SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): August 31,
1999
HEALTHCARE INVESTORS OF AMERICA, INC.
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(Exact name of registrant as specified in its charter)
Maryland 33-11863 86-0576027
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- -
(State or other (Commission (IRS Employer
jurisdiction of File Identification
incorporation) Number) Number)
2990 N. Swan Road, Suite 228, Tucson, Arizona 85712
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (520) 326-2000
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(Former name or former address, if changed since last report)
ITEM 2. Acquisition or Disposition of Assets.
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Healthcare Investors of America, Inc. (the "Registrant"), a
Maryland corporation, Bayshore Healthcare Services, Inc.
("BHS"), an Arizona corporation (the Registrant and BHS are
collectively hereinafter referred to as the "Sellers"), and
Abraham Shaulson (the "Buyer") entered into a Purchase and Sale
Agreement (the "Original Agreement"), dated as June 3, 1999, as
amended by Amendment to Purchase and Sale Agreement (the
"Amendment," which together with the Original Agreement is
hereinafter collectively referred to as the "Agreement"), dated
as of August 31, 1999. Under the Agreement, Sellers have agreed
to sell all of the real estate, personal property, inventory,
trademarks and other intangibles, and patient contracts
(collectively, the "Assets") to Buyer with respect to the
Bayshore Convalescent Center ("Bayshore") located at 16650 West
Dixie Highway, Miami, Florida. Excepted from the Asset sale is
all cash, accounts receivables, prepaid expenses, notes
receivable and personal property of the residents at Bayshore.
Buyer agreed to pay Sellers $5,750,000 (the "Purchase
Price") for Sellers' Assets as follows:
(i) $350,000 (the "Deposit") from Buyer to Sellers as a
nonrefundable deposit except in the event of a default
by Sellers under the Agreement; and
(ii) The balance of the purchase price due on the closing
date scheduled on or before October 31, 2000 (the
"Closing Date").
The Agreement provides for the allocation of the Purchase
Price between the Sellers in accordance with a schedule that
will be attached to the Agreement. To date, the Sellers have
not made an allocation to disclose on the schedule that the
Sellers will attach to the Agreement.
With the execution of the Amendment, the Buyer deposited
$150,000 into a separate interest bearing account of Sellers.
The proceeds in this account are for capital improvements to
Bayshore, as described in the Agreement. Buyer is responsible
for the completion of the improvements. Buyer submits evidence
of the completion of the improvements and costs to Sellers for
reimbursement by Sellers. Upon the closing of the sale under
the Agreement, any amount not used for the completion of
improvements shall be applied to the Purchase Price. If the
Asset sale fails to close by the Closing Date for any reason
other than a default by the Sellers, any amount not used for
capital improvements shall become the property of the Sellers.
Pending the closing of the sale under the Agreement,
Sellers have agreed to have the Registrant lease Bayshore to a
Buyer affiliate. The terms of the Lease (the "Lease"), dated as
of July 30, 1999, from the Registrant to Watercrest Nursing and
Rehabilitation Center, Inc. (the "Lessee"), are as follows:
The initial term of the Lease commenced September 1, 1999
and ends August 31, 2000. The base rent for Bayshore is $47,814
per month payable on the 20th day of each calendar month plus
such additional amounts that may be necessary to cover the debt
service under the loan agreement between the Registrant and any
mortgagee of Bayshore. Lessee assumes the obligation to pay all
taxes and other charges which arise out of Bayshore. Lessee is
responsible for all utilities, insurance premiums related to the
premises including a $2,500 monthly insurance administration fee
due the Registrant for monitoring the insurance coverage of
Bayshore.
In the event of a partial condemnation or damage to or
destruction of Bayshore, which does not render Bayshore
unsuitable for its primary intended use, the rent shall be
abated to the extent that it is fair, just and equitable to both
the Registrant and Lessee. The primary intended use of the
property is as a health care facility licensed for skilled and
intermediate long-term nursing services. Lessee covenants in
the Lease to operate Bayshore in accordance with the primary
intended use and to maintain its qualifications for licensure
and accreditation. Under the Lease, Lessee may enter into a
management agreement with the prior written consent of the
Registrant and any mortgagee of Bayshore, subject to the payment
of the management fees being subordinate to all sums due under
the Lease.
The Lease requires the Lessee to maintain Bayshore in good
order and repair. Lessee is responsible for the cost of any
capital additions to Bayshore which shall be deemed a leasehold
improvement. The Lease further requires the Lessee to spend the
$150,000 referred to above on improvements to Bayshore. Lessee
may not create or allow to remain on the premises of Bayshore
any lien or encumbrance on Bayshore. Lessee may, however,
contest any taxes, insurance requirements, liens or encumbrances
so long as Lessee shall provide reasonable security in the event
any such lien, taxes, insurance requirements or encumbrance
exceeds $50,000.
Lessee must maintain all-risk insurance in an amount equal
to the replacement costs of Bayshore, boiler insurance, business
interruption insurance covering the Registrant's risk of loss,
comprehensive public liability insurance in an amount not less
than $4 million per occurrence for injuries and $2 million for
property damage, malpractice insurance in an amount of not less
than $5 million for each person and $10 million for each
occurrence, and flood insurance if Bayshore lies in a flood
plain area.
Insurance proceeds as a result of loss or damage to
Bayshore are payable to the Registrant for reconstruction or
repair of Bayshore. If Bayshore is totally or substantially
destroyed from a risk covered by insurance, Lessee, subject to
the rights of any mortgagee, shall have the option to restore
Bayshore or acquire Bayshore at fair market value or terminate
the Lease. If Bayshore is destroyed from a risk not covered by
insurance, the Registrant may elect to restore Bayshore or
absent such an election Lessee may terminate the Lease.
A partial condemnation of Bayshore so long as Bayshore is
not rendered unsuitable for its primary intended use, shall not
cause a termination of the Lease. If the condemnation causes
Bayshore to be rendered unsuitable for its primary intended use,
then Lessee has the right to restore Bayshore at its own
expense, to acquire Bayshore for fair market value or terminate
the Lease. In the event Lessee or its affiliate purchases
Bayshore, any condemnation award belongs to Lessee, otherwise
the award belongs to the Registrant.
An event of default occurs upon:
(i) the existence of an event of default under any
other lease between the Registrant and Lessee;
(ii) failure of Lessee to make a rental payment under
the Lease and such failure continues for a period
of 10 days after receipt of written notice;
(iii) Lessee's failure to observe or perform any other
term, covenant or condition of the Lease and such
failure is not cured within 30 days after receipt
of notice;
(iv) bankruptcy of Lessee;
(v) voluntary cessation of operations by Lessee at
Bayshore for a period of longer than 30 days; or
(vi) failure of Lessee to provide financial statements
or copies of required licensing information, to
maintain quarterly cashflow of not less than 125%
of minimum rent or to operate Bayshore for its
primary intended use.
If an event of default shall have occurred and be
continuing, the Registrant may terminate the Lease. The
Registrant may not remove Lessee from Bayshore until the
Registrant provides for a substitute operator acceptable to any
Bayshore mortgagee. Notwithstanding termination of the Lease,
Lessee is responsible for all rent due and payable with respect
to Bayshore. In addition, if an event of default shall have
occurred and be continuing the Registrant may require Lessee to
purchase Bayshore for the Purchase Price plus all rent then due
and payable. If Lessee fails to perform under the Lease and is
removed from Bayshore, such action by the Registrant shall not
be deemed an eviction of Lessee.
Lessee agrees to indemnify the Registrant against all
liabilities arising from the operation of Bayshore. Lessee may
not, without the prior written consent of the Registrant and any
mortgagee, assign the Lease or sublet any part of Bayshore.
BHS owns all personal property used at Bayshore. The
Lessee is not paying any consideration for the personal property
and upon termination of the Lease, all the personal property
shall be deemed owned by BHS.
The Registrant agrees to indemnify the Lessee from:
(i) any liability arising from any breach of
representations, warranties, covenants or
agreements made in the Lease;
(ii) any overpayment or assessment relating to Bayshore
from the Medicare or Medicaid programs;
(iii) any claims by any creditor incurred by Bayshore
prior to the effective date of the Lease; and
(iv) any claim arising out of operation of Bayshore
prior to the effective date of the Lease.
In the event either Medicaid or Medicare withholds, recoups or
offsets any payment due the Lessee for claims arising prior to
the effective date of the Lease, the Registrant agrees to
immediately reimburse Lessee for such withholding, recoupment or
offset. Notwithstanding other terms of the Lease, the Lessee
may offset any payments that the Registrant fails to make in
this situation from the monthly rent and insurance
administration fee. Any amounts due to the Lessee from the
Registrant as a result of the unreimbursed Medicaid or Medicare
payments shall bear interest at 10% per annum until paid by the
Registrant to the Lessee.
One of the principal conditions to the closing of the sale
of Bayshore is the shareholder approval of the sale by the
Registrant's shareholders. If Sellers have not obtained
shareholder approval at least six (6) months prior to the end of
the Lease, Buyer has the option to extend the Lease for three
one-year renewal terms with a rent increase equal to the
consumer price index increase for the preceding twelve (12)
months.
Buyer must file applications for the appropriate licenses
to operate Bayshore with the applicable licensing agencies by
September 30, 1999, with all licenses to be issued on or before
December 31, 1999. The failure to file by the specified date or
to have issued the licenses by the later date results in the
default by Buyer under the Agreement and the Lease. Sellers may
exercise their rights to terminate the Lease in such a
circumstance, and retain the Deposit as liquidated damages.
Buyer further agrees to indemnify and hold Sellers harmless from
all liabilities arising in connection with the operation of
Bayshore from and after the date of the Lease until the Closing
Date.
The Agreement contains Sellers' representations and
warranties related to, among others:
(i) due organization and existence;
(ii) authorization of the Agreement;
(iii) good title to the real and personal property of
Bayshore;
(iv) the operating condition of the buildings and
appurtenances on the real estate;
(v) proper licensing for operation of Bayshore as a 150
bed nursing home;
(vi) payment of real estate taxes;
(vii) fair presentation of the financial condition and
results of operations of Bayshore as contained in
the financial statements Sellers have delivered to
Buyer;
(viii) no pending labor problems with the existing union
at Bayshore;
(ix) no material and adverse litigation with respect to
Bayshore;
(x) proper filing of all taxes, tax returns and cost
reports;
(xi) sufficient insurance coverage with respect to
Bayshore; and
(xii) no environmental claims.
The Agreement contains Buyer's warranties and representations
related to due organization and existence, and proper
authorization of the Agreement, among others.
Conditions to the Buyer's obligation to consummate the
Agreement include:
(i) no adverse change in Bayshore and the Sellers'
Assets;
(ii) Sellers' compliance with the terms of the
Agreement;
(iii) Buyer's receipt of a commitment to finance the
Assets on terms reasonably acceptable to Buyer;
(iv) no material and adverse litigation affecting
Bayshore or the Sellers' Assets;
(v) the patient census shall not be less than 113 with
Medicaid certified beds to be 115 and Medicare
certified beds to be 16; and
(vi) Buyer's receipt of evidence that all cost reports
of Sellers required to be filed prior to the
Closing Date have been timely filed.
Conditions to the Sellers' obligation to close the sale of
Bayshore include Buyer's continuing compliance with the
Agreement, no litigation pending against Buyer questioning the
legality of the transactions under the Agreement, and Sellers'
receipt of shareholder approval of the sale of Sellers' Assets.
Closing adjustments to the Purchase Price shall include
proration of:
(i) real estate taxes;
(ii) water, sewage and electricity charges;
(iii) fees for customer annual or periodic licenses and
permits;
(iv) employee wages and related payroll taxes and
expenses; and
(v) charges on service and maintenance agreements.
Sellers shall also be responsible for the payment of real estate
brokerage commissions. Buyer and Sellers shall pay equally all
closing costs including documentary stamp taxes, county surtax,
recording fees and title insurance premiums.
Sellers jointly and severally indemnify Buyer for, among
others items:
(i) liabilities and obligations of Sellers arising prior
to the Closing Date unless otherwise expressly
assumed by Buyer;
(ii) damages or deficiencies resulting from any
misrepresentation, breach of warranty or
nonfulfillment of any obligation on the part of
Sellers;
(iii) any retroactive payments due to the State of Florida
or the United States for periods prior to the
closing unless specifically assumed by Buyer; and
(iv) liabilities arising out of the transfer of funds or
property by any patient to the Sellers prior to the
Closing Date.
Buyer indemnifies Sellers for, among other items:
(i) liabilities of Sellers arising after the Closing Date
and expressly assumed by Buyer or relating to the
operation of Bayshore by Buyer; or
(ii) any damage or deficiency resulting from any
misrepresentation, breach of warranty or
nonfulfillment of any obligation on the part of Buyer
under the Agreement.
Bayshore is the sole remaining property of the Registrant.
If the Bayshore sale closes, the Registrant intends to
liquidate.
ITEM 7. Financial Statements and Exhibits.
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(a) Financial Statements. Not applicable.
(b) Pro Forma Financial Information. Not applicable.
(c) Exhibits.
Exhibit 10.1 Purchase and Sale Agreement, dated
as of June 3, 1999, as amended, by
and between the registrant,
Bayshore Healthcare Services,
Inc., and Abraham Shaulson
Exhibit 10.2 Master Facility Lease, dated as of
July 30, 1999, as amended, by and
between the registrant and
Watercrest Nursing and
Rehabilitation Center, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Dated: September 15, 1999 HEALTHCARE INVESTORS OF AMERICA,
INC.
By: /s/ F. Dale Markham
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F. Dale Markham, President
and Chief Financial Officer
EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT
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THIS AGREEMENT made and entered into this 3rd day of June,
1999, by and between Healthcare Investors of America, Inc., a
Maryland corporation qualified to do business in Florida, and
Bayshore Healthcare Services, Inc., an Arizona corporation
qualified to do business in Florida (referred to individually as
"Healthcare" and "Bayshore," respectively, referred to jointly
as "Seller")and Abraham Shaulson , an individual resident of
the State of Florida("Buyer").
WHEREAS, Seller is engaged in the nursing home business,
and owns and operates the land, building, fixtures, equipment,
and other assets comprising a one hundred fifty (150) bed
nursing home facility at 16650 W. Dixie Highway, Miami Florida,
under the name Bayshore Convalescent Center (the "Nursing
Home"); and
WHEREAS, the parties have reached an understanding with
respect to the sale by Seller and the purchase by Buyer or its
nominee of the real estate, assets and business related to the
Nursing Home as more particularly set forth in Section 1 herein;
and
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties intending to be legally
bound, agree as follows:
1. Assets to be Conveyed. Subject to the terms and
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conditions hereinafter set forth, Seller will sell, transfer,
convey and assign to Buyer, and Buyer will purchase from Seller,
for the consideration hereinafter set forth, on the Closing Date
(as defined below) the following (collectively, the "Seller's
Assets"):
(a) All real estate shown on Schedule 1 attached
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hereto, including land, buildings, improvements, fixtures and
equipment thereon, appurtenant rights, easements, and, to the
extent permitted by law, permits and licenses related thereto
(the "Real Estate").
(b) All of the personal property of Seller located at
the Real Estate or used in connection with the Nursing Home, and
owned in whole or in part by Seller, including, without
limitation, all fixtures, machinery, equipment, office
equipment, furniture, furnishings, fixtures, building
maintenance equipment, all parts and accessories and supplies
for the same, all leasehold improvements, and all motor
vehicles, and including without limitation all of the property
listed on Schedule 2 attached hereto. All such Assets shall
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be included in the sale even if fully depreciated or amortized
or otherwise written off the books of the Seller.
(c) All of Seller's inventory (the "Inventory")
located at the Nursing Home including, without limitation, food,
food products, supplies, medicines, disposable equipment,
dishes, silverware, linen and other property of a similar
nature. At the Closing, there shall be sufficient inventory to
operate the Nursing Home in the normal course of business for a
period of at least ten (10) days, and there shall be included in
such inventory all items required under applicable Florida laws
and regulations.
(d) All trademarks, trade names, franchises,
licenses, permits and consents (to the extent they are
assignable), proprietary rights owned or used in and to the
Nursing Home; copies of books and records of Seller, including
but not limited to books and ledgers, computer programs
(including licenses to the extent they are transferable), data
bases and printouts, resident medical records, and all records
and lists of sources of supply for purchases and services.
(e) All patient contracts, if any, all names,
addresses, telephone numbers, record of billings to and payments
by patients, and other information relating to current patients
and accounts; all medical books and records required for the
current operation of Nursing Home; consent to the rights to use
the telephone numbers and listings pertaining to same; all
rights of Seller under any non-competition or similar covenants
with present or former employees, officers, directors or
shareholders; all deposits, credits and advances under the
Contracts listed in Schedule 3 which Buyer elects to assume.
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(f) Excepted from the sale hereunder are all cash,
accounts receivable, prepaid expenses, notes receivable, and all
personal property of patients residing at the Nursing Home.
Notwithstanding the foregoing, all deposits, advance payments,
and other credits due any resident shall be transferred and paid
over to Buyer together with a full accounting of the same and
Buyer shall execute in favor of Seller an indemnification
against any claims to such amounts.
2. Purchase Price and Payment and Adjustment Thereof.
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(a) The Purchase Price for the Seller's Assets shall
be Five Million Seven Hundred Fifty Thousand ($5,750,000)
Dollars.
(b) The Purchase Price due under Paragraph 2(a) above
shall be paid in the following manner:
(i) $50,000 payable simultaneously with the
execution hereof as a deposit (the "Deposit"), which
Deposit is to be held in escrow by Goldsmith & Grout,
P.A., in an interest-bearing bank account to be
disbursed as provided hereinafter. Twelve Thousand
Five Hundred Dollars ($12,500) shall be immediately
irrevocably released to Seller upon submission hereof.
Twelve Thousand Five Hundred Dollars ($12,500) shall
be irrevocably released to Seller on June 14, 1999
unless this Agreement has been terminated in
accordance with its terms or the sale closed. Twenty
five Thousand Dollars ($25,000) shall be irrevocably
released to Seller on July 7, 1999 unless this
Agreement has been terminated in accordance with its
terms or the sale closed. If the Buyer shall default
in its obligations contained herein, Seller shall
receive the Deposit and all interest accrued thereon
as liquidated damages, and Buyer shall have no further
obligation to Seller arising out of or in connection
with this Agreement. If the transactions herein
contemplated shall not be consummated for any other
reason, Buyer shall forthwith receive a refund of the
Deposit and all interest accrued thereon (except that
Buyer shall have the right to seek specific
performance if Seller defaults without cause). If not
previously disbursed, upon Closing hereunder, the
Deposit shall be paid to Seller and credited to the
Purchase Price due at Closing.
(ii) The balance of the Purchase Price, subject
to adjustments, shall be paid by Buyer to Seller at
Closing by wire transfer, certified check or bank
cashier's check.
(c) The Purchase Price will be allocated to the
Seller's Assets in the manner set forth in Schedule 4 hereto.
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Such allocation shall be for tax and accounting purposes only
and shall not in any way affect the payment of the Purchase
Price. The transaction described in Section 1 shall only occur
upon the full payment of the Purchase Price.
3. Ancillary Matters.
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(a) Contracts. At the Closing, Seller shall assign
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to Buyer, and Buyer shall assume, the Contracts, if any, listed or
described on Schedule 3 attached hereto, as then in effect, but
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only if Buyer has elected to assume the same by notice to Seller
delivered by June 7, 1999. At or prior to Closing, Seller shall
deliver to Buyer a written consent to the assignment to Buyer
from each party to a Contract where such consent is required by
the terms thereof, each such consent to be in form and substance
reasonably satisfactory to Buyer.
(b) No Liabilities. Except as expressly set forth in
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Section 3(a) with respect to Seller's obligations under the
Contracts to be assigned to and assumed by Buyer, Buyer is not
assuming and shall in no event be liable for any other
liabilities or obligations of any nature of Seller, whether
accrued, contingent or otherwise, whether known or unknown, and
whether due or to become due, except those which Buyer
specifically agrees to assume. Seller shall terminate any
contracts that the Buyer is not assuming.
4. Title. The Real Estate will be conveyed at Closing by
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a General Warranty Deed running to Buyer, or to the nominee
designated by Buyer, and said Deed shall convey a good, clear
record, marketable and insurable title thereto, free from
encumbrances, except:
(a) Provisions of existing building and zoning laws,
provided same continue to permit the Real Estate to be used as a
Nursing Home as presently operated by Seller without necessity
of any special permit, variance or the like;
(b) Such taxes for the then current year as are not
due and payable on the date of the delivery of such Deed;
(c) Easements and restrictions of record, provided
that they do not materially interfere with the use of the Real
Estate as a Nursing Home and may be insured over by a
Comprehensive Endorsement to the title insurance policy.
(d) The Cross Parking Agreement dated July 10, 1987
between Alvin and Betty Stern, grantors, and Medical Resource
Development Corporation as recorded in Official Recording 1335,
Page 2216.
5. Possession. Full possession of the Real Estate is to
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be delivered at the time of the delivery of the Deed. Seller
shall bear the risk of loss prior to Closing and Buyer shall
bear the risk of loss thereafter.
6. Warranties and Representations of Seller. As an
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inducement to Buyer to enter into this Agreement, Seller
represents and warrants to, and agrees with Buyer as follows:
(a) Organization and Existence. Seller is, and on
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the Closing Date will be, a corporation duly organized, validly
existing and in good standing under the laws of the state of
Arizona or Maryland and qualified to do business in Florida.
Seller has all requisite power to own its property and to carry
on its business as presently conducted. Seller is the sole
owner of the Seller's Assets. Seller has complete and
unrestricted power to perform this Agreement and to sell,
assign, transfer, convey and deliver all of the Seller's Assets
as contemplated by this Agreement.
(b) Authorization. This Agreement and all other
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agreements, documents and instruments executed pursuant hereto
are and will be the valid and binding obligations of Seller, as
applicable, enforceable in accordance with their terms, and the
execution, delivery and performance of this Agreement, and such
other agreements, documents and instruments and the transactions
contemplated hereunder, have been and will be duly and validly
authorized by Seller's Board of Directors, and Seller will
deliver to Buyer at the Closing certified copies of the votes of
its Directors with respect thereto.
(c) Title to Assets. Seller has, and will transfer
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to Buyer on the Closing Date, good, clear, record (if appropriate),
merchantable and marketable title to all of the Seller's Assets,
free and clear of all liens, encumbrances, and agreements of
every kind, nature and description, except for the liens and
encumbrances described on Schedule 5 hereto, all of which liens
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and encumbrances shall be released and discharged of record on
or prior to the Closing Date, unless specifically assumed by
Buyer.
(d) Tangible Personal Property. The tangible
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property described in Section 1(b) hereof constitutes all of the
assets and equipment used and utilized in the conduct of the Nursing
Home in the normal course. All such assets and equipment as are
reasonably necessary for the functioning of Nursing Home or for
the Nursing Home to retain its operating licenses are in
operating order, repair and condition and conform in all
material respects with all applicable Federal, state and local
laws, ordinances and regulations. Except as previously
specified, Seller is selling all such assets "AS IS, WHERE IS"
and makes no warranties in connection therewith, including
warranties of merchantability and fitness for a particular
purpose.
(e) Real Estate. All buildings and appurtenances
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included in the Real Estate (collectively, the "Buildings") are
in good operating order, repair and condition with all HVAC
equipment, electrical, plumbing, sewage and other facilities and
utility systems in good operating order, repair and condition
and will be so maintained until Closing. The Real Estate,
including the Buildings, and the present use thereof by Seller
for Nursing Home conforms in all respects with all applicable
Federal, state and local laws, ordinances and regulations,
including without limitation building, zoning and environmental
protection laws, and has unrestricted access to public ways.
The Buildings have adequate and sufficient utilities and utility
services for the operation of Nursing Home thereat in the normal
course. Except as previously specified, the Real Estate and
Buildings are being sold "AS IS, WHERE IS" and Seller makes no
warranties in connection therewith, including warranties of
merchantability and fitness for a particular purpose.
(f) Licensing Laws. Nursing Home is a fully licensed
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150 bed nursing home and Seller has no knowledge of any laws,
ordinances, codes, regulations and requirements of the state of
Florida and any political subdivision thereof and the Federal
Government and any political subdivision thereof concerning and
applicable to the licensing or operation of nursing homes, the
violation of which has had or would have a material adverse
effect on the operation, licensing and occupancy of the Nursing
Home as a fully licensed 150-bed nursing home. Seller has
advised Buyer that the facility has neither been under state
moratorium at any time during the last seven (7) years, nor has
it been designated a poor performing facility by the Health Care
Financing Administration. To the best of Seller's knowledge,
Seller shall not be at risk for any state or Federal sanctions
which would cause the facility to be decertified, delicensed,
forced to restrict admissions, or denied payment for new
admissions.
(g) Real Estate Taxes. Seller has not received any
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notice, oral or written, of any increase in the assessed
valuation of the Real Estate or any personal property from the
assessed values thereof for the current fiscal year.
(h) Interests in the Real Estate. No party other
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than the Seller has any beneficial, legal or other interest
whatsoever in the Real Estate, except easements, restrictions,
and other matters of record, none of which have a material
effect on the operation of the property as a nursing home.
(i) Financial Statements. The statements of income
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and retained earnings and balance sheets of Seller, which Seller
has delivered to Buyer (the "Financial Statements"), are true
and correct in all material respects and present fairly the
financial condition and results of operation of Nursing Home for
the period then ended in conformity with generally accepted
accounting principles applied on a basis consistent with that of
each preceding period. Except to the extent reflected or
reserved against in Seller's most current balance sheet, Seller
had, under generally accepted accounting principles no
liabilities or obligations of any nature, whether accrued,
absolute, contingent, or otherwise, including without limitation
tax liabilities, due or to become due and whether incurred in
respect of or measured by such Seller's income for any period
prior to such dates, or arising out of transactions entered into
or any state of facts existing prior thereto. Seller neither
knows, nor has reasonable grounds to know, of any basis for the
assertion against such Seller as of the date of signing this
Contract, of any liability of any nature which is material in
amount and which is not reflected or reserved against in such
Seller's balance sheet as of such date. If, prior to Closing,
the Financial Statements shall be restated in any material
respect, Seller shall immediately deliver such restated
Financial Statements to Buyer.
(j) Inventory. The Inventory consists of reasonable
---------
quantities of items that are usable in the normal course of the
Nursing Home and all items are in good and merchantable
condition. Seller will have, on the Closing Date, adequate and
sufficient Inventory as required under paragraph 1(c) of this
Agreement.
(k) Regulatory Filings. Seller has previously given
------------------
Buyer copies of all reports or forms filed for the purpose of
Medicaid or Medicare reimbursement for the past three (3) years,
as well as an accounting of residents' trust funds, receipt of
which is hereby acknowledged by Buyer. All such reports, forms,
and accountings are true, accurate and complete in all material
respects. Seller agrees to provide copies of any other forms or
accountings as may be reasonably requested by Buyer within ten
(10) days of request therefore.
(l) Labor Matters. The Nursing Home is subject to a
-------------
collective bargaining agreement, a copy of which is attached as
Schedule 6. To the best of Seller's knowledge, there are no
pending labor problems of any kind at Seller's place of
business, including, without limitation, disputes,
controversies, grievances, disturbances, and similar problems
with any employees. Seller is a party to a collective
bargaining agreement. To the best of Seller's knowledge, Seller
is currently in compliance in all material respects with all
Federal and state laws respecting employment and employment
practices, terms and conditions of employment and wages and
hours, and there are no written claims, notices, or
communications received from Federal or state officials in
respect to violations of any such laws which are unremedied.
(m) Employees. Set forth on Schedule 7 hereto is the
--------- ----------
following information:
(i) The names of all of Seller's employees
employed at the Nursing Home, their rate of
compensation, the job performed or position held by
each such person, and a description of all fringe
benefits, including, without limitation, all
vacations, bonuses and/or bonus arrangements, paid or
provided by Seller to each such persons; and
(ii) A description of any plans providing
pensions, insurance benefits or any other similar type
of fringe benefits to which Seller is a party or
committed either orally or in writing including
without limit all employee benefit plans ("Employee
Benefit Plans"), as defined in Section 3(e) of the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), established by Seller or to which
Seller contributes or is required to contribute, and
sets forth at the most recent date available to the
date hereof, the approximate value of plan assets (at
then current market price) for Seller's Employees
Benefit Plans. The Employee Benefit Plans and the
related trusts comply with the provisions of ERISA and
all other applicable laws, rules and regulations, and
all necessary governmental approvals for the Employee
Benefit Plans have been obtained, including, but not
limited to, qualification of the Employee Benefit
Plans under the Internal Revenue Code, as amended.
The Employee Benefit Plans have been administered to
date in compliance with the requirements of ERISA.
True and complete copies of all annual reports filed
with the Internal Revenue Service or the Department of
Labor for the Employee Benefit Plans since December
31, 1995, and all actuarial reports prepared for the
last three (3) plan years of the Employee Benefit
Plans have heretofore been delivered by Seller to
Buyer. Since December 31, 1995, no fiduciary of the
Employee Benefit Plans has engaged in any "prohibited
transaction" (as defined in ERISA).
(n) Contracts. Set forth on Schedule 3 is a complete
--------- ----------
list and summary description of all contracts, agreements,
equipment leases, resident agreements, either oral or in writing
(collectively, "Contracts"), extending beyond the Closing Date
to which Seller is a party or by which Seller is bound. A true
and exact copy of each of the Contracts which is in writing has
been furnished to Buyer or will be furnished to Buyer within 14
days from the date hereof. Neither Seller nor any other
contracting party is in default in the performance of any of its
obligations under any of the Contracts, except as set forth in
Schedule 3. The Contracts to be assigned to Buyer under this
- ----------
agreement are freely assignable, or, if consent of the contracting
party to the assignment is required, such consent will be secured
prior to the Closing Date, and those whose stated duration extends
beyond the Closing Date will, at such time, be in full force and
effect and unimpaired by any acts or omissions of Seller or its
agents or employees, and said Contracts will not be modified
without Buyer's prior written consent.
(o) No Conflict. The execution and delivery of this
-----------
agreement and the performance of the transactions contemplated
hereby does not, and will not, constitute a violation of, and is
not, and will not be, a default under or conflict with the terms
of (i) the charter documents or by-laws of Seller, or (ii) any
contract, lease, indenture, agreement, order, judgment or decree
to which Seller is a party or by which it is bound or to which
any of the Seller's Assets being transferred hereunder are
subject, and does not, and will not, violate or constitute a
default under any statute, rule, regulation, order, or ordinance
of any governmental, judicial or arbitral body.
(p) Litigation. Except as set forth on Schedule 8
---------- ----------
hereto, there is, and on the Closing Date there will be, no
suit, action or legal, administrative, arbitration or other
proceedings of any nature pending, or to the knowledge of
Seller, threatened, against any of Seller, Seller's Assets or
Nursing Home which might materially and adversely affect the
legality or validity of this agreement, the transactions
contemplated hereby, or the continued operations and earnings of
the business presently conducted by Seller or which might
materially and adversely affect the enjoyment or use thereof by
Buyer, and there is not, nor will there be, any factual basis
known to either Seller or stockholder for any such suit, action
or proceeding. Seller is not in default in any respect of any
order or any decree or rule of any court or governmental
authority that may have jurisdiction over Seller or Nursing
Home.
(q) Taxes, Tax Returns, and Cost Reports. Seller has
------------------------------------
filed with the appropriate governmental agencies all tax returns
required to be filed by each of them, and has paid, or made
provision for the payment of, all taxes which have, or may
became due, pursuant to said returns or pursuant to any
assessment received by Seller. All Federal, state and local
income, sales, use, property, excise or other taxes due in
connection with Seller's Assets or Nursing Home have been fully
paid or shall be fully paid as of the Closing Date or thereafter
when due. Seller shall also have filed all reports required to
be filed with all public agencies. Except as disclosed hereto,
none of the Federal, state or local income tax returns filed by
Seller have been audited. Seller has no knowledge neither of
any additional assessments or adjustments pending or threatened
against Seller for any period, nor of any basis of such
assessment or adjustment. Seller shall promptly file all final
Medicare and Medicaid cost reports with respect to the Nursing
Home and shall report the sale contemplated herein in accordance
with the terms of this Agreement. Seller shall be solely
responsible for all adjustments due as a result of its
participation in Medicare and Medicaid.
(r) Insurance. Seller has and will continue to have
---------
between the date hereof and the Closing Date, sufficient
insurance coverage to fully protect, indemnify and reimburse it
for, from and against all loss or damage arising from fire,
theft or other casualties, liability for injury to or death of
any person, and for damage to any property, malpractice,
worker's compensation, and in general such other insurance as
may be usual or customary in the Nursing Home, in all events in
amounts sufficient to prevent Seller from becoming a co-insurer
(other than reasonable deductible amounts as provided by such
insurance policies).
(s) Environmental Issues.
--------------------
(i) To the knowledge of Seller, there has been
no discharge or release onto the Real Estate
(including surface water, ground water, and any
existing improvements) of any substantial amounts of
waste or debris, or contamination, including, without
limitation (a) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976, as
amended from time to time, and regulations promulgated
thereunder; (b) any "hazardous substance" as defined
by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended
from time to time, and regulations promulgated
thereunder; and (c) any substance the presence of
which is prohibited or regulated by any Federal, state
or local law, ruling, rule or regulation similar or
dissimilar, including radon gas, to those set forth in
this section.
(ii) To the knowledge of Seller, there has not
been placed on or under the Real Estate any asbestos
or any underground storage tanks.
(t) Disclosure. No representations or warranties by
----------
Seller in this Agreement, nor any written statement or
certificate furnished or to be furnished by Seller pursuant to
this Agreement, or in connection with the transactions
contemplated hereby, contains or shall contain any untrue
statement of material fact or omits or fails to state a
statement of material fact, which omission or failure makes such
statement or certificate misleading or untrue.
7. Buyer's Warranties and Representations. Buyer
--------------------------------------
represents and warrants and agrees with Seller as follows:
(a) Organization and Existence. Buyer has all
--------------------------
requisite power to conduct its business and perform the
transactions contemplated hereby, and is, and on the Closing
Date will be a corporation validly existing and in good standing
under the laws of the state of Florida.
(b) Authorization. This Agreement is the valid and
-------------
binding obligation of Buyer enforceable in accordance with its
terms and the execution, delivery and performance of this
Agreement and the transactions contemplated hereby by Buyer have
been or will be duly and validly authorized and approved by all
persons whose authority and approval are required, and a
certificate evidencing such authorization shall be delivered to
Seller at the Closing.
(c) No Conflict. The execution and delivery of this
-----------
Agreement and the performance of the transactions contemplated
hereby do not, and will not, constitute a violation of, and are
not, and will not be, a default under or conflict with the terms
of any applicable organizational documents of Buyer, or any
contract, lease, indenture, agreement, order, judgment or decree
to which Buyer is a party or by which they are bound and do not,
and will not, to the best of Buyer's knowledge, violate or
constitute a default under any statute, rule, regulation, order
or ordinance of any governmental, judicial or arbitral body.
(d) Disclosure. No representations or warranties by
----------
Buyer in this Agreement, nor any written statement or
certificate furnished, or to be furnished by Buyer pursuant to
this Agreement, or in connection with the transactions
contemplated hereby, contains or shall contain any untrue
statement of material fact or omits or fails to state a
statement of material fact, which omission or failure makes such
statement or certificate misleading or untrue.
8. Pre-Closing Matters.
-------------------
(a) Conduct of Business. Seller agrees that until
-------------------
the Closing or until this Agreement is terminated, whichever shall
first occur, Seller will continue to operate Nursing Home in the
ordinary course in a manner consistent with past practices, and,
in furtherance hereof, Seller agrees that:
(i) Seller will neither do, cause nor permit any
act or thing, make any change in the operation of
Nursing Home or undertake any contract which will
materially adversely affect the acquisition by Buyer
of the Seller's Assets or the Nursing Home to be
acquired hereunder upon the terms and conditions
herein set forth, or which will result in a breach of
any representation or warranty of Seller, or which
will materially adversely affect the Assets, property,
business, or affairs of Seller, nor undertake any
contract out of the ordinary course of business.
(ii) Seller will continue to perform all of its
obligations under existing contracts and new contracts
entered into in the normal course of business and will
use its best efforts to keep its business intact, to
preserve for the benefit of Buyer all sources of
supply available to Seller and all of the patients and
good will for the benefit of Buyer.
(iii) Seller will not enter into any employment
contracts of any kind or character, labor contracts or
renegotiations of the union contracts, or contracts
for the purchase of any fixed assets or lease of the
same, or any leases of any kind or character without
the prior written consent of Buyer. Without limiting
the generality of the foregoing, Seller will not hire
any new employees except for replacements of existing
employees, nor increase the compensation of any
employee between the date hereof and the date of the
Closing without the prior written consent of Buyer;
nor will it make any promise or undertaking to
increase the compensation of any employee without such
prior written consent of Buyer unless such increase is
in the normal course of business. All consents
required of Buyer hereunder shall not be unreasonably
withheld or delayed.
(iv) Excepting normal wear and tear, Seller will
maintain in good repair, working order, condition and
efficiency the Nursing Home and all the Seller's
Assets used or usable in the Nursing Home, and will
not sell any such property or assets (except for
inventory items in the ordinary course of business)
and from time to time will make or cause to be made
all needed and appropriate repairs, renewals,
replacements, additions, betterments, and improvements
thereto, and shall at all times carry on Nursing Home
in an efficient manner exercising the use of good
business judgment.
(b) Access. From and after the date of this Agreement
------
and until the Closing Date, Buyer and its authorized
representatives shall have reasonable access, during normal
business hours, to all premises occupied by Seller and to all
properties, books, records, contracts and documents of Seller,
relating to the Seller's Assets or Nursing Home for the purpose
of studies and inspection, and Seller shall furnish or cause to
be furnished to Buyer and its authorized representatives all
information with respect to the Seller's Assets and Nursing Home
as Buyer may reasonably request, including, without limitation,
payroll records prepared or received by Seller from and after
January 1, 1999, except that if Buyer's lender shall require,
Seller shall provide such records for transactions before
January 1, 1999. At its sole cost and expense, Buyer may make
tests or inspections at the Real Estate provided Buyer
substantially restores the Real Estate to its former condition
after performing any tests or inspections.
(c) Approvals. Promptly after the execution hereof,
---------
Buyer shall file with the Agency, and diligently pursue, all
necessary applications for approval of Buyer as licensee of the
Nursing Home.
(d) Employees. Except to the extent otherwise required
---------
by the terms of any collective bargaining agreement, effective
as of 11:00 p.m. on the day immediately preceding Closing,
Seller shall terminate the employment of all employees and, no
later than the normal pay period, shall pay to employees all
salaries and wages due for the period ending with their
termination. Seller shall not pay employees for vacation or sick
leave accrued but not taken prior to the Closing. Instead, Buyer
and Seller shall determine at Closing and Buyer shall receive a
credit against the balance of the purchase price payable at
Closing the amount of money due to employees for vacation and
sick leave accrued but not taken. Buyer shall hold harmless
Seller from any claims by employees for the value of such
accrued but untaken vacation and sick pay. Seller shall timely
pay all applicable governmental and regulatory authorities all
employment related taxes due with respect to the employees. The
Buyer shall have no obligation to offer employment to any
employees. After Closing, Seller shall allow Buyer reasonable
access to all records concerning the employees. After the
Closing, Seller shall retain for each employee (i) all
liabilities arising under any group life, accident, medical,
dental, or disability plan to the extent that such liability
relates to claims incurred at or prior to 11:00 p.m. on the day
immediately preceding Closing and (ii) all liabilities for
workers compensation to the extent that such liability relates
to occurrences that take place at or prior to 11:00 p.m. on the
day immediately preceding Closing.
(e) Inspection/Due Diligence. Buyer shall have until
------------------------
June 30, 1999 to (a) conduct such inspections and investigations
of Seller's Assets and the Nursing Home as Buyer desires,
including geotechnical, environmental, soil engineering, and
similar tests, and (b) to give notice to Seller that Buyer has
disapproved any aspect of Seller's Assets. If Buyer gives to
Seller such notice on or before June 30, 1999, then, at Seller's
sole option and without any obligation to do so, Seller may
correct to the reasonable satisfaction of the Buyer such
disapproved aspect of Seller's Assets. If Buyer gives to Seller
notice of disapproval on or before June 30, 1999 and Seller does
not elect to correct such disapproved aspect of Seller's Assets
to the reasonable satisfaction of Buyer, then, in Buyer's sole
discretion, Buyer may either (i) terminate this Agreement by
written notice to Seller whereupon such part of the Deposit
which has not been previously released shall be returned to
Buyer and the parties obligations to each other shall end or
(ii) waive its previous disapproval, whereupon the transactions
contemplated by this Agreement shall close. as scheduled.
9. Conditions to Buyer's Obligations. The obligations of
---------------------------------
Buyer to consummate this Agreement are subject to the
satisfaction (unless waived by Buyer) on or prior to the Closing
Date of each of the following conditions:
(a) Representations and Warranties. All
------------------------------
representations and warranties of Seller contained in this
Agreement shall be true and correct, on and as of the Closing
Date in all respects as though made on and as of the Closing
Date.
(b) No Adverse Change. Nursing Home and the Seller's
-----------------
Assets shall not have been materially and adversely affected in
any way as a result of fire, explosion, earthquake, disaster,
accident, labor trouble or dispute, any action by the United
States or any other governmental, judicial or arbitral
instrumentality, flood, drought, embargo, riot, civil
disturbance, uprising, activity of armed forces or act of God or
public enemy, or otherwise.
(c) Financial Commitment. Buyer will obtain a
--------------------
commitment to finance the purchase of the Real Estate and Assets
on terms and conditions reasonably acceptable to Buyer by July
19, 1999.
(d) Compliance with Agreement. Seller shall have
-------------------------
performed and complied with all of its obligations under this
Agreement which are to be performed or complied with by it prior
to or on the Closing Date and shall have delivered to Buyer sole
and exclusive possession of all the Real Estate, all the
Seller's Assets and all the items referred to in Section 11(b)
below.
(e) Proceedings and Instruments Satisfactory. All
----------------------------------------
proceedings, corporate or other, to be taken in connection with
the transactions contemplated by this Agreement, and all
documents incident thereto, shall be satisfactory in all
respects to Buyer and Buyer's counsel acting in their reasonable
discretion. Seller shall have made available to Buyer for
examination the originals or true and correct copies of all
records and documents relating to the Seller's Assets which
Buyer may reasonably request in connection with this
transaction. Seller shall have complied with all statutory
requirements for the valid consummation by Seller of the
transactions contemplated by this Agreement, and Buyer shall
have obtained all licenses and approvals required for operation
of the Nursing Home by Buyer. In this regard, Buyer shall
forthwith undertake in good faith to obtain all such licenses
and approvals and Seller shall cooperate with Buyer to this end.
(f) No Litigation. No investigation, suit, action,
-------------
administrative or other proceeding shall be pending or
threatened which materially and adversely affects the Nursing
Home or the Seller's Assets or which in the opinion of Buyer's
counsel is likely to result in the restraint, prohibition or the
obtaining of damages or other relief in connection with the
performance of this Agreement or the consummation of the
transactions contemplated hereby.
(g) Beds. On the Closing Date, the census of patients
----
shall not be less than one hundred thirteen (113), the total
beds certified to participate in the Medicaid program shall be
150 and certified to participate in the Medicare program shall
be 16, and there shall be no requirement established by the
Agency or any other governmental agency or court regarding the
number of beds in the Nursing Home required to be utilized by
residents involved in or eligible for the Florida Medicaid
Program or any such similar requirement relating to the use of
beds at the Nursing Home or any ban on admissions to any beds
(h) Licenses and Approvals. Buyer shall have obtained
----------------------
from the appropriate agencies of the state of Florida, as
applicable, all licenses or transfer of licenses or consents
thereto necessary to operate the Nursing Home and use the
Seller's Assets, as a 150-bed long-term care facility without
the necessity for any improvements to the Seller's Assets. In
this regard, Buyer shall forthwith undertake and diligently
prosecute in good faith to obtain all such licenses and
approvals and Seller shall cooperate with Buyer to this end.
Buyer shall provide Seller with a copy of its application for
licensure and any related documentation, which in no event shall
be filed later than July 15, 1999. Buyer shall be under no
obligation to pay for the correction of any deficiencies noted
by the applicable licensing authorities prior to Closing or for
any work for which a waiver was previously obtained.
Notwithstanding the foregoing, if a waiver exists and is
transferred to Buyer but later revoked, Seller shall have no
liability to pay for correcting the prior waived deficiencies.
(i) Rate Setting Forms and Cost Reports. Buyer shall
-----------------------------------
have received assurances satisfactory to Buyer that all cost
reports which Seller has been required to file prior to the
Closing Date with any state or Federal authority have been
timely filed.
10. Conditions to Seller's Obligations. The obligations
----------------------------------
of Seller to consummate this Agreement are subject to the
satisfaction (unless waived by Seller) on or prior to the
Closing Date of each of the following conditions:
(a) Representation and Warranties. All
-----------------------------
representations and warranties of Buyer set forth in this
Agreement shall be true and correct, on and as of the Closing
Date, in all respects as though made on and as of the Closing
Date.
(b) Compliance with Agreement. Buyer shall have
-------------------------
performed and complied with all obligations under this Agreement
which are to be performed or complied with by Buyer on or prior
to the Closing Date.
(c) Proceedings and Instruments Satisfactory. All
----------------------------------------
proceedings, corporate or other, to be taken by Buyer in
connection with this Agreement, and all documents incident
thereto, shall be satisfactory to Seller's counsel acting in
their reasonable discretion.
(d) No Litigation. No suit, action or other
-------------
proceeding shall be pending against Buyer before any court or
governmental agency questioning the legality or validity of the
transactions contemplated by this Agreement or which questions
the legality or validity of the transactions contemplated by
this Agreement, or any actions or omissions of Buyer in respect
of such transactions.
(e) All Items. Buyer shall have delivered all the
---------
items referred to in section 11(c) below.
(f) Shareholder Approval: Seller shall have obtained
--------------------
shareholder approval for sale of Seller's Assets as contemplated
herein. Seller agrees to proceed immediately to obtain and
diligently prosecute such approval.
11. Closing and Deliveries.
----------------------
(a) Time and Place. The Closing Date shall be no
--------------
later than September 30, 1999, at such time and place mutually
agreed upon by the parties. In the event that the Closing shall
not occur by September 30, 1999, solely for the reason that the
state has not issued its license to operate the Facility and
such delay by the state has not been caused by Buyer's
unreasonable delay in completing its licensure application,
Buyer shall be entitled to an extension for Closing through and
to October 31, 1999.
(b) Deliveries by Seller. At the Closing, Seller
--------------------
shall deliver to Buyer the following:
(i) General Warranty Deed, Warranty Bills of
Sale, and other instruments of assignments and
transfer covering all of the Seller's Assets to be
transferred hereunder, in forms usual and customary
for transfers of title in the state of Florida and
satisfactory to Buyer along with possession of all the
Seller's Assets to be delivered to Buyer.
(ii) Assignment and Assumption Agreements in
form and substance satisfactory to Buyer, executed by
Seller with respect to all of the contracts to be
assigned, together with written consents to the
assignments thereof to Buyer for all such Contracts
where Buyer determines such consents to be required.
(iii) Certificates of legal existence, good
standing (tax and corporate) and a waiver of tax lien
certificates for Seller issued by the Florida
Secretary of State and the Florida Department of
Revenue, as the case may be.
(iv) Smoke detector certificates for the
Buildings on the Real Estate, if available.
(v) A so-called "FIRPTA Affidavit" executed by
the Seller.
(vi) A certificate executed by the President of
Seller certifying to the due fulfillment of all of the
conditions included herein and that the President has
all authority to act on behalf of the Seller to
consummate the transactions contemplated herein.
(vii) To the extent in Seller's possession, true
and correct copies of all plans and specifications of
the Real Estate and improvements thereupon, together
with existing surveys of the boundaries of the Real
Estate and an "as-built" survey showing the location
of the improvements within the Real Estate.
(viii) The opinion of Seller's counsel in form
and substance satisfactory to Buyer's counsel, but
only if Buyer's lender requires such opinion.
(ix) A check payable to the order of Buyer in the
amount of all patient funds held by the Seller in
connection with the Nursing Home, and an accounting of
such funds and other property of patients held by such
Seller. The Seller shall also deliver any other
patient property (with an accounting thereof) it holds
in connection with the Nursing Home.
(x) Seller will assign and transfer to Buyer, to
the extent permitted by law, all licenses,
certifications, and permits for the conduct of Nursing
Home. To the extent the same was not transferable,
Seller shall cancel and quitclaim the same in favor of
the Buyer and will cooperate fully with Buyer in
Buyer's obtaining issuance of new licenses,
certifications, and permits.
(xi) Evidence of payment by Seller of all sales,
transfers, use and documentary taxes and stamp taxes,
if any, payable in connection with the sale, transfers
and deliveries under this Agreement.
(xii) Such other and further documents,
instruments and certificates not inconsistent with the
provisions of this Agreement, executed by Seller as
Buyer shall reasonably require to carry out and
effectuate the purposes and terms of this Agreement
and all previously undelivered items, if any, required
to be delivered by Seller before the Closing.
(c) Deliveries by Buyer. At the Closing, Buyer shall
-------------------
deliver to Seller the following:
(i) The payment provided for in paragraph 2(b).
(ii) The Assignment and Assumption Agreement
with respect to the Contracts, duly executed by
Buyer's nominee.
(iii) A certificate of the vote of the Directors
of Buyer authorizing and approving this Agreement and
the consummation of the transactions contemplated
hereby.
(iv) A certificate executed by the President of
Buyer certifying to the due fulfillment of all of the
conditions set forth in this Agreement.
(v) Certificates of the legal existence,
corporate good standing and authority to conduct
business of Buyer issued by the Florida Secretary of
State.
(vi) A Receipt and Assumption Agreement pursuant
to which Buyer shall acknowledge receipt of and shall
assume Seller's fiduciary obligations with respect to
the funds and property of the patients.
(vii) Such other and further documents,
instruments and certificates not inconsistent with the
provisions of this Agreement, executed by Buyer, as
Seller shall reasonably require to carry out and
effectuate the purposes and terms of this Agreement,
and all previously undelivered items, if any, required
to be delivered by Buyer on or before the Closing.
12. Extension to Perfect Title or Make Premises Conform.
---------------------------------------------------
If Seller shall be unable to give title or to make conveyance,
or to deliver possession of the Seller's Assets all as herein
stipulated, or if at the time of the delivery of the deeds or
bills of sale the Seller's Assets do not conform with the
provisions hereof at Buyer's election, Seller shall use
reasonable efforts to remove any defects in title, or to deliver
possession as provided herein, or to make the Seller's Assets
conform to the provisions hereof, as the case may be, in which
event the time for performance hereof shall be extended for a
period of sixty (60) days.
13. Use of Purchase Price by Seller. To enable Seller to
-------------------------------
make conveyance as herein provided, Seller shall, at the time of
delivery of the deeds and bills of sale, use the purchase money
or any portion thereof, to clear the title of any or all
encumbrances or interests, provided that all instruments so
procured are recorded or delivered simultaneously with the
delivery of the deeds and bills of sale or mutually satisfactory
arrangements are made for recording thereafter, in accordance
with customary closing practices.
14. Closing Adjustments. The following items shall be
-------------------
separately apportioned and adjusted between Seller and Buyer as
of midnight prior to the date of the Closing (the "Adjustment
Date"), with the net amount (the "Net Adjustment Amount") shown
to be payable to Seller, or to Buyer, as the case may be, to be
paid at the Closing, (1) if to Buyer, by deducting the Net
Adjustment Amount from the amount which would otherwise be
payable by Buyer to Seller pursuant to Section 2 hereof, or (2)
if to Seller, by the payment of the Net Adjustment Amount by
Buyer to Seller by certified or bank cashier's check or wire
transfer:
(a) Real estate taxes (however entitled or
designated) on the basis of the fiscal year for which assessed,
and if the tax rate or assessment for that year has not yet been
fixed, such adjustment shall be made on the basis of the
unabated taxes for the prior fiscal year, subject to
readjustment when such rate and/or assessment has been fixed,
provided however that no such readjustment will be done unless
the effect of such readjustment is greater than $1000. If the
taxes to be apportioned shall thereafter be reduced by
abatement, the amount of that abatement (less the reasonable
fees and expenses attributable thereto) shall be apportioned
between Seller and Buyer in the same proportions as said taxes;
(b) Water and sewer charges and rents and charges for
electricity;
(c) Fees for customary annual or other periodic
licenses and permits (assignable and assigned to Buyer at the
Closing);
(d) Employees' wages and related payroll taxes and
expenses, vacation pay, sick time, bonuses and other benefits,
if any, which have accrued, or which Seller has otherwise
committed or is required to pay, for services rendered through
the Closing Date for any employees to be continued by Buyer,
based upon each employee's actual date of commencement of
employment;
(e) Charges on service and maintenance agreements and
other agreements assigned to and assumed by Buyer hereunder;
(f) Seller will endeavor to obtain final cut-off
readings of fuel, telephone, electricity, water and gas on the
day preceding the Closing. If such readings are obtained,
Seller shall pay the bills based upon such readings promptly
after the same are rendered and provide proof of such final
readings at the Closing. If arrangements cannot be made for any
such cut-off reading, the parties shall apportion the charges
for such service on the basis of the bill therefor for the most
recent billing period prior to the Adjustment Date. When bills
are finally rendered to the Adjustment Date, Seller and Buyer
promptly shall readjust the apportionments in accordance with
the last bills rendered.
(g) Buyer may, at its option, assume any liability of
Seller. If this option is exercised by Buyer, Buyer shall
receive a credit at Closing in accordance with this section of
the entire amount of debt assumed, including interest and
penalties; provided, however, that Buyer shall notify Seller of
which liabilities it shall assume on or before June 7, 1999 and
upon assuming such liabilities shall execute such document as
Seller may reasonably request evidencing such assumption and
agreeing to indemnify and hold harmless Seller from such
liabilities.
(h) Seller shall pay the cost of the real estate
broker commission payable to Mike Pardoll, Marcus & Millichap,
18911 Swanhaven Court, Davidson, NC 28036.
(i) Except as otherwise set forth above, Buyer and
Seller shall pay an equal share of any other closing costs
including, but not limited to, all documentary stamps, Dade
County surtax, recording fees, and title insurance premiums.
15. Buyer's Election to Accept Title. If title to
--------------------------------
Seller's Assets or their condition as of the Closing Date or any
extension thereof does not conform to the requirements of this
Agreement, Buyer may elect nonetheless to purchase the Seller's
Assets, without a reduction in the purchase price, except that,
if the Assets have been damaged by fire or casualty insured
against, then, if Buyer elects to proceed with the purchase,
Seller shall:
(a) Pay over and assign to the Buyer all amounts
recovered or recoverable on account of such insurance, less any
amounts reasonably expended by Seller for reasonable
professional and expert fees and costs in connection with
recovering of the same and for any partial restoration; and
(b) If a holder or any mortgage on the Real Estate
does not permit the insurance proceeds or a part thereof to be
used to restore the Real Estate to its condition (reasonable
wear and tear excepted) at the time of execution of this
Agreement or to be so paid over and assigned to Buyer, give to
Buyer credit against the purchase price at the Closing equal to
the amounts recovered or recoverable and retained by the holder
of said mortgage less any amounts reasonably expended by the
Seller for any partial restoration.
16. Post-Closing Matters.
--------------------
(a) Preservation of Books and Records. For a period
---------------------------------
of seven (7) years from the Closing, Buyer and Seller will each
preserve the books and records of the Nursing Home in their
respective possession or control. Each party will make such
books and records available to the other party at all reasonable
times and upon reasonable notice and permit the other party, at
its expense, to make extracts from or copies of all such
records.
(b) Non-Solicitation. Seller shall not, directly or
----------------
indirectly, solicit, for a period of two (2) years following the
Closing, any then current employees or current patients of
Nursing Home. In the event of an actual or threatened breach of
this covenant, Buyer shall be entitled to injunctive and other
equitable relief in addition to any other legal relief as shall
be appropriate under the circumstances.
(c) Final Reports and Actions. Seller will in a
-------------------------
timely manner (i) file with all appropriate private and public
entities all reports and forms required to be filed and (ii)
execute and deliver such other documents, and take such other
action, as may reasonably be requested in order to more
effectively consummate the transactions contemplated hereby, and
confirm and assure to Buyer title to all the Seller's Assets
being transferred hereunder. If Seller fails to do so, Buyer
may do so in Seller's name and seek reimbursement therefor
pursuant to Section 17.
(d) Liability Insurance. Buyer shall maintain
-------------------
general liability insurance in an amount of not less than Three
Million ($3,000,000.00) Dollars for at least three (3) years
after the Closing Date.
(e) Receivables. Buyer shall assume responsibility
-----------
for all billings and the collection of all accounts with respect
to the use of the Facility after Closing. Seller shall retain
all right, title, and interest in all accounts, notes, and other
receivables with respect to the operation of the Facility and
Seller shall retain responsibility for collection of all such
receivables. Within twenty (20) days after Closing, Buyer shall
deliver to Seller a list of Seller's receivables. All payments
that may be received by Buyer with respect to Seller's
receivables shall be received by Buyer in trust for the benefit
of Seller, shall be segregated from the other funds of Buyer,
and shall be immediately delivered to Seller in the form
received, with any necessary endorsements. Any payment received
by Buyer within thirty (30) days following the Closing shall be
deemed to be a payment with respect to Seller's receivables
unless the payor specifically designates that such payment
relates to services performed after the Closing or unless there
is no receivable to which such payment relates on the list of
Seller's receivables provided to Buyer.
17. Indemnification by Seller/Claims Resolution.
-------------------------------------------
(a) Indemnification by Seller. Seller shall jointly
-------------------------
and severally indemnify Buyer and hold Buyer harmless at all
times after the Closing Date against and in respect of any of
the following (collectively the "Claims"):
(i) Any and all liabilities and obligations of
Seller, or claims against Buyer with respect to the
Seller's Assets being purchased by Buyer hereunder, or
with respect to the Nursing Home or the contracts or
related to Nursing Home, which arise or accrue prior
to the Closing Date other than as expressly assumed by
Buyer under or pursuant to the terms of this
Agreement;
(ii) Any and all damage or deficiency resulting
from any misrepresentation, breach of warranty, or non-
fulfillment of any obligation on the part of Seller,
under this Agreement, any agreement executed pursuant
hereto or any Schedule or Exhibit to this Agreement or
from any misrepresentation in or omission from any
schedules, certificates or other instrument furnished
to Buyer hereunder, or pursuant hereto or in
connection herewith;
(iii) Any retroactive payments due to the state
of Florida or the United States Government for periods
prior to the Closing, unless specifically assumed by
Buyer;
(iv) Any and all liabilities and obligations or
claims arising out of the transfer of funds or
property by any patient to the Seller or Seller's
employees prior to Closing; and
(v) All demands, assessments, judgments, costs,
and reasonable legal and other expenses arising from
or in connection with any action, suit, proceeding or
claim incident to any of the foregoing.
(b) Reimbursement and Offset. Subject to the
------------------------
provisions of Section 17(c) below, Buyer shall be reimbursed by
Seller on demand, for any payment made by it or loss, damage,
cost or expense suffered by it at any time after the Closing
Date with respect to any claim to which the foregoing indemnity
relates. In addition, Buyer shall have the right to set off and
deduct any payment made by it or any loss suffered by it with
respect to any claim to which the indemnity provided for in
Section 17(a) above relates against the amount of any obligation
of Buyer to either Seller, whether under this Agreement or any
other agreement executed pursuant hereto or otherwise.
(c) Conditions of Indemnification. The obligations
-----------------------------
and liabilities of Seller hereunder with respect to claims
resulting from the assertion of liability by third parties
("Third Party Claims") shall be subject to the following terms
and conditions:
(i) Buyer will give Seller prompt notice of any
Third Party Claims asserted against or imposed upon or
incurred by Buyer. Seller will undertake the defense
thereof by representatives of its own choosing
reasonably satisfactory to Buyer. Buyer shall have
the right at its own expense to participate in any
such defense with representatives of its own choosing.
(ii) In the event Seller, within a reasonable
time after notice of any Third Party Claim, fails to
defend or prosecute any such defense diligently, Buyer
will (upon further notice to Seller) have the right to
undertake the defense, compromise or settlement of
such Third Party claim on behalf of, and for the
account of Seller, at the expense and risk of Seller.
(iii) Neither shall Seller, without Buyer's
written consent, settle or compromise any such Third
Party Claim or consent to entry of any judgment which
does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to Buyer an
unconditional release from all liability in respect of
such Third Party claim.
(d) Cumulative Remedies. Except as herein expressly
-------------------
provided, the remedies provided herein shall be cumulative and
shall not preclude the assertion by Buyer of any other rights or
the seeking of any other remedies against Seller.
18. Indemnification by Buyer.
------------------------
(a) Buyer shall indemnify Seller and hold Seller
harmless at all times after the Closing Date against and in
respect of all of the following (collectively "claims"):
(i) Any and all liabilities and obligations of
Seller arising after the Closing Date and (i)
expressly assumed by Buyer under this Agreement and/or
under contracts assigned to and assumed by Buyer or
(ii) relating to the operation of the Nursing Home by
Buyer.
(ii) Any and all damage or deficiency resulting
from any misrepresentation, breach of warranty, or non-
fulfillment of any obligation on the part of Buyer
under this Agreement or any Schedule to this Agreement
or from any misrepresentation in or omission from any
Schedule, certificate or other instrument furnished to
Seller hereunder, or pursuant hereto or in connection
herewith.
(iii) All demands, assessments, judgments,
costs, and reasonable legal and other expenses arising
from or in connection with any action, suit,
proceeding or claim incident to any of the foregoing.
(b) Reimbursement and Offset. Subject to the
------------------------
provisions of Section 18(c) below, Seller shall be reimbursed by
Buyer, on demand, for any payment made by Seller or loss,
damage, cost or expense suffered by Seller at any time after the
Closing Date with respect to any liability or claim to which the
foregoing indemnity relates.
(c) Conditions of Indemnification. The obligations
-----------------------------
and liabilities of Buyer hereunder with respect to claims
resulting from the assertion of liability by third parties
(herein "Third Party Claims") shall be subject to the following
terms and conditions:
(i) Seller will give Buyer prompt notice of any
Third Party Claims asserted against or imposed upon or
incurred by either Seller, and Buyer will undertake
the defense thereof by representatives of its own
choosing reasonably satisfactory to Seller. Seller
shall have the right at its own expense to participate
in any such defense with representatives of its own
choosing; and
(ii) In the event Buyer, within a reasonable
time after notice of any Third Party Claim, fails to
defend or prosecute any such defense diligently,
Seller will (upon further notice to Seller) have the
right to undertake the defense, compromise or
settlement of such Third Party Claim on behalf of and
for the account of Buyer, at the expense and risk of
Buyer.
(d) Cumulative Remedies. Except as herein expressly
-------------------
provided, the remedies provided herein shall be cumulative and
shall not preclude the assertion by Seller of any other rights
or the seeking of any other remedies against Buyer.
19. Survival of Representations.
---------------------------
(a) Survival of Representations. All
---------------------------
representations, warranties and agreements made by any party to
this Agreement or pursuant hereto shall survive the Closing
hereunder, notwithstanding any investigation by any party made
either before or after the Closing.
(b) Statements as Representations. All statements
-----------------------------
contained in any certificate, schedule, list, document or other
writing delivered pursuant hereto or in connection with the
transactions contemplated hereby shall be deemed representations
and warranties within the meaning of Sections 17(a) and 18(a)
hereof.
20. Miscellaneous Provisions.
------------------------
(a) Expenses. Except as otherwise expressly provided
--------
herein, each party shall be responsible for its own fees and
expenses in connection with the execution and delivery of this
Agreement and the performance of its obligations hereunder.
(b) Benefit. This Agreement shall be binding upon
-------
and inure to the benefit of the parties hereto, and their
respective heirs, executors, administrators, successors and
assigns. Buyer may assign this Agreement and all its
obligations and rights hereunder to one or more entities, which
shall assume Buyer's obligations and be entitled to the benefit
of Buyer's rights under this Agreement.
(c) Notice. All necessary notices, payments, demands
------
and requests shall be in writing and shall be deemed duly given
if mailed by certified mail, postage prepaid, return receipt
requested, and addressed as follows:
IF TO SELLER:
Mr. James R. Sellers
Bayshore Healthcare Services, Inc.
2990 North Swan Road
Suite 228
Tucson Ariz. 85712
F. Dale Markham
Healthcare Investors of America, Inc.
1278 Brenholt Lane
Showlow Ariz. 85910
with a copy to:
John A. Cocklereece, Jr.
Bell Davis & Pitt, P.A.
635 W. Fourth Street
Winston Salem NC 27104
IF TO BUYER:
Abraham Shaulson
3190 Pine Tree Drive
Miami Beach, Florida 33140
with a copy to:
Goldsmith & Grout, P.A.
385 West Fairbanks Avenue, #300
Post Office Box 2011
Winter Park, Florida 32790-2011
Either party may change its address for notice by giving notice
of change of address in the manner set forth above.
(d) Headings. The headings of the paragraphs of this
--------
Agreement are for convenience of reference only and do not form
a part hereof and in no way modify, interpret or construe the
meanings of the parties.
(e) Tax Reporting. The parties hereto agree and
-------------
acknowledge that the determination of the price for each of the
Seller's Assets, as set forth in this Agreement, is the result
of arms-length negotiations between the parties, and the parties
agree and warrant and represent to each other, their respective
tax returns and those of any parent, subsidiary or affiliated
entity shall report the transactions contemplated by this
Agreement in accordance with the characterization and allocated
prices of the various assets set forth in this Agreement.
(f) Entire Agreement. This Agreement, together with
----------------
the Schedules and Exhibits, sets forth the entire agreement and
understanding between the parties as to the subject matter
hereof and merges and supersedes all prior discussions,
agreements, whether written or oral, and understandings with
respect hereto. This Agreement and said Exhibits and Schedules
may not be amended, changed or modified except by a written
instrument duly executed by the parties hereto. This Agreement
shall be governed and construed and enforced in accordance with
the laws of the state of Florida.
(g) Counterparts. This Agreement may be signed in
------------
any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same
instrument.
(h) Exhibits. This Agreement may be signed without
--------
the Exhibits. All Exhibits shall be prepared and submitted
within fifteen (15) days of signing this Agreement. Buyer shall
review all Exhibits produced by Seller within ten (10) days.
Buyer retains the right to rescind this Contract if any such
Exhibits do not meet Seller's approval.
(i) Confidentiality. Buyer has received from Seller
---------------
and will receive from Seller documents and information relating
to the Seller's Assets. Buyer agrees to keep said documents and
information confidential, and not to disclose same to another
person or party except to its staff, accountants, attorneys,
insurance agents and mortgage lenders without the prior written
approval of Seller unless required by law. In the event the
Closing contemplated by this Agreement is not consummated, Buyer
will promptly return to Seller any and all information and
documents received from Seller. Seller agrees to keep
confidential any information or documentation received from
Buyer regarding Buyer and this transaction.
(j) Assignment. This Agreement is not assignable by
----------
either party without the consent of the other party; provided,
however, that Buyer shall be entitled to assign its rights
hereto to a corporation to be formed for purposes of
consummating the Closing.
IN WITNESS WHEREOF, the parties have executed this
Agreement under seal as of the day and year first above written.
"SELLER"
Bayshore Healthcare Services, Inc.
BY: /s/ James R. Sellers
----------------------------------
James R. Sellers, President
Healthcare Investors of America, Inc.
BY: /s/ F. Dale Markham
----------------------------------
F. Dale Markham, President
"BUYER"
/s/ Abraham Shaulson (SEAL)
--------------------------
Abraham Shaulson
SCHEDULE 1
DESCRIPTION OF REAL PROPERTY
SCHEDULE 2
PERSONAL PROPERTY
[TO BE PROVIDED AND ATTACHED ON OR BEFORE 6/30/1999]
SCHEDULE 3
CONTRACTS
SCHEDULE 4
PURCHASE PRICE ALLOCATION
[TO BE PROVIDED AND ATTACHED ON OR BEFORE 6/30/1999]
SCHEDULE 5
LIENS AND ENCUMBRANCES
THOSE LIENS AND ENCUMBRANCES SET FORTH IN PARAGRAPH 4 OF THE
AGREEMENT AND SUCH FURTHER LIENS AND ENCUMBRANCES AS MAY BE
REFLECTED ON BUYER'S TITLE POLICY, TO THE EXTENT THAT SUCH LIENS
AND ENCUMBRANCES SHALL NOT MATERIALLY AFFECT BUYER'S OWNERSHIP
OR USE OF THE PROPERTY; SAVE AND EXCEPT SUCH LIENS AND
ENCUMBRANCES FOR FINANCING WHICH SHALL BE PAID AT CLOSING.
SCHEDULE 6
COLLECTIVE BARGAINING AGREEMENTS
See attached copies of two (2) collective bargaining agreements
SCHEDULE 7
EMPLOYEE INFORMATION
[TO BE PROVIDED AND ATTACHED ON OR BEFORE 6/30/1999]
SCHEDULE 8
LITIGATION
[TO BE PROVIDED AND ATTACHED ON OR BEFORE 6/30/1999]
AMENDMENT TO PURCHASE AND SALE AGREEMENT
----------------------------------------
This Amendment to Purchase and Sale Agreement ("Amendment")
is entered into this 31st day of August, 1999, by and between
Healthcare Investors of America, Inc., a Maryland corporation
qualified to do business in Florida, and Bayshore Healthcare
Services, Inc., an Arizona corporation qualified to do business
in Florida (referred individually as "Healthcare" and
"Bayshore," respectively, and referred jointly as "Seller") and
Abraham Shaulson, an individual resident of the State of Florida
("Buyer").
INTRODUCTION
------------
WHEREAS, Seller is engaged in the nursing home business,
and owns and operates the land, building, fixtures, equipment
and other assets comprising a one hundred fifty (150) bed
nursing home facility located at 16650 West Dixie Highway,
Miami, Florida, under the name "Bayshore Convalescent Center"
(the "Nursing Home");
WHEREAS, the parties reached an understanding for the sale
by Seller and the purchase by Buyer or its nominee of the real
estate, assets and business related to the Nursing Home, which
agreement is evidenced by a Purchase and Sale Agreement dated
June 3, 1999 ("Agreement");
WHEREAS, the parties wish to amend the terms of the
Agreement and execute this Amendment to evidence such changes.
Capitalized terms, not otherwise defined herein, shall have the
meaning set forth in the Agreement.
AGREEMENT
---------
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the
terms and conditions hereinafter set forth, the parties,
intending to be legally bound, agree as follows:
1) RESCHEDULING OF CLOSING. The Closing Date shall be no
-----------------------
later than October 31, 2000, at such time and place mutually
agreed upon by the parties. Time is of the essence in
connection with the Closing.
2) PURCHASE PRICE AND PAYMENT.
--------------------------
(a) The parties confirm that the Purchase Price for the
Seller's Assets shall be five million seven hundred fifty
thousand dollars ($5,750,000).
(b) The Purchase Price shall be paid as follows:
(i) The parties acknowledge that Buyer has previously
paid to Seller the sum of twenty-five thousand dollars
($25,000). The parties further acknowledge that,
simultaneously with the execution hereof, Buyer has
paid to Seller the sum of three hundred twenty-five
thousand dollars ($325,000). The total amount of
three hundred fifty thousand dollars ($350,000)
("Deposit") received by Seller to date shall be
applied toward the Purchase Price at the Closing. If
the Closing shall not occur due to Seller's default,
Buyer shall receive an immediate refund of the
Deposit. If the Closing shall not occur for any other
reason, Seller shall receive the Deposit as liquidated
damages and Buyer shall have no further obligation to
Seller arising out of or in connection with the sale.
(ii) The balance of the Purchase Price, subject to
adjustments, shall be paid by Buyer to Seller at
Closing by wire transfer, certified check or bank
cashiers check.
3) DEPOSIT AND DISBURSEMENT OF CAPITAL IMPROVEMENT BUDGET.
------------------------------------------------------
Simultaneously with the execution hereof, Buyer has deposited
with Seller the sum of one hundred fifty thousand dollars
($150,000), which amount shall be deposited in a separate
interest bearing account in Seller's name. Buyer and Seller
have agreed to a list of capital improvements, which
improvements and the schedule for completion thereof, are set
forth on Exhibit A attached hereto ("Capital Improvements
Budget"). Buyer shall complete the improvements specified in
accordance with Exhibit A. Upon submission of an estimate of
the cost of completing specific improvements on the Capital
Improvement Budget, Seller shall advance from the account the
amount of the estimated cost, but in no event shall such advance
exceed twenty-five thousand dollars ($25,000). As the
improvements are completed, Buyer shall submit satisfactory
evidence of the completion of the improvements and the cost
thereof to Seller and, thereupon, be entitled to reimbursement
by Seller from the Capital Improvement Budget, less any previous
advances for the cost of such work. Upon the closing of the sale
pursuant to this Agreement, any amount remaining in the Capital
Improvements Budget shall be applied in payment of the Purchase
Price. If the sale shall fail to close by the Closing Date for
any reason other than default by the Seller, any amount
remaining in the Capital Improvements Budget shall become the
property of Seller.
4) LEASE OF PREMISES PENDING SALE. Pending the Closing of the
------------------------------
sale under the Agreement, Seller shall lease the Nursing Home to
Buyer. Simultaneously herewith, Seller and Buyer's designate
have entered into a lease agreement generally in the form
attached hereto as Exhibit B ("Lease"). Effective upon the
beginning date of the Lease, Buyer's designate shall assume all
operational control of the Nursing Home, subject only to Buyer's
full and complete performance under the terms of the Lease.
5) BUYER'S LICENSE TO OPERATE FACILITY; INDEMNIFICATION.
----------------------------------------------------
Buyer shall proceed immediately to file any and all such
applications and documents as may be necessary to obtain a
license to operate the Nursing Home. In no event, however,
shall Buyer fail to file any and all documents necessary for the
application of such license any later than September 30, 1999.
Upon filing all such applications, Buyer shall proceed with due
diligence to obtain the license. In no event shall such license
fail to be issued on or before December 31, 1999. In the event
Buyer shall fail to apply for the license by the date specified
herein or such license shall not have been issued by the date
specified herein for any reason other than fault of the Seller,
Buyer shall be in default of its obligations under the
Agreement, this Amendment, and the Lease. In such event,
Seller, at its option, may exercise its rights to terminate the
Lease, deem the Buyer in default under the terms of the
Agreement, and retain the Deposit as liquidated damages as
provided herein. Buyer agrees to indemnify and hold Seller
harmless from any and all liabilities which may arise in
connection with the operation of the Nursing Home from and after
the beginning date of the Lease until Closing.
6. SATISFACTION OF BUYER'S CONDITIONS OF CLOSING. The parties
---------------------------------------------
hereby acknowledge that all conditions precedent to Buyer's
obligation under the Agreement to close, other than the
satisfaction by Seller of its obligations under the Agreement,
have been satisfied or waived and that Buyer is obligated to
close as specified in the Agreement.
7. SATISFACTION OF SELLER'S CONDITION TO CLOSING; EXTENSION OF
-----------------------------------------------------------
LEASE. A condition to Seller's obligation to close is that
- -----
Seller shall have obtained shareholder approval of the sale. In
the event that Seller shall not have obtained such approval at
least six (6) months prior to the end of the Lease, Buyer, at
its option, shall have the right to extend the Lease for three
(3) successive periods of one (1) year each on the same terms
and conditions, except that rent shall increase from the prior
year in an amount equal to the increase in the consumer price
index for the preceding twelve (12) months.
8. REAFFIRMATION OF AGREEMENT. Except as amended by the terms
--------------------------
of this Amendment, all terms and conditions of the Agreement
remain in effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the day and date first above written.
Healthcare Investors of America, Inc.
By: /s/ F. Dale Markham
----------------------------------
Print Name: F. Dale Markham
Title: President
Bayshore Healthcare Services, Inc.
By:/s/ James R. Sellers
----------------------------------
Print Name: James R. Sellers
Title: President
/s/ Abraham Shaulson (SEAL)
-------------------------------------
Abraham Shaulson
EXHIBIT A
Capital Improvement Budget
--------------------------
EXHIBIT B
Lease Agreement
---------------
See attached 34 page lease and exhibits
EXHIBIT 10.2
LEASE
-----
THIS LEASE ("Lease") is dated as of the 30th day of July,
1999, and is between HEALTHCARE INVESTORS OF AMERICA, INC., a
Maryland corporation ("HAI") and or ("Lessor"), and WATERCREST
NURSING AND REHABILITATION CENTER, INC., a Florida corporation
("WCNRC") and or ("Lessee").
ARTICLE 1
---------
LEASED PROPERTY; TERM
---------------------
1.1 Upon and subject to the terms and conditions
hereinafter set forth, Lessor leases to Lessee, and Lessee rents
from Lessor, all of Lessor's rights and interests in and to the
following property (collectively, the "Leased Property"):
(i) the real property described in Exhibit 1 attached
hereto (the "Land");
(ii) all buildings, structures, fixtures (as hereinafter
defined) and other improvements of every kind, including but not
limited to alleyways and connecting tunnels, sidewalks, utility
pipes, conduits and lines (on-site and off-site), and parking
areas and roadways appurtenant to such buildings and structures
presently or hereafter situated upon the Land (collectively, the
"Leased Improvements");
(iii) all easements, rights and appurtenances relating
to the Land and the Leased Improvements (collectively, the
"Related Rights"); and
(iv) all fixtures, permanently affixed to or incorporated into
the Leased Improvements,including without limitation, all
furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration,
air and water pollution control, waste disposal, air-cooling and
air-conditioning systems and apparatus, sprinkler systems and
fire and theft protection equipment, and built-in oxygen and
vacuum systems, all of which, to the greatest extent permitted
by law, are hereby deemed by the parties hereto to constitute
real estate, together with all replacements, modifications,
alterations and additions thereto, but specifically excluding
all items included within the category of Personal Property as
defined below (collectively, the "Fixtures").
The Leased Property is demised in its present condition
without representation or warranty by Lessor and subject to the
rights of parties in possession, and to the existing state of
title including all covenants, conditions, restrictions,
easements and other matters of record including all applicable
laws, the lien of financing instruments, mortgages, deeds of
trusts and including other matters which would be disclosed by
an inspection of the Leased Property or by an accurate survey
thereof. The Leased Property is leased subject to all
covenants, conditions, restrictions, easements and other matters
set forth in Exhibit 2.
1.2 Term. The initial term of this Lease shall be for a
fixed term (the "Term") commencing on September 1, 1999 (the
"Commencement Date") and ending at midnight on August 31, 2000,
unless this Lease is sooner terminated as hereinafter provided.
ARTICLE 2
---------
DEFINITIONS
-----------
2.1 Definitions. For all purposes of this Lease, except
-----------
as otherwise expressly provided or unless the context otherwise
requires, (i) the terms defined in this Article have the
meanings assigned to them in this Article and include the plural
as well as the singular, (ii) all accounting terms not otherwise
defined herein have the meanings assigned to them in accordance
with generally accepted accounting principles at the applicable
time, (iii) all references in this Lease to designated
"Articles," "Sections" and other subdivisions are to the
designated Articles, Sections and other subdivisions of this
Lease, and (iv) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Lease as a whole and
not to any particular Article, Section or other subdivision.
Additional Charges: As defined in Section 3.4.
------------------
Additional Rent: Not applicable
---------------
Affiliate: As used in this Lease the term "Affiliate"
---------
shall mean (i) any person which, directly or indirectly,
controls or is controlled by or is under common control with
such person, (ii) any other person that owns, beneficially,
directly or indirectly, five percent (5%) of the outstanding
capital stock, shares or equity interests of such person, or
.(iii) any officer, director, employee, general partner or
trustee of such person or any person controlling, controlled by
or under common control with such person (excluding trustees and
persons serving in similar capacities who are not otherwise an
Affiliate of such person). The term "person" means and includes
individuals, corporations, general and limited partnerships,
stock companies or associations, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business
trusts, or other entities and governments, agencies and
political subdivisions thereof. For the purposes of this
definition, "control" (including the correlative meanings of the
terms "controlled by" and "under common control with") as used
with respect to any person shall mean the possession. directly
or indirectly, of the power to direct or cause the direction of
the management and policies of such person through the ownership
of voting securities, partnership interests or other equity
interests.
Award: As defined in Section 15. 1 (a) .
-----
Base Gross Revenues: Not applicable
-------------------
Base Property Cost Component: Not applicable
----------------------------
Base Rent: As defined in Section 3. 1 (a) (i) .
---------
Business Day: Each Monday, Tuesday, Wednesday, Thursday
------------
and Friday which is not a day on which national banks in the
state of Florida are authorized, or obligated, by law or
executive order, to close and including Jewish holidays.
Capital Addition: One or more new buildings, or one or
----------------
more additional structures annexed to any portion of any of the
Leased Improvements, or the material expansion of existing
improvements which are constructed on any parcel or portion of
the Land during the Term, including the construction of a new
wing or new story, or the renovation of existing improvements on
the Leased Property in order to provide a functionally new
facility needed to provide services not previously offered, or
any expansion, construction, renovation or conversion in order
to increase the bed capacity of the Facility, to change the
purpose for which such beds are utilized or to improve the
quality of the Facility.
Capital Additions Cost: The term "Capital Additions Cost"
----------------------
shall mean the cost of any Capital Addition proposed to be made
by Lessee whether paid for by Lessee or Lessor. Such cost shall
include (a) the cost of construction of the Capital Addition
including site preparation and improvement, materials, labor,
supervision, developer and administrative fees, legal fees, and
related design, engineering and architectural services, the cost
of any fixtures, the cost of construction financing (including
but not limited to capitalized interest) and other miscellaneous
costs approved by Lessor, (b) if agreed to in writing by Lessor
in advance, the cost of any land contiguous to the Leased
Property which is to become a part of the Leased Property
purchased for the purpose of placing thereon the Capital
Addition or any portion thereof, or for providing means of
access thereto, or parking facilities therefor, including the
cost of surveying the same, (c) the cost of insurance, real
estate taxes, water and sewage charges and other carrying
charges for such Capital Addition during construction, (d) the
cost of title insurance, (e) reasonable fees and expenses of
legal counsel, (f) filing, registration and recording taxes and
fees, (g) documentary stamp taxes or surtax, if any, and (h) all
reasonable costs and expenses of Lessor and any Lending
Institution which has committed to finance the Capital Addition,
including but not limited to (i) the reasonable fees and
expenses of their respective legal counsel, (ii) all printing
expenses, if any, (iii) the amount of any filing, registration
and recording taxes and fees, (iv) documentary stamp taxes, if
any (v) title insurance charges and appraisal fees, if any (vi)
rating agency fees, if any, and (vii) commitment fees, if any,
charged by any Lending Institution advancing or offering to
advance any portion of the financing for such Capital Addition.
Code: The Internal Revenue Code of 1986, as amended.
----
Commencement Date: As defined in Section 1.2.
-----------------
Condemnation, Condemnor: As defined in Section 15.1.
-----------------------
Consolidated Financial: For any fiscal year or other
----------------------
accounting period for Lessee and its consolidated subsidiaries,
if any, statements of earnings and retained earnings and of
changes in financial position for such period and for the period
from the beginning of the respective fiscal year to the end of
such period and the related balance sheet as at the end of such
period, together with the notes thereto, all in reasonable
detail and setting forth in comparative form the corresponding
figures for the corresponding period in the preceding fiscal
year, and prepared in accordance with generally accepted
accounting principles.
Consolidated Net Worth: At any time, the sum of the
----------------------
following for Lessee and its consolidated subsidiaries, if any,
on a consolidated basis determined in accordance with generally
accepted accounting principles:
(1) the amount of capital or stated capital (after
deducting the cost of any treasury shares) , plus
(2) the amount of capital surplus and retained earnings (or, in
the case of a capital surplus or retained earnings deficit,minus
the amount of such deficit), minus
(3) the sum of the following (without duplication of deductions
in respect of items already deducted in arriving at surplus and
retained earnings): (a) unamortized debt discount and expense
and (b) any write-up in book value of assets resulting from a
revaluation thereof subsequent to the most recent Consolidated
Financials prior to the date thereof, except any net write-up in
value of foreign currency in accordance with generally accepted
accounting principles; any write-up resulting from a reversal of
a reserve for bad debts or depreciation; and any write-up
resulting from a change in methods of accounting for inventory.
Cost of Living Index: The Consumer Price Index, Urban
--------------------
Wage Earners and Clerical Workers, All Items, Case 1967=100,
Published by the Bureau of Labor Statistics, U.S. Department of
Labor, for the geographical area which includes the Leased
Property, or if said Index is not available, then an available
index for the state in which the Leased Property is located, or
if not available, for the entire United States, published by
said bureau or its successor, or if none, by any other
instrumentality of the United States or of the state in which
the Leased Property is located, in the order mentioned.
Date of Taking: As defined in Section 15. 1.
--------------
Debt Component: As defined in Section 3.l(a)(i)(2).
--------------
Equity Component: As defined in Section 3. 1 (a) (i) (1).
----------------
Encumbrance: As defined in Section 36. 1.
-----------
Event of Default: As defined in Section 16.l.
----------------
Excess Gross Revenues: Gross Revenues less Base Gross
---------------------
Revenues.
Extended Terms: As defined in Section 33. 1.
--------------
Facility: The existing health care facility situated
--------
on the Leased Property on the Commencement Date, as it may be
modified from time-to-time with approval of Lessor.
Facility Mortgage: As defined in Section 13. 1.
-----------------
Facility Mortgagee: As defined in Section 13. 1.
------------------
Fair Market Value: The fair market value of the Leased
-----------------
Property, including all Capital Additions, and (a) assuming the
same is unencumbered by this Lease, (b) determined in accordance
with the appraisal procedures set forth in Article 34 or in such
other manner as shall be mutually acceptable to Lessor and
Lessee, and (c) not taking into account any reduction in value
resulting from any Encumbrance to which the Leased Property is
subject and which Encumbrance Lessee or Lessor is otherwise
required to remove at or prior to closing of the transaction.
In determining such Fair Market Value the positive or negative
effect on the value of the Leased Property attributable to the
interest rate, amortization schedule, maturity date, prepayment
penalty and other terms and conditions of any mortgage on the
Leased Property which is not so required or agreed to be removed
shall be taken into account in determining such Fair Market
Value. The Fair Market Value shall be determined by using
alternative forms of appraisal such as the "income" approach as
rental property and the "bricks and mortar" approach; however,
the Fair Market value shall be the higher of those values.
Fair Market Added Value: The Fair Market Value of the
-----------------------
Leased Property (including all Capital Additions) less the Fair
Market Value of the Leased Property determined as if no Capital
Additions financed by Lessee had been constructed.
Fair Market Value Purchase Price: The Fair Market Value of
--------------------------------
the Leased Property less the Fair Market Added Value.
Fiscal Quarter: Each of the three (3) month periods
--------------
commencing August, November, February, and May.
Fiscal Year: The twelve (12) month period from August 1
-----------
to July 31.
Fixtures: As defined in Section 1. 1.
--------
Gross Revenue Base Additional Rent: As defined in
---------------------------------
Section 3.2(b)(i).
Gross Revenues: The term "Gross Revenues" shall
--------------
mean all revenues received or receivable from or by reason of
the operation of the Facility (including any Capital Additions),
or any other use of the Leased Property, including without
limitation, all patient revenues received or receivable for the
use of or otherwise by reason of all rooms, beds and other
facilities provided, meals served, services performed, space or
facilities subleased or goods sold on the Leased Property,
including without limitation, and except as provided below, any
consideration received under any subletting, licensing, or other
arrangements with third parties relating to the possession or
use of any portion of the Leased Property and all revenues from'
all ancillary services; provided, however, that Gross Revenues
shall not include non-operating revenues such as interest income
or gain from the sale of assets not sold in the ordinary course
of business and; provided, further, that there shall be deducted
from such revenues:
(i) contractual allowances (relating to any period
during the Term of this Lease) for billings not paid by or
received from the appropriate governmental agencies or third
party providers;
(ii) allowances according to generally accepted
accounting principles for uncollectible accounts;
(iii) all proper patient billing credits and
adjustments according to generally accepted accounting
principles relating to health care accounting;
(iv) federal, state or local sales, use, gross
receipts and excise taxes and any tax based upon or measured by
said Gross Revenues which is added to or made a part of the
amount billed to the patient or other recipient of such services
or goods, whether included in the billing or stated separately;
(v) provider discounts for hospital or other medical
facility utilization contracts;
(vi) the cost of any federal, state or local
governmental program imposed specially to provide or finance
indigent patient care;
(vii) revenues attributable to Capital Additions or
Non-Capital Additions paid for or financed by Lessee as provided
for in Section 10. 1 and Section 10. 2, respectively;
(viii) revenues attributable to machinery or equipment
owned by Lessee and separately charged to patients; and
(ix) revenues attributable to Leasehold Improvements
paid for or financed by Lessee as provided for in Section 10.1
or Section 10.2, respectively.
Hazardous Substances: Collectively, (1) any
--------------------
material which may be dangerous to health or the environment,
either separately or in combination with any other substance,
when improperly stored, treated, disposed, or otherwise managed,
including without limitation, hazardous substances as defined in
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. 9601, and (2) crude
or refined oil including waste oil. Hazardous Substances shall
not include pharmaceuticals," "infectious waste," "sewage
discharge," or cleaning supplies" of the types and in quantities
normally stocked by health care providers similar to the
Facility.
Impositions: Collectively, all taxes (including without
-----------
limitation, all capital stock and franchise taxes of Lessor, all
ad valorem, sales and use single business, gross receipts,
transaction privilege, rent or similar taxes), assessments
(including without limitation all assessments for public
improvements or benefits, whether or not commenced or completed
prior to the date hereof and whether or not to be completed
within the Term), ground rents, water, sewer or other rents and
charges, excises, tax levies, fees (including without
limitation, license, permit, inspection, authorization and
similar fees), and all other governmental charges, in each case
whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of the
Leased Property or the Rent (including all interest and
penalties thereon due to any failure in payment by Lessee),
which at any time prior to, during or in respect of the Term
hereof may be assessed or imposed on or in respect of or be a
lien upon (a) Lessor or Lessor's interest in the Leased
Property, (b) the Leased Property or any part thereof or any
rent therefrom or any estate, right, title or interest therein,
or (c) any occupancy, operation, use or possession of, sales
from, or activity conducted on, or in connection with, the
Leased Property or the leasing or use of the Leased Property or
any part thereof; provided, however, nothing contained in this
Lease shall be construed to require Lessee to pay (1) any tax
based on net income (whether denominated as a franchise or
capital stock or other tax) imposed on Lessor or any other
person, or (2) any transfer, net revenue, or sales tax of Lessor
or any other person except Lessee and its successors, or (3) any
tax imposed with respect to the sale, exchange or other
disposition by Lessor of any portion of the Leased Property or
the proceeds thereof, or (4) except as expressly provided
elsewhere in this Lease, any principal or interest on any
Encumbrance on the Leased Property; however, the provisions set
forth in this sentence shall not be applicable to the extent
that any tax assessment, tax levy or charge which Lessee is
obligated to pay pursuant to the first sentence of this
definition and which is in effect at any time during the Term
hereof is totally or partially repealed, and a tax, assessment,
tax levy or charge set forth in clause (1) or (2) is levied,
assessed or imposed expressly in lieu thereof.
Independent Contractor Agreement: Any agreement, whether
--------------------------------
written or oral, between Lessor and any other party (including
but not limited to an affiliate of Lessee) to manage or oversee
the Lease on behalf of Lessor.
Insurance Requirements: All terms of any insurance policy
----------------------
required by this Lease and all requirements of the issuer of any
such policy.
Land: As defined in Section 1. 1.
----
Lease: As defined in the preamble.
-----
Leasehold Improvements: Improvements, whether Capital
----------------------
Additions or Non-Capital Additions, which are funded by Lessee.
Lease Year: A twelve- (12-) month period commencing on
----------
the Commencement Date or on each anniversary date thereof, as
the case may be.
Leased Improvements; Leased Property: Each as
------------------------------------
defined in Section 1.1.
Legal Requirements: All federal, state, county,
------------------
municipal and other governmental statutes, laws, rules, orders,
regulations ordinances, judgments, decrees and injunctions
affecting either the Leased Property or the construction, use,
operation, or alteration thereof, whether now or hereafter
enacted and in force, including any which may (i) require
repairs, modifications or alterations in or to the Leased
Property, or (ii) in any way adversely affect the use and
enjoyment thereof, and all permits, licenses, authorizations and
regulations relating thereto, including all covenants,
agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Lessee (other than
encumbrances created by Lessor without the consent of Lessee),
at any time in force affecting the Leased Property, or (iii)
require clean-up of Hazardous Substances.
Lending Institution: Any insurance company, federally
-------------------
insured commercial or savings bank, national banking
association, savings and loan association, employee welfare,
pension or retirement fund or system, corporate profit-sharing
or pension trust, college or university, or real estate
investment trust, including any corporation qualified to be
treated for federal tax purposes as a real estate investment
trust, having a net worth of at least $50,000,000.
Lessee: Watercrest Convalescent and Rehabilitation
------
Center, Inc. Healthcare Co. Inc., a Florida corporation, and its
successors and assigns.
Lessor: Healthcare Investors of America, Inc., a
------
Maryland corporation, and its successors and assigns.
Management Agreement: Any agreement, whether written or
--------------------
oral, between Lessee and any other party (including but not
limited to an Affiliate of Lessee) to manage or operate the
Facility on behalf of Lessee.
Minimum Rent: As defined in Section 3. 1.
------------
Non-Capital Addition: Any improvement to the Leased
--------------------
Property not within the meaning of a Capital Addition.
Officer's Certificate: A certificate of Lessee signed by
---------------------
the Chairman of the Board of Directors, the President, any Vice
President or the Treasurer of Lessee or another officer
authorized to so sign by the Board of Directors or By-Laws of
Lessee, or any other person whose power and authority to act has
been authorized by delegation in writing by any of the persons
holding the foregoing offices.
Overdue Rate: On any date, a rate per annum equal to
------------
one percent (1%) above the Prime Rate, but in no event greater
than the maximum rate then permitted under applicable law.
Payment Date: Any due date for the payment of the
------------
installments of Minimum Rent, Additional Rent or any other sums
payable under this Lease.
Personal Property: All machinery, equipment, furniture,
-----------------
furnishings, movable walls or partitions, computers or trade
fixtures, contract rights under the Asset Purchase Agreement,
trade names, trademarks, goodwill, contracts, agreements,
leases, licenses, permits, authorizations and books of account,
or other personal property, and consumable inventory and
supplies, used or useful in Lessee's business on the Leased
Property and removable without causing material damage to the
Leased Property, including without limitation, all items of
furniture, furnishings, equipment, vehicles, supplies and
inventory, together with all replacements, modifications,
alterations, and additions thereto, except items, if any,
included within the definition of Fixtures.
Prime Rate: The annual rate publicly announced by PNC
----------
Bank, of Louisville, Kentucky to be its base rate for 90-day
unsecured loans to its United States corporate borrowers of the
highest credit standing, as in effect from time-to-time.
Property Cost Component: That portion of the Medicaid
-----------------------
rate available to Lessee under the "Fair Rental Value System"
reimbursement for property cost under Florida law.
Property Cost Percentage Increase: The percentage
---------------------------------
derived from the following calculation: Property Cost Component
divided by the Base Property Cost Component minus one.
Primary Intended Use: Use of the Facility as a
--------------------
health care facility licensed for skilled and intermediate long-
term nursing services, plus such additional uses which are
permitted by Lessor from time-to-time and consented to by
Facility Mortgagee.
Rent: The Minimum Rent.
----
State: The state of Florida.
-----
Subsidiaries: Corporations or partnerships, of which
------------
Lessee owns, directly or indirectly, more than fifty percent
(50%) of the voting stock (individually, a "subsidiary").
Taking: A taking or voluntary conveyance during the
------
Term hereof of all or part of the Leased Property, or any
interest therein or right accruing thereto or use thereof, as
the result of or in settlement of any Condemnation or other
eminent domain proceeding affecting the Leased Property whether
or not the same shall have actually been commenced.
Term: Collectively, the Fixed Term and any
----
Extended Term, as the context may require, unless earlier
terminated pursuant to the provisions hereof.
United States Treasury Securities: The uninsured
---------------------------------
treasury securities issued by the United States Federal Reserve
Bank.
Unsuitable for Its Primary Intended Use: As used
---------------------------------------
anywhere in this Lease, the term "Unsuitable for its Primary
Intended Use" shall mean that, by reason of damage or
destruction or a partial Taking by Condemnation, in the good
faith judgment of Lessee, reasonably exercised, the Facility
cannot be operated on a commercially practicable basis for its
Primary Intended Use, taking into account, among other relevant
factors, the number of usable beds affected by such damage or
destruction or partial Taking.
Unavoidable Delays: Delays due to strikes, lockouts,
------------------
inability to procure materials, power failure, acts of God,
governmental restrictions not under the parties' control, enemy
action, civil commotion, fire, unavoidable casualty or other
causes beyond the control of the party responsible for
performing an obligation hereunder; provided, that lack of funds
shall not be deemed a cause beyond the control of either party
hereto.
ARTICLE 3
---------
RENT, ADDITIONAL CHARGES AND OTHER PAYMENTS
-------------------------------------------
3.1 Rent for Land, Leased Improvements, Related Rights and
------------------------------------------------------
Fixtures. Lessee will pay to Lessor, in lawful money of the
- --------
United Sates of America, at Lessor's address set forth herein or
at such other place or to such other person, firms or
corporations as Lessor from time-to-time may designate in
writing, Rent for the Leased Property, as follows:
(a) Minimum Rent:
------------
(i) A Minimum Rent ("Base Rent") shall be
payable monthly, in arrears, on the 20th day of each calendar
month during the Term of this Lease, or the pro-rated portion
thereof in the event possession is delivered to Lessee after the
Commencement Date. The Base Rent shall be calculated as the sum
of the following amounts:
(1) A payment in the amount of $47,814 per
month. It is acknowledged and agreed that the amount of the
payment shall vary only as a result of changes in the interest
rate per annum applicable from time-to-time to the principal of
the Facility Mortgage, i.e. The lease payment shall be increased
or decreased by the amount of the increase or decrease in the
mortgage payment.
(2) Such additional amounts, if any, that
may be necessary from time-to-time to cover the debt service
under the loan agreements of even date herewith between Lessor
and initial Facility Mortgagee.
(b) Additional Rent: Not applicable.
---------------
(c) Total Rent. Notwithstanding the provisions
----------
outlined below in this Article 3 regarding Additional Charges
and Other Payments, the Base Rent shall constitute the total
obligation of Lessee for Rent, and only such amounts shall be
deemed Rent under the provisions of this Lease.
3.2 Calculation and Payment of Additional Rent; Annual
--------------------------------------------------
Reconciliation. Not applicable
- --------------
3. 3 Method of Accounting: Lessee shall
--------------------
utilize the accrual method of accounting and keep its books and
records in a manner which shall accurately record and, as
required from time-to-time, adjust Gross Revenues in accordance
with generally accepted accounting principles, consistently
applied. Lessor may, from time-to-time, request access to such
records of Lessee as may be required to review or audit Gross
Revenues. In no event, however, shall Lessor have access to
records where such access would violate any state or federal law
or state or federal regulation.
3.4 Additional Charges. In addition to the Rent
------------------
obligations described above, Lessee assumes the obligation to
pay all Impositions and other charges (as set forth in Article
4) which arise out of the Leased Property. Such assumed
obligations are Additional Charges. Lessee shall not assume any
obligations of Lessor arising out of Lessor's receipt of Rent,
including any state or federal income or other ad valorem tax on
such Rent. Lessee agrees to pay and discharge all such
Additional Charges as they may become due and payable, including
any fine, penalty or other levy associated with the non-payment
of such Additional Charges in a timely manner. Lessor reserves
all rights and remedies available under this lease, at law or in
equity in the event of the non-payment or non-discharge of the
Additional Charges.
3.5 Other Payments. Lessee and Lessor acknowledge
--------------
that Lessee may receive monies from time-to-time from or on
behalf of the state of Florida which may constitute advances to
Lessee. In such an event, Lessor and Lessee agree that any such
advances may be transferred to Lessor upon Lessee's and Lessor's
mutual consent, and Lessor will assume all repayment obligations
for any advances transferred to Lessor. If Lessor's repayment
obligations for any such advances are later reduced or forgiven
by the state of Florida or its designee, then the amount of any
such reduction or cancellation will be treated as payment toward
Total Rent.
3.6 No Payment Within Ten Days of Due Date.
--------------------------------------
Notwithstanding any other provision in this Lease, failure of
Lessee to pay any obligation for Rent or Additional Charges
within ten (10) days of the stated due date (in the case of
Additional Charges the last date payable under the Imposition
without formal recovery action taken), then Lessor may charge a
late charge computed at the lesser of the Prime Rate plus one
percent or the maximum rate permitted by law. Such late charge
shall be deemed to be an Additional Charge and is payable upon
demand.
3.7 Net Lease. The Rent and Additional Charges shall
---------
be paid absolutely net to Lessor, so that this Lease shall yield
to Lessor the full amount of the installments of Minimum Rent
and the payments of Additional Charges throughout the Term,
subject to the provisions for adjustment or abatement of Rent
and Additional Charges. Notwithstanding the foregoing, Lessee
is not obligated for any Imposition on Lessor related to taxes,
assessments or levies on Lessor's receipt of the above payments
or taxes related to Lessor's net income derived from this Lease.
ARTICLE 4
---------
IMPOSITIONS; TAXES; UTILITIES; INSURANCE PAYMENTS
-------------------------------------------------
4.1 Payment of Impositions. Subject to Article 12
----------------------
relating to permitted contests, Lessee will pay or cause to be
paid all Impositions before any fine, penalty, interest or cost
may be added for non-payment, such payments to be made directly
to the taxing authority where feasible, and Lessee will promptly
furnish Lessor copies of official receipts or other satisfactory
proof evidencing payment. If Lessee has failed to make any
payments required under this Article 4, or Lessee is otherwise
in default under this Lease, then upon Lessor's request, Lessee
will pay to the Lessor monthly, together with the Minimum Rent,
one-twelfth (1/12) of the amount from time-to-time estimated by
the Lessor to reflect the Impositions which are assessed or
billed to the Lessor by the appropriate governmental authority
or authorities, if any. Lessee's obligation to pay such
Impositions shall be deemed absolutely, fixed upon the date such
Impositions become a lien upon the Leased Property or any part
thereof. If any such Imposition may at the option of the
taxpayer lawfully be paid in installments (whether or not
interest shall accrue on the unpaid balance of such Imposition),
Lessee may exercise the option to pay the same (and any accrued
interest on the unpaid balance of such Imposition) in
installments and, in such event, shall pay such installments
during the Term hereof (subject to Lessee's right of contest
pursuant to the provisions of Article 12) as the same
respectively become due and before any fine, penalty, premium,
further interest or cost may be added thereto. Lessor, at its
expense shall, to the extent permitted by applicable law,
prepare and file all tax returns and reports as may be required
by governmental authorities in respect of Lessor's net income,
gross receipts, franchise taxes and taxes on its capital stock
and Lessee, at its expense, shall, to the extent permitted by
applicable laws and regulations, prepare and file all other tax
returns and reports in respect of any Imposition as may be
required by governmental authorities. If no Event of Default
shall have occurred hereunder and be continuing, any refund due
from any taxing authority in respect of any Imposition paid by
Lessee shall be paid over to or retained by Lessee. If any
Event of Default shall have occurred and be continuing, such
funds shall be, at Lessor's option, paid over to Lessor or
retained by Lessor and applied as provided in Article 16.
Lessor and Lessee shall, upon request of the other, provide such
data as is maintained by the party to whom the request is made
with respect to the Leased Property as may be necessary to
prepare any required returns and reports. In the event any
governmental authorities classify any property covered by this
Lease as personal property, Lessee shall file all personal
property tax returns in such jurisdictions where it may legally
so file. Lessor, to the extent it possesses the same, and
Lessee, to the extent it possesses the same, will provide the
other party upon request, with cost and depreciation records
necessary for filing returns for any property so classified as
personal property. Where Lessor is legally required to file
personal property tax returns, Lessee will be provided with
copies of assessment notices indicating a value in excess of the
reported value in sufficient time for Lessee to file a protest.
Lessee may upon giving notice to Lessor, at Lessee's option and
at Lessee's sole cost and expense, protest, appeal, or institute
such other proceedings as Lessee may deem appropriate to effect
a reduction of real estate or personal property assessments and
Lessor, at Lessee's ipxpense as aforesaid, shall fully cooperate
with Lessee in such protest, appeal, or other action. Billings
for reimbursement by Lessee to Lessor of personal property taxes
shall be accompanied by copies of a bill therefor and payments
thereof which identify the personal property with respect to
which such payments are made.
4.2 Notice of Impositions. Lessor shall give
---------------------
prompt notice to Lessee of all Impositions payable by Lessee
hereunder of which Lessor at any time has knowledge, but
Lessor's failure to give any such notice shall in no way
diminish Lessee's obligations hereunder to pay such Impositions.
4.3 Adjustment of Impositions. Impositions imposed in
-------------------------
respect of the tax-fiscal period during which the Term
terminates shall be adjusted and prorated between Lessor and
Lessee, whether or not such Imposition is imposed before or
after such termination, and Lessee's obligation to pay its
prorated share thereof shall survive such termination.
4.4 Utility Charges. Lessee will pay or cause to be
---------------
paid all charges for electricity, power, natural gas, oil,
sewer, water, telephone and communication expenses, and all
other utilities of any kind whatsoever used in the Leased
Property during the Term.
4.5 Insurance Premiums. Lessee will pay or cause to
------------------
be paid all premiums for the insurance coverage required to be
maintained pursuant to Article 13 during the Term. At Lessor's
request, if Lessee fails to make payments required under this
Article 4 or if there is otherwise a default under this Lease,
Lessee shall pay to Lessor monthly, together with Minimum Rent,
one-twelfth (1/12) of the amount from time-to-time estimated by
Lessor to reflect the amount necessary to pay premiums for such
insurance coverage. Lessee shall pay to Lessor a monthly fee of
$2,500.00 for insurance administration, whereby Lessor shall
monitor the coverage to be sure it is accurate and current.
ARTICLE 5
---------
NO LESSEE TERMINATION; ABATEMENTS OF RENT
-----------------------------------------
5.1 No Lessee Termination. Except as specifically
---------------------
provided in this Lease or upon the mutual written consent of
Lessee, Lessor, and Facility Mortgagee, Lessee and Lessor, to
the maximum extent permitted by law, shall remain bound by this
Lease in accordance with its terms and neither of them shall
take any action without the consent of the other and Facility
Mortgagee to modify, surrender or terminate the same, or as
regards Lessor, to waive or compromise any of Lessor's rights
hereunder,'any of such purported actions without such consents
being void and of no effect. In no event shall Lessee be
entitled to any set-off against Minimum Rent. Except as
otherwise may specifically be provided in this Lease or upon the
mutual written consent of Lessee, Lessor, and Facility
Mortgagee, Lessee shall not seek nor be entitled to any
abatement, deduction, deferment or reduction of Rent, or set-off
against the Rent, nor shall the respective obligations of Lessor
and Lessee be otherwise affected by reason of (a) any damage to,
or destruction of any Leased Property, or any portion thereof,
from whatever cause or any Taking of the Leased Property or any
portion thereof (except as otherwise specifically provided in
Section 5.2 below and Articles 14 and 15), (b) the lawful or
unlawful prohibition of or restriction upon Lessee's use of the
Leased Property, or any portion thereof, or the interference
with such use by any person, corporation, partnership or other
entity, or by reason of eviction by paramount title, (c) any
claim which Lessee has or might have against Lessor or by reason
of any default or breach of any warranty by Lessor under this
Lease or any other agreement between Lessor and Lessee, or to
which Lessor and Lessee are parties, (d) any bankruptcy,
insolvency, reorganization, composition, readjustment,
liquidation, dissolution, winding up or other proceedings
affecting Lessor or any assignee or transferee of Lessor, or (e)
any other cause whether similar or dissimilar to any of the
foregoing other than a discharge of Lessee from any such
obligations as a matter of law. Lessee hereby specifically
waives all rights arising from any occurrence whatsoever, which
may now or hereafter be conferred upon it by law to (i) modify,
surrender or terminate this Lease or quit or surrender the
Leased Property or any portion thereof (except as otherwise
specifically provided in Section 29.2), or (ii) entitle Lessee
to any abatement, reduction, suspension or deferment of Rent or
other sums payable by Lessee hereunder, except as otherwise
specifically provided in Section 5.2. The obligations of Lessor
and Lessee hereunder shall be separate and independent covenants
and agreements and the Rent and all other sums payable by Lessee
hereunder shall continue to be payable in all events unless the
obligations to pay the same shall be terminated pursuant to the
express provisions of this Lease or by termination of this Lease
other than by reason of an Event of Default.
5.2 Abatement of Rent Procedures. In the event of a
----------------------------
partial Taking as described in Section 15.4, a temporary Taking
as described in Section 15.7, or damage to or destruction of the
Leased Property as described in Article 14, which Taking, damage
or destruction does not render the Leased Property Unsuitable
for Its Primary Intended Use, the Lease shall not terminate,
however, the Minimum Rent shall be abated (except as otherwise
specifically provided in Article 14.6) to the extent that is
fair, just and equitable to both Lessee and Lessor, taking into
consideration all relevant factors affecting the Facility
resulting from such partial Taking or damage or destruction, but
in no event in a manner which would cause a default under any
Facility Mortgage. If Lessor and Lessee are unable to agree
upon the amount of such abatement within ninety (90) days after
such partial or temporary taking, or damage or destruction, the
matter shall be submitted to arbitration.
ARTICLE 6
---------
OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY; SECURITY
------------------------------------------------------------
INTEREST; REMOVAL AND REPLACEMENT OF PERSONAL PROPERTY
------------------------------------------------------
6.1 Ownership of the Leased Property. Lessee acknowledges
--------------------------------
that the Leased Property is the property of Lessor and that
Lessee has only the right to the exclusive possession and use of
the Leased Property upon the terms and conditions of this Lease.
6.2 Personal Property; Security Interest; Removal and
-------------------------------------------------
Replacement of Personal Property. After the commencement of this
- --------------------------------
Lease, Lessee may, at its expense, install, affix or assemble or
place on the Leased Property, any items of Personal Property,
and such Personal Property and replacements thereof, shall be at
all times the property of Lessee. Notwithstanding the foregoing
sentence, in order to secure the payment and the performance of
all of Lessee's obligations under this Lease and any obligations
in any lease between Lessee and any Affiliates and Lessor,
Lessee hereby grants to Lessor a security interest in (and
hereby pledges and collaterally assigns to Lessor) all of
Lessee's rights, title and interest in and to Lessee's Personal
Property, all whether now existing or hereafter acquired and the
proceeds thereof and Lessee hereby further agrees to execute and
deliver to Lessor, forthwith after demand by Lessor from time-to-
time, any security agreement in a form determined by Lessor and
such additional writings and instruments, including without
limitation financing statements, as may be required by Lessor
for the purpose of effectuating the intent of this sentence and
Lessee agrees that Lessor shall have with respect to all
Lessee's Personal Property (in addition to all other rights
hereunder), all rights and remedies of a secured party under the
Uniform Commercial Code, including but not limited to the right
to use or sell Lessee's Personal Property, and Lessor shall not
be required to remove any of such Personal Property from the
Leased Property and in no event shall Lessor be liable to Lessee
for use of such Personal Property. This instrument shall be
deemed to satisfy the requirements of a financing statement
under the Uniform Commercial Code. Notwithstanding the
foregoing, Lessee may from time-to-time create or otherwise
cause to exist a lien or encumbrance on the Personal Property as
provided in Section 36.2. Lessee shall maintain during the
entire Lease Term all Personal Property and shall provide at its
expense all necessary replacements thereof as may be necessary
in order to operate the Facility as it is presently operated, or
as may be necessary in order to operate the Facility in
compliance with all applicable licensure, certification, legal
or insurance requirements, or otherwise in accordance with
customary practice in the industry for the Primary Intended Use.
Lessee shall in addition furnish all necessary replacements of
obsolete items of the Personal Property during the term of this
Lease. All of Lessee's Personal Property not removed by Lessee
within thirty (30) days following the expiration or earlier
termination of this Lease shall be considered abandoned by
Lessee and may be appropriated, sold, destroyed or otherwise
disposed of by Lessor without first giving notice thereof to
Lessee, without any payment to Lessee and without any obligation
to account therefor. Notwithstanding the foregoing, Lessee
shall have no right to remove any Personal Property from the
Leased Premises, except if such Personal Property is
simultaneously replaced by equivalent personal property or upon
termination of this Lease for reasons other than default by
Lessee or the removal of such Personal Property when appropriate
in the normal and ordinary cause of business and at a time when
Lessee is not in default under this Lease. Lessee will, at its
expenses, restore the Leased Property to the condition required
by Section 9.1(a), including repair of all damage to the Leased
Property caused by the removal of Lessee's Personal Property,
whether effected by Lessee or Lessor. To the extent the terms
and conditions of this Section 6.2 conflict with any security
agreement between Lessor and Lessee, the terms of any such
security agreement shall govern.
ARTICLE 7
---------
CONDITION AND USE OF LEASED PROPERTY; MANAGEMENT AGREEMENTS
-----------------------------------------------------------
7.1 Condition of the Leased Property. Lessee acknowledges
--------------------------------
receipt and delivery of possession of the Leased Property and
that Lessee has examined and otherwise has acquired knowledge of
the condition of the Leased Property prior to the execution and
delivery of this Lease and has found the same to be in good
order and repair and satisfactory for its purpose hereunder.
Lessee is leasing the Leased Property "as is" in its present
condition. Lessee waives any claim or action against Lessor in
respect of the condition of the Leased Property. LESSOR MAKES
NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF
THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS
FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR
PURPOSE OR OTHERWISE, OR AS TO DEFECTS IN QUALITY OF THE
MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE. LESSEE
ACKNOWLEDGES THAT THE LEASED PROPERTY HAS BEEN INSPECTED BY
LESSEE AND IS SATISFACTORY TO IT.
7.2 Use of the Leased Property.
--------------------------
7.2.1 Obligation to Operate. Lessee covenants
---------------------
that it will during the Term of this Lease operate continuously
the Leased Property in accordance with its Primary Intended Use
and maintain its qualifications for licensure and accreditation
as required by Legal Requirements.
7.2.2 Permitted Uses; Compliance with Insurance.
-----------------------------------------
After the Commencement Date and during the entire Term, Lessee
shall use or cause to be used the Leased Property and the
improvements thereon in accordance with its Primary Intended Use
and for such other uses as may be necessary in connection with
or incidental to such use. Lessee shall not use the Leased
Property or any portion thereof for any other primary use
without the prior written consent of Lessor and Facility
Mortgagee. No use shall be made or permitted to be made of the
Leased Property and no acts shall be done which will cause the
cancellation of any insurance policy covering the Leased
Property or any part thereof, nor shall Lessee sell or otherwise
provide to patients therein or permit to be kept, used or sold
in or about the Leased Property any article which may be
prohibited by law or by the standard form of fire insurance
policies, any other insurance policies required to be carried
hereunder, or fire underwriters regulations. Lessee shall, at
its sole cost, comply with all of the requirements pertaining to
the Leased Property or other improvements of any insurance
board, association, organization or company necessary for the
maintenance of the insurance, as herein provided, covering the
Leased Property.
7.2.3 No Waste. Lessee shall not commit or suffer
--------
to be committed any waste on the Leased Property or in the
Facility, nor shall Lessee cause or permit any nuisance thereon.
7.2.4 No Impairment. Lessee shall neither suffer
-------------
nor permit the Leased Property or any portion thereof to be used
in such a manner as (i) might reasonably tend to impair Lessor's
title thereto or to any portion thereof, or (ii) may reasonably
make possible a claim or claims of adverse usage or adverse
possession by the public, as such, or of implied dedication of
the Leased Property or any portion thereof.
7.3 Management Agreements. Lessee may enter into any
---------------------
Management Agreement with the prior written consent of Lessor
------------------------------
and Facility Mortgagee, which consent will not be unreasonably
withheld or delayed. All such Management Agreements must be in
writing and must state that all fees payable thereunder by
Lessee are subordinated to all sums due under this Lease.
ARTICLE 8
---------
LEGAL AND INSURANCE
-------------------
8.1 Compliance with Legal and Insurance Requirements.
------------------------------------------------
Lessee, at its expense, will promptly (a) comply with all Legal
Requirements and Insurance Requirements in respect of the use,
operation, maintenance, repair and restoration of the Leased
Property, whether or not compliance therewith shall require
structural change in any of the Leased Improvements or interfere
with the use and enjoyment of the Leased Property and (b)
procure, maintain and comply with all licenses, qualifications,
accreditation, certificates of need, provider agreements and
other authorizations required for any use of the Leased Property
for the Primary Intended Use or other permitted uses then being
made and for the proper erection, installation, operation and
maintenance of the Leased Property or any part thereof.
8.2 Legal Requirement Covenants. Lessee covenants and
---------------------------
agrees that the Leased Property shall not be used for any
unlawful purpose and it shall acquire and maintain all licenses,
certificates, permits, provider agreements and other
authorizations and approvals needed to operate the Leased
Property in its customary manner for the Primary Intended Use
and any other use conducted on the Leased Property as may be
permitted from time-to-time hereunder. Lessee further covenants
and agrees that Lessee's use of the Leased Property and any
maintenance, alteration, and operation of the same, and all
parts thereof, shall at all times conform to all applicable
local, state and federal laws, ordinances, rules and
regulations, unless the same are held by a court of competent
jurisdiction to be unlawful.
8.3 Permitted Contest of Certain Legal Requirements.
-----------------------------------------------
Lessee may contest the legality or applicability of any law,
ordinance, rule or regulation, or any licensure or notification
decision related to the operation of the Leased Property for the
Primary Intended Use or other uses conducted thereon which are
permitted by Lessor, if Lessee maintains such action in good
faith, with due diligence, without prejudice to Lessor's rights
hereunder, and at Lessee's own expense. If, by the terms of any
such law, ordinance, rule or regulation, compliance therewith
pending the prosecution of any such proceeding may legally be
delayed without the occurrence of any lien, charge or liability
of any kind against the Facility or Lessee's leasehold interest
therein and without subjecting Lessee or Lessor to any
liability, civil or criminal, for failure so to comply
therewith, Lessee may delay compliance therewith until the final
determination of such proceeding. If any lien, charge or civil
or criminal liability would be incurred by reason of any such
delay, Lessee, on obtaining the prior written consent of Lessor
and Facility Mortgagee, which consent will not be unreasonably
withheld or delayed, may nonetheless contest as aforesaid any
delay as aforesaid provided that such delay would not subject
Lessor to civil or criminal liability and Lessee (a) furnishes
to Lessor security reasonably satisfactory to Lessor against any
loss or injury by reason of such contest or delay, and (b)
prosecutes the contest with due diligence and in good faith.
ARTICLE 9
---------
REPAIRS; RESTRICTIONS
---------------------
9.1 Maintenance and Repair.
----------------------
(a) Lessee will keep the Leased Property and all
private roadways, sidewalks and curbs appurtenant thereto which
are under Lessee's control in good order and repair (whether or
not the need for such repairs occurs as a result of Lessee's
use, any prior use, the elements or the age of the Leased
Property or any portion thereof) and, except as otherwise
provided in this Article or Articles 14 and 15, with reasonable
promptness will make all necessary and appropriate repairs
thereto of every kind and nature, whether interior or exterior,
structural or non-structural, ordinary or extraordinary,
foreseen or unforeseen, or arising by reason of a condition
(concealed or otherwise) existing prior to the commencement of
the Term of this Lease; however, if the cost of any maintenance
or repairs exceed the aggregate amount of $100,000 in any
calendar year, then the costs of any major maintenance or
repairs in excess of such amount during such calendar year that
is not otherwise recognized or deemed to be a Leasehold
Improvement under generally accepted accounting principles may
nevertheless be deemed to be Leasehold Improvements by Lessee
for purposes of this Lease. Lessee shall also be obligated to
make all repairs, modifications, and renovations necessary to
comply with all licensing, safety, health and building codes,
and regulations applicable to the Leased Property so that it can
be legally operated for its Primary Intended Use. All repairs
shall be, to the extent reasonably achievable, at least
equivalent in quality to the original work. Lessee will not
take or omit to take any action the taking or omission of which
might materially impair the value or the usefulness of the
Leased Property or any part thereof for the Primary Intended
Use.
(b) Except to the extent provided in this Article or
Articles 7, 8, 14 and 15 hereof, Lessor or Lessee, as the case
may be, shall not under any circumstances be required to build
or rebuild any improvements on the Leased Property, or to make
any repairs, replacements, alterations, restorations, or
renewals of any nature or description to the Leased Property,
whether ordinary or extraordinary, structural or non-structural,
foreseen or unforeseen, or to make any expenditure whatsoever
with respect thereto in connection with this Lease.
(c) Nothing contained in this Lease and no action or
inaction by Lessor shall be construed as (i) constituting the
consent or request of Lessor, express or implied, to any
contractor, subcontractor, laborer, materialman or vendor to or
for the performance of any labor or services for the
construction, alteration, addition, repair or demolition of or
to the Leased Property or any part thereof, or (ii) giving
Lessee any right, power or permission to contract for or permit
the performance of any labor or services or the furnishing of
any materials or other property in such fashion as would permit
the making of any claim against Lessor in respect thereof or to
make any agreement that may create, or in any way be the basis
for, any right, title, interest, lien, claim or other
encumbrance upon the estate of Lessor in the Leased Property or
any portion thereof.
9.2 Encroachments; Restrictions. If any of the Leased
---------------------------
Improvements shall, at any time, encroach upon any property,
street or right-of-way adjacent to the Leased Property, or shall
violate the agreements or conditions contained in any lawful
restrictive covenant or other agreement affecting the Leased
Property or any part thereof, or shall impair the rights of
others under any easement or right-of-way to which the Leased
Property is subject, then promptly upon the request of Lessor,
Lessee shall, at its expense, subject to its right to contest
the existence of any encroachment, violation or impairment, (i
obtain valid and effective waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment,
violation or impairment, whether the same shall affect Lessor or
Lessee or (ii) make such changes in the Leased Improvements, and
take such other actions as Lessee in the good faith exercise of
its judgment deems reasonably practicable to remove such
encroachment, or to end such violation or impairment, including,
if necessary, the alteration of any of the Leased Improvements
and in any event take all such actions as may be necessary in
order to be able to continue the operation of the Leased
Improvements for the Primary Intended Use substantially in the
manner and to the extent the Leased Improvements were operated
prior to the assertion of such violation or encroachment. Any
such alteration shall be made in conformity with the applicable
requirements of Article 10. Lessee's obligations under this
Section 9.2 shall be in addition to and shall in no way
discharge or diminish any obligation of any insurer under any
policy of title or other insurance and Lessee shall be entitled
to a credit for any sums recovered by Lessor under any such
policy of title or other insurance.
ARTICLE 10
----------
CAPITAL ADDITIONS; NON-CAPITAL
------------------------------
ADDITIONS; LEASEHOLD IMPROVEMENTS
---------------------------------
10.1 Construction of Capital Additions. Without the
---------------------------------
prior written consent of Lessor, which consent may be withheld
or granted by Lessor in its sole discretion, and Facility
Mortgagee, and except as may be expressly required pursuant to
Article 9 hereof, Lessee shall not enlarge or reduce the size of
the Facility. The cost of any such Capital Addition(s) will be
paid by Lessee and be deemed to be a Leasehold Improvement.
10.2 Non-Capital Additions. Lessee shall have the right
---------------------
and obligation with Lessor's consent, which consent will not be
unreasonably withheld or delayed, and Facility Mortgagee's
consent, to make additions, modifications or improvements to the
Leased Property which are not Capital Additions from time-to-
time as it may deem desirable or necessary for its uses and
purposes, provided that such action will not significantly alter
the character or purpose or detract from the value or operating
efficiency thereof and will not significantly impair the revenue-
producing capability of the Leased Property or adversely affect
the ability of the Lessee to comply with the provisions of this
Lease. The cost of any such Non-Capital Additions,
modifications or improvements to the Leased Property shall be
paid by Lessee, and be deemed to be a Leasehold Improvement.
Lessee hereby agrees to make and complete all renovations
required under any escrow or renovation agreements with Lessor
or the holder of any mortgage.
10.3 Salvage. All materials which are scrapped or removed
-------
in connection with the making of either Capital Additions or Non-
Capital Additions permitted by this Article, or repairs required
by Article 9 shall be or become the property of Lessor or Lessee
depending on which party is paying for such work.
10.4 Improvement Deposit. Lessee agrees to spend not less
-------------------
than $150,000 on improvements to the property as listed on
Exhibit 3. Upon execution hereof, Lessee will deposit with
Lessor said $150,000. Lessor will deposit same in an interest
bearing account and release funds to Lessee upon presentment of
reasonable evidence of payment for, or estimate for, the list of
improvements shown on Exhibit 3. Interest earned on such
deposit will be paid to Lessee.
ARTICLE 11
----------
LIENS
-----
Subject to the provisions of Article 12 relating to
permitted contests, Lessee will not, directly or indirectly,
create or allow to remain and will promptly discharge at its
expense any lien, encumbrance, attachment, title retention
agreement, or claim upon the Leased Property or any attachment,
levy, claim or encumbrance in respect of the Rent, not
including, however, (a) this Lease, (b) the matters, if any, set
forth in Exhibit 2 restrictions, liens and other encumbrances
which are consented to in writing by Lessor and Facility
Mortgagee, (d) liens for those taxes of Lessor which Lessee is
not required to pay hereunder, (e) subleases permitted by
Article 22, (f) liens of mechanics, laborers, materialmen,
suppliers or vendors for sums either disputed or not yet due,
provided that (1) the payment of such sums shall not be
postponed for more than sixty (60) days after the completion of
the action giving rise to such lien and such reserve or other
appropriate provisions as shall be required by law or generally
accepted accounting principles shall have been made therefor, or
(2) any such liens are in the process of being contested as
permitted by Article 12 and such liens are discharged of record
within sixty (60) days after recordation thereof, or adequate
security is posted by Lessee therefor, (g) any liens which are
the responsibility of Lessor pursuant to the provisions of
Article 36 of this Lease, (h) liens for Impositions not yet due
and payable without addition of any fine or penalty or are in
the process of being contested under Article 12 and (i) Capital
Additions or Non-Capital Additions paid for by Lessee and
approved by Lessor and Facility Mortgagee pursuant to the
provisions of Article 10.
ARTICLE 12
----------
PERMITTED CONTESTS
------------------
Lessee, on its own or on Lessor's behalf (or in Lessor's
name), but at Lessee's expense, may contest, by appropriate
legal proceedings conducted in good faith and with due
diligence, the amount, validity or application, in whole or in
part, of any Imposition, Legal Requirement, Insurance
Requirement, lien, attachment, levy, encumbrance, charge or
claim not otherwise permitted by Article 11, provided that (a)
in the case of an unpaid Imposition, lien, attachment, levy,
encumbrance, charge or claim, the commencement and continuation
of such proceedings shall suspend the collection thereof from
Lessor and from the Leased Property, (b) neither the Leased
Property nor any Rent therefrom nor any part thereof or interest
therein would be in any immediate danger of being sold,
forfeited, attached or lost (c) in the case of a Legal
Requirement, Lessor would not be in any immediate danger of
civil or criminal liability for failure to comply therewith
pending the outcome of such proceedings, (d) in the event that
any such contest shall involve a sum of money or potential loss
in excess of Fifty Thousand Dollars ($50,000), then, in any such
event, Lessee shall deliver to Lessor an Officer's Certificate
and opinion of counsel, if appropriate, to the effect set forth
in clauses (a) , (b) and (c) , to the extent applicable, (e) in
the case of a Legal Requirement or an Imposition, lien,
encumbrance or charge, Lessee shall give such reasonable
security as may be demanded by Lessor to insure ultimate payment
of the same and to prevent any sale or forfeiture of the
affected portion of the Leased Property or the Rent by reason of
such non-payment or non-compliance; provided, however, the
provisions of this Article 12 shall not be construed to permit
Lessee to contest the payment of Rent or any other sums payable
by Lessee to Lessor hereunder, (f) in the case of an Insurance
Requirement, the coverage required by Article 13 shall be
maintained, and (g) if such contest be finally reserved against
Lessor or Lessee, Lessee shall, as Additional Charges due
hereunder, promptly pay the amount required to be paid, together
with all interest and penalties accrued thereon, or comply with
the applicable Legal Requirement or Insurance Requirement.
Lessor, at Lessee's expense, shall execute and deliver to Lessee
such authorizations and other documents as may reasonably be
required in any such contest and, if reasonably requested by
Lessee or if Lessor so desires, Lessor shall join as a party
therein. Lessee shall indemnify and save Lessor harmless
against any liability, cost or expense of any kind that may be
imposed upon Lessor in connection with any such contest and any
loss resulting therefrom.
ARTICLE 13
----------
INSURANCE
---------
13.1 General Insurance Requirements. During the Term of
------------------------------
this Lease, Lessee at all times shall keep the Leased Property,
and all property located in or on the Leased Property insured
with the kinds and amounts of insurance described below. This
insurance shall be written by companies authorized to do
insurance business in the state of Florida. The policies must
name Lessor as an additional insured and losses shall be payable
to Lessor or Lessee as provided in Article 14. In addition, the
policies shall name as an additional insured the holder
("Facility Mortgagee") of any mortgage, deed of trust or other
security agreement securing any Encumbrance placed on the Leased
Property in accordance with the provisions of Article 36
("Facility Mortgage") by way of a standard form of mortgagee's
loss payable endorsement. All such policies of insurance will
provide that they may not be cancelled or terminated without at
least thirty (30) days prior written notice of such proposed
cancellation or termination to Lessor and Facility Mortgagee.
Any loss adjustment shall require the written consent of Lessor,
Lessee and each affected Facility Mortgagee. Evidence of
insurance shall be deposited with Lessor and, if requested, with
any Facility Mortgagee(s). If any provision of any Facility
Mortgage requires deposits for insurance premiums to be made
with such Facility Mortgagee, Lessee shall either pay to Lessor
monthly the amounts required and Lessor shall transfer such
amounts to such Facility Mortgagee or, pursuant to written
direction by Lessor or Facility Mortgagee, Lessee shall make
such deposits directly with such Facility Mortgagee. The
policies on the Leased Property shall insure against the
following risks, except as may be otherwise provided for in
Section 13.2:
13.1.1 All Risk Insurance. Loss or damage by fire,
------------------
vandalism and malicious mischief, extended coverage perils
commonly known as "All Risk" and all physical loss perils,
including but not limited to sprinkler leakage in an amount not
less than the greater of one hundred percent (100%) of the then
full replacement cost thereof (as defined below in Section 13.3)
or in such amount which is economically feasible and which is
acceptable to Lessor;
13.1.2 Boiler Insurance. Loss or damage by
----------------
explosion of steam boilers, pressure vessels or similar
apparatus, now or hereafter installed in the Facility, in such
limits with respect to any one accident as may be reasonably
requested by Lessor from time-to-time;
13.1.3 Rental Insurance. Loss of rent or business
----------------
interruption covering Lessor's risk of loss during the first
twelve (12) months of reconstruction necessitated by the
occurrence of any of the hazards described in Sections 13.1.1 or
13.1.2 in an amount sufficient to prevent Lessor from becoming a
co-insurer and to cover two (2) years Rent;
13.1.4 Liability Insurance. Claims for personal
-------------------
injury or property damage under a policy of comprehensive
general public liability insurance with amounts not less than
Four Million Dollars ($4,000,000) per occurrence in respect of
bodily injury and death and Two Million Dollars ($2,000,000) for
property damage;
13.1.5 Malpractice Insurance. Claims arising out
---------------------
of malpractice in an amount not less than Five Million Dollars
($5,000,000) for each person and Ten million Dollars
($10,000,000) for each occurrence; and
13.1.6 Flood Insurance. Flood (if the Leased
---------------
Property is located in whole or in part within a designated
flood plain area) and such other hazards and in such amounts as
may be customary for comparable properties in the area, and if
available from insurance companies authorized to do business in
the state of Florida at rates which are economically practicable
in relation to the risks covered.
13.2 Full Replacement Cost. The term "full replacement
---------------------
cost", as used herein, shall mean the actual replacement cost of
the Leased Property (including all Capital Additions regardless
of who paid for such improvements) thereof from time-to-time,
including increased cost of construction endorsement, less
exclusions provided in the normal fire insurance policy. In the
event either party believes that the full replacement cost has
increased or decreased at any time during the Term, it shall
have the right from time-to-time to have such full replacement
cost redetermined by the fire insurance company which is then
providing the largest amount of fire insurance carried on the
Leased Property, hereinafter referred to as the "impartial
appraiser." The party desiring to have the full replacement cost
so redetermined shall forthwith, on receipt of such
determination by such impartial appraiser, give written notice
thereof to the other party hereto. The determination of such
impartial appraiser shall be final and binding on the parties
hereto, and Lessee shall forthwith increase (or may decrease)
the amount of the insurance carried pursuant to this Article, as
the case may be, to the amount so determined by the impartial
appraiser. Each party shall pay one-half (1/2) of the fee, if
any, of the impartial appraiser.
13.3 Additional Insurance. In addition to the insurance
--------------------
described above, Lessee shall maintain such additional insurance
as may be required from time-to-time by any Facility Mortgagee
and shall further at all times maintain adequate worker's
compensation insurance coverage for all persons employed by
Lessee on the Leased Property in accordance with the
requirements of applicable local, state and federal law.
13.4 Waiver of Subrogation. All insurance policies carried
---------------------
by either party covering the Leased Property including without
limitation, contents, fire and casualty insurance, shall
expressly waive any right of subrogation on the part of the
insurer against the other party so long as the same is
obtainable without extra cost, and in the event of such an extra
charge, the other party may in its discretion pay the same, but
shall not be obligated to do so.
13.5 Form of Insurance. All of the policies of insurance
-----------------
referred to herein shall be written in form reasonably
satisfactory to Lessor and Facility Mortgagee and by insurance
companies reasonably satisfactory to Lessor and Facility
Mortgagee. Lessor agrees that it will not unreasonably withhold
its approval as to the form of the policies of insurance or as
to the insurance companies selected by Lessee. Lessee shall pay
all of the premiums therefor, and deliver such policies or
certificates thereof to Lessor prior to their effective date
(and, with respect to any renewal policy at least ten (10) days
prior to the expiration of the existing policy) and in the event
of the failure of Lessee either to effect such insurance in the
names herein called for or to pay the premiums therefor or to
deliver such policies or certificates thereof to Lessor at the
times required, Lessor shall be entitled, but shall have no
obligation, to effect such insurance and pay the premiums
therefor, which premiums shall be repayable to Lessor with
interest at the Overdue Rate upon written demand therefor, and
failure to repay the same with interest within fifteen (15) days
after such demand shall constitute an Event of Default within
the meaning of Section 16.1(c). Each insurer mentioned in this
Section shall agree, by endorsement on the policy or policies
issued by it, or by independent instrument furnished to Lessor,
that it will give Lessor and Facility Mortgagee not less than
thirty (30) days written notice before the policy or policies in
question shall be altered, allowed to expire, or cancelled.
13.6 Increase in Limits. In the event that either party
------------------
shall at any time deem the limits of the personal injury or
property damage or public liability insurance then carried to be
either excessive or insufficient, the parties shall endeavor to
agree on the proper and reasonable limits for such insurance to
be carried and such insurance shall thereafter be carried with
the limits thus agreed on until further change pursuant to the
provisions of this Section. If the parties shall be unable to
agree upon the proper and reasonable limits for such insurance,
then such insurance shall be determined by an impartial third
party selected by the parties. Nothing herein shall permit the
amount of insurance to be reduced below the amount or amounts
required by any Facility Mortgage.
13.7 Blanket Policy. Notwithstanding anything to the
--------------
contrary contained herein, Lessee's obligations to carry the
insurance provided for herein may be brought within the coverage
of a so-called blanket policy or policies of insurance carried
and maintained by Lessee; provided, however, that the coverage
afforded Lessor will not be reduced or diminished or otherwise
be different from that which would exist under a separate policy
meeting all other requirements of this Lease by reason of the
use of such blanket policy of insurance and; provided, further,
that the requirements of this Article 13 are otherwise
satisfied.
13.8 No Separate Insurance. Lessee shall not, on Lessee's
---------------------
own initiative or pursuant to the request or requirement of any
third party, take out separate insurance concurrent in form or
contributing in the event of loss with that required in this
Article to be furnished by, or which may reasonably be required
to be furnished by Lessee, or increase the amounts of any then
existing insurance by securing an additional policy or
additional policies, unless all parties having an insurable
interest in the subject matter of the insurance, including in
all cases Lessor and all Facility Mortgagees, are included
therein as additional insured and the loss is payable under said
insurance in the same manner as losses are required to be
payable under this Lease. Lessee shall immediately notify
Lessor of the taking out of any such separate insurance or of
the increasing of any of the amounts of the then existing
insurance by securing an additional policy or policies.
ARTICLE 14
----------
FIRE AND CASUALTY
-----------------
14.1 Insurance Proceeds. Subject to the rights of the
------------------
Facility Mortgagee, all proceeds payable by reason of any loss
or damage to the Leased Property, or any portion thereof, and
insured under any policy of insurance required by Article 13 of
this Lease shall be paid to Lessor and held by Lessor in trust,
and shall be made available for reconstruction or repair, as the
case may be, of any damage to or destruction of the Leased
Property, or any portion thereof, and shall be paid out by
Lessor from time-to-time subject to the provisions hereof for
the reasonable cost of such reconstruction or repair. Any
excess proceeds of insurance remaining after the completion of
the restoration or reconstruction of the Leased Property (or in
the event neither Lessor nor Lessee is required or elects to
repair and restore) all such insurance proceeds shall be
retained by Lessor free and clear upon completion of any such
repair and restoration, except as otherwise specifically
provided below in this Article 14. All salvage resulting from
any risk covered by insurance shall belong to Lessor except that
any salvage relating to Lessee's Personal Property shall belong
to Lessee.
14.2 Reconstruction in the Event of Damage or Destruction
----------------------------------------------------
Covered by Insurance.
--------------------
14.2.1 If during the Term the Leased Property is
totally or substantially destroyed from a risk covered by the
insurance described in Article 13 and the Facility thereby is
rendered Unsuitable for Its Primary Intended Use, Lessee,
subject to the rights of the Facility Mortgagee, shall have the
option, by giving notice to Lessor within sixty (60) days
following the date of such destruction, to (a) restore the
Facility to substantially the same condition as existed
immediately before the damage or destruction, or (b) acquire the
Leased Property from Lessor at the Fair Market Value to be
determined as of the day immediately prior to such damage or
destruction, but in no event less than the remaining principal
balance and accrued but unpaid interest due initial Facility
Mortgagee, in which event Lessee shall be paid the insurance
proceeds, or (c) terminate this Lease, in which event Lessor
shall be entitled to retain the insurance proceeds, provided,
however, that Lessee shall only have such right of termination
effective upon recovery by Lessor of such insurance proceeds
and, in the event such proceeds are less than the greater of (i)
the amount specified in Section 13.1.1 hereof, or (ii) the
remaining principal balance and accrued but unpaid interest due
initial Facility' Mortgagee, Lessee may only terminate upon
payment of the amount of such short-fall in cash to Lessor or
the initial Facility Mortgagee, as applicable, at the time
notice to terminate is given.
14.2.2 If during the Term the Leased Improvements
or the Fixtures are totally or partially destroyed from a risk
covered by the insurance described in Article 13, but the
Facility is not thereby rendered Unsuitable for its Primary
Intended Use, then Lessee shall, subject to the rights of the
Facility Mortgagee, restore the Facility or the applicable part
thereof to substantially the same condition as existed
immediately before the damage or destruction. Such damage or
destruction shall not terminate this Lease; provided, however,
if Lessee cannot within a reasonable time and after exercise of
diligent efforts obtain all necessary governmental approvals,
building permits, licenses, conditional use permits and any
certificates of need in order to be able to perform all required
repair and restoration work and to operate the Facility for its
Primary Intended Use in substantially the manner as immediately
prior to such damage or destruction, then Lessee may either (i)
acquire the Leased Property from Lessor pursuant to Section 34.1
with the Fair Market Value to be determined as of the date
immediately prior to such damage or destruction, but in no event
less than the remaining principal balance and accrued but unpaid
interest due initial Facility Mortgagee, in which event Lessee
shall be paid the insurance proceeds, or (ii) terminate this
Lease in which event Lessor shall be entitled to retain the
insurance proceeds; provided, however, that Lessee shall only
have such right of termination effective upon recovery by Lessor
of such insurance proceeds and, in the event such proceeds are
in an amount less than the greater of (i) the amount specified
in Section 13.1.1 hereof, or (ii) the remaining principal
balance and accrued but unpaid interest due initial Facility
Mortgagee, Lessee may only terminate upon payment of the amount
of such short-fall in cash to Lessor or the initial Facility
Mortgagee, as applicable, at the time notice to terminate is
given.
14.2.3 If Lessee is required or elects to restore
the Leased Property, Leased Improvements or Fixtures and the
cost of the repair or restoration exceeds the amount of proceeds
received by Lessor from the insurance required under Article 13,
Lessee shall be obligated to contribute any excess amount needed
to restore the same. Such amount shall be paid by Lessee to
Lessor to be held in trust together with any other insurance
proceeds for application to the cost of repair and restoration.
Such amounts shall be deemed a Leasehold Improvement for
purposes of computing Gross Revenues.
14.3 Reconstruction in the Event of Damage or Destruction
----------------------------------------------------
Not Covered by Insurance. If during the Term the Facility is
- ------------------------
totally or materially destroyed from a risk (including
earthquake) not covered by the insurance described in Article
13, whether or not such damage or destruction renders the
Facility Unsuitable for Its Primary Intended Use, Lessor may
elect to restore the Facility to substantially the same
condition as it was in immediately before such damage or
destruction or absent such an election Lessee may terminate this
Lease by giving Lessor written notice within ninety (90) days
after such damage or destruction. Notwithstanding the preceding
sentence, if Lessor does not elect to restore the Facility to
substantially the same condition as it was in immediately before
such damage or destruction and Lessor does not have sufficient
liquid assets to immediately satisfy its obligations to initial
Facility Mortgagee, the Lessee shall promptly advance monies to
initial Facility Mortgagee on behalf of Lessor in an amount not
less than that necessary to discharge Lessor's remaining
obligations to initial Facility Mortgagee prior to and as a
condition to termination of this Lease. Any such advances made
by Lessee to Lessor under this Section shall not be deemed to be
Rent or Additional Charges payable by Lessee under this Lease,
and Lessee shall be entitled to encumber any and all assets of
Lessor in consideration for any such advances.
14.4 Lessee's Property. All insurance proceeds payable by
-----------------
reason of any loss of or damage to any of Lessee's Personal
Property, Leasehold Improvements, Capital Additions, or Non-
Capital Additions paid for or financed by Lessee shall be paid
to Lessee or, if Lessee self-insures, allocated to Lessee, and
Lessee shall hold such insurance or self-insurance proceeds in
trust to pay the cost of repairing or replacing damaged Lessee's
Personal Property, Leasehold Improvements, Capital Additions, or
Non-Capital Additions paid for or financed by Lessee.
14.5 Restoration of Lessee's Property. If Lessee is
--------------------------------
required or elects to restore the Facility as provided in
Section 14.2 or 14.3, Lessee shall either (i) restore all
alterations and improvements made by Lessee, Lessee's Personal
Property and all Capital Additions or Non-Capital Additions paid
for or financed by Lessee, or (ii) replace such alterations and
improvements, Lessee's Personal Property, and Capital Additions
or Non-Capital Additions with improvements or items of the same
or better quality and utility in the operation of the Leased
Property.
14.6 Abatement of Rent. This Lease shall remain in full
-----------------
force and effect, and Lessee's obligation to make rent payments
and to pay all other charges required by this Lease shall remain
unabated during the first twelve (12) months of any period
required for repair and restoration. Thereafter, payments of
Minimum Rent shall be abated or reduced as provided in Section
5.2. In no event will Lessor be entitled to recover Rent from
both Lessee and any insurance paid for by Lessee under Article
13.
14.7 Damage Near End of Term. Not applicable
-----------------------
ARTICLE 15
----------
CONDEMNATION
------------
15.1 Definitions.
-----------
(a) "Award" means all compensation, sums or anything
of value awarded, paid or received on a total or partial
Condemnation.
(b) "Condemnation" means (a) the exercise of any
governmental power, whether by legal proceedings or otherwise,
by a Condemnor or (b) a voluntary sale or transfer by Lessor to
any Condemnor either under threat of Condemnation or while legal
proceedings for Condemnation are pending.
(c) "Condemnor" means any public or quasi-public
authority, or private corporation or individual, having the
power of Condemnation.
(d) "Date of Taking" means the date the Condemnor has
the right to possession of the property being condemned.
15.2 Parties. If during the Term there is any Taking of
-------
all or any part of the Leased Property or any interest in this
lease by Condemnation, the rights and obligations of the parties
shall be determined by this Article 15.
15.3 Total Taking. If there is a Taking of all of the
------------
Leased Property by Condemnation, this Lease shall terminate on
the Date of Taking.
15.4 Partial Taking. If there is a Taking of a portion of
--------------
the Leased Property by Condemnation, this Lease shall remain in
effect if the Facility is not thereby rendered Unsuitable for
Its Primary Intended Use. If, however, the Facility is thereby
rendered Unsuitable for Its Primary Intended Use, Lessee shall
have the right subject to Section 15.6 below (a) to restore the
Facility at its own expense and to the extent possible to
substantially the same condition as existed immediately' before
the partial Taking, (b) to acquire the Leased Property from
Lessor for a purchase price determined in accordance with
Section 34.1, with the Fair Market value of the Leased Property
to be determined as of the day immediately prior to such partial
Taking, but in no event less than the remaining principal
balance and accrued but unpaid interest due Facility Mortgagee,
in which event this Lease shall terminate upon payment of such
purchase price, or (c) to terminate this Lease as of the date
when Lessee is required to surrender possession of the portion
of the Leased Property so taken. Lessee shall exercise its
option by giving Lessor notice thereof within sixty (60) days
after Lessee receives notice of the Taking. If, as the result
of any such partial Taking by Condemnation, this Lease is not
terminated as provided above, Lessee shall be entitled to
abatement of Rent as provided in Section 5.2 effective as of the
date upon which the Leased Property is rendered Unsuitable for
Its Primary Intended Use.
15.5 Restoration. If there is a partial Taking of the
-----------
Leased Property and this Lease remains in full force and effect
pursuant to Section 15.4, Lessee shall accomplish all necessary
restoration. If the cost of the restoration exceeds the amount
of the Award, Lessee shall be obligated to contribute any excess
amount needed to restore the Facility.
15.6 Award Distribution. In the event Lessee purchases the
------------------
Leased Property, as described in Section 15.4, the entire Award
shall belong to Lessee and Lessor agrees to assign to Lessee all
of its rights thereto. In any other event, the entire amount of
any Award shall belong to and be paid to Lessor, except that if
this Lease is terminated as a result of the taking, and subject
to the rights of the Facility Mortgagee, Lessee shall be
entitled to receive from the Award, if and to the extent such
Award specifically includes such items, the following:
(a) A sum attributable to the value, if any, of the
leasehold interest of Lessee under this Lease; and
(b) A sum attributable to the value of any Personal
Property placed on the Leased Property by and belonging to
Lessee, and any reasonable removal and relocation costs included
in the Award. If Lessee is required or elects to restore the
Facility, Lessor agrees that, subject to the rights of the
Facility Mortgagee, its portion of the Award shall be used for
such restoration and it shall hold such portion of the Award in
trust for application to the cost of the restoration.
15.7 Temporary Taking. The Taking of the Leased Property,
----------------
or any part thereof, by military or other public authority shall
constitute a Taking by Condemnation only when the use and
occupancy by the Taking authority has continued for longer than
six (6) months. During any such six (6) month period all the
provisions of this Lease shall remain in full force and effect,
except that the Minimum Rent shall be abated or reduced during
such period of Taking as provided in Section 5.2.
ARTICLE 16
----------
DEFAULT
-------
16.1 Events of Default. Any of the following events shall
-----------------
be an "Event of Default" hereunder:
(a) an Event of Default under any other lease between
Lessor and Lessee; or
(b) Lessee shall fail to make a payment of the Rent
payable by Lessee under this Lease when the same becomes due and
payable, and such failure is not cured by Lessee within a period
of ten (10) days after receipt by Lessee of notice thereof from
Lessor; or
(c) Lessee shall fail to observe or perform any other
term, covenant or condition of this Lease and such failure is
not cured by Lessee within a period of thirty (30) days after
receipt by Lessee of notice thereof from Lessor, unless such
failure cannot with due diligence be cured within a period of
thirty (30) days, in which case such failure shall not be deemed
to continue if Lessee proceeds promptly and with due diligence
to cure the failure and diligently completes the curing thereof;
or
(d) Lessee shall:
(i) admit in writing its inability to pay its
debts generally as they become due, or
(ii) file a petition in bankruptcy or a petition
to take advantage of any insolvency act; or
(iii) make an assignment for the benefit of its
creditors ; or
(iv) consent to the appointment of a receiver of
itself or of the whole or any substantial part of its property;
or
(v) file a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws
or any other applicable law or statute of the United States of
America or any state thereof; or
(e) After a petition in bankruptcy is filed against
Lessee, it shall be adjudicated a bankrupt, or if a court of
competent jurisdiction shall enter an order or decree appointing
a receiver of Lessee or the whole or substantially all of its
property, or Lessee has a petition approved by a court of
competent jurisdiction relating to reorganization or arrangement
of Lessee under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any
other state thereof,, or
(f) Lessee shall be liquidated or dissolved, or shall
begin proceedings toward such liquidation or dissolution, or
Lessee shall in any manner permit the sale or divestiture of
substantially all of its assets other than in connection with a
merger or consolidation of Lessee into, or a sale of Lessee or
substantially all of Lessee's assets to, another corporation,
provided that such merger or consolidation of Lessee into, or a
sale of substantially all of Lessee's assets is approved in
writing by Lessee and Facility Mortgagee, which consent will not
be unreasonably withheld or delayed by Lessor but which may be
withheld by Facility Mortgagee in its sole discretion and;
provided, further, that if the survivor of such merger or the
purchaser of such assets shall assume all of Lessee's
obligations under this Lease by a written instrument, in form
and substance reasonably satisfactory to Lessor, accompanied by
an opinion of counsel, reasonably satisfactory to Lessor and
addressed to Lessor stating that such instrument of assumption
is valid, binding and enforceable against the parties thereto in
accordance with its terms (subject to usual bankruptcy and other
creditors' rights exceptions) and; provided, further, that if
immediately after giving effect to any such merger,
consolidation or sale, Lessee or such other corporation (if not
the Lessee) surviving the same shall have a Consolidated Net
Worth not less than the Consolidated Net Worth of Lessee
immediately prior to such merger, consolidation or sale, all as
to be set forth in an Officer's Certificate delivered to Lessor
within a reasonable period of time after such merger,
consolidation or sale and provide Lessor an estoppel certificate
from the Guarantor recognizing full liability under the Guaranty
notwithstanding the sale or merger and such sufficient other
security for the obligations under this Lease as Lessor may
request (including further guaranties), an Event of Default
shall not be deemed to have occurred; or
(g) the estate or interest of Lessee in the Leased
Property or any part thereof shall be levied upon or attached in
any proceeding and the same shall not be vacated or discharged
within the later of ninety (90) days after commencement thereof
or thirty (30) days after receipt by Lessee of notice thereof
from Lessor (unless Lessee shall be contesting such lien or
attachment in good faith in accordance with Article 12 hereof);
or
(h) except as a result of damage, destruction or a
partial or complete Condemnation, Lessee voluntarily ceases
operations on the Leased Property for a period in excess of
thirty (30) days; or
(i) Lessee shall fail to provide information or meet
other operating criteria as provided in Article 23. Provided,
however, that no Event of Default (other than a failure to make
payment of money) shall be deemed to exist under clause (c)
during any time the curing thereof is prevented by an
Unavoidable Delay so long as upon the cessation of such
Unavoidable Delay, Lessee shall remedy such default without
further delay.
16.2 Remedies.
--------
(a) If any Event of Default shall have occurred and
be continuing, Lessor may terminate this Lease and all rights of
Lessee under this Lease shall cease. Lessor shall have all
rights at law and in equity available to Lessor as a result of
Lessee's breach of this Lease. Notwithstanding the preceding
sentence, Lessor will not remove Lessee from the Facility until
such time that Lessor can provide for a substitute operator
acceptable to Facility Mortgagee who can operate the Facility in
accordance with applicable law and regulations.
(b) Lessee will, to the extent permitted by law, pay
as Additional Charges all costs and expenses incurred by or on
behalf of Lessor, including without limitation, reasonable
attorney's fees and expenses as a result of any Event of Default
hereunder.
(c) If any Event of Default shall have occurred and
be continuing, whether or not this Lease has been terminated
pursuant to paragraph (a) of this Section, Lessee shall, to the
extent permitted by law and required by Lessor upon not less
than ten (10) days prior notice from Lessor, immediately
surrender to Lessor the Leased Property pursuant to the
provisions of paragraph (a) of this Section and quit the same
and Lessor may enter upon and repossess the Leased Property by
reasonable force, summary proceedings, ejectment or otherwise,
and may remove Lessee and all other persons and any and all of
Lessee's Personal Property from the Leased Property subject to
the rights of any residents or patients and to any requirement
of law, or Lessor may claim ownership of Lessee's Personal
Property as set forth in Article 32 hereof. Lessor shall use
reasonable, good faith efforts to relet the Leased Property or
otherwise mitigate damages suffered by Lessor as a result of
Lessee's breach of this Lease.
(d) In addition to all of the rights and remedies of
Lessor set forth in this lease, if Lessee shall fail to pay any
Rent due hereunder within ten (10) days after the same shall
have become due and payable, then and in such event the Lessee
shall also pay to the Lessor a late payment service charge (in
order to partially defray the Lessor's administrative and other
overhead expenses) of two hundred-fifty dollars ($250) plus
interest on such unpaid sum per day for each day or part thereof
after the Payment Date thereof during which such payment shall
not have been received by Lessor at the greater of (i) eighteen
percent (18%) or (ii) the Overdue Rate, but in no event in
excess of any maximum interest rate (if such sum shall be
denominated as interest by any court of competent jurisdiction)
permissible under applicable law, it being understood that
nothing herein shall be deemed to extend the due date for
payment of any sums required to be paid by Lessee hereunder or
to relieve Lessee of its obligation to pay such sums at the time
or times required by this Lease.
16.3 Damages. Except as otherwise provided herein neither
-------
(a) the termination of this Lease pursuant to Section 16.2, (b)
the repossession of the Leased Property, (c) the failure of
Lessor, notwithstanding reasonable good faith efforts, to relet
the Leased Property, (d) the reletting of all or any portion
thereof, nor (e) the failure of Lessor to collect or receive any
Rent due upon any such reletting, shall relieve Lessee of its
liability and obligations hereunder, all of which shall survive
any such termination, repossession or reletting. In the event
of any such termination, Lessee shall forthwith pay to Lessor
all Rent due and payable with respect to the Leased Property to
and including the date of such termination. In addition, Lessee
shall forthwith pay to Lessor, at Lessor's option, either:
(a) the sum of:
(i) the worth, on the date of award of the
amount by which the Rent that would have been earned after
termination until the date of the award exceeds the amount of
such rental loss that Lessee proves could have been reasonably
avoided,
(ii) the worth, on the date of the award, of the
amount by which the unpaid Rent for the balance of the Term
after the date of the award exceeds the amount of such rental
loss that Lessee proves could be reasonably avoided, and
(iii) any other amount necessary to compensate
Lessor for all the detriment proximately caused by Lessee's
failure to perform its obligations under this Lease or which in
the ordinary course would be likely to result therefrom.
In making the above determinations, the worth on the date of
the award shall be determined by a court having jurisdiction
thereof using the lowest rate of capitalization (highest present
worth) reasonably applicable at the time of such determination
and allowed by applicable law and the Additional Rent shall be
deemed to be the same as for the then current Fiscal Year or if
not determinable, the immediately preceding Fiscal Year, for the
remainder of the Term, or such other amount as either party
shall prove reasonably could have been earned during the
remainder of the Term or any, portion thereof or
(b) without termination of the Lessee's right to
possession of the Leased Property, each installment of said Rent
and other sums payable by Lessee to Lessor under this Lease as
the same become due and payable, which Rent and other sums shall
bear interest at the maximum annual rate permitted by the laws
of the state of Florida from the date when due until paid, and
Lessor may enforce, by action or otherwise, any other term or
covenant of this Lease.
16.4 Waiver. If this Lease is terminated pursuant to
------
Section 16.2, Lessee waives, to the extent permitted by
applicable law (a) any right of redemption, re-entry or
repossession, (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this
Article 16, and (c) the benefit of any laws now or hereafter in
force exempting property from liability for rent or debt.
16.5 Application of Funds. Any payments otherwise payable
--------------------
to Lessee which are received by Lessor under any of the
provisions of this Lease during the existence or continuance of
any Event of Default shall be applied to Lessee's obligations in
the order which Lessor may reasonably determine or as may be
prescribed by the laws of the state of Florida.
16.6 Failure to Conduct Business. Not applicable.
---------------------------
16.7 Lessee's Obligation to Purchase. If an Event of
-------------------------------
Default shall have occurred and be continuing, Lessor may
require Lessee to purchase the Leased Property on the first
Payment Date occurring not less than thirty (30) days after the
receipt of, or such later date that is specified in, the written
Notice requiring such purchase. The purchase price of the
Leased Property shall be $5,750,000 plus all Rent then due and
payable (excluding the installment of Minimum Rent due on the
purchase date and excluding the $350,000 to be paid in
consideration of execution of this lease) as of the date of
purchase. In no event shall the date of such purchase by Lessee
occur prior to the receipt by Lessee of all applicable
governmental consents and approvals, including without
limitation, licenses and approval, or a decision not to review
the capital expenditure contemplated herein, by the health
planning agencies having jurisdiction over the Leased Property.
If Lessor exercises such right Lessor shall convey the Leased
Property to Lessee on the date fixed therefor upon receipt of
the purchase price therefor and this Lease shall thereupon
terminate. Any purchase by Lessee of the Leased Property
pursuant to this Section shall be in lieu of the damages
specified in Section 16.3.
ARTICLE 17
----------
LESSOR'S RIGHT TO CURE
----------------------
17.1 If Lessee shall fail to make any payment, or to
perform any act required to be made or performed under this
Lease and to cure the same within the relevant time periods
provided in Section 16.1, Lessor, after notice to and demand
upon Lessee and without waiving or releasing any obligation or
Event of Default, may (but shall be under no obligation to) at
any time thereafter make such payment or perform such act for
the account and at the expense of Lessee and may, to the extent
permitted by law, enter upon the Leased Property for such
purpose and take all such action thereon as, in Lessor's
reasonable opinion, may be necessary or appropriate therefor.
No such entry shall be deemed an eviction of Lessee. All sums
so paid by Lessor and all costs and expenses (including without
limitation, reasonable attorney's fees and expenses in each case
to the extent permitted by law) so incurred, together with a
late charge thereon (to the extent permitted by law) at the
Overdue Rate from the date on which such sums or expenses are
paid or incurred by Lessor, shall be paid by Lessee to Lessor on
demand. The obligations of Lessee and rights of Lessor
contained in this Article shall survive the expiration or
earlier termination of this Lease.
ARTICLE 18
----------
PURCHASE OF THE LEASED PROPERTY
-------------------------------
18.1 Purchase of Leased Property. Not Applicable
---------------------------
ARTICLE 19
----------
HOLDING OVER
------------
19.1 If Lessee shall for any reason remain in possession of
the Leased Property after the expiration of the Term or any
earlier termination of the Term hereof, such possession shall be
as a month-to-month tenant during which time Lessee shall pay as
Rent each month one and one-half times, except as otherwise
provided in Article 1.2, the aggregate of (i) one-twelfth of the
aggregate Minimum Rent, and (ii) all other sums, if any, payable
by Lessee pursuant to the provisions of this Lease with respect
to the Leased Property. During such period of month-to-month
tenancy, Lessee shall be obligated to perform and observe all of
the terms, covenants and conditions of this Lease, but shall
have no rights hereunder other than the right, to the extent
given by law to month-to-month tenants, to continue its
occupancy and use of the Leased Property. Nothing contained
herein shall constitute the consent, express or implied, of
Lessor to the holding over of Lessee after the expiration or
earlier termination of this Lease.
ARTICLE 20
----------
RISK OF LOSS
------------
20.1 During the Term of this Lease, the risk of decrease in
the enjoyment and beneficial use of the Leased Property in
consequence of the damage or destruction thereof by fire, the
elements, casualties, thefts, riots, wars or otherwise, or in
consequence of foreclosures, attachments, levies or executions
other than by Lessor and those claiming from, through or under
Lessor is assumed by Lessee and, in the absence of the
negligence, willful misconduct or default in the performance of
Lessor's obligations under this Lease, Lessor shall in no event
be answerable or accountable therefor nor shall any of the
events mentioned in this Section entitle Lessee to any abatement
of Rent except as otherwise specifically provided in this Lease.
ARTICLE 21
----------
INDEMNIFICATION
---------------
21.1 Notwithstanding the existence of any insurance
provided for in Article 13, and without regard to the policy
limits of any such insurance, Lessee will protect, indemnify,
save harmless and defend Lessor from and against all
liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including without limitation,
reasonable attorney's fees and expenses), to the extent
permitted by law, imposed upon or incurred by or asserted
against Lessor arising from the operation of the Facility,
including but not limited to (a) any accident, injury to or
death of persons or loss of or damage to property occurring on
or about the Leased Property or adjoining sidewalks, including
without limitation any claims of malpractice, (b) any use,
misuse, non-use, condition, maintenance or repair by Lessee of
the Leased Property, (c) any Impositions (which are the
obligations of Lessee to pay pursuant to the applicable
provisions of this Lease), (d) any failure on the part of Lessee
to perform or comply with any of the terms of this Lease, and
(e) the non-performance of any of the terms and provisions of
any and all existing and future permitted subleases of the
Leased Property to be performed by the landlord (Lessee)
thereunder. Any amounts which become payable by Lessee under
this Section shall be paid within ten (10) days after liability
therefor on the part of Lessor is determined by litigation or
otherwise, and if not timely paid, shall bear a late charge (to
the extent permitted by law) at the Overdue Rate from the date
of such determination to the date of payment. Lessee, at its
expense, shall contest, resist and defend any such claim, action
or proceeding asserted or instituted against Lessor or may
compromise or otherwise dispose of the same as Lessee sees fit.
Nothing herein shall be construed as indemnifying Lessor against
its own gross negligence or willful misconduct.
Lessor shall indemnify, save harmless and defend Lessee from
and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including
without limitation, reasonable attorney's fees and expenses)
imposed upon or incurred by or asserted against Lessee as a
result of the gross negligence or willful misconduct of Lessor.
Lessee's or Lessor's liability for a breach of the
provisions of this Article arising during the Term hereof shall
survive any termination of this Lease.
ARTICLE 22
----------
SUBLETTING AND ASSIGNMENT
-------------------------
22.1 Subletting and Assignment. Lessee shall not without
-------------------------
the prior written consent of Lessor and Facility Mortgagee,
which consent will not be unreasonably withheld or delayed by
Lessor but which may be withheld by Facility Mortgagee in its
sole discretion, assign this Lease or sublet all or any part of
the Leased Property or mortgage or encumber the leasehold
interest created by this Lease. For purposes of this Section
22.1, the term "assign" shall be deemed to include but not be
limited to any one or more sales, pledges or other transfers
hereafter of an aggregate of fifty percent (50%) or more of the
capital stock of any class of Lessee or of any parent or any
Affiliate of Lessee or any Guarantor of the obligations or
liabilities of Lessee hereunder, or of any such sales, pledges
or other transfers of the capital assets or income interest in
Lessee or any such parent, Affiliate or Guarantor, and such
sale, pledge, or other transfer results in a change in the day-
to-day management and administration of the Facility. Lessee
acknowledges that any approval by Lessor and Facility Mortgagee
of the assignment of this Lease or the sale of more than fifty
percent (50%) of the voting stock in the Lessee is contingent
upon, among other things, the assignee or purchaser being an
entity with experience in the health care field and
creditworthiness equal to or greater than Lessee.
22.2 Attornment. Lessee shall insert in each sublease
----------
permitted under Section 22.1 provisions to the effect that (a)
such sublease is subject and subordinate to all of the terms and
provisions of this Lease and to the rights of Lessor hereunder,
(b) in the event this Lease shall terminate before the
expiration of such sublease, the sublessee thereunder will, at
Lessor's option, attorn to Lessor and waive any right the
sublessee may have to terminate the sublease or to surrender
possession thereunder, as a result of the termination of this
Lease, and (c) in the event the sublessee receives a written
notice from Lessor or Lessor's assignees, if any, stating that
Lessee is in default under this Lease, the sublessee shall
thereafter be obligated to pay all rents accruing under said
sublease directly to the party giving such notice or as such
party may direct. All rents received from the sublessee by
Lessor or Lessor's assignees, if any, as the case may be, shall
be credited against the amounts owing by Lessee under this
Lease.
ARTICLE 23
----------
ADDITIONAL COVENANTS OF LESSEE
------------------------------
23.1 Officer's Certificates. At any time and from time-to-
----------------------
time upon Lessee's receipt of not less than twenty (20) days
prior written request by Lessor, Lessee will furnish to Lessor
an Officer's Certificate certifying that this Lease is
unmodified and in full force and effect (or that this Lease is
in full force and effect as modified and setting forth the
modifications) and the dates to which the Rent has been paid.
Any such Officer's Certificate furnished pursuant to this
Section shall be addressed to such prospective purchaser or
mortgagee of the Leased Property as Lessor may request and may
be relied upon by Lessor and any such prospective purchaser or
mortgagee of the Leased Property.
23.2 Financial Statements. Lessee will furnish the
--------------------
following statements to Lessor:
(i) within sixty (60) days after the end of each
of Lessee's Fiscal Years, a copy of the Consolidated Financials
for the preceding Fiscal Year certified by an independent
certified public accountant and an Officer's Certificate stating
that to the best of the signer's knowledge and belief after
making due inquiry Lessee is not in default in the performance
or observance of any of the terms of this Lease or, if Lessee
shall be in default to its knowledge, specifying all such
defaults, the nature thereof and the steps being taken to remedy
the same;
(ii) within thirty (30) days after the end of
each of Lessee's Fiscal Quarters, Lessee shall provide Lessor
with unaudited operating statements and leasing status reports;
(iii) with reasonable promptness, such other
information respecting the financial condition and affairs of
Lessee as Lessor may reasonably request from time-to-time; and
23.3 Licensing Information. Lessee shall promptly furnish
---------------------
to Lessor complete copies of all surveys, examinations,
inspections, compliance certificates and other similar reports
of any kind issued to Lessee by any governmental agencies or
authority having jurisdiction over the licensing of the
operation of the Facility.
23.4 Cash Flow. Lessee will maintain during the term of
---------
the initial Facility Mortgage a cash flow (depreciation plus net
profit), calculated quarterly as of the end of each Fiscal
Quarter of Lessee, of not less than 125% of Minimum Rent.
23.5 Operation of Facility. Lessee agrees during the term
---------------------
of this Lease that it will operate the Facility only for its
Primary Intended Use, or such other uses as may be permitted
from time-to-time by Lessor and Facility Mortgagee, and will use
its best efforts and use due diligence to maintain all licenses
and certifications necessary for the operation of a 150-bed
skilled nursing facility. In the event Lessee is notified by
appropriate governmental authorities of a condition or event
which may, unless corrected, result in any loss or diminution of
Lessee's rights to operate the Leased Property in the manner
described above, or, in the event the State of Florida notifies
Lessee that the license classification is to be issued below
"Standard" then Lessee will notify Lessor and Facility Mortgagee
in writing within forty-eight hours (48) of receipt of such
notification as to the nature and extent of such potential loss,
diminution, or reclassification of license and the condition or
event causing such potential loss, diminution or
reclassification of license. As soon as practicable thereafter,
Lessee will notify Lessor and Facility Mortgagee in writing of
its plan of corrective action regarding the same and will keep
Lessor and Facility Mortgagee apprised in writing of the
progress thereunder. If such loss, diminution or
reclassification of license shall actually occur, then Lessor
may avail itself of any rights it may have under Section 16 or
Section 17 of this Lease, at law or in equity.
ARTICLE 24
----------
INSPECTION
----------
24.1 Lessee shall permit Lessor, Facility Mortgagee or
their respective authorized representatives, upon 24 hours
notice to inspect the Leased Property and to make any on-site
surveys including soil testing, structural testing, etc. during
usual business hours, subject to any existing 'or future
"patient bill of rights, security, health, safety or
confidentiality requirements of Lessee, any governmental agency,
any Insurance Requirements relating to the Leased Property, or
imposed by law or applicable regulations.
ARTICLE 25
----------
NO WAIVER
---------
25.1 No failure by Lessor or Lessee to insist upon the
strict performance of any term hereof or to exercise any right,
power or remedy consequent upon a breach thereof, and no
acceptance of full or partial payment of Rent during the
continuance of any such breach, shall constitute a waiver of any
such breach or any such term. To the extent permitted by law,
no waiver of any breach shall affect or alter this Lease, which
shall continue in full force and effect with respect to any
other then existing or subsequent breach.
ARTICLE 26
----------
REMEDIES CUMULATIVE
-------------------
26.1 To the extent permitted by law, each legal, equitable
or contractual right, power and remedy of Lessor or Lessee now
or hereafter provided either in this Lease or by statute or
otherwise shall be cumulative and concurrent and shall be in
addition to every other right, power and remedy, and the
exercise or beginning of the exercise by Lessor or Lessee of any
one or more of such rights, powers and remedies shall not
preclude the simultaneous or subsequent exercise by Lessor or
Lessee of any or all of such other rights, powers and remedies.
ARTICLE 27
----------
SURRENDER OF LEASED PROPERTY; OF LEASE
--------------------------------------
27.1 (i) Lessee will, upon the expiration or prior
termination of the Term, vacate and surrender the Leased
Property to Lessor in the condition in which the Leased Property
was originally received from Lessor except as repaired, rebuilt,
restored, altered or added to as permitted or required by the
provisions of this Lease, and except for ordinary wear and tear
(subject to the obligation of Lessee to maintain the Leased
Property in good order and repair during the entire Term of the
Lease), damage caused by the gross negligence or willful acts of
Lessor, and damage or destruction described in Article 14, or
resulting from a Taking described in Article 15 which Lessee is
not required by the terms of this Lease to repair or restore,
and Lessee shall use its best efforts to transfer and assign to
Lessor or its designee, or assist Lessor or its designee in
obtaining any contracts, licenses, and certificates required for
the then operation of the Facility.
(ii) Except at the termination of the Term in the
ordinary course, no surrender to Lessor of this Lease or of the
Leased Property or any part thereof, or of any interest therein,
shall be valid or effective unless agreed to and accepted in
writing by Lessor and Facility Mortgagee and no act by Lessor or
any representative or agent of Lessor, other than such a written
acceptance by Lessor and Facility Mortgagee, shall constitute an
acceptance of any such surrender.
ARTICLE 28
----------
NO MERGER OF TITLE
------------------
28.1 There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the
same person, firm, corporation or other entity may acquire, own
or hold, directly or indirectly, (a) this Lease or the leasehold
estate created hereby or any interest in this Lease or such
leasehold estate, and (b) the fee estate in the Leased Property.
ARTICLE 29
----------
TRANSFERS BY LESSOR
-------------------
29.1 Subject first to the rights of Abraham Shaulson to
purchase the Property, Lessor or any successor owner of the
Leased Property shall convey the Leased Property in accordance
with the terms hereof, other than as security for a debt, and
the grantee or transferee of the Leased Property shall expressly
assume all obligations of Lessor hereunder arising or accruing
from and after the date of such conveyance or transfer and shall
be reasonably capable of performing the obligations of Lessor
hereunder, Lessor or such successor owner, as the case may be,
shall thereupon be released from all future liabilities and
obligations of the Lessor under this Lease arising or accruing
from and after the date of such conveyance or other transfer as
to the Leased Property, and all such future liabilities and
obligations shall thereupon be binding upon the new owner.
29.2 Not applicable.
ARTICLE 30
----------
QUIET ENJOYMENT
---------------
30.1 So long as Lessee shall pay all Rent as the same
becomes due and shall fully comply with all of the terms of this
Lease and fully perform its obligations hereunder, Lessee shall
peaceably and quietly have, hold and enjoy the Leased Property
for the Term hereof, free of any claim or other action by Lessor
or anyone claiming by, through or under Lessor, but subject to
all liens and encumbrances of record as of the date hereof. No
failure by Lessor to comply with the foregoing covenant shall
give Lessee any right to cancel or terminate this Lease, or to
fail to pay any sum under this Lease, or to fail to perform any
other obligation of Lessee hereunder. Notwithstanding the
foregoing, Lessee shall have the right by separate and
independent action to pursue any claim it may have against
Lessor as a result of a breach by Lessor of the covenant of
quiet enjoyment contained in this Article.
ARTICLE 31
----------
NOTICES
-------
31.1 All notices, demands, requests, consents, approvals
and other communications hereunder shall be in writing and
delivered or mailed (by registered or certified mail, return
receipt requested and postage prepaid), or delivered by
reputable overnight delivery service, addressed to the
respective parties, as follows:
(a) if to Lessee: Watercrest Nursing and Rehabilitation
Center, Inc.
C/O Abraham Shaulson
3190 Pine Tree Drive
Miami Beach, FL 33140
with a copy to: Goldsmith & Grout, P.A.
385 W. Fairbanks Ave, Suite 300
PO Box 2011
Winter Park, FL 32790-2011
(b) if to Lessor: Healthcare Investors of America, Inc.
C/O James R. Sellers
2990 N. Swan Rd., Suite 228
Tucson, AZ 85712
with a copy to: John A. Cocklereece
Bell, Davis & Pitt, P.A.
635 W. Fourth Street
Winston Salem, NC 27104
or to such other address as either party may hereafter
designate, and shall be effective upon receipt.
ARTICLE 32
----------
OWNERSHIP OF PERSONAL PROPERTY
------------------------------
32.1 It is agreed and understood all Personal Property is
currently owned by Bayshore Healthcare Services, Inc., ("BHS")
the prior Lessee. It is further agreed Lessee is paying no
consideration for said Personal Property. Upon termination of
this Lease, whether by expiration of the Term or otherwise, and
if this lease is not extended, all Lessee's Personal Property
shall be deemed owned by BHS without cost to Lessor or BHS,
subject only to the rights of holders of security interest prior
to Lessor's security interest in Lessee's Personal Property.
Notwithstanding the foregoing, if Lessee is in default under
this Lease, at Lessor's option all Lessee's Personal Property
shall be deemed owned by BHS without cost to Lessor or BHS,
subject only to the rights of holders of security interest prior
to Lessor's security interest in Lessee's Personal Property.
ARTICLE 33
----------
EXTENDED TERMS
--------------
33.1 Not applicable.
ARTICLE 34
----------
APPRAISAL
---------
34.1 Not applicable.
34.2 In the event that it becomes necessary to determine
the Fair Market Value of the Leased Property for any purpose
other than selling the Leased Proprety to Lessee, then Fair
Market Value will be determined by this Section. If the Lessor
and Lessee agree, then Fair Market Value will be determined by a
jointly chosen appraiser who is a member of the American
Institute of Real Estate Appraisers or the Society of Real
Estate Appriasers (or any successor organizations thereto). If
the parties cannot agree on the choice of one appraiser, then
Lessor will appoint one appraiser and Lessee will appoint
another, both appraisers to be qualified as provided in the
preceding sentence. The appraisers) will proceed to appraise
the Leased Property to determine the Fair Market Value thereof
as of the relevant date (giving effect to the impact, if any, of
inflation from the date of their decision to the relevant date
and any Capital Additions, Non-Capital Additions or Leasehold
Improvements paid for or financed by Lessee). To the extent
consistent with a sound appraisal, such appraisal shall be made
on a basis consistent with the basis on which the Leased
Property was appraised for purposes of determining its Fair
Market Value at the time the Leased Property was acquired by
Lessor. If the' resulting appraisal values are different, and
the higher appraisal value is less than 125/-, of the lower
appraisal, then the two appraisals will be averaged, and the
averaged value will be the deemed Fair Market Value for the
purposes of this Lease. If the higher appraisal value is more
than 125% of the lower appraisal value, then the two appraisers
will appoint a third appraiser and submit copies of their
independent appraisals to the jointly chosen appraiser. The
third appraiser will review both appraisals and, on a basis of a
review of the appraisals, will determine the Fair Market Value
for purposes of this Lease. The decision of the third appraiser
will be final. This provision for determination by appraisal
shall be specifically enforceable to the extent such remedy is
available under applicable law, and any determination hereunder
shall be final and binding upon the parties, except as otherwise
provided by applicable law. Lessor and Lessee shall each pay
the fees and expenses of the appraiser appointed by it and each
shall pay one-half of the fees and expenses of any third
appraiser and one-half of all other cost and expenses incurred
in connection with each appraisal.
ARTICLE 35
----------
DEFAULT BY LESSOR
-----------------
35.1 Lessor shall be in default of its obligations under
this Lease if Lessor shall fail to observe or perform any term,
covenant or condition of this Lease on its part to be performed
and such failure shall continue for a period of thirty (30) days
after notice thereof to Lessor and Facility Mortgagee from
Lessee (or such shorter time as may be necessary in order to
protect the health or welfare of any patients of the Facility),
unless such failure cannot with due diligence be cured within a
period of thirty (30) days, in which case such failure shall not
be deemed to continue if Lessor, within said thirty (30) day
period, proceeds promptly and with due diligence to cure the
failure and diligently completes the curing thereof. The time
within which Lessor shall be obligated to cure any such failure
shall also be subject to extension of time due to the occurrence
of any Unavoidable Delay. Lessee agrees that any cure of a
default by Lessor which is effected by Facility Mortgagee will
have the same effect as if implemented by Lessor.
ARTICLE 36
----------
LIENS ON THE LEASED PROPERTY; PERSONAL PROPERTY
-----------------------------------------------
36.1 Lessor May Grant Liens. Without the consent of
----------------------
Lessee, Lessor may, subject to the terms and conditions set
forth below in this Section 36.1, from time-to-time, directly or
indirectly, create or otherwise cause to exist any lien,
encumbrance or title retention agreement ("Encumbrance") upon
the Leased Property, or any portion thereof or interest therein,
whether to secure any borrowing or other means of financing or
refinancing, provided that Lessee shall have no obligation to
make payments under such Encumbrance other than payments of Rent
remitted directly to Facility Mortgagee or a receiver in
conjunction with the exercise by Facility Mortgagee of its
lawful remedies following a default by Lessor under the Facility
Mortgage. Lessee hereby agrees that any such Encumbrance may
provide that Lessee's right of option to purchase the Leased
Property, if any, shall not be applicable upon a foreclosure
sale or transfer in lieu thereof. Lessee shall subordinate this
Lease to the lien of any such Encumbrance, on the condition that
the beneficiary or holder of such Encumbrance executes a non-
disturbance agreement in conformity to Section 37. 1.
36.2 Lessee May Grant Liens. Without the consent of
----------------------
Lessor, Lessee may, subject to the terms and conditions set
forth below in this Section 36.2 and subject to any contrary
provisions in the security agreement of even date herewith
between Lessor and Lessee, from time-to-time, directly or
indirectly, create or otherwise cause to exist any lien,
encumbrance or title retention agreement ("Encumbrance") upon
the Personal Property, or any portion thereof or interest
therein, whether to secure any borrowing or other means of
financing or refinancing, provided that Lessor shall have no
obligation to make payments under such Encumbrance. Upon
request of Lessee, Lessor agrees to subordinate its Lessor's
interest in newly leased or acquired personal property, if
Lessee has previously secured Lessor's approval of such purchase
or leased property.
ARTICLE 37
----------
SUBORDINATION AND NON-DISTURBANCE
---------------------------------
37.1 In the event Lessor shall have the right to terminate
this Lease under the terms and provisions expressly set forth
herein; (a) agreeing that for any period while it may be Lessor
hereunder, it will perform, fulfill and observe all of Lessor's
representations, warranties and agreements set forth herein; and
(b) agreeing that all proceeds of the casualty insurance
describe in Article 14 of this Lease and all Awards described in
Article 15 will be made available to Lessee, subject to the
rights of Facility Mortgagee, for restoration of the Leased
Property as and to the extent required by this Lease, subject
only to reasonable regulation regarding the disbursement and
application thereof; provided, however, that Lessee delivers an
agreement of the type described in the following paragraph if so
requested by the Holder of an Encumbrance.
At the request from time-to-time by one or more holders of
any Encumbrance that may hereafter be placed upon the Leased
Property or any part thereof by Lessor, and any and all
renewals, replacements, modifications, consolidations, spreaders
and extensions thereof, Lessee will subordinate this Lease and
all of Lessee's rights and estate hereunder to each such
Encumbrance and agree with each such holder that Lessee will
attorn to and recognize such holder or the purchaser at any
foreclosure sale or any sale under a power of sale contained in
any such Encumbrance as Lessor under this Lease for the balance
of the Term then remaining, subject to all of the terms and
provisions of this Lease; provided, however, that each such
holder simultaneously executes, delivers and records a written
agreement as provided in the preceding paragraph.
ARTICLE 38
----------
MISCELLANEOUS
-------------
38.1 General. Anything contained in this Lease to the
-------
contrary notwithstanding, all claims against, and liabilities
of, Lessee or Lessor arising prior to any date of termination of
this Lease shall survive such termination. If any term or
provision of this Lease or any application thereof shall be
invalid or unenforceable, the remainder of this Lease and any
other application of such term or provision shall not be
affected thereby. If any late charges provided for in any
provision of this Lease are based upon a rate in excess of the
maximum rate permitted by applicable law, the parties agree that
such charges shall be fixed at the maximum permissible rate.
Neither this Lease nor any provision hereof may be changed,
waived, discharged or terminated except by an instrument in
writing and in recordable form signed by Lessor and Lessee. All
the terms and provisions of this Lease shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns. The headings in this Lease are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof. This Lease shall be governed by and
construed in accordance with the laws of the state of Florida.
Lessee waives all presentments, demands for performance, notices
of nonperformance, protests, notices of protest, notices of
dishonor, and notices of acceptance and waives all notices of
the existence, creation, or incurring of new or additional
obligations, except as expressly granted herein.
38.2 Transfer of Licenses. Unless this Lease is extended,
--------------------
upon the expiration or earlier termination of the Term, Lessee
shall use its best efforts to transfer to Lessor or Lessor's
nominee all licenses, operating permits and other governmental
authorizations and all contracts, including contracts with
governmental or quasi-governmental entities, which may be
necessary or useful in the operation of the Facility.
38.3 Construction. Not applicable.
------------
ARTICLE 39
----------
MEMORANDUM OF LEASE
-------------------
39.1 Lessor and Lessee shall, promptly upon the request of
either, enter into a short form memorandum of this Lease, in
form suitable for recording under the laws of the state of
Florida, in which reference to this Lease, and all options
contained herein, shall be made.
ARTICLE 40
----------
LIMITATION OF LIABILITY
-----------------------
40.1 Lessee specifically agrees that no trustee, officer,
shareholder, employee or agent of Lessor or its subsidiaries
shall be held to any personal liability, jointly or severally,
for any obligation of, or claim against Lessor, Lessee agreeing
to look solely to Lessor's equity interest in the Leased
property for recovery of any judgment from Lessor. The
provisions contained in the foregoing sentence are not intended
to, and shall not limit any right that Lessee might otherwise
have to obtain injunctive relief against Lessor or Lessor's
successors in interest, or any action not involving the personal
liability of Lessor (original or successor). In no event shall
Lessor (original or successor) be required to respond in
monetary damages from Lessor's assets other than Lessor's equity
interest aforesaid in said properties, including the Leased
Property. Furthermore, except as otherwise expressly provided
herein, in no event shall Lessor (original or successor) ever be
liable to Lessee for any indirect or consequential damages
suffered by Lessee from whatever cause.
IN WITNESS WHEREOF, the parties have caused this Lease to
be executed and attested by their respective officers thereunto
duly authorized.
LESSEE:
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF: WATERCREST NURSING AND
REHABILITATION CENTER, INC
By: /s/ Abraham Shaulson
- ---------------------------- --------------------------
Title:
- ---------------------------- -----------------------
LESSOR:
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF: HEALTHCARE INVESTORS OF
AMERICA, INC.
By: /s/ F. Dale Markham
- ---------------------------- --------------------------
Title:
- ---------------------------- -----------------------
EXHIBIT 1
---------
LEGAL DESCRIPTION
-----------------
Being a portion of Lots 1, 2, 3 and 4, Block "G". First
Addition to Fulford, as recorded in Plat Book 2, Page 103 of the
Public Records of Dade County, Florida, being more particularly
described as follows:
Commence at the northwest corner of Lot 6. Block "G" of
said First Addition to Fulford; thence south I degree, 30
minutes, 30 seconds east along the west line of said Lot 6
for 356.57 feet; thence south 88 degrees, 37 minutes, 11
seconds east along a fine 25.00 feet north of and parallel
with the south line of Lots 6 and 5 of said First Addition
to Fulford for 100.13 feet to the Point of Beginning of the
following described parcel of land; thence north I degree,
31 minutes, 20 seconds west along the west line of Lot 4
for 254.99 feet; thence south 88 degrees, 23 minutes, 16
seconds east for 193.08 feet; thence south 1 degree, 30
minutes, 30 seconds east along a line 5.00 feet west of and
parallel with the east line of said Lot 1 for 250.89 feet;
thence north 88 degrees, 37 minutes, 11 seconds west for
2.80 feet; thence run south 1 degree, 30 minutes, 30
seconds east for 3.30 feet; thence north 88 degrees, 37
minutes, 11 seconds west along a line 25.00 feet north of
and parallel with the south line of Lots 1, 2, 3 and 4 for
192.17 feet to the Point of Beginning, lying and being in
the City of North Miami Beach, Dade County, Florida.
EXHIBIT 2
---------
PERMITTED TITLE EXCEPTIONS
--------------------------
1. Mortgage in favor of PNC Bank, National Association,
formerly known as Citizens Fidelity Bank and Trust Company,
of Louisville, Kentucky, to which this Lease is junior and
subordinate.
2. Easements, restrictions or stipulations of record.
3. Ad valorem taxes which are not yet due and payable.
4. All matters of planning and zoning, including regulations
thereto.
EXHIBIT 3
----------
SCHEDULE OF PROPERTY IMPROVEMENTS/MAJOR REPAIRS
-----------------------------------------------
AMENDMENT NO. 1 TO MASTER FACILITY LEASE
Of Nursing Home at
16650 W. Dixie Highway
North Miami, FL
Dated July 30, 1999
Lessor agrees to indemnify and hold harmless Lessee from and
against any and all claims, losses, liability, attorney's fees,
costs and/or expenses relating or arising from the following:
A. Any breach by the lessor of representations, warranties,
covenants or agreements made in this Agreement, or any
document delivered in this transaction;
B. Any overpayment or assessment relating to the facility for
any period prior to the effective date of this Agreement,
from the Medicare or Medicaid program, or other third party
payor;
C. Any claims by any creditor, whether secured or unsecured,
incurred by the facility prior to the effective date of this
Agreement;
D. Any claim, demand, suit, action, whether at law, or in
equity, proceeding or judgment arising out of, or incident to
the operation of the facility prior to the effective date of
this Agreement whether that claim, demand, suit, action,
proceeding, or judgment has been filed, threatened,
anticipated, or is, at this time, not anticipated;
E. Any attorney's fees or costs incurred by the Lessee in
defending or participating in any action arising from the
paragraphs set forth above.
In the event either Medicaid or Medicare, as third parties
withholds, recoups, or offsets any payment due the Lessee for any
claims or assessments arising during periods prior to the
effective date of this Agreement, the Lessor agrees to immediately
reimburse the Lessee the full amount of the withholding,
recoupment, or offset. Lessor's obligation to reimburse the
Lessee shall commence on the date that the Lessee provides written
notice evidencing the withholding, recoupment, or offset.
In the event that the Lessor fails to reimburse the Lessee as
specified above, the lessee shall have the right to offset the
amount from the monthly rent and insurance administering fee which
according to this Agreement is $50,314.00 monthly.
In the event that any withholding, recoupment, or offset
exceeds the monthly rent and insurance administering fee
($50,314.00), the Lessee shall have the right to deduct the amount
of the withholding, recoupment, or offset from the purchase price
of the facility as specified in the Purchase and Sale Agreement
entered into between the Parties
Any amount due the Lessee from the Lessor under the above
provisions shall, if not paid to the Lessee within five (5) days
after the notice of such claim is received by the Lessor, shall
accrue an interest charge at the rate of 10%, per annum. The
accrual of interest shall continue at the above specified rate
until the Lessor satisfies the amount owed to the Lessee.
In witness whereof, the parties have caused this Lease to be
executed and attested by their respective officers thereunto duly
authorized.
LESSEE: LESSOR:
WATERCREST NURSING AND HEALTHCARE INVESTORS OF
REHABILITATION CENTER, INC. AMERICA, INC.
By: /s/ Abraham Shaulson By: /s/ F. Dale Markham
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Title: Title: President
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