L E A S E
HEALTH CARE PROPERTY INVESTORS, INC.,
Lessor
AND
EMERITUS CORPORATION
Lessee
Dated as of September 5, 2001
v
i
TABLE OF CONTENTS
ARTICLE I. 1
1.1 Leased Property; Term 1
ARTICLE II. 2
2.1 Definitions 2
ARTICLE III. 11
3.1 Rent 11
3.2 [Intentionally Omitted] 12
3.3 [Intentionally Omitted] 12
3.4 Additional Charges 12
3.5 Late Payment of Rent 12
3.6 Net Lease 13
ARTICLE IV. 13
4.1 Impositions 13
4.2 Utilities 14
4.3 Insurance 14
4.4 Impound Account 14
4.5 Tax Service 14
ARTICLE V. 14
5.1 No Termination, Abatement, etc 14
ARTICLE VI. 15
6.1 Ownership of the Leased Property 15
6.2 Personal Property 15
6.3 Transfer of Personal Property and Capital Additions to Lessor 15
ARTICLE VII. 16
7.1 Condition of the Leased Property 16
7.2 Use of the Leased Property 16
7.3 Lessor to Grant Easements, etc 17
7.4 Preservation of Gross Revenues 17
ARTICLE VIII. 18
8.1 Compliance with Legal and Insurance Requirements, Instruments, etc
18
ARTICLE IX. 18
9.1 Maintenance and Repair 18
9.2 Encroachments, Restrictions, Mineral Leases, etc 19
ARTICLE X. 20
10.1 Construction of Capital Additions to the Leased Property 20
10.2 Funding by Lessor 22
10.3 Capital Additions Financed by Lessee 23
ARTICLE XI. 23
11.1 Liens 23
ARTICLE XII. 24
12.1 Permitted Contests 24
ARTICLE XIII. 24
13.1 General Insurance Requirements 25
13.2 Replacement Cost 26
13.3 Additional Insurance 26
13.4 Waiver of Subrogation 26
13.5 Policy Requirements 26
13.6 Increase in Limits 27
13.7 Blanket Policies and Policies Covering Multiple Locations 27
13.8 No Separate Insurance 27
ARTICLE XIV. 27
14.1 Insurance Proceeds 27
14.2 Insured Casualty 28
14.3 Uninsured Casualty 29
14.4 No Abatement of Rent 29
14.5 Waiver 29
14.6 Damage Near End of Term 29
ARTICLE XV. 29
15.1 Total Taking 29
15.2 Partial Taking 29
15.3 Restoration 29
15.4 Award-Distribution 30
15.5 Temporary Taking 30
ARTICLE XVI. 30
16.1 Events of Default 30
16.2 Certain Remedies 32
16.3 Damages 33
16.4 Receiver 34
16.5 Lessee's Obligation to Purchase 34
16.6 Waiver 34
16.7 Application of Funds 34
16.8 Reserved 34
16.9 Reserved 34
16.10 Lessor's Security Interest 34
ARTICLE XVII. 35
17.1 Lessor's Right to Cure Lessee's Default 35
ARTICLE XVIII. 35
18.1 Purchase of the Leased Property 36
ARTICLE XIX. 36
19.1 Renewal Term 36
ARTICLE XX. 36
20.1 Holding Over 37
ARTICLE XXI. 37
21.1 Letters of Credit 37
21.2 Uses of Letters of Credit 37
ARTICLE XXII. 37
22.1 Risk of Loss 37
ARTICLE XXIII. 37
23.1 General Indemnification 37
ARTICLE XXIV. 38
24.1 Prohibition 38
24.2 Consent 39
24.3 Costs 40
24.4 No Release of Lessee's Obligations 41
24.5 Assignment of Lessee's Rights Against Sublease 41
24.6 Reserved 41
24.7 REIT Protection 41
24.8 Prepaid Rent 42
ARTICLE XXV. 42
25.1 Officer's Certificate 42
25.2 Statements 42
25.3 Charges 44
ARTICLE XXVI. 44
26.1 Lessor's Right to Inspect and Show the Leased Property and Capital
Additions 44
ARTICLE XXVII. 44
27.1 No Waiver 44
ARTICLE XXVIII. 44
28.1 Remedies Cumulative 44
ARTICLE XXIX. 44
29.1 Acceptance of Surrender 44
ARTICLE XXX. 44
30.1 No Merger 44
ARTICLE XXXI. 45
31.1 Conveyance by Lessor 45
ARTICLE XXXII. 45
32.1 Quiet Enjoyment 45
ARTICLE XXXIII. 45
33.1 Notices 45
ARTICLE XXXIV. 46
34.1 Appraiser 46
ARTICLE XXXV. [Intentionally Omitted] 46
ARTICLE XXXVI. 46
36.1 Lessor May Grant Liens 47
36.2 Attornment 47
ARTICLE XXXVII. 47
37.1 Hazardous Substances 47
37.2 Notices 48
37.3 Remediation 48
37.4 Indemnity 48
37.5 Environmental Inspection 49
ARTICLE XXXVIII. 49
38.1 Memorandum of Lease 49
ARTICLE XXXIX. 50
39.1 Sale of Assets 50
ARTICLE XL. 50
40.1 Subdivision 50
ARTICLE XLI. 51
41.1 Authority 51
ARTICLE XLII. 51
42.1 Attorneys' Fees 51
ARTICLE XLIII. 51
43.1 Brokers 51
ARTICLE XLIV. 51
44.1 Miscellaneous 52
Addendum
Exhibit A-1 Legal Description of the Land (Biloxi)
Exhibit A-2 Legal Description of the Land (Auburn)
Exhibit B List of Lessor's Personal Property
Exhibit C Form of Amendment
Exhibit D Number of Units at Each Facility
Exhibit E List of Other Leases
58
LEASE
THIS LEASE ("Lease") is dated as of the 5th day of September, 2001, and is
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by and between HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation
("Lessor") and EMERITUS CORPORATION, a Washington corporation ("Lessee").
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1.
2. Leased Property; Term
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. Upon and subject to the terms and conditions hereinafter set forth,
Lessor leases to Lessee and Lessee leases from Lessor all of Lessor's rights and
interest in and to the following (collectively, the "Leased Property"):
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3. the real property described in Exhibit A-1 (Biloxi) and Exhibit A-2
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(Auburn) attached hereto (collectively, the "Land");
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4. all buildings, structures, Fixtures and other improvements of every kind
now or hereafter located on the Land including, alleyways and connecting
tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site to
the extent Lessor has obtained any interest in the same), parking areas and
roadways appurtenant to such buildings and structures and Capital Additions
funded by Lessor (collectively, the "Leased Improvements");
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5. all easements, rights and appurtenances relating to the Land and the
Leased Improvements (collectively, the "Related Rights");
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6. all equipment, machinery, fixtures, and other items of real and/or
personal property, including all components thereof, now and hereafter located
in, on or used in connection with and permanently affixed to or incorporated
into the Leased Improvements, including all furnaces, boilers, heaters,
electrical equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air-cooling and
air-conditioning systems, apparatus, sprinkler systems, 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 to constitute real
estate, together with all replacements, modifications, alterations and additions
thereto (collectively, the "Fixtures"); and
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7. the machinery, equipment, furniture and other personal property described
on Exhibit B attached hereto, together with all replacements and
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substitutes therefor (collectively, "Lessor's Personal Property").
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SUBJECT, HOWEVER, to the easements, encumbrances, covenants, conditions and
restrictions and other matters which affect the Leased Property as of the date
hereof or the Commencement Date or created thereafter as permitted hereunder to
have and to hold for a fixed term (the "Fixed Term") commencing on the
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Commencement Date, as defined below, and ending at 11:59 p.m. Los Angeles time
on the expiration of the fifteenth (15th) Lease Year, and the one (1) Extended
Term provided for in Article XIX unless this Lease is earlier terminated as
hereinafter provided. Promptly after the Commencement Date, the parties shall
execute an amendment to this Lease in substantially the form attached hereto as
Exhibit C to confirm certain matters, including the Commencement Date and the
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Minimum Rent as determined pursuant to Section 3.1 below. Upon any change in
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the Minimum Rent in accordance with the provisions of Section 3.1 below or
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otherwise pursuant to this Lease, the parties shall similarly execute an
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amendment to this Lease confirming such matters. Notwithstanding the foregoing,
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the failure of Lessee to so execute and deliver any such amendment shall not
affect Lessor's determination of the matters to be confirmed thereby. No such
amendment to this Lease will be recorded in the public records without the prior
written consent of Lessor and Lessee.
8.
9. Definitions
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. (See also Addendum Section 46.3) For all purposes of this Lease, except
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as otherwise expressly provided or unless the context otherwise requires, (i)
the terms defined in this Article have the meanings assigned to them in this
Article and include the plural as well as the singular; (ii) all accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with GAAP as at the time applicable; (iii) all references in this
Lease to designated "Articles," "Sections" and other subdivisions are to the
designated Articles, Sections and other subdivisions of this Lease; (iv) the
word "including" shall have the same meaning as the phrase "including, without
limitation," and other similar phrases; and (v) the words "herein," "hereof" and
"hereunder" and other similar words refer to this Lease as a whole and not to
any particular Article, Section or other subdivision:
Additional Charges: As defined in Article III.
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Affiliate: Any Person which, directly or indirectly, controls or is controlled
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by or is under common control with any other Person. For purposes of this
definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities, partnership interests or other
equity interests. When used with respect to any corporation, the term
"Affiliate" shall also include any Person which owns, directly or indirectly,
fifty percent (50%) or more of any class of security of such corporation, but
shall exclude any affiliates of ▇▇▇▇▇▇ ▇. ▇▇▇▇ which but for their relationship
with ▇▇▇▇▇▇ ▇. ▇▇▇▇ would not be considered affiliates of Lessee.
Appraiser: As defined in Article XXXIV.
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Award: All compensation, sums or anything of value awarded, paid or received on
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a total or partial Condemnation.
Base Period: The period commencing on that date which is eighteen (18) months
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prior to the date any appraisal of the Facility is made pursuant to the
provisions of Article XXXIV and ending on the date which is six (6) months prior
to the date any such appraisal of the Facility is made.
BLS: Bureau of Labor Statistics, U.S. Department of Labor.
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Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday which is not
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a day on which national banks in the City of New York, New York are authorized,
or obligated, by law or executive order, to close.
Capital Additions: One or more new buildings, or one or more additional
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structures annexed to any portion of any of the Leased Improvements, or the
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material expansion of existing improvements, which are constructed on any parcel
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or portion of the Land, during the Term, including construction of a new wing or
new story, or the renovation of existing improvements on the Leased Property in
order to provide a functionally new facility needed to provide services not
previously offered.
Capital Additional Costs: The costs of any Capital Addition made to the Leased
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Property whether paid for by Lessee or Lessor, including (i) all permit fees and
other costs imposed by any governmental authority, the cost of site preparation,
the cost of construction including materials and labor, the cost of supervision
and related design, engineering and architectural services, the cost of any
fixtures, and if and to the extent approved by Lessor, the cost of construction
financing; (ii) fees paid to obtain necessary licenses and certificates; (iii)
the cost of any land contiguous to the Leased Property which is to become a part
of the Leased Property purchased for the purpose of placing thereon the Capital
Addition or any portion thereof or for providing means of access thereto, or
parking facilities therefor, including the cost of surveying the same, but only
to the extent approved by Lessor in writing and in advance if Lessor is funding
such Capital Addition; (iv) the cost of insurance, real estate taxes, water and
sewage charges and other carrying charges for such Capital Addition during
construction; (v) the cost of title insurance; (vi) reasonable fees and expenses
of legal counsel; (vii) filing, registration and recording taxes and fees;
(viii) documentary stamp and similar taxes; and (ix) all reasonable costs and
expenses of Lessor and any Person which has committed to finance the Capital
Addition, including (a) the reasonable fees and expenses of their respective
legal counsel; (b) printing expenses; (c) filing, registration and recording
taxes and fees; (d) documentary stamp and similar taxes; (e) title insurance
charges and appraisal fees; (f) rating agency fees; and (g) commitment fees
charged by any Person advancing or offering to advance any portion of the
financing for such Capital Addition.
Cash Flow: The net income from the Facility, determined on the basis of GAAP
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applied on a consistent basis, plus the sum of (i) depreciation and amortization
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expense; (ii) Rent and other expenses payable hereunder, excluding, however,
Impositions; plus (iii) management fees; less the sum of (y) a management fee
allowance of five percent (5%) of Gross Revenues for the corresponding period
plus (z) an annual Two Hundred Dollar ($200) per unit reserve, pro-rated for the
corresponding period.
Cash Flow Coverage: For any period, calculated as of the last day of the
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period, the ratio of Cash Flow attributable to such period to total Rent payable
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for such period under the Lease.
Closing Date: As defined in the Contract of Acquisition.
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Code: The Internal Revenue Code of 1986, as amended.
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Commencement Date: The Closing Date.
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Condemnation: The exercise of any governmental power, whether by legal
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proceedings or otherwise, by a Condemnor or a voluntary sale or transfer by
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Lessor to any Condemnor, either under threat of condemnation or while legal
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proceedings for condemnation are pending.
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Condemnor: Any public or quasi-public authority, or private corporation or
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individual, having the power of Condemnation.
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Consolidated Financials: For any fiscal year or other accounting period for
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Lessee and its consolidated Subsidiaries, statements of earnings and retained
---
earnings and of changes in financial position for such period and for the period
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from the beginning of the respective fiscal year to the end of such period and
the related balance sheet as at the end of such period, together with the notes
thereto, all in reasonable detail and setting forth in comparative form the
corresponding figures for the corresponding period in the preceding fiscal year,
and prepared in accordance with GAAP.
Consolidated Net Worth: At any time, the sum of the following for Lessee and
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its consolidated Subsidiaries, on a consolidated basis determined in accordance
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with GAAP:
10. the amount of capital or stated capital (after deducting the cost of any
shares held in its treasury), plus
11. the amount of capital surplus and retained earnings (or, in the case of
a capital surplus or retained earnings deficit, minus the amount of such
deficit), minus
12. the sum of the following (without duplication of deductions in respect
of items already deducted in arriving at surplus and retained earnings): (a)
unamortized debt discount and expense; and (b) any write-up in book value of
assets resulting from a revaluation thereof subsequent to the most recent
Consolidated Financials prior to the date hereof, excluding, however, any (i)
net write-up in value of foreign currency in accordance with GAAP, (ii) write-up
resulting from a reversal of a reserve for bad debts or depreciation, and
(iii) write-up resulting from a change in methods of accounting for inventory.
Contract of Acquisition: The agreement of even date herewith by and
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between Lessor and Lessee relative to the acquisition by Lessor of the Leased
-
Property.
Cost of Living Index: The Consumer Price Index for All Urban Consumers, U.S.
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City Average (1982-1984 =100), published by the BLS, or such other renamed
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index. If the BLS changes the publication frequency of the Cost of Living Index
--
so that a Cost of Living Index is not available to make a cost-of-living
adjustment as specified herein, the cost-of-living adjustment shall be based on
the percentage difference between the Cost of Living Index for the closest
preceding month for which a Cost of Living Index is available and the Cost of
Living Index for the comparison month as required by this Lease. If the BLS
changes the base reference period for the Cost of Living Index from 1982-84
=100, the cost-of-living adjustment shall be determined with the use of such
conversion formula or table as may be published by the BLS. If the BLS
otherwise substantially revises, or ceases publication of the Cost of Living
Index, then a substitute index for determining cost-of-living adjustments,
issued by the BLS or by a reliable governmental or other nonpartisan
publication, shall be reasonably selected by Lessor and Lessee.
CPI Rent: An amount equal to the sum of (i) the product of (y) a fraction, the
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numerator of which is the Cost of Living Index for the first month of the Lease
Year for which CPI Rent is being calculated minus the Cost of Living Index for
the first month of the immediately preceding Lease Year, and the denominator of
which is the Cost of Living Index for the first month of the immediately
preceding Lease Year multiplied by (z) the sum of the prior Lease Year's Minimum
Rent plus (ii) the prior Lease Year's CPI Rent; provided, however, that in no
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event will the increase in CPI Rent from one Lease Year to the next be (A)
greater than three and fifty one hundredths percent (3.50%) of the sum of the
prior Lease Year's Minimum Rent and CPI Rent or (B) less than zero,
notwithstanding the actual percentage change in the Cost of Living Index for the
applicable period.
Date of Taking: The date the Condemnor has the right to possession of the
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property being condemned.
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Environmental Costs: As defined in Article XXXVI.
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Emeritus: Emeritus Corporation, a Washington corporation.
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Emeritus' Reimbursable Expenses: As defined in the Contract of Acquisition.
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Environmental Laws: Environmental Laws shall mean any and all federal, state,
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municipal and local laws, statutes, ordinances, rules, regulations, guidances,
policies, orders, decrees, judgments, whether statutory or common law, as
amended from time to time, now or hereafter in effect, or promulgated,
pertaining to the environment, public health and safety and industrial hygiene,
including the use, generation, manufacture, production, storage, release,
discharge, disposal, handling, treatment, removal, decontamination, cleanup,
transportation or regulation of any Hazardous Substance, including the
Industrial Site Recovery Act, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Comprehensive Environmental Response Compensation
and Liability Act, the Resource Conservation and Recovery Act, the Federal
Insecticide, Fungicide, Rodenticide Act, the Safe Drinking Water Act and the
Occupational Safety and Health Act.
Event of Default: As defined in Article XVI.
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Extended Term: As defined in Article XIX.
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Facility: The assisted living facility being operated or proposed to be
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operated on the Leased Property. (See also Addendum Section 46.3)
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Facility Mortgage: As defined in Article XIII.
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Facility Mortgagee: As defined in Article XIII.
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Fair Market Added Value: The Fair Market Value (as hereinafter defined) of the
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Leased Property (including all Capital Additions) less the Fair Market Value of
the Leased Property determined as if no Capital Additions financed by Lessee had
been constructed.
Fair Market Rental: The fair market rental value of the Leased Property, or
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applicable portion thereof, based upon the Fair Market Value, including any
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periodic increases therein, determined in accordance with the appraisal
---
procedures set forth in Articles XXXIV.
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Fair Market Value: The fair market value of the Leased Property, and all
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Capital Additions, determined in accordance with the appraisal procedures set
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forth in Article XXXIV. Fair Market Value shall be the value obtained by
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assuming that the Leased Property is encumbered by this Lease. Further, in
--
determining Fair Market Value the positive or negative effect on the value of
--
the Leased Property attributable to the interest rate, amortization schedule,
--
maturity date, prepayment penalty and other terms and conditions of any
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encumbrance which will not be removed at or prior to the date as of which such
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Fair Market Value determination is being made shall be taken into account. The
Leased Property shall be valued at its highest and best use which shall be
presumed to be as a fully-permitted Facility operated in accordance with the
provisions of this Lease. Fair market value of the Leased Property shall not
include "going concern" or "business enterprise" value attributable to factors
other than the highest and best use of the Leased Property. In addition, the
following specific matters shall be factored in or out, as appropriate, in
determining Fair Market Value:
(i) The negative value of (a) any deferred maintenance or other items of
repair or replacement of the Leased Property, (b) any then current or prior
licensure or certification violations and/or admissions holds and (c) any other
breach or failure of Lessee to perform or observe its obligations hereunder
shall not be taken into account; rather, the Leased Property, and every part
thereof, shall be deemed to be in the condition required by this Lease (i.e.,
good order and repair) and Lessee shall at all times be deemed to have operated
the Facility in compliance with and to have performed all obligations of the
Lessee under this Lease.
13. The occupancy level of the Facility shall be deemed to be the average
occupancy during the Base Period.
14. If the Facility's Primary Intended Use includes a mixed use, then the
average of such mix during the Base Period shall be taken into account.
Fixed Term: As defined in Article I.
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Fixtures: As defined in Article I. (See also Addendum Section 46.3)
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GAAP: Generally accepted accounting principles.
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Gross Revenues: All revenues received or receivable from or by reason of the
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operation of the Facility or any other use of the Leased Property, Lessee's
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Personal Property and all Capital Additions including all revenues received or
--
receivable for the use of or otherwise attributable to units, rooms, beds and
other facilities provided, meals served, services performed (including ancillary
services), space or facilities subleased or goods sold on or from the Leased
Property and all Capital Additions, including, and except as provided below, any
consideration received under any commercial (as opposed to resident or patient)
subletting, licensing or other arrangements with third parties (a "Commercial
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Sublessee") relating to the possession or use of any portion of the Leased
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Property and all Capital Additions; provided, however, that Gross Revenues shall
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not include:
(ii) non-operating revenues such as interest income or income from the sale
of assets not sold in the ordinary course of business;
15. federal, state or local excise taxes and any tax based upon or measured
by such revenues which is added to or made a part of the amount billed to the
patient or other recipient of such services or goods, whether included in the
billing or stated separately;
16. contractual allowances (relating to any period during the Term of the
Lease) for ▇▇▇▇▇▇▇▇ not paid by or received from the appropriate governmental
agencies or third party providers; and
17. all proper patient billing credits and adjustments according to
generally accepted accounting principles relating to health care accounting.
Gross Revenues for each Lease Year shall reflect all cost report settlement
adjustments, whether positive or negative, received in or payable during such
Lease Year in accordance with GAAP relating to health care accounting,
regardless of the year that such settlement amounts are applicable to; provided,
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however, that to the extent settlement amounts are applicable to years, or
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portions thereof, prior to the Commencement Date, such settlement amounts shall
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not be reflected in Gross Revenues for the Lease Year in which such settlement
amounts are received or paid. Gross Revenues shall include the Gross Revenues
of any Commercial Sublessee with respect to any applicable portion of the Leased
Property and/or any Capital Additions, i.e., the Gross Revenues generated from
the operations conducted on or from such portion shall be included directly in
the Gross Revenues and the rent received or receivable by Lessee from such
Commercial Sublessee shall be excluded from Gross Revenues for such purpose.
Guarantor: Any guarantor of Lessee's or an Affiliate of Lessee's obligation to
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Lessor or an Affiliate of Lessor, in every case, whether such Guaranty is now or
hereafter existing.
Handling: As defined in Article XXXVII.
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Hazardous Substances: Collectively, any petroleum, petroleum product or
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byproduct or any substance, material or waste regulated or listed pursuant to
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any Environmental Law.
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HCPI: Health Care Property Investors, Inc., a Maryland corporation.
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HCPI's Transaction Costs: As defined in the Contract of Acquisition.
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Impositions: Collectively, all taxes, including capital stock, franchise and
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other state taxes of Lessor (or, if Lessor is not HCPI, of HCPI as a result of
--
its investment in Lessor), ad valorem, sales, use, single business, gross
receipts, transaction privilege, rent or similar taxes; assessments including
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be completed within the
Term; ground rents; water, sewer and other utility levies and charges; excise
tax levies; fees including license, permit, inspection, authorization and
similar fees; and all other governmental charges, in each case whether general
or special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Leased Property and/or the Rent and all interest and
penalties thereon attributable to any failure in payment by Lessee which at any
time prior to, during or in respect of the Term hereof may be assessed or
imposed on or in respect of or be a lien upon (i) Lessor or Lessor's interest in
the Leased Property, (ii) the Leased Property or any part thereof or any rent
therefrom or any estate, right, title or interest therein, or (iii) 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; provided, however, that nothing contained in this
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Lease shall be construed to require Lessee to pay (a) any tax based on net
income (whether denominated as a franchise or capital stock or other tax)
imposed on Lessor or any other Person, (b) any transfer, or net revenue tax of
Lessor or any other Person except Lessee and its successors, (c) any tax imposed
with respect to the sale, exchange or other disposition by Lessor of any Leased
Property or the proceeds thereof, or (d) any principal or interest on any
indebtedness on the Leased Property owed to a Facility Mortgagee for which
Lessor is the obligor, except to the extent that any tax, assessment, tax levy
or charge, which is otherwise included in this definition, and a tax,
assessment, tax levy or charge set forth in clause (a) or (b) is levied,
assessed or imposed in lieu thereof or as a substitute therefor.
Insurance Requirements: The terms of any insurance policy required by this
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Lease and all requirements of the issuer of any such policy and of any insurance
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board, association, organization or company necessary for the maintenance of any
such policy.
Intangible Property: All accounts, proceeds of accounts, rents, profits, income
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or revenues derived from the use of rooms or other space within the Leased
Property or the providing of services in or from the Leased Property; documents,
chattel paper, instruments, contract rights, deposit accounts, general
intangibles, causes of action, now owned or hereafter acquired by Lessee
(including any right to any refund of any Impositions) arising from or in
connection with Lessee's operation or use of the Leased Property; all licenses
and permits now owned or hereinafter acquired by Lessee, which are necessary or
desirable for Lessee's use of the Leased Property for its Primary Intended Use,
including, if applicable, any certificate of need or similar certificate; the
right to use any trade name or other name associated with the Facility; and any
and all third-party provider agreements (including Medicare and Medicaid).
Land: As defined in Article I. (See also Addendum Section 46.3)
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Lease: As defined in the preamble.
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Lease Rate: Eleven percent (11%).
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Lease Year: Each period of twelve (12) full calendar months from and after the
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Commencement Date, unless the Commencement Date is a day other than the first
(1st) day of a calendar month, in which case the first (1st) Lease Year shall be
the period of twelve (12) full calendar months from and after the first (1st)
day of the first (1st) calendar month following the month in which the
Commencement Date occurs, and each subsequent Lease Year shall be the period of
twelve (12) full calendar months from and after the first (1st) day of the first
(1st) calendar month following the expiration of the prior Lease Year; provided,
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however, that the last Lease Year during the Term may be a period of less than
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twelve (12) full calendar months and shall end on the last day of the Term.
Leased Improvements: As defined in Article I. (See also Addendum Section 46.3)
-------------------- --- ---- -------- ------- ----
Leased Property: As defined in Article I. (See also Addendum Section 46.3)
---------------- --- ---- -------- ------- ----
Legal Requirements: All federal, state, county, municipal and other
-------------------
governmental statutes, laws (including common law and Environmental Laws),
-----------
rules, policies, guidance, codes, orders, regulations, ordinances, permits,
-----
licenses, covenants, conditions, restrictions, judgments, decrees and
----
injunctions affecting either the Leased Property, Lessee's Personal Property and
----
all Capital Additions or the construction, use or alteration thereof, whether
now or hereafter enacted and in force, including any which may (i) require
repairs, modifications or alterations in or to the Leased Property, Lessee's
Personal Property and all Capital Additions, (ii) in any way adversely affect
the use and enjoyment thereof, or (iii) regulate the transport, handling, use,
storage or disposal or require the cleanup or other treatment of any Hazardous
Substance.
Lessee: As defined in the preamble.
------
Lessee's Personal Property: The Personal Property other than Lessor's Personal
---------------------------
Property. (See also Addendum Section 46.3)
--- ---- -------- ------- ----
Lessor: As defined in the preamble.
------
Lessor's Initial Investment. At any given time, the sum of (i) Lessor's
-----------------------------
Purchase Price, plus (ii) all of HCPI's Transaction Costs, plus (iii) all of
-------
Emeritus' Reimbursable Expenses paid, funded, reimbursed or credited by Lessor,
---
as HCPI, to Lessee, as Emeritus, pursuant to the Contact of Acquisition.
Lessor's Personal Property: As defined in Article I. (See also Addendum Section
-------------------------- --- ---- -------- -------
46.3)
----
Lessor's Purchase Price: The total Purchase Price paid by Lessor for all of the
-----------------------
Leased Property, as set forth in the Contract of Acquisition (i.e.,
$15,100,000).
Letters of Credit: As defined in Section 21.1.
-------------------
Minimum Rent: As defined in Section 3.1.1.
-------------
Minimum Repurchase Price: As defined in Addendum Section 46.3.
--------------------------
Officer's Certificate: A certificate of Lessee signed by an officer authorized
----------------------
to so sign by its board of directors or by-laws.
Other Leases: As defined in Section 21.1.
-------------
Overdue Rate: On any date, a rate equal to 2% above the Prime Rate, but in no
-------------
event greater than the maximum rate then permitted under applicable law.
Payment Date: Any due date for the payment of the installments of Minimum Rent,
------------
CPI Rent or any other sums payable under this Lease.
Person: Any individual, corporation, partnership, joint venture, association,
------
joint stock company, trust, unincorporated organization, government or any
agency or political subdivision thereof or any other form of entity.
Personal Property: All machinery, furniture and equipment, including phone
------------------
systems and computers, trade fixtures, inventory, supplies and other tangible
----
personal property used or useful in the use of the Leased Property for its
--
Primary Intended Use, other than Fixtures.
--
Primary Intended Use: As defined in Addendum Section 46.3.
----------------------
Prime Rate: On any date, a rate equal to the annual rate on such date announced
----------
by the Bank of New York to be its prime, base or reference rate for 90-day
unsecured loans to its corporate borrowers of the highest credit standing but in
no event greater than the maximum rate then permitted under applicable law. If
the Bank of New York discontinues its use of such prime, base or reference rate
or ceases to exist, Lessor shall designate the prime, base or reference rate of
another state or federally chartered bank based in New York to be used for the
purpose of calculating the Prime Rate hereunder.
Priority Encumbrances: As defined in Article XXXVI.
----------------------
Purchase Price. As defined in the Contract of Acquisition.
---------------
Quarter: During each Lease Year, the first three (3) calendar month period
-------
commencing on the first (1st) day of such Lease Year and each subsequent three
----
(3) calendar month period within such Lease Year; provided, however, that the
last Quarter during the Term may be a period of less than three (3) calendar
months and shall end on the last day of the Term.
Related Rights. As defined in Article I. (See also Addendum Section 46.3)
--------------- --- ---- -------- ------- ----
Rent: Collectively, the Minimum Rent, CPI Rent and Additional Charges.
----
SEC: The Securities and Exchange Commission.
---
State: The State or Commonwealth in which the Leased Property is located.
-----
Subsidiaries: Corporations, limited liability companies or partnerships, in
------------
which Lessee owns, directly or indirectly, more than 50% of the voting stock,
---
membership interests or partnership interest, respectively.
--
Term: Collectively, the Fixed Term and the Extended Term, as the context may
----
require, unless earlier terminated.
--
Test Rate: The minimum interest rate necessary to avoid imputation of original
----------
issue discount income under Sections 483 or 1272 of the Code or any similar
provisions.
Transfer Consideration: As defined in Article XXIV.
-----------------------
Unavoidable Delays: Delays due to strike, lockout, inability to procure
-------------------
materials, power failure, act of God, governmental restriction, enemy action,
-------
civil commotion, fire, unavoidable casualty or other cause beyond the control of
--
the party responsible for performing an obligation hereunder; provided, however,
-------- -------
that a lack of funds shall not be deemed a cause beyond the control of either
party hereto.
Unsuitable for Its Primary Intended Use: A state or condition of the Facility
-----------------------------------------
such that by reason of damage or destruction or Condemnation, in the good faith
judgment of Lessor and Lessee, the Facility cannot be operated on a commercially
practicable basis for its Primary Intended Use taking into account, among other
relevant factors, the number of units and usable beds affected by such damage or
destruction or Condemnation.
18.
19. Rent
----
. Lessee will pay to Lessor in lawful money of the United States of
America which shall be legal tender for the payment of public and private debts,
without offset or deduction, the amounts set forth hereinafter as Minimum Rent
and CPI Rent during the Term. Payments of Minimum Rent and CPI Rent shall be
made by wire transfer initiated by Lessee to Lessor's account or to the account
of such other Person as Lessor from time to time may designate in writing on the
first day of each calendar month.
20. Minimum Rent.
-------------
21. Fixed Term.
-----------
22. Subject to increases provided in subsection (b) below, for the period
from the Commencement Date through the expiration of the Fixed Term, Lessee
shall pay to Lessor "Minimum Rent" monthly, in advance on or before the first
------------
day of each calendar month, in an amount equal to one-twelfth (1/12) of the
product of (i) the Lease Rate, times (ii) the total Minimum Repurchase Price for
-----
the Facilities as of the Commencement Date. The first monthly payment of
Minimum Rent shall be payable on the Commencement Date (prorated as to any
partial calendar month at the beginning of the Term).
23. The monthly Minimum Rent determined pursuant to subsection (i) above
shall be increased from time to time on the date of any payment, funding,
accrual, reimbursement or crediting of any of HCPI's Transaction Costs or
Emeritus' Reimbursable Expenses by Lessor, as HCPI, under the Contract of
Acquisition following the Commencement Date by an amount equal to one-twelfth
(1/12) of the product of (A) the amount of such post-Commencement Date payment,
funding, accrual, reimbursement or crediting by Lessor of any such HCPI's
Transaction Costs or of Emeritus' Reimbursable Expenses, times (B) the Lease
-----
Rate.
24. Extended Term. During the Extended Term, if at all, Lessee shall pay to
-------------
Lessor "Minimum Rent" monthly, in advance, on or before the first day of
-------------
each calendar month, in an amount equal to one-twelfth (1/12) of the product of
(i) the total Minimum Rent and CPI Rent payable for the last Lease Year of Fixed
Term, times (ii) 103.5%.
-----
25. CPI Rent. In addition to the Minimum Rent, Lessee shall, commencing
---------
with the first calendar month of the second Lease Year and continuing through
the expiration of the Fixed Term and commencing with the first calendar month of
the second Lease Year of the Extended Term and continuing through the
expiration of the Term, pay to Lessor each month one twelfth (1/12th) of the CPI
Rent.
26. [Intentionally Omitted]
------------------------
27. [Intentionally Omitted]
28. Additional Charges
. In addition to the Minimum Rent and CPI Rent, (i) Lessee shall also pay
and discharge as and when due and payable all other amounts, liabilities,
obligations and Impositions which Lessee assumes or agrees to pay under this
Lease; and (ii) in the event of any failure on the part of Lessee to pay any of
those items referred to in clause (i) above, Lessee shall also promptly pay and
discharge every fine, penalty, interest and cost which may be added for
non-payment or late payment of such items (the items referred to in clauses (i)
and (ii) above being referred to herein collectively as the "Additional
----------
Charges").
29. Late Payment of Rent
-----------------------
. Lessee hereby acknowledges that late payment by Lessee to Lessor of Rent
will cause Lessor to incur costs not contemplated hereunder, the exact amount of
which is presently anticipated to be extremely difficult to ascertain. Such
costs may include processing and accounting charges and late charges which may
be imposed on Lessor by the terms of any loan agreement and other expenses of a
similar or dissimilar nature. Accordingly, if any installment of Rent other
than Additional Charges payable to a Person other than Lessor shall not be paid
within three (3) Business Days after its due date, Lessee will pay Lessor on
demand a late charge equal to the lesser of (i) five percent (5%) of the amount
of such installment or (ii) the maximum amount permitted by law. The parties
agree that this late charge represents a fair and reasonable estimate of the
costs that Lessor will incur by reason of late payment by Lessee. The parties
further agree that such late charge is Rent and not interest and such assessment
does not constitute a lender or borrower/creditor relationship between Lessor
and Lessee. In addition, the amount unpaid, including any late charges, shall
bear interest at the Overdue Rate compounded monthly from the due date of such
installment to the date of payment thereof, and Lessee shall pay such interest
to Lessor on demand. The payment of such late charge or such interest shall not
constitute waiver of, nor excuse or cure, any default under this Lease, nor
prevent Lessor from exercising any other rights and remedies available to
Lessor.
30. Net Lease
----------
. This Lease is and is intended to be what is commonly referred to as a
"net, net, net" or "triple net" lease. The Rent shall be paid absolutely net to
Lessor, so that this Lease shall yield to Lessor the full amount of the
installments of Minimum Rent, CPI Rent and Additional Charges throughout the
Term, all as more fully set forth in Article IV and subject to any other
provisions of this Lease which expressly provide for adjustment or abatement of
Rent or other charges.
31.
32. Impositions
-----------
.
33. Subject to Article XII relating to permitted contests, Lessee shall pay,
or cause to be paid, all Impositions before any fine, penalty, interest or
cost may be added for non-payment. Lessee shall make such payments directly to
the taxing authorities where feasible, and promptly furnish to Lessor copies of
official receipts or other satisfactory proof evidencing such payments.
Lessee's obligation to pay Impositions shall be absolutely fixed upon the date
such Impositions become a lien upon the Leased Property or any part thereof. If
any Imposition may, at the option of the taxpayer, lawfully be paid in
installments, whether or not interest shall accrue on the unpaid balance of such
Imposition, Lessee may pay the same, and any accrued interest on the unpaid
balance of such Imposition, in installments as the same respectively become due
and before any fine, penalty, premium, further interest or cost may be added
thereto.
34. Lessor shall prepare and file all tax returns and reports as may be
required by Legal Requirements with respect to Lessor's net income, gross
receipts, franchise taxes and taxes on its capital stock, and Lessee shall
prepare and file all other tax returns and reports as may be required by Legal
Requirements.
35. Any refund due from any taxing authority in respect of any Imposition
paid by Lessee shall be paid over to or retained by Lessee if no Event of
Default shall have occurred hereunder and be continuing. Any other refund shall
be paid over to or retained by Lessor.
36. Lessor and Lessee shall, upon request of the other, provide such data as
is maintained by the party to whom the request is made with respect to the
Leased Property as may be necessary to prepare any required returns and reports.
If any property covered by this Lease is classified as personal property for tax
purposes, Lessee shall file all personal property tax returns in such
jurisdictions where it must legally so file. Lessor, to the extent it possesses
the same, and Lessee, to the extent it possesses the same, shall provide the
other party, upon request, with cost and depreciation records necessary for
filing returns for any property so classified as personal property. Where
Lessor is legally required to file personal property tax returns and to the
extent practicable, Lessee shall be provided with copies of assessment notices
indicating a value in excess of the reported value in sufficient time for Lessee
to file a protest.
37. Lessee may, upon notice to Lessor, at Lessee's option and at Lessee's
sole cost and expense, protest, appeal, or institute such other proceedings as
Lessee may deem appropriate to effect a reduction of real estate or personal
property assessments and Lessor, at Lessee's expense as aforesaid, shall
reasonably cooperate with Lessee in such protest, appeal, or other action but at
no cost or expense to Lessor. ▇▇▇▇▇▇▇▇ for reimbursement by Lessee to
Lessor of personal property or real property taxes shall be accompanied by
copies of a ▇▇▇▇ therefor and payments thereof which identify the personal
property or real property with respect to which such payments are made.
38. Lessor shall give prompt notice to Lessee of all Impositions payable by
Lessee hereunder of which Lessor has knowledge, but Lessor's failure to give any
such notice shall in no way diminish Lessee's obligations hereunder to pay
such Impositions.
39. Impositions imposed in respect of the tax-fiscal period during which the
Term terminates shall be adjusted and prorated between Lessor and Lessee,
whether or not such Imposition is imposed before or after such termination.
40. Utilities
---------
. Lessee shall pay or cause to be paid all charges for electricity, power,
gas, oil, water and other utilities used in the Leased Property and all Capital
Additions thereto. Lessee shall also pay or reimburse Lessor for all costs and
expenses of any kind whatsoever which at any time with respect to the Term
hereof may be imposed against Lessor by reason of any of the covenants,
conditions and/or restrictions affecting the Leased Property or any portion
thereof, or with respect to easements, licenses or other rights over, across or
with respect to any adjacent or other property which benefits the Leased
Property, including any and all costs and expenses associated with any utility,
drainage and parking easements.
41. Insurance
---------
. Lessee shall pay or cause to be paid all premiums for the insurance
coverage required to be maintained by Lessee hereunder.
42. Impound Account
----------------
. Lessor may, at its option to be exercised by thirty (30) days' written
notice to Lessee, require Lessee to deposit, at the time of any payment of
Minimum Rent, an amount equal to one-twelfth (1/12th) of Lessee's estimated
annual taxes, of every kind and nature, required pursuant to Section 4.1 plus,
if Lessee fails to pay any insurance premium in a timely manner as required by
this Lease, one-twelfth (1/12th) of Lessee's estimated annual insurance premiums
required pursuant to Section 4.3 into an impound account as directed by Lessor.
Such amounts shall be applied to the payment of the obligations in respect of
which said amounts were deposited in such order of priority as Lessor shall
determine, on or before the respective dates on which the same or any of them
would become delinquent. The cost of administering such impound account shall
be paid by Lessee. Nothing in this Section 4.4 shall be deemed to affect any
right or remedy of Lessor hereunder.
43. Tax Service
------------
. If requested by Lessor, Lessee shall, at its sole cost and expense,
cause to be furnished to Lessor a tax reporting service, to be designated by
Lessor, covering the Leased Property and all Capital Additions.
44.
45. No Termination, Abatement, etc
---------------------------------
. Except as otherwise specifically provided in this Lease, Lessee shall
remain bound by this Lease in accordance with its terms and shall not seek or be
entitled to any abatement, deduction, deferment or reduction of Rent, or set-off
against the Rent. The respective obligations of Lessor and Lessee shall not be
affected by reason of (i) any damage to or destruction of the Leased Property or
any portion thereof from whatever cause or any Condemnation of the Leased
Property or any portion thereof; (ii) other than as a result of Lessor's willful
misconduct or gross negligence, the lawful or unlawful prohibition of, or
restriction upon, Lessee's use of the Leased Property, or any portion thereof,
the interference with such use by any Person or by reason of eviction by
paramount title; (iii) any claim that Lessee has or might have against Lessor by
reason of any default or breach of any warranty by Lessor hereunder or under any
other agreement between Lessor and Lessee or to which Lessor and Lessee are
parties; (iv) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Lessor or any assignee or transferee of Lessor; or (v) for any other
cause, whether similar or dissimilar to any of the foregoing, other than a
discharge of Lessee from any such obligations as a matter of law. Lessee hereby
specifically waives all rights arising from any occurrence whatsoever which may
now or hereafter be conferred upon it by law (a) to modify, surrender or
terminate this Lease or quit or surrender the Leased Property or any portion
thereof; or (b) which may entitle Lessee to any abatement, reduction, suspension
or deferment of the Rent or other sums payable by Lessee hereunder, except as
otherwise specifically provided in this Lease. However, nothing shall preclude
Lessee from bringing a separate action and Lessee is not waiving other rights
and remedies not expressly waived herein. The obligations of Lessor and Lessee
hereunder shall be separate and independent covenants and agreements and the
Rent and all other sums payable by Lessee hereunder shall continue to be payable
in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease or by termination of this Lease
other than by reason of an Event of Default.
46.
47. Ownership of the Leased Property
------------------------------------
. Lessee acknowledges that the Leased Property is the property of Lessor
and that Lessee has only the right to the exclusive possession and use of the
Leased Property upon the terms and conditions of this Lease. Lessee shall, at
its expense, restore the Leased Property to the condition required by Section
9.1.4.
48. Personal Property
------------------
. During the Term, Lessee may, as necessary and at its expense, install,
affix or assemble or place on any parcels of the Land or in any of the Leased
Improvements, any items of Lessee's Personal Property and replacements thereof
which shall be the property of and owned by Lessee. Except as provided in
Sections 6.3 and 16.10, Lessor shall have no rights to Lessee's Personal
Property. Lessee shall provide and maintain during the entire Term all Personal
Property necessary in order to operate the Facility in compliance with all
licensure and certification requirements, all Legal Requirements and all
Insurance Requirements and for the Primary Intended Use and as required, in
Lessee's prudent business judgment, to meet the needs of residents of the
Facility.
49. Transfer of Personal Property and Capital Additions to Lessor
---------------------------------------------------------------------
. Upon the expiration or earlier termination of this Lease, Lessee's
Personal Property which does not provide a new function with respect to Lessor's
Personal Property shall become the property of Lessor, free of any encumbrance
and Lessee shall execute all documents and take any actions reasonably necessary
to evidence such ownership and discharge any encumbrance. Notwithstanding the
foregoing, Lessee shall not be required to transfer any of the following of
Lessee's Personal Property to Lessor in accordance with this Section 6.3, to the
extent such Personal Property is being leased by Lessee from a third-party
lessor: (a) motor vehicles; (b) copy machines; (c) fax machines; (d) postage
meters; and (e) dish machines (i.e., dishwashers).
50.
51. Condition of the Leased Property
------------------------------------
. Lessee acknowledges receipt and delivery of possession of the Leased
Property and that Lessee has examined and otherwise has knowledge of the
condition of the Leased Property prior to the execution and delivery of this
Lease and has found the same to be in good order and repair, free from Hazardous
Substances not in compliance with Legal Requirements (except as set forth in
Addendum Section 46.12) and satisfactory for its purposes hereunder.
----- ------- -----
Regardless, however, of any examination or inspection made by Lessee and whether
----- -
or not any patent or latent defect or condition was revealed or discovered
thereby, Lessee is leasing the Leased Property "as is" in its present condition.
Lessee waives any claim or action against Lessor in respect of the condition of
the Leased Property including any defects or adverse conditions not discovered
or otherwise known by Lessee as of the date hereof. LESSOR MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY
PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY
PARTICULAR USE OR PURPOSE OR OTHERWISE, OR AS TO THE NATURE OR QUALITY OF THE
MATERIAL OR WORKMANSHIP THEREIN, OR THE EXISTENCE OF ANY HAZARDOUS SUBSTANCE, IT
BEING AGREED THAT ALL SUCH RISKS, LATENT OR PATENT, ARE TO BE BORNE SOLELY BY
LESSEE INCLUDING ALL RESPONSIBILITY AND LIABILITY FOR ANY ENVIRONMENTAL
REMEDIATION AND COMPLIANCE WITH ALL ENVIRONMENTAL LAWS.
52. Use of the Leased Property
------------------------------
.
53. Lessee covenants that it will obtain and maintain all authorization and
approvals needed to use and operate the Leased Property and the Facility for the
Primary Intended Use and any other use conducted on the Leased Property as
may be permitted from time to time hereunder in accordance with Legal
Requirements including applicable licenses, provider agreements, permits, and,
if appropriate, Medicare and/or Medicaid certification.
54. Lessee shall use or cause to be used the Leased Property and the
improvements thereon for their Primary Intended Use. Lessee shall not use the
Leased Property or any portion thereof or, any Capital Addition thereto for any
other use without the prior written consent of Lessor, which consent Lessor may
withhold in its sole discretion.
55. Lessee shall operate continuously the Leased Property and all Capital
Additions thereto in accordance with its Primary Intended Use. Lessee shall
devote the entire Facility and all Capital Additions thereto to the Primary
Intended Use, except for areas reasonably required for office or storage space
uses incidental to the Primary Intended Use. Lessee shall not modify the
services offered or take any other action (e.g., removing patients or residents
from the Facility or directing patients or residents, or prospective patients or
residents, to another Facility) which would materially reduce Gross
Revenues. Lessee shall at all times maintain an adequate staff for the service
of its residents and/or patients. Lessee shall employ its best judgment,
efforts and abilities to operate the Facility in such a manner so as to maximize
Gross Revenues and to enhance the reputation and attractiveness of the Facility.
56. Lessee shall conduct its business at the Facility in conformity with
prudent standards of patient or resident care practice.
57. Lessee shall not commit or suffer to be committed any waste on the
Leased Property or any Capital Addition thereto or cause or permit any nuisance
thereon.
58. Lessee shall neither suffer nor permit the Leased Property or any
portion thereof or any Capital Addition thereto financed by Lessor to be used in
such a manner as (i) might reasonably tend to impair Lessor's title thereto
or to any portion thereof or (ii) may make possible a claim of adverse use or
possession, or an implied dedication of the Leased Property or any portion
thereof or any Capital Addition thereto financed by Lessor.
59. Lessor to Grant Easements, etc
----------------------------------
. Lessor shall, from time to time so long as no Event of Default has
occurred and is continuing, at the request of Lessee and at Lessee's cost and
expense, but subject to the approval of Lessor, which approval shall not be
unreasonably withheld or delayed (i) grant easements and other rights in the
nature of easements; (ii) release existing easements or other rights in the
nature of easements which are for the benefit of the Leased Property; (iii)
dedicate or transfer unimproved portions of the Leased Property for road,
highway or other public purposes; (iv) execute petitions to have the Leased
Property annexed to any municipal corporation or utility district; (v) execute
amendments to any covenants, conditions and restrictions affecting the Leased
Property; and (vi) execute and deliver to any Person any instrument appropriate
to confirm or effect such grants, releases, dedications and transfers to the
extent of its interest in the Leased Property, but only upon delivery to Lessor
of an Officer's Certificate stating that such grant release, dedication,
transfer, petition or amendment is not detrimental to the proper conduct of the
business of Lessee on the Leased Property and does not materially reduce the
value of the Leased Property.
60. Preservation of Gross Revenues
---------------------------------
. Lessee acknowledges that a fair return to Lessor on its investment in
the Leased Property is dependent, in part, on the concentration on the Leased
Property during the Term of the assisted living business of Lessee and its
Affiliates in the geographical area of the Leased Property. Lessee further
acknowledges that diversion of residents and/or patients, as applicable, from
the Facility to other facilities or institutions owned, operated or managed,
whether directly or indirectly, by Lessee or its Affiliates will have a material
adverse impact on the value and utility of the Leased Property. Accordingly,
Lessor and Lessee agree as follows:
61. During the Term, neither Lessee nor any of its Affiliates, directly or
indirectly, shall operate, own, manage or have any interest in or otherwise
participate in or receive revenues from any other facility or institution
providing services or similar goods to those provided in connection with the
Facility and the Primary Intended Use (which Lessee did not operate, own, manage
or have any interest in on the Commencement Date), within a ten (10) mile
radius outward from the outside boundary of the Leased Property. All distances
shall be measured on a straight line rather than on a driving distance basis.
In the event that any portion of such other facility or institution is located
within such restricted area the entire facility or institution shall be deemed
located within such restricted area.
62.
63. Compliance with Legal and Insurance Requirements, Instruments, etc
------------------------------------------------------------------------
. Subject to Article XII regarding permitted contests, Lessee, at its
expense, shall promptly (i) comply with all Legal Requirements and Insurance
Requirements regarding the use, operation, maintenance, repair and restoration
of the Leased Property, Lessee's Personal Property and all Capital Additions
whether or not compliance therewith may require structural changes in any of the
Leased Improvements or Capital Additions thereto or interfere with the use and
enjoyment of the Leased Property and (ii) procure, maintain and comply with all
licenses, certificates of need, provider agreements (but only to the extent
Lessee, in its prudent business judgment, elects to participate in the Medicare,
Medicaid or other third party payor programs) and other authorizations required
for the use of the Leased Property, Lessee's Personal Property and all Capital
Additions for the Primary Intended Use and any other use of the Leased Property,
Lessee's Personal Property and all Capital Additions then being made, and for
the proper erection, installation, operation and maintenance of the Leased
Property, Lessee's Personal Property and all Capital Additions. In an emergency
or in the event of a breach by Lessee of its obligations hereunder which is not
cured within any applicable cure period, Lessor may, but shall not be obligated
to, enter upon the Leased Property and all Capital Additions thereto and take
such actions and incur such costs and expenses to effect such compliance as it
deems advisable to protect its interest in the Leased Property and Capital
Additions thereto, and Lessee shall reimburse Lessor for all costs and expenses
incurred by Lessor in connection with such actions. Lessee covenants and agrees
that the Leased Property, Lessee's Personal Property and all Capital Additions
shall not be used for any unlawful purpose.
64.
65. Maintenance and Repair
------------------------
.
66. Lessee, at its expense, shall maintain the Leased Property, and every
portion thereof, Lessee's Personal Property and all Capital Additions, and all
private roadways, sidewalks and curbs appurtenant to the Leased Property, and
which are under Lessee's control in good order and repair whether or not the
need for such repairs occurs as a result of Lessee's use, any prior use, the
elements or the age of the Leased Property, Lessee's Personal Property and all
Capital Additions, and, with reasonable promptness, make all necessary and
appropriate repairs thereto of every kind and nature, including, without
limitation, those necessary to comply with changes in any Legal Requirements,
whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen or arising by reason of a condition
existing prior to the Commencement Date. All repairs shall be at least
equivalent in quality to the original work. Lessee will not take or omit to
take any action the taking or omission of which might materially impair the
value or the usefulness of the Leased Property or any part thereof or, any
Capital Addition thereto for its Primary Intended Use.
67. Lessor shall not under any circumstances be required to (i) build or
rebuild any improvements on the Leased Property; (ii) make any repairs,
replacements, alterations, restorations or renewals of any nature to the Leased
Property, whether ordinary or extraordinary, structural or non-structural,
foreseen or unforeseen, or to make any expenditure whatsoever with respect
thereto; or (iii) maintain the Leased Property in any way. Lessee hereby
waives, to the extent permitted by law, the right to make repairs at the expense
of Lessor pursuant to any law in effect at the time of the execution of
this Lease or hereafter enacted.
68. Nothing contained in this Lease and no action or inaction by Lessor
shall be construed as (i) constituting the consent or request of Lessor,
expressed or implied, to any contractor, subcontractor, laborer, materialman or
vendor to or for the performance of any labor or services or the furnishing of
any materials or other property for the construction, alteration, addition,
repair or demolition of or to the Leased Property or any part thereof or any
Capital Addition thereto; or (ii) giving Lessee any right, power or permission
to contract for or permit the performance of any labor or services or the
furnishing of any materials or other property in such fashion as would permit
the making of any claim against Lessor in respect thereof or to make any
agreement that may create, or in any way be the basis for, any right, title,
interest, lien, claim or other encumbrance upon the estate of Lessor in the
Leased Property or portion thereof or any Capital Addition thereto.
69. Unless Lessor shall convey any of the Leased Property to Lessee pursuant
to the provisions of the Lease, Lessee shall, upon the expiration or
earlier termination of the Term, vacate and surrender the Leased Property,
Lessor's Personal Property, and all Capital Additions to Lessor in the condition
in which the Leased Property and Lessor's Personal Property were originally
received from Lessor and Lessee's Personal Property and Capital Additions were
originally introduced to the Facility, except as repaired, rebuilt, restored,
altered or added to as permitted or required by the provisions of this Lease and
except for ordinary wear and tear.
70. Encroachments, Restrictions, Mineral Leases, etc
----------------------------------------------------
. If any of the Leased Improvements or Capital Additions shall, at any
time, encroach upon any property, street or right-of-way, or shall violate any
restrictive covenant or other agreement affecting the Leased Property, or any
part thereof or any Capital Addition thereto, or shall impair the rights of
others under any easement or right-of-way to which the Leased Property is
subject, or the use of the Leased Property or any Capital Addition thereto is
impaired, limited or interfered with by reason of the exercise of the right of
surface entry or any other provision of a lease or reservation of any oil, gas,
water or other minerals, then promptly upon the request of Lessor or any Person
affected by any such encroachment, violation or impairment, Lessee, at its sole
cost and expense, but subject to its right to contest the existence of any such
encroachment, violation or impairment, shall protect, indemnify, save harmless
and defend Lessor from and against all losses, liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses (including reasonable
attorneys', consultants' and experts' fees and expenses) based on or arising by
reason of any such encroachment, violation or impairment. In the event of an
adverse final determination with respect to any such encroachment, violation or
impairment, Lessee shall either (i) obtain valid and effective waivers or
settlements of all claims, liabilities and damages resulting from each such
encroachment, violation or impairment, whether the same shall affect Lessor or
Lessee; or (ii) make such changes in the Leased Improvements and any Capital
Addition thereto, and take such other actions, as Lessee in the good faith
exercise of its judgment deems reasonably practicable, to remove such
encroachment or to end such violation or impairment, including, if necessary,
the alteration of any of the Leased Improvements or any Capital Addition
thereto, and in any event take all such actions as may be necessary in order to
be able to continue the operation of the Leased Improvements and any Capital
Addition thereto for the Primary Intended Use substantially in the manner and to
the extent the Leased Improvements and Capital Additions were operated prior to
the assertion of such encroachment, violation or impairment. Lessee's
obligations under this Section 9.2 shall be in addition to and shall in no way
discharge or diminish any obligation of any insurer under any policy of title or
other insurance and, to the extent the recovery thereof is not necessary to
compensate Lessor for any damages incurred by any such encroachment, violation
or impairment, Lessee shall be entitled to a credit for any sums recovered by
Lessor under any such policy of title or other insurance and Lessor, upon
request by Lessee, shall assign Lessor's rights under such policies to Lessee
provided such assignment does not adversely affect Lessor's rights under any
such policy and provided further that Lessee shall indemnify, defend, protect
and save Lessor harmless from and against any liability, cost or expense of any
kind that may be imposed upon Lessor in connection with any such assignment.
71.
72. Construction of Capital Additions to the Leased Property
---------------------------------------------------------------
.
(See also Addendum Section 46.4)
--- ---- -------- ------- ----
73. Requests. No Capital Addition shall be made which would tie in or
--------
connect any Leased Improvements with any improvements on property adjacent to
the Land without Lessor's approval, which may be withheld in Lessor's sole and
absolute discretion. Except as provided above, Lessee shall, without the
consent of Lessor, have the right to make a Capital Addition if the Capital
Addition Cost for such Capital Addition project does not exceed $100,000. All
other Capital Additions shall be subject to Lessor's review and approval which
approval shall not be unreasonably withheld. For any Capital Addition which
does not require the approval of Lessor, Lessee shall, prior to commencing
construction of such Capital Addition, provide to Lessor a written description
of such Capital Addition and on an ongoing basis supply Lessor with related
documentation and information as Lessor may reasonably request. If Lessee
desires to make a Capital Addition for which Lessor's approval is required,
Lessee shall submit to Lessor in reasonable detail a general description of the
proposal, the projected cost of construction and such plans and specifications,
permits, licenses, contracts and other information concerning the proposal as
Lessor may reasonably request. Such description shall indicate the use or uses
to which such Capital Addition will be put and the impact, if any, on current
and forecasted gross revenues and operating income attributable thereto. It
shall be reasonable for Lessor to condition its approval of any Capital Addition
upon any or all of the following terms and conditions:
74. Such construction shall be effected pursuant to detailed plans and
specifications approved by Lessor;
75. Such construction shall be conducted under the supervision of a licensed
architect or engineer selected by Lessee and approved by Lessor;
76. Lessee shall have procured or caused to be procured a performance and
payment bond for the full value of such construction, which such bond shall name
Lessor as an additional obligee and otherwise be in form and substance and
issued by a Person reasonably satisfactory to Lessor; and
77. Such construction shall not be undertaken unless Lessee demonstrates to
the reasonable satisfaction of Lessor the financial ability to complete the
construction without adversely affecting its cash flow position or financial
viability.
78. Construction Requirements for all Capital Additions. Whether or not
-------------------------------------------------------
Lessor's review and approval is required, for all Capital Additions:
79. Such construction shall not be commenced until Lessee shall have
procured and paid for all municipal and other governmental permits and
authorizations required therefor, and Lessor shall join in the application for
such permits or authorizations whenever such action is necessary; provided,
--------
however, that (i) any such joinder shall be at no cost or expense to Lessor; and
---
(h) any plans required to be filed in connection with any such application
which require the approval of Lessor as hereinabove provided shall have been so
approved by Lessor;
80. Such construction shall not, and Lessee's licensed architect or engineer
shall certify to Lessor that such construction shall not, impair the
structural strength of any component of the Facility or overburden the
electrical, water, plumbing, HVAC or other building systems of any such
component;
81. Lessee's licensed architect or engineer shall certify to Lessor that the
detailed plans and specifications conform to and comply with all applicable
building, subdivision and zoning codes, laws, ordinances and regulations imposed
by all governmental authorities having jurisdiction over the Leased Property;
82. Such construction shall, when completed, be of such a character as not
to decrease the value of the Leased Property as it was immediately before such
Capital Addition;
83. During and following completion of such construction, the parking which
is located in the Facility or on the Land shall remain adequate for the
operation of the Facility for its Primary Intended Use and in no event shall
such parking be less than that which was or is required by law or which was
located in the Facility or on the Land prior to such construction; provided,
--------
however, with Lessor's prior consent and at no additional expense to Lessor, (i)
----
to the extent additional parking is not already a part of a Capital
Addition, Lessee may construct additional parking on the Land; or (ii) Lessee
may acquire off-site parking to serve the Facility as long as such parking shall
be dedicated to, or otherwise made available to serve, the Facility;
84. All work done in connection with such construction shall be done
promptly and in a good and workmanlike manner using first-class materials and in
conformity with all Legal Requirements; and
85. Promptly following the completion of such construction, Lessee shall
deliver to Lessor "as built" drawings of such addition, certified as accurate by
the licensed architect or engineer selected by Lessee to supervise such
work, and copies of any new or revised Certificates of Occupancy.
86. Funding by Lessor
-------------------
.
87. Lessee may request that Lessor fund a Capital Addition, in which case
Lessee shall provide to Lessor any information about such Capital Addition which
Lessor may reasonably request. Lessor may, but shall be under no
obligation to, provide the funds necessary to meet the request. Within thirty
(30) days of receipt of a request to fund a proposed Capital Addition, Lessor
shall notify Lessee as to whether it will fund the proposed Capital Addition
and, if so, the terms and conditions upon which it would do so, including the
terms of any amendment to this Lease. Lessee shall have ten (10) days to accept
or reject Lessor's funding proposal. In no event shall the portion of the
projected Capital Addition Cost comprised of land, if any, materials, labor
charges and fixtures be less than ninety percent (90%) of the total amount of
the projected cost of such Capital Addition.
88. If Lessor agrees to fund a proposed Capital Addition and Lessee accepts
the terms thereof, Lessee shall provide Lessor with the following prior to any
advance of funds:
89. any information, certificates, licenses, permits or documents requested
by Lessor which are necessary and obtainable to confirm that Lessee will be able
to use the Capital Addition upon completion thereof in accordance with the
Primary Intended Use, including all required federal, state or local government
licenses and approvals;
90. an Officer's Certificate and, if requested, a certificate from Lessee's
architect, setting forth in reasonable detail the projected or actual Capital
Addition Costs;
91. an amendment to this Lease, in a form prepared by Lessor and reasonably
agreed to by Lessee, providing for an increase in the Rent in amounts as agreed
upon by the parties hereto and other provisions as may be necessary or
appropriate;
92. a deed conveying title to Lessor to any land acquired for the purpose of
constructing the Capital Addition free and clear of any liens or
encumbrances except those approved by Lessor, and accompanied by an ALTA survey
thereof satisfactory to Lessor;
93. for each advance, endorsements to any outstanding policy of title
insurance covering the Leased Property or commitments therefor satisfactory in
form and substance to Lessor (i) updating the same without any additional
exception except as may be approved by Lessor and (ii) increasing the coverage
thereof by an amount equal to the Fair Market Value of the Capital Addition,
except to the extent covered by the owner's policy of title insurance referred
to in subparagraph (f), below;
94. if appropriate, an owner's policy of title insurance insuring fee simple
title to any land conveyed to Lessor free and clear of all liens and
encumbrances except those that do not materially affect the value of such land
and do not interfere with the use of the Leased Property or are approved by
Lessor;
95. if requested by Lessor, a M.A.I. appraisal of the Leased Property
indicating that the Fair Market Value of the Leased Property upon completion of
the Capital Addition will exceed the Fair Market Value of the Leased Property
immediately prior thereto by an amount not less than ninety-five percent (95%)
of the cost of the Capital Addition; and
96. such other billing statements, invoices, certificates, endorsements,
opinions, site assessments, surveys, resolutions, ratifications, lien releases
and waivers and other instruments and information reasonably required by Lessor.
97. Capital Additions Financed by Lessee
----------------------------------------
. If Lessee provides or arranges such financing, the following shall
apply:
98. There shall be no adjustment in the Minimum Rent or CPI Rent by reason
of any such Capital Addition.
99. Upon the expiration or earlier termination of this Lease, except by
reason of an Event of Default by Lessee hereunder, Lessor shall compensate
Lessee for all Capital Additions financed by Lessee:
100. By purchasing such Capital Additions from Lessee for cash in the amount
of the then Fair Market Added Value of such Capital Additions; or
101. By such other arrangement regarding such compensation as shall be
mutually and reasonably acceptable to Lessor and Lessee.
102.
103. Liens
-----
. Subject to the provisions of Article XII relating to permitted contests,
Lessee will not directly or indirectly create or allow to remain and will
promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any Capital Addition
thereto or any attachment, levy, claim or encumbrance in respect of the Rent,
excluding, however, (i) this Lease; (ii) the matters that existed as of the
Commencement Date; (iii) restrictions, liens and other encumbrances which are
consented to in writing by Lessor, or any easements granted pursuant to the
provisions of Section 7.3; (iv) liens for Impositions which Lessee is not
required to pay hereunder; (v) subleases permitted by Article XXIV; (vi) liens
for Impositions not yet delinquent; (vii) liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either disputed or not yet due;
provided that (1) the payment of such sums shall not be postponed under any
---
related contract for more than sixty (60) days after the completion of the
action giving rise to such lien and such reserve or other appropriate provisions
as shall be required by law or GAAP shall have been made therefor or (2) any
such liens are in the process of being contested as permitted by Article XII;
(viii) any liens which are the responsibility of Lessor pursuant to the
provisions of Article XXXVI; and (ix) liens related to equipment leases for
equipment which is used or useful in Lessee's business on the Leased Property;
provided that the payment of any sums due under such equipment leases shall
-------
either (A) be paid as and when due in accordance with the terms thereof, or (B)
---
be in the process of being contested as permitted by Article XII.
104.
105. Permitted Contests
-------------------
. Lessee, upon prior written notice to Lessor, on its own or in Lessor's
name, at Lessee's expense, may contest, by appropriate legal proceedings
conducted in good faith and with due diligence, the amount, validity or
application, in whole or in part, of any licensure or certification decision,
Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy,
encumbrance, charge or claim; provided, however, 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 Lessor and from the Leased Property or any Capital Addition
thereto; (ii) neither the Leased Property or any Capital Addition thereto, the
Rent therefrom nor any part or interest in either thereof would be in any danger
of being sold, forfeited, attached or lost pending the outcome of such
proceedings; (iii) in the case of a Legal Requirement, neither Lessor nor Lessee
would be in any danger of civil or criminal liability for failure to comply
therewith pending the outcome of such proceedings; (iv) if any such contest
shall involve a sum of money or potential loss in excess of Fifty Thousand
Dollars ($50,000), Lessee shall deliver to Lessor and its counsel an opinion of
legal counsel reasonably acceptable to Lessor to the effect set forth in clauses
(i), (ii) and (iii) above, to the extent applicable; (v) in the case of a Legal
Requirement, Imposition, lien, encumbrance or charge, Lessee shall give such
reasonable security as may be required by Lessor to insure ultimate payment of
the same and to prevent any sale or forfeiture of the Leased Property or any
Capital Addition thereto or the Rent by reason of such non-payment or
noncompliance; (vi) in the case of an Insurance Requirement, the coverage
required by Article XIII shall be maintained; and (vii) if such contest be
finally resolved against Lessor or Lessee, Lessee shall promptly pay the amount
required to be paid, together with all interest and penalties accrued thereon,
or comply with the applicable Legal Requirement or Insurance Requirement.
Lessor, at Lessee's expense, shall execute and deliver to Lessee such
authorizations and other documents as may reasonably be required in any such
contest, and, if reasonably requested by Lessee or if Lessor so desires, Lessor
shall join as a party therein. The provisions of this Article XII shall not be
construed to permit Lessee to contest the payment of Rent or any other amount
(other than Impositions or Additional Charges which Lessee may from time to time
be required to impound with Lessor) payable by Lessee to Lessor hereunder.
Lessee shall indemnify, defend, protect and save Lessor harmless from and
against any liability, cost or expense of any kind that may be imposed upon
Lessor in connection with any such contest and any loss resulting therefrom.
106.
(See also Addendum Section 46.5)
--- ---- -------- ------- ----
107. General Insurance Requirements
--------------------------------
. During the Term, Lessee shall at all times keep the Leased Property, and
all property located in or on the Leased Property, including Capital Additions,
the Fixtures and the Personal Property, insured with the kinds and amounts of
insurance described below. This insurance shall be written by companies
authorized to do insurance business in the State in which the Leased Property is
located. All liability type policies must name Lessor as an "additional
----------
insured." All property policies shall name Lessor as "loss payee." All business
----------
interruption policies shall name Lessor as "loss payee" with respect to Rent
----------
only. Losses shall be payable to Lessor and/or Lessee as provided in Article
XIV. In addition, the policies, as appropriate, shall name as an "additional
----------
insured" or "loss payee" the holder of any mortgage, deed of trust or other
----- -----------
security agreement ("Facility Mortgagee") securing any indebtedness or any other
-- ------------------
Encumbrance placed on the Leased Property in accordance with the provisions of
Article XXXVI ("Facility Mortgage") by way of a standard form of mortgagee's
------------------
loss payable endorsement. Any loss adjustment shall require the written consent
of Lessor, Lessee, and each Facility Mortgagee unless the amount of the loss is
less than $10,000 in which event no consent shall be required. Evidence of
insurance shall be deposited with Lessor and, if requested, with any Facility
Mortgagee(s). If any provision of any Facility Mortgage requires deposits of
insurance to be made with such Facility Mortgagee, Lessee shall either pay to
Lessor monthly the amounts required and Lessor shall transfer such amounts to
each Facility Mortgagee, or, pursuant to written direction by Lessor, Lessee
shall make such deposits directly with such Facility Mortgagee. The policies
shall insure against the following risks:
108. Loss or damage by fire, vandalism and malicious mischief, extended
coverage perils commonly known as special form perils, earthquake (including
earth movement) and windstorm in an amount not less than the insurable value on
a replacement cost basis (as defined below in Section 13.2) and including a
building ordinance coverage endorsement;
109. Loss or damage by explosion of steam boilers, pressure vessels or
similar apparatus, now or hereafter installed in the Facility, in such limits
with respect to any one accident as may be reasonably requested by Lessor from
time to time;
110. Flood (when the Leased Property is located in whole or in part within a
designated ▇▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇) and such other hazards and in such
amounts as may be customary for comparable properties in the area;
111. Loss of rental value in an amount not less than twelve (12) months'
Rent payable hereunder or business interruption in an amount not less than
twelve (12) months of income and normal operating expenses including payroll and
Rent payable hereunder with an endorsement extending the period of
indemnity by at least ninety (90) days (Building Ordinance - Increased Period of
Restoration Endorsement) necessitated by the occurrence of any of the hazards
described in Sections 13.1.1, 13.1.2 or 13.1.3;
112. Claims for bodily injury or property damage under a policy of
commercial general liability insurance with amounts not less than One Million
and No/100 Dollars ($1,000,000.00) combined single limit and Three Million
No/100 Dollars ($3,000,000.00) in the annual aggregate; and
113. Medical professional liability with amounts not less than One Million
Dollars ($1,000,000) combined single limit and Three Million Dollars
($3,000,000) in the annual aggregate.
114. Replacement Cost
-----------------
. The term "replacement cost" shall mean the actual replacement cost of
the insured property from time to time with new materials and workmanship of
like kind and quality. If either party believes that the replacement cost has
increased or decreased at any time during the Term, it shall have the right to
have such replacement cost redetermined by an impartial national insurance
company reasonably acceptable to both parties (the "impartial appraiser"). The
-------------------
party desiring to have the replacement cost so redetermined shall forthwith, on
receipt of such determination by the impartial appraiser, give written notice
thereof to the other party hereto. The determination of the impartial appraiser
shall be final and binding on the parties hereto, and Lessee shall forthwith
increase or decrease the amount of the insurance carried pursuant to this
Article to the amount so determined by the impartial appraiser. Each party
shall pay one-half (1/2) of the fee, if any, of the impartial appraiser. If
Lessee has made improvements to the Leased Property, Lessor may at Lessee's
expense have the replacement cost redetermined at any time after such
improvements are made, regardless of when the replacement cost was last
determined.
115. Additional Insurance
---------------------
. In addition to the insurance described above, Lessee shall maintain such
additional insurance upon notice from Lessor as may be reasonably required from
time to time by any Facility Mortgagee and shall further at all times maintain
adequate workers' compensation coverage and any other coverage required by Legal
Requirements for all Persons employed by Lessee on the Leased Property and any
Capital Addition thereto in accordance with Legal Requirements.
116. Waiver of Subrogation
-----------------------
. All insurance policies carried by either party covering the Leased
Property and any Capital Addition thereto and Lessee's Personal Property
including contents, fire and casualty insurance, shall expressly waive any right
of subrogation on the part of the insurer against the other party. The parties
hereto agree that their policies will include such waiver clause or endorsement
so long as the same are obtainable without extra cost, and in the event of such
an extra charge the other party, at its election, may pay the same, but shall
not be obligated to do so. Each party waives any claims it has against the
other party to the extent such claim is covered by insurance.
117. Policy Requirements
--------------------
. All of the policies of insurance referred to in this Article shall be
written in form satisfactory to Lessor and by insurance companies with a
policyholder rating of "A" and a financial rating of "X" in the most recent
version of Best's Key Rating Guide. Lessee shall pay all of the premiums
therefor, and deliver such policies or certificates thereof to Lessor prior to
their effective date (and with respect to any renewal policy, at least ten (10)
days prior to the expiration of the existing policy), and in the event of the
failure of Lessee either to effect such insurance in the names herein called for
or to pay the premiums therefor, or to deliver such policies or certificates
thereof to Lessor, at the times required, Lessor shall be entitled, but shall
have no obligation, to effect such insurance and pay the premiums therefor, in
which event the cost thereof, together with interest thereon at the Overdue
Rate, shall be repayable to Lessor upon demand therefor. Each insurer shall
agree, by endorsement on the policy or policies issued by it, or by independent
instrument furnished to Lessor, that it will give to Lessor ten (10) days'
written notice before the policy or policies in question shall be altered,
allowed to expire or cancelled. Each property policy shall have a deductible or
deductibles, if any, which are no greater than those normally maintained for
similar facilities in the State. Each earthquake policy shall have a deductible
of ten percent (10%) of real property, personal property and rental value limit
at the subject location, unless such requirement is specifically waived by
Lessor.
118. Increase in Limits
--------------------
. If either party shall at any time believe the limits of the insurance
required hereunder to be either excessive or insufficient, the parties shall
endeavor to agree in writing on the proper and reasonable limits for such
insurance to be carried and such insurance shall thereafter be carried with the
limits thus agreed on until further change pursuant to the provisions of this
Section. If the parties shall be unable to agree thereon, the proper and
reasonable limits for such insurance to be carried shall be determined by an
impartial third party reasonably selected by the parties. Nothing herein shall
permit the amount of insurance to be reduced below the amount or amounts
required by any Facility Mortgagee.
119. Blanket Policies and Policies Covering Multiple Locations
---------------------------------------------------------------
.. Notwithstanding anything to the contrary contained in this Article, Lessee's
obligations to carry the insurance provided for herein may be brought within the
coverage of a blanket policy or policies of insurance carried and maintained by
Lessee; provided, however, that the coverage afforded Lessor will not be reduced
-------- -------
or diminished or otherwise be different from that which would exist under a
separate policy meeting all other requirements of this Lease by reason of the
use of such blanket policy of insurance, and provided further that the
requirements of this Article XIII are otherwise satisfied. For any liability
policies covering facilities in addition to the Leased Property, Lessor may
require excess limits as Lessor reasonably determines.
120. No Separate Insurance
-----------------------
. Lessee shall not, on Lessee's own initiative or pursuant to the request
or requirement of any third party, (i) take out separate insurance concurrent in
form or contributing in the event of loss with that required in this Article to
be furnished by, or which may reasonably be required to be furnished by, Lessee
or (ii) increase the amounts of any then existing insurance by securing an
additional policy or additional policies, unless all parties having an insurable
interest in the subject matter of the insurance, including in all cases Lessor
and all Facility Mortgagees, are included therein as additional insureds and the
loss is payable under such insurance in the same manner as losses are payable
under this Lease. Lessee shall immediately notify Lessor of the taking out of
any such separate insurance or of the increasing of any of the amounts of the
then existing insurance by securing an additional policy or additional policies.
121.
(See also Addendum Section 46.6)
--- ---- -------- ------- ----
122. Insurance Proceeds
-------------------
. All proceeds payable by reason of any loss or damage to the Leased
Property, or any portion thereof, under any policy of insurance required to be
carried hereunder shall be paid to Lessor and made available by Lessor to Lessee
from time to time for the reasonable costs of reconstruction or repair, as the
case may be, of any damage to or destruction of the Leased Property, or any
portion thereof; provided, however, that if the total amount of proceeds payable
-------- -------
is $10,000 or less, the proceeds shall be paid to Lessee and used for the repair
of any damage to the Leased Property. Any excess proceeds of insurance
remaining after the completion of the restoration or reconstruction of the
Leased Property to substantially the same condition as existed immediately
before the damage or destruction and with materials and workmanship of like kind
and quality and to Lessor's reasonable satisfaction shall be remitted by Lessor
to Lessee free and clear upon completion of any such repair and restoration
except as otherwise specifically provided below in this Article XIV. In the
event neither Lessor nor Lessee is required or elects to repair and restore the
Leased Property, all such insurance proceeds shall be retained by Lessor free
and clear except as otherwise specifically provided below in this Article XIV.
All salvage resulting from any risk covered by insurance shall belong to Lessor.
123. Insured Casualty
-----------------
.
124. If the Leased Property is damaged or destroyed from a risk covered by
insurance carried by Lessee such that the Facility thereby is rendered
Unsuitable for its Primary Intended Use, Lessee shall either (i) restore the
Leased Property to substantially the same condition as existed immediately
before such damage or destruction, or (ii) offer to acquire the Leased Property
from Lessor for a purchase price equal to the greater of (y) the Minimum
Repurchase Price or (z) the Fair Market Value immediately prior to such damage
or destruction. If Lessor does not accept Lessee's offer to so purchase the
Leased Property, Lessee may either withdraw such offer and proceed to restore
the Leased Property to substantially the same condition as existed immediately
before such damage or destruction or terminate the Lease in which event Lessor
shall be entitled to retain the insurance proceeds.
125. If the Leased Property is damaged from a risk covered by insurance
carried by Lessee, but the Facility is not thereby rendered Unsuitable for its
Primary Intended Use, Lessee shall restore the Leased Property to substantially
the same condition as existed immediately before such damage. Such damage shall
not terminate this Lease; provided, however, that if Lessee cannot within a
--------
reasonable time after diligent efforts obtain the necessary government approvals
needed to restore and operate the Facility for its Primary Intended Use, Lessee
may offer to purchase the Leased Property for a purchase price equal to the
greater of the Minimum Repurchase Price or the Fair Market Value immediately
prior to such damage. If Lessee shall make such offer and Lessor does not
accept the same, Lessee may either withdraw such offer and proceed to restore
the Leased Property to substantially the same condition as existed immediately
before such damage or destruction, or terminate the Lease, in which event Lessor
shall be entitled to retain the insurance proceeds.
126. If the cost of the repair or restoration exceeds the amount of proceeds
received by Lessor from the insurance required to be carried hereunder,
Lessee shall contribute any excess amounts needed to restore the Facility. Such
difference shall be paid by Lessee to Lessor together with any other insurance
proceeds, for application to the cost of repair and restoration.
127. If Lessor accepts Lessee's offer to purchase the Leased Property, this
Lease shall terminate as to the Leased Property upon payment of the purchase
price and Lessor shall remit to Lessee all insurance proceeds pertaining to the
Leased Property, including insurance proceeds pertaining to Capital Additions
and Lessee's Personal Property, then held by Lessor.
128. Uninsured Casualty
-------------------
. If the Leased Property is damaged or destroyed from a risk not covered
by insurance carried by Lessee, whether or not such damage or destruction
renders the Leased Property Unsuitable for its Primary Intended Use, Lessee at
its expense shall restore the Leased Property to substantially the same
condition it was in immediately before such damage or destruction and such
damage or destruction shall not terminate this Lease; provided, however, that if
-------- -------
Lessee cannot within a reasonable time after diligent efforts obtain the
necessary government approvals needed to restore and operate the Facility for
its Primary Intended Use, Lessee shall purchase the Leased Property for a
purchase price equal to the greater of the Minimum Repurchase Price or the Fair
Market Value immediately prior to such damage.
129. No Abatement of Rent
-----------------------
. This Lease shall remain in full force and effect and Lessee's obligation
to pay the Rent and all other charges required by this Lease shall remain
unabated during the period required for adjusting insurance, satisfying Legal
Requirements, repair and restoration.
130. Waiver
------
. Lessee waives any statutory rights of termination which may arise by
reason of any damage or destruction of the Leased Property.
131. Damage Near End of Term
---------------------------
. If the damage or destruction contemplated hereunder occurs during the
last year of the Fixed Term or the Extended Term, as applicable, Lessee may, in
lieu of repairing and restoring the Leased Property as contemplated hereunder,
terminate this Lease effective as of the date of payment to Lessor of the
greater of (a) the insurance proceeds attributable to such damage or destruction
and (b) the cost to repair such damage or destruction as reasonably estimated by
Lessor.
132.
(See also Addendum Section 46.7)
--- ---- -------- ------- ----
15. Condemnation
------------
.
133. Total Taking
-------------
. If the Leased Property is totally and permanently taken by Condemnation,
this Lease shall terminate as of the day before the Date of Taking.
134. Partial Taking
---------------
. If a portion of the Leased Property is taken by Condemnation, this Lease
shall remain in effect if the Facility is not thereby rendered Unsuitable for
Its Primary Intended Use, but if the Facility is thereby rendered Unsuitable for
Its Primary Intended Use, this Lease shall terminate as of the day before the
Date of Taking.
135. Restoration
-----------
. If there is a partial taking of the Leased Property and this Lease
remains in full force and effect pursuant to Section 15.2, Lessor shall make
available to Lessee the portion of the Award necessary and specifically
identified for restoration of the Leased Property and Lessee shall accomplish
all necessary restoration whether or not the amount provided by the condemnor
for restoration is sufficient.
136. Award-Distribution
------------------
. The entire Award shall belong to and be paid to Lessor, except that,
subject to the rights of the Facility Mortgagees, Lessee shall be entitled to
receive from the Award, if and to the extent such Award specifically includes
such item, lost profits value and moving expenses, provided, that in any event
Lessor shall receive from the Award, subject to the rights of the Facility
Mortgagees, no less than the greater of the Fair Market Value prior to the
institution of the Condemnation or the Minimum Repurchase Price.
137. Temporary Taking
-----------------
. The taking of the Leased Property, or any part thereof, shall constitute
a taking by Condemnation only when the use and occupancy by the taking authority
has continued for longer than 180 consecutive days. During any shorter period,
which shall be a temporary taking, all the provisions of this Lease shall remain
in full force and effect and the Award allocable to the Term shall be paid to
Lessee.
138.
(See also Addendum Section 46.8)
--- ---- -------- ------- ----
139. Events of Default
-------------------
. Any one or more of the following shall constitute an "Event of Default":
----------------
140. a default shall occur under any other lease or other agreement or
instrument, including the Contract of Acquisition or the Other Leases, between
Lessor or an Affiliate of Lessor and Lessee or an Affiliate of Lessee, or any
letter of credit, guaranty, mortgage, deed of trust, or other instrument
executed by Lessee or an Affiliate of Lessee in favor of Lessor or an Affiliate
of Lessor, in every case, whether now or hereafter existing, where the default
is not cured within any applicable grace period set forth therein;
141. Lessee shall fail to pay any installment of Rent when the same becomes
due and payable and such failure is not cured by Lessee within a period of five
(5) days after notice thereof from Lessor; provided, however, that such notice
-------- -------
shall be in lieu of and not in addition to any notice required under applicable
law;
142. [Intentionally Omitted];
143. if Lessee shall fail to observe or perform any other term, covenant or
condition of this Lease and such failure is not cured by Lessee within thirty
(30) days after notice thereof from Lessor, unless such failure cannot with due
diligence be cured within a period of thirty (30) days, in which case such
failure shall not be deemed to be an Event of Default if Lessee proceeds
promptly and with due diligence to cure the failure and diligently completes the
curing thereof; provided, however, that such notice shall be in lieu of and
-------- -------
not in addition to any notice required under applicable law;
144. Lessee or any Guarantor shall:
145. admit in writing its inability to pay its debts generally as they
become due,
146. file a petition in bankruptcy or a petition to take advantage of any
insolvency act,
147. make an assignment for the benefit of its creditors,
148. consent to the appointment of a receiver of itself or of the whole or
any substantial part of its Property, or
149. file a petition or answer seeking reorganization or arrangement under
the Federal bankruptcy laws or any other applicable law or statute of the United
States of America or any state thereof;
150. Lessee or any Guarantor shall be adjudicated as bankrupt or a court of
competent jurisdiction shall enter an order or decree appointing, without the
consent of Lessee, a receiver of Lessee or of the whole or substantially all of
its property, or approving a petition filed against it seeking reorganization or
arrangement of Lessee under the Federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state thereof,
and such judgment, order or decree shall not be vacated or set aside or stayed
within sixty (60) days from the date of the entry thereof;
151. Lessee or any Guarantor shall be liquidated or dissolved, or shall
begin proceedings toward such liquidation or dissolution, or shall, in any
manner, permit the sale or divestiture of substantially all its assets;
152. the estate or interest of Lessee in the Leased Property or any part
thereof shall be levied upon or attached in any proceeding and the same shall
not be vacated or discharged within the later of ninety (90) days after
commencement thereof or thirty (30) days after receipt by Lessee of notice
thereof from Lessor; provided, however, that such notice shall be in lieu of and
-------- -------
not in addition to any notice required under applicable law;
153. except as a result of damage, destruction or Condemnation, Lessee
voluntarily ceases operations on the Leased Property for a period in excess of
thirty (30) days;
154. any of the representations or warranties made by Lessee in the Contract
of Acquisition or otherwise proves to be untrue when made in any material
respect which materially and adversely affects Lessor;
155. any Facility's applicable license or third-party provider reimbursement
agreements material to the Facility's operation for its Primary Intended
Use are at any time terminated or revoked or suspended for more than twenty (20)
days;
156. any local, state or federal agency having jurisdiction over the
operation of the Facility removes ten percent (10%) or more of the patients or
residents located in the Facility;
157. Lessee voluntarily transfers ten (10) or more patients located in the
Facility to any other facility in which Lessee or any Affiliate of Lessee has
any ownership or other financial interest, including, without limitation, fees
earned under any management agreement; provided that Lessee's transfer of any
--------
patient to a different type of care facility as a result of such patient's
special needs that cannot be met at the Facility shall not be deemed a voluntary
transfer;
158. Lessee fails to give notice to Lessor not later than ten (10) days
after Lessee's receipt thereof of any Class "A" or equivalent fine notice from
any governmental authority or officer acting on behalf thereof relating to the
Facility;
159. Lessee fails to notify Lessor within twenty-four (24) hours after
receipt of any notice from any governmental agency terminating or suspending or
threatening termination or suspension, of any material license or certification
relating to the Facility;
160. Lessee fails to give notice to Lessor not later than ten (10) days
after any notice, claim or demand from any governmental authority or any officer
acting on behalf thereof, of any violation of any law, order, ordinance,
rule or regulation with respect to the operation of the Facility;
161. Lessee fails to cure or ▇▇▇▇▇ any Class "A" or equivalent violation
occurring during the Term that is claimed by any governmental authority, or any
officer acting on behalf thereof, of any law, order, ordinance, rule or
regulation pertaining to the operation of the Facility, and within the time
permitted by such authority for such cure or abatement;
162. any proceedings are instituted against Lessee by any governmental
authority which are reasonably likely to result in (i) the revocation of any
license granted to Lessee for the operation of the Facility, (ii) if applicable,
the decertification of the Facility from participation in the Medicare or
Medicaid reimbursement program, or (iii) the issuance of a stop placement order
with respect to the Facility;
163. any default and acceleration of any recourse funded indebtedness of
Lessee or any recourse funded indebtedness of any Affiliate of Lessee has
occurred, and such funded indebtedness has an unpaid principal balance of
$1,000,000 or more or such default and acceleration could reasonably be expected
to have a material adverse impact on the financial condition or operations
of Lessee or any Guarantor; and
164. any default which is not cured within any applicable cure period shall
occur under any guaranty of Lessee's or an Affiliate of Lessee's obligations to
Lessor or an Affiliate of Lessor, in every case, whether such guaranty is now or
hereafter existing.
165. Certain Remedies
-----------------
. If an Event of Default shall have occurred, Lessor may terminate this
Lease by giving Lessee notice of such termination and the Term shall terminate
and all rights of Lessee under this Lease shall cease. Lessor shall have all
rights at law and in equity available to Lessor as a result of any Event of
Default. Lessee shall pay as Additional Charges all costs and expenses incurred
by or on behalf of Lessor, including reasonable attorneys' fees and expenses, as
a result of any Event of Default hereunder. If an Event of Default shall have
occurred and be continuing, whether or not this Lease has been terminated
pursuant to Section 16.1, Lessee shall, to the extent permitted by law, if
required by Lessor so to do, immediately surrender to Lessor possession of the
Leased Property and any Capital Additions thereto and quit the same and Lessor
may enter upon and repossess the Leased Property and any Capital Addition
thereto by reasonable force, summary proceedings, ejectment or otherwise, and,
to the extent permitted by law, may remove Lessee and all other Persons (other
than the residents of the Facility) and any of Lessee's Personal Property from
the Leased Property and any Capital Addition thereto.
166. Damages
-------
. (i) The termination of this Lease; (ii) the repossession of the Leased
Property and any Capital Addition thereto; (iii) the failure of Lessor,
notwithstanding reasonable good faith efforts, to relet the Leased Property;
(iv) the reletting of all or any portion of the Leased Property; or (v) the
inability of Lessor to collect or receive any rentals due upon any such
reletting, shall not relieve Lessee of its liabilities and obligations
hereunder, all of which shall survive any such termination, repossession or
reletting. If any such termination occurs, Lessee shall forthwith pay to Lessor
all Rent due and payable with respect to the Leased Property to and including
the date of such termination. Thereafter, Lessee shall forthwith pay to Lessor,
at Lessor's option, as and for liquidated and agreed current damages for
Lessee's Default, either:
167. the sum of:
168. the worth at the time of award of the unpaid Rent which had been earned
at the time of termination to the extent not previously paid by Lessee
under this Section 16.3,
169. the worth at the time of award of the amount by which the unpaid Rent
which would have been earned after termination until the time of award exceeds
the amount of such rental loss that Lessee proves could have been reasonably
avoided,
170. the worth at the time of award of the amount by which the unpaid Rent
for the balance of the Term after the time of award exceeds the amount of such
rental loss that Lessee proves could be reasonably avoided, plus
171. any other amount necessary to compensate Lessor for all the detriment
proximately caused by Lessee's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom.
As used in clauses (i) and (ii) above, the "worth at the time of award" shall be
computed by allowing interest at the Overdue Rate. As used in clause (iii)
above, the "worth at the time of award" shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%).
Alternatively, if Lessor does not elect to terminate this Lease, then
Lessee shall pay to Lessor, at Lessor's option, as and for agreed damages for
such Event of Default without termination of Lessee's right to possession of the
Leased Property, each installment of said Rent and other sums payable by Lessee
to Lessor under the Lease as the same becomes due and payable, together with
interest at the Overdue Rate from the date when due until paid, and Lessor may
enforce, by action or otherwise, any other term or covenant of this Lease.
172. Receiver
--------
. Upon the occurrence of an Event of Default, and upon commencement of
proceedings to enforce the rights of Lessor hereunder, Lessor shall be entitled,
as a matter of right, to the appointment of a receiver or receivers acceptable
to Lessor of the Leased Property and any Capital Addition thereto and of the
revenues, earnings, income, products and profits thereof, pending the outcome of
such proceedings, with such powers as the court making such appointment shall
confer.
173. Lessee's Obligation to Purchase
----------------------------------
. If an Event of Default shall have occurred, Lessor may require Lessee to
purchase the Leased Property on the first Minimum Rent Payment Date occurring
not less than thirty (30) days after the date specified in a notice from Lessor
requiring such purchase for an amount equal to the greater of (i) the Fair
Market Value, or (ii) the Minimum Repurchase Price, plus, in either event, all
Rent then due and payable (excluding the installment of Minimum Rent due on the
purchase date). If Lessor exercises such right, Lessor shall convey the Leased
Property to Lessee on the date fixed therefor in accordance with the provisions
of Article XVIII upon receipt of the purchase price therefor and this Lease
shall thereupon terminate. Any purchase by Lessee of the Leased Property
pursuant to this Section shall be in lieu of the damages specified in Section
16.3.
174. Waiver
------
. If Lessor initiates judicial proceedings or if this Lease is terminated
by Lessor pursuant to this Article, Lessee waives, to the extent permitted by
applicable law, (i) any right of redemption, re-entry or repossession; and (ii)
the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt.
175. Application of Funds
----------------------
. Any payments received by Lessor under any of the provisions of this
Lease during the existence or continuance of any Event of Default which are made
to Lessor rather than Lessee due to the existence of an Event of Default shall
be applied to Lessee's obligations in the order which Lessor may reasonably
determine or as may be prescribed by the laws of the State.
176. Reserved
--------
.
177. Reserved
--------
.
178. Lessor's Security Interest
----------------------------
. The parties intend that if an Event of Default occurs under this Lease,
Lessor will control Lessee's Personal Property and the Intangible Property so
that Lessor or its designee or nominee can operate or re-let the Leased Property
intact for its Primary Intended Use. Accordingly, to implement such intention,
and for the purpose of securing the payment and performance obligations of
Lessee hereunder, Lessor and Lessee agree as follows:
179. Lessee, as debtor, hereby grants to Lessor, as secured party, a
security interest and an express contractual lien upon all of Lessee's right,
title and interest in and to Lessee's Personal Property and in and to the
Intangible Property and any and all products, proceeds, rents and profits
thereof in which Lessee now owns or hereafter acquires an interest or right,
including any leased Lessee's Personal Property. This Lease constitutes a
security agreement covering all such Lessee's Personal Property and the
Intangible Property. The security interest granted to Lessor with respect to
Lessee's Personal Property in this Section 16.10 is intended by Lessor and
Lessee to be subordinate to any security interest granted in connection with the
financing or leasing of all or any portion of the Lessee's Personal
Property so long as Lessee uses its best efforts to secure an agreement in
Lessor's favor that the lessor or financier of such Lessee's Personal Property
agrees to give Lessor written notice of any default by Lessee under the terms of
such lease or financing arrangement, to give Lessor a reasonable time following
such notice to cure any such default and consents to Lessor's written assumption
of such lease or financing arrangement upon Lessor's curing of any such
defaults. This security agreement and the security interest created herein
shall survive the termination, but not the expiration of this Lease until such
time as Lessor has been fully compensated for all damages resulting from such
termination.
180. If required by Lessor at any time during the Term, Lessee shall execute
and deliver to Lessor, in form reasonably satisfactory to Lessor,
additional security agreements, financing statements, fixture filings and such
other documents as Lessor may reasonably require to perfect or continue the
perfection of Lessor's security interest in Lessee's Personal Property and the
Intangible Property and any and all products and proceeds thereof now owned or
hereinafter acquired by Lessee. Additionally, Lessee hereby authorizes Lessor
to file, without Lessee's signature, any financing or continuation statements,
and amendments thereto (or similar documents required by any laws of any
applicable jurisdiction) reasonably required to perfect or continue the
perfection of Lessor's security interest in Lessee's Personal Property and the
Intangible Property and any and all products and proceeds thereof now owned or
hereinafter acquired by Lessee. In the event Lessee fails to execute any
financing statement or other documents for the perfection or continuation of
Lessor's security interest, Lessee hereby appoints Lessor as its true and lawful
attorney-in-fact to execute any such documents on its behalf, which power of
attorney shall be irrevocable and is deemed to be coupled with an interest.
181. Upon the occurrence of an Event of Default, Lessor shall be entitled to
exercise any and all rights or remedies available to a secured party under
the Uniform Commercial Code, or available to a lessor under the laws of the
State, with respect to Lessee's Personal Property and the Intangible Property,
including the right to sell the same at public or private sale.
182.
183. Lessor's Right to Cure Lessee's Default
--------------------------------------------
. If Lessee shall fail to make any payment or to perform any act required
to be made or performed hereunder, Lessor, without waiving or releasing any
obligation or default, may, but shall be under no obligation to, make such
payment or perform such act for the account and at the expense of Lessee, and
may, to the extent permitted by law, enter upon the Leased Property and any
Capital Addition thereto for such purpose and take all such action thereon as,
in Lessor's opinion, may be necessary or appropriate therefor. No such entry
shall be deemed an eviction of Lessee. All sums so paid by Lessor and all costs
and expenses, including reasonable attorneys' fees and expenses, so incurred,
together with interest thereon at the Overdue Rate from the date on which such
sums or expenses are paid or incurred by Lessor, shall be paid by Lessee to
Lessor on demand.
184.
(See also Addendum Section 46.9)
--- ---- -------- ------- ----
185. Purchase of the Leased Property
-----------------------------------
. If Lessee purchases the Leased Property from Lessor, Lessor shall, upon
receipt from Lessee of the applicable purchase price, together with full payment
of any unpaid Rent due and payable with respect to any period ending on or
before the date of the purchase, deliver to Lessee an appropriate deed or other
conveyance conveying the entire interest of Lessor in and to the Leased Property
to Lessee free and clear of all encumbrances other than (i) those that Lessee
has agreed hereunder to pay or discharge; (ii) those mortgage liens, if any,
which Lessee has agreed in writing to accept and to take title subject to; (iii)
those liens and encumbrances which were in effect on the date of conveyance of
the Leased Property to Lessor; and (iv) any other encumbrances permitted
hereunder to be imposed on the Leased Property which are assumable at no cost to
Lessee or to which Lessee may take subject without cost to Lessee; provided,
however, that in no event shall Lessee be obligated to assume or take subject to
any encumbrance with a principal balance in excess of the applicable purchase or
option price, and provided further that where the purchase price is equal to the
Minimum Repurchase Price and if any such encumbrance may not be removed without
penalty, the applicable purchase price shall be increased or decreased by an
amount equal to the positive or negative effect on Fair Market Value
attributable to the interest rate, amortization schedule, maturity date,
prepayment penalty and other terms and conditions of such encumbrance. The
difference between the applicable purchase price and the total of the
encumbrances assumed or taken subject to shall be paid to Lessor or as Lessor
may direct in immediately available funds. All expenses of such conveyance,
including the cost of title insurance, attorneys' fees incurred by Lessor in
connection with such conveyance and release, transfer taxes and recording and
escrow fees, shall be paid by Lessee.
186.
(See also Addendum Section 46.10)
--- ---- -------- ------- -----
187. Renewal Term
-------------
. Provided that Lessee exercises its right to renew the lease for both of
the Properties in accordance with the respective terms of the renewal option
relating to each such lease and provided that no Event of Default, or event
which, with notice or lapse of time or both, would constitute an Event of
Default, has occurred and is continuing, either at the date of exercise or upon
the commencement of the Extended Term, then Lessee shall have the right to renew
this Lease for one (1) ten year renewal term (the "Extended Term), upon giving
-------------
written notice to Lessor of such renewal not less than twelve (12) months and
not more than fifteen (15) months prior to the expiration of the then current
Fixed Term. During the Extended Term, all of the terms and conditions of this
Lease shall continue in full force and effect. Notwithstanding anything to the
contrary in this Article XIX, Lessor, in its sole discretion, may waive the
condition to Lessee's right to renew this Lease that no Event of Default, or
event which, with notice or lapse of time or both, would constitute an Event of
Default, have occurred or be continuing, and the same may not be used by Lessee
as a means to negate the effectiveness of Lessee's exercise of its renewal right
for such Extended Term.
188.
189. Holding Over
-------------
. Except as provided in Section 19.1, if Lessee shall for any reason
remain in possession of the Leased Property after the expiration or earlier
termination of the Fixed Term, such possession shall be as a month-to-month
tenant during which time Lessee shall pay as Rent each month twice the sum of
(i) monthly Minimum Rent and CPI Rent applicable to the prior Lease Year, plus
(ii) all Additional Charges and all other sums payable by Lessee pursuant to
this Lease. During such period of month-to-month tenancy, Lessee shall be
obligated to perform and observe all of the terms, covenants and conditions of
this Lease, but shall have no rights hereunder other than the right, to the
extent given by law to month-to-month tenancies, to continue its occupancy and
use of the Leased Property. Nothing contained herein shall constitute the
consent, express or implied, of Lessor to the holding over of Lessee after the
expiration or earlier termination of this Lease.
190.
191. Letters of Credit
-------------------
. The parties acknowledge that Lessor or an Affiliate of Lessor currently
holds and will hold certain letters of credit delivered or hereafter required to
be delivered by Lessee and/or Lessee's Affiliates pursuant to certain existing
leases between Lessor or an Affiliate of Lessor and Lessee or an Affiliate of
Lessee (collectively, the "Letters of Credit"). A list of such other leases is
-----------------
attached hereto as Exhibit E (the "Other Leases"). Pursuant to the terms of the
--------- ------------
Other Leases and pursuant to the Letters of Credit, the Letters of Credit secure
Lessee's and any Affiliate of Lessee's obligations under any lease or other
agreement or instrument with or in favor of Lessor or any Affiliate of Lessor.
In that regard, the parties acknowledge that the Letters of Credit also secure
Lessee's obligations under this Lease at the times, and for the purposes set
forth below. No notice to Lessee or any Affiliate of Lessee shall be required
to enable Lessor to draw upon the Letters of Credit hereunder.
192. Uses of Letters of Credit
-----------------------------
. Lessor shall have the right to draw upon the Letters of Credit up to
their full amounts whenever an Event of Default has occurred. No such draw
shall (i) cure or constitute a waiver of an Event of Default, (ii) be deemed to
fix or determine the amounts to which Lessor is entitled to recover under this
Lease or otherwise, or (iii) be deemed to limit or waive Lessor's right to
pursue any remedies provided for in this Lease.
193.
194. Risk of Loss
--------------
. The risk of loss or of decrease in the enjoyment and beneficial use of
the Leased Property as a consequence of the damage or destruction thereof by
fire, the elements, casualties, thefts, riots, wars or otherwise, or in
consequence of foreclosures, attachments, levies or executions (other than by
Lessor and Persons claiming from, through or under Lessor) is assumed by Lessee,
and except as otherwise provided herein no such event shall entitle Lessee to
any abatement of Rent.
195.
196. General Indemnification
------------------------
. In addition to the other indemnities contained herein, and
notwithstanding the existence of any insurance carried by or for the benefit of
Lessor or Lessee, and without regard to the policy limits of any such insurance,
Lessee shall protect, indemnify, save harmless and defend Lessor from and
against all liabilities, obligations, claims, damages penalties, causes of
action, costs and expenses, including reasonable attorneys', consultants' and
experts' fees and expenses, imposed upon or incurred by or asserted against
Lessor by reason of: (i) any accident, injury to or death of Persons or loss of
or damage to property occurring on or about the Leased Property or adjoining
sidewalks; (ii) any use, misuse, non-use, condition, maintenance or repair by
Lessee of the Leased Property; (iii) any failure on the part of Lessee to
perform or comply with any of the terms of this Lease; (iv) the non-performance
of any of the terms and provisions of any and all existing and future subleases
of the Leased Property to be performed by any party thereunder; (v) any claim
for malpractice, negligence or misconduct committed by any Person on or working
from the Leased Property; and (vi) the violation by Lessee of any Legal
Requirement. Any amounts which become payable by Lessee under this Article
shall be paid within ten (10) days after liability therefor is determined by
litigation or otherwise, and if not timely paid shall bear interest at the
Overdue Rate from the date of such determination to the date of payment.
Lessee, at its sole cost and expense, shall contest, resist and defend any such
claim, action or proceeding asserted or instituted against Lessor or may
compromise or otherwise dispose of the same as Lessee sees fit. For purposes of
this Article XXIII, any acts or omissions of Lessee, or by employees, agents,
assignees, contractors, subcontractors or others acting for or on behalf of
Lessee (whether or not they are negligent, intentional, willful or unlawful),
shall be strictly attributable to Lessee.
Lessor shall indemnify, save harmless and defend Lessee from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses, including, but not limited to, reasonable attorneys' fees, imposed
upon or incurred by or asserted against Lessee as a result of the gross
negligence or willful misconduct of Lessor. Lessor, at its expense, shall
contest, resist, and defend any claim, action or proceeding asserted or
instituted against Lessee with respect to the foregoing or may compromise or
otherwise dispose of the same as Lessor sees fit. Any amounts which become
payable by Lessor under this Section shall be paid within ten (10) days after
liability therefor on the part of Lessor is determined by litigation or
otherwise, and if not timely paid shall bear a late charge (to the extent
permitted by law) at the Overdue Rate from the date of such determination to the
date of payment.
197.
24. Subletting and Assignment.
---------------------------
198. Prohibition
-----------
. Lessee shall not, without Lessor's prior written consent, which may be
withheld in Lessor's sole and absolute discretion, voluntarily or by operation
of law assign (which term includes any sale, encumbering, pledge or other
transfer or hypothecation) this Lease, master sublet all or any part of the
Leased Property or engage the services of any Person for the management or
operation of the Facility. Lessee acknowledges that Lessor is relying upon the
expertise of Lessee in the operation of the Facility and that Lessor entered
into this Lease with the expectation that Lessee would remain in and operate the
Facility during the entire Term and for that reason Lessor retains sole and
absolute discretion in approving or disapproving any assignment or master
sublease. If Lessee is a corporation or partnership, any transfer of its stock
(other than a transfer of any of Lessee's stock owned by ▇▇▇▇▇▇ ▇. ▇▇▇▇ for
estate planning purposes) or partnership interests (or the stock or partnership
interests of the entity(ies) that controls Lessee) or any dissolution or merger
or consolidation of Lessee (or its controlling entity(ies)) with any other
entity, which results in any Person (other than ▇▇▇▇▇▇ ▇. ▇▇▇▇) and such
Person's Affiliates collectively owning greater than twenty-five percent (25%)
of the total outstanding shares of any class of Lessee's stock or partnership
interests, or the sale or other transfer of all or substantially all of the
assets of Lessee (or its controlling entity(ies)), shall constitute an
assignment of Lessee's interest in this Lease within the meaning of this Article
XXIV and the provisions requiring consent contained herein shall apply
(provided, however, that the foregoing provision regarding transfer of Lessee's
-------
stock constituting an assignment shall not apply if (i) Lessee's stock is
publicly traded, and (ii) Lessee's Consolidated Net Worth after such transfer is
not less than Lessee's Consolidated Net Worth as of the Commencement Date). Any
sublease of more than ten percent (10%) of the Facility to any Person or its
Affiliates, in one transaction or in a series of transactions, shall be deemed
to be a master sublease hereunder. For any sublease transaction not requiring
the consent of Lessor hereunder, Lessee shall, within ten (10) days of entering
into any such sublease, notify Lessor of the existence of such sublease and the
identity of the sublessee and supply Lessor with a copy of the sublease, any
related documentation and any other materials or information reasonably
requested by Lessor.
199. Lessor will not unreasonably withhold its written consent to an
assignment of this Lease to (A) any Person which acquires all or substantially
all of the assets and business of Lessee by virtue of a merger or consolidation
of, with or into Lessee or (B) any purchaser of 51% or more of the outstanding
voting stock, membership interests or partnership interest of Lessee, if in
Lessor's reasonable judgment such assignee, together with any guarantor of such
assignee's obligations under this Lease, has (1) a consolidated net worth equal
to or greater than Lessee's Consolidated Net Worth at the time of the proposed
assignment or as of the Commencement Date, whichever is greater, and (2) the
operational expertise and reputation at least equal to that of Lessee at the
time of the proposed assignment or as of the Commencement Date, whichever is
greater.
200. Consent
-------
. If Lessee desires at any time to assign this Lease, to master sublet the
Facility or any portion thereof or engage the services of any Person for the
management or operation of the Facility, it shall first notify Lessor of its
desire to do so and shall submit in writing to Lessor: (i) the name of the
proposed master sublessee, assignee or manager; (ii) the terms and provisions of
the proposed master sublease, assignment or management agreement; and (iii) such
financial information as Lessor reasonably may request concerning the proposed
master sublessee, assignee or manager.
201. Lessor may, as a condition to granting such consent, require that the
obligations of any sublessee, assignee, or manager which is an Affiliate of
another Person be guaranteed by its parent or controlling Person if (i) the
Consolidated Net Worth of Lessee would be diminished as a result of any such
assignment of Lessee's interest described in this Article XXIV, or (ii) the new
controlling Person(s) would have a consolidated net worth less than the Lessee's
Consolidated Net Worth as of the Closing Date and that any guaranty of this
Lease be reaffirmed by any Guarantor notwithstanding such subletting, assignment
or management arrangement. Any sublease shall be expressly subject and
subordinate to all applicable terms and conditions of this Lease and provide
that Lessor, at its option and without any obligation to do so, may require any
sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of Lessee, as sublessor under such sublease from the time of the
exercise of such option to the termination of such sublease and in such case
Lessor shall not be liable for any prepaid rents or security deposit paid by
such sublessee to Lessee unless Lessor actually receives the same from Lessee or
for any other prior defaults of Lessee under such sublease. In the event that
Lessor shall not require such attornment with respect to any sublease, then such
sublease shall automatically terminate upon the expiration or earlier
termination of this Lease, including any early termination by mutual agreement
of Lessor and Lessee. Furthermore, any sublease, assignment or management
agreement shall expressly provide that the sublessee, assignee or manager shall
furnish Lessor with such financial and operational information and information
about the physical condition of the Facility, including the information required
by Section 25.2 herein, as Lessor may request from time to time.
202. Lessor may, as a condition to its consent to any such master
subletting, require Lessee to pay to Lessor one hundred percent (100%) of all
Transfer Consideration. "Transfer Consideration" shall mean the positive
-----------------------
difference, if any, between the Fair Market Rental and the Rent payable by
Lessee determined on a monthly basis, prorating the Rent, as appropriate, if
less than all of the Facility is sublet; provided, however, in no event shall
-------- -------
Lessor be entitled to receive any amount in excess of the amount Lessee is
entitled to receive as a result of the master sublease. The Transfer
Consideration for each month shall be paid by Lessee to Lessor monthly when the
Minimum Rent is due for the duration of the master subletting.
203. Lessor may, as a condition to its consent to any assignment or
management arrangement, require Lessee to pay to Lessor upon the effective date
of such assignment or management arrangement an amount equal to one hundred
percent (100%) of the Transfer Consideration for the remaining Term of the Lease
assuming all renewal options are exercised and there is no early
termination of the Lease and Lessor shall refund any amounts attributable to
renewal options if they subsequently are not exercised with interest thereon at
the Prime Rate; provided, however, in no event shall Lessor be entitled to
-------- -------
receive any amount in excess of the amount Lessee is entitled to receive as a
result of the assignment or management agreement.
204. The consent by Lessor to any assignment, master subletting or
management arrangement shall not constitute a consent to any subsequent
assignment, master subletting or management arrangement by Lessee or to any
subsequent or successive assignment, master subletting or management arrangement
by the master sublessee, assignee or manager. Any purported or attempted
assignment, sublease, management agreement or other permission to use the
Facility contrary to the provisions of this Article shall be void and, at the
option of Lessor, shall terminate this Lease.
205. Notwithstanding the preceding, Lessee may sublease or assign the Lease
to an Affiliate of Lessee without the written consent of Lessor and Lessee shall
not be required to pay any Transfer Consideration to Lessor as a result of
such sublease or assignment to an Affiliate, but such sublease or assignment of
the Lease from Lessee to an Affiliate of Lessee will not relieve Lessee from its
obligations under the Lease or any Guarantor from its obligations under any
guaranty of this Lease.
206. Costs
-----
. Lessee shall reimburse Lessor for Lessor's reasonable costs and expenses
incurred in conjunction with the processing and documentation of any assignment,
master subletting or management arrangement, including reasonable attorneys',
architects', engineers' or other consultants' fees whether or not such master
sublease, assignment or management agreement is actually consummated.
207. No Release of Lessee's Obligations
--------------------------------------
. No assignment, subletting or management agreement shall relieve Lessee
of its obligation to pay the Rent and to perform all of the other obligations to
be performed by Lessee hereunder. The liability of Lessee named herein and any
immediate and remote successor in interest of Lessee (by assignment or
otherwise), and the due performance of the obligations of this Lease on Lessee's
part to be performed or observed, shall not in any way be discharged, released
or impaired by any (i) agreement which modifies any of the rights or obligations
of the parties under this Lease, (ii) stipulation which extends the time within
which an obligation under this Lease is to be performed, (iii) waiver of the
performance of an obligation required under this Lease, or (iv) failure to
enforce any of the obligations set forth in this Lease.
208. Assignment of Lessee's Rights Against Sublease
---------------------------------------------------
.. If Lessor shall consent to a master subletting, then the written instrument
of consent, executed and acknowledged by Lessor, Lessee and sublessee, shall
contain a provision substantially similar to the following:
209. Lessee and sublessee hereby agree that, if sublessee shall be in
default of any obligation of Lessee under the sublease, which default also
constitutes a default by Lessee under the Lease, then Lessor shall be permitted
to avail itself of all of the rights and remedies available to Lessee in
connection therewith.
210. Without limiting the generality of the foregoing, Lessor shall be
permitted (by assignment of a cause of action or otherwise) to institute an
action or proceeding against sublessee in the name of Lessee in order to enforce
Lessee's rights under the sublease, and also shall be permitted to take all
ancillary actions (e.g., serve default notices and demands) in the name of
Lessee as Lessor reasonably shall determine to be necessary.
211. Lessee agrees to cooperate with Lessor, and to execute such documents
as shall be reasonably necessary, in connection with the implementation of the
foregoing rights of Lessor.
212. Lessee expressly acknowledges and agrees that the exercise by Lessor of
any of the foregoing rights and remedies shall not constitute an election
of remedies, and shall not in any way impair Lessor's entitlement to pursue
other rights and remedies directly against Lessee.
213. Reserved
--------
.
214. REIT Protection
----------------
. Anything contained in this Lease to the contrary notwithstanding, Lessee
shall not (i) sublet, assign or enter into a management arrangement for the
Leased Property on any basis such that the rental or other amounts to be paid by
the sublessee, assignee or manager thereunder would be based, in whole or in
part, on the income or profits derived by the business activities of the
sublessee, assignee or manager; (ii) furnish or render any services to the
sublessee, assignee or manager or manage or operate the Leased Property so
subleased, assigned or managed; (iii) sublet, assign or enter into a management
arrangement for the Leased Property to any Person in which Lessee or Lessor owns
an interest, directly or indirectly (by applying constructive ownership rules
set forth in Section 856(d)(5) of the Code); or (iv) sublet, assign or enter
into a management arrangement for the Leased Property in any other manner which
could cause any portion of the amounts received by Lessor pursuant to this Lease
or any sublease to fail to qualify as "rents from real property" within the
meaning of Section 856(d) of the Code, or any similar or successor provision
thereto or which could cause any other income of Lessor to fail to qualify as
income described in Section 856(c)(2) of the Code.
215. Prepaid Rent
-------------
. Lessee shall not require or accept prepayment for more than three (3)
months' use of individual units or rooms of the Facility. Amounts charged to
residents for individual units or rooms shall not be materially less than fair
market value.
216.
25. Officer's Certificates and Financial Statements.
---------------------------------------------------
217. Officer's Certificate
----------------------
. At any time and from time to time upon Lessee's receipt of not less than
ten (10) days' prior written request by Lessor, Lessee shall furnish to Lessor
an Officer's Certificate certifying (i) that this Lease is unmodified and in
full force and effect, or that this Lease is in full force and effect as
modified and setting forth the modifications; (ii) the dates to which the Rent
has been paid; (iii) whether or not, to the best knowledge of Lessee, Lessor is
in default in the performance of any covenant, agreement or condition contained
in this Lease and, if so, specifying each such default of which Lessee may have
knowledge; and (iv) responses to such other questions or statements of fact as
Lessor, any ground or underlying lessor, any purchaser or any current or
prospective Facility Mortgagee shall reasonably request. Lessee's failure to
deliver such statement within such time shall constitute an acknowledgement by
Lessee that (x) this Lease is unmodified and in full force and effect except as
may be represented to the contrary by Lessor; (y) Lessor is not in default in
the performance of any covenant, agreement or condition contained in this Lease;
and (z) the other matters set forth in such request, if any, are true and
correct. Any such certificate furnished pursuant to this Article may be relied
upon by Lessor and any current or prospective Facility Mortgagee, ground or
underlying lessor or purchaser of the Leased Property.
218. Statements
----------
. Lessee shall furnish the following statements to Lessor:
219. within 120 days after the end of each of Lessee's fiscal years, a copy
of the audited consolidated balance sheets of Lessee and its consolidated
Subsidiaries as of the end of such fiscal year, and related audited consolidated
statements of income, changes in common stock and other stockholders'
equity and changes in the financial position of Lessee and its consolidated
Subsidiaries for such fiscal year, prepared in accordance with GAAP applied on a
basis consistently maintained throughout the period involved, such consolidated
financial statements to be certified by nationally recognized certified public
accountants;
220. within 120 days after the end of Lessee's fiscal years, and together
with the annual audit report furnished in accordance with clause (a) above, an
Officer's Certificate stating that to the best of the signer's knowledge and
belief after making due inquiry, Lessee is not in default in the performance or
observance of any of the terms of this Lease, or if Lessee shall be in default,
specifying all such defaults, the nature thereof, and the steps being taken to
remedy the same;
221. within thirty (30) days after the end of each month for those months
occurring from the Commencement Date to three months after the first month in
which the average Cash Flow Coverage for the Facility equals or exceeds 1.3 for
such month, all consolidated financial reports Lessee produces for reporting
purposes and detailed statements of income and detailed operational statistics
regarding occupancy rates, patient and resident mix and patient and resident
rates by type for the Facility; and thereafter within sixty (60) days after the
end of each of Lessee's quarters, all quarterly consolidated financial reports
Lessee produces for reporting purposes and detailed statements of income and
detailed operational statistics regarding occupancy rates, patient and resident
mix and patient and resident rates by type for the Facility;
222. within 120 days after the end of each of Lessee's fiscal years, a copy
of each cost report, if any, filed with the appropriate governmental agency for
the Facility;
223. within thirty (30) days after they are required to be filed with the
SEC, copies of any annual reports and of information, documents and other
reports, or copies of such portions of any of the foregoing as the SEC may
prescribe, which Lessee is required to file with the SEC pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended;
224. within three (3) Business Days after Lessee's receipt thereof, copies
of all written communications received by Lessee from any regulatory agency
relating to (i) surveys of the Facility for purposes of licensure, Medicare and
Medicaid certification and accreditation and (ii) any proceeding, formal or
informal, with respect to cited deficiencies with respect to services and
activities provided and performed at the Facility, including patient and
resident care, patient and resident activities, patient and resident therapy,
dietary, medical records, drugs and medicines, supplies, housekeeping and
maintenance, or the condition of the Facility, and involving an actual or
threatened warning, imposition of a fine or a penalty, or suspension,
termination or revocation of the Facility's license to be operated in accordance
with its Primary Intended Use;
225. [Intentionally Omitted];
226. immediately upon Lessee's receipt thereof, copies of all material
claims, complaints, notices, warnings or asserted violations relating in any way
to the Leased Property or Lessee's use thereof; and
227. with reasonable promptness, such other information respecting the
financial and operational condition and affairs of Lessee and the Facility and
the physical condition of the Leased Property and any Capital Addition thereto
as Lessor may reasonably request, in the form of a questionnaire or otherwise,
from time to time.
228. Charges
-------
. Lessee acknowledges that the failure to furnish Lessor with any of the
certificates or statements required by this Article XXV will cause Lessor to
incur costs and expenses not contemplated hereunder, the exact amount of which
is presently anticipated to be extremely difficult to ascertain. Accordingly,
if Lessee fails to furnish Lessor with any of the certificates or statements
required by this Article XXV, Lessee shall pay to Lessor upon demand $1,000 for
each such failure as Additional Charges. The parties agree that this charge
represents a fair and reasonable estimate of the costs that Lessor will incur by
reason of Lessee's failure to furnish Lessor with such certificates and
statements.
229.
230. Lessor's Right to Inspect and Show the Leased Property and Capital
-----------------------------------------------------------------------
Additions
-----
. Lessee shall permit Lessor and its authorized representatives to inspect
the Leased Property and any Capital Addition thereto during usual business hours
and on reasonable notice subject to any security, health, safety or
confidentiality requirements of Lessee or any Legal Requirement or Insurance
Requirement.
231.
232. No Waiver
----------
. No failure by Lessor to insist upon the strict performance of any term
hereof or to exercise any right, power or remedy hereunder and no acceptance of
full or partial payment of Rent during the continuance of any default or Event
of Default shall constitute a waiver of any such breach or of any such term. No
waiver of any breach shall affect or alter this Lease, which shall continue in
full force and effect with respect to any other then existing or subsequent
breach.
233.
234. Remedies Cumulative
--------------------
. Each legal, equitable or contractual right, power and remedy of Lessor
now or hereafter provided either in this Lease or by statute or otherwise shall
be cumulative and concurrent and shall be in addition to every other right,
power and remedy and the exercise or beginning of the exercise by Lessor of any
one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Lessor of any or all of such other
rights, powers and remedies.
235.
236. Acceptance of Surrender
-------------------------
. No surrender to Lessor of this Lease or of the Leased Property or any
part thereof or of any interest therein, shall be valid or effective unless
agreed to and accepted in writing by Lessor and no act by Lessor or any
representative or agent of Lessor, other than such a written acceptance by
Lessor, shall constitute an acceptance of any such surrender.
237.
238. No Merger
----------
. There shall be no merger of this Lease or of the leasehold estate
created hereby by reason of the fact that the same Person may acquire, own or
hold, directly or indirectly, (i) this Lease or the leasehold estate created
hereby or any interest in this Lease or such leasehold estate and (ii) the fee
estate in the Leased Property.
239.
240. Conveyance by Lessor
----------------------
. If Lessor or any successor owner of the Leased Property shall convey the
Leased Property other than as security for a debt, Lessor or such successor
owner, as the case may be, shall thereupon be released from all future
liabilities and obligations of the Lessor under this Lease arising or accruing
from and after the date of such conveyance or other transfer and all such future
liabilities and obligations shall thereupon be binding upon the new owner.
241.
242. Quiet Enjoyment
----------------
. So long as Lessee shall pay the Rent as the same becomes due and shall
fully comply with all of the terms of this Lease and fully perform its
obligations hereunder, Lessee shall peaceably and quietly have, hold and enjoy
the Leased Property for the Term, free of any claim or other action by Lessor or
anyone claiming by, through or under Lessor, but subject to all liens and
encumbrances of record as of the date hereof, or the Commencement Date or
created thereafter as permitted hereunder or thereafter consented to by Lessee.
No failure by Lessor to comply with the foregoing covenant shall give Lessee any
right to cancel or terminate this Lease or ▇▇▇▇▇, reduce or make a deduction
from or offset against the Rent or any other sum payable under this Lease, or to
fail to perform any other obligation of Lessee hereunder. Notwithstanding the
foregoing, Lessee shall have the right, by separate and independent action to
pursue any claim it may have against Lessor as a result of a breach by Lessor of
the covenant of quiet enjoyment contained in this Article.
243.
244. Notices
-------
. Any notice, consent, approval, demand or other communication required or
permitted to be given hereunder (a "notice") must be in writing and may be
------
served personally or by U.S. Mail. If served by U.S. Mail, it shall be
addressed as follows:
If to Lessor: Health Care Property Investors, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal Department
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lessee: Emeritus Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: The ▇▇▇▇▇▇▇▇▇ Group PLLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice which is personally served shall be effective upon the date of
service; any notice given by U.S. Mail shall be deemed effectively given, if
deposited in the United States Mail, registered or certified with return receipt
requested, postage prepaid and addressed as provided above, on the date of
receipt, refusal or non-delivery indicated on the return receipt. In addition,
either party may send notices by facsimile or by a nationally recognized
overnight courier service provides written proof of delivery (such as U.P.S. or
Federal Express). Any notice sent by facsimile shall be effective upon
confirmation of receipt in legible form, and any notice sent by a nationally
recognized overnight courier shall be effective on the date of delivery to the
party at its address specified above as set forth in the courier's delivery
receipt. Either party may, by notice to the other from time to time in the
manner herein provided, specify a different address for notice purposes.
245.
246. Appraiser
---------
. If it becomes necessary to determine the Fair Market Value or Fair
Market Rental for any purpose of this Lease, the same shall be determined by
Valuation Counselors, or in the event Valuation Counselors no longer exists upon
the date the same is to be determined, any other nationally recognized appraisal
firm, in which one or more of the members, officers or principals of such firm
are members of the American Institute of Real Estate Appraisers (or any
successor organization thereto), as may be selected by Lessor in writing to
Lessee (the "Appraiser"). Lessor shall cause such Appraiser to determine the
---------
Fair Market Value or Fair Market Rental as of the relevant date (giving effect
to the impact, if any, of inflation from the date of the Appraiser's decision to
the relevant date) and the determination of such Appraiser shall be final and
binding upon the parties. If the Facility had reached stabilized operations
prior to the Commencement Date, to the extent consistent with sound appraisal
practice as then existing at the time of any such appraisal, an appraisal for
Fair Market Value shall be made on a basis consistent with the basis on which
the Leased Property was appraised for purposes of determining its fair market
value at the time the Leased Property was acquired by Lessor. This provision
for determination by appraisal shall be specifically enforceable to the extent
such remedy is available under applicable law, and any determination hereunder
shall be final and binding upon the parties except as otherwise provided by
applicable law. Lessor and Lessee shall each pay one-half of the fees and
expenses of the Appraiser and one-half of all other cost and expenses incurred
in connection with such appraisal.
247.
[INTENTIONALLY OMITTED]
248.
249. Lessor May Grant Liens
-------------------------
. Without the consent of Lessee, Lessor may, from time to time, directly
or indirectly, create or otherwise cause to exist any lien, encumbrance or title
retention agreement upon the Leased Property, or any portion thereof or interest
therein, whether to secure any borrowing or other means of financing or
refinancing. This Lease is and at all times shall be subject and subordinate to
any ground or underlying leases, mortgages, trust deeds or like encumbrances
(collectively, "Priority Encumbrances"), which may now or hereafter affect the
----------------------
Leased Property and to all renewals, modifications, consolidations, replacements
and extensions of any such lease, mortgage, trust deed or like encumbrance;
provided, however, that the subjection and subordination of this Lease and
---- -------
Lessee's leasehold interest hereunder to any Priority Encumbrance shall be
-
conditioned upon the execution by the holder of each Priority Encumbrance and
-
delivery to Lessee of a nondisturbance and attornment agreement which provides
that so long as no default has occurred and is continuing beyond the period of
time allowed for the remedy thereof under the terms of this Lease, the holder of
such Priority Encumbrance (i) shall not disturb either Lessee's leasehold
interest or possession of the Leased Property in accordance with the terms
hereof, or any of its rights, privileges and options, (ii) shall permit
application of all proceeds of insurance and all Awards and payments in
connection with the taking of all or any portion of the Leased Property in
accordance with the provisions of Articles XIV and XV of this Lease, (iii)
waives all Priority Encumbrance rights or interests in any of Lessee's Personal
Property, and (iv) shall execute a release of such rights, privileges, options
and all liens and claims that the holder of such Priority Encumbrance may have
in the Leased Property upon payment of the purchase price therefor in the event
Lessee exercises any of its options or rights to purchase the Leased Property
provided in this Lease. In connection with the foregoing and at the request of
Lessor, Lessee shall promptly execute a reasonable subordination, nondisturbance
and attornment agreement which will incorporate the terms set forth in the
preceding sentence. Except for the documents described in the preceding
sentences, this clause shall be self-operative and no further instrument of
subordination shall be required by any ground or underlying lessor or by any
mortgagee or beneficiary, affecting any lease or the Leased Property. In
confirmation of such subordination, Lessee shall execute promptly any
certificate that Lessor may request for such purposes.
250. Attornment
----------
. If Lessor's interest in the Leased Property is sold or conveyed upon the
exercise of any remedy provided for in any Facility Mortgage, or otherwise by
operation of law: (i) at the new owner's option, Lessee shall attorn to and
recognize the new owner as Lessee's Lessor under this Lease or enter into a new
lease substantially in the form of this Lease with the new owner, and Lessee
shall take such actions to confirm the foregoing within ten (10) days after
request; and (ii) the new owner shall not be (a) liable for any act or omission
of Lessor under this Lease occurring prior to such sale or conveyance, or (b)
subject to any offset, abatement or reduction of rent because of any default of
Lessor under this Lease occurring prior to such sale or conveyance.
251.
252. Hazardous Substances
---------------------
. Lessee shall not allow any Hazardous Substance to be located in, on,
under or about the Leased Property or incorporated in the Facility; provided,
--------
however, that Hazardous Substances may be brought, kept, used or disposed of in,
-----
on or about the Leased Property in quantities and for purposes similar to those
brought, kept, used or disposed of in, on or about similar facilities used for
purposes similar to the Primary Intended Use or in connection with the
construction of facilities similar to the Facility and which are brought, kept,
used and disposed of in strict compliance with Legal Requirements. Lessee shall
not allow the Leased Property to be used as a waste disposal site or for the
manufacturing, handling, storage, distribution or disposal of any Hazardous
Substance.
253. Notices
-------
. Lessee shall provide to Lessor promptly, and in any event immediately
upon Lessee's receipt thereof, a copy of any notice, or notification with
respect to, (i) any violation of a Legal Requirement relating to Hazardous
Substances located in, on, or under the Leased Property or any adjacent
property; (ii) any enforcement, cleanup, removal, or other governmental or
regulatory action instituted, completed or threatened with respect to the Leased
Property; (iii) any claim made or threatened by any Person against Lessee or the
Leased Property relating to damage, contribution, cost recovery, compensation,
loss, or injury resulting from or claimed to result from any Hazardous
Substance; and (iv) any reports made to any federal, state or local
environmental agency arising out of or in connection with any Hazardous
Substance in, on, under or removed from the Leased Property, including any
complaints, notices, warnings or asserted violations in connection therewith.
254. Remediation
-----------
. If Lessee becomes aware of a violation of any Legal Requirement relating
to any Hazardous Substance in, on, under or about the Leased Property or any
adjacent property, or if Lessee, Lessor or the Leased Property becomes subject
to any order of any federal, state or local agency to repair, close, detoxify,
decontaminate or otherwise remediate the Leased Property, Lessee shall
immediately notify Lessor of such event and, at its sole cost and expense, cure
such violation or effect such repair, closure, detoxification, decontamination
or other remediation. If Lessee fails to implement and diligently pursue any
such cure, repair, closure, detoxification, decontamination or other
remediation, Lessor shall have the right, but not the obligation, to carry out
such action and to recover from Lessee all of Lessor's costs and expenses
incurred in connection therewith.
255. Indemnity
---------
. Lessee shall indemnify, defend, protect, save, hold harmless, and
reimburse Lessor for, from and against any and all costs, losses (including,
losses of use or economic benefit or diminution in value), liabilities, damages,
assessments, lawsuits, deficiencies, demands, claims and expenses (collectively,
"Environmental Costs") (whether or not arising out of third-party claims and
--------------------
regardless of whether liability without fault is imposed, or sought to be
--
imposed, on Lessor) incurred in connection with, arising out of, resulting from
--
or incident to, directly or indirectly, before or during (but not after) the
Term or such portion thereof during which the Leased Property is leased to
Lessee (i) the production, use, generation, storage, treatment, transporting,
disposal, discharge, release or other handling or disposition of any Hazardous
Substances from, in, on or about the Leased Property (collectively, "Handling"),
--------
including the effects of such Handling of any Hazardous Substances on any Person
or property within or outside the boundaries of the Leased Property, (ii) the
presence of any Hazardous Substances in, on, under or about the Leased Property
and (iii) the violation of any Environmental Law. "Environmental Costs" include
-------------------
interest, costs of response, removal, remedial action, containment, cleanup,
investigation, design, engineering and construction, damages (including actual,
consequential and punitive damages) for personal injuries and for injury to,
destruction of or loss of property or natural resources, relocation or
replacement costs, penalties, fines, charges or expenses, attorney's fees,
expert fees, consultation fees, and court costs, and all amounts paid in
investigating, defending or settling any of the foregoing.
Without limiting the scope or generality of the foregoing, Lessee expressly
agrees to reimburse Lessor for any and all costs and expenses incurred by Lessor
in connection with, arising out of, resulting from or incident to, directly or
indirectly, before or during (but not after) the Term or such portion thereof
during which the Leased Property is leased to Lessee of the following:
256. In investigating any and all matters relating to the Handling of any
Hazardous Substances, in, on, from, under or about the Leased Property;
257. In bringing the Leased Property into compliance with all Legal
Requirements; and
258. Removing, treating, storing, transporting, cleaning-up and/or disposing
of any Hazardous Substances used, stored, generated, released or disposed
of in, on, from, under or about the Leased Property or off-site.
If any claim is made by Lessor for reimbursement for Environmental Costs
incurred by it hereunder, Lessee agrees to pay such claim promptly, and in any
event to pay such claim within thirty (30) calendar days after receipt by Lessee
of notice thereof. If any such claim is not so paid and Lessor is ultimately
found or agrees to be responsible therefore, Lessee agrees also to pay interest
on the amount paid from the date of the first notice of such claim, at the
Overdue Rate.
259. Environmental Inspection
-------------------------
. Lessor shall have the right, from time to time, during normal business
hours and upon not less than five (5) days written notice to Lessee, except in
the case of an emergency in which event no notice shall be required, to conduct
an inspection of the Leased Property to determine the existence or presence of
Hazardous Substances on or about the Leased Property. Lessor shall have the
right to enter and inspect the Leased Property, conduct any testing, sampling
and analyses it deems necessary and shall have the right to inspect materials
brought into the Leased Property. Lessor may, in its discretion, retain such
experts to conduct the inspection, perform the tests referred to herein, and to
prepare a written report in connection therewith. All costs and expenses
incurred by Lessor under this Section shall be paid on demand as Additional
Charges by Lessee to Lessor. Failure to conduct an environmental inspection or
to detect unfavorable conditions if such inspection is conducted shall in no
fashion be intended as a release of any liability for environmental conditions
subsequently determined to be associated with or to have occurred during
Lessee's tenancy. Lessee shall remain liable for any environmental condition
related to or having occurred during its tenancy regardless of when such
conditions are discovered and regardless of whether or not Lessor conducts an
environmental inspection at the termination of the Lease. The obligations set
forth in this Article shall survive the expiration or earlier termination of the
Lease.
260.
261. Memorandum of Lease
---------------------
. Lessor and Lessee shall, promptly upon the request of either, enter into
a short form memorandum of this Lease, in form suitable for recording under the
laws of the State. Lessee shall pay all costs and expenses of recording any
such memorandum and shall fully cooperate with Lessor in removing from record
any such memorandum upon the expiration or earlier termination of the Term.
262.
263. Sale of Assets
----------------
. Notwithstanding any other provision of this Lease, Lessor shall not be
required to (i) sell or transfer the Leased Property, or any portion thereof,
which is a real estate asset as defined in Section 856(c)(6)(B), or functionally
equivalent successor provision, of the Code, to Lessee if Lessor's counsel
advises Lessor that such sale or transfer may not be a sale of property
described in Section 857(b)(6)(C), or functionally equivalent successor
provision, of the Code or (ii) sell or transfer the Leased Property, or any
portion thereof, to Lessee if Lessor's counsel advises Lessor that such sale or
transfer could result in an unacceptable amount of gross income for purposes of
the ninety five percent (95%) gross income test contained in Section 856(c)(2),
or functionally equivalent successor provision, of the Code. If Lessee has the
obligation to purchase the property pursuant to the terms herein, and if Lessor
determines not to sell such property pursuant to the above sentence, then Lessee
shall purchase such property, upon and subject to all applicable terms and
conditions set forth in this Lease, including the provisions of Article XXXV, at
such time as the transaction, upon the advice of Lessor's counsel, would be a
sale of property (to the extent the Leased Property is a real estate asset)
described in Section 857(b)(6)(C), or functionally equivalent successor
provision, of the Code, and would not result in an unacceptable amount of gross
income for purposes of the ninety five percent (95%) gross income test contained
in Section 856(c)(2), or functionally equivalent successor provision of the Code
and until such time Lessee shall lease the Leased Property from Lessor at the
Fair Market Rental determined in accordance with Article XXXIV; provided,
--------
however, that if Lessee's obligation to purchase arises pursuant to Section
-
16.5, and if the events giving rise to the Event of Default for which Lessor
exercised its right to put the Leased Property to Lessee pursuant to Section
16.5 has been cured prior to the time Lessor determines to sell the Leased
Property, then this Lease shall continue in full force and effect as if such
Event of Default had not occurred. If Lessee has the right to purchase the
property pursuant to the terms herein, and if Lessor determines not to sell such
property pursuant to the above sentence, Lessee's right, if any, to purchase any
or all of such property shall, upon notice to Lessor that Lessee intends to
continue such right, continue and be exercisable, upon and subject to all
applicable terms and conditions set forth in this Lease, including the
provisions of Article XXXV, at such time as the transaction, upon the advice of
Lessor's counsel, would be a sale of property (to the extent the Leased Property
is a real estate asset) described in Section 857(b)(6)(C), or functionally
equivalent successor provision, of the Code, and would not result in an
unacceptable amount of gross income for purposes of the ninety five percent
(95%) gross income test contained in Section 856(c)(2), or functionally
equivalent successor provision of the Code and until such time Lessee shall
lease the Leased Property from Lessor at the Fair Market Rental determined in
accordance with Article XXXIV.
264.
265. Subdivision
-----------
. If the Land is in excess of that which is required to operate the Leased
Property in accordance with its Primary Intended Use, Lessor may subdivide the
Land and amend this Lease and the legal descriptions attached hereto as Exhibit
-------
A-1 and Exhibit A-2 such that the Land contains only so much of the Land as is
--- -----------
necessary to operate the Leased Property in accordance with its Primary Intended
Use. If Lessor subdivides the Land, Lessee shall have the right to an
appropriate abatement of Rent payable and the right to reasonably adjust any
other obligations of either party accordingly. After any such subdivision
Lessee shall have no rights to any land which is no longer part of the Leased
Property and Lessor may sell, lease or develop any land which is no longer part
of the Leased Property; provided that Lessor may not use such land for the
--------
operation of a facility providing adult congregate care and assisted living
services; and provided further that Lessor may not sell or lease such land to a
----------------
third party that Lessor knows intends to use such land for the development of a
facility providing adult congregate care and assisted living services. If
Lessor elects to subdivide the Land Lessee shall cooperate with Lessor and take
all actions reasonably requested by Lessor to effect such subdivision.
266.
267. Authority
---------
. If Lessee is a corporation, trust, or partnership, Lessee, and each
individual executing this Lease on behalf of Lessee, represent and warrant that
each is duly authorized to execute and deliver this Lease on behalf of Lessee
and shall within thirty (30) days after execution of this Lease deliver to
Lessor evidence of such authority satisfactory to Lessor.
268.
269. Attorneys' Fees
----------------
. If Lessor or Lessee brings an action or other proceeding against the
other to enforce any of the terms, covenants or conditions hereof or any
instrument executed pursuant to this Lease, or by reason of any breach or
default hereunder or thereunder, the party prevailing in any such action or
proceeding and any appeal thereupon shall be paid all of its costs and
reasonable outside attorneys' fees incurred therein. In addition to the
foregoing and other provisions of this Lease that specifically require Lessee to
reimburse, pay or indemnify against Lessor's attorneys' fees, Lessee shall pay,
as Additional Charges, all of Lessor's reasonable outside attorneys' fees
incurred in connection with the administration or enforcement of this Lease,
including attorneys' fees incurred in connection with the renewal of this Lease
for the Extended Term, the review of any letters of credit, the review,
negotiation or documentation of any subletting, assignment, or management
arrangement or any consent requested in connection therewith, and the collection
of past due Rent.
270.
271. Brokers
-------
. Lessee warrants that it has not had any contact or dealings with any
Person or real estate broker which would give rise to the payment of any fee or
brokerage commission in connection with this Lease, and Lessee shall indemnify,
protect, hold harmless and defend Lessor from and against any liability with
respect to any fee or brokerage commission arising out of any act or omission of
Lessee. Lessor warrants that it has not had any contact or dealings with any
Person or real estate broker which would give rise to the payment of any fee or
brokerage commission in connection with this Lease, and Lessor shall indemnify,
protect, hold harmless and defend Lessee from and against any liability with
respect to any fee or brokerage commission arising out of any act or omission of
Lessor.
272.
273. Miscellaneous
-------------
.
274. Survival. Anything contained in this Lease to the contrary
--------
notwithstanding, all claims against, and liabilities and indemnities of, Lessee
--
or Lessor arising prior to the expiration or earlier termination of the Term
shall survive such expiration or termination.
275. Severability. If any term or provision of this Lease or any
------------
application thereof shall be held invalid or unenforceable, the remainder of
-
this Lease and any other application of such term or provision shall not be
affected thereby.
276. Non-Recourse. Lessee specifically agrees to look solely to the Leased
------------
Property for recovery of any judgment from Lessor. It is specifically agreed
that no constituent partner in Lessor or officer or employee of Lessor shall
ever be personally liable for any such judgment or for the payment of any
monetary obligation to Lessee. The provision contained in the foregoing
sentence is not intended to, and shall not, limit any right that Lessee might
otherwise have to obtain injunctive relief against Lessor, or any action not
involving the personal liability of Lessor. Furthermore, except as otherwise
expressly provided herein, in no event shall Lessor ever be liable to Lessee for
any indirect or consequential damages suffered by Lessee from whatever
cause.
277. Licenses. Upon the expiration or earlier termination of the Term,
--------
Lessee shall use its best efforts to transfer to Lessor or Lessor's nominee and
shall cooperate with Lessor or Lessor's designee or nominee in connection with
the processing by Lessor or Lessor's designee or nominee of any applications for
all licenses, operating permits and other governmental authorization, all
contracts, including contracts with governmental or quasi-governmental entities,
business records, data, patient and resident records, and patient and resident
trust accounts, which may be necessary or useful for the operation of the
Facility; provided that the costs and expenses of any such transfer or the
--------
processing of any such application shall be paid by Lessor or Lessor's designee
or nominee. Lessee shall not commit any act or be remiss in the undertaking of
any act that would jeopardize the licensure or certification of the Facility,
and Lessee shall comply with all requests for an orderly transfer of the same
upon the expiration or early termination of the Term. In addition, upon
request, Lessee shall promptly deliver copies of all books and records relating
to the Leased Property and its operation to Lessor or Lessor's designee or
nominee but Lessee shall not be required to deliver corporate financial records
or proprietary materials. Lessee shall indemnify, defend, protect and hold
harmless Lessor from and against any loss, damage, cost or expense incurred by
Lessor or Lessor's designee or nominee in connection with the correction of any
and all deficiencies of a physical nature identified by any governmental
authority responsible for licensing the Leased Property in the course of any
change of ownership inspection and audit and previously identified during the
Term by such governmental authority.
278. Successors and Assigns. This Lease shall be binding upon Lessor and
------------------------
its successors and assigns and, subject to the provisions of Article XXIV, upon
Lessee and its successors and assigns.
279. Governing Law. (See Also Addendum Section 46.11) THIS LEASE (AND ANY
-------------- --- ---- -------- ------- -----
AGREEMENT FORMED PURSUANT TO THE TERMS HEREOF) SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW) AND ANY APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA. LESSEE AND LESSOR EACH HEREBY (I) IRREVOCABLY
SUBMIT TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE AND
CONSENT TO SERVICE OF PROCESS IN ANY LEGAL PROCEEDINGS ARISING OUT OF, OR IN
CONNECTION WITH, THIS LEASE (OR ANY AGREEMENT FORMED PURSUANT TO THE TERMS
HEREOF), BY ANY MEANS AUTHORIZED BY APPLICABLE LAW; (II) IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION TO WHICH SUCH PARTY MAY NOW
OR HEREINAFTER HAVE TO THE LYING OR TO THE LAYING OF VENUE OF ANY LITIGATION
ARISING OUT OF, IN CONNECTION WITH, THIS LEASE (OR ANY AGREEMENT FORMED PURSUANT
TO THE TERMS HEREOF), BROUGHT IN THE STATE COURTS OF ORANGE COUNTY,
CALIFORNIA, OR IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT IN WHICH
SUCH COUNTY IS LOCATED; AND (III) IRREVOCABLY WAIVE ANY CLAIM IN ANY LITIGATION
BROUGHT IN ANY SUCH COURT THAT THE SAME HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
280. Waiver of Trial by Jury. EACH OF LESSOR AND LESSEE ACKNOWLEDGES THAT
-------------------------
IT HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO
TRIAL BY JURY UNDER THE CONSTITUTION OF THE UNITED STATES AND THE STATE. EACH
OF LESSOR AND LESSEE HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS LEASE (OR ANY
AGREEMENT FORMED PURSUANT TO THE TERMS HEREOF) OR (ii) IN ANY MANNER CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF LESSOR AND LESSEE WITH RESPECT
TO TIES LEASE (OR ANY AGREEMENT FORMED PURSUANT TO THE TERMS HEREOF) OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREINAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE; EACH OF LESSOR AND LESSEE HEREBY AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND,
------
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY, AND
THAT EITHER PARTY MAY FILE A COPY OF THIS SECTION WITH ANY COURT AS CONCLUSIVE
EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL
BY JURY.
LESSOR'S INITIALS:
LESSEE'S INITIALS:
281. Entire Agreement. This Lease, together with the other Emeritus
-----------------
Documents, as defined in the Contract of Acquisition, the Exhibits hereto and
thereto and such other documents as are contemplated hereunder or thereunder,
constitutes the entire agreement of the parties with respect to the subject
matter hereof, and may not be changed or modified except by an agreement in
writing signed by the parties. Lessor and Lessee hereby agree that all prior or
contemporaneous oral understandings, agreements or negotiations relative to
the leasing of the Leased Property are merged into and revoked by this Lease.
282. Headings. All titles and headings to sections, subsections, paragraphs
--------
or other divisions of this Lease are only for the convenience of the
parties and shall not be construed to have any effect or meaning with respect to
the other contents of such sections, subsections, paragraphs or other divisions,
such other content being controlling as to the agreement among the parties
hereto.
283. Counterparts. This Lease may be executed in any number of
------------
counterparts, each of which shall be a valid and binding original, but all of
---
which together shall constitute one and the same instrument.
284. Joint and Several. If more than one Person is the Lessee under this
-------------------
Lease, the liability of such Persons under this Lease shall be joint and
several.
285. Interpretation. Both Lessor and Lessee have been represented by
--------------
counsel and this Lease and every provision hereof has been freely and fairly
negotiated. Consequently, all provisions of this Lease shall be interpreted
according to their fair meaning and shall not be strictly construed against any
party.
286. Time of Essence. Time is of the essence of this Lease and each
-----------------
provision hereof in which time of performance is established.
287. Further Assurances. The parties' agree to promptly sign all documents
-------------------
reasonably requested to give effect to the provisions of this Lease.
[SIGNATURE PAGE FOLLOWS]
SIGNATURE PAGE TO LEASE
| OC_DOCS\419784.7[W2000]||
IN WITNESS WHEREOF, the parties have caused this Lease to be executed and
attested by their respective officers thereunto duly authorized.
HEALTH CARE PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------
Its: Senior Vice President
-----------------------
EMERITUS CORPORATION,
a Washington corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------
Its: Vice President of Finance
----------------------------
------
A-1 Page 1
EXHIBIT A-1
-----------
Description of Land - Biloxi
▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ of Biloxi, Second Judicial District
of ▇▇▇▇▇▇▇▇ County, Mississippi, as shown on the map or plat thereof on file and
of record in Plat Book 14, pages 4-6 in the office of the Chancery Clerk of the
Second Judicial District of ▇▇▇▇▇▇▇▇ County, Mississippi.
------
A-1
A-2 Page 1
EXHIBIT A-2
-----------
Description of Land - Auburn
PARCEL ONE
A PORTION OF THE SOUTHEAST QUARTER OF SECTION 29, TOWNSHIP 13 NORTH, RANGE 8
EAST, M.D.B. & M., IN THE UNINCORPORATED AREA OF PLACER COUNTY, CALIFORNIA,
SHOWN AS "REMAINDER" ON PARCEL MAP NO. 75529 FILED IN BOOK 28 OF PARCELS MAPS AT
PAGE 85, PLACER COUNTY RECORDS, AND MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE NORTH-SOUTH CENTERLINE OF SAID SECTION 29, A 3/4
INCH DIAMETER IRON PIPE FOUND SET FOR THE SOUTHWEST CORNER OF SAID REMAINDER
PARCEL WHICH BEARS NORTH 0 36' 26" WEST 228.69 FEET FROM THE SOUTH QUARTER
CORNER OF SAID SECTION 29; THENCE FROM THE POINT OF BEGINNING ALONG THE BOUNDARY
OF SAID REMAINDER PARCEL ON THE FOLLOWING (4) CONSECUTIVE COURSES: (1) ALONG
SAID NORTH-SOUTH CENTERLINE NORTH 0 36' 26" WEST 488.26 FEET TO THE CENTERLINE
OF EDUCATION STREET, (2) ALONG SAID STREET CENTERLINE NORTH 89 23' 34" EAST
232.97 FEET, (3) SOUTH 0 36' 26" EAST 484.48 FEET AND (4) SOUTH 88 27' 41"
WEST 233.00 FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NUMBER ▇▇▇-▇▇▇-▇▇▇
PARCEL TWO
AN EASEMENT FOR INGRESS, EGRESS AND DRIVEWAY PURPOSES OVER, UPON AND ACROSS THE
PROPERTY SET FORTH IN THE DOCUMENT ENTITLED "RECIPROCAL EASEMENT AGREEMENT DATED
NOVEMBER 11, 1995 AND RECORDED NOVEMBER 17, 1995 AS INSTRUMENT NO. 1995-62386,
PLACER COUNTY RECORDS.
------
B-1
EXHIBIT B
---------
List of Lessor's Personal Property
All furniture, equipment, and tangible personal property, including but not
limited to the following: all fabrics, beds, mattresses, credenzas, desks,
mirrors, framed pictures, prints, art work, tables, chairs, lamps, luggage
racks, draperies, bed spreads, sofas, nightstands, activity tables, stools,
shower curtains and hooks, registration equipment, planters, coat racks, ceiling
fans, memo holders, podiums, stands, window blinds, wastebaskets, copy machines,
file cabinets, typewriters, trash cans, safes, lockers, washers, dryers, towels,
washcloths, linens, blankets, mattress pads, pillows, laundry carts, maid carts,
vacuum cleaners, hand trucks, medical carts, time clocks, clothes hangers, ice
machines, locksetters and equipment, ice bins, blenders, moveable coolers,
beverage dispensers, glass racks, syrup tanks, cash registers, coffee machines,
ranges, fryers, broilers, griddles, hot plates, warmers, toasters, waffle irons,
soup ▇▇▇▇▇, microwaves, heat lamps, timers, dishwashers, coffee grinders,
steamers, ovens, smallwares, china, silverware, glasses, t.v. sets, and supplies
of every type and nature now or hereafter used in the Facility and all
increases, substitutions, replacements, additions and accessions to any such, of
every type, and any certificate of occupancy and architectural drawings with
respect to the Facility; excluding, however, other intangible personal property
relating to the trade or business operated on the Facility, including operating
licenses and good will, and any inventory or vehicles relating to the trade or
business operated on the Facility.
------
1
C-1
EXHIBIT C
---------
Form of Amendment to Lease
--------------------------
This First Amendment to Lease ("Amendment") is dated as of ______________,
---------
200__ by and between ________________________________, a__________________
("Lessor") and ________________________________, a__________________ ("Lessee").
--- ------
RECITALS
A. Lessor and Lessee entered into a lease dated as of _____________ __,
200__ (the "Lease") for the _______________ facility located in
-----
___________________ and the _______________ facility located in
----
___________________.
----
▇. ▇▇▇▇▇▇ and Lessee desire to memorialize their understanding regarding
certain provisions of the Lease.
AGREEMENT
Capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in the Lease. Lessor and Lessee hereby agree as follows:
1. The Commencement Date of the Lease is __________________;
2. The Term of the Lease shall end on __________________;
3. The first Lease Year for the Lease commences on _______________, 200__
and ends on _______________, 200__;
4. Subject to further upward adjustments as provided in Section 3.1 of the
Lease, the initial monthly Minimum Rent payable under the Lease shall be the sum
of $______________;
Except as amended above, the Lease between Lessor and Lessee shall remain in
full force and effect. This Amendment may be executed in any number of
counterparts, all of which together shall constitute one and the same
instrument.
[SIGNATURE PAGE FOLLOWS]
C-2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first above written.
,
HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation a
--
By: By:
Name: Name:
Its: Its:
------
▇-▇
▇-▇
EXHIBIT D
---------
Number of Units at Each Facility
--------------------------------
Biloxi, Mississippi (Loyalton at Biloxi)-81 units
Auburn, California (Emerald Hills)-89 units
------
E-1
EXHIBIT E
---------
LIST OF OTHER LEASES
--------------------
Lease
Lessor Lessee Facility Name City State Date
----
HCPI Trust Emeritus Corporation GREEN ▇▇▇▇▇▇▇ OF ALLENTOWN ALLENTOWN
---------- -------------------- -------------------------- ---------
PA 19-Oct-95
-- ---------
Health Care Property Investors, Inc. Emeritus Corporation SUMMER WIND
--------------------------------------- -------------------- -----------
RESIDENCE BOISE ID 31-Aug-95
--------- ----- -- ---------
Health Care Property Investors, Inc. Emeritus Corporation GREEN ▇▇▇▇▇▇▇
------------------------------------- -------------------- -------------
AT DOVER DOVER DE 16-Oct-95
-------- ----- -- ---------
HCPI Trust Emeritus Corporation COUNTRYSIDE VILLAGE EASLEY SC
----------- --------------------- -------------------- ------ --
26-Jan-96
---------
HCPI Trust Emeritus Corporation SUMMIT PLACE EASLEY SC
---------- -------------------- ------------ ------ --
26-Jan-96
---------
Texas HCP Holding, L.P. Emeritus Corporation THE PALISADES EL PASO
------------------------- -------------------- ------------- -------
TX 1-Apr-97
-- --------
Texas HCP Holding, L.P. Emeritus Corporation CAMBRIA LODGE EL PASO
------------------------- -------------------- ------------- -------
TX 23-Aug-96
-- ---------
Health Care Property Investors, Inc. Emeritus Corporation SEABROOK
---------------------------------------- --------------------- --------
RETIREMENT EVERETT WA 27-Dec-95
---------- ------- -- ---------
Health Care Property Investors, Inc. Emeritus Corporation ROSEWOOD COURT
------------------------------------ -------------------- --------------
FULLERTON CA 29-Mar-96
--------- -- ---------
Health Care Property Investors, Inc. Emeritus Corporation HERITAGE LODGE
------------------------------------ -------------------- --------------
HENDERSONVILLE NC 26-Jan-96
-------------- -- ---------
Health Care Property Investors, Inc. Emeritus Corporation HERITAGE HILLS
------------------------------------ -------------------- --------------
RETIREMENT HENDERSONVILLE NC 26-Jan-96
---------- -------------- -- ---------
Health Care Property Investors, Inc. Emeritus Corporation PINE PARK
---------------------------------------- --------------------- ---------
HENDERSONVILLE NC 26-Jan-96
-------------- -- ---------
HCPI Trust Emeritus Corporation GREEN ▇▇▇▇▇▇▇ OF LATROBE LATROBE
----------- --------------------- -------------------------- -------
PA 19-Oct-95
-- ---------
Texas HCP Holding, L.P. Emeritus Corporation SHERWOOD PLACE ODESSA
------------------------- -------------------- -------------- ------
TX 27-Dec-95
-- ---------
Health Care Property Investors, Inc. Emeritus Corporation GREEN ▇▇▇▇▇▇▇
------------------------------------- -------------------- -------------
AT PAINTED POST PAINTED POST NY 27-Dec-95
--------------- ------------ -- ---------
Health Care Property Investors, Inc. Emeritus Corporation THE ARBOR AT
-------------------------------------- -------------------- ------------
OLIVE GROVE PHOENIX AZ 11-Aug-95
----------- ------- -- ---------
Health Care Property Investors, Inc. Emeritus Corporation RENTON VILLA
-------------------------------------- -------------------- ------------
RENTON WA 11-Aug-95
------ -- ---------
Texas HCP Holding, L.P. Emeritus Corporation ▇▇▇▇▇ ▇▇▇▇ SAN ANTONIO
------------------------ -------------------- ---------- -----------
TX 1-Apr-97
-- --------
Texas HCP Holding, L.P. Emeritus Corporation REDWOOD SPRINGS SAN
-------------------------- --------------------- --------------- ---
MARCOS TX 1-Apr-97
------ -- --------
HCPI Trust Emeritus Corporation SKYLYN PLACE SPARTANBURG SC
---------- -------------------- ------------ ----------- --
26-Jan-96
---------
Health Care Property Investors, Inc. Emeritus Corporation LAUREL LAKES
-------------------------------------- -------------------- ------------
ESTATE VOORHEES NJ 27-Dec-95
------ -------- -- ---------
Health Care Property Investors, Inc. Emeritus Corporation ▇▇▇▇▇▇▇▇ CREEK
------------------------------------ -------------------- --------------
WALLA WALLA WA 24-Jul-96
----------- -- ---------
(a) Mortgage
ADDENDUM TO LEASE DATED SEPTEMBER 5, 2001
BETWEEN HEALTH CARE PROPERTY INVESTORS, INC.,
A MARYLAND CORPORATION,
AS LESSOR, AND
EMERITUS CORPORATION,
A WASHINGTON CORPORATION,
AS LESSEE
I. FOR RESTARTING AUTOMATIC NUMBERING ONLY -- WILL NOT PRINT!
46.1 Interpretation. The provisions of this Addendum shall be included
--------------
in and form a part of this Lease and shall supercede and override any other
provision in this Lease to the extent the same are inconsistent.
46.2 Provisions Relating to Master Lease. Lessor and Lessee hereby
----------------------------------------
acknowledge and agree that this Lease is and the parties intend the same for all
purposes to be treated as a single, integrated and indivisible agreement.
Lessee acknowledges that in order to induce Lessor to lease the Leased Property
of each Facility to Lessee and as a condition thereto, Lessor insisted that the
parties execute this Lease covering all of the Facilities in a single,
integrated and indivisible agreement.
46.3 Additional Defined Terms and Modifications to Defined Terms. For all
-------------------------------------------------------------
purposes of this Lease, except as otherwise expressly provided or unless the
context otherwise requires, the terms defined in this Section 46.3 or defined
elsewhere in this Lease and modified in this Section 46.3 shall have the
meanings assigned to them in this Section 46.3 or as so modified in this Section
46.3, as applicable:
Allocated Lessor's Initial Investment: With respect to each Facility, the
--------------------------------------
amount of total Lessor's Initial Investment payable hereunder from time to time
and allocated to such Facility as follows:
Biloxi 42%
Auburn 58%
Allocated Minimum Rent and CPI Rent: With respect to each Facility, the
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amount of total Minimum Rent and CPI Rent payable hereunder from time to time
and allocated to such Facility as follows:
Biloxi 42%
Auburn 58%
Facilities: Each facility currently being operated on the applicable
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portion of the Leased Property as more particularly described on Exhibit A-1
-----------
(Biloxi) and Exhibit A-2 (Auburn) attached hereto and incorporated herein by
----- ----------------------
this reference (each, a "Facility").
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Fixtures: With respect to each Facility, the Fixtures (as defined in
--------
Article I) of such Facility.
Land: With respect to each Facility, the Land (as defined in Article I) of such
----
Facility.
Leased Improvements: With respect to each Facility, the Leased Improvements (as
--------------------
defined in Article I) of such Facility.
Leased Property: With respect to each Facility, the Leased Property (as defined
----------------
in Article I) of such Facility.
Lessee's Personal Property: With respect to each Facility, Lessee's Personal
-----------------------------
Property (as defined in Article II) of such Facility.
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Lessor's Personal Property: With respect to each Facility, Lessor's Personal
----------------------------
Property (as defined in Article I) of such Facility.
Minimum Repurchase Price: With respect to each Facility at any given time, the
-------------------------
sum of (i) the Allocated Lessor's Initial Investment of such Facility, plus (ii)
any Capital Addition Costs funded by Lessor with respect to such Facility.
Primary Intended Use. With respect to each Facility, an assisted living
----------------------
facility containing the number of units set forth on Exhibit D attached hereto
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and incorporated herein by this reference with respect to such Facility and such
other uses necessary or incidental to such use.
Related Rights: With respect to each Facility, the Related Rights (as defined
----------------
in Article I) of such Facility.
46.4 Capital Additions and Other Alterations. For purposes of Section
---------------------------------------
10.1 of this Lease, the amount of "$100,000.00" as set forth therein shall be
applied and calculated separately with respect to each Facility.
46.5 Insurance Requirements. Lessee shall maintain the insurance
-----------------------
required by Article XIII with respect to the Leased Property of each Facility
and the Personal Property and operations thereon.
46.6 Insurance Proceeds and Casualty. The provisions of Article XIV shall
--------------------------------
apply separately with respect to each Facility. Accordingly, without limiting
the generality of the foregoing, if a Facility is damaged or destroyed and
Lessee offers to purchase the Leased Property of such Facility pursuant to any
provision of such Article XIV and Lessor shall accept such offer, then this
Lease shall terminate as to the Leased Property of such damaged Facility upon
payment of the purchase price therefor and Lessor shall remit to Lessee all
insurance proceeds pertaining to the Leased Property of such damaged Facility
being held in trust by Lessor. In the event that this Lease shall terminate
with respect to any damaged Facility in accordance with the terms hereof, such
termination shall not affect the Term of this Lease with respect to the other
Facility, and this Lease shall continue in full force and effect with respect to
such other Facility, except that the total monthly Minimum Rent payable
hereunder shall be reduced by the amount of monthly Allocated Minimum Rent and
CPI Rent with respect to such damaged Facility as to which this Lease has so
terminated.
46.7 Condemnation. The provisions of Article XV shall apply
------------
separately with respect to each Facility. Accordingly, without limiting the
generality of the foregoing, if the Leased Property of a Facility is totally and
permanently taken by Condemnation or a portion of the Leased Property of such
Facility is taken and the Facility is rendered Unsuitable for its Primary
Intended Use, then in either event this Lease shall terminate with respect to
such affected Facility as provided in Article XV. In the event that this Lease
shall so terminate with respect to any such Facility, such termination shall not
affect the Term of this Lease with respect to the other Facility, and this Lease
shall continue in full force and effect with respect to such other Facility,
except that the total monthly Minimum Rent and CPI Rent payable hereunder shall
be reduced by the amount of monthly Allocated Minimum Rent and CPI Rent with
respect to such Facility as to which this Lease has so terminated.
46.8 Events of Default and Remedies.
----------------------------------
(a) If an Event of Default shall have occurred, Lessor may terminate
this Lease pursuant to Section 16.2 and this Addendum Section 46.8 with respect
to any one or both of the Facilities (regardless whether the events giving rise
to such Event of Default emanated from one or more Facilities) by giving Lessee
notice of such termination and the Term shall terminate and all rights of Lessee
under this Lease shall cease with respect to all such Facilities as to which
Lessor has elected to so terminate this Lease. If an Event of Default shall
have occurred and be continuing, whether or not this Lease has been terminated
with respect to any one or more (including all, if so elected by Lessor) of the
Facilities pursuant to Section 16.2 and this Addendum Section 46.8, Lessee
shall, to the extent permitted by law, if required by Lessor so to do,
immediately surrender to Lessor possession of the Leased Property of all of the
Facilities and any Capital Additions as to which Lessor has so elected to
terminate this Lease and quit the same and Lessor may enter upon and repossess
the Leased Property of such Facility(ies) and any Capital Additions by
reasonable force, summary proceedings, ejectment or otherwise, and may remove
Lessee and all other Persons and any of Lessee's Personal Property from the
Leased Property of any such Facility(ies) and any Capital Additions.
(b) The provisions of Section 16.3 shall apply separately with respect to
each Facility (including all, if applicable) as to which Lessor has elected to
terminate this Lease following an Event of Default. For purposes of computing
the unpaid Rent with respect to each Facility as to which this Lease has been so
terminated following and Event of Default, such unpaid Rent shall be equal to
the unpaid Allocated Minimum Rent and CPI Rent for each such Facility, together
with all Additional Charges payable with respect to each such Facility.
(c) If an Event of Default shall have occurred, Lessor may require Lessee to
purchase the Leased Property pursuant to Section 16.5 and this Addendum Section
46.8 with respect to any one or both of the Facilities (regardless whether the
events giving rise to such Event of Default emanated from one or more
Facilities) by giving Lessee notice of such obligation to purchase. If Lessor
exercises such right, Lessor shall convey the Leased Property to Lessee on the
date fixed therefor in accordance with the provisions of Article XVIII upon
receipt of the purchase price therefor and this Lease shall thereupon terminate
for such Facility or Facilities that Lessor required Lessee to purchase. Any
purchase by Lessee of the Leased Property of one or both of the Facilities
pursuant to Section 16.5 and this Addendum Section 46.8 shall be in lieu of
damages specified in Section 16.3. For the purpose of calculating Minimum Rent
and CPI Rent for such Facility for which Lessor has required Lessee to purchase
the Leased Property, the same shall be equal to the then applicable Allocated
Minimum Rent and CPI Rent for such Facility.
(d) Notwithstanding anything in this Lease to the contrary, in the event
that this Lease shall be terminated by Lessor with respect to any Facility by
reason of an Event of Default as provided in Sections 16.2 and/or 16.3 of this
Lease (as modified by this Addendum Section 46.8) or by reason of Lessor's
exercise of its rights pursuant to Section 16.5 of this Lease (as modified by
this Addendum Section 46.8), such termination shall not affect the applicable
Term of this Lease with respect to the other Facility not so terminated by
Lessor, and this Lease shall continue in full force and effect with respect to
such other Facility, except that the total monthly Minimum Rent and CPI Rent
payable hereunder shall be reduced by the amount of monthly Allocated Minimum
Rent and CPI Rent of the Facility as to which this Lease has so terminated,
subject, however, to Lessor's right to recover damages or to receive the
applicable purchase price in each case with respect to such Facility as to which
this Lease has been so terminated as provided in the applicable provisions of
Article XVI of this Lease (as modified by this Addendum Section 46.8).
46.9 Provisions Relating to Purchase of the Leased Property of a
------------------------------------------------------------------
Facility(ies). For purposes of calculating the unpaid Rent for any Facility
-------
purchased by Lessee, the same shall be equal to the then applicable Allocated
Minimum Rent and CPI Rent for such Facility together with all Additional Charges
payable for such Facility.
46.10 Renewal Matters. Lessee shall only have the right to renew this Lease
---------------
for the Extended Term pursuant to Section 19.1 with respect to all of the
Facilities (i.e., as a group) then being leased by Lessee under this Lease at
time of exercise of such right.
46.11 Governing Law. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTION
--------------
45.1.6, THIS LEASE (AND ANY AGREEMENT FORMED PURSUANT TO THE TERMS HEREOF) SHALL
BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF CALIFORNIA (WITHOUT REGARD OF PRINCIPLES OR CONFLICTS OF LAW)
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT THAT (A) TO THE
EXTENT THAT APPLICATIONS OF THE LAWS OF THE STATE OF CALIFORNIA WOULD DEROGATE
FROM THE RIGHTS OF LESSOR UNDER THE LAWS OF THE STATE IN WHICH THE LEASED
PROPERTY OF A FACILITY IS LOCATED WITH RESPECT TO ENFORCEMENT OF THE RIGHTS AND
REMEDIES OF LESSOR UNDER THIS LEASE WITH RESPECT TO SUCH FACILITY, THEN THE LAWS
OF THE STATE IN WHICH SUCH FACILITY IS LOCATED WILL CONTROL AND (B) ALL MATTERS
RELATING TO RECOVERY OF POSSESSION OF THE LEASED PROPERTY OF ANY FACILITY (SUCH
AS AN ACTION FOR UNLAWFUL DETAINER OR OTHER SIMILAR ACTION) SHALL BE CONSTRUED
AND ENFORCED ACCORDING TO, AND GOVERNED BY, THE LAWS OF THE STATE IN WHICH THE
LEASED PROPERTY OF SUCH FACILITY IS LOCATED.
46.12 Condition of the Leased Property. The acknowledgements contained in
----------------------------------
Section 7.1 of this Lease are subject to the following:
(a) With respect to the Biloxi Facility, that certain Phase One
Environmental Site Assessment dated August 6, 2001, prepared by The ▇▇▇▇▇▇▇
Group for Lessee, and
(b) With respect to the Auburn Facility, that certain Phase One
Environmental Site Assessment dated March 16, 2001, prepared by The ▇▇▇▇▇▇▇
Group for Lessee.
46.13 New Lease. Lessor shall have the right, at any time and from
----------
time to time during the Term for any purpose, by written notice to Lessee, to
require Lessee to execute an amendment to this Lease whereby the Leased Property
of one or more Facilities (individually, a "Separated Property" or collectively,
the "Separated Properties") is separated and removed from this Lease, and to
simultaneously execute a substitute lease with respect to such Separated
Property(ies), in which case:
(a) Lessor and Lessee shall execute a new lease (the "New Lease") for
such Separated Property(ies), effective as of the date specified in Section
46.13(c) below (the "New Lease Effective Date"), in the same form and substance
as this Lease, but with such changes thereto as necessary to reflect the
separation of the Separated Property(ies) from the balance of the Leased
Property, including the following:
(i) The total monthly Minimum Rent payable under such New
Lease shall be the total applicable monthly Allocated Minimum Rent (pursuant to
Section 46.3 above) with respect to such Separated Property(ies);
(ii) All Minimum Rent escalations under the New Lease shall be at
the times and in the amounts set forth in this Lease for Minimum Rent increases;
(iii) The New Lease shall provide that the lessee thereunder shall
be responsible for the payment, performance and satisfaction of all duties,
obligations and liabilities arising under this Lease, insofar as they relate to
the Separated Property(ies), that were not paid, performed and satisfied in full
prior to the effective date of the New Lease (and Lessee under this Lease shall
also be responsible for the payment, performance and satisfaction of the
aforesaid duties, obligations and liabilities not paid, performed and satisfied
in full prior to the effective date of such New Lease).
(b) Lessor and Lessee shall also execute an amendment to this Lease
effective as of the New Lease Date reflecting the separation of the Separated
Property(ies) from the balance of the Leased Property and making such
modifications to this Lease as are necessitated thereby.
(c) In the case of any New Lease that is entered into in accordance
with this Section 46.13, such New Lease shall be effective on the date which is
the earlier of (i) the date the New Lease is fully executed and delivered by the
parties thereto and (ii) the date specified in the written notice from Lessor to
Lessee requiring a New Lease as described above, which date shall be no sooner
than ten (10) days after the date such notice is issued.
(d) Lessor and Lessee shall take such actions and execute and deliver
such documents, including without limitation the New Lease and an amendment to
this Lease, as are reasonably necessary and appropriate to effectuate the
provisions and intent of this Section 46.13.
(e) Each party shall bear its own costs and expenses in connection with
any New Lease entered into in accordance with this Section 46.13.
[Signature Page Follows]
SIGNATURE PAGE TO ADDENDUM TO LEASE
IN WITNESS WHEREOF, the parties have caused this Addendum to be executed
and their respective corporate seals to be hereunto affixed and attested by
their respective officers thereunto duly authorized.
"LESSOR"
"LESSEE"
HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation
EMERITUS CORPORATION, a Washington corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------- ----------------------------
Its: Senior Vice President Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------- -----------------------
Its: Vice President of Finance
----------------------------
