LEASE AGREEMENT
HR ACQUISITION I CORPORATION
a Maryland corporation,
CAPSTONE CAPITAL OF PENNSYLVANIA, INC.
a Pennsylvania corporation,
and
HRT HOLDINGS, INC.
a Delaware corporation
("LESSOR")
AND
EMERITUS CORPORATION
a Washington corporation
("LESSEE")
May 1, 2003
for
ASSISTED LIVING FACILITY
located at
Outlook Pointe at Harrisburg - Harrisburg, Pennsylvania
Outlook Pointe at Creekview - Hampden, Pennsylvania
Outlook Pointe at Bloomsburg - Bloomsburg, Pennsylvania
Outlook Pointe at Harrisonburg - Harrisonburg, Virginia
Outlook Pointe at Roanoke - Roanoke, Virginia
Outlook Pointe at Danville - Danville, Virginia
Outlook Pointe at Ravenna - Ravenna, Ohio
Outlook Pointe at Greensboro - Greensboro, North Carolina
Table of Contents
-----------------
(continued)
Page
----
iii
i
ARTICLE 1 LEASED PROPERTY; TERM 1
ARTICLE 2 RENT 2
2.1 Minimum Rent and Adjustments to Minimum Rent 2
2.2 Calculation of Increases to Minimum Rent. 3
2.3 Additional Charges. 3
2.5 Abatement of Rent Limited 3
ARTICLE 3 IMPOSITIONS 4
3.1 Payment of Impositions 4
3.2 Proration of Impositions. 4
3.3 Utility Charges 4
3.4 Insurance Premiums 5
ARTICLE 4 NO TERMINATION 5
ARTICLE 5 OWNERSHIP OF LEASED PROPERTY 5
5.1 Ownership of the Property. 5
5.2 Personal Property. 5
ARTICLE 6 CONDITION AND USE OF LEASED PROPERTY 5
6.1 Condition of the Leased Property. 5
6.2 Use of the Leased Property. 6
6.3 Management of Facility 6
6.4 Lessor to Grant Easements 6
ARTICLE 7 LEGAL, INSURANCE AND FINANCIAL REQUIREMENTS 7
7.1 Compliance with Legal and Insurance Requirements. 7
7.2 Legal Requirement Covenants. 7
7.3 Rent and Debt Service Coverage - Facility 7
ARTICLE 8 REPAIRS; RESTRICTIONS AND ANNUAL INSPECTIONS 8
8.1 Maintenance and Repair. 8
8.2 Encroachments; Restrictions. 9
8.3 Inspections 9
ARTICLE 9 CAPITAL ADDITIONS 10
9.1 Construction of Capital Additions to the Leased Property. 10
9.2 Capital Additions Financed by Lessee. 10
9.4 Remodeling and Non-Capital Additions. 12
9.5 Salvage. 12
ARTICLE 10 LIENS 12
ARTICLE 11 PERMITTED CONTESTS 13
ARTICLE 12 INSURANCE 13
12.1 General Insurance Requirements. 13
12.2 Replacement Cost. 14
12.3 Additional Insurance 14
12.4 Waiver of Subrogation. 14
12.5 Form of Insurance. 14
12.6 Change in Limits. 15
12.7 Blanket Policy. 15
12.8 No Separate Insurance 15
12.9 Insurance for Contractors. 15
ARTICLE 13 FIRE AND CASUALTY 15
13.1 Insurance Proceeds. 15
13.2 Reconstruction in the Event of Damage or Destruction Covered by
Insurance. 15
13.3 Reconstruction in the Event of Damage or Destruction Not Covered by
Insurance. 16
13.4 Personal Property 17
13.5 Restoration of Capital Additions 17
13.6 No Abatement of the Rent 17
13.7 Damage Near End of Term 17
13.8 Purchase or Substitution 17
13.9 Waiver 17
ARTICLE 14 CONDEMNATION 18
14.1 Parties' Rights and Obligations 18
14.2 Total Taking 18
14.3 Partial Taking 18
14.4 Restoration 18
14.5 Award Distribution 18
14.6 Temporary Taking 19
14.7 Purchase or Substitution 19
ARTICLE 15 DEFAULT 19
15.1 Events of Default 19
15.2 Remedies 20
15.3 Additional Expenses 21
15.4 Waiver 21
15.5 Application of Funds 21
15.6 Notices by Lessor 21
15.7 Lessor's Security Interest 21
ARTICLE 16 LESSOR'S RIGHT TO CURE 22
ARTICLE 17 PURCHASE OF THE LEASED PROPERTY 22
ARTICLE 18 HOLDING OVER 23
ARTICLE 19 ABANDONMENT 23
19.1 Discontinuance of Operations on the Leased Property; Offer of
Substitution 23
19.2 Obsolescence of the Leased Property; 23
19.3 Conveyance of Leased Property 23
ARTICLE 20 SUBSTITUTION OF PROPERTY 24
20.1 Substitution of Property for the Leased Property. 24
20.2 Conditions to Substitution. 25
20.3 Conveyance to Lessee. 26
20.4 Expenses. 26
ARTICLE 21 RISK OF LOSS 26
ARTICLE 22 INDEMNIFICATION 26
ARTICLE 23 SUBLETTING AND ASSIGNMENT 27
23.1 Subletting and Assignment. 27
23.2 Non-Disturbance, Subordination and Attornment. 27
23.3 Sublease Limitation. 28
23.4 Sublease to Current Licensee 28
ARTICLE 24 OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS 28
24.1 Estoppel Certificate 28
24.2 Financial Statements and Certificates. 28
ARTICLE 25 INSPECTION 29
ARTICLE 26 QUIET ENJOYMENT 30
ARTICLE 27 NOTICES 30
ARTICLE 28 APPRAISAL 31
ARTICLE 29 PURCHASE RIGHTS 32
29.1 Right of First Refusal. 32
29.2 Option to Purchase. 32
29.3 Third Party Designee 32
ARTICLE 30 DEFAULT BY LESSOR 33
30.1 Default by Lessor. 33
30.2 Lessee's Right to Cure 33
ARTICLE 31 ARBITRATION 33
31.1 Controversies. . 33
31.2 Appointment of Arbitrators. 33
31.3 Third Arbitrator. 33
31.4 Arbitration Procedure. 33
31.5 Expenses. 34
ARTICLE 32 FINANCING OF THE LEASED PROPERTY 34
ARTICLE 33 SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE 34
ARTICLE 34 EXTENDED TERMS 35
ARTICLE 35 MISCELLANEOUS 35
35.1 No Waiver. 35
35.2 Remedies Cumulative 35
35.3 Surrender 35
35.4 No Merger of Title 36
35.5 Transfers by Lessor 36
35.6 General. 36
35.7 Memorandum of Lease 36
35.8 Transfer of Licenses 36
35.9 Prior Existing Property Conditions 36
35.10 Capital Improvements Term Loan 36
35.11 Facility Repairs and Capital Improvements 37
ARTICLE 36 GLOSSARY OF TERMS 37
LEASE
THIS LEASE ("Lease") dated the first day of May, 2003 between HR
Acquisition I Corporation, a Maryland corporation, Capstone Capital of
Pennsylvania, Inc. and HRT Holdings, Inc., each having its principal office at
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ each of which is
("Lessor") hereunder, and EMERITUS CORPORATION, a Washington corporation, having
its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ("Lessee").
LEASED PROPERTY; TERM
---------------------
Upon and subject to the terms and conditions hereinafter set forth, Lessor
leases to Lessee and Lessee rents from Lessor all of Lessor's rights and
interest in and to the following property (collectively, the "Leased Property"):
(a) the real property more particularly described on Exhibit A attached
---------
hereto together with all covenants, licenses, privileges and benefits thereto
belonging, and any easements, rights-of-way, rights of ingress and egress or
other interests of Lessor in, on or to any land, highway, street, road or
avenue, open or proposed, in, on, across, in front of, abutting or adjoining
such real property, including all strips and gores adjacent to or lying between
such real property and any adjacent real property (the "Land");
(b) the assisted living facilities (individually a "Facility" and
collectively the "Facilities") located on the Land together with all buildings,
structures, Fixtures (as hereinafter defined) and other improvements of every
kind (including all alleyways and connecting tunnels, crosswalks, sidewalks,
landscaping, parking lots and structures and roadways appurtenant to such
buildings and structures presently or hereafter situated upon the Land, drainage
and all above-ground and underground utility structures) (collectively, together
with the Facility, and any Capital Additions financed by Lessor, the "Leased
Improvements" now or hereafter located therein or thereon);
(c) all permanently affixed equipment, machinery, fixtures and other items
of real and/or personal property, including all components thereof, now and
hereafter located in, on or used in connection with, and permanently affixed to
or incorporated into the Leased Improvements, including all furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste disposal,
air-cooling and air conditioning systems and apparatus, sprinkler systems and
fire and theft protection equipment, carpet, moveable or immovable walls or
partitions and built-in oxygen and vacuum systems, all of which are hereby
deemed by the parties hereto to constitute real estate, together with all
replacements, modifications, alterations and additions thereto, but specifically
excluding all items included within the category of Personal Property
(collectively the "Fixtures");
(d) the Personal Property;
(e) to the extent permitted by law, all permits, approvals and other
intangible property or any interest therein now or hereafter owned or held by
Lessor in connection with the Leased Property or any business or businesses now
or hereafter conducted by Lessee or any Tenant or with the use thereof,
including all leases, contract rights, agreements, trade names, water rights and
reservations, zoning rights, business licenses and warranties (including those
relating to construction or fabrication) related to the Leased Property or any
part thereof, but specifically excluding the general corporate trademarks,
service marks, logos, insignia or books and records of Lessee; and
(f) all site plans, surveys, soil and substrata studies, architectural
drawings, plans and specifications, engineering plans and studies, floor plans,
landscape plans, and other plans and studies that relate to the Land or the
Leased Improvements and are in Lessor's possession or control.
SUBJECT, HOWEVER, to the matters set forth on Exhibit B attached hereto (the
---------
"Permitted Exceptions"), to have and to hold for a fixed term of ten (10) years
(the "Initial Term") commencing as to each of the Facilities on the date set
forth in Exhibit C opposite the name of the Facility, which date the parties
acknowledge and agree will be the date upon which Lessee has secured the
approval of its Board of Directors to the transaction which is the subject of
the Lease and is issued a license to operate such Facility (the "Commencement
Date"), and ending as to all of the Facilities at midnight on April 30, 2013
(the "Expiration Date"), as may be extended pursuant to the terms of Article 34.
The date on which the Initial Term has commenced as to all of the Facilities
shall hereinafter be referred to as the "Final Commencement Date."
RENT
----
1.1 Minimum Rent and Adjustments to Minimum Rent. Lessee shall pay to
--------------------------------------------------
Lessor, without notice, demand, set off (except as set forth in Section 30.2
hereof) or counterclaim, in advance in lawful money of the United States of
America, at Lessor's address set forth herein or at such other place or to such
other person, firms or corporations as Lessor from time to time may designate in
writing, Minimum Rent, as adjusted annually pursuant to Section 2.1(b)
during the Term, as follows:
(g) Minimum Rent. Lessee will pay to Lessor as rent (as adjusted from time
-------------
to time in accordance with Section 2.1 (b), the "Minimum Rent") for the Leased
Property the annual sum of $3,450,000. The Minimum Rent shall be payable in
advance in 12 equal, consecutive monthly installments on the first day of each
calendar month during the Term commencing on the Commencement Date. The Minimum
Rent (or pro rata portion thereof, as applicable) shall be prorated for any
partial month and is subject to adjustment as provided in Sections 2.1(b) and
9.3(b)(iv) below. The Minimum Rent shall be allocated to a Facility for the
purposes of this Article 2 as shown on Exhibit C attached hereto.
----------
(h) Increases to Minimum Rent. On the first and second anniversary of the
----------------------------
Final Commencement Date the then-current Minimum Rent shall be increased,
effective as of each such anniversary of the Final Commencement Date, by the
percentage increase in the Gross Revenues over the prior twelve-month period
times 50% (up to a maximum of $275,000) (the "Rent Cap"). [For example if the
Gross Revenues as of the Final Commencement Date were $1,000,000 and the Gross
Revenues as of the first anniversary of the Final Commencement Date were
$1,500,000, then the increase to Minimum Rent as of the first anniversary of the
Final Commencement Date would be $500,000 50% = $250,000]. In the event the
Rent Cap is achieved as a result of the increase in Gross Revenues at one or
more of the Facilities during the applicable period, the total increase to
Minimum Rent in the second and third Lease Years shall be allocated among the
affected Facilities on a pro rata basis based on the ratio of the increase in
Gross Revenues at each affected Facility to the total increase in Gross Revenues
at all of the affected Facilities. Beginning with the third anniversary date of
the Final Commencement Date (the "Adjustment Date"), the then-current Minimum
Rent shall be increased annually effective as of such Adjustment Date by the
increase in the Consumer Price Index from the second anniversary date of the
Final Commencement Date to the first Adjustment Date and, thereafter, from the
prior Adjustment Date to the then-current Adjustment Date, provided that in no
event will the annual change in the Minimum Rent be more than 3.5% of the
Minimum Rent for the prior year. In addition to the increases to Minimum Rent
provided in this Section 2.1(b), the Minimum Rent shall also be increased as
provided in Section 35.11 of this Lease.
(i) Capital Expenditures. Lessee will fund expenditures for repairs and
---------------------
replacements for the Facilities as approved by Lessor, the costs of which
according to generally accepted accounting principles must be depreciated over
periods greater than one year, as follows: (i) during the first twelve months of
the Term, no funding required; (ii) during the second twelve months of the Term,
funding at the rate of $150.00 per bed per year less the difference between the
required deposit and the actual expenditure made by Lessee pursuant to this
Section 2.1(c) and (iii) commencing the third twelve months of the Term and
thereafter during the Term, funding at the rate of $300.00 per bed per year less
the difference between the required deposit and the actual expenditure made by
Lessee pursuant to this Section 2.1(c). Within 45 days after each anniversary of
the Final Commencement Date, Lessee provide evidence of such expenditures
satisfactory to Lessor. In the event such expenditures are not made, then within
such 45-day period following each anniversary of the Final Commencement Date,
Lessee will pay to Lessor for deposit in a money market account in a federally
insured bank acceptable to Lessor and Lessee the difference between the
expenditures required and the amount actually spent for such purposes, which
funds (the "Capital Replacement Account") shall be made available to Lessee to
make such repairs and replacements. The Capital Replacement Account shall be in
the name of Lessor, and interest earned on such account shall be retained in the
Capital Replacement Account. Lessee shall make detailed requests for such funds
in writing to Lessor in the same form as a Request pursuant Section 9.3 hereof.
Within 30 days of such Request, Lessor shall approve, in its reasonable
discretion, the amount of requested funds and make mutually agreeable
arrangements for the disbursement of the funds, or provide Lessee with written
notice in reasonable detail specifying Lessor's objections to such Request. So
long as this Lease is still in effect (i) at the Expiration Date, up to
$100,000.00 of the Capital Replacement Account will be paid to Lessee and the
balance of such account shall be the sole property of Lessor or (ii) in the
event of the purchase of any or all of the Facilities by Leseee pursuant to
Article 29, then all of the funds in the Capital Replacement Account allocated
to the purchased Facility shall be paid to Lessee and Lessor shall have no
rights with respect thereto. Until released or until the Expiration Date, as
applicable, such escrow funds will constitute security for Lessee's obligations
under this Lease, and Lessee hereby grants to Lessor an assignment of, a
security interest in and a right of setoff against all such escrow funds.
(j) Payment of Minimum Rent. All payments of Minimum Rent shall be made in
-------------------------
lawful money of the United States by wire transfer of same day funds to such
account or location specified by Lessor from time to time in writing. In the
event that Lessor fails to timely provide such notice, Lessee shall make the
payment to Lessor at the address provided for notices below or such other
address as Lessor may from time to time designate in writing to Lessee.
2.1 Calculation of Increases to Minimum Rent. On or about each Adjustment
-------------------------------------------
Date, Lessor will calculate the increase in the Minimum Rent pursuant to the
provisions of Section 2.1(b) and will provide Lessee with written notice of
same. Lessee shall continue to pay the Current Minimum Rent until it receives
notice of the increase in the Minimum Rent.
3.1 Additional Charges. Subject to Article 11 relating to permitted
-------------------
contests, Lessee will also pay and discharge as and when due (a) all other
amounts, liabilities and obligations, which Lessee assumes or agrees to pay
under this Lease including, to the extent applicable, any condominium
association dues, assessments or other charges, and (b) in the event of any
failure on the part of Lessee to pay any of those items referred to in clause
(a) above, Lessee will also promptly pay and discharge every fine, penalty,
interest and cost which may be added for non-payment or late payment of such
items (the items referred to in clauses (a) and (b) above being referred to
herein collectively as the "Additional Charges"), and Lessor shall have all
legal, equitable and contractual rights, powers and remedies provided in this
Lease, by statute or otherwise, in the case of non-payment of the Additional
Charges, as well as the Minimum Rent. If any installment of Minimum Rent or
Additional Charges (but only as to those Additional Charges which are payable
directly to Lessor) shall not be paid within ten days after the date when due,
Lessee will pay Lessor on demand, as Additional Charges, interest (to the extent
permitted by law) computed at the Overdue Rate on the amount of such
installment, from the date when due to the date of payment in full thereof. In
the event Lessor provides Lessee with written notice of failure to timely pay
any installment of Minimum Rent or any Additional Charges pursuant to Section
15.1(b) more than three times within any twelve month period, Lessee shall pay
an administrative fee to Lessor in the amount of $500.00 for each additional
written notice Lessor gives pursuant to Section 15.1(b) during the next twelve
months. To the extent that Lessee pays any Additional Charges to Lessor or the
Facility Mortgagee pursuant to any requirement of this Lease, Lessee shall be
relieved of its obligation to pay such Additional Charges to the entity to which
such Additional Charges would otherwise be due. Additional Charges shall be
deemed Rent hereunder.
4.1 Net Lease. The Rent shall be paid absolutely net to Lessor, so that this
---------
Lease shall yield to Lessor the full amount of the installments of Minimum Rent
and the payments of Additional Charges (but only those which are payable
directly to Lessor) throughout the Term but subject to any provisions of this
Lease which expressly provide for payments by a party other than Lessor or the
adjustment of the Rent or other charges.
5.1 Abatement of Rent Limited. There shall be no abatement of Rent on
----------------------------
account of any Casualty, Taking or other event, except that (a) in the event of
a partial Taking or a temporary Taking as described in Sections 14.3 and 14.6,
the Minimum Rent shall be abated as follows: (i) in the case of such a partial
Taking, the Project Amount shall be reduced for the purposes of calculating
Minimum Rent pursuant to Section 2.1 by subtracting therefrom, as applicable,
the net amount of the Award received by Lessor, and (ii) in the case of such a
temporary Taking, by reducing the Minimum Rent for the period of such a
temporary Taking, by the net amount of the Award received by Lessor and (b) in
the event of a Casualty, the Minimum Rent shall be abated as follows: The
Project Amount shall be reduced for the purposes of calculating Minimum Rent
pursuant to Section 2.1 by subtracting therefrom, as applicable, the net amount
of the insurance proceeds.
For the purposes of this Section 2.5, the "net amount of the Award received
by Lessor" shall mean the Award paid to Lessor or a Facility Mortgagee (as
defined below) on account of such Taking, minus all costs and expenses incurred
by Lessor in connection therewith, and minus any amounts paid to or for the
account of Lessee to reimburse for the costs and expenses of reconstructing the
Facility following such Taking in order to create a viable and functional
Facility under all of the circumstances ("Net Award Amount") and the "net amount
of the insurance proceeds" shall mean the insurance proceeds paid to Lessor or a
Facility Mortgagee on account of such Casualty, minus all costs and expenses
incurred by Lessor in connection therewith and minus any amounts paid to or for
the account of Lessee to reimburse for the costs and expenses of reconstructing
the Facility following such Casualty in order to create a viable and functional
Facility under all of the circumstances ("Net Proceeds Amount").
IMPOSITIONS
-----------
6.1 Payment of Impositions. Subject to Article 11 relating to permitted
------------------------
contests, Lessee will pay, or cause to be paid, all Impositions which are due
and owing during the Term and which relate to the period covered by the Term
before any fine, penalty, interest or cost may be added for non-payment, such
payments to be made directly to the taxing authorities where feasible, and
Lessee will promptly, upon request, furnish to Lessor copies of official
receipts or other satisfactory proof evidencing such payments. Lessee's
obligation to pay such Impositions and the amount thereof shall be deemed
absolutely fixed upon the date such Impositions become a lien upon the Leased
Property or any part thereof. If any such Imposition may lawfully be paid in
installments (whether or not interest shall accrue on the unpaid balance of such
Imposition), Lessee may exercise the option to pay the same (and any
accrued interest on the unpaid balance of such Imposition) in installments and,
in such event, shall pay such installments during the Term hereof as the same
become due and before any fine, penalty, premium, further interest or cost may
be added thereto. Lessor, at its expense, shall, to the extent permitted by
applicable law, prepare and file all tax returns and reports as may be required
by governmental authorities in respect of Lessor's net income, gross receipts,
franchise taxes and taxes on its capital stock. Lessee, at its expense, shall,
to the extent permitted by applicable laws and regulations, prepare and file all
other tax returns and reports in respect of any Imposition as may be required by
governmental authorities. If any refund shall be due from any taxing authority
in respect of any Imposition paid by Lessee, the same shall be paid over to or
retained by Lessee if no Event of Default shall have occurred hereunder and be
continuing. Any such funds retained by Lessor due to an Event of Default shall
be applied as provided in Article 15. Lessor and Lessee shall, upon request of
the other, provide such data as is maintained by the party to whom the request
is made with respect to the Leased Property as may be necessary to prepare any
required returns and reports. In the event governmental authorities classify any
property covered by this Lease as personal property, Lessee shall file all
personal property tax returns in such jurisdictions where filing is required.
Lessor and Lessee will provide the other party, upon request, with cost and
depreciation records necessary for filing returns for any property so classified
as personal property. Where Lessor is legally required to file personal property
tax returns, and Lessee is obligated for the same hereunder, Lessee will be
provided with copies of assessment notices in sufficient time for Lessee to file
a protest. Lessee may, upon giving 30 days' prior written notice to Lessor, at
Lessee's option and at Lessee's sole cost and expense, protest, appeal, or
institute such other proceedings as Lessee may deem appropriate to effect a
reduction of real estate or personal property assessments and Lessor, if
requested by Lessee and at Lessee's expense as aforesaid, shall fully cooperate
with Lessee in such protest, appeal, or other action. ▇▇▇▇▇▇▇▇ for reimbursement
by Lessee to Lessor of personal property taxes shall be accompanied by copies of
an invoice therefor and payments thereof which identify the personal property
with respect to which such payments are made. Lessor will cooperate with Lessee
in order that Lessee may fulfill its obligations hereunder, including the
execution of any instruments or documents reasonably requested by Lessee.
7.1 Proration of Impositions. Impositions imposed in respect of the
--------------------------
tax-fiscal period during which the Term commences and terminates shall be
prorated between Lessor and Lessee, whether or not such Imposition is imposed
before or after such termination, and Lessee's and Lessor's obligation to pay
their respective prorated shares thereof with respect to any tax period which
relates to the period after termination of the Lease shall survive such
termination.
8.1 Utility Charges. Lessee will, or will cause its Tenants, if any, to,
----------------
contract for, in its own name, and will pay or cause to be paid all charges for,
electricity, power, gas, oil, water and other utilities used in the Leased
Property during the Term.
9.1 Insurance Premiums. Lessee will contract for, in its own name, and will
------------------
pay or cause to be paid all premiums for, the insurance coverage required to be
maintained by Lessee pursuant to Article 12 during the Term.
NO TERMINATION
--------------
Except as provided in this Lease, Lessee shall remain bound by this Lease in
accordance with its terms and shall neither take any action without the consent
of Lessor to modify, surrender or terminate the same, nor seek nor be entitled
to any abatement, deduction, deferment or reduction of Rent, or set-off against
the Rent, nor shall the respective obligations of Lessor and Lessee be otherwise
affected by reason of (a) any damage to, or destruction of, the Leased Property
or any portion thereof from whatever cause or any Taking of the Leased Property
or any portion thereof, except as otherwise provided in Articles 13 or 14, (b)
the lawful prohibition of, or restriction upon, Lessee's use of the Leased
Property, or any portion thereof, or the interference with such use by any
person, corporation, partnership or other entity, or by reason of eviction by
paramount title, (c) any claim which Lessee has or might have against Lessor or
by reason of any default or breach of any warranty by Lessor under this Lease or
any other agreement between Lessor and Lessee or to which Lessor and Lessee are
parties, (d) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Lessor or any assignee or transferee of Lessor, or (e) for any other
cause whatsoever whether similar or dissimilar to any of the foregoing. Lessee
hereby specifically waives all rights arising from any occurrence whatsoever
which may now or hereafter be conferred upon it by law to (i) modify, surrender
or terminate this Lease or quit or surrender the Leased Property or any portion
thereof, or (ii) entitle Lessee to any abatement, reduction, suspension or
deferment of the Rent or other sums payable by Lessee hereunder, except as
otherwise specifically provided in this Lease. The obligations of Lessor and
Lessee hereunder shall be separate and independent covenants and agreements and
the Rent and all other sums payable by Lessee hereunder shall continue to be
payable in all events, unless the obligations to pay the same shall be
terminated pursuant to the express provisions of this Lease. Notwithstanding the
foregoing, Lessee shall have the right by separate and independent action to
pursue any claim or seek any damages it may have against Lessor as a result of a
breach by Lessor of the terms of this Lease.
OWNERSHIP OF LEASED PROPERTY
----------------------------
10.1 Ownership of the Property. Lessee acknowledges that the Leased Property
-------------------------
is the property of Lessor and that Lessee has only the right to the
possession and use of the Leased Property upon the terms and conditions of this
Lease.
11.1 Personal Property. Lessee may (and shall as provided hereinbelow), at
------------------
its expense, install, affix or assemble or place on any parcels of the Land or
in any of the Leased Improvements any items of the Personal Property, and may
remove, replace or substitute for the same from time to time in the Ordinary
Course of Business or upon expiration of the Term. Lessee shall provide and
maintain during the entire Term all such Personal Property as shall be necessary
in order to operate the Facility in compliance with all licensure and, if
applicable, certification requirements, in compliance with all applicable Legal
Requirements and Insurance Requirements and otherwise in accordance with
customary practice in the industry for the Primary Intended Use.
CONDITION AND USE OF LEASED PROPERTY
------------------------------------
12.1 Condition of the Leased Property. Lessor hereby assigns for Lessee's
-----------------------------------
benefit any covenants, representations and warranties made in favor of Lessor or
any predecessor to Lessor with respect to the design and construction of
the Improvements. Lessee will examine and otherwise acquire knowledge of the
condition of the Leased Property prior to the occupancy of the Leased. Property.
Lessee is leasing the Leased Property "as is" in its condition at the time of
occupancy. Lessee waives any claim or action against Lessor in respect of the
condition of the Leased Property. LESSOR MAKES NO WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF,
EITHER AS TO ITS FITNESS FOR USE, SUITABILITY, DESIGN OR CONDITION FOR ANY
PARTICULAR USE OR PURPOSE OR OTHERWISE, OR AS TO QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE
TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT THE LEASED PROPERTY HAS BEEN
INSPECTED BY LESSEE AND IS SATISFACTORY TO IT IN ALL RESPECTS. Notwithstanding
the foregoing, Lessee shall have no liability to Lessor for any liens which may
be imposed against the Leased Property as a result of the acts or omissions of
any party other than Lessee during the period prior to the Commencement Date but
the same shall be and remain the responsibility of Lessor.
13.1 Use of the Leased Property.
(k) After the Commencement Date and during the entire Term, Lessee shall use
or cause to be used each Facility and the Leased Property as an assisted
living facility and for such other uses as may be necessary in connection with
or incidental to such use (the "Primary Intended Use"). Lessee shall not use
the Leased Property or any portion thereof for any other use without the prior
written consent of Lessor, which consent shall not be unreasonably withheld or
delayed.
(l) Lessee covenants that it will obtain and maintain all material approvals
needed to use and operate the Leased Property and each Facility for the Primary
Intended Use in compliance with all applicable Legal Requirements.
(m) Lessee covenants and agrees that during the Term it will use its
reasonable best efforts to operate continuously the Leased Property in
accordance with its Primary Intended Use and to maintain its certifications for
reimbursement, if any, and licensure and its accreditation, if compliance with
accreditation standards is required to maintain the operations of a Facility and
if a failure to comply would adversely affect operations of the Facility.
(n) Lessee shall not commit or suffer to be committed any waste on the
Leased Property, or in the Facility or cause or permit any nuisance thereon.
(o) Lessee shall neither suffer nor permit the Leased Property or any
portion thereof, including any Capital Addition whether or not financed by
Lessor, to be used in such a manner as (i) is reasonably likely to impair
Lessor's estate therein or any portion thereof, or (ii) is reasonably likely to
result in a claim or claims of adverse usage or adverse possession by the
public, as such, or of implied dedication of the Leased Property or any portion
thereof.
(p) Lessee will not utilize any Hazardous Materials on the Leased Property
except in accordance with applicable Legal Requirements and will not permit any
contamination which may require remediation under any applicable Hazardous
Materials Law. Lessee agrees not to dispose of any Hazardous Materials or
substances within the sewerage system of the Leased Property, and that it will
handle all "red bag" wastes in accordance with applicable Hazardous Materials
Laws.
14.1 Management of Facility. Unless otherwise agreed to in writing by Lessor
----------------------
(i) Lessee shall cause each Facility to be managed and leased to Residents
and Tenants at all times by Lessee or an Affiliate of Lessee, (ii) Lessee shall
not enter into any agreement (oral or written) with respect to such management
and leasing activities unless the terms thereof and the proposed manager or
leasing agent have been approved in writing by Lessor, (iii) all such management
or leasing agreements must be in writing, and (iv) all management or leasing
agreements with an Affiliate of Lessee must contain provisions to the effect
that (A) the obligation of Lessee to pay management fees is subordinate to its
obligation to pay the Rent, and (B) the manager shall not have the right to
collect any management fees during the continuance of an Event of Default.
15.1 Lessor to Grant Easements. Lessor will, from time to time, at the
----------------------------
request of Lessee and at Lessee's cost and expense, but subject to the approval
of Lessor of the terms and conditions thereof, (a) grant easements and other
rights in the nature of easements, (b) release existing easements or other
rights in the nature of easements which are for the benefit of the Leased
Property, (c) dedicate or transfer unimproved portions of the Leased Property
for road, highway or other public purposes, (d) execute petitions to have the
Leased Property annexed to any municipal corporation or utility district, (e)
execute amendments to any covenants and restrictions affecting the Leased
Property, and (f) execute and deliver to any person such instruments as may be
necessary or appropriate to confirm or effect such grants, releases, dedications
and transfers (to the extent of its interest in the Leased Property), but only
upon delivery to Lessor of an Officer's Certificate stating (and such other
information as Lessor may reasonably require confirming) that such grant,
release, dedication, transfer, petition or amendment is required or beneficial
for and not detrimental to the proper conduct of the business of Lessee on the
Leased Property and does not reduce the value thereof.
LEGAL, INSURANCE AND FINANCIAL REQUIREMENTS
-------------------------------------------
16.1 Compliance with Legal and Insurance Requirements. Subject to Article 11
------------------------------------------------
relating to permitted contests, Lessee, at its expense, will promptly (a)
comply with all material Legal Requirements and Insurance Requirements in
respect of the use, operation, maintenance, repair and restoration of the Leased
Property, whether or not compliance therewith shall require structural change in
any of the Leased Improvements or interfere with the use and enjoyment of the
Leased Property, and (b) directly or indirectly with the cooperation of Lessor,
but at Lessee's sole cost and expense, procure, maintain and comply with all
material licenses, certificates of need, if any, and other authorizations
required for (i) any use of the Leased Property then being made, and for (ii)
the proper erection, installation, operation and maintenance of the Leased
Improvements or any part thereof, including any Capital Additions.
17.1 Legal Requirement Covenants. Lessee covenants and agrees that the
-----------------------------
Leased Property shall not be used for any unlawful purpose. Lessee shall,
directly or indirectly with the cooperation of Lessor, but at Lessee's sole cost
and expense, acquire and maintain all material licenses, certificates, permits
and other authorizations and approvals needed to operate the Leased Property in
its customary manner for the Primary Intended Use and any other use conducted on
the Leased Property as may be permitted from time to time hereunder. Lessee
further covenants and agrees that Lessee's use of the Leased Property and
Lessee's maintenance, alteration, and operation of the same, and all parts
thereof, shall at all times conform to all applicable Legal Requirements.
18.1 Rent and Debt Service Coverage - Facility. As used herein, the
-----------------------------------------------
following terms shall have the meanings indicated:
"Consolidated Coverage Ratio" means, for any period, the ratio of (i)
EBITDARM on a consolidated basis for the Facilities in the aggregate for the
applicable period, to (ii) the principal (excluding any prepayments or principal
at maturity), interest and lease (capital and operating) payment obligations of
the Facilities in the aggregate for the same period.
"EBITDARM" means, for any period, the Net Income (or deficit) plus (i) the
interest charges paid or accrued during such period (including imputed interest
on lease (capital or operating) obligations (including this Lease), but
excluding amortization of debt discount and expense), (ii) income taxes for such
period, (iii) any amounts in respect of depreciation and amortization for such
period, (iv) the rent due under all leases (capital or operating, including this
Lease) for such period, and (v) any actual management fees paid or incurred
during such period.
"Facility Coverage Ratio" means, for any period, the ratio of (i) the
difference between EBITDARM for the Facility for the applicable period, minus
assumed management fees of five percent (5%) of the Gross Revenues from the
Facility to (ii) the principal (excluding any prepayments or principal at
maturity), interest and lease (capital and operating) payment obligations with
respect to the Facility (including the Minimum Rent) for the same period.
(q) Lessee agrees and covenants with Lessor that, so long as this Lease is
in effect, Lessee will achieve and maintain, on a consolidated basis, the
Consolidated Coverage Ratios set forth below for the twelve months preceding
each quarterly reporting date.
Required Consolidated
Period Coverage Ratio
------ ---------------
(i) Prior to date in (ii) No requirement
(ii) For the last two calendar quarters during
the calendar year ending 12/31/05 1.05 to 1.0
(iii) For each calendar quarter during the
calendar year ending 12/31/06 1.10 to 1.0
(iv) For each calendar quarter during the
calendar year ending 12/31/07 1.15 to 1.0
(v) For each calendar quarter during the
calendar year ending 12/31/08 and during
each calendar year thereafter 1.20 to 1.0
(b) Lessee agrees and covenants with Lessor that, so long as this Lease
is in effect, Lessee will achieve and maintain the Facility Coverage Ratios set
forth below for the twelve months preceding each quarterly reporting date.
Required Facility
Period Coverage Ratio
------ ---------------
(i) Prior to date in (ii) No requirement
(ii) For the last two calendar quarters during
the calendar year ending 12/31/05 and for
each calendar quarter during the calendar
year ending 12/31/06 1.0 to 1.0
(iii) For each calendar quarter during the
calendar years ending 12/31/07 and 12/31/08 1.05 to 1.0
(iv) For each calendar quarter during the calendar
year ending 12/31/09 and during each
calendar year thereafter 1.10 to 1.0
REPAIRS; RESTRICTIONS AND ANNUAL INSPECTIONS
--------------------------------------------
19.1 Maintenance and Repair.
(r) Lessee, at its expense, will keep the Leased Property and all private
roadways, sidewalks and curbs appurtenant thereto in reasonably good order and
repair (whether or not the need for such repairs occurs as a result of Lessee's
use, the elements, the age of the Leased Property or any portion thereof), and
except as otherwise provided in Articles 13 and 14, with reasonable promptness
will make all necessary and appropriate repairs thereto of every kind and nature
(including remodeling to the extent necessary to maintain the Leased
Property in a condition substantially the same as exists on the date hereof),
whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen or arising by reason of a condition
existing prior to or after the commencement of the Term of this Lease (concealed
or otherwise). All repairs and remodeling shall, to the extent reasonably
achievable, be at least equivalent in quality to the original work and shall be
accomplished by Lessee or a party selected by Lessee. Lessee will not take or
omit to take any action the taking or omission of which would materially impair
the value or usefulness of the Leased Property or any part thereof for the
Primary Intended Use. If Lessee fails to perform any of its obligations
hereunder, Lessor may, on giving 30 days' written notice to Lessee (other than
in a case reasonably deemed by Lessor to be an emergency, in which case no such
notice shall be required), without demand on Lessee, perform any such
obligations in such manner and to such extent and take such other action as
Lessor may deem appropriate in the event that Lessee has not timely commenced to
perform such obligation or take such action, and all costs, expenses and charges
of Lessor relating to any such action shall constitute Additional Charges and
shall be payable by Lessee to Lessor in accordance with Section 2.3.
(s) Except for the use of any insurance proceeds (to the extent required by
Sections 13.1 and 13.2) and any Award (to the extent required by Section 14.3)
and except for repairs, replacements, alterations, restorations and renewals
required as a result of the acts of omissions of any party other than Lessee
during the period prior to the Commencement Date, which shall be and remain the
responsibility of Lessor, Lessor shall not under any circumstances be required
to build or rebuild any improvements on the Leased Property, or to make any
repairs, replacements, alterations, restorations, or renewals of any nature or
description to the Leased Property, whether ordinary or extraordinary,
structural or nonstructural, foreseen or unforeseen, or to make any expenditure
whatsoever with respect thereto in connection with this Lease, or to maintain
the Leased Property in any way.
(t) Nothing contained in this Lease and no action or inaction by Lessor
shall be construed as constituting the consent or request of Lessor, expressed
or implied, to any contractor, subcontractor, laborer, materialman or vendor to
or for the performance of any particular labor or services or the furnishing of
any particular materials or other property for the construction, alteration,
addition, repair or demolition of or to the Leased Property or any part thereof.
(u) Unless Lessor shall convey any of the Leased Property to Lessee pursuant
to the provisions of this Lease, Lessee will, upon the expiration or prior
termination of this Lease, vacate and surrender the Leased Property to Lessor in
the condition in which the Leased Property was originally received from Lessor,
except for ordinary wear and tear (subject to the obligation of Lessee to
maintain the Property in good order and repair during the entire Term), damage
caused by the gross negligence or willful acts of Lessor, and damage or
destruction described in Article 13 or resulting from a Taking described in
Article 14 which Lessee is not required by the terms of this Lease to repair or
restore, and except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Lease.
20.1 Encroachments; Restrictions. If any of the Improvements shall, at any
----------------------------
time, encroach upon any property, street or right-of-way adjacent to the Leased
Property, or shall violate the agreements or conditions contained in any
applicable Legal Requirement, lawful restrictive covenant or other agreement
affecting the Leased Property, or any part thereof, or shall impair the rights
of others under any easement or right-of-way to which the Leased Property is
subject, then promptly upon the request of Lessor, Lessee shall at its expense,
subject to its right to contest the existence of any such encroachment,
violation or impairment, (a) obtain valid and effective waivers or settlements
of all claims, liabilities and damages resulting from each such encroachment,
violation or impairment, whether the same shall affect Lessor or Lessee, or (b)
make such changes in the Improvements, and take such other actions, as Lessor in
the good faith exercise of its judgment deems reasonably practicable, to
remove such encroachment, or to end such violation or impairment, including, if
necessary, the alteration of any of the Leased Improvements, and in any event
take all such actions as may be necessary in order to be able to continue the
operation of the Facility for the Primary Intended Use substantially in the
manner and to the extent the Facility was operated prior to the assertion of
such violation or encroachment. Any such alteration shall be made in conformity
with the applicable requirements of Article 9. Lessee's obligations under this
Section 8.2 shall be in addition to and shall in no way discharge or diminish
any obligation of any insurer under any policy of title or other insurance and
Lessee shall be entitled to a credit for any sums recovered by Lessor under any
such policy of title or other insurance. Notwithstanding the foregoing, Lessee
shall have no liability to Lessor for any encroachments or violations which
existed prior to the Commencement Date or arise, whether before or after the
Commencement Date, from as a result of the acts or omissions of any party other
than Lessee, its agents, employees or contractors but the same shall be and
remain the responsibility of Lessor.
21.1 Inspections. From time to time during the Term but no more often than
-----------
one time per year, Lessor and its agents shall have the right to inspect the
Leased Property and all systems contained therein at any reasonable time to
determine Lessee's compliance with its obligations under this Lease, including
those obligations set forth in Article 7 and this Article 8. Lessee shall pay
Lessor the sum of $2,000.00 per year to cover the time and expense associated
with such inspections as and when performed.
CAPITAL ADDITIONS
-----------------
22.1 Construction of Capital Additions to the Leased Property.
(v) If no Event of Default shall have occurred and be continuing, Lessee
shall have the right, upon and subject to the terms and conditions set forth
below, to construct or install Capital Additions on the Leased Property with the
prior written consent of Lessor which consent shall not be unreasonably
withheld; provided that Lessee shall not be permitted to create any Encumbrance
on the Leased Property in connection with such Capital Addition without first
complying with Section 9.1(b) hereof. Prior to commencing construction of any
Capital Addition, Lessee shall submit to Lessor in writing a proposal setting
forth in reasonable detail any proposed Capital Addition and shall provide to
Lessor such plans and specifications, permits, licenses, contracts and other
information concerning the proposed Capital Addition as Lessor may reasonably
request. Without limiting the generality of the foregoing, such proposal shall
indicate the approximate projected cost of constructing such Capital Addition
and the use or uses to which it will be put.
(w) Prior to commencing construction of any Capital Addition, Lessee shall
first request Lessor to provide funds to pay for such Capital Addition in
accordance with the provisions of Section 9.3. If Lessor declines or is unable
to provide such financing on terms acceptable to Lessee and Lessee rejects
Lessor's offer of financing, Lessee may arrange or provide other financing,
subject to the provisions of Section 9.2. Lessor will reasonably cooperate with
Lessee regarding the grant of any consents or easements or the like necessary or
appropriate in connection with any Capital Addition; provided that no Capital
Addition shall be made which would tie in or connect any Leased Improvements on
the Leased Property with any other improvements on property adjacent to the
Leased Property (and not part of the Land covered by this Lease) including
tie-ins of buildings or other structures or utilities, unless Lessee shall have
obtained the prior written approval of Lessor, which approval shall not be
unreasonably withheld. All proposed Capital Additions shall be architecturally
integrated into and consistent with the Leased Property.
23.1 Capital Additions Financed by Lessee. If Lessee finances or arranges to
------------------------------------
finance any Capital Addition with a party other than Lessor or if Lessee
pays cash for any Capital Addition, this Lease shall be and hereby is amended to
provide as follows:
(x) There shall be no adjustment in the Minimum Rent by reason of any such
Capital Addition.
(y) Upon the expiration or earlier termination of this Lease, Lessor shall
compensate Lessee for all Capital Additions paid for or financed by Lessee in
any of the following ways:
(1) By purchasing all Capital Additions paid for by Lessee from Lessee for
cash in the amount of the Fair Market Added Value at the time of purchase by
Lessor of all such Capital Additions paid for or financed by Lessee; or
(2) Such other arrangement regarding such compensation as shall be mutually
acceptable to Lessor and Lessee.
Any amount owed by Lessee to Lessor under this Lease at such termination or
expiration may be deducted from any compensation for Capital Additions payable
by Lessor to Lessee under this Section 9.2.
24.1 Capital Additions Financed by Lessor.
(z) Lessee shall request that Lessor provide or arrange financing for a
Capital Addition by providing to Lessor such information about the Capital
Addition as Lessor may reasonably request (a "Request"), including all
information referred to in Section 9.1 above. Lessor may, but shall be under no
obligation to provide or obtain the funds necessary to meet the Request. Within
30 days of receipt of a Request, Lessor shall notify Lessee as to whether it
will finance the proposed Capital Addition and, if so, the terms and conditions
upon which it would do so, including the terms of any amendment to this Lease.
In no event (i) shall the portion of the projected Capital Addition Cost
comprised of land (if any), materials, labor charges, fixtures and out-of-pocket
expenses (including a reasonable construction management fee) be less than
100% of the total amount of such cost, or (ii) shall Lessee or any of its
Affiliates be entitled to any commission or development fee, directly or
indirectly, as a portion of the Capital Addition Cost other than for services
actually provided in connection with the design or construction of such Capital
Addition. Any Capital Addition not financed by Lessor, which Lessee intends to
finance or arrange financing for pursuant to Section 9.2, must still be approved
in writing by Lessor pursuant to the terms of Section 9.1 hereof, which consent
will not be unreasonably withheld. Lessee may withdraw its Request by notice to
Lessor at any time before or after receipt of Lessor's terms and conditions.
(aa) If Lessor agrees to finance the proposed Capital Addition, Lessor's
obligation to advance any funds shall be subject to receipt of all of the
following, in form and substance reasonably satisfactory to Lessor:
(3) such loan documentation as may be required by Lessor;
(4) any information, certificates, licenses, permits or documents requested
by Lessor, or by any lender with whom Lessor has agreed or may agree to provide
financing, which are necessary or appropriate to confirm that Lessee will be
able to use the Capital Addition upon completion thereof in accordance with the
Primary Intended Use, including all required federal, state or local government
licenses and approvals;
(5) an Officer's Certificate and, if requested, a certificate from Lessee's
architect, setting forth in detail reasonably satisfactory to Lessor the
projected (or actual, if available) cost of the proposed Capital Addition;
(6) an amendment to this Lease, duly executed and acknowledged, in form and
substance satisfactory to Lessor and Lessee (the "Lease Amendment"), containing
such provisions as may be necessary or appropriate due to the Capital Addition,
including any appropriate changes in the legal description of the Land and the
Rent, all such changes to be mutually agreed upon by Lessor and Lessee;
(7) if appropriate, a deed conveying title to Lessor to any land and
improvements or other rights acquired for the purpose of constructing the
Capital Addition, free and clear of any liens or encumbrances except those
approved in writing by Lessor and, both prior to and following completion of the
Capital Addition, an as-built survey thereof reasonably satisfactory to Lessor;
(8) if appropriate, endorsements to any outstanding policy of title
insurance covering the Leased Property or a supplemental policy of title
insurance covering the Leased Property reasonably satisfactory in form and
substance to Lessor (A) updating the same without any additional exceptions,
except as may be permitted by Lessor; and (B) increasing the coverage thereof by
an amount equal to the Fair Market Value of the Capital Addition (except to the
extent covered by the owner's policy of title insurance referred to in
subparagraph (vii) below);
(9) if required by Lessor, (A) an owner's policy of title insurance insuring
fee simple title to any land conveyed to Lessor pursuant to subparagraph (v),
free and clear of all liens and encumbrances except those approved by Lessor and
(B) a lender's policy of title insurance satisfactory in form and substance to
Lessor and the Lending Institution advancing any portion of the Capital Addition
Cost;
(10) if required by Lessor upon completion of the Capital Addition, an
M.A.I. appraisal of the Leased Property; and
(11) such other certificates (including endorsements increasing the
insurance coverage, if any, at the time required by Section 12.1), documents,
customary opinions of Lessee's counsel, appraisals, surveys, certified copies of
duly adopted resolutions of the Board of Directors of Lessee authorizing the
execution and delivery of the Lease Amendment and any other instruments or
documents as may be reasonably required by Lessor.
(bb) Upon making a Request to finance a Capital Addition, whether or not
such financing is actually consummated, Lessee shall pay the reasonable costs
and expenses of Lessor and any Lending Institution which has committed to
finance such Capital Addition paid or incurred in connection with the financing
of the Capital Addition, including (i) the fees and expenses of their respective
counsel, (ii) the amount of any recording or transfer taxes and fees, (iii)
documentary stamp taxes, if any, (iv) title insurance charges, (v) appraisal
fees, if any, and (vi) commitment fees, if any. Notwithstanding the foregoing,
Lessee shall have no obligation to reimburse Lessor for any of the fees, charges
and expenses described in this Section 9.3(c), if such Capital Addition
financing fails to close subsequent to Lessor issuing Lessee a written
commitment to finance said Capital Additions; provided that this provision shall
not apply if such financing fails to close due to the acts or omissions of
Lessee.
25.1 Remodeling and Non-Capital Additions. Lessee shall have the right and
--------------------------------------
the obligation to make additions, modifications or improvements to the Leased
Property which are not Capital Additions, including tenant improvements made in
connection with the Tenant Leases, from time to time as may reasonably be
necessary for its uses and purposes and to permit Lessee to comply fully with
its obligations set forth in this Lease; provided that such action will be
undertaken expeditiously, in a workmanlike manner and will not significantly
alter the character or purpose or detract from the value or operating efficiency
of the Leased Property and will not significantly impair the revenue
producing capability of the Leased Property or adversely affect the ability of
Lessee to comply with the provisions of this Lease. Title to all non-Capital
Additions, modifications and improvements shall, without payment by Lessor at
any time, be included under the terms of this Lease and, upon expiration or
earlier termination of this Lease, shall pass to and become the property of
Lessor.
26.1 Salvage. All materials which are scrapped or removed in connection with
-------
the making of either Capital Additions permitted by Section 9.1, remodeling and
non-capital additions permitted by Section 9.4 or repairs required by Article 8
shall be or become the property of Lessor; provided that Lessor may require
Lessee to dispose of such materials and remit the net proceeds thereof to Lessor
within 15 days of such disposal.
LIENS
-----
Subject to the provisions of Article 11 relating to permitted contests, Lessee
will not directly or indirectly create or suffer to exist and will promptly
discharge at its expense any lien, encumbrance, attachment, title retention
agreement or claim upon the Leased Property or any attachment, levy, claim or
encumbrance in respect of the Rent, not including, however, (a) this Lease, (b)
the matters, if any, set forth in Exhibit B attached hereto, (c) restrictions,
---------
liens and other encumbrances which are consented to in writing by Lessor, or any
easements granted pursuant to the provisions of Section 6.4 of this Lease, (d)
liens for those taxes of Lessor which Lessee is not required to pay hereunder,
(e) subleases permitted by Article 23, (f) liens for Impositions or for sums
resulting from noncompliance with Legal Requirements so long as (1) the same are
not yet payable or are payable without the addition of any fine or penalty or
(2) such liens are in the process of being contested in accordance with the
provisions of Article 11, (g) liens of mechanics, laborers, materialmen,
suppliers or vendors for sums either disputed or not yet due, provided that (1)
the payment of such sums shall not be postponed for more than 60 days after the
completion of the action (including any appeal from any judgment rendered
therein) giving rise to such lien and such reserve or other appropriate
provisions as shall be required by law or generally accepted accounting
principles shall have been made therefor or (2) any such liens are in the
process of being contested in accordance with the provisions of Article 11, (h)
any Encumbrance placed on the Leased Property by Lessor, and (i) the liens
granted by Lessee to Lessor under the terms of the leasehold mortgages described
in Section 25.10 (the "Leasehold Mortgages"). Notwithstanding the foregoing,
Lessee shall have no liability to Lessor for any liens which may be imposed
against the Leased Property as a result of the acts or omissions of any party
other than Lessee, its agents, employees or contractors, during the period prior
to the Commencement Date but the same shall be and remain the responsibility of
Lessor.
PERMITTED CONTESTS
------------------
Lessee, after ten days' prior written notice to Lessor, on its own or on
Lessor's behalf (or in Lessor's name), but at Lessee's expense, may contest, by
appropriate legal proceedings conducted in good faith and with due diligence,
the amount, validity or application, in whole or in part, of any Imposition,
Legal Requirement, Insurance Requirement, lien, attachment, levy, encumbrance,
charge or claim (collectively "Charge") not otherwise permitted by the terms of
this Lease, which is required to be paid or discharged by Lessee, any Resident
or any Tenant; provided that (a) in the case of an unpaid Charge, the
commencement and continuation of such proceedings, or the posting of a bond or
certificate of deposit as may be permitted by applicable law, shall suspend the
collection thereof from Lessor and from the Leased Property; (b) neither the
Leased Property nor any Rent therefrom nor any part thereof or interest therein
would be in any immediate danger of being sold, forfeited, attached or lost; (c)
Lessor would not be in any immediate danger of civil or criminal liability for
failure to comply therewith pending the outcome of such proceedings; (d) in the
event that any such contest shall involve a sum of money or potential loss in
excess of $50,000.00, then Lessee shall deliver to Lessor and its counsel an
Officer's Certificate and such opinions of legal counsel as Lessor may
reasonably request as to the matters set forth in clauses (a), (b) and (c); (e)
in the case of an Insurance Requirement, the coverage required by Article 12
shall be maintained; and (f) if such contest be finally resolved against Lessor
or Lessee, Lessee shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or otherwise comply with the applicable Charge; provided further that
nothing contained herein shall be construed to permit Lessee to contest the
payment of the Rent, or any other sums payable by Lessee to Lessor hereunder.
Lessor, at Lessee's expense, shall execute and deliver to Lessee such
authorizations and other documents as may reasonably be required in any such
contest and, if reasonably requested by Lessee or if Lessor so desires and then
at its own expense, Lessor shall join as a party therein. Lessor shall do all
things reasonably requested by Lessee in connection with such action. Lessee
shall indemnify and save Lessor harmless against any liability, cost or expense
of any kind that may be imposed upon Lessor in connection with any such contest
and any loss resulting therefrom.
INSURANCE
---------
27.1 General Insurance Requirements. During the Term of this Lease, Lessee
--------------------------------
shall at all times keep the Leased Property, and all property owned or leased by
Lessee and located in or on the Leased Property insured with the kinds and
amounts of insurance described below and written by companies reasonably
acceptable to Lessor authorized to do insurance business in the state in which
the Leased Property is located. The policies must name Lessor as an additional
insured and losses shall be payable to Lessor and/or Lessee as provided in
Article 13. In addition, the policies shall name as an additional insured the
holder of any mortgage, deed of trust or other security agreement securing any
Encumbrance placed on the Leased Property ("Facility Mortgagee") or any part
thereof in accordance with the provisions of Article 32 ("Facility Mortgage"),
if any, by way of a standard form of mortgagee's loss payable endorsement. Any
loss adjustment in excess of $100,000.00 shall require the written consent of
Lessor and each affected Facility Mortgagee. Evidence of insurance shall be
deposited with Lessor and, if requested, with any Facility Mortgagee(s). The
policies on the Leased Property, including the Leased Improvements, the Fixtures
and the Personal Property, shall insure against the following risks:
(cc) Loss or damage by fire, vandalism and malicious mischief, extended
coverage perils commonly known as "All Risk" and all physical loss perils,
including sprinkler leakage and business interruption, in an amount not less
than 100% of the then Full Replacement Cost thereof (as defined below in Section
12.2) after deductible with a replacement cost endorsement sufficient to
prevent Lessee from becoming a co-insurer together with an agreed value
endorsement;
(dd) Loss or damage by explosion of steam boilers, pressure vessels or
similar apparatus now or hereafter installed in the Facility, in such limits
with respect to any one accident as may be reasonably requested by Lessor from
time to time;
(ee) Loss or damage by hurricane, tornado and earthquake in the amount of
the Full Replacement Cost, after deductible;
(ff) Loss of income under a business interruption insurance policy covering
risk of loss during the first 12 months of reconstruction necessitated by the
occurrence of any of the hazards described in Sections 12.1(a), 12.1(b) or
12.1(c), in an amount sufficient to prevent Lessee from becoming a co-insurer;
provided that in the event that there shall be an Event of Default outstanding
hereunder and Lessor shall receive any proceeds from such income insurance
which, when added to income amounts received with respect to the applicable time
period, exceed the amount of income owed by Lessee hereunder, Lessor shall
immediately pay such excess to Lessee;
(gg) Claims for personal injury or property damage under a policy of
commercial general liability insurance including insurance against assumed or
contractual liability including indemnities under this Lease, with amounts not
less than $5,000,000.00 per occurrence in respect of bodily injury and death and
$10,000,000.00 for property damage; and
(hh) Flood (when the Leased Property is located in whole or in part within a
designated flood plain area) and upon written request of Lessor such other
hazards and in such amounts as may be customary for comparable properties in the
area and if available at commercially reasonable rates from insurance companies
authorized to do business in the state in which the Leased Property is located.
28.1 Replacement Cost. The term "Full Replacement Cost" as used herein shall
----------------
mean the actual replacement cost of the Facility from time to time,
including increased cost of construction endorsement, less exclusions provided
in the normal fire insurance policy. In the event Lessor or Lessee believes that
the Full Replacement Cost has increased or decreased at any time during the
Term, it shall have the right at its own expense to have such Full Replacement
Cost redetermined by the insurance company which is then providing the largest
amount of casualty insurance carried on the Leased Property, hereinafter
referred to as the "impartial appraiser". The party desiring to have the Full
Replacement Cost so redetermined shall forthwith, on receipt of such
determination by the impartial appraiser, give written notice thereof to the
other party hereto. The determination of such impartial appraiser shall be final
and binding on the parties hereto, and Lessee shall forthwith increase, or may
decrease, the amount of the insurance carried pursuant to this Article to the
amount so determined by the impartial appraiser.
29.1 Additional Insurance. In addition to the insurance described above,
---------------------
Lessee shall upon written request of Lessor maintain such additional insurance
as may be reasonably required from time to time by any Facility Mortgagee which
is consistent with insurance coverage for similar properties in the city, county
and state where the Leased Property is located and is available at commercially
reasonable rates, or required pursuant to any applicable Legal Requirement, and
shall at all times maintain or cause to be maintained adequate worker's
compensation insurance coverage for all persons employed by Lessee on the Leased
Property, in accordance with all applicable Legal Requirements or is self
insured in accordance with an approved self insurance program.
30.1 Waiver of Subrogation. All insurance policies carried by either party
-----------------------
covering the Leased Property, the Fixtures, the Facility and/or the Personal
Property, including contents, fire and casualty insurance, shall expressly waive
any right of subrogation on the part of the insurer against the other party
except with respect to claims arising out of the negligence and willful
misconduct of such other party. The parties hereto agree that their policies
will include such a waiver clause or endorsement so long as the same is
obtainable without extra cost, and in the event of such an extra charge the
other party, at its election, may request and pay the same, but shall not be
obligated to do so.
31.1 Form of Insurance. All of the policies of insurance referred to in this
-----------------
Section shall be written in form reasonably satisfactory to Lessor by insurance
companies reasonably satisfactory to Lessor. Lessee shall pay all premiums
therefor, and deliver such policies or certificates thereof to Lessor prior to
their effective date (and, with respect to any renewal policy, prior to the
expiration of the existing policy). In the event of the failure of Lessee to
effect such insurance in the names herein called for or to pay the premiums
therefor, or to deliver such policies or certificates thereof to Lessor at the
times required, Lessor shall be entitled, but shall have no obligation, to enact
such insurance and pay the premiums therefor, which premiums shall be repayable
by Lessee to Lessor upon written demand therefor, and failure to repay the same
shall constitute an Event of Default within the meaning of Section 15.1(c). Each
insurer mentioned in this Section shall agree, by endorsement on the policy or
policies issued by it, or by independent instrument furnished to Lessor, that it
will give to Lessor prior written notice before the policy or policies in
question shall be altered, allowed to expire or canceled.
32.1 Change in Limits. In the event that Lessor shall at any time reasonably
----------------
and in good faith believe the limits of the personal injury, property damage or
general public liability insurance then carried to be insufficient, the parties
shall endeavor to agree on the proper and reasonable limits for such insurance
to be carried and such insurance shall thereafter be carried with the limits
thus agreed on until further change pursuant to the provisions of this Section.
If the parties shall be unable to agree thereon, the proper and reasonable
limits for such insurance shall be determined by an impartial third party
selected by the parties the costs of which shall be divided equally between the
parties. Such redeterminations, whether made by the parties or by arbitration,
shall be made no more frequently than every year. Nothing herein shall permit
the amount of insurance to be reduced below the amount or amounts reasonably
required by any Facility Mortgagee.
33.1 Blanket Policy. Notwithstanding anything to the contrary contained in
---------------
this Section, Lessee's obligations to carry the insurance provided for herein
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Lessee. Currently, Lessee's blanket policy
insurance coverage is as set forth on Exhibit H attached hereto and Lessee
agrees to give Lessor thirty (30) days prior written notice of any material
change to be made in such coverage.
34.1 No Separate Insurance. Without the prior written consent of Lessor,
-----------------------
Lessee shall not, on Lessee's own initiative or pursuant to the request or
requirement of any third party, take out separate insurance concurrent in form
or contributing in the event of loss with that required in this Article 12 to be
furnished by, or which may reasonably be required by a Facility Mortgagee to be
furnished by, Lessee, or increase the amounts of any then-existing insurance
required under this Article 12 by securing an additional policy or additional
policies, unless all parties having an insurable interest in the subject matter
of the insurance, including in all cases Lessor and all Facility Mortgagees, are
included therein as additional insureds and the loss is payable under said
insurance in the same manner as losses are required to be payable under this
Lease. Lessee shall immediately notify Lessor of the taking out of any such
separate insurance or of the increasing of any of the amounts of the
then-existing insurance required under this Article 12 by securing an additional
policy or additional policies.
35.1 Insurance for Contractors. If Lessee shall engage or cause to be
---------------------------
engaged any contractor to perform work on the Leased Property, Lessee shall
require such contractor to carry and maintain insurance coverage comparable to
the foregoing requirements, at no expense to Lessor.
FIRE AND CASUALTY
-----------------
36.1 Insurance Proceeds. All proceeds payable by reason of any loss or
-------------------
damage to the Leased Property or any portion thereof, and insured under any
policy of insurance required by Article 12 of this Lease shall be paid to Lessor
and held by Lessor in trust (subject to the provisions of Section 13.7) and
shall be made available for reconstruction or repair, as the case may be, of any
damage to or destruction of the Leased Property, or any portion thereof, and
shall be paid out by Lessor from time to time for the reasonable cost of such
reconstruction or repair in accordance with this Article 13 after Lessee has
expended an amount equal to or exceeding the deductible under any applicable
insurance policy. Any excess proceeds of insurance remaining after the
completion of the restoration or reconstruction of the Leased Property shall be
retained by Lessee free and clear upon completion of any such repair and
restoration except as otherwise specifically provided below in this Article 13;
provided that in the event neither Lessor nor Lessee is required or elects to
repair or restore the Leased Property, then all such insurance proceeds shall be
retained by Lessor. All salvage resulting from any risk covered by insurance
shall belong to Lessee, including any salvage relating to Capital Additions paid
for by Lessee.
37.1 Reconstruction in the Event of Damage or Destruction Covered by
Insurance.
(ii) Facility Rendered Unsuitable for Its Primary Intended Use. Except as
------------------------------------------------------------
provided in Section 2.6 and Section 13.7, if during the Term, a Facility is
totally or partially destroyed from a risk covered by the insurance described in
Article 12 and the Facility thereby is rendered Unsuitable for its Primary
Intended Use, such damage or destruction shall not terminate this Lease as to
such Facility and all of Lessee's obligations with respect to payment of Rent
shall continue in full force and effect and shall not be affected thereby and
Lessee shall either:
(12) apply all proceeds payable with respect thereto to restore the Facility
to substantially the same condition as existed immediately prior to such
damage or destruction, or
(13) offer either (A) to acquire the affected Facility from Lessor for a
purchase price equal to the Minimum Purchase Price of the affected Facility
immediately prior to such damage or destruction or (B) to substitute a new
property or properties for the affected Facility pursuant to and in accordance
with the provisions of Article 20 (which offer to substitute Lessor may in its
reasonable discretion refuse).
Lessee shall give written notice to Lessor within 60 days after the date of such
damage or destruction whether Lessee chooses option (i) or option (ii), and if
option (ii) is chosen, such notice shall be accompanied by the offer referred to
therein. In the event Lessee fails to give such notice or does not make an offer
under option (ii), Lessee shall promptly proceed to restore the Facility to
substantially the same condition as existed immediately prior to the damage or
destruction. If Lessee's offer to substitute for the affected Facility is
reasonably refused by Lessor, Lessee shall promptly proceed to restore the
affected Facility to substantially the same condition as existed immediately
prior to such damage or destruction or acquire the affected Facility from Lessor
for a purchase price equal to the Minimum Purchase Price of the affected
Facility immediately prior to such damage or destruction.
(jj) Facility Not Rendered Unsuitable for Its Primary Intended Use. Except
---------------------------------------------------------------
as provided in Section 2.6 and Section 13.7, if during the Term, a Facility is
partially destroyed from a risk covered by the insurance described in Article
12, but the Facility is not thereby rendered Unsuitable for its Primary Intended
Use, Lessee shall restore the Facility to substantially the same condition
as existed immediately prior to the damage or destruction and such damage or
destruction shall not terminate this Lease and all of Lessee's obligations
hereunder, including Lessee's obligations with respect to the payment of the
Rent, shall continue in full force and effect and shall not be affected thereby;
provided that if Lessee cannot within a reasonable time obtain all necessary
governmental approvals, including building permits, licenses, conditional use
permits and any certificates of need, after diligent efforts to do so, in order
to be able to perform all required repair and restoration work and to operate
the Facility for its Primary Intended Use in substantially the same manner as
immediately prior to such damage or destruction, then Lessee shall:
offer, either (i) to acquire the affected Facility from Lessor for a purchase
price equal to the Minimum Purchase Price immediately prior to such damage or
destruction, or (ii) to substitute a new property or properties for the affected
Facility pursuant to and in accordance with the provisions of Article 20 (which
offer to substitute Lessor in its reasonable discretion may refuse).
Lessee shall give written notice to Lessor within 60 days after the date of such
damage or destruction whether Lessee chooses option (i) or (ii) and such notice
shall be accompanied by the offer referred to therein. In the event Lessee fails
to give such notice or does not make an offer, Lessee shall promptly proceed to
restore the affected Facility to substantially the same condition as existed
immediately prior to the damage or destruction. If Lessee's offer to substitute
for the affected Facility is reasonably refused by Lessor, Lessee shall promptly
proceed to restore the Facility to substantially the same condition as existed
immediately prior to such damage for destruction or acquire the affected
Facility from Lessor for a purchase price equal to the Minimum Purchase Price of
the affected Facility immediately prior to such damage or destruction.
38.1 Reconstruction in the Event of Damage or Destruction Not Covered by
-----------------------------------------------------------------------
Insurance. Except as provided in Section 13.7, if during the Term a Facility is
------
totally or materially destroyed from a risk not covered by the insurance
described in Article 12, whether or not such damage or destruction renders the
Facility Unsuitable for Its Primary Intended Use, Lessee shall:
(14) restore the Facility to substantially the same condition it was in
immediately prior to such damage or destruction and such damage or destruction
shall not terminate this Lease, and all of Lessee's obligations hereunder,
including Lessee's obligations with respect to the payment of the Rent, shall
continue in full force and effect and not be affected thereby, or
(15) offer either (A) to acquire the affected Facility from Lessor for a
purchase price equal to the Minimum Purchase Price immediately prior to such
damage or destruction, or (B) to substitute a new property or properties for the
affected Facility pursuant to and in accordance with the provisions of Article
20 (which offer to substitute Lessor in its reasonable discretion may refuse);
provided that if such damage or destruction is not material in the reasonable
opinion of Lessor, Lessee shall restore the affected Facility to substantially
the same condition as existed immediately prior to any such damage or
destruction.
Lessee shall give written notice to Lessor within 60 days after the date of such
damage or destruction whether Lessee chooses option (i), (ii)(A) or (ii)(B) and,
in the event of either option (ii)(A) or (ii)(B), such notice shall be
accompanied by the offer referred to therein. In the event Lessee fails to give
such notice or does not make an offer, Lessee shall promptly proceed to restore
the affected Facility to substantially the same condition as existed immediately
prior to the damage or destruction. If Lessor does not accept Lessee's offer to
substitute for or purchase the affected Facility within 30 days after the date
of such offer, Lessee' offer shall be deemed withdrawn on such 30th day and
Lessee shall promptly proceed to restore the affected Facility to substantially
the same condition as existed immediately prior to such damage for destruction;
provided that if such damage or destruction occurs during any Extended Term,
then Lessor must accept Lessee's offer to acquire the affected Facility from
Lessor for a purchase price equal to the Minimum Purchase Price immediately
prior to such damage or destruction.
39.1 Personal Property. Lessee shall use any insurance proceeds payable by
------------------
reason of any loss of or damage to any of the Personal Property to restore such
Personal Property to the affected Facility with items of substantially
equivalent value to the items being replaced.
40.1 Restoration of Capital Additions. If Lessee is required or elects to
----------------------------------
restore a Facility as provided in Sections 13.2 or 13.3, Lessee shall also
restore the Personal Property related thereto as required by Section 13.4 and
all Capital Additions paid for or financed by Lessor. Insurance proceeds payable
by reason of damage to Capital Additions paid for or financed by Lessor shall be
paid to Lessor and Lessor shall hold such insurance proceeds in trust to pay the
cost of repairing or replacing such Capital Additions in the event Lessee does
not purchase or substitute other property or properties for the affected
Facility.
41.1 No Abatement of the Rent. Except as otherwise provided in Section 2.6,
-------------------------
this Lease shall remain in full force and effect and Lessee's obligation to make
rental payments and to pay all other charges required by this Lease shall remain
unabated during any period required for repair and restoration.
42.1 Damage Near End of Term. Notwithstanding any provisions of Sections
---------------------------
13.2 or 13.3 to the contrary, if damage to or destruction of a Facility occurs
during the last 12 months of the Term, and if such damage or destruction cannot
be fully repaired and restored within the lesser of (i) six months or (ii) the
period remaining in the Term immediately following the date of loss, then either
party shall have the right to terminate this Lease as to such Facility by giving
notice of termination to the other within 30 days after the date of such damage
or destruction, in which event Lessor shall be entitled to retain the insurance
proceeds and Lessee shall pay to Lessor on demand the amount of any deductible
or uninsured loss arising in connection therewith; provided that any such notice
given by Lessor shall be void and of no force and effect if Lessee exercises an
available option to extend the Term for one Extended Term, or one additional
Extended Term, as the case may be, within 30 days following receipt of such
termination notice.
43.1 Purchase or Substitution. In the event Lessor accepts any offer by
--------------------------
Lessee to purchase the affected Facility or to substitute a property or
properties for the affected Facility, this Lease as to the affected Facility
shall terminate upon payment of the purchase price and execution and delivery of
all documentation in accordance with Article 17, or execution and delivery of
all documents required in connection with a Substitute Property under Article
20. Lessor shall remit to Lessee, or in the case of a purchase allow Lessee a
credit toward the purchase price, in an amount equal to all insurance proceeds
being held in trust by Lessor.
44.1 Waiver. Lessee hereby knowingly and expressly waives any statutory or
------
common law rights of termination which may arise by reason of any damage or
destruction of the Facilities.
CONDEMNATION
------------
45.1 Parties' Rights and Obligations. If during the Term there is any
----------------------------------
Taking of all or any part of the Leased Property or any interest in this Lease
by Condemnation, the rights and obligations of the parties shall be determined
by this Article 14.
46.1 Total Taking. If there is a Taking of all of a Facility by
-------------
Condemnation, this Lease shall terminate on the Date of Taking as to such
--
Facility, and the Minimum Rent and all Additional Charges paid or payable
hereunder shall be apportioned and paid to the Date of Taking.
47.1 Partial Taking. Except as provided in Section 2.7, if there is a
---------------
Taking of a portion of a Facility by Condemnation such that the Facility is not
thereby rendered Unsuitable for Its Primary Intended Use, this Lease shall not
terminate and all of Lessee's obligations hereunder, including Lessee's
obligations with respect to the payment of the Rent, shall continue in full
force and effect and shall not be affected thereby. If, however, a Facility is
thereby rendered Unsuitable for Its Primary Intended Use, Lessee shall either:
(16) at Lessee's expense, restore the affected Facility, to the extent
possible, to substantially the same condition as existed immediately prior to
the partial Taking, in which case the proceeds of any Award shall be applied to
such restoration to the extent necessary or appropriate, or
(17) offer either (A) to acquire the affected Facility from Lessor for a
purchase price equal to the Minimum Purchase Price of the affected Facility
immediately prior to such partial Taking, or (B) to substitute a new property or
properties for the affected Facility pursuant to and in accordance with the
provisions of Article 20 (which offer to substitute Lessor may in its reasonable
discretion refuse), or
(18) terminate this Lease effective upon the effective date of such Taking
as to the affected Facility.
Lessee will give written notice to Lessor within 60 days after Lessee receives
notice of the Taking which option Lessee chooses, and if option (ii) is chosen,
such notice shall be accompanied by the offer referred to therein. In the event
Lessor does not accept Lessee's offer to so purchase the affected Facility
within 30 days after receipt of the notice described in the preceding sentence,
Lessee may either (a) withdraw its offer to purchase the affected Facility and
proceed to restore the affected Facility, to the extent possible, to
substantially the same condition as existed immediately before the partial
Taking, or (b) terminate the offer and this Lease by written notice to Lessor.
48.1 Restoration. If there is a partial Taking of a Facility and this Lease
-----------
remains in full force and effect pursuant to any provision of this Article
14, Lessee shall accomplish all necessary restoration in order that the affected
Facility may continue to be used for its Primary Intended Use.
49.1 Award Distribution. In the event Lessee purchases a Facility pursuant
-------------------
to Section 14.3 or Lessor accepts any offer by Lessee to purchase a Facility or
to provide a Substitute Property therefor pursuant to this Article 14, then the
entire Award shall belong to Lessee and Lessor agrees to assign to Lessee all of
its rights thereto. Except as otherwise expressly provided in this Article 14,
in any other event the entire Award shall belong to and be paid to Lessor;
provided that if this Lease is terminated in accordance with Section 14.2(b) or
14.3(a), and subject to the rights of any Facility Mortgagees, Lessee shall be
entitled to receive from the Award any sum attributable to Lessee's Personal
Property, loss of Lessee's business, moving expenses and any sum attributable to
any Capital Additions for which Lessee would be entitled to reimbursement at the
end of the Term pursuant to the provisions of Section 9.2(b), but only if any to
the extent such Award expressly includes such items and allocates a value
thereto. If Lessee is required or elects to restore a Facility, Lessor agrees
that, subject to the rights of the Facility Mortgagees, its portion of the Award
shall be used for such restoration and it shall hold such portion of the Award
in trust, for application to the costs of the restoration.
50.1 Temporary Taking. The Taking of a Facility, or any part thereof, by
-----------------
military or other public authority shall constitute a Taking by Condemnation
only when the use and occupancy by the Taking authority has continued for longer
than six months. During any such six-month period all the provisions of this
Lease shall remain in full force and effect and, except as provided in Section
2.6, the Rent shall not be abated or reduced during such period of Taking;
provided that to the extent any compensation is paid by the Taking authority as
a result of such temporary Taking, Lessee will retain such compensation.
51.1 Purchase or Substitution. In the event Lessor accepts any offer by
--------------------------
Lessee to purchase an affected Facility or to substitute a property or
properties for an affected Facility, this Lease shall terminate upon payment of
the purchase price and execution and delivery of all appropriate documentation,
in accordance with Article 17, or execution and delivery of all documents
required in connection with a Substitute Property under Article 20.
DEFAULT
-------
52.1 Events of Default. The occurrence of any one or more of the following
------------------
events shall constitute events of default (individually, an "Event of Default"
and, collectively, "Events of Default") hereunder:
(kk) An event of default shall occur under any other lease or agreement (the
"Related Leases") between Lessor or any of its Affiliates and Lessee or any
of its Affiliates, which event of default is not cured within the applicable
grace period set forth therein;
(ll) Lessee shall fail to make a payment of the Rent payable by Lessee under
this Lease when the same becomes due and payable and such failure continues for
a period of ten calendar days after written notice from Lessor to Lessee;
(mm) Lessee shall fail to observe or perform any other term, covenant or
condition of this Lease or any document executed in connection herewith and such
failure is not cured by Lessee within a period of 30 days after receipt by
Lessee of notice thereof from Lessor specifying in reasonable detail the nature
of such default, unless such failure cannot with due diligence be cured within a
period of 30 days, in which case such failure shall not be deemed to continue if
Lessee proceeds promptly and with due diligence to cure the failure and
diligently completes the curing thereof (as soon as reasonably possible);
(nn) Lessee shall:
(19) admit in writing its inability to pay its debts generally as they
become due,
(20) file a petition in bankruptcy or a petition to take advantage of any
insolvency law,
(21) make an assignment for the benefit of its creditors,
(22) consent to the appointment of a receiver of itself or of the whole or
any substantial part of its property, or
(23) file a petition or answer seeking reorganization or arrangement under
the Federal bankruptcy laws or any other applicable law or statute of the United
States of America or any state thereof; or
(oo) Lessee shall default beyond any applicable grace period contained in
one or more major credit facilities which by their terms would permit the
acceleration of an outstanding balance equal to or greater than $10,000,000.00
in the aggregate and the same shall be accelerated by the lenders or other
applicable parties.
53.1 Remedies. If an Event of Default shall have occurred, Lessor may, at
--------
its election, then or at any time thereafter, pursue any one or more of the
following remedies, in addition to any remedies which may be permitted by law or
by other provisions of this Lease, without further notice or demand, except
as hereinafter provided:
(pp) Apply or appropriate, as the case may be, the Capital Replacement
Account, without prejudice to any other remedies provided herein or at law or
equity.
(qq) Without any notice or demand whatsoever, Lessor may take any one or
more actions permissible at law to ensure performance by Lessee of Lessee's
covenants and obligations under this Lease. In this regard, it is agreed that if
Lessee abandons or vacates the Leased Property (other than as permitted by
Section 19.1), Lessor may enter upon and take possession of such Leased Property
in order to protect it from deterioration and continue to demand from Lessee the
monthly rentals and other charges provided in this Lease. Lessor shall use
reasonable efforts to relet but shall have no absolute obligation to relet. If
Lessor does, at its sole discretion, elect to relet the Leased Property, such
action by Lessor shall not be deemed as an acceptance of Lessee's surrender of
the Leased Property unless Lessor expressly notifies Lessee of such acceptance
in writing, Lessee hereby acknowledging that Lessor shall otherwise be reletting
as Lessee's agent. It is further agreed in this regard that in the event of any
Event of Default described in this Article 15, Lessor shall have the right to
enter upon the Leased Property and do whatever Lessee is obligated to do under
the terms of this Lease. Lessee agrees to reimburse Lessor on demand for any
reasonable expenses which Lessor may incur in thus effecting compliance with
Lessee's obligations under this Lease, and further agrees that Lessor shall not
be liable for any damages resulting to Lessee from such action, except as may
result from Lessor's gross negligence or willful misconduct.
(rr) Lessor may terminate this Lease by written notice to Lessee, in which
event Lessee shall immediately surrender the Leased Property to Lessor, and if
Lessee fails to do so, Lessor may, without prejudice to any other remedy which
Lessor may have for possession or arrearage in rent (including any interest
which may have accrued pursuant to Section 2.3 of this Lease or otherwise),
enter upon and take possession of the Leased Property and expel or remove Lessee
and any other person who may be occupying said premises or any part thereof
other than Residents pursuant to Resident Agreements or Tenants pursuant to
Tenant Leases. In addition, Lessee agrees to pay to Lessor on demand the amount
of all loss and damage which Lessor may suffer by reason of any termination
effected pursuant to this subsection (c), said loss and damage to be determined,
at Lessor's option, by either of the following alternative measures of damages:
(24) Although Lessor shall be under no absolute obligation to attempt and
shall be obligated only to use reasonable efforts, to relet the Leased Property,
until the Leased Property is relet Lessee shall pay to Lessor on or before
the first day of each calendar month the difference between the monthly rentals
and other charges provided in this Lease and the amount paid by the new tenant
to Lessor under the terms of any new lease. After the Leased Property has been
relet by Lessor, Lessee shall pay to Lessor on the 10th day of each calendar
month the difference between the monthly rentals and other charges provided in
this Lease for the preceding calendar month and that actually collected by
Lessor for such month. If it is necessary for Lessor to bring suit in order to
collect any deficiency, Lessor shall have a right to allow such deficiencies to
accumulate and to bring an action on several or all of the accrued deficiencies
at one time. Any such suit shall not prejudice in any way the right of Lessor to
bring a similar action for any subsequent deficiency or deficiencies. Any amount
collected by Lessor from subsequent tenants for any calendar month in excess of
the monthly rentals and other charges provided in this Lease shall be credited
to Lessee in reduction of Lessee's liability for any calendar month for which
the amount collected by Lessor will be less than the monthly rentals and other
charges provided in this Lease, but Lessee shall have no right to such excess
other than the above described credit; or
(25) When Lessor desires, Lessor may demand a final settlement not to exceed
the Minimum Purchase Price at the time of such final settlement. Upon demand for
a final settlement, Lessor shall have a right to, and Lessee hereby agrees to
pay, the difference between the total of all monthly rentals and other charges
provided in this Lease for the remainder of the Term and the reasonable rental
value of the Leased Property for such period (including a reasonable time to
relet the Leased Property), as determined pursuant to the provisions of Article
28 hereof, such difference to be discounted to present value at a rate equal to
the Treasury Yield then in effect with maturity periods substantially equivalent
to the balance of the Initial Terns or any Extended Term then in effect.
The rights and remedies of Lessor hereunder are cumulative, and pursuit of any
of the above remedies shall not preclude pursuit of any other remedies
prescribed in other sections of this Lease and any other remedies provided by
law or equity. Forbearance by Lessor to enforce one or more of the remedies
herein provided upon an Event of Default shall not be deemed or construed to
constitute a waiver of such Event of Default. Exercise by Lessor of any one or
more remedies shall not constitute an acceptance of surrender of the Leased
Property by Lessee, it being understood that such surrender can be effected only
by the prior written agreement of Lessor and Lessee.
54.1 Additional Expenses. In addition to payments required pursuant to
--------------------
subsections (a) and (b) of Section 15.2 above, Lessee shall compensate Lessor
for all reasonable expenses incurred by Lessor in repossessing the Leased
Property (including any increase in insurance premiums caused by the vacancy of
the Leased Property), all reasonable expenses incurred by Lessor in reletting
(including repairs, remodeling, replacements, advertisements and brokerage
fees), all reasonable concessions granted to a new tenant upon reletting
(including renewal options), all fees and expenses incurred by Lessor as a
direct or indirect result of any appropriate action by a Facility Mortgagee and
a reasonable allowance for Lessor's administrative efforts, salaries and
overhead attributable directly or indirectly to Lessee's default and Lessor's
pursuing the rights and remedies provided herein and under applicable law.
55.1 Waiver. If this Lease is terminated pursuant to law or the provisions
------
of this Article 15, Lessee waives, to the extent permitted by applicable law,
(a) any right of redemption, reentry or repossession and (b) the benefit of any
laws now or hereafter in force exempting property from liability for rent or for
debt.
56.1 Application of Funds. All payments otherwise payable to Lessee which
----------------------
are received by Lessor under any of the provisions of this Lease during the
existence or continuance of any Event of Default shall be applied to Lessee's
obligations in the order which Lessor may reasonably determine or as may be
prescribed by the laws of the state in which the Facility is located.
57.1 Notices by Lessor. The provisions of this Article 15 concerning
-------------------
notices shall be liberally construed insofar as the contents of such notices are
concerned, and any such notice shall be sufficient if it shall generally apprise
Lessee of the nature and approximate extent of any default in sufficient detail
so as to enable Lessee to undertake the necessary corrective action.
58.1 Lessor's Security Interest. Lessee hereby grants to Lessor, a valid
----------------------------
and continuing security interest to secure payment of all rentals and other sums
of money becoming due hereunder from Lessee, and to secure payment of any
damages or loss which Lessor may suffer by reason of the breach by Lessee of any
covenant, agreement or condition contained herein, upon all of the Personal
Property owned by Lessee and presently, or which may hereafter be, situated in
or about and used in connection with the operation of the Leased Property, and
all proceeds therefrom and accessions thereto and, except as a result of sales
made in the ordinary course of Lessee's business, such property shall not be
removed without the consent of Lessor until any arrearage in rent as well as any
and all other sums of money then due to Lessor or to become due to Lessor
hereunder shall first have been paid and discharged and all the covenants,
agreements and conditions hereof have been fully complied with and performed by
Lessee. Upon the occurrence of an Event of Default by Lessee, Lessor may, in
addition to any other remedies provided herein, enter upon the Leased Property
and take possession of any and all of the Personal Property, without liability
for trespass or conversion, and sell the same at public or private sale, with or
without having such property at the sale, after giving Lessee reasonable notice
of the time and place of any public sale or of the time after which any private
sale is to be made, at which sale Lessor or its assigns may purchase unless
otherwise prohibited by law or unless such removal would materially and
adversely affect the compliance of the operations at the Facility with law or
jeopardize resident health or welfare or give rise to a default under a Tenant
Lease. Unless otherwise provided by law, and without intending to exclude any
other manner of giving Lessee reasonable notice, the requirement of reasonable
notice shall be met, if such notice is given in the manner prescribed in this
Lease at least seven days prior to the time of sale. Any sale made pursuant to
the provision of this paragraph shall be deemed to have been a public sale
conducted in commercially reasonable manner if held in the above described
premises or where the property is located after the time, place and method of
sale and a general description of the types of property to be sold have been
advertised in a daily newspaper published in the county in which the property is
located, for five consecutive days before the date of the sale. The proceeds
from any such disposition, less any and all expenses connected with the taking
of possession, holding and selling of the property (including reasonable
attorneys' fees and legal expenses), shall be applied as a credit against the
indebtedness secured by the security interest granted in this paragraph. Any
surplus shall be paid to Lessee or as otherwise required by law; Lessee shall
pay any deficiencies forthwith. Upon request by Lessor, Lessee agrees to execute
and deliver to Lessor a financing statement in form sufficient to perfect the
security interest of Lessor in the aforementioned property and proceeds thereof
under the provision of the Uniform Commercial Code (or corresponding state
statute or statutes) in force in the state of Lessee's incorporation, as well as
any other state the laws of which Lessor may at any time consider to be
applicable. Notwithstanding anything to the contrary contained in this Section,
Lessor's security interest in the property of Lessee described above shall be
subject to and absolutely subordinate to any and all purchase money security
interests at any time given by Lessee to third parties and to the liens granted
to Lessor by Lessee under the terms of the Leasehold Mortgages.
LESSOR'S RIGHT TO CURE
----------------------
If Lessee, without the prior written consent of Lessor, shall fail to make any
payment, or to perform any act required to be made or performed under this Lease
and to cure the same within the relevant time periods provided in Section 15.1,
Lessor, without waiving or releasing any obligation or Event of Default, may
(but shall be under no obligation to) make such payment or perform such act for
the account and at the expense of Lessee, and may, to the extent permitted by
law, enter upon the Leased Property for such purpose and take all such action
thereon as, in Lessor's opinion, may be necessary or appropriate therefor. No
such entry shall be deemed an eviction of Lessee. All sums so paid by Lessor,
together with a late charge thereon (to the extent permitted by law) at the
Overdue Rate from the date on which such sums or expenses are paid or incurred
by Lessor, and all costs and expenses (including reasonable attorneys' fees and
expenses, in each case, to the extent permitted by law) so incurred shall be
paid by Lessee to Lessor on demand and if not paid as provided herein such costs
and expenses shall thereby increase the Project Amount. The obligations of
Lessee and rights of Lessor contained in this Article shall survive the
expiration or earlier termination of this Lease.
PURCHASE OF THE LEASED PROPERTY
-------------------------------
In the event Lessee purchases the Leased Property, or any portion thereof, from
Lessor pursuant to any of the terms of this Lease (other than a purchase
pursuant to Section 29.2 which contains all of the provisions relevant to such
purchase and thus such purchase shall be governed by Section 29.2), Lessor
shall, upon receipt from Lessee of the applicable purchase price (after credit
for the balance of the Capital Replacement Account allocated to the applicable
portion of the Leased Property being purchased by Lessee based on the ratio of
the number of units at the applicable portion of the Leased Property being
purchased by Lessee to the total number of units at the Leased Property at the
time of such purchase), together with full payment of any unpaid Rent due and
payable with respect to any period ending on or before the date of the purchase
and any other amounts owing to Lessor hereunder, deliver to Lessee an
appropriate special warranty deed and any other documents reasonably requested
by Lessee to convey the interest of Lessor in and to the Leased Property or the
applicable portion thereof to Lessee, and such other standard documents usually
and customarily prepared in connection with such transfers, free and clear of
all encumbrances other than (a) those that Lessee agrees to pay or discharge,
(b) those mortgage liens, if any, which Lessee agrees in writing to accept and
to take title subject to, (c) any other Encumbrances permitted to be imposed on
the Leased Property under the provisions of Article 32 which are assumable at no
cost to Lessee and which Lessee elects in its sole discretion to assume, and (d)
any matters affecting the Leased Property, or the applicable portion thereof, on
or as of the Commencement Date as shown on Exhibit B attached hereto. The
difference between the applicable purchase price and the total of the
encumbrances assigned or taken subject to shall be paid in cash to Lessor, or as
Lessor may direct, in federal or other immediately available funds except as
otherwise mutually agreed by Lessor and Lessee. The closing of any such sale
shall be contingent upon and subject to Lessee obtaining all required
governmental consents and approvals for such transfer and on Lessor obtaining
the legal opinion described in the last sentence of this Article 17; provided,
however, if Lessor cannot obtain the legal opinion described herein, after
receipt of Lessor's written notice that Lessor cannot obtain the required legal
opinion, Lessee shall have ninety (90) days in which to elect to substitute a
new property in accordance with the provisions of Article 20 and upon failure to
give written notice to Lessor within said ninety (90) day period, Lessor may
elect (i) not to consummate the transfer whereupon this Lease shall continue in
full force and effect or (ii) to consummate the transfer whereupon this Lease
shall terminate. If such sale shall fail to be consummated by reason of the
inability of Lessee or Lessor to obtain all such approvals and consents or
Lessor to obtain the legal opinion described in the last sentence of this
Article 17, any options to extend the Term which otherwise would have expired
during the period from the date when Lessee elected or became obligated to
purchase the Leased Property until Lessee's inability to obtain the approvals
and consents is confirmed shall be deemed to remain in effect for 30 days after
the end of such period and any other options available to Lessee under this
Lease at the time the purchase option was exercised shall be reinstated during
such 30 days period. The closing with respect to any such sale shall be
appropriately timed to accommodate the determination of the Minimum Purchase
Price in accordance with Article 28. All expenses of such conveyance, including
the cost of title examination or standard coverage title insurance, reasonable
attorneys' fees incurred by Lessor in connection with such conveyance, transfer
taxes and recording fees shall be paid by Lessee. Additionally, any sale to
Lessee shall be subject to delivery of an opinion of Lessor's counsel confirming
that (i) the sale will not result in ordinary recapture income to Lessor
pursuant to Code Section 1245 or 1250 or any other Code provision, (ii) the sale
will result in income, if any, to Lessor of a type described in Code Section
856(c)(2) or 856(c)(3) and will not result in income of the types described in
Code Section 856(c)(4) or result in the tax imposed under Code Section
857(b)(6), and (iii) the sale, together with all other substitutions and sales
made or requested by Lessee pursuant to any other leases with Lessor of
properties hereto or any other transfers of the Leased Property or the
properties leased under other such operating leases, during the relevant time
period, will not jeopardize the qualification of Lessor as a real estate
investment trust under Code Sections 856-860. Lessee shall have the right to
designate a third party to take title to the Leased Property or any portion
thereof acquired by Lessee pursuant to this Article 17.
HOLDING OVER
------------
If Lessee shall for any reason remain in possession of the Leased Property after
the expiration of the Term or any earlier termination of the Term hereof without
Lessor consent, such possession shall be as a tenancy at will during which time
Lessee shall pay as rental each month an amount equal to the sum of (a) 150 % of
the aggregate of 1/12 of the aggregate Minimum Rent payable with respect to the
last complete year prior to the expiration of the Term, plus (b) all Additional
Charges accruing during such month, plus (c) all other sums, if any, payable
pursuant to the provisions of this Lease with respect to the Leased Property.
During such period of tenancy, Lessee and Lessor shall be obligated to perform
and observe all of the terms, covenants and conditions of this Lease and to
continue its occupancy and use of the Leased Property. Nothing contained herein
shall constitute the consent, express or implied, of Lessor to the holding over
of Lessee after the expiration or earlier termination of this Lease.
ABANDONMENT
-----------
59.1 Discontinuance of Operations on the Leased Property; Offer of
---------------------------------------------------------------------
Substitution. If Lessee has discontinued use of the Leased Property, or any
---
portion thereof, for its Primary Intended Use for 90 consecutive days without
Lessor's prior written consent for alterations or remodeling pursuant to Article
9, repairs or restoration pursuant to Article 13 or Article 14 or
otherwise, then provided Lessor has not terminated this Lease pursuant to
Section 15.2, Lessee may offer to substitute a new property or properties for
the affected portion of the Leased Property pursuant to and in accordance with
the provisions of Article 20 (which offer to substitute Lessor may in its
reasonable discretion refuse).
60.1 Obsolescence of the Leased Property; Offer to Purchase. If the Leased
--------------------------------------------------------
Property, or any portion thereof, becomes Unsuitable for its Primary Intended
Use, all as set forth in an Officer's Certificate delivered to Lessor, Lessee
may (provided this Lease is still in effect), purchase the affected portion of
the Leased Property for the Minimum Purchase Price on the first Payment Date
occurring not less than 120 days after the date of such Officer's Certificate.
61.1 Conveyance of Leased Property. In the event Lessee elects to purchase
-------------------------------
the affected portion of the Leased Property pursuant to Section 19.2, then on
the first Payment Date occurring not less than 120 days after the date of the
Officer's Certificate referred to in Section 19.2, Lessor shall, upon receipt
from Lessee of the Minimum Purchase Price as of the date of such purchase and
all Rent and or other sums then due and payable under this Lease (excluding any
installment of Minimum Rent due on such Payment Date), convey the affected
portion of the Leased Property to Lessee on such date in accordance with the
provisions of Article 17 and this Lease shall thereupon terminate as to the
affected Leased Property.
SUBSTITUTION OF PROPERTY
------------------------
62.1 Substitution of Property for the Leased Property.
(ss) In the event Lessor accepts an offer by Lessee to substitute other
property for all or any portion of the Leased Property under Article 13, Article
14 or Article 19, and provided that no Event of Default shall have occurred
and be continuing, Lessee shall have the right (subject to the conditions set
forth below in this Article 20, and upon notice to Lessor) to substitute one or
more properties (collectively referred to as "Substitute Properties" or
individually as a "Substitute Property") for the affected portion of the Leased
Property on a monthly Payment Date specified in such notice (the "Substitution
Date") occurring not less than 90 days after receipt by Lessor of such notice.
The notice shall be in the form of an Officer's Certificate and shall specify
the reason(s) for the proposed substitution and the proposed Substitution Date.
Notwithstanding anything contained herein to the contrary, any other
substitution for all or any portion of the Leased Property shall require the
prior written consent of Lessor which shall be within the sole discretion of
Lessor.
(tt) If Lessee gives the notice referred to in Section 20.1(a) above, Lessee
shall present to Lessor one or more properties (or groups of properties) having
comparable operating characteristics, each of which property (or groups of
properties) shall provide Lessor with a yield (i.e., an annual return on its
equity in such property) equal to or greater than the Current Yield (and the
yield reasonably expected to be received thereafter throughout the remainder of
the term) from the affected portion of the Leased Property at the time of such
proposed substitution (or in the case of a proposed substitution as a result of
damage, destruction or Condemnation, the Current Yield immediately prior to such
damage, destruction or Condemnation) and as reasonably projected over the
balance of the then effective Initial Term or Renewal Term (as applicable) of
this Lease and shall have a Fair Market Value substantially equivalent to the
Fair Market Value of the Leased Property, but in no event less than the Project
Amount. Lessor shall have a period of 90 days within which to review such
information and either to accept or to reject the Substitute Property or
Substitute Properties so presented; provided that if Lessee is required by a
court order or administrative action to divest or otherwise dispose of the
affected portion of the Leased Property within a shorter time period, the time
period shall be shortened appropriately to meet the reasonable needs of Lessee,
but in no event shall said period be less than 15 Business Days after Lessor's
receipt of said notice (subject to further extension for any period of time in
which Lessor is not timely provided with the information provided for in Section
20.2 and Section 20.3 below); provided that if Lessor shall contend that the
Substitute Properties fail to meet all the conditions for substitution set forth
in this Article 20, including the provisions of Sections 20.1(c), (d) and (e)
below, Lessee shall withdraw its offer to substitute property whereupon Lessee
shall within thirty (30) days of notice of its withdrawn offer of substitution
give Lessor written notice that it will either offer (i) to substitute
additional property or (ii) purchase the affected portion of the Leased Property
for the Minimum Purchase Price with either such election to be in accordance
with the provisions of this Lease.
(uu) It shall be a condition to consummation of any substitution hereunder
that all of the conditions set forth in Section 20.2 below, shall have been
satisfied with respect to such substitution, and to the delivery of an opinion
of counsel for Lessor confirming that (i) the substitution of the Substitute
Property for the affected portion of the Leased Property will qualify as an
exchange solely of property of alike-kind under Section 1031 of the Code, in
which, generally, except for "boot" such as cash needed to equalize exchange
values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii)
the substitution will not result in ordinary recapture income to Lessor pursuant
to Code Section 1245 or 1250 or any other Code provision, (iii) the substitution
will result in income, if any, to Lessor of a type described in Code Section
856(c)(2) or 856(c)(3) and will not result in income of the types described in
Code Section 856(c)(4) or result in the tax imposed under Code Section
857(b)(6), and (iv) the substitution, together with all other substitutions and
sales made or requested by Lessee pursuant to any other leases with Lessor of
properties hereto or any other transfers of the Leased Property or any portion
thereof or the properties leased under other such operating leases, during the
relevant time period, will not jeopardize the qualification of Lessor as a real
estate investment trust under Code Sections 856-860.
(vv) In the event that the equity value of the Substitute Property or group
of Substitute Properties (i.e., the Fair Market Value of the Substitute Property
or group of Substitute Properties minus the encumbrances subject to which Lessor
will take the Substitute Property or group of Substitute Properties) as of the
Substitution Date is greater than the equity value of the affected portion of
the Leased Property (i.e., the Fair Market Value of the Leased Property minus
the encumbrances subject to which Lessee will take the Leased Property) as of
the Substitution Date (or in the case of damage destruction or Condemnation, the
Fair Market Value immediately prior to such damage, destruction or
Condemnation), Lessor shall pay to Lessee an amount equal to the difference,
subject to the limitation set forth below. In the event that said equity value
of the Substitute Property or group of Substitute Properties is less than said
equity value of the affected portion of the Leased Property, Lessee shall pay to
Lessor an amount equal to the difference, subject to the limitation set forth
below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be
obligated to consummate any substitution if such party would be required to make
a payment to the other in excess of an amount equal to ten percent of said Fair
Market Value of the Leased Property (the amount of cash paid by one party to the
other being hereinafter referred to as the "Cash Adjustment").
(ww) The Rent for such Substitute Property in all respects shall provide
Lessor with a yield at the time of such substitution (i.e., annual return on its
investment in such Substitute Property) not less than the Current Yield (and the
yield reasonably expected to be received thereafter throughout the remainder of
the Term) from the Leased Property prior to any damage, destruction or
Condemnation, taking into account the Cash Adjustment paid or received by Lessor
and any other relevant factors.
(xx) The Minimum Purchase Price of any Substitute Property or Substitute
Properties shall be an amount equal to the Minimum Purchase Price of the
affected portion of the Leased Property on the Substitution Date (i) increased
by any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) above, or (ii)
decreased by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d)
above.
63.1 Conditions to Substitution. On the Substitution Date, the Substitute
----------------------------
Property will become a part of the Leased Property hereunder upon delivery by
Lessee to Lessor of the following items in form and substance reasonably
satisfactory to Lessor:
(yy) an Officer's Certificate representing, warranting and certifying that
(i) the Substitute Property has been accepted by Lessee for all purposes of this
Lease and there has been no material damage to the improvements located on
the Substitute Property nor is any condemnation or eminent domain proceeding
pending with respect thereto; (ii) all permits, licenses and certificates
(including a permanent, unconditional certificate of occupancy and, to the
extent permitted by law, all certificates of need and licenses) which are
necessary to permit the use of the Substitute Property in accordance with the
provisions of this Lease have been obtained and are in full force and effect;
(iii) under applicable zoning and use laws, ordinances, rules and regulations
the Substitute Property may be used for the purposes contemplated by Lessee and
all necessary subdivision approvals have been obtained; (iv) there are no
mechanic's or materialmen's liens outstanding or threatened to the knowledge of
Lessee against the Substitute Property arising out of or in connection with the
construction of the improvements thereon, other than those being contested by
Lessee pursuant to Article 11; (v) any mechanic's or materialmen's liens being
contested by Lessee will be promptly paid by Lessee if such contest is resolved
in favor of the mechanic or materialman; (vi) to the best knowledge of Lessee,
there exists no Event of Default under this Lease, and no defense, offset or
claim exists with respect to any sums to be paid by Lessee hereunder; and (vii)
any exceptions to Lessor's title to the Substitute Property do not materially
interfere with the intended use of the Substitute Property by Lessee;
(zz) a special warranty deed with warranties against claims arising under
Lessee conveying to Lessor title to the Substitute Property free and clear of
any liens and encumbrances except those approved in writing or assumed by
Lessor;
(aaa) an amendment to this Lease duly executed, acknowledged and delivered
by Lessee, setting forth (i) the legal description of the Land related to the
Substitute Property, (ii) the Project Amount and the Minimum Rent allocated to
such Substitute Property and (iii) such other changes as may be necessary or
appropriate under the circumstances;
(bbb) a standard owner's or lessee's (as applicable) policy of title
insurance covering the Substitute Property (or a valid, binding, unconditional
commitment therefor), dated the Substitution Date, in current form and including
mechanics' and materialmen's lien coverage, if available in the State in which
the Substitute Property is located issued to Lessor by a title insurance company
reasonably satisfactory to Lessor. Such policy shall (i) insure (A) Lessor's fee
title to the Substitute Property, subject to no liens or encumbrances except
those approved or assumed by Lessor, and (B) that any restrictions affecting the
Substitute Property have not been violated and that a further violation thereof
will not result in a forfeiture or reversion of title, (ii) be in an amount at
least equal to the Fair Market Value of the Substitute Property, and (iii)
contain such endorsements as may be reasonably requested by Lessor if available
in the State in which the Substitute Property is located;
(ccc) certificates of insurance with respect to the Substitute Property
fulfilling the requirements of Article 12;
(ddd) current appraisals or other evidence satisfactory to Lessor, in its
sole discretion, as to the current Fair Market Values of such Substitute
Property;
(eee) all available revenue data relating to the Substitute Property for the
period from the date of opening for business of the Substitute Property to the
date of Lessee's most recent Fiscal-Year end, or for the most recent three years
or the period of Lessee's ownership or operation of the Substitute Property,
whichever is less; and
(fff) such other certificates, documents, opinions of counsel (which may be
in-house counsel), and other instruments or information as may be reasonably
required by Lessor, including, but not limited to ALTA/ACSM land surveys,
engineering studies and environmental assessments.
64.1 Conveyance to Lessee. On the Substitution Date Lessor will convey the
----------------------
affected portion of the Leased Property to Lessee (and terminate the Lease as to
the affected portion of the Leased Property being replaced) in accordance
with the provisions of Article 17 (except as to payment of any expenses in
connection therewith which shall be governed by Section 20.4 below) upon
conveyance to Lessor of the Substitute Property.
65.1 Expenses. Lessee shall pay or cause to be paid, on demand, all
--------
reasonable costs and expenses paid or incurred by Lessor in connection with the
substitution and conveyance of the Leased Property and the Substitute Property,
including (a) fees and expenses of Lessor's counsel, (b) Lessor's costs incurred
in due diligence and inspections of the Substitute Properties, (c) the amount of
any recording taxes and filing fees, (d) the cost of preparing and recording, if
appropriate, a release of the affected portion of the Leased Property from the
lien of any mortgage, (e) broker's fees and commissions for Lessee, if any, (f)
documentary stamp and transfer taxes, if any, (g) title insurance charges, and
(h) escrow fees, if any.
RISK OF LOSS
------------
Except as otherwise provided in this Lease, during the Term of this Lease, the
risk of loss or of decrease in the enjoyment and beneficial use of the Leased
Property in consequence of the damage or destruction thereof by fire, the
elements, casualties, thefts, riots, wars or otherwise, or in consequence of
foreclosures, attachments, levies or executions (other than by Lessor and those
claiming from, through or under Lessor) is assumed by Lessee and, Lessor shall
in no event be answerable or accountable therefor nor shall any of the events
mentioned in this Section entitle Lessee to any abatement of the Rent except as
specifically provided in this Lease.
INDEMNIFICATION
---------------
Notwithstanding the existence of any insurance or self insurance provided for in
Article 12, and without regard to the policy limits of any such insurance or
self insurance, Lessee will protect, indemnify, save harmless and defend Lessor
from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and expenses (including reasonable attorneys' fees and
expenses), to the extent permitted by law, imposed upon or incurred by or
asserted against Lessor by reason of: (a) any accident, injury to or death of
persons or loss to property occurring on or about the Leased Property, including
any claims of malpractice, (b) any use, misuse, no use, condition, maintenance
or repair by Lessee of the Leased Property, (c) any Impositions (which are the
obligations of Lessee to pay pursuant to the applicable provisions of this
Lease), (d) any failure on the part of Lessee to perform or comply with any of
the terms of this Lease when due or within any applicable cure period, (e) the
non-performance of any of the terms and provisions of any and all existing and
future subleases of the Leased Property to be performed by Lessee as landlord
thereunder when due or within any applicable cure period and (f) the violation
by Lessee of any Hazardous Materials Law. Any amounts which become payable by
Lessee under this Section shall be paid within ten days after liability therefor
on the part of Lessor is finally determined by litigation or otherwise
(including the expiration of any time for appeals) and, if not timely paid,
shall bear interest (to the extent permitted by law) at the Overdue Rate from
the date of such determination to the date of payment. Lessee, at its expense,
shall contest, resist and defend any such claim, action or proceeding asserted
or instituted against Lessor or may compromise or otherwise dispose of the same
as Lessee sees fit. Lessor shall cooperate with Lessee in a reasonable manner to
permit Lessee to satisfy Lessee's obligations hereunder, including the execution
of any instruments or documents reasonably requested by Lessee. Nothing herein
shall be construed as indemnifying Lessor or its agents for their own negligent
acts or omissions or willful misconduct. Lessee's liability for a breach of the
provisions of this Article shall survive any termination of this Lease.
SUBLETTING AND ASSIGNMENT
-------------------------
66.1 Subletting and Assignment. Subject to the rights of (i) residents under
-------------------------
existing resident agreements, (ii) Tenants under existing Tenant Leases,
(iii) the provisions of Section 23.3 below and (iv) any other express conditions
or limitations set forth herein, Lessee may not, without the consent of Lessor,
sublet all or any part of the Leased Property other than an assignment or
sublease to an entity which is controlled by or under common control with Lessee
in which case no such consent shall be required but Lessor shall be given notice
of such assignment or sublease and the same shall otherwise meet the
requirements of clauses (b) through (e) of the following sentence. Lessor shall
not unreasonably withhold its consent to any subletting or assignment; provided
that (a) in the case of a subletting, the sublessee shall comply with the
provisions of Section 23.2, (b) in the case of an assignment, the assignee shall
assume in writing and agree from and after the effective date of such assignment
to keep and perform all of the terms of this Lease on the part of Lessee to be
kept and performed and shall be and become jointly and severally liable with
Lessee for the performance thereof, (c) an original counterpart of each such
sublease and assignment and assumption, duly executed by Lessee and such
sublessee or assignee, as the case may be, in form and substance reasonably
satisfactory to Lessor, shall be delivered promptly to Lessor, and (d) in case
of either an assignment or subletting, Lessee shall remain primarily liable, as
principal rather than as surety, for the prompt payment of the Rent and for the
performance and observance of all of the covenants and conditions to be
performed by Lessee hereunder. In addition to Lessee's rights to sublet and
assign as provided in this section above, Lessee shall also have the right (upon
Lessor's prior consent, which consent shall not unreasonably be withheld) to
enter into Tenant Leases which extend beyond the Term of this Lease and (e) the
sublease or assignment provides for a use of the Leased Property which is
consistent with the Primary Intended Use. To the extent that any such Tenant
Leases extend beyond the Term of this Lease, Lessor shall receive the rents
from, and be responsible for any obligations on the part of the landlord or
lessor under such Tenant Leases for such excess period. Any and all such Tenant
Leases shall, to the extent applicable, be subject to the provisions of this
Section and Section 23.2. Nothing in this Section 23.1 shall be construed as
prohibiting Lessee from granting the Leasehold Mortgages or Lessor from
exercising its rights thereunder.
67.1 Non-Disturbance, Subordination and Attornment. Lessee shall insert in
-----------------------------------------------
each sublease permitted under Section 23.1 provisions to the effect that (a)
such sublease is subject and subordinate to all of the terms and provisions of
this Lease and to the rights of Lessor hereunder, (b) in the event this Lease
shall terminate before the expiration of such sublease, the sublessee thereunder
will, at Lessor's option, attorn to Lessor and waive any right the sublessee may
have to terminate the sublease or to surrender possession thereunder as a result
of the termination of this Lease and (c) in the event the sublessee receives a
written notice from Lessor or Lessor's assignees, if any, stating that there is
an Event of Default under this Lease, the sublessee, shall thereafter be
obligated to pay all rentals accruing under said sublease directly to the party
giving such notice, or as such party may direct until advised that such Event of
Default is no longer outstanding. All rentals received from the sublessee by
Lessor or Lessor's assignees, if any, shall be credited against amounts owing by
Lessee under this Lease. Lessor agrees that notwithstanding any default,
termination, expiration, sale, entry or other act or omission of Lessee pursuant
to the terms of this Lease, or at law or in equity, Tenant's possession shall
not be disturbed unless such possession may otherwise be terminated pursuant to
the terms of the applicable Tenant Lease. Lessor hereby agrees, upon Lessee's
request, to execute a nondisturbance agreement in favor of any Tenant or in
favor of any sublessee under any sublease permitted under Section 23.1 above;
provided that the Tenant or any such sublessee has acknowledged all of the
foregoing provisions and executed all documents required by this Section 23.2.
68.1 Sublease Limitation. Notwithstanding anything contained in this Lease
--------------------
to the contrary, Lessee shall not sublet the Leased Property, including any of
the Resident Agreements and Tenant Leases, on any basis such that the rental to
be paid by the sublessee thereunder would be based, in whole or in part, on
either (a) the income or profits derived by the business activities of the
sublessee, or (b) any other formula such that any portion of the sublease rental
received by Lessor would fail to qualify as "rents from real property" within
the meaning of Section 856(d) of the Code, or any similar or successor provision
thereto.
69.1 Sublease to Current Licensee. Notwithstanding anything in this Article
----------------------------
23 to the contrary, Lessee shall have the right to sublease the Leased Property
to the current holder of the necessary license for operation of the Leased
Property as an assisted living facility and to simultaneously enter into an
agreement with such licensee for the management of the Leased Property. The
sublease and the management agreement shall be subject to the review and consent
of Lessor. Lessee agrees that notwithstanding any sublease pursuant to this
Section 23.4, Lessee shall proceed to and diligently pursue in conjunction and
cooperation with Lessor to have all required licenses for operation of the
Leased Property transferred to Lessee and within thirty (30) days of transfer of
or issuance of the required license for operation of the Leased Property to
Lessee, the sublease and management agreement shall be terminated.
OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS
-----------------------------------------------
70.1 Estoppel Certificate. At any time and from time to time within 20 days
following written request by Lessor, Lessee will furnish to Lessor an
Officer's Certificate certifying that this Lease is unmodified and in full force
and effect (or that this Lease is in full force and effect as modified and
setting forth the modifications) and the dates to which the Rent has been paid.
Any such Officer's Certificate furnished pursuant to this Article may be relied
upon by Lessor, any prospective purchaser of the Leased Property and any third
parties who have an interest in the Leased Property, including any Lender or
professional advisor or Lessor.
71.1 Financial Statements and Certificates. Lessee will furnish the
following statements to Lessor; provided that Lessor shall keep confidential
items furnished by Lessee which are not generally available to the public:
(26) within 120 days after the end of each Fiscal Year (A) a copy of the
Consolidated Financial Statements for such Fiscal Year; (B) an Officer's
Certificate stating (x) that no Event of Default, or event which, with the
giving of notice or the passage of time, or both, would constitute an Event of
Default, has occurred and is continuing and has not been waived, or, if there
shall have occurred and be continuing such an Event of Default, specifying the
nature thereof and the steps being taken to remedy the same, and (y) that to the
best of the signer's knowledge and belief, Lessee is not in default in the
performance or observance of any of the terms of any loans or credit facilities,
with an outstanding balance equal to or greater than $10,000,000.00 in the
aggregate, which default would permit the holder thereof to accelerate its
stated maturity; (C) a current rent or lease roll for each Facility setting
forth rental information in reasonable detail regarding all of the Tenants and
Tenant Leases, including any space utilized by Lessee; (D) a statement of
revenues and expenses of the Leased Property for the twelve-month period then
ended in detail reasonably satisfactory to Lessor; (E) balance sheets for each
Facility for the twelve-month period then ended, in detail reasonably
satisfactory to Lessor, and (F) a certificate in form satisfactory to Lessor
setting forth the Consolidated Coverage Ratio and the Facility Coverage Ratios
for the twelve-month period then ended, each certified as accurate by Lessee's
chief financial officer;
(27) within 30 days after the end of each calendar month, a statement of all
revenues and expenses and balance sheets relating to the operation of each of
the Facilities during such calendar month, in each case certified as accurate by
Lessee's chief financial officer;
(28) within 15 days after request by Lessor, (A) a statement of the number
of units available and the actual resident-days for the most recent month,
quarter and year to date, (B) census information for the Facilities in
sufficient detail to show resident-mix on a daily average basis for the prior
quarter and year, and (C) an aged accounts receivable report in sufficient
detail to show amounts due from each class of resident-mix (such as private,
Medicare, Medicaid and V.A.) by the account age classifications of 30 days, 60
days, 90 days, 120 days, and over 120 days;
(29) if applicable, within 15 days after filing or receipt, as the case may
be, (A) all cost reports filed with any regulatory or licensing agency
(including any cost reports for Medicare or Medicaid) and any amendments
thereto, together with all responses, audit reports or inquiries with respect to
such cost reports, (B) copies of all licensure and certification survey reports
and statements of deficiencies with respect to the Facilities (with correction
plans attached thereto), (C) copies of the Medicaid rate calculation worksheet
(or equivalent thereof), if any, issued by the applicable Medicaid Agency, (D)
copies of all notices (regardless of form) from any and all licensing and/or
certifying agencies that the license or applicable reimbursement certification
for the Facilities is being downgraded to a substandard category, revoked or
suspended or that action is pending or being considered to downgrade to a
substandard category, revoke or suspend any Facility's license or certification,
and (E) evidence of the payment of any bed taxes or similar taxes;
(30) within ten days after receipt, copies of all licensure and
certification surveys, reports and statements of deficiencies with respect to
each of the Facilities together with any plans of correction applicable thereto,
if any, within the time prescribed by any applicable Legal Requirement;
(31) within 30 days after filing, copies of the 10-Q and 10-K Reports of
Lessee filed with the United States Securities and Exchange Commission;
(32) within 45 days after the end of each quarter, a certificate in form
acceptable to Lessor that the required Consolidated Coverage Ratio and Facility
Coverage Ratios for the quarter then ended has been achieved; and
(33) with reasonable promptness, such other information respecting the
financial condition, affairs and properties of Lessee as Lessor may reasonably
request from time to time and as is generally prepared by Lessee for its own
internal reporting purposes.
INSPECTION
----------
Lessee shall permit Lessor, any Facility Mortgagee and their authorized
representatives to inspect the Leased Property on reasonable advance notice and
during usual business hours subject to any security, health, safety or
confidentiality requirements of Lessee, the rights of the Residents, the rights
of the Tenants, any Insurance Requirements relating to the Leased Property, or
any other restrictions imposed by law or applicable regulations. In addition,
during each year of the Term after the first anniversary of the Commencement
Date, Landlord shall have the right to inspect the Leased Property and all
systems contained therein at any reasonable time to determine Tenant's
compliance with its obligations under this Lease, including those obligations
set forth in Article 7 herein. Tenant shall be responsible for the costs of
such annual inspections, which costs shall be equal to the sum of $2,000 per
Facility.
QUIET ENJOYMENT
---------------
So long as Lessee shall pay all Rent as the same becomes due and shall fully
comply with all of the terms of this Lease and fully perform its obligations
hereunder, Lessee shall peaceably and quietly have, hold and enjoy the Leased
Property for the Term hereof, free of any claim or other action by Lessor or
anyone claiming by, through or under Lessor, but subject to all liens and
encumbrances of record as of the date hereof as shown on Exhibit B attached
hereto or hereafter consented to by Lessee. No failure by Lessor to comply with
the foregoing covenant shall give Lessee any right to cancel or terminate this
Lease, or to fail to pay any other sum payable under this Lease, or to fail to
perform any other obligation of Lessee hereunder. Notwithstanding the foregoing,
Lessee shall have the right by separate and independent action to pursue any
claim or seek any damages it may have against Lessor as a result of a breach by
Lessor of the covenant of quiet enjoyment contained in this Article.
NOTICES
-------
Any notices, demands, approvals and other communications provided for herein
shall be in writing and shall be delivered by telephonic facsimile, overnight
air courier, personal delivery or registered or certified U.S. Mail with return
receipt requested, postage paid, to the appropriate party at its address as
follows:
If to Lessor:
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lessee:
Emeritus Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: 206/▇▇▇-▇▇▇▇
Telecopy: 206/301-4500
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
With a copy to:
The ▇▇▇▇▇▇▇▇▇ Group
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: 206-623-1738
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Addresses for notice may be changed from time to time by written notice to all
other parties. Any communication given by mail will be effective (i) upon the
earlier of (a) three business days following deposit in a post office or other
official depository under the care and custody of the United States Postal
Service or (b) actual receipt, as indicated by the return receipt; (ii) if given
by telephone facsimile, when sent; and (iii) if given by personal delivery or by
overnight air courier, when delivered to the appropriate address set forth.
APPRAISAL
---------
In the event that it becomes necessary to determine the Fair Market Value, Fair
Market Value Purchase Price, the Fair Market Added Value, the Minimum Purchase
Price or the Fair Market Rental Value of the Leased Property, or any portion
thereof, or a Substitute Property for any purpose of this Lease, the party
required or permitted to give notice of such required determination shall
include in the notice the name of a person selected to act as an appraiser on
its behalf. Within ten days after receipt of any such notice, Lessor (or Lessee,
as the case may be) shall by notice to Lessee (or Lessor, as the case may be)
appoint a second person as an appraiser on its behalf. The appraisers thus
appointed (each of whom must be a member of the American Institute of Real
Estate Appraisers or any successor organization thereto) shall, within 45 days
after the date of the notice appointing the first appraiser, proceed to appraise
the Leased Property or the affected portion thereof or the Substitute Property,
as the case may be, to determine any of the foregoing values as of the relevant
date (giving effect to the impact, if any, of inflation from the date of their
decision to the relevant date); provided that if only one appraiser shall have
been so appointed, or if two appraisers shall have been so appointed but only
one such appraiser shall have made such determination within 50 days after the
making of Lessee's or Lessor's request, then the determination of such appraiser
shall be final and binding upon the parties. If two appraisers shall have been
appointed and shall have made their determinations within the respective
requisite periods set forth above and if the difference between the amounts so
determined shall not exceed ten percent of the lesser of such amounts, then the
Fair Market Value or Fair Market Added Value or the Fair Market Rental Value
shall be an amount equal to 50 of the sum of the amounts so determined. If the
difference between the amounts so determined shall exceed 10% of the lesser of
such amounts, then such two appraisers shall have 20 days to appoint a third
appraiser, but if such appraisers fail to do so, then either party may request
the American Arbitration Association or any successor organization thereto to
appoint an appraiser within 20 days of such request, and both parties shall be
bound by any appointment so made within such 20-day period. If no such appraiser
shall have been-appointed within such 20 days or within 90 days of the original
request for a determination of Fair Market Value or Fair Market Added Value or
the Fair Market Rental Value, whichever is earlier, either Lessor or Lessee may
apply to any court having jurisdiction to have appointment made by such court.
Any appraiser appointed, by the American Arbitration Association or by such
court, shall be instructed to determine the Fair Market Value or Fair Market
Added Value or the Fair Market Rental Value within 30 days after appointment of
such appraiser. The determination of the appraiser which differs most in terms
of dollar amount from the determinations of the other two appraisers shall be
excluded, and 50% of the sum of the remaining two determinations shall be final
and binding upon Lessor and Lessee as the Fair Market Value or Fair Market Added
Value or the Fair Market Rental Value for such interest. However, in the event
that following the appraisal performed by said third appraiser, the dollar
amount of two of such appraisals are higher and lower, respectively, than the
dollar amount of the remaining appraisal in equal dollar amounts, the
determinations of both the highest and lowest appraisal, respectively, shall be
rejected and the determination of the remaining appraisal shall be final and
binding upon Lessor and Lessee as the Fair Market Value or Fair Market Added
Value or the Fair Market Rental Value for such interest. This provision for
determination by appraisal shall be specifically enforceable to the extent such
remedy is available under applicable law, and any determination hereunder shall
be final and binding upon the parties except as otherwise provided by applicable
law. Lessor and Lessee shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
third appraiser and one-half of all other costs and expenses, incurred in
connection with each appraisal.
PURCHASE RIGHTS
---------------
72.1 Right of First Refusal. During the Term hereof (provided that no Event
-----------------------
of Default has occurred and is continuing), Lessee shall have a first refusal
option to purchase the Leased Property or any portion thereof upon the same
terms and conditions as Lessor, or its successors and assigns, shall propose to
sell the Leased Property or any portion thereof, or shall have received an offer
from a Third Party, as defined herein, to purchase the Leased Property,
which Lessor intends to accept (or has accepted subject to Lessee's right of
first refusal granted herein). If, during the Term, Lessor receives such an
offer or reaches such agreement with a Third Party or proposes to offer the
Leased Property or any portion thereof for sale to a Third Party, Lessor shall
promptly notify Lessee of the purchase price for the Leased Property or the
affected portion thereof and all other material terms and conditions of such
agreement or proposed sale together with a copy of such offer, and Lessee shall
have 30 days after receipt of such notice from Lessor within which time to
exercise Lessee's option to purchase. If Lessee exercises its option, then such
purchase shall be consummated within the time set forth in the Third-Party offer
and in accordance with the provisions of Article 17 hereof to the extent not
inconsistent herewith. If Lessee shall not exercise Lessee's option to purchase
within said 30-day period after receipt of said notice from Lessor, Lessor shall
be free for a period of 90 days after the expiration of said 30-day period to
sell the Leased Property or the affected portion thereof to the Third Party at
the price and terms set forth in such offer. Whether or not such sale is
consummated, Lessee shall be entitled to exercise its right of first refusal as
provided in this Article, as to any subsequent sale of the Leased Property or
any portion thereof during the Term of this Lease. Notwithstanding anything to
the contrary herein set forth, it is agreed that for purposes of this Section
29.1, a "Third Party" shall be only such Person(s), entities or joint ventures
which are Affiliates of Lessor. Without limiting the foregoing, Lessee
expressly agrees that the proposed conveyance, sale, lease, assignment or other
transfer of any nature whatsoever of the Leased Property, or any portion
thereof, in any foreclosure proceeding initiated by any Facility Mortgagee or to
any Affiliate of Lessor, including without limitation, any subsidiary or
"special purpose entity" established by Lessor at the request of any Facility
Mortgagee or proposed Facility Mortgagee, shall not obligate Lessor to serve
notice upon Lessee as contemplated hereby or permit Lessee to exercise those
first refusal rights granted hereby with respect to the Leased Property, in part
or in whole.
73.1 Option to Purchase. Anytime subsequent to the first anniversary of the
-------------------
Commencement Date and through the third year of the Initial Term, Lessee shall
have the option to purchase some or all of the Facilities in accordance with the
terms of this Section 29.2 and the Contract for Sale of Real Estate attached
hereto as Exhibit "E" upon written notice to Lessor for a purchase price equal
-----------
to (i) the Project Amount if purchased in year two of the Initial Term and (ii)
the Project Amount plus three percent (3%) if purchased in year three of the
Initial Term. Upon Lessee's exercise of its option to purchase, Lessee, or its
affiliates, and Lessor will execute the Contract for Sale of Real Estate
attached as Exhibit "E". If not sooner exercised, the option to purchase
------------
granted hereby will expire and be of no further force and effect upon the
expiration of the third year of the Initial Term or the earlier termination of
this Lease. As a condition to the exercise of Lessee's purchase option, Lessee
shall be required to simultaneously exercise its option to purchase the lesser
of (i) four (4) Facilities or (ii) the remaining Facilities then being leased by
Lessee; provided, however, nothing herein shall be construed as prohibiting
Lessee from concurrently exercising its option to purchase more than four(4)
Facilities, up to and including all of the Facilities. The Facilities as to
which Lessee concurrently exercises its purchase option under this Section 29.2
shall hereinafter be referred to as the "Option Properties" Except as otherwise
provided herein, Lessor shall have the right to approve the Option Properties.
Lessor shall have a period of ten (10) days after receipt of Lessee's option
exercise notice to object to any of the other Facilities included within the
Option Properties and, in the event Lessor so objects, Lessor and Lessee shall
have a period of thirty (30) days in which to negotiate in good faith in an
effort to agree upon the Option Properties but failing such, Lessee shall have
the right, on written notice to Lessor, delivered within ten (10) days after the
end of such thirty (30) day period to withdraw its option exercise notice as to
the Option Properties. Provided Lessor and Lessee agree upon the Option
Properties, the purchase and sale of the Option Properties shall close
concurrently. Lessor shall have no right to approve the Option Properties if the
same represent all of the Leased Property then subject to the terms of this
Lease.
74.1 Third Party Designee. Lessee shall have the right to designate a third
--------------------
party to take title to all or any portion of the Leased Property purchased by
Lessee pursuant to this Article 29.
DEFAULT BY LESSOR
-----------------
75.1 Default by Lessor. Lessor shall be in default of its obligations under
------------------
this Lease if Lessor shall fail to observe or perform any term, covenant or
condition of this Lease on its part to be performed and such failure shall
continue for a period of 30 days after written notice thereof is received by
Lessor, unless such failure cannot with due diligence be cured within a period
of 30 days, in which case such failure shall not be deemed to continue if
Lessor, within said 30-day period, proceeds promptly and with due diligence to
cure the failure and diligently completes the curing thereof. The time within
which Lessor shall be obligated to cure any such failure shall also be subject
to extension of time due to the occurrence of any Unavoidable Delay. In the
event Lessor fails to cure any such default, Lessee, without waiving or
releasing any obligations hereunder, and in addition to all other remedies
available to Lessee hereunder or at law or in equity, may purchase the Leased
Property from Lessor for a purchase price equal to the greater of the Fair
Market Value Purchase Price or the Minimum Purchase Price of the Leased Property
minus an amount equal to any damage suffered by Lessee by reason of such
default. In the event Lessee elects to purchase the Leased Property, it shall
deliver a notice thereof to Lessor specifying a Payment Date occurring no less
than 90 days subsequent to the date of such notice on which it shall purchase
the Leased Property, and the same shall be thereupon conveyed in accordance with
the provisions of Article 17. Any sums owed Lessee by Lessor hereunder shall
bear interest at the Overdue Rate from the, date due and payable until the date
paid.
76.1 Lessee's Right to Cure. Subject to the provisions of Section 30.1, if
------------------------
Lessor shall breach any covenant to be performed by it under this Lease, Lessee,
after giving notice to and demand upon Lessor in accordance with Section 30.1,
without waiving or releasing any obligation of Lessor hereunder, and in addition
to all other remedies available to Lessee hereunder and at law or in equity,
Lessee may (but shall be under no obligation at any time thereafter to) make
such payment or perform such act for the account and at the expense of Lessor.
All sums so paid by Lessee and all costs and expenses (including reasonable
attorneys' fees) so incurred, together with interest thereon at the Overdue Rate
from the date on which such sums or expenses are paid or incurred by Lessee,
shall be paid by Lessor to Lessee on demand or set off against the Rent. The
rights of Lessee hereunder to cure and to secure payment from Lessor in
accordance with this Section 30.2 shall survive the termination of this Lease.
ARBITRATION
-----------
77.1 Controversies. Except with respect to the payment of Minimum Rent
-------------
hereunder, in case any controversy shall arise between the parties hereto as to
any of the requirements of this Lease or the performance thereof which
controversy the parties shall be unable to settle by agreement or as otherwise
provided herein, such controversy shall be determined by arbitration to be
initiated and conducted as provided in this Article 31.
78.1 Appointment of Arbitrators. The party or parties requesting arbitration
--------------------------
shall serve upon the other a written demand therefor specifying the matter to be
submitted to arbitration, and nominating an arbitrator who is a member in good
standing of the American Arbitration Association ("AAA"). Within 20 days after
receipt of such written demand and notification, the other party shall, in
writing, nominate a person who is a member in good standing with AAA and the two
arbitrators so designated shall, within ten days thereafter, select a third
arbitrator who is a person who is a member in good standing with AAA and give
immediate written notice of such selection to the parties and shall fix in said
notice a time and place for the first meeting of the arbitrators, which meeting
shall be held as soon as conveniently possible after the selection of all
arbitrators, at which time and place the parties to the controversy may appear
and be heard.
79.1 Third Arbitrator. In case the notified party or parties shall fail to
-----------------
make a selection upon notice, as aforesaid, or in case the first two arbitrators
selected shall fail to agree upon a third arbitrator within ten days after their
selection, then such arbitrator or arbitrators may, upon application made by
either of the parties to the controversy, after 20 days' written notice thereof
to the other party or parties, have a third arbitrator appointed by any judge of
any United States court of record having jurisdiction in the state in which the
Leased Property is located or, if such office shall not then exist, by a judge
holding an office most nearly corresponding thereto.
80.1 Arbitration Procedure. Said arbitrators shall give each of the parties
----------------------
not less than ten days' written notice of the time and place of each meeting at
which the parties or any of them may appear and be heard and after hearing the
parties in regard to the matter in dispute and taking such other testimony and
making such other examinations and investigations as justice shall require and
as the arbitrators may deem necessary, they shall decide the questions submitted
to them in accordance with the rules of AAA. The decision of said arbitrators in
writing signed by a majority of them shall be final and binding upon the parties
to such controversy. In rendering such decisions and award, the arbitrators
shall not add to, subtract from or otherwise modify the provisions of this
Lease.
81.1 Expenses. Unless otherwise specified in the decision of the
--------
arbitrators, the prevailing party in any arbitration proceeding shall be
--
reimbursed its reasonable out-of-pocket expenses by the non-prevailing party,
including travel expenses and reasonable attorneys' fees and expenses, and the
non-prevailing party shall pay all other costs of such proceeding.
FINANCING OF THE LEASED PROPERTY
--------------------------------
Lessor agrees that it will not grant or create any mortgage, deed of trust,
lien, encumbrance or other title retention agreement upon the Leased Property to
secure any indebtedness of Lessor (an "Encumbrance"), unless each holder of such
an Encumbrance agrees (a) to give Lessee the same notice, if any, given to
Lessor of any default or acceleration of any obligation underlying any such
Encumbrance or any sale in foreclosure of such Encumbrance, (b) to permit Lessee
to appear with its representatives and to bid at any public foreclosure sale
with respect to any such Encumbrance, (c) agrees to release the Leased Property
from the Encumbrance upon the exercise by Lessee of a right to purchase
contained in this Lease and the payment by Lessee of the applicable purchase
price, and (d) enters into an agreement with Lessee containing the provisions
described in Article 33 of this Lease. Lessee agrees to execute and deliver to
Lessor or the holder of an Encumbrance any written agreement required by this
Article within ten days of written request thereof by Lessor or such holder of
an Encumbrance. Lessee hereby consents to the assignment of and grant of a
security interest and lien in this Lease together with the other documents and
instruments delivered to Lessor by Lessee pursuant hereto and in connection
herewith (collectively, the "Assigned Documents"), including all rights of
Lessor in, to and under each Assigned Document, by Lessor to any Facility
Mortgagee requesting same. Lessee hereby further agrees to execute a Consent to
Assignment in substantially the form attached hereto as Exhibit ▇. ▇▇▇▇▇▇ shall
---------
pay any Encumbrance as and when due subject to any right granted Lessor in such
Encumbrance to contest any obligation of Lessor or to withhold any payment or
sum due under the Encumbrance.
SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE
---------------------------------------------
At the request from time to time by one or more holders of an Encumbrance that
may hereafter be placed upon the Leased Property or any part thereof, and any
and all renewals, replacements, modifications, consolidations, spreaders and
extensions thereof, Lessee will subordinate this Lease and all of Lessee's
rights and estate hereunder to each such Encumbrance and will attorn to and
recognize such holder (or the purchaser at any foreclosure sale or any sale
under a power of sale contained in any such Encumbrance or a holder by a deed in
lieu of foreclosure, as the case may be) as Lessor under this Lease for the
balance of the Term then remaining, subject to all of the terms and provisions
of this Lease; provided that each such institutional holder simultaneously with
or prior to recording any such Encumbrance executes and delivers a written
agreement in recordable form (a) consenting to this Lease and agreeing that,
notwithstanding any such other lease, mortgage, deed of trust, right, title or
interest, or any default, expiration, termination, foreclosure, sale, entry or
other act or omission under, pursuant to or affecting any of the foregoing,
Lessee shall not be disturbed in peaceful enjoyment of the Leased Property nor
shall this Lease be terminated or canceled at any time, except in the event
Lessor shall have the right to terminate this Lease under the terms and
provisions expressly set forth herein; (b) agreeing that it will be bound by all
the terms of this Lease, perform and observe all of Lessor's obligations set
forth herein; and (c) agreeing that all proceeds of the casualty insurance
described in Article 13 of this Lease and all Awards described in Article 14
will be made available to Lessor for restoration of the Leased Property as and
to the extent required by this Lease, subject only to reasonable regulation
regarding the manner of disbursement and application thereof except to the
extent the same are actually received by said Facility Mortgagee. Lessee agrees
to execute and deliver to Lessor or the holder of an Encumbrance any written
agreement required by this Article within ten days of written request thereof by
Lessor or such holder of an Encumbrance. From time to time throughout the Term
of this Lease, Lessee agrees to execute at the request of Lessor, or any
prospective purchaser of the Lessor interests in the Leased Property, or any
Facility Mortgagee or proposed Facility Mortgagee a certificate setting forth
(i) the then-remaining Term of the Lease, (ii) the scope of defaults, if any, by
Lessor hereunder, (iii) the then-current Rents payable hereunder, (iv) the dates
through which Rent has been paid, and (v) such other matters as the requesting
party may reasonably set forth. Further, without limiting the foregoing and
without the necessity of any additional documentation (unless any Facility
Mortgagee may request reaffirmation of the following by separate agreement which
Lessee agrees to execute), for the benefit of each Facility Mortgagee, Lessee
agrees that, in the event that any such Facility Mortgagee succeeds to the
interest of Lessor under the Lease, such Facility Mortgagee shall not be: (A)
liable for any act or omission of Lessor or any prior "Lessor" under this Lease;
or (B) subject to any defense, set-offs, counter-claims or offsets which Lessee
may have against any prior "Lessor" (including Lessor); or (C) bound by any
payment of Rent including Additional Charges, which Lessee may have paid for
more than one (1) month in advance of the due date hereunder to any prior
"Lessor" hereunder (including Lessor); or (D) bound by any obligations to make
any payment to Lessee which was required to be paid prior to the time such
Facility Mortgagee succeeds to Lessor's interest; or (E) accountable for any
monies deposited with any prior Lessor (including security deposits), except to
the extent same are actually received by said Facility Mortgagee; or (F) bound
by any surrender, termination, amendment, restatement or modification of this
Lease occurring or entered into after the date on which such Facility Mortgagee
first provided debt secured by the Facility or Facilities made without the
consent of said Facility Mortgagee; or (G) otherwise have any liability, duty or
obligation whatsoever under this Lease, or under any extension or renewal
hereof, either by virtue of any assignment of leases or rents granted by Lessor
to said Facility Mortgagee or the subsequent collection of rents thereunder,
until said Facility Mortgagee, or its designee or nominee becomes the fee owner
of the Leased Property, and then only for such periods which such Facility
Mortgagee or its designee or nominee actually owns the Leased Property. Nothing
in this Article 33 shall affect the rights of Lessee granted in Section 29.1 of
this Lease.
EXTENDED TERMS
--------------
If no Event of Default shall have occurred and be continuing, Lessee is hereby
granted the right to extend the Term of this Lease for three additional,
consecutive five-year periods (each such period, an "Extended Term") for a
maximum possible Term of 25 years, by giving written notice to Lessor of each
such extension at least 180 days, but not more than 270 days, prior to the
expiration of the then--current Term; subject, however, to the provisions of
Section 13.7 hereof and any other provisions which provide a specific right to
renew this Lease after the expiration of the applicable renewal provision.
During each Extended Term, all of the terms and conditions of this Lease shall
continue in full force and effect, except that the Minimum Rent for and during
each of the Extended Terms shall be the greater of (i) the Fair Market Rental
Value on the first day of such Extended Term or (ii) the Minimum Rent in effect
immediately prior to the first day of such Extended Term. In any event, the
Minimum Rent shall continue to be increased throughout the Extended Terms in
accordance with the provisions of Section 2.1(b) hereof.
MISCELLANEOUS
-------------
82.1 No Waiver. No failure by Lessor or Lessee to insist upon the strict
----------
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of the Rent during the continuance of any such breach, shall constitute a waiver
of any such breach or any such term. To the extent permitted by law, no
waiver of any breach shall affect or alter this Lease, which shall continue in
full force and effect with respect to any other then existing or subsequent
breach.
83.1 Remedies Cumulative. To the extent permitted by law, each legal,
--------------------
equitable or contractual right, power and remedy of Lessor or Lessee now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy and the exercise or beginning of the exercise by Lessor or Lessee of
any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Lessor or Lessee of any or all of such
other rights, powers and remedies.
84.1 Surrender. No surrender to Lessor of this Lease or of the Leased
---------
Property or any part thereof, or of any interest therein, shall be valid or
effective unless agreed to and accepted in writing by Lessor and no act by
Lessor or any representative or agent of Lessor, other than such a written
acceptance by Lessor, shall constitute an acceptance of any such surrender.
85.1 No Merger of Title. There shall be no merger of this Lease or of the
--------------------
leasehold estate created hereby by reason of the fact that the same person,
firm, corporation or other entity may acquire, own or hold, directly or
indirectly, (a) this Lease or the leasehold estate created hereby or any
interest in this Lease or (b) such leasehold estate and the fee estate in the
Leased Property.
86.1 Transfers by Lessor. If Lessor or any successor owner of the Leased
---------------------
Property shall convey the Leased Property in accordance with the terms hereof,
other than as security for a debt, the grantee or transferee of the Leased
Property shall expressly assume all obligations of Lessor hereunder arising or
accruing from and after the date of such conveyance or transfer, and shall be
reasonably capable of performing the obligations of Lessor hereunder and Lessor
or such successor owner, as the case may be, shall thereupon be released from
all future liabilities and obligations of Lessor under this Lease arising or
accruing from and after the date of such conveyance or other transfer and all
such future liabilities and obligations shall thereupon be binding upon the new
owner.
87.1 General. Anything contained in this Lease to the contrary
-------
notwithstanding, all claims against, and liabilities of, Lessee and Lessor
----
against the other arising out of or relating to this Lease and arising prior to
any date of termination of this Lease shall survive such termination. If any
term or provision of this Lease or any application thereof shall be invalid or
unenforceable, the remainder of this Lease and any other application of such
term or provision shall not be affected thereby. If any late charges provided
for in any provision of this Lease are based upon a rate in excess of the
maximum rate permitted by applicable law, the parties agree that such charges
shall be fixed at the maximum permissible rate. Neither this Lease nor any
provision hereof may be changed, waived, discharged or terminated except by an
instrument in writing signed by Lessor and Lessee. All the terms and provisions
of this Lease shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. The headings in this Lease
are for convenience of reference only and shall not limit or otherwise affect
the meaning hereof. This Lease shall be governed by and construed in accordance
with the laws of the state where the Land is located, but not including its
conflict of laws rules. This Lease may be executed in one or more counterparts,
each of which shall be an original but, when taken together, shall constitute
but one document.
88.1 Memorandum of Lease. Lessor and Lessee shall, promptly upon the
---------------------
request of either, enter into a short form memorandum of this Lease in form
suitable for recording under the laws of the state in which the Leased Property
is located in which reference to this Lease, and all options contained herein,
shall be made.
89.1 Transfer of Licenses. Upon the expiration or earlier termination of
----------------------
the Term, Lessee shall take all action necessary or appropriate to effect (or
useful in effecting) the transfer, to the extent permitted by any Legal
Requirement, to Lessor or Lessor's nominee of all licenses, operating permits
and other governmental authorizations and all service contracts to the extent
permitted by the terms thereof which may be necessary or useful in the operation
of the Facility and which relate exclusively to the Facility which have not
previously been transferred or assigned to Lessor.
90.1 Prior Existing Property Conditions. In no event shall Lessee have any
-----------------------------------
obligation for Hazardous Materials located in, under or upon any Facility prior
to the Commencement Date or discovered after the Commencement Date if such
Hazardous Materials were created by the acts or omissions of Lessor or Balanced
Care Corporation, or its or their affiliates, and not otherwise exacerbated by
the acts, omissions or negligence of Lessee once such Hazardous Materials are
known to Lessee.
91.1 Capital Improvements Term Loan. Provided no Event of Default has
---------------------------------
occurred or is continuing, upon written request of Lessee, Lessor shall loan to
Lessee up to $600,000.00 to be evidenced by a term note with interest at ten
percent (10%) payable in equal consecutive monthly installments of interest only
with a balloon payment of the outstanding principal and all accrued but unpaid
interest and other charges on the first day of the last month of the Initial
Term of this Lease or upon the purchase by Lessee of all (or the last, as
applicable) of the Facilities. Notwithstanding anything herein to the contrary,
the loan may be prepaid on a pro rata basis (based on the ratio of the number of
Facilities being purchased by Lessee to the total number of Facilities then
being leased by Lessee) if Lessee purchased some, but not all, of the Facilities
then being leased by Lessee. There shall be no prepayment premium charged at
payoff. The proceeds of the loan shall be used by Lessee solely for Lessee's
working capital purposes and for capital and other improvements to the
Facilities. Lessee may borrow all or any portion of the $600,000.00 as it
chooses but in no event shall Lessor be obligated to loan more than the
aggregate sum of $600,000.00. The loan shall be secured by a leasehold mortgage
upon the interests of Lessee in the Facilities. The form of the term note is
attached hereto as Exhibit "F".
------------
92.1 Facility Repairs and Capital Improvements. Provided no Event of
----------------------------------------------
Default has occurred or is continuing, upon written request of Lessee, Lessor
shall reimburse Lessee for up to $500,000.00 for Facility repairs and capital
improvements in accordance with Schedule 1 attached hereto and made a part
hereof including $50,000 for the purchase of vans. Lessor's reimbursement shall
be conditioned upon the following requirements: (i) Lessee shall submit to
Lessor paid invoices for all work and materials completed and incorporated into
the Facilities and such other documentation to substantiate such work and
materials as Lessor shall require in its reasonable opinion, (ii) a release of
mechanics and materialmen's liens for all work and materials completed and
incorporated into the Facilities; (iii) a certificate executed by a duly
authorized officer of Lessee certifying that (a) all invoices, documents and
releases submitted to Lessor are complete, true and accurate, (b) all sums as
invoiced have been paid by Lessee, (c) all work has been performed per the
invoices, (d) all materials as invoiced have been incorporated into the
Facilities, (e) to the best of Lessee's knowledge all work and materials are in
compliance with all Legal Requirements, (f) to the best of Lessee's knowledge
all work has been performed in a workmanlike manner and (g) Lessee has not
permitted any liens to be filed against the Leased Property with respect to such
work which have not been released or bonded off, and (iv) from and after the
reimbursement by Lessor of each invoice, the Minimum Rent shall be increased by
the amount paid by Lessor times ten (10%) percent. Lessor shall provide Lessee
thirty (30) days prior written notice of adjustments to Minimum Rent as required
in this Section 35.11.
GLOSSARY OF TERMS
-----------------
For purposes of this Lease, except as otherwise expressly provided or unless the
context otherwise requires, (a) the terms defined in this Article 36 have the
meanings assigned to them in this Article 36 and include the plural as well as
the singular, (b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as at the time applicable, (c) all references in this Lease to
designated "Articles", "Sections" and other subdivisions are to the designated
Articles, Sections and other subdivisions of this Lease, and (d) the words
"herein", "hereof" and "hereunder" and other words of similar import refer to
this Lease as a whole and not to any particular Article, Section or other
subdivision, (e) the word "including" shall mean "including without limitation,"
and (f) all consents required of Lessor hereunder shall be in Lessor's sole and
absolute discretion, unless otherwise specifically set forth herein. For
purposes of this Lease, the following terms shall have the meanings indicated:
"AAA" means the American Arbitration Association.
"Additional Charges" has the meaning set forth in Section 2.3 hereof together
with all other items specifically included as "Additional Charges" in this
Lease.
"Adjustment Date" has the meaning set forth in Section 2.1(b) hereof.
"Affiliate", when used with respect to Lessee, means any Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with Lessee. For the purposes of this definition, "control", as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, through the ownership of voting securities, partnership interests or
other equity interests. Specifically excluded from the term Affiliate is any
entity in which ▇▇▇ ▇▇▇▇ has an interest as an officer, director, shareholder,
member, partner, beneficiary or employee.
"Applicable Period" has the meaning set forth in Section 7.3.
"Assigned Documents" has the meaning set forth in Article 32 hereof.
"Award" means all compensation, sums or anything of value awarded, paid or
received on a total or partial Condemnation.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which
is not a day on which national banks in the City of Nashville, Tennessee are
closed.
"Capital Additions" means one or more new buildings or one or more additional
structures annexed to any portion of any of the Leased Improvements, which are
constructed on any parcel or portion of the Land including any additions thereto
during the Term, including the construction of a new wing or new story, or the
rebuilding of the existing Leased Improvements or any portion thereof not
normal, ordinary or recurring to maintain the Leased Property, excluding,
however, any construction governed by the provisions of Article 13.
"Capital Addition Cost" means the cost of any Capital Additions proposed to be
made by Lessee whether paid for by Lessee or Lessor. Such cost shall include and
be limited to (a) the cost of construction of the Capital Additions, including
site preparation and improvement, materials, labor, supervision and certain
related design, engineering and architectural services and the cost of any
fixtures, construction financing and miscellaneous items approved in writing by
Lessor, (b) if agreed to by Lessor in writing in advance, the cost of any land
contiguous to the Leased Property purchased for the purpose of placing thereon
the Capital Additions or any portion thereof or for providing means of access
thereto, or parking facilities therefor, including the cost of surveying the
same, (c) the cost of insurance, real estate taxes, water and sewage charges and
other carrying charges for such Capital Additions during construction, (d) the
cost of title insurance, (e) reasonable fees and expenses of legal counsel and
accountants, (f) filing, registration and recording taxes and fees, (g)
documentary stamp taxes, if any, (h) environmental assessments and boundary
surveys and (i) all reasonable costs and expenses of Lessor and any Lending
Institution which has committed to finance the Capital Additions, including, (A)
the reasonable fees and expenses of their respective legal counsel, (B) all
printing expenses, (C) the amount of any filing, registration and recording
taxes and fees, (D) documentary stamp taxes, if any, (E) title insurance
charges, appraisal fees, if any, (F) rating agency fees, if any, and (G)
commitment fees, if any, charged by any Lending Institution advancing or
offering to advance any portion of the financing for such Capital Additions.
"Capital Replacement Account" has the meaning set forth in Section 2.1(c).
"Cash Adjustment" has the meaning set forth in Section 20.1(d).
"Charge" has the meaning set forth in Article 11 hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commencement Date" has the meaning set forth in Article 1.
"Condemnation" means the transfer of all or any part of the Leased Property as a
result of (i) the exercise of any governmental power, whether by legal
proceedings or otherwise, by a Condemnor or (ii) a voluntary sale or transfer by
Lessor to any Condemnor, either under threat of condemnation or while legal
proceedings for condemnation are pending.
"Condemnor" means any public or quasi-public authority, or private corporation
or individual, having the power of Condemnation.
"Consolidated Financial Statements" means for any fiscal year or other
accounting period for Lessee and its respective consolidated Affiliates, audited
statements of earnings and retained earnings and of changes in financial
position for such period and for the period from the beginning of the respective
fiscal year of Lessee to the end of such period and the related balance sheet as
at the end of such period, together with the notes thereto, all in reasonable
detail and setting forth in comparative form the corresponding figures for the
corresponding period in the preceding fiscal year of Lessee, and prepared in
accordance with generally accepted accounting principles consistently applied,
except as noted.
"Consumer Price Index" or "CPI" means the Consumer Price Index for All Urban
Consumers for the U. S. City Average for all Items (1982-1984=100) as published
by the United States Department of Labor, Bureau of Labor Statistics. If the
manner in which the Consumer Price Index is determined by the Bureau of Labor
Statistics shall be substantially revised (including a change in the base index
year), an adjustment shall be made by Lessor in such revised index which would
produce results equivalent, as nearly as possible, to those which would have
been obtained if the Consumer Price Index had not been so revised. If the
Consumer Price Index shall become unavailable to the public because publication
is discontinued or otherwise, or if equivalent data is not readily available to
enable Lessor to make the adjustment referred to in the preceding sentence,
Lessor will substitute therefor a comparable index based upon changes in the
cost of living or purchasing power of the consumer dollar published by any other
governmental agency, or if no such index shall be available, then a comparable
index published by a major bank or other financial institution or by a
university or a recognized financial publication.
"Coverage Ratio" has the meaning set forth in Section 7.3
"Credit Enhancements" means all cash collateral, security deposits, security
interests, letters of credit, pledges, prepaid rent or other sums, deposits or
interests held by Lessee, if any, to secure obligations with respect to the
Leased Property, the Resident Agreements, the Residents, the Tenant Leases or
the Tenants.
"Current Yield" means as of any date the annual Minimum Rent, as adjusted from
time-to-time pursuant to the terms of this Lease, divided by the sum of (i) the
Project Amount plus (ii) all Capital Additions Costs paid for or financed by
Lessor which have not been repaid by Lessee.
"Date of Taking" means the date the Condemnor has the right to possession of the
property being condemned.
"EBITDARM" has the meaning set forth in Section 7.3.
"Encumbrance" has the meaning set forth in Article 32.
"Event of Default" has the meaning set forth in Section 15.1.
"Extended Term" has the meaning set forth in Article 34.
"Facility" has the meaning set forth in Article 1.
"Facility Coverage Ratio" has the meaning set forth in Section 7.3.
"Facility Mortgage" has the meaning set forth in Section 12.1.
"Facility Mortgagee" has the meaning set forth in Section 12.1.
"Fair Market Added Value" means the Fair Market Value (as hereinafter defined)
of the Leased Property (including all Capital Additions) less the Fair Market
Value of the Leased Property determined as if no Capital Additions paid for by
Lessee without financing by Lessor had been constructed.
"Fair Market Rental Value" means the fair market rental value of the Leased
Property or any Substitute Property, (a) assuming the same is unencumbered by
this Lease, (b) determined in accordance with the appraisal procedures set forth
in Article 28 or in such other manner as shall be mutually acceptable to Lessor
and Lessee, and (c) not taking into account any reduction in value resulting
from an indebtedness to which the Leased Property or Substitute Property may be
subject.
"Fair Market Value" means the fair market value of the Leased Property or any
Substitute Property, including all Capital Additions, (a) assuming the same is
unencumbered by this Lease, (b) determined in accordance with the appraisal
procedures set forth in Article 28 or in such other manner as shall be mutually
acceptable to Lessor and Lessee, and (c) not taking into account any reduction
in value resulting from any indebtedness to which the Leased Property or such
Substitute Property is subject or which encumbrance Lessee or Lessor is
otherwise required to remove pursuant to any provision of this Lease or agrees
to remove at or prior to the closing of the transaction as to which such Fair
Market Value determination is being made. The positive or negative effect on the
value of the Leased Property or Substitute Property attributable to the interest
rate, amortization schedule, maturity date, prepayment penalty and other terms
and conditions of any Encumbrance on the Leased Property or any Substitute
Property, as the case may be, which is not so required or agreed to be removed
shall be taken into account in determining such Fair Market Value.
"Fair Market Value Purchase Price" means the Fair Market Value less the Fair
Market Added Value.
"Fiscal Year" means the 12-month period from January 1 to December 31.
"Fixtures" has the meaning set forth in Article 1.
"Full Replacement Cost" has the meaning set forth in Section 12.2.
"Gross Revenues" shall mean all revenues received or receivable from or by
reason of the operation of the Facilities including, without limitation, all
resident revenues received or receivable for the use of or otherwise by reason
of all rooms, beds and other facilities provided, services performed, space or
facilities subleased or goods sold on the Leased Property, including without
limitation and except as provided below, any consideration received under any
subletting, licensing or other arrangements with any person or entity relating
to the possession or use of any portion of the Leased Property and all revenues
from all ancillary services provided by Lessee; provided, however, that Gross
Revenues shall not include non-operating revenues such as interest income or
gain from the sale of assets not sold in the ordinary course of business; and
provided, further, that there shall be deducted from such revenues: (i)
contractual allowances (relating to any period during the Term of this Lease)
for ▇▇▇▇▇▇▇▇ not paid by or received from the appropriate governmental authority
or third party payor; (ii) allowances according to GAAP for uncollectible
accounts; (iii) all proper resident billing credits and adjustments according to
GAAP relating to health care accounting: and (iv) federal, state or local excise
taxes and any tax based upon or measured by said Gross Revenues which is added
to or made a part of the amount billed to the resident or other recipient of
such services or goods, whether included in the billing or stated separately;
and, provided, further, that Gross Revenues shall include, as to residents or
third party payors who receive discounts or as to residents who receive free
care as a condition to Lessee's participation in any federal, state or local
governmental program, only the revenues actually received or receivable from
such residents. To the extent that all or any portion of the Leased Property is
subleased by Lessee, Gross Revenues of such sublessee with respect to the
affected portion of the Leased Property but excluding the rent received or
receivable by Lessee from or under such sublease.
"Hazardous Materials" means any substance, including asbestos or any substance
containing asbestos, the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, medical waste,
chemicals, pollutants, effluents, contaminants, emissions or any other related
materials and items included in the definition of hazardous or toxic wastes,
materials or substances under any Hazardous Materials Law.
"Hazardous Materials Law" means any law, regulation or ordinance relating to
environmental conditions, medical waste and industrial hygiene, including the
Resource Conservation and Recovery Act of 1976 ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as
amended by the Superfund Amendments and Reauthorization Act of 1986 ("▇▇▇▇"),
the Hazardous Materials Transportation Act, the Federal Water Pollution Control
Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act,
the Safe Drinking Water Act, the Atomic Energy Act and all similar federal,
state and local environmental statutes and ordinances, whether heretofore or
hereafter enacted or effective and all regulations, orders, or decrees
heretofore or hereafter promulgated thereunder.
"Impositions" means, collectively, all taxes relating to the Leased Property,
including all ad valorem, sales and use, gross receipts, action, privilege, rent
(with respect to the Resident Agreements and the Tenant Leases) or similar
taxes, assessments (including all assessments for public improvements or
benefits, whether or not commenced or completed prior to the date hereof and
whether or not to be completed within the Term), water, sewer or other rents and
charges, excises, tax levies, fees (including license, permit, inspection,
authorization and similar fees), and all other governmental charges, in each
case whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Leased Property and/or the Rent
(including all interest and penalties thereon due to any failure in payment by
Lessee), which at any time during or in respect of the Term hereof may be
assessed or imposed on or in respect of or be a lien upon (a) Lessor or Lessor's
interest in the Leased Property, (b) the Rent, the Leased Property or any part
thereof or any rent therefrom or any estate, right, title or interest therein,
or (c) any occupancy, operation, use or possession of, sales from, or activity
conducted on, or in connection with, the Leased Property, the Resident
Agreements or the Tenant Leases or use of the Leased Property or any part
thereof; provided that nothing contained in this Lease shall be construed to
require Lessee to pay (1) any tax based on net income (whether denominated as a
franchise or capital stock or other tax) imposed on Lessor, (2) any transfer or
net revenue tax of Lessor, (3) any tax imposed with respect to the sale,
exchange or other disposition by Lessor of any portion of the Leased Property or
the proceeds thereof, (4) any principal or interest on any Encumbrance on the
Leased Property, or (5) any judgment lien against Lessor which does not relate
to or arise out of any amount or obligation that Lessee is required to pay or
perform pursuant to the terms of this Lease, except to the extent that any tax,
assessment, tax levy or charge which Lessee is obligated to pay pursuant to this
definition and which is in effect at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (1), (2) or (3) is levied, assessed or imposed expressly in lieu thereof.
"Initial Term" has the meaning set forth in Article 1.
"Insurance Requirements" means all terms of any insurance policy required by
this Lease and all requirements of the issuer of any such policy.
"Land" has the meaning set forth in Article 1.
"Lease" means this Lease.
"Lease Amendment" has the meaning set forth in Section 9.3(b)(iv).
"Lease Assignment" means that certain Assignment of Rents and Leases,
substantially in the form attached hereto as Exhibit D, to be dated on or about
the date hereof executed by Lessee to the Lessor, pursuant to the terms of which
Lessee assigns to the Lessor each of the Tenant Leases and the Credit
Enhancements, as security for the obligations of Lessee under this Lease, and
any other obligations of Lessee, or any Affiliate of Lessee to Lessor.
"Leased Improvements" and "Leased Property" have the meanings set forth in
Article 1.
"Legal Requirements" means all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting the Leased Property or the construction, use
or alteration thereof, whether now or hereafter enacted and in force, including
any which may (a) require repairs, modifications or alterations of or to the
Leased Property, or (b) in any way adversely affect the use and enjoyment
thereof, and all permits, licenses, authorizations and regulations relating
thereto, and all covenants, agreements, actions and encumbrances contained in
any instruments, either of record or known to Lessee (other than encumbrances
created by Lessor without the consent of Lessee), at any time in force affecting
the Leased Property.
"Lending Institution" means any insurance company, federally insured commercial
or savings bank, national banking association, savings and loan association,
employees' welfare, pension or retirement fund or system, corporate
profit-sharing or pension plan, college or university, or real estate investment
company including any corporation qualified to be treated for federal tax
purposes as a real estate investment trust having a net worth of at least
$50,000,000.
"Lessee" means EMERITUS CORPORATION, a Washington corporation, its successors
and assigns.
"Lessor" means the parties identified in the opening paragraph of this Lease,
and their successors and assigns.
"Minimum Rent" has the meaning set forth in Section 2.1(a) and as to each
Facility means the amount set forth on Schedule G.
"Minimum Purchase Price" means the greater of (i) the Fair Market Value of the
Leased Property at the time of purchase hereunder by Lessee and (ii) the Project
Amount (and in the case of a substitution pursuant to Article 20, as adjusted
pursuant to Section 20.1(f)) as such amount is increased at the rate of three
percent compounded annually for each year (to be prorated for partial years)
between the Commencement Date and the date of repurchase by Lessee, plus the sum
of all Capital Addition Costs relating to the Leased Property paid for or
financed by Lessor which as of the date of repurchase of the Leased Property
have not been repaid by Lessee, less the net amount (after deduction of all
reasonable legal fees and other costs and expenses, including expert witness
fees, incurred by Lessor in connection with obtaining any such award or
proceeds) of all Awards received by Lessor from Condemnation of the Leased
Property and all insurance proceeds received by Lessor from any damage or
destruction of the Leased Property.
"Net Income" means Gross Revenues less all expenses including but not limited to
operating expenses, depreciation, amortization, rent, goodwill, property taxes,
income taxes, insurance, and all other actual or accrued expenses computed in
accordance with generally accepted accounting principles (other than resident
move in fees which are not accounted for in accordance with GAAP) consistently
applied plus non-operating revenues such as interest income or gain from the
sale of assets not sold in the ordinary course of business.
"Officer's Certificate" means a certificate of Lessee signed by the Chairman of
the Board of Directors, the President, any Vice President or another officer
authorized to so sign by the Board of Directors or By-Laws of Lessee, or any
other person whose power and authority to act has been authorized by delegation
in writing by any of the persons holding the foregoing offices.
"Ordinary Course of Business" means the ordinary course of business for Lessee
consistent with past custom and practice (including quantity and frequency).
"Overdue Rate" means as of any date, a rate per annum equal to the Prime Rate as
of such date, plus two percent,
"Payment Date" means any due date for the payment of the installments of Minimum
Rent under this Lease.
"Permitted Exceptions" has the meaning set forth in Article 1 hereof.
"Permitted Liens" means (i) the Permitted Exceptions, (ii) pledges or deposits
made to secure payments of worker's compensation insurance (or to participate in
any fund in connection with worker's compensation insurance), unemployment
insurance, pensions or social security programs, (iii) liens imposed by
mandatory provisions of law such as for materialmen, mechanics, warehousemen and
other like liens arising in the Ordinary Course of Business, securing
indebtedness whose payment is not yet due and payable, (iv) liens for taxes,
assessments and governmental charges or levies if the same are not yet due and
payable or if the same are being contested in good faith and as to which
adequate cash reserves have been provided, (v) liens arising from good faith
deposits in connection with leases, real estate bids or contracts (other than
contracts involving the borrowing of money), pledges or deposits to secure
public or statutory obligations and deposits to secure (or in lieu of) surety,
stay, appeal or custom bonds and deposits to secure the payment of taxes,
assessments, duties or other similar charges, (vi) liens to secure purchase
money indebtedness, so long as the indebtedness incurred to purchase the new
asset is secured only by such asset, or (vii) encumbrances consisting of zoning
restrictions, easements or other restrictions on the use of real property;
provided that such items do not impair the use of such property for the purposes
intended, none of which is violated by existing or proposed structures or land
use.
"Person" means a natural person, corporation, partnership, trust, association,
limited liability company or other entity.
"Personal Property" means all machinery, equipment, furniture, furnishings,
computers, signage, trade fixtures or other personal property and consumable
inventory and supplies used in the operation of the Leased Property for its
Primary Intended Use, together with all replacements and substitutions therefor.
"Primary Intended, Use" has the meaning set forth in Section 6.2(a).
"Prime Rate" means the annual rate reported by The Wall Street Journal, Eastern
Edition (or, if The Wall Street Journal shall no longer be published or shall
cease to report such rates, then a publication or journal generally acceptable
in the financial industry as authoritative evidence of prevailing commercial
lending rates) from time to time as being the prevailing prime rate (or, if more
than one such rate shall be published in any given edition, the arithmetic mean
of such rates). The prime rate is an index rate used by The Wall Street Journal
to report prevailing lending rates and may not necessarily be its most favorable
lending rate available. Any change in the Prime Rate hereunder shall take effect
on the effective date of such change in the prime rate as reported by The Wall
Street Journal, without notice to Lessee or any other action by Lessor. Interest
shall be computed on the basis that each year contains 360 days, by multiplying
the principal amount by the per annum rate set forth above, dividing the product
so obtained by 360, and multiplying the quotient thereof by the actual number of
days elapsed.
"Project Amount" means Lessor's investment in each Facility as shown on Exhibit
-------
G attached hereto, as may be increased by Capital Additions which are financed
by Lessor, by reimbursements pursuant to Section 35.11 of this Lease or
otherwise pursuant to Article 16 of this Lease.
"Related Leases" has the meaning set forth in Section 15.1(a).
"Rent" means, collectively, the Minimum Rent, Additional Charges and the
Impositions.
"Request" has the meaning set forth in Section 9.3(a).
"Substitution Date" has the meaning set forth in Section 20.1.
"Substitute Properties" has the meaning set forth in Section 20.1.
"Taking" means a taking or voluntary conveyance during the Term hereof of all or
part of the Leased Property, or any interest therein or right accruing thereto
or use thereof, as the result of, or in settlement of any Condemnation or other
eminent domain proceeding affecting the Leased Property whether or not the same
shall have actually been commenced.
"Tenant" means the lessees or tenants under the Tenant Leases, if any.
"Tenant Leases" means all leases, subleases and other rental agreements and
resident agreements with assisted living residents and guaranties thereof
(written or verbal, now or hereafter in effect) that grant a possessory interest
in and to occupy and enjoy all or any portion of the Property (save and except
any and all leases, subleases or other agreements pursuant to which Assignor is
granted a possessory interest in the Land, Credit Enhancements, Engineering
Documents and Warranties), together with all the rights, power and authority of
Lessee to execute, deliver, perform, enforce, alter, modify or supplement the
terms of such leases and agreements or to surrender, cancel or terminate such
leases and agreements without the prior written consent of Lessor and Assignee,
and together with any and all guarantees of any of the tenant's obligations
under any of such leases. Any of the Tenant Leases are hereinafter referred to
individually as a "Tenant Lease" and collectively as the "Tenant Leases".
"Term" means the Initial Term and any Extended Term as to which Lessee has
exercised its options to extend contained in Article 34 hereof unless earlier
terminated pursuant to the provisions hereof.
"Unavoidable Delays" means delays due to strikes, lockouts, inability to procure
materials after the exercise of reasonable efforts, power failure, acts of God,
governmental restrictions, enemy action, civil commotion, fire, unavoidable
casualty or other causes beyond the control of the party responsible for
performing an obligation hereunder, provided that lack of funds shall not be
deemed a cause beyond the control of either party hereto unless such lack of
funds is caused by the failure of the other party hereto to perform any
obligations of such other party under this Lease.
"Unsuitable for Its Primary Intended Use" as used anywhere in this Lease, shall
mean that, by reason of damage or destruction, or a partial Taking, (i) the
affected Facility is required to be demolished pursuant to any Legal
Requirement, (ii) Lessee is unable within 12 months to obtain any governmental
approval pursuant to any Legal Requirement, or (iii) in the good faith judgment
of Lessee, reasonably exercised, the Facility cannot be profitably operated for
its Primary Intended Use, taking into account, among other relevant factors, the
number of usable units and number and diversity of the Residents and the Tenants
affected by such damage or destruction or partial Taking.
[COUNTERPART SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties have caused this Lease to be executed and their
respective corporate seals to be hereunto affixed and attested by their
respective officers thereunto duly authorized as of the date first written
above.
LESSOR:
HR ACQUISITION I CORPORATION
By:
Its:
------
IN WITNESS WHEREOF, the parties have caused this Lease to be executed and their
respective corporate seals to be hereunto affixed and attested by their
respective officers thereunto duly authorized as of the date first written
above.
LESSOR:
CAPSTONE CAPITAL OF PENNSYLVANIA, INC.
By:
Its:
IN WITNESS WHEREOF, the parties have caused this Lease to be executed and their
respective corporate seals to be hereunto affixed and attested by their
respective officers thereunto duly authorized as of the date first written
above.
LESSOR:
HRT HOLDINGS, INC.
By:
Its:
IN WITNESS WHEREOF, the parties have caused this Lease to be executed and their
respective corporate seals to be hereunto affixed and attested by their
respective officers thereunto duly authorized as of the date first written
above.
LESSEE:
EMERITUS CORPORATION
By:
Its:
EXHIBIT A
PROPERTY DESCRIPTIONS
DANVILLE, VA
LEGAL DESCRIPTION
-----------------
All that certain tract or parcel of land, together with improvements thereon and
appurtenances thereunto belonging, situate in the City of Danville, Virginia,
described as follows:
BEGINNING at an existing iron at the intersection of Lot 1-B, Section "K"
Wedgewood and Briarcliff Lane; thence with the right-of-way of Briarcliff Lane
along an arc subtended by a chord having a bearing of N 38 19' 22" W and a
distance of 224.87 feet; thence continuing along Briarcliff Lane, N 56 01' 10"
W 63.78 feet to an iron; thence along an arc subtended by a chord having a
bearing of N 16 08' 10" W and a distance of 25.65 feet to an iron at the
intersection of Briarcliff Lane with Hermitage Drive; thence with the
right-of-way of Hermitage Drive, N 23 44' 50" E 438.93 feet to an iron; thence
continuing with Hermitage Drive along an arc subtended by a chord having a
bearing of N 37 51' 47" E and a distance of 432.90 feet to an iron; thence
along an arc subtended by a chord having a bearing of N 81 47' 39" E and a
distance of 19.89 feet to a point at the intersection of Hermitage Drive with
River Oak Drive; thence with the right-of-way of River Oak Drive along an arc
subtended by a chord having a bearing of S 39 36' 34" E and a distance of
479.45 feet to a point; thence continuing with River Oak Drive S 10 49' 40" E
29.68 feet to an iron at the intersection of River Oak Drive and property of now
or formerly Danville School Board; thence leaving River Oak Drive along the
dividing line with now or formerly Danville School Board, S 36 08' 05" W 627.79
feet to an iron, common with property of now or formerly Danville School Board
and Lot 1-B Section "K" Wedgewood; thence along said property with Lot 1-B
Section "K" Wedgewood, S 69 10' 00" W 218.00 feet to the beginning; and being
Parcel H, containing 9.863 acres, as shown on ALTA/ACSM Title Survey for BCC at
Danville, Inc., a Delaware corporation, dated March 5, 1997, revised June 19,
1997 by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, recorded in the Clerk's Office of the Circuit Court of
the City of Danville, Virginia as Instrument No. 97-3866, to which map specific
reference is here made for a more particular description of the property herein
conveyed.
ROANOKE, VA
LEGAL DESCRIPTION
-----------------
BEGINNING at Corner #1, an iron pin set, said corner located on the
northerly right-of-way of U.S. Route 221 (Brambleton Avenue, SW), said point
also being the southwesterly corner of Lot 2, ▇. ▇▇▇▇▇▇ ▇▇▇▇ Subdivision (Plat
Book 19, Page 185); thence leaving Lot 2, and with the right-of-way of U.S.
Route 221, for the following three courses: S 58 00' 00" W, 43.39 feet to
Corner #2, an existing iron pin; thence N 77 00' 00" W, 35.36 feet to Corner
#3, an existing iron pin; thence S 58 00' 00" W, 50.00 feet to Corner #4, an
existing iron pin; said point being the southeasterly corner of ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇; thence leaving U.S. Route 221 and with ▇▇▇▇▇▇▇, N 32 00' 00"
W, 141.30 feet to Corner #5, an existing iron pin; thence S 58 00' 00" W, with
▇▇▇▇▇▇▇ for approximately 200.00 feet, in all 375.00 feet to Corner #6, an "X"
▇▇▇▇ on curb, said point located on the northerly boundary of Tri-State Clinic,
Inc. (D.B. 1276, Pg. 355); said corner also located on the easterly property
line of M. T. Holding Company (D.B. 1238, Pg. 1119); thence leaving Tri-State
Clinic, Inc. and with M. T. Holding Company, N 32 00' 00" W, for approximately
125 feet passing the southeasterly corner of Brambleton Storage (D.B. 1307, Pg.
62), in all 275.00 feet to Corner #7, an existing iron pin; said point in the
northeasterly corner on Brambleton Storage and said corner located on the
southerly boundary of ▇▇▇▇▇ Brothers Contracting, (Oakcliff Common Area); thence
leaving Brambleton Storage and with ▇▇▇▇▇ Brothers Contracting (Oakcliff Common
Area) for the following two courses: N 58 00' 00" E, 40.00 feet to Corner #8,
an existing iron pin; thence N 32 00' 00" W, 151.86 feet to Corner #9, an
existing iron pin; said point located on the southerly boundary of ▇▇▇▇▇ ▇,
▇▇▇▇▇▇▇ #▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇.▇. 3, Pg. 136); thence leaving ▇▇▇▇▇ Brothers
Contracting (Oakcliff Common Area) and with the southerly boundary of Berwick
Heights, N 85 32' 13" E, 219.07 feet to Corner #10, an existing concrete
monument; said point being the southwesterly corner of Section #1, Map of ▇. ▇.
▇▇▇▇▇▇ (P. B. 2, Pg. 119); thence leaving Berwick Heights and with the southerly
boundary of Map of ▇. ▇. ▇▇▇▇▇▇, N 85 22' 30" E, 291.81 feet to Corner #11, an
iron pin set; said point being the northwesterly corner of Lot 2, Resubdivision
of property of ▇. ▇▇▇▇▇▇ ▇▇▇▇ (P.B. 19, Pg. 185); thence leaving ▇. ▇. ▇▇▇▇▇▇
and with the westerly boundary of ▇▇▇ ▇, ▇ ▇▇ 00' 00" E 357.70 feet to Corner
#1, the place of BEGINNING and containing 3.884 acres, more or less.
GREENSBORO, N.C.
LEGAL DESCRIPTION
-----------------
BEGINNING AT A EXISTING IRON PIPE; SAID PIPE BEING THE SOUTHWESTERN CORNER OF
LOT 2 OF THE ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ FARM SUBDIVISION RECORDED THE OFFICE OF THE REGISTER
OF DEEDS OF GUILFORD COUNTY IN PLAT BOOK 5 PAGE 330; SAID PIPE BEING N 59 39'
44" E 2534.53' FROM A PRELIMINARY NGS MONUMENT "DENTIST"; THENCE ALONG THE
WESTERN LINE OF ▇▇▇▇ ▇, ▇, & ▇ ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ N 01 06' 31" W 418.73' TO AN
EXISTING IRON PIPE; THENCE WITH THE NORTHERN LINE OF LOT 4 OF SAID PLAT S 86
48' 03" E 367.99' TO A NEW IRON PIPE; SAID IRON BEING ON THE WESTERN LINE OF A
70' RIGHT-OF-WAY ON LAWNDALE DRIVE AS DESCRIBED IN DEED BOOK 3161 PAGE 483
RECORDED AT SAID REGISTRY; THENCE WITH SAID RIGHT-OF-WAY S 11 03' 18" E 385.80'
TO A NEW IRON PIPE; SAID PIPE BEING AT THE INTERSECTION OF THE SOUTHERN LINE OF
LOT 2 OF SAID PLAT AND SAID 70' RIGHT-OF-WAY; THENCE WITH THE SOUTHERN LINE OF
LOT 2 OF SAID PLAT S 87 25' 38" W 433.73' TO THE POINT OF BEGINNING; CONTAINING
3.663 AC. MORE OR LESS DESCRIBED AS THE "BALANCED CARE ONE" SURVEY PERFORMED BY
ALLEY, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & KING, INC. DATED 8/27/96.
RAVENNA, OH
LEGAL DESCRIPTION
-----------------
Situated in the State of Ohio, County of Portage, Township and City of Ravenna,
being part of ▇▇▇ ▇▇ ▇▇▇ ▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in said Township and City and
bounded and described as follows:
Beginning at a " iron rod found in a monument box at the intersection of the
centerlines of North Avenue and C.H. ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇;
Thence N 13 deg. 39' 45" W along the centerline of C.H. 324 a distance of 445.16
feet to a point at the northwesterly corner of land now or formerly owned by
▇▇▇▇▇▇ ▇. & ▇▇▇▇▇ ▇. ▇▇▇▇ (Vol. 1029, Pg. 487);
Thence continuing N 13 deg. 39' 45" W along the centerline of said C.H. 324 a
distance of 156.66 feet to a point which marks the true place of beginning for
the following described parcel of land;
Thence continuing N 13 deg. 39' 45" W along the centerline of said C.H. 324 a
distance of 80.00 feet to a point;
Thence N 76 deg. 27' 37" E a distance of 137.84 feet to a " iron rod found;
Thence deflecting to the right of the arc of a circular curve having a radius of
375.31 feet, a chord of 94.21 feet a chord bearing N 83 deg. 40' 12" E, distance
of 94.46 feet to a 5/8" iron rod set;
Thence S 89 deg. 07' 11" E a distance of 62.30 feet to a " iron rod found in
the westerly line of Lot 16, South Division;
Thence N 01 deg. 25' 25" E along the westerly line of said Lot 16 a distance of
437.16 feet to a " iron rod found in a southerly line of the Maplegrove
Cemetery;
Thence S 89 deg. 07' 11" E a distance of 213.84 feet to a " iron pipe found in
an easterly line of said Maplegrove Cemetery;
Thence N 02 deg. 02' 39" E a distance of 85.26 feet to a " iron pipe found in a
southerly line of said Maplegrove Cemetery;
Thence S 87 deg. 51' 43" E along said southerly line of the Maplegrove Cemetery
a distance of 335.45 feet to a 5/8" iron rod set;
Thence S 01 deg. 25' 25" W a distance of 299.18 feet to a 5/8" iron rod set;
Thence deflecting to the left on the arc of a circular curve having a radius of
630.00 feet, a chord of 189.43 feet and a chord bearing S 68 deg. 31' 37" W, a
distance of 190.15 feet to a 5/8" iron rod set;
Thence S 59 deg. 52' 49" W a distance of 191.53 feet to a 5/8" iron rod set;
Thence deflecting to the right on the arcs of a circular curve having a radius
of 316.13 feet, a chord of 168.96 feet and a chord bearing S 75 deg. 22' 49" W,
a distance of 171.04 feet to a 5/8"' iron rod set;
Thence S 00 deg. 52' 49" W a distance of 60.00 feet to a 5/8" iron rod set;
Thence N 89 deg. 07' 11" W a distance of 29.90 feet to a 5/8" iron rod set;
Thence deflecting to the left on the arc of a circular curve having a radius of
332.00 feet, a chord of 83.34 feet and a chord bearing S 83 deg. 40' 13" W
(crossing the line between Lot 16 and Lot 15) a distance of 83.56 feet to a 5/8"
iron rod set;
Thence S 76 deg. 27' 37" W a distance of 213.38 feet to the true place of
beginning, containing 5.565 acres of land, more or less, of which 0.494 acres,
more or less, are in Lot 15 and 5.071 acres, more or less, are in Lot 16 as
surveyed March of 1997 by ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ P.S. No. 6562, for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Associates, Inc., Professional Engineers and Surveyors.
Excepting therefrom the portion of dedicated right-of-way known as being
Chestnut Hill Drive (50) as recorded in Portage County Record of Plats, Volume
91, Page 2 and Volume 91, Page 11.
BLOOMSBURG, PA
LEGAL DESCRIPTION
-----------------
All that certain piece or parcel of land situate in the Township of ▇▇▇▇▇,
County of Columbia and Commonwealth of Pennsylvania, bounded and described as
follows:
Beginning at a PK nail (set); said point being the westerly bounds of PA
State Route 1001 (▇▇▇▇▇▇▇ Road) and being the southeasterly corner of Master
Lube, Inc. (D.B. 595, P. 943); thence from said point of Beginning S 24 31' 03"
E 139.65' along said westerly bounds to a point; thence southwesterly 45.25'
along a curve with a radius of 25.00' (chord: S 27 19' 21" W 39.32') to a point
in the northerly bounds of a 60' wide private right-of-way; thence S 79 10' 20"
W 248.18' along said bounds to an iron pin (found) in the line of land of ▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇ (D.B. 423, P. 188); thence along said ▇▇▇▇ passing through an
iron pin (found) at 352.98', N 12 59' 15" W 359.74' and N 79 10' 12" E 46.65'
to a point, said point being the northwesterly corner of said Master Lube, Inc.;
thence along said Master Lube, Inc. the following 3 courses and distances:
1) S 24 31' 33" E 148.30' passing through an iron pin (found) at 10.0'
to an iron pin (found);
2) S 10 50' 00" E 48.80' to an iron pin (found);
3) N 79 10' 20" E 171.20' to the point or place of Beginning.
Containing 1.288 acres of land more or less.
HARRISONBURG, VA
LEGAL DESCRIPTION
-----------------
All that certain lot or parcel of land containing 3.267 acres, more or less,
situate on the western side of ▇▇▇▇▇▇▇ Avenue, in the City of Harrisonburg,
Virginia, being more particularly, described and designated as Lot 1 on that
certain subdivision plat entitled "FINAL PLAT BLUE STONE HILLS SUBDIVISION,
SECTION 7" made by ▇▇▇▇▇▇▇ ▇. Mars, ▇. ▇., and dated February 10, 1997, which
plat is recorded in the Office of the Circuit Court of Rockingham County,
Virginia, in Deed Book 1493, page 453.
BEING the same property conveyed unto Capstone Capital of Virginia, Inc., from
ALCO I, L.L.C. by deed dated June 15, 1998, and recorded in Deed Book 1597, page
282, in the aforesaid Clerk's Office.
HARRISBURG, PA
LEGAL DESCRIPTION
-----------------
ALL THAT CERTAIN tract of land situate in Susquehanna Township, Dauphin
County, Pennsylvania described in accordance with a survey by Alpha Consulting
Engineers, Inc., dated March 18, 1997 as follows:
BEGINNING at an iron pin at lands now on or formerly of ▇▇▇▇▇ ▇. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, lands now or formerly of The Charrington Group and the
subject tract; thence from said point of BEGINNING the following seven courses
and distances:
1) North 83 degrees 01 minutes 49 seconds East a distance of 442.26 feet
to a point; thence
2) South 08 degrees 40 minutes 23 seconds West a distance of 172.50 feet
to an iron pipe; thence
3) South 81 degrees 21 minutes 37 seconds East a distance of 206.19 feet
to a point; thence
4) along the non-tangent curve to the left, with a radius of 1472.69 feet
and an arc length of 82.47 feet to a point; thence
5) South 08 degrees 44 minutes 48 seconds West a distance of 65.70 feet
to a railroad spike; thence
6) South 78 degrees 13 minutes 05 seconds West a distance of 639.71 feet
to a point; thence
7) North 02 degrees 07 minutes 52 seconds East a distance of 426.07 to an
iron pin, said point being the point of BEGINNING.
SAID lot containing 209,937.35 square feet or 4.8195 acres.
HAMPDEN, PA
LEGAL DESCRIPTION
-----------------
ALL THAT CERTAIN tract of land situate in the Township Hampden, County of
Cumberland, and Commonwealth of Pennsylvania, more particularly bounded and
described as follows, to wit:
BEGINNING at a point on the southern line of ▇▇▇▇▇▇▇ Way at the corner of
▇▇▇ ▇▇. ▇▇▇ ▇▇ ▇▇▇▇▇ ▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇; thence by ▇▇▇▇ ▇▇▇, ▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇ ▇▇
▇▇▇▇▇ I South 34 degrees 21 minutes 40 seconds East a distance of 297.25 feet to
an iron pin; thence by Lots Nos. 166, 165 and 164, South 21 degrees 22 minutes
00 seconds East a distance of 199.77 feet to an iron pin at other lands of the
Grantors; thence by same North 68 degrees 38 minutes 00 seconds East a distance
of 344.07 feet to an iron pin; thence by same North 38 degrees 22 minutes 51
seconds East a distance of 257.95 feet to an iron pin in the center of a PP&L
right of way; thence through the PP&L right of way and by other lands of the
Grantors, North 27 degrees 25 minutes 44 seconds West a distance of 90.31 feet
to an iron pin; thence by other lands of Grantors, North 71 degrees 27 minutes
32 seconds West a distance of 372.31 feet to an iron pin; thence by same North
34 degrees 21 minutes 40 seconds West a distance of 106.15 feet to a concrete
monument on the southern side of ▇▇▇▇▇▇▇ Way; thence by the southern line of
▇▇▇▇▇▇▇ Way, South 55 degrees 38 minutes 20 seconds West a distance of 323.00
feet to a concrete monument, the point of BEGINNING.
CONTAINING 5.48 acres.
BEING Lot No. 1 of a Preliminary/Final Subdivision and Land Development
Plan for Outlook Pointe at Creekview, Hampden Township, Cumberland County,
Pennsylvania, prepared by H. ▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, and recorded in
Cumberland County Plan Book _____________, Page __________.
B-1
EXHIBIT B
LIST OF PERMITTED EXCEPTIONS
THE AFOREMENTIONED PROPERTY IS CONVEYED SUBJECT TO THE FOLLOWING:
LIST FROM TITLE COMMITMENTS
EXHIBIT C
ALLOCATION OF MINIMUM RENT BY FACILITY
EMERITUS
LICENSED MINIMUM COMMENCEMENT
FACILITY BEDS RENT DATE
Harrisburg 51 $376,614 May 1, 2003
---------- -- -------- -------------
Creekview 102 $665,054 May 1, 2003
Bloomsburg 46 $333,374 May 1, 2003
Harrisonburg 51 $481,474 May 1, 2003
Roanoke 58 $475,935 May 1, 2003
Danville 60 $386,679 May 1, 2003
Ravenna 53 $362,622 May 1, 2003
Greensboro 50 $368,248 May 1, 2003
TOTALS 471 $3,450,000
EXHIBIT D
ASSIGNMENT OF RENTS AND LEASES
STATE OF )
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF )
THIS ASSIGNMENT OF RENTS AND LEASES (this "Assignment") is entered into as of
the day of , 200_, by and between EMERITUS
-
CORPORATION, a Washington corporation ("Assignor"), whose address for notice
hereunder is ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and HR
Acquisition I Corporation, a Maryland corporation, Capstone Capital of
Pennsylvania, Inc., a Pennsylvania corporation, and Capstone Capital of
Virginia, Inc., an Alabama corporation (collectively, "Assignee"), whose address
for notice hereunder is ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
WITNESSETH
ARTICLE
DEFINITIONS
As used herein, the following capitalized terms used herein shall have the
following meanings:
"Credit Enhancements" means all security deposits, security interests, letters
of credit, pledges, prepaid rent or other sums, deposits or interests, if any,
held by Lessee with respect to the Property, the Tenant Leases or the tenants
under the Tenant Leases.
"Engineering Documents" means all site plans, surveys, soil and substrata
studies, architectural drawings, plans and specifications, engineering plans and
studies, floor plans, landscape plans, and other plans and studies that relate
to the Land, the Improvements or the Fixtures and are in Lessee's possession or
control.
"Fixtures" means all permanently affixed equipment, machinery, fixtures, and
other items of real and/or personal property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Improvements, including, without limitation,
all furnaces, boilers, heaters, electrical equipment, heating, plumbing,
lighting, ventilating, refrigerating, incineration, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, and built-in vacuum,
cable transmission, oxygen and similar systems, all of which, to the greatest
extent permitted by law, are hereby deemed by the parties hereto to constitute
real estate, together with all replacements, modifications, alterations and
additions thereto, but specifically excluding any of Tenant's trade fixtures or
other fixtures that a Tenant is permitted to remove pursuant to the applicable
Tenant Lease.
"Improvements" means all buildings, improvements, structures and Fixtures now or
on the Commencement Date located on the Land, including, without limitation,
landscaping, parking lots and structures, roads, drainage and all above ground
and underground utility structures, equipment systems and other so-called
"infrastructure" improvements.
"Land" means the real property more particularly described on Exhibit A attached
hereto and made a part hereof, together with all covenants, licenses, privileges
and benefits thereto belonging, and any easements, rights-of-way, rights of
ingress or egress or other interests of Lessee in, on, or to any land, highway,
street, road or avenue, open or proposed, in, on, across, in front of, abutting
or adjoining such real property including, without limitation, any strips and
gores adjacent to or lying between such real property and any adjacent real
property.
"Lease" means that certain lease agreement of even date herewith between
Assignee and Assignor.
"License" has the meaning set forth in Section 3.1 hereof.
"Obligations" means any and all of the indebtedness, liabilities, and other
obligations made or undertaken by Assignor to Assignee as set forth in the
Security Documents (hereinafter defined), the Lease and any lease, sublease or
other form of conveyance or any other agreement pursuant to which Assignor is
granted a possessory interest in the Property.
"Obligation Documents" means any and all agreements, assignments and instruments
(including any renewals, extensions, modifications or amendments thereof)
evidencing, securing or pertaining to the Lease.
"Property" means, collectively, the Improvements, the Credit Enhancements, the
Engineering Documents and the Warranties.
"Rents" means the immediate, absolute and continuing right to collect and
receive all of the rents, income, receipts, revenues, proceeds, security and
other types of deposits, issues and profits now due or which may become due or
to which Assignor may now or shall hereafter (whether upon any applicable
redemption period or otherwise) become entitled or may demand or claim, arising
or issuing from or out of the Tenant Leases, or from or out of the Property or
any part thereof (subject only to the limited license granted herein by Assignee
to Lessee to so collect and receive the Rents), including, without limiting the
generality of the foregoing, minimum rents, additional rents, parking
maintenance charges or fees, tax and insurance contributions, proceeds of sale
of electricity, gas, chilled and heated water and other utilities and services,
deficiency rents and liquidated damages following default, premiums payable by
any tenant upon the exercise of a cancellation privilege provided for in a
Tenant Lease and all proceeds payable under any policy of insurance covering
loss of rents resulting from untenantability caused by destruction or damage to
the Property.
"Security Documents" means this Assignment, and any and all other documents now
or hereafter executed by Assignor, or any other person or party, to evidence or
secure the payment or performance and discharge of the Obligations, including,
without limitation, the Lease.
"Tenant Leases" means all leases, subleases and other rental agreements and
resident agreements with assisted living residents and guaranties thereof
(written or verbal, now or hereafter in effect) that grant a possessory interest
in and to occupy and enjoy all or any portion of the Property (save and except
any and all leases, subleases or other agreements pursuant to which Assignor is
granted a possessory interest in the Land, Credit Enhancements, Engineering
Documents and Warranties), together with all the rights, power and authority of
Lessee to execute, deliver, perform, enforce, alter, modify or supplement the
terms of such leases and agreements or to surrender, cancel or terminate such
leases and agreements without the prior written consent of Lessor and Assignee,
and together with any and all guarantees of any of the tenant's obligations
under any of such leases. Any of the Tenant Leases are hereinafter referred to
individually as a "Tenant Lease" and collectively as the "Tenant Leases".
"Warranties" means all transferable warranties, representations and guaranties
with respect to the Property, whether express or implied, which Lessee now holds
or under which Lessee is the beneficiary, including, without limitation, all of
the representations, warranties and guaranties given and/or assigned to Lessee
under the Tenant Leases.
ARTICLE 2
ASSIGNMENT
Assignor, in consideration of the sum of $10.00, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
does hereby grant, sell, convey, assign, transfer, set over and deliver the
Tenant Leases and the Rents unto the Assignee, to have and to hold the Tenant
Leases and the Rents unto Assignee, and Assignor does hereby bind itself, its
successors and assigns to warrant and defend the title to the Tenant Leases and
the Rents unto Assignee against every person whomsoever lawfully claiming or to
claim the name or any part thereof, by, through or under Lessee but not
otherwise.
ARTICLE 3
LIMITED LICENSE, CONTINUATION
AND TERMINATION OF AGREEMENT
3.1 Limited License. Lessee shall have the right under a limited
----------------
license (the "License") which may be revoked by Assignee pursuant to the terms
of Section 7.1, to collect upon, but not prior to accrual, all of the Rents and
Lessee shall receive the Rents and hold the same, as well as the right and
license to receive the Rents, as a trust fund to be applied, and Lessee hereby
covenants to apply the Rents, to the payment, satisfaction and discharge of the
Obligations then due, including specifically, but without limitation, to the
payment of taxes and assessments upon the Property before payment of penalty or
interest are due thereon, to the cost of such insurance then due, maintenance
and repairs as may be required by the terms of the Security Documents and in
satisfaction of all obligations of Assignor under the Tenant Leases then due;
all prior to the application by Assignor of the Rents for any other purposes.
The License shall also include the right of Assignor to execute, deliver,
perform, enforce, alter, modify, change or supplement the terms of the Tenant
Leases and to surrender, cancel or terminate such Tenant Leases without the
prior written consent of Assignee except for any of the Tenant Leases executed,
modified or supplemented after the date hereof whose term (including any
possible extensions on the part of the applicable Tenant) extends beyond the
Term of the Lease. Thereafter, so long as there exists no Event of Default
hereunder or under any of the Security Documents, Assignor may use the Rents in
any manner not inconsistent with the Security Documents. Upon the sale and
conveyance by Assignee or its successors or assigns of the title to the
Property, all right, title, interest and power granted under the License granted
herein shall be automatically continued subject to the terms and conditions of
the Lease and any of the other Security Documents.
3.2 Continuation and Termination of Assignment. Upon final payment,
---------------------------------------------
performance and discharge in full of the Obligations, this Assignment shall
become and be void and of no force or effect. Written demand by Assignor or
Assignee delivered to any Tenant for payment of the Rents by reason of the
occurrence of any Event of Default claimed by Assignor or Assignee, and the then
existence thereof, shall be sufficient evidence of each such Tenant's obligation
and authority to make all future payments of the Rents to Assignor or Assignee,
as the case may be, without the necessity for further consent by Assignor.
ARTICLE4
WARRANTIES AND REPRESENTATIONS
Assignor hereby unconditionally warrants and represents to Assignee with respect
to the Tenant Leases, if any, in effect as of the date hereof, as follows:
4.1 Ownership of Tenant Leases and the Rents. Subject to the terms of
------------------------------------------
the Lease, Assignor has good title to the Tenant Leases not previously
transferred or assigned to Assignee and the Rents and has all requisite right,
power and authority to assign such Tenant Leases and the Rents to Assignee, and
no other person, firm or corporation has any right, title or interest therein.
4.2 No Default. Assignor has duly and punctually performed, all and
-----------
singular, the terms, covenants, conditions and warranties of the Tenant Leases
on Assignor's part to be kept, observed and performed; and, to the best of
Assignor's knowledge, the Tenants thereunder are not in material default of any
of the terms or provisions of the respective Tenant Leases.
4.3 No Modification of the Tenant Leases or Anticipation or
---------------------------------------------------------------
Hypothecation of the Rents. The Tenant Leases are valid and unmodified, except
----------------
as indicated herein, and remain in full force and effect; Assignor has not
previously sold. assigned, transferred, or pledged the Tenant Leases or the
Rents, or any part thereof, whether now due or hereafter to become due; the
Rents now due, or to become due, for any periods subsequent to the date hereof
have not been collected and that payment thereof has not been anticipated,
waived or released, discounted, set off or otherwise discharged or compromised;
and Assignor has not received any funds or deposits from any Tenant for which
credit has not already been made on account of the accrued Rents.
ARTICLE 5
AFFIRMATIVE COVENANTS
Assignor hereby unconditionally covenants and agrees with Assignee as follows:
5.1 Performance. Assignor shall observe, perform and discharge, duly
-----------
and punctually, all and singular, the obligations, terms, covenants, conditions
and warranties of the Tenant Leases to be observed, performed or discharged by
landlord thereunder; and Assignor shall promptly deliver to Assignee any notices
received with respect to the Tenant Leases alleging any failure on the part of
the Assignor to observe, perform and discharge the same.
5.2 Notification to Tenants. Upon written request by Assignee, Assignor
-----------------------
shall notify and direct, in writing, such and every present or future Tenant
that any Credit Enhancement delivered to Assignor by such Tenant shall be
retained by Assignor but assigned to Assignee.
5.3 Enforcement. Assignor shall enforce or secure in the name of
------------
Assignor the performance of each and every obligation, term, covenant, condition
and agreement in the Tenant Leases by any Tenant to be performed, and Assignor
shall appear in and defend any action or proceeding arising under, occurring out
of or in any manner connected with the Tenant Leases or the obligations, duties
or liabilities of Assignor and any Tenant thereunder, and upon request by
Assignee, Assignor will do so in the name and on behalf of Assignee, but at the
expense of Assignor, and Assignor shall pay all costs and expenses of Assignee,
including reasonable attorneys' fees and disbursements, in any action or
proceeding in which Assignee may appear.
5.4 Anticipation or Hypothecation of the Rents. Assignor hereby
-----------------------------------------------
covenants and agrees (a) upon and after an Event of Default hereunder or under
any of the Security Documents and while the same shall continue, to give to
Assignee duplicate notice of each default by each Tenant and copies of any and
all notices and communications received from any Tenant promptly upon delivery
or receipt thereof; (b) to comply with the terms and provisions of each Tenant
Lease; (c) not to assign, transfer, pledge, mortgage or otherwise encumber any
Tenant Lease; (d) not to assign, transfer, pledge, mortgage or otherwise
encumber any Rents; (e) not to collect, accept from any Tenant, or permit any
Tenant to pay any Rents for more than one month in advance (whether in cash or
by evidence of indebtedness) excepting, however, the collection of security
deposits; (f) except in the ordinary course of business and in accordance with
past practice and custom, not to waive, excuse, condone, discount, set-off,
compromise or in any manner release or discharge any Tenant of and from any
obligations, covenants, conditions or agreements to be kept, observed or
performed by such Tenant, under and in accordance with the terms of the
respective Tenant Lease; and (g) not to enter into any Tenant Lease or amend,
modify, extend or renew any Tenant Lease for a time period extending beyond the
term of the Lease, without prior written approval of Assignee, which approval
shall not be unreasonably withheld.
5.5 Delivery of the Tenant Leases; Further Acts and Assurance. Until
------------------------------------------------------------
the Obligations secured hereby have been paid in full, performed and discharged,
Assignor shall enter into only leases of the Property in a form approved in
writing by Assignee and shall upon the written request of Assignee deliver
executed copies of all existing and all other and future Tenant Leases when
executed upon all or any part of the Property and will transfer and assign such
other and future Tenant Leases upon the same terms and conditions as herein
contained, and Assignor hereby covenants and agrees to make, execute and deliver
to Assignee, upon demand and at any time or times, any and all assignments and
other documents and instruments which Assignee may deem advisable to carry out
the true purpose and intent of this Assignment .
ARTICLE 6
EVENTS OF DEFAULT
The term "Event of Default", as used herein, shall mean the occurrence or
happening, at any time and from time to time, of any one or more of the
following:
6.1 Performance of Obligations. If Assignor shall fail, refuse or
----------------------------
neglect to perform and discharge fully and timely any of its obligations
hereunder and such failure is not cured by Assignor within a period of 30 days
after receipt by Lessee of written notice thereof from Assignee, unless such
failure cannot with due diligence be cured within a period of 30 days, in which
case such failure shall not be deemed to continue if Assignor proceeds promptly
and with due diligence to cure the failure and diligently completes the curing
thereof (as soon as reasonably possible).
6.2 Security Documents. The occurrence of any Event of Default under
-------------------
and as defined in the Lease or any other of the Security Documents.
ARTICLE 7
REMEDIES
7.1 Remedies. Upon or any time after the occurrence, and during the
--------
continuance thereof, of an Event of Default hereunder, Assignee, at its option,
shall have the complete right, power and authority hereunder, then or thereafter
until the Event of Default is cured, to exercise and enforce any or all of the
following rights and remedies set out in this Article 7:
(a) To terminate the License and then and thereafter without
taking possession of the Property, to the extent permitted by law, in Assignor's
own name, to demand, collect, receive, ▇▇▇ for, attach and levy the Rents and
give proper receipts, releases and acquittances therefor, and after deducting
all necessary and proper costs and expenses of operation and collection, as
determined by Assignee, including reasonable attorneys' fees, and apply the net
proceeds thereof, together with any funds of Assignor deposited with Assignee,
in reduction or repayment of the Obligations in such order of priority as
Assignee may, in its sole discretion, determine in accordance with applicable
law;
(b) To declare the Lease in default and, at its option, exercise
all of the rights and remedies contained in the Lease or any other of the
Security Documents;
(c) Without regard to the adequacy of the security, with or
without any action or proceeding through any person or by any agent, or by a
receiver to be appointed by a court of competent jurisdiction, and irrespective
of Assignor's possession, then or thereafter to enter upon, take possession of,
manage and operate the Property or any part thereof; make, modify, enforce,
cancel or accept surrender of a Tenant Lease now in effect or hereafter in
effect on the Property or any part thereof; remove and evict any Tenant that is
in default of the applicable Tenant Lease; increase or decrease the Rents under
a Tenant Lease; decorate, clean and repair, and otherwise do any act or incur
any cost or expense which Assignee may deem reasonably necessary to protect the
status and value of the Property as fully and to the same extent as Assignor
could do if in possession thereof; and in such event, to apply the Rents so
collected to the operation and management of the Property, but in such order or
priority as Assignee shall deem proper, and including the payment of reasonable
management, brokerage and attorneys' fees and disbursements, and payment of the
Obligations and to the establishment and maintenance, without interest, of a
reserve for replacements; and
(d) Any other remedy available to Assignee at law or in equity.
7.2 Exculpation of Assignee. The acceptance by Assignee of this
-------------------------
Assignment, with all of the rights, powers, privileges and authority created
hereby, shall not, prior to entry upon and taking possession of the Property by
Assignee, nor thereafter or at any time or in any event obligate Assignee to
take any action hereunder or to expend any money or incur any expenses or
perform or discharge any obligation, duty or liability under a Tenant Lease or
to assume any obligation or responsibility for any security deposits or other
deposits delivered to Lessee by a Tenant and not assigned and delivered to
Assignee, nor shall Assignee be liable in any way for any injury or damage to
persons or property sustained by any person, firm or corporation in or about the
Property not attributable to the negligence or fault of Assignee, its agents or
affiliates.
7.3 No Waiver or Election of Remedies.
--------------------------------------
(a) Waiver. Neither the collection of the Rents and application
------
as provided for in this Assignment nor the entry upon and taking possession of
the Property by Assignee shall be deemed to cure or waive any Event of Default
or waive, modify or affect any notice of default under any Security Document or
invalidate any act done pursuant to any such notice. If Assignee shall
thereafter elect to discontinue the exercise of any such right or remedy
hereunder, such right or remedy may be reasserted at any time and from time to
time following any subsequent Event of Default.
(b) Election of Remedies. The failure of Assignee to assert any
----------------------
of the terms, covenants or conditions of this Assignment for any period of time
or at any time or times shall not be construed or deemed to be a waiver of any
such right, and nothing herein contained nor anything done or omitted to be done
by Assignee pursuant to this Assignment shall be deemed to be an election of
remedies or a waiver by Assignee of any of its rights and remedies under any
other Security Document or under the law. The right of the Assignee to collect
and enforce the payment and performance of the Obligations and to enforce any
security therefor may be exercised by the Assignee either prior to or
simultaneously with or subsequent to any action taken hereunder.
7.4 Appointment of Attorney-in-Fact. Upon and following the occurrence
--------------------------------
of an Event of Default remaining uncured, Assignor hereby constitutes and
appoints Assignee the true and lawful attorney-in-fact, coupled with an
interest, of Assignor and in the name, place and stead of Assignor to demand,
▇▇▇ for, attach, levy, recover and receive any premium or penalty payable upon
the exercise by a Tenant under a Tenant Lease of a privilege of cancellation
originally provided in such Tenant Lease and to give proper receipts, releases
and acquittances therefor and, after deducting expenses of collection, to apply
the net proceeds as a credit upon any portion of the Obligations selected by
Assignee, notwithstanding the fact that such portion of the Obligations may not
then be due and payable or that such portion of the Obligations is otherwise
adequately secured; and Lessee does hereby authorize and direct any such Tenant
to deliver such payment to Assignee in accordance with this Assignment, and
Assignor hereby ratifies and confirms that Assignee, as attorney-in-fact, shall
do or cause to be done by virtue of the powers granted hereby. Under the
circumstances referred to in this Section 7.4, the foregoing appointment is
irrevocable and continuing, and such rights, powers and privileges shall be
exclusive in Assignee, its successors and assigns, so long as any part of the
Obligations secured hereby remain unpaid and undischarged.
ARTICLE 8
MISCELLANEOUS
8.1 Performance at Assignor's Expense. The cost and expense of
------------------------------------
performing or complying with any and all of the Obligations shall be borne
solely by Assignor, and no portion of such cost and expense shall be, in any way
and to any extent credited against any installment on or portion of the
Obligations.
8.2 Survival of Obligations. Each and all of the Obligations shall
-------------------------
survive the execution and delivery of the Security Documents and the
consummation of the transaction called for therein, and shall continue in full
force and effect until the Obligations shall have been paid and performed in
full.
8.3 Further Assurances. Assignor, upon the request of Assignee, will
-------------------
execute, acknowledge, deliver and record and/or file such further instruments
and do such further acts as may be necessary, desirable or proper to carry out
more effectively the purpose of the Security Documents and to subject to the
liens and security interests thereof any property intended by the terms thereof
to be covered thereby, including specifically, but without limitation, any
renewals, substitutions, replacements, modifications or amendments to the Tenant
Leases.
8.4 Recording and Filing. Assignor will cause the Security Documents
-----------------------
and all amendments and supplements thereto and substitutions therefor to be
recorded, filed, re-recorded and refiled in such manner and in such places as
Assignee shall reasonably request, and will pay all such recording, filing,
re-recording and refiling taxes, fees and other charges.
8.5 Notices. Any notices, demands, approvals and other communications
-------
provided for in this Assignment shall be in writing and shall be delivered by
telephonic facsimile, overnight air courier, personal delivery or registered or
certified U.S. Mail with return receipt requested, postage paid, to the
appropriate party at its address as follows:
If to Assignee:
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
If to Assignor:
Emeritus Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: 206/▇▇▇-▇▇▇▇
Telecopy: 206/301-4500
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
With a copy to:
The ▇▇▇▇▇▇▇▇▇ Group PLLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: 206-623-1738
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Addresses for notice may be changed from time to time by written notice to all
other parties. Any communication given by mail will be effective upon the
earlier of (i) actual receipt or refusal of receipt, as indicated by the return
receipt; (ii) if given by telephone facsimile, when sent and confirmed; and
(iii) if given by personal delivery or by overnight air courier, when delivered
to the appropriate address set forth.
8.6 Successors and Assigns. All of the terms of the Security Documents
----------------------
shall apply to, be binding upon and inure to the benefit of the parties hereto,
their successors, assigns, heirs and legal representatives, and all other
persons claiming by, through or under them.
8.7 No Waiver; Severability. Any failure by Assignee to insist, or any
-----------------------
election by Assignee not to insist, upon strict performance by Assignor of any
of the terms, provisions or conditions of the Security Documents shall not be
deemed to be a waiver of same or any other terms, provisions or conditions
thereof, and Assignee shall have the right at any time or times thereafter to
insist upon strict performance by Assignor of any and all such terms, provisions
and conditions. The Security Documents are intended to be performed in
accordance with, and only to the extent permitted by, all applicable legal
requirements. If any provision of any of the Security Documents or the
application thereof to any person or circumstance shall, for any reason and to
any extent, be invalid or unenforceable, then neither the remainder of the
instrument in which such provision to other persons or circumstances nor the
other instruments referred to herein shall be affected thereby, but rather,
shall be enforced to the greatest extent permitted by law.
8.8 Entire Agreement and Modification. This Assignment contains the entire
-----------------------------------
agreement between the parties relating to the subject matter hereof, and all
prior agreements relative thereto which are not contained herein are terminated.
This Assignment may not be amended, revised, waived, discharged, released or
terminated orally, but only by a written instrument or instruments executed by
the party against which enforcement of the amendment, revision, waiver,
discharge, release or termination is asserted. Any alleged amendment, revision,
waiver, discharge, release or termination which is not so documented shall not
be effective as to any party.
8.9 Counterparts. This Assignment may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute but one instrument.
8.10 Applicable Law. The Security Documents shall be governed by and
---------------
construed according to the laws of the State of Tennessee from time to time in
effect except to the extent preempted by United States federal law. It is
expressly stipulated and agreed to be the intent of Lessee and Assignee at all
times to comply with applicable law now or hereafter governing any interest
payable under the Lease, including any notes evidencing the Obligations or any
part thereof. If the applicable law is ever revised, repealed or judicially
interpreted so as to render usurious any amount called for under any of the
Security Documents, or if Assignee exercise of the opinion to accelerate the
maturity of the Obligations or if any prepayment by Assignor results in Assignor
having paid any interest in excess of that permitted by law, then it is
Assignor's and Assignee's express intent that all excess amounts therefore
collected by Assignee be credited on the principal balance of he Obligations
(or, if the Obligations have been paid in full, refunded to Assignor, and the
provisions of the Security Documents immediately be deemed reformed and the
amounts thereafter collectible hereunder and thereunder reduced, so as to comply
with the then applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder or thereunder). All sums paid or agreed to
be paid to Assignee for the use, forbearance or detention of the Obligations
shall to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of the Obligations until payment
in full so that the rate or amount of interest on account of such obligations
does not exceed the usury ceiling from time to time in effect and applicable to
the Obligations so long as debt is outstanding thereunder.
8.11 Headings. The Article, Paragraph and Subparagraph headings hereof
--------
are inserted for convenience of reference only and shall in no way alter, modify
or define, or be used in construing, the text of such Articles, Paragraphs or
Subparagraphs.
[COUNTERPART SIGNATURE PAGES FOLLOW]
This Lease EXECUTED as of the date first above written, to be effective as of
the date first above written.
ASSIGNOR:
EMERITUS CORPORATION
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Its: Chief Financial Officer
STATE OF )
:
_______________COUNTY )
I, the undersigned authority, a Notary Public in and for said County in said
State, hereby certify that ________________________, whose name as
_______________________, of Emeritus Corporation, a Washington corporation, is
signed to the foregoing instrument and who is known to me, acknowledged before
me on this day that, being informed of the contents of said instrument, he/she,
as such officer and with full authority, executed the same voluntarily for and
as the act of said corporation.
GIVEN under my hand and seal, this __ day of ____________, 2003.
[ NOTARIAL SEAL ]
Notary Public
My Commission Expires
------
This Lease EXECUTED as of the date first above written, to be effective as of
the date first above written.
ASSIGNEE:
HR ACQUISITION I CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Its: VP/Assistant General Counsel
STATE OF )
:
COUNTY)
I, the undersigned authority, a Notary Public in and for said county in said
state, hereby certify that , whose name as of
HR Acquisition I Corporation, a Maryland corporation, is signed to the foregoing
instrument and who is known to me, acknowledged before me on this day that,
being informed of the contents of the said instrument, he, as such officer and
with frill authority, executed the same voluntarily for and as the act of said
corporation.
GIVEN under my hand and seal, this ____ day of __________, 2003.
[ NOTARIAL SEAL ]
Notary Public
My Commission Expires
------
This Lease EXECUTED as of the date first above written, to be effective as of
the date first above written.
ASSIGNEE:
CAPSTONE CAPITAL OR PENNSYLVANIA, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Its: VP/Assistant General Counsel
STATE OF )
:
COUNTY)
I, the undersigned authority, a Notary Public in and for said county in said
state, hereby certify that , whose name as of
Capstone Capital of Pennsylvania, Inc., a Pennsylvania corporation, is signed to
the foregoing instrument and who is known to me, acknowledged before me on this
day that, being informed of the contents of the said instrument, he, as such
officer and with frill authority, executed the same voluntarily for and as the
act of said corporation.
GIVEN under my hand and seal, this ____ day of __________, 2003.
[ NOTARIAL SEAL ]
Notary Public
My Commission Expires
This Lease EXECUTED as of the date first above written, to be effective as of
the date first above written.
ASSIGNEE:
HRT HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Its: VP/Assistant General Counsel
STATE OF )
:
COUNTY)
I, the undersigned authority, a Notary Public in and for said county in said
state, hereby certify that , whose name as of
HRT Holdings, Inc., a Delaware corporation, is signed to the foregoing
instrument and who is known to me, acknowledged before me on this day that,
being informed of the contents of the said instrument, he, as such officer and
with frill authority, executed the same voluntarily for and as the act of said
corporation.
GIVEN under my hand and seal, this ____ day of __________, 2003.
[ NOTARIAL SEAL ]
Notary Public
My Commission Expires
Exhibit A
EXHIBIT E
CONTRACT FOR SALE OF REAL ESTATE
THIS CONTRACT of sale made this _____ day of , 200 by
and between , a , hereinafter called
"Seller", and hereinafter called "Buyer".
WHEREAS, Seller desires to sell and Buyer desires to purchase the real
property more particularly described on Exhibit "A" attached hereto and made a
part hereof (the "Property'); and
NOW, THEREFORE, in consideration of the premises and the terms and
conditions hereinafter recited, Seller shall sell the Property and Buyer or
Buyer's designee shall purchase the Property as follows:
1. Seller shall sell and tender to Buyer or Buyer's designee a limited
warranty deed for the Property in the form attached hereto as Exhibit B.
2. Buyer shall pay or cause to be paid to Seller in good funds the sum
of $ for the purchase of the Property.
-
3. Adjustments to be made at time of closing:
(i) If and to the extent that as of the Closing Date taxes for the
period prior to remain due and owing the same shall be
-
paid by Seller and all other taxes for the period subsequent to
shall be paid by Buyer. Rent with respect to the Property due under the
existing Lease dated between Seller, as Landlord, and Buyer,
as Tenant (the "Lease") shall be prorated as of the date of Closing.
(ii) Sale to be closed on or before twenty (20) business days after
satisfaction of all conditions to Seller's obligations to sell and Buyer's
obligations to purchase the Property but in no event later than
-
..
4. Conveyance to be subject to existing building restrictions and/or
zoning ordinances and easements aforesaid and, except as otherwise provided in
Paragraph 6, all other matters of record.
5. Title Insurance provided by Seller: None
6. Buyer may review title to the Property. Seller shall have no
obligation to cure title objections other than liens of any mortgage held or
granted by Seller or its assigns, any leases entered into by Seller or
predecessors in interest with any party, including Buyer and any options to
purchase the Property granted by Seller or its predecessors in interest to any
party, including Buyer, which Seller shall cause to be released at the closing
by execution and delivery of any and all necessary release documents
(collectively, the "Release"). Seller further agrees to remove any exceptions
or encumbrances to title which are created by, under or through Seller after the
date of this Contract without Buyer's consent. Any other title objections Buyer
may cure at its sole cost and expense. Buyer may terminate this Contract if the
title materially affects Buyer's or Buyer's designee's intended use of the
Property.
7. At the closing, Seller shall furnish and deliver for delivery to
Buyer and/or Buyer's designee, the deed, an amendment to the Lease to reflect
the termination of the Lease with respect to the Property (the "Lease
Amendment"), a ▇▇▇▇ of sale, a certificate of non-foreign status, a closing
statement, the Release and such other documents and instruments as are customary
in the jurisdiction in which the Property is located to vest in Buyer fee simple
title to the Property and release all security interests and rights of Seller
and any third party other than Buyer to enable Buyer to secure extended coverage
title insurance policies at Closing, each in form and substance reasonably
acceptable to Buyer and/or Buyer's designee and each duly executed and
acknowledged by Seller.
8. At the closing, Buyer shall furnish and deliver or cause to be
furnished and delivered for delivery to Seller:
a. Cash, wired funds or cashier's check payable to the order of
Seller representing the cash portion of the Purchase Price.
b. Such instruments as are necessary, or reasonably required by
Seller to evidence the authority of Buyer to consummate the purchase and sale
transaction contemplated hereby and to execute and deliver the closing documents
on the Buyer's part to be delivered.
c. A closing statement.
d. The Lease Amendment.
e. Additionally at Closing all rents due shall be prorated and
all security deposits and tax impounds held by Seller shall be returned to
Buyer.
f. Any excise or transfer taxes shall be paid in accordance with
applicable law; if no such law exists, in accordance with the custom of the
state or county where the Property is located.
9. Seller shall be deemed to be in default hereunder upon the
occurrence of the following events: (i) any of Seller's warranties or
representations, if any, set forth herein shall be untrue when made or at
closing; or (ii) Seller shall fail to meet, comply with, or perform any
covenant, agreement or obligation on its part required within the time limits
and in the manner required in this Contract.
10. Seller represents to Buyer the following:
a. Seller is a , duly organized, validly existing
and in good standing under the laws of the State of . Seller has
all requisite corporate power and authority to own and operate its properties
and to carry on its business as now conducted and as proposed to be conducted
and to enter into and carry out the terms of this Contract and any documents
executed in furtherance hereof.
b. Seller is duly authorized to make and enter into this Contract
and to carry out the transactions contemplated herein and is duly authorized to
make and enter into any other documents executed in furtherance hereof to which
it is or will be a party and to carry out the transactions contemplated therein.
This Contract has been duly executed and delivered by Seller and is the legal,
valid and binding obligation of Seller enforceable against Seller in accordance
with its terms, except as such enforceability may be limited by applicable
creditors rights laws and general principles of equity. All of the other
documents to which Seller is or will be a party have been, or will be by
Closing, duly executed and delivered by Seller, and each is, or will be by
Closing, a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, except as such enforceability may be
limited by applicable creditors rights laws and general principles of equity.
c. The execution, delivery and performance of this Contract and
any other documents executed in furtherance hereof to which it is or will be a
party and the consummation of the transaction thereby contemplated shall not
result in any breach of, or constitute a default under, or result in the
acceleration of, or constitute an event which, with the giving of notice or the
passage of time, or both, could result in default or acceleration of any
obligations of Seller under any permit, contract, mortgage, lien, lease,
agreement, instrument, franchise, arbitration award, judgment, decree, bank loan
or credit agreement, trust indenture or other instrument to which Seller is a
party or by which Seller may be bound or affected.
d. Except for such regulatory approvals, consents and filings, if
any, which Buyer is required to secure in connection with its acquisition of
title to the Property under any licensure or other health care law to which the
Property may be subject (as to which Seller makes no representation and has no
knowledge) (the "Health Care Approvals"), no consent or approval or other
authorization of, or exemption by, or declaration or filing with, any person and
no waiver of any right by any person is required to authorize or permit, or is
otherwise required as a condition of the execution, delivery and performance of
Seller's obligations under the Contract and any other documents executed in
furtherance hereof to which it is or will be a party.
e. The Seller is not a "foreign person" as that term is defined
in the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated pursuant thereto.
f. To Seller's actual knowledge, all copies of documents
furnished or to be furnished to the Buyer by the Seller or on its behalf in
connection with this Contract and the proposed purchase and sale of the Property
are true and complete copies of the originals.
g. Other than the Lease and as set forth in documents duly
recorded in the public records of the jurisdictions in which the Property is
located, Seller has not entered into and will not enter into any other
agreements granting any person a right or interest in the Property. Seller has
not obligated and will not obligate itself in any manner whatsoever to sell the
Property or any portion thereof to any party other than Buyer or Buyer's
designee.
h. There is no claim, litigation, or proceeding pending against
Seller with respect to which Seller has been served notice (except for
mechanics' liens and other litigation, claims or proceedings arising or
occurring as a result of the actions or inactions of Buyer, its affiliates or
any Person acting by, through or under them), or, to Seller's current actual
knowledge, threatened against Seller, which could prevent or hinder the
consummation of the transactions contemplated hereby or call into question the
validity of any of the Contract and any other documents executed in furtherance
hereof to which it is or will be a party or any action taken or to be taken in
connection with the transactions contemplated thereunder or which relates to the
Property or the transactions contemplated by this Contract.
i. Seller has received no written notice of any condemnation
proceedings relating to the Property.
j. Except as set forth on Schedule 1 attached hereto, Seller has
not received written notice, nor does Seller otherwise have actual knowledge, of
any uncured violation of any federal, state, or local law relating to the
ownership, use or operation of the Property.
k. Seller is the owner of the Property and has, or at closing
will have, good and marketable title thereto free and clear of all liens and
encumbrances other than the encumbrances approved by Buyer pursuant to Paragraph
6.
11. Buyer's obligation to purchase Property hereunder is subject to the
following conditions, any one or all of which may be waived by Buyer:
(i) The title insurance company shall issue with respect to the
Property as of the Closing Date, an owner's policy of title insurance to Buyer
or Buyer's designee in the full amount of the purchase price (the "Owner's Title
Policy"), with extended coverage without survey exception and which shall
reflect only those title exceptions approved by Buyer in accordance with
Paragraph 6 and subject to such endorsements as may be reasonably requested by
Buyer or Buyer's designee.
(ii) Buyer shall have received an ALTA survey of the property
showing no encroachments not acceptable to Buyer and certified to Buyer, the
title insurance company and Buyer's designee, if applicable.
(iii) Buyer shall be satisfied in its sole discretion that the
zoning applicable to the Property permits the continued operation of the
assisted living facility located thereon and permits the reconstruction of such
facility without the need to secure further approval in the event of the damage
or destruction thereof; provided, however, this condition shall be deemed
satisfied unless Buyer advises Seller in writing at Closing that it has not been
satisfied.
(iv) No material portion of the Property shall have been damaged
or destroyed by fire or other casualty, or shall have been taken or condemned by
any public or quasi-public authority under the power of eminent domain. In the
event of damage, destruction or condemnation notwithstanding any provision
herein to the contrary, Buyer's remedies shall be limited to either (i) close
the purchase and receive the insurance or condemnation proceeds or (ii)
terminate its obligation under this Agreement and proceed to exercise its rights
pursuant to the Lease between Landlord and Buyer.
(v) Seller shall not be in default, where said default cannot be cured
by Closing, under any mortgage, contract, lease or other agreement affecting or
relating to the Property.
(vi) Seller shall have performed all of its obligations under
this Agreement that are to be performed prior to or at Closing to the extent the
same have not been waived by Buyer in accordance with the terms hereof.
(vii) Seller's representations and warranties contained in this
Agreement or in any certificate or document delivered in connection with this
Agreement or the transactions contemplated herein shall be true at and as of the
date of Closing as though such representations and warranties were then again
made.
12. Except as otherwise provided herein, Buyer shall be deemed to be in
default hereunder if Buyer shall fail to deliver, at the Closing, any of the
items specified in Section 8 hereof for any reason other than a default by
----------
Seller hereunder.
13. In the event Buyer or Seller shall be in default hereunder, Buyer
and Seller's remedy shall be to terminate this Contract in which event neither
party shall have any further obligations or liability hereunder, each party
waiving all other rights or remedies in the event of such default. The Lease
shall continue in full force and effect.
14. All notices, requests and other communications under this Contract
shall be in writing and shall be either (a) delivered in person, (b) sent by
certified mail, return receipt requested, (c) delivered by a recognized delivery
service of (d) sent by facsimile transmission and addressed as follows:
If intended for Seller:
Healthcare Realty Trust Incorporated
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇ III, Esq
Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If intended for Buyer: Emeritus Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
With a copy to: The ▇▇▇▇▇▇▇▇▇ Group PLLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
or at such other address, and to the attention of such other person, as the
parties shall give notice as herein provided. A notice, request and other
communication shall be deemed to be duly received if delivered in person or by a
recognized delivery service, when left at the address of the recipient and if
sent by facsimile, upon receipt by the sender of an acknowledgment or
transmission report generated by the machine from which the facsimile was sent
indicating that the facsimile was sent in its entirety to the recipient's
facsimile number; provided that if a notice, request or other communication is
served by hand or is received by facsimile on a day which is not a business day,
or after 5:00 P.M. on any business day at the addressee's location, such notice
or communication shall be deemed to be duly received by the recipient at 9:00
a.m. on the first business day thereafter.
15. This Contract embodies and constitutes the entire understanding
between the parties with respect to the transactions contemplated herein, and
all prior or contemporaneous agreements, understandings, representations and
statements (oral or written) related to the transactions contemplated herein are
merged into this Contract. Neither this Contract nor any provision hereof may
be waived, modified, amended, discharged or terminated except by an instrument
in writing signed by the party against whom the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and then only to
the extent set forth in such instrument.
16. THIS CONTRACT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE(S) IN WHICH
THE PROPERTY IS LOCATED. The parties agree that jurisdiction and venue for any
litigation arising out of this Contract shall be in the U.S. District Court for
the Middle District of Tennessee and accordingly, consent thereto.
17. This Contract shall be binding upon and shall inure to the benefit
of the parties hereto and their respective heirs, executors, administrators,
legal representatives, successors, and assigns.
18. With respect to all provisions of this Contract, time is of the
essence. However, if the first or last date of any period which is set out in
any provision of this Contract falls on a day which is not a Business Day, then,
in such event, the time of such period shall be extended to the next day which
is a Business Day.
19. In the event of any litigation between the parties under this
Contract, the prevailing party shall be entitled to reasonable attorneys' fees
and court costs at all trial and appellate levels.
THE PROPERTY IS SOLD BY SELLER AND ACCEPTED BY BUYER AS IS, WHERE IS, AND
WITH ALL FAULTS, AND WITHOUT ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER
EXPRESSED OR IMPLIED, WRITTEN OR ORAL, EXCEPT FOR THE SPECIAL WARRANTY OF TITLE
AND OTHER SPECIFIC REPRESENTATIONS MADE BY SELLER AS HEREIN PROVIDED, IT BEING
THE INTENTION OF SELLER AND BUYER HEREUNDER TO EXPRESSLY REVOKE, RELEASE,
NEGATE, AND EXCLUDE ALL REPRESENTATIONS AND WARRANTIES INCLUDING, BUT NOT
LIMITED TO, ANY AND ALL EXPRESS OR IMPLIED REPRESENTATIONS AND WARRANTIES AS TO
(I) THE CONDITION OF THE PROPERTY OR ANY ASPECT THEREOF, INCLUDING, WITHOUT
LIMITATION, ANY AND ALL EXPRESS OR IMPLIED REPRESENTATIONS AND WARRANTIES
RELATED TO SUITABILITY FOR HABITATION, MERCHANTABILITY, OR FITNESS FOR A
PARTICULAR USE OR PURPOSE; (II) THE NATURE OR QUALITY OF CONSTRUCTION,
STRUCTURAL DESIGN, OR ENGINEERING OF THE IMPROVEMENTS; (III) THE QUALITY OF THE
LABOR OR MATERIALS INCLUDED IN THE IMPROVEMENTS; (IV) THE SOIL CONDITIONS,
DRAINAGE, TOPOGRAPHICAL FEATURES, OR OTHER CONDITIONS OF THE PROPERTY OR WHICH
AFFECT THE PROPERTY; (V) ANY FEATURES OR CONDITIONS AT OR WHICH AFFECT THE
PROPERTY WITH RESPECT TO ANY PARTICULAR PURPOSE, USE, DEVELOPMENTAL POTENTIAL,
CASH FLOW, OR OTHERWISE; (VI) ALL EXPRESS OR IMPLIED REPRESENTATIONS OR
WARRANTIES CREATED BY ANY AFFIRMATION OF FACT OR PROMISE OR BY ANY DESCRIPTION
OF THE PROPERTY; (VII) ANY ENVIRONMENTAL, GEOLOGICAL, METEOROLOGICAL,
STRUCTURAL, OR OTHER CONDITION OR HAZARD OR THE ABSENCE THEREOF HERETOFORE, NOW,
OR HEREAFTER AFFECTING IN ANY MANNER ANY OF THE PROPERTY OR THE LEASED PROPERTY;
AND (VIII) ALL OTHER EXPRESS OR IMPLIED WARRANTIES AND REPRESENTATIONS BY SELLER
WHATSOEVER.
The words "Seller" and "Buyer" when used in this Contract shall be
construed as plural whenever the number of parties to this contract so requires.
This Contract may be executed in counterparts, each of which shall
constitute an original of this Contract.
WITNESS our hands the day of , 200 .
SELLER: BUYER
By: By:
Its: Its: ________________________________
Exhibit A
Property Description
EXHIBIT F
TERM LOAN NOTE
$ __________________ ____________________,
2003
FOR VALUE RECEIVED, the undersigned, Emeritus Corporation, a Washington
corporation (the "Maker"), hereby promises to pay to the order of HR ACQUISITION
I CORPORATION, a Maryland corporation, or assigns (the "Payee") at ▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the principal amount of
____________________________Dollars ($___________________.00), or so much
thereof that has from time to time been advanced, together with interest at a
rate per annum equal to ten percent (10%). Interest payable under this Note
shall be computed on the basis of a 365-day year and actual days elapsed. All
past due principal shall bear interest from the date of maturing thereof at a
rate equal to the lesser of eighteen percent (18%) per annum or the maximum rate
of interest permitted from time to time by applicable law.
As of the date hereof, this Note is secured by a Leasehold Deed of Trust (the
"Mortgage"), of even date herewith, upon certain real estate and improvements
located in .
This Note will be paid in monthly installments of interest only, commencing on
________________ and continuing thereafter on the 1st day of each succeeding
month thereafter with the final installment to be made on
______________________, at which time this Note shall mature and all unpaid
principal and interest hereunder shall be due and payable in full. Upon the
purchase of any or all of the Facilities leased under that certain Lease by and
between Maker and Payee dated ______, 2003, Maker shall prepay the Note on a
prorata basis (based on the ratio of the number of Facilities being purchased by
Maker to the total number of Facilities then being leased by Maker) if Maker
purchases some, but not all, of the Facilities then being leased by Maker and
shall prepay the Note in full if Maker purchases all of the Facilities then
being leased by Maker.
Except as otherwise expressly provided herein, each maker, surety, endorser, and
guarantor of this Note hereby severally waives demand and presentation for
payment, notice of non-payment, protest and notice of protest, and the diligence
of bringing suit against any party hereto and consents that time of payment may
be extended from time to time without notice thereof to each maker, surety,
endorser or guarantor.
All amounts payable hereunder by the Maker shall be payable to the Payee at the
address set forth above or at such other place as the Payee or the holder hereof
may, from time to time, indicate in writing to the Maker, and shall be made by
the Maker in lawful money of the United States by check or in cash at such place
of payment.
If any payment required to be made hereunder becomes due and payable on a
non-business day, the maturity thereof shall extend to the next business day and
interest shall be payable at the rate applicable thereto during such extension.
The term "business day" shall mean a calendar day excluding Saturdays, Sundays
or other days on which banks in the State of Tennessee are required or
authorized to remain closed.
If this Note is placed in the hands of an attorney for collection, Maker agrees
to pay reasonable attorneys' fees and costs and expenses of collection,
including but not limited to court costs.
Upon the failure of prompt and timely payment when due of any installment of
principal or interest under this Note, such failure continuing for thirty (30)
calendar days after notice thereof from Payee to Maker, then the Payee, at its
option, may declare the entire unpaid balance of principal and accrued interest
hereunder to be immediately due and payable. Time is of the essence of this
Note and the performance of each of the covenants and agreements contained
herein.
This Note shall be governed by and construed in accordance with the laws of the
State of Washington and applicable laws of the United States. MAKER HEREBY
CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
DAVIDSON COUNTY, TENNESSEE AND IRREVOCABLY AGREES THAT, SUBJECT TO PAYEE'S
ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS NOTE OR
THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. MAKER EXPRESSLY
SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY
DEFENSE OF FORUM NON CONVENIENS. MAKER HEREBY WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON
MAKER BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO
MAKER, AT THE ADDRESS SET FORTH IN THIS NOTE AND SERVICE SO MADE SHALL BE
COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
TO THE EXTENT PERMITTED BY LAW, MAKER, AND PAYEE BY ITS ACCEPTANCE OF THIS NOTE,
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS NOTE AND THE
BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY MADE BY MAKER AND BY PAYEE, AND MAKER ACKNOWLEDGES
THAT NEITHER PAYEE NOR ANY PERSON ACTING ON BEHALF OF PAYEE HAS MADE ANY
REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY
ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. MAKER AND PAYEE FURTHER
ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE
REPRESENTED) IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL.
In no contingency or event whatsoever shall the amount paid or agreed to be paid
by Maker, received by Payee, or requested or demanded to be paid by Maker exceed
the maximum amount permitted by applicable law. In the event any such sums paid
to Payee by Maker would exceed the maximum amount permitted by applicable law,
Payee shall automatically apply such excess to the unpaid principal amount of
this Note or, if the amount of such excess exceeds the unpaid principal amount
of this Note, such excess automatically shall be applied by Payee to the unpaid
principal amount of other indebtedness, if any, owed by Maker to Payee, or if
there be no such other indebtedness, such excess shall be paid to Maker. All
sums paid or agreed to be paid by Maker, received by Payee, or requested or
demanded to be paid by Maker which are or hereafter may be construed to be, or
in respect of, compensation for the use, forbearance, or detention of money
shall, to the extent permitted by applicable law, be amortized, prorated, spread
and allocated throughout the full term of all indebtedness of Maker to Payee, to
the end that the actual rate of interest hereon shall never exceed the maximum
rate of interest permitted from time to time by applicable law.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
The privilege is reserved and given to make payments on the principal of this
Note on the due date of any installment prior to maturity without the payment of
a penalty or premium, provided that not less than twenty (20) days' prior
written notice of intent to prepay is given to the Holder hereof. Any partial
prepayment of principal shall, however, not have the effect of suspending or
deferring the monthly principal payments herein provided for but the same shall
continue to be due and payable on each due date subsequent to any such partial
prepayment of the principal, and shall operate to effect full payment of the
principal at an early date.
ENTERED INTO AT , on the day and year first above
written.
Emeritus Corporation
By:
EXHIBIT G
[PROJECT AMOUNT]
HRT
===
Licensed PROJECT
FACILITY BEDS AMOUNT
Harrisburg 51 4,606,784
---------- -- ---------
Creekview 102 7,990,971
Bloomsburg 46 4,277,867
Harrisonburg 51 5,689,443
Roanoke 58 5,576,337
Danville 60 4,919,294
Ravenna 53 4,435,632
Greensboro 50 4,704,450
TOTALS 471 42,200,778