) days after Notice thereof
from Lessee (or such shorter time as
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may be required in order to protect the health or welfare of any patients or
other residents of the Leased Property) in the case of a non-monetary
default, unless in the case of a non-monetary default such failure cannot
with due diligence be cured within a period of thirty (30) days, in which
case such failure shall not be deemed to continue if Lessor, within said
thirty (30) day period, proceeds promptly, continuously and with due
diligence to cure the failure and diligently completes the curing thereof.
The time within which Lessor shall be obligated to cure any such failure
shall also be subject to extension of time due to the occurrence of any
Unavoidable Delay.
ARTICLE XXXIII
33. MISCELLANEOUS.
33.1 SURVIVAL OF OBLIGATIONS. Anything contained in
this Lease to the contrary notwithstanding, all claims against, and
liabilities of, Lessee or Lessor arising prior to, or in connection with
any event occurring prior to, the date of any expiration or termination of
this Lease or the date of Lessee's surrender of possession of the Leased
Property, whichever is later, shall survive such termination or surrender
of possession.
33.2 LATE CHARGES; INTEREST. If any interest rate
provided for in any provision of this Lease is based upon a rate in excess
of the maximum rate permitted by applicable law, the parties agree that
such charges shall be fixed at the maximum permissible rate.
33.3 LIMITS OF LESSOR'S LIABILITY. Lessee
specifically agrees to look solely to the assets of Lessor for recovery of
any judgment against Lessor, it being specifically agreed that no
constituent shareholder, officer or director of Lessor shall ever be
personally liable for any such judgment or the payment of any monetary
obligation to Lessee. The provision contained in the foregoing sentence is
not intended to, and shall not, limit any right that Lessee might otherwise
have to obtain injunctive relief against Lessor or Lessor's successors in
interest, or any action not involving the personal liability of Lessor
(original or successor). Additionally, Lessor shall be exonerated from any
further liability under this Lease upon Lessor's transfer or other
divestiture of its ownership of the Leased Property, provided that the
assignee or grantee shall expressly assume in writing the obligations of
Lessor hereunder. Furthermore, in no event shall Lessor (original or
successor) ever be liable to Lessee for any indirect or consequential
damages suffered by Lessee from whatever cause.
33.4 LIMITS OF LESSEE'S LIABILITY. Lessor
specifically agrees to look solely to the assets of Lessee for recovery of
any judgment against Lessee, it being specifically agreed that no
constituent shareholder, officer or director of Lessee shall ever be
personally liable for any such judgment or the payment of any monetary
obligation to Lessor. The provision contained in the foregoing sentence is
not intended to, and shall not, limit any right that Lessor might otherwise
have to obtain injunctive relief against Lessee or Lessee's successors in
interest, or any action not involving the personal liability of Lessee
(original or successor). Furthermore, in no event shall Lessee (original
or successor) ever be liable to Lessor for any indirect or consequential
damages suffered by Lessor from whatever cause.
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33.5 TRANSFER OF OPERATIONS. At Lessor's request,
upon the expiration or earlier termination of the Term, Lessee shall use
its best efforts to transfer to Lessor or Lessor's nominee (or to cooperate
with Lessor or Lessor's nominee in connection with the processing by Lessor
or Lessor's nominee of any applications for) all licenses, operating
permits and other governmental authorizations and all contracts, including
contracts with governmental or quasi-governmental entities which may be
necessary for the operation of the Facility; provided that the costs and
expenses of any such transfer or the processing of any such application
shall be paid by Lessor or Lessor's nominee.
33.6 ADDENDUM, AMENDMENTS AND EXHIBITS. Any
addendum, amendments and exhibits attached to this Lease are hereby
incorporated in this Lease and made a part of this Lease.
33.7 HEADINGS. The headings and paragraph titles in
this Lease are not a part of this Lease and shall have no effect upon the
construction or interpretation of any part of this Lease.
33.8 TIME. Time is of the essence of this Lease and
each and all of its provisions.
33.9 DAYS. Unless otherwise expressly indicated
herein, any reference to "days" in this Lease shall be deemed to refer to
calendar days.
33.10 RENT. Each and every monetary obligation under
this Lease shall be deemed to be "Rent" under this Lease and for all other
purposes under law.
33.11 APPLICABLE LAW; VENUE. This Lease shall be
governed by and construed in accordance with the laws of the Commonwealth
of Pennsylvania, but not including its conflicts of laws rules; thus the
law that will apply is the law applicable to a transaction solely within
the Commonwealth of Pennsylvania. Notwithstanding the application of the
laws of the Commonwealth of Pennsylvania, each party hereto hereby
irrevocably submits itself to the jurisdiction of the state courts of the
State of California and to the jurisdiction of the United States District
Court for the Central District of California, for the purpose of any suit,
action or other proceeding arising out of or based upon this Lease or the
subject matter hereof brought by either party hereto and such suit, action
or other proceedings shall be conducted in the State or Federal courts
located in Los Angeles, California.
33.12 SUCCESSORS AND ASSIGNS. The covenants and
conditions contained in this Lease shall, subject to the provisions
regarding assignment (Article XXII), apply to and bind the heirs,
successors, executors, administrators, and assigns of Lessor and Lessee.
33.13 RECORDATION. Lessor and Lessee shall execute
with appropriate acknowledgments and record in the Official Records of the
county in which the Leased Property is located, that certain Memorandum of
Lease in the form and content of Exhibit "C" attached hereto.
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Lessor and Lessee shall equally share the cost of recording the Memorandum of
Lease. In no event shall this Lease otherwise be recorded.
33.14 PRIOR AND FUTURE AGREEMENTS. This Lease
contains all of the agreements of Lessor and Lessee with respect to any
matter covered or mentioned in this Lease, and no prior agreements or
understanding pertaining to any such matters shall be effective for any
purpose. No provision of this Lease may be amended or supplemented except
by an agreement in writing signed by both Lessor and Lessee or their
respective successors in interest. This Lease shall not be effective or
binding on any party until fully executed by both Lessor and Lessee.
33.15 PARTIAL INVALIDITY. Any provision of this Lease
which shall be held by a court of competent jurisdiction to be invalid,
void or illegal shall in no way affect, impair or invalidate any other
provision or term of this Lease, and such other provision or terms shall
remain in full force and effect.
33.16 ATTORNEYS' FEES. In the event of any action or
proceeding brought by one party against the other under this Lease, the
prevailing party shall be entitled to recover its reasonable attorneys' fees
in such action or proceeding from the other party, including all attorneys'
fees incurred in connection with any appeals, and any post-judgment
attorneys' fees incurred in efforts to collect on any judgment.
33.17 AUTHORITY OF LESSOR AND LESSEE. Lessor and
Lessee each hereby represent and warrant that the individuals signing on
its behalf are duly authorized to execute and deliver this Lease on behalf
of the corporation, in accordance with the bylaws of the corporation, and
that this Lease is binding upon the corporation.
33.18 RELATIONSHIP OF THE PARTIES. Nothing contained
in this Lease shall be deemed or construed by Lessor or Lessee, nor by any
third party, as creating the relationship of principal and agent or a
partnership, or a joint venture by Lessor or Lessee, it being understood
and agreed that no provision contained in this Lease nor any acts of Lessor
and Lessee shall be deemed to create any relationship other than the
relationship of landlord and tenant.
33.19 COUNTERPARTS. This Lease may be executed in one
or more separate counterparts, each of which, once they are executed, shall
be deemed to be an original. Such counterparts shall be and constitute one
and the same instrument.
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33.20 BROKERS. Lessor and Lessee each warrants that
it has had no dealings with any real estate broker or agent in connection
with the negotiation of this Lease and it knows of no real estate broker or
agent who is entitled to a commission in connection with this Lease.
Lessor and Lessee hereby agree to indemnify the other and to hold the other
harmless from and against any and all costs, expenses, claims, damages,
suits, including attorneys' fees, in any way resulting from claims or
demands for commissions or other compensation from any real estate brokers
claiming through such party with respect to this Lease.
33.21 NEW COMBINED LEASE. The parties agree that at
any time during the Term of this Lease, upon the written request of Lessor,
Lessor and Lessee shall execute a new lease merging this Lease and the
lease entered into between the Lessor and Lessee, dated May 21, 1998, for
that certain assisted living facility commonly known as Karrington at Rocky
River located in the City of Rocky River, State of Ohio. The new combined
lease for both facilities shall incorporate all of the same terms and
conditions as set forth in each individual lease and shall provide for the
aggregation of all payments due under each lease.
WHEREFORE, each of the parties has accepted and agreed by affixing
their respective authorized signatures below as of the date first above
written.
[SIGNATURE CONTINUED ON NEXT PAGE]
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[SIGNATURE CONTINUED FROM PREVIOUS PAGE]
"LESSEE"
SIGNED AND ACKNOWLEDGED KARRINGTON OPERATING COMPANY, INC.,
IN PRESENCE OF: AN OHIO CORPORATION
/s/ Xxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxxx
----------------------------- ---------------------------------------
Printed: Xxx X. Xxxxxxx Its: President and Chief Operating Officer
-------------------- --------------------------------------
SIGNED AND ACKNOWLEDGED
IN PRESENCE OF:
/s/ Xxxxx X. Xxxxxxxxx
-----------------------------
Printed: Xxxxx X. Xxxxxxxxx
---------------------
[SIGNATURE CONTINUED ON NEXT PAGE]
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[SIGNATURE CONTINUED FROM PREVIOUS PAGE]
"LESSOR"
SIGNED AND ACKNOWLEDGED MISSOURI RIVER CORPORATION,
IN THE PRESENCE OF: A DELAWARE CORPORATION
/s/ Xxxx Xxxxxxxxx BY: /s/ Xxxx X. Xxxxxx
----------------------------------- -----------------------------
PRINTED NAME: Xxxx Xxxxxxxxx ITS: Assistant Secretary
---------------------- ----------------------------
/s/ Xxxxxxxxx X. Xxxxxx
-----------------------------------
PRINTED NAME: Xxxxxxxxx X. Xxxxxx
-----------------------------------
ACKNOWLEDGEMENT
STATE OF CALIFORNIA )
) SS.
COUNTY OF LOS ANGELES)
The foregoing instrument was acknowledged before me on this 28th
day of June, 1998, by Xxxx X. Xxxxxx, Assistant Secretary of Missouri River
Corporation, a Delaware corporation, on behalf of the corporation.
/s/ Xxxxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxxxx X. Xxxxxx Notary Public
My Commission Expires:
[STAMP]
June 22, 1999
-----------------------------------
ACKNOWLEDGEMENT
STATE OF OHIO )
) SS.
COUNTY OF FRANKLIN)
The foregoing instrument was acknowledged before me on this 26th
day of June, 1998, by Xxxx X. Xxxxxxxx, President and Chief Operating
Officer of Karrington Operating Company, Inc., an Ohio Corporation, on
behalf of the corporation.
/s/ Xxx X. Xxxxxxx
-------------------------
Notary Public
[STAMP]
My Commission Expires:
September 29, 1999
--------------------------
INDEX OF EXHIBITS
Exhibit "A" - Legal Description
Exhibit "B" - Related Leases
Exhibit "C" - Memorandum of Lease
Exhibit "D" - Approved Use of Proceeds
EXHIBIT A
Legal Description
Erie Real Property
EXHIBIT "B"
RELATED LEASES*
1. That certain Lease and Sublease dated April 21, 1998 by and
between LTC-Ohio, Inc., as "Lessor and Sublessor", and Karrington
Operating Company, Inc., as "Lessee and Sublessee", for those four
(4) assisted living facilities commonly known as Karrington on the
Scioto, Karrington Place, Karrington at Xxxxxx Creek and
Karrington of Bexley and located in the City of Xxxxx Xxxxxxxxx,
Xxxx xx Xxxxxxxxxxx, Xxxx of Worthington and City of Bexley,
respectively, all in the State of Ohio.
2. That certain Lease dated May 21, 1998, by and between Missouri
River Corporation (via assignment from LTC-Ohio,Inc.), as
"Lessor", and Karrington Operating Company, Inc., as "Lessee", for
that certain assisted living facility commonly known as Karrington
at Rocky River located in the City of Rocky River, State of Ohio.
*The Related Leases referenced above will be modified in writing in the
future if Lessor and Lessee enter into a lease (or leases) of property in
addition to or in substitution of any of the aforementioned Related Leases.
