1
Exhibit 10.92
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Agreement") is made and entered into as of
this 1st day of July, 1996, by and between WESTMINISTER HEALTHCARE, INC., a
Texas corporation ("Lessor"), and BRITWILL INVESTMENTS - II, INC., a Delaware
corporation ("Lessee").
RECITALS
WHEREAS, Lessor is the owner of the Demised Premises (as hereinafter
defined);
WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to lease
from Lessor, the Demised Premises;
NOW, THEREFORE, for and in consideration of the mutual covenants,
conditions and agreements set forth herein, and other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. LEASED PROPERTY.
Upon the terms, covenants and conditions hereinafter set forth, Lessor
hereby leases to Lessee, and Lessee hereby leases from Lessor, all property
constituting a part of, or used in the operation of, that certain 138-bed
nursing home facility commonly known as Homestead of XxXxxxxx, located at 0000
Xxxxxxx Xxxxxx, XxXxxxxx, Xxxxx (the "Demised Premises"). The Demised Premises
includes all of the following property (the "Property"):
All of that parcel of land (the "Land") described on
Exhibit "A" attached hereto and incorporated herein by reference;
(a) All buildings, structures and other improvements
(collectively, the "Improvements") now or hereafter located upon the
Land, including the building or buildings comprising the nursing home
facility presently located thereon;
(b) All of the following items of personal property, fixtures
and equipment used in conjunction with such Land and Improvements,
(collectively, the "Personal Property") now or hereafter installed in
or about the Land and the Improvements and owned or leased by Lessor,
more particularly described in Exhibit "A-1" attached hereto and
incorporated herein by reference.
2
2. TERM.
This Agreement shall be for an initial term of 20 years (the "Initial
Term") commencing on July 1, 1996 (the "Commencement Date"), with two 10-year
renewal options (the "Additional Terms"), which Lessee may exercise by notice to
Lessor at any time prior to 90 days before the expiration of the immediately
preceding Term, provided that Lessee is not in default at the time of such
exercise and this Agreement has not otherwise been terminated or extended in
accordance with the provisions hereof. The rental rate during any renewal
periods shall be based upon a fair market rental as agreed upon by the parties
at the time of the extension. Each year from the commencement date or any
anniversary date thereof through the date immediately preceding the next
anniversary date thereof shall be a "Lease Year." This Agreement shall terminate
automatically upon transfer of ownership of the Demised Premises to Lessee
pursuant to Section 45 or 46 below. In such event, rent and any other
obligations hereunder shall be prorated through the date of such transfer of
ownership.
3. RENT.
Lessee shall pay to Lessor monthly rent for the Demised Premises as
follows:
(a) Initial Rent. For the first Lease Year, Lessee shall pay
rent of $47,500 per month.
(b) Rent Increases. The rent shall increase on the first day
of each subsequent Lease Year by an amount equal to the immediately
preceding rental amount multiplied by the total of all percentage
increases in the applicable daily bed rate, if any, approved by the
Medicaid agency for the state in which the Demised Premises is located
during the Lease Year just ended; provided that in no event shall the
rent ever (i) increase by an amount of more than 6% in any Lease Year,
or (ii) decrease. If information regarding Medicaid bed rate percentage
increases is not available, the parties shall in good faith seek to
utilize a comparable index or otherwise negotiate to obtain a fair
rental rate.
(c) Payment of Rent. Rent for each calendar month shall be
paid on or before the 15th day of such calendar month. Rent shall be
made to Lessor at the address specified in the Notices section below,
or at such other place as Lessor may from time to time direct. If the
Commencement Date falls on other than the first day of the month, rent
for the partial month shall be prorated and shall be paid on or before
the later of (i) the Commencement Date, or (ii) the 15th day of the
calendar month within which the Commencement Date falls.
4. SECURITY DEPOSIT. Lessee shall deposit with Lessor the sum of
$47,500 as security for the full and faithful performance of every provision of
this Agreement to be performed by Lessee, which sum shall be delivered on or
before the
-2-
3
Commencement Date. If Lessee has committed an Event of Default (as hereinafter
defined), including but not limited to the provisions relating to the payment or
rent or any other sum required hereunder, Lessor may apply the security deposit
to fund the amount in question, or to compensate Lessor for any other loss, cost
or damage which Lessor may suffer by reason of Lessee's default. If any portion
of said deposit is used or applied, Lessee shall, within 30 days after written
demand therefor, deposit cash with Lessor in an amount sufficient to restore the
security deposit to its original amount and Lessee's failure to do so shall be a
breach of this Agreement. If Lessee shall fully and faithfully perform every
provision to be performed by it, the security deposit or any balance thereof
shall be repaid to the Lessee within 10 days after the expiration of this Lease.
5. PURCHASE OF INVENTORY AND SUPPLIES.
Lessee will purchase for all cash Lessor's inventory and supplies on
hand in the Demised Premises as of the Commencement Date for 70% of the actual
cost as documented by invoices and other evidence of cost. The amount of
inventory and supplies shall not be materially in excess of the amount
customarily retained at the Demised Premises. Lessee and Lessor shall conduct
the inventory jointly on a date to be determined by mutual consent prior to the
Commencement Date.
6. TREATMENT OF ACCOUNTS.
The ownership of accounts receivable and payment of accounts payable
for services rendered prior to the Commencement Date shall remain with Lessor.
Lessee, however, agrees to use its good faith efforts to collect Lessor's
pre-Commencement Date accounts receivable and to pay Lessor's pre-Commencement
Date accounts payable (from the proceeds of Lessor's receivables and not from
Lessee's own funds). Lessee shall be entitled to retain 5% of all of Lessor's
pre-Commencement Date accounts receivable which are collected by Lessee as
compensation for this service.
7. TREATMENT OF EMPLOYEES.
Up to, but not exceeding, the first 120 days after the Commencement
Date (the "Transition Period"), Lesser shall remain the employer of all
employees of Lessor involved in the day-to-day operations of the Demised
Premises immediately prior to the Commencement Date, although such employees
shall report directly to Lessor. Lessee shall reimburse Lessor for the salary,
payroll tax and benefit expenses related to employment of the above-referenced
employees during the Transition Period; provided, that Lessee shall not be
obligated to reimburse for any increases in salaries or benefits, granted
without Lessee's consent, over the most recent amounts for those items disclosed
to and approved by Lessee prior to the Commencement Date. Lessor shall not, as
employer during the Transition Period, take any action with respect to the
employees that would in any way impair Lessee's quiet enjoyment of, or its
ability to operate, the Demised Premises. No later than the 120th day following
the Commencement Date, Lessor shall terminate the employment of and cooperate
-3-
4
with Lessee to provide for the transfer of employment to Lessee as a successor
employer of those employees of Lessor involved in the day-to-day operations of
the Demised Premises that are offered employment by Lessee, with such employment
by Lessee to be on substantially the same terms and conditions of employment as
existed between Lessor and such employees immediately prior to the expiration of
the Transition Period. Unless otherwise required by applicable law, employee
vacation, holiday, sick pay, retirement and severance benefits, and payroll
taxes shall not be prorated at the end of the Transition Period. Instead, Lessor
shall pay all such items directly on or prior to the end of the Transition
Period and provide satisfactory proof of payment to Lessee.
8. RECORDS. Lessee shall maintain adequate and customary books and
records in connection with its use and occupancy, management and operation of
the Demised Premises and any business thereon and all revenues and other sales
earned in connection with its business conducted at the Demised Premises. Lessee
agrees that such books and records shall be available for review by Lessor at
reasonable times and upon reasonable notice. Lessee shall provide Lessor with
copies of its quarterly operating statements, profit and loss statements and
annual financial statements within 15 days after such statements are available
to Lessee.
9. NET LEASE. This Agreement is intended to be a net lease in that it
is the intention of the parties hereto that all expenses and charges related to
the ownership and operation of the Demised Premises, whether for upkeep,
maintenance, insurance, taxes, utilities, federal, state and municipal
requirements and other charges of a like nature or type or otherwise shall be
paid by Lessee.
10. TAXES AND ASSESSMENTS.
(a) Obligation to Pay Taxes and Assessments. Lessee agrees to
pay before delinquency any and all real and personal property taxes and
assessments levied or assessed against the Demised Premises during the
term of this Agreement and any other taxes, assessments, or fees levied
or assessed against the Demised Premises as a substitute for or in
addition to real and personal property taxes. At the commencement and
end of the term of this Agreement, such taxes and assessments shall be
prorated. Lessee further agrees to pay before delinquency any and all
taxes or assessments levied or assessed against the rents required to
be paid hereunder or imposed upon the lease documents, including,
without limitation, any recording charges. Lessee shall promptly pay
when due any and all federal, state and local taxes including without
limitation unemployment and sales taxes, levied or assessed with
respect to any services or products furnished, used or licensed
pursuant to this Agreement and all accounts or other indebtedness of
every kind incurred by Lessee in the operation of the Demised Premises.
(b) Lessee's Right to Protest. Lessee shall have the right to
protest the amount or payment of any real or personal property taxes or
assessments
-4-
5
which it is required to pay pursuant to this Agreement; provided that
Lessee adequately protects Lessor's interest in the Demised Premises by
bonding or otherwise. Lessee agrees that it shall hold Lessor harmless
and defend Lessor from any and all claims, losses or damages resulting
from prosecution of such protest by Lessee.
11. INSURANCE.
(a) General and Liability. During the Initial Term and any
Additional Term of this Agreement, Lessee shall at all times keep the
Demised Premises insured with the kinds and amounts of insurance
described below. The policies must name Lessor as an additional
insured. Losses shall be payable to Lessor and Lessee as provided in
Subsection (d) of this Section. In addition, the policies shall name as
an additional insured any mortgagee by way of a standard form of
mortgagee's loss payable endorsement. Any loss adjustment shall require
the written consent of Lessor, Lessee, and each mortgagee. Evidence of
insurance shall be deposited with Lessor and, if requested, with any
mortgagee(s). Lessee shall furnish Lessor with a copy of such insurance
coverage, or with a certificate of the company issuing such insurance
certifying that the same is in full force and effect. Lessee shall
timely renew any and all policies required by this Section and furnish
evidence of such renewal and the payment of policy premiums at least 30
days prior to the expiration of such policy. The policies on the
Demised Premises shall insure against the following risks:
(i) Loss or damage by fire and such other risks as
may be included in extended coverage insurance, including but
not limited to loss or damage from leakage of any sprinkler
system now or hereafter installed in the Demised Premises 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 100% of the then full replacement value thereof (as
defined below in Subsection (b) of this Section);
(ii) Loss or damage by explosion of steam boilers,
pressure vessels or similar apparatus, now or hereafter
installed in the Demised Premises, in such limits with respect
to any one accident as may be reasonably agreed by Lessor and
Lessee from time to time;
(iii) Claims for personal injury or property damage
under a policy of general public liability insurance with
amounts not less than $1,000,000 per claim in respect of
bodily injury, $4,000,000 aggregate per claim and $300,000 for
property damage;
(iv) Claims arising out of medical malpractice in an
amount not less than $1,000,000 for each person and for each
occurrence;
-5-
6
(v) Such other hazards and in such amounts as may be
customary for comparable properties in the area and is
reasonably available;
(vi) Loss of rental under a rental value insurance
policy covering a risk of loss during the six months of
reconstruction resulting from the occurrence of any of the
hazards described in subsections (i) and (ii) of this
Subsection (a) of this Section in an amount sufficient to
prevent Lessor from becoming a coinsurer; and
(vii) Lessee agrees to procure and maintain
throughout the term of this Agreement Worker's Compensation
insurance in such amounts as may be required by applicable
state laws or regulations.
(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, Lessee shall maintain such additional insurance as may
be reasonably required, from time to time, by any mortgagee.
(d) Insurance Proceeds. Upon any damage to the Improvements,
any insurance proceeds payable as a result of such damage (other than
business interruption insurance proceeds), shall be paid to Lessor and
held by Lessor in trust and shall be made available for reconstruction
or repair, as the case may be, 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 Demised Premises shall be retained by Lessor
and shall be credited against future rental payments due from Lessee
under this Agreement. All salvage resulting from any such loss covered
by insurance shall belong to Lessor.
(e) Damage or Destruction. If, during the Term of this
Agreement, the Demised Premises are totally or partially destroyed from
a risk covered by the insurance described in Subsection (a) of this
Section, Lessor 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 Lessor from the insurance required under
Subsection (a) of this Section, Lessee shall be solely responsible for
paying the difference between the amount of insurance proceeds and such
cost of restoration.
(f) Restoration of Lessee's Property. If Lessor is required to
restore the Demised Premises as provided in Subsection (e) of this
Section, Lessor shall not be required to restore alterations made by
Lessee, Lessee's improvements,
-6-
7
trade fixtures or personal property, such excluded items being the sole
responsibility of Lessee to restore.
(g) Abatement of Rent. During the period required for repair
and restoration, payments of rent provided for in Section 3 shall not
be abated until after the exhaustion of business interruption insurance
as provided for in Subsection (a)(vi) of this Section. After the
exhaustion of business interruption insurance, payments of rent
provided in Section 3 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 damage or destruction.
(h) Blanket Coverage. Notwithstanding anything to the contrary
contained in this Section, Lessee'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 Lessee; provided, however,
that the coverage afforded Lessor will not be reduced or diminished or
otherwise be different from that which would exist under a separate
policy meeting all other requirements of this Agreement.
(i) Endorsement and Rating. Lessee shall make timely delivery
of policies and certificates of all required insurance to Lessor, each
of which shall (i) contain a clause of endorsement to the effect that
it may not be terminated or materially amended except after 30 days'
written notice to Lessor and Lessee, and (ii) be written by a company
having a rating of not less than A+ in the current issue of "Best's
Insurance Guide" or a company acceptable to Lessor. All insurance shall
comply with and be subject to any underlying mortgage requirements.
(j) Waiver of Subrogation. Lessor and Lessee expressly waive
any and all rights and claims as against each other for losses and
damages to the extent that such losses and damages are required to be
covered by insurance, provided that such waiver is not prohibited by
the terms of the applicable insurance policies.
12. INDEMNIFICATION. Lessee agrees to indemnify Lessor against and hold
Lessor harmless from any and all liabilities, claims, suits, demands, causes of
action, losses, damages, costs and expenses, including attorneys' fees, arising
from or in any manner connected with the operation of the business by Lessee,
the performance of the terms and conditions of this Lease and any acts or
omissions of Lessee in connection with any of the matters contemplated by this
transaction. Lessor agrees to indemnify Lessee against and hold Lessee harmless
from any and all liabilities, claims, suits, demands, causes of action, damages,
costs and expenses, including attorneys' fees, arising from or in any manner
connected with Lessor's performance of the terms and conditions of this Lease.
-7-
8
13. USE OF DEMISED PREMISES. The Demised Premises shall be used for the
purpose of operating a health care facility, nursing home, or such other
activities, uses and purposes as are consistent with the use of the Demised
Premises as a certified and licensed nursing home.
14. MAINTENANCE AND REPAIRS. At all times during the term of this
Agreement and any renewals thereof, Lessee shall maintain the entire Demised
Premises in good condition and repair, ordinary wear and tear excepted. All
maintenance and repair work undertaken by Lessee shall be done in a workmanlike
manner, leaving the Demised Premises free of liens for labor and material. At
the termination of this Agreement, an inspection shall be performed as to
condition of paint, carpets, appliances, plumbing, and other interior fixtures,
improvements, and finishes etc., together with an inspection report as to the
exterior of each building and its surrounding grounds. It is the intent of the
parties hereto that the Demised Premises be maintained at all times and returned
upon the termination or expiration of this Agreement in a condition equal to
that at the time of execution of this Agreement, reasonable wear and tear
excepted. In the event that the parties cannot agree to the condition upon
termination of this Agreement, then the matter shall be submitted to arbitration
as provided for hereinbelow.
15. CONSTRUCTION OF IMPROVEMENTS TO EXISTING FACILITY. Lessee shall
have the right, without the consent of Lessor, to make nonstructural repairs,
improvements, alterations and installations to the Demised Premises in an amount
of less than $10,000 for each occurrence. All other repairs, improvements,
alterations and installations shall require the consent of Lessor, which shall
not be unreasonably withheld. Lessee shall make and construct all such repairs,
improvements, alterations and installations in accordance with all laws, rules
and regulations of applicable governing bodies and agencies, and shall
diligently complete such construction once the same has commenced. Lessor shall
have no responsibility for said construction or any costs, loss or damage
suffered by Lessee in connection therewith. All improvements constructed by
Lessee upon the Demised Premises shall, upon termination of this Agreement,
belong to Lessor. Lessee shall save and hold Lessor harmless and the Demised
Premises harmless from any and all liability of any kind on account of such work
or improvement while this Agreement remains in effect. Lessor shall have the
right at any time to post the Demised Premises with such notices as may be
required to protect Lessor's interest in the Demised Premises from mechanics'
liens or other liens of a similar nature.
16. PERSONAL PROPERTY.
(a) Lessee acknowledges that the Personal Property is the
property of Lessor and that Lessee has only the right to the exclusive
possession and use of the said property as provided herein. Lessee
shall keep all of the Personal Property in as good working order and
condition as it is in on the date of commencement of this Agreement,
and at the expiration of this Agreement shall return and deliver all
such Personal Property to Lessor in as good order
-8-
9
and condition as when received hereunder, reasonable wear and tear and
damage by Acts of God or insurable peril excepted; provided, that
Lessee agrees, if necessary for the proper operation of the Demised
Premises, or to comply with or maintain all pertinent licensure,
certification, insurance policy or other legal requirements and
otherwise in accordance with customary practice in the industry, that
Lessee shall replace all items of Personal Property which may be
damaged or destroyed through no fault or neglect of Lessor or which may
become worn out or obsolete during the Term of this Agreement (i.e.,
the "New Personal Property"), and such New Personal Property and
replacements thereof shall be the property of and owned by Lessor. Upon
expiration or termination of this Agreement, all Personal Property and
New Personal Property shall become the property of Lessor, if not
already owned by Lessor, and Lessee shall execute all documents and
take any actions reasonably necessary to evidence such ownership.
(b) If Lessee expends more than $5,000 in the aggregate to
replace any of the Personal Property during the last five years of the
Initial Term (and this Agreement is not renewed for an Additional
Term), Lessor, at its option, shall either (i) pay to Lessee Lessee's
depreciated book value (using a five-year straight-line method) for
such New Personal Property within 30 days of Lessee's surrender of the
Demised Premises, or (ii) allow Lessee to retain ownership of such New
Personal Property, in which event, Lessee may claim and remove the same
from the Demised Premises within a reasonable time thereafter.
17. UTILITIES. Lessee shall be responsible for and shall pay for all
utilities, including, without limitation, electricity, gas, water, garbage and
telephone, and any other services which may be used or furnished to or for
Lessee incident to the use and occupancy of the Demised Premises.
18. LAWS AND REGULATIONS; LICENSING REQUIREMENTS. Lessee shall at its
sole cost and expense comply with all laws, statutes, ordinances and regulations
of all governmental agencies having jurisdiction over the Demised Premises. The
judgment of any court of competent jurisdiction, or the admission of Lessee in
any action or proceeding against Lessee, that Lessee has violated any such
ordinance, statue, law or regulation applicable to the Demised Premises in the
use and occupancy thereof by Lessor shall be conclusive of such fact as between
Lessor and Lessee. In addition to the foregoing, Lessee shall, at its own cost
and expense, promptly do and provide or perform each and every requirement of
any state or federal licensing or certification authority having jurisdiction
over the Demised Premises as a health care facility or nursing home.
19. WASTE AND NUISANCE. Lessee shall not commit, or allow to be
committed, any waste upon the Demised Premises, or any public or private
nuisance. Lessee shall not use, nor allow the Demised Premises to be used for
any improper, immoral,
-9-
10
unlawful or objectionable purpose or take any actions which would impair the
reputation of the Demised Premises or Lessor.
20. DEFAULT BY LESSEE.
(a) Events of Default. The occurrence of any of the following
events shall constitute an "Event of Default":
(i) If Lessee fails to pay any installment of rent as
required by this Agreement, and such failure continues for 5
days after written notice of such failure from Lessor to
Lessee; or
(ii) If Lessee fails to perform any other covenants
or conditions on its part agreed to be performed and such
failure to perform other covenants shall continue for 30 days
after written notice (or such longer period of time, not to
exceed 120 days, as may be reasonably required to cure a
matter which Lessee is proceeding diligently to cure but, due
to its nature, cannot reasonably be remedied within 30 days)
of such failure from Lessor to Lessee; or
(iii) If a petition or proceeding under the federal
Bankruptcy Act or any amendment thereto is filed or commenced
by or against Lessee and said proceedings shall not be
dismissed within 60 days following commencement thereof; or
(iv) If Lessee is adjudged insolvent or makes an
assignment for the benefit of its creditors; or
(v) If a receiver is appointed in any proceeding or
action to which Lessee is a party with authority to take
possession or control of the Demised Premises or the business
conducted thereon by Lessee and such receiver is not
discharged within a period of 60 days after his appointment;
or
(vi) If any material license or certification of
Lessee necessary for the operation of the Demised Premises as
a nursing home facility is revoked or suspended (but not
including decertification for Medicare) and Lessee does not
obtain reinstatement of the license within 60 days thereafter.
(b) Remedies Available to Lessor. If an Event of Default shall
occur, Lessor shall have the right, at its election:
(i) To reenter the Demised Premises. In conjunction
with such reentry, Lessor may elect either to (A) terminate
this Agreement, or (B)
-10-
11
repossess the Demised Premises without terminating this
Agreement, in which event the obligations of Lessee to pay
rent for the balance of the lease term then in effect (but
excluding any Additional Term(s) not yet exercised) shall
remain. Lessor may reenter and repossess the Demised Premises
in the manner contemplated herein without being guilty of
trespass.
(ii) To cure Lessee's default at Lessee's cost. Any
sums paid by Lessor in this regard shall be due immediately
from Lessee to Lessor, and shall bear interest at a rate of
10% per annum from the date the sum is paid by Lessor until
Lessor is reimbursed by Lessee. The sum, together with
interest on it, shall be additional rent.
(iii) To xxx Lessee for damages for noncompliance
with any covenant, agreement or warranty contained in this
Agreement or for nonpayment of any sum required to be paid by
Lessee to Lessor.
(c) Default by Lessor. Any of the following occurrences,
conditions or acts by Lessor shall constitute a default hereunder: (i)
Lessor's failure to perform any obligation hereunder within 10 days
after receipt of written notice from Lessee to Lessor specifying such
default and demanding the same be cured; or (ii) Lessor's breach of any
representation or warranty hereunder which is not cured within 30 days
after receipt of written notice from Lessee to Lessor specifying such
default and demanding that the same be cured. Upon the occurrence of a
default by Lessor, Lessee shall have any and all remedies available at
law and/or in equity.
21. REMEDIES CUMULATIVE. The remedies conferred by this Agreement upon
Lessor and Lessee are not intended to be exclusive, but are cumulative and in
addition to all remedies otherwise afforded by law.
22. CONDEMNATION. In the event the title or possession of the whole of
the Demised Premises shall be taken by duly constituted authority in
condemnation proceedings under the exercise of the right of eminent domain, this
Agreement shall terminate upon the vesting of title or taking of possession
pursuant thereto, and Lessee shall make all payments required to be made by
Lessee pro rata to the date of such vesting or possession, and Lessee shall be
released from all further payment or rent or other obligations or rights under
this Agreement. In the event of a partial acquisition of said Demised Premises
under condemnation proceedings and both parties agree that it shall not be
practicable or economical for Lessee to retain and operate the remainder in
accordance with the uses and purposes to which the Demised Premises are then
being put, it shall be optional with Lessee to terminate this Agreement and, in
the event Lessee so elects, said termination shall be as provided in the
preceding sentence.
-11-
12
(a) In the event the parties disagree as to whether it is
practical or economical for Lessee to retain and operate the remainder
in accordance with the uses and purposes to which said premises are
then being put, the matter shall be submitted to resolution and
arbitration as provided for hereinafter.
(b) In the event that title or possession to a portion of the
Demised Premises shall be taken and if Lessee elects to continue to use
and operate the Demised Premises, or if it shall be practical and
economical for Lessee to continue to use and operate the Demised
Premises in accordance with the uses and purposes to which the Demised
Premises are then being put, this Agreement shall not terminate, but
the basic monthly rent after the date of vesting of title or the taking
of possession shall be reduced proportionately as agreed to between the
parties to the extent of the Demised Premises taken in such
proceedings. In the event the parties cannot agree to the reduction,
the matter shall be submitted to arbitration as provided for in Section
37. Termination shall be without prejudice to the rights of either
Lessor or Lessee to recover compensation from the condemning authority.
23. ASSIGNMENT AND SUBLETTING. Except as set forth in the following
sentence, Lessee may not transfer, sublet or assign any interest in this
Agreement without the prior written consent of Lessor, which Lessor shall not
unreasonably withhold. Lessee may, upon prior written notice to Lessor,
transfer, sublet or assign any interest in this Agreement to any subsidiary,
affiliate or other entity under common control with Lessee without the consent
of Lessor, provided that in such event Lessee shall remain liable for the full,
faithful and complete performance of this Agreement as provided herein. The
consent to any one assignment of subletting shall not be deemed a consent to a
subsequent assignment or subletting.
24. MECHANICS LIENS. Lessee agrees to keep the Demised Premises and all
parts thereof at all times free of mechanic's liens and other liens of labor,
services, supplies, equipment or material purchased or procured, directly or
indirectly by or for Lessee. Lessee, however, shall have the right to contest
the validity of the amount of any such lien as filed upon posting a bond in an
amount sufficient to discharge any lien, and upon a negative determination of
such contest shall immediately pay and discharge any judgment rendered, together
with all costs and charges incidental thereto, and shall cause the lien thereof
to be released from the Demised Premises. Should Lessee fail, within 90 days
after notice of filing of any such lien, to discharge or cause the release of
such liens or charges or to contest the same and post bond as provided for
above, then Lessor, at Lessor's option, may satisfy said liens by payment
thereof; and, in such event, the amount of such payment, together with interest
thereon at the rate of 10% per annum from the time the payment is so made until
repayment thereof, shall immediately be due and payable by Lessee to Lessor.
Upon the commencement of any work or alteration or repair, Lessor shall be
permitted to post on and affix to said premises proper notices of
nonresponsibility.
-12-
13
25. SUBORDINATION AND ATTORNMENT.
(a) General. Subject to the conditions set forth in this
Section, this Agreement is and shall be subordinate to any mortgage or
deed of trust now of record or recorded after the date hereof affecting
the Demised Premises; provided, however, that Lessee's agreement to
subordinate to any future mortgage is conditioned entirely upon the
agreement of the lienholder and any subsequent purchaser or acquiror to
not disturb Lessee's possession of the Demised Premises as long as
Lessee has not committed an Event of Default under this Agreement. In
the event of any foreclosure of any mortgage or deeds of trust
encumbering the Demised Premises, or any deed in lieu of foreclosure,
Lessee shall attorn to and recognize the purchaser at the foreclosure
sale or the acquiring party pursuant to the deed in lieu of foreclosure
as Lessee's landlord, provided that said purchaser also recognizes
Lessee's nondisturbance rights under this Agreement. Lessee shall
receive a copy of any notice of default sent to Lessor from any such
mortgagee on the Demised Premises and be given the same right to cure
as Lessor.
(b) Sale by Lessor. In the event of any sale or conveyance by
Lessor (or its mortgagee) of the Demised Premises or any part thereof
(i) the acquiring party shall take subject to this Agreement and the
rights of Lessee hereunder, and (ii) the sale shall operate to release
Lessor (and any mortgagee) from any further liability under any of the
terms, covenants, and conditions contained in this Agreement, express
or implied, arising after the date thereof and Lessee shall look solely
to the purchaser with respect to any matter arising after such date.
(c) Estoppel Certificates. Either party, within 10 days after
written request by the other, shall execute and deliver an estoppel
certificate which shall, at a minimum, state to the extent of the true
facts: (i) that the Agreement provided to the lender, purchaser or
other applicable third party is a true and correct copy of the
Agreement and that it has not been modified or terminated except as set
forth, (ii) that the rentals in the Agreement have not been modified,
(iii) that there are no other agreements between the parties affecting
the Demised Premises, (iv) that there are no disputes existing as to
the Agreement, (v) that no party is in default under this Agreement,
(vi) that there have been no rentals paid more than 30 days in advance,
and (vii) any other terms reasonably required, including, but not
limited to, a disclaimer from Lessor of any interest in accounts
receivable generated from the operation of the Demised Premises
(excluding Lessor's receivables provided for under Section 6) and an
agreement to turn any such receivables over to Lessee's
receivable-based lender, if requested by such lender.
(d) Leasehold Financing. As long as no Event of Default exists
hereunder, Lessee shall have the right to collaterally assign or
mortgage its interest in this Agreement. If Lessee does so, Lessor
agrees as follows: (i)
-13-
14
Lessor shall not agree to any modification, amendment or termination of
this Agreement without first obtaining the prior written approval of
Lessee's leasehold mortgagee (the "Lessee's Mortgagee"), which approval
shall not be unreasonably withheld, provided, however, that this
provision shall not impair Lessor's right to terminate this Agreement
pursuant to its terms due to Event of Default hereunder; (ii) Lessor
shall notify Lessee's Mortgagee in writing of any Event of Default by
Lessee under this Agreement at the time notice is sent to Lessee and
Lessee's Mortgagee shall then have the right, but not the obligation,
to correct any such default within the time allotted to Lessee under
this Agreement, provided, however, that no such notification of
Lessee's Mortgagee shall be required unless Lessee has provided Lessor
with name and current address of Lessee's Mortgagee; (iii) If for any
reason whatsoever, including the disaffirmance of rejection of this
Agreement in a bankruptcy proceeding, this Agreement shall terminate or
come to an end during the term of Lessee's Mortgagee's mortgage, Lessor
shall enter into a new lease with Lessee's Mortgagee on the same terms
and conditions as this Agreement if Lessee's Mortgagee shall pay Lessor
all amounts owed by Lessee under the Agreement, (iv) Lessee's Mortgagee
shall not be liable for the performance of this Agreement (subject to
subsection (iii) above) except during such time as Lessee's Mortgagee
shall be in possession due to foreclosure or other acquisition of the
leasehold estate, and upon any permitted subsequent assignment of this
Agreement by Lessee's Mortgagee, Lessee's Mortgagee shall remain liable
for the performance of the obligations of any Lessee under any
substitute agreement entered into between Lessee's Mortgagee and
Lessor.
Lessor shall enter into an agreement in recordable form with
Lessee's Mortgagee, if so requested by Lessee's Mortgagee, containing
the foregoing terms and conditions. In no event shall Lessor be liable
to pay any such amounts due to Lessee's Mortgagee or under any such
leasehold mortgage.
26. SURRENDER OF POSSESSION. Lessee shall, on or before the last day of
the term of this Agreement, surrender possession of the Demised Premises to
Lessor, clean and in good condition and repair, ordinary wear and tear excepted.
The Demised Premises, upon the surrender of possession, shall be in compliance
with all local codes and regulations, notwithstanding that such codes and
regulations may not have applied to Lessee during the term of this Agreement.
27. NOTICES. Any notice, demand or election required or permitted to be
given or made hereunder shall be in writing and shall be personally delivered,
telecopied with confirmation received, or mailed, certified by registered mail,
return receipt requested, addressed to the respective parties as follows:
-14-
15
Lessor: Westminister Healthcare, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx Xx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
With a Copy to: Vial, Hamilton, Xxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
-------
Lessee: BritWill Investments - II, Inc.
c/o Unison HealthCare Corporation
0000 Xxxx Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx, President and CEO
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
With a Copy to: Xxxxxxx & Xxxxx
Xxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Notice will be deemed to be received when personally delivered (if
signed receipt obtained) or telecopied (confirmation received) or three days
after mailing. Lessor and Lessee may change their addresses and/or telephone
number for purposes of this Agreement by giving notice thereof in accordance
with the provisions of this Section.
28. NOTICE OF ACTION AGAINST LICENSE. Notwithstanding any other
provision of this Agreement to the contrary, Lessee shall inform Lessor
immediately by telephone, telecopy or telegraph of any action taken, commenced
or instituted by any state or federal authority having jurisdiction over the
Demised Premises as a health care facility to terminate or revoke any license or
certification of Lessee. Such notice shall be given to Lessor at the address or
telephone number set forth in the preceding Section.
-15-
16
29. QUIET ENJOYMENT. If and so long as Lessee is not in default
hereunder, Lessor agrees that it will not interfere with the peaceful and quiet
occupation and enjoyment of the Demised Premises by Lessee.
30. REPRESENTATIONS AND WARRANTIES.
(a) Lessor. Lessor hereby warrants and represents to Lessee
that:
(i) Lessor, if other than an individual, is a duly
organized and validly existing corporation, incorporated and in good
standing under the laws of the State of Texas. Lessor is qualified to
do business and in good standing in the state where the Demised
Premises is located.
(ii) Lessor has full power and authority to execute
and to deliver this Agreement and all related documents, and to carry
out the transactions contemplated herein. This Agreement is valid,
binding and enforceable against Lessor in accordance with its terms.
(iii) The Demised Premises is as described in Section
1 of this Agreement, and Lessor is the fee simple owner of the
Property. Except as set forth on Exhibit A-2 attached hereto, no
portion of the Demised Premises is subject to any liens. There are no
mechanics', materialmen's or similar claims or liens presently claimed
or, to the best of Lessor's knowledge, which will be claimed against
the Demised Premises for work performed or commenced prior to the
Commencement Date.
(iv) At all times prior to the Commencement Date,
Lessor, to the best of its knowledge, properly maintained all material
local, state and federal licenses necessary for the lawful operation of
the Demised Premises as a nursing home facility (the "Licenses") and,
to the best of its knowledge, currently meets all requirements
necessary for Lessee to secure the Licenses in its own name as of, or
as soon as practicable after, the Commencement Date. There is no action
pending or, to the best knowledge of Lessor, recommended by the
appropriate local, state or federal agency having jurisdiction thereto,
to terminate or rescind or not to renew any of the Licenses or any
action of any other type which would have a material adverse effect on
the Demised Premises. Lessor, to the best of its knowledge, is not
required to submit any notice, report or other filing with any
licensing agency or other federal, state or local governmental
authority in connection with the execution or delivery or performance
by Lessor of this Agreement or the consummation of the transactions
contemplated hereby, except such as already have been submitted or
filed or will be submitted or obtained in a timely manner.
(v) None of Lessor's employees are members of a labor
union or subject to a collective bargaining agreement. Lessor is not a
party to any labor dispute or grievance.
-16-
17
(vi) To the best of Lessor's knowledge, the Demised
Premises is in compliance with all currently applicable municipal,
county, state and federal laws, regulations, ordinances, standards and
orders and with all municipal, health, building and zoning by-laws and
regulations (including, without limitation, the building and zoning
codes) where the failure to comply therewith or to obtain a waiver
therefrom could have a material adverse effect on the business,
property, condition (financial or otherwise) or operation of the
Demised Premises. There are no outstanding deficiencies or work orders
of any authority having jurisdiction over the Demised Premises
requiring conformity to any applicable statute, regulation, ordinance
or by-law pertaining thereto.
(vii) Intentionally omitted.
(viii) Except in accordance with, and in full
compliance with, any and all applicable governmental laws, regulations
and requirements relating to environmental and occupational health and
safety matters and hazardous materials, substances or wastes (as
defined from time to time under any applicable federal, state or local
laws, regulations or ordinances), Lessor has not released into the
environment, or discharged, placed or disposed of any such hazardous
materials, substances or wastes or caused the same to be so released
into the environment or discharged, placed or disposed of at, on or
under the Demised Premises or in the operation thereof.
(b) Lessee. Lessee hereby warrants and represents to Lessor
that:
(i) Lessee is a duly organized, validly existing
Arizona corporation and is qualified to do business and is in good
standing in the state where the Demised Premises is located.
(ii) Lessee has full power and authority to execute
and to deliver this Agreement and all related documents, and to carry
out the transactions contemplated herein. This Agreement is valid,
binding and enforceable against Lessee in accordance with its terms.
(iii) Lessee will operate the Demised Premises at all
times after the Commencement Date in material compliance with all
applicable laws.
(iv) Except in accordance with, and in full
compliance with, any and all applicable governmental laws, regulations
and requirements relating to environmental and occupational health and
safety matters and hazardous materials, substances or wastes (as
defined from time to time under any applicable federal, state or local
laws, regulations or ordinances), Lessee, on and after the Commencement
Date, shall not release into the environment, or discharge, place or
dispose of any such hazardous materials, substances or wastes or cause
the same to be so released into the environment or discharged,
-17-
18
placed or disposed of at, on or under the Demised Premises or in the
operation thereof.
31. NO WAIVER. No waiver of any default or breach of the terms,
covenants, conditions or agreements of this Agreement shall be construed to be a
waiver of any succeeding default or breach of the same or of any other term,
covenant, condition or agreement hereof; nor shall any custom or practice which
may develop between the parties in the administration of this Agreement be
construed to waive or lessen the right of Lessor or Lessee to insist upon the
performance by Lessee or Lessor in strict accordance with all of the terms,
covenants, conditions and agreements of this Agreement. The subsequent
acceptance of any payment owed by Lessee to Lessor or of any payment owed by
Lessor to Lessee under this Agreement, or the payment of rent by Lessee, shall
not be deemed to be a waiver of any preceding breach or default by Lessee or
Lessor of any term, covenant, condition or agreement of this Agreement, other
than the failure of Lessee or Lessor to make the specific payment so accepted by
Lessor or Lessee, regardless of Lessor's or Lessee's knowledge of such preceding
breach or default at the time of the making or acceptance of such payment.
32. INSPECTION AND ENTRY BY LESSOR. Lessor shall have the right to go
upon and inspect the Demised Premises at reasonable times during normal business
hours upon at least 24 hours' prior notice and at any time upon an emergency.
Such entry by Lessor shall not unreasonably interfere with Lessee's use and
occupancy of the Demised Premises or with the privacy of Lessee's residents or
patients. Lessor shall also have the right to enter the Demised Premises to show
such to any prospective purchaser or tenant or any potential or current
mortgagee.
33. POSTING. Lessor at all times has the right to go upon the Demised
Premises to post any notice that shall be required or permitted by any law
relating to or affecting liability of Lessor for labor performed or materials
furnished in or for the Demised Premises. Such entry or posting by Lessor shall
be effected in compliance with the immediately preceding Section, and shall not
unreasonably interfere with Lessee's use or occupancy of the Demised Premises.
34. FORCE MAJEURE. Except as otherwise specifically contemplated in
this Agreement, in the event that Lessor or Lessee shall be delayed or hindered
in, or prevented from, the performance of any act required hereunder (except for
the obligation of Lessee to pay rent) by reason of inability to procure
materials, delay by the other party, failure of power or unavailability of
utilities, riots, insurrection, war or other reason of a like nature not the
fault of such party or not within its control, then performance of such act
shall be excused for the period of delay, and the period for the performance of
any such act shall be extended for a period equivalent to the period of such
delay.
-18-
19
35. MEMORANDUM OF LEASE. If required by Lessee, Lessor agrees to
execute a Memorandum of Lease in recordable form, setting forth such provisions
hereof as reasonably may be required by Lessee.
36. HOLDING OVER. If Lessee continues to occupy the Demised Premises
after the expiration of the term of this Agreement, and Lessor elects to accept
rent thereafter, a month-to-month tenancy terminable by either Lessor or Lessee
on 30 days' notice shall be created, and the rent for such month-to-month
tenancy shall be at 125% of the monthly rent in effect immediately prior to
expiration. Except for the provisions of this Agreement regarding the rental
rate and the term of the Agreement, all other provisions, terms, conditions,
covenants and agreements contained in this Agreement shall apply to a
month-to-month tenancy.
37. RESOLUTION OF DISPUTE; ARBITRATION. In the event of any dispute or
disagreement between the parties hereto affecting the parties' respective rights
in this Agreement, the disputing party shall set forth its position and
disagreement in writing and give written notice of the same to the other party
that such dispute exists. The parties will make a good faith effort to resolve
the dispute or disagreement. If the dispute is not resolved at the expiration of
30 days from the time such notice is received, then the entire matter shall be
submitted to arbitration through and in accordance with the rules then existing
of the American Arbitration Association, and judgment upon the award rendered
may be entered in any court having jurisdiction thereof. The arbitrator(s) shall
be bound to the strict interpretation and observation of the terms of this
Agreement. Any arbitration proceeding shall be conducted in Dallas, Texas.
38. APPLICABLE LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Texas (without regard
to its rules of conflicts of laws).
39. HEADINGS. The descriptive headings used in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
any of its provisions.
40. AMENDMENT OR MODIFICATION. This Agreement shall not be amended or
modified without the prior written consent of the parties hereto.
41. SEVERABILITY. In event any part or provision of this Agreement
shall be determined to be invalid or unenforceable, the remaining portions of
this Agreement shall, nevertheless, continue in full force and effect.
42. TIME. Time is of the essence of this Agreement.
43. BINDING. This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto, their estates, heirs, personal representatives,
successors in interest and permitted assigns.
-19-
20
44. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall constitute an original and all of which together shall constitute
one and the same Agreement.
45. INTENTIONALLY OMITTED.
46. RIGHT OF FIRST REFUSAL. Lessee shall have a right of first refusal
to purchase the Demised Premises upon the following terms and conditions:
(a) In the event Lessor shall make an offer to or receive an
offer from a party other than Lessee (the "Outside Purchaser") for the sale of
the Demised Premises, which offer the recipient desires to accept (the "Outside
Purchase Offer"), Lessor shall give written notice of such Outside Purchase
Offer to Lessee, which notice shall set forth the material features of such
Outside Purchase Offer. Lessee then shall have 30 business days from the date
notice is received in which to elect to purchase the Demised Premises on the
same terms and conditions as contained in the Outside Purchase Offer, including
any financing to be provided by Lessor, such election to be exercised by Lessee
giving written notice to Lessor within such 30 business day period.
(b) If Lessee elects to purchase the Demised Premises on the
terms and conditions contained in the Outside Purchase Offer, the closing shall
take place at the time provided in the Outside Purchase Offer or, if no time for
the closing is provided therein, the closing shall occur within 90 days after
written notice has been given by Lessee to Lessor of Lessee's exercise of such
election.
(c) If Lessee elects not to purchase the Demised Premises
within the 30 day period provided in Subsection (c) above, then Lessor may close
the sale thereof with the Outside Purchaser on the same terms and conditions set
forth in the notice of such Outside Purchase Offer to Lessee, but subject to
Lessee's rights under this Agreement, but excluding Lessee's rights under this
Section, which shall lapse upon the closing of the sale to the Outside
Purchaser.
47. TAX ESCROW. Along with each monthly payment of rent, Lessee shall
pay to Lessor an amount equal to one-twelfth of the real property taxes that
Lessor reasonably estimates will be payable during the next ensuing 12 months in
order to accumulate with Lessor sufficient funds to pay all such taxes at least
30 days prior to their respective due dates (the "Tax Escrow Fund"). Lessee
hereby pledges to Lessor and grants to Lessor a security interest in any and all
monies now or hereafter deposited in the Tax Escrow Fund as additional security
for the payment of any and all amounts due and arising under this Lease. Lessor
will apply the Tax Escrow Fund to payments of taxes required to be made by
Lessee hereunder. If the amount of the Tax Escrow Fund shall exceed at any time
the amount due for the next installment of taxes, Lessor shall promptly notify
Lessee, and, at Lessee's instruction, either return any excess to Lessee or
credit such excess against future payments to be made by Lessee to the Tax
Escrow Fund.
-20-
21
IN WITNESS WHEREOF, Lessor and Lessee have executed this Agreement
effective as of the date first set forth above.
LESSOR:
WESTMINISTER HEALTHCARE, INC., a Texas
corporation
By /S/
--------------------------------------
Its Authorized Agent
----------------------------
LESSEE:
BRITWILL INVESTMENTS - II, INC., a
Delaware corporation
By /S/ Xxxxx X. Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxx
President and CEO
-21-
22
EXHIBIT "A"
Situated in the County of Collin, State of Texas, being a part of the
Xxxxxx XxXxxx Survey, Abstract No. 641 also being a part of Xxx 0, Xxxxx "X" of
Heritage, an addition to City of XxXxxxxx, Texas according to the amended plat
recorded in Volume F, Page 744, Map Records of Collin County, Texas, and being
described by metes and bounds as follows:
Beginning at a 1/2" steel rod found at the northeast corner of said Lot
3, said rod also being at the intersection of the south line of Pearson Avenue a
60' right-of-way and the west line of Xxxxxx Street a 50' right-of-way;
Thence South 02[degree]33'41" West with said west line a distance of
469.67 feet to "X" found cut in concrete at the southeast corner of said Lot 3;
Thence North 87[degree]09'28" West with the south line of said Lot 3 a
distance of 534.92 feet to a set 1/2" steel rod;
Thence North 02[degree]21'42" East a distance of 266.33 feet to a 1/2"
steel rod;
Thence in a northwesterly direction with a curve to the left having a
radius of 310.00 feet (chord bears North 07[degree]28'26" West, 111.27 feet) an
arc distance of 111.87 feet to a 1/2" steel rod;
Thence in a northwesterly direction with a curve to the left having a
radius of 284.88 feet (chord bears North 06[degree]04'17" West, 95.53 feet) an
arc distance of 95.99 feet to a 1/2" steel rod in said south line of Pearson
Avenue;
Thence in a southeasterly direction with said south line and a curve to
the left having a radius of 530.00 feet (chord bears South 84[degree]17'17"
East, 58.03 feet) an arc distance of 58.96 feet to a 1/2" steel rod;
Thence South 87[degree]25'36" East and continuing with said south line
a distance of 509.29 feet to the Point-of-Beginning and containing 5,808 acres
of land.
-22-
