EXHIBIT 10.1
BROOK FACILITY LEASE
HEALTHCARE PROPERTIES, L.P., a Delaware limited partnership. with its
principal place of business at 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxx
00000 ("Lessor"), SENIOR MANAGEMENT SERVICES OF BENBROOK, INC., a Texas
corporation, with its principal place of business at 000 X. Xxxxx, Xxxxx 000,
Xxxxxxxxx, XX 00000 ("Operator"), and Xxxx Xxxxxxx, whose address is 000 X.
Xxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000 (the "Guarantor") agree as follows:
Recitals
WHEREAS, Lessor owns certain real property and improvements located at
0000 XxXxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx Xxxxxx, Xxxxx, more particularly
described in Exhibit A, comprising a nursing home licensed for 114 beds, _____
of which are certified for Medicaid, and related facilities (the "Facility")
(the Facility, together with all other personal property located therein and
thereat, and its replacements or additions, is hereinafter collectively, the
"Property"); and
WHEREAS, Operator desires to lease the Property from Lessor and Lessor
desires to lease the Property to Operator.
Agreements
NOW, THEREFORE, it is agreed that the occupancy of the Facility and the
use of the Property shall be subject to and in accordance with the terms,
conditions, and provisions of this Lease. As used herein, "Lease Year" shall
mean a twelve (12) month period commencing on the Commencement Date (as
hereinafter defined) and ending each anniversary date of the Commencement Date
thereafter, except that if the Commencement Date is other than the first day of
a calendar month, then the first Lease Year shall be the period from the
Commencement Date through the date twelve (12) months after the last day of the
calendar month in which the Commencement Date occurs, and each subsequent Lease
Year shall be the period of twelve (12) months following the last day of the
prior lease Year.
1. Lease Term. Except as expressly provided below, the term of this
Lease shall be for a period of five (5) years commencing on a date that is the
later to occur of (a) the date Operator files with the Texas Department of Human
Services a complete application for licensure and Medicaid certification or (b)
the date on which Arbor Living Centers of Texas, Inc.(which entity is currently
in bankruptcy), the party currently occupying the Facility, vacates the property
and delivers possession to Lessor or Operator (the later of such date being
referred to herein as the "Commencement Date"), on the terms and conditions set
forth in this Lease, and expiring on the last day to the fifth (5th) anniversary
of the Commencement Date, unless terminated earlier as provided for herein.
Notwithstanding anything contained herein to the contrary, if the Commencement
Date occurs on any date other than the first day of a calendar month, then the
term of the Lease shall commence on the Commencement Date and shall expire on
the fifth (5th) anniversary of the last day of the calendar month in which the
Commencement Date occurs, unless terminated earlier as provided for herein (the
"Initial Term"). When the Commencement Date has been determined, Lessor and
Operator agree to execute and deliver a written statement confirming the actual
Commencement Date. In the event that the Commencement Date has not occurred on
or before March 1, 2002, either Lessor or Operator may terminate this Lease by
delivering written notice to the other party at any time before the Commencement
Date occurs, and the parties shall have no liability to the other hereunder or
otherwise.
2. Security Deposit. Upon execution this Lease, operator will initially
pay to Lessor a deposit ("Security Deposit") of $71,820.00, which is in an
amount equivalent to the Minimum Monthly Rent for the last three (3) months of
the Initial Term. The Security Deposit shall be held by Lessor in an interest
bearing account, with interest to be added to the Security Deposit is it
accrues. In no event, however, shall Lessor be liable for the performance of
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such account or interest earned thereon. The Security Deposit shall be held as
security for the performance by Operator of its obligations under this Lease, it
being expressly understood that the Security Deposit shall not be considered an
advance payment of Minimum Monthly Rent (except as otherwise specifically
provided herein), any other rent hereunder, or a measure of Lessor's damages in
the event of Operator's default or upon termination of the Lease. Lessor may use
the Security Deposit to the extent necessary to cure any Default by Operator
hereunder. Following any such application of the Security Deposit, Operator
shall pay to Lessor, upon demand, the amount so applied in order to restore the
Security Deposit to its original amount. If Operator is not in default in its
obligations hereunder at the termination of the Lease, the Security Deposit (or
balance, if portions have been applied and not replaced) shall be returned by
Lessor to Operator within thirty (30) days following the expiration of the Lease
Term. In the event Healthcare Properties, L.P. transfers its interest in the
Building during the term of the Lease, and Healthcare Properties, L.P. assigns
the Security Deposit to its transferee, who specifically accepts Lessor's
obligations hereunder, Healthcare Properties, L.P. shall have no further
liability for the return of the Security Deposit.
3. Minimum Rent. Commencing on (a) the first (1st) day of the first
(1st) month of the Initial Term and continuing until the last day of the third
(3rd) month of the Initial Term, Operator will pay monthly on or before the
first (1st) day of each calendar month the sum of $18,000.00, (b) the first
(1st) day of the fourth (4th) month of the Initial Term and continuing until the
last day of the sixth (6th) month of the Initial Term, Operator will pay monthly
on or before the first (1st) day of each calendar month the sum of $21,000.00,
and (c) the first (lst) day of the seventh (7th) month of the Initial Term and
continuing until the expiration or earlier termination of this Lease, Operator
will pay monthly on or before the first (1st) day of each calendar month, the
sum of $23,940.00 ("Minimum Monthly Rent"). The Minimum Monthly Rent shall be
prorated for the first and last months of the term of this Lease.
4. Additional Rent. Additional Rent for the Property shall be
calculated as follows:
a. The "Revenue Base" shall be $205,348.00.
b. For each calendar month throughout the term of this Lease,
Lessor shall be entitled to Additional Rent in the amount of five percent (5%)
of the difference between Gross Monthly Revenue and the Revenue Base. Payments
of Additional Rent are to be paid within fifteen (15) days of the end of each
calendar quarter (i.e., the 15th days of April, July, October, and January),
with an appropriate payment made within fifteen (15) days of the termination or
expiration of this Lease. For purposes of this Lease, "Gross Monthly Revenue"
shall mean gross patient revenues relating to the Property and the services
provided thereon.
c. Notwithstanding subparagraphs a. and b. above, no Additional
Rent shall be due for the first six (6) months of the Lease Term.
5. Late Charge. For any rental payment not made by Operator within ten
(10) days after such payment is due, Operator will pay an additional "late
charge" payment of one (1.0%) percent of the monthly rental. This late charge
will not be construed as interest or penalty, but will be for the purpose of
reimbursing Lessor for extra bookkeeping and collection expenses incurred by
reason of such delinquency. All past due rental payments also will accrue
interest at the lesser of (a) the "prime rate" (as published in The Wall Street
Journal on the next business day after the due date of such rental payment) or
(b) the highest rate allowed by law. Except as otherwise provided in this Lease,
Operator will pay all rental payments without set-off or any other claim or
demand.
6. Place of Payment. All rental payments will be made to Lessor at
Lessor's address set forth above or at such other place as Lessor may designate
in writing.
7. Options for Extended Terms. Unless Operator has delivered written
notice to Landlord, at least six (6) months prior to the end of the Initial
Term, that it does not desire to renew this lease, then the term of this Lease
shall automatically be extended for one additional period of five (5) years (the
"Extended Term"), subject to the following conditions precedent:
a. The Lease has not been terminated during the Initial Term.
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b. Operator is not in default under the terms of the Lease
during the Initial Term.
The Extended Term will be upon the same terms, covenants and
conditions as provided in ,, this Lease for the Initial Term, other than Minimum
Monthly Rent, which will be increased to reflect the increase in the "Fixed
Capital Asset Fee Component" of the Texas Medicaid per diem reimbursement rate
from the Commencement Date to the fifth (5th) anniversary thereof (provided that
in no event shall such Minimum Monthly Rent be less than the Minimum Monthly
Rent for the Initial Term). The Minimum Monthly Rent for each year of. the
Extended Terms shall thereafter increase proportionately with the increase in
the Fixed Capital Asset Fee Component of the Texas Medicaid per diem
reimbursement rate during the prior Lease year (provided that in no event shall
such Minimum Monthly Rent be less than the Minimum Monthly Rent for the prior
Lease year).
8. License and Certifications. Operator shall promptly apply for,
procure, comply with all the requirements of, and keep in full force and effect,
all necessary licenses, permits, provider agreements, and certifications
required by any governmental authority for the purpose of maintaining and
operating the Facility as a Medicaid and Medicare certified nursing home, having
no less than 114 licensed beds, ____ of which are certified for Medicaid, and
such Facility shall at all times be qualified to participate in the Medicaid and
Medicare reimbursement programs. Notwithstanding the foregoing, Operator's
receipt of notice of its non-compliance with any such licenses, permits,
provider agreements, or certifications shall not be deemed a default under this
Lease provided that either (a) Operator contests such notice of non-compliance
in accordance with all of the terms, restrictions and conditions of Section 14,
or (b) Operator diligently proceeds to cure or correct any deficiencies set
forth in such notice of non-compliance, Operator promptly pays in full any fines
or penalties imposed in connection therewith, no lien or charges imposed against
the Property or any portion thereof as a result of such notice or any deficiency
noted thereon, all such licenses, permits, provider agreements, and
certifications remain in full force and effect, and there is no material adverse
affect on the financial condition or operations of the Facility. Lessor agrees
to reasonably cooperate with Operator, at Operator's expense, in obtaining any
licenses, authorizations, or certifications necessary or desirable for the
operation of the Facility. Upon written request from Lessor, Operator shall
provide evidence of all current licenses and certifications required for the
operation of the facility as a nursing home, including, but not limited to, the
most recent inspection reports and similar documents from the Texas Department
of Health and the Texas Department of Human Services (subject to no waivers,
variances, or violations concerning the improvements constituting any portion of
the Property, except for waivers or variances required by new regulations [or
changes in existing regulations] which have been "grandfathered" with respect to
the Property and do not adversely affect its current operations), and evidence
reasonably satisfactory to Lessor of compliance with all state, local, and
federal laws governing the operation of the Facility as a nursing home, as
required under the provisions of Section 12, below. Upon expiration or
termination of this Lease for any reason, Operator will return to Lessor the
Property, qualified and sufficient for licensing and certification by all
governmental agencies having jurisdiction over the Property as a Medicaid and
Medicare certified nursing home facility having no less than 114 licensed and
____ Medicaid certified beds, with licenses, certifications, and provider
agreements in full force and effect; provided, however, that Operator shall not
be required to make any repair or replacement to or of the Property upon
expiration or termination of the Lease to the extent that the law, order, rule,
or regulation requiring such repair or replacement was enacted or became
effective as to the Property or the operator thereof only after the expiration
or termination of the Lease and the Operator's vacation of the Facility. The
Property shall be surrendered in good order, condition and repair.
9. Net Lease. As an additional rental during the term of this Lease,
Operator will pay directly to the appropriate governmental authorities, subject
to proration as of the day of commencement and termination of the Initial Term
or the Extended Term all taxes and assessments levied against the Property or
any portion thereof, public utilities and related costs and expenses, insurance
premiums, expenses of operating, maintaining or repairing the Property, and any
other expenses or charges which are levied, assessed or imposed by any
governmental authority upon or with respect to, or incurred in connection with,
the possession, operation, alteration, maintenance; repair and use of the
Property. It is intended that this Lease shall be a "net lease" and will result
in a rental to be paid to Lessor, without additional costs to Lessor or
diminution or offset in the monthly rental set forth above. Operator will be
under no obligation, however, to pay interest or principal on any debt of Lessor
secured by the Property, any franchise or income tax payable by Lessor, any
gift, inheritance, transfer, estate or succession tax by reason of any present
or future law which may be enacted during the term of this Lease.
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10. Utilities. Operator will contract in its own name and pay all
charges for water, gas, sewer, electricity, light, heat, air conditioning,
power, telephone, waste removal or other services used by, rendered or supplied
to Operator in connection with the Facility.
11. Maintenance and Repairs.
a. Operator, at its sole cost and expense and without
obligation on the part of Lessor, will keep and maintain the Property in good
and sanitary order, condition and repair, including structural and
nonstructural, foreseen and unforeseen, repairs and replacements, and will paint
the interior and exterior of the buildings throughout the term of this Lease,
reasonable wear and tear excepted, all as are necessary to maintain the quality
of the Property. In the event any such repairs and replacements are covered by
any warranties or guarantees in favor of Lessor, Lessor will cooperate with
Operator to the end that such replacements and repairs are made either without
cost or at the least cost possible under the circumstances. Except with the
prior written consent of Lessor, which consent will not be withheld or delayed
unreasonably, Operator will make such repairs or replacements without creating
alien or security interest in or against the Property.
b. All replacing, repairing, and restoring required of
Operator shall be new and, in the reasonable opinion of Lessor, of good and
workmanlike quality, and shall be in compliance with all standards and
requirements of law, licenses, and municipal ordinances necessary to operate the
Facility as a Medicaid and Medicare certified nursing home facility having no
less than 114 licensed and ____ Medicaid certified beds. All Property that is
uneconomical to repair shall be replaced by new items of good and workmanlike
quality and all replacement items shall become part of the Property. None of the
Property shall be removed from the Facility except in connection with repair or
replacement of such items. Operator may, from time to time, place at the
Facility such personal property as is owned by Operator to the extent it
consists of facsimile machines, photocopiers, computer software, computer
printers, or other computer hardware, or items of a like nature. Within 60 days
of the Commencement Date, Operator shall provide Lessor with a list of all such
property and, thereafter, Operator shall notify Lessor in writing, within 60
days after the commencement of each Lease year, of any additional such items
owned by Operator placed at the Facility during such calendar year. Any such
property not removed from the Facility within 10 days after the expiration or
termination of this Lease shall become the exclusive Property of Lessor and
Lessor may thereupon use or dispose of such property as it determines in its
sole discretion.
c. To provide for major maintenance and repairs, operator
agrees to include in its annual operating budget sufficient monies to pay for
all reasonably expected maintenance and repairs contemplated hereunder
12. Compliance with Laws. Operator, at its sole cost and expense, will
observe and comply promptly with all laws, orders, regulations, rules,
ordinances, and requirements of federal, state, county and local governments and
of all of their administrative departments, bureaus and officials, the local
fire insurance rating organization, and of all insurance companies writing
policies covering the Property, whether such laws, orders, regulations, rules or
requirements relate to structural repairs, changes or alterations to or in and
about the Facility or any buildings or improvements thereon or to repairs,
changes or alterations incident to or resulting from any use or occupancy of the
Facility by Operator, whether they are now in force, or at any time in the
future may be enacted or directed (provided that any waiver Operator may obtain
from any of the foregoing governmental entities shall constitute substantial
compliance, and further provided that if such waiver concerns the improvements
constituting any portion of the Property, it must be the result of new
regulations {or changes in existing regulations] which have been
"grandfathered"). Operator shall pay all costs, expenses, claims, fines,
penalties and damages that may arise out of or be imposed as a result of the
failure of Operator to comply with this Section_ Operator will operate the
Property in accordance with all applicable regulations regarding qualification
for Medicaid, Medicare, and Vocational Rehabilitation (if applicable) payments
and reimbursements, if Operator elects to operate the Property pursuant to the
Vocational Rehabilitation programs.
13. Mechanics' Liens. Operator will have no power to subject the
Property or Lessor's interest in the Property to any mechanics' or other liens.
If any mechanics' or other liens or orders for the payment of money are filed
against the Property or any building or improvement thereon by reason of or
arising out of any labor or material furnished or alleged to have been furnished
or to be furnished to or for Operator at the Facility, or for or by reason of
any change, alteration or addition, or the cost or expense thereof, or any
contract relating thereto, Operator will cause the same to be canceled and
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discharged of record, by bond or otherwise as allowed by law at the expense of
Operator, within thirty (30) days after written demand, and also will defend on
behalf of Lessor at Operator's sole cost and expense, any action, suitor
proceeding which may be brought for the enforcement of such liens or orders, and
Operator will pay any damages and satisfy and discharge any judgment entered
therein and save and bold Lessor harmless from any claim or damage resulting
therefrom. Failure to comply with this Section will constitute an event of
default under Section 24 below upon the expiration of said demand without any
additional notice.
14. Good Faith Contesting. Operator, after notice to Lessor, by
appropriate proceedings conducted promptly at its own expense and in its name
(or when necessary, Lessor's name), may contest in good faith the validity or
enforcement of any such law, ordinance, governmental rule, regulation,
requirement, order, taxes, utilities or mechanic liens referred to in Sections
8. 9. 10. 12 and 13, above, and 23, below, and may defer compliance therewith
provided that (i) such noncompliance will not constitute a crime on the part of
Lessor, (ii) Operator will prosecute diligently such contest to final
determination by a court, department or governmental authority or body having
final jurisdiction, and (iii) Operator will furnish Lessor with such security,
by bond or otherwise, as Lessor reasonably may request in connection with such
contest. Lessor will cooperate reasonably with Operator, and will execute any
documents or pleadings reasonably required for the purpose of any such contest,
provided that Operator will discharge any expense or liability of Lessor in
connection therewith.
15. Surrender at End of Term.
a. Operator will surrender and deliver the Property to Lessor
at the expiration or earlier termination of this Lease (including the Extended
Term) in good repair and condition, reasonable wear and tear excepted. If
Operator shall continue to hold any property after the termination of this
Lease, whether the termination occurs by lapse of time or otherwise, such
holding over shall, unless otherwise agreed by Lessor in writing, constitute and
be construed as a tenancy-at-will at a daily rental equal to one-thirtieth
(1/30th) of an amount equal to two (2) times the amount of the monthly minimum
rent plus two (2) times any additional rental which may have accrued during the
last calendar month prior to the termination of this Lease, and upon and subject
to all the other terms, provisions, covenants and agreements set forth herein
except the right, if any, at that time, to renew the term of this Lease or the
option, if any, shall exist at such time, to purchase the Property, or any
similar rights, provisions or options. In addition to such rent, Operator shall
be liable to Lessor for all damages sustained by Lessor in connection with such
holding over.
b. For purposes of this subparagraph, the date on which this
Lease either terminates or expires pursuant to its terms shall be referred to as
the "Closing Date." On the Closing Date, this Lease shall be deemed and
construed as an absolute assignment for purposes of vesting in Lessor (or its
designee) all of Operator's right, title, and interest in and to the following
intangible property which is now or hereafter used in connection with the
operation of the Facility (the "Intangibles") and an assumption by Lessor of
Operator's obligations under the Intangibles from and after the Closing Date;
provided that, from and after the Closing Date, Operator shall indemnify,
defend, and hold Lessor harmless from and against any and all claims, losses,
costs, damages, and expenses (including reasonable attorneys' fees) incurred or
arising by reason of Operator's obligations under the Intangibles prior to the
Closing Date:
i. To the extent assignable, service contracts and
equipment leases for the Property, and which can be terminated without
penalty by Operator within 60 days or less notice, or which Lessor
requests be assigned to Lessor pursuant to this Section 15;
ii. To the extent assignable by Operator, any
provider agreements with Medicare, Medicaid, or any other third-party
payor programs (excluding the rights to any reimbursement for periods
prior to the Closing Date) entered into in connection with the
Facility;
iii. All existing agreements with residents (and
any guarantors thereof) of the Facility, to the extent assignable by
Operator (excluding the right to any payments for periods prior to the
Closing Date) and any and all patient trust fund accounts; and
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iv. At Lessor's option, the business of Operator as
conducted at the Facility as a going concern, including, but not
limited to, the name of the business conducted thereon and all
telephone numbers presently in use therein, but excluding any
trademarks, tradenames, and brands of Operator, other than the name of
the Facility.
x. Xxxxxx shall be responsible for and pay all accrued
expenses with respect to the Property accruing on or after the Closing Date and
shall be entitled to receive and retain all revenues from the Property accruing
on or after the Closing Date. Within 15 business days after the Closing Date,
the following adjustments and prorations shall be determined as of the Closing
Date:
i. All taxes relating to the Properly, including ad
valorem taxes, real property assessments, personal property taxes,
intangible and use taxes, and other like taxes and assessments. if the
information as to the actual amount of any of the foregoing taxes and
assessments are not available for the tax year in which the Closing
Date occurs, the proration of such taxes and assessments shall be
estimated based upon reasonable information available to the parties,
including information disclosed by the local tax office or other public
information, and an adjustment shall be made between the parties when
actual figures become available;
ii. Operator will terminate the, employment of all
employees on the closing date and shall be and remain liable for any
and all wages, accrued vacation, and sick leave pay for employees of
the Facility with respect to the period prior to and including the
Closing Date;
iii. Lessor shall receive a credit equal to any
advance payments by patients at the Facility to the extent attributable
on and after the Closing Date;
iv. The present insurance coverage on the
Property shall be terminated as of the Closing Date and there shall be
no proration of insurance premiums;
v. All other income from, and expenses of, the
Facility (other than mortgage payments) including, but not limited to,
public utility charges and deposits, maintenance charges, and service
charges, shall be prorated between Operator and Lessor as of the
Closing Date. Operator shall obtain final utility meter readings as of
the Closing Date. To the extent that information for any such proration
is not available, the parties shall effect such proration within 60
days following the Closing Date;
vi. Operator shall be and remain responsible for any
employee severance pay and accrued benefits which may be payable as a
result of any termination of an employee's employment on or prior to
the Closing Date.
d. All necessary arrangements shall be made to provide
possession of the Property to Lessor on the Closing Date, at which time of
possession Operator shall deliver to lessor all medical records, patient records
and other personal information concerning all patients residing at the Facility
as of the Closing Date and other relevant records used or developed in
connection with the business conducted at the Facility, but excluding any
trademarks, tradenames and brands of Operator, other than the name of the
Facility. Such transfer and delivery shall be in accordance with all applicable
laws, rules and regulations concerning the transfer of medical records and other
types of patient records.
e. For the period commencing on the Closing Date and ending on
the date Lessor, or its designee, obtains any and all appropriate state or other
governmental licenses and certifications required to operate the Facility,
Operator hereby agrees that Lessor, or Lessor's designee, shall have the right,
but not the obligation, to manage and operate the Facility, on a triple net
basis, and shall be entitled to all revenues of the Facility during such period,
and to use any and all licenses, certifications and provider agreements issued
to Operator by any federal, state or other governmental authority for such
operation of the Facility, if permitted by any such governmental authorities. If
Lessor or its designee exercises the right described above in this Section 15,
the provisions of this Section 15 shall be self-operative and shall constitute a
management agreement between Operator, on the one hand, and Lessor or its
designee, on the other hand, on the terms set forth above in this Section 15;
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provided, however, that upon the request of Lessor or its designee, Operator
shall enter into a separate management agreement on the terms set forth in this
Section 15 and on such other terms and provisions as may be specified by Lessor
or its designee.
f. Operator shall provide Lessor with an accounting within 15
days after the Closing Date of all funds belonging to patients at the Facility
which are held by Operator in a custodial capacity. Such accounting shall set
forth the names of the patients for whom such funds are held, the amounts held
on behalf of each such patient and Operator's warranty that the accounting is
true, correct and complete. Additionally, Operator, in accordance with all
applicable rules and regulations, shall make all necessary arrangements to
transfer such funds to a bank account designated by Lessor, and Lessor shall in
writing acknowledge receipt of and expressly assume all Operator's financial and
custodial obligations with respect thereto. Notwithstanding the foregoing,
Operator will indemnify, defend and hold Lessor harmless from all liabilities,
claims and demands, including reasonable attorneys' fees, in the event the
amount of funds, if any, transferred to Lessor's bank account as provided above,
did not represent the full amount of the funds then or thereafter shown to have
been delivered to Operator as custodian that remain undisbursed for the benefit
of the patient for whom such funds were deposited, or with respect to any
matters relating to patient funds which accrued during the term of this Lease.
g. All cash, checks and cash equivalent at the Facility and
deposits in bank accounts (other than patient trust accounts) relating to the
Facility on the Closing Date shall remain Operator's property after the Closing
Date. Subject to the provisions of Section 24(g) hereof, all accounts
receivable, loans receivable and other receivables of Operator, whether derived
from operation of the Facility or otherwise, shall remain the property of
Operator after the Closing Date. Operator shall retain full responsibility for
the collection thereof. Lessor shall assume responsibility for the billing and
collection of payments on account of services rendered by it on and after the
Closing Date. In order to facilitate operator's collection efforts, Operator
agrees to deliver to Lessor, within a reasonable time after the Closing Date, a
schedule identifying all of those private pay balances owing for the period
prior to the Closing Date and Lessor agrees to apply any payments received which
are specifically designated as being applicable to services rendered prior to
the Closing Date to reduce the pre-Closing Date balances of said patients by
promptly remitting said payments to Operator. All other payments received shall
be retained by Lessor as being applicable to services rendered after the Closing
Date. Lessor shall, at no cost to Lessor, cooperate with Operator in Operator's
collection of its preclosing account receivable. Lessor shall have no liability
for uncollectible receivables and shall not be obligated to bear any expense as
a result of such activities on behalf of Operator. Subject to the provisions of
Section 24(g) hereof, Lessor shall remit to Operator or its assignee those
portions of any payments received by Lessor which are specifically designated as
repayment or reimbursement arising out of cost reports filed for the cost
reporting periods ending on or prior to the Closing Date.
h. With respect to residents at the Facility on the Closing
Date, Lessor and Operator agree as follows:
i. With respect to Medicare and Medicaid residents,
Lessor and Operator agree that, subject to the provisions of Section
24(g), payment for in-house residents covered by Medicare or Medicaid
on the Closing Date will be made (on a per diem basis) by Medicare or
Medicaid under current regulations directly to Operator for services
rendered at the Facility prior to the Closing Date. Said payments shall
be the sole responsibility of Operator and Lessor shall in no way be
liable therefor. After the Closing Date, Lessor and Operator shall each
have the right to review supporting books, records and documentation
that are in the possession of the other relating to Medicaid or
Medicare payments.
ii. If, following the Closing Date, Lessor receives
payment from any state or federal agency or third party provider which
represents reimbursement with respect to services provided at the
Property prior to the Closing Date, Lessor agrees that, subject to the
provisions of Section 24(g), it shall remit such payments to Operator.
Payments by Lessor to Operator shall be accompanied by a copy of the
appropriate remittance.
i. In addition to the obligations required to be performed
hereunder by Operator and Lessor on and after the Closing Date, Operator and
Lessor agree to perform such other acts, and to execute, acknowledge, and/or
deliver subsequent to the Closing Date such other instruments, documents and
materials, as the other may reasonably request in order to effectuate the
consummation of the transaction contemplated herein.
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j. Operator for itself, its successors and assigns hereby
indemnifies and agrees to defend and hold Lessor and its successors and assigns
harmless from any and all claims, demands, obligations, losses, liabilities,
damages, recoveries and deficiencies (including interest, penalties and
reasonable attorneys' fees, costs and expenses) which any of them may suffer as
a result of the breach by Operator in the performance of any of its commitments,
covenants or obligations under this Section 15, or with respect to any suits,
arbitration proceedings, administrative actions or investigations which relate
to the use by Operator of the Facility during the Lease Terms or for any
liability which may arise from operation of the Facility as a nursing home
during the Lease Term, including without limitation, any amounts due or to be
reimbursed to any governmental authority based upon any audit or review of
Operator or of the Facility or the operation thereof and pertaining to the
period prior to the Closing Date or any amounts recaptured under Title XIX based
upon applicable Medicaid/Medicare recapture regulations. The rights of Lessor
under this subsection j are without prejudice to any other remedies not
inconsistent herewith which Lessor may have against Operator pursuant to the
terms of this Lease. The foregoing indemnity shall survive the expiration or
termination of this Lease, whether due to lapse of time or otherwise.
k. So long as the termination of this Lease is not due to a
default by Operator hereunder and provided further that Operator has performed
in accordance with Section 1 herein, Lessor for itself, its successors and
assigns hereby indemnifies and agrees to defend and hold Operator and its
successors and assigns harmless from any and all claims, demands, obligations,
losses, liabilities, damages, recoveries and deficiencies (including interest,
penalties and reasonable attorneys' fees, costs and expenses) which any of them
may suffer as a result of the breach by Lessor in the performance of any of its
commitments, covenants or obligations under this Section 15, or with respect to
any suits, arbitration proceedings, administrative actions or investigations
which relate to the use of the Property after the Lease Term or for any
liability which may arise from operation of the Facility as a nursing home after
the Lease Term. The rights of Operator under this paragraph are without
prejudice to any other remedies not inconsistent herewith which Operator may
have against Lessor pursuant to the terms of this Lease or otherwise.
x. Xxxxxx shall have the right to offset against any monies
due Operator pursuant to the terms of this Section 15, any amounts due by
Operator to Lessor pursuant to this Lease or due by Operator to any third party,
including without limitation any amounts due for taxes, utilities, unemployment
insurance premiums, payroll obligations or any other obligation arising from the
operation of the Facility.
m. Anything to the contrary contained in this Section 15
notwithstanding, in the event the termination of this Lease is due to a default
by Operator hereunder, none of the provisions of this Section 15 shall in any
way limit, reduce, restrict or modify the rights granted to Lessor herein, and
to the extent any monies are due to Operator pursuant to this Section 15, such
sums shall be applied by Lessor to any damages suffered by Lessor as a result of
Operator's default hereunder.
16. Inspection. Operator will permit Lessor and its agents to enter
upon and inspect the Property at reasonable hours upon reasonable notice.
17. Indemnification. Operator will indemnify, defend (with counsel
acceptable to Lessor), and hold Lessor harmless from all liability, damages,
costs and expenses, including but not limited to reasonable attorney's fees, for
anything and everything whatsoever arising from or out of the occupancy of the
Facility by or under Operator, Operators agents or employees (other than that
arising from the negligence or acts or omission of Lessor or its agents or
employees) and from any loss or damage arising from any fault or negligence by
Operator or any failure on the part of Operator to comply with any of the
covenants, terms and conditions contained in this Lease.
18. Insurance.
a. Operator, at its sole cost and expense, will insure and
keep insured with responsible insurance companies authorized to do business in
the jurisdiction in which the Facility is located, the Property and all
alterations, extension, and improvements thereto mid replacements thereof,
against loss or damage by fire and the risks contemplated within the extended
coverage endorsement (as such endorsement in the broadest form may customarily
be written in such jurisdiction from time to time) and against such other risks
as may be reasonably required by Lessor all in such amounts and with such
deductibles as may be reasonably required by Lessor or by any lender holding a
mortgage superior to this Lease, but in no event in an amount less than an
amount which, if the Property were substantially or totally destroyed, would
provide sufficient proceeds to completely repair or replace the Property, as
such amounts may change from time to tune. Operator will pay the premium for
Page 8
such insurance as it becomes due and will deliver to Lessor insurance
certificates evidencing the existence of all such policies of insurance. All
policies of fire and other insurance will be for the benefit of, and with loss
payable to Lessor, Operator and any lender holding a mortgage superior to this
Lease, as their interests may appear. The interest of any such lender will be
covered by the standard mortgagee endorsement used in the jurisdiction in which
the Facility is located.
b. In the event any buildings at the Facility are damaged or destroyed
during the term of the Lease, subject to the consent of any lender holding a
mortgage superior to thus Lease to the use of any insurance proceeds for repair
or replacement by Operator, and receipt of any insurance proceeds by any such
lender, Lessor, or Operator, then Operator will repair and replace the same at
its expense with reasonable promptness so that such buildings after such repair
and replacement are as nearly as possible in the same condition as prior to such
damage or destruction, and will do so even though the proceeds of any insurance
policies are insufficient to reimburse Operator therefor. Operator will not be
entitled to any abatement of rent, nor will its obligations under this Lease be
terminated during the term of this Lease, not withstanding any destruction or
damage to the Property.
c. In the event of damage to any of the buildings at the Facility
during the term of this Lease, Lessor (if received by Lessor) will pay or,
subject to provisions of subsection b, above, cause any lender (if received by
such lender) to pay to Operator proceeds of any insurance policy paid for by
Operator covering the loss. If any loss covered by insurance as adjusted exceeds
One Hundred Thousand and no/100 ($100,000.00) Dollars, Lessor, at its election.
may pay the amount of insurance proceeds to Operator in staged payments as the
work of restoration is completed by Operator. Unless Operator provides Lessor
with other sufficient collateral or security, each staged payment will be in an
amount equal to ninety percent (90%) of the cost of the work duly certified to
have been completed from the time of the making of the prior stage payment to
the date of requisition of the then current payment, and any balance remaining
will be paid upon due certification of completion of the restoration to Lessor.
All payments will be received by Operator in trust to pay the cost of
restoration, and will not be commingled with any of Operator's other funds.
Without limiting the foregoing, however, Lessor reserves the right to make
direct payment to Operator's contractors and vendors. No payment of any
insurance proceeds will be required to be made by Lessor to Operator until
Operator has expended for restoration an amount equal to the excess of any loss
over the amount paid by the insurance carrier on the loss as adjusted, and due
proof of payment for such excess has been submitted by Operator to Lessor.
Certificate of the cost of work will be made by the architect of Operator
supervising the restoration, with the privilege, however in Lessor to examine
Operator's contracts and its books and records pertaining to the work of.
restoration. Without limiting the foregoing, if Lessor elects staged payments of
insurance proceeds then Lessor, as a condition to the making of such payments,
may require that Operator submit drawings and specifications of the proposed
restoration for its written approval, which approval will not be unreasonably
withheld or delayed. The foregoing provisions of this Section are subject to
such conditions as may be required by any lender holding a mortgage on the
Property superior to this Lease, relative to the disbursement of. insurance
proceeds.
d. Operator also will carry and maintain at all times during the term
of this Lease insurance against claims for personal injury or property damage
under a policy of general liability insurance in an amount of at least Two
Million and No/100 Dollars ($2,000,000.00) per occurrence and One Hundred
Thousand and No/100 Dollars ($100,000.00) property damage (but in no event less
than the requirements of Lessor's lenders). Operator also will carry adequate
workmen's compensation insurance (or, in lieu thereof, may include the Facility
in its program for work-related death and injury to employees, so long as such
program meets all the requirements of Texas law). Operator shall also obtain and
maintain a minimum of Seven Hundred Fifty Thousand and No/) 00 Dollars
($750,000.00) business interruption insurance.
e. Omitted.
f. Operator, at its sole cost and expense, will maintain such other
usual and customary policies of insurance in such amounts as may be required by
law or as reasonably required by Lessor's lenders.
g. All insurance maintained by Operator pursuant to this Section 18
shall provide that such insurance may not be cancelled except after thirty (30)
days written notice to Lessor.
Page 9
19. Condemnation and Destruction.
a. If any person or corporation, municipal, public, private or
otherwise, at any time during the term of this Lease lawfully condemns and by
reason thereof acquires title to Lessor's interest in the Property, in or by
condemnation proceedings in pursuance of the law, general, specific or
otherwise, Lessor will be entitled to and will receive the entire award that may
be made, except (i) the award, if any, to Operator for the value of the
unexpired term. of this Lease and/or (ii) any award for taking of or damage to
the personal property of Operator (provided Operator is not then in default
hereunder), and/or (iii) any award related to business interruption or moving
expenses. As between Operator and any lender holding a mortgage inferior to this
Lease, this relinquishment of Operator's interest in any portion of any award in
favor of Lessor is not intended to lodge in any such lender, or any other
inferior lienor, any right to the interest so relinquished, which in all
circumstances, will belong absolutely to Lessor, and is made on that condition
accordingly, to be disbursed to Operator as part of the award for restoration as
provided below should such restoration be made in the circumstances set forth
below.
b. In the event of a taking by condemnation, this Lease,
except as set forth below, will continue and Lessor will apply any sutra awarded
for damage to a building toward the cost of restoring such building as nearly as
possible to the condition before such taking. In any event, but subject to the
consent of any lender holding a mortgage superior to this tease to the use of
any condemnation award for repair or restoration by Operator and the receipt of
any such award by such tender, Lessor, or Operator, Operator will make such
restoration to the extent of the award and Lessor, upon payment of the award,
will apply toward the cost of such restoration such award as and when Operator
is required to pay the cost of such restoration upon and according to the
certificate of the architect in charge of such work. The amounts for restoration
will be disbursed by Lessor to Operator in staged payments as the work of
restoration progresses, upon due proof that no lien has attached in respect to
the work performed by Operator. All payments to Operator will be received in
trust to pay for the improvements, with the privilege in Lessor to make direct
payments to contractors and vendors. In the event of partial condemnation, if
the monies received by the Lessor are not sufficient to fully restore the
property, Lessor shall have the option to (i) pay for the additional costs
necessary for such restoration or (ii) cancel and terminate this Lease, and
shall notify Operator in writing of its decision within thirty (30) days after
receipt of the condemnation award, unless Operator notifies Lessor of its
intention to fully pay for such restoration and keep this Lease in effect.
c. In the event of either (i) destruction of over fifty
percent (50%) of the Property occurs during any part of the last two (2) years
of the Initial Term or Extended Terms of this Lease (whether or not covered by
insurance), or (ii) at any time a major taking by condemnation of a portion of
the Property materially adversely affecting Operator's ability to effectively
carry on its business in the manner prior to such taking, then Operator, at its
option, upon thirty (30) days' notice in writing to Lessor, given at any time
within sixty (60) days after the vesting of title in the condemnor may cancel
and terminate this Lease.
20. Curing Operator's Defaults. In the event Operator fails to perform
any of the terms of this Lease on its part to be performed, following any
required notice under Section 24, Lessor may perform the same and add any such
sum or sums paid or expended in such performance to any rent then due or
thereafter falling due with like effect as if an original part of such
installment, and such sum or sums shall be and become additional rental. The
foregoing, however, does not grant Operator any license or privilege to allow
the Property to be without the insurance coverage as set forth in Section 18,
above.
21. Operator's Right to Pay Mortgages. In the event Lessor fails to pay
the principal and interest due under the terms of any debt secured by a lien on
the Property, and as a result Lessor's lender actively commences to foreclose
its lien, Lessor shall promptly give Operator notice of the commencement of such
action by Lessor's lender, and Operator, as its Sole remedy, may pay all amounts
necessary to cure any such default and offset such payments against rental' due
or to become due under this Lease, or if no rental is remaining hereunder,
Operator shall restore the property with such proceeds.
22. Mortgaging; Assignment; Subletting. Operator will not, without the
prior written consent of Lessor, (a) mortgage, assign, or sublet this Lease, nor
its interest in the whole or any part of the Property (except that Operator may
enter into subleases or similar arrangements for up to twenty percent (20%) of
the square footage of the Facility for such ancillary services as commonly found
in similar facilities, provided such activities do not reduce the number of
nursing home beds at the Facility), (b) permit the Facility to be occupied by
Page 10
any third party under any other contractual arrangement which is tantamount to a
lease, sublease or assignment of this Lease (except as permitted above), (c) in
any event permit the Facility to be occupied for any purpose other than the
operation of a nursing home and/or for other health care related activity
approved by Lessor, nor for any business or purpose deemed illegal,
disreputable, or hazardous on account of fire, or (d) permit anything to be done
in the Facility that will injure the reputation of the Facility. The acceptance
of rental payments by Lessor from any assignee, subtenant, or successor in
interest of Operator, with or without notice, will not relieve Operator from its
obligations hereunder, except to the extent such obligations are specifically
assumed (with the consent of Lessor) by such assignee, subtenant, or successor
in interest, nor will it be deemed to waive the right of Lessor at any time
thereafter to elect to terminate this Lease on account of such assignment,
subletting or transfer done without the prior consent of Lessor. The Lessor
shall have the right to sell, assign, or convey all or part of Lessor's right,
title, and interest in and to the Property without the consent of Operator or
Guarantor and be relieved of any future liability hereunder; provided, however,
that the new assignee assumes the responsibilities of Lessor and agrees and is
bound by the terms of the Lease. The parties agree that the execution of a
purchase and sale agreement for the Facility by Operator and Lessor shall be
permitted hereunder.
23. Taxes.
a. Operator will pay and discharge all such duties, taxes
(including ad valorem taxes), charges for water, sewer taxes, assessments and
payments, extraordinary as well as ordinary, whether foreseen or unforeseen, as
are demised, laid, levied, assessed or imposed upon, or become due and payable
during the term of this Lease, or liens upon the property, or any part thereof,
or any appurtenances thereto, or any personal property located thereon, the
leasehold estate hereby created, the sidewalks or streets in front of or
adjoining the Facility or any vault or vaults thereunder, by virtue of any
present or future federal, state or law, order or ordinance, or of any
department, office or bureau thereof, or any other governmental authority.
b. Operator will make all payments mentioned in this Section
when the same become due and payable without interest or penalty to the
department, officer or bureau charged with the collection thereof. Operator will
not be required, however, to pay any inheritance, franchise, income, payroll,
excise, privilege, rent, capital stock, estate or profit tax, or any tax of
similar nature, that is or may be imposed upon Lessor, unless such taxes shall
be levied upon the rent herein reserved in the place of taxes upon the property.
c. All taxes, assessments and water rents will be prorated and
adjusted for the fiscal years in which the term of this Lease begins and ends.
d. to the event of assessments for local improvements or
betterments which are assessed or imposed during the term of this Lease and
which may be payable in installments, Operator will be obligated to pay only
such installments as fall due during the term of this Lease.
e. In any suit or proceeding of any kind or nature, arising or
growing out of the failure of Operator to keep any covenant contained in this
Section, the certificate or receipt of the department, officer or bureau charged
with collection of the imposition, showing that the tax, water rent, assessment
or other charge, affecting the Property, is due and payable, of has been paid,
will be prima facie evidence that such tax, water rent, assessment or other
charge was due and payable as a lien or charge against the Property or that it
has been paid as such by Lessor or Operator as the case may be,
f. Operator will have the right to contest or review by legal
proceedings or in such manner as Lessor in its opinion shall deem advisable
(which proceedings or other steps taken by Operator, if instituted, will be
conducted diligently at its own expense and free of expense to Lessor) all taxes
or other impositions levied, assigned, or imposed upon or against the Property
or the building or improvements thereon, or taxes in lieu thereof, required to
be paid by Operator under this Lease. No such contest or review shall be
undertaken in a manner that exposes the Property or Lessor's interest therein to
jeopardy.
g. Operator will deliver promptly to Lessor copies of all paid
bills for real estate taxes and assessments, and shall promptly notify Lessor of
any default regarding such payments.
Page 11
h. It is agreed that, if Lessor makes request of Operator,
Operator shall pay to Lessor, as additional rent hereunder, at the same time as
the Minimum Monthly Rent is paid, an amount equal to one-twelfth (1/12th)
terminated by Lessor in its reasonable discretion) of the projected amount of
the taxes and assessments against the Property for the particular calendar year
(the "Tax Estimate"). A final adjustment (the "Estimate Reconciliation") shall
be made between the parties as soon as practicable following the end of each
calendar year, comparing the actual amount of taxes and assessments owing for
the Property for the calendar year to the aggregate of the Tax Estimate paid by
Operator. To the extent that the Estimate Reconciliation is different from the
actual taxes paid to Lessor by Operator for the calendar year just completed,
Operator shall pay Lessor the difference in cash within thirty (30) days
following receipt by Operator of such statement from Lessor, or receive a credit
on future rentals owing hereunder (or cash if there is no future rentals owing
hereunder) as the case may be. If, during any particular year, there is a change
in the information on which Lessor based the estimate upon which Operator is
then making its payment so that such Tax Estimate furnished to Operator is no
longer accurate, Lessor shall be permitted to revise such Tax Estimate by
notifying Operator, and there shall be such adjustments made in the payments on
the first day of the month following the serving of such statement on Operator
(by either increasing or decreasing, as the case may be, the amount of such
payments then being paid by Operator for the balance of the calendar year, but
in no event shall any such decrease result in a reduction of the rent below the
Minimum Monthly Rent plus all other amounts of Additional Rent). Lessor's and
Operator's responsibilities with respect to the payments under this subsection
shall survive the expiration or early termination of this Lease.
24. Defaults.
a. Each of the following will be deemed a default ("Default")
by Operator and a breach of this Lease:
i. A failure on the part of Operator to pay any
installment of minimum or additional rent, which failure persists
after the expiration of five (5) days from the date Lessor gives
written notice to Operator of the existence of such failure
(provided that Lessor shall not be required to deliver more than 2
such notices during any 12-month period);
ii. A failure on the part of Operator to observe or
perform any of the other terms, covenants or conditions of the
Lease on the part of Operator to be observed and performed, which
failure persists after the expiration of thirty (30) days from the
date Lessor has given notice to operator of the existence of such
failure, but, if (1) the matter that is the subject of the notice
is of such a nature that it cannot be reasonably corrected within
thirty (30) days, then no default will be deemed to have occurred
if Operator promptly upon the receipt of the notice commences the
curing of the default and diligently prosecutes the same to
completion or (2) applicable law requires that the failure be
corrected by a date certain that is prior to such thirty (30) day
period, then such failure must be cured by the date certain;
iii. The failure of Operator to adjust and pay the
Minimum Monthly Rent payments called for under Section 3 hereof
and to provide the additional insurance required by Section 18(d)
hereof;
iv. The adjudication of Operator in bankruptcy; the
taking by Operator of the benefit of any other insolvency act or
procedure, which term includes any form of proceeding for
reorganization or arrangement or rearrangement under the Federal
Bankruptcy Code, and any amendments thereto, as will as an
assignment for the benefit of. creditors; or the appointment of a
receiver for Operator or Guarantor and such receiver remains
undischarged for sixty (60) days.
v. The removal by any local, state, or federal
agency having jurisdiction over the operation of the Property of
10% or more of the patients located therein;
vi. Except as provided in Section 36(b) , the
voluntary transfer by Operator of ten or more patients located at
the Facility to any facility owned, operated, leased, or managed
by Operator, or any of its affiliates or related entities, and
such transfer is not for reasons relating to the health and
well-being of the patients that were transferred;
Page 12
vii. Failure of Operator to give notice to Lessor
not later than ten (10) days after receipt by Operator of any
notice, claim, or demand from any governmental authority, or any
officer acting on behalf thereof, of any violation of any law,
order, ordinance, rule, or regulation with respect to the
operation of the nursing home located at the Facility; and
viii. The suspension or loss of the right to receive
Medicaid or Medicare reimbursements based on any actual or alleged
fraud or other misfeasance or malfeasance.
b. In the event of any Default by Operator or Guarantor,
Lessor at any time thereafter, at its option, may give Operator ten (10) days'
written notice of intention to end the term of this Lease and at the expiration
of such ten (10) day period, the term of this Lease shall expire as fully and
completely as if that date were the date fixed for the expiration of the terms
of this Lease, and Operator will then quit and surrender the Property to Lessor
but Operator will remain liable as set forth below.
c. If the notice provided for in Subsection b. of this Section
is given and the term so expires, or if Operator abandons the Facility, or if
the Lease is taken from Operator as a result of any execution against Operator
in any proceeding in which Operator has no appeal or further appeal, then Lessor
may re-enter the Facility without notice either by force or otherwise, and
Operator or other occupant or occupants of the Facility will remove their
effects and hold the Facility as if this Lease had not been made, and Operator
waives the service of the notice of intention to re-enter or to institute legal
proceedings to that end.
d. In the event of any default, re-entry, expiration or
dispossession by summary proceedings or otherwise, (i) rent will become due and
be paid up to the time of such re-entry, dispossession or expiration, together
with such expenses as Lessor may incur for legal expenses of possession,
brokerage and putting the Property in good order, or for preparing the same for
re-rental; (ii) Lessor may relet all or any part of the Property, either in the
name of Lessor or otherwise, for a term or terms which may at its option be less
than or exceed the period which would otherwise have constituted the balance of
the term of this Lease and may grant concessions or free rent without affecting
Operator's liability for the rental payable under this Lease for the period of
concession or free rent; and (iii) Operator also will pay Lessor as liquidated
damages for the failure of Operator to observe and perform the covenants herein
contained any deficiency between the rent payable under this Lease and the net
amount, if any, of the rents collected by reason of the reletting of the
Property for each month of the period which would otherwise have constituted the
balance of the term of this Lease. In computing such liquidated damages, there
will be added to such deficiency any expenses as Lessor may incur in connection
with the recovery of possession of the Property and reletting, including, but
not limited to legal expenses, attorneys' fees, brokerage fees, expense for
keeping the Property in good order and for preparing the same for reletting. Any
such liquidated damages will be paid in monthly installments by Operator on the
rent day specified in this Lease and any suit brought to collect the amount of
the deficiency for any month will not prejudice in any way the rights of Lessor
to collect the deficiency for any subsequent month by a similar action or
proceeding. Lessor may make such alterations and decorations in the Facility as
it in its sole judgment considers advisable and necessary for the purpose of
reletting the Property; and the making of such alterations or decorations will
not operate or be construed to release Operator from any liability under this
Lease. In no event will Lessor be liable and Operator's liability will not be
affected or diminished for the failure of Lessor to relet the Property, or in
the event that the Property is relet, for failure to collect the rent due under
such reletting; provided, however, Lessor will use reasonable efforts to
mitigate its damages. In the event of a breach or threatened breach of any of
the covenants or provisions of this Lease by Operator, Lessor will have the
right of injunction and the right to invoke any remedy allowed at law or in
equity as if reentry, summary dispossession proceedings or other remedies were
not provided for in this Lease. The reference in this Lease to any particular
remedy will not preclude Lessor from any other remedy, at law or in equity.
e. In the event Lessor enters into and repossesses all or any
past of the Property by reason of the default of Operator in the performance of
any of the terms, covenants or conditions of this Lease, Operator will not claim
the right to redeem the Property, reenter the Facility, or restore the operation
of this Lease, and Operator waives the right to such redemption and reentrance.
under any present or future law, and further, for any party claiming through or
under Operator, further expressly waives its right, if any, to make payment of
any sum or sums of rent, or otherwise, of which Operator is in default and to
claim any subrogation to the rights of Operator under this Lease by reason of
such payment.
Page 13
f. Any action taken by Lessor under this Section will not
operate as a waiver of any right which Lessor would otherwise have against
Operator, and Operator will remain responsible to Lessor for any loss and damage
suffered by Lessor by reason of Operators default or breach. The words "reenter"
and "reentry" as used in this Lease are not restricted to their technical legal
meaning.
g. In addition to the foregoing remedies, in the event
Operator is in default hereunder, Lessor shall have all of the rights of a
secured party under the terms of the Uniform Commercial Code of the state in
which the Property is located, including, but not limited to all rights
pertaining to the repossession of the Property.
h. No fixtures or personal property of Operator shall be
removed from the Property after the occurrence of a default under this Lease
unless Lessor gives its specific prior written consent. Upon the occurrence of
an event of default by Operator under this Lease, Lessor shall have the option,
in addition to another remedies provided herein or by law, to enter upon the
Property with or without the permission of operator and take possession of any
and all personal property of Operator situated on the Property without liability
for trespass or conversion.
25. No Reinstatement.
a. No receipt of monies by Lessor from Operator after
termination or cancellation of this Lease shall reinstate, continue or extend
the term of this Lease, or affect any notice theretofore given to Operator, or
operate as a waiver of the right of Lessor to enforce the payment of rents then
due, or thereafter falling due, or operate as a waiver of the right of Lessor to
recover possession of the Property by proper suit, action, proceeding or remedy.
After the service of notice to terminate this Lease, or the commencement of a
suit, action or summary proceedings, or any other remedy, or after a final order
or judgment for the possession of the Property, Lessor may demand, receive and
collect any monies due or thereafter falling due, without affecting such notice,
proceeding, suit, action, order or judgment; and any and all such monies
collected will be deemed to be payments on account of the use and occupancy or
Operator's liability under thus Lease.
b. The failure of Lessor to enforce any agreement, condition,
covenant or term, by reason of a breach by Operator, will not be deemed to void
or affect the right of Lessor to enforce the same agreement, condition, covenant
or term on the occasion of a subsequent default or breach.
26. Subordination. This Lease will be subject and subordinate to all
mortgages which may now or hereafter affect Lessor's interest in the Property,
and all renewals, modifications, consolidations, replacements and extensions
thereof. This clause will be self-operative and no further instruments of
subordination will be required. In confirmation of such subordination, Operator
will execute promptly subordination certificates in form reasonably satisfactory
to the parties within ten (10) days of request.
27. Quiet Enjoyment. Operator, upon payment of the rent and performing
the other terms, covenants and conditions of this Lease on Operator's part to be
performed will peaceably and quietly have, hold and enjoy the Property at all
times during the term of this Lease free of molestation by Lessor, or any person
or entity claiming by, through or under Lessor.
28. Successors and Assigns. The covenants and agreements contained in
this Lease inure to the benefit of and are binding upon Lessor and Operator,
their successors and assigns, but this Section does not modify the provisions of
Section 2 governing assignment.
29. Alterations. Operator may make nonstructural alterations to the
Facility without prior consent of Lessor. Structural alterations, however, may
be made by Operator only with the prior written consent of Lessor, which consent
will not be unreasonably withheld or delayed.
30. Notices. All notices will be addressed to Operator and Lessor at
their respective addresses set forth above, or to such other address designated
in writing and delivered to the other in the same manner as for giving notice.
Notice must be given either by registered or certified mail, return receipt
Page 14
requested. In the case of the former, the service of the notice will be deemed
complete upon registration with the postal authorities, and in the case of the
latter, upon due mailing.
31. No Waiver. The failure of Lessor to insist in any one (1) or more
instances upon a strict performance of any of the covenants of this Lease, or to
a exercise any option, will not be construed as a waiver of or relinquishment
for the future of the performance of such covenant, or the right to exercise
such option, but the same will continue and remain in full force and effect. The
receipt by Lessor of rent with knowledge of the breach of any covenant of this
Lease will not be deemed a waiver of such breach, and no waiver by Lessor of any
provision of this Lease shall be deemed to have been made unless expressed in
writing and signed by Lessor. The receipt by Lessor of any installment of
minimum or additional rent will not be a waiver of any minimum or additional
rent then due.
32. Remedies Cumulative. All the rights and remedies given to Lessor
for the recovery of the Property in the event of a default by Operator in the
payment of any amount payable under this Lease, or upon the breach of any of the
terms, covenants, or conditions of this Lease, or the right to reenter the
Facility and otherwise take possession of the Property upon the happening of any
event of default or breach of such terms, covenants or conditions, or the right
to maintain any action for rent or damages and all other rights and remedies
allowed at law or in equity, are reserved and conferred upon Lessor as distinct,
separate and cumulative remedies, and none of them, whether exercised by Lessor
or not, will be deemed to be in exclusion of any of the others.
33. Entire Agreement. This Lease contains the entire agreement between
Operator and Lessor, and any subsequent agreement will not operate to change,
modify, or discharge this Lease in whole or in part unless such agreement is in
writing and signed by all of the parties hereto.
34. Condition f the Property. Operator is fully familiar with the
physical condition of the Property, the building, improvements, fixtures and
equipment, and Operator takes the Property in its "as is" condition. Lessor has
made no representations in connection with the condition of the Property or of
the buildings, improvements, fixtures or equipment and Lessor will not be liable
for any latent or patent defects therein. Operator hereby specifically waives
all implied warranties cinder Article 2 of the Uniform Commercial Code,
including, but not limited to, those of habitability and fitness for a
particular purpose.
35. Estoppel Certificates. Operator will execute, acknowledge and
deliver to Lessor at anytime and from time to time upon not less than ten (10)
days' prior written request, a statement in writing certifying that this Lease
is unmodified and in full force and effect (or if there have been modifications
that this Lease is in full force and effect as modified and stating the
modifications), and the dates to which the rent and other charges have been paid
in advance, if any. It is intended that any such statement delivered pursuant to
this Section may be relied upon by prospective lenders of Lessor and purchasers
of Lessor's interest in or a mortgage on the Property.
36. Occupancy and Relocation.
a. Operator shall at all times use its best efforts to
maximize the number of occupied beds at the Facility. Without Lessor's prior
written consent, which Lessor may grant or withhold in its sole discretion,
Operator shall not apply for, or consent to,-any reduction in the number of.
state licensed beds or Medicare and Medicaid certified beds at the Facility.. In
addition, Operator shall not take any action or fail to take any action which
would result in a reduction in the number of state licensed beds or Medicare and
Medicaid certified beds at the Facility, unless such loss is temporary and is
promptly restored by Operator or such loss is based on an alternative use, such
as office space, and such alternative use is consented to in writing by Lessor
in advance. Notwithstanding the foregoing, if the number of beds certified for
Medicaid is unilaterally decreased by action of a governmental authority as part
of an action unrelated to Operator's operation of the Facility, then so long as
Operator at all times uses its diligent best efforts to restore the Medicaid
certification for such beds (including, but not limited to, filing any necessary
applications and supporting documents with applicable governmental authorities),
then Operator shall not be in default by reason of the Medicaid bed
decertification.
b. Operator covenants that it will not intentionally take any
action to cause any patient at the Facility to move to another facility for
other than specialized medical services which are not offered at the Facility.
Page 15
Without Lessor's consent, Operator will not lease, operate, or develop a new
facility whose purpose is to provide similar services it now provides at the
Facility within a five-mile radius of the Facility, unless more than 85% of the
beds at the Facility are filled for a continuous 90-day period preceding the
first filing of any governmental application in connection with said new
facility. Notwithstanding the foregoing, at any time, Operator may buy, lease,
operate or manage any facility located in any area, provided such existing
facility has been developed, built, and/or operated by a third party unrelated
to and unaffiliated with, Operator.
c. Operator acknowledges and agrees that the violation of the
covenant in this Section will cause irreparable injury to Lessor, and since the
remedy at law for any breach or attempted breach of the provisions of this
Section will be inadequate, Lessor will be entitled to specific performance and
injunctive or other equitable relief in addition to whatever other remedies may
be available at law. Operator waives any requirement for the securing or posting
of any bond or of proving actual damages in connection with obtaining specific
performance or injunctive or other equitable relief.
37. Right of First Refusal. Operator shall have a right of first
refusal to purchase the Property pursuant to a bona fide offer of purchase
received by, and acceptable to, Lessor, subject to the approval of the limited
partners of Lessor. Lessor shall give to Operator full details in writing of any
such offer which is acceptable to Lessor at least thirty (30) days prior to the
anticipated sale. Operator shall have fifteen (15) days from receipt of such
notice in which to notify Lessor of its desire to purchase the Property on the
same terms and conditions as set forth in the written notification. If Operator
does not exercise its right to purchase the Property, Lessor shall have six (6)
months in which to complete such sale on substantially the same terms, following
which the right of first refusal shall continue in full force and effect as
provided above with respect to the Property. In the event Operator does not
exercise its option, on the date Operator transfers the Facility and/or Property
to an unrelated third party, this Lease shall terminate and the Deferred Rent,
if not previously paid, shall be immediately due and payable.
38. Memorandum of Lease. This Lease shall not be recorded, but a
Memorandum of Lease or a Short Form of Lease shall be executed by both parties
upon the request of either party, describing the parties and the term of this
Lease and setting forth any provision either party deems appropriate. Said
instrument will be in a form suitable for recording, and may be recorded at the
request of either party, in the real property records of Tarrant County. The
Memorandum of Lease shall be prepared and recorded by the requesting party at
its expense.
39. Guaranty. The performance of all obligations hereunder by Operator
shall be guaranteed by Guarantor pursuant to a separate Lease Guaranty in the
form attached hereto as Exhibit C.
40. Single Purpose Entity. Operator shall have as its purpose the
operation of the Property as a nursing home facility, and no other purposes, and
it shall own no other assets, nor incur any liabilities, other than in relation
to the Facility. Operator's Articles of Incorporation shall limit its purpose to
the foregoing, which purpose shall not be amended (nor shall Operator ever
voluntarily file bankruptcy proceedings or make an assignment for the benefit of
creditor(s)) without the unanimous written consent of Operator's Board of
Directors ("Board"), which Board shall at all times include a member designated
by Lessor.
41. Attorney's Fees. Operator shall be responsible for the payment of
Lessor's reasonable attorney's fees should Lessor be required to appear in court
to enforce the provisions of this Lease.
42. Condition Precedent. Notwithstanding anything herein to the
contrary, this Lease shall be subject to the approval of Lessor's mortgagee and
the vacation of the Facility by the current tenant, which operator understands
is in bankruptcy.
43. Purchase Agreement. On or about even date herewith, Lessor and
Preston Hollow Properties, LLC ("PHP"), an affiliate of Operator, have entered
into a Purchase Agreement (herein so called) whereby Lessor has agreed to sell
and PHP has agreed to purchase the Property on the terms set forth therein. The
parties agree that the Purchase Agreement is a separate and independent
agreement and the rights and obligations of the parties therein are separate and
independent of this Lease. No claims or setoffs from the Purchase Agreement
shall be applicable to this Lease.
Page 16
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed as of the 12th day of December, 2001.
LESSOR: OPERATOR:
------ --------
HEALTHCARE PROPERTIES, L.P. SENIOR MANAGEMENT SERVICES OF
BENBROOK, INC., a Texas
By: Capital Realty Group Senior corporation
Housing, Inc., its General Partner
By: By:
-------------------------------- ------------------------------
Name: Name:
------------------------------ ----------------------------
Title: Title:
----------------------------- ---------------------------
Page 17
EXHIBIT C
Standby Lease Guaranty
GUARANTY OF LEASE dated as of this 12th day of December, 2001, given by
Xxxx Xxxxxxx (the "Guarantor"), given to HEALTHCARE PROPERTIES, L.P., a Delaware
limited partnership, having its principal place of business at 000 Xxxxxxx
Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxx 00000 (the "Lessor").
WITNESSETH:
WHEREAS, the Guarantor desires to induce Lessor to enter into a lease
with SENIOR MANAGEMENT SERVICES OF BENBROOK, INC., a Texas corporation (the
"Operator"), with respect to certain premises, located at 0000 XxXxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxx Xxxxxx, Xxxxx (the "Lease");
WHEREAS, the entering into of the Lease by Lessor and Operator will be
of pecuniary advantage to Guarantor; and
WHEREAS, the execution and delivery hereof and the assumption of
liability hereunder have been in all respects authorized and approved by proper
action on the part of the Guarantor, and the Guarantor has full authority and
power to execute this Guaranty.
NOW, THEREFORE, in consideration of One Dollar ($1.00) paid by Lessor
to Guarantor, t he receipt and sufficiency of which is hereby acknowledged, the
Guarantor hereby covenants and agrees with the Lessor, its successors and
assigns, as follows:
1. Each person or entity comprising Guarantor, as a primary obligor,
hereby jointly and severally (if more than one) (a) unconditionally guarantees
the prompt, punctual and full payment of. the rentals of the Lease in accordance
with the terms and tenure thereof as completely and effectually as if such
guaranty had been made by Guarantor on the face of the Lease; (b)
unconditionally guarantees the prompt, punctual and full performance by Operator
of any and all of the agreements, covenants, terms and conditions agreed to be
performed by Operator under the provisions of the Lease; (c) unconditionally
guarantees any other Obligations (as hereafter defined); and (d) covenants and
agrees that in the event the Operator fails to timely make any payments or
otherwise timely perform any of the other terms, covenants or conditions
thereof, the Guarantor will promptly make or cause such payment to be made or
will perform or cause to be performed all such terms, covenants and conditions,
irrespective of any invalidity therein, the unenforceability thereof or the
insufficiency, invalidity or unenforceability of any security therefor
2. The Guarantor does hereby further agree that Guarantor's liability
hereunder as Guarantor shall not be prejudiced, impaired or affected by (a) any
renewal or extension which may be made (with or without its knowledge or
consent) of the time of payment of the rentals of the Lease or of the time for
performance by any party obligated thereto of any of the terms and provisions of
the Lease, or (b) by any forbearance or delay in enforcing the payment of the
rentals of the Lease or enforcing the obligations of any party or person to the
Lease in accordance with the terms thereof, or (c) by any (modification of the
terms, tenor or provisions of the Lease.
3. This Guaranty is and shall be construed to be an irrevocable,
absolute, unlimited and continuing guaranty of payment and performance, and the
liability of Guarantor hereunder shall not be affected, unpaired or discharged,
in whole or in part, by reason of an extension or discharge that may be granted
to the Operator by any Court in proceedings under the Bankruptcy Code, or any
amendments thereof, or of any such extension or discharge.
4. Following any applicable notice requirements, the Lessor shall have
the right to proceed against Guarantor upon Operator's failure to timely pay or
perform any obligation under the Lease and shall not be required to take any
action or proceedings. of any kind against the Operator or any other party
Page 18
liable for the Operator's debts or obligations. Should Lessor desire to proceed
against Guarantor and Operator in the same action, Guarantor agrees that
Guarantor may, at; Lessor's option, be joined in any such action against
Operator and that recovery may be had against Guarantor to the extent of
Guarantor's liability in such action. However, Guarantor hereby expressly waives
the provisions of. (a) Section 34.02 and Section 34.03 of the Texas Business and
Commerce Code, and (b) Rule 31 of the Texas Rules of Civil Procedure, to the
extent such laws (or any of them) are applicable to the Guaranty, or any other
agreements or obligations of Guarantor to Lessor.
5. From such time as Lessor may call upon Guarantor to honor, pay or
perform all or part of any obligation of the Operator, and Guarantor fails to
honor such demand, the debt or obligation owed the Lessor pursuant to this
Guaranty shall bear interest at the highest rate permitted by contract under
applicable law (but never to exceed eighteen percent (18%) per annum). In case
Guarantor fails or refuses to honor this Guaranty, the Lessor is hereby
authorized to utilize such legal means as Lessor deems proper to enforce this
Guaranty, through the efforts of its employees, agents, or attorneys, and
Guarantor shall pay all costs of enforcement and collection, including
reasonable attorneys' fees.
6. The Guaranty shall be binding upon and inure to the benefit of the
successors and assigns of Guarantor and the Lessor. The Lessor shall have the
right to assign and transfer this Guaranty to any assignee of the Lease. The
Lessor's successors and assigns shall have the rights, elections, remedies, and
privileges, discretions and powers granted hereunder to the Lessor and shall
have the right to rely upon this Guaranty and to enter into and continue other
and additional transactions with the Operator in reliance hereon, in the same
manner and with the same force and effect as if they were specifically named as
the Lessor herein.
7. Deleted.
8. Notice of any default by the Operator (which is not cured within any
cure period allowed in the Lease, but which cure period may not be extended by
any court or tribunal for purposes of this Guaranty) shall be communicated to
Guarantor at least ten (10) days before the Lessor makes demand upon Guarantor
for any payment or performance hereunder. Any such notice or demand shall be
addressed to Guarantor at its address set forth above, or to such other address
designated in writing and delivered in the same manner as for giving notice, and
shall be given either by express, registered or certified mail, return receipt
requested. In the case of registered mail, the service of notice or demand will
be deemed complete upon registration with the postal authorities, and in the
case of express or certified mail, upon due mailing.
9. This Guaranty shall constitute a Texas contract, and be governed by
the laws of the State of Texas. The undersigned hereby voluntarily submits to
the jurisdiction of any court in the State of Texas having jurisdiction over the
subject matter of this instrument, and, if. not available by personal service,
hereby constitutes the Secretary of State of the State of Texas as its agent for
service of process in connection with any suit or proceeding arising hereunder.
10. Failure of the Lessor or its assigns to insist in any one or more
instance upon strict performance of any one or more of the provisions of this
Guaranty or to take advantage of any of its rights hereunder shall not be
construed as a waiver of any such provisions or the relinquishment of any such
rights, but the same shall continue and remain in full force and effect.
11. The Lessor or its assigns shall have the right, without affecting
Guarantor's obligations hereunder, and without demand or notice, to collect
first from the Operator, and to exercise its rights of setoff against any asset
of the Operator, and to otherwise pursue and collect from the Operator any other
indebtedness of the Operator to the Lessor or its assigns not covered by this
Guaranty, and any sums received from the Operator, whether by voluntary payment,
offset, or collection efforts, may be applied by the Lessor its assigns as it
sees fit, including the application of all such amounts to other debts not
guaranteed by Guarantor. Subrogation rights or any other rights of any kind of
Guarantor against the Operator, if any, shall not become available until all
indebtedness and obligations of the Operator to the Lessor or. its assigns are
paid in full.
12. Guarantor agrees that no release of Operator, any co-guarantor, or
of any other person primarily or secondarily liable on the Obligations under the
Lease (sometimes herein being referred to as the "Obligations"), or any part
thereof shall in any manner impair, diminish or affect the liability of
Guarantor or the rights of Lessor, hereunder, it being recognized, acknowledged,
and agreed by Guarantor that Guarantor maybe required to pay the Obligations in
Page 19
full without assistance or support of any other party, and Guarantor has not
been induced to enter into this Guaranty on the basis of a contemplation,
belief, understanding, or agreement that other parties will be liable to perform
the Obligations, or that Lessor will look to other parties to perform the
Obligations.
13. Guarantor specifically agrees that it shall not be necessary or
required, and that Guarantor shall not be entitled to require, that Lessor
mitigate damages, or file suit or proceed to obtain or assert a claim for
personal judgment against Operator for the Obligations from Operator, or
foreclose against or seek to realize upon any security or collateral now or
hereafter existing for the Obligations, or file suit or proceed to obtain or
assert a claim for personal judgment against any other party (whether Operator,
guarantor, endorser or surety) liable for the Obligations, or make any effort at
collection of the Obligations from any such other party or exercise or assert
any other right or remedy to which Lessor is or may be entitled in connection
with the Obligations or any security or collateral or other guaranty therefor,
or assert or file any claim against the assets or estate of Operator or any
other guarantor or other person liable for the Obligations, or any party
thereof, before or as a condition of enforcing the liability of Guarantor under
this Guaranty or requiring payment of the Obligations by Guarantor hereunder, or
at any time thereafter.
14. Guarantor waives all defenses given to sureties or guarantors at
law or in equity other than actual satisfaction of the Obligations. Guarantor
absolutely and unconditionally covenants and agrees that if all or any part of
the Obligations (or any instrument or agreement made or executed in connection
therewith), or Operator's liability for the Obligations, is for any reason found
to be invalid, illegal, unenforceable, uncollectible or legally impossible, for
any reason whatsoever (including, without limiting the generality of the
foregoing, upon the grounds that the payment and/or performance of the
Obligations is ultra xxxxx or otherwise without authority, is subject to valid
defenses, claims or offsets of Operator, or any instrument evidencing any of the
Obligations is forged or otherwise irregular); then in any such case Guarantor
shall pay and perform the Obligations as herein provided and that no such
occurrence shall in any way diminish or otherwise affect Guarantor's
obligations; hereunder.
15. In the event any payment of Operator to Lessor is held to
constitute a preference under bankruptcy, debtor relief, or similar laws, such
payment by Operator to Lessor shall not constitute a release of Guarantor from
any liability hereunder, but Guarantor agrees to pay such amount to Lessor upon
demand and this Guaranty shall continue to be effective or shall be reinstated,
as the case may be, to the extent of any such payment or payments.
16. Until the obligations are paid in full, Guarantor hereby waives and
releases any and all rights of subrogation that Guarantor may have against
Operator, rights of contribution that Guarantor may have against any other
guarantor of, or other person secondarily liable for the payment or performance
of, any of the Obligations, or rights of reimbursement that Guarantor may have
as against Operator and agrees that any monies received by Guarantor under such
rights in a bankruptcy of the Operator shall be held in trust for, and
immediately delivered to, Lessor.
17. Notwithstanding anything herein to the contrary, this Guaranty
shall expire at such time as the Lease is terminated in accordance with its
terms, provided the Operator has fully performed the Obligations under the
Lease.
18. Each person or entity comprising Guarantor attests that a true and
correct copy of his/her/its most current financial statement is attached to this
Guaranty as Exhibit C-1.
IN WITNESS WHEREOF, this Guaranty is executed as of the 12th
day of December, 2001.
-------------------------------------------------
Xxxx Xxxxxxx
Page 20
EXHIBIT C-1
GUARANTOR'S CURRENT FINANCIAL STATEMENT
Page 21
