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Exhibit 10.57
(________)
FORM OF LEASE
THIS LEASE ("Lease") dated as of June 15, 1998, is entered into by and
between CAPSTONE CAPITAL OF VIRGINIA, INC., an Alabama corporation having its
principal office at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx
00000 ("Lessor") and ALCO IX, L.L.C., a North Carolina limited liability
company, having its principal office at 00 Xxxxx Xxxxxx X.X., Xxxxxxx, Xxxxx
Xxxxxxxx 00000 ("Lessee").
ARTICLE I
LEASED PROPERTY; TERM
Upon and subject to the terms and conditions hereinafter set forth,
Lessor leases to Lessee and Lessee rents from Lessor all of Lessor's rights and
interest in and to the following real property (collectively, the "Leased
Property"):
(a) the real property more particularly described on Exhibit A attached
hereto together with all covenants, licenses, privileges and benefits thereto
belonging and any easements, rights-of-way, rights of ingress and egress or
other interests of Lessor in, on or to any land, highway, street, road or
avenue, open or proposed, in, on, across, in front of abutting or adjoining such
real property, including all strips and gores adjacent to or lying between such
real property and any adjacent real property (the "Land");
(b) all buildings, structures, Fixtures (as hereinafter defined) and
other improvements of every kind (including all alleyways and connecting
tunnels, crosswalks, sidewalks, landscaping, parking lots and structures and
roadways appurtenant to such buildings and structures presently or hereafter
situated upon the Land, and Capital Additions financed by Lessor (but
specifically excluding Capital Additions financed by Lessee), drainage and all
above-ground and underground utility structures) (collectively the "Leased
Improvements");
(c) all permanently affixed 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 and apparatus, sprinkler
systems and fire and theft protection equipment, carpet, moveable or immovable
walls or partitions and built-in oxygen and
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vacuum systems, all of which are hereby deemed by the parties hereto to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto, but specifically excluding all items included
within the category of Personal Property (collectively the "Fixtures");
(d) the Personal Property;
(e) to the extent permitted by law, all permits, approvals and other
intangible property or any interest therein now or hereafter owned or held by
Lessor in connection with the Leased Property, or any business or businesses now
or hereafter conducted by Lessee or any Tenant or with the use thereof,
including all leases, contract rights, agreements, trade names, water rights and
reservations, zoning rights, business licenses and warranties (including those
relating to construction or fabrication) related to the Leased Property or any
part thereof, but specifically excluding the general corporate trademarks,
service marks, logos, insignia or books and records of Lessor or Lessee; and
(f) all site plans, surveys, soil and substrata studies, architectural
drawings, plans and specifications, engineering plans and studies, floor plans,
landscape plans, and other plans and studies that relate to the Land or the
Leased Improvements and are in Lessor's possession or control.
SUBJECT, HOWEVER, to the matters set forth on Exhibit B attached hereto
(the "Permitted Exceptions"), to have and to hold for a fixed term of 10 years
(the "Initial Term") commencing at 12:01 a.m. on June 15, 1998 (the
"Commencement Date") and ending at midnight on June 14, 2008, as may be extended
pursuant to the terms of Article 34.
ARTICLE II
RENT
2.1 MINIMUM RENT AND ADJUSTMENTS TO MINIMUM RENT. Lessee shall pay to
Lessor without notice, demand, set off (except as set forth in Section 30.2 or
Article XXXII hereof) or counterclaim, in advance in lawful money of the United
States of America, at Lessor's address set forth herein or at such other place
or to such other person, firms or corporations as Lessor from time to time may
designate in writing, Minimum Rent, as adjusted annually pursuant to Section
2.1(b) during the Term, as follows:
(a) Minimum Rent. Lessee will pay to Lessor as rent (as adjusted from
time to time in accordance with Sections 2.1(b), (c) and (f), the "Minimum
Rent") for the Leased Property the annual sum equal to the product of (i) 1.10
times the Project Amount, times (ii) the sum of (A) the rate, as of the
Commencement Date, equal to the weekly average yield on United States Treasury
Securities - Constant Maturity Series for a term of ten years plus (B) 350 basis
points.
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The Minimum Rent shall be payable in advance in 12 equal, consecutive monthly
installments on the first day of each calendar month during the Term. The
parties shall execute an acknowledgment of the calculation of the initial
Minimum Rent pursuant to this Section 2.1(a) as soon as reasonably practicable
after the Commencement Date. The Minimum Rent shall be prorated for any partial
month, and is subject to adjustment as provided in Sections 2.1(b), 2.1(f) and
9.3(b)(iv) below. As used herein, the term "Project Amount" means the total
amount funded or to be funded or otherwise expended for the acquisition of the
Land and the Personal Property and the development and construction of the
Facility and the other Leased Improvements, pursuant to the Loan Agreement or
otherwise and including all amounts loaned by Capstone to Xxxxxxx X. Xxxxxxxx
(the "Xxxxxxxx Loan"), plus all accrued interest owing now or in the future
under the Loan Agreement and the Xxxxxxxx Loan. The parties agree, subject to
adjustment pursuant to Section 2.1(f) below, that the initial Minimum Rent is
$456,214.00.
(b) Increases to Minimum Rent. Commencing on the first anniversary date
of the Commencement Date and on each anniversary date thereafter throughout the
remainder of the Initial Term and any Extended Term (each such anniversary date
individually being referred to as an "Adjustment Date"), the then current
Minimum Rent shall be increased annually effective as of such Adjustment Date by
125% of the increase in the Consumer Price Index for the Base Period (as defined
below); provided, however, if the increase in the Consumer Price Index for such
Base Period is greater than 2.4%, Lessor and Lessee mutually agree to use their
best efforts to negotiate the increase in Minimum Rent based on the fair rental
value of the Leased Property to become effective on the Adjustment Date.
(c) Capital Expenditures. Beginning on the first (1st) anniversary of
the Commencement Date, Lessee shall make an annual Facility upgrade expenditure
in an amount equal to $200 per bed for capital improvements, such amount to be
increased $50 per bed on each Adjustment Date. If requested by Lessor, Lessee
shall promptly provide evidence of such capital expenditures. In the event
Lessee fails to make the required capital expenditure in any Lease year, Lessee
shall deposit in a money market account with an Acceptable Financial Institution
amounts not less than the difference between the required capital expenditures
and the amounts actually spent. Such account shall be in the name of the Lessor.
Lessee shall make detailed requests for such funds in writing to Lessor in the
same form as a Request pursuant to Section 9.3 hereof. Within 30 days of such
Request, Lessor shall reasonably approve the amount of requested funds and make
mutually agreeable arrangements for the disbursement of the funds or provide
Lessee with written notice in reasonable detail specifying Lessor's objections
to such Request.
(d) Payment of Minimum Rent. All payments of Minimum Rent shall be made
in lawful money of the United States by wire/ACH transfer of same day funds to
Lessor's account or other location specified by Lessor from time to time in
writing on or before 2:00 p.m., Birmingham time, on any Business Day.
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(e) Recalculation of Minimum Rent. The parties agree that the Project
Amount may be estimated as of the Commencement Date. As soon as reasonably
practicable after the determination of the final Project Amount, Lessor will
recalculate the Minimum Rent pursuant to Section 2.1(a) whereupon the parties
will execute an acknowledgment of the recalculated Minimum Rent.
2.2 CALCULATION OF INCREASES TO MINIMUM RENT. On or about each
Adjustment Date Lessor will calculate the increase in the Minimum Rent pursuant
to the provisions of Section 2.l(b) and will provide Lessee with written notice
of same.
2.3 ADDITIONAL CHARGES. Lessee will also pay and discharge as and when
due (a) all other amounts, liabilities, obligations and Impositions, which
Lessee assumes or agrees to pay under this Lease including, to the extent
applicable, any condominium association dues, assessments or other charges and
(b) in the event of any failure on the part of Lessee to pay any of those items
referred to in clause (a) above, Lessee will 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 (a) and (b) above
being referred to herein collectively as the "Additional Charges"), and Lessor
shall have all legal, equitable and contractual rights, powers and remedies
provided in this Lease, by statute or otherwise, in the case of non-payment of
the Additional Charges as well as the Minimum Rent. If any installment of
Minimum Rent or Additional Charges (but only as to those Additional Charges
which are payable directly to Lessor) shall not be paid within ten (10) days
after the date when due, Lessee will pay Lessor on demand, as Additional
Charges, interest (to the extent permitted by law) computed at the Overdue Rate
on the amount of such installment, from the due date when due to the date of
payment in full thereof. In the event Lessor provides Lessee with written notice
of failure to timely pay any installment of Minimum Rent or any Additional
Charges pursuant to Section 15.1(b) more than three times within any
twelve-month period, Lessee shall pay an administrative fee to Lessor in the
amount of $500.00 per year for such twelve-month period. To the extent that
Lessee pays any Additional Charges to Lessor or the Facility Mortgagee pursuant
to any requirement of this Lease, Lessee shall be relieved of its obligation to
pay such Additional Charges to the entity to which such Additional Charges would
otherwise be due. Additional Charges shall be deemed Rent hereunder.
2.4 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 and the payments of Additional Charges throughout the Term but subject to
any provisions of this Lease which expressly provide for payments by Lessor or
the adjustment of the Rent or other charges.
2.5 RENT COVERAGE.
(a) Beginning with the end of the second calendar quarter after the
Commencement Date, for the Applicable Period, the Facility must achieve and
maintain the following:
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(i) A Rent Coverage Ratio of not less than 1.25 to 1.0, and
(ii) An Adjusted Rent Coverage Ratio of not less than 1.0 to
1.0.
For purposes of this provision, the following terms shall have the
meanings indicated:
"Rent Coverage Ratio" means, for each Applicable Period, the ratio of
(i) Cash Flow, plus management fees as determined on an accrual basis of
accounting for the Facility, to (ii) the Minimum Rent payable under the Lease.
"Adjusted Rent Coverage Ratio" means, for each Applicable Period, the
ratio of (i) Cash Flow to (ii) the Minimum Rent payable under the Lease.
"Cash Flow" means the pre-tax income of the Facility, plus (i) lease
expense with respect to the Lease and (ii) non-cash expenses or allowances for
depreciation and amortization with respect to the Facility. In calculating
"pre-tax" income, any extraordinary income or extraordinary loss shall be
excluded.
(b) The Rent Coverage Ratio and the Adjusted Rent Coverage Ratio will
be measured quarterly, commencing with the first measurement at the end of the
second calendar quarter after the Commencement Date. The first such measurement
shall cover an Applicable Period of 3 months; the second such measurement will
cover an Applicable Period of 6 months; the third such measurement will cover an
Applicable Period of 9 months, and each subsequent measurement will cover an
Applicable Period of 12 months.
ARTICLE III
IMPOSITIONS
3.1 PAYMENT OF IMPOSITIONS. Subject to Article XI relating to permitted
contests, Lessee will pay or cause to be paid all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible, and Lessee will promptly,
upon request, furnish to Lessor copies of official receipts or other
satisfactory proof evidencing such payments. Lessee's obligation to pay such
Impositions and the amount thereof shall be deemed absolutely fixed upon the
date such Impositions become a lien upon the Leased Property or any part
thereof. If any such Imposition may lawfully be paid in installments (whether or
not interest shall accrue on the unpaid balance of such Imposition), Lessee may
exercise the option to pay the same (and any accrued interest on the unpaid
balance of such Imposition) in installments and, in such event, shall pay such
installments during the Term hereof as the same becomes due and before any fine,
penalty, premium, further interest or cost may be added thereto. Lessor, at its
expense, shall, to the extent permitted by applicable law, prepare and file all
tax returns and reports as may be required by governmental authorities in
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respect of Lessor's net income, gross receipts, franchise taxes and taxes on its
capital stock. Lessee, at its expense, shall, to the extent permitted by
applicable laws and regulations, prepare and file all other tax returns and
reports in respect of any Imposition as may be required by governmental
authorities. If any refund shall be due from any taxing authority in respect of
any Imposition paid by Lessee, the same shall be paid over to or retained by
Lessee if no Event of Default shall have occurred hereunder and be continuing.
Any such funds retained by Lessor due to an Event of Default shall be applied as
provided in Article XV. Lessor and Lessee shall, upon request of the other,
provide such data as is maintained by the party to whom the request is made with
respect to the Leased Property as may be necessary to prepare any required
returns and reports. In the event governmental authorities classify any property
covered by this Lease as personal property, Lessee shall file all personal
property tax returns in such jurisdictions where filing is required. Lessor and
Lessee will provide the other party, upon request, with cost and depreciation
records necessary for filing returns for any property so classified as personal
property. Where Lessor is legally required to file personal property tax
returns, and Lessee is obligated for the same hereunder, Lessee will be provided
with copies of assessment notices in sufficient time for Lessee to file a
protest. Lessee may upon giving 30 days' prior written 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, if
requested by Lessee and at Lessee's expense as aforesaid, shall fully cooperate
with Lessee in such protest, appeal, or other action. Xxxxxxxx for reimbursement
by Lessee to Lessor of personal property taxes shall be accompanied by copies of
an invoice therefor and payments thereof which identify the personal property
with respect to which such payments are made. Lessor will cooperate with Lessee
in order that Lessee may fulfill its obligations hereunder, including the
execution of any instruments or documents reasonably requested by Lessee.
3.2 PRORATION OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates shall be prorated between
Lessor and Lessee, whether or not such Imposition is imposed before or after
such termination, and Lessee's and Lessor's obligation to pay their respective
prorated shares thereof shall survive such termination.
3.3 UTILITY CHARGES. Lessee will, or will cause Tenants to, contract
for, in its own name, and will pay or cause to be paid all charges for,
electricity, power, gas, oil, water and other utilities used in the Leased
Property during the Term.
3.4 INSURANCE PREMIUMS. Lessee will contract for or cause to be
contracted for, in Lessee's own name, and will pay or cause to be paid all
premiums for, the insurance coverage required to be maintained by Lessee
pursuant to Article XII during the Term.
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ARTICLE IV
NO TERMINATION
Except as provided in this Lease and to the extent provided by law,
Lessee shall remain bound by this Lease in accordance with its terms and shall
neither take any action without the consent of Lessor to modify surrender or
terminate the same, nor seek nor be entitled to any abatement, deduction,
deferment or reduction of Rent, or set-off against the Rent, nor shall the
respective obligations of Lessor and Lessee be otherwise affected by reason of
(a) any damage to, or destruction of, the Leased Property or any portion thereof
from whatever cause or any Taking of the Leased Property or any portion thereof,
except as otherwise provided in Articles XIII or XIV, (b) the lawful or unlawful
prohibition of or restriction upon, Lessee's use of the Leased Property, or any
portion thereof, or the interference with such use by any person, corporation,
partnership or other entity or by reason of eviction by paramount title, (c) any
claim which Lessee has or might have against Lessor or by reason of any default
or breach of any warranty by Lessor under this Lease or any other agreement
between Lessor and Lessee or to which Lessor and Lessee are parties, (d) any
bankruptcy, insolvency, reorganization, composition, readjustment, liquidation,
dissolution, winding up or other proceedings affecting Lessor or any assignee or
transferee of Lessor, or (e) for any other cause whatsoever whether similar or
dissimilar to any of the foregoing. Lessee hereby specifically waives all rights
arising from any occurrence whatsoever which may now or hereafter be conferred
upon it by law to (i) modify, surrender or terminate this Lease or quit or
surrender the Leased Property or any portion thereof, or (ii) 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. 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. Notwithstanding the foregoing, Lessee shall have the
right by separate and independent action to pursue any claim or seek any damages
it may have against Lessor as a result of a breach by Lessor of the terms of
this Lease.
ARTICLE V
OWNERSHIP OF LEASED PROPERTY
5.1 OWNERSHIP OF THE PROPERTY. Lessee acknowledges that the Leased
Property is the property of Lessor and that Lessee has only the right to the
possession and use of the Leased Property upon the terms and conditions of this
Lease.
5.2 PERSONAL PROPERTY. Lessee may (and shall as provided hereinbelow)
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 Personal Property, and may
remove, replace or substitute for the same
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from time to time in the Ordinary Course of Business. Lessee shall provide and
maintain during the entire Term all such Personal Property as shall be necessary
in order to operate the Facility in compliance with all licensure and
certification requirements, in compliance with all applicable Legal Requirements
and Insurance Requirements and otherwise in accordance with customary practice
in the industry for the Primary Intended Use. Lessee shall provide Lessor with a
list of Personal Property provided by Lessee, updated at least semi-annually for
all items of Personal Property with a value in excess of $50,000. In addition
Lessee shall grant to Lessor a security interest in certain personal property of
Lessee as more particularly described in an Assignment and Security Agreement
executed on even date herewith and substantially in the form attached hereto as
Exhibit C.
ARTICLE VI
CONDITION AND USE OF LEASED PROPERTY
6.1 CONDITION OF THE LEASED PROPERTY. Lessee acknowledges receipt and
delivery of possession of the Leased Property and that Lessee has examined and
otherwise acquired knowledge of the condition of the Leased Property prior to
the execution and delivery of this Lease and has found the same to be in good
order and repair and satisfactory for its purpose hereunder. Lessee is leasing
the Leased Property "as is" in its present condition. Lessee waives any claim or
action against Lessor in respect of the condition of the Leased Property. LESSOR
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE
LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE,
SUITABILITY, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE,
OR AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT
BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES
THAT THE LEASED PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT
IN ALL RESPECTS.
6.2 USE OF THE LEASED PROPERTY.
(a) After the Commencement Date and during the entire Term, Lessee
shall use or cause to be used the Leased Property and the improvements thereon
as a personal care facility and for such other uses as may be necessary in
connection with or incidental to such use (the "Primary Intended Use"). Lessee
shall not use the Leased Property or any portion thereof for any other use
without the prior written consent of Lessor, which consent shall not be
unreasonably withheld or delayed.
(b) Lessee covenants that it will obtain and maintain all material
approvals needed to use and operate the Leased Property and the Facility for the
Primary Intended Use in compliance
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with all applicable Legal Requirements.
(c) Lessee covenants and agrees that during the Term it will use its
reasonable best efforts to operate continuously the Leased Property in
accordance with its Primary Intended Use and to maintain its certifications for
reimbursement, if any, and licensure and its accreditation, if compliance with
accreditation standards is required to maintain the operations of the Facility
and if a failure to comply would adversely affect operations of the Facility.
(d) Lessee shall not commit or suffer to be committed any waste
(ordinary wear and tear excepted) on the Leased Property or in the Facility or
cause or permit any nuisance thereon.
(e) Lessee shall neither suffer nor permit the Leased Property or any
portion thereof, including any Capital Addition whether or not financed by
Lessor, to be used in such a manner as (i) might reasonably tend to impair
Lessor's estate therein or in any portion thereof, or (ii) may reasonably result
in a claim or claims of adverse usage or adverse possession by the public, as
such, or of implied dedication of the Leased Property or any portion thereof.
(f) Lessee will not utilize any Hazardous Materials on the Leased
Property except in accordance with applicable Legal Requirements and will not
permit any contamination which may require remediation under any applicable
Hazardous Materials Law. Lessee agrees not to dispose of any Hazardous Materials
or substances within the sewerage system of the Leased Property, and that it
will handle all "red bag" wastes in accordance with applicable Hazardous
Materials Laws.
6.3 MANAGEMENT OF FACILITY. Unless otherwise agreed to in writing by
Lessor (i) Lessee shall cause the Facility to be managed (including any leasing
activities) at all times by Lessee or a manager approved by Lessor, (ii) Lessee
shall not enter into any agreement (oral or written) with respect to such
management and leasing activities unless the terms thereof and the proposed
manager or leasing agent have been approved in writing by Lessor, (iii) all such
management or leasing agreements must be in writing, and (iv) all management or
leasing agreements with an Affiliate of Lessee must contain provisions to the
effect that (A) the obligation of Lessee to pay management fees is subordinate
to its obligation to pay the Rent, and (B) the manager shall not have the right
to collect any management fees during the continuance of an Event of Default.
Pursuant to clause (ii) above, Lessor hereby approves the terms of the
Management Agreement and the Management Company as the initial manager and
leasing agent of the Facility. The parties acknowledge that the Management
Company is authorized to satisfy the obligations of, and to cure any default by,
Lessee hereunder.
6.4 LESSOR TO GRANT EASEMENTS. Lessor will, from time to time, at the
request of Lessee and at Lessee's cost and expense, but subject to the approval
of Lessor (a) grant easements and other rights in the nature of easements, (b)
release existing easements or other rights in the nature of easements which are
for the benefit of the Leased Property, (c) dedicate or transfer
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unimproved portions of the Leased Property for road, highway or other public
purposes, (d) execute petitions to have the Leased Property annexed to any
municipal corporation or utility district, (e) execute amendments to any
covenants and restrictions affecting the Leased Property, and (f) execute and
deliver to any person such instruments as may be necessary or 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 (and such other information as Lessor may
reasonably require confirming) that such grant, release, dedication, transfer,
petition or amendment has no adverse effect on the Primary Intended Use of the
Leased Property and does not reduce the value thereof.
ARTICLE VII
LEGAL, INSURANCE AND FINANCIAL REQUIREMENTS
7.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS. Subject to
Article XI relating to permitted contests, Lessee, at its expense, will promptly
(a) comply with all material Legal Requirements and Insurance Requirements in
respect of the use, operation, maintenance, repair and restoration of the Leased
Property, whether or not compliance therewith shall require structural change in
any of the Leased Improvements or interfere with the use and enjoyment of the
Leased Property, and (b) directly or indirectly with the cooperation of Lessor,
but at Lessee's sole cost and expense, procure, maintain and comply with all
material licenses, certificates of need, if any, and other authorizations
required for (i) any use of the Leased Property then being made, and for (ii)
the proper erection, installation, operation and maintenance of the Leased
Improvements or any part thereof, including any Capital Additions.
7.2 LEGAL REQUIREMENT COVENANTS. Lessee covenants and agrees that the
Leased Property shall not be used for any unlawful purpose. Lessee shall,
directly or indirectly with the cooperation of Lessor, but at Lessee's sole cost
and expense, acquire and maintain all material licenses, certificates, permits
and other authorizations and approvals needed to operate the Leased Property in
its customary manner for the Primary Intended Use and any other use conducted on
the Leased Property as may be permitted from time to time hereunder. Lessee
further covenants and agrees that Lessee's use of the Leased Property and
Lessee's maintenance, alteration, and operation of the same, and all parts
thereof, shall at all times conform to all applicable Legal Requirements.
7.3 OCCUPANCY. From and after the end of the fifth calendar year
following the Commencement Date, the Lessee must achieve and maintain a daily
average occupancy of the Facility of not less than 75% for each calendar
quarter, based on an effective capacity of ______ beds. For the first quarter
that the Facility fails to achieve and maintain this daily average occupancy,
Lessee shall cause the Manager to use its best efforts to increase occupancy at
the Facility. After the Facility fails to achieve and maintain this daily
average occupancy for two (2)
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consecutive calendar quarters, Lessee shall engage a consultant acceptable to
Lessor, with recognized expertise in the long term care industry, to assist
Manager in improving the Facility's occupancy level. If for three (3)
consecutive quarters the Facility fails to maintain its occupancy requirements
and if at such time the Rent Coverage Ratio for the Facility is less than 1.40
to 1.0, then, for so long as such conditions exist, the Lessee shall not be
permitted to exercise its purchase rights provided for in Section 29 or its
renewal rights provided for in Section 34.
ARTICLE VIII
REPAIRS; RESTRICTIONS AND ANNUAL INSPECTIONS
8.1 MAINTENANCE AND REPAIR.
(a) Lessee, at its expense, will keep the Leased Property and all
private roadways, sidewalks, and curbs appurtenant thereto in reasonably 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, the age of the Leased Property or any
portion thereof), and except as otherwise provided in Articles XIII and XIV,
with reasonable promptness will make all necessary and appropriate repairs
thereto of every kind and nature (including remodeling to the extent necessary
to maintain the Leased Property in a condition substantially the same as exists
on the date hereof), whether interior or exterior, structural or non-structural,
ordinary or extraordinary, foreseen or unforeseen or arising by reason of a
condition existing prior to or after the commencement of the Term of this Lease
(concealed or otherwise). All repairs and remodeling shall, to the extent
reasonably achievable, be at least equivalent in quality to the original work
and shall be accomplished by Lessee or a party selected by Lessee. Lessee will
not take or omit to take any action the taking or omission of which might
materially impair the value or usefulness of the Leased Property or any part
thereof for the Primary Intended Use. If Lessee fails to complete or to
diligently pursue completion of any of its obligations hereunder, or if Lessor
reasonably determines that action is necessary and is not being taken Lessor
may, on giving 30 days' written notice to Lessee (other than in a case
reasonably deemed by Lessor to be an emergency, in which case no such notice
shall be required), without demand on Lessee, perform any such obligations in
such manner and to such extent and take such other action as Lessor may deem
appropriate, and all costs, expenses and charges of Lessor relating to any such
action shall constitute Additional Charges and shall be payable by Lessee to
Lessor in accordance with Section 2.3.
(b) Except for the use of any insurance proceeds (to the extent
required by Sections 13.1 and 13.2) and any Award (to the extent required by
Section 14.3) or the gross negligence or willful acts of Lessor, Lessor shall
not under any circumstances be required to build or rebuild any improvements on
the Leased Property, or to make any repairs, replacements, alterations,
restorations, or renewals of any nature or description to the Leased Property,
whether ordinary or extraordinary, structural or nonstructural, foreseen or
unforeseen, or to make any expenditure
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whatsoever with respect thereto in connection with this Lease, or to maintain
the Leased Property in any way.
(c) Nothing contained in this Lease and no action or inaction by Lessor
shall be construed as (i) constituting the consent or request of Lessor,
expressed or implied, to any contractor, subcontractor, laborer, materialman or
vendor to or for the performance of any particular labor or services or the
furnishing of any particular materials or other property for the construction,
alteration, addition, repair or demolition of or to the Leased Property or any
part thereof, or (ii) giving Lessee any right, power or permission to contract
for or permit the performance of any labor or services or the finishing of any
materials or other property in such fashion as would permit the making of any
claim against Lessor in respect thereof or to make any agreement that may
create, or in any way be the basis for, any right, title, interest, lien, claim
or other encumbrance upon the estate of Lessor in the Leased Property or any
portion thereof.
(d) Unless Lessor shall convey any of the Leased Property to Lessee
pursuant to the provisions of this Lease, Lessee will, upon the expiration or
prior termination of this Lease, vacate and surrender the Leased Property to
Lessor in the condition in which the Leased Property was originally received
from Lessor, except for ordinary wear and tear (subject to the obligation of
Lessee to maintain the Property in good order and repair during the entire
Term), damage caused by the gross negligence or willful acts of Lessor, and
damage or destruction described in Article XIII or resulting from a Taking
described in Article XIV which Lessee is not required by the terms of this Lease
to repair or restore, and except as repaired, rebuilt restored, altered or added
to as permitted or required by the provisions of this Lease.
8.2 ENCROACHMENTS; RESTRICTIONS. If any of the Improvements shall at
any time, encroach upon any property, street or right-of-way adjacent to the
Leased Property, or shall violate the agreements or conditions contained in any
applicable Legal Requirement, lawful restrictive covenant or other agreement
affecting the Leased Property, or any part thereof or shall impair the rights of
others under any easement or right-of-way to which the Leased Property is
subject, then promptly upon the request of Lessor, Lessee shall at its expense
subject to its right to contest the existence of any such encroachment,
violation or impairment, (a) 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 (b)
make such changes in the Improvements, and take such other actions as Lessor in
the good faith exercise of its judgment deems reasonably practicable, to remove
such encroachment, or to end such violation or impairment, including, if
necessary, the alteration of any of the Leased Improvements, and in any event
take all such actions as may be necessary in order to be able to continue the
operation of the Facility for the Primary Intended Use substantially in the
manner and to the extent the Facility was operated prior to the assertion of
such violation or encroachment. Any such alteration shall be made in conformity
with the applicable requirements of Article IX. Lessee's obligations under this
Section 8.2 shall be in addition to and shall in no way discharge or
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diminish any obligation of any insurer under any policy of title or other
insurance and Lessee shall be entitled to a credit for any sums recovered by
Lessor under any such policy of title or other insurance.
8.3 INSPECTIONS; UNDERWRITING FEE. From time to time during the Term,
Lessor and its agents shall have the right to inspect the Leased Property and
all systems contained therein at any reasonable time to determine Lessee's
compliance with its obligations under this Lease, including those obligations
set forth in Article VII and this article VIII. Lessee shall be responsible for
the costs of such inspections which costs shall equal $2,000.00 per year during
the Term. In addition, Lessee shall pay Lessor a one-time initial facility due
diligence and underwriting fee of $3,000.00 which is due upon full execution of
this Lease.
ARTICLE IX
CAPITAL ADDITIONS
9.1 CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY.
(a) If no Event of Default shall have occurred and be continuing,
Lessee shall have the right, upon and subject to the terms and conditions set
forth below, to construct or install Capital Additions on the Leased Property
with the prior written consent of Lessor which consent shall not be unreasonably
withheld; provided that Lessee shall not be permitted to create any Encumbrance
on the Leased Property in connection with such Capital Addition without first
complying with Section 9.l(b) hereof. Prior to commencing construction of any
Capital Addition, Lessee shall submit to Lessor in writing a proposal setting
forth in reasonable detail any proposed Capital Addition and shall provide to
Lessor such plans and specifications, permits, licenses, contracts and other
information concerning the proposed Capital Addition as Lessor may reasonably
request. Without limiting the generality of the foregoing, such proposal shall
indicate the approximate projected cost of constructing such Capital Addition
and the use or uses to which it will be put. Notwithstanding the foregoing,
Lessee shall be permitted to construct or install Capital Additions whose cost
does not exceed $25,000 in any one Lease year without the need to obtain the
prior written consent of Lessor provided that such improvements shall be
architecturally integrated into and consistent with the Leased Property.
(b) Prior to commencing construction of any Capital Addition, Lessee
shall first request Lessor to provide funds to pay for such Capital Addition in
accordance with the provisions of Section 9.3 unless the Capital Addition Cost
is less than $25,000. If Lessor declines or is unable to provide such financing
on terms acceptable to Lessee and Lessee rejects Lessor's offer of financing,
Lessee may arrange or provide other financing, subject to the provisions of
Section 9.2. Lessor will reasonably cooperate with Lessee regarding the grant of
any consents or easements or the like necessary or appropriate in connection
with any Capital Addition; provided
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that no Capital Addition shall be made which would tie in or connect any Leased
Improvements on the Leased Property with any other improvements on property
adjacent to the Leased Property (and not part of the Land covered by this Lease)
including tie-ins of buildings or other structures or utilities, unless Lessee
shall have obtained the prior written approval of Lessor, which approval shall
not be unreasonably withheld. All proposed Capital Additions shall be
architecturally integrated into and consistent with the Leased Property.
9.2 CAPITAL ADDITIONS FINANCED BY LESSEE. If Lessee finances or
arranges to finance any Capital Addition with a party other than Lessor or if
Lessee pays cash for any Capital Addition, this Lease shall be and hereby is
amended to provide as follows:
(a) There shall be no adjustment in the Minimum Rent by reason of any
such Capital Addition.
(b) Upon the expiration or earlier termination of this Lease, Lessor
shall compensate Lessee for all Capital Additions (if consented to by Lessor and
Lessor's consent is required) paid for or financed by Lessee in any of the
following ways:
(i) By purchasing all Capital Additions paid for by Lessee
from Lessee for cash in the amount of the Fair Market Added Value at the time of
purchase by Lessor of all such Capital Additions paid for or financed by Lessee;
or
(ii) any other arrangement regarding such compensation as
shall be mutually acceptable to Lessor and Lessee.
Any amount owed by Lessee to Lessor under this Lease at such termination or
expiration may be deducted from any compensation for Capital Additions payable
by Lessor to Lessee under this Section 9.2.
9.3 CAPITAL ADDITIONS FINANCED BY LESSOR.
(a) Lessee shall request that Lessor provide or arrange financing for a
Capital Addition by providing to Lessor such information about the Capital
Addition as Lessor may reasonably request (a "Request"), including all
information referred to in Section 9.1 above. Lessor may, but shall be under no
obligation to, provide or obtain the funds necessary to meet the Request. Within
30 days of receipt of a Request, Lessor shall notify Lessee as to whether it
will finance 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.
In no event (i) shall the portion of the projected Capital Addition Cost
comprised of land (if any), materials, labor charges, a five percent (5%)
development fee and fixtures be less than 100% of the total amount of such cost,
or (ii) shall Lessee or any of its Affiliates be entitled to any commission or
development fee (other than
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described in (i)), directly or indirectly, as a portion of the Capital Addition
Cost. Any Capital Addition not financed by Lessor must still be approved in
writing by Lessor pursuant to the terms of Section 9.1 hereof, which consent
will not be unreasonably withheld. Lessee may withdraw its Request by notice to
Lessor at any time before or after receipt of Lessor's terms and conditions.
(b) If Lessor agrees to finance the proposed Capital Addition, Lessor's
obligation to advance any funds shall be subject to receipt of all of the
following, in form and substance reasonably satisfactory to Lessor:
(i) such loan documentation as may be required by Lessor;
(ii) any information, certificates, licenses, permits or
documents requested by Lessor, or by any lender with whom Lessor has agreed or
may agree to provide financing which are necessary or appropriate 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;
(iii) an Officer's Certificate and, if requested, a
certificate from Lessee's architect, setting forth in detail reasonably
satisfactory to Lessor the projected (or actual, if available) cost of the
proposed Capital Addition;
(iv) an amendment to this Lease, duly executed and
acknowledged in form and substance satisfactory to Lessor and Lessee (the "Lease
Amendment"), containing such provisions as may be necessary or appropriate due
to the Capital Addition, including any appropriate changes in the legal
description of the Land and the Rent, all such changes to be mutually agreed
upon by Lessor and Lessee;
(v) a deed conveying title to Lessor to any land and
improvements or other rights acquired for the purpose of constructing the
Capital Addition, free and clear of any liens or encumbrances except those
approved in writing by Lessor and, both prior to and following completion of the
Capital Addition, an as-built survey thereof reasonably satisfactory to Lessor;
(vi) endorsements to any outstanding policy of title insurance
covering the Leased Property or a supplemental policy of title insurance
covering the Leased Property reasonably satisfactory in form and substance to
Lessor (A) updating the same without any additional exceptions, except as may be
permitted by Lessor; and (B) 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 (vii)
below);
(vii) if required by Lessor, (A) an owner's policy of title
insurance insuring fee simple title to any land conveyed to Lessor pursuant to
subparagraph (v), free and clear of all liens
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and encumbrances except those approved by Lessor and (B) a lender's policy of
title insurance satisfactory in form and substance to Lessor and the Lending
Institution advancing any portion of the Capital Addition Cost;
(viii) if required by Lessor upon completion of the Capital
Addition, an M.A.I. appraisal of the Leased Property; and
(ix) such other certificates (including endorsements
increasing the insurance coverage, if any, at the time required by Section
12.1), documents, customary opinions of Lessee's counsel, appraisals, surveys,
certified copies of duly adopted resolutions of the Board of Directors of Lessee
authorizing the execution and delivery of the Lease Amendment and any other
instruments or documents as may be reasonably required by Lessor.
(c) Upon making a Request to finance a Capital Addition, whether or not
such financing is actually consummated, Lessee shall pay the reasonable costs
and expenses of Lessor and any Lending Institution which has committed to
finance such Capital Addition paid or incurred in connection with the financing
of the Capital Addition including (i) the fees and expenses of their respective
counsel, (ii) the amount of any recording or transfer taxes and fees, (iii)
documentary stamp taxes, if any, (iv) title insurance charges, (v) appraisal
fees, if any, and (vi) commitment fees, if any.
(d) Notwithstanding the foregoing, Lessor and Developer have entered
into a Development Agreement of even date herewith pursuant to which the
Developer shall cause the Facility to be constructed.
9.4 REMODELING AND NON-CAPITAL ADDITIONS. Lessee shall have the right
and the obligation to make additions, modifications or improvements to the
Leased Property which are not Capital Additions, including tenant improvements
made in connection with the Tenant Leases, from time to time as may reasonably
be necessary for its uses and purposes and to permit Lessee to comply fully with
its obligations set forth in this Lease; provided that such action will be
undertaken expeditiously, in a workmanlike manner and will not significantly
alter the character or purpose or detract from the value or operating efficiency
of the Leased Property and will not significantly impair the revenue producing
capability of the Leased Property or adversely affect the ability of Lessee to
comply with the provisions of this Lease. Title to all non-Capital Additions,
modifications and improvements shall, without payment by Lessor at any time, be
included under the terms of this Lease and, upon expiration or earlier
termination of this Lease, shall pass to and become the property of Lessor.
9.5 SALVAGE. All materials which are scrapped or removed in connection
with the making of either Capital Additions permitted by Section 9.1 or repairs
required by Article VIII shall be or become the property of Lessor; provided
that Lessor may require Lessee to dispose of
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such materials and remit the net proceeds thereof to Lessor within 15 days of
such disposal.
ARTICLE X
LIENS
Subject to the provisions of Article XI relating to permitted contests,
Lessee will not directly or indirectly create or suffer to exist and will
promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim, or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, set forth in Exhibit B attached hereto, (c)
restrictions, liens and other encumbrances which are consented to in writing by
Lessor, or any easements granted pursuant to the provisions of Section 6.4 of
this Lease, (d) liens for those taxes of Lessor which Lessee is not required to
pay hereunder, (e) subleases permitted by Article XXIII, (f) liens for
Impositions or for sums resulting from noncompliance with Legal Requirements so
long as (1) the same are not yet payable or are payable without the addition of
any fine or penalty or (2) such liens are in the process of being contested in
accordance with the provisions of Article XI, (g) liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either disputed or not yet due,
provided that (1) the payment of such sums shall not be postponed for more than
60 days after the completion of the action (including any appeal from any
judgment rendered therein) giving rise to such lien and such reserve or other
appropriate provisions as shall be required by law or generally accepted
accounting principles shall have been made therefor or (2) any such liens are in
the process of being contested in accordance with the provisions of Article XI,
and (h) any Encumbrance placed on the Leased Property by Lessor.
ARTICLE XI
PERMITTED CONTESTS
Lessee, after ten days' prior written notice to Lessor, on its own or
on Lessor's behalf (or in Lessor's name), but at Lessee's expense, may contest,
by appropriate legal proceedings conducted in good faith and with due diligence,
the amount, validity or application, in whole or in part, of any Imposition,
Legal Requirement, Insurance Requirement, lien, attachment, levy, encumbrance,
charge or claim (collectively "Charge") not otherwise permitted by Article X,
which is required to be paid or discharged by Lessee or any Tenant; provided
that (a) in the case of an unpaid Charge, the commencement and continuation of
such proceedings, or the posting of a bond or certificate of deposit as may be
permitted by applicable law, shall suspend the collection thereof from Lessor
and from the Leased Property; (b) neither the Leased Property nor any Rent
therefrom nor any part thereof or interest therein would be in any immediate
danger of being sold, forfeited, attached or lost; (c) Lessor would not be in
any immediate danger of civil or criminal liability for failure to comply
therewith pending the outcome of such proceedings; (d) in the event
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that any such contest shall involve a sum of money or potential loss in excess
of $50,000.00, then Lessee shall deliver to Lessor and its counsel an Officer's
Certificate as to the matters set forth in clauses (a), (b) and (c) and such
opinions of legal counsel as Lessor may reasonably request; (e) in the case of
an Insurance Requirement, the coverage required by Article XII shall be
maintained; and (f) if such contest be finally resolved against Lessor or
Lessee, Lessee shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or otherwise comply with the applicable Charge; provided further that
nothing contained herein shall be construed to permit Lessee to contest the
payment of the Rent, or any other sums payable by Lessee to Lessor hereunder.
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 and then
at its own expense, Lessor shall join as a party therein. Lessor shall do all
things reasonably requested by Lessee in connection with such action. Lessee
shall indemnify and save Lessor harmless against any liability, cost or expense
of any kind that may be imposed upon Lessor in connection with any such contest
and any loss resulting therefrom.
ARTICLE XII
INSURANCE
12.1 GENERAL INSURANCE REQUIREMENTS. During the Term of this Lease,
Lessee shall at all times keep the Leased Property, and all property located in
or on the Leased Property insured with the kinds and amounts of insurance
described below and written by companies reasonably acceptable to Lessor
authorized to do insurance business in the state in which the Leased Property is
located. The policies must name Lessor as an additional insured and losses shall
be payable to Lessor and/or Lessee as provided in Article XIII. In addition, the
policies shall name as an additional insured the holder ("Facility Mortgagee")
of any mortgage, deed of trust or other security agreement securing any
Encumbrance placed on the Leased Property or any part thereof in accordance with
the provisions of Article XXXII ("Facility Mortgage"), if any, by way of a
standard form of mortgagee's loss payable endorsement. Any loss adjustment in
excess of $100,000.00 shall require the written consent of Lessor and each
affected Facility Mortgagee. Evidence of insurance shall be deposited with
Lessor and if requested, with any Facility Mortgagee(s). If any provision of any
Facility Mortgage which constitutes a first lien on the Leased Property 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 such Facility Mortgagee or, pursuant to written direction by Lessor,
Lessee shall make such deposits directly with such Facility Mortgagee. The
policies on the Leased Property, including the Leased Improvements, the Fixtures
and the Personal Property, shall insure against the following risks:
(a) Loss or damage by fire, vandalism and malicious mischief extended
coverage perils
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commonly known as "All Risk" and all physical loss perils, including sprinkler
leakage and business interruption, in an amount not less than 90% of the then
Full Replacement Cost thereof (as defined below in Section 12.2) after
deductible with a replacement cost endorsement sufficient to prevent Lessee from
becoming a co-insurer together with an agreed value endorsement;
(b) 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;
(c) Loss or damage by hurricane and earthquake in the amount of the
Full Replacement Cost, after deductible;
(d) Loss of rental under a rental value insurance policy covering risk
of loss during the first 6 months of reconstruction necessitated by the
occurrence of any of the hazards described in Sections 12.1(a), 12.1(b) or 12.1
(c), in an amount sufficient to prevent Lessee from becoming a co-insurer;
provided that in the event that Lessee shall not be in default hereunder and
Lessor shall receive any proceeds from such rental insurance which when added to
rental amounts received with respect to the applicable time period exceed the
amount of rental owed by Lessee hereunder, Lessor shall immediately pay such
excess to Lessee;
(e) Claims for personal injury or property damage under a policy of
comprehensive general public liability insurance including insurance against
assumed or contractual liability including indemnities under this Lease, with
amounts not less than $5,000,000.00 per occurrence in respect of bodily injury
and death and $5,000,000.00 for property damage; provided that if it becomes
customary for tenants occupying similar buildings in the same City where the
Leased Property is located to be required to provide liability coverage with
higher limits than the foregoing, then Lessee shall provide Lessor with an
insurance policy with coverage limits that are not less than such customary
limits; and
(f) Flood (when the Leased Property is located in whole or in part
within a designated flood plain area) and such other hazards and in such amounts
as may be customary for comparable properties in the area and if available from
insurance companies authorized to do business in the state in which the Leased
Property is located.
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12.2 REPLACEMENT COST. The term "Full Replacement Cost" as used herein
shall mean the actual replacement cost of the Facility from time to time,
including increased cost of construction endorsement, less exclusions provided
in the normal fire insurance policy. In the event Lessor or Lessee believes that
the Full Replacement Cost has increased or decreased at any time during the
Term, it shall have the right at its own expense to have such Full Replacement
Cost redetermined by the insurance company which is then providing the largest
amount of casualty insurance carried on the Leased Property, hereinafter
referred to as the "impartial appraiser. The party desiring to have the Full
Replacement Cost so redetermined shall forthwith, on receipt of such
determination by the impartial appraiser, give written notice thereof to the
other party hereto. The determination of such impartial appraiser shall be final
and binding on the parties hereto, and Lessee shall forthwith increase, or may
decrease, the amount of the insurance carried pursuant to this Article to the
amount so determined by the impartial appraiser.
12.3 ADDITIONAL INSURANCE. In addition to the insurance described
above, Lessee shall maintain such additional insurance as may be reasonably
required from time to time by any Facility Mortgagee which is consistent with
insurance coverage for similar properties in the city, county and state where
the Leased Property is located, or required pursuant to any applicable Legal
Requirement, and shall at all times maintain or cause to be maintained adequate
worker's compensation insurance coverage for all persons employed by Lessee on
the Leased Property in accordance with all applicable Legal Requirements.
12.4 WAIVER OF SUBROGATION. All insurance policies carried by either
party covering the Leased Property, the Fixtures, the Facility and/or the
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 a
waiver clause or endorsement so long as the same is obtainable without extra
cost, and in the event of such an extra charge the other party, at its election,
may request and pay the same, but shall not be obligated to do so.
12.5 FORM OF INSURANCE. All of the policies of insurance referred to in
this Section shall be written in form reasonably satisfactory to Lessor by
insurance companies reasonably satisfactory to Lessor: provided that the
deductibles for insurance required by Sections 12.1 (a) through 12.1 (d) shall
be no greater than $50,000.00 and the deductible for coverage required by
Section 12.1(e) shall be no greater than $100,000.00. Lessee shall pay all
premiums therefor, and deliver such policies for certificates thereof to Lessor
prior to their effective date (and with respect to any renewal policy, at least
30 days prior to the expiration of the existing policy). In the event of the
failure of Lessee 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 enact such insurance and pay the premiums therefor, which
premiums shall be repayable by Lessee to Lessor upon written demand therefor,
and failure to repay the same shall constitute an Event of Default within the
meaning of
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Section 15.1(c). Each insurer mentioned in this Section shall agree, by
endorsement on the policy or policies issued by it, or by independent instrument
furnished to Lessor, that it will give to Lessor prior written notice before the
policy or policies in question shall be altered, allowed to expire or canceled.
12.6 CHANGE IN LIMITS. In the event that Lessor shall at any time
reasonably and in good faith believe the limits of the personal injury, property
damage or general public liability insurance then carried to be insufficient,
the parties shall endeavor to agree on the proper and reasonable limits for such
insurance to be carried and such insurance shall thereafter be carried with the
limits thus agreed on until further change pursuant to the provisions of this
Section. If the parties shall be unable to agree thereon, the proper and
reasonable limits for such insurance shall be determined by an impartial third
party selected by the parties the costs of which shall be divided equally
between the parties. Such redeterminations, whether made by the parties or by
arbitration shall be made no more frequently than every year. Nothing herein
shall permit the amount of insurance to be reduced below the amount or amounts
reasonably required by any Facility Mortgagee.
12.7 BLANKET POLICY. Notwithstanding anything to the contrary contained
in this Section, Lessee's obligations to carry the insurance provided for herein
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Lessee or the Management Company; provided
that the coverage afforded Lessor will not be reduced or diminished or otherwise
be different from that which would exist under separate policies meeting all
other requirements of this Lease: provided further that the requirements of this
Article XII are otherwise satisfied.
12.8 NO SEPARATE INSURANCE. Without the prior written consent of
Lessor, Lessee shall not on Lessee's own initiative or pursuant to the request
or requirement of any third party, take out separate insurance concurrent in
form or contributing in the event of loss with that required in this Article XII
to be furnished by, or which may reasonably be required by a Facility Mortgagee
to be furnished by, Lessee, or increase the amounts of any then-existing
insurance required under this Article XII 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 said insurance in the same manner as losses are required to be payable
under this Lease. Lessee shall immediately notify Lessor of the taking out of
any such separate insurance or of the increasing of any of the amounts of the
then-existing insurance required under this Article XII by securing an
additional policy or additional policies.
12.9 INSURANCE FOR CONTRACTORS. If Lessee shall engage or cause to be
engaged any contractor to perform work on the Leased Property, Lessee shall
require such contractor to carry and maintain insurance coverage comparable to
the foregoing requirements, at no expense to
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Lessor; provided that in cases where such coverage is excessive in relation to
the work being done, Lessee may allow any such contractor to carry or maintain
alternative coverage in reasonable amounts upon Lessor's prior written consent
which shall not be unreasonably withheld.
ARTICLE XIII
FIRE AND CASUALTY
13.1 INSURANCE PROCEEDS. All proceeds payable by reason of any loss or
damage to the Leased Property or any portion thereof, and insured under any
policy of insurance required by Article XII of this Lease shall be paid to
Lessor and held by Lessor in trust (subject to the provisions of Section 13.7)
and shall be made available for reconstruction or repair, as the case may be, of
any damage to or destruction of the Leased Property, or any portion thereof, and
shall be paid out by Lessor from time to time for the reasonable cost of such
reconstruction or repair in accordance with this Article XIII after Lessee has
expended an amount equal to or exceeding the deductible under any applicable
insurance policy. Any excess proceeds of insurance remaining after the
completion of the restoration or reconstruction of the Leased Property shall be
retained by Lessee free and clear upon completion of any such repair and
restoration except as otherwise specifically provided below in this Article
XIII; provided that in the event neither Lessor nor Lessee is required or elects
to repair or restore the Leased Property, then all such insurance proceeds shall
be retained by Lessor. All salvage resulting from any risk covered by insurance
shall belong to Lessee, including any salvage relating to Capital Additions paid
for by Lessee.
13.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE.
(a) Facility Rendered Unsuitable for Its Primary Intended Use. Except
as provided in Section 13.7, if during the Term, the Facility is totally or
partially destroyed from a risk covered by the insurance described in Article
XII and the Facility thereby is rendered Unsuitable for Its Primary Intended
Use, such damage or destruction shall not terminate this Lease and all of
Lessee's obligations with respect to payment of the Rent shall continue in full
force and effect and shall not be affected thereby and Lessee shall either:
(i) apply all proceeds payable with respect thereto to restore
the Facility to substantially the same condition as existed immediately prior to
such damage or destruction, or
(ii) offer either (A) to acquire the Leased Property from
Lessor for a purchase price equal to the Minimum Repurchase Price of the Leased
Property immediately prior to such damage or destruction or (B) to substitute a
new property or properties for the Leased Property pursuant to and in accordance
with the provisions of Article XX (which offers Lessor may in its sole
discretion refuse).
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Lessee shall give written notice to Lessor within 60 days after the date of such
damage or destruction whether Lessee chooses option (i) or option (ii), and if
option (ii) is chosen, such notice shall be accompanied by the offer referred to
therein. In the event Lessee fails to give such notice or does not make an offer
under option (ii), Lessee shall promptly proceed to restore the Facility to
substantially the same condition as existed immediately prior to the damage or
destruction. If Lessor does not accept Lessee's offer to substitute for or
purchase the Leased Property within 30 days after the date of such offer,
Lessee's offer shall be deemed withdrawn on such 30th day and Lessee shall
promptly proceed to restore the Facility to substantially the same condition as
existed immediately prior to such damage for destruction.
(b) Facility Not Rendered Unsuitable for Its Primary Intended Use.
Except as provided in Section 13.7, if during the Term, the Facility is
partially destroyed from a risk covered by the insurance described in Article
XII, but the Facility is not thereby rendered Unsuitable for Its Primary
Intended Use, Lessee shall restore the Facility to substantially the same
condition as existed immediately prior to the damage or destruction and such
damage or destruction shall not terminate this Lease and all of Lessee's
obligations hereunder, including Lessee's obligations with respect to the
payment of the Rent, shall continue in full force and effect and shall not be
affected thereby; provided that if Lessee cannot within a reasonable time obtain
all necessary governmental approvals, including building permits, licenses,
conditional use permits and any certificates of need, after diligent efforts to
do so, in order to be able to perform all required repair and restoration work
and to operate the Facility for Its Primary Intended Use in substantially the
same manner as immediately prior to such damage or destruction then Lessee shall
either offer, either:
(i) offer either (A) to acquire that Leased Property from
Lessor for a purchase price equal to the Minimum Repurchase Price immediately
prior to such damage or destruction, or (B) to substitute a new property or
properties for the Leased Property pursuant to and in accordance with the
provisions of Article XX (which offers Lessor in its sole discretion may
refuse), or
(ii) after the fourth anniversary of the Commencement Date,
offer to purchase the Leased Property from Lessor for a purchase price equal to
the Minimum Repurchase Price of the Leased Property immediately prior to such
damage or destruction.
Lessee shall give written notice to Lessor within 60 days after the
date of such damage or destruction whether Lessee chooses option (i) or option
(ii), and if option (i) is chosen, such notice shall be accompanied by the offer
referred to therein. In the event Lessee fails to give such notice or does not
make an offer under option (i), Lessee shall promptly proceed to restore the
Facility to substantially the same condition as existed immediately prior to the
damage or destruction. If Lessor does not accept Lessee's offer to substitute
for or purchase the Leased Property within 30 days after the date of such offer,
Lessee's offer shall be deemed withdrawn on
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such 30th day and Lessee shall promptly proceed to restore the Facility to
substantially the same condition as existed immediately prior to such damage for
destruction.
13.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED
BY INSURANCE. Except as provided in Section 13.7, if during the Term the
Facility is totally or materially destroyed from a risk (including earthquake)
not covered by the insurance described in Article XII, whether or not such
damage or destruction renders the Facility Unsuitable for Its Primary Intended
Use, Lessee shall:
(i) restore the Facility to substantially the same condition
it was in immediately prior to such damage or destruction and such damage or
destruction shall not terminate this Lease, and all of Lessee's obligations
hereunder, including Lessee's obligations with respect to the payment of the
Rent, shall continue in full force and effect and not be affected thereby, or
(ii) offer either (A) to acquire the Leased Property from
Lessor for a purchase price equal to the Minimum Repurchase Price immediately
prior to such damage or destruction, or (B) to substitute a new property or
properties for the Leased Property pursuant to and in accordance with the
provisions of Article XX (which offers Lessor in its sole discretion may
refuse); provided that if such damage or destruction is not material in the
reasonable opinion of Lessor, Lessee shall restore the Facility to substantially
the same condition as existed immediately prior to any such damage or
destruction.
Lessee shall give written notice to Lessor within 60 days after the
date of such damage or destruction whether Lessee chooses option (i) or option
(ii), and if option (ii) is chosen such notice shall be accompanied by the offer
referred to therein. If Lessor does not accept Lessee's offer to substitute for
or purchase the Leased Property within 30 days after the date of such offer
Lessee's offer shall be deemed to be withdrawn on such 30th day. If such offer
is so withdrawn, or if Lessee fails to purchase the Leased Property or to
provide a Substitute Property in accordance with Article XX, then such damage
and destruction shall be deemed to be a total Taking of such Facility under
Section 14.2 and the provisions of said Section 14.2 shall apply to the rights
of the parties and all insurance proceeds payable in connection with such damage
or destruction shall be treated as if such proceeds constituted an "Award" under
said Section 14.2
13.4 LESSEE'S PROPERTY. Lessee shall use any insurance proceeds payable
by reason of any loss of or damage to any of the Personal Property to restore
such Personal Property to the Leased Property with items of substantially
equivalent value to the items being replaced.
13.5 RESTORATION OF LESSEE'S PROPERTY. If Lessee is required or elects
to restore the Facility as provided in Sections 13.2 or 13.3, Lessee shall also
restore the Personal Property related thereto as required by Section 13.4 and
all Capital Additions paid for or financed by Lessor. Insurance proceeds payable
by reason of damage to Capital Additions paid for or
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financed by Lessor shall be paid to Lessor and Lessor shall hold such insurance
proceeds in trust to pay the cost of repairing or replacing such Capital
Additions in the event Lessee does not purchase or substitute other property or
properties for the Leased Property.
13.6 NO ABATEMENT OF THE RENT. This Lease shall remain in full force
and effect and Lessee's obligation to make rental payments and to pay all other
charges required by this Lease shall remain unabated during any period required
for repair and restoration.
13.7 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of
Sections 13.2 or 13.3 to the contrary, if damage to or destruction of the
Facility occurs during the last 12 months of the Term, and if such damage or
destruction cannot be fully repaired and restored within the lesser of (i) six
months or (ii) the period remaining in the Term immediately following the date
of loss, then either party shall have the right to terminate this Lease by
giving notice of termination to the other within 30 days after the date of such
damage or destruction, in which event Lessor shall be entitled to retain the
insurance proceeds and Lessee shall pay to Lessor on demand the amount of any
deductible or uninsured loss arising in connection therewith; provided that any
such notice given by Lessor shall be void and of no force and effect if Lessee
exercises an available option to extend the Term for one Extended Term, or one
additional Extended Term, as the case may be, within 30 days following receipt
of such termination notice.
13.8 PURCHASE OR SUBSTITUTION. In the event Lessor accepts any offer by
Lessee to purchase the Leased Property or to substitute a property or properties
for the Leased Property, this Lease shall terminate upon payment of the purchase
price and execution and delivery of all documentation in accordance with Article
XVII, or execution and delivery of all documents required in connection with a
Substitute Property under Article XX. Lessor shall remit to Lessee, or in the
case of a purchase allow Lessee a credit toward the purchase price, an amount
equal to all insurance proceeds being held in trust by Lessor.
13.9 WAIVER. Lessee hereby knowingly and expressly waives any statutory
or common law rights of termination which may arise by reason of any damage or
destruction of the Facility.
ARTICLE XIV
CONDEMNATION
14.1 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
Taking of all or any part of the Leased Property or any interest in this Lease
by Condemnation, the rights and obligations of the parties shall be determined
by this Article XIV.
14.2 TOTAL TAKING. If there is a Taking of all of the Leased Property
by Condemnation, this Lease shall terminate on the Date of Taking, and the
Minimum Rent and all Additional
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Charges paid or payable hereunder shall be apportioned and paid to the Date of
Taking.
14.3 PARTIAL TAKING. If there is a Taking of a portion of the Leased
Property by Condemnation such that the Facility is not thereby rendered
Unsuitable for Its Primary Intended Use, this Lease shall not terminate and all
of Lessee's obligations hereunder, including Lessee's obligations with respect
to the payment of the Rent, shall continue in full force and effect and shall
not be affected thereby. If however, the Facility is thereby rendered Unsuitable
for Its Primary Intended Use, Lessee shall either:
(i) at Lessee's expense, restore the Facility to the extent
possible, to substantially the same condition as existed immediately prior to
the partial Taking, in which case the proceeds of any Award shall be applied to
such restoration to the extent necessary or appropriate, or
(ii) offer either (A) to acquire the Leased Property from
Lessor for a purchase price equal to the Minimum Repurchase Price of the Leased
Property immediately prior to such partial Taking, or (B) to substitute a new
property or properties for the Leased Property pursuant to and in accordance
with the provisions of Article XX (which offers Lessor may in its sole
discretion refuse), or
(iii) terminate this Lease effective upon the effective date
of such Taking.
Lessee will give written notice to Lessor within 60 days after Lessee receives
notice of the Taking whether Lessee chooses option (i), option (ii) or option
(iii), and if option (ii) is chosen, such notice shall be accompanied by the
offer referred to therein. In the event Lessor does not accept Lessee's offer to
so purchase the Leased Property within 30 days after receipt of the notice
described in the preceding sentence, Lessee may either (a) withdraw its offer to
purchase the Leased Property and proceed to restore the Facility, to the extent
possible, to substantially the same condition as existed immediately prior to
before the partial Taking, or (b) terminate the offer and this Lease by written
notice to Lessor.
14.4 RESTORATION. If there is a partial Taking of the Leased Property
and this Lease remains in full force and effect pursuant to any provision of
this Article XIV. Lessee shall accomplish all necessary restoration in order
that the Leased Property may continue to be used for Its Primary Intended Use.
14.5 AWARD DISTRIBUTION. In the event Lessee purchases the Leased
Property pursuant to Section 14.3 or Lessor accepts any offer by Lessee to
purchase the Leased Property or to provide a Substitute Property therefor
pursuant to this Article XIV, then the entire Award shall belong to Lessee and
Lessor agrees to assign to Lessee all of its rights thereto. Except as otherwise
expressly provided in this Article XIV, in any other event the entire Award
shall belong
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to and be paid to Lessor; provided that if this Lease is terminated in
accordance with Section 14.2 and subject to the rights of any Facility
Mortgagees, Lessee shall be entitled to receive from the Award any sum
attributable to any Capital Additions for which Lessee would be entitled to
reimbursement at the end of the Term pursuant to the provisions of Section
9.2(b), but only if any to the extent such Award expressly includes such items
and allocates a value thereto. If Lessee is required or elects to restore the
Facility, Lessor agrees that, subject to the rights of the Facility Mortgagees,
its portion of the Award shall be used for such restoration and it shall hold
such portion of the Award in trust, for application to the costs of the
restoration.
14.6 TEMPORARY TAKING. The Taking of the Leased Property, or any part
thereof, by military or other public authority shall constitute a Taking by
Condemnation only when the use and occupancy by the Taking authority has
continued for longer than six months. During any such six-month period all the
provisions of this Lease shall remain in full force and effect and the Rent
shall not be abated or reduced during such period of Taking; provided that to
the extent any compensation is paid by the Taking authority as a result of such
temporary Taking, Lessee will retain such compensation.
14.7 PURCHASE OR SUBSTITUTION. In the event Lessor accepts any offer by
Lessee to purchase the Leased Property or to substitute a property or properties
for the Leased Property this Lease and Lease obligations shall terminate upon
payment of the purchase price and execution and delivery of all appropriate
documentation in accordance with Article XVII, or execution and delivery of all
documents required in connection with a Substitute Property under Article XX.
ARTICLE XV
DEFAULT
15.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute events of default (individually, an "Event of
Default" and collectively, "Events of Default") hereunder:
(a) An event of default shall occur under (i) any other lease or other
agreement between Lessor or any of its Affiliates and Lessee or any of its
Affiliates, (b) any Support Document, or (c) the Development Agreement; or
(b) Lessee shall fail to make a payment of the Rent payable by Lessee
under this Lease when the same becomes due and payable and such failure shall
continue for a period of ten calendar days after written notice from Lessor to
Lessee; or
(c) Lessee shall fail to observe or perform any other term covenant or
condition of this
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Lease or any document executed in connection herewith and such failure is not
cured by Lessee within a period of 30 days after receipt by Lessee of notice
thereof from Lessor, unless such failure cannot with due diligence be cured
within a period of 30 days, in which case such failure shall not be deemed to
continue if Lessee proceeds promptly and with due diligence to cure the failure
and diligently completes the curing thereof (as soon as reasonably possible); or
(d) Lessee shall (i) admit in writing its inability to pay its debts
generally as they become due, (ii) file a petition in bankruptcy or a petition
to take advantage of any insolvency law and such petition is not discharged
within sixty days of filing, (iii) make an assignment for the benefit of its
creditors,(iv) consent to the appointment of a receiver of itself or of the
whole or any substantial part of its property, or (v) file a petition or answer
seeking reorganization or arrangement under the Federal bankruptcy laws or any
other applicable law or statute of the United States of America or any state
thereof; or
(e) Lessee shall default beyond any applicable grace period contained
in one or more major credit facilities which by their terms would permit an
outstanding balance equal to or greater than $1,000,000.00 in the aggregate and
the same shall be accelerated by the lenders or other applicable parties; or
(f) Lessee shall default beyond any applicable grace period contained
in one or more of the Leases; or
(g) any certificate, financial statement or information, or any
representation or warranty provided herein or pursuant to this Lease by Lessee
should prove to be false or misleading in any material respect. Notwithstanding
the foregoing, it shall not be an Event of Default hereunder if upon discovering
such false or misleading statements and before Lessor relies upon the same (i)
Lessor notifies Lessee and (ii) Lessee, within ten (10) days of such notice,
takes appropriate action necessary to correct such false or misleading
statements.
15.2 REMEDIES. If an Event of Default shall have occurred, Lessor may,
at its election then or at any time thereafter, pursue any one or more of the
following remedies, in addition to any remedies which may be permitted by law or
by other provisions of this Lease, without further notice or demand except as
hereinafter provided:
(a) Without any notice or demand whatsoever, Lessor may take any one or
more actions permissible at law to ensure performance by Lessee of Lessee's
covenants and obligations under this Lease. In this regard, it is agreed that if
Lessee abandons or vacates the Leased Property, Lessor may enter upon and take
possession of such Leased Property in order to protect it from deterioration and
continue to demand from Lessee the monthly rentals and other charges provided in
this Lease. Lessor shall use reasonable efforts to relet but shall have no
absolute
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obligation to relet. If Lessor does, at its sole discretion, elect to relet the
Leased Property, such action by Lessor shall not be deemed as an acceptance of
Lessee's surrender of the Leased Property unless Lessor expressly notifies
Lessee of such acceptance in writing, Lessee hereby acknowledging that Lessor
shall otherwise be reletting as Lessee's agent. It is further agreed in this
regard that in the event of any Event of Default described in this Article XV,
Lessor shall have the right to enter upon the Leased Property and do whatever
Lessee is obligated to do under the terms of this Lease, Lessee agrees to
reimburse Lessor on demand for any reasonable expenses which Lessor may incur in
thus effecting compliance with Lessee's obligations under this Lease and further
agrees that Lessor shall not be liable for any damages resulting to Lessee from
such action, except as may result from Lessor's gross negligence or willful
misconduct.
(b) Lessor may terminate this Lease by written notice to Lessee, in
which event Lessee shall immediately surrender the Leased Property to Lessor,
and if Lessee fails to do so, Lessor may, without prejudice to any other remedy
which Lessor may have for possession or arrearage in rent (including any
interest which may have accrued pursuant to Section 2.3 of this Lease or
otherwise), enter upon and take possession of the Leased Property and expel or
remove Lessee and any other person who may be occupying said premises or any
part thereof other than Tenants pursuant to Tenant Leases. In addition Lessee
agrees to pay to Lessor on demand the amount of all loss and damage which Lessor
may suffer by reason of any termination effected pursuant to this subsection
(b), said loss and damage to be determined, at Lessor's option, by either of the
following alternative measures of damages:
(i) Although Lessor shall be under no absolute obligation to
attempt and shall be obligated only to use reasonable efforts, to relet the
Leased Property, until the Leased Property is relet Lessee shall pay to Lessor
on or before the first day of each calendar month the monthly rentals and other
charges provided in this Lease. After the Leased Property has been relet by
Lessor, Lessee shall pay to Lessor on the 10th day of each calendar month the
difference between the monthly rentals and other charges provided in this Lease
for the preceding calendar month and that actually collected by Lessor for such
month. If it is necessary for Lessor to bring suit in order to collect any
deficiency, Lessor shall have a right to allow such deficiencies to accumulate
and to bring an action on several or all of the accrued deficiencies at one
time. Any such suit shall not prejudice in any way the right of Lessor to bring
a similar action for any subsequent deficiency or deficiencies. Any amount
collected by Lessor from subsequent tenants for any calendar month in excess of
the monthly rentals and other charges provided in this Lease shall be credited
to Lessee in reduction of Lessee's liability for any calendar month for which
the amount collected by Lessor will be less than the monthly rentals and other
charges provided in this Lease, but Lessee shall have no right to such excess
other than the above described credit; or
(ii) When Lessor desires, Lessor may demand a final settlement
not to exceed the Minimum Repurchase Price at the time of such final settlement.
Upon demand for a final settlement, Lessor shall have a right to, and Lessee
hereby agrees to pay, the difference between
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the total of all monthly rentals and other charges provided in this Lease for
the remainder of the Term and the reasonable rental value of the Leased Property
for such period (including a reasonable time to relet the Leased Property), as
determined pursuant to the provisions of Article XXVIII hereof, such difference
to be discounted to present value at a rate equal to the lowest rate of
capitalization (highest present worth) reasonably consistent with industry
standards at the time of such determination and allowed by applicable law.
The rights and remedies of Lessor hereunder are cumulative, and pursuit
of any of the above remedies shall not preclude pursuit of any other remedies
prescribed in other sections of this Lease and any other remedies provided by
law or equity. Forbearance by Lessor to enforce one or more of the remedies
herein provided upon an Event of Default shall not be deemed or construed to
constitute a waiver of such Event of Default. Exercise by Lessor of any one or
more remedies shall not constitute an acceptance of surrender of the Leased
Property by Lessee, it being understood that such surrender can be effected only
by the prior written agreement of Lessor and Lessee
15.3 ADDITIONAL EXPENSES. In addition to payments required pursuant to
subsections (a) and (b) of Section 15.2 above, Lessee shall compensate Lessor
for all reasonable expenses incurred by Lessor in repossessing the Leased
Property (including any increase in insurance premiums caused by the vacancy of
the Leased Property), all reasonable expenses incurred by Lessor in reletting
(including repairs, remodeling, replacements, advertisements and brokerage
fees), all reasonable concessions granted to a new tenant upon reletting
(including renewal options), all fees and expenses incurred by Lessor as a
direct or indirect result of any appropriate action by a Facility Mortgagee, any
expenses of Lessor incurred for the installation of separate lines or meters for
any public utilities not previously metered separately from adjacent property of
Lessee and a reasonable allowance for Lessor's administrative efforts, salaries
and overhead attributable directly or indirectly to Lessee's default and
Lessor's pursuing the rights and remedies provided herein and under applicable
law.
15.4 WAIVER. If this Lease is terminated pursuant to law or the
provisions of this Article XV, Lessee waives, to the extent permitted by
applicable law, (a) any right of redemption, reentry or repossession and (b) the
benefit of any laws now or hereafter in force exempting property from liability
for rent or for debt.
15.5 APPLICATION OF FUNDS. All payments otherwise payable to Lessee
which are received by Lessor under any of the provisions of this Lease during
the existence or continuance of any Event of Default shall be applied to
Lessee's obligations in the order which Lessor may reasonably determine or as
may be prescribed by the laws of the state in which the Facility is located.
15.6 NOTICES BY LESSOR. The provisions of this Article XV concerning
notices shall be
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liberally construed insofar as the contents of such notices are concerned, and
any such notice shall be sufficient if it shall generally apprise Lessee of the
nature and approximate extent of any default.
ARTICLE XVI
LESSOR'S RIGHT TO CURE
If Lessee, without the prior written consent of Lessor, shall fail to
make any payment, or to perform any act required to be made or performed under
this Lease and to cure the same within the relevant time periods provided in
Section 15.1, Lessor, without waiving or releasing any obligation or Event of
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 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, together with a late charge thereon (to the extent permitted by law)
at the Overdue Rate from the date on which such sums or expenses are paid or
incurred by Lessor, and all costs and expenses (including reasonable attorneys'
fees and expenses, in each case, to the extent permitted by law) so incurred
shall be paid by Lessee to Lessor on demand. The obligations of Lessee and
rights of Lessor contained in this Article shall survive the expiration or
earlier termination of this Lease.
ARTICLE XVII
PURCHASE OF THE LEASED PROPERTY
In the event Lessee purchases the Leased Property from Lessor pursuant
to any of the terms of this Lease, 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
and any other amounts owing to Lessor hereunder, deliver to Lessee an
appropriate special warranty deed and any other documents reasonably requested
by Lessee to convey the interest of Lessor in and to the Leased Property to
Lessee, and such other standard documents usually and customarily prepared in
connection with such transfers, free and clear of all encumbrances other than
(a) those that Lessee has agreed hereunder to pay or discharge, (b) those
mortgage liens, if any, which Lessee has agreed in writing to accept and to take
title subject to, (c) any other Encumbrances permitted to be imposed on the
Leased Property under the provisions of Article XXXII which are assumable at no
cost to Lessee, and (d) any matters affecting the Leased Property on or as of
the Commencement Date. The difference between the applicable purchase price and
the total of the encumbrances assigned or taken subject to shall be paid in cash
to Lessor, or as Lessor may direct, in federal or other immediately available
funds except as otherwise mutually agreed by Lessor and Lessee. The closing of
any
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such sale shall be contingent upon and subject to Lessee obtaining all required
governmental consents and approvals for such transfer. If such sale shall fail
to be consummated by reason of the inability of Lessee to obtain all such
approvals and consents, any options to extend the Term which otherwise would
have expired during the period from the date when Lessee elected or became
obligated to purchase the Leased Property until Lessee's inability to obtain the
approvals and consents is confirmed shall be deemed to remain in effect for 30
days after the end of such period. The closing with respect to any such sale
shall be appropriately timed to accommodate the determination of the Minimum
Repurchase Price in accordance with Article XXVIII. All expenses of such
conveyance, including the cost of title examination or standard coverage title
insurance, attorneys' fees incurred by Lessor in connection with such
conveyance, transfer taxes and recording fees shall be paid by Lessee.
Additionally, any sale to Lessee shall be subject to delivery of an opinion of
Lessor's counsel confirming that (i) the sale will not result in ordinary
recapture income to Lessor pursuant to Code Section 1245 or 1250 under
applicable Legal Requirements as they exist on the date hereof, or any other
Code provision, (ii) the sale will result in income, if any, to Lessor of a type
described in Code Section 856(c)(2) or 856(c)(3) and will not result in income
of the types described in Code Section 856(c)(4) or result in the tax imposed
under Code Section 857(b)(6), and (iii) the sale, together with all other
substitutions and sales made or requested by Lessee pursuant to any other leases
with Lessor of properties hereto or any other transfers of the Leased Property
or the properties leased under other such operating leases, during the relevant
time period, will not jeopardize the qualification of Lessor as a real estate
investment trust under Code Sections 856-860; provided Lessor is a real estate
investment trust thereunder.
ARTICLE XVIII
HOLDING OVER
If Lessee shall for any reason remain in possession of the Leased
Property after the expiration of the Term or any earlier termination of the Term
hereof, such possession shall be as a tenancy at will during which time Lessee
shall pay as rental each month an amount equal to the sum of (a) 150% of the
aggregate of l/12 of the aggregate Minimum Rent payable with respect to the last
complete year prior to the expiration of the Term, plus (b) all Additional
Charges accruing during such month, plus (c) all other sums, if any, payable
pursuant to the provisions of this Lease with respect to the Leased Property.
During such period of tenancy, Lessee and Lessor shall be obligated to perform
and observe all of the terms, covenants and conditions of this Lease and to
continue its occupancy and use of the Leased Property. Nothing contained herein
shall constitute the consent, express or implied, of Lessor to the holding over
of Lessee after the expiration or earlier termination of this Lease.
ARTICLE XIX
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ABANDONMENT
19.1 DISCONTINUANCE OF OPERATIONS ON THE LEASED PROPERTY; OFFER OF
SUBSTITUTION. If Lessee has discontinued use of the Leased Property for Its
Primary Intended Use for 90 consecutive days without Lessor's prior written
consent for alterations or remodeling pursuant to Article IX, repairs or
restoration pursuant to Article XIII or Article XIV or otherwise, then provided
Lessor has not terminated this Lease pursuant to Section 15.2, Lessee may offer
to substitute a new property or properties for the Leased Property pursuant to
and in accordance with the provisions of Article XX (which offers Lessor may in
its sole discretion refuse).
19.2 OBSOLESCENCE OF THE LEASED PROPERTY; OFFER TO PURCHASE. If the
Leased Property becomes Unsuitable for Its Primary Intended Use, all as set
forth in an Officer's Certificate delivered to Lessor, Lessee may on or after
the fifteenth anniversary of the Commencement Date (provided this Lease is still
in effect), purchase the Leased Property for the Minimum Repurchase Price on the
first Payment Date occurring not less than 120 days after the date of such
Officer's Certificate.
19.3 CONVEYANCE OF LEASED PROPERTY. In the event Lessee elects to
purchase the Leased Property pursuant to Section 19.2, then on the first Payment
Date occurring not less than 120 days after the date of the Officer's
Certificate referred to in Section 19.2, Lessor shall, upon receipt from Lessee
of the Minimum Repurchase Price as of the date of such purchase and all Rent and
or other sums then due and payable under this Lease (excluding any installment
of Minimum Rent due on such Payment Date), convey the Leased Property to Lessee
on such date in accordance with the provisions of Article XVII and this Lease
shall thereupon terminate as to the Leased Property.
ARTICLE XX
SUBSTITUTION OF PROPERTY
20.1 SUBSTITUTION OF PROPERTY FOR THE LEASED PROPERTY.
(a) In the event Lessor accepts an offer by Lessee to substitute other
property for the Leased Property under Article XIII, Article XIV or Article XIX,
and provided that no Event of Default shall have occurred and be continuing,
Lessee shall have the right (subject to the conditions set forth below in this
Article XX, and upon notice to Lessor) to substitute one or more properties
(collectively referred to as "Substitute Properties" or individually as a
"Substitute Property") for the Leased Property on a monthly Payment Date
specified in such notice (the "Substitution Date") occurring not less than 90
days after receipt by Lessor of such notice. The notice shall be in the form of
an Officer's Certificate and shall specify the reason(s) for the proposed
substitution and the proposed Substitution Date. Notwithstanding anything
contained
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herein to the contrary, any other substitution for the Leased Property shall
require the prior written consent of Lessor which shall be within the sole
discretion of Lessor.
(b) If Lessee gives the notice referred to in Section 20.1(a) above,
Lessee shall present to Lessor one or more properties (or groups of properties)
each of which property (or groups of properties) shall provide Lessor with a
yield (i.e., an annual return on its equity in such property) equal to or
greater than the Current Yield (and the yield reasonably expected to be received
thereafter throughout the remainder of the term) from the Leased Property at the
time of such proposed substitution (or in the case of a proposed substitution as
a result of damage, destruction or Condemnation, the Current Yield immediately
prior to such damage, destruction or Condemnation) and as reasonably projected
over the remaining Term of this Lease and shall have a Fair Market Value
substantially equivalent to the Fair Market Value of the Leased Property. Lessor
shall have a period of 90 days within which to review such information and
either to accept or to reject the Substitute Property or Substitute Properties
so presented; provided that if Lessee is required by a court order or
administrative action to divest or otherwise dispose of the Leased Property
within a shorter time period, in which case the time period shall be shortened
appropriately to meet the reasonable needs of Lessee, but in no event shall said
period be less than 15 Business Days after Lessor's receipt of said notice
(subject to further extension for any period of time in which Lessor is not
timely provided with the information provided for in Section 20.2 and Section
20.3 below); provided that if Lessor shall contend that the Substitute
Properties fail to meet all the conditions for substitution set forth in this
Article XX, including the provisions of Sections 20.1(c), (d) and (e) below, the
matter shall be submitted to arbitration in accordance with Article XXXI and the
time periods for Lessor's approval or rejection shall be tolled during the
period of such arbitration.
(c) It shall be a condition to consummation of any substitution
hereunder that all of the conditions set forth in Section 20.2 below, shall have
been satisfied with respect to such substitution, and to the delivery of an
opinion of counsel for Lessor confirming that (i) the substitution of the
Substitute Property for the Leased Property will qualify as an exchange solely
of property of a like-kind under Section 1031 of the Code, in which, generally,
except for "boot" such as cash needed to equalize exchange values or discharge
indebtedness, no gain or loss is recognized to Lessor, (ii) under applicable
Legal Requirements as they exist on the date hereof, 1997, the substitution or
sale will not result in ordinary recapture income to Lessor pursuant to Code
Section 1245 or 1250 or any other Code provision, (iii) the substitution or sale
will result in income, if any, to Lessor of a type described in Code Section
856(c)(2) or 856(c)(3) and will not result in income of the types described in
Code Section 856(c)(4) or result in the tax imposed under Code Section
857(b)(6), and (iv) the substitution or sale, together with all other
substitutions and sales made or requested by Lessee pursuant to any other leases
with Lessor of properties hereto or any other transfers to the Leased Property
or the properties leased under other such operating leases, during the relevant
time period, will not jeopardize the qualification of Lessor as a real estate
investment trust under Code Sections 856-860.
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(d) In the event that the equity value of the Substitute Property or
group of Substitute Properties (i.e., the Fair Market Value of the Substitute
Property or group of Substitute Properties minus the encumbrances subject to
which Lessor will take the Substitute Property or group of Substitute
Properties) as of the Substitution Date is greater than the equity value of the
Leased Property (i.e., the Fair Market Value of the Leased Property minus the
encumbrances subject to which Lessee will take the Leased Property) as of the
Substitution Date (or in the case of damage destruction or Condemnation, the
Fair Market Value immediately prior to such damage, destruction or
Condemnation), Lessor shall pay to Lessee an amount equal to the difference,
subject to the limitation set forth below. In the event that said equity value
of the Substitute Property or group of Substitute Properties is less than said
equity value of the Leased Property, Lessee shall pay to Lessor an amount equal
to the difference, subject to the limitation set forth below. Notwithstanding
the foregoing, neither Lessor nor Lessee shall be obligated to consummate any
substitution if such party would be required to make a payment to the other in
excess of an amount equal to ten percent of said Fair Market Value of the Leased
Property (the amount of cash paid by one party to the other being hereinafter
referred to as the "Cash Adjustment").
(e) The Rent for such Substitute Property in all respects shall provide
Lessor with a yield at the time of such substitution (i.e., annual return on its
investment in such Substitute Property) not less than the Current Yield (and the
yield reasonably expected to be received thereafter throughout the remainder of
the Term) from the Leased Property prior to any damage, destruction or
Condemnation, taking into account the Cash Adjustment paid or received by Lessor
and any other relevant factors
(f) The Minimum Repurchase Price of any Substitute Property or
Substitute Properties shall be an amount equal to the Minimum Repurchase Price
of the Leased Property on the Substitution Date (i) increased by any Cash
Adjustment paid by Lessor pursuant to Section 20.1(d) above, or (ii) decreased
by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) above.
20.2 CONDITIONS TO SUBSTITUTION. On the Substitution Date, the
Substitute Property will become the Leased Property hereunder upon delivery by
Lessee to Lessor of the following, items in form and substance reasonably
satisfactory to Lessor:
(a) an Officer's Certificate representing, warranting and certifying
that (i) the Substitute Property has been accepted by Lessee for all purposes of
this Lease and there has been no material damage to the improvements located on
the Substitute Property nor is any condemnation or eminent domain proceeding
pending with respect thereto; (ii) all permits, licenses and certificates
(including a permanent, unconditional certificate of occupancy and, to the
extent permitted by law, all certificates of need and licenses) which are
necessary to permit the use
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of the Substitute Property in accordance with the provisions of this Lease have
been obtained and are in full force and effect; (iii) under applicable zoning
and use laws, ordinances, rules and regulations the Substitute Property may be
used for the purposes contemplated by Lessee and all necessary subdivision
approvals have been obtained; (iv) there are no mechanic's or materialmen's
liens outstanding or threatened to the knowledge of Lessee against the
Substitute Property arising out of or in connection with the construction of the
improvements thereon, other than those being contested by Lessee pursuant to
Article XI; (v) any mechanic's or materialmen's liens being contested by Lessee
will be promptly paid by Lessee if such contest is resolved in favor of the
mechanic or materialman; (vi) to the best knowledge of Lessee, there exists no
Event of Default under this Lease, and no defense, offset or claim exists with
respect to any sums to be paid by Lessee hereunder; and (vii) any exceptions to
Lessor's title to the Substitute Property do not materially interfere with the
intended use of the Substitute Property by Lessee;
(b) a special warranty deed with warranties against claims arising
under Lessee conveying to Lessor title to the Substitute Property free and clear
of any liens and encumbrances except those approved in writing or assumed by
Lessor;
(c) a lease duly executed, acknowledged and delivered by Lessee,
containing the same terms and conditions as are contained herein, except that
(i) the legal description of the Land shall refer to the Substitute Property,
(ii) the Minimum Repurchase Price, Rent and any Additional Charges for the
Substitute Property shall be consistent with the requirements of Section 20.1
and (iii) such other changes therein as may be necessary or appropriate under
the circumstances shall be made;
(d) a standard owner's or lessee's (as applicable) policy of title
insurance covering the Substitute Property (or a valid, binding, unconditional
commitment therefor), dated the Substitution Date, in current form and including
mechanics' and materialmen's lien coverage, issued to Lessor by a title
insurance company reasonably satisfactory to Lessor. Such policy shall (i)
insure (A) Lessor's fee title to the Substitute Property, subject to no liens or
encumbrances except those approved or assumed by Lessor, and (B) that any
restrictions affecting the Substitute Property have not been violated and that
further violation thereof will not result in a forfeiture or reversion of title,
(ii) be in an amount at least equal to the Fair Market Value of the Substitute
Property, and (iii) contain such endorsements as may be reasonably requested by
Lessor;
(e) certificates of insurance with respect to the Substitute Property
fulfilling the requirements of Article XII;
(f) current appraisals or other evidence satisfactory to Lessor, in its
sole discretion, as to the current Fair Market Values of such Substitute
Property;
(g) all available revenue data relating to the Substitute Property for
the period from
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the date of opening for business of the Substitute Property to the date of
Lessee's most recent Fiscal-Year end, or for the most recent three years,
whichever is less; and
(h) such other certificates, documents, opinions of counsel (which may
be in-house counsel), and other instruments as may be reasonably required by
Lessor.
20.3 CONVEYANCE TO LESSEE. On the Substitution Date Lessor will convey
the Leased Property to Lessee in accordance with the provisions of Article XVII
(except as to payment of any expenses in connection therewith which shall be
governed by Section 20.4 below) upon either (a) payment in cash therefor or (b)
conveyance to Lessor of the Substitute Property, as appropriate.
20.4 EXPENSES. Lessee shall pay or cause to be paid, on demand, all
reasonable costs and expenses paid or incurred by Lessor in connection with the
substitution and conveyance of the Leased Property and the Substitute Property,
including (a) fees and expenses of Lessor's counsel, (b) the amount of any
recording taxes and filing fees, (c) the cost of preparing and recording, if
appropriate, a release of the Leased Property from the lien of any mortgage, (d)
broker's fees and commissions for Lessee, if any, (e) documentary stamp and
transfer taxes, if any, (f) title insurance charges, and (g) escrow fees, if
any.
ARTICLE XXI
RISK OF LOSS
Except as otherwise provided in this Lease, during the Term of this
Lease, the risk of loss or of decrease in the enjoyment and beneficial use of
the Leased Property in consequence of the damage or destruction thereof by fire,
the elements, casualties, thefts, riots, wars or otherwise, or in consequence of
foreclosures, attachments, levies or executions (other than by Lessor and those
claiming from, through or under Lessor) is assumed by Lessee and, Lessor shall
in no event be answerable or accountable therefor nor shall any of the events
mentioned in this Section entitle Lessee to any abatement of the Rent except as
specifically provided in this Lease.
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ARTICLE XXII
INDEMNIFICATION
Notwithstanding the existence of any insurance or self insurance
provided for in Article XII, and without regard to the policy limits of any such
insurance or self insurance, Lessee will protect, indemnify, save harmless and
defend Lessor from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including reasonable attorneys'
fees and expenses), to the extent permitted by law, imposed upon or incurred by
or asserted against Lessor by reason of: (a) any accident, injury to or death of
persons or loss to property occurring on or about the Leased Property, including
any claims of malpractice, (b) any use, misuse, no use, condition, maintenance
or repair by Lessee of the Leased Property, (c) any Impositions (which are the
obligations of Lessee to pay pursuant to the applicable provisions of this
Lease), (d) any failure on the part of Lessee to perform or comply with any of
the terms of this Lease, (e) 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 Lessee as landlord thereunder and (f) the violation of any
Hazardous Materials Law. Any amounts which become payable by Lessee under this
Section shall be paid within ten days after liability therefor on the part of
Lessor is finally determined by litigation or otherwise (including the
expiration of any time for appeals) and, if not timely paid, shall bear interest
(to the extent permitted by law) at the Overdue Rate from the date of such
determination to the date of payment. Lessee, at its expense, shall contest,
resist and defend any such claim, action or proceeding asserted or instituted
against Lessor or may compromise or otherwise dispose of the same as Lessee sees
fit. Lessor shall cooperate with Lessee in a reasonable manner to permit Lessee
to satisfy Lessee's obligations hereunder, including the execution of any
instruments or documents reasonably requested by Lessee. Nothing herein shall be
construed as indemnifying Lessor or its agents for their own negligent acts or
omissions or willful misconduct. Lessee's liability for a breach of the
provisions of this Article shall survive any termination of this Lease.
ARTICLE XXIII
SUBLETTING AND ASSIGNMENT
23.1 SUBLETTING AND ASSIGNMENT. Subject to the rights of Tenants under
existing Tenant Leases and subject to the provisions of Section 23.2 below and
any other express conditions or limitations set forth herein, Lessee may,
without the consent of Lessor, sublet all or any part of the Leased Property
consistently with the Primary Intended Use. Lessor shall not unreasonably
withhold its consent to any other or further subletting or assignment; provided
that (a) in the case of a subletting, the sublessee shall comply with the
provisions of Section 23.2, (b) in the case of an assignment, the assignee shall
assume in writing and agree to keep and perform all of the terms of this Lease
on the part of Lessee to be kept and performed and shall be and become jointly
and severally liable with Lessee for the performance thereof, (c) an original
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counterpart of each such sublease and assignment and assumption, duly executed
by Lessee and such sublessee or assignee, as the case may be, in form and
substance reasonably satisfactory to Lessor, shall be delivered promptly to
Lessor, and (d) in case of either an assignment or subletting, Lessee shall
remain primarily liable, as principal rather than as surety, for the prompt
payment of the Rent and for the performance and observance of all of the
covenants and conditions to be performed by Lessee hereunder. In addition to
Lessee's rights to sublet and assign as provided in this section above, Lessee
shall also have the right (upon Lessor's prior consent, which consent shall not
unreasonably be withheld) to enter into Tenant Leases which extend beyond the
Term of this Lease. To the extent that any such Tenant Leases extend beyond the
Term of this Lease, Lessor shall receive the rents from, and be responsible for
any obligations on the part of the landlord or lessor under such Tenant Leases.
Any and all such Tenant Leases shall, to the extent applicable, be subject to
the provisions of this Section and Section 23.2. No sublease or assignment shall
release Lessee from their obligations under the Lease.
Notwithstanding the foregoing, Lessor's consent shall not be required
if Lessee's rights hereunder are assigned to or acquired by BCC or an Affiliate
of BCC as a result of an exercise by BCC of its rights under the Asset Purchase
Option or the Equity Option in accordance with the terms of the Shortfall
Funding Agreement or the Option Agreement, or under the Right of First Refusal
Agreement, and otherwise in accordance with the foregoing paragraph and the
other provisions of this Lease, and upon such assignment or acquisition the
obligations of Lessee and any guarantor which is BCC or an Affiliate of BCC
hereunder shall be extinguished.
23.2 NON-DISTURBANCE, SUBORDINATION AND ATTORNMENT. Except for existing
Tenant Leases, Lessee shall insert in each sublease permitted under Section 23.1
provisions to the effect that (a) such sublease is subject and subordinate to
all of the terms and provisions of this Lease and to the rights of Lessor
hereunder, (b) in the event this Lease shall terminate before the expiration of
such sublease, the sublessee thereunder will, at Lessor's option, attorn to
Lessor and waive any right the sublessee may have to terminate the sublease or
to surrender possession thereunder as a result of the termination of this Lease
and (c) in the event the sublessee receives a written notice from Lessor or
Lessor's assignees, if any, stating that Lessee is in default under this Lease,
the sublessee, shall thereafter be obligated to pay all rentals accruing under
said sublease directly to the party giving such notice, or as such party may
direct. All rentals received from the sublessee by Lessor or Lessor's assignees,
if any, shall be credited against amounts owing by Lessee under this Lease.
Lessor agrees that notwithstanding any default, termination, expiration, sale,
entry or other act or omission of Lessee pursuant to the terms of this Lease, or
at law or in equity, Tenant's possession shall not be disturbed unless such
possession may otherwise be terminated pursuant to the terms of the applicable
Tenant Lease. Lessor hereby agrees, upon Lessee's request, to execute a
nondisturbance agreement in favor of any Tenant or in favor of any sublessee
under any sublease permitted under Section 23.1 above; provided that the Tenant
or any such sublessee has acknowledged all of the foregoing provisions and
executed all documents required by this Section 23.2.
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ARTICLE XXIV
OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS
24.1 ESTOPPEL CERTIFICATE. At any time and from time to time within 20
days following written request by Lessor, Lessee will furnish to Lessor an
Officer's Certificate certifying that this Lease is unmodified and in full force
and effect (or that this Lease is in full force and effect as modified and
setting forth the modifications) the amounts of and the dates to which the Rent
has been paid, and such other matters regarding the Lease as Lessor may
reasonably request. Any such Officer's Certificate furnished pursuant to this
Article may be relied upon by Lessor, any prospective purchaser of the Leased
Property and any third parties who have an interest in the Leased Property,
including any lender or professional advisor or Lessor.
24.2 FINANCIAL STATEMENTS AND CERTIFICATES. Lessee will furnish or
cause to be furnished to the Lessor,
(a) within forty-five (45) days after the end of each calendar
quarter, a certificate of Lessee, in form acceptable to Lessor substantially
similar to the form set forth on Exhibit G hereto, that no Default or Event of
Default then exists and no event has occurred (that has not been cured) and no
condition currently exists (herein, a "Default") that would, but for the giving
of any required notice or explanation of any applicable cure period, constitute
an Event of Default;
(b) upon Lessor's request, within thirty (30) days of the end
of each calendar month, an aged accounts receivable report of the Facility from
Lessee in sufficient detail to show amounts due from each class of patient-mix
(i.e. private, Medicare (if applicable), Medicaid (if applicable) and V.A.) by
the account age classifications of 30 days, 60 days, 90 days, 120 days;
(c) upon Lessor's request, within thirty (30) days of the end
of each calendar month, a current year-to-date operating statement from the
Lessee for the Facility;
(d) upon Lessor's request, within thirty (30) days of the end
of each calendar month, monthly census information of the Facility in sufficient
detail to show patient-mix on a daily average basis for such month;
(e) within ten (10) days of filing or receipt (i) all cost
reports, if any, and any amendments thereto filed with respect to the Facility
and (ii) all responses, audits reports, or inquiries with respect to such cost
reports, all of which Lessee shall prepare and file on a timely basis;
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(f) within ten (10) days of Lessee's receipt, copies of all
licensure and certification survey reports, if any, and statements of
deficiencies (with plans of correction attached thereto);
(g) within three (3) days of Lessee's receipt, any and all
notices (regardless of form) from any and all licensing and/or certifying
agencies that the license and/or any applicable reimbursement contract or
certification of the Facility is being downgraded to a substandard category,
revoked, or suspended, or that action is pending or being considered to
downgrade to a substandard category, revoke, or suspend the Facility's license
or certification; and
(h) Upon Lessor's request, evidence of payment by Lessee of
any applicable provider bed taxes or similar taxes, which taxes Lessee agrees to
pay.
The Lessee shall correct any deficiency within the date
required by any licensure and certification agency. Lessor reserves the right to
require such other financial information and tax returns of Lessee at such other
times as it shall deem necessary. All financial statements must be in such form
and detail as the Lessor shall from time to time request.
ARTICLE XXV
INSPECTION
Lessee shall permit Lessor and its authorized representatives to
inspect the Leased Property during usual business hours subject to any security,
health, safety or confidentiality requirements of Lessee, the rights of the
Tenants, any Insurance Requirements relating to the Leased Property, or any
other restrictions imposed by law or applicable regulations.
ARTICLE XXVI
QUIET ENJOYMENT
So long as Lessee shall pay all Rent as the same becomes due and shall
fully comply with all of the terms of this Lease and fully perform its
obligations hereunder, Lessee shall peaceably and quietly have, hold and enjoy
the Leased Property for the Term hereof, free of any claim or other action by
Lessor or anyone claiming by, through or under Lessor, but subject to all liens
and encumbrances of record as of the date hereof or hereafter 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 to fail to pay 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 or seek any damages it may
have against Lessor as a result of a breach by Lessor of the covenant of quiet
enjoyment contained in this
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Article.
ARTICLE XXVII
NOTICES
Any notices, demands, approvals and other communications provided for
herein shall be in writing and shall be delivered by telephonic facsimile,
overnight air courier, personal delivery or registered or certified U.S. Mail
with return receipt requested, postage paid, to the appropriate party at its
address as follows:
If to Lessor:
Capstone Capital of Virginia, Inc.
0000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx XxXxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
Sirote & Permutt, P.C.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Lessee:
ALCO IX, L.L.C.
x/x Xxxxxx Xxxxx, Xxx.
00 Xxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With copies to:
Balanced Care Corporation
c/o Balanced Care Development and Management Co.
0000 Xxxxxx Xxxxx
Xxxxx 000
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Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Telephone: (000)000-0000
Telecopy: (000) 000-0000
and
Xxxxxxxxxxx & Xxxxxxxx, LLP
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or to such other address, and to the attention of such other person (including a
Facility Mortgagee) or officer as either party may designate in writing by
notice. Addresses for notice may be changed from time to time by written notice
to all other parties. Any communication given by mail will be effective (i) upon
the earlier of (a) three business days following deposit in a post office or
other official depository under the care and custody of the United States Postal
Service or (b) actual receipt, as indicated by the return receipt; (ii) if given
by telephone facsimile, when sent; and (iii) if given by personal delivery or by
overnight air courier, when delivered to the appropriate address set forth.
ARTICLE XXVIII
APPRAISAL
In the event that it becomes necessary to determine the Fair Market
Value, Fair Market Value Purchase Price, the Fair Market Added Value, the
Minimum Repurchase Price or the Fair Market Rental Value of the Leased Property
or a Substitute Property for any purpose of this Lease, the party required or
permitted to give notice of such required determination shall include in the
notice the name of a person selected to act as an appraiser on its behalf.
Within ten days after receipt of any such notice, Lessor (or Lessee, as the case
may be) shall by notice to Lessee (or Lessor, as the case may be) appoint a
second person as an appraiser on its behalf. The appraisers thus appointed (each
of whom must be a member of the American Institute of Real Estate Appraisers or
any successor organization thereto) shall, within 45 days after the date of the
notice appointing the first appraiser, proceed to appraise the Leased Property
or the Substitute Property, as the case may be, to determine any of the
foregoing values as of the relevant date (giving effect to the impact, if any,
of inflation from the date of their decision to the relevant date) provided that
if only one appraiser shall have been so appointed, or if two appraisers shall
have been so appointed but only one such appraiser shall have made such
determination within 50 days
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after the making of Lessee's or Lessor's request, then the determination of such
appraiser shall be final and binding upon the parties. If two appraisers shall
have been appointed and shall have made their determinations within the
respective requisite periods set forth above and if the difference between the
amounts so determined shall not exceed ten percent of the lesser of such
amounts, then the Fair Market Value or Fair Market Added Value or the Fair
Market Rental Value shall be an amount equal to 50% of the sum of the amounts so
determined. If the difference between the amounts so determined shall exceed 10%
of the lesser of such amounts, then such two appraisers shall have 20 days to
appoint a third appraiser, but if such appraisers fail to do so, then either
party may request the American Arbitration Association or any successor
organization thereto to appoint an appraiser within 20 days of such request, and
both parties shall be bound by any appointment so made within such 20-day
period. If no such appraiser shall have been appointed within such 20 days or
within 90 days of the original request for a determination of Fair Market Value
or Fair Market Added Value or the Fair Market Rental Value, whichever is
earlier, either Lessor or Lessee may apply to any court having jurisdiction to
have appointment made by such court. Any appraiser appointed, by the American
Arbitration Association or by such court, shall be instructed to determine the
Fair Market Value or Fair Market Added Value or the Fair Market Rental Value
within 30 days after appointment of such appraiser. The determination of the
appraiser which differs most in terms of dollar amount from the determinations
of the other two appraisers shall be excluded, and 50% of the sum of the
remaining two determinations shall be final and binding upon Lessor and Lessee
as the Fair Market Value or Fair Market Added Value or the Fair Market Rental
Value for such interest. However, in the event that following the appraisal
performed by said third appraiser, the dollar amount of two of such appraisals
are higher and lower, respectively, than the dollar amount of the remaining
appraisal in equal degrees, the determinations of both the highest and lowest
appraisal, respectively, shall be rejected and the determination to the
remaining appraisal shall be final and binding upon Lessor and Lessee as the
Fair Market Value or Fair Market Added Value or the Fair Market Rental Value for
such interest. This provision for determination by appraisal shall be
specifically enforceable to the extent such remedy is available under applicable
law, and any determination hereunder shall be final and binding upon the parties
except as otherwise provided by applicable law. Lessor and Lessee shall each pay
the fees and expenses of the appraiser appointed by it and each shall pay
one-half of the fees and expenses of the third appraiser and one-half of all
other costs and expenses incurred in connection with each appraisal.
ARTICLE XXIX
PURCHASE RIGHTS
29.1 PURCHASE OPTION. Not more than 180 days prior to the end of the
Initial Term and each Extended Term exercised by Lessee pursuant to the terms of
Article 34, Lessee shall have the option to purchase the Leased Property upon
written notice to Lessor for a purchase price equal to the Minimum Repurchase
Price. If not sooner exercised, the option to purchase
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granted hereby will expire and be of no further force and effect upon the
expiration of the Term or the earlier termination of this Lease.
ARTICLE XXX
DEFAULT BY LESSOR
30.1 DEFAULT BY LESSOR. Lessor shall be in default of its obligations
under this Lease if Lessor shall fail to observe or perform any term, covenant
or condition of this Lease on its part to be performed and such failure shall
continue for a period of 30 days after written notice thereof is received by
Lessor, unless such failure cannot with due diligence be cured within a period
of 30 days, in which case such failure shall not be deemed to continue if
Lessor, within said 30-day period, proceeds promptly and with due diligence to
cure the failure and diligently completes the curing thereof. The time within
which Lessor shall be obligated to cure any such failure shall also be subject
to extension of time due to the occurrence of any Unavoidable Delay. In the
event Lessor fails to cure any such default, Lessee, without waiving or
releasing any obligations hereunder, and in addition to all other remedies
available to Lessee hereunder or at law or in equity, may purchase the Leased
Property from Lessor for a purchase price equal to the greater of the Fair
Market Value Purchase Price or the Minimum Repurchase Price of the Leased
Property minus an amount equal to any damage suffered by Lessee by reason of
such default. In the event Lessee elects to purchase the Leased Property, it
shall deliver a notice thereof to Lessor specifying a Payment Date occurring no
less than 90 days subsequent to the date of such notice on which it shall
purchase the Leased Property, and the same shall be thereupon conveyed in
accordance with the provisions of Article XVII. Any sums owed Lessee by Lessor
hereunder shall bear interest at the Overdue Rate from the date due and payable
until the date paid.
30.2 LESSEE'S RIGHT TO CURE. Subject to the provisions of Section 30.1,
if Lessor shall breach any covenant to be performed by it under this Lease,
Lessee, after giving notice to and demand upon Lessor in accordance with Section
30.1, without waiving or releasing any obligation of Lessor hereunder, and in
addition to all other remedies available to Lessee hereunder and at law or in
equity, Lessee may (but shall be under no obligation at any time thereafter to)
make such payment or perform such act for the account and at the expense of
Lessor. All sums so paid by Lessee and all costs and expenses (including
reasonable attorneys' fees) so incurred, together with interest thereon at the
Overdue Rate from the date on which such sums or expenses are paid or incurred
by Lessee, shall be paid by Lessor to Lessee on demand or set off against the
Rent. The rights of Lessee hereunder to cure and to secure payment from Lessor
in accordance with this Section 30.2 shall survive the termination of this
Lease.
ARTICLE XXXI
ARBITRATION
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31.1 CONTROVERSIES. Except with respect to the payment of Minimum Rent
hereunder, in case any controversy shall arise between the parties hereto as to
any of the requirements of this Lease or the performance thereof which
controversy the parties shall be unable to settle by agreement or as otherwise
provided herein, such controversy shall be determined by arbitration to be
initiated and conducted as provided in this Article XXXI.
31.2 APPOINTMENT OF ARBITRATORS. The party or parties requesting
arbitration shall serve upon the other a written demand therefor specifying the
matter to be submitted to arbitration, and nominating an arbitrator who is a
member in good standing of the American Arbitration Association ("AAA"). Within
20 days after receipt of such written demand and notification, the other party
shall, in writing, nominate a person who is a member in good standing with AAA
and the two arbitrators so designated shall, within ten days thereafter, select
a third arbitrator who is a person who is a member in good standing with AAA and
give immediate written notice of such selection to the parties and shall fix in
said notice a time and place for the first meeting of the arbitrators, which
meeting shall be held as soon as conveniently possible after the selection of
all arbitrators, at which time and place the parties to the controversy may
appear and be heard.
31.3 THIRD ARBITRATOR. In case the notified party or parties shall fail
to make a selection upon notice as aforesaid, or in case the first two
arbitrators selected shall fail to agree upon a third arbitrator within ten days
after their selection, then such arbitrator or arbitrators may, upon application
made by either of the parties to the controversy, after 20 days' written notice
thereof to the other party or parties have a third arbitrator appointed by any
judge of any United States court of record having jurisdiction in the state in
which the Leased Property is located or, if such office shall not then exist, by
a judge holding an office most nearly corresponding thereto.
31.4 ARBITRATION PROCEDURE. Said arbitrators shall give each to the
parties not less than ten days' written notice of the time and place of each
meeting at which the parties or any of them may appear and be heard and after
hearing the parties in regard to the matter in dispute and taking such other
testimony and making such other examinations and investigations as justice shall
require and as the arbitrators may deem necessary, they shall decide the
questions submitted to them in accordance with the rules of AAA. The decision of
said arbitrators in writing signed by a majority of them shall be final and
binding upon the parties to such controversy. In rendering such decisions and
award, the arbitrators shall not add to, subtract from or otherwise modify the
provisions of this Lease.
31.5 EXPENSES. The expenses of such arbitration shall be divided
between Lessor and Lessee unless otherwise specified in the decision of the
arbitrators. Each party in interest shall pay the fees and expenses of its own
counsel.
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ARTICLE XXXII
FINANCING OF THE LEASED PROPERTY
Lessor agrees that it will not grant or create any mortgage deed of
trust, lien encumbrance or other title retention agreement upon the Leased
Property to secure any indebtedness of Lessor (an "Encumbrance"), unless each
holder of such an Encumbrance agrees (a) to give Lessee the same notice, if any,
given to Lessor of any default or acceleration of any obligation underlying any
such Encumbrance or any sale in foreclosure of such Encumbrance, (b) to permit
Lessee to appear with its representatives and to bid at any public foreclosure
sale with respect to any such Encumbrance, (c) agrees to release the Leased
Property from the Encumbrance upon the exercise by Lessee of a right to purchase
contained in this Lease and the payment by Lessee of the applicable purchase
price, and (d) enters into an agreement with Lessee containing the provisions
described in Article XXXIII of this Lease. Lessee agrees to execute and deliver
to Lessor or the holder of an Encumbrance any written agreement required by this
Article within ten days of written request thereof by Lessor or the holder of an
Encumbrance.
Lessee hereby consents to the assignment of and grant of a security
interest and lien in this Lease together with the other documents and
instruments delivered to Lessor by Lessee pursuant hereto and in connection
herewith (collectively, the "Assigned Documents"), including all rights and
obligations of Lessor in, to and under each Assigned Document, by Lessor to
Capstone, as lender pursuant to the Loan Agreement, pursuant to which Capstone
has established a credit facility in favor of Lessor for the purpose of
constructing the Facility.
ARTICLE XXXIII
ATTORNMENT AND NON-DISTURBANCE
At the request from time to time by one or more holders of an
Encumbrance that may hereafter be placed upon the Leased Property or any part
thereof, and any and all renewals, replacements, modifications, consolidations,
spreaders and extensions thereof, Lessee will subordinate this Lease and all of
Lessee's rights and estate hereunder to each such Encumbrance and will attorn to
and recognize such holder (or the purchaser at any foreclosure sale or any sale
under a power of sale contained in any such Encumbrance or a holder by a deed in
lieu of foreclosure, as the case may be) as Lessor under this Lease for the
balance of the Term then remaining, subject to all of the terms and provisions
of this Lease; provided that each such institutional holder simultaneously with
or prior to recording any such Encumbrance executes and delivers a written
agreement in recordable form (a) consenting to this Lease, and agreeing that,
notwithstanding any such other lease, mortgage, deed of trust, right, title or
interest, or any default, expiration, termination, foreclosure, sale, entry or
other act or omission under, pursuant to or affecting any of the foregoing,
Lessee shall not be disturbed in peaceful enjoyment of the
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Leased Property nor shall this Lease be terminated or canceled at any time,
except in the event Lessor shall have the right to terminate this Lease under
the terms and provisions expressly set forth herein; (b) agreeing that it will
be bound by all the terms of this Lease, perform and observe all of Lessor's
obligations set forth herein; and (c) agreeing that all proceeds of the casualty
insurance described in Article XIII of this Lease and all Awards described in
Article XIV will be made available to Lessor for restoration of the Leased
Property as and to the extent required by this Lease, subject only to reasonable
regulation regarding the manner of disbursement and application thereof. Lessee
agrees to execute and deliver to Lessor or the holder of an Encumbrance any
written agreement required by this Article within ten days of written request
thereof by Lessor or the holder of an Encumbrance. Lessee agrees to execute at
the request from time to time of Lessor or an institutional investor a
certificate setting forth any defaults of Lessor hereunder and the dates through
which Rent has been paid and such other matters as may be reasonably requested.
ARTICLE XXXIV
EXTENDED TERMS
If no Event of Default shall have occurred and be continuing, Lessee is
hereby granted the right to extend the Term of this Lease for three (3)
consecutive five (5) year periods ("Extended Term") for a maximum possible Term
of twenty-five (25) years, by giving written notice to Lessor of each such
extension at least 180 days, but not more than 270 days, prior to the expiration
of the then-current Term; subject, however, to the provisions of Section 13.7
hereof. Lessor agrees to use its best efforts to provide Lessee with prior
written notice at least 210 days prior to the expiration of the then-current
Term. Lessee may not exercise its option for more than one Extended Term at a
time. During each Extended Term, all of the terms and conditions of this Lease
shall continue in full force and effect, except that the Minimum Rent for and
during each of the Extended Terms shall be the greater of (i) the Fair Market
Rental Value on the first day of such Extended Term or (ii) the Minimum Rent in
effect immediately prior to the first day of such Extended Term. In any event,
the Minimum Rent shall continue to be increased throughout the Extended Terms in
accordance with the provisions of Section 2.1(b) hereof. In addition to the
foregoing, Lessee may not exercise any renewal option hereunder unless each
lessee of the Leases exercises its respective renewal option in accordance with
the terms of each such Lease.
ARTICLE XXXV
MISCELLANEOUS
35.1 NO WAIVER. No failure by Lessor or Lessee to insist upon the
strict performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of the Rent during the continuance of any such
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breach, shall constitute a waiver of any such breach or any such term. To the
extent permitted by law, no waiver of any breach shall affect or alter this
Lease, which shall continue in full force and effect with respect to any other
then existing or subsequent breach.
35.2 REMEDIES CUMULATIVE. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Lessor or Lessee now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy and the exercise or beginning of the exercise by Lessor or Lessee of
any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Lessor or Lessee of any or all of such
other rights, powers and remedies.
35.3 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.
35.4 NO MERGER OF TITLE. There shall be no merger of this Lease or of
the leasehold estate created hereby by reason of the fact that the same person,
firm, corporation or other entity may acquire, own or hold, directly or
indirectly, (a) this Lease or the leasehold estate created hereby or any
interest in this Lease or (b) such leasehold estate and the fee estate in the
Leased Property.
35.5 TRANSFERS BY LESSOR. If Lessor or any successor owner of the
Leased Property shall convey the Leased Property in accordance with the terms
hereof, other than as security for a debt, the grantee or transferee of the
Leased Property shall expressly assume all obligations of Lessor hereunder
arising or accruing from and after the date of such conveyance or transfer, and
shall be reasonably capable of performing the obligations of Lessor hereunder
and Lessor or such successor owner as the case may be, shall thereupon be
released from all future liabilities and obligations of 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.
35.6 GENERAL. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee and Lessor
against the other arising out of or relating to this Lease and arising prior to
any date of termination of this Lease shall survive such termination. If any
term or provision of this Lease or any application thereof shall be invalid or
unenforceable, the remainder of this Lease and any other application of such
term or provision shall not be affected thereby. If any late charges provided
for in any provision of this Lease are based upon a rate in excess of the
maximum rate permitted by applicable law, the parties agree that such charges
shall be fixed at the maximum permissible rate. Neither this Lease nor any
provision
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hereof may be changed, waived, discharged or terminated except by an instrument
in writing and in recordable form signed by Lessor and Lessee. All the terms and
provisions of this Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. The headings in this
Lease are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof. This Lease shall be governed by and construed in
accordance with the laws of Alabama, but not including its conflict of laws
rules. This Lease may be executed in one or more counterparts, each of which
shall be an original but, when taken together, shall constitute but one
document.
35.7 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 in which the Leased Property
is located in which reference to this Lease, and all options contained herein,
shall be made. Recordation shall be at Lessee's expense.
35.8 TRANSFER OF LICENSES. Upon the expiration or earlier termination
of the Term, Lessee shall take all action necessary to effect or useful in
effecting the transfer to Lessor or Lessor's nominee of all licenses, operating
permits and other governmental authorizations and all service contracts which
may be necessary or useful in the operation of the Facility and which relate
exclusively to the Facility which have not previously been transferred or
assigned to Lessor.
35.9 DEPOSIT ACCOUNT. Subject to the Deposit Pledge Agreement and the
Management Agreement, all deposit accounts established pursuant to this Lease
shall either be in Lessee's name or in Lessor's name as and for the benefit of
Lessee, at Lessee's option. Lessee shall be entitled to receive all interest on
such accounts and to select investments in money market accounts or certificates
of deposit up to a two (2) month maturity, so long as no Event of Default
exists. Lessor shall have an assignment of such accounts as collateral for
Lessee's obligations hereunder. Upon termination of the Lease without any Event
of Default then existing or these being amounts owed to Lessor, Lessee shall be
entitled to receive the balance of funds in such accounts.
35.10 LEASE TERMINATION. Upon any termination or expiration of this
Lease Agreement for any reason (other than the exercise by Lessee of a purchase
option provided for herein), the Lessee shall peaceably quit and surrender to
Lessor the Leased Property and the right to receive all rental and other income
of and from the same. Upon such surrender, Lessee shall fully cooperate with
Lessor or Lessor's designee to enable Lessor or Lessor's designee to obtain all
such licenses, permits, certifications, and any other such items necessary to
operate the Leased Property as an assisted living/personal care facility and, to
the extent applicable, qualify for third-party payor programs, such as Medicare
or Medicaid.
35.11 ACCESS TO RECORDS. To the extent required by law, Lessor shall
(and, if Lessor carries out any of the duties under this Lease, whether on
Lessor's or Lessee's behalf, through a subcontract with a related organization
and such subcontract has a value or cost of Ten Thousand
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Dollars ($10,000) or more during any twelve (12) month period, such subcontract
shall contain a clause to the effect that the subcontractor shall) until the
expiration of four (4) years after the furnishing of services pursuant to this
Lease, make available, upon request by the Secretary of Health and Human
Services or upon the request by the U.S. Comptroller General, or any duly
authorized representative of either of them, the books, documents and records of
Lessor (or such subcontractor) that are necessary to verify the nature and
extent of such costs in connection with said services.
ARTICLE XXXVI
GLOSSARY OF TERMS
36.1 For purposes of this Lease, except as otherwise expressly provided
or unless the context otherwise requires, (a) the terms defined in this Article
XXXVI have the meanings assigned to them in this Article XXXVI and include the
plural as well as the singular, (b) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with generally accepted
accounting principles as at the time applicable, (c) all references in this
Lease to designated "Articles", "Sections" and other subdivisions are to the
designated Articles, Sections and other subdivisions of this Lease, and (d) the
words "herein", "hereof" and "hereunder" and other words of similar import refer
to this Lease as a whole and not to any particular Article, Section or other
subdivision, (e) the word "including" shall mean including without limitation,"
and (f) all consents required of Lessor hereunder shall be in Lessor's sole and
absolute discretion, unless otherwise specifically set forth herein. For
purposes of this Lease, the following terms shall have the meanings indicated:
"AAA" means the American Arbitration Association.
"Acceptable Financial Institution" means AmSouth Bank, Colonial Bank,
SouthTrust Bank or First Commercial Bank, each in Birmingham, Alabama, or such
other financial institution as may be acceptable to Lessor.
"Additional Charges" has the meaning set forth in Section 2.3 hereof
together with all other items specifically included as "Additional Charges" in
this Agreement.
"Additions" means that certain 25-unit addition to be constructed at
the Facility in accordance with the Development Agreement.
"Adjustment Date" has the meaning set forth in Section 2.1 (b) hereof.
"Affiliate", when used with respect to Lessee, means any Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with Lessee. For the
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purposes of this definition, "control", 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.
"Applicable Period" means, except as described in Section 2.5, the
immediately preceding twelve (12) months.
"Approved Budget Costs" has the meaning set forth in Section 2.1 of the
Development Agreement.
"Asset Purchase Option" means BCC's option to purchase all of Lessee's
assets contained in Section 1.03 of the Shortfall Funding Agreement.
"Assigned Documents" has the meaning set forth in Article XXXII hereof.
"Assignment and Assumption Agreement" means that certain Assignment and
Assumption Agreement dated as of even date herewith among Lessor, Borrower and
Capstone, pursuant to which Borrower has assigned to Lessor and Lessor has
assumed from Borrower all of the rights and obligations of Borrower under the
Loan Agreement.
"Assignment, Assumption and Amendment Agreement" means that certain
Assignment, Assumption and Amendment Agreement dated as of even date herewith
among Lessor, Borrower and Developer, pursuant to which Borrower has assigned to
Lessor and Lessor has assumed from Borrower all of the rights and obligations of
Borrower under the Development Agreement, as amended thereby.
"Award" means all compensation, sums or anything of value awarded, paid
or received on a total or partial Condemnation.
"BCC" means Balanced Care Corporation, a Delaware corporation.
"Borrower" means ALCO I, L.L.C., a North Carolina limited liability
company.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday, and
Friday which is not a day on which national banks in the City of Birmingham,
Alabama are closed.
"Capital Additions" means one or more new buildings or one or more
additional structures annexed to any portion of any of the Leased improvements
which are constructed on any parcel or portion of the Land during the Term,
including the construction of a new wing or new story or the rebuilding of the
existing Leased Improvements or any portion thereof not normal, ordinary or
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recurring to maintain the Leased Property, excluding, however, any construction
governed by the provisions of Article XIII.
"Capital Addition Cost" means the cost of any Capital Additions
proposed to be made by Lessee whether paid for by Lessee or Lessor. Such cost
shall include and be limited to (a) the cost of construction of the Capital
Additions, including site preparation and improvement, materials, labor
supervision and certain related design, engineering and architectural services
and the cost of any fixtures construction financing and miscellaneous items
approved in writing by Lessor, (b) if agreed to by Lessor in writing in advance,
the cost of any land contiguous to the Leased Property purchased for the purpose
of placing thereon the Capital Additions or any portion thereof or for providing
means of access thereto, or parking facilities therefor including the cost of
surveying the same, (c) the cost of insurance real estate taxes water and sewage
charges and other carrying charges for such Capital Additions during
construction, (d) the cost of title insurance, (e) reasonable fees and expenses
of legal counsel and accountants, (f) filing, registration and recording taxes
and fees, (g) documentary stamp taxes, if any (h) environmental assessments and
boundary surveys and (i) all reasonable costs and expenses of Lessor and any
Lending Institution which has committed to finance the Capital Additions,
including (A) the reasonable fees and expenses of their respective legal counsel
(B) all printing expenses, (C) the amount of any filing, registration and
recording taxes and fees (D) documentary stamp taxes, if any (E) title insurance
charges appraisal fees, if any, (F) rating agency fees, if any, (G) commitment
fees, if any, charged by any Lending Institution advancing or offering to
advance any portion of the financing for such Capital Additions, (H) a
development fee not exceeding five percent (5%) of total Capital Additions Cost.
"Capstone" means Capstone Capital Corporation, a Maryland corporation.
"Cash Adjustment" has the meaning set forth in Section 20.l(d).
"Charge" has the meaning set forth in Article XI hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commencement Date" has the meaning set forth in Article I.
"Condemnation" means the transfer of all or any part of the Leased
Property as a result of (i) the exercise of any governmental power, whether by
legal proceedings or otherwise, by a Condemnor or (ii) a voluntary sale or
transfer by Lessor to any Condemnor, either under threat of Condemnation or
while legal proceedings for Condemnation are pending.
"Condemnor" means any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.
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"Consolidated Financial Statements" means for any fiscal year or other
accounting period for Lessee and its respective consolidated Affiliates, audited
statements of earnings and retained earnings and of changes in financial
position for such period and for the period from the beginning of the respective
fiscal year of Lessee 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 of Lessee, and prepared in
accordance with generally accepted accounting principles consistently applied,
except as noted.
"Consumer Price Index" or "CPI" means the Consumer Price Index for All
Urban Consumers for the U S. City Average for all Items (1982-1984=100) as
published by the United States Department of Labor, Bureau of Labor Statistics.
If the manner in which the Consumer Price Index is determined by the Bureau of
Labor Statistics shall be substantially revised (including a change in the base
index year), an adjustment shall be made by Lessor in such revised index which
would produce results equivalent, as nearly as possible, to those which would
have been obtained if the Consumer Price Index had not been so revised. If the
Consumer Price Index shall become unavailable to the public because publication
is discontinued or otherwise, or if equivalent data is not readily available to
enable Lessor to make the adjustment referred to in the preceding sentence,
Lessor will substitute therefor a comparable index based upon changes in the
cost of living or purchasing power of the consumer dollar published by any other
governmental agency, or if no such index shall be available, then a comparable
index published by a major bank or other financial institution or by a
university or a recognized financial publication.
"Credit Enhancements" means all cash collateral, security deposits,
security interests, letters of credit, pledges, prepaid rent or other sums,
deposits or interests held by Lessee, if any, to secure obligations with respect
to the Leased Property, the Tenant Leases or the Tenants.
"Current Yield" means as of any date the annual Minimum Rent, as
adjusted from time-to-time pursuant to the terms of this Lease, divided by the
sum of (i) the Project Amount plus (ii) all Capital Additions Costs paid for or
financed by Lessor which have not been repaid by Lessee.
"Date of Taking" means the date the Condemnor has the right to
possession of the property being condemned.
"Deposit Pledge Agreement" means that certain Deposit Pledge Agreement
dated as of even date herewith made by Lessee in favor of BCC and Lessor.
"Developer" means BCC Development and Management Co., a Delaware
corporation.
"Development Agreement" means that certain Development Agreement dated
as of
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June 30, 1997, by and between Developer and Borrower, Borrower's rights and
liabilities under which have been assigned to and assumed by Lessor pursuant to
the Assignment, Assumption and Amendment Agreement.
"Encumbrance" has the meaning set forth in Article XXXII.
"Equity Option" means the option granted to BCC to purchase equity in
Lessee pursuant to the Option Agreement.
"Event of Default" has the meaning set forth in Section 15.1
"Extended Term" has the meaning set forth in Article XXXIV.
"Facility" means the 51-unit, 60-bed licensed assisted living facility
to be constructed and operated on the Leased Property.
"Facility Mortgage" has the meaning set forth in Section 12.1.
"Facility Mortgagee" has the meaning set forth in Section 12.1.
"Fair Market Added Value" means the Fair Market Value (as hereinafter
defined) of the Leased Property (including all Capital Additions) less the Fair
Market Value of the Leased Property determined as if no Capital Additions paid
for by Lessee without financing by Lessor had been constructed.
"Fair Market Rental Value" means the fair market rental value of the
Leased Property or any Substitute Property, (a) assuming the same is
unencumbered by this Lease, (b) determined in accordance with the appraisal
procedures set forth in Article XXVIII or in such other manner as shall be
mutually acceptable to Lessor and Lessee, and (c) not taking into account any
reduction in value resulting from an indebtedness to which the Leased Property
or Substitute Property may be subject.
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"Fair Market Value" means the fair market value of the Leased Property
or any Substitute Property, including all Capital Additions, (a) assuming the
same is unencumbered by this Lease, (b) determined in accordance with the
appraisal procedures set forth in Article XXVIII or in such other manner as
shall be mutually acceptable to Lessor and Lessee, and (c) not taking into
account any reduction in value resulting from any indebtedness to which the
Leased Property or such Substitute Property is subject or which encumbrance
Lessee or Lessor is otherwise required to remove pursuant to any provision of
this Lease or agrees to remove at or prior to the closing of the transaction as
to which such Fair Market Value determination is being made. The positive or
negative effect on the value of the Leased Property or Substitute Property
attributable to the interest rate, amortization schedule, maturity date,
prepayment penalty and other terms and conditions of any Encumbrance on the
Leased Property or any Substitute Property, as the case may be, which is not so
required or agreed to be removed shall be taken into account in determining such
Fair Market Value.
"Fair Market Value Purchase Price" means the Fair Market Value less the
Fair Market Added Value.
"Fiscal Year" means the 12-month period from January 1 to December 31.
"Fixtures" has the meaning set forth in Article I.
"Full Replacement Cost" has the meaning set forth in Section 12.1.
"Hazardous Materials" means any substance, including asbestos or any
substance containing asbestos, the group of organic compounds known as
polychlorinated biphenyls, flammable explosives, radioactive materials, medical
waste, chemicals, pollutants, effluents, contaminants, emissions or any other
related materials and items included in the definition of hazardous or toxic
wastes, materials or substances under any Hazardous Materials Law.
"Hazardous Materials Law" means any law, regulation or ordinance
relating to environmental conditions, medical waste and industrial hygiene,
including the Resource Conservation and Recovery Act of 1976 ("RCRA") the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of
1986 ("XXXX"), the Hazardous Materials Transportation Act, the Federal Water
Pollution Control Act the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Safe Drinking Water Act, the Atomic Energy Act and
all similar federal, state and local environmental statutes and ordinances,
whether heretofore or hereafter enacted or effective and all regulations,
orders, or decrees heretofore or hereafter promulgated thereunder.
"Impositions" means, collectively, all taxes relating to the Leased
Property, including all
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ad valorem, sales and use, gross receipts, action, privilege, rent (with respect
to the Tenant Leases) or similar taxes, assessments (including all assessments
for public improvements or benefits, whether or not commenced or completed prior
to the date hereof and whether or not to be completed within the Term), water,
sewer or other rents and charges, excises, 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 (including all interest and penalties thereon due to any failure
in payment by Lessee), which at any time prior to, during or in respect of the
Term hereof may be assessed or imposed on or in respect of or be a lien upon (a)
Lessor or Lessor's interest in the Leased Property, (b) the Rent, the Leased
Property or any part thereof or any rent therefrom or any estate, right, title
or interest therein, or (c) any occupancy, operation, use or possession of,
sales from, or activity conducted on, or in connection with, the Leased Property
or the Tenant Leases or use of the Leased Property or any part thereof; provided
that nothing contained in this Lease shall be construed to require Lessee to pay
(1) any tax based on net income (whether denominated as a franchise or capital
stock or other tax) imposed on Lessor, (2) any transfer or net revenue tax of
Lessor, (3) any tax imposed with respect to the sale, exchange or other
disposition by Lessor of any portion of the Leased Property or the proceeds
thereof, or (4) except as expressly provided elsewhere in this Lease, any
principal or interest on any Encumbrance on the Leased Property, except to the
extent that any tax, assessment, tax levy or charge which Lessee is obligated to
pay pursuant to this definition and which is in effect at any time during the
Term hereof is totally or partially repealed, and a tax, assessment, tax levy or
charge set forth in clause (1), (2) or (3) is levied, assessed or imposed
expressly in lieu thereof.
"Indemnification Agreement" means that certain Indemnification
Agreement dated as of the date hereof made by BCC in favor of Lessor.
"Initial Term" has the meaning set forth in Article I.
"Insurance Requirements" means all terms of any insurance policy
required by this Lease and all requirements of the issuer of any such policy.
"Land" has the meaning set forth in Article I.
"Lease" means this Lease.
"Leases" means, collectively, (i) this Lease; (ii) that certain lease
of even date herewith between Lessor and ALCO X, L.L.C, a North Carolina limited
liability company, for a residential care facility located in _______, Virginia;
and (iii) that certain lease of even date herewith between Lessor and ALCO XI,
L.L.C, a North Carolina limited liability company, for a residential care
facility located in ___________, Virginia.
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"Lease Amendment" has the meaning set forth in Section 9.3(b)(iv).
"Lease Assignment" means that certain Assignment of Rents and Leases,
substantially in the form attached hereto as Exhibit D, to be dated on or about
the date hereof executed by Lessee to Lessor, pursuant to the terms of which
Lessee assigns to Lessor each of the Tenant Leases and Credit Enhancements, if
any, as security for the obligations of Lessee under this Lease, and any other
obligations of Lessee, or any Affiliate of Lessee to Lessor.
"Leased Improvements" and "Leased Property" have the meanings set forth
in Article I.
"Legal Requirements" means all federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions affecting the Leased Property or the
construction, use or alteration thereof, whether now or hereafter enacted and in
force, including any which may (a) require repairs, modifications or alterations
of or to the Leased Property, or (b) in any way adversely affect the use and
enjoyment thereof, and all permits, licenses, authorizations and regulations
relating thereto, and all covenants, agreements, actions and encumbrances
contained in any instruments, either of record or known to Lessee (other than
encumbrances created by Lessor without the consent of Lessee), at any time in
force affecting the Leased Property.
"Lending Institution" means any insurance company, federally insured
commercial or savings bank, national banking association, savings and loan
association, employees' welfare, pension or retirement fund or system, corporate
profit-sharing or pension plan, college or university, or real estate investment
company including any corporation qualified to be treated for federal tax
purposes as a real estate investment trust having a net worth of at least
$50,000,000.
"Lessee" means ALCO IX, L.L.C., a North Carolina limited liability
company.
"Lessor" means Capstone Capital of Virginia, Inc., an Alabama
corporation.
"Loan Agreement" means that certain that certain Building and Term Loan
Agreement dated as of June 30, 1997 (the "Loan Agreement") between Capstone, as
lender, and ALCO I, L.L.C., as borrower, the borrower's rights under which have
been assigned to and assumed by Lessor pursuant to the Assignment and Assumption
Agreement.
"Management Agreement" means that certain Management Agreement dated as
of even date herewith between Lessee and Management Company.
"Management Company" means , a Delaware
corporation.
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"Minimum Rent has the meaning set forth in Section 2.1(a).
"Minimum Repurchase Price" means the greater of (i) the Fair Market
Value of the Leased Property less the Fair Market Added Value at the time of
repurchase hereunder by Lessee or (ii) the Project Amount (and in the case of a
substitution pursuant to Article XX, as adjusted pursuant to Section 20.1(f)) as
such amount is increased at the rate of three percent compounded annually for
each year (to be prorated for partial years) between the Commencement Date and
the date of repurchase by Lessee, plus the sum of all Capital Addition Costs
relating to the Leased Property paid for or financed by Lessor which as of the
date of repurchase of the Leased Property have not been repaid by Lessee, less
the net amount (after deduction of all reasonable legal fees and other costs and
expenses, including expert witness fees, incurred by Lessor in connection with
obtaining any such award or proceeds) of all Awards received by Lessor from
Condemnation of the Leased Property.
"Officer's Certificate" means a certificate of Lessee signed by the
Chairman of the Board of Directors, the President, any Vice President or another
officer authorized to so sign by the Board of Directors or By-Laws of Lessee, or
any other person whose power and authority to act has been authorized by
delegation in writing by any of the persons holding the foregoing offices.
"Option Agreement" means that certain option agreement dated as of even
date herewith between Lessee and BCC.
"Ordinary Course of Business" means the ordinary course of business for
Lessee consistent with past custom and practice (including quantity and
frequency).
"Overdue Rate" means as of any date, a rate per annum equal to the
Prime Rate as of such date, plus two percent, but in no event greater than the
maximum rate then permitted under applicable law.
"Payment Date" means any due date for the payment of the installments
of Minimum Rent under this Lease.
"Permitted Exceptions" has the meaning set forth in Article I hereof.
"Permitted Liens" means (i) liens described on Exhibit E attached
hereto, (ii) pledges or deposits made to secure payments of worker's
compensation insurance (or to participate in any fund in connection with
worker's compensation insurance), unemployment insurance, pensions or social
security programs, (iii) liens imposed by mandatory provisions of law such as
for materialmen, mechanics, warehousemen and other like liens arising in the
Ordinary Course of Business, securing indebtedness whose payment is not yet due
and payable, (iv) liens for taxes, assessments and governmental charges or
levies if the same are not yet due and payable or if the
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same are being contested in good faith and as to which adequate cash reserves
have been provided, (v) liens arising from good faith deposits in connection
with tenders, leases, real estate bids or contracts (other than contracts
involving the borrowing of money), pledges or deposits to secure public or
statutory obligations and deposits to secure (or in lieu of) surety, stay,
appeal or customs bonds and deposits to secure the payment of taxes,
assessments, duties or other similar charges, (vi) liens to secure purchase
money indebtedness, so long as the indebtedness incurred to purchase the new
asset is secured only by such asset, or (vii) encumbrances consisting of zoning
restrictions, easements or other restrictions on the use of real property;
provided that such items do not impair the use of such property for the purposes
intended, none of which is violated by existing or proposed structures or land
use.
"Person" means a natural person, corporation, partnership, trust,
association, limited liability company or other entity.
"Personal Property" means all machinery, equipment, furniture,
furnishings, computers, signage, trade fixtures or other personal property and
consumable inventory and supplies used or useful in the operation of the Leased
Property for Its Primary Intended Use, together with all replacements and
substitutions therefor, except for any portion of the Leased Property, all as
more specifically set forth on Exhibit F attached hereto.
"Primary Intended Use" has the meaning set forth in Section 6.2(a).
"Prime Rate" means the annual rate reported by The Wall Street Journal,
Eastern Edition (or, if The Wall Street Journal shall no longer be published or
shall cease to report such rates, then a publication or journal generally
acceptable in the financial industry as authoritative evidence of prevailing
commercial lending rates) from time to time as being the prevailing prime rate
(or, if more than one such rate shall be published in any given edition, the
arithmetic mean of such rates). The prime rate is an index rate used by The Wall
Street Journal to report prevailing lending rates and may not necessarily be its
most favorable lending rate available. Any change in the Prime Rate hereunder
shall take effect on the effective date of such change in the prime rate as
reported by The Wall Street Journal, without notice to Lessee or any other
action by Lessor. Interest shall be computed on the basis that each year
contains 360 days, by multiplying the principal amount by the per annum rate set
forth above, dividing the product so obtained by 360, and multiplying the
quotient thereof by the actual number of days elapsed.
"Project Amount" has the meaning set forth in Section 2.1(a).
"Rent" means, collectively, the Minimum Rent and the Additional
Charges.
"Request" has the meaning set forth in Section 9.3(a).
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"Right of First Refusal Agreement" means that certain Right of First
Refusal Agreement dated as of even date herewith between Lessor and BCC.
"Shortfall Funding Agreement" means that certain Shortfall Funding
Agreement dated as of even date herewith among Lessee, the members of the Lessee
parties thereto, and BCC in favor of Lessor.
"Subordination Agreement" means that certain Subordination and
Standstill Agreement dated as of even date herewith among Lessor, Lessee,
Capstone and BCC.
"Substitution Date" has the meaning set forth in Section 20.1.
"Substitute Properties" has the meaning set forth in Section 20.1.
"Support Document" means the Working Capital Assurance Agreement, the
Deposit Pledge Agreement, the Indemnification Agreement or any other agreement
pursuant to which the obligations of Lessee hereunder and under the related
documents are guaranteed or supported by a third party or parties.
"Taking" means a taking or voluntary conveyance during the Term hereof
of all or part of the Leased Property, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of any Condemnation
or other eminent domain proceeding affecting the Leased Property whether or not
the same shall have actually been commenced.
"Tenant" means the lessees or tenants under the Tenant Leases, if any.
"Tenant Leases" means all residency agreements and similar rental
agreements (written or verbal, now or hereafter in effect), if any, that grant a
possessory interest in and to any individual unit in the Improvements, and all
Credit Enhancements, if any, held in connection therewith.
"Term" means the Initial Term and any Extended Term as to which Lessee
has exercised its options to extend contained in Article XXXIV hereof unless
earlier terminated pursuant to the provisions hereof.
"Unavoidable Delays" means delays due to strikes, lockouts, inability
to procure materials after the exercise of reasonable efforts, power failure,
acts of God, governmental restrictions, enemy action, civil commotion, fire,
unavoidable casualty or other causes beyond the control of the party responsible
for performing an obligation hereunder, provided that lack of funds shall not be
deemed a cause beyond the control of either party hereto unless such lack of
funds is caused by the failure of the other party hereto to perform any
obligations of such other party under this Lease.
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"Unsuitable for Its Primary Intended Use" as used anywhere in this
Lease, shall mean that, by reason of damage or destruction, or a partial Taking,
in the good faith judgment of Lessee, reasonably exercised, the Facility cannot
be profitably operated for its Primary Intended Use, taking into account, among
other relevant factors, the number of usable suites and number and diversity of
Tenants affected by such damage or destruction or partial Taking.
"Working Capital Assurance Agreement" means that certain Working
Capital Assurance Agreement dated as of even date herewith between BCC and
Lessor.
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IN WITNESS WHEREOF, the parties have caused this Lease to be executed
and their respective corporate seals to be hereunto affixed and attested by
their respective officers thereunto duly authorized as of the date first written
above.
LESSOR:
CAPSTONE CAPITAL OF VIRGINIA, INC.,
an Alabama corporation
By:
-------------------------------------
Title:
LESSEE:
ALCO IX, L.L.C., a North Carolina
limited liability company
By:
-------------------------------------
Title:
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OMITTED EXHIBITS
EXHIBIT A PROPERTY DESCRIPTION
EXHIBIT B LIST OF PERMITTED EXCEPTIONS
EXHIBIT C ASSIGNMENT AND SECURITY AGREEMENT
EXHIBIT D ASSIGNMENT OF RENTS AND LEASES
EXHIBIT E PERMITTED LIENS
EXHIBIT F PERSONAL PROPERTY
EXHIBIT G COMPLIANCE CERTIFICATE
