<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and
- --- Exchange Act of 1934
For the period ended September 30, 1997, or
Transition Report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
For the transition period from _____________ to ________________.
COMMISSION FILE NUMBER 0-25908
-----------------
JUST LIKE HOME, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 65-0568234
(State or other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
3647 CORTEZ ROAD WEST 34210-3106
BRADENTON, FLORIDA (Zip Code)
(Address of Principal Executive Offices)
REGISTRANT'S TELEPHONE NUMBER AND AREA CODE: 941-756-2555
2440 TAMIAMI TRAIL NORTH 34275
NOKOMIS, FLORIDA (Former Zip Code)
(Former Address of Principal Executive Offices)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, PAR VALUE $.001 NASDAQ
(Title of Class) (Name of Each Exchange on
Which Registered)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
----- -----
As of September 30, 1997, there were outstanding 7,073,711 shares of Just Like
Home, Inc. Common Stock, par value $.001.
<PAGE> 2
PART I
ITEM 1. FINANCIAL STATEMENTS
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CONSOLIDATED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 641,432
Restricted cash 614,444
Accounts receivable - trade 49,804
Due from related parties 241,696
Construction Work in Process 751,800
Other current assets 167,942
-----------
Total current assets 2,467,118
-----------
Property and equipment, net 2,285,564
Property held for sale 1,521,608
Intangible assets, net 562,521
Other Assets 17,963
-----------
4,387,656
-----------
Total Assets $ 6,854,774
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 312,355
Accrued interest 11,820
Accrued compensation 87,665
Current portion of long-term debt 1,127,500
Other current liabilities 105,027
-----------
Total current liabilities 1,644,367
-----------
Long-term debt 1,686,084
Note payable to related party 478,306
-----------
2,164,390
-----------
Total liabilities 3,808,757
-----------
Common Stock and Options Subject to Put Options 432,002
-----------
Stockholders' Equity
Preferred stock, $.01 par value; 2,000,000 shares
authorized; none issued and outstanding 0
Common stock, $.001 par value; 13,000,000 shares
authorized; 7,073,711 shares issued and outstanding 7,073
Additional paid-in capital 8,717,748
Accumulated deficit (6,110,806)
-----------
Total stockholders' equity 2,614,015
-----------
Total Liabilities and Stockholders' Equity $ 6,854,774
===========
</TABLE>
See accompanying notes to consolidated financial statements
2
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JUST LIKE HOME, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Resident fees $ 320,860 $ 434,585 $ 818,196 $ 1,307,934
Companion care fees 15,880 93,809 18,415 249,561
Consulting fees 143,772 -- 384,459 336,148
Management Fees 25,185 20,884 75,885 67,924
Other income 61,756 27,562 131,637 93,480
---------------------------------------------------------
Total revenue 567,453 576,840 1,428,592 2,055,047
---------------------------------------------------------
Expenses:
General and administration 481,947 436,067 1,252,763 1,350,310
Resident care expenses 237,184 419,514 544,053 1,039,908
Companion care 52,267 114,898 96,094 307,740
Consulting expenses 120,101 102,651 370,190 391,792
Depreciation and amortization 70,818 52,987 159,238 202,379
---------------------------------------------------------
Total expenses 962,317 1,126,117 2,422,338 3,292,129
---------------------------------------------------------
Operating Loss (394,864) (549,277) (993,746) (1,237,082)
---------------------------------------------------------
Non-Operating Income (Expense)
Interest expense (89,259) (97,125) (207,752) (318,910)
Interest income 13,015 34,390 64,438 70,385
---------------------------------------------------------
(76,244) (62,735) (143,314) (248,525)
---------------------------------------------------------
Loss Before Income Taxes (471,108) (612,012) (1,137,060) (1,485,607)
---------------------------------------------------------
Income Tax Expense -- -- -- --
---------------------------------------------------------
Net Loss $ (471,108) $ (612,012) $(1,137,060) $(1,485,607)
=========================================================
Net Loss Per Common Share $ (0.12) $ (0.09) $ (0.29) $ (0.25)
=========================================================
Weighted Average Common Shares Outstanding 3,921,627 7,073,711 3,910,582 5,929,137
=========================================================
</TABLE>
See accompanying notes to consolidated financial statements
3
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JUST LIKE HOME, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1996 1997
---- ----
<S> <C> <C>
Cash Flows used in Operating Activities: $ (535,596) $ (572,907)
----------- -----------
Cash Flows from Investing Activities:
Proceeds from sale of assets -- 978,009
Acquisitions of property and equipment (3,559,418) (64,967)
Costs of property held for sale -- (1,521,608)
Loans to related parties (26,012) --
Repayments of related-party loans 23,168 --
Payments made organization costs and intangible costs (458,724) (186,371)
Payments for other assets (96,479) 66,677
Purchase of certificate of deposit (800,000) --
Proceeds from certificate of deposit 1,150,000 --
Deposits into restricted cash accounts (2,016) (281,782)
----------- -----------
Net cash used in investing activities (3,769,481) (1,010,042)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from mortgages and notes payable 2,900,510 --
Repayment of mortgages and notes payable (73,419) (256,815)
Borrowings from related parties -- (91,490)
Repayment of related-party loans (4,166) --
Issuance of common stock 1,545,749
----------- -----------
Net cash provided by financing activities 2,822,925 1,197,444
----------- -----------
Net (decrease) in cash (1,482,152) (385,505)
Cash, beginning of period 1,847,974 1,026,937
----------- -----------
Cash, end of period $ 365,822 $ 641,432
=========== ===========
</TABLE>
In 1996 the Company issued 40,351 shares of common stock, valued at $460,000 in
connection with the acquisition of Charis Place, Inc.
See accompanying notes to consolidated financial statements
4
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JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
Just Like Home, Inc. and Subsidiaries (the "Company") have not changed their
accounting and reporting policies from those stated in the 1996 annual report.
These unaudited interim consolidated condensed financial statements should be
read in conjunction with the audited financial statements and related
disclosures included in the Company's annual report on Form 10-KSB for the year
ended December 31, 1996, and also the restated audited financial statements and
footnotes included in the Company's 8-K filing dated April 14, 1997, and amended
June 23, 1997.
In the opinion of the management of the Company, the accompanying unaudited
consolidated condensed financial statements contain all adjustments, consisting
only of normal recurring accruals, necessary to present fairly the Company's
financial position, results of operations and cash flows for the periods
presented. The results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for the full year.
NOTE 2 - NET LOSS PER COMMON SHARE
Primary net loss per common share is computed by dividing net loss by the
weighted average number of common shares outstanding during each period. Common
stock equivalents are not included in the calculation as their impact would be
anti-dilutive.
NOTE 3 - BUSINESS COMBINATION
On April 10, 1997, Community Assisted Living Centers, Inc. (Community) was
merged into the Company. At December 31, 1996 Community had approximately
$913,000 in assets and approximately $9,000 in liabilities. This business
combination was accounted for as a pooling of interests.
For the nine months ended September 30, 1996 the Company reported $861,138 of
revenues and a net loss of ($665,954). Community was not in operation for this
entire period. In 1997, prior to consummation of the business combination with
the Company, Community recorded $12,990 of revenue and a net loss of ($132,246).
NOTE 4 - FUTURE ACCOUNTING REQUIREMENTS
Comprehensive Income: In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS) No. 130, Reporting of
Comprehensive Income, which established standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains, and losses)
in a full set of financial statements. This statement also requires that all
items that are required to be recognized under accounting standards as
components of comprehensive
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income be reported in a financial statement that is displayed with the same
prominence as other financial statements.
This statement is effective for fiscal years beginning after December 15, 1997.
Earlier application is permitted. Reclassification of financial statements for
earlier periods provided for a comparative purpose is required. Management does
not believe that adoption of SFAS No. 130 will have a material impact on the
Company's financial statements.
Disclosures About Segments of an Enterprise: In June 1997, the Financial
Accounting Standards Board also issued SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Information, which establishes standards for the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports
issued to shareholders. This statement also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
This statement requires the reporting of financial and descriptive information
about an enterprise's reportable operating segments.
This statement is effective for financial statements for periods beginning after
December 15, 1997. In the initial year of application, comparative information
for earlier years is to be restated. The Company has not yet determined the
impact adoption of SFAS No. 131 will have on its financial statements.
NOTE 5 - SUBSEQUENT EVENTS AND LIQUIDITY
Private Placement: On March 27, 1997, the Company issued a private placement
memorandum offering up to 2,500,000 shares of its common stock at a purchase
price of $1.00 per share. The Company has been using the proceeds of the
offering to pay certain then existing liabilities of the Company, to pay
operating expenses, to fund development and start-up costs, and for general
corporate purposes. The private placement closed on April 10, 1997, and the
Company received approximately $1,510,000 in proceeds.
REIT Financing: The Company entered into an agreement on April 30, 1997, with
Health Care REIT, Inc., a real estate investment trust (the "REIT"), for up to
$41,800,000 in operating lease financings for assisted living facilities. The
initial financing was completed on July 18, 1997, and involved the
sale-leaseback of four assisted living facilities owned by the Company for an
aggregate sale price of $2,700,000.
Going Concern: The Company has experienced recurring losses and at December 31,
1996 had limited resources. On April 10, 1997, the management of Community ("New
Management") took effective control of the Company. In addition to the events
described above, New Management plans to dispose of the property held for sale
at its carrying value, sell certain operating assets to an assisted-living
facility real estate investment trust and lease them back, and improve operating
results at facilities managed by the Company. Current projections and plans
indicate that the Company will have sufficient resources to continue as a going
concern.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONDITIONS AND RESULTS OF
OPERATIONS.
OVERVIEW
The historical financial statements represent the consolidated results
of operations and financial condition of Just Like Home, Inc. and its
subsidiaries (JLH or the Company). On April 10, 1997, Community Assisted Living
Centers, Inc. (Community) merged into a newly formed subsidiary of the Company.
All financial information reflects the combined operations of JLH and Community
since January 1, 1997.
The following table sets forth the number of facilities owned or
managed and the total beds and occupancy as of the end of each of the periods
presented.
<TABLE>
<CAPTION>
December 31, September 30,
-------------- -------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Facilities owned.......................................... 2 6 2
Facilities leased(1)...................................... 0 0 4
Facilities managed........................................ 3 3 3
Total beds................................................ 100 184 184
Occupancy percentage at end of period..................... 97.0% 81.0% 75.0%
</TABLE>
(1) On July 18, 1997 the Company sold 4 facilities to Health Care REIT, Inc. and
simultaneously leased the properties back under a 10 year lease agreement.
- ----------------
Revenues
Nine Months
Total revenues for the nine-month period ended September 30, 1997 increased by
44% from approximately $1,429,000 in 1996 to approximately $2,055,000 in 1997.
Resident fee income increased 60% from $818,000 in 1996 to $1,308,000 in 1997
due to the acquisition of Charis Place in March 1996 and two newly constructed
facilities completed in July and December of 1996. Consulting Fees decreased
from $384,000 in 1996 to $336,000 in 1997 due to the sale of Project Market
Decisions, Inc. effective July 1, 1997. In addition, Just Like Family, Inc., the
Company's companion care service subsidiary, reflected revenues of $18,000
during its start up phase in 1996 and posted revenues of $250,000 in 1997.
Three Months
Total revenues for the three-month period ended September 30, 1997 increased
slightly from approximately $567,000 in 1996 to approximately $577,000 in 1997.
This change was due primarily to the increased companion care revenues of
$78,000, additional assisted living facilities revenues of $114,000 and was
offset by the reduction of consulting revenues which were $144,000 in 1996 and
$0 in 1997. Other Income includes $76,000 of gain from the sale of Project
Market Decisions, Inc. in 1997.
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Expenses
Nine Months
Total expenses for the nine-month period ended September 30, 1997 increased by
36%, from approximately $2,422,000 in 1996, to approximately $3,292,000 in 1997.
Assisted living operating expenses increased from $544,000 in 1996 to $1,040,000
in 1997 due to newly acquired and constructed facilities. Companion care costs
increased from $96,000 in 1996 to $308,000 in 1997 due to increased volume and
the start up of new geographic areas. General and administrative expenses were
up from $1,253,000 in 1996 to $1,350,000 in 1997. This increase was caused by
several factors, including bad debt allowances totaling $98,000 against
receivables from the National Foundation on Gerontology and a franchisee, and
$95,000 additional costs involved with settlement of outstanding contractual
obligations.
Three Months
Total expenses for the three-month period ended September 30, 1997 increased by
17%, from approximately $962,000 in 1996 to approximately $1,126,000 in 1997.
Operational expenses of the assisted living facilities increased from $237,000
in 1996, to $420,000 in 1997 attributable primarily to acquired and newly
constructed facilities. Companion care expenses increased from $52,000 in 1996
to $115,000 in 1997 due to increased volume and the start up of new market
areas. General and administrative expenses were down from $482,000 in 1996 to
$436,000 in 1997.
Interest Expense
Nine Months
Interest expense for the nine-month period ended September 30, 1997 increased
from approximately $208,000 in 1996 to approximately $319,000 in 1997 due to the
inclusion of the Charis Place, Inc. acquisition with its associated debt and the
opening of two additional facilities with their associated debt. Also, the
company incurred debt for working capital totaling $850,000 during late 1996.
Three Months
Interest expense for the nine-month period ended September 30, 1997 increased
from approximately $89,000 in 1996 to approximately $97,000 in 1997. The same
factors effecting the six-month Interest Expense combine to affect the second
quarter.
Loss Before Income Taxes
As a result of the above, the Company incurred a loss before taxes of
approximately ($1,486,000) for the 1997 period as compared to a loss of
approximately ($1,137,000) for the 1996 period.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended September 30, 1997 the Company sustained a loss of
approximately $1,486,000. This resulted primarily from the Company not having a
sufficient number of facilities in operation to generate necessary income to
cover home office overhead costs and the carrying costs associated with
non-income producing properties. The Company's merger with Community resolved
the immediate short-term cash requirements of the Company. Additionally,
simultaneously with the closing of the merger, the Company closed a private
placement of 1,510,000 shares of its Common Stock at a purchase price of $1.00
per share, for an aggregate purchase price of $1,510,000. The Company also is
offering for sale two parcels of land that are not consistent with the Company's
current plans to focus on smaller facilities in more rural communities. The
Company is obligated to apply all of the net proceeds of these sales to the
reduction of certain indebtedness of the Company. Therefore, these transactions,
if completed, will not directly provide additional working capital, but they
should reduce the debt burden of the Company and the corresponding interest
expense. In addition, effective July 1, 1997 the Company sold the operations of
its subsidiary, Project Market Decisions. Management had determined
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that this consulting business did not directly add to the renewed focus on
development and operation of assisted living facilities. The operations were
sold for $175,000 of which the Company received $125,000 in cash and the
remainder in a 2 year note receivable.
The Company entered into an agreement on April 30, 1997, with Health Care REIT,
Inc., a real estate investment trust (the "REIT"), for up to $41,800,000 of
financing for assisted living facilities. The initial financing was completed on
July 18, 1997, and involved the sale-leaseback of four assisted living
facilities owned by the Company for an aggregate sale price of $2,700,000. Each
phase of the REIT financing is subject to numerous conditions, including
satisfaction of certain financial coverage tests by the Company. The initial
REIT financing provided the Company with approximately $1,000,000 ($750,000 from
REIT proceeds and the release of a $250,000 of certificate of deposit held as
collateral by the mortgage lender) in additional working capital after the
payment of certain long-term and short-term indebtedness related to the four
facilities sold to the REIT. Financing of a fifth existing facility for a sale
price of $1,300,000 is currently in process. This financing has been delayed due
to certain environmental contamination of groundwater caused by conditions at an
adjoining property. The Company believes, after consultation with counsel, that
it has no liability for the groundwater contamination or the costs of
remediation. The Company anticipates that the REIT sale-leaseback financing of
this facility will proceed as soon as the adjoining landowner, with the
assistance of the Company, obtains a commitment from the State funding program
for the necessary clean-up. The Company anticipates that an additional $750,000
in working capital will be provided from the sale of this facility.
The ultimate financial success of the Company will depend largely upon its
ability to develop or acquire a sufficient number of assisted living facilities
to cover the operating expenses of these facilities and to cover the home office
expenses of the Company. To that end, the Company commenced construction of a
new 42-unit facility on August 4, 1997, and expects to complete that facility in
February 1998, on schedule and within budget (approximately $2,100,000). The
Company has acquired the sites and related permits and approvals for three
additional facilities (42-52 units each). The Company anticipates that
construction of these facilities will commence in November, 1997 and January
1998. The REIT has issued commitment letters for the financing of all three of
these properties, with closings scheduled for November 1997 for two of the new
projects.
The remaining $30,700,000 of REIT funding will be available, subject to
continuing satisfaction of the various financial and other covenants in the
agreement, to fund approximately 15 assisted living facilities in the eastern
United States. The financing commitment expires on May 1, 2000.
As of September 30, 1997, the Company had working capital of approximately
$823,000. Operating losses are expected to continue to occur until additional
facilities are in operation. It is anticipated that existing working capital and
the sale-leaseback of an existing building will fund these losses. The primary
cash needs of the Company relate to start-up costs associated with constructing
and opening new facilities, projected operating losses for those facilities
until they reach a stabilized occupancy and certain corporate office expense
until all facilities are generating sufficient cash flow to cover those
expenses.
The rate at which the Company can develop these sites and future sites will be
directly affected by the continuing availability of the REIT financing and the
Company's ability to generate or raise the cash necessary to finance the
anticipated start-up costs associated with opening new facilities. Among the
financial covenants that must be satisfied by the Company prior to any future
construction financings with the REIT are requirements that the Company fund
cash reserves to cover customary start-up operating losses of the new facility,
obtain a letter of credit amounting to 5% of the development cost, and meet
certain financial covenants specified in the REIT lease agreement. If the
Company is unable to
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raise additional capital, it is unlikely to be able to satisfy these conditions
in the foreseeable future, and thus would be unable to utilize the financing
available from the REIT. Accordingly, the Company anticipates that it will seek
additional equity capital in the next six months in a private placement
transaction or from a strategic partner. There can be no assurances that the
Company will be able to complete an equity financing.
If the Company is unable to develop its various projects in a timely manner, it
will be required to modify or curtail its expansion plans, which would have a
material adverse effect on the Company's ability to continue its operations.
The Company's common stock is traded on NASDAQ and listed under the symbol
"JLHC".
FACTORS AFFECTING FORWARD-LOOKING STATEMENTS
This Form 10-QSB contains forward-looking statements that involve a number of
risks and uncertainties. Among the factors that could cause actual results to
differ materially from those indicated by the forward-looking statement are the
ability of the Company to raise additional equity capital to fund financing and
start up costs associated with opening new facilities, continued compliance with
the financial covenants in the REIT financing commitment described above, the
ability of the Company to attain and maintain high rates of occupancy in its
existing and planned facilities, and the Company's ability to control expense
levels at its existing and planned facilities, and the other risks detailed in
the Company's reports and registration statements filed with the Securities and
Exchange Commission.
10
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGE IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
The following exhibit is filed with this Form 10-QSB:
10.1 Lease Agreement between Health Care REIT, Inc. and
and JLH Series I, Inc. dated July 18, 1997.
10.2 Merger Agreement dated February 14, 1997, among the
Company, JLH Acquisition Corporation and Community
Assisted Living Centers, Inc.
27.1 Financial Data Schedule (for SEC use only).
11
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 14, 1997 Just Like Home, Inc.
(John F. Robenalt)
---------------------------------------------
Chief Executive Officer
(Michael W. Monahan)
---------------------------------------------
Chief Financial Officer (Principal Accounting
Officer and Principal Financial Officer)
12
<PAGE> 1
EXHIBIT 10.1
LEASE AGREEMENT
This Lease Agreement ("Lease" or "Agreement") is made
effective as of the 18th day of July, 1997 (the "Effective Date") between HEALTH
CARE REIT, INC., a corporation organized under the laws of the State of Delaware
("Landlord"), having its principal office located at One SeaGate, Suite 1500,
P.O. Box 1475, Toledo, Ohio 43603, and JLH SERIES I, INC., a Corporation
organized under the laws of the State of Florida ("Tenant"), having its chief
executive office located at 3647 Cortez Road West, Bradenton, Florida 34210.
R E C I T A L S
A. As of the date hereof, Landlord acquired the Leased
Property (defined below) and paid the Acquisition Amount (defined below) towards
the purchase price for the Leased Property. The amount paid by Tenant for the
acquisition costs of the Leased Property shall be considered Tenant's
contribution.
B. Landlord desires to lease the Leased Property to Tenant
and Tenant desires to lease the Leased Property from Landlord upon the terms set
forth in this Lease.
NOW, THEREFORE, Landlord and Tenant agree as follows:
ARTICLE 1: LEASED PROPERTY, TERM AND DEFINITIONS
1.1 Leased Property. Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord the following property:
(a) The land described in Exhibit A attached hereto
(the "Land").
(b) All buildings, structures, and other
improvements, including without limitation, sidewalks, alleys, utility pipes,
conduits, and lines, parking areas, and roadways, now or hereafter situated upon
the Land (the "Improvements").
(c) All easements, rights and other appurtenances
relating to the Land and Improvements (the "Appurtenances").
(d) All permanently affixed equipment, machinery,
fixtures, and other items of real and personal property, including all
components thereof, located in, or used in connection with, and permanently
affixed to or incorporated into the Improvements, including without limitation,
all furnaces, boilers, heaters, electrical equipment, heating, plumbing,
lighting, ventilating,
<PAGE> 2
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").
(e) All machinery, equipment, furniture, furnishings,
movable walls or partitions, computers, trade fixtures, consumable inventory and
supplies, and other personal property used or useful in Tenant's business on the
Leased Property, including without limitation, all items of furniture,
furnishings, equipment, supplies and inventory listed on Exhibit A-1 attached
hereto and the replacements therefor, except items, if any, included within the
definition of Fixtures (collectively the "Personal Property").
SUBJECT, HOWEVER, to all easements, liens, encumbrances,
restrictions, agreements, and other title matters existing as of the date hereof
as listed on Exhibit B attached hereto (the "Permitted Exceptions").
1.2 Term. The initial term ("Initial Term") of this Lease
commences on the Effective Date and expires at 12:00 Midnight Eastern Time on
the tenth anniversary of the Commencement Date (the "Expiration Date");
provided, however, that [i] Tenant has one or more options to renew the Lease
pursuant to Article 12, and [ii] the Initial Term may be extended from time to
time pursuant to Article 23.
1.3 Definitions. Except as otherwise expressly provided, [i]
the terms defined in this section have the meanings assigned to them in this
section 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 as of the time
applicable; and [iii] the words "herein", "hereof", and "hereunder" and similar
words refer to this Lease as a whole and not to any particular section.
"Acquisition Amount" means $2,700,000.00.
"ADA" means the federal statute entitled Americans with
Disabilities Act, 42 U.S.C. Section 12101, et seq.
"Affiliate" means any person, corporation, partnership,
limited liability company, trust, or other legal entity that, directly or
indirectly, controls, or is controlled by, or is under
-2-
<PAGE> 3
common control with Tenant or Guarantor. "Control" (and the correlative meanings
of the terms "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity. "Affiliate" includes,
without limitation, Just Like Home, Inc..
"Affiliate Facility" means each facility leased by Landlord or
any Landlord Affiliate to any Affiliate, whether now or hereafter existing.
"Affiliate Lease" means each lease now or hereafter made
between Landlord or any Landlord Affiliate and any Affiliate, as amended,
modified, extended or renewed from time to time.
"Affiliate Tenant" means each Affiliate that is a tenant under
an Affiliate Lease.
"Annual Financial Statements" means [i] for Tenant, the
audited balance sheet and statement of income for the most recent fiscal year on
an individual facility and consolidated basis; [ii] for the Facility, an audited
Facility Financial Statement for the most recent fiscal year; [iii] for
Guarantor, if Guarantor is or includes a corporation, partnership or limited
liability company, the audited balance sheet and statement of income for the
most recent fiscal year; and [iv] for Guarantor, if Guarantor is or includes an
individual, a current unaudited personal financial statement.
"Base Rent" has the meaning set forth in Section 2.1, as
increased from time to time pursuant to Section 2.2.
"Business Day" means any day other than a Saturday, Sunday, or
national holiday.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
"Closing" means the closing of the purchase of the Leased
Property by Landlord and the lease of the Leased Property to Tenant.
"Commencement Date" means the Effective Date if such date is
the first day of a month, and if it is not, the first day of the first month
following the Effective Date.
"Commitment" means the Commitment letter for the Lease dated
April 10, 1997 and the First Amendment thereto dated April 25, 1997.
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"Effective Date" means the date of this Lease.
"Environmental Laws" means all federal, state, and local laws,
ordinances and policies the purpose of which is to protect human health and the
environment, as amended from time to time, including but not limited to [i]
CERCLA; [ii] the Resource Conservation and Recovery Act; [iii] the Hazardous
Materials Transportation Act; [iv] the Clean Air Act; [v] Clean Water Act; [vi]
the Toxic Substances Control Act; [vii] the Occupational Safety and Health Act;
[viii] the Safe Drinking Water Act; and [ix] analogous state laws and
regulations.
"Event of Default" has the meaning set forth in Section 8.1.
"Expiration Date" has the meaning set forth in Section 1.2.
"Extended Term" has the meaning set forth in Section 12.3(a).
"Facility" means, individually and collectively, the assisted
living facilities known as Just Like Home and located on the Leased Property,
described in Exhibit A-2 attached hereto.
"Facility Financial Statement" means the financial statement
for the Facility which shall include the balance sheet, statement of income,
statement of cash flows, statement of shareholders' equity, occupancy census
data (including payor mix) and a comparison of the actual financial data versus
the Facility's internal budget for the applicable period.
"Facility Uses" means the uses relating to the operation of
the Facility as an assisted living facility with the number of beds per facility
described in Exhibit A-2 attached hereto.
"Financial Statements" means [i] the annual, quarterly and
year to date financial statements of Tenant and Guarantor; and [ii] all
operating statements for the Facility, that were submitted to Landlord prior to
the Effective Date.
"Government Authorizations" means all permits, licenses,
approvals, consents, and authorizations required to comply with all Legal
Requirements, including but not limited to, [i] zoning permits, variances,
exceptions, special use permits, conditional use permits, and consents; [ii] the
permits, licenses, provider agreements and approvals required for licensure and
operation of an assisted living facility certified as a provider under the
federal Medicare and state Medicaid programs; [iii] environmental, ecological,
coastal, wetlands, air, and water permits, licenses, and consents; [iv] curb
cut, subdivision, land use, and planning permits, licenses, approvals and
consents; [v] building, sign, fire, health, and safety permits, licenses,
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approvals, and consents; and [vi] architectural reviews, approvals, and consents
required under restrictive covenants.
"Guarantor" means Just Like Home, Inc.
"Guaranty" means the Unconditional and Continuing Lease
Guaranty entered into by Guarantor to guarantee payment and performance of
Tenant's Obligations and any amendments thereto or substitutions or replacements
therefor.
"Hazardous Materials" means any substance [i] the presence of
which poses a hazard to the health or safety of persons on or about the Land
including but not limited to asbestos containing materials; [ii] which requires
removal or remediation under any Environmental Law, including without limitation
any substance which is toxic, explosive, flammable, radioactive, or otherwise
hazardous; or [iii] which is regulated under or classified under any
Environmental Law as hazardous or toxic including but not limited to any
substance within the meaning of "hazardous substance", "hazardous material",
"hazardous waste", "toxic substance", "regulated substance", "solid waste", or
"pollutant" as defined in any Environmental Law.
"Impositions" has the meaning set forth in Section 3.2.
"Increaser Rate" means 25 basis points per year for the
Initial Term and 25 basis points per year for the Renewal Term.
"Initial Term" has the meaning set forth in Section 1.2.
"Issuer" means a financial institution satisfactory to
Landlord issuing the Letter of Credit and such Issuer's successors and assigns.
Any "Issuer" shall have a Lace Financial Service Rating of "C+" or higher at all
times throughout the Term.
"Landlord Affiliate" means any person, corporation,
partnership, limited liability company, trust, or other legal entity that,
directly or indirectly, controls, or is controlled by, or is under common
control with Landlord. "Control" (and the correlative meanings of the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such entity. "Landlord Affiliate" includes, without limitation,
HCRI Texas Properties, Ltd., HCRI Pennsylvania Properties, Inc., and HCRI Nevada
Properties, Inc.
"Lease Advance" means [i] the first Lease Advance by Landlord
in the Acquisition Amount; or [ii] any other advance of funds by Landlord to
Tenant pursuant to the term of this Lease.
"Lease Advance Amount" means the amount of any Lease
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Advance. The Acquisition Amount is the first Lease Advance Amount.
"Lease Advance Date" means the date on which Landlord makes a
Lease Advance.
"Lease Amount" is an aggregate concept and means the sum of
the Lease Advance Amounts outstanding at the applicable time.
"Lease Payments" means the sum of the Base Rent payments (as
increased from time to time) for the applicable period.
"Lease Rate" means the annual rate used to determine Base Rent
for each Lease Advance. The Lease Rate is the sum of the applicable Rate Index
plus the applicable Rate Spread, computed using the 365/360 method. The Lease
Rate includes any accrued Increaser Rate.
"Lease Year" means each consecutive period of 365 or 366 days
throughout the Term. The first Lease Year commences on the Commencement Date and
expires on the day before the first anniversary of the Commencement Date.
"Leased Property" means, collectively, the Land, Improvements,
Appurtenances, Fixtures and Personal Property.
"Legal Requirements" means all laws, regulations, rules,
orders, writs, injunctions, decrees, certificates, requirements, agreements,
conditions of participation and standards of any federal, state, county,
municipal or other governmental entity, administrative agency, insurance
underwriting board, architectural control board, private third-party payor,
accreditation organization, or any restrictive covenants applicable to the
development, construction, condition and operation of the Facility by Tenant,
including but not limited to, [i] zoning, building, fire, health, safety, sign,
and subdivision regulations and codes; [ii] certificate of need laws (if
applicable); [iii] licensure to operate as an assisted living facility; [iv]
Medicare and Medicaid certification requirements (if applicable); [v] the ADA;
[vi] any Environmental Laws; and [vii] requirements, conditions and standards
for participation in third-party payor insurance programs.
"Letter of Credit" means an irrevocable and transferable
Letter of Credit in an amount equal to 5% of the Lease Amount, issued by Issuer
in favor of Landlord as security for the Lease and in form acceptable to
Landlord, and any amendments thereto or replacements or substitutions therefor.
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"Manager" means Just Like Home, Inc., a corporation organized
under the laws of the State of Florida.
"Material Obligation" means [i] any indebtedness secured by a
security interest in or a lien, deed of trust or mortgage on any of the Leased
Property (or any part thereof, including any Personal Property) and any
agreement relating thereto; [ii] any obligation or agreement that is material to
the construction or operation of the Facility or that is material to Tenant's
business or financial condition; [iii] any indebtedness or capital lease of
Tenant that has an outstanding principal balance of at least $50,000.00 and any
agreement relating thereto; [iv] any obligation to or agreement with the Issuer
relating to the Letter of Credit; and [v] any sublease of the Leased Property.
"Overdue Rate" has the meaning set forth in Section 8.6.
"Periodic Financial Statements" means [i] for Tenant, the
unaudited balance sheet and statement of income of Tenant for the most recent
quarter; [ii] for the Facility, the unaudited Facility Financial Statement for
the most recent month; [iii] for Guarantor, if Guarantor is or includes a
corporation, partnership, or limited liability company, the unaudited balance
sheet and statement of income of Guarantor for the most recent quarter; and [iv]
for Guarantor, if Guarantor is or includes an individual, a current unaudited
personal financial statement.
"Permitted Exceptions" means the exceptions to title set forth
on Exhibit B.
"Permitted Liens" means [i] liens granted to Landlord; [ii]
liens customarily incurred by Tenant in the ordinary course of business for
items not delinquent including construction liens and deposits and charges under
worker's compensation laws; [iii] liens for taxes and assessments not yet due
and payable; [iv] any lien, charge, or encumbrance which is being contested in
good faith pursuant to this Agreement; [v] the Permitted Exceptions; and [vi]
purchase money financing and capitalized equipment leases for the acquisition of
personal property provided, however, that Landlord obtains a nondisturbance
agreement from the purchase money lender or equipment lessor (substantially in
the form of Exhibit H attached hereto) if the original cost of the equipment
exceeds $50,000.00.
"Pro Forma Statement" means a financial forecast for the
Facility for the next 5 year period prepared in accordance with the standards
for forecasts established by the American Institute of Certified Public
Accountants.
"Rate Determination Date" means the date on which the value
for the Rate Index is established for computing any Lease
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Rate. For any Lease Advances made during the Initial Term or the Renewal Term,
the Rate Determination Date is the Lease Advance Date.
"Rate Index" means the yield quoted in the Wall Street Journal
on the applicable Rate Determination Date for the most actively traded United
States Treasury Notes having the nearest equivalent maturity date to the
Expiration Date or the expiration date for the current Renewal Term, as
applicable. For any Lease Advance other than the first Lease Advance, the yield
shall be computed based upon the remainder of the Initial Term or Renewal Term,
as applicable.
"Rate Spread" means the rate spread from time to time used to
calculate the Lease Rate applicable to any Lease Advance. The Rate Spread is 390
basis points for the Initial Term and the Renewal Term (for any additional Lease
Advance made during the Renewal Term).
"Receivables" means [i] all of Tenant's rights to receive
payment for providing resident care and services as set forth in any accounts,
contract rights, and instruments, and [ii] those documents, chattel paper,
inventory proceeds, provider agreements, participation agreements, ledger
sheets, files, records, computer programs, tapes, and agreements relating to
Tenant's rights to receive payment for providing resident care services.
"Renewal Date" means the first day of the Renewal Term.
"Renewal Option" has the meaning set forth in Section 12.1.
"Renewal Rate" means the Lease Rate established for the
Renewal Date pursuant to Section 12.2(c).
"Renewal Term" has the meaning set forth in Section 12.1.
"Rent" has the meaning set forth in Section 2.3.
"Seller" means JLH Series I, Inc., a corporation organized
under the laws of the State of Florida.
"State" means the State of Florida.
"Tenant's Obligations" means all payment and performance
obligations of Tenant under this Lease and all documents executed by Tenant in
connection with this Lease.
"Tenant's Organizational Documents" means [i] for a corporate
Tenant, the Articles of Incorporation of Tenant certified by the Secretary of
State of the state of organization,
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as amended to date, and the Bylaws of Tenant certified by Tenant, as amended to
date; [ii] for a partnership Tenant, the Partnership Agreement of Tenant
certified by Tenant, as amended to date and the Partnership Certificate,
certified by the appropriate authority, as amended to date; and [iii] for a
limited liability Tenant, the Articles of Organization of Tenant certified by
the Secretary of State of the state of organization, as amended to date and the
Operating Agreement of Tenant certified by Tenant, as amended to date.
"Term" means the Initial Term and the Renewal Term.
ARTICLE 2: RENT
2.1 Base Rent. Tenant shall pay Landlord base rent ("Base
Rent") in advance in consecutive monthly installments payable on the first day
of each month during the Term commencing on the Commencement Date. If the
Effective Date is not the first day of a month, Tenant shall pay Landlord Base
Rent on the Effective Date for the partial month, i.e. for the period commencing
on the Effective Date and ending on the day before the Commencement Date. The
Base Rent for the Initial Term will be computed monthly and will be equal to
1/12th of the sum of the products of each Lease Advance times the Lease Rate for
each Lease Advance. The Base Rent for the Renewal Term will be computed in
accordance with Section 12.2.
2.2 Increase of Lease Rate and Base Rent. Commencing on the
first anniversary of the Commencement Date and on each anniversary thereafter
throughout the Term (including the Renewal Term and Extended Term), the Lease
Rate will increase by the applicable Increaser Rate. On each date that the Lease
Rate is increased, the Base Rent will be increased accordingly and will be equal
to 1/12th of the sum of the products of each Lease Advance times the Lease Rate
(including the applicable Increaser Rate) for each Lease Advance.
2.3 Additional Rent. In addition to Base Rent, Tenant shall
pay all other amounts, liabilities, obligations and Impositions which Tenant
assumes or agrees to pay under this Lease and any fine, penalty, interest,
charge and cost which may be added for nonpayment or late payment of such items
(collectively the "Additional Rent"). The Base Rent and Additional Rent are
hereinafter referred to as "Rent". Landlord shall have all legal, equitable and
contractual rights, powers and remedies provided either in this Lease or by
statute or otherwise in the case of nonpayment of the Rent.
2.4 Place of Payment of Rent. Tenant shall make all
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payments of Rent at the Landlord's address set forth in the first paragraph of
this Lease or at such other place as Landlord may designate from time to time.
2.5 Net Lease. This Lease shall be deemed and construed to be
an "absolute net lease", and Tenant shall pay all Rent and other charges and
expenses in connection with the Leased Property throughout the Term, without
abatement, deduction or set-off.
2.6 No Termination, Abatement, Etc. Except as otherwise
specifically provided in this Lease, Tenant shall remain bound by this Lease in
accordance with its terms. Tenant shall not, without the consent of Landlord,
modify, surrender or terminate the Lease, nor seek nor be entitled to any
abatement, deduction, deferment or reduction of Rent, or set-off against the
Rent. Except as expressly provided in this Lease, the obligations of Landlord
and Tenant shall not be affected by reason of [i] any damage to, or destruction
of, the Leased Property or any part thereof from whatever cause or any Taking
(as hereinafter defined) of the Leased Property or any part thereof; [ii] the
lawful or unlawful prohibition of, or restriction upon, Tenant's use of the
Leased Property, or any part thereof, the interference with such use by any
person, corporation, partnership or other entity, or by reason of eviction by
paramount title; [iii] any claim which Tenant has or might have against Landlord
or by reason of any default or breach of any warranty by Landlord under this
Lease or any other agreement between Landlord and Tenant, or to which Landlord
and Tenant are parties; [iv] any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceeding affecting Landlord or any assignee or transferee of Landlord; or [v]
any other cause, whether similar or dissimilar to any of the foregoing, other
than a discharge of Tenant from any such obligations as a matter of law. Except
as otherwise specifically provided in this Lease, Tenant hereby specifically
waives all rights, arising from any occurrence whatsoever, which may now or
hereafter be conferred upon it by law [a] to modify, surrender or terminate this
Lease or quit or surrender the Leased Property or any portion thereof; or [b]
entitling Tenant to any abatement, reduction, suspension or deferment of the
Rent or other sums payable by Tenant hereunder. The obligations of Landlord and
Tenant hereunder shall be separate and independent covenants and agreements and
the Rent and all other sums payable by Tenant hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease or by termination of this Lease
other than by reason of an Event of Default.
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2.7 Computational Method. Landlord and Tenant acknowledge that
all rates under this Lease will be computed based on the actual number of days
elapsed over a 360-day year (365/360 method).
2.8 Commitment Fee. On the Effective Date, Tenant shall pay a
commitment fee to Landlord in an amount equal to 1% of the Acquisition Amount.
2.9 Working Capital Escrow. [RESERVED]
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ARTICLE 3: IMPOSITIONS AND UTILITIES
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3.1 Payment of Impositions. Tenant shall pay, as Additional
Rent, all Impositions that may be levied or become a lien on the Leased Property
or any part thereof at any time (whether prior to or during the Term), without
regard to prior ownership of said Leased Property, before any fine, penalty,
interest, or cost is incurred; provided, however, Tenant may contest any
Imposition in accordance with Section 3.7. Tenant shall deliver to Landlord [i]
not more than 5 days after the due date of each Imposition, copies of the
invoice for such Imposition and the check delivered for payment thereof; and
[ii] not more than 30 days after the due date of each Imposition, a copy of the
official receipt evidencing such payment or other proof of payment satisfactory
to Landlord. Tenant'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. Tenant, at its expense, shall prepare and file all
tax returns and reports in respect of any Imposition as may be required by
governmental authorities. Tenant shall be entitled to any refund due from any
taxing authority if no Event of Default shall have occurred hereunder and be
continuing. Landlord shall be entitled to any refund from any taxing authority
if an Event of Default has occurred and is continuing. Any refunds retained by
Landlord due to an Event of Default shall be applied as provided in Section 8.8.
Landlord and Tenant 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 governmental authorities classify any property covered by this Lease as
personal property, Tenant shall file all personal property tax returns in such
jurisdictions where it may legally so file. Landlord, to the extent it possesses
the same, and Tenant, 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
Landlord is legally required to file personal property tax returns, Tenant will
be provided with copies of assessment notices indicating a value in excess of
the reported value in sufficient time for Tenant to file a protest. Tenant may,
upon notice to Landlord, at Tenant's option and at Tenant's sole cost and
expense, protest, appeal, or institute such other proceedings as Tenant may deem
appropriate to effect a reduction of real estate or personal property
assessments and Landlord, at Tenant's expense as aforesaid, shall fully
cooperate with Tenant in such protest, appeal, or other action, and grant to
Tenant a limited power of attorney as is reasonable and necessary for the
purposes of such protest, appeal or other action. Tenant shall reimburse
Landlord for all personal property taxes paid by Landlord within 30 days after
receipt of billings accompanied by copies of a bill therefor and payments
thereof which identify the personal property with respect to which such payments
are made. Impositions imposed in
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respect to the tax-fiscal period during which the Term terminates shall be
adjusted and prorated between Landlord and Tenant, whether or not such
Imposition is imposed before or after such termination, and Tenant's obligation
to pay its prorated share thereof shall survive such termination.
3.2 Definition of Impositions. "Impositions" means,
collectively, [i] taxes (including without limitation, all capital stock and
franchise taxes of Landlord imposed by the State or any governmental entity in
the State due to this lease transaction or Landlord's ownership of the Leased
Property and the income arising therefrom, or due to Landlord being considered
as doing business in the State because of Landlord's ownership of the Leased
Property or lease thereof to Tenant), all real estate and personal property ad
valorem, sales and use, business or occupation, single business, gross receipts,
transaction privilege, rent or similar taxes; [ii] 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 with the Term); [iii] ground rents, water, sewer or other rents and
charges, excises, tax levies, and fees (including without limitation, license,
permit, inspection, authorization and similar fees); [iv] all taxes imposed on
Tenant's operations of the Leased Property, including without limitation,
employee withholding taxes, income taxes and intangible taxes; [v] all taxes
imposed by the State or any governmental entity in the State with respect to the
conveyance of the Leased Property by Landlord to Tenant or Tenant's designee,
including without limitation, conveyance taxes and capital gains taxes; and [vi]
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 any part thereof and/or the Rent (including
all interest and penalties thereon due to any failure in payment by Tenant),
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] Landlord or
Landlord's interest in the Leased Property or any part thereof; [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, or
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. Tenant shall
not, however, be required to pay any tax based on net income (whether
denominated as a franchise or capital stock or other tax) imposed on Landlord by
any governmental entity other than as described in clause [i] above.
3.3 Escrow of Impositions. If an Event of Default occurs and
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while it remains uncured, Tenant shall, at Landlord's election, deposit with
Landlord on the first day of each month a sum equal to 1/12th of the Impositions
assessed against the Leased Property for the preceding tax year, which sums
shall be used by Landlord toward payment of such Impositions. Tenant, on demand,
shall pay to Landlord any additional funds necessary to pay and discharge the
obligations of Tenant pursuant to the provisions of this section. The receipt by
Landlord of the payment of such Impositions by and from Tenant shall only be as
an accommodation to Tenant, the mortgagees, and the taxing authorities, and
shall not be construed as rent or income to Landlord, Landlord serving, if at
all, only as a conduit for delivery purposes.
3.4 Utilities. Tenant shall pay, as Additional Rent, all
taxes, assessments, charges, deposits, and bills for utilities, including
without limitation charges for water, gas, oil, sanitary and storm sewer,
electricity, telephone service, and trash collection, which may be charged
against the occupant of the Improvements during the Term. If an Event of Default
occurs and while it remains uncured, Tenant shall, at Landlord's election,
deposit with Landlord on the first day of each month a sum equal to 1/12th of
the amount of the annual utility expenses for the preceding Lease Year, which
sums shall be used by Landlord to pay such utilities. Tenant shall, on demand,
pay to Landlord any additional amount needed to pay such utilities. Landlord's
receipt of such payments shall only be an accommodation to Tenant and the
utility companies and shall not constitute rent or income to Landlord. Tenant
shall at all times maintain that amount of heat necessary to ensure against the
freezing of water lines. Tenant hereby agrees to indemnify and hold Landlord
harmless from and against any liability or damages to the utility systems and
the Leased Property that may result from Tenant's failure to maintain sufficient
heat in the Improvements.
3.5 Discontinuance of Utilities. Landlord will not be liable
for damages to person or property or for injury to, or interruption of, business
for any discontinuance of utilities nor will such discontinuance in any way be
construed as an eviction of Tenant or cause an abatement of rent or operate to
release Tenant from any of Tenant's obligations under this Lease.
3.6 Business Expenses. Tenant shall promptly pay all expenses
and costs incurred in connection with the operation of the Facility on the
Leased Property, including without limitation, employee benefits, employee
vacation and sick pay, consulting fees, and expenses for inventory and supplies.
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3.7 Permitted Contests. Tenant, on its own or on Landlord's
behalf (or in Landlord's name), but at Tenant's expense, may contest, by
appropriate legal proceedings conducted in good faith and with due diligence,
the amount or validity or application, in whole or in part, of any Imposition or
any Legal Requirement or insurance requirement or any lien, attachment, levy,
encumbrance, charge or claim provided that [i] 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 Landlord and from the Leased Property; [ii] 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; [iii] in
the case of a Legal Requirement, Landlord would not be in any immediate danger
of civil or criminal liability for failure to comply therewith pending the
outcome of such proceedings; [iv] in the event that any such contest shall
involve a sum of money or potential loss in excess of $50,000.00, Tenant shall
deliver to Landlord and its counsel an opinion of Tenant's counsel to the effect
set forth in clauses [i], [ii] and [iii], to the extent applicable; [v] in the
case of a Legal Requirement and/or an Imposition, lien, encumbrance or charge,
Tenant shall give such reasonable security as may be demanded by Landlord to
insure ultimate payment of the same and to prevent any sale or forfeiture of the
affected Leased Property or the Rent by reason of such nonpayment or
noncompliance; provided, however, the provisions of this section shall not be
construed to permit Tenant to contest the payment of Rent (except as to contests
concerning the method of computation or the basis of levy of any Imposition or
the basis for the assertion of any other claim) or any other sums payable by
Tenant to Landlord hereunder; [vi] in the case of an insurance requirement, the
coverage required by Article 4 shall be maintained; and [vii] if such contest be
finally resolved against Landlord or Tenant, Tenant shall, as Additional Rent
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. Landlord, at Tenant's expense, shall
execute and deliver to Tenant such authorizations, limited powers of attorney
and other documents as may be reasonably required in any such contest, and, if
reasonably requested by Tenant or if Landlord so desires, Landlord shall join as
a party therein. Tenant hereby agrees to indemnify and save Landlord harmless
from and against any liability, cost or expense of any kind that may be imposed
upon Landlord in connection with any such contest and any loss resulting
therefrom.
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ARTICLE 4: INSURANCE
4.1 Property Insurance. At Tenant's expense, Tenant shall
maintain in full force and effect a property insurance policy or policies
insuring the Leased Property against the following:
(a) Loss or damage commonly covered by a "Special
Form" policy insuring against physical loss or damage to the Improvements and
Personal Property, including but not limited to, risk of loss from fire and
other hazards, collapse, transit coverage, vandalism, malicious mischief, theft,
earthquake (if the Leased Property is in earthquake zone 1 or 2) and sinkholes
(if usually recommended in the area of the Leased Property). The policy shall be
in the amount of the full replacement value (as defined in Section 4.5) of the
Improvements and Personal Property and shall contain a deductible amount
acceptable to Landlord. Landlord shall be named as an additional insured. The
policy shall include a stipulated value endorsement or agreed amount endorsement
and endorsements for contingent liability for operations of building laws,
demolition costs, and increased cost of construction.
(b) If applicable, loss or damage by explosion of
steam boilers, pressure vessels, or similar apparatus, now or hereafter
installed on the Leased Property, in commercially reasonable amounts acceptable
to Landlord.
(c) Consequential loss of rents and income coverage
insuring against all "Special Form" risk of physical loss or damage with limits
and deductible amounts acceptable to Landlord covering risk of loss during the
first 9 months of reconstruction, and containing an endorsement for extended
period of indemnity of at least 6 months, and shall be written with a stipulated
amount of coverage if available at a reasonable premium.
(d) If the Leased Property is located, in whole or in
part, in a federally designated 100-year flood plain area, flood insurance for
the Improvements in an amount equal to the lesser of [i] the full replacement
value of the Improvements; or [ii] the maximum amount of insurance available for
the Improvements under all federal and private flood insurance programs.
(e) Loss or damage caused by the breakage of plate
glass in commercially reasonable amounts acceptable to Landlord.
(f) Loss or damage commonly covered by blanket crime
insurance including employee dishonesty, loss of money
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orders or paper currency, depositor's forgery, and loss of property of patients
accepted by Tenant for safekeeping, in commercially reasonable amounts
acceptable to the Landlord.
4.2 Liability Insurance4.2 Liability Insurance. At Tenant's
expense, Tenant shall maintain liability insurance against the following:
(a) Claims for personal injury or property damage
commonly covered by comprehensive general liability insurance with endorsements
for incidental malpractice, contractual, personal injury, owner's protective
liability, voluntary medical payments, products and completed operations, broad
form property damage, and extended bodily injury, with commercially reasonable
amounts for bodily injury, property damage, and voluntary medical payments
acceptable to Landlord, but with a combined single limit of not less than
$5,000,000.00 per occurrence.
(b) Claims for personal injury and property damage
commonly covered by comprehensive automobile liability insurance, covering all
owned and non-owned automobiles, with commercially reasonable amounts for bodily
injury, property damage, and for automobile medical payments acceptable to
Landlord, but with a combined single limit of not less than $5,000,000.00 per
occurrence.
(c) Claims for personal injury commonly covered by
medical malpractice insurance in commercially reasonable amounts acceptable to
Landlord.
(d) Claims commonly covered by worker's compensation
insurance for all persons employed by Tenant on the Leased Property. Such
worker's compensation insurance shall be in accordance with the requirements of
all applicable local, state, and federal law.
4.3 Builder's Risk Insurance. In connection with any
construction (which does not constitute a nonstructural renovation), Tenant
shall maintain in full force and effect a builder's completed value risk policy
("Builder's Risk Policy") of insurance in a nonreporting form insuring against
all "Special Form" risk of physical loss or damage to the Improvements,
including but not limited to, risk of loss from fire and other hazards,
collapse, transit coverage, vandalism, malicious mischief, theft, earthquake (if
Leased Property is in earthquake zone 1 or 2) and sinkholes (if usually
recommended in the area of the Leased Property). The Builder's Risk Policy shall
include endorsements providing coverage for building materials and supplies and
temporary premises. The Builder's Risk Policy shall be in the amount of the full
replacement value of the Improvements
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and shall contain a deductible amount acceptable to Landlord. Landlord shall be
named as an additional insured. The Builder's Risk Policy shall include an
endorsement permitting initial occupancy.
4.4 Insurance Requirements. The following provisions shall
apply to all insurance coverages required hereunder:
(a) The form and substance of all policies shall be
subject to the approval of Landlord, which approval will not be unreasonably
withheld.
(b) The carriers of all policies shall have a Best's
Rating of "A" or better and a Best's Financial Category of X or higher and shall
be authorized to do insurance business in the State.
(c) Tenant shall be the "named insured" and Landlord
shall be an "additional insured" on each liability policy, excluding any policy
of workers compensation. On all property and casualty policies, Landlord and
Tenant shall be joint loss payees.
(d) Tenant shall deliver to Landlord certificates or
policies showing the required coverages and endorsements. The policies of
insurance shall provide that the policy may not be cancelled or not renewed, and
no material change or reduction in coverage may be made, without at least 30
days' prior written notice to Landlord.
(e) The policies shall contain a severability of
interest and/or cross-liability endorsement, provide that the acts or omissions
of Tenant or Landlord will not invalidate the coverage of the other party, and
provide that Landlord shall [i] not be responsible for payment of premiums; and
[ii] receive at least 30 days prior written notice of cancellation.
(f) All loss adjustment shall require the written
consent of Landlord and Tenant, as their interests may appear.
(g) At least 30 days prior to the expiration of each
policy, Tenant shall deliver to Landlord a certificate showing renewal of such
policy and payment of the annual premium therefor.
4.5 Replacement Value. The term "full replacement value" means
the actual replacement cost thereof from time to time including increased cost
of construction endorsement, with no reductions or deductions. Tenant shall, in
connection with each annual policy
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renewal, deliver to Landlord a redetermination of the full replacement value by
the insurer or an endorsement indicating that the Leased Property is insured for
its full replacement value. If Tenant makes any Permitted Alterations (as
hereinafter defined) to the Leased Property, Landlord may have such full
replacement value redetermined at any time after such Permitted Alterations are
made, regardless of when the full replacement value was last determined.
4.6 Blanket Policy. Notwithstanding anything to the contrary
contained in this section, Tenant may carry the insurance required by this
Article under a blanket policy of insurance, provided that the coverage afforded
Tenant will not be reduced or diminished or otherwise be different from that
which would exist under a separate policy meeting all of the requirements of
this Lease.
4.7 No Separate Insurance. Tenant shall not take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article, 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 Landlord and any mortgagees, are included therein as additional
insureds or loss payees, the loss is payable under said insurance in the same
manner as losses are payable under this Lease, and such additional insurance is
not prohibited by the existing policies of insurance. Tenant shall immediately
notify Landlord of the taking out of such separate insurance or the increasing
of any of the amounts of the existing insurance by securing an additional policy
or additional policies.
4.8 Waiver of Subrogation. Each party hereto hereby waives any
and every claim which arises or may arise in its favor and against the other
party hereto during the Term for any and all loss of, or damage to, any of its
property located within or upon, or constituting a part of, the Leased Property,
which loss or damage is covered by valid and collectible insurance policies, to
the extent that such loss or damage is recoverable under such policies. Said
mutual waiver shall be in addition to, and not in limitation or derogation of,
any other waiver or release contained in this Lease with respect to any loss or
damage to property of the parties hereto. Inasmuch as the said waivers will
preclude the assignment of any aforesaid claim by way of subrogation (or
otherwise) to an insurance company (or any other person), each party hereto
agrees immediately to give each insurance company which has issued to it
policies of insurance, written notice of the terms of said mutual waivers, and
to have such insurance policies properly endorsed, if necessary, to prevent the
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invalidation of said insurance coverage by reason of said waivers, so long as
such endorsement is available at a reasonable cost.
4.9 Mortgages. The following provisions shall apply if
Landlord now or hereafter places a mortgage on the Leased Property or any part
thereof: [i] Tenant shall obtain a standard form of lender's loss payable clause
insuring the interest of the mortgagee; [ii] Tenant shall deliver evidence of
insurance to such mortgagee; [iii] loss adjustment shall require the consent of
the mortgagee; and [iv] Tenant shall provide such other information and
documents as may be required by the mortgagee.
4.10 Escrows. After an Event of Default occurs hereunder,
Tenant shall make such periodic payments of insurance premiums in accordance
with Landlord's requirements after receipt of notice thereof from Landlord.
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ARTICLE 5: INDEMNITY
5.1 Tenant's Indemnification. Tenant hereby indemnifies and
agrees to hold harmless Landlord, any successors or assigns of Landlord, and
Landlord's and such successor's and assign's directors, officers, employees and
agents from and against any and all demands, claims, causes of action, fines,
penalties, damages (including consequential damages), losses, liabilities
(including strict liability), judgments, and expenses (including, without
limitation, reasonable attorneys' fees, court costs, and the costs set forth in
Section 8.7) incurred in connection with or arising from: [i] the use or
occupancy of the Leased Property by Tenant or any persons claiming under Tenant;
[ii] any activity, work, or thing done, or permitted or suffered by Tenant in or
about the Leased Property; [iii] any acts, omissions, or negligence of Tenant or
any person claiming under Tenant, or the contractors, agents, employees,
invitees, or visitors of Tenant or any such person; [iv] any breach, violation,
or nonperformance by Tenant or any person claiming under Tenant or the
employees, agents, contractors, invitees, or visitors of Tenant or of any such
person, of any term, covenant, or provision of this Lease or any law, ordinance,
or governmental requirement of any kind including, without limitation, any
failure to comply with any applicable requirements under the ADA; [v] any injury
or damage to the person, property or business of Tenant, its employees, agents,
contractors, invitees, visitors, or any other person entering upon the Leased
Property; and [vi] any construction, alterations, changes or demolition of the
Facility performed by or contracted for Tenant or its employees, agents or
contractors. If any action or proceeding is brought against Landlord, its
employees, or agents by reason of any such claim, Tenant, upon notice from
Landlord, will defend the claim at Tenant's expense with counsel reasonably
satisfactory to Landlord. Landlord and Tenant shall jointly approve or
disapprove any settlement offer in an amount of $500,000 or more made or
accepted in connection with any such action, suit or proceeding. Tenant may
solely approve or disapprove a settlement offer in an amount less than $500,000
made or accepted in connection with any such action, suit or proceeding. All
amounts payable to Landlord under this section shall be payable on written
demand and any such amounts which are not paid within 10 days after demand
therefor by Landlord shall bear interest at the Overdue Rate. In case any
action, suit or proceeding is brought against Tenant by reason of any such
occurrence, Tenant shall use its best efforts to defend such action, suit or
proceeding. Tenant's indemnity under this section does not include tortiously
intentional acts or gross negligence of Landlord.
5.1.1 Notice of Claim. Landlord shall notify Tenant in writing
of any claim or action brought against Landlord
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in which indemnity may be sought against Tenant pursuant to this section. Such
notice shall be given in sufficient time to allow Tenant to defend or
participate in such claim or action, but the failure to give such notice in
sufficient time shall not constitute a defense hereunder nor in any way impair
the obligations of Tenant under this section unless the failure to give such
notice precludes Tenant's defense of any such action.
5.1.2 Survival of Covenants. The covenants of Tenant contained
in this section shall remain in full force and effect after the termination of
this Agreement until the expiration of the period stated in the applicable
statute of limitations during which a claim or cause of action may be brought
and payment in full or the satisfaction of such claim or cause of action and of
all expenses and charges incurred by Landlord relating to the enforcement of the
provisions herein specified.
5.1.3 Reimbursement of Expenses. Unless prohibited by law,
Tenant hereby agrees to pay to Landlord all of the reasonable fees, charges and
reasonable out-of-pocket expenses related to the Facility and required hereby,
or incurred by Landlord in enforcing the provisions of this Agreement.
5.2 Environmental Indemnity; Audits5.2 Environmental
Indemnity; Audits.
5.2.1 Indemnification. Tenant hereby indemnifies and agrees to
hold harmless Landlord, any successors to Landlord's interest in this Lease, and
Landlord's and such successors' directors, officers, employees and agents from
and against any losses, claims, damages (including consequential damages),
penalties, fines, liabilities (including strict liability), costs (including
cleanup and recovery costs), and expenses (including expenses of litigation and
reasonable consultants' and attorneys' fees) incurred by Landlord or any other
indemnitee or assessed against the Leased Property by virtue of any claim or
lien by any governmental or quasi-governmental unit, body, or agency, or any
third party, for cleanup costs or other costs pursuant to any Environmental Law.
Tenant's indemnity shall survive the termination of this Lease. Provided,
however, Tenant shall have no indemnity obligation with respect to [i] Hazardous
Materials first introduced to the Leased Property subsequent to the date that
Tenant's occupancy of the Leased Property shall have fully terminated; or [ii]
Hazardous Materials introduced to the Leased Property by Landlord, its agent,
employees, successors or assigns. If at any time during the Term of this Lease
any governmental authority notifies Landlord or Tenant of a violation of any
Environmental Law or Landlord has good cause to believe that a Facility may
violate any Environmental Law, Landlord may require an environmental audit of
the Leased Premises, (and such further action as may be indicated by such
environmental audit) in such
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form, scope and substance as specified by Landlord, at Tenant's expense. Tenant
shall, within 30 days after receipt of an invoice from Landlord, reimburse
Landlord for all costs and expenses incurred in reviewing any environmental
audit, including without limitation, reasonable attorneys' fees and costs.
5.3 Limitation of Landlord's Liability. Landlord, its agents,
and employees, will not be liable for any loss, injury, death, or damage
(including consequential damages) to persons, property, or Tenant's business
occasioned by theft, act of God, public enemy, injunction, riot, strike,
insurrection, war, court order, requisition, order of governmental body or
authority, fire, explosion, falling objects, steam, water, rain or snow, leak or
flow of water (including water from the elevator system), rain or snow from the
Leased Property or into the Leased Property or from the roof, street, subsurface
or from any other place, or by dampness or from the breakage, leakage,
obstruction, or other defects of the pipes, sprinklers, wires, appliances,
plumbing, air conditioning, or lighting fixtures of the Leased Property, or from
construction, repair, or alteration of the Leased Property or from any acts or
omissions of any other occupant or visitor of the Leased Property, or from any
other cause beyond Landlord's control.
ARTICLE 6: USE AND ACCEPTANCE OF PREMISES
6.1 Use of Leased Property. Tenant shall use and occupy the
Leased Property exclusively for the Facility Uses and for all lawful and
licensed ancillary uses, and for no other purpose without the prior written
consent of the Landlord. Tenant shall obtain and maintain all approvals,
licenses, and consents needed to use and operate the Leased Property as herein
permitted. Tenant shall deliver to Landlord complete copies of surveys,
examinations, certification and licensure inspections, compliance certificates,
and other similar reports issued to Tenant by any governmental agency within 10
days after Tenant's receipt of each item.
6.2 Acceptance of Leased Property. Tenant acknowledges that
[i] Tenant and its agents have had an opportunity to inspect the Leased
Property; [ii] Tenant has found the Leased Property fit for Tenant's use; [iii]
Landlord will deliver the Leased Property to Tenant in "as-is" condition; [iv]
Landlord is not obligated to make any improvements or repairs to the Leased
Property; and [v] the roof, walls, foundation, heating, ventilating, air
conditioning, telephone, sewer, electrical, mechanical, elevator, utility,
plumbing, and other
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portions of the Leased Property are in good working order. Tenant waives any
claim or action against Landlord with respect to the condition of the Leased
Property. LANDLORD 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 QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
6.3 Conditions of Use and Occupancy. Tenant agrees that during
the Term it shall use and keep the Leased Property in a careful, safe and proper
manner; not commit or suffer waste thereon; not use or occupy the Leased
Property for any unlawful purposes; not use or occupy the Leased Property or
permit the same to be used or occupied, for any purpose or business deemed
extrahazardous on account of fire or otherwise; keep the Leased Property in such
repair and condition as may be required by the Board of Health, or other city,
state or federal authorities, free of all cost to Landlord; not permit any acts
to be done which will cause the cancellation, invalidation, or suspension of any
insurance policy; and permit Landlord and its agents to enter upon the Leased
Property at all reasonable times to examine the condition thereof.
ARTICLE 7: REPAIRS AND MECHANICS' LIENS
7.1 Maintenance. Tenant shall maintain, repair, and replace
the Leased Property, including without limitation, all structural and
nonstructural repairs and replacements to the roof, foundations, exterior walls,
parking areas, sidewalks, water, sewer, and gas connections, pipes, and mains.
Tenant shall pay, as Additional Rent, the full cost of maintenance, repairs, and
replacements. Tenant shall maintain all drives, sidewalks, parking areas, and
lawns on or about the Leased Property in a clean and orderly condition, free of
accumulations of dirt, rubbish, snow and ice. Tenant shall permit Landlord to
inspect the Leased Property at all reasonable times, and shall consider in good
faith all reasonable suggestions of the Landlord as to the maintenance and
replacement of the Leased Property.
7.2 Required Alterations. Tenant shall, at Tenant's sole cost
and expense, make any additions, changes, improvements or alterations to the
Leased Property, including structural alterations, which may be required by any
governmental authorities, including those required to maintain licensure or
certification under the Medicare and Medicaid programs (if so certified),
whether such changes are required by Tenant's use,
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changes in the law, ordinances, or governmental regulations, defects existing as
of the date of this Lease, or any other cause whatever. All such additions,
changes, improvements or alterations shall be deemed to be Permitted Alterations
and shall comply with all laws requiring such alterations and with the
provisions of Section 16.4.
7.3 Construction Liens. Tenant shall have no authority to
permit or create a lien against Landlord's interest in the Leased Property, and
Tenant shall post notices or file such documents as may be required to protect
Landlord's interest in the Leased Property against liens. Tenant hereby agrees
to defend, indemnify, and hold Landlord harmless from and against any
construction liens against the Leased Property by reason of work, labor,
services or materials supplied or claimed to have been supplied on or to the
Leased Property. Tenant shall remove, bond-off, or otherwise obtain the release
of any construction lien filed against the Leased Property within 10 days after
the filing thereof. Tenant shall pay all expenses in connection therewith,
including without limitation, damages, interest, court costs and reasonable
attorneys' fees.
7.4 Replacements of Fixtures and Personal Property. Tenant
shall not remove Fixtures and Personal Property from the Leased Property except
to replace the Fixtures and Personal Property by other similar items of equal
quality and value, for which replacement of Fixture and Personal Property,
Landlord shall execute and deliver bills of sale or other documents of transfer
necessary to accomplish such replacements. Items being replaced by Tenant may be
removed and shall become the property of Tenant and items replacing the same
shall be and remain the property of Landlord. Tenant shall execute, upon written
request from Landlord, any and all documents necessary to evidence Landlord's
ownership of the Personal Property and replacements therefor. Tenant may finance
replacements for the Fixtures and Personal Property by equipment lease or by a
security agreement and financing statement if [i] Landlord has consented to the
terms and conditions of the equipment lease or security agreement; and [ii] the
equipment lessor or lender has entered into a nondisturbance agreement with
Landlord upon terms and conditions reasonably acceptable to Landlord, including
without limitation, the following: [a] Landlord shall have the right (but not
the obligation) to assume such security agreement or equipment lease upon the
occurrence of an Event of Default under this Lease; [b] the equipment lessor or
lender shall notify Landlord of any default by Tenant under the equipment lease
or security agreement and give Landlord a reasonable opportunity to cure such
default; and [c] Landlord shall have the right to assign its rights under
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the equipment lease, security agreement, or nondisturbance agreement. Tenant
shall, within 30 days after receipt of an invoice from Landlord, reimburse
Landlord for all costs and expenses incurred in reviewing and approving the
equipment lease, security agreement, and nondisturbance agreement, including
without limitation, reasonable attorneys' fees and costs.
ARTICLE 8: DEFAULTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of
the following shall be an event of default ("Event of Default") hereunder:
(a) Tenant fails to pay in full any installment of
Rent, or any other monetary obligation payable by Tenant under this Lease,
within 10 days after such payment is due.
(b) Landlord gives Tenant three or more notices of
non-payment of Rent (after expiration of the 10 day grace period) in any Lease
Year.
(c) Tenant or Guarantor (where applicable) fails to
comply with any covenant set forth in Article 14, Section 15.6, Section 15.7 or
Article 20 of this Lease.
(d) Tenant fails to observe and perform any other
covenant, condition or agreement under this Lease to be performed by Tenant and
[i] such failure continues for a period of 30 days after written notice thereof
is given to Tenant by Landlord; or [ii] if, by reason of the nature of such
default, the same cannot be remedied within said 30 days, Tenant fails to
proceed with diligence reasonably satisfactory to Landlord after receipt of the
notice to cure the same or, in any event, fails to cure such default within 60
days after receipt of the notice. The foregoing notice and cure provisions do
not apply to any Event of Default otherwise specifically described in any other
subsection of Section 8.1.
(e) Tenant abandons or vacates the Leased Property or
any material part thereof or ceases to do business or ceases to exist for any
reason for any one or more days, excepting absence due to construction or
nonstructural renovations.
(f) [i] The filing by Tenant of a petition under 11
U.S.C. or the commencement of a bankruptcy or similar proceeding by Tenant; [ii]
the failure by Tenant within 60 days to dismiss an involuntary bankruptcy
petition or other commencement of a bankruptcy, reorganization or similar
proceeding against Tenant, or to lift or stay any execution, garnishment or
attachment of such consequence as will impair its ability to carry on its
operation at the Leased Property; [iii] the entry of an
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order for relief under 11 U.S.C. in respect of Tenant; [iv] any assignment by
Tenant for the benefit of its creditors; [v] the entry by Tenant into an
agreement of composition with its creditors; [vi] the approval by a court of
competent jurisdiction of a petition applicable to Tenant in any proceeding for
its reorganization instituted under the provisions of any state or federal
bankruptcy, insolvency, or similar laws; [vii] appointment by final order,
judgment, or decree of a court of competent jurisdiction of a receiver of a
whole or any substantial part of the properties of Tenant (provided such
receiver shall not have been removed or discharged within 60 days of the date of
his qualification).
(g) [i] Any receiver, administrator, custodian or
other person takes possession or control of any of the Leased Property and
continues in possession for 60 days; [ii] any writ against any of the Leased
Property is not released within 60 days; [iii] any judgment is rendered or
proceedings are instituted against the Leased Property or Tenant which affect
the Leased Property or any part thereof, which is not dismissed for 60 days
(except as otherwise provided in this section); [iv] all or a substantial part
of the assets of Tenant or Guarantor are attached, seized, subjected to a writ
or distress warrant, or are levied upon, or come into the possession of any
receiver, trustee, custodian, or assignee for the benefit of creditors; [v]
Tenant or Guarantor is enjoined, restrained, or in any way prevented by court
order, or any proceeding is filed or commenced seeking to enjoin, restrain or in
any way prevent Tenant from conducting all or a substantial part of its business
or affairs; or [vi] except as otherwise permitted hereunder, a final notice of
lien, levy or assessment is filed of record with respect to all or any part of
the Leased Property or any property of Tenant located at the Leased Property and
is not dismissed, discharged, or bonded-off within 30 days.
(h) Any material representation or warranty made by
Tenant or Guarantor in this Lease or any other document executed in connection
with this Lease, any guaranty of or other security for this Lease, or any
report, certificate, application, financial statement or other instrument
furnished by Tenant or Guarantor pursuant hereto or thereto shall prove to be
false, misleading or incorrect in any material respect as of the date made.
(i) Tenant, any Guarantor, or any Affiliate defaults
on any indebtedness or obligation to Landlord or any Landlord Affiliate, or any
agreement with Landlord or any Landlord Affiliate including, without limitation,
any lease with Landlord or any Landlord Affiliate, or Tenant or any Guarantor
defaults on any Material Obligation, and any applicable grace or cure period
with respect to default under such indebtedness or obligation
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expires without such default having been cured. This provision applies to all
such indebtedness, obligations and agreements as they may be amended, modified,
extended, or renewed from time to time.
(j) The occurrence of any change in Tenant's
leasehold interest in the Leased Property, without the prior written consent of
Landlord.
(k) Any guarantor of the Lease dies, dissolves,
terminates, is adjudicated incompetent, files a petition in bankruptcy, or is
adjudicated insolvent under 11 U.S.C. or any other insolvency law, or fails to
comply with any covenant or requirement of such guarantor set forth in this
Lease or in the guaranty of such guarantor, and in the case of the death or
incompetency of an individual guarantor only, Tenant fails within 30 days to
deliver to Landlord a substitute guaranty or other collateral reasonably
satisfactory to Landlord.
(l) The license for the Facility or any other
Government Authorization, is cancelled, suspended or otherwise invalidated,
notice of impending revocation proceedings is received and Tenant fails to
diligently contest such proceeding, or any reduction occurs in the number of
licensed beds or units at the Facility.
8.2 Remedies. Landlord may exercise any one or more of the
following remedies upon the occurrence of an Event of Default:
(a) Landlord may re-enter and take possession of the
Leased Property without terminating the Lease, and lease the Leased Property for
the account of Tenant, holding Tenant liable for all costs of the Landlord in
reletting the Leased Property and for the difference in the amount received by
such reletting and the amounts payable by Tenant under the Lease.
(b) Landlord may terminate this Lease, exclude Tenant
from possession of the Leased Property and use efforts to lease the Leased
Property to others, holding Tenant liable for the difference in the amounts
received from such reletting and the amounts payable by Tenant under the Lease.
(c) Landlord may re-enter the Leased Property and
have, repossess and enjoy the Leased Property as if the Lease had not been made,
and in such event, Tenant and its successors and assigns shall remain liable for
any contingent or unliquidated obligations or sums owing at the time of such
repossession.
(d) Landlord may have access to and inspect, examine
and make copies of the books and records and any and all
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accounts, data and income tax and other returns of Tenant insofar as they
pertain to the Leased Property.
(e) Landlord may accelerate all of the unpaid Rent
hereunder so that the present value of the aggregate Rent for the unexpired term
of this Lease becomes immediately due and payable.
(f) Landlord may take whatever action at law or in
equity as may appear necessary or desirable to collect the Rent and other
amounts payable under the Lease then due and thereafter to become due, or to
enforce performance and observance of any obligations, agreements or covenants
of Tenant under this Lease.
(g) With respect to the Collateral and Landlord's
security interest therein, Landlord may exercise all of its rights as secured
party under Article 9 of the Uniform Commercial Code as adopted in the State.
Landlord may sell the Collateral by public or private sale upon 5 days notice to
Tenant. Tenant agrees that a commercially reasonable manner of disposition of
the Collateral shall include, without limitation and at the option of Landlord,
a sale of the Collateral, in whole or in part, concurrently with the sale of the
Leased Property.
(h) Landlord may obtain control over and collect the
Receivables and apply the proceeds of the collections to satisfaction of
Tenant's Obligations unless prohibited by law. Tenant appoints Landlord or its
designee as attorney for Tenant with powers [i] to receive, to indorse, to sign
and/or to deliver, in Tenant's name or Landlord's name, any and all checks,
drafts, and other instruments for the payment of money relating to the
Receivables, and to waive demand, presentment, notice of dishonor, protest, and
any other notice with respect to any such instrument; [ii] to sign Tenant's name
on any invoice or bill of lading relating to any Receivable, drafts against
account debtors, assignments and verifications of Receivables, and notices to
account debtors; [iii] to send verifications of Receivables to any account
debtor; and [iv] to do all other acts and things necessary to carry out this
Lease. Landlord shall not be liable for any omissions, commissions, errors of
judgment, or mistakes in fact or law made in the exercise of any such powers. At
Landlord's option, Tenant shall [i] provide Landlord a full accounting of all
amounts received on account of Receivables with such frequency and in such form
as Landlord may require, either with or without applying all collections on
Receivables in payment of Tenant's Obligations or [ii] deliver to Landlord on
the day of receipt all such collections in the form received and duly indorsed
by Tenant. At Landlord's request, Tenant shall institute any action or enter
into any settlement determined by Landlord to be necessary to obtain recovery or
redress from any account debtor in default of Receivables. Landlord may give
notice of its security interest in
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the Receivables to any or all account debtors with instructions to make all
payments on Receivables directly to Landlord, thereby terminating Tenant's
authority to collect Receivables. After terminating Tenant's authority to
enforce or collect Receivables, Landlord shall have the right to take possession
of any or all Receivables and records thereof and is hereby authorized to do so,
and only Landlord shall have the right to collect and enforce the Receivables.
Prior to the occurrence of an Event of Default, at Tenant's cost and expense,
but on behalf of Landlord and for Landlord's account, Tenant shall collect or
otherwise enforce all amounts unpaid on Receivables and hold all such
collections in trust for Landlord, but Tenant may commingle such collections
with Tenant's own funds, until Tenant's authority to do so has been terminated,
which may be done only after an Event of Default. Notwithstanding any other
provision hereof, Landlord does not assume any of Tenant's obligations under any
Receivable, and Landlord shall not be responsible in any way for the performance
of any of the terms and conditions thereof by Tenant.
(i) Without waiving any prior or subsequent Event of
Default, Landlord may waive any Event of Default or, with or without waiving any
Event of Default, remedy any default.
(j) Landlord may terminate its obligation to disburse
Lease Advances.
(k) Landlord may enter and take possession of the
Land and Facility without terminating the Lease and complete construction and
renovation of the Improvements (or any part thereof) and perform the obligations
of Tenant under the Lease Documents. Without limiting the generality of the
foregoing and for the purposes aforesaid, Tenant hereby appoints Landlord its
lawful attorney-in-fact with full power to do any of the following: [i] complete
construction, renovation and equipping of the Improvements in the name of
Tenant; [ii] use unadvanced funds remaining under the Lease Amount, or funds
that may be reserved, escrowed, or set aside for any purposes hereunder at any
time, or to advance funds in excess of the Lease Amount, to complete the
Improvements; [iii] make changes in the plans and specifications that shall be
necessary or desirable to complete the Improvements in substantially the manner
contemplated by the plans and specifications; [iv] retain or employ new general
contractors, subcontractors, architects, engineers, and inspectors as shall be
required for said purposes; [v] pay, settle, or compromise all existing bills
and claims, which may be liens or security interests, or to avoid such bills and
claims becoming liens against the Facility or security interest against fixtures
or equipment, or as may be necessary or desirable for the completion of the
construction and equipping of the Improvements or for the clearance of title;
[vi] execute all applications and certificates, in the name of Tenant, that may
be required in
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connection with any construction; [vii] do any and every act that Tenant might
do in its own behalf, to prosecute and defend all actions or proceedings in
connection with the Improvements; and [viii] to execute, deliver and file all
applications and other documents and take any and all actions necessary to
transfer the operations of the Facility to Landlord or Landlord's designee. This
power of attorney is a power coupled with an interest and cannot be revoked.
8.3 Right of Set-Off. Landlord may, and is hereby authorized
by Tenant to, at any time and from time to time without advance notice to Tenant
(any such notice being expressly waived by Tenant), set-off and apply any and
all sums held by Landlord, any indebtedness of Landlord to Tenant, and any
claims by Tenant against Landlord, against any obligations of Tenant hereunder
and against any claims by Landlord against Tenant, whether or not such
obligations or claims of Tenant are matured and whether or not Landlord has
exercised any other remedies hereunder. The rights of Landlord under this
section are in addition to any other rights and remedies Landlord may have
against Tenant.
8.4 Performance of Tenant's Covenants. Landlord may perform
any obligation of Tenant which Tenant has failed to perform within 5 days after
Landlord has sent a written notice to Tenant informing it of its specific
failure. Tenant shall reimburse Landlord on demand, as Additional Rent, for any
expenditures thus incurred by Landlord and shall pay interest thereon at the
Overdue Rate (as defined in Section 8.6).
8.5 Late Payment Charge. Tenant acknowledges that any default
in the payment of any installment of Rent payable hereunder will result in loss
and additional expense to Landlord in servicing any indebtedness of Landlord
secured by the Leased Property, handling such delinquent payments, and meeting
its other financial obligations, and because such loss and additional expense is
extremely difficult and impractical to ascertain, Tenant agrees that in the
event any Rent payable to Landlord hereunder is not paid within 10 days after
the due date, Tenant shall pay a late charge of 5% of the amount of the overdue
payment as a reasonable estimate of such loss and expenses, unless applicable
law requires a lesser charge, in which event the maximum rate permitted by such
law may be charged by Landlord. The 10 day grace period set forth in this
section shall not extend the time for payment of Rent or the period for curing
any default or constitute a waiver of such default.
8.6 Interest. In addition to the late payment charge, any
payment not made by
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Tenant within 10 days after the due date shall thereafter bear interest at the
rate (the "Overdue Rate") of 18% per annum, provided, however, that at no time
will Tenant be required to pay interest at a rate higher than the maximum legal
rate and, provided further, that if a court of competent jurisdiction determines
that any other charges payable under this Lease are deemed to be interest, the
Overdue Rate shall be adjusted to ensure that the aggregate interest payable
under this Lease does not accrue at a rate in excess of the maximum legal rate.
Tenant shall not be required to pay interest upon any late payment fees assessed
pursuant to Section 8.5.
8.7 Litigation; Attorneys' Fees. Within 5 days after Tenant
has knowledge of any litigation or other proceeding that may be instituted
against Tenant, against the Leased Property to secure or recover possession
thereof, or that may affect the title to or the interest of Landlord in the
Leased Property, Tenant shall give written notice thereof to Landlord. Tenant
shall pay all reasonable costs and expenses incurred by Landlord in enforcing or
preserving Landlord's rights under this Lease, whether or not an Event of
Default has actually occurred or has been declared and thereafter cured,
including without limitation, [i] the fees, expenses, and costs of any
litigation, receivership, administrative, bankruptcy, insolvency or other
similar proceeding; [ii] reasonable attorney, paralegal, consulting and witness
fees and disbursements, whether in house counsel or outside counsel; and [iii]
the expenses, including without limitation, lodging, meals, and transportation,
of Landlord and its employees, agents, attorneys, and witnesses in preparing for
litigation, administrative, bankruptcy, insolvency or other similar proceedings
and attendance at hearings, depositions, and trials in connection therewith. All
such costs, charges and fees payable by Tenant shall be deemed to be Additional
Rent under this Lease.
8.8 Escrows and Application of Payments. As security for the
performance of its obligations hereunder, Tenant hereby assigns to Landlord all
its right, title, and interest in and to all monies escrowed with Landlord under
this Lease and all deposits with utility companies, taxing authorities and
insurance companies; provided, however, that Landlord shall not exercise its
rights hereunder until an Event of Default has occurred. Any payments received
by Landlord under any provisions of this Lease during the existence or
continuance of an Event of Default shall be applied to Tenant's obligations in
the order which Landlord may determine.
8.9 Remedies Cumulative. The remedies of Landlord herein are
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cumulative to and not in lieu of any other remedies available to Landlord at law
or in equity. The use of any one remedy shall not be taken to exclude or waive
the right to use any other remedy.
ARTICLE 9: DAMAGE AND DESTRUCTION
9.1 Notice of Casualty. If the Leased Property shall be
destroyed, in whole or in part, or damaged by fire, flood, windstorm or other
casualty (a "Casualty"), Tenant shall give written notice thereof to the
Landlord within one business day after the occurrence of the Casualty. Within 15
days after the occurrence of the Casualty or as soon thereafter as such
information is reasonably available to Tenant, Tenant shall provide the
following information to Landlord: [i] the date of the Casualty; [ii] the nature
of the Casualty; [iii] a description of the damage or destruction caused by the
Casualty including the type of Leased Property damaged and the area of the
Improvements damaged; [iv] a preliminary estimate of the cost to repair,
rebuild, restore or replace the Leased Property; [v] a preliminary estimate of
the schedule to complete the repair, rebuilding, restoration or replacement of
the Leased Property; [vi] a description of the anticipated property insurance
claim including the name of the insurer, the insurance coverage limits, the
deductible amount, the expected settlement amount, and the expected settlement
date; and [vii] a description of the business interruption claim including the
name of the insurer, the insurance coverage limits, the deductible amount, the
expected settlement amount, and the expected settlement date. Within five days
after request from Landlord, Tenant will provide Landlord with copies of all
correspondence to the insurer and any other information reasonably requested by
Landlord.
9.2 Substantial Destruction.
9.2.1 If the Improvements are substantially destroyed at any
time other than during the final 18 months of the Initial Term or the Renewal
Term, Tenant shall promptly rebuild and restore the Leased Property in
accordance with Section 9.4 and Landlord shall make the insurance proceeds
available to Tenant for such restoration. The term "substantially destroyed"
means any casualty resulting in the loss of use of 50% or more of the licensed
beds at any one Facility.
9.2.2 If the Improvements are substantially destroyed during
the final 18 months of the Initial Term or the Renewal Term, Landlord may elect
to terminate this Lease or terminate this Lease and all Affiliate Leases, at
Landlord's option, and retain the insurance proceeds unless Tenant exercises
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its option to renew as set forth in Section 9.2.3. If Landlord elects to
terminate, Landlord shall give notice ("Termination Notice") of its election to
terminate this Lease (or this Lease and all Affiliate Leases, if elected by
Landlord) within 30 days after receipt of Tenant's notice of the damage. If
Tenant does not exercise its option to renew under Section 9.2.3 within 15 days
after delivery of the Termination Notice, this Lease (or this Lease and all
Affiliate Leases, if elected by Landlord) shall terminate on the 15th day after
delivery of the Termination Notice. If this Lease (or this Lease and all
Affiliate Leases, if elected by Landlord) is so terminated, Tenant shall be
liable to Landlord for all Rent and all other obligations accrued under this
Lease through the effective date of termination and each Affiliate shall be
liable to Landlord for all Rent and all other obligations accrued under its
respective Affiliate Lease through the effective date of termination.
9.2.3 If the Improvements are substantially destroyed during
the final 18 months of the Initial Term or the Renewal Term and Landlord gives
the Termination Notice, Tenant shall have the option to renew this Lease. Tenant
shall give Landlord irrevocable notice of Tenant's election to renew, and each
Affiliate Tenant shall give irrevocable notice of renewal, within 15 days after
delivery of the Termination Notice. If Tenant and each Affiliate Tenant elect to
renew, the Renewal Term will be in effect for the balance of the then current
Term plus a 10 year period. The Renewal Term will commence on the third day
following Landlord's receipt of Tenant's and each Affiliate Tenant's notice of
renewal. All other terms of this Lease for the Renewal Term shall be in
accordance with Article 12. The Leased Property will be restored by Tenant in
accordance with the provisions of this Article 9 regarding partial destruction.
9.3 Partial Destruction. If the Leased Property is not
substantially destroyed, then Tenant shall comply with the provisions of Section
9.4 and Landlord shall make the insurance proceeds available to Tenant for such
restoration.
9.4 Restoration. Tenant shall promptly repair, rebuild, or
restore the Leased Property, at Tenant's expense, so as to make the Leased
Property at least equal in value to the Leased Property existing immediately
prior to such occurrence and as nearly similar to it in character as is
practicable and reasonable. Before beginning such repairs or rebuilding, or
letting any contracts in connection with such repairs or rebuilding, Tenant will
submit for Landlord's approval, which approval Landlord will not unreasonably
withhold or delay, plans and specifications meeting the requirements of Section
16.2 for such repairs or rebuilding. Promptly after receiving Landlord's
approval of the plans and specifications and receiving the
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proceeds of insurance, Tenant will begin such repairs or rebuilding and will
prosecute the repairs and rebuilding to completion with diligence, subject,
however, to strikes, lockouts, acts of God, embargoes, governmental
restrictions, and other causes beyond Tenant's reasonable control. Landlord will
make available to Tenant the net proceeds of any fire or other casualty
insurance paid to Landlord for such repair or rebuilding as the same progresses,
after deduction of any costs of collection, including attorneys' fees. Payments
will be made against properly certified vouchers of a competent architect in
charge of the work and approved by Landlord. Prior to commencing the repairing
or rebuilding, Tenant shall deliver to Landlord for Landlord's approval a
schedule setting forth the estimated monthly draws for such work. Landlord will
contribute to such payments out of the insurance proceeds an amount equal to the
proportion that the total net amount received by Landlord from insurers bears to
the total estimated cost of the rebuilding or repairing, multiplied by the
payment by Tenant on account of such work. Landlord may, however, withhold 10%
from each payment until the work is completed and proof has been furnished to
Landlord that no lien or liability has attached or will attach to the Leased
Property or to Landlord in connection with such repairing or rebuilding. Upon
the completion of rebuilding and the furnishing of such proof, the balance of
the net proceeds of such insurance payable to Tenant on account of such
repairing or rebuilding will be paid to Tenant. Tenant will obtain and deliver
to Landlord a temporary or final certificate of occupancy before the Leased
Property is reoccupied for any purpose. Tenant shall complete such repairs or
rebuilding free and clear of mechanic's or other liens, and in accordance with
the building codes and all applicable laws, ordinances, regulations, or orders
of any state, municipal, or other public authority affecting the repairs or
rebuilding, and also in accordance with all requirements of the insurance rating
organization, or similar body. Any remaining proceeds of insurance after such
restoration will be Tenant's property.
9.5 Insufficient Proceeds. If the proceeds of any insurance
settlement are not sufficient to pay the costs of such repair, rebuilding or
restoration in full, Tenant shall deposit with Landlord at Landlord's option,
and within 30 days of Landlord's request, an amount sufficient in Landlord's
reasonable judgment to complete such repair, rebuilding or restoration. Tenant
shall not, by reason of the deposit or payment, be entitled to any reimbursement
from Landlord or diminution in or postponement of the payment of the Rent.
9.6 Not Trust Funds. Notwithstanding anything herein or at law
or equity to the contrary, none of the insurance proceeds paid to Landlord as
herein provided shall be deemed trust funds, and Landlord shall be
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entitled to dispose of such proceeds as provided in this Article 9. Tenant
expressly assumes all risk of loss, including a decrease in the use, enjoyment
or value, of the Leased Property from any casualty whatsoever, whether or not
insurable or insured against.
9.7 Landlord's Inspection. During the progress of such
repairs or rebuilding, Landlord and its architects and engineers may, from time
to time, inspect the Leased Property and will be furnished, if required by them,
with copies of all plans, shop drawings, and specifications relating to such
repairs or rebuilding. Tenant will keep all plans, shop drawings, and
specifications at the building, and Landlord and its architects and engineers
may examine them at all reasonable times. If, during such repairs or rebuilding,
Landlord and its architects and engineers determine that the repairs or
rebuilding are not being done in accordance with the approved plans and
specifications, Landlord will give prompt notice in writing to Tenant,
specifying in detail the particular deficiency, omission, or other respect in
which Landlord claims such repairs or rebuilding do not accord with the approved
plans and specifications. Upon the receipt of any such notice, Tenant will cause
corrections to be made to any deficiencies, omissions, or such other respect.
Tenant's obligations to supply insurance, according to Article 4, will be
applicable to any repairs or rebuilding under this section.
9.8 Landlord's Costs. Tenant shall, within 30 days after
receipt of an invoice from Landlord, pay the costs, expenses, and fees of any
architect or engineer employed by Landlord to review any plans and
specifications and to supervise and approve any construction, or for any
services rendered by such architect or engineer to Landlord as contemplated by
any of the provisions of this Lease, or for any services performed by Landlord's
attorneys in connection therewith. The daily fee for Landlord's consulting
engineer is $750.00.
9.9 No Rent Abatement. Rent will not abate pending the
repairs or rebuilding of the Leased Property.
9.10 Business Interruption Insurance. All business
interruption insurance proceeds shall be paid to Tenant.
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ARTICLE 10: CONDEMNATION
10.1 Total Taking. If, by exercise of the right of eminent
domain or by conveyance made in response to the threat of the exercise of such
right ("Taking"), the entire Leased Property is taken, or so much of the Leased
Property is taken that the Leased Property cannot be used by Tenant for the
purposes for which it was used immediately before the Taking, then this Lease
will end on the earlier of the vesting of title to the Leased Property in the
condemning authority or the taking of possession of the Leased Property by the
condemning authority. All damages awarded for such Taking under the power of
eminent domain shall be the property of the Landlord, whether such damages shall
be awarded as compensation for diminution in value of the leasehold or the fee
of the Leased Property. If this Lease is terminated with respect to a Facility
subject to a taking as described in this section, Landlord may, at its option,
terminate each Affiliate Lease.
10.2 Partial Taking. If, after a Taking, so much of the Leased
Property remains that the Leased Property can be used for substantially the same
purposes for which it was used immediately before the Taking, then [i] this
Lease will end as to the part taken on the earlier of the vesting of title to
the Leased Property in the condemning authority or the taking of possession of
the Leased Property by the condemning authority; [ii] at its cost, Tenant shall
restore so much of the Leased Property as remains to a sound architectural unit
substantially suitable for the purposes for which it was used immediately before
the Taking, using good workmanship and new, first-class materials; [iii] upon
completion of the restoration, Landlord will pay Tenant the lesser of the net
award made to Landlord on the account of the Taking (after deducting from the
total award, attorneys', appraisers', and other fees and costs incurred in
connection with the obtaining of the award and amounts paid to the holders of
mortgages secured by the Leased Property), or Tenant's actual out-of-pocket
costs of restoring the Leased Property; and [iv] Landlord shall be entitled to
the balance of the net award. The restoration shall be completed in accordance
with Sections 9.4, 9.5, 9.7, 9.8 and 9.9 with such provisions deemed to apply to
condemnation instead of casualty.
10.3 Condemnation Proceeds Not Trust Funds. Notwithstanding
anything in this Lease or at law or equity to the contrary, none of the
condemnation award paid to Landlord shall be deemed trust funds, and Landlord
shall be entitled to dispose of such proceeds as provided in this Article 10.
Tenant expressly assumes all risk of loss, including a decrease in the use,
enjoyment, or value, of the Leased Property from any Condemnation.
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ARTICLE 11: TENANT'S PROPERTY
11.1 Tenant's Property. Tenant shall install, place, and use
on the Leased Property such fixtures, furniture, equipment, inventory and other
personal property in addition to the Personal Property as may be required or as
Tenant may, from time to time, deem necessary or useful to operate the Leased
Property for its permitted purposes. All fixtures, furniture, equipment,
inventory, and other personal property installed, placed, or used on the Leased
Property which is owned by Tenant or leased by Tenant from third parties is
hereinafter referred to as "Tenant's Property".
11.2 Requirements for Tenant's Property. Tenant shall comply
with all of the following requirements in connection with Tenant's Property:
(a) Tenant shall, at Tenant's sole cost and expense,
maintain, repair, and replace Tenant's Property.
(b) Tenant shall, at Tenant's sole cost and expense,
keep Tenant's Property insured against loss or damage by fire, vandalism and
malicious mischief, sprinkler leakage, earthquake, and other physical loss
perils commonly covered by fire and extended coverage, boiler and machinery, and
difference in conditions insurance in an amount not less than 90% of the then
full replacement cost thereof. Tenant shall use the proceeds from any such
policy for the repair and replacement of Tenant's Property. The insurance shall
meet the requirements of Section 4.3.
(c) Tenant shall pay all taxes applicable to Tenant's
Property.
(d) If Tenant's Property is damaged or destroyed by
fire or any other cause, Tenant shall promptly repair or replace Tenant's
Property unless Landlord elects to terminate this Lease pursuant to Section
9.2.2.
(e) Unless an Event of Default or any event which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default has occurred, Tenant may remove Tenant's Property from the Leased
Property from time to time provided that [i] the items removed are not required
to operate the Leased Property for the Facility Uses (unless such items are
being replaced by Tenant); and [ii] Tenant repairs any damage to the Leased
Property resulting from the removal of Tenant's Property.
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(f) Tenant shall not, without the prior written
consent of Landlord or as otherwise provided in this Lease, remove any Tenant's
Property or Leased Property. Tenant shall, at Landlord's option, remove Tenant's
Property upon the termination or expiration of this Lease and shall repair any
damage to the Leased Property resulting from the removal of Tenant's Property.
If Tenant fails to remove Tenant's Property within 30 days after request by
Landlord, then Tenant shall be deemed to have abandoned Tenant's Property,
Tenant's Property shall become the property of Landlord, and Landlord may
remove, store and dispose of Tenant's Property. In such event, Tenant shall have
no claim or right against Landlord for such property or the value thereof
regardless of the disposition thereof by Landlord. Tenant shall pay Landlord,
upon demand, all expenses incurred by Landlord in removing, storing, and
disposing of Tenant's Property and repairing any damage caused by such removal.
Tenant's obligations hereunder shall survive the termination or expiration of
this Lease.
(g) Tenant shall perform its obligations under any
equipment lease or security agreement for Tenant's Property. For equipment loans
or leases for equipment having an original cost in excess of $50,000.00, Tenant
shall cause such equipment lessor or lender to enter into a nondisturbance
agreement with Landlord upon terms and conditions acceptable to Landlord,
including without limitation, the following: [i] Landlord shall have the right
(but not the obligation) to assume such equipment lease or security agreement
upon the occurrence of an Event of Default by Tenant hereunder; [ii] such
equipment lessor or lender shall notify Landlord of any default by Tenant under
the equipment lease or security agreement and give Landlord a reasonable
opportunity to cure such default; and [iii] Landlord shall have the right to
assign its interest in the equipment lease or security agreement and
nondisturbance agreement. Tenant shall, within 30 days after receipt of an
invoice from Landlord, reimburse Landlord for all costs and expenses incurred in
reviewing and approving the equipment lease, security agreement and
nondisturbance agreement, including without limitation, reasonable attorneys'
fees and costs.
ARTICLE 12: RENEWAL OPTIONS
12.1 Renewal Options. Tenant has the option to renew ("Renewal
Option") this Lease for one 10-year renewal term. Tenant can exercise the
Renewal Option only upon satisfaction of the following conditions:
(a) There shall be no uncured Event of Default,
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or any event which with the passage of time or giving of notice would constitute
an Event of Default, at the time Tenant exercises its Renewal Option nor on the
date the Renewal Term is to commence.
(b) Tenant shall give Landlord irrevocable written
notice of renewal no later than the date which is [i] 90 days prior to the
expiration date of the then current Term; or [ii] 15 days after Landlord's
delivery of the Termination Notice as set forth in Section 9.2.3.
(c) Each Affiliate Tenant shall concurrently give
irrevocable notice of renewal for each Affiliate Lease.
12.2 Effect of Renewal. The following terms and conditions
will be applicable if Tenant renews the Lease:
(a) Effective Date. Except as otherwise provided in
Section 9.2.3, the effective date of the Renewal Term will be the first day
after the expiration date of the then current Term. The first day of the Renewal
Term is also referred to as the Renewal Date.
(b) Lease Amount. Effective as of the Renewal Date, a
single Lease Amount will be computed by summing all Lease Advance Amounts
(including the Acquisition Amount).
(c) Lease Rate. Effective as of the Renewal Date, a
single Lease Rate will be computed equal to the Renewal Rate. The Renewal Rate
will be the sum of the Lease Rate for the final year of the Initial Term plus 25
basis points.
(d) Base Rent. Effective as of the Renewal Date, the
Base Rent will be changed to equal 1/12th of the product of [i] the Lease Amount
on the Renewal Date times [ii] the new Lease Rate equal to the Renewal Rate.
(e) Other Terms and Conditions. Except for the
modifications set forth in this Section 12.2, all other terms and conditions of
the Lease will remain the same for the Renewal Term. The Lease Rate and Base
Rent will increase annually as set forth in Section 2.2.
12.3 Effect of Non-Renewal or Expiration of Lease. The
following terms and conditions will be applicable if Tenant does not renew this
Lease by the expiration date for the then current Term:
(a) Extension of Current Term. The current Term
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will be extended (the "Extended Term") for 180 days.
(b) Lease Payments. During the Extended Term, Tenant
shall continue to make monthly payments of Rent (including Base Rent) based upon
the then existing Lease Rate.
ARTICLE 13: RIGHT OF FIRST REFUSAL
13.1 Right of First Refusal. Tenant shall have the right of
first refusal to purchase the Leased Property during the Term of this Lease. If
at any time during the Term, Landlord shall receive a bona fide offer ("Offer")
from a third person for the purchase of the Leased Property, which Offer
Landlord desires to accept, Landlord shall promptly deliver to Tenant a copy of
such Offer. Tenant shall have the right for a period of 60 days thereafter to
elect to purchase the Leased Property on the same terms and conditions as those
set forth in the Offer. If Tenant elects to purchase the Leased Property, Tenant
must give written notice thereof to Landlord no later than the 60th day after
the date Landlord delivers the Offer to Tenant.
13.2 No Exercise. If Tenant does not elect to exercise its
right of first refusal as set forth in Section 13.1, Landlord shall be free to
sell and convey the Leased Property to the third party purchaser in accordance
with the terms and provisions of the Offer. In the event that Landlord does not
consummate the sale of the Leased Property to such purchaser, Tenant's right of
first refusal under this Article 13 shall remain applicable to subsequent
bonafide offers from third persons.
ARTICLE 14: NEGATIVE COVENANTS
Until Tenant's Obligations shall have been performed in full,
Tenant and Guarantor covenant and agree that Tenant (and Guarantor where
applicable) shall not do any of the following without the prior written consent
of Landlord:
14.1 No Debt. Tenant and Guarantor shall not create, incur,
assume, or permit to exist any indebtedness other than [i] trade debt incurred
in the ordinary course of business; [ii] indebtedness relating to the Letter of
Credit; and [iii] indebtedness that is secured by any Permitted Lien; provided,
however, that other indebtedness shall be permitted if Tenant and Guarantor are
in compliance with the financial covenants set forth in Section 15.7 as of the
date such other indebtedness is incurred.
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14.2 No Liens. Tenant and Guarantor shall not create, incur,
or permit to exist any lien, charge, encumbrance, easement or restriction upon
the Leased Property or any lien upon or pledge of any interest in Tenant, except
for Permitted Liens.
14.3 No Guaranties. Tenant and Guarantor shall not create,
incur, assume, or permit to exist any guarantee of any loan or other
indebtedness except for the [i] endorsement of negotiable instruments for
collection in the ordinary course of business; and [ii] guarantee of the
indebtedness permitted in Section 14.1; provided, however, that other guaranties
shall be permitted if Tenant and Guarantor are in compliance with the financial
covenants set forth in Section 15.7 as of the date such other guaranty is
incurred.
14.4 No Transfer. Tenant shall not sell, lease, sublease,
mortgage, convey, assign or otherwise transfer any legal or equitable interest
in the Leased Property or any part thereof, except for transfers made in
connection with any Permitted Lien.
14.5 No Dissolution. Tenant, Manager (if applicable) or
Guarantor shall not dissolve, liquidate, merge, consolidate or terminate its
existence or sell, assign, lease, or otherwise transfer (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired).
14.6 No Change in Management or Operation. No material change
shall occur in the management of Tenant, Guarantor or Manager (if applicable) or
in the management or licensed operation of the Facility. Just Like Home, Inc.
shall remain the Manager of the Facility and the licensed operator of the
Facility and John F. Robenalt shall remain the President of Tenant and
Guarantor.
14.7 No Investments. Tenant and Guarantor shall not purchase
or otherwise acquire, hold, or invest in securities (whether capital stock or
instruments evidencing indebtedness) of or make loans or advances to any person,
including, without limitation, any Guarantor, any Affiliate, or any shareholder,
member or partner of Tenant, Guarantor or any Affiliate, except for cash
balances temporarily invested in short-term or money market securities and
investments in marketable securities.
14.8 Contracts. Tenant and Guarantor shall not execute or
modify any material contracts
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or agreements with respect to the Facility except for contracts and
modifications approved by Landlord. Contracts made in the ordinary course of
business and in an amount less than $100,000.00 shall not be considered
"material" for purposes of this paragraph.
14.9 Subordination of Payments to Affiliates14.9
Subordination of Payments to Affiliates. After the occurrence of an Event of
Default and until such Event of Default is cured, Tenant and Guarantor shall not
make any payments or distributions (including, without limitation, salary,
bonuses, fees, principal, interest, dividends, liquidating distributions,
management fees, cash flow distributions or lease payments) to Guarantor,
Manager (if applicable), any Affiliate, or any shareholder, member or partner of
Tenant, Guarantor, Manager (if applicable) or any Affiliate.
14.10 Change of Location or Name. Tenant shall not change any
of the following: [i] the location of the principal place of business or chief
executive office of Tenant, or any office where any of Tenant's books and
records are maintained; or [ii] the name under which Tenant conducts any of its
business or operations.
ARTICLE 15: AFFIRMATIVE COVENANTS
15.1 Perform Obligations. Tenant shall perform all of its
obligations under this Lease, the Government Authorizations, the Permitted
Exceptions, and all Legal Requirements. Tenant shall take all necessary action
to obtain all Government Authorizations required for the operation of the
Facility as soon as possible after the Effective Date.
15.2 Proceedings to Enjoin or Prevent Construction.. If any
proceedings are filed seeking to enjoin or otherwise prevent or declare invalid
or unlawful Tenant's construction, occupancy, maintenance, or operation of the
Facility or any portion thereof, Tenant will cause such proceedings to be
vigorously contested in good faith, and in the event of an adverse ruling or
decision, prosecute all allowable appeals therefrom, and will, without limiting
the generality of the foregoing, resist the entry or seek the stay of any
temporary or permanent injunction that may be entered, and use its best efforts
to bring about a favorable and speedy disposition of all such proceedings and
any other proceedings.
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15.3 Documents and Information.
15.3.1 Furnish Documents. Tenant shall periodically during the
term of the Lease deliver to Landlord the Annual Financial Statements, Periodic
Financial Statements and other documents described on Exhibit C within the
specified time periods. With each delivery of Annual Financial Statements and
Periodic Financial Statements (other than the monthly Facility Financial
Statement) to Landlord, Tenant shall also deliver to Landlord a certificate
signed by the Chief Financial Officer, general partner or managing member (as
applicable) of Tenant, an Annual Facility Financial Report or Quarterly Facility
Financial Report, as applicable, and a Quarterly Facility Accounts Receivable
Aging Report all in the form of Exhibit D. In addition, Tenant shall deliver to
Landlord the Annual Facility Financial Report and a Quarterly Facility Accounts
Receivable Aging Report (based upon internal financial statements) within 60
days after the end of each fiscal year.
15.3.2 Furnish Information. Tenant shall [i] promptly supply
Landlord with such information concerning its financial condition, affairs and
property, as Landlord may reasonably request from time to time hereafter; [ii]
promptly notify Landlord in writing of any condition or event that constitutes a
breach or event of default of any term, condition, warranty, representation, or
provisions of this Agreement or any other agreement, and of any material adverse
change in its financial condition; [iii] maintain a standard and modern system
of accounting; [iv] permit Landlord or any of its agent or representatives to
have access to and to examine all of its books and records regarding the
financial condition of the Facility at any time or times hereafter during
business hours and after reasonable oral or written notice; and [v] permit
Landlord to copy and make abstracts from any and all of said books and records.
15.3.3 Further Assurances and Information. Tenant shall, on
request of Landlord from time to time, execute, deliver, and furnish documents
as may be necessary to fully consummate the transactions contemplated under this
Agreement. Within 15 days after a request from Landlord, Tenant shall provide to
Landlord such additional information regarding Tenant, Tenant's financial
condition or the Facility as Landlord, or any existing or proposed creditor of
Landlord, or any auditor or underwriter of Landlord, may require from time to
time, including, without limitation, a current Tenant's Certificate and Facility
Financial Report in the form of Exhibit D. Upon Landlord's request, but not more
than once every three years, Tenant shall provide to Landlord, an appraisal
prepared by an MAI appraiser setting forth the current fair market value of the
Leased Property.
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15.3.4 Material Communications. Tenant shall transmit to
Landlord, within 10 business days after receipt thereof, any material
communication affecting a Facility, this Lease, the Legal Requirements or the
Government Authorizations, and Tenant will promptly respond to Landlord's
inquiry with respect to such information. Tenant shall promptly notify Landlord
in writing after Tenant has knowledge of any potential, threatened or existing
litigation or proceeding against, or investigation of, Tenant, Guarantor, or the
Facility that may affect the right to operate the Facility or Landlord's title
to the Facility or Tenant's interest therein.
15.3.5 Requirements for Financial Statements. Tenant shall
meet the following requirements in connection with the preparation of the
financial statements: [i] all audited financial statements shall be prepared in
accordance with general accepted accounting principles consistently applied;
[ii] all unaudited financial statements shall be prepared in a manner
substantially consistent with prior audited and unaudited financial statements
submitted to Landlord; [iii] all financial statements shall fairly present the
financial condition and performance for the relevant period in all material
respects; [iv] the financial statements shall include all notes to the financial
statements and a complete schedule of contingent liabilities and transactions
with Affiliates; and [v] the audited financial statements shall contain an
unqualified opinion.
15.4 Compliance With Laws. Tenant shall comply with all Legal
Requirements and keep all Government Authorizations in full force and effect.
Tenant shall pay when due all taxes and governmental charges of every kind and
nature that are assessed or imposed upon Tenant at any time during the term of
the Lease, including, without limitation, all income, franchise, capital stock,
property, sales and use, business, intangible, employee withholding, and all
taxes and charges relating to Tenant's business and operations. Tenant shall be
solely responsible for compliance with all Legal Requirements, including the
ADA, and Landlord shall have no responsibility for such compliance.
15.5 Broker's Commission. Tenant shall indemnify Landlord from
claims of brokers arising by the execution hereof or the consummation of the
transactions contemplated hereby and from expenses incurred by Landlord in
connection with any such claims (including attorneys' fees).
15.6 Existence and Change in Ownership. Tenant, Manager and
Guarantor shall maintain its existence throughout the term of this Agreement.
Any change in the ownership of Tenant directly or indirectly, shall require
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Landlord's prior written consent. John Robenalt or Michael Monahan may transfer
his present respective ownership interest (or any part thereof) of Guarantor
throughout the term of this Lease, only with Landlord's prior written consent.
15.7 Financial Covenants. The defined terms used in this
section are defined in Section 15.7.1. The method of calculating Net Worth and
valuing assets shall be consistent with the Financial Statements. For puroses of
determining compliance with Section 15.7, guaranties shall be considered
indebtedness but shall not be counted twice if the primary indebtedness is also
attributed to the entity that issues the guaranty. The following financial
covenants shall be met throughout the term of this Lease:
15.7.1 Definitions.
(a) "Cash Flow" means the net income of Tenant as
reflected on the income statement of Tenant plus [i] the amount of the provision
for depreciation and amortization; [ii] the amount of the provision for
management fees; plus [iii] the amount of the provision for income taxes; plus
[iv] the amount of the provision for Rent payments and interest and lease
payments, if any; minus [v] an imputed management fee equal to 5% of gross
revenues (net of contractual allowances); and minus [vi] an imputed replacement
reserve of $400.00 per licensed bed at each Facility, per year.
(b) "Coverage Ratio" is the ratio of [i] Cash Flow
for each applicable period; to [ii] the Rent payments due pursuant to this Lease
and all other debt service and lease payments relating to the Leased Property
for the applicable period.
(c) "Net Worth" means an amount equal to the total
consolidated fair market value of the tangible assets of the person (excluding
good will and other intangible assets) minus the total consolidated liabilities
of such person.
15.7.2 Coverage Ratio. Tenant shall maintain for each fiscal
quarter a Coverage Ratio with respect to each Facility of not less than [i] 1.1
to 1.0 as of the Effective Date; and [ii] 1.25 to 1.0 as of the second
anniversary of the Effective Date. For purposes of computing the Coverage Ratio
for each Facility, the Cash Flow and Rent payments shall be allocated to each
individual Facility pro rata based upon the Lease Amount allocated to such
Facility as set forth in Exhibit A-2.
15.7.3 Net Worth. Guarantor shall maintain for each fiscal
quarter a Net Worth of at least $500,000.00 with cash and cash equivalents of at
least $200,000.00.
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15.7.4 Current Ratio. Tenant and Guarantor shall maintain for
each fiscal quarter a ratio of current assets to current liabilities of not less
than 1.10 to 1.00.
15.7.5 Debt to Equity Ratio. Guarantor shall maintain for each
fiscal quarter a ratio of total indebtedness to shareholders' equity in accord
with the following schedule:
<TABLE>
<CAPTION>
Year Debt-to-Equity
---- --------------
<S> <C>
1997 15:1
1998 20:1
1999 25:1
2000 18:1
2001 10:1
</TABLE>
The aggregate lease amount under all capitalized and operating leases shall be
included as indebtedness and all subordinated debt shall be included as equity.
15.8 Transfer of License. If this Lease is terminated due to
expiration of the Term, pursuant to an Event of Default or for any reason other
than Tenant's purchase of the Leased Property, or if Tenant vacates the Leased
Property without termination of this Lease, Tenant shall execute, deliver and
file all documents and statements requested by Landlord to effect the transfer
of the Facility license and Government Authorizations to an entity designated by
Landlord, subject to any required approval of governmental regulatory
authorities, and Tenant shall provide to Landlord all information and records
required by Landlord in connection with the transfer of the license and
Government Authorizations.
16: ALTERATIONS, CAPITAL IMPROVEMENTS, AND SIGNS
16.1 Prohibition on Alterations and Improvements. Except for
Permitted Alterations (as hereinafter defined), Tenant shall not make any
structural or nonstructural changes, alterations, additions and/or improvements
(hereinafter collectively referred to as "Alterations") to the Leased Property.
16.2 Approval of Alterations. If Tenant desires to perform any
Permitted Alterations, Tenant shall deliver to Landlord plans, specifications,
drawings, and such other information as may be reasonably requested by Landlord
(collectively the "Plans and Specifications") showing in
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reasonable detail the scope and nature of the Alterations that Tenant desires to
perform. It is the intent of the parties hereto that the level of detail shall
be comparable to that which is referred to in the architectural profession as
"design development drawings" as opposed to working or biddable drawings.
Landlord agrees not to unreasonably delay its review of the Plans and
Specifications. Within 30 days after receipt of an invoice, Tenant shall
reimburse Landlord for all costs and expenses incurred by Landlord in reviewing
and, if required, approving or disapproving the Plans and Specifications,
inspecting the Leased Property, and otherwise monitoring compliance with the
terms of this Article 16. Tenant shall comply with the requirements of Section
16.4 in making any Permitted Alterations.
16.3 Permitted Alterations. Permitted Alterations means any
one of the following: [i] Alterations approved by Landlord; [ii] Alterations
required under Section 7.2; [iii] Alterations having a total cost of less than
$25,000.00; or [iv] repairs, rebuilding and restoration required or undertaken
pursuant to Section 9.4.
16.4 Requirements for Permitted Alterations. Tenant shall
comply with all of the following requirements in connection with any Permitted
Alterations:
(a) The Permitted Alterations shall be made in
accordance with the approved Plans and Specifications.
(b) The Permitted Alterations and the installation
thereof shall comply with all applicable legal requirements and insurance
requirements.
(c) The Permitted Alterations shall be done in a good
and workmanlike manner, shall not impair the value or the structural integrity
of the Leased Property, and shall be free and clear of all construction liens.
(d) For any Permitted Alterations having a total cost
of $100,000.00 or more, Tenant shall deliver to Landlord a payment and
performance bond, with a surety acceptable to Landlord, in an amount equal to
the estimated cost of the Permitted Alterations, guaranteeing the completion of
the work free and clear of liens and in accordance with the approved Plans and
Specifications, and naming Landlord and any mortgagee of Landlord as joint
obligees on such bond.
(e) Tenant shall, at Tenant's expense, obtain a
builder's completed value risk policy of insurance insuring against all risks of
physical loss, including collapse and transit
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coverage, in a nonreporting form, covering the total value of the work
performed, and equipment, supplies, and materials, and insuring initial
occupancy. Landlord and any mortgagee of Landlord shall be additional insureds
of such policy. Landlord shall have the right to approve the form and substance
of such policy.
(f) Tenant shall pay the premiums required to
increase the amount of the insurance coverages required by Article 4 to reflect
the increased value of the Improvements resulting from installation of the
Permitted Alterations, and shall deliver to Landlord a certificate evidencing
the increase in coverage.
(g) Tenant shall, not later than 60 days after
completion of the Permitted Alterations, deliver to Landlord a revised
"as-built" survey of the Leased Property if the Permitted Alterations altered
the Land or "foot-print" of the Improvements and an "as-built" set of Plans and
Specifications for the Permitted Alterations in form and substance reasonably
satisfactory to Landlord.
(h) Tenant shall, not later than 30 days after
Landlord sends an invoice, reimburse Landlord for any reasonable costs and
expenses, including attorneys' fees and architects' and engineers' fees,
incurred in connection with reviewing and approving the Permitted Alterations
and ensuring Tenant's compliance with the requirements of this section. The
daily fee for Landlord's consulting engineer is $750.00.
16.5 Ownership and Removal of Permitted Alterations. The
Permitted Alterations shall become a part of the Leased Property, owned by
Landlord, and leased to Tenant subject to the terms and conditions of this
Lease. Tenant shall not be required or permitted to remove any Permitted
Alterations.
16.6 Signs. Tenant may, at its own expense, erect and maintain
identification signs at the Leased Property, provided such signs comply with all
laws, ordinances, and regulations. Upon the termination or expiration of this
Lease, Tenant shall, within 30 days after notice from Landlord, remove the signs
and restore the Leased Property to its original condition.
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ARTICLE 17: [RESERVED]
ARTICLE 18: ASSIGNMENT AND SALE OF LEASED PROPERTY
18.1 Prohibition on Assignment and Subletting. Tenant
acknowledges that Landlord has entered into this Lease in reliance on the
personal services and business expertise of Tenant. Except for an assignment to
an Affiliate pursuant to Section 18.6, Tenant may not assign, sublet, mortgage,
hypothecate, pledge, or transfer any interest in this Lease, or in the Leased
Property, in whole or in part, without the prior written consent of Landlord,
which Landlord may withhold in its sole and absolute discretion. The following
transactions will be deemed an assignment or sublease requiring Landlord's prior
written consent: [i] an assignment by operation of law; [ii] an imposition
(whether or not consensual) of a lien, mortgage, or encumbrance upon Tenant's
interest in the Lease; [iii] an arrangement (including but not limited to,
management agreements, concessions, licenses, and easements) which allows the
use or occupancy of all or part of the Leased Property by anyone other than
Tenant; and [iv] a change of ownership of Tenant. Landlord's consent to any
assignment or sublease will not release Tenant (or any guarantor) from its
payment and performance obligations under this Lease, but rather Tenant, any
guarantor, and Tenant's assignee or sublessee will be jointly and severally
liable for such payment and performance. An assignment or sublease without the
prior written consent of Landlord will be void at the Landlord's option.
Landlord's consent to one assignment or sublease will not waive the requirement
of its consent to any subsequent assignment or sublease.
18.2 Requests for Landlord's Consent to Assignment, Sublease
or Management Agreement. If Tenant requests Landlord's consent to a specific
assignment, sublease, or management agreement, Tenant shall give Landlord [i]
the name and address of the proposed assignee, subtenant or manager; [ii] a copy
of the proposed assignment, sublease or management agreement; [iii] reasonably
satisfactory information about the nature, business and business history of the
proposed assignee, subtenant, or manager and its proposed use of the Leased
Property; and [iv] banking, financial, and other credit information, and
references about the proposed assignee, subtenant or manager sufficient to
enable Landlord to determine the financial responsibility and character of the
proposed assignee, subtenant or manager. Any assignment, sublease or management
agreement shall contain provisions to the effect that [a] such assignment,
sublease or management agreement is subject and subordinate to all of the terms
and provisions of this
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Lease and to the rights of Landlord; [b] such assignment, sublease or management
agreement may not be modified without the prior written consent of Landlord not
to be unreasonably withheld or delayed; [c] if this Lease shall terminate before
the expiration of such assignment, sublease or management agreement, the
assignee, subtenant or manager thereunder will, at Landlord's option, attorn to
Landlord and waive any right the assignee, subtenant or manager may have to
terminate the assignment, sublease or management agreement or surrender
possession thereunder as a result of the termination of this Lease; and [d] if
the assignee, subtenant or manager receives a written notice from Landlord
stating that Tenant is in default under this Lease, the assignee, subtenant or
manager shall thereafter pay all rentals or payments under the assignment,
sublease or management agreement directly to Landlord until such default has
been cured. Tenant hereby collaterally assigns to Landlord, as security for the
performance of its obligations hereunder, all of Tenant's right, title, and
interest in and to any assignment, sublease or management agreement now or
hereafter existing for all or part of the Leased Property. Tenant shall, at the
request of Landlord, execute such other instruments or documents as Landlord may
request to evidence this collateral assignment. If Landlord, in its sole and
absolute discretion, consents to such assignment, sublease, or management
agreement, such consent shall not be effective until [i] a fully executed copy
of the instrument of assignment, sublease or management agreement has been
delivered to Landlord; [ii] in the case of an assignment, Landlord has received
a written instrument in which the assignee has assumed and agreed to perform all
of Tenant's obligations under the Lease; and [iii] Tenant has paid to Landlord a
fee in the amount of $2,500.00; and [iv] Landlord has received reimbursement
from Tenant or the assignee for all attorneys' fees and expenses and all other
reasonable out-of-pocket expenses incurred in connection with determining
whether to give its consent, giving its consent and all matters relating to the
assignment.
18.3 Agreements with Residents. Notwithstanding Section 18.1,
Tenant may enter into an occupancy agreement with residents of the Leased
Property without the prior written consent of Landlord provided that [i] the
agreement does not provide for lifecare services; [ii] Tenant may not collect
rent for more than one month in advance other than deposits for first and last
month's rent; and [iii] all residents of the Leased Property are accurately
shown in Tenant's accounting records.
18.4 Sale of Leased Property. If Landlord or any subsequent
owner of the Leased Property sells the Leased Property, its liability for the
performance of its agreements in this Lease will end on the date of the sale of
the Leased Property, and
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Tenant will look solely to the purchaser for the performance of those
agreements. For purposes of this section, any holder of a mortgage or security
agreement which affects the Leased Property at any time, and any landlord under
any lease to which this Lease is subordinate at any time, will be a subsequent
owner of the Leased Property when it succeeds to the interest of Landlord or any
subsequent owner of the Leased Property.
18.5 Assignment by Landlord. Landlord may transfer, assign,
mortgage, collaterally assign, or otherwise dispose of Landlord's interest in
this Lease or the Leased Property.
18.6 Assignment to Affiliate. Tenant may assign its entire
interest in this Lease (but not any partial interest) to an Affiliate of Tenant,
provided that the requirements of Section 18.2 shall have been satisfied and
upon such satisfaction, Landlord's consent shall be deemed to have been given.
ARTICLE 19: HOLDOVER AND SURRENDER
19.1 Holding Over. Should Tenant, with or without the express
or implied consent of Landlord, continue to hold and occupy the Leased Property
after the expiration of the Term, such holding over beyond the Term and the
acceptance or collection of Rent by the Landlord shall operate and be construed
as creating a tenancy from month-to-month and not for any other term whatsoever.
Said month-to-month tenancy may be terminated by Landlord by giving Tenant 15
days written notice, and at any time thereafter Landlord may re-enter and take
possession of the Leased Property.
19.2 Surrender. Except for [i] Permitted Alterations; [ii]
normal and reasonable wear and tear (subject to the obligation of Tenant to
maintain the Leased Property in good order and repair during the Term); and
[iii] damage and destruction not required to be repaired by Tenant, Tenant shall
surrender and deliver up the Leased Property at the expiration or termination of
the Term in as good order and condition as of the Commencement Date.
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ARTICLE 20: LETTER OF CREDIT
20.1 Terms of Letter of Credit. As security for the
performance of its obligations hereunder, Tenant shall provide Landlord with the
Letter of Credit at the Closing. Tenant shall maintain the Letter of Credit in
favor of Landlord until Tenant's Obligations are performed in full. The Letter
of Credit shall permit partial draws and shall permit drawing upon presentation
of a draft drawn on the issuer and a certificate signed by Landlord stating that
an Event of Default has occurred under this Lease. The Letter of Credit shall be
for an initial term of one year and shall be automatically renewed annually for
successive terms of at least one year unless Landlord receives notice from the
Issuer, by certified mail, at least 60 days prior to the expiry date then in
effect that the Letter of Credit will not be extended for an additional one-year
period.
20.2 Replacement Letter of Credit. Tenant shall provide a
replacement Letter of Credit which satisfies the requirements of Section 20.1
from an Issuer acceptable to Landlord within 30 days after the occurrence of any
of the following: [i] Landlord's receipt of notice from the Issuer that the
Letter of Credit will not be extended for an additional one-year period; [ii]
Landlord gives notice to Tenant that the Lace Financial Service Rating of the
Issuer is less than a "C+"; or [iii] Landlord gives notice to Tenant of the
admission by Issuer in writing of its inability to pay its debts generally as
they become due, or Issuer's filing of a petition in bankruptcy or petitions to
take advantage of any insolvency act, making an assignment for the benefit of
its creditors, consenting to the appointment of a receiver of itself or of the
whole or any substantial part of its property, or filing 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. Tenant's failure to comply with the requirements of this section shall
be an immediate Event of Default without any notice (other than as provided for
in the section), cure or grace period.
20.3 Draws. Landlord may draw under the Letter of Credit upon
the occurrence of an Event of Default hereunder. Any such draw shall not cure an
Event of Default. Landlord shall have the right, but not the obligation, to
apply all or any portion of the proceeds from the Letter of Credit to pay all or
any portion of [i] all Rent and other charges and expenses payable by Tenant
under this Lease; plus [ii] all expenses and costs incurred by Landlord in
enforcing or preserving Landlord's rights under this Lease or any security for
the Lease,
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including without limitation, [a] the fees, expenses, and costs of any
litigation, receivership, administrative, bankruptcy, insolvency, or other
similar proceeding; [b] attorney, paralegal, consulting and witness fees and
disbursements; and [c] the expenses, including without limitation, lodging,
meals and transportation of Landlord and its employees, agents, attorneys, and
witnesses in preparing for litigation, administrative, bankruptcy, insolvency,
or similar proceedings and attendance at hearings, depositions, and trials in
connection therewith.
With respect to any portion of the Letter of Credit proceeds
that is not applied to payment of Tenant's Obligations, Landlord shall have the
option to either [i] deposit the proceeds into an interest-bearing account with
a financial institution chosen by Landlord ("LC Account"); or [ii] require
Tenant to obtain a replacement Letter of Credit satisfactory to Landlord, with
the Letter of Credit proceeds made available to Tenant to secure Tenant's
reimbursement obligation for the Letter of Credit. All interest accruing on the
LC Account shall be paid to Landlord and may, from time to time, be withdrawn
from the LC Account by Landlord. At any time and from time to time until
Tenant's Obligations are performed in full, Landlord may apply all or any
portion of the funds held in the LC Account to payment of all or any portion of
Tenant's Obligations. Within 10 days after any such payment from the LC Account,
Landlord shall give written notice to Tenant describing the amount of such
payment and how it was applied to Tenant's Obligations.
Upon the occurrence of either [i] Landlord's receipt of a
replacement Letter of Credit that satisfies the requirements of Section 20.1 and
is issued by an Issuer acceptable to Landlord; or [ii] the date on which all of
Tenant's Obligations are performed in full, Landlord shall pay the principal
balance of the LC Account (but not any accrued interest) to Tenant.
20.4 Partial Draws. Upon the occurrence of a monetary Event of
Default under this Lease, Landlord may, at its option, make a partial draw on
the Letter of Credit in an amount not to exceed the amount of Tenant's monetary
obligations under this Lease then past due. If Landlord then applies the
proceeds from such partial draw on the Letter of Credit to payment of all or any
portion of Tenant's monetary obligations then past due, Tenant shall, within 10
days after notice from Landlord of such partial draw and payment, cause the
amount of the Letter of Credit to be reinstated to the amount in effect prior to
such partial draw. Tenant's failure to comply with the requirements of this
section shall be an immediate Event of Default under the Loan Documents without
any notice (other than as provided for in this section), cure or grace period.
Landlord's rights under this Section 20.4 are in addition to, and not in
limitation of, Landlord's rights under Section 20.3.
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20.5 Substitute Letter of Credit. Tenant may, from time to
time, deliver to Landlord a substitute Letter of Credit meeting the requirements
of this Agreement and issued by an Issuer acceptable to Landlord. Upon
Landlord's approval of the substitute Letter of Credit, Landlord shall release
the previous Letter of Credit to the Tenant.
ARTICLE 21: QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT AND ESTOPPEL CERTIFICATES
21.1 Quiet Enjoyment. So long as Tenant performs all of its
obligations under this Lease, Tenant's possession of the Leased Property will
not be disturbed by Landlord.
21.2 Subordination. Subject to the terms and conditions of
this section, this Lease and Tenant's rights under this Lease are subordinate to
any ground lease or underlying lease, first mortgage, first deed of trust, or
other first lien against the Leased Property, together with any renewal,
consolidation, extension, modification or replacement thereof, which now or at
any subsequent time affects the Leased Property or any interest of Landlord in
the Leased Property, except to the extent that any such instrument expressly
provides that this Lease is superior. The foregoing subordination provision is
expressly conditioned upon any lessor or mortgagee being obligated and bound to
recognize Tenant as the tenant under this Lease, and such lessor or mortgagee
shall have no right to disturb Tenant's possession, use and occupancy of the
Leased Property or Tenant's enjoyment of its rights under this Lease unless and
until an Event of Default occurs hereunder. Any foreclosure action or proceeding
by any mortgagee with respect to the Leased Property shall not affect Tenant's
rights under this Lease and shall not terminate this Lease unless and until an
Event of Default occurs hereunder. The foregoing provisions will be
self-operative, and no further instrument will be required in order to effect
them. However, Tenant shall execute, acknowledge and deliver to Landlord, at any
time and from time to time upon demand by Landlord, such documents as may be
requested by Landlord or any mortgagee or any holder of any mortgage or other
instrument described in this section, to confirm or effect any such
subordination, provided that any such document shall include a non-disturbance
provision as set forth in this section satisfactory to Tenant. Any mortgagee of
the Leased Property shall be deemed to be bound by the non-disturbance provision
set forth in this section. If Tenant fails or refuses to execute, acknowledge,
and deliver any such document within 20
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days after written demand, Landlord may execute acknowledge and deliver any such
document on behalf of Tenant as Tenant's attorney-in-fact. Tenant hereby
constitutes and irrevocably appoints Landlord, its successors and assigns, as
Tenant's attorney-in-fact to execute, acknowledge, and deliver on behalf of
Tenant any documents described in this section. This power of attorney is
coupled with an interest and is irrevocable.
21.3 Attornment. If any holder of any mortgage, indenture,
deed of trust, or other similar instrument described in Section 21.2 succeeds to
Landlord's interest in the Leased Property, Tenant will pay to such holder all
Rent subsequently payable under this Lease. Tenant shall, upon request of anyone
succeeding to the interest of Landlord, automatically become the tenant of, and
attorn to, such successor in interest without changing this Lease. The successor
in interest will not be bound by [i] any amendment or modification of this Lease
made after the successor in interest succeeds to Landlord's interest and made
without its consent as provided in this Lease; [ii] any claim against Landlord
arising prior to the date on which the successor succeeded to Landlord's
interest; or [iii] any claim or offset of Rent against the Landlord. Upon
request by Landlord or such successor in interest and without cost to Landlord
or such successor in interest, Tenant will execute, acknowledge and deliver an
instrument or instruments confirming the attornment. If Tenant fails or refuses
to execute, acknowledge, and deliver any such instrument within 20 days after
written demand, then Landlord or such successor in interest will be entitled to
execute, acknowledge, and deliver any document on behalf of Tenant as Tenant's
attorney-in-fact. Tenant hereby constitutes and irrevocably appoints Landlord,
its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any such document. This power of
attorney is coupled with an interest and is irrevocable.
21.4 Estoppel Certificates. At the request of Landlord or any
mortgagee or purchaser of the Leased Property, Tenant shall execute,
acknowledge, and deliver an estoppel certificate, in recordable form, in favor
of Landlord or any mortgagee or purchaser of the Leased Property certifying the
following: [i] that the Lease is unmodified and in full force and effect, or if
there have been modifications that the same is in full force and effect as
modified and stating the modifications; [ii] the date to which Rent and other
charges have been paid; [iii] whether Tenant or Landlord is in default or
whether there is any fact or condition which, with notice or lapse of time, or
both, would constitute a default, and specifying any existing default, if any;
[iv] that Tenant has accepted and occupies the Leased Property; [v] that Tenant
has no defenses, set-offs, deductions, credits, or counterclaims against
Landlord, if that be the case, or specifying
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such that exist; and [vi] such other information as may reasonably be requested
by Landlord or any mortgagee or purchaser. Any purchaser or mortgagee may rely
on this estoppel certificate. If Tenant fails to deliver the estoppel
certificates to Landlord within 10 business days after the request of the
Landlord, then Tenant shall be deemed to have certified that [a] the Lease is in
full force and effect and has not been modified, or that the Lease has been
modified as set forth in the certificate delivered to Tenant; [b] Tenant has not
prepaid any Rent or other charges except for the current month; [c] Tenant has
accepted and occupies the Leased Property; [d] neither Tenant nor Landlord is in
default nor is there any fact or condition which, with notice or lapse of time,
or both, would constitute a default; and [e] Tenant has no defenses, set-offs,
deductions, credits, or counterclaims against Landlord. Tenant hereby
irrevocably appoints Landlord as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on Tenant's behalf any estoppel certificate to which
Tenant does not object within 10 days after Landlord sends the certificate to
Tenant. This power of attorney is coupled with an interest and is irrevocable.
ARTICLE 22: REPRESENTATIONS AND WARRANTIES
Tenant hereby makes the following representations and
warranties, as of the Effective Date, to Landlord and acknowledges that Landlord
is granting the Lease in reliance upon such representations and warranties.
Tenant's representations and warranties shall survive the Closing and, except to
the extent made as of a specific date, shall continue in full force and effect
until Tenant's Obligations have been performed in full.
22.1 Organization and Good Standing. Tenant is a Corporation,
duly organized, validly existing and in good standing under the laws of the
State of Florida and is qualified to do business in and is in good standing
under the laws of the State.
22.2 Power and Authority. Tenant has the power and authority
to execute, deliver and perform this Lease. Tenant has taken all requisite
action necessary to authorize the execution, delivery and performance of
Tenant's obligations under this Lease.
22.3 Enforceability. This Lease constitutes a legal, valid,
and binding obligation of Tenant enforceable in accordance with its terms.
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22.4 Government Authorizations. The Facility is in compliance
with all Legal Requirements. All Government Authorizations are in full force and
effect. Except as otherwise noted in Exhibit E, Tenant holds all Government
Authorizations necessary for the operation of the Facility as an assisted living
facility. Seller presently holds all Government Authorizations necessary for the
Facility's operation as an assisted living facility. Upon the Closing, Tenant
will be authorized to operate the Facility as an assisted living facility until
a license to operate the Facility is issued to Tenant. Tenant has filed all
applications and reports and taken all necessary action to obtain all Government
Authorizations as soon as possible after the Effective Date, subject to
governmental approval, and Tenant has no knowledge of any fact or circumstance
that would prevent or delay Tenant's obtaining of such Government
Authorizations.
22.5 Financial Statements. Tenant has furnished Landlord with
true, correct, and complete copies of the Financial Statements. The Financial
Statements fairly present the financial position of Tenant and Guarantor as
applicable, as of the respective dates and the results of operations for the
periods then ended in conformance with generally accepted accounting principles
applied on a basis consistent with prior periods. The Financial Statements and
other information furnished to Landlord are true, complete and correct and, as
of the Effective Date, no material adverse change has occurred since the
furnishing of such statements and information. As of the Effective Date, the
Financial Statements and other information do not contain any untrue statement
or omission of a material fact and are not misleading in any material respect.
Tenant and Guarantor are solvent, and no bankruptcy, insolvency, or similar
proceeding is pending or contemplated by or, to the knowledge of Tenant, against
Tenant or Guarantor.
22.6 Condition of Facility. To the best of Tenant's knowledge,
all of the mechanical and electrical systems, heating and air-conditioning
systems, plumbing, water and sewer systems, and all other items of mechanical
equipment or appliances are in good working order, condition and repair, are of
sufficient size and capacity to service the Facility for the Facility Uses and
conform with all applicable ordinances and regulations, and with all building,
zoning, fire, safety, and other codes, laws and orders. The Improvements,
including the roof and foundation, are structurally sound and free from leaks
and other defects.
22.7 Compliance with Laws. To the best of Tenant's knowledge,
there is no violation of, or noncompliance with, [i] any laws,
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orders, rules or regulations, ordinances or codes of any kind or nature
whatsoever relating to the Facility or the ownership or operation thereof
(including without limitation, building, fire, health, occupational safety and
health, zoning and land use, planning and environmental laws, orders, rules and
regulations); [ii] any covenants, conditions, restrictions or agreements
affecting or relating to the ownership, use or occupancy of the Facility; or
[iii] any order, writ, regulation or decree relating to any matter referred to
in [i] or [ii] above.
22.8 No Litigation. As of the Effective Date and except as
disclosed on Exhibit F, [i] there are no actions or suits, or any proceedings or
investigations by any governmental agency or regulatory body pending against
Tenant, Guarantor or the Facility; [ii] Tenant has not received notice of any
threatened actions, suits, proceedings or investigations against Tenant,
Guarantor or the Facility at law or in equity, or before any governmental board,
agency or authority which, if determined adversely to Tenant or Guarantor, would
materially and adversely affect the Facility or title to the Facility (or any
part thereof), the right to operate the Facility as presently operated, or the
financial condition of Tenant or Guarantor; [iii] there are no unsatisfied or
outstanding judgments against Tenant, Guarantor or the Facility; [iv] there is
no labor dispute materially and adversely affecting the operation or business
conducted by Tenant, Guarantor, or the Facility; and [v] Tenant does not have
knowledge of any facts or circumstances which might reasonably form the basis
for any such action, suit, or proceeding.
22.9 Consents. The execution, delivery and performance of
this Lease will not require any consent, approval, authorization, order, or
declaration of, or any filing or registration with, any court, any federal,
state, or local governmental or regulatory authority, or any other person or
entity, the absence of which would materially impair the ability of Tenant to
operate the Facility for the Facility Uses except for the post-acquisition
filing for licensure of the Facility.
22.10 No Violation. The execution, delivery and performance of
this Lease [i] do not and will not conflict with, and do not and will not result
in a breach of Tenant's Organizational Documents; [ii] do not and will not
conflict with, and do not and will not result in a breach of, and do not and
will not constitute a default under (or an event which, with or without notice
or lapse of time, or both, would constitute a default under), any of the terms,
conditions or provisions of any agreement or other instrument or obligation to
which Tenant is a party or by which its assets are bound; and [iii] do not and
will not violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Tenant or the Facility.
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22.11 Reports and Statements. All reports, statements,
certificates and other data furnished by or on behalf of Tenant or Guarantor to
Landlord in connection with this Lease, and all representations and warranties
made herein or in any certificate or other instrument delivered in connection
herewith and therewith, are true and correct in all material respects and do not
omit to state any material fact or circumstance necessary to make the statements
contained herein or therein, in light of the circumstances under which they are
made, not misleading as of the date of such report, statement, certificate or
other data. The copies of all agreements and instruments submitted to Landlord,
including, without limitation, all agreements relating to management of the
Facility, the Letter of Credit, and Tenant's working capital are true, correct
and complete copies and include all amendments and modifications of such
agreements.
22.12 ERISA. All plans (as defined in Section 4021(a) of the
Employee Retirement Income Security Act of 1974, as amended or supplemented from
time to time ("ERISA")) for which Tenant is an "employer" or a "substantial
employer" (as defined in Sections 3(5) and 4001(a)(2) of ERISA, respectively)
are in compliance with ERISA and the regulations and published interpretations
thereunder. To the extent Tenant maintains a qualified defined benefit pension
plan: [i] there exists no accumulated funding deficiency; [ii] no reportable
event and no prohibited transaction has occurred; [iii] no lien has been filed
or threatened to be filed by the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA; and [iv] Tenant has not
been deemed to be a substantial employer.
22.13 Chief Executive Office. Tenant maintains its chief
executive office and its books and records at the address set forth in the
introductory paragraph of this Agreement. Tenant does not conduct any of its
business or operations other than at its chief executive office and at the
Facility.
22.14 Other Name or Entities. Except as disclosed herein or as
otherwise consented to by Landlord, none of Tenant's business is conducted
through any corporate subsidiary, unincorporated association or other entity and
Tenant has not, within the six years preceding the date of this Agreement [i]
changed its name, [ii] used any name other than the name stated at the beginning
of this agreement, or [iii] merged or consolidated with, or acquired any of the
assets of, any corporation or other business.
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22.15 Parties in Possession. Except as disclosed on Exhibit B,
there are no parties in possession of any Leased Property or any portion thereof
as managers, lessees, tenants at sufferance, or trespassers.
22.16 Access. Access to the Land is directly from a dedicated
public right-of-way without any easement. To the knowledge of Tenant, there is
no fact or condition which would result in the termination or reduction of the
current access to and from the Land to such right-of-way.
22.17 Utilities. There are available at the Land gas,
municipal water, and sanitary sewer lines, storm sewers, electrical and
telephone services in operating condition which are adequate for the operation
of the Facility at a reasonable cost. The Land has direct access to utility
lines located in a dedicated public right-of-way without any easement. As of the
Effective Date, there is no pending or, to the knowledge of Tenant, threatened
governmental or third party proceeding which would impair or result in the
termination of such utility availability.
22.18 Condemnation and Assessments. As of the Effective Date,
Tenant has not received notice of, and there are no pending or, to the best of
Tenant's knowledge, threatened, condemnation, assessment or similar proceedings
affecting or relating to the Facility, or any portion thereof, or any utilities,
sewers, roadways or other public improvements serving the Facility.
22.19 Zoning. As of the Effective Date, [i] the use and
operation of the Facility for the Facility Uses is a permitted use under the
applicable zoning code; [ii] except as disclosed on Exhibit E hereto, no special
use permits, conditional use permits, variances, or exceptions have been granted
or are needed for such use of the Facility; [iii] the Land is not located in any
special districts such as historical districts or overlay districts; and [iv]
the Facility has been constructed in accordance with and complies with all
applicable zoning laws, including but not limited to, dimensional, parking,
setback, screening, landscaping, sign and curb cut requirements.
22.20 Pro Forma Statement. Tenant has delivered to Landlord a
true, correct and complete copy of the Pro Forma Statement. The Pro Forma
Statement shows Tenant's reasonable expectation of the most likely results of
Facility operations for the next 5 year period.
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22.21 Environmental Matters. During the period of Tenant's
ownership or possession of the Leased Property and, to the best of Tenant's
knowledge after diligent inquiry, for the period prior to Tenant's ownership or
possession of the Leased Property, [i] the Leased Property is in compliance with
all Environmental Laws; [ii] there were no releases or threatened releases of
Hazardous Materials on, from, or under the Leased Property, except in compliance
with all Environmental Laws; [iii] no Hazardous Materials have been, are or will
be used, generated, stored, or disposed of at the Leased Property, except in
compliance with all Environmental Laws; [iv] asbestos has not been and will not
be used in the construction of any Improvements; [v] no permit is or has been
required from the Environmental Protection Agency or any similar agency or
department of any state or local government for the use or maintenance of any
Improvements; [vi] underground storage tanks on or under the Land, if any, have
been and currently are being operated in compliance with all applicable
Environmental Laws; [vii] any closure, abandonment in place or removal of an
underground storage tank on or from the Land was performed in compliance with
applicable Environmental Laws and any such tank had no release contaminating the
Leased Property or, if there had been a release, the release was remediated in
compliance with applicable Environmental Laws to the satisfaction of regulatory
authorities; [viii] no summons, citation or inquiry has been made by any such
environmental unit, body or agency or a third party demanding any right of
recovery for payment or reimbursement for costs incurred under CERCLA or any
other Environmental Laws and the Land is not subject to the lien of any such
agency; and [ix] to the best of Tenant's knowledge, the Environmental Assessment
is true, complete and accurate. "Disposal" and "release" shall have the meanings
set forth in CERCLA.
22.22 Leases and Contracts. As of the Effective Date and
except as disclosed on Exhibit G, there are no leases or contracts (including
but not limited to, insurance contracts, maintenance contracts, construction
contracts, employee benefit plans, employment contracts, equipment leases,
security agreements, architect agreements, and management contracts) to which
Tenant or Guarantor is a party relating to any part of the ownership, operation,
possession, construction, management or administration of the Land or the
Facility.
22.23 No Default. As of the Effective Date, [i] there is no
existing Event of Default under this Lease; and [ii] no event has occurred
which, with the giving of notice or the passage of time, or both, would
constitute or result in such an Event of Default.
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ARTICLE 23: FUTURE PROJECTS; COTERMINOUS FINANCINGS
23.1 Project Submissions. Tenant, Guarantor and any Affiliate
shall submit certain future acquisition and development projects to Landlord as
provided in the Commitment.
23.2 Coterminous Financings. All future lease financings
between Landlord or any Landlord Affiliate and Tenant or any Affiliate will be
coterminous and will have identical renewal dates and option exercise periods.
Accordingly, as each lease financing is closed, the term renewal date and option
exercise periods under this Lease will be automatically extended to be
coterminous with the most recently closed lease financing.
ARTICLE 24: SECURITY INTEREST
24.1 Collateral. Tenant hereby grants to Landlord a security
interest in the following described property, whether now owned or hereafter
acquired by Tenant (the "Collateral"), to secure the payment and performance of
Tenant's Obligations:
(a) All machinery, furniture, equipment, trade fixtures,
appliances, inventory and all other goods (as "equipment," "inventory" and
"goods" are defined for purposes of Article 9 ("Article 9") of the Uniform
Commercial Code as adopted in the State) and any leasehold interest of Tenant in
any of the foregoing, now or hereafter located in or on or used or usable in
connection with the Land, Improvements, or Fixtures and replacements, additions,
and accessions thereto, including without limitation those items which are to
become fixtures or which are building supplies and materials to be incorporated
into an Improvement or Fixture.
(b) All accounts, contract rights, general intangibles,
instruments, documents, and chattel paper [as "accounts", "contract rights",
"general intangibles", "instruments", "documents", and "chattel paper", are
defined for purposes of Article 9] now or hereafter arising in connection with
the business located in or on or used or usable in connection with the Land,
Improvements, or Fixtures, and replacements, additions, and accessions thereto.
(c) All franchises, permits, licenses, operating rights,
certifications, approvals, consents, authorizations and
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other general intangibles regarding the use, occupancy or operation of the
Improvements, or any part thereof, including without limitation, certificates of
need, state health care facility licenses, and Medicare and Medicaid provider
agreements, to the extent permitted by law.
(d) Unless expressly prohibited by the terms thereof, all
contracts, agreements, contract rights and materials relating to the design,
construction, operation or management of the Improvements, including but not
limited to, plans, specifications, drawings, blueprints, models, mock-ups,
brochures, flyers, advertising and promotional materials and mailing lists.
(e) All ledger sheets, files, records, computer programs,
tapes, other electronic data processing materials, and other documentation
relating to the preceding listed property or otherwise used or usable in
connection with the Land and Improvements.
(f) The products and proceeds of the preceding listed
property, including without limitation cash and non-cash proceeds, proceeds of
proceeds, and insurance proceeds.
24.2 Additional Documents. At the request of Landlord, Tenant
shall execute additional security agreements, financing statements, and such
other documents as may be requested by Landlord to maintain and perfect such
security interest. Tenant hereby irrevocably appoints Landlord, its successors
and assigns, as Tenant's attorney-in-fact to execute, acknowledge, deliver and
file such documents on behalf of Tenant. This power of attorney is coupled with
an interest and is irrevocable.
24.3 Notice of Sale. With respect to any sale or other
disposition of any of the Collateral after the occurrence of an Event of
Default, Landlord and Tenant agree that the giving of 5 days notice by Landlord,
sent by overnight delivery, postage prepaid, to Tenant's notice address
designating the time and place of any public sale or the time after which any
private sale or other intended disposition of such Collateral is to be made,
shall be deemed to be reasonable notice thereof and Tenant waives any other
notice with respect thereto.
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ARTICLE 25: MISCELLANEOUS ARTICLE
25.1 Notices. Landlord and Tenant hereby agree that all
notices, demands, requests, and consents (hereinafter "notices") required to be
given pursuant to the terms of this Lease shall be in writing, shall be
addressed to the addresses set forth in the introductory paragraph of this
Lease, and shall be served by [i] personal delivery; [ii] certified mail, return
receipt requested, postage prepaid; or [iii] nationally recognized overnight
courier. All notices shall be deemed to be given upon the earlier of actual
receipt or 3 days after mailing, or one business day after deposit with the
overnight courier. Any notices meeting the requirements of this section shall be
effective, regardless of whether or not actually received. Landlord or Tenant
may change its notice address at any time by giving the other party notice of
such change.
25.2 Advertisement of Leased Property. In the event the
parties hereto have not executed a renewal Lease within 120 days prior to the
expiration of this Lease, then Landlord or its agent shall have the right to
enter the Leased Property at all reasonable times for the purpose of exhibiting
the Leased Property to others and to place upon the Leased Property for and
during the period commencing 120 days prior to the expiration of this Lease,
"for sale" or "for rent" notices or signs.
25.3 Entire Agreement. This Lease contains the entire
agreement between Landlord and Tenant with respect to the subject matter hereof.
No representations, warranties, and agreements have been made by Landlord except
as set forth in this Lease.
25.4 Severability. If any term or provision of this Lease is
held or deemed by Landlord to be invalid or unenforceable, such holding shall
not affect the remainder of this Lease and the same shall remain in full force
and effect, unless such holding substantially deprives Tenant of the use of the
Leased Property or Landlord of the rents herein reserved, in which event this
Lease shall forthwith terminate as if by expiration of the Term.
25.5 Captions and Headings. The captions and headings are
inserted only as a matter of convenience and for reference and in no way define,
limit or describe the scope of this Lease or the intent of any provision hereof.
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25.6 Governing Law. This Lease shall be construed under the
laws of the State.
25.7 Memorandum of Lease. Tenant shall not record this Lease.
Tenant may, however, record a memorandum of lease approved by Landlord.
25.8 Waiver. No waiver by Landlord of any condition or
covenant herein contained, or of any breach of any such condition or covenant,
shall be held or taken to be a waiver of any subsequent breach of such covenant
or condition, or to permit or excuse its continuance or any future breach
thereof or of any condition or covenant, nor shall the acceptance of Rent by
Landlord at any time when Tenant is in default in the performance or observance
of any condition or covenant herein be construed as a waiver of such default, or
of Landlord's right to terminate this Lease or exercise any other remedy granted
herein on account of such existing default.
25.9 Binding Effect. This Lease will be binding upon and inure
to the benefit of the heirs, successors, personal representatives, and permitted
assigns of Landlord and Tenant.
25.10 Power of Attorney. Effective upon [i] the occurrence and
during the continuance of an Event of Default, or [ii] termination of this Lease
for any reason other than Tenant's purchase of the Leased Property, Tenant
hereby irrevocably and unconditionally appoints Landlord, or Landlord's
authorized officer, agent, employee or designee, as Tenant's true and lawful
attorney-in-fact, to act for Tenant in Tenant's name, place, and stead, to
execute, deliver and file all applications and any and all other necessary
documents and statements to effect the issuance, transfer, reinstatement,
renewal and/or extension of the Facility license and all Governmental
Authorizations issued to Tenant or applied for by Tenant in connection with
Tenant's operation of the Facility, to permit any designee of Landlord or any
other transferee to operate the Facility under the Governmental Authorizations,
and to do any and all other acts incidental to any of the foregoing. Tenant
irrevocably and unconditionally grants to Landlord as its attorney-in-fact full
power and authority to do and perform every act necessary and proper to be done
in the exercise of any of the foregoing powers as fully as Tenant might or could
do if personally present or acting, with full power of substitution, hereby
ratifying and confirming all that said attorney shall lawfully do or cause to be
done by virtue hereof. This power of attorney is coupled with an interest and is
irrevocable prior to Tenant's purchase of the Leased Property. Except in the
case of an emergency, Landlord shall give Tenant three business days prior
written notice before acting on behalf of Tenant pursuant to this power of
attorney.
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25.11 No Offer. Landlord's submission of this Lease to Tenant
is not an offer to lease the Leased Property, or an agreement by Landlord to
reserve the Leased Property for Tenant. Landlord will not be bound to Tenant
until Tenant has duly executed and delivered duplicate original leases to
Landlord, and Landlord has duly executed and delivered one of these duplicate
original leases to Tenant.
25.12 Modification. This Lease may only be modified by a
writing signed by both Landlord and Tenant. All references to this Lease,
whether in this Lease or in any other document or instrument, shall be deemed to
incorporate all amendments, modifications and renewals of this Lease, made after
the date hereof. If Tenant requests Landlord's consent to any change in
ownership, merger or consolidation of Tenant or Guarantor, any assumption of the
Lease, or any material modification of the Lease, Tenant shall provide Landlord
all relevant information and documents sufficient to enable Landlord to evaluate
the request. In connection with any such request, Tenant shall pay to Landlord a
fee in the amount of $2,500.00 and shall pay all of Landlord's reasonable
attorney's fees and expenses and other reasonable out-of-pocket expenses
incurred in connection with Landlord's evaluation of Tenant's request, the
preparation of any documents and amendments, the subsequent amendment of any
documents between Landlord and its collateral pool lenders (if applicable), and
all related matters.
25.13 Landlord's Modification. Tenant acknowledges that
Landlord may mortgage the Leased Property or use the Leased Property as
collateral for a collateralized mortgage obligations or Real Estate Mortgage
Investment Companies (REMICS). If any mortgage lender of Landlord desires any
modification of this Lease, Tenant agrees to consider such modification in good
faith and to execute an amendment of this Lease if Tenant finds such
modification acceptable.
25.14 No Merger. The surrender of this Lease by Tenant or the
cancellation of this Lease by agreement of Tenant and Landlord or the
termination of this Lease on account of Tenant's default will not work a merger,
and will, at Landlord's option, terminate any subleases or operate as an
assignment to Landlord of any subleases. Landlord's option under this paragraph
will be exercised by notice to Tenant and all known subtenants of the Leased
Property.
25.15 Laches. No delay or omission by either party hereto to
exercise any right or power accruing upon any noncompliance or default by the
other party with
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respect to any of the terms hereof shall impair any such right or power or be
construed to be a waiver thereof.
25.16 Limitation on Tenant's Recourse. Tenant's sole recourse
against Landlord, and any successor to the interest of Landlord in the Leased
Property, is to the interest of Landlord, and any such successor, in the Leased
Property. Tenant will not have any right to satisfy any judgment which it may
have against the Landlord, or any such successor, from any other assets of
Landlord, or any such successor. In this section, the terms "Landlord" and
"successor" include the shareholders, venturers, and partners of "Landlord" and
"successor" and the officers, directors, and employees of the same. The
provisions of this section are not intended to limit Tenant's right to seek
injunctive relief or specific performance.
25.17 Construction of Lease. This Lease has been prepared by
Landlord and its professional advisors and reviewed by Tenant and its
professional advisors. Landlord, Tenant, and their advisors believe that this
Lease is the product of all their efforts, that it expresses their agreement,
and agree that it shall not be interpreted in favor of either Landlord or Tenant
or against either Landlord or Tenant merely because of their efforts in
preparing it.
25.18 Counterparts. This Lease may be executed in multiple
counterparts, each of which shall be deemed an original hereof.
25.19 Lease Guaranty. The payment of Rent and the performance
of Tenant's obligations under this Lease are guaranteed by Guarantor pursuant to
a Lease Guaranty of even date.
25.20 Custody of Escrow Funds. Any funds paid to Landlord in
escrow hereunder may be held by Landlord or, at Landlord's election, by a
financial institution, the deposits or accounts of which are insured or
guaranteed by a federal or state agency. The funds shall not be deemed to be
held in trust, may be commingled with the general funds of Landlord or such
other institution, and shall not bear interest.
25.21 Landlord's Status as a REIT. Tenant acknowledges that
Landlord (or a Landlord Affiliate) has now and may hereafter elect to be taxed
as a real estate investment trust ("REIT") under the Internal Revenue Code.
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25.22 Exhibits. The following exhibits are attached hereto and
incorporated herein:
<TABLE>
<S> <C>
Exhibit A: Legal Description
Exhibit A-1: Personal Property
Exhibit A-2: Designation of Facilities
Exhibit B: Permitted Exceptions
Exhibit C: Documents to be Delivered
Exhibit D: Certificate and Facility Financial Reports
Exhibit E: Government Authorizations to be Obtained;
Zoning Permits
Exhibit F: Pending Litigation
Exhibit G: List of Leases and Contracts
Exhibit H: Nondisturbance Agreement
</TABLE>
25.23 WAIVER OF JURY TRIAL. LANDLORD AND TENANT WAIVE TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST
THE OTHER ON ALL MATTERS ARISING OUT OF THIS LEASE OR THE USE AND OCCUPANCY OF
THE LEASED PROPERTY (EXCEPT CLAIMS FOR PERSONAL INJURY OR PROPERTY DAMAGE). IF
LANDLORD COMMENCES ANY SUMMARY PROCEEDING FOR NONPAYMENT OF RENT, TENANT WILL
NOT INTERPOSE, AND WAIVES THE RIGHT TO INTERPOSE, ANY COUNTERCLAIM IN ANY SUCH
PROCEEDING.
25.24 CONSENT TO JURISDICTION. TENANT HEREBY IRREVOCABLY
SUBMITS AND CONSENTS TO THE NON-EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR
FEDERAL COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO OR MANATEE COUNTY,
FLORIDA FOR ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING
FROM OR RELATED TO [I] THE COMMITMENT; [II] THIS LEASE; OR [III] ANY DOCUMENT
EXECUTED BY TENANT IN CONNECTION WITH THIS LEASE. TENANT HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT TENANT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. TENANT
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW.
TENANT AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING
AGAINST LANDLORD OR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT OR PROPERTY OF
LANDLORD, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THE COMMITMENT,
THIS LEASE OR ANY RELATED DOCUMENT IN ANY COURT OTHER THAN A STATE OR FEDERAL
COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO OR MANATEE COUNTY, FLORIDA.
TENANT HEREBY CONSENTS TO SERVICE OF PROCESS BY LANDLORD IN
ANY MANNER AND IN ANY JURISDICTION PERMITTED BY LAW. NOTHING HEREIN SHALL AFFECT
OR IMPAIR LANDLORD'S RIGHT TO SERVE
-70-
<PAGE> 71
LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW, OR LANDLORD'S RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST TENANT OR THE PROPERTY OF TENANT IN THE COURTS OF
ANY OTHER JURISDICTION.
25.25 Attorney's Fees and Expenses. Tenant shall pay to
Landlord all reasonable costs and expenses incurred by Landlord in administering
this Lease and the security for this Lease, enforcing or preserving Landlord's
rights under this Lease and the security for this Lease, and in all matters of
collection, whether or not an Event of Default has actually occurred or has been
declared and thereafter cured, including but not limited to, [a] reasonable
attorney's and paralegal's fees and disbursements; [b] the fees and expenses of
any litigation, administrative, bankruptcy, insolvency, receivership and any
other similar proceeding; [c] court costs; [d] the expenses of Landlord, its
employees, agents, attorneys and witnesses in preparing for litigation,
administrative, bankruptcy, insolvency and other proceedings and for lodging,
travel, and attendance at meetings, hearings, depositions, and trials; and [e]
consulting and witness fees incurred by Landlord in connection with any
litigation or other proceeding.
25.26 Survival. The following provisions shall survive
termination of the Lease: Article 9 (Damage & Destruction), Article 10
(Condemnation); Article 16 (Alterations); and ss.25.26 (Survival).
25.27 Warrants. In consideration of Landlord's purchase of the
Leased Property and lease of the Leased Property to Tenant, Just Like Home, Inc.
has issued stock warrants to Landlord upon the terms and conditions set forth
therein.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
-71-
<PAGE> 72
IN WITNESS WHEREOF, the parties hereto have executed this
Lease or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
Signed and acknowledged
in the presence of: HEALTH CARE REIT, INC.
Signature By:
------------------------ ----------------------------
Print Name
------------------------
Title:
------------------------
Signature
------------------------
Print Name
------------------------
JLH SERIES I, INC.
Signature By:
------------------------ ----------------------------
Print Name
------------------------
Title:
------------------------
Signature
------------------------
Print Name
------------------------ Tax I.D. No.: 65-0386620
STATE OF OHIO )
) SS:
COUNTY OF LUCAS )
The foregoing instrument was acknowledged before me this _____ day of
_____________, 1997 by ___________________________, the _________________ of
Health Care REIT, Inc., a Delaware corporation, on behalf of the corporation.
-------------------------------
Notary Public
My Commission Expires: [SEAL]
---------------------
-72-
<PAGE> 73
STATE OF FLORIDA )
) SS:
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me this _____ day of
______________________, 1997 by ___________________ ___________________________,
the _________________ of JLH Series I, Inc., a Florida corporation, on behalf of
the corporation.
------------------------------
Notary Public
My Commission Expires: [SEAL]
---------------------
THIS INSTRUMENT PREPARED BY:
JOHN S. ZARBANO, ESQ.
SHUMAKER, LOOP & KENDRICK, LLP
1000 JACKSON STREET
TOLEDO, OHIO 43624
-73-
<PAGE> 74
EXHIBIT A: LEGAL DESCRIPTION
<PAGE> 75
EXHIBIT A-1: PERSONAL PROPERTY
[TENANT TO PROVIDE]
<PAGE> 76
EXHIBIT A-2
DESIGNATION OF FACILITIES
JUST LIKE HOME I
Number of Beds: 16
Local Address: 1604 71st Street N.W.
Bradenton, Florida 34209
Allocated Acquisition Amount: $475,000.00
JUST LIKE HOME III
Number of Beds: 20
Local Address: 2015 75th Street West
Bradenton, Florida 34209
Allocated Acquisition Amount: $425,000.00
JUST LIKE HOME VII (also known as Just Like Home at Twin Oaks)
Number of Beds: 20
Local Address: 2614 43rd Street West
Bradenton, Florida 34210
Allocated Acquisition Amount: $900,000.00
JUST LIKE HOME VIII (also known as Just Like Home at Twin Oaks)
Number of Beds: 20
Local Address: 2614 43rd Street West
Bradenton, Florida 34210
Allocated Acquisition Amount: $900,000.00
<PAGE> 77
EXHIBIT B: PERMITTED EXCEPTIONS
1. Taxes and assessments not yet due and payable.
[TO BE COMPLETED]
<PAGE> 78
EXHIBIT C: DOCUMENTS TO BE DELIVERED
Tenant shall deliver each of the following documents to Landlord no
later than the date specified for each document:
1. Annual Financial Statement of Tenant (audited) and Facility
Financial Statement (audited) - within 90 days after the end of each fiscal
year.
2. Periodic Financial Statement of Tenant - within 45 days after the
end of each quarter.
3. Monthly Facility Financial Statement - within 30 days after the end
of each month.
4. Tenant's Certificate and Annual or Quarterly Facility Financial
Report (Exhibit D) - with each delivery of Tenant's financial statements.
5. Annual Facility Financial Report (based upon internal financial
records) - within 60 days after the end of each fiscal year.
6. Annual Financial Statement (audited) of Guarantor (corporation,
partnership or limited liability company) - within 90 days after the end of each
fiscal year.
7. Periodic Financial Statement of Guarantor (corporation, partnership
or limited liability company) - within 45 days after the end of each quarter.
8. Guarantor's certificate - with each delivery of Guarantor's
financial statements.
9. Federal tax returns of Tenant and Guarantor - within 15 days after
the filing of the return. If the filing date is extended, also provide a copy of
the extension application within 15 days after filing.
10. Medicaid cost reports for each Facility - within 15 days after
filing of the report with the State agency.
11. State and federal survey and inspection reports for each Facility -
within 7 days after receipt by Tenant.
12. Real estate taxes
(a) Copy of invoice and check - within 5 days after the due date;
and
<PAGE> 79
(b) Copy of official receipt or other satisfactory evidence of
payment - within 30 days after the due date.
13. Certificate of insurance renewal and evidence of payment of premium
- - at least 30 days prior to the expiration of each policy.
-2-
<PAGE> 80
EXHIBIT D: TENANT'S CERTIFICATE
AND FACILITY FINANCIAL REPORTS
Report Period: Commencing and ending
------------ -----------
Lease: Lease made by Health Care REIT, Inc. ("Landlord") to JLH
Series I, Inc. ("Tenant")
I hereby certify to Landlord as follows:
1. The attached [specify audited or unaudited and annual or quarterly,
and if consolidated, so state] financial statements of Tenant [i] have been
prepared in accordance with generally accepted accounting principles
consistently applied; [ii] have been prepared in a manner substantially
consistent with prior financial statements submitted to Landlord; and [iii]
fairly present the financial condition and performance of Tenant in all material
respects.
2. The attached [Annual or Quarterly] Facility Financial Report and
Facility Accounts Receivable Aging Report for the Report Period is complete,
true and accurate and has been prepared in a manner substantially consistent
with prior schedules submitted to Landlord. As set forth in the [Annual or
Quarterly] Facility Financial Report, Tenant has maintained the Coverage Ratio
[IF APPLICABLE: and the Current Ratio/Debt to Equity Ratio] for the Report
Period as required under the Lease between Tenant and Landlord.
3. To the best of my knowledge, Tenant was in compliance with all of
the provisions of the Lease and all other documents executed by Tenant in
connection with the Lease at all times during the Report Period, and no default,
or any event which with the passage of time or the giving of notice or both
would constitute a default, has occurred under the Lease.
Executed this _____ day of _____________, ________.
-----------------------------------------------
Name:
-----------------------------------------------
Title:
-----------------------------------------------
<PAGE> 81
ANNUAL FACILITY FINANCIAL REPORT
FACILITY NAME:
-------------------------------------------------------------
FACILITY ADDRESS:
-------------------------------------------------------------
-------------------------------------------------------------
REPORT PERIOD: Twelve (12) months beginning ________________ and ending
__________________________________. All information reported
should be for this period only.
<TABLE>
<CAPTION>
CENSUS % RESIDENT
OCCUPANCY DATA DATA DAYS % REVENUES
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Beds/Units: Medicaid: % %
------- ------- -------
Total Available Days: Medicare: % %
------- ------- -------
Total Occupied Days: Private & Other: % %
------- ------- -------
Occupancy Percentage: % Total: % %
------- ------- -------
</TABLE>
OPERATING DATA
<TABLE>
<S> <C> <C>
1. Gross Revenues..................................................$
-----------
2. Contractual Allowances..........................................$
-----------
3. Net Revenues....................................................$
-----------
4. Operating Expenses (before interest,
lease/rent, depreciation, amortization and
management fees)................................................$
-----------
5. Net Operating Income............................................$
-----------
6. Interest Expense................................................$
-----------
7. Lease/Rent Expense..............................................$
-----------
8. Depreciation Expense............................................$
-----------
9. Amortization Expense............................................$
-----------
10. Management Fees.................................................$
-----------
11. Management Fees (as a percent of Gross
Revenues)........................................................ %
----------
12. Overhead Allocation (if applicable).............................$
-----------
13. Other (identify)................................................$
-----------
14. Income Taxes....................................................$
-----------
15. Net Income (amount should agree with the
facility's financial statements)................................$
-----------
</TABLE>
-2-
<PAGE> 82
FINANCING DATA
(Note: This data breaks out Items 6 and 7 above.)
<TABLE>
<CAPTION>
Related to HCRI All Other Leases
and/or Debt Total
------------------ ---------------------------------
<S> <C> <C> <C>
Interest or Lease Expense
---------- --------- --------
Principal Payments
---------- --------- --------
(if any)
$ $ $
---------- --------- --------
</TABLE>
COVERAGE RATIO
<TABLE>
<S> <C> <C>
1. Net Operating Income $
--------------
2. Less Imputed Management Fee
( % of gross revenues) ( )
----- --------------
3. Less Imputed Replacement Reserve for period
($ per bed [or unit] per year) ( )
--------- --------------
4. Adjusted Net Operating Income $
--------------
5. Loan/Lease Payments to HCRI $
--------------
6. Actual Coverage Ratio (Line 4 / Line 5)
--------------
7. Minimum Coverage Ratio (per Lease Agreement)
--------------
</TABLE>
CURRENT RATIO
[DELETE IF NOT APPLICABLE]
<TABLE>
<S> <C> <C>
1. Current Assets $
--------------
2. Current Liabilities $
--------------
3. Actual Current Ratio (Line 1 / Line 2)
--------------
4. Minimum Current Ratio (per Lease Agreement)
--------------
</TABLE>
I certify that the foregoing is true and accurate.
Date:
- ----------------------------------- -----------------------
Name:
-----------------------------
Title:
----------------------------
Phone Number:
---------------------
-3-
<PAGE> 83
QUARTERLY FACILITY FINANCIAL REPORT
FACILITY NAME:
----------------------------------------------------
FACILITY ADDRESS:
----------------------------------------------------
----------------------------------------------------
REPORT PERIOD: Three (3) months beginning __________________ and
ending __________________________. All information
reported should be for this period only.
<TABLE>
<CAPTION>
CENSUS % RESIDENT
OCCUPANCY DATA DATA DAYS % REVENUES
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Beds/Units: Medicaid: % %
------- ------- -------
Total Available Days: Medicare: % %
------- ------- -------
Total Occupied Days: Private & Other: % %
------- ------- -------
Occupancy Percentage: % Total: % %
------- ------- -------
</TABLE>
OPERATING DATA
<TABLE>
<S> <C> <C>
1. Gross Revenues..................................................$
-----------
2. Contractual Allowances..........................................$
-----------
3. Net Revenues....................................................$
-----------
4. Operating Expenses (before interest,
lease/rent, depreciation, amortization and
management fees)................................................$
-----------
5. Net Operating Income............................................$
-----------
6. Interest Expense................................................$
-----------
7. Lease/Rent Expense..............................................$
-----------
8. Depreciation Expense............................................$
-----------
9. Amortization Expense............................................$
-----------
10. Management Fees.................................................$
-----------
11. Management Fees (as a percent of Gross
Revenues)........................................................ %
----------
12. Overhead Allocation (if applicable).............................$
-----------
13. Other (identify)................................................$
-----------
14. Income Taxes....................................................$
-----------
15. Net Income (amount should agree with the
facility's financial statements)................................$
-----------
</TABLE>
-4-
<PAGE> 84
FINANCING DATA
(Note: This data breaks out Items 6 and 7 above.)
<TABLE>
<CAPTION>
Related to HCRI All Other Leases
and/or Debt Total
--------------------------------------------------
<S> <C> <C> <C>
Interest or Lease Expense
--------- --------- --------
Principal Payments
--------- --------- --------
(if any)
$ $ $
--------- --------- --------
</TABLE>
COVERAGE RATIO
<TABLE>
<S> <C> <C>
1. Net Operating Income $
--------------
2. Less Imputed Management Fee
( % of gross revenues) ( )
----- --------------
3. Less Imputed Replacement Reserve for period
($ per bed [or unit] per year) ( )
--------- --------------
4. Adjusted Net Operating Income $
--------------
5. Loan/Lease Payments to HCRI $
--------------
6. Actual Coverage Ratio (Line 4 / Line 5)
--------------
7. Minimum Coverage Ratio (per Lease Agreement)
--------------
</TABLE>
CURRENT RATIO
[DELETE IF NOT APPLICABLE]
<TABLE>
<S> <C> <C>
1. Current Assets $
--------------
2. Current Liabilities $
--------------
3. Actual Current Ratio (Line 1 / Line 2)
--------------
4. Minimum Current Ratio (per Lease Agreement)
--------------
</TABLE>
I certify that the foregoing is true and accurate.
Date:
- ----------------------------------- -----------------------
Name:
-----------------------------
Title:
----------------------------
Phone Number:
---------------------
-5-
<PAGE> 85
QUARTERLY FACILITY ACCOUNTS RECEIVABLE AGING REPORT
FACILITY NAME:
-----------------------------
FACILITY ADDRESS:
-----------------------------
-----------------------------
-----------------------------
ACCOUNTS RECEIVABLE AGING AS OF ____________ (MOST RECENT QUARTER ENDED)
<TABLE>
<CAPTION>
PAYOR 0-30 DAYS % 31-60 DAYS % 61-90 DAYS % OVER 90 DAYS % TOTALS %
<S> <C> <C> <C> <C> <C>
Medicaid $ % $ % $ % $ % $ %
---------------- ---------------- ---------------- ---------------- ----------------
Medicare $ % $ % $ % $ % $ %
---------------- ---------------- ---------------- ---------------- ----------------
Commercial Insurance $ % $ % $ % $ % $ %
---------------- ---------------- ---------------- ---------------- ----------------
Other - $ % $ % $ % $ % $ %
------------- ---------------- ---------------- ---------------- ---------------- ----------------
TOTALS $ 100% $ 100% $ 100% $ 100% $ 100%
------------- ------------- ------------- ------------- -------------
% OF TOTALS $ % % % % 100%
--------------- ---------------- ---------------- ----------------
</TABLE>
ACCOUNTS RECEIVABLE AGING AS OF ____________ (2ND RECENT QUARTER ENDED)
<TABLE>
<CAPTION>
PAYOR 0-30 DAYS % 31-60 DAYS % 61-90 DAYS % OVER 90 DAYS % TOTALS %
<S> <C> <C> <C> <C> <C>
Medicaid $ % $ % $ % $ % $ %
---------------- ---------------- ---------------- ---------------- ----------------
Medicare $ % $ % $ % $ % $ %
---------------- ---------------- ---------------- ---------------- ----------------
Commercial Insurance $ % $ % $ % $ % $ %
---------------- ---------------- ---------------- ---------------- ----------------
Other - $ % $ % $ % $ % $ %
------------- ---------------- ---------------- ---------------- ---------------- ----------------
TOTALS $ 100% $ 100% $ 100% $ 100% $ 100%
------------- ------------- ------------- ------------- -------------
</TABLE>
-6-
<PAGE> 86
EXHIBIT E: GOVERNMENT AUTHORIZATIONS
TO BE OBTAINED; ZONING PERMITS
[TENANT TO PROVIDE]
<PAGE> 87
EXHIBIT F: PENDING LITIGATION
NONE
<PAGE> 88
EXHIBIT G: LIST OF LEASES AND CONTRACTS
[TENANT TO PROVIDE]
<PAGE> 89
EXHIBIT H: LANDLORD-EQUIPMENT LESSOR
NONDISTURBANCE AGREEMENT
This Agreement is made this _____ day of ______________, 19____ by and
between HEALTH CARE REIT, INC. ("Landlord"), a Delaware corporation, having an
address of One SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio 43603, and
__________________________ ("Equipment Lessor"), having an address of
________________________ __________________________.
R E C I T A L S:
A. Landlord has leased to __________________ _________________________
("Lessee") the real and personal property located at ___________________________
and known as ____________________________________________ (the "Facility").
B. Equipment Lessor intends to enter or has entered into an equipment
lease with Lessee (the "Equipment Lease") for the personal property described in
Schedule 1 attached hereto (the "Equipment").
C. Landlord and Equipment Lessor have agreed to enter into this
Agreement to clarify their respective rights to the Equipment.
NOW, THEREFORE, Landlord and Equipment Lessor have agreed as follows:
1. Ownership of Equipment. Landlord acknowledges that the Equipment is
solely the property of Equipment Lessor and is personal property and shall not
constitute fixtures or become a part of the Facility, even though the Equipment
may be attached to the Facility by means of cement, plaster, nails, bolts,
screws or otherwise. Except as provided in Paragraph 3, Equipment Lessor may, at
all reasonable times, enter upon the Facility to inspect and/or to remove the
Equipment, in whole or in part; provided, however, that [i] Equipment Lessor
will not sell or auction the Equipment at the Facility; and [ii] Equipment
Lessor will reimburse the Landlord for reasonable costs of repair for any damage
done to the Facility as a result of said removal.
2. Waiver. Landlord acknowledges that Landlord has no interest in the
Equipment and waives any right arising under any law or any deed, lease or other
instrument to levy upon, distrain, seize or otherwise possess the Equipment.
3. Notice of Termination or Default. Equipment Lessor shall not
terminate the Equipment Lease or remove the Equipment from the Facility without
giving 30 days prior written
<PAGE> 90
notice to Landlord. Equipment Lessor shall give Landlord written notice of any
default of Lessee under the Equipment Lease simultaneously with its giving such
notice to Lessee and shall give Landlord the opportunity to cure any such
default within 30 days after Landlord's receipt of such notice.
4. Assumption of Equipment Lease. Landlord may at its option, at any
time, assume the obligations of Lessee as lessee under the Equipment Lease and
Equipment Lessor shall accept the performance of Landlord thereunder. Landlord
may thereafter assign its rights under the Equipment Lease to a purchaser or
tenant of the Facility. If the purchaser or tenant satisfies the Equipment
Lessor's credit standards for lessees, Equipment Lessor shall release Landlord
from its obligations under the Equipment Lease after such assignment. In the
event of any such assignment, the terms of this Agreement shall remain in full
force and effect if Landlord continues to hold any mortgage on, security
interest in, or title to the Facility.
5. Miscellaneous. This Agreement shall be construed under and governed
by the laws of the State of _________________. This Agreement shall be binding
upon the successors and assigns of Landlord and Equipment Lessor. This Agreement
may only be modified in writing signed by the Landlord and Equipment Lessor.
IN WITNESS WHEREOF, Landlord and Equipment Lessor have executed this
Agreement as of the date first above written.
HEALTH CARE REIT, INC.
By:
-------------------------------
Title:
----------------------------
----------------------------------
By:
-------------------------------
Title:
----------------------------
The undersigned Lessee consents to the foregoing Agreement.
----------------------------------
By:
-------------------------------
Title:
----------------------------
<PAGE> 91
SCHEDULE 1 - EQUIPMENT
(EQUIPMENT LESSOR OR LESSEE TO PROVIDE)
<PAGE> 92
LEASE AGREEMENT
BETWEEN
HEALTH CARE REIT, INC.
AND
JLH SERIES I, INC.
JULY 18, 1997
JUST LIKE HOME
BRADENTON, FLORIDA
<PAGE> 93
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
ARTICLE 1: LEASED PROPERTY, TERM AND DEFINITIONS.................. 1
1.1 Leased Property........................................ 1
1.2 Term................................................... 2
1.3 Definitions............................................ 2
ARTICLE 2: RENT................................................... 9
2.1 Base Rent.............................................. 9
2.2 Increase of Lease Rate and Base Rent................... 9
2.3 Additional Rent........................................ 9
2.4 Place of Payment of Rent............................... 9
2.5 Net Lease.............................................. 9
2.6 No Termination, Abatement, Etc......................... 10
2.7 Computational Method................................... 10
2.8 Commitment Fee......................................... 10
2.9 Working Capital Escrow................................. 10
ARTICLE 3: IMPOSITIONS AND UTILITIES.............................. 11
3.1 Payment of Impositions................................. 11
3.2 Definition of Impositions.............................. 12
3.3 Escrow of Impositions.................................. 12
3.4 Utilities.............................................. 13
3.5 Discontinuance of Utilities............................ 13
3.6 Business Expenses...................................... 13
3.7 Permitted Contests..................................... 13
ARTICLE 4: INSURANCE.............................................. 14
4.1 Property Insurance..................................... 14
4.2 Liability Insurance.................................... 15
4.3 Builder's Risk Insurance............................... 16
4.4 Insurance Requirements................................. 16
4.5 Replacement Value...................................... 17
4.6 Blanket Policy......................................... 17
4.7 No Separate Insurance.................................. 17
4.8 Waiver of Subrogation.................................. 18
4.9 Mortgages.............................................. 18
4.10 Escrows................................................ 18
ARTICLE 5: INDEMNITY.............................................. 18
5.1 Tenant's Indemnification............................... 18
5.2 Environmental Indemnity; Audits........................ 20
5.3 Limitation of Landlord's Liability..................... 20
ARTICLE 6: USE AND ACCEPTANCE OF PREMISES......................... 21
6.1 Use of Leased Property................................. 21
6.2 Acceptance of Leased Property.......................... 21
6.3 Conditions of Use and Occupancy........................ 21
</TABLE>
(i)
<PAGE> 94
<TABLE>
<S> <C> <C> <C>
ARTICLE 7: REPAIRS AND MECHANICS' LIENS........................... 22
7.1 Maintenance............................................ 22
7.2 Required Alterations................................... 22
7.3 Construction Liens..................................... 22
7.4 Replacements of Fixtures and Personal Property......... 23
ARTICLE 8: DEFAULTS AND REMEDIES.................................. 23
8.1 Events of Default...................................... 23
8.2 Remedies............................................... 25
8.3 Right of Set-Off....................................... 28
8.4 Performance of Tenant's Covenants...................... 28
8.5 Late Payment Charge.................................... 28
8.6 Interest............................................... 29
8.7 Litigation; Attorneys' Fees............................ 29
8.8 Escrows and Application of Payments.................... 29
8.9 Remedies Cumulative.................................... 30
ARTICLE 9: DAMAGE AND DESTRUCTION................................. 30
9.1 Notice of Casualty..................................... 30
9.2 Substantial Destruction................................ 30
9.3 Partial Destruction.................................... 31
9.4 Restoration............................................ 31
9.5 Insufficient Proceeds.................................. 32
9.6 Not Trust Funds........................................ 33
9.7 Landlord's Inspection.................................. 33
9.8 Landlord's Costs....................................... 33
9.9 No Rent Abatement...................................... 33
9.10 Business Interruption Insurance........................ 33
ARTICLE 10: CONDEMNATION........................................... 33
10.1 Total Taking........................................... 33
10.2 Partial Taking......................................... 34
10.3 Condemnation Proceeds Not Trust Funds.................. 34
ARTICLE 11: TENANT'S PROPERTY...................................... 34
11.1 Tenant's Property...................................... 34
11.2 Requirements for Tenant's Property..................... 35
ARTICLE 12: RENEWAL OPTIONS........................................ 36
12.1 Renewal Options........................................ 36
12.2 Effect of Renewal...................................... 36
12.3 Effect of Non-Renewal or Expiration of Lease........... 37
ARTICLE 13: RIGHT OF FIRST REFUSAL................................. 37
13.1 Right of First Refusal................................. 37
13.2 No Exercise............................................ 38
ARTICLE 14: NEGATIVE COVENANTS..................................... 38
14.1 No Debt................................................ 38
14.2 No Liens............................................... 38
14.3 No Guaranties.......................................... 38
14.4 No Transfer............................................ 38
</TABLE>
(ii)
<PAGE> 95
<TABLE>
<S> <C> <C> <C>
14.5 No Dissolution......................................... 38
14.6 No Change in Management or Operation................... 38
14.7 No Investments......................................... 39
14.8 Contracts.............................................. 39
14.9 Subordination of Payments to Affiliates................ 39
14.10 Change of Location or Name............................. 39
ARTICLE 15: AFFIRMATIVE COVENANTS.................................. 39
15.1 Perform Obligations.................................... 39
15.2 Proceedings to Enjoin or Prevent Construction.......... 39
15.3 Documents and Information.............................. 40
15.4 Compliance With Laws................................... 41
15.5 Broker's Commission.................................... 41
15.6 Existence and Change in Ownership...................... 41
15.7 Financial Covenants.................................... 42
ARTICLE 16: ALTERATIONS, CAPITAL IMPROVEMENTS, AND SIGNS........... 43
16.1 Prohibition on Alterations and Improvements............ 43
16.2 Approval of Alterations................................ 43
16.3 Permitted Alterations.................................. 44
16.4 Requirements for Permitted Alterations................. 44
16.5 Ownership and Removal of Permitted Alterations......... 45
16.6 Signs.................................................. 45
ARTICLE 17: [RESERVED]............................................. 45
ARTICLE 18: ASSIGNMENT AND SALE OF LEASED PROPERTY................. 45
18.1 Prohibition on Assignment and Subletting............... 45
18.2 Requests for Landlord's Consent to Assignment,
Sublease or Management Agreement....................... 46
18.3 Agreements with Residents.............................. 47
18.4 Sale of Leased Property................................ 47
18.5 Assignment by Landlord................................. 47
18.6 Assignment to Affiliate................................ 47
ARTICLE 19: HOLDOVER AND SURRENDER................................. 47
19.1 Holding Over........................................... 47
19.2 Surrender.............................................. 48
ARTICLE 20: LETTER OF CREDIT....................................... 48
20.1 Terms of Letter of Credit.............................. 48
20.2 Replacement Letter of Credit........................... 48
20.3 Draws.................................................. 48
20.4 Partial Draws.......................................... 49
20.5 Substitute Letter of Credit............................ 50
ARTICLE 21: QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT AND ESTOPPEL CERTIFICATES................... 50
21.1 Quiet Enjoyment........................................ 50
21.2 Subordination.......................................... 50
21.3 Attornment............................................. 51
</TABLE>
(iii)
<PAGE> 96
<TABLE>
<S> <C> <C> <C>
21.4 Estoppel Certificates.................................. 51
ARTICLE 22: REPRESENTATIONS AND WARRANTIES......................... 52
22.1 Organization and Good Standing......................... 52
22.2 Power and Authority.................................... 52
22.3 Enforceability......................................... 52
22.4 Government Authorizations.............................. 52
22.5 Financial Statements................................... 53
22.6 Condition of Facility.................................. 53
22.7 Compliance with Laws................................... 53
22.8 No Litigation.......................................... 54
22.9 Consents............................................... 54
22.10 No Violation........................................... 54
22.11 Reports and Statements................................. 54
22.12 ERISA.................................................. 55
22.13 Chief Executive Office................................. 55
22.14 Other Name or Entities................................. 55
22.15 Parties in Possession.................................. 55
22.16 Access................................................. 55
22.17 Utilities.............................................. 55
22.18 Condemnation and Assessments........................... 56
22.19 Zoning................................................. 56
22.20 Pro Forma Statement.................................... 56
22.21 Environmental Matters.................................. 56
22.22 Leases and Contracts................................... 57
22.23 No Default............................................. 57
ARTICLE 23: FUTURE PROJECTS; COTERMINOUS FINANCINGS................ 57
23.1 Project Submissions.................................... 57
23.2 Coterminous Financings................................. 57
ARTICLE 24: SECURITY INTEREST...................................... 57
24.1 Collateral............................................. 57
24.2 Additional Documents................................... 58
24.3 Notice of Sale......................................... 59
ARTICLE 25: MISCELLANEOUS.......................................... 59
25.1 Notices................................................ 59
25.2 Advertisement of Leased Property....................... 59
25.3 Entire Agreement....................................... 59
25.4 Severability........................................... 59
25.5 Captions and Headings.................................. 60
25.6 Governing Law.......................................... 60
25.7 Memorandum of Lease.................................... 60
25.8 Waiver................................................. 60
25.9 Binding Effect......................................... 60
25.10 Power of Attorney...................................... 60
25.11 No Offer............................................... 61
25.12 Modification........................................... 61
25.13 Landlord's Modification................................ 61
25.14 No Merger.............................................. 61
25.15 Laches................................................. 62
25.16 Limitation on Tenant's Recourse........................ 62
</TABLE>
(iv)
<PAGE> 97
<TABLE>
<S> <C> <C> <C>
25.17 Construction of Lease.................................. 62
25.18 Counterparts........................................... 62
25.19 Lease Guaranty......................................... 62
25.20 Custody of Escrow Funds................................ 62
25.21 Landlord's Status as a REIT............................ 62
25.22 Exhibits............................................... 63
25.23 WAIVER OF JURY TRIAL................................... 63
25.24 CONSENT TO JURISDICTION................................ 63
25.25 Attorney's Fees and Expenses........................... 64
25.26 Survival............................................... 64
25.27 Warrants............................................... 64
</TABLE>
EXHIBIT A: LEGAL DESCRIPTION
EXHIBIT A-1: PERSONAL PROPERTY
EXHIBIT A-2: DESIGNATION OF FACILITIES
EXHIBIT B: PERMITTED EXCEPTIONS
EXHIBIT C: DOCUMENTS TO BE DELIVERED
EXHIBIT D: TENANT'S CERTIFICATE AND FACILITY FINANCIAL REPORTS
EXHIBIT E: GOVERNMENT AUTHORIZATIONS TO BE OBTAINED;
ZONING PERMITS
EXHIBIT F: PENDING LITIGATION
EXHIBIT G: LIST OF LEASES AND CONTRACTS
EXHIBIT H: LANDLORD-EQUIPMENT LESSOR NONDISTURBANCE AGREEMENT
<PAGE> 1
EXHIBIT 10.2
MERGER AGREEMENT
THIS MERGER AGREEMENT (the "Agreement") entered into as of ____, 1997,
by and among JUST LIKE HOME, INC., a Florida corporation ( "JLH") whose
principal address is 3647 Cortez Road West, Bradenton, Florida 34210-3106, JLH
ACQUISITION CORPORATION, a Florida corporation and a wholly-owned Subsidiary of
JLH (the "Acquisition Company") whose principal address is 3647 Cortez Road
West, Bradenton, Florida 34210-3106, and COMMUNITY ASSISTED LIVING CENTERS,
INC., a Florida corporation ("CALCI") whose principal address is 2440 Tamiami
Trail North, Nokomis, Florida 34275. JLH, the Acquisition Company, and CALCI are
referred to collectively herein as the "Parties."
This Agreement contemplates a merger of CALCI with and into the
Acquisition Company in a tax free exchange.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"JLH" has the meaning set forth in the preface above.
"JLH Stock" has the meaning set forth in Section 2 below.
"Certificate of Merger" has the meaning set forth in Section 2 below.
"Closing" has the meaning set forth in Section 2 below.
"Closing Date" has the meaning set forth in Section 2 below.
"Confidential Information" means any information concerning the
businesses and affairs of CALCI and its Subsidiaries that is not already
generally available to the public.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Effective Time" has the meaning set forth in Section 2 below.
<PAGE> 2
"Florida General Corporation Law" means the General Corporation Law of
the State of Florida, as amended.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Knowledge" means actual knowledge without independent investigation.
"Merger" has the meaning set forth in Section 2 below.
"Merger Consideration" has the meaning set forth in Section 2 below.
"Most Recent Fiscal Quarter End" has the meaning set forth in Section 3
below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Public Report" has the meaning set forth in Section 3 below.
"Registration Statement" has the meaning set forth in Section 5 below.
"Requisite Stockholder Approval" means the affirmative vote of the
holders of a majority of CALCI Shares in favor of this Agreement and the Merger.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, including, without limitation, (a)
mechanic's, materialman's, and similar liens, (b) liens for taxes not yet due
and payable or for taxes that the taxpayer is contesting in good faith through
appropriate proceedings, (c) purchase money liens and liens securing rental
payments under capital lease arrangements, and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing of
money.
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<PAGE> 3
"Special Meeting" has the meaning set forth in Section 5 below.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Surviving Corporation" has the meaning set forth in Section 2 below.
"CALCI" has the meaning set forth in the preface above.
"CALCI Share" means any share of the Common Stock of CALCI.
"CALCI Stockholder" means any Person who or which holds any CALCI
Shares.
"Acquisition Company" has the meaning set forth in the preface above.
2. BASIC TRANSACTION.
(a) The Merger. On and subject to the terms and conditions of this
Agreement, CALCI will merge with and into the Acquisition Company (the "Merger")
at the Effective Time. The Acquisition Company shall be the corporation
surviving the Merger (the "Surviving Corporation").
(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at such location and time as the
Parties shall mutually agree no later than thirty (30) days after the execution
hereof, unless otherwise provided herein (the "Closing Date").
(c) Actions at the Closing. At the Closing:
(i) JLH and the Acquisition Company will deliver to CALCI the
various certificates, instruments, and documents referred to in Section
6 below;
(ii) CALCI and the Acquisition Company will file with the
Secretary of State of the State of Florida a Certificate of Merger in
the form attached hereto as Exhibit 2(c) (the "Certificate of Merger");
and
(iii) JLH will cause the Surviving Corporation to deliver the
JLH Stock in the manner provided below in this Section 2.
(d) CALCI's Acquisition Audit. CALCI's obligation to close hereunder is
expressly contingent upon CALCI's ability to satisfy itself about the status of
JLH's operations as a provider of assisted living services and CALCI's ability
to integrate and oversee the operations of JLH in a fiscally profitable manner.
Toward that end, CALCI shall continue its acquisition audit (the "Acquisition
Audit") of JLH commenced prior to the execution hereof. CALCI's Acquisition
Audit shall include, but not be limited to:
3
<PAGE> 4
(i) a review of JLHOs properties, books and records and such
additional financial and operating data and other information as CALCI
may from time to time require in order to determine the present
condition and character of JLHOs business and operations; and
(ii) a thorough background investigation regarding the
officers and directors of JLH.
CALCI's obligation to conclude the transactions contemplated by this
Agreement shall be contingent upon CALCI's satisfaction, in its sole discretion,
with the results of the Acquisition Audit. In the event of CALCI determines that
it is not satisfied with the results of its Acquisition Audit at any time prior
to Closing, CALCI may terminate this Agreement prior to or upon such date by
providing JLH with written notice of such election, and this Agreement shall
immediately terminate and be of no further force and effect, and the parties
shall have no further rights, claims or obligations with respect to each other,
except as otherwise set forth herein. Alternatively, in the event of CALCI
determines that it is satisfied at any time prior to the termination of this
Agreement with the results of its Acquisition Audit, or CALCI's waiver thereof,
CALCI may, upon five (5) daysO written notice of such election, proceed to
Closing.
(e) Effect of Merger.
(i) Effective Time of Merger. The Merger shall become
effective at the time (the "Effective Time") CALCI and the Acquisition
Company file the Certificate of Merger with the Secretary of State of
the State of Florida (the "Effective Time"). The Merger shall have the
effect set forth in the Florida General Corporation Law. The Surviving
Corporation may, at any time after the Effective Time, take any action
(including executing and delivering any document) in the name and on
behalf of either CALCI or the Acquisition Company in order to carry out
and effectuate the transactions contemplated by this Agreement.
(ii) Certificate of Incorporation. As of the Effective Time
the Articles of Incorporation of the Acquisition Company immediately
prior to the Effective Time shall become the Articles of Incorporation
of the Surviving Corporation.
(iii) Bylaws. As of the Effective Time the Bylaws of the
Acquisition Company immediately prior to the Effective Time shall
become the Bylaws of the Surviving Corporation.
(iv) Directors and Officers. The directors and officers of
the Acquisition Company shall become the directors and officers of the
Surviving Corporation at and as of the Effective Time retaining their
respective positions and terms of office.
4
<PAGE> 5
(v) Conversion of CALCI Shares. At and as of the Effective
Time each CALCI Share shall be converted into one and one half (1.5)
shares of common stock of JLH (the "JLH Stock") issued by JLH. No CALCI
Share shall be deemed to be outstanding or to have any rights other
than those set forth above in this subsection after the Effective Time.
Stock issuable in exchange for each share of CALCI Stock is referred to
herein as "Merger Consideration".
(f) Exchange Agent / Conversion of CALCI Shares. Prior to the
Effective Time, CALCI and JLH shall appoint American Stock Transfer & Trust
Company, CALCI's transfer agent, or such other mutually acceptable bank or trust
company as agent (the "Exchange Agent") for the purpose of exchanging
certificates representing CALCI Shares outstanding immediately prior to the
Effective Time for the Merger Consideration. Promptly after the Effective Time,
(i) the Exchange Agent shall mail to each record holder
of CALCI Shares, as of the Effective Time, of an outstanding
Certificate or Certificates which immediately prior to the Effective
Time represented by shares of CALCI common stock (the "Certificates") a
form letter of transmittal and instructions advising such holder of the
relevant terms of the exchange effected by the Merger and the procedure
for surrendering to the Exchange Agent such Certificates for exchange.
Upon surrender to the Exchange Agent of a Certificate, together with
such letter of transmittal duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor a
Certificate or Certificates representing the Merger Consideration
multiplied by the number of shares of CALCI common stock represented by
such Certificate and such surrendered Certificate shall then be
canceled. Until surrendered in accordance with the provisions of this
Section, each Certificate shall represent for all purposes the right to
receive Merger Consideration multiplied by the number of CALCI Shares
represented by such Certificate.
(ii) At and after the Effective Time there shall be no
transfers of CALCI Shares which were outstanding immediately prior to
the Effective Time on the stock transfer books of CALCI. If, after the
Effective Time, Certificates are presented to CALCI or the Exchange
Agent, they shall be canceled and exchanged for the Merger
Consideration multiplied by the number of CALCI Shares represented by
such Certificates as provided herein. At the close of business on the
day prior to the Effective Time the stock ledger of CALCI shall be
closed.
(iii) From and after the Effective Time, holders of
Certificates formerly evidencing CALCI Shares shall cease to have any
rights as stockholders of CALCI, except as provided herein or by law.
(g) Intentionally Left Blank.
5
<PAGE> 6
(h) Management of JLH. From the date of execution hereof forward
until the earlier of the termination or the Closing of this Agreement, JLH shall
consult with CALCI regarding all material JLH decisions. Upon the Closing of
this Agreement, the daily management team of JLH and its subsidiaries and
affiliates shall be conducted by and through the following personnel:
Richard T. Conard Co-Chairman
Ronald Braun Co-Chairman
John F. Robenalt President & CEO
Elizabeth A. Conard President, JLH subsidiary & Just
Like Family, Inc.
Michael Monahan Chief Financial Officer
Victoria Partin Vice President, Operations
Vancene F. Robenalt Vice President, Construction
Thomas B. Luzier Vice President, Acquisition &
Development
Christine DeCroce Director of Shareholder Relations
Terry Evans Director of Programs & Training
Sister Kathy Buster Executive Director, Just Like
Family, Inc.
Terri Ware Assistant for Construction &
Development
Each of these individuals will hold office in accordance with the
Articles of Incorporation and Bylaws of the Surviving Corporation until their
respective successors are duly elected and qualified.
(i) Shareholder Agreement. Upon the execution hereof, Elizabeth A.
Conard and John Robenalt will enter into a shareholder agreement in
substantially the same form as that contained in "Exhibit 2(i)" hereto, whereby
Elizabeth A. Conard and John F. Robenalt will be required to vote their JLH
Stock in accordance with the terms of such agreement. Such shareholder agreement
shall only be effective upon the Closing hereof.
(j) Board of Directors. At the Effective Time, the following
individuals shall become the directors of the Surviving Corporation, each of
such directors to hold office, subject to the applicable provisions of the
Articles of Incorporation and Bylaws of the Surviving Corporation, until the
next annual meeting of shareholders of the Surviving Corporation and until their
successors shall be duly elected and shall duly qualify:
1. Richard M. Conard, M.D.
2. Betty Conard
3. Isidore Siegel
4. John F. Robenalt
5. Ronald O. Braun
6.
------------------
7.
------------------
The sixth and seventh positions shall be held by two of Norbert P. Donelly,
Alastair Haddow, and Ken Perry subject to the agreement of John F. Robenalt and
Elizabeth A.
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<PAGE> 7
Conard. Rosters of subsequently elected directors shall be agreed upon by John
F. Robenalt and Elizabeth A. Conard pursuant to the terms of the shareholder
agreement enumerated above.
3. REPRESENTATIONS AND WARRANTIES OF CALCI. CALCI represents and
warrants to JLH and the Acquisition Company that the statements contained in
this section are correct and complete as of the date of this Agreement, and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this section), except as set forth in the disclosure schedule
accompanying this Agreement and initialed by the Parties (the ODisclosure
ScheduleO), which Disclosure Schedule shall be amended as of the Closing in
order to accurately reflect the correctness and completeness of such
representations and warranties as of the Closing. The Disclosure Schedule will
be arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this section.
(a) Organization, Qualification, and Corporate Power. CALCI is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Florida. CALCI is duly authorized to conduct business and
is in good standing under the laws of each jurisdiction where such qualification
is required, except where the lack of such qualification would not have a
material adverse effect on the financial condition of CALCI taken as a whole or
on the ability of the Parties to consummate the transactions contemplated by
this Agreement. CALCI has full corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it.
(b) Capitalization. The entire authorized capital stock of CALCI
consists of 1,097,500 CALCI Shares, of which 1087,500 CALCI Shares are issued
and outstanding and 10,000 CALCI Shares are held in treasury. All of the issued
and outstanding CALCI Shares have been duly authorized and are validly issued,
fully paid, and nonassessable. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require CALCI to issue,
sell, or otherwise cause to become outstanding any of its capital stock. There
are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to CALCI.
(c) Authorization of Transaction. CALCI has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder; provided, however, that
CALCI cannot consummate the Merger unless and until it receives the Requisite
Stockholder Approval. This Agreement constitutes the valid and legally binding
obligation of CALCI, enforceable in accordance with its terms and conditions
subject to receipt of shareholder approval.
(d) Noncontravention. To the knowledge of any director or officer
of CALCI, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will:
7
<PAGE> 8
(i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
CALCI is subject or any provision of the charter or bylaws of CALCI, or
(ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or
other arrangement to which CALCI is a party or by which it is bound or
to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets), except where the
violation, conflict, breach, default, acceleration, termination,
modification, cancellation, failure to give notice, or Security
Interest would not have a material adverse effect on the financial
condition of CALCI taken as a whole or on the ability of the Parties to
consummate the transactions contemplated by this Agreement.
To the Knowledge of any director or officer of CALCI, and other than in
connection with the provisions of the Florida General Corporation Law, the
Securities Exchange Act, the Securities Act, and the state securities laws,
CALCI needs not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement except where the failure to give notice, to file, or to obtain any
authorization, consent, or approval would not have a material adverse effect on
the financial condition of CALCI taken as a whole or on the ability of the
Parties to consummate the transactions contemplated by this Agreement.
(e) Intentionally Left Blank.
(f) Brokers' Fees. CALCI has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(g) Title to Assets. CALCI has good and marketable title to, or a
valid leasehold interest in, the properties and assets used or owned by it,
located on their premises, or acquired after the date thereof, free and clear of
all Security Interests, except for properties and assets disposed of in the
Ordinary Course of Business since the date hereof. Without limiting the
generality of the foregoing, CALCI has good and marketable title to all of these
assets, free and clear of any Security Interest or restriction on transfer.
(h) Events Subsequent to Most Recent Fiscal Year End. Since the
Most Recent Fiscal Year End (as defined below), there has not been any material
adverse change in the business, financial condition, operations, results of
operations, or future prospects of CALCI. Without limiting the generality of the
foregoing, since that date:
8
<PAGE> 9
(i) CALCI has not sold, leased, transferred, or assigned
any of its assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) CALCI has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts, leases,
and licenses) either involving more than $50,000.00 or outside the
Ordinary Course of Business;
(iii) no party has accelerated, terminated, modified, or
canceled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) involving more
than $50,000.00 to which CALCI is a party or by which it is bound;
(iv) intentionally left blank;
(v) CALCI has not made any capital expenditure (or series
of related capital expenditures) either involving more than $100,000.00
or outside the Ordinary Course of Business;
(vi) CALCI has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of, any other
Person (or series of related capital investments, loans, and
acquisitions) either involving more than $1,000,000.00 or outside the
Ordinary Course of Business;
(vii) CALCI has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness
for borrowed money or capitalized lease obligation either involving
more than $1,000,000.00 singly or $2,500,000.00 in the aggregate;
(viii) CALCI has not delayed or postponed the payment of
accounts payable and other Liabilities;
(ix) CALCI has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims)
either involving more than $50,000.00;
(x) CALCI has not granted any license or sublicense of
any rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the
charter or bylaws of any of CALCI;
(xii) CALCI has not issued, sold, or otherwise disposed of
any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock;
9
<PAGE> 10
(xiii) CALCI has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;
(xiv) CALCI has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its property;
(xv) CALCI has not made any loan to, or entered into any
other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xvi) CALCI has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms
of any existing such contract or agreement;
(xvii) CALCI has not granted any increase in the base
compensation of any of its directors, officers, and employees outside
the Ordinary Course of Business;
(xviii) CALCI has not adopted, amended, modified or
terminated any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any
other Employee Benefit plan);
(xix) CALCI has not made any other change in employment
terms for any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xx) CALCI has not has made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(xxi) CALCI has not paid any amount to any third party with
respect to any Liability or obligation (including any costs and
expenses CALCI has incurred or may incur in connection with this
Agreement and the transactions contemplated hereby) which would not
constitute an Assumed Liability if in existence as of the Closing;
(xxii) there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving CALCI; and
(xxiii) CALCI has not committed to any of the foregoing.
(i) Undisclosed Liabilities. CALCI has no Liability (and, to the
knowledge of CALCI, its officers and directors, there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against any of
10
<PAGE> 11
them giving rise to any Liability), except for those which have arisen after the
Most Recent Fiscal Month End in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement, or violation of
law).
(j) Financial Statements. Attached hereto as "Exhibit 3(g)" are
the following financial statements (collectively the "Financial Statements"):
(i) unaudited consolidating balance sheets and statements of
income, changes in stockholders' equity, and cash flow as of and for
the calendar year ended December 31, 1996 (the "Most Recent Fiscal Year
End") for CALCI; and
(ii) unaudited consolidated and consolidating balance sheets
and statements of income, changes in stockholders' equity, and cash
flow (the "Most Recent Financial Statements") as of and for the month
ended January 31, 1997 (the "Most Recent Fiscal Month End") for CALCI.
The Financial Statements (including the Notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of CALCI as of such
dates and the results of operations of CALCI for such periods, are correct and
complete, and are consistent with the books and records of CALCI (which books
and records are correct and complete); provided, however, that the Most Recent
Financial Statements are subject to normal year-end adjustments (which will not
be material individually or in the aggregate) and lack footnotes and other
presentation items.
(k) Events Subsequent to Most Recent Fiscal Year End. Since the
Most Recent Fiscal Year End, there has not been any adverse change in the
business, financial condition, operations, results of operations, or future
prospects of any of CALCI.
4. REPRESENTATIONS AND WARRANTIES OF JLH AND THE ACQUISITION
COMPANY. Each of JLH (on its own behalf and, as more fully enumerated below, on
behalf of each of its Subsidiaries) and the Acquisition Company (represents and
warrants to CALCI that the statements contained in this section are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this section), except as
set forth in the Disclosure Schedule which Disclosure Schedule shall be amended
as of the Closing in order to accurately reflect the correctness and
completeness of such representations and warranties as of the Closing. The
Disclosure Schedule will be arranged in paragraphs corresponding to the numbered
and lettered paragraphs contained in this section.
(a) Organization and Qualification. Each of JLH and the
Acquisition Company, is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation. Each of
JLH and the Acquisition Company is duly authorized to conduct business and is in
good standing under the laws
11
<PAGE> 12
of each jurisdiction where such qualification is required, except where the lack
of such qualification would not have a material adverse effect on the financial
condition of each of JLH and the Acquisition Company taken as a whole or on the
ability of the Parties to consummate the transactions contemplated by this
Agreement.
(b) Authorization of Transaction. Each of JLH and the Acquisition
Company has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of each of JLH and the Acquisition Company, enforceable in accordance with its
terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will:
(i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
either JLH or the Acquisition Company is subject or any provision of
the charter or bylaws of either JLH or the Acquisition Company, or
(ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument or
other arrangement to which either JLH or the Acquisition Company is a
party or by which it is bound or to which any of its assets is subject.
Other than in connection with the provisions of the Florida General Corporation
Law, the Securities Exchange Act, the Securities Act, and the state securities
laws, neither JLH nor the Acquisition Company needs to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement. As of the Closing, all such
authorizations, consents and approvals necessary for the parties to consummate
the transactions contemplated by this Agreement shall have been received.
(d) Brokers' Fees. Neither JLH nor the Acquisition Company has any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement for which
any of CALCI and the Acquisition Company could become liable or obligated.
(e) Disclosure. The following representations and warranties apply
to JLHOs reporting to the SEC:
(i) any information provided to the SEC pursuant to the terms
hereof shall comply with the Securities Act in all material respects.
Such information will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the
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circumstances under which they will be made, not misleading; provided,
however, that JLH and the Acquisition Company make no representation or
warranty with respect to any information that CALCI will supply
specifically for use in any documents filed with the SEC. None of the
information that JLH and the Acquisition Company will supply will
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they will be made, not
misleading;
(ii) all information previously provided to the SEC, of any
kind or nature, complies with the Securities Act in all material
respects. Such information will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements made therein, in the light of the circumstances
under which they will be made, not misleading.
(f) Capitalization. The Disclosure Statement contains a schedule
of the entire authorized capital stock of JLH and its Subsidiaries. All of the
issued and outstanding shares of JLH and its Subsidiaries have been duly
authorized and are validly issued, fully paid, and nonassessable. Other than
those enumerated in "Exhibit 4(f)" hereto, there are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
JLH or its Subsidiaries to issue, sell, or otherwise cause to become outstanding
any of its capital stock. Other than those described in "Exhibit 4(f)" hereto,
there are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to JLH or its Subsidiaries.
(g) Title to Assets. JLH, the Acquisition Company and the JLH
Subsidiaries have good and marketable title to, or a valid leasehold interest
in, the properties and assets used by them, located on their premises,
including, but not limited to those shown on the Most Recent Balance Sheet
(defined hereunder) or acquired after the date thereof, free and clear of all
Security Interests since the date of the Most Recent Balance Sheet. Without
limiting the generality of the foregoing, JLH has good and marketable title to
all of the assets, free and clear of any Security Interest or restriction on
transfer.
(h) Subsidiaries. The attached Disclosure Schedule sets forth for
each Subsidiary of JLH (including the Acquisition Company):
(i) its name and jurisdiction of incorporation,
(ii) the number of shares of authorized capital stock of each
class of its capital stock,
(iii) the number of issued and outstanding shares of each
class of its capital stock, the names of the holders thereof, and the
number of shares held by each such holder,
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<PAGE> 14
(iv) the number of shares of its capital stock held in
treasury, and
(v) its directors and officers.
Each Subsidiary of JLH is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation. Each
Subsidiary of JLH is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required. Each
Subsidiary of JLH has full corporate power and authority and all licenses,
permits, and authorizations necessary to carry on the businesses in which it is
engaged and in which it presently proposes to engage and to own and use the
properties owned and used by it. JLH has delivered to CALCI correct and complete
copies of the charter and bylaws of each Subsidiary of JLH (as amended to date).
All of the issued and outstanding shares of capital stock of each Subsidiary of
JLH have been duly authorized and are validly issued, fully paid, and
nonassessable. JLH holds of record and owns legally or beneficially all of the
outstanding capital stock of each Subsidiary of JLH, free and clear of any
restrictions on transfer (other than restrictions under the Securities Act and
state securities laws), Taxes, Security Interests, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require any of JLH or the Acquisition Company to sell, transfer, or
otherwise dispose of any capital stock of any of the Subsidiaries of JLH or that
could require any Subsidiary of JLH to issue, sell, or otherwise cause to become
outstanding any of its own capital stock (other than this Agreement). There are
no outstanding stock appreciation, phantom stock, profit participation, or
similar rights with respect to any Subsidiary of JLH. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of any capital stock of any Subsidiary of JLH. The minute books
(containing the records of meetings of the stockholders, the board of directors,
and any committees of the board of directors), the stock certificate books, and
the stock record books of each Subsidiary of JLH are correct and complete. None
of the Subsidiaries of JLH is in default under or in violation of any provision
of its charter or bylaws. None of JLH or the Acquisition Company controls
directly or indirectly or has any direct or indirect equity participation in any
corporation, partnership, trust, or other business association which is not a
Subsidiary of JLH.
(i) Financial Statements. Unless otherwise noted, attached hereto
as Exhibit 4(i) are the following financial statements (collectively the
"Financial Statements"):
(i) audited consolidated balance sheets and statements of
income, changes in stockholders' equity, and cash flow of JLH and all
subsidiaries as of and for the fiscal years ended December 31, 1996
(presently being prepared and to be attached subsequent to the date of
execution hereof, but in any event prior to the Closing), December 31,
1995, December 31, 1994, December 31, 1993, (the "Most Recent Fiscal
Year End") for JLH and its Subsidiaries; and
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<PAGE> 15
(ii) unaudited consolidated and consolidating balance sheets
and statements of income, changes in stockholders' equity, and cash
flow of JLH and all subsidiaries (the "Most Recent Financial
Statements") as of and for the month ended January 31, 1997 (the "Most
Recent Fiscal Month End") for JLH and its Subsidiaries.
The Financial Statements (including the Notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of JLH and its
Subsidiaries as of such dates and the results of operations of JLH and its
Subsidiaries for such periods, are correct and complete, and are consistent with
the books and records of JLH and its Subsidiaries (which books and records are
correct and complete); provided, however, that the Most Recent Financial
Statements are subject to normal year-end adjustments (which will not be
material individually or in the aggregate) and lack footnotes and other
presentation items.
(j) Events Subsequent to Most Recent Fiscal Year End. Since the
Most Recent Fiscal Year End, there has not been any adverse change in the
business, financial condition, operations, results of operations, or future
prospects of any of JLH and the Acquisition Company or any Subsidiaries. Without
limiting the generality of the foregoing, since that date:
(i) neither of JLH the Acquisition Company, nor any other
Subsidiary has sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than for a fair consideration;
(ii) neither of JLH the Acquisition Company, nor any other
Subsidiary has entered into any agreement, contract, lease, or license
(or series of related agreements, contracts, leases, and licenses)
either involving more than $50,000.00 or outside the Ordinary Course of
Business;
(iii) neither JLH, the Acquisition Company, nor any Subsidiary
has accelerated, terminated, modified, or canceled any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) involving more than $50,000.00 or
outside the Ordinary Course of Business;
(iv) no Security Interest upon any of the assets, tangible or
intangible, of JLH, the Acquisition Company, or any other Subsidiary
has been created;
(v) neither of JLH the Acquisition Company, nor any other
Subsidiary has made any capital expenditure (or series of related
capital expenditures) either involving more than $100,000.00 or outside
the Ordinary Course of Business;
(vi) neither of JLH the Acquisition Company, nor any other
Subsidiary has made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or series
of related capital investments,
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<PAGE> 16
loans, and acquisitions) either involving more than $1,000,000.00 or
outside the Ordinary Course of Business;
(vii) neither of JLH the Acquisition Company, nor any other
Subsidiary has issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money or capitalized lease obligation either involving more than
$1,000,000.00 singly or $2,500,000.00 in the aggregate;
(viii) neither of JLH the Acquisition Company, nor any other
Subsidiary has delayed or postponed the payment of accounts payable and
other Liabilities outside the Ordinary Course of Business;
(ix) neither of JLH the Acquisition Company, nor any other
Subsidiary has canceled, compromised, waived, or released any right or
claim (or series of related rights and claims) either involving more
than $50,000.00;
(x) neither of JLH the Acquisition Company, nor any other
Subsidiary has granted any license or sublicense of any rights under or
with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the
charter or bylaws of JLH, the Acquisition Company, or any other
Subsidiary;
(xii) neither of JLH the Acquisition Company, nor any other
Subsidiary has issued, sold, or otherwise disposed of any of its
capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
(xiii) neither of JLH the Acquisition Company, nor any other
Subsidiary has declared, set aside, or paid any dividend or made any
distribution with respect to its capital stock (whether in cash or in
kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
(xiv) neither of JLH the Acquisition Company, nor any other
Subsidiary has experienced any damage, destruction, or loss (whether or
not covered by insurance) to its property;
(xv) neither of JLH the Acquisition Company, nor any other
Subsidiary has made any loan to, or entered into any other transaction
with, any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xvi) neither of JLH the Acquisition Company, nor any other
Subsidiary has entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
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(xvii) neither of JLH the Acquisition Company, nor any other
Subsidiary has granted any increase in the base compensation of any of
its directors, officers, and employees outside the Ordinary Course of
Business;
(xviii) neither of JLH the Acquisition Company, nor any other
Subsidiary has adopted, amended, modified or terminated any bonus,
profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other Employee
Benefit plan);
(xix) neither of JLH the Acquisition Company, nor any other
Subsidiary has made any other change in employment terms for any of its
directors, officers, and employees outside the Ordinary Course of
Business;
(xx) neither of JLH the Acquisition Company, nor any other
Subsidiary has made or pledged to make any charitable or other capital
contribution outside the Ordinary Course of Business;
(xxi) neither of JLH the Acquisition Company, nor any other
Subsidiary has paid any amount to any third party with respect to any
Liability or obligation (including any costs and expenses JLH has
incurred or may incur in connection with this Agreement and the
transactions contemplated hereby) which would not constitute an Assumed
Liability if in existence as of the Closing;
(xxii) there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving either JLH, the Acquisition Company, or
any Subsidiary; and
(xxiii) neither of JLH the Acquisition Company, nor any other
Subsidiary has committed to any of the foregoing.
(k) Undisclosed Liabilities. Neither of JLH and the Acquisition
Company has any Liability (and there is no basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any Liability), except for
(i) Liabilities set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) and
(ii) Liabilities which have arisen after the Most Recent
Fiscal Month End in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law).
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(l) ERISA; Employee Benefit Plans.
(i) The Disclosure Schedule contains a complete list of
all employee benefit plans sponsored or maintained by JLH or its
Subsidiaries or under which JLH or its Subsidiaries may be obligated.
JLH has delivered to CALCI accurate and complete:
(A) Copies of all employee benefit plan documents and all
other material documents relating thereto, including
all summary plan descriptions, summary annual reports
and insurance contracts;
(B) detailed summaries of all unwritten employee benefit
plans;
(C) copies of the most recent financial statements and
actuarial reports with respect to all employee
benefit plans for which financial statements or
actuarial reports are required or have been prepared;
and
(D) copies of all annual reports for all employee benefit
plans (for which annual reports are required)
prepared since JLH's inception.
Each employee benefit plan providing benefits that are funded
through a policy of insurance is indicated by the word "insured" placed
by the listing of the employee benefit plans in the JLH Disclosure
Schedule.
(ii) All employee benefit plans listed in the JLH
Disclosure Schedule conform (and at all times have conformed) in all
material respects to, and are being administered and operated (and have
at all times been administered and operated) in material compliance
with, all applicable requirements of ERISA, the Internal Revenue Code
of 1986, as amended (the "Code"), and all other applicable Laws.
(iii) Any employee benefit plan that is intended to be
qualified under Section 401(a) of the Code and exempt from tax under
Section 501(a) of the Code has been determined by the Internal Revenue
Service ("IRS") to be so qualified, and such determination remains in
effect and has not been revoked. Nothing has occurred since the date of
any such determination that is reasonably likely to affect adversely
such qualification or exemption, or result in the imposition of excise
taxes or income taxes or unrelated business income under the Code or
ERISA with respect to any such employee benefit plan.
(iv) JLH and its Subsidiaries do not have a defined
benefit plan subject to Title IV of ERISA and do not have a current or
contingent obligation to contribute to any multi-employer plan (as
defined in Section 3(37) of ERISA). JLH and its Subsidiaries have no
liability with respect to any employee benefit plan (as defined in
Section 3(3) of ERISA) other than with respect to the employee benefit
plans listed on the JLH Disclosure Schedule.
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(v) There are no pending or, to JLH's knowledge,
threatened proceedings by or on behalf of any employee benefit plan
listed on the Disclosure Schedule, or by or on behalf of any individual
participants or beneficiaries of any such employee benefit plan,
alleging any breach of fiduciary duty on the part of JLH or its
Subsidiaries or any of their officers, directors or employees under
ERISA or any other applicable regulations, or claiming benefit payments
other than those made in the ordinary operation of such plans, nor is
there, to JLH's knowledge, any basis for any such Proceeding. To JLH's
knowledge, the Employee Benefit plans listed on the Disclosure Schedule
are not the subject to any investigation, audit or action by the
Internal Revenue Service, the Department of Labor or the Pension
Benefit Guaranty Corporation ("PBGC").
(vi) No former or present employee of JLH or its
Subsidiaries has any claim against JLH or its Subsidiaries (whether
under federal or state law, any employment agreement or otherwise) on
account of or for:
(A) Overtime pay;
(B) wages or salary for any period;
(C) vacation, time off or pay in lieu of vacation or time
off; or
(D) any violation of any statute, ordinance or regulation
relating to minimum wages or maximum hours of work.
No person or party (including, but not limited to,
governmental agencies of any kind) has any claim or basis for any
Proceeding against JLH or its Subsidiaries arising out of any statute,
ordinance or regulation relating to discrimination in employment or to
employment practices, sexual harassment or occupational safety and
health standards.
(m) Status of SEC Reporting. JLH has been a reporting company (as
such is designated by the SEC) for at least one continuous year, has filed all
required report in a timely manner according to SEC rules and regulations during
that year. JLH has complied in all material respects with all rules and
regulations of the SEC. All information provided to the SEC is true and correct
and does not contain any untrue or misleading statements of material facts.
(n) Control Share Acquisition. Section 607.0902, Florida Statutes,
relative to control share acquisitions does not apply to the transactions
contemplated by this Agreement.
(o) Accounts Receivable. The accounts receivable of JLH and its
Subsidiaries are bona fide accounts receivable created in the ordinary course of
business and JLH is aware of no reason why accounts receivable are not good and
collectable within periods of time normally prevailing in the assisted living
industry at the recorded amounts
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thereof, subject to the allowance for doubtful accounts receivable that is
included in the JLH balance sheet. To the best of JLH's knowledge, no account
receivable is subject to any claim for reduction, counterclaim, set off,
recoupment or other claim for credit by the obligor thereof.
(p) Board Recommendation. By a vote of the directors present at a
meeting of JLHOs Board of Directors on February 3, 1997 (which meeting was duly
called and held and at which a quorum was present at all time), the Board of
Directors of JLH:
(i) approved and adopted this Agreement, including the
Merger and the other transactions contemplated herein, and determined
that the Merger is fair to the shareholders of JLH.
(ii) intentionally left blank.
(q) Liquidity. Neither JLH, nor any of its Subsidiaries, including
the Acquisition Company shall take any action, or omit to take any action, which
would have the effect of materially decreasing the liquidity or availability of
JLHOs or any of its SubsidiariesO current assets as of the date of this
Agreement, or invest any funds not used by JLH or any of its Subsidiaries for
working capital purposes between the date of this Agreement and Effective Time
in any investment other than direct obligations of or instruments guaranteed by
the United States of America having a maturity of not more than one year;
provided, however, that JLH and its Subsidiaries shall not dispose of any
marketable equity securities.
(r) Default. Neither JLH nor any of JLHOs Subsidiaries is in
default, nor do any circumstances exist which, with notice or the passage of
time, or both, would give rise to a default under any of the documents, recorded
or unrecorded, relating to any properties owned by JLH or its Subsidiaries or
with respect to any contractual obligations that would have a material adverse
effect on such properties.
(s) Insurance. JLH and its Subsidiaries are, and will be through
the Closing Date, adequately insured with responsible insurers in respect of
their properties, assets and business against risks normally insured against by
companies in similar lines of business under similar circumstances. The
Disclosure Schedule correctly describes (by type, carrier, policy number,
limits, premium and expiration date) the insurance coverage carried by JLH and
its Subsidiaries with respect to the business of JLH and its Subsidiaries, which
insurance will remain in full force and effect with respect to all events
occurring prior to the Closing. JLH and its Subsidiaries:
(i) have not failed to give any notice or present any
claim under any such policy or binder in due and timely fashion;
(ii) have not received notice of cancellation or
non-renewal of any such policy or binder;
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(iii) are not aware of any threatened or proposed
cancellation or non-renewal of any such policy or binder; and
(iv) have not received notice of and are not otherwise
aware of any insurance premiums which will be materially increased in
the future.
There are no outstanding claims under any such policy which have gone
unpaid for more than forty-five (45) days, or as to which the insurer has
disclaimed liability.
5. COVENANTS. The Parties agree as follows with respect to the
period from and after the execution of this Agreement.
(a) General. Each of the Parties will use its best efforts to take
all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth
below). Additionally, the Parties shall use their best efforts:
(i) If any events should occur, either within or without
the knowledge or control of any party, which would prevent fulfillment
of the conditions to the obligations of any party hereto to consummate
the transactions contemplated by this Agreement, to cure the same as
expeditiously as possible;
(ii) To cooperate fully with each other in preparing,
filing, prosecuting, and taking any other actions which are or may be
reasonable and necessary to obtain the consent of any governmental
instrumentality or any third party to accomplish the transactions
contemplated by this Agreement;
(iii) To deliver such other instruments of title,
certificates, consents, endorsements, assignments, assumptions and
other documents or instruments, in form reasonably acceptable to the
Party requesting the same and its counsel, as may be reasonably
necessary to carry out and/or to comply with the terms of this
Agreement and the transactions contemplated herein; and
(iv) To confer on a regular basis with the other, report
on material operational matters and promptly advise the other orally
and in writing of any change or event resulting in, or which, insofar
as can reasonably be foreseen could result in, a material adverse
change on such Party or which would cause or constitute a material
breach of any of the representations, warranties or covenants of such
Party contained herein.
(b) Regulatory Matters and Approvals. Each of the Parties will
give any notices to, make any filings with, and use its best efforts to obtain
any authorizations, consents, and approvals of governments and governmental
agencies required of them individually in connection with the matters referred
to in Section 3 and Section 4 above.
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(c) Operation of Business. Each Party hereby agrees that, except with
the prior written consent of the other Party, it will not engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business. Without limiting the generality of the foregoing, each Party
agrees that it will not:
(i) authorize or effect any change in its charter or
bylaws;
(ii) grant any options, warrants, or other rights to
purchase or obtain any of its capital stock or issue, sell, or
otherwise dispose of any of its capital stock (except upon the
conversion or exercise of options, warrants, and other rights currently
outstanding);
(iii) None of the Parties will declare, set aside, or pay
any dividend or distribution with respect to its capital stock (whether
in cash or in kind), or redeem, repurchase, or otherwise acquire any of
its capital stock, in either case outside the Ordinary Course of
Business;
(iv) None of the Parties will issue any note, bond, or
other debt security or create, incur, assume, or guarantee any
indebtedness for borrowed money or capitalized lease obligation outside
the Ordinary Course of Business;
(v) None of the Parties will impose any Security Interest
upon any of its assets outside the Ordinary Course of Business;
(vi) None of the Parties will make any capital investment
in, make any loan to, or acquire the securities or assets of any other
Person outside the Ordinary Course of Business;
(vii) None of the Parties will make any change in
employment terms for any of its directors, officers, and employees
outside the Ordinary Course of Business; and
(viii) None of the Parties will commit to any of the
foregoing.
(d) Full Access. The Parties will permit representatives of each
to have full access at all reasonable times, and in a manner so as not to
interfere with their normal business operations, to all premises, properties,
personnel, books, records (including tax records), contracts, and documents of
or pertaining to each of the Parties. Each of the Parties will treat and hold as
such any Confidential Information any one receives from any other in the course
of the reviews contemplated by this subsection, will not use any of the
Confidential Information except in connection with this Agreement, and, if this
Agreement is terminated for any reason whatsoever, agree to return as soon as
possible to source of such Confidential Information all tangible embodiments
(and all copies) thereof which are in the Party's possession.
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(e) Notice of Developments. Each Party will give prompt written
notice to the others of any material adverse development causing a breach of any
of its own representations and warranties in Section 3 and Section 4 above. No
disclosure by any Party pursuant to this subsection, however, shall be deemed to
amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant. Additionally, the
Parties shall promptly notify each other of:
(i) any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any foreign or
domestic governmental or regulatory agency or authority in connection
with the transactions contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the respective Party's knowledge,
threatened against, relating to or involving or otherwise affecting the
Party or any of its Subsidiaries which, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant
hereto or which relate to the consummation of the transactions
contemplated by this Agreement; and
(iv) the occurrence of any event relating to the Parties or
their Subsidiaries or the transactions contemplated hereby to which the
Parties shall become aware that would require any amendment or
supplement any SEC registration statement then in effect.
(f) Exclusivity. JLH will not, directly or indirectly, through any
officer, director, agent, shareholder or otherwise:
(i) Solicit or initiate, directly or indirectly, or
encourage submission of inquiries, proposals, or offers from any person
or entity other than CALCI relating to the disposition or merger of the
assets (whether tangible or intangible) or securities of JLH, its
affiliates, subsidiaries, or any divisions thereof; or
(ii) subject to fiduciary obligations under applicable law as
advised in writing by counsel, participate in any discussions or
negotiations regarding, or furnish to any person or entity any
information with respect to, the disposition of the assets (whether
tangible or intangible) or any securities of JLH, its affiliates,
subsidiaries, or any divisions thereof.
Furthermore, JLH shall not offer the assets (tangible or intangible) which
comprise JLH, its affiliates, subsidiaries, or any divisions thereof, for sale
or combination to any person or entity other than CALCI nor will JLH, or any of
its stockholders, enter into negotiation with any other party for the
disposition or combination of the business or stock of JLH,
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its affiliates, subsidiaries, or any divisions thereof, during the pendency of
negotiations between Community and JLH pursuant to this Agreement.
(g) Insurance and Indemnification.
(i) JLH will not take any action to alter or impair any
exculpatory or indemnification provisions now existing in the
certificate of incorporation or bylaws of CALCI for the benefit of any
individual who served as a director or officer of CALCI at any time
prior to the Effective Time.
(ii) JLH will hold harmless, indemnify and defend CALCI at
any time prior to the Effective Time or, at any time should CALCI not
close this transaction, from and against any and all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims,
demands, injunctions, judgments, orders, decrees, rulings, damages,
dues, penalties, fines, costs, amounts paid in settlement, liabilities,
obligations, taxes, liens, losses, expenses, and fees, including court
costs and attorneys' fees and expenses, resulting from, arising out of,
relating to, in the nature of, or caused by this Agreement or any of
the transactions contemplated herein.
(h) Solicitation of Employees. In the event of the termination of
this Agreement prior to Closing, the Parties shall not, for a period of two (2)
years from the date of such termination, call on, solicit, take away or attempt
to call on, solicit, or take away any of the employees of the other who was
employed by one of the Parties at any time during the period of this Agreement,
either for the benefit of the soliciting Party or any other person, firm or
corporation. This provision shall specifically survive the termination or
Closing hereof.
(i) Indemnification by Parties.
(i) JLH (on its own behalf and on behalf of its
Subsidiaries) and the Acquisition Company shall hold harmless,
indemnify and defend CALCI against and with respect to any and all
damage, loss, liability, deficiency, cost and expense, including
without limitation reasonable attorney's fees, resulting from any
misrepresentation, breach of warranty, failure to fulfill any agreement
or covenant on JLH's part under this Agreement.
(ii) CALCI shall hold harmless, indemnify and defend JLH
and the Acquisition Company against and with respect to any and all
damage, loss, liability, deficiency, cost and expense, including
without limitation reasonable attorney's fees, resulting from any
misrepresentation, breach of warranty, failure to fulfill any agreement
or covenant on CALCI's part under this Agreement.
6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of JLH and the Acquisition Company.
The obligation of each of JLH and the Acquisition Company to consummate the
transactions
24
<PAGE> 25
to be performed by it in connection with the Closing is subject to satisfaction
of the following conditions:
(i) the representations and warranties set forth in
Section 3 above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) CALCI shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) CALCI shall have delivered to JLH and the Acquisition
Company a certificate to the effect that each of the conditions
specified above in Section 6(a)(i)-(iii) is satisfied in all respects;
(iv) any information required to be filed under the
Securities Act shall have been accepted and become effective under the
Securities Act;
(v) JLH and the Acquisition Company shall have received
from counsel to CALCI an opinion in form and substance as set forth in
Exhibit E attached hereto, addressed to JLH and the Acquisition
Company, and dated as of the Closing Date;
(vi) all actions to be taken by CALCI in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to JLH and the Acquisition Company.
JLH and the Acquisition Company may waive any condition specified in this
Section 6(a) if they execute a writing so stating at or prior to the Closing.
b. The obligation of CALCI to consummate the transactions to be
performed by it in connection with the Closing is subject to satisfaction of the
following conditions:
(i) CALCI is fully satisfied, in its sole and absolute
discretion, with the results of its Acquisition Audit as described in
Section 2 above;
(ii) the representations and warranties set forth in
Section 4 above shall be true and correct in all material respects at
and as of the Closing Date, without regard to any amendment to the JLH
Disclosure made subsequent to the date hereof;
(iii) this Agreement and the Merger shall have received the
Requisite Stockholder Approval;
(iv) the transaction herein contemplated shall be deemed a
tax free reorganization;
25
<PAGE> 26
(v) Elizabeth A. Conard and John F. Robenalt have entered
into a Shareholder Agreement as set forth in Paragraph 2(i).
(vi) each of JLH and the Acquisition Company shall have
performed and complied with all of its covenants hereunder in all
material respects through the Closing;
(vii) No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would:
(A) prevent consummation of any of the transactions
contemplated by this Agreement,
(B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation,
(C) affect adversely the right of the shareholders of
CALCI to own the capital stock of the Surviving
Corporation and share in the control the Surviving
Corporation and its Subsidiaries, or
(D) affect adversely the right of any of the Surviving
Corporation and its Subsidiaries to own its assets
and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or
charge shall be in effect);
(viii) each of JLH and the Acquisition Company shall have
delivered to CALCI a signed certificate to the effect that each of the
conditions specified above in Section 6(b)(i)-(vi) is satisfied in all
respects;
(ix) the Parties shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3 and Section 4 above;
(x) all actions to be taken by JLH and the Acquisition
Company in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and
other documents required to effect the transactions contemplated hereby
will be satisfactory in form and substance to CALCI;
(xi) CALCI shall have received an opinion of an attorney
licensed to practice in the State of Florida retained by JLH, dated as
of the Effective Time, in the form and substance reasonably
satisfactory to CALCI.
26
<PAGE> 27
CALCI may waive any condition specified in this Section 6(b) if it executes a
writing so stating at or prior to the Closing.
7. TERMINATION.
(a) Termination of Agreement. Any of the Parties may terminate
this Agreement with the prior authorization of its board of directors (whether
before or after stockholder approval) as provided below:
(i) the Parties may terminate this Agreement by mutual
written consent at any time prior to the Effective Time;
(ii) JLH and the Acquisition Company may terminate this
Agreement by giving written notice to CALCI if the Closing shall not
have occurred upon the expiration of thirty (30) days from the date
hereof, by reason of the failure of any condition precedent hereunder
(unless the failure results primarily from JLH or the Acquisition
Company breaching any representation, warranty, or covenant contained
in this Agreement);
(iii) CALCI may terminate this Agreement by giving written
notice to JLH and the Acquisition Company at any time prior to the
Effective Time:
(A) in the event JLH or the Acquisition Company has
breached any material representation, warranty, or
covenant contained in this Agreement in any material
respect, CALCI has notified JLH and the Acquisition
Company of the breach, and the breach has continued
without cure for a period of 30 days after the notice
of breach, or
(B) if the Closing shall not have occurred on or before
the expiration of thirty (30) days from the date
hereof, by reason of the failure of any condition
precedent hereunder (unless the failure results
primarily from CALCI breaching any representation,
warranty, or covenant contained in this Agreement);
(iv) CALCI may, without any liability, terminate this
Agreement by giving written notice to JLH and the Acquisition Company
at any time prior to the Effective Time in the event CALCI's board of
directors concludes that termination would be in the best interests of
CALCI and its stockholders.
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 7(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach); provided, however, that
the confidentiality provisions contained in Section 5 above shall survive any
such termination.
27
<PAGE> 28
8. REGISTRATION RIGHTS.
A. Demand Registrations.
(i) Requests for Registration. Subject to paragraph
1(b) below, at any time and from time to time after the first
anniversary of the Effective Date, the holders of at least 51%
of the shares held by the former shareholders of CALCI
(ORegistrable SecuritiesO) may request registration, whether
underwritten or otherwise, of all or part of their Registrable
Securities on Form S-1 or any similar long-form registration
("Long-Form Registrations"), or on Form S-2 or S-3 or any
similar short-form registration ("Short-Form Registrations")
if available. Within ten days after receipt of any such
request, the Company will give written notice of such
requested registration to all other holders of Registrable
Securities and will include in such registration all
Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 15 days
after the receipt of the Company's notice. All registrations
requested pursuant to this paragraph 1(a) are referred to
herein as "Demand Registrations".
(ii) Restrictions on Demand Registrations. The
Company will not be obligated to effect any Demand Long-Form
Registration during the period starting with the date thirty
(30) days prior to the Company's good faith estimate of the
date of filing of, and ending on a date one hundred twenty
(120) days after the effective date of, a Company-initiated
registration; provided that the Company is actively employing
in good faith all reasonable efforts to cause such
registration statement to become effective. The Company may
postpone for up to one hundred twenty (120) days the filing or
the effectiveness of a registration statement for a Demand
Registration if the Company determines in good faith, that
such Demand Registration would reasonably be expected to have
a material adverse effect on the Company.
B. Piggyback Registrations.
(i) Right to Piggyback. Whenever the Company
proposes to register any of its securities under the
Securities Act (other than pursuant to (i) a Demand
Registration, (ii) a registration in connection with shares
issued by the Company in connection with a merger,
consolidation, exchange offer or the acquisition of all or
substantially all of the assets of any company or companies or
(iii) a registration solely of shares that have been issued
pursuant to the Company's employee benefit plans) and the
registration form to be used may be used for the registration
of Registrable Securities (a "Piggyback Registration"), the
Company will give prompt written notice to all holders of
Registrable Securities of its intention to effect such a
registration and will include in such registration all
Registrable Securities with respect to which the Company has
received written requests for inclusion therein within fifteen
(15) days after the receipt of the Company's notice.
28
<PAGE> 29
(ii) Piggyback Expenses. The Registration
Expenses of the holders of Registrable Securities will be paid
by the Company in all Piggyback Registrations.
(iii) Priority on Primary Registrations. If a
Piggyback Registration is an underwritten primary registration
on behalf of the Company, the Company will include in such
registration all Registrable Securities requested to be
included in such registration; provided, that if the managing
underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in
such registration exceeds the number which can be sold in such
offering without adversely affecting the marketability of the
offering, the Company will include in such registration (i)
first, the securities the Company proposes to sell, (ii)
second, the Registrable Securities (and other securities with
pari passu registration rights) requested to be included in
such registration, pro rata among the holders of such
Registrable Securities (and other securities with pari passu
registration rights) on the basis of the number of shares of
Registrable Securities (and other securities with pari passu
registration rights) owned by each holder of securities to be
registered in such offering and (iii) third, other securities,
if any, requested to be included in such registration;
provided that in any event the holders of Registrable
Securities shall be entitled to register at least 20% of the
securities to be included in any such registration, other than
the Company's initial underwritten primary registration,
unless waived by the holders of at least 51% of the
Registrable Securities to be included in such registration.
(iv) Priority on Secondary Registrations. If a
Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's securities,
and the managing underwriters advise the Company in writing
that in their opinion the number of securities requested to be
included in such registration exceeds the number which can be
sold in such offering without adversely affecting the
marketability of the offering, the Company will include in
such registration (i) first, the securities requested to be
included in such registration by the holders requesting such
registration, (ii) second, the Registrable Securities (and
other securities with pari passu registration rights)
requested to be included in such registration, pro rata among
the holders of such Registrable Securities (and other
securities with pari passu registration rights) on the basis
of the number of Registrable Securities (and other securities
with pari passu registration rights) owned by each holder of
securities to be registered in such offering, and (iii) third,
other securities requested to be included in such registration
not covered by clause (i) above.
(v) Other Registrations. If the Company has
previously filed a registration statement with respect to
Registrable Securities pursuant to paragraph 1 or pursuant to
this paragraph 2, and if such previous registration has not
been withdrawn or abandoned, the Company will not file or
cause to be effected any other registration of any of its
equity securities or securities convertible or exchangeable
into or exercisable for its equity securities under the
29
<PAGE> 30
Securities Act (except on Forms S-4 or S-8 or any successor
forms thereto), whether on its own behalf or at the request of
any holder or holders of such securities, until a period of at
least six (6) months has elapsed from the effective date of
such previous registration.
9. MISCELLANEOUS.
(a) Survival. None of the representations, warranties, and
covenants of the Parties (other than the provisions in Section 2 above
concerning payment of the Merger Consideration and the provisions in Section 5
above concerning insurance and indemnification) will survive the Effective Time.
(b) Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement without the prior written approval of the other Parties;
provided, however, that any Party may make any public disclosure which is
required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its best
efforts to advise the other Party in writing at least ten (10) days prior to
making the disclosure.
(c) No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns; provided, however, that the
provisions in Section 2 above concerning payment of the Merger Consideration are
intended for the benefit of CALCI Stockholders.
(d) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication
30
<PAGE> 31
hereunder shall be deemed duly given if (and then two business days after) it is
sent by registered or certified mail, return receipt requested, postage prepaid,
and addressed to the intended recipient as set forth below:
If to CALCI: Community Assisted Living Centers, Inc.
ATTN: John F. Robenalt, President & CEO
2440 Tamiami Trail North
Nokomis, Florida 34275
tel.: (941) 966-3636
fax: (941) 966-6678
Copy to: Scott Margol, Esq.
Ruden, McClosky, Smith, Schuster & Russell, P.A.
200 East Broward Boulevard
Ft. Lauderdale, Florida 33301
tel.: (954) 764-6660
fax: (954) 764-4996
If to JLH: Just Like Home, Inc.
ATTN: Richard M. Conard, M.D., Chairman
3647 Cortez Road West
Bradenton, Florida 34210-3106
tel.: 941.756.2555
fax: 941.755.1845
Copy to: William J. Schifino, Esq.
Schifino & Fleischer, P.A.
201 North Franklin Street, Suite 2700
Tampa, Florida 33602
tel.: 813.223.1535
fax: 813.223.3070
If to the Acquisition Company:
Just Like Home Acquisition Company
3647 Cortez Road West
Bradenton, Florida 34210-3106
tel.: 941.756.2555
fax: 941.755.1845
Copy to: William J. Schifino, Esq.
Schifino & Fleischer, P.A.
201 North Franklin Street, Suite 2700
Tampa, Florida 33602
tel.: 813.223.1535
fax: 813.223.3070
31
<PAGE> 32
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Florida without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Florida or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Florida.
(j) Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to stockholder approval will be subject
to the restrictions contained in the Florida General Corporation Law. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
32
<PAGE> 33
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(o) Costs. Unless otherwise stated herein, the Parties will each be
solely responsible for and bear all of their own respective expenses, including,
without limitation, expenses of legal counsel, accountants, and other advisors,
incurred at any time in connection with pursuing or consummating this Agreement,
and the transactions contemplated thereby. In the event any party takes legal
action to enforce any of the terms of this Agreement, the prevailing party to
such action shall not be entitled to reimbursement for such party's expenses,
including reasonable attorney's fees, incurred in such action.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
JUST LIKE HOME, INC.
By: /s/ Richard T. Conard, M.D.
- ---------------------------------- ------------------------------
Corporate Secretary
Print: Its:
---------------------------- ------------------------------
- ----------------------------------
[Seal]
JLH ACQUISITION
CORPORATION
By:
- ---------------------------------- ------------------------------
Corporate Secretary
Print: Its:
- ---------------------------------- ------------------------------
- ----------------------------------
COMMUNITY ASSISTED
LIVING CENTERS, INC.
By:
- ---------------------------------- -----------------------------
Thomas B. Luzier, Secretary John F. Robenalt, President & CEO
[Seal]
33
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 641,432
<SECURITIES> 0
<RECEIVABLES> 49,804
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,467,118
<PP&E> 2,487,049
<DEPRECIATION> 201,485
<TOTAL-ASSETS> 6,854,774
<CURRENT-LIABILITIES> 1,644,367
<BONDS> 0
0
0
<COMMON> 7,073
<OTHER-SE> 8,717,748
<TOTAL-LIABILITY-AND-EQUITY> 6,854,774
<SALES> 0
<TOTAL-REVENUES> 2,125,432
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,292,129
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 318,910
<INCOME-PRETAX> (1,485,607)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,485,607)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,485,607)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
