LEASE AGREEMENT
THIS LEASE AGREEMENT made and entered into as of November 30, 1996, by and
between WASHINGTON ASSOCIATES, an Illinois limited partnership (hereinafter
referred to as "Lessor"), and SUNRISE HEALTHCARE CORPORATION, a New Mexico
Corporation ("Lessee").
W I T N E S S E T H:
WHEREAS, Lessor is the owner of a certain tract of land located in the
State of Washington and more particularly described in EXHIBIT A attached hereto
and made a part hereof, which tract of land is improved with a one hundred
twenty three (123) bed nursing facility commonly known as Blue Mountain
Convalescent Center located at 0000 Xxxxx Xxxx Xxxxxxx Xxxxxx, Xxxxxxx Xxxxx,
Xxxxxxxxxx (which tract and nursing home facility, together with any other
improvements now or hereafter located on the tract and all easements, tenements,
hereditaments and appurtenances thereto are hereinafter collectively referred to
as the "Demised Premises"); and
WHEREAS, Lessor, pursuant to the terms of a certain Lease Agreement dated
December 31, 1986 (the "Original Lease"), leased the Demised Premises to Horizon
Health Systems, L.P.; and
WHEREAS, Horizon Health Systems, L.P., pursuant to the terms of a Sublease,
Assumption and Consent Agreement dated December 31, 1988, subleased the Demised
Premises to Lessee;
WHEREAS, the Original Lease provides for a lease term which expires
December 31, 1996;
WHEREAS, Lessor desires to continue to lease the Demised Premises to Lessee
and Lessee desires to continue to lease the Demised Premises from Lessor
pursuant to the terms and conditions of this Lease; and
WHEREAS, Sun Healthcare Group, Inc., a Delaware corporation (the
"Guarantor") will execute and deliver to Lessor that certain Unconditional
Guaranty of Lease (the "Lease Guaranty") dated of even date herewith,
guarantying the performance of all of the obligations of Lessee under this
Lease; and
WHEREAS, the parties hereto have agreed to the terms and conditions of this
Lease.
NOW THEREFORE, it is agreed that the use and occupancy of the Demised
Premises, and the use of the Personal Property shall be subject to and in
accordance with the terms, conditions and provisions of this Lease.
ARTICLE I - DEFINITIONS
1.1 The terms defined in this Article, for all purposes this Lease and all
agreements supplemental hereto, have the meaning herein specified.
(a) "Demised Premises" shall mean the real estate described in
EXHIBIT A and all improvements located thereon.
(b) "Personal Property" shall mean all furniture, fixtures and
equipment located on the Demised Premises (including, without limitation,
those items set forth on EXHIBIT B attached hereto and made a part hereof),
other than such furniture, fixtures, equipment and supplies that persons
other than the Lessor may own or that the Lessee may lease from persons
other than the Lessor or that are purchased by Lessee other than as
replacements for Personal Property.
(c) "Leased Property" shall mean the Demised Premises and the
Personal Property.
(d) "Lease Year" shall mean a twelve (12) month period commencing on
the Commencement Date as hereafter defined, and on each anniversary 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.
(e) All other terms shall be as defined in other sections of this
Lease.
ARTICLE II - DEMISED PREMISES AND PERSONAL PROPERTY
2.1 Lessor, for and in consideration of the rents, covenants and
agreements hereinafter reserved, mentioned and contained on the part of the
Lessee, its successors and assigns, to be paid, kept and performed, does hereby
lease unto Lessee the Demised Premises together with the Personal Property to be
used in and upon the Demised Premises for the Term hereinafter specified, for
use and operation therein and thereon of a skilled and/or intermediate care
nursing home, in full compliance with all the rules and regulations and minimum
standards applicable thereto, as prescribed by the State of Washington and such
other governmental authorities having jurisdiction thereof and having no less
than one hundred twenty three (123) beds and for any other purpose authorized by
Lessor in writing and for no other purpose.
ARTICLE III - TERM OF LEASE
3.1 Except as expressly provided below, the term of this Lease shall be
for a period of ten (10) years commencing on January 1, 1997, (said date is
hereafter referred to as the "Commencement Date"), and expiring on December 31,
2006, unless sooner terminated or extended as hereinafter provided (the "Initial
Term").
3.2 Lessee shall have and is hereby granted the right and option to extend
the Initial Term of this Lease for an extended term (the "First Extended Term")
of five (5) Lease Years upon and subject to all the terms, provisions and
conditions hereof, except that Rent, as hereinafter defined, payable with
respect to each Lease Year of the First Extended Term shall be the amount set
forth in Section 4.1. The first Lease Year of the First Extended Term shall
commence upon the day next following the expiration of the Initial Term.
The option granted pursuant to this Section 3.2 may be exercised only
if Lessee is not in default under this Lease at the time of exercise and at the
time of expiration of the Initial Term, and, further, only if there is not at
either time an event or occurrence which with the passage of time or giving of
notice, or both, would constitute a default hereunder, and said option shall be
exercised by Lessee giving to Lessor written notice of Lessee's election so to
do not less than twelve (12) full calendar months prior to the date of
expiration of the Initial Term.
3.3 Provided Lessee shall have exercised the option contained in Section
3.2 above, Lessee shall and Lessee is hereby granted the right and option to
extend this Lease for an additional Extended Term (the "Second Extended Term")
of five (5) Lease Years upon and subject to all the terms, provisions and
conditions hereof, except
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that Rent, as hereinafter defined, payable with respect to each Lease Year of
the Second Extended Term shall be the amount set forth in Section 4.1 hereof.
The first Lease Year of the Second Extended Term shall commence on the day next
following the expiration of the First Extended Term.
The option granted pursuant to this Section 3.3 may be exercised only
if Lessee is not in default under the Lease at the time of exercise and at the
time of the expiration of the First Extended Term, and, further, only if there
is not then an event or occurrence which with the passage of time or giving of
notice, or both, would constitute a default hereunder, and said option shall be
exercised by Lessee giving to Lessor written notice of Lessee's election so to
do not less than twelve (12) full calendar months prior to the expiration of the
First Extended Term.
Notwithstanding the foregoing, Lessor acknowledges and agrees that the
Rent for the First Extended Term and the Second Extended Term may not be known
by Lessor at the time that Lessee is required to exercise its respective renewal
options. Accordingly, in the event Lessor has not advised Lessee of the First
Extended Term Rent at least thirteen (13) months prior to the date of the
expiration of the Initial Term or the Second Extended Term Rent at least
thirteen (13) months prior to the expiration of the First Extended Term, Lessee
shall have the right to exercise the renewal right provided for herein subject
to the right to rescind the same on written notice to Lessor delivered within
thirty (30) days after Lessor advises Lessee in writing as to the First Extended
Term Rent or the Second Extended Term Rent, as the case may be (the "Rent
Notice"), which Rent Notice shall be delivered by Lessor to Lessee as soon as
practicable after the debt service for the First Extended Term or the Second
Extended Term, as the case may be, has been determined but in no event less than
one hundred and eighty (180) days prior to the commencement of the First
Extended Term or the Second Extended Term, as the case may be.
The Initial Term, as it may be extended by the First Extended Term and
the Second Extended Term, is hereinafter collectively known as the "Term".
As used in this ARTICLE 3, the term default shall mean an "Event of
Default" as defined in ARTICLE 19 of this Lease.
ARTICLE IV - RENT
4.1 Throughout the Term of this Lease, Lessee shall pay to Lessor, or
as Lessor shall direct, as fixed annual rental ("Rent") for the Demised Premises
and the Personal Property over and above all other and additional payments to be
made by Lessee as provided in this Lease the following amounts:
(i) For the first Lease Year, an annual Rent of $439,079.40,
payable in equal monthly installments of $36,589.95;
(ii) For the second Lease Year and each subsequent Lease Year (of
the Initial Term or any Extended Lease Term) an amount equal to the
prior Lease Year's Rent multiplied by 1.5 times the increase, if any,
in the Cost of Living Index (as hereinafter defined) in effect on
October 1st of the current Lease Year over the Cost of Living Index in
effect on October 1st of the preceding Lease Year; provided, however,
that in no event will the increase in Rent from one Lease Year to the
next be greater than two and one-half percent (2.5%) of the sum of the
prior Lease Year's Rent nor shall such Rent decrease from the prior
Lease Year; and
(iii) The Cost of Living Index is defined as the Consumer
Price
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Index for All Xxxxx Xxxxxxxxx, X.X. Xxxx Xxxxxxx (0000-0000 = 100),
published by the BLS, or such other renamed index. If the BLS changes
the publication frequency of the Cost of Living Index so that a Cost
of Living Index is not available to make a cost-of-living adjustment
as specified herein, the cost-of-living adjustment shall be based on
the percentage difference between the Cost of Living Index for the
closest preceding month for which a Cost of Living Index is available
and Cost of Living Index for the comparison month is required by this
Lease. If the BLS changes the base reference period for the Cost of
Living Index from 1982-84 = 100, the cost-of-living adjustment shall
be determined with the use of such conversion formula or table as may
be published by the BLS. If the BLS otherwise substantially revises,
or ceases publication of the Cost of Living Index, then a substitute
index for determining cost-of-living adjustments, issued by the BLS or
by a reliable governmental or other nonpartisan publication, shall be
reasonably selected by Lessor and Lessee.
In the event the Commencement Date shall be other than the first day
of the month, Lessee shall pay to Lessor a pro rata portion of the Rent for the
month and a pro rata portion of all tax, insurance and other deposits provided
for in this Lease. All fixed annual rental payments shall be made in equal
monthly installments and shall be paid in advance on the first (1st) day of each
month (together with all tax and insurance deposits required in this Lease).
Unless otherwise notified in writing, all checks shall be made payable to Lessor
and shall be sent c/o Washington Associates, Xxx Xxxxx XxXxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000.
The Rent set forth in this ARTICLE 4 is based, in part, upon the debt
service of the permanent first mortgage financing on the Demised Premises
("Initial Financing"). In the event that the debt service payable on Lessor's
mortgage financing in effect on the date that the First Extended Term commences
is more or less that the debt service on the Initial Financing, the Rent due
during the First Extended Term shall be adjusted according to the following
formula: The annual Rent due during the first year of the First Extended Term
shall be increased or decreased in an amount equal to the difference between (i)
the annual debt service on the indebtedness secured by the first mortgage
encumbering the Demised Premises in effect on the first day of the First
Extended Term, and (ii) the annual debt service on the indebtedness secured by
the first mortgage encumbering the Demised Premises in effect on the day of the
Initial Financing; provided, however, that the amount of principal to be used in
making the calculations shall not exceed the original principal amount of the
loan encumbering the Demised Premises concurrent with Lessor's acquisition of
the Demised Premises. The subsequent annual increases as provided in ARTICLE
4.1 above for the remainder of the First Extended Term shall be calculated on
the Annual Rent payable during the first year of the First Extended Term as so
adjusted.
In the event that the debt service payable on Lessor's mortgage
financing in effect on the date that the Second Extended Term commences is more
or less than the debt service on Lessor's mortgage financing in effect on the
date the First Extended Term commences, the Rent due during the Second Extended
Term shall be adjusted according to the following formula: the annual Rent due
during the first year of the Second Extended Term shall be increased or
decreased in an amount equal to the difference between (i) the annual debt
service on the indebtedness secured by the first mortgage encumbering the
Demised Premises in effect on the first day of the Second Extended Term, and
(ii) the annual debt service on the indebtedness secured by the first mortgage
encumbering the Demised Premises on the date that the First Extended Term
commences; provided, however, that the amount of principal to be used in making
the calculation shall not exceed the original principal amount of the loan
encumbering the Demised Premises concurrent with Lessor's acquisition of the
Demised Premises. The subsequent annual increases as provided in ARTICLE 4.1
above for the remainder of the Second Extended Term shall be calculated on the
annual rent payable during the first year of the Second Extended Term as so
adjusted.
4.2 This Lease is and shall be deemed and construed to be a "pure net" or
"triple-net" lease and the Rent specified herein shall be net to the Lessor in
each year during the Term of this Lease. The Lessee shall pay
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all costs, expenses and obligations of every kind whatsoever relating to the
Demised Premises which may arise or become due during the Term of this Lease,
except for any principal and interest payments and other costs owed by Lessor
relating to any Mortgage (defined below) and Landlord's general overhead and
administrative expenses (collectively, "Additional Rent"). Lessee does hereby
indemnify the Lessor against any and all such costs, expenses and obligations.
ARTICLE V - LATE CHARGES
5.1 If payment of any sums required to be paid or deposited by Lessee
to Lessor under this Lease, and payments made by Lessor under any provision
hereof for which Lessor is entitled to reimbursement by Lessee, shall become
overdue for a period of ten (10) days beyond the date on which they are due and
payable as in this Lease provided, a late charge of 3% per month on the sums so
overdue shall become immediately due and payable to Lessor as liquidated damages
for Lessee's failure to make prompt payment and said late charges shall be
payable on the first day of the month next succeeding the month during which
such late charges become payable. If non-payment of any late charges shall
occur, Lessor shall have, in addition to all other rights and remedies, all the
rights and remedies provided for herein and by law in the case of non-payment of
Rent. No failure by Lessor to insist upon the strict performance by Lessee of
Lessee's obligations to pay late charges shall constitute a waiver by Lessor of
its rights to enforce the provisions of this Article in any instance thereafter
occurring.
ARTICLE VI- PAYMENT OF TAXES AND ASSESSMENTS
6.1 Lessee will pay or cause to be paid, as provided herein, as
additional Rent, before any fine, penalty, interest or cost may be added thereto
for the non-payment thereof, all taxes, assessments, licenses and permit fees,
charges for public utilities, and all governmental charges, general and special,
ordinary and extraordinary, foreseen and unforeseen, of any kind and nature
whatsoever which during the Term of this Lease may have been, or may be
assessed, levied, confirmed, imposed upon or become due and payable out of or in
respect of, or become a lien on the Demised Premises and/or Personal Property or
any part thereof (hereinafter collectively referred to as "Taxes and
Assessments").
6.2 Any Taxes and Assessments relating to a fiscal period of any
authority, a part of which is included within the Term of this Lease and a part
of which is included in a period of time after the Term of this Lease, shall be
adjusted pro rata between Lessor and Lessee and each party shall be responsible
for its pro rata share of any such Taxes and Assessments.
6.3 Nothing herein contained shall require Lessee to pay income taxes
assessed against Lessor, or capital levy, franchise, business license, estate,
succession or inheritance taxes of Lessor.
6.4 Lessee shall have the right to contest the amount or validity, in
whole or in part, of any Taxes and Assessments by appropriate proceedings
diligently conducted in good faith, but only after payment of such Taxes and
Assessments, unless such payment would operate as a bar to such contest or
interfere materially with the prosecution thereof, in which event, Lessee may
postpone or defer such payment only if:
(1) Neither the Demised Premises nor any part thereof would by
reason of such postponement or deferment be in danger of being
forfeited or lost; and
(2) Lessee shall have deposited with Lessor, to be held in
trust,
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cash or other security satisfactory to Lessor in an amount equal to
not less than the amount of such Taxes and Assessments which at such
time shall be actually due and payable, and such additional amounts
reasonably required by Lessor and any Mortgagee (as hereinbelow
defined) of Lessor from time to time, together with all interest and
penalties in connection therewith and all charges that may or might be
assessed against or become a charge on the Demised Premises or any
part thereof in such proceedings, or, if required by the taxing
authority, an amount deposited in trust with the taxing authority
during the pendency of any contest in lieu of any additional charge
against the Demised Premises until resolution of the contest.
Unless Lessor agrees otherwise, the cash so deposited with Lessor
shall not bear interest and the cash or securities so deposited shall be held by
Lessor until the Demised Premises or any part thereof shall have been released
and discharged and shall thereupon be returned to the Lessee, less the amount of
any loss, cost, damage and reasonable expense that Lessor or any Mortgagee has
sustained in connection with the Taxes and Assessments so contested.
6.5 Upon the termination of any such proceedings, Lessee 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, and such payment, at
Lessee's request, shall be made by Lessor out of the amount deposited with
respect to such Taxes and Assessments as aforesaid. In the event such amount is
insufficient, then the balance due shall be paid by Lessee.
6.6 Lessor shall not be required to join in any proceedings referred
to in this Article, 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 Lessor, in which event Lessor shall join in such proceedings or permit
the same to be brought in its name. Lessor shall not ultimately be subjected to
any liability for the payment of any costs or expenses in connection with any
such proceedings, and Lessee will indemnify and save harmless Lessor from any
such costs and expenses. Lessee shall be entitled to any refund of any Taxes
and Assessments and penalties or interest thereon received by Lessor but
previously reimbursed in full by Lessee.
6.7 If any income, profits or revenue tax shall be levied, assessed
or imposed upon the income, profits or revenue arising from rents payable
hereunder, whether partially or totally in lieu of or as a substitute for real
estate or personal property taxes imposed upon the Demised Premises or Personal
Property or otherwise, then Lessee shall be responsible for the payment of such
tax.
ARTICLE VII - TAX DEPOSITS
7.1 Lessee shall be required to make deposits for annual Taxes and
Assessments and, will make monthly deposits with Lessor, of an amount equal to
one twelfth (1/12) of the annual Taxes and Assessments or such greater amount as
may be required by any Mortgagee. Said deposits shall be due and payable on the
first day of each month as additional Rent, shall not bear interest and shall be
held by Lessor and/or a mortgagee of the Lessor to pay the real estate taxes as
they become due and payable. If the total of the monthly payments as made under
this Article shall be insufficient to pay the Taxes and Assessments when due,
then Lessee shall on demand pay Lessor the amount necessary to make up the
deficiency, and if appropriate, Lessee shall receive a credit against the next
monthly tax escrow payment coming due in an amount equal to said deficiency
payment.
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ARTICLE VIII - OCCUPANCY
8.1 During the Term of this Lease, the Demised Premises shall be used
and occupied by Lessee for and as a Medicare and Medicaid certified skilled care
and/or intermediate care nursing home and for no other purpose. Lessee shall at
all times maintain in good standing and full force all the licenses,
certifications and provider agreements issued by the State of Washington and any
other applicable state or federal governmental agencies, permitting the
operation on the Demised Premises of a Medicare and Medicaid certified skilled
and/or intermediate care nursing home facility with no less than one hundred
twenty three (123) licensed, and Medicaid certified beds.
8.2 Lessee will not suffer any act to be done or any condition to
exist on the Demised Premises which may be dangerous or which may, in law,
constitute a public or private nuisance or which may void or make voidable any
insurance then in force on the Demised Premises.
8.3 Except as otherwise specifically provided in this Lease, upon
termination of this Lease for any reason, Lessee will return to Lessor the
Demised Premises qualified and sufficient for licensing and certification by all
governmental agencies having jurisdiction over the Demised Premises as a
Medicare and Medicaid certified skilled and/or intermediate care nursing home
having no less than one hundred twenty three (123) licensed, and Medicaid
certified beds with licenses, certifications, and provider agreements in full
force and good standing. All the Demised Premises, with the improvements
located thereon, and all the Personal Property shall be surrendered in good
order, condition and repair, ordinary wear and tear excepted.
ARTICLE IX - INSURANCE
9.1 Lessee shall, at its sole cost and expense, during the Term of
this Lease, maintain property insurance provided by a Causes of Loss-Special
Form or similar form. Such insurance shall include an endorsement for increased
cost of construction. Such insurance shall be obtained from a responsible
company or companies approved by Lessor, not to be unreasonably withheld. Such
insurance shall, at all times, be maintained in an amount equal to the full
replacement cost of the Demised Premises and the Personal Property or in such
lesser amount as may be required by Lessor and any Mortgagee of the Demised
Premises but at all times, in an amount sufficient to prevent Lessor and Lessee
from becoming co-insurers under applicable provisions of the insurance policies.
As used herein, the term "full replacement cost" shall mean coverage for the
actual replacement cost of the Demised Premises and the Personal Property
requiring replacement from time to time which, if not agreed upon by Lessor and
Lessee, shall be determined by an appraiser, engineer, architect or contractor
reasonably selected by Lessor. Upon request by Lessee, Lessor will provide
Lessee with information in its possession which is reasonably necessary to
establish the value of the Demised Premises. Such insurance shall at all times
be payable to Lessor and Lessee as their interests may appear, and shall contain
a loss-payable clause to the holder of any Mortgage to which this Lease shall be
subject and subordinate (in accordance with ARTICLE 26 herein) , as said
Mortgagee's interest may appear. All such policies of insurance shall provide
that:
(a) They are carried in favor of the Lessor, Lessee and any
Mortgagee, as their respective interests may appear, and any loss shall be
payable as therein provided, notwithstanding any act or negligence of
Lessor or Lessee, which might otherwise result in forfeiture of insurance;
and
(b) A standard Mortgagee clause in favor of any Mortgagee, and shall
contain, if obtainable, a waiver of the insurer's right of subrogation
against funds paid under the standard Mortgagee endorsement which are to be
used to pay the cost of any repairing, rebuilding, restoring or replacing.
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9.2 Lessee shall also, at Lessee's sole cost and expense, cause to be
issued and shall maintain during the Term of this Lease:
(a) Commercial general liability insurance, including the Lessor as
an additional insured, insuring against claims for bodily injury or
property damage occurring upon, in or about the Demised Premises. Such
insurance to have limits of not less than $1,000,000 each occurrence and
$3,000,000 general aggregate and an excess or umbrella liability policy of
not less than $5,000,000 each occurrence and $5,000,000 aggregate; and
(b) Hospital Professional Liability insurance in the amount of
$1,000,000 each occurrence and $3,000,000 aggregate.
Lessor may, from time to time, or any Mortgagee may reasonably require Lessee to
change the amount or type of insurance, or to add or substitute additional
coverages, required to be maintained by Lessee hereunder. Notwithstanding the
foregoing, Lessee shall not be required to add coverage for damage to the
Demised Premises resulting from earthquake or flood as covered losses unless the
Demised Premises is classified as an earthquake or flood prone area by an
authority having jurisdiction over the Demised Premises and such authority
recommends such insurance.
9.3 All policies of insurance shall provide that they shall not be
canceled, terminated, reduced or materially modified without at least twenty
(20) days prior written notice to Lessor and any Mortgagee.
9.4 An original certificate of insurance for all insurance policies
required by this Article shall be delivered to Lessor at least five (5) days
prior to the Commencement Date at any time and from time to time within ten (10)
days after Lessor's request therefore, Lessee shall deliver to Lessor copies of
all insurance policies then being carried by Lessee pursuant to this ARTICLE 9.
9.5 Lessee shall at all times keep in effect business interruption
insurance with a loss of rents endorsement naming Lessor as an insured in an
amount at least sufficient to cover:
(a) The aggregate of the cost of all Taxes and Assessments due during
the period of the business interruption at the Facility (the "Business
Interruption Period");
(b) The cost of all insurance premiums for insurance required to be
carried by Lessee, with respect to the Demised Premises, for the Business
Interruption Period; and
(c) The aggregate of the amount of the fixed monthly rental for the
Business Interruption Period.
All proceeds of any business interruption insurance shall be applied,
first, to the payment of any and all fixed rental payments for the Business
Interruption Period; second, to the payment of any Taxes and Assessments and
insurance deposits required to be deposited for the Business Interruption
Period; and, thereafter, after all necessary repairing, rebuilding, restoring or
replacing has been completed as required by the pertinent Articles of this Lease
and the pertinent sections of any mortgage, any remaining balance of such
proceeds shall be paid over to the Lessee.
In lieu of the foregoing but subject to the terms and conditions of
this ARTICLE 9, Lessee may, at its option, obtain and maintain a blanket
insurance policy in an amount sufficient to provide all or part of the coverage
described in this ARTICLE 9.
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ARTICLE X - LESSOR'S RIGHT TO PERFORM
10.1 Should Lessee fail to perform any of its covenants herein agreed
to be performed, subject to applicable cure periods, if any, set forth in
Section 19.1 herein with respect to any such failure to perform, Lessor may
elect, but shall not be required, to make such payment or perform such
covenants, and all sums so expended by Lessor thereon shall immediately be
payable by Lessee to Lessor, with interest thereon at a rate which is the lesser
of fifteen percent (15%) per annum or the maximum rate permitted by law from
date thereof until paid, and in addition, Lessee shall reimburse Lessor for
Lessor's reasonable expenses in enforcing or performing such covenants,
including reasonable attorney's fees. Any such costs or expenses incurred or
payments made by the Lessor shall be deemed to be Additional Rent payable by
Lessee and collectible as such by Lessor.
10.2 Performance of and/or payment to discharge said Lessee's
obligations shall be optional with Lessor and such performance and payment shall
in no way constitute a waiver of, or a limitation upon, Lessor's other rights
hereunder.
10.3 Lessee hereby acknowledges and agrees that any Mortgagee shall have
the right but not the obligation to perform any covenants and pay any amounts
which Lessee has failed to so perform or pay as required under the terms of this
Lease but only to the extent such Mortgagee is entitled under the terms of its
Mortgage and the provisions of any subordination, nondisturbance and attornment
agreement which may be in effect for such Mortgage.
ARTICLE XI - REPAIRS AND MAINTENANCE
11.1 Throughout the Term of this Lease, Lessee, at its sole cost and
expense, will keep and maintain, or cause to be kept and maintained, the Demised
Premises (including the grounds, sidewalks and curbs abutting the same) and the
Personal Property in good order and condition without waste and in suitable
state of repair at least comparable to that which existed immediately prior to
the Commencement Date (ordinary wear and tear excepted, subject to Lessee's
obligation to repair and replace the same in accordance with the terms of this
Lease), and will make or cause to be made, as and when the same shall become
necessary, all structural and nonstructural, exterior and interior, replacing,
repairing and restoring necessary to that end. All replacing, repairing and
restoring required of Lessee shall be (in the reasonable opinion of Lessor) of
quality at least equal to the original work and shall be in compliance with all
standards and requirements of law, licenses and municipal ordinances necessary
to operate the Demised Premises as a Medicare and Medicaid certified skilled
and/or intermediate care nursing home having no less than one hundred twenty
three (123) licensed, and Medicaid certified beds.
11.2 Any items of Personal Property that are uneconomical to repair shall
be replaced by new items of like kind and all replacement items shall become
part of the Personal Property. No items of Personal Property shall be removed
from the Demised Premises except in connection with repair or replacement of
such items. Lessee may place additional property on the Demised Premises (not
required for the replacement of the Personal Property) and such additional
property shall be and remain the property of Lessee. Lessee shall remove such
additional property upon termination or expiration of this Lease provided that
Lessee shall make such necessary repairs or replacements as may be required in
order to return the Demised Premises to the condition which existed prior to the
removal of the additional property.
11.3 Provided there is not an Event of Default by Lessee under this
Lease, Lessee shall have the right, at any time and from time to time, to remove
and dispose of any Personal Property which may have become obsolete or unfit for
use, or which is no longer useful in the operation of the Demised Premises,
provided Lessee promptly replaces any such Personal Property so removed or
disposed of with other personal property free of any
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security interest, lien or encumbrance. Said personal property shall be of the
same character and shall be at least equal in usefulness and quality as any such
Personal Property so removed or disposed of, and such replacement property shall
automatically become the property of and shall belong to the Lessor, and Lessee
shall execute such bills of sale or other documents reasonably requested by
Lessor to vest the ownership of such personal property in Lessor.
Notwithstanding the foregoing, Lessee shall have the right to place leased
Personal Property on the Demised Premises provided that the payments due under
such leases do not exceed $4,000 per year. In the event Lessee desires to place
leased personal property on the Demised Premises having annual payments in
excess of the amount provided for herein, Lessee shall advise Lessor in writing
and Lessor shall use its reasonable best efforts to seek the approval of the
Mortgagee or an amendment of the Mortgage with respect thereto.
ARTICLE XIA - DAMAGE AND DESTRUCTION
11A.1 In the event that any part of the improvements located on the
Demised Premises or the Personal Property shall be damaged or destroyed by fire
or other casualty (any such event being called a "Casualty"), Lessee shall
promptly replace, repair and restore the same as nearly as possible to its
condition immediately prior to such Casualty, in accordance with all of the
terms, covenants and conditions and other requirements of this Lease and any
applicable Mortgage and in accordance with any subordination, nondisturbance and
attornment agreement which may be in effect for such Mortgage; provided,
however, that in the event of a Casualty occurring during the last six (6)
months of the Term or a Casualty resulting from an earthquake, flood, nuclear
accident or war which is not covered by insurance maintained by Lessee and which
renders the Demised Premises unsuitable for use as a nursing home, in the
reasonable opinion of Lessor and Lessee, then Lessee shall have the right to
terminate this Lease upon forty-five (45) days written notice to Lessor. If
applicable, the Demised Premises and the Personal Property shall be so replaced,
repaired and restored as to be of at least equal value and substantially the
same character as prior to such Casualty. If the estimated cost of any such
restoring, replacing or repairing is Fifty Thousand Dollars and no/100
($50,000.00) or more, the plans and specifications for same shall be first
submitted to and approved in writing by Lessor, which approval shall not be
unreasonably withheld, and, if reasonably required by Lessor, Lessee shall
immediately select an independent architect, approved by Lessor who shall be in
charge of such repairing, restoring or replacing. Lessee covenants that it will
give to Lessor prompt written notice of any Casualty affecting the Demised
Premises or the personal property or any portion thereof.
11A.2 Within thirty (30) days after a casualty or within thirty (30)
days after approval of the final plans and specifications (including by
Mortgagee and any governmental or quasi-governmental agency or entity exercising
jurisdiction), issuance of a building permit and any other necessary permits and
licenses for commencement of construction, whichever is later, Lessee shall
commence to restore the Demised Premises and Lessee shall complete the same
within 180 days thereafter, provided, however, that in the case of damage or
destruction which cannot with due diligence be repaired within said 180 day
period, Lessee shall have an additional period of time, not to exceed 180
additional days, to complete the reconstruction, provided Lessee is proceeding
promptly and with due diligence to complete the restoration. Lessee may utilize
all insurance proceeds available for any such repair or restoration, subject to
the terms of Section 11A.3 hereof and any required approval of any Mortgagee.
Lessee's obligation to make Rent payments and to pay all other charges required
by this Lease shall not be abated during the period of the repair or
restoration.
11A.3 No sums shall be disbursed by Lessor toward such repairing,
rebuilding, restoring or replacing unless it shall be first made to appear to
the reasonable satisfaction of Lessor that either (i) the amount received from
such insurance proceeds is sufficient to complete such work or (ii) if there is
an amount required in excess of the amount received from such insurance
proceeds, either said excess amount has been expended by Lessee or that Lessee
has deposited such excess funds with Lessor or has satisfied Lessor that it has
such funds available to it so that, in either case, the total amount available
will be sufficient to complete such repairing, rebuilding, restoring or
replacing in accordance with the provisions of any Mortgage and any plans and
specifications submitted in connection therewith, free from any liens or
encumbrances of any kind whatsoever and the funds
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held by Lessor shall be disbursed periodically during construction, but not more
than once every thirty (30) days after the presentment of architect's or general
contractor's certificates, waivers of lien, contractor's sworn statements, and
other evidence of cost and payments as may be reasonably required by Lessor or
any Mortgagee.
ARTICLE XII - ALTERATIONS AND DEMOLITION
12.1 Lessee will not remove or demolish any improvement or building
which is part of the Demised Premises or any portion thereof or allow it to be
removed or demolished, without the prior written consent of the Lessor, which
consent shall not be unreasonably withheld. Except as required by law, Lessee
further agrees that it will not make, authorize or permit to be made any changes
or alterations in or to the Demised Premises without first obtaining Lessor's
written consent thereto, which consent shall not be unreasonably withheld. All
alterations, improvements and additions to the Demised Premises shall be in
quality and class at least equal to the original work and shall become the
property of the Lessor and shall meet all building and fire codes, and all other
applicable codes, rules, regulations, laws and ordinances. Nothing herein shall
be deemed or construed to require Lessee to obtain Lessor's consent to non-
structural changes or alterations such as painting, the replacement of
wallcoverings or the replacement of floor coverings.
ARTICLE XIII - COMPLIANCE WITH LAWS
AND ORDINANCES/ENVIRONMENTAL COMPLIANCE
13.1 Throughout the Term of this Lease, Lessee, at its sole cost and
expense, will obey, observe and promptly comply with all present and future
laws, ordinances, orders, rules, regulations and requirements of any federal,
state and municipal governmental agency or authority having jurisdiction over
the Demised Premises and the operation thereof as a Medicare and Medicaid
certified skilled and/or intermediate care nursing home having no less than one
hundred twenty three (123) licensed, and Medicaid certified beds, which may be
applicable to the Personal Property and the Demised Premises and including, but
not limited to, the sidewalks, alleyways, passageways, vacant land, parking
spaces, curb cuts, curbs adjoining the Demised Premises, which are under
Lessee's control, whether or not such law, ordinance, order, rules, regulation
or requirement shall necessitate structural changes or improvements.
13.2 Lessee shall likewise observe and comply with the requirements of all
policies of public liability and fire insurance and all other policies of
insurance at any time in force with respect to the Demised Premises.
13.3 Lessee shall promptly apply for and procure and keep in good
standing and in full force and effect all necessary licenses, permits and
certifications required by any governmental authority for the purpose of
maintaining and operating on the Demised Premises a Medicare and Medicaid
certified skilled and/or intermediate care nursing home having no less than one
hundred twenty three (123) licensed, and Medicaid certified beds, and the
Demised Premises shall be qualified to participate in the Medicare and Medicaid
reimbursement programs.
13.4 Upon request, Lessee will deliver or mail to Lessor wherever Rent
is then paid, in form required for notices, copies of all exit interviews,
inspection reports and surveys, administrative proceedings and/or court actions
from all state, federal and local governmental bodies regarding the Demised
Premises or the nursing home operated thereon. Lessee shall notify Lessor
within twenty-four (24) hours after receipt thereof of any notice from any
governmental agency terminating or suspending or threatening termination or
suspension of any license, permit, provider agreement or certification relating
to the Demised Premises or the nursing home operated thereon.
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13.5 Lessee shall have the right upon written notice thereof to the
Lessor, to contest by appropriate legal proceedings, diligently conducted in
good faith, the validity or application of any law, regulation or rule mentioned
herein, and to delay compliance therewith pending the prosecution of such
proceedings; provided, however, that no civil or criminal liability would
thereby be incurred by Lessor and no lien or charge would thereby be imposed
upon or satisfied out of the Demised Premises and further provided that the
effectiveness and good standing of any license, certificate or permit affecting
the Demised Premises or the nursing home operated thereon would continue in full
force and effect during the period of such contest.
13.6 Lessee shall not generate, dispose of, release, use, handle,
possess or store any hazardous substances upon the Demised Premises except in
accordance with applicable laws, rules and regulations. Lessee shall at its
sole cost and expense promptly remove or clean up any hazardous substances
introduced onto the Demised Premises by Lessee or with its permission or at its
sufferance. Such removal or cleanup shall be in compliance with all applicable
laws and regulations. Lessee hereby agrees to indemnify and hold Lessor
harmless and agrees to defend Lessor from all losses, damages, claims,
liabilities and fines, including costs and reasonable attorneys' fees, of any
nature whatsoever in connection with the actual or alleged presence upon the
Demised Premises of any hazardous substances introduced by Lessee or with its
permission or at its sufferance.
ARTICLE XIV - DISCHARGE OF LIENS
14.1 Lessee will not create or permit to be created or to remain, and
Lessee will discharge, any lien, encumbrance or charge levied on account of any
mechanic's, laborer's or materialman's lien or, except as provided for in
Section 11.3 any conditional sale, security agreement or chattel mortgage, or
otherwise, which might be or become a lien, encumbrance or charge upon the
Demised Premises or any part thereof or the income therefrom or the Personal
Property, for work or materials or personal property furnished or supplied to,
or claimed to have been supplied to or at the request of Lessee.
14.2 If any mechanic's, laborer's or materialman's lien caused or
charged to Lessee shall at any time be filed against the Demised Premises or
Personal Property, Lessee shall have the right to contest such lien or charge,
provided, Lessee within thirty (30) days after notice of the filing thereof,
will cause the same to be discharged of record or in lieu thereof to secure
Lessor against said lien by either (i) deposit with Lessor of such security as
may be reasonably demanded by Lessor to protect against such lien, or (ii) post
a release bond in form and amount as required by applicable law and as otherwise
satisfactory to Lessor. If Lessee shall fail to cause such lien to be
discharged within the period aforesaid, or to otherwise secure Lessor as
aforesaid, then in addition to any other right or remedy, Lessor may, upon ten
(10) days notice, but shall not be obligated to, discharge the same either by
paying the amount claimed to be due or by processing the discharge of such lien
by deposit or by bonding proceedings. Any amount so paid by Lessor and all
costs and expenses incurred by Lessor in connection therewith, together with
interest thereon at a rate which is the lesser of fifteen percent (15%) per
annum or the maximum rate permitted by law, shall constitute Additional Rent
payable by Lessee under this Lease and shall be paid by Lessee to Lessor on
demand. Except as herein provided, nothing contained herein shall in any way
empower Lessee to do or suffer any act which can, may or shall cloud or encumber
Lessor's or any Mortgagee's interest in the Demised Premises.
ARTICLE XV - INSPECTION OF PREMISES BY LESSOR
15.1 At any time, during reasonable business hours and upon reasonable
notice, Lessor and/or its authorized representatives shall have the right to
enter and inspect the Demised Premises and Personal Property.
15.2 Lessor agrees that the person or persons entering and inspecting
the Demised Premises and
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Personal Property will cause as little inconvenience to the Lessee and to the
residents of the Facility as may reasonably be possible under the circumstances.
15.3 Lessee hereby acknowledges and agrees that any Mortgagee shall have
the right but not the obligation to enter and inspect the Demised Premises to
the extent such Mortgagee is entitled to do so under the terms of its Mortgage
and to the extent consistent with any subordination, nondisturbance and
attornment agreement then in effect for such Mortgage.
ARTICLE XVI - CONDEMNATION
16.1 In case all or substantially all of the Demised Premises leased
hereunder shall be taken or sold under the threat of such taking for any public
use by act of any public authorities, then this Lease shall terminate as of the
date possession is taken by the condemnor. If all or substantially all of the
Demised Premises shall be taken, the net proceeds of any condemnation award,
settlement or compromise for the Demised Premises taken shall belong to Lessor;
provided, however, Lessee shall have the right to pursue a separate award for
the value of Lessee's interest in the Demised Premises as long as such separate
award does not diminish the award, settlement or compromise paid to Lessor; and
provided, further, that Lessee shall be solely entitled to any amount awarded
for the value of Lessee's property located on the Demised Premises in accordance
with Section 11.1 and any amount for relocation and loss of business as long as
such separate award does not diminish the award. For the purposes of this
paragraph "substantially all of the Demised Premises leased hereunder" shall be
deemed to have been taken if upon the taking of less than the whole of the
Demised Premises that portion of the Demised Premises not so taken shall not by
itself be adequate for the conduct therein of Lessee's business, in the
reasonable judgment of Lessor and Lessee, subject further to the rights of
Lessor's Mortgagee.
In the event of a partial condemnation the result of which shall be a
reduction in the number of licensed beds on the Demised Premises to sixty (60)
or less, Lessee shall have the right to terminate this Lease by written notice
to Lessor within thirty (30) days following the issuance of the condemnation
order or conveyance of the property, whichever is earlier. If Lessee does not
elect to terminate this Lease, Lessor shall hold in trust that portion, if any,
of such award, settlement or compromise which shall be allocable to
consequential damage to buildings and improvements not taken, and Lessor shall
pay out such portion to Lessee to reimburse Lessee for the cost of restoring the
Demised Premises as a complete structural unit, as such restoration work
progresses in accordance with the procedure for making insurance proceeds
available for restoration, repair or rebuilding as set forth in ARTICLE 11A
hereof. In the event of a partial condemnation which does not result in a
termination of this Lease, the annual Rent rate payable under paragraph 4.1
hereof shall be reduced to such amount as Lessor and Lessee agree is fair and
equitable taking into consideration the number of operational beds remaining
after such taking as compared to the number of operational beds on the
Commencement Date.
ARTICLE XVII - RENT ABSOLUTE
17.1 The Personal Property and the Demised Premises are let and leased
subject to the rights, if any of patients currently residing in the Demised
Premises and the state of the title thereof as of the date the Lessor acquires
title from its seller, to any state of facts which an accurate survey or
physical inspection thereof might show, and to all zoning regulations,
restrictions, rules and ordinances, building restrictions and other laws and
regulations now in effect or hereafter adopted by any governmental authority
having jurisdiction thereover. Lessee has examined the Personal Property and
the Demised Premises and has found the same satisfactory. Lessee acknowledges
that the Personal Property and the Demised Premises are the property of Lessor
and that Lessee has the leasehold rights as set forth in the terms and
conditions of this Lease.
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As a material inducement to Lessor in the making of and entry into
this Lease, Lessee hereby expressly agrees as follows:
(a) It is the responsibility of the Lessee to be fully acquainted
with the nature, in all respects, of the Demised Premises, including (but
not by way of limitation); the soil and geology thereof, the waters thereof
and thereunder; the drainage thereof; the manner of construction and the
condition and state of repair and lack of repair of all improvements of
every nature; the nature, provisions and effect of all health, fire,
zoning, building, subdivision and all other use and occupancy laws,
ordinances, and regulations applicable thereto; and the nature and extent
of the rights of others with respect thereto, whether by way of reversion,
easement, right of way, prescription, adverse possession, profit,
servitude, lease, tenancy, lien, encumbrance, license, contract,
reservation, condition, right of re-entry, possibility of reverter,
sufferance or otherwise. Lessor makes no representation as to, and has no
duty to be informed with respect to, any of the matters set forth in the
preceding sentence. Lessee hereby accepts the Demised Premises as suitable
and adequate in all respects for the conduct of the business and the uses
of the Demised Premises contemplated under the provisions of the Lease.
Notwithstanding the foregoing, Lessor represents that it has no actual
knowledge of anything related to the foregoing which would cause the
Demised Premises to be materially inadequate for its permitted use
hereunder.
(b) Lessee expressly covenants and agrees that it hereby takes this
Lease and the leasehold estate hereby established upon and subject to
Lessor's title as it was acquired from its seller, including all rights,
rights of way, easements, profits, servitudes, reservations, restrictions,
conditions, exceptions, reversions, possibilities of reverter, liens,
encumbrances, occupancies, tenancies, licenses, clouds, claims and defects,
known and unknown and whether of record or not. In the event of any defect
in Lessor's title to the Demised Premises by which a third party's
paramount fee ownership of the Demised Premises requires that Lessee vacate
the Demised Premises, then in such event this Lease shall be terminated.
(c) Lessee hereby expressly waives any and all rights which it might
otherwise have against Lessor by reason of any of the foregoing, including
(but not limited to) the requirements of any inspection or examination by
Lessee of the Demised Premises.
Except as otherwise expressly provided in this Lease, this Lease shall
continue in full force and effect, and the obligations of Lessee hereunder
shall not be released, discharged or otherwise affected, by reason of: (i) any
damage to or destruction of the Demised Premises or any part thereof or the
taking of the Demised Premises or any part thereof by condemnation, requisition
or otherwise for any reason; (ii) any restriction or prevention of or
interference with any use of the Demised Premises or any part thereof including
any restriction or interference with or circumstance which prevents the use of
the Demised Premises as contemplated by Paragraph 8.1; (iii) any frustration of
Lessee's purposes hereunder, for any claim which Lessee has or might have
against Lessor; or (iv) any other occurrence whatsoever, whether similar or
dissimilar to the foregoing. However, nothing shall preclude Lessee from
bringing a separate action and Lessee is not waiving other rights and remedies
not waived herein.
ARTICLE XVIII - ASSIGNMENT AND SUBLETTING
18.1 During the Term of the Lease, Lessee shall not assign this Lease
or in any manner whatsoever sublet, assign or transfer all or any part of the
Demised Premises or in any manner whatsoever transfer or assign an interest in
the Demised Premises or any interest in the Lessee or sell or assign a
controlling number of the outstanding shares in Lessee (other than to Xxxxxx X.
Xxxxxx or an entity controlled by Xxxxxx X. Xxxxxx or a wholly owned subsidiary
of Lessee or of Lessee's parent corporation Sun Healthcare Group, Inc.) without
the
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prior written consent of the Lessor, which consent shall not be unreasonably
withheld. Any violation or breach or attempted violation or breach of the
provisions of this Article by Lessee, or any acts inconsistent herewith shall
vest no right, title or interest herein or hereunder or in the Demised Premises,
in any such transferee or assignee; and Lessor may, at its exclusive option,
terminate this Lease and invoke the provisions of this Lease relating to
default. Lessor acknowledges and agrees that the sale of equity or debt
securities in Lessee or Lessee's parent corporation shall in no event constitute
an assignment or transfer of this Lease or of an interest hereunder provided
Lessee remains a wholly owed subsidiary of Sun Healthcare Group, Inc.
ARTICLE XIX - ACTS OF DEFAULT
19.1 The following acts or events shall be deemed to be an Event of
Default (herein an "Event of Default") on the part of the Lessee:
(1) The failure of Lessee to pay when due any Rent, or any part
thereof, or any other sum or sums of money due or payable to the
Lessor under the provisions of this Lease, when such failure shall
continue for a period of ten (10) days following written notice to
Lessee;
(2) The failure of Lessee to perform, or the violation by Lessee
of, any of the other covenants, terms, conditions or provisions of
this Lease (other than as set forth in Sections 19.1(3) and 19.1(4),
if such failure or violation shall not be cured within thirty (30)
days after notice thereof by Lessor to Lessee;
(3) The removal by any local, state or federal agency having
jurisdiction over the operation of the nursing home located on the
Demised Premises of fifty percent (50%) or more of the patients
located in the nursing home;
(4) The failure of Lessee to comply, or the violation by Lessee
of, any of the terms, conditions or provisions of any Mortgage
relating to the Demised Premises of which Lessee has been made aware
and with which Lessee has agreed to comply if such failure or
violation shall not be cured within twenty (20) days (or such lesser
period as may be provided in the Mortgage) after notice thereof by
Lessor to Lessee;
(5) The voluntary transfer by Lessee of ten percent (10%) or
more of the patients located in the Demised Premises if such transfer
is not for reasons relating to the health and well being of the
patients that were transferred or such other reasons as may be
permitted by state or federal law, such as nonpayment of stay or the
welfare of other residents of the Facility;
(6) The failure of Lessee to replace, within thirty (30) days
after notice by Lessor to Lessee, a substantial portion of the
Personal Property previously removed by Lessee;
(7) The making by Lessee of an assignment for the benefit of
creditors;
(8) The levying of a writ of execution or attachment on or
against
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the property of Lessee which is not discharged or stayed by action of
Lessee contesting same, within ninety (90) days after such levy or
attachment (provided if the stay is vacated or ended, this paragraph
shall again apply);
(9) If proceedings are instituted in a court of competent
jurisdiction for the reorganization, liquidation or involuntary
dissolution of the Lessee or for its adjudication as a bankrupt or
insolvent, or for the appointment of a receiver of the property of
Lessee, and said proceedings are not dismissed and any receiver,
trustee or liquidator appointed therein is not discharged within
ninety (90) days after the institution of said proceedings;
(10) The sale of the interest of Lessee in the Demised Premises
or any portion thereof under execution or other legal process;
(11) The failure of Lessee to give notice to Lessor not less than
ten (10) days after receipt by Lessee 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
on the Demised Premises;
(12) The failure on the part of Lessee during the Term of this
Lease to cure or xxxxx any violation claimed by any governmental
authority, or any officer acting on behalf thereof, of any law, order,
ordinance, rule or regulation pertaining to the operation of the
nursing home located on Demised Premises, and within ten (10) days
prior to the expiration of any time permitted by such authority for
such cure or abatement;
(13) institution of any proceedings against Lessee by any
governmental authority either (i) to revoke any license granted to
Lessee for the operation of a skilled and/or intermediate care nursing
home within the Demised Premises, having no less than one hundred
twenty three (123) licensed beds, or (ii) decertify the nursing home
operated in the Demised Premises from participation in the Medicare or
Medicaid reimbursement program, which is not either appealed by Lessee
and stayed while Lessee's appeal thereof is pending, or revoked or
rescinded by the applicable governmental authority;
(14) The abandonment of the Demised Premises by Lessee, other
than as a result of the damage or destruction or taking thereof; or
(15) The failure of the Guarantor to perform, or the violation by
the Guarantor of, any of the covenants set forth in the Lease
Guaranty.
19.2 Except for default by Lessee in the payment of Rent or any
additional payment required hereunder, in any case where Lessor shall have given
to Lessee a written notice specifying a situation which, as hereinbefore
provided, must be remedied by Lessee within a certain time period, and, if for
causes beyond Lessee's control, it would not reasonably be possible for Lessee
to remedy such situation within such period, then, provided Lessee immediately
upon receipt of such notice shall advise Lessor in writing of Lessee's intention
to institute, and shall, as soon as reasonably possible thereafter, duly
institute, and thereafter diligently prosecute to completion, all steps
necessary to remedy such situation and shall remedy the same, and provided that
any license or certification necessary for the operation of the Demised
Premises, as a nursing facility is not affected thereby, this Lease and the Term
and estate hereby granted shall not expire and terminate at the expiration of
such
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time period as otherwise hereinbefore provided, except that in no event shall
Lessee have more than ninety (90) additional days to remedy any such situation
in the manner set forth herein, or such longer period of time granted by any
governmental agency having jurisdiction over the Facility.
ARTICLE XX - (INTENTIONALLY OMITTED)
ARTICLE XXI - LESSOR'S REMEDIES UPON DEFAULT
21.1 In the event of any Event of Default on the part of Lessee,
Lessor may, if it so elects, upon written notice to Lessee of such election,
forthwith terminate this Lease and Lessee's right to possession of the Demised
Premises, or, at the option of the Lessor, terminate Lessee's right to
possession of the Demised Premises without terminating this Lease. Upon any
such termination of this Lease, or upon any such termination of Lessee's right
to possession without termination of this Lease, Lessee shall vacate the Demised
Premises immediately, and shall quietly and peaceably deliver possession thereof
to the Lessor, and Lessee hereby grants to the Lessor full and free license to
enter into and upon the Demised Premises in such event with or without process
of law and to repossess the Demised Premises and Personal Property as the
Lessor's former estate. In the event of any such termination of this Lease, the
Lessor shall again have possession and enjoyment of the Demised Premises and
Personal Property to the extent as if this Lease had not been made, and
thereupon this Lease and everything herein contained on the part of Lessee to be
done and performed shall cease and terminate, all, however, without prejudice to
and without relinquishing the rights of the Lessor to Rent (which, upon such
termination of this Lease and entry of Lessor upon the Demised Premises, shall,
in any event, be the right to receive Rent due up to the time of such entry) or
any other right given to the Lessor hereunder or by operation of law.
21.2 In the event of any Event of Default and Lessor's election either
to terminate this Lease or to terminate Lessee's right to possession of the
Demised Premises, then all licenses, certifications, permits and authorizations
issued by any governmental agency, body or authority in connection with or
relating to the Demised Premises and the nursing home operated thereon shall be
deemed to be assigned to Lessor, to the extent permitted by law. Lessor shall
also have the right to continue to utilize the telephone number and name (other
than the name "Sunrise Healthcare" or similar name) used by Lessee in connection
with the operation of the nursing home located on the Demised Premises. This
Lease shall be deemed and construed as an assignment for purposes of vesting in
Lessor, all right, title and interest in and to: (i) all licenses,
certifications, permits and authorizations obtained in connection with the
operation of the nursing home located on the Demised Premises; and (ii) the name
and telephone number used in connection with the operation of the nursing home
located on the Demised Premises (other than the name "Sunrise Healthcare" or
similar name). Lessee hereby agrees to take such other action and execute such
other documents as may be necessary in order to vest in Lessor all right, title
and interest to the items specified herein, to the extent permitted by law.
21.3 If Lessee abandons the Demised Premises or otherwise entitles
Lessor so to elect, and the Lessor elects to terminate Lessee's right to
possession only, without terminating this Lease, Lessor may, at its option,
enter into the Demised Premises, remove Lessee's signs and other evidences of
tenancy and take and hold possession thereof as in the foregoing paragraph 21.2
of this Article provided, without such entry and possession terminating this
Lease or releasing Lessee, in whole or in part, from Lessee's obligation to pay
the Rent hereunder for the full remaining Term of this Lease, and in any such
case, Lessee shall pay to Lessor a sum equal to the entire amount of the Rent
reserved hereunder and required to be paid by Lessee up to the time of such
termination of the right of possession plus any other sums then due hereunder.
Upon and after entry into possession without termination of this Lease, Lessor
may attempt to relet the Demised Premises or any part thereof for the account of
Lessee for such Rent, or shall operate the nursing home located on the Demised
Premises for such time and upon such terms as Lessor in its sole discretion
shall determine. In any such case, Lessor may make repairs, alterations and
additions in or to the Demised Premises, and redecorate the same to the extent
deemed desirable by Lessor, and
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Lessee shall, upon demand, pay the reasonable cost thereof, together with
Lessor's reasonable expenses of reletting. If the consideration collected by
Lessor upon any such reletting is not sufficient to pay monthly the full amount
of Rent reserved in this Lease, together with the reasonable costs of repairs,
alterations, additions, redecorating and Lessor's expenses, Lessee shall pay to
the Lessor the amount of each monthly deficiency upon demand.
21.4 Lessee's liability to Lessor for damages for default in payment
of Rent or otherwise hereunder shall in all events survive the termination by
Lessor of the Lease or the termination by Lessor of Lessee's right to possession
only, as hereinabove provided. Upon such termination of the Lease or at any time
after such termination of Lessee's right to possession, Lessor may recover from
Lessee and Lessee shall pay to Lessor as damages, whether or not Lessor shall
have collected any current monthly deficiencies under the foregoing paragraph,
and in lieu of such current deficiencies after the date of demand for such
damages, the amount thereof found to be due by a court of competent
jurisdiction, which amount thus found may be equal to:
(a) the remainder, if any, of Rent and charges due from Lessee for
the period up to and including the date of the termination of the Lease or
Lessee's right to possession;
(b) the amount of any current monthly deficiencies accruing and
unpaid by Lessee up to and including the date of Lessor's demand for final
damages hereunder; and
(c) the excess, if any, of:
(i) the present value, discounted at the rate of 10% per annum,
of the Rent reserved for what would have been the remainder of the
Term of this Lease together with charges to be paid by Lessee under
the Lease; over
(ii) the present value, discounted at the rate of 10% per annum
of the then fair rental value of the Demised Premises and the Personal
Property.
If any statute or rule governing a proceeding in which such damages
are to be proved shall validly limit the amount thereof to an amount less than
the amount above agreed upon, Lessor shall be entitled to the maximum amount
allowable under such statute or rule of law.
ARTICLE XXII - LIABILITY OF LESSOR
22.1 It is expressly agreed by the parties that in no case shall Lessor,
any shareholders, officers, directors, managers, members, agents or employees of
Lessor be liable under any express or implied covenant, agreement or provisions
of this Lease, for any damages whatsoever to Lessee beyond Lessor's interest in
the Demised Premises.
ARTICLE XXIII - CUMULATIVE REMEDIES OF LESSOR
23.1 The specific remedies to which Lessor may resort under the terms
of this Lease are cumulative and are not intended to be exclusive of any other
remedies or means of redress to which Lessor may be lawfully entitled in case of
any breach or threatened breach by Lessee of any provision or provisions of this
Lease. The failure of Lessor to insist, in any one or more cases, upon the
strict performance of any of the terms, covenants, conditions, provisions or
agreements of this Lease, or to exercise any option herein contained, shall not
be
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construed as a waiver or relinquishment for the future of any such term,
covenant, condition, provisions, agreement or option.
ARTICLE XXIV - SECURITY FOR RENT
24.1 Lessor shall have a first lien paramount to all others on every
right and interest of Lessee in and to this Lease, and on any furnishings,
equipment, fixtures or other tangible property of any kind belonging to Lessee
and located in or about the Demised Premises. Such lien is granted for the
purpose of securing the payments of rents, charges, penalties, and damages
herein covenanted to be paid by Lessee, and for the purpose of securing the
performance of all of Lessee's obligations under this Lease. Such lien shall be
in addition to all rights to Lessor given and provided by law but shall only be
exercised by Lessor after the occurrence of an Event of Default which is not
cured within any applicable cure period. This Lease shall constitute a security
agreement under the Uniform Commercial Code granting Lessor a security interest
in any furnishings, equipment, fixtures, or other tangible personal property
(subject to the terms of ARTICLE 11 herein) of any kind belonging to Lessee and
located in or about the Demised Premises. If required by Lessor, Lessee shall
execute financing statements for filing under the Uniform Commercial Code
reflecting the security interest granted under this section.
Notwithstanding anything to the contrary contained in this Section
24.1, in the event all or substantially all of the Demised Premises or the Lease
is sublet, assigned or transferred, or a controlling number of the outstanding
shares in Lessee is sold, assigned or otherwise transferred (other than to
Xxxxxx X. Xxxxxx or an entity controlled by Xxxxxx X. Xxxxxx or a wholly owned
subsidiary of Lessee or of Lessee's parent corporation Sun Healthcare Group,
Inc.) with the prior written consent of the Lessor in accordance with Section
18.1 of this Lease, this Lease shall at such time only constitute a security
agreement under the Uniform Commercial Code granting Lessor a security interest
in any accounts receivable of Lessee's successor related to the Demised Premises
and at such time, Lessee's successor shall execute a security agreement and
financing statements for filing under the Uniform Commercial Code reflecting a
security interest in said accounts receivable.
ARTICLE XXV - INDEMNIFICATION
25.1 To the extent insurance proceeds do not cover same, Lessee.
agrees to protect, indemnify, defend and save harmless the Lessor from and
against any and all claims, demands and causes of action of any nature
whatsoever for injury to or death of persons or loss of or damage to property,
occurring during the Term on the Demised Premises or, to the extent the same are
under Lessee's control, any adjoining sidewalks, streets or ways, or in any
manner growing out of or connected with the use and occupation of the Demised
Premises by Lessee, its officers, agents, employees or invitees, or Lessee's
maintenance of the condition thereof, or the use of any existing or future sewer
system, or the use of any adjoining sidewalks, streets or ways which are under
Lessee's control during the Term of this Lease, and Lessee further agrees to pay
any reasonable attorneys' fees and expenses incident to the defense by Lessor of
any such claims, demands or causes of action.
ARTICLE XXVI - SUBORDINATION PROVISIONS
26.1 This Lease (and Lessee's interest in the Demised Premises and
Personal Property) shall be subject and subordinate to any and all mortgages or
deeds of trust now or hereafter in force and affecting the Demised Premises (or
any portion thereof) and/or the Personal Property, and to all renewals,
modifications, consolidations, replacements and extensions thereof (any such
Mortgage or deed of trust, as it may be renewed, modified, consolidated,
replaced or extended is hereinafter referred to as a "Mortgage", and the holder
or beneficiary of a
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Mortgage is hereinafter referred to as a "Mortgagee"), provided that, for other
than Existing Mortgages (as defined below), Lessee receives a subordination,
nondisturbance and attornment agreement in a commercially reasonable form
satisfactory to such Mortgagee. Lessee agrees to execute, acknowledge and
deliver upon demand such further instruments subordinating this Lease to any
such Mortgage, or other liens or encumbrances as shall be desired by Lessor;
provided, that Lessee receives a subordination, nondisturbance and attornment
agreement, in a commercially reasonable form satisfactory to such Mortgagee.
Furthermore, in connection with any mortgage loan pertaining to the Demised
Premises existing as of the date of this Lease (an "Existing Mortgage"), Lessor
agrees to use all commercially reasonable efforts to deliver to Lessee a
nondisturbance agreement from the current Mortgagee in a form reasonably
satisfactory to such Mortgagee on the Commencement Date or as soon as possible
thereafter. Lessee further agrees that promptly after receipt of a request from
any Mortgagee made at any time prior to foreclosure of its Mortgage, Lessee
shall execute, acknowledge and deliver to such Mortgagee any instrument as such
Mortgagee may reasonably request whereby Lessee agrees to subordinate and attorn
to such Mortgagee, at such Mortgagee's election, after the foreclosure of its
Mortgage or its acceptance of a deed in lieu of foreclosure, provided that
Lessee concurrently receives a nondisturbance agreement in commercially
reasonable form satisfactory to such Mortgagee. Lessee agrees further that any
Mortgagee shall have the right to subordinate its Mortgage and its rights
thereunder to this Lease, except that such Mortgagee shall be entitled to
expressly exclude from such subordination the Mortgagee's rights, if any, to
insurance proceeds and eminent domain awards in the event of a loss or casualty
or eminent domain taking of the Demised Premises or any portion thereof. If
such Mortgagee executes and records an instrument which purports to effect a
partial or complete subordination of its Mortgage to this Lease, any rights of
such Mortgagee to insurance proceeds or eminent domain awards which are
expressly excluded from such subordination shall remain superior to the rights
of Lessee.
ARTICLE XXVII - LESSEE'S FAITHFUL COMPLIANCE WITH MORTGAGES
27.1 Subject to the terms of any subordination, nondisturbance and
attornment agreement which may be in effect, and anything in this Lease
contained to the contrary notwithstanding, Lessee shall at all times and in all
respects fully, timely and faithfully comply with and observe each and all of
the conditions, covenants, and provisions required on the part of the Lessor and
of which Lessee has received notice under any Mortgage (and to any renewals,
modifications, extensions, replacements and/or consolidations thereof) to which
this Lease is subordinate or to which it later may become subordinate,
including, without limitation, such conditions, covenants and provisions thereof
as relate to the care, maintenance, repair, insurance, restoration, preservation
and condemnation of the Demised Premises, notwithstanding that such conditions,
covenants and provisions may require compliance and observance to a standard or
degree in excess of that required by the provisions of this Lease, or may
require performance not required by the provisions of this Lease, and shall not
do or permit to be done anything which would constitute a breach of or default
under any obligation of the Lessor under any such mortgage, it being the
intention hereof that Lessee shall so comply with and observe each and all of
such covenants, conditions and provisions of any such Mortgage affecting the
Demised Premises so that it will at all times be in good standing and there will
not be any default on the part of the Lessor thereunder. However, nothing in
this Article contained shall be construed to obligate Lessee to pay any part of
the principal or interest secured by any Mortgage or to perform any obligation
imposed on Lessor thereunder which is not delegable by Lessor by the terms
thereof. Lessee further covenants and agrees that Lessee shall give any
Mortgagee notice of any Lessor default under this Lease, and if Lessor fails to
cure such default, such Mortgagee shall have an additional reasonable time to
cure any such default on Lessor's behalf.
ARTICLE XXVIII - MORTGAGE RESERVES
28.1 Any tax, insurance or other reserve required by the holder of any
Mortgage against the Demised Premises during the Term of this Lease (except for
any payments resulting from Lessor's failure to comply with the terms of the
Mortgage), and not otherwise paid by Lessee to Lessor pursuant to Section 7.1,
shall be paid by
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the Lessee or as directed by Lessor.
ARTICLE XXIX - LESSEE'S ATTORNMENT
29.1 Lessee covenants and agrees that, if by reason of a default upon
the part of the Lessor herein in the performance of any of the terms and
conditions of any Mortgage which results in the estate of the Lessor thereunder
being terminated by summary dispossession proceedings or otherwise, Lessee will
attorn to the then holder of such Mortgage or the purchaser in such foreclosure
proceedings, as the case may be, and will recognize such holder of the Mortgage
or such purchaser as the Lessor under this Lease. Lessee covenants and agrees to
execute and deliver, at any time and from time to time, upon the request of
Lessor or of the holder of such Mortgage or the purchaser in foreclosure
proceedings, any instrument which may be necessary or appropriate to evidence
such attornment. Lessee further waives the provisions of any statute or rule of
law now or hereafter in effect which may terminate this Lease or give or purport
to give Lessee any right of election to terminate this Lease or to surrender
possession of the Demised Premises in the event any such proceedings are brought
against the Lessor under such Mortgage or the holder of any such Mortgage, and
agrees that this Lease shall not be affected in any way whatsoever by any such
proceedings.
29.2 If Lessor shall default in the performance of any of the terms,
provisions, covenants or conditions under any Mortgage, or fails to pay the
amounts due thereunder when due, then immediately upon notice of such default or
failure on the part of Lessor, Lessee shall have the right to cure such
defaults, and to make such payments as are due from Lessor, directly to the
holder of the Mortgage, as the case may be, and to the extent such payments are
accepted by the holder of the Mortgage, to deduct the amounts expended by Lessee
to cure such defaults, together with interest thereon from the date of payment
by Lessee at a rate which is the lesser of fifteen percent (15%) per annum or
the maximum rate permitted by law, from the next succeeding rental payment or
payments due under this Lease, and such deductions shall not constitute a
default under this Lease.
ARTICLE XXX - REPRESENTATIONS AND WARRANTIES
30.1 Lessee represents, warrants and covenants to Lessor as follows:
(a) Lessee is a corporation organized and validly existing under the
laws of the State of New Mexico, and is authorized to transact business in
the State of Washington; and
(b) Lessee has full corporate right and power to enter into, or
perform its obligations under this Lease and has taken all requisite
corporate action to authorize the execution, delivery and performance of
this Lease.
30.2 Lessor represents, warrants and covenants to Lessee as follows:
(a) Lessor is a limited partnership duly organized and validly
existing under the laws of the State of Illinois; and
(b) Lessor has full power and authority to enter into this Lease and
to carry out the transactions contemplated herein.
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ARTICLE XXXI - SECURITY DEPOSIT
31.1 As additional security for the faithful and prompt performance of
its obligations hereunder, Lessee shall concurrently with the execution of this
Lease pay to Lessor, as a security deposit the sum of One Hundred Nine Thousand
Seven Hundred Sixty Nine and 85/100 Dollars ($109,769.85), payable on the first
day of the Term. Said security deposit may be applied by Lessor for the purpose
of curing any default or defaults of Lessee hereunder, in which event Lessee
shall replenish said deposit in full by promptly paying to Lessor the amount so
applied. Lessor shall not pay any interest on said deposit, except as required
by law. If Lessee has not defaulted hereunder and Lessor has not applied said
deposit to cure a default, then said deposit, or such applicable portion
thereof, shall be paid to Lessee within thirty (30) days after the termination
of this Lease. Said deposit shall not be deemed an advance payment of Rent or a
measure of Lessor's damages for any default hereunder by Lessee.
ARTICLE XXXII - FINANCIAL STATEMENTS
32.1 Within 120 days after the end of each of its fiscal years, Lessee
shall furnish to Lessor full and complete financial statements of the operations
of the Demised Premises and nursing home operated thereon for such annual fiscal
period which shall be prepared by or on behalf of Lessee, and which shall
contain a balance sheet and detailed income and expense statement (collectively
called "Financial Statements"), and copies of all Medicaid and Medicare cost
reports as filed with the governmental authority, as of the end of the fiscal
year. In addition, Lessee shall furnish Lessor, within 10 days following
filing, a copy of its or its parent corporation's federal income tax return if
it does not file separate returns for the preceding year. Each such statement
shall be certified as being true and correct by an officer of Lessee.
32.2 Within thirty (30) days after each calendar quarter, Lessee shall
furnish to Lessor copies of all Financial Statements for the Demised Premises
prepared by Lessee for the preceding calendar quarter.
32.3 At all times, Lessee shall keep and maintain full and correct
records and books of account of the operations of Lessee in the Demised Premises
and records and books of account of the entire business operations of Lessee in
accordance with sound accounting practices. Upon request by Lessor, Lessee shall
make available for inspection by Lessor or its designee, during reasonable
business hours, the said records and books of account covering the entire
business operations of Lessee on the Demised Premises.
ARTICLE XXXIII -
TRANSFER OF OPERATIONS UPON TERMINATION OF LEASE
33.1 The date on which this Lease either terminates pursuant to its
Terms or is terminated by either party whether pursuant to a right granted to it
hereunder or otherwise shall be referred to as the "Closing Date" in this
Article. On the Closing Date, this Lease shall be deemed and construed as an
absolute assignment for purposes of vesting in Lessor or Lessor's designee all
of Lessee'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
Demised Premises (the "Intangibles") and an assumption by Lessor of Lessee's
obligations under the Intangibles other Intangibles from and after the Closing
Date; provided that from and after the Closing Date, Lessee shall indemnify,
defend and hold harmless Lessor against any claims, losses, costs or damages,
including reasonable attorneys' fees incurred or arising by reason of Lessee's
obligations under the Intangibles prior to the Closing Date:
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(a) service contracts for the benefit of the Demised Premises to
which Lessee is a party, and which can be terminated without penalty
within sixty (60) or fewer days' notice or which Lessor requests be
assigned to Lessor or its designee pursuant to this ARTICLE 33;
(b) any provider agreements with Medicare, Medicaid or any other
third-party payor programs (excluding the right to any reimbursement for
periods on or prior to the Closing Date) entered in connection with the
Demised Premises to the extent assignable by Lessee;
(c) all licenses, permits, accreditations, and certificates of
occupancy issued by any federal, state, municipal or quasi-governmental
authority for the use, maintenance or operation of the Demised Premises,
running to or in favor of Lessee, to the extent assignable by Lessee;
(d) all documents, charts, personnel records, property manuals,
resident/patient records and lists maintained with respect to the Demised
Premises (subject to the resident's rights to access to his/her medical
records as provided by law and confidentiality requirements), books,
records, files and other business records attributable to the business or
operations of the Demised Premises to the extent assignable by Lessee;
(e) all existing agreements with residents and any guarantors thereof
of the Demised Premises, to the extent assignable by Lessee (excluding the
right to any payments for periods prior to the Closing Date) any and all
patient trust fund accounts;
(f) all assignable guaranties and warranties in favor of Lessee with
respect to the Demised Premises and/or the Personal Property;
(g) all other assignable intangible property not enumerated herein
which is now or hereafter used in connection with the operation of the
Demised Premises as a long-term care facility; and
(h) At Lessors option, the business of the Lessee as conducted at the
Demised Premises 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 specifically excluding the name "Sunrise Healthcare" or
similar name, or any Sunrise policy or procedure manuals, forms or systems,
or other confidential or proprietary information.
33.2 Lessee shall be responsible for, and pay all accrued expenses
with respect to the Demised Premises and Personal Property accruing before 12:00
a.m. on the Closing Date and shall be entitled to all revenues from the Demised
Premises for the period through 12:00 a.m. on the Closing Date. Lessor shall be
responsible for and pay all accrued expenses with respect to the Demised
Premises accruing on or after 12:01 a.m. on the day after the Closing Date and
shall be entitled to receive and retain all revenues from the Demised Premises
accruing on or after the Closing Date. Within fifteen (15) business days after
the Closing Date, the following adjustments and prorations shall be determined
as of the Closing Date and the party to whom payment is owed shall receive said
payment within said fifteen (15) day period:
(a) Real estate taxes, ad valorem taxes, school taxes, assessments
and personal property, intangible and use taxes, if any. If the actual ad
valorem taxes are not available on the Closing Date for the tax year in
which the Closing Date occurs, the proration of such taxes shall be
estimated at the Closing Date 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 when actual
figures are published or otherwise become available.
(b) Lessee will terminate the employment of all employees on the
Closing Date.
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The obligation for wages and the obligation, if any, to pay to employees of
the Demised Premises accrued vacation and sick leave pay or employee
severance pay or other accrued benefits which may be payable as the result
of any termination of any employee on or prior to the Closing Date for the
period prior to the Closing Date shall remain the Lessee's obligation after
the Closing Date.
(c) Lessor shall receive a credit equal to any advance payments
received by Lessee from patients of the Demised Premises to the extent
attributable to periods following the Closing Date.
(d) The present insurance coverage on the Demised Premises shall be
terminated as of the Closing Date and there shall be no proration of
insurance premiums.
(e) All other income from, and expenses of, the Demised Premises
(other than Mortgage interest and principal), including but not limited to
public utility charges and deposits, maintenance charges and service
charges shall be prorated between Lessee and Lessor as of the Closing Date.
Lessee shall, if possible, obtain final utility meter readings as of the
Closing Date. To the extent that information for any such proration is not
available on the Closing Date, Lessee and Lessor shall effect such
proration within ninety (90) days after the Closing Date or as soon
thereafter as such information becomes available.
(f) Lessee shall receive a credit equal to (i) any sums held in
escrow by Lessor or the holder of any Mortgage for taxes or insurance
premiums; and (ii) any other sums being held by Lessor for the benefit of
Lessee provided that any such sums are not needed to pay costs and expenses
which relate to the period prior to the Closing Date, in accordance with
the applicable provisions of this Lease.
(g) Subject to the terms of ARTICLE 31 hereof, Lessee shall receive a
credit for any security deposit made pursuant to this Lease.
(h) Lessor shall receive a credit for any amounts due from Lessee
pursuant to the terms of this Lease, including payments due to third party
vendors, which are paid by Lessor on behalf of Lessee.
(i) Lessee shall be and will remain responsible for any employee's
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.
33.3 All necessary arrangements shall be made to provide possession of
the Demised Premises to Lessor on the Closing Date, at which time of possession
Lessee shall, to the extent permitted by law, deliver to Lessor all medical
records, patient records and other personal information concerning all patients
residing at the Demised Premises as of the Closing Date and other relevant
records used or developed in connection with the business conducted at the
Demised Premises other than Lessee's corporate business records, manuals, forms
and systems documentation or other confidential or proprietary information.
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.
33.4 Within fifteen (15) days following the Closing Date, Lessee shall
provide Lessor with an accounting of all funds belonging to patients at the
Demised Premises which are held by Lessee 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 the Lessee's warranty
that, to the actual current knowledge of Lessee, the accounting is true, correct
and complete. Additionally, Lessee, in accordance with all applicable rules and
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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 the Lessee's financial and custodial
obligations with respect thereto. Notwithstanding the foregoing, Lessee will
indemnify and hold Lessor harmless from all liabilities, claims and demands,
including reasonable attorney's 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
Lessee 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 accrue during the Term of this Lease.
33.5 For the period commencing upon an Event of Default hereunder and
Lessor's election to terminate this Lease as provided in ARTICLE 21 and ending
on the date Lessor or its designee obtains all appropriate state or other
governmental licenses and certifications required to operate the Demised
Premises as a Medicare and Medicaid certified nursing home, Lessee shall enter
into a management agreement with Lessor or Lessor's designee whereby Lessor or
its designee shall have the right to operate the Demised Premises, on a triple
net basis, and shall be entitled to all revenues of the Demised Premises during
such period, and to use any and all licenses, certifications and provider
agreements issued to Lessee by any federal, state or other governmental
authority for such operation of the Demised Premises, if permitted by such
governmental authorities.
33.6 All cash, checks and cash equivalents at the Demised Premises and
deposits in bank accounts (other than patient trust accounts) relating to the
Demised Premises on the Closing Date shall remain Lessee's property after the
Closing Date. All accounts receivable, loans receivable and other receivables
of Lessee, whether derived from operation of the Demised Premises or otherwise,
shall remain the property of Lessee after the Closing Date. Lessee shall retain
full responsibility for the collection thereof. Lessor shall assume
responsibility for the billing and collection of payment on account of services
rendered by it on and after the Closing Date. In order to facilitate Lessee's
collection efforts, Lessee 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 month 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 balances
of said patients by promptly remitting said payments to Lessee. In the event
payments specifically indicate that they relate to services rendered post-
Closing, such payments shall be retained by Lessor. In the event no designation
is made, such payments shall be applied one-half to Lessee's accounts receivable
and one-half to Lessor's accounts receivable. Lessor shall cooperate with
Lessee in Lessee's collection of its pre-Closing accounts 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 Lessee. Subject
to the provisions of ARTICLE 24 hereof, Lessor shall remit to Lessee or its
assignee those portions of any payments received by Lessor which are
specifically designated as repayment or reimbursement received by Lessor arising
out of cost reports filed for the cost reporting periods ending prior to the
Closing Date.
33.7 With respect to residents in the Demised Premises on the Closing
Date, Lessor and Lessee agree as follows:
(a) With respect to Medicare and Medicaid residents, Lessor and
Lessee agree that payment for in-house residents covered by Medicare or
Medicaid on the Closing Date will, under current regulations, be paid by
Medicare or Medicaid directly to Lessee for services rendered at the
Demised Premises prior to the Closing Date allocated on the per diem basis.
Said payments shall be the sole responsibility of Lessee and, except as
provided in Section 33.7(b) below, Lessor shall in no way be liable
therefor. After the Closing Date, Lessor and Lessee 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.
(b) If, following the Closing Date, Lessor receives payment from any
state or federal agency or third-party payor which represents
reimbursement with respect to services
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provided at the Demised Premises prior to the Closing Date, Lessor agrees
that it shall remit such payments to Lessee. Payments by Lessor to Lessee
shall be accompanied by a copy of the appropriate remittance advice.
33.8 In addition to the obligations required to be performed hereunder
by Lessee and Lessor at the Closing Date, Lessee 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. The obligations hereunder shall survive termination or
expiration of the Lease.
33.9 Lessee and Lessor each, for itself, its successors and assigns
hereby indemnifies and agrees to defend and hold the other and its successors
and assigns harmless from any and all claims, demands, obligations, losses,
liabilities, damages, recoveries and deficiencies (including interest, penalties
and reasonable attorney's fees, costs and expenses) (hereinafter collectively
"the Claims") which any of them may suffer as a result of the breach by the
other party in the performance of any of its commitments, covenants, or
obligations under this ARTICLE 33. Lessee does further agree to indemnify,
defend and hold harmless Lessor from any such Claims or with respect to any
suits, arbitration proceedings, administrative actions or investigations which
relate to the use by Lessee of the Demised Premises prior to the Closing Date or
any liability which may arise from operation by Lessee of the Demised Premises
as a nursing home prior to the Closing Date or any amounts recaptured under
Title XIX based upon applicable Medicare/Medicaid Recapture Regulations. Lessor
does further agree to indemnify, defend and hold harmless Lessee from any such
Claims or with respect to any suits, arbitration proceedings, administrative
actions or investigations which relate to the ownership of the Demised Premises
by Lessor or the use of the Demised Premises by Lessor or the operation by
Lessor of the nursing home located thereon after the Closing Date. The rights
of the parties under this paragraph are without prejudice to any other remedies
not inconsistent herewith which the parties may have pursuant to the terms of
this Lease, provided the rights of Lessee hereunder are subject to Section 22.1
hereof.
33.10 Anything to the contrary contained in this ARTICLE 33
notwithstanding, in the event the termination of this Lease is due to a default
by Lessee, none of the provisions of this ARTICLE 33 shall in any way limit,
reduce, restrict or modify the rights granted to Lessor pursuant to ARTICLES 21,
23, and 24 of this Lease. If the termination of this Lease is a result of an
Event of Default, then to the extent any monies are due to Lessee pursuant to
this ARTICLE 33, such sums shall be applied by Lessor to any damages suffered by
Lessor as a result of Lessee's Event of Default.
ARTICLE XXXIV - MISCELLANEOUS
34.1 Lessee, upon paying the fixed Rent, Additional Rent including
Taxes and Assessments and all other charges herein provided, and upon observing
and keeping the covenants, agreements, terms and conditions of this Lease on its
part to be performed, shall lawfully and quietly hold, occupy and enjoy the
Demised Premises during the Term of this Lease, and subject to its terms,
without hindrance by Lessor or by any other person or persons claiming under
Lessor.
34.2 All payments to be made by the Lessee hereunder, whether or not
designated as Rent, shall be deemed Additional Rent, so that in the event of a
default of payment when due, the Lessor shall be entitled to all of the remedies
available at law or equity, or under this Lease, for the nonpayment of Rent.
34.3 It is understood and agreed that the granting of any consent by
Lessor to Lessee to perform any act of Lessee requiring Lessor's consent under
the terms of this Lease, or the failure on the part of Lessor to object to any
such action taken by Lessee without Lessor's consent, shall not be deemed a
waiver by Lessor of its rights to require such consent for any further similar
act by Lessee, and Lessee hereby expressly covenants and warrants
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that as to all matters requiring Lessor's consent under the terms of this Lease,
Lessee shall secure such consent for each and every happening of the event
requiring such consent, and shall not claim any waiver on the part of Lessor of
the requirement to secure such consent.
34.4 Lessee and Lessor each represent to the other party that it did
not deal with any broker in connection with this Lease, and hereby indemnifies
the other party against the claims or demands of any broker claimed through a
relationship with it.
34.5 If an action shall be brought to recover any rental under this
Lease, or for or on account of any breach of or to enforce or interpret any of
the terms, covenants or conditions of this Lease, or for the recovery of
possession of the Demised Premises, the prevailing party shall be entitled to
recover from the other party, as part of the prevailing party's costs,
reasonable attorney's fees, the amount of which shall be fixed by the court and
shall be made a part of any judgment rendered.
34.6 Should Lessee hold possession hereunder after the expiration of
the Term this Lease with the consent of Lessor, Lessee shall become a tenant on
a month-to-month basis upon all the terms, covenants and conditions herein
specified, excepting however that Lessee shall pay Lessor a monthly rental, for
the period of such month-to-month tenancy, in an amount equal to one hundred
fifty percent (150%) the last rental specified.
34.7 Any notice, or demand required to be given by either party to the
other shall be in writing and shall be sent by (a) personal delivery, (b)
expedited delivery service with proof of delivery, (c) United States
registered/certified mail, return receipt requested or (d) prepaid telecopy,
telegram, telex or fax, addressed to the other party hereto at the address set
forth below:
If to Lessor: Washington Associates
c/x Xxxxxx Capital Ventures, Inc.
Suite 0000
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
If to Lessee: Sunrise Healthcare Corporation
000 Xxx Xxxx X.X.
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Mr. Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
or if written notification of a change of address has been sent, to such other
party and/or to such other address as may be designated in that written
notification. Any such notice or demand shall be deemed to have been given
either at the time of personal delivery or in the case of service by mail, as of
the date of first attempted delivery at the address and in the manner provided
herein, or in the case of telecopy, telegram or telex, upon receipt.
34.8 Upon demand by either party, Lessor and Lessee agree to execute
and deliver a Memorandum of Lease in recordable form so that the same may be
recorded by either party and the costs thereof shall be borne by the party
requesting recordation of the Memorandum.
34.9 Each party agrees any time, and from time to time, upon not less
than ten (10) days prior written request from the other party, to execute,
acknowledge and deliver to the other party a statement in writing, certifying
that this Lease is unmodified and in full force and effect (or if there have
been modifications, that the
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same is in full force and effect as modified, and stating the modifications),
the dates to which Rent has been paid, the amount of the Security Deposit held
by Lessor, and whether the Lease is then in default or whether any events have
occurred which, with the giving of notice or the passage of time, or both, could
constitute a default hereunder, it being intended that any such statement
delivered pursuant to this paragraph may be relied upon by any prospective
assignee, Mortgagee or purchaser of the fee interest in the Demised Premises or
of this Lease.
34.10 All of the provisions of this Lease shall be deemed and construed
to be "conditions" and "covenants" as though the words specifically expressing
or importing covenants and conditions were used in each separate provision
hereof.
34.11 Any reference herein to the termination of this Lease shall be
deemed to include any termination thereof by expiration or pursuant to Articles
referring to earlier termination.
34.12 The headings and titles in this Lease are inserted only as a
matter of convenience and for reference and in no way define, limit or describe
the scope or intent of this Lease, nor in any way affect this Lease.
34.13 This Lease contains the entire agreement between the parties and
any executory agreement hereafter made shall be ineffective to change, modify or
discharge it in whole or in part unless such executory agreement is in writing
and signed by the party against whom enforcement of the change, modification or
discharge is sought. This Lease cannot be changed orally or terminated orally.
34.14 Except as otherwise herein expressly provided, the covenants,
conditions and agreements in this Lease shall bind and inure to the benefit of
the Lessor and Lessee and their respective successors and assigns.
34.15 All nouns and pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural as the identity
of the person or persons, firm or firms, corporation or corporations, entity or
entities or any other thing or things may require.
34.16 If any term or provision of this Lease shall to any extent be
held invalid or unenforceable, the remaining terms and provisions of this Lease
shall not be affected thereby, but each term and provision shall be valid and be
enforceable to the fullest extent permitted by law.
34.17 In the event of any conveyance or other divestiture of title to
the Demised Premises, the grantor or the person who is divested of title shall
be entirely freed and relieved of all covenants and obligations thereafter
accruing hereunder, and the grantee or the person who otherwise succeeds to
title shall be deemed to have assumed the covenants and obligations of the
grantor or the person who is divested of title thereafter accruing hereunder and
shall then be the Lessor under this Lease. Notwithstanding anything to the
contrary provided in this Lease, if Lessor or any successor in interest of
Lessor shall be an individual, partnership, corporation, trust, tenant in common
or Mortgagee, there shall be absolutely no personal liability on the part of any
individual or member of Lessor or any stockholder, director, officer, employee,
partner or trustee of Lessor with respect to the terms, covenants or conditions
of this Lease, and Lessee shall look solely to the interest of Lessor in the
Demised Premises for the satisfaction of each and every remedy which Lessee may
have for the breach of this Lease; such exculpation from personal liability to
be absolute and without any exception, whatsoever.
34.18 The failure of either party to insist on strict performance of
any of the covenants, agreements, terms, and conditions of this Lease or to
exercise any option conferred herein in any one or more instances shall not be
construed to be a waiver or relinquishment of any such covenant, agreement,
term, condition or option and the same shall be and remain in full force and
effect.
34.19 This Lease may be executed in counterparts, each of which shall
be deemed to be an original but all of which taken together shall constitute but
one and the same instrument.
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34.20 This Lease shall be governed by and construed in accordance with
the laws of the State of Washington.
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be signed
by persons authorized so to do on behalf of each of them respectively the day
and year just above written.
LESSOR: LESSEE:
WASHINGTON ASSOCIATES, SUNRISE HEALTHCARE CORPORATION,
an Illinois limited partnership a New Mexico corporation
By: Washington L.L.C., an Illinois limited
liability company
Its: general partner
By: By:
----------------------------------- ------------------------------
Xxx Xxxxxxx, Manager
By:
---------------------------------
Xxxxxx Xxxxxx, Manager
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EXHIBIT B
To be completed within thirty (30) days of Commencement Date
