EXHIBIT 10.24
LEASE AGREEMENT
BETWEEN XXXXXXX HEALTH, INC.
AND
TRANSITIONAL HEALTH PARTNERS
D/B/A
TRANSITIONAL HEALTH SERVICES
LEASE
THIS LEASE is made as of the 22nd day of May , 1995, by and between
XXXXXXX HEALTH, INC., a Michigan corporation, the address of which is 000
Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx Xxxxx, Xxxxxxxx 00000, as Lessor, and
TRANSITIONAL HEALTH PARTNERS d/b/a TRANSITIONAL HEALTH SERVICES, a Delaware
general partnership, with principal offices at 0000 Xxxxxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, as Lessee.
IN CONSIDERATION OF the rents to be paid and the mutual covenants,
promises and agreements herein set forth, Lessor and Lessee agree as follows:
Lessor hereby leases unto Lessee the following described premises:
One (1) 102-bed skilled nursing facility; one (1) 82-bed skilled nursing
facility; one (1) 31-bed home for the aged; and one (1) 9-unit apartment
complex; said facilities being situated upon and consisting of the real
property described on the Exhibit "A" attached hereto and made a part
hereof, together with all structures, fixtures, pavings, surfacing and
improvements thereon; additionally, all fixtures, furnishings, equipment
and all other personal property located thereon (a list of which is
attached hereto as Exhibit "B"), including, without limitation, all drugs,
medications, food, linens and supplies utilized in connection with the
operation of said facilities, all available proprietary rights in the
names and related trademarks, logos and telephone numbers of said
facilities, all patient records and agreements, personnel records,
provider agreements, governmental records, and all other contracts,
records and information (irrespective of the manner in which stored) as
are available and are related to the operation of said facilities, a 1992
Dodge Pickup and 1954 Ford Tractor and Mower, and all other available
property, tangible and intangible, utilized in the operation of said
facilities;
ALL OF THE FOREGOING, including all replacements thereof (irrespective of
which party paid for such replacements), are hereinafter collectively referred
to as the "leased premises" or "premises". As to patient records and agreements,
personnel records, provider agreements, governmental records, other contracts,
records and the like, Lessee acknowledges that Lessor's ability to grant actual
possession or control thereof to Lessee pursuant to this Lease is subject to the
availability thereof and to applicable laws, ordinances, rules and regulations
pertaining to same. Possession of all of the foregoing records, agreements and
the like is transferred hereunder only for the purpose of continuing patient
services at the facilities and the same shall be preserved and held confidential
in accordance with state and federal law.
TO HAVE AND TO HOLD for a term of ten (10) years from and after the
commencement of the term as hereinafter provided.
SECTION 1.
CONDITION OF PREMISES
1.01 Lessor shall deliver the leased premises in "as is" condition.
Subject to Lessee's option to terminate as hereinafter provided, upon delivery
of possession, Lessee covenants and agrees to take unconditional physical
possession of the leased premises and accepts the leased premises in "as is"
condition without representation by Lessor or any person, firm or corporation on
behalf of Lessor as to the condition thereof, and acknowledges that the leased
premises are in satisfactory condition. Subject to Lessee having commissioned an
engineering survey within (seven) 7 days of the date of execution hereof, during
the twenty-one (21) days following the date of execution hereof, Lessee shall
have access to the leased premises for purposes of inspecting the condition of
same. In the event that Lessee shall notify Lessor in writing within such 21 day
period that Lessee shall have discovered a significant defect or disrepair in
the leased premises (subject to independent verification, if Lessor deems same
reasonably necessary), then Lessee shall have the option of terminating this
Lease by giving written notice thereof to Lessor within such 21 day period. For
purposes of the foregoing sentence, a "significant defect or disrepair" in the
leased premises shall be deemed to mean defects or items of disrepair of such a
nature as to require aggregate capital expenditures or repair costs of more than
$100,000, within the 120 day period immediately following the commencement date
of the term hereof. Upon Lessor's receipt of Lessee's notice to terminate,
Lessor shall have ten (10) days during which Lessor may nullify and vitiate
Lessee's option by agreeing to bear the cost of correction or disrepair in
excess of $100,000.00.
SECTION 2.
POSSESSION AND COMMENCEMENT OF TERM
2.01 This Lease is contingent upon the consummation of Lessor's
acquisition of title to the leased premises. Except as herein provided, Lessor
covenants that actual possession of the leased premises (with personal property
to be in sufficient quantities so as to continue the operation of the nursing
facilities) shall be delivered to Lessee on or about the date Lessor shall close
on Lessor's acquisition of the leased premises; such closing scheduled for July
31, 1995, subject to adjustment. Lessor shall give Lessee at least thirty (30)
days' prior written notice of the date on which Lessor shall actually deliver
possession of the leased premises to Lessee (the
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"delivery of possession date", which shall be deemed to be the commencement date
of the term of this Lease). Lessee shall be permitted to enter the leased
premises at least ten (10) days prior to the delivery of possession date for the
sole purpose of preparing for Lessee's tenancy. By occupying the leased
premises, Lessee will be deemed to have accepted the leased premises and
acknowledged that they are in satisfactory condition.
2.02 In the event Lessor fails to deliver the leased premises because of
the delay in consummating Lessor's acquisition of the leased premises or for any
other cause whatsoever, Lessor shall not be liable to Lessee for damages as a
result of Lessor's delay in delivering the leased premises, and Lessee shall
have no right to terminate the Lease or contest the validity of the Lease, and
the commencement date of the Lease shall be postponed until such time as the
leased premises are delivered to Lessee and the termination date of this Lease
shall be extended for a period equivalent to the period of such postponement
provided such postponed termination date shall occur on the last day of a
calendar month; if not, then such termination date shall be extended by an
additional period so as to fall on the last day of such calendar month in which
it would otherwise occur. Notwithstanding anything to the contrary contained
herein, if for any reason whatsoever, the term of this Lease shall not have
commenced by September 30, 1995 (subject to a reasonable extension thereof in
the event of pending but uncompleted licensure approvals), then this Lease shall
be automatically terminated without further act of either party hereto, and the
parties hereto shall be released from all obligations hereunder, except as
otherwise specifically provided herein.
2.03 On the commencement date or within fifteen (15) days thereafter upon
request by Lessor, Lessor and Lessee shall execute a written instrument
confirming the commencement date and the termination date of the Lease and that
the Lease is in full force and effect, the rent is paid currently, the amount of
rent, if any, paid in advance, and that there are no known uncured defaults by
Lessor or Lessee, or stating those claimed by Lessor and/or Lessee.
2.04 Provided Lessee is not then in default of any of the terms of this
Lease, Lessee shall have the option to extend the term hereof for one (1)
additional period of ten (10) years. Said option shall be exercised, if at all,
by written notice to Lessor at least one hundred eighty (180) days prior to the
expiration of the original term. All terms and conditions contained in this
Lease shall apply during the option period. The annual minimum net rental for
the first year of the option period shall equal the annual minimum net rental
for the final year of the original term plus the annual increase per Section
3.01 hereof, subject to further annual increases as provided therein. In the
event Lessee shall fail to exercise the foregoing option to extend the term
hereof within the required time period, such option shall then automatically be
null and void and be of no further force or effect.
On or before the date which is one hundred eighty (180) days prior
to the expiration of the original term hereof (but no sooner than four hundred
twenty-five (425) days prior to expiration of the original term hereof), Lessee
shall be required to provide a Lessor financial statements prepared by an
independent certified public accountant establishing and certifying that the
Guarantor of this Lease shall then have a minimum net worth of at least
twenty-five million and 00/100ths Dollars ($25,000,000.00). In the event Lessee
shall fail to provide such financial statements during such period, Lessor shall
have the option to nullify and
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vitiate Lessee's exercise of its option to extend the term pursuant to this
Section 2.04 by giving written notice thereof to Lessee.
SECTION 3.
RENTAL
3.01 In consideration of the leasing aforesaid, commencing on the
commencement date of the term hereof, Lessee hereby covenants and agrees to pay
Lessor, at such place as Lessor may hereafter from time to time designate in
writing, annual minimum net rental of Seven Hundred Thousand and no/100 Dollars
($700,000.00), in United States funds, payable monthly in advance on the tenth
(10th) day of each and every month in equal monthly installments of Fifty-Eight
Thousand, Three Hundred Thirty Three and 33/100 Dollars ($58,333.33). Receipt of
Fifty-Eight Thousand, Three Hundred Thirty Three and 33/100 Dollars
($58,333.33), representing the first month's rent is hereby acknowledged. The
rental payments shall be made by Lessee at the office of Lessor without any
prior demand therefor and without any deductions or set-offs whatsoever.
Commencing with the second year of the term hereof, and for each subsequent year
during the initial term and extended term, if any, the annual minimum net rental
owing for the year in question shall equal the annual minimum net rental payable
for the immediately preceding year increased by three percent (3%), on a
non-compounded basis. (As an illustration of the foregoing, the annual minimum
net rental owing for the second year of the term hereof shall be $700,000.00 x
1.03, or $721,000.00; the annual minimum net rental owing for the third year
shall be $700,000.00 x 1.06, or $742,000.00, and so on.) Lessor shall notify
Lessee of the adjusted annual minimum net rental for each year following the
determination of same by Lessor, and Lessee shall pay such rent for the
applicable year in the manner set forth hereinabove in this Section 3.01.
3.02 Lessor and Lessee intend that the minimum net rental shall be net to
Lessor, so that this Lease shall yield, net, to Lessor, not less than the
minimum net rent specified in Section 3.01 hereof during the term of this Lease,
and that all costs, expenses and charges of every kind and nature relating to
the leased premises which may be attributable to, or become due during the term
of this Lease, shall be paid by Lessee and that Lessor shall be indemnified and
saved harmless by Lessee from and against the same. In the event that the Lease
term shall commence on a day other than the first day of a calendar month or
shall end on a day other than the last day of a calendar month, then the rental
for such month shall be prorated upon a daily basis based upon a thirty (30) day
calendar month. Lessor and Lessee agree that no portion of annual minimum net
rental paid by Lessee after the expiration of any period during which such
rental was abated shall be allocated by Lessor or Lessee to such abatement
period, nor is such rental intended by the parties to be allocable to any
abatement period.
3.03 Any rental unpaid for more than ten (10) days after such rental is
due and any rental received and accepted more than ten (10) days after such
rental is due shall be subject to a late charge of three percent (3%) of such
rental, and such late charges shall be due from Lessee to Lessor as additional
rental on or before the next rental due date. Any default in the payment of
rental shall not be considered and cured unless and until such late charges are
paid
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by Lessee to Lessor. On default of payment of such late charges, Lessor shall
have the same remedies as on default in payment of rental; provided, however,
that Lessee shall be entitled to notice and an opportunity to cure as provided
in Section 18.01 hereof. Such late charges shall be in addition to any other
rights or remedies Lessor may have as provided by this Lease or as allowed by
law. Lessor and Lessee agree that such late charges represent a fair and
reasonable estimate of administrative costs suffered by Lessor as a result of
such nonpayment by Lessee.
3.04 If any rental, any late charges, or any other sums payable by Lessee
to Lessor under this Lease are not paid within ten (10) days after such rental,
late charges or other sums are due (after giving effect to the ten (10) day
grace period set forth in Section 3.03 above), such rental, late charges or
other sums shall bear interest at the rate of two (2) percentage points above
the effective prime interest rate per annum then charged by Comerica
Bank-Detroit as publicly announced from time to time as its prime rate,
provided, however, that such rate of interest shall never be less than seven
percent (7%) per annum nor more than eighteen percent (18%) per annum, or the
highest rate permitted by law, whichever is less. Such interest shall be due
from Lessee to Lessor as additional rental on or before the next rental due date
and shall accrue from the date that such rental, late charges or other sums are
payable under the terms of this Lease. Such interest for rental, late charges or
other sums shall continue to accrue through the date such rental, late charges
or other sums are paid by Lessee. Any default in the payment of rental, late
charges or other sums shall not be considered cured unless and until such
interest is paid by Lessee to Lessor. On default of payment of such interest,
Lessor shall have the same remedies as on default in payment or rental. such
interest shall be in addition to any other rights or remedies Lessor may have as
provided by this Lease or as allowed by law.
3.05 "Rent" or "rental", as those terms are used throughout this Lease
shall be defined to include the minimum net rental and all other charges of
whatever nature required to be paid by Lessee under this Lease.
SECTION 4.
TAXES, ASSESSMENTS AND UTILITIES
4.01 Lessee agrees to pay, as the same shall become due, all ad valorem
taxes and assessments, general and special, and all other government impositions
which may be levied upon or levied against the leased premises or any part
thereof until the termination of the original term and of any extended term of
this Lease. The property taxes and assessments for the first and last year of
the original term or any extended term, as the case may be, shall be prorated
between Lessor and Lessee so that Lessee will be responsible for any such tax or
assessment attributable to the period during which Lessee has Lease obligations
for the leased premises. Any tax and/or assessment of any kind or nature
presently or hereafter imposed or assessed, either by way of substitution for or
in lieu of all or any part of the taxes and assessments levied or assessed
against the leased premises or any part thereof by the State of Michigan or any
political subdivision thereof or any governmental authority having jurisdiction
there over upon, against or with respect to the rentals payable by Lessee to
Lessor or on the income of Lessor derived from the leased premises or with
respect to the Lessor's, or the
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individuals or entities which form the Lessor herein, ownership of the leased
premises, shall be deemed to constitute a tax and/or assessment against the
leased premises for the purpose of this Section and Lessee shall be obligated to
pay those taxes. Notwithstanding anything contained herein to the contrary,
Lessee's obligation hereunder shall not include the payment of any income, gross
receipts, rentals, or other form of use, tax of general applicability assessed
on or against or with respect to the rentals payable by Lessee to Lessor, except
to the extent that such tax is assessed in lieu of or in substitution for
existing ad valorem taxes on real property which are hereafter modified,
abolished or repealed in whole or in part.
4.02 In the event any or all of the foregoing taxes and assessments are to
be paid from any escrowed fund required to be established by Lessor's financial
institution under the terms of any financing, the Lessor shall notify Lessee and
Lessee shall be required to include with the monthly payments of rent under
Section 3.01 hereof a monthly amount equal to the amount required to be paid by
Lessor under the terms of such financing to the escrowed fund on account of such
taxes and assessments. If such taxes and assessments, when due, exceed the total
amount then in the escrow then the Lessee shall, within fifteen (15) days after
Lessor's written demand therefor, pay any deficiency to Lessor. If such payments
by Lessee, over the term of the Lease, exceed the amount of taxes and
assessments paid from the escrow, such excess shall be refunded by Lessor to
Lessee following an annual reconciliation thereof. The escrow for such taxes and
assessments shall be adjusted as often as necessary to provide sufficient funds
to pay current taxes and assessments.
4.03 Lessee also agrees to pay all charges made against the premises for
gas, heat, electricity, water, sewer, and all other utilities (all of the
foregoing hereinafter collectively referred to as the "utilities") during the
continuance of this Lease as the same shall become due.
SECTION 5.
USE OF LEASED PREMISES
5.01 It is understood and agreed between the parties that the leased
premises during the continuance of this Lease shall be used and occupied,
continuously throughout the term hereof, for the operation of two (2) skilled
nursing facilities, one (1) home for the aged, and one (1) apartment complex,
consistent with the use and operation of such facilities as they currently
exist; and for no other purpose without the prior written consent of Lessor,
such consent not to be unreasonably withheld. Lessee shall at all times during
the term of this Lease be required to obtain and maintain full and proper
licensing by the State of Michigan for (a) the operation of the two (2) skilled
nursing facilities on the leased premises, with a combined minimum total of one
hundred eighty-four (184) licensed beds, (b) the operation of the home for the
aged on the leased premises, with a minimum total of thirty-one (31) licensed
beds, and (c) the operation of the apartment complex on the leased premises.
Lessee covenants and represents to Lessor that the leased premises shall be
operated in a manner to maintain such licensing. Lessee shall comply or conform
to all laws, rules, regulations and the like, relating to the condition, use or
occupancy of the leased premises necessary to maintain such licensing and
certification of the nursing facilities as providers under Medicaid and Medicare
legislation or any successor
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legislation. A voluntary reduction in licensed beds shall be permitted only as
approved in writing in advance by Lessor; except, however, that Lessee may from
time to time, place beds in escrow on a temporary basis provided the same shall
not risk the permanent loss of such beds. Lessee covenants to work diligently at
all times during the Lease term to achieve maximum occupancy in the facilities
on the leased premises. The risk of loss or decrease in the enjoyment and
beneficial use of the leased premises (including, without limitation, a mandated
reduction in licensed beds) is assumed by Lessee, and Lessee shall not be
entitled to any abatement or reduction of rent as a result thereof, except as
specifically provided herein. Lessee agrees that it will not use or permit any
person to use the leased premises or any part thereof for any use or purpose in
violation of the laws of the United States, the State of Michigan, the laws,
ordinances, rules, regulations and the like of the County and City in which the
leased premises are situated, or of any other lawful authorities. Lessee shall
comply with all labor and employment laws applicable to all persons working on
or about the leased premises. During the original term or any extended term, the
Lessee will keep the leased premises and every part thereof in a clean and
wholesome condition and will comply with all lawful health and police
regulations. All signs and advertising displayed in and about the leased
premises shall be such only as to advertise the business carried on upon the
leased premises and shall otherwise comply with all applicable law, ordinances,
rules and regulations. No signs or awnings shall be displayed in or about the
leased premises unless Lessor shall have been notified in writing thereof in
advance. Lessee shall give prompt notice to Lessor of any notice it receives of
the violation of any law or requirement of any public authority with respect to
the leased premises or the use or occupation thereof.
5.02 Lessee hereby covenants and warrants that each and every contract or
agreement of whatever nature entered into by Lessee in connection with Lessee's
use and occupancy of the leased premises, including, but not limited to, any
union contract(s), shall be for a term which shall in no event extend beyond the
then current term of this Lease. It is the intent of the parties hereto that at
such time that Lessee shall surrender possession of the leased premises to
Lessor, the terms of all contracts and agreements pertaining to Lessee's use and
occupancy of the leased premises shall have expired. Lessee agrees that none of
such contracts or agreements shall contain any provisions which shall purport to
impose upon Lessee's successor any obligation to assume such contract or
agreement.
SECTION 6.
INSURANCE AND INDEMNITY
6.01 (a) During the term of this Lease, Lessee shall at all times keep the
leased premises (as well as Lessee's property located in or on the leased
premises) insured with the kinds and amounts of insurance described below. This
insurance shall be written by companies authorized to do insurance business in
the State of Michigan and having a rating of no less than "A" in the most
current edition of Best's Insurance Reports. The policies must name Lessor as an
additional insured as its interest appears. Losses shall be payable to Lessor
and Lessee as provided below. In addition, the policies shall name as an
additional insured Lessor's mortgagee(s), if any, by way of a standard form of
mortgagee's loss payable endorsement. Any
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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 leased premises shall
insure against the following risks:
(i) 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 on the premises, in amounts sufficient to
prevent Lessor or Lessee from becoming a co-insurer 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);
(ii) Loss or damage by explosion of steam boilers, pressure vessels
or similar apparatus, now or hereafter installed in the facilities, 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 One Million and
no/100 Dollars ($1,000,000.00) per occurrence in respect of bodily injury, Two
Million and no/100 Dollars ($2,000,000.00) aggregate per occurrence, and Three
Hundred Thousand and no/100 Dollars ($300,000.00) for property damage;
(iv) Claims arising out of malpractice in an amount not less than
Two Million and no/100 Dollars ($2,000,000.00) for each person and for each
occurrence;
(v) 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 Michigan;
(vi) 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 subsection (i) and (ii) of
paragraph (a) above in an amount sufficient to prevent Lessor from becoming a
co-insurer; and
(vii) Worker's compensation.
(b) 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) 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) Any provision in this Lease to the contrary notwithstanding, each
party hereto, to the extent it is permitted so to do by the terms and provisions
of any such policy or policies, hereby waives any and all rights to recover from
the other, its agents, or employees, any loss or damage from risks ordinarily
insured against under such policies, but only to the extent that
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such loss or damage is in fact covered by such insurance and is collectible by
such insured party. Each party further covenants and agrees that it will, upon
request of the other, request each such insurance company to attach to such
policy or policies issued by it a waiver of subrogation with respect to the
other party, its agents and employees.
(e) All proceeds payable by reason of any loss or damage to any of the
improvements comprising the leased premises and insured under any policy of
insurance required by (a) above shall be paid to Lessor and held by Lessor in
trust (subject to the provisions of paragraph (f) below and the rights of any
mortgagee(s)) and shall be made available for reconstruction or repair, as the
case may be, of any damage to or destruction of the leased premises, 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 leased premises 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.
(f) If, during the term hereof, the leased premises are totally or
partially destroyed from a risk covered by the insurance described in paragraph
(a) above, Lessor shall, as soon as practicable, restore the leased 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 paragraph (a) above, Lessee shall be solely
responsible for paying the difference between the amount of insurance proceeds
and such costs of restoration, the failing of which shall constitute a default
hereunder as well as relieving Lessor (at Lessor's option) of Lessor's
obligation to so restore the leased premises.
(g) If Lessor is required to restore the facilities as provided in
paragraph (f) above, 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.
(h) During the period required for repair and restoration, payment of rent
hereunder 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, and availability of business interruption insurance proceeds to
satisfy Lessee's obligations to pay rent.
(i) Notwithstanding anything to the contrary contained herein, Lessee's
obligation to carry the insurance provided for herein may be brought within the
coverage of Lessee's so-called blanket policy (including, without limitation,
its "umbrella" liability policy of not less than Ten Million Dollars
($10,000,000.00) coverage), carried and maintained by Lessee; provided, however
that the coverage afforded Lessor will not be reduced or diminished or otherwise
be different from that which would exist under a separate policy meeting all
other requirements of this Lease. Further, such insurance policy or policies
shall provide not less than thirty (30) days notice of cancellation or amendment
to all parties named therein as insured.
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6.02 Except to the extent that the same shall result from the negligence,
willful misconduct or wrongful acts of Lessor, its agents or employees, Lessee
covenants to indemnify Lessor, and save it harmless from and against any and all
claims, actions, damages, liability and expense, including attorneys' fees, in
connection with loss of life, personal injury and/or damage to property arising
from or out of any occurrence in, upon or at the leased premises or the
occupancy or use by Lessee of the leased premises or any part thereof, arising
from or out of Lessee's failure to comply with any provision of this Lease, or
occasioned wholly or in part by any act or omission of Lessee, its agents,
contractors, employees, servants, customers or licensees. In case Lessor shall,
without fault on its part, be made a party to any litigation commenced by or
against Lessee, then Lessee shall protect and hold harmless and shall pay all
costs, expenses and reasonable attorneys' fees incurred or paid by Lessor in
connection with such litigation. Lessee shall also pay all costs, expenses and
reasonable attorneys' fees that may be incurred in enforcing the Lessee's
covenants and agreements in this Lease.
SECTION 7.
REPAIRS
7.01 Lessee covenants and agrees, at its sole expense, to keep the leased
premises, including, without limitation, its structure, roof, walls, electrical,
mechanical and plumbing systems, fixtures, furnishings, equipment, personal
property, the grounds, sidewalks, driveways and parking areas, at all times in
good maintenance, appearance and repair and otherwise as required by any law,
statute, ordinance, rule, regulation, government or licensing authority, or
insurance carrier. Lessee's obligation hereunder shall include (without
limitation) the responsibility for capital expenditures as may be necessary or
appropriate, from time to time, in order to maintain the leased premises in
good, safe and operable condition. If so requested by Lessor, Lessee shall
promptly deliver to Lessor a xxxx of sale or other appropriate instrument
evidencing the transfer of all right, title and interest to Lessor, other than
the leasehold estate created hereby, in and to such replacement item.
All damages or injury done to the leased premises by the Lessee, or
by any person who may be in or upon the leased premises with the consent,
invitation or license of the Lessee, shall be repaired and paid for by the
Lessee.
In the event that Lessee fails to commence and complete repairs
promptly and adequately, or otherwise to perform any act or fulfill any
obligation required of Lessee pursuant to this Section 7.01, Lessor may, but
shall not be required to, after thirty (30) days prior notice to Lessee (except
for emergency, in which event no notice shall be required), make or complete any
such repairs or perform such act without prior notice to, but at the sole cost
and expense of, Lessee, and Lessee shall reimburse Lessor for all costs and
expenses of Lessor thereby incurred within twenty (20) days after receipt by
Lessee from Lessor of a statement setting forth the amount of such costs and
expenses. The failure by Lessee so to make repairs, to perform any act required
under this Section, or to reimburse Lessor (in the case of reimbursement, within
such ten-day period) shall constitute a default by Lessee under this Lease and
shall carry with it the same consequences as failure to pay any installment of
rental.
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SECTION 8.
ALTERATIONS
8.01 Except as otherwise specifically provided in this Lease, Lessee
agrees that the leased premises shall not be altered, improved, or changed
without the written consent of Lessor, which consent shall not be unreasonably
withheld, and that unless otherwise provided by written agreement, all
alterations, improvements and changes which may be desired by the Lessee shall
be done, at Lessee's cost, after written notice thereof to Lessor. Any such
improvements constructed by Lessee shall be performed in accordance with plans
and specifications approved in writing in advance by Lessor, and otherwise in
accordance with applicable laws, ordinances, rules and regulations. All
alterations, additions and improvements made in or to the leased premises shall,
unless otherwise provided by written agreement, be the property of the Lessor
upon the expiration or earlier termination of this Lease, and remain upon and be
surrendered with the leased premises; provided, however, the Lessor may
designate by written notice to Lessee those alterations, additions and
improvements which shall be removed by Lessee at the expiration or termination
of the Lease and Lessee shall promptly remove the same and repair any damage to
the leased premises caused by such removal.
SECTION 9.
LIENS
9.01 Lessee shall keep the leased premises free from any and all liens,
including, without limitation, mortgage liens, or any liens arising out of any
work performed, materials furnished or obligations incurred by or for Lessee
(but excluding any liens created by Lessor), and agrees to bond against or
discharge any construction lien within ten (10) days after written request
therefor by Lessor. Lessee shall reimburse Lessor for any and all costs and
expenses which may be incurred by Lessor by reason of the filing of any such
liens and/or the removal of same, such reimbursement to be made within ten (10)
days after receipt by Lessee from Lessor of a statement setting forth the amount
of such costs and expenses.
SECTION 10.
[Intentionally Omitted]
SECTION 11.
[Intentionally Omitted]
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SECTION 12.
EMINENT DOMAIN
12.01 In the event, during the term of this Lease, proceedings shall be
instituted under the power of eminent domain which shall result in the taking of
all of the leased premises, then at the time of such eviction, this Lease shall
be void and the term hereof shall cease and terminate. If there is only a
partial taking that does not result in Lessee's eviction, actual or
constructive, from the leased premises, the Lessor shall, as promptly and
practicable (taking into account all of the then existing circumstances),
restore the leased premises substantially to its original condition and all of
the terms of this Lease shall continue in effect, except that, as of the day
possession of a portion of the leased premises is taken by public authority, the
annual minimum net rental owing pursuant to Section 3.01 hereof shall be reduced
in proportion to the number of licensed beds necessarily eliminated by reason of
such taking; provided, however, that Lessee shall be entitled to such abatement
of annual minimum net rental only to the extent that Lessor shall actually
receive proceeds pursuant to the "rental abatement" insurance provided for in
Section 6 above. The entire award for all or any portion of the leased premises
shall be the sole property of, and be payable to the Lessor and provided
further, that the entire award specifically made for Lessee's trade fixtures,
loss of business and for removal and relocation expenses in any condemnation
proceedings shall be the sole property of, and be payable to, the Lessee. It is
further agreed that in any such condemnation proceedings, the Lessor and Lessee
shall each seek its own award and at its own expense.
SECTION 13.
ASSIGNMENT
13.01 Lessee shall not assign, pledge, license, or encumber this Lease, or
sublet the leased premises or any part thereof, except, however, that the Lessee
shall have the right, with Lessor's written consent, such consent not to be
unreasonably withheld, to assign or sublet the entirety of the leased premises
to an acquiring or merging partner (provided that such acquiring or surviving
entity shall possess a post-acquisition or post-merger net worth of not less
than that of Lessee's consolidated net worth on the effective date of such
transaction), or Lessee's parent company, affiliate or wholly owned subsidiary
of the Lessee, for a use permitted pursuant to Section 5.01 hereof, provided
that Lessee is not at such time in default hereunder, and provided further that
such successor shall execute an instrument in writing assuming all of the
obligations and liabilities to the Lessor, and provided further that such
assignment or subletting shall not operate to release Lessee from its
obligations under the Lease.
SECTION 14.
INSPECTION OF LEASED PREMISES
14.01 Lessee agrees to permit Lessor and the authorized representatives of
Lessor to enter the leased premises at all reasonable times after twenty-four
(24) hours written notice to
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Lessee (except that no notice shall be required in the event of emergency),
during normal business hours (but at any time in the event of emergency) for the
purpose of inspecting the same, determining Lessee's compliance with its
obligations under this Lease, or performing such acts necessary for the safety
or preservation of the leased premises (without any obligation on the part of
Lessor, however, to do so).
SECTION 15.
[PAGE 10 OF HARD COPY MISSING]
SECTION 16.
[TEXT MISSING]
days following the delivery of the same to the United States Post Office for
mailing.
SECTION 17.
BANKRUPTCY
17.01 Lessee covenants and agrees that if any one or more of the following
events occur, namely:
(a) Lessee shall be adjudged a bankrupt or insolvent or a trustee
shall be appointed for Lessee after a petition has been filed for Lessee's
reorganization or arrangement under the federal bankruptcy laws, as now or
hereafter amended, or under the laws of the any State, and any such
adjudication or appointment shall not have been vacated or stayed or set
aside within ninety (90) days from the date of the entry or granting
thereof; or
(b) Lessee shall file, or consent to, any petition in bankruptcy or
arrangement under the federal bankruptcy laws, as ow or hereafter amended,
or under the laws of the State; or
(c) A decree or order appointing a receiver of the property of
Lessee shall be made and such decree or order shall not have been vacated,
stayed or set aside within ninety (90) days from the date of the entry or
granting thereof or Lessee shall apply for or consent to the appointment
of a receiver for Lessee; or
(d) Lessee shall make any assignment for the benefit of creditors;
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then it shall be lawful for Lessor, at its election, to declare this Lease in
default and proceed to pursue its rights and remedies as set forth in Section 18
below.
SECTION 18.
DEFAULT, RE-ENTRY AND DAMAGES
18.01 In case any of the following shall occur:
(a) any rent or other payments required to be made by Lessee shall
be due and remain unpaid for more than ten (10) days after written notice that
the same are due; or
(b) Lessee fails to comply with any of the provisions of this Lease
which results in (i) a deficiency, non-compliance item or the like cited by the
applicable Medicare, Medicaid or other licensing agency, and Lessee's failure to
correct same or cause same to be corrected within the time frame established by
such agency (or such additional reasonable period of time pending Lessee's good
faith contest and/or appeal of same), and (ii) revocation or suspension of any
of Lessee's licensing or certification as a medicaid or Medicare provider at the
leased premises, or any portion thereof (unless Lessor shall have consented to
decertification), or (iii) the removal of twenty (20) or more patients from the
leased premises, and any such failure shall continue for more than 48 hours
after written notice thereof; or
(c) Lessee fails to materially comply with any of the other
covenants, agreements, stipulations or conditions herein contained and such
failure shall continue for a period of thirty (30) days after written notice
from Lessor to Lessee of such default (provided, however, that such period shall
be extended for an additional, reasonable period if Lessee has diligently
commenced the curing of such default and is diligently pursuing the same to
completion); or
(d) if the leased premises shall be deserted or _________, then
Lessor, in addition to other rights or remedies it may have, shall have the
immediate right of re-entry pursuant to the Michigan Summary Proceedings Act or
any other statue enacted as a replacement or substitute therefor (or any other
application law in the event there shall exist no such replacement or
substitute) and may remove all persons and property from the leased premises;
such property may be removed and stored in any other place, for the account of,
and at the expense and at the risk of Lessee.
18.02 Should Lessor elect to re-enter as herein provided or should it take
possession pursuant to legal proceedings or pursuant to any notice provided for
by law, it may either terminate this Lease or it may from time to time, without
terminating this Lease, re-let the leased premises or any part thereof for such
term or terms and at such rentals and upon such other terms and conditions as
Lessor in its sole discretion may deem advisable, with the right to make
alterations (at Lessor's expense, except to the extent necessitated by reason of
Lessee's default hereunder, and then at Lessee's expense) and repairs (at
Lessee's expense) to the leased premises. Rentals received by Lessor from such
re-letting shall be applied as follows:
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First, to the payment of Lessee's obligations accruing
pursuant of Section 6.02 hereof;
Second, to the payment of rent and other payments required
hereunder of Lessee for taxes, insurance or utilities due and
unpaid hereunder;
Third, to the payment of any other sum specified in Section
3.02 hereof;
Fourth, to the payment of any cost of such re-letting;
Fifth, to the payment of the cost of any repairs to the leased
premises necessary to permit the re-letting thereof;
and the residue, if any, shall be held by Lessor and applied in payment of
future rent as the same may become due and payable hereunder. Should such
rentals received from such re-letting during any month be less than that amount
agreed to be paid that month by Lessee hereunder, the Lessee shall pay such
deficiency to Lessor. Such deficiency shall be calculated and paid monthly.
No such re-entry or taking possession of the leased premises by
Lessor shall be construed as an election on its part to terminate this Lease
unless a written notice of such intention be given to Lessee or unless the
termination thereof be decreed by a court of competent jurisdiction.
Notwithstanding any such re-letting without termination, Lessor may at time
thereafter elect to terminate this Lease for previous breach. Should Lessor at
any time terminate this Lease for any breach, in addition to any other remedy,
it may recover from Lessee all damages it may incur by reason of such
termination of the amount of rent and other payments required of Lessee
hereunder for the remainder of the stated term, subject to Lessor's obligation
to credit Lessee with all recoveries (including the proceeds of any reletting or
subletting of the leased premises) made by Lessor; and provided further, Lessor
shall at all times exercise its reasonable efforts to mitigate damages
hereunder.
SECTION 19.
SURRENDER OF LEASED PREMISES ON TERMINATION
19.01 Subject to Section 11 hereof, whenever this Lease shall be
terminated, whether by lapse of time, forfeiture, or in any other way, Lessee
will yield and deliver up the leased premises peaceably to Lessor in as good
repair as when taken, except for reasonable and normal wear and tear and
casualty loss or damage caused by Lessor. Additionally, at such time, Lessee
shall be required to relinquish to Lessor its interest in and possession of all
patient records, patient trust funds and accounting for same, as well as copies
of all financial and operating records relating to the leased premises and the
business operations therein, and to reasonably cooperate with Lessor in all
license, certificate of need, and certifications necessary or appropriate for
Lessor to operate in the leased premises to a condition and quality at least
substantially equal to as they existed on the commencement date of the term
hereof, including,
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without limitation, restoring the drugs, medications, food, linens, supplies,
inventory and the like to substantially the levels existing as of the
commencement date of the term hereof. For all purposes under this Lease, the
parties agree to hereafter execute such instruments and perform such acts as are
reasonably necessary to carry out the intent and purposes of the provisions of
this Lease.
SECTION 20.
PERFORMANCE BY LESSOR OF THE COVENANTS OF LESSEE
20.01 Should Lessee at any time fail to materially comply with any of the
provisions of this Lease, Lessor at its option, and in addition to any and all
other rights and remedies of Lessor in such event, may (but shall not be
required to), after thirty (30) days prior written notice to Lessee (except for
emergency, in which event no notice shall be required) do the same or cause the
same to be done, and the reasonable amount of any money expended by Lessor in
connection therewith shall be due from Lessee or Lessor as additional rent on or
before the next rental due date bearing interest at a rate of two (2) percentage
points above the effective prime interest rate then charged by Comerica
Bank-Detroit, as publicly announced from time to time as its prime rate, but in
the event that such rate shall exceed the highest rate permitted by law, then at
the highest legal rate, from the date of payment until the repayment thereof to
Lessor by Lessee. On default in such payment, Lessor shall have the same
remedies as on default in payment of rent.
20.02 If Lessor defaults in the performance of any condition or obligation
in this Lease and if Lessee gives Lessor notice of the default stating the
default complained of and referring to the Section in the Lease relied on by
Lessee, Lessor shall have thirty (30) days after receiving written notice from
Lessee to commence the cure of any default and shall thereafter cure same in
good faith, with diligence, and within a reasonable period of time. If Lessor
fails to cure any such default or to diligently and in good faith pursue the
cure as provided for herein, then Lessee may xxx Xxxxxx for its damages, and may
further obtain injunctive relief if necessary to maintain operation of the
facilities or conform with applicable law. Anything to the contrary herein
contained notwithstanding, there shall be absolutely no personal liability on
the part of Lessor or persons or entities who have an ownership interest in
Lessor with respect to any of the terms, covenants, conditions and provisions of
this Lease, and Lessee shall, subject to the rights of any prior mortgagee, look
solely to the interest of Lessor in the leased premises in accordance with
Section 33.05 hereof for the satisfaction of each and every remedy of Lessee in
the event of default by Lessor hereunder; such exculpation of personal liability
being absolute and without any exception whatsoever.
Whenever this Lease requires any action (other than the payment of a
liquidated sum of money, e.g. rent, taxes, insurance, utilities, etc.) by Lessor
or Lessee within a certain period of time or a certain time, the time for the
performance of such act shall be extended by the period of any delay caused by
war, strikes, lockouts, civil commotion, unpreventable material shortages,
casualties, acts of God or other conditions or events beyond the control of the
obligated party; provided, however, than written notice of such delay and the
cause and
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circumstances thereof shall be given to the other party immediately after
commencement of such delay and knowledge of such delay becoming known by the
obligated party.
SECTION 21.
RIGHTS TO MORTGAGE
21.01 Lessor reserves the right to subject and subordinate this Lease at
all time, to the lien of any mortgage or mortgages now or hereafter placed upon
Lessor's interest in the leased premises. Lessee also agrees that any mortgage
of Lessor may elect to have this Lease constitute a prior lien to its mortgage,
and in the event of such election and upon notification by such mortgagee to
Lessee to that effect, this Lease shall be deemed prior in lien to such
mortgage, whether this Lease is dated prior to or subsequent to the date of said
mortgage. Lessee covenants and agrees to execute and deliver upon request such
further instrument or instruments as may be reasonably required by Lessor or
Lessor's mortgagee to carry out the intent of this Section. In consideration of
Lessee's execution of any subordination and/or attornment agreement which may be
required of Lessee hereunder, such instrument shall contain a non-disturbance
agreement. Lessor agrees to exercise its reasonable effort to procure such
mortgagee's agreement in such instrument to notify Lessee of, and granting
Lessee an opportunity to cure, any breach by Lessor of the terms of the mortgage
on the leased premises.
In the event any proceedings are brought for the foreclosure of or
in the event of exercise of the power of sale under any mortgage made by Lessor
covering the leased premises, Lessee shall, at the option and request of the
purchaser, and so long as the purchaser shall perform the obligations of
"Lessor" hereunder from and after the date of sale to such purchaser, attorn to
the purchaser upon any such foreclosure or sale and recognize such purchaser as
the Lessor under this Lease.
SECTION 22.
COVENANT OF QUIET ENJOYMENT
22.01 Lessor covenants and agrees to and with Lessee that at all times
during the term of this Lease when Lessee is not in default under the terms
hereof, Lessee's quiet and peaceable enjoyment of the leased premises shall not
be disturbed or interfered with by Lessor or any person claiming by, through, or
under Lessor.
SECTION 23.
SECURITY DEPOSIT
23.01 The Lessor herewith acknowledges the receipt of Three Hundred
Thousand and 00/100 Dollars ($300,000.00), ($100,000 of which shall be in the
form of an Irrevocable
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Standby Letter of Credit (payable upon demand) in form satisfactory to Lessor.
Lessor shall retain same as security for the faithful performance of all of the
covenants, conditions, and agreements of this Lease, but in no event shall the
Lessor, prior to Lessor's declaration of default and the termination of this
Lease, be obligated to apply the same upon rents or other charges in arrears or
upon damages for the Lessee's failure to perform the said covenants, condition
and agreements. The Lessor shall so apply the security upon Lessor's declaration
of default and the termination of this Lease or upon any other termination of
the lease. The Lessor's right to the possession of the leased premises for
nonpayment of rent or for any other reason shall not in any event be affected by
reason of the fact that the Lessor holds such security. Provided Lessee is not
then in default under any of the terms of this Lease, and further provided that
no portion of said security has been applied toward the payment of rent or other
charges in arrears or toward the payment of damages suffered by Lessor by reason
of the Lessee's breach of this Lease, then upon the expiration of the fifth
(5th) year of the term hereof, Lessee shall have the option, exercisable by
written notice to Lessor, of requiring the release of $100,000 of said security
(from the cash deposit), to be either refunded to Lessee or applied against
Lessee's rental obligations hereunder, at Lessee's option. The balance of said
security, if not applied toward the payment of rent or other charges in arrears
or toward the payment of damages suffered by the Lessor by reason of the
Lessee's breach of this Lease, shall be released and/or returned to the Lessee
within thirty (30) days after the expiration of the term hereof, provided that
Lessee shall have vacated the leased premises, delivered possession to the
Lessor in the condition required under the terms of this Lease, and shall have
otherwise fully satisfied all of its obligations under this Lease.
In the event that the Lessor repossesses itself of the leased
premises because of the Lessee's default or because of the Lessee's failure to
carry out the covenants, conditions and agreements of the Lease, the Lessor
shall apply the said security upon all damages suffered to the date of said
repossession and may retain the balance of the said security to pay upon such
damages as may be suffered or shall accrue thereafter by reason of the Lessee's
default or breach. The Lessor shall not be obliged to keep the said security as
separate fund, but may mix the said security with its own funds. On or before
ninety (90) days prior to the expiration of the initial term of this Lease
(provided Lessee has not extended the term hereof) or the extended term, as the
case may be, if Lessor shall fail to show Lessee that the unrestricted and
unapplied cash portion of Lessee's security deposit is then available and shall
thereafter remain available, then Lessee may apply same against rentals accruing
thereafter, provided that Lessee shall not then be in default under this Lease
and, further provided, that Lessee shall give Lessor five (5) days written
notice and opportunity to cure its failure hereunder before such application may
be permitted.
Lessee hereby agrees not to look to the mortgagee, as mortgagee,
mortgagee in possession, or successor in title to the land of which the leased
premises are a part, for accountability for any security deposit required by
Lessor hereunder, unless said deposit shall have actually been received by said
mortgagee as security for Lessee's performance under the terms of this Lease.
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SECTION 24.
HOLDING OVER
24.01 In the event of Lessee holding over after the termination of this
Lease, thereafter the tenancy shall be from month to month in the absence of a
written agreement to the contrary, subject to all the conditions, provisions and
obligations of this Lease insofar as the same are applicable to a month to month
tenancy; except that such month to month tenancy shall be at a monthly minimum
net rental in an amount equal to 150% of the monthly minimum net rental
stipulated in Section 3 if Lessee shall be holding over without Lessor's written
consent.
SECTION 25.
REMEDIES NOT EXCLUSIVE; WAIVER
25.01 Each and every of the rights, remedies and benefits provided by this
Lease shall be cumulative, and shall not be exclusive of any other of said
rights, remedies and benefits, or of any other rights, remedies and benefits
allowed by law.
25.02 One or more waivers of any covenant or condition by Lessor shall not
be construed as a waiver of a further or subsequent breach of the same covenant
or condition, and the consent or approval by Lessor to or of any act by Lessee
requiring Lessor's consent or approval shall not be deemed to waive or render
unnecessary Lessor's consent or approval to or of any subsequent similar act by
Lessee.
SECTION 26.
RIGHT TO SHOW LEASED PREMISES
26.01 Provided that Lessor shall not materially disrupt Lessee's
operations in the leased premises, the Lessee hereby agrees that, during the
term hereof, Lessor may show the leased premises to prospective lessees and
purchasers.
SECTION 27.
LESSEE'S PROPERTY
27.01 Lessee shall be responsible for and shall pay before delinquency all
municipal, county, state and federal taxes or fees of any nature assessed during
the term of this Lease against any leasehold interest, fixtures, furnishing,
equipment or personal property of any kind, owned by or placed in, upon or about
the leased premises.
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27.02 The Lessor shall not be responsible or liable to the Lessee for any
loss or damage that may be occasioned by or through the acts or omissions of
persons occupying adjoining premises, or any part of the premises adjacent to or
connected with the leased premises, or for any loss or damage resulting to the
Lessee or its property from bursting, stoppage or leaking of water, gas, sewer
or steam pipes or for any damage or loss of property or within the leased
premises from any cause whatsoever except to the extent that the same shall
result from the negligent or wrongful acts of Lessor, its agents or employees.
27.03 Less shall give immediate notice to Lessor in case of fire or other
casualty in the leased premises or of defects therein or in any fixtures or
equipment.
SECTION 28.
[Intentionally Omitted]
SECTION 29.
MEMORANDUM OF LEASE
30. Upon either party's request, the parties agree to prepare and record a
mutually acceptable form of Memorandum of this Lease, to be recorded at the
office of the County Register of Deeds.
SECTION 31.
LESSOR'S OPTION TO PURCHASE
31.01 Upon the expiration or earlier termination of the term of this
Lease, Lessor and/or Lessor's partners shall have the option to purchase all of
the assets, tangible and intangible, owned by Lessee which are utilized in
connection with the business operations conducted on the leased premises,
including, but not limited to, all fixtures, furnishings, equipment and personal
property of Lessee on or about the leased premises, and, to the extent
assignable, Lessee's interest in all licenses and certificates pertaining to
Lessee's use and operation of the leased premises (collectively the "Assets");
which option may be exercised by Lessor by notifying Lessee in writing not prior
to ninety (90) days prior to the expiration or earlier termination of this lease
or within ninety (90) days after the expiration or earlier termination of the
term hereof. In the event Lessor shall exercise the foregoing option to
purchase, the total consideration therefor to be paid by lessor at the closing
of the transaction shall be One Dollar ($1.00) plus the fair market value of the
Assets on the date of expiration or earlier termination of this Lease, such
value to be determined by independent appraisal, performed by an appraiser
mutually acceptable to the parties, the cost of which shall be borne equally by
the parties.
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31.02 Lessee agrees that in the event of exercise by Lessor of the
foregoing option to purchase, Lessee shall execute all necessary and required
documents to consummate the transaction, and Lessee shall utilize its best
efforts to consummate the transaction in an expeditious manner; and Lessee
agrees, at all times during the term of this Lease, to fully cooperate with
Lessor in connection with the transfer and/or issuance of all licenses,
certificates and governmental approvals necessary for Lessor's operation of the
facilities on the leased premises. The option to purchase as set forth in this
Section shall be freely assignable, in whole or in part, by Lessor.
SECTION 31
FINANCIAL STATEMENTS
31.03 Lessee shall furnish Lessor, as soon as available and in any event
within forty-five (45) days after the end of the first three quarters of each
fiscal year of the Lessee, the consolidated balance sheet of the Lessee and
affiliates at the end of such fiscal quarter, and the related consolidated
statements of income, retained earnings and changes in financial positions for
the period commencing at the end of the previous fiscal year and ending with the
end of such fiscal quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding date or period of the preceding
fiscal year, all in reasonable detail and duly certified (subject to year-end
audit adjustments) by an officer of the Lessee as having been prepared in
accordance with generally accepted accounting principles, together with a
certificate of an officer of the Lessee stating that no default or event which,
with notice or lapse of time or both, would constitute a default, has occurred
or, if a default or such event has occurred, a statement setting forth the
details thereof and the action which the Lessee has taken or proposes to take
with respect thereto.
31.04 As soon as available and in any event within one hundred eighty
(180) days after the end of each fiscal year of the Lessee, the Lessee shall
furnish to Lessor a consolidated and consolidating financial statement for such
year, including a balance sheet as of the close of such fiscal year, statements
of income and retained earnings and changes in financial position for such year,
prepared in accordance with generally accepted accounting principles
consistently applied and certified by Lessee's independent certified public
accountants and supported by the opinion of such independent certified public
accountants, together with a certificate of an officer of the Lessee stating
that no default or event which, with notice or lapse of time or both, would
constitute a default, has occurred or, if a default or such event has occurred,
a statement setting forth the details thereof and action which the Lessee has
taken or proposes to take with respect thereto.
31.05 Additionally, within forty-five (45) days after the end of each
quarter of each fiscal year of the Lessee, Lessee shall furnish to Lessor an
income and operations statement (in such form and detail reasonably satisfactory
to Lessor) and such other information as shall reflect the business operations
and financial for each of the facilities operated on the leased premised for
such quarter and the year to date.
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SECTION 32.
HAZARDOUS SUBSTANCES
32.01 Lessee shall at all times use, store, generate, treat, or dispose of
any Hazardous Substance associated with the operation of the leased premises in
compliance with applicable environmental laws, ordinances, rules and
regulations. For purposes of this section, the term "Hazardous Substance" means
any substance, the manufacturer, use, treatment, storage, transportation, or
disposal of which is regulated by any law having as its object the protection of
public health, natural resources, or the environment, including, by the way of
illustration only and not as a limitation, the following: the Resource
Conservation and Recovery Act; the Comprehensive Environment Response,
Compensation, and Liability Act; the Toxic Substances Control Act; the Federal
Water Pollution Control Act; the Clean Air Act; the Michigan Hazardous Waste
Management Act; the Michigan Water Resources Commission Act, the Michigan Solid
Waste Management Act; and the Michigan Environmental Response Act as each of
such acts shall be amended from time to time. Lessor hereby represents and
warrants to Lessee that it has commissioned a Phase I environmental assessment
of the leased premises (the results of which shall be reasonably satisfactory in
all respects to Lessee prior to the commencement date hereof) and (ii) Lessor
has no knowledge that there as "Hazardous Substances" or underground storage
tanks on, in, at or under the leased premises. Lessor shall be responsible for
all indicated and recommended remediation in said Phase I environmental
assessment as and when required by an governmental authority unless such
environmental problem should reasonably present a serious threat to the health,
safety or welfare of the residents or employees of the premises, in which case
Lessor shall effect such remediation immediately.
32.02 Lessee shall promptly supply to Lessor a copy of all notices,
demands, inquiries, or claims received from any person or entity as a result of
Hazardous Substances alleged to be on or emanating from the leased premises or
adjacent property, and any notices, reports, or applications for licenses,
permits, or approvals submitted by or on behalf of Lessee to any environmental
regulatory agency affecting the leased premises or adjacent property.
32.03 Lessor reserves the right (but shall not have the obligation) to
enter upon and inspect the leased premises at any time, and from time to time,
during Lessee's business hours and, on reasonable notice, at other times. Such
inspection may include, without limitation, the taking and analysis of soil
borings, samples of ground water or surface water, installation of observation
xxxxx, and investigation of the surface or subsurface of the leased premises by
geophysical means. Lessee shall promptly furnish to Lessor any information
requested by or on behalf of Lessor concerning Lessee's operations on the leased
premises and on adjacent property, whether or not such information is a
proprietary nature.
32.04 Lessee shall, at its sole cost and expense, take all steps necessary
from and after the commencement date hereof to forthwith remove and properly
dispose of all Hazardous Substances and clean up and remediate any contamination
or damage resulting therefrom caused by, resulting from, or attributable to,
Lessee's operations on, or possession of, the leased premises, in full
compliance with all applicable laws and regulations. Lessee agrees to defend,
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indemnify and hold Lessor harmless from and against any liabilities including,
without limitation, judgments, fines, penalties, court costs, and actual
attorney fees claimed or asserted against or sustained by Lessor resulting from
lessee's failure to fully comply with the provisions of the Section 32.
SECTION 33.
MISCELLANEOUS
33.01 This Lease shall be governed by, and construed in accordance with,
the laws of the State of Michigan. If any provision of this Lease or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Lease shall not be affected
thereby and each provision of the Lease shall be valid and enforceable to the
fullest extent permitted by the law.
33.02 The captions of this Lease are for convenience only and are not to
be construed as part of this Lease and shall not be construed as defining or
limiting in any way the scope of intent of the provisions hereof.
33.03 Whenever herein the singular member is used, the same shall include
the plural and the masculine gender shall include the feminine and neuter
genders.
33.04 This Lease shall constitute the entire agreement of the parties
hereto; all prior agreements between the parties, whether written or oral, are
merged herein and shall be of no force and effect. This Lease cannot be changed,
modified or discharged orally but only by an agreement in writing, signed by the
party against whom enforcement of the change, modification or discharge is
sought.
33.05 If Lessor shall fail to perform any covenant, term or condition of
this Lease upon Lessor's part to be performed, and if as a consequence of such
default Lessee shall recover a money judgment against Lessor, such judgment
shall be satisfied only out of the proceeds of sale received upon execution of
such judgment and levied thereon against the right, title and interest of Lessor
in the leased premises, and neither Lessor nor any of the co-partners comprising
the partnership which is the Lessor herein shall be liable for any deficiency.
33.06 Lessor may freely transfer, assign or otherwise encumber its
interest herein and/or in the leased premises. In the event of any such
transfer, the transferor shall be automatically relieved of any and all
obligations and liabilities on the part of Lessor accruing from and after the
date of such transfer provided that such obligations and liabilities are assumed
by the transferee. lessor shall give Lessee at least three (3) business days
notice prior to entering a binding agreement to sell the leased premises.
33.07 All rights and liabilities herein given to, or imposed upon, the
respective parties hereto shall extend to and bind the several respective heirs,
executors, administrators, successors, and assigns of the said parties; and if
there shall be more than one Lessee, they shall
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all be bound jointly and severally by the terms, covenants and agreements
herein. No rights, however, shall inure to the benefit of any assignee of Lessee
unless the assignment of such assignee is permissible in accordance with the
terms and conditions of Section 13.01.
33.08 No payment by Lessor or receipt by Lessor of a lesser amount than
the monthly rent herein stipulated shall be deemed to be other than on account
of the earliest stipulated rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Lessor shall accept such check or payment without
prejudice to Lessor's right to recover the balance of such rent or pursue any
other remedy in this Lease provided.
33.09 The submission of this Lease for examination does not constitute a
reservation of or option for the leased premises, and this Lease shall become
effective as a Lease only upon execution and delivery thereof by Lessor and
Lessee.
33.10 Lessee shall not interpose any non-compulsory counterclaims or
claims for set-off, recoupment or deduction of rent in a summary proceeding for
nonpayment of rent or other action or summary proceeding based on termination,
holdover or other default in which Lessor seeks repossession of the leased
premises from Lessee.
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IN WITNESS WHEREOF, the Lessor and Lessee have executed this Lease as of
the date set forth at the outset hereof.
LESSOR:
WITNESSES: XXXXXXX HEALTH, INC.,
a Michigan corporation
/s/ signature illegible By: /s/ Xxxxxx Xxxxxxx
-------------------------------- ------------------------------
Vice President of Acquisitions
/s/ Xxxxxxx Xxxxx Its: Vice President
--------------------------------
LESSEE:
TRANSITIONAL HEALTH PARTNERS, d/b/a
TRANSITIONAL HEALTH SERVICES, a
Delaware general partnership
/s/ Xxxx X. Xxxxxxx By: THS PARTNERS I, INC.,
-------------------------------- a Delaware corporation,
Vice President of Legal Affairs General Partner
/s/ signature illegible By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------- ------------------------------
V.P. of Bus. Dev.
Its: G. M.
/s/ Xxxx X. Xxxxxxx And: THS PARTNERS II, INC.,
-------------------------------- a Delaware corporation,
V. P. of Legal Affairs General Partner
/s/ signature illegible By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------- ------------------------------
V. P. of Bus. Dev.
Its: G. M.
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