EXHIBIT 10.22
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease"), executed and dated as of this 27th day
of April, 1989, between Sheridan Health Care Center, Inc., an Indiana
corporation (hereinafter referred to as "Lessor"), and Cardinal Development Co.,
Inc, a Kentucky corporation which is duly qualified to do business in the State
of Indiana (hereinafter referred to as "Lessee" or "Cardinal").
In consideration of the mutual undertakings and covenants hereinafter
contained and the acts to be performed hereunder, Lessor and Lessee hereby agree
to the within Lease Agreement for the Danville Health Care Center facility
(hereinafter referred to as the "Facility") and certain other property herein
identified, both of which are owned by Lessor and located in Danville, Indiana,
as follows:
RECITALS
Representations and Warranties of Lessor. Lessor makes the following
representations and warranties in reliance on the representations and warranties
of Lessee in an Assets Purchase and Exchange Agreement, among Lessee, Lessor,
Cicero Children's Center, Inc. and joined in by Xxxxx Xxxxxxx and M. Xxxx
Xxxxxxx. Lessee has relied on said representations and warranties in entering
into this Lease for which Lessor shall be liable for any damages incurred in the
event they are untrue:
a) Except as provided in Exhibit A, there exist no leases, liens and/or
monetary encumbrances (the Facility Mortgages) against the Facility or related
to the business at the Facility.
b) Lessor has no collective bargaining agreements or employment contracts
for employees of the Facility that would extend to Cardinal;
c) On the Commencement Date (as hereinafter defined) Lessor will provide
Lessee with a fully equipped facility with all furniture, fixtures and equipment
as set forth in Exhibit B needed to operate the Facility in compliance with all
applicable local, state and/or federal law;
d) The Facility has current provider agreements under Med- icaid Programs;
e) There is no litigation, investigation or other proceeding pending and,
to the best knowledge of Lessor, threatened against or relating to Lessor, its
property or business, which is material to the Facility, the Premises and the
Leased Equipment or to this Lease, and the transaction contemplated herein has
not been challenged by any governmental agency or other person, nor does Lessor
know or have reasonable grounds to know of any basis for such litigation,
investigation or other proceeding; and
f) To the best of Lessor's knowledge and in reliance on the
representations and warranties of Lessee in an Assets Purchase and Exchange
Agreement, among Lessee, Lessor, Cicero Children's Center, Inc. and joined in by
Xxxxx Xxxxxxx and M. Xxxx Xxxxxxx:
(a) The Facility and its operation and use now are in substantial
compliance with all applicable municipal, county, state and federal laws,
regulations, ordinances, statutes and orders and with all municipal,
health, building and zoning bylaws and regulations (including, without
limitation, the fire safety code) where the failure to comply therewith
could have a material adverse effect on the business, property, condition
(financial or otherwise) or operation of the Facility;
(b) There are no outstanding deficiencies or work orders of any
authority having jurisdiction over the Facility requiring conformity to
any applicable statute, regulation, ordinance or bylaw pertaining to
nursing homes, including, but not limited to the Medicare and/or Medicaid
Programs;
(c) Lessor is not aware of any notice of any claim, requirement or
demand of any licensing or certifying agency supervising or having
authority over the Facility or otherwise to rework or redesign it or to
provide additional furniture, fixtures, equipment or inventory so as to
conform to or comply with any existing law, code or standard which have
not been fully satisfied prior to the Commencement Date (as hereinafter
defined); and
(d) Lessor has no knowledge that the Facility is not in material
compliance with all conditions and/or standards of participation in the
Medicare and/or Medicaid Programs.
ARTICLE I
Section 1.1 Leased Premises. Lessor hereby demises and leases to Lessee,
and Lessee hereby leases and takes from Lessor, the two tracts of real estate
located in Danville, Indiana and described in Exhibit C attached hereto and by
reference made a part hereof (the "Premises"), together with all improvements
located thereon including but not limited to the Facility and all rights,
privileges and easements appertaining thereto.
Section 1.2 Leased Equipment. Lessor hereby demises and leases to Lessee,
and Lessee hereby leases and takes from Lessor, the equipment, furniture,
furnishings and fixtures listed on Exhibit B attached hereto and by reference
made a part hereof and any additional items added thereto from time to time by
written agreement among Lessor and Lessee (such equipment, furniture,
furnishings and fixtures, together with all additions and acces-
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sories thereto or replacements thereof, being hereinafter referred to as the
"Leased Equipment").
Section 1.3 Maintenance of Leased Equipment. Lessee shall keep all of the
Leased Equipment in as good working order and condition as it is in on the
Commencement Date (as hereinafter defined), and at the expiration of the Lease
shall return and deliver all of such property to Lessor in as good order and
condition as when received hereunder, reasonable wear and tear and damage by
Acts of God or insurable perils excepted. Lessee shall replace all items of
Leased Equipment which may be damaged or destroyed or which may become worn out
or obsolete during the Term of this Lease. Lessee may place additional property
on the Leased Premises or may substitute equipment of its own choosing for the
Leased Equipment (subject to Lessee's obligation to replace the Leased Equipment
so removed upon expiration of the Term of this Lease), and the same shall be and
remain the property of Lessee ("Lessee's Equipment").
Section 1.4 Subordination of Landlord's Lien. Lessor agrees to execute a
subordination of any statutory or landlords lien that Lessor may have to any
security interest granted by Lessee to secure a purchase money obligation or a
lease of any additional Leased Equipment or of Lessee's Equipment.
ARTICLE II
Section 2.1 Term. The initial term of this Lease shall commence on April
27, 1989, provided Lessee has obtained the necessary permits and licenses (if
any) to operate the Facility as currently operated from local, federal and state
authorities, as may be applicable (the "Commencement Date") and shall extend for
a period of ten (10) years from the Commencement Date. unless earlier terminated
as provided herein (the "Initial Term").
Section 2.2 Renewal Terms. Provided (i) Lessee 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, Lessee shall have the option upon the
expiration of the Initial Term to extend the Initial Term for an additional term
of five (5) years (the 'First Renewal Term'), Should Lessee elect to exercise
such option, it shall do so by written notice to Lessor at least ninety (90)
days prior to the expiration of the Initial Term. During the First Renewal Term,
this Lease shall continue in effect upon the same terms (except for renewal
options) and subject to the same conditions applicable to the Initial Term;
provided, however, that the Base Rent for the First Renewal Term shall be as
stated in Section 3.2.
Section 2.3 Term. The Initial Term and any additional term of this Lease
resulting from the exercise of the option granted in Section 2.2 are
collectively referred to in this Lease as the "Term."
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Section 2.4 Holding Over. In the event Lessee remains in possession of the
Premises or the Facility after the expiration of the Term and without the
execution of a new lease, it shall be deemed to be occupying the Premises and
Facility as a tenant from month to month, subject to all conditions, provisions
and obligations of this Lease insofar as the same are applicable to a
month-to-month tenancy.
ARTICLE III
Section 3.1 Base Rent. Lessee shall pay to Lessor as annual Base Rent
during the initial Term the sum of $310,742.76, payable in equal monthly
installments of $25,895.23 each in advance on the first day of each and every
calendar month during the Initial Term.
Section 3.2 Base Rent Adjustment for initial Term and Renewal Term.
Section 3.2.1 Lessee shall pay an Annual Base Rent during the second five
(5) years of the Initial Term ("Adjusted Term Base Rent") which shall be the
greater of (i) the Base Rent payable during the first five years of the Initial
Term ("Initial Term Base Rent") or (ii) the sum of the Initial Term Base Rent
plus a percentage of the initial Term Base Rent equal to 66% of the percentage
increase in the Consumer Price index -- Seasonally Adjusted U.S. City Average
for All Items for all Urban Consumers (1982-1984 = 100), as published by the
Bureau of Labor Statistics, United States Department of Labor ("CPI-U") for the
period from April 27, 1999 to April 27, 2004, but in no event more than 130% of
the Initial Term Base Rent.
Section 3.2.2 Lessee shall pay an annual Base Rent during the First
Renewal Term provided for in Section 2.2 ("First Renewal Term Base Rent") which
shall be the greater of (i) the Base Rent payable during the last five years of
the initial Term ("Initial Term Base Rent") or (ii) the sum of the Initial Term
Base Rent plus a percentage of the Initial Term Base Rent equal to 66% of the
percentage increase in the CPI-U, for the period April 27, 1999 to April 27,
2004, but in no event more than 130% of the Initial Term Base Rent.
Section 3.2.3 If the CPI-U shall no longer be published, another index
generally recognized as authoritative shall be substituted by agreement of the
parties. If they are unable to agree within sixty (60) days after demand by
either party, the substitute index shall, on application of either party, be
selected by the chief officer of the Atlanta Regional Office of the Bureau of
Labor Statistics or its successor. If the base year "(1982-84=100)" is changed,
the figures used in calculating the base rent for any remaining renewal term
shall be changed accordingly, so that all increases in the CPI-U are taken into
account notwithstanding any change in the base year.
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The minimum annual rental for each year of each renewal term shall be paid
in twelve (12) equal monthly installments, which installments shall be due and
payable in advance on the first day of each and every calendar month of the
renewal term year. If, at the beginning of any renewal term, sufficient
published data is not available to allow calculation of the percentage increase
in the CPI-U for the entire comparison period relevant to the renewal term,
Lessor shall estimate such percentage increase and Lessee shall pay, in advance,
on the first day of each calendar month occurring prior to the availability of
such data, a rental installment based on such estimated percentage increase in
the CPI-U. After such data becomes available and the renewal term base rent has
been determined, Lessee shall pay, with the next monthly installment of rental
falling due, any rental deficiency accrued during the preceding months of the
renewal term. If any excess rental has been paid during the preceding months,
Lessor shall credit the amount of such excess against the next monthly
installment of rent falling due.
Section 3.3 Payment of Net Rental. Except as otherwise provided in this
Article III, all rental payments shall be payable in advance on the first day of
each calendar month during the Term. The rent shall be payable to Lessor at the
address set forth in Article XVI or to such other person, firm or corporation at
such other address as Lessor may designate by notice in writing to Lessee.
Section 3.4 Additional Rent. Except as otherwise provided herein, all
impositions, insurance premiums, costs, fees, interests charges, expenses,
reimbursements and obligations of every kind and nature whatsoever relating to
the Premises, the Facility and the Leased Equipment (except payments of
principal and interest on any Facility Mortgage) which may arise or become due
during the Term, and which relate to the Term, shall be paid or discharged by
Lessee, and Lessee agrees to indemnify and to save Lessor harmless from and
against such costs, fees, charges, expenses, reimbursements, and obligations and
any interest thereon. Lessee shall pay all sales, business privilege, and other
taxes that are now or hereafter payable by Lessor in connection with the rent
specified in Section 3.1 or the payment or receipt thereof, or as the result of
any other payment or expenditure required to be made by Lessee hereunder,
provided, however, that Lessor shall utilize its best efforts to determine
whether it is exempt from said business privilege tax. All sales, business
privilege and other taxes payable by Lessee shall be paid monthly on the due
date of each rent payment, and with respect to other amounts required to be paid
or expended by Lessee, shall be paid upon demand of Lessor.
Section 3.5 Payment of Additional Rent. Except as otherwise provided
herein, Lessee shall pay or cause to be paid (except as hereinafter in Section
3.7 provided) before any penalty, interest or cost may be added thereto, all
sewer rents, water meter and water charges, excise, levies, licenses and permit
fees, charges for public utilities, and other charges or burdens of an
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operational nature, without particularizing by any known name or by whatever
name hereafter called, and whether any of the foregoing be general or special,
ordinary or extraordinary (all of which are herein referred to as "Impositions"
and as to any one such item as an "Imposition"), which at any time during the
Term may have been, or may be imposed upon, or grow or become a lien on the
Premises, the Facility, the Leased Equipment or any part thereof or any
appurtenances thereto. If, by law, any Imposition may, at the option of the
payor, be paid in installments, Lessee may exercise the option to pay the same,
including any accrued interest on the unpaid balance of such Imposition, in
installments and in such event shall pay only such installments as may become
due during the Term as the same become due and payable and before any fine,
penalty, further interest or cost may be added thereto. Any Imposition (except
Impositions which have become converted into installment payments as provided
above) relating to a fiscal period of the taxing authority, a part of which is
included in a period of time prior to the Commencement Date and/or after the
expiration of the Term shall be adjusted between Lessor and Lessee as of the
Commencement Date and/or as of the expiration of the Term, as appropriate.
Section 3.6 Exclusions from Additional Rent. Nothing in this Lease shall
require Lessee to pay municipal, state or federal income or excess profits taxes
assessed against Lessor or any estate, succession, inheritance or transfer taxes
of Lessor or corporation franchise taxes imposed upon any corporate owner of the
Premises, the Facility, the Leased Equipment, or any portion thereof.
Section 3.7 Permitted Contests. Lessee shall have the right to contest the
amount or validity in whole or in part of any Imposition by appropriate
proceedings diligently conducted in good faith but only after payment of such
Imposition unless such payment or a payment thereof under protest would operate
as a bar to such contest or interfere materially with the prosecution thereof in
which event, notwithstanding the provisions of this Section 3.7, Lessee may
postpone or defer payment of such imposition if neither the Premises, the
Facility, the Leased Equipment nor any part thereof would by reason of such
postponement or deferment be in danger of being forfeited or lost. Upon the
termination of any such proceedings, Lessee shall pay the amount of such
Imposition or part thereof, if any, as finally determined in such proceedings,
together with costs, fees, including reasonable attorneys' fees, interest,
penalties and any other liability in connection therewith. Lessee shall be
entitled to any refund of any Impositions and penalties and interest thereon
received by Lessor which have been paid by Lessee. Lessor shall not be required
to join in any proceedings referred to in this Section unless the provisions of
any law, rule or regulation at the time in effect shall require that such
proceedings be brought by or in the name of Lessor, in which event Lessor shall
join in such proceedings or permit the same to be brought in Lessor's name upon
compliance with such conditions as Lessor may reasonably require. Lessor shall
not
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be subjected to any liability for the payment of any fees, including attorneys
fees, costs or expenses in connection with such proceedings, all of which shall
be paid by Lessee.
Section 3.8 Payment of Facility Mortgages. Lessor shall be obligated to
make any and all principal and interest payments owing under the Facility
Mortgages. If any holder of any such mortgage encumbering the Premises and the
Facility requires a deposit of taxes or insurance or for replacement reserves to
be made with such holder, Lessee shall either pay to Lessor monthly the amounts
required and Lessor shall thereafter transfer such amounts to each holder, or,
pursuant to written direction by Lessor, Lessee shall make such deposits
directly with such holder. Lessor shall notify Lessee of any default of Lessor
under the Facility Mortgages as soon as Lessor becomes aware of such default
upon learning of a default under any of the Facility Mortgages, Lessee may, at
its option, take any steps necessary or desirable to cure the default and
thereafter reduce the next rental payment (or payments) due to Lessor under this
Lease by the amounts paid by Lessee to cure the default.
ARTICLE IV
Section 4.1 Use of the Premises, the Facility, and the Leased Equipment.
Lessee covenants to proceed with all due diligence to obtain or maintain all
approvals (if any) needed to operate the Facility under applicable local, state
and federal law, Including, but not limited to licensure and Medicare and/or
Medicaid certification. No use shall be made or permitted to be made of the
Premises, the Facility, the Leased Equipment or other improvements, and no acts
shall be done, which will cause the cancellation of any insurance policy
covering the Facility or any part thereof, nor shall Lessee sell or permit to be
kept, used or sold in or about the Premises or the Facility any article which
may be prohibited by the standard form of fire insurance policies.
Section 4.2 Waste Prohibited. Lessee shall not commit or suffer to be
committed any waste on the Premises or Facility, nor shall Lessee cause or
permit any nuisance thereon.
ARTICLE V
Section 5.1 Compliance with Law. Lessee covenants and agrees that the
Premises and Facility shall not be used for any unlawful purpose.
Section 5.2 Impairment of Title. Lessee shall neither suffer nor permit
the Premises or the Facility or any portion thereof to be used in such a manner
as (i) might reasonably tend to impair Lessor's title to the Premises, the
Facility or the Leased Equipment or 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 Premises or any portion
thereof.
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ARTICLE VI
Section 6.1 Maintenance. Lessee shall, at its own cost, and without
expense to Lessor, keep and maintain the Premises, the Facility and the Leased
Equipment, including all sidewalks, buildings, surface parking lots and
improvements of any kind which may be a part thereof in as good condition and
repair as they are in on the Commencement Date, ordinary wear and tear,
obsolescence in spite of repair, acts of God and damages from insurable perils
excepted, Lessee shall also maintain the grounds in a good and sightly
appearance, including regular mowing, pruning, fertilizing, and other
appropriate care of all grass, plants, and trees. Lessor shall not be obligated
to make any repairs, replacements or renewals of any kind, nature or description
whatsoever to the Premises or the Facility or other improvements thereon or to
the Leased Equipment. At the expiration of this Lease, Lessee may remove any
equipment purchased by Lessee and kept at the Facility, Lessee may also remove
any improvements made to the Premises by Lessee, provided that such improvements
may be removed with little or no damage to the Premises.
Section 6.2 Alterations. Lessee shall make no changes alterations, or
additions to Tract I of the Premises, as set forth in Exhibit C, or the Facility
without the prior written consent of Lessor, except as hereinafter provided,
which consent shall not be unreasonably withheld. Lessee may make alterations to
Tract I of the Premises, as set forth in Exhibit C, or the Facility without
Lessor's consent that do not result in a substantial modification of the floor
plan or exterior appearance of the Facility and that do not reduce the fair
market value of the Facility for use as a long-term care facility. All
alterations shall be completed in compliance with all applicable codes,
regulations and other governmental requirements. Lessee may change, alter or add
to Tract II of the Premises, as set forth in Exhibit C, without the prior
consent of Lessor; however, Lessee shall provide Lessor written notice of any
proposed change, alteration or addition to Tract II of the Premises, as set
forth in Exhibit C, ninety (90) days prior to the effective date or date of
undertaking any such change, alteration or addition.
Section 6.3 Utilities. Lessee shall pay all charges for water,
electricity, gas, sewerage, waste, trash and garbage disposal, telephone, cable
television, and other services furnished to the Premises or the improvements
thereon.
ARTICLE VII
Section 7.1 Liens and Encumbrances. Lessee will not cause the Premises,
the Facility, the Leased Equipment or any improvements thereon to become subject
to any lien, charge, or encumbrance, except for purchase money security
interests in Leased Equipment purchased by Lessee for the Facility.
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Section 7.2 Mechanic's Liens. Lessee shall pay all costs incurred by
Lessee in connection with the alteration, maintenance and repair of any and all
improvements on the Premises. Should a lien or claim of lien be filed against
Lessor's interest in the Premises, the Facility or the Leased Equipment by any
contractor, subcontractor, mechanic, laborer, materialman or any other person as
a result of work done on behalf of Lessee, Lessee shall, within forty-five (45)
days after the filing thereof, cause the same to be discharged of record.
ARTICLE VIII
Section 8.1 Non-Liability and Indemnification of Landlord. During the
Term, Lessee agrees to protect, indemnify and save harmless Lessor from and
against all claims arising out of or connected with Lessee's use and occupancy
of the Premises, the Facility and the Leased Equipment and shall pay all costs
and expenses incurred by Lessor in connection with such claims, including,
without limitation, court costs and reasonable attorneys' fees for trial and
appellate proceedings, the amount of which shall be determined by a court of
law. This excludes any claim relating to Lessor's ownership or operation of the
Premises, the Facility and/or the Leased Equipment prior to the Commencement
Date.
ARTICLE IX
Section 9.1 Insurance. During the Term of this Lease, Lessee shall at all
times keep the Premises, the Facility, and the Leased Equipment 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 Indiana. The
policies must name Lessor as an additional insured. Losses shall be payable to
Lessor and Lessee as provided in Section 10.1 of this Lease. In addition, the
policies shall name as an additional insured any mortgagee by way of a standard
form of mortgagees loss payable endorsement. Any loss adjustment shall require
the written consent of Lessor, Lessee, and each mortgagee. Evidence of insurance
shall be deposited with Lessor and, if requested, with any mortgagee(s). The
policies on the Premises, the Facility and the Leased Equipment shall insure
against the following risks:
(a) 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 Lessor or Lessee 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 Section 9.2);
(b) Loss or damage by explosion of steam boilers, pressure vessels
or similar apparatus, now or hereafter installed
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in the Facility, in such limits with respect to any one accident as may be
reasonably agreed by Lessor and Lessee from time to time;
(c) 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 and
Five Hundred Thousand No/100 Dollars ($500,000.00) for property damage;
(d) 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; and
(e) 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 Indiana; and
(f) 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 (a) and (b) of
this Section 9.1 in an amount sufficient to prevent Lessor from becoming a
coinsurer.
Section 9.2 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.
Section 9.3 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 any mortgages.
Section 9.4 Waiver of Subrogation. All insurance policies carried by
either party covering the Premises, the Facility and the Leased Equipment,
including without limitation, contents, fire and casualty insurance, shall
expressly waive any right of subrogation on the part of the insurer against the
other party. Lessor and Lessee hereby waive and relinquish, and release each
other from, any and all rights and claims which either may have or hereafter
acquire against the other arising out of damage to the Premises, the Facility
and the Leased Equipment resulting from fire or other peril insurable under
available forms of fire and extended coverage insurance policies whether or not
such damage is caused by any alleged negligence of either Lessor or Lessee,
their respective employee, invitees, agents or licensees.
ARTICLE X
Section 10.1 Insurance Proceeds. All proceeds payable by reason of any
loss or damage to any of the improvements comprising the Premises or the
Facility or the Leased Equipment and insured under any policy of insurance
required by Article IX of this Lease
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shall be paid to Lessor and held by Lessor in trust (subject to the provisions
of Section 10.2 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 Premises, the Facility, and the Leased Equipment
and shall be paid out by Lessor 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 Premises, the Facility or the Leased
Equipment shall be retained by Lessor and shall be credited against future
rental payments due from Lessee under this Lease. All salvage resulting from any
such loss covered by insurance shall belong to Lessor.
Section 10.2 Damage or Destruction. If, during the Term, the Facility, the
Premises or the Leased Equipment are totally or partially destroyed from a risk
covered by the insurance described in Article IX, Lessor shall, as soon as
practicable, restore the Facility to substantially the same condition as existed
immediately before the destruction. If the costs of the restoration exceed the
amount of proceeds received by Lessor from the insurance required under Article
IX, Lessor shall be solely responsible for paying the difference between the
amount of insurance proceeds and such cost of restoration.
Section 10.3 Restoration of Lessee's Property. If Lessor is required to
restore the Facility as provided in Section 10.2, Lessor shall not be required
to restore alterations made by Lessee, Lessee's improvements, trade fixtures or
personal property, such excluded items being the sole responsibility of Lessee
to restore.
Section 10.4 Abatement of Rent. During the period required for repair and
restoration, payments of rent provided for in Section 3.1 shall be abated in the
manner and to the extent that is fair, just and equitable to both Lessee and
Lessor, taking into consideration, among other relevant factors, the number of
useable beds affected by such damage or destruction.
ARTICLE XI
Section 11.1 Definitions.
(a) "Condemnation" means (a) the exercise of any governmental power,
whether by legal proceedings or otherwise, by a condemnor, and (b) a voluntary
sale or transfer by Lessor to any condemnor, either under threat of condemnation
or while legal proceedings for condemnation are pending.
(b) "Date of Taking" means the date the condemnor has the right to
possession of the property being condemned.
(c) "Award" means all compensation, sums or anything of value
awarded, paid or received on a total or partial condemnation.
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(d) "Condemnor" means any public or quasi-public authority, or
private corporation or individual, having the power of condemnation.
Section 11.2 Parties' Rights and Obligations. If during the term of this
Lease there is any taking of all or any part of the Premises or the Facility or
any interest in this Lease by condemnation, the rights and obligations of the
parties shall be determined by this Article XI.
Section 11.3 Total Taking. If the Facility and the Premises are totally
taken by condemnation, this Lease shall terminate on the Date of Taking.
Section 11.4 Partial Taking. If a portion of the Premises and/or all or a
portion of the Facility is taken or condemned, this Lease shall remain in effect
providing that the Facility is not thereby rendered unsuitable for use. The
Facility shall be deemed to have been rendered unsuitable for use if, in the
good faith and judgment of Lessee, reasonably exercised, after any such taking
by condemnation, the Facility cannot be operated on a commercially practicable
basis as a long term care facility of the type and quality existing and licensed
immediately prior to such taking or condemnation, taking into account, among
other relevant factors, the number of useable beds affected by such taking or
condemnation.
If as the result of any such partial taking or condemnation, this Lease is
not terminated but the number of beds available for operation of the Facility of
the type and quality existing prior to the taking has been reduced, Lessee shall
be entitled to a reduction as of the Date of Taking in the amount of rent to the
extent that is fair, just and equitable to both Lessee and Lessor, taking into
consideration, among other relevant factors, the number of beds affected by such
taking or condemnation.
Section 11.5 Restoration. If there is a partial taking of the Premises or
the Facility and this Lease remains in full force and effect pursuant to Section
11.4, Lessor shall, as soon as practicable, at its cost, accomplish all
necessary restoration to restore the Facility to substantially the same
condition as existed immediately before the taking, provided, however, that
Lessor shall have no obligation to repair or restore alterations made by Lessee,
Lessee's leasehold improvements, Lessee's trade fixtures and Lessee's Equipment.
Section 11.6 Award--Distribution.
The entire Award shall belong to and be paid to Lessor except that Lessee
shall be entitled to receive from the award the following:
(a) Any amounts in excess of $2,825,000.
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(b) Any sum specifically included in the award for loss of goodwill
by Lessee or moving expenses.
ARTICLE XII
Section 12.1 Events of Default. The occurrence of any of the events, acts
or circumstances described in Sections 12.2 and 12.3 shall constitute an Event
of Default under this Lease.
Section 12.2 Failure in Payment. Failure by Lessee to pay in full any rent
payable under this Lease when due, and the continuance of such failure for seven
(7) days after Lessor has given Lessee notice of such failure.
Section 12.3 Failure in Other Performance. Failure by Lessee to observe,
perform or comply with any of the terms covenants, agreements or conditions
contained in this Lease (other than as specified in Section 12.2), and the
continuance of such failure for thirty (30) days after Lessor have given Lessee
notice of such failure. If Lessee has promptly commenced and diligently pursued
remedial action within said thirty (30) day period but has been unable to cure
its default prior to the expiration thereof, said thirty (30) day period shall
be extended for the minimum time reasonably required for the completion of
Lessee's remedial action.
Section 12.4 Remedies. Upon the occurrence of any Event of Default,
Lessor, in addition to the other rights or remedies they may have, shall have
the immediate right of reentry. Should Lessor elect to reenter, as herein
provided, or should it take possession pursuant to legal proceedings or pursuant
to any notice provided for by law, Lessor may either terminate this Lease or it
may from time to time, without terminating this Lease, relet for the account of
Lessee the Premises, the Facility, the Leased Equipment or any part thereof for
such term or terms, which may be for a term shorter than or for a term extending
beyond the term of this Lease, and at such rental or rentals and on such other
terms and conditions as Lessor, in its sole discretion, may deem advisable.
Should Lessor at any time terminate this Lease as a result of an Event of
Default, in addition to any other remedy it may have, Lessor may recover from
Lessee all damages incurred by reason of such Event of Default, including the
cost of recovering the Premises. Notwithstanding the foregoing, should Lessor
terminate this Lease, Lessee shall have the right to reenter the Premises and
the Facility for the sole purpose of removing any of Lessee's Equipment located
thereon or therein.
Section 12.5 No Remedy Exclusive. No remedy herein conferred upon or
reserved to Lessor is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Lease or now or hereafter
existing at law or in equity or by statute. No delay or omission to exercise any
right, remedy, or power accruing upon any Event of Default shall impair any such
right, remedy or power or shall be construed to be
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a waiver thereof unless and until such Event of Default has been cured.
ARTICLE XIII
Section 13.1 Lessor's Right to Perform Lessee's Covenants. If Lessee
defaults in the making of any of the payments, or the performance of any of the
obligations provided for in this Lease, Lessor may, at its option and on behalf
of Lessee, make any such payments or perform any such obligations.
Section 13.2 Notice of Default. Before exercising the option in Section
13.1, however, Lessor must give Lessee written notice of Lessee's default, and
of Lessor's intention to correct that default. If thirty (30) days after such
notice, or such shorter time period as Lessor may specify in the notice if
further delay would impair materially any substantial right, property, or
benefit of Lessor, Lessee has not corrected such default, Lessor may exercise
its rights under this Article XIII.
Section 13.3 Lessee's Obligations to Lessor. In the event Lessor performs
any obligation on Lessee's behalf, Lessee shall reimburse Lessor for any amounts
reasonably paid or expended. This reimbursement shall be due and payable on the
next date after the expense is incurred that rent is otherwise due.
ARTICLE XIV
Section 14.1 Quiet Enjoyment. Lessor covenants and agrees that, so long as
Lessee observes and performs all of the covenants, conditions, and stipulations
of this Lease, Lessee may lawfully and quietly hold, occupy and enjoy the
Premises, the Facility and the Leased Equipment during the Term.
Section 14.2 Inspection by Lessor. Notwithstanding the foregoing, Lessor
shall have the right, during normal business hours upon not less than
twenty-four (24) hours advance notice, to enter upon the Premises and into the
Facility and to examine and inspect the same.
ARTICLE XV
Section 15.1 Assignment and Subletting.
Section 15.1.1 To a Lessee Affiliate. Lessee may, without prior approval
from Lessor, sublease both Tract I and Tract II of the Premises, as set forth on
Exhibit C, the Facility and the Leased Equipment or assign its rights and
obligations under this Lease to any corporation which is a parent, sister or
wholly-owned subsidiary of Lessee (a "Lessee Affiliate"). Lessee shall give
Lessor written notice of any such assignment or subletting. No assignment or
subletting shall release Lessee from its liability under this Lease, unless
Lessor specifically consents to a release.
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Section 15.1.2 To other than a Lessee Affiliate - The Facility. Lessee may
sublease Tract I of the Promises as set forth on Exhibit C, the Facility and the
Leased Equipment or assign its rights and obligations under this Lease to a
person or entity that is not a Lessee Affiliate with the prior written consent
of Lessor, which consent shall not be unreasonably withheld if Lessor is
satisfied as to the ability of the proposed transferee to make the rent payments
due and owing hereunder and to comply with Lessee's other obligations under this
Lease. No assignment or subletting shall release Lessee from its liability under
this Lease, unless Lessor specifically consents to a release.
Section 15.1.3 To other than a Lessee Affiliate - Additional Property.
Lessee may sublease Tract II of the Premises, as set forth on Exhibit C. or
assign its rights and obligations under this Lease with respect to Tract II to a
person or entity that is not a Lessee Affiliate without the prior written
consent of Lessor. No assignment or subletting shall release Lessee from its
liability under this Lease, unless Lessor specifically consents to a release.
Section 15.2 Assignment and Subletting By Lessor. Lessor may at any time
assign its rights and obligations under this agreement, provided, however, that
Lessor shall furnish to Lessee a written statement from Lessor's assignee that
such assignee recognizes all of the Lessee's rights under this agreement.
Section 15.3 Subsequent Assignments. No assignment or subletting that is
approved pursuant to this Article XV shall be deemed to remove any subsequent
assignment or subletting from the provisions of this Article XV, it being the
intent hereof that every assignment and subletting, whenever occurring, shall
require the same approval as is set forth herein for an original assignment or
subletting.
ARTICLE XVI
Section 16.1 Notices. All notices provided for in this Lease or related to
this Lease shall be in writing and shall be delivered to the parties at the
addresses set forth below. All such notices or other papers or instruments
related to this Lease shall be deemed sufficiently served or delivered on the
third day after the date of mailing, provided that they are sent by United
States Registered or Certified Mail, postage prepaid, in an envelope properly
sealed.
Notices intended for the Lessor should be sent to:
Sheridan Health Care Center, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Notices intended for the Lessee should be sent to:
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Cardinal Development Co., Inc.
0000 Xxxxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Section 16.2 Change in Address. Both Lessor and Lessee may change the
address or the name of the addressee applicable to subsequent notices by giving
notice as provided above. However, notice of such a change shall not be
effective until the fifth day after mailing.
ARTICLE XVII
Section 17.1 Captions. The captions in this Lease are for convenience of
reference only. In no way do those captions define, limit or describe the scope
or intent of this Lease.
Section 17.2 Gender. Words showing number shall be taken to include both
the singular and the plural forms. Words showing gender shall be taken to
include masculine, feminine and neuter.
Section 17.3 Successors and Assigns. This Lease shall inure to the benefit
of and be binding upon Lessor and Lessee and their respective successors and
assigns.
Section 17.4 Governing Law. This Lease shall be governed, construed, and
enforced in accordance with the Laws of the State of Indiana.
Section 17.5 Memorandum of Lease. Lessor and Lessee shall execute a
Memorandum of this Lease in form and substance satis- factory to Lessee. The
Memorandum may be recorded in the Public Records of Xxxxxxxxx County, Indiana.
Lessee shall pay the cost of recording.
Section 17.6 Severability. Each term and provision of this Lease shall be
enforced to the fullest extent permitted by law. Should any term or provision of
this Lease, or the application thereof, prove illegal or unenforceable, the
remainder of this Lease shall still be valid and enforceable.
Section 17.7 Amendments and Modifications. Neither this Lease nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought.
Section 17.8 Interpretation. No provision of this Lease shall be construed
against or interpreted to the disadvantage of either Lessor or Lessee by any
court or other governmental or
-16-
judicial authority by reason of such party's having or being deemed to have
structured, written, drafted or dictated such pro visions.
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the
day and year first written above.
WITNESSES: LESSOR:
SHERIDAN HEALTH CARE CENTER, INC.
/s/ Xxxxx X. X'Xxxxx /s/ Xxxxx X. Xxxxxxx
---------------------------- ---------------------------------
As to Lessor Xxxxx X. Xxxxxxx, President
Date:4/28/89
LESSEE:
CARDINAL DEVELOPMENT CO., INC.
/s/ Xxxxx XxXxxxxx /s/ Xxxxxxx X. Xxxxxxx
---------------------------- ---------------------------------
As to Lessee Xxxxxxx X. Xxxxxxx, Vice President
Date:4/28/89
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FIRST AMENDMENT TO LEASE AGREEMENT
This is a FIRST AMENDMENT TO LEASE AGREEMENT (the "First Amendment")
executed and dated as of the 5th day of August, 1992 between SHERIDAN HEALTH
CARE CENTER, INC., an Indiana corporation ("Lessor") and CARDINAL DEVELOPMENT
CO, INC., a Kentucky corporation ("Lessee").
Recital
Lessor and Lessee entered into a certain Lease Agreement executed and
dated as of April 27, 1989 (the "Original Lease"), pursuant to which the Lessor
leased to Lessee a certain nursing home facility in Danville, Indiana. The
parties wish to amend the Original Lease as provided below.
NOW, THEREFORE, in consideration of the Lessor's execution and delivery of
a certain Settlement Agreement of even date herewith by and among Lessor, Cicero
Children's Center, Inc., Lessee, and Sheridan Acquisition Corporation (to which
the form of this First Amendment is attached as Annex A), and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Lessor and Lessee hereby amend the Original Lease as follows:
1. Section 3.1 of the Original Lease is hereby modified and
amended to add the following sentence:
Lessee shall pay to Lessor a late payment charge equal to five
percent (5%) of the monthly Base Rent payment if such payment is
posted later than the 12th day of each calendar month during the
Initial Term and any Renewal Term.
2. For purposes of Article XV of the Original Lease, Lessor hereby
acknowledges and approves Lessee's good faith attempts through and until January
31, 1993, to qualify and obtain a subtenant to sublet and operate the Danville
facility, and Lessee agrees not to unreasonably withhold its consent to such
subletting or assignment of the Original Lease.
IN WITNESS WHEREOF, the parties have executed and delivered this First
Amendment effective as of the date set forth in the preamble hereto, but
actually on the date set forth below.
SHERIDAN HEALTH CARE CENTER, INC.
By:/s/ Xxxxx Xxxxxxx
------------------------------
Xxxxx Xxxxxxx
President
Date:8/10/92
CARDINAL DEVELOPMENT CO., INC.
By:/s/ Xxxxx X. Xxxx
------------------------------
Xxxxx X. Xxxx
President
Date:8-6-92
SECOND AMENDMENT TO LEASE AGREEMENT
This is a Second Amendment to Lease Agreement (the "Second Amendment")
executed and dated as of October 25, 1993 between SHERIDAN HEALTHCARE CENTER,
INC., an Indiana corporation ("Lessor") and CARDINAL DEVELOPMENT CO., INC, a
Kentucky corporation ("Lessee").
Recital
Lessor and Lessee entered into a certain Lease Agreement executed and
dated as of April 27, 1989, as amended by a certain First Amendment to Lease
Agreement dated August 5, 1992 (the "Original Lease"), pursuant to which the
Lessor leased to Lessee a certain nursing home facility in Danville, Indiana
(the "Facility"). The parties wish to amend the Original Lease as provided
below.
NOW, THEREFORE, in consideration of the consents, releases and other
covenants provided for below and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledge, Lessor and Lessee agree
as follows:
1. Lessee hereby releases to Lessor the real estate described as Tract II
to the Original Lease pursuant to the Partial Release of Lease of even date
herewith, a copy of which is attached hereto (the "Release of Lease").
2. Lessor hereby covenants and agrees that during the Term of the Original
Lease and any and all Renewal Terms, Lessor shall not directly or indirectly
construct, develop, own, manage, operate, join, control or participate in the
ownership, management, development, construction or control of, or be connected
in any manner with, as agent, partner, proprietor, shareholder, officer,
director, consultant, developer, or otherwise, a nursing home or related
long-term healthcare business on the real property released to Lessor pursuant
to the Release of Lease (the "Real Property"). Subject to the foregoing
constraint, which Lessor agrees shall run with the land, Lessee and Lessor agree
that Lessor is free to alienate and use said Real Property for any other use or
purpose whatsoever. Lessor and Lessee agree that, in the event of a breach of
the covenant set forth in the preceding sentence, damages would be difficult to
ascertain, and that Lessee will be entitled to injunctive and/or other equitable
relief, without prejudice to other rights or remedies, and that the Lessor shall
not assert in any such action that there is an adequate remedy at law for the
breach upon with the action is based, Lessor agrees that any subsequent
alienation or conveyance of the Real Property by deed or lease shall prohibit
the Grantee or other Lessee from using the Real Property in contravention of the
terms of this paragraph.
3. The Original Lease is hereby amended to add a new Section 17.9 as
follows:
Within thirty (30) days of the end of each calendar quarter
commencing September 1, 1993, Lessee shall furnish Lessor with a
copy of Lessee's unaudited financial statements pertinent to the
operation of the Facility, including but not limited to an income
statement and balance sheet, together with any and all other
financial information reasonably requested by Lessor. Additionally,
within one hundred and twenty (120) days of the end of Lessee's
fiscal year, Lessee shall deliver to Lessor an annual financial
report containing a combined or combining balance sheet and
statement of operations for the Lessee for the year then ended,
together with an audit report issued by Lessee's certified public
accounting firm. Any request by Lessor for Lessee's financial
information shall not be unreasonable, provided such information is
maintained and/or otherwise generated in the normal course of
Lessee's operations.
4. Lessor hereby consents to and otherwise agrees to execute and deliver
to Lessee the certain Lease Assignment, Consent and Release dated and effective
as of November 1, 1993, a copy of which is attached hereto. Lessee agrees to
cooperate with Lessor and Lessor's mortgagee with respect to the execution and
delivery of appropriate subordinations, attornment and non-disturbance
agreements as may be necessary to complete the transactions contemplated
thereby.
5. Except as otherwise set forth herein, the remaining terms and
conditions of the Original Lease and all amendments thereto remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereby execute this Second Amendment
effect as of October 25, 1993, but actually on the dates set forth below.
LESSOR: XXX HEALTHCARE CENTER, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Xxxxx X. Xxxxxxx
President
Date:10/27/93
Attest:
/s/ Xxxxx X'Xxxxx
--------------------------
Xxxxx X'Xxxxx
Attorney
LESSEE: CARDINAL DEVELOPMENT CO., INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxx
Vice President
Date:10/25/93
Attest:
/s/ Xxxx X. Xxxxxxx
--------------------------
Xxxx X. Xxxxxxx
Assistant Secretary
PARTIAL RELEASE OF LEASE
This is a Partial Release of Lease dated October 25, 1993 from:
Cardinal Development Co, Inc, ("LESSEE")
0000 Xxxxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
to
Sheridan Healthcare Center, Inc. ("LESSOR")
c/o Xxxxx X. Xxxxxxx
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
W I T N E S S E T H:
For valuable consideration received, Lessee hereby releases and discharges
in full to Lessor the real property described on Exhibit A hereto constituting a
part of the real estate originally leased by Lessor to Lessee pursuant to a
certain Lease Agreement dated April 27, 1989, as amended by a certain First
Amendment to Lease Agreement dated August 5, 1992, and a Second Amendment to
Lease Agreement dated October 25, 1993 (evidenced by recorded Memorandum of
Lease recorded as Instrument No. 7823 in Miscellaneous Book 117, Page 295, with
the Register of Deeds of Xxxxxxxxx County, Indiana).
WITNESS the signature of Lessee on the above date.
CARDINAL DEVELOPMENT CO., INC.
By:/s/ Xxxxxxx Xxxxxxx
------------------------------
Title:Vice President
COMMONWEALTH OF KENTUCKY )
)
COUNTY OF JEFFERSON )
The foregoing Partial Release of Lease was acknowledged before me on
October 25, 1993, by Xxxxxxx X. Xxxxxxx, Vice President of Cardinal Development
Co., Inc., on behalf of the Corporation.
My commission expires:July 24, 1994
/s/ XxXxx Xxxxxx
------------------------------
NOTARY PUBLIC
State-at-Large, Kentucky
Printed Name:XxXxx Xxxxxx
County of Residence:Jefferson
THIS INSTRUMENT PREPARED BY:
/s/ Xxxx X. Xxxxxxx
-------------------------------
Xxxx X. Xxxxxxx, Esq.
Cardinal Group Corporation
0000 Xxxxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Indiana Bar No. 15327-22
EXHIBIT A
TRACT II: Part of the Northwest Quarter of Section 8 Township 15 North, Range 1
East of the Second Meridian in Washington Township, Xxxxxxxxx County, Indiana
described as follows, to-wit:
Commencing at a brass plug found marking the Northwest corner of said Quarter
Section; thence South 01 degrees 02 minutes 12 seconds West (assumed bearing)
along the West line of said Quarter Section 663.13 feet to the beginning point
of this description; thence continue South 01 degrees 02 minutes 12 seconds West
along the last described course 259.01 feet; thence North 90 degrees 00 minutes
00 seconds East parallel with the North line of said Quarter Section 603.06
feet; thence South 01 degrees 02 minutes 12 seconds West parallel with the West
line of said Quarter Section 120.00 feet; thence North 90 degrees 00 minutes 00
seconds East parallel with the North line of said Quarter Section on an
extension of the Northerly boundary of "Amended Saddlebrook Farm West-Section
Two" as recorded in Plat Book 8, page 104, in the office of the Recorder of
Xxxxxxxxx Xxxxxx, Xxxxxxx, 0000.00 feet; thence North 00 degrees 07 minutes 41
seconds East along the Northwesterly boundary of "Amended Saddlebrook Farm
West-Section Two" and the Westerly boundary of "Saddlebrook Farm West-Section
One" as recorded in Plat Book 8, page 97 in the office of the Recorder of
Xxxxxxxxx County, Indiana, 518.02 feet; thence South 90 degrees 00 minutes 00
seconds West parallel with the North line of said Quarter Section 1805.98 feet;
thence South 01 degrees 02 minutes 12 seconds West parallel with the West line
of said Quarter Section 139.09 feet; thence South 90 degrees 00 minutes 00
seconds West parallel with the North line of said Quarter Section 200.00 feet to
the point of beginning. Containing 21.604 acres, more or less.
