EXHIBIT 10.25
MASTER LEASE DOCUMENT
GENERAL TERMS AND CONDITIONS
DATED AS OF JUNE 30, 1992
FOR LEASES TO BE EXECUTED BY
HEALTH AND REHABILITATION PROPERTIES TRUST,
AS LANDLORD,
AND
GCI HEALTH CARE CENTERS, INC.,
AS TENANT
MASTER LEASE DOCUMENT
THIS MASTER LEASE DOCUMENT, GENERAL TERMS AND CONDITIONS (hereinafter,
the "Master Lease Document") is prepared for and will be adopted as part of each
lease to be executed by HEALTH AND REHABILITATION PROPERTIES TRUST, a Maryland
real estate investment trust, having its principal office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as Landlord, and GCI HEALTH CARE CENTERS, INC., a
Delaware corporation, having its principal office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as Tenant.
RECITALS
This Master Lease Document is made and entered into with reference to
the following recitals:
A. Landlord has entered into separate Acquisition Agreements, dated as of
May 29, 1992 (as the same may be amended, modified or supplemented from
time to time, the "Acquisition Agreements"), with each of Samaritan
Senior Services of Arizona, Inc., an Arizona non-profit corporation
("Samaritan Arizona"), Samaritan Senior Services of California, Inc., a
California non-profit corporation ("Samaritan California') and
Samaritan Senior Services of South Dakota, Inc., a South Dakota
non-profit corporation ("Samaritan South Dakota", together with
Samaritan Arizona and Samaritan California, the "Sellers"), pursuant to
which ▇▇▇▇▇▇▇▇ has agreed to acquire from the Sellers certain parcels
of real property and improvements (together the "Collective Leased
Properties", individually, a "Leased Property [as such terms are
further defined below]") as otherwise described on Exhibit A-1 hereto.
The Collective Leased Properties are identified in Exhibit A-2 hereto.
B. Landlord and GranCare, Inc., a California corporation ("GranCare") and
owner of 100% of the issued and outstanding capital stock of Tenant
have entered into a letter agreement dated April 10, 1992, pursuant to
which ▇▇▇▇▇▇▇▇ has agreed to lease to Tenant the Collective Leased
Properties.
▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ have executed and delivered a lease for each of the
Collective Leased Properties, each of which leases is substantially in
the form of Exhibit B hereto and incorporates by reference all of the
terms and conditions of this Master Lease Document. Each such lease is
hereinafter referred to as a "Lease".
D. Notwithstanding anything herein to the contrary, the terms and
conditions of this Master Lease Document shall be construed and
interpreted as to each Lease as if a separate
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lease containing all the terms of this Master Lease Document and such
Lease had been executed by Landlord and Tenant with respect to the
Leased Property described in such Lease (hereinafter referred to as the
"applicable Leased Property").
NOW, THEREFORE, in consideration of the foregoing, and of other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Landlord and Tenant agree as follows:
ARTICLE 1
DEFINITIONS
For all purposes of this Master Lease Document, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Article shall have the meanings assigned to them in this Article
and include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein shall have the meanings assigned to them in accordance
with generally accepted accounting principles consistently applied, (iii) all
references in this Master Lease Document to designated "Articles," "Sections"
and other subdivisions are to the designated Articles, Sections and other
subdivisions of this Master Lease Document, and (iv) the words "herein,"
"hereof," "hereunder" and other words of similar import refer to this Master
Lease Document as a whole and not to any particular Article, Section or other
subdivision.
Acquisition Agreements: As defined in the recital clauses hereto.
Added Value Percentage: As defined in Section 6.2.2(a).
Additional Charges: As defined in Section 3.1.3.
Additional Rent: As defined in Section 3.1.2 with respect to the
Collective Leased Properties.
Additional Rent Adjustment Date shall mean, for any Fiscal Year during
the Fixed Term and the First Extended Term, the date on which an amount of Net
Patient Revenues shall have been generated by the Collective Leased Properties,
such that the aggregate Additional Rent due to HRP for the Collective Leased
Properties for the then current Fiscal Year is equal to two percent (2%) of the
sum of the Purchase Prices for the Collective Leased Properties.
Adjusted Percentage Yield shall mean, for the applicable Lease, a
percentage equal to 450 basis points above the yield (calculated on the basis of
a monthly equivalent yield) on 5-year United States Treasury securities computed
at the close of the applicable Business Day and based upon information quoted in
The
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Wall Street Journal, all as more particularly described in Section 3.1.1.
Adjusted Purchase Price shall mean, for the applicable Leased Property,
the Purchase Price of such Leased Property plus the aggregate amount of all
disbursements made by Landlord with respect to such Leased Property pursuant to
the terms of any renovation funding agreement, plus any other amount disbursed
or advanced by Landlord to finance, or to reimburse Tenant for its financing of,
any Capital Addition to such Leased Property less any amounts that have been
repaid to Landlord pursuant to the terms of any renovation funding agreement or
otherwise, less the amount of any Award or the proceeds of any insurance
received by Landlord in connection with a partial Condemnation or a partial
casualty involving the applicable Leased Property as described in Section 11.2
or 10.2.2, and not applied by Landlord to the restoration of the applicable
Leased Property as provided therein.
Affiliate shall mean as to any Person (a) any other Person which,
directly or indirectly, controls or is controlled by or is under common control
with such Person, (b) any other Person that owns, beneficially, directly or
indirectly, five percent (5%) or more on a consolidated basis, of the
outstanding capital stock, shares, equity or beneficial interests of such
Person, (c) any officer, director, employee, general partner or trustee of such
Person or any other Person controlling, controlled by or under common control
with such Person (excluding trustees and Persons serving in similar capacities
who are not otherwise an Affiliate of such Person), or (d) with respect to any
individual, a spouse, any ancestor or descendant, or any other relative (by
blood, adoption or marriage), within the third degree, of such individual. For
the purposes of this definition, "control" (including the correlative meanings
of the terms "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, through the ownership of voting securities, partnership interests or
other equity interests.
Applicable Laws: As defined in Section 4.4.
Award shall mean all compensation, sums or other value awarded, paid or
received by virtue of a total or partial Condemnation of the applicable Leased
Property (after deduction of all reasonable legal fees and other reasonable
costs and expenses, including, without limitation, expert witness fees, incurred
by Landlord or Tenant, as the case may be, in connection with obtaining any such
award).
Base Net Patient Revenues shall mean the aggregate amount of Net
Patient Revenues for the Collective Leased Properties for the applicable Base
Year.
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Base Year shall mean, with respect to the Fixed Term and the First
Extended Term, the Fiscal Year beginning January 1, 1992 and ending December 31,
1992; and with respect to the Second Extended Term, the Fiscal Year beginning
January 1, 2017 and ending December 31, 2017.
Business Day shall mean any day other than Saturday, Sunday, or any
other day on which banking institutions in the State are authorized by law or
executive action to close.
Capital Addition shall mean one or more new buildings, or one or more
additional structures annexed to any portion of any of the Leased Improvements
with respect to the applicable Leased Property, or the material expansion of
existing improvements, which are constructed on any parcel or portion of the
Land during the Term, including, the construction of a new wing or new story,
the renovation of existing improvements on such Leased Property in order to
provide a functionally new facility needed to provide services not previously
offered, or any expansion, construction, renovation or conversion in order to
increase the bed capacity of the Facility located on the applicable Leased
Property, to change the purpose for which such beds are utilized or to
materially improve the quality of such Facility.
Capital Additions Cost shall mean the cost of any Capital Addition
proposed to be made by Tenant at the applicable Leased Property, whether paid
for by Tenant or Landlord. Such cost shall include (a) the cost of construction
of the Capital Addition, including site preparation and improvement, materials,
labor, supervision, developer and administrative fees, legal fees, and related
design, engineering and architectural services, the cost of any fixtures, the
cost of equipment and other personalty, the cost of construction financing
(including, but not limited to, capitalized interest) and other miscellaneous
costs approved by Landlord, (b) if agreed to by Landlord in writing, in advance,
the cost of any land (including all related acquisition costs incurred by
Tenant) contiguous to the Leased Property which is to become a part of the
Leased Property purchased for the purpose of placing thereon the Capital
Addition or any portion thereof or for providing means of access thereto, or
parking facilities therefor, including the cost of surveying the same, (c) the
cost of insurance, real estate taxes, water and sewage charges and other
carrying charges for such Capital Addition during construction, (d) title
insurance charges, (e) reasonable attorneys' fees and expenses, (f) filing,
registration and recording taxes and fees, (g) documentary stamp or transfer
taxes, and (h) all actual and reasonable costs and expenses of Landlord and
Tenant and, if agreed to by Landlord in writing, in advance, any Lending
Institution committed to finance the Capital Addition, including, but not
limited to, all (i) reasonable attorneys' fees and expenses, (ii) printing
expenses, (iii) filing, registration and recording taxes and fees, (iv)
documentary stamp or transfer taxes, (v) title insurance charges and appraisal
fees, (vi) rating agency fees, and (vii) commitment fees charged by any Lending
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Institution advancing or offering to advance any portion of any financing to
which Landlord has consented in writing for such Capital Addition.
Change in Control shall mean the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission) of 20% or more, or rights,
options or warrants to acquire 20% or more, of the outstanding shares of voting
stock of Tenant or the merger or consolidation of Tenant with or into any other
Person or any one or more sales or conveyances to any Person of all or
substantially all of the assets of Tenant.
Code shall mean the Internal Revenue Code of 1986 and, to the extent
applicable, the Treasury Regulations promulgated thereunder, each as from time
to time amended.
Collective Leased Properties shall mean, at any time and from time to
time at the time of determination, all of the Leased Properties that are then
subject to a Lease.
Commencement Date: As defined in the applicable Lease.
Condemnation shall mean, as to the applicable Leased Property, (a) the
exercise of any governmental power, whether by legal proceedings or otherwise,
by a Condemnor of its power of condemnation, (b) a voluntary sale or transfer by
▇▇▇▇▇▇▇▇ to any Condemnor, either under threat of condemnation or while legal
proceedings for condemnation are pending, and (c) a taking or voluntary
conveyance of all or part of such Leased Property, or any interest therein, or
right accruing thereto or use thereof, as the result or in settlement of any
Condemnation or other eminent domain proceeding affecting such Leased Property,
whether or not the same shall have actually been commenced.
Condemnor shall mean any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.
Consolidated Financials shall mean, for any Fiscal Year or other
accounting period of Tenant, annual audited and quarterly unaudited financial
statements prepared on a consolidated basis, including Tenant's consolidated
balance sheet and the related statements of income, all in reasonable detail,
and setting forth in comparative form the corresponding figures for the
corresponding period in the preceding Fiscal Year, and prepared in accordance
with generally accepted accounting principles, consistently applied throughout
the periods reflected.
Cost of Living Index shall mean the United States Department of Labor,
Bureau to Labor statistics Consumer Price Index for all Urban Consumers, United
States Average, Subgroup "All Items" (1982-1984-100).
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Date of Taking shall mean, as to the applicable Leased Property, the
date the Condemnor has the right to possession of such Leased Property, or any
portion thereof, in connection with a Condemnation.
Default shall mean (a) any Event of Default or (b) any condition or
event that has occurred and is continuing and that (i) with the giving of notice
or lapse of time or both would, unless cured or waived, become an Event of
Default and (ii) either relates to the payment of Rent or relates to a matter as
to which Landlord has given Notice of default to Tenant.
Encumbrance: As defined in Section 22.1.
Environmental Obligation: As defined in Section 4.4.
Environmental Notice: As defined in Section 4.4.
Environmental Report: As defined in Section 4.4.
Event of Default: As defined in Section 12.1.
Excess Net Patient Revenues shall mean, for any Fiscal Year or quarter
thereof, the aggregate amount of Net Patient Revenues for such Fiscal Year (or
applicable quarter thereof) in excess of the Base Net Patient Revenues (or, with
respect to any quarter in any Fiscal Year, twenty-five percent (25%) of the Base
Net Patient Revenues); provided that such term shall mean, (i) with respect to
any partial Fiscal Year (other than as to any complete quarter thereof), the
amount by which the Net Patient Revenues for such partial Fiscal Year, prorated
to reflect the number of days in such partial Fiscal Year, exceeds the product
of (x) a fraction of which the numerator is the number of days in such partial
Fiscal Year, and the denominator is 360, multiplied by (y) the Base Net Patient
Revenues ; and (ii) with respect to any partial quarter, the amount by which the
Net Patient Revenues for such partial quarter, prorated to reflect the number of
days in such partial quarter, exceeds the product of (x) a fraction of which the
numerator is the number of days in such partial quarter, and the denominator is
360, multiplied by (y) the Base Net Patient Revenues for the applicable Base
Year.
Extended Term(s): As defined in Section 2.4.
Facility shall mean the facility offering health care or related
services being operated or proposed to be operated on the applicable Leased
Property.
Facility Mortgage shall mean any Encumbrance placed upon the applicable
Leased Property in accordance with Article 22 hereof.
Facility Mortgagee shall mean the holder of any Facility Mortgage.
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Facility Trade Name shall mean any name under which ▇▇▇▇▇▇ has
conducted the business of operating the Facility located on the applicable
Leased Property at any time during the Term.
Fair Market Added Value shall mean, as to any applicable Leased
Property, the Fair Market Value of such Leased Property (including all Capital
Additions) less the Fair Market Value of such Leased Property determined as if
no Tenant's Capital Additions had been constructed.
Fair Market Rental shall mean, as to the applicable Leased Property,
the rental which a willing tenant not compelled to rent would pay a willing
landlord not compelled to lease for the use and occupancy of such Leased
Property (including all Capital Additions other than Tenant's Capital Additions)
on the terms and conditions of the applicable Lease for the term in question,
assuming Tenant is not in default thereunder and determined by agreement between
Landlord and Tenant, or, failing agreement, in accordance with the appraisal
procedures set forth in Article 20 hereof or in such other manner as shall be
mutually acceptable to Landlord and Tenant. The determination of such Fair
Market Rental shall be made without regard to the fact that Additional Rent may
be payable.
Fair Market Value shall mean the price that a willing buyer not
compelled to buy would pay a willing seller not compelled to sell for the
applicable Leased Property, (a) assuming the same is unencumbered by the
applicable Lease, (b) determined in accordance with the appraisal procedures set
forth in Article 20 hereof or in such other manner as shall be mutually
acceptable to Landlord and Tenant, and (c) not taking into account any reduction
in value resulting from any indebtedness to which such Leased Property is
subject, except the positive or negative effect on the value of such Leased
Property attributable to the interest rate, amortization schedule, maturity
date, prepayment penalty and other terms and conditions of any Encumbrance which
is not removed at or prior to the closing of the transaction as to which such
Fair Market Value determination is being made.
Fair Market Value Purchase Price shall mean the Fair Market Value of
the applicable Leased Property less the Fair Market Added Value.
Financial Officer's Certificate shall mean a certificate of the
financial officer of Tenant, duly authorized, accompanying the financial
statements required to be delivered by Tenant pursuant to Section 18.2, in which
such officer shall (a) certify that such statements have been properly prepared
in accordance with GAAP and are true, correct and complete in all material
respects and fairly present the consolidated financial condition of Tenant at
and as of the dates thereof and the results of its and their operations for the
periods covered thereby, (b) certify that such officer has reviewed the Leases
and has no knowledge of any material default by Tenant in the performance or
observance of any of the
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provisions of the Leases or any other Transaction Document or of any condition
or event which constitutes an Event of Default under the Leases or any of the
Transaction Documents or which with the passage of time or the giving of notice
or both would become such an Event of Default, and (c) provide computations and
schedules showing in reasonable detail compliance, as at the date of each such
financial statement, with Section 23.7 of the Master Lease Document.
Fiscal Year shall mean the twelve (12) month period from January 1 to
December 31.
Fixed Term: As defined in Section 2.3.
Fixtures: As defined in Section 2.1(d).
First Extended Term: As defined in the applicable Lease.
Five Percent Additional Rent shall mean, for any Fiscal Year during the
Fixed Term and the First Extended Term, the sum equal to five percent (5%) of
all Excess Net Patient Revenues for such Fiscal Year through the Additional Rent
Adjustment Date.
GAAP shall mean generally accepted accounting principles consistently
applied.
GranCare shall mean GranCare, Inc., a California corporation, and its
successors and assigns.
Guarantor(s) shall mean any guarantor of Tenant's obligations under the
applicable Lease, including, without limitation, GranCare and AMS Properties,
Inc., a Delaware corporation, and their respective successors and assigns.
Guaranty shall mean and include any guaranty agreement executed by a
Guarantor in favor of Landlord pursuant to which the payment and performance of
Tenant's obligations under the Lease are guaranteed, together with all
modifications, amendments or supplements thereto.
Hazardous Substances: As defined in Section 4.4.
HRP Shares Pledge Agreement shall mean the Amended and Restated Pledge
Agreement of even date herewith executed by AMS Properties, Inc., a Delaware
corporation, in favor of Landlord, as such agreement may be modified, amended or
supplemented from time to time.
Impositions shall mean for the applicable Leased Property,
collectively, all taxes (including, without limitation, all taxes imposed under
the laws of the State, as such laws may be amended from time to time, and all ad
valorem, sales and use, single business, gross receipts, transaction privilege,
rent or similar taxes as the same relate to or are imposed upon Landlord, Tenant
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or the business conducted upon the applicable Leased Property), assessments
(including, without limitation, all assessments for public improvements or
benefit, 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, without limitation, 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 applicable Leased
Property or the business conducted thereon by Tenant (including all interest and
penalties thereon due to any failure in payment by Tenant), which at any time
prior to, during or in respect of the Term hereof may be assessed or imposed on
or in respect of or be a lien upon (a) Landlord's interest in such Leased
Property, (b) such Leased Property or any part thereof or any rent therefrom or
any estate, right, title or interest therein, or (c) any occupancy, operation,
use or possession of, or sales from, or activity conducted on, or in connection
with such Leased Property or the leasing or use of such Leased Property or any
part thereof by Tenant. Provided, however, nothing contained in the Lease with
respect to the applicable Leased Property shall be construed to require Tenant
to pay (1) any tax based on net income imposed on Landlord, or (2) any net
revenue tax of Landlord, or (3) any transfer fee or other tax imposed with
respect to the sale, exchange or other disposition by Landlord of the applicable
Leased Property or the proceeds thereof (other than in connection with the sale,
exchange or other disposition to, or in connection with a transaction involving,
Tenant), or (4) any single business, gross receipts (other than a tax on any
rent received by Landlord from Tenant), transaction privilege, rent or similar
taxes as the same are related to or imposed upon Landlord, except to the extent
that any tax, assessment, tax levy or charge, which Tenant is obligated to pay
pursuant to the first sentence of 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) or (2) is levied,
assessed or imposed expressly in lieu thereof.
Increased Minimum Rent: As defined in Section 3.1.1(b).
Independent Trustees shall mean Trustees who, in their individual
capacity, (a) are not Affiliates of Tenant and (b) do not perform any services
for Landlord except as Trustees.
Insurance Requirements shall mean all terms of any insurance policy
required by the applicable Lease with respect to the applicable Leased Property
and all requirements of the issuer of any such policy.
Land: As defined in Section 2.1(a) with respect to the applicable
Lease.
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Landlord shall mean Health and Rehabilitation Properties Trust, a
Maryland real estate investment trust, and its successors and assigns.
Lease(s): As defined in the recital clauses hereto.
Leased Improvements: As defined in Section 2.1(b) with respect to the
applicable Lease.
Leased Personal Property: As defined in Section 2.1(e) with respect to
the applicable Lease.
Leased Property: As defined in Section 2.1 with respect to the
applicable Lease.
Legal Requirements shall mean, as to the applicable Leased Property,
all federal, state, county, municipal and other governmental statutes, laws,
rules, orders, regulations, ordinances, judgments, decrees and injunctions
affecting such Leased Property or the maintenance, construction, alteration or
operation thereof, whether now or hereafter enacted or in existence, including,
without limitation, (a) all permits, licenses, certificates of need,
authorizations and regulations necessary to operate such Leased Property for its
Primary Intended Use, and (b) all covenants, agreements, restrictions and
encumbrances contained in any instruments at any time in force affecting such
Leased Property, including those which may (i) require material repairs,
modifications or alterations in or to such Leased Property or (ii) in any way
adversely affect the use and enjoyment thereof.
Lending Institution shall mean 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 trust, college or university, or real estate
investment trust, including any corporation qualified to be treated for federal
tax purposes as a real estate investment trust, such trust having a net worth of
at least $10,000,000.
Minimum Rent: As defined in the applicable Lease, as the same may be
adjusted from time to time in accordance with Section 3.1.1, and including all
Increased Minimum Rent, as provided in Section 3.1.1(b).
Minimum Rent Adjustment Date shall mean, for the applicable Lease, each
of the 5th, 10th, 15th, 20th, and 30th anniversary of the Commencement Date.
Net Patient Revenues with respect to the Facilities located at the
Collective Leased Properties shall mean the aggregate amount of all revenues
(determined in accordance with GAAP, except as provided below) received or
receivable from or by reason of the operation of such Facilities, or any other
use of such Facilities,
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including without limitation all patient or client revenues received or
receivable for the use of or otherwise by reason of all rooms, beds and other
facilities provided, meals served, services performed or provided, space or
facilities subleased or goods sold at such Facilities, including, without
limitation, any other arrangements with third parties relating to the possession
or use of any portion of such Facilities; provided, however, that Net Patient
Revenues shall not include:
(a) revenue from professional fees or charges by physicians
and unaffiliated providers of ancillary services, when and to the
extent such charges are paid over to such physicians or unaffiliated
providers of ancillary services, or are separately billed and not
included in comprehensive fees;
(b) non-operating revenues such as interest income or income
from the sale of assets not sold in the ordinary course of business;
(c) revenues attributable to services actually provided
off-site or otherwise away from such Facilities, such as home health
care, to persons that are not patients at such Facility;
(d) all revenues attributable to Tenant's Capital Additions
(as such revenues are calculated in accordance with Section 6.2.2(a));
and
(e) revenues attributable to child care services provided
primarily to employees of such Facilities.
Notice shall mean a notice given in accordance with Section 24.12.
Officer's Certificate shall mean a certificate signed by an officer of
Tenant duly authorized by the board of directors of Tenant.
Overdue Rate shall mean, on any date, a per annum rate of interest
equal to (a) two percent (2%), plus (b) a percentage equal to (i) the quotient
(expressed as a decimal) of the aggregate Minimum Rent payable for the
Collective Leased Properties for the then current Fiscal Year, divided by the
aggregate of the then Adjusted Purchase Prices for the Collective Leased
Properties, multiplied by (ii) 100; but in no event greater than the maximum
rate then permitted under applicable law.
Permitted Encumbrances shall mean, with respect to the applicable
Leased Property all rights, restrictions, and easements of record set forth on
Schedule B to the applicable owner's title insurance policy issued to Landlord
in accordance with the applicable Acquisition Agreement, plus any other such
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encumbrances as may have been consented to in writing by Landlord from time to
time.
Person shall mean any individual, corporation, general or limited
partnership, stock company or association, joint venture, association, company,
trust, bank, trust company, land trust, business trust, any government or agency
or political subdivision thereof or any other entity.
Pledged Shares: As defined in the HRP Shares Pledge Agreement.
Primary Intended Use: As defined in Section 4.1.1.
Purchase Price(s): With respect to the applicable Leased Property, the
amount identified as such in the applicable Lease.
Records: As defined in Section 7.2.
Relevant Percentage shall mean, with respect to the first quarter of
any Fiscal Year, twenty-five percent (25%), with respect to the second quarter
of such Fiscal Year, fifty percent (50%), with respect to the third quarter of
such Fiscal Year, seventy-five percent (75%), and with respect to the fourth
quarter of such Fiscal Year, one hundred percent (100%).
Rent shall mean, collectively, the Minimum Rent, Additional Rent and
Additional Charges payable with respect to the applicable Leased Property.
SEC shall mean the Securities and Exchange Commission.
Second Extended Term: As defined in the applicable Lease.
Sellers: As defined in the Recitals.
State shall mean the State or Commonwealth in which the applicable
Leased Property is located.
Subordinated Creditor shall mean any creditor of Tenant party to a
Subordination Agreement in favor of Landlord, including, without limitation,
GranCare, AMS Properties, Inc., a Delaware corporation and Affiliates of either
of them, respectively.
Subordination Agreement shall mean and include any agreement executed
by a Subordinated Creditor pursuant to which the payment and performance of
Tenant's obligations to such Subordinated Creditor are subordinated to the
payment and performance of Tenant's obligations to Landlord under the Leases and
the other Transaction Documents.
Subsidiary shall mean, with respect to any Person, any corporation or
other entity of which the securities or other ownership interests having
ordinary voting power to elect a
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majority of the board of directors or other Persons performing similar functions
are at the time directly or indirectly owned by such Person.
Substitute Properties: As defined in Article 16.
Substitution Date: As defined in Article 16.
Tenant shall mean GCI Health Care Centers, Inc., a Delaware
corporation, and its permitted successors and assigns.
Tenant's Capital Additions: As defined in Section 6.2.2.
Tenant's Personal Property shall mean (a) all motor vehicles and (b)
consumable inventory and supplies, furniture, furnishings, movable walls and
partitions, equipment and machinery and all other personal property of Tenant
acquired by Tenant on and after the date hereof and located on the applicable
Leased Property or used in Tenant's business on such Leased Property and all
modifications, replacements, alterations and additions to such personal property
installed at the expense of Tenant, other than any items included within the
definition of Fixtures or Leased Personal Property.
Term shall mean, collectively, for the applicable Lease, the Fixed Term
and the Extended Terms, to the extent properly exercised pursuant to the
provisions of Section 2.4, unless sooner terminated pursuant to the provisions
of this Master Lease Document or the applicable Lease.
Test Rate shall mean the minimum interest rate necessary to avoid
imputation of original issue discount or interest income under Sections 483 or
1272 of the Code or any similar provision.
Three Percent Additional Rent shall mean, for any Fiscal Year during
the Second Extended Term, the sum equal to three percent (3%) of all Excess Net
Patient Revenues for such Fiscal Year.
Transaction Documents shall mean the documents listed on Schedule 1
hereto, as such documents may be modified, amended or supplemented from time to
time, together with any and all other documents executed in connection with,
relating to, evidencing, or creating collateral or security for, the Leases.
Trustees shall mean the trustees of Landlord.
Unavoidable Delays shall mean delays due to strikes, lockouts,
inability to procure materials, power failure, acts of God, governmental
restrictions, enemy action, civil commotion, unavoidable casualty or any other
causes beyond the reasonable control of the party responsible for performing an
obligation hereunder, but in no event to exceed forty-five (45) days (provided
that lack of funds shall not be deemed a cause beyond
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the control of Tenant) so long as Tenant shall use reasonable efforts to
alleviate the cause of such delay and thereafter promptly perform such
obligation, and so long as, in any event, no permit, license, certificate of
need or authorization necessary to operate such Leased Property for its Primary
Intended Use is adversely affected or subject to any danger of revocation or
termination. In no event shall Tenant's obligation to pay the Rent be affected
by Unavoidable Delays.
Unsuitable for Its Primary Intended Use shall mean a state or condition
of the Facility located at the applicable Leased Property such that (a)
following any damage or destruction involving such Leased Property, such Leased
Property cannot reasonably be expected to be restored to substantially the same
condition as existed immediately before such damage or destruction, and as
otherwise required by Section 10.2.4, within a period equal to eighteen (18)
months following such damage or destruction or such shorter period of time as to
which business interruption insurance is available to cover Rent and other costs
related to such Leased Property following such damage or destruction, or (b) as
the result of a partial taking by Condemnation, such Facility cannot be
operated, in the good faith judgment of Landlord, on a commercially practicable
basis for its Primary Intended Use taking into account, among other relevant
factors, the number of usable beds, the amount of square footage, or the
revenues affected by such damage or destruction or partial taking.
Work: As defined in Section 10.2.4.
ARTICLE 2
LEASED PROPERTY AND TERM
2.1 Leased Property.
Upon and subject to the terms and conditions hereinafter set forth,
Landlord leases to Tenant and Tenant leases from Landlord with respect to each
applicable Lease all of the following (collectively, the "Leased Property"):
(a) that certain tract, piece and parcel of land, as more
particularly described in the applicable Lease (the "Land");
(b) all buildings, structures, Fixtures and other improvements of
every kind including, but not limited to, alleyways and
connecting tunnels, sidewalks, utility pipes, conduits and
lines (on-site and off-site), parking areas and roadways
appurtenant to such buildings and structures presently
situated upon the Land and all Capital Additions other than
Tenant's Capital Additions (collectively, the "Leased
Improvements");
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(c) all easements, rights and appurtenances relating to the Land
and the Leased Improvements;
(d) all equipment, machinery, fixtures, and other items of
property, now or hereafter permanently affixed to or
incorporated into the Leased 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, all of which, to the greatest extent permitted by
law, are hereby deemed by the parties hereto to constitute
real estate, together with all replacements, modifications,
alterations and additions thereto, but specifically excluding
all items included within the category of Tenant's Personal
Property (collectively the "Fixtures");
(e) all machinery, equipment, furniture, furnishings, moveable
walls or partitions, computers or trade fixtures or other
personal property of any kind or description used or useful in
Tenant's business on or in the Leased Improvements, and
located on or in the Leased Improvements, and all
modifications, replacements, alterations and additions to such
personal property, except items, if any, included within the
category of Fixtures, but specifically excluding all items
included within the category of Tenant's Personal Property
(collectively the "Leased Personal Property"); and
(f) all existing leases of space (including any security deposits
held by Tenant pursuant thereto) in the Leased Improvements to
tenants thereof.
2.2 Condition of Leased Property.
Tenant acknowledges receipt and delivery of possession of the
applicable Leased Property and Tenant accepts such Leased Property in its "as
is" condition, subject to the rights of parties in possession, the existing
state of title, including all covenants, conditions, restrictions, reservations,
mineral leases, easements and other matters of record or that are visible or
apparent on the Leased Property, all applicable Legal Requirements, the lien of
financing instruments, mortgages and deeds of trust, and such other matters
which would be disclosed by an inspection of such Leased Property and the record
title thereto or by an accurate survey thereof. TENANT REPRESENTS THAT IT HAS
INSPECTED SUCH LEASED PROPERTY AND ALL OF THE FOREGOING AND HAS FOUND THE
CONDITION THEREOF SATISFACTORY AND IS NOT RELYING ON ANY REPRESENTATION OR
WARRANTY OF LANDLORD OR LANDLORD'S AGENTS OR
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EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST
LANDLORD IN RESPECT OF THE CONDITION OF THE APPLICABLE LEASED PROPERTY. LANDLORD
MAKES NO WARRANTY OR REPRESENTATION EXPRESS OR IMPLIED, IN RESPECT OF THE
APPLICABLE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR
USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO
THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT. To the extent permitted by
law, however, Landlord hereby assigns to Tenant all of Landlord's rights to
proceed against any predecessor in title for breaches of warranties or
representations or for latent defects in the applicable Leased Property.
Landlord shall fully cooperate with ▇▇▇▇▇▇ in the prosecution of any such
claims, in ▇▇▇▇▇▇▇▇'s or ▇▇▇▇▇▇'s name, all at Tenant's sole cost and expense.
Tenant shall indemnify, defend, and hold harmless Landlord from and against any
loss, cost, damage or liability (including reasonable attorneys' fees) incurred
by Landlord in connection with such cooperation.
2.3 Fixed Term.
The initial term of the applicable Lease (the "Fixed Term") shall be
for a fixed term as set forth in such Lease.
2.4 Extended Term.
Provided that no Default shall have occurred and be continuing under
the Lease or Master Lease Document or any other applicable Lease and provided
that this Lease and each other Lease pertaining to the Collective Leased
Properties shall be in full force and effect (other than Leases that have been
terminated in accordance with the provisions hereof, or by the mutual agreement
of Landlord and Tenant, other than after an Event of Default), Tenant shall have
the right to extend the Term as set forth in the applicable Lease and below (the
"Extended Term(s)"); provided, however, ▇▇▇▇▇▇'s right to extend is subject to
Tenant exercising such right simultaneously with respect to all, and not less
than all, of the Collective Leased Properties.
Each Extended Term for the applicable Lease shall commence on the day
succeeding the expiration of the Fixed Term or the preceding Extended Term
therefor, as the case may be. All of the terms, covenants and provisions of such
Lease shall apply to each such Extended Term, except that the Minimum Rent for
each such Extended Term shall be as set forth in Section 3.1.1(b) (subject to
adjustment as provided in Section 3.1.1) with respect thereto. If Tenant shall
elect to exercise any of the aforesaid extensions, it shall do so by giving
Landlord Notice thereof not later than twenty-four (24) months prior to the
scheduled expiration of the then current Term of such Lease (Fixed or Extended,
as applicable), it being agreed that time is of the essence with respect to the
giving of such Notice. Tenant may not exercise its option for more than one such
Extended Term at a time. If Tenant shall fail to give any such Notice, the
Leases shall automatically
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terminate at the end of the Term then in effect and Tenant shall have no further
option to extend the Term of the Leases. If Tenant shall give such Notice, the
extension of the Leases shall be automatically effected without the execution of
any additional documents; it being understood and agreed, however, that Tenant
and Landlord shall execute such documents and agreements as either party shall
reasonably require to evidence the same. Notwithstanding the provisions of the
foregoing sentence, if, subsequent to the giving of such Notice, any Event of
Default shall occur, unless Landlord shall otherwise consent in writing, the
extension of the Leases shall cease to take effect and the Leases shall
automatically terminate at the end of the Term then in effect and Tenant shall
have no further option to extend the Term of the Leases.
ARTICLE 3
RENT
3.1 Rent.
Tenant shall pay to Landlord, in lawful money of the United States of
America which shall be legal tender for the payment of public and private debts,
at Landlord's address set forth above or at such other place or to such other
Person as Landlord from time to time may designate in a Notice to Tenant,
without offset, abatement, demand or deduction, Minimum Rent, Additional Rent
and Additional Charges, during the Term, except as hereinafter expressly
provided. All payments to Landlord shall be made by certified check, wire
transfer of immediately available funds or by other means acceptable to Landlord
in its sole discretion.
3.1.1 Minimum Rent:
(a) During Fixed Term. The Minimum Rent payable with respect to the
Fixed Term is the annual sum set forth in the applicable Lease (subject to
adjustment as provided herein), payable in advance in equal, consecutive monthly
installments as set forth in such Lease, on the first day of each calendar month
of the Fixed Term; provided, however, that the first monthly payment of Minimum
Rent shall be payable on the Commencement Date and that the first and last
monthly payments of Minimum Rent shall be prorated as to any partial month.
(b) Computation of Minimum Rent for the Extended Terms. (i) First
Extended Term. The Minimum Rent payable with respect to the First Extended Term
for the applicable Lease shall equal an annual sum (determined at the
commencement of such Extended Term for such Lease and subject to adjustment as
set forth herein) equal to the greater of (x) the Minimum Rent payable for the
immediately preceding twelve (12) months for such Lease, or (y) the product of
(1) the Adjusted Purchase Price for the applicable Leased Property, and (2) the
Adjusted Percentage Yield, payable in
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advance in equal, consecutive monthly installments on the first day of each
calendar month of the First Extended Term. The computation of such Adjusted
Percentage Yield shall be made using the information quoted in The Wall Street
Journal published on the fifth Business Day immediately preceding the
commencement of the First Extended Term. If there is no such quotation, the next
preceding day for which there is a quotation shall be used. If The Wall Street
Journal shall not be available, Landlord shall choose the quotation from another
recognized source.
(ii) Second Extended Term. The Minimum Rent payable with
respect to the Second Extended Term for the applicable Lease shall equal an
annual sum (determined at the commencement of such Extended Term for such Lease
and subject to adjustment as set forth herein) equal to the greater of (x) the
sum of (1) the Minimum Rent payable for the immediately preceding twelve (12)
months for such Lease and (2) the Additional Rent payable for the immediately
preceding twelve (12) months for such Lease allocable to such Leased Property
based upon the Excess Net Patient Revenues generated by such Leased Property
during such twelve (12) month period or (y) the Fair Market Rental for such
Leased Property, payable in advance in equal, consecutive monthly installments
on the first day of each calendar month of the Second Extended Term.
(c) Mid-Term Adjustments of Minimum Rent. During the Term of the
applicable Lease, on each Minimum Rent Adjustment Date, the Minimum Rent payable
under such Lease shall be adjusted to the annual sum equal to the greater of (i)
the Minimum Rent payable for the immediately preceding twelve (12) months for
such Lease or (ii) the product of (x) the Adjusted Purchase Price for the
applicable Leased Property and (y) the Adjusted Percentage Yield. The
computation of such Adjusted Percentage Yield shall be made using the
information quoted in The Wall Street Journal published on the fifth Business
Day immediately preceding such Minimum Rent Adjustment Date. If there is no such
quotation, the next preceding day for which there is a quotation shall be used.
If The Wall Street Journal shall not be available, Landlord shall choose the
quotation from another recognized source.
(d) Credits Against Minimum Rent.
(i) Excess Condemnation and Casualty Proceeds. Landlord shall
credit the amount or any Award or the proceeds of any insurance received by
Landlord in connection with a partial Condemnation or a partial casualty
involving the applicable Leased Property as described in Section 11.2 or 10.2.2,
and not applied by Landlord to the restoration of the applicable Leased Property
affected by such partial Condemnation or partial casualty as provided therein,
to the payment of Minimum Rent payable with respect to such Leased Property.
(ii) Notice. Landlord shall calculate the amount of such
credits within 15 days after the end of each calendar month, shall Notify Tenant
of such amount as soon as reasonably
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practicable after such calculation, and shall reduce the amount of the
installment of Minimum Rent next due after the date of such Notice by the amount
of such credits.
3.1.2 Additional Rent:
(a) Amount. For each Fiscal Year or portion thereof during the Term,
commencing with the Fiscal Year ending December 31, 1993, Tenant shall pay an
amount ("Additional Rent") with respect to the Collective Leased Properties
equal to the greater of:
(i) (A) during the Fixed Term and the First Extended
Term: (x) the Five Percent Additional Rent
for such Fiscal Year if no Additional Rent
Adjustment Date shall have occurred during
such Fiscal Year or portion thereof; or, if
an Additional Rent Adjustment Date shall
have occurred during such Fiscal Year or
portion thereof, (y) the sum of (1) the Five
Percent Additional Rent for such Fiscal Year
or portion thereof plus (2) two and one-half
percent (2.5%) of the Excess Net Patient
Revenues in respect of the period from such
Additional Rent Adjustment Date through the
end of such Fiscal Year;
(B) during the Second Extended Term: the Three
Percent Additional Rent for such Fiscal
Year; and
(ii) Additional Rent payable for the immediately preceding
Fiscal Year; provided, however, calculation of this amount shall not
include any Additional Rent allocable to any Leased Property (based
upon the Excess Net Patient Revenues generated by such Leased Property
during such Fiscal Year) which is no longer subject to a Lease.
(b) Quarterly Installments. Installments of Additional Rent for any
Fiscal Year or portion thereof shall be calculated and paid quarterly in arrears
as follows:
(i) For each quarter of such Fiscal Year during the Term, Tenant
shall pay an amount equal to the excess of (x) the greater of
(1) the Relevant Percentage for such quarter of the Additional
Rent payable for the immediately preceding Fiscal Year or (2)
the Additional Rent (calculated as provided in Section
3.1.2(a) above) payable for such quarter of such Fiscal Year
and for any previous quarter(s) of such Fiscal Year, over (y)
the sum of the installments of such Additional Rent payable
for any previous quarter(s) in such Fiscal Year.
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Installments of Additional Rent due with respect to a partial quarter
in any Fiscal Year shall be calculated on a pro rata basis as follows: a sum
equal to the excess of (1) the greater of (a) the product of (x) a fraction of
which the numerator is the number of days in such Fiscal Year, and the
denominator is 360, multiplied by (y) the Additional Rent payable for such
Leased Property for the immediately preceding Fiscal Year (calculated as
provided in Section 3.1.2(a)(ii) above), or (b) the sum of the Additional Rent
(calculated as provided in Section 3.1.2(a)) payable through the end of such
partial quarter over (2) the Additional Rent payable for any previous quarters
in such Fiscal Year.
(c) Date of Payment of Additional Rent. Tenant shall deliver to
Landlord an Officer's Certificate setting forth the calculation of Additional
Rent due and payable for each quarter of any Fiscal Year. Each quarterly payment
of Additional Rent for the applicable Leased Property is due and payable and
shall be delivered to Landlord, together with such Officer's Certificate, within
forty-five (45) days after the end of each quarter of any Fiscal Year (or in the
case of the final quarter in any Fiscal Year, eighty (80) days thereafter),
commencing with the quarter ending March 31, 1993, during the Term.
(d) Reconciliation of Additional Rent. In addition, on or before March
31, of each year, commencing with March 31, 1993, Tenant shall deliver to
Landlord certified audits of Tenant's financial operations for the preceding
Fiscal Year, together with a certificate from ▇▇▇▇▇ & Young or other certified
public accountants reasonably acceptable to Landlord, in form reasonably
acceptable to Landlord, setting forth the Net Patient Revenues for such
preceding Fiscal Year, and such other matters as Landlord may from time to time
reasonably request.
If the annual Additional Rent for said preceding Fiscal Year as shown
in the year-end certificate is less than the amount previously paid with respect
thereto by Tenant, Landlord shall grant Tenant a credit against Additional Rent
next coming due in the amount of such difference, together with interest at the
Test Rate, which interest shall accrue from the close of such preceding Fiscal
Year until the date such credit is applied or paid, as the case may be. If such
a credit cannot be made because the Term of the applicable Lease has expired
before the credit can be effected, Landlord will pay, by check, the amount of
such difference to Tenant, together with any interest which shall have accrued
as provided in the preceding sentence.
If the annual Additional Rent for the applicable Leased Property for
said preceding Fiscal Year as shown in the year-end certificate exceeds the
amount previously paid with respect thereto by Tenant, Tenant shall pay such
excess to Landlord at such time as the certificate is delivered, together with
interest at the Test Rate, which interest shall accrue from the close of such
preceding Fiscal Year until the date that such certificate is
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required to be delivered, and thereafter such interest shall accrue at the
Overdue Rate, until the amount of such difference shall be paid or otherwise
discharged.
(e) Confirmation of Additional Rent. Tenant shall utilize, or cause to
be utilized, an accounting system for the applicable Leased Property (which
shall be the same as that used for all the Collective Leased Properties) in
accordance with its usual and customary practices and in accordance with GAAP,
which will accurately record all Net Patient Revenues, and shall employ
independent accountants reasonably acceptable to Landlord, and Tenant shall
retain, for at least five (5) years after the expiration of each Fiscal Year,
reasonably adequate records conforming to such accounting system showing all Net
Patient Revenues for such Fiscal Year. Landlord, at its own expense except as
provided hereinbelow, shall have the right from time to time by its accountants
or representatives to audit the information set forth in the Officer's
Certificate referred to in subparagraph (c) above or the year-end certificate
referred to in subparagraph (d) above, and in connection with such audits to
examine ▇▇▇▇▇▇'s books and records with respect thereto (including supporting
data and sales and excise tax returns) subject to any prohibitions or
limitations on disclosure of any such data under applicable law or regulations,
including without limitation any duly enacted "Patients' Bill of Rights" or
similar legislation, including such limitations as may be necessary to preserve
the confidentiality of the facility-patient relationship and the
physician-patient privilege and/or other similar privilege or confidentiality
obligations. If any such audit discloses a deficiency in the payment of
Additional Rent, and either Tenant agrees with the result of such audit or the
matter is otherwise determined with Landlord, Tenant shall forthwith pay to
Landlord the amount of the deficiency, as finally agreed or determined, together
with interest at the Test Rate, or if no such Test Rate exists, then at a per
annum rate of interest equal to the Overdue Rate, from the date when said
payment should have been made to the date of payment thereof; provided, however,
that as to any audit that is commenced more than two (2) years after the date
Net Patient Revenues for any Fiscal Year are reported by Tenant to Landlord, the
deficiency, if any, with respect to such Net Patient Revenues shall bear
interest as permitted herein only from the date such determination of deficiency
is made unless such deficiency is the result of gross negligence or willful
misconduct on the part of Tenant. If any such audit discloses that the Net
Patient Revenues actually received by Tenant for any Fiscal Year exceed those
reported by Tenant by more than three percent (3%), Tenant shall pay the
reasonable cost of such audit and examination. If any such audit discloses that
Tenant paid more Additional Rent for any Fiscal Year than was due hereunder, and
either Landlord agrees with the result of such audit or the matter is otherwise
determined, Landlord shall grant Tenant a credit equal to the amount of such
overpayment against Rent due and payable or next coming due in the amount of
such difference, as finally agreed or determined, together with interest thereon
at
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the Test Rate, or if no such Test Rate exists, then at a per annum rate of
interest equal to the overdue Rate, from the date of such audit until the date
such credit is made; provided, however, if an Event of Default has occurred and
is continuing, such credit shall not include a credit for interest. If such a
credit cannot be made because the Term of the applicable Lease has expired
before the credit can be effected, Landlord will pay, by check, the amount of
such credit to Tenant.
Any proprietary information obtained by Landlord pursuant to the
provisions of the applicable Lease shall be treated as confidential, except that
such information may be used, subject to appropriate confidentiality safeguards,
in any litigation between the parties and except further that Landlord may
disclose such information to its prospective lenders. The obligations of Tenant
and Landlord contained in this Section 3.1.2 shall survive the expiration or
earlier termination of the applicable Lease.
3.1.3 Additional Charges.
In addition to the Minimum Rent and Additional Rent payable with
respect to the applicable Leased Property, Tenant shall pay and discharge as and
when due and payable the following (collectively, "Additional Charges"):
(a) Impositions. Subject to Article 8 relating to Permitted
Contests, Tenant shall pay, or cause to be paid, all Impositions before any
fine, penalty, interest or cost (other than any opportunity cost as a result of
a failure to take advantage of any discount for early payment) may be added for
non-payment, such payments to be made directly to the taxing authorities where
feasible, and shall promptly upon request, furnish to Landlord copies of
official receipts or other satisfactory proof evidencing such payments. If any
such Imposition may, at the option of the taxpayer, lawfully be paid in
installments (whether or not interest shall accrue on the unpaid balance of such
Imposition), Tenant 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 as the same become due and
before any fine, penalty, premium, further interest or cost may be added
thereto. Landlord, at its expense, shall, to the extent required or permitted by
applicable law, prepare and file all tax returns in respect of Landlord's net
income, gross receipts, sales and use, single business, transaction privilege,
rent, ad valorem, franchise taxes and taxes on its capital stock, and Tenant, at
its expense, shall, to the extent required or 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. Provided no
Default shall have occurred and be continuing, if any refund shall be due from
any taxing authority in respect of any Imposition paid by ▇▇▇▇▇▇, the same shall
be paid over to or retained by Tenant. Landlord and Tenant shall, upon request
of the other, provide such data as is maintained by the party to whom
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the request is made with respect to the applicable Leased Property as may be
necessary to prepare any required returns and reports. In the event governmental
authorities classify any property covered by the applicable Lease as personal
property, Tenant shall file all personal property tax returns in such
jurisdictions where it may legally so file. Each party shall, to the extent it
possesses the same, provide the other, upon request, with cost and depreciation
records necessary for filing returns for any property so classified as personal
property. Where Landlord is legally required to file personal property tax
returns, Landlord shall provide Tenant with copies of assessment notices in
sufficient time for Tenant to file a protest. All Impositions assessed against
such personal property shall be (irrespective of whether Landlord or Tenant
shall file the relevant return) paid by Tenant not later than the last date on
which the same may be made without interest or penalty. If the provisions of any
Facility Mortgage require deposits on account of Impositions to be made with
such Facility Mortgagee, provided the Facility Mortgagee has not elected to
waive such provision, Tenant shall either pay Landlord the monthly amounts
required at the time and place that payments of Minimum Rent are required and
Landlord shall transfer such amounts to such Facility Mortgagee or, pursuant to
written direction by Landlord, Tenant shall make such deposits directly with
such Facility Mortgagee.
Landlord shall give prompt Notice to Tenant of all Impositions payable
by Tenant hereunder of which Landlord at any time has knowledge, provided,
▇▇▇▇▇▇▇▇'s failure to give any such notice shall in no way diminish ▇▇▇▇▇▇'s
obligation hereunder to pay such Impositions.
(b) Utility Charges. Tenant shall pay or cause to be paid all
charges for electricity, power, gas, oil, water and other utilities used in the
applicable Leased Property during the Term.
(c) Insurance Premiums. Tenant shall pay or cause to be paid,
as Additional Charges, all premiums for the insurance coverage required to be
maintained pursuant to Article 9.
(d) Other Charges. Tenant shall pay or cause to be paid, as
Additional Charges, all other amounts, liabilities and obligations which Tenant
assumes or agrees to pay under the applicable Lease, including, without
limitation, all agreements to indemnify Landlord under Sections 4.4 and 9.7.
(e) Reimbursement for Additional Charges. If Tenant pays or
causes to be paid property taxes or similar Additional Charges attributable to
periods after the end of the Term, whether upon expiration or sooner termination
of the applicable Lease (other than termination following an Event of Default)
and Tenant has not exercised its right to purchase the Collective Leased
Properties as provided herein, Tenant may, within sixty (60) days of the end of
the Term, provide Notice to Landlord of its estimate of such amounts. Landlord
shall promptly reimburse Tenant for all
-24-
payments of such taxes and other similar Additional Charges that are
attributable to any period after the Term of the Lease.
(f) Sales Tax. Tenant shall also pay, as Additional Charges,
with all Rent due under the applicable Lease an amount equal to all sales, use,
excise and other taxes now or hereafter imposed by any lawful authority on all
amounts due or required under the applicable Lease and classified as Rent by any
such authority.
3.2 Late Payment of Rent.
If any installment of Minimum Rent, Additional Rent or Additional
Charges (but only as to those Additional Charges which are payable directly to
Landlord) shall not be paid on its due date, Tenant shall pay Landlord, on
demand, as Additional Charges, a late charge (to the extent permitted by law)
computed at the Overdue Rate on the amount of such installment, from the due
date of such installment to the date of payment thereof. To the extent that
Tenant pays any Additional Charges directly to Landlord pursuant to any
requirement of the applicable Lease, Tenant shall be relieved of its obligation
to pay such Additional Charges to the entity to which they would otherwise be
due.
In the event of any failure by Tenant to pay any Additional Charges
when due, Tenant shall promptly pay and discharge, as Additional Charges, every
fine, penalty, interest and cost which may be added for non-payment or late
payment of such items. Landlord shall have all legal, equitable and contractual
rights, powers and remedies provided either in the applicable Lease or by
statute or otherwise in the case of non-payment of the Additional Charges as in
the case of non-payment of the Minimum Rent and Additional Rent.
3.3 Net Lease.
The Rent shall be absolutely net to Landlord, so that the applicable
Lease shall yield to Landlord the full amount of the installments or amounts of
Rent throughout the Term, subject to any other provisions of the applicable
Lease or this Master Lease Document which expressly provide for adjustment or
abatement of Rent or other charges.
3.4 No Termination, Abatement, Etc.
Except as otherwise specifically provided in the applicable Lease or in
this Master Lease Document, Tenant, to the extent permitted by law, shall remain
bound by the applicable Lease in accordance with its terms and shall neither
take any action without the consent of Landlord to modify, surrender or
terminate the same, nor seek, nor be entitled to any-abatement, deduction,
deferment or reduction of the Rent, or set-off against the Rent, nor shall the
respective obligations of Landlord and Tenant be otherwise affected by reason of
(a) any damage to, or destruction
-25-
of, the applicable Leased Property or any portion thereof from whatever cause or
any Condemnation, (b) the lawful or unlawful prohibition of, or restriction upon
Tenant's use of the applicable Leased Property, or any portion thereof, or the
interference with such use by any Person or by reason of eviction by paramount
title; (c) any claim which Tenant may have against Landlord by reason of any
default or breach of any warranty by Landlord under the applicable Lease or any
other agreement between Landlord and Tenant, or to which Landlord and Tenant are
parties, (d) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Landlord or any assignee or transferee of Landlord, or (e) for any
other cause whether similar or dissimilar to any of the foregoing. Tenant hereby
waives all rights arising from any occurrence whatsoever, which may now or
hereafter be conferred upon it by law, to (a) modify, surrender or terminate the
applicable Lease or quit or surrender the applicable Leased Property or any
portion thereof, or (b) entitle Tenant to any abatement, reduction, suspension
or deferment of the Rent or other sums payable or other obligations to be
performed by Tenant hereunder, except as otherwise specifically provided in the
applicable Lease or in this Master Lease Document. The obligations of Tenant
hereunder shall be separate and independent covenants and agreements, and the
Rent and all other sums payable by Tenant hereunder shall continue to be payable
in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of the applicable Lease or by termination of
the applicable Lease other than by reason of an Event of Default.
ARTICLE 4
USE OF THE APPLICABLE LEASED PROPERTY
4.1 Permitted Use.
4.1.1 Primary Intended Use.
Tenant shall, at all times during the Term, and at any other time
Tenant shall be in possession of the Leased Property, continuously use or cause
to be used the applicable Leased Property as a licensed nursing home or as
otherwise described on Exhibit A-1 hereto and for such other uses as may be
incidental or necessary thereto (such use being hereinafter referred to as such
Leased Property's "Primary Intended Use"). Tenant shall not use the applicable
Leased Property or any portion thereof for any other use without the prior
written consent of Landlord (which consent shall not be unreasonably withheld or
delayed). No use shall be made or permitted to be made of the applicable Leased
Property and no acts shall be done thereon which will cause the cancellation of
any insurance policy covering such Leased Property or any part thereof (unless
another adequate policy is available), nor shall Tenant sell or otherwise
provide to residents or
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patients therein, or permit to be kept, used or sold in or about such Leased
Property any article which may be prohibited by law or by the standard form of
fire insurance policies, or any other insurance policies required to be carried
hereunder, or fire underwriter's regulations. Tenant shall, at its sole cost,
comply with all of the requirements pertaining to the applicable Leased Property
or other improvements of any insurance board, association, organization or
company necessary for the maintenance of insurance, as herein provided, covering
such Leased Property and Tenant's Personal Property, including, without
limitation, the Insurance Requirements.
4.1.2 Necessary Approvals.
Tenant shall proceed with all due diligence and exercise its best
efforts to maintain all approvals necessary to use and operate, for its Primary
Intended Use, the applicable Leased Property and the Facility located at such
Leased Property under applicable local, state and federal law, and without
limiting the foregoing, shall use its best efforts to maintain appropriate
licenses and certifications and approvals for Medicare and Medicaid
reimbursement.
4.1.3 Continuous Operation, Etc.
Tenant shall use its best efforts to operate continuously the
applicable Leased Property as a provider of health care or related services in
accordance with its Primary Intended Use. Tenant will not take or omit to take
any action, the taking or omission of which would materially impair the value or
the usefulness of such Leased Property or any part thereof for its Primary
Intended Use.
4.1.4 Lawful Use, Etc.
Tenant shall not use or suffer or permit the use of the applicable
Leased Property and Tenant's Personal Property for any unlawful purpose. Tenant
shall not commit or suffer to be committed any waste on the applicable Leased
Property, or in the Facility located on the applicable Leased Property located
thereon, nor shall Tenant cause or permit any nuisance thereon or therein.
Tenant shall neither suffer nor permit the applicable Leased Property or any
portion thereof, including any Capital Addition, or Tenant's Personal Property,
to be used in such a manner as (i) might reasonably tend to impair Landlord's
(or Tenant's, as the case may be) title thereto or to any portion thereof, or
(ii) may reasonably make possible a claim or claims for adverse usage or adverse
possession by the public, as such, or of implied dedication of the applicable
Leased Property or any portion thereof.
4.2 Compliance with Legal and Insurance Requirements, Etc.
Subject to the provisions of Article 8 hereof, Tenant, at its sole
expense, shall promptly (i) comply with all material Legal
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Requirements and all Insurance Requirements in respect of the use, operation,
maintenance, repair, alteration and restoration of the applicable Leased
Property, and (ii) procure, maintain and comply with all appropriate licenses,
certificates of need, permits, provider agreements and other authorizations and
agreements required for any use of the applicable Leased Property and Tenant's
Personal Property then being made, and for the proper erection, installation,
operation and maintenance of the applicable Leased Property or any part thereof,
including, without limitation, any Capital Additions, including compliance with
all Legal Requirements pertaining thereto.
4.3 Compliance with Medicaid and Medicare Requirements.
Tenant shall, at its sole cost and expense, make whatever improvements
(capital or ordinary) as are required to conform the applicable Leased Property
to such standards as may, from time to time, be required by Federal Medicare
(Title 18) or Medicaid (Title 19) skilled nursing facility and/or nursing
facility programs, if applicable, or any other applicable programs or
legislation, or capital improvements required by any other governmental agency
having jurisdiction over such Leased Property as a condition of the continued
operation of such Leased Property for its Primary Intended Use.
4.4 Environmental Matters.
Tenant shall not store, spill upon, dispose of or transfer to or from
the applicable Leased Property any Hazardous Substance, except that Tenant may
store, transfer and dispose of Hazardous Substances in compliance with all
Applicable Laws. Tenant shall maintain the applicable Leased Property at all
times free of any Hazardous Substance (except such Hazardous Substances as are
maintained in compliance with all Applicable Laws). Tenant shall, as to the
applicable Leased Property, promptly: (a) notify Landlord in writing of any
change in the nature or extent of such Hazardous Substances maintained, (b)
transmit to Landlord a copy of any Community Right to Know report, which is
required to be filed, if any, by Tenant for the applicable Leased Property
pursuant to ▇▇▇▇ Title III or any other Applicable Law, (c) transmit to Landlord
copies of any citations, orders, notices or other governmental communications
received by Tenant or its agents or representatives with respect thereto
(collectively, "Environmental Notice"), which Environmental Notice requires a
written response or any action to be taken and/or if such Environmental Notice
gives notice of and/or could give rise to a violation of any Applicable Law
and/or could give rise to any cost, expense, loss or damage (an "Environmental
Obligation"), (d) observe and comply with any and all Applicable Laws relating
to the use, maintenance and disposal of Hazardous Substances and all orders or
directives from any official, court or agency of competent jurisdiction relating
to the use or maintenance or requiring the removal, treatment, containment or
other disposition thereof, and (e) pay or otherwise dispose of any fine, charge
or
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Imposition related thereto, unless Tenant shall contest the same in good faith
and by appropriate proceedings and the right to use and the value of such Leased
Property is not materially and adversely affected thereby.
For purposes of this Section 4.4, (i) the term "Applicable Laws" shall
mean and include all applicable Federal, state or local statutes, laws,
ordinances, rules and regulations, licensing requirements or conditions, whether
now existing or hereafter arising, relating to Hazardous Substances; and (ii)
the term "Hazardous Substances" shall mean hazardous substances (as defined by
the Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA), as now in effect or as hereafter from time to time amended), hazardous
wastes (as defined by the Resource Conservation and Recovery Act (RCRA), as now
in effect or as hereafter from time to time amended), any hazardous waste,
hazardous substance, pollutant or contaminant, oils, radioactive materials,
asbestos in any form or condition, or any pollutant or contaminant or hazardous,
dangerous or toxic chemicals, materials or substances within the meaning of any
other applicable Federal, state or local law, regulation, ordinance or
requirements relating to or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, substance or materials, all
as now in effect or hereafter from time to time amended.
If at any time prior to the termination of the applicable Lease,
Hazardous Substances are discovered on the applicable Leased Property, Tenant
hereby agrees to take all actions, and to incur any and all expense, as may be
reasonably necessary and as may be required by any municipal, State or Federal
agency or other governmental entity or agency having jurisdiction thereof, (i)
to clean up and remove from and about the applicable Leased Property all
Hazardous Substances thereon, (ii) to contain and prevent any further release or
threat of release of Hazardous Substances on or about the applicable Leased
Property and (iii) to use good faith efforts to eliminate any further release or
threat of release of Hazardous Substances on or about the applicable Leased
Property.
Six (6) months prior to expiration of the final Term of the applicable
Lease, Tenant, at its sole cost and expense, shall designate a qualified
environmental engineer, satisfactory to Landlord in its sole discretion, which
engineer shall conduct an environmental investigation of the applicable Leased
Property and prepare an environmental site assessment report (the "Environmental
Report"). The scope of the investigation must include the matters set forth on
Schedule II hereto and otherwise may be limited to review of relevant records,
interviews with persons knowledgeable about the applicable Leased Property and
relevant governmental agencies and a site inspection of the applicable Leased
Property, any buildings, the fenceline of the applicable Leased Property and
adjoining properties (Phase I), if such investigation in the opinion of such
engineer clearly indicates that the applicable Leased Property is
environmentally sound and is free from oil, asbestos, radon and other Hazardous
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Substances except in compliance with Applicable Laws. Otherwise, the
investigation shall include a more detailed physical site inspection,
appropriate testing, subsurface and otherwise, and review of historical records
(Phase II) to demonstrate the compliance of the applicable Leased Property with
Applicable Laws and the absence of Hazardous Substances.
All preliminary drafts of such Environmental Report, and supplements
and amendments thereto, shall be provided to Landlord contemporaneously with
delivery thereof to Tenant. With respect to any recommendations contained in the
Environmental Report, violations of Applicable Laws and/or the existence of any
conditions at the applicable Leased Property which could give rise to an
Environmental Obligation, Tenant shall promptly give Notice to Landlord of all
action Tenant proposes to take in connection therewith and Tenant shall promptly
take all actions, and incur any and all expense, as may be reasonably necessary
and as may be required by any municipal, State or Federal agency or other
governmental entity or agency having jurisdiction thereof and as may be required
by Landlord, (i) to clean up, remove or remediate from and about the applicable
Leased Property all Hazardous Substances thereon, (ii) to contain, prevent and
eliminate any further release or threat of release of Hazardous Substances on or
about the applicable Leased Property, and (iii) to otherwise eliminate such
violation or condition from the applicable Leased Property to the reasonable
satisfaction of Landlord.
Tenant shall protect, indemnify and hold harmless Landlord and each
Facility Mortgagee, their trustees, officers, agents, employees and
beneficiaries, and any of their respective successors or assigns (hereafter the
"Indemnitees," and when referred to singly, an "Indemnitee") for, from and
against any and all debts, liens, claims, causes of action, administrative
orders or notices, costs, fines, penalties or expenses, including attorney's
fees suffered or incurred by the Indemnitees resulting from, either directly or
indirectly, the presence in, upon or under the soil or ground water of the
applicable Leased Property or any properties surrounding the applicable Leased
Property of any Hazardous Substances in violation of any Applicable Law.
▇▇▇▇▇▇'s duty herein includes but is not limited to costs associated with
personal injury or property damage claims as a result of the presence of
Hazardous Substances in, upon or under the soil or ground water of the
applicable Leased Property in violation of any Applicable Law. Upon written
request of Landlord, Tenant shall undertake the defense, at ▇▇▇▇▇▇'s sole cost
and expense, of any indemnification duties set forth herein. In the event that
▇▇▇▇▇▇ refuses to undertake the defense of an Indemnitee promptly after
receiving such notice, such Indemnitee may undertake its own defense.
Tenant shall, upon demand, pay to Landlord, as an Additional Charge,
any reasonable cost or expense incurred by Landlord and growing out of a failure
of Tenant strictly to observe and perform the foregoing requirements (including,
without limitation,
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reasonable attorneys' fees), which amounts shall bear interest from the date
incurred until paid at the Overdue Rate.
The provisions of this Section 4.4 shall survive the expiration or
sooner termination of the applicable Lease.
ARTICLE 5
MAINTENANCE AND REPAIRS
5.1 Maintenance and Repair.
5.1.1 Tenant's Obligations.
Tenant shall, at its sole cost and expense, keep the
applicable Leased Property and all private roadways, sidewalks and
curbs appurtenant thereto (and Tenant's Personal Property) in good
order and repair, reasonable wear and tear excepted (whether or not the
need for such repairs occurs as a result of Tenant's use, any prior
use, the elements or the age of such Leased Property or Tenant's
Personal Property, or any portion thereof), and, shall promptly make
all necessary and appropriate repairs and replacements thereto of every
kind and nature, whether interior or exterior, structural or
nonstructural, ordinary or extraordinary, foreseen or unforeseen or
arising by reason of a condition existing prior to the commencement of
the Term (concealed or otherwise), provided, Tenant shall be permitted
to prosecute claims against Landlord's predecessors in title for breach
of any representation or warranty made to or on behalf of Landlord, or
for any latent defects in such Leased Property. All repairs shall be
made in good, workmanlike and first-class manner, in accordance with
all applicable federal, state and local statutes, ordinances, by-laws,
codes, rules and regulations relating to any such work. Tenant will not
take or omit to take any action, the taking or omission of which would
materially impair the value or the usefulness of the applicable Leased
Property or any part thereof for its Primary Intended Use. Tenant's
obligations under this Section 5.1.1 as to the applicable Leased
Property shall be limited, in the event of any casualty or Condemnation
involving such Leased Property, as set forth in Sections 10.2.1 and
11.1. Notwithstanding this Section 5.1.1, Tenant's obligations with
respect to Hazardous Substances are as set forth in Article 4.
5.1.2 Landlord's Obligations.
Landlord shall not, under any circumstances, be required to
build or rebuild any improvement on the applicable Leased Property, or
to make any repairs, replacements, alterations, restorations or
renewals of any nature or description to the applicable Leased
Property, whether ordinary or
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extraordinary, structural or nonstructural, foreseen or unforeseen, or
to make any expenditure whatsoever with respect thereto, in connection
with the applicable Lease, or to maintain the applicable Leased
Property in any way, except as specifically provided herein. Tenant
hereby waives, to the extent permitted by law, the right to make
repairs at the expense of Landlord pursuant to any law in effect at the
time of the execution of the applicable Lease or hereafter enacted.
Landlord shall have the right to give, record and post, as appropriate,
notices of nonresponsibility under any mechanic's lien laws now or
hereafter existing.
5.1.3 Nonresponsibility of Landlord; No Mechanics Liens.
▇▇▇▇▇▇▇▇'s interest in the Leased Property shall not be
subject to liens for Capital Additions made by the Tenant, and Tenant
shall have no power or authority to create any lien or permit any lien
to attach to the Leased Property or the present estate, reversion or
other estate of Landlord in the Leased Property or on the building or
other improvements thereon as a result of Capital Additions made by
Tenant or for any other cause or reason. All materialmen, contractors,
artisans, mechanics and laborers and other persons contracting with
Tenant with respect to the Leased Property or any part thereof, are
hereby charged with notice that such liens are expressly prohibited and
that they must look solely to Tenant to secure payment for any work
done or material furnished for Capital Additions by Tenant or for any
other purpose during the term of the applicable Lease.
Nothing contained in this Lease shall be deemed or construed
in any way as constituting the consent or request of Landlord., express
or implied by inference or otherwise, to any contractor, subcontractor,
laborer or materialmen for the performance of any labor or the
furnishing of any materials for any alteration, addition, improvement
or repair to the Leased Property or any part thereof or as giving
Tenant any right, power or authority to contract for or permit the
rendering of any services or the furnishing of any materials that would
give rise to the filing of any lien against the Leased Property or any
part thereof nor to subject Landlord's estate in the Leased Property or
any part thereof to liability under the mechanic's Lien Law of the
State in any way, it being expressly understood Landlord's estate shall
not be subject to any such liability.
5.2 Tenant's Personal Property.
Tenant 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 Tenant's Personal Property, and Tenant may,
subject to the conditions set forth below, remove the same at any time, provided
that no Default
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has occurred and is continuing. Tenant shall provide and maintain during the
entire Term all such Tenant's Personal Property as shall be necessary in order
to operate the Facility located at the Leased Property in compliance with all
applicable licensure and certification requirements, in compliance with
applicable Legal Requirements and Insurance Requirements and otherwise in
accordance with customary practice in the industry for the Primary Intended Use.
All of Tenant's Personal Property not removed by Tenant on or prior to the
expiration or earlier termination of the applicable Lease of the applicable
Leased Property where such Tenant's Personal Property is located shall be
considered abandoned by Tenant and may be appropriated, sold, destroyed or
otherwise disposed of by Landlord without the necessity of first giving notice
thereof to Tenant, without any payment to Tenant and without any obligation to
account therefor. Tenant shall, at its expense, restore such Leased Property to
the condition required by Section 5.3, including repair of all damage to such
Leased Property caused by the removal of Tenant's Personal Property, whether
effected by Tenant or Landlord.
If Tenant uses any item of tangible personal property (other than motor
vehicles) on, or in connection with, the Leased Property which belongs to anyone
other than Tenant and which is material to the operation of the Facility for its
Primary Intended Use, Tenant shall use good faith efforts to require the
agreement permitting such use to provide that Landlord or its designee may
assume Tenant's rights under such agreement upon exercise of Landlord's rights
hereunder pursuant to Section 7.2.
5.3 Yield Up.
Upon the expiration or sooner termination of the applicable Lease
(unless the applicable Leased Property is transferred to Tenant as provided
herein), Tenant shall vacate and surrender the applicable Leased Property to
Landlord in the condition in which such Leased Property was on the Commencement
Date, except as repaired, rebuilt, restored, altered or added to as permitted or
required by the provisions of such Lease, ordinary wear and tear excepted (and
casualty damage and condemnation, in the event that the applicable Lease is
terminated following a casualty or total condemnation in accordance with Article
10 or Article 11).
In addition, upon the expiration or earlier termination of the
applicable Lease unless the applicable Leased Property is transferred to Tenant
as provided herein, Tenant shall, at Landlord's sole cost and expense, use its
best efforts to transfer to and cooperate with Landlord or Landlord's nominee in
connection with the processing of all applications for licenses, operating
permits and other governmental authorizations and all contracts, including
contracts with governmental or quasi-governmental entities which may be
necessary for the operation of the Facility located on such Leased Property. If
requested by Landlord, ▇▇▇▇▇▇ will continue to manage such Facility after the
expiration of the Term and for as long thereafter as is necessary to obtain all
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necessary licenses, operating permits and other governmental authorizations, on
such reasonable terms (which shall include an agreement to reimburse Tenant for
its reasonable out-of-pocket costs and expenses, and reasonable administrative
costs) as Landlord shall request.
5.4 Encroachments, Restrictions, Etc.
If any of the Leased Improvements on the applicable Leased Property
shall, at any time, encroach upon any property, street or right-of-way adjacent
to such Leased Property, other than Permitted Encumbrances, or shall violate the
agreements or conditions contained in any lawful restrictive covenant or other
agreement affecting such Leased Property, or any part thereof, or shall impair
the rights of others under any easement or right-of-way to which such Leased
Property is subject, upon the request of Landlord (but only as to any
encroachment, violation or impairment that is not a Permitted Encumbrance) or of
any Person affected by any such encroachment, violation or impairment, Tenant
shall, at its sole cost and expense, subject to its right to contest the
existence of any encroachment, violation or impairment in accordance with the
provisions of Article 8, either (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 Landlord or
Tenant, or (b) make such changes in the Leased Improvements and take such other
actions, as are reasonably practicable to remove such encroachment, and 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 ensure the continued operation of the Leased Improvements
for the Primary Intended Use substantially in the manner and to the extent the
Leased Improvements were operated prior to the assertion of such violation,
impairment or encroachment. Any such alteration shall be made in conformity with
the applicable requirements of this Article 5. Tenant's obligations under this
Section 5.4 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.
5.5 Landlord to Grant Easements, Etc.
Landlord will, from time to time, so long as no Default shall have
occurred and be continuing, at the request of Tenant with respect to the
applicable Leased Property and at Tenant's sole cost and expense, (a) grant
easements and other rights in the nature of easements with respect to such
Leased Property to third parties, (b) release existing easements or other rights
in the nature of easements which are for the benefit of such Leased Property,
(c) dedicate or transfer unimproved portions of such Leased Property for road,
highway or other public purposes, (d) execute petitions to have such Leased
Property annexed to any municipal corporation or utility district, (e) execute
amendments to any covenants and restrictions affecting such Leased Property
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and (f) execute and deliver to any Person any instrument appropriate to confirm
or effect such grants, release, dedications, transfers, petitions and amendments
(to the extent of its interests in such Leased Property); provided that Landlord
shall have reasonably determined that such grant, release, dedication, transfer,
petition or amendment is not materially detrimental to the operation of such
Leased Property for its Primary Intended Use and does not materially reduce the
value of such Leased Property, and that Landlord shall have received an
Officer's Certificate confirming such determination, and such additional
information as Landlord may reasonably request.
ARTICLE 6
CAPITAL ADDITIONS, ETC.
6.1 Construction of Capital Additions to the Leased Property.
Tenant shall not construct or install Capital Additions on the
applicable Leased Property without obtaining Landlord's prior written consent,
provided that no consent shall be required for any Capital Addition so long as
(a) the Capital Additions Costs for such Capital Addition are less than
$250,000, (b) such construction or installation would not adversely affect or
violate any Legal Requirement or Insurance Requirement applicable to the
applicable Leased Property, (c) such construction or installation is not
expected, in Tenant's reasonable opinion, to result in a decrease of the Net
Patient Revenues for such Leased Property on an aggregate basis for the twelve
(12) month period following completion of construction, and (d) Landlord shall
have received an Officer's Certificate certifying as to the satisfaction of the
conditions set out in clauses (a) (b) and (c) above. If ▇▇▇▇▇▇▇▇'s consent is
required, prior to commencing construction of any Capital Addition, Tenant shall
submit to Landlord, in writing, a proposal setting forth, in reasonable detail,
any proposed Capital Addition and shall provide to Landlord, such plans and
specifications, permits, licenses, contracts and other information concerning
the proposed Capital Addition as Landlord may reasonably request. Without
limiting the generality of the foregoing, such proposal shall indicate the
approximate projected cost of constructing such Capital Addition, the use or
uses to which it will be put and a good faith estimate of the change, if any, in
the Net Patient Revenues that Tenant anticipates will result from such Capital
Addition. No Capital Addition shall be made which would tie in or connect any
Leased Improvement on the applicable Leased Property with any other improvements
on property adjacent to such Leased Property (and not part of the Land)
including, without limitation, tie-ins of buildings or other structures or
utilities. Tenant shall not finance the cost of any construction of any Capital
Addition without the prior written consent of Landlord, which consent may be
withheld by Landlord in Landlord's sole discretion. Any Capital Additions
(including
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Tenant's Capital Additions) shall, upon the expiration or sooner termination of
the applicable Lease for such Leased Property, pass to and become the property
of Landlord, free and clear of all encumbrances other than Permitted
Encumbrances but subject to Landlord's obligation to compensate Tenant for
Tenant's Capital Additions as provided below.
6.2 Capital Additions Financed or Paid For by Tenant.
6.2.1 Financing of Capital Additions.
Provided that Tenant has obtained the prior written consent of Landlord
in each instance, Tenant may arrange for financing for Capital Additions from
third party lenders, provided, however that (i) the terms and conditions of any
such financing shall be subject to the prior approval of Landlord; and (ii) if
Landlord consents to the grant thereof, which consent may be withheld in the
sole discretion of Landlord, any security interests in any property of Tenant,
including without limitation the applicable Leased Property, shall be expressly
and fully subordinated to the applicable Lease and to the interest of Landlord
in the applicable Leased Property and to the rights of any Facility Mortgagee.
6.2.2 Amendments to Lease.
If, pursuant to the provisions of this Lease, Tenant either pays for or
arranges financing (to the extent permitted in Section 6.2.1) to pay for the
costs of construction or installation of any Capital Addition ("Tenant's Capital
Additions") (but excluding, in any event, any Capital Addition financed by or
through Landlord), this Lease shall be and hereby is amended to provide as
follows:
(a) Upon completion of any such Tenant's Capital Addition, Net
Patient Revenues attributable to such Tenant's Capital Addition shall
be excluded from Net Patient Revenues of the applicable Leased Property
for purposes of calculating Additional Rent. The Net Patient Revenues
attributable to any such Tenant's Capital Addition shall be deemed to
be an amount (the "Added Value Percentage") which bears the same
proportion to the total Net Patient Revenues from the entire Leased
Property (including all Capital Additions) as the Fair Market Added
Value of such Capital Addition bears to the Fair Market Value of the
entire Leased Property (including all Capital Additions) immediately
after completion of such Tenant's Capital Addition. The Added Value
Percentage for any Tenant's Capital Additions shall remain in effect
until any subsequent Capital Addition is completed, at which time the
Added Value Percentage will again be determined as provided above.
(b) There shall be no adjustment in the Minimum Rent by reason
of any such Tenant's Capital Addition.
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(c) upon the expiration or earlier termination of the
applicable Lease (but if the applicable Lease is terminated by reason
of an Event of Default, only after Landlord is fully compensated for
all damages resulting therefrom), Landlord shall compensate Tenant for
all Tenant's Capital Additions in any of the following ways determined
in Landlord's sole discretion:
(i) By purchasing such Tenant's Capital Additions from
Tenant for cash in the amount of the then Fair Market
Added Value of such Tenant's Capital Additions; or
(ii) By making such other arrangement regarding such
compensation as shall be mutually acceptable to
Landlord and Tenant; or
(iii) If such termination is by reason of an Event of
Default:
(1) By purchasing such Tenant's Capital
Additions from Tenant by delivering to
Tenant Landlord's purchase money promissory
note in the amount of the Fair Market Added
Value, which note shall be on then
commercially reasonable terms and secured by
a mortgage or deed of trust on the
applicable Leased Property and such Tenant's
Capital Additions subject to all existing
mortgages and encumbrances on such Leased
Property and such Tenant's Capital Additions
at the time of such purchase; or
(2) By assigning to Tenant the right to receive
an amount equal to the Added Value
Percentage (determined as of the date of the
expiration or earlier termination of this
Lease) of all rent and other consideration
receivable by Landlord under any reletting
or other disposition of the Leased Property
and such Tenant's Capital Additions, after
deducting from such rent all costs and
expenses incurred by Landlord in connection
with such reletting or other disposition of
the Leased Property and such Tenant's
Capital Additions and all costs and expenses
of operating and maintaining the Leased
Property and such Tenant's Capital Additions
during the term of any such new lease which
are not borne by the tenant thereunder, with
the provisions of this Section 6.2.2 to
remain in effect until the sale or other
final disposition of the Leased Property and
such Tenant's Capital Additions, at which
time the Fair Market Added Value of such
Tenant's Capital Addition shall be
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immediately due and payable, such obligation
to be secured by a mortgage on the Leased
Property and such ▇▇▇▇▇▇'s Capital
Additions, subject to all existing mortgages
and encumbrances on the Leased Property at
the time of such purchase and assignment.
6.3 Capital Additions Financed by Landlord.
If Landlord shall, at the request of Tenant and in Landlord's sole
discretion, elect to finance the proposed Capital Addition, Tenant shall provide
Landlord with such information as Landlord may from time to time request.
If Landlord shall finance the proposed Capital Addition, Tenant shall
pay to Landlord all reasonable costs and expenses paid or incurred by Landlord
and any Facility Mortgagee or Lending Institution which has committed to finance
such Capital Addition in connection therewith, including, but not limited to,
(a) the reasonable attorneys' fees and expenses, (b) all printing , expenses,
(c) all filing, registration and recording taxes and fees, (d) documentary stamp
taxes, (e) title insurance charges, appraisal fees, and rating agency fees, and
(f) commitment fees.
6.4 Non-Capital Additions.
Tenant shall have the right, at Tenant's sole cost and expense, to make
additions, modifications or improvements to the applicable Leased Property which
are not Capital Additions ("Non-Capital Additions") from time to time as Tenant,
in its discretion, may deem desirable for the Primary Intended Use, provided
that such action will not materially alter the character or purpose or
materially detract from the value, operating efficiency or revenue-producing
capability of such Leased Property, or adversely affect the ability of Tenant to
comply with the provisions of the applicable Lease, and, without limiting the
foregoing, will not adversely affect or violate any Legal Requirement or
Insurance Requirement applicable to the applicable Leased Property. All such
Non-Capital Additions shall, upon expiration or earlier termination of the
applicable Lease for such Leased Property, pass to and become the property of
Landlord, free and clear of all liens and encumbrances, other than Permitted
Encumbrances.
6.5 Salvage.
All materials which are scrapped or removed in connection with the
making of either Capital Additions or Non-Capital Additions or repairs required
by Article 5 shall be or become the property of the party that paid for such
work.
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ARTICLE 7
LIENS
7.1 Liens.
Subject to Article 8, Tenant shall not directly or indirectly create or
allow to remain and shall promptly discharge, at its expense, any lien,
encumbrance, attachment, title retention agreement or claim upon the applicable
Leased Property or Tenant's leasehold interest in such Leased Property or any
attachment, levy, claim or encumbrance in respect of the Rent, other than (a)
Permitted Encumbrances, (b) restrictions, liens and other encumbrances which are
consented to in writing by Landlord, (c) liens for those taxes of Landlord which
▇▇▇▇▇▇ is not required to pay hereunder, (d) subleases permitted by Article 17,
(e) liens for Impositions or for sums resulting from noncompliance with Legal
Requirements so long as (i) the same are not yet payable, or (ii) are being
contested in accordance with Article 8, (f) liens of mechanics, laborers,
materialmen, suppliers or vendors incurred in the ordinary course of business
that are not yet due and payable, or are for sums that are being contested in
accordance with Article 8, and (g) any Facility Mortgages or other liens which
are the responsibility of Landlord pursuant to the provisions of Article 22.
7.2 Landlord's Lien.
In addition to any statutory landlord's lien and in order to secure
payment of the Rent and all other sums payable hereunder by ▇▇▇▇▇▇, and to
secure payment of any loss, cost or damage which Landlord may suffer by reason
of Tenant's breach of the applicable Lease, Tenant hereby grants unto Landlord a
security interest in and an express contractual lien upon the Tenant's Personal
Property (except motor vehicles), and all ledger sheets, files, records,
documents and instruments (including, without limitation, computer programs,
tapes and related electronic data processing) relating to the operation of the
Facility located at the applicable Leased Property (the "Records") and all
proceeds therefrom; and such Tenant's Personal Property shall not be removed
from the applicable Leased Property at any time when a Default has occurred and
is continuing.
Upon ▇▇▇▇▇▇▇▇'s request, ▇▇▇▇▇▇ shall execute and deliver to Landlord a
financing statement in form sufficient to perfect the security interest of
Landlord in Tenant's Personal Property and the proceeds thereof in accordance
with the provisions of the applicable laws of the State. Tenant hereby grants
Landlord an irrevocable limited power of attorney, coupled with an interest, to
execute all such financing statements in ▇▇▇▇▇▇'s name, place and stead. The
security interest herein granted is in addition to any statutory lien for the
Rent.
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ARTICLE 8
PERMITTED CONTESTS
Tenant shall have the right to contest the amount or validity of any
Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy,
encumbrance, charge or claim (collectively "Claims") as to the applicable Leased
Property, by appropriate legal proceedings, conducted in good faith and with due
diligence, provided that (a) the foregoing shall in no way be construed as
relieving, modifying or extending Tenant's obligation to pay any Claims as
finally determined, (b) such contest shall not cause Landlord or Tenant to be in
default under any mortgage or deed of trust encumbering such Leased Property or
any interest therein or result in or reasonably be expected to result in a lien
attaching to such Leased Property, (c) no part of the applicable Leased Property
nor any Rent therefrom shall be in any immediate danger of sale, forfeiture,
attachment or loss, and (d) Tenant shall indemnify and hold harmless Landlord
from and against any cost, claim, damage, penalty or reasonable expense,
including reasonable attorneys' fees, incurred by Landlord in connection
therewith or as a result thereof. Upon ▇▇▇▇▇▇▇▇'s request, Tenant shall either
(i) provide a bond or other assurance reasonably satisfactory to Landlord that
all Claims which may be assessed against the applicable Leased Property,
together with all interest and penalties thereon will be paid, or (ii) deposit
within the time otherwise required for payment with a bank or trust company, as
trustee, as security for the payment of such Claims, an amount sufficient to pay
the same, together with interest and penalties in connection therewith and all
Claims which may be assessed against or become a Claim on the applicable Leased
Property, or any part thereof, in connection with any such contest. Tenant shall
furnish Landlord and any Facility Mortgagee with reasonable evidence of such
deposit within five (5) days after request therefor. ▇▇▇▇▇▇▇▇ agrees to join in
any such proceedings if required legally to prosecute such contest; provided,
Landlord shall not thereby be subjected to any liability therefor (including,
without limitation, for the payment of any costs or expenses in connection
therewith). Tenant shall be entitled to any refund of any Claims and such
charges and penalties or interest thereon which have been paid by ▇▇▇▇▇▇ or paid
by Landlord and for which ▇▇▇▇▇▇▇▇ has been fully reimbursed by ▇▇▇▇▇▇. If
Tenant shall fail (x) to pay any Claims when finally determined, (y) to provide
security therefor as provided in this Article 8, or (z) to prosecute any such
contest diligently and in good faith, Landlord may, upon reasonable notice to
Tenant (which notice may be oral and shall not be required if Landlord shall
determine the same is not practicable), pay such charges, together with interest
and penalties due with respect thereto, and Tenant shall reimburse Landlord
therefor, upon demand, as Additional Charges.
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ARTICLE 9
INSURANCE AND INDEMNIFICATION
9.1 General Insurance Requirements.
Tenant shall at all times during the Term and at any other time Tenant
shall be in possession of the applicable Leased Property, keep the applicable
Leased Property and all property located in or on the applicable Leased
Property, including Tenant's Personal Property, insured against the risks and in
the amounts (unless Landlord shall agree in writing that Tenant may maintain
insurance in lesser amounts) as follows:
(a) Loss or damage by fire, vandalism and malicious mischief,
extended coverage perils, earthquake and all physical loss perils
insurance, including but not limited to sprinkler leakage, in an amount
equal to not less than the full Replacement Cost thereof (as defined in
Section 9.2 below) with the usual extended coverage endorsements,
including a Replacement Cost Endorsement and Builder's Risk Coverage
during the continuance of any construction on the applicable Leased
Property;
(b) Loss or damage by explosion of steamboilers, pressure
vessels or other similar apparatus, now or hereafter installed in the
Facility located at the Leased Property, in such amounts as may be
reasonably required by Landlord or any Facility Mortgagee from time to
time;
(c) Business interruption and blanket earnings plus extra
expense under a rental value insurance policy covering risk of loss
during the lesser of the first twelve (12) months of reconstruction or
the actual reconstruction period necessitated by the occurrence of any
of the hazards described in subparagraphs (a) and (b) above, in such
amounts as may be customary for comparable properties in the area and
in an amount sufficient to prevent Landlord or Tenant from becoming a
co-insurer;
(d) Claims for personal injury or property damage under a
policy of comprehensive general accident and public liability insurance
(in a broad form comprehensive policy, including, without limitation,
broad form contractual liability, independent contractor's hazard and
completed operations coverage), claims arising out of malpractice in an
amount not less than One Million Dollars ($1,000,000) per occurrence,
Three Million Dollars ($3,000,000) in the aggregate and umbrella
coverage of all such claims in an amount not less than Ten Million
Dollars ($10,000,000);
(e) Flood (when the applicable Leased Property is located in
whole or in part within an area identified as an area having special
flood hazards and in which flood
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insurance has been made available under the National Flood Insurance
Act of 1968, as amended, or the Flood Disaster Protection Act of 1973,
as amended (or any successor acts thereto)) and such other hazards and
in such amounts as may be customary for comparable properties in the
area;
(f) Worker's compensation insurance coverage for all persons
employed by Tenant on the applicable Leased Property with statutory
limits and otherwise with limits of and provisions in accordance with
the requirements of applicable local, State and federal law, and
employer's liability insurance in such amounts as Landlord and any
Facility Mortgagee shall reasonably require; and
(g) Such additional insurance as may be reasonably required,
from time to time, by Landlord or any Facility Mortgagee.
9.2 Replacement Cost.
"Replacement Cost" as used herein, shall mean the actual replacement
cost of the property requiring replacement from time to time, including an
increased cost of construction endorsement, less exclusions provided in the
standard form of fire insurance policy. In the event either party believes that
the then full replacement cost less such exclusions has increased or decreased
at any time during the Term, such party, at its own cost, shall have the right
to have such full replacement cost redetermined by an accredited appraiser
approved by the other, which approval shall not be unreasonably withheld or
delayed. The party desiring to have the full replacement cost so redetermined
shall forthwith, on receipt of such determination by such appraiser, give
written notice thereof to the other. The determination of such appraiser shall
be final and binding on the parties hereto, and Tenant shall forthwith conform
the amount of the insurance carried to the amount so determined by the
appraiser.
9.3 Waiver of Subrogation.
Landlord and Tenant agree that (insofar as and to the extent that such
agreement may be effective without invalidating or making it impossible to
secure insurance coverage from responsible insurance companies doing business in
the State) with respect to any property loss which is covered by insurance then
being carried by Landlord or Tenant, respectively, the party carrying such
insurance and suffering said loss releases the other of and from any and all
claims with respect to such loss; and they further agree that their respective
insurance companies shall have no right of subrogation against the other on
account thereof, even though extra premium may result therefrom. In the event
that any extra premium is payable by Tenant as a result of this provision,
Landlord shall not be liable for reimbursement to Tenant for such extra premium.
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9.4 Form Satisfactory, Etc.
All insurance policies and endorsements required pursuant to this
Article 9 shall be fully paid for, nonassessable and contain such provisions and
expiration dates and be in such form and amounts and issued by insurance
carriers authorized to do business in the State, having a general policy
holder's rating of A or A+ in Best's latest rating guide, and as otherwise shall
be approved by Landlord. Without limiting the foregoing, such policies shall
include no deductible (unless consistent with deductibles included in policies
carried by entities engaged in similar businesses and owning similar properties
similarly situated or agreed to in advance by Landlord) and, with the exception
of the insurance described in Section 9.1(f), shall name Landlord and any
Facility Mortgagee as additional insureds, as their interests may appear. All
losses shall be payable to Landlord, any Facility Mortgagee or Tenant as
provided in Article 10. Any loss adjustment in excess of $50,000 shall require
the written consent of Landlord, Tenant, and each Facility Mortgagee. Tenant
shall pay all insurance premiums, and deliver policies or certificates thereof
to Landlord prior to their effective date (and, with respect to any renewal
policy, thirty (30) days prior to the expiration of the existing policy), and in
the event Tenant shall fail either to effect such insurance as herein required,
to pay the premiums therefor, or to deliver such policies or certificates to
Landlord or any Facility Mortgagee at the times required, Landlord shall have
the right, but not the obligation, to acquire such insurance and pay the
premiums therefor, which amounts shall be payable to Landlord, upon demand, as
Additional Charges, together with interest accrued thereon at the Overdue Rate
from the date such payment is made until the date repaid. All such policies
shall provide Landlord (and any Facility Mortgagee, if required by the same)
thirty (30) days' prior written notice of any expiration or cancellation of such
policy or any modification thereof the effect of which is to reduce the amount
of insurance maintained or otherwise fail to effect the insurance required by
this Article 9.
9.5 Blanket Policy.
Notwithstanding anything to the contrary contained in this Article 9,
Tenant's obligation to maintain the insurance herein required may be brought
within the coverage of a so-called blanket policy or policies of insurance
carried and maintained by Tenant; provided, that (a) the coverage thereby
afforded will not be reduced or diminished from that which would exist under a
separate policy meeting all other requirements of the applicable Lease, and (b)
the requirements of this Article 9 are otherwise satisfied. Without limiting the
foregoing, the amounts of insurance that are required to be maintained pursuant
to Section 9.1 shall be on a Facility by Facility basis, and shall not be
subject to an aggregate limit.
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9.6 No Separate Insurance.
Tenant shall not take out separate insurance concurrent in form or
contributing in the event of loss with that required by this Article 9, or
increase the amount of any existing insurance by securing an additional policy
or additional policies, unless all parties having an insurable interest in the
subject matter of such insurance, including, Landlord and all Facility
Mortgagees, are included therein as additional insureds, and the loss is payable
under such insurance in the same manner as losses are payable under the
applicable Lease. In the event Tenant shall take out any such separate insurance
or increase any of the amounts of the then existing insurance, Tenant shall give
Landlord prompt Notice thereof.
9.7 Indemnification of Landlord.
Notwithstanding the existence of any insurance or self-insurance
provided for herein, and without regard to the policy limits of any such
insurance or self-insurance, Tenant shall protect, indemnify and hold harmless
Landlord from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and reasonable expenses (including, without
limitation, reasonable attorneys' fees), to the maximum extent permitted by law,
imposed upon or incurred by or asserted against Landlord by reason of: (a) any
accident, injury to or death of persons or loss of or damage to property
occurring on or about the applicable Leased Property or adjoining sidewalks or
rights of way, including, without limitation, any claims of malpractice, (b) any
past, present or future use, misuse, non-use, condition, management, maintenance
or repair by Tenant or anyone claiming under Tenant of the applicable Leased
Property or Tenant's Personal Property or any litigation, proceeding or claim by
governmental entities or other third parties to which Landlord is made a party
or participant related to the applicable Leased Property or Tenant's Personal
Property or such use, misuse, non-use, condition, management, maintenance, or
repair thereof including, failure to perform obligations (other than
Condemnation proceedings) to which Landlord is made a party, (c) any Impositions
(which are the obligations of Tenant to pay pursuant to the applicable
provisions of the applicable Lease), and (d) any failure on the part of Tenant
or anyone claiming under Tenant to perform or comply with any of the terms of
the applicable Lease. Notwithstanding the foregoing, Tenant shall not be
required to indemnify Landlord against any liabilities, obligations, claims,
damages, penalties, causes of action, or costs that arise from events occurring
after Landlord, or anyone claiming by, through or under Landlord (other than
Tenant or anyone claiming by, through or under Tenant) shall take actual
possession of the applicable Leased Property or that directly result from the
gross negligence or willful misconduct of Landlord. Tenant shall pay all amounts
payable under this Section 9.7 within ten (10) days after demand therefor, and
if not timely paid, such amounts shall bear interest
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at the Overdue Rate from the date of determination to the date of payment.
Tenant, at its expense, shall contest, resist and defend any such claim, action
or proceeding asserted or instituted against Landlord or may compromise or
otherwise dispose of the same, with ▇▇▇▇▇▇▇▇'s prior written consent (which
consent may not be unreasonably withheld or delayed). The obligations of Tenant
under this Section 9.7 shall survive the termination of the applicable Lease.
ARTICLE 10
CASUALTY
10.1 Insurance Proceeds.
All proceeds in excess of $10,000 payable by reason of any loss or
damage to the applicable Leased Property, or any portion thereof, and insured
under any policy of insurance required by Article 9 (including, without
limitation, proceeds of any business interruption insurance) shall be paid
directly to Landlord (subject to the provisions of Section 10.2). If Tenant is
required to reconstruct or repair such Leased Property as provided herein, such
proceeds shall be paid out by Landlord from time to time for the reasonable
costs of reconstruction or repair of such Leased Property necessitated by such
damage or destruction, subject to the provisions of Section 10.2.4. Provided no
Default or Event of Default has occurred and is continuing, any excess proceeds
of insurance remaining after the completion of the restoration shall be paid to
Tenant. In the event that Section 10.2.1 below is applicable, the insurance
proceeds shall be retained by the party entitled thereto pursuant to Section
10.2.1. All salvage resulting from any risk covered by insurance shall belong to
Landlord, except any salvage related to Tenant's Capital Additions and Tenant's
Personal Property shall belong to Tenant.
10.2 Damage or Destruction.
10.2.1 Damage or Destruction of Leased Property.
If, during the Term, the applicable Leased Property shall be
totally or partially destroyed and the Facility located thereon is
thereby rendered Unsuitable for Its Primary Intended Use, Tenant shall,
at Tenant's option, exercisable by Notice to Landlord within thirty
(30) days after the date of such damage or destruction, either
irrevocably offer (a) to purchase such Leased Property from Landlord
for a purchase price equal to the greater of (i) the Adjusted Purchase
Price of such Leased Property or (ii) the Fair Market Value Purchase
Price of such Leased Property immediately prior to such damage or
destruction or (b) to substitute a new property for the applicable
Leased Property in accordance with the provisions of Article 16 hereof.
If Tenant shall fail to give such Notice, Tenant shall be deemed
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to have elected the option provided in clause (a) above. In the event
Landlord does not accept ▇▇▇▇▇▇'s offer to purchase the applicable
Leased Property or substitute another property for the applicable
Leased Property within thirty (30) days after receipt of Tenant's
Notice of election, the applicable Lease with respect to the applicable
Leased Property shall terminate without further liability hereunder and
Landlord shall be entitled to retain the insurance proceeds payable on
account of such damage. In the event Tenant purchases such Leased
Property as provided in this Section 10.2.1, the insurance proceeds
payable on account of such damage shall be paid to Tenant.
10.2.2 Partial Damage or Destruction.
If during the Term, the applicable Leased Property shall be
totally or partially destroyed but the Facility located thereon is not
rendered Unsuitable for its Primary Intended Use, Tenant shall promptly
restore such Facility as provided in Section 10.2.4.
10.2.3 Insufficient Insurance Proceeds.
If the cost of the repair or restoration of the applicable
Leased Property exceeds the amount of insurance proceeds received by
Landlord pursuant to Article 9, upon the demand of Landlord, Tenant
shall contribute any excess amounts needed to restore such Leased
Property. Such difference shall be paid by Tenant to Landlord and held
by Landlord, together with any other insurance proceeds, for
application to the cost of repair and restoration.
10.2.4 Disbursement of Proceeds.
In the event Tenant is required to restore the applicable
Leased Property pursuant to Section 10.2, Tenant will, at its sole cost
and expense, commence promptly and continue diligently to perform the
repair and restoration of such Leased Property (hereinafter called the
"Work"), or shall cause the same to be done, so as to restore such
Leased Property in full compliance with all Legal Requirements and so
that such Leased Property shall be at least equal in value and general
utility to its general utility and value immediately prior to such
damage or destruction. Subject to the terms hereof, Landlord shall
advance the insurance proceeds (other than proceeds of business
interruption insurance which should be advanced as provided below) and
the amounts paid to it pursuant to Section 10.2.3 to Tenant regularly
during the repair and restoration period so as to permit payment for
the cost of any such restoration and repair. Any such advances shall be
for not less than $50,000 (or such lesser amount as equals the entire
balance of the repair and restoration) and Tenant shall submit to
Landlord a written requisition and substantiation therefor on AIA Forms
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G702 and G703 (or on such other form or forms as may be acceptable to
Landlord). Landlord may, at its option, condition advancement of said
insurance proceeds and other amounts on (i) the absence of any Default,
(ii) its approval of plans and specifications of an architect
satisfactory to Landlord (which approval shall not be unreasonably
withheld or delayed), (iii) general contractors' estimates, (iv)
architect's certificates, (v) unconditional lien waivers of general
contractors, (vi) evidence of approval by all governmental authorities
and other regulatory bodies whose approval is required and (vii) such
other certificates as Landlord may, from time to time, reasonably
require. Except as provided in the following sentence and provided no
Default has occurred and is continuing, on the first day of each
calendar month during which proceeds of business interruption insurance
are disbursed to Landlord under the policy of business interruption
insurance maintained pursuant to Article 9, Landlord shall disburse
proceeds of business interruption insurance received by it to Tenant
upon Notice from Tenant accompanied by a certification from Tenant that
such moneys will be used for costs or expenses of owning or operating
the applicable Leased Property, including any corporate allocation in
compliance with Section 23.9. Proceeds of business interruption
insurance shall be applied by Landlord, on the first day of the
calendar month following such disbursement, first to the payment of all
Minimum Rent, Additional Rent and Additional Charges then due and
payable and to become due and payable for the period for which such
proceeds have been paid by the insurance provider, if at any time the
amount of such proceeds will be insufficient to pay all Minimum Rent,
Additional Rent and Additional Charges due or to come due during such
period, Landlord shall suspend disbursement of such proceeds.
▇▇▇▇▇▇▇▇'s obligation to disburse insurance proceeds under
this Article 10 shall be subject to the release of such proceeds by the
applicable Facility Mortgagee to Landlord.
10.2.5 Termination of Applicable Lease.
If Landlord accepts ▇▇▇▇▇▇'s offer to purchase the applicable
Leased Property or to substitute a new property in place of the
applicable Leased Property, as provided herein, the applicable Lease
shall terminate as to the applicable Leased Property upon payment of
the purchase price therefor or substitution of the new property, and
Landlord shall remit to Tenant all insurance proceeds pertaining to the
applicable Leased Property then held by Landlord.
10.3 Damage Near End of Term.
Notwithstanding any provisions of Section 10.1 or 10.2 to the contrary,
if damage to or destruction of the applicable Leased Property occurs during the
last eighteen (18) months of the then
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applicable Term (whether Fixed or Extended) of the applicable Lease, if Tenant
has not exercised its option to further extend the Term, and if such damage or
destruction cannot reasonably be expected to be fully repaired and restored
prior to the date that is six (6) months prior to the end of such Term, then
Tenant shall have the right to terminate the applicable Lease on thirty (30)
days prior Notice to Landlord by giving Notice thereof to Landlord within sixty
(60) days after the date of such damage or destruction.
10.4 Tenant's Property.
All insurance proceeds payable by reason of any loss of or damage to
any of Tenant's Personal Property or Tenant's Capital Additions shall be paid to
Tenant and, to the extent necessary to repair or replace Tenant's Capital
Additions or Tenant's Personal Property in accordance with Section 10.5, Tenant
shall hold such proceeds in trust to pay the cost of repairing or replacing
damaged Tenant's Personal Property or Tenant's Capital Additions.
10.5 Restoration of Tenant's Property.
If Tenant is required to restore the applicable Leased Property as
hereinabove provided, Tenant shall either (a) restore all alterations and
improvements made by Tenant, Tenant's Personal Property and all Tenant's Capital
Additions, or (b) replace such alterations and improvements, Tenant's Personal
Property, and/or Tenant's Capital Additions with improvements or items of the
same or better quality and utility in the operation of such Leased
Property.
10.6 No Abatement of Rent.
The applicable Lease shall remain in full force and effect and Tenant's
obligation to make all payments of Rent (including, without limitation,
Additional Rent) and to pay all other charges as and when required under such
Lease shall remain unabated during the Term notwithstanding any damage involving
the applicable Leased Property (provided that Landlord shall credit against such
payments any amounts paid to Landlord as a consequence of such damage under any
business interruption insurance obtained by Tenant hereunder); provided,
however, that effective upon the purchase of such Leased Property or termination
of such Lease pursuant to and in accordance with Section 10.2, such Lease shall
terminate except with respect to the obligations and liabilities of Tenant
thereunder, actual or contingent, that arose prior to such termination. The
provisions of this Article 10 shall be considered an express agreement governing
any cause of damage or destruction to the applicable Leased Property and, to the
maximum extent permitted by law, no local or State statute, laws, rules,
regulation or ordinance in effect during the Term which provide for such a
contingency shall have any application in such case.
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10.7 Termination of Rights of First Refusal and Option to Purchase.
Any termination of the applicable Lease pursuant to this Article 10
shall cause any rights of first refusal and options to purchase granted to
Tenant under the applicable Lease with respect to such Leased Property to be
terminated and to be without further force or effect.
10.8 Waiver.
Tenant hereby waives any statutory rights of termination which may
arise by reason of any damage or destruction of the applicable Leased Property
which Landlord is obligated to restore or may restore under any of the
provisions of the applicable Lease.
ARTICLE 11
CONDEMNATION
11.1 Total Condemnation, Etc.
If either (i) the whole of the applicable Leased Property shall be
taken by Condemnation or (ii) a Condemnation of less than the whole of such
Leased Property renders such Leased Property Unsuitable for Its Primary Intended
Use, the Rent for such Leased Property shall ▇▇▇▇▇ in its entirety on the Date
of Taking, the applicable Lease shall terminate and Tenant and Landlord shall
seek the Award for their interests in such Leased Property as provided in
Section 11.5. If the Award received by Landlord for Landlord's interest in such
Leased Property is less than the greater of (x) the Adjusted Purchase Price or
(y) the Fair Market Value Purchase Price of such Leased Property immediately
prior to such Condemnation, Tenant shall contribute and pay to Landlord the
lesser of (1) the amount of Tenant's Award or (2) such shortfall; provided,
however, that notwithstanding the foregoing, if the sum of the Awards received
by Landlord and Tenant with respect to such Condemnation is less than the
Adjusted Purchase Price of such Leased Property, Tenant shall pay the amount of
such difference to Landlord, whether or not such amount exceeds ▇▇▇▇▇▇'s Award.
11.2 Partial Condemnation.
In the event of a Condemnation of less than the whole of the applicable
Leased Property such that such Leased Property is still suitable for its Primary
Intended Use, Tenant will, at its sole cost and expense, commence promptly and
continue diligently to restore the untaken portion of the Leased Improvements on
such Leased Property so that such Leased Improvements shall constitute a
complete architectural unit of the same general character and condition (as
nearly as may be possible under the circumstances) as the Leased Improvements
existing immediately prior to such Condemnation, in full compliance with all
Legal Requirements.
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Subject to the terms hereof, Landlord shall contribute to the cost of
restoration that part of the Award necessary to complete such repair or
restoration, together with severance and other damages awarded for the taken
Leased Improvements, to Tenant regularly during the restoration period so as to
permit payment for the cost of such repair or restoration. Landlord may, at its
option, condition advancement of said Award and other amounts on (i) the absence
of any Default, (ii) its approval of plans and specifications of an architect
satisfactory to Landlord (which approval shall not be unreasonably withheld or
delayed), (iii) general contractors' estimates, (iv) architect's certificates,
(v) unconditional lien waivers of general contractors, (vi,) evidence of
approval by all governmental authorities and other regulatory bodies whose
approval is required and (vii) such other certificates as Landlord may, from
time to time, reasonably require. Landlord's obligation under this Section 11.2
to disburse the Award and such other amounts shall be subject to (1) the
collection thereof by Landlord and (2) the satisfaction of any applicable
requirements of any Facility Mortgage, and the release of such Award by the
applicable Facility Mortgagee. If the cost of the restoration of the applicable
Leased Property exceeds that part of the Award necessary to complete such
restoration, together with severance and other damages awarded for the taken
Leased Improvements, Tenant shall contribute upon the demand of Landlord any
excess amounts needed to restore such Leased Property. Such difference shall be
paid by Tenant to Landlord and held by Landlord, together with such part of-the
Award and such severance and other damages, for application to the cost of
restoration.
11.3 Abatement of Rent.
Other than as specifically provided in this Master Lease Document, the
applicable Lease shall remain in full force and effect and Tenant's obligation
to make all payments of Rent (including, without limitation, Additional Rent)
and to pay all other charges as and when required under such Lease shall remain
unabated during the Term notwithstanding any Condemnation involving the
applicable Leased Property; provided, however that effective upon the purchase
of such Leased Property or the termination of the Lease pursuant to and in
accordance with Section 11.1, such Lease shall terminate except with respect to
the obligations and liabilities of Tenant thereunder, actual or contingent, that
arose prior to such termination. The provisions of this Article 11 shall be
considered an express agreement governing any Condemnation involving the
applicable Leased Property and, to the maximum extent permitted by law, no local
or State statute, law, rule, regulation or ordinance in effect during the Term
which provides for such a contingency shall have any application in such case.
11.4 Temporary Condemnation.
In the event of any temporary Condemnation of all or any part of the
applicable Leased Property or Tenant's interest under the
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applicable Lease of such Leased Property, the applicable Lease shall continue in
full force and effect, and Tenant shall continue to pay, in the manner and on
the terms therein specified, the full amount of the Rent. Tenant shall continue
to perform and observe all of the other terms and conditions hereof on the part
of the Tenant to be performed and observed. Provided no Default or Event of
Default that relates to the payment of money has occurred and is continuing, the
entire amount of any Award made for such temporary Condemnation allocable to the
Term, whether paid by way of damages, rent or otherwise, shall be paid to
Tenant. Tenant shall, promptly upon the termination of any such period of
temporary Condemnation, at its sole cost and expense, restore such Leased
Property to the condition that existed immediately prior to such Condemnation,
in full compliance with all Legal Requirements, unless such period of temporary
Condemnation shall extend beyond the expiration of the Term, in which event
Tenant shall not be required to make such restoration. For purposes of this
Section 11.4, a Condemnation shall be deemed to be temporary if the period of
such Condemnation is not expected to, and does not, exceed twenty-four (24)
months.
11.5 Allocation of Award.
Except as provided in the second sentence of this Section 11.5, the
total Award shall be solely the property of and payable to Landlord. Any portion
of the Award made for the taking of Tenant's leasehold interest in the Leased
Property, Tenant's Capital Additions, loss of business during the remainder of
the Term, the taking of Tenant's Personal Property, or ▇▇▇▇▇▇'s removal and
relocation expenses shall be the sole property of and payable to Tenant (subject
to the provisions of Section 11.2 hereof). In any Condemnation proceedings,
Landlord and Tenant shall each seek its own Award in conformity herewith, at its
own expense.
11.6 Termination of Rights of First Refusal.
Any termination of the applicable Lease pursuant to this Article 11
shall cause any rights of first refusal and options to purchase granted to
Tenant under the applicable Lease to be terminated and to be without further
force or effect.
ARTICLE 12
DEFAULTS AND REMEDIES
12.1 Events of Default.
The occurrence, and continuance beyond the expiration of any applicable
grace period specifically provided for in this Section 12.1 or in any
Transaction Document, of any one or more of the following events shall
constitute an "Event of Default" under the applicable Lease:
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(a) an Event of Default (as defined therein) shall occur and
be continuing under any Transaction Document (other than the applicable
Lease); or
(b) Tenant shall fail to make any payment of the Rent or any
other sum (including, but not limited to, payment of the purchase price
for any of the Collective Leased Properties which Tenant shall be
obligated or elects to purchase pursuant to the terms of this Master
Lease Document or any Lease) payable hereunder or under any Lease when
due and such failure continues for a period of ten (10) days after the
date when due; or
(c) Tenant shall default in the due observance or performance
of any of the terms, covenants or agreements contained herein or in any
other Transaction Document to be performed or observed by it relating
to other than the payment of money and not otherwise referred to in
this Section 12.1, and such default shall remain unremedied for a
period of ten (10) days after Notice thereof from Landlord (provided
that no such notice shall be required if Landlord shall reasonably
determine immediate action is necessary to protect person or property),
provided, however that if such default is susceptible of cure but such
cure cannot be accomplished with due diligence within such period of
time, and if in addition Tenant commences to cure such default within
ten (10) days after Notice thereof from Landlord, and thereafter
prosecutes the curing of such default with all due diligence, such
period of time shall be extended to such period of time (not to exceed
an additional fifty (50) days) as may be necessary to cure such default
with all due diligence provided, further, however, that the period
within which Tenant must commence such cure or complete such cure shall
be extended by the number of days during which there shall exist any
Unavoidable Delay; or
(d) Tenant shall default in due performance or observance of
any term, covenant or agreement on its part to be performed or observed
pursuant to Article 7 or Section 9.1 or 9.4; or
(e) any Guarantor shall default in due performance or
observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any Guaranty; or
(f) any of the Transaction Documents shall cease for any
reason to be in full force and effect (other than as specifically
provided therein, or released as provided therein), or Tenant or any
Guarantor shall so assert in writing; or
(g) the occurrence of a default or breach of condition
continuing beyond the expiration of any applicable grace
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period under the terms of any other agreement, document or instrument
(including, without limitation, all leases and loan documents)
evidencing any indebtedness, covenant, liability, obligation or
undertaking due to, or made for the benefit of, Landlord, HRPT
Advisors, Inc., or any Subsidiary of either of them, by (i) Tenant,
(ii) any Affiliate of Tenant, (iii) any Guarantor, (iv) any Affiliate
of any Guarantor or (v) any entity owned, legally or beneficially, by
Tenant or any Guarantor, whether such indebtedness, covenants,
liabilities, obligations or undertakings are direct or indirect,
absolute or contingent, liquidated or unliquidated, due or to become
due, joint, several or joint and several, primary or secondary, now
existing or hereafter arising; or
(h) any obligation of Tenant or any Guarantor, or of any
Subsidiary of either, in respect of any Indebtedness for money borrowed
(excluding trade accounts payable in the ordinary course of business on
customary trade terms), or any guaranty relating thereto shall be
declared to be or shall become due and payable prior to the stated
maturity thereof, or there shall occur and be continuing any default
under any instrument, agreement or evidence of indebtedness relating to
any such Indebtedness for money borrowed the effect of which is to
permit the holder or holders of such instrument, agreement or evidence
of indebtedness, or a trustee, agent or other representative on behalf
of such holder or holders, to cause such Indebtedness for money
borrowed to become due prior to its stated maturity; or
(i) there shall occur a final unappealable determination by
applicable state authorities of the revocation or limitation of any
license, permit, certification or approval required for the lawful
operation of the Facility located on the applicable Leased Property in
accordance with its Primary Intended Use or the loss or limitation of
any license, permit, certification or approval under any other
circumstances under which Tenant is required to cease its operation of
such Facility in accordance with its Primary Intended Use as currently
operated, and Tenant shall not, within thirty (30) days thereafter,
have commenced appropriate procedures for the substitution of a new
property therefor in accordance with the provisions of Article 16
hereof, or, if Tenant shall have commenced such procedures, the
substitution of such new property shall not have occurred within ninety
(90) days of such determination or loss; or
(j) any representation or warranty made by or on behalf of
Tenant or any Guarantor under or in connection with the applicable
Lease or any of the other Transaction Documents, or in any document,
certificate or agreement delivered pursuant to the terms of such Lease
or any of the other Transaction Documents, shall prove to have been
false or
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misleading in any material respect on the day when made or deemed made;
or
(k) Tenant or any Guarantor shall be generally not paying its
debts as they become due, or Tenant or any Guarantor, or any subsidiary
thereof, shall make a general assignment for the benefit of creditors;
or
(l) any petition shall be filed by or against (i) Tenant or
(ii) any Guarantor or (iii) any Affiliate of either (where the filing
of such petition against any such Affiliate will have a material
adverse effect upon the operations, business, prospects, property, or
assets of, liabilities, or the condition of, Tenant or any Guarantor),
under the Federal bankruptcy laws, or any other proceeding shall be
instituted by or against Tenant or such Guarantor or Affiliate seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation,
reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order
for relief or the appointment of a receiver, trustee, custodian or
other similar official for Tenant or such Guarantor or Affiliate, or
for any substantial part of the property of Tenant or such Guarantor or
Affiliate, and such proceeding is not dismissed within ninety (90) days
after institution thereof, or Tenant or such Guarantor or Affiliate
shall take any action to authorize or effect any of the actions set
forth above in this paragraph (1); or
(m) Tenant or any Guarantor or any Affiliate of any of them
(where the dissolution or termination or any such Affiliate will have a
material adverse effect upon the operations, business prospects,
property, or assets of, liabilities, or the condition of, Tenant or any
Guarantor) shall cause or institute any proceeding for its dissolution
or termination; or
(n) Tenant shall voluntarily cease operation of the applicable
Leased Property for its Primary Intended Use for a period in excess of
thirty (30) consecutive days, except as a result of damage, destruction
or partial or complete condemnation, and Tenant shall not, within
thirty (30) days thereafter, have commenced appropriate procedures for
the substitution of a new property therefor in accordance with the
provisions of Article 16 hereof, or, if Tenant shall have commenced
such procedures, the substitution of such new property shall not have
occurred within ninety (90) days of the cessation of such operations;
or
(o) a default shall occur under any mortgage which is secured
by ▇▇▇▇▇▇'s leasehold interest in the applicable Lease or the mortgagee
under any such mortgage accelerates
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the indebtedness secured thereby or commences a foreclosure action in
connection with said mortgage;
then, and in any such event, Landlord, in addition to all other remedies
available to it, may terminate the applicable Lease by giving Notice of such
termination, and upon the expiration of the time, if any, fixed in such Notice,
the Term shall terminate and all rights of Tenant under the applicable Lease
shall cease. Landlord shall have all rights at law and in equity available to
Landlord as a result of Tenant's breach of the applicable Lease.
Upon the occurrence of an Event of Default, Landlord may, in addition
to any other remedies provided herein, enter upon the Collective Leased
Properties or any portion thereof and take possession of any and all of Tenant's
Personal Property and the Records (subject to any prohibitions or limitations to
disclosure of any such data as described in Section 3.1.2(e)) on the applicable
Leased Property, without liability for trespass or conversion (Tenant hereby
waiving any right to notice or hearing prior to such taking of possession by
Landlord) and sell the same at public or private sale, after giving Tenant
reasonable Notice of the time and place of any public or private sale, at which
sale Landlord or its assigns may purchase all or any portion of Tenant's
Personal Property unless otherwise prohibited by law. Without intending to
exclude any other manner of giving Tenant reasonable notice, the requirement of
reasonable Notice shall be met if such Notice is given at least ten (10) days
before the day of sale. The proceeds from any such disposition, less all
expenses incurred in connection with the taking of possession, holding and
selling of such property (including, reasonable attorneys' fees) shall be
applied as a credit against the indebtedness which is secured by the security
interest granted in Section 7.2. Any surplus shall be paid to Tenant or as
otherwise required by law and Tenant shall pay any deficiency to Landlord, as
Additional Charges, upon demand.
12.2 Remedies.
Neither (a) the termination of the applicable Lease pursuant to Section
12.1, (b) the repossession of the applicable Leased Property or any portion
thereof, (c) the failure of Landlord, notwithstanding reasonable good faith
efforts, to relet the applicable Leased Property or any portion thereof, nor (d)
the reletting of all or any portion thereof, shall relieve Tenant of its
liability and obligations hereunder, all of which shall survive any such
termination, repossession or reletting. In the event of any such termination,
Tenant shall forthwith pay to Landlord all Rent due and payable with respect to
the applicable Leased Property to and including the date of such termination.
Thereafter, Tenant, until the end of what would have been the Term of the
applicable Lease in the absence of such termination, and whether or not the
applicable Leased Property or any portion thereof shall have been relet, shall
be liable to Landlord for, and shall pay to Landlord, as current damages, the
Rent and other
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charges which would be payable hereunder for the remainder of the Term had such
termination not occurred, less the net proceeds, if any, of any reletting of the
applicable Leased Property, after deducting all reasonable expenses in
connection with such reletting, including, without limitation, all repossession
costs, brokerage commissions, legal expenses, attorneys' fees, advertising,
expenses of employees, alteration costs and expenses of preparation for such
reletting. Tenant shall pay such current damages to Landlord monthly on the days
on which the Minimum Rent would have been payable hereunder if the applicable
Lease had not been terminated. Additional Rent for the purposes of this Section
12.2 shall be a sum equal to the amount of the Additional Rent (determined on an
annualized basis) payable for the Fiscal Year immediately preceding the Fiscal
Year in which the termination, re-entry or repossession takes place. If,
however, such termination, re-entry or repossession occurs during the first full
Fiscal Year after the Commencement Date, the Additional Rent for such Leased
Property shall be determined based on the assumption that Additional Rent for
such Leased Property would have continued to accrue at the same rate that it had
for the Fiscal Year immediately prior to such termination, re-entry or
repossession determination.
At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages beyond the date
of such termination, at Landlord's election, Tenant shall pay to Landlord either
(a) an amount equal to the excess, if any, of the Rent and other charges which
would be payable hereunder from the date of such termination (assuming that, for
the purposes of this paragraph, annual payments by Tenant on account of
Impositions would be the same as payments required for the immediately preceding
twelve calendar months, or if less than twelve calendar months have expired
since the Commencement Date, the payments required for such lesser period
projected to an annual amount) for what would be the then unexpired term of the
applicable Lease if the same remained in effect, over the Fair Market Rental for
the same period, or (b) an amount equal to the lesser of (i) the Rent and other
charges that would have been payable for the balance of the Term had it not been
terminated, or (ii) the aggregate of the Rent and other charges accrued in the
twelve (12) months ended next prior to such termination (without reduction for
any free rent or other concession or abatement). In the event the applicable
Lease is so terminated prior to the expiration of the first full year of the
Term, the liquidated damages which Landlord may elect to recover pursuant to
clause (b) (ii) of this paragraph shall be calculated as if such termination had
occurred on the first anniversary of the Commencement Date. Nothing contained in
the applicable Lease shall, however, limit or prejudice the right of Landlord to
prove and obtain in proceedings for bankruptcy or insolvency an amount equal to
the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, the damages are to be proved, whether or
not the amount be greater
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than, equal to, or less than the amount of the loss or damages referred to
above.
In case of any Event of Default, re-entry, expiration and dispossession
by summary proceedings or otherwise, Landlord may (a) relet the applicable
Leased Property or any part or parts thereof, either in the name of Landlord or
otherwise, for a term or terms which may at Landlord's option, be equal to, less
than or exceed the period which would otherwise have constituted the balance of
the Term and may grant concessions or free rent to the extent that ▇▇▇▇▇▇▇▇
considers advisable and necessary to relet the same, and (b) may make such
reasonable alterations, repairs and decorations in the applicable Leased
Property or any portion thereof as Landlord, in its sole judgment, considers it
advisable and necessary for the purpose of reletting the applicable Leased
Property; and the making of such alterations, repairs and decorations shall not
operate or be construed to release Tenant from liability hereunder as aforesaid.
Landlord shall in no event be liable in any way whatsoever for failure to relet
the applicable Leased Property, or, in the event that the applicable Leased
Property is relet, for failure to collect the rent under such reletting. To the
fullest extent permitted by law, Tenant hereby expressly waives any and all
rights of redemption granted under any present or future laws in the event of
Tenant being evicted or dispossessed, or in the event of Landlord obtaining
possession of the applicable Leased Property, by reason of the violation by
Tenant of any of the covenants and conditions of the applicable Lease.
12.3 TENANT'S WAIVER.
IF THE APPLICABLE LEASE IS TERMINATED PURSUANT TO SECTION 12.1 OR 12.2
HEREOF, TENANT WAIVES, TO THE EXTENT PERMITTED BY LAW, (A) ANY RIGHT TO A TRIAL
BY JURY IN THE EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN
THIS ARTICLE 12, AND (B) THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN FORCE
EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT.
12.4 Application of Funds.
Any payments received by Landlord under any of the provisions of the
applicable Lease during the existence or continuance of any Default or Event of
Default (and any payment made to Landlord rather than Tenant due to the
existence of any Default or Event of Default) shall be applied to Tenant's
obligations under the applicable Lease and under the other Transaction
Documents, in such order as Landlord may determine or as may be prescribed by
the laws of the State.
12.5 Failure to Conduct Business.
For the purpose of determining rental loss damages for Additional Rent,
in the event Tenant shall fail to conduct its business at the applicable Leased
Property for the Primary
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Intended Use, exact damages or the amount of Additional Rent being
unascertainable, the Additional Rent for such Leased Property shall be deemed to
be equal to the annual amount of the Additional Rent for the Fiscal Year
immediately preceding the Fiscal Year in which such determination takes place.
If, however, such determination occurs during the first full Fiscal Year after
the Commencement Date, the Additional Rent for such Leased Property shall be
determined based on the assumption that Additional Rent for such Leased Property
would have continued to accrue at the same rate that it had for the period prior
to such determination.
12.6 Landlord's Right to Cure ▇▇▇▇▇▇'s Default.
If an Event of Default shall have occurred and be continuing, Landlord,
after Notice to Tenant (provided that no such notice shall be required if
Landlord shall reasonably determine immediate action is necessary to protect
person or property), without waiving or releasing any obligation of Tenant, and
without waiving or releasing any Event of Default, may (but shall not be
obligated to), at any time thereafter, make such payment or perform such act for
the account and at the expense of Tenant, and may, to the extent permitted by
law, enter upon the applicable Leased Property or any portion thereof for such
purpose and take all such action thereon as, in Landlord's opinion, may be
necessary or appropriate therefor, including the management of the Facility
located on the applicable Leased Property by Landlord or its designee (which may
include, without limitation, Greenery Managers, Inc.), and Tenant hereby
irrevocably appoints, in the event of such election by Landlord, Landlord or its
designee as manager of the Facility located on the applicable Leased Property
and its attorney in fact for such purpose, irrevocably and coupled with an
interest, in the name, place and stead of Tenant. No such entry shall be deemed
an eviction of Tenant. All reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred by Landlord in connection
therewith, together with interest thereon (to the extent permitted by law) at
the Overdue Rate from the date such sums are paid by Landlord until repaid,
shall be paid by Tenant to Landlord, on demand.
12.7 Trade Names.
If the applicable Lease relating to a Facility is terminated for any
reason Tenant shall not use a Facility Trade Name in the same market in which
such Facility is located in connection with any business that competes with such
Facility.
ARTICLE 13
HOLDING OVER
Any holding over by Tenant after the expiration of the Term shall be
treated as a daily-tenancy at sufferance at a rate equal to 1-1/2 times the
Minimum Rent and the Additional Rent then in
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effect plus Additional Charges and other charges herein provided (prorated on a
daily basis). Tenant shall also pay to Landlord all damages (other than
consequential damages) sustained by reason of any such holding over. Otherwise,
such holding over shall be on the terms and conditions set forth in the
applicable Lease, to the extent applicable. Nothing contained herein shall
constitute the consent, express or implied, of Landlord to the holding over of
Tenant after the expiration or earlier termination of the applicable Lease.
ARTICLE 14
LANDLORD'S DEFAULT
If Landlord shall default in the performance or observance of any of
its covenants or obligations set forth in the applicable Lease, and such default
shall continue for a period of thirty (30) days after Notice thereof from Tenant
to Landlord and any applicable Facility Mortgagee, or such additional period as
may be reasonably required to correct the same, Tenant may declare the
occurrence of a "Landlord Default" by a second Notice to Landlord and to such
Facility Mortgagee. Thereafter, Tenant may forthwith cure the same and, subject
to the provisions of the following paragraph, invoice Landlord for costs and
expenses (including reasonable attorneys' fees and court costs) incurred by
Tenant in curing the same, together with interest from the date Landlord
receives ▇▇▇▇▇▇'s invoice, at a rate equal to the lesser of the Overdue Rate or
the maximum rate allowed by law. Tenant shall have no right to terminate the
applicable Lease for any default by Landlord hereunder and no right, for any
such default, to offset or counterclaim against any Rent or other charges due
hereunder.
If Landlord shall in good faith dispute the occurrence of any Landlord
Default and Landlord, before the expiration of the applicable cure period, shall
give Notice thereof to Tenant, setting forth, in reasonable detail, the basis
therefor, no Landlord Default shall be deemed to have occurred and Landlord
shall have no obligation with respect thereto until final adverse determination
thereof. If Tenant and Landlord shall fail, in good faith, to resolve the
dispute within ten (10) days after ▇▇▇▇▇▇▇▇'s Notice of dispute, either may
submit the matter for resolution to a court of competent jurisdiction.
ARTICLE 15
PURCHASE OF LEASED PROPERTY
In the event Tenant shall purchase the applicable Leased Property from
Landlord pursuant to the terms of the applicable Lease, Landlord shall, upon
receipt from Tenant of the applicable purchase price, together with full payment
of any unpaid Rent and other charges due and payable with respect to any period
ending on
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or before the date of the purchase, and so long as no Default shall have
occurred and be continuing at such time, (or, solely in the case of the purchase
of the Collective Leased Properties pursuant to Section 21.4, so long as no
Default involving the nonpayment of Rent shall have occurred and be continuing),
deliver to Tenant a title insurance policy, together with an appropriate deed or
other instruments, conveying the entire interest of Landlord in and to such
Leased Property to Tenant, free and clear of all encumbrances created through
the act or omission of Landlord other than (i) those liens, if any, which ▇▇▇▇▇▇
has agreed in writing to accept and take title subject to, and (ii) encumbrances
imposed on such Leased Property under Section 5.5 hereof. The difference between
the applicable purchase price and the total cost of discharging the encumbrances
described in clause (i) above shall be paid in cash to Landlord or as Landlord
may direct, in federal or other immediately available funds. Other than as
specifically provided above, such Leased Property shall be conveyed to Tenant on
an "as is" basis, and in its then physical condition. The closing of any such
sale shall be subject to all terms and conditions with respect thereto set forth
in the applicable Lease and in the other Transaction Documents, and shall,
unless waived by Tenant, be contingent upon and subject to Tenant's obtaining
all required governmental consents and approvals for such transfer. All expenses
of such conveyance, including, without limitation, all transfer and sales taxes,
documentary fees, the reasonable fees and expenses of counsel to Landlord and
the cost of any title examination or title insurance, shall be paid by Tenant.
ARTICLE 16
SUBSTITUTION OF PROPERTY FOR THE LEASED PROPERTY
16.1 Tenant's Substitution Option.
If (a) in the good faith judgment of Tenant, the Leased Property shall
become Unsuitable for Its Primary Intended Use, and no Default shall have
occurred and then be continuing, or (b) Tenant shall have voluntarily ceased
operations on the applicable Leased Property or there shall have occurred a
final unappealable determination by an applicable State authority of the
revocation of any license, permit or approval required for the lawful operation
of the Facility located on the applicable Leased Property in accordance with its
Primary Intended Use or the loss of any license under any other circumstances
under which Tenant is required to cease its operation of such Facility in
accordance with its Primary Intended Use, and no Event of Default shall have
occurred and then be continuing, Tenant shall have the right, subject to the
conditions set forth in this Article 16, upon not less than thirty (30) days,
and not more than ninety (90) days, prior Notice to Landlord, to substitute one
or more properties (collectively, "Substitute Properties" or individually,
"Substitute Property") on the date specified in such Notice (the
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"Substitution Date") (which date shall not be more than ninety (90) days from
the date of cessation of operations at the Facility); provided, however, if
Tenant is required by court order or administrative action to divest or
otherwise dispose of the applicable Leased Property in less than thirty (30)
days and Tenant shall have given Landlord prior Notice of the filing of such
court or administrative action and kept Landlord reasonably apprised of the
status thereof, the time period shall be shortened appropriately to meet the
reasonable needs of Tenant, but in no event less than ten (10) Business Days
after the receipt by Landlord of such Notice. Such Notice shall (i) be in the
form of an Officer's Certificate, setting forth in reasonable detail the
reason(s) for the substitution and the proposed Substitution Date, and (ii)
designate not less than two properties (or groups of properties), each of which
properties (or groups of properties) shall provide Landlord with a yield (i.e.,
annual return on its equity in such property) substantially equivalent to
Landlord's yield from the applicable Leased Property at the time of such
proposed substitution (or in the case of substitution because of damage or
destruction, the yield immediately prior to such damage or destruction) and as
reasonably projected over the remaining Term of the applicable Lease.
16.2 Substitution Procedures.
(a) If Tenant shall initiate a substitution pursuant to Section 16.1 or
above, Landlord shall have a period of thirty (30) days within which to review
the designated properties and such additional information as may be reasonably
requested by Landlord and either accept or reject the Substitute Properties so
presented, unless Tenant is required by a court order or administrative action
to divest or otherwise dispose of the Leased Property within a shorter time
period, in which case the time period shall be shortened appropriately to meet
the reasonable needs of Tenant, but in no event shall such period be less than
ten (10) Business Days after Landlord's actual receipt of Tenant's notice
(subject to further extension for any period of time in which Landlord is not
timely provided with the information provided for in this Section 16.2 and
Section 16.3 below). Landlord and Tenant shall use good faith efforts to agree
on a Substitute Property.
(b) ▇▇▇▇▇▇'s right (and obligation) to offer to substitute a property
as set forth in this Article is subject to (i) satisfaction of the conditions
set forth in Section 16.3 below, (ii) determination by Landlord that the
Substitute Property shall provide Landlord with a yield substantially equivalent
to Landlord's yield from the Leased Property immediately before such
substitution or such damage or destruction, as the case may be, and as projected
over the remainder of the Term, and (iii) the delivery of an opinion of counsel
for Landlord confirming that (w) the substitution of the Substitute Property for
the Leased Property will qualify as an exchange solely of property of a like
kind under Section 1031 of the Code, in which, generally, except
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for "boot", no gain or loss will be recognized by Landlord, (x) the substitution
will not result in ordinary recapture income to Landlord pursuant to Code
Section 1250(d)(4) or any other Code provision, (y) the substitution will result
in income, if any, to the Landlord of a type described in Code Section 856(c)(2)
or (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 (z) the
substitution, together with all other substitutions made or requested by Tenant
or an Affiliate pursuant to any other lease with Landlord or other transfers of
the Leased Property or properties leased under other such leases, during the
relevant time period, will not jeopardize the qualification of Landlord as a
real estate investment trust under Code Sections 856-860 .
(c) In the event that the then Fair Market Value of the Substitute
Property or group of Substitute Properties minus the encumbrances assumed by
Landlord, or as to which the Landlord will take the Substitute Property or group
of Substitute Properties subject, as of the Substitution Date is greater than
the then Adjusted Purchase Price of the applicable Leased Property minus the
encumbrances assumed by Tenant, or as to which the Tenant will take the
applicable Leased Property subject, as of the Substitution Date (or in the case
of damage or destruction, the Adjusted Purchase Price of the applicable Leased
Property immediately prior to such damage or destruction), Landlord shall pay to
Tenant an amount equal to the difference, subject to the limitation set forth
below; in the event that such value of the Substitute Property or group of
Substitute Properties is less than such value of the applicable Leased Property,
Tenant shall pay to Landlord an amount equal to the difference, subject to the
limitation set forth below, provided, however, neither Landlord nor Tenant shall
be obligated to consummate such substitution if such party would be required to
make a payment (the "Cash Adjustment") to the other in excess of an amount equal
to fifteen percent (15%) of the Fair Market Value of the applicable Leased
Property. Without limiting the effect of the preceding sentence, in the event
that, on the Substitution Date, Landlord is obligated to pay a Cash Adjustment
to Tenant and Landlord, by a vote of a majority of the Independent Trustees,
shall elect not to make such payment in cash, Landlord shall provide Tenant with
(and Tenant shall accept) a purchase money note and mortgage or deed of trust,
on then commercially reasonable terms.
(d) The Rent for such Substitute Property from the Substitution Date
shall, in all respects, provide Landlord with a yield (i.e., annual return on
its equity in such property) substantially equivalent to Landlord's yield from
the Leased Property at the time of such substitution (or in the case of
substitution because of damage or destruction the yield immediately prior to
such damage or destruction) and as reasonably projected over the remaining Term,
taking into account the Cash Adjustment paid or received by-Landlord and any
other relevant
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factors, as determined by a majority of the Independent Trustees and a majority
of the Trustees.
(e) The Adjusted Purchase Price of the Substitute Property shall be an
amount equal to the Adjusted Purchase Price of the Leased Property (i) increased
by any Cash Adjustment paid by Landlord pursuant to paragraph (c) above, or (ii)
decreased by any Cash Adjustment paid by Tenant pursuant to paragraph (c) above.
16.3 Conditions to Substitution.
On the Substitution Date, the Substitute Property shall become the
Leased Property hereunder, upon delivery by Tenant to Landlord of the following:
(a) An Officer's Certificate, and, with respect to the matters
described in (ii), (iii) and (iv) below, an opinion of counsel to
Tenant reasonably acceptable to Landlord, certifying that (i) the
Substitute Property has been accepted by Tenant for all purposes of the
applicable Lease and there has been no material damage to the
improvements located thereon, nor is any condemnation or eminent domain
proceeding pending with respect thereto; (ii) all appropriate permits,
licenses and certificates (including, but not limited to, a permanent,
unconditional certificate of occupancy and all certificates of need,
licenses and provider agreements) which are necessary to permit the use
of the Substitute Property in accordance with the provisions of the
applicable 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 the applicable Lease and all necessary subdivision
approvals, if any, have been obtained; (iv) there are no mechanics' or
materialmen's liens outstanding or threatened to the knowledge of
Tenant against the Substitute Property arising out of or in connection
with the construction of the improvements thereon, other than those
being contested by Tenant pursuant to Article 8 hereof; (v) no Default
exists, and no defense, offset or claim exists with respect to any sums
payable by Tenant under the applicable Lease; and (vi) any exceptions
to Landlord's title to the Substitute Property do not materially
interfere with the intended use of the Substitute Property by Tenant;
(b) A deed with limited warranties or assignment of a
leasehold estate with limited warranties (as applicable) conveying to
Landlord title to the Substitute Property free and clear of any liens
or encumbrances, except those approved by Landlord;
(c) an amendment duly executed, acknowledged and delivered by
▇▇▇▇▇▇, in form and substance reasonably satisfactory to Landlord,
amending the applicable Lease to (i) correct the legal description of
the Land, (ii) establish
(x) the Adjusted Purchase Price and (y) the Minimum Rent of, the
Substitute Property and (iii) make such other changes herein as may be
necessary or appropriate under the circumstances;
(d) counterparts of 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 as of
the Substitution Date, in then current form and including mechanics'
and materialmen's lien coverage, issued to Landlord by a title
insurance company and in the form reasonably satisfactory to Landlord.
Such policy shall (i) insure (x) Landlord's fee title or leasehold
estate to the Substitute Property, subject to no liens or encumbrances
except those approved by Landlord and (y) that any restrictions
affecting the Substitute Property have not been violated; (ii) be in an
amount at least equal to the Fair Market Value of the Substitute
Property; and (iii) contain such affirmative coverage endorsements as
Landlord shall reasonably request;
(e) certificates of insurance with respect to the Substitute
Property fulfilling the requirements of Article 9;
(f) current appraisals or other evidence satisfactory to
Landlord, in its sole discretion, as to the then current Fair Market
Values and the projected residual values of such Substitute Property
and the applicable Leased Property for the remainder of the Term;
(g) all available revenue data relating to the Substitute
Property for the period from the date of opening for business of the
Facility on such Substitute Property to the date of Tenant's most
recent Fiscal Year end, or for the most recent three (3) years,
whichever is less;
(h) written confirmation from any guarantor of Tenant's
obligations under the applicable Lease; and
(i) such other certificates, documents, opinions of counsel
and other instruments as may be reasonably required by Landlord.
16.4 Conveyance to Tenant.
On the Substitution Date, Landlord shall convey the Leased Property to
Tenant in accordance with the provisions of Article 15 hereof (except as to
payment of any expenses in connection therewith which shall be governed by
Section 16.5 below) upon conveyance to Landlord of the Substitute Property, as
appropriate.
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16.5 Expenses.
Tenant shall pay or cause to be paid, on demand, all reasonable costs
and expenses paid or incurred by Landlord in connection with the substitution
and conveyance of the Leased Property and Substitute Property, including, but
not limited to, (a) reasonable fees and expenses of counsel, (b) all printing
expenses, (c) the amount of filing, registration and recording taxes and fees,
(d) the cost of preparing and recording, if appropriate, a release of the Leased
Property from the lien of any mortgage, (e) brokers' fees and commissions, (f)
documentary stamp and transfer taxes, (g) title insurance charges and premiums,
and (h) escrow fees.
ARTICLE 17
SUBLETTING AND ASSIGNMENT
17.1 Subletting and Assignment.
Except as provided in Section 17.3 below, Tenant shall not, without the
prior written consent of a majority of the Independent Trustees and a majority
of the Trustees, assign, mortgage, pledge, hypothecate, encumber or otherwise
transfer the applicable Lease or sublease (which term shall be deemed to include
the granting of concessions and licenses and the like), all or any part of the
applicable Leased Property or suffer or permit the applicable Lease or the
leasehold estate created hereby or thereby or any other rights arising under the
applicable Lease to be assigned, transferred, mortgaged, pledged, hypothecated
or encumbered, in whole or in part, whether voluntarily, involuntarily or by
operation of law, or permit the use or occupancy of the applicable Leased
Property by anyone other than Tenant, or the applicable Leased Property to be
offered or advertised for assignment or subletting except as hereinafter
provided. For purposes of this Section 17.1, an assignment of the applicable
Lease shall be deemed to include any Change in Control of Tenant or any
transaction pursuant to which Tenant is merged or consolidated with another
entity or pursuant to which all or substantially all of Tenant's assets are
transferred to any other entity, as if such Change in Control or transaction
were an assignment of the applicable Lease.
If the applicable Lease is assigned or if the applicable Leased
Property or any part thereof are sublet (or occupied by anybody other than
Tenant and its employees, except as permitted by Section 17.3) Landlord, after
an Event of Default occurs and is continuing, may collect the rents from such
assignee, subtenant or occupant, as the case may be, and apply the net amount
collected to the Rent herein reserved, but no such collection shall be deemed a
waiver of the provisions set forth in the first paragraph of this Section 17.1,
the acceptance by Landlord of such assignee, subtenant or occupant, as the case
may be, as a tenant, or a release of Tenant from the future performance by
▇▇▇▇▇▇ of its
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covenants, agreements or obligations contained in the applicable Lease.
No subletting or assignment shall in any way impair the continuing
primary liability of Tenant hereunder, and no consent to any subletting or
assignment in a particular instance shall be deemed to be a waiver of the
prohibition set forth in this Section 17.1. No assignment, subletting or
occupancy shall affect the Primary Intended Use. Any subletting, assignment or
other transfer of ▇▇▇▇▇▇'s interest in the applicable Lease in contravention of
this Section 17.1 shall be voidable at Landlord's option.
17.2 Required Sublease Provisions.
Any sublease of all or any portion of the applicable Leased Property
shall provide (a) that it is subject and subordinate to the applicable Lease and
to the matters to which the applicable Lease and such Lease is or shall be
subject or subordinate; (b) that in the event of termination of such Lease or
reentry or dispossession of Tenant by Landlord under such Lease, Landlord may,
at its option, terminate such sublease or take over all of the right, title and
interest of Tenant, as sublessor under such sublease, and such subtenant shall,
at Landlord's option, attorn to Landlord pursuant to the then executory
provisions of such sublease, except that neither Landlord nor any Facility
Mortgagee, as holder of a mortgage or as Landlord under the applicable Lease, if
such mortgagee succeeds to that position, shall (i) be liable for any act or
omission of Tenant under such sublease, (ii) be subject to any credit,
counterclaim, offset or defense which theretofore accrued to such subtenant
against Tenant, (iii) be bound by any previous modification of such sublease not
consented to in writing by Landlord or by any previous prepayment of more than
one (1) month's Rent, (iv) be bound by any covenant of Tenant to undertake or
complete any construction of such Leased Property or any portion thereof, (v) be
required to account for any security deposit of the subtenant other than any
security deposit actually delivered to Landlord by Tenant, (vi) be bound by any
obligation to make any payment to such subtenant or grant any credits, except
for services, repairs, maintenance and restoration provided for under the
sublease that are performed after the date of such attornment, (vii) be
responsible for any monies owing by Tenant to the credit of such subtenant, or
(viii) be required to remove any Person occupying such Leased Property or any
part thereof; and (c) in the event the subtenant receives a written Notice from
Landlord or the Facility Mortgagee, if any, stating that an Event of Default has
occurred and is continuing, the subtenant shall thereafter be obligated to pay
all rentals accruing under said sublease directly to the party giving such
Notice or as such party may direct. All rentals received from the subtenant by
Landlord or the Facility Mortgagee, if any, as the case may be, shall be
credited against the amounts owing by Tenant under the applicable Lease; and
such sublease shall provide that the subtenant thereunder shall, at the request
of Landlord,
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execute a suitable instrument in confirmation of such agreement to attorn. An
original counterpart of each such sublease and assignment and assumption, duly
executed by ▇▇▇▇▇▇ and such subtenant or assignee, as the case may be, in form
and substance satisfactory to Landlord, shall be delivered promptly to Landlord
and (a) in the case of an assignment, the assignee shall assume in writing and
agree to keep and perform all of the terms of the applicable Lease on the part
of Tenant to be kept and performed and shall be, and become, jointly and
severally liable with Tenant for the performance thereof and (b) in case of
either an assignment or subletting, Tenant 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 Tenant hereunder.
The provisions of this Section 17.2 shall not be deemed a waiver of the
provisions set forth in the first paragraph of Section 17.1.
17.3 Permitted Sublease.
Notwithstanding the foregoing, but subject to the provisions of Section
17.4 below and any other express conditions or limitations set forth herein,
Tenant may, in each instance after Notice to Landlord, sublease space at the
applicable Leased Property for laundry, commissary or child care purposes in
furtherance of the Primary Intended Use, so long as such sublease would not
reduce the number of licensed beds at the applicable Facility, would not violate
or affect any Legal Requirement or Insurance Requirement, and Tenant has
provided such additional insurance coverage applicable to the activities to be
conducted in such subleased space as is acceptable to Landlord (and any Facility
Mortgagee) in its discretion.
17.4 Sublease Limitation.
Anything contained in this Lease to the contrary notwithstanding,
Tenant shall not sublet the applicable Leased Property 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 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.
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ARTICLE 18
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS
18.1 Estoppel Certificates
At any time and from time to time, upon not less than ten (10) days
prior Notice by Landlord, Tenant shall furnish to Landlord an Officer's
Certificate certifying that the applicable Lease is unmodified and in full force
and effect (or that the applicable Lease is in full force and effect as modified
and setting forth the modifications), the date to which the Rent has been paid,
that Tenant is not in default in the performance of observance of any of the
terms of the applicable Lease and that no event exists which with the giving of
notice, lapse of time, or both, would constitute a Default or an Event of
Default, or if a Default or an Event of Default shall exist, specifying in
reasonable detail such Default or an Event of Default, and the steps being taken
to remedy the same, and such additional information as Landlord may reasonably
request. Any such certificate furnished pursuant to this Section 18.1 may be
relied upon by Landlord and any prospective purchaser or mortgagee of the
applicable Leased Property.
18.2 Financial Statements.
Tenant shall furnish the following statements to Landlord:
(a) within forty-five (45) days after each of the first three
quarters of any Fiscal Year, the most recent Consolidated Financials of
Tenant, accompanied by the Financial Officer's Certificate;
(b) within ninety (90) days after the end of each Fiscal Year,
the most recent Consolidated Financials of Tenant for such year,
certified by ▇▇▇▇▇ & ▇▇▇▇▇ or any other independent certified public
accountant reasonably satisfactory to Landlord and accompanied by the
Financial Officer's Certificate;
(c) promptly after the sending or filing thereof, copies of
all reports which Tenant sends to its security holders generally, and
copies of all periodic reports which Tenant files with the SEC or any
stock exchange on which its shares are listed or traded;
(d) promptly after the delivery thereof to Tenant, or its
management, a copy of any management letter or written report prepared
by the certified public accountants with respect to the financial
condition, operations, business or prospects of Tenant.
(e) at any time and from time to time upon not less than
twenty (20) days Notice from Landlord, Tenant will
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furnish to Landlord any Consolidated Financials or any other financial
reporting information required to be filed by Landlord with any
securities and exchange commission, the SEC or any successor agency, or
any other governmental authority, or required pursuant to any order
issued by any court governmental authority or arbitrator in any
litigation to which Landlord is a party, for purposes of compliance
therewith; and
(f) promptly upon notice from Landlord, such other information
concerning the business, financial condition and affairs of Tenant as
Landlord may reasonably request from time to time.
Landlord may at any time, and from time to time, provide any Facility Mortgagee
with copies of any of the foregoing statements.
18.3 General Operations.
Tenant covenants and agrees to furnish to Landlord:
18.3.1 Reimbursement, Licensure etc.
Within thirty (30) days after receipt or modification thereof, copies
of
(a) all licenses authorizing Tenant to operate the
Facility for its Primary Intended Use;
(b) all Medicare and Medicaid certifications, together
with provider agreements and all material
correspondence relating thereto with respect to the
Facility (excluding, however, correspondence which
may be subject to any attorney-client privilege);
(c) a Nursing Home Administrator License for the
individual employed in such capacity with respect to
the Facility; and
(d) all reports of surveys, statements of deficiencies,
plans of correction, and all material correspondence
relating thereto, including, without limitation, all
reports and material correspondence concerning
compliance with or enforcement of licensure,
Medicare/ Medicaid, and accreditation requirements,,
including physical environment and Life Safety Code
survey reports (excluding, however, correspondence
which may be subject to any attorney-client
privilege); and
(e) with reasonable promptness, such other confirmation
as to the Licensure and Medicare
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and Medicaid participation of Tenant as Landlord may
reasonably request from time to time.
18.3.2 Annual Budgets.
Not less than thirty (30) days prior to commencement of any Fiscal
Year, proposed annual income and ordinary expense and capital improvement
budgets setting forth projected income and costs and expenses projected to be
incurred by ▇▇▇▇▇▇ in managing, owning, maintaining and operating the Facility
during the next succeeding Fiscal Year.
ARTICLE 19
LANDLORD'S RIGHT TO INSPECT
Tenant shall permit Landlord and its authorized representatives to
inspect the applicable Leased Property during usual business hours upon not less
than three (3) Business Days' Notice (provided that no such notice shall be
required if Landlord shall reasonably determine immediate action is necessary to
protect person or property), and to make such repairs as Landlord is permitted
or required to make pursuant to the terms of the applicable Lease; provided that
any inspection or repair by Landlord or its representatives will not
unreasonably interfere with Tenant's use and operation of applicable Leased
Property; further provided that in the event of an emergency, as determined by
Landlord in its sole discretion, prior notice shall not be necessary.
ARTICLE 20
APPRAISAL
20.1 Appraisal Procedure.
In the event that it becomes necessary to determine the Fair Market
Value or Fair Market Rental of any property for any purpose of the applicable
Lease, and the parties cannot agree amongst themselves on such Fair Market Value
or Fair Market Rental, Tenant may request that Landlord select, or Landlord may
on its own initiative select, a Qualified Appraiser (as hereinafter defined). If
Tenant does not accept the Fair Market Value or Fair Market Rental, as the case
may be, of such property as of the relevant date as determined by such Qualified
Appraiser, Tenant may, within ten (10) days after receiving the report of such
Qualified Appraiser, by written notice to Landlord, appoint a second Qualified
Appraiser. If Tenant does not so appoint a second Qualified Appraiser within
such ten (10) day period, Tenant shall be deemed to have accepted the Fair
Market Value or Fair Market Rental determined by the first Qualified Appraiser.
The two appraisers
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so designated shall meet within ten (10) days after the second Qualified
Appraiser is designated, and, if within ten (10) days after the second Qualified
Appraiser is designated, the two appraisers do not agree upon the Fair Market
Value or Fair Market Rental, as the case may be, of any property as of the
relevant date, the two appraisers shall designate a third Qualified Appraiser,
within ten (10) days thereafter. In the event that the two appraisers are unable
to agree upon the appointment of a third Qualified Appraiser within such ten
(10) day period, either Landlord or Tenant, on behalf of both, may then request
appointment of such appraiser by the then president of the American Arbitration
Association. In the event of a failure, refusal or inability of any appraiser to
act, a new Qualified Appraiser shall be appointed in his stead, which
appointment shall be made in the same manner as hereinabove provided for the
appointment of such appraiser so failing, refusing or being unable to act. In
the event that all appraisers cannot agree upon such value within ten (10) days
as aforesaid, each appraiser shall submit his appraisal of such value to the
other two appraisers in writing, and such value shall be determined by
calculating the average of the two numerically closest (or, if the values are
equidistant, all three) values determined by the three appraisers.
"Qualified Appraiser" shall mean any-disinterested person who is a
member in good standing of the American Institute of Real Estate Appraisers or
the American Society of Real Estate Counselors (or the successor to either of
such organizations) and who has had not less than ten (10) years experience in
appraising and valuing, commercial buildings in the State.
The costs (other than Landlord's counsel fees) of each such appraisal
shall be borne by Tenant and shall be included as part of the Additional
Charges. Upon determining such value, the appraisers shall promptly notify
Landlord and Tenant in writing of such determination. If any party shall fail to
appear at the hearings appointed by the appraisers, the appraisers may act in
the absence of such party.
The determination of the board of appraisers (or the single Qualified
Appraiser, as appropriate) made in accordance with the foregoing provisions
shall be final and binding upon the parties, such determination may be entered
as an award in arbitration in a court of competent jurisdiction, and judgment
thereon may be entered.
20.2 Landlord's Right to Appraisal.
Landlord shall have the right, exercisable twice at any time during the
Term, to appoint a Qualified Appraiser (which may include, without limitation,
American Appraisal Associates) to perform a complete appraisal of the applicable
Leased Property, (each such appraisal to include complete valuations of such
Leased Property based upon (a) the "Cost Approach", (b) the "Market Approach"
and (c) the "Income Approach"), which appraisal shall
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meet all requirements of any state or Federal bank regulatory authority that
Landlord considers relevant or any Facility Mortgagee. The costs of each such
appraisal shall be borne by Tenant and shall be included as part of the
Additional Charges. Such right may not be exercised more than twice during the
Term.
ARTICLE 21
RIGHTS OF FIRST REFUSAL; OPTION TO PURCHASE
21.1 First Refusal to Purchase.
Provided, (a) no Default has occurred and is continuing, (b) the Leases
for each of the Collective Leased Properties shall be in full force and effect
(other than Leases that have been terminated in accordance with the provisions
hereof for reasons other than as a result of the occurrence of an Event of
Default), and (c) other than as expressly permitted by Article 17,
Tenant shall not have assigned the Leases for any of the Collective Leased
Properties or subleased all or any portion of the Collective Leased Properties,
during the Term and for sixty (60) days after expiration of the Term, Tenant
shall have a right of first refusal to purchase the applicable Leased Property
(subject to Section 22.1) upon the same price, terms and conditions as Landlord
shall propose to sell such Leased Property, or upon the same price, terms and
conditions of any written offer from a third party to purchase such Leased
Property which Landlord intends to accept (or has accepted subject to Tenant's
right of first refusal herein provided). If, during the Term and for sixty (60)
days after expiration of the Term, Landlord reaches such agreement with a third
party or proposes to offer the applicable Leased Property for sale, Landlord
shall promptly give Notice to Tenant of the purchase price and all other
material terms and conditions of such agreement or proposed sale and Tenant
shall have thirty (30) days thereafter to exercise Tenant's right of first
refusal to purchase by Notice to Landlord thereof. Failure of Tenant to respond
within such 30-day period shall be deemed a waiver of Tenant's right to purchase
such Leased Property pursuant to this Section 21.1. If Tenant exercises its
right of first refusal, the sale to Tenant shall be consummated upon the same
terms and conditions as contained in such agreement or Landlord's Notice of the
proposed sale (including all terms certain in such agreement or Notice relating
to any security deposit or fee, and the date of closing). Such sale to Tenant
shall be made in accordance with the provisions of Article 15, to the extent not
inconsistent herewith, no later than the closing date (or, if no closing date is
specified in such agreement or Notice, thirty (30) days after Tenant exercises
its right of first refusal), specified in such agreement or Notice. If Tenant
shall not exercise its right of first refusal within the time period and in the
manner above provided, Landlord shall be free to sell such Leased Property to
any third party at a price and upon terms substantially similar and in any event
no less favorable to Landlord than those offered
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to Tenant. Tenant shall be entitled to exercise its right of first refusal as
provided in this Section 21.1 as to any subsequent or proposed sale during the
Term.
Tenant's right of first refusal shall be applicable to all sales or
proposed sales of any portion of the applicable Leased Personal Property and the
price at which Tenant may so purchase such parts shall be the lesser of (a) the
proposed sale price of the parts or (b) the then Fair Market Value Purchase
Price of the parts of the applicable Leased Personal Property.
21.2 First Refusal to Lease.
Provided (a) this Lease shall not have been terminated in connection
with an Event of Default, and (b) other than as expressly permitted by Article
17 hereof, Tenant shall not have assigned this Lease or subleased all or any
portion of the Leased Property, Tenant shall have a first refusal option to
lease the Leased Property for a period of sixty (60) days after the expiration
of the Term, upon the same terms and conditions as Landlord shall propose to
lease the Leased Property to a third party or upon the same terms and conditions
of any offer from any third party which Landlord intends to accept (or has
accepted subject to ▇▇▇▇▇▇'s right of first refusal herein provided). If, at any
time prior to the expiration of such sixty (60) day period, Landlord reaches
such agreement with a third party or proposes to lease the Leased Property to a
third party, Landlord shall promptly notify Tenant of the rental rates and all
other material terms of such agreement or proposal and Tenant shall have five
(5) days after receipt of such notice within which time to exercise its right of
first refusal to lease. Landlord and Tenant shall enter into a new lease of the
Leased Property, in form reasonably satisfactory to both Landlord and Tenant, as
soon as practicable after the date of receipt by Landlord of Tenant's election
to exercise such right of first refusal to lease. Failure of Tenant to give such
notice to Landlord within such five (5) day period and such sixty (60) day
period, as the case may be, or to enter into such new lease within fifteen (15)
days after exercise of such right of first refusal to lease shall be deemed a
waiver of Tenant's rights pursuant to this Section 21.2.
21.3 Landlord's Option to Purchase the Tenant's Personal Property;
Transfer of Licenses.
Effective on not less than fifteen (15) days' prior notice given at
least sixty (60) days prior to expiration of the Term (or such shorter period as
shall be appropriate if the applicable Lease is terminated prior to its
expiration date), Landlord shall have the option to purchase all (but not less
than all) of Tenant's Personal Property (except motor vehicles), if any, at the
expiration or termination of the applicable Lease, for an amount equal to the
then fair market value thereof (determined in accordance with the appraisal
procedures set forth in Article 20),
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subject to, and with appropriate price adjustments for, all equipment leases,
conditional sale contracts, security interests and other encumbrances to which
such Tenant's Personal Property is subject. Tenant's Personal Property will be
conveyed to Landlord on an "as-is" basis, in its then current condition and
state of repair. Tenant shall provide Landlord with warranties of title,
reflecting no encumbrances as to which adjustments to the purchase price
thereof, as required by the previous sentence, have not been made. Failure of
Landlord to notify Tenant of the election of its option to purchase Tenant's
Personal Property by the fifteenth day prior to the termination of the
applicable Lease shall be deemed to constitute a waiver of Landlord's right to
purchase Tenant's Personal Property at the applicable Leased Property. Upon the
expiration or sooner termination of the applicable Lease, or upon management of
the Facility located on the applicable Leased Property by the Landlord or its
designee, Tenant shall use all reasonable efforts to transfer and assign to
Landlord or its designee, or assist Landlord or its designee in obtaining, any
contracts, licenses, and certificates required for the then operation of such
Facility.
21.4 Tenant's Option to Purchase the Leased Property.
Provided, (a) no Default has occurred and is continuing at the time of
exercise of the purchase option provided for in this Section 21.4 or at the time
of payment of the purchase price provided for in this Section 21.4, (b) the
Leases for each of the Collective Leased Properties (other than Leases that have
been terminated in accordance with the provisions hereof for reasons other than
as a result of the occurrence of an Event of Default) shall be in full force and
effect and (c) other than as expressly permitted by Article 17, Tenant shall not
have assigned the Leases for any of the Collective Leased Properties or
subleased all or any portion of the Collective Leased Properties, effective on
not less than twelve (12) months Notice, given not more than thirty six (36)
months prior to the expiration of the then current Term of the Leases, Tenant
shall have the option to purchase the Collective Leased Properties at a purchase
price equal to the greater of (i) one hundred twenty percent (120%) of the
aggregate of the Adjusted Purchase Prices of such Collective Leased Properties
or (ii) the aggregate of the Adjusted Purchase Prices of such Collective Leased
Properties, each as increased by the increase in the Cost of Living Index from
the date hereof, as of the date of expiration of the then current Term;
provided, however, Tenant's option to purchase is subject to Tenant exercising
such option simultaneously with respect to all, and not less than all, of the
Collective Leased Properties that are then subject to a Lease, as provided
herein. Such purchase by Tenant shall be made in accordance with the provisions
of Article 15 hereof and the closing date for such purchase shall be the date of
expiration of the then current Term.
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ARTICLE 22
FACILITY MORTGAGES
22.1 Landlord May ▇▇▇▇▇ ▇▇▇▇▇.
Without the consent of Tenant, Landlord may, subject to the terms and
conditions set forth in this Section 22.1, from time to time, directly or
indirectly, create or otherwise cause to exist any lien, encumbrance or title
retention agreement ("Encumbrance") upon the applicable Leased Property, or any
portion thereof or interest therein, whether to secure any borrowing or other
means of financing or refinancing. Any such Encumbrance shall include the right
to prepay (whether or not subject to a prepayment penalty) and shall provide
(subject to Section 22.2 below) that it is subject to the rights of Tenant under
the applicable Lease, including the rights of Tenant to acquire such Leased
Property pursuant to the applicable provisions of the applicable Lease (except
Tenant's right of first refusal to purchase such Leased Property shall not apply
upon foreclosure or transfer in lieu thereof, provided, that any such purchaser
or transferee (a) shall take title subject to Tenant's rights to acquire such
Leased Property pursuant to the applicable Lease, (b) shall agree to give Tenant
the same notice, if any, given to Landlord of any default or acceleration of any
obligation with respect to such Encumbrance, and (c) shall agree to permit
Tenant to appear by its representative and bid at any sale in foreclosure made
with respect to any such Encumbrance).
22.2 Subordination of Lease.
Subject to Section 22.1 above and the last paragraph of this Section
22.2, the applicable Lease, any and all rights of Tenant hereunder, are and
shall be subject and subordinate to any ground or master lease, and all
renewals, extensions, modifications and replacements thereof, and to all
mortgages and deeds of trust, which may now or hereafter affect the applicable
Leased Property or any improvements thereon and/or any of such leases, whether
or not such mortgages or deeds of trust shall also cover other lands and/or
buildings and/or leases, to each and every advance made or hereafter to be made
under such mortgages and deeds of trust, and to all renewals, modifications,
replacements and extensions of such leases and such mortgages and deeds of trust
and all consolidations of such mortgages and deeds of trust. This Section shall
be self-operative and no further instrument of subordination shall be required.
In confirmation of such subordination, ▇▇▇▇▇▇ shall promptly execute,
acknowledge and deliver any instrument that Landlord, the lessor under any such
lease or the holder of any such mortgage or the trustee or beneficiary of any
deed of trust or any of their respective successors in interest may reasonably
request to evidence such subordination. Any lease to which the applicable Lease
is, at the time referred to, subject and subordinate is herein called "Superior
Lease" and the lessor of a Superior Lease or its successor in interest at the
time
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referred to, is herein called "Superior Landlord" and any mortgage or deed of
trust to which the applicable Lease is, at the time referred to, subject and
subordinate, is herein called "Superior Mortgage" and the holder, trustee or
beneficiary of a Superior Mortgage is herein called "Superior Mortgagee".
If any Superior Landlord or Superior Mortgagee or the nominee or
designee of any Superior Landlord or Superior Mortgagee shall succeed to the
rights of Landlord under the applicable Lease, whether through possession or
foreclosure action or delivery of a new lease or deed, or otherwise, then at the
request of such party so succeeding to Landlord's rights (herein called
"Successor Landlord") and upon such Successor Landlord's written agreement to
accept Tenant's attornment, Tenant shall attorn to and recognize such Successor
Landlord as ▇▇▇▇▇▇'s landlord under the applicable Lease, and shall promptly
execute and deliver any instrument that such Successor Landlord may reasonably
request to evidence such attornment. Upon such attornment, the applicable Lease
shall continue in full force and effect as a direct lease between the Successor
Landlord and Tenant upon all of the terms, conditions and covenants as are set
forth in the applicable Lease, except that the Successor Landlord (unless
formerly the landlord under the applicable Lease or its nominee or designee)
shall not be (a) liable in any way to Tenant for any act or omission, neglect or
default on the part of Landlord under the applicable Lease, (b) responsible for
any monies owing by or on deposit with Landlord to the credit of Tenant, (c)
subject to any counterclaim or setoff which theretofore accrued to Tenant
against Landlord, (d) bound by any modification of the applicable Lease
subsequent to such Superior Lease or Mortgage, or by any previous prepayment of
Minimum Rent or Additional Rent for more than one (1) month, which was not
approved in writing by the Superior Landlord or the Superior Mortgagee thereto,
(e) liable to the Tenant beyond the Successor Landlord's interest in the
applicable Leased Property and the rents, income, receipts, revenues, issues and
profits is suing from such Leased Property, (f) responsible for the performance
of any work to be done by the Landlord under the applicable Lease to render the
applicable Leased Property ready for occupancy by Tenant, or (g) required to
remove any Person occupying the applicable Leased Property or any part thereof,
except if such person claims by, through or under the Successor Landlord. ▇▇▇▇▇▇
agrees at any time and from time to time to execute a suitable instrument in
confirmation of ▇▇▇▇▇▇'s agreement to attorn, as aforesaid.
Tenant's obligation to subordinate the applicable Lease and ▇▇▇▇▇▇'s
rights hereunder to any Superior Mortgage or Superior Lease and to attorn to any
Successor Landlord, shall be conditioned upon Landlord obtaining from any
Superior Mortgagee or Superior Landlord, an agreement which shall be executed by
Tenant and such Superior Mortgagee or Superior Landlord which shall provide in
substance that so long as no Event of Default exists as would entitle Landlord
or any such Superior Mortgagee or Superior Landlord to terminate the applicable
Lease or would cause, without
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any further action of Landlord or such Superior Mortgagee or Superior Landlord,
the termination of the applicable Lease or would entitle Landlord or such
Superior Mortgagee or Superior Landlord to dispossess Tenant, the applicable
Lease shall not be terminated, nor shall Tenant's use, possession or enjoyment
of the applicable Leased Property, in accordance with the terms and provisions
of the applicable Lease, be interfered with, nor shall the leasehold estate
granted by the applicable Lease be affected in any other manner, in any
foreclosure or any action or proceeding instituted under or in connection with
such Superior Mortgage or Superior Lease, or in the event such Superior
Mortgagee or Superior Landlord takes possession of the applicable Leased
Property pursuant to any provisions of such Superior Mortgage or Superior Lease,
unless Landlord or such Superior Mortgagee or Superior Landlord would have had
such right of termination pursuant to the applicable Lease. Such agreement shall
be in form customarily used by the holder of any such Superior Mortgage or
Superior Lease.
22.3 Notice to Mortgagee and Ground Landlord.
Subsequent to the receipt by Tenant of notice from any Person that it
is a Facility Mortgagee, or that it is the ground lessor under a lease with
Landlord, as ground lessee, which includes the applicable Leased Property as
part of the demised premises, no notice from Tenant to Landlord as to the
applicable Leased Property shall be effective unless and until a copy of the
same is given to such Facility Mortgagee or ground lessor, and the curing of any
of Landlord's defaults by such Facility Mortgagee or ground lessor shall be
treated as performance by Landlord.
ARTICLE 23
ADDITIONAL COVENANTS OF TENANT
23.1 Prompt Payment of Indebtedness.
Tenant will (a) pay or cause to be paid when due all payments of
principal of and premium and interest on Indebtedness for money borrowed and
will not permit or suffer any such Indebtedness to become or remain in default
beyond any applicable grace or cure period, (b) pay or cause to be paid when due
all lawful claims for labor and rents, (c) pay or cause to be paid on customary
trade terms and in any event prior to the institution of proceedings for the
collection thereof, all trade payables and (d) pay or cause to be paid when due
all other Indebtedness upon which it is or becomes obligated, except, in each
case, other than that referred to in clause (a), to the extent payment is being
contested in good faith by appropriate proceedings in accordance with Article 8
and if Tenant shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP or unless and until foreclosure, distraint sale
or other similar proceedings shall have been commenced.
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23.2 Conduct of Business.
Tenant will not engage in any business other than the ownership and
operation of (a) the Collective Leased Properties, (b) any Substitute
Properties, or (c) any other health care properties owned by Landlord and leased
to Tenant or given as security for Indebtedness owed to Landlord, and will do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect and in good standing its corporate existence and its rights and
licenses necessary to conduct such business.
23.3 Accreditation.
Tenant agrees to make diligent efforts to secure accreditation by the
Joint Commission on Accreditation of Health Care Organizations or the Commission
of Accreditation of Rehabilitation Facilities for the Facility maintained upon
the Applicable Leased Property such accreditation to be obtained as soon as
reasonably practicable.
23.4 Maintenance of Accounts and Records.
Tenant will keep true records and books of account in which full, true
and correct entries will be made of dealings and transactions in relation to the
business and affairs of Tenant in accordance with GAAP. Tenant will apply
accounting principles in the preparation of the financial statements of Tenant
which, in the judgment of and the opinion of its independent public accountants,
are in accordance with GAAP, except for changes approved by such independent
public accountants. Tenant will provide to Landlord either in a footnote to the
financial statements delivered under Section 18.2 which relate to the period in
which such change occurs, or in separate schedules to such financial statements,
information reasonably sufficient to show the effect of any such changes on such
financial statements.
23.5 Notice of Change of Name, Administrator, Etc.
Tenant will promptly give Notice to Landlord of any change in (a) the
name (operating or otherwise) of Tenant or the Facility, (b) the individual
licensed as administrator of the Facility, (c) the number of beds in any bed
category for which the Facility is licensed or the number of beds in any bed
category available for use at the Facility (except for changes in the number of
certified distinct part beds made for reimbursement maximization purposes), and
(d) the patient and/or child care services that are offered at the Facility.
23.6 Notice of Litigation, Potential Event of Default, Etc.
Tenant will promptly give Notice to Landlord of any litigation or any
administrative proceeding to which it may hereafter become a party which
involves a potential liability
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equal to or greater than $100,000, or which may otherwise result in any material
adverse change in the business, operations, property, prospects results of
operation or condition financial or other, of Tenant. Forthwith upon Tenant
obtaining knowledge of any Default, Event of Default or event of default under
any agreement relating to Indebtedness for money borrowed, or any event or
condition that would be required to be disclosed in a current report filed by
Tenant on Form 8-K or in Part II of a quarterly report on Form 10-Q if Tenant
were required to file such reports under the Securities Exchange Act of 1934, as
amended, Tenant will furnish a Notice to Landlord specifying the nature and
period of existence thereof and what action Tenant has taken or is taking or
proposes to take with respect thereto.
23.7 Indebtedness of Tenant.
Tenant shall not create, incur, assume or guarantee, or permit to
exist, or become or remain liable directly or indirectly upon, any Indebtedness
except the following:
(a) Indebtedness of Tenant to Landlord;
(b) unsecured Indebtedness of Tenant, other than for money borrowed
incurred in the ordinary course of business;
(c) Indebtedness of Tenant for taxes, assessments, governmental charges
or levies, to the extent that payment thereof shall not at the time be required
to be made in accordance with the provisions of Article 8;
(d) Indebtedness of Tenant in respect of judgments or awards which have
been in force for less than the applicable appeal period and in respect of which
execution thereof shall have been stayed pending such appeal or review, or (ii)
which are fully covered by insurance payable to Tenant, or (iii) which have been
in force for not longer than the applicable appeal period, so long as execution
is not levied thereunder, or (iv) in respect of which an appeal or proceedings
for review shall at the time be prosecuted in good faith in accordance with the
provisions of Article 8, and in respect of which execution thereof shall have
been stayed pending such appeal or review;
(e) unsecured borrowings of Tenant from its Affiliates which are by
their terms expressly subordinate to the payment and performance of Tenant's
obligations under the Leases;
(f) Indebtedness (including without limitation, accrued and unpaid
management fees) of Tenant owed to GranCare or any wholly-owned Subsidiary of
GranCare, provided that the payment of such Indebtedness shall be subject to the
terms of a subordination agreement among Tenant as debtor, GranCare or such
wholly-owned Subsidiary as subordinate creditor and HRP as senior creditor,
which subordination agreement shall be satisfactory to HRP in its sole and
absolute discretion.
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(g) Indebtedness of Tenant to Samaritan Arizona, Samaritan California
and Samaritan South Dakota under Section 7.2 of those certain Tenant Purchase
and Sale Agreement, dated as of May 29, 1992, by and among Tenant, Samaritan
Arizona and such affiliates. This Master Lease Document shall not affect the
validity, or in any other way, interfere with or adversely affect, the
indemnification and hold harmless clauses appearing in those various agreements.
(h) Indebtedness incurred to finance the purchase price of Tenant's
Personal Property or replacements to the Leased Personal Property; or
(i) Indebtedness expressly consented to in writing by ▇▇▇▇▇▇▇▇.
23.8 Financial Condition of Tenant.
(a) Tenant shall at all times maintain a ratio of current assets to
current liabilities of not less than 1 to 1. The terms "current assets" and
"current liabilities", respectively, shall mean all assets or liabilities, as
the case may be, which should, in accordance with GAAP, be classified as current
assets or current liabilities, as the case may be.
(b) Tenant shall at all times maintain Tangible Net Worth of
$1,000,000.
23.9 Distributions, Payments to Affiliates, Etc.
Tenant will not declare, order, pay or make, directly or indirectly,
any Distribution or any payment to any Affiliate (including payments in the
ordinary course of business and payment pursuant to management agreements with
any such Affiliate) or set apart any sum or property therefor, or agree to do
so, if, at the time of such proposed action, or immediately after giving effect
thereto, any event or condition shall exist which constitutes a Default or an
Event of Default.
23.10 Investments.
Tenant shall not make, or permit to remain outstanding, at any time any
Investment except the following:
(a) Marketable direct full faith and credit obligations of, and
marketable obligations guaranteed by, the United States of America, or any
agency or instrumentality thereof, which mature within one year from the date of
acquisition thereof;
(b) Marketable direct full faith and credit obligations of any state of
the United States of America, or any county, city, town, township or other
governmental subdivision of any such state, which mature within one year from
the date of acquisition
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thereof, provided, that such obligations are accorded a rating within one of the
three highest grades by ▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's
Corporation;
(c) Commercial paper maturing no more than two hundred and seventy
(270) days from the date of issue, provided that such paper is accorded a rating
within the highest category by ▇▇▇▇▇'▇ Investors Service, Inc. or Standard &
Poor's Corporation; or
(d) Certificates of deposit which have a remaining term to maturity at
the time of purchase of no more than one year (or which are subject to a
repurchase agreement with one of the banks or trust companies described in this
paragraph (c) exercisable within one year from the time of purchase) issued by
banks or trust companies organized under the laws of the United States of
America or a State thereof and which are member banks of the Federal Reserve
System, and have aggregate capital, surplus and undivided profits of at least
$100,000,000 and the long term obligations of which carry a rating of "A" or
better by ▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's Corporation;
(e) Bonds or debentures which have a remaining term to maturity at the
time of purchase of no more than one year, issued by a corporation, other than
GranCare or an Affiliate thereof, organized under the laws of a State of the
United States or the District of Columbia; provided, that such obligations carry
a rating of "A" or better by ▇▇▇▇▇'▇ Investors Service, Inc. or Standard &
Poor's Corporation.
23.11 Prohibited transactions.
Tenant shall not permit to exist or enter into any agreement or
arrangement whereby it engages in a transaction of any kind with any Affiliate
of Tenant, except on terms and conditions which are not less favorable to Tenant
than those on which similar transactions between unaffiliated parties could
fairly be expected to be entered into on an arms-length basis except, Tenant may
enter into a management agreement with its Affiliates without regard to this
Section 23.11 provided to do so would not give rise to a Default or Event of
Default and the payment of all fees thereunder is expressly subordinate to the
obligations of Tenant to HRP.
23.12 Management of Leased Property.
Tenant shall not enter into any management or similar agreement in
respect of the applicable Leased Property without the express prior written
consent of Landlord except Tenant may enter into a management agreement with its
Affiliates in compliance with Section 23.11.
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23.13 Definitions.
When used in this Article 23 the following terms shall have the
respective meanings provided therefor and, unless otherwise specifically
indicated, shall be deemed to relate to Tenant.
(a) The term "Distribution" shall mean (i) the declaration or payment
of any dividend (except dividends payable in common stock of Tenant) on or in
respect of any shares of any class of capital stock of Tenant, (ii) the
purchase, redemption or other retirement of any shares of any class of capital
stock of Tenant owned by a Person other than Tenant, and (iii) any other
distribution on or in respect of any shares of any class of capital stock of
Tenant by a Person other than Tenant.
(b) The term "Indebtedness" shall mean all obligations, contingent or
otherwise, which in accordance with GAAP should be reflected on the obligor's
balance sheet as liabilities.
(c) The term "Investment" shall mean all loans, advances, extensions of
credit (except for accounts and notes receivable for merchandise sold or
services furnished in the ordinary course of business, and amounts paid in
advance on account of the purchase price of merchandise to be delivered to the
payor within one year of the date of the advance), or purchases of stock, notes,
bonds or other securities or evidences of indebtedness or capital contribution
to any Person, whether in cash or other property. The amount of an Investment
shall be its cost (the amount of cash or the fair market value of other property
given in exchange therefor), whether or not written or charged off or -sold or
otherwise disposed of, except to the extent such cost shall have been paid to
Tenant by a Person in which Tenant had no present or prospective financial
interest at the time of such payment.
(d) "Tangible Net Worth" shall mean the excess of total assets over
total liabilities, total assets and total liabilities each to be determined in
accordance with GAAP, excluding, however, from the determination of total
assets: (i) goodwill, organizational expenses, research and development
expenses, trademarks, trade names, copyrights, patents, patent applications,
licenses and rights in any thereof, and other similar intangibles; (ii) all
deferred charges or unamortized debt discount and expense; (iii) all reserves
carried and not deducted from assets; (iv) treasury stock and capital stock,
obligations or other securities of, or capital contributions to, or investments
in, any Subsidiary; (v) securities which are not readily marketable other than
undrawn amounts under the $750,000.00 Promissory Note from GranCare, Inc. to
Tenant of even date herewith; (vi) any write-up in the book value of any asset
resulting from a revaluation thereof subsequent to the Closing Date; and (vii)
any items not included in clauses (i) through (vi) above that are treated as
intangibles in conformity with GAAP.
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ARTICLE 24
MISCELLANEOUS
24.1 Limitation on Payment of Rent.
All agreements between Landlord and Tenant herein are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of Rent, or otherwise, shall the Rent or any other amounts payable
to Landlord under this Lease or any of the other Transaction Documents exceed
the maximum permissible under applicable law, the benefit of which may be
asserted by Tenant as a defense, and if, from any circumstance whatsoever,
fulfillment of any provision of the applicable Lease or any of the other
Transaction Documents, at the time performance of such provision shall be due,
shall involve transcending the limit of validity prescribed by law, or if from
any circumstances Landlord should ever receive as fulfillment of such provision
such an excessive amount, then, ipso facto, the amount which would be excessive
shall be applied to that reduction of the installments of Minimum Rent next due
and not to the payment of such excessive amount. This provision shall control
every other provision of the Transaction Documents and any other agreements
between Landlord and Tenant.
24.2 No Waiver.
No failure by Landlord 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 Rent during the
continuance of any such breach, shall constitute a waiver of any such breach or
of any such term. To the extent permitted by law, no waiver of any breach shall
affect or alter the applicable Lease, which shall continue in full force and
effect with respect to any other then existing or subsequent breach.
24.3 Remedies Cumulative.
To the extent permitted by law, each legal, equitable or contractual
right, power and remedy of Landlord, now or hereafter provided either in the
applicable 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 Landlord of any one or more of such rights,
powers and remedies shall not preclude the simultaneous or subsequent exercise
by Landlord of any or all of such other rights, powers and remedies.
24.4 Severability.
Any clause, sentence, paragraph, section or provision of the applicable
Lease held by a court of competent jurisdiction to be invalid, illegal or
ineffective shall not impair, invalidate or
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nullify the remainder of the applicable Lease, but rather the effect thereof
shall be confined to the clause, sentence, paragraph, section or provision so
held to be invalid, illegal or ineffective, and the applicable Lease shall be
construed as if such invalid, illegal or ineffective provisions had never been
contained therein.
24.5 Acceptance of Surrender.
No surrender to Landlord of the applicable Lease or of the applicable
Leased Property or any part thereof, or of any interest therein, shall be valid
or effective unless agreed to and accepted in writing by Landlord and no act by
Landlord or any representative or agent of Landlord, other than such a written
acceptance by ▇▇▇▇▇▇▇▇, shall constitute an acceptance of any such surrender.
24.6 No Merger of Title.
It is expressly acknowledged to be the intent of the parties that there
shall be no merger of the applicable Lease or of the leasehold estate created
hereby by reason of the fact that the same Person may acquire, own or hold,
directly or indirectly (a) the applicable Lease or the leasehold estate created
hereby or any interest in the applicable Lease or such leasehold estate and (b)
the fee estate or ground landlord's interest in the applicable Leased Property.
24.7 Conveyance by Landlord.
If Landlord or any successor owner of the applicable Leased Property
shall convey such Leased Property in accordance with the terms hereof other than
as security for a debt, and the grantee or transferee of such Leased Property
shall expressly assume all obligations of Landlord hereunder arising or accruing
from and after the date of such conveyance or transfer, Landlord or such
successor owner, as the case may be, shall thereupon be released from all future
liabilities and obligations of Landlord under the applicable Lease arising or
accruing from and after the date of such conveyance or other transfer as to such
Leased Property and all such future liabilities and obligations shall thereupon
be binding upon the new owner.
24.8 Quiet Enjoyment.
So long as Tenant shall pay the Rent as the same becomes due and shall
substantially comply with all of the terms of the applicable Lease and perform
its obligations hereunder and thereunder, Tenant shall peaceably and quietly
have, hold and enjoy the applicable Leased Property for the Term hereof, free of
any claim or other action by Landlord or anyone claiming by, through or under
Landlord, but subject to (i) any Encumbrance permitted under Article 22, or
otherwise permitted to be created by Landlord hereunder, (ii) all Permitted
Encumbrances, (iii) liens as to obligations of Landlord that are either not yet
due or
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which are being contested in good faith and by proper proceedings, and (iv)
liens that have been consented to in writing by ▇▇▇▇▇▇. Except as otherwise
provided in the applicable Lease, no failure by Landlord to comply with the
foregoing covenant shall give Tenant any right to cancel or terminate the
applicable Lease or ▇▇▇▇▇, reduce or make a deduction from or offset against the
Rent or any other sum payable under the applicable Lease, or to fail to perform
any other obligation of Tenant hereunder.
24.9 NON-LIABILITY OF TRUSTEES.
THE DECLARATION OF TRUST ESTABLISHING LANDLORD, DATED OCTOBER 9, 1986,
A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS
DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF
MARYLAND, PROVIDES THAT THE NAME "HEALTH AND REHABILITATION PROPERTIES TRUST"
REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT
INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE
OR AGENT OF LANDLORD SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, LANDLORD. ALL PERSONS
DEALING WITH LANDLORD, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF LANDLORD FOR
THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
24.10 Landlord's Consent of Trustees.
Where provision is made in the applicable Lease for Landlord's consent
and Landlord shall fail or refuse to give such consent, Tenant shall not be
entitled to any damages for any withholding by Landlord of its consent, it being
intended that Tenant's sole remedy shall be an action for specific performance
or injunction, and that such remedy shall be available only in those cases where
Landlord has expressly agreed in writing not to unreasonably withhold its
consent.
24.11 Memorandum of Lease.
Neither Landlord nor Tenant shall record the applicable Lease or this
Master Lease Document. However, Landlord and Tenant shall promptly, upon the
request of either, enter into a short form memorandum of the applicable Lease,
in form suitable for recording under the laws of the State in which reference to
the applicable Lease and the Master Lease Document, and all options contained
herein, shall be made. Tenant shall pay all costs and expenses of recording such
memorandum.
24.12 Notices.
Any notice, request, demand, statement or consent ("Notice") desired or
required to be given hereunder shall be in writing and shall be delivered by
hand, sent by certified mail, return receipt requested, or sent by a nationally
recognized commercial overnight delivery service with provisions for a receipt,
postage or delivery charges prepaid, and shall be deemed given (i) when
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actually delivered, if delivered by hand, (ii) upon receipt, if sent by
certified mail, or (iii) the next Business Day after being placed in the
possession of an overnight delivery service, if sent by an overnight delivery
service, and shall be addressed as follows:
If to Tenant: c/o GranCare, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
With copies to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
If to Landlord: Health and Rehabilitation Properties Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
With a copy to: ▇▇▇▇▇▇▇▇ & Worcester
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
or at such other place as any party hereto may from time to time hereafter
designate to the other in writing. Any Notice given to Tenant from Landlord
shall not imply that such Notice or any further or similar Notice was or is
required. The failure of Landlord or Tenant to provide the copies indicated
above shall not render any Notice given by Landlord to Tenant or Tenant to
Landlord ineffective.
24.13 Incorporation by Reference.
All of the representations, warranties and covenants of Tenant
contained in the Acquisition Agreements and in each of the other Transaction
Documents to which Tenant is a party are hereby incorporated by reference
herein.
24.14 Construction.
Anything contained in the applicable Lease to the contrary
notwithstanding, (i) all claims against, and liabilities of, Tenant or Landlord
arising prior to any date of termination or expiration of the applicable Lease
shall survive such termination or expiration and (ii) neither party hereto shall
be liable for any consequential damages suffered by the other party as the
result of a breach by such party of its obligations owed to the other party. If
any term or provision of the applicable Lease or
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any application thereof shall be invalid or unenforceable, the remainder of the
applicable Lease and any other application of such term or provisions shall not
be affected thereby. If any late charges or any interest rate 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 the applicable Lease nor any provision
hereof may be changed, waived, discharged or terminated except by an instrument
in writing signed by the party to be charged. All the terms and provisions of
the applicable Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Each term or
provision of this Master Lease Document or the applicable Lease to be performed
by Tenant shall be construed as an independent covenant and condition. Time is
of the essence with respect to the exercise of any rights of Tenant under this
Master Lease Document and the applicable Lease. Except as otherwise set forth in
this Master Lease Document, any obligations of Tenant (including without
limitation, any monetary, repair and indemnification obligations) shall survive
the expiration or sooner termination of the applicable Lease. The headings in
the applicable Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.
24.15 GOVERNING LAW.
THE APPLICABLE LEASE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, EXCEPT AS TO MATTERS
REGARDING THE INTERNAL AFFAIRS OF LANDLORD AND ISSUES OF OR LIMITATIONS ON ANY
PERSONAL LIABILITY OF THE SHAREHOLDERS AND TRUSTEES OF LANDLORD FOR OBLIGATIONS
OF LANDLORD, AS TO WHICH THE LAWS OF THE STATE OF MARYLAND SHALL GOVERN.
[Intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Master Lease
Document as a sealed instrument as of the date first above written.
Executed in the LANDLORD:
presence of:
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate investment trust
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Treasurer
/s/
As to Landlord
TENANT:
GCI HEALTH CARE CENTERS, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Executive Vice President
/s/
As to Landlord
Signature Page to
Master Lease Document
dated as of June 30, 1992
EXHIBIT A-1
Primary Intended Use
EXHIBIT A-2
Collective Leased Properties
Mom and Dad's Sioux Falls, South Dakota
Description
The land together with the buildings and improvements thereon, located
in the County of Minnehaha, State of South Dakota and described as follows:
Blocks 2 and 4, and that portion of vacated Norton Avenue lying
adjacent thereto in Freed's Addition to South Sioux Falls, Minnehaha County,
South Dakota, according to the recorded plat thereof; and
Lot 1 in County Auditor's subdivision of the Sl/2NEl/4 of Section 32,
Township 101 North, Range 49 West of the 5th P.M., Minnehaha County, South
Dakota, according to the recorded plat thereof.
Village Green, Phoenix, Arizona
Description
The land, together with the buildings and improvements thereon, located
in the County of Maricopa, State of Arizona, more particularly described as
follows:
Lots 6, 7 and 8, ▇▇▇▇▇▇ TRACT, a subdivision recorded in Book 13 of
Maps, page 29 records of Maricopa County, Arizona.
La Mesa, Yuma, Arizona
Description
The land, together with the buildings and improvements thereon, located
in Yuma County, Arizona, more particularly described as follows:
Tract "B", La ▇▇▇▇ ▇▇▇▇▇, according to the plat of record in the office
of the County Recorder of Yuma, Arizona, in Book 3 of Plats, page 140;
EXCEPT the North 179 feet of the East 179 feet thereof.
Huron, Huron, South Dakota
Description
The land, together with the buildings and improvements thereon, located
in ▇▇▇▇▇▇ County, South Dakota, more particularly described as follows:
PARCEL I: Dynacor Lot 1, City of Huron,
▇▇▇▇▇▇ county, South Dakota
PARCEL II: Lots 1, 2, 3, 4 and 5, Block 2,
Camden Addition to the City
of Huron, ▇▇▇▇▇▇ County, South Dakota
▇▇ ▇▇▇▇▇▇▇▇, Stockton, California
Description
PARCEL ONE:
A tract of land situated in the County Of San Josquin. State of California, in
the Southeast quarter (SE 1/4) of Section seventeen (17), ▇. ▇. ▇▇▇▇▇ ▇▇▇▇▇,
more particularly described as follows:
COMMENCING at a steel axle at the Northwest corner of Oak Park, being also the
1/4 Section corner between Sections seventeen (17) and eighteen (18) of said ▇.
▇. ▇▇▇▇▇ ▇▇▇▇▇; thence along the West line of the Southeast 1/4 of said Section
seventeen (17). North 17 degrees 33 minutes West, 40 feet; thence along the
North line of ▇▇▇▇▇▇ Street (formerly Calaveras Avenue), North 72 degrees 30
minutes East 959.7 feet to an iron pipe at the Southwest corner of true point of
beginning of the within described tract; thence continue along the North line of
▇▇▇▇▇▇ Street. North 72 degrees 30 minutes East, 97 feet to the Southeast corner
of the 0.96 acre tract, described in Deed to ▇▇▇▇, recorded in Vol. 597 of
Official Records, page 493, San ▇▇▇▇▇▇▇ County Records; thence along the East
line of above mentioned 0.96 acre tract, North 17 degrees 30 minutes West, 150
feet to an iron pipe thence South 72 degrees 30 minutes West, 97 feet to an iron
pipe; thence South 17 degrees 30 minutes East 150 feet to the Point of
Beginning.
EXCEPTING the South 10 feet as described in Dead to City of Stockton recorded
August 8, 1967 in Vol. 3144 of Official Records, page 30, San ▇▇▇▇▇▇▇ County
Records.
PARCEL TWO:
A tract of land situated in the County of San ▇▇▇▇▇▇▇, State of California, in
the Southeast quarter (SE 1/4) of Section seventeen (17), ▇. ▇. ▇▇▇▇▇ ▇▇▇▇▇,
more particularly described as follows:
COMMENCING at a steel axle at the Northwest corner of Oak Park, being also the
114 Section corner between Sections seventeen (17) and eighteen (18) of said ▇.
▇. ▇▇▇▇▇ ▇▇▇▇▇; thence along the West line of the Southeast 114 of said Section
seventeen (17), North 17 degrees 33 minutes West, 40 feet; thence along the
North line of ▇▇▇▇▇▇ Street (formerly Calaveras Avenue) North 72 degrees 30
minutes East 862.7 feet to an iron pipe at the southwest corner of the 0.75 acre
tract described in Dead to ▇▇▇▇ recorded in Vol. 1864 of Official Records, page
404, San ▇▇▇▇▇▇▇ County Records; and being the Southwest corner and true point
of beginning of the within described tract; thence along the West line of said
0.75 acre tract, North 17 degrees 30 minutes West, 150 feet to an iron pipe;
thence North 72 degrees 30 minutes East, 97 feet to an iron pipe; thence South
17 degrees 30 minutes East, 150 foot to an iron pipe in the North line of ▇▇▇▇▇▇
Street; thence along the North line ▇▇▇▇▇▇ Street, South 72 degrees 30 minutes
West, 97 feet to the True Point of Beginning.
EXCEPTING the South 10 feet as described in Deed to City of Stockton, recorded
August 6, 1967 in Vol. 3144 of Official Records. page 30, San ▇▇▇▇▇▇▇ County
Records.
PARCEL THREE:
A portion of the Southeast quarter (SE 114) of Section seventeen (17), ▇. ▇.
▇▇▇▇▇ ▇▇▇▇▇, said portion being more particularly described as follows:
COMMENCING at a steel axle at the Northwest corner of Oak Park, (formerly known
as ▇▇▇▇▇▇▇▇▇ Grove) said axle being at the 1/4 section corner between Section
eighteen (18), and said Section seventeen (17); and running thence North 17
degrees 33 minutes West, 40 feet along said 1/4 section line in the middle of
said Section seventeen (17) to a steel axle in the North line of ▇▇▇▇▇▇ Street
(formerly Calaveras Avenue); thence along the North line of ▇▇▇▇▇▇ Street
(formerly Calaveras Avenue), North 72 degrees 30 minutes East, 662.7 feet to an
iron pipe at the Southwest corner of the 0.75 acre tract described in Dead to
▇▇▇▇, recorded in Vol. 1864 of Official Records, page 404, San ▇▇▇▇▇▇▇ County
Records; thence along the West line of said 0.75 acre tract, North 17 degrees 30
minutes West, 150 feet to an iron pipe and being the true point of beginning of
the property hereinafter described; thence continue North 17 degrees 30 minutes
West, 233.50 feet to an iron pipe on the South line of that certain 19.68 acre
tract, as described in Book A of Deeds, Vol. 199, page 441, San ▇▇▇▇▇▇▇ County
Records; thence North 72 degrees 30 minutes Fast. 194 feet to the Northeast
corner of that certain 0.96 acre tract described in Deed recorded June 22, 1938
in Vol. 597 of Official Records, page 493, San ▇▇▇▇▇▇▇ County Records; thence
South 17 degrees 30 minutes East, 233.50 feet to the Northeast corner of Parcel
described in Deed to ▇▇▇▇▇▇ ▇. ▇▇▇▇, recorded September 7, 1965 in Vol. 1900 of
Official Records, page 385, San ▇▇▇▇▇▇▇ County Records; thence South 72 degrees
30 minutes West along North line of ▇▇▇▇▇▇ ▇. ▇▇▇▇ property and said North line
extended Westerly, 194 feet to the Point of Beginning.
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EXHIBIT B
Form of Lease
EXHIBIT B
FORM OF LEASE
THIS LEASE is made as of June 30, 1992 between HEALTH AND
REHABILITATION PROPERTIES TRUST, a Maryland real estate investment trust
("Landlord"), having its principal office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and GCI HEALTH CARE CENTERS, INC., a Delaware corporation,
("Tenant"), having its principal office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with reference to the following facts:
▇. ▇▇▇▇▇▇▇▇, and Samaritan Senior Services of [State], Inc., a [State]
corporation ("Samaritan"), have entered into an Acquisition Agreement, dated as
of May 29, 1992 (as the same may be amended, modified or supplemented from time
to time, the "Acquisition Agreement"), pursuant to which Landlord has agreed to
acquire from Samaritan and simultaneously to lease to Tenant certain parcels of
real property and improvements (together the "Collective Leased Properties",
individually, a "Leased Property") each for use and operation as a licensed
nursing home or other facility offering other related health care products and
services.
B. The transaction contemplated in the foregoing recital provides that
each Leased Property will be leased pursuant to a lease which shall incorporate
a Master Lease Document dated as of June 30, 1992 between Landlord and Tenant
(as the same may be amended, modified or supplemented from time to time, the
"Master Lease Document"). This Lease is a Lease referred to in the Master Lease
Document.
In consideration of the foregoing, the parties agree:
1. Incorporation of Master Lease Document. The Master Lease Document is
hereby incorporated herein in its entirety as though each and every part thereof
were set forth in full herein.
2. Description of Leased Property. The Leased Property demised pursuant
to Article 2 of the Master Lease Document is that property located at the
following street address:
The Land referred to in the Master Lease Document is more particularly
described in Schedule A hereto.
3. Purchase Price. Landlord purchased the Leased Property from
Samaritan for the sum of _________ Dollars ($___________) (the "Purchase
Price").
4. Fixed Term. The Fixed Term of this Lease is fourteen (14) years,
commencing on July 1, 1992 (the "Commencement Date,") and ending on June 30,
2006.
5. Extended Term. Subject to the provisions of Section 2.4 of the
Master Lease Document, Tenant is hereby granted the right to renew the Lease for
two consecutive optional renewal terms ("Extended Term(s)") as follows: (i) the
"First Extended Term" is for ten (10) years and six (6) months, ending on
December 31, 2016, and (ii) the "Second Extended Term" is for ten (10) years and
six (6) months, ending on June 30, 2027.
6. Rental. The initial Minimum Rent payable pursuant to Section
3.1.1(a) of the Master Lease Document during years (i) one and two of the Fixed
Term is the annual sum of ________ Dollars ($_______) payable in equal monthly
installments of ________Dollars ($_______) (ii) three through five of the Fixed
Term is the annual sum of ________ Dollars ($_______) payable in equal monthly
installments of ______ Dollars ($_______), and (iii) thereafter, at the rental
provide for in Section 3.1.1(c) . of the Master Lease Document. The Minimum Rent
for the Extended Terms shall be at the rental provided for in Section 3.1.1(b)
of the Master Lease Document. During the Term, Minimum Rent shall be subject to
adjustment as provided in Section 3.1.1(c) of the Master Lease Document.
Landlord will credit against installments of Minimum Rent the amounts determined
in accordance with Section 3.1.1(d) of the Master Lease Document. Tenant shall
also pay Additional Rent pursuant to Section 3.1.2 of the Master Lease Document.
7. NONLIABILITY OF TRUSTEES. THE DECLARATION OF TRUST ESTABLISHING
LANDLORD, DATED OCTOBER 9, 1986, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS
THERETO (THE "DECLARATION"), IS ▇▇▇▇ FILED WITH THE DEPARTMENT OF ASSESSMENTS
AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HEALTH AND
REHABILITATION PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY. NO TRUSTEE,
OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF LANDLORD SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, LANDLORD. ALL PERSONS DEALING WITH LANDLORD IN ANY WAY SHALL LOOK ONLY
TO THE ASSETS OF LANDLORD FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
[Intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Lease by their duly
authorized officers as of the date first above written.
LANDLORD:
HEALTH AND REHABILITATION
PROPERTIES TRUST, a Maryland real
estate investment trust
By:___________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Treasurer
TENANT:
GCI HEALTH CARE CENTERS, INC.
By:__________________________
Its:
Signature page for Lease
dated as of June 30, 1992
Property address:
SCHEDULE A
Description of Land
(Legal description)
SCHEDULE I
Transaction Documents
Schedule I
1. Letter Agreement, dated April 25, 1992, from HRP to GranCare,
accepted by GranCare.
2. Closing Escrow Agreement, dated May 29, 1992, among HRP,
Samaritan, Samaritan Arizona, Samaritan California, Samaritan
South Dakota and GCI and the Title Company, as escrow agent,
delivering various closing documents and providing information
and instructions regarding delivery and recording of such
documents.
3. Master Lease Document, dated as of June 30, 1992, between HRP
as Landlord and GCI as Tenant.
4. Facility Leases, each dated as of June 30, 1992, between HRP
as Landlord and GCI as Tenant, for each Facility.
5. Amended and Restated HRP Shares Pledge Agreement, dated as of
June 30, 1992, between HRP and AMS, pursuant to which AMS has
pledged the HRP Shares to HRP to secure its obligations to
HRP.
6. Amended and Restated Voting Trust Agreement, dated as of June
30, 1992 from AMS to HRPT Advisors, Inc., as voting trustee.
(a) Voting Trust Certificate
(b) Stock Power
7. Guaranty, Cross Default and Cross Collateralization Agreement,
dated as of June 30, 1992, from AMS and GCI, in favor of HRP.
8. Guaranty, dated as of June 30, 1992 from GranCare, in favor o
HRP.
9. Security Agreement, dated as of June 30, 1992, from GCI to
HRP, granting HRP a security interest in all tangible and
intangible personal property and including all accounts
receivable, contract rights and general intangibles.
10. Assignment of Contracts, Licenses and Permits, dated as of
June 30, 1992, from GCI to HRP, assigning to HRP, all
contracts, licenses and permits used in connection with the
operation of the Facilities.
11. Pledge Agreement, dated as of June 30, 1992 Date, from
GranCare pursuant to which all of the capital stock of GCI is
pledged to HRP to secure the obligations of GCI.
(a) Stock power relating to pledged shares
12. Subordination Agreement, dated as of June 30, 1992, among
GranCare, subordinated creditor, GCI, as debtor and HRP as
senior creditor, pursuant to which all obligations of GCI to
the subordinated creditor are subordinated.
13. Subordination Agreement, dated as of June 30, 1992, among AMS
as subordinated creditor, GCI, as debtor and HRP as senior
creditor, pursuant to which all obligations of GCI to the
subordinated creditor are subordinated.
14. $750,000 Promissory Note made by GranCare, Inc. to GCI for
working capital purposes.
15. Representation Letter and Indemnification Agreement, dated
June 30, 1992, from GranCare, AMS and GCI, with respect to,
inter Al", the continued effectiveness of the representations
and warranties made by GranCare and GCI in, and the absence of
any Defaults under, the Transaction Documents.
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SCHEDULE II
DRAFT ENVIRONMENTAL QUESTIONNAIRE FOR NURSING HOME REFINANCING
1. PROJECT DESCRIPTION
1.1 Site location/address:
1.2 Name of present owner of Facility and Site:
1.3 Description of present uses of Facility and Site:
1.4 Describe the known history of the use(s) of the Site:
2. HAZARDOUS WASTES
2.1 State whether the Facility uses, generates, stores, treats, or
disposes of any hazardous substances, materials or wastes (as
defined by applicable federal or state laws, including,
without limitation, medical wastes).
If any of the above conditions apply,
2.1.1 Describe in terms of types of materials, substances
or wastes involved, including estimated annual
volumes of each.
2.1.2 Describe current hazardous waste disposal practices,
including identification of offsite disposal
facilities used, where applicable.
2.1.3 Provide a copy of all hazardous waste manifests for
the most recent twelve month period, where
applicable.
2.1.4 Provide a copy of the Facility's U.S. EPA Hazardous
Waste Identification Number along with a copy of any
other required federal or state hazardous waste
permit or approval, where applicable.
2.2 State whether the Facility or Site has any underground storage
tanks.
If any underground tanks are present,
2.2.1 Provide a description of each including location,
capacity, contents, and tank age. If federal or state
registration is required, furnish copy of appropriate
registration.
2.3 Describe any known legal, administrative or other action that
has been taken by any governmental agency relative to the
actual or potential release of hazardous wastes or petroleum
hydrocarbons on or beneath the Site. For each such action,
describe the circumstances, including current status of case.
2.4 Has the Facility been designated as a Potentially Responsible
Party by any federal or state agency with regard to the
off-site disposal of hazardous wastes originating from the
Facility? If so, describe the situation, including the current
status of the case.
3 PCB'S AND ASBESTOS
3.1 Does the Facility or Site contain any electrical
transformers or capacitors? If so, are any labeled as
containing PCB's?
3.2 Does the Facility appear to have asbestos containing
materials (ACM)? If so, describe locations of ACM and
physical condition of the ACM.
Comprehensive inspection not required.
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