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Exhibit 10.43
FORM OF LEASE AGREEMENT
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THIS LEASE AGREEMENT (the "Lease") is made and entered into this ____
day of ___________ by and between __________________________________________, a
Delaware limited liability company ("Tenant"), and ______________________, a
Florida corporation or its designee and its successors and assigns ("Landlord").
WHEREAS, on or about the date hereof, Landlord has acquired fee title
to certain property as defined herein from ___________________________________;
WHEREAS, Landlord, Tenant and BCC Development and Management Co.
("BCC") have entered into a Development Agreement of even date herewith (the
"Development Agreement") which calls for the construction by BCC and Tenant on
behalf of Landlord of a ________ personal care home with assisted living
services and related personalty, fixtures and amenities on the Real Property (as
defined below); and
WHEREAS, the Landlord and Tenant have executed this Lease pursuant to
the Development Agreement with the understanding that the Lease shall become
effective upon satisfaction of certain conditions referenced herein and of all
terms and conditions under and the absence of a Default under the Development
Agreement, the terms of which are incorporated herein by reference.
NOW THEREFORE, in consideration of the mutual covenants contained
herein and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Landlord and Tenant hereby agree as follows:
SECTION 1. THE PREMISES.
SECTION 1.1 FACILITY. Landlord hereby demises and leases to Tenant and
Tenant hereby leases and takes from Landlord, the Real Property described in
EXHIBIT 1.1A (the "Real Property"), together with those certain improvements
(the "Improvements") thereon to be constructed on behalf of Landlord pursuant to
the Development Agreement, consisting of a personal care home with assisted
living services (the "Facility") as more particularly described and provided for
in Exhibit D to the Development Agreement and incorporated herein by this
reference (the "Scope of Work"), subject to those encumbrances and other matters
of record set forth on EXHIBIT 1.1B attached hereto made a part hereof (the
"Permitted Encumbrances"). The Real Property, the Improvements and the Personal
Property (defined below) shall collectively constitute the "Premises."
SECTION 1.2 PERSONAL PROPERTY. Landlord hereby further demises and
leases to Tenant, and Tenant hereby leases and takes from Landlord, all
equipment, furniture, furnishings, and fixtures which are to be installed as
part of the Improvements pursuant to the "Plans and Specifications" (as that
term is defined in the Development Agreement) approved by Landlord and Tenant,
as provided for in the Scope of Work, together with any
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additional items added thereto from time to time by written agreement between
Landlord and Tenant (such equipment, furniture, furnishings and fixtures,
together with all additions thereto or replacements thereof will hereinafter be
referred to as the "Personal Property"). If any equipment, in addition to the
Personal Property, is necessary or convenient to operate the Facility, all such
additional equipment shall be acquired by and at the cost of Tenant and the same
shall be and remain the property of Tenant in accordance with the terms of
SECTION 1.2.1 below.
SECTION 1.2.1 Tenant shall keep all of the Personal Property in good
working order and condition at Tenant's sole cost and expense, and at the
expiration or termination of the Lease Term (as defined below) shall return and
deliver all of such property to Landlord in good working order and condition,
reasonable wear and tear excepted. If necessary for the proper operation of the
Facility, Tenant shall, during the Lease Term, replace part or all of the items
of Personal Property which have been damaged or destroyed or become worn out or
obsolete, and, except as provided in SECTION 3.5 with respect to the utilization
of the Capital Reserve Account, such replacement shall be at the sole cost of
Tenant, but any such equipment which has been acquired for the purpose of
replacing Personal Property previously provided by Landlord shall be and remain
the property of Landlord. Tenant shall not place additional property on the
Premises (not required for replacement of property covered in this Lease)
without Landlord's prior written consent, which consent shall not be
unreasonably withheld or delayed and the same shall be and remain the property
of Tenant ("Tenant's Equipment").
SECTION 2. TERM.
SECTION 2.1 INITIAL LEASE TERM. The effective date and term of this
Lease shall commence on written notice by Landlord to Tenant that the conditions
precedent set forth in EXHIBIT 2.1 hereto have been satisfied and approved by
Landlord, or, at Landlord's option, waived in writing in its sole discretion
(the "Commencement Date") and shall continue for a period of sixty (60) months
following the Commencement Date (the "Lease Term") In the event the Lease Term
expires on any day other than the last day of a calendar month, the Lease Term
shall be automatically extended by the number of days necessary to cause the
Lease Term to expire on the last day of the month. Notwithstanding the above,
the provisions of SECTIONS 19, 22 AND 23 shall be effective on the date hereof.
SECTION 3. RENT.
SECTION 3.1 BASE RENT. During the Lease Term, Tenant covenants to pay
to Landlord, without previous demand therefor, and without offset or deduction
whatsoever, a net fixed annual minimum rent (the "Base Rent") for each year of
the Lease Term according to the following formula:
The Base Rent shall be calculated based on the Total Project Cost (as
defined below) multiplied by the Lease Rate (as defined below) as follows:
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Annual Base Rent = Total Project Cost x Lease Rate
The "Lease Rate" during the Lease Term shall be _____% (the "Lease
Rate"). The Lease Rate shall be calculated on a three hundred sixty (360) day
year applied to actual days.
The "Total Project Cost" as defined herein shall mean all costs set
forth in the Budget as defined in the Development Agreement and EXHIBIT 3.1
hereto, as and when such costs are advanced by Landlord pursuant to the
Development Agreement. The parties agree that Tenant shall be provided copies of
monthly advances of the Budget which shall be prima facie evidence of Total
Project Cost, without the need for further documentation, provided Tenant shall
have the right to object to any mathematical errors and receive appropriate
adjustment therefor as set forth in Section 5C of the Development Agreement.
Any increase in Base Rent with respect to payments made pursuant to
Section 32.12 of Exhibit B to the Development Agreement shall commence to accrue
on the day of such advance. The increased Base Rent from the day of such advance
to the day preceding the regularly scheduled Base Rent installment date which
occurs at least five (5) days following the notice from Landlord to Tenant of
the increased Base Rent amount and the first adjusted monthly Base Rent amount
shall be due on the regularly scheduled Base Rent installment date which occurs
at least five (5) days following notice from Landlord to Tenant of the increased
Base Rent and such increased Base Rent shall thereafter be payable as otherwise
provided herein.
SECTION 3.1.1 The obligation to pay the Base Rent and Additional Rent
(as defined in 3.2.1) shall commence on the Commencement Date. Base Rent shall
be paid in advance in equal monthly installments on the first day of each month.
For purposes of this Lease, a Lease Year shall be the twelve (12) month period
commencing on the Commencement Date, or if the Commencement Date is a day other
than the first day of a month, the first Lease Year shall be such partial month
plus the following twelve (12) months and each Lease Year thereunder shall be
twelve (12) months. In the event the date of Commencement Date shall be other
than the first day of the month, Tenant shall pay to Landlord a pro rata portion
of rent for the month.
SECTION 3.2. PAYMENT OF BASE RENT. Except as specifically provided for
herein, the Base Rent shall be payable without offset, abatement or other
deduction to Landlord at the address set forth in SECTION 16, or to such other
person, firm or corporation at such other address as Landlord may designate by
notice in writing to Tenant.
SECTION 3.2.1 This Lease is intended to be absolutely net to Landlord,
so that this Lease shall yield the Base Rent net to the Landlord. Tenant shall
pay to Landlord, net throughout the Lease Term, the Base Rent prescribed by
SECTION 3.1, free of any offset, abatement, or other deduction, except as may be
expressly set forth herein. Except as may otherwise be expressly set forth
herein, Landlord shall not be required to make any payment of any kind with
respect to the Premises and Tenant agrees to pay as they become due and payable
all costs, expenses, and obligations of every kind relating to the Premises
whether usual or unusual, ordinary or extraordinary, foreseen or unforeseen,
which may arise or become due following the
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Commencement Date (the "Additional Rent"). Base Rent and Additional Rent are
sometimes referred to collectively herein as "Rent". Notwithstanding the
foregoing, Landlord shall be responsible for making all payments due with
respect to any mortgage or deed of trust secured by the Premises (the "Facility
Mortgage") and all income taxes assessed against Landlord, and all estate,
succession, transfer or inheritance taxes of Landlord.
SECTION 3.2.2 This Lease shall continue in full force and effect, and
the obligations of Tenant hereunder shall not be released, discharged or
otherwise affected for any cause whatsoever, including, without limitation,
casualty.
SECTION 3.2.3 If any payment of any sums required to be paid by Tenant
to Landlord under this Lease and payments made by Landlord under any provision
hereof for which Landlord is entitled to reimbursement by Tenant is not paid
within ten (10) days after the same is due, interest at the "Lease Rate" plus
four percent (4%) per annum, shall accrue on such sum and be paid to Landlord
from the original date due until actually paid and a late charge of 5% of such
overdue amount shall be due to Landlord. No failure by Landlord to insist upon
the strict performance by Tenant of Tenant's obligation to pay such interest or
late charges shall constitute a waiver by Landlord of its rights to enforce the
provisions of this Section in any instance thereafter occurring.
SECTION 3.2.4. Subject to SECTION 23 and SECTION 24, during the period
prior to Stabilization (as defined below) (the "Pre-Stabilization Period"),
Landlord may utilize the Letter of Credit (as defined in SECTION 23), to the
extent available, proceeds of the Mandatory Sweep Account (as defined in SECTION
24) and to the extent the Letter of Credit and the Mandatory Sweep Account are
depleted, the proceeds from the Operating Deficit Loans (as defined in SECTION
24) to fund operating deficits and make the payments of Base Rent and/or
Additional Rent during the Pre-Stabilization Period. Notwithstanding the above
and any other contrary term in this Lease, Landlord's rights under the Letter of
Credit, Mandatory Sweep Account, Operating Deficit Loan Documents (as defined in
SECTION 24) and under any Transaction Document shall upon the occurrence of an
Event of Default be cumulative and non-exclusive with Landlord having the right
to exercise its rights under all or any of such instruments or documents in such
order as Landlord shall determine.3.2.4. SUBJECT TO SECTION 23 AND SECTION 24,
DURING THE PERIOD PRIOR TO STABILIZATION (AS DEFINED BELOW) (THE
"PRE-STABILIZATION PERIOD), LANDLORD MAY UTILIZE THE LETTER OF CREDIT (AS
DEFINED IN SECTION 23) AND, TO THE EXTENT AVAILABLE, PROCEEDS OF THE MANDATORY
SWEEP ACCOUNT (AS DEFINED IN SECTION 24) TO FUND OPERATING DEFICITS AND MAKE THE
PAYMENTS OF BASE RENT AND/OR ADDITIONAL RENT DURING THE PRE-STABILIZATION
PERIOD. NOTWITHSTANDING THE ABOVE AND ANY OTHER CONTRARY TERM IN THIS LEASE,
LANDLORD'S RIGHTS UNDER THE LETTER OF CREDIT, MANDATORY SWEEP ACCOUNT, HEREUNDER
AND UNDER ANY TRANSACTION DOCUMENT SHALL UPON THE OCCURRENCE OF AN EVENT OF
DEFAULT BE CUMULATIVE AND NON-EXCLUSIVE WITH LANDLORD HAVING THE RIGHT TO
EXERCISE ITS RIGHTS UNDER ALL OR ANY OF SUCH INSTRUMENTS OR DOCUMENTS IN SUCH
ORDER AS LANDLORD SHALL DETERMINE.
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Subject to SECTIONS 23 AND 24, the Tenant will be solely responsible
for payment of all Base Rent irrespective of availability under the Letter of
Credit, Mandatory Sweep Account or Operating Deficit Loan Documents.
"Stabilization" shall occur upon written notice by Landlord to Tenant
of satisfaction of the following conditions precedent, all of which shall have
been observed or satisfied, as required, by Tenant:
(a) There shall be no Event of Default or Default under the terms of
the Development Agreement, Lease, Guaranty of Payment and Performance (the
"Guaranty") of even date herewith by Senior Care Operators, LLC and Oakhaven
Senior Living, Inc. (collectively, the "Guarantors") or any other document
executed to secure the same or with respect to any of the foregoing (the
"Transaction Documents");
(b) The Facility shall have been issued a final and unconditional
Certificate of Occupancy with respect to all of the dwelling units contained
therein and all dwellings units shall be available for occupancy;
(c) Title to the Facility shall be free and clear of any mechanics',
materialmen's (unless such mechanics' or materialmen's lien has been bonded over
to the reasonable satisfaction of Landlord and in a bonded amount satisfactory
to Landlord in its sole discretion and provided further that any such mechanic's
or materialman's lien does not exceed $75,000), or other liens, other than those
liens that arise out of materials supplied or work performed at the request of
Landlord unless required to be performed by Tenant hereunder or under the
Development Agreement and Tenant failed to perform such work as required;
(d) All licenses and permits for the administration, operation,
occupancy and use of the Facility as a personal care home with assisted living
services shall be in full force and effect and free from default, from any
federal, state, or local agency or authority having jurisdiction including, but
not limited to, any license, certification or filing required by the
Pennsylvania Department of Public Welfare for a personal care home;
(e) There shall have been no material adverse change in the financial
condition of the Tenant, Balanced Care Corporation or any of the Guarantors;
(f) The Facility shall have achieved ninety percent (90%) occupancy for
the six calendar months immediately preceding. Occupancy shall be defined as:
90% of the total units for the Facility under executed leases for which prepaid
non-refundable rent has been received; and
(g) The Facility shall have maintained a minimum Lease Payment Coverage
Ratio (as defined in Section 24(b)(3) hereof) of 1.30 : 1.00 for the six
calendar months immediately preceding.
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SECTION 3.3. RENT INCREASES.
Effective as of the expiration of each Lease Year, the Base Rent shall
be adjusted upward by an amount equal to the increase, if any, in the Consumer
Price Index (as that term is defined below) determined in the manner provided
for below; provided, however, in no event shall the Base Rent be adjusted
downward.
As used herein the term "Consumer Price Index" shall mean the United
States Department of Labor, Bureau of Labor Statistics Consumer Price Index, All
Urban Consumers, All Items, for Northeast Urban (1982-1984= 100). If at any time
there shall not exist the Consumer Price Index in the same format as recited in
this SECTION 3.3, Landlord shall substitute any official index published by the
Bureau of Labor Statistics or successor or similar governmental agency, as may
then be in existence and shall be most equivalent thereto. The increase in the
Consumer Price Index shall be determined by the percentage increase, if any,
between the index published and in effect thirty (30) days preceding the annual
adjustment date and the index published and in effect on the Commencement Date.
As used herein the term "Consumer Price Increase shall mean the United
States Department of Labor, Bureau of Labor Statistics Consumer Price Index, All
Urban Consumers, All Items, for Northeast Urban (1982-1984=100). If at any time
there shall not exist the Consumer Price Index in the same format as recited in
this SECTION 3.3, Landlord shall substitute any official index published by the
Bureau of Labor Statistics or successor or similar governmental agency, as may
then be in existence and shall be most equivalent thereto. The increase in the
Consumer Price Index shall be determined by the percentage increase, if any,
between the index published and in effect thirty (30) days preceding the annual
adjustment date and the index published and in effect on the Commencement Date.
SECTION 3.4. TAXES/DEPOSITS/SECURITY
SECTION 3.4.1. Unless Tenant shall be escrowing estimated Tax payments
with Landlord as provided below or otherwise paying such amounts through
Landlord as provided below, Tenant shall pay directly to the applicable taxing
authority, by the applicable due date or, if permitted by applicable law or
regulation, the date by which penalties, sanctions or interest shall begin to be
charged, all "Taxes" (as that term is defined below) for each fiscal period
wholly included in the Lease Term (and a prorated amount thereof for partial
years occurring during the first and last Lease Year of the Lease Term) assessed
with respect to the Premises which payments shall be deemed Additional Rent
hereunder, in addition to the Base Rent hereinbefore set forth, and Tenant shall
provide Landlord with reasonable evidence of such payment.
Any interest or penalties which accrue as a result of Tenant's failure
to make such payment within the time required by this SECTION 3.4 shall be the
responsibility and obligation of Tenant unless the failure to make such payment
within the time required by this SECTION 3.4 was caused by any action or
inaction of Landlord (not caused by Tenant) then any such interest or penalties
shall be the responsibility and obligation of Landlord. At such time as Landlord
receives any xxxx for Taxes, Landlord shall promptly notify Tenant and Tenant
agrees to pay to
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Landlord at least one (1) business day prior to delinquency of such Taxes
calculated in the manner provided for above. "Taxes" shall mean all real estate
taxes, general and special assessments, personal property taxes, and other
public charges which are assessed, levied, confirmed, or imposed upon the
Premises during the Lease Term, and all sales taxes and other taxes that are now
or hereafter may be payable in connection with the Base Rent payable hereunder
during the Lease Term.
SECTION 3.4.2. Any Taxes and assessments relating to a fiscal period of
any authority, a part of which is already included within the Lease Term and a
part of which is included in a period of time before or after the Lease Term,
shall be adjusted pro rata between Landlord and Tenant and each party shall be
responsible for its pro rata share of any such taxes and assessments. In no
event shall Tenant extend payment of any Taxes or assessments over any period
other than the period initially assessed by the relevant taxing authority.
SECTION 3.4.3. Nothing herein shall require Tenant to pay income taxes
assessed against Landlord, or estate, succession, transfer or inheritance taxes
of Landlord.
SECTION 3.4.4. Tenant may contest, in its own name or in the name of
Landlord, with Landlord's consent, which Landlord can withhold in its reasonable
discretion, the legality or validity of any such tax or assessment or of any law
under which the same shall be imposed. This must be done in good faith, with due
diligence, and at Tenant's own expense. If Tenant does so contest such tax or
assessment beyond the time limit for payment thereof by Tenant, Tenant shall
either pay such amount under protest or procure and maintain a stay of all
proceedings with adequate bond to enforce collection of such tax or assessment.
Landlord shall also have the right, at Landlord's sole cost and expense, to
contest in good faith and with due diligence any assessment with respect to the
Real Property. Landlord and Tenant agree to reasonably cooperate with each other
with respect to any permitted contest under this SECTION 3.4.4.
SECTION 3.4.5. Subject to Landlord's prior consent above, Tenant shall
have the power and authority, at Tenant's cost to make and file and prosecute
any statement or report or claim for refund which may be required or permitted
by law, as the basis of or in connection with the assessment, determination,
equalization, reduction or payment of any and every tax or assessment or license
or charge which Tenant is required to pay or discharge hereunder.
SECTION 3.4.6. Landlord shall not be required to join in any
proceedings referred to in this Section, unless the provisions of any law, rule
or regulation at the time in effect shall require that such proceedings be
brought by and/or in the name of Landlord, in which event Landlord shall join in
such proceedings or permit the same to be brought in its name. Landlord shall
not ultimately be subjected to any liability for the payment of any costs or
expenses in connection with any such proceedings, and Tenant will indemnify,
defend and save harmless Landlord from any such costs and expenses. Tenant shall
be entitled to any refund of any taxes and assessments and penalties or interest
thereon received by Landlord but previously paid or reimbursed in full by
Tenant.
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SECTION 3.4.7. Upon the termination of any such proceeding, Tenant
shall pay the amount of such taxes and assessments or part thereof as finally
determined in such proceedings, the payment of which may have been deferred
during the prosecution of such proceedings, together with any costs, fees,
interest, penalties or other liabilities in connection therewith.
SECTION 3.4.8. At the option of Landlord, which may be exercised at any
time, Tenant shall, upon written request of Landlord, on the first day of the
calendar month immediately following such request, and on the first day of each
calendar month thereafter during the Lease Term (each of which dates is referred
to as a "Monthly Deposit Date"), pay to and deposit with Landlord a sum equal to
one-twelfth (1/12th) of the Taxes to be levied, charged, filed, assessed or
imposed upon or against the Premises within one (1) year after said Monthly
Deposit Date. If the amount of the Taxes to be levied, charged, assessed or
imposed within the ensuing one (1) year period shall not be fixed upon any
Monthly Deposit Date, such amount for the purpose of computing the deposit to be
made by Tenant hereunder shall be reasonably estimated by Landlord with an
appropriate adjustment to be promptly made between Landlord and Tenant as soon
as such amount becomes determinable. In addition, Landlord may, at its option,
from time to time require that any particular deposit be greater than
one-twelfth (1/12th) of the estimated amount payable within one (1) year after
said Monthly Deposit Date, if such additional deposit is required in order to
provide to Landlord a sufficient fund from which to make payment of all Taxes on
or before the next due date of any installment thereof.
SECTION 3.4.9 USE OF DEPOSITS. The sums deposited by Tenant under this
SECTION 3.4 shall be held by Landlord and shall be applied to payment of the
Taxes when due. Any such deposits may be commingled with other assets of
Landlord, and shall be deposited by Landlord at OCWEN Federal Bank FSB. Landlord
shall not be responsible to Tenant for any loss of principal so deposited at
such depository bank due to financial failure or any act of omission of such
depository. The income from such investment or interest on such deposit shall be
paid to Tenant on a semi-annual basis as long as no Event of Default has
occurred. Tenant shall give not less than ten (10) days prior written notice to
Landlord in each instance when a Tax is due, specifying the Tax in full (or in
installments as otherwise provided for herein), together with any penalty or
interest thereon, provided, however, Tenant shall not be in default hereunder if
it fails to receive notice from the applicable taxing authority and such notice
was sent directly to the Landlord. Landlord may change its estimate of any Tax
for any period on the basis of a change in an assessment or tax rate or on the
basis of a prior miscalculation or for any other good faith reason; in which
event, within ten (10) days after demand by Landlord, Tenant shall deposit with
Landlord the amount in excess of the sums previously deposited with Landlord for
the applicable period which would theretofore have been payable under the
revised estimate. Landlord shall provide Tenant with an annual statement of all
amounts deposited and interest earned thereon under this SECTION 3.4.
SECTION 3.4.10 OTHER PROPERTIES. If any Tax shall be levied, charged,
filed, assessed, or imposed upon or against the Premises, and if such Tax shall
also be a levy, charge, assessment, or imposition upon or for any other real or
personal property owned by Tenant that does not
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constitute a part of the Premises, then the computation of the amounts to be
deposited under this SECTION 3.4 shall be based upon the entire amount of such
Tax and Tenant shall not have the right to apportion any deposit with respect to
such Tax owed by Tenant.
SECTION 3.4.11 TRANSFERS. In connection with any assignment of the
Landlord's interest under this Lease, the original Landlord named herein and
each successor in interest shall have the right to transfer all amounts
deposited pursuant to the provisions of this SECTION 3.4 and still in its
possession to such assignee (as the subsequent holder of Landlord's interest in
this Lease) and upon such transfer, the original Landlord named herein or the
applicable successor in interest transferring the deposits shall thereupon be
completely released from all liability with respect to such deposits so
transferred and Tenant shall look solely to said assignee, as the subsequent
holder of Landlord's interest under this Lease, in reference thereto.
SECTION 3.4.12 SECURITY. All amounts deposited with Landlord pursuant
to the provisions of this SECTION 3.4 shall be held by Landlord as additional
security for the payment and performance of all obligations of Tenant under the
Lease and, upon the occurrence of any Event of Default, Landlord may, in its
sole and absolute discretion, apply said amounts towards payment or performance
of such obligations.
SECTION 3.4.13 RETURN. Upon the expiration or earlier termination of
this Lease, provided, that, all of the Lease obligations have been fully paid
and performed, any sums then held by Landlord under this SECTION 3.4 shall be
refunded to Tenant.
SECTION 3.4.14 RECEIPTS. Tenant shall deliver to Landlord copies of all
notices, demands, claims, bills and receipts in relation to the Taxes promptly
upon receipt thereof by Tenant and Landlord shall deliver to Tenant copies of
all notices, demands, claims, bills and receipts in relation to Taxes within a
reasonable time upon receipt thereof by Landlord.
SECTION 3.4.15 FEES. Tenant agrees to pay reasonable administrative or
other fees associated with Landlord or its designees holding, disbursing and
otherwise managing the Deposits.
SECTION 3.5 CAPITAL RESERVES. Tenant shall pay, as Additional Rent
hereunder on the first day of each month, commencing with the thirteenth (13th)
full calendar month after the Commencement Date, into a capital reserve fund
(the "Capital Reserve Account"), the amount of $29.17 per unit, which funds
shall be deposited into an interest bearing escrow account in Tenant's name
to be disbursed from time to time in accordance with EXHIBIT 3.5 hereto to pay
for replacements and correction of deferred maintenance items. Landlord shall
also be entitled to use such funds to cure any Event of Default hereunder
pursuant to the Assignment and Pledge of Deposit Account Agreement between the
parties of even date herewith. Funds held in the Capital Reserve Account shall
be deposited by Landlord at OCWEN Federal Bank FSB. Landlord shall not be
liable to Tenant for any consequent loss of principal so deposited at such
depository bank. Any funds remaining in the Capital Reserve Account at
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Lease expiration or earlier termination shall be retained by Landlord unless
Tenant exercises and consummates the Purchase Option (as defined herein).
SECTION 4. USE OF THE PREMISES/COMPLIANCE WITH LAWS.
SECTION 4.1 PERMITTED USES. The Premises may be used only as a 60 unit
personal care home with assisted living services and for no other purpose.
Tenant assumes full responsibility for confirming that such use is permitted
under all laws, statutes, ordinances, regulations, and orders governing the Real
Property and for obtaining any license or other authorization required to
operate such use and/or to provide assisted living services within the Facility
and to obtain the necessary building permit and certificate of occupancy for the
Improvements and for assuring that the Improvements constructed by Tenant comply
with all applicable laws, statutes, ordinances, rules, regulations, orders,
restrictions and other governmental requirements of any governmental entities
and divisions having regulatory authority over Tenant and the Improvements by
virtue of the health care business conducted by Tenant. Landlord makes no
representation or warranty as to the compliance of such use under any such laws,
statutes, ordinances, regulations, and orders governing the Real Property and/or
insurance requirements. Any failure by Tenant to obtain or maintain any required
authorization or approval shall not affect Tenant's obligation to pay Rent or
perform any other obligation hereunder.
SECTION 4.2 OPERATING APPROVALS. Tenant covenants to comply, or shall
cause any manager of the Facility to comply, with all notification and reporting
requirements imposed on an operator or proposed operator of a personal care home
and to maintain, or cause to be maintained in the case of any manager of the
Facility, all approvals and licenses to operate the Facility and to provide
assisted living services therein under applicable state and federal law
(collectively, the "Operating Approvals") and shall maintain the same in full
force and effect throughout the Lease Term. Tenant acknowledges that its
obligation to pay Rent is not contingent upon the receipt and maintenance of any
such Operating Approvals.
SECTION 4.3 COMPLIANCE WITH INSURANCE. After the Commencement Date,
Tenant shall neither use nor permit to be used the Premises, or any part thereof
for any purpose which will cause the cancellation of any insurance policy
covering the Premises of any part thereof, nor shall Tenant sell or permit to be
kept, used or sold in or about the Premises any article which may be prohibited
by the standard form of fire insurance policies. Tenant shall, at its sole cost,
comply with all of the requirements pertaining to the Premises of any insurance
organization or company necessary for the maintenance of insurance, as herein
provided, covering the Premises.
SECTION 4.4 WASTE/COMPLIANCE WITH LAWS. Tenant covenants and agrees
that the Premises shall not be used for any unlawful purpose. Tenant shall not
commit or suffer to be committed any waste on the Premises, nor shall Tenant
cause or permit any nuisance thereon. Tenant further covenants and agrees that
Tenant's use of the
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Premises and the maintenance, alteration, and operation thereof shall at all
times conform to all applicable and lawful local, state, and federal laws,
ordinances, and regulations, including orders of agencies which regulate or are
responsible for accrediting personal care home with assisted living services.
Tenant shall make such alterations to the Premises (whether capital or
non-capital in nature) as may become necessary after the Commencement Date to
maintain the Premises in compliance with applicable laws at Tenant's sole cost
and expense.
SECTION 4.5 ENVIRONMENTAL COMPLIANCE.
SECTION 4.5.1 Tenant shall use the Premises in compliance with all
applicable Environmental Laws (as defined below). Tenant shall not generate,
store or use any hazardous materials in or on the Premises, nor permit any
Person to do so on the Premises, except those customarily generated, stored and
used in the operation of a personal care home with assisted living services, and
then only in compliance with all Environmental Laws, insurance requirements and
applicable industry standards. Tenant shall not dispose of hazardous materials
on the Premises (or permit any person to do so) to any other location except a
properly licensed disposal facility and then only in compliance with all
applicable Environmental Laws. Tenant shall, at its sole cost and expense,
promptly remove or clean up any hazardous materials introduced onto the Premises
by Tenant or with its permission or at its sufferance (other than hazardous
materials introduced onto the Premises solely by Landlord's actions). Such
removal or cleanup shall be in compliance with all applicable Environmental
Laws. Tenant hereby agrees to indemnify and hold Landlord and any mortgagee
under a Facility Mortgage (a "Facility Mortgagee") harmless and agrees to defend
Landlord and any Facility Mortgagee from all losses, damages, claims and
liabilities and fines, including costs and reasonable attorneys' fees, of any
nature whatsoever in connection with the actual presence upon the Premises of
any hazardous materials introduced by Tenant. For purposes hereof, the term
"Environmental Laws" shall mean any and all applicable governmental laws,
regulations and requirements relating to environmental and occupational health
and safety matters and hazardous materials, substances or wastes (as defined
from time to time under any applicable federal, state or local laws, regulations
or ordinances). The provisions of this SECTION 4.5.1 shall survive the
expiration or earlier termination of this Lease.
SECTION 4.5.2 HAZARDOUS MATERIALS. The term "hazardous materials" shall
mean any chemical, substance, waste, material, gas or emission which is deemed
hazardous, toxic, a pollutant, or a contaminant under any statute, ordinance,
by-law, rule, regulation, executive order or other administrative order,
judgment, decree, injunction or other judicial order of or by any governmental
authority, now or hereafter in effect, relating to pollution or protection of
human health or the environment. By way of illustration and not limitation,
"Hazardous Materials" includes asbestos, radioactive materials, and "oil",
"hazardous materials", "hazardous waste", "hazardous substance" and "toxic
material" as defined in the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Section 9601 ET M., as amended, the Resource
Conservation and Recovery Act of 1976, 42 U.S. C. Section 2601 et seq., as
amended, the regulations promulgated thereunder, and the provisions of the
Pennsylvania ______________ Code and the regulations promulgated thereunder.
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SECTION 5. REPORTING REQUIREMENTS. Notwithstanding anything set forth
in this Lease to the contrary, for the purposes of this SECTION 5 and all other
sections of this Lease, Landlord acknowledges and agrees that the determination
by Tenant and/or the Manager (as defined below) as to whether either of them
desire to become a participating provider under any reimbursement program,
including but not limited to, Medicaid, Medicare or other governmental or
private third party program, and whether to continue to be such a participating
provider shall be within their respective sole discretion. Tenant hereby agrees
as follows:
SECTION 5.1 From and after the Commencement Date, Tenant shall provide
Landlord with the following financial statements and information on a continuing
basis:
(a) Within one hundred and twenty (120) days after the end of each
fiscal year, audited financial statements of the Tenant prepared by a nationally
recognized certified public accounting firm or other independent certified
public accounting firm acceptable to the Landlord, prepared in accordance with
GAAP, and including a balance sheet, and a statement of income and expenses for
the year then ended.
(b) Within thirty (30) days after the end of each fiscal year quarter
(i) unaudited financial statements of the Tenant prepared in accordance with
GAAP for the quarter then ended including a balance sheet and statement of
income and expenses, prepared on a basis consistent with the annual statements,
and certified by the chief financial officer of the Tenant to be true and
correct, (ii) a certificate from the chief financial officer of Balanced Care at
Shippensburg, Inc. (the "Manager") or the chief financial officer of the Tenant,
in form reasonably acceptable to Landlord, that, to such chief financial
officer's knowledge after due inquiry, as of the date of the certificate, no
event has occurred (that has not been cured) and no condition currently exists
that constitutes an "Event of Default" or would by giving of any required notice
or expiration of any applicable cure period constitute an "Event of Default" and
(iii) a quarterly census information of the Facility in sufficient detail to
show, unit occupancy on a daily average basis for such quarter.
(c) Within fifteen (15) days of the end of each calendar month (i) an
aged accounts receivable report for the Facility, certified by the Tenant to be
true and correct, and (ii) monthly census information for the Facility in
sufficient detail to show census on a daily average basis for such month.
(d) Within three (3) business days of the receipt by the Tenant,
Facility or the Manager at the Facility, any and all notices (regardless of
form) from any licensing, reimbursement and/or certifying agency that any
Operating Approvals, certifications or any reimbursement contract is being
revoked, downgraded or suspended or that action is pending or being considered
to revoke or suspend any such Operating Approvals, certifications, permits, or
any reimbursement contract or any rights thereunder.
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(e) If the Facility should hereafter be required to file any cost
report as a condition of participation pursuant to a reimbursement contract,
then within ten (10) days of the date of the required filing of cost reports of
such Facility with the appropriate State Medicaid, Medicare or other applicable
agency or pursuant to any reimbursement contract, or of the date of actual
filing of such cost report by the Facility, whichever is earlier, furnish to
Landlord a complete and accurate copy of the annual cost report for such
Facility, which will be prepared in accordance with the requirement of the
applicable reimbursement contract, and any amendments filed with respect to such
reports and all responses, audit reports or inquiries with respect to such
reports.
(f) Such financial statements of Guarantors as and when required in the
Guaranty.
(g) Within fifteen (15) days of the end of each calendar month during
the Pre-Stabilization Period (i) monthly financial and operating statements for
the Facility certified by the chief financial officer of the Manager or the
Tenant, (ii) a current rent roll statement with respect to the Facility and
(iii) a status report from the chief financial officer of the Manager or the
Tenant as to the projected date when Stabilization will occur.
(h) Furnish to Landlord within ten (10) days of receipt a copy of any
licensing agency (or, to the extent Tenant or any Manager becomes a
participating provider and elects to remain so in any Medicaid, Medicare or
other reimbursement agency), or reimbursement authority survey or report (and
any amendment thereto) and any statement of deficiencies, and within the time
period required by the particular agency or authority for furnishing a plan of
correction furnish or cause to be furnished to Landlord a copy of the plan of
correction generated from such survey or report for the Facility or any Manager
and any responses, audit reports or inquiries with respect to same, and correct
or cause to be corrected any deficiency, the curing of which is a condition of
continued licensure (or, to the extent Tenant or the Manager becomes a
participating provider and elects to remain so) for full participation in
Medicaid, Medicare or other reimbursement program pursuant to any reimbursement
contract for existing residents or for new residents to be admitted with
Medicaid, Medicare or reimbursement contract coverage by the date required for
cure by such agency or authority (plus extensions granted by such agency or
authority).
(i) Furnish promptly to Landlord such information as Landlord may
reasonably require concerning costs, progress of any construction, and such
other factors as Landlord may reasonably require regarding the Facility; notify
Landlord promptly of any material litigation instituted or threatened against
Tenant or any of the Guarantors, and any material deficiencies asserted or liens
filed by the Internal Revenue Service against Tenant or any of the Guarantors;
notify Landlord promptly of any condemnation or similar proceedings with respect
to the Premises, any proceeding seeking to enjoin the Facility or intended use
of any of the Improvements, and of all material changes in governmental
requirements pertaining to the Facility, utility unavailability, the receipt by
Tenant of any notice, claim or demand which alleges Tenant is in violation of
any license, reimbursement contract, law, rule or regulation applicable to the
Facility. The Tenant shall promptly commence and diligently pursue or cause the
diligent pursuit of the correction of the subject of each deficiency notice (or
if such deficiency can be appealed or contested without the incurrence of
interest, penalties, liens, or
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sanctions, to so contest or appeal such deficiency as permitted by applicable
law), and shall correct or cause the correction of the subject of the deficiency
notice promptly, but in any event prior to the expiration of any period allowed
by the governmental agency for correction. The Tenant shall at the Landlord's
request promptly provide from time to time such cost estimates, reports and
other information as the Landlord may reasonably require to demonstrate to the
Landlord's reasonable satisfaction that the Tenant or the responsible party has
the financial and other ability to effect the correction and is taking the
actions required by this subsection, and any other matters which could
reasonably be expected to adversely affect Tenant's or such responsible party's
ability to perform its obligations with respect to such deficiency correction.
The Landlord reserves the right to reasonably require such other
financial information (including tax returns, detailed cash flow information and
contingent liability information) of Tenant, Manager and any of the Guarantors,
all at such times as Landlord shall reasonably deem necessary, and Tenant agrees
promptly to provide such information to Landlord. All financial statements must
be in the form and detail as the Landlord shall from time to time reasonably
request. In any event Tenant shall provide Landlord with (i) an annual cash flow
statement within 30 days of year end and (ii) filed tax returns within 120 days
from year end or 255 days from year end if an extension is granted.
Landlord may sell participation interests in the Lease, may sell or
transfer the Lease, or may place the Lease in a pooling of leases for
syndication and sale of interests therein to investors. In such event Tenant
consents to the Landlord's disclosure and distribution of financial and other
information that has been provided by Tenant to Landlord pursuant to this Lease
to prospective participants, purchasers, investors, rating agencies and others
involved in any participation, sale, pooling or syndication.
At the time of furnishing the quarterly financial statement and census
data for the Facility required under the foregoing section, Tenant shall furnish
to Landlord a compliance certificate in the form attached hereto as EXHIBIT 5.1
with all information completed and certified by the chief financial officer of
the Manager or the Tenant as true and correct.
SECTION 6. OPERATING REQUIREMENTS.
SECTION 6.1 STANDARDS OF OPERATION. From and after the Commencement
Date and during the Lease Term, Tenant shall thereafter cause the Facility to be
properly operated as a personal care home with assisted living services and no
other use. Without limiting the foregoing, Tenant shall and/or cause any Manager
to:
(a) maintain the standard of care for the residents of the Facility at
all times at a level necessary to insure quality care for the residents of the
Facility;
(b) operate the Facility in a prudent manner in compliance with
applicable, licenses, laws and regulations relating thereto and cause all
licenses, permits, if any, and any other
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agreements necessary for the use and operation of the Facility as a personal
care home with assisted living services;
(c) maintain sufficient inventory and equipment of types and quantities
at the Facility to enable Tenant adequately to perform all operations at the
Facility; and
(d) keep all Improvements and Personal Property located on or used or
useful in connection with the Facility in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
needed and proper repairs, renewals, replacements, additions, and improvements
thereto to keep the same in good operating condition.
SECTION 7. RESIDENCY AGREEMENTS. Tenant shall establish as policy and
will require that any and all residents or other persons for which the Tenant
(or the Manager) provides services execute and deliver to the Tenant a residency
agreement approved as to form by Landlord, which approval shall not be
unreasonably withheld or delayed.
SECTION 8. MAINTENANCE, REPAIR - ALTERATIONS AND UTILITIES.
SECTION 8.1 TENANT'S MAINTENANCE. Tenant shall, at its own cost, and
without expense to the Landlord, maintain the Premises, including all sidewalks,
buildings, building systems, water, sewer and other utility lines on the Real
Property serving the Facility, surface parking lots, exterior lighting and
improvements of any kind which may be a part thereof in good, sanitary, neat and
first-rate order, condition and repair, ordinary wear and tear, casualty,
condemnation and acts of God excepted. Tenant's obligations shall include,
without limitation, replacements of structural components, roof and building
systems, and other necessary capital expenditures, as required by the previous
sentence. Tenant shall maintain the Premises in such a manner as may be
necessary to operate the Facility in accordance with applicable state and/or
federal laws or regulations. Tenant shall perform all interior and exterior
painting, and maintain the grounds of the Facility in a good and sightly
appearance. All costs of the foregoing maintenance and replacement obligations
shall be paid (i) with insurance proceeds, if applicable, in accordance with
SECTION 11 hereof, (ii) with funds from the Capital Reserve Account, if
applicable, in accordance with SECTION 3.5 hereof, and (iii) otherwise by
Tenant.
Tenant shall not commit or suffer to be committed any waste upon or
about the Premises, and shall promptly at its cost and expense, make all
necessary replacements, restorations, renewals, and repairs to the Premises and
appurtenances thereto, whether interior or exterior, structural or
non-structural, ordinary or extraordinary, and foreseen or unforeseen, ordinary
wear and tear excepted. Repairs restorations, renewals, and replacements shall,
to the extent possible, be at least equivalent in quality to the original work
or the property replaced, as the case may be. Tenant shall not make any claim or
demand upon or bring any action against the Landlord for any loss, cost, injury,
damage, or other expense caused by any failure or defect, structural or
non-structural, of the Premises or any part thereof.
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Landlord shall not under any circumstances be required to build any
improvements on the Premises, or to make any repairs, replacements, alterations,
or renewals of any nature or description to the Premises or to any of the
Improvements, whether interior or exterior, ordinary or extraordinary,
structural or non-structural, foreseen or unforeseen, or to make any expenditure
whatsoever in connection with this Lease or to inspect or maintain the Premises
in any way. Tenant hereby waives the right to make repairs, replacements,
renewals, or restorations at the expense of Landlord pursuant to all applicable
laws and Tenant shall not make any claim or demand upon or bring any action
against Landlord for any loss, cost, injury, damage or other expense caused by
any failure or defect, structural or non-structural, to the Premises or any part
thereof.
Tenant acknowledges that, pursuant to the Development Agreement,
Landlord has contracted with Tenant and BCC to construct the Improvements, that
the Improvements will be constructed pursuant to the Development Agreement and
that although title to the Improvements rests in Landlord in fee, Landlord has
made no representation, warranty or covenant regarding the suitability,
workmanship or freedom of defects of the Improvements as a result of the
Development Agreement, any act of approval of Landlord's agents, consultants or
engineers thereunder or by virtue of this Lease, or any statement or provision
in the Transaction Documents to the contrary notwithstanding.
LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT
TO THE PREMISES, EITHER AS TO ITS FITNESS FOR ANY PARTICULAR PURPOSE OR USE, ITS
DESIGN OR CONDITION OR OTHERWISE, OR AS TO DEFECTS IN QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL RISKS RELATING
TO THE DESIGN, CONDITION OR USE OF THE PREMISES ARE TO BE BORNE BY TENANT.
TENANT HEREBY ASSUMES ALL RISK OF THE PHYSICAL CONDITION OF THE PREMISES AND THE
SUITABILITY OF THE PREMISES FOR TENANT'S PURPOSES ARE TO BE BORNE BY TENANT.
TENANT ASSUMES ALL RISK OF AND THE COMPLIANCE OR NON-COMPLIANCE OF THE PREMISES
WITH ALL APPLICABLE REQUIREMENTS OF LAW, INCLUDING BUT NOT LIMITED TO
ENVIRONMENTAL LAWS AND ZONING OR LAND USE LAWS.
SECTION 8.2 ALTERATIONS. Tenant will not alter, add to, improve, remove
or demolish any improvement or building which is part of the Premises or any
portion thereof or allow it to be removed or demolished, without the prior
written consent of Landlord, which may be withheld at Landlord's sole
discretion; provided, that no consent shall be required of Landlord for any
alteration, addition or improvement that costs less than $25,000 in the
aggregate. If Tenant fails to obtain Landlord's prior written consent for any
alteration, and such consent is required under this Lease, then such alteration
must be removed/restored at the end of the Lease Term. All alterations, approved
by Landlord shall be in quality and class at least equal to the original work
and shall meet all building and fire codes, and all other applicable codes,
rules, regulations, laws and ordinances. Tenant also agrees to maintain
builder's risk insurance and shall cause its contractors to carry the types of
insurance as a prudent owner or tenant would
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require. Landlord shall have the right to approve the plans and specifications
for any alteration in excess of $50,000 in the aggregate, which approval may be
withheld in Landlord's sole discretion.
SECTION 8.3. UTILITIES. Tenant shall arrange for, furnish and pay all
charges for water, electricity, gas, sewage, waste, trash and garbage disposal,
telephone, cable television, and other services furnished to the Premises from
and after the Commencement Date and during the Lease Term. Except as set forth
below, Landlord shall not be responsible in any manner for any suspension,
interruption or curtailment of any services or utilities to the Premises
regardless of the cause thereof, and no such suspension, interruption or
curtailment shall give rise to any claim for abatement of Rent or other
compensation to Tenant from Landlord, nor may Tenant claim any damages on
account thereof, nor shall this Lease or any obligation of Tenant hereunder be
affected thereby, nor shall Tenant claim the same as a constructive eviction.
SECTION 9. LIENS AGAINST THE PREMISES.
SECTION 9.1. LIENS. Except as provided for herein and except for any
lien, charge or encumbrance granted by Landlord with respect to the Premises,
Tenant will not permit the Premises to become subject to any lien, charge, or
encumbrance. Tenant shall maintain the Premises free from all orders, notices,
and violations filed or entered by any public or quasi-public authorities.
SECTION 9.2. LANDLORD'S RIGHTS. Should a judgment on any lien, charge,
encumbrance, order, notice or, violation be rendered against the Premises for
any work performed by or for Tenant or any person claiming through or under
Tenant and should Tenant fail to discharge such judgment within thirty days of
receipt of notification thereof by Tenant (or if notification is sent to
Landlord within thirty days of Landlord's notification to Tenant of the same),
Landlord shall have the right, but not the obligation, to discharge said
judgment. If Landlord exercises that option, any amounts paid by Landlord shall
be due from Tenant as Additional Rent. Such Additional Rent shall be due and
payable on the next date after such expense was incurred.
SECTION 9.3 MECHANIC'S LIENS. Tenant shall take all reasonable steps
necessary to ensure that no lien arising under Pennsylvania law as a result of
construction done at the Premises at Tenant's request shall extend to the
interest of Landlord in the Premises. Tenant shall pay all costs incurred by
Tenant in connection with the construction, alteration, demolition, maintenance
and repair of any and all improvements on the Premises. Should a lien or claim
of lien be filed against the Landlord's interest in the Premises by any
contractor, subcontractor, mechanic, laborer, materialman or any other person
whomsoever retained by Tenant, Tenant shall, within thirty (30) days after
receipt of notice thereof, cause the same to be discharged of record.
SECTION 9.4 NO LIABILITY TO LANDLORD. Nothing contained in this Lease
shall be construed as constituting the consent of Landlord, express or implied,
to, or for the performance
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by, any materialman, contractor, mechanic, labor or other person furnishing any
labor, services, materials, supplies or equipment in connection with any capital
additions to any part of the Premises. Tenant shall not, and shall have no power
to, grant any lien, mortgage or other encumbrance upon the reversionary or other
estate of Landlord, or any interest of Landlord in the Premises. NOTICE IS
HEREBY GIVEN THAT LANDLORD IS NOT AND SHALL NOT BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE
HOLDING ANY PART OF THE PREMISES, AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY
SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF
LANDLORD IN AND TO THE PREMISES. Tenant shall notify any contractor,
subcontractor, laborer, materialman or vendor providing any labor, services or
materials to the addition of the foregoing provisions of this SECTION 9.4.
SECTION 10. NON-LIABILITY AND INDEMNIFICATION.
SECTION 10.1 TENANT'S INDEMNITY. During the Lease Term, Tenant agrees
to defend, protect, indemnify and save harmless Landlord and any Facility
Mortgagee from and against all claims arising out of or connected with the use,
misuse, occupancy, possession or unoccupancy of the Premises by Tenant any
person claiming by, through or under Tenant, or its respective officers,
directors, servants, agents, licensees, guests, customers, concessionaires,
sublessees, contractors, employees or invitees and shall pay all costs and
expenses incurred by Landlord and any Facility Mortgagee (each an "Indemnified
Party") in connection with such claims, including without limitation, court
costs and reasonable attorney's fees for trial and appellate proceedings. The
Indemnified Parties shall be protected hereby from all claims arising during the
Lease Term from loss of or damage to property, or death or personal or bodily
injury to persons except to the extent such loss, damage, death or injury is
caused by the gross negligence or willful actions of Landlord or any
person-claiming by, through or under Landlord. Promptly after the assertion by
any party of any claim against any Indemnified Party that, in the judgment of
such Indemnified Party, is a claim for which such Indemnified Party would be
entitled to indemnification pursuant to this Lease, such Indemnified Party shall
deliver to Tenant a written notice describing in reasonable detail such claim
and Tenant shall assume the defense of the Indemnified Party against such claim
(including the employment of counsel, who shall be reasonably satisfactory to
such Indemnified Party, and the payment of expenses), unless such claim relates
to a defense which Landlord considers relevant to Landlord's business as a whole
(limited to the ownership, operation or leasing of the Facility) in which case
Landlord may defend the claim at the expense of Tenant. Any Indemnified Party
shall have the right to employ separate counsel in any such action or claim and
to participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of Tenant unless (i) Tenant shall have failed,
within a reasonable time after having been notified by the Indemnified Party of
the existence of such claim as provided in the preceding sentence, to assume the
defense of such claim, or such claim relates to a defense which Landlord
considers relevant to Landlord's business as a whole (limited to the ownership,
operation or leasing of the Facility), (ii) the employment of such counsel has
been specifically authorized in writing by Tenant, or (iii) the named parties to
any such action (including any impleaded parties) include both such
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Indemnified Party and Tenant and such Indemnified Party shall have been advised
in writing by such counsel that there may be one or more legal defenses
available to the Indemnified Party or Tenant which are not available to, or the
assertion of which would be adverse to the interests of, the other party. Tenant
shall not be liable to indemnify any Indemnified Party for any settlement of any
such action or claim effected without the consent of Tenant, which shall not be
unreasonably withheld, but if settled with the written consent of Tenant, or if
there be a final judgment for the plaintiff in any such action, Tenant shall
indemnify and hold harmless each Indemnified Party from and against any loss or
liability by reason of such settlement or judgment. The provisions of this
Section shall survive the termination or expiration or earlier termination of
this Lease.
SECTION 10.2 LIMITATION ON LIABILITY. Neither Landlord nor any agent of
Landlord shall be liable to Tenant, or any other person whatsoever for any
damage, injury, loss, compensation, or claim (including, but not limited to, any
claim for the interruption of or loss to any business conducted on the Premises)
based on, arising out of or resulting from any cause whatsoever (except to the
extent such damage, injury, loss, compensation or claim is caused by the gross
negligence or willful misconduct of Landlord or any person claiming by, through
or under Landlord), including, but not limited to, the following: (a) repairs to
the Premises, (b) interruption in use of the Premises, (c) any accident or
damage resulting from the use or operation of the Premises or any business
conducted thereon, (d) the termination of this Lease by reason of casualty or
condemnation, (e) any fire, theft or other casualty or crime, (f) the actions,
omissions or misconduct of any other person, (g) damage to any property, or (h)
any damage from the flow or leaking of water, rain or snow. All Personal
Property and the personal property of any other person on the Premises
(including, without limitation, Tenant's Equipment) shall be at the sole risk of
Tenant and Landlord shall not in any manner be held responsible therefor. During
the Lease Term of this Lease, the risk of loss or of decrease in the enjoyment
and beneficial use of the Premises in consequence of any damage or destruction
thereof by fire, the elements, casualties, thefts, riots, wars or otherwise, or
in consequence of foreclosures, levies or executions of liens (other than those
granted by Landlord) is assumed by Tenant and, Landlord shall in no event be
answerable or accountable therefor nor shall any of the events mentioned in this
SECTION 10.2 entitle Tenant to any abatement of Rent.
It is expressly agreed by the parties that in no case shall Landlord
(or its partners any individuals or entities comprising Landlord) be personally
liable, under any express or implied covenant, agreement or provision of this
Lease, for any damages whatsoever to Tenant beyond Landlord's interest in the
Premises plus insurance proceeds. Landlord shall have no liability hereunder for
indirect or consequential damages.
SECTION 11. INSURANCE.
SECTION 11.1 All insurance policies required by this SECTION 11 shall
be issued by a good and solvent insurance company or companies licensed to do
business in the Commonwealth of Pennsylvania, with a BEST'S KEY RATING GUIDE
rating of A- and a financial rating of XII or better, selected by Tenant and
reasonably satisfactory to Landlord, and shall include Landlord and each
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mortgagee of which Landlord has notified Tenant as additional insureds as their
interests may appear. Tenant shall provide a copy of binders for insurance
policies conforming to the requirements of this Lease for Landlord's review at
least thirty (30) days prior to the Commencement Date. Tenant agrees to deliver
certificates of such insurance to Landlord as of the Commencement Date and
thereafter not less than thirty (30) days prior to the expiration of any such
policy. Such insurance shall not be canceled, materially changed, or non-renewed
without thirty (30) days' written notice to Landlord.
Landlord and Tenant shall each give prompt notice to the other of all
losses, damages or injuries to any person or damage to any property which may in
any way be related to this Lease and for which a claim might be made against the
other party. Each party shall promptly report to the other party all such
claims, whether related to matters insured or uninsured. Landlord and Tenant
shall assist and cooperate with any insurance company in the adjustment or
litigation of all claims and losses arising under this Lease.
11.2 PROPERTY INSURANCE. From and after the Commencement Date, Tenant
shall obtain and keep in force throughout the Lease Term, at its expense,
"all-risk" property insurance upon the Improvements and Personal Property
against fire and such other hazards, casualties and contingencies
(including boiler and machinery coverage on a comprehensive basis) as are from
time to time customarily covered by all-risk policies for similar buildings
used for similar purposes as Tenant is then making of the Facility with
endorsements insuring against earthquake and subsidence. The limit of such
insurance shall never be less than 100% of the actual replacement cost at the
time and place of loss (without deduction for depreciation), and the policy
shall include an agreed amount endorsement. This policy shall include coverage
for increased cost of construction, demolition and contingent liability as a
result of compliance with then existing applicable legal requirements. Such
insurance will be subject only to such deductibles as are approved by Landlord
(Tenant agreeing to pay to Landlord, upon demand as Additional Rent, the amount
of any such deductible following any casualty loss). The policy shall include
rent continuation coverage payable to Landlord, of no less than twelve (12)
months rent (including Base Rent and Additional Rent). Landlord agrees to apply
the proceeds of any rent continuation coverage received by Landlord to Base
Rent and Additional Rent due hereunder, and the balance, if any, to Tenant for
payment of normal operating expenses in Landlord's reasonable discretion. Any
such proceeds remaining after the completion of restoration as permitted
hereunder shall be paid over to Tenant provided no Event of Default exists
hereunder. If such Event of Default exists, Landlord may utilize such proceeds
to cure such Event of Default. All such policies shall name Landlord as the
named insured and each Facility Mortgagee as a loss payee as its interest may
appear (so long as, as to any Facility Mortgagee, such Mortgagee has agreed in
writing with Tenant and Landlord to allow use of the insurance proceeds as
provided herein).
In the event that Landlord receives a notice of cancellation of such
insurance policy or policies without a corresponding notice regarding the
issuance of new insurance prior to the effective date of such cancellation,
Landlord may, in addition to and without thereby waiving any other remedies, pay
the premiums necessary to prevent such cancellation and xxxx Tenant
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therefor. Tenant shall reimburse Landlord therefor by paying such amount,
together with interest at the rate set forth in SECTION 3.2.3, to Landlord, as
Additional Rent, within five (5) days after demand therefor by Landlord.
SECTION 11.3 LIABILITY INSURANCE. Tenant shall provide or cause to be
provided at its expense, and keep in force during the Lease Term:
(a) Commercial general liability insurance (without any so-called
employee exclusion or the like) in an amount reasonably required by Landlord
from time to time based on the then current practice for similar buildings used
for senior housing or personal care homes providing assisted living services
located within the vicinity of the Real Property, but in any event not less than
the greater of (i) One Million Dollars ($1,000,000.00) per occurrence, Three
Million Dollars ($3,000,000.00) aggregate, or (ii) the liability coverage
typically carried by Tenant in similar facilities, including contractual
liability coverage. Such policy shall name Tenant as a named insured and
Landlord and each Facility Mortgagee of which Landlord has notified Tenant, as
additional insureds with respect to any claim arising from Tenant's use,
occupancy, repair or operation of the Premises;
(b) Comprehensive automobile liability insurance including personal
injury and property damage in the amount of a combined single limit of One
Million Dollars ($1,000,000.00) each occurrence. Coverage must include owned,
leased, hired and non-owned vehicles;
(c) Worker's compensation and occupational disease insurance with
statutory limits;
(d) Professional liability insurance with a limit not less than Five
Million Dollars ($5,000,000.00) per occurrence; and
(e) Excess liability policy in umbrella form with a minimum limit of
liability of ___________________ ($_____________) applying in excess of the
coverages listed in (a), (b) and (d) above.
(f) All liability insurance shall be on an occurrence basis. Tenant may
not elect to carry claims made commercial general liability insurance unless
occurrence coverage is generally unavailable at commercially reasonable rates in
the marketplace. Tenant's insurance shall state that it is primary and not
contributing with any insurance purchased by Landlord. Tenant's insurance shall
also state that it is severable with respect to all insureds under the policy
and that acts of one insured will not abrogate coverage for other insureds.
SECTION 11.4 PERSONAL PROPERTY INSURANCE. Tenant shall obtain and
keep in force throughout the Lease Term, at its expense, "all-risk" property
insurance on Tenant's Equipment, including but not limited to furniture,
machinery and equipment, for the full replacement cost.
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SECTION 11.5 MORTGAGEE'S OTHER REQUIREMENTS. Tenant shall maintain
any other insurance reasonably required by Landlord or the Facility Mortgagee
to the extent such insurance is available in Pennsylvania and is customarily
carried by owners or operators of personal care homes with assisted living
services. Flood insurance shall be required for the maximum amount required
through the federal flood program if any of the Improvements are located in a
designated flood hazard zone as identified in the Flood Disaster Act of 1973.
SECTION 11.6 BLANKET INSURANCE. Nothing contained in this SECTION 11
shall prohibit Landlord or Tenant from obtaining a policy or policies of
blanket insurance which may cover other properties of Landlord or Tenant
provided that (a) any such blanket policy expressly allocates to the Premises
not less than the amount of insurance required hereunder to be maintained and
(b) such blanket policy shall not diminish the obligations to insure hereunder,
so that proceeds from such policies shall be an amount no less than the
proceeds that would be available under a separate policy.
SECTION 11.7 WAIVER OF SUBROGATION. Landlord and Tenant, each for
itself and its insurer, hereby waive all claims and rights against the other
and their respective officers, directors, employees, contractors, servants, and
agents, for any damage to or destruction of real or personal property of
Landlord or Tenant to the extent covered by the insurance required to be
maintained hereunder. All property insurance policies carried at any time
during the Lease Term by either party covering the Premises shall include a
clause to the effect that such waiver of subrogation shall not adversely affect
or impair such policies or prejudice the rights of the insureds to recover
thereunder. The provisions of this SECTION 11.7 shall survive the expiration or
earlier termination of this Lease.
SECTION 11.8 DEPOSIT OF INSURANCE PREMIUMS. At the option
of Landlord, which may be exercised at any time, Tenant shall, upon written
request of Landlord, on the first day of the calendar month immediately
following such request, and on the first day of each calendar month thereafter
during the Lease Term (each of which dates is referred to as a "Insurance
Monthly Deposit Date"), pay to and deposit with Landlord a sum equal to
one-twelfth (1/12th) of the insurance premiums required by this SECTION 11 (the
"Insurance Premiums") with respect to the Premises within one (1) year after
said Insurance Monthly Deposit Date. If the amount of the insurance premiums
within the ensuing one (1) year period shall not be fixed upon any Insurance
Monthly Deposit Date, such amount for the purpose of computing the deposit to be
made by Tenant hereunder shall be reasonably estimated by Landlord with an
appropriate adjustment to be promptly made between Landlord and Tenant as soon
as such amount becomes determinable. In addition, Landlord may, at its option,
from time to time require that any particular deposit be greater than
one-twelfth (1/12th) of the estimated amount payable within one (1) year after
said Insurance Monthly Deposit Date, if such additional deposit is required in
order to provide to Landlord a sufficient fund from which to make payment of all
insurance premiums on or before the next due date of any installment thereof.
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SECTION 11.9 USE OF DEPOSITS. The sums deposited by Tenant under
this SECTION 11 shall be held by Landlord and shall be applied to payment to
the insurance premiums when due. Any such deposits may be commingled with other
assets of Landlord, and shall be deposited by Landlord at OCWEN Federal Bank
FSB. Landlord shall not be responsible to Tenant for any loss of principal so
deposited at such depository bank due to financial failure or any act of
omission of such depository. The income from such investment or interest on
such deposit shall be paid to Tenant on a semi-annual basis as long as no Event
of Default has occurred. Tenant shall give not less than ten (10) days prior
written notice to Landlord in each instance when an insurance premium is due,
specifying the amount of the insurance premium in full (or any installment),
together with any penalty or interest thereon, provided, however, Tenant shall
not be in default hereunder if it fails to receive notice from the applicable
insurance company and such notice was sent directly to the Landlord. Landlord
may change its estimate of any Insurance Premium on the basis of a change in
any invoice received or on the basis of a prior miscalculation or for any other
good faith reason; in which event, within ten (10) days after demand by
Landlord, Tenant shall deposit with Landlord the amount in excess of the sums
previously deposited with Landlord for the applicable period which would
theretofore have been payable under the revised estimate. Landlord shall
provide Tenant with an annual statement of all amounts deposited and interest
earned thereon under this SECTION 11. In connection with any assignment of the
Landlord's interest under this Lease, the original Landlord named herein and
each successor in interest shall have the right to transfer all amounts
deposited pursuant to the provisions of this SECTION 11 and still in its
possession to such assignee (as the subsequent holder of Landlord's interest in
this Lease) and upon such transfer, the original Landlord named herein or the
applicable successor in interest transferring the deposits shall thereupon be
completely released from all liability with respect to such deposits so
transferred and Tenant shall look solely to said assignee, as the subsequent
holder of Landlord's interest under this Lease, in reference thereto. All
amounts deposited with Landlord pursuant to the provisions of this SECTION 11
shall be held by Landlord as additional security for the payment and
performance of all obligations of Tenant under the Lease and, upon the
occurrence of any Event of Default, Landlord may, in its sole and absolute
discretion, apply said amounts towards payment or performance of such
obligations. Upon the expiration or earlier termination of this Lease, provided
that, all of the Lease obligations have been fully paid and performed, any sums
then held by Landlord under this SECTION 11 shall be refunded to Tenant. Tenant
agrees to pay reasonable administrative or other fees associated with Landlord
or its designees holding, disbursing and otherwise managing the deposits under
this SECTION 11.
SECTION 12. DAMAGE AND DESTRUCTION.
SECTION 12.1 REPAIR OR RESTORATION AFTER MAJOR CASUALTY. In the event
that any part of the Improvements or the Personal Property shall be damaged or
destroyed by fire or other casualty for which Tenant is required to maintain
insurance hereunder and the cost to repair such casualty is greater than
$200,000, (any such event being called a "Major Casualty"), Tenant shall
promptly replace, repair and restore the same as nearly as possible to its
condition immediately prior to such Major Casualty, in accordance with all of
the terms, covenants and conditions and other requirements of this Lease. If,
pursuant to
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this SECTION 12, Tenant shall be obligated to make repairs, the Premises shall
be so replaced, repaired and restored as to be substantially the same character
as prior to such Major Casualty. The plans and specifications for such
restoration shall be first submitted to and approved in writing by Landlord,
which approval may be withheld in Landlord's sole discretion. Landlord agrees to
provide its approval or disapproval of plans and specifications within fifteen
(15) days of submission to Landlord by Tenant together with reasonable detail as
to how such plans or specifications are deficient or can be approved, if
applicable. Tenant may elect to retain, at its expense, an independent
architect, reasonably approved by Landlord, who shall oversee such repairing,
restoring or replacing. Tenant covenants that it will give to Landlord prompt
written notice of any casualty affecting the Premises or any portion thereof.
Notwithstanding the above Landlord shall have no obligation to restore the
Premises; Landlord's sole obligation shall be to disburse any available
insurance proceeds pursuant to the procedures and to the extent described
herein.
Landlord agrees that Landlord shall make the net proceeds of insurance
(after payment of Landlord's costs and expenses of collection) available to
Tenant for Tenant's repair, restoration and replacement of the Improvements and
Personal Property damaged on the following terms and subject to Tenant's
satisfaction of the following conditions:
(a) At the time of such loss or damage and at all times thereafter
while Landlord is holding any portion of such proceeds, there shall exist no
Event of Default;
(b) In Landlord's judgment, the Improvements and Personal Property to
which loss or damage has resulted shall be capable of being restored to its
pre-existing condition and utility in all material respects with a value equal
to or greater than that existing prior to such loss or damage and, in Landlord's
judgment, Substantial Completion of such repair, replacement and restoration can
be achieved within 6 months of the casualty or prior to the expiration of Lease
Term, whichever is earlier. As used herein "Substantial Completion" shall have
the same meaning for such term used in the Development Agreement (modified as
needed to reflect any partial casualty);
(c) Within thirty (30) days from the date of such loss or damage Tenant
shall have given Landlord a written notice electing to have the proceeds applied
for such purpose;
(d) Within sixty (60) days following the date of notice under the
preceding subparagraph and prior to any proceeds being disbursed to Tenant,
Tenant shall have provided to Landlord all of the following:
i) complete plans and specifications for restoration, repair
and replacement of the Improvements and Personal Property damaged to the
condition, utility and value required by (b) above,
ii) if loss or damage exceeds $200,000, a fixed-price or
guaranteed maximum cost bonded construction contracts for completion of the
repair and restoration work to the
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Improvements in accordance with such plans and specifications and firm price
quotes good for the period of restoration for the Personal Property which must
be repaired or replaced,
iii) builder's risk insurance for the full cost of
construction with Landlord named under a standard mortgagee loss-payable clause,
iv) such additional funds as in Landlord's reasonable opinion
are necessary to complete the repair, restoration and replacement, which funds
may be made available in cash or by delivery of a letter of credit in a form and
from an issuer acceptable to Landlord, and
v) copies of all permits and licenses necessary to complete
the work in accordance with the plans and specifications and any applicable
regulatory approvals;
(e) Landlord may, at Tenant's expense, retain an independent inspector
to review and approve plans and specifications and completed construction and to
approve all requests for disbursement, which approvals shall be conditions
precedent to release of proceeds as work progresses;
(f) No portion of such proceeds shall be made available by Landlord for
architectural reviews or for any other purposes which are not directly
attributable to the cost of repairing, restoring or replacing the Improvements
and Personal Property for which a loss or damage has occurred unless the same
are covered by such insurance;
(g) Tenant shall commence such work within ninety (90) days of such
loss or damage and shall diligently pursue such work to completion;
(h) Each disbursement by Landlord of such proceeds and deposits shall
be funded subject to conditions and in accordance with disbursement procedures
which a commercial landlord would typically establish in the exercise of sound
practices and shall be made only upon receipt of disbursement requests on an AIA
G702/703 form (or similar form approved by Landlord) signed and certified by the
Tenant and its architect and general contractor with appropriate invoices and
lien waivers as required by Landlord;
(i) In the event Tenant fails to timely make such election or having
made such election fails to timely comply with the terms and conditions set
forth herein, Landlord shall be entitled without notice to or consent from
Tenant to apply such proceeds, or the balance thereof, at Landlord's option
either (i) to the full or partial payment or prepayment of the Base Rent and to
sums advanced under the Transaction Documents by Landlord or (ii) to the repair,
restoration and/or replacement of all or any part of such Improvements and
Personal Property for which a loss or damage has occurred. Any excess insurance
proceeds which remain after payment in full for the restoration to the Premises
hereunder shall be paid to Tenant provided no Event of Default exists hereunder,
in which case Landlord may utilize such proceeds to cure such Event of Default.
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Tenant appoints Landlord as Tenant's attorney-in-fact to cause the
issuance of or an endorsement of any policy to bring Tenant into compliance
herewith and, as limited above, at Landlord's sole option, to make any claim
for, receive payment for, and execute and endorse any documents, checks or other
instruments in payment for loss, theft, or damage covered under any such
insurance policy; however, in no event will Landlord be liable for failure to
collect any amounts payable under any insurance policy.
SECTION 12.2 EXCEPTION FOR MAJOR CASUALTY DURING LAST TWO LEASE YEARS
AND UNINSURED CASUALTY. Notwithstanding the foregoing, in the event
of a Major Casualty (a) occurring during the last two Lease Years of the Lease
Term or (b) resulting from a flood, nuclear accident, war or other event for
which Tenant is not obligated to maintain insurance hereunder and which, in the
opinion of Landlord, renders the Premises unsuitable for Tenant's use as a
personal care homes with assisted living services as operated by Tenant prior to
the Casualty, then, subject to the rights of Tenant as provided in SECTION 12.9
hereof, Landlord shall have the right to terminate this Lease upon written
notice to Tenant and, in such event, all insurance proceeds attributable to the
Real Property, Improvements and Personal Property shall be payable to the
Facility Mortgagee or, if none, to Landlord and all insurance proceeds
attributable to Tenant's Equipment shall be payable to Tenant. Termination
rights under this Section shall be exercised by written notice to Tenant sent
within thirty (30) days after the occurrence of the destruction or damage and
shall take effect fifteen (15) days after Tenant's receipt of such notice.
SECTION 12.3 FAILURE BY TENANT TO COMPLETE REPAIRS. In the event that
(a) Tenant has not procured the necessary permits and approvals for the
restoration and/or has not commenced repair and restoration of the Premises
within ninety (90) days of the date of the Major Casualty, or (b) Tenant's work
has not reached Substantial Completion within the earlier of 6 months following
commencement of repair and restoration or the expiration of the Lease Term,
then, in either event, Landlord may give written notice to Tenant and any
Facility Mortgagee of Landlord's intention to terminate this Lease as provided
in SECTION 12.2 or assume responsibility for completion of such repair and
restoration of the Premises.
SECTION 12.4 TERMINATION. Notwithstanding anything to the contrary
contained in this SECTION 12, Tenant shall not be obligated to rebuild
following a Major Casualty if the repairs or reconstruction of the damage
cannot be made under existing laws, ordinances, statutes or regulations of any
governmental authority applicable thereto. In the event Tenant is unable to
rebuild in accordance with the provisions hereof, and such casualty causes the
Premises to be rendered unsuitable for use as a personal care home with
assisted living services, then, subject to the rights of Tenant as provided in
SECTION 12.9 hereof, this Lease shall terminate. In such event all insurance
proceeds shall be payable to any Facility Mortgagee or, if none, to Landlord
within ten (10) days of said Lease termination date free and clear of all liens
or claims, and all insurance proceeds attributable to Tenant's Equipment shall
be payable to Tenant.
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In the event of such termination, Tenant shall promptly, at its own expense,
remove from the Premises any of Tenant's Equipment not so damaged or destroyed.
SECTION 12.5 RENDERED UNSUITABLE. For the purposes of this
SECTION 12, the Facility shall be deemed to have been rendered unsuitable for
use as a personal care home with assisted living services if, in the good faith
judgment of Landlord, the Facility cannot after any such loss be
operated on a commercially practicable basis as a personal care home with
assisted living services of the type and quality existing and licensed
immediately prior to such loss, taking into account, among other relevant
factors, the number of units, dining and kitchen facilities, parking lots,
driveways, or walkways affected by such loss.
SECTION 12.6 REPAIR OR RESTORATION AFTER MINOR CASUALTY. In the event
that any part of the Improvements or Personal Property shall be damaged or
destroyed by fire or other casualty and the cost to repair such casualty is
$200,000 or less (a "Minor Casualty"), then Tenant shall promptly repair and
restore the same as nearly as possible to its condition immediately prior to
such Minor Casualty, in accordance with all of the applicable terms, covenants
and conditions and other requirements of this Lease in the event of such Minor
Casualty (except Section 12.1(d)(ii)), and Tenant shall be entitled to the use
of all insurance proceeds available therefor.
SECTION 12.7 ABATEMENT OF RENT. This Lease shall remain in full force
and effect during the period of any casualty, repair and restoration and Tenant
shall be entitled to no abatement of Rent for any reason whatsoever.
SECTION 12.8 NO LESSOR OBLIGATION. Landlord shall not, under any
circumstances, be required to build or rebuild any improvements on the Premises
(or any private roadways, sidewalks or curbs appurtenant thereto), or to make
any repairs, replacements, renovations, alterations, restorations,
modifications, or renewals of any nature or description to the Premises (or any
private roadways, sidewalks or curbs appurtenant thereto), whether ordinary or
extraordinary, structural or non-structural, foreseen or unforeseen.
SECTION 12.9 TENANT'S RIGHTS TO ACQUIRE PREMISES AFTER CASUALTY. In the
event Landlord elects to terminate the Lease pursuant to SECTIONS 12.2 OR 12.4
hereof, then for the period of time commencing on the delivery of notice by
Landlord to Tenant of Lease termination and ending fifteen (15) days after
Tenant's receipt of such notice, Tenant shall have the option to elect to
purchase the Premises in its "as is" condition (the "Casualty Option") on the
same terms and conditions as are set forth in SECTION 21 hereof, except as
follows: (i) Closing on the purchase shall occur within 90 days after the date
Tenant exercises the Casualty Option; (ii) the purchase price shall equal the
greater of (a) Total Project Costs less insurance proceeds recovered by Landlord
(but not below zero) or (b) 50% of (the Appraised Value of the Premises (without
utilization of insurance proceeds to restore the Premises, transaction costs or
the Letter of Credit) less the amounts set forth in clause (a) above), plus the
amounts set forth in clause (a) above; (iii) if Tenant delivers Tenant's
Casualty Option notice and Closing does not occur due to a default
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by Tenant, Tenant shall have no further right to purchase the Premises under
this Lease, Landlord may retain the Deposit and the Lease shall terminate.
SECTION 13. CONDEMNATION.
SECTION 13.1 TAKING OF WHOLE.
SECTION 13.1.1 Subject to the provisions of SECTION 13.4 below, during
the Lease Term, so much of the Premises are taken or condemned in fee for a
public or quasi-public use that in the judgement of Landlord, the Premises are
rendered unsuitable for use as a personal care home with assisted living
services, this Lease shall terminate. Termination will be effective without
entry or notice. Termination shall occur as of the day when possession is
required to be surrendered to the taking or condemning authority.
SECTION 13.1.2 For purposes of this SECTION 13, the Premises shall be
deemed to have been rendered unsuitable for use as a personal care home with
assisted living services if, in the good faith judgment of Landlord, the
Premises after such loss cannot be operated on a commercially practicable basis
as a personal care home with assisted living services of the type and quality
existing and licensed immediately prior to such loss taking into account, among
other relevant factors, the number of units and/or parking lots, driveways,
dining and kitchen facilities, or walkways affected by such loss.
SECTION 13.2 TAKING OF A PORTION. If during the Lease Term, a portion
of the Premises and/or the Facility is taken or condemned in fee for a public
or quasi-public use such that the Facility is not rendered unsuitable for use
as a personal care home with assisted living services, this Lease shall not
terminate. If, however, as a result of the taking, the number of units
available for operation of the Facility as a personal care home with assisted
living services of the type and quality existing and licensed prior to-the
taking has been or must be reduced, Tenant shall be entitled to an abatement of
Rent. The rent abatement shall be to the extent that is fair, just and
equitable to both Tenant and Landlord, taking into consideration, among other
relevant factors, the number of units and/or parking lots, driveways, dining
and kitchen facilities or walkways affected by such loss.
SECTION 13.3 DAMAGES FOR TAKING. All damages awarded in connection
with the taking of the Premises shall vest in Landlord. In the event of a
partial taking where the Lease is not terminated, Landlord shall apply or make
available to Tenant that portion of the proceeds reasonably necessary for the
repair or reconstruction of the Premises. Notwithstanding anything to the
contrary contained in any Facility Mortgage or related document, all damages
awarded (or otherwise sought by Tenant) in connection with the taking of
Tenant's Equipment, and all moving and relocation costs, shall vest in Tenant.
SECTION 13.4 TENANT'S RIGHT TO ACQUIRE PREMISES AFTER TAKING. In the
event Landlord elects to terminate the Lease pursuant to Section 13.1, then for
the period of time commencing on the delivery of notice by Landlord to Tenant
of Lease termination
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and ending fifteen (15) days after Tenant's receipt of such notice, Tenant shall
have the option to elect to purchase the remaining portion of the Premises in
its "as is" condition (the "Taking Option") on the same terms and conditions as
are set forth in SECTION 21 except as follows: (i) Closing shall occur within
ninety (90) days after the date Tenant exercises the Taking Option; (ii) the
Purchase Price shall equal the greater of (a) Total Project Costs less
condemnation proceeds recovered by Landlord (but not below zero) or (b) 50% of
(the Appraised Value of the remaining Premises (without utilization of
condemnation awards to restore the Premises, transaction costs or Letter of
Credit) less the amounts set forth in clause (a) above), plus the amounts set
forth in clause (a) above; (iii) if Tenant delivers Tenant's Taking Option
notice and Closing does not occur due to a default by Tenant, Tenant shall have
no further right to purchase the Premises under the Lease, Landlord may retain
the Deposit and this Lease shall terminate.
SECTION 14. QUIET ENJOYMENT. Landlord covenants and agrees that, so
long as Tenant observes and performs all of the covenants, conditions, and
stipulations of this Lease, Tenant may, subject to all the terms and conditions
hereof, lawfully and quietly hold, occupy and enjoy the Premises during the
Lease Term.
SECTION 15. ASSIGNMENT AND SUBLETTING.
SECTION 15.1 LANDLORD'S CONSENT. Except as provided in SECTIONS 15.4,
15.7(D) AND 15.8 below, Tenant may not sublease, assign, pledge or in any way
transfer this Lease or any interest in Tenant or any member of Tenant without
the prior written consent of Landlord. If Tenant wishes to assign or sublease
this Lease and Landlord's consent is required hereunder, Tenant shall deliver
to Landlord (i) a true and complete copy of the proposed instrument of
assignment or sublease containing all of the terms and conditions of such
proposed assignment or sublease, (ii) information as to the identity and
experience of the assignee/sublessee as Landlord may reasonably require, (iii)
such financial information concerning the proposed assignee or sublessee as
Landlord may reasonably require, and (iv) except in the case of a sublease
entered into pursuant to SECTION 15.5 below, a written agreement, in form
reasonably approved by Landlord, between such proposed assignee or sublessee
and Landlord in which such proposed assignee or sublease agrees with Landlord
to perform and observe all of the terms, covenants and conditions of this
Lease, as well as all of the other documents executed and delivered to Landlord
in connection with the Lease, jointly and severally with Tenant, all of which
Landlord may consider in determining whether to grant its consent. Landlord
agrees to notify Tenant within 30 days following delivery of the foregoing
information, as to whether or not Landlord shall grant its consent. If Landlord
fails to notify Tenant in writing within said 30 day period, Landlord shall be
deemed to have not consented to said assignment or sublease.
If Landlord consents to an assignment or sublease, then prior to such
assignee or sublessee taking occupancy of the Premises, Tenant shall deliver to
Landlord an original of the fully-executed instrument of assignment and, if
applicable, of the agreement described in clause (iv) of the preceding paragraph
of this Section.
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SECTION 15.2 LANDLORD'S ASSIGNMENT RIGHTS. Landlord may at any time
assign, participate or securitize all or part of its rights and
obligations under this Lease.
SECTION 15.3 SUBSEQUENT ASSIGNMENTS OR SUBLEASES. No assignment
or subletting that is approved pursuant to this SECTION 15 shall be deemed to
remove any subsequent assignment or subletting from the provisions of this
SECTION 15, it being the intent hereof that every assignment and subletting,
whenever occurring, shall require the same approval as is set forth herein for
an original assignment or subletting.
SECTION 15.4 RESIDENTIAL LEASES. Notwithstanding anything to
the contrary contained herein, Tenant shall be permitted, without obtaining
Landlord's consent, to sublease individual units pursuant to a form approved in
advance in writing by Landlord, which approval shall not be unreasonably
withheld or delayed, provided (i) the term of each sublease does not exceed one
(1) year and (ii) the sublease does not provide for any periods of reduced or
no rent, or other similar concessions. Tenant shall obtain Landlord's consent
which consent shall not be unreasonably withheld or delayed to any material
changes which may be made to the standard form.
SECTION 15.5 COMMERCIAL LEASES. Landlord acknowledges and understands
that Tenant may enter into one or more commercial subleases covering portions
of the Premises with sublessees who shall provide certain specialized services
and amenities to the residents of the Facility (e.g. beauty parlor,
convenience store, bank outlet). Tenant shall obtain Landlord's prior written
consent to such subleases, and in no event shall (i) the term of such sublease
be greater than one (1) year, (ii) the square footage to be subleased exceed
three thousand (3,000) square feet in the aggregate for all subleases, and
(iii) such sublease (other than residential unit subleases) survive termination
or expiration of this Lease. Any such sublease shall be in form and substance
reasonably satisfactory to Landlord including the provision of professional
liability and general liability insurance as Landlord shall reasonably require.
Upon the request of Landlord, Tenant shall provide copies of any such executed
subleases to Landlord and obtain subordinations, if applicable, of such
subleases to this Lease.
SECTION 15.6 EFFECT OF ASSIGNMENT OR SUBLETTING. In all events,
notwithstanding any assignment or subletting permitted hereunder, Tenant's
liability to Landlord shall remain direct and primary. Any assignee or
sublessee of Tenant's interest in the Premises, other than a sublessee under
a sublease entered into pursuant to SECTION 15.4 or SECTION 15.5 hereof to whom
such joint and severally liability provisions shall not apply, shall be deemed
to have agreed directly with Landlord to be jointly and severally liable with
Tenant for the performance of Tenant's obligations hereunder and such assignee
or sublessee shall upon request execute and deliver such instruments as
Landlord reasonably requests in confirmation thereof (and agrees that its
failure to do so shall be subject to the default provisions of this Lease). At
any time after the occurrence of an Event of Default hereunder, Landlord may
collect rent and other charges from any assignee or sublessee (and upon notice
any assignee or
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sublessee shall pay such sums directly to Landlord) and apply the amount
collected to the rent and other charges herein reserved. No consent to
assignment or collection of rent by Landlord directly from any assignee or
sublessee or failure so to collect such rent shall be deemed a waiver of the
provisions of this SECTION 15, an acceptance of such assignee or sublessee as a
tenant hereunder, or a release of Tenant from direct and primary liability for
the performance of all of the covenants of this Lease.
SECTION 15.7 OTHER PROVISIONS REGARDING SUBLEASES AND ASSIGNMENTS.
(a) (i) A copy of any sublease fully executed and acknowledged by the
Tenant and the sublessee, shall be mailed to Landlord within ten (10) days from
effective date of such subletting.
(ii) Such assignment and/or subletting shall be subject to all
the provisions, terms, covenants, and conditions of this Lease and the
Tenant-assignor (and any guarantor(s) of this Lease) and such assignee(s) shall
continue to be and remain liable hereunder, it being expressly understood and
agreed that no assignment or subletting of the Premises shall in any way relieve
Tenant or any subsequent assignee(s) from the performance of any of the
agreements, terms, covenants, and conditions of this Lease.
(iii) Each sublease permitted under this SECTION 15 shall
contain provisions to the effect that (A) such sublease is only for the actual
use and occupancy by the sublessee, and (B) unless Landlord elects otherwise,
such sublease is subject and subordinate to all of the terms, covenants, and
conditions of this Lease and to all of the rights of Landlord thereunder, and
(C) such sublease shall expire prior to the expiration or earlier termination of
the Lease Term (except residential unit subleases).
(b) Notwithstanding anything contained in this Lease to the contrary,
and notwithstanding any consent by Landlord to any sublease of the Premises or
any assignment of this Lease, no sublessee shall assign its sublease nor further
sublease the Premises, or any portion thereof, and no assignee shall further
assign its interest in this Lease nor sublease the Premises, or any portion
thereof, without Landlord's prior written consent in each of such cases.
(c) Tenant's failure to comply with all of the provisions and
conditions of this SECTION 15 and all of the subsections hereof shall at
Landlord's option, render any purported assignment or subletting null and void
and of no force and effect.
(d) In the event that Tenant hereunder or any of the Guarantors shall,
at any time, be a corporation, limited liability company or partnership, any
change in one or a series of related transactions in the outstanding capital
stock, equity, beneficial or membership interest of Tenant (or such Guarantors)
without the prior written consent of Landlord, shall constitute a sublease or
assignment hereunder requiring Landlord consent other than the transfer of all
membership interests in Tenant to Balanced Care Corporation (or a wholly owned
subsidiary of Balanced Care Corporation) provided that in each case Balanced
Care Corporation guarantees the
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obligations of Tenant to Landlord in form and substance satisfactory to Landlord
in its sole discretion pursuant to that certain Option Agreement, dated the date
hereof, by and among Tenant, Guarantors and Balanced Care Corporation; provided,
that Balanced Care Corporation or said wholly owned subsidiary of Balanced Care
Corporation shall provide evidence satisfactory to Landlord that as the sole
member of Tenant such entity is unrestricted in making capital contributions or
equity infusions into Tenant for the purpose of funding Tenant's obligations and
agreements hereunder.
(e) Without the prior written consent of Landlord, Tenant may not
mortgage, pledge, or otherwise encumber its leasehold estate hereunder, and any
attempt to mortgage, pledge, or otherwise encumber such estate shall be null and
void and of no force and effect.
Notwithstanding the foregoing, (i) the Tenant's leasehold interest in the Lease
may be mortgaged as security for the obligations of Tenant to Balanced Care
Corporation under the Operating Deficit Loan Documents (as defined below);
provided, that, Balanced Care Corporation shall not otherwise assign or transfer
such mortgage and (ii) subject to Tenant's assignment of its interest in the
Lease to Balanced Care Corporation or a wholly owned subsidiary of Balanced Care
Corporation pursuant to Section 15.8 hereof, Balanced Care Corporation shall
have a right to pledge any accounts receivables arising from any permitted
subleases at the Facility to a third-party creditor subject to Landlord's first
priority security interest in such accounts receivables and the execution and
delivery to Landlord of an intercreditor agreement with such third-party
creditor in form and substance satisfactory to Landlord in its sole discretion.
SECTION 15.8 PERMITTED ASSIGNMENT. Tenant may assign its entire
interest in the Lease to Balanced Care Corporation (or a wholly owned
subsidiary of the Balanced Care Corporation, provided that Balanced Care
Corporation guarantees the obligations of such entity to Landlord in form and
substance satisfactory to Landlord in its sole discretion) at any time
without the consent of Landlord pursuant to Section 1.03 of the Shortfall
Funding Agreement, dated the date hereof, by and between Tenant and Balanced
Care Corporation (the "Shortfall Funding Agreement"); provided, that, Tenant
shall deliver to Landlord an original of the fully-executed instrument of
assignment and, if applicable, of the agreement described in clause (iv) of
SECTION 15.1 hereof. Upon any such permitted assignment, Tenant shall no longer
be liable for any obligations of Tenant occurring after the date of such
assignment but Tenant shall not be released from and shall remain liable for
any obligations under the Lease that arose or occurred prior to the date of
such assignment. Tenant has delivered a copy of the fully-executed Shortfall
Funding Agreement and the various documents and instruments being executed and
delivered therewith (collectively, the "Shortfall Documents") to Landlord and
Tenant agrees not to modify, amend or terminate the Shortfall Documents without
Landlord's prior written consent, which may be withheld in Landlord's sole
discretion.
SECTION 16. NOTICES. No notice or other communication shall be deemed
given unless sent in any of the manners, and to the persons, specified in this
SECTION 16. All notices and other communications hereunder shall be in writing
and shall be deemed given (i) upon receipt if delivered personally (unless
subject to clause (ii)) or if mailed by registered or
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certified mail, (ii) at noon on the date after dispatch if sent by overnight
courier or (iii) upon the completion of transmission on or before 4:30 p.m.
local time of the recipient if received on a business day (which is confirmed by
telephone or by a statement generated by the transmitting machine (if
transmitted by telecopy of other means of facsimile which provides immediate or
near immediate transmission to compatible equipment in the possession of the
recipient), or on the next business day following receipt if received after 4:30
p.m. local time of the recipient on any business day, in any case to the parties
at the following addresses or telecopy numbers (or at such other address or
telecopy number for a party as will be specified by like notice):
If to Landlord: 1675 Palm Beach Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Attention: Secretary
Telecopy Number: (000) 000-0000
Confirmation Number: (000) 000-0000
cc: Vice President Multifamily Finance
Telecopy Number: (000) 000-0000
Confirmation Number: (000) 000-0000
If to Tenant: Senior Care Operators of Shippensburg, LLC
c/o Hakman Capital Corp.
0000 Xxx Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Telecopy Number: (000) 000-0000
Confirmation Number: (000) 000-0000
With a copy to: Xxxxx Xxxxxxx, Esq.
Xxxxxx Godward LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telecopy Number: (000) 000-0000
Confirmation Number: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx, LLP
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxxx, XX 00000-0000
Telecopy Number: (000) 000-0000
Confirmation Number: (000) 000-0000
SECTION 17. MORTGAGEE PROTECTION.
SECTION 17.1 ATTORNMENT. Tenant, including, without limitation, any
permitted assigns or successor to Tenant and any holder of a leasehold mortgage
granted by Tenant (collectively, the "Tenant Parties"), covenants and agrees
that, if by reason of a default
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upon the part of the Landlord in the performance of any of the terms and
conditions of any Facility Mortgage, the estate of Landlord thereunder is
terminated by summary disposition proceedings or otherwise, Tenant Parties will
attorn to the then Facility Mortgagee or the purchaser in such foreclosure
proceedings, as the case may be, and will recognize such Facility Mortgagee or
such purchaser as the Landlord under this Lease. Tenant Parties covenant and
agree to execute and deliver, at any time and from time to time, upon reasonable
request of Landlord or the holder of such mortgage or the purchaser in
foreclosure, any instrument which may be reasonably necessary to evidence such
attornment, subject to Tenant's receipt of a non-disturbance agreement from
Landlord's Facility Mortgagee in form reasonably required by such Facility
Mortgagee providing that Tenant's tenancy hereunder and Tenant's purchase
options under this Lease will not be disturbed so long as no Event of Default
exists under this Lease in the event of a default by Landlord and foreclosure
under the Facility Mortgage.
SECTION 17.2 ESTOPPEL STATEMENTS. The parties hereto shall, at any time
and from time to time upon not less than ten (10) days prior written notice from
the other party, execute, acknowledge and deliver to such other party, in form
reasonably satisfactory to such other party or to such other party's mortgagee,
a written statement certifying (if true) that this Lease is unmodified and in
full force and effect (or if there have been modifications stating the nature
thereof), that, to the best of such signer's knowledge, such other party is not
in default hereunder (or specifying the nature of any default), the date to
which rental and other charges have been paid and such other information as may
be reasonably required by such other party. It is intended that any such
statement delivered pursuant to this subsection may be relied upon by any
prospective purchaser or mortgagee of the Premises any permitted assignee of
this Lease or permitted sublessee and their permitted respective successors and
assigns.
SECTION 17.3 SUBORDINATION. This Lease and any permitted leasehold
mortgage encumbering Tenant's interest in the Lease shall, at the request and
option of the holder of any Facility Mortgage, be subordinated to the lien of
any Facility Mortgage; provided that as to any such lien recorded after the date
of this Lease such subordination shall only occur so long as Landlord shall
provide Tenant at Landlord's expense with a non-disturbance agreement from
Landlord's Facility Mortgagee in form reasonably required by such Facility
Mortgagee providing that Tenant's tenancy hereunder and Tenant's purchase
options under this Lease will not be disturbed so long as no Event of Default
exists under this Lease in the event of a default by Landlord and foreclosure
under the Facility Mortgage.
SECTION 17.4 RENT ASSIGNMENT. If from time to time Landlord assigns
this Lease or the rents payable hereunder to any person or entity, whether such
assignment is conditional in nature or otherwise, such assignment shall not be
deemed an assumption by the assignee of any obligations of Landlord and Tenant
shall comply with the terms of any such assignment so long as the same are not
inconsistent with the rights of Tenant hereunder; but the assignee shall be
responsible only for non-performance of Landlord's obligations which occur after
it succeeds to and only while it holds Landlord's interest in the Premises or is
a mortgagee in possession of the Premises.
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SECTION 17.5 NOTICE TO MORTGAGEE. No act or failure to act on the part
of Landlord which would entitle Tenant under the terms of this Lease, or by law,
to be relieved of Tenant's obligations hereunder or to terminate this Lease,
shall result in a release or termination of such obligations or a termination of
this Lease unless (i) Tenant shall have first given written notice of Landlord's
act or failure to act to each of the holders under any Facility Mortgage
specifying the act or failure to act on the part of Landlord which could or
would give basis to Tenant's rights, and (ii) such mortgage holder, after
receipt of such notice, has failed or refused to correct or cure the condition
complained of within a reasonable time thereafter; but nothing contained in this
SECTION 17.5 shall be deemed to impose any obligation on any such mortgage
holder to correct or cure any such condition. Tenant's obligation to send a
notice to Landlord's mortgagee in the preceding sentence shall be limited to
mortgagees of which Landlord has supplied Tenant with names and addresses.
"Reasonable time" as used above shall mean a period of not more than thirty (30)
days and shall include (but not be limited to) a reasonable time to obtain
possession of the Premises if the mortgagee elects to do so and a reasonable
time to correct or cure the condition if such condition is determined to exist.
The agreements in this Lease with respect to the rights and powers of a
mortgagee constitute a continuing offer to any such third party beneficiary
which may be accepted by taking a mortgage of the Premises.
SECTION 18. LANDLORD INSPECTION. Landlord may enter upon the Premises
during normal business hours and upon three (3) days prior written notice for
any purpose in its sole discretion; provided, that Landlord shall not
unreasonably interfere with Tenant's business operations.
SECTION 19. REPRESENTATIONS AND WARRANTIES.
SECTION 19.1 TENANT'S REPRESENTATIONS AND WARRANTIES. Tenant
represents, warrants and covenants to Landlord both as of the date hereof and as
of the Commencement Date as follows:
(a) Tenant is a Delaware limited liability company duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
(b) Tenant is, and during the entire time that this Lease remains in
force and effect shall be, engaged in no business, trade or activity on the
Premises other than the operation of the Facility for the primary intended use.
Balanced Care at Shippensburg, Inc. (the "Manager") or any other permitted
manager is, and during the entire time that this Lease remains in force and
effect shall be, engaged in no business, trade or activity on the Premises other
than the management of the Facility for its primary intended use.
(c) Tenant has full right and power to enter into, or perform its
obligations under this Lease, has taken all requisite action to authorize the
execution, delivery and performance of this
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Lease, and this Lease is enforceable against Tenant in accordance with its terms
and does not violate any agreement, operating agreement, decree or law by which
Tenant is bound.
(d) Except as set forth in Exhibit 19.1(d), the Real Property is not
subject to any agreement which will require Landlord to construct or install, or
cause to be constructed or installed, or bear the expense of liability thereof,
any improvements whatsoever outside the boundaries of the Real Property.
(e) The Real Property is free of all waste, debris, contamination, and
Hazardous Materials, and the Real Property is not now used nor in the past has
been used for the storage or dumping of any of the Hazardous Materials;
provided, however, if any such Hazardous Materials are discovered on the Real
Property, Tenant shall not be deemed in default hereunder because of the
existence of such Hazardous Materials so long as Tenant and/or any of the other
Indemnitors under that certain Environmental Indemnity Agreement dated the date
hereof (the "Environmental Indemnity Agreement") which has been delivered to
Landlord are remediating such Hazardous Material as required pursuant to such
Environmental Indemnity Agreement.
(f) There are no pending, or, to the knowledge of the Tenant,
threatened (i) condemnation proceedings affecting the Real Property, (ii)
investigations before or by any state or federal court or administrative agency
against the Tenant, the Manager, any of the Guarantors or the Facility or (iii)
litigation against the Tenant or the Real Property that in any respect, may
affect the Real Property, Tenant or the Facility; and, as of the Commencement
Date Tenant shall provide Landlord with a written list and explanation of any
such condemnation proceedings, investigations or litigation of which Tenant has
become aware prior to the Commencement Date.
(g) There are no violations of any law or ordinance, order or
requirement relating to the Real Property.
(h) Tenant has no knowledge of any circumstances that would limit
Landlord's ability, after compliance with (i) the various construction related
permits and approvals which have already been obtained by Tenant, (ii) the
applicable building code and (iii) any governmental regulations relating to a
personal care home providing assisted living services, to receive permits
authorizing construction and occupancy of a personal care home providing
assisted living services on the Real Property.
(i) There are no encroachments, easements or rights other than the
Permitted Encumbrances and those arising after the date of execution of this
Lease as permitted herein.
(j) All bills and claims for labor performed and materials furnished to
or for the benefit of the Real Property by or on behalf of Tenant for all
periods have been paid in full.
(k) The Real Property has legal access and there are no inoperable or
unavailable public utilities related to the Real Property, including but not
limited to, sanitary and storm sewers, solid waste disposal, gas and
electricity, water and telephone.
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(l) Tenant is not in violation of any agreement, the violation of which
might reasonably be expected to have a materially adverse effect on its business
or assets, and Tenant is not in violation of any order, judgment, or decree of
any state or federal court, or any statute or governmental regulation to which
it is subject.
(m) All financial statements heretofore or hereafter provided by the
Tenant, Manager, or the Guarantors are and will be true and complete in all
material respects as of their respective dates and fairly and will fairly
present the financial condition of the Tenant, Manager, or the Guarantors, as
the case may be, and there are, and will be, no liabilities, direct or indirect,
fixed or contingent, as of the respective dates of such statements which are not
reflected therein or in the notes thereto or in a written certificate delivered
with such statements. The financial statements of the Tenant have been and will
be prepared in accordance with GAAP. There has been no material adverse change
in the financial condition, operations, or prospects of the Tenant since the
dates of such statements previously provided except as fully disclosed in
writing with the delivery of such statements.
(n) Upon completion of the Facility pursuant to the Development
Agreement, the Facility will be duly licensed under the applicable laws of the
Commonwealth of Pennsylvania as a personal care home providing assisted living
services for 60 units. To the extent applicable, the Tenant and the Manager are
in compliance in all material respects with the requirements for the licensure
of the Improvements as a personal care home and issuance to the Manager of all
relevant permits or licenses to provide assisted living services at the Facility
and operate the same and all approvals for the Facility and applicable
provisions of personal care facility laws, rules, regulations and published
interpretations to which the Facility is subject. No waivers of any laws, rules,
regulations or requirements (including, but not limited to, minimum square
footage requirements per bed) are required for the existing Improvements to
operate at the foregoing licensed bed capacity. Tenant is in good standing with
the respective governmental, quasi-governmental and other third party payors and
regulatory agencies under such applicable licenses and any applicable
reimbursement contracts. Tenant is current in payment of all so-called provider
specific taxes or other assessments, if any, with respect to such reimbursement
contracts.
(o) The Tenant has not granted to any third party the right to reduce
the number of licensed beds in any Facility or to apply for approval to move the
right to any or all of the licensed beds to any other location.
(p) The Tenant has filed all federal, state, and local tax returns
which are required to be filed and has paid, or made adequate provision for the
payment of, all taxes which have or may become due pursuant to such returns or
to assessments received by Tenant, including, without limitation, provider
taxes, if any.
(q) The Security (as hereafter defined) constitutes a first lien upon
and security interest in all collateral described therein, prior to all other
liens, including those which may
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hereafter accrue. Tenant shall not be permitted to obtain any secured financing
with respect to the Security except for purchase-money or lease financing with
respect to Tenant's Equipment in the ordinary course of Tenant's business, or
subordinate unsecured financing, in form and substance satisfactory to Landlord
in its reasonable discretion, or as provided herein.
(r) The location of Tenant's principal place of business and chief
executive office are as set forth in SECTION 16 and Tenant shall notify Landlord
in writing at least thirty (30) days prior to any change in location of the
principal place of business and chief executive office.
(s) All information furnished or to be furnished by Tenant to the
Landlord in connection with the Lease or Development Agreement, is, or will be
at the time the same is furnished, accurate and correct in all material respects
and complete insofar as completeness may be reasonably necessary to provide the
Landlord a true and accurate knowledge of the subject matter.
(t) The ownership of all the beneficial interests of Tenant and Manager
for the Facility are fully and accurately set forth on EXHIBIT 19.1(t) hereto
and no change in such ownership shall occur except as permitted in this Lease.
(u) As of the date of the execution of the Lease, neither the
Improvements, the Real Property, the Tenant nor the Manager is in violation of
or subject to any existing, pending, or, to the knowledge of Tenant, threatened
investigation or inquiry by any governmental authority or any response costs or
remedial obligations under any applicable environmental laws, and this
representation and warranty would continue to be true and correct following
disclosure to the applicable governmental authorities of all relevant facts,
conditions and circumstances, if any, pertaining to the Improvements, the Real
Property, or the Tenant. Tenant has not obtained and is not required to obtain,
any permits, licenses or similar authorizations to construct, occupy, operate or
use any Improvements at the Real Property by reason of any Applicable
Environmental Law (except such permits, licenses and authorizations which have
been obtained or which are described in the legal opinion dated the date hereof
which was provided to Landlord by Tenant's counsel). No petroleum products, oil,
or Hazardous Materials or solid wastes have been disposed of or otherwise
released on or are otherwise located on the Real Property except those
customarily generated, stored and used in the operation of a personal care home
with assisted living services in accordance with all applicable laws and
regulations; provided, however, if any such materials are discovered on the Real
Property, Tenant shall not be deemed in default hereunder because of the
existence of the same so long as Tenant and/or the other Indemnitors under the
Environmental Indemnity Agreement are remediating such material as required
pursuant to such Environmental Indemnity Agreement. The use of the Real Property
as previously operated and hereafter intended to be operated by the Tenant will
not result in the location on or disposal or other release of any petroleum
products, oil, or Hazardous Materials or solid wastes on or to the Real Property
except those customarily generated, stored and used in the operation of a
personal care home with assisted living services in accordance with Applicable
Environmental Laws (as defined in the Environmental Indemnity Agreement). Tenant
agrees to permit Landlord to have access to the Facility and the Real Property
at all reasonable times upon
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prior notice to Tenant in order to conduct any investigation and testing which
Landlord deems necessary to ensure that Tenant, the Improvements, and the Real
Property are in compliance with all Applicable Environmental Laws. Tenant and
the Guarantors have entered into the Environmental Indemnity Agreement, and
Tenant agrees to perform its obligations thereunder.
(v) Tenant represents and warrants that it is solvent within the
meaning of 11 U.S.C. ss. 548 and GAAP, and the Lease will not render the Tenant
insolvent within the meaning of 11 U.S.C. ss. 548 and GAAP.
(w) Except as itemized in Exhibit 19.1(w) all licenses and permits and
regulatory approvals, including building permits, have been obtained to permit
construction of the Facility in accordance with the Plans and Specifications;
all public utility and public sanitary sewage services necessary for the
construction and use of the Facility are available to the Facility and Tenant
has received permission to make such use thereof as is necessary for
construction and to make permanent connections thereto upon substantial
completion; and dedicated and publicly maintained roads necessary for the full
use of the facility for their intended purposes have been completed to the Real
Property. Except as itemized in Exhibit 19.1(w)(1), there are no unsatisfied
conditions and no offsite roads, sewage systems, water systems or other
improvements which must be completed prior to issuance of a final unconditional
certificate of occupancy for the Facility once completed.
(x) All financial information heretofore furnished to the Landlord with
respect to the Tenant, Manager, the Guarantors and the Facility, is complete and
correct and fairly presents the financial condition of the Tenant, Manager,
Guarantors and the Facility, respectively. There are no liabilities, direct or
indirect, fixed or contingent, of the Tenant which are required to be disclosed
under GAAP except or with respect to the Facility as reflected therein or in the
notes thereto. There has been no material adverse change in the financial
condition or operations of the Tenant, Manager, Guarantors or the Facility since
the date of such financial information (and to the Tenant's knowledge, no such
material adverse change is pending or threatened), and the Tenant has not
guaranteed the obligations of, or made any investments in or advances to, any
person other than as expressly described and noted as a contingent liability in
financial statements provided to Landlord prior to the date hereof and approved
by Landlord in writing.
(y) In connection with the sale and purchase of the Real Property and
this Lease, neither party has dealt with any real estate broker, agent or
finder, and there is no other commission, charge or other compensation due on
account thereof other than a fee due to Hakman and Company, Incorporated
("Hakman"), which will be paid by Tenant. Landlord and Tenant expressly agree
that such fee shall not be part of Total Project Costs, and that Tenant shall be
solely responsible for the payment of such fee. Tenant agrees to indemnify and
hold Landlord harmless from and against any claims for any brokerage fee or
commission on account of this transaction by any person or entity, including
without limitation Hakman.
SECTION 20. SURRENDER. Upon Lease termination, Tenant shall quit and
surrender the Premises free and clear of all tenants, occupants, liens, and
encumbrances
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whatsoever except (i) Permitted Encumbrances and (ii) subleases entered into in
accordance with SECTION 15.4 AND 15.5 hereof, and (iii) encumbrances
restrictions or reservations caused by or consented to in writing by Landlord.
Tenant shall, surrender the Premises to Landlord broom clean and in good order,
condition and repair, reasonable wear and tear (and casualty and condemnation
damage; provided Tenant was not obligated to replace, repair and replace the
Premises or any portion thereof as provided in Sections 12 and 13 hereof)
excepted, with all Tenant's Equipment removed. Any of Tenant's Equipment which
is not removed from the Premises by the termination date shall be deemed
abandoned to Landlord and Landlord may dispose of the same as it sees fit, at
Tenant's expense. All alterations which Landlord approved shall become part of
the Premises and remain following surrender. Tenant shall repair any damage
caused by the removal of any alterations or any of Tenant's Equipment and
restore the Facility or the surface of the Real Property, as the case may be, to
substantially the condition in which it was prior to such removal.
SECTION 21. TENANT'S OPTION TO PURCHASE.
SECTION 21.1 CONDITIONS TO OPTION. On the conditions (which conditions
Landlord may waive, at its sole option, by notice to Tenant at any time) that
(a) at the time of exercise of the Purchase Option, there is no Event of Default
hereunder, and no fact or circumstance exists which constitutes or with the
passage of time, or giving of notice, or both could constitute a default and (b)
Tenant strictly complies with the provisions of this SECTION 21, then Tenant
shall have the option to purchase the Premises, at the price and upon the terms
hereinafter set forth (the "Purchase Option").
SECTION 21.2 EXERCISE OF OPTION. Beginning on the first day of the
forty-ninth (49th) full calendar month of the Lease Term and ending on the last
day of the fifty-sixth (56th) full calendar month of the Lease Term, the Tenant
shall have the option to purchase the Premises (or arrange for such purchase)
for an amount equal to the greater of: (i) the Total Project Cost or (ii) the
Net Economic Value (the "Purchase Price"). In the event Tenant decides to
purchase the Premises, Tenant shall within ten (10) days after determination of
the Purchase Price as set forth in this SECTION 21, deposit with Landlord a
nonrefundable Purchase Option deposit (the "Deposit") equal to three times the
monthly Base Rent for the month the Tenant exercises the Purchase Option, which
Deposit shall be held in escrow and applied to the Purchase Price or forfeited
to Landlord as provided in SECTION 21.11 below. Closing on the purchase shall
occur within ninety (90) days after the date Tenant exercises the Purchase
Option.
Upon closing on the purchase of the Premises as provided hereunder,
Tenant shall be entitled to receive a credit for fifty percent (50%) of the
Value Creation (as defined below) in the Premises. Landlord will give the Tenant
credit for 50% of the Value Creation on the settlement statement, as well as a
credit equal to the balances, if any, in any reserve accounts and escrow
accounts and a credit equal to any Excess Project Costs (as defined with respect
to Force Majeure in SECTION 17.2 of Exhibit B to the Development Agreement).
Value Creation is defined as the Purchase Price less the Total Project Cost less
the Letter of Credit Amount . The Letter of Credit Amount is defined as the
Letter of Credit (as defined below) less amounts returned to Tenant up
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to an amount not to exceed $__________. The Tenant shall purchase the Premises
in an "as is" condition, which title shall be good and marketable of record and
subject only to the Permitted Encumbrances plus subleases, encumbrances,
restrictions or reservations which were made or caused by Tenant or by Landlord
at the request of Tenant.
NET ECONOMIC VALUE. Net Economic Value is defined as the then-current
Appraised Value of the fee simple interest in the Premises less an amount of up
to 3% of such Net Economic Value which represents actual costs paid by the
Tenant relative to the exercise of the Purchase Option including but not limited
to commissions, management fees (not to exceed 5% of Operating Revenues (as
defined below)), legal fees, etc.
APPRAISAL PROCEDURE. The Appraised Value of the Premises for purposes
of calculating Net Economic Value of Premises shall be determined not more than
ninety (90) days prior to the date of closing on the purchase of the Premises.
To that end, Tenant and Landlord shall first attempt to agree in writing upon
the Appraised Value of the fee simple interest in the Premises. In the event
that Tenant and Landlord are unable to agree in writing upon the Appraised Value
of the Premises within ten (10) days, then Landlord shall appoint an Appraiser
(the "Landlord's Appraiser"), and Tenant shall appoint an Appraiser (the
"Tenant's Appraiser"). If the Appraised Value of the Premises as determined by
Landlord's Appraiser and the Appraised Value of the Premises as determined by
Tenant's Appraiser differ by ten percent (10%) or less, then the Appraised Value
of the Premises shall be determined by averaging the two appraisals. The
Appraisers chosen shall be MAI's and active in the business of appraisals for
facilities providing assisted living services.
If the appraisals differ by more than ten percent (10%), then
Landlord's Appraiser and Tenant's Appraiser shall mutually agree on a third
Appraiser (the "Mutual Appraiser") to determine the Appraised Value of the
Premises. If the Mutual Appraiser's determination of the Appraised Value of the
Premises shall be identical to the Appraised Value of the Premises as determined
by either the Landlord's Appraiser or the Tenant's Appraiser, then the Appraised
Value of the Premises as determined by the Mutual Appraiser shall be final and
shall be deemed to be the Appraised Value of the Premises. If the Appraised
Value of the Premises as determined by the Mutual Appraiser shall be different
than the Appraised Value determined by Landlord's Appraiser and the Appraised
Value determined by Tenant's Appraiser, then the Appraised Value of the Premises
shall be determined by selecting among the three Appraisals the two numerically
closest appraisals and then calculating the arithmetic mean thereof. If the
three appraisals shall differ by the same numerical amount, then the Appraised
Value of the Premises shall be determined by calculating the arithmetic average
of the three Appraisals.
Notwithstanding the foregoing, if Tenant notifies Landlord in writing
of its intention to exercise its Purchase Option and the price at which Tenant
would be willing to buy, Landlord will notify Tenant in writing within five (5)
business days after receipt of Tenant's notice either (i) that Landlord approves
the sale price; or (ii) that Landlord does not approve the sale price. If the
Landlord approves the sale price, then the Tenant may buy the Premises at the
price specified in its notice and such price shall be binding and conclusive on
the parties. If the Landlord does
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not approve the sale price, then the Tenant may initiate the appraisal process
as previously described to determine the Appraised Value for purposes of
calculating the Net Economic Value. The price approved by Landlord, or
established by the appraisal procedure set forth above shall be valid for a
period of not more than ninety (90) days from the date of Landlord's approval or
of the completion of the appraisal process.
SECTION 21.3 TENANT COOPERATION. In the event the Tenant does not
exercise the Purchase Option as provided in the preceding paragraph, Tenant
shall cooperate with Landlord in assuring the smooth transition of Premises
operations, licensing to Landlord, and unconditional assignment of all other
certificates and licenses necessary to the operation of the Premises which can
lawfully be assigned by Tenant to Landlord. Tenant, at Landlord's request and
at Landlord's sole cost and expense shall also assist Landlord in its
application for any and all other licenses and approvals necessary for Landlord
to operate the Premises as a personal care home with assisted living services.
Tenant appoints Landlord as Tenant's attorney-in-fact to execute and deliver
any instruments, documents or certificates necessary to transfer any licenses
or permits to Landlord or Landlord's designee to operate the Premises as a
personal care home providing assisted living services.
SECTION 21.4 CONVEYANCE. If the Purchase Option is exercised by
Tenant in accordance with the terms hereof, the Real Property and Improvements
shall be conveyed by a good and sufficient _________________ Deed (with
covenants against Grantor's acts) (the "Deed") and the Personal Property
shall be conveyed in a good and sufficient limited warranty Xxxx of Sale (with
covenants against grantor's acts) (the "Xxxx of Sale") each running to Tenant
or to such grantee as Tenant may designate by notice to Landlord at least seven
(7) days before the Time of Closing.
SECTION 21.5 PAYMENT OF PURCHASE PRICE. The Purchase Price less the
Deposit shall be paid by Tenant at the Time of Closing by certified, cashier's,
treasurer's or bank check(s) or wire transfer pursuant to instructions
received from Landlord at least twenty-four (24) hours prior to the Time of
Closing. Tenant shall be responsible for all conveyance, recording or transfer
stamps, fees or taxes.
SECTION 21.6 PLACE AND TIME OF CLOSING. If this Purchase Option is
exercised, the closing shall occur and the Closing Documents specified below
shall be delivered (the "Closing") at the office of Landlord at 12:00 o'clock
noon (E.S.T.) on the relevant Purchase Option Date (such time, as the same
may be extended by mutual written agreement of Landlord and Tenant, being
hereinafter referred to as the "Time of Closing"). It is agreed that time is of
the essence of this Purchase Option.
SECTION 21.7 CONDITION OF PREMISES. The Premises is to be purchased
'AS IS' and 'WHERE IS' as of the Time of Closing.
SECTION 21.8 QUALITY OF TITLE. If Landlord shall be unable to give
title or to make conveyance, as stipulated in this Section, then, at
Landlord's option, (i) Landlord
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may cure such failure at its expense or (ii) elect to have the Purchase Price
reduced by the effect on the Appraised Value of the Premises in the manner
established in this Section.
SECTION 21.9 MERGER BY DEED. The acceptance of the Deed and Xxxx of
Sale by Tenant or the grantee designated by Tenant, as the case may be, shall
be deemed to be a full performance and discharge of every agreement and
obligation to be performed by Landlord contained or expressed in this Lease.
SECTION 21.10 USE OF PURCHASE PRICE TO CLEAR TITLE. To enable
Landlord to make conveyance as provided in this SECTION 21, Landlord may, at
the Time of Closing, use the Purchase Price or any portion thereof to clear the
title of any lien, provided that all instruments so procured are recorded
contemporaneously with the closing or reasonable arrangements are made for a
recording subsequent to the Time of Closing in accordance with customary
conveyancing practices.
SECTION 21.11 TENANT'S DEFAULT. If Tenant delivers Tenant's Purchase
Option Notice and closing does not occur due to a default by Tenant, Tenant
shall thereafter have no further right to purchase the Premises pursuant to
this SECTION 21 and Landlord shall retain the Deposit although this Lease shall
otherwise continue in full force and effect.
SECTION 21.12 PRORATION OF BASE RENT. If the Purchase Option is
exercised by Tenant in accordance with the terms hereof, and the Closing shall
occur prior to the last day of any month of the Lease Term, then at the
Closing, the Base Rent paid by Tenant for such month shall be adjusted between
Landlord and Tenant as of the Time of Closing with the Tenant being entitled to
a credit from Landlord to be shown on the settlement statement in an amount
equal to the Base Rent attributable to any period from and after 12:00 midnight
of the day preceding the date of Closing.
SECTION 21.13 CLOSING DOCUMENTS. If the Purchase Option is exercised
by Tenant in accordance with the terms hereof, at the Closing, Landlord shall
deliver, or cause to be delivered, to Tenant the following documents, in
executed and where appropriate, acknowledged form:
(1) the Deed;
(2) the Xxxx of Sale;
(3) a Notice of Termination of the Lease in form
reasonably acceptable to Tenant;
(4) Affidavit(s) customarily required by title insurance
companies in the Commonwealth of Pennsylvania for the issuing of title insurance
protecting against parties in possession who obtained their rights from Landlord
and mechanics liens with respect to any
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mechanics who may have performed work or supplied materials to the Premises at
the direction of and on behalf of Landlord;
(5) Affidavit, certifying that Landlord is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code of
1986, as amended; and as that term is defined in the Foreign Investment and Real
Property Tax Act of 1980, as amended, and providing Landlord's U.S. Taxpayer
Identification Number; and
(6) Releases for any Facility Mortgage and any other
encumbrances which Tenant is not required to acquire title to as provided
herein.
SECTION 22. SECURITY.
(a) In order to secure the payment and performance of all of the
obligations hereunder, Tenant agrees to provide or cause there to be provided
the following security (the "Security"):
i) a first lien and exclusive security interest in the
Tenant's Equipment and receivables, as more particularly provided for in the
Security Agreement and Assignment of Lease, Rents and Receivables each of even
date herewith by Tenant to Landlord;
ii) a first lien and exclusive pledge and assignment of, and
security interest in, all Permits and Contracts, as more particularly provided
for in the Assignment of Contracts, Plans, Permits and Approvals of even date
herewith by Tenant to Landlord;
iii) an assignment and subordination of the Management
Agreement ("the Management Agreement") dated the date hereof between Tenant and
Manager, pursuant to the Assignment of Contracts, Plans, Permits and Approvals
and the Management Agreement Subordination Agreement each of even date herewith
by Tenant to Landlord;
iv) the Letter of Credit (as defined below);
v) the Mandatory Sweep Account (as defined below);
vi) the Developer's Fee and the other deposits and
escrows described herein; and
vi) the Guaranty.
SECTION 23. LETTER OF CREDIT. For purposes of the Lease the term
"Letter of Credit" is defined as the cash on deposit at Ocwen Federal Bank FSB
plus interest earned thereon or the irrevocable standby letter of credit
payable to Landlord for the benefit of Tenant (or any combination of the two)
in the amount of $_______ (the "Letter of Credit Maximum Amount") for a period
equal to two (2) years initially which, unless Stabilization shall
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have occurred prior to the initial expiration of such Letter of Credit, shall be
renewed until Stabilization or successive periods of 12 months whichever is
later (provided, however, after the Commencement Date any such renewal Letter of
Credit shall be required in the amount of the then unused balance and provided
further Landlord may draw the full amount available under a Letter of Credit if
same is not replaced as required hereunder within 10 days prior to expiration of
any expiring Letter of Credit). The Letter of Credit shall be in form and
substance, and from an issuer satisfactory to Landlord, deposited with Landlord
to secure all obligations hereunder and under the Development Agreement, the
payment of working capital and Pre-Stabilization Rent payments upon sight draft
by Landlord; provided, that no Event of Default exists hereunder. Working
capital in the MAXIMUM amount of $_______ may be made available by Landlord for
any expense to operate the Facility (other than Base Rent and Additional Rent)
and up to $200,000 may be used to fund pre-marketing and operational start-up
costs (the "Start-Up Costs") from the Letter of Credit during the
Pre-Stabilization Period to be disbursed by Landlord to Tenant in Landlord's
reasonable discretion. To the extent additional working capital is necessary,
Tenant shall provide written notice to Landlord requesting that additional funds
be made available from the Letter of Credit; provided that all such requests in
the aggregate do not exceed $______. Landlord shall review any such request and
shall have the right to require evidence or documentation from Tenant with
respect to such working capital expenses. Landlord shall have the right to
accept or reject any such request in its reasonable discretion. To the extent
Landlord rejects any request or such request exceeds the $______ limit or Tenant
has already exceeded the $______ limit, then Tenant will be required to fund the
working capital that is needed. To the extent the Letter of Credit is reduced
below an amount equal to the Letter of Credit Maximum Amount less the Start-Up
Costs at any time prior to the Commencement Date, Tenant shall be required to
deposit the shortfall in the form of cash to be held under the Assignment and
Pledge of Deposit Account agreement or a replacement Letter of Credit in the
amount of such shortfall on the same terms and conditions as and issued by the
same issuer as the Letter of Credit with Landlord on or before the Commencement
Date. The balance, if any, of Letter of Credit shall be returned to Tenant upon
achievement of Stabilization. In the event that at any time during the Lease
Term (i) the cash flow from the Premises for any month is insufficient to pay
scheduled Base Rent or Additional Rent, and (ii) scheduled Base Rent or
Additional Rent then due and payable is not otherwise paid by Tenant directly or
through a debit of the Mandatory Sweep Account under Section 24(a) or (b) then,
provided that no Event of Default shall have occurred, Landlord upon receipt of
a written direction from Tenant at least five (5) days prior to the payment
date, shall disburse to itself from funds then available under the Letter of
Credit an amount sufficient to pay the Base Rent or Additional Rent then due and
payable.
SECTION 24. CASH SWEEP; OPERATING DEFICIT LOANS; DEVELOPER'S FEE
(a) PRE-STABILIZATION PERIOD. All Excess Cash Flow (as defined below)
from the Premises (after the payment of monthly Base Rent and any Additional
Rent due) will be deposited into an interest bearing escrow account established
at Ocwen Federal Bank FSB within five (5) days of the end of each month (the
"Mandatory Sweep Account") pursuant to an
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Assignment and Pledge of Deposit Account Agreement between Tenant and Landlord
of even date. Except as provided below, Tenant shall have no right to withdraw
from the Mandatory Sweep Account prior to Stabilization. Provided there is no
Event of Default, upon achievement of Stabilization any balance, if any, in the
Mandatory Sweep Account shall be paid to the Tenant. Prior to the occurrence of
an Event of Default, the Tenant will calculate the Excess Cash Flow (after the
payment of monthly Base Rent and Additional Rent due) for the Premises and
deposit the same into the Mandatory Sweep Account. Following an Event of
Default, the Tenant will consent to and participate in a lockbox agreement with
Landlord for referral of all Premises revenues to a lockbox. On the date hereof,
the Tenant and the Landlord will execute a lockbox agreement to be held by
Landlord during the term of the Lease for its enforcement should an Event of
Default occur. In the event that at any time during the Lease Term (i) the cash
flow from the Premises for any month is insufficient to pay scheduled Base Rent
or Additional Rent and (ii) scheduled Base Rent or Additional Rent then due and
payable is not otherwise paid by Tenant, then, provided that no Event of Default
shall have occurred, Landlord, upon receipt of a written direction from Tenant
at least five (5) days prior to the payment date, shall disburse to itself from
funds then in the Mandatory Sweep Account an amount sufficient to pay the
scheduled Base Rent or Additional Rent then due and payable.
(b) STABILIZATION PERIOD
(1) In the event that the average Lease Payment Coverage Ratio
falls below 1.30 to 1.00 for any six calendar month period after Stabilization,
all Excess Cash Flow from the Premises (after the payment of monthly Base Rent
and Additional Rent due) will be deposited into the Mandatory Sweep Account
within five (5) days of the end of each month. Except as provided below, Tenant
shall have no right to withdraw from the Mandatory Sweep Account during any
period after Stabilization during which the Excess Cash Flow is being deposited
in such Mandatory Sweep Account. In the event that at any time during the Lease
Term (i) the cash flow from the Premises for any month is insufficient to pay
scheduled Base Rent or Additional Rent and (ii) scheduled Base Rent or
Additional Rent then due and payable is not otherwise paid by Tenant, then,
provided that no Event of Default shall have occurred, Landlord, upon receipt of
a written direction from Tenant at least five (5) days prior to the payment
date, shall disburse to itself from funds then in the Mandatory Sweep Account an
amount sufficient to pay the scheduled Base Rent or Additional Rent then due and
payable.
(2) Prior to an Event of Default, the Tenant will receive and
calculate the Excess Cash Flow for the Premises. Following an Event of Default,
the Tenant will consent, to and participate in a lockbox agreement with Landlord
for referral of all Premises revenues to a lockbox. On the date hereof, the
Tenant and the Landlord will execute a lockbox agreement to be held by Landlord
during the term of the Lease for its enforcement should an Event of Default
occur. On each anniversary of the Lease after Stabilization and at maturity, so
long as the Mandatory Sweep Account is not then in effect as provided in Section
24(b)(1) hereof and no Event of Default shall have occurred, any balance in the
Mandatory Sweep Account shall be paid to the Tenant.
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(3) The Lease Payment Coverage Ratio (the "Lease Payment
Coverage Ratio") is defined as Operating Revenues less the Operating Expenses
(all as defined in EXHIBIT 24(b)) for the Premises (excluding depreciation and
income taxes and including a maximum management fee of 5.0% of the Operating
Revenues, and scheduled reserves for the Premises, all in accordance with
generally accepted accounting principles) over scheduled monthly Base Rent. If
the average Lease Payment Coverage Ratio increases to or above 1.30 to 1.00 for
any consecutive 6 calendar month period, commencing 6 months immediately
following the commencement of the mandatory sweep, then the Excess Cash Flow
will become available to the Tenant. Excess Cash Flow shall be defined as
Operating Revenues LESS the Operating Expenses for the Premises (excluding
depreciation and income taxes and including a maximum management fee of 5.0% of
the Operating Revenues, and scheduled reserves for the Premises, all in
accordance with generally accepted accounting principles).
(c) OPERATING DEFICIT LOANS. Tenant and Balanced Care Corporation have
entered into an Shortfall Funding Agreement, dated the date hereof (the
"Shortfall Funding Agreement"), whereby Balanced Care Corporation shall provide
unlimited operating deficit loans ("Operating Deficit Loans") to Tenant to fund
any payments of Base Rent or Additional Rent or working capital requirements of
Tenant during the Lease Term. The Operating Deficit Loans shall be made after
the Letter of Credit and the Excess Cash Flow in the Mandatory Sweep Account
have been depleted. The Shortfall Funding Agreement provides that upon notice
from Landlord or Tenant to Balanced Care Corporation of (i) insufficient funds
to pay scheduled Base Rent or Additional Rent, and (ii) the depletion of the
Letter of Credit and Mandatory Sweep Account, Balanced Care Corporation shall
make an Operating Deficit Loan to Tenant within three (3) days of receipt of
such notice, the proceeds of which shall be disbursed directly to Landlord to
pay such Base Rent or Additional Rent. Balanced Care Corporation shall have a
leasehold mortgage on the Tenant's interest in the Lease to secure the Operating
Deficit Loans (the "Leasehold Mortgage" and together with the Shortfall Funding
Agreement, the Option Agreement and any other documents or instruments which
have been executed and delivered in connection with the Operating Deficit Loans
from Tenant to Balanced Care Corporation shall collectively be referred to
hereinafter as "Operating Deficit Loan Documents"). Tenant hereby agrees that
(i) Tenant shall not amend or modify the Operating Deficit Loan Documents
without the prior written consent of the Landlord and (ii) Tenant shall not make
any payments on account of the Operating Deficit Loans until all payments
required to be paid under this Lease by Tenant have been paid in full and except
as provided in the Subordination and Standstill Agreement, dated the date
hereof, by and among Tenant, Landlord and Balanced Care Corporation.
(d) DEVELOPER'S FEE. Tenant acknowledges that any unpaid portion of the
Developer's Fee as defined in the Development Agreement shall secure Tenant's
obligations hereunder and may be utilized by Landlord to remedy any Event of
Default. Upon Final Payment (as defined in the Development Agreement) by
Landlord, the unpaid balance of the Developer's Fee shall be paid. The
utilization of the Developer's Fee by Landlord to pay Base Rent or Additional
Rent shall be at Landlord's sole discretion.
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SECTION 25. DEFAULT. The occurrence of any of the events, acts or
circumstances described in this SECTION 25 shall constitute an Event of
Default under this Lease.
SECTION 25.1 EVENTS OF DEFAULT. Failure by Tenant to pay in full (i)
any Base Rent payable under this Lease within ten (10) days after the same is
due or (ii) any Additional Rent within ten (10) days after notice thereof
from Landlord.
SECTION 25.1.1 Failure by Tenant to comply, perform or observe any
covenant contained in SECTIONS 11 AND 15.
SECTION 25.1.2 Failure by Tenant to observe, perform or comply with any
of the terms, covenant, agreements or conditions contained in this Lease (other
than as set forth in SECTION 25.1.1) and the continuance of such failure for
thirty (30) days after Landlord has given Tenant written notice of such failure;
provided, however, that as to any failure which cannot with diligence be cured
within thirty (30) days, Tenant shall be entitled to an additional thirty (30)
days to cure such failure provided Tenant commences and diligently prosecutes
such cure at all times.
SECTION 25.1.3 The making by Tenant, Balanced Care Corporation, any of
the Guarantors or Manager of an assignment for the benefit of its creditors or
the commencement of proceedings in a court of competent jurisdiction for the
reorganization, liquidation or involuntary dissolution of such party or for the
adjudication of such party as a bankrupt or insolvent or for the appointment of
a receiver of the property of such party which, with respect to any involuntary
proceedings, are not dismissed and any receiver, trustee or liquidator appointed
therein is not discharged, within ninety (90) days after the institution
thereof.
SECTION 25.1.4 The abandonment of the Premises by Tenant other than as
a result of total condemnation.
SECTION 25.1.5 The failure to open the Facility for business within
thirty (30) days after the Commencement Date unless such failure is due to a
Major Casualty or Taking;
SECTION 25.1.6 A default by Tenant or any of the Guarantors under any
of the Transaction Documents beyond any applicable notice or grace period,
including, but not limited to the Development Agreement, the Guaranty or the
Management Agreement.
SECTION 25.1.7 Intentionally Omitted.
SECTION 25.1.8 Any certificate, statement, representation, warranty or
audit heretofore or hereafter furnished by or on behalf of the Tenant, or the
Guarantors pursuant to or in connection with this Lease or otherwise (including,
without limitation, representations and warranties contained herein or in any
Transaction Documents) or as an inducement to Landlord to extend any credit to
or to enter into this or any other agreement with Tenant or the Guarantors
proves to have been false in any material respect at the time when the facts
therein set forth were stated or
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certified, or proves to have omitted any substantial contingent or unliquidated
liability or claim against Tenant or any of the Guarantors, or on the date of
execution of this Lease there shall have been any materially adverse change in
any of the facts previously disclosed by any such certificate, statement,
representation, warranty or audit, which change shall not have been disclosed to
Landlord in writing at or prior to the time of such execution; or
SECTION 25.1.9 Facility (or the Tenant or the Manager with respect to
such Facility) should be assessed final non-appealable fines or penalties with
respect to the operation or maintenance of the Facility or the provision of
services to the residents of the Facility in excess of $25,000 in the aggregate
in any calendar year by any state or any licensing agency (or, to the extent
hereafter applicable, any reimbursement agency) having jurisdiction over Tenant,
any Manager or such Facility; or
SECTION 25.1.10 A final judgment in the amount in excess of $10,000
shall be rendered by a court of law or equity against Tenant or any of the
Guarantors and the same shall remain undischarged for a period of thirty (30)
days, unless such judgment is either (i) fully covered by collectible insurance
and such insurer has within such period acknowledged such coverage in writing,
or (ii) although not fully covered by insurance, enforcement of such judgment
has been effectively stayed, such judgment is being contested or appealed by
appropriate proceedings and Tenant or any of Guarantors, as the case may be, has
established reserves adequate for payment in the event Tenant or any of
Guarantors is ultimately unsuccessful in such contest or appeal and evidence
thereof is provided to Landlord; or
SECTION 25.1.11 The occurrence of any materially adverse change in the
financial condition of Tenant, any of the Guarantors or Balanced Care
Corporation which, in Landlord's reasonable determination, constitutes an
impairment of Tenant's, any of the Guarantors' or Balanced Care Corporation's
ability to perform its obligations under the Lease, the Guaranty or the
Operating Deficit Loan Documents, respectively.
SECTION 25.1.12 The involuntary, imposed or required revocation,
suspension, termination, probation, restriction, limitation or refusal to renew,
or pending, revocation, suspension, termination, probation, restriction,
limitation, of, or refusal to renew, any permit which materially affects the
ability of the Tenant or any Manager to operate the Facility as a personal care
home providing assisted living services in the absence of the submittal by
Tenant or the Manager of any corrective or remedial plan or appeal complying
with all applicable law, the effect of which is to stay any such revocation,
suspension, termination, probation, restriction, time limitation or refusal to
renew any Permit, or the issuance or pending issuance of any Permit for a period
of less than twelve (12) months as a consequence of any sanctions imposed by any
governmental authority; or the assessment or pending assessment, of any civil or
criminal penalties by any governmental authority, any third party payor or any
accreditation organization or person; or
SECTION 25.1.13 If the Department of Health and Human Services, Office
of Inspector General, any of its subsidiaries, affiliates, or any state agency
brings a claim, demand or cause of
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action against the Tenant, any of the Guarantors or the Manager for violation of
the Medicare/Medicaid Anti-Fraud and Abuse laws which would constitute grounds
for suspension or exclusion of the Tenant, any of the Guarantors or the Manager
from participation in the Medicare/Medicaid programs; or
SECTION 25.1.14 Notice of decertification is received by the Tenant or
any Manager, or the denial, termination, restriction, suspension, probation of
non-renewal of the Tenant's or Manager's participation in the Medicare or
Medicaid programs or any limitation thereof, including imposition of alternative
enforcement remedies such as appointment of temporary management, based on
conditions creating an immediate and serious threat to the residents' health and
safety, regardless of the filing or status of any appeal by Tenant or Manager;
or
SECTION 25.1.15 Notice of certification of the Tenant's non-compliance
with conditions of participation, or of the denial, termination, restriction,
suspension, probation or non-renewal of the Tenant's or any Manager's
participation in the Medicare or Medicaid programs or any limitation thereof,
including notice of the imposition of alternative enforcement remedies on the
basis of non-life threatening conditions; and (i) failure of Tenant or any
Manager to deliver or cause to be delivered to the Landlord within ninety (90)
days of receipt of such notice by Tenant or any Manager, a written notice from
the appropriate governmental authority indicating such decertification,
termination, restriction, suspension, probation or non-renewal of participation
or other adverse action has been fully and unconditionally rescinded; and/or
(ii) failure of the Tenant or any Manager to comply with any and all applicable
requirements of federal and state laws and regulations to qualify for
continuation of payment and participation in the Medicare or Medicaid programs
after receipt of the notice of certification of non-compliance, regardless of
Tenant's or any Manager's filing of any appeal or the status of any appeal.
SECTION 25.1.16 Any violation by Tenant, any of the Guarantors,
Manager, or Balanced Care Corporation of that certain Non-Compete Agreement by
and among Landlord and such parties of even date.
SECTION 25.1.17 (i) The Manager assigns, pledges or transfers in whole
or in parts its responsibilities under the Management Agreement, transfers any
interest in the Manager without Landlord's prior written consent to be granted
or withheld in Landlord's sole discretion, or (ii) the Management Agreement is
amended, terminated, supplemented or otherwise altered without Landlord's prior
written consent to be granted or withheld Landlord's sole discretion.
SECTION 25.1.18 An event of default or default beyond the expiration of
the applicable cure period shall occur under any other document or agreement
between Tenant or any Affiliate (as defined in the Development Agreement) of
Tenant and Landlord or any Affiliate (as defined in the Development Agreement)
of Landlord.
SECTION 25.1.19 A default or event of default beyond the expiration of
the applicable cure period shall occur under the Operating Deficit Loan
Documents.
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SECTION 25.1.20 Any default or breach of any obligation or agreement
under the Management Agreement Subordination Agreement or the Affiliated Party
Subordination Agreement, each dated the date hereof.
SECTION 26. LANDLORD'S REMEDIES: DAMAGES ON DEFAULT.
SECTION 26.1 In case of the occurrence of any Event of Default
hereinbefore provided, the Landlord shall have the immediate right of reentry,
and may remove all persons and property from the Premises by summary
proceedings, lawful force, or otherwise. In addition, in the event of the
occurrence of any Event of Default (whether or not Landlord shall elect to
reenter or to take possession pursuant to legal proceedings or pursuant to any
notice provided for by applicable laws), Landlord shall have the right, at its
option, to terminate this Lease (including the Purchase Option) on not less than
two (2) days' notice to Tenant and upon the giving of said notice, this Lease
and the term hereof shall cease and expire on the date set forth in said notice
as if said date were the expiration date originally set forth herein and or it
may from time to time, whether or not this Lease be terminated, make such
alterations and repairs as may be reasonably necessary in order to relet the
Premises or any part(s) thereof for such term or terms (which may extend beyond
the term of this Lease) and at such rental(s) and upon such other terms and
conditions as Landlord in its sole discretion may deem advisable; upon each such
reletting, all rentals received by the Landlord from such reletting shall be
applied, first, to the payment of any indebtedness (other than Rents due
hereunder) of Tenant to Landlord, second, to the payment of any costs and
expenses of such reletting, including, without limitation, brokerage fees (at no
greater than customary rates in the area in which the Premises is located) and
reasonable attorneys' fees, and of the cost of such alterations and repairs,
third, to the payment of Rents due and unpaid hereunder; and the residue, if
any, shall be held by Landlord and applied in payment of future rents and other
payments required to be made by Tenant hereunder as the same may become due and
payable hereunder, with the right reserved to Landlord to bring such action(s)
or proceeding(s) for the recovery of any deficits remaining unpaid without
obliged to await the end of the term for a final determination of Tenant's
account; and the commencement or maintenance of any one or more actions shall
not bar Landlord from bringing other or subsequent actions for further accruals
pursuant to the provisions of this Section. If such rentals received from such
reletting during any month are less than that to be paid during that month by
Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly subject to Landlord's right of
action(s) or proceeding(s) as aforesaid. No such reentry or taking possession of
the Premises by Landlord shall be construed as an election on its part to
terminate this Lease unless a written notice of such intention be given to
Tenant, or unless the termination thereof be decreed by a court of competent
jurisdiction. Notwithstanding any such reletting without termination, Landlord
may at any time thereafter elect to terminate this Lease for such previous
breach. Should Landlord at any time terminate this Lease for any breach, in
addition to any other remedies it may have, it may recover from Tenant all
damages it may incur by reason of such breach, in addition to any other remedies
it may have, as damages for loss of the bargain and not as a penalty, including
the cost of recovering the Premises, reasonable attorneys' fees, and including
the worth, at the time of such termination, of the excess, if any, of
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the amount of rental and charges equivalent to the rental and charges reserved
in this Lease for the remainder of the then term of this Lease, over the
aggregate rental value of the Premises for the remainder of such term, all of
which shall be immediately due the payable from Tenant to Landlord. If any
applicable laws shall validly limit the amount of the damages provided or in the
immediately preceding sentence to less than the amount above agreed upon,
Landlord shall be entitled to the maximum amount allowable under such laws. In
the event the Tenant does not comply with its obligations under this Lease,
Landlord shall also have the right to appropriate injunctive relief. The rights
and remedies, whether herein or anywhere else in this Lease provided, shall be
cumulative, and the exercise of any one right or remedy shall not preclude the
exercise of, or act as a waiver of, any other right or remedy of Landlord
hereunder, or which may be existing at law, or in equity, or by statute, or
otherwise. In addition to the foregoing, Tenant, and its successor and assigns,
shall at all times indemnify Landlord for, defend Landlord against, and save
Landlord harmless from, any liability, loss, cost, injury, damage, or other
expense or risk whatsoever, directly or indirectly, arising out of, resulting
from, or otherwise in connection with (i) the failure for any reason on the part
of Tenant to perform, observe, or comply with any of the covenant, conditions,
and obligations under this Lease to be performed, observed, or complied with by
Tenant, and/or (ii) the failure for any reason of any representation, warrant,
or covenant given by Tenant in connection with the execution of this Lease by
Landlord to be materially true, complete, and accurate, including, without
limitation, any representation, warranty, or covenant given or made by Tenant
under the Development Agreement, all of which representations, warranties, and
covenants are hereby incorporated by reference herein this Lease. This indemnity
shall survive termination of this Lease.SECTION 26.1 Subject to the provision of
Section 25.1.18 above, in case of the occurrence of any Event of Default
hereinbefore provided, the Landlord shall have the immediate right of reentry,
and may remove all persons and property from the Premises by summary
proceedings, lawful force, or otherwise. In addition, in the event of the
occurrence of any Event of Default (whether or not Landlord shall elect to
reenter or to take possession pursuant to legal proceedings or pursuant to any
notice provided for by applicable laws), Landlord shall have the right, at its
option, to terminate this Lease (including the Purchase Option) on not less than
two (2) days' notice to Tenant and upon the giving of said notice, this Lease
and the term hereof shall cease and expire on the date set forth in said notice
as if said date were the expiration date originally set forth herein and or it
may from time to time, whether or not this Lease be terminated, make such
alterations and repairs as may be reasonably necessary in order to relet the
Premises or any part(s) thereof for such term or terms (which may extend beyond
the term of this Lease) and at such rental(s) and upon such other terms and
conditions as Landlord in its sole discretion may deem advisable; upon each such
reletting, all rentals received by the Landlord advisable, upon each such
reletting, all rentals received by the Landlord from such reletting shall be
applied, first, to the payment of any indebtedness (other than Rents due
hereunder) of Tenant to Landlord, second, to the payment of any costs and
expenses of such reletting, including, without limitation, brokerage fees (at no
greater than customary rates in the area in which the Premises is located) and
reasonable attorneys' fees, and of the cost of such alterations and repairs,
third, to the payment of Rents due and unpaid hereunder; and the residue, if
any, shall be held by Landlord and applied in payment of future rents and other
payments required to be made by Tenant hereunder as the same may become due and
payable hereunder, with the right reserved to Landlord to bring such action(s)
or
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proceeding(s) for the recovery of any deficits remaining unpaid without
obliged to await the end of the term for a final determination of Tenant's
account; and the commencement or maintenance of any one or more actions shall
not bar Landlord from bringing other or subsequent actions for further accruals
pursuant to the provisions of this Section. If such rentals received from such
reletting during any month are less than that to be paid during that month by
Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly subject to Landlord's right of
action(s) or proceeding(s) as aforesaid. No such reentry or taking possession of
the Premises by Landlord shall be construed as an election on its part to
terminate this Lease unless a written notice of such intention be given to
Tenant, or unless the termination thereof be decreed by a court of competent
jurisdiction. Notwithstanding any such reletting without termination, Landlord
may at any time thereafter elect to terminate this Lease for such previous
breach. Should Landlord at any time terminate this Lease for any breach, in
addition to any other remedies it may have, it may recover from Tenant all
damages it may incur by reason of such breach, in addition to any other remedies
it may have, as damages for loss of the bargain and not as a penalty, including
the cost of recovering the Premises, reasonable attorneys' fees, and including
the worth, at the time of such termination, of the excess, if any, of the amount
of rental and charges equivalent to the rental and charges reserved in this
Lease for the remainder of the then term of this Lease, over the aggregate
rental value of the Premises for the remainder of such term, all of which shall
be immediately due the payable from Tenant to Landlord. If any applicable laws
shall validly limit the amount of the damages provided or in the immediately
preceding sentence to less than the amount above agreed upon, Landlord shall be
entitled to the maximum amount allowable under such laws. In the event the
Tenant does not comply with its obligations under this Lease, Landlord shall
also have the right to appropriate injunctive relief. The rights and remedies,
whether herein or anywhere else in this Lease provided, shall be cumulative, and
the exercise of any one right or remedy shall not preclude the exercise of, or
act as a waiver of, any other right or remedy of Landlord hereunder, or which
may be existing at law, or in equity, or by statute, or otherwise. In addition
to the foregoing, Tenant, and its successor and assigns, shall at all times
indemnify Landlord for, defend Landlord against, and save Landlord harmless
from, any liability, loss, cost, injury, damage, or other expense or risk
whatsoever, directly or indirectly, arising out of, resulting from, or otherwise
in connection with (i) the failure for any reason on the part of Tenant to
perform, observe, or comply with any of the covenant, conditions, and
obligations under this Lease to be performed, observed, or complied with by
Tenant, and/or (ii) the failure for any reason of any representation, warrant,
or covenant given by Tenant in connection with the execution of this Lease by
Landlord to be materially true, complete, and accurate, including, without
limitation, any representation, warranty, or covenant given or made by Tenant
under the Development Agreement, all of which representations, warranties, and
covenants are hereby incorporated by reference herein this Lease. This indemnity
shall survive termination of this Lease.
SECTION 26.2 RIGHT TO SELF HELP. If Tenant shall fail to fully
comply with any of its liabilities or obligations under this Lease (including,
without limitation those related to repairs, taxes, insurance and permits)
Landlord shall have the right, but shall not be obligated, to enter upon the
Premises and to perform such obligation notwithstanding the fact that no
specific provision for such substituted performance by Landlord
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is made in this Lease with respect to such Event of Default. If an Event of
Default under Section 25.1.12 hereof shall occur, then Landlord shall have the
right to submit on behalf of Tenant to any licensing authority a corrective or
remedial plan in order to stay a license revocation or similar proceeding and
the right to submit any documentation, certificate or instrument on behalf of
Tenant necessary to transfer any license or Operating Approvals to Landlord or
its designee and Tenant shall cooperate with Landlord so as to permit the smooth
operation of the Facility and Tenant hereby appoints Landlord its
attorney-in-fact for the purposes of this Section 26 only. In performing such
obligation, Landlord may make any payment of money or perform any other act. The
aggregate of (i) all sums so paid by Landlord, (ii) interest on such sums at the
"Lease Rate" (as defined herein) on the day on which demand for payment is made
by Landlord as hereinafter provided plus four percent (4%) per annum, and (iii)
all necessary incidental costs and expenses in connection with the performance
of any such act by Landlord, shall be deemed to be Rent under this Lease and
shall be payable to Landlord immediately upon demand. Landlord may exercise the
foregoing rights without waiving any other of its rights or releasing Tenant
from any of its obligations under this Lease.
SECTION 26.3 FURTHER REMEDIES. Except as otherwise provided in this
Lease, Landlord shall have the right to invoke any right and remedy allowed at
law or in equity or by statute or otherwise, and nothing in this Lease
shall require Landlord to elect any remedy for an Event of Default by Tenant
hereunder, and all rights herein provided shall be cumulative with one another
and with any other rights and remedies which Landlord may have at law or in
equity in the case of such an Event of Default. Landlord's remedies under this
Section 26 shall survive the early termination of this Lease.
SECTION 27. MISCELLANEOUS
SECTION 27.1 CAPTIONS. The captions in this Lease are for convenience
of reference only. In no way do those captions define, limit or describe the
scope or intent of this Lease.
SECTION 27.2 INTERPRETATION. Words showing number shall be taken to
include both the singular and the plural forms. Words showing gender shall be
taken to include masculine, feminine and neuter.
SECTION 27.3 SUCCESSORS AND ASSIGNS. Subject to the restrictions on
transfers set forth herein, this Lease shall inure to the benefit of and be
binding upon Landlord and Tenant and their respective successors and assigns.
The definition of "Landlord" and "Tenant" herein refer to the Landlord and
Tenant at the time in question. Any assignment by Landlord shall relieve
Landlord of all obligations hereunder; Tenant agreeing to look solely to
Landlord's successor as "Landlord" hereunder from and after such assignment.
SECTION 27.4. GOVERNING LAW. This Lease shall be governed, construed,
and enforced in accordance with the laws of the ____________________________.
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SECTION 27.5 ENTIRE AGREEMENT. This Lease and (i) any agreement that
has been entered into with regard to the funds to be escrowed or deposited with
Landlord as provided herein or (ii) any agreement that has been entered into to
secure Tenant's obligations hereunder represent the entirety of the agreement
among the parties hereto and shall be deemed to supersede any prior discussions
or agreements among the parties hereto. This Lease may not be amended or
modified except by written instrument signed by the parties hereto.
SECTION 27.6 WAIVER. The failure of either party to insist upon
strict performance of any of the covenants, agreements, terms and conditions of
this Lease in any one or more instances shall not be construed as a waiver or
relinquishment of any such covenant, agreement, terms, or condition and the
same shall remain in full force and effect.
SECTION 27.7 ATTORNEY'S FEE. In the event either party brings an
action to enforce any of the terms hereof or in connection herewith, the
prevailing party in such action shall be entitled to and the losing party
agrees to pay the reasonable attorneys' fees and expenses, including attorneys'
fees and expenses of appellate proceedings, of the prevailing party.
SECTION 27.8 MEMORANDUM. On the date hereof, (i) Landlord and Tenant
shall execute a Notice of Lease in a form attached as EXHIBIT 27.8A and Tenant
shall have the right to record the same in the __________ County Land Records,
(ii) Tenant shall execute on behalf of Landlord an Assignment of Leases, Rents
and Receivables in the form attached as EXHIBIT 27.8B and Landlord shall have
the right to record the same in such Land Records and (iii) Tenant shall
execute on behalf of Landlord Assignments of Leases, Rents and Receivables, as
required by Landlord, in the form attached as EXHIBIT 27.8C and Landlord shall
have the right to record the same in the applicable Land Records. Any leasehold
mortgagee of Tenant shall not record any leasehold mortgage until after the
said Notice of Lease and Assignment of Leases, Rents and Receivables has been
recorded. Tenant hereby appoints Landlord as Tenant's attorney-in-fact to
execute and deliver any instrument or document necessary to terminate such
Notice of Lease on the land records of _____________ County, Pennsylvania;
provided that Landlord shall only exercise such power of attorney upon the
occurrence of a Default under the Development Agreement or if any of the
conditions contained in Exhibit 2.1 hereof cannot be satisfied in the
reasonable judgment of Landlord and such power of attorney shall terminate upon
the occurrence of the Commencement Date hereunder. Tenant hereby agrees to
deliver to Landlord on the date hereof a fully executed copy of a Termination
of Memorandum of Lease to be held by Landlord's in house legal department in
escrow; provided, however, that Landlord shall have an automatic right to break
the escrow and record the same with the ____________ County Land Records
without any notice to Tenant upon the occurrence of a Default under the
Development Agreement or if any of the conditions contained in Exhibit 2.1
hereof cannot be satisfied in the reasonable judgment of Landlord. Upon
occurrence of the Commencement Date hereunder and provided Landlord has not
recorded the Termination of Memorandum of Lease, Landlord agrees to deliver
such Termination of Memorandum of Lease to Tenant.
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SECTION 27.9 UNENFORCEABLE PROVISION. Each term and provision of this
Lease shall be enforced to the fullest extent permitted by law. Should any term
or provision of this Lease, or the application thereof, prove illegal or
unenforceable, the remainder of this Lease shall still be valid and enforced.
SECTION 27.10 BROKER. Except as provided herein, Landlord and Tenant
each represent to the other that there are no claims for brokerage or other
commissions or finder's or other similar fees in connection with the
transactions contemplated by this Lease insofar as such claims shall be based
on arrangements or agreements made by or on behalf of the party so
representing.
SECTION 27.11 AMENDMENTS. Neither this Lease nor any provision hereof
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the parties hereto and approved in writing by
Landlord's Mortgagee if required under the terms of the Facility Mortgage.
SECTION 27.12 COUNTERPARTS. This Lease may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall comprise but a single instrument.
SECTION 27.13 APPLYING PROVISIONS. No provision of this Lease shall
be construed against or interpreted to the disadvantage of either Landlord or
Tenant by any court or other governmental or judicial authority by reason of
such party's having or being deemed to have structured, written, drafted or
dictated such provisions.
SECTION 17.14 TIME IS OF THE ESSENCE. Time is of the essence of this
Lease.
SECTION 27.15 RELATIONSHIP OF PARTIES. Nothing in this Lease shall be
construed to render or constitute Landlord in any way or for any purpose a
partner, joint venturer or associate in any relationship with Tenant other than
that as Landlord and Tenant, nor shall this Lease be construed to authorize
either party to act as agent for the other party except as expressly provided
to the contrary in this Lease.
SECTION 27.16. HOLDING OVER. If Tenant occupies the Premises after
the Lease expiration date without having entered into a new lease of the
Premises with Landlord (or otherwise obtaining Landlord's written consent to
remain), Tenant shall be a tenant-at-sufferance only subject to all of the
terms and provisions of this Lease except that, after a holdover of ten (10)
days after Lease expiration, the Base Rent shall be two hundred percent (200%)
of the Base Rent during the last Lease Year. Such a holding over, even if with
the consent of Landlord, shall not constitute an extension or renewal of this
Lease.
SECTION 27.17 NO TENANT TERMINATION OR OFFSET.
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SECTION 27.17.1 NO TERMINATION. Except as may be otherwise specifically
and expressly provided in this Lease, Tenant, to the extent not prohibited by
applicable law, shall remain bound by this Lease in accordance with its terms
and shall neither take any action without the consent of Landlord to modify,
surrender or terminate the same, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off against the Rent, nor
shall the respective obligations of Landlord and Tenant be otherwise affected by
reason of (a) any casualty or any taking of the Premises, (b) the lawful or
unlawful prohibition of, or restriction upon, Tenant's use of the Premises or
the interference with such use by any person (other than Landlord, except to the
extent permitted hereunder) or by reason of eviction by paramount title; (c) any
claim that Tenant has or might have against Landlord, under this Lease, any
other Transaction Document or any related party agreement, (d) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting Landlord or any assignee or transferee
of Landlord or (f) for any other cause whether similar or dissimilar to any of
the foregoing.
SECTION 27.18 No surrender to Landlord of this Lease or of the
Premises, or any part thereof, or of any interest therein, shall be valid or
effective unless agreed to and accepted in writing by Landlord and consented to
in writing by any and all Facility Mortgagees and superior lessors, and no act
or omission by Landlord or any representative or agent of Landlord, other than
such a written acceptance by Landlord, consented to as aforesaid, shall
constitute an acceptance of any such surrender.
SECTION 27.19 WAIVER. Tenant to the fullest extent not prohibited by
applicable law, hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(a) modify, surrender or terminate this Lease or quit or surrender the Premises
or (b) entitle Tenant to any abatement, reduction, suspension or deferment of
the Rent or other sums payable by Tenant hereunder, except as otherwise
specifically and expressly provided in this Lease.
SECTION 27.20 INDEPENDENT COVENANTS. The obligations of Landlord and
Tenant hereunder shall be separate and independent covenants and agreements and
the Rent and all other sums payable by Tenant hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease or (except in those instances
where the obligation to pay expressly survives the termination of this Lease) by
termination of this Lease other than by reason of an Event of Default.
SECTION 27.21 WAIVER OF JURY TRIAL. THE TENANT AND LANDLORD HEREBY
WAIVE ANY RIGHT THAT ANY OF THEM MAY HAVE TO A TRIAL BY JURY OF ANY CLAIM,
COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING OUT OF OR IN
ANY WAY RELATED TO THIS LEASE OR THE TRANSACTION DOCUMENTS, OR (B) IN ANY WAY
CONNECTED WITH OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF
LANDLORD AND/OR TENANT WITH RESPECT TO THE TRANSACTION DOCUMENTS OR THE CONDUCT
OR THE RELATIONSHIP OF THE PARTIES HERETO, IN ALL OF THE
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FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE. THE TENANT AND LANDLORD AGREE THAT THE OTHER
PARTY MAY FILE A COPY OF THIS LEASE WITH ANY COURT AS WRITTEN EVIDENCE OF THE
KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT OF TENANT AND LANDLORD
IRREVOCABLY TO WAIVE ITS RESPECTIVE RIGHTS TO TRIAL BY JURY AS AN INDUCEMENT OF
TENANT AND LANDLORD TO MAKE THIS LEASE, AND THAT, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY DISPUTE OR CONTROVERSY WHATSOEVER (WHETHER OR NOT MODIFIED
HEREIN) BETWEEN TENANT AND LANDLORD SHALL INSTEAD BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
SECTION 27.22 NO ARBITRATION. Landlord and Tenant hereby agree that no
claims or disputes between Landlord and Tenant arising out or relating to the
Lease or a breach thereof shall be decided by any arbitration proceeding
including, without limitation, any proceeding under the Federal Arbitration
Action (9 U.S.C. Sections 1-14), or any applicable state arbitration statute.
SECTION 27.23 CONSENT TO JURISDICTION. Landlord and Tenant hereby agree
that the United States District Court for the District of Pennsylvania or, to
the extent required by applicable law, any Pennsylvania State Court shall have
exclusive jurisdiction to hear and determine any claims or disputes between
Landlord and Tenant pertaining directly or indirectly to this Lease or the
Transaction Documents.
Section 27.24. CROSS DEFAULT AND CROSS COLLATERALIZATION. The Tenant
acknowledges and agrees that this transaction shall be cross-collateralized and
cross-defaulted to any transaction between Tenant or any Affiliate of Tenant and
Landlord or any Affiliate of Landlord and Landlord would not have consummated
this transaction without such assurance and understanding by Tenant. Tenant also
acknowledges and agrees that Landlord has relied upon such assurance and
understanding in consummating this transaction. Tenant agrees to execute and
deliver any and all such documentation, in form and substance satisfactory to
Landlord in Landlord's sole discretion, as Landlord may require with respect to
any such cross-collateralization and cross-default after the date hereof.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties hereby execute this Lease Agreement on
the day and year first written above.
WITNESS: LANDLORD:
________________________ ______________________
Name:
By: ____________________________
Name: _______________________________
Title: ____________________________
WITNESS: TENANT:
________________________ _____________________________________
Name:
By: Senior Care Operators, LLC, Manager
By: ____________________________
Name: _______________________________
Title: ____________________________
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