[Junction City, AR]
L E A S E
between
HEALTH CARE PROPERTY INVESTORS, INC.,
as Lessor
AND
CENTENNIAL HEALTHCARE INVESTMENT CORPORATION,
as Lessee
Dated as of June 15, 1998
TABLE OF CONTENTS
Page
ARTICLE I................................................. 1
1. Leased Property; Term........................... 1
ARTICLE II................................................ 2
2. Definitions..................................... 2
ARTICLE III............................................... 18
3.1 Rent............................................ 18
3.2 Determination of Additional Rent................ 20
3.3 Confirmation of Gross Revenues.................. 21
3.4 Additional Charges.............................. 21
3.5 Late Payment of Rent............................ 22
3.6 Net Lease....................................... 23
ARTICLE IV................................................ 23
4.1 Impositions..................................... 23
4.2 Utilities....................................... 24
4.3 Insurance....................................... 24
4.4 Impound Account................................. 25
4.5 Tax Service..................................... 25
ARTICLE V................................................. 25
5. No Termination, Abatement, etc.................. 25
ARTICLE VI................................................ 26
6.1 Ownership of the Leased Property................ 26
6.2 Personal Property............................... 26
6.3 Transfer of Personal Property and Capital
Additions to Lessor.................................. 26
ARTICLE VII............................................... 26
7.1 Condition of the Leased Property................ 26
7.2 Use of the Leased Property...................... 27
7.3 [Reserved]...................................... 28
7.4 Preservation of Gross Revenues and Facility
Value 28
ARTICLE VIII.............................................. 28
8. Compliance with Legal and Insurance
Requirements, Instruments, etc.................. 28
ARTICLE IX................................................ 29
9.1 Maintenance and Repair.......................... 29
9.2 Encroachments, Restrictions, etc................ 31
ARTICLE X................................................. 32
10.1 Construction of Capital Additions and Other
Alterations to the Leased Property.............. 32
10.2 Requirements for Any Alterations Which Do
Not Require Lessor's Consent.................... 32
ARTICLE XI................................................ 41
11. Liens........................................... 41
ARTICLE XII............................................... 41
12. Permitted Contests.............................. 41
ARTICLE XIII.............................................. 42
13.1 General Insurance Requirements.................. 42
13.2 Replacement Cost................................ 43
13.3 Additional Insurance............................ 43
13.4 Waiver of Subrogation........................... 43
13.5 Policy Requirements............................. 44
13.6 Increase in Limits.............................. 44
13.7 Blanket Policies and Policies Covering
Multiple Locations................................... 44
13.8 No Separate Insurance........................... 44
ARTICLE XIV............................................... 45
14.1 Insurance Proceeds.............................. 45
14.2 Insured Casualty................................ 45
14.3 Uninsured Casualty.............................. 46
14.4 No Abatement of Rent............................ 47
14.5 Waiver.......................................... 47
ARTICLE XV................................................ 47
15. Condemnation.................................... 47
15.1 Total Taking............................... 47
15.2 Partial Taking............................. 47
15.3 Restoration................................ 47
15.4 Award-Distribution......................... 47
15.5 Temporary Taking........................... 48
15.6 Sale Under Threat of Condemnation.......... 48
ARTICLE XVI............................................... 48
16.1 Events of Default............................... 48
16.2 Certain Remedies................................ 51
16.3 Damages......................................... 51
16.4 Receiver........................................ 52
16.5 Lessee's Obligation to Purchase................. 52
16.6 Waiver.......................................... 52
16.7 Application of Funds............................ 53
16.8 Facility Operating Deficiencies................. 53
16.9 [Reserved]...................................... 53
16.10Lessor's Security Interest...................... 53
ARTICLE XVII.............................................. 54
17. Lessor's Right to Cure Lessee's Default......... 54
ARTICLE XVIII............................................. 55
18. Purchase of the Leased Property................. 55
ARTICLE XIX............................................... 55
19. Renewal Terms................................... 55
ARTICLE XX................................................ 56
20. Holding Over.................................... 56
ARTICLE XXI............................................... 56
21.1 Letter(s) of Credit............................. 56
21.2 Uses of Letter(s) of Credit..................... 56
21.3 Treatment of Funds Drawn Under Letter(s) of
Credit............................................... 57
ARTICLE XXII.............................................. 57
22. Risk of Loss.................................... 57
ARTICLE XXIII............................................. 57
23. General Indemnification......................... 57
ARTICLE XXIV.............................................. 58
24. Transfers....................................... 58
24.1 Prohibition................................ 58
24.2 Consent and Transfer Consideration......... 59
24.3 Attornment and Related Matters............. 60
24.4 Assignment of Lessee's Rights Against
Occupant Under a Master Sublease........... 61
24.5 Costs...................................... 61
24.6 No Release of Lessee's Obligations......... 61
24.7 REIT Protection............................ 62
24.8 Transfers In Bankruptcy.................... 62
24.9 Public Offering/Public Trading............. 63
24.10Special Transactions Not Requiring
Lessor's Consent................................ 63
ARTICLE XXV............................................... 65
25. Officer's Certificates and Financial
Statements........................................... 65
25.1 Officer's Certificate...................... 65
25.2 Statements................................. 65
25.3 Charges.................................... 66
ARTICLE XXVI.............................................. 67
26. Lessor's Right to Inspect and Show the
Leased Property and Capital Additions........... 67
ARTICLE XXVII............................................. 67
27. No Waiver....................................... 67
ARTICLE XXVIII............................................ 67
28. Remedies Cumulative............................. 67
ARTICLE XXIX.............................................. 68
29. Acceptance of Surrender......................... 68
ARTICLE XXX............................................... 68
30. No Merger....................................... 68
ARTICLE XXXI.............................................. 68
31. Conveyance by Lessor............................ 68
ARTICLE XXXII............................................. 68
32. Quiet Enjoyment................................. 68
ARTICLE XXXIII............................................ 68
33. Notices......................................... 68
ARTICLE XXXIV............................................. 69
34. Appraiser....................................... 69
ARTICLE XXXV.............................................. 71
35. Right of First Offer............................ 71
ARTICLE XXXVI............................................. 72
36.1 Lessor May Grant Liens.......................... 72
36.2 Attornment...................................... 72
ARTICLE XXXVII............................................ 72
37.1 Hazardous Substances............................ 72
37.2 Notices......................................... 73
37.3 Remediation..................................... 73
37.4 Indemnity....................................... 74
37.5 Environmental Inspection........................ 75
37.6 Review and Approval of Current Environmental
Report............................................... 76
ARTICLE XXXVIII........................................... 78
38. Memorandum of Lease............................. 78
ARTICLE XXXIX............................................. 78
39. Sale of Assets.................................. 78
ARTICLE XL. [INTENTIONALLY DELETED].................... 79
ARTICLE XLI............................................... 79
41. Authority....................................... 79
ARTICLE XLII.............................................. 79
42. Attorneys' Fees................................. 79
ARTICLE XLIII............................................. 79
43. Brokers......................................... 79
ARTICLE XLIV.............................................. 79
44. Submission to Arbitration....................... 79
ARTICLE XLV............................................... 81
45. Miscellaneous................................... 81
45.1 Survival................................... 81
45.2 Severability............................... 81
45.3 Non-Recourse............................... 81
45.4 Licenses................................... 81
45.5 Successors and Assigns..................... 82
45.6 Termination Date........................... 82
45.7 Governing Law.............................. 83
45.8 Waiver of Trial by Jury.................... 83
45.9 Lessee's Equitable Remedies................ 84
45.10Entire Agreement........................... 84
45.11Headings................................... 84
45.12Counterparts............................... 84
45.13Joint and Several.......................... 84
45.14Interpretation............................. 85
45.15Time of Essence............................ 85
45.16Force Majeure.............................. 85
45.17Further Assurances......................... 85
ARTICLE XLVI.............................................. 85
46. Delays in Delivery of Possession................ 85
ARTICLE XLVII............................................. 86
47. Additional Conditions to Continued
Effectiveness of Lease............................... 86
ARTICLE XLVIII............................................ 87
48. Representations by the Parties.................. 87
ARTICLE XLIX.............................................. 88
49. Renegotiation/Early Termination................. 88
ARTICLE L................................................. 89
50. Minimum Rent and Special Additional Rent
Reallocation......................................... 89
ARTICLE LI................................................ 90
51. Pre-Commencement Provisions..................... 90
Exhibit A Legal Description of the Land
Exhibit B List of Lessor's Personal Property
Exhibit C Form of Amendment
Exhibit D Existing Leases
Exhibit E Facilities Group Leases
Exhibit F Fixed Term Monthly Minimum Rent Schedule; Initial
Minimum Purchase Price and Special Additional Rent
Schedule
Exhibit G Permitted Exceptions
Exhibit H Minimum Rent Reallocation Example(s)
LEASE
THIS LEASE ("Lease") is dated as of the 15th day of June, 1998, and
is between [HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation
("Lessor"), and CENTENNIAL HEALTHCARE INVESTMENT CORPORATION, a Georgia
corporation ("Lessee").
ARTICLE I.
1. Leased Property; Term
Upon and subject to the terms and conditions hereinafter set forth,
Lessor leases to Lessee and Lessee leases from Lessor all of Lessor's rights and
interests in and to the following (collectively the "Leased Property"):
(a) the real property described in Exhibit A
attached hereto (collectively, the "Land");
(b) all buildings, structures, Fixtures and other improvements
of every kind now or hereafter located on the Land, including alleyways and
connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and
off-site to the extent Lessor has obtained any interest in the same), parking
areas and roadways appurtenant to such buildings and structures and Capital
Additions funded by Lessor (collectively, the "Leased Improvements");
(c) all easements, rights and appurtenances relating to the Land
and the Leased Improvements (collectively, the "Related Rights");
(d) all equipment, machinery, fixtures, and other items of real
and/or personal property, including all components thereof, now and hereafter
located in, on or used in connection with and permanently affixed to or
incorporated into the Leased Improvements, including all furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste disposal,
air-cooling and air-conditioning systems, apparatus, sprinkler systems, fire and
theft protection equipment, and built-in oxygen and vacuum systems, all of
which, to the greatest extent permitted by law, are hereby deemed to constitute
real estate, together with all replacements, modifications, alterations and
additions thereto (collectively, the "Fixtures"); and
(e) the machinery, equipment, furniture and other personal
property described on Exhibit B attached hereto together with any other item of
personal property funded by Lessor as part of a Capital Project pursuant to
Section 10.3 below (as defined below) and any and all replacements and
substitutes for any of the foregoing (collectively, "Lessor's Personal
Property").
SUBJECT, HOWEVER, to the Permitted Exceptions, as defined below, to
have and to hold for (1) a fixed term (the "Fixed Term") commencing on the
Commencement Date, as defined below, and ending at 11:59 p.m. Los Angeles,
California, time on September 30, 2012, and (2) the Extended Terms provided for
in Article XIX unless this Lease is earlier terminated as hereinafter provided.
Following the Commencement Date, the parties shall execute an amendment to this
Lease in substantially the form attached hereto as Exhibit C to confirm certain
matters, including the Commencement Date. In addition, following each Capital
Project Rent Commencement Date (as defined below), if any, the parties shall
similarly execute an amendment to this Lease to confirm the total Project Costs
(as defined below) funded by Lessor on account of a Capital Project (as defined
below) and the applicable increase in the Minimum Rent (as defined below) on
account thereof pursuant to Section 3.1 below. Upon any other change in the
Minimum Rent pursuant to Section 3.1 below or elsewhere in this Lease, the
parties shall again execute an amendment to this Lease confirming such matters.
Notwithstanding the foregoing, the failure of Lessee to so execute and deliver
any such amendment shall not affect Lessor's determination of the matters to be
confirmed thereby.
ARTICLE II.
2. Definitions. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular; (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
GAAP as at the time applicable; (iii) all references in this Lease to designated
"Articles," "Sections" and other subdivisions are to the designated Articles,
Sections and other subdivisions of this Lease; (iv) the word "including" shall
have the same meaning as the phrase "including, without limitation," and other
similar phrases; and (v) the words "herein," "hereof" and "hereunder" and other
similar words refer to this Lease as a whole and not to any particular Article,
Section or other subdivision:
AAA: As defined in Article XLIV.
Additional Charges: As defined in Article III.
Additional Rent: As defined in Article III.
Adios Date: As defined in Article XLVII.
Adjustment Amount: As defined in Article L.
Affiliate: Any Person which, directly or indirectly (including
through one or more intermediaries), controls or is controlled by or is under
common control with any other Person, including any Subsidiary of a Person. For
purposes of this definition, the definition of "Controlling Person" below, and
Article XXIV below, the term "control" (including the correlative meanings of
the terms "controlled by" and "under common control with"), as used with respect
to any Person, shall mean the possession, directly or indirectly (including
through one or more intermediaries), of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
or control of voting securities, partnership interests or other equity interests
or otherwise. Without limiting the generality of the foregoing, when used with
respect to any corporation, the term "Affiliate" shall also include (i) any
Person which owns, directly or indirectly (including through one or more
intermediaries), Fifty Percent (50%) or more of any class of voting security or
equity interests of such corporation, (ii) any Subsidiary of such corporation
and (iii) any Subsidiary of a Person described in clause (i).
Allocated Value: As defined in the definition of Transfer
Consideration in this Article II and as further determined in accordance with
the appraisal procedures set forth in Article XXXIV.
Appraiser: As defined in Article XXXIV.
Architect: An architect and/or engineer licensed in the State
and selected by Lessee and reasonably approved by Lessor; provided, however,
that with respect to any approved Capital Project, if the scope and nature
thereof does not require the services of an architect and/or engineer as
reasonably determined by Lessee and Lessor, then for purposes of any such
Capital Project, the term "Architect" may instead mean a space planner or other
construction consultant engaged by Lessee and reasonably approved by Lessor.
Award: All compensation, sums or anything of
value awarded, paid or received on a total or partial
Condemnation.
Bankruptcy Code: The United Stated Bankruptcy
Code (11 U.S.C. ss. 101 et seq.), and any successor statute or
legislation thereto.
Base Gross Revenues: (i) For the Fixed Term, the Gross Revenues
for the Gross Revenue Year commencing January 1, 2001 and ending December 31,
2001, (ii) for the first Extended Term (i.e., October 1, 2012 through and
including September 30, 2022), if applicable, the Gross Revenues for the Gross
Revenue Year commencing January 1, 2012 and ending December 31, 2012, and (iii)
for the second Extended Term (i.e., October 1, 2022 through and including
September 30, 2032), if applicable, the Gross Revenues for the Gross Revenue
Year commencing January 1, 2022 and ending December 31, 2022.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which national banks in the City of New York, New
York are authorized, or obligated, by law or executive order, to close.
Capital Additions: One or more new buildings, or one or more
additional structures annexed to any portion of any of the Leased Improvements,
or the material expansion of existing improvements, which are constructed on any
parcel or portion of the Land, during the Term, including construction of a new
wing or new story, or the renovation of existing improvements on the Leased
Property in order to provide a functionally new facility needed to provide
services not previously offered.
Capital Addition Costs: The costs of any Capital Addition made
to the Leased Property whether paid for by Lessee or Lessor, including (i) all
permit fees and other costs imposed by any Governmental Authority, the cost of
site preparation, the cost of construction including materials and labor, the
cost of supervision and related design, engineering and architectural services,
the cost of any fixtures, and if and to the extent approved by Lessor, the cost
of construction financing; (ii) fees paid to obtain necessary licenses and
certificates; (iii) if and to the extent approved by Lessor in writing and in
advance, the cost of any land contiguous to the Leased Property which is to
become a part of the Leased Property purchased for the purpose of placing
thereon the Capital Addition or any portion thereof or for providing means of
access thereto, or parking facilities therefor, including the cost of surveying
the same; (iv) the cost of insurance, real estate taxes, water and sewage
charges and other carrying charges for such Capital Addition during
construction; (v) the cost of title insurance; (vi) reasonable fees and expenses
of legal counsel; (vii) filing, registration and recording taxes and fees;
(viii) documentary stamp and similar taxes; and (ix) all reasonable costs and
expenses of Lessor and any Person which has committed to finance the Capital
Addition, including (a) the reasonable fees and expenses of their respective
legal counsel; (b) printing expenses; (c) filing, registration and recording
taxes and fees; (d) documentary stamp and similar taxes; (e) title insurance
charges and appraisal fees; and (f) commitment fees charged by any Person
advancing or offering to advance any portion of the financing for such Capital
Addition. All Project Costs advanced or funded by Lessor hereunder on account of
a Capital Project shall be treated as a Capital Addition Cost paid for by Lessor
under this Lease.
Capital Project Rent Commencement Date: With respect to any
Capital Project funded by Lessor pursuant to Section 10.3 below, the earlier of
(i) the Completion Date and (ii) the Outside Date.
Capital Projects: Collectively, any approved (i) Capital
Renovation Project and/or (ii) Capital Addition, in each such instance which is
to be funded by Lessor pursuant to Section 10.3.
Capital Renovation Project: Any capital repairs and/or
improvements to the Leased Property which do not constitute a Capital Addition,
together with any FF&E Refurbishment. As used herein, a "capital repair or
capital improvement" shall be any repair or improvement the cost of which must
be capitalized for financial reporting purposes.
Code: The Internal Revenue Code of 1986, as
amended.
Commencement Date: The date Lessee takes possession of and
commences use and operation of the Leased Property for any purpose whatsoever
following satisfaction of the condition to the continued effectiveness of this
Lease as set forth in Article XLVII below.
Commercial Occupancy Arrangement: Any commercial
(as opposed to resident or patient) Occupancy Arrangement.
Completion Date: The date on which the construction/performance
of any Capital Project has been substantially completed and Lessee has received
all licenses, authorizations and permits, if any, required by any Governmental
Authority for the use and operation of the Capital Project (including a
certificate or temporary certificate of occupancy, if applicable). For purposes
of this Lease, "substantially completed" shall mean that the
improvements/repairs being constructed/performed as part of the Capital Project
and all other work which Lessee is obligated to perform under this Lease with
respect to a Capital Project have been functionally completed in accordance with
the Plans therefor and the applicable provisions of this Lease, notwithstanding
the fact that Punch-List Items remain to be performed.
Condemnation: The exercise of any governmental power, whether by
legal proceedings or otherwise, by a Condemnor or a voluntary sale or transfer
by Lessor to any Condemnor, either under threat of condemnation or while legal
proceedings for condemnation are pending.
Condemnor: Any public or quasi-public authority,
or private corporation or individual, having the power of
Condemnation.
Consolidated Financials: For any fiscal year or other accounting
period for any Person and its consolidated Subsidiaries, statements of earnings
and retained earnings and of changes in financial position for such period and
for the period from the beginning of the respective fiscal year to the end of
such period and the related balance sheet as of the end of such period, together
with the notes thereto, all in reasonable detail and setting forth in
comparative form the corresponding figures for the corresponding period in the
preceding fiscal year, and prepared in accordance with GAAP.
Consolidated Net Worth: At any time, the sum of
the following for any Person and its consolidated Subsidiaries,
on a consolidated basis determined in accordance with GAAP:
(i) the amount of capital or stated capital (after
deducting the cost of any shares held in its treasury), plus
(ii) the amount of capital surplus and retained earnings
(or, in the case of a capital surplus or retained earnings deficit,
minus the amount of such deficit), minus
(iii)the sum of the following (without duplication of
deductions in respect of items already deducted in arriving at
surplus and retained earnings): (a) unamortized debt discount and
expense; and (b) any write-up in book value of assets resulting from
a revaluation thereof subsequent to the most recent Consolidated
Financials prior to the date hereof, excluding, however, any (i) net
write-up in value of foreign currency in accordance with GAAP, (ii)
write-up resulting from a reversal of a reserve for bad debts or
depreciation, and (iii) write-up resulting from a change in methods
of accounting for inventory.
Controlling Person: Any (i) Person(s) which, directly or
indirectly (including through one or more intermediaries), controls Lessee and
would be deemed an Affiliate of Lessee, including any partners, shareholders,
principals, members, trustees and/or beneficiaries of any such Person(s) to the
extent the same control Lessee and would be deemed an Affiliate of Lessee, and
(ii) Person(s) which controls, directly or indirectly (including through one or
more intermediaries), any other Controlling Person(s) and which would be deemed
an Affiliate of any such Controlling Person(s).
County: The County or Township in which the
Leased Property is located.
CPR: As defined in Article XLIV.
Current Operator: As defined in Article XLVI.
Date of Taking: The date the Condemnor has the
right to possession of the property being condemned.
Environmental Costs: As defined in Article XXXVII.
Environmental Laws: Environmental Laws shall mean any and all
federal, state, municipal and local laws, statutes, ordinances, rules,
regulations, guidances, policies, orders, decrees, judgments, whether statutory
or common law, as amended from time to time, now or hereafter in effect, or
promulgated, pertaining to the environment, public health and safety and
industrial hygiene, including the use, generation, manufacture, production,
storage, release, discharge, disposal, handling, treatment, removal,
decontamination, clean-up, transportation or regulation of any Hazardous
Substance, including the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Comprehensive Environmental Response Compensation
and Liability Act, the Resource Conservation and Recovery Act, the Federal
Insecticide, Fungicide, Rodenticide Act, the Safe Drinking Water Act and the
Occupational Safety and Health Act.
Environmental Report: As defined in Article
XXXVII.
Event of Default: As defined in Article XVI.
Existing Leases: Those certain leases described on Exhibit D
attached hereto and incorporated herein by this reference between Lessor or an
Affiliate of Lessor and Lessee or an Affiliate of Lessee.
Extended Term(s): As defined in Section 19.1.
Facility: The health care facility being operated
on the Leased Property, together with any Capital Additions, in
accordance with this Lease.
Facility Group Facilities: The "Leased Property"
and "Facilities" covered by each Facility Group Lease (each, a
"Facility Group Facility").
Facility Group Leases: Those certain leases, each of even date
herewith, between Lessor or an Affiliate of Lessor and Lessee or an Affiliate of
Lessee and covering one of the respective facilities described on Exhibit E
attached hereto and incorporated herein by this reference. This Lease shall be
deemed a "Facility Group Lease" for purposes of each other Facility Group Lease.
Facility Mortgage: As defined in Article XIII.
Facility Mortgagee: As defined in Article XIII.
Facility Operating Deficiency: A deficiency in the conduct of
the operation of the Facility which, in the reasonable determination of Lessor,
if not corrected within a reasonable time, would have the likely effect of
causing a revocation or termination of (i) the Facility's applicable licensure
necessary to operate the Facility for its Primary Intended Use or (ii)
certification under government reimbursement programs and which would materially
affect Gross Revenues or a material number of patients/residents.
Fair Market Rental: The fair market rental value of the Leased
Property and all Capital Additions, or applicable portion(s) thereof (including
any appropriate periodic escalations therein), determined in accordance with the
appraisal procedures set forth in Article XXXIV, and assuming the same is
exposed on the open market at the time of the appraisal and taking into account,
among other relevant factors, the income generated from the Leased Property and
all Capital Additions, or applicable portion(s) thereof, but specifically
excluding brokerage commissions and other Lessor payments that do not directly
inure to the benefit of lessees.
Fair Market Value: The fair market value of the Leased Property
and all Capital Additions, determined in accordance with the appraisal
procedures set forth in Article XXXIV and this definition. Fair Market Value
shall also be determined by valuing the Leased Property and all Capital
Additions as a fully-permitted Facility operated in accordance with the
provisions of this Lease.
FF&E Refurbishment: That portion of any Capital Project which
relates to the purchase, installation and/or repair of any tangible moveable
Personal Property for the Facility.
Fixed Term: As defined in Article I.
Fixtures: As defined in Article I.
GAAP: Generally accepted accounting principles.
Governmental Authority: The United States, the State, county,
city and applicable subdivision in which the Leased Property is located or which
exercise jurisdiction over the Leased Property and/or the
construction/performance of a Capital Project, and any court administrator,
agency, department, commission, board, bureau or instrumentality of any of them
which exercise jurisdiction over the Leased Property and/or
construction/performance of a Capital Project.
Gross Revenue Year: Each twelve (12) month period
from January 1 to and including December 31.
Gross Revenues: All revenues received or receivable from or by
reason of the operation of the Facility or any other use of the Leased Property,
Lessee's Personal Property and all Capital Additions including all revenues
received or receivable for the use of or otherwise attributable to units, rooms,
beds and other facilities provided, meals served, services performed (including
ancillary services), space or facilities subleased or goods sold on or from the
Leased Property and all Capital Additions; provided, however, that Gross
Revenues shall not include:
(i) non-operating revenues such as interest income or
income from the sale of assets not sold in the ordinary course of
business; and
(ii) federal, state or local excise taxes and any tax based
upon or measured by such revenues which is added to or made a part of
the amount billed to the patient or other recipient of such services
or goods, whether included in the billing or stated separately.
Gross Revenues for each Gross Revenue Year shall include all
cost report settlement amounts properly estimated and recordable during such
Gross Revenue Year in accordance with GAAP relating to health care accounting,
regardless of the Gross Revenue Year that such settlement amounts based upon
such estimates are actually received or paid; provided, however, that if any
settlements amounts received, paid or charged during any Gross Revenue Year are
attributable to any prior Gross Revenue Year and such amounts actually received
or charged are in excess of or less than the settlements amounts which were
properly estimated and recordable during such prior Gross Revenue Year, then the
amount of such excess or deficiency, as the case may be, shall be included (or
excluded, as the case may be) during the Gross Revenue Year in which paid,
received or charged, as applicable, regardless of the Gross Revenue Year that
such excess or deficiency actually applies to. Gross Revenues shall also include
the Gross Revenues of any Occupant under a Commercial Occupancy Arrangement,
i.e., the Gross Revenues generated from the operations conducted on or from such
subleased, licensed or other used or occupied portion of the Leased Property and
all Capital Additions shall be included directly in the Gross Revenues;
provided, however, that the rent received or receivable by Lessee from or under
such Commercial Occupancy Arrangement shall be excluded from Gross Revenues for
such purpose.
Guarantors: Centennial Healthcare Corporation, a
Delaware corporation.
Guaranty: The Guaranty of Obligations of even
date herewith executed by Guarantor.
Handling: As defined in Article XXXVII.
Hazardous Substances: Collectively, any
petroleum, petroleum product or byproduct, asbestos or material
containing asbestos, polychlorinated biphenyls, or any substance,
material or waste regulated or listed pursuant to any
Environmental Law.
HCPI: Health Care Property Investors, Inc., a
Maryland corporation.
Historical Operating Information: As defined in
Article XLIX.
Impositions: Collectively, all taxes, including capital stock,
franchise and other state taxes of Lessor (and, if Lessor is not HCPI, of HCPI
as a result of its investment in Lessor), ad valorem, sales, use, single
business, gross receipts, transaction privilege, rent or similar taxes;
assessments including assessments for public improvements or benefits, whether
or not commenced or completed prior to the date hereof and whether or not to be
completed within the Term; ground rents; water, sewer and other utility levies
and charges; excise tax levies; fees including license, permit, inspection,
authorization and similar fees; and all other governmental charges, in each case
whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Leased Property, any Capital
Additions and/or the Rent and all interest and penalties thereon attributable to
any failure in payment by Lessee which at any time during or in respect of the
Term hereof may be assessed or imposed on or in respect of or be a lien upon (i)
Lessor or Lessor's interest in the Leased Property or any Capital Additions,
(ii) the Leased Property, any Capital Additions or any parts thereof or any rent
therefrom or any estate, right, title or interest therein, or (iii) any
occupancy, operation, use or possession of, or sales from or activity conducted
on or in connection with the Leased Property, any Capital Additions or the
leasing or use of the Leased Property, any Capital Additions or any parts
thereof; provided, however, that nothing contained in this Lease shall be
construed to require Lessee to pay (a) any tax based on net income (whether
denominated as a franchise or capital stock or other tax) imposed on Lessor or
any other Person, (b) any transfer, or net revenue tax of Lessor or any other
Person except Lessee and its successors, (c) any tax imposed with respect to the
sale, exchange or other disposition by Lessor of any Leased Property, any
Capital Additions or the proceeds thereof, or (d) except as expressly provided
elsewhere in this Lease, any principal or interest on any indebtedness on the
Leased Property for which Lessor is the obligor, except to the extent that any
tax, assessment, tax levy or charge, of the type described in any of clauses
(a), (b), (c) or (d) above is levied, assessed or imposed in lieu of or as or as
a substitute for any tax, assessment, levy or charge which is otherwise included
in this definition of an "Imposition."
Incremental Gross Revenues: The positive amount,
if any, by which the Gross Revenues for the Gross Revenue Year in
question exceeds the Base Gross Revenues.
Insurance Requirements: The terms of any insurance policy
required by this Lease and all requirements of the issuer of any such policy and
of any insurance board, association, organization or company necessary for the
maintenance of any such policy.
Intangible Property: All accounts, proceeds of accounts, rents,
profits, income or revenues derived from the use of rooms or other space within
the Leased Property or the providing of services in or from the Leased Property
and all Capital Additions; documents, chattel paper, instruments, contract
rights, deposit accounts, general intangibles, causes of action, now owned or
hereafter acquired by Lessee (including any right to any refund of any
Impositions) arising from or in connection with Lessee's operation or use of the
Leased Property and all Capital Additions; all licenses and permits now owned or
hereinafter acquired by Lessee, which are necessary or desirable for Lessee's
use of the Leased Property and all Capital Additions for the Primary Intended
Use, including, if applicable, any certificate of need or similar certificate;
the right to use any trade name or other name associated with the Facility
(other than the names "Centennial" or "Paragon"); and any and all third-party
provider agreements (including Medicare and Medicaid).
Land: As defined in Article I.
Lease: As defined in the preamble.
Lease Year: Each period of twelve (12) full calendar months from
and after the Commencement Date, unless the Commencement Date is a day other
than the first (1st) day of a calendar month, in which case the first Lease Year
shall be the period commencing on the Commencement Date and ending on the last
day of the eleventh (11th) month following the month in which the Commencement
Date occurs and each subsequent Lease Year shall be each period of twelve (12)
full calendar months after the last day of the prior Lease Year; provided,
however, that the last Lease Year during the Term may be a period of less than
twelve (12) full calendar months and shall end on the last day of the Term.
Leased Improvements; Leased Property: Each as
defined in Article I.
Legal Requirements: Collectively, (i) all federal, state,
county, municipal and other governmental statutes, laws (including common law
and Environmental Laws), rules, policies, guidance, codes, orders, regulations,
ordinances, permits, licenses, covenants, conditions, restrictions, judgments,
decrees and injunctions affecting either the Leased Property, Lessee's Personal
Property and all Capital Additions or the construction, use or alteration
thereof, whether now or hereafter enacted and in force, including any which may
(A) require repairs, modifications or alterations in or to the Leased Property,
Lessee's Personal Property and all Capital Additions, (B) in any way adversely
affect the use and enjoyment thereof, or (C) regulate the transport, handling,
use, storage or disposal or require the cleanup or other treatment of any
Hazardous Substance, and (ii) all Permitted Exceptions.
Lessee: As defined in the preamble.
Lessee's Affidavit: A sworn affidavit of Lessee, in form and
substance reasonably satisfactory to Lessor, stating that to the best of
Lessee's knowledge, all labor and material bills of every kind and character
incurred by Lessee to the date of such affidavit in connection with a Capital
Project has been paid in accordance with the payment provisions of the
applicable Project Contracts except for the unpaid bills to be paid from the
proceeds of the current advance request, and that the builder's risk insurance
as described in Section 10.3 contains sufficient coverage for the
construction/performance of a Capital Project, including the value of any
materials stored off the Leased Property.
Lessee's Personal Property: The Personal Property
other than Lessor's Personal Property.
Lessee's Removable Personal Property: Lessee's computer software
and hardware, all accounting, patient care, payroll, cash management, accounting
and other business information systems, and any and all marketing materials and
management manuals used by Lessee in the operation of the Facility.
Lessor: As defined in the preamble.
Lessor's Personal Property: As defined in Article
I.
Letter(s) of Credit: As defined in Article XXI.
Master Sublease: As defined in Article XXIV.
Maximum Funding Amount: The aggregate total Project Costs which
Lessor or an Affiliate of Lessor has agreed to fund on account of all approved
Capital Projects pursuant to this Lease and the other Facility Group Leases,
which amount is agreed to be the sum of $6 Million and of which $1 Million may
be allocated in the aggregate for FF&E Refurbishment Project Costs pursuant to
this Lease and the other Facility Group Leases.
Minimum Purchase Price: At any given time, the sum of (i) the
initial amount set for as the "Initial Minimum Purchase Price" on Exhibit F
attached hereto and incorporated herein by this reference, as such amount is
increased at the rate of Three Percent (3%) compounded annually for each Lease
Year (to be prorated for partial Lease Years) between the Commencement Date and
the date of any purchase of the Leased Property by Lessee pursuant to this
Lease, plus (ii) 58.33% of the total Project Costs paid or funded by Lessor on
account of any Capital Projects, as such amount is increased at the rate of
Three Percent (3%) compounded annually from the applicable Capital Project Rent
Commencement Date to the date of any such purchase of the Leased Property by
Lessee pursuant to this Lease, plus (iii) any other Capital Addition Costs
(i.e., other than Project Costs attributable to a Capital Project) paid for,
funded or accrued by Lessor, also as such amount is increased at the rate of
Three Percent (3%) computed annually from the date of any such payment, funding
or accrual to the date of any such purchase of the Leased Property by Lessee
pursuant to this Lease.
Minimum Rent: As defined in Article III.
Minimum Rent Reallocation Amount: As defined in
Article L.
Net Worth Hurdle: As defined in Article XXIV.
Occupancy Arrangement: Any sublease, license or other
arrangement with a Person for the right to use, occupy or possess any portion of
the Leased Property and/or any Capital Additions.
Occupant: Any Person under an Occupancy
Arrangement.
Officer's Certificate: A certificate of Lessee
signed by an officer authorized to so sign by its board of
directors or by-laws.
Old Lease: As defined in Article XLVI.
Outside Date: With respect to any Capital Project, subject to
Permitted Delays, the date agreed upon by the parties for completion pursuant to
the approved Plans therefor.
Outside Renegotiation Date: As defined in Article
XLIX.
Overdue Rate: On any date, a rate equal to Two Percent (2%)
above the Prime Rate, but in no event greater than the maximum rate then
permitted under applicable law.
Payment Date: Any due date for the payment of the
installments of Pre-Commencement Rent, Minimum Rent, Additional
Rent, Special Additional Rent or any other sums payable under
this Lease.
Permitted Delays: The actual number of days'
delay in the Completion Date for any Capital Project proximately
caused by:
(i) a breach or default by Lessor of its obligations under
Section 10.3 of this Lease (including Lessor's failure to fund any advance
which Lessor is required to fund under such Section);
(ii) the failure of Lessor to approve or disapprove any Plans
(including changes thereto), any Project Budget and/or any Project
Contracts (to the extent Lessor's approval is required therefor) within
ten (10) Business Days after Lessor's receipt of Lessee's request for
approval thereof; and/or
(iii)any event or occurrence of the type described in Section
45.16 of this Lease; provided, however, that for purposes of determining
the applicable Capital Project Rent Commencement Date only, in no event
shall the Outside Date be extended by more than sixty (60) days in the
aggregate pursuant to this clause (iii).
Permitted Exceptions: Collectively, (i) those easements,
encumbrances, covenants, restrictions and other matters affecting title to the
Leased Property set forth on Exhibit G attached hereto and incorporated herein
by this reference or which would as of the date hereof be disclosed by an
accurate survey of the Leased Property, (ii) any easements, encumbrances,
covenants and restrictions and other matters which affect the Leased Property
and which are created after the date hereof as permitted pursuant to this Lease,
and (iii) any other non-monetary matters affecting title to the Leased Property
as of the date hereof which do not individually or in the aggregate materially
and adversely affect the value of the Leased Property or the maintenance,
occupancy or use of the Leased Property for its Primary Intended Use.
Person: Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other form of entity.
Personal Property: All machinery, furniture and equipment,
including phone systems and computers, trade fixtures, inventory, supplies and
other personal property used or useful in the use of the Leased Property and any
Capital Additions for their Primary Intended Use, other than Fixtures.
Plans: (i) The final plans and specifications for the
construction/performance of a Capital Project prepared by the Architect and
approved by Lessor, including a construction schedule and time-line and (ii) all
amendments, modifications and supplements thereto which do not require the
approval of Lessor or which have been approved by Lessor subsequent to the
approval of the plans and specifications described in clause (i).
Pre-Commencement Rent: As defined in Article LI.
Pre-Commencement Rent Date: As defined in Article
LI.
Pre-Commencement Term: As defined in Article LI.
Primary Intended Use: For a long-term skilled nursing care
facility and such other uses necessary or incidental to such use, including the
provision of post acute services on both an inpatient and outpatient basis.
Prime Rate: On any date, a rate equal to the annual rate on such
date announced by the Bank of New York to be its prime, base or reference rate
for 90-day unsecured loans to its corporate borrowers of the highest credit
standing but in no event greater than the maximum rate then permitted under
applicable law. If the Bank of New York discontinues its use of such prime, base
or reference rate or ceases to exist, Lessor shall designate the prime, base or
reference rate of another state or federally chartered bank based in New York to
be used for the purpose of calculating the Prime Rate hereunder.
Project Budget: A detailed estimate prepared by Lessee's general
contractor and reasonably approved by Lessor for a Capital Project, together
with such other budget information relating to a Capital Project as Lessor may
reasonably request and approve from Lessee, including a breakdown of hard
construction costs to a level of detail that will allow Lessor to determine the
actual cost and percentage of completion of construction as of the date of any
Request for Advance.
Project Contracts: Any contracts between Lessee and Architect
and any contractor (including subcontractors) relating to rendering of services
or furnishing of materials in connection with the construction/performance of a
Capital Project, contracts between lessee's general contractor and any
subcontractor and contracts between any other Persons relating to the rendering
of services or furnishing materials in connection with the
construction/performance of a Capital Project.
Project Costs: All costs and expenses incurred in connection
with (i) the construction/performance of a Capital Project, as contemplated by
the applicable Project Budget, including costs of constructing/performing work
depicted by the Plans and otherwise in accordance with applicable provisions of
this Lease, costs and fees for bonds, costs and fees for surveys, costs for
title work and premiums for title insurance, environmental fees and expenses,
Architect's fees, engineering costs, the cost of purchase and installation of
any furniture, fixtures and equipment and other Personal Property included as
part of a FF&E Refurbishment included in a Capital Project and all governmental
license and fees. Without limiting the foregoing, Project Costs shall include
all amounts funded or advanced by Lessor pursuant to this Lease on account of a
Capital Project pursuant to section 10.3 below.
Projected Facility Results: As defined in Article
XLIX.
Projected Group Results: As defined in Article
XLIX.
Punch-List Items: Minor details of construction, mechanical
adjustments or decorations which remain to be completed following the Completion
Date for a Capital Project and which do not interfere with Lessee's use of the
Facility for its Primary Intended Use.
Put Event: An Event of Default hereunder pursuant to the
applicable provisions of Section 16.1 arising out of (i) any failure of Lessee
to obtain and/or maintain in effect all material licenses, permits, approvals
and other authorizations required to use and operate the Facility for the
Primary Intended Use in accordance with all Legal Requirements, including
provider agreements and Medicare and Medicaid certification; (ii) except as
provided in Section 7.2.3, Lessee shall fail at all times during the Term to
continuously operate the entire Leased Property and all Capital Additions in
accordance with the Primary Intended Use; or (iii) any breach or default by
Lessee during the term of any of its duties, obligations and liabilities
pursuant to either Section 37.1 or 37.2. Notwithstanding that Lessor and Lessee
have specifically defined a "Put Event" for the limited purpose of setting forth
the circumstances under which Lessor shall be entitled to the remedy set forth
in Section 16.5, in no event shall this definition derogate the materiality of
any other Event of Default (including any Event of Default which does not
constitute a Put Event) or otherwise limit Lessor's rights and remedies upon the
occurrence of any such Event of Default, including those rights and remedies set
forth in Sections 16.2, 16.3, 16.4, 16.8 and/or 16.10.
Remaining Funds: With respect to any Capital Project to be
funded by Lessor pursuant to Section 10.3 below, the lesser of (i) the
unadvanced portion of the Project Costs therefor within the Project Budget, (ii)
the unadvanced portion of the Project Costs therefor which when aggregated with
all other Project Costs funded by Lessor pursuant to Section 10.3 hereof do not
exceed $1.5 Million and (iii) the unadvanced portion of the Maximum Funding
Amount.
Rent: Collectively, the Pre-Commencement Rent,
Minimum Rent, Additional Rent, Special Additional Rent and
Additional Charges.
Rent Adjustment Percentage: As defined in Article
L.
Rent Reallocation Share: As defined in Article L.
Request for Advance: Except as provided in the last sentence
below this definition, with respect to any Capital Project to be funded by
Lessor pursuant to Section 10.3, certificates of Lessee and the Architect, in
each case on the appropriate American Institute of Architects ("AIA") form,
including form G702 together with attached AIA form G703 (or equivalent, which
AIA form G703 or equivalent shall be modified to include columns for the
original estimate of scheduled values for each line item, changes to the
scheduled values for each line item and a revised scheduled value for each line
item after any such change) and/or such other form(s) as Lessor may hereafter
reasonably request which shall: (i) set forth the parties to whom money is owed
and the amount owed each; (ii) certify among other things that such amounts
represent payments due for services actually rendered or materials actually
acquired or furnished in connection with the construction/performance of a
Capital Project approved by Lessor; (iii) state that the sum requested is a
Project Cost within the Project Budget for such items and that, in the opinion
of the Architect and Lessee, the Remaining Funds are sufficient to complete such
Capital Project pursuant to the Plans and to pay for all labor, material,
interest and other expenses in connection therewith; (iv) be accompanied by
copies of billing statements, fee schedules, documentation supporting all costs
to date, copies of all subcontracts not previously submitted and vouchers or
invoices from the parties named therein, in form reasonably satisfactory to
Lessor; (v) refer to an attached schedule, to be verified by the Architect prior
to the advance being requested, identifying in a manner reasonably satisfactory
to Lessor all materials not yet affixed or incorporated into such Capital
Project but which have been covered by certificates submitted to date, including
the current certificate; (vi) contain a statement, to be verified by the
Architect and Lessee prior to the advance being requested, that all such
materials not yet affixed or incorporated into such Capital Project have been
stored at the Leased Property or at one or more other bonded locations approved
by Lessor identified therein (specifying the materials located at each location)
under adequate safeguards to minimize the possibility of loss, damage or
commingling with other materials or projects, and that builder's risk insurance
coverage for such materials stored off the Leased Property; and (vii) be
accompanied by appropriate waivers of lien rights (to the extent not previously
received and approved by Lessor) with respect to work and materials for which
funds have already been advanced pursuant to this Lease, executed by any general
contractor no more than one month in arrears and who has furnished labor or
material to date and whose charges are or will be greater than Twenty-Five
Thousand Dollars ($25,000.00) and by all subcontractors, mechanics and
materialmen no more than one month in arrears and who have furnished labor or
material to date and whose charges are or will be greater than Ten Thousand
Dollars ($10,000.00), unless in any such case Lessee has provided a statutory
payment bond in accordance with applicable Legal Requirements by all other
contractors, subcontractors, mechanics and materialmen. To the extent that any
payment or funding of Project Costs by Lessor hereunder is attributable or
allocable to one or more of the categories comprising a Capital Project, Lessor
shall allocate such Project Costs among such categories as Lessor shall
reasonably determine. Notwithstanding the foregoing, with respect to any single
Capital Project, the cost of which is less than $400,000.00, a "Request for
Advance" shall mean certificates of Lessee and the Architect, in each case on
the appropriate AIA Form, including Form G702 together with attached AIA Form
G703 (or equivalent), and such other forms or information as Lessor may
hereafter reasonably request, and shall be accompanied by the items described in
clause (vii) above.
Required Approvals: As defined in Article XLVII.
Right of First Refusal: As defined in Article
XXXV.
Sale of Business: A Transfer of the type described in any of
clauses (iv), (v) or (vi) of Section 24.1 below, unless such Transfer involves
only the stock and/or assets of Lessee and Lessee has no substantial assets
other than (a) its interest in the Leased Property and any Capital Additions
pursuant to this Lease, (b) the business and operations on the Leased Property
and any Capital Additions and (c) Lessee's Personal Property.
SEC: Securities and Exchange Commission.
Special Additional Rent: As defined in Article
III.
Special Additional Rent Reallocation Amount(s):
As defined in Article L.
State: The State or Commonwealth in which the
Leased Property is located.
Subsidiaries: Corporations, partnerships, limited liability
companies, business trusts or other legal entities with respect to which a
Person owns, directly or indirectly (including through one or more
intermediaries), more than 50% of the voting stock or partnership, membership or
other equity interest, respectively.
Term: Collectively, Pre-Commencement Term, the
Fixed Term and any Extended Term(s), as the context may require,
unless earlier terminated.
Terminating Facility Group Lease: As defined in
Article L.
Terms of the Offer: As defined in Article XXXV.
Total Monthly Minimum Rent: As defined in Article
L.
Transfer: As defined in Article XXIV.
Transfer Consideration: With respect to any Transfer
constituting a Master Sublease (other than a Master Sublease entered into in
connection with a Sale of Business), "Transfer Consideration" shall mean
Twenty-Five Percent (25%) of the positive difference, if any, between the Master
Sublease rent (however denominated and paid but excluding any items in the
nature of reimbursement for and/or payment of Impositions, insurance premiums
and similar expenditures of Lessee) paid by the Occupant or transferee in excess
of the Minimum Rent, Additional Rent and Special Additional Rent payable by
Lessee under this Lease, determined on a monthly basis, prorating such Minimum
Rent, Additional Rent and Special Additional Rent, as appropriate, if less than
all of the Facility is Master Subleased. Twenty-Five Percent (25%) of the
difference shall be paid by Lessee to Lessor monthly when the Minimum Rent is
due; provided, however, that in no event shall the total Transfer Consideration
to which Lessor is entitled in connection with any such Master Sublease exceed
the total consideration given directly or indirectly (including through one or
more intermediaries) to Lessee, to any Controlling Person(s) or to any other
Person in exchange for, in connection with, related to or arising out of the
transaction(s) as to which such Master Sublease is a part. With respect to any
other Transfer (i.e., a Transfer other than pursuant to a Master Sublease, but
including a Master Sublease which is part of a Sale of Business) "Transfer
Consideration" shall mean Twenty-Five Percent (25%) of the sum of (a) any and
all consideration given directly or indirectly (including through one or more
intermediaries) to Lessee, to any Controlling Person(s) or to any other Persons
in exchange for, in connection with, related to or arising out of such Transfer,
less (b) the Net Book Value Adjustment (as hereinafter defined) and the
Unamortized Capital Addition Costs of Lessee (as hereinafter defined); provided,
however, that if such Transfer constitutes a Sale of Business, is a Master
Sublease entered into in connection with a Sale of Business or involves the
Transfer of more than one facility, then "Transfer Consideration" shall mean
Twenty-Five Percent (25%) of the Allocated Value (as hereinafter defined) of the
sum of (i) any and all such consideration given directly or indirectly
(including through one or more intermediaries) to Lessee, to any Controlling
Person(s) or to any other Person in exchange for, in connection with, related to
or arising out of such Sale of Business or Transfer of more than one facility,
less (ii) the Net Book Value Adjustment and the Unamortized Capital Addition
Costs of Lessee. As used herein, the term "Net Book Value Adjustment" shall mean
the book value of any cash or cash equivalents, receivables and any other
tangible assets of Lessee or of any Controlling Person(s) or other
transferor(s), as the case may be, being transferred, conveyed or sold, directly
or indirectly, in connection with such Transfer or Sale of Business, as the case
may be, net of any liabilities relating to such transferred assets being
assumed, directly or indirectly, by the transferee in connection with such
Transfer (e.g., accounts payable, accrued vacation, equipment leases, etc., but
specifically excluding, without limitation, the obligations under this Lease),
all as determined in accordance with GAAP. As used herein, the term "Unamortized
Capital Addition Costs of Lessee" shall mean all Capital Addition Costs incurred
by Lessee for any approved Capital Additions, less accumulated
deprecation/amortization based upon the useful life thereof in accordance with
GAAP. As used herein, the term "Allocated Value" shall mean the sum of clauses
(i) and (ii) above allocated to the Leased Property, any Capital Additions and
Lessee's operations thereon (including any and all business, enterprise and
goodwill value), determined by the appraisal procedures set forth in Article
XXXIV and based upon (x) the present value of the then current earnings before
interest, taxes, depreciation, amortization and rents (including Rents under
this Lease) ("EBITDAR") of the Facility over the remaining Term of this Lease
(taking into account any unexercised Extended Term(s)), less the present value
of the remaining Minimum Rent, Additional Rent and Special Additional Rent to be
paid under this Lease for such period(s), as compared to (y) the sum of the
following with respect to all operations being transferred, conveyed or sold,
directly or indirectly, in connection with such Transfer or Sale of Business:
(1) with respect to all operations conducted at leased facilities (including the
Facility), the present value of the then current EBITDAR of all such operations
over the remaining terms of all such leases (taking into account any unexercised
extension options thereunder), less the present value of the remaining rents to
be paid under such leases for such period(s), and (2) with respect to any
operations conducted at owned facilities, the EBITDAR of such operations
capitalized at the appropriate market capitalization rate, less debt which is
being assumed, directly or indirectly, by the transferee (taking into account
the positive or negative value of such assumed debt attributable to the interest
rate, amortization schedule, maturity date, prepayment penalties and other
relevant terms thereof). As used herein, the term "consideration" shall mean and
include money, services, property and other things of value, including payment
of costs, cancellation or forgiveness of indebtedness, discounts, rebates,
barter and the like. For purposes of Section 24.2.2 and the payment of Transfer
Consideration to Lessor as provided in this Lease, if any such consideration
given in exchange for, in connection with, related to or arising out of such
Transfer is in a form other than cash (such as in kind, equity interests,
indebtedness, earn-outs or other deferred payments, consulting or management
fees, etc.), Lessor shall be entitled to receive the applicable Transfer
Consideration on account thereof in cash based upon the present fair market
value of such consideration at the time of the Transfer. Lessee acknowledges and
agrees that the terms under which Lessor is entitled to the payment of Transfer
Consideration pursuant to this Lease and the amount thereof has been freely
negotiated and represents a fair and equitable division with Lessor of the
consideration payable in connection with a Transfer taking into account, among
other things, Lessor's investment in the Leased Property, the terms of this
Lease and the inherent risks of owning and leasing real property.
Unsuitable for Its Primary Intended Use: A state or condition of
the Facility such that by reason of damage or destruction or Condemnation to the
Leased Property, in the good faith judgment of Lessor and Lessee, the Facility
cannot be operated on a commercially practicable basis for its Primary Intended
Use.
ARTICLE III.
3.1 Rent. Lessee will pay to Lessor in lawful money of the United
States of America which shall be legal tender for the payment of public and
private debts, without offset or deduction, the amounts set forth hereinafter as
Minimum Rent, Additional Rent and Special Additional Rent during the Term.
Payments of Minimum Rent and Additional Rent shall be paid in advance on or
before the first day of each calendar month and shall be made via wire transfer
to an account as Lessor may from time to time designate in writing. Payments of
Special Additional Rent shall be paid in advance on or before the first day of
the month for which the same is due and shall be made via wire transfer to the
same account as Lessor may have then designated for the payment of Minimum Rent
and Additional Rent.
3.1.1 Minimum Rent.
(a) Subject to upward adjustment pursuant to
subsections (b) and (c) below and either upward or downward adjustment pursuant
to Articles XLIX and L below, during the Fixed Term Lessee shall pay to Lessor
as monthly "Minimum Rent," the applicable amounts set forth as the "Fixed Term
Minimum Rent Schedule" and for the relevant time period specified on Exhibit F
attached hereto and incorporated herein by this reference. The first monthly
payment of Minimum Rent shall be payable on the Commencement Date (prorated as
to any partial calendar month at the beginning of the Term).
(b) On any Capital Project Rent Commencement
Date, the applicable monthly Minimum Rent determined pursuant to subsection (a)
above (as the same may have been previously increased pursuant to this
subsection (b) or subsection (c) below for any prior Capital Project funded by
Lessor pursuant to Section 10.3 below), shall be increased by an amount equal to
one-twelfth (1/12th) of the product of (i) 58.33% of the total Project Costs
paid or funded by Lessor on account of the applicable Capital Project as of the
applicable Capital Project Rent Commencement Date, times (ii) Nine Percent (9%).
The monthly Minimum Rent payable for the month during which any such increase is
applicable shall be prorated based on the number of days for which the rental
amounts apply.
(c) Monthly Minimum Rent determined pursuant
to subsection (a) above (as the same may have been previously increased pursuant
to subsection (b) above or pursuant to this subsection (c)) shall further be
increased from time to time on the date of any payment or funding of any such
Project Costs by Lessor pursuant to Section 10.3 below on account of any Capital
Project by an amount equal to one-twelfth (1/12th) of the product of 58.33% of
the amount of any Project Costs paid or funded by Lessor following any
applicable Capital Project Rent Commencement Date (to the extent not included in
subsection (b) above), times (ii) Nine Percent (9%). Again, the monthly Minimum
Rent payable for any month during which such increase is applicable shall be
prorated based upon the number of days for which the different rental amounts
apply.
(d) Minimum Rent for the Extended Terms, if
any, shall be determined in accordance with the provisions of
Article XIX.
3.1.2 Additional Rent and Special Additional Rent.
(a) In addition to the Minimum Rent, Lessee
shall, commencing on the first (1st) day of the fifth (5th) Gross Revenue Year
(i.e., the Gross Revenue Year commencing January 1, 2003) and continuing on the
first (1st) day of each month thereafter during the Fixed Term, pay to Lessor
monthly "Additional Rent" in the amount of one-twelfth (1/12th) of Five Percent
(5%) of Incremental Gross Revenues for the immediately prior Gross Revenue Year.
By way of illustration, if Five Percent (5%) of Lessee's Incremental Gross
Revenues for the fourth (4th) Gross Revenue Year (i.e., the Gross Revenue Year
ending December 31, 2002), is $10,000.00, then commencing on the first (1st) day
of the fifth (5th) Gross Revenue Year Lessee shall pay to Lessor monthly
Additional Rent in advance equal to $844.44 per month (i.e., one-twelfth
(1/12th) of $10,000.00). Beginning in the sixth (6th) Gross Revenue Year (i.e.,
the Gross Revenue Year commencing January 1, 2004) and in each Gross Revenue
Year thereafter during the Fixed Term, monthly Additional Rent shall be at least
equal to the highest monthly Additional Rent attributable to any prior Gross
Revenue Year during the Fixed Term; provided further however, that, subject to
any adjustments in monthly Minimum Rent pursuant to any of Articles XLIX or L
below, commencing with the fifth (5th) Gross Revenue Year of the Fixed Term, in
no event shall the sum of Minimum Rent and Additional Rent paid or payable by
Lessee for any Gross Revenue Year through the expiration of the Fixed Term be
more than One Hundred Three Percent (103%) of the sum of Minimum Rent and
Additional Rent (if applicable) paid or payable by Lessee for the immediately
prior Gross Revenue Year (taking into account the annualized adjusted monthly
Minimum Rent pursuant to either of Articles XLIX or L below, as applicable). In
no event shall the Special Additional Rent payable by Lessee pursuant to
subsection (d) below be added to the Minimum Rent and Additional Rent during any
Gross Revenue Year for purposes of determining whether the foregoing Three
Percent (3%) limitation has been reached.
(b) During each Extended Term, if any,
Lessee shall, commencing on the first (1st) day of the second (2nd) Gross
Revenue Year of such Extended Term (i.e., January 1, 2014 with respect to the
first Extended Term and January 1, 2024 with respect to the second Extended
Term) and continuing through the expiration of such Extended Term, pay to Lessor
monthly "Additional Rent" in the amount of one-twelfth (1/12th) of Five Percent
(5%) of Incremental Gross Revenues for the immediately prior Gross Revenue Year;
provided, however, that beginning in the third (3rd) Gross Revenue Year of such
Extended Term and in each Lease Year thereafter during such Extended Term,
annual Additional Rent shall be at least equal to the highest annual Additional
Rent attributable to any prior Gross Revenue Year during such Extended Term;
provided further however, that, subject to any adjustments in monthly Minimum
Rent pursuant to any of Articles XLIX or L below, commencing with the second
(2nd) Gross Revenue Year of such Extended Term in no event shall the sum of the
Minimum Rent and Additional Rent paid or payable by Lessee for any Gross Revenue
Year through the expiration of such Extended Term be more than One Hundred Three
Percent (103%) of the sum of Minimum Rent and Additional Rent paid or payable by
Lessee for the immediately prior Gross Revenue Year (taking into account the
annualized adjusted monthly Minimum Rent pursuant to either of Articles XLIX or
L below, as applicable). Again, in no event shall the Special Additional Rent
payable by Lessee pursuant to subsection (d) below be added to the Minimum Rent
and Additional Rent during any Gross Revenue Year for purposes of determining
whether the foregoing Three Percent (3%) limitation has been reached.
(c) If the amount of monthly Additional Rent
to be paid by Lessee for any Gross Revenue Year during the Term shall not have
been determined at the commencement of the applicable Gross Revenue Year, then
Lessee shall continue to pay monthly Additional Rent (if applicable) at the last
applicable rate until Lessee receives Lessor's written notice as to the amount
due for the then current Gross Revenue Year. Within ten (10) days after Lessee's
receipt of Lessor's notice, Lessee shall pay to Lessor an amount equal to the
new monthly Additional Rent for such Gross Revenue Year times the number of
months from commencement of the then current Gross Revenue Year to the date of
receipt of Lessor's notice, less the aggregate amount paid by Lessee on account
thereof for the same period. Thereafter, Lessee shall pay monthly Additional
Rent for the applicable Gross Revenue Year at the new rate set forth in Lessor's
notice.
(d) In addition to Minimum Rent and any
Additional Rent payable hereunder, Lessee shall, subject to the provisions of
Article L below, pay one-time payments of "Special Additional Rent" during the
Fixed Term and each Extended Term, if any, in the amounts set forth as the
"Special Additional Rent" and at the times specified on Exhibit F attached
hereto and incorporated herein by this reference.
3.2 Determination of Additional Rent. Within thirty (30) days after
the end of each Gross Revenue Year commencing upon the expiration of the third
(3rd) Gross Revenue Year of the Fixed Term and continuing thereafter, Lessee
shall deliver to Lessor an Officer's Certificate setting forth the Gross
Revenues for such Gross Revenue Year. As soon as practicable following receipt
by Lessor of such Certificate, Lessor shall determine the Additional Rent for
the then current Gross Revenue Year (i.e., the Gross Revenue Year then in
effect) based upon the Incremental Gross Revenues for the prior Gross Revenue
Year and give Lessee notice of the same together with the calculations upon
which such Additional Rent is based.
3.3 Confirmation of Gross Revenues. Lessee shall utilize, or cause to
be utilized, an accounting system for the Leased Property and all Capital
Additions in accordance with its usual and customary practices and in accordance
with GAAP which will accurately record all Gross Revenues and Lessee shall
retain for at least five (5) years after the expiration of each Gross Revenue
Year reasonably adequate records conforming to such accounting system showing
all Gross Revenues for such Gross Revenue Year. Lessor, at its own expense
except as provided hereinbelow, shall have the right from time to time by its
accountants or representatives, to review and/or audit the information set forth
in the Officer's Certificate referred to in Section 3.2 and in connection with
such review and/or audit to examine Lessee's records with respect thereto
(including supporting data and sales tax returns) subject to any prohibitions or
limitations on disclosure of any such data under applicable law or regulations
including any duly enacted "Patients' ▇▇▇▇ of Rights" or similar legislation, or
as may be necessary to preserve the confidentiality of the Facility-patient
relationship and the physician-patient privilege. If any such review and/or
audit discloses a deficiency in the payment of Additional Rent for any
applicable Gross Revenue Year, Lessee shall forthwith pay to Lessor the amount
of the deficiency together with interest thereon at the Overdue Rate compounded
quarterly from the date when said payment should have been made to the date of
payment thereof. If any such review and/or audit discloses that the Gross
Revenues actually received by Lessee for any Gross Revenue Year exceed those
reported by Lessee by more than Two Percent (2%), Lessee shall pay the costs of
such review and/or audit. Notwithstanding the foregoing, in the event that
Lessee shall disagree with the results of any such review or audit by Lessor,
Lessee shall so notify Lessor within ten (10) Business Days after receipt of the
results of Lessor's review or audit and shall pay to Lessor currently with such
notice any amount not in dispute. In the event that Lessor and Lessee cannot
agree upon the correct results of such review or audit within thirty (30) days
after Lessee's receipt of Lessor's original results thereof, then either Lessor
or Lessee may submit the dispute to arbitration as provided in Article XLIV of
this Lease. Upon resolution of any such dispute or arbitration, Lessee shall pay
to Lessor the amount of the deficiency determined to be still owing to Lessor
together with interest thereon at the Overdue Rate compounded quarterly from the
date when said payment should have been made to the date of payment thereof. Any
proprietary information obtained by Lessor pursuant to such review and/or audit
shall be treated as confidential, except that such information may be used,
subject to appropriate confidentiality safeguards, in any litigation or
arbitration proceedings between the parties and except further that Lessor may
disclose such information to prospective lenders or purchasers.
3.4 Additional Charges. In addition to the Minimum Rent, and
Additional Rent, (i) Lessee shall also pay and discharge as and when due and
payable all other amounts, liabilities, obligations and Impositions which Lessee
assumes or agrees to pay under this Lease; and (ii) in the event of any failure
on the part of Lessee to pay any of those items referred to in clause (i) above,
Lessee shall also promptly pay and discharge every fine, penalty, interest and
cost which may be added for nonpayment or late payment of such items (the items
referred to in clauses (i) and (ii) above being referred to herein collectively
as the "Additional Charges").
3.5 Late Payment of Rent.
(a) LESSEE HEREBY ACKNOWLEDGES THAT LATE PAYMENT BY LESSEE TO
LESSOR OF RENT WILL CAUSE LESSOR TO INCUR COSTS NOT CONTEMPLATED HEREUNDER, THE
EXACT AMOUNT OF WHICH IS PRESENTLY ANTICIPATED TO BE EXTREMELY DIFFICULT TO
ASCERTAIN. SUCH COSTS MAY INCLUDE PROCESSING AND ACCOUNTING CHARGES AND LATE
CHARGES WHICH MAY BE IMPOSED ON LESSOR BY THE TERMS OF ANY LOAN AGREEMENT AND
OTHER EXPENSES OF A SIMILAR OR DISSIMILAR NATURE. ACCORDINGLY, IF ANY
INSTALLMENT OF RENT OTHER THAN ADDITIONAL CHARGES PAYABLE TO A PERSON OTHER THAN
LESSOR SHALL NOT BE PAID WITHIN TEN (10) BUSINESS DAYS AFTER ITS DUE DATE,
LESSEE WILL PAY LESSOR ON DEMAND A LATE CHARGE EQUAL TO THE LESSER OF (I) THREE
PERCENT (3%) OF THE AMOUNT OF SUCH INSTALLMENT OR (II) THE MAXIMUM AMOUNT
PERMITTED BY LAW. THE PARTIES AGREE THAT THIS LATE CHARGE REPRESENTS A FAIR AND
REASONABLE ESTIMATE OF THE COSTS THAT LESSOR WILL INCUR BY REASON OF LATE
PAYMENT BY LESSEE. THE PARTIES FURTHER AGREE THAT SUCH LATE CHARGE IS RENT AND
NOT INTEREST AND SUCH ASSESSMENT DOES NOT CONSTITUTE A LENDER OR
BORROWER/CREDITOR RELATIONSHIP BETWEEN LESSOR AND LESSEE. IN ADDITION, THE
AMOUNT UNPAID, INCLUDING ANY LATE CHARGES, SHALL BEAR INTEREST AT THE OVERDUE
RATE COMPOUNDED MONTHLY FROM THE DUE DATE OF SUCH INSTALLMENT TO
THE DATE OF
PAYMENT THEREOF, AND LESSEE SHALL PAY SUCH INTEREST TO LESSOR ON DEMAND. THE
PAYMENT OF SUCH LATE CHARGE OR SUCH INTEREST SHALL NOT CONSTITUTE WAIVER OF, NOR
EXCUSE OR CURE, ANY DEFAULT UNDER THIS LEASE, NOR PREVENT LESSOR FROM EXERCISING
ANY OTHER RIGHTS AND REMEDIES AVAILABLE TO LESSOR.
Lessor's Initials:
Lessee's Initials:
(b) If Lessee shall, during any six (6) month period, be more
than five (5) Business Days delinquent in the payment of any Rent due and
payable by Lessee hereunder on three (3) or more occasions then, notwithstanding
anything herein to the contrary, Lessor may, by written notice to Lessee, elect
to require Lessee to pay all Pre-Commencement Rent, Minimum Rent, Additional
Rent and Special Additional Rent payable hereunder quarterly in advance (if
applicable). Such right of Lessor shall be in addition to and not in lieu of any
other right of remedy available to Lessor hereunder or at law on account of an
Event of Default by Lessee hereunder.
3.6 Net Lease. This Lease is and is intended to be what is commonly
referred to as a "net, net, net" or "triple net" lease; provided, however, that
such designation shall not be deemed to relieve Lessor of, or impose on Lessee
responsibility or liability for, any of Lessor's express obligations under this
Lease.
ARTICLE IV.
4.1 Impositions.
4.1.1. Subject to Article XII relating to permitted contests,
Lessee shall pay, or cause to be paid, all Impositions before any fine, penalty,
interest or cost may be added for nonpayment. Lessee shall make such payments
directly to the taxing authorities where feasible, and promptly furnish to
Lessor copies of official receipts or other satisfactory proof evidencing such
payments. Lessee's obligation to pay Impositions (to the extent allocable to the
Term) shall be absolutely fixed upon the date such Impositions become a lien
upon the Leased Property, any Capital Additions or any part(s) thereof. If any
Imposition may, at the option of the taxpayer, lawfully be paid in installments,
whether or not interest shall accrue on the unpaid balance of such Imposition,
Lessee may pay the same, and any accrued interest on the unpaid balance of such
Imposition, in installments as the same respectively become due and before any
fine, penalty, premium, further interest or cost may be added thereto; provided,
however, that if during the last five (5) years of the Term, an Imposition in
excess of the aggregate principal amount of $250,000 shall be levied upon the
Leased Property and the same is in the nature of a special assessment for public
improvements or benefits having a useful life beyond the expiration of the Term
of this Lease, then for purposes of determining Lessee's payment obligations
hereunder with respect to such Imposition, the same shall be amortized over the
lesser of (a) ten (10) years and (b) the useful life of such improvements or
benefits, as the case may be, as reasonably determined by Lessor and its
accountants, and Lessee shall be responsible for only that portion of such
amortization applicable to the year in question. Nothing herein, however, shall
prevent Lessor from paying any such Imposition in the nature of a special
assessment for public improvements or benefits in any single lump sum or over a
shorter period of time than the amortization period provided above, so long as
the foregoing procedure with respect Lessee's obligation to pay the same is
followed. In addition, the amortization for which Lessee shall be responsible
for any such Imposition in excess of $250,000 for any year shall include any
interest payable on account of payment of the same in installments as charged by
the taxing authority, or if Lessor shall be required to pay the same in a lump
sum or over a shorter period then the applicable amortization, at a fair market
interest rate as reasonably determined by Lessor.
4.1.2 Lessor shall prepare and file all tax returns and reports
as may be required by Legal Requirements with respect to Lessor's net income,
gross receipts, franchise taxes and taxes on its capital stock, and Lessee shall
prepare and file all other tax returns and reports as may be required by Legal
Requirements.
4.1.3 Any refund due from any taxing authority in respect of any
Imposition paid by Lessee shall be paid over to or retained by Lessee if no
Event of Default shall have occurred hereunder and be continuing. Any other
refund shall be paid over to or retained by Lessor.
4.1.4 Lessor and Lessee shall,upon request of the other, provide
such data as is maintained by the party to whom the request is made with respect
to the Leased Property and all Capital Additions as may be necessary to prepare
any required returns and reports. If any property covered by this Lease is
classified as personal property for tax purposes, Lessee shall file all personal
property tax returns in such jurisdictions where it must legally so file.
Lessor, to the extent it possesses the same, and Lessee, to the extent it
possesses the same, shall provide the other party, upon request, with cost and
depreciation records necessary for filing returns for any property so classified
as personal property. Where Lessor is legally required to file personal property
tax returns and to the extent practicable, Lessee shall be provided with copies
of assessment notices indicating a value in excess of the reported value in
sufficient time for Lessee to file a protest.
4.1.5 Lessee may, upon notice to Lessor, at Lessee's option and
at Lessee's sole cost and expense, protest, appeal, or institute such other
proceedings as Lessee may deem appropriate to effect a reduction of real estate
or personal property assessments and Lessor, at Lessee's expense as aforesaid,
shall reasonably cooperate with Lessee in such protest, appeal, or other action
but at no cost or expense to Lessor. ▇▇▇▇▇▇▇▇ for reimbursement by Lessee to
Lessor of personal property or real property taxes shall be accompanied by
copies of a ▇▇▇▇ therefor and payments thereof which identify the personal
property or real property with respect to which such payments are made.
4.1.6 Lessor shall give prompt notice to Lessee of all
Impositions payable by Lessee hereunder of which Lessor has knowledge, but
Lessor's failure to give any such notice shall in no way diminish Lessee's
obligations hereunder to pay such Impositions.
4.1.7 Impositions imposed in respect of the tax-fiscal period
during which the Term commences and/or terminates shall be adjusted and prorated
between Lessor and Lessee, whether or not such Imposition is imposed before or
after such commencement and/or termination.
4.2 Utilities. Lessee shall pay or cause to be paid all charges for
electricity, power, gas, oil, water and other utilities used in the Leased
Property and all Capital Additions. Lessee shall also pay or reimburse Lessor
for all costs and expenses of any kind whatsoever which at any time with respect
to the Term hereof may be imposed against Lessor by reason of any of the
Permitted Exceptions affecting the Leased Property, any Capital Additions and/or
any part(s) thereof, or with respect to easements, licenses or other rights
over, across or with respect to any adjacent or other property which benefits
the Leased Property and/or any Capital Additions, including any and all costs
and expenses associated with any utility, drainage and parking easements to the
extent the same are Permitted Exceptions.
4.3 Insurance. Lessee shall pay or cause to be paid all premiums for
the insurance coverage required to be maintained by Lessee hereunder.
4.4 Impound Account. If Lessee, at any time during the Term, does not
timely make payment of any Impositions or insurance premiums required pursuant
to Section 4.1 or Section 4.3 and the same constitutes an Event of Default,
Lessor may, at any time thereafter, at its option to be exercised by thirty (30)
days' written notice to Lessee, require Lessee to deposit, at the time of any
payment of Minimum Rent, an amount equal to Lessee's estimated annual taxes, of
every kind and nature, required pursuant to Section 4.1 plus Lessee's estimated
annual insurance premiums required pursuant to Section 4.3 into an impound
account as directed by Lessor. Such amounts shall be applied to the payment of
the obligations in respect of which said amounts were deposited in such order of
priority as Lessor shall determine, on or before the respective dates on which
the same or any of them would become delinquent. The cost of administering such
impound account shall be paid by Lessee. Nothing in this Section 4.4 shall be
deemed to affect any right or remedy of Lessor hereunder.
4.5 Tax Service. If, on more than one (1) occasion during the Term,
Lessee fails to provide Lessor with reasonable documentation demonstrating that
Impositions imposed upon the Leased Property (other than those that are not yet
delinquent) have been paid within ten (10) days after written request therefor
by Lessor, then if requested by Lessor, Lessee shall, at its sole cost and
expense, engage the services of a tax reporting company, to be designated by
Lessor, and cause such company to issue to Lessor reports covering the Leased
Property and all Capital Additions.
ARTICLE V.
5. No Termination, Abatement, etc. Except as otherwise specifically
provided in this Lease, Lessee shall remain bound by this Lease in accordance
with its terms and shall not seek or be entitled to any abatement, deduction,
deferment or reduction of Rent, or set-off against the Rent. Except as otherwise
specifically provided in this Lease, the respective obligations of Lessor and
Lessee shall not be affected by reason of (i) any damage to or destruction of
the Leased Property, any Capital Additions and/or any part(s) thereof from
whatever cause and/or any Condemnation of the Leased Property, any Capital
Additions and/or any part(s) thereof; (ii) the lawful or unlawful prohibition
of, or restriction upon, Lessee's use of the Leased Property, any Capital
Additions and/or any part(s) thereof, the interference with such use by any
Person or by reason of eviction by paramount title, other than by reason of any
such Person claiming by or through Lessor; (iii) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting Lessor or any assignee or transferee of Lessor;
or (iv) for any other cause, whether similar or dissimilar to any of the
foregoing, other than a discharge of Lessee from any such obligations as a
matter of law. Lessee hereby specifically waives all rights arising from any
occurrence whatsoever which may now or hereafter be conferred upon it by law (a)
to modify, surrender or terminate this Lease or quit or surrender the Leased
Property, any Capital Additions and/or any part(s) thereof; or (b) which may
entitle Lessee to any abatement, reduction, suspension or deferment of the Rent
or other sums payable by Lessee hereunder, except as otherwise specifically
provided in this Lease. The obligations of Lessor and Lessee hereunder shall be
separate and independent covenants and agreements and the Rent and all other
sums payable by Lessee hereunder shall continue to be payable in all events
unless the obligations to pay the same shall be terminated pursuant to the
express provisions of this Lease or by termination of this Lease other than by
reason of an Event of Default.
ARTICLE VI.
6.1 Ownership of the Leased Property. Lessee acknowledges that the
Leased Property is the property of Lessor and that Lessee has only a leasehold
estate in the Leased Property which includes the right to the exclusive
possession and use of the Leased Property upon the terms and conditions of this
Lease. Upon the expiration or earlier termination of this Lease Lessee shall, at
its expense, repair and restore the Leased Property to the condition required by
Section 9.1.4.
6.2 Personal Property. During the Term, Lessee shall, as necessary
and at its expense, install, affix or assemble or place on any parcels of the
Land or in any of the Leased Improvements, any items of Lessee's Personal
Property and replacements thereof which shall be the property of and owned by
Lessee. Except as provided in Sections 6.3 and 16.10, Lessor shall have no
rights to Lessee's Personal Property. Lessee shall provide and maintain during
the entire Term all Personal Property necessary in order to operate the Facility
in compliance with all licensure and certification requirements, all Legal
Requirements and all Insurance Requirements and otherwise in accordance with
customary practice in the industry for the Primary Intended Use.
6.3 Transfer of Personal Property and Capital Additions to Lessor.
Upon the expiration or earlier termination of this Lease, all Capital Additions
not owned by Lessor and Lessee's Personal Property shall become the property of
Lessor, free of any encumbrance and Lessee shall execute all documents and take
any actions reasonably necessary to evidence such ownership and discharge any
encumbrance; provided, however, that Lessee shall be entitled to remove all
Removable Personal Property from the Leased Property at the end of the Term so
long as Lessee repairs any damage to the Leased Property caused by such removal.
Notwithstanding anything to the contrary in this Lease, upon the expiration or
earlier termination of this Lease, Lessor shall not be obligated to reimburse
Lessee for any replacements, rebuildings, alterations, additions, substitutions,
and/or improvements that are surrendered as part of or with the Leased Property
or any Capital Additions.
ARTICLE VII.
7.1 Condition of the Leased Property. Except as otherwise expressly
provided to the contrary in this Lease, Lessee acknowledges that Lessee (i) has
examined and otherwise has knowledge of the condition of the Leased Property
prior to the execution and delivery of this Lease and (ii) Lessee has found the
Leased Property satisfactory for its purposes hereunder. Except as otherwise
expressly provided to the contrary in this Lease, regardless, however, of any
examination or inspection made by Lessee and whether or not any patent or latent
defect or condition was revealed or discovered thereby, Lessee is leasing the
Leased Property "as is" in its present condition. Except as otherwise expressly
provided to the contrary in this Lease, Lessee waives any claim or action
against Lessor in respect of the condition of the Leased Property including any
defects or adverse conditions not discovered or otherwise known by Lessee as of
the date hereof or as of the Commencement Date. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED TO THE CONTRARY IN THIS LEASE, LESSOR MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY
PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY
PARTICULAR USE OR PURPOSE OR OTHERWISE, OR AS TO THE NATURE OR QUALITY OF THE
MATERIAL OR WORKMANSHIP THEREIN, OR THE EXISTENCE OF ANY HAZARDOUS SUBSTANCE.
7.2 Use of the Leased Property.
7.2.1 Lessee ovenants that it will obtain and maintain all
authorizations and approvals needed to use and operate the Leased Property, all
Capital Additions and the Facility for the Primary Intended Use and any other
use conducted on the Leased Property and any Capital Additions as may be
permitted from time to time hereunder in substantial compliance with all Legal
Requirements, including applicable licenses, provider agreements, permits, and
Medicare and/or Medicaid certification.
7.2.2 Lessee shall use or cause to be used the Leased Property,
all Capital Additions and the improvements thereon for the Primary Intended Use.
Lessee shall not use the Leased Property, any Capital Additions or any part(s)
thereof for any other use without the prior written consent of Lessor, which
consent Lessor may withhold in its sole discretion; provided, however, that
Lessor agrees not to unreasonably withhold its consent to a change in use of the
Leased Property from the Primary Intended Use to another health care related
use.
7.2.3 Except as a result of (a) damage, destruction or
Condemnation of the Leased Property and such reasonable period of time to effect
repairs necessitated thereby, (b) temporary closures of portions of the Facility
as may reasonably necessary to effect repairs and/or maintenance to the Facility
and/or to perform any approved Capital Projects, provided that any such
temporary closure shall be (i) only for so long as may be reasonably required to
effect such repairs/maintenance and/or perform such Capital Project and (ii)
limited only to that portion of the Facility effected thereby (including all, if
applicable) or (c) any other occurrence of the nature and type described in
Section 45.16 of this Lease, Lessee shall at all times during the Term operate
continuously the entire Leased Property and all Capital Additions in accordance
with the Primary Intended Use. Lessee shall devote the entire Facility and all
Capital Additions to the Primary Intended Use, except for areas reasonably
required for office or storage space uses incidental to the Primary Intended
Use. Lessee shall not modify the services offered or take any other action
(e.g., removing patients or residents from the Facility or directing patients or
residents, or prospective patients or residents, to another Facility except for
(i) medically appropriate reasons, (ii) patient/resident relations (including
compatibility), or (iii) the acute care needs of such patient/resident) which
would materially reduce the Fair Market Value of the Facility. Lessee shall
utilize commercially reasonable efforts to operate the Facility in such a manner
so as to maintain the reputation and attractiveness of the Facility.
7.2.4 Lessee shall conduct its business at the Facility in
conformity with the standards of patient or resident care practice provided in
similar good-quality facilities in the State. Without limiting generality of the
foregoing, Lessee shall at all times exercise its best efforts to maintain an
adequate staff for the service of its residents and/or patients consistent with
such standards of patient or resident care practice provided in similar
good-quality facilities in the State and industry.
7.2.5 Lessee shall not commit or suffer to be committed any
waste on the Leased Property and/or on or to any Capital Additions or cause or
permit any nuisance to exist thereon or with respect thereto.
7.2.6 [Intentionally Deleted]
7.2.7 [Intentionally Deleted]
7.3 [Reserved]
. Lessee acknowledges that diversion of residents and/or y Value patients, as
applicable, from the Facility to and competition with other facilities or
institutions owned, operated or managed, whether directly or indirectly, by
Lessee or its Affiliates will have a material adverse impact on the value and
utility of the Leased Property and all Capital Additions. Accordingly, Lessor
and Lessee agree as follows:
7.4.1 During the Term and for a period of one (1) year
thereafter, neither Lessee nor any of its Affiliates, directly or indirectly,
shall develop any new facility or institution (including the renovation of any
existing structure(s) not currently operating as a health care facility to
create a functionally new facility or institution, but specifically excluding
the acquisition of any then existing and operating facilities) which will
provide services similar to those provided in connection with the Facility and
the Primary Intended Use, within an eight (8) mile radius outward from the
outside boundary of the Leased Property. All distances shall be measured on a
straight line rather than on a driving distance basis. In the event that any
portion of such new or renovated facility or institution is located within such
restricted area the entire facility or institution shall be deemed located
within such restricted area.
7.4.2 Except as required for medically appropriate reasons,
during the Term and after the expiration or earlier termination of this Lease,
Lessee shall not recommend or solicit the removal or transfer of any resident or
patient from the Facility to any other facility or institution, including any
such facility or institution, owned, operated or managed, whether directly or
indirectly, by Lessee or its Affiliates.
ARTICLE VIII.
8. Compliance with Legal and Insurance Requirements,
Subject to Article XII regarding permitted contests, Lessee, at
its expense, shall promptly (i) comply in all material respects with all Legal
Requirements and Insurance Requirements regarding the use, operation,
maintenance, repair and restoration of the Leased Property, Lessee's Personal
Property and all Capital Additions whether or not compliance therewith may
require structural changes in any of the Leased Improvements or any Capital
Additions or interfere with the use and enjoyment of the Leased Property and
(ii) procure, maintain and comply with all licenses, certificates of need,
provider agreements and other authorizations required for the use of the Leased
Property, Lessee's Personal Property and all Capital Additions for the Primary
Intended Use and any other use of the Leased Property, Lessee's Personal
Property and all Capital Additions then being made, and for the proper erection,
installation, operation and maintenance of the Leased Property, Lessee's
Personal Property and all Capital Additions. Upon the occurrence of an Event of
Default, Lessor may, but shall not be obligated to, enter upon the Leased
Property and all Capital Additions and take such actions and incur such costs
and expenses to effect such compliance as it deems advisable to protect its
interest in the Leased Property and all Capital Additions, and Lessee shall
reimburse Lessor for all costs and expenses incurred by Lessor in connection
with such actions. Lessee covenants and agrees that the Leased Property,
Lessee's Personal Property and all Capital Additions shall not be used for any
unlawful purpose.
ARTICLE IX.
9.1 Maintenance and Repair
9.1.1 Lessee, at its expense, shall maintain the Leased
Property, and every portion thereof, Lessee's Personal Property and all Capital
Additions, and all private roadways, sidewalks and curbs appurtenant to the
Leased Property, and which are under Lessee's control in good order and repair
whether or not the need for such repairs occurs as a result of Lessee's use, any
prior use, the elements or the age of the Leased Property, Lessee's Personal
Property and all Capital Additions, and, with reasonable promptness, make all
necessary and appropriate repairs thereto of every kind and nature, including
those necessary to comply with changes in any Legal Requirements, whether
interior or exterior, structural or nonstructural, ordinary or extraordinary,
foreseen or unforeseen or arising by reason of a condition existing prior to the
Commencement Date. All repairs shall be at least equivalent in quality to the
original work. Lessee will not take or omit to take any action the taking or
omission of which might materially impair the value or the usefulness of the
Leased Property, any Capital Additions, or any part(s) thereof for the Primary
Intended Use.
Notwithstanding anything to the contrary in
this Lease, the following shall apply:
(a) In the event that (i) Lessee shall be required to make
any structural or other capital alterations (excluding, however, ordinary
maintenance and repair) to the Leased Improvements or any Capital
Additions by reason of the enactment of any Legal Requirements after the
Commencement Date, (ii) the aggregate cost of any such structural or other
capital alterations exceeds $100,000.00, and (iii), in Lessee's good faith
judgment, reasonably exercised, because of the cost thereof, the Facility
could not thereafter be operated on a commercially practical basis for its
Primary Intended Use for the remainder of the Term, then, at any time
within four (4) months after the enactment of any such Legal Requirement
necessitating any such structural or other capital alterations, Lessee may
by written notice to Lessor offer to purchase the Leased Property for a
purchase price equal to the then Minimum Purchase Price. Any such written
offer to Lessor shall specify in reasonable detail the nature of the new
Legal Requirement (including the date of enactment thereof), the
structural or other capital alterations necessitated thereby, a detailed
cost estimate for completing the same, and the reasons why the Facility
could not be operated on a commercially reasonable basis if Lessee were
required to make the same. If Lessee shall be entitled to and shall make
such offer and Lessor does not accept the same within fifteen (15)
Business Days after Lessor's receipt thereof, which Lessor shall have the
right to accept or reject in its sole and absolute discretion, then this
Lease shall terminate upon the expiration of the one hundred eightieth
(180th) day following Lessor's receipt of Lessee's written offer to
purchase, unless within such fifteen (15) Business Day period Lessor shall
by written notice to Lessee elect to have Lessee make such structural or
other capital alterations at Lessor's expense, in which event this Lease
shall remain in full force in effect.
(b) In the event that (i) Lessee shall be required to make
any structural or other capital alterations (excluding again, however,
ordinary maintenance and repair) to the Leased Improvements or any Capital
Additions by reason of the enforcement of any Legal Requirements existing
as of the Commencement Date which had not previously been enforced or for
which a waiver of compliance had previously been granted, (ii) the
enforcement of or withdrawal of such waiver is not due to Lessee's failure
to otherwise operate the Facility in compliance with all Legal
Requirements and/or Lessee's request (whether direct or indirect) to any
such Governmental Authority to enforce with such previously unenforced
Legal Requirement or to withdraw such waiver of compliance therewith,
(iii) the aggregate cost of any such structural or other capital
alterations exceeds $100,000.00, and (iv), in Lessee's good faith
judgment, reasonably exercised, because of the cost thereof, the Facility
could not thereafter be operated on a commercially practical basis for its
Primary Intended Use for the remainder of the Term, then, at any time
within four (4) months after the enforcement of or required compliance
with any such existing Legal Requirement necessitating any such structural
or other capital alterations, Lessee may by written notice elect to
terminate this Lease. Any such written notice of termination to Lessor
shall again specify in reasonable detail the nature of the Legal
Requirement being enforced or with which the Facility is required to
comply, the structural or other capital alterations necessitated thereby,
a detailed cost estimate for completing the same, and the reasons why the
Facility could not be operated on a commercially reasonable basis if
Lessee were required to make the same. If Lessee shall be entitled to and
shall exercise its right to terminate, then this Lease shall terminate
upon the expiration of the one hundred eightieth (180th) day following
Lessor's receipt of Lessee's notice of termination, unless within such
fifteen (15) Business Days after receipt of Lessee's notice of termination
Lessor shall by written notice to Lessee elect to have Lessee make such
structural or other capital alterations at Lessor's expense, in which
event this Lease shall remain in full force in effect.
9.1.2 Except as expressly provided in Sections 9.1.1 and 10.3
below, Lessor shall not under any circumstances be required to (i) build or
rebuild any improvements on the Leased Property or any Capital Additions; (ii)
make any repairs, replacements, alterations, restorations or renewals of any
nature to the Leased Property, whether ordinary or extraordinary, structural or
nonstructural, foreseen or unforeseen, or to make any expenditure whatsoever
with respect thereto; or (iii) maintain the Leased Property or any Capital
Additions in any way. Lessee hereby waives, to the extent permitted by law, the
right to make repairs at the expense of Lessor pursuant to any law in effect at
the time of the execution of this Lease or hereafter enacted.
9.1.3 Nothing contained in this Lease and no action or inaction
by Lessor shall be construed as (i) constituting the consent or request of
Lessor, expressed or implied, to any contractor, subcontractor, laborer,
materialman or vendor to or for the performance of any labor or services or the
furnishing of any materials or other property for the construction, alteration,
addition, repair or demolition of or to the Leased Property, any Capital
Additions or any part(s) thereof; or (ii) giving Lessee any right, power or
permission to contract for or permit the performance of any labor or services or
the furnishing of any materials or other property in such fashion as would
permit the making of any claim against Lessor in respect thereof or to make any
agreement that may create, or in any way be the basis for, any right, title,
interest, lien, claim or other encumbrance upon the estate of Lessor in the
Leased Property, any Capital Additions or any part(s) thereof.
9.1.4 Unless Lessor shall convey any of the Leased Property to
Lessee pursuant to the provisions of this Lease, Lessee shall, upon the
expiration or earlier termination of the Term, vacate and surrender the Leased
Property, Lessee's Personal Property (other than Lessee's Removable Personal
Property) and all Capital Additions to Lessor in the condition in which the
Leased Property was originally received from Lessor and Lessee's Personal
Property and any Capital Additions were originally introduced to the Facility,
except as repaired, rebuilt, restored, altered or added to as permitted or
required by the provisions of this Lease and except for (i) ordinary wear and
tear and (ii) any damage resulting from a casualty or a Condemnation which
Lessee is not required to restore/repair/rebuild pursuant to this Lease.
If any Capital Addition shall, at any time, encroach upon any property, street
or right-of-way, or shall violate any restrictive covenant or other agreement
affecting the Leased Property, any other Capital Additions or any parts thereof,
or shall impair the rights of others under any easement or right-of-way to which
the Leased Property is subject, then promptly upon the request of Lessor or any
Person affected by any such encroachment or violation, Lessee, at its sole cost
and expense, but subject to its right to contest the existence of any such
encroachment or violation, shall protect, indemnify, save harmless and defend
Lessor from and against all losses, liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including reasonable
attorneys', consultants' and experts' fees and expenses) based on or arising by
reason of any such encroachment or violation. In the event of an adverse final
determination with respect to any such encroachment or violation, Lessee shall
either (i) obtain valid and effective waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation or
impairment, whether the same shall affect Lessor or Lessee; or (ii) make such
changes in such Capital Additions, and take such other actions, as Lessee in the
good faith exercise of its judgment deems reasonably practicable, to remove such
encroachment, or to end such violation or impairment, including, if necessary,
the alteration of any Capital Addition, and in any event take all such actions
as may be necessary in order to be able to continue the operation of the Leased
Improvements and any Capital Addition for the Primary Intended Use substantially
in the manner and to the extent the Leased Improvements and Capital Additions
were operated prior to the assertion of such encroachment, violation or
impairment. Lessee's obligations under this Section 9.2 shall be in addition to
and shall in no way discharge or diminish any obligation of any insurer under
any policy of title or other insurance and, to the extent the recovery thereof
is not necessary to compensate Lessor for any damages incurred by any such
encroachment or violation, Lessee shall be entitled to a credit for any sums
recovered by Lessor under any such policy of title or other insurance.
ARTICLE X.
10.1 Construction of Capital Additions and Other . Without the prior
written consent of Lessor, which consent may given or withheld in Lessor's sole
and absolute discretion, Lessee shall (a) make no Capital Additions on or
structural alterations to the Leased Property, (b) not enlarge or reduce the
size of the Facility or otherwise alter in any way which materially and
adversely affect any main Facility systems, including any main plumbing,
electrical or heating, ventilating and air conditioning systems of the Facility
and/or (c) make no Capital Additions or other alterations which would tie in or
connect with any improvements on property adjacent to the Land, other than to
public improvements as may be permitted by and in compliance with all applicable
Legal Requirements. Lessee may, without Lessor's prior written consent, make any
alterations, additions, or improvements (collectively, "alterations") to the
Leased Property if such alterations are not of the type described in either
clause (a), (b) or (c) above, so long as in each case: (i) the same do not (A)
decrease the value of the Leased Property, (B) materially and adversely affect
the exterior appearance of the Leased Property, or (C) materially and adversely
affect the structural components of the Leased Improvements or the main
electrical, mechanical, plumbing or ventilating and air conditioning systems for
the Facility, (ii) the same are consistent in terms of style, quality and
workmanship to the original Leased Improvements and Fixtures, (iii) the same are
constructed and performed in accordance with the provisions of Section 10.2
below and (iv) the cost thereof does not exceed, in the aggregate, $75,000.00
for any twelve (12) month period. Any other alterations (i.e., other than
alterations described in clauses (a), (b) or (c) above, and other than
alterations which meet the foregoing requirements of clauses (i), (ii), (iii)
and (iv)) shall be subject to Lessor's prior written consent, which consent
shall not be unreasonably withheld. To the extent Lessor's prior written consent
shall be required in connection with any alterations or Capital Additions,
Lessor may impose such conditions thereon in connection with its approval
thereof, if at all, as Lessor deems appropriate.
10.2 Requirements for Any Alterations Which Do Not . For all
alterations which Lessee desires to make and which do not require Lessor's
approval pursuant to Section 10.1 above, the following shall apply:
(a) Such construction shall not commence until Lessee has
procured and paid for all municipal and other governmental permits and
authorizations required therefor. Lessor shall join in the application for any
such permits or authorizations whenever such action is necessary; provided,
however, that (i) any such joinder shall be at no cost or expense to Lessor; and
(ii) any plans and specifications required to be filed in connection with any
such application shall have been delivered to Lessor.
(b) If the full value of such construction is in excess of
$200,000.00, Lessee shall have procured or caused to be procured a payment and
performance bond for the full value of such construction, which bond shall name
Lessor as an additional obligee and otherwise be in form and substance and
issued by a Person reasonably satisfactory to Lessor.
(c) Such construction shall not, and the Architect shall certify
to Lessor that such construction shall not, impair the structural strength of
any component of the Facility or overburden the main electrical, water,
plumbing, HVAC or other building systems of the Facility or any component
thereof.
(d) The Architect shall certify to Lessor that the detailed
plans and specifications, if applicable, conform to and comply in all material
respects with all applicable building, subdivision and zoning codes, laws,
ordinances, regulations and other Legal Requirements imposed by all Governmental
Authorities, all Insurance Requirements and all Permitted Exceptions.
(e) All work done in connection with such construction shall be
done promptly and in a good and workmanlike manner using first-class materials
and in conformity with all Legal Requirements.
(f) Promptly following the completion of such construction,
Lessee shall deliver to Lessor "as built" drawings of such alteration (if
reasonably appropriate based upon the scope or nature of such Capital Addition),
certified as accurate by the Architect.
(g) If by reason of the construction thereof, a new Certificate
of Occupancy for any component of the Facility is required, Lessee shall obtain
and furnish a copy of the same to Lessor promptly upon completion thereof.
In no event shall the listing of the foregoing requirements with respect to any
alterations not requiring Lessor's prior written approval pursuant to Section
10.1 above be deemed to limit or otherwise reduce Lessor's approval rights with
respect to any Capital Additions or other alterations which do require Lessor's
prior written consent pursuant to such Section 10.1. Notwithstanding the
foregoing provisions of this Section 10.2, Lessee shall not be required to
furnish any certificate of the Architect pursuant to subsections (c) or (d) of
this Section 10.2 or to provide "as built" drawings as provided in subsection
(f) of this Section 10.2, unless the alterations performed by Lessee are of such
a nature that procurement of the services of an Architect are in Lessee's and/or
Lessor's reasonable business judgment necessary for the proper performance of
such alterations.
10.3 Funding of Approved Capital Projects by Lessor.
10.3.1 Agreement to Fund. Provided that (a) no Event of Default
exists and is continuing hereunder and (b) the Capital Project (i.e., approved
by Lessor pursuant to the applicable provisions of this Lease) is commenced
within fifteen (15) months of the Commencement Date and is completed within
twenty-four (24) months of the Commencement Date, subject to Permitted Delays,
then Lessor agrees to provide funding for such Capital Project(s) in accordance
with the provisions of this Section 10.3 up the lesser of (i) the amount set
forth in the applicable Project Budget for such Capital Project, (ii) $1.5
Million when aggregated with all Capital Projects funded by Lessor pursuant to
this Section 10.3 and (iii) the Maximum Funding Amount when aggregated with all
Capital Projects funded by Lessor or an Affiliate of Lessor under this Lease and
all other Facility Group Leases; provided, however, that in no event shall
Lessor provide funding for a Capital Project if the portion of the applicable
Project Budget therefor comprised of land, if any, materials, labor charges and
fixtures shall be less than eighty-five percent (85%) of the total amount of the
Project Budget for such Capital Project.
10.3.2 Capital Projects; Performance, Completion and Funding.
Without limiting any other obligation or liability of Lessee under this Lease,
the following shall apply with respect to any Capital Project to be funded by
Lessee pursuant to this Section 10.3:
(a) Obligations of Lessee.
(i) Construction/Performance of Capital
Projects. Lessee shall be responsible to arrange, supervise, coordinate and
carry out all services necessary for the construction, performance and
completion of each Capital Project in accordance with the Plans and the
applicable provisions of this Lease. Lessee shall cause each Capital Project to
be completed substantially in accordance with the Plans and the terms of the
Project Contracts for an amount not to exceed the applicable Project Budget
thereof and the Completion Date therefor to occur by the Outside Date. If and to
the extent total Project Costs exceed the applicable Project Budget thereof, or
the total of all Project Costs for all Capital Projects paid for or funded (1)
by Lessor hereunder exceed in the aggregate $1.5 Million, or (2) by Lessor
and/or Lessor's Affiliate(s) under this Lease and the other Facility Group
Leases exceed in the aggregate the Maximum Funding Amount, Lessee shall pay and
shall not be reimbursed for such excess.
(ii) Duties and Responsibilities. The
duties and responsibilities of Lessee with respect to any Capital Project shall
specifically include the following:
(A) To administer and monitor the
performance under all Project Contracts and other agreements relating to
the construction/performance of such Capital Project and the monthly
reporting of the status of estimated costs of completing the same in
relation to the Project Budget therefor;
(B) To review and make a
recommendation to Lessor with respect to payment of all applications for
payments under the Project Contracts and other agreements relating to the
construction/performance of such Capital Project and make payments of any
and all bills, invoices or other matters calling for payment by Lessee or
Lessor or for Lessor's account in connection with the
construction/performance of such Capital Project;
(C) To coordinate with the
Architect and any inspecting engineer or consultant employed by Lessor in
the performance of periodic inspections of the Leased Property in order to
confirm that the materials furnished and work performed are in accordance
with the Plans and that the work on such Capital Project is progressing on
schedule;
(D) To stop the work and cause the
correction of any defect in the materials or workmanship furnished by any
contractor or of any failure by any contractor to perform its obligations
under its Project Contract and to promptly inform Lessor of any instances
of faulty materials and/or workmanship;
(E) To make available to Lessor,
upon request, the identities of and copies of contracts with all
subcontractors and any other Person supplying labor or materials for the
construction/performance of such Capital Project; and
(F) To obtain all approvals
necessary to construct/perform such Capital Projects and to operate the
Facility for its Primary Intended Use.
(iii) Performance of Duties. Lessee
agrees that, subject to the performance by Lessor of its obligations under this
Section 10.3, Lessee shall act with prudence and diligence in performing its
duties and responsibilities under this Lease, with respect to each approved
Capital Project.
(b) Completion Guarantee.
(i) Construction and Cost Guarantee.
Lessee unconditionally guarantees to Lessor (A) the construction/performance of
each Capital Project in substantial accordance with the Plans in a good and
workmanlike manner in accordance with sound building and engineering practices
and all applicable Legal Requirements and all covenants and obligations of
Lessee under this Lease, by the Outside Date and (B) the payment without demand,
and without right to reimbursement therefor, of all Project Costs for any
approved Capital Project incurred for any reason whatsoever in excess of the
Project Budget therefor or which when aggregated together with (1) all other
Project Costs funded by Lessor hereunder exceed $1.5 Million or (2) all other
Project Costs funded by Lessee or Lessee's Affiliates under all Facility Group
Leases, exceed the Maximum Funding Amount.
(ii) Completion of Punch List Items. All
Punch List Items, other than those reasonably requiring more than thirty (30)
days to complete due to long scheduling or ordering time or other reasonable
factors, shall be completed within thirty (30) days after the applicable
Completion Date, but in no event later than thirty (30) days after the Outside
Date. Any Punch List Items reasonably requiring more than thirty (30) days to
complete shall be diligently pursued and completed as promptly as practicable.
(d) Other Covenants of Lessee.
(i) Change Orders, Defects. Lessee may,
without obtaining the prior written approval of Lessor change the Plans, permit
the Plans to be changed or permit construction/performance of a Capital Project
other than in substantial accordance with the Plans therefor; provided, however,
that if (1) any such change would (x) change the basic structure or character of
the Facility; (y) change the exterior appearance of the Facility; or (z) change
or reduce the quality of the basic building systems, including the mechanical,
electrical, sprinkler, plumbing, life-safety, heating, air conditioning and
ventilation systems within the Facility, (2) any single change in the Plans
involves an amount in excess of Ten Thousand Dollars ($10,000,00), or (3) any
number of changes in the Plans involves in the aggregate an amount in excess of
Twenty Thousand Dollars ($20,000.00), then in any such event Lessee must obtain
the prior written approval of Lessor prior to implementing such change, which
approval shall not, subject to any other express limitations and provisions of
this Lease, be unreasonably withheld.
(ii)Insurance. Lessee will at all times
maintain or cause to be maintained the following insurance during the
construction/performance of any Capital Project (including through the date of
completion of the Punch List Items):
(A) Builder's risk insurance
covering the construction/performance of such Capital Project, in a face
amount of not less than the full insurable value of such Capital Project
and materials supplied in connection therewith, with appropriate
provisions made to include coverage of materials stored off the Leased
Property in an amount not less than the full insurable value of such
materials stored off the Leased Property from time to time.
(B) Errors and omissions insurance
by the Architect (if applicable) in an amount at least equal to One
Million Dollars ($1,000,000) which can be applied to the
construction/performance of such Capital Projects, covering the entire
period of design and construction/performance of such Capital Project and
terminating upon the receipt of the certificate of occupancy issued by the
appropriate municipality.
All such insurance maintained or caused to be maintained by Lessee
pursuant to clauses (A) and (B) of this clause (iii) shall name Lessor as an
additional insured. All insurance maintained or caused to be maintained by
Lessee pursuant to clause (A) of this clause (ii) shall name Lessee, Lessor and
any general contractor, jointly, as loss payee. In addition, all such insurance
to be maintained or caused to be maintained by Lessee shall otherwise, to the
extent applicable, comply with the provisions of Article XIII of this Lease.
(iv)Performance and Payment Bond.
Lessee shall procure or cause to be procured a performance and payment bond for
the total amount of the hard construction costs (including labor and materials)
set forth in the applicable Project Budget therefor. Such performance and
payment bonds shall name Lessor as an additional obligee and be in form and
substance and from an institution satisfactory to Lessor in its sole discretion.
(v) Liens on Materials. Lessee shall
not at any time during the performance of the work, make or cause to be made, or
permit Lessee's general contractor or any other contractor to make, any contract
for materials or equipment of any kind or nature whatsoever to be incorporated
in or to become a part of the Leased Property, title to which is not good or
which is subject to any lien or title retention arrangement other than inchoate
mechanic's liens. Lessee will deliver to Lessor, on demand, true copies of any
contracts, bills of sale, statements, receipted vouchers, or agreements, under
which Lessee claims title to any materials, fixtures, or articles used in the
construction/performance of such Capital Project.
(vi)Storage of Materials. Lessee will
cause all materials acquired or furnished in connection with the
construction/performance of a Capital Project, but not affixed or incorporated
into the Leased Property, to be stored at the Leased Property or at bonded
locations approved by Lessor, in each case under adequate safeguards to minimize
the possibility of loss, theft, damage or commingling with other materials or
projects. Lessee will employ suitable means to protect from theft or vandalism
the Leased Property and all tools and building materials stored on the Leased
Property.
(vii) Inspections. Without limiting
any of Lessor's rights or remedies under this Lease, at any time during regular
business hours, Lessor and/or its representatives will be permitted to enter
upon the Leased Property and any and all materials to be used in the
construction/performance thereof, and to examine all detailed plans and shop
drawings which are or may be kept at the construction site, provided that in so
doing, Lessor shall unreasonably interfere with the construction/performance of
any Capital Project. Upon request, Lessor will be furnished with reasonable
information regarding the construction/performance of any Capital Project from
Lessee, Architect, Lessee's general contractor and any other contractors or
subcontractors.
(viii) Use of Funds, Deficiency.
(A) Lessee shall expend all the
proceeds of each advance hereunder for Project Costs in amounts and for
the purposes provided in the Project Budget therefor and for no other
purpose whatsoever.
(B) Lessee will promptly advise
Lessor if and when (1) Project Costs shall exceed or appear likely to
exceed the Project Budget therefor or (2) Project Costs with respect to
any particular item in the Project Budget shall exceed or appear likely to
exceed the amount specified for any such site, in the Project Budget, and
shall give Lessor sufficiently detailed information with respect thereto.
(C) If, in the sole good faith
judgment of Lessor, it appears at any time or from time to time that the
Remaining Funds will be insufficient to complete the
construction/performance of any Capital Project in accordance with this
Section 10.3, and to pay for all Project Costs incurred in connection with
such construction/performance, or if any other expenses are required for
such completion which were not scheduled in the Project Budget, Lessor may
request that Lessee demonstrate that the Remaining Funds are sufficient
for such completion and payment. If Lessee does not so demonstrate to
Lessor's reasonable satisfaction within five (5) Business Days of receipt
of Lessor's request to do so, then Lessee shall make arrangements for
additional monies to be made available as shall, in the reasonable good
faith judgment of Lessor, when added to the Remaining Funds, be sufficient
so as to complete and/or pay for the construction/performance of such
Capital Project. Such additional monies of Lessee shall be applied for
payment of costs prior to Lessor advancing any additional funds to
complete the Capital Project. If any such additional monies made available
by Lessee are ultimately not required because the Remaining Funds within
the Project Budget are sufficient for each item to complete and/or pay for
the construction/performance of the Capital Project, then Lessor shall
refund the unused portion of such additional monies to Lessee.
(ix) Documents at Completion. Without
limiting any other provision of this Section 10.3, from time to time as
requested by Lessor and as soon as practicable following the applicable
Completion Date, Lessee shall supply or cause to be supplied to Lessor such
reasonable documents and information pertaining to the applicable Capital
Project and the construction, performance and/or completion of the same as
Lessor shall request.
(e) Advances of Funds by Lessor.
(i) Funding. Subject to the
satisfaction by Lessee of the conditions set forth in Section 10.3(f) below,
Lessor will advance to Lessee funds for a Capital Project up to the lesser of
(A) the amount set forth in the applicable Project Budget therefor, (B) that
amount which when aggregated together with all other Project Costs funded by
Lessor hereunder equals $1.5 Million and (C) that amount which when aggregated
with all Project Costs paid for or funded by Lessor or an Affiliate of Lessor
under this Lease and the other Facility Group Leases equals the Maximum Funding
Amount.
(ii) Limitation of Funding Obligation.
Lessor shall not be obligated to advance to Lessee any sums on account of a
Capital Project (A) in excess of the lesser of the amounts determined by clause
(i) above, (B) for which a Request for Advance is received more than one hundred
twenty (120) days after the Outside Date, or (C) when any of the conditions set
forth in Section 10.3(f) have not been met or fulfilled.
(iii) Advances of Funds by Lessor.
Draw requests will be reviewed monthly and will be based on the prorata share
completion to date of each construction line items listed in the Project Budget.
All advances of funds under this Section 10.3 shall be made by Lessor in
accordance with a Request for Advance. Each Request for Advance shall be honored
within ten (10) Business Days of receipt of the same delivered in accordance
with the notice provisions of this Lease, subject, however, to the limitations
set forth in this Section 10.3. In no event shall Lessor be required to make any
advance for a particular line item which, when aggregated with prior advances,
is in excess of the Project Budget for such line items except to the extent
amounts from contingency line items are unused and/or to the extent savings, in
Lessor's reasonable good faith discretion, in other budget line items remain
unused. Lessor shall issue checks payable to, or otherwise advance funds to,
Lessee, the payees designated in a Request for Advance or jointly to Lessee and
such payees, as Lessor shall reasonably determine. Advances of funds to such
payees or jointly to Lessee and any such payee shall constitute an advance
hereunder as though advanced directly to Lessee.
(iv) Holdbacks. Any advances for costs
and expenses of labor and materials connected with the construction/performance
of a Capital Project shall be limited to Ninety Percent (90%) of such costs and
expenses and shall be made in accordance with the payment schedule of the
Project Contract with Lessee's general contractor for such Capital Project. The
final advance of proceeds representing the Ten Percent (10%) retainage for any
particular item will not be made until the last to occur of (A) the Completion
Date, (B) completion of all Punch List Items and (C) the date Lessor receives
(1) all final lien releases and waivers provided for herein in connection with
such Capital Project, (2) an "As-Built" set of plans and specifications (if
reasonably appropriate in light of the scope or nature of the Capital Project),
(3) an ALTA "As-Built" survey (if reasonably appropriate in light of the scope
or nature of the Capital Project) and (4) such other documents as Lessor may
reasonably request. In no event shall any portion of such retainage be paid if
any mechanics' and/or materialmen's liens or other encumbrances have been filed
and remain on the Leased Property (except for permitted contests pursuant to
Article XII of this Lease).
(f) Conditions to Lessor Obligations to
Advance Funds. Lessor shall not be obligated to make any advance of funds under
this Section 10.3, including the first advance, unless and until the following
conditions shall have been satisfied (with proof thereof in form and sufficiency
as may be reasonably requested by Lessor):
(i) Approvals/Entitlements. To the
extent not theretofore received and approved by Lessor and to the extent of a
material change not permitted herein without approval, Lessor shall have
received and approved (A) the Plans and Project Budget for a Capital Project;
and (B) all Project Contracts with the general contractor selected by Lessee and
reasonably approved by Lessor, the Architect and any other subcontractor or
material supplier that may be reasonably requested by Lessor. In addition,
Lessee shall have received and delivered to Lessor copies of all authorizations
and permits required by any Governmental Authority for the
construction/performance of such Capital Project, including building and grading
permits, a foundation letter (if applicable) and such other authorizations and
permits as are required for the work to be performed in connection with such
Capital Project which are then procurable.
(ii) Utilities and Access. To the
extent reasonably appropriate in light of the scope or nature of the Capital
Project, Lessor shall have received evidence satisfactory to Lessor that (A) all
existing public utilities, including telephone, water, sewage, electricity and
gas are adequate for any expansion of the Facility as part of such Capital
Project; and (B) all existing means of ingress and egress, parking, access to
public streets and drainage facilities are adequate for any expansion of the
Facility as part of such Capital Project.
(iii) Soils and Other Tests. To the
extent reasonably appropriate in light of the scope or nature of the Capital
Project, Lessor shall have received and approved test borings, engineering
reports and such other site analysis as Lessor may reasonably require, all of
which must indicate that the soil is adequate for the proposed
construction/performance of such Capital Project in accordance with the Plans.
(iv) Insurance. Lessor shall have
received certificates with respect to the insurance required to be carried by
Lessee or other Persons pursuant to this Section 10.3, together with evidence
satisfactory to Lessor that the premiums therefor have been paid in full.
(v) Payment and Performance Bond(s).
Lessor shall have received the payment and performance bond(s) fulfilling the
requirements set forth in this Section 10.3 and shall have made arrangements, to
the extent applicable, for the recordation and/or filing of the same for
recordation in the Official Records in the County in which the Land is located,
along with a copy of the approved Project Contract with the general contractor.
(vi) No Default. No Event of Default
shall have occurred and be continuing under this Lease.
(vii) Other Documents and
Assurances. Lessor shall have received such other documents and
assurances as Lessor shall reasonably request.
(ix) Request for Advance. Lessor shall
have received and approved (A) a Request for Advance accompanied by all
necessary documents and certificates as set forth in the definition thereof; (B)
a Lessee's Affidavit; and (C) a certificate from the Architect to the effect
that in the Architect's opinion (1) the construction/performance of such Capital
Project theretofore performed is in accordance with the Plans and (2) the amount
requested is appropriate in light of the percentage of construction completed
and amount of stored material.
(g) Miscellaneous Provisions Applicable to
Capital Projects.
(i) Ownership of Capital Projects. At
all times all Capital Projects shall be owned entirely by Lessor subject to the
leasehold interest of Lessee under this Lease with respect to such Capital
Projects. Upon the request of Lessor, Lessee shall execute and/or cause any
Affiliate of Lessee to execute such documents as Lessor may reasonably request
evidencing and confirming Lessor's ownership of such Capital Projects.
(ii) Advance Not a Waiver. No advance of
funds under this Lease shall constitute a waiver of any of the conditions to
Lessor's obligation to make further advances nor, if Lessee is unable to satisfy
any such condition, shall any such advance have the effect of precluding Lessor
from thereafter declaring such inability to be an Event of Default under this
Lease, if such inability would actually be an Event of Default hereunder after
any applicable notice and cure period.
(iii) Conditions for Benefit of
Lessor. All conditions to the obligations of Lessor hereunder are imposed solely
for the benefit of Lessor and no other Person shall have standing to require
satisfaction of such conditions.
(iv) Compliance Responsibility.
Notwithstanding the review and approval by Lessor of the Plans or any other
matter, Lessor shall have no responsibility for compliance of any Capital
Project with Legal Requirements, sound architectural or engineering practices or
other matters.
ARTICLE XI.
Subject to the provisions of Article XII relating to permitted contests,
Lessee will not directly or indirectly create or allow to remain and will
promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any Capital Additions
or any attachment, levy, claim or encumbrance in respect of the Rent, excluding,
however, (i) this Lease; (ii) the matters that existed as of the Commencement
Date; (iii) restrictions, liens and other encumbrances which are consented to in
writing by Lessor, or any easements granted pursuant to the provisions of
Section 7.3; (iv) liens for Impositions which Lessee is not required to pay
hereunder; (v) subleases permitted by Article XXIV; (vi) liens for Impositions
not yet delinquent; (vii) liens of mechanics, laborers, materialmen, suppliers
or vendors for amounts not yet due; (viii) any liens which are the
responsibility of Lessor pursuant to the provisions of Article XXXVI; (ix) any
judgment liens against Lessor for amounts which are not otherwise the
responsibility of Lessee; and any other matter arising by, through or under
Lessor.
ARTICLE XII.
Lessee, upon prior written notice to Lessor, on its own or in Lessor's name,
at Lessee's expense, may contest, by appropriate legal proceedings conducted in
good faith and with due diligence, the amount, validity or application, in whole
or in part, of any licensure or certification decision, Imposition, Legal
Requirement, Insurance Requirement, lien, attachment, levy, encumbrance, charge
or claim; subject, however, to the further requirement that (i) in the case of
an unpaid Imposition, lien, attachment, levy, encumbrance, charge or claim, the
commencement and continuation of such proceedings shall suspend the collection
thereof from Lessor and from the Leased Property or any Capital Additions; (ii)
neither the Leased Property nor any Capital Additions, the Rent therefrom nor
any part or interest in either thereof would be in any reasonable and imminent
danger of being sold, forfeited, attached or lost pending the outcome of such
proceedings; (iii) in the case of a Legal Requirement, neither Lessor nor Lessee
would be in any reasonable and imminent danger of civil or criminal liability
for failure to comply therewith pending the outcome of such proceedings; (iv) if
any such contest shall involve a sum of money or potential loss in excess of
Fifty Thousand Dollars ($50,000), Lessee shall deliver to Lessor and its counsel
an opinion of legal counsel reasonably acceptable to Lessor to the effect set
forth in clauses (i), (ii) and (iii) above, to the extent applicable; (v) in the
case of a Legal Requirement, Imposition, lien, encumbrance or charge, Lessee
shall give such reasonable security as may be required by Lessor to insure
ultimate payment of the same and to prevent any sale or forfeiture of the Leased
Property or any Capital Additions or the Rent by reason of such nonpayment or
noncompliance; and (vi) in the case of an Insurance Requirement, the coverage
required by Article XIII shall be maintained. If any such contest is finally
resolved against Lessor or Lessee, Lessee shall promptly pay the amount required
to be paid, together with all interest and penalties accrued thereon, or comply
with the applicable Legal Requirement or Insurance Requirement. Lessor, at
Lessee's expense, shall execute and deliver to Lessee such authorizations and
other documents as may reasonably be required in any such contest, and, if
reasonably requested by Lessee or if Lessor so desires, Lessor shall join as a
party therein. The provisions of this Article XII shall not be construed to
permit Lessee to contest the payment of Rent or any other amount payable by
Lessee to Lessor hereunder. Lessee shall indemnify, defend, protect and save
Lessor harmless from and against any liability, cost or expense of any kind that
may be imposed upon Lessor in connection with any such contest and any loss
resulting therefrom.
ARTICLE XIII.
During the Term, Lessee shall at all times keep the Leased Property, and all
property located in or on the Leased Property, including all Capital Additions,
the Fixtures and the Personal Property, insured with the kinds and amounts of
insurance described below. This insurance shall be written by companies
authorized to do insurance business in the State in which the Leased Property is
located. All liability type policies must name Lessor as an "additional
insured." All property, loss of rental and business interruption type policies
shall name Lessor as "loss payee." Losses shall be payable to Lessor and/or
Lessee as provided in Article XIV. In addition, the policies, as appropriate,
shall name as an "additional insured" or "loss payee" the holder of any
mortgage, deed of trust or other security agreement ("Facility Mortgagee")
securing any indebtedness or any other Encumbrance placed on the Leased Property
in accordance with the provisions of Article XXXVI ("Facility Mortgage") by way
of a standard form of mortgagee's loss payable endorsement. Any loss adjustment
shall require the written consent of Lessor, Lessee, and each Facility
Mortgagee. Evidence of insurance shall be deposited with Lessor and, if
requested, with any Facility Mortgagee(s). If any provision of any Facility
Mortgage requires deposits of insurance to be made with such Facility Mortgagee,
Lessee shall either pay to Lessor monthly the amounts required and Lessor shall
transfer such amounts to each Facility Mortgagee, or, pursuant to written
direction by Lessor, Lessee shall make such deposits directly with such Facility
Mortgagee. The policies shall insure against the following risks:
13.1.1 Loss or damage by fire, vandalism and malicious mischief,
extended coverage perils commonly known as special form perils, earthquake
(including earth movement), sinkhole and windstorm in an amount not less than
the insurable value on a replacement cost basis (as defined below in Section
13.2) and including a building ordinance coverage endorsement;
13.1.2 Loss or damage by explosion of steam boilers, pressure
vessels or similar apparatus, now or hereafter installed in the Facility, in
such limits with respect to any one accident as may be reasonably requested by
Lessor from time to time;
13.1.3 Flood (when the Leased Property is located in whole or in
part within a designated ▇▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇) and such other hazards and
in such amounts as may be customary for comparable properties in the area;
13.1.4 Loss of rental value in an amount not less than twelve
(12) months' Rent payable hereunder or business interruption in an amount not
less than twelve (12) months of income and normal operating expenses including
payroll and Rent payable hereunder with an endorsement extending the period of
indemnity by at least ninety (90) days (Building Ordinance Increased Period of
Restoration Endorsement) necessitated by the occurrence of any of the hazards
described in Sections 13.1.1, 13.1.2 or 13.1.3;
13.1.5 Claims for bodily injury or property damage under a
policy of commercial general liability insurance with amounts not less than One
Million and No/100 Dollars ($1,000,000.00) combined single limit and Three
Million No/100 Dollars ($3,000,000.00) in the annual aggregate; and
13.1.6 Medical professional liability with amounts not less than
One Million Dollars ($1,000,000) combined single limit and Three Million Dollars
($3,000,000) in the annual aggregate.
The term "replacement cost" shall mean the actual replacement cost of the
insured property from time to time with new materials and workmanship of like
kind and quality. If either party believes that the replacement cost has
increased or decreased at any time during the Term, and if the other party does
not so agree, then either party shall have the right to have such replacement
cost redetermined by an impartial national insurance company reasonably
acceptable to both parties (the "impartial appraiser"). The party desiring to
have the replacement cost so redetermined shall forthwith, on receipt of such
determination by the impartial appraiser, give written notice thereof to the
other party hereto. The determination of the impartial appraiser shall be final
and binding on the parties hereto, and Lessee shall forthwith increase or
decrease the amount of the insurance carried pursuant to this Article to the
amount so determined by the impartial appraiser. Each party shall pay one-half
(1/2) of the fee, if any, of the impartial appraiser. If Lessee has made
improvements to the Leased Property, including any Capital Additions, and if
Lessor and Lessee are unable to agree upon replacement cost, then Lessor may at
Lessee's expense have the replacement cost redetermined at any time after such
improvements are made, regardless of when the replacement cost was last
determined.
In addition to the insurance described above, Lessee shall maintain such
additional insurance as may be reasonably required from time to time by any
Facility Mortgagee and shall further at all times maintain adequate workers'
compensation coverage and any other coverage required by Legal Requirements for
all Persons employed by Lessee on the Leased Property and any Capital Additions
in accordance with Legal Requirements.
All insurance policies carried by either party covering the Leased Property
and any Capital Additions and Lessee's Personal Property including contents,
fire and casualty insurance, shall expressly waive any right of subrogation on
the part of the insurer against the other party. Each party waives any claims it
has against the other party to the extent such claim is covered by insurance.
All of the policies of insurance referred to in this Article shall be written
in form satisfactory to Lessor and by insurance companies with a policyholder
rating of "A" and a financial rating of "X" in the most recent version of Best's
Key Rating Guide. Lessee shall pay all of the premiums therefor, and deliver
such policies or certificates thereof to Lessor prior to their effective date
(and with respect to any renewal policy, at least ten (10) days prior to the
expiration of the existing policy), and in the event of the failure of Lessee
either to effect such insurance in the names herein called for or to pay the
premiums therefor, or to deliver such policies or certificates thereof to
Lessor, at the times required, Lessor shall be entitled, but shall have no
obligation, to effect such insurance and pay the premiums therefor, in which
event the cost thereof, together with interest thereon at the Overdue Rate,
shall be repayable to Lessor upon demand therefor. Each insurer shall agree, by
endorsement on the policy or policies issued by it, or by independent instrument
furnished to Lessor, that it will give to Lessor ten (10) days' written notice
before the policy or policies in question shall be altered, allowed to expire or
cancelled. Each policy shall have a deductible or deductibles, if any, which are
no greater than those normally maintained for similar facilities in the State.
If either party shall at any time believe the limits of the insurance required
hereunder to be either excessive or insufficient, the parties shall endeavor to
agree in writing on the proper and reasonable limits for such insurance to be
carried and such insurance shall thereafter be carried with the limits thus
agreed on until further change pursuant to the provisions of this Section. If
the parties shall be unable to agree thereon, the proper and reasonable limits
for such insurance to be carried shall be determined by an impartial nationally
or regionally recognized insurance brokerage firm reasonably selected by Lessor.
Nothing herein shall permit the amount of insurance to be reduced below the
amount or amounts required by any of the Facility Mortgagees.
13.7 Blanket Policies and Policies Covering Multiple .
Notwithstanding anything to the contrary contained in this Article, Lessee's
obligations to carry the casualty insurance provided for herein may be brought
within the coverage of a blanket policy or policies of insurance carried and
maintained by Lessee; provided, however,that the coverage afforded Lessor will
not be reduced or diminished or otherwise be different from that which would
exist under a separate policy meeting all other requirements of this Lease by
reason of the use of such blanket policy of insurance, and provided further that
the requirements of this Article XIII are otherwise satisfied. For any liability
policies covering facilities in addition to the Leased Property, Lessor may
require excess limits as Lessor reasonably determines.
Lessee shall not, on Lessee's own initiative or pursuant to the request or
requirement of any third party, (i) take out separate insurance concurrent in
form or contributing in the event of loss with that required in this Article to
be furnished by, or which may reasonably be required to be furnished by, Lessee
or (ii) increase the amounts of any then existing insurance by securing an
additional policy or additional policies, unless all parties having an insurable
interest in the subject matter of the insurance, including in all cases Lessor
and all Facility Mortgagees, are included therein as additional insured and the
loss is payable under such insurance in the same manner as losses are payable
under this Lease. Lessee shall immediately notify Lessor of the taking out of
any such separate insurance or of the increasing of any of the amounts of the
then existing insurance by securing an additional policy or additional policies.
ARTICLE XIV.
All proceeds payable by reason of any loss or damage to the Leased Property,
any Capital Additions or any part(s) or portion(s) thereof, under any policy of
insurance required to be carried hereunder shall be paid to Lessor and Lessee by
issuance of a joint check and shall be made available to Lessee from time to
time for the reasonable costs of reconstruction or repair, as the case may be,
of any damage to or destruction of the Leased Property, any Capital Additions or
any part(s) or portion(s) thereof. Any excess proceeds of insurance remaining
after the completion of the restoration or reconstruction of the Leased Property
and any Capital Additions to the satisfaction of Lessor shall belong and be paid
over to Lessee; provided, however, that except as otherwise provided in this
Article XIV, in the event neither Lessor nor Lessee is required or elects to
repair and restore, then all such insurance proceeds shall belong to and paid
over to Lessor. At all times salvage resulting from any risk covered by
insurance shall belong to and paid over to Lessor. Lessor hereby represents and
warrants to Lessee that as of the date hereof there are no Facility Mortgagees
who have the right to apply insurance proceeds other than in the manner provided
for in this Lease.
14.2 Insured Casualty
14.2.1 If the Leased Property and/or any Capital Additions are
damaged or destroyed from a risk covered by insurance required to be carried by
Lessee under this Lease such that the Facility thereby is rendered Unsuitable
for its Primary Intended Use, Lessee shall either (i) restore the Leased
Property and such Capital Additions to substantially the same condition as
existed immediately before such damage or destruction, or (ii) offer to acquire
the Leased Property from Lessor for a purchase price equal to the then Minimum
Purchase Price immediately prior to such damage or destruction. If Lessor does
not accept Lessee's offer to so purchase the Leased Property within fifteen (15)
Business Days after Lessee's receipt thereof, Lessee may either withdraw such
offer and proceed to restore the Leased Property to substantially the same
condition as existed immediately before such damage or destruction or terminate
the Lease in which event Lessor shall be entitled to retain the insurance
proceeds.
14.2.2 If the Leased Property and/or any Capital Additions are
damaged from a risk covered by insurance required to be carried by Lessee under
this Lease, but the Facility is not thereby rendered Unsuitable for its Primary
Intended Use, Lessee shall restore the Leased Property and such Capital
Additions to substantially the same condition as existed immediately before such
damage. Such damage shall not terminate this Lease; provided, however, that if
Lessee cannot within a reasonable time after diligent efforts obtain the
necessary government approvals needed to restore and operate the Facility for
its Primary Intended Use, Lessee may offer to purchase the Leased Property for a
purchase price equal to the then Minimum Purchase Price immediately prior to
such damage. If Lessee shall make such offer and Lessor does not accept the same
within fifteen (15) Business Days after Lessor's receipt thereof, Lessee may by
written notice to Lessor at anytime thereafter either withdraw such offer and
proceed to restore the Leased Property to substantially the same condition as
existed immediately before such damage or destruction, or terminate the Lease
effective as of the date of such notice to Lessor, in which event Lessor shall
be entitled to retain the insurance proceeds.
14.2.3 If Lessee elects or is required to repair and restore as
provided and the cost of the repair or restoration exceeds the amount of
proceeds received by Lessor from the insurance required to be carried hereunder,
Lessee shall contribute any excess amounts needed to restore the Facility. Such
difference shall be paid by Lessee to Lessor together with any other insurance
proceeds, for application to the cost of repair and restoration.
14.2.4 If Lessor accepts Lessee's offer to purchase the Leased
Property, this Lease shall terminate as to the Leased Property upon payment of
the purchase price and Lessor shall remit to Lessee all insurance proceeds
pertaining to the Leased Property then held by Lessor.
14.3 Uninsured Casualty
(a) If the Leased Property is damaged or destroyed from a risk
not covered by insurance required to be carried by Lessee under this Lease or
otherwise carried by Lessee, such that the Facility is thereby rendered
Unsuitable for its Primary Intended Use, Lessee shall either (i) restore the
Leased Property to substantially the same condition as existed immediately prior
to such damage or destruction in accordance with the provisions of Section 14.1,
or (ii) offer to acquire the Leased Property from Lessor for a purchase price
equal to the then Minimum Purchase Price immediately prior to such damage or
destruction. If Lessor does not accept Lessee's offer to so purchase the Leased
Property within fifteen (15) Business Days after Lessor's receipt thereof, which
Lessor shall have the right to accept or reject in its sole and absolute
discretion, then this Lease shall terminate on the date of Lessor's rejection of
Lessee's offer to purchase the Leased Property, unless Lessor within such
fifteen (15) Business Day period shall by written notice to Lessee elect to have
Lessee restore the Facility pursuant to the provisions of Article XIV and
Article X, but at Lessor's cost and expense, in which case this Lease shall
remain in full force and effect.
(b) If the Leased Property is damaged from a risk not covered by
insurance required to be carried by Lessee under this Lease or otherwise carried
by Lessee, but the Facility is not thereby rendered Unsuitable for its Primary
Intended Use, Lessee shall restore the Leased Property to substantially the same
condition that existed before such damage in accordance with the provisions of
Section 14.1. Such damage shall not terminate this Lease; provided, however,
that if Lessee cannot within a reasonable time after diligent efforts obtain the
necessary government approvals needed to restore and operate the Facility for
its Primary Intended Use, Lessee may offer to purchase the Leased Property for a
purchase price equal to the then Minimum Purchase Price immediately prior to
such damage. If Lessor does not accept Lessee's offer to so purchase the Leased
Property within fifteen (15) Business Days after Lessor's receipt thereof, which
Lessor shall have the right to accept or reject in its sole and absolute
discretion, then this Lease shall terminate on the date of Lessor's rejection of
Lessee's offer to purchase the Leased Property.
(c) If Lessor accepts Lessee's offer to purchase the Leased
Property pursuant to either of Sections 14.3(a) or 14.3(b), as applicable, this
Lease shall terminate as to the Leased Property upon payment of the applicable
purchase price.
This Lease shall remain in full force and effect and Lessee's obligation to
pay the Rent and all other charges required by this Lease shall remain unabated
during the period required for adjusting insurance, satisfying Legal
Requirements, repair and restoration; provided, however, that Lessee shall
receive a credit against its Rent obligations hereunder in an amount equal to
the proceeds of any and all rental value and/or business interruption insurance
carried by Lessee pursuant to this Lease (or other similar insurance carried by
Lessee) which are paid over to Lessor.
Lessee waives any statutory rights of termination which may arise by reason of
any damage or destruction of the Leased Property and/or any Capital Additions.
ARTICLE XV.
15. Condemnation
If the Leased Property and any Capital Additions are totally and permanently
taken by Condemnation, this Lease shall terminate as of the Date of Taking.
If a portion of the Leased Property and any Capital Additions is taken by
Condemnation, this Lease shall remain in effect if the Facility is not thereby
rendered Unsuitable for Its Primary Intended Use, but if the Facility is thereby
rendered Unsuitable for its Primary Intended Use, this Lease shall terminate as
of the Date of Taking.
If there is a partial taking of the Leased Property and any Capital Additions
and this Lease remains in full force and effect pursuant to Section 15.2, Lessor
shall make available to Lessee any portion of the Award not paid on account of
Lessor's fee or other interest in and to the Leased Property and any Capital
Additions and Lessee shall accomplish all necessary restoration whether or not
the amount provided by the Condemnor for restoration is sufficient.
The entire Award shall belong to and be paid to Lessor, except that Lessee
shall be entitled to receive from the Award, if and to the extent such Award
specifically includes such item, lost profits value, moving expenses, any then
unamortized (in accordance with GAAP) Capital Addition Costs funded by Lessee
and the value of Lessee's leasehold estate hereunder, provided, that in the
event of a Condemnation which results in a termination of this Lease Lessor
shall receive in any event from the Award, subject to the rights of the Facility
Mortgagees, no less than the Minimum Purchase Price immediately prior to such
Condemnation.
The taking of the Leased Property, any Capital Additions and/or any part(s)
thereof, shall constitute a taking by Condemnation only when the use and
occupancy by the taking authority has continued or will continue for longer than
180 consecutive days. During any shorter period, which shall be a temporary
taking, all the provisions of this Lease shall remain in full force and effect
and the Award allocable to the Term shall be paid to Lessee.
A sale by Lessor to any Condemnor, either under threat of Condemnation or
while Condemnation proceedings are pending, shall be deemed a Condemnation for
purposes of this Lease. Lessor may, without any obligation to Lessee, agree to
sell and/or convey to any Condemnor all or any portion of the Leased Property
free from this Lease and the rights of Lessee hereunder without first requiring
that any action or proceeding be instituted or pursued to judgment.
Notwithstanding the foregoing provisions of this Section 15.6, Lessor may not
agree to sell or convey to a Condemnor all or any portion of the Leased Property
pursuant to this Section 15.6 without the approval of Lessee unless the amount
of the Award payable in connection therewith equals or exceeds the amount
necessary for the restoration of the Leased Property and any Capital Additions
which Lessee is obligated to perform pursuant to this Article XV or, in the case
of a Condemnation which results in the termination of this Lease, the Fair
Market Value of the Leased Property and the Capital Additions immediately prior
to the institution of such Condemnation.
ARTICLE XVI.
Any one or more of the following shall constitute an "Event of
Default":
(a) a default (whether monetary, non-monetary or otherwise)
shall occur under any other Facility Group Lease where the default is not cured
within any applicable grace period set forth therein;
(b) Lessee shall fail to pay any installment of Rent when the
same becomes due and payable and such failure is not cured by Lessee within a
period of five (5) days after receipt of notice thereof from Lessor; provided,
however, that such notice shall be in lieu of and not in addition to any notice
required under applicable law;
(c) the "Lessee" under any other Existing Lease shall fail to
obtain a letter of credit as required by the terms of such Existing Lease and as
supplemented by Article XXI of this Lease within the applicable notice and cure
period provided for in such Existing Lease;
(d) except as otherwise specifically provided for in this
Section 16.1, if Lessee shall fail to observe or perform any other term,
covenant or condition of this Lease and such failure is not cured by Lessee
within thirty (30) days after notice thereof from Lessor, unless such failure
cannot with due diligence be cured within a period of thirty (30) days, in which
case such failure shall not be deemed to be an Event of Default if Lessee
proceeds promptly and with due diligence to cure the failure and diligently
completes the curing thereof; provided, however, that such notice shall be in
lieu of and not in addition to any notice required under applicable law;
(e) Lessee or any Guarantor shall:
(i) admit in writing its inability to pay
its debts generally as they become due,
(ii) file a petition in bankruptcy or a
petition to take advantage of any insolvency act,
(iii) make an assignment for the benefit
of its creditors,
(iv) consent to the appointment of a
receiver of itself or of the whole or any substantial part of its
Property, or
(v) file a petition or answer seeking
reorganization or arrangement under the Federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state thereof;
(f) Lessee or any Guarantor shall be adjudicated as bankrupt or
a court of competent jurisdiction shall enter an order or decree appointing,
without the consent of Lessee, a receiver of Lessee or of the whole or
substantially all of its property, or approving a petition filed against it
seeking reorganization or arrangement of Lessee under the Federal bankruptcy
laws or any other applicable law or statute of the United States of America or
any state thereof, and such judgment, order or decree shall not be vacated or
set aside or stayed within sixty (60) days from the date of the entry thereof;
(g) Except to the extent permitted pursuant to Article XXIV of
this Lease, Lessee or any Guarantor shall be liquidated or dissolved, or shall
begin proceedings toward such liquidation or dissolution, or shall, in any
manner, permit the sale or divestiture of substantially all its assets;
(h) the estate or interest of Lessee in the Leased Property, any
Capital Additions or any part(s) thereof shall be levied upon or attached in any
proceeding and the same shall not be vacated or discharged within the later of
ninety (90) days after commencement thereof or thirty (30) days after receipt by
Lessee of notice thereof from Lessor, unless such vacation or discharge cannot
reasonably be obtained within such time periods, in which case failure to obtain
such release or discharges in such time periods shall not be deemed an Event of
Default so long as Lessee proceeds promptly and with due diligence to obtain the
same as promptly as practicable, but in any event within one hundred eighty
(180) days after the same shall be levied upon or attached in any such
proceeding; provided, however, that such notice shall be in lieu of and not in
addition to any notice required under applicable law;
(i) any Transfer occurs without Lessor's consent in accordance
with the provisions of Article XXIV;
(j) any of the representations or warranties made by Lessee
hereunder or otherwise or any Guarantor in the Guaranty or otherwise proves to
be untrue when made in any material respect which materially and adversely
affects Lessor and such representation or warranty is not corrected by Lessee or
such Guarantor within thirty (30) days after notice thereof from Lessor, unless
such correction cannot with due diligence be corrected within such thirty (30)
day period, in which case such untrue representation or warranty shall not be
deemed an Event of Default if Lessee or Guarantor shall proceed promptly with
due diligence to correct the same, and diligently completes the correction
thereof, but in any event within sixty (60) days after notice thereof from
Lessor;
(k) the Facility's applicable license or third-party provider
reimbursement agreements material to the Facility's operation for its Primary
Intended Use are at any time terminated or revoked or suspended for more than
twenty (20) days;
(l) any local, state or federal agency having jurisdiction over
the operation of the Facility removes Ten Percent (10%) or more of the patients
or residents located in the Facility;
(m) Lessee fails to give notice to Lessor not later than ten
(10) Business Days after Lessee's receipt thereof of any Class A (as such term
is customarily used) or equivalent fine notice from any Governmental Authority
or officer acting on behalf thereof relating to the Facility;
(n) Lessee fails to cure or ▇▇▇▇▇ any Class A or equivalent
violation occurring during the Term that is claimed by any Governmental
Authority, or any officer acting on behalf thereof, of any law, order,
ordinance, rule or regulation pertaining to the operation of the Facility, and
within the time permitted by such authority or by applicable Legal Requirement
for such cure or abatement;
(o) Lessee fails to notify Lessor within five (5) Business Days
after receipt of any notice from any governmental agency terminating or
suspending or threatening termination or suspension, of any material license or
certification relating to the Facility;
(p) Lessee fails to give notice to Lessor not later than ten
(10) days after any notice, claim or demand from any Governmental Authority or
any officer acting on behalf thereof, of any violation of any material law,
order, ordinance, rule or regulation with respect to the operation of the
Facility;
(q) any proceedings are instituted against Lessee by any
Governmental Authority which more likely than not will result in (i) the
revocation of any license granted to Lessee for the operation of the Facility or
(ii) the decertification of the Facility from participation in the Medicare or
Medicaid reimbursement program;
(r) any default and acceleration of any indebtedness following
any applicable cure period therefor of $1 Million or more of Lessee;
(s) any default shall occur under any Guaranty;
or
(t) a monetary default shall occur under any Existing Lease or
any other agreement or instrument now or hereafter with or in favor of Lessor or
any Affiliate of Lessor and made by or with Lessee or any Affiliate of Lessee
where such monetary default is not cured within any applicable grace period set
forth therein.
. If an Event of Default shall have occurred, Lessor may terminate this Lease by
giving Lessee notice of such termination and the Term shall terminate and all
rights of Lessee under this Lease shall cease. Lessor shall have all rights at
law and in equity available to Lessor as a result of any Event of Default.
Lessee shall pay as Additional Charges all costs and expenses incurred by or on
behalf of Lessor, including reasonable attorneys' fees and expenses, as a result
of any Event of Default hereunder. If an Event of Default shall have occurred
and be continuing, whether or not this Lease has been terminated pursuant to
this Section 16.2, Lessee shall, to the extent permitted by law, if required by
Lessor so to do, immediately surrender to Lessor possession of the Leased
Property and any Capital Additions and quit the same and Lessor may enter upon
and repossess the Leased Property and any Capital Additions by reasonable force,
summary proceedings, ejectment or otherwise, and may remove Lessee and all other
Persons and any of Lessee's Personal Property from the Leased Property and any
Capital Additions.
. (i) The termination of this Lease; (ii) the repossession of the Leased
Property and any Capital Additions; (iii) the failure of Lessor, notwithstanding
reasonable good faith efforts, to relet the Leased Property; (iv) the reletting
of all or any portion of the Leased Property; or (v) the failure or inability of
Lessor to collect or receive any rentals due upon any such reletting, shall not
relieve Lessee of its liabilities and obligations hereunder, all of which shall
survive any such termination, repossession or reletting. If any such termination
occurs, Lessee shall forthwith pay to Lessor all Rent due and payable with
respect to the Leased Property to and including the date of such termination.
Thereafter, following any such termination, Lessee shall forthwith pay to
Lessor, at Lessor's option, as and for liquidated and agreed current damages for
an Event of Default by Lessee, the sum of:
(1) the worth at the time of award of the unpaid Rent which had been
earned at the time of termination,
(2) the worth at the time of award of the amount by which the unpaid
Rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Lessee proves could have
been reasonably avoided,
(3) the worth at the time of award of the amount by which the unpaid
Rent for the balance of the Term after the time of award exceeds the
amount of such rental loss that Lessee proves could be reasonably avoided,
plus
(4) any other amount proved by Lessor to be necessary to compensate
Lessor for all the damages proximately caused by Lessee's failure to
perform its obligations under this Lease or which in the ordinary course
of things would be likely to result therefrom.
As used in clauses (1) and (2) above, the "worth at the time of award"
shall be computed by allowing interest at the Overdue Rate. As used in
clause (3) above, the "worth at the time of award" shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank
of San Francisco at the time of award plus One Percent (1%). For purposes
of determining the worth at the time of the award, Additional Rent that
would have been payable for the remainder of the Term shall be deemed to
be the greater of (y) the same as the Additional Rent for the then current
Lease Year or, if not determinable, the immediately preceding Lease Year;
and (z) such other amount as Lessor shall prove could reasonably have been
earned.
Alternatively, if Lessor does not elect to terminate this Lease, then Lessee
shall pay to Lessor, at Lessor's option, as and for agreed damages for such
Event of Default without termination of Lessee's right to possession of the
Leased Property and any Capital Additions, each installment of said Rent and
other sums payable by Lessee to Lessor under the Lease as the same becomes due
and payable, together with interest at the Overdue Rate from the date when due
until paid, and Lessor may enforce, by action or otherwise, any other term or
covenant of this Lease.
Upon the occurrence of an Event of Default, and upon commencement of
proceedings to enforce the rights of Lessor hereunder, Lessor shall be entitled,
as a matter of right, to the appointment of a receiver or receivers acceptable
to Lessor of the Leased Property and any Capital Additions of the revenues,
earnings, income, products and profits thereof, pending the outcome of such
proceedings, with such powers as the court making such appointment shall confer.
Upon the occurrence of a Put Event, Lessor shall be entitled to require Lessee
to purchase the Leased Property on the first Minimum Rent Payment Date occurring
not less than thirty (30) days after the date specified in a notice from Lessor
requiring such purchase for an amount equal to the greater of (i) the Fair
Market Value, or (ii) the Minimum Purchase Price, plus, in either event, all
Rent then due and payable (excluding the installment of Minimum Rent due on the
purchase date). If Lessor exercises such right, Lessor shall convey the Leased
Property to Lessee on the date fixed therefor in accordance with the provisions
of Article XVIII upon receipt of the purchase price therefor and this Lease
shall thereupon terminate. Any purchase by Lessee of the Leased Property
pursuant to this Section shall be in lieu of the damages specified in Section
16.3.
If Lessor initiates judicial proceedings or if this Lease is terminated by
Lessor pursuant to this Article, Lessee waives, to the extent permitted by
applicable law, (i) any right of redemption, re-entry or repossession; and (ii)
the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt.
Any payments received by Lessor under any of the provisions of this Lease
during the existence or continuance of any Event of Default which are made to
Lessor rather than Lessee due to the existence of an Event of Default shall be
applied to Lessee's obligations in the order which Lessor may determine or as
may be prescribed by the laws of the State.
On notice or request therefor by Lessor to Lessee, upon the occurrence of a
Facility Operating Deficiency specified with particularity in Lessor's notice,
and for a period equal to the greater of six (6) months or the time necessary
fully to remedy the Facility Operating Deficiency, Lessee shall engage the
services of a management consultant, unaffiliated with Lessee and approved by
Lessor, to review the management of the Facility for the purpose of making
recommendations to remedy the Facility Operating Deficiency(ies). The management
consultant shall have complete access to the Facility, its records, offices and
facilities, in order that it may carry out its duties. Lessee shall cause such
management consultant to prepare and deliver to Lessor and Lessee a written
report of its recommendations within thirty (30) days after its engagement. If
Lessee shall fail to designate a management consultant acceptable to Lessor
within five (5) days after receipt of the notice of request therefor, Lessor may
designate such management consultant by further notice to Lessee. Lessee shall
be responsible for payment of all fees and expenses reasonably charged and
incurred by the management consultant in carrying out its duties. Lessee shall
promptly implement any and all reasonable recommendations made by such
management consultant in order to promptly correct or cure such Facility
Operating Deficiency; provided, however, that in no event shall Lessee implement
any such recommendations if the same would otherwise cause an Event of Default
hereunder (e.g., a Transfer or change in use of the Leased Property), without
Lessor's prior written consent, which consent may be given or withheld in
Lessor's sole and absolute discretion.
16.9 [Reserved]
The parties intend that if an Event of Default occurs under this Lease, Lessor
will control Lessee's Personal Property and the Intangible Property so that
Lessor or its designee or nominee can operate or re-let the Facility intact for
the Primary Intended Use. Accordingly, to implement such intention, and for the
purpose of securing the payment and performance obligations of Lessee hereunder,
Lessor and Lessee agree as follows:
16.10.1 Lessee, as debtor, hereby grants to Lessor, as secured
party, to the extent permitted by applicable Legal Requirements, a security
interest and an express contractual lien upon all of Lessee's right, title and
interest in and to Lessee's Personal Property and in and to the Intangible
Property and any and all products, rents, proceeds and profits thereof in which
Lessee now owns or hereafter acquires an interest or right, including any leased
Lessee's Personal Property. This Lease constitutes a security agreement covering
all such Lessee's Personal Property and the Intangible Property. The security
interest granted to Lessor with respect to Lessee's Personal Property in this
Section 16.10 is intended by Lessor and Lessee to be subordinate to any security
interest granted in connection with the financing or leasing of all or any
portion of the Lessee's Personal Property so long as the lessor or financier of
such Lessee's Personal Property agrees to give Lessor written notice of any
default by Lessee under the terms of such lease or financing arrangement, to
give Lessor a reasonable time following such notice to cure any such default and
consents to Lessor's written assumption of such lease or financing arrangement
upon Lessor's curing of any such defaults. This clause shall be self-operative
and no further instrument of subordination shall be required; provided, however,
that in confirmation of such subordination, Lessor shall execute promptly any
certificate or document that Lessor or any Person providing financing or leasing
of all or any portion of Lessee's Personal Property may reasonably request for
such proposes so long as the same complies with the provisions of the
immediately preceding sentence. This security agreement and the security
interest created herein shall survive the expiration or earlier termination of
this Lease.
16.10.2 If required by Lessor at any time during the Term,
Lessee shall execute and deliver to Lessor, in form reasonably satisfactory to
Lessor, additional security agreements, financing statements, fixture filings
and such other documents as Lessor may reasonably require to perfect or continue
the perfection of Lessor's security interest in Lessee's Personal Property and
the Intangible Property and any and all products and proceeds thereof now owned
or hereafter acquired by Lessee. In the event Lessee fails to execute any
financing statement or other documents for the perfection or continuation of
Lessor's security interest, Lessee hereby appoints Lessor as its true and lawful
attorney-in-fact to execute any such documents on its behalf, which power of
attorney shall be irrevocable and is deemed to be coupled with an interest.
16.10.3 Upon the occurrence of an Event of Default, Lessor shall
be entitled to exercise any and all rights or remedies available to a secured
party under the Uniform Commercial Code, or available to a lessor under the laws
of the State, with respect to Lessee's Personal Property and the Intangible
Property, including the right to sell the same at public or private sale.
ARTICLE XVII.
If Lessee shall fail to make any payment or to perform any act required to be
made or performed hereunder within the applicable notice and cure periods
provided for in this Lease, Lessor, without waiving or releasing any obligation
or default, may, but shall be under no obligation to, make such payment or
perform such act for the account and at the expense of Lessee, and may, to the
extent permitted by law, enter upon the Leased Property and any Capital
Additions for such purpose and take all such action thereon as, in Lessor's
opinion, may be necessary or appropriate therefor. No such entry shall be deemed
an eviction of Lessee. All sums so paid by Lessor and all costs and expenses,
including reasonable attorneys' fees and expenses, so incurred, together with
interest thereon at the Overdue Rate from the date on which such sums or
expenses are paid or incurred by Lessor, shall be paid by Lessee to Lessor on
demand.
ARTICLE XVIII.
If Lessee purchases the Leased Property from Lessor, Lessor shall, upon
receipt from Lessee of the applicable purchase price, together with full payment
of any unpaid Rent due and payable with respect to any period ending on or
before the date of the purchase, deliver to Lessee an appropriate limited or
special warranty deed or other conveyance conveying the entire fee simple or
ground lease interest of Lessor in and to the Leased Property to Lessee free and
clear of all encumbrances other than (i) those that Lessee has agreed hereunder
to pay or discharge; (ii) those mortgage liens, if any, which Lessee has agreed
in writing to accept and to take title subject to; (iii) the Permitted
Exceptions; and (iv) any other encumbrances permitted hereunder to be imposed on
the Leased Property which are assumable at no cost to Lessee or to which Lessee
may take subject without cost to Lessee. The difference between the applicable
purchase price and the total of the encumbrances assumed or taken subject to
shall be paid to Lessor or as Lessor may direct in immediately available funds;
provided, however, that if the total of all such encumbrances exceeds the
applicable purchase price, then the difference shall be paid to Lessee by Lessor
as Lessee may direct in immediately available funds. All expenses of such
conveyance, including the cost of title insurance, reasonable attorneys' fees
incurred by Lessor in connection with such conveyance and release, transfer
taxes and recording and escrow fees, shall be paid by Lessee. Notwithstanding
anything to the contrary in the foregoing provisions, in no event shall Lessee
be required to accept title to the Leased Property subject to any encumbrances
described in clause (iv) above that are not terminable or prepayable without
fee, premium or penalty on or at any time after the date of conveyance of title
of the Leased Property to Lessee.
ARTICLE XIX.
Provided that no Event of Default has occurred and is continuing, either at
the date of exercise or upon the commencement of an Extended Term (as hereunder
defined), then Lessee shall have the right to renew this Lease for two (2)
ten-year renewal terms (each, an "Extended Term"), upon (i) giving written
notice to Lessor of such renewal not less than twelve (12) months and not more
than eighteen (18) months prior to the expiration of the then current Term, (ii)
delivering to Lessor concurrent with such notice a reaffirmation of any guaranty
of Lessee's obligations hereunder executed by each Guarantor stating, in
substance, that such Guarantor's obligations under the guaranty shall extend to
this Lease, as extended by the Extended Term and (iii) the "Lessee" under each
of the other Facility Group Leases, concurrently therewith exercising its right
to renew such other Facility Group Lease for the corresponding Extended Term of
such Facility Group Lease in the manner and within the time provided in Article
XIX thereof. The Extended Terms, if at all, shall commence and end (subject to
earlier termination as herein provided) as follows: (A) the first Extended Term
shall be the period from October 1, 2012 through and including September 30,
2022; and (b) the second Extended Term shall be the period from October 1, 2022
to September 20, 2032. During each Extended Term, if any, all of the terms and
conditions of this Lease shall continue in full force and effect except that the
annual Minimum Rent for and during such Extended Term shall be the greater of
(a) the then current annual Fair Market Rental and (b) the sum of annual Minimum
Rent and Additional Rent payable for the last Lease Year of the immediately
preceding Term.
Notwithstanding anything to the contrary in this Article XIX, Lessor,
in its sole discretion, may waive the condition to Lessee's right to renew this
Lease that no Event of Default, or event which, with notice or lapse of time or
both, would constitute an Event of Default, have occurred or be continuing, and
the same may not be used by Lessee as a means to negate the effectiveness of
Lessee's exercise of its renewal right for such Extended Term.
ARTICLE XX.
If Lessee shall for any reason remain in possession of the Leased Property
and/or any Capital Additions after the expiration or earlier termination of the
Term, such possession shall be as a month-to-month tenant during such period and
Lessee shall pay during such period (i) Minimum Rent monthly in an amount equal
to the monthly Minimum Rent and Additional Rent in effect immediately prior to
the expiration or earlier termination of this Lease to and until Lessor shall
notify Lessee in writing that Lessor deems Lessee a holdover tenant without
permission, in which event, Lessee shall from and thereafter pay Minimum Rent
monthly in an amount equal to One Hundred Fifty Percent (150%) of the monthly
Minimum Rent and Additional Rent in effect immediately prior to the expiration
or earlier termination of this Lease, plus (ii) all Additional Charges and all
other sums payable by Lessee pursuant to this Lease. During such period of
month-to-month tenancy, Lessee shall be obligated to perform and observe all of
the terms, covenants and conditions of this Lease, but shall have no rights
hereunder other than the right, to the extent given by law to month-to-month
tenancies, to continue its occupancy and use of the Leased Property and/or any
Capital Additions. Nothing contained herein shall constitute the consent,
express or implied, of Lessor to the holding over of Lessee after the expiration
or earlier termination of this Lease.
ARTICLE XXI.
Pursuant to the terms of the Existing Leases, the "Lessee" thereunder is
required to obtain and deliver to Lessor or an Affiliate of Lessor a letter(s)
of credit meeting the requirements of the provisions of such other Existing
Leases (collectively, the "Letter(s) of Credit"). Accordingly, for so long as
such Letter(s) of Credit (or any of them) are required to be delivered under the
Existing Leases, such Letter(s) of Credit shall also name Lessor as beneficiary
to secure Lessee's obligations hereunder. Notwithstanding anything to the
contrary in the Existing Leases, Lessee shall cause any such Letter(s) of Credit
to provide that it will be honored upon a signed statement by Lessor that Lessor
is entitled to draw upon such Letter(s) of Credit under this Lease, and shall
require no signature or statement from any party other than Lessor. No notice to
Lessee or any Affiliate of Lessee shall be required to enable Lessor to draw
upon the Letter(s) of Credit. Lessee shall also ensure that such Letter(s) of
Credit provide that following the honor of any drafts in an amount not less than
the aggregate amount of the Letter(s) of Credit, the financial institution shall
return the original Letter(s) of Credit to Lessor or Lessor's Affiliate and
Lessor or Lessor's Affiliate's rights as to the remaining amount of the
Letter(s) of Credit will not be extinguished.
Lessor or Lessor's Affiliate shall have the right to draw upon such Letter(s)
of Credit up to its full amount whenever (a) an Event of Default hereunder has
occurred or, (b) to the extent provided therein, an event of default under any
other lease or agreement between Lessor or an Affiliate of Lessor and Lessee or
an Affiliate of Lessee or under any other letter of credit, guaranty, mortgage,
deed of trust, or other instrument now or hereafter executed by Lessee or an
Affiliate of Lessee in favor of Lessor or an Affiliate of Lessor has occurred
(including a default under any other Facility Group Lease or any Existing Lease)
or (c) an event or circumstance has occurred which with notice or passage of
time, or both, would constitute an Event of Default hereunder or an event of
default under any such other lease, agreement, letter of credit, guaranty,
mortgage, deed of trust or other instrument (including under any other Facility
Group Lease or any Existing Lease), notwithstanding that transmittal of any such
notice may be barred by the Bankruptcy Code or any other applicable federal,
state or local debtor relief law. No such draw shall (i) cure or constitute a
waiver of an Event of Default, (ii) be deemed to fix or determine the amounts to
which Lessor is entitled to recover under this Lease or otherwise, or (iii) be
deemed to limit or waive Lessor's right to pursue any remedies provided for in
this Lease.
In the event that Lessor or any Affiliate of Lessor draws upon a Letter(s) of
Credit the proceeds thereof shall be used only for purposes of application to
any Rent due under this Lease and/or to any damage or loss that Lessor has
suffered or will suffer by reason of any Event of Default hereunder or to the
obligations of the other parties under the other leases and agreements secured
by such letter of credit or to compensate Lessor or Lessor's Affiliate for any
damage or loss which Lessor or Lessor's Affiliate may suffer or reasonably
expect to suffer by reason of default under any such other leases or agreements.
In the event the amounts drawn under such letter(s) of credit exceeds the
obligations secured thereby, then Lessor or Lessor's Affiliate shall remit such
excess to the Person legally entitled thereto upon payment and discharge in full
of all obligations secured by such letter(s) of credit. To and until Lessor or
Lessor's Affiliate remits such excess, such excess shall be held as security for
the performance of the obligations which remain secured by such letter(s) of
credit. Upon delivery of any replacement letter(s) of credit meeting the
requirements of the provisions of the applicable existing Leases, Lessor shall
immediately pay or cause to be paid to the Persons legally entitled thereto any
unused proceeds from the letter(s) of credit upon which Lessor or Lessor's
Affiliate has so drawn.
ARTICLE XXII.
The risk of loss or of decrease in the enjoyment and beneficial use of the
Leased Property and any Capital Additions as a consequence of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosures, attachments, levies or executions
(other than by Lessor and Persons claiming from, through or under Lessor) is
assumed by Lessee, and no such event shall entitle Lessee to any abatement of
Rent.
ARTICLE XXIII.
In addition to the other indemnities contained herein, and notwithstanding the
existence of any insurance carried by or for the benefit of Lessor or Lessee,
and without regard to the policy limits of any such insurance, Lessee shall
protect, indemnify, save harmless and defend Lessor from and against all
liabilities, obligations, claims, damages penalties, causes of action, costs and
expenses, including reasonable attorneys', consultants' and experts' fees and
expenses, imposed upon or incurred by or asserted against Lessor by reason of
any of the following occurrences during the Term: (i) any accident, injury to or
death of Persons or loss of or damage to property occurring on or about the
Leased Property, or any Capital Additions or adjoining sidewalks thereto; (ii)
any use, misuse, non-use, condition, maintenance or repair by Lessee of the
Leased Property or any Capital Additions; (iii) any failure on the part of
Lessee to perform or comply with any of the terms of this Lease; (iv) the
non-performance of any of the terms and provisions of any and all Occupancy
Arrangements of the Leased Property or any Capital Additions to be performed by
any party thereunder entered into by Lessee or any other Occupant claiming by,
through or under Lessee; (v) any claim for malpractice, negligence or misconduct
committed by any Person on or working from the Leased Property or any Capital
Additions; and (vi) the violation of any Legal Requirement. Any amounts which
become payable by Lessee under this Article shall be paid within thirty (30)
days after liability therefor is determined by litigation or otherwise, and if
not timely paid shall bear interest at the Overdue Rate from the date of such
determination to the date of payment; provided, however, that payment of any
liability shall be deferred if such determination is the subject of a pending
appeal or a motion for modification or reconsideration, in which case Lessee
shall not be required to pay such liability until any such appeal or motion for
modification or reconsideration has been denied by any appellate court with
jurisdiction. Lessee, at its sole cost and expense, shall contest, resist and
defend any such claim, action or proceeding asserted or instituted against
Lessor or may compromise or otherwise dispose of the same as Lessee sees fit;
provided, however, that any legal counsel selected by Lessee to defend Lessor
shall be reasonably satisfactory to Lessor. All indemnification covenants are
intended to apply to losses, damages, injuries, claims, etc. incurred directly
by the indemnified parties and their property, as well as by the indemnifying
party or third party, and their property. For purposes of this Article XXIII,
any acts or omissions of Lessee, or by employees, agents, assignees,
contractors, subcontractors or others acting for or on behalf of Lessee (whether
or not they are negligent, intentional, willful or unlawful), shall be strictly
attributable to Lessee. It is understood and agreed that payment shall not be a
condition precedent to enforcement of the foregoing indemnification obligations.
Notwithstanding anything to the contrary in this Lease, Lessee shall not be
required to indemnify Lessor pursuant to this Article XXIII to the extent that
the facts or circumstances surrounding the event that is the subject of the
claim for indemnification occurred prior to the Commencement Date or after the
date Lessee vacates and surrenders possession of the Leased Property to Lessor
following the expiration or earlier termination of the Term of this Lease;
provided, however, that Lessee shall at all times indemnify Lessor pursuant to
this Article XXIII by reason of the occurrence of any of the events described in
clauses (iii) and (iv) above.
ARTICLE XXIV.
24. Transfers
Except as permitted pursuant to Sections 24.9 and 24.10 below, Lessee shall
not, without Lessor's prior written consent, which consent may not be
unreasonably withheld, either directly or indirectly or through one or more step
transactions or tiered transactions, voluntarily or by operation of law, (i)
assign, convey, sell, pledge, mortgage, hypothecate or otherwise encumber,
transfer or dispose of all or any part of this Lease or Lessee's leasehold
estate hereunder, (ii) Master Sublease all or any part of the Leased Property
and/or any Capital Additions, (iii) engage the services of any Person for the
management or operation of all or any part of the Leased Property and/or any
Capital Additions, (iv) convey, sell, assign, transfer or dispose of any stock
or partnership, membership or other interests (whether equity or otherwise) in
Lessee (which shall include any conveyance, sale, assignment, transfer or
disposition of any stock or partnership, membership or other interests (whether
equity or otherwise) in any Controlling Person(s)), if such conveyance, sale,
assignment, transfer or disposition results, directly or indirectly, in a change
in control of Lessee (or in any Controlling Person(s)), (v) dissolve, merge or
consolidate Lessee (which shall include any dissolution, merger or consolidation
of any Controlling Person) with any other Person, if such dissolution, merger or
consolidation, directly or indirectly, results in a change in control of Lessee
or in any Controlling Person(s), (vi) sell, convey, assign, or otherwise
transfer all or substantially all of the assets of Lessee (which shall include
any sale, conveyance, assignment, or other transfer of all or substantially all
of the assets of any Controlling Person(s)), (vii) enter into or permit to be
entered into any agreement or arrangement to do any of the foregoing or to grant
any option or other right to any Person to do any of the foregoing (each of the
aforesaid acts referred to in clauses (i) through (vii) being referred to herein
as a "Transfer"). Any Occupancy Arrangement with respect to more than Ten
Percent (10%) of the Facility in the aggregate to any Person and/or its
Affiliates, directly or indirectly, or through one or more step transactions or
tiered transactions, shall be deemed to be a "Master Sublease" hereunder. For
any Occupancy Arrangement transaction not requiring the consent of Lessor
hereunder (i.e., an Occupancy Arrangement not constituting a Master Sublease),
Lessee shall, within ten (10) days of entering into any such Occupancy
Arrangement, notify Lessor of the existence of such Occupancy Arrangement and
the identity of the Occupant and supply Lessor with a copy of the agreement
relating to such Occupancy Arrangement and any other related documentation,
materials or information reasonably requested by Lessor.
24.2 Consent and Transfer Consideration
24.2.1 Prior to any Transfer for which the
consent of Lessor is required under this Lease, Lessee shall first notify Lessor
of its desire to do so and shall submit in writing to Lessor: (i) the name of
the proposed Occupant, assignee, manager or other transferee; (ii) the terms and
provisions of the Transfer, including any agreements in connection therewith;
and (iii) such financial information as Lessor reasonably may request concerning
the proposed Occupant, assignee, manager or other transferee. Lessor may, as a
condition to granting such consent, and in addition to any other conditions
imposed by Lessor, require that the obligations of any Occupant, assignee,
manager or other transferee which is an Affiliate of another Person be
guaranteed by its parent or Controlling Person and that any Guaranty of this
Lease be reaffirmed by any Guarantor notwithstanding such Transfer. The consent
by Lessor to any Transfer shall not constitute a consent to any subsequent
Transfer or to any subsequent or successive Transfer. Any purported or attempted
Transfer contrary to the provisions of this Article shall be void and, at the
option of Lessor, shall terminate this Lease. In exercising its right of
reasonable approval or disapproval to a proposed Transfer, Lessor shall be
entitled to take into account any fact or factor which Lessor reasonably deems
relevant to such decision, including the following, all of which are agreed to
be reasonable factors for Lessor's consideration:
(a) The financial strength of the
proposed Occupant, assignee, manager or other transferee, including the adequacy
of its working capital.
(b) The operating experience of the
proposed Occupant, assignee, manager or other transferee with respect to a
business of the type and size of the Facility.
(c) Violation of any agreements to
which Lessee is a party.
(d) Whether there then exists any
Event of Default by Lessee pursuant to this Lease.
Moreover, Lessor shall be entitled to be reasonably satisfied that each and
every covenant, condition or obligation imposed upon Lessee by this Lease and
each and every right, remedy or benefit afforded Lessor by this Lease is not
impaired or diminished by such Transfer.
24.2.2 In connection with any Transfer,
Lessor shall be entitled to receive the applicable Transfer Consideration.
24.2.3 The consent by Lessor to any
Transfer shall not constitute a consent to any subsequent Transfer or to any
subsequent or successive Transfer. Any purported or attempted Transfer contrary
to the provisions of this Article shall be void and, at the option of Lessor,
shall terminate this Lease.
Any Occupancy Arrangement (whether or not the same constitutes a Master
Sublease) shall be expressly subject and subordinate to all applicable terms and
conditions of this Lease and provide that Lessor, at its option and without any
obligation to do so, may require any Occupant, upon an Event of Default under
this Lease, to attorn to Lessor, in which event Lessor shall undertake the
obligations of Lessee, as sublessor, licensor or otherwise under such Occupancy
Arrangement from the time of the exercise of such option to the termination of
such Occupancy Arrangement and in such case Lessor shall not be liable for any
prepaid rents, fees or other charges or for any prepaid security deposits paid
by such Occupant to Lessee or for any other prior defaults of Lessee under such
Occupancy Arrangement. In the event that Lessor shall not require such
attornment with respect to any Occupancy Arrangement, then such Occupancy
Arrangement shall automatically terminate upon the expiration or earlier
termination of this Lease, including any early termination by mutual agreement
of Lessor and Lessee. Furthermore, any Occupancy Arrangement or other agreement
regarding a Transfer shall expressly provide that the Occupant, assignee,
manager or other transferee shall furnish Lessor with such financial,
operational and other information about the physical condition of the Facility,
including the information required by Section 25.2 herein, as Lessor may request
from time to time.
24.4 Assignment of Lessee's Rights Against . If Lessor shall
consent to a Master Sublease, then the written instrument of consent, executed
and acknowledged by Lessor, Lessee and the Occupant thereunder, shall contain a
provision substantially similar to the following:
(i) Lessee and such Occupant hereby agree
that, if such Occupant shall be in default of any of its obligations under the
Master Sublease, which default also constitutes an Event of Default by Lessee
under this Lease, then Lessor shall be permitted to avail itself of all of the
rights and remedies available to Lessee against such Occupant in connection
therewith.
(ii) Without limiting the generality of
the foregoing, Lessor shall be permitted (by assignment of a cause of action or
otherwise) to institute an action or proceeding against such Occupant in the
name of Lessee in order to enforce Lessee's rights under the Master Sublease,
and also shall be permitted to take all ancillary actions (e.g., serve default
notices and demands) in the name of Lessee as Lessor reasonably shall determine
to be necessary.
(iii) Lessee agrees to cooperate with
Lessor, and to execute such documents as shall be reasonably necessary, in
connection with the implementation of the foregoing rights of Lessor.
(iv) Lessee expressly acknowledges and
agrees that the exercise by Lessor of any of the foregoing rights and remedies
shall not constitute an election of remedies, and shall not in any way impair
Lessor's entitlement to pursue other rights and remedies directly against
Lessee.
Notwithstanding anything to the contrary in this Section 24.4, Lessor agrees
that Lessor will not implement the foregoing rights of Lessor pursuant to this
Section 24.4 upon the occurrence of an Event of Default under this Lease by
reason of any such default by such Occupant under any such Master Sublease if
Lessee is diligently pursuing and enforcing all rights and remedies Lessee has
against such Occupant under such Master Sublease or at law or in equity.
Lessee shall reimburse Lessor for Lessor's reasonable costs and expenses
incurred in conjunction with the processing and documentation of any request to
Transfer, including attorneys', architects', engineers' or other consultants'
fees whether or not such Transfer is actually consummated.
No Transfer shall relieve Lessee of its obligation to pay the Rent and to
perform all of the other obligations to be performed by Lessee hereunder. The
liability of Lessee named herein and any immediate and remote successor in
interest of Lessee (i.e., by means of any Transfer), and the due performance of
the obligations of this Lease on Lessee's part to be performed or observed,
shall not in any way be discharged, released or impaired by any (i) agreement
which modifies any of the rights or obligations of the parties under this Lease,
(ii) stipulation which extends the time within which an obligation under this
Lease is to be performed, (iii) waiver of the performance of an obligation
required under this Lease, or (iv) failure to enforce any of the obligations set
forth in this Lease. If any Occupant, assignee, manager or other transferee
defaults in any performance due hereunder, Lessor may proceed directly against
the Lessee named herein and/or any immediate and remote successor in interest of
Lessee without exhausting its remedies against such Occupant, assignee, manager
or other transferee.
Anything contained in this Lease to the contrary notwithstanding, (i) no
Transfer shall be consummated on any basis such that the rental or other amounts
to be paid by the Occupant, assignee, manager or other transferee thereunder
would be based, in whole or in part, on the income or profits derived by the
business activities of the Occupant, assignee, manager or other transferee; (ii)
Lessee shall not furnish or render any services to an Occupant, assignee,
manager or other transferee with respect to whom Transfer Consideration is
required to be paid or manage or operate the Leased Property and/or any Capital
Additions so Transferred with respect to which Transfer Consideration is being
paid; (iii) Lessee shall not consummate a Transfer with any Person in which
Lessor, after consultation with its tax counsel, reasonably determines that it
owns an interest, directly or indirectly (by applying constructive ownership
rules set forth in Section 856(d)(5) of the Code); and (iv) Lessee shall not
consummate a Transfer with any Person or in any manner which could cause any
portion of the amounts received by Lessor pursuant to this Lease or any
Occupancy Arrangement to fail to qualify as "rents from real property" within
the meaning of Section 856(d) of the Code, or any similar or successor provision
thereto or which could cause any other income of Lessor to fail to qualify as
income described in Section 856(c)(2) of the Code; provided, however, that
payment of Transfer Consideration by Lessee to Lessor shall not be deemed to be
amounts received by Lessor which fail to qualify as income described in Section
856(c)(2) of the Code. At the request of Lessee, Lessor agrees to cause Lessor's
REIT counsel to review any proposed Transfer or other matter addressed in this
Section 24.7 in order to determine whether the same complies with the provisions
hereof. The reasonable costs and expenses of Lessor's counsel shall be
reimbursed by Lessee to Lessor as an Additional Charge hereunder within ten (10)
days after Lessor's demand therefor. The non-privileged results of any such
review by Lessor's REIT counsel shall be set forth in the form of either a
memorandum or non-binding letter as opposed to a formal legal opinion and shall
be addressed to Lessor and Lessee.
In the event of a Transfer pursuant to the provisions of the Bankruptcy Code,
all consideration payable or otherwise to be delivered in connection with such
Transfer shall be paid or delivered to Lessor, shall be and remain the exclusive
property of Lessor and shall not constitute property of Lessee or of the estate
of Lessee within the meaning of the Bankruptcy Code. Any consideration
constituting Lessor's property pursuant to the immediately preceding sentence
and not paid or delivered to Lessor shall be held in trust for the benefit of
Lessor and be promptly paid or delivered to Lessor. For purposes of this Section
24.8, the term "consideration" shall mean and include money, services, property
and any other thing of value such as payment of costs, cancellation or
forgiveness of indebtedness, discounts, rebates, barter and the like. If any
such consideration is in a form other than cash (such as in kind, equity
interests, indebtedness earn-outs, or other deferred payments, consulting or
management fees, etc.), Lessor shall be entitled to receive in cash the then
present fair market value of such consideration.
Notwithstanding anything to the contrary in this Article XXIV, Lessor's
consent shall not be required in connection with any Transfer of any stock of
Lessee or any Controlling Person(s) as a result of a public offering of Lessee's
or such Controlling Person's stock which (a) constitutes a bona fide public
distribution of such stock pursuant to a firm commitment underwriting or a plan
of distribution registered under the Securities Act of 1933 and (b) results in
such stock being listed for trading on the American Stock Exchange or the New
York Stock Exchange or authorized for quotation on the NASDAQ National Market
immediately upon the completion of such public offering. In addition, so long as
the stock of Lessee or any such Controlling Person(s) is listed for trading on
any such exchange or authorized for quotation on such market, the transfer or
exchange of such stock over such exchange or market shall not be deemed a
Transfer hereunder.
24.10 Special Transactions Not Requiring Lessor's .
Notwithstanding anything to the contrary in Section 24.1, but subject to the
provisions of Section 24.7 above, Lessor's consent shall not be required in
connection with and the provisions of Section 24.2.2 above shall not apply to
any of the following:
24.10.1 Affiliate Transfers. Any Transfer
to an Affiliate of Lessee, including any assignment of this Lease or any Master
Sublease of the Leased Property to any Affiliate of Lessee or Subsidiary of
Guarantor, so long as in connection therewith, each of the following conditions
is met:
(a) In connection with such Transfer,
there is no change in the use of the Leased Property from the
Primary Intended Use;
(b) Except in the case of a Transfer
resulting from merger or consolidation as to which Lessee is not the surviving
party and in which the transferee assumes the obligations of Lessee hereunder as
a matter of law, any Affiliate-transferee shall assume all of the obligations of
Lessee hereunder accruing subsequent to the effective date of such Transfer and
by an instrument in writing in form and substance reasonably satisfactory to
Lessor. A copy of such executed assumption shall be delivered to Lessor along
with the notice specified in clause (e) below;
(c) Any Master Subletting shall be
subject to the provisions of Section 24.3 above.
(d) Neither the original Lessee nor any
Guarantor shall be released from any of the obligations of the Lessee hereunder
or under any guaranty (including the Guaranty), as applicable, whether occurring
prior to or after the effective date of such Transfer;
(e) Within ten (10) days after the
effectiveness of such Transfer, Lessee shall notify Lessor in writing of the
occurrence of such event, the effective date thereof, the facts placing the same
within the provisions of this Section 24.10.1 (including the relationship
between Lessee and such Affiliate-transferee or Guarantor and such
Subsidiary-transferee, as the case may be) and any other change in the address
for ▇▇▇▇▇▇▇▇ and notices to Lessee pursuant to this Lease, accompanied by an
executed copy of the assumption or Master Sublease (if any) required pursuant to
this Lease.
24.10.2 Guarantor.
(a) Any sale, conveyance or transfer of
any stock of Guarantor or any shareholder of Guarantor to one or more Persons
(regardless of whether the same causes a "change in control"), except to extent
such a stock transaction is in connection with a merger, consolidation or stock
exchange to which Guarantor is a party or otherwise results in the cessation of
Guarantor as a separate legal entity, in which event the provisions of
subsection (b)(ii) below shall govern (if applicable).
(b) Any (i) sale, conveyance or transfer
of all or substantially all of the assets of Guarantor to a single Person or
(ii) merger, consolidation or stock exchange to which Guarantor is a party
(whether as the surviving, disappearing or acquired Person) so long as in
connection therewith, each of the following conditions is met:
(A) Except in the case of a
transaction as described in clause (ii) above and in which the transferee
assumes the obligations of Guarantor as a matter of law, such transferee
shall assume all of the obligations of Guarantor under the Guaranty by an
instrument in writing in form and substance reasonably satisfactory to
Lessor. A copy of such executed assumption shall be delivered to Lessor
along with the notice specified in clause (D) below. In the event that the
form of assumption instrument executed and delivered to Lessor is not
reasonably acceptable to Lessor, Lessor shall be entitled to require that
a reasonably acceptable replacement instrument be executed and delivered
to Lessor following the closing of such transaction;
(B) In the event of a transaction
of the type described in clause (ii) above and in which Guarantor is the
surviving Person, Guarantor shall not be released from any of the
obligations of the Guarantor under the Guaranty, whether prior to or after
the effective date of such transaction;
(C) If either Guarantor (unless
Guarantor is not the surviving Person in connection with a transaction of
the type described in clause (ii) above) or the transferee does not have a
Consolidated Net Worth following the effectiveness of any such transaction
equal to or greater than Seventy-Five Percent (75%) of the average
Consolidated Net Worth of Guarantor for the twelve (12) month period
immediately prior to the effectiveness of such transaction (the "Net Worth
Hurdle"), then either (x) the ultimate parent entity of such transferee
(if one exists) or (y), if a parent entity exists but refuses to execute a
guaranty or such a parent does not exist, then another responsible Person,
in either case with a Consolidated Net Worth equal to or greater than the
Net Worth Hurdle shall execute and deliver to Lessor a written guaranty of
Lessee's obligations under this Lease in form and substance substantially
identical to the Guaranty. If either Guarantor (if applicable) or such
transferee's Consolidated Net Worth equals or exceeds the Net Worth
Hurdle, evidence of the same shall be delivered via the Consolidated
Financials of Guarantor or such transferee, as applicable, to Lessor
concurrent with the notice specified in clause (D) below. If not, then a
copy of such new guaranty, along with the Consolidated Financials of such
parent entity or other Person, shall be delivered to Lessor concurrent
with the notice specified in clause (D) below; and
(D) Within ten (10) days after the
effectiveness of any such transaction, Guarantor shall notify Lessor in
writing of the occurrence of such event, the effective date thereof and
any change in the address for notices pursuant to the Guaranty,
accompanied by an executed copy of an assumption instrument pursuant to
clause (A) above or any new guaranty and other information from any
ultimate parent entity or other Person as may be required pursuant to
clause (C) above.
ARTICLE XXV.
25. Officer's Certificates and Financial Statements
At any time and from time to time upon Lessee's receipt of not less than
twenty (20) days' prior written request by Lessor, Lessee shall furnish to
Lessor an Officer's Certificate certifying (i) that this Lease is unmodified and
in full force and effect, or that this Lease is in full force and effect as
modified and setting forth the modifications; (ii) the dates to which the Rent
has been paid; (iii) whether or not, to the best knowledge of Lessee, Lessor is
in default in the performance of any covenant, agreement or condition contained
in this Lease and, if so, specifying each such default of which Lessee may have
knowledge; and (iv) responses to such other questions or statements of fact as
Lessor, any ground or underlying lessor, any purchaser or any current or
prospective Facility Mortgagee shall reasonably request. Lessee's failure to
deliver such statement within such time shall constitute an acknowledgement by
Lessee that (x) this Lease is unmodified and in full force and effect except as
may be represented to the contrary by Lessor; (y) Lessor is not in default in
the performance of any covenant, agreement or condition contained in this Lease;
and (z) the other matters set forth in such request, if any, are true and
correct. Any such certificate furnished pursuant to this Article may be relied
upon by Lessor and any current or prospective Facility Mortgagee, ground or
underlying lessor or purchaser of the Leased Property.
Lessee shall furnish the following statements to Lessor:
(a) within 120 days after the end of each of
Lessee's and Guarantor's fiscal years, a copy of the audited consolidated
balance sheets of Lessee, its consolidated Subsidiaries and Guarantor as of the
end of such fiscal year, and related audited consolidated statements of income,
changes in common stock and other stockholders' equity and changes in the
financial position of Lessee, its consolidated Subsidiaries and Guarantor for
such fiscal year, prepared in accordance with GAAP applied on a basis
consistently maintained throughout the period involved, such consolidated
financial statements to be certified by nationally recognized certified public
accountants;
(b) within 120 days after the end of each of
Lessee's and Guarantor's fiscal years, and together with the annual audit report
furnished in accordance with clause (a) above, an Officer's Certificate stating
that to the best of the signer's knowledge and belief after making due inquiry,
Lessee is not in default in the performance or observance of any of the terms of
this Lease, or if Lessee shall be in default, specifying all such defaults, the
nature thereof, and the steps being taken to remedy the same;
(c) within forty-five (45) days after the
end of each of Lessee's quarters, all quarterly consolidated financial reports
Lessee produces for reporting purposes and detailed statements of income and
detailed operational statistics regarding occupancy rates, patient and resident
mix and patient and resident rates by type for the Facility;
(d) within thirty (30) days after the same
is required to be filed with the appropriate Governmental
Authority, a copy of each cost report for the Facility;
(e) within thirty (30) days after they are
required to be filed with the SEC, copies of any annual reports and of
information, documents and other reports, or copies of such portions of any of
the foregoing as the SEC may prescribe, which Lessee is required to file with
the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934;
(f) immediately upon Lessee's receipt
thereof, copies of all written communications received by Lessee from any
regulatory agency relating to (i) surveys of the Facility for purposes of
licensure, Medicare and Medicaid certification and accreditation and (ii) any
proceeding, formal or informal, with respect to cited deficiencies with respect
to services and activities provided and performed at the Facility, including
patient and resident care, patient and resident activities, patient and resident
therapy, dietary, medical records, drugs and medicines, supplies, housekeeping
and maintenance, or the condition of the Facility, and involving an actual or
threatened warning, imposition of a fine or a penalty, or suspension,
termination or revocation of the Facility's license to be operated in accordance
with its Primary Intended Use;
(g) [Intentionally Deleted];
(h) immediately upon Lessee's receipt
thereof, copies of all claims, reports, complaints, notices, warnings or
asserted violations relating in any way to the Leased Property or any Capital
Additions or Lessee's use thereof; and
(i) with reasonable promptness, such other
information respecting (i) the financial and operational condition and affairs
of Lessee, any Guarantor and the Facility, (ii) the physical condition of the
Leased Property and any Capital Additions and (iii) any suspected Transfer,
including the then equity or voting ownership in Lessee or in any Controlling
Person(s), in each case as Lessor may reasonably request, in the form of a
questionnaire or otherwise, from time to time, but not more often than is
reasonable under the circumstances.
Lessee acknowledges that the failure to furnish Lessor with any of the
certificates or statements required by this Article XXV will cause Lessor to
incur costs and expenses not contemplated hereunder, the exact amount of which
is presently anticipated to be extremely difficult to ascertain. Accordingly, if
Lessee fails to furnish Lessor with any of the certificates or statements
required by this Article XXV, Lessee shall pay to Lessor upon demand $500.00 for
each such failure as Additional Charges; provided, however, that with respect to
the first three (3) only occurrences when Lessee fails to furnish Lessor with
any certificate or statement required by this Article XXV during the Term,
Lessee shall not be required to pay such $500.000 additional charge thereon if
Lessee delivers its certificate or statement required within five (5) Business
Days after receipt of written notice from Lessor of Lessee's failure to deliver
the same. The parties agree that this charge represents a fair and reasonable
estimate of the costs that Lessor will incur by reason of Lessee's failure to
furnish Lessor with such certificates and statements.
ARTICLE XXVI.
26. Lessor's Right to Inspect and Show the Leased . Lessee shall
permit Lessor and its authorized representatives to (i) inspect the Leased
Property and any Capital Additions and (ii) exhibit the same to prospective
purchasers and lenders, and during the last twelve (12) months of the Term, to
prospective Lessees or managers, in each instance during usual business hours
and subject to any reasonable security, health, safety or confidentiality
requirements of Lessee or any Legal Requirement or Insurance Requirement. Lessee
shall cooperate with Lessor in exhibiting the Leased Property and any Capital
Additions to prospective purchasers, lenders, Lessees and managers.
ARTICLE XXVII.
. No failure by Lessor to insist upon the strict performance of any term hereof
or to exercise any right, power or remedy hereunder and no acceptance of full or
partial payment of Rent during the continuance of any default or Event of
Default shall constitute a waiver of any such breach or of any such term. No
waiver of any breach shall affect or alter this Lease, which shall continue in
full force and effect with respect to any other then existing or subsequent
breach.
ARTICLE XXVIII.
Except as expressly otherwise provided in this Lease, each legal, equitable or
contractual right, power and remedy of Lessor or Lessee now or hereafter
provided either in this Lease or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power and remedy and
the exercise or beginning of the exercise by Lessor or Lessee of any one or more
of such rights, powers and remedies shall not preclude the simultaneous or
subsequent exercise by Lessor or Lessee of any or all of such other rights,
powers and remedies.
ARTICLE XXIX.
. No surrender to Lessor of this Lease or of the Leased Property or any Capital
Additions or any part(s) thereof or of any interest therein, shall be valid or
effective unless agreed to and accepted in writing by Lessor and no act by
Lessor or any representative or agent of Lessor, other than such a written
acceptance by Lessor, shall constitute an acceptance of any such surrender.
ARTICLE XXX.
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, (i) this Lease or the leasehold estate created hereby or
any interest in this Lease or such leasehold estate and (ii) the fee estate in
the Leased Property.
ARTICLE XXXI.
Except as expressly or otherwise provided in this Lease, if Lessor or any
successor owner of the Leased Property shall convey the Leased Property other
than as security for a debt, and the grantee or transferee of the Leased
Property shall assume all obligations of Lessor hereunder arising or accruing
from and after the date of such conveyance or transfer, Lessor or such successor
owner, as the case may be, shall thereupon be released from all future
liabilities and obligations of the lessor under this Lease arising or accruing
from and after the date of such conveyance or other transfer provided that the
new owner expressly assumes in writing all such further liabilities and all such
future liabilities and obligations shall thereupon be binding upon such new
owner.
ARTICLE XXXII.
So long as Lessee shall pay the Rent as the same becomes due and shall fully
comply with all of the terms of this Lease and fully perform its obligations
hereunder, Lessee shall peaceably and quietly have, hold and enjoy the Leased
Property for the Term, free of any claim or other action by Lessor or anyone
claiming by, through or under Lessor, but subject to all the Permitted
Exceptions.
ARTICLE XXXIII.
Any notice, consent, approval, demand or other communication
required or permitted to be given hereunder (a "notice") must be
in writing and may be served personally or by U.S. Mail. If
served by U.S. Mail, it shall be addressed as follows:
If to Lessor: Health Care Property Investors, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal Department
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lessee: Centennial Healthcare Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Office and
Chairman of the Board
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice which is personally served shall be effective upon the date of
service; any notice given by U.S. Mail shall be deemed effectively given, if
deposited in the United States Mail, registered or certified with return receipt
requested, postage prepaid and addressed as provided above, on the date of
receipt, refusal or non-delivery indicated on the return receipt. In addition,
either party may send notices by facsimile or by a nationally recognized
overnight courier service which provides written proof of delivery (such as
U.P.S. or Federal Express). Any notice sent by facsimile shall be effective upon
confirmation of receipt in legible form, and any notice sent by a nationally
recognized overnight courier shall be effective on the date of delivery to the
party at its address specified above as set forth in the courier's delivery
receipt. Either party may, by notice to the other from time to time in the
manner herein provided, specify a different address for notice purposes.
ARTICLE XXXIV.
If it becomes necessary to determine the Fair Market Value or Fair Market
Rental for any purpose of this Lease or the Allocated Value for purposes of
determining Transfer Consideration payable to Lessor in connection with a Sale
of Business or other Transfer pursuant to this Lease, the same shall be
determined by an independent appraisal firm, in which one or more of the
members, officers or principals of such firm are Members of the Appraisal
Institute (or any successor organization thereto), as may be reasonably selected
by Lessor and approved by Lessee (the "Appraiser"). Lessor shall cause such
Appraiser to determine the Fair Market Value, Fair Market Rental or Allocated
Value as of the relevant date (giving effect to the impact, if any, of inflation
from the date of the Appraiser's decision to the relevant date) and the
determination of such Appraiser shall be final and binding upon the parties. A
written report of such Appraiser shall be delivered and addressed to each of
Lessor and Lessee. To the extent consistent with sound appraisal practice as
then existing at the time of any such appraisal, an appraisal of Fair Market
Value for purposes of this Lease shall take into account and shall give
appropriate consideration to all three customary methods of appraisal (i.e., the
cost approach, the sales comparison approach and the income approach), and no
one method or approach shall be deemed conclusive simply by reason of the nature
of Lessor's business or because such approach may have been used for purposes of
determining the fair market value of the Facility at the time of acquisition
thereof by Lessor. This provision for determination by appraisal shall be
specifically enforceable to the extent such remedy is available under applicable
law, and any determination hereunder shall be final and binding upon the parties
except as otherwise provided by applicable law. Lessor and Lessee shall each pay
one-half of the fees and expenses of the Appraiser(s) and one-half of all other
costs and expenses incurred in connection with such appraisal. If Lessor and
Lessee are unable to agree upon the Appraiser within fifteen (15) days after
Lessor notifies Lessee of the identity of Lessor's selected Appraiser, then the
following shall apply:
(a) Within ten (10) days after Lessee's receipt of Lessor's
selected Appraiser, Lessee shall by notice to Lessor appoint a second Appraiser
meeting the requirements set forth above to act on its behalf. In such event,
the Appraisers thus appointed shall, within forty-five (45) days after the date
of Lessor's notice of its originally selected Appraiser, proceed to determine
the Fair Market Value, Fair Market Rental or Allocated Value as of the relevant
date (giving effect to the impact, if any, of inflation from the date of their
decision to the relevant date); provided, however, that if Lessee fails to
appoint its Appraiser within the time permitted, or if two Appraisers shall have
been so appointed but only one such Appraiser shall have made such determination
within such forty-five (45) day period, then the determination of such sole
Appraiser shall be final and binding upon the parties.
(b) If the two Appraisers shall have been appointed and shall
have made their determinations within the respective requisite periods set forth
above and if the difference between the amounts so determined shall not exceed
ten percent (10%) of the lesser of such amounts then the Fair Market Value, Fair
Market Rental or Allocated Value, as the case may be, shall be an amount equal
to fifty percent (50%) of the sum of the amounts so determined. If the
difference between the amounts so determined shall exceed ten percent (10%) of
the lesser of such amounts, then such two Appraisers shall have twenty (20) days
to appoint a third Appraiser meeting the above requirements, but if such
Appraisers fail to do so, then either party may request the CPR or AAA (as such
terms are defined in Article XLIV) or any successor organization(s) thereto to
appoint an Appraiser meeting the above requirements within twenty (20) days of
such request, and both parties shall be bound by any appointment so made within
such twenty (20) day period. If no such Appraiser shall have been appointed
within such twenty (20) days or within ninety (90) days of the original request
for a determination of Fair Market Value, Fair Market Rental or Allocated Value,
whichever is earlier, either Lessor or Lessee may apply to any court having
jurisdiction to have such appointment made by such court. Any Appraiser
appointed by the original Appraisers, by the CPR or AAA or by such court shall
be instructed to determine the Fair Market Value, Fair Market Rental or
Allocated Value within thirty (30) days after appointment of such Appraiser.
(c) The determination of the Appraiser which differs most in
terms of dollar amount from the determinations of the other two Appraisers shall
be excluded, and fifty percent (50%) of the sum of the remaining two
determinations shall be final and binding upon Lessor and Lessee as the Fair
Market Value, Fair Market Rental or Allocated Value. This provision for
determination by appraisal shall be specifically enforceable to the extent such
remedy is available under applicable law, and any determination hereunder shall
be final and binding upon the parties except as otherwise provided by applicable
law. If the foregoing three (3) Appraiser system is utilized, then Lessor and
Lessee shall each pay the fees and expenses of the Appraiser appointed by it and
each shall pay one-half of the fees and expenses of the third Appraiser and
one-half of all other cost and expenses incurred in connection with each
appraisal.
ARTICLE XXXV.
35. Right of First Offer
(a) Provided no Event of Default has occurred and is continuing
hereunder, then in the event that during the Term of this Lease Lessor desires
to transfer or sell the Leased Property, Lessor agrees that it shall first offer
to sell the Leased Property to Lessee ("Right of First Offer"). Such Right of
First Offer shall be by written notice from Lessor to Lessee, and shall specify
the purchase price of the Leased Property and the material terms of the proposed
transaction (collectively, the "Terms of the Offer"). Within twenty (20) days
after delivery to Lessee of Lessor's notice stating the Terms of the Offer,
Lessee shall by written notice to Lessor (i) accept the Terms of the Offer, (ii)
reject the Terms of the Offer or (iii) reject the Terms of the Offer but counter
with a new offer under its own terms. If Lessee fails to deliver such written
notice to Lessor in the manner and within the time specified in this subsection
(a), then Lessee shall be deemed to have elected not to accept the Terms of the
Offer.
(b) In the event Lessee shall, in the manner
and within the time specified above, (i) elect to accept the Terms of the Offer
or (ii) reject the Terms of the Offer but propose a counter offer under its own
terms and, Lessor shall by written notice to Lessee in its sole and absolute
discretion accept such counter offer within five (5) days after Lessee's
delivery of its notice of such counter offer, then Lessor and Lessee shall enter
into a written agreement under the Terms of the Offer or the terms of Lessee's
counter offer, as the case may be. If Lessor fails to accept or reject Lessee's
counter offer in the manner and within the time specified in this subsection
(b), then Lessor shall be deemed to have elected not to accept Lessee's counter
offer.
(c) In the event that Lessee rejects or is
deemed to have rejected the Terms of the Offer pursuant to subsection (a) above,
or Lessor rejects or is deemed to have rejected Lessee's counter offer pursuant
to subsection (b) above, Lessor shall have the right to offer to sell the Leased
Property to any third Person and to negotiate with any third Person upon such
terms as shall be acceptable to Lessor and such purchaser without again offering
the Leased Property to Lessee. It is understood and agreed that the provisions
of this Section 35 create only an obligation for Lessor to offer the Leased
Property to Lessee only once and a right of Lessee to require such first offer
only once.
(d) Notwithstanding anything to the contrary
contained in this Section 35, the provisions of subsections (a) through (c)
above and Lessee's Right of First Offer shall not apply to the sale or transfer
of the Leased Property, (i) to any Affiliate of Lessor, (ii) to the surviving
Person in connection with a merger, consolidation or acquisition of or with
Lessor, (iii) to any Person which acquires all or substantially all of the
assets or stock of Lessor or (iv) any transfer of the Leased Property to any
bona fide mortgagee or any subsequent holder of a note secured by an interest in
the Leased Property who acquires the same by foreclosure or deed in lieu of
foreclosure.
ARTICLE XXXVI.
36.1 Lessor May Grant Liens. Without the consent of Lessee, Lessor
may, from time to time, directly or indirectly, create or otherwise cause to
exist any ground lease, mortgage, trust deed, lien, encumbrance or title
retention agreement (collectively, an "encumbrance") upon the Leased Property
and any Capital Additions or any part(s) or portion(s) thereof or interests
therein. This Lease is and at all times shall be subject and subordinate to any
such encumbrance which may now or hereafter affect the Leased Property and/or
any such Capital Additions and to all renewals, modifications, consolidations,
replacements and extensions thereof. This clause shall be self-operative and no
further instrument of subordination shall be required; provided, however, that
in confirmation of such subordination, Lessee shall execute promptly any
certificate or document that Lessor or any ground or underlying lessor,
mortgagee or beneficiary may request for such purposes; provided further,
however, that any such subjection and subordination of this Lease or Lessee's
leasehold interest hereunder to any such encumbrance imposed after the date
hereof shall be conditioned upon the execution by the holder of such encumbrance
and delivery to Lessee of a non-disturbance and attornment agreement in form
reasonably satisfactory to Lessor, Lessee and such holder of such encumbrance
and which provides, in substance, in addition to such other reasonable matters,
that so long as no Event of Default has occurred, the holder of such encumbrance
shall not disturb either Lessee's leasehold interest or possession of the Leased
Property in accordance with the terms hereof. Lessee shall also promptly execute
and deliver to Lessor and such holder of such encumbrance such non-disturbance
and attornment agreement if requested by Lessor and/or such holder.
36.2 Attornment. Subject to the provisions of Section 36.1 above, if
Lessor's interest in the Leased Property and/or any Capital Additions is sold or
conveyed upon the exercise of any remedy provided for in any Facility Mortgage,
or otherwise by operation of law: (i) at the new owner's option, Lessee shall
attorn to and recognize the new owner as Lessee's Lessor under this Lease or
enter into a new lease substantially in the form of this Lease with the new
owner, and Lessee shall take such actions to confirm the foregoing within ten
(10) days after request; and (ii) the new owner shall not be (a) liable for any
act or omission of Lessor under this Lease occurring prior to such sale or
conveyance, or (b) subject to any offset, abatement or reduction of rent because
of any default of Lessor under this Lease occurring prior to such sale or
conveyance.
ARTICLE XXXVII.
37.1 Hazardous Substances. During the Term of this Lease, Lessee
shall not allow any Hazardous Substance to be located in, on or under the Leased
Property or incorporated in the Facility (other than those Hazardous Substances,
if any, located in, on or under the Leased Property as of the Commencement
Date); provided, however, that Hazardous Substances may be brought, kept, used
or disposed of in, on or about the Leased Property or any Capital Additions in
quantities and for purposes similar to those brought, kept, used or disposed of
in, on or about similar facilities used for purposes similar to the Primary
Intended Use and which are brought, kept, used and disposed of in compliance
with Legal Requirements. Lessee shall not allow the Leased Property or any
Capital Additions to be used as a waste disposal site or, except as permitted in
the immediately preceding sentence, for the manufacturing, handling, storage,
distribution or disposal of any Hazardous Substance.
37.2 Notices. Lessee shall provide to Lessor promptly, and in any
event immediately upon Lessee's receipt thereof, a copy of any notice, or
notification to Lessee or its Affiliates with respect to, (i) any violation of a
Legal Requirement relating to Hazardous Substances located in, on, or under the
Leased Property or any Capital Additions or any adjacent property thereto; (ii)
any enforcement, cleanup, removal, or other governmental or regulatory action
instituted, completed or threatened with respect to the Leased Property or any
Capital Additions; (iii) any claim made or threatened by any Person against
Lessee or the Leased Property or any Capital Additions relating to damage,
contribution, cost recovery, compensation, loss, or injury resulting from or
claimed to result from any Hazardous Substance; and (iv) any reports made to any
federal, state or local environmental agency arising out of or in connection
with any Hazardous Substance in, on, under or removed from the Leased Property
or any Capital Additions, including any complaints, notices, warnings or
asserted violations in connection therewith.
37.3 Remediation.
(a) Except as provided in subsection (b) below, if Lessee
becomes aware of a violation of any Legal Requirement relating to any Hazardous
Substance in, on or under the Leased Property or any Capital Additions or any
adjacent property thereto, or if Lessee, Lessor or the Leased Property or any
Capital Additions becomes subject to any order of any federal, state or local
agency to repair, close, detoxify, decontaminate or otherwise remediate the
Leased Property and any Capital Additions, Lessee shall immediately notify
Lessor of such event and, at its sole cost and expense with respect to any such
Hazardous Substances in, on or under the Leased Property (but not adjacent
thereto unless caused by Lessee), cure such violation or effect such repair,
closure, detoxification, decontamination or other remediation; provided,
however, that Lessor shall be responsible for any Hazardous Substances in, on,
under or about the Leased Property as of the Commencement Date. If Lessee fails
to implement and diligently pursue any such cure, repair, closure,
detoxification, decontamination or other remediation, Lessor shall have the
right, but not the obligation, to carry out such action and to recover from
Lessee all of Lessor's costs and expenses incurred in connection therewith.
(b) Notwithstanding anything to the contrary in this Lease, if
Lessor becomes aware of a violation of any Legal Requirement relating to any
Hazardous Substance in, on, under or about the Leased Property or any Capital
Additions or any adjacent property thereto resulting from the presence of
Hazardous Substances in, on, under or about the Leased Property as of the
Commencement Date, or if Lessee, Lessor or the Leased Property or any Capital
Additions becomes subject to any order of any federal, state or local agency to
repair, close, detoxify, decontaminate or otherwise remediate the Leased
Property and any Capital Additions, resulting from the presence of Hazardous
Substances in, on, under or about the Leased Property as of the Commencement
Date, Lessor shall immediately notify Lessee of such event and, at its sole cost
and expense (subject to Lessor's right to seek indemnification or contribution
from other Persons), cure such violation or effect such repair, closure,
detoxification, decontamination or other remediation. If Lessor fails to
implement and diligently pursue any such cure, repair, closure, detoxification,
decontamination or other remediation for which Lessor is responsible pursuant to
this subsection (b), Lessee shall have the right, but not the obligation, to
carry out such action and to recover from Lessor all of Lessee's costs and
expenses incurred in connection therewith.
37.4 Indemnity.
(a) Lessee shall indemnify, defend, protect, save, hold
harmless, and reimburse Lessor for, from and against any and all costs, losses
(including, losses of use or economic benefit or diminution in value),
liabilities, damages, assessments, lawsuits, deficiencies, demands, claims and
expenses (collectively, "Environmental Costs") (whether or not arising out of
third-party claims and regardless of whether liability without fault is imposed,
or sought to be imposed, on Lessor) incurred in connection with, arising out of,
resulting from or incident to, directly or indirectly, during the Term (i) the
production, use, generation, storage, treatment, transporting, disposal,
discharge, release or other handling or disposition of any Hazardous Substances
from, in, on or about the Leased Property or any Capital Additions (but not
adjacent thereto unless caused or contributed to by Lessee) (collectively,
"Handling"), including the effects of such Handling of any Hazardous Substances
on any Person or property within or outside the boundaries of the Leased
Property or any Capital Additions, (ii) the presence of any Hazardous Substances
in, on, under or about the Leased Property or any Capital Additions (other than
by reason of the presence of Hazardous Substances in, on, under or about the
Leased Property as of the Commencement Date) and (iii) the violation of any
Legal Requirements (including Environmental Laws), other than by reason of any
violations of any such Legal Requirements existing in, on, under or about the
Leased Property as of the Commencement Date. "Environmental Costs" include
interest, costs of response, removal, remedial action, containment, cleanup,
investigation, design, engineering and construction, damages (including actual,
consequential and punitive damages) for personal injuries and for injury to,
destruction of or loss of property or natural resources, relocation or
replacement costs, penalties, fines, charges or expenses, attorney's fees,
expert fees, consultation fees, and court costs, and all amounts paid in
investigating, defending or settling any of the foregoing.
Without limiting the scope or generality of
the foregoing, Lessee expressly agrees to reimburse Lessor for any and all costs
and expenses incurred by Lessor to the extent covered by the foregoing
indemnity:
(A) In investigating any and all matters
relating to the Handling of any Hazardous Substances, in, on, from, under or
about the Leased Property or any Capital Additions (other than by reason of the
presence of Hazardous Substances in, on, under or about the Leased Property as
of the Commencement Date);
(B) In bringing the Leased Property or any
Capital Additions into compliance with all Legal Requirements; and
(C) Removing, treating, storing,
transporting, cleaning-up and/or disposing of any Hazardous Substances used,
stored, generated, released or disposed of in, on, from, under or about the
Leased Property or any Capital Additions or offsite (other than by reason of the
presence of Hazardous Substances in, on, under about the Leased Property as of
the Commencement Date).
Subject to the right of Lessee to contest any
such claim (including exhaustion of all appeal processes) as provided in Article
XII, if any claim is made hereunder, Lessee agrees to pay such claim promptly,
and in any event to pay such claim within thirty (30) calendar days after
receipt by Lessee of notice thereof. If any such claim is not so paid and Lessor
is ultimately found or agrees to be responsible therefore, Lessee agrees also to
pay interest on the amount paid from the date of the first notice of such claim,
at the Overdue Rate.
(b) Lessor shall indemnify, defend, protect, save, hold
harmless, and reimburse Lessee for, from and against any and all Environmental
Costs (whether or not arising out of third-party claims and regardless of
whether liability without fault is imposed, or sought to be imposed, on Lessor)
incurred in connection with, arising out of, resulting from or incident to,
directly or indirectly, the presence of Hazardous Substances in, on, under or
about the Leased Property as of the Commencement Date.
Without limiting the scope or generality of
the foregoing, Lessor expressly agrees to reimburse Lessee for any and all costs
and expenses incurred by Lessee to the extent covered by the foregoing
indemnity:
(A) In investigating any and all matters
relating to the Handling of any Hazardous Substances, in, on, from, under or
about the Leased Property or any Capital Additions by reason of the presence of
Hazardous Substances in, on, under or about the Leased Property as of the
Commencement Date;
(B) In bringing the Leased Property or any
Capital Additions into compliance with all Legal Requirements by reason of the
presence of Hazardous Substances in, on, under or about the Leased Property as
of the Commencement Date; and
(B) Removing, treating, storing,
transporting, cleaning-up and/or disposing of any Hazardous Substances present
in, on, from, under or about the Leased Property or any Capital Additions as of
the Commencement Date.
37.5 Environmental Inspection. Lessor shall have the right, from time
to time, and upon not less than five (5) days' written notice to Lessee, except
in the case of an emergency in which event no notice shall be required, to
conduct an inspection of the Leased Property and all Capital Additions to
determine the existence or presence of Hazardous Substances on or about the
Leased Property or any such Capital Additions. Lessor shall have the right to
enter and inspect the Leased Property and all Capital Additions, conduct any
testing, sampling and analyses it deems reasonably necessary and shall have the
right to inspect materials brought into the Leased Property or any such Capital
Additions. Lessor may, in its discretion, retain such experts to conduct the
inspection, perform the tests referred to herein, and to prepare a written
report in connection therewith. In the event that any such inspections detect
unfavorable conditions relating to Hazardous Substances for which Lessee is
responsible under this Lease, then all costs and expenses incurred by Lessor
under this Section shall be paid on demand as Additional Charges by Lessee to
Lessor. Failure to conduct an environmental inspection or to detect unfavorable
conditions if such inspection is conducted shall in no fashion be intended as a
release of any liability for environmental conditions subsequently determined to
be associated with or to have occurred during Lessee's tenancy. Lessee shall
remain liable for any environmental condition related to or having occurred
during its tenancy regardless of when such conditions are discovered and
regardless of whether or not Lessor conducts an environmental inspection at the
termination of this Lease. The obligations set forth in this Article shall
survive the expiration or earlier termination of the Lease.
37.6 Review and Approval of Current Environmental Report.
(a) The continued effectiveness of this Lease and the other
Facility Group Leases and the obligations of the respective "Lessor" and
"Lessee" hereunder and thereunder are expressly conditioned upon Lessee and the
"Lessee" under each other Facility Group Lease obtaining and approving a Phase 1
environmental assessment and survey of the Leased Property and the other
Facility Group Facilities within the time and in the manner provided in this
Section 37.6 and in Section 37.6 of each other Facility Group Lease.
(b) Accordingly, promptly upon the execution and delivery of
this Lease Lessee shall, at its sole cost, cause an environmental consultant
selected by Lessee and reasonably approved by Lessor to make a Phase 1
environmental assessment and survey of the Leased Property (the "Environmental
Report"); provided, however, that upon the Commencement Date or any early
termination of this Lease pursuant to this Section 37.6, if at all, Lessor shall
reimburse (to the extent not already paid) to Lessee the lesser of (a) $3,000.00
and (b) the actual out-of-pocket costs incurred by Lessee in obtaining such
Environmental Report. Following the execution and delivery of this Lease, Lessee
and its approved environmental consultant shall have the right to enter the
Leased Property for purposes of inspecting the same in connection with the
preparation of such Environmental Report; provided, however, that no such
inspections shall (x) damage the Lease Property in any respect, or (y) disturb
or disrupt the business activities of the Current Operator, and all such
inspections shall be conducted only after delivering to Lessor (i) prior written
notice of the date, time, location, type and extent of each such inspection, and
(ii) evidence satisfactory to Lessor that adequate public liability and other
insurance is available respecting such inspection and naming Lessor and the
Current Operator as additional insureds. Lessor reserves the right to have its
own representative present during any inspections. The provisions of Article
XXIII of this Lease shall specifically apply to any and all such inspections
conducted by Lessee or its consultant pursuant to this Section 37.6.
(c) Promptly upon receipt of such Environmental Report (and in
any case on or before June 20, ▇▇▇▇), ▇▇▇▇▇▇ shall cause Lessee's consultant at
no additional charge to Lessor, to deliver to Lessor a copy of such
Environmental Report. Lessee shall be deemed to have approved of the
Environmental Report, unless Lessee has delivered written notice of its
reasonable disapproval thereof on or before June 26, 1998 (regardless whether
Lessee has received a copy of such Environmental Report by such date); provided,
however, that if (1) Lessee actually receives such Environmental Report, (2) the
same recommends any so-called "Phase II" tests, (3) Lessee has, by written
notice to Lessor on or before June 26, 1998 elected to conduct such Phase II
testing, and (4) Lessor has approved the scope and duration of such testing,
then the foregoing June 26, 1998 date shall be extended for such Phase II tests
to and until July 6, 1998 and the term "Environmental Report" as used in this
Section 37.6 shall include the results of any such Phase II tests. In addition
to the amount for which Lessor is responsible on account of the Environmental
Report pursuant to subsection (b) above, Lessor also agrees to pay to Lessee (or
reimburse Lessee for) upon the Commencement Date or any earlier termination of
this Lease pursuant to this Section 37.6 the lesser of (x) $5,000.00 or (y) the
actual out-of-pocket costs incurred by Lessee for such approved Phase II tests.
In the event that Lessee shall reasonably disapprove of the Environmental Report
within the time and in the manner provided in this Section 37.6, then Lessor
shall have a period of ten (10) Business Days following Lessor's receipt of
Lessee's notice of disapproval within which to investigate such disapproved
matters and to notify Lessee in writing whether Lessor intends, in its sole
discretion, to cure such the same without cost therefor to Lessee. In the event
that Lessor so elects then, subject to the provisions of subsection (c) below,
this Lease shall continue in full force and effect and Lessor shall proceed
promptly and in good faith to cure any such disapproved items in accordance with
all applicable Legal Requirements. Failure of Lessor to so notify Lessee of its
intention to cure within said ten (10) Business Day period, however, shall be
deemed Lessor's election not to cure. In the event that Lessor has elected or is
deemed to have elected not to cure, Lessee shall have a period of five (5)
Business Days after receipt of Lessor's notice of its election not to cure or
the date Lessor is deemed to have elected not to cure within which to elect in
writing to Lessor to either (A) to terminate this Lease or (B) waive the
previously disapproved matter, in which case this Lease, subject to the
provisions of subsection (c) below, shall continue in full force and effect.
Failure of Lessee to so waive such disapproved matter within such five (5)
Business Day period shall be deemed Lessee's election to terminate this Lease.
Upon any such termination of this Lease pursuant to this Section 37.6, each
party shall bear its own costs and fees incurred in the negotiation and
preparation of this Lease and in performing its respective obligations hereunder
through the date of such termination and neither party shall have any further
obligation to the other hereunder except for those obligations which are
intended to survive the earlier termination of this Lease prior to the
Commencement Date, if any. Pending any such termination, each party shall
perform its respective obligations pursuant to this Lease.
(d) Notwithstanding anything to the contrary in this Lease, in
the event that any other Facility Group Lease shall be terminated pursuant to
Section 37.6 thereof, then this Lease shall without further action of Lessor and
Lessee hereunder also automatically terminate. In other words, the election or
deemed election of any other "Lessee" to terminate another Facility Group Lease
pursuant to Section 37.6 of such Facility Group Lease shall also be deemed to be
Lessor's and Lessee's mutual election to terminate this Lease.
ARTICLE XXXVIII.
38. Memorandum of Lease. Lessor and Lessee shall, promptly upon the
request of either, enter into a short form memorandum of this Lease, in form
suitable for recording under the laws of the State. Lessee shall pay all costs
and expenses of recording any such memorandum and shall fully cooperate with
Lessor in removing from record any such memorandum upon the expiration or
earlier termination of the Term.
ARTICLE XXXIX.
39. Sale of Assets. Notwithstanding any other provision of this
Lease, Lessor shall not be required to (a) sell or transfer the Leased Property,
or any portion thereof, which is a real estate asset as defined in Section
856(c)(5)(B), or functionally equivalent successor provision, of the Code, to
Lessee if Lessor's counsel reasonably advises Lessor that such sale or transfer
has a significant risk of being deemed a sale of property subject to the tax
imposed by Section 857(b)(6), or functionally equivalent successor provision, of
the Code or (b) sell or transfer the Leased Property, or any portion thereof, to
Lessee if Lessor's counsel reasonably advises Lessor that such sale or transfer
has a significant risk of resulting in a significant amount of non-qualifying
gross income for purposes of the Ninety-Five Percent (95%) gross income test
contained in Section 856(c)(2), or functionally equivalent successor provision,
of the Code, that would create a material risk that Lessor would be unable to
satisfy the Ninety-Five Percent (95%) gross income test for the taxable year of
such scheduled sale or transfer. If Lessee has the right or obligation to
purchase the Leased Property pursuant to the terms herein, and if Lessor
determines not to sell such Leased Property pursuant to the above sentence, then
Lessee shall purchase such Leased Property, upon and subject to all applicable
terms and conditions set forth in this Lease, at such time as the transaction,
upon the reasonable advice of Lessor's counsel, no longer has a significant risk
of (i) being deemed a sale of property (to the extent the Leased Property is a
real estate asset) subject to the tax imposed by Section 857(b)(6), or
functionally equivalent successor provision, of the Code, or (ii) resulting in a
significant amount of non-qualifying gross income for purposes of the
Ninety-Five Percent (95%) gross income test contained in Section 856(c)(2), or
functionally equivalent successor provision of the Code, that would create a
material risk that Lessor would be unable to satisfy the Ninety-Five Percent
(95%) gross income test for the taxable year of such scheduled sale or transfer,
and until such time Lessee shall lease the Leased Property and all Capital
Additions from Lessor at the lesser of (A) the then Fair Market Rental and (B)
the sum of the monthly Minimum Rent and Additional Rent in effect immediately
prior to the date Lessee has the right or becomes obligated to purchase the
Leased Property pursuant to this Lease; provided, however, that (x) there shall
be no further increase in the applicable purchase price for the Leased Property
by reason of any such delay and (y) during any such lease period to and until
Lessee purchases the Leased Property, Lessee shall be relieved of all operating
covenants and liabilities under this Lease, including all maintenance, repair
and/or reconstruction obligations; provided further, however, that at all times
during such period Lessee shall remain responsible for its obligations pursuant
to Articles XXIII or XXXVIII of this Lease. Notwithstanding anything to the
contrary in this Article XXXIX, Lessor agrees that the foregoing provisions
shall not delay or otherwise postpone any sale of the Leased Property to Lessee
(to the extent Lessee shall be entitled or required to purchase the same) so
long as Lessor or any Affiliate of Lessor has not sold (and is not required to
sell) any other property to Lessee or any Affiliate of Lessee (including
pursuant to any other Facility Group Lease) during the calendar year in which
Lessee is required or entitled to purchase the Leased Property under this Lease.
ARTICLE XL.
[INTENTIONALLY DELETED]
ARTICLE XLI.
41. Authority. If Lessee is a corporation, trust, or partnership,
Lessee, and each individual executing this Lease on behalf of Lessee, represent
and warrant that each is duly authorized to execute and deliver this Lease on
behalf of Lessee and shall concurrently with the execution of this Lease deliver
to Lessor evidence of such authority satisfactory to Lessor.
ARTICLE XLII.
42. Attorneys' Fees. If Lessor or Lessee brings an action or other
proceeding (including an arbitration pursuant to Article XLIV) against the other
to enforce any of the terms, covenants or conditions hereof or any instrument
executed pursuant to this Lease, or by reason of any breach or default hereunder
or thereunder, the party prevailing in any such action or proceeding and any
appeal thereupon shall be paid all of its costs and reasonable attorneys' fees
incurred therein.
ARTICLE XLIII.
43. Brokers. Lessee warrants that it has not had any contact or
dealings with any Person or real estate broker which would give rise to the
payment of any fee or brokerage commission in connection with this Lease, and
Lessee shall indemnify, protect, hold harmless and defend Lessor from and
against any liability with respect to any fee or brokerage commission arising
out of any act or omission of Lessee. Lessor warrants that it has not had any
contact or dealings with any Person or real estate broker which would give rise
to the payment of any fee or brokerage commission in connection with this Lease,
and Lessor shall indemnify, protect, hold harmless and defend Lessee from and
against any liability with respect to any fee or brokerage commission arising
out of any act or omission of Lessor.
ARTICLE XLIV.
44. Submission to Arbitration.
44.1 Except as provided in Section 44.2 below, any controversy,
dispute or claim of whatsoever nature arising out of, in connection with, or in
relation to the interpretation, performance or breach of this Lease, including
any claim based on contract, tort or statute, shall be determined by final and
binding, confidential arbitration in accordance with the then current CPR
Institute for Dispute Resolution Rules for Non-Administered Arbitration of
Business Disputes ("CPR"), by a sole arbitrator selected from among the CPR
Panel of Distinguished Neutrals; provided, however, that if the CPR (or any
successor organization thereto) no longer exists, then such arbitration shall be
administered by the American Arbitration Association ("AAA") in accordance with
its then-existing Commercial Arbitration Rules, and the sole arbitrator shall be
selected in accordance with such AAA rules. Any arbitration hereunder shall be
governed by the United States Arbitration Act, 9 U.S.C. 1-16 (or any successor
legislation thereto), and judgment upon the award rendered by the arbitrator may
be entered by any state or federal court having jurisdiction thereof. Neither
Lessor, Lessee nor the arbitrator shall disclose the existence, content or
results of any arbitration hereunder without the prior written consent of all
parties; provided, however, that either party may disclose the existence,
content or results of any such arbitration to its partners, officers, directors,
employees, agents, attorneys and accountants and to any other Person to whom
disclosure is required by applicable Legal Requirements, including pursuant to
an order of a court of competent jurisdiction. Unless otherwise agreed by the
parties, any arbitration hereunder shall be held at a neutral location selected
by the arbitrator in the major metropolitan area in the State closest in
proximity to the Leased Property. The cost of the arbitrator and the expenses
relating to the arbitration (exclusive of legal fees) shall be borne equally by
Lessor and Lessee unless otherwise specified in the award of the arbitrator.
Such fees and costs paid or payable to the arbitrator shall be included in
"costs and reasonable attorneys' fees" for purposes of Article XLII and the
arbitrator shall specifically have the power to award to the prevailing party
pursuant to such Article XLII such party's costs and expenses incurred in such
arbitration, including fees and costs paid to the arbitrator.
44.2 The provisions of this Article XLIV shall not apply to:
(a) Any unlawful detainer or other similar
summary or expedited proceeding for ejectment or recovery of possession of the
Leased Property and Capital Additions instituted by Lessor in accordance with
applicable Legal Requirements as the result of an Event of Default or alleged
Event of Default by Lessee pursuant to this Lease. In addition, if permitted by
applicable Legal Requirements, Lessor shall be entitled in connection with any
such proceeding to seek any damages to which it is entitled at law, including
those set forth in Article XVI.
(b) Any specific controversy, dispute,
question or issue as to which this Lease specifically provides another method of
determining such controversy, dispute, question or issue and provides that a
determination pursuant to such method is final and binding, unless both Lessor
and Lessee agree in writing to waive such procedure and proceed instead pursuant
to this Article XLIV.
(c) Any request or application for an order
or decree granting any provisional or ancillary remedy (such as a temporary
restraining order or injunction) with respect to any right or obligation of
either party to this Lease, and any preliminary determination of the underlying
controversy, dispute, question or issue as is required to determine whether or
not to grant such relief. A final and binding determination of such underlying
controversy, dispute, question or issue shall be made by an arbitration
conducted pursuant to this Article XLIV after an appropriate transfer or
reference to the arbitrator selected pursuant to this Article XLIV upon motion
or application of either party hereto. Any ancillary or provisional relief which
is granted pursuant to this clause (c) shall continue in effect pending an
arbitration determination and entry of judgment thereon pursuant to this Article
XLIV.
ARTICLE XLV.
45. Miscellaneous
45.1 Survival. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities and indemnities of, Lessee
or Lessor arising prior to the expiration or earlier termination of the Term
shall survive such expiration or termination. In addition, all claims against,
and all liabilities and indemnities hereunder of Lessee shall continue in full
force and effect and in favor of the Lessor named herein and its successors and
assigns, notwithstanding any conveyance of the Leased Property to Lessee.
45.2 Severability. If any term or provision of this Lease or any
application thereof shall be held invalid or unenforceable, the remainder of
this Lease and any other application of such term or provision shall not be
affected thereby.
45.3 Non-Recourse. Lessee specifically agrees to look solely to
the Leased Property and any other Facility Group Facility owned by Lessor and
covered by any other Facility Group Lease for recovery of any judgment from
Lessor; provided, however, that if Lessor's aggregate equity in the Leased
Property together with the other Facility Group Facilities owned by Lessor is
less than $3 Million, then other assets of Lessor shall be available to satisfy
any judgment against Lessor as provided herein, but only to the extent of the
difference between (i) the then sum of Lessor's equity in the Leased Property
and each such other Facility Group Facility and (ii) $3 Million; and provided
further, however, that all assets of Lessor shall be available to satisfy any
judgment against Lessor hereunder on account of any failure of Lessor to fund an
approved Capital Project up to the maximum amount required to be funded by
Lessor on account thereof pursuant to Section 10.3. It is specifically agreed,
however, that no constituent partner in Lessor or officer, director or employee
of Lessor shall ever be personally liable for any such judgment or for the
payment of any monetary obligation to Lessee. The provision contained in the
foregoing sentence is not intended to, and shall not, limit any right that
Lessee might otherwise have to obtain injunctive relief against Lessor, or any
action not involving the personal liability of Lessor.
45.4 Licenses. Upon the expiration or earlier termination of the
Term, Lessee shall operate in good faith and use commercially reasonable efforts
to transfer to Lessor or Lessor's nominee a fully operational Facility and shall
cooperate with Lessor or Lessor's designee or nominee in connection with the
preparation and processing by Lessor or Lessor's designee or nominee of any
applications for all licenses, operating permits and other governmental
authorization, and in the transaction of all contracts, including contracts with
governmental or quasi-governmental entities, business records, data, patient and
resident records, and patient and resident trust accounts, which may be
reasonably requested by Lessor for the orderly transition of operations of the
Facility; provided that the costs and expenses of any such transfer or the
preparation and processing of any such application shall be paid by Lessor or
Lessor's designee or nominee. Lessee shall not intentionally or in bad faith
commit any act or be remiss in the undertaking of any act that would jeopardize
the licensure or certification of the Facility, and Lessee shall comply with all
commercially reasonable requests for an orderly transfer of the same upon the
expiration or early termination of the Term. In addition, upon request, Lessee
shall promptly deliver copies of all non-proprietary books and records (other
than personnel evaluations) relating to the Leased Property and all Capital
Additions and operations thereon to Lessor or Lessor's designee or nominee, as
the case may be (it being understood that Lessee may keep copies of all such
books and records for its own files).
45.5 Successors and Assigns. This Lease shall be binding upon
Lessor and its successors and assigns and, subject to the provisions of Article
XXIV, upon Lessee and its successors and assigns.
45.6 Termination Date. If this Lease is terminated by Lessor or
Lessee under any provision hereof, and upon the expiration of the Term
(collectively, the "termination date"), the following shall pertain:
(a) Lessee shall vacate and surrender the
Leased Property, Lessee's Personal Property (other than Lessee's Removable
Personal Property) and all Capital Additions to Lessor in the condition required
by Section 9.1.4. Prior to such vacation and surrender, Lessee shall remove any
items which Lessee is permitted or required to remove hereunder. Lessee shall,
at Lessee's cost, repair any damage to the Leased Property, Lessee's Personal
Property and any Capital Additions caused by such vacation and/or removal of any
items which Lessee is required or permitted hereunder to remove. Any items which
Lessee is permitted to remove but fails to remove prior to the surrender to
Lessor of the Leased Property, Lessee's Personal Property and any Capital
Additions shall be deemed abandoned by Lessee, and Lessor may retain or dispose
of the same as Lessor sees fit without claim by Lessee thereto or to any
proceeds thereof. If Lessor elects to remove and dispose of any such items
abandoned by Lessee, the cost of such removal and disposal shall be an
Additional Charge payable by Lessee to Lessor upon demand. Lessee shall pay all
amounts payable by it through the termination date and any costs charged
pursuant to the immediately preceding sentence, each of the parties shall bear
their own costs and fees incurred (including all costs incurred in performing
their respective obligations hereunder) through the termination date and from
and after the termination date neither party shall have any further obligations
to the other, except for those obligations set forth in this subsection (a),
those obligations hereunder which are intended to survive the expiration or
earlier termination of this Lease and those specific obligations set forth in
subsection (b) below.
(b) Notwithstanding the provisions of clause
(i), upon any such termination or expiration of this Lease, the following shall
pertain:
(i) Lessee shall remain liable for the
cost of all utilities used in or at the Leased Property and any Capital
Additions through the termination date and accrued and unpaid, whether or not
then billed, as of the termination date until full payment thereof by Lessee.
Lessee shall obtain directly from the companies providing such services closing
statements for all services rendered through the termination date and shall
promptly pay the same. If any utility statement with respect to the Leased
Property and any Capital Additions includes charges for a period partially prior
to and partially subsequent to the termination date, such charges shall be
prorated as between Lessor and Lessee, with Lessee responsible for the portion
thereof (based upon a fraction the numerator of which is the number of days of
service on such statement through the termination date and the denominator of
which is the total number of days of service on such statement) through the
termination date and Lessor shall be responsible for the balance. The party
receiving any such statement which requires proration hereunder shall promptly
pay such statement and the other party shall, within ten (10) days after receipt
of a copy of such statement, remit to the party paying the statement any amount
for which such other party is responsible hereunder.
(ii) Lessee shall remain responsible to
the extent required under Article IV for any and all Impositions imposed against
the Leased Property, the Personal Property and any Capital Additions with a lien
date prior to the termination date (irrespective of the date of billing
therefor) and for its pro rata share of any Impositions imposed in respect of
the tax-fiscal period during which the Term terminates as provided in Section
4.1.7, and Lessee shall indemnify and hold Lessor harmless with respect to any
claims for such Impositions or resulting from nonpayment thereof.
(iii)Lessee shall (y) execute all
documents and take any actions reasonably necessary to (1) cause the transfer of
all of Lessee's Personal Property (other than Lessee's Removable Personal
Property) and any Capital Additions not owned by Lessor to Lessor, in each case
free of any encumbrance, as provided in Section 6.3 and (2) remove this Lease
and/or any memorandum hereof as a matter affecting title to the Leased Property
as provided in Article XXXVIII and (z) comply with its covenants set forth in
Section 45.4.
(iv) Lessee shall continue to observe
the covenants of Lessee set forth in Sections 7.4.1 and 7.4.2 and any other
covenant or agreement of Lessee in this Lease which is intended to survive the
expiration or sooner termination of this Lease.
45.7 Governing Law. THIS LEASE (AND ANY AGREEMENT FORMED
PURSUANT TO THE TERMS HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE (WITHOUT REGARD OF PRINCIPLES
OR CONFLICTS OF LAW) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
45.8 Waiver of Trial by Jury. EACH OF LESSOR AND LESSEE
ACKNOWLEDGES THAT IT HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO
ITS RIGHTS TO TRIAL BY JURY UNDER THE CONSTITUTION OF THE UNITED STATES AND THE
STATE. EACH OF LESSOR AND LESSEE HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
LEASE (OR ANY AGREEMENT FORMED PURSUANT TO THE TERMS HEREOF) OR (ii) IN ANY
MANNER CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF LESSOR AND
LESSEE WITH RESPECT TO THIS LEASE (OR ANY AGREEMENT FORMED PURSUANT TO THE TERMS
HEREOF) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREINAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE; EACH OF LESSOR AND LESSEE HEREBY AGREES AND CONSENTS THAT,
SUBJECT TO ARTICLE XLIV, ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY A COURT TRIAL WITHOUT A JURY, AND THAT EITHER PARTY MAY FILE A
COPY OF THIS SECTION WITH ANY COURT AS CONCLUSIVE EVIDENCE OF THE CONSENT OF
EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
LESSOR'S INITIALS: _______
LESSEE'S INITIALS: _______
45.9 Lessee's Equitable Remedies. In the event that Lessee
claims or asserts that Lessor has violated or failed to perform a covenant of
Lessor not to unreasonably withhold or delay Lessor's consent or approval
hereunder, or in any case where Lessor's reasonableness in exercising its
judgment is in issue, Lessee's sole remedy shall be an action for specific
performance, declaratory judgment or injunction, and (a) in no event shall
Lessee be entitled to any monetary damages for a breach of such covenant, and
(b) Lessee hereby specifically waives the right to any monetary damages or other
remedies in connection with any such claim or assertion; provided, however, that
if Lessee shall establish in a court of competent jurisdiction that Lessor has
acted maliciously or in bad faith in withholding its consent in any instance
where Lessor has agreed hereunder not to unreasonably delay or withhold its
consent, then the foregoing limitations shall not apply and Lessee shall be
entitled to seek any remedies available at law or in equity by reason of
Lessor's actions.
45.10 Entire Agreement. This Lease and the Exhibits hereto and
thereto and such other documents as are contemplated hereunder or thereunder,
constitutes the entire agreement of the parties with respect to the subject
matter hereof, and may not be changed or modified except by an agreement in
writing signed by the parties. Lessor and Lessee hereby agree that all prior or
contemporaneous oral understandings, agreements or negotiations relative to the
leasing of the Leased Property are merged into and revoked by this Lease.
45.11 Headings. All titles and headings to sections,subsections,
paragraphs or other divisions of this Lease are only for the convenience of the
parties and shall not be construed to have any effect or meaning with respect to
the other contents of such sections, subsections, paragraphs or other divisions,
such other content being controlling as to the agreement among the parties
hereto.
45.12 Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be a valid and binding original, but all of
which together shall constitute one and the same instrument.
45.13J oint and Several. If more than one Person is the Lessee
under this Lease, the liability of such Persons under this Lease shall be joint
and several.
45.14 Interpretation. Both Lessor and Lessee have been
represented by counsel and this Lease and every provision hereof has been freely
and fairly negotiated. Consequently, all provisions of this Lease shall be
interpreted according to their fair meaning and shall not be strictly construed
against any party.
45.15 Time of Essence. Time is of the essence of this Lease and
each provision hereof in which time of performance is established.
45.16 Force Majeure. In the event that either Lessor or Lessee
is delayed in performing its respective obligations pursuant to this Lease by
any cause beyond the reasonable control of the party required to perform such
obligation, the time period for performing such obligation shall be extended by
a period of time equal to the period of the delay. For purposes of this Lease:
(a) A cause shall be beyond the reasonable
control of a party to this Lease when such cause would affect any person
similarly situated (such as power outage, labor strike, Act of God or trucker's
strike) but shall not be beyond the reasonable control of such party when
peculiar to such party (such as financial inability or failure to order long
lead time material sufficiently in advance).
(b) This Section shall not apply to any
obligation to pay money or otherwise perform any financial
obligation hereunder.
(c) In the event of any occurrence which a
party believes constitutes a cause beyond the reasonable control of such party
and which will delay any performance by such party, such party shall promptly in
writing notify the other party of the occurrence and nature of such cause, the
anticipated period of delay and the steps being taken by such party to mitigate
the effects of such delay. Failure to give such notice promptly, shall deem such
occurrence or event not to be a cause beyond the reasonable control of such
party.
45.17 Further Assurances. The parties agree to promptly sign all
documents reasonably requested to give effect to the provisions of this Lease.
ARTICLE XLVI.
46. Delays in Delivery of Possession. Lessee acknowledges that (i)
the Leased Property is currently occupied and operated as a long-term skilled
nursing care facility by a subsidiary of either Vencor, Inc., ▇▇▇▇▇▇▇
Enterprises, Inc. or Hunter Care, Inc. (or a subsidiary of any of the foregoing)
(the "Current Operator") pursuant to the terms of a written lease between
Current Operator and Lessor (the "Old Lease") and (ii) Lessor's ability to
tender delivery of possession of and/or Lessee's ability to obtain possession of
the Leased Property is conditioned upon Current Operator's surrender of the
Leased Property, which is expected to occur upon satisfaction of the last of the
conditions to the continued effectiveness of this Lease pursuant to Article
XLVII below. The target Commencement Date is August 1, 1998; provided, however,
that if the Commencement Date shall not have occurred on or before the target
Commencement Date, this Lease shall not be void or voidable, nor shall Lessor be
liable for any loss or damage resulting therefrom. Instead this Lease shall
continue in full force and effect to and until occurrence of the Commencement
Date, unless earlier terminated as herein provided.
ARTICLE XLVII.
47. Additional Conditions to Continued Effectiveness of Lease. In
addition to the provisions of Section 37.6 above, the continued effectiveness of
this Lease and the obligations of Lessor and Lessee hereunder are expressly
conditioned upon Lessee's ability to obtain all licenses, permits,
accreditations, authorizations and certifications from all governmental or
quasi-governmental authorities, agencies, departments or otherwise which are
required for the operation of the Facility for its Primary Intended Use,
including any certificate of need and any accreditations or certifications from
Medicare and/or Medicaid (collectively, the "Required Approvals"). Promptly upon
execution and delivery of this Lease, Lessee shall cooperate with Current
Operator (to the extent applicable) and shall make application for and shall
thereafter operate in good faith and use commercially reasonable efforts to
diligently pursue and obtain all such Required Approvals. Lessor hereby agrees
that it will also cooperate with Lessee in connection with the obtaining such
Required Approvals as reasonably requested by Lessee, but without requirement
that Lessor incur any out-of-pocket costs or assume and obligations (financial
or otherwise). Notwithstanding the Current Operator's apparent willingness to
cooperate with Lessee's efforts to obtain the Required Approvals and in
effecting a smooth transition of the operations of the Facility to Lessee, there
can be no assurances that the Current Operator will in fact cooperate and/or
continue to cooperate, and no such non-cooperation or cessation of cooperation
by the Current Operator shall relieve Lessee from its obligation to operate in
good faith and use commercially reasonable efforts to obtain the same. Promptly
upon satisfaction of the condition described in this paragraph (i.e., obtaining
all such Required Approvals), Lessee shall notify Lessor of the same.
In the event that (a) such condition is not satisfied on or before
December 15, 1998 (the "Adios Date"), or (b) Lessor reasonably determines in
good faith any time after the date of this Lease that Lessee is not operating in
good faith and using its commercially reasonable efforts to obtain such Required
Approvals on or before the Adios Date, then Lessor shall have the right and
option to terminate this Lease. Such option shall be exercised by Lessor, if at
all, at any time after the Adios Date or the date Lessor makes the determination
set forth in clause (b) above, and prior to the date Lessee receives the
Required Approvals. In addition, if after operating in good faith and using
commercially reasonable efforts, Lessee has been unable to obtain the Required
Approvals on or before the Adios Date and Lessor has not previously elected to
terminate this Lease as provided above, then at any time after the Adios Date
and prior to receipt of such Required Approvals, Lessee shall also have the
option to terminate this Lease by written notice to Lessor. Upon any termination
of this Lease pursuant to this Article XLVII, each party shall bear its own
costs and fees incurred in the negotiation and preparation of this Lease and in
performing its respective obligations hereunder through the date of such
termination and neither party shall have any further obligation to the other
hereunder except for those obligations which are intended to survive the earlier
termination of this Lease prior to the Commencement Date, if any. Pending any
such termination, each party shall perform its respective obligations pursuant
to this Lease.
ARTICLE XLVIII.
48. Representations by the Parties. As of the date of hereof, Lessor
and Lessee hereby represent and warrant to the other, as applicable, as follows:
48.1 By Both Lessor and Lessee.
(a) Such party is duly organized, validly existing and, to
the extent applicable, in good standing under the laws of its state
of organization/formation, is qualified to do business and, to the
extent applicable, in good standing in the State and has full power,
authority and legal right to execute and deliver and to perform and
observe the provisions of this Lease to be observed and/or performed
by such party hereunder.
(b) This Lease has been duly authorized, executed and
delivered by such party, and constitutes and will constitute the
valid and binding obligations of such party enforceable against such
party in accordance with their respective terms.
(c) Such party is solvent, has timely and accurately filed
all tax returns required to be filed by such party, and is not in
default in the payment of any taxes levied or assessed against such
party or any of its assets, or subject to any judgment, order,
decree, rule or regulation of any Governmental Authority which would,
in each case or in the aggregate, adversely affect its condition,
financial or otherwise, or its prospects or the Leased Property.
(d) Except for the Required Approvals to use and operate
the Facility for its Primary Intended Use, no other consent, approval
or other authorization of, or registration, declaration or filing
with, any Governmental Authority is required for the due execution
and delivery of this Lease, or for the performance by or the validity
or enforceability of this Lease against such party.
(e) The execution and delivery of this Lease and compliance
with the provisions hereof will not result in (i) a breach or
violation of (A) any Legal Requirement applicable to such party now
in effect; (B) the organizational or charter documents of such party;
(C) any judgment, order or decree of any Governmental Authority
binding upon such party; or (D) any agreement or instrument to which
such party is a counterparty or by which it is bound; or (ii) the
acceleration of any obligation of such party.
48.2 By Lessor Only.
(a) To the best knowledge of Lessor, the Leased Property is
free and clear of all liens and other encumbrances other than the
Permitted Exceptions. There are no current Facility Mortgages
encumbering the Leased Property.
(b) To the actual knowledge of Lessor, there are no
actions, proceedings or investigations, including Condemnation
proceedings pending or threatened, against or affecting the Leased
Property.
(c) Lessor has furnished to Lessee true and correct copies
of those financial and other operating statements relating to the
Leased Property, including cost reports, which were supplied by the
Current Operator to Lessor and which Lessor, in its reasonable
judgment, has deemed to be relevant for Lessee's purposes.
(d) To the actual knowledge of Lessor, the Facility is not
subject to any hold on admissions or other similar sanction imposed
by any applicable Governmental Authority.
As used herein, the term "actual knowledge of Lessor" shall mean the
present actual knowledge of any senior officer of HCPI, without
investigation and without the duty to conduct any investigation.
ARTICLE XLIX.
49. Renegotiation/Early Termination. In connection with Guarantor's
initial due diligence and economic feasibility studies of the Facility and the
other Facility Group Facilities, Lessor or its Affiliate(s) obtained and
delivered to Guarantor and/or its Affiliate(s) certain financial information
prepared by the Current Operator and/or its Affiliate(s) respecting the
historical operating revenues and expenses of the Facility and the other
Facility Group Facilities (collectively, the "Historical Operating
Information"). Based upon such Historical Operating Information, Lessee and its
Affiliate(s) prepared proforma financial projections and models concerning the
Facility (the "Projected Facility Results") and the other Facility Group
Facilities (collectively, the "Projected Group Results"). Accordingly, Lessor
and Lessee agree that if, at anytime after the date hereof through June 30,
1999, it is discovered that either (a) the Historical Operating Information was
materially inaccurate, that as a direct result thereof the Projected Group
Results were materially overstated, and that, when taken as a whole, the results
of operations from the Facility and the other Facility Group Facilities are
materially less than that expected in the Projected Group Results or (b) the
Historical Operating Information specifically relating to the Facility was
materially inaccurate, that as a direct result thereof the Projected Facility
Results and Projected Group Results were both materially overstated, and that
the results of operation from the Facility in and of itself has had a material
adverse effect on the results of operation from all of the Facility Group
Facilities and has caused the same to be materially less than that expected in
the Projected Group Results, then in either such event Lessee may so notify
Lessor of the same along with Lessee's desire to renegotiate the Minimum Rent
and Special Additional Rent payable under this Lease during the Term (but
specifically excluding any right to renegotiate Additional Rent payable under
this Lease or any component or variable thereof, including Base Gross Revenues
or Incremental Revenues). It is specifically agreed, however, that Lessor shall
be under no obligation whatsoever to renegotiate the Minimum Rent or Special
Additional Rent to be so paid hereunder. In the event that Lessee shall be
entitled to and so shall notify Lessor of its desire to renegotiate the same on
or before June 30, 1999, and Lessor and Lessee are unable to mutually agree upon
the Rent to be so paid under this Lease within thirty (30) days after Lessor's
receipt of Lessee notice (the "Outside Renegotiation Date"), then Lessee may at
anytime after the Outside Renegotiation Date and prior to the parties reaching
agreement on the same, if at all, terminate this Lease by written notice to
Lessor. In such event, this Lease shall terminate 180 days following Lessor's
receipt of Lessee's notice of termination. Notwithstanding anything to the
contrary in this Lease, in the event that any other Facility Group Lease shall
be terminated pursuant to clause (a) of Section 49 thereof (but not clause (b)),
then this Lease shall without further action of Lessor and Lessee hereunder also
automatically terminate. In other words, the election or deemed election of any
other "Lessee" to terminate another Facility Group Lease pursuant to clause (a)
of Section 49 of such Facility Group Lease shall also be deemed to be Lessor's
and Lessee's mutual election to terminate this Lease.
ARTICLE L.
50. Minimum Rent and Special Additional Rent Reallocation.
Notwithstanding anything to the contrary in this Lease, if any one (1) or more
Facility Group Lease(s) is/are terminated for any reason whatsoever prior to the
expiration of the stated Term (including by reason of damage, destruction,
Condemnation, failure of condition, default or any other reason) (each, a
"Terminating Facility Group Lease") and this Lease is not also terminated
concurrently therewith, then the monthly Minimum Rent and Special Additional
Rent payable hereunder shall be adjusted in accordance with the following
provisions:
(a) First, Lessor shall determine the total monthly Minimum Rent
("Total Monthly Minimum Rent") under all remaining Facility Group Leases
(i.e., excluding any Terminating Facility Group Leases) at the then
current rate.
(b) Second, Lessor shall determine the "Rent Reallocation Share"
for each remaining Facility Group Lease (i.e., excluding any Terminating
Facility Group Lease) by dividing the Total Monthly Minimum Rent (i.e., as
the denominator) into the monthly Minimum Rent at the then current rate
for each such Facility Group Lease (i.e., as the numerator).
(c) Third, Lessor shall determine the "Minimum Rent Reallocation
Amount" for each Terminating Facility Group Lease by multiplying (i) the
monthly Minimum Rent at the rate in effect under such Terminating Facility
Group Lease immediately prior to termination thereof, times (ii) the
percentage (positive or negative) set forth as the "Rent Adjustment
Percentage" on Exhibit F attached hereto. Similarly, Lessor shall
determine the "Special Additional Rent Reallocation Amount(s)" for each
payment of Special Additional Rent then unpaid under each Terminating
Facility Group Lease by multiplying (A) each such payment of Special
Additional Rent then unpaid, times (B) such "Rent Adjustment Percentage."
If the Rent Adjustment Percentage is stated to be a negative (-)
percentage, then the Minimum Rent Reallocation Amount and Special
Additional Rent Reallocation Amount(s) resulting from the foregoing
calculations shall also be stated as negative amount(s). If the Rent
Adjustment Percentage is stated to be a positive (+) percentage, then the
Minimum Rent Reallocation Amount and Special Additional Rent Reallocation
Amount(s) resulting from the foregoing calculations shall also be stated
as a positive amount(s).
(e) Fourth, Lessor shall determine the "Minimum Rent Adjustment
Amount" and the "Special Additional Rent Adjustment Amount(s)" for each
remaining Facility Group Lease by multiplying the Minimum Rent
Reallocation Amount and Special Additional Rent Reallocation Amount(s)
(whether positive or negative), respectively, by the Rent Reallocation
Share for each such remaining Facility Group Lease as determined pursuant
to clause (a) above.
(f) Finally, effective on the date of termination of any
Terminating Facility Group Lease, the monthly Minimum Rent and Special
Additional Rent(s) payable hereunder shall be adjusted by the Minimum Rent
Adjustment Amount and the Special Additional Rent Adjustment Amount(s)
applicable to this Lease (each, an "Adjustment Amount"). Provided,
however, that if the applicable Adjustment Amounts shall not have been
determined as of the termination date of any Terminating Facility Group
Lease, then Lessee shall continue to pay monthly Minimum Rent and Special
Additional Rent at the last applicable rate until Lessee receives Lessor's
written notice as to the Adjustment Amounts. If such Adjustment Amounts
are positive, then within ten (10) days after Lessee's receipt of Lessor's
notice, Lessee shall pay to Lessor an amount equal to the new monthly
Minimum Rent times the number of months from the date of termination of
such Terminating Facility Group Lease(s) to the date of receipt of
Lessor's notice and the total amount of any such Special Additional Rent
then due, in each case less the aggregate amount paid by Lessee on account
thereof for the same period. If such Adjustment Amounts are negative, the
amount of excess Rent paid by Lessee on account of such monthly Minimum
Rent and Special Additional Rent shall be credited against the next
amounts coming due on account of monthly Minimum Rent hereunder.
Thereafter, Lessee shall pay monthly Minimum Rent and any such Special
Additional Rent at the new rate(s) set forth in Lessor's notice.
By way of illustration only, attached hereto as Exhibit H are two examples of
the calculation of the Minimum Rent Adjustment Amounts pursuant to this Article
L in the event of a termination of any other Facility Group Lease.
ARTICLE LI.
51. Pre-Commencement Provisions.
51.1 Pre-Commencement Term. The Term of this Lease consists of
the aggregate of the Pre-Commencement Term, the Fixed Term and the Extended
Terms, if any, unless sooner terminated pursuant to any provisions of this
Lease. The "Pre-Commencement Term" shall be the period from the date of
execution and delivery hereof to and until the Commencement Date. During the
Pre-Commencement Term, the sole obligations of Lessor and Lessee pursuant to
this Lease shall be as set forth in Section 37.6 above, Articles XLVI, XLVII and
XLVIII above, and this Article LI; provided, however, that at all times from and
after the execution and delivery of this Lease, the applicable provisions of
Articles I, II, V, VI, XI, XVI, XVII, XVIII, XXIV, XXI, XXVII, XXVIII, XXXI,
XXXIII, XXXV, XXXVI, XXXIX, XLI, XLII, XLIII, XLIV, XLV and Sections 7.1, 7.4
and 23(iii) of this Lease shall at all times be in full force and effect and
shall apply to Lessor and Lessee.
51.2 Pre-Commencement Rent Date. Lessor and Lessee acknowledge
and agree that prior to the Commencement Date Lessee may take possession and
commence use and occupancy of the Leased Property prior to receipt of the
Required Approvals either as manager, sublessee or otherwise pursuant to any
agreement concerning such matters as may be agreed upon by the Current Operator
and Lessee. In such event, the date that Lessee shall so take possession or
commence the management or operation of the Leased Property for any reason by or
through the Current Operator shall be referred to herein as the
"Pre-Commencement Rent Date." From and after the Pre-Commencement Rent Date, if
at all, through the Commencement Date, the following shall apply:
(a) Lessee shall pay to Lessor in lawful
money of the United States of America, without offset or deduction, the
Pre-Commencement Rent (as hereinafter defined). As used herein, the term
"Pre-Commencement Rent" shall mean an amount equal the positive difference, if
any, between the Rent which would have been payable by Lessee under this Lease
assuming that the Commencement Date had occurred on the Pre-Commencement Rent
Date and the total rent payable by the Current Operator to or for the benefit of
Lessor during such period. Such Pre-Commencement Rent shall be prorated as to
any partial calendar month at the beginning of the Term. If the total rent
payable by the Current Operator to Lessor is more than the Rent which would have
been payable by Lessee under this Lease assuming the Commencement Date had
occurred on the Pre-Commencement Date, then such excess payment by such current
operator shall be accrued and carried forward and provided by Lessor to Lessee
as a credit towards Lessee's Minimum Rent obligations under this Lease on and as
of the Commencement Date. Payments of Pre-Commencement Rent shall be paid in
advance on or before the first day of each calendar month and shall be made via
wire transfer to an account as Lessor may from time to time designate in
writing.
(b) Lessee shall maintain the insurance
specified in accordance with Sections 13.1.5 and 13.1.6.
(c) Article XXIII shall apply at all times
during such period.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have caused this Lease to be executed
and attested by their respective officers thereunto duly authorized.
"Lessor" "Lessee"
HEALTH CARE PROPERTY INVESTORS, CENTENNIAL HEALTHCARE INVESTMENT
INC., a Maryland corporation CORPORATION, a Georgia
corporation
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Vice President By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
Its: Vice President
A-1
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
THIS EXHIBIT INTENTIONALLY OMITTED
B-1
EXHIBIT B
LESSOR'S PERSONAL PROPERTY
All machinery, equipment, furniture, furnishings, moveable walls or
partitions, computers or trade fixtures or other tangible personal
property in, on or about the Facility on and as of the Commencement
Date and owned by Lessor, excluding items, if any, included within
the definition of Fixtures.
C-2
EXHIBIT C
FORM OF AMENDMENT TO LEASE
This First Amendment to Lease ("Amendment") is dated as of
_________________, 1998 by and between HEALTH CARE PROPERTY INVESTORS, INC., a
Maryland corporation "Lessor"), and CENTENNIAL HEALTHCARE INVESTMENT
CORPORATION, a Georgia corporation ("Lessee").
RECITALS
A. Lessor and Lessee entered into a Lease dated as of
June 15, 1998 (the "Lease") for the
__________________________________________ facility located in
----------------------------------------.
▇. ▇▇▇▇▇▇ and Lessee desire to memorialize their understanding
regarding certain provisions of the Lease.
AGREEMENT
Capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in the Lease. Lessor and Lessee hereby agree as follows:
1. The Commencement Date of the Lease is_____________;
2. The first Lease Year for the Lease commences on ____________,
199__ and ends on ____________, 199__;
Except as amended above, the Lease between Lessor and Lessee shall
remain in full force and effect. This Amendment may be executed in any number of
counterparts, all of which together shall constitute one and the same
instrument.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the day and year first above written.
"Lessor" "Lessee"
HEALTH CARE PROPERTY INVESTORS, CENTENNIAL HEALTHCARE INVESTMENT
INC., a Maryland corporation CORPORATION, a Georgia
corporation
By:
Its: By:
Its:
The undersigned Guarantor hereby consents to this Amendment and reaffirms
to Lessor that its obligations under the Guaranty dated as of June 15, 1998,
remain in full force and effect with respect to the Lease as amended hereby.
CENTENNIAL HEALTHCARE
CORPORATION, a Delaware
corporation
By:
Its:
D-2
C-1
EXHIBIT D
EXISTING LEASES
The following leases (as the same may be further amended, modified or
supplemented from time to time in accordance with the respective terms thereof)
shall be "Existing Leases" for purposes of this Lease:
1. Operating Lease dated as of March 28, 1991 between HCPI, as lessor, and
Cardinal of Indiana, Inc., a Kentucky corporation ("Cardinal"), as the original
lessee, as amended by that certain Amendment to Operating Lease made and
effective November 1, 1993, that certain Second Amendment to Operating Lease
made and effective as of April 1, 1994 and that certain Third Amendment to
Operating Lease made and effective as of March 31, 1995. On November 1, 1993,
Cardinal assigned its lessee/tenant interests under such Lease to Transitional
Health Partners d/b/a Transitional Health Services, a Delaware general
partnership ("THS") pursuant to a Lease Assignment, Consent and Release, which
is recorded as Instrument No. 93-2187 in Misc. Book 94, Pages 326-333, with the
Register of Deeds of Pike County, Indiana.
2. Operating Lease dated as of August 8, 1990 between HCPI, as lessor, and HRO
Acquisition Corporation, a Kentucky corporation ("HRO"), as the original lessee,
as amended by that certain Amendment to Operating Lease made and effective
November 1, 1993, that certain Second Amendment to Operating Lease made and
effective as of April 1, 1994 and that certain Third Amendment to Operating
Lease made and effective as of March 31, 1995. On November 1, 1993, HRO assigned
its lessee/tenant interests under such Lease to THS pursuant to a Lease
Assignment, Consent and Release, which is recorded as Instrument No. 93-19199
with the Register of Deeds of La Porte County, Indiana.
3. Operating Lease dated as of March 28, 1991 between HCPI, as lessor, and
Cardinal, as the original lessee, as amended by that certain Amendment to
Operating Lease made and effective November 1, 1993, that certain Second
Amendment to Operating Lease made and effective as of April 1, 1994 and that
certain Third Amendment to Operating Lease made and effective as of March 31,
1995. On November 1, 1993, Cardinal assigned its lessee/tenant interests under
such Lease to THS pursuant to a Lease Assignment, Consent and Release, which is
recorded as Instrument No. 93-11-0923 with the Register of Deeds of Kosciusko
County, Indiana.
4. Operating Lease dated as of August 8, 1990 between HCPI, as lessor, and HRO,
as the original lessee, as amended by that certain Amendment to Operating Lease
made and effective November 1, 1993, that certain Second Amendment to Operating
Lease made and effective as of April 1, 1994, that certain Third Amendment to
Operating Lease made and effective as of June 29, 1994, that certain Fourth
Amendment to Operating Lease made and effective March 31, 1995 and that certain
Fifth Amendment to Operating Lease made and effective July 10, 1995. On November
1, 1993, HRO assigned its lessee/tenant interests under such Lease to THS
pursuant to a Lease Assignment, Consent and Release, which is recorded as
Instrument No. 18089 in Misc. Drawer 25, with the Register of Deeds of ▇▇▇▇▇
County, Indiana.
5. Operating Lease dated as of March 28, 1991 between HCPI, as lessor, and
Cardinal, as the original lessee, as amended by that certain Amendment to
Operating Lease made and effective November 1, 1993, that certain Second
Amendment to Operating Lease made and effective as of April 1, 1994 and that
certain Third Amendment to Operating Lease made and effective as of March 31,
1995. On November 1, 1993, Cardinal assigned its lessee/tenant interests under
such Lease to the Lessee pursuant to a Lease Assignment, Consent and Release,
which is recorded as Instrument No. 174875 in Book 92, Page 118, with the
Register of Deeds of ▇▇▇▇▇▇ County, Indiana.
6. Operating Lease dated as of March 28, 1991 between HCPI, as lessor, and
Cardinal, as the original lessee, as amended by that certain Amendment to
Operating Lease made and effective November 1, 1993, that certain Second
Amendment to Operating Lease made and effective as of April 1, 1994 and that
certain Third Amendment to Operating Lease made and effective as of March 31,
1995. On November 1, 1993, Cardinal assigned its lessee/tenant interests under
such Lease to THS pursuant to a Lease Assignment, Consent and Release, which is
recorded as Instrument No. 93080020 with the Register of Deeds of Lake County,
Indiana.
7. Operating Lease dated as of June 19, 1995 between HCPI Charlotte, Inc., a
Delaware corporation and an affiliate of HCPI, as lessor, and THS, as lessee.
8. Operating Lease dated as of June 19, 1995 between HCPI Knightdale, Inc., a
Delaware corporation and an affiliate of HCPI, as lessor, and THS, as lessee.
▇-▇
▇-▇
EXHIBIT E
FACILITIES GROUP LEASES
Those leases, each dated as of June 15, 1998, between Lessor or an Affiliate of
Lessor and Lessee or an Affiliate of Lessee, for the following facilities shall
be "Facility Group Leases" for purposes of this Lease:
1. Walnut Cove, NC;
2. Orlando, FL;
3. Omro, WI;
4. ▇▇▇▇ ▇▇. ▇▇▇▇▇, ▇▇;
▇. ▇▇▇▇▇ ▇▇▇, ▇▇;
6. Salina, KS;
7. Junction City, AR;
8. ▇▇▇▇▇, AR;
9. Piggott, AR; and
10. Lake City, FL.
LESSOR'S
INITIALS
LESSOR'S
INITIALS
LESSEE'S
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INITIALS
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LESSEE'S
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INITIALS
F-1
E-1
EXHIBIT F
FIXED TERM MONTHLY MINIMUM RENT SCHEDULE
Subject to upward adjustment pursuant to Sections 3.1.1(b) and (c)
and subject further to adjustment pursuant to either Articles XLIX or L of
this Lease, during the Fixed Term Lessee shall pay to Lessor as monthly
"Minimum Rent," the following amounts in accordance with the following
schedule:
(a) For the period from the Commencement Date through the expiration
of the first (1st) Lease Year of the Fixed Term, the sum of $12,500.00;
(b) For the second (2nd) Lease Year of the Fixed Term,
the sum of $12,847.25;
(c) For the third (3rd) Lease Year of the Fixed Term,
the sum of $13,368.08; and
(d) For the balance of the Fixed Term, the sum of
$13,809.00.
INITIAL MINIMUM PURCHASE PRICE
The initial Minimum Purchase Price for the Leased Property shall be
the sum of $1,747,600.00.
SPECIAL ADDITIONAL RENT
Subject to Article L of this Lease, Lessee shall pay one-time
payments of "Special Additional Rent" during the Fixed Term and each
Extended Term, if any, the following amounts in accordance with the
following schedule:
(a) On October 1, 2001, the sum of $1,666.66.
(b) On October 1, 2013, the sum of $2,500.00.
(c) On October 1, 2023, the sum of $3,333.33.
▇-▇
▇-▇
RENT ADJUSTMENT PERCENTAGE
The Rent Adjustment Percentage for this Lease for purposes of Article
L is 34.7133 %.
G-1
E-1
EXHIBIT G
PERMITTED EXCEPTIONS
THIS EXHIBIT INTENTIONALLY OMITTED
H-1
G-1
EXHIBIT H
MINIMUM RENT REALLOCATION EXAMPLE(S)
THIS EXHIBIT INTENTIONALLY OMITTED
Centennial HealthCare Investment Corporation has entered into
lease Lease Agreements substantially identical to Exhibit 10.1 as
follows:
1. Lease Agreement dated June 15, 1998 with Health Care Property
Investors, Inc., for the Green Bay, Wisconsin facility.
Material details in which this Lease Agreement differs
from Exhibit 10.1 are that the base rent per year is YEAR
1 $400,000, YEAR 2 $411,111, YEAR 3 $427,778, and YEAR 4 $441,889.
2. Lease Agreement dated June 15, 1998 with Health Care Property
Investors, Inc., for the ▇▇▇▇▇▇, KS facility. Material
details in which this Lease Agreement differs from
Exhibit 10.1 are that the base rent per year is YEAR 1
$290,000, YEAR 2 $298,056, YEAR 3 $310,139, and YEAR 4 $320,369.
3. Lease Agreement dated June 15, 1998 with Health Care Property
Investors, Inc., for the Junction City, AR facility.
Material details in which this Lease Agreement differs
from Exhibit 10.1 are that the base rent per year is YEAR 1
$150,000, YEAR 2 $154,167, YEAR 3 $160,417, Healthcare Property
Investors, INC., and YEAR 4 $165,708.
4. Lease Agreement dated June 15, 1998 with Health Care Property
Investors, Inc., for the Dumas, AR facility. Material
details in which this Lease Agreement differs from
Exhibit 10.1 are that the base rent per year is YEAR 1 $270,000,
YEAR 2 $277,500 YEAR 3 $288,750, and YEAR 4 $298,275.
5. Lease Agreement dated June 15, 1998 with Health Care Property
Investors, Inc., for the Port St. Lucie, FL facility.
Material details in which this Lease Agreement differs
from Exhibit 10.1 are that the base rent per year is YEAR 1
$560,000, YEAR 2 $575,556, YEAR 3 $598,889, and YEAR 4 $618,644.
6. Lease Agreement dated June 15, 1998 with Health Care Property
Investors, Inc., Healthcare Property Investors, Inc., for
the Piggot, AR facility. Material details in which this
Lease Agreement differs from Exhibit 10.1 are that the
base rent per year is YEAR 1 $290,000, YEAR 2 $298,056, YEAR 3
$310,139, and YEAR 4 $320,369.
7. Lease Agreement dated June 15, 1998 with Health Care Property
Investors, Inc., for the Lake City, FL facility. Material
details in which this Lease Agreement differs from
Exhibit 10.1 are that the base rent per year is YEAR 1
$330,000, YEAR 2 $339,157, YEAR 3 $352,917, and YEAR 4 $364,558.
8. Lease Agreement dated June 15, 1998 with Health Care Property
Partners, for the Omro, Wisconsin facility. Material details
in which this Lease Agreement differs from Exhibit 10.1
are that the base rent per year is YEAR 1 $400,000, YEAR 2 $411,111,
YEAR 3 $427,778, and YEAR 4 $441,889.
9. Lease Agreement dated June 15, 1998 with Health Care Propery
Partners, for the Walnut Cove, NC facility. Material details
in which this Lease Agreement differs from Exhibit 10.1 are
that the base rent per year is YEAR 1 $350,000, YEAR 2
$359,722, YEAR 3 $374,306, and YEAR 4 $386,653.
10. Lease Agreement dated June 15, 1998 with Health Care
Property Partners, for the Orlando, FL facility. Material
details in which this Lease Agreement differs from
Exhibit 10.11 are that the base rent per year is YEAR 1
$560,000, YEAR 2 $575,556, YEAR 3 $598,889, and YEAR 4 $618,644.