EXHIBIT 10.17
LEASE
ARTICLE I.
PARTIES
Section 1.01 Parties. This lease agreement entered into in duplicate by and
between: Xxxxxxxx-Xxxxxx, a Kentucky general partnership (hereinafter
referred to as "Landlord"), and Cardinal of Kentucky, Inc. (hereinafter
referred to as "Tenant")
ARTICLE II.
PREMISES
Section 2.01 Premises. WITNESSETH That for and in consideration of the mutual
covenants and agreements herein contained the Landlord hereby leases to Tenant,
and the Tenant hereby leases from Landlord, in accordance with the terms and
conditions set forth herein, the following described premises in Jefferson
County, State of Kentucky, to-wit:
As legally described on Exhibit "A" attached hereto and incorporated
herein, including all improvements located thereon and all rights,
privileges and easements appertaining thereto (the "Premises").
Section 2.02 Assumed Name. The Tenant shall have the right to use and to
register as the assumed business name for the premises the name "The Autumn Care
Convalescent Center" after the commencement date of this lease and thereafter
while this lease is in effect.
ARTICLE III.
TERM AND EXTENSION
Section 3.01 Term. The term of this lease shall commence upon the effective date
of the license to be obtained by Landlord for
the premises from the Division for Licensing and Regulation or 30 days after the
Commission for Health Economics Control in Kentucky receives notice from Tenant
of Tenant's intent to acquire the premises by lease from Landlord, whichever
occurs last. Provided, however, that if the Commission requires Tenant to obtain
a certificate of need to perform the acquisition, the effective date shall be
the date Tenant receives a final and unappealable decision allowing Tenant to
acquire the premises by lease from Landlord pursuant to KRS Chapter 216B.
Notwithstanding any of the foregoing, the term shall not commence until Landlord
delivers possession of the improvements and leased equipment to Tenant in
accordance with the provisions of this lease and a conditional use permit is
issued by the appropriate zoning authorities allowing the use of the premises
for a health care facility. The term of this lease shall terminate fifteen (15)
years from said date, unless sooner terminated or extended.
Section 3.02 Extension of Term. if this lease is still in effect and if Tenant
shall not then be in default, Tenant is hereby granted an option to extend the
initial term of this lease for an additional ten (10) years, all under the same
terms and conditions, except as herein stated, and any such extension of lease
shall be deemed automatically made without notice unless Tenant shall have given
one hundred eighty (180) days notice in writing before the expiration of the
term that Tenant will not extend said lease.
ARTICLE IV.
RENTAL
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Section 4.01 Base Rental. Rent shall commence on the commencement date of this
lease as stated in Section 3.01 of this lease. The rent payment provided for
herein shall be paid by Tenant in advance, without notice of demand, on the 1st
day of each month, and the rent for the calendar month during which rent shall
begin to accrue and for the last calendar month of the term of this lease shall
be apportioned, if necessary. All rental payments shall be made to Landlord at
the address stated in this lease or to such other person, firm or corporation at
such other address as Landlord may designate by notice in writing to Tenant.
Tenant shall pay interest at the rate of Eighteen percent (18%) per annum on all
amounts hereunder which are not paid within ten (10) days of their due date,
together with costs of collection and reasonable attorneys fees, all without
relief from valuation or appraisement laws.
Tenant agrees to pay Landlord as rent the sum of Six Hundred Twenty Five
Thousand Dollars ($625,000.00) each lease year. For Tenant's convenience, said
rent shall be paid in equal monthly installments of $52,083.33 payable in
advance without demand. (Said monthly rent payments hereinafter referred to as
the "base rental".)
Section 4.02 Adjustments to Base Rental. "Lease Year" shall commence as provided
in Article 3.01 and shall end at the close of the twelfth month thereafter. Each
"lease year" subsequent shall consist of twelve calendar months.
At the beginning of the second lease year and at the beginning of each
lease year thereafter (including the extension term) (i.e.
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each year) the monthly base rental shall be adjusted upward in the same
percentage amount as the percentage increase in the Consumer Price index for the
Louisville, Kentucky, metro statistical area, over the base period i.e., index
figure for the month the rental begins. The Consumer Price Index shall mean the
average for "all items" shown on the Louisville metro statistical area average
for urban wage earners and clerical workers, all items, groups, sub groups and
special groups of items as published quarterly by the Bureau of Labor Statistics
of the United States Department of Labor (1982 - 1984 = 100).
If the Louisville, Kentucky, Metro Statistical Index of the United States
Bureau of Labor Statistics is discontinued, Landlord and Tenant shall select
comparable statistics on the purchasing power of the consumer dollar in the
Louisville, Kentucky, metro area, which are then available and published in some
responsible financial periodical of recognized authority, governmental or
otherwise.
In the event of a decrease in the Consumer Price Index at any adjustment
period date, the rental shall not decrease, but shall remain the same as the
immediate preceding period.
Section 4.03. Rent Abatement. The rental payments provided for in Section 4.01
of this lease shall xxxxx during the first six (6) months of the lease term;
provided, however, if Tenant is in default at the beginning of the abatement
period or becomes in default during the abatement period, the abatement shall
not begin or shall end, accordingly.
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In addition, the adjustment to base rental provided for in Section 4.02 of
this lease shall not occur in any lease year following a lease year in which
Tenant's profit for the lease year before all taxes and after deduction only for
direct and on site (leased premises) "out of pocket" expenses, including the
cost of an administrator (on site) is less that $175,000.00. In the event that
the rental adjustment of Section 4.02 of this lease is abated in accordance with
this paragraph, then the next adjustment in accordance with Section 4.02 shall
not occur until the beginning of the lease year following a lease year in which
Tenant's profit for the lease year (before all taxes and after deduction only
for direct and on site "out of pocket" expenses, including an on site
administrator) equals or exceeds $250,000.00. Reinstatement of the Section 4.02
adjustment to base rental shall not be cumulative (i.e., the percentage increase
in the CPI during any lease year in which the adjustment is abated shall not be
included in a later adjustment calculation). If Tenant is in default at the
beginning of the abatement period or becomes in default during the abatement
period, the abatement shall not begin or shall end, accordingly. Notwithstanding
any of the foregoing, there shall be a CPI adjustment as to base rental for the
second lease year regardless of the Tenant's profit during the first lease year.
ARTICLE V.
TITLE AND POSSESSION
Section 5.01 Title. Landlord represents and warrants to Tenant that Landlord
owns the fee simple title to the premises, has the right and authority to enter
into this lease on the terms and
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conditions and for the use stated and that Landlord has no knowledge of any
liens, encumbrances, easements or restrictions affecting the premises other than
as shown on Commonwealth Title Policy No. 442-309356 previously supplied to
Tenant.
Section 5.02 Construction of Facility and Possession To Tenant. Landlord agrees
to deliver to the Tenant physical possession of the improvements and leased
equipment no later than the 1st day of August, 1991. Landlord's architect shall
notify Tenant in writing at least Thirty (30) days prior to the estimated date
of the issuance of an "authority to occupy", however, such notice shall not
amend the dates or terms of this lease. Tenant shall not have any right to
cancel this lease, reform this lease, or demand damages of any nature from
Landlord if possession is given after such date so long as Landlord is
diligently pursuing the completion of construction and licensure of the
improvements or in the event possession was delayed due to the acts or omissions
of Tenant. If possession has not been delivered by August 1, 1992, through no
fault of Tenant, then Tenant's sole remedy shall be a cancellation of this
lease.
Landlord is now erecting on the demised premises a one story building
suitable for use as a long term health facility for 35 skilled, 80 intermediate
and 25 personal care beds and with administration offices. At such time as
Landlord delivers possession of the improvements to Tenant, the improvements
shall be in compliance with licensure requirements of the State of Kentucky,
state and local building codes and zoning laws and regulations. Landlord shall
erect the improvements at its own expense, including
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all architects, engineering and other fees incurred by Landlord at its request
and the improvements shall at all times belong to it.
Section 5.03 Leased Equipment. Landlord shall, at its expense, furnish and
install as "leased equipment" in the facility to be constructed on the premises
the equipment and furnishings in accordance with the list attached hereto as
Exhibit "B" and incorporated herein (the "Leased Equipment") and such leased
equipment shall be leased to Tenant and be controlled by the terms of this lease
as a part of the rental provided for herein. The parties may, by mutual written
agreement, delete or add items to such list. In no event shall the aggregate
purchase cost to Landlord, of all items of leased. equipment exceed Four Hundred
Thousand Dollars ($400,000.00). Any additional items added thereto from time to
time by written agreement of the Landlord and Tenant shall also be considered
"leased equipment". Tenant shall keep all of the leased equipment in good
working order and condition at Tenant's sole cost and expense. Tenant shall have
the right to also utilize its own equipment on the premises in addition to the
leased equipment. Tenant shall be responsible for furnishing and maintaining all
other equipment, personal property and supplies required at the facility.
If necessary for the proper operation of the Facility, Tenant shall,
during the Lease Term, replace part or all of the items of Leased Equipment
which have been damaged, destroyed or that need replacement through no fault or
neglect of Landlord; and such replacement shall be at the sole cost of Tenant,
but any such replaced equipment shall be and remain the property of Landlord.
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Section 5.04 Surrender of Possession. At the end of the lease term or any
renewal term or upon the earlier termination of this lease, Tenant, at its
expense, shall surrender the leased premises, leased equipment (including
additions, replacements and accessories thereto), and fixtures to Landlord in
the same good condition and state of repair as they were at the beginning of the
original lease term, ordinary wear and tear excepted, and broom clean.
Section 5.05 Holding Over. If Tenant remains in possession of the premises after
the expiration of either the original term of this lease, or any extended term,
except pursuant to an exercise of an option to extend, such possession shall be
as a month-to-month tenant. During such month-to-month tenancy, rent shall be
payable at the same rate as that in effect during the last month of the
preceding term (including the CPI adjustment) and the provisions of this lease
shall be applicable and continue in full force and effect.
Section 5.06 Additional Personal Property. Landlord shall purchase, in addition
to the leased equipment, any other equipment or personal property approved in
writing by Tenant and necessary for Landlord to obtain an "Authority to Occupy"
and initial licensure from the State of Kentucky with regards the operation of
the premises.
Section 5.07 Quiet Enjoyment. At all times prior to the expiration or other
termination of this lease when Tenant is not in default hereunder, Landlord
covenants that the peaceable and quiet enjoyment of the premises by the Tenant
shall not be disturbed by
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anyone, claiming by, under or through Landlord or at Landlord's direction.
Section 5.08 Zoning and Restrictions. Landlord represents and warrants to Tenant
that the Landlord has received all building and zoning permits necessary to
construct the health care facility now being constructed on the premises and
that Landlord, at its expense and prior to the commencement date of this Lease,
shall secure all necessary zoning permits to allow the use of the premises as a
health care facility and that there are no deed or other restrictions affecting
the premises that would prohibit the use of the premises as contemplated by the
terms of this lease.
ARTICLE VI.
TAXES, ASSESSMENTS AND UTILITIES
Section 6.01 Real Estate Taxes. Tenant, at its expense, shall pay when due all
real estate taxes becoming due and payable against the premises beginning with
the date that possession of the premises is delivered to Tenant and all taxes
thereafter becoming due and payable during the term of this lease. Tenant shall
have the right, at its expense and in good faith, to contest the amount or
validity of any such tax payable by Tenant under the terms of this lease. The
terms of Section 7.02 of this lease shall apply to any such action by Tenant. In
addition, if at any time payment of any such tax shall become necessary to
prevent the tax sale of the leased property or any portion thereof because of
nonpayment, then Tenant shall pay the same in sufficient time to prevent such
sale. Any real estate taxes which become due and payable for the year in which
possession is given to Tenant shall be prorated for the
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calendar year between Landlord and Tenant and such proration shall also occur at
the end of the term of this lease for the calendar year of termination. Landlord
shall be responsible for all taxes due and payable in 1990.
Section 6.02 Personal Property Taxes. Tenant, at its expense, shall pay when due
all personal property taxes assessed against any of Tenant's tangible or
intangible personal property or leased equipment beginning on the date Tenant is
given possession,and during the term of this lease.
Section 6.03 Sewer Use Fees. Tenant, at its expense, shall pay when due all
sewer use fees assessed against the premises during this lease commencing with
the date of possession.
Section 6.04 Utilities. Tenant, at its expense, shall obtain in its name and pay
when due all charges for gas, water, electricity, cable television, trash,
telephone, communication services, and all other utilities used on or supplied
to the premises commencing with the date Tenant is given possession.
ARTICLE VII.
USE OF PREMISES
Section 7.01 Use by Tenant. Tenant shall use the premises only for the business
purpose of a health care facility (the "facility") (i.e., nursing home or
retirement home providing some care for its residents) and for no other purpose.
Tenant covenants and agrees that during the term of the Lease, it will use its
best efforts to operate the Facility as a provider of health care services and
to maintain its certifications for reimbursement and licensure, and its
accreditation, if compliance with accreditation standards is
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required to maintain the operations of the Facility and a failure to comply
would adversely affect operations of the Facility.
Section 7.02 Compliance with Laws. Tenant, in operating the improvements on the
premises, at its expense, shall comply with all city, county, state and federal
building codes, ordinances, rules, regulations and laws applicable to the
premises, including but not limited to any and all guidelines relating to
alzheimer facilities adopted, and as amended from time to time, by the
University of Kentucky Xxxxxxx - Xxxxx Center on Aging, unless same relates to
the original construction of the improvements or structural alterations required
by law which shall be the responsibility of the Landlord, (Landlord shall not be
liable for any changes necessary to comply with any law or regulation amended or
commencing after the commencement date of this lease except for any structural
changes to the premises required by law). If, at any time, the Xxxxxxx-Xxxxx
Guidelines directly conflict with state regulations, then state regulations
shall take precedence to the extent of the conflict. Tenant, at its expense
shall have the right, after notice to Landlord, to contest by appropriate legal
proceedings the validity of or application to the premises of any building code,
ordinance, rule, regulation, tax or law and to delay compliance therewith
pending the prosecution of such proceedings; provided, however, that the Tenant,
at its expense, shall defend, hold harmless and indemnify Landlord against all
encumbrances or civil liability and reasonable attorney fees incurred by the
Landlord or imposed upon the premises by reason of any delay caused
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by Tenant in compliance with any city, county, state or federal building code,
ordinance, rule, regulation or law.
Section 7.03 Waste. Tenant shall neither commit, nor permit the commission of
waste upon or against the leased premises and leased equipment, ordinary wear
and tear excepted.
Section 7.04 Condition of Premises and Equipment. The taking of possession by
Tenant shall be conclusive evidence that Landlord has complied in every respect
with its obligations under Section 5.02 of this lease. Landlord makes no
warranty and Tenant waives any warranty, express or implied, relative to the
premises, any area common thereto, or leased equipment, except as expressly
stated in this lease. Tenant shall, however, have the full benefit of any and
all warranties of any architect connected with the construction of the leased
premises or of any manufacturer or seller of equipment or fixtures constituting
a part of the premises or items of leased equipment. Landlord and Xxxxxx X.
Xxxxxx, as the general contractor, warrant outside walls, roof and foundation
for the period of this lease as to defects arising from unworkmanlike
construction, In addition, the Landlord shall, at its expense, correct any
defects in construction of the premises by it arising from unworkmanlike
construction which occur within one (1) year after the commencement date of this
lease. Tenant waives any claims against the general contractor and any express
or implied warranties of the general contractor, except as set forth in this
lease.
Landlord represents and warrants to Tenant that to the best of Landlord's
knowledge there are no "hazardous substances" located
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on, in, at or under the premises. Landlord makes no other representations or
warranties with regards to "hazardous substances". Landlord has hereof ore given
Tenant a copy of an environmental site assessment dated November 26, 1990, from
Xxxxxxxxx Associates, Inc. For purposes of the foregoing "hazardous substance"
means any hazardous or toxic substance, material or waste regulated or listed
pursuant to any federal, state or local environmental law, including without
limitation, the Toxic Substances Control Act, the Comprehensive Environmental
Response Compensation and Liability Act and the Clean Water Act.
Section 7.05 License and Permits. Tenant, at its expense, shall acquire and
maintain all licenses and permits needed to operate a long term health care
facility on the premises. Tenant shall reimburse Landlord its costs for the
Tenant's pro rata share of the cost for the remaining period of the first one
(1) year license of the facility initially obtained by Landlord. Such costs
shall not include the cost of Landlord's obtaining the Certificate of Need as
the costs referenced in this section refer to operational licenses only. Tenant
shall not be released or excused from the term of this lease, by reason of or as
a result of, a failure to obtain or retain any such licenses and permits
provided the facility as constructed meets all applicable requirements for
initial licensure. Landlord, at Tenant's expense, shall diligently assist and
cooperate with Tenant in obtaining any such licenses and/or permits. However,
Landlord shall not be required to institute litigation for such purposes.
Section 7.06. Right of Entry for Inspection and Repairs. Landlord, in the event
of Tenant's default
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under this lease, shall have the right to enter upon the premises for the
purpose of inspection or making of such improvements, repairs and alterations of
the premises as Landlord may deem reasonably necessary or advisable. At all
reasonable times and with the least disturbance reasonably necessary, Landlord
may inspect the premises or view with existing or prospective mortgagees,
prospective purchasers or prospective tenants (as to tenants if the termination
of the lease will occur within six (6) months or Tenant has defaulted). The
consent of Tenant (not to be unreasonably withheld) shall be obtained prior to
commencement of major repairs, improvements or alterations, to the premises by
Landlord and, if reasonably possible, such work shall be done at such time or
times as will not interfere with the operations of Tenant, provided further,
that if such work prevents the use of any part of the facility by Tenant for a
substantial and material period of time, then rent shall xxxxx based upon the
same formula as contained in Article Thirteen (13) herein. The exercise of any
right reserved hereunder by Landlord shall not operate as a constructive
eviction or disturbance of Tenant's use and possession of the premises and shall
not render Landlord liable to Tenant or any other person.
ARTICLE VIII.
EMINENT DOMAIN
Section 8.01 Permanent or Temporary Taking. In the event the improvements, any
part thereof, or complete access to the premises is acquired on a permanent or
temporary basis by any Federal, State, or local governmental agency, by means of
condemnation or
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threat of condemnation, or by reason of mutual agreement between Landlord and
said governmental agency, this article shall control.
Section 8.02 Compensation. All compensation awarded for any taking (including
loss of leasehold) shall belong to and be the property of the Landlord,
provided, however, that Tenant shall be entitled to any portion of the award
made to the Tenant for its loss of business, depreciation to or for the cost of
removal of stock, fixtures, equipment other than the leased equipment or signs,
moving expenses, relocation costs or any other allowances to which Tenant may be
legally entitled, and this lease shall not preclude the right of Tenant to
pursue an independent action for damages against any governmental agency for
said taking. In any event, Landlord shall not be liable to Tenant for any
damages.
Section 8.03 Effect on Lease for Permanent Taking. In the event that the whole
of the improvements are taken permanently by any method then this lease shall
terminate as of the date title to the premises vests in the government agency.
Such date of vesting shall operate as though it were the date originally
intended by the parties for expiration of this lease and Tenant shall pay rent
accrued to the date of such vesting.
In the event a substantial and material portion of the improvements are
taken permanently, then either party to this lease shall have the option to
terminate this lease by giving the other party to this lease sixty (60) days
written notice. If neither party elects to terminate this lease or if less than
a substantial and material portion of the premises are taken then the lease
shall terminate as to the part taken and base rent shall be reduced for
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the remainder of the term and extensions, if any, on the basis and in the
proportion that the square footage of the facility taken bears to the total
premises leased herein. In the event that a substantial and material part of the
premises is temporarily taken in excess of ninety (90) consecutive days, then
such taking shall be deemed a permanent taking for purposes of this lease (it
shall be presumed that the taking is "substantial and material" if the Division
of Licensure and Regulation, Cabinet for Human Resources, closes the leased
premises because of such taking).
In the event that the leased premises is landlocked by such taking, then
either party to this lease shall have the right to terminate this lease by
written notice to the other party to this lease, which shall terminate this
lease sixty (60) days after notice.
Section 8.04 Effect on Lease of Temporary Taking. In the event that all or part
of the improvements are taken for a temporary use, the base rental shall be
abated by the greater of : (a) the proportion the square footage of the facility
taken bears to the total square footage of the entire leased premises herein or
(b) the proportion that the number of beds available f or use after the taking
bears to the number of beds available for use prior to the taking. Tenant shall
continue to perform all other conditions of this lease as though the taking or
condemnation had not occurred, except to the extent that Tenant shall be
prevented from doing so by reason of the taking or condemnation and except for
the abatement of base rental as provided. Neither party shall have any right to
terminate this lease by reason of a temporary taking of
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improvements or the demised premises, except as stated in Section 8.03 herein.
ARTICLE IX.
ALTERATIONS, REPAIRS AND TRADE FIXTURES
Section 9.01 Repairs by Tenant Generally. Except for those situations set forth
in Article Thirteen of this lease, Tenant, at its expense, shall inspect,
maintain and repair the improvements constructed by Landlord on the premises so
as to keep the improvements and interior decorations in good repair and in a
safe condition, free from dirt, water, snow, ice, refuse, trash and obstruction.
This obligation to repair shall include, but not be limited to, Tenant's signs,
glass, air conditioning, heating, electrical, parking areas and driveways,
plumbing systems, roof, walls and all interior repairs. Tenant shall not alter
any part of the structure of the leased premises or change or alter any
permanent improvement in or on the leased premises or make additions thereto
without the prior written consent of Landlord which consent shall not be
unreasonably withheld. However, Tenant may make alterations without Landlord's
consent that do not result in a substantial modification of the floor plan or
exterior appearance of the facility and otherwise have an aggregate cost of no
more than 10% of the annual rent then in effect so long as Tenant gives a copy
of the plans to Landlord at least ten (10) days prior to the alterations. Tenant
shall not do anything or permit anything to be done upon the premises which will
increase the rate of fire or casualty insurance upon the building or its
contents, without Landlord's written consent, or to cause structural damage
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to any improvements. Except for trade fixtures, any improvements made to the
premises shall become the property of the Landlord, free of charge, if affixed
to the realty.
Section 9.02 Quality and Promptness of Repairs. All ordinary repairs made by
Tenant shall be made promptly when necessary; shall be at least equal to the
original construction in the quality of materials and workmanship and shall be
done in full compliance with all applicable building codes, ordinances, rules,
regulations and statutes of the city, county, state and federal governments.
Section 9.03 Liability of Landlord. Landlord shall not liable to Tenant or any
other person or corporation, including employees and invitees, for death or
injury to the person or for loss or damage to property caused by theft,
vandalism, water, rain, snow, frost, fire, storm or accident, or by breakage,
stoppage, or leakage of water, gas, heating or sewer pipes or plumbing, upon,
about or adjacent to the premises or by any other cause, except damages caused
by Landlord's breach of this lease, gross negligence or willful misconduct.
Section 9.04 Removal of Personal Property. Upon the expiration of or termination
of this lease, Tenant, at its expense, shall remove from the premises all of the
personal property and equipment described in Section 5.06 of this lease (not
leased equipment). If any disfigurement or damage results from such removal,
repairs shall be made by Tenant at its expense.
If upon surrender to Landlord of possession of the premises and
improvements, Tenant, at its expense, does not within ten (10) days after the
Landlord's demand remove Tenant's personal
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property and equipment, Landlord, at Landlord's election, shall have the right
either to treat Tenant's property as having been abandoned by Tenant to Landlord
without any payment or offset or, at Tenant's risk and expense, to remove
Tenant's property from the premises and improvements and store them. Tenant, at
its expense, shall defend, hold harmless and indemnify Landlord from and against
any and all costs, expenses, losses, demands and damages, including reasonable
attorney fees, caused by the removal of Tenant's property from the premises and
improvements, regardless of whether caused by Tenant or Landlord.
Section 9.05 Future Construction. That with the written consent of both parties
to this lease, the Landlord may construct an addition to the premises
contemplated by this lease for rental by the Tenant on the same terms as this
lease with rent proportionately higher based pro rata with the rent due under
this lease and determined by the additional number of beds added as a result of
the addition.
ARTICLE X.
SIGNS
Section 10.01 Tenant's Signs. Tenant shall have the right to place upon the
leased premises such sign or signs as it may desire for advertising purposes at
its own expense, but the placement and the height of such sign shall be with the
approval of Landlord, such approval by Landlord shall not be unreasonably
withheld. All signs shall comply with all applicable state and local statutes,
rules, regulations and ordinances. Tenant shall maintain such signs in a good
state of repair and shall repair any damage to the demised premises by the
erection, maintenance or removal of such
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signs at the termination of this lease. Upon the termination of this lease, all
signs of Tenant (except any sign attached to a building on the premises) shall
be removed in accordance with the Article relating to trade fixtures.
ARTICLE XI.
ASSIGNMENT, SUBLETTING AND SUBORDINATION
Section 11.01 Assignment or Subletting by Tenant. Tenant shall not assign this
lease or any interest herein, or sublet the leased premises or any part thereof
or any right or privilege appurtenant thereto, or allow any person other than
Tenant and its agents, employees, patients and medical staff to occupy or use
the premises or any part thereof without Landlord's written consent (and the
consent of any mortgagee of the premises). This section shall not prohibit
assignment to affiliated entities of Tenant so long as the assignee complies
with subdivisions (a) and (e) of this section. Any unauthorized assignment or
sublease shall be voidable and shall constitute a breach of this lease at
Landlord's option.
Landlord and any mortgagee shall not unreasonably withhold its consent to
assignment or subletting of this lease. The Landlord (and any mortgagee) may
withhold its consent if any of the following facts do not exist:
(a) Assignee or sublessee agrees in writing to be bound by all terms,
conditions and obligations under this lease and the Agreement between the
parties of even date herewith.
(b) In landlord's reasonable opinion the proposed assignee or sublessee
has assets sufficient to operate the premises and to meet the obligations of
Tenant.
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(c) Assignee or sublessee has both the reputation and the experience in
rendering long term care similar to Tenant's reputation and experience.
(d) Assignee's or sublessee's proposed use is permitted by the use
provision of this lease.
(e) The proposed assignee or sublessee promptly obtains licensure approval
after the assignment or sublease and in any event in accordance with applicable
Kentucky statutes and regulations.
(f) Any other reasonable factor as determined by Landlord or Landlord's
mortgagee. In the event Landlord or a mortgagee refuses to grant such consent
and if Tenant wishes to contest Landlord's or mortgagee's decision, then
Tenant's sole remedy shall be for injunctive relief and not for any form of
damages or costs. It shall not be unreasonable to withhold said consent if
Tenant is in default of this lease at such time. Any such assignment or sublease
shall be subject to the terms of this lease and Tenant and guarantors shall
remain primarily liable to Landlord for the full performance of duties and
obligations under this lease.
Section 11.02 Subordination and Attornment. This lease shall be subject and
subordinate to the lien of any mortgage now secured by or hereafter to be
secured by the leased premises at the election of any owner of such premises,
and to all renewals, modifications, amendments, consolidations, replacements and
extensions thereof, provided that such mortgage provides that Tenant's use and
occupancy of the Premises shall not be disturbed notwithstanding
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any foreclosure or deed in lieu thereof so long as Tenant is not in default
hereunder. Tenant shall execute and deliver to the owner of the premises and any
mortgagee documents which may be reasonably required by any owner of the
premises in confirmation of such subordination promptly upon Landlord's written
request. Further, Tenant, as a part of any subordination agreement, if
requested, shall agree to attorn to any mortgagee in the event of foreclosure or
deed in lieu of foreclosure. In consideration of Tenant's execution of a
subordination and/or attornment agreement, Tenant shall be granted a
nondisturbance agreement from such mortgagee. In any event, Tenant shall be
obligated to continue to pay rent and comply with all other terms of this lease
if allowed to remain in possession after any foreclosure or deed in lieu of
foreclosure.
The periodic payment terms of any mortgage hereafter given by Landlord and
secured by the Leased Premises shall be in an amount not greater than either (1)
the original base rental or (2) the then current base rental as adjusted by the
terms of this lease, whichever amount is greater, except that this limitation
shall not apply if Landlord is rebuilding the Leased Premises in accordance with
Article Thirteen (13) of this Lease. The Tenant shall receive a copy of any
notice of default sent to Landlord from any such mortgagee and be given the same
right to cure as Landlord.
Section 11.03 Sale by Landlord. In the event of any sale or conveyance by
Landlord (or its mortgagee) of the leased premises or any part thereof, the sale
or conveyance shall be made subject to this lease and shall operate to release
Landlord (and any mortgagee) from any further liability under any of the terms,
22
covenants, and conditions contained in this lease, express or implied, arising
after the date thereof and Tenant shall look solely to the purchaser with
request to any matter arising after such date.
Section 11.04 Estoppel Certificates. Tenant, upon request by Landlord, shall
execute and deliver to Landlord, in contemplation of the sale or mortgage of the
leased premises, an estoppel certificate which shall, at a minimum, state to the
extent of the true facts: (1) that the lease provided to the lender or purchaser
is a true and correct copy of the lease and that it has not been modified or
terminated except as set forth, (2) that the rentals in the lease have not been
modified, (3) that there are no outside agreements that would affect lender or
purchaser or any of their rights to the lease or premises, (4) that there are no
disputes existing as to the lease, (5) that Landlord has complied with the terms
of this lease to the date of the certificate, (6) that there have been no
rentals paid more than thirty (30) days in advance, and (7) any other reasonable
terms.
Section 11.05 Leasehold Financing. Whenever Tenant shall not be in default under
the terms and conditions of this Lease and if permitted by the terms of any
mortgage now or hereafter secured by the premises and given by Landlord, Tenant
shall have the right to mortgage its leasehold interest in this Lease. If Tenant
does so, Landlord agrees as follows: (a) Landlord shall not agree to any
modification, amendment or termination of this Lease without first obtaining the
prior written approval of Tenant's leasehold mortgagee (the "Mortgagee"), which
approval shall not be
23
unreasonably withheld, provided, however, that this provision shall not impair
Landlord's right to terminate this Lease pursuant to its terms due to a default
hereunder by Tenant, subject to the provisions of this Article 11.05, (b)
Landlord shall notify Mortgagee in writing of any default by Tenant under this
Lease at the time notice is sent to Tenant and Mortgagee shall then have the
right, but not the obligation, to correct any such default within the time
allotted to Tenant under this Lease, (c) If for any reason whatsoever, including
the disaffirmance or rejection of this Lease in a bankruptcy proceeding, this
Lease shall terminate or come to an end during the term of Mortgagee's mortgage,
Landlord shall enter into a new lease with Mortgagee on the same terms and
conditions as this Lease, (d) Mortgagee shall not be liable for the performance
of this Lease except during such time as Mortgagee shall be in possession due to
foreclosure or other acquisition of the leasehold estate, and upon subsequent
assignment of this Lease by Mortgagee, Mortgagee shall remain liable for the
performance of the obligations of Tenant under any substitute lease entered into
between Mortgagee and Landlord.
Landlord shall enter into an agreement in recordable form with Mortgagee,
if so requested by Mortgagee, containing the foregoing terms and conditions.
Except as expressly stated in this Section, no Mortgagee, nor anyone who claims
by, through or under such mortgagee shall acquire any greater or more extended
rights then Tenant has under this Lease and any such mortgage shall in every
respect be subject and subordinate to all conditions and terms of this Lease and
the rights of Landlord herein as well as in respect
24
to all improvements located on the premises. In no event shall Landlord be
liable to pay any such leasehold mortgage.
ARTICLE XII.
DEFAULT
Section 12.01 Default by Tenant. The occurrence of any one or more of the
following conditions or any failure of Tenant to abide by the terms of this
lease shall constitute a "default" within the meaning of that word as used in
this lease. Tenant shall correct said default within ten (10) days after the
receipt of written notice of such "default" if such "default" is a monetary
default and within thirty (30) days if the "default" is nonmonetary. If such
"default" is not remedied by Tenant within the above applicable period, the
Landlord shall have the rights as set forth in this Article, which rights are
cumulative and in addition to any rights or remedies which Landlord may have by
law. If any nonmonetary default is not capable of cure within thirty (30) days,
Tenant shall have such longer period as is reasonably necessary to cure such
default provided that Tenant commences such cure within such thirty (30) day
period and diligently and in good faith prosecutes such cure to completion.
(1) The failure of Tenant to pay any part of a rental payment or
other charge due under this lease on or before its due date;
(2) Unauthorized assignment or sublease of this lease or any part
thereof or of any interest therein;
(3) Abandonment or vacation of the premises by Tenant, or failure of
Tenant to conduct business as required by this lease;
25
(4) Dissolution of Tenant;
(5) The appointment of a receiver or Trustee over any part or all of
Tenant's property or that of any successor;
(6) The voluntary or involuntary making by or against Tenant of a
general assignment for the benefit of any one or more of Tenant's past, present
or future creditors;
(7) The filing or attachment of any lien or encumbrance against the
premises arising out of any act or omission by Tenant which is not released or
bonded by Tenant in accordance with law;
(8) The supplying by Tenant to Landlord of any information material
to Tenant's ability to perform this lease that Tenant knew at the time to be
false;
(9) Failure of Tenant to perform any covenant, condition, or
obligation contained herein or to give any notice required hereunder;
(10) Any act of intentional damage to the leased premises or leased
equipment;
(11) Except as qualified by subsection (12) below, Tenant's material
breach of any of its obligations arising out of the ancillary operating
"Agreement" or the "Side Agreement" between the parties both of even date
herewith;
(12) Loss of any license or permit required to operate the facility
as a long term care facility and the expiration of any appeal period or period
in which deficiencies can be corrected.
In the event of any default, Landlord shall give Tenant written notice of
the default stating the default complained of and
26
referring to the Article and Section in this lease relied on by Landlord.
Section 12.02 Landlord's Rights and Remedies. Upon any default and a failure by
Tenant to cure same within the time period in the preceding section, Landlord,
at its option, and without further demand or notice, shall have the following
rights and remedies in addition to any rights provided by law, all of which
shall be cumulative:
(1) Perform any covenant or obligation of Tenant and charge the cost of
the cure to the next installment or installments of base rental due.
(2) Allow Tenant to remain in possession, declare the total rental under
this lease immediately due and payable and institute collection proceedings.
(3) Retake possession of the leased premises and any leased equipment and
relet the leased premises or any part thereof to a third party. If the Landlord
relets the premises (either for a term greater than less than or equal to the
unexpired portion of the term then in effect under the terms of this lease) for
an aggregate rent during the portion of such new lease which is less than the
rent and other charges which Tenant would pay hereunder for such period,
Landlord may immediately upon the making of such new lease, xxx for and recover
the difference between the aggregate rental provided for in said new lease for
the portion of the term coextensive with the term then in effect under this
lease, and the rent which Tenant would pay hereunder for such period (discounted
to present value at a factor of 8% per annum), together with any
27
expense to which Landlord may be put for brokerage commission, placing the
demised premises in tenantable condition, charges accrued prior to the new lease
or otherwise. If such new lease or tenancy is made for a shorter term than the
balance of the term of this lease, any such action brought by Landlord to
collect the deficit for that period shall not bar Landlord from thereafter suing
for any loss accruing during the balance of the unexpired term of this lease.
(4) Operate the facility on Tenant's behalf (and subject to applicable
Kentucky statutes and regulations) until any default by Tenant under this lease
has been cured. Any such summary action by Landlord shall not be construed as an
election or act constituting retaking of possession unless expressly so stated
in writing by Landlord to Tenant.
Tenant knowingly and voluntarily waives demand for performance, notice to
quit and any and all rights of redemption which Tenant may now have or hereafter
acquire pursuant to statute or court decision, except for notice as provided in
this Article.
Landlord shall have the right to cure any default by Tenant without giving
notice to Tenant in the event of an emergency.
Landlord's failure to insist on the strict performance of and compliance
with each condition in this lease shall neither constitute nor be construed as
constituting a waiver by Landlord of Landlord's rights under this Article or by
law, nor constitute nor be construed as consisting of a waiver by Landlord of a
second or subsequent default by Tenant of the same condition. Acceptance of past
due rent or other sums due shall in no way act as a waiver of
28
Tenant's default nor prevent Landlord from proceeding as above stated. In the
event litigation is commenced, it shall not be necessary for Landlord to notify
Tenant of any additional occurrences of default prior to proceeding as
permitted.
Section 12.03 Default by Landlord. If Landlord defaults in the performance of
any condition or obligation in this lease and if Tenant gives Landlord notice of
the default stating the default complained of and referring to the Article and
Section in this lease relied on by Tenant, Landlord shall have thirty (30) days
after receiving written notice from Tenant to undertake the cure of any default
and shall thereafter cure same in good faith, with diligence, and within a
reasonable period of time. Notwithstanding the foregoing, Landlord shall not
have the right to cure the failure to meet the deadlines stated in Section 5.02,
except with the express written consent of Tenant.
If Landlord fails to cure any such default or to diligently and in good
faith pursue the cure as provided for herein, then Tenant may xxx Landlord for
its damages, and may further obtain injunctive relief if necessary to maintain
operation of the facility or conform with applicable law. Anything to the
contrary herein contained, notwithstanding, there shall be absolutely no
personal liability on firms, individuals or entities who have an ownership
interest in Landlord with respect to any of the terms, covenants, conditions and
provisions of this lease, and Tenant shall, subject to the rights of any prior
mortgage, look solely to the interest of Landlord, its successors and assigns in
the leased premises for the satisfaction of each and every remedy of Tenant in
29
the event of default by Landlord hereunder; such exculpation of personal
liability is absolute and without any exception whatsoever.
Whenever this lease requires any act (other than the payment of a
liquidated sum of money i.e., rental payments, taxes, utilities, etc.) by
Landlord or Tenant within a certain period of time or by 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, that written notice of such
delay and the cause and 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.
ARTICLE XIII.
DAMAGE TO PREMISES
Section 13.01 Major Damage. In the event that the leased premises are damaged by
fire or other casualty, then Tenant shall notify Landlord in writing of such an
event.
Landlord shall repair such damage unless: (a) the estimated cost of fully
repairing the damage exceeds seventy five percent (75%) of the then full
replacement value, and the damage occurs at such time when there is three (3)
years or less of the lease term remaining (an extension term, if any, that has
not been exercised shall be included in the calculation only in the event that
Tenant
30
agrees in writing within thirty (30) days of damage that it will extend the term
subject to Landlord's duty to restore as herein provided) in which event either
party shall have the right to terminate this Lease. Rent shall xxxxx in
accordance with Section 13.02 of this lease if Tenant is unable to use all or
any part of the premises while repairs are made.
If either party elects to terminate this lease pursuant to this section,
the lease shall terminate fifteen (15) days after date of notice, Tenant shall
surrender possession to Landlord, and all accrued rights under this lease shall
survive termination.
Section 13.02 Nonmajor Damage. Any other damage to the leased premises from any
casualty or risk which does not qualify as major damage as defined above shall
be deemed to be nonmajor.
If neither party elects to terminate this lease under the "major damage"
provision above, or if the damage is nonmajor, then Landlord shall at its
expense repair or rebuild the leased premises to substantially, the same
condition as existed immediately prior to the damage and in accordance with
Kentucky State building codes and sufficient to meet licensure requirements of
the State of Kentucky for long term care facilities. The restoration shall be
done as promptly as reasonably possible, Landlord shall also restore any damaged
leased equipment, but in no event shall Landlord be responsible to restore
Tenant's personal property or equipment.
Landlord's duty to restore the leased premises and leased equipment shall
be contingent upon Landlord's receipt of insurance proceeds, however, Landlord's
obligation to restore shall not be
31
limited to the extent of insurance proceeds received so long as Landlord
receives all of such proceeds. Landlord shall not have any obligation to restore
the leased premises and leased equipment in the event that Landlord's mortgagee,
under the terms of a mortgage, retains all or any portion of insurance proceeds
covering the damage unless Landlord, after a diligent and good faith attempt, is
able to borrow an amount sufficient to restore the Leased Premises at an
interest rate of twelve percent (12%) or lower and with "points" or financing
costs not exceeding one percent (1%) in the aggregate.
In the event Tenant is unable to use all or any part of the leased
premises while Landlord restores same, then monthly rent shall be equitably
prorated and abated in the greater of: (a) the proportion that the monthly rent
of the part usable by Tenant bears to the monthly rent of the total space then
leased by Tenant, taking into consideration the monthly rental rate per square
foot for the space for which the proration is made or (b) the proportion that
the number of beds available for use after such damage bears to the number of
beds available for use prior to such damage. The abatement of monthly rent shall
commence with the date of the damage and continue until the repairs are
substantially completed. Other obligations of Tenant under this lease shall not
xxxxx in any manner.
If the leased premises is a part of a larger structure or development and
if the larger building or development is damaged, there shall be no abatement of
monthly rent where the leased premises itself is not damaged.
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ARTICLE XIV.
INSURANCE SUBROGATION AND INDEMNIFICATION
Section 14.01 Comprehensive Liability and Professional Insurance to be carried
by the Tenant. Tenant before occupying the premises, at its expense, shall cause
to be issued and kept in force during the term and each extension term, if any,
a policy or policies of comprehensive liability and professional liability
insurance, including public liability, malpractice and property damage, by the
terms of which both Landlord and Tenant shall be insured against claims for
bodily injury, death and property damage as a result of an occurrence on the
premises, with minimum combined single limits of Five Million Dollars
($5,000,000.00). Tenant shall remain liable to Landlord for any deficiency
should insurance afforded by this section be insufficient to satisfy the
liability of Tenant under Lease Section 14.05.
Section 14.02 Certificate of Insurance. Tenant, at its expense, shall carry all
insurance required by this Article with a company or companies reasonably
acceptable to Landlord and qualified to do business in the State of Kentucky,
and Tenant shall cause each policy of insurance procured by it and required by
this Article to be endorsed to provide that each insurer shall have the right to
change or cancel the policy only after first giving both parties fifteen (15)
days prior written notice by certified mail, return receipt requested, of the
insurer's intention to cancel or change the policy.
Tenant, at its expense, before commencement of the term and upon each
renewal of such insurance, shall deliver to and deposit
33
with Landlord certificates of insurance for each policy required by this Article
and copies of receipts evidencing that all current premiums on such policies
have been paid.
A party's obligation to carry the insurance provided herein may be brought
within the coverage of a so-called "blanket policy" or policies of the insurance
carrier maintained by such party. However, the other party to this lease must be
named as an additional insured thereunder as its interest may appear; the
coverage afforded the other party must not be reduced or diminished by the
blanket policy of insurance, with an endorsement to that effect provided to such
other party; and the requirements set forth herein must be otherwise satisfied.
Section 14.03 Adjustments to Insurance Coverage. In order to maintain the same
level of coverage that will exist at the commencement of the term of this Lease,
the amounts and types of coverage called for herein shall be subject to review
at the end of each three year period following the effective date of this lease
and, if appropriate, they shall be increased or extended to provide the amounts
and types of coverage that are at least equal to the amounts and types of
coverages carried by prudent owners and operators of properties similar to the
leased premises but in no event shall the coverage be less than as required by
the terms of this Article.
Section 14.04 Other Coverage. Tenant, at its expense, shall carry insurance in a
reasonable amount to provide coverage for loss or damage to or from: (1) leased
equipment for its full replacement value (2) explosion of steam boilers,
pressure vessels or similar
34
apparatus (3) loss of rental during first six (6) months during reconstruction
after any damage or destruction of premises.
Section 14.05 Indemnification of Landlord. Tenant assumes all risk and
responsibility for injury or death to persons and damage to property (damages to
the leased premises being waived to the extent of insurance proceeds paid to or
on behalf of Landlord) arising out of or in any way connected with or related to
Tenant's use and control of the leased premises and Tenant shall indemnify and
hold Landlord harmless as to all such liability, including reasonable attorney
fees, except as to liability for Landlord's gross negligence or willful
misconduct as to which Landlord shall hold Tenant harmless, including reasonable
attorney fees.
Section 14.06 Fire, Extended Coverage and Additional Perils Insurance. Tenant,
at its expense, shall cause to be issued and kept in force during the terms and
each extension, if any, a policy or policies of fire, extended coverage and
additional perils insurance by which Landlord and any mortgagee shall be insured
against loss resulting from damage to or destruction of the improvements located
on the premises and leased equipment for its full replacement value (exclusive
of land) as established by the insurance carrier.
14.07 Denial of Subrogation Rights. Tenant shall cause each policy of insurance
carried by it and insuring either Landlord or Tenant or both against loss or
damage as a result of fire, causes enumerated in extended coverage and
additional perils policies and endorsements, bodily injury, death and property
damage, to be written and endorsed to provide that each insurance company waives
35
all rights of recovery by way of subrogation against Landlord in connection with
any loss or damage covered by and to the extent of the maximum limits and the
maximum proceeds payable under each policy of insurance.
Tenant, and for each person, organization, association and corporation
claiming under or through Tenant, herein waives, releases and discharges
Landlord from all costs, expenses, losses, damages, demands, claims and
liabilities arising in any manner that is covered by policies of insurance now
or hereafter existing during the term of this lease or any extension period, if
any. However, this release is applicable only to the extent of the maximum
proceeds paid under each applicable policy of insurance.
If the release and discharge of Landlord by Tenant as contained in this
Article, to the extent of maximum proceeds paid under each applicable policy of
insurance, contravenes any statute or decision with regard to exculpatory
agreements, the liability of Landlord shall be deemed not released but shall be
secondary to all of the insurance proceeds paid under such applicable policy of
insurance.
ARTICLE XV.
GENERAL CONDITIONS
Section 15.01 Notice. All notices, requests, demands or other communications
required or permitted under this lease shall be in writing and shall be either
personally delivered evidenced by a signed receipt or transmitted by United
States mail, certified, return receipt requested, postage prepaid, addressed as
follows:
If given to Landlord:
36
c/o Xxxxxx X. Xxxxxx Copy to: Xxxxx Xxxxxxx, Attorney
0000 Xxxxxxx 00 000 X. Xxxxx Xxx.
Xxxxxxxxxxxxxx, XX 00000 Xxxxxxxxxxxxxx, XX 00000
If given to Tenant:
Xxxxxxx Xxxxxxx Copy to: C. Xxxxxx Xxxxxxxxx, Esq.
c/o Tenant Xxxxx, Xxxx & Xxxxxxx
0000 Xxxxxxxxxxx Xxxx 0000 Xxxxxxxx Xxxxx
Xxxxx 0000 Xxxxxxxxxx, XX 00000
Xxxxxxxxxx, XX 00000
All notices, requests, demands and other communications shall be effective
upon personal delivery evidenced by a signed receipt or upon five (5) calendar
days after being deposited in the United States mail, whichever occurs first.
The time period in which a response to any such notice, request, demand or other
communication must be given, however, shall commence to run from the date of
personal delivery evidenced by a signed receipt or the date of receipt on the
return receipt of the notice, request, demand or other communication; provided,
however, that if a party refuses delivery of any such notice, request, demand or
other communication sent by mail, or fails or neglects without reasonable cause,
to accept delivery after three (3) attempts to so deliver by postal authorities,
it shall be deemed received on the date of its last being deposited in the
United States mail. The parties hereto shall have the right, at any time and
from time to time during the term of this lease, to change their respective
addresses for notices by giving the other party hereto written notice thereof.
Section 15.02 Merger - Entire Agreement. All prior oral negotiations, promises
and agreements between Landlord and Tenant have been and shall be conclusively
presumed to be merged into this lease. There are no promises or agreements
between the parties
37
hereto other than those contained herein, other than the Agreement and Side
Agreement between the parties both of even date herewith.
Section 15.03 Amendment. This lease may be amended at any time and from time to
time; provided, however, that no amendment to this lease shall be legally
enforceable against either Landlord or Tenant unless it is in writing, executed
and acknowledged by both Landlord and Tenant.
Section 15.04 Construction. This lease shall be construed in accordance with the
laws of the State of Kentucky.
Section 15.05 Specific Performance. Landlord and Tenant for themselves and for
each person, business organization, association and corporation claiming by,
under or through either Landlord or Tenant, stipulate that both Landlord and
Tenant shall have the remedy of specific performance against the other.
Landlord and Tenant, for themselves and for each person, business
organization, association and corporation claiming by, under or through either
Landlord or Tenant, knowingly and voluntarily waive their rights to allege or
assert in or to any and all claims or counts for specific performance arising
out of or in any way connected with this lease the defense that the other party
has an adequate remedy at law.
Section 15.06 Binding Effect on Successors. Landlord and Tenant expressly agree
that, subject to the terms of this lease, all terms and conditions of this lease
shall extend to and be binding upon or inure to the benefit of the heirs,
executors, administrators, personal representatives, assigns and successors in
interest of both Landlord and Tenant.
38
Section 15.07 Memorandum of Lease. Landlord and Tenant shall execute and deliver
to each other a Memorandum of Lease for recording purposes within a reasonable
time after this lease is executed by both parties. Either party, at its expense,
shall have the right to record such memorandum for the purpose of giving notice
of Tenant's interest in the premises.
Section 15.08 Reading and Receipt of Lease. Landlord and Tenant stipulate that
each has read and understands the conditions in this lease and by their
respective signatures below, acknowledge the receipt of an executed copy of this
lease.
Section 15.09 Attorney Fees and Costs. Tenant shall pay all reasonable
attorney's fees and costs incurred on behalf of Landlord if (a) Landlord
institutes litigation against Tenant for a breach of the terms and conditions of
this lease and prevails in such litigation, (b) Landlord institutes litigation
against Tenant for an unlawful detainer of the demised premises, or (c) Landlord
is made a party to litigation against Tenant instituted by a third party,
relating to the demised premises wherein Landlord is not at fault. Landlord
shall pay all reasonable attorneys fees and costs incurred on behalf of Tenant
if Tenant institutes litigation against Landlord for a breach of this Lease and
prevails in such litigation. The reimbursement of attorneys fees shall not be
conditioned upon the commencement of litigation.
Section 15.10 Prohibition of Mechanics Liens. Nothing in this lease shall be
deemed or construed in any way as constituting the consent or request of
Landlord, expressed or implied, by inference or otherwise, to any contractor,
subcontractor, laborer, or
39
materialman for the performance of any labor or the furnishing of any materials
for any specific improvements, alteration to, or repair of the demised premises
or any part thereof, nor as giving Tenant any right, power, or authority to
contract for or permit the rendering of any services or the furnishing of any
materials that would give rise to the filing of any lien against the demised
premises or any part thereof.
Tenant shall not allow any encumbrances or liens resulting from
alterations, construction, repairs or maintenance performed at its request to
attach to the interest of Landlord, unless Tenant protects the interest of
Landlord by bond in accordance with law.
Section 15.11 Brokerage or Agents Fees. Each party shall be solely responsible
to pay any broker or agent representing such party and involved in this
transaction, and each agrees to indemnify and hold the other harmless, including
attorney fees, from all actions from any broker or agent for fees or commissions
claiming to represent the indemnifying party in this transaction.
Section 15.12 Captions and Indexes. Section titles, captions or indexes,
contained in this agreement are inserted only as a matter of convenience and
reference, and in no way define, limit, extend or describe the scope of this
agreement, or the intent of any provision hereof.
Section 15.13 Pronouns. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural as the identity
of the person or persons may require.
40
Section 15.14 Triple Net Lease. This lease is intended by the parties to be a
Triple Net Lease and Landlord shall not be required to make any payment of any
kind with respect to the premises, facility or the leased equipment except as
expressly stated herein (i.e., 1 year "call back" correction period of Section
7.04).
Section 15.15 Guaranty. The obligations of Tenant hereunder are guaranteed
personally by Xxxxxxx Xxxxxxx and Xxxxx Xxxx, jointly and severally, under a
guaranty of even date herewith and this lease shall have no legal force and
effect until and unless each guarantor above named signs the Guaranty of even
date herewith.
Section 15.16 Drafting of Lease. Landlord and Tenant have both been represented
by counsel in negotiating and drafting this lease and both parties to this lease
have influenced the language of this lease. Therefore this lease shall not be
construed against either party to this lease by reason of drafting authorship.
Section 15.17 Waiver of Landlord's Lien. Landlord hereby waives any Landlord
Liens that it may have now or in the future for unpaid rent with respect to any
accounts receivable or accounts owed to or to be reimbursed to Tenant.
ARTICLE XVI.
CONDITION PRECEDENT
Section 16.01 Condition Precedent. Landlord cannot transfer the facility, within
the meaning of KRS 216B, to Tenant until the facility has been licensed by the
Division of Licensing and Regulation, Kentucky Cabinet for Human Resources and
thirty (30) days have expired from the filing by Tenant of an "Acquisition of a
Health Facility - Notice of Intent" with the Commission for
41
Health Economics Control in Kentucky. Therefore, the obligation of Landlord and
Tenant to consummate the transactions contemplated by this Lease are subject to
the satisfaction of the following condition precedent:
The receipt of all permits, consents, approvals and authorizations from
federal and state governmental authorities and regulatory agencies
necessary to effect the transaction contemplated herein, including but not
limited to the approval of, or notification that a certificate of need is
not necessary from, the Commission for Health Economics Control in
Kentucky.
In addition, the obligations of Landlord and Tenant hereunder are
contingent upon the following conditions precedent occurring within fifteen (15)
days from the date this Lease is signed:
(a) Landlord obtaining written consent to enter into this Lease from its
existing Mortgagee, INB Banking Company.
(b) Tenant obtaining a signed non-disturbance agreement, in reasonable
form and content, from Landlord's existing Mortgagee, INB Banking Company.
Tenant and Landlord shall each, in good faith and in cooperation with each
other, attempt to satisfy the aforesaid conditions. Landlord and Tenant shall be
bound by the terms and conditions of this Lease, and shall not be entitled to
cancel this Lease except as specifically stated in Section 5.02.
ARTICLE XVII.
FIRST RIGHT OF REFUSAL
Section 17.01 Tenant's Right of First Refusal. In the event that Landlord shall
receive a bona fide written offer for the purchase of the leased premises and
the offer of purchase shall be acceptable to Landlord, then Tenant shall have
the right to
42
purchase the premises at the price and on the terms of the offer so made.
Landlord shall give written notice of the offer to Tenant, requiring Tenant to
elect to accept the purchase offer from Landlord in accordance with the terms of
the bona fide offer within fifteen (15) days after such written notice to
Tenant. If Tenant elects to accept the offer, then closing shall occur within
sixty (60) days from the date of Tenant's election to accept the purchase offer.
The failure of Tenant to accept to purchase in accordance with the bona
fide offer within the period above provided shall nullify and void Tenant's
right of first refusal and Landlord may sell the premises on the terms of the
bona fide offer, provided however, if Landlord does not sell pursuant to such
offer, Tenant's right of first refusal shall remain in effect.
The Tenant's right of first refusal, if not sooner terminated in
accordance with this article, shall exist during the entire duration of the
initial term of this lease and any extensions.
In the event that Tenant is in default with the terms of this lease then
Tenant's election to purchase shall be valid only if Tenant has completely cured
any default prior to its election and notice to Landlord that it shall purchase
in accordance with the bona fide offer.
43
IN WITNESS WHEREOF, the parties have set their hands and seals this 29th
day of March, 1991.
LANDLORD: Xxxxxxxx-Xxxxxx, a
Kentucky General Partnership
TENANT: Cardinal of Kentucky,
Inc. By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx, General
Partner
By: /s/ Xxxxx X. Xxxx
-------------------------------
By: /s X. Xxxxxxx Xxxxxxxx
Title: President -----------------------------------
X. Xxxxxxx Xxxxxxxx, M.D.,
General Partner
Attest:
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Title: Vice President
44
STATE OF INDIANA
SS:
COUNTY OF XXXXX
Before me, the undersigned a Notary Public in and for said County and State,
this 29th day of March, 1991, appeared Cardinal of Kentucky, Inc., by Xxxxx Xxxx
its President and Xxxxxxx Xxxxxxx its Secretary each of whom acknowledged the
execution of the above and foregoing instrument. Witness My hand and notarial
seal.
/s/ Xxxxx Xxxxxxx
--------------------------------------------
Notary Public, Resident of Xxxxx County,
Indiana
My commission expires: Xxxxx Xxxxxxx
--------------------------------------------
Printed Name
0-00-00
XXXXX XX XXXXXXX
SS:
COUNTY OF XXXXX
Before me, the undersigned, a Notary Public in and for said County and
State, this 29th day of March , 1991, appeared Xxxxxxxx-Xxxxxx, a Kentucky
Partnership, by Xxxxxx X. Xxxxxx and acknowledged the execution of the above and
foregoing instrument.
Witness My hand and notarial seal.
/s/ Xxxxx Xxxxxxx
--------------------------------------------
Notary Public, Resident of Xxxxx County,
Indiana
My commission expires: Xxxxx Xxxxxxx
--------------------------------------------
Printed Name
6-25-93
45
STATE OF INDIANA
SS:
COUNTY OF XXXXX
Before me, the undersigned, a Notary Public in and for said County and
State, this 29th day of March, 1991, appeared Xxxxxxxx-Xxxxxx, a Kentucky
Partnership, by X. Xxxxxxx Xxxxxxxx and acknowledged the execution of the above
and foregoing instrument.
Witness My hand and notarial seal.
/s/ Xxxxx Xxxxxxx
--------------------------------------------
Notary Public, Resident of Xxxxx County,
Indiana
My commission expires: Xxxxx Xxxxxxx
--------------------------------------------
Printed Name
6-25-93
46
