EXHIBIT 10.25
WILORA LAKE HEALTH CARE CENTER, INC.
LEASE AGREEMENT
THIS LEASE, made as of the 1st day of March 1996 by and between WILORA
HEALTH CARE CENTER, INC., a North Carolina corporation ("Landlord") and
TRANSITIONAL HEALTH SERVICES, a Delaware general partnership qualified to do
business in North Carolina ("Tenant");
INTRODUCTION
A. Landlord is the owner of the premises herein demised;
B. Landlord has received governmental approval for the construction and
operation of a nursing home Facility with ninety (90) beds;
C. Landlord has undertaken to construct the Facility and, upon licensure
and obtaining of all governmental approvals, desires to lease the Facility to
Tenant and Tenant desires to lease the Facility from Landlord.
AGREEMENT
For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged and in consideration of the mutual covenants and obligations herein
contained, it is agreed:
1. Lease: Landlord does hereby demise and lease unto Tenant, and Tenant
does hereby take, hire and let from Landlord that certain tract or parcel of
real estate, together with the buildings, improvements and all fixtures
constructed thereon, and the privileges and appurtenances thereunto pertaining,
situate, lying and being in or around Charlotte, North Carolina and being more
particularly described on Exhibit A attached hereto (hereinafter referred to as
"Premises" and "Demised Premises"), including but not limited to the nursing
Facility located at Demised Premises ("Facility"), together with all furniture,
equipment and other items listed on Exhibit B attached hereto (the "Personal
Property"). (The parties acknowledge that Exhibit B may not be capable of
description at the execution hereof, but agree that such exhibit shall be
attached prior to the commencement date.)
2. Covenant of Title and Quiet Enjoyment: Landlord covenants and warrants
that at the commencement date of this Lease it alone shall have full right and
lawful authority to enter into this Lease for the full term hereof; that it is
lawfully seized of the Premises in fee simple and has good title thereto, free
and clear of all tenancies, restrictions and encumbrances (with the exception of
liens securing Lenders providing financing for the Facility, and other matters
not adversely affecting the intended use of the Premises or merchantability of
title, or other matters agreed to between the parties, as specified on Exhibit C
attached hereto) and that at all times during the term of this Lease and any
extensions of said term, Tenant's quiet and peaceful enjoyment of the Premises
shall not be disturbed or interfered with by anyone.
3. Governmental Authorizations and Use of Premises: Landlord hereby
represents and warrants to Tenant, that the use of the Premises as a nursing
home Facility will be a permitted use by right under all applicable zoning or
other use restrictions or Federal or State regulations. In particular, Landlord
represents and warrants to Tenant that the Facility, as designed, will meet all
standards presently required for Federal Medicare and Medicaid certification.
Landlord further represents and warrants to Tenant that the Facility, as
designed, will be in compliance with all applicable municipal, county, state and
federal laws and regulations (including, without limitation, health care laws,
building codes and the fire safety code). Landlord and Tenant agree not to
effect any voluntary reduction in the Facility's bed capacity without the prior
written approval of HUD and the North Carolina Division of Facility services.
4. Term:
(a) The initial term of this Lease shall be for ten (10) years
commencing with the first day of the calendar month following the date
that the Tenant exercises its option to lease the Facility pursuant to
this Lease (following the date the Facility is licensed, has received all
necessary governmental approvals, and becomes operational) (the
"Commencement Date"). Landlord shall give Tenant written notice of the
licensure of the Facility and, therefore, the Commencement Date. The
effectiveness of this lease is specifically contingent upon prior
licensure of the Facility and the receipt of all necessary governmental
approvals pursuant to the Certificate of Need authorizing the Facility or
otherwise required.
(b) Provided (i) Tenant shall not be in default in performance of
any of its obligations under this Lease, and (ii) this Lease shall not
have previously been terminated, Tenant shall have the option upon the
expiration of the Initial Term to extend the Initial Term for an
additional term of ten (10) years (the "First Renewal Term"). Should
Tenant elect to exercise such option, it shall do so by written notice to
Lessor at least twelve (12) months prior to the expiration of the Initial
Term. During the First Renewal Term, this Lease shall continue in effect
upon the same terms (excluding renewal options) and rent schedule (i.e.,
three percent (3%) per year noncompounded increases) and subject to the
same conditions applicable to the Initial Term. The Initial Term and any
additional term of this Lease resulting from the exercise of the option
granted in this section are collectively referred to in this Lease as the
"Term."
(c) When used herein, the phrases "term of this Lease" or "term
hereof" or like phrases shall be deemed to include both the initial and
any renewal terms of this Lease.
5. Rent:
(a) Tenant shall pay the following rent to Landlord at its offices
at 0000 Xxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxxx 00000, or at such other
place as Landlord may advise in writing, in advance, on the 1st day of
each calendar month, without notice, demand, offset or deduction, in
lawful money of the United States of America, during
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and throughout the term of this Lease (adjusted for such period as the
Tenant has managed the Facility pursuant to the Management Agreement):
(1) For the first twelve (12) months of the term (Lease Year
1) the sum of $394,200.00.
(2) For the next twelve (12) months of the term (Lease Year
2) the sum of $406,026.00.
(3) For the next twelve (12) months of the term (Lease Year
3) the sum of $417,852.00.
(4) For the next twelve (12) months of the term (Lease Year
4) the sum of $429,678.00.
(5) For the next twelve (12) months of the term (Lease Year
5) the sum of $441,504.00.
(6) For the next twelve (12) months of the term (Lease Year
6) the sum of $453,330.00.
(7) For the next twelve (12) months of the term (Lease Year
7) the sum of $465,156.00.
(8) For the next twelve (12) months of the term (Lease Year
8) the sum of $476,982.00.
(9) For the next twelve (12) months of the term (Lease Year
9) the sum of $488,808.00.
(10) For the next twelve (12) months of the term (Lease Year
10) the sum of $500,634.00.
(b) If Landlord does not receive from Tenant any monthly rental
payment within fifteen (15) days after such payment is due, Landlord, at
its option, may charge Tenant a late charge and handling fee equal to five
percent (5%) of the monthly rental payment. Such fee shall be considered
additional rent and shall be due and payable by Tenant to Landlord
immediately upon delivery of written notice to Tenant. In addition, if any
check of Tenant is returned to Landlord unpaid, Tenant shall reimburse
Landlord for all charges associated with such returned check and Landlord,
at its option, may thereafter require that Tenant pay the rent and any
other charges payable hereunder by a certified or cashier's check.
(c) All additional sums payable by Tenant to Landlord under the
provisions of this Lease shall constitute additional rent.
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(d) (1) Except as otherwise expressly provided in this Lease, this
Lease is a "net lease" pursuant to which the parties intend to yield "net"
to Landlord the rental provided for in section 5(a) above.
(2) To further ensure that the rent to Landlord is absolutely
"net" to Landlord, Tenant further agrees to timely pay during the
term of this Lease, all costs and expenses, including but not
limited to the following:
(i) All occupational licenses and other permits
necessary in the operation of the business to be
conducted on the Demised Premises;
(ii) All utility charges for water, sewer, electricity,
gas, telephone or any other services provided to
or consumed on the Demised Premises;
(iii) All sales and use taxes due as a result of the
business conducted on the Demised Premises and any
real and personal property taxes assessed against
any property located on or used in connection with
the Demised Premises;
(iv) All real property taxes and assessments levied on
the Demised Premises as provided in Section 9;
(v) All premiums for all insurance required by this
Lease as provided in Section 10; and
(vi) The Landlord's "replacement reserve" payments
required as a condition to the Landlord's
HUD-guaranteed mortgage in the monthly amount of
$3,448.09; provided, that Landlord assigns to
Tenant all its right, title and interest in and to
such reserves funded by Tenant on Landlord's
behalf, and shall, subject to applicable HUD
requirements, cooperate with Tenant in obtaining
the timely release of such reserve funds for the
purpose of replacing and upgrading the Facility's
tangible personal property as Tenant requests;
and Tenant agrees to hold Landlord harmless from any such cost or expense
related thereto.
6. Use of Premises: The Tenant shall use the Premises for a Federal
Medicare (Title XVIII) or Medicaid (Title XIX) certified Facility and home for
adults which shall be operated in full compliance with all laws and regulations
applicable thereto. Tenant covenants that no part of the Premises shall be used
for any unlawful purpose, nor will any unlawful condition or nuisance be
permitted to exist thereon. Tenant further warrants and represents that the
Premises
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will be certified for participation in the Medicare and Medicaid programs and
that it will maintain such certifications at all times during the term of this
lease or any extensions thereof.
7. Reports: Tenant agrees to provide Landlord quarterly unaudited
financial statements and yearly audited financial statements of the Tenant
including balance sheets and income statements certified by an officer of Tenant
to have been prepared in accordance with Generally Accepted Accounting
Principles and to fairly present the financial condition and the results of
operations of Tenant on the dates and for the periods indicated, subject, in the
case of the quarterly financial statements, to normally recurring year-end
adjustments. Such statements shall be delivered promptly upon their completion
and in no event later than thirty (30) days after the close of each of the
Tenant's quarters and no later than one hundred twenty (120) days after the
close of each of Tenant's fiscal years. Tenant will also provide such other
financial information as Landlord or its mortgagee may require after notice.
Tenant further will provide Landlord as the same are filed with the State of
North Carolina, copies of all Medicaid Cost Reports and further will immediately
provide Landlord, to the extent reasonably required, copies of all
communications received from the State of North Carolina or any agency thereof
regarding violations or alleged violations of applicable laws, rules, codes or
regulations.
8. Repair and Maintenance of Improvements: Landlord warrants that the
entire Premises and the building and improvements thereon shall be in good, safe
condition and repair on the Commencement Date of this Lease. Landlord shall be
responsible for the structural integrity of the building and repair of exterior
walls, excluding windows and glass panels, and except for damages caused or
suffered to be caused by Tenant, or Tenant's invitees or licensees, during the
term of this Lease. Tenant shall promptly notify Landlord of any condition known
to Tenant that Landlord is required to repair. Landlord shall not be liable to
Tenant for any damages arising in connection with Landlord's responsibility as
provided above unless Landlord fails to pursue the applicable repair within a
reasonable time after receipt of written notice from Tenant. Except for such
responsibility undertaken by Landlord, Tenant shall be responsible, during the
term of this Lease, for maintaining the Premises in good repair, including
without limitation, the roof, ail interior surfaces, electrical, plumbing,
heating, air conditioning, generator and other systems, as well as the exterior
grounds, and shall at the end of the term, return the same to Landlord in good
repair and condition, with the exception of casualties insured against and
ordinary wear and tear. If Tenant fails to make any repairs, and/or perform any
maintenance for which it is responsible, within thirty (30) days after written
notice thereof, Landlord may, at its sole option, make the repairs and/or
perform the maintenance and the reasonable expense thereof shall be paid by
Tenant, together with interest at a rate equal to one and one-half percent (1
1/2%) above the prime rate then in effect at the financial institution financing
the Facility if such expense is not paid within thirty (30) days. Tenant shall
not make or construct any parking areas, driveways, additions, buildings,
structures or other improvements without the prior written consent of Landlord,
which consent shall not be unreasonably withheld after review of all applicable
architectural plans and building permits and, if applicable, obtaining approval
of Landlord's mortgagee. All improvements shall be at Tenant's sole cost and
expense and shall become the property of Landlord at the termination of this
Lease. Tenant agrees to indemnify Landlord against all claims by laborers and
materialmen for any improvements constructed by Tenant. Tenant shall cause any
mechanic's lien filed against the
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Premises as a result of any act or interest of Tenant or any party claiming
through Tenant to be removed within thirty (30) days of the filing thereof.
9. Taxes and Assessments: Tenant agrees to pay when due all taxes (as
hereinafter defined) on or with respect to the Premises. Landlord will promptly
send Tenant copies of all bills for taxes received by Landlord and Tenant will
pay the same to the appropriate governmental authority. Tenant shall promptly
send Landlord reasonable evidence of payment of such xxxx after such payment.
Such payments shall be further in accordance with the following provisions:
(a) Definitions: The term "Taxes" shall mean all taxes payable with
respect to the Premises or any property located on or used in connection
with the Premises, or any activity conducted on the Premises, including
but not limited to, real estate, personal property, and sales and use
taxes. Tenant may be required to make escrow payments of taxes. In such
event Tenant agrees to timely make such payments to Landlord's mortgagee,
or as otherwise directed, in accordance with the escrow requirements.
Tenant shall in no event be liable for Taxes with respect to any time
Tenant is not entitled to the Demised Premises, and Landlord shall in no
event be liable for Taxes with respect to any time Landlord is not
entitled to the Demised Premises. If, at any time during the term of this
Lease, any tax or excise on rents or other Taxes, however described, are
levied or assessed upon, or against, or measured by the rent payable to
Landlord hereunder, either wholly or partially in substitution for, or in
addition to, Taxes, such tax or excise in respect of rents shall be
included in Taxes. Taxes shall not include franchise, estate, inheritance,
succession, capital levy, transfer, income, or excess profit taxes
assessed on Landlord.
(b) Reimbursement of Taxes:
(1) If, after Tenant shall have paid any Taxes pursuant to
this section, Landlord shall receive a refund of any portion of
Taxes paid by Tenant with respect to any tax year during the term
hereof as a result of an abatement of such Taxes by legal
proceedings, the net refund will be paid over to Tenant.
(2) At the request of Tenant, Landlord will execute any and
all proper documents to permit the Tenant, in the name of the
Landlord, and at Tenant's sole cost and expense, to protest,
institute and pursue any and all legal proceedings necessary or
appropriate to obtain reduction in any Tax assessment or refund of
any Taxes. In the event Landlord elects to undertake any such
protest or legal proceedings for such purpose, Landlord will permit
Tenant to participate therein at Tenant's sole cost and expense in
order that Tenant may assure itself that all appropriate steps are
being taken to reduce the tax obligations for which Tenant is liable
hereunder.
(3) In the event this Lease shall commence, or shall end (by
reason of expiration of the term or earlier termination pursuant to
the provisions hereof), on any date other than the first or last day
of the year, or should the year or
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period of assessment of real estate taxes be changed to more or less
than one year, as the case may be, then the amount of Taxes payable
by Tenant as provided hereunder shall be appropriately apportioned.
10. Insurance Indemnity:
(a) During the original term of this Lease, Tenant shall at all
times keep the Demised Premises 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 of North Carolina. The
policies must name Landlord as additional insured. Losses shall be payable
to Landlord and Tenant as provided in Section 10(e) below. In addition,
the policies shall name as an additional insured any mortgagee by way of a
standard form of mortgagees's loss payable endorsement. Any loss
adjustment shall require the written consent of Landlord, Tenant, and each
mortgagee. Evidence of insurance shall be deposited with Landlord and, if
requested, with any mortgagee(s). The policies on the Demised Premises
shall insure against the following risks:
(1) Loss or damage by fire and such other risks as may be
included in the broadest form of extended coverage insurance from
time to time available, including but not limited to loss or damage
from leakage of any sprinkler system now or hereafter installed in
the Facility or on the Premises, in amounts sufficient to prevent
Landlord or Tenant from becoming a coinsurer within the terms of the
applicable policies and in any event in an amount not less than one
hundred percent (100%) of the then full replacement value thereof
(as defined below in Paragraph (b);
(2) Loss or damage by explosion of steam boilers, pressure
vessels or similar apparatus, now or hereafter installed in the
Facility, in such limits with respect to any one accident as may be
reasonably agreed by Landlord and Tenant from time to time;
(3) Claims for personal injury or property damage under a
policy of general public liability insurance with amounts not less
than One Million and No/100 Dollars ($1,000,000.00) per occurrence
in respect of bodily injury, Two Million and No/100 Dollars
($2,000,000.00) aggregate per occurrence, and Three Hundred Thousand
and No/100 Dollars ($300,000.00) for property damage;
(4) Claims arising out of malpractice in an amount not less
than One Million and No/100 Dollars ($1,000,000.00) for each person
and for each occurrence;
(5) Such other hazards and in such amounts as may be customary
for comparable properties in the area and is available from
insurance companies authorized to do business in the State of North
Carolina;
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(6) Loss of rental under a rental value insurance policy
covering a risk of loss during the first six (6) months of
reconstruction resulting from the occurrence of any of the hazards
described in subsections (i) and (ii) of Paragraph (a) in an amount
sufficient to prevent Landlord from becoming a coinsurer; and
(7) Worker's compensation.
(b) Replacement Cost. The term "full replacement value" of
improvements as used herein, shall mean the actual replacement cost
thereof from time to time, less exclusions provided in the normal fire
insurance policy.
(c) Additional Insurance. In addition to the insurance described
above, Tenant shall maintain such additional insurance as may be
reasonably required from time to time by any mortgagee.
(d) Insurance Proceeds. All proceeds payable by reason of any loss
or damage to any of the Improvements comprising the Demised Premises and
insured under any policy of insurance required by (a) above of this Lease
shall be paid to Landlord and held by Landlord in trust (subject to the
provisions of Paragraph (f) below and the rights of the holders of the
Facility mortgages) and shall be made available for reconstruction or
repair, as the case may be, of any damage to or destruction of the Demised
Premises, and shall be paid out by Landlord from time to time for the
reasonable costs of such work. Any excess proceeds of insurance remaining
after the completion of the restoration or reconstruction of the Demised
Premises shall be retained by Landlord and shall be credited against
future rental payments due from Tenant under this Lease. All salvage
resulting from any such loss covered by insurance shall belong to
Landlord.
(e) Damage or Destruction. If, during the Term, the Premises are
totally or partially destroyed from a risk covered by the insurance
described in paragraph (a), Landlord shall, as soon as practicable,
restore the Demised Premises to substantially the same condition as
existed immediately before the destruction. If the costs of the
restoration exceed the amount of proceeds received by Landlord from the
insurance required under paragraph (a), Tenant shall be solely responsible
for paying the difference between the amount of insurance proceeds and
such cost of restoration.
(f) Restoration of Tenant's Property. If Landlord is required to
restore the Facility as provided in paragraph (f), Landlord shall not be
required to restore alterations made by Tenant, or Tenant's improvements,
trade fixtures or personal property, such excluded items being the sole
responsibility of Tenant to restore. Landlord shall be required to restore
tangible personal property owned by Landlord and leased to Tenant pursuant
to this Lease (and scheduled on Exhibit B hereto) or otherwise.
(g) Abatement of Rent. During the period required for repair and
restoration, payments of rent provided for in Section (a) shall be abated
in the manner and to the extent that is fair, just and equitable to both
Tenant and Landlord, taking into consideration, among other relevant
factors, the number of useable beds affected by such
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damage or destruction, and availability of business interest insurance
proceeds to satisfy Tenant's obligations to pay rent.
(1) Tenant Blanket Policy. Notwithstanding anything to the
contrary contained in this Section, Tenant's obligation to carry the
insurance provided for herein may be brought within the coverage of
a so-called blanket policy, carried and maintained by Tenant;
provided, however, that the coverage afforded Landlord 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.
11. Signs: Tenant shall have the right, upon Landlord's prior written
consent, which consent shall not be unreasonably withheld, to install, maintain
and replace in, on or over, or in front of, the Premises or any part thereof,
such signs and advertising matter as Tenant may desire. Tenant shall comply with
all applicable requirements of governmental authorities having jurisdiction and
shall obtain any necessary permits for such purpose. As used in this paragraph,
the word "sign" shall be construed to include any placard, light or other
advertising symbol or object, irrespective of whether same be temporary or
permanent.
12. Eminent Domain: If the whole or substantially all of the Premises, or
all or substantially all of the means of access thereto, be acquired by eminent
domain or by purchase in lieu thereof, so that the Premises cannot be licensed
as a 90 bed nursing home Facility, or as otherwise amended by the approval of an
amendment to the CON, this Lease shall terminate as of the date of the actual
taking. Should, however, only a portion of the Premises be so condemned or
taken, so as not to materially and adversely affect the usefulness of the
Premises for the purposes for which it is leased hereunder, this Lease shall
continue in full force and effect; provided, however, that the rent payable
under the unexpired portion of this Lease shall be adjusted to such extent as
may be fair and reasonable under the circumstances. Landlord shall, in such
event, promptly restore the Demised Premises as nearly as feasible to the
condition of such Premises immediately prior to the taking, subject to
reasonable delays, but Landlord shall not be required to restore or rebuild the
Demised Premises during the last year of the lease term or to restore Tenant's
fixtures, furnishings, floor coverings, equipment, stock or other personalty;
provided, however, that if Landlord elects not to restore or rebuild the Demised
Premises or to restore Tenant's fixtures, furnishings, floor coverings,
equipment, stock or other personalty, Tenant shall have the option of
terminating this Lease. Tenant shall not be entitled to any part of the
condemnation proceeds arising from any partial taking, except that Tenant shall
be entitled to make a claim for any of Tenant's property which is condemned
other than Tenant's interest in the Lease. Notwithstanding the foregoing, this
Lease shall terminate if, as the result of only a portion of the Premises being
condemned or taken, Tenant is prevented from operating or using the Premises
under the then existing governmental and quasi-governmental licenses, permits,
approvals and certifications. In such case, Landlord and Tenant shall have such
rights to condemnation awards as are set forth above for a total or substantial
taking.
13. Utility Easements: Landlord agrees, without expense to it, to execute
all necessary documents for utility easements required to service the buildings
constructed on the Premises.
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14. Default:
(a) Any one or more of the following events shall constitute an
event of default:
(1) Tenant's failure to make any payment of rent (whether
monthly or additional rent) when the same is due and payable, or
certify the Premises for participation in the Medicare (Title XVIII)
and Medicaid Title (XIX) programs and to further ensure that the
Premises maintains such certifications at all times during the term
of this lease or any extensions thereof, or license the Premises for
the operation as a nursing Facility pursuant to the laws of the
State of North Carolina and maintain such license in good order at
all times during the term of this lease or any extensions thereof,
and the continuance of such failure for a period of ten (10) days
after written notice to Tenant by Landlord.
(2) Tenant's failure to perform any of the other covenants,
conditions and agreements imposed by it under this Lease and the
continuance of such failure without the curing of same for a period
of thirty (30) days after receipt of notice in writing from Landlord
specifying in detail the nature of such failure and provided Tenant
shall not cure said failure as provided in paragraph (b) below.
(3) The adjudication of Tenant as a bankrupt, or the
appointment of a receiver or trustee for Tenant's property and
affairs, or the making by Tenant of any assignment for the benefit
of its creditors or the filing by or against Tenant of a petition in
bankruptcy which is not vacated or set aside within fifteen (15)
days of such filing.
(b) In the event Landlord gives notice of a default of such a nature
(other than a default which may be cured by a payment of money) that it
cannot be cured within the applicable cure period, and Tenant initiates
and proceeds to cure or mitigate the default, then such default shall not
be deemed to exist for so long as Tenant proceeds to cure the same with
reasonable diligence or is delayed in or prevented from curing the same by
Force Majeure (as hereinafter defined).
(c) After the applicable cure periods have elapsed, pursuant to the
respective provision hereinbefore set forth and in the event of default,
Landlord, in addition to any other right or remedy it may have with
respect to default, may terminate this Lease immediately, and reenter the
Premises and take possession of the Premises and the Personal Property, or
in such event Landlord may, at its option, without declaring this Lease
terminated, reenter the Premises and occupy or lease the whole or any part
of the Premises and the Personal Property, for and on account of Tenant
and on such terms and conditions and for such rental as Landlord may deem
proper, and Landlord shall in such event collect such rent and apply the
same upon the rents due from Tenant and upon the expenses of such
subletting, and any and all other damages sustained by Landlord. In the
event of default, Landlord shall exercise reasonable efforts to mitigate
damages hereunder and to relet the Premises and the Personal Property, but
Landlord's failure to
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so relet shall not prevent or delay the exercise by Landlord, at its
option, of its right to accelerate and recover as damages rents due and
owing for the remainder of the term, together with all costs expenses of
collecting the same, subject to Landlord's obligation to repay or credit
Tenant with all recoveries made by Landlord.
15. Holding Over: In the event Tenant remains in possession of the
Premises after the expiation of the term hereof, including any extensions of the
term, and without the execution of a new lease, Tenant shall occupy the Premises
as a tenant from month to month, subject to all of the conditions of this Lease
insofar as consistent with such a tenancy, and rent shall increase by fifty
percent (50%) during any such hold-over period.
16. Attornment and Subordination:
(a) In the event of the exercise of any power of sale under the
provisions of any mortgage or deed of trust now or hereafter encumbering
the Premises, Tenant agrees that it shall attorn to the purchaser at such
sale and that it shall recognize such purchaser as Landlord under the
terms and provisions of this Lease and shall continue this Lease in full
force and effect regardless of whether such mortgage or deed of trust was
superior or subordinate to this Lease, provided such purchaser recognizes
Tenant hereunder; and provided further that in the event Landlord shall
default in any payment due in respect of such mortgage, Tenant shall have
the right under Landlord's mortgage, but not the obligation, upon ten (10)
days written notice from either Landlord or Landlord's mortgagee to pay
such amount due and thereby cure such default. Landlord further agrees
that it shall execute and deliver no mortgage on the Demised Premises
purporting to limit and prohibit Tenant from collaterally assigning this
Lease or its leasehold interest arising hereunder as security for Tenant's
financing.
(b) Tenant agrees that this Lease shall be and is subordinate to any
deeds of trust or mortgages now or hereafter encumbering the land and
buildings of which the Demised Premises are a part or against any
buildings hereafter placed upon the land on which the Demised Premises is
situated.
(c) Upon request by Landlord, Tenant agrees to promptly enter into
and deliver to Landlord such written instruments in form reasonably
acceptable to Landlord and its mortgagee which confirm the above
subordination and effect the above attornment.
17. Tenant's Indemnification: Tenant agrees to indemnify, protect and hold
harmless Landlord from and against all liabilities and damages (a) arising from
or out of any occurrence in, upon or at the Demised Premises or any part
thereof, or the occupancy or use by Tenant of the Demised Premises, the Personal
Property or any part thereof, or occasioned wholly or in part by any act or
omission of Tenant, its agents, contractors, employees or invitees in connection
with the Demised Premises Or the Personal Property during the term of this
Lease, or any renewal hereof, or (b) related to any claims, rents, chargebacks
or other expenses (whether owed to or assessed by a private or governmental
party) arising in connection with the
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operation or other use of the Demised Premises or the Personal Property during
the term of this Lease, or any renewal hereof.
18. Landlord's Indemnification: Landlord agrees to indemnify, protect and
hold harmless Tenant from and against any and all liabilities and damages
arising from or occasioned wholly or in part by any act or omission of Landlord,
its agents, contractors, employees or invitees in connection with the Demised
Premises or the Personal Property during the term of this Lease, or any renewal
hereof
19. Compliance with Governmental Programs: Landlord covenants that the
Premises will, during the term hereof, meet all standards required for Federal
Medicare (Title XVIII) or Medicaid (Title XIX) certified nursing programs and
that it will make any alterations necessary to remain in compliance with same.
Any alterations, changes or expansions required to bring the Leased Premises
into compliance with such standards as in effect on the date of execution of
this Lease shall, unless otherwise agreed, be paid for by Landlord. Any
alterations, changes or expansions required by subsequent changes in such
standards will be negotiated at the then-current cost of construction, which
cost, together with interest at the rate of interest at which such construction
is financed, shall be amortized in level monthly additional rent payments over
the agreed upon remaining lease period.
20. Waivers: Failure of Landlord or Tenant to complain of any act or
omission on the part of either other party, no matter how long the same may
continue, shall not be deemed to be a waiver by said party of any of its rights
hereunder. No waiver by Landlord or Tenant at any time, expressed or implied, of
any breach of any provisions of this Lease, shall be deemed a consent to any
subsequent breach of the same or any other provision. No acceptance by Landlord
of any partial payment shall constitute an accord or satisfaction but shall only
be deemed a part payment on account.
21. Force Majeure: In the event that Landlord or Tenant shall be delayed,
hindered in or prevented from the performance of any act required hereunder by
reason of strikes, lockouts, labor troubles, inability to procure materials,
failure of power, restrictive governmental laws or regulations, riots,
insurrection, the act, failure to act or default of the other party, war or
other reason beyond their control, then performance of such act (except the
payment of rent which shall not in any case be excused) shall be excused for the
period of the delay and the period for the performance of any such act shall be
extended for a period equivalent to the period of such delay.
22. Surrender of Premises: Upon the expiration or other termination of
this Lease, Tenant covenants and agrees that it will peaceably leave and
surrender possession of the Premises and the Personal Property to Landlord. Upon
such surrender, the Premises and the Personal Property shall be in good repair,
ordinary wear and tear and alterations, additions and improvements herein
permitted, excepted.
23. Inspection: Landlord reserves the right to inspect the Demised
Premises and all buildings situated thereon at all reasonable times and show the
property through agents or otherwise to bona fide purchasers or prospective
tenants.
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24. Further Assurances: Tenant agrees to execute and deliver to Landlord
any additional or supplemental instruments or documents as may be reasonably
requested by Landlord or its mortgagee in connection with this Lease, including
any memorandum of lease.
25. No Joint Venture: The relationship between Landlord and Tenant shall
always and only be that of Lessor and Lessee. Tenant is not the agent of
Landlord. Landlord shall not be responsible for the acts or omissions of Tenant
or its agents. This Agreement is, and is intended to be, a lease. Tenant does
not acquire hereby any right, title or interest whatsoever, legal or equitable,
in the Premises, except as the Lessee hereunder.
26. Personal Liability: In no event shall any partners, principals or
stockholders of Landlord ever be personally liable for any judgment of Tenant
against Landlord.
27. No Representation: It is understood and agreed by the parties hereto
that this Lease contains all of the covenants, agreements, terms, provisions,
and conditions relating to the leasing of the Premises and the Personal
Property, and that Landlord has not made and is not making, and Tenant in
executing and delivering this Lease is not relying upon any warranties,
representations, promises or statements, except to the extent that the same may
expressly be set forth in this Lease.
28. Validity: In the event that any provisions of this Lease shall be held
invalid, the same shall not affect in any respect whatsoever the validity of the
remainder of this Lease.
29. Applicable Law: This Lease and the rights of the parties hereunder
shall be interpreted in accordance with the laws of the State of North Carolina.
30. Notices: Until notice to the contrary to the other party has been
given, all notices and payments of money if made to Landlord shall be made or
given by (1) personal delivery; or (2) by mail (postage prepaid, certified,
return receipt requested) addressed to Landlord at 0000 Xxxxxx Xxxxxx, X.X.,
Xxxxxxx, Xxxxxxxx 00000, Attn: Xx. Xxxxxxx X. Xxxxxxxx, or if made to Tenant
shall be made by delivery or by mail (postage prepaid, certified, return receipt
requested) addressed to Tenant at the Premises with a copy to: Transitional
Health Services, Inc., 0000 Xxxxxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx
00000, Attention: Xxxxxxx X. Xxxxxxx, or (3) by facsimile to Landlord at
000-000-0000 and to Tenant at 000-000-0000. Notice shall be deemed given when
received, if notice is given by personal delivery, or three (3) days after
mailing, if notice is given by mail or one (1) day after sending, if notice is
given by facsimile.
31. Short-Form Lease: The parties hereto shall forthwith execute a
memorandum or short-form lease agreement, in recordable form, including such
provisions hereof as either party may desire to incorporate therein.
32. Entire Agreement. No oral statement or prior written matter shall have
any or force or effect. Tenant agrees that it is not relying on any
representations or agreements other than those contained in this Lease. This
Lease shall not be modified or canceled except by writing subscribed to by all
parties.
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33. Brokerage: Each of the parties covenants and represents to the other
that neither has incurred brokerage fees with respect to the transactions herein
set forth.
34. Parties: The covenants, conditions, obligations and agreements
contained in this Lease shall bind and inure to the benefit of Landlord and
Tenant and their respective successors and assigns.
35. Assignment: Except as otherwise provided herein, Tenant may not assign
this Lease or sublet the Premises or any part thereof without the Landlord's
written consent (and consent of the U.S. Dept. of Housing and Urban Development
(HUD) and the Landlord's mortgagee of the Premises, it being specifically
understood that mortgagee); provided, that such consent of Landlord (and
mortgagee) shall not be unreasonably withheld if Tenant's proposed assignee
shall furnish Landlord with security for its obligations hereunder equivalent to
Tenant and otherwise demonstrate that its has sufficient assets and ability to
make the Rent payments due hereunder, and otherwise possesses such skill
experience and licenses as may be reasonably required to operate the Premises in
a manner substantially as operated by Tenant, in which case Tenant, upon payment
to Landlord of a $2,500.00 release and processing fee plus all actual fees and
expenses which may be incurred by Landlord in connection with the lease
assignment and release, including, but not limited to costs of Landlord's
efforts to obtain mortgagee obligations hereunder); and provided further, that
Tenant may assign this Lease to an affiliate of Tenant on the condition that
Tenant shall remain liable hereunder or shall otherwise guarantee such
affiliates's performance of any and all terms of this Lease.
36. Right of First Refusal: In the Event Landlord wishes to sell the
Demised Premises, Tenant shall have a right of first refusal to purchase the
Demised Premises upon the same terms and conditions. Such right of first refusal
shall be exercised as follows. Upon Landlord's receipt of a bona fide third
party offer to purchase the Demised Premises, including purchase price and
payment terms, which Landlord desires to accept, Landlord shall give notice of
such offer in writing to Tenant, including a copy of such offer. Tenant shall
have a period of thirty (30) days after notice to exercise its right to first
refusal by written notice to Landlord. If Tenant exercises its right of first
refusal, the closing of the sale shall occur in accordance with the terms of the
third party offer. If Tenant does not exercise its right of first refusal or,
having exercised it, refuses to close, Tenant's right of first refusal shall
forever lapse. Landlord may sell the Demised Premises free and clear of the
right of first refusal.
37. Letter of Credit: Tenant furnished to Landlord a working
capital/fill-up letter of credit in the amount of One Hundred Forty-four
Thousand Two Hundred Thirty-seven and No/100 Dollars ($144,237.00). in
connection with certain HUD financing of the Premises. To the extent that such
letter of credit is outstanding as of the date hereof, this letter of credit
shall remain outstanding until released by HUD.
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease to be
executed under seal in its name and on its behalf, each by its duly authorized
officer or general partner, all as of this day and year first above written.
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LANDLORD:
WILORA LAKE HEALTH CARE CENTER,
INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: President
ATTEST:
/s/ Xxxxxxxxx X. Free
---------------------------------
Name: Xxxxxxxxx X. Free
Title: (Asst) Secretary
[SEAL]
TENANT:
TRANSITIONAL HEALTH PARTNERS d/b/a
TRANSITIONAL HEALTH SERVICES
a Delaware general partnership
By: THS PARTNERS I, INC. and
THS PARTNERS II, INC.
both Delaware corporations and General
Partners
By: /s/ Xxxxx X. XxxXxxxx
-----------------------------------------
Xxxxx X. XxxXxxxx
Executive Vice President, CFO
ATTEST:
/s/ Xxxx X. Xxxxxxx
--------------------------------
Xxxx X. Xxxxxxx, Asst. Secretary
[SEAL]
15
The undersigned corporate parent of Tenant's corporate general partners, THS
Partners I, Inc. and THS partners II, Inc., hereby guarantees to Landlord the
Tenant's full and faithful performance of all of Tenant's obligations under the
foregoing Lease:
TRANSITIONAL HEALTH SERVICES, INC.
a Delaware corporation
By: /s/ Xxxxx X. XxxXxxxx
-----------------------------------------
Xxxxx X. XxxXxxxx
Vice President, CFO
ATTEST:
/s/ Xxxx X. Xxxxxxx
--------------------------------
Xxxx X. Xxxxxxx, Asst. Secretary
[SEAL]
16
STATE OF VIRGINIA
)ss:
CITY OF ROANOKE )
I, Xxxxxx X. Xxxxxx , Notary Public for said City and State, certify that
Xxxxxxxxx X. Free personally came before me this day and he/she is Assistant
Secretary of WILORA LAKE HEALTH CARE CENTER, INC., a corporation, and that by
authority duly given and as the act of the corporation, the foregoing instrument
was signed in its name by its Vice President, sealed with its corporate seal,
and attested by him/her as its Assistant Secretary.
WITNESS my hand and official seal, this the 17th day of April, 1996.
/s/ Xxxxxx X. Xxxxxx
--------------------------
Notary Public
My Commission Expires:
November 30, 2000
[SEAL]
17
STATE OF KENTUCKY
)ss:
COUNTY OF JEFFERSON )
I, Xxxxx X. Xxxxx , Notary Public for said County and State, certify that
XXXX X. XXXXXXX personally came before me this day and he/she is Assistant
Secretary of THS PARTNERS I, INC. and THS PARTNERS II, INC., both a Delaware
corporation, and that by authority duly given and as the act of the corporations
acting as the sole general partners of TRANSITIONAL HEALTH PARTNERS d/b/a
TRANSITIONAL HEALTH SERVICES, a Delaware general partnership, the foregoing
instrument was signed in its name by its Executive Vice President/CFO, sealed
with its corporate seal, and attested by him/her as its Assistant Secretary.
WITNESS my hand and official seal, this the 1st day of March, 1996.
/s/ Xxxxx X. Xxxxx
-----------------------------
Notary Public
My Commission Expires:
10-13-98
[SEAL]
18
STATE OF KENTUCKY
)ss:
COUNTY OF JEFFERSON )
I, Xxxxx X. Xxxxx , Notary Public for said County and State, certify that
XXXX X. XXXXXXX personally came before me this day and he/she is Assistant
Secretary of TRANSITIONAL HEALTH SERVICES, INC, a Delaware corporation, and that
by authority duly given and as the act of the corporation, the foregoing
instrument was signed in its name by its Executive Vice President/CFO, sealed
with its corporate seal, and attested by him/her as its Assistant Secretary.
WITNESS my hand and official seal, this the 1st day of March, 1996.
/s/ Xxxxx X. Xxxxx
-----------------------------
Notary Public
My Commission Expires:
10-13-98
[SEAL]
19
