EXHIBIT 10.23
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LEASE
between
HHC 1998-1 TRUST,
as Lessor,
and
HARBORSIDE OF DAYTON LIMITED PARTNERSHIP,
as Lessee
___________________________
Dated as of August 11, 1998
___________________________
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THIS LEASE IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF THE CHASE MANHATTAN
BANK, AS AGENT (THE "AGENT") FOR THE LENDERS UNDER A CREDIT AGREEMENT, DATED AS
OF AUGUST 11, 1998 AMONG HHC 1998-1 TRUST, THE LENDERS, AND THE AGENT, AS
AMENDED OR SUPPLEMENTED. THIS LEASE HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS.
TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL PAPER (AS SUCH TERM
IS DEFINED IN THE UNIFORM COMMERCIAL CODE OF THE STATE OF NEW YORK), NO SECURITY
INTEREST IN THIS LEASE MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY
COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART CONTAINING THE RECEIPT THEREFOR
EXECUTED BY THE AGENT ON THE SIGNATURE PAGE HEREOF.
TABLE OF CONTENTS
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Page
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SECTION 1. DEFINITIONS...................................................... 1
1.1 Defined Terms....................................................... 1
SECTION 2. PROPERTY AND TERM................................................ 1
2.1 Property............................................................ 1
2.2 Lease Term.......................................................... 1
2.3 Title............................................................... 1
2.4 Lease Supplements................................................... 1
SECTION 3. RENT............................................................. 1
3.1 Rent................................................................ 1
3.2 Supplemental Rent................................................... 2
3.3 Performance on a Non-Business Day................................... 2
SECTION 4. UTILITY CHARGES.................................................. 2
4.1 Utility Charges..................................................... 2
SECTION 5. QUIET ENJOYMENT.................................................. 3
5.1 Quiet Enjoyment..................................................... 3
SECTION 6. NET LEASE........................................................ 3
6.1 Net Lease; No Setoff; Etc........................................... 3
6.2 No Termination or Abatement......................................... 4
SECTION 7. OWNERSHIP OF PROPERTY............................................ 4
7.1 Ownership of the Property........................................... 4
SECTION 8. CONDITION OF PROPERTY............................................ 6
8.1 Condition of the Property........................................... 6
8.2 Possession and Use of the Property.................................. 6
SECTION 9. COMPLIANCE....................................................... 6
9.1 Compliance with Legal Requirements and Insurance Requirements....... 6
9.2 Environmental Matters............................................... 7
SECTION 10................................................................... 7
10.1 Maintenance and Repair; Return...................................... 7
10.2 Right of Inspection................................................. 9
10.3 Environmental Inspection............................................ 9
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SECTION 11. MODIFICATIONS.................................................... 9
11.1 Modifications, Substitutions and Replacements....................... 9
SECTION 12. TITLE............................................................ 10
12.1 Warranty of Title................................................... 10
12.2 Grants and Releases of Easements.................................... 11
SECTION 13. PERMITTED CONTESTS............................................... 11
13.1 Permitted Contests Other Than in Respect of Impositions............. 11
SECTION 14. INSURANCE........................................................ 12
14.1 Public Liability and Workers' Compensation Insurance................ 12
14.2 Hazard and Other Insurance.......................................... 12
14.3 Coverage............................................................ 13
SECTION 15. CONDEMNATION AND CASUALTY........................................ 13
15.1 Casualty and Condemnation........................................... 13
SECTION 16. LEASE TERMINATION................................................ 15
16.1 Termination upon Certain Events..................................... 15
16.2 Procedures.......................................................... 16
SECTION 17. DEFAULT.......................................................... 16
17.1 Lease Events of Default............................................. 16
17.2 Final Liquidated Damages............................................ 17
17.3 Lease Remedies...................................................... 18
17.4 Waiver of Certain Rights............................................ 19
17.5 Assignment of Rights Under Contracts................................ 20
17.6 Remedies Cumulative................................................. 20
SECTION 18. LESSOR'S RIGHT TO CURE........................................... 20
18.1 Lessor's Right to Cure Lessee's Lease Defaults...................... 20
SECTION 19. LEASE TERMINATION................................................ 20
19.1 Provisions Relating to Lessee's Termination of this Lease or
Exercise of Purchase Option......................................... 20
SECTION 20. PURCHASE OPTION.................................................. 21
20.1 Purchase Option..................................................... 21
20.2 Maturity Date Purchase Option....................................... 21
20.3 Obligation to Purchase All Properties............................... 21
SECTION 21. SALE OF PROPERTY 21
21.1 Sale Procedure...................................................... 21
21.2 Application of Proceeds of Sale..................................... 22
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21.3 Indemnity for Excessive Wear......................................... 23
21.4 Appraisal Procedure.................................................. 23
21.5 Certain Obligations Continue......................................... 23
SECTION 22. HOLDING OVER...................................................... 24
22.1 Holding Over......................................................... 24
SECTION 23. RISK OF LOSS...................................................... 24
23.1 Risk of Loss......................................................... 24
SECTION 24. SUBLETTING AND ASSIGNMENT......................................... 24
24.1 Subletting and Assignment............................................ 24
24.2 Subleases............................................................ 24
SECTION 25. ESTOPPEL CERTIFICATES............................................. 25
25.1 Estoppel Certificates................................................ 25
SECTION 26. NO WAIVER......................................................... 25
26.1 No Waiver............................................................ 25
SECTION 27. ACCEPTANCE OF SURRENDER........................................... 25
27.1 Acceptance of Surrender.............................................. 25
SECTION 28. NO MERGER OF TITLE................................................ 25
28.1 No Merger of Title................................................... 26
SECTION 29. NOTICES........................................................... 26
29.1 Notices.............................................................. 26
SECTION 30. MISCELLANEOUS..................................................... 27
30.1 Miscellaneous........................................................ 27
30.2 Amendments and Modifications......................................... 27
30.3 Successors and Assigns............................................... 27
30.4 Headings and Table of Contents....................................... 27
30.5 Counterparts......................................................... 27
30.6 GOVERNING LAW........................................................ 27
30.7 Limitations on Recourse.............................................. 28
30.8 Memorandum of Lease.................................................. 28
30.9 Priority............................................................. 28
30.10 Ground Lease......................................................... 28
Exhibits
Exhibit A Lease Supplement
Exhibit B Memorandum of Lease
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LEASE (this "Lease"), dated as of August 11, 1998, between HHC 1998-1
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TRUST, a Delaware business trust, as lessor (the "Lessor"), and HARBORSIDE OF
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DAYTON LIMITED PARTNERSHIP, a Massachusetts limited partnership, as lessee (the
"Lessee").
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In consideration of the mutual agreements herein contained, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS
1.1 Defined Terms. Capitalized terms used herein but not otherwise
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defined in this Lease shall have the respective meanings specified in Annex A to
the Participation Agreement dated as of the date hereof among Lessee, Lessor,
Trust Company, Agent, the Investors and the Lenders named therein, as such
Participation Agreement may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
2. PROPERTY AND TERM
2.1 Property. Subject to the terms and conditions hereinafter set
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forth and contained in the respective Lease Supplement relating to each
Property, Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
each Property.
2.2 Lease Term. The Property is leased for the Term, unless extended
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or earlier terminated in accordance with the provisions of this Lease.
2.3 Title. The Property is leased to Lessee without any
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representation or warranty, express or implied, by Lessor and subject to the
rights of parties in possession, the existing state of title (including, without
limitation, the Permitted Exceptions) and all applicable Legal Requirements.
Lessee shall in no event have any recourse against Lessor for any defect in
title to the Property.
2.4 Lease Supplements. On each Property Closing Date, Lessee and
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Lessor shall each execute and deliver a Lease Supplement for the Property to be
leased on such date in substantially the form of Exhibit A hereto and thereafter
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such Property shall be subject to the terms of this Lease.
3. RENT
3.1 Rent. (a) On each applicable Payment Date occurring after the
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termination of the Construction Period with respect to a Construction Period
Property and on each applicable Payment Date after the Property Closing Date
with respect to a Completed Property, Lessee shall pay the Basic Rent
attributable to such Property.
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(a) Basic Rent shall be due and payable in lawful money of the United
States and shall be paid by wire transfer of immediately available funds on the
due date therefor to such account or accounts at such bank or banks or to such
other Person or in such other manner as Lessor shall from time to time direct.
(b) Neither Lessee's inability or failure to take possession of all,
or any portion, of the Property when delivered by Lessor, nor Lessor's inability
or failure to deliver all or any portion of the Property to Lessee, whether or
not attributable to any act or omission of Lessee or any act or omission of
Lessor, or for any other reason whatsoever, shall delay or otherwise affect
Lessee's obligation to pay Rent in accordance with the terms of this Lease.
3.2 Supplemental Rent. (a) Lessee shall pay to Lessor or the Person
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entitled thereto any and all Supplemental Rent promptly as the same shall become
due and payable, and if Lessee fails to pay any Supplemental Rent as the same
shall become due and payable, Lessor shall have all rights, powers and remedies
provided for herein or by law or equity or otherwise in the case of nonpayment
of Basic Rent. Lessee shall pay to Lessor as Supplemental Rent, among other
things, on demand, to the extent permitted by applicable Legal Requirements,
interest at the applicable Overdue Rate on any installment of Basic Rent not
paid when due for the period for which the same shall be overdue and on any
payment of Supplemental Rent not paid when due or demanded by Lessor for the
period from the due date or the date of any such demand or the date on which the
Person entitled thereto is entitled to receive interest thereon (if later than
the due date or the date of Lessor's demand), as the case may be, until the same
shall be paid. The expiration or other termination of Lessee's obligations to
pay Basic Rent hereunder shall not limit or modify the obligations of Lessee
with respect to Supplemental Rent. Unless expressly provided otherwise in this
Lease or any other Operative Agreement, in the event of any failure on the part
of Lessee to pay and discharge any Supplemental Rent as and when due, Lessee
shall also promptly pay and discharge any fine, penalty, interest or cost which
may be assessed or added for nonpayment or late payment of such Supplemental
Rent, all of which shall also constitute Supplemental Rent.
(a) Lessee shall make a payment of Supplemental Rent equal to the
Maximum Residual Guarantee Amount in accordance with Section 21.1(c).
3.3 Performance on a Non-Business Day. If any payment is required
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hereunder on a day that is not a Business Day, then such payment shall be due on
the next succeeding Business Day, unless, in the case of payments based on the
Eurodollar Rate, the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.
4. UTILITY CHARGES
4.1 Utility Charges. Lessee shall pay, or cause to be paid, all
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charges for electricity, power, gas, oil, water, telephone, sanitary sewer
service and all other rents and
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utilities used in or on each Property during the Term. Lessee shall be entitled
to receive any credit or refund with respect to any utility charge paid by
Lessee and the amount of any credit or refund received by Lessor on account of
any utility charges paid by Lessee, net of the costs and expenses incurred by
Lessor in obtaining such credit or refund, shall be promptly paid over to
Lessee. All charges for utilities imposed with respect to the Property for a
billing period during which this Lease expires or terminates shall be adjusted
and prorated on a daily basis between Lessor and Lessee, and each party shall
pay or reimburse the other for each party's pro rata share thereof.
5. QUIET ENJOYMENT
5.1 Quiet Enjoyment. So long as no Lease Event of Default shall have
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occurred and be continuing, Lessee shall peaceably and quietly have, hold and
enjoy each Property for the Term, free of any claim or other action by Lessor or
anyone rightfully claiming by, through or under Lessor.
6. NET LEASE
6.1 Net Lease; No Setoff; Etc. This Lease shall constitute a net
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lease and, notwithstanding any other provision of this Lease, it is intended
that Basic Rent and Supplemental Rent shall be paid without counterclaim,
setoff, deduction or defense of any kind and without abatement, suspension,
deferment, diminution or reduction of any kind, and Lessee's obligation to pay
all such amounts is absolute and unconditional. The obligations and liabilities
of Lessee hereunder shall in no way be released, discharged or otherwise
affected for any reason, including, without limitation, to the maximum extent
permitted by law: (a) any defect in the condition, merchantability, design,
construction, quality or fitness for use of any portion of any Property, or any
failure of any Property to comply with all Legal Requirements, including any
inability to occupy or use any Property by reason of such non-compliance; (b)
any damage to, abandonment, loss, contamination of or Release from or
destruction of or any requisition or taking of any Property or any part thereof,
including eviction; (c) any restriction, prevention or curtailment of or
interference with any use of any Property or any part thereof, including
eviction; (d) any defect in title to or rights to any Property or any Lien on
such title or rights or on any Property; (e) any change, waiver, extension,
indulgence or other action or omission or breach in respect of any obligation or
liability of or by Lessor, Investors, Agent or any Lender; (f) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceedings relating to Lessee, Lessor, Investors, Agent, any Lender
or any other Person, or any action taken with respect to this Lease by any
trustee or receiver of Lessee, Lessor, Investors, Agent, any Lender or any other
Person, or by any court, in any such proceeding; (g) any claim that Lessee has
or might have against any Person, including, without limitation, Lessor,
Investors, Agent or any Lender; (h) any failure on the part of Lessor to perform
or comply with any of the terms of this Lease, any other Operative Agreement or
of any other agreement; (i) any invalidity or unenforceability or disaffirmance
against or by Lessee of this Lease or any provision hereof or any of the other
Operative Agreements or any provision of
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any thereof; (j) the impossibility of performance by Lessee, Lessor or both; (k)
any action by any court, administrative agency or other Governmental Authority;
any restriction, prevention or curtailment of or any interference with the
construction on or any use of any Property or any part thereof; or (m) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not Lessee shall have notice or knowledge of any of the foregoing. This Lease
shall be noncancellable by Lessee for any reason whatsoever except as expressly
provided herein, and Lessee, to the extent permitted by Legal Requirements,
waives all rights now or hereafter conferred by statute or otherwise to quit,
terminate or surrender this Lease, or to any diminution, abatement or reduction
of Rent payable by Lessee hereunder. If for any reason whatsoever this Lease
shall be terminated in whole or in part by operation of law or otherwise, except
as otherwise expressly provided herein, Lessee shall, unless prohibited by Legal
Requirements, nonetheless pay to Lessor (or, in the case of Supplemental Rent,
to whomever shall be entitled thereto) an amount equal to each Rent payment at
the time and in the manner that such payment would have become due and payable
under the terms of this Lease if it had not been terminated in whole or in part,
and in such case, so long as such payments are made and no Lease Event of
Default shall have occurred and be continuing, Lessor will deem this Lease to
have remained in effect. Each payment of Rent made by Lessee hereunder shall be
final and, absent manifest error in the computation of the amount thereof,
Lessee shall not seek or have any right to recover all or any part of such
payment from Lessor, Investors, Agent or any party to any agreements related
thereto for any reason whatsoever. Lessee assumes the sole responsibility for
the condition, use, operation, maintenance, and management of the Property and
Lessor shall have no responsibility in respect thereof and shall have no
liability for damage to the property of Lessee or any subtenant of Lessee on any
account or for any reason whatsoever.
6.2 No Termination or Abatement. Lessee shall remain obligated under
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this Lease in accordance with its terms and shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting Lessor, or any action with respect to this Lease which may
be taken by any trustee, receiver or liquidator of Lessor or by any court with
respect to Lessor, except as otherwise expressly provided herein. Lessee hereby
waives all right (i) to terminate or surrender this Lease, except as otherwise
expressly provided herein, or (ii) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim or defense with respect to any Rent.
Lessee shall remain obligated under this Lease in accordance with its terms and
Lessee hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Lease. Notwithstanding any such statute or otherwise, Lessee shall be
bound by all of the terms and conditions contained in this Lease.
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7. OWNERSHIP OF PROPERTY
7.1 Ownership of the Property. (a) Lessor and Lessee intend that (i)
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for financial accounting purposes with respect to Lessee (A) this Lease will be
treated as an "operating lease" pursuant to Statement of Financial Accounting
Standards (SFAS) No. 13, as amended, (B) Lessor will be treated as the owner and
lessor of the Property and (C) Lessee will be treated as the lessee of the
Property, but (ii) for federal, state and local income tax and remedial purposes
(A) this Lease will be treated as a financing arrangement, (B) the Lenders will
be treated as senior lenders making loans to Lessee in an amount equal to the
Loans, which Loans will be secured by the Property, (C) Lessor will be treated
as a subordinated lender making a loan to Lessee in an amount equal to the
Investor Contribution, which loan is secured by the Property, and (D) Lessee
will be treated as the owner of the Property and will be entitled to all tax
benefits ordinarily available to an owner of property like the Property for such
tax purposes.
(a) Lessor and Lessee further intend and agree that, for the purpose
of securing Lessee's obligations for the repayment of the above-described loans,
(i) this Lease shall also be deemed to be a security agreement and financing
statement within the meaning of Article 9 of the Uniform Commercial Code and a
real property mortgage or deed of trust, as applicable; (ii) the conveyance
provided for in Section 2 shall be deemed a grant of a security interest in and
a mortgage lien on the Lessee's right, title and interest in the Properties
(including the right to exercise all remedies as are contained in the applicable
Mortgage and Memorandum of Lease upon the occurrence of a Lease Event of
Default) and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, investments, securities or other property, whether in the
form of cash, investments, securities or other property, for the benefit of the
Lessor to secure the Lessee's payment of all amounts owed by the Lessee under
this Lease and the other Operative Agreements and Lessor holds title to the
Properties so as to create and grant a first lien and prior security interest in
each Property (A) pursuant to this Lease for the benefit of the Agent under the
Assignment of Lease, to secure to the Agent the obligations of the Lessee under
the Lease and (B) pursuant to the Mortgages to secure to the Agent the
obligations of the Lessor under the Mortgages and the Notes; (iii) the
possession by Lessor or any of its agents of notes and such other items of
property as constitute instruments, money, negotiable documents or chattel paper
shall be deemed to be "possession by the secured party" for purposes of
perfecting the security interest pursuant to Section 9-305 of the Uniform
Commercial Code; and (iv) notifications to Persons holding such property, and
acknowledgements, receipts or confirmations from financial intermediaries,
bankers or agents (as applicable) of Lessee shall be deemed to have been given
for the purpose of perfecting such security interest under applicable law.
Lessor and Lessee shall, to the extent consistent with this Lease, take such
actions as may be necessary to ensure that, if this Lease were deemed to create
a security interest in the Properties in accordance with this Section, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the
Basic Term. Nevertheless, Lessee acknowledges and agrees that none of Lessor,
Investors, the Trust Company, Agent, or any Lender has provided or will provide
tax, accounting or legal advice to Lessee regarding this Lease, the Operative
Agreements or the transactions contemplated hereby and thereby, or made any
representations or warranties concerning the tax, accounting or legal
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characteristics of the Operative Agreements, and that Lessee has obtained and
relied upon such tax, accounting and legal advice concerning the Operative
Agreements as it deems appropriate.
(b) Lessor and Lessee further intend and agree that in the event of
any insolvency or receivership proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency laws or statute of the United
States of America or any State or Commonwealth thereof affecting Lessee or
Lessor, the transactions evidenced by this Lease shall be regarded as loans made
by an unrelated third party lender to Lessee.
8. CONDITION OF PROPERTY
8.1 Condition of the Property. LESSEE ACKNOWLEDGES AND AGREES THAT IT
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IS RENTING EACH PROPERTY "AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT
(EXPRESS OR IMPLIED) BY LESSOR AND SUBJECT TO (A) THE EXISTING STATE OF TITLE,
(B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, (C) ANY STATE OF FACTS
WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW AND (D) VIOLATIONS OF
LEGAL REQUIREMENTS WHICH MAY EXIST ON THE DATE HEREOF. NONE OF LESSOR, THE
INVESTORS, THE AGENT AND ANY LENDER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY
REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED, INCLUDING THE
CONDITION OF ANY IMPROVEMENTS THEREON, THE SOIL CONDITION, OR ANY ENVIRONMENTAL
OR HAZARDOUS MATERIAL CONDITION) OR SHALL BE DEEMED TO HAVE ANY LIABILITY
WHATSOEVER AS TO THE TITLE, VALUE, HABITABILITY, USE, CONDITION, DESIGN,
OPERATION, OR FITNESS FOR USE OF THE PROPERTY (OR ANY PART THEREOF), OR ANY
OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY PROPERTY (OR ANY PART THEREOF) AND NONE OF LESSOR, THE INVESTORS,
THE AGENT AND ANY LENDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT
DEFECT THEREIN OR THE FAILURE OF ANY PROPERTY, OR ANY PART THEREOF, TO COMPLY
WITH ANY LEGAL REQUIREMENT.
8.2 Possession and Use of the Property. Each Construction Period
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Property shall be used in a manner consistent with the Agency Agreement and,
after the Completion Date for such Construction Period Property, and after the
Property Closing Date for a Completed Property, used by Lessee in the normal
course of its operations as a skilled nursing, assisted living, retirement or
congregate care facility (or related ancillary businesses, such as
rehabilitative therapy, home healthcare and pharmaceutical businesses associated
therewith). Lessee shall pay, or cause to be paid, all charges and costs
required in connection with the use of the Properties. Lessee shall not commit
or permit any waste of any Property or any part thereof.
9. COMPLIANCE
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9.1 Compliance with Legal Requirements and Insurance Requirements.
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Subject to the terms of Section 13 relating to permitted contests, Lessee, at
its sole cost and expense, shall (a) comply in all material respects with all
Legal Requirements (including all Environmental Laws) and Insurance Requirements
relating to each Property, including the use, construction, operation,
maintenance, repair and restoration thereof, whether or not compliance therewith
shall require structural or extraordinary changes in the Improvements or
interfere with the use and enjoyment of each Property, and (b) procure, maintain
and comply in all material respects with all licenses, permits, orders,
approvals, consents and other authorizations required for the construction,
renovation, use, maintenance and operation of each Property and for the use,
operation, maintenance, repair and restoration of the Improvements.
9.2 Environmental Matters. (a) Promptly upon Lessee's actual
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knowledge of the presence of Hazardous Substances in any portion of a Property
in concentrations and conditions that constitute an Environmental Violation,
Lessee shall notify Lessor in writing of such condition. In the event of such
Environmental Violation, Lessee shall, not later than ninety (90) days after
Lessee has actual knowledge of such Environmental Violation, either deliver to
Lessor and the Agent an Officer's Certificate and a Termination Notice with
respect to such Property pursuant to Section 16.1, if applicable, or, at
Lessee's sole cost and expense, promptly and diligently undertake any response,
clean up, remedial or other action necessary to remove, cleanup or remediate the
Environmental Violation in accordance with the terms of Section 9.1. If Lessee
does not deliver a Termination Notice with respect to such Property pursuant to
Section 16.1, Lessee shall, upon completion of remedial action by Lessee, cause
to be prepared by an environmental consultant reasonably acceptable to Lessor a
report describing the Environmental Violation and the actions taken by Lessee
(or its agents) in response to such Environmental Violation, and a statement by
the consultant that such Environmental Violation has been remedied in full
compliance with applicable Environmental Laws.
(a) In addition, Lessee shall provide to Lessor, within five (5)
Business Days of receipt, copies of all written communications with any
Governmental Authority relating to the material violation of any Environmental
Law in connection with any Property. Lessee shall also promptly provide such
detailed reports of any such environmental claims as reasonably may be requested
by Lessor and the Agent.
10. MAINTENANCE AND REPAIR
10.1 Maintenance and Repair; Return. (a) Lessee, at its sole cost
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and expense, shall maintain each Property in good condition (ordinary wear and
tear excepted) and make all necessary repairs thereto, of every kind and nature
whatsoever, whether interior or exterior, ordinary or extraordinary, structural
or nonstructural or foreseen or unforeseen, in each case as required by all
Legal Requirements and Insurance Requirements and on a basis reasonably
consistent with the operation and maintenance of commercial properties
comparable in type and location to the applicable Property subject, however, to
the provisions of Section 15 with respect to Condemnation and Casualty.
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(a) Lessor shall under no circumstances be required to build any
Improvements on any Property, make any repairs, replacements, alterations or
renewals of any nature or description to any Property, make any expenditure
whatsoever in connection with this Lease or maintain any Property in any way.
Lessor shall not be required to maintain, repair or rebuild all or any part of
any Property, and Lessee waives the right to (i) require Lessor to maintain,
repair, or rebuild all or any part of any Property, or (ii) make repairs at the
expense of Lessor pursuant to any Legal Requirement, Insurance Requirement,
contract, agreement, covenants, condition or restriction at any time in effect.
(b) Lessee shall, upon the expiration or earlier termination of the
Term with respect to a Property (unless the Property is being conveyed to
Lessee), vacate, surrender and transfer such Property to Lessor, at Lessee's own
expense, free and clear of all Liens other than Permitted Liens and Lessor
Liens, in as good condition as they were on the Property Closing Date in the
case of a Completed Property or on the Completion Date in the case of a
Construction Period Property, ordinary wear and tear excepted, and in compliance
with all Legal Requirements and the other requirements of this Lease (and in any
event without (x) any asbestos installed or maintained in any part of such
Property, (y) any polychlorinated byphenyls (PCBs) in, on or used, stored or
located at such Property, and (z) any other Hazardous Substances). Lessee shall
provide, or cause to be provided or accomplished, at the sole cost and expense
of Lessee, (unless the Property is being conveyed to Lessee) to or for the
benefit of Lessor or a purchaser, at least thirty Business Days prior to the
expiration or earlier termination of the Term with respect to a Property, each
of the following: (i) an endorsement to the title policy issued for such
Property showing (A) record title of the Lessor in the leasehold or fee estate,
as the case may be, subject to no Liens other than Permitted Liens described in
clauses (i),(v) and (viii) of the definition of Permitted Liens, Liens for Taxes
not yet due, Liens described in clauses (iii) and (iv) of the definition of
Permitted Exceptions and Lessor Liens and (B) the Mortgage as a valid and
perfected first lien; (ii) an environmental assessment for such Property
satisfying the requirements set forth in Section 10.3 below; (iii) an assignment
(to the extent assignable) of all of the Lessee's right, title and interest in
and to each agreement executed by Lessee in connection with the construction,
renovation, development, use, maintenance or operation of such Property
(including all warranty, performance, service and indemnity provisions); (iv) to
the extent available, copies of all Plans and Specifications relating to the
design, construction, renovation or development of such Property; (v) an
assignment (to the extent assignable) of all permits, licenses, approvals and
other authorizations from all Governmental Authorities in connection with the
construction, operation and use of such Property; (vi) copies of all books and
records, and in the case of any Non-Completed Property, all Budgets and
construction schedules, with respect to the construction, renovation,
maintenance, repair, operation or use of such Property; (vii) in the case of any
Non-Completed Property, (x) evidence satisfactory to Lessor that all building
materials purchased or contracted for purchase which have not been incorporated
into the Improvements at such Property are (A) owned by Lessor free from any
Liens, (B) secured, segregated and identifiable (and if stored off-site, the
location of such place of storage) and (C) insured under policies in amounts and
by insurers reasonably satisfactory to Lessor; (y) evidence satisfactory to
Lessor that adequate provision has been made for the protection of materials
stored on-site and for the protection of the Improvements, to the extent then
constructed, against deterioration and against other loss or damage or theft,
and (z) an agreement, in form and
9
substance reasonably satisfactory to Lessor, from all contractors, construction
managers, architects, engineers and other designee professionals that each will
continue to perform under their respective contracts for the benefit of Lessor
or its assignee; and (viii) an estoppel certificate in form and substance
reasonably acceptable to Lessor from the ground lessor of any Ground Lease.
Lessee shall cooperate with any independent purchaser of such Property in order
to facilitate the ownership and operation by such purchaser of such Property
after such expiration or earlier termination of the Term, including providing
all books, reports and records regarding the maintenance, repair and ownership
of such Property and all data and technical information relating thereto. Lessee
shall assign to Lessor or to any independent purchaser of such property all
licenses necessary for the operation and maintenance of such Property (to the
extent assignable) and if requested by Lessor or by such independent purchaser,
shall use best efforts in seeking and obtaining all licenses, permits and
approvals of Governmental Authorities for the benefit of such independent
purchaser necessary for the operation of such Property for the uses set forth in
Section 8.2 hereof. Lessee shall have also paid the total cost for the
completion of all Modifications commenced prior to such expiration or earlier
termination of the Term. The obligation of Lessee under this Section 10.1(c)
shall survive the expiration or termination of this Lease.
10.2 Right of Inspection. Lessor may, at reasonable times (but no
-------------------
more frequently than quarterly unless a Lease Default or Lease Event of Default
shall have occurred and be continuing) and with reasonable prior notice, enter
upon, inspect and examine at its own cost and expense (unless a Lease Event of
Default exists, in which case the out-of-pocket costs and expenses of Lessor
shall be paid by Lessee), any Property. Lessor shall have no duty to make any
such inspection or inquiry and shall not incur any liability or obligation by
reason of not making any such inspection or inquiry.
10.3 Environmental Inspection. During the period commencing on the
------------------------
date which is 12 months prior to the Maturity Date (unless Lessee has previously
irrevocably exercised the Maturity Date Purchase Option), and terminating on the
date which is thirty Business Days prior to surrender of possession of a
Property, Lessor shall, at Lessee's sole cost and expense, obtain a report by
the Environmental Engineer or such other environmental consultant reasonably
selected by Lessor certifying that each Property or any portion thereof (i) does
not contain Hazardous Substances under circumstances or in concentrations that
could result in a violation of or liability under any Environmental Law and (ii)
is in compliance with all Environmental Laws. If such is not the case, then
Lessee shall be deemed to have irrevocably exercised the Maturity Date Purchase
Option pursuant to Section 20.2.
11. MODIFICATIONS
11.1 Modifications, Substitutions and Replacements. (a) So long as
---------------------------------------------
no Lease Event of Default has occurred and is continuing, Lessee, at its sole
cost and expense, may at any time and from time to time make alterations,
renovations, improvements and additions to a Property or any part thereof
(collectively, "Modifications"); provided, that: (i) except for any Modification
------------- --------
required to be made pursuant to a Legal Requirement or an Insurance Requirement,
10
no Modification, individually, or when aggregated with any (A) other
Modification to such Property or (B) grant, dedication, transfer or release
pursuant to Section 12.2, shall impair the value of such Property or the utility
or useful life of such Property from that which existed immediately prior to
such Modification; (ii) the Modification shall be performed expeditiously and in
a good and workmanlike manner; (iii) Lessee shall comply with all Legal
Requirements (including all Environmental Laws) and Insurance Requirements
applicable to the Modification, including the obtaining of all permits and
certificates of occupancy, and the structural integrity of such Property shall
not be adversely affected; (iv) Lessee shall maintain or cause to be maintained
builders' risk insurance at all times when a Modification is in progress; (v)
subject to the terms of Section 13 relating to permitted contests, Lessee shall
pay all costs and expenses and discharge any Liens arising with respect to the
Modification; (vi) such Modifications shall comply with Sections 8.2 and 10.1
and shall not change the primary character of such Property; and (vii) no
Improvements shall be demolished, except to the extent such demolition does not
impair the value, utility or useful life of such Property or is replaced with
Improvements of at least equivalent value. All Modifications (other than those
that may be readily removed without impairing the value, utility or remaining
useful life of such Property) shall remain part of the realty and shall be
subject to this Lease, and title thereto shall immediately vest in Lessor. So
long as no Lease Event of Default has occurred and is continuing, Lessee may
place upon a Property any inventory, trade fixtures, machinery, equipment or
other property belonging to Lessee or third parties and may remove any
inventory, trade fixtures, machinery, equipment or other personal property,
whether placed thereon by Lessee or otherwise located thereon (or cause Lessor
to remove the same, to the extent owned by Lessor) at any time during the term
of this Lease; provided that the removal of such inventory, trade fixtures,
--------
machinery, equipment or other property, or their respective operations, does not
materially impair the value, utility or remaining useful life of such Property
unless appropriate replacements having at least equal value, utility and
remaining useful life are provided therefor.
(a) Following the Completion Date with respect to any Construction
Period Property, or the Property Closing Date with respect to any Completed
Property, Lessee shall notify Lessor of the undertaking of any construction,
repairs or alterations to a Property the cost of which is anticipated to exceed
$1,000,000. Prior to undertaking any such construction or alterations, Lessee
shall deliver to Lessor (i) a brief narrative of the work to be done and a copy
of the plans and specifications relating to such work; and (ii) an Officer's
Certificate stating that such work when completed will not impair the value,
utility or remaining life of such Property. Lessor, by itself or its agents,
shall have the right, but not the obligation, from time to time at reasonable
times, upon reasonable prior notice to inspect such construction to ensure that
the same is completed consistent with the plans and specifications.
(b) Following the Completion Date with respect to any Construction
Period Property, or the Property Closing Date with respect to any Completed
Property, Lessee shall not without the consent of Lessor undertake any
construction or alterations to such Property (other than construction or
alterations required for compliance with any Legal Requirement) if such
construction or alterations cannot, in the reasonable judgement of Agent, be
completed on or prior to the date that is twelve months prior to the Expiration
Date unless Lessee has irrevocably exercised the Maturity Date Purchase Option.
11
12. TITLE
12.1 Warranty of Title. (a) Lessee agrees that, except as otherwise
-----------------
provided herein and subject to the terms of Section 13 relating to permitted
contests, Lessee shall not directly or indirectly create or allow to remain, and
shall promptly discharge at its sole cost and expense, any Lien, defect,
attachment, levy, title retention agreement or claim upon any Property or any
Modifications or any Lien, attachment, levy or claim with respect to the Rent or
with respect to any amounts held by the Agent pursuant to the Credit Agreement,
other than Permitted Liens. Lessee shall promptly notify Lessor in the event it
receives knowledge that a Lien (other than a Permitted Lien) exists with respect
to the Property.
(a) Nothing contained in this Lease shall be construed as
constituting the consent or request of Lessor, expressed or implied, to or for
the performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to any Property
or any part thereof. NOTICE IS HEREBY GIVEN THAT LESSOR IS NOT AND SHALL NOT BE
LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO
LESSEE, OR TO ANYONE HOLDING ANY PROPERTY OR ANY PART THEREOF THROUGH OR UNDER
LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR
MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LESSOR IN AND TO ANY
PROPERTY.
12.2 Grants and Releases of Easements. Provided that no Lease Event
--------------------------------
of Default shall have occurred and be continuing and subject to the provisions
of Sections 8, 9, 10 and 11, Lessor hereby consents to the following actions by
Lessee, in the name and stead of Lessor, but at Lessee's sole cost and expense:
(a) the granting (and subordination of the Lien of the Mortgage thereto) of
easements, licenses, rights-of-way and other rights and privileges in the nature
of easements reasonably necessary or desirable for the construction, use,
repair, renovation or maintenance of any Property as herein provided; (b) the
release (free and clear of the Lien of the Mortgage) of existing easements or
other rights in the nature of easements which are for the benefit of any
Property; (c) the dedication or transfer (and subordination of the Lien of the
Mortgage thereto) of unimproved portions of any Property for road, highway or
other public purposes; (d) the execution of petitions to have any Property
annexed to any municipal corporation or utility district; and (e) the execution
of amendments to any covenants and restrictions affecting any Property;
provided, that in each case Lessee shall have delivered to Lessor an Officer's
--------
Certificate stating that: (i) such grant, release, dedication or transfer does
not impair the value or utility or remaining useful life of the applicable
Property, (ii) such grant, release, dedication or transfer is necessary in
connection with the construction, use, maintenance, alteration, renovation or
improvement of the applicable Property, (iii) Lessee shall remain obligated
under this Lease and under any instrument executed by Lessee consenting to the
assignment of Lessor's interest in this Lease as security for indebtedness, in
each such case in accordance with their terms, as though such grant, release,
dedication or transfer, had not been effected and (iv) Lessee shall pay and
perform any obligations of Lessor under such grant,
12
release, dedication or transfer. Without limiting the effectiveness of the
foregoing, provided that no Lease Event of Default shall have occurred and be
continuing, Lessor shall, upon the request of Lessee, and at Lessee's sole cost
and expense, execute and deliver any instruments necessary or appropriate to
confirm any such grant, release, dedication or transfer to any Person permitted
under this Section.
13. PERMITTED CONTESTS
13.1 Permitted Contests Other Than in Respect of Impositions. Except
-------------------------------------------------------
to the extent otherwise provided for in Section 12.2 of the Participation
Agreement, Lessee, on its own or on Lessor's behalf but at Lessee's sole cost
and expense, may contest, by appropriate administrative or judicial proceedings
conducted in good faith and with due diligence, the amount, validity or
application, in whole or in part, of any Legal Requirement, or utility charges
payable pursuant to Section 4.1 or any Lien, attachment, levy, encumbrance or
encroachment, and Lessor agrees not to pay, settle or otherwise compromise any
such item, provided that (a) the commencement and continuation of such
proceedings shall suspend the collection thereof from, and suspend the
enforcement thereof against the applicable Properties, Lessor, the Agent, the
Investors and the Lenders; (b) there shall be no risk of the imposition of a
Lien (other than a Permitted Lien) on any Property and no part of any Property
nor any Rent would be in any danger of being sold, forfeited, lost or deferred
during the pendency of such proceedings; (c) at no time during the permitted
contest shall there be a risk of the imposition of criminal liability or civil
liability on Lessor, the Agent or any Lender for failure to comply therewith;
and (d) in the event that, at any time, there shall be a material risk of
extending the application of such item beyond the earlier of the Maturity Date
and the Expiration Date for the applicable Property, then Lessee shall deliver
to Lessor an Officer's Certificate certifying as to the matters set forth in
clauses (a), (b) and (c) of this Section 13.1. Lessor, at Lessee's sole cost and
expense, shall execute and deliver to Lessee such authorizations and other
documents as may reasonably be required in connection with any such contest and,
if reasonably requested by Lessee, shall join as a party therein at Lessee's
sole cost and expense.
14. INSURANCE
14.1 Public Liability and Workers' Compensation Insurance. During
----------------------------------------------------
the Term, Lessee shall procure and carry, at Lessee's sole cost and expense,
commercial general liability insurance for claims for injuries or death
sustained by persons or damage to property while on each Property. Such
insurance shall be on terms and in amounts that are no less favorable than
insurance maintained by owners of similar properties, that are in accordance
with normal industry practice. The policy shall be endorsed to name Lessor, the
Trust Company, the Investors, the Agent and the Lenders as additional insureds.
The policy shall also specifically provide that the policy shall be considered
primary insurance which shall apply to any loss or claim before any contribution
by any insurance which Lessor, the Trust Company, the Agent or the Lenders may
have in force. Lessee shall, in the operation of the Property, comply with the
applicable workers' compensation laws and protect Lessor against any liability
under such laws.
13
14.2 Hazard and Other Insurance. (a) During the Term, Lessee shall
--------------------------
keep with respect to each Property an All Risk policy of insurance for loss or
damage in amounts equal to the actual replacement cost of the Improvements and
betterments and/or building value, if applicable. So long as no Lease Event of
Default exists, any loss payable under the insurance policy required by this
Section will be paid to and adjusted solely by Lessee, subject to Section 15.
(a) If at any time during the Term the area in which any Property is
located is designated a "flood-prone" area pursuant to the Flood Disaster
Protection Act of 1973 or any amendments or supplements thereto, then Lessee
shall comply with the National Flood Insurance Program as set forth in the Flood
Disaster Protection Act of 1973, as may be amended. In addition, Lessee will
fully comply with the requirements of the National Flood Insurance Act of 1968
and the Flood Disaster Protection Act of 1973, as each may be amended from time
to time, and with any other Legal Requirement, concerning flood insurance to the
extent that it applies to any Property. Coverage shall be maintained in an
amount equal to the insurable replacement cost of the Improvements and
betterments and/or building value, if applicable.
(b) Notwithstanding the provisions of Section 14.2, with respect to
each Construction Period Property, at all times until the Completion Date with
respect to such Construction Period Property, Lessee shall maintain (i) a
standard builder's all risk policy (completed value non-reporting form) for not
less than the full insurable amount of the work to be performed and equipment,
supplies and materials to be furnished, which policy shall contain a stated
value endorsement so that no co-insurance provision shall be applicable to any
loss thereunder and shall contain such endorsements and shall be in such form as
the Agent shall reasonably require and (ii) such other coverage and in such
amounts as the Agent shall reasonably require.
14.3 Coverage. (a) Lessee shall furnish Lessor with certificates
--------
showing the insurance required under Sections 14.1 and 14.2 to be in effect and
naming Agent, the Lenders, the Lessor, the Investors, and the Trust Company as
an additional insured with respect to liability insurance and showing the
mortgagee endorsement required by Section 14.3(c). All such insurance shall be
at the cost and expense of Lessee. Such certificates shall include a provision
in which the insurer agrees to provide thirty (30) days' advance written notice
by the insurer to Lessor and the Agent in the event of cancellation or
modification of such insurance that could be adverse to the interests of Lessor,
the Trust Company or the Agent. If a Lease Event of Default has occurred and is
continuing and Lessor so requests, Lessee shall deliver to Lessor copies of all
insurance policies required by this Lease to be held and applied by Lessor
toward payment of the cost of Restoration in accordance with Section 15.1(e).
(a) Lessee agrees that the insurance policy or policies required by
this Lease shall include an appropriate clause pursuant to which such policy
shall provide that it will not be invalidated should Lessee waive, in writing,
prior to a loss, any or all rights of recovery against any party for losses
covered by such policy. Lessee hereby waives any and all such rights
14
against Lessor, the Trust Company, the Investors, the Agent and the Lenders to
the extent of payments made under such policies.
(b) All insurance policies required by Section 14.2 shall include a
"New York" or standard form mortgagee endorsement in favor of the Agent; the
Agent, as its interests may appear shall be named as "Morgagee" and "loss
payee", accordingly.
(c) Neither Lessor nor Lessee shall carry separate insurance
concurrent in kind or form or contributing in the event of loss with any
insurance required under this Lease except that Lessor may carry separate
liability insurance so long as (i) Lessee's insurance is designated as primary
and in no event excess or contributory to any insurance Lessor may have in force
which would apply to a loss covered under Lessee's policy and (ii) each such
insurance policy will not cause Lessee's insurance required under this Lease to
be subject to a coinsurance exception of any kind.
(d) Lessee shall pay as they become due all premiums for the
insurance required by this Lease, shall renew or replace each policy prior to
the expiration date thereof and shall promptly deliver to Lessor and the Agent
certificates for renewal and replacement policies.
15. CONDEMNATION AND CASUALTY
15.1 Casualty and Condemnation. (a) Subject to the provisions of
-------------------------
this Section 15 and Section 16 (in the event Lessee delivers, or is obligated to
deliver, a Termination Notice), and prior to the occurrence and continuation of
a Lease Default, Lessee shall be entitled to receive (and Lessor hereby
irrevocably assigns to Lessee all of Lessor's right, title and interest in) any
award, compensation or insurance proceeds to which Lessee or Lessor may become
entitled by reason of their respective interests in a Property (i) if all or a
portion of such Property is damaged or destroyed in whole or in part by a
Casualty or (ii) if the use, access, occupancy, easement rights or title to such
Property or any part thereof is the subject of a Condemnation; provided,
--------
however, if a Lease Default shall have occurred and be continuing such award,
-------
compensation or insurance proceeds shall be paid directly to Lessor or, if
received by Lessee, shall be held in trust for Lessor, and shall be paid over by
Lessee to Lessor, and provided further that in the event of any Casualty or
-------- -------
Condemnation, the estimated cost of restoration of which is in excess of 25% of
the aggregate Project Costs for such Property, any such award, compensation or
insurance proceeds shall be paid directly to Lessor, or if received by Lessee,
shall be held in trust for Lessor and shall be paid over by Lessee to Lessor to
be held and applied by Lessor toward payment of the cost of restoration in
accordance with Section 15.1(e).
(a) So long as no Lease Event of Default has occurred and is
continuing, Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award, compensation or insurance
payment on account of any such Casualty or Condemnation and shall pay all
expenses thereof; provided that if the estimated cost of restoration of the
--------
Property or the payment on account of such proceeding or action is in excess of
25% of the aggregate Project Costs for such Property, then Lessor shall be
entitled to participate
15
in any such proceeding or action. At Lessee's reasonable request, and at
Lessee's sole cost and expense, Lessor and the Agent shall participate in any
such proceeding, action, negotiation, prosecution or adjustment. Lessor and
Lessee agree that this Lease shall control the rights of Lessor and Lessee in
and to any such award, compensation or insurance payment.
(b) If Lessor or Lessee shall receive notice of a Casualty or a
possible Condemnation of a Property or any interest therein, Lessor or Lessee,
as the case may be, shall give notice thereof to the other and to the Agent
promptly after the receipt of such notice.
(c) In the event of a Casualty or receipt of notice by Lessee or
Lessor of a Condemnation, Lessee shall, not later than thirty (30) days after
such occurrence, deliver to Lessor and the Agent an Officer's Certificate
stating that either (i) (x) such Casualty is not a Significant Casualty or (y)
such Condemnation is neither a Total Condemnation nor a Significant Condemnation
and that this Lease shall remain in full force and effect with respect to the
applicable Property and, at Lessee's sole cost and expense, Lessee shall
promptly and diligently restore the applicable Property in accordance with the
terms of Section 15.1(e) or (ii) this Lease shall terminate with respect to the
applicable Property in accordance with Section 16.1.
(d) If pursuant to this Section 15.1, this Lease shall continue in
full force and effect following a Casualty or Condemnation with respect to the
affected Property, Lessee shall, at its sole cost and expense, promptly and
diligently repair any damage to the applicable Property caused by such Casualty
or Condemnation in conformity with the requirements of Sections 10.1 and 11.1
using the as-built plans and specifications for the applicable Property (as
modified to give effect to any subsequent Modifications, any Condemnation
affecting the Property and all applicable Legal Requirements) so as to restore
the applicable Property to the same condition, operation, function and value as
existed immediately prior to such Casualty or Condemnation. In such event, title
to the applicable Property shall remain with Lessor. Lessor shall make
disbursements from time to time of any award, compensation or insurance proceeds
held by it to Lessee for application to the cost of restoration subject to the
following conditions: (i) Lessor shall have received a fully executed
counterpart of a Requisition requesting funds in an amount not exceeding the
cost of work completed or incurred since the last disbursement, together with
reasonably satisfactory evidence of the stage of completion and of performance
of the work in a good and ▇▇▇▇▇▇▇-like manner and in accordance with the as-
built plans and specifications, (ii) at the time of any such disbursement, no
Lease Event of Default shall have occurred and be continuing, and no mechanic's
or materialmen's liens shall have been filed and remain undischarged, except
those discharged by the disbursement of the requested funds or bonded, (iii)
Lessor shall be reasonably satisfied that sufficient funds are available to
complete such restoration and (iv) title to the Project shall conform to the
representation set forth in Section 7.7 (b) of the Participation Agreement.
Provided no Lease Default shall have occurred and be continuing, any award,
compensation or insurance proceeds remaining after restoration of the Project as
herein provided shall be paid to Lessee.
(e) In no event shall a Casualty or Condemnation with respect to
which this Lease remains in full force and effect under this Section 15.1 affect
Lessee's obligations to pay Rent pursuant to Section 3.1.
16
(f) Notwithstanding anything to the contrary set forth in Section
15.1(a) or Section 15.1(e), if during the Term a Casualty occurs with respect to
a Property or Lessee receives notice of a Condemnation with respect to a
Property, and following such Casualty or Condemnation, such Property cannot
reasonably be restored on or before the date which is twelve months prior to the
Maturity Date to substantially the same condition as existed immediately prior
to such Casualty or Condemnation or before such day such Property is not in fact
so restored, then Lessee shall exercise its Purchase Option with respect to such
Property on the next Payment Date or irrevocably agree in writing to exercise
the Maturity Date Purchase Option with respect to such Property, and in either
such event Casualty or Condemnation proceeds shall be paid to the Agent, which
shall pay such funds to Lessee upon the closing of the purchase of such
Property.
16. LEASE TERMINATION
16.1 Termination upon Certain Events. (a) Lessee shall be obligated
-------------------------------
to deliver a written notice in the form described in Section 16.2(a) (a
"Termination Notice") of the termination of this Lease with respect to any
------------------
Property (i) within thirty (30) days after Lessee receives notice of a Total
Condemnation with respect to any such Property or (ii) promptly after the
occurrence of a Significant Environmental Event with respect to any such
Property.
(a) If: (i) Lessee or Lessor shall have received notice of a
Condemnation, and Lessee shall have delivered to Lessor an Officer's Certificate
that such Condemnation is a Significant Condemnation; or (ii) a Casualty occurs,
and Lessee shall have delivered to Lessor an Officer's Certificate that such
Casualty is a Significant Casualty; or (iii) an Environmental Violation occurs
with respect to any Property and Lessee shall have delivered to Lessor an
Officer's Certificate that this Lease shall terminate with respect to such
Property; then, Lessee shall, simultaneously with the delivery of the Officer's
Certificate pursuant to the preceding clause (i), (ii) or (iii), deliver a
Termination Notice with respect to the affected Property.
16.2 Procedures. (a) A Termination Notice shall contain: (i)
----------
notice of termination of this Lease with respect to the affected Property on a
date not more than thirty (30) days after Lessor's receipt of such Termination
Notice (the "Termination Date"); (ii) a binding and irrevocable agreement of
----------------
Lessee to pay the Termination Value and purchase such Property on such
Termination Date and (iii) the Officer's Certificate described in Section
16.1(b).
(a) On the Termination Date, Lessee shall pay to Lessor the
Termination Value for the applicable Property, including all amounts owing in
respect of Rent for such Property (including Supplemental Rent) theretofore
accruing and Lessor shall convey such Property to Lessee (or Lessee's designee)
all in accordance with Section 19.1.
17. DEFAULT
17
17.1 Lease Events of Default. If any one or more of the following
-----------------------
events (each a "Lease Event of Default") shall occur:
----------------------
(a) Lessee shall fail to make payment of (i) any Basic Rent or any
Supplemental Rent representing amounts owed under the Credit Agreement or
the other Credit Documents within five (5) days after the same has become
due and payable or (ii) any Maximum Residual Guarantee Amount, Purchase
Option Price or Termination Value after the same has become due and
payable; or
(b) Lessee shall fail to make payment of any other Supplemental Rent
due and payable within five (5) days after receipt of notice thereof; or
(c) Lessee shall fail to maintain insurance as required by Section
14; or
(d) Lessee or any Guarantor shall default in the observance or
performance of any term, covenant or condition of Lessee or any Guarantor,
respectively, under this Lease, the Participation Agreement, the Guarantee
or any other Operative Agreement to which it is a party (other than those
set forth in Section 17.1(a), (b), (c) or (h) hereof) and such default
shall continue unremedied for a period of thirty days or any representation
or warranty by Lessee or any Guarantor, respectively, set forth in this
Lease, the Guarantee or in any other Operative Agreement or in any document
entered into in connection herewith or therewith or in any document,
certificate or financial or other statement delivered in connection
herewith or therewith shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(e) an Agency Agreement Event of Default shall have occurred and be
continuing; or
(f) Lessee or the Guarantor shall (i) admit in writing its inability
to pay its debts generally as they become due, (ii) file a petition under
the United States bankruptcy laws or any other applicable insolvency law or
statute of the United States of America or any State or Commonwealth
thereof, (iii) make a general assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or the whole or any
substantial part of its property, (v) fail to cause the discharge of any
custodian, trustee or receiver appointed for Lessee or the Guarantor or the
whole or a substantial part of its property within sixty (60) days after
such appointment, or (vi) file a petition or answer seeking or consenting
to reorganization under the United States bankruptcy laws or any other
applicable insolvency law or statute of the United States of America or any
State or Commonwealth thereof; or
(g) insolvency proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency law or statute of the
United States of America or any State or Commonwealth thereof shall be
filed against Lessee or the Guarantor and not dismissed within sixty (60)
days from the date of its filing, or a court of competent jurisdiction
shall enter an order or decree appointing, without its consent of, a
receiver of
18
Lessee or the Guarantor or the whole or a substantial part of its property,
and such order or decree shall not be vacated or set aside within ninety
(90) days from the date of the entry thereof; or
(h) a Credit Agreement Event of Default (other than a Credit
Agreement Event of Default set forth in Section 6.1(d)) shall have occurred
and be continuing; or
(i) an Event of Default under and as defined in the Senior Secured
Credit Agreement shall have occurred and be continuing;
then, in any such event, Lessor may, in addition to the other rights and
remedies provided for in this Section 17 and in Section 18.1, terminate this
Lease by giving Lessee ten (10) days notice of such termination, and this Lease
shall terminate. Lessee shall, to the fullest extent permitted by law, pay as
Supplemental Rent all costs and expenses incurred by or on behalf of Lessor,
including fees and expenses of counsel, as a result of any Lease Event of
Default hereunder.
17.2 Final Liquidated Damages. If a Lease Event of Default shall
------------------------
have occurred and be continuing, Lessor shall have the right to recover, by
demand to Lessee and at Lessor's election, and Lessee shall pay to Lessor, as
and for final liquidated damages, but exclusive of the indemnities payable under
Section 13 of the Participation Agreement, and in lieu of all damages beyond the
date of such demand the sum of (a) the Termination Value, plus (b) all other
amounts owing in respect of Rent and Supplemental Rent theretofore accruing
under this Lease. In addition, if a Lease Event of Default shall have occurred
and be continuing, Lessee shall have the right to pay, without regard to
Lessor's demand, as and for final liquidated damages, but exclusive of the
indemnities payable under Section 13 of the Participation Agreement, and in lieu
of all damages beyond the date of such payment, the sum of (i) the Termination
Value, plus (ii) all other amounts owing in respect of Rent and Supplemental
Rent theretofore accruing under this Lease. Upon payment of the amount specified
pursuant to the first or second sentence of this Section 17.2, Lessee shall be
entitled to receive from Lessor, at Lessee's request and cost, an assignment of
Lessor's right, title and interest in the Properties, in each case in recordable
form and otherwise in conformity with local custom and free and clear of the
Lien of the Mortgages and other Security Documents. Lessee (or Lessee's
designee) shall execute and deliver to Lessor an assumption of all of Lessor's
obligations under the Ground Leases, if any. The Properties shall be quitclaimed
to Lessee (or Lessee's designee) "AS IS" and in their then present physical
condition. If any statute or rule of law shall limit the amount of such final
liquidated damages to less than the amount agreed upon, Lessor shall be entitled
to the maximum amount allowable under such statute or rule of law; provided,
--------
that Lessee shall not be entitled to receive an assignment of Lessor's interest
under the Ground Leases, if any, or in the Properties unless Lessee shall have
paid in full the Termination Value of each of the Properties.
17.3 Lease Remedies. Lessor and Lessee intend that for commercial
--------------
law and bankruptcy law purposes, this Lease will be treated as a financing
arrangement, as set forth in Section 7. If, as a result of applicable state
law, which cannot be waived, this Lease is deemed to be a lease of the
Properties, rather than a financing arrangement, and Lessor is unable to enforce
the remedies set forth in Section 17.2, the following remedies shall be
available to Lessor:
19
(a) Surrender of Possession. If a Lease Event of Default shall have
-----------------------
occurred and be continuing, and whether or not this Lease shall have been
terminated pursuant to Section 17.1, Lessee shall, upon thirty (30) days
written notice, surrender to Lessor possession of the Property and Lessee
shall quit the same. Lessor may enter upon and repossess the Property by
such means as are available at law or in equity, and may, subject to the
provisions of applicable law, remove Lessee and all other Persons and any
and all personal property and Lessee's equipment and personalty and
severable Modifications from the Property. Lessor shall have no liability
by reason of any such entry, repossession or removal performed in
accordance with applicable law.
(b) Reletting. If a Lease Event of Default shall have occurred and be
---------
continuing, and whether or not this Lease shall have been terminated
pursuant to Section 17.1, Lessor may, but shall be under no obligation to,
relet all, or any portion, of the Property, for the account of Lessee or
otherwise, for such term or terms (which may be greater or less than the
period which would otherwise have constituted the balance of the Term) and
on such conditions (which may include concessions or free rent) and for
such purposes as Lessor may determine, and Lessor may collect, receive and
retain the rents resulting from such reletting. Lessor shall not be liable
to Lessee for any failure to relet the Property or for any failure to
collect any rent due upon such reletting.
(c) Damages. None of (i) the termination of this Lease pursuant to
-------
Section 17.1; (ii) the repossession of the Property; or (iii) except to the
extent required by applicable law, the failure of Lessor to relet all, or
any portion, of the Property, the reletting of all or any portion thereof,
nor the failure of Lessor to collect or receive any rentals due upon any
such reletting shall relieve Lessee of its liability and obligations
hereunder, all of which shall survive any such termination, repossession or
reletting. If any Lease Event of Default shall have occurred and be
continuing and notwithstanding any termination of this Lease pursuant to
Section 17.1, Lessee shall forthwith pay to Lessor all Basic Rent and other
sums due and payable hereunder to and including the date of such
termination. Thereafter, on the days on which the Basic Rent or
Supplemental Rent, as applicable, are payable under this Lease or would
have been payable under this Lease if the same had not been terminated
pursuant to Section 17.1 and until the end of the Term or what would have
been the Term in the absence of such termination, Lessee shall pay Lessor,
as current liquidated damages (it being agreed that it would be impossible
accurately to determine actual damages) an amount equal to the Basic Rent
and Supplemental Rent that are payable under this Lease or would have been
payable by Lessee hereunder if this Lease had not been terminated pursuant
to Section 17.1, less the net proceeds, if any, which are actually received
by Lessor with respect to the period in question of any reletting of the
Property or any portion thereof; provided that Lessee's obligation to make
--------
payments of Basic Rent and Supplemental Rent under this Section 17.3 shall
continue only so long as Lessor shall not have received the amounts
specified in Section 17.2. In calculating the amount of such net proceeds
from reletting, there shall be deducted all of Lessor's, the Agent's and
any Lenders' expenses in connection therewith, including repossession
costs, brokerage commissions, fees and expenses for
20
counsel and any necessary repair or alteration costs and expenses incurred
in preparation for such reletting. To the extent Lessor receives any
damages pursuant to this Section 17.3, such amounts shall be regarded as
amounts paid on account of Rent.
(d) Acceleration of Rent. If a Lease Event of Default shall have
--------------------
occurred and be continuing, and this Lease shall not have been terminated
pursuant to Section 17.1, and whether or not Lessor shall have collected
any current liquidated damages pursuant to Section 17.3(c), Lessor may upon
written notice to Lessee accelerate all payments of Basic Rent due
hereunder and, upon such acceleration, Lessee shall immediately pay Lessor,
as and for final liquidated damages and in lieu of all current liquidated
damages on account of such Lease Event of Default beyond the date of such
acceleration (it being agreed that it would be impossible accurately to
determine actual damages) an amount equal to the sum of (a) all Basic Rent
(assuming interest at a rate per annum equal to the Overdue Rate), as
applicable, due from the date of such acceleration until the end of the
Term, plus (b) the Maximum Residual Guarantee Amount that would be payable
----
under Section 21.1(c) assuming the proceeds of the sale pursuant to such
Section 21.1(c) are equal to zero, which sum is then discounted to present
value at a rate equal to the rate then being paid on United States treasury
securities with maturities corresponding to the then remaining Term.
Following payment of such amount by Lessee, Lessee will be permitted to
stay in possession of the Property for the remainder of the Term, subject
to the terms and conditions of this Lease, including the obligation to pay
Supplemental Rent, provided that no further Lease Event of Default shall
occur and be continuing, following which Lessor shall have all the rights
and remedies set forth in this Section 17 (but not including those set
forth in this Section 17.3). If any statute or rule of law shall limit the
amount of such final liquidated damages to less than the amount agreed
upon, Lessor shall be entitled to the maximum amount allowable under such
statute or rule of law.
17.4 Waiver of Certain Rights. If this Lease shall be terminated
------------------------
pursuant to Section 17.1, Lessee waives, to the fullest extent permitted by law,
(a) any notice of re-entry or the institution of legal proceedings to obtain re-
entry or possession; (b) any right of redemption, re-entry or repossession; (c)
the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt; and (d) any other rights which might otherwise
limit or modify any of Lessor's rights or remedies under this Section 17.
17.5 Assignment of Rights Under Contracts. If a Lease Event of
------------------------------------
Default shall have occurred and be continuing and if Lessee shall be obligated
to surrender to Lessor possession of the Property, whether or not this Lease
shall have been terminated pursuant to Section 17.1, Lessee shall upon Lessor's
demand immediately assign, transfer and set over to Lessor all of Lessee's
right, title and interest in and to each agreement executed by Lessee in
connection with the construction, renovation, development, use or operation of
the Property (including all right, title and interest of Lessee with respect to
all warranty, performance, service and indemnity provisions), as and to the
extent that the same relate to the construction, renovation, and operation of
the Property.
21
17.6 Remedies Cumulative. The remedies herein provided shall be
-------------------
cumulative and in addition to (and not in limitation of) any other remedies
available at law, equity or otherwise including, without limitation, any
mortgage foreclosure remedies contained in the Memorandum of Lease.
18. LESSOR'S RIGHT TO CURE
18.1 Lessor's Right to Cure Lessee's Lease Defaults. Lessor, without
----------------------------------------------
waiving or releasing any obligation or Lease Event of Default, may (but shall be
under no obligation to) remedy any Lease Event of Default for the account and at
the sole cost and expense of Lessee, including the failure by Lessee to maintain
any insurance required by Section 14, and may, to the fullest extent permitted
by law, and notwithstanding any right of quiet enjoyment in favor of Lessee,
enter upon any Property for such purpose and take all such action thereon as may
be necessary or appropriate therefor. No such entry shall be deemed an eviction
of Lessee. All out-of-pocket costs and expenses so incurred (including the fees
and expenses of counsel), together with interest thereon at the Overdue Rate
from the date on which such sums or expenses are paid by Lessor, shall be paid
by Lessee to Lessor on demand as Supplemental Rent.
19. LEASE TERMINATION
19.1 Provisions Relating to Lessee's Termination of this Lease or
------------------------------------------------------------
Exercise of Purchase Option. In connection with any termination of this Lease
---------------------------
with respect to any Property pursuant to the terms of Section 16.2, or in
connection with Lessee's exercise of its Purchase Option or Maturity Date
Purchase Option, upon the date on which this Lease is to terminate with respect
to the applicable Property or upon the Expiration Date with respect to the
applicable Property, and upon tender by Lessee of the amounts set forth in
Section 16.2(b), 20.1 or 20.2, as applicable:
(a) Lessor shall execute and deliver to Lessee (or to Lessee's
designee) at Lessee's cost and expense an assignment of Lessor's entire
interest in the applicable Properties, in each case in recordable form and
otherwise in conformity with local custom and free and clear of the Lien of
the applicable Mortgage and other Security Documents and any Lessor Liens;
and
(b) The applicable Property shall be conveyed to Lessee "AS IS" and
in then present physical condition.
20. PURCHASE OPTION
20.1 Purchase Option. Provided that no Lease Default or Lease Event
---------------
of Default shall have occurred and be continuing, Lessee shall have the option
(exercisable by giving Lessor irrevocable written notice (the "Purchase Notice")
---------------
of Lessee's election, which election shall be
22
irrevocable, to exercise such option not less than ten (10) days prior to the
date of purchase pursuant to such option) to purchase one or more of the
Properties on the date specified in such Purchase Notice, which date must occur
prior to the date which is twelve months prior to the Maturity Date, at a price
equal to the Termination Value (the "Purchase Option Price") (which the parties
---------------------
do not intend to be a "bargain" purchase price) of such Property. If Lessee
exercises its option to purchase one or more of the Properties pursuant to this
Section 20.1 (the "Purchase Option"), Lessor shall quitclaim to Lessee or
---------------
Lessee's designee all of Lessor's right, title and interest in and to such
Property as of the date specified in the Purchase Notice upon receipt of the
Purchase Option Price, including all Rent and other amounts then due and payable
under this Lease and any other Operative Agreement, in accordance with Section
19.1.
20.2 Maturity Date Purchase Option. Not less than twelve months
-----------------------------
prior to the Maturity Date, Lessee may give Lessor and Agent irrevocable written
notice (the "Maturity Date Election Notice") that Lessee is electing to exercise
-----------------------------
the Maturity Date Purchase Option. If Lessee does not give a Maturity Date
Election Notice on or before the date twelve months prior to the Maturity Date,
then Lessee shall be obligated to remarket the Properties pursuant to Section
21. If Lessee has elected to exercise the Maturity Date Purchase Option, then
on the Maturity Date Lessee shall pay to Lessor an amount equal to the
Termination Value for all the Properties (which the parties do not intend to be
a "bargain" purchase price) and, upon receipt of such amount, including all Rent
and other amounts then due and payable under this Lease and any other Operative
Agreement, Lessor shall transfer to Lessee or Lessee's designee all of Lessor's
right, title and interest in and to the Properties in accordance with Section
19.1.
20.3 Obligation to Purchase All Properties. If on the date which is
-------------------------------------
twelve months prior to the Maturity Date the then Termination Value of all the
Properties is less than the Maximum Purchase Option Amount, then on the Maturity
Date Lessee shall be required to exercise its Purchase Option on the Maturity
Date with respect to all remaining Properties.
21. SALE OF PROPERTY
21.1 Sale Procedure. (a) With respect to each Property, at the
--------------
expiration of the Term, unless Lessee shall have elected to purchase such
Property and has paid the Purchase Option Price with respect thereto, or
otherwise terminated this Lease with respect thereto and paid the Termination
Value with respect thereto, Lessee shall (i) pay to Lessor the Maximum Residual
Guarantee Amount for such Property, and (ii) to the extent that Lessor has not
elected to retain the Property, sell such Property to one or more third parties
for cash in accordance with Section 21.1(b).
(a) During the Marketing Period, Lessee, as nonexclusive broker for
Lessor, shall use its best efforts to obtain bids for the cash purchase of each
Property being sold for the highest price available in the relevant market,
shall notify Lessor promptly of the name and address of each prospective
purchaser and the cash price which each prospective purchaser shall have offered
to pay for such Property and shall provide Lessor with such additional
information about the bids and the bid solicitation procedure as Lessor may
request from time to time.
23
Lessor may reject any and all bids and may assume sole responsibility for
obtaining bids by giving Lessee written notice to that effect; provided,
--------
however, that notwithstanding the foregoing, Lessor may not reject a bid if such
-------
bid, together with any amounts to be paid pursuant to Section 21.3, is greater
than or equal to the sum of the Limited Deficiency Amount and all costs and
expenses referred to in Section 21.2(i) and is a bona fide offer by a third
party purchaser who is not an Affiliate of Lessee. If the price which a
prospective purchaser shall have offered to pay for all or any of the Properties
is less than the sum of the Limited Deficiency Amount and all costs and expenses
referred to in Section 21.2(i), Lessor may elect to retain the Property by
giving Lessee at least two Business Days' prior written notice of Lessor's
election to retain the Property, and upon receipt of such notice, Lessee shall
surrender the Property to Lessor pursuant to Section 10.1(c). Unless Lessor
shall have elected to retain the Property pursuant to the preceding sentence,
Lessor shall sell the Property free of any Lessor Liens attributable to it,
without recourse or warranty, for cash to the purchaser or purchasers identified
by Lessee or Lessor, as the case may be. Lessee shall surrender the Property so
sold to each purchaser in the condition specified in Section 10.1.
(b) On each date during the Marketing Period on which a Property is
sold pursuant to Section 21.1(b), and on the Maturity Date with respect to any
Properties remaining unsold, Lessee shall pay to Lessor the Maximum Residual
Guarantee Amount for such Property.
(c) If within six (6) months after the expiration of the Term,
Lessor shall sell all of the Properties, then to the extent net sale proceeds
from the sale of the Properties are available after payment (i) to the
Indemnified Parties of all costs, expenses, fees, commissions, transfer taxes
and recording costs with respect to the operation, maintenance, repair,
transfer, sale, financing and administration of the Properties incurred by any
Indemnified Party, (ii) to the Lenders of the outstanding amount of the Tranche
B Notes and any and all accrued and unpaid interest thereon at the Overdue Rate
or otherwise, and (iii) to the Investors of the unreturned Investor Contribution
and any and all accrued and unpaid Investor Return thereon at the Overdue Rate
or otherwise, such excess proceeds shall be paid to Lessee within thirty (30)
days after the sale of the last Property.
21.2 Application of Proceeds of Sale. Lessor shall apply the
-------------------------------
proceeds of sale of each Property in the following order of priority:
(i) FIRST, to pay or to reimburse Lessor for the payment of all
-----
reasonable costs and expenses incurred by Lessor in connection with the
sale; and
(ii) SECOND, the balance shall be paid to the Agent to be
------
applied pursuant to the provisions of the Credit Agreement.
21.3 Indemnity for Excessive Wear. If the proceeds of the sale
----------------------------
described in Section 21.1(b) with respect to any Property, less all expenses
incurred by Lessor in connection with such sale, shall be less than the Limited
Deficiency Amount for such Property at the time of such sale and if it shall
have been determined (pursuant to the Appraisal Procedure) that the Fair Market
Sales Value of such Property shall have been impaired by greater than expected
wear and
24
tear during the Term, Lessee shall pay to Lessor within ten (10) days
after receipt of Lessor's written statement (i) the amount of such excess wear
and tear determined by the Appraisal Procedure or (ii) the amount of the Net
Sale Proceeds Shortfall, whichever amount is less. Any Appraisal Procedure
shall be commenced within ten (10) days after Lessor delivers written notice to
Lessee that the proceeds of such sale, less all expenses incurred by Lessor,
shall be less than the Limited Deficiency Amount and that Lessor is requiring an
appraisal to be obtained pursuant to this Section 21.3 and Section 21.4 hereof.
21.4 Appraisal Procedure. For determining the Fair Market Sales
-------------------
Value of a Property or any other amount which may, pursuant to any provision of
any Operative Agreement, be determined by an appraisal procedure, Lessor and
Lessee shall use the following procedure (the "Appraisal Procedure"). Lessor
-------------------
and Lessee shall endeavor to reach a mutual agreement as to such amount for a
period of ten (10) days from commencement of the Appraisal Procedure, and if
they cannot agree within ten (10) days, then two qualified appraisers, one
chosen by Lessee and one chosen by Lessor, shall mutually agree thereupon, but
if either party shall fail to choose an appraiser within twenty (20) days after
notice from the other party of the selection of its appraiser, then the
appraisal by such appointed appraiser shall be binding on Lessee and Lessor. If
the two appraisers cannot agree within twenty (20) days after both shall have
been appointed, then a third appraiser shall be selected by the two appraisers
or, failing agreement as to such third appraiser within thirty (30) days after
both shall have been appointed, by the American Arbitration Association. The
decisions of the three appraisers shall be given within twenty (20) days of the
appointment of the third appraiser and the decision of the appraiser most
different from the average of the other two shall be discarded and such average
shall be binding on Lessor and Lessee; provided that if the highest appraisal
--------
and the lowest appraisal are equidistant from the third appraisal, the third
appraisal shall be binding on Lessor and Lessee. The fees and expenses of all
of the appraisers shall be paid by the Lessee.
21.5 Certain Obligations Continue. During the Marketing Period, the
----------------------------
obligation of Lessee to pay Rent with respect to each Property (including the
installment of Basic Rent due on the Maturity Date) shall continue undiminished
until payment in full to Lessor of the sale proceeds, the Maximum Residual
Guarantee Amount, if any, the amount due under Section 21.3, if any, and all
other amounts due to Lessor with respect to the Property. Lessor shall have the
right, but shall be under no duty, to solicit bids, to inquire into the efforts
of Lessee to obtain bids or otherwise to take action in connection with any such
sale, other than as expressly provided in this Section 21.
22. HOLDING OVER
22.1 Holding Over. If Lessee shall for any reason remain in
------------
possession of a Property after the expiration or earlier termination of this
Lease (unless the Property is conveyed to Lessee), such possession shall be as a
tenancy at sufferance during which time Lessee shall continue to pay
Supplemental Rent that would be payable by Lessee hereunder were the Lease then
in full force and effect with respect to such Property and Lessee shall continue
to pay Basic Rent at an annual rate equal to the rate payable hereunder
immediately preceding such expiration
25
or earlier termination; provided, however, that from and after the sixtieth
-------- -------
(60th) day Lessee shall remain in possession of such Property after such
expiration or earlier termination, Lessee shall pay Basic Rent at an annual rate
equal to two hundred percent (200%) of the Basic Rent payable hereunder
immediately preceding such expiration or earlier termination. Such Basic Rent
shall be payable from time to time upon demand by Lessor. During any period of
tenancy at sufferance, Lessee shall, subject to the second preceding sentence,
be obligated to perform and observe all of the terms, covenants and conditions
of this Lease, but shall have no rights hereunder other than the right, to the
extent given by law to tenants at sufferance, to continue its occupancy and use
of the Property. Nothing contained in this Section 22 shall constitute the
consent, express or implied, of Lessor to the holding over of Lessee after the
expiration or earlier termination of this Lease as to any Property and nothing
contained herein shall be read or construed as preventing Lessor from
maintaining a suit for possession of any Property or exercising any other remedy
available to Lessor at law or in equity.
23. RISK OF LOSS
23.1 Risk of Loss. The risk of loss of or decrease in the enjoyment
------------
and beneficial use of the Property as a result of the damage or destruction
thereof by fire, the elements, casualties, thefts, riots, wars or otherwise is
assumed by Lessee, and Lessor shall in no event be answerable or accountable
therefor.
24. SUBLETTING AND ASSIGNMENT
24.1 Subletting and Assignment. Lessee may not assign this Lease or
-------------------------
any of its rights or obligations hereunder in whole or in part. Lessee may,
without the consent of Lessor, sublease the Property or a portion thereof to any
Person. No sublease or other relinquishment of possession of the Property shall
in any way discharge or diminish any of Lessee's obligations to Lessor hereunder
and Lessee shall remain directly and primarily liable under this Lease as to the
Property, or any portion thereof, so sublet. Any sublease of the Property shall
be made subject to and subordinate to this Lease and to the rights of Lessor
hereunder, shall expire prior to the expiration of the Term and shall expressly
provide for the surrender of the Property after a Lease Event of Default
hereunder.
24.2 Subleases. Promptly following the execution and delivery of any
---------
sublease permitted by this Section 24, Lessee shall deliver a copy of such
executed sublease to Lessor and the Agent.
25. ESTOPPEL CERTIFICATES
25.1 Estoppel Certificates. Each party hereto agrees at any time and
---------------------
from time to time upon not less than twenty (20) days' prior request by the
other party, it shall furnish to such other party a certificate signed by an
individual having the office of vice president or higher in the Certifying Party
certifying that this Lease is in full force and effect (or that this Lease is in
26
full force and effect as modified and setting forth the modifications); the
dates to which the Basic Rent and Supplemental Rent have been paid; to the best
knowledge of the signer of such certificate, whether or not any party hereto is
in default under any of its obligations hereunder (and, if so, the nature of
such alleged default); and such other matters under this Lease as may be
reasonably requested. Any such certificate furnished by any party hereto
pursuant to this Section 25 may be relied upon by such other party hereto, and
any existing or prospective mortgagee, purchaser or lender, and any accountant
or auditor, of, from or to such other party (or any Affiliate thereof), provided
that no such certificate may be requested unless the requesting party has a good
faith reason for such request.
26. NO WAIVER
26.1 No Waiver. No failure by Lessor or Lessee to insist upon the
---------
strict performance of any term hereof or to exercise any right, power or remedy
upon a default hereunder, and no acceptance of full or partial payment of Rent
during the continuance of any such default, shall constitute a waiver of any
such default or of any such term. To the fullest extent permitted by law, no
waiver of any default shall affect or alter this Lease, and this Lease shall
continue in full force and effect with respect to any other then existing or
subsequent default.
27. ACCEPTANCE OF SURRENDER
27.1 Acceptance of Surrender. (a) As of the Expiration Date, if any
-----------------------
Default shall have occurred and be continuing under the Lease or the
representations and warranties set forth in Section 7.5 of the Participation
Agreement shall not be true and correct in all material respects, then Lessee
shall be deemed to have irrevocably exercised the Maturity Date Purchase Option
pursuant to Section 20.2.
(a) Except as otherwise expressly provided in this Lease, no
surrender to Lessor of this Lease or of all or any portion of the Property or of
any interest therein shall be valid or effective unless agreed to and accepted
in writing by Lessor and, prior to the payment or performance of all obligations
under the Credit Documents, the Agent, and no act by Lessor or the Agent or any
representative or agent of Lessor or the Agent, other than a written acceptance,
shall constitute an acceptance of any such surrender.
28. NO MERGER OF TITLE
28.1 No Merger of Title. There shall be no merger of this Lease or
------------------
of the leasehold estate created hereby by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly, in whole or in part,
(a) this Lease or the leasehold estate created hereby or any interest in this
Lease or such leasehold estate, (b) the fee estate in the Property,
27
except as may expressly be stated in a written instrument duly executed and
delivered by the appropriate Person, or (c) a beneficial interest in Lessor.
29. NOTICES
29.1 Notices. Unless otherwise specifically provided herein, all
-------
notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person to be effective shall be in writing (including by Facsimile transmission)
and shall be deemed to have been duly given or made (a) when delivered by hand,
(b) one Business Day after delivery to such nationally recognized courier
service specifying overnight delivery, (c) three Business Days after being
deposited in the mail, certified or registered, postage prepaid or (d) in the
case of Facsimile notice, when received, addressed to such Person as indicated:
If to Lessee: c/o Harborside Healthcare Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lessor: Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to the Agent:
The Chase Manhattan Bank
c/o The Loan and Agency Services Group
One Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
28
With a copy to:
Chase New England Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or such additional parties and/or other address as such party may hereafter
designate.
30. MISCELLANEOUS
30.1 Miscellaneous. Anything contained in this Lease to the contrary
-------------
notwithstanding, all claims against and liabilities of Lessee or Lessor arising
from events commencing prior to the expiration or earlier termination of this
Lease shall survive such expiration or earlier termination. If any term or
provision of this Lease or any application thereof shall be declared invalid or
unenforceable, the remainder of this Lease and any other application of such
term or provision shall not be affected thereby. If any right or option of
Lessee provided in this Lease, including any right or option described in
Sections 15, 16, 22 or 21, would, in the absence of the limitation imposed by
this sentence, be invalid or unenforceable as being in violation of the rule
against perpetuities or any other rule of law relating to the vesting of an
interest in or the suspension of the power of alienation of property, then such
right or option shall be exercisable only during the period which shall end
twenty-one (21) years after the date of death of the last survivor of the
descendants of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, the former President of the United States,
▇▇▇▇▇ ▇▇▇▇, the deceased automobile manufacturer, and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, the
founder of the Standard Oil Company, known to be alive on the date of the
execution and delivery of this Lease.
30.2 Amendments and Modifications. Neither this Lease nor any
----------------------------
provision hereof may be amended, waived, discharged or terminated except by an
instrument in writing signed by Lessor and Lessee.
30.3 Successors and Assigns. All the terms and provisions of this
----------------------
Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
30.4 Headings and Table of Contents. The headings and table of
------------------------------
contents in this Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.
30.5 Counterparts. This Lease may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.
29
30.6 GOVERNING LAW. THIS LEASE HAS BEEN DELIVERED IN, AND SHALL IN
-------------
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE CREATION, PERFECTION AND
ENFORCEMENT OF LIENS AND SECURITY INTERESTS AND THE EXERCISE OF REMEDIES WITH
RESPECT THERETO, WHICH SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE IN WHICH THE APPLICABLE PROPERTY IS LOCATED.
30.7 Limitations on Recourse. Except as expressly set forth in the
-----------------------
Operative Agreements, Lessee agrees to look solely to Lessor's estate and
interest in the Property, the proceeds of sale thereof, any insurance proceeds
or any other award or any third party proceeds received by Lessor in connection
with the Property for the collection of any judgment requiring the payment of
money by Lessor in the event of liability by Lessor, and no other property or
assets of Lessor, the Trust Company member, partner or other owner of an
interest, direct or indirect, in Lessor, or any director, officer, shareholder,
employee, beneficiary, Affiliate of any of the foregoing shall be subject to
levy, execution or other enforcement procedure for the satisfaction of Lessee's
remedies under or with respect to this Lease, the relationship of Lessor and
Lessee hereunder or Lessee's use of the Property or any other liability of
Lessor to Lessee; provided that nothing in this Section shall be construed to
--------
impair or limit the rights of Lessee against the Investors under the Operative
Agreements. Nothing in this Section shall be interpreted so as to limit the
terms of Section 6.1 or 6.2.
30.8 Memorandum of Lease. This Lease shall not be recorded, but
-------------------
Lessor and Lessee shall, upon the execution and delivery of each Lease
Supplement, execute and deliver a memorandum of this Lease (a "Memorandum of
-------------
Lease") substantially in the form of Exhibit B and otherwise in form suitable
----- ---------
for recording under the laws of the jurisdiction in which the Property covered
by such Lease Supplement is located, which memorandum shall be recorded at
Lessee's sole cost and expense.
30.9 Priority. On and prior to the Maturity Date, the Mortgage shall
--------
be subject and subordinate to this Lease and following the Maturity Date, the
Mortgage, at the sole election of the Agent, shall be senior to this Lease
without any further act by any Person.
30.10 Ground Lease. During the Term, Lessee shall observe and perform
------------
all of the obligations of Lessor under any Ground Lease (including the payment
of all rent and other amounts thereunder) and, in connection therewith, shall,
prior to the occurrence and continuation of a Lease Event of Default, have the
benefit of all of Lessor's rights as lessee under any Ground Lease.
30
IN WITNESS WHEREOF, the parties have caused this Lease be duly
executed and delivered as of the date first above written.
HARBORSIDE OF DAYTON LIMITED
PARTNERSHIP
By: Harborside Health I Corporation,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
HHC 1998-1 TRUST, by Wilmington Trust
Company, not individually but solely as Trustee
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Financial Services Officer
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged on this 11th day of August, 1998.
THE CHASE MANHATTAN BANK, as the Agent
for the Lenders
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
Exhibit A
---------
LEASE SUPPLEMENT NO. __
THIS LEASE SUPPLEMENT NO. __ (this "Lease Supplement") dated as of
----------------
_______________, between HHC 1998-1 TRUST, a Delaware business trust, as lessor
(the "Lessor"), and HARBORSIDE OF DAYTON LIMITED PARTNERSHIP, a Massachusetts
------
limited partnership, as lessee (the "Lessee").
------
WHEREAS, the Lessor is the owner of the Property described on Schedule
I hereto (the "Leased Property") and wishes to lease the same to the Lessee;
---------------
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
31. Definitions; Rules of Usage. For purposes of this Lease
---------------------------
Supplement, capitalized terms used herein and not otherwise herein shall have
the meanings assigned to them in Appendix A to the Participation Agreement,
dated as of August 11, 1998, among the Lessee, the Lessor, the Investors, the
Agent, and the Lenders, as it may be amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof.
32. The Properties. Attached hereto as Schedule I is the description
--------------
of the Leased Property. Effective upon the execution and delivery of this Lease
Supplement by the Lessor and the Lessee, the Leased Property shall be subject to
the terms and provisions of the Lease.
33. Ratification. Except as specifically modified hereby, the terms
------------
and provisions of the Lease are hereby ratified and confirmed and remain in full
force and effect.
34. Original Lease Supplement. The single executed original of this
-------------------------
Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART"
on the signature page thereof and containing the receipt of the Agent therefor
on or following the signature page thereof shall be the Original Executed
Counterpart of this Lease Supplement (the "Original Executed Counterpart"). To
-----------------------------
the extent that this Lease Supplement constitutes chattel paper, as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction, no security interest in this Lease Supplement may be created
through the transfer or possession of any counterpart other than the Original
Executed Counterpart.
35. GOVERNING LAW. THIS LEASE SUPPLEMENT HAS BEEN DELIVERED IN, AND
-------------
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE CREATION,
PERFECTION AND ENFORCEMENT OF LIENS AND SECURITY INTERESTS AND THE EXERCISE OF
REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED
2
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE IN WHICH THE
APPLICABLE PROPERTY IS LOCATED.
36. Counterpart Execution. This Lease Supplement may be executed in
---------------------
any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.
37. Recordation. The Lessor and the Lessee agree that a memorandum of
-----------
this Lease Supplement No. __ shall be recorded at the Lessee's sole cost and
expense as required by the Lease.
IN WITNESS WHEREOF, the parties have caused this Lease Supplement No.
__ be duly executed and delivered as of the date first above written.
HARBORSIDE OF DAYTON LIMITED
PARTNERSHIP
By: Harbor Health I Corporation,
its general partner
By: ____________________________________
Name:
Title:
HHC 1998-1 TRUST, by Wilmington Trust
Company, not in its individual capacity but solely
as Trustee
By:______________________________
Name:
Title:
3
Receipt of this original counterpart of the foregoing Lease Supplement
is hereby acknowledged on this ___ day of ______, _____.
THE CHASE MANHATTAN BANK, as the Agent
for the Lenders
By:____________________________________
Name:
Title: