MASTER LEASE AGREEMENT
BETWEEN
HB-ESC I, LLC
AND
EMERITUS CORPORATION
DECEMBER 31, 2003
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MASTER LEASE AGREEMENT
This Master Lease Agreement ("Lease") is made and entered into as of
December 31, 2003 1 (the "Effective Date") between HB-ESC I, LLC, a limited
liability company organized under the laws of the State of Washington
("Landlord"), having its principal office located at 000 Xxxxxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, XX 00000, and EMERITUS CORPORATION, A corporation 4
organized under the laws of the State of Washington ("Tenant"), having its chief
executive office located at 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx
00000.
RECITALS
A. Landlord is the owner of the Leased Property and desires to lease the
Leased Property, as hereinafter defined, to Tenant and Tenant desires to lease
the Leased Property from Landlord upon the terms set forth in this Lease.
NOW, THEREFORE, Landlord and Tenant agree as follows:
ARTICLE 1: LEASED PROPERTY, TERM AND DEFINITIONS
1.1 Leased Property.Landlord hereby leases to Tenant and Tenant hereby
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leases from Landlord the Leased Property, subject, however, to the Permitted
Exceptions and subject to the terms and conditions of this Lease.
1.2 Indivisible Lease.This Lease constitutes one indivisible lease of the
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entire Leased Property. The Leased Property constitutes one economic unit and
the Base Rent and all other provisions, have been negotiated and agreed to based
on a lease of all of the Leased Property as a single, composite, inseparable
transaction and would have been materially different had separate leases or a
divisible lease been intended. Except as expressly provided herein for specific,
isolated purposes (and then only to the extent expressly otherwise stated), all
provisions of this Lease shall apply equally and uniformly to all the Leased
Property as one unit and any Event of Default under this Lease is an Event of
Default as to the entire Leased Property. The parties intend that the provisions
of this Lease shall at all times be construed, interpreted and applied so as to
carry out their mutual objective to create a single indivisible lease of all the
Leased Property and, in particular but without limitation, that for purposes of
any assumption, rejection or assignment of this Lease under the Bankruptcy Code,
this is one indivisible and non-severable lease and executory contract dealing
with one legal and economic unit which must be assumed, rejected or assigned as
a whole with respect to all (and only all) the Leased Property covered hereby.
The parties agree that the existence of more than one Landlord under this Lease
or of different methods of calculating the Base Rent due to various Landlords
under this Lease does not affect the indivisible, non-severable nature of this
Lease. The parties may amend this Lease from time to time to include one or more
additional Facility Properties as part of the Leased Property and such future
addition to the Leased Property shall not in any way change the indivisible and
non-severable nature of this Lease and all of the foregoing provisions shall
continue to apply in full force.
1.3 Term.The term ("Term") of this Lease commences on the Effective Date
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and expires at 12:00 Midnight local time in the City where the applicable
Facility is located on
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the day before the 10th anniversary of the Commencement Date (the "Expiration
Date") it being understood and agreed that Tenant has no option to renew the
Lease.
1.4 Definitions.Except as otherwise expressly provided, [i] the terms
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defined in this section have the meanings assigned to them in this section and
include the plural as well as the singular; [ii] all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as of the time applicable; and [iii]
the words "herein", "hereof', and "hereunder" and similar words refer to this
Lease as a whole and not to any particular section.
"Actual Debt Service Coverage Ratio" means, for purposes of the calculation
set forth in Section 15.10, the ratio of the Actual Net Income to Debt Service.
"Actual Management Fees" shall mean, for purposes of the various
definitions contained herein and the calculations set forth in Exhibit F, actual
management fees paid in connection with the operation of the Facility.
"Actual Net Income" means, for purposes of the various definitions
contained herein and for purposes of the calculation set forth in Section 15.10,
Net Income plus the amount deducted for Assumed Management Fees in calculating
Net Income minus Actual Management Fees incurred during the relevant period.
"Assumed Management Fees" shall mean, for purposes of the various
definitions contained herein and for purposes of the calculation set forth in
Section 15.10, assumed management fees of five percent (5%) of net resident
revenues of the Facility (after Medicaid and Medicare contractual adjustments).
"ADA" means the federal statute entitled Americans with Disabilities Act,
42 V.S.C. 12101,~.
"Affiliate" means any person, corporation, partnership, limited liability
company, trust, or other legal entity that, directly or indirectly, controls, or
is controlled by, or is under common control with Tenant or Guarantor. "Control"
(and the correlative meanings of the terms "controlled by" and ''under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such entity.
"Affiliate" includes, without limitation, Guarantor. An Affiliate of Tenant
shall specifically exclude Columbia Pacific Management, Inc., or any Affiliate
thereof, Holiday Retirement Corporation, or any Affiliate thereof, and Alterra
Healthcare Corporation or any Affiliate thereof
"Annual Cash Flow Rent Reconciliation Schedule" has the meaning set forth in
Exhibit D.
"Annual Company Budget" means Company's projection of its financial
statement for the next fiscal year, which shall include the balance sheet,
statement of income, statement of cash flows, statement of shareholders' equity
and statement of capital expenditures for the applicable period.
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"Annual Facility Budget" means Tenant's projection of the Facility
Financial Statement for the next fiscal year.
"Annual Financial Statements" means for Tenant, an audited balance sheet,
statement of income, and statement of cash flows for the most recent fiscal year
on a consolidated basis and means, for the Facility, an unaudited balance sheet,
statement of income
and statement of cash flows of the most recent fiscal year on an individual
Facility and, if applicable, consolidated, basis.
"Average Daily Census" means the number determined by dividing the total
resident days for a Facility during a specific month by the actual number of
days contained in that month.
"Bankruptcy Code" means the United States Bankruptcy Code set forth in 11
U.S.C. 101 et seq. seq., as amended from time to time.
"Base Rent" has the meaning set forth in 2.1.
"Business Day" means any day other than a Saturday, Sunday, or national
holiday.
"Cash Flow Rent" has the meaning set forth in Exhibit D.
"Cash Flow Rent Due" has the meaning set forth in Exhibit D.
"Cash Flow Rent Paid" has the meaning set forth in Exhibit D.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time.
"Closing" means the closing of the lease of the Leased Property to Tenant.
"Collateral" has the meaning set forth in 21.1.
"Commencement Date" means the Effective Date if such date is the first day
of a month, and if it is not, the first day of the first month following the
Effective Date.
"Company" means Tenant.
"Debt Service" means for purposes of the various definitions contained
herein and for purposes of the calculations set forth in Section 15.10 and in
Exhibit F, for the three (3) month period prior to the determination date, the
aggregate interest expense for the Facility Debt plus the aggregate amount of
principal payments due and payable during such three (3) month period (excluding
optional prepayments).
"Debt Service Coverage Ratio" means, for purposes of the calculations set
forth in Section 15.10 and in Exhibit F, the ratio of the Net Income to Debt
Service.
"Debt Service Rent" has the meaning set forth in Exhibit D.
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"Effective Capacity" means the actual number of units utilized at the
Facility from time to time.
"Extraordinary Income and Extraordinary Expenses" means material items of a
character significantly different from the typical or customary business
activities of the Tenant which would not be expected to recur frequently and
which would not be considered as recurring factors in any evaluation of the
ordinary operating processes of the Tenant's business, and which would be
treated as extraordinary income or extraordinary expenses under GAAP
"Effective Date" means the date of this Lease.
"Environmental Laws" means all federal, state, and local laws, ordinances
and policies the purpose of which is to protect human health and the
environment, as amended from time to time, including, but not limited to, [i]
CERCLA; [ii] the Resource Conservation and Recovery Act; [iii] the Hazardous
Materials Transportation Act; [iv] the Clean Air Act; [ v] Clean Water Act; [vi]
the Toxic Substances Control Act; [vii] the Occupational Safety and Health Act;
[viii] the Safe Drinking Water Act; and [ix] analogous state laws and
regulations.
"Event of Default" has the meaning set forth in 8.1.
"Expiration Date" has the meaning set forth in 1.3.
"Facility" means each facility located on a portion of the Land, including
the Facility Property associated with such Facility. References in this Lease to
"the Facility" shall mean each Facility individually unless expressly stated
otherwise.
"Facility Cash Flow" means, for purposes of the calculation of Cash Flow
Rent, the sum of (i) the net income of the Facility for the applicable
calculation period as reflected on the statement of income included in the
Facility Financial Statement and as determined in accordance with GAAP (with the
exception of the method of accounting for move in fees) less (ii) an assumed
management fee equal to five percent (5%) of the Facility's gross revenues
during the applicable calculation period and less (iii) $250 per unit per year
as a capital expenditure reserve and less (iv) Insurance Payments made in the
applicable calculation period plus (v) the amount of management fees reflected
on the Facility Financial Statement for the applicable calculation period and
plus (vi) the Cash Flow Rent paid by Tenant during the applicable calculation
period and plus (vii) the amount of depreciation and amortization reflected on
the Facility Financial Statement for the applicable calculation period and plus
(viii) the general and professional liability insurance premium and SIR expense
accruals reflected on the Facility Financial Statement for the applicable
calculation period.
"Facility Debt" means, for purposes of the calculation of Debt Service
Rent, the Initial Facility Debt or any Refinancing Debt secured from time to
time by the Facility in accordance with the terms of this Lease.
"Facility Financial Statement" means a financial statement for each
Facility which shall include the balance sheet, statement of income, occupancy
census data (including payor mix), statement of capital expenditures and a
comparison of the actual financial data versus the Annual Facility Budget for
the applicable period.
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"Facility Name" means the name under which a Facility has done business
during the Term. The Facility Name in use by each Facility on the Effective Date
is set forth on the attached Exhibit A.
"Facility Property" means the portion of the Land on which a Facility is
located, the legal description of which is set forth beneath the applicable
Facility Name on Exhibit B, the Improvements on such portion of the Land, the
Related Rights with respect to such portion of the Land, and Landlord's Personal
Property with respect to such Facility.
"Facility State" means the State in which a respective Facility is located.
"Facility States" means, collectively, the States in which the Leased Property
is
located.
"Facility Uses" means the uses relating to the operation of a Facility as a
facility of the type and operating the number of units set forth on Exhibit A
with respect to such Facility.
"Fixtures" means all permanently affixed equipment, machinery, fixtures and
other items of real and/or personal property (excluding Landlord's 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
Improvements, including, without limitation, all furnaces, boilers, heaters,
electrical equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air-cooling and
air-conditioning systems and apparatus, sprinkler systems and fire and theft
protection equipment, built-in oxygen and vacuum systems, towers and other
devices for the transmission of radio, television and other signals, all of
which, to the greatest extent permitted by law, are hereby deemed by the parties
hereto to constitute real estate, together with all replacements, modifications,
alterations and additions thereto.
"General Additional Rent" has the meaning set forth in 2.2.1.
"Government Authorizations" means all permits, licenses, approvals,
consents, and authorizations required to comply with all Legal Requirements,
including, but not limited to, [i] zoning permits, variances, exceptions,
special use permits, conditional use permits, and consents; [ii] the permits,
licenses, provider agreements and approvals required for licensure and operation
of each Facility in accordance with its respective Facility Uses and, if
applicable, certified as a provider under the federal Medicare and state
Medicaid programs; [iii] environmental, ecological, coastal, wetlands, air, and
water permits, licenses, and consents; [iv] curb cut, subdivision, land use, and
planning permits, licenses, approvals and consents; [v] building, sign, fire,
health, and safety permits, licenses, approvals, and consents; and [vi]
architectural reviews, approvals, and consents required under restrictive
covenants.
"Hazardous Materials" means any substance [i] the presence of which poses a
hazard to the health or safety of persons on or about the Land, including, but
not limited to, asbestos containing materials; [ii] which requires removal or
remediation under any Environmental Law, including, without limitation, any
substance which is toxic, explosive, flammable, radioactive, or otherwise
hazardous; or [iii] which is regulated under or classified under any
Environmental Law as hazardous or toxic, including, but not limited to, any
substance
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within the meaning of "hazardous substance", "hazardous material", "hazardous
waste", "toxic substance", "regulated substance", "solid waste", or "pollutant"
as defined in any Environmental Law.
"Impositions" has the meaning set forth in 3.2.
"Improvements" means all buildings, structures, Fixtures and other
improvements of every kind on any portion of the Land, including, but not
limited to, alleys, sidewalks, utility pipes, conduits and lines (on-site and
off-site), parking areas and roadways appurtenant to such buildings and
structures, now or hereafter situated upon any portion of the Land.
"Initial Facility" means the Facility located in Shreveport, Louisiana.
"Initial Facility Debt" means that Promissory Note dated as of May 13, 1999
in the face amount of $6,480,000 executed Senior Lifestyle Shreveport, L.L.C., a
Delaware limited liability company for the benefit of Lender, as assumed by
Landlord by Assumption and Modification Agreement dated July 3, 2002 and as
modified by Modification Agreement dated as of December 31, 2003, with an
outstanding principal balance as of January 1, 2004 $6,204,611.60.
"Insurance Payments" means amounts actually paid by Tenant for general and
professional liability insurance premiums allocated to the Facility during the
Lease Term and self insurance retention amounts ("SIR") with respect to claims
arising at the Facility during the Lease Term.
"Land" means the real property described in Exhibit B attached hereto.
"Landlord" means HB-ESC I, LLC and the owner of any Additional Facilities
hereinafter covered by the terms of this Lease.
"Landlord Affiliate" means any person, corporation, partnership, limited
liability company, trust, or other legal entity that, directly or indirectly,
controls, or is controlled by, or is under common control with Landlord, other
than Tenant. "Control" (and the correlative meanings of the terms "controlled
by" and ''under common control with") means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such entity.
"Landlord's Personal Property" means all Personal Property owned by
Landlord on the Effective Date and located at the Facility, together with any
and all replacements thereof,
and all Personal Property that pursuant to the terms of this Lease becomes the
property of Landlord during the Term but specifically excluding all inventory
and any Tenant's Property.
"Lease" means this Master Lease Agreement, as amended from time to time.
"Lease Documents" means this Lease and all documents executed by Landlord
and Tenant relating to this Lease or the Facility.
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"Lease Payments" means the sum of the Base Rent payments for the applicable
period.
"Lease Year" means each consecutive period of 365 or 366 days throughout
the Term. The first Lease Year commences on the Commencement Date and expires on
the day before the first anniversary of the Commencement Date.
"Leased Property" means all of the Land, Improvements, Related Rights and
Landlord's Personal Property.
"Legal Requirements" means all laws, regulations, rules, orders, writs,
injunctions, decrees, certificates, requirements, agreements, conditions of
participation and standards of any federal, state, county, municipal or other
governmental entity, administrative agency, insurance underwriting board,
architectural control board, private third-party payor, accreditation
organization, or any restrictive covenants applicable to the development,
construction, condition and operation of the Facility by Tenant for the Facility
Uses, including, but not limited to, [i] zoning, building, fire, health, safety,
sign, and subdivision regulations and codes; [ii] certificate of need laws (if
applicable); [iii] licensure to operate as each Facility in accordance with its
respective Facility Uses; [iv] Medicare and Medicaid certification requirements
(if applicable); [v] the ADA; [vi] any Environmental Laws; and [vii]
requirements, conditions and standards for participation in third-party payor
insurance programs (if applicable).
"Lender" means GMAC Commercial Mortgage Corporation, a California
corporation.
"Net Income" means, for purposes of the various definitions contained
herein and the calculations set forth in Section 15.10 and in Exhibit F, the net
pre-tax income of the Facility for the applicable three (3) month period prior
to the determination date without deduction for Actual Management Fees plus
interest or lease expenses or allowances for depreciation and amortization of
the Facility for the relevant period to the extent deducted from such net
pre-tax income minus Extraordinary Income to the extent included in such net
pre-tax income plus Extraordinary Expenses to the extent deducted from such net
pre-tax income minus Assumed Management Fees for the Facility for such three (3)
month period."
"Organization State" means the State in which an entity is organized.
"Organizational Documents" means [i] for a corporation, its Articles of
Incorporation certified by the Secretary of State of the Organization State, as
amended to date, and its Bylaws certified by such entity, as amended to date;
[ii] for a partnership, its Partnership Agreement certified by such entity, as
amended to date, and the Partnership Certificate, certified by the appropriate
authority (if applicable), as amended to date; and [iii] for a limited liability
company, its Articles of Organization certified by the Secretary of State of the
Organization State, as amended to date, and its Operating Agreement certified by
such entity, as amended to date.
"Periodic Financial Statements" means [i] for Tenant, an unaudited balance
sheet and statement of income for the most recent quarter; and [ii] for the
Facility, an unaudited Facility Financial Statement for the most recent month.
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"Permitted Exceptions" means all easements, liens, encumbrances,
restrictions, agreements and other title matters existing as of the Effective
Date, including, without limitation,
the exceptions to title set forth on Exhibit C attached hereto, and any sublease
of any portion of the Leased Property made in complete accordance with Article
17.
"Permitted Liens" means [i] liens granted to Landlord; [ii] liens
customarily incurred by Tenant in the ordinary course of business for items not
delinquent, including mechanic's liens and deposits and charges under worker's
compensation laws; [iii] liens for taxes and assessments not yet due and
payable; [iv] any lien, charge, or encumbrance which is being contested in good
faith pursuant to this Lease; [ v] the Permitted Exceptions; and [vi] purchase
money financing and capitalized equipment leases for the acquisition of personal
property provided, however, that Landlord obtains a nondisturbance agreement
from the purchase money lender or equipment lessor in form and substance as may
be satisfactory to Landlord if the original cost of the equipment exceeds
$250,000.00 per Facility.
"Personal Property" means all machinery, equipment, furniture, furnishings,
movable walls or partitions, computers (and all associated software), trade
fixtures and other personal property (but excluding consumable inventory and
supplies owned by Tenant) used in connection with the Leased Property, together
with all replacements and alterations thereof and additions thereto, except
items, if any, included within the definition of Fixtures or Improvements.
"Qualified Capital Expenditures" means any amounts expended for routine
repairs and maintenance as well as expenditures capitalized on the books of Ten
ant for any of the following: replacement of furniture, fixtures and equipment,
including refrigerators, ranges, major appliances, bathroom fixtures, doors
(exterior and interior), central air conditioning and heating systems (including
cooling towers, water chilling units, furnaces, boilers and fuel storage tanks)
and replacement of siding; roof replacements, including replacements of gutters,
downspouts, xxxxx and soffits; repairs and replacements of plumbing and sanitary
systems; overhaul of elevator systems; repaving, resurfacing and sealcoating of
sidewalks, parking lots and driveways; repainting of entire building exterior
and normal maintenance and repairs needed to maintain the quality and condition
of the Facility in the market in which it operates, but excluding Alterations.
"Receivables" means [i] all of Tenant's right to receive payment for
providing resident care and services at the Facility as set forth in any
accounts, contract rights, and instruments, and [ii] those documents, chattel
paper, inventory proceeds, provider agreements, participation agreements, ledger
sheets, files, records, computer programs, tapes, and agreements relating to
Tenant's rights to receive payment for providing resident care services at the
Facility.
"Refinancing Debt" means any debt secured by a Facility upon a refinancing
of
the Facility Debt provided that for purposes of calculating the Debt Service
Rent, (i) the principal amount thereof shall be equal to the outstanding
principal balance of the Initial Facility Debt immediately prior to the date on
which the first refinancing of the Initial Facility Debt occurs, as such
outstanding principal balance may be reduced from time to time as a result of
the application of the Debt Service Rent to the payment thereof and (ii) the
amortization period shall be twenty five (25) years from the closing of the
Refinancing Debt transaction and (iii) the
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interest rate shall be the actual interest rate, as it may vary from time to
time, set forth in the documents evidencing the Refinancing Debt.
"Related Rights" means all easements, rights (including bed operating
rights) and appurtenances relating to the Land and the Improvements.
"Rent" means Base Rent, General Additional Rent and Default Rent.
"Replacement Operator" has the meaning set forth in 15.7.1. "Secured Party" has
the meaning set forth in 21.1.
"Tenant" has the meaning set forth in the introductory paragraph of this Lease.
"Term" has the meaning set forth in 1.3.
ARTICLE 2: RENT
2.1 Base Rent.Tenant shall pay Landlord the rent due hereunder (the "Base
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Rent") in monthly installments payable in the amounts and at the times set forth
in Exhibit D.
2.2
Additional Rent.
2.2.1 General Additional Xxxx.Xx addition to Base Rent, Tenant shall pay
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all other amounts, liabilities, obligations and Impositions which Tenant assumes
or agrees to pay under this Lease including any fine, penalty, interest, charge
and cost which may be added for nonpayment or late payment of such items
(collectively the "General Additional Rent").
2.3 Place of Payment of Rent.Tenant shall make all payments of the Debt
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Service Rent directly to the Facility Lender and all payments of the Cash Flow
Rent to Landlord at the address set forth in this Lease.
2.4 Net Lease/Guaranty of Payment of Rent.This Lease shall be deemed and
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construed to be an "absolute net lease", and Tenant shall pay all Rent and other
charges and expenses in connection with the Leased Property throughout the Term,
without abatement, deduction, recoupment or set-off Landlord shall have all
legal, equitable and contractual rights,
powers and remedies provided either in this Lease or by statute or otherwise in
the case of nonpayment of the Rent.
2.5 No Termination. Abatement. Etc.Except as otherwise specifically
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provided in this Lease, Tenant shall remain bound by this Lease in accordance
with its terms. Tenant shall not, without the consent of Landlord, modify,
surrender or terminate the Lease, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off or recoupment against the
Rent. Except as expressly provided in this Lease, the obligations of Landlord
and Tenant shall not be affected by reason of [i] any damage to, or destruction
of, the Leased Property or any part thereof from whatever cause or any Taking
(as hereinafter defined) of the Leased Property or any part thereof; [ii] the
lawful or unlawful prohibition of, or restriction upon, Tenant's use of the
Leased Property, or any part thereof, the interference with
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such use by any person, corporation, partnership or other entity, or by reason
of eviction by paramount title; [iii] any claim which Tenant has or might have
against Landlord or by reason of any default or breach of any warranty by
Landlord under this Lease or any other agreement between Landlord and Tenant, or
to which Landlord and Tenant are parties; [iv] any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceeding affecting Landlord or any assignee or transferee of
Landlord; or [v] any other cause, whether similar or dissimilar to any of the
foregoing, other than a discharge of Tenant or Landlord from any such
obligations as a matter of law. Except as otherwise specifically provided in
this Lease, Tenant hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law
[a] to modify, surrender or terminate this Lease or quit or surrender the Leased
Property or any portion thereof; or [b] entitling Tenant to any abatement,
reduction, suspension or deferment of the Rent or other sums payable by Tenant
hereunder. The obligations of Landlord and Tenant hereunder shall be separate
and independent covenants and agreements and the Rent and all other sums payable
by Tenant hereunder shall continue to be payable in all events unless the
obligations to pay the same
shall be terminated pursuant to the express provisions of this Lease or by
termination of this Lease other than by reason of an Event of Default. Nothing
in this 2.5 shall be construed to limit any right which Tenant may have to
bring a separate action against Landlord for any claim which Tenant may have or
allege to have against Landlord.
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ARTICLE 3: IMPOSITIONS AND UTILITIES
3.1 Payment of Impositions. Tenant shall pay, as Additional Rent,
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all
Impositions that may be levied or become a lien on the Leased Property or any
part thereof at any time during the Term before any fine, penalty, interest, or
cost is incurred; provided, however, Tenant may contest any Imposition in
accordance with 3.7. Tenant shall deliver to Landlord [i] not more than five
days after the due date of each Imposition, copies of the invoice for such
Imposition and the check delivered for payment thereof; and [ii] not more than
30 days after the due date of each Imposition, a copy of the official receipt
evidencing such payment or other proof of payment satisfactory to Landlord.
Tenant's obligation to pay such Impositions shall be deemed absolutely fixed
upon the date such Impositions become a lien upon the Leased Property or any
part thereof Tenant, at its expense, shall prepare and file all tax returns and
reports in respect of any Imposition as may be required by governmental
authorities. Tenant shall be entitled to any refund due from any taxing
authority if no Event of Default shall have occurred hereunder and be continuing
and if Tenant shall have paid all Impositions due and payable as of the date of
the refund. Landlord shall be entitled to any refund from any taxing authority
if an Event of Default has occurred and is continuing. Any refunds retained by
Landlord due to an Event of Default shall be applied as provided in 8.8.
Landlord and Tenant shall, upon request of the other, provide such data as is
maintained by the party to whom the request is made with respect to the Leased
Property as may be necessary to prepare any required returns and reports. In the
event governmental authorities classify any property covered by this Lease as
personal property, Tenant shall file all personal property tax returns in such
jurisdictions where it may legally so file. Landlord, to the extent it possesses
the same, and Tenant, to the extent it possesses the same, will provide the
other party, upon request, with cost and depreciation records necessary for
filing returns for any property so classified as personal property. Where
Landlord is legally required to file personal property tax returns, Tenant will
be provided with copies of assessment notices indicating a value in excess of
the reported value in sufficient time for Tenant to file a protest. Tenant may,
at Tenant's option and at Tenant's sole cost and expense, protest, appeal or
institute such other proceedings as Tenant may deem appropriate to effect a
reduction of real estate or personal property assessments and Landlord, at
Tenant's expense as aforesaid, shall fully cooperate with Tenant in such
protest, appeal, or other action. Tenant shall reimburse Landlord for all
personal property taxes paid by Landlord within 30 days after receipt of
xxxxxxxx accompanied by copies of a xxxx therefore and payments thereof which
identify the personal property with respect to which such payments are made.
Impositions imposed in respect to the tax-fiscal period during which the Term
terminates shall be adjusted and prorated between Landlord and Tenant as of the
termination date, whether or not such Imposition is imposed before or after such
termination, and Tenant's obligation to pay its prorated share thereof shall
survive such termination.
3.2 Definition of Impositions."Impositions" means, collectively, [i]
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all real
estate and personal property ad valorem, sales and use, business or occupation,
single business, gross receipts, transaction privilege, rent or similar taxes;
[ii] assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not to be completed with the Term); [iii] ground
rents, water, sewer or other rents and charges, excises, tax levies, and fees
(including, without limitation, license, permit, inspection, authorization and
similar fees); [iv] all taxes imposed on Tenant's operations of the Leased
Property, including, without limitation,
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employee withholding taxes, income taxes and intangible taxes; [v] all taxes
imposed by the Facility State or any governmental entity in the Facility State
with respect to the conveyance of
the Leased Property by Landlord to Tenant or Tenant's designee, including,
without limitation, conveyance taxes; and [vi] all other governmental charges,
in each case whether general or special, ordinary or extraordinary, or foreseen
or unforeseen, of every character in respect of the Leased Property or any part
thereof and/or the Rent (including all interest and penalties thereon due to any
failure in payment by Tenant), which at any time prior to, during or in respect
of the Term hereof may be assessed or imposed on or in respect of or be a lien
upon [a] Landlord or Landlord's interest in the Leased Property or any part
thereof; [b] the Leased Property or any part thereof or any rent therefrom or
any estate, right, title or interest therein; or [c] any occupancy, operation,
use or possession of, or sales from, or activity conducted on, or in connection
with the Leased Property or the leasing or use by Tenant of the Leased Property
or any part thereof Tenant shall not, however, be required to pay any capital
gains tax or any tax based on net income imposed on Landlord by any governmental
entity taxes including, without limitation, any capital stock or franchise taxes
of Landlord imposed by the Facility State or any governmental entity in the
Facility State due to this lease transaction or Landlord's ownership of the
Leased Property and the income arising therefrom, or due to Landlord being
considered as doing business in the Facility State because of Landlord's
ownership of the Leased Property or lease thereof to Tenant.
3.3 Escrow of Impositions.If requested by Landlord after the occurrence of
----------------------
an Event of Default or if required by the terms of any Facility Debt, Tenant
shall deposit with Landlord on the first day of each month a sum equal to 1I12th
of the Impositions assessed against the Leased Property for the preceding tax
year for real estate taxes (or any amount required by any mortgagee or any
beneficiary of a deed of trust securing any Facility Debt), which sums shall be
used by Landlord toward payment of such Impositions. In addition, if an Event of
Default occurs and while it remains uncured, Tenant shall, at Landlord's
election, deposit with Landlord on the first day of each month a sum equal to
1I12th of the Impositions assessed against the Leased Property for the preceding
tax year other than real estate taxes (or any amount required by any mortgagee
or any beneficiary of a deed of trust securing any Facility Debt), which sums
shall be used by Landlord toward payment of such Impositions. Tenant, on demand,
shall pay to Landlord any additional funds necessary to pay and discharge the
obligations of Tenant pursuant to the provisions of this section. The receipt by
Landlord of the
payment of such Impositions by and from Tenant shall only be as an accommodation
to Tenant, the mortgagees, and the taxing authorities, and shall not be
construed as rent or income to Landlord, Landlord serving, if at all, only as a
conduit for delivery purposes.
3.4 Utilities.Tenant shall pay, as Additional Rent, all taxes, assessments,
----------
charges, deposits, and bills for utilities, including, without limitation,
charges for water, gas, oil, sanitary and storm sewer, electricity, telephone
service, and trash collection, which may be charged against the occupant of the
Improvements during the Term. If an Event of Default occurs and while it remains
uncured, Tenant shall, at Landlord's election, deposit with Landlord on the
first day of each month a sum equal to 1I12th of the amount of the annual
utility expenses
for the preceding Lease Year, which sums shall be used by Landlord to pay such
utilities. Tenant shall, on demand, pay to Landlord any additional amount needed
to pay such utilities. Landlord's receipt of such payments shall only be an
accommodation to Tenant and the utility companies and shall not constitute rent
or income to Landlord. Absent circumstances beyond
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Tenant's reasonable control, Tenant shall at all times maintain that amount of
heat necessary to ensure against the freezing of water lines. Tenant hereby
agrees to indemnify and hold Landlord harmless from and against any liability or
damages to the utility systems and the Leased Property that may result from
Tenant's failure to maintain sufficient heat in the Improvements absent
circumstances beyond Tenant's reasonable control.
3.5 Discontinuance of Utilities.Landlord will not be liable for damages
----------------------------
to
person or property or for injury to, or interruption of, business for any
discontinuance of utilities nor will such discontinuance in any way be construed
as an eviction of Tenant or cause an abatement of rent or operate to release
Tenant from any of Ten ant's obligations under this Lease.
3.6 Business Expenses.Tenant shall promptly pay all expenses and costs
-------------------
incurred in connection with the operation of the Facility on the Leased
Property, including, without limitation, employee benefits, employee vacation
and sick pay, consulting fees, and expenses for inventory and supplies.
3.7 Permitted Contests.Tenant, on its own or on Landlord's behalf (or in
--------------------
Landlord's name), but at Tenant's expense, may contest, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition or any Legal
Requirement or insurance requirement or any lien, attachment, levy, encumbrance,
charge or claim provided that [i] in the case of an unpaid Imposition, lien,
attachment, levy, encumbrance, charge or claim, the commencement and
continuation of such proceedings shall suspend the collection thereof from
Landlord and from the Leased Property; [ii] neither the Leased Property nor any
Rent therefrom nor any part thereof or interest therein would be in any
immediate danger of being sold, forfeited, attached or lost; [iii] in the case
of a Legal Requirement, Landlord would not be in any immediate danger of civil
or criminal liability for failure to comply therewith pending the outcome of
such proceedings; [iv] in the event that any such contest shall involve a sum of
money or potential loss in excess of $50,000.00, Tenant shall deliver to
Landlord and its counsel an opinion of Tenant's counsel to
the effect set forth in clauses [i], [ii] and [iii], to the extent applicable;
[v] in the case of a Legal Requirement and/or an Imposition, lien, encumbrance
or charge, Tenant shall give such reasonable security as may be demanded by
Landlord to insure ultimate payment of the same and to prevent any sale or
forfeiture of the affected Leased Property or the Rent by reason of such
nonpayment or noncompliance; provided, however, the provisions of this section
shall not be construed to permit Tenant to contest the payment of Rent (except
as to contests concerning the method of computation or the basis of levy of any
Imposition or the basis for the assertion of any other claim) or any other sums
payable by Tenant to Landlord hereunder; [vi] in the case of an insurance
requirement, the coverage required by Article 4 shall be maintained; and [vii]
if such contest be finally resolved against Landlord or Tenant, Tenant shall, as
Additional Rent due hereunder, promptly pay the amount required to be paid,
together with all interest and penalties
accrued thereon, or comply with the applicable Legal Requirement or insurance
requirement. Landlord, at Tenant's expense, shall execute and deliver to Tenant
such authorizations and other
documents as may be reasonably required in any such contest, and, if reasonably
requested by Tenant or if Landlord so desires, Landlord shall join as a party
therein. Tenant hereby agrees to indemnify and save Landlord harmless from and
against any liability, cost or expense of any kind that may be imposed upon
Landlord in connection with any such contest and any loss resulting therefrom.
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ARTICLE 4: INSURANCE
4.1 Property Xxxxxxxxx.Xx Tenant's expense, Tenant shall maintain in full
--------------------
force and effect a property insurance policy or policies insuring the Leased
Property against the following:
(a) Loss or damage commonly covered by a "Special Form" or "All
Risk" policy insuring against physical loss or damage to the Improvements and
Personal Property, including, but not limited to, risk of loss from fire and
other hazards, collapse, transit coverage, vandalism, malicious mischief, theft,
earthquake (if the Leased Property is in earthquake zone 1 or 2) and sinkholes
(if usually recommended in the area of the Leased
Property). The policy shall be in the amount of the full replacement value (as
defined in 4.5) of
the Improvements and Personal Property and shall contain a deductible amount
acceptable to Landlord. Landlord shall be named as an additional insured. The
policy shall include a stipulated value endorsement or agreed amount endorsement
and endorsements for contingent liability for operations of building laws,
demolition costs, and increased cost of construction.
(b) If applicable, loss or damage by explosion of steam boilers,
pressure vessels, or similar apparatus, now or hereafter installed on the Leased
Property, in commercially reasonable amounts acceptable to Landlord.
( c) Consequential loss of rents and income coverage insuring against
all "All Risk" or "Special Form" risk of physical loss or damage with limits and
deductible
amounts acceptable to Landlord covering risk of loss during the first nine
months of reconstruction, and containing an endorsement for extended period of
indemnity of at least 90 days, and shall be written with a stipulated amount of
coverage if available at a reasonable premium.
(d) If the Leased Property is located, in whole or in part, in a
federally
designated 100-year flood plain area, flood insurance for the Improvements in an
amount equal to the lesser of [i] the full replacement value of the
Improvements; or [ii] the maximum amount of insurance available for the
Improvements under all federal and private flood insurance programs.
( e) Loss or damage caused by the breakage of plate glass in
commercially reasonable amounts acceptable to Landlord.
(t) Loss or damage commonly covered by blanket crime insurance,
including employee dishonesty, loss of money orders or paper currency,
depositor's forgery, and loss of property of patients accepted by Tenant for
safekeeping, in commercially reasonable amounts acceptable to Landlord.
4.2 Liability Xxxxxxxxx.Xx Tenant's expense, Tenant shall maintain
---------------------
liability insurance against the following:
(a) Claims for personal injury or property damage commonly covered
by comprehensive general liability insurance with endorsements for incidental
malpractice, contractual, personal injury, owner's protective liability,
voluntary medical payments, products
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and completed operations, broad form property damage, and extended bodily
injury, with commercially reasonable amounts for bodily injury, property damage,
and voluntary medical payments acceptable to Landlord, but with a combined
single limit of not less than $6,000,000.00 per occurrence.
(b) Claims for personal injury and property damage commonly
covered by comprehensive automobile liability insurance, covering all owned and
non-owned automobiles, with commercially reasonable amounts for bodily injury,
property damage, and for automobile medical payments acceptable to Landlord, but
with a combined single limit of not less than $5,000,000.00 per occurrence.
(c) Professional liability insurance in at least the amount of
$1,000,000 per occurrence, $3,000,000 aggregate, which shall include "tail"
coverage insuring Tenant for acts occurring prior to the date hereof, with a
$5,000,000 umbrella policy which includes coverage for professional liability. "
(d) Claims commonly covered by worker's compensation insurance
for all persons employed by Tenant on the Leased Property. Such worker's
compensation insurance shall be in accordance with the requirements of all
applicable local, state, and federal law.
4.3 Builder's Risk Insurance. In connection with any construction,
--------------------------
Tenant
shall maintain in full force and effect a builder's completed value risk
coverage ("Builder's Risk Coverage") of insurance in a nonreporting form
insuring against all "All Risk" or "Special
Form" risk of physical loss or damage to the Improvements, including, but not
limited to, risk of
loss from fire and other hazards, collapse, transit coverage, vandalism,
malicious mischief, theft, earthquake (if Leased Property is in earthquake zone
1 or 2) and sinkholes (if usually recommended in the area of the Leased
Property). The Builder's Risk Coverage shall include endorsements providing
coverage for building materials and supplies and temporary premises. The
Builder's Risk Coverage shall be in the amount of the full replacement value of
the Improvements and shall contain a deductible amount acceptable to Landlord.
Landlord shall be named as an additional insured. The Builder's Risk Coverage
shall include an endorsement permitting initial occupancy.
4.4 Insurance Xxxxxxxxxxxx.xxxxxxxxx coverages required hereunder:
------------------------
The following provisions shall apply to all
(a) The form and substance of all policies shall be subject to the
approval of Landlord, which approval will not be unreasonably withheld.
(b) The carriers of all policies shall have a Best's Rating of "A" or
better and a Best's Financial Category of XII or higher and shall be authorized
to do insurance business in the Facility State.
(c) Tenant shall be the "named insured" and Landlord shall be an
"additional insured" on each policy.
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(d) Tenant shall deliver to Landlord certificates or policies showing
the required coverages and endorsements. The policies of insurance shall provide
that the policy may not be canceled or not renewed, and no material change or
reduction in coverage may be made, without at least 30 days' prior written
notice to Landlord.
(e) The policies shall contain a severability of interest and/or
cross-liability endorsement, provide that the acts or omissions of Tenant or
Landlord will not invalidate the coverage of the other party, and provide that
Landlord shall not be responsible for payment of premiums.
(t) All loss adjustment shall require the written consent of Landlord
and Tenant, as their interests may appear.
(g) At least 30 days prior to the expiration of each insurance policy,
Tenant shall deliver to Landlord a certificate showing renewal of such policy
and payment of the annual premium therefor and a current Certificate of
Compliance (in the form delivered at the time of Closing) completed and signed
by Tenant's insurance agent.
4.5 Replacement Value.The term "full replacement value" means the actual
-------------------
replacement cost thereof from time to time, including increased cost of
construction endorsement, with no reductions or deductions. Tenant shall, in
connection with each annual policy renewal, deliver to Landlord a
redetermination of the full replacement value by the insurer or an endorsement
indicating that the Leased Property is insured for its full replacement value.
If
Tenant makes any Permitted Alterations (as hereinafter defined) to the Leased
Property, Landlord may have such full replacement value redetermined at any time
after such Permitted Alterations are made, regardless of when the full
replacement value was last determined.
4.6 Blanket Policy.Notwithstanding anything to the contrary contained in
----------------
this Article 4, Tenant may carry the insurance required by this Article under a
blanket policy of insurance, provided that the coverage afforded Tenant will not
be reduced or diminished or otherwise be different from that which would exist
under a separate policy meeting all of the requirements of this Lease.
4.7 No Separate Insurance. Tenant shall not take out separate
------------------------
insurance
concurrent in form or contributing in the event of loss with that required in
this Article, or increase the amounts of any then existing insurance, by
securing an additional policy or additional policies, unless all parties having
an insurable interest in the subject matter of the insurance, including Landlord
and any mortgagees, are included therein as additional insureds or loss payees,
the loss is payable under said insurance in the same manner as losses are
payable under this Lease, and such additional insurance is not prohibited by the
existing policies of insurance. Tenant shall immediately notify Landlord of the
taking out of such separate insurance or the increasing of any of the amounts of
the existing insurance by securing an additional policy or additional policies.
4.8 Waiver of Subrogation.Each party hereto hereby waives any and every
----------------------
claim which arises or may arise in its favor and against the other party hereto
during the Term for any and all loss of, or damage to, any of its property
located within or upon, or constituting a part
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of, the Leased Property, which loss or damage is covered by valid and
collectible insurance policies, to the extent that such loss or damage is
recoverable under such policies. Said mutual waiver shall be in addition to, and
not in limitation or derogation of, any other waiver or release contained in
this Lease with respect to any loss or damage to property of the parties hereto.
Inasmuch as the said waivers will preclude the assignment of any aforesaid claim
by way of
subrogation (or otherwise) to an insurance company (or any other person), each
party hereto agrees immediately to give each insurance company which has issued
to it policies of insurance, written notice of the terms of said mutual waivers,
and to have such insurance policies properly endorsed, if necessary, to prevent
the invalidation of said insurance coverage by reason of said waivers, so long
as such endorsement is available at a reasonable cost.
4.9 Mortgages.The following provisions shall apply if Landlord now or
----------
hereafter places a mortgage on the Leased Property or any part thereof: [i]
Tenant shall obtain a standard form of lender's loss payable clause insuring the
interest of the mortgagee; [ii] Tenant shall deliver evidence of insurance to
such mortgagee; [iii] loss adjustment shall require the consent of the
mortgagee; [iv] Tenant shall provide such other information and documents as may
be required by the mortgagee and [v] any rights which Tenant or Landlord may
have hereunder with respect to insurance proceeds shall be subject to all rights
granted therein to Lender and any obligations with respect thereto imposed on
Landlord under any documents evidencing the Facility Debt.
4.10 Escrows.After an Event of Default occurs hereunder, Tenant shall make
--------
such periodic payments of insurance premiums in accordance with Landlord's
requirements after receipt of notice thereof from Landlord.
4.11. Waiver of Insurance Requirements.Notwithstanding anything to the
------------------------------------
contrary set forth herein, because of current market conditions, based upon
prudent business practices, Tenant has advised Landlord that, as of the
Effective Date and as of one month after the Effective Date, i.e., as of January
1, 2004, Tenant will not meet all of the requirements regarding maintenance of
insurance as set forth in this Article 4 with respect to the Initial Facility
and Landlord has agreed that the insurance in effect on the Effective Date as
evidenced by the insurance certificates provided by Tenant to Landlord at
Closing, and the insurance which shall
be in place as of January 1,2004, as described in certain additional deliveries
made by Tenant to Landlord at the Closing, shall be deemed to satisfy the
requirements of this Article 4; provided, however, Tenant hereby agrees that it
will, from time to time during the term of the Lease, consistent with prudent
business practices, investigate current market availability and pricing for
insurance that would meet or more closely approximate meeting the requirements
of Landlord with respect to insurance as set forth in this Article 4 and shall,
in good faith consider the implementation of such insurance if the same becomes
available on reasonable business terms, taking into account, among other things,
the pricing thereof Notwithstanding the foregoing, Tenant may not be
unilaterally required by Landlord to purchase additional insurance beyond that
in effect at Closing
ARTICLE 5: INDEMNITY
5.1 Tenant's Indemnification.Tenant hereby indemnifies and agrees to hold
--------------------------
harmless Landlord, any successors or assigns of Landlord, and Landlord's and
such successor's
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and assign's directors, officers, employees and agents from and against any and
all demands, claims, causes of action, fines, penalties, damages (including
consequential damages), losses, liabilities (including strict liability),
judgments, and expenses (including, without limitation, reasonable attorneys'
fees, court costs) incurred in connection with or arising from: [i] the use or
occupancy of the Leased Property by Tenant or any persons claiming under Tenant;
[ii] any activity, work, or thing done, or permitted or suffered by Tenant in or
about the Leased Property; [iii] any acts, omissions, or negligence of Tenant or
any person claiming under Tenant, or the contractors, agents, employees,
invitees, or visitors of Tenant or any such person; [iv] any breach, violation,
or nonperformance by Tenant or any person claiming under Tenant or the
employees, agents, contractors, invitees, or visitors of Ten ant or of any such
person, of any term, covenant, or provision of this Lease or any law, ordinance,
or governmental requirement of any kind, including, without limitation, any
failure to comply with any applicable requirements under
the ADA; [v] any injury or damage to the person, property or business of Tenant,
its employees, agents, contractors, invitees, visitors, or any other person
entering upon the Leased Property; [vi] any construction, alterations, changes
or demolition of the Facility performed by or contracted for by Tenant or its
employees, agents or contractors; and [vii] any obligations, costs or expenses
arising under any Permitted Exceptions. If any action or proceeding is brought
against Landlord, its employees, or agents by reason of any such claim, Tenant,
upon notice from Landlord, will defend the claim at Tenant's expense with
counsel reasonably satisfactory to Landlord. All amounts payable to Landlord
under this section shall be payable on written demand and any such amounts which
are not paid within 10 days after demand therefor by Landlord shall bear
interest at five percent (5.00%) per annum above the prime interest rate in
effective from time to time as published on the website of the Federal Reserve
Board at
http:/xxx.xxxxxxxxxxxxxx.xxx/xxxxxxxx/x00/xxxx/xxxxxxx.xxx). In case any action,
suit or
proceeding is brought against Tenant by reason of any such occurrence, Tenant
shall use its commercially reasonable efforts to defend such action, suit or
proceeding. Nothing in this 5.1 shall be construed as requiring Tenant to
indemnify Landlord with respect to Landlord's own gross negligence or willful
misconduct.
5.1.1 Notice of Claim.Landlord shall notify Tenant in writing of any claim
----------------
or action brought against Landlord in which indemnity may be sought against
Tenant pursuant to this section. Such notice shall be given in sufficient time
to allow Tenant to defend or participate in such claim or action, but the
failure to give such notice in sufficient time shall not constitute a defense
hereunder nor in any way impair the obligations of Tenant under this section
unless the failure to give such notice precludes Tenant's defense of any such
action.
5.1.2 Survival of Covenants.The covenants of Tenant contained in this
------------------------
section shall remain in full force and effect after the termination of this
Lease until the expiration of the period stated in the applicable statute of
limitations during which a claim or cause of action may be brought and payment
in full or the satisfaction of such claim or cause of action and of all expenses
and charges incurred by Landlord relating to the enforcement of the provisions
herein specified.
5.1.3 Reimbursement of Expenses.Unless prohibited by law, Tenant hereby
----------------------------
agrees to pay to Landlord all of the reasonable fees, charges and reasonable
out-of-pocket expenses related to the Facility and required hereby, or incurred
by Landlord in enforcing the provisions of this Lease.
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5.2 Environmental Indemnity; Audits.Tenant hereby indemnifies and agrees to
--------------------------------
hold harmless Landlord, Lender, any successors to Landlord's interest in this
Lease, including Lender, and Landlord's and Lender's and such successors'
directors, officers, employees and agents from and against any losses, claims,
damages (including consequential damages), penalties, fines, liabilities
(including strict liability), costs (including cleanup and recovery costs), and
expenses (including expenses of litigation and reasonable consultants' and
attorneys' fees) incurred by Landlord, Lender or any other indemnities or
assessed against any portion of the Leased Property by virtue of any claim or
lien by any governmental or quasi-governmental unit, body, or agency, or any
third party, for cleanup costs or other costs pursuant to any Environmental Law.
Tenant's indemnity shall survive the termination of this Lease. Provided,
however, Tenant shall have no indemnity obligation with respect to [i] Hazardous
Materials first introduced to the Leased Property subsequent to the date that
Tenant's occupancy of the Leased Property shall have fully terminated; or [ii]
Hazardous Materials introduced to the Leased Property by Landlord, Lender, its
or their agent, employees, successors or assigns. If at any time during the Term
of this Lease any governmental authority notifies Landlord or Tenant of a
violation of any Environmental Law or Landlord reasonably believes that a
Facility may violate any Environmental Law, Landlord may require one or more
environmental audits of such portion of the Leased Property, in such form, scope
and substance as specified by Landlord, at Tenant's expense. Tenant shall,
within 30 days after receipt of an invoice from Landlord, reimburse
Landlord for all costs and expenses incurred in reviewing any environmental
audit, including, without limitation, reasonable attorneys' fees and costs.
5.3 Limitation of Landlord's Liability.Landlord, its agents, and
--------------------------------------
employees,
will not be liable for any loss, injury, death, or damage (including
consequential damages) to persons, property, or Tenant's business occasioned by
theft, act of God, public enemy, injunction, riot, strike, insurrection, war,
court order, requisition, order of governmental body or authority, fire,
explosion, falling objects, steam, water, rain or snow, leak or flow of water
(including water from the elevator system), rain or snow from the Leased
Property or into the Leased Property or from the roof, street, subsurface or
from any other place, or by dampness or
from the breakage, leakage, obstruction, or other defects of the pipes,
sprinklers, wires, appliances, plumbing, air conditioning, or lighting fixtures
of the Leased Property, or from construction, repair, or alteration of the
Leased Property or from any acts or omissions of any other occupant or visitor
of the Leased Property, or from any other cause beyond Landlord's control.
5.4. Notice of Certain Events.Tenant shall promptly provide Landlord
----------------------------
and
any Lender with written notice of the occurrence of any or all of the following:
(a) Tenant's discovery of any Hazardous Materials on the Leased Property
which are not permitted by the terms of this Lease or of the violation of any
Hazardous Material Laws at or affecting the Leased Property (collectively, a
"Prohibited Activity and Condition");
-------------------------------------
(b) Tenant's receipt of or knowledge of any compliant, order, notice of
violation of other communication from any governmental authority or other person
or entity with regard to present or future alleged Prohibited Activity and
Conditions or any other environmental, health or safety matters affecting the
Leased property or any other property of Tenant that is adjacent to the Leased
Property; and
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(c) Any representation or warranty of Tenant in this Article 5 which
becomes untrue at any time after the Commencement Date.
No such notice shall serve to relieve Tenant from any obligations imposed
on it under this Lease, including, but not limited to, under this Article 5, no
Landlord from any obligations imposed on it under the documents evidencing the
Facility Debt.
ARTICLE 6: USE AND ACCEPTANCE OF PREMISES
6.1 Use of Leased Property.Tenant shall use and occupy the Leased Property
-----------------------
exclusively for the Facility Uses specified for each Facility and for all lawful
and licensed ancillary uses, including the operation of an Alzheimer's Memory
Loss Unit, provided Tenant complies with all applicable Legal Requirements, and
for no other purpose without the prior written consent of Landlord. Tenant shall
obtain and maintain all approvals, licenses, and consents needed to use and
operate the Leased Property as herein permitted. Tenant shall deliver to
Landlord complete copies of surveys, examinations, certification and licensure
inspections, compliance certificates, and other similar reports issued to Tenant
by any governmental agency within 10 Business Days after Tenant's receipt of
each item. Further, Tenant shall conduct the operation of the Facility at all
times in a manner consistent with the level of operation of the Facility as of
the date hereof, which shall include without limitation, Tenant's covenant to do
the following:
(a) to operate the Facility in material compliance with applicable laws and
regulations relating thereto and cause all licenses, permits, certificates of
need, third party reimbursement contracts, and any other agreements necessary
for the use and operation of the Facility or as may be necessary for
participation in the Medicaid or other applicable reimbursement programs in
which the Facility participates to remain in effect without reduction in the
number of licensed units or units authorized for use in the Medicaid
reimbursement programs (unless Tenant first obtains the prior consent of
Landlord to such reduction, which consent may be withheld in its sole
discretion);
(b) to maintain sufficient inventory and equipment of types and quantities
at the Facility to enable Tenant adequately to perform operations of the
Facility;
(c) to keep all Improvements, Fixtures and equipment located on or used or
useful in connection with the Facility in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
needed and proper repairs, renewals, replacements, additions, and improvements
thereto to keep the same in good operating condition; and
(d) to maintain sufficient cash in its operating accounts in order to
satisfy the working capital needs of the Facility.
6.2 Acceptance of Leased Property.Tenant acknowledges that [i] Tenant and
-------------------------------
its agents have had an opportunity to inspect the Leased Property; [ii] Tenant
has found the Leased Property fit for Tenant's use; [iii] Landlord will deliver
the Leased Property to Tenant in "as-is" condition; [iv] Landlord is not
obligated to make any improvements or repairs to the
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Leased Property; and [v] the roof, walls, foundation, heating, ventilating, air
conditioning, telephone, sewer, electrical, mechanical, elevator, utility,
plumbing, and other portions of the Leased Property are in good working order.
Tenant waives any claim or action against Landlord with respect to the condition
of the Leased Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS
FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR
OTHERWISE, OR AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR
PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
6.3 Conditions of Use and Occupancy.Tenant agrees that during the Term it
---------------------------------
shall use and keep the Leased Property in a careful, safe and proper manner; not
commit or suffer waste thereon; not use or occupy the Leased Property for any
unlawful purposes; not use or occupy the Leased Property or permit the same to
be used or occupied, for any purpose or business deemed extra hazardous on
account of fire or otherwise; keep the Leased Property in such repair and
condition as may be required by the Board of Health, or other city, state or
federal authorities, free of all cost to Landlord; not permit any acts to be
done which will cause the cancellation, invalidation, or suspension of any
insurance policy; and permit Landlord and its agents to enter upon the Leased
Property at all reasonable times to examine the condition thereof.
ARTICLE 7: MAINTENANCE AND MECHANICS' LIENS
7.1 Maintenance.Tenant shall maintain, repair, and replace the Leased
------------
Property, including, without limitation, all structural and non structural
repairs and replacements to the roof, foundations, exterior walls, HV AC
systems, equipment, parking areas, sidewalks, water, sewer and gas connections,
pipes and mains. Tenant shall pay, as Additional Rent, the full cost of
maintenance, repairs, and replacements. Tenant shall maintain all drives,
sidewalks, parking areas, and lawns on or about the Leased Property in a clean
and orderly condition, free of accumulations of dirt, rubbish, snow and ice.
Tenant shall at all times maintain, operate and otherwise manage the Leased
Property on a basis and in a manner consistent with the standards currently
maintained by Tenant at the Leased Property. All repairs shall, to the extent
reasonably achievable, be at least equivalent in quality to the original work or
the property to be repaired shall be replaced. Tenant will not take or omit to
take any action the taking or omission of which might materially impair the
value or the usefulness of the Leased Property or any parts thereof
for the Facility Uses. Tenant shall permit Landlord to inspect the Leased
Property at all reasonable times and on reasonable advance notice, and if
Landlord has a reasonable basis to believe that there are maintenance problem
areas and gives Tenant written notice thereof setting forth its concerns in
reasonable detail, Tenant shall deliver to Landlord a plan of correction within
10 Business Days after receipt of the notice. Tenant shall diligently pursue
correction of all problem areas within 60 days after receipt of the notice or
such longer period as may be necessary for reasons beyond its reasonable control
such as shortage of materials or delays in securing necessary permits, but not
caused by lack of diligence by Tenant, and, upon expiration of the 60-day
period, shall deliver evidence of completion to Landlord or an interim report
evidencing Tenant's diligent progress towards completion and, at the end of the
next 60-day
period, evidence of satisfactory completion. Upon completion, Landlord shall
have the right to re-inspect the Facility. At each inspection of the Leased
Property by Landlord, the Facility
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/"'"
employee in charge of maintenance shall be available to tour the Facility with
Landlord and answer questions.
7.2 Required Alterations.Tenant shall, at Tenant's sole cost and expense,
----------------------
make any additions, changes, improvements or alterations to the Leased Property,
including structural alterations, which may be required by any governmental
authorities, including those required to maintain licensure or certification
under the Medicare and Medicaid programs (if so certified), whether such changes
are required by Tenant's use, changes in the law, ordinances, or governmental
regulations, defects existing as of the date of this Lease, or any other cause
whatsoever. All such additions, changes, improvements or alterations shall be
deemed to be Permitted Alterations and shall comply with all laws requiring such
alterations and with the provisions of 16.4.
7.3 Mechanic's Liens.Tenant shall have no authority to permit or create a
------------------
lien against Landlord's interest in the Leased Property, and Tenant shall post
notices or file such documents as may be required to protect Landlord's interest
in the Leased Property against liens. Tenant hereby agrees to defend, indemnify,
and hold Landlord harmless from and against any mechanic's liens against the
Leased Property by reason of work, labor, services or materials supplied or
claimed to have been supplied on or to the Leased Property. Subject to Tenant's
right to contest the same in accordance with the terms of this Lease, Tenant
shall remove, bond-off, or otherwise obtain the release of any mechanic's lien
filed against the Leased Property within 10 days after notice of the filing
thereof. Tenant shall pay all expenses in connection
therewith, including, without limitation, damages, interest, court costs and
reasonable attorneys' fees.
7.4 Replacements of Fixtures and Landlord's Personal Property.Tenant shall
----------------------------------------------------------
not remove Fixtures and Landlord's Personal Property from the Leased Property
except to replace the Fixtures and Landlord's Personal Property with other
similar items of equal quality
and value. Items being replaced by Tenant may be removed and shall become the
property of
Tenant and items replacing the same shall be and remain the property of
Landlord. Tenant shall execute, upon written request from Landlord, any and all
documents necessary to evidence Landlord's ownership of Landlord's Personal
Property and replacements therefor. Tenant may finance replacements for the
Fixtures and Landlord's Personal Property by equipment lease or by a security
agreement and financing statement if, with respect to any financing of critical
care equipment and with respect to any other Personal Property having a value
per Facility in excess of$250,000.00, [i] Landlord has consented to the terms
and conditions of the equipment lease or security agreement; and [ii] the
equipment lessor or lender has entered into a nondisturbance agreement with
Landlord upon terms and conditions reasonably acceptable to Landlord, including,
without limitation, the following: [a] Landlord shall have the right (but not
the obligation) to assume such security agreement or equipment lease upon the
occurrence of an Event of Default under this Lease; [b] the equipment lessor or
lender shall notify Landlord of any default by Tenant under the equipment lease
or security agreement and give Landlord a
reasonable opportunity to cure such default; and [c] Landlord shall have the
right to assign its rights under the equipment lease, security agreement, or
nondisturbance agreement. Tenant shall, within 30 days after receipt of an
invoice from Landlord, reimburse Landlord for all costs and expenses incurred in
reviewing and approving the equipment lease, security agreement, and
nondisturbance agreement, including, without limitation, reasonable attorneys'
fees and costs.
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ARTICLE 8: DEFAULTS AND REMEDIES
8.1 Events of Default.The occurrence of anyone or more of the following
--------------------
shall be an event of default ("Event of Default") hereunder without any advance
notice to Tenant unless specified herein:
(a) Tenant fails to pay in full any installment of Base Rent, any
Additional Rent or any other monetary obligation payable by Tenant under this
Lease within 10 days after such payment is due.
(b) Tenant fails to comply with any covenant set forth in Article 14,
15.6.2, 15.7 or 15.8 of this Lease.
(c) Tenant fails to observe and perform any other covenant, condition
or agreement under this Lease to be performed by Tenant and [i] such failure
continues for a period of 30 days after written notice thereof is given to
Tenant by Landlord; or [ii] if, by reason of the nature of such default it
cannot be remedied within 30 days, Tenant fails to proceed with diligence
reasonably satisfactory to Landlord after receipt of the notice to cure the
default or, in any event, fails to cure such default within 60 days after
receipt of the notice. The foregoing notice and cure provisions do not apply to
any Event of Default otherwise specifically described in any other subsection of
8.1.
(d) Tenant abandons or vacates (except during a period of repair or
reconstruction after damage, destruction or a Taking) any Facility Property or
any material part thereof, ceases to operate any Facility, ceases to do business
or ceases to exist for any reason for anyone or more days.
(e) [i] The filing by Tenant of a petition under the Bankruptcy Code or
the commencement of a bankruptcy or similar proceeding by Tenant; [ii] the
failure by Tenant within 60 days to dismiss an involuntary bankruptcy petition
or other commencement of a bankruptcy, reorganization or similar proceeding
against such party, or to lift or stay any execution, garnishment or attachment
of such consequence as will impair its ability to carry on its operation at the
Leased Property; [iii] the entry of an order for relief under the Bankruptcy
Code in respect of Tenant; [iv] any assignment by Tenant for the benefit of its
creditors; [v] the entry by Tenant into an agreement of composition with its
creditors; [vi] the approval by a court of competent jurisdiction of a petition
applicable to Tenant in any proceeding for its reorganization instituted under
the provisions of any state or federal bankruptcy, insolvency, or similar laws;
[vii] appointment by final order, judgment, or decree of a court of competent
jurisdiction of a receiver of the whole or any substantial part of the
properties of Tenant (provided such receiver shall not have been removed or
discharged within 60 days of the date of his qualification).
(f) [i] Any receiver, administrator, custodian or other person takes
possession or control of any of the Leased Property and continues in possession
for 60 days; [ii] any writ against any of the Leased Property is not released
within 60 days; [iii] any judgment is rendered or proceedings are instituted
against the Leased Property or Tenant which adversely affect the Leased Property
or any part thereof, which is not dismissed for 60 days (except as
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otherwise provided in this section); [iv] all or a substantial part of the
assets of Tenant are attached, seized, subjected to a writ or distress warrant,
or are levied upon, or come into the possession of any receiver, trustee,
custodian, or assignee for the benefit of creditors; [ v] Tenant is enjoined,
restrained, or in any way prevented by court order, or any proceeding is filed
or commenced seeking to enjoin, restrain or in any way prevent Tenant from
conducting all or a substantial part of its business or affairs; or [vi] except
as otherwise permitted hereunder, a final notice of lien, levy or assessment is
filed of record with respect to all or any part of the Leased Property or any
property of Tenant located at the Leased Property and is not dismissed,
discharged, or bonded-off within 30 days.
(g) Any representation or warranty made by Tenant in this Lease or
any other document executed in connection with this Lease, any guaranty of or
other security for this Lease, or any report, certificate, application,
financial statement or other instrument furnished by Tenant pursuant hereto or
thereto shall prove to be false, misleading or incorrect in any material respect
as of the date made.
(h) The license for the Facility or any other Government Authorization
is canceled, suspended, reduced to provisional or temporary, or otherwise
invalidated, or license revocation or decertification proceedings are commenced
against Tenant with respect to its operations at the Facility and, in each
instance, such action is not stayed pending appeal, or, as a
result of the acts or omissions of Ten ant, any reduction of more than 5% occurs
in the number of licensed units at the Facility, or an admissions ban is issued
for the Facility and remains in effect for a period of more than 45 days.
8.2 Remedies.Upon the occurrence of an Event of Default under this Lease or
---------
any Lease Document, and at any time thereafter until Landlord waives the default
in writing or acknowledges cure of the default in writing, at Landlord's option,
without declaration, notice of nonperformance, protest, notice of protest,
notice of default, notice to quit or any other notice or demand of any kind,
Landlord may exercise any and all rights and remedies provided in this Lease or
any Lease Document or otherwise provided under law or in equity, including,
without limitation, anyone or more of the following remedies:
(a) Landlord may re-enter and take possession of the Leased Property
or any portion thereof without terminating this Lease, and lease such Leased
Property for the account of Tenant, holding Tenant liable for all costs of
Landlord in reletting such Leased Property and for the difference in the amount
received by such reletting and the amounts payable by Tenant under the Lease.
(b) Landlord may terminate this Lease with respect to all or any
portion of the Leased Property by written notice to Tenant, exclude Tenant from
possession of such Leased Property and use commercially reasonable efforts to
lease such Leased Property to others, holding Tenant liable for the difference
in the amounts received from such reletting and the amounts payable by Tenant
under this Lease.
(c) Landlord may re-enter the Leased Property or any portion thereof
and have, repossess and enjoy such Leased Property as if this Lease had not been
made, and in
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such event, Tenant and its successors and assigns shall remain liable for any
contingent or unliquidated obligations or sums owing at the time of such
repossession.
(d) Landlord may have access to and inspect, examine and make
copies of the books and records and any and all accounts, data and income tax
and other returns of Tenant insofar as they pertain to the Leased Property
subject to Landlord's obligation to maintain the confidentiality of any patient
or employee information in accordance with the requirements of applicable State
or federal law.
( e) Landlord may accelerate all of the unpaid Rent hereunder based on
the then current Rent Schedule so that the aggregate Rent for the unexpired term
of this Lease becomes immediately due and payable.
(t) Landlord may take whatever action at law or in equity as may
appear necessary or desirable to collect the Rent and other amounts payable
under this Lease then due and thereafter to become due, or to enforce
performance and observance of any obligations, agreements or covenants of Tenant
under this Lease.
(g) With respect to the Collateral or any portion thereof and Secured
Party's security interest therein, Secured Party may exercise all of its rights
as secured party under Article 9 of the Uniform Commercial Code. Secured Party
may sell the Collateral by public or private sale upon five days notice to
Tenant. Tenant agrees that a commercially reasonable manner of disposition of
the Collateral shall include, without limitation and at the option of Secured
Party, a sale of the Collateral, in whole or in part, concurrently with the sale
of the Leased Property.
(h) Secured Party may obtain control over and collect the Receivables
and apply the proceeds of the collections to satisfaction of the obligations of
Tenant to Landlord under this Lease unless prohibited by law. Tenant appoints
Landlord or its designee as attorney for Tenant with powers [i] to receive, to
endorse, to sign and/or to deliver, in Tenant's name or Secured Party's name,
any and all checks, drafts, and other instruments for the payment of
money relating to the Receivables, and to waive demand, presentment, notice of
dishonor, protest, and any other notice with respect to any such instrument;
[ii] to sign Tenant's name on any invoice or xxxx of lading relating to any
Receivable, drafts against account debtors, assignments and verifications of
Receivables, and notices to account debtors; [iii] to send verifications of
Receivables to any account debtor; and [iv] to do all other acts and things
necessary to carry out this Lease. Absent gross negligence or willful misconduct
of Secured Party, Secured Party shall not be liable for any omissions,
commissions, errors of judgment, or mistakes in fact or law made in the exercise
of any such powers. At Secured Party's option, Tenant shall [i] provide Secured
Party a full accounting of all amounts received on account of Receivables with
such frequency and in such form as Secured Party may require, either with or
without applying all collections on Receivables in payment of the obligations of
Tenant to Landlord under this Lease or [ii] deliver to Secured Party on the day
of receipt all such collections in the form received and duly endorsed by
Tenant. At Secured Party's request, Tenant shall institute any action or enter
into any settlement determined by Secured Party to be
necessary to obtain recovery or redress from any account debtor in default of
Receivables. Secured Party may give notice of its security interest in the
Receivables to any or all account
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debtors with instructions to make all payments on Receivables directly to
Secured Party, thereby terminating Tenant's authority to collect Receivables.
After terminating Tenant's authority to enforce or collect Receivables, Secured
Party shall have the right to take possession of any or all Receivables and
records thereof and is hereby authorized to do so, and only Secured Party shall
have the right to collect and enforce the Receivables. Prior to the occurrence
and during the continuance of an Event of Default, at Tenant's cost and expense,
but on behalf of Secured Party and for Secured Party's account, Tenant shall
collect or otherwise enforce all amounts unpaid on Receivables and hold all such
collections in trust for Secured Party, but Tenant may commingle such
collections with Tenant's own funds, until Tenant's authority to do so has been
terminated, which may be done only after an Event of Default. Notwithstanding
any other provision hereof, Secured Party does not assume any of Tenant's
obligations under any Receivable, and Secured Party shall not be responsible in
any way for the performance of any of the terms and conditions thereof by
Tenant.
(i) Without waiving any prior or subsequent Event of Default,
Landlord may waive any Event of Default or, with or without waiving any Event of
Default, remedy any default.
(j) Landlord may enter and take possession of the Land or any portion
thereof and anyone or more Facilities without terminating this Lease and
complete construction and renovation of the Improvements (or any part thereof)
and perform the obligations of Tenant under the Lease Documents. Without
limiting the generality of the foregoing and for the purposes aforesaid, Tenant
hereby appoints Landlord its lawful attorney-in-fact with full power to do any
of the following: [i] complete construction, renovation and equipping of the
Improvements in the name of Tenant; [ii] use funds that may be reserved,
escrowed, or set aside for any purposes hereunder at any time to complete the
Improvements; [iii] make changes in the plans and specifications that shall be
necessary or desirable to complete the Improvements in substantially the manner
contemplated by the plans and specifications; [iv] retain or employ new general
contractors, subcontractors, architects, engineers, and inspectors as shall be
required for said purposes; [v] pay, settle, or compromise all existing bills
and claims, which may be liens or security interests, or to avoid such bills and
claims becoming liens against the Facility or security interest against fixtures
or equipment, or as may be necessary or desirable for the completion of the
construction and equipping of the Improvements or for the clearance of title;
[vi] execute all applications and certificates, in the name of Tenant, that may
be required in connection with any construction; [vii] do any and every act that
Tenant might do in its own behalf, to prosecute and defend all actions or
proceedings in connection with the Improvements; and [viii] execute, deliver and
file all applications and other documents and take any and all actions necessary
to transfer the operations of the Facility to Secured Party or Secured Party's
designee. This power of attorney is a power coupled with an interest and cannot
be revoked.
(k) Landlord may apply, with or without notice to Tenant, for the
appointment of a receiver ("Receiver") for Tenant's business at the Leased
Property or for the Leased Property; provided, however, in the case of an Event
of Default at time when this Master Lease covers more than one Facility, which
Event of Default relates to less than all of the Leased Property, such
Receiver's power and authority shall be limited to the affected Facility. Unless
prohibited by law, such appointment may be made either before or after
termination of Tenant's possession of the Leased Property, without notice,
without regard to the solvency or insolvency
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of Tenant at the time of application for such Receiver and without regard to the
then value of the Leased Property, and Secured Party may be appointed as
Receiver. After the occurrence and during the continuance of an Event of
Default, Landlord shall be entitled to appointment of a receiver as a matter of
right and without the need to make any showing other than the existence of an
Event of Default. The Receiver shall have the power to collect the rents,
income, profits and Receivables of the Leased Property during the pendency of
the receivership and all other powers which may be necessary or are usual in
such cases for the protection, possession, control, management and operation of
the Leased Property during the whole of said proceeding. All sums of money
received by the Receiver from such rents and income, after deducting therefrom
the reasonable charges and expenses paid or incurred in connection with the
collection and disbursement thereof, shall be applied to the payment of the Rent
or any other monetary obligation of Tenant under this Lease, including, without
limitation, any losses or damages incurred by Landlord under this Lease. Tenant,
if requested to do so, will consent to the appointment of any such Receiver as
aforesaid.
(1) Landlord may terminate any management agreement with respect
to any of the Leased Property and shall have the right to retain one or more
managers for the Leased Property at the expense of Tenant, such manager(s) to
serve for such term and at such compensation as Landlord reasonably determines
is necessary under the circumstances.
8.3 Right of Set-OffLandlord may, and is hereby authorized by Tenant, at
------------------
any time and from time to time but only after written notice to Tenant setting
forth in reasonable detail a description of the proposed action and the basis
therefor, to set-off or recoup and apply any and all sums held by Landlord, any
indebtedness of Landlord to Tenant, and any claims by Tenant against Landlord,
against any obligations of Tenant hereunder and against any claims by Landlord
against Tenant, whether or not such obligations or claims of Tenant are matured
and whether or not Landlord has exercised any other remedies hereunder. The
rights of Landlord under this section are in addition to any other rights and
remedies Landlord may have against Tenant.
8.4 Performance of Tenant's Covenants.Landlord may perform any obligation
-----------------------------------
of Tenant which Tenant has failed to perform within five (5) days after Landlord
has sent a written notice to Tenant informing it of its specific failure and of
the action proposed to be taken by Landlord. Tenant shall reimburse Landlord on
demand, as General Additional Rent, for any expenditures reasonably incurred by
Landlord in performing Tenant's obligations hereunder.
8.5 Late Payment Charge. Tenant acknowledges that any default in
----------------------
the
payment of any installment of Rent payable hereunder will result in loss and
additional expense to Landlord in servicing any indebtedness of Landlord secured
by the Leased Property, handling such delinquent payments, and meeting its other
financial obligations, and because such loss and additional expense is extremely
difficult and impractical to ascertain, Tenant agrees that in the event any Rent
payable to Landlord hereunder is not paid within 10 days after the due date,
Tenant shall pay a late charge of 5% of the amount of the overdue payment as a
reasonable estimate of such loss and expenses, unless applicable law requires a
lesser charge, in which event the maximum rate permitted by such law may be
charged by Landlord. The 10-day grace period set forth in this section shall not
extend the time for payment of Rent or the period for curing any default or
constitute a waiver of such default.
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8.6 Attorneys' Fees.Tenant shall pay all reasonable costs and expenses
-----------------
incurred by Landlord in enforcing or preserving Landlord's rights under this
Lease, whether or not an Event of Default has actually occurred or has been
declared and thereafter cured, including, without limitation, [i] the fees,
expenses, and costs of any litigation, appellate, receivership, administrative,
bankruptcy, insolvency or other similar proceeding; [ii] reasonable attorney,
paralegal, consulting and witness fees and disbursements; and [iii] the
expenses, including, without limitation, lodging, meals, and transportation, of
Landlord and its employees, agents, attorneys, and witnesses in preparing for
litigation, administrative, bankruptcy, insolvency or other similar proceedings
and attendance at hearings, depositions, and trials in connection therewith. All
such reasonable costs, expenses, charges and fees payable by Tenant shall be
deemed to be General Additional Rent under this Lease.
8.7 Escrows and Application of Xxxxxxxx.Xx security for the performance of
------------------------------------
Tenant's obligations under this Lease, Tenant hereby assigns to Landlord all its
right, title, and interest in and to all monies escrowed with Landlord under
this Lease and all deposits with utility companies, taxing authorities and
insurance companies; provided, however, that Landlord shall not exercise its
rights hereunder until an Event of Default has occurred. Any payments received
by Landlord under any provisions of this Lease during the existence or
continuance of an Event of Default shall be applied to the Tenant's obligations
under this Lease in the order which Landlord may determine.
8.8 Remedies Cumulative.The remedies of Landlord herein are cumulative to
---------------------
and not in lieu of any other remedies available to Landlord at law or in equity.
The use of any one remedy shall not be taken to exclude or waive the right to
use any other remedy.
8.9 Waivers.Tenant waives [i] any notice required by statute or other law
--------
as a condition to bringing an action for possession of, or eviction from, any of
the Leased Property, [ii] any right of re-entry or repossession, [iii] any right
to a trial by jury in any action or proceeding arising out of or relating to
this Lease, [iv] any right of redemption whether pursuant to statute, at law or
in equity, [v] all presentments, demands for performance, notices of
nonperformance, protest, notices of protest, notices of dishonor, notices to
quit and any other notice or demand of any kind (other than those specifically
provided for in this Lease, and [vi] all notices of the existence, creation or
incurring of any obligation or advance under this Lease before or after this
date.
8.10 Obligations Under the Bankruptcy Code.Upon filing of a petition by or
--------------------------------------
against Tenant under the Bankruptcy Code, Tenant, as debtor and as
debtor-in-possession, and any trustee who may be appointed with respect to the
assets of or estate in bankruptcy of Tenant, agree to pay monthly in advance on
the first day of each month, as reasonable compensation for the use and
occupancy of the Leased Property, an amount equal to all Rent due pursuant to
this Lease. Included within and in addition to any other conditions or
obligations imposed upon Tenant or its successor in the event of the assumption
and/or assignment of this Lease are the following: [i] the cure of any monetary
defaults and reimbursement of pecuniary loss within not
more than five Business Days of assumption and/or assignment; [ii] the deposit
of an additional amount equal to not less than three months' Base Rent, which
amount is agreed to be a necessary and appropriate deposit to adequately assure
the future performance under this Lease of the Tenant or its assignee; and [iii]
the continued use of the Leased Property for the Facility Uses.
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Nothing herein shall be construed as an agreement by Landlord to any assignment
of this Lease or a waiver of Landlord's right to seek adequate assurance of
future performance in addition to that set forth hereinabove in connection with
any proposed assumption and/or assignment of this Lease.
8.11 California Xxxxxxxx.Xx addition to the provisions set forth above, in
--------------------
the event at any time any Facility covered by this Lease is located in the State
of California, the following provisions shall apply and shall supersede any
provision in violation of the laws of the State of California:
8.11.1 Remedies.On the occurrence of an Event of Default, Landlord may at
---------
any time thereafter and prior to the cure of such Event of Default, upon giving
written notice to Tenant but without limiting Landlord in the exercise of a
right or remedy which Landlord may have by reason of an Event of Default, do any
of the following:
(a) Landlord may elect to continue the term of this Lease in full force and
effect and not terminate Tenant's right to possession of the Leased Property, in
which event Landlord shall have the right to enforce any rights and remedies
granted by this Lease or by law against Tenant, including, without limitation,
the right to collect when due Rent and other sums payable hereunder. Landlord
shall not be deemed to have elected to terminate this Lease unless
Landlord gives Tenant written notice of such election to terminate. Landlord's
acts of maintenance or preservation of the Leased Property or efforts to relet
the Leased Property shall not terminate this Lease.
(b) Landlord may elect immediately upon written notice to Tenant to
terminate this Lease at any time prior to Tenant's cure of an Event of Default
and in such event Landlord may, at Landlord's option, declare this Lease and
Tenant's right to possession of the Leased Property terminated, reenter the
Leased Property, remove Tenant's Property therefrom and dispose of it in any
manner whatsoever allowed by law at Tenant's expense or store it for Tenant's
account and at Tenant's risk and expense (but Landlord shall not be required to
effect such removal), eject all persons from the Leased Property and recover
damages from Tenant as hereinafter provided. Any such reentry shall be permitted
by Tenant without hindrance. Landlord shall not thereby be liable in damages for
such reentry or be guilty of trespass, forcible entry or unlawful detainer. If
Landlord so terminates this Lease and Tenant's right to possession, such
termination shall cancel all Tenant's options, if any, to extend or renew the
term of this Lease.
(c) Landlord may at its sole discretion elect to notify any subtenant (or
assignee) of the Leased Property of the existence of an Event of Default by
Tenant in writing and thereafter all Rent and other amounts due from any
subtenant of the Leased Property shall be paid to Landlord and Landlord shall
apply such Rent and other amounts in payment of the amounts due from Tenant
under this Lease. The delivery of such notice to any subtenant and the
collection of such Rent and other amounts by Landlord shall not terminate this
Lease. Upon Tenant's cure of the Event of Default and receipt by Landlord of all
Rent and other amounts due from Tenant, Landlord shall notify such subtenant (or
assignee) to make payments as provided in its sublease or lease.
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8.11.2 Xxxxxxx.Xx the event Landlord elects to terminate this Lease and
--------
Tenant's right to possession in accordance with 8.11.1 (b), or the same are
terminated by operation of law due to an Event of Default, Landlord may recover
as damages from Tenant the following:
(a) The worth at the time of award of the unpaid Rent and other sums due
hereunder which had been earned at the time of termination of the Lease;
(b) The worth at the time of award of the amount by which the unpaid Rent
and other sums due hereunder which would have been earned after the date of
termination of this Lease until the time of award exceeds the amount of such
loss of Rent and other sums due that Tenant proves could have been reasonably
avoided;
(c) The worth at the time of the award of the amount by which the unpaid
Rent and other sums due hereunder for the balance of the term after the time of
award exceeds the amount of the loss of such Rent and other sums that Tenant
proves could be reasonably avoided;
(d) Any other amount, including but not limited to reasonable attorneys'
fees and court costs, leasing commissions and all costs and expenses incurred by
Landlord in reletting the Leased Property or preparing, altering or remodeling
the Leased Property for such reletting. Landlord shall also recover any amount
which is necessary to compensate Landlord
for all detriment proximately caused by Tenant's act of default or which in the
ordinary course of things would be likely to result therefrom; and
(e) At Landlord's election, such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time by applicable law.
The "worth at the time of award" of the amounts referred to in 8.11.2(a) and
(b) above, is computed by allowing interest at the maximum legal rate of
interest. The "worth at the time of award" of the amount referred to in 8.11.2(
c) above, is computed by discounting such amount at the discount rate of Federal
Reserve Bank of San Francisco at the time of award plus 1 %.
ARTICLE 9: DAMAGE AND DESTRUCTION
9.1 Notice of Casualty.If the Leased Property shall be destroyed, in whole
-------------------
or in part, or damaged by fire, flood, windstorm or other casualty in excess of
$150,000.00 (a "Casualty"), Tenant shall give written notice thereof to Landlord
within two Business Days after the occurrence of the Casualty. Within 15 days
after the occurrence of the Casualty or as soon thereafter as such information
is reasonably available to Tenant, Tenant shall provide the
following information to Landlord: [i] the date of the Casualty; [ii] the nature
of the Casualty;
[iii] a description of the damage or destruction caused by the Casualty,
including the type of Leased Property damaged and the area of the Improvements
damaged; [iv] a preliminary estimate of the cost to repair, rebuild, restore or
replace the Leased Property; [ v] a preliminary estimate of the schedule to
complete the repair, rebuilding, restoration or replacement of the Leased
Property; [vi] a description of the anticipated property insurance claim,
including the
name of the insurer, the insurance coverage limits, the deductible amount, the
expected settlement amount, and the expected settlement date; and [vii] a
description of the business
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interruption claim, including the name of the insurer, the insurance coverage
limits, the deductible amount, the expected settlement amount, and the expected
settlement date. Within five (5) days after request from Landlord, Tenant will
provide Landlord with copies of all correspondence to the insurer and any other
information reasonably requested by Landlord.
9.2
Substantial Destruction.
9.2.1 If any Facility's Improvements are substantially destroyed at any
time other than during the final 18 months of the Term, Tenant shall promptly
rebuild and restore such Improvements in accordance with 9.4 and Landlord shall
make the insurance proceeds available to Tenant for such restoration. The term
"substantially destroyed" means any casualty resulting in the loss of use of 50%
or more of the licensed units at anyone Facility.
9.2.2 If any Facility's Improvements are substantially destroyed during the
final 18 months of the Term, Landlord may elect to terminate this Lease with
respect to the entire Leased Property and retain the insurance proceeds. If
Landlord elects to terminate, Landlord shall give notice ("Termination Notice")
of its election to terminate this Lease within 30 days after receipt of Tenant's
notice of the damage and this Lease shall terminate on the 15th day after
delivery of the Termination Notice. If this Lease is so terminated, Tenant shall
be liable to Landlord for all Rent and all other obligations accrued under this
Lease through the effective date of termination.
9.3 Partial Destruction.If any Facility's Improvements are not
---------------------
substantially destroyed, then Tenant shall comply with the provisions of 9.4
---
and Landlord shall make the insurance proceeds available to Tenant for such
restoration.
9.4 Restoration.Subject to any limitations imposed by law with respect to
------------
the rebuilding of the Leased Premises, Tenant shall promptly repair, rebuild, or
restore the damaged Leased Property, at Tenant's expense, so as to make the
Leased Property at least equal in value to the Leased Property existing
immediately prior to such occurrence and as nearly similar to it in character as
is practicable and reasonable. Before beginning such repairs or rebuilding, or
letting any contracts in connection with such repairs or rebuilding with respect
to any Casualty, Tenant will submit for Landlord's approval, which approval
Landlord will not unreasonably withhold or delay, plans and specifications
meeting the requirements of 16.2 for such repairs or rebuilding. Promptly
after receiving Landlord's approval of the plans and specifications, Tenant will
begin such repairs or rebuilding and will prosecute the repairs and rebuilding
to completion with diligence, subject, however, to strikes, lockouts, acts of
God, embargoes, governmental restrictions, and other causes beyond Tenant's
reasonable control. Landlord will make available to Tenant the net proceeds of
any fire or other casualty insurance paid to Landlord for such repair or
rebuilding as the same progresses, after deduction of any costs of collection,
including reasonable attorneys' fees. Payments will be made against properly
certified vouchers of a competent architect in charge of the work and approved
by Landlord. Payments for deposits for the repairing or rebuilding or delivery
of materials to the Facility will be made upon Landlord's receipt of evidence
satisfactory to Landlord that such payments are required in advance. With
respect to any Casualty, prior to commencing the repairing or rebuilding, Tenant
shall deliver to Landlord for Landlord's approval a schedule setting forth the
estimated monthly draws for such
work. Landlord will contribute to such payments out of the insurance proceeds an
amount equal
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to the proportion that the total net amount received by Landlord from insurers
bears to the total estimated cost of the rebuilding or repairing, multiplied by
the payment by Tenant on account of
such work. Landlord may, however, withhold 10% from each payment until the work
is completed and proof has been furnished to Landlord that no lien or liability
has attached or will attach to the Leased Property or to Landlord in connection
with such repairing or rebuilding. Upon the completion of rebuilding and the
furnishing of such proof, the balance of the net proceeds of such insurance
payable to Tenant on account of such repairing or rebuilding will be paid to
Tenant. If required by law as a result of the nature or extent of the damage,
Tenant will obtain and deliver to Landlord a temporary or final certificate of
occupancy before the damaged Leased Property is reoccupied for any purpose.
Tenant shall complete such repairs or rebuilding free and clear of mechanic's or
other liens, and in accordance with the building codes and all applicable laws,
ordinances, regulations, or orders of any state, municipal, or other public
authority affecting the repairs or rebuilding, and also in accordance with all
requirements of the insurance rating organization, or similar body. Any
remaining proceeds of insurance after such restoration will be Tenant's
property.
9.5 Insufficient Proceeds.If the proceeds of any insurance settlement are
-----------------------
not sufficient to pay the costs of Tenant's repair, rebuilding or restoration
under 9.4 in full, Tenant shall deposit with Landlord at Landlord's option, and
within 10 days of Landlord's request, an amount sufficient in Landlord's
reasonable judgment to complete such repair, rebuilding or restoration or shall
provide Landlord with evidence reasonably satisfactory to Landlord that Tenant
has available the funds needed to complete such repair, rebuilding or
restoration. Tenant shall not, by reason of the deposit or payment, be entitled
to any reimbursement from Landlord or diminution in or postponement of the
payment of the Rent.
9.6 Not Trust Funds.Notwithstanding anything herein or at law or equity to
----------------
the contrary, none of the insurance proceeds paid to Landlord as herein provided
shall be deemed trust funds, and Landlord shall be entitled to dispose of such
proceeds as provided in this Article 9. Tenant expressly assumes all risk of
loss, including a decrease in the use, enjoyment or value, of the Leased
Property from any casualty whatsoever, whether or not insurable or insured
against.
9.7 Landlord's Inspection.During the progress of such repairs or
-----------------------
rebuilding, Landlord and its architects and engineers may, from time to time,
-
inspect the Leased Property and will be furnished, if required by them, with
copies of all plans, shop drawings, and specifications relating to such repairs
or rebuilding. Tenant will keep all plans, shop drawings, and specifications at
the building, and Landlord and its architects and engineers may examine
them at all reasonable times and on reasonable notice. If, during such repairs
or rebuilding,
Landlord and its architects and engineers determine that the repairs or
rebuilding are not being done in accordance with the approved plans and
specifications, Landlord will give prompt notice in writing to Tenant,
specifying in detail the particular deficiency, omission, or other respect in
which Landlord claims such repairs or rebuilding do not accord with the approved
plans and specifications. Upon the receipt of any such notice, Tenant will cause
corrections to be made to any deficiencies, omissions, or such other respect.
Tenant's obligations to supply insurance, according to Article 4, will be
applicable to any repairs or rebuilding under this section.
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9.8 Landlord's Costs.Tenant shall, within 30 days after receipt of an
------------------
invoice from Landlord, pay the costs, expenses, and fees of any architect or
engineer employed by Landlord to review any plans and specifications and to
supervise and approve any construction,
or for any services rendered by such architect or engineer to Landlord as
contemplated by any of the provisions of this Lease, or for any services
performed by Landlord's attorneys in connection therewith.
9.9 No Rent Xxxxxxxxx.Xxxx will not xxxxx pending the repairs or rebuilding
------------------
of the Leased Property.
ARTICLE 10: CONDEMNATION
10.1 Total Taking.If, by exercise of the right of eminent domain or by
--------------
conveyance made in response to the threat of the exercise of such right
("Taking"), any entire Facility Property is taken, or so much of any Facility
Property is taken that the number of licensed units at the Facility Property is
reduced by more than 25% as a result of such Taking, then this Lease will end
with respect to such Facility Property only on the earlier of the vesting of
title to the Facility Property in the condemning authority or the taking of
possession of the Facility Property by the condemning authority. Upon such
termination, the Base Rent shall be reduced to eliminate the rent allocated by
the terms of this Lease to the affected Facility unless there is only one
Facility Property subject to this Lease at the time of the Taking, in which case
the Lease will terminate. All damages awarded for such Taking under the power of
eminent domain shall be the property of Landlord, whether such damages shall be
awarded as
compensation for diminution in value of the leasehold or the fee of the Facility
Property; provided, however, nothing herein shall preclude Tenant from pursuing
a separate award for the Taking of its Tenant's Property (as defined below) or
for relocation costs or expenses.
10.2 Partial Taking.If, after a Taking, so much of the Facility Property
----------------
remains that the Facility Property can be used for substantially the same
purposes for which it was used immediately before the Taking, then [i] this
Lease will end as to the part taken on the earlier of the vesting of title to
such Leased Property in the condemning authority or the taking of possession of
such Leased Property by the condemning authority and the Rent will be adjusted
accordingly taking into account, among other factors, the number of units
affected by such Taking; [ii] at its cost, Tenant shall restore so much of the
Facility Property as remains to a sound architectural unit substantially
suitable for the purposes for which it was used immediately before the Taking,
using good workmanship and new, first-class materials; [iii] upon completion of
the restoration, Landlord will pay Tenant the lesser of the net award made to
Landlord on the account of the Taking (after deducting from the total award,
reasonable attorneys', appraisers', and other fees and costs incurred in
connection with the obtaining of the award and amounts paid to the holders of
mortgages secured by the Facility Property), or Tenant's actual out-of-pocket
costs of restoring the Facility Property; and [iv] Landlord shall be entitled to
the balance of the net award except to the extent specifically allocated to the
value of Tenant's Property or any
relocation costs or expenses incurred by Tenant as a result of such Partial
Taking. The restoration shall be completed in accordance with 9.4, 9.5, 9.7,
9.8 and 9.9 with such provisions deemed to apply to condemnation instead of
casualty.
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10.3 Condemnation Proceeds Not Trust Funds.Notwithstanding anything in this
--------------------------------------
Lease or at law or equity to the contrary, none of the condemnation award paid
to Landlord shall be deemed trust funds, and Landlord shall be entitled to
dispose of such proceeds as provided in this Article 10. Tenant expressly
assumes all risk of loss, including a decrease in the use, enjoyment, or value,
of the Leased Property from any Condemnation.
ARTICLE 11: TENANT'S PROPERTY
11.1 Tenant's Property.Tenant shall have the right to install, place, and
-------------------
use on the Leased Property such fixtures, furniture, equipment, inventory and
other personal property in addition to Landlord's Personal Property as may be
required or as Tenant may, from time to time, deem necessary or useful to
operate the Leased Property for its permitted purposes. All fixtures, furniture,
equipment, inventory, and other personal property installed, placed, or used on
the Leased Property which is owned by Tenant or leased by Tenant from third
parties is hereinafter referred to as "Tenant's Property".
11.2 Requirements for Tenant's Property.Tenant shall comply with all of the
-----------------------------------
following requirements in connection with Tenant's Property:
(a) Tenant shall, at Tenant's sole cost and expense, maintain, repair,
and replace Tenant's Property.
(b) Tenant shall, at Tenant's sole cost and expense, keep Tenant's
Property insured against loss or damage by fire, vandalism and malicious
mischief, sprinkler leakage, earthquake, and other physical loss perils commonly
covered by fire and extended coverage, boiler and machinery, and difference in
conditions insurance in an amount not less than 90% of the then full replacement
cost thereof. Tenant shall use the proceeds from any such policy for the repair
and replacement of Tenant's Property. The insurance shall meet the requirements
of 4.3.
(c)
Tenant shall pay all taxes applicable to Tenant's Property.
(d) If Tenant's Property is damaged or destroyed by fire or any other
cause, Tenant shall have the right, but not the obligation, to repair or replace
Tenant's Property (unless the same is required for the operation of the Leased
Property in compliance with applicable Legal Requirements, in which case Tenant
shall be required to promptly repair or replace the same) unless Landlord elects
to terminate this Lease pursuant to 9.2.2.
( e) Unless an Event of Default or any event which, with the giving of
notice or lapse of time, or both, would constitute an Event of Default has
occurred, Tenant may remove Tenant's Property from the Leased Property from time
to time provided that [i] the items removed are not required to operate the
Leased Property for the Facility Uses (unless such items are being replaced by
Tenant); and [ii] Tenant repairs any damage to the Leased Property resulting
from the removal of Ten ant's Property.
(f) Tenant shall not, without the prior written consent of Landlord or
as otherwise provided in this Lease, remove any Tenant's Property or Leased
Property. Tenant shall, at Landlord's option, remove Tenant's Property upon the
termination or expiration of this
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Lease and shall repair any damage to the Leased Property resulting from the
removal of Tenant's Property. If Tenant fails to remove Tenant's Property within
30 days after request by Landlord, then Tenant shall be deemed to have abandoned
Tenant's Property, Tenant's Property shall become the property of Landlord, and
Landlord may remove, store and dispose of Tenant's Property. In such event,
Tenant shall have no claim or right against Landlord for such property or the
value thereof regardless of the disposition thereof by Landlord. Tenant shall
pay Landlord, upon demand, all expenses incurred by Landlord in removing,
storing, and disposing of Tenant's Property and repairing any damage caused by
such removal. Tenant's obligations hereunder shall survive the termination or
expiration of this Lease.
(g) Tenant shall perform its obligations under any equipment lease or
security agreement for Tenant's Property. For equipment loans or leases for
critical care equipment and for all other equipment having an original cost in
excess of $250,000.00 per Facility, Tenant shall cause such equipment lessor or
lender to enter into a nondisturbance agreement with Landlord upon terms and
conditions acceptable to Landlord, including, without limitation, the following:
[i] Landlord shall have the right (but not the obligation) to assume such
equipment lease or security agreement upon the occurrence of an Event of Default
by Tenant hereunder; [ii] such equipment lessor or lender shall notify Landlord
of any default by Tenant under the equipment lease or security agreement and
give Landlord a reasonable opportunity to cure such default; and [iii] Landlord
shall have the right to assign its interest in the equipment lease or security
agreement and nondisturbance agreement. Tenant shall, within 30 days after
receipt of an invoice from Landlord, reimburse Landlord for all costs and
expenses incurred in reviewing and approving the equipment lease, security
agreement and nondisturbance agreement, including, without limitation,
reasonable attorneys' fees and costs.
ARTICLE 12: RENEWAL OPTIONS
Tenant acknowledges and agrees that Tenant shall have no right to renew
this Lease beyond the Term.
ARTICLE 13: RIGHT OF FIRST OPPORTUNITY
13.1 Right of First Xxxxxxxxxxx.Xx the event at any time during the
------------------------------
Term either
[i] Landlord elects to seek a purchaser of the Leased Property (the "Right of
First Opportunity Event") or [ii] Landlord receives a bona fide offer from a
third party (the "Offer") setting forth the terms and conditions upon which it
proposes to purchase the Leased Property which it is interested in accepting,
but in no event shall Landlord be obligated to accept (the "Right of First
Refusal Event"), the following provisions shall apply:
(a) In the event of the occurrence of the Right of First Opportunity Event,
Landlord shall provide Tenant with written notice of its intent to sell the
Leased Property and its proposed terms with respect thereto (the "Opportunity
Notice"). Landlord and Tenant shall have a period of 30 days after Tenant's
receipt of the Opportunity Notice (the "Protected Period") to negotiate in good
faith with respect to the terms and conditions under which such transaction
shall occur (the "Opportunity Transaction"). In the event Landlord and Tenant
are unable to reach agreement within the Protected Period with respect to the
terms of the Opportunity Transaction, then Landlord shall be free to enter into
negotiations with respect to the Opportunity
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Transaction with any other person or entity; provided, however, that Landlord
shall not be permitted to consummate a transaction with any other person or
entity on terms which are less favorable to Landlord than those offered to
Tenant during the Protected Period without first offering Tenant the opportunity
on written notice setting forth such terms to consummate the Opportunity
Transaction on such alternative terms and conditions (the "Modified Opportunity
Notice"); provided, however, that Tenant shall be deemed to have waived its
right to proceed with such revised Opportunity Transaction in the event it does
not advise Landlord of its election to proceed within 5 days after its receipt
of the Modified Opportunity Notice.
(b) In the event of the occurrence of a Right of First Refusal Event,
Landlord shall provide Tenant with a true and correct copy of the Offer (the
"Right of First Refusal Notice"). Tenant shall have 10 days from its receipt of
the Right of First Refusal Notice to advise Landlord in writing whether it is
prepared to purchase the Leased Property on the same terms and conditions as set
forth in the Offer. Tenant's failure to so advise Landlord within such 10 day
period shall be deemed to be a determination by Tenant not to exercise the right
of first refusal provided for herein, at which time Landlord shall be free to
consummate the transaction
which was the subject of the Offer; provided, however, that Landlord shall not
be permitted to modify the terms specified in the Offer in an manner more
favorable to the third party than those reflected in the original Offer (the
"Modified Offer") without first again offering Tenant the opportunity to
consummate a transaction on the terms set forth in the Modified Offer; provided,
however, that Tenant shall be deemed to have waived its right to proceed with
such a transaction
in the event it does not advise Landlord of its election to proceed within 5
days after its receipt of the Modified Offer.
(c) In the event Landlord does not consummate a transaction on the terms
provided for in the Offer or the Modified Offer, as applicable, within 120 days
after the date thereof, Landlord shall not be permitted to sell the Leased
Property to the Offeror or to any other party, whether on the terms set forth in
the Offer or the Modified Offer, as applicable, or pursuant to a new Offer
without again first offering Tenant an option to consummate a transaction on the
terms specified in the Offer, the Modified Offer or any new Offer, as
applicable; provided, however, that Tenant shall be deemed to have waived its
rights hereunder in the event it does not advise Landlord of its election to
proceed within 5 days after its receipt of another copy of the Offer or of the
Modified Offer or the new Offer, as applicable.
(d) In the event Tenant exercises its right of first refusal or right of
first opportunity provided for herein, Tenant and Landlord shall have a period
of 30 days in which to enter into one or more written agreements outlining the
terms and conditions, in addition to those set forth in the Offer or Modified
Offer, if applicable, on which the sale will occur (the "Transaction
Documents"). In the event Landlord and Tenant fail to execute the Transaction
Documents within said 10 day period, then Tenant shall be deemed to have
forfeited its rights hereunder with respect to such transaction; provided,
however, that Landlord shall not be
permitted to sell the Leased Property to any other person or entity on terms
which are less favorable to Landlord than those offered to Tenant during the
Protected Period or beyond the expiration of the 120 day period provided for in
clause (c), without first complying with the
terms of this 13.1 unless Landlord and Tenant failed to execute the Transaction
Documents as a result of Tenant's bad faith in the negotiation of the terms of
such Transaction Documents, in
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which case Landlord shall be permitted to sell the Leased Property to any other
person or entity regardless of the terms of such transaction.
(e) Any sale of the Leased Property by Landlord pursuant to this 13, other
than to Tenant, shall be subject to the rights of Ten ant under this Lease,
including, but not limited to, its rights under this 13.
(f) Any closing pursuant to, and the consequences to Tenant of failing to
close after exercising its rights under 13.1, shall be in accordance with the
terms set forth in the Offer or Modified Offer and in the Transaction Documents
executed pursuant to the terms of this Article 13.
ARTICLE 14: NEGATIVE COVENANTS
Until the obligations of Tenant under this Lease shall have been performed
in full, Tenant covenants and agrees that Tenant shall not do any of the
following without the prior written consent of Landlord:
14.1 No Debt.Tenant shall not create, incur, assume, or permit to exist any
--------
indebtedness with respect to the Leased Property other than [i] trade debt
incurred in the ordinary course of business; [ii] indebtedness for Facility
working capital purposes; and [iii] indebtedness that is secured by any
Permitted Lien.
14.2 No Liens.Tenant shall not create, incur, or permit to exist any lien,
---------
charge, encumbrance, easement or restriction upon the Leased Property, except
for Permitted Liens.
14.3 No Guaranties.Tenant shall not create, incur, assume, or permit to
---------------
exist any guarantee of any loan or other indebtedness with respect to the
operation of the Leased Properties except for the endorsement of negotiable
instruments for collection in the ordinary course of business.
14.4 No Transfer.Tenant shall not sell, lease, sublease, mortgage, convey,
------------
assign or otherwise transfer any legal or equitable interest in the Leased
Property or any part thereof, except for transfers made in connection with any
Permitted Lien or leases to the residents of the Leased Property or commercial
leases with respect to a portion of the Leased Property comprising in the
aggregate less than 2,500 square feet provided such commercial leases shall be
for services that are an integral part of the Facility.
14.5 No Dissolution.Tenant shall not dissolve, liquidate, merge,
----------------
consolidate or terminate its existence or sell, other than in a sale-leaseback
or sale/manage back transaction, assign, lease, or otherwise transfer (whether
in one transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired) unless, in the case of a
merger or consolidation by Tenant, the surviving entity in such merger has a net
worth immediately after the merger or consolidation at least equal to that of
the Tenant immediately prior thereto.
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14.6 Subordination of Certain Payments.After the occurrence of an Event
----------------------------------
of
Default and until such Event of Default is cured or waived in writing, Tenant
shall not make any payments or distributions (including, without limitation,
salary, bonuses, fees, principal, interest, dividends, liquidating
distributions, management fees, cash flow distributions or lease payments but
specifically excluding salary paid to employees of the Facilities or employees
of Tenant in the ordinary course of business) to any wholly or majority owned
subsidiary or sister corporation or to any person or entity which controls such
subsidiary or sister corporation; provided, however, nothing herein shall be
construed as prohibiting any payments due to Landlord or Landlord's Affiliates,
whether under the terms of this Lease or under any other contract or agreement
between such parties, all of which shall be permitted despite the fact that
Landlord and its Affiliates are Affiliates of Ten ant.
14.7 Change of Location or Name.Tenant shall not, without providing
-------------------------------
Landlord with 30 days prior notice thereof, change any of the following: [i] the
location of the principal place of business or chief executive office of Tenant
or any office where any of Tenant's books and records are maintained; [ii] the
name under which Tenant conducts any of its business or operations; or [iii]
reorganize or otherwise change its Organization State.
ARTICLE 15: AFFIRMATIVE COVENANTS
15.1 Perform Obligations.Tenant shall each perform all of its obligations
---------------------
under this Lease, the Government Authorizations, the Permitted Exceptions, and
all Legal Requirements.
15.2 Proceedings to Enjoin or Prevent Construction.If any proceedings are
-----------------------------------------------
filed seeking to enjoin or otherwise prevent or declare invalid or unlawful
Tenant's construction, occupancy, maintenance, or operation of the Facility or
any portion thereof, Tenant will cause such proceedings to be vigorously
contested in good faith, and in the event of an adverse ruling or decision,
prosecute all allowable appeals therefrom, and will, without limiting the
generality of the foregoing, resist the entry or seek the stay of any temporary
or permanent injunction that may be entered, and use its best commercially
reasonable efforts to bring about a favorable and speedy disposition of all such
proceedings and any other proceedings.
15.3
Documents and Information.
15.3.1 Furnish Documents.Tenant shall periodically during the term of the
-------------------
Lease deliver to Landlord the Annual Financial Statements, Periodic Financial
Statements, Annual Facility Budget and Annual Company Budget within the time
periods specified on Exhibit E.
15.3.2 Lender Required Xxxxxxxxx.Xx the extent not included in Section
----------------------------
15.3.1. Tenant shall provide the following financial and operational information
to Landlord and/or Lender, as set forth below, throughout the term of the Lease:
(a) Within one hundred twenty (120) days after the end of each fiscal year
of
Tenant, either (i) audited financial statements of the Tenant, which statements
shall be prepared in accordance with GAAP (with the exception of the method of
accounting for resident move in fees) and shall include a balance sheet and a
statement of income and expenses for the year then
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ended, and shall be certified as true and correct in all material respects by a
financial officer of the Tenant or (ii) for so long as Tenant's stock is traded
on a national stock exchange, Tenant's 10K filing with the Securities and
Exchange Commission.
(b) Within forty-five (45) days after the end of each fiscal quarter of
Landlord, either (i) unaudited quarterly financial statements of the operations
of the Facility, which statements shall be prepared in accordance with GAAP
(with the exception of the method of accounting for resident move in fees) and
shall include a balance sheet and statement of income and expenses for the
quarter then ended, certified by a financial officer of the Tenant as true and
correct or (ii) for so long as Tenant's stock is traded on a national stock
exchange, Tenant's lOQ filing with the Securities and Exchange Commission.
(c) Within forty-five (45) days of the end of each calendar quarter, a
statement of the number of unit days available and the actual resident days
incurred for the quarter, together with quarterly census information of the
Facility as of the end of such quarter in sufficient detail to show resident-mix
(i.e., private, Medicare, Medicaid, and V.A.) on a daily
average basis for such year through the end of such quarter, certified by a
financial officer of Tenant to be true and correct, which such statements of the
Facility shall be accompanied by the Quarterly Financial Statements and Census
Data attached hereto as Exhibit "F".
(d) Upon request by Landlord, as soon as available, but in no event
more
than thirty (30) days after the filing deadline, as may be extended from time to
time, copies of all federal, state and local tax returns of Tenant, together
with all supportive documentation and schedules.
(e) Within ten (10) days following filing, all Medicaid cost reports and
any amendments thereto filed with respect to the Facility and all responses,
audit reports, or inquiries with respect to such cost reports.
(f) Within ten (10) days following receipt, a copy of the "Medicaid Rate
Calculation Worksheet" (or the equivalent thereof) issued by the appropriate
Medicaid agency for the Facility.
(g) Within ten (10) days of receipt, a statement of the number of resident
days for the Facility for which the Facility has received the Medicare default
rate for any applicable period. For purposes herein, "default rate" shall have
the meaning ascribed to it in that certain Medicare rate notification letter
prepared in connection with any review or survey of the Facility.
Upon request by Landlord, evidence of payment by Tenant of any applicable
provider bed taxes or similar taxes, which taxes Tenant agrees to pay.
(h) If requested by Landlord or Lender and to the extent available, within
twenty (20) days of Landlord's request, an aged accounts receivable report
prepared by Tenant of the Facility in sufficient detail to show amounts due from
each class of resident-mix, if applicable (i.e., private, Medicare, Medicaid and
V.A.) by the account age classifications of 30 days, 60 days, 90 days, 120 days,
and over 120 days.
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(i) At the time of furnishing the quarterly operating statements required
under this Section 15.3.1, Tenant shall furnish to Landlord such information as
may be required for Landlord to complete the compliance certificate in the form
attached hereto as Exhibit G.
(j) Within twenty (20) days of receipt a copy of any Medicaid, or other
licensing agency surveyor report and any statement of deficiencies and/or any
other report indicating that any action is pending or being considered to
downgrade the Facility to a substandard category, and within the time period
required by the particular agency for furnishing a plan of correction also
furnish or cause to be furnished a copy of the plan of correction generated from
such surveyor report for the Facility, and correct or cause to be corrected any
deficiency, the curing of which is a condition of continued licensure or for
full participation in Medicaid or any other reimbursement program pursuant to
any third party reimbursement contract for existing residents or for new
residents to be admitted with Medicaid coverage, by the date required for cure
by such agency (plus extensions granted by such agency).
15.3.2 Furnish Information.Tenant shall [i] promptly supply Landlord with
---------------------
such information concerning its financial condition, affairs and property, as
Landlord may reasonably request from time to time hereafter; [ii] promptly
notify Landlord in writing of any condition or event that constitutes a breach
or event of default of any term, condition, warranty, representation, or
provisions of this Lease or any other agreement, and of any material adverse
change in its financial condition; [iii] maintain a standard and modern system
of accounting;
[iv] permit Landlord or any of its agent or representatives to have access to
and to examine all of
its books and records regarding the financial condition of the Facility at any
time or times hereafter during business hours and after reasonable oral or
written notice; and [v] permit Landlord to copy and make abstracts from any and
all of said books and records subject to any limitations imposed by State or
federal law with respect to the confidentiality of patient and employee records.
15.3.3 Further Assurances and Information.Tenant shall, on request of
--------------------------------------
Landlord from time to time, execute, deliver, and furnish documents as may be
necessary to fully consummate the transactions contemplated under this Lease.
Within 15 days after a request from Landlord, Tenant shall provide to Landlord
such additional information regarding Tenant,
Tenant's financial condition or the Facility as Landlord, or any existing or
proposed creditor of Landlord, or any auditor or underwriter of Landlord, may
reasonably require from time to time.
15.3.4 Material Communications.Tenant shall transmit to Landlord, within
-------------------------
five days after receipt thereof, any material communication affecting a
Facility, this Lease, the Legal Requirements or the Government Authorizations,
and Tenant will promptly respond to Landlord's inquiry with respect to such
information. Tenant shall notify Landlord in writing within five days after
Tenant has knowledge of any potential, threatened or existing litigation or
proceeding against, or investigation of, Tenant or the Facility that would
reasonably be expected to adversely affect the right to operate the Facility or
Landlord's title to the Facility or Tenant's interest therein.
15.3.5 Requirements for Financial Statements.Tenant shall meet the
-----------------------------------------
following requirements in connection with the preparation of the financial
statements: [i] all audited financial statements shall be prepared in accordance
with general accepted accounting principles
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consistently applied except with respect to the method of accounting for
resident move in fees; [ii] all unaudited financial statements shall be prepared
in a manner substantially consistent with prior audited and unaudited financial
statements submitted to Landlord; [iii] all financial statements shall fairly
present the financial condition and performance for the relevant period in all
material respects; [iv] the audited financial statements shall include all notes
to the financial statements and a complete schedule of contingent liabilities
and transactions with Affiliates; and [v] the audited financial statements shall
contain an unqualified opinion.
15.4 Compliance With Laws.Tenant shall comply with all Legal Requirements
----------------------
and keep all Government Authorizations in full force and effect. Subject to
Tenant's right to contest the same in accordance with the terms of this Lease,
Tenant shall pay when due all taxes and governmental charges of every kind and
nature that are assessed or imposed upon Tenant at any time during the term of
the Lease, including, without limitation, all income, franchise, capital stock,
property, sales and use, business, intangible, employee withholding, and all
taxes and charges relating to Tenant's business and operations at the Leased
Property. Tenant shall be solely responsible for compliance with all Legal
Requirements, including the ADA, and Landlord shall have no responsibility for
such compliance.
15.5
Existence.Tenant shall maintain its existence throughout the term of this
----------
Lease.
15.6
Facility Licensure and Certification.
----------------------------------------
15.6.1. Tenant shall [i] give written notice to Landlord within five days
after an inspection of the Facility with respect to health care licensure or
certification has occurred; and [ii] deliver to Landlord copies of each of the
reports, notices, correspondence and all other items and documents delivered to
Tenant by the applicable Governmental Authority as part of such inspection
process within five days after receipt thereof
15.6.2 If Tenant receives a Facility surveyor inspection report with
material deficiencies which threatens a loss of licensure or, if applicable,
certification of the Facility or the imposition of a ban on admissions to the
Facility (collectively "Material Regulatory Deficiencies") or notice of failure
to comply with a previously submitted plan of correction related to a survey
with Material Regulatory Deficiencies, Tenant shall cure all of the Material
Regulatory Deficiencies and implement all corrective actions with respect
thereto by the date required by the regulatory authority and shall deliver
evidence of same to Landlord.
15.7 Transfer of License and Facility Operations. If this Lease is
---------------------------------------------
terminated
due to expiration of the Term, pursuant to an Event of Default or for any reason
other than Tenant's purchase of the Leased Property, or if Tenant vacates the
Leased Property (or any part thereof) without termination of this Lease (other
than during periods of repair or reconstruction after damage, destruction or a
Taking, the following provisions shall be immediately effective:
15.7.1 Licensure.Tenant shall execute, deliver and file all documents and
----------
statements requested by Landlord to effect the transfer of the Facility license
and Government Authorizations to a replacement operator designated by Landlord
("Replacement Operator"), subject to any required approval of governmental
regulatory authorities, and Tenant shall provide
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to Landlord all information and records required by Landlord in connection with
the transfer of the license and Government Authorizations.
15.7.2 Facility Xxxxxxxxxx.Xx order to facilitate a responsible and
---------------------
efficient transfer of the operations of the Facility, Tenant shall, if and to
the extent requested by Landlord, [i] assuming Tenant has not already vacated
the Leased Property, continue and maintain the operation of the Facility in the
ordinary course of business, including using its commercially reasonable efforts
to retain the residents at the Facility to the fullest extent practicable and
consistent with applicable laws and regulations, until transfer of the Facility
operations to the Replacement Operator is completed; [ii] enter into such
management agreements, operations transfer agreements and other types of
agreements that may be reasonably requested by Landlord or the Replacement
Operator; provided, however, in no event shall Tenant be required to permit the
Replacement Operator to operate the Leased Property under its licenses unless
Tenant receives confirmation that doing so will not violate applicable Legal
Requirements and appropriate indemnities from the Replacement Operator in form
and substance reasonably acceptable to Tenant; and [iv] provide reasonable
access during normal business hours and on reasonable advance notice for
Landlord and its agents to show the Facility to potential replacement operators.
Tenant consent to the distribution by Landlord to potential replacement
operators of Facility financial statements, licensure reports, financial and
property due diligence materials and other documents, materials and information
relating to the Facility. The provisions of this section do not create or
establish any rights in Tenant or any third party and Landlord reserves all
rights and remedies relating to termination of this Lease.
15.8 Operating Rights.Tenant acknowledges and agrees that the rights to
------------------
operate the units located at the Facility as set forth on Exhibit A under the
law of the Facility State, to relocate such bed operating rights to another
location or locations, and to transfer such bed operating rights to third
parties, are property of the Landlord and are an integral part of the real and
personal property that constitutes the Leased Property. Tenant has only the
right to use of such rights during the term of this Lease and subject to its
terms and conditions. All operating rights shall automatically revert to
Landlord or Landlord's designee upon the expiration or termination of this Lease
for any reason whatsoever (other than Tenant's purchase of the Leased Property)
without any requirement of a transfer or the payment of additional
consideration.
15.9 Power of Attorney.Effective upon [i] the occurrence and during the
--------------------
continuance of an Event of Default, or [ii] termination of this Lease for any
reason other than Tenant's purchase of the Leased Property, Tenant hereby
irrevocably and unconditionally appoints Landlord, or Landlord's authorized
officer, agent, employee or designee, as Tenant's true and lawful
attorney-in-fact, to act for Tenant in Tenant's name, place, and stead, to
execute, deliver and file all applications and any and all other necessary
documents and statements to effect the issuance, transfer, reinstatement,
renewal and/or extension of the Facility license and all Governmental
Authorizations issued to Tenant or applied for by Tenant in connection with
Tenant's operation of the Facility, to permit any designee of Landlord or any
other transferee to operate the Facility under the Governmental Authorizations,
and to do any and all other acts incidental to any of the foregoing but only in
the event Tenant fails to take such actions or execute such documents after a
request from Landlord. Tenant irrevocably and unconditionally grants to Landlord
as its attorney-in-fact full power and authority to do and perform every act
necessary and proper to be done in the exercise of any of the foregoing powers
as fully as Tenant
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might or could do if personally present or acting, with full power of
substitution, hereby ratifying and confirming all that said attorney shall
lawfully do or cause to be done by virtue hereof. This power of attorney is
coupled with an interest and is irrevocable prior to Tenant's purchase of the
Leased Property. Landlord shall provide Tenant with copies of any documents
filed and/or with a summary of any actions taken pursuant to this power of
attorney.
15.10. Debt Service Coverage Requirements.For so long as the Facility Debt
-----------------------------------
is outstanding, the Tenant agrees to cause the Facility to achieve, and agrees
to provide evidence to Landlord and Lender of the achievement of, the following
debt service coverage requirement:
(a) As of March 31, 2004, and for each calendar quarter remaining in the
term of the Facility Debt, a Debt Service Coverage Ratio of not less than 1.15
to 1.0, and an Actual Debt Service Coverage Ratio of not less than 1.15 to 1.0,
for the immediately preceding three (3) month period.
15.11. Occupancy.For so long as the Facility Debt remains outstanding,
----------
Tenant will maintain at all times an average (based on the immediately preceding
three (3) month period) occupancy rate for the Facility of not less than eighty
percent (80%).
15.12. Change of Xxx.Xx long as the Facility Debt remains outstanding,
----------------
Tenant agrees that it will not alter or change the use of the Facility or enter
into any management agreement for the Facility unless Tenant first notifies
Landlord and provides Landlord a copy of the proposed management agreement,
obtains Landlord's written consent thereto and, if required by the terms of the
documents evidencing the Facility Debt, obtains and provides Lender with a
subordination agreement in form satisfactory to Landlord from such manager
subordinating to all rights of Lender.
15.13 Notifications to Xxxxxx.Xx long as the Facility Debt remains
--------------------------
outstanding, Tenant agrees that it will, within three (3) business days
following receipt, provide Lender with a copy of any and all notices (regardless
of the form) from any and all licensing and/or certifying agencies that the
Facility's license and/or the Medicare and/or Medicaid certification is being
downgraded to a substandard category, revoked, or suspended, or that such action
is pending.
15.14 Notice of Tax Payment to Xxxxxx.Xx long as the Facility Debt remains
--------------------------------
outstanding, Tenant agrees that it will, upon request by Lender, provide Lender
with evidence of payment of any applicable provider bed taxes or similar taxes,
which taxes Tenant agrees to pay.
15.15 Lender Access to Books and Records.For so long as the Facility Debt
------------------------------------
remains outstanding, Tenant will permit persons designated by Lender to inspect
any and all of the Leased Property and the books and records of Tenant relating
to the Facility and to discuss the affairs of Tenant and the Facility with
officers of Tenant as designated by Lender, all at such times as Lender shall
reasonably request, provided, however, that such inspections may not
unreasonably interfere with the operation of the Facility.
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ARTICLE 16: ALTERATIONS, CAPITAL IMPROVEMENTS, AND SIGNS
16.1 Prohibition on Alterations and Improvements.Except for Permitted
------------------------------------------------
Alterations (as hereinafter defined), Tenant shall not make any structural or
nonstructural changes, alterations, additions and/or improvements (hereinafter
collectively referred to as "Alterations") to the Leased Property.
16.2 Approval of Alterations.If Tenant desires to perform any Permitted
--------------------------
Alterations, Tenant shall deliver to Landlord plans, specifications, drawings,
and such other information as may be reasonably requested by Landlord
(collectively the "Plans and Specifications") showing in reasonable detail the
scope and nature of the Alterations that Tenant desires to perform. It is the
intent of the parties hereto that the level of detail shall be comparable to
that which is referred to in the architectural profession as "design development
drawings" as opposed to working or biddable drawings. Landlord agrees not to
unreasonably delay its review of the Plans and Specifications. Within 30 days
after receipt of an invoice, Tenant shall reimburse Landlord for all costs and
expenses incurred by Landlord in reviewing and, if required, approving or
disapproving the Plans and Specifications, inspecting the Leased Property, and
otherwise monitoring compliance with the terms of this Article 16. Tenant shall
comply with the requirements of 16.4 in making any Permitted Alterations.
16.3 Permitted Alterations.Permitted Alterations means anyone of the
-----------------------
following: [i] Alterations approved by Landlord; [ii] Alterations required under
7.2; [iii] Alterations affecting the structure of the Leased Property and having
a total cost of less than $250,000.00 individually or in the aggregate; [iv]
repairs, rebuilding and restoration required or undertaken pursuant to 9.4; or
[v] non-structural Alterations such as painting, landscaping, wallpapering,
installing new floor coverings, etc. without regard to the cost thereof.
16.4 Requirements for Permitted Alterations.Tenant shall comply with all of
---------------------------------------
the following requirements in connection with any Permitted Alterations:
(a) The Permitted Alterations shall be made in accordance with the
approved Plans and Specifications.
(b) The Permitted Alterations and the installation thereof shall comply
with all applicable legal requirements and insurance requirements.
( c) The Permitted Alterations shall be done in a good and
workmanlike manner, shall not impair the value or the structural integrity of
the Leased Property, and shall be free and clear of all mechanic's liens.
(d) For any Permitted Alterations having a total cost of $ 100,000.00
or
more, Tenant shall deliver to Landlord a payment and performance bond, with a
surety acceptable to Landlord, in an amount equal to the estimated cost of the
Permitted Alterations, guaranteeing the completion of the work free and clear of
liens and in accordance with the approved Plans and Specifications, and naming
Landlord and any mortgagee of Landlord as joint obligees on such bond.
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(e) Tenant shall, at Tenant's expense, obtain a builder's completed
value risk policy of insurance insuring against all risks of physical loss,
including collapse and transit coverage, in a nonreporting form, covering the
total value of the work performed, and equipment, supplies, and materials, and
insuring initial occupancy. Landlord and any mortgagee of Landlord shall be
additional insureds of such policy. Landlord shall have the right to approve the
form and substance of such policy.
(f) Tenant shall pay the premiums required to increase the amount of
the insurance coverages required by Article 4 to reflect the increased value of
the Improvements resulting from installation of the Permitted Alterations, and
shall deliver to Landlord a certificate evidencing the increase in coverage.
(g) Tenant shall, not later than 60 days after completion of the
Permitted Alterations, deliver to Landlord a revised "as-built" survey of the
respective Facility if the Permitted Alterations altered the Land or "footprint"
of the Improvements and an "as-built" set of Plans and Specifications for the
Permitted Alterations in form and substance satisfactory to Landlord.
(h) Tenant shall, not later than 30 days after Landlord sends an
invoice, reimburse Landlord for any reasonable costs and expenses, including
attorneys' fees and architects' and engineers' fees, incurred in connection with
reviewing and approving the Permitted Alterations and ensuring Tenant's
compliance with the requirements of this section.
16.5 Ownership and Removal of Permitted Alterations.The Permitted
----------------------------------------------------
Alterations shall become a part of the Leased Property, owned by Landlord, and
leased to Tenant subject to the terms and conditions of this Lease. Tenant shall
not be required or permitted to remove any Permitted Alterations.
16.6 Minimum Qualified Capital Expenditures.During each calendar year of
-----------------------------------------
the Term, Tenant shall expend at least $300.00 per unit for Qualified Capital
Expenditures to the Facilities of which, on average during the Term, no less
than $250.00 per unit per calendar year shall be spent on items which are
capitalized on the books of Tenant, as compared to on routine repair and
maintenance items. At least annually, at the request of Landlord, Landlord and
Tenant shall review capital expenditures budgets and agree on modifications, if
any, required by changed circumstances and the changed conditions of the Leased
Property.
16.7 Signs.Tenant may, at its own expense, erect and maintain
------
identification signs at the Leased Property, provided such signs comply with all
---
laws, ordinances, and regulations. Upon the termination or expiration of this
Lease (other than as a result of the exercise by Tenant of its purchase option),
Tenant shall, within 30 days after notice from Landlord, remove the signs and
restore the Leased Property to its original condition.
ARTICLE 17: ASSIGNMENT AND SALE OF LEASED PROPERTY
17.1 Prohibition on Assignment and Subletting.Tenant acknowledges that
---------------------------------------------
Landlord has entered into this Lease in reliance on the personal services and
business expertise of Tenant. Tenant may not assign, sublet, mortgage,
hypothecate, pledge, grant a right of first refusal or transfer any interest in
this Lease, or in the Leased Property, in whole or in part,
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without the prior written consent of Landlord, which Landlord may withhold in
its sole and absolute discretion. The following transactions will be deemed an
assignment or sublease requiring Landlord's prior written consent: [i) an
assignment by operation of law; [ii] an imposition (whether or not consensual)
of a lien, mortgage, or encumbrance upon Tenant's interest in the Lease; [iii]
except as otherwise permitted by 14.4 and 17.3, an arrangement (including,
but not limited to, management agreements, concessions, licenses, and easements)
which allows the use or occupancy of all or part of the Leased Property by
anyone other than Tenant; and [iv] a material change of ownership of Tenant
other than changes resulting from the trading of Ten ant's stock on a national
stock exchange or from a change in the ownership interest held by Xxxxxx X. Xxxx
or his Affiliates in Tenant. Landlord's consent to any assignment, right of
first refusal or sublease will not release Tenant from its payment and
performance obligations under this Lease, but rather Tenant and Tenant's
assignee or sublessee will be jointly and severally liable for such payment and
performance. An assignment, right of first refusal or sublease without the prior
written consent of Landlord will be void at Landlord's option. Landlord's
consent to one assignment, right of first refusal or sublease will not waive the
requirement of its consent to any subsequent assignment or sublease.
17.2 Requests for Landlord's Consent to Assignment. Sublease or Management
---------------------------------------------------------------------
Agreement.If Tenant is required to obtain Landlord's consent to a specific
----------
assignment, sublease, or management agreement, Tenant shall give Landlord [i)
-----
the name and address of the proposed assignee, subtenant or manager; [ii] a copy
--
of the proposed assignment, sublease or management agreement; [iii] reasonably
satisfactory information about the nature, business and business history of the
proposed assignee, subtenant, or manager and its proposed use of the Leased
Property; and [iv] banking, financial, and other credit information, and
references about the proposed assignee, subtenant or manager sufficient to
enable Landlord to determine the financial responsibility and character of the
proposed assignee, subtenant or manager. Any assignment, sublease or management
agreement shall contain provisions to the effect that [a] such assignment,
sublease or management agreement is subject and subordinate to all of the terms
and provisions of this Lease and to the rights of Landlord and that the
assignee, subtenant or manager shall comply with all applicable provisions of
this Lease; [b) such assignment, sublease or management agreement may not be
modified without the prior written consent of Landlord not to be unreasonably
withheld or delayed; [c) if this Lease shall terminate before the expiration of
such assignment, sublease or management agreement, the assignee, subtenant or
manager thereunder will, solely at Landlord's option and only upon the express
written notice of attornment from Landlord, attorn to Landlord and waive any
right the assignee, subtenant or manager may have to terminate the assignment,
sublease or management agreement or surrender
possession thereunder as a result of the termination of this Lease; and [d) if
the assignee, subtenant or manager receives a written notice from Landlord
stating that Tenant is in default under this Lease, the assignee, subtenant or
manager shall thereafter pay all rentals or payments under the assignment,
sublease or management agreement directly to Landlord until such default has
been cured. Any attempt or offer by an assignee, subtenant or manager to attorn
to Landlord shall not be binding or effective without the express written
consent of Landlord. Tenant hereby collaterally assigns to Landlord, as security
for the performance of its obligations hereunder, all of Ten ant's right, title,
and interest in and to any assignment, sublease or management agreement
now or hereafter existing for all or part of the Leased Property. Tenant shall,
at the request of Landlord, execute such other instruments or documents as
Landlord may request to evidence this collateral assignment. If Landlord, in its
sole and absolute discretion, consents to such
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assignment, sublease, or management agreement, such consent shall not be
effective until [i] a fully executed copy of the instrument of assignment,
sublease or management agreement has been delivered to Landlord; [ii] in the
case of an assignment, Landlord has received a written instrument in which the
assignee has assumed and agreed to perform all of Ten ant's obligations
under the Lease; and [iii] Tenant has paid to Landlord a fee in the amount equal
to the lesser of
Landlord's actual out-of-pocket costs and expenses and $2,500.00; and [iv]
Landlord has received reimbursement from Tenant or the assignee for all
attorneys' fees and expenses and all other reasonable out-of-pocket expenses
incurred in connection with determining whether to give its consent, giving its
consent and all matters relating to the assignment.
17.3 Agreements with Residents.Notwithstanding 17.1, Tenant may enter into
--------------------------
an occupancy agreement with residents of the Leased Property without the prior
written consent of Landlord provided that except as otherwise specifically
provided in this Section 17.3, [i] the agreement does not provide for lifecare
services; [ii] the agreement does not contain any type of rate lock provision or
rate guaranty for more than one calendar year; [iii] the agreement does not
provide for any rent reduction or waiver other than for an introductory period
not to exceed six months; [iv] Tenant may not collect rent for more than one
month in advance, other than one month of rent collected to be held as security
for the performance of the resident's obligation to Tenant; and [v] all
residents of the Leased Property are accurately shown in accounting records for
the Facility. Nothing herein shall be construed as prohibiting Tenant from
implementing from time to time occupancy incentive programs which provide for,
among other things, the payment of larger move in fees in consideration for
lower monthly rental fees provided that Tenant shall, from time to time, as and
when requested by Landlord, provide Landlord with a written description of all
such programs which may then be in effect at the Facility.
17.4 Sale of Leased Property.If Landlord or any subsequent owner of the
---------------------------
Leased Property sells the Leased Property, its liability for the performance of
its agreements in this Lease will end on the date of the sale of the Leased
Property, and Tenant will look solely to the purchaser for the performance of
those agreements. For purposes of this section, any holder of a mortgage or
security agreement which affects the Leased Property at any time, and any
landlord under any lease to which this Lease is subordinate at any time, will be
a subsequent owner of the Leased Property when it succeeds to the interest of
Landlord or any subsequent owner of the Leased Property.
17.5 Assignment by Landlord.Landlord may transfer, assign, mortgage,
-------------------------
collaterally assign, or otherwise dispose of Landlord's interest in this Lease
or the Leased Property.
ARTICLE 18: HOLDOVER AND SURRENDER
18.1 Holding Over.If Tenant, with or without the express or implied consent
-------------
of Landlord, continues to hold and occupy the Leased Property (or any part
thereof) after the expiration of the Term or earlier termination of this Lease
(other than pursuant to Tenant's purchase of the Leased Property), such holding
over beyond the Term and the acceptance or collection of Rent in the amount
specified below by Landlord shall operate and be construed as creating a tenancy
from month to month and not for any other term whatsoever. Said
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month-to-month tenancy may be terminated by Landlord by giving Tenant five days
written notice, and at any time thereafter Landlord may re-enter and take
possession of the Leased Property. If, without Landlord's consent or at
Landlord's request, Tenant continues after the expiration of the Term or earlier
termination of this Lease to hold and occupy the Leased Property whether as a
month-to-month tenant or a tenant at sufferance or otherwise, Tenant shall pay
Rent for each month in an amount equal to the sum of [i] one and one-half
(1-112) times the Base Rent payable during the month in which such expiration or
termination occurs, plus [ii] all General Additional Rent accruing during the
month, plus [iii] any and all other sums payable by Tenant pursuant to this
Lease. During any continued tenancy after the expiration of the Term or earlier
termination of this Lease, Tenant shall be obligated to perform and observe all
of the terms, covenants and conditions of this Lease, but shall have no rights
hereunder other than the right, to the extent given by applicable law, to
continue its occupancy and use of the Leased Property until the tenancy is
terminated. Nothing contained herein shall constitute the consent, express or
implied, of Landlord to the holding over of Tenant after the expiration or
earlier termination of this Lease.
18.2 Surrender.Except for [i] Permitted Alterations; [ii] normal and
----------
reasonable wear and tear (subject to the obligation of Tenant to maintain the
Leased Property in good order and repair during the Term); and [iii] damage and
destruction not required to be repaired by Tenant, Tenant shall surrender and
deliver up the Leased Property at the expiration or termination of the Term in
as good order and condition as they were in at the time they first became
subject to the terms of this Lease. The provisions of this 18.2 shall not
apply in the event of the termination of the Lease upon the exercise by Tenant
of the rights set forth in Article 13.
18.3 Indemnity.If Tenant fails to surrender the entire Leased Property or
----------
any part thereof upon the expiration or termination of this Lease in a timely
manner and in accordance with the provisions of this Lease, in addition to any
other liabilities to Landlord accruing therefrom, Tenant shall defend, indemnify
and hold Landlord, its principals, officers, directors, agents, and employees
harmless from loss or liability resulting from such failure, including, without
limiting the generality of the foregoing, loss of rental with respect to any new
lease in which the rental payable thereunder exceeds the Rent collected by
Landlord pursuant to this Lease during Tenant's hold-over and any claims by any
proposed new tenant founded on Tenant's failure to surrender the Leased
Property. The provisions of this Article 18 shall survive the expiration or
termination of this Lease. The provisions of this 18.3 shall not apply in the
event of the termination of this Lease upon the exercise by Tenant of the rights
set forth in Article 13.
ARTICLE 19: QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT AND ESTOPPEL CERTIFICATES
19.1 Quiet Xx00xxxxx.Xx long as Tenant performs all of its obligations
-----------------
under this Lease, Tenant's possession of the Leased Property will not be
disturbed by Landlord or any party claiming by, through or under Landlord.
19.2 Subordination.Subject to the terms and conditions of this section,
--------------
this Lease and Tenant's rights under this Lease are subordinate to any ground
lease or underlying
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lease, first mortgage, first deed of trust, or other first lien against the
Leased Property, together with any renewal, consolidation, extension,
modification or replacement thereof, which now or at any subsequent time affects
the Leased Property or any interest of Landlord in the Leased Property, except
to the extent that any such instrument expressly provides that this Lease is
superior. The foregoing subordination provision is expressly conditioned upon
any lessor or mortgagee being obligated and bound to recognize Tenant as the
tenant under this Lease, and such lessor or mortgagee shall have no right to
disturb Tenant's possession, use and occupancy of the Leased Property or
Tenant's enjoyment of its rights under this Lease unless and until an Event of
Default occurs hereunder. Any foreclosure action or proceeding by any mortgagee
with respect to the Leased Property shall not affect Tenant's rights under this
Lease and shall not terminate this Lease unless and until an Event of Default
occurs hereunder. The foregoing provisions will be self-operative, and no
further instrument will be required in order to effect them. However, Tenant
shall execute, acknowledge and deliver to Landlord, at any time and from time to
time upon demand by Landlord, such documents as may be requested by Landlord
or any mortgagee or any holder of any mortgage or other instrument described in
this section, to confirm or effect any such subordination, provided that any
such document shall include a nondisturbance provision as set forth in this
section satisfactory to Tenant. Any mortgagee of the Leased Property shall be
deemed to be bound by the nondisturbance provision set forth in this section. If
Tenant fails or refuses to execute, acknowledge, and deliver any such document
within 20 days after written demand, Landlord may execute acknowledge and
deliver any such document on behalf of Tenant as Tenant's attorney-in-fact.
Tenant hereby constitutes and irrevocably appoints Landlord, its successors and
assigns, as Tenant's attorney-in-fact to execute, acknowledge, and deliver on
behalf of Tenant any documents described in this section. This power of attorney
is coupled with an interest and is irrevocable.
19.3 Attornment.If any holder of any mortgage, indenture, deed of trust, or
-----------
other similar instrument described in 19.2 succeeds to Landlord's interest in
the Leased Property, Tenant will pay to such holder all Rent subsequently
payable under this Lease. Tenant shall, upon request of anyone succeeding to the
interest of Landlord, automatically become the tenant of, and attorn to, such
successor in interest without changing this Lease. The successor in interest
will not be bound by [i] any payment of Rent for more than one month in advance
unless actually received by such successor; [ii] any amendment or modification
of this Lease thereafter made without its consent as provided in this Lease;
[iii] any claim against Landlord arising prior to the date on which the
successor succeeded to Landlord's interest; or [iv] any claim or offset of Rent
against Landlord. Upon request by Landlord or such successor in interest and
without cost to Landlord or such successor in interest, Tenant will execute,
acknowledge and deliver an
instrument or instruments confirming the attornment. If Tenant fails or refuses
to execute, acknowledge, and deliver any such instrument within 20 days after
written demand, then Landlord or such successor in interest will be entitled to
execute, acknowledge, and deliver any document on behalf of Tenant as Tenant's
attorney-in-fact. Tenant hereby constitutes and irrevocably appoints Landlord,
its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any such document. This power of
attorney is coupled with an interest and is irrevocable.
19.4 Estoppel Xxxxxxxxxxxx.Xx the request of Landlord or any mortgagee or
-----------------------
purchaser of the Leased Property, Tenant shall execute, acknowledge, and deliver
an estoppel certificate, in recordable form, in favor of Landlord or any
mortgagee or purchaser of the Leased
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Property certifying the following: [i] that the Lease is unmodified and in full
force and effect, or if there have been modifications that the same is in full
force and effect as modified and stating the modifications; [ii] the date to
which Rent and other charges have been paid; [iii] whether Tenant or Landlord is
in default or whether there is any fact or condition known to Landlord or Tenant
which, with notice or lapse of time, or both, would constitute a default, and
specifying any existing default, if any; [iv] that Tenant has accepted and
occupies the Leased Property; [v] that Tenant has no defenses, set-offs,
deductions, credits, or counterclaims against Landlord, if that be the case, or
specifying such that exist; and [vi] such other information as may reasonably be
requested by Landlord or any mortgagee or purchaser. Any purchaser or mortgagee
may rely on this estoppel certificate. If Tenant fails to deliver the estoppel
certificates to Landlord within 10 days after the request of Landlord, then
Tenant shall be deemed to have certified that [ a] the Lease is in full force
and effect and has not been modified, or that the Lease has been modified as set
forth in the certificate delivered to Tenant; [b] Tenant has not prepaid any
Rent or other charges except for the current month; [c] Tenant has accepted and
occupies the Leased Property; [d] neither Tenant nor Landlord is in default nor
is there any fact or condition which, with notice or lapse of time, or both,
would constitute a default; and [e] Tenant has no defenses, set-offs,
deductions, credits, or counterclaims against Landlord. Tenant hereby
irrevocably appoints Landlord as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on Tenant's behalf any estoppel certificate to which
Tenant does not object within 10 days after Landlord sends the certificate to
Tenant. This power of attorney is coupled with an interest and is irrevocable.
ARTICLE 20: REPRESENTATIONS AND WARRANTIES
Tenant hereby makes the following representations and warranties, as of the
Effective Date, to Landlord and acknowledges that Landlord is granting the Lease
in reliance upon such representations and warranties. Tenant's representations
and warranties shall survive the Closing and, except to the extent made as of a
specific date, shall continue in full force and effect until the obligations of
Ten ant under this Lease have been performed in full.
20.1 Organization and Good Standing.Tenant is a corporation 4 , duly
----------------------------------
organized, validly existing and in good standing under the laws of its
Organization State. Tenant is qualified to do business in and is in good
standing under the laws of the Facility State(s).
20.2 Power and Authority.Tenant has the power and authority to execute,
----------------------
deliver and perform this Lease. Tenant has taken all requisite action necessary
to authorize the execution, delivery and performance of their respective
obligations under this Lease.
20.3 Enforceability.This Lease constitutes a legal, valid, and binding
---------------
obligation of Tenant enforceable in accordance with its terms except as such
enforceability may be limited by creditors rights laws and general principles of
equity.
20.4 Government Authorizations.The Facility is in compliance with all Legal
--------------------------
Requirements. All Government Authorizations are in full force and effect. Except
as otherwise
noted in Exhibit H, Tenant holds all Government Authorizations necessary for the
operation of the Facility in accordance with the Facility Uses. No prior notice
to or approval from any
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licensure authority is required in connection with the Lease other than those
notices which have been given or approvals which have been obtained prior to the
Commencement Date.
20.5 Consents.The execution, delivery and performance of this Lease will
---------
not require any consent, approval, authorization, order, or declaration of, or
any filing or registration with, any court, any federal, state, or local
governmental or regulatory authority, or any other person or entity, the absence
of which would materially impair the ability of Tenant to operate the Facility
for the Facility Uses except for any post-closing filing related to the
licensure of the Facility.
20.6 No Violation.The execution, delivery and performance of this Lease [i]
-------------
do not and will not conflict with, and do not and will not result in a breach of
Tenant's Organizational Documents; [ii] do not and will not conflict with, and
do not and will not result in a breach of, and do not and will not constitute a
default under (or an event which, with or without notice or lapse of time, or
both, would constitute a default under), any of the terms, conditions or
provisions of any agreement or other instrument or obligation to which Tenant is
a party or by which its assets are bound; and [iii] do not and will not violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Tenant.
20.7 Chief Executive Xxxxxx.Xx of the Effective Date, Tenant maintains its
-----------------------
chief executive office and its books and records at Tenant's address set forth
in the introductory paragraph of this Lease, it being understood and agreed that
nothing herein shall be construed as prohibiting Tenant from changing its chief
executive office at any time during the Term provided, however, prior notice
thereof shall be required to be given to Landlord in accordance with the
requirements of Section 14.7 hereof.
ARTICLE 21: SECURITY INTEREST
21.1 Collateral.Tenant hereby grants to each Landlord (individually and
-----------
collectively called "Secured Party") a security interest in the following
described property located at, related to or used in connection with a Leased
Property, whether now owned or hereafter acquired by Tenant (the "Collateral"),
to secure the payment and performance of the obligations of Ten ant under this
Lease:
(a) All machinery, furniture, equipment, trade fixtures, appliances,
inventory and all other goods (as "equipment", "inventory" and "goods" are
defined for purposes of Article 9 ("Article 9") of the Uniform Commercial Code
as adopted in Washington) and any leasehold interest of Tenant in any of the
foregoing, including, without limitation, those items which are to become
fixtures or which are building supplies and materials to be incorporated into
any improvement or fixture.
(b) All accounts, deposit accounts, money, investment property,
contract rights, general intangibles, instruments, documents, and chattel paper
[as "accounts", "contract rights", "general intangibles", "instruments",
"documents", and "chattel paper", are defined for purposes of Article 9] now or
hereafter arising.
(c) All franchises, permits, licenses, operating rights,
certifications,
approvals, consents, authorizations and other general intangibles, including,
without limitation,
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certificates of need, state health care facility licenses, and Medicare and
Medicaid provider agreements, to the extent permitted by law.
(d) Unless expressly prohibited by the terms thereof, all contracts,
agreements, contract rights and materials relating to the design, construction,
operation or management of any improvements, including, but not limited to,
plans, specifications, drawings, blueprints, models, mock-ups, brochures,
flyers, advertising and promotional materials and mailing lists.
(e) All subleases, occupancy agreements, license agreements and
concession agreements, written or unwritten, of any nature, now or hereafter
entered into, and all
right, title and interest of Tenant thereunder; and including, without
limitation, Tenant's right, if
any, to cash or securities deposited thereunder whether or not the same was
deposited to secure performance by the subtenants, occupants, licensees and
concessionaires of their obligations thereunder, including the right to receive
and collect the rents, revenues, and other charges thereunder.
(f) All ledger sheets, files, records, computer programs, tapes, other
electronic data processing materials, and other documentation.
(g) The products and proceeds of the preceding listed property,
including, without limitation, cash and non-cash proceeds, proceeds of proceeds,
and insurance proceeds.
21.2 Additional Xxxxxxxxx.Xx the request of Landlord, Tenant shall execute
---------------------
additional security agreements, financing statements, and such other documents
as may be requested by Landlord to maintain and perfect such security interest.
Tenant hereby irrevocably appoints Landlord, its successors and assigns, as
Tenant's attorney-in-fact to execute, acknowledge, deliver and file such
documents on behalf of Tenant. This power of attorney is coupled with an
interest and is irrevocable.
21.3 Notice of Sale.With respect to any sale or other disposition of
-----------------
any of the
Collateral after the occurrence of an Event of Default, Landlord and Tenant
agree that the giving of five days' notice by Landlord, sent by overnight
delivery, postage prepaid, to Tenant's notice address designating the time and
place of any public sale or the time after which any private sale or other
intended disposition of such Collateral is to be made, shall be deemed to be
reasonable notice thereof and Tenant waives any other notice with respect
thereto.
21.4 Recharacterization.Landlord and Tenant intend this Lease to be a true
-------------------
lease. However, if despite the parties' intent, it is determined or adjudged by
a court for any reason that this Lease is not a true lease or if this Lease is
recharacterized as a financing arrangement, then this Lease shall be considered
a secured financing agreement and Landlord's title to the Leased Property shall
constitute a perfected first priority lien in Landlord's favor on the Leased
Property to secure the payment and performance of all the obligations of Tenant
hereunder.
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ARTICLE 22: MISCELLANEOUS
22.1 Notices.Landlord and Tenant hereby agree that all notices, demands,
--------
requests, and consents (hereinafter "notices") required to be given pursuant to
the terms of this Lease shall be in writing, shall be addressed to the addresses
set forth in the introductory paragraph of this Lease, and shall be served by
[i] personal delivery; [ii] certified mail, return receipt requested, postage
prepaid; or [iii] nationally recognized overnight courier. All notices shall be
deemed to be given upon the earlier of actual receipt or three Business Days
after mailing, or one Business Day after deposit with the overnight courier. Any
notices meeting the requirements of this section shall be effective, regardless
of whether or not actually received.
Landlord or Tenant may change its notice address at any time by giving the other
party notice of such change.
22.2 Advertisement of Leased Property.Landlord or its agent shall have the
---------------------------------
right to enter the Leased Property at all reasonable times for the purpose of
exhibiting the Leased Property to others and to place upon the Leased Property
for and during the period commencing 120 days prior to the expiration of this
Lease, "for sale" or "for rent" notices or signs.
22.3 Entire Agreement.This Lease contains the entire agreement between
------------------
Landlord and Tenant with respect to the subject matter hereof. No
representations, warranties, and agreements have been made by Landlord except as
set forth in this Lease. No oral agreements or understandings between Landlord
and Tenant shall survive execution of this Lease.
22.4 Severability.If any term or provision of this Lease is held or deemed
-------------
by Landlord to be invalid or unenforceable, such holding shall not affect the
remainder of this Lease and the same shall remain in full force and effect,
unless such holding substantially deprives Tenant of the use of the Leased
Property or Landlord of the rents herein reserved, in which event this Lease
shall forthwith terminate as if by expiration of the Term.
22.5 Captions and Headings.The captions and headings are inserted only
-----------------------
as a
matter of convenience and for reference and in no way define, limit or describe
the scope of this Lease or the intent of any provision hereof.
22.6 Governing Law.This Lease shall be governed by and construed in
---------------
accordance with the laws of the State of Washington, except as to matters under
which the laws
of a State in which a respective Facility is located, or under applicable
procedural conflicts of laws rules, require the application of laws of such
other State, in which case the laws or conflicts of laws rules, as the case may
be, of such State shall govern to the extent required.
22.7 Memorandum of Lease.Tenant shall not record this Lease. Tenant
----------------------
shall,
however, record a memorandum of lease approved by Landlord upon Landlord's
request.
22.8 Xxxxxx.Xx waiver by Landlord of any condition or covenant herein
-------
contained, or of any breach of any such condition or covenant, shall be held or
taken to be a waiver of any subsequent breach of such covenant or condition, or
to permit or excuse its continuance or any future breach thereof or of any
condition or covenant, nor shall the acceptance of Rent by Landlord at any time
when Tenant is in default in the performance or
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- 53-
observance of any condition or covenant herein be construed as a waiver of such
default, or of Landlord's right to terminate this Lease or exercise any other
remedy granted herein on account of such existing default.
22.9 Binding Effect.This Lease will be binding upon and inure to the
---------------
benefit of the heirs, successors, personal representatives, and permitted
assigns of Landlord and Tenant.
22.10 Modification.This Lease may only be modified by a writing signed by
-------------
both Landlord and Tenant. All references to this Lease, whether in this Lease or
in any other document or instrument, shall be deemed to incorporate all
amendments, modifications and renewals of this Lease, made after the date hereof
If Tenant requests Landlord's consent to any change in ownership, merger or
consolidation of Tenant (where such consent is required by the terms of this
Lease), any assumption of the Lease, or any modification of the Lease, Tenant
shall provide Landlord all relevant information and documents sufficient to
enable Landlord to evaluate the request. In connection with any such request,
Tenant shall pay to Landlord a fee in an amount equal to the lesser of $2,500.00
and Landlord's actual reasonable attorney's fees and expenses and other
reasonable out-of-pocket expenses incurred in connection with Landlord's
evaluation of Tenant's request, the preparation of any documents and amendments,
the subsequent amendment of any documents between Landlord and its lenders (if
applicable), and all related matters.
22.11 No Merger.The surrender of this Lease by Tenant or the cancellation
-----------
of this Lease by agreement of Tenant and Landlord or the termination of this
Lease on account of
Tenant's default will not work a merger, and will, at Landlord's option,
terminate any subleases or operate as an assignment to Landlord of any
subleases. Landlord's option under this paragraph will be exercised by notice to
Tenant and all known subtenants of the Leased Property.
22.12 Xxxxxx.Xx delay or omission by either party hereto to exercise any
-------
right or power accruing upon any noncompliance or default by the other party
with respect to any of the terms hereof shall impair any such right or power or
be construed to be a waiver thereof
22.13 Construction of Lease.Each of Landlord and Tenant has participated in
----------------------
the drafting and negotiation of this Lease and accordingly Landlord and Tenant
agree that in the event of a dispute with respect to the interpretation or
enforcement of the terms hereof, it shall not be interpreted in favor of either
Landlord or Tenant or against either Landlord or Tenant merely because of their
efforts in preparing it.
22.14 Counterparts.This Lease may be executed in multiple counterparts,
-------------
each of which shall be deemed an original hereof
22.15 Custody of Escrow Funds.Any funds paid to Landlord in escrow
---------------------------
hereunder may be held by Landlord or, at Landlord's election, by a financial
institution, the deposits or accounts of which are insured or guaranteed by a
federal or state agency. The funds shall not be deemed to be held in trust, may
be commingled with the general funds of Landlord or such other institution, and
shall not bear interest.
22.16 Exhibits.All of the exhibits referenced in this Lease are attached hereto
---------
and incorporated herein.
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22.17 WAIVER OF JURY TRIAL.LANDLORD AND TENANT WAIVE TRIAL BY JURY IN ANY
----------------------
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE OTHER
ON ALL MATTERS ARISING OUT OF THIS LEASE OR THE USE AND OCCUPANCY OF THE LEASED
PROPERTY (EXCEPT
CLAIMS FOR PERSONAL INJURY OR PROPERTY DAMAGE). IF LANDLORD
COMMENCES ANY SUMMARY PROCEEDING FOR NONPAYMENT OF RENT, TENANT WILL NOT
INTERPOSE, AND WAIVES THE RIGHT TO INTERPOSE, ANY COUNTERCLAIM IN ANY SUCH
PROCEEDING.
22.18 CONSENT TO JURISDICTION.TENANT HEREBY IRREVOCABLY SUBMITS AND
--------------------------
CONSENTS TO THE NONEXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL
COURT HAVING JURISDICTION OVER KING COUNTY, WASHINGTON OR ANY COUNTY IN WHICH A
FACILITY IS LOCATED FOR ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER
ARISING FROM OR RELATED TO [I] THE COMMITMENT; [II] THIS LEASE; OR [III] ANY
DOCUMENT EXECUTED BY TENANT IN CONNECTION WITH THIS LEASE. TENANT HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT TENANT MAY EFFECTIVELY DO SO, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR
PROCEEDING. TENANT AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
TENANT AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST
LANDLORD OR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT OR PROPERTY OF LANDLORD,
CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS LEASE OR ANY RELATED
DOCUMENT IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT HAVING JURISDICTION
OVER KING COUNTY, WASHINGTON UNLESS SUCH COURT LACKS IN PERSONAM OR SUBJECT
MATTER JURISDICTION IN WHICH CASE TENANT SHALL HAVE THE RIGHT TO INSTITUTE SUCH
ACTION OR PROCEEDING BEFORE ANY COURT HAVING SUCH JURISDICTION.
22.19 Attorney's Fees and Xxxxxxxx.Xx the event of a dispute with respect
------------------------------
to the enforcement or interpretation of this Lease, the prevailing party shall
be entitled to collect from the other its reasonable costs and attorneys fees,
including its costs and fees on appeal.
22.20 Survival.The following provisions shall survive termination of the
---------
Lease: Article 8 (Defaults and Remedies); Article 9 (Damage and Destruction);
Article 10 (Condemnation); 15.7 (Transfer of License and Facility Operations);
15.8 (Bed Operating
Rights); 17.2 (Assignment or Sublease); Article 18 (Holdover and Surrender);
Article21 (Security Interest) and 22.20 (Survival).
22.21 Time.Time is of the essence in the performance of this Lease.
-----
22.22 Landlord's Consent.Whenever Tenant is required to secure the consent
-------------------
of Landlord under this Lease, Landlord shall have the right to condition the
granting or withholding
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of such consent on the receipt by Landlord of any Lender consent required under
the documents evidencing the Facility Debt.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease or caused
the same to be executed by their respective duly authorized officers as of the
date first set forth above.
LANDLORD:
HB-ESC I, LLC
By: /s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
Its: Manager
TENANT:
EMERITUS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Its: Director of Real Estate Finance
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57
[GRAPHIC OMITED]
EXHIBIT A: FACILITY INFORMATION
Xxxxxxxx Place of Shreveport
0000 Xxxxxxxxxx Xxxxx 79 assisted living units Xxxxxxxxxx, XX 00000
Emeritus Corporation
EXHIBIT B: LEGAL DESCRIPTIONS
Shreveport - Initial Lease
-----------------------------
A TRACT OF LAND located in Fractional Section 37, Township 17 North, Range 13
West, Shreveport, Caddo Parish, Louisiana, being more fully described as
follows: Beginning at the Northeast corner of Xxx 000, Xxxxxxxxxx Xxxxxxx, as
recorded in Book 1100, pages 159 through
169 of the Records of Caddo Parish, Louisiana, said point also located on the
Westerly right of way line of University Drive; Thence leaving said Westerly
right of way line run along the Northerly line of said University Terrace South
89 18' 00" West a distance of 746.13 feet to a point of the high bank of Sand
Beach Bayou; Thence leaving said Northerly line of University Terrace run along
said high bank the following courses and distances: North 23 44' 00" East a
distance of367.57 feet and North 03 04' 00" East a distance of 115.60 feet;
Thence leaving said high bank run North 89 18' 00" East a distance of 586.50
feet to a point on the Westerly right of
way line of University Drive; Run thence along said Westerly right of way line
South 00 42' 00" East a distance of 450.00 feet to the point of beginning of
tract, containing 6.711 acres, more or less.
EXHIBIT C: PERMITTED EXCEPTIONS
Initial Facility-Shreveport
----------------------------
1. Lien of the Lender (as defined in the Lease) securing the Facility Debt (as
defined in the
Lease). 2. Any unpaid taxes for the current year, and all subsequent years,
not yet due and payable. 3. Any lease, grant, exception or reservation of
minerals or mineral rights appearing in
public records.
4. Servitude rights in favor of the Caddo Levee District, as contained in
instrument dated March 3, 1953 and recorded March 19, 1953 under Registry No.
45626 in Conveyance Book 691, page 91 of the Records of Caddo Parish, Louisiana;
as amended by partial release of Servitude dated November 14, 1996 and recorded
November 18, 1996 under Registry No. 1538810 in Conveyance Book 3148, page 253
of the Records of Caddo Parish, Louisiana.
5. Right of Way in favor of Southwestern Electric Company, dated January 8, 1999
and recorded January 12, 1999 under Registry No 1637167 in Conveyance Book 3294,
page 432 of the Records of Caddo Parish, Louisiana.
6. Financing Statement executed by Senior Lifestyle Shreveport, L.L.C., debtor,
in favor of GMAC Commercial Mortgage corporation, secured party, and filed for
record on May 17, 1999 as Registry No. 09-976293 of the Records of Caddo Parish,
Louisiana, as amended byUCC-3 Financing Statement to designate HB-ESC I, LLC, a
Washington limited liability company as Debtor, filed July 3,2002 as Registry
No. 09-1011418 of the UCC Records of Caddo Parish, Louisiana.
7. Cable Television Service Agreement by and between Senior Lifestyle
Shreveport, LLC and Shreveport Division of Time Warner Cable, dated November 9,
1998 and recorded March 5, 1999 under Registry No. 1643943 in Conveyance Book
3304, page 323 of the Records of Caddo Parish, Louisiana.
8. Cable Television Service Agreement by and between Senior Lifestyle
Shreveport, LLC and Shreveport Division of Time Warner Cable, dated October 5,
1999 and recorded January 18,2000 under Registry No. 1688134 in Conveyance Book
3368, page 201 of the Records of Caddo Parish, Louisiana.
EXHIBIT D: BASE RENT
The Base Rent for the Initial Facility shall be equal to the sum of [i] the
principal and interest payments due and payable on the Facility Debt and which
relate to the period from and after the Effective Date (the "Debt Service Rent")
plus [ii] an amount equal to twenty five percent (25%) of the Facility Cash Flow
for the preceding month (the "Cash Flow Rent").
Each payment of the Debt Service Rent shall be due and payable on the first day
of each month commencing on January 1, 2004 and shall be accompanied by a
reasonably detailed calculation of the Debt Service Rent payment and of the then
outstanding principal balance of the Refinancing Debt used for purposes of such
calculation, if and to the extent such outstanding principal balance is other
than the actual outstanding principal balance of the Refinancing Debt; provided,
however, that the Debt Service Rent payment due on January 1, 2004 shall be
limited to the portion of the January payment on the Facility Debt which is
allocated to the January principal payment, it being understood and agreed that
Tenant shall have no obligation to pay that portion of the Facility Debt service
payment due on January 1, 2004 which includes interest for the month of
December, 2003.
Each payment of Cash Flow Rent shall be due and payable monthly in arrears as
soon as the calculation of Facility Cash Flow is available but in no event later
than the twenty fifth (25th) day of the month following the applicable month for
which the Cash Flow Rent relates, with the first such payment due as soon as the
calculation of Facility Cash Flow for the month of January, 2004 is available
but in no event later than February 25, 2004, and shall be accompanied by a
reasonably detailed calculation of the Cash Flow Rent payment.
The Cash Flow Rent paid by Tenant shall be subject to the following adjustments:
(a)
With each Cash Flow Rent payment due in January of each Lease Year, commencing
with the Cash Flow Rent payment due in January, 2005, Tenant shall provide
Landlord with a reconciliation (the "Annual Cash Flow Rent Reconciliation
Schedule") showing the actual Cash Flow Rent due for the preceding Lease Year
based on the annual Facility Cash Flow during such Lease Year (the "Cash Flow
Rent Due") as compared to the Cash Flow Rent paid during such Lease Year (the
"Cash Flow Rent Paid") and to the extent the Cash Flow Rent Paid is greater than
the Cash Flow Rent Due, Landlord shall remit such excess to Tenant within five
(5) days after receipt of the Annual Cash Flow Rent Reconciliation Schedule and,
to the extent the Cash Flow Rent Paid is less than the Cash Flow Rent Due,
Tenant shall remit such shortfall to Landlord within five (5) days after
delivery of the Annual Cash Flow Rent Reconciliation Schedule.
(b)
The Cash Flow Rent Paid in any Lease Year shall be subject to further adjustment
to the extent that at any time during or after the Lease Year Tenant makes an
Insurance Payment for a claim which arose during the Lease Term. The amount of
such adjustment shall be equal to the lesser of (i) the Cash Flow Rent Paid in
the Lease Year in which such claim arose and with respect to which such
Insurance Payment relates or (ii) 25% of
- 2 -
the amount of such Insurance Payment. Such adjustment shall be due and owing
from Landlord to Tenant within five (5) days after Landlord's receipt of a
written demand therefor, accompanied by reasonably detailed supporting
documentation with respect to the amount and nature of the Insurance Payment.
Base Rent shall be prorated for any partial month in which the Term commences or
terminates.
- 3 -
EXHIBIT E: DOCUMENTS TO BE DELIVERED
Tenant shall deliver each of the following documents to Landlord, to the
extent applicable,. no later than the date specified for each document:
1. Annual Financial Statement of Tenant (audited) and Facility Financial
Statement (audited) - within 90 days after the end of each fiscal year.
2. Annual Facility Budget and Annual Company Budget not later than 45 days
after the beginning of the next fiscal year.
3. Periodic Financial Statement of Ten ant, (unaudited) - within 45
days after
the end of each quarter.
4.
Monthly Facility Financial Statement - within 30 days after the end of
each month.
EXHIBIT F
MONTHLY FINANCIAL STATEMENT AND CENSUS DATA
Facility Name: Management Company: Report Date:
Xxxxxxxx Place at Shreveport Emeritus Corporation
------------------------------------------------------
Census Data
-----------
Total Number of Units Number of Days in Period Total Resident Days Available
Resident Utilization Days
Medicaid
Private
Medicare
Other Payor (Specify)
Total Utilization Days Average Occupancy
MONTH ENDING (DATE)
MONTH ENDING (DATE)
MONTH ENDING (DATE)
MONTH ENDING (DATE)
12MTHS ENDING (DATE)
(C)
Debt Service Coverage Analysis
------------------------------
Net Routine Patient (Resident) Revenue Other Revenues
Total Revenues
Total Expenses
Pre- Tax Income
(A) (B)
Add Back
--------
Depreciation and Amortization
Interest on GMACCM loan (or Facility Lease Expense)
Extraordinary Items
Net Operating Income after Actual Management Fees
Principal and Interest payments due for the period
(A) (B) (A)
+
(C) * 5% (D)
DEBT SERVICE COVERAGE AFTER ACTUAL MGMT. FEES
Net Operating Income after Actual Management Fees
Add Back
--------
Actual Management Fees
Less
----
Assumed Management Fees (I) Net Operating Income after Assumed Management
Fees
(D) (B)
DEBT SERVICE COVERAGE AFTER ASSUMED MGMT. FEES
I certify the above to be true and correct in all material respects. Dated this
- day
By: Name: Title:
B-1
(I) Percentage used as defined in definitions section of Loan Agreement.
B-2
EXHIBIT G
CERTIFICATE OF COMPLIANCE
GMAC Commercial Mortgage Corporation 0000 Xxxxxxxxx Xxxxx, Xxxxx 000 Xxxxxxxxxx,
XX 00000
Re:
Loan Agreement dated as of May 13, 1999, by and between GMAC Commercial Mortgage
Corporation, as Lender, and Senior Lifestyle
Shreveport, L.L.C., as assumed by HB-ESC I, LLC, as Borrower (together with all
amendments and modifications thereto, the "Loan Agreement")
The undersigned officer of HB-ESC I, LLC does hereby certify that for the
quarterly financial period ending
1.
No Default or Event of Default has occurred or exists except
2. The Debt Service Coverage Ratio for the preceding three (3) months
designated below through the end of such period is:
Quarterly Period Ending Required Actual
---------- ------- --------
12/31/03 1.0 to 1.0 to 1.0
--------- ---------- ------
3/31/04 1.15 to 1.0 to 1.0
-------- ----------- ------
6/30/04 1.15 to 1.0 to 1.0
-------- ----------- ------
9/30/04 1.15 to 1.0 to 1.0
-------- ----------- ------
12/31/04 1.15 to 1.0 to 1.0
--------- ----------- ------
3/31/05 1.15 to 1.0 to 1. 0
-------- ----------- -------
3. The Actual Debt Service Coverage Ratio for the preceding three months
designated below through the end of such period is:
Quarterly Period Ending Required Actual
---------- ------- --------
12/31/03 1.0 to 1.0 to 1.0
--------- ---------- ------
3/31/04 1.15 to 1.0 to 1.0
-------- ----------- ------
4. Facility is:
6/30/04 1.15 to 1.0 to 1.0
-------- ----------- ------
9/30/04 1.15 to 1.0 to 1.0
-------- ----------- ------
12/31/04 1.15 to 1.0 to 1.0
--------- ----------- ------
3/31/05 1.15 to 1.0 to 1.0
-------- ----------- ------
The average daily occupancy (on a three (3) calendar month rolling basis) for
the
Required: Actual:
Not less than 80%
%
6. The outstanding principal balance of all Indebtedness (other than the
Loan) of
Borrower is $ , consisting of the following:
[DESCRIBE EACH DEBT AND THE BALANCE THEREOF.]
7. All representations and warranties made by Borrower in the Loan
Agreement and
in other Loan Documents are true and correct in all material respects as though
given on the date hereof, except
8.
All information provided herein is true and correct in all material respects.
9. Capitalized terms not defined herein shall have the meanings given
to such terms
in the Loan Agreement.
Dated this
day of
By: Name: Title:
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EXHIBIT H: GOVERNMENT AUTHORIZATIONS TO BE OBTAINED
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